Fletcher King Regulatory News (FLK)

10 Jul 2007 07:00

Fletcher King PLC10 July 2007 PRESS RELEASE Not for release before 0700, 10th July 2007 FLETCHER KING PLC ANNOUNCES STRONG SET OF RESULTS - INCREASED PRE TAX PROFITS AND DIVIDEND Fletcher King, the London based property fund manager and asset manager,announces today its preliminary results for the year ended 30 April 2007. Financial highlights: • Profit before tax up 71% to £1,027,000 (2006: £600,000)• Final ordinary dividend up 50% to 3.75 pence per share (2006: 2.5 pence per share)• Earnings per share (EPS) up 44% to 7.34 pence (2006: 5.09 pence) Operational highlights: • Record contribution made by Fund Management department.• Second Stratton House Investment Property Syndicate now fully invested and the third fund has completed a successful equity raising.• Asset management department has met targets and the added value initiative continues to produce both rental and capital growth.• The Valuation department's turnover significantly up on last year, new contracts include AIB and The Ulster Bank.• Landlord and Tenant department enjoyed its most successful year since its establishment with turnover increasing by 20%. Commenting, David Fletcher, Chairman of Fletcher King, said: "I am delighted to announce such a strong set of results, with profits beforetax up by 71% and the recommended final dividend up by 50%. We also have astrong pipeline of business and I believe the year ahead will be an excitingtime for the group." For further information: David Fletcher, Fletcher King 020 7493 8400Tim McCall, MJ2 Business Communications 020 7491 7776 CHAIRMAN'S STATEMENT Results Turnover for the year was £7.438m (2006: £6.117m) with profit before tax of£1,027,000 (2006: £600,000). The Board is proposing a final dividend of 3.75pper share (2006: 2.5p). The final dividend is subject to shareholders' approvalat the Annual General Meeting and will be paid on 28 September 2007 toshareholders on the register at the close of business on 31 August 2007. Withthe interim dividend of 1.0p per share (2006: 0.63p) already paid, the totalordinary dividend for the year will amount to 4.75p per share (2006: 3.13p). The Commercial Property Market The commercial property market continued the trend of the past few years andproduced record prices for commercial property investments and record rents inthe West End of London. Occupier demand for all types of space was generally positive which led torental growth across all sectors. The only sign of weakness was perhaps in some High Streets where rental growthstalled and there was some drift in investment yields. REITs finally arrived. After strong initial interest and rising share pricessome disillusionment crept in and they have been receiving a poor press. Webelieve REITs are a useful addition to the property investment market and theirtax transparency and the liquidity enjoyed by the larger ones is of positivebenefit to many investors. Property returns for the year to the end of March were 15.6% as measured by IPDand are likely to be around 9% for the coming year. At this level property willcontinue to produce a return that most balanced portfolio investors will findvery acceptable. Our second SHIPS fund is now fully invested. We recently concluded a successfulequity raising for our third Fund and have already agreed to purchase its firstproperty. Outlook for 2007/2008 Although prices are weakening in the secondary investment market, prime propertyand deals with added value potential continue to be in strong demand and we donot see that situation changing in the coming months. The rise in interest rates has made it more difficult to debt finance buying butthere is enough equity in the market to sustain interest at current levels. Wehave a strong pipeline of business for the coming year and look forward tocontinuing growth. DAVID FLETCHERCHAIRMAN10 JULY 2007 DIVISIONAL REVIEW Fletcher King Fund Management and Investment As might be expected in such a buoyant investment market the department had anextremely active year. Turnover was fairly evenly divided between sales andpurchases compared to last year when most of the activity was buying. We carried out our first transaction in Continental Europe buying a prime officein Paris for €17.26m. Other significant acquisitions during the year were aSainsbury's supermarket in Guernsey for £19.25m together with office buildingsin the City and Nottingham. Sales included a Business Park in Ascot for £10.5m and a mixed use portfolio ofproperties throughout the country for £25m. Our Fund Management fees continue to be a significant contributor to thedepartment's turnover and we successfully closed the equity raising operationfor our latest SHIPS fund where we again co-invested. Another first for the department