Fletcher King Plc AAnnnnuuaall RReeppoorrtt aanndd AAccccoouunnttss 22001144 D I R E C T O R S A N D A D V I S E R S C O N T E N T S Directors DJR Fletcher FRICS Chairman REG Goode FRICS Managing Director RA Dickman FRICS Executive Director DH Stewart Non Executive Secretary and Registered Office PE Bailey ACA 61 Conduit Street, London W1S 2GB Financial Advisers and Stockbrokers Cairn Financial Advisers LLP 61 Cheapside, London EC2V 6AX Solicitors Boodle Hatfield 240 Blackfriars Road, London SE1 8NW Auditors Nexia Smith & Williamson 25 Moorgate, London EC2R 6AY Tax Advisers Smith & Williamson LLP 25 Moorgate, London EC2R 6AY Principal Bankers NatWest Bank Plc 63 Piccadilly, London W1A 2AG Registrars and Transfer Office Computershare Investor Services Plc Registrar’s Department, PO Box No 82 The Pavilions, Bridgwater Road, Bristol BS99 7NH Dedicated shareholder telephone number: 0870 889 4095 Audit Committee DH Stewart Chairman DJR Fletcher Remuneration Committee DH Stewart, Chairman DJR Fletcher AIM Committee DH Stewart, Chairman DJR Fletcher Company Number 02014432 Financial Highlights two Chairman’s Statement three – four Strategic Report five – six Directors’ Report seven – ten Auditors’ Report eleven – twelve Accounts thirteen – thirty five Notice of Meeting thirty six– thirty eight Form of Proxy thirty nine Certificate No. FS27825 O N E H I G H L I G H T S • Revenue for the year of £3.653m (2013: £3.031m) • Profit before tax of £711,000 (2013: £292,000) • Profit after tax for the year of £542,000 (2013: £227,000) • Basic and diluted earnings per share of 5.89p (2013: 2.46p) • Final dividend of 2.25p per share. An interim dividend of 0.75p per share was paid and therefore the total ordinary dividend for the year will be 3.0p per share (2013: 1.50p) F I N A N C I A L C A L E N D A R Half Year Results Announced 16 December 2013 Full Year Results Preliminary announcement 15 July 2014 Annual General Meeting 17 September 2014 Final Dividend Payable 25 September 2014 Interim Dividend To be announced in December 2014 Payable in January 2015 T W O C H A I R M A N ’ S S TAT E M E N T Results Revenue for the year was £3.65m (2013: £3.03m) with profit before tax of £711,000 (2013: £292,000). The board is proposing a final dividend of 2.25p per share (2013: 0.75p). The final dividend is subject to shareholder approval at the AGM and will be paid on 25 September 2014 to those shareholders on the register at close of business on 29 August 2014. With the interim of 0.75p per share (2013: 0.75p) already paid, the total ordinary dividend for the year will amount to 3.0p per share (2013: 1.5p). The board considers the results for the year to be highly satisfactory. The Commercial Property Market The commercial property market has continued its improvement during the second half of our year. The investment market in London and the south east continues to be very strong. Investors looking for higher returns are extending their purchasing into most major cities with multi-let industrial buildings and high street shops being most in favour. Provincial offices, in all but a very few centres, continue to be difficult to sell or let. Tenant demand outside London and the south east remains patchy but the industrial market continues to be active. Selective high streets are now attracting tenants as are offices in some of the regional centres. Central London continues to be a strong market for lettings and investment demand. Business Overview Investment transactions have been excellent in the second half. We enjoyed a number of notable successes including the largest sale in the history of the firm of an office block on the Old Street roundabout for £110m. Our “SHIPS” funds have enjoyed a successful year and the return on our cash invested together with fees and carried interests have made a significant contribution to performance. Both the Basinghall Street and St Swithins Lane buildings were sold during the year providing returns to investors of 11% per annum and 20% per annum respectively. A further acquisition for “SHIPS” was made in December with the purchase of a multi-let office building in Leadenhall Street adjacent to the “Cheesegrater” for circa £9m. The common parts and three floors of this building are currently being refurbished. We continue to look for similar situations. The investment side of our business has started the new year with some good sale and purchase instructions but it will be a challenge to match this year’s performance. Fund Management continues to perform well and its regular quarterly fee income is a valuable contribution to performance. T H R E E C H A I R M A N ’ S S TAT E M E N T The same can be said for Asset Management which had an excellent year with new business added. Rating had a very difficult year and continues to be affected by the unacceptably slow progress the Valuation Office is making in settling outstanding appeals. It is hoped that the huge backlog will start to be agreed and our fee income in this area will grow again. In my Interim Statement I reported an increase in valuations work and this trend has continued into the second half. Outlook We have had an excellent year and it will be a hard task to match the performance in the coming year. We have some good business in the pipeline but the higher margin transaction business requires not only hard work but also often relies on factors outside our control falling into place. We are hopeful of picking up further Asset Management work this year and our SHIPS investors have indicated an appetite for further investments if we can find the stock. As always I must pay tribute to our talented and hardworking team and to all our loyal clients without whom we would have no business. DAVID FLETCHER CHAIRMAN 8 August 2014 F O U R S T R AT E G I C R E P O R T The Directors present the group strategic report for Fletcher King Plc and its subsidiary companies for the year end 30 April 2014. Principal Activities The Group provides a comprehensive range of property services and expert advice throughout the United Kingdom, including property fund management, property asset management, rating, valuations and investment broking. Business Review The Group continued its strategy of providing a range of property services to existing and new clients and key performance indicators for the Group for the year to 30 April were as follows: 2014 2013 Revenue £3,653,000 £3,031,000 Profit before taxation Profit for the year £711,000 £542,000 Earnings per share 5.89p £292,000 £227,000 2.46p The Group has benefitted during the year from a more buoyant market for property transactions and this has helped to offset the slow progress on ratings assessments caused by a backlog at the Valuation Office. Cash generated from operations in the year amounted to £944,000 (2013: cash absorbed amounted to £129,000) and after investing activities and dividend payments the cash balance increased by £743,000 to £3,314,000. The group will continue to look for opportunities to participate in the in- house Syndicated Property Investments (‘SHIPS’). The healthy cash balance provides financial flexibility and significant comfort for the future. The Chairman’s Statement contains a review of the Group’s performance, financial results, future development and prospects and is incorporated into this Strategic Report by reference. Principal Risks and Uncertainties The Directors have identified below a number of risks which they believe may affect the Group’s ability to deliver its strategic goals. This list does not purport to be an exhaustive summary of the risks affecting the Group, is given in no particular order of priority and contains risks considered to be outside the control of the Directors. (i) Economic Risk The main economic risks that would affect the Group’s performance are a major slowdown in the UK economy and a slump in UK commercial property values. The Group has, where possible, implemented actions to mitigate some of the effects of these risks. This includes providing a comprehensive range of services, some being less influenced by economic factors than others. F I V E S T R AT E G I C R E P O R T (ii) Management of Growth The ability of the Group to implement its strategy requires effective planning and management control systems. The speed at which the business develops may place significant strain on the Group’s management, operational, financial and personnel resources. Failure to expand and improve operational, financial and management information and quality control systems in