REG - Fletcher King PLC - Final Results
16/08/2024 07:00
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RNS Number : 6773A Fletcher King PLC 16 August 2024
FLETCHER KING PLC
Audited results for the Year Ending 30 April 2024
Highlights
· Revenue for the year of £3,826,000 (2023: £3,079,000)
· Statutory profit before tax of £452,000 (2023: £192,000)
· Adjusted profit before tax of £504,000 (2023: £165,000) *
· Adjusted basic earnings per share of 3.26p (2023: 2.01p) **
· Final proposed dividend: 2.25p per share (2023: 0.75p per share)
· Cash and fixed term deposit reserves: £3.8m as at 30 April 2024
(2023: £2.8m)
*Adjusted profit before tax is before share-based payment expenses and after
other comprehensive income (see note 2). The Board considers the adjusted
results to be an important measure of performance due to the nature of the
Company, and with share options being awarded to directors and key staff only.
**Adjusted basic earnings per share is calculated using adjusted profits (see
note 4).
The Annual Report and Accounts will shortly be posted on the Company's website
and a further announcement will be made when the document is sent to
shareholders.
Commenting on the results, David Fletcher, chairman of Fletcher King Plc said:
"Against a backdrop of subdued property markets, we are pleased to report
improved results compared with last year and to be able to recommend an
increased dividend payment. Markets are likely to remain cautious for a while
longer, and it will be a challenge to maintain the same financial performance.
However, we have started the new year with a solid base of contracted fee
income and, with some good instructions in the pipeline, we are cautiously
optimistic for the forthcoming period."
This announcement contains inside information for the purposes of the UK
Market Abuse Regulation and the Directors of the Company are responsible for
the release of this announcement.
For further information, please contact:
Fletcher King plc Tel: +44 (0) 20 7493 8400
David Fletcher, Non-Executive Chairman
Peter Bailey, Finance Director
Cairn Financial Advisers LLP Tel: +44 (0) 20 7213 0880
(Nominated Adviser)
James Caithie
Liam Murray
CHAIRMAN'S STATEMENT
Results
Revenue for the year was £3,826,000 (2023: £3,079,000). Adjusted profit
before tax (see note 2) was £504,000 (2023: £165,000). Statutory profit
before tax was £452,000 (2023: £192,000).
The Board considers the adjusted results to be an important measure of
performance and to be more representative of performance for the year than the
statutory results (which have been prepared in accordance with International
Financial Reporting Standards).
Dividend
The Board is proposing a final dividend of 2.25p per share (2023: 0.75p per
share). The final dividend is subject to shareholder approval at the AGM and
will be paid on 25 October 2024 to shareholders on the register at the close
of business on 27 September 2024 with an ex-dividend date of the 26 September
2024. With no interim dividend paid (2023: £nil per share) the dividend for
this year will amount to 2.25p per share (2023: 0.75p per share).
The Commercial Property Market
Global economic and political uncertainty, together with high interest rates,
have led to the largest downturn in the commercial property market since the
great financial crash of 2008. This has caused investors to refrain from the
market, resulting in a 17% fall in capital investment in the UK over the last
12 months to £60.5bn compared to £72.6bn the previous year. However, with a
new government in place with a strong mandate, investors may now begin to feel
more confident about re-entering the market in the coming months.
Over the last 12 months, total returns for all property were just positive at
1.0%. This flat performance was significantly skewed by the office sector
which remained deep in negative territory at -9.7%.
Capital values fell on average by -4.7% with offices falling by -14.2%, retail
-5.0% and industrial slightly creeping into positive figures at +0.3%.
However, after a very difficult period, there are definite signs that a slow
recovery has at last begun with property yields remaining unchanged and
investors beginning to return particularly since commercial property is now
providing an attractive net initial yield of 5.3%. Activity however still
remains well below pre-pandemic levels but there are definite signs that the
second half of the year will see activity levels picking up.
