Fletcher King Plc
Annual Report and Accounts 2018
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
Financial Highlights
2
Chairman’s Statement
3
Strategic Report
4-5
Directors’ Report
6-9
Auditors’ Report
10-13
Accounts
14-39
Notice of Meeting
40-42
Form of Proxy
43
Directors
DJR Fletcher FRICS Chairman
REG Goode FRICS Managing Director
RA Dickman FRICS Executive Director
P J Andrews MRICS 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
The Pavilions, Bridgwater Road, Bristol BS13 8AE
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
Certificate Nº FS27825
1
H I G H L I G H T S
Profit before tax of £274,000 (2017: £738,000)
Profit after tax for the year of £209,000 (2017: £579,000)
• Revenue for the year of £3,080,000 (2017: £4,094,000)
•
•
• Basic earnings per share of 2.27p (2017: 6.29p)
•
Final dividend of 0.75p per share. An interim dividend of 1.00p per share was paid and
therefore the total ordinary dividend for the year will be 1.75p per share (2017: 4.00p)
F I N A N C I A L C A L E N D A R
Half Year Results
Announced 18 December 2017
Full Year Results
Preliminary announcement 13 July 2018
Annual General Meeting
19 September 2018
Final Dividend
Payable 5 October 2018
Interim Dividend
To be announced in December 2018
Payable in January 2019
2
C H A I R M A N ’ S S TAT E M E N T
Results
Revenue for the year was £3,080,000 (2017: £4,094,000). Profit before tax was £274,000
(2017: £738,000).
The board is proposing a final dividend of 0.75p per share. The final dividend is subject to
shareholder approval at the AGM and will be paid on 5 October 2018 to those shareholders on the
register at the close of business on 7 September 2018. With the interim dividend of 1.00p per share
(2017:1.00p) the dividend for the year will amount to 1.75p per share (2017: 4.00p per share).
The Commercial Property Market
Brexit uncertainty continues to impact the Central London office letting market but the capital
markets remain strong.
Both overseas and domestic buyers remain active, particularly for industrials and city centre
offices, and prices are generally stable.
Online retail sales are growing and they are adversely affecting the high street. This is likely to
remain the case for some time to come.
Business Overview
Performance was disappointing and did not meet management expectations.
The uncertainties, mentioned above, impacted our ability to let the two SHIPS buildings in the City
and Clerkenwell although both buildings do have some of the space occupied. As a result, earnings
from the sale of these buildings did not materialise as anticipated. However our other investment
property sales held up well.
It was a disappointing year for agreeing rating appeals, with the Valuation Office delaying
settlements and our valuation work was also down on the previous years.
Property management continues to provide a steady income flow.
Outlook
Brexit uncertainties will continue to impact the markets but we start the year with a good volume of
investment sales. We would hope to let and sell the two SHIPS properties during the coming year
but not perhaps in the first half. Our capital markets team have some significant sales instructions
of both industrials and London office buildings which we anticipate will be completed this coming
year.
There is significant pressure on the Valuation Office to engage on Rating Appeals and we would
hope to benefit from that. We have some substantial appeals in the pipeline which should come to
fruition this coming year. During the year we have added new clients including advising on the
Rating of The Scalpel, a recently completed 35 storey 380,000sq.ft. office tower in Lime Street
EC3.
The banks continue to be active lenders to the commercial property market and that will benefit our
valuation work. The new year has started well which is an encouraging sign.
Forecasting what might happen in the coming year remains as difficult as it was this time last year.
However we manage the business conservatively and continue to have a strong balance sheet.
Our loyal client base and excellent and hardworking team give us confidence for the future.
DAVID FLETCHER
CHAIRMAN
21 August 2018
3
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 (“the Company”) and its
subsidiary companies for the year end 30 April 2018 (together “the Group”).
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:
2018
Revenue
Profit before taxation
Profit for the year
Basic earnings per share 2.27p
£3,080,000
£274,000
£209,000
2017
£4,094,000
£738,000
£579,000
6.29p
The results for the year were disappointing and did not meet management expectations. Whilst
the Company continued to receive good recurring revenue, it was not able to match the strong
performance of the previous couple of years which benefited from increased transactional revenue
on property sales and ratings appeals, and significant fees and profits earned on the sale of a SHIPS
property.
Cash generated by operations in the year amounted to £275,000 (2017: £364,000) and after
investing activities and dividend payments the cash balance decreased by £105,000 to £2,628,000.