line with the Group’s own growth could have detrimental impact on the trading performance of the Group. In mitigation the Group has an experienced management team and a clear strategy for the integration and management of the expected business growth. (iii) Attraction and Retention of Key Employees The Group will depend on the continued service and performance of the Executive Directors and key employees and whilst it has entered into contractual arrangements with these individuals with the aim of securing the services of each of them, retention of these services cannot be guaranteed. The loss of the services of Executive Directors or other key employees could damage the Group’s business. Equally the ability to attract new employees and senior executives with the appropriate expertise and skills cannot be guaranteed. The Group may experience difficulties in hiring appropriate employees and failure to do so may have a detrimental effect upon the trading performance of the Group. (iv) Financial Risk Management Details of the Group’s approach to financial risk management are disclosed in detail in note 23 to the financial statements. (v) Forward-Looking Statements This annual report contains forward-looking statements on Fletcher King Plc’s future financial performance, results from operations, and goals and strategy. By definition, forward-looking statements carry risk and uncertainty because they refer to events in the future and depend on circumstances that cannot be foreseen in advance. Numerous factors can contribute to material deviation from results and developments indicated in forward-looking statements. Such factors can include general economic circumstances, scarcity on the labour market and the ensuing demand for personnel, changes in labour legislation, personnel costs, future interest rates, changes in tax rates, and future corporate mergers, acquisitions and divestments. Undue reliance should not be placed on these forward-looking statements. They are made at the time of publication of the annual financial statements of the company and in no way provide guarantees for future performance. All operating and business environments are subject to risk and uncertainty. For this reason, no assurances can be offered that the forward-looking statements published here will prove correct at a future date, and the company assumes no duty to update any such forward-looking statements. Approved by the board of Directors and signed on behalf of the board DAVID FLETCHER CHAIRMAN 8 August 2014 S I X D I R E C T O R S ’ R E P O R T The Directors present their report and accounts for the year ended 30 April 2014. General Information Fletcher King is a public limited company which is listed on the AIM market of the London Stock Exchange and is incorporated and domiciled in the UK. The company’s registration number is 02014432. Results and Dividend The consolidated statement of comprehensive income is set out on page 13. The profit for the year after taxation is £542,000 (2013: £227,000). The Directors recommend the payment of an ordinary final dividend of 2.25p per share (2013: 0.75p). An interim dividend of 0.75p per share (2013: 0.75p per share) has already been paid to shareholders. Income from the Group’s available-for-sale investments and net bank interest amounted to £28,000 (2013: £30,000). The effective taxation charge was 22.8% (2013: 23.2%). Future Developments The Group has some good business in the pipeline although the higher margin transaction business requires not only hard work but also often relies on factors outside the Group’s control falling into place. The Group is hopeful of picking up further Asset Management work this year and SHIPS investors have indicated an appetite for further investments subject to availability of suitable stock. Capital and equity interests Basic and diluted earnings per share from continuing operations amounted to 5.89p (2013: 2.46p). During the year no shares were issued to directors or employees pursuant to the exercise of share options. The total number of ordinary shares in issue at 30 April 2014 was 9.2 million (2013: 9.2 million). Cash flow and liquidity Net cash inflow from operating activities amounted to £944,000 (2013: outflow of £129,000) which, after allowing for cash flows including dividends and capital expenditure, resulted in a net increase in cash balances of £743,000 (2013: decrease of £241,000). At 30 April 2014, the Group’s cash at bank and on short term deposit amounted to £3.3 million (2013: £2.6 million). This was deposited with leading banks. Risk identification and Management The identification, control and monitoring of risks facing the business remain a management priority. S E V E N D I R E C T O R S ’ R E P O R T Financial risk management The Group manages its treasury operations in accordance with policies and procedures approved by the Board. Information about the Group’s policies on financial instruments is set out in note 3 of the accounts. The Group has no borrowings. As the Group operates almost exclusively in the United Kingdom, there are no significant direct foreign exchange risks. The Group has in place a risk management programme that seeks to limit the adverse effects on the financial performance of the Group and these are outlined in note 23 to the accounts. Directors The current Directors of the Company are set out below. D J R Fletcher R E G Goode R A Dickman D H Stewart Chairman Managing Director Executive Director Non Executive Director R E G Goode and D H Stewart retire by rotation in accordance with the Company’s Articles of Association, and being eligible offer themselves for re-election at the forthcoming Annual General Meeting. R E G Goode FRICS, is Managing Director and has been jointly responsible for running the Company since 2000. Previously he worked in the property investment departments of DTZ and Hillier Parker. He is involved in the fund and asset management for a number of major institutional and in-house clients. D H Stewart, had a long career in banking. At Abbey National Group, he led business banking and the asset finance activities of First National Bank. Prior to that he held senior appointments with TSB Group, Hill Samuel Bank, Creditanstalt and County NatWest Limited. Directors Remuneration DJR Fletcher REG Goode DH Stewart R A Dickman Salary Benefits £000 £000 Bonus £000 Fees £000 100 100 - 100 300 31 12 - 5 48 240 240 - 25 505 - - 22 - 22 2014 £000 371 352 22 130 875 2013 £000 215 198 20 224 657 No executive Directors at 30 April 2014 received any pension entitlements. E I G H T D I R E C T O R S ’ R E P O R T Directors Indemnity Insurance As permitted by Section 233 of the Companies Act 2006, the Company has purchased insurance cover on behalf of the Directors indemnifying them against certain liabilities which may be incurred by them in relation to the Company. Corporate social responsibility The Board recognises the importance of social and environmental matters in the conduct of the Group’s business and remains committed to social and environmental awareness throughout its operations, notwithstanding the relatively low environmental impact of the Group’s activities. Energy efficiency, recycling and the use of “fair trade” products are encouraged. The Board recognises that enthusiastic, well-trained and high-quality staff are essential to the achievement of the Group’s commercial objectives. Participation in the success of the Group is encouraged via comprehensive incentive schemes. The Group provides employment on an equal basis irrespective of race, sex, disability, sexual orientation and religious beliefs. Employee communication and feedback is encouraged across the Group. Authority to Allot Unissued Shares In accordance with normal practice the Directors propose to take the usual authorities under Sections 551 and 570 of the Companies Act 2006. Therefore it is proposed to extend the Section 551 authority given at the last Annual General Meeting on 19 September 2013 for a further year in respect of ordinary 10p shares up to a maximum of 1,790,221 shares (£179,022). Apart from possible issues under Employee Share Option Schemes there is at present no intention of issuing any further ordinary shares. In any event, no issue will be made which would effectively alter the control of the Company without the prior approval of the Company in general meeting. Purchase of Shares The Directors, in line with boards of directors of other listed companies, consider that it would be appropriate for the Company to have the