Fletcher King Regulatory News (FLK)

12 Jul 2005 07:00

Fletcher King PLC12 July 2005 PRESS RELEASENot for release before 0700, 12 July 2005 FLETCHER KING PLC PRELIMINARY RESULTS Profit increase of 64% for the year ended 30 April 2005 Fletcher King, the London based property fund managers, asset managers andchartered surveyors, announces today its preliminary results for the year ended30 April 2005. As outlined in the trading statement released on 8 June 2005, theresults are better than anticipated due to an overall growth in profitabilityacross the company. Financial highlights:• Profit before tax up 64% to £546,000 (2004: £332,000)• Turnover for the year up 9% at £6.1m (2004: £5.6m)• Basic earnings per share grew 79% to 4.46p (2004: 2.49p)• Total dividend for the year 3.5p per share (2004: 2.3p per share) Operational highlights:• Commercial property investment produced strong performance throughout the year attracting increasing allocations from institutions, overseas and private investors• First Stratton House Investment Property Syndicate fully invested and fundraising for the second fund complete• New Facilities Management structure introduced increasing the level of service to tenants within portfolios• Rating and Valuation department turnover increased and over 200 Rating Appeals targeted for negotiation in the next 6 months• Landlord and Tenant department completed its second full year and increased turnover by 55%• Asset Management department's application to the FSA for clearance approved• Fletcher King Howard increased profitability in line with expectations Commenting David Fletcher, Chairman of Fletcher King said:"We have seen a strong year and good performance throughout all departmentswhich is reflected in these excellent results and the proposed full yeardividend of 3.5p per share. I remain optimistic about both the letting andinvestment markets in the coming year and look forward to the continued growthof the company." For further information:David Fletcher, Fletcher King 020 7493 8400Tim McCall, MJ2 Business Communications 020 7491 7776 CHAIRMAN'S STATEMENT Results Trading in the second half of the year, and more particularly in the lastquarter, was better than anticipated and as a result we issued a tradingstatement on 8 June 2005 confirming that activity was ahead of expectations.This increase arose from an overall growth in profitability across the companyrather than from any specific transaction or departmental activity. Turnover for the year was £6.1m (2004: £5.6m) with profits before tax of£546,000 (2004: £332,000). The Board is proposing an Ordinary Final Dividend of2p per share (2004: 1p per share) together with a Special Final Dividend of 1pper share (2004: 1p per share) to reflect the one-off profit of £105,000 on thesale of our minority interest in Fletcher King Manchester, which we reported inthe first half of the year. These dividends are subject to shareholder approvalat the Annual General Meeting and will be paid on 27 September 2005 toShareholders on the register at the close of business on 2 September 2005. With the Interim Dividend of 0.5p per share (2004: 0.3p per share) already paid,the total dividend for the year will amount to 3.5p per share (2004: 2.3p pershare). Commercial Property Market During 2004/5, the commercial property market has continued the trend wereported last year. The letting market has generally been positive throughoutthe country with offices in Mayfair and the West End seeing the greatest levelof activity, and with mid-town and docklands showing some positive movement. Offices in the Thames Valley and western approaches have also seen moreinterest, although the volume of vacant space overhanging the market shows nosignificant decrease. The industrial market in the regions remains active and,continuing the trend of last year, interest is mainly from owner occupiers whocontinue to outnumber those seeking to lease space. Out of town retail is very buoyant and despite reports of reduced levels oftrading, the prime high street locations continue to attract tenants. The investment market remains extremely strong, with ever increasing volumes ofcapital competing for a limited supply of stock. This has resulted in a furthercontraction in yields giving rise to exceptional performance in the sector.Rental growth is coming through and this has further added to performance. Property continues to be a sector to which a majority of funds wish to commitfurther capital and, with a fall in the medium term interest rates, debt drivenpurchasers are also active. The potential advent of REITS, details of which arepromised by HM Treasury in 2006, will give added stimulus to the investmentmarket. As reported at the interim stage, the first Stratton House Investment PropertySyndicate is fully invested and our second Syndicate closed in January 2005after raising £10 million of equity. The second fund has, to date, acquiredproperties to the value of £15 million and, with gearing, has a further £20million available to invest. The