The Group continued to look for opportunities to participate in the Syndicated Property Investments
(‘SHIPS’) and will make investments when suitable opportunities arise.
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 decision to leave the EU has
had a destabilising effect on the market and increased economic risk for the Group. 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.
4
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 a 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 Group 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
21 August 2018
5
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 2018.
General information
Fletcher King Plc 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 14. The profit for the
year after taxation is £209,000 (2017: £579,000). The Directors recommend the payment of an
ordinary final dividend of 0.75p per share (2017: 3.00p). An interim dividend of 1.00p per share
(2017: 1.00p per share) has already been paid to shareholders.
Income from the Group’s available-for-sale investments and net bank interest amounted to £2,000
(2017: £21,000).
The effective taxation charge was 23.7% (2017: 21.5%).
Future developments
The new financial year has started with a good pipeline of potential sales transactions and it is also
hoped that at least one of the current SHIPS properties will be let and sold during the year. The
uncertainties surrounding Brexit are adversly impacting our market and the Group’s performance.
This is likely to continue for some time to come.
Capital and equity interests
Basic earnings per share from continuing operations amounted to 2.27p (2017: 6.29p).
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 2018 was 9.2 million
(2017: 9.2 million).
Cash flow and liquidity
Net cash inflow from operating activities amounted to £275,000 (2017: £364,000) which, after
allowing for cash flows including dividends and capital expenditure, resulted in a net decrease in
cash balances of £105,000 (2017: decrease of £113,000).
At 30 April 2018, the Group’s cash at bank and on short term deposit amounted to £2.63 million
(2017: £2.73 million). This was deposited with leading banks.
Risk identification and management
The identification, c ontrol a nd m onitoring o f r isks f acing t he b usiness r emain a management
priority.
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
6
D I R E C T O R S ’ R E P O R T
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
PJ Andrews
Chairman
Managing Director
Executive Director
Non Executive Director
Executive Director
R E G Goode and R A Dickman 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 department of DTZ and
Hillier Parker. He is involved in fund and asset management for a number of major institutional
and in-house clients.
R A Dickman BSc (Hons) Est Man FRICS, is a Chartered Surveyor, and has been a Director of
Fletcher King since May 1992. He has been in charge of the Valuation and Rating department since
that date.
Directors’ Remuneration
DJR Fletcher
REG Goode
DH Stewart
R A Dickman
P J Andrews
Salary
Benefits
Bonus
£000
£000
£000
100
100
15
100
100
415
27
23
-
16
11
77
75
75
4
15
40
209
2018
£000
202
198
19
131
151
701
2017
£000
365
361
21
189
160
1096
R A Dickman and P J Andrews received additional pension entitlements of £419 each in the year
(2017: £279).
D J R Fletcher, R E G Goode, R A Dickman and P J Andrews were granted 100,000 share options
each in October 2016 under an EMI share option scheme at an exercise price of 48.5p. The options
can be exercised between October 2021 and October 2026. These Directors held 100,000 share
options each as at 30 April 2018 and 30 April 2017.
7
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 27 September 2017 for a further year
in respect of ordinary 10p shares up to a maximum of 2,762,934 shares (£276,293.40). 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
2019. The intention of the Board is to seek to renew the authority at future Annual General Meetings.
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.
8
D I R E C T O R S ’ R E P O R T
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; and
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 Company’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 the Group 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 auditor
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
auditor was 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 auditor was aware of that information.
Auditor
A resolution to reappoint the auditor, Nexia Smith & Williamson, will be proposed at the
forthcoming Annual General Meeting.
This report was approved by the Board on 21 August 2018.
P E Bailey
Company Secretary
Registered Number: 02014432
9
A U D I T O R S ’ R E P O R T
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FLETCHER KING PLC
Opinion
We have audited the financial statements of Fletcher King plc (the ‘Parent Company’) and its
subsidiaries (the ‘Group’) for the year ended 30 April 2018 which comprise the Consolidated
statement of comprehensive income, the Consolidated statement of financial position, the Company
statement of financial position, the Consolidated statement of cash flows, the Company statement
of cash flows, the Consolidated Statement of changes in equity, the Company statement of changes
in equity and the notes to the financial statements, including a summary of significant accounting
policies. 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.
In our opinion:
•
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 2018 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union;
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
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
•
•
•
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent
of the Group and Parent Company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK)
require us to report to you where:
•
the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties
that may cast significant doubt about the Group’s or the Parent Company’s ability to continue
to adopt the going concern basis of accounting for a period of at least twelve months from the
date when the financial statements are authorised for issue.
