Fletcher King Plc
Annual Report and Accounts 2022
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
Highlights
2
Chairman’s Statement
3-4
Corporate Governance
Statement
5-11
Strategic Report
12-15
Directors’ Report
16-20
Auditors’ Report
21-27
Accounts
28 -55
Directors
D J R Fletcher FRICS Non-Executive Chairman
R E G Goode FRICS Non-Executive Director
D H Stewart Non-Executive Director
D A E Gibbs Non-Executive Director
M I Wise Non-Executive Director
P J Andrews MRICS Managing Director
R A Dickman FRICS Executive Director
P E Bailey ACA Finance Director
Secretary and Registered Office
P E Bailey ACA
19-20 Great Pulteney Street, London W1F 9NF
Nominated Adviser and Broker
Cairn Financial Advisers LLP
9th Floor, 107 Cheapside, London EC2V 6DN
Solicitors
Boodle Hatfield
240 Blackfriars Road, London SE1 8NW
Wedlake Bell LLP
71 Queen Victoria Street, London, EC4V 4AY
Auditor
CLA Evelyn Partners Limited
45 Gresham Street, London EC2V 7BG
Principal Bankers
NatWest Bank Plc
38-39 Strand, London WC2N 5JB
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
Certificate Nº FS27825
1
H I G H L I G H T S
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Revenue for the year of £2,967,000 (2021: £2,264,000)
Statutory profit before tax of £134,000 (2021: loss of £834,000)
Adjusted profit before tax of £144,000 (2021: loss of £935,000) *
Adjusted basic earnings per share of 1.73p (2021: loss of 8.57p) (see note 11) *
Final proposed dividend: 0.50p per share (2021: £nil per share)
Significant cash reserves: £3.4m as at 30 April 2022 (2021: £2.9m)
* Adjusted results are before share based payment expenses and after other comprehensive income (see note 5)
F I N A N C I A L C A L E N D A R
Annual General Meeting
12 October 2022
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C H A I R M A N ’ S S TAT E M E N T
Results
Revenue for the year was £2,967,000 (2021: £2,264,000). Adjusted profit before tax (see note 5)
was £144,000 (2021: loss of £935,000). Statutory profit before tax was £134,000 (2021: loss of
£834,000).
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).
Dividend
The Board is proposing a final dividend of 0.5p per share. The final dividend is subject to shareholder
approval at the AGM and will be paid on 28 October 2022 to shareholders on the register at the
close of business on 30 September 2022. With no interim dividend paid (2021: £nil per share) the
dividend for this year will amount to 0.5p per share (2021: £nil per share).
The Commercial Property Market
It was encouraging that both the letting and capital markets were considerably more buoyant than
the previous year.
The impact of Covid on the market has now largely disappeared although numbers back to the
office have not yet returned to pre pandemic levels. However no sooner has one world problem
diminished than another takes its place in the form of the tragic war in Ukraine and its impact on
all economies throughout the world.
Despite the continuing levels of uncertainty, the industrial property market continued to perform
exceptionally well with rents growing and capital values powering ahead. Over the year, according
to MSCI data, total returns in the sector produced an astonishing 42% which compared to retail at
6% and offices at 6.7%.
High Street retail continues to be difficult but interestingly the office sector, in both London and
major cities throughout the country, is showing strong tenant demand for prime space with potential
under supply in some locations.
Business Overview
As seen from the figures above, the market was significantly better than the previous year but it was
not without its ups and downs and a significant level of uncertainty remains in predicting future
outcomes.
Property and Fund Management had a strong year. Despite the challenges of the pandemic, we
continued to produce excellent rent collection statistics. We remodelled parts of the portfolios and
acquired new clients during the year. Our continued robust performance has fostered long client
relationships some of which have been in existence for over fifty years.
Bank Valuations showed a marked improvement compared to the previous year and there has been
a steady flow of instructions from lenders for whom we have not previously acted.
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C H A I R M A N ’ S S TAT E M E N T
Income from rating appeals was negligible, reflecting a disappointingly low number of appeals
settled with the Valuation Office. Hopefully the backlog of appeals will be addressed by the
Valuation Office and we can benefit from the significant pipeline of appeals submitted on behalf
of our clients.
As announced on 4 March 2022, and after a delay in receiving FCA approval, the transaction
completed whereby C M Strategic 613 Limited (an investment company of Elliott Bernerd)
acquired a 29.99% shareholding in the Company.
Our move to new offices in Soho went well and both staff and clients are happy with our new
location. We are using our new space more efficiently and there has been a material reduction in
our property overhead.
Outlook
The uncertainties mentioned above together with rising interest rates, inflationary pressures and
forecast recession are likely to have a continuing impact on all markets in which the company
operates and will affect our ability to accurately forecast the future. However, we are optimistic
about our performance for the coming year and we have started it with some excellent sales
instructions as well as client funds available to invest in suitable propositions. Our management
portfolios are likely to grow both organically and from appointments to advise new clients.
