Fletcher King Plc
Annual Report and Accounts 2020
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
D J R Fletcher FRICS Chairman
P J Andrews MRICS Managing Director
R E G Goode FRICS Executive Director
R A Dickman FRICS Executive Director
P E Bailey ACA Finance Director
D H Stewart Non Executive
Secretary and Registered Office
P E Bailey ACA
61 Conduit Street, London W1S 2GB
Financial Advisers and Stockbrokers
Cairn Financial Advisers LLP
62 - 63 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: 0370 889 4095
Audit Committee
D H Stewart Chairman
D J R Fletcher
Remuneration Committee
D H Stewart, Chairman
D J R Fletcher
Company Number
02014432
Highlights
2
Chairman’s Statement
3-5
Corporate Governance
Statement
6-12
Strategic Report
13-16
Directors’ Report
17-20
Auditors’ Report
21-25
Accounts
26 -54
Notice of Meeting
55-59
Form of Proxy
60
Certificate Nº FS27825
1
H I G H L I G H T S
•
•
•
•
•
•
•
•
•
Revenue for the year of £2,616,000 (2019: £3,053,000)
Statutory profit before tax of £76,000 (2019: £282,000)
Adjusted profit before tax of £243,000 (2019: £282,000) *
Cash generated from operations of £917,000 (2019: £458,000 absorbed by operations)
Adjusted basic earnings per share of 2.20p (2019: 2.50p) (see note 11)
Final dividend of 0.50p per share proposed. An interim dividend of 1.00p per share was
paid and therefore the total ordinary dividend for the year will be 1.50p per share (2019:
1.75p)
Sale of interest in SHIPS 15 Syndicate realising profit of £99,000
Significant cash reserves: £3.6m as at 30 April 2020
Well positioned to withstand current crisis
*Adjusted results are before share based payment expenses and after other comprehensive income
(see note 5). All share options were surrendered in the year. However, the Company is required
under IFRS 2 to recognise a share based payment charge of £68,000 (2019: £nil). The Company
realised a profit of £99,000 on disposal of the SHIPS 15 syndicate investment. However, the
Company is required under IFRS 9 to include this as a fair value gain in other comprehensive
income.
F I N A N C I A L C A L E N D A R
Annual General Meeting
28 October 2020
Final Dividend
Payable 30 October 2020
Interim Dividend
To be announced in December 2020
Payable in January 2021
2
C H A I R M A N ’ S S TAT E M E N T
Results
Revenue for this year was £2,616,000 (2019: £3,053,000). Adjusted profit before tax (see note 5)
was £243,000 (2019: £282,000). Statutory profit before tax was £76,000 (2019: £282,000).
The Board considers the adjusted results to be an important measure of performance and to be more
representative of performance for the year than the statutory results (which have been prepared in
accordance with International Financial Reporting Standards). Adjusted results include the profit
on disposal of the SHIPS 15 syndicate interest for £99,000 and exclude a share based payment
expense of £68,000 (2019: £nil) that is required to be recognised in the accounts even though all
outstanding EMI options were surrendered in the year.
Dividend
The Board is proposing a final dividend of 0.50p per share. The final dividend is subject to
shareholder approval at the AGM and will be paid on 30 October 2020 to shareholders on the
register at the close of business on 2 October 2020. With the interim dividend of 1.00p per share
(2019: 1.00p per share) the dividend for this year will amount to 1.50p per share (2019: 1.75p per
share).
The Commercial Property Market
The year to 30 April 2020 was a difficult one in the industry with both Brexit and political
uncertainties adversely affecting the market.
Generally tenants in all sectors were deferring decisions and whilst there was reasonable demand
for offices and industrials, the retail sector continued its decline. There were plenty of funds
available for investment but buyers remained cautious.
After the General Election and the return of a Conservative Government with the largest majority
for decades, the market began to move forward and there was enthusiasm from both investors and
tenants to make decisions and plan for the future. For a few busy weeks the skies looked blue, and
then there was the emergence of Covid-19 and lockdown.
Since then the commercial property market has been in a state of flux. Retail continues to suffer
with no end in sight yet to its downward spiral. There is little leasing activity and with an ever
increasing number of retailers facing the prospect of bankruptcy, both rental and capital values
are continuing to fall. However, since lock-down on-line retailing has grown strongly and now
represents over 30% of all purchases but this, of course, is further hastening the potential demise
of the high street.
Within the commercial property market, conversely the industrial property market is very buoyant,
driven in large part from demand from online sales and a lack of good quality stock. Both rental
and Capital values are continuing to grow and there is strong demand from institutional investors,
property companies and high net worth individuals.
The office lettings and capital markets remain slow. Even before Covid many tenants were
assessing their future work practices by implementing more hot desking and reducing their space
requirements. We believe that lockdown has accelerated that process by as much as five years.
3
C H A I R M A N ’ S S TAT E M E N T
Office workers need to get back to work in the big city centres for the survival of their infrastructure
of shops, restaurants, coffee shops, dry cleaners etc. However there remains a fear factor for
commuters using public transport and the safety issue may well not go away until there is a vaccine.
We believe the office market will return strongly but the timing is impossible to predict.
Business Overview
With challenging market conditions, it proved to be a difficult trading period with revenue lower than
the previous financial year. This was compensated by increased income from SHIPS investments
and overall adjusted profit for the Group was only slightly lower than last year.
The Investment team transacted a similar number of deals to last year but the average deal size, and
consequential fee, was significantly lower.
The volume of bank valuations was also down and the Valuation Office continues to delay settling
rating appeals.
The Property Management team strengthened their portfolio of client instructions with additional
Fund Management mandates and this provides valuable recurring revenue for the Company.
The SHIPS investment in Sekforde Street was sold during the year realising a profit for investors
in the fund. We continue to hold an investment in the SHIPS property in Botolph Lane where there
remain two vacant floors.
All employees have been working from home since 17 March 2020 and the health and wellbeing
of employees is of paramount importance. The Company has invested in systems and processes to
support remote working and all teams have been functioning well in the new environment.
Outlook
Whilst there is huge uncertainty caused by the Covid-19 virus, it seems increasingly likely that the
wider economic impact will be severe and prolonged. The UK government has taken unprecedented
measures to support businesses during the initial lockdown phase, but as support measures are
wound down and businesses are forced to make tough decisions, the longer term economic impact
will be brought more sharply into focus.
It is very difficult to accurately assess our future trading performance in the current market
conditions. It will be extremely challenging to remain profitable and it is very likely that the
Company will make a loss in the first half of its financial year.
Since the year end, we have renewed our Professional Indemnity cover and been faced with a severe
contraction in the market for such insurance, particularly with regard to our property valuation
work. The premium has increased by just over £200,000 for the financial year.
We expect Fund and Property management mandates to continue to provide stable and recurring
fee income. We are fortunate that the majority of the portfolios that we manage are focussed on
industrial and office sectors with much lower exposure to retail, leisure and hospitality.
4
C H A I R M A N ’ S S TAT E M E N T
Transaction based fees such as investment deals and bank valuations rely on activity in the market
and fees have been materially lower than normal since the commencement of lockdown. The
investment team has an encouraging pipeline of instructions and potential deals but there is huge
uncertainty around the timing or likelihood of completions. It remains to be seen how strongly
activity returns to the market but it is likely that transaction based fees for the year will be materially
lower than would otherwise be expected.
The Company is in a good position to withstand the current crisis and continues to have a strong
balance sheet, with cash reserves of £3.6m as at 30 April 2020. The Company has not drawn on any
of the support measures offered by the government in response to Covid-19.
Working closely with our loyal clients and experienced colleagues we have an established and
stable partnership to take us through these difficult and challenging times.
DAVID FLETCHER
CHAIRMAN
28 September 2020
5
C O R P O R AT E G O V E R N A N C E S TAT E M E N T
All members of the Board believe strongly in the value and importance of good corporate governance
and in our accountability to all stakeholders including shareholders, clients and employees. In
order to meet the requirements of AIM Rule 26 we have chosen to follow the QCA Corporate
Governance Code 2018.
As Chairman, I lead the Board and take ultimate responsibility for ensuring that there is absolute
clarity in our strategy and our quantitative and qualitative objectives and the collective and
individual responsibilities of the Directors.
Importantly my responsibilities include ensuring that the Company maintains its strong values of
delivery, integrity, trust, client service and good corporate governance and in so doing delivers
value for shareholders over the medium to long term.
In the following statement we give a summary of how our Board and its committees operate and
how we are applying the ten principles of the QCA Code.
Principle 1: Establish a strategy and business model which promote long-term value for
shareholders
The Group provides a range of property services and expert advice throughout the United
Kingdom, including property fund management, property asset management, rating, valuations
and investment broking. We seek to always be a company that values clarity, consistency, delivery
and integrity.
Although we face significant competition in all of our activities, we believe that by delivering
outstanding services managed or overseen personally by experienced Directors and staff who are
readily available to clients and by doing so in a flexible and non-hierarchical manner we will
continue to maintain existing client relationships and attract new clients who like our personal and
non-standardised approach.
The Group’s Key Performance indicators and Principal Risks and Uncertainties are set out in the
Strategic Report of the Annual Report and Accounts on pages 13 to 15.