•
Key audit matters
We identified the key audit matters described below as those that were of most significance in
the audit of the financial statements of the current period. Key audit matters include the most
significant assessed risks of material misstatement, including those risks that had the greatest effect
on our overall audit strategy, the allocation of resources in the audit and the direction of the efforts
of the audit team.
1 0
A U D I T O R S ’ R E P O R T
In addressing these matters, we have performed the procedures below which were designed to
address the matters in the context of the financial statements as a whole and in forming our opinion
thereon. Consequently, we do not provide a separate opinion on these individual matters.
1) Valuation of available for sale investments - Group
Description of risk
The valuation of the Group’s available-for-sale investments in the Stratton House Investment
Property Syndicates (‘SHIPS’) is inherently subjective due to, among other factors, determining
the value of the underlying property within the SHIPS accounts (due to the individual nature of
each property, its location and the expected future rentals for that particular property), in order to
estimate the fair value of the Group’s available-for-sale investment in the SHIPS. As a result there
is a risk that the carrying value of the available-for-sale investments may be materially different to
their fair value.
Each of the SHIPS obtained a valuation for the property it held as at 30 April 2018. This was
carried out by Fletcher King Services Limited (‘FKS’), Chartered Surveyors, a subsidiary of the
parent company.
In determining the fair value of each available-for-sale investment, the FKS valuation of each
underlying property is reviewed and challenged by the Group’s Executive Committee and Audit
Committee. The Committees also consider property-specific information such as the property
attributes and conditions, current lease agreements and rental income. They apply assumptions for
tenure, letting, taxation and condition and repair of the property and sites, which are influenced by
comparable market transactions, to arrive at the final valuation for the Group’s share of the SHIPS
available-for-sale investment.
The Group’s accounting policy for available-for-sale investments is included within note 3.
Details of the Group’s valuation methodology and resulting valuation can be found in note 13.
How the matter was addressed in the audit
As part of our procedures we read the valuation reports for all the properties to understand the
valuation approach. We carried out procedures to verify the Group’s share of the SHIPS. We
carried out procedures to satisfy ourselves of the reasonableness of the inputs used by the group in
their valuations via the corroboration to external market data and sensitivity analysis on certain key
metrics and assumptions used by management.
2) Revenue recognition – Group
Description of risk
Revenue growth is a key performance indicator of the Group. Revenue and profit based targets and
expectations may place pressure on management to distort revenue recognition. This may result in
overstatement or deferral of revenues to assist in meeting current or future targets or expectations.
How the matter was addressed in the audit
In testing revenue recognition we documented and walked through the controls over revenue
recognition for the different services provided by the Group. We have performed detailed
substantive testing of a sample of revenue transactions, including agreement to sales invoice and
subsequent client payment to ensure that revenue had been recognised in the correct financial year
and in accordance with the Groups accounting policies and accounting standards.
1 1
A U D I T O R S ’ R E P O R T
Materiality
The materiality for the Group financial statements as a whole was set at £61,500. This has been
determined with reference to the benchmark of the Group’s total revenue, which we consider
to be one of the principal considerations for members of the Parent Company in assessing the
performance of the Group. Materiality represents 2% of the total revenue as presented on the face
of the Consolidated Statement of Comprehensive Income.
The materiality for the Parent Company financial statements as a whole was set at £49,000. This has
been determined with reference to the benchmark of the Parent Company’s net assets, as the Parent
Company exists only as a holding company for the Group, capped at the performance materiality
of the Group financial statements. Parent Company materiality represents 80% of Group financial
statement materiality.
An overview of the scope of our audit
Of the Group’s three reporting components, we subjected all components to audits for Group
reporting purposes.
The components within the scope of our work covered 100% of Group revenue, Group profit
before tax and Group net assets. The Group audit team visited one location in the UK covering the
three components that we subjected to audit.
Other information
The other information comprises the information included in the Annual Report and Accounts, other
than the financial statements and our auditor’s report thereon. The directors are responsible for the
other information. Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we
are required to determine whether there is a material misstatement in the financial statements or
a material misstatement of the other information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
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; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable
legal requirements.
•
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and their
environment obtained in the course of the audit, we have not identified material misstatements in
the strategic report or the directors’ report.