We anticipate the volume of valuations will increase during the year and hopefully this will be the
year when we return to activity in agreeing rating appeals.
Importantly we hope our new significant shareholder will in due course become the source of
additional income streams and we await to see the progression of this during the year.
Our balance sheet and cash reserves remain strong and have been of immense importance during
the difficult times we have experienced over the last two years.
Once again, on behalf of all at Fletcher King I would like to thank our loyal clients for their
continued support. On behalf of the Board, I also congratulate our outstanding staff for their
foresight, expertise, dedication and hard work which is ultimately why our clients appoint us.
DAVID FLETCHER
CHAIRMAN
25 August 2022
4
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 always seek to 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 12 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
investor relations issues and matters of governance.
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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
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 and also in the S.172 Statement in the Strategic Report.
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 clients’ 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. The Company achieved
QA recertification in April 2022 following a comprehensive audit process and certification is valid
for a further 3 years.
Our ability to fulfil client services and develop strong client relationships depends on having
talented and motivated staff who enjoy working for the company and this is reflected in high
employee retention rates. 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 25 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.
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
lies with the Chair of the Board.
Following retirement of David Fletcher and Richard Goode from executive positions on 30 April
2021, and the appointment of David Gibbs and Matthew Wise to the Board in March 2022, the
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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 now consists of eight Directors of whom three are Executive Directors, four are Non-
Executive Directors, and one an Independent Non-Executive Director. As the company grows the
Board will consider adding additional independent Non-Executive Directors. 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 Directors Report.
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 Directors have a particular responsibility to challenge
constructively the strategy proposed by the 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 Independent Non-executive Director without other
Executives present. The senior Executives enjoy open access to the Non-executive Directors 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
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
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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, 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 Non-Executive 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.
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.
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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
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 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, and reviews external auditor independence.
The Remuneration Committee sets and reviews the compensation of Directors including the setting
of targets and performance frameworks for cash and share-based awards.
The Executive Committee, consisting of the Executive Directors, 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.
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
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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
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 twice in the year, with the external auditor attending one meeting and the Finance Director
attended both meetings. Consideration was given to the audit plan and audit findings reports and
these provided opportunities to review the accounting policies, internal control and the financial
information contained in both the annual and interim reports.
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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
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 Directors. In
addition, the Committee oversees the creation and implementation of employee share plans. The
Remuneration Committee consists of David Stewart, chair, and David Fletcher. The committee met
twice in the year.
During the year the Remuneration Committee has granted options over ordinary shares in the
Company to Executive Directors and employees of the Group. In granting these options, the
Remuneration Committee’s objective was to motivate and retain key staff over the long term,
designed to incentivise delivery of the Company’s growth objectives.
David Fletcher
Chairman
25 August 2022
11
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 2022 (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 (“KPIs”) for the Group for the year to 30 April were as
follows:
Revenue
Profit/(loss) before taxation
Adjusted profit/(loss) before taxation*
Total comprehensive income
Adjusted total comprehensive income*
Basic earnings/(loss) per share
Adjusted basic earnings/(loss) per share (note 11)
2022
£2,967,000
£134,000
£144,000
£152,000
£162,000
1.62p
1.73p
2021
£2,264,000
(£834,000)
(£935,000)
(£789,000)
(£789,000)
(7.47p)
(8.57p)
*Adjusted profit before tax reflects adding back a share-based payment expense of £10,000 incurred
in respect of share options that were issued in the year. Adjusted KPIs for the prior year reflect
inclusion of the unrealised loss in the year on revaluation of the interest in the SHIPS 16 syndicate
which is required to be shown in the Statement of Comprehensive Income as other comprehensive
income (see note 5).
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.
The Company moved office at the end of February 2022 and, as shown in note 24, reached a
settlement with the landlord on lease liabilities and other property related costs. The settlement
resulted in a gain of £125,000 on remeasurement of the lease liability. The Company has taken a
new lease on premises in Great Pulteney Street, London and discounted lease liabilities of £546,000
have been capitalised as a right-of use asset. Capital expenditure on leasehold improvements
(£190,000) and office equipment (£83,000) were made in the year, and the office move is expected
to deliver material savings over the forthcoming years.
The Company has invested in new property management software during the year with capability
to offer enhanced services to new and existing clients. Costs associated with the system
implementation, amounting to £79,000, have been capitalised and amortised.
Following the exceptional increase in Professional Indemnity insurance premiums in the prior
year, when renewal costs at the time of the outbreak of Covid-19 increased premiums by over
£200,000, the Company was able to recover some of this increase in the subsequent annual renewal
when premiums were £125,000 lower.
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S T R AT E G I C R E P O R T
In March 2022, the Company raised £486,000, net of costs, in a share placing and introduced a key
strategic shareholder, Elliott Bernerd, to the share register, with the potential to collaborate on new
projects and assignments in forthcoming periods.
Principal Risks and Uncertainties
The Directors have identified below a number of risks which they believe may affect the Group’s
ability to deliver its strategic goals. This list does not purport to be an exhaustive summary of the
risks affecting the Group, is given in no particular order of priority and contains risks considered
to be outside the control of the Directors.