Principle 2: Seek to understand and meet shareholder needs and expectations
The Board attaches great importance to providing shareholders with clear and transparent
information on the Company’s strategy, activities and financial position. Details of all shareholder
communications are provided on the Company website. Our strategy and approach have remained
consistent over many years. The Board seeks to present a fair and balanced assessment of the
Company’s financial position and prospects in its Annual and Interim Reports. Comments from
shareholders on the quality and content of the reports and areas for improvement are always
welcomed.
The Annual General Meeting (“AGM”) provides a forum for discussion between the Board and
Shareholders. Outside of AGMs, the Chairman is available by arrangement for discussions with
Shareholders. The Company’s Senior Independent director, David Stewart, is also available for
meetings and discussions and the Company Secretary can also be contacted on shareholder and
6
C O R P O R AT E G O V E R N A N C E S TAT E M E N T
investor relations issues and matters of governance.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications
for long-term success
The Board’s communication with shareholders and how it seeks their feedback is explained under
Principle 2 above.
The majority of the Company’s clients have been engaged for many years and some since
inception. A close partnering relationship is developed with clients where we can fully understand
their thoughts and the strategy they have for their business and property portfolios. Our business
objective is to ensure that our client’s assets perform to agreed criteria which are clear, unequivocal
and understandable.
Our philosophy is to deliver a highly personal service with directors involved at all stages.
Continuity of personnel is paramount.
The Company operates to Quality Assurance (“QA”) standards and holds ISO9001:2015
certification. The QA process includes annual external audit of internal processes and includes
feedback from clients. Feedback from clients has been consistently positive.
Our ability to fulfil client services and develop strong client relationships depends on having
talented and motivated staff who enjoy working for the company. Over 60% of employees have
been with the Company for 8 years or more. Annual reviews and regular two-way communication
with staff provide opportunities for feedback leading to enhancement of management practices and
staff incentives.
As a Company we are always cognisant of our social responsibilities and wish to be and be seen to
be a good employer, a reputable company and a responsible member of Society.
Principle 4: Embed effective risk management, considering both opportunities and threats,
throughout the organisation
The Company’s key risks and uncertainties are set out in the Strategic Report and the main risks
arising from the Company’s financial instruments and how these are managed by the Board are set
out in note 24 to the Financial Statements.
The Company reviews Principal Risks and Uncertainties on an ongoing basis and maintains a Risk
Register which is reviewed at least annually by the Board.
The Board is very focussed on financial and operational risks, including the importance of
protecting client money, data security and protecting the company against cyber fraud.
Principle 5: Maintain the Board as a well-functioning, balanced team led by the Chair
The members of the Board have a collective responsibility and legal obligation to promote
the interests of the Group, and are collectively responsible for defining corporate governance
arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance
7
C O R P O R AT E G O V E R N A N C E S TAT E M E N T
lies with the Chair of the Board.
The Board consists of six Directors of which five are Executive Directors and one an Independent
Non-Executive Director. As the company grows the Board will consider adding an additional
independent Non-Executive Director. However, for now the Board considers its composition
appropriate given the size of the Company, its revenues and profitability.
The Board is supported by two committees: audit and remuneration. The Board does not consider
that it is of a size at present to require a separate nominations committee, and all members of the
Board are involved in the appointment of new Directors.
Director biographies for the current Directors are shown in the Investor Relations section of the
Company website.
The Board sets the Company’s strategic aims and ensures that necessary resources are in place in
order for the Company to meet its objectives. All members of the Board take collective responsibility
for the performance of the Company and all decisions are taken in the interests of the Company.
Whilst the Board has delegated the normal operational management of the Company to the
Executive Directors and other senior management, there are detailed specific matters subject to
decision by the Board of Directors. These include acquisitions and disposals, and investments
and projects of a capital nature. The Non-Executive Director has a particular responsibility to
challenge constructively the strategy proposed by the Chairman and Executive Directors; to
scrutinise and challenge performance; to ensure appropriate remuneration and that succession
planning arrangements are in place in relation to Executive Directors and other senior members
of the management team. The Chairman holds informal meetings with the Non-executive Director
without other Executives present. The senior Executives enjoy open access to the Non-executive
Director with or without the Chairman being present.
The Board of Directors meets at least four times a year to review the performance of the Group.
There are clearly defined lines of responsibility and delegation of authority from the Board to the
Executive Committee, which meets on a monthly basis to review and make decisions on business,
financial and operational matters of the subsidiary companies.
The Chairman is responsible for ensuring that, to inform decision-making, Directors receive
accurate, sufficient and timely information. The Company Secretary compiles the board and
Committee papers which are circulated to Directors prior to meetings.
Controls and systems
The Board is responsible for ensuring that a sound system of internal control exists to safeguard
shareholders’ interests and the Group’s assets. It is responsible for the regular review of the
effectiveness of the systems of internal control. Internal controls are designed to manage rather
than eliminate risk and therefore even the most effective system cannot provide assurance that each
and every risk, present and future, has been addressed.
Independence of the Directors
The independent Non-Executive Director of the Company, David Stewart, was appointed to the
8
C O R P O R AT E G O V E R N A N C E S TAT E M E N T
Board on 1 July 2002. In the Board’s opinion, based on the consistent independent oversight and
constructive challenge of the Executive Directors that has been demonstrated since appointment,
he is considered to be independent, despite the length of time that he has been a member of the
Board, taking into account his experience, skills, and personal qualities
Directors’ time commitments
Executive Directors are employed under full-time service agreements. Non-Executive Directors
are required to attend 4 board meetings per year and to be available at other times as required for
face-to-face and telephone meetings with the executive team and investors.
Audit and Remuneration Committees
Audit and Remuneration committees, each comprised of the Non-Executive Director, David
Stewart, and the Chairman, David Fletcher. The Audit Committee meets at least twice a year and
is responsible for ensuring that the financial performance, position and prospects of the Group
are properly monitored and reported on, meeting the auditors and reviewing their reports relating
to accounts and internal controls. The Remuneration Committee reviews the performance of
Executive Directors and sets the scale and structure of their remuneration and the terms of their
service agreements with due regard to the interests of shareholders. The Remuneration Committee
also determines the payment of bonuses to Executive Directors and the allocation of share options
to employees.
Board and Committees’ attendance
The Board met on four occasions and the Audit and Remuneration Committees met on two
occasions during the last year. There was full attendance by all representative members at each
meeting.
Principle 6: Ensure that between them the directors have the necessary up-to-date experience,
skills and capabilities
The Board as a whole is confident that it has a strong team containing the necessary mix and
balance of experience, skills, personal qualities and capabilities to deliver the Company’s strategy
for the benefit of shareholders over the medium to long-term. Directors attend seminars and other
regulatory, trade and capital markets events to ensure that their knowledge remains current.
The Board will continue to review the collective resources of its Directors and whether further
resource and skills may be required to deliver on the Company’s strategic objectives. The Board
has, between its members, a broad balance of skills, experience and personal qualities to operate
the Company in areas including property, industry, financial and governance.
Principle 7: Evaluate board performance based on clear relevant objectives, seeking continuous
improvement
An annual assessment of the effectiveness of the Board is carried out through an internal questionnaire
process. The outcomes and principal findings are reported to the Board for consideration by the
Company Secretary with recommendations as to any action that might be taken and changes that
could be made.
9
C O R P O R AT E G O V E R N A N C E S TAT E M E N T
The review considers effectiveness in a number of areas including general supervision and
oversight, business risks and trends, succession and related matters, communications, ethics and
compliance, corporate governance and individual contribution.
As a result of the evaluation, the Board considers the performance of each Director to be effective
and concluded that both the Board and its Committees continue to provide effective leadership and
exert the required levels of governance and control.
The most recent review has reconfirmed the Board’s awareness of the need to ensure that effective
succession plans are in place at Board and Executive Committee level. This will be a key area of
focus for the Board.
The Board currently considers that the use of external consultants to facilitate the Board evaluation
process is unlikely to be of significant benefit to the process, although the option of doing so is kept
under review.
Principle 8: Promote a corporate culture that is based on ethical values and behaviours
The Board believes that the promotion of a corporate culture based on sound ethical values and
behaviours is essential to maximise shareholder value. The Company maintains and annually
reviews a Staff Handbook and Quality Assurance manual that includes clear guidance on what
is expected of every employee and officer of the company. Adherence of these standards is a key
factor in the evaluation of performance within the company, including during annual performance
reviews.
Principle 9: Maintain governance structures and processes that are fit for purpose and support
good decision making by the Board
The Board provides strategic leadership for the Group and operates within the scope of a robust
corporate governance framework. Its purpose is to ensure the delivery of long-term shareholder
value, which involves setting the culture, values and practices that operate throughout the business,
and defining the strategic goals that the Group implements in its business plans. The Board defines
a series of matters reserved for its decision and has approved terms of reference for its Audit
and Remuneration Committees to which certain responsibilities are delegated. The chair of each
committee reports to the board on the activities of that committee.
The Audit Committee monitors the integrity of financial statements, oversees risk management
and control, monitors the effectiveness of the internal audit function and reviews external auditor
independence.
The Remuneration Committee sets and reviews the compensation of Executive Directors including
the setting of targets and performance frameworks for cash and share-based awards.