1 2
A U D I T O R S ’ R E P O R T
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:
•
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
the Parent Company financial statements are not in agreement with the accounting records and
returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
•
Responsibilities of directors
As explained more fully in the Statement of Directors’ Responsibilities set out on page 9, the
directors are responsible for the preparation of the financial statements and for being satisfied that
they give a true and fair view, and for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and
the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located
on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent Company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Jacqueline Oakes
Senior Statutory Auditor, for and on behalf of
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
25 Moorgate
London
EC2R 6AY
24 August 2018
1 3
FORM OF PROXY
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 2018
Notes
4 Revenue
6 Employee benefits expense
11 Depreciation expense
Other operating expenses
2018
£000
3,080
(1,609)
(18)
(1,181)
2017
£000
4,094
(2,129)
(34)
(1,214)
5 Operating profit
272
717
Income from investments
7 Finance income
Profit before taxation
8 Taxation
Profit and total comprehensive income for the year
attributable to equity shareholders
10 Basic earnings per share
10 Diluted earnings per share
The notes on pages 20 to 39 form part of the financial statements.
-
2
274
(65)
209
2.27p
2.25p
12
9
738
(159)
579
6.29p
6.29p
1 4
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 2018
Notes
Assets
Non-current assets
11 Property, plant and equipment
13 Available-for-sale investments
18 Deferred tax assets
Current assets
14 Trade and other receivables
15 Cash and cash equivalents
Total assets
Liabilities
Current liabilities
16 Trade and other payables
Current taxation liabilities
17 Other payables
Total liabilities
Shareholders’ equity
19 Share capital
Share premium
Retained earnings
Total shareholders’ equity
2018
£000
12
1,588
16
1,616
917
2,628
3,545
2017
£000
16
1,588
16
1,620
1,495
2,733
4,228
5,161
5,848
485
43
492
568
97
883
1,020
1,548
1,020
1,548
921
140
3,080
4,141
921
140
3,239
4,300
Total equity and liabilities
5,161
5,848
Approved by the Board on 21 August 2018 and signed on its behalf by
David Fletcher
Chairman
Registered Number: 02014432 England and Wales
The notes on pages 20 to 39 form part of the financial statements.
1 5
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 2018
Notes
Assets
Non-current assets
2018
£000
2017
£000
12 Investments in group undertakings
50
105
Current assets
14 Trade and other receivables
15 Cash and cash equivalents
Total assets
Liabilities
Current liabilities
16 Trade and other payables
17 Other payables
Total liabilities
Shareholders’ equity
19 Share capital
Share premium
Retained earnings
310
821
1,131
384
889
1,273
1,181
1,378
10
15
25
25
921
140
95
18
14
32
32
921
140
285
Total shareholders’ equity
1,156
1,346
Total equity and liabilities
1,181
1,378
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 £178,000 (2017: £47,000).
Approved by the Board on 21 August 2018 and signed on its behalf by
David Fletcher
Chairman
Registered Number: 02014432 England and Wales
The notes on pages 20 to 39 form part of the financial statements.
1 6
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 2018
Cash flows from operating activities
Profit before taxation from continuing operations
Adjustments for:
Depreciation expense
Income from investments
Finance income
Cash flows from operating activities before
movement in working capital
Decrease / (increase) in trade and other receivables
(Decrease) / increase in trade and other payables
2018
£000
274
18
-
(2)
290
578
(474)
2017
£000
738
34
(12)
(9)
751
(624)
579
Cash generated from operations
394
706
Taxation paid
(119)
(342)
Net cash flows from operating activities
275
364
Cash flows from investing activities
Purchase of investments
Purchase of fixed assets
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 decrease in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year (note 15)
The notes on pages 20 to 39 form part of the financial statements.
-
(14)
2
-
(12)
(368)
(368)
(105)
2,733
2,628
(314)
-
9
12
(293)
(184)
(184)
(113)
2,846
2,733
1 7
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 2018
Cash flows from operating activities
Profit before taxation
Adjustments for:
Adjustment of investment
Finance income
Dividends received from subsidiary undertakings
Cash flows from operating activities before
movement in working capital
Decrease in trade and other receivables
(Decrease) / increase in trade and other payables
2018
£000
178
55
(2)
(368)
(137)
74
(7)
2017
£000
47
-
(4)
(184)
(141)
66
18
Cash absorbed by operations
(70)
(57)
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 in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year (note 15)
The notes on pages 20 to 39 form part of the financial statements.