(i) Economic Risk
The main economic risks that would affect the Group’s performance are a major slowdown in the
UK economy and a slump in UK commercial property values. The Group has, where possible,
implemented actions to mitigate some of the effects of these risks. This includes providing a
comprehensive range of services, some being less influenced by economic factors than others.
(ii) 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.
(iii) Financial Risk Management
Details of the Group’s approach to financial risk management are disclosed in detail in note 25 to
the financial 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 of 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.
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S T R AT E G I C R E P O R T
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. The Company has an Employee Assistance Programme to support
the wellbeing of employees, particularly mental health. During the year, the Company introduced
additional welfare benefits for all employees in the form of Life Assurance cover and Income
Protection.
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. The Company operates a number of green initiatives including, for
example, reducing paper usage and operating a cycle-to-work scheme to encourage employees to
travel to work in an environmentally friendly way. The fitout of the Company’s new office in early
2022 included consideration of environmentally friendly initiatives such as promoting recycling
opportunities, reducing paper and printing activity, and reducing energy usage.
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 4 November 2021. The Company welcomes shareholder engagement and has interacted with
shareholders during the year via other communication channels including email, telephone and in
person.
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. The addition of a key new shareholder, Elliott Bernerd, in March 2022
provides the Company with the opportunity to engage and potentially collaborate with a highly
experienced and successful property investor, and help to facilitate the introduction to Fletcher
King of new projects, advisory assignments and funds under Fletcher King management for the
benefit of all shareholders.
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S T R AT E G I C R E P O R T
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 2022:
•
•
•
•
•
•
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
25 August 2022
1 5
D I R E C T O R S ’ R E P O R T
The Directors present their report and accounts for the year ended 30 April 2022.
General information
Fletcher King Plc is a public limited company which is listed on the Alternative Investment
Market (AIM) 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 28. The total comprehensive
income for the year after taxation is £152,000 (2021: total loss of £789,000).
The Board is proposing a final dividend of 0.5p per share. The final dividend is subject to shareholder
approval at the AGM and will be paid on 28 October 2022 to shareholders on the register at the
close of business on 30 September 2022. With no interim dividend paid (2021: £nil per share) the
dividend for this year will amount to 0.5p per share (2021: £nil per share).
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 4 and
in Note 24 regarding subsequent events.
Capital and equity interests
During the year, 1,042,430 new ordinary shares were issued and allotted for cash consideration. No
shares were issued to Directors or employees pursuant to the exercise of share options.
The total number of ordinary shares in issue at 30 April 2022 was 10.25 million (2021: 9.21
million).
Cash flow and liquidity
Net cash inflow from operating activities amounted to £322,000 (2021: outflow of £688,000)
which, after allowing for cash flows including investing activities, share issues, dividends and lease
payments, resulted in a net increase in cash balances of £473,000 (2021: decrease of £732,000).
At 30 April 2022, the Group’s cash at bank and on short term deposit amounted to £3.36 million
(2021: £2.89 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 25 to the accounts.
1 6
D I R E C T O R S ’ R E P O R T
Directors
The current Directors of the Company are set out below.
D J R Fletcher Non- Executive Chairman
R E G Goode
R A Dickman
P J Andrews
P E Bailey
D H Stewart
D A E Gibbs
M I Wise
Non-Executive Director
Executive Director
Managing Director
Finance Director
Non-Executive Director
Non-Executive Director (appointed 4 March 2022)
Non-Executive Director (appointed 4 March 2022)
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 has been 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 A E Gibbs was the Managing Partner of Sunrise Brokers, an inter dealer brokerage which
employed 200 people in London, New York and Hong Kong, from 2005 to 2017. It was sold
to BGC Cantor Fitzgerald in 2016. He is currently a director of Envy Post Production Limited,
Chelsfield Capital LLP and Chelsfield Retech Investments Limited.
M I Wise was, until April 2021, Chief Operating Officer and Head of Asset Management at
Chelsfield Group. Since April 2021, he has been advising Elliott Bernerd’s Private Office on a
number of domestic and international transactions. Prior to joining Chelsfield Group in 2011,
Mr Wise worked for a number of private and publicly quoted property companies, working on
property throughout Western Europe and the UK.
D H Stewart and P J Andrews retire by rotation in accordance with the Company’s Articles of
Association, and being eligible offer themselves for re-election at the forthcoming Annual General
Meeting.
1 7
D I R E C T O R S ’ R E P O R T
Directors’ Remuneration
D J R Fletcher
R E G Goode
R A Dickman
P J Andrews
P E Bailey
D H Stewart
D A E Gibbs
M I Wise
Salary
£000
Fees
£000
Benefits
Bonus
Pension
£000
£000
£000
2022
£000
2021
£000
-
-
130
150
100
-
-
-
380
50
20
-
-
-
15
-
-
85
21
16
19
14
5
-
-
-
-
-
10
25
10
-
-
-
75
45
-
-
1
1
1
-
-
-
3
71
36
160
190
116
15
-
-
135
97
120
115
95
15
-
-
588
577
David Gibbs and Matthew Wise were appointed on 4 March 2022.