The Executive Committee, consisting of the Executive Directors and Company Secretary, operates
as a management committee which reviews operational matters and performance of the business,
and is responsible for significant management decisions while delegating other operational matters
to individual managers within the business.
1 0
C O R P O R AT E G O V E R N A N C E S TAT E M E N T
The Chairman has overall responsibility for corporate governance and in promoting high standards
throughout the Group. He leads and chairs the Board, ensuring that committees are properly
structured and operate with appropriate terms of reference, ensures that performance of individual
Directors, the Board and its committees are reviewed on a regular basis, leads in the development
of strategy and setting objectives, and oversees communication between the Group and its
shareholders.
The Executive Directors are responsible for implementing and delivering the strategy and
operational decisions agreed by the Board, making operational and financial decisions required in
the day-to-day operation of the Group, providing executive leadership to managers, championing
the Group’s core values and promoting talent management.
The Independent Non-Executive Director contributes independent thinking and judgement through
the application of external experience and knowledge, scrutinises the performance of management,
provides constructive challenge to the Executive Directors and ensures that the Group is operating
within the governance and risk framework approved by the Board.
The Company Secretary is responsible for providing clear and timely information flow to the Board
and its committees and supports the board on matters of corporate governance and risk.
The Board has approved the adoption of the QCA Code as its governance framework against which
this statement has been prepared and will monitor the suitability of this Code on an annual basis
and revise its governance framework as appropriate as the Group evolves.
Principle 10: Communicate how the company is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders
The Board is committed to maintaining an open dialogue with shareholders. Communication with
shareholders is co-ordinated by the Chairman and Company Secretary.
The Board believes that the Annual Report and Accounts, and the Interim Report published at the
half-year, play an important part in presenting all shareholders with an assessment of the Group’s
position and prospects. All reports and press releases are published on the Group’s website.
The AGM is the principal opportunity for private shareholders to meet and discuss the Group’s
business with the Directors. There is an open question and answer session during which shareholders
may ask questions both about the resolutions being proposed and the business in general. The
Directors are also available after the meeting for an informal discussion with shareholders.
In addition to the investor relations activities described above, the following Audit and Remuneration
committee reports are provided:
Audit Committee Report
During the year, the Audit Committee has continued to focus on the effectiveness of controls
throughout the Group.
The Audit Committee consists of David Stewart, Chair, and David Fletcher. The committee met
11
C O R P O R AT E G O V E R N A N C E S TAT E M E N T
twice in the year, and the external auditor and Company Secretary attended these meetings.
Consideration was given to the auditor’s pre- and post-audit reports and these provided opportunities
to review the accounting policies, internal control and the financial information contained in both
the annual and interim reports.
Remuneration Committee Report
The remit of the Remuneration Committee is to determine the framework, policy and level of
remuneration, and to make recommendations to the Board on the remuneration of Executive
Directors. In addition, the Committee oversees the creation and implementation of all-employee
share plans. The Remuneration Committee consists of David Stewart, chair, and David Fletcher.
The committee met twice in the year.
David Fletcher
Chairman
1 2
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 2020 (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:
2020
£2,616,000
Revenue
£76,000
Profit before taxation
£243,000
Adjusted profit before taxation*
£135,000
Total comprehensive income
£203,000
Adjusted total comprehensive income*
0.39p
Basic earnings per share
Adjusted basic earnings per share (note 11) 2.20p
2019
£3,053,000
£282,000
£282,000
£230,000
£230,000
2.50p
2.50p
*Adjusted KPIs reflect adding back a share based payment expense of £68,000 incurred in respect
of share options that were surrendered in the year, and also the realised gain in the year on disposal
of the interest in the SHIPS 15 syndicate which is required to be shown in the Statement of
Comprehensive Income as other comprehensive income (see note 5).
Reduced revenue from property services in the year was offset by income from SHIPS investments,
including profits on the sale of the Group’s interest in the SHIPS 15 syndicate. Overall total
comprehensive income (after adding back share based payment expenses) was £203,000 compared
with £230,000 in the prior year.
Net cash generated from operating activities in the year amounted to £917,000 (2019: cash outflow
of £458,000) and after investing activities and dividend payments the cash balance increased
by £1,623,000 to £3,624,000. The Group continued to look for opportunities to participate in
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.
1 3
S T R AT E G I C R E P O R T
(i) Covid-19
Covid-19 may have a significant impact on transactional activity but it is difficult to predict this
impact accurately in a dynamic market. The welfare of our staff and clients is paramount and we
have implemented risk management measures consistent with government guidelines. In addition,
we have business continuity plans to enable us to respond quickly to mitigate the impact. We will
closely monitor the impacts of the virus as the wider economic impact becomes clearer.
(ii) 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 Covid-19 virus and Brexit
uncertainties have 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.
(iii) Management of Growth
Whilst revenues have contracted recently, the Group aims to grow operations organically and
potentially inorganically. 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 potential business growth.
(iv) 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
(v) Financial Risk Management
Details of the Group’s approach to financial risk management are disclosed in detail in note 24 to
the financial statements.
(vi) 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
1 4
S T R AT E G I C R E P O R T
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.
Engaging with our stakeholders (Companies Act S.172 disclosures)
The following disclosure is made in line with the Companies (Miscellaneous Reporting) Regulations
2018 which requires Companies to report on employee and stakeholder engagement. The Board
remains committed to further strengthening its dialogue with employees and the Company’s wider
stakeholder group. The Board recognises that engagement is fundamental to the success of the
Company and, in performing its duties under s172, considers the views of key stakeholders in its
decision-making, recognising that they are central to the long-term prospects of the Company.
Clients: Our clients are key to the success our business. We are in continuous contact with our
clients, to understand their requirements, to listen to their feedback on our service levels and
to understand their expectations in terms of the development of our service offering. It is the
responsibility of dedicated relationship managers to gain a deep understanding of our clients’
businesses through regular dialogue and to share this knowledge with the wider client service
teams. The quality of our service performance is regularly assessed to help us better understand
how we are managing the relationship and to provide the added value that our clients expect.
Positive feedback from clients each year supports the Company’s continued certification under the
ISO 9001 Quality Management system.
Our People: Our people are our most valuable asset. We firmly believe that our people are
key to delivering excellent service to our clients and achieving our objectives. Our long-standing
philosophy is founded on the premise that staff in our sector are motivated through incentive and
performance based (and, therefore, variable) remuneration. We believe that this approach best
aligns Shareholders’ and management’s interests and incentivises superior performance and the
creation of long-term Shareholder value. We are committed to providing a working environment
that promotes employee’s wellbeing, facilitates high performance, and acts in their best interests.
We continue to monitor and develop our approach to employee engagement in light of emerging
best practice. The Company supports employees with practical training and a route to RICS
professional qualifications. Following the Covid-19 virus outbreak, all employees have been
working from home and the Company has maintained employee engagement through video
conferencing facilities and other complementary channels. The Company has also introduced
an Employee Assistance Programme to support the wellbeing of employees, particularly mental
health. During the year, directors and employees agreed to surrender all outstanding share options
with a view to constructing a suitable incentive structure in the future to attract and motivate
employees and directors of the Company to drive the business forward.
Community and environment: We are mindful of the impact of Company operations on
both the community and the environment, and expect employees and suppliers to meet exacting
standards in everyday business conduct.
1 5
S T R AT E G I C R E P O R T
Shareholders: We believe that engaging with our Shareholders and encouraging an open
dialogue helps to ensure mutual understanding. Delivering for our Shareholders ensures the
business continues to be successful in the long term and can therefore continue to deliver for all
our stakeholders. The directors provide information for shareholders through the AGM, the annual
report, the interim report, and public announcements made through RNS. The Board is available at
the AGM to meet and engage with Shareholders. The Chairman and other Senior Directors are also
available to engage with Shareholders at all other times as required. The last AGM took place on
18 September 2019. A number of shareholders attended and engaged in an open dialogue with the
Board. Whilst the next AGM is likely to have restricted access due to Covid-19 mitigation measures,
we welcome shareholder engagement through email, telephone and other communication channels.
Suppliers: In this area our primary focus is on developing strong relationships with our property
management supply partners to help us to provide consistent standards and the high quality services
required by clients across our property management business.
During the year the Board has, amongst other things, considered and evaluated a number of
potential growth opportunities with a view to strengthening the financial position and operational
capability of the Company. It has also taken measures to position the Company for management
succession, including promoting Paul Andrews to the position of Managing Director and Peter
Bailey to the position of Finance Director.
Section 172(1) Statement
The Board of Directors of Fletcher King Plc consider, both individually and together, that they have
acted in the way they consider, in good faith, would be most likely to promote the success of the
Company for the benefit of its members as a whole. In doing this, the Directors have had regard
to the stakeholders and amongst other matters to those set out in s172(1) (a-f) of the Act) in the
decisions taken during the year ended 30 April 2020:
•
•
•
•
•
•
likely consequences of any decisions in the long term;
interests of the Company’s employees;
need to foster the Company’s business relationships with suppliers, clients and others;
impact of the Company’s operations on the community and environment;
Company’s reputation for high standards of business conduct; and
need to act fairly as between members of the Company.
Approved by the board of Directors
and signed on behalf of the board
David Fletcher
28 September 2020
1 6
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 2020.