368
2
370
(368)
(368)
(68)
889
821
184
4
188
(184)
(184)
(53)
942
889
1 8
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 2018
CONSOLIDATED
Share
capital
£000
Share
premium
Retained
earnings
£000
£000
TOTAL
EQUITY
£000
Balance at 1 May 2016
921
140
2,844
3,905
Total comprehensive income for
the year
Equity dividends paid
-
-
-
-
579
(184)
579
(184)
Balance at 30 April 2017
921
140
3,239
4,300
Total comprehensive income for
the year
Equity dividends paid
-
-
-
-
209
(368)
209
(368)
Balance at 30 April 2018
921
140
3,080
4,141
COMPANY
Share
capital
£000
Share
premium
Retained
earnings
£000
£000
TOTAL
EQUITY
£000
Balance at 1 May 2016
921
140
422
1,483
Total comprehensive income for
the year
Equity dividends paid
-
-
-
-
47
(184)
47
(184)
Balance at 30 April 2016
921
140
285
1,346
Total comprehensive income for
the year
Equity dividends paid
-
-
-
-
178
(368)
178
(368)
Balance at 30 April 2017
921
140
95
1,156
1 9
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 AIM Market 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 21 August 2018. 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 and amended standards and interpretations
At the date of authorisation of these financial statements, the following new and amended standards
and interpretations are relevant to the Group. They are mandatory for accounting periods beginning
on or after 1 January 2018 and have not been early adopted:
IFRS 15 “Revenue from contracts with customers” – the standard establishes a principles based
approach for revenue recognition and is based on recognising revenue for obligations only when
they are satisfied and the control of goods or services is transferred. The implementation of IFRS
15 may result in some refinement in the timing of recognition of certain fee income, however the
impact of any refinement is not likely to be material.
IFRS 9 “Financial instruments” – this standard addresses the classification, measurement and
recognition of financial assets and financial liabilities. The application of IFRS 9 will not have a
material impact on the amounts reported in the Group’s consolidated financial statements.
IFRS 16 “Leases” – the standard addresses the classification, measurement and recognition of
leases with the objective of ensuring the lessees and lessors provide relevant information that
faithfully represents those transactions. The standard is expected to have a significant impact on the
consolidated financial statements of the Group. On adoption, lease agreements will give rise to both
a right of use asset and a lease liability for future lease payables. Depreciation of the right of use
will be recognised in the statement of comprehensive income on a straight-line basis, with interest
recognised on the lease liability. This will result in a change to the profile of the net charge taken
to the statement of comprehensive income over the life of the lease. These charges will replace the
lease costs currently charged to the statement of comprehensive income. The Group continues to
assess the full impact of IFRS 16 and the impact will greatly depend on the facts and circumstances
at the time of adoption and upon transition choices adopted. It is therefore not yet practicable to
provide a reliable estimate of the financial impact on the Group’s consolidated results.
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.
2 0
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
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 Company 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 Company controls another entity. Subsidiary entities are
consolidated from the date on which control is transferred to the Company 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.
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:-
Office furniture and fittings
Computer equipment
Short leasehold premium and improvements
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 statement of comprehensive income during the financial period in which they are
incurred.
Residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting 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 Statement of
Comprehensive Income.
2 1
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
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.
Financial instruments
Financial assets and liabilities are recognised on the Group’s statement of financial position 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 reporting 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 reliably measurable. Changes in fair value are recognised in
Other Comprehensive Income, 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
reclassified to Profit or Loss.
Available-for-sale financial assets are included in non-current assets unless management intends to
dispose of the investment within twelve months of the reporting 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 Statement of Comprehensive Income.
All financial assets are reviewed annually for impairment, with any losses reflected in the statement
of comprehensive income. Investment income is recognised in the Statement of Comprehensive
Income.
(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 six 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
2 2
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
specific financial liabilities and equity instruments are set out below.
(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 reporting 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 Statement of Comprehensive Income, 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 reporting 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.
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
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.
2 3
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 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. Benefits received and receivable as an incentive to
enter into an operating lease are spread on a straight line basis over the lease term.
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.
(i) 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 reporting date. The Directors have made provisions for
impairment where there is objective evidence that fair value is less than cost.
(ii) 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.
4. Segment Information – Group
All revenue was generated in the UK.
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 as resources are not
allocated between the individual General Services and therefore these do not meet the definition
of an operating segment in IFRS 8. 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.