In October 2021, P E Bailey was granted 200,000 share options and R A Dickman and P J Andrews were
each granted 250,000 share options under an EMI share option scheme at an exercise price of 50p. The
options can be exercised between October 2026 and October 2031 subject to a minimum increase in
share price of 20%.
As at 30 April 2022, P E Bailey held 200,000 share options (2021: nil), and R A Dickman and P J
Andrews each held 250,000 share options (2021: nil).
Directors’ Indemnity Insurance
As permitted by Section 233 of the Companies Act 2006, the Company has purchased insurance cover
on behalf of the Directors indemnifying them against certain liabilities which may be incurred by them
in relation to the Company.
Corporate social responsibility
The Board recognises the importance of social and environmental matters in the conduct of the Group’s
business and remains committed to social and environmental awareness throughout its operations,
notwithstanding the relatively low environmental impact of the Group’s activities (see also Companies
Act S.172 disclosures in Strategic Report).
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 4 November 2021 for a further year in respect of ordinary 10p
shares up to a maximum of 3,075,663 shares (£307,566.30). 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.
1 8
D I R E C T O R S ’ R E P O R T
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 512,610 of its own shares, representing 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
October 2023. 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 UK-
adopted international accounting standards. 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 UK-adopted international accounting standards 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
1 9
D I R E C T O R S ’ R E P O R T
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. This information is given and should be
interpreted in accordance with the provisions of S418 of the Companies Act 2006.
Auditor
A resolution to reappoint the auditor, CLA Evelyn Partners Limited (formerly Nexia Smith &
Williamson), will be proposed at the forthcoming Annual General Meeting.
This report was approved by the Board on 25 August 2022.
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 2022 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 significant accounting policies. The
financial reporting framework that has been applied in their preparation is applicable law and UK-
adopted international accounting standards.
give a true and fair view of the state of the group’s and of the parent company’s
In our opinion, the financial statements
•
affairs as at 30 April 2022 and of the group’s profit for the year then ended;
•
standards; and
•
have been prepared in accordance with the requirements of the Companies Act 2006.
have been properly prepared in accordance with UK-adopted international accounting
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent
of the group and parent company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Our approach to the 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.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period, and include the most significant assessed
risks of material misstatement (whether or not due to fraud) we identified, including those which
had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
2 1
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
and considered the appropriateness
of the basis of valuation.
We challenged management’s
estimate and 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. We reviewed
sensitivity analysis performed
on certain key metrics and
assumptions used by management.
We considered the adequacy of
disclosures made in note 14.
A U D I T O R S ’ R E P O R T
Key audit matter 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
SHIPS 16. As a result, there is a risk
that management’s estimate of fair value
may not be materially correct.
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 2022. The property valuation was
carried out by employees of Fletcher
King Services Limited (‘FKS’),
Chartered Surveyors, a subsidiary of the
Parent Company.
In determining the fair value of the
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.
Valuation of
financial asset
investments -
Group
2 2
Revenue recognition
(note 4) – Group
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.
A U D I T O R S ’ R E P O R T
In testing revenue recognition,
we documented and walked
through the controls over revenue
recognition for the different
services provided by the Group.
As part of our procedures we
performed detailed substantive
testing of:
• a sample of revenue transactions
selected from the accounting
records, including agreement to
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 contract and the accounting
records to ensure that revenue is
complete.
During the above testing we
assessed whether revenue had been
recognised in accordance with the
Group’s accounting policies and
accounting standards, specifically
IFRS 15.
Our application of materiality
The materiality for the group financial statements as a whole (“group FS materiality”) was set at
£57,690. This has been determined with reference to the benchmark of the group’s turnover, which
we consider to be one of the principal considerations for members of the company in assessing
the group’s performance. Group FS materiality represents 2% of the group’s 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 (“parent FS materiality”)
was set at £46,150. This has been determined with reference to the benchmark of the parent
company’s total assets as it exists only as a holding company for the group and carries on no trade
in its own right. Parent FS materiality represents 2.5% of the parent company’s total assets as
presented on the face of the parent company statement of financial position.
Performance materiality for the group financial statements was set at £46,150, being 80% of group
FS materiality, for purposes of assessing the risks of material misstatement and determining the
nature, timing and extent of further audit procedures. We have set it at this amount to reduce
2 3
A U D I T O R S ’ R E P O R T
to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds group FS materiality. We judged this level to be appropriate based on
our understanding of the group and its financial statements, as updated by our risk assessment
procedures and our expectation regarding current period misstatements including considering
experience from previous audits. It was set at 80% to reflect the fact that in our historical experience
management are keen to process adjustments and there are few areas of judgement and estimation
in the Group financial statements.