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 24. The total comprehensive
income the year after taxation is £135,000 (2019: £230,000). The Directors recommend the payment
of an ordinary final dividend of 0.50p per share (2019: 0.75p). An interim dividend of 1.00p per
share (2019: 1.00p per share) has already been paid to shareholders.
Income from the Group’s net bank interest amounted to £14,000 (2019: £7,000).
Additional information on performance for the year is shown in the Chairman’s Statement and the
Strategic Report and also in the profit reconciliation (see note 5).
Future developments
Future developments for the business are covered in the Chairman’s Statement on pages 3 to 5.
Capital and equity interests
All share options were surrendered in the year and there were no outstanding options as at 30 April
2020. The total number of ordinary shares in issue at 30 April 2020 was 9.2 million (2019: 9.2
million).
Cash flow and liquidity
Net cash inflow from operating activities amounted to £917,000 (2019: outflow of £458,000)
which, after allowing for cash flows including dividends, capital expenditure and investment sales,
resulted in a net increase in cash balances of £1,623,000 (2019: decrease of £627,000).
At 30 April 2020, the Group’s cash at bank and on short term deposit amounted to £3.62 million
(2019: £2.00 million). This was deposited with leading banks.
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 24 to the accounts.
Directors
The current Directors of the Company are set out below.
D J R Fletcher Chairman
P J Andrews
R E G Goode
R A Dickman
P E Bailey
D H Stewart
Managing Director
Executive Director
Executive Director
Finance Director
Non-Executive Director
1 7
D I R E C T O R S ’ R E P O R T
D J R Fletcher (FRICS), is a founding partner and Chairman of the Company. He has extensive
experience in property and fund management, advising clients such as the pension funds of IBM,
Debenhams, BHS, Allied Domecq and the Industrial Training Boards as well as the Stratton House
Investment Property Syndicates and other clients.
R E G Goode FRICS, has been jointly responsible for running the Company since 2000 until
handing over Managing Director responsibilities to Paul Andrews on 1 May 2020. 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.
P J Andrews (MRICS) heads up the Asset Management department and he has worked at Fletcher
King since 2007. He was appointed a Director in May 2016 and appointed Managing Director on
1 May 2020.
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.
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 Country NatWest Limited.
P E Bailey (ACA) is Finance Director and has been Company Secretary at Fletcher King since
2008. He was appointed a Director in November 2019.
D J R Fletcher and P E Bailey retire by rotation in accordance with Company convention, and being
eligible offer themselves for re-election at the forthcoming Annual General Meeting.
Directors’ Remuneration
D J R Fletcher
R E G Goode
R A Dickman
P J Andrews
P E Bailey*
D H Stewart
Salary
Benefits
Bonus
Pension
£000
£000
£000
£000
100
74
100
100
45
15
434
33
22
18
14
2
-
89
27
27
27
27
14
4
126
-
-
1
1
1
-
3
2020
£000
160
126
146
142
62
19
625
2019
£000
198
193
139
182
-
19
731
*Remuneration for P E Bailey is pro-rata from date of appointment on 1 November 2019.
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.
1 8
D I R E C T O R S ’ R E P O R T
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 18 September 2019 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 2021. 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, the
Corporate Governance Statement, 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,
1 9
D I R E C T O R S ’ R E P O R T
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 whether applicable IFRSs as adopted by the European Union have been followed subject to
any material departure disclosed and explained in the financial statements; 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 28 September 2020.
P E Bailey
Company Secretary
Registered Number: 02014432
2 0
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 2020 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 2020 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
SME 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.
2 1
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 financial asset investments - Group
Description of risk
The valuation of the Group’s financial asset investment in the Stratton House Investment Property
Syndicate (‘SHIPS 16’) is inherently subjective due to, amongst other factors, determining the
value of the underlying property within the SHIPS 16 accounts (due to the individual nature of
the property, its location and the expected future rentals for that particular property), in order to
estimate the fair value of the Group’s financial asset investment in the SHIPS 16. As a result, there
is a risk that the carrying value of the financial asset investment may be materially different to its
fair value.
The Directors of the Group prepare a fair value paper each year setting out the methodology adopted
in the fair value calculation and the underlying assumptions and inputs used in the valuation. For
the SHIPS 16 investment the Directors obtained a valuation for the underlying property held as
at 30 April 2020. The property valuation was carried out by employees of Fletcher King Services
Limited (‘FKS’), Chartered Surveyors, a subsidiary of the Parent Company.
The valuers have included a material valuation uncertainty clause in their property valuation reports
as at 30 April 2020. This clause highlights that less certainty, and consequently a higher degree of
caution, should be attached to the valuation as a result of the COVID-19 pandemic. This represents
a significant estimation uncertainty in relation to the valuation of investment properties.
In determining the fair value of financial asset investment, the FKS valuation specialists apply
assumptions for tenure, letting 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 16 financial asset investment.
The Group’s accounting policy for financial asset investments is included within note 3. Details of
the Group’s valuation methodology and resulting valuation can be found in note 14.
How the matter was addressed in the audit
As part of our procedures we read the Directors fair value paper and the underlying valuation
report for the property within SHIPS 16 to understand the valuation approach. We carried out
procedures to verify the Group’s share of the SHIPS 16. We considered the appropriateness of
the basis of valuation and consulted with internal valuation specialists. We carried out procedures
to satisfy ourselves of the reasonableness of the inputs used by the Directors in their valuations
via the corroboration to external market data and sensitivity analysis on certain key metrics and
assumptions used by management and also agreed rents to new signed agreements. We considered
the impact of the property valuation including a material uncertainty and also considered the
adequacy of disclosures made in note 14.
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.
2 2
A U D I T O R S ’ R E P O R T
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 performed detailed substantive
testing of:
• a sample of revenue transactions selected from the accounting records,
including agreement to sales contract and invoice and subsequent client payment to
ensure that revenue exists;
• a sample of revenue transactions spanning the year end to confirm that
revenue has been recognised in the correct accounting period, including recalculation
of accrued and deferred income amounts; and
• a sample of sales invoices raised in the year, as selected from invoice
listings maintained by the relevant departments, including agreement to the accounting
records and subsequent payment to ensure that revenue is complete.
During the above testing we assessed whether revenue had been recognised in accordance with the
Groups accounting policies and accounting standards.
Materiality
The materiality for the Group financial statements as a whole was set at £53,000. 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 £43,000. This
has been determined with reference to the benchmark of the Parent Company’s total assets, as the
Parent Company exists only as a holding company for the Group. Materiality represents 3% of the
Company’s total assets as presented on the face of the Company Statement of Financial Position.
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. Remote auditing was performed in response to the COVID-19 pandemic,
the client’s offices were last visited in June 2019 by the audit team.
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.
2 3
A U D I T O R S ’ R E P O R T
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.
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 19, 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.
2 4
A U D I T O R S ’ R E P O R T
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
28 September 2020
2 5
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 2020
Notes
2020
£000
2019
£000
4 Revenue
2,616
3,053
7 Employee benefits expense
12 Depreciation expense
Other operating expenses
20
Share based payment expense
Other operating income
8 Investment income
8 Finance income
8 Finance expense
Profit before taxation
9 Taxation
Profit for the year
(1,441)
(1,648)
(278)
(910)
(68)
(3)
(1,218)
-
(2,697)
(2,869)
57
113
14
(27)
76
(40)
36
91
-
7
-
282
(52)
230
Other comprehensive income
Fair value gain on financial assets through other
comprehensive income
99
-
Total comprehensive income for the year
attributable to equity shareholders
135
230
Earnings per share
11 Basic
11 Diluted
Adjusted earnings per share
11 Basic
11 Diluted
0.39p
0.39p
2.20p
2.20p
2.50p
2.50p
2.50p
2.50p
The notes on pages 32 to 54 form part of the financial statements.
2 6
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 2020
Notes
Assets
Non-current assets
12 Property, plant and equipment
12 Right of use asset
14 Financial assets
18 Deferred tax assets
Current assets
15 Trade and other receivables
16 Cash and cash equivalents
2020
£000
21
544
630
-
1,195
680
3,624
4,304
2019
£000
9
-
1,603
16
1,628
1,809
2,001
3,810
Total assets
5,499
5,438
Liabilities
Current liabilities
17 Trade and other payables
Current taxation liabilities
26 Lease liabilities
Non current liabilities
26 Lease liabilities
689
35
299
1,204
24
-
1,023
1,228
262
-
Total liabilities
1,285
1,228
Shareholders’ equity
19 Share capital
Share premium
Investment revaluation reserve
Retained earnings
Total shareholders’ equity
921
140
-
3,153
4,214
921
140
-
3,149
4,210
Total equity and liabilties
5,499
5,438
Approved by the Board on 28 September 2020 and signed on its behalf by
David Fletcher
Chairman
Registered Number: 02014432 England and Wales
The notes on pages 32 to 54 form part of the financial statements.
2 7
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 2020
Notes
Assets
Non-current assets
2020
£000
2019
£000
13 Investments in group undertakings
118
50
Current assets
15 Trade and other receivables
16 Cash and cash equivalents
14
1,370
1,384
14
1,218
1,232
Total assets
1,502
1,282
Liabilities
Current liabilities
17 Trade and other payables
Total liabilities
Shareholders’ equity
19 Share capital
Share based payment reserve
Share premium
Retained earnings
214
214
921
68
140
159
70
70
921
-
140
151
Total shareholders’ equity
1,288
1,212
Total equity and liabilities
1,502
1,282
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 £169,000 (2019:
£217,000).