authority to purchase its own shares as one of a range of investment options available to them, more especially if the purchase of its own shares produced an improvement in earnings per share. Shareholders should be assured that the Board will commence share purchases only after careful consideration and after taking account of the overall financial position of the Group. An ordinary resolution will be proposed to authorise the Company to make market purchases of up to a maximum of 460,000 of its own shares, representing less than 5% of the existing issued ordinary shares. The maximum price to be paid on any exercise of the authority will be restricted to 5% above the average of the middle market quotation as derived from The London Stock Exchange Daily Official List for the ordinary shares for the ten dealing days immediately prior to purchase. The minimum price that may be paid for the ordinary shares is the nominal value of 10p per share. The authority for the purchase sought at the Annual General Meeting will expire at the conclusion of the following Annual General Meeting which is expected to take place in September 2015. The intention of the Board is to seek to renew the authority at future Annual General Meetings. N I N E D I R E C T O R S ’ R E P O R T Statement of Directors’ Responsibilities The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgments and accounting estimates that are reasonable and prudent; • state that the financial statements comply with IFRSs as adopted by the European Union; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are also responsible for ensuring that they meet their responsibilities under the AIM rules. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Disclosure of information to the auditors In the case of each person who was a Director at the time this report was approved, so far as that Director was aware there was no relevant available information of which the Group and Company’s auditors were unaware; and that Director had taken all steps that the Director ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Group and Company’s auditors were aware of that information. Auditors A resolution to reappoint the auditors, Nexia Smith & Williamson, will be proposed at the forthcoming Annual General Meeting. This report was approved by the Board on 8 August 2014. P E Bailey Company Secretary Registered Number: 02014432 T E N A U D I T O R S ’ R E P O R T Independent auditors’ report to the members of Fletcher King plc We have audited the financial statements of Fletcher King Plc for the year ended 30 April 2014 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Cash Flows, the Consolidated and Company Statements of Changes in Equity and the related notes 1 to 24. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the Statement of Directors’ Responsibilities set out on page 8, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council’s (FRC’s) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the FRC’s website at www.frc.org.uk/auditscopeukprivate. Opinion on financial statements In our opinion: (cid:3) the financial statements give a true and fair view of the state of the Group’s and of the Parent company’s affairs as at 30 April 2014 and of the Group’s profit for the year then ended; (cid:3) the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; (cid:3) the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and (cid:3) the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. E L E V E N A U D I T O R S ’ R E P O R T Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: (cid:3) adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or (cid:3) the parent company financial statements are not in agreement with the accounting records and returns; or (cid:3) certain disclosures of directors’ remuneration specified by law are not made; or (cid:3) we have not received all the information and explanations we require for our audit. Stephen Drew Senior Statutory Auditor, for and on behalf of Nexia Smith & Williamson Statutory Auditor Chartered Accountants 25 Moorgate London EC2R 6AY 12 August 2014 T W E LV E C O N S O L I D AT E D S TAT E M E N T O F C O M P R E H E N S I V E I N C O M E for the year ended 30 April 2014 Notes 6 11 Revenue Employee benefits expense Depreciation expense Other operating expenses Operating profit Profit on disposal of available for sale investments Income from investments Finance income )) 7 Profit before taxation 8 Taxation 10 Profit for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year, attributable to equity shareholders 10 Basic and diluted earnings per share 2014)) £000)) 3,653)) (2,017)) (44)) (1,083)) 509)) 174)) 13)) 15)) 711)) (169)) 542)) —)) 542)) 5.89 p 2013))) £000))) 3,031))) (1,641))) (43))) (1,085))) 262))) –))) 11))) 19))) 292))) (65))) 227))) — ) 227))) 2.46p) T H I R T E E N 2014) £000) 112) 750) 18) 880) 1,247) 3,314) 4,561) 5,441) 702) 123) 887) 1,712) 1,712) 921) 140) 2,668) 3,729) 5,441) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) 2013 £000 141 500 63 704 1,462 2,571 4,033 4,737 810 53 549 1,412 1,412 921 140 2,264 3,325 4,737 C O N S O L I D AT E D S TAT E M E N T O F F I N A N C I A L P O S I T I O N as at 30 April 2014 Notes Assets Non-current assets Property, plant and equipment Available-for-sale investments Deferred tax assets 11 13 18 Current assets Trade and other receivables Cash and cash equivalents 14 15 Total assets Liabilities Current liabilities Trade and other payables Current taxation liabilities Other creditors 16 17 Total liabilities 19 Shareholders’ equity Share capital Share premium Profit and Loss Reserve Total shareholders’ equity Total equity and liabilities Approved by the Board on 8 August 2014 and signed on its behalf by David Fletcher Chairman Registered Number: 02014432 England and Wales F O U R T E E N C O M PA N Y S TAT E M E N T O F F I N A N C I A L P O S I T I O N as at 30 April 2014 Notes 12 14 15 16 17 19 Assets Non-current assets Investments in group undertakings Current assets Trade and other receivables Cash and cash equivalents Total assets Liabilities Current liabilities Trade and other payables Other creditors Total liabilities Shareholders’ equity Share capital Share premium Profit and Loss reserve Total shareholders’ equity Total equity and liabilities Approved by the Board on 8 August 2014 and signed on its behalf by David Fletcher Chairman Registered Number: 02014432 England and Wales 2014) £000) 105) 63) 1,070) 1,133) 1,238) 15) 14) 29) 29) 921) 140) 148) 1,209) 1,238) ) ) ) ) 2013 £000 ) ) 105 121 1,123 1,244 1,349 14 14 28 28 921 140 260 1,321 1,349 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) F I F T E E N C O N S O L I D AT E D S TAT E M E N T O F C A S H F L O W S for the year ended 30 April 2014 Cash flows from operating activities Profit before taxation from continuing operations Adjustments for: Depreciation expense Profit on disposal of available for sale investments Income from investments Finance income Cash flows from operating activities before movement in working capital Decrease/(increase) in trade and other receivables Increase in trade and other payables Cash generated from/(absorbed by) operations Taxation paid Net cash flows from operating activities Cash flows from investing activities Purchase of fixed assets Purchase of investments Sale of investments Finance income Income from investments Net cash flows from investing activities Cash flows from financing activities Dividends paid to shareholders Net cash flows from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at start of year Cash and cash equivalents at end of year (note 15) S I X T E E N 2014) £000) 711 44) (174) (13) (15) 553) 215) 230) 998) (54) 944) (15) (750) 674) 15) 13) (63) (138) (138) 743) 2,571) 3,314) 2013) £000) 292) 43) –) (11) (19) 305) (570) 207) (58) (71) (129) ) (4) ) –) –) 19) 11) 26) (138) (138) (241) 2,812) 2,571 ) C O M PA N Y S TAT E M E N T O F C A S H F L O W S for the year ended 30 April 2014 Cash flows from operating activities Profit before taxation Adjustments for: Finance income Dividends received from subsidiary undertakings Cash flows from operating activities before movement in working capital Decrease in trade and other receivables Increase/(decrease) in trade and other payables Cash absorbed by operations Cash flows from investing activities Dividends received from subsidiary undertakings Finance income Net cash flows from investing activities Cash flows from financing activities Dividends paid to shareholders Net cash flows