Performance materiality for the parent company financial statements was set at £36,920, being
80% of parent FS materiality. It was set at 80% to reflect the fact that in our historical experience
management are keen to process adjustments and there are few areas of judgement and estimation
in the Parent Company financial statements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group and parent company’s ability to continue
to adopt the going concern basis of accounting included:
•
Reviewing the future cash flow forecast prepared by management and challenging the
inputs and assumptions included in the forecast. Where appropriate, we corroborated the
inputs and assumptions to supporting information.
Reviewing the current cash reserves and comparing these to the cash outflows forecast
over the period to the end of September 2023.
Testing the underlying model for mathematical accuracy.
Reviewing alternative scenarios prepared by management to assess the impact of changing
key assumptions and performing additional stress testing of the forecast.
•
•
•
Based on the work we have performed, we have not identified any material uncertainties relating
to events or conditions that, individually or collectively, may cast significant doubt on the group
and parent company’s ability to continue as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
Other information
The other information comprises the information included in the Accounts, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information
contained within the Accounts. 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. 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 course of 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 this gives rise to a material misstatement in
the financial statements themselves. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
2 4
A U D I T O R S ’ R E P O R T
Opinions 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 in relation to which 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 directors’ responsibilities statement 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is
detailed below. Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined above, to detect
material misstatements in respect of irregularities, including fraud.
We obtained a general understanding of the Parent Company and Group’s legal and regulatory
framework through enquiry of management concerning: their understanding of relevant laws and
2 5
A U D I T O R S ’ R E P O R T
regulations; the policies and procedures regarding compliance; and how they identify, evaluate and
account for litigation claims. We also drew on our existing understanding of the Parent Company
and Group’s industry and regulation.
We understand that the Parent Company and Group comply with the framework through:
•
•
•
•
•
Outsourcing payroll and insurance services to external experts.
Subscribing to relevant updates from external experts and making changes to internal
procedures and controls as necessary.
The directors’ close involvement in the day-to-day running of the business, meaning that
any litigation or claims would come to their attention directly.
The directors’ relevant knowledge and expertise of the property fund management,
property asset management, rating, valuations and investment broking industries, and
related laws and regulations.
Provision of staff training and maintenance of a Money Laundering Compliance manual.
In the context of the audit, we considered those laws and regulations: which determine the form
and content of the financial statements; which are central to the Parent Company and Group’s
ability to conduct its business; and where failure to comply could result in material penalties. We
identified the following laws and regulations as being of significance in the context of the Parent
Company and Group:
•
•
•
•
•
The Companies Act 2006 and IFRS in respect of the preparation and presentation of the
financial statements;
AIM rules and UK Market Abuse Regulations;
Royal Institution of Chartered Surveyors Standards;
The Proceeds of Crime Act 2002; and
The UK regulatory principles, including those governed by the Financial Conduct
Authority (FCA).
We performed the following specific procedures to gain evidence about compliance with the
significant laws and regulations identified above:
•
•
•
•
Made enquiries of management;
Inspected correspondence with regulators;
Reviewed board meeting minutes held during the year and post year-end; and
Obtained written management representations regarding the adequacy of procedures in
place.
The senior statutory auditor led a discussion with senior members of the engagement team regarding
the susceptibility of the Parent Company and Group’s financial statements to material misstatement,
including how fraud might occur. The key areas identified in this discussion were with regard to the
manipulation of the financial statements through manual journal entries, including those in relation
to estimates, and incorrect recognition of revenue.
These areas were communicated to the other members of the engagement team who were not
present at the discussion.
2 6
A U D I T O R S ’ R E P O R T
The procedures we carried out to gain evidence in the above areas included:
•
•
•
Testing of manual journal entries, selected based on specific risk assessments applied
based on the Group and Parent Company’s processes and controls surrounding manual
journal entries;
Substantive testing of revenue transactions (see KAM section above); and
Reviewing and challenging estimates made by management.
A further description of our responsibilities
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
is available on
the FRC’s website at:
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.
