FLETCHER KING PLC — Earnings Release 2019

Jul 31, 2019

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RNS Number : 2749H

Fletcher King PLC

31 July 2019

FLETCHER KING PLC

Audited results for the Year Ending 30th April 2019

Highlights

·   Revenue for the year of £3,053,000 (2018: £3,080,000)

·   Profit before tax of £282,000 (2018: £274,000)

·   Profit after tax of £230,000 (2018: £209,000)

·   Basic earnings per share of 2.50p (2018: 2.27p)

·   Final dividend of 0.75p per share proposed. An interim dividend of 1.00p per share was paid and therefore the total ordinary dividend for the year will be 1.75p per share (2018: 1.75p)

Commenting on the results, David Fletcher, chairman of Fletcher King Plc said:

"Performance for the year turned out very much in line with last year despite challenging market conditions.

Ongoing political and Brexit uncertainties are likely to continue to negatively impact the UK property markets in which we operate and it will be increasingly difficult to maintain profitability. However, our strong balance sheet is significant in such times and secures our ability to maintain dividend payments to shareholders".

This announcement contains inside information for the purposes of Article 7 of EU regulations 596/2014.

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For further information, please call:

David Fletcher/Peter Bailey, Fletcher King            020 7493 8400

James Caithie/Tony Rawlinson, Cairn Financial Advisers LLP 020 7213 0880

CHAIRMAN'S STATEMENT

Results

Revenue for this year was £3,053,000 (2018: £3,080,000). Profit before tax was £282,000 (2018: £274,000).

The board is proposing a final dividend of 0.75p per share. The final dividend is subject to shareholder approval at the AGM and will be paid on 4 October 2019 to shareholders on the register at close of business on 6 September 2019. With the interim dividend of 1.00p per share (2018: 1.00p) the dividend for this year will amount to 1.75p per share (2018: 1.75p per share).

The Commercial Property Market

The unprecedented political and Brexit uncertainties continue to severely impact lettings and sales in the UK commercial property market.

As the next Brexit deadline approaches, both investors and occupiers are likely to become increasingly cautious until this momentous issue is finally resolved.

However, there continues to be some reasonable traction in London and the major cities and it is clear that there are substantial funds available for investment once the future becomes more certain.

Generally, activity in the capital markets has slowed and prices have softened over the last 6 months.

The industrial market continues to be the best performing sector, followed by city centre offices. Retail continues to suffer with no end in sight to the rise in online sales, causing rental values to slide further and a corresponding fall in capital values.

Business Overview

Performance turned out very much in line with management expectations, and indeed in line with the previous year, and was achieved during challenging market conditions.

We transacted a good volume of investment property sales although market prices were lower towards the end of the period.

Property Management, Rating and Valuations all performed well although the Valuation Office continued to delay settlement of rating appeals which makes income forecasting difficult for that part of our business.

The Stratton House Investment Property Syndicates ("SHIPS"), in which we have an investment and are managers, have enjoyed some success in leasing up vacant space.

Two further floors in the Clerkenwell building were let earlier this calendar year and the last two vacant floors were let in July 2019.

The City building likewise achieved lettings of three floors during the financial year and a further floor was let in July 2019. Two floors remain to be let.

Outlook

Forecasting the future is more difficult than ever for the reasons outlined above. We have some good investment sales instructions but fewer than the same time last year.

Property management is hoping to secure further mandates and it will continue to provide a steady and secure income flow.

Rating income is entirely driven by the Valuation Office's willingness to engage in negotiations on the many challenges we have in the pipeline.

Currently the banks continue to lend and we anticipate a steady flow of valuation instructions.

As a result of the uncertainties I have outlined above it is impossible to accurately predict the outcome for the coming year as it becomes increasingly difficult to maintain profitability.

We manage the business conservatively and in such times a strong balance sheet, with liquidity and no debt, is of immense importance to our relationship with our clients and also in the recruitment and retention of our valuable staff. It also secures our ability to continue our unbroken record of dividend payment.

As always thanks must go to our loyal clients and hardworking colleagues.