Outlook for 2005/2006 I remain optimistic about both the letting and the property investment marketsfor the coming year. Whilst the letting market will remain difficult, wellpresented and correctly priced space will generally find tenants. As previouslymentioned, some areas have a difficulty with oversupply and owner/occupiers arelikely to be dominant in the industrial market. Given the potential for further substantial amounts of capital entering theinvestment market, we do not agree with many commentators who feel prices havepeaked. Although the rate of capital growth has cooled, and will continue to doso, we predict a further contraction in yields over the coming year makingproperty a strong performer yet again. Our results are a reflection of the effort put in by everyone within theorganisation and they are to be congratulated. DAVID FLETCHERCHAIRMAN 12 July 2005 DIVISIONAL REVIEW FLETCHER KING LONDON Investment and Fund Management Commercial property investment produced outstanding performance during the yearand attracted ever increasing allocations from institutions, overseas andprivate investors. In previous years, the UK institutions have taken a back seatbut, during the year, they moved forward strongly and are now a significantforce in the market. Debt driven purchasers remained active, particularly asswap rates have drifted lower in the last few months. Yields across the board moved lower and many observers are now calling the topof the market. As the Chairman has stated in his review, this is not a view withwhich we concur and we anticipate further contraction of yields during thecoming year. All of our clients were active during the year and significant purchasesincluded a £7.75m freehold office building in the West End, an £8m 92,000 sq.ft.industrial and trade park in Warrington and a £6m office park in Bristol. Thedepartment also completed the investment programme for the first Stratton HouseInvestment Property Syndicate and embarked on the second fund's £35m investmentprogramme. Sales were particularly active and office buildings in Richmond,Chertsey, Cardiff, the Isle of Man and Preston amongst others were transacted. The coming year will be active and we are currently marketing £30m of property.We expect acquisitions this year to be busy with over £100m to spend forin-house clients. The availability of stock is limited, the competition verystrong and the timing of transactions in such a market is difficult to predict. Our Fund Management activities continue to provide a steady flow of income tothe department and it is anticipated this will increase during the coming year. Asset Management The department enjoyed another successful year winning many new instructionsincluding a £35m mixed use portfolio and a 30,000 sq.ft. office building. Mostof the department's existing clients expanded their portfolios which added toturnover. We commented last year on the FSA's Regulations of The Property Industry inrespect of insurance products. Our application to the FSA for clearance wasapproved and we now operate that part of our business on a regulated basis. During the year we raised our level of service to tenants within the portfolioswe manage by introducing a new Facilities Management Structure and providing adedicated telephone help desk. The department is budgeting to increase its turnover in the coming year. Rating and Valuation Despite 2004/05 being the last year of the 2000 Rating List, the departmentenjoyed a satisfactory year. Many significant reductions were obtained forclients, the most notable of which were a 30% reduction for Chancery Gate AssetManagement on their headquarters in Hemel Hempstead, a 25% reduction for OrchardHouse Foods on their factory in Corby and a 15% reduction for Scania on theirnew service centre at Purfleet. Turnover on valuations increased during the year and notable jobs included a£240m portfolio valuation of 65 properties throughout the UK for Royal Bank ofScotland and a £125m portfolio of 33 properties throughout the UK for Barclays.Our instructions from NatWest Bank increased by 40% and new banks instructing usduring the year including Allied Irish (UK), Morgan Stanley, Adam & Co andHypothenken Bank. The future looks bright with over 200 Rating Appeals targeted for negotiation inthe next 6 months, which should clear the majority of the 2000 Rating Listbacklog. We are encouraged by the level of valuation instructions received so far thisyear which is currently running ahead of last year's level. Agency The department had a mixed year and generally underperformed its target. Agencyhas been a peripheral part of our business for some years and we have now takenthe decision to exit this sector of the market altogether. We will continue toassist clients in their acquisition of new space, but this will now be carriedout within the departments by the client surveyor. We will also work withsub-contracted specialists as the need arises. Landlord & Tenant The department has now completed its second full year as a separate entitywithin