this year was investment into the indirectmarket. We purchased units in WELLput and Hercules for one of our discretionaryfund management clients. These transactions were executed by our FSA regulatedsubsidiary Fletcher King Investment Management Plc. The coming year is likely to show a repeat of the department's excellentperformance and there is already a very strong pipeline of instructions. Asset Management The department has met its targets and the added value initiative that Imentioned in my interim statement continues to produce both rental and capitalgrowth. A number of new instructions were won throughout the year including a largemixed use block of property opposite Gloucester Road station in SouthKensington. David Hall, a director of the operating company, was promoted to Head of thedepartment and under his leadership the department is driving forwardsuccessfully. Valuation and Rating The department's turnover is significantly up on last year and since my interimstatement we have been appointed to the Valuation Panels of AIB and The UlsterBank. Despite three interest rate rises, lending to the property sector has notdiminished nor has the demand for valuation advice. At this time last year we predicted a very heavy workload for the forthcomingyear on rating and this has been the case. Highlights for the year include a£1.25m rate payment saving for Gate Gourmet on their short haul kitchen atHeathrow Airport, a 22% reduction in rate liability for The Merchant Group inMilton Keynes and a total rate saving of £216,000 for WSP Plc on theirheadquarters in Holborn. Whilst Central Government pressure on the Valuation Office to deal withoutstanding deals as rapidly as possible has now relaxed we have a significantvolume of appeals still be to negotiated and anticipate a busy year to come. Landlord and Tenant The Landlord and Tenant department enjoyed its most successful year since itsestablishment in 2003 and turnover this year increased by 20%. Highlights included a rent review on a 170,000 sq.ft. distribution unit inBristol and a 65,000 sq.ft. Call Centre in the North-East. We achieved a 36%increase in rent for a landlord on a Bond Street shop and saved £250,000 perannum from the quoting rent for a tenant on the North Circular Road. The department has a strong pipeline of work for the coming year. Fletcher King Howard At the end of the year George Howard, the company's long serving Chairman,retired and we wish him all the very best for the future and thank him for hiscontribution to the company over very many years. Our non-executive Director,Harry Richardson, has been appointed Chairman for an interim period and JonathanHoward has been appointed Managing Director. Fletcher King Howard had a busy work load in 2006 which saw the completion ofthe Travelodge Hotel in Hatfield, as part of Frontier Estates' town centreredevelopment scheme; the completion of AGCO's £12 million HQ Offices at StonelyPark, Coventry; and the occupation of the £12 million Malcolm Arnold House, amedium secure mental healthcare facility for St Andrew's Healthcare inNorthampton. Also completed during the year was the largest Agri-processing plant in Europewith the construction of Moy Park's poultry processing plant at Sleaford,Lincolnshire. Two medium secure units for St Andrew's Hospital, the £12 millionSmyth House facility in Northampton, and the £6 million Clare House facility atBasildon, Essex were completed. New orders for 2007 include two more Travelodge Hotels, in Blackpool andUxbridge; a roll-out programme for Swanton Care & Community on their complexneeds units nationwide; and a similar commission for Barchester Healthcare onseveral old persons care homes. Work continues on the VOSA (Vehicle and Operating Services Agency) programmecomprising the refurbishment of their vehicle testing centres throughout the UK,and for Carlsberg on their UK distribution network. Work also continues onEducation projects for Berkhamsted, Spratton Hall and St Albans private schools,and on state schools through the Government's PFI initiative. CONSOLIDATED INCOME STATEMENTfor the year ended 30 April 2007 Notes 2007 2006 £000 £000 Revenue 7,438 6,117 Employee benefits expense (4,602) (4,019) Depreciation expense (114) (86) Other operating expenses (1,951) (1,747) Operating profit 771 265 Other income -- 237 Profit on disposal of non-current assets held for sale 132 -- Income from investments 18 34 Finance income 106 66 Finance expense -- (2) Profit before taxation 1,027 600 Taxation (351) (136) Profit for the year after taxation attributable to equity shareholders 676 464 Basic earnings per share 7.34p 5.09p Diluted earnings per share 7.33p 5.06p CONSOLIDATED BALANCE SHEETas at 30 April 2007 Notes 2007 2006 £000 £000 Assets Non-current assets Property, plant and