2 4
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
5. Operating profit
Operating profit is stated after charging / (crediting):
Year ended 30 April
Operating lease rentals relating to property
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
6. Employee benefits expense
Year ended 30 April
Basic wages and salaries
Performance-based payments
Social security costs
Pension Costs
Other costs
Group
2018
£000
1,053
315
1,368
175
5
61
2017
£000
1,179
656
1,835
237
4
53
1,609
2,129
Group
Company
Company
2018
£000
295
18
(61)
10
23
4
9
2017
£000
287
34
(28)
6
19
4
9
2018
£000
2017
£000
75
-
75
10
-
-
85
75
-
75
10
-
-
85
2 5
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 average number of persons (including directors) employed by the Group was as follows:
Year ended 30 April
Management
Professional
Administration
Group
2018
No
Group
Company
Company
2017
No
2018
No
2017
No
4
6
6
16
4
7
7
18
4
-
-
4
4
-
-
4
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:
Directors’ emoluments
Salaries and benefits
Performance-related bonuses
2018
£000
492
209
701
2017
£000
479
617
1,096
Two executive directors received pension entitlement in the year of £419 each (2017: £279).
Highest paid director
Basic pay
Benefits
Performance related bonus
2 6
2018
£000
100
27
75
202
2017
£000
100
26
239
365
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 compensation
Aggregate compensation for key management, being the Directors of the Company, was as follows:-
2018
£000
2017
£000
Short term employee benefits
798
1,247
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
8. Taxation
Year ended 30 April
Current tax
UK corporation tax – current year
UK corporation tax – prior years
Deferred tax
UK deferred tax – current year
Total tax charged for the year
2018
£000
2017
£000
2
9
2018
£000
66
(1)
65
-
-
65
2017
£000
161
(4)
157
2
2
159
2 7
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 effective rate of UK corporation tax is calculated as the standard rate of UK corporation tax of
19%. 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 19% (2017:
19.9%)
Deferred tax assets not recognised
Expenses not deductible for tax purposes
Prior year adjustment
Other adjustments
Group total tax charge for the year
2018
£000
274
52
-
9
(1)
5
65
2017
£000
738
147
2
8
(4)
6
159
The main rate of UK corporation tax is 19% with effect from April 2017 and will be reduced to
17% from 1 April 2020, which was substantively enacted by the Finance Act 2016.
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 2017:
3.00p per share (2016: 1.00p)
Interim dividend for the year ended 30 April 2018:
1.00p per share (2017: 1.00p)
Proposed ordinary final dividend for the year ended
30 April 2018: 0.75p per share
2018
£000
2017
£000
92
92
184
276
92
368
69
2 8
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
10. Earnings per share
2018
No
2017
No
Weighted average number of shares for basic earnings per share
9,209,779
9,209,779
Share options
58,907
-
Weighted average number of shares for diluted earnings per share
9,268,686
9,209,779
Earnings for basic and diluted earnings per share
Basic earnings per share
Diluted earnings per share
£000
209
2.27p
2.25p
£000
579
6.29p
6.29p
As disclosed in note 19 the share options were granted in October 2016. No share options have been
granted in 2018. As at 30 April 2018 the share options have a dilutive impact on earnings per share.
As at 30 April 2017 the share options were antidilutive and as a result were not included within
the weighted average number of shares for the diluted earnings per share calculations for 2017.
2 9
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
Furniture,
fittings and
computers
Short
leasehold
premium and
improvements
£000
£000
Cost
At 1 May 2017
Additions
As at 30 April 2018
Depreciation
At 1 May 2017
Charge for the year
At 30 April 2018
Net book value at 30 April 2018
Cost
At 1 May 2016 and at 30 April 2017
Depreciation
At 1 May 2016
Charge for the year
At 30 April 2017
Net book value at 30 April 2017
181
-
181
175
6
181
-
181
168
7
175
6
12. Investments in Group undertakings - Company
Year ended 30 April
Shares in Group undertakings at cost:
At 1 May
Adjustment in respect of prior periods
At 30 April
276
14
290
266
12
278
12
276
239
27
266
10
2018
£000
105
(55)
50
Total
£000
457
14
471
441
18
459
12
457
407
34
441
16
2017
£000
105
-
105
The adjustment in respect of prior periods relates to the write down of an investment no longer
held. The adjustment has been made in 2018 rather than as a prior year restatement as it was
immaterial to the financial statements in the prior year.
3 0
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
As at 30 April 2018, 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.
Fletcher King Services Ltd also own 100% of the ordinary share capital of the following dormant
nominee companies in which the Company has no beneficial interest: Stratton One Limited,
Stratton Two Limited, Stratton 9 Limited, Stratton 10 Limited, Stratton 11 Limited and Stratton
12 Limited.
The registered office of all the above named companies is 61 Conduit Street, London, W1S 2GB.