Julie Mutton
45 Gresham Street
Senior Statutory Auditor, for and on behalf of
London
CLA Evelyn Partners Limited
Statutory Auditor EC2V 7BG
Chartered Accountants
26 August 2022
2 7
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 2022
Notes
2022
£000
2021
£000
4 Revenue
2,967
2,264
7 Employee benefits expense
12 Depreciation and amortisation expense
Gain recognised on remeasurement of lease liability
Other operating expenses
21
Share based payment expense
Other operating income
8 Investment income
8 Finance income
8 Finance expense
(1,630)
(346)
125
(1,014)
(10)
(2,875)
39
18
-
(15)
(1,262)
(281)
-
(1,566)
-
(3,109)
25
-
2
(16)
Profit/(loss) before taxation
134
(834)
9 Taxation
18
146
Profit/(loss) for the year
152
(688)
Other comprehensive income
Fair value loss on financial assets through other
comprehensive income
-
(101)
Total comprehensive income for the year
attributable to equity shareholders
152
(789)
Earnings per share
11 Basic
11 Diluted
Adjusted earnings per share
11 Basic
11 Diluted
1.62p
1.50p
(7.47p)
(7.47p)
1.73p
1.60p
(8.57p)
(8.57p)
The notes on pages 34 to 55 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 F I N A N C I A L P O S I T I O N
as at 30 April 2022
Notes
Assets
Non-current assets
12a Software
12b Property, plant and equipment
12b Right of use asset
14 Financial assets
19 Deferred tax assets
Current assets
15 Trade and other receivables
Corporation tax debtor
16 Cash and cash equivalents
Total assets
Liabilities
Current liabilities
17 Trade and other payables
18 Provisions
27 Lease liabilities
Non current liabilities
27 Lease liabilities
2022
£000
76
266
494
529
32
1,397
1,329
97
3,365
4,791
2021
£000
-
12
272
529
-
813
1,148
111
2,892
4,151
6,188
4,964
1,124
25
610
908
100
577
1,759
1,585
402
-
Total liabilities
2,161
1,585
Shareholders’ equity
20 Share capital
Share premium
Investment revaluation reserve
Share option reserve
Retained earnings
Total shareholders’ equity
Total equity and liabilties
1,025
522
(101)
10
2,571
4,027
6,188
921
140
(101)
-
2,419
3,379
4,964
Approved by the Board on 25 August 2022 and signed on its behalf by
David Fletcher
Chairman
Registered Number: 02014432 England and Wales
The notes on pages 34 to 55 form part of the financial statements.
2 9
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 2022
Notes
Assets
Non-current assets
19 Deferred tax asset
13 Investments in group undertakings
Current assets
15 Trade and other receivables
16 Cash and cash equivalents
2022
£000
32
128
160
15
1,706
1,721
2021
£000
-
118
118
14
1,291
1,305
Total assets
1,881
1,423
Liabilities
Current liabilities
17 Trade and other payables
Total liabilities
Shareholders’ equity
20 Share capital
Share based payment reserve
Share premium
Retained earnings
49
49
1,025
10
522
275
328
328
921
-
140
34
Total shareholders’ equity
1,832
1,095
Total equity and liabilities
1,881
1,423
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 £241,000 (2021: loss
of £147,000).
Approved by the Board on 25 August 2022 and signed on its behalf by
David Fletcher
Chairman
Registered Number: 02014432 England and Wales
The notes on pages 34 to 55 form part of the financial statements.
3 0
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 2022
Cash flows from operating activities
Profit/(loss) before taxation from continuing operations
Adjustments for:
Movement in provision
Depreciation and amortisation expense
Remeasurement of lease liability
Investment income
Finance income
Finance expense
Share based payment expense
2022
£000
2021
£000
134
(834)
(75)
346
(125)
(18)
-
15
10
100
281
-
-
(2)
16
-
Cash flows from operating activities before
287
(439)
movement in working capital
Increase in trade and other receivables
Increase in trade and other payables
Cash generated from / (absorbed by) operations
Taxation paid
Net cash flows from operating activities
Cash flows from investing activities
Purchase of fixed assets
Investment income
Finance income
Net cash flows from investing activities
Cash flows from financing activities
Lease payments
Proceeds of share placing
Placing costs
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)
(181)
216
322
-
322
(352)
18
-
(334)
(1)
547
(61)
-
485
473
2,892
3,365
(468)
219
(688)
-
(688)
-
-
2
2
-
-
-
(46)
(46)
(732)
3,624
2,892
The notes on pages 34 to 55 form part of the financial statements.
3 1
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 2022
Cash flows from operating activities
Profit/(loss) before taxation
Adjustments for:
Finance income
Dividends received from subsidiary undertakings
2022
£000
2021
£000
209
(147)
-
-
(1)
(46)
Cash flows from operating activities before
209
(194)
movement in working capital
Increase in trade and other payables
(Decrease)/increase in trade and other payables
Cash absorbed by operations
Cash flows from investing activities
Dividends received from subsidiary undertakings
Finance income
Net cash flows from investing activities
Cash flows from financing activities
Proceeds of share placing
Placing costs
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)
(1)
(279)
(71)
-
-
-
547
(61)
-
486
415
1,291
1,706
-
114
(80)
46
1
47
-
-
(46)
(46)
(79)
1,370
1,291
The notes on pages 34 to 55 form part of the financial statements.