Approved by the Board on 28 September 2020 and signed on its behalf by
David Fletcher
Chairman
Registered Number: 02014432 England and Wales
The notes on pages 32 to 54 form part of the financial statements.
2 8
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 2020
Cash flows from operating activities
Profit before taxation from continuing operations
76
282
2020
£000
2019
£000
Adjustments for:
Depreciation expense
Investment income
Finance income
Finance expense
Share based payment expense
278
(113)
(14)
27
68
3
-
(7)
-
-
Cash flows from operating activities before
322
278
movement in working capital
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated from /(absorbed by) operations
Taxation paid
1,077
(468)
931
(14)
(892)
226
(388)
(70)
Net cash flows from operating activities
917
(458)
Cash flows from investing activities
Purchase of investments
Sale of investments
Purchase of fixed assets
Investment income
Finance income
Net cash flows from investing activities
Cash flows from financing activities
Lease payments
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 16)
The notes on pages 32 to 54 form part of the financial statements.
-
1,072
(18)
113
14
1,181
(314)
(161)
(475)
1,623
2,001
3,624
(15)
-
-
-
7
(8)
-
(161)
(161)
(627)
2,628
2,001
2 9
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 2020
Cash flows from operating activities
Profit before taxation
Adjustments for:
Finance income
Dividends received from subsidiary undertakings
2020
£000
2019
£000
169
217
(9)
(311)
(6)
(361)
Cash flows from operating activities before
(151)
(150)
movement in working capital
Decrease in trade and other receivables
Increase in trade and other payables
Cash (absorbed by) / generated from 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 increase in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year (note 16)
-
144
(7)
311
9
320
(161)
(161)
152
1,218
1,370
296
45
191
361
6
367
(161)
(161)
397
821
1,218
The notes on pages 32 to 54 form part of the financial statements.
3 0
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 2020
CONSOLIDATED
Share
capital
£000
Share
Retained
premium
earnings
£000
£000
TOTAL
EQUITY
£000
Balance at 1 May 2018
921
140
3,080
4,141
Total comprehensive income
for the year
Equity dividends paid
Balance at 30 April 2019
Adjustment on initial application of
IFRS 16 (net of tax) (see note 26)
-
-
921
-
-
-
140
-
230
230
(161)
(161)
3,149
(38)
4,210
(38)
Adjusted balance as at 1 May
921
140
3,111
4,172
2019
Total comprehensive income
for the year
Equity dividends paid
Share based payment expense
-
-
-
-
-
-
135
135
(161)
68
(161)
68
Balance at 30 April 2020
921
140
3,153
4,214
COMPANY
Share
Share based
Share
Retained
TOTAL
capital
payment
premium
earnings
EQUITY
reserve
£000
£000
£000
£000
£000
Balance at 1 May 2018
921
Total comprehensive income
for the year
Equity dividends paid
-
-
Balance at 30 April 2019
921
Total comprehensive income
for the year
Equity dividends paid
Share based payment expense
-
-
-
-
-
-
-
-
-
68
140
95
1,156
-
-
217
217
(161)
(161)
140
151
1,212
-
-
-
169
169
(161)
-
(161)
68
Balance at 30 April 2020
921
68
140
159
1,288
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
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 28 September 2020. 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, except for the revaluation of certain financial assets.
2.1 Going concern
In light of the COVID-19 pandemic and the increased uncertainty that it brings, the Directors have
carried out an analysis to support their view that the Group is a going concern and under which
basis these financial statements have been prepared.
Underlying their conclusion is the Group’s cash balance as at 30 April 2020 of £3.6 million. The
Board believes it is well placed to navigate a prolonged period of uncertainty if necessary.
The health and safety of all its employees and key service providers continues to remain a priority
and the Group continues to monitor recommendations issued by the relevant authorities. The Group
has put into action its disaster recovery plans which include travel restrictions and remote working
policies. These have been in effect since 17 March 2020 and are operating well.
Analysis and scenario testing, which includes the impact from the COVID-19 pandemic, has been
carried out on the Group’s main income streams:
•
•
•
•
contingent transactional fees such as property transactions and rating assessments,
bank valuations
recurring fee income associated with fund and property management contracts
cash returns from investments.
Whilst transactional fees are anticipated to be materially lower than would otherwise be expected,
the Group is well supported by its management contracts and strong balance sheet.
Going Concern statement
Based on the results of the analysis carried out as outlined above the Board believes that the Group
has the ability to continue its business for at least 12 months from the date of approval of the
financial statements and therefore has adopted the going concern basis in the preparation of this
financial information.
2.2 Changes in accounting policies and disclosures
(a) New and amended standards and interpretations adopted by the Group and Company
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
Standards, amendments and interpretations endorsed by the EU and mandatorily effective for the
first time for the financial year beginning 1 May 2019 include the following:
•
IFRS 16, ‘Leases’, replaces IAS 17 that relates to the classification, measurement and
recognition of leases with the objective of ensuring that lessees and lessors provide relevant
information that represents those transactions. The standard is effective for the Group from
1 May 2019.
The Group applies the simplified transition approach and will not restate comparative amounts
for the year prior to first adoption. Right-of-use assets have been measured on transition as if
the new rules had always been applied.
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which
had previously been classified as ‘operating leases’ under the principles of IAS 17 Leases.
These liabilities were measured at the present value of the remaining lease payments, discounted
using the lessee’s incremental borrowing rate as of 1 May 2019. The weighted average lessee’s
incremental borrowing rate applied to the lease liabilities on 1 May 2019 was 4.0%.
This new standard requires additional disclosures which have been provided in note 26.
(b) New and amended Standards and Interpretations mandatory for the first time for
the financial year beginning 1 May 2019 but not currently relevant to the Group or
Company.
The following new and amended Standards and Interpretations are not currently relevant to the
Group or Company; however they may have an impact in future years:
•
•
•
•
•
• IFRIC 23 “Uncertainty over Income Tax Treatments”
• Amendment to IFRS 9: “Prepayment Features with Negative Compensation”
• Amendment to IAS 28: “Investments in Associates and Joint Ventures”
• Amendment to IAS 19: “Employee Benefits”
• Amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23 in “Annual Improvements 2015-2017
cycle”
(c) New and amended Standards and Interpretations issued but not effective for the
financial year beginning 1 May 2019.
Amendments have been made to IAS 1 Presentation of Financial Statements and IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors in relation to the definition of material.
The new definition will apply for the first time in the next financial year. The amendments clarify
the definition of what is material to the financial statements and how to apply the definition. The
amendments will have an impact on the presentation and disclosure in the financial statements.
After applying the new definition, the financial statements may have less disclosures as it may be
easier to justify that certain disclosures are immaterial to users of financial statements. Furthermore,
more meaningful disclosures may be presented in a more prominent manner due to the additional
guidance on the effects of obscuring information.
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 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
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.
The Company has taken advantage of the exemption under Section 408 of the Companies Act 2006
from publishing its individual Statement of Comprehensive Income and related notes.
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
Leasehold improvements
Right-of-use asset (head office)
25%
33%
Straight line over life of lease
Straight line over life of lease
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.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
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
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 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 designated as financial assets at fair value through other comprehensive income (FVOCI).
Financial assets are initially recognised at the fair value of the consideration given, including
associated acquisition costs, which may equate to cost. On subsequent measurement, financial
assets 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.
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 transaction price and are subsequently measured
at amortised cost using the effective interest method. The Group applies the simplified approach
to measuring expected credit losses (“ECL”). Trade receivables have been grouped according to
shared credit risk characteristics and days past due. The ECL rates are based on historic payment
profiles and credit losses experienced, adjusted for forecasts of future economic conditions. The
amount of any provision is recognised in the Statement of Comprehensive Income.
All financial assets (with the exception of financial assets measured at fair value through other
comprehensive income) 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
specific financial liabilities and equity instruments are set out below.
Trade and other payables
Trade and other payables are initially measured at fair value, and are subsequently
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
measured at amortised cost using the effective interest rate method.
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 is measured based on the consideration specified in a contract with a client and excludes
amounts collected on behalf of third parties. The Group recognises revenue when it transfers
control of a product or service to a client.
Revenue comprises commissions and fees receivable excluding value added tax. Asset management
and administration fees are recognised in the income statement as services are rendered. Performance
related fees are recognised when the performance calculation can be performed with reasonable
certainty, and it is highly probable there will not be a significant reversal of revenue in a future
period, which is normally when the performance period has ended. Transaction fees are recognised
once the relevant transaction has completed.
Transaction fees are invoiced to the client upon completion. Payment arrangements for property
management and fund management services vary between contracts and are generally invoiced
quarterly in advance or quarterly in arrears.
There has been no material change in the recognition of revenue year on year.
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 financial assets 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
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
an expense for cash-settled bonuses when contractually obliged or when there is a past practice
creating a constructive obligation.
