Final Results

RNS Number : 7483V

Fletcher King PLC

16 July 2009

 



FLETCHER KING PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 APRIL 2009

Highlights

•     Revenue from continuing operations was £3.130m (2008: £4.529m) 
•     Profit before tax, impairments and exceptional items of £414,000 (2008: £613,000)
•     Impairments, exceptional items and the loss on discontinued operations amounted to £888,000 
•     Loss for the year £432,000 (2008: profit £550,000)
•     The company transferred to the Alternative Investment Market ('AIM')
•     Disposal of Fletcher King Howard to its management for a nominal sum
•     Overheads reduced on an annualised basis by approximately 20%
•     The continuing business is trading profitably 
•     Final dividend of 1p per share (2008: 1.75p). No interim dividend was paid and therefore the
      total ordinary dividend for this year will be 1p per share (2008: 3.0p)

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

'2009/2010 will not be an easy year for us and the level of transactions is unlikely to be significantly higher than in the past year. However, we have excellent and loyal clients from whom we receive a regular income flow. We also have a strong balance sheet with good cash reserves, have taken all necessary steps to adjust our overhead and firmly believe we are well positioned to meet the challenging conditions in which we find ourselves.'

For further information, please call:

David Fletcher/ Richard Goode, Fletcher King    020 7493 8400

Christopher Joll/Simon Stretch, BLJ Financial        020 7259 0503

James Caithie, Dowgate Capital Advisers Limited    020 7492 4777

CHAIRMAN'S STATEMENT

Results

During the year the company transferred to AIM, disposed of Fletcher King Howard to its management for a nominal sum, crystallising a loss, made provision for the impairment of its investment in SHIPS 04 and for the outstanding debt from Fletcher King Howard.

Revenue from continuing operations was £3.130m (2008: £4.529m) with profit before tax, impairments and exceptional items of £414,000 (2008: £613,000).

Impairments, exceptional items and the loss on discontinued operations amounted to £888,000. This resulted in a loss for the year attributable to equity shareholders of £432,000 (2008: profit £550,000).

During the year we continued to review our overheads and on an annualised basis reduced the costs of the ongoing business by approximately 20%.

Despite reporting an overall loss, the continuing business traded profitably and in view of this and the strong balance sheet, the Board is proposing a final dividend of 1p per share (2008: 1.75p). The final dividend is subject to shareholders' approval at the AGM and will be paid on 25 September 2009 to those shareholders on the register at the close of business on 28 August 2009. No interim dividend was paid and therefore the total ordinary dividend for this year will be 1p per share (2008: 3.0p).

The Commercial Property Market

The IPD Monthly All Property Index shows a fall in capital values of 42.7% from the peak in June 07 to the end of April 09 although this index has consistently lagged market sale prices which suggest a fall closer to 50%.

Against this background the market is in a stagnant state and few transactions are taking place.

Whilst we think it unlikely that yields will move very much higher it is evident that rents are falling across the board and this is likely to have a further depressing effect on values.

Debt is almost impossible to obtain and until more liquidity is injected into the banking system the market is unlikely to improve significantly in the short term.

The properties that are finding favour with investors are those buildings let for ten years or more to strong covenants in lots up to £5m and these properties are obtaining competitive bids. Otherwise double digit initial yields are required for there to be any interest.

Outlook 

2009/2010 will not be an easy year for us and the level of transactions is unlikely to be significantly higher than in the past year. However, we have excellent and loyal clients from whom we receive a regular income flow. We also have a strong balance sheet with good cash reserves, have taken all necessary steps to adjust our overhead and firmly believe we are well positioned to meet the challenging conditions in which we find ourselves.

Finally, I would like to thank our hardworking staff who have done a great job in these difficult times.

DIVISIONAL REVIEW

Fund Management and Investment

As advised in the Interim Statement and by the Chairman above, the volume of transactions has been at a very low level and shows little sign of picking up in the immediate future.

Well let investment property is now beginning to look fair value and inflation adjusted initial yields are as high as they have been in the last twenty years. However only those with cash and no need to resort to bank funding, are able to take advantage of the opportunities that will present themselves in the coming months.

Our fund management mandates continue to provide a strong income flow and portfolio management opportunities are likely to add to our fee income. The continuity of income flow is all important in the current market and economic climate and every effort is being made to sustain this in all of our clients portfolios.

Our SHIPS 06 fund has not yet purchased any investments but we expect to do so during the coming year. We are in the process of raising additional equity for the fund to add to the £8m held in cash.

Asset Management

New clients have been acquired during the year as reported in the Interim Statement.

Despite the poor economic situation we are still collecting 95% of all rents due within three days of the quarter day. Very few tenants in the various portfolios we manage have failed and similarly very few are on monthly rents.

As noted above the continuity of income flow is of paramount importance to our clients in these difficult times and we are using all our resources to ensure this occurs. Rent reviews and lease renewals are still producing increases in some areas and our use of local agents and consultants is proving successful in producing the best results.