equipment 125 144 Available-for-sale investments 897 597 1,022 741 Current assets Trade and other receivables 1,600 1,485 Amounts recoverable on contracts 222 202 Cash and cash equivalents 2,990 2,143 4,812 3,830 Non-current assets classified as held for sale -- 393 Total assets 5,834 4,964 Liabilities Current liabilities Trade and other payables 395 359 Current taxation liabilities 187 135 Other creditors and provisions 1,605 1,085 2,187 1,579 Non-current liabilities Deferred taxation liabilities 94 122 Total liabilities 2,281 1,701 Shareholders' equity Share capital 921 921 Share premium 140 140 Reserves 2,492 2,202 Total shareholders' equity 3,553 3,263 Total equity and liabilities 5,834 4,964 CONSOLIDATED CASH FLOW STATEMENTfor the year ended 30 April 2007 2007 2006 £000 £000 Cash flows from operating activitiesProfit before taxation 1,027 600Adjustments for:Depreciation expense 114 86Profit on disposal of non-current assets held for sale (132) --Income from investments (18) (34)Finance income (106) (66)Finance expense -- 2 Cash flows from operating activities before movement in working capital 885 588(Increase) / decrease in trade and other receivables (115) 145Increase / (decrease) in trade and other payables 556 (148)Increase in work in progress (20) (3) Cash generated from operations 1,306 582Finance expense -- (2)Taxation paid (299) (156) Net cash flows from operating activities 1,007 424 Cash flows from investing activitiesPurchases of equipment (95) (68)Purchase of investments (250) --Sale of investments 383 --Finance income 106 66Income from investments 18 34Net cash flows from investing activities 162 32 Cash flows from financing activitiesProceeds from the issue of equity shares -- 104Dividends paid to shareholders (322) (334)Net cash flows from financing activities (322) (230) Net increase in cash and cash equivalents 847 226Cash and cash equivalents at start of year 2,143 1,917Cash and cash equivalents at end of year 2,990 2,143 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Profit Fair Share Share and value Total TOTAL capital premium loss reserve Reserves EQUITY £000 £000 £000 £000 £000 £000 Balance at 1 May 2005 881 76 1,732 207 1,939 2,896Net profit for the year -- -- 464 -- 464 464Fair value gain on investments -- -- -- 193 193 193Deferred taxation adjustment -- -- -- (60) (60) (60)Total income and expense for the year -- -- 464 133 597 597Issue of ordinary shares 40 64 -- -- -- 104Equity dividends paid -- -- (334) -- (334) (334) Balance at 1 May 2006 921 140 1,862 340 2,202 3,263 Net profit for the year -- -- 676 -- 676 676Transfer of realised gains on disposal -- -- -- (142) (142) (142)Deferred taxation adjustment -- -- -- 43 43 43Fair value gain on investments -- -- -- 50 50 50Deferred taxation adjustment -- -- -- (15) (15) (15)Total income and expense for the year -- -- 676 (64) 612 612Equity dividends paid -- -- (322) -- (322) (322) Balance at 30 April 2007 921 140 2,216 276 2,492 3,553 NOTES 1. Basis of preparation The financial information set out above, which has been prepared in accordancewith International Financial Reporting Standards, does not comprise thecompany's statutory financial statements. Statutory financial statements forthe previous financial year ended 30 April 2006 have been delivered to theRegistrar of Companies. The auditors' report on those financial statements wasunqualified and did not contain any statement under section 237(2) or (3) of theCompanies Act 1985. The auditors have not yet reported on financial statementsfor the year ended 30 April 2007, nor have any such financial statements beendelivered to the Registrar of Companies. 2. Dividends Year ended 30 April 2007 2006 £000 £000 Equity dividends on ordinary shares:Declared and paid during yearOrdinary final dividend for the year ended 30 April2006: 2.5p per share (2005: 2.0p) 230 184Special final dividend for the year ended 30 April 2005:1.0p per share -- 92Interim dividend for the six months ended 31 October2006: 1.0p per share (2005: 0.63p) 92 58 322 334 Proposed ordinary final dividend for the year ended30 April 2007: 3.75p per share 345 3. Earnings per share Basic earnings per share is calculated by reference to the result attributableto equity shareholders of £676,000 (2006: £464,000) and the weighted average of9,209,779 shares (2006: 9,123,745) in issue during the year. Diluted earnings per share is calculated by reference to the result attributableto equity shareholders of £676,000 (2006: £464,000) and the weighted average of9,221,475 shares (2006: 9,175,141) in issue during the year, being the weightedaverage number of shares adjusted for the weighted average number of shareoptions outstanding at the end of each year. This information is provided by RNS The company news service from the London Stock Exchange