from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at start of year 2014)) £000)) 26)) (6)) (138)) (118)) 58)) 1)) (59)) 138)) 6)) 144)) (138)) (138)) (53)) 1,123)) Cash and cash equivalents at end of year (note 15) 1,070)) ) ) ) ) ) 2013) £000) 134) (13) (238) ) (117) )) 91 ) (7) ) (33) ) ) 238 ) 13) ) ) ) 251) (138) (138) ) 80) ) ) 1,043 ) 1,123) S E V E N T E E N S TAT E M E N T O F C H A N G E S I N E Q U I T Y for the year ended 30 April 2014 CONSOLIDATED Balance at 1 May 2012 Total comprehensive income for the year Equity dividends paid Share) capital) £000) Share) premium) £000) ) ) ) 921 — — ) ) ) 140 — — Profit)) and)) Loss)) Reserve) £000)) 2,175 ) ) 227)) ) (138) TOTAL)) EQUITY)) £000)) )) 3,236 227)) ) (138) Balance at 30 April 2013 921) 140) 2,264 3,325)) Total comprehensive income for the year Equity dividends paid —) —) —) —) 542)) (138)) 542)) (138)) Balance at 30 April 2014 921) 140) 2,668)) 3,729)) The profit and loss reserve comprises the undistributed profits/(losses) of the Group. COMPANY Balance at 1 May 2012 Total comprehensive income for the year Equity dividends paid Share Share) capital) £000) Share Share) premium) £000) ) 921 ) ) — — ) 140 ) ) — — Profit)) and)) loss)) reserve)) £000)) 264)) 134)) ) (138) TOTAL) TOTAL)) EQUITY)) £000)) 1,325 ) ) 134)) ) (138) Balance at 30 April 2013 921) 140) 260)) 1,321)) Total comprehensive income for the year Equity dividends paid —) —) —) —) 26)) (138)) 26)) (138)) Balance at 30 April 2014 921) 140) 148)) 1,209)) The profit and loss reserve comprises the undistributed profits/(losses) of the Company. E I G H T E E N N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 1. General information Fletcher King Plc (‘the Company’) and its subsidiaries (together ‘the Group’) carry on the business of property fund management, property asset management, rating, valuations and investment broking throughout the United Kingdom. The Company is a public limited company incorporated and domiciled in England and Wales and listed on the Alternative Investment Market (“AIM”) of The London Stock Exchange. The registered office address is 61 Conduit Street, London W1S 2GB. These consolidated financial statements were approved for issue by the Board of Directors on 8 August 2014. They are presented in Sterling which is the Group’s functional currency. The Group has no overseas operations. 2. Basis of preparation and presentation of financial statements These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and under the historical cost convention. New standards and interpretations At the date of authorisation of these financial statements, the following new standards and interpretations were in issue and relevant to the Group: (cid:3) IFRS 13 Fair Value Measurement At the date of authorisation of these financial statements, the following new standards and interpretations are relevant to the Group and have been issued but have not been applied in these financial statements:- (cid:3) IFRS 9 Financial Instruments (cid:3) IFRS 10 Consolidated Financial Statements (cid:3) IFRS 12 Disclosure of Interests in Other Entities (cid:3) IAS 27 Separate Financial Statements The directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group’s financial statements. Certain of these standards and interpretations will require additional disclosures over and above those currently included in these financial statements in the period of application. N I N E T E E N N O T E S T O T H E F I N A N C I A L S TAT E M E N T S The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates and also requires management to exercise judgement in applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are highly significant to the financial statements, are set out in note 3 below. 3. Principal accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies, which are also applicable to the financial statements of the Company, have been consistently applied to all the years presented. Basis of consolidation The financial statements consolidate the accounts of the Company and all subsidiary undertakings drawn up to the same year end. Subsidiaries Subsidiaries are entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than 50% of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiary entities are consolidated from the date on which control is transferred to the Group and are deconsolidated from the date on which control ceases. In respect of subsidiaries, inter-company transactions, balances and unrealised gains on intra-group transactions are eliminated on consolidation. The accounting policies of subsidiaries are changed where necessary to ensure consistency with the policies adopted by the Group. T W E N T Y N O T E S T O T H E F I N A N C I A L S TAT E M E N T S Property, plant and equipment and depreciation Property, plant and equipment are stated at historical cost, net of depreciation, at rates calculated to write off the cost, less residual value, of each asset over its expected useful life. Depreciation rates on a straight line basis are as follows:- Motor vehicles Office furniture and fittings Computer equipment Short leasehold premium and improvements 25% 25% 33% 10% Cost includes expenditure that is directly attributable to the acquisition of the asset. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposal are determined by comparing proceeds with carrying amount. These are included in the income statement. Segmental reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker as required by IFRS 8 “Operating Segments”. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Committee. T W E N T Y- O N E N O T E S T O T H E F I N A N C I A L S TAT E M E N T S Financial instruments Financial assets and liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument. Measurement depends on their classification and is discussed below: (i) Investments Investments held by the Company in subsidiary entities, not held for sale, are shown at cost less any provision for impairment. The Directors determine the classification of investments held by the Group at initial recognition and re-evaluate this designation at each reporting date. At the balance sheet date all these investments were classified as available-for-sale. Available-for-sale investments are initially recognised at the fair value of the consideration given, including associated acquisition costs, which may equate to cost. On subsequent measurement, available-for-sale investments are measured at either fair value or at cost where fair value is not readily ascertainable. Changes in fair value are recognised in equity, together with the related deferred tax asset or liability. When such investments are disposed of, the accumulated gains or losses, previously recognised in equity, are transferred to the income statement. Available-for-sale financial assets are included in non-current assets unless management intends to dispose of the investment within twelve months of the balance sheet date. (ii) Trade and other receivables Trade and other receivables are initially measured at fair value, and are subsequently measured at amortised cost using the effective interest method. A provision is established when there is objective evidence that the Group will not be able to collect all amounts due. The amount of any provision is recognised in the income statement. All financial assets are reviewed annually for impairment, with any losses reflected in the income statement. Investment income is recognised in the income statement. (iii) Cash and cash equivalents Cash and cash equivalents include cash in hand, call deposits held with banks, and other short-term highly liquid investments with original maturities of three months or less. (iv) Financial liabilities and equity Financial liabilities and equity instruments issued by the group are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below. T W E N T Y- T W O N O T E S T O T H E F I N A N C I A L S TAT E M E N T S (a) Trade and other payables Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost using the effective interest rate method. (b) Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds, net of tax. Taxation Current income tax is provided on taxable profits at the current rate. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using rates enacted at the balance sheet date which are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are only recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Income tax and deferred tax are reflected in the income statement, unless they relate to items recognised in equity, in which case they are recognised in equity. Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that the Group will be required to settle the obligation, and the amount can be reliably estimated. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date. Revenue recognition Revenue comprises commissions and fees receivable excluding value added tax and is measured at fair value. Fees on property transactions and other contingent fee arrangements are recognised as earned on the unconditional completion of a contract or when a fee is contractually due. Fees for other professional services are recognised on completion of the assignment. Interest and investment income is recognised on a time-proportion basis using the effective interest method. T W E N T Y- T H R E E N O T E S T O T H E F I N A N C I A L S TAT E M E N T S Operating profit Operating profit is stated before income from investments, finance income, costs and losses on impairment of available-for-sale investments and taxation. Employee benefits No pension schemes are operated by the Group. Contributions to employees’ money-purchase pension schemes are made on an arising basis where these form part of contractual remuneration obligations. The Group recognises a liability and an expense for cash-settled bonuses when contractually obliged or when there is a past practice creating a constructive obligation. Operating Leases Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease. Dividend Distributions Dividends to the Company’s shareholders are recognised as a liability when paid (if interim dividends) or approved by shareholders (if final dividends). Critical accounting estimates and assumptions The preparation of the consolidated financial statements in conformity with International Financial Reporting Standards requires management to make estimates and assumptions concerning the future. While the resulting accounting estimates will, by definition, seldom equal the related actual results, in the opinion of the Directors the estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are detailed below. (a) Impairment of available-for-sale investments The fair value of available-for-sale investments is determined by reference to the underlying value of the assets of those investments at each balance sheet date. The Directors have made provisions for impairment where there is objective evidence that fair value is less than cost. (b) Provisions for impairment of trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less provision for impairment. The Directors have made provisions for impairment where there is objective evidence that the Group will not be able to collect all amounts due. There have not been any provisions for impairment of available for sale investments or trade receivables in the year. T W E N T Y- F O U R N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 4. Segment Information – Group IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker to allocate resources to the segments and to assess their performance. In accordance with IFRS 8 the chief operating decision maker has been identified as the Executive Committee. They review the Group’s internal reporting in order to assess performance and allocate resources. The Executive Committee considers that the business comprises a single activity being General Services. Therefore, the Group is organised into one operating segment and there is one reporting segment. The segment information is the same as that set out in the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity and consolidated statement of cash flows. 5. Operating profit Operating profit is stated after charging/(crediting): Year ended 30 April Operating lease rentals relating to property Other operating lease rentals Depreciation Rental income Fees payable to the Company’s auditor for the audit of the Company’s consolidated annual financial statements Fees payable to the Company’s auditor and its associates for other services: - the audit of the Company’s subsidiaries - other assurance services - tax compliance services 2014) £000) 287) –) 44) (11) ) 6) 17) 4) 9) ) ) ) ) 2013 £000 ) ) ) ) 287 ) 30 ) 43 ) (19) ) ) 6 ) ) ) ) ) ) 17 4 8 As permitted by section 408(3) of the Companies Act 2006, the Company has taken advantage of the legal dispensation not to present its own statement of comprehensive income. The profit after taxation of the Company for the year was £26,000 (2013: £134,000). 6. Employee benefits expense YYear ended 30 April Basic wages and salaries Performance-based payments Social security costs Other costs ) 2014 ) £000)) 1,102)) 642)) 1,744)) 231)) 42)) 2,017)) The average number of persons (including directors) employed by the Group was as follows: Year ended 30 April Management Professional Administration 2014)) No.)) 4)) 7)) 7)) 18)) ) ) ) ) 2013) £000) 1,113) 307) 1,420 ) ) ) 184) ) ) 37 ) 1,641) ) ) 2013) No.) 4)) 7)) 7)) 18)) T W E N T Y- F I V E N O T E S T O T H E F I N A N C I A L S TAT E M E N T S Key management are those persons having authority and responsibility for planning, directing and controlling the activities of the entity. In the opinion of the Board, the Group’s key management comprises the executive and non-executive Directors of Fletcher King Plc. Information regarding their compensation, all of which are short-term benefits, is set out below: The Group does not operate any pension schemes. Directors’ Emoluments Fees Salaries and benefits Performance-related bonuses 2014) £000) 22) 348) 505) 875) No executive Directors at 30 April 2014 received any pension entitlements (2013: nil). Highest Paid Director Basic Pay Benefits Performance Related Bonus 2014) £000) 100) 31) 240) 371) Key Management Compensation Aggregate compensation for key management, being the Directors of the Company, was as follows: Short term employee benefits 2014) £000) 996) 2013) £000) 20) 346) 291) 657) 2013) £000) 100) 5) 119) 224) 2013) £000) 748) In accordance with AIM Rule 19, information of individual director’s remuneration has been disclosed in the Directors’ Report. 7. Finance income Year ended 30 April Finance income Bank interest receivable 2014) £000) 15) 2013) £000) 19) T W E N T Y- S I X N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 8. Income tax Year ended 30 April Current tax UK corporaton tax – current year UK corporation tax – prior years Deferred tax UK deferred tax – current year Total tax charged in the income statement 2014)) £000)) 135)) (11)) 124)) 45)) 45)) 169)) 2013)) £000)) 76)) (11)) 65)) –)) –)) 65)) The effective rate of UK corporation tax is calculated as the standard rate of UK corporation tax of 23% less any effective marginal relief. The difference between the total current tax shown above and the amount calculated applying the effective rate of UK corporation tax, to the profit before taxation is as follows: Year ended 30 April Profit before taxation Tax on Group profit at UK corporation tax rate of 22.8% (2013: 23.2%) Difference between capital allowances and depreciation Expenses not deductible for tax purposes Prior year adjustment Other adjustments Group total tax charge for the year 2014)) £000)) 711)) 162)) 3)) 7)) (11)) 8)) 169)) 2013)) £000)) 292)) 68)) 4)) 8)) (11)) (4)) 65)) The main rate of corporate tax changed to 21% from 23% on 1 April 2014 and it is anticipated that it will further change to 20% on 1 April 2015 to be aligned with the small companies rate of 20%. T W E N T Y- S E V E N N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 9. Dividends Year ended 30 April Equity dividends on ordinary shares: Declared and paid during year Ordinary final dividend for the year ended 30 April 2013: 0.75p per share (2012: 0.75p) Interim dividend for the year ended 30 April 2014: 0.75p per share (2013: 0.75p) \ Proposed ordinary final dividend for the year ended 30 April 2014: 2.25p per share 10. Earnings per share 2014) £000) 69) 69) 138) 207) 2014)) No)) 2013) £000) 69) 69) 138) 2013)) No)) Weighted average number of shares for basic and diluted earnings per share 9,209,779)) 9,209,779)) Earnings for basic and diluted earnings per share Basic and diluted earnings per share £000)) 542)) 5.89p) £000)) 227)) 2.46p) T W E N T Y- E I G H T N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 11. Property, plant and equipment - Group Cost At 1 May 2013 Additions As at 30 April 2014 Depreciation At 1 May 2013 Charge for the year At 30 April 2014 Net book value at 30 April 2014 Cost At 1 May 2012 Additions As at 30 April 2013 Depreciation At 1 May 2012 Charge for