Valuation and Rating

The volume of valuation instructions declined significantly in the last half of the year as bank lending reduced dramatically. However, we are seeing the first signs of loan restructuring coming through which will increase the demand for valuations.

Rating work is largely unaffected by the economy but we saw a reduction in the volume of settlements in the last half of the year. This resulted from the Valuation Office concentrating their resources in completing valuations for the 2010 Rating List which will be published in September this year.

Even though volumes are down, we still achieved some notable successes and renegotiated a reduction for Myhotels in Brighton from RV £535,000 to RV £355,000 and for Britannia Parking in Bangor and Barnet a 36% and 23% reduction in assessments respectively. We achieved a saving of 80% for Travelex in Dover and Ashford and 70% on charitable premises in Finchley.

Fletcher King Howard

As reported in the Interim Statement we disposed of this company to its management for a nominal sum. This gave rise to a loss as detailed in these accounts. The outstanding debt at the year end was £167,000 down from £180,000 at the time of sale. To be prudent the Board has taken the decision to impair this debt to zero in these accounts.

  CONSOLIDATED INCOME STATEMENT

for the year ended 30 April 2009 

		2009	2008
		£000	£000
	Revenue	3,130	4,529
	Employee benefits expense	(1,634)	(2,512)
	Depreciation expense	(73)	(56)
	Exceptional impairment losses	(167)	-
	Exceptional costs on transfer to AIM	(68)	-
	Other operating expenses	(1,096)	(1,519)
	Operating profit	92	442
	Profit on disposal of available-for-sale investments	-	236
	Impairment of available-for-sale investments	(178)	(71)
	Income from investments	13	37
	Finance income	74	134
	Profit before taxation	1	778
	Analysed as:
	Profit before taxation, exceptional items and impairments	414	613
	Exceptional impairment losses	(167)	-
	Exceptional costs on transfer to AIM	(68)	-
	Profit on disposal of available-for sale investments	-	236
	Impairment of available for sale investments	(178)	(71)
	Profit before taxation	1	778
	Taxation	42	(206)
	Profit for the year from continuing operations	43	572
	Loss for the year from discontinued operations	(475)	(22)
	(Loss)/Profit for the year attributable to equity shareholders	(432)	550
	Basic (loss)/earnings per share
	Continuing operations	0.47p	6.21p
	Discontinued operations	(5.16)p	(0.24)p
	Total operations	(4.69)p	5.97p
	Diluted (loss)/earnings per share
	Continuing operations	0.47p	6.20p
	Discontinued operations	(5.16)p	(0.24)p
	Total operations	(4.69)p	5.96p

  CONSOLIDATED BALANCE SHEET

as at 30 April 2009 

		2009	2008
		£000	£000
	Assets
	Non-current assets
	Property, plant and equipment	358	457
	Available-for-sale investments	250	428
	Deferred tax assets	93	58
		701	943
	Current assets
	Trade and other receivables	899	1,462
	Amounts recoverable on contracts	-	154
	Cash and cash equivalents	2,129	2,773
		3,028	4,389
	Total assets	3,729	5,332
	Liabilities
	Current liabilities
	Trade and other payables	297	508
	Current taxation liabilities	-	132
	Other creditors	658	1,325
		955	1,965
	Non-current liabilities	-	-
	Total liabilities	955	1,965
	Shareholders' equity
	Share capital	921	921
	Share premium	140	140
	Profit and Loss reserve	1,713	2,306
	Total shareholders' equity	2,774	3,367
	Total equity and liabilities	3,729	5,332

  CONSOLIDATED CASH FLOW STATEMENT

for the year ended 30 April 2009 

	2009	2008
	£000	£000
Cash flows from operating activities
Profit before taxation from continuing operations	1	778
Loss before taxation from discontinued operations	(389)	(19)
Adjustments for:
Depreciation expense	82	79
Profit on disposal of non-current assets held for sale	-	(236)
Impairment of available-for-sale investments	178	71
Income from investments	(13)	(37)
Finance income	(75)	(137)
Cash flows from operating activities before movement in working capital	(216)	499
Decrease in trade and other receivables	265	138
Decrease in trade and other payables	(491)	(167)
Decrease in work in progress	63	68
Cash (used in) / generated from operations	(379)	538
Taxation paid	(136)	(296)
Net cash flows from operating activities	(515)	242
Cash flows from investing activities
Purchases of equipment	(17)	(427)
Sale of equipment	6	16
Purchase of investments	-	-
Sale of investments	-	238
Finance income	75	137
Income from investments	13	37
Disposal of subsidiary undertaking, net of cash disposal	(45)	-
Net cash flows from investing activities	32	1
Cash flows from financing activities
Dividends paid to shareholders	(161)	(460)
Net cash flows from financing activities	(161)	(460)
Net decrease in cash and cash equivalents	(644)	(217)
Cash and cash equivalents at start of year	2773	2,990
Cash and cash equivalents at end of year	2,129	2,773