the company and increased its turnover by 55%, handling reviews and leaserenewals of properties nationwide with a capital value of approximately £100m.The forward order book for the coming year is excellent. FLETCHER KING HOWARD Our wholly owned construction services subsidiary performed well during theyear, increasing its profitability in line with expectation. The business continued to work on a diverse range of projects and, during theyear, completed a £5.5m distribution hub for NYK Logistics and are retained on asecond phase which will start this year. One 50,000 sq.ft. and two 15,000 sq.ft.freeze chambers were completed during the year for Baugur together with twobuildings totalling 350,000 sq.ft. in Manchester for L'Oreal. A £4.5m grandstandat Towcester Racecourse is nearing completion. Activity continues on a £10.5m medium secure unit at Northampton's St AndrewsHospital and the company has been appointed for a further £10m development atthe hospital to start later this year. Work in the education sector is strong and projects starting this year willinclude a £9.4m extension to Northampton School for Boys and a £3.5m designcentre for Berkhamsted Collegiate School. Work has started on a 60 acre development for Gefco's new northern regionaldistribution centre, an £11m building for Hayley Conferences at Windsor and a£4m warehouse in Cheshire for Seafield Logistics. Agco's new £10m headquarters at Stoneleigh and Northampton Saints Rugby Club new£3m stand will also be completed during the year. The strength of our forward order book should ensure that we grow the businessin the coming year. FLETCHER KING MANCHESTER As mentioned earlier we sold our minority interest in the company during theyear and will work with locally based organisations when we require specialistinput. FLETCHER KING PLCUNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 30 April 2005 2005 2004 £000 £000 -------- ------- TURNOVER 6,093 5,623 Staff costs (3,864) (3,593)Depreciation (74) (76)Other operating charges (1,808) (1,675) -------- ------- OPERATING PROFIT 347 279 Share of results of associated undertaking - 9Profit on disposal of interest in associatedundertaking 105 -Interest receivable and similar income 96 47Interest payable and similar charges (2) (3) -------- ------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 546 332 Tax on profit on ordinary activities (153) (113) -------- ------- PROFIT FOR THE FINANCIAL YEAR 393 219 Dividends (308) (203) -------- ------- RETAINED PROFIT FOR THE YEAR 85 16 -------- ------- Earnings per share - basic 4.46p 2.49p - diluted 4.41p 2.45p Basic earnings per share is based on the profit for the financial year ended 30April 2005 of £393,000 (2004: £219.000) and on 8,807,279 (2004: 8,807,279)ordinary shares in issue throughout the year. Diluted earnings per share isbased on the profit for the financial year ended 30 April 2005 of £393,000(2004: £219,000) and on 8,907,913 (2004: 8,926,433) ordinary shares in issueduring the year adjusted for the weighted average number of options outstandingat the end of each period. FLETCHER KING PLCUNAUDITED CONSOLIDATED BALANCE SHEET as at 30 April 2005 2005 2005 2004 2004 £000 £000 £000 £000 ------- -------- ------- ------- FIXED ASSETSTangible assets 162 178Investment in associated undertakings - 27Other investments 503 253 -------- ------- 665 458 CURRENT ASSETSDebtors 1,859 1,640Cash at bank and in hand 1,917 1,836 ------- ------- 3,776 3,476 CREDITORSAmounts falling due within one year (1,959) (1,537) ------- ------- NET CURRENT ASSETS 1,817 1,939 -------- ------- NET ASSETS 2,482 2,397 -------- ------- CAPITAL AND RESERVESCalled up share capital 881 881Share premium account 76 76Profit and loss account 1,525 1,440 -------- ------- EQUITY SHAREHOLDERS' FUNDS 2,482 2,397 -------- ------- FLETCHER KING PLCUNAUDITED CASHFLOW STATEMENT for the year ended 30 April 2005 2005 2004 £000 £000 -------- ------- Net cash inflow from operating activities 514 643 Dividends received from associated undertakings 9 -Returns on investments and servicing of finance 85 44Taxation (114) (21)Capital expenditure and financial investment (308) (35)Proceeds from disposal of interest in associatedundertaking 132 -Equity dividends paid (220) (92) -------- ------- Cash inflow before financing 98 539Financing (17) (21) -------- ------- Increase in cash in the year 81 518 -------- ------- The financial information set out above does not comprise the company'sstatutory financial statements. Statutory financial statements for the previousfinancial year ended 30 April 2004 have been delivered to the Registrar ofCompanies. The auditors' report on those financial statements was unqualifiedand did not contain any statement under section 237(2) or (3) of the CompaniesAct 1985. The auditors have not yet reported on financial statements for theyear ended 30 April 2005, nor have any such financial statements been deliveredto the Registrar of Companies. This information is provided by RNS The company news service from the London Stock Exchange