Share based payments
The Group issues options over the Company’s equity to certain employees and these are measured
for fair value at the date of grant using the Black-Scholes model. Where material, this fair value is
fully expensed over the vesting period and is credited to the share-based payment reserve shown
under shareholders’ equity in the statement of financial position. Management’s best estimates
of leavers, price volatility and exercise restrictions have been used in the valuation method. All
options were surrendered during the year ended 30 April 2020. The Company has accounted for
the surrender of options as a cancellation resulting in an acceleration of vesting, and has therefore
recognised immediately the amount that otherwise would have been recognised for services
received over the remainder of the vesting period.
Leases
Accounting policy applicable before 1 May 2019
Leases were classified as finance leases whenever the terms of the lease transferred substantially all
the risks and rewards of ownership to the lessee. All other leases were classified as operating leases.
At the year-end date all leases were classified as operating leases.
Rentals payable under operating leases were charged to income on a straight-line basis over the
term of the relevant lease.
Accounting policy applicable after 1 May 2019
IFRS 16 was adopted as of 1 May 2019 without restatement of comparative figures. See note 26
for details of the transition.
A right of use asset and a lease liability has been recognized for all leases except leases of low value
assets, which are considered to be those with a fair value below £4,500, and those with a duration
of 12 months or less. The right-of-use asset has been measured at cost, which is made up of the
initial measurement of the lease liability, any initial direct costs incurred by the Group, and any
lease payments made in advance of the lease commencement date.
The Group will depreciate the right-of-use assets on a straight-line basis from the lease
commencement date to the earlier of the end of the useful life of the right-of-use asset or the end
of the lease term. Where impairment indicators exist, the right of use asset will be assessed for
impairment.
The lease liabilities are measured at the present value of the lease payments due to the lessor over
the lease term, discounted using the interest rate implicit in the lease if that rate is readily available
or the Group’s incremental borrowing rate.
After initial measurement, any payments made will reduce the liability and the interest accrued will
increase it. Any reassessment or modification will lead to a remeasurement of the liability. In such
case, the corresponding adjustment will be reflected in the right-of-use asset, or profit and loss if
the right-of-use asset is already reduced to zero.
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).
3 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
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) Fair value of financial assets (estimate and judgment)
The fair value of financial assets is determined by reference to the underlying value of the assets of
those investments at each reporting date. The Directors have made adjustments to fair value where
there is objective evidence that fair value is higher or lower than cost. Details of carrying amounts
are provided in note 14.
(ii) Provisions for expected credit loses relating to trade receivables (estimate)
Trade and other receivables are initially measured at transaction price and are subsequently measured
at amortised cost using the effective interest method. The Group applies the simplified approach
to measuring expected credit losses (“ECL”). Trade receivables have been grouped according to
shared credit risk characteristics and days past due. The ECL rates are based on historic payment
profiles and credit losses experienced, adjusted for forecasts of future economic conditions. The
amount of any provision is recognised in the Statement of Comprehensive Income.
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 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.
Transaction based fees (recognised at a point in time) such as investment deals, property valuations
and rating appeals accounted for 40% of revenue for the year (2019: 53%). The balance of revenue
was from less transactional activity (recognised over time), including recurring fee income from
property asset management and fund management contracts.
3 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
5. Alternative performance measures - profit reconciliation
The reconciliation set out below provides additional information to enable the reader to reconcile
to the numbers discussed in the Chairman’s Statement and Strategic Report.
Profit before taxation
Add back: Share based payment expense
Include: Fair value gain on financial assets through OCI
Adjusted profit before share based payment expense and
taxation
Taxation
Adjusted profit after tax for the year
2020
£000
2019
£000
76
68
99
243
(40)
203
282
-
-
282
(52)
230
The fair value gain on financial assets represents the realised gain in the year on the disposal of the
Group’s interest in the SHIPS 15 syndicate. The profit is shown in the Consolidated Statement of
Comprehensive Income as other comprehensive income.
The Company has accounted for the surrender of options in the year as a cancellation, in accordance
with IFRS 2, resulting in an acceleration of vesting and a share based payment charge of £68,000
(2019: £nil). The charge reflects the amount that otherwise would have been recognised for services
received over the remainder of the vesting period (all outstanding options were surrendered in the
year).
6. 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
2020
£000
-
278
(57)
17
25
4
9
2019
£000
302
3
(91)
10
25
4
9
3 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
Fees payable to the Company’s auditors for non-audit services to the Company itself are not
disclosed in the individual financial statements of Fletcher King plc because the Company’s
consolidated financial statements are required to disclose such fees on a consolidated basis.
7. Employee benefits expense
Year ended 30 April
Basic wages and salaries
Performance-based payments
Social security costs
Pension costs
Other costs
Group
2020
£000
998
210
1,208
157
14
62
Group
Company
Company
2019
£000
1,108
292
1,400
178
10
60
2020
£000
2019
£000
83
-
83
11
-
-
94
75
-
75
10
-
-
85
1,441
1,648
The average number of persons (including directors) employed by the Group was as follows:
Group
2020
No
Group
Company
Company
2019
No
2020
No
2019
No
5
6
3
14
4
6
6
16
5
-
-
5
2020
£000
523
126
3
4
-
-
4
2019
£000
499
230
2
Year ended 30 April
Management
Professional
Administration
Directors’ emoluments
Salaries and benefits
Performance-related bonuses
Pension contribution
4 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
652
731
2020
£000
100
33
27
160
2019
£000
100
30
68
198
Highest paid director
Basic pay
Benefits
Performance related bonus
Key management compensation
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:
Aggregate compensation for key management, being the Directors of the Company, was as follows:-
2020
£000
2019
£000
Short term employee benefits
739
830
In accordance with AIM Rule 19, information of individual director’s remuneration has been
disclosed in the Directors’ Report.
8. Finance income and expense
Year ended 30 April
Finance income
Investment income
Bank interest receivable
2020
£000
113
14
127
2019
£000
-
7
7
Investment income of £113,000 was received in the year (2019: £nil) from interests in SHIPS
syndicates.
Year ended 30 April
Finance expense
Finance charges on lease liabilities (see note 26)
2020
£000
27
2019
£000
-
4 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
9. 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
202
£000
2019
£000
35
(11)
24
16
16
40
60
(8)
52
-
-
52
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% (2019:
19%)
Expenses not deductible for tax purposes
Share based payment expense
Fair value gain
Prior year adjustment
Other adjustments
Group total tax charge for the year
2020
£000
76
14
7
13
19
(11)
(2)
40
2019
£000
282
54
7
-
-
(8)
(1)
52
4 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
10. Dividends
Year ended 30 April
Equity dividends on ordinary shares:
Declared and paid during year
Ordinary final dividend for the year ended 30 April 2019: 0.75p
per share (2018: 0.75p)
Interim dividend for the year ended 30 April 2020: 1.00p
per share (2019: 1.00p)
Proposed ordinary final dividend for the year ended
30 April 2020: 0.50p per share
11. Earnings per share
Number of shares
2020
£000
2019
£000
69
92
161
69
92
161
46
2020
No
2019
No
Weighted average number of shares for basic earnings per share
Share Options
9,209,779
-
9,209,779
-
Weighted average number of shares for diluted earnings per share
9,209,779
9,209,779
Earnings
Profit after tax for the year
(used to calculate the basic and diluted earnings per share)
Add back: Share based payment expense
Include: Fair value gain on financial assets through OCI
Adjusted profit after tax for the year
(used to calculated adjusted basic and diluted earnings per share)
Earnings per share
Basic
Diluted
Adjusted earnings per share
Basic
Diluted
£’000
36
68
99
203
0.39p
0.39p
2.20p
2.20p
£000
230
-
-
230
2.50p
2.50p
2.50p
2.50p
As disclosed in note 20, share options were granted in March 2019 and October 2016.
All share options were surrendered in April 2020. The share options were non-dilutive
4 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
for the years ending 30 April 2019 and 2020 and as a result were not included within
the weighted average number of shares for the diluted earnings per share calculations.
12. Property, plant and equipment - Group
Right
of use
Furniture,
fittings and
computers
Short
leasehold
premium and
improvements
Total
£000
£000
£000
£000
Cost
At 1 May 2019 (as previously reported)
IFRS 16 adjustment
1 May 2019 (adjusted)
Additions
As at 30 April 2020
Depreciation
At 1 May 2019
Charge for the year
At 30 April 2020
-
816
816
-
816
-
272
272
Net book value at 30 April 2020
544
Cost
At 1 May 2018
Additions
As at 30 April 2019
Depreciation
At 1 May 2018
Charge for the year
At 30 April 2019
Net book value at 30 April 2019
-
-
-
-
-
-
-
181
-
181
18
199
181
3
184
15
181
-
181
181
-
181
-
290
-
290
-
290
281
3
284
471
816
1,287
18
1,305
462
278
740
6
565
276
14
290
278
3
281
457
14
471
459
3
462
9
9
The right-of-use asset is a leased property asset. All other assets are owned by the Group.
4 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
13. Investments in Group undertakings - Company
Year ended 30 April
2020
£000
2019
£000
Shares in Group undertakings
118
50
The change in value of the investment during the year recognises the share based payment expense
associated with share options granted to employees of the subsidiary (see note 20).
As at 30 April 2020, 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 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.
