Fletcher King Regulatory News (FLK)

17 Dec 2007 07:00

Fletcher King PLC17 December 2007 PRESS RELEASE Not for release before 0700hrs, 17 December 2007 FLETCHER KING PLC INTERIM RESULTS Fletcher King announces strong performance for the first half of the year butremains cautious for the full year results. Fletcher King PLC, the London based property fund managers and asset managersannounces today its interim results for the 6 months to 31 October 2007. Financial highlights: • Profit before tax up 53% to £470,000 (2006: £308,000). • Turnover up 6% at £3.598m (2006: £3.40m). • Increased in interim dividend of 25% to 1.25p (2006: 1p) which will be paid on 18 January 2008. Operational highlights: • The Investment and Fund Management department has performed well during the period. • The funds from the latest Stratton House Investment Property Syndicate ("SHIPS")are in place ready to capitalise on the attractive buying opportunities that should present themselves in 2008. • The Valuation and Rating department continues to perform strongly and the volume of valuation instructions continues at undiminished levels. Commenting David Fletcher, Chairman of Fletcher King said: "I am delighted to announce another 6 months of strong trading during which we have increased profit, turnover and dividend. However, going forward the company will not be immune from the impact of the recent reduction in activity in the commercial property market and I believe that the results for the full year will fall materially short of those achieved during 2006. That said, there will be a number of excellent buying opportunities during 2008 and we are well placed to take advantage of such opportunities with the funds from the latest SHIPS fund." For further information: David Fletcher, Fletcher King 020 7493 8400 Tim McCall, MJ2 020 7484 5353 FLETCHER KING PLC INTERIM REPORT 2007 CHAIRMAN'S STATEMENT The Group performed well compared with the same period last year with profits before tax of £470,000 (2006 £308,000) on a turnover of £3.598m (2006 £3.4m). Earnings per share are 3.46p (2006 2.2p). Your Directors have declared an increased interim dividend of 1.25p (2006 1.0p) to be paid on 18 January 2008 to shareholders on the register at close of business on 4 January 2008. The Commercial Property Market The commercial property investment market continued to perform strongly for the first three months of the period at the end of which it moved sharply downwards in reaction to the American sub prime mortgage crisis and the subsequentbanking liquidity problems. At the time of writing there is virtually no institutional commercial property investment market. The Central London office markets have been, and remain, relatively resilient although we are of the opinion that the market peaked in early Summer and the knock-on effect of the turmoil in financial markets is beginning to impact rental growth. Elsewhere in both the industrial and retail markets we are still seeing rental growth. The jury is out on whether contagion from financial markets will impact on the economy generally and thus rental values. There is little institutional investment in the market and the debt financed buyers have also substantially withdrawn as a result of their inability to gear. With falling five year SWAP rates returns on equity for those that can borroware beginning to look attractive. Divisional Trading Investment Fund Management A significant volume of business was transacted during the period although volumes have fallen sharply since August. Our latest SHIPS Fund, to which I referred in my last annual report, is holding the equity it raised on deposit awaiting attractive buying opportunities which we believe will present themselves during the second half of 2008 calendar year. Asset Management Two new management contracts were won during the period and the department met its budgets for the half year. We continue to implement further operational efficiencies. Valuation and Rating The department enjoyed a good first half and the volume of valuation instructions continues at undiminished levels despite general market conditions. We completed a number of large rating assignments during the period which resulted in significant savings for our clients. We still have a large number of unresolved appeals and can see a further eighteen months of work before the 2005 Rating List is cleared and the new List is published. Rent Reviews The department concluded a number of significant reviews and lease renewals during the period and is currently on target for the remainder of the year. Fletcher King Howard The division had a busy first half but the outlook for the remainder of the year is less clear as orders begin to slow, or projects are put on hold, as a result of the "credit crunch". OUTLOOK The future is uncertain and much depends, for us, on the investment market and the timing of when purchasers consider values have stabilised and the moment has come to re-enter the market. At this stage in the cycle there are substantial differences between this downturn and previous ones. The most significant being that interest rates remain low, as does inflation, and the economy is currently relatively strong.Also there is not the chronic over supply of space that existed in downturns of the 1970's and late 1980's. There is currently a disconnect between property valuations and market conditions. Until the valuers reflect more closely the market and substantially down value portfolios, levels of activity will not be re-established. We would expect to re-enter the market for our in-house funds during the second half of 2008. In view of the continuing uncertainties in the market, the Board has reviewed the Company's prospects for the second half and consider that the results for the full year will fall materially short of those achieved last year and this is likely to be reflected in the final dividend. DAVID FLETCHERCHAIRMAN18 December 2007 Registered Office:61 Conduit StreetLondon W1S 2GB Fletcher King Plc Consolidated Interim Income Statement(unaudited) for the 6 months ended 31 October 2007 6 months ended 6 months ended Year ended 31 October 31 October 30 April 2007 2006 2007 £000 £000 £000 Revenue 3,598 3,449 7,438 Employee benefits expense (2,255) (2,096) (4,602)Depreciation