DAVID FLETCHER

CHAIRMAN

30 July 2019

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 April 2019

	Note	2019	2018
		£000	£000
Revenue		3,053	3,080
Employee benefits expense		(1,648)	(1,609)
Depreciation expense		(3)	(18)
Other operating expenses Other operating income		(1,218) 91	(1,242) 61
Operating profit		275	272
Finance income		7	2
Profit before taxation		282	274
Taxation		(52)	(65)
Profit and total comprehensive income for the year attributable to equity shareholders		230	209
Basic earnings per share Diluted earnings per share	3 3	2.50p 2.50p	2.27p 2.25p

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 30 April 2019

	2019	2018
	£000	£000
Assets
Non-current assets
Property, plant and equipment	9	12
Financial assets	1,603	1,588
Deferred tax assets	16	16
	1,628	1,616
Current assets
Trade and other receivables	1,809	917
Cash and cash equivalents	2,001	2,628
	3,810	3,545
Total assets	5,438	5,161
Liabilities
Current liabilities
Trade and other payables	1,204	977
Current taxation liabilities	24	43
	1,228	1,020
Total liabilities	1,228	1,020
Shareholders' equity
Share capital	921	921
Share premium	140	140
Retained Earnings	3,149	3,080
Total shareholders' equity	4,210	4,141
Total equity and liabilities	5,438	5,161

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 30 April 2019

	2019	2018
	£000	£000
Cash flows from operating activities
Profit before taxation from continuing operations	282	274
Adjustments for:
Depreciation expense	3	18
Finance income	(7)	(2)
Cash flows from operating activities before movement in working capital
278	290
(Increase)/decrease in trade and other receivables	(892)	578
Increase/(decrease) in trade and other payables	226	(474)
Cash (absorbed)/generated from operations	(388)	394
Taxation paid	(70)	(119)
Net cash flows from operating activities	(458)	275
Cash flows from investing activities
Purchase of investments	(15)	-
Purchase of fixed assets	-	(14)
Finance income	7	2
Net cash flows from investing activities	(8)	(12)
Cash flows from financing activities
Dividends paid to shareholders	(161)	(368)
Net cash flows from financing activities	(161)	(368)
Net decrease in cash and cash equivalents	(627)	(105)
Cash and cash equivalents at start of year	2,628	2,733
Cash and cash equivalents at end of year	2,001	2,628

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 April 2019

	Note	Share capital	Share premium	Retained Earnings	TOTAL EQUITY
		£000	£000	£000	£000
Balance at 1 May 2017		921	140	3,239	4,300
Total comprehensive income for the year		-	-	209	209
Equity dividends paid	2	-	-	(368)	(368)
Balance at 30 April 2018		921	140	3,080	4,141
Total comprehensive income for the year		-	-	230	230
Equity dividends paid	2	-	-	(161)	(161)
Balance at 30 April 2019		921	140	3,149	4,210

NOTES

1. Basis of preparation

The financial information set out in this announcement does not comprise the Group's statutory accounts for the year ended 30 April 2019. The financial information has been extracted from the statutory accounts of the Group for the year ended 30 April 2019. The auditors reported on these accounts. Their reports were 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 statutory accounts for the year ended 30 April 2018 have been delivered to the Registrar of Companies, whereas those for the year ended 30 April 2019 will be delivered to the Registrar of Companies following the Company's annual general meeting. Except where noted in the statutory accounts the accounting policies are consistent with those applied in the preparation of the interim results for the period ended 31 October 2018 and the statutory accounts for the year ended 30 April 2018, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

2.  Dividends

Year ended 30 April	2019	2018
	£000	£000
Equity dividends on ordinary shares:
Declared and paid during year
Ordinary final dividend for the year ended 30 April 2018: 0.75p per share (2017:  3.00p)	69	276
Interim dividend for the year ended 30 April 2019: 1.00p per share (2018: 1.00p)	92	92
	161	368
Proposed ordinary final dividend for the year ended 30 April 2019: 0.75p per share	69

3. Earnings per share

	2019 No	2018 No
Weighted average number of shares for basic earnings per share Share options	9,209,779 -	9,209,779 58,907
Weighted average number of shares for diluted earnings per share	9,209,779	9,268,686
	£000	£000
Earnings for basic and diluted earnings per share	230	209
Basic earnings per share	2.50p	2.27p
Diluted earnings per share	2.50p	2.25p

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