3 2
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 2022
CONSOLIDATED
Share
Share
Investment
Share based
Retained
TOTAL
capital
premium
Revaluation
payment
earnings
EQUITY
Reserve
reserve
£000
£000
£000
£000
£000
£000
Balance as at 1 May 2020
921
140
Loss for the year
Fair value loss on financial
assets through other
comprehensive income
Equity dividends paid
Balance at 30 April 2021
Total comprehensive income
for the year
Share issue
Cost of share issue
Share based payment expense
-
-
-
921
-
104
-
-
Balance at 30 April 2022
1,025
-
-
-
140
-
443
(61)
-
522
-
-
(101)
-
(101)
-
-
-
-
(101)
-
-
-
-
-
-
-
-
10
10
3,153
4,214
(688)
(688)
-
(101)
(46)
(46)
2,419
3,379
152
152
-
-
-
547
(61)
10
2,571
4,027
COMPANY
Share
Share
Share
Retained
TOTAL
capital
premium
based payment
earnings
EQUITY
reserve
£000
£000
£000
£000
£000
Balance at 1 May 2020
921
140
68
159
1,288
Total comprehensive income for the year
Equity dividends paid
Transfer to retained earnings
Balance at 30 April 2021
Total comprehensive income for the year
Share issue
Cost of share issue
Share based payment expense
-
-
-
921
-
104
-
-
Balance at 30 April 2022
1,025
-
-
-
140
-
443
(61)
-
522
-
-
(68)
-
-
-
-
10
10
(147)
(46)
68
(147)
(46)
-
34
1,095
241
-
-
-
241
547
(61)
10
275
1,832
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
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 19-20 Great Pulteney Street, London W1F 9NF. These consolidated
financial statements were approved for issue by the Board of Directors on 25 August 2022. 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 UK-adopted
international accounting standards and under the historical cost convention, except for the
revaluation of certain financial assets.
2.1 Going concern
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 2022 of £3.4 million. The
Board believes it is well placed to navigate a prolonged period of uncertainty if necessary.
Analysis and scenario testing 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, and
cash returns from investments.
The Group is well supported by its management contracts and strong balance sheet even if
transactional fee income is materially lower than would otherwise be expected.
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
Standards, amendments and interpretations mandatorily effective for the first time for the
financial year beginning 1 May 2021 include the following:
o
The Group and the Company have adopted the amendment to IFRS 16 “Covid-19
Related Rent Concessions” for the first time this period. This extended the concessions
and related disclosures have been provided in note 24 and 27.
Interest rate benchmark reform – phase 2 – amendments provided a practical expedient
when accounting for a modification of a financial instrument when an old interest rate
benchmark is replaced with an alternative (SONIA) as a result of the reform.
o
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
New and amended Standards and Interpretations issued but not effective for the
(b)
financial year beginning 1 May 2021
o
o
o
IFRS 17: “Insurance Contracts”
Amendment to IAS 1: “Classification of Liabilities as Current or Non-current”
Amendment to IAS 12 ‘Deferred tax related to assets and liabilities arising from a single
transaction’
IAS 8: Definition of accounting estimates
IAS 1: Disclosure initiative – accounting policies
IFRS 9: Fees in the ’10 per cent’ test for derecognition of financial liabilities
IAS 37: Onerous contracts – cost of fulfilling a contract
IAS 16: PPE: Proceeds before intended use
IAS 41: Taxation in fair value measurements
•
•
•
•
•
•
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
Both the consolidated and the Company’s financial statements are for the year ended 30 April 2022
and present comparative information for the year ended 30 April 2021. All intra-group transactions,
balances, income and expenditure are eliminated upon consolidation.
The Group’s financial statements incorporate the financial statements of Fletcher King plc and
other entities controlled by the Company (‘the subsidiaries’). The control principle in IFRS 10
sets out the following three elements of control: power over the investee; exposure, or rights, to
variable returns from involvement with the investee; and. the ability to use power over the investee
to affect the amount of those returns. The financial statements of these other entities cease to be
included in the Group financial statements from the date that control ceases.
Computer software, property, plant and equipment and depreciation
Computer software, 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:
Computer software
Office furniture and fittings
Computer equipment
Leasehold improvements
Right-of use asset (head office)
Straight line over 3-7 years
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
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
Comprehensive Income.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision-maker as required by IFRS 8 “Operating Segments”. The chief operating
decision-maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Executive Committee.
Investment in subsidiaries
Investments held by the Company in subsidiary entities are shown at cost less any provision for
impairment.
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
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 three months or less.
(iv) Financial liabilities and equity
Financial liabilities and equity instruments issued by the Group are classified in accordance with
the substance of the contractual arrangements entered into and the definitions of a financial liability
and an equity instrument. An equity instrument is any contract that evidences a residual interest
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
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
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. The dilapidations provision is 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 statement of comprehensive income 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.
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
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
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 adjusted 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.
Leases
A right of use asset and a lease liability has been recognised 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.
Covid-19 related rent concession
The group has early adopted the practical expedient from the Covid-19 Related Rent Concessions
amendment to IFRS 16. The practical expedient enables the group to account for any change in lease
payments resulting from rent concessions due to Covid-19 as if it were not a lease modification.
This has been applied to all rent concessions that meet the following conditions:
- the change in lease payments results in revised consideration for the lease that is
substantially the same as, or less than, the consideration for the lease immediately
preceding the change;
- any reduction in lease payments affects only payments originally due on or before 30
June 2022; and
- there is no substantive change to other terms and conditions of the lease.
The amount of the lease payment change due to the rent concessions has been recognised through
profit or loss.
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
Dividend Distributions
Dividends to the Company’s shareholders are recognised as a liability when paid (if interim
dividends) or approved by shareholders (if final dividends).