the year At 30 April 2013 Net book value at 30 April 2013 Furniture,))) fittings and))) computers))) £000))) Short))) leasehold))) Motor))) premium and))) vehicles))) improvements))) £000))) £000))) 158))) 15))) 173))) 137))) 16))) 153))) 20 ) )) 154))) 4))) 158))) 121))) 16))) 137))) 21 ) )) 53))) ) – )) 53 ) )) 53))) –) )) 53))) – ) )) 53))) ) – )) 53))) 53))) ) – )) 53))) –) )) 276))) ) – )) 276))) 156))) 28))) 184))) 92 ) )) 276))) ) – )) 276))) 129))) 27))) 156))) 120 ))) Total))) £000))) 487))) 15))) 502))) 346))) 44))) 390))) 112 ))) 483))) 4))) 487))) 303))) 43))) 346))) 141 ) )) 12. Investments in Group undertakings – Company Year ended 30 April Shares in Group undertakings at cost: At 1 May and 30 April 2014) £000) 105) 2013) £000) 105) As at 30 April 2014, the Company owns 100% of the ordinary share capital of the following companies registered in England and Wales, the accounts of which are consolidated into the Group accounts: Fletcher King Services Limited, which is the trading subsidiary through which the Fletcher King business is carried out and Fletcher King Investment Management Plc, the group’s FCA-regulated investment services company. T W E N T Y- N I N E N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 13. Available-for-sale investments – Group Year ended 30 April At 1 May Additions Disposals At 30 April Classified as: Available-for-sale investments UK unlisted investments classified as available-for-sale 2014)) £000)) 500)) 750)) (500)) 750)) 750)) 750)) 2013) ) £000) ) 500)) –)) –)) 500)) 500)) 500)) An amount of £750,000 represents a partnership interest in the Stratton House Investment Property Syndicate (SHIPS 14) which was acquired during the year ended 30 April 2014. This investment is stated at cost, which is equal to the fair value of the investment based on the underlying value of the Syndicate’s assets. During the year ended 30 April 2014, interests held in the Stratton House Investment Properties Limited Partnership (SHIPS 06) and Stratton House Investment Property Syndicate (SHIPS 11) were sold. An impairment loss of £178,000 was incurred in 2009 on a 2.5% holding in Stratton House Investment Property Syndicate (SHIPS 04) to revalue the investment to £nil. This remains the fair value of the investment as at 30 April 2014 and is based on the underlying value of the Syndicate’s assets. 14. Trade and other receivables Trade receivables Amount owed by group undertakings Other receivables Prepayments and accrued income Group)) 2014))) £000))) 972))) —)))) 33))) 242))) Group))) 2013))) £000))) 1,113))) —)))) 119))) 230))) 1,247))) 1,462))) Company)) 2014)) £000)) Company))) 2013))) £000))) —)) 57)) –– )) 6)) 63)) —))) 115))) —))) 6))) 121))) Trade receivables are non-interest bearing and generally have a 30-90 day term. Due to their short maturities, the fair value of trade receivables approximates their book value. The fair value of amounts owed by group undertakings approximate their book value. A provision for impairment of trade receivables is established when there is no objective evidence that the Group will be able to collect all amounts due according to the original terms. The group considers factors such as default or delinquency in payment, significant financial difficulties of the debtor and the probability that the debtor will enter bankruptcy in deciding whether the trade receivable is impaired. As at 30 April 2014, trade receivables of £nil were impaired (2013: £nil). As at 30 April 2014, trade receivables of £473,000 (2013: £444,000) were past due, but not impaired. The ageing analysis of these trade receivables is as follows: Group))) 2014))) £000))) Group)))) 2013)))) £000)))) Company))) 2014))) £000))) Company))) 2013))) £000))) 463))) 6))) 4))) 473))) 439))) 2))) 3))) 444))) —))) —))) —))) —))) —))) —))) —))) —))) Up to 3 months past due 3 to 6 months past due Over 6 months past due T H I R T Y N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 15. Cash and cash equivalents Cash at bank and in hand Group))) 2014))) £000))) 3,314))) 3,314))) Group)))) 2013)))) £000)))) Company))) 2014))) £000))) Company))) 2013))) £000))) 2,571))) 1,070))) 1,123))) 2,571))) 1,070))) 1,123))) Cash and cash equivalents are all denominated in Sterling. The effective interest rate on Group cash balances for the year ended 30th April 2014 was 0.5% (2013: 0.5%). There is no material difference between the fair value and book value of cash and cash equivalents. 16. Trade and other payables Trade payables Other taxation and social security Other payables Group))) 2014))) £000))) Group)))) 2013)))) £000)))) Company))) 2014))) £000))) Company))) 2013))) £000))) 363))) 323))) 16))) 702))) 302))) 300))) 208))) 810))) 15))) —))) —))) 15))) 14))) —))) —))) 14))) The carrying amounts of trade and other payables approximate their fair value. 17. Other creditors )Bonus accruals Other accruals and deferred income Group))) 2014))) £000))) Group)) 2013)) £000)) Company)) 2014)) £000)) Company)) 2013)) £000)) 593))) 294))) 887))) 347)) 202)) 549)) —)) 14)) 14)) —)) 14)) 14)) T H I R T Y- O N E N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 18. Deferred taxation (non-current) – Group Year ended 30 April Deferred taxation asset: Timing differences on provisions At 1 May Movement during year At 30 April 2014)) £000)) 63)) (45)) 18)) 2013)) £000)) 63)) –)) 63)) 19. Share capital 30 April)) 2014)) Number)) 30 April))) 2013))) Number))) 30 April)) 2014)) £000)) 30 April)) 2013)) £000)) Ordinary shares of 10p each: ) Issued and fully paid 9,209,779)) 9,209,779))) 921)) 921)) The Company has one class of ordinary shares which carry no rights to fixed income. No shares were issued during the year. 20. Share based payments Executive Share Option Scheme: As at 1 May 2013, no options were outstanding under this scheme. No new options were issued during the year ended 30 April 2014. 1996 Employee Share Option Scheme: As at 1 May 2013, no options were outstanding under this scheme. No new options were issued during the year ended 30 April 2014. There is no change to the accounts in the year as all schemes had vested prior to the start of the year. T H I R T Y- T W O N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 21. Capital and operating lease commitments and contingent liabilities As at 30 April 2014 and 30 April 2013, neither the Group nor the Company had any capital commitments or contingent liabilities. As at 30 April 2014 and at 30 April 2013, the Group had outstanding commitments under non-cancellable leases which fall due as follows: Within one year In one to five years Property leases Other leases 2014) £000) 287) 284) 571) 2013) £000) 287) 571) 858) 2013) £000) –– ) –– ) –– ) 2012) £000) 22) 8) 30) Total) 2013) £000) 287) 571) Total) 2012) £000) 309) 866) 858) 1175) Property leases relate to office premises occupied by the Group. 22. Related party transactions Transactions between the Company and its subsidiaries are in the normal course of business. Such transactions are eliminated on consolidation. Total inter-company balances between the Company and its subsidiaries, which are unsecured and which relate to the provision of working capital, are disclosed in the accounts. During the year, the Company had funding transactions with subsidiaries amounting to £58,000 (2013: £87,000) Group companies hold investments in a number of property funds (see note 13) in which Group companies also act as fund manager. During the year, Group companies received fees and were owed amounts as follows:- SHIPS 04 Fund SHIPS 06 Fund SHIPS 11 Fund SHIPS 14 Fund Fees 2014)) £000)) 2013)) £000)) 101)) 217)) 261)) 95)) 217)) 60)) 16)) –)) Amount Due 2014) £000) 2013)) £000)) 20) – ) – ) 16) 5)) –)) –)) –)) All transactions were made in the ordinary course of business. Compensation paid to the Company’s Board of directors and key management is disclosed in note 6 and in the Directors Report. 