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Share capital	Share premium	Profit and loss reserve	Fair value reserve	Total Reserves	TOTAL EQUITY
	£000	£000	£000	£000	£000	£000
Balance at 1 May 2007	921	140	2,216	276	2,492	3,553
Net profit for the year	-	-	550	-	550	550
Transfer of realised gains on disposal	-	-	-	(342)	(342)	(342)
Deferred taxation adjustment	-	-	-	118	118	118
Fair value loss on investments	-	-	-	(52)	(52)	(52)
Total recognised income and expense for the year	-	-	550	(276)	274	274
Equity dividends paid	-	-	(460)	-	(460)	(460)
Balance at 30 April 2008	921	140	2,306	-	2,306	3,367
Net loss for the year	-	-	(432)	-	(432)	(432)
Total recognised income and expense for the year	-	-	(432)	-	(432)	(432)
Equity dividends paid	-	-	(161)	-	(161)	(161)
Balance at 30 April 2009	921	140	1,713	-	1,713	2,774

  NOTES 

1. Basis of preparation

The financial information set out above, which has been prepared on the basis of the accounting policies as set out in the prior year's accounts does not comprise the company's financial statements for the year ended 30 April 2009. While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. Statutory financial statements for the previous financial year ended 30 April 2008 have been delivered to the Registrar of Companies. The auditors' report on those financial statements was unqualified and did not contain any statement under section 237(2) or (3) of the Companies Act 1985. The auditors have not yet reported on financial statements for the year ended 30 April 2009, and such financial statements will be finalised on the basis of the figures in this preliminary announcement.

2. Dividends

Year ended 30 April	2009	2008
	£000	£000
Equity dividends on ordinary shares:
Declared and paid during year
Ordinary final dividend for the year ended 30 April 2008: 1.75p per share (2007: 3.75p)	161	345
Interim dividend for the six months ended 31 October 2008: £nil per share (2007: 1.25p)	-	115
	161	460
Proposed ordinary final dividend for the year ended 30 April 2009: 1p per share	92

3. Exceptional Items

Year ended 30 April	2009	2008
	£000	£000
Impairment losses	167	-
Cost of transfer to AIM	68	-
	235	-

Impairment losses represent full provision against the outstanding loan payable by FK Howard Limited, a company divested from the group on 19th December 2008. 

The Group transferred from the UK Official List to AIM on 14 October 2008 and incurred exceptional costs of £68,000 on the transaction.

4. Discontinued Operations

On 19th December 2008, the Group disposed of its 100% subsidiary Fletcher King Howard Limited to its Management Team for a nominal sum. An outstanding loan of £180,000 remained payable by Fletcher King Howard Limited to the Group at the time of disposal and full provision has been made against the remaining balance of £167,000 in the accounts for the year ended 30 April 2009.

Income Statement and Segmental Analysis of discontinued operations

Year ended 30 April	2009	2008
	£000	£000
Revenue	682	1,881
Employee benefits expense	(680)	(1,284)
Depreciation expense	(9)	(23)
Other operating expenses	(383)	(596)
	(390)	(22)
Finance Income	1	3
Loss before taxation	(389)	(19)
Taxation	-	(3)
Loss after taxation	(389)	(22)
Loss on disposal	(86)	-
Loss for the year from discontinued operations	(475)	(22)

Cashflows from discontinued operations

	2009	2008
	£000	£000
Net cash flow from operating activities	5	(65)
Net cash flows from investing activities	(56)	(2)
Net cash flows from financing activities	-	-
Net decrease in cash and cash equivalents	(51)	(67)
Cash and cash equivalents at start of year	51	118
Cash and cash equivalents at end of year	-	51

(Loss)/earnings per share from discontinued operations

	2009	2008
	£000	£000
Basic loss per share	(5.16)p	(0.24)p
Diluted loss per share	(5.16)p	(0.24)p

  Assets and liabilities of discontinued operations

	19 December 2008	30 April 2008
	£000	£000
Property, plant and equipment	28	25
Cash and cash equivalents	45	51
Other current assets	400	858
Current liabilities	(387)	(459)
Net assets	86	475
Total consideration	-
Net Loss on disposal	86
Net cash outflow arising on disposal:
Cash consideration	-
Cash and cash equivalents disposed	(45)
	(45)

5. Earnings per share 

	2009  No	2008  No
Weighted average number of shares for basic earnings per share	9,209,779	9,209,779
Effect of dilutive share options	-	11,696
	9,209,779	9,221,475
Earnings for basic and diluted earnings per share	£000	£000
Continuing operations	43	572
Discontinued operations	(475)	(22)
	(432)	(550)
Basic (loss)/ earnings per share
Continuing operations	0.47p	6.21p
Discontinued operations	(5.16)p	(0.24)p
Total operations	(4.69)p	5.97p
Diluted (loss)/earnings per share
Continuing operations	0.47p	6.20p
Discontinued operations	(5.16)p	(0.24)p
Total operations	(4.69)p	5.96p

 

END

 

 

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