14. Financial assets – Group
Year ended 30 April
At 1 May
Additions
Disposals
At 30 April
2020
£000
1,603
-
(973)
630
2019
£000
1,588
15
-
1,603
The Group holds unlisted investments in property syndicates managed by it. All are held at fair
value. All of the assets have been designated at fair value through other comprehensive income
upon the adoption of IFRS 9. In the Directors’ view the fair value has been estimated to be not
materially different from their carrying value. Fair value has been arrived at by applying the Group’s
percentage holding in the investments to the fair value of their net assets. The investments are as
follows:
An amount of £nil (2019: £973,000) represents a syndicate interest in the Stratton House Investment
Property Syndicate (SHIPS 15). The investment was sold during the year.
An amount of £630,000 (2019: £630,000) represents a syndicate interest in the Stratton House
Investment Property Syndicate (SHIPS 16).
Fair value of the net assets of the investment is determined by professional valuers at Fletcher
4 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
King Services Limited based primarily on the expected rental value and yield of the underlying
properties. 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. A movement of 0.35% in the yield
assumptions would have a material effect on the financial statements. Under IFRS7 Financial
instruments: Disclosures and IFRS13 Fair value measurements, UK unlisted equity investments
are classified under the fair value hierarchy as Level 3.
The Covid-19 virus outbreak has created unprecedented uncertainty in global financial markets and
the valuation performed by the appointed valuers contains a “material valuation uncertainty” in
accordance with RICS Red Book Global guidance. Whilst a higher degree of caution is attached to
the valuation than would normally be the case, the Group’s Executive and Audit Committees have
concluded that the fair value assessment is reasonable.
15. Trade and other receivables
Year ended 30 April
Trade receivables
Other receivables
Prepayments
Group
2020
£000
544
2
134
680
Group
Company
Company
2019
£000
1,671
1
137
1,809
2020
£000
-
2
12
14
2019
£000
-
3
11
14
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.
A provision is made against trade receivables based on expected credit losses, determined by
reference to past payment history, current financial status of the customer and future expectations.
As at 30 April 2020, there were expected credit losses of £nil (2019: £nil).
As at 30 April 2020, trade receivables of £412,000 (2019: £408,000) 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:
Year ended 30 April
Up to 3 months past due
3 to 6 months past due
Over 6 months past due
4 6
Group
2020
£000
394
18
-
412
Group
Company
Company
2019
£000
363
45
-
408
2020
£000
2019
£000
-
-
-
-
-
-
-
-
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
16. Cash and cash equivalents
Cash at bank and in hand
Group
2020
£000
3,624
3,624
Group
Company
Company
2019
£000
2,001
2,001
2020
£000
1,370
1,370
2019
£000
1,218
1,218
Cash and cash equivalents are all denominated in Sterling. The effective interest rate on Group
cash balances for the year ended 30 April 2020 was 0.38% (2019: 0.35%). There is no material
difference between the fair value and book value of cash and cash equivalents.
17. Trade and other payables
Year ended 30 April
Trade payables
Amount owed by group undertakings
Other taxation and social security
Accurals
Deferred income
Group
Group
Company
Company
2020
£000
113
-
221
304
51
689
2019
£000
330
-
332
493
49
1,204
2020
£000
1
199
-
14
-
214
2019
£000
8
47
-
15
-
70
The carrying amounts of trade and other payables approximate their fair value.
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
2020
£000
2019
£000
16
(16)
-
16
-
16
4 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
18. Share capital and other reserves
30 April
2020
Number
30 April
2019
Number
30 April
2020
£000
30 April
2019
£000
Ordinary shares of 10p each:
Authorised
11,000,000
11,000,000
1,100
1,100
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.
20. Share Options
In April 2020, the holders of all 1,240,000 options issued under the Company’s Enterprise
Management Incentive (“EMI”) plan surrendered their options. At 30 April 2020 there were no
options in issue.
The Company had 1,240,000 share options outstanding at 30 April 2019, including the following
options held by Directors: D J R Fletcher held 100,000 share options, R E G Goode held 200,000
share options, and R A Dickman and P J Andrews each held 250,000 share options. Upon exercise
of these share options, the ordinary shares would rank pari passu with the existing Ordinary Shares.
At 30 April 2019 no share options were exercisable.
October 2016 options:
A total of 600,000 share options were granted under the HMRC Enterprise Management Incentive
Scheme in October 2016. These share options had an exercise price of 48.5p and were exercisable
between October 2021 and October 2026, being conditional on a 20% increase in the share price
of the Company.
The fair value of the 600,000 share options as at the grant date was £29,000. The fair value was
calculated using the Black-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 exercise price). The Company did
not recognise a charge for the 2019 year due to it being immaterial.
4 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
March 2019 options:
A total of 640,000 share options were granted under the HMRC Enterprise Management Incentive
Scheme in March 2019. These share options had an exercise price of 46p and were exercisable
between March 2024 and March 2029, being conditional on a 20% increase in the share price of
the Company.
The fair value of the 640,000 share options as at the grant date was £56,000. The fair value was
calculated using the Black-Scholes model with the following key assumptions: (i) volatility of
43.3% based on monthly historical volatility rates; (ii) risk free rate of 1.14%; (iii) dividend yield
of 3.8%; (iv) life of 5 years; (v) bid discount of 10%; and (vi) share price at date of grant of 46p
(the exercise price). The Company did not recognise a charge for the 2019 year due to it being
immaterial.
Surrender of options:
All options were surrendered in April 2020. A charge of £68,000 has been recognised as a result.
21. Capital Commitments
As at 30 April 2020 and 30 April 2019 neither the Group nor the Company had any capital
commitments
22. Operating lease commitments and contingent liabilities
As at 30 April 2020 and 30 April 2019, neither the Group nor the Company had any contingent
liabilities. As at 30 April 2020 and at 30 April 2019, the Group had future minimum lease payments
under non-cancellable leases which fall due as follows:
Property Leases
Within one year
In two to five years
2020
£000
314
267
581
2019
£000
314
581
865
Property leases relate to office premises occupied by the Group.
23. 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.
Group companies hold investments in a number of property funds (see note 14) in which Group
companies also act as fund manager. During the year, Group companies received fees and were
4 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
owed amounts as follows:-
SHIPS 04 Fund
SHIPS 15 Fund
SHIPS 16 Fund
Fees
Amount Due
2020
£000
52
171
62
2019
£000
19
47
60
2020
£000
-
-
-
2019
£000
-
7
9
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.
24. 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
Trade receivables
Other receivables
Cash and cash equivalents
Financial liabilities at
amortised cost
Trade payables
Amount due to group undertakings
Accruals
Lease liabilities
5 0
Group
2020
£000
544
2
3,624
4,170
Group
2020
£000
113
-
304
561
Group
Company
Company
2019
£000
1,671
1
2,001
3,673
2020
£000
-
2
1,370
1,372
2019
£000
-
3
1,218
1,221
Group
Company
Company
2019
£000
330
-
493
-
2020
£000
1
199
14
-
2019
£000
8
47
15
-
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 assets at fair value
through other comprehensive
income
978
823
214
70
Group
2020
£000
Group
Company
Company
2019
£000
2020
£000
2019
£000
Unlisted investments
630
1,603
-
-
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
2020
£000
544
3,624
2
4,170
Group
Company
Company
2019
£000
1,671
2,001
1
3,673
2020
£000
-
1,370
2
1,372
2019
£000
-
1,218
3
1,221
Trade receivables
Cash and cash 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 2020, 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 (2019: £10,000)
higher, and for the Company £6,000 (2019: £6,000) higher. Conversely, if LIBOR had decreased
5 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
by 0.5% with all other variables held constant, post tax profit and equity for the Group would have
been £13,000 (2019: £10,000) lower, and for the Company £6,000 (2019: £6,000) lower.
The Group’s cash and cash equivalents earned interest during the year at an average of 0.38%
(2019: 0.35%), and the Company’s cash and cash equivalents earned interest during the year at an
average of 0.49% (2019: 0.49%).
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:
Group
2020
£000
262
224
486
Group
2020
£000
150
149
262
561
Group
Company
Company
2019
£000
526
354
880
2020
£000
15
-
15
2019
£000
23
-
23
Group
Company
Company
2019
£000
2020
£000
2019
£000
-
-
-
-
-
-
-
-
-
-
-
-
Financial liabilities falling due:
Within 1 month
From 2 to 3 months
Lease liabilities falling due:
Within 6 month
From 6 to 12 months
After 12 months
25. 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.
5 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
26. Adoption of IFRS 16
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had
previously been classified as “operating leases” under the principles of IAS 17 Leases. The
liabilities were measured at the present value of the remaining lease payments, discounted using
the lessee’s incremental borrowing rate as at 1 May 2019.
The Group has adopted IFRS 16 using the modified retrospective method (including appropriate
practical expedients), with the effect of initially applying this standard at the date of initial
application. Accordingly, the comparative information presented for the prior year has not been
restated and it is presented, as previously reported, under IAS 17 and related interpretations.
The Group has reviewed the lease terms of its leases in force at the date of transition and has
identified one relevant lease, being the lease of the Group’s office at Conduit Street, London. The
lease terminates on 3 May 2022.
The Group has concluded that the interest rate implicit in the lease cannot be readily determined
and therefore the lease has been discounted by the incremental borrowing rate (IBR) of 4.0%,
being the rate of interest that the group would have to pay to borrow over a similar term, and with
a similar security, the funds necessary to obtain assets of a similar value to the right-of-use asset in
a similar economic environment.