The occupational markets however have overall been a different story. Rental
growth has been achieved across all 3 main sectors with the industrial sector
continuing to provide the best performance with 6.3% growth in rents, with
offices at 2.5% but retail a mere 0.9%. The demand for large logistics
warehousing is continuing to drive rents and across London and the South-East
rents for units over 50,000 sq ft have risen 13% year on year. Retail still
shows little signs of emerging from the doldrums and shopping centres in
particular are struggling. However, demand for good quality retail warehousing
has seen a pick up with rental values climbing steadily for well located high
quality schemes.
In spite of the continuing move towards working from home, the Central London
office market in particular has seen some significant deals completed over the
last 12 months with record rents being achieved. However, occupiers are
increasingly demanding grade A space that meet environmental, social and
governance requirements for which they are prepared to pay top rents. This is
creating a 2-tier market where secondary accommodation which does not meet
current high standards, is becoming virtually unlettable other than at heavily
discounted prices.
Business Overview
I am very pleased to report that despite a very difficult market we have
enjoyed an excellent year with progress on most fronts. As noted in the
Company's announcement of 15 May 24, the growth in revenue and profitability
has largely resulted from increased fees earned from transaction completions,
particularly in the period immediately prior to the year end.
The Company's investment team has worked hard to secure deals in a market that
has remained cautious throughout the year. The number of deals completed has
been relatively low but this has been compensated by a higher than normal
average deal size.
The Company has continued to focus on improving non-transactional fees from
the core service of property and asset management. Some additional
instructions have been won during the year further improving recurring revenue
under contract.
The Company's valuation team has grown to meet the increased volume of
instructions from the major high street banks and this has translated into
improved recurring fee income in this area.
There has been a noticeable improvement in the engagement of the Valuation
Office Agency ("VOA") in settling rating appeals and this has helped to
generate increased fee income in this area of business. We hope that this
increased engagement will continue in subsequent periods and allow for timely
settlement of appeals.
As announced on 21 December 2023 in the Interim Statement, a new planning
service commenced in November 2023 and this has started very positively with
some good fee income.
One of the investment transactions completed in the year was the sale of the
underlying property in the SHIPS 16 Syndicate, in which the Company had a
co-investment and acted as adviser. The property had been revalued downwards
over the last few years, with the revaluations reflected in the Report and
Accounts, and the property was sold at an amount close to the most recent
valuation. Whilst it is disappointing to crystalise a loss on this property,
it reflects the changing office market in a post-covid world.
Outlook
It continues to be difficult to predict the property market's direction
particularly with the current uncertain economic environment.
The investment market is likely to remain very difficult in the year ahead and
investment fee income may be adversely affected accordingly. We do however
have some good instructions in the pipeline, although the timing of any
completions is uncertain.
We are optimistic that our non-transactional fee income will continue to grow
in the coming year. We continue to expand our valuation, rating, property
management and planning work with increasing instructions in all these areas.
The Company remains well supported by a strong balance sheet with no debt,
providing optionality for investment activity including co-investment in new
in-house property syndicates and any value accretive corporate opportunities.
We continue to actively manage our cash reserves, including use of fixed term
deposits, as appropriate.
Our recent and long-standing loyal clients continue to support us. Every one
of the team continue their hard work and these results reflect their
dedication to the firm and our clients.