expense (37) (38) (114) Other operating expenses ( 903) (1,051) (1,951)Operating profit 403 264 771 Profit on disposal of non-current assets held for sale - - -Income from investments 13 7 18 Finance income 54 37 106 Finance expense - - - Profit before taxation 470 308 1,027 Taxation (151) (105) (351) Profit for the period after taxationattributable to equity shareholders 319 203 676 Basic earnings per share (note 2) 3.46p 2.20p 7.34p Diluted earnings per share (note 2) 3.46p 2.20p 7.33p Equity dividends on ordinary shares:Declared and paid during periodOrdinary final dividend for theyear ended 30 April 2007:3.75p per share (2006: 2.5p) 345 230 230 Interim dividend for the six monthsended 31 October 2006 (see below) - - 92 345 230 322 Proposed but not yet paidInterim dividend for the six monthsended 31 October 2007:1.25p per share (2006: 1.0p) 115 92 -Ordinary final dividendfor 2007 (see above) - - 345 115 92 345 Fletcher King PlcConsolidated Interim Balance Sheet(unaudited) as at 31 October 2007 31 October 31 October 30 April 2007 2006 2007 £000 £000 £000 AssetsNon-current assetsProperty, plant and equipment 379 138 125Available for sale investments 846 553 897 1,225 691 1,022Current assetsTrade and other receivables 1,434 1,668 1,600Amounts recoverable on contracts 209 190 222Cash and cash equivalents 2,255 1,844 2,990 3,898 3,702 4,812Non-current assets classified asheld for sale - 393 - Total assets 5,123 4,786 5,834 LiabilitiesCurrent liabilitiesTrade and other payables 773 489 395Current taxation liabilities 134 102 187Other creditors and provisions 637 869 1,605 1,544 1,460 2,187Non-current liabilitiesDeferred taxation liabilities - 121 94 Total liabilities 1,544 1,581 2,281 Shareholders' equityShare capital 921 921 921Share premium 140 140 140Reserves 2,518 2,144 2,492 Total shareholders' equity 3,579 3,205 3,553 Total equity and liabilities 5,123 4,786 5,834 Fletcher King PlcConsolidated Interim Statement of Changes in Equity(unaudited) for the 6 months ended 31 October 2007 Profit Fair Share Share and value Total TOTAL capital premium loss reserve reserves EQUITY £000 £000 £000 £000 £000 £000 Balance at 1 May 2007 921 140 2,216 276 2,492 3,553Net profit for the period - - 319 - 319 319Fair value loss on investments - - - 75 75 75Deferred taxation adjustment - - - (23) (23) (23)Total income and expense for the period - - 319 52 371 371Equity dividends paid - - (345) - (345) (345) Balance at 31 October 2007 921 140 2,190 328 2,518 3,579 Balance at 1 May 2006 921 140 1,862 340 2,202 3,263Net profit for the period - - 203 - 203 203Fair value gain on investments - - - (44) (44) (44)Deferred taxation adjustment - - - 13 13 13Total income and expense for the period 0 0 203 (31) 172 172Equity dividends paid - - (230) - (230) (230) Balance at 31 October 2006 921 140 1,835 309 2,144 3,205 Balance at 1 May 2006 921 140 1,862 340 2,202 3,263Net profit for the period - - 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 period 0 0 676 (64) 612 612Equity dividends paid - - (322) - (322) (322) Balance at 30 April 2007 921 140 2,216 276 2,492 3,553 Fletcher King PlcConsolidated Interim Cash Flow Statement(unaudited) for the 6 months ended 31 October 2007 6 months ended 6 months ended Year ended 31 October 31 October 30 April 2007 2006 2007 £000 £000 £000 Cash flows from operating activitiesProfit before taxation 470 308 1,027Adjustments for:Depreciation expense 37 38 114Income from fixed asset investments (13) (7) (18)Finance income (54) (37) (106)Finance expense - - - Cash flows from operating activitiesbefore movement in working capital 440 302 885(Increase) / decrease in tradeand other receivables 166 (183) (115)Increase / (Decrease) in trade and other payables (590) (86) 556Decrease / (increase) in work in progress 13 11 (20) Cash (absorbed by) / generatedfrom operations 29 44 1,306Taxation paid (200) (125) (299) Net cash flows from operating activities (171) (81) 1,007 Cash flows from investing activitiesPurchases of equipment (302) (32) (95)Proceeds from sale of equipment 16 - -Purchases of investments - - (250)Sales of investments - - 383Finance income 54 37 106Income from investments 13 7 18 Net cash flows from investing activities (219) 12 162 Cash flows from financing activitiesDividends paid to shareholders (345) (230) (322) Net cash flows from financing activities (345) (230) (322) Net (decrease) / increase in cashand cash equivalents (735) (299) 847Cash and cash equivalentsat start of period 2,990 2,143 2,143Cash and cash equivalentsat end of period 2,255 1,844 2,990 Fletcher King PlcExplanatory Notes 1. Basis of preparation These consolidated interim financial statements, which are neither audited norreviewed, comprise the unaudited results for the six months ended 31 October2007 and 31 October 2006, together with the audited results for the twelvemonths ended 30 April 2007, and have been prepared under the historical costconvention as modified by the revaluation of available for sale financial assets. The Group has prepared these consolidated interim financial statements using theprincipal accounting policies set out in note 2 of the 2007 Annual Report andAccounts. The Group has chosen not to adopt IAS 34 in preparing these consolidated interimfinancial statements. 2. Earnings per share Basic earnings per share is calculated by reference to the result attributableto equity shareholders of £319,000 (2006: £203,000) and the weighted average of9,209,779 shares (2006: 9,209,779) in issue during the period. Diluted earnings per share is calculated by reference to the result attributableto equity shareholders of £319,000 (2006: £203,000) and the adjusted weightedaverage of 9,221,475 shares (2006: 9,220,196) in issue during the period. 3. Results for 2007 The results for the year ended 30 April 2007 and the balance sheet at that date,which have been included in these interim consolidated financial statements, arenot statutory accounts. The Group's statutory financial statements for the yearended 30 April 2007 have been delivered to the Registrar of Companies. Theindependent auditors' report on those financial statements is unqualified anddoes not contain a statement under Section 237(2) or (3) of the Companies Act1985. This information is provided by RNS The company news service from the London Stock Exchange