Final Results

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: [phone]
David Fletcher, Non-Executive Chairman Peter Bailey, Finance Director
Cairn Financial Advisers LLP	Tel: [phone]
(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 Share based payment expense		(1,078) (58)	(1,064) (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 Diluted	4 4	2.75p 2.75p	2.27p 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

	Note	Share capital	Share premium	Investment Revaluation Reserve	Share option reserve	Retained Earnings	TOTAL 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 (2022: 0.50p)	77	51
	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 No	2023 No
Weighted average number of shares for basic earnings per share Share options (non-dilutive at prevailing average share price)	10,252,209 -	10,252,209 -
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 Diluted	2.75p 2.75p	2.27p 2.27p
Adjusted earnings per share Basic Diluted	3.26p 3.26p	2.01p 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

 

END