Transition to IFRS 16 permits the right-of-use asset to be recognised at the carrying amount as if
IFRS 16 had been applied since the lease commencement date, as discounted by the incremental
borrowing rate at the date of initial application. This has led to a decrease in retained earnings as at
1 May 2019, net of tax, of £38,000.
The table below reconciles the measurement of lease liabilities upon transition with reference to
operating lease commitments at 30 April 2019.
Operating lease commitments at 30 April 2019 per IAS 17
Discounted using incremental borrowing rate at 1 May 2019
Lease liability recognised at 1 May 2019 per IFRS 16
Group
£000
895
(47)
848
5 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
The balance sheet shows the following amounts relating to lease liabilities:
As at 1 May 2019
Change in accounting policy (adoption of IFRS 16)
As at 1 May 2019 (restated)
Repayment of lease liabilities
Unwinding of discount
Closing amount as at 30 April 2020
Shown as:
Current lease liabilities
Non-current lease liabilities
Group
£000
-
848
848
(314)
27
561
299
262
561
Under IFRS 16, the Company has recognised a combined depreciation charge and interest expense
in the year of £299,000. Under IAS 17, the charge in respect of lease costs would have been
£302,000. There has been no impact on cash flows.
27. Reconciliation of liabilities arising from financing activities - Group
As at
1 May
2018
Cashflow
As at
30 April
2019
Recognised
on transition
to IFRS 16
leases
Cashflow
Non-cash
movements
As at
30 April
2020
£000
£000
£000
£000
£000
£000
£000
Current
liabilities
Lease liabilities
-
Non-current
liabilities
Lease liabilities
-
-
-
-
-
-
-
-
299
(314)
314
299
594
-
(287)
262
848
(314)
27
561
5 4
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 OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting (AGM) of Fletcher King Plc (the
Company) will be held at 61 Conduit Street, London W1S 2GB on 28 October 2020 at 9.00am
to consider and, if thought fit, pass the resolutions as set out below.
General Information in light of Coronavirus (COVID-19)
AGM Format:
The Board recognises the importance of the AGM to the Company’s shareholders and would
normally welcome the occasion as an opportunity to meet with you, present to you on the Company’s
strategy and performance, and listen and respond to your questions, in person. However, in light
of the evolving COVID-19 outbreak, it has been necessary to make some important changes to the
way in which we hold and conduct this year’s meeting.
In light of the measures taken by the Government to reduce the public health risks the Board
considers that it is in the Company’s best interests to proceed with this year’s AGM, but that the
meeting will be purely functional in format, focusing on the formal business only. The Board
proposes that a limited number of Company representatives will attend the AGM in person to
ensure that a valid meeting is held. In doing so, they will observe all relevant social distancing
guidelines.
To ensure the safety of all our stakeholders, shareholders will not be permitted to attend the AGM
in person. Shareholders and guests who travel to the meeting will not be admitted. It is, therefore,
important that you do not attend the meeting in person.
We regret that this is a necessary step but the health and wellbeing of the Company’s shareholders,
as well as its employees, is of paramount importance.
Voting at the AGM
The Board is keen to ensure that you are still able to exercise your right to vote at the meeting.
Therefore, if you wish to vote at the AGM, you should appoint the Chairman of the meeting as
your proxy and give your instructions on how you wish the Chairman to vote on the proposed
resolutions. All proposed resolutions will be put to a vote on a poll. This will result in a more
accurate reflection of the views of shareholders by ensuring that every vote is recognised. On a
poll, each shareholder has one vote for every share held. If you do choose to appoint a proxy other
than the Chairman of the meeting your appointment will be deemed to be an appointment of the
Chairman of the meeting.
Details of how to appoint a proxy are set out in the Notes to the Notice of AGM. To be valid, your
proxy appointment in the form set out on page 60 must be received by Computershare Investor
Services Plc, The Pavilions, Bridgwater Road, Bristol BS99 6ZY by no later than 13.00 on Monday
26 October 2020.
5 5
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
Resolutions
Resolutions 1 to 6 (inclusive) are proposed as ordinary resolutions. For each of these to be passed,
more than half of the total voting rights of members who vote must be in favour of the resolution.
Resolutions 7 and 8 are proposed as special resolutions. For each of these to be passed, at least
three-quarters of the total voting rights of members who vote must be in favour of the resolution.
Ordinary Resolutions
1. To receive and adopt the Directors’ Reports and Accounts for the financial year ended 30 April
2020.
2. To declare a final dividend for the financial year ended 30 April 2020.
3. To re-elect DJR Fletcher as a Director, who retires by rotation, in accordance with Company
convention as in previous years and in line with best practice, and who offers himself for re-
election.
4. To re-elect PE Bailey as a Director who retires by rotation, in accordance with Company
convention as in previous years and in line with best practice, 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.
6. 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 equity securities in the Company up to a maximum
number of 2,762,934 of the unissued ordinary shares of 10p each of the Company with an
aggregate nominal value of £276,293.40, provided that this authority shall, unless renewed, varied
or revoked by the Company shall expire at the conclusion of the next Annual General Meeting of
the Company save that the Company may, before such expiry, make an offer or agreement which
would or might require shares to be allotted and the Directors may allot shares in pursuance of such
offer or agreement notwithstanding that the authority conferred by this resolution has expired and
at any time thereafter pursuant to any offer or agreement made by the Company before the expiry
of this authority.
This authority revokes and replaces all unexercised authorities previously granted to the Directors
but without prejudice to any allotment of shares already made or offered or agreed to be made
pursuant to such authorities
5 6
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
Special Resolutions
7. 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 £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
renewed, varied or revoked by the Company prior to or on that date), 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.
8. 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 aggregate 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 2021 or eighteen months from the passing of this resolution, if earlier,
unless such authority is renewed, varied or revoked by the Company 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.
5 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
By order of the Board
P E Bailey
Secretary
Fletcher King Plc
28 September 2020
Registered Office:
61 Conduit Street
London W1S 2GB
Notes
(a)
(b)
(c)
In light of measures taken by the Government to reduce the public health risks posed by the spread of
COVID-19, shareholders will not be permitted to attend the AGM in person. Every eligible shareholder does
however, have the right to appoint one or more proxies to exercise all or any of his or her rights on his or her
behalf at the meeting, provided that if more than one proxy is appointed each proxy is appointed to exercise
the rights attaching to a different share or shares held by the appointing shareholder. The appointment of
a proxy in relation to this year’s AGM will, however, be subject to the special arrangements in these notes
or any alternative arrangements that the Board considers necessary to ensure the validity of the meeting.
Shareholders who wish to vote at the meeting should appoint the Chairman of the meeting as their
proxy in order to do so. No other person(s) appointed as proxy will be permitted to attend the meeting
in person. If a shareholder appoints some other person or persons as proxy, such shareholder shall be
deemed to have appointed the Chairman of the meeting and not the other named person(s) as their proxy.
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, Computershare Investor Services
Plc, The Pavilions, Bridgwater Road, Bristol BS99 6ZY, together with a certified copy of any power of
attorney or other authority under which it is executed, not less than 48 hours before the time appointed for the
meeting. The form assumes that a shareholder will wish to vote on all of his or her Shares in the same way.
(d) 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.
(e) 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, 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.
(f)
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the
appointments submitted by the most senior holder will be accepted. Seniority is determined by the order
in which the names of the joint holders appear in the Company’s Register of Members in respect of the
joint holding (the first-named being the most senior).
5 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
(g) In accordance with Regulation 41 of the Uncertificated Securities Regulations 2001, only those members
entered on the Company’s register of members at 6.00pm on 26 October 2020 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.
(h) As at 6.00pm on 28 September 2020 (the latest practicable date before publication of this notice), 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 28 September 2020 is 9,209,779.
(i) Any corporation which is a shareholder can appoint one or more persons to act as its representative(s)
at the meeting. Each such representative may exercise on the corporation’s behalf all of its powers as
a shareholder provided that they do not do so in relation to the same Shares. Please note that a person
other than the Chairman of the meeting who is appointed as a representative will not be permitted to
attend the meeting in person.
(j) 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.
(k) Information regarding the meeting, including the information required by section 311A of the
Companies Act 2006, can be found at www.fletcherking.co.uk/investor-relations/.
5 9
F O R M O F P R O X Y
FORM OF PROXY
For use at the Annual General Meeting of the Fletcher King Plc to be held at 9.00 am on 28 October 2020
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
28 October 2020 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.
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.
3. 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.
4. Any alterations made to this form of proxy should be initialled.
5.
If you choose now to appoint a proxy other than the Chairman of the meeting, but the social distancing measures or other
restrictions on attendance in person continue to be in force, your appointment will be deemed to be an appointment of the
Chairman of the meeting.
6. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares.
However, as above if you choose now to appoint a proxy other than the Chairman of the meeting, but the social distancing
measures or other restrictions on attendance in person continue to be in force, your appointment in relation to those shares
will in any case be deemed to be an appointment of the Chairman of the meeting. 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.
6 0
Third fold and tuck in
BUSINESS REPLY SERVICE
License No. SWB 1002
11
Computershare Investor Services Plc
The Pavilions
Bridgwater Road
Bristol
BS99 6ZY
Second fold