DAVID FLETCHER
CHAIRMAN
15 August 2024
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended 30 April 2024
Note 2024 2023
£000 £000
Continuing operations
Revenue 3,826 3,079
Employee benefits expense (2,195) (1,704)
Depreciation expense (194) (197)
Other operating expenses (1,078) (1,064)
Share based payment expense (58) (17)
(3,525) (2,982)
Other operating income 51 51
Investment income 20 42
Finance income 94 21
Finance expense (14) (19)
Profit before taxation 452 192
Taxation (170) 41
Profit for the year 282 233
Other comprehensive income: amounts not to be
reclassified to profit or loss
Fair value loss on financial assets through (6) (44)
other comprehensive income
Total comprehensive income for the year attributable to equity shareholders
276 189
Earnings per share
Basic 4 2.75p 2.27p
Diluted 4 2.75p 2.27p
Adjusted earnings per share
Basic 4 3.26p 2.01p
Diluted 4 3.26p 2.01p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 April 2024
Note 2024 2023
£000 £000
(Restated)*
Assets
Non-current assets
Intangible assets 58 61
Property, plant and equipment 142 205
Right-of-use asset 263 378
Financial assets - 485
Deferred tax assets - 73
463 1,202
Current assets
Trade and other receivables 5 1,968 1,553
Cash and cash equivalents 1,327 1,268
Fixed term deposits 2,500 1,487
5,795 4,308
Total assets 6,258 5,510
Liabilities
Current liabilities
Trade and other payables 6 1,410 901
Corporation tax 97 -
Lease liabilities 120 141
1,627 1,042
Non-current liabilities
Lease liabilities 192 286
Total liabilities 1,819 1,328
Shareholders' equity
Share capital 1,025 1,025
Share premium 522 522
Investment revaluation reserve - (145)
Share option reserve 85 27
Retained earnings 2,807 2,753
Total shareholders' equity 4,439 4,182
Total equity and liabilities 6,258 5,510
* Restated following reclassification of fixed term deposits with a maturity
date of greater than three months at inception which on further review did not
meet the definition of cash and cash equivalents.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 April 2024
2024 2023
£000 £000
(Restated)*
Cash flows from operating activities
Profit before taxation from continuing operations 452 192
Adjustments for:
Movement in provision - (25)
Depreciation and amortisation expense 194 197
Investment income (20) (42)
Finance income (94) (21)
Finance expense 14 19
Share based payment expense 58 17
Cash flows from operating activities before
movement in working capital
604 337
Increase in trade and other receivables (415) (224)
Increase/(decrease) in trade and other payables 509 (223)
Cash generated from / (absorbed by) operations 698 (110)
Taxation received - 97
Net cash flows from operating activities 698 (13)
Cash flows from investing activities
Purchase of fixed assets (14) (5)
Sale of financial asset 479 -
(Increase) in fixed term deposits (1,013) (1,487)
Investment income 20 42
Finance income 94 21
Net cash flows from investing activities (434) (1,429)
Cash flows from financing activities
Lease payments (128) (604)
Dividends paid to shareholders (77) (51)
Net cash flows from financing activities (205) (655)
Net increase/(decrease) in cash and cash equivalents 59 (2,097)
Cash and cash equivalents at start of year 1,268 3,365
Cash and cash equivalents at end of year 1,327 1,268
* Restated following reclassification of fixed term deposits with a maturity
date of greater than three months at inception which on further review did not
meet the definition of cash and cash equivalents.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 April 2024
Investment Share option reserve
Note Share Share Revaluation Retained TOTAL
capital premium Reserve Earnings EQUITY
£000 £000 £000 £000 £000 £000
Balance as at 1 May 2022 1,025 522 (101) 10 2,571 4,027
Profit for the year - - - - 233 233
Fair value loss on financial assets through other comprehensive income - - (44) - - (44)
Share based payment expense - - - 17 - 17
Equity dividends paid - - - - (51) (51)
Balance at 30 April 2023 1,025 522 (145) 27 2,753 4,182
Profit for the year - - - - 282 282
Fair value loss on financial assets
through other comprehensive income - - (6) - - (6)
Share based payment expense - - - 58 - 58
Equity dividends paid 2 - - - - (77) (77)
Transfer on disposal of
financial asset - - 151 - (151) -
Balance at 30 April 2024 1,025 522 - 85 2,807 4,439
NOTES
1. General information
Whilst the financial information included in this preliminary announcement has
been prepared in accordance with UK-adopted international accounting
standards, this announcement does not itself contain sufficient information to
comply with IFRSs.