13. Available-for-sale investments – Group
Year ended 30 April
At 1 May
Additions
Disposals
At 30 April
Classified as:
Available-for-sale investments
2018
£000
1,588
-
-
1,588
2017
£000
1,274
314
-
1,588
1,588
1,588
UK unlisted investments classified as available-for-sale
1,588
1,588
An amount of £973,000 (2017: £973,000) represents a syndicate interest in the Stratton House
Investment Property Syndicate (SHIPS 15). This investment is stated at fair value, which is equal
to the cost of the investment based on the underlying value of the Syndicate’s assets.
An amount of £615,000 (2017: £615,000) represents a syndicate interest in the Stratton House
Investment Property Syndicate (SHIPS 16). This investment is stated at fair value, which is equal
to the cost of the investment based on the underlying value of the Syndicate’s assets.
Available-for-sale investments are property assets that are undergoing refurbishment and are stated at fair
value as determined by professional valuers at Fletcher King Services Limited. Valuations are reviewed
and challenged by the Group’s Executive Committee and Audit Committee to verify that the fair value
represents the amount at which the assets could be exchanged by a knowledgeable willing buyer and
a knowledgeable willing seller in an arms-length transaction. Valuations are inherently subjective with
uncertainty with regard to future yields and the amounts which may ultimately be realised in respect of
any given property may differ from the valuations shown in the Statement of Financial Position. Under
IFRS7 Financial instruments: Disclosures and IFRS13 Fair value measurements, UK unlisted equity
3 1
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
investments are classified under the fair value hierarchy as Level 3.
14. Trade and other receivables
Group
Company
Company
Group
2018
£000
2017
£000
2018
£000
-
292
5
13
310
2017
£000
-
368
4
12
384
Trade receivables
Amount owed by group
undertakings
Other receivables
Prepayments and accrued income
786
1,425
-
6
125
917
-
8
62
1,495
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 objective evidence that
the Group will not 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 2018, trade receivables of £nil were impaired (2017: £nil).
As at 30 April 2018, trade receivables of £361,000 (2017: £764,000) were past due, but not
impaired. In the opinion of the Directors the Group is not exposed to any one material credit risk
and all trade receivables are assessed by the Group to be good quality. The ageing analysis of these
trade receivables is as follows:
Group
2018
£000
348
13
-
361
Group
Company
Company
2017
£000
751
13
-
764
2018
£000
2017
£000
-
-
-
-
-
-
-
-
Up to 3 months past due
3 to 6 months past due
Over 6 months past due
3 2
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
2018
£000
2,628
2,628
2017
£000
2,733
2,733
2018
£000
821
821
2017
£000
889
889
Cash and cash equivalents are all denominated in Sterling. The effective interest rate on Group
cash balances for the year ended 30 April 2018 was 0.08% (2017: 0.3%). 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
Group
2018
£000
139
346
485
Group
Company
Company
2017
£000
166
402
568
2018
£000
10
-
10
2017
£000
18
-
18
The carrying amounts of trade and other payables approximate their fair value.
3 3
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
17. Other creditors
Bonus accruals
Other accruals and deferred income
Group
2018
£000
177
315
492
Group
Company
Company
2017
£000
627
256
883
2018
£000
-
15
15
2017
£000
-
14
14
18. Deferred taxation (non-current) - Group
Year ended 30 April
Deferred taxation asset:
Temporary differences on provisions
At 1 May
Movement during year
At 30 April
2018
£000
2017
£000
16
-
16
18
(2)
16
3 4
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
19. Share capital and other reserves
30 April
2018
Number
30 April
2017
Number
30 April
2018
£000
30 April
2017
£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.
Details of movements in other reserves are set out in the Statement of Changes in Equity. A
description of each reserve is set out below.
The Share Premium reserve records the amount above the nominal value received for shares sold,
less transaction costs.
Retained earnings are the accumulated, undistributed profits of the Group or Company that have
been recognised through the Statement of Comprehensive Income.A total of 600,000 share options
were granted under the HMRC Enterprise Management Incentive Scheme in October 2016.
These share options have an exercise price of 48.5p and are exercisable between October 2021
and October 2026, being conditional on a 20% increase in the share price of the Company. The
Company had 600,000 share options outstanding at 30 April 2018 (2017: £600,000), including
those noted in Directors’ Remuneration in the Directors’ Report. Upon exercise of these share
options, the ordinary shares will rank pari possu with the existing Ordinary Shares.