23. Financial instruments The Group’s and the Company’s financial instruments comprise UK unlisted investments, cash and cash equivalents, and items such as trade payables and trade receivables which arise directly from its operations. The main purpose of these financial instruments is to provide finance for the Group’s and the Company’s operations. The Group’s and the Company’s operations expose them to a variety of financial risks including credit risk, interest rate risk, and liquidity risk. Commensurate with the size of the Group, the directors set the policies regarding financial risk management, and these are implemented accordingly by Group companies. Loans and receivables Trade receivables Amount owed by group undertakings Other receivables Cash and cash equivalents Group)) 2014)) £000)) 972)) –– )) 33)) 3,314)) 4,319)) Group))) 2013))) £000)v) Company)) 2014)) £000)) 1,113)) –– )) 119)) 2,571)) 3,803)) –– )) 57)) –– )) 1,070)) 1,127)) Company)) 2013)) £000)) –– ))) 115)) –– ))) 1,123)) 1,238)) T H I R T Y- T H R E E N O T E S T O T H E F I N A N C I A L S TAT E M E N T S Financial liabilities at amortised costs Trade payables Other payables Amounts owed to group undertakings Bonus accruals Other accruals and deferred income Group)) 2014)) £000)) 363)) 16)) –– )) 593)) 294)) Group)) 2013)) £000)) Company)) 2014)) £000)) Company)) 2013)) £000)) 302)) 208)) –)) 347)) 202)) 15)) –– )) –– )) –– )) 14)) 29)) 14)) –)) –)) –)) 14)) 28)) 1,266)) 1,059)) Credit risk ) The Group’s credit risk is attributable both to trade receivables and to cash balances held. The Company’s credit risk is attributable primarily to cash balances held. The Group has implemented policies to ensure that credit checks are made on potential clients before work is carried out on their behalf. The amount of exposure to any individual counterparty is subject to limits set by the directors. Cash balances held are deposited with leading banks. The carrying amount of financial assets represents the maximum credit exposure. The maximum credit exposure to credit risk at the reporting date was: Group)) 2014)) £000)) 972)) 3,314)) 22)) 4,308)) Group)) 2013)) £000)) 1,113)) 2,571)) 110)) 3,794)) Company)) 2014)) £000)) Company)) 2013)) £000)) –– )) 1,070)) –– )) 1,070)) –)) 1,123)) –)) 1,123) Trade receivables Cash and other equivalents Other receivables Interest rate risk ) The Group and the Company have interest bearing assets, but no interest bearing liabilities. Interest bearing assets comprise only cash and cash equivalents which earn interest at a variable rate. The interest earned on the Group’s and the Company’s cash and cash equivalents, denominated in sterling, derived principally from Money Market deposits of differing fixed time periods, and from call deposits held with banks which provide short-term liquidity to meet liabilities when they fall due. The Group and the Company are exposed to interest rate risk as a result of these positive cash balances. For the year ended 30 April 2014, if LIBOR had increased by 0.5% with all other variables held constant, post tax profit and equity for the Group would have been £15,000 (2013: £19,000) higher, and for the Company £6,000 (2013: £13,000) higher. Conversely, if LIBOR had decreased by 0.5% with all other variables held constant, post tax profit and equity for the Group would have been £15,000 (2013: £19,000) lower, and for the Company £6,000 (2013: £13,000) lower. The Group’s cash and cash equivalents earned interest during the year at an average of 0.5% (2013: 0.5%), and the Company’s cash and cash equivalents earned interest during the year at an average of 0.5% (2013: 0.5%). T H I R T Y- F O U R N O T E S T O T H E F I N A N C I A L S TAT E M E N T S Liquidity risk ) The Group and the Company actively maintain cash and cash equivalents to ensure that there are sufficient funds available for a period of at least six months to meet liabilities when they fall due. The following table shows the contractual maturities of the Group’s and the Company’s financial liabilities, all of which are measured at amortised cost: Financial liabilities falling due: Within 1 month From 2 to 3 months Group)) 2014)) £000)) 598)) 668)) Group)) 2013)) £000)) Company)) 2014)) £000)) Company)) 2013)) £000)) 674)) 421)) 29)) –– )) 29)) 28)) –)) 28)) 1,266)) 1,095)) 24. Capital risk management The Group and the Company seek, when managing capital, to safeguard the Group’s and the Company’s ability to continue as going concerns, in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. The Group and the Company define capital as being share capital plus reserves. The Board of Directors monitors the level of capital employed in order to achieve these objectives. T H I R T Y- F I V E N O T I C E O F A N N U A L G E N E R A L M E E T I N G Notice is hereby given that the Annual General Meeting of Fletcher King Plc will be held at 61 Conduit Street, London W1S 2GB on 17 September 2014 at 9.00am for the following purposes: 1 To receive and adopt the Directors’ Reports and Accounts for the financial year ended 30 April 2014. 2.To declare a final dividend for the financial year ended 30 April 2014. 3 To re-elect R E G Goode as a Director, who retires by rotation in accordance with the Company’s Articles of Association and who offers himself for re-election. 4 To re-elect D H Stewart as a Director who retires by rotation in accordance with the Company’s Articles of Association and who offers himself for re-election. Biographical details regarding these Directors are included in the accompanying Report and Accounts. 5 To re-appoint Nexia Smith & Williamson as auditors to hold office from the completion of the meeting to the conclusion of the next meeting at which the accounts are laid before the Company, at a remuneration to be determined by the Directors. To consider and, if thought fit, to pass the following resolutions of which resolution number 6 will be proposed as an ordinary resolution and resolutions number 7 and number 8 will be proposed as special resolutions. 6 ORDINARY RESOLUTION That the Directors of the Company be and are hereby authorised generally and unconditionally for the purpose of Section 551 of the Companies Act 2006 (such authority to be in substitution for all previous authorities granted to the Directors for the purpose of the said Section 551 or Section 80 of the Companies Act 1985) to allot shares in the Company up to a maximum number of 1,790,221 of the unissued ordinary shares of 10p each of the Company with a nominal value of £179,022.10, such authority to expire at the conclusion of the next Annual General Meeting of the Company and at any time thereafter pursuant to any offer or agreement made by the Company before the expiry of this authority. 7 SPECIAL RESOLUTION That, subject to the passing of resolution 6, the Directors of the Company be and are hereby empowered pursuant to Section 570 of the Companies Act 2006 to allot equity securities (as defined in Section 560 of that Act) pursuant to the authority conferred by the immediately preceding resolution as if subsection (1) of Section 561 of the said Act did not apply to any such allotment, provided that this power shall be limited: (a) To the allotment of equity securities in connection with a rights issue in favour of ordinary shareholders where the equity securities respectively attributable to the interests of all ordinary shareholders are proportionate (as nearly as may be) to the respective numbers of ordinary shares held by them but subject to such other exclusions or arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements for legal or practical problems under the laws of any territory or the requirements of any recognised regulatory body or any stock exchange in any country; and (b) to the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to an aggregate nominal value of £46,049 (being 5% of the said issued capital of the Company), and shall expire at the conclusion of the next Annual General Meeting of the Company unless it is renewed by special resolution of the Company in general meeting, provided that if the Company before such expiry shall make an offer or agreement which would or might require securities to be allotted after such expiry, the Directors of the Company may allot equity securities in pursuance of such offer or agreements as if the power conferred hereby had not expired. T H I R T Y- S I X N O T I C E O F A N N U A L G E N E R A L M E E T I N G 8 SPECIAL RESOLUTION That the Company is hereby generally and unconditionally authorised to make one or more market purchases (within the meaning of Section 693(4) of the Companies Act 2006) of ordinary shares of 10p each in the capital of the Company (‘ordinary shares’) provided that: (a) The maximum number of ordinary shares hereby authorised to be purchased is 460,000; (b) the maximum price which may be paid for an ordinary share is 5% above the average of the middle market quotations for shares of the same class as derived from The London Stock Exchange Daily Official List for the ten dealing days immediately prior to the date of the purchase of such shares and the minimum price that may be paid for