The financial information is presented in pounds sterling rounded to the
nearest thousand, and prepared in accordance with UK-adopted international
accounting standards and under the historical cost convention, except for the
revaluation of certain financial assets. The financial information set out in
this announcement does not comprise the Group's statutory accounts for the
years ended 30 April 2024 or 30 April 2023.
The financial information for the year ended 30 April 2023 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their report was
unqualified and did not contain a statement under either Section 498 (2) or
Section 498 (3) of the Companies Act 2006 and did not include references to
any matters to which the auditor drew attention by way of emphasis.
The Statement of Financial Position has been restated as at 30 April 2023 to
reclassify fixed term deposits that were previously included in cash and cash
equivalents. On review, the fixed term deposits did not meet the definition of
cash and cash equivalents and have been reclassified accordingly.
The financial information for the year ended 30 April 2024 is derived from the
audited statutory accounts for the year ended 30 April 2024 on which the
auditors have given an unqualified report, that did not contain a statement
under section 498(2) or 498(3) of the Companies Act 2006 and did not include
references to any matters to which the auditors drew attention by way of
emphasis. The statutory accounts will be delivered to the Registrar of
Companies following the Company's annual general meeting.
2. Alternative performance measures - profit reconciliation
The reconciliation set out below provides additional information to enable the
reader to reconcile to the numbers discussed in the Chairman's Statement and
Highlights section.
Year ended 30 April 2024 2023
£000 £000
Profit before taxation 452 192
Add back: Share based payment expense 58 17
Include: Fair value loss on financial assets through OCI (6) (44)
Adjusted profit before share-based payment expense and taxation 504 165
Taxation (170) 41
Adjusted profit after tax for the year 334 206
The fair value loss on financial assets represents the loss in the year on the
revaluation of the Group's interest in the SHIPS 16 syndicate, prior to
disposal of the asset.
3. Dividends
Year ended 30 April 2024 2023
£000 £000
Equity dividends on ordinary shares:
Declared and paid during year
Ordinary final dividend for the year ended 30 April 2023: 0.75p per share 77 51
(2022: 0.50p)
77 51
Proposed ordinary final dividend for the year ended
30 April 2024: 2.25p per share 231
4. Earnings per share
Number of shares 2024 2023
No No
Weighted average number of shares for basic earnings per share 10,252,209 10,252,209
Share options (non-dilutive at prevailing average share price) - -
Weighted average number of shares for diluted earnings per share 10,252,209 10,252,209
Earnings £000 £000
Profit after tax for the year 282 233
(used to calculate the basic and diluted earnings per share)
Add back: Share based payment expense 58 17
Include: Fair value loss on financial assets through OCI (6) (44)
Adjusted profit after tax for the year 334 206
(used to calculate the adjusted basic and diluted earnings per share)
Earnings per share
Basic 2.75p 2.27p
Diluted 2.75p 2.27p
Adjusted earnings per share
Basic 3.26p 2.01p
Diluted 3.26p 2.01p
5. Trade and other receivables
2024 2023
£000 £000
Trade receivables 1,533 1,164
Other receivables 47 50
Prepayments 140 137
Accrued income 248 202
1,968 1,553
6. Trade and other payables
2024 2023
£000 £000
Trade payables 213 239
Other taxation and social security 389 201
Accruals 636 294
Deferred income 172 167
1,410 901
Forward Looking Statements
Certain statements in this announcement are forward-looking statements
relating to the Company's operations, performance and financial position based
on current expectations of, and assumptions and forecasts made by, management.
They are subject to a number of risks, uncertainties and other factors which
could cause actual results, performance or achievements of the Company to
differ materially from any outcomes or results expressed or implied by such
forward-looking statements. Undue reliance should not be placed on such
forward looking statements. They are made only as of the date of this
announcement and no representation, assurance, guarantee or warranty is given
in relation to them including as to their accuracy, completeness, or the basis
on which they are made.
END
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