The fair value of the 600,000 share options as at the grant date was £29,000 (2017: £29,000). The
fair value was calculated using the Block-Scholes model with the following key assumptions: (i)
volatility of 25% based on monthly historical volatility rates; (ii) risk free rate of 1%; (iii) dividend
yield of 5%; (iv) life of 5 years; and (v) share price at date of grant of 48.5p. The Company has not
recognised a charge for the year (2017: £nil) due to it being immaterial.
3 5
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
20. Capital Commitments
As at 30 April 2018 and 30 April 2017 neither the Group nor the Company had any capital
commitments.
21. Operating lease commitments and contingent liabilities
As at 30 April 2018 and 30 April 2017, neither the Group nor the Company had any contingent
liabilities.
As at 30 April 2018 and at 30 April 2017, the Group had outstanding commitments under non-
cancellable leases which fall due as follows:
Property leases
Within one year
In two to five years
2018
£000
314
944
2017
£000
236
1,258
1,258
1,494
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 notes to the accounts. During the year, the Company had funding transactions with
subsidiaries amounting to £76,000 (2017: £76,000)
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 15 Fund
SHIPS 16 Fund
Fees
Amount Due
2018
£000
86
40
68
2017
£000
82
36
58
2018
£000
13
17
68
2017
£000
48
10
14
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.
3 6
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
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 capital gains and
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
Group
2018
£000
2017
£000
Group
Company
Company
Trade receivables
Amount owed by group
undertakings
Other receivables
786
1,425
-
6
-
8
Cash and cash equivalents
2,628
2,733
2018
£000
-
292
5
821
2017
£000
-
368
4
889
Financial liabilities at
amortised cost
Trade payables
Bonus accruals
Other accruals
3,420
4,166
1,118
1,261
Group
2018
£000
139
177
315
631
Group
Company
Company
2017
£000
166
627
256
1,049
2018
£000
2017
£000
10
-
15
25
18
-
14
32
3 7
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
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
Company
Company
Group
2018
£000
786
2,628
6
Trade receivables
Cash and cash equivalents
Other receivables
2017
£000
1,425
2,733
8
3,420
4,166
2018
£000
-
821
5
826
2017
£000
-
889
4
893
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 2018, if LIBOR had increased by 0.5% with all other variables
held constant, post tax profit and equity for the Group would have been £13,000 (2017: £14,000)
higher, and for the Company £5,000 (2017: £5,000) 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 £14,000 (2017: £14,000) lower, and for the Company £5,000 (2017: £5,000) lower.
The Group’s cash and cash equivalents earned interest during the year at an average of 0.08%
(2017: 0.3%), and the Company’s cash and cash equivalents earned interest during the year at an
average of 0.08% (2017: 0.3%).
3 8
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
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
2018
£000
304
305
609
Group
Company
Company
2017
£000
229
820
1,049
2018
£000
25
-
25
2017
£000
32
-
32
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.
3 9
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 19 September 2018 at 9.00am for the following purposes:
1. To receive and adopt the Directors’ Reports and Accounts for the financial year ended 30 April 2018.
2. To declare a final dividend for the financial year ended 30 April 2018.
3. To re-elect R E G Goode as a Director, who retires by rotation in accordance with the Company’s Article
of Association and who offers himself for re-election.
4. To re-elect R A Dickman 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 2,762,934 of the unissued ordinary shares of 10p each of the Company with
a nominal value of £276,293.40, 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
to the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to an aggregate
nominal value of £184,195.58 (being 20% 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.
(b)
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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;
the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the
Company to be held in 2019 or eighteen months from the passing of this resolution, if earlier, unless such
authority is renewed prior to such time; and
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.
(c)
(d)
By order of the Board
P E Bailey
Secretary
Fletcher King Plc
21 August 2018
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 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
4 1
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
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 17 September 2018 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.
(e) As at 30 April 2018, 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 2018 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)
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
(ii) 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.
4 2
For use at the Annual General Meeting of the Fletcher King Plc to be held at 9.00 am on 19 September 2018
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 19
September 2018 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.
2.
3.
4.
5.
6.
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.
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, 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.
4 3
FORM OF PROXY Third fold and tuck in
BUSINESS REPLY SERVICE
License No. SWB 1002
Computershare Investor Services Plc
The Pavilions
Bridgewater Road
Bristol
BS99 6ZY
Computershare Investor Services Plc
PO Box 1075
The Pavilions
Bridgwater Road
Bristol
BS99 6ZY
1
Second fold
d
l
o
f
t
s
r
i
F
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