an ordinary share is the nominal value of 10p per share; (c) the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2015 or eighteen months from the passing of this resolution, if earlier, unless such authority is renewed prior to such time; and (d) the Company may enter into a contract to purchase ordinary shares under the authority hereby conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiry of such authority and may make such purchases of ordinary shares in pursuance of any such contract or contracts. By order of the Board P E Bailey Secretary Fletcher King Plc 8 August 2014 Registered Office: 61 Conduit Street London W1S 2GB Notes (a) A member of the Company entitled to attend and vote at the meeting covered by this notice is entitled to appoint a proxy or proxies to exercise all or any of his or her rights to attend, speak and to vote at the meeting instead of him or her. A member of the Company can only appoint a proxy using the procedures set out in these notes and the notes to the proxy form. A proxy need not be a member of the Company. To be valid the form of proxy must be completed, signed and deposited at the office of the Company’s registrars not less than 48 hours before the time appointed for the meeting. Completion of the proxy does not preclude a member from subsequently attending and voting at the meeting in person if he or she so wishes. If a proxy has been appointed and the member subsequently attends the meeting in person, the proxy appointment will automatically be terminated. (b) To change your proxy instructions simply submit a new proxy appointment using the method set out above. Note that the cut-off time for receipt of proxy appointments (as above) also applies in relation to amended instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded. Where you require another hard-copy proxy form in order to change the instructions, please contact the Company Secretary at 61 Conduit Street, London, W1S 2GB. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence. (c) In order to revoke a proxy instruction, you will need to inform the Company by sending a hard copy notice clearly stating your intention to revoke your proxy appointment to the office of the Company’s registrars, Computershare Investor Services Plc, at PO Box No 1075, The Pavilions, Bridgwater Road, Bristol BS99 6ZY. The revocation notice must be received by the Company no less than 48 hours before the time appointed for the meeting. In the case of a member which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice. (d) In accordance with Regulation 41 of the Uncertificated Securities Reg 2001, only those members entered on the Company’s register of members at 6.00pm on 15 September 2014 or, if the meeting is adjourned, shareholders entered on the Company’s register of members at 6.00pm on the day which is two days before the day of the adjourned meeting, shall be entitled to attend and vote at the meeting. T H I R T Y- S E V E N N O T I C E O F A N N U A L G E N E R A L M E E T I N G (e) As at 30 April 2014, the Company’s issued share capital comprised 9,209,779 ordinary shares of 10p each. Each ordinary share carries the right to one vote at a general meeting of the Company and, therefore, the total number of voting rights in the Company as at 30 April 2014 is 9,209,779. (f) In order to facilitate voting by corporate representatives at the Meeting, arrangements will be put in place at the Meeting so that: (i) (ii) if a corporate member has appointed the Chairman of the Meeting as its corporate representative with instructions to vote on a poll in accordance with the directions of all the other corporate representatives for that member at the Meeting, then, on a poll, those corporate representatives will give voting directions to the Chairman and the Chairman will vote (or withhold a vote) as corporate representative in accordance with those directions; and if more than one corporate representative for the same corporate member attends the Meeting but the corporate member has not appointed the Chairman of the Meeting as its corporate representative, a designated corporate representative will be nominated, from those corporate representatives who attend, who will vote on a poll and the other corporate representatives will give voting directions to that designated corporate representative. Corporate members are referred to the guidance issued by the Institute of Chartered Secretaries and Administrators on proxies and corporate representatives – www.icas.org – for further details of this procedure. The guidance includes a sample form of representation letter to appoint the Chairman as a corporate representative as described in (i) above. (g) Except as provided above, members who have general queries about the meeting should contact the Company Secretary A member may not use any electronic address provided in this notice or in any related documents (including the proxy form) to communicate with the Company for any purposes other than those expressly stated. T H I R T Y- E I G H T F O R M O F P R O X Y For use at the Annual General Meeting of the Fletcher King Plc to be held at 9.00 am on 17 September 2014. I/We (Block capitals please) of being (a) member(s) of the Company, hereby appoint the Chairman of the Meeting or (see Note 5) as my/our proxy to attend and vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held on 17 September 2014 at 9.00 am and at any adjournment of the meeting. I/We direct my/our proxy to vote on the Resolutions set out in the notice convening the Annual General Meeting as follows: For Against Vote Withheld To Adopt Ordinary Resolution 1 To Adopt Ordinary Resolution 2 To Adopt Ordinary Resolution 3 To Adopt Ordinary Resolution 4 To Adopt Ordinary Resolution 5 To Adopt Ordinary Resolution 6 To Adopt Special Resolution 7 To Adopt Special Resolution 8 If no indication is given, my/our proxy will vote or abstain from voting at his or her discretion and I/we authorise my/our proxy to vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting. Signature Date Notes 1 Please indicate with an ‘X” in the spaces provided how you wish your votes to be cast. If you do not indicate how your votes are to be cast the proxy will vote as he thinks fit or abstain. The ‘‘Vote Withheld’’ option is provided to enable you to instruct your proxy not to vote on any particular resolution. Please note that a ‘‘Vote Withheld’’ has no legal effect and will not be counted in the calculation of the votes ‘‘For’’ or ‘‘Against’’ a resolution. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting. 2 3 4 5 6 In the case of a corporation, this form of proxy must be executed under the common seal or under the hand of an officer or duly authorised attorney. In the case of joint holders, the vote of the senior who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the other registered holders and for this purpose seniority shall be determined by the order in which the names stand in the register of members. To be effective this form of proxy, and the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of such power or authority, must be deposited at the office of the Company’s registrars at Computershare Investor Services Plc, at PO Box No 1075, The Pavilions, Bridgwater Road, Bristol BS99 6ZY, not less than 48 hours before the time of the meeting. Any alterations made to this form of proxy should be initialled. If you wish to appoint a proxy other than as above please delete the reference to the Chairman and insert the name of your proxy or proxies, who need not be members of the Company, in the space provided. A proxy must attend the meeting in person to represent you. Your appointment of a proxy will not preclude you from attending and voting at the meeting. If you wish your proxy to make any comments on your behalf, you will need to appoint someone other than the chairman and give them the relevant instructions directly. Where you appoint as your proxy someone other than the Chairman, you are responsible for ensuring that they attend the meeting and are aware of your voting intentions. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, please contact the Company registrars for more information at the address provided in note 3 sufficiently in advance of the meeting so that the requirements of note 3 may be complied with. T H I R T Y- N I N E Third fold and tuck in BUSINESS REPLY SERVICE License No. SWB 1002 d l o f t s r i F Computershare Investor Services Plc PO Box 1075 The Pavilions Bridgwater Road Bristol BS99 6ZY 11 Second fold