Critical accounting estimates and judgments
The preparation of the consolidated financial statements in conformity with International Financial
Reporting Standards requires management to make estimates and judgments 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 judgments 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 losses 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. Revenue and 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. 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 42% of revenue for the year (2021: 30%). 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 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
5. Alternative performance measures – profit/(loss) 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/(loss) before taxation
Add back: Share based payment expense
Include: Fair value loss on financial assets through OCI
Adjusted profit/(loss) before share-based payment expense and
taxation
Taxation
Adjusted profit/(loss) after tax for the year
2022
£000
134
10
-
144
18
162
2021
£000
(834)
-
(101)
(935)
146
(789)
The fair value loss on financial assets in the prior year represents the unrealised loss in the year on
the revaluation of the Group’s interest in the SHIPS 16 syndicate.
6. Operating profit
Operating profit is stated after charging / (crediting):
Year ended 30 April
Depreciation and amortisation
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
2022
£000
346
(39)
20
35
3
-
2021
£000
281
(25)
17
25
3
9
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.
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
7. Employee benefits expense
Year ended 30 April
Basic wages and salaries
Performance-based payments
Social security costs
Pension costs
Other costs
Group
2022
£000
1,185
163
1,349
181
18
82
Group
2021
£000
1,042
-
1,042
138
14
68
1,630
1,262
Company
Company
2022
£000
133
-
133
18
-
36
187
2021
£000
90
-
90
12
-
-
102
The average number of persons (including directors) employed by the Group was as follows:
Year ended 30 April
Management
Professional
Administration
Directors’ emoluments
Salaries and benefits
Performance-related bonuses
Pension contributions
Group
2022
Group
2021
No
Company
Company
2022
No
2021
No
5
6
5
16
5
6
3
14
3
-
-
3
2022
£000
540
45
3
588
5
-
-
5
2021
£000
574
-
3
577
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
Highest paid director
Basic pay
Benefits
Performance related bonus
Pension contributions
2022
£000
150
14
25
1
190
2021
£000
100
35
-
-
135
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:-
Short term employee benefits
2022
£000
2021
£000
669
656
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
2022
£000
18
-
18
2021
£000
-
2
2
Investment income of £18,000 was received in the year from interests in SHIPS syndicates.
Year ended 30 April
Finance expense
Finance charges on lease liabilities
4 2
2022
£000
2021
£000
15
16
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 credited for the year
2022
£000
-
14
14
(32)
(32)
(18)
2021
£000
(111)
(35)
(146)
-
-
(146)
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 / (loss) before taxation
Tax on Group profit at UK corporation tax rate of 19% (2021: 19%)
Expenses not deductible for tax purposes
Income not taxable
Accelerated capital allowances
Prior year adjustment
Movement in deferred tax not recognised
Deferred tax on losses previously not recognised
Other adjustments
Group total tax credit for the year
2022
£000
134
25
6
(19)
(2)
14
(6)
(32)
(4)
(18)
2021
£000
(834)
(158)
1
-
-
-
11
-
-
(146)
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
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 2021: nil per
share (2020: 0.50p)
Interim dividend for the year ended 30 April 2022: nil per share
(2021: nil)
Proposed ordinary final dividend for the year ended
30 April 2022: 0.50 per share
11. Earnings per share
Number of shares
Weighted average number of shares for basic earnings per share
Share Options
Weighted average number of shares for diluted earnings per share
Earnings
Profit/(loss) after tax for the year
(used to calculate the basic and diluted earnings per share)
Add back: Share based payment expense
Include: Fair value loss on financial assets through OCI
Adjusted profit/(loss) 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
4 4
2022
£000
2021
£000
46
-
46
-
-
-
51
2022
No
9,375,425
920,000
10,129,779
2021
No
9,209,779
-
9,209,779
£000
£000
152
10
-
162
1.62p
1.50p
1.73p
1.60p
(688)
-
(101)
(789)
(7.47p)
(7.47p)
(8.57p)
(8.57p)
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
12a. Intangible Assets - Group
Cost
At 1 May 2021
Additions
As at 30 April 2022
Amortisation
At 1 May 2021
Charge for the year
At 30 April 2022
Net book value at 30 April 2022
Computer
software
£000
-
79
79
-
3
3
76
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
12b. Property, plant and equipment - Group
Cost
At 1 May 2021
Additions
Disposals
As at 30 April 2022
Depreciation
At 1 May 2021
Disposals
Charge for the year
At 30 April 2022
Right
of use
£000
816
546
(816)
546
544
(816)
324
52
Net book value at 30 April 2022
494
Cost
At 1 May 2020
Additions
As at 30 April 2021
Depreciation
At 1 May 2020
Charge for the year
At 30 April 2021
Net book value at 30 April 2021
816
-
816
272
272
544
272
Furniture,
fittings and
computers
Leasehold
improvements
Total
£000
£000
£000
195
83
(177)
101
186
(177)
9
18
83
199
-
199
184
6
190
9
290
190
1,301
819
(290)
(1,283)
190
837
287
1,021
(290)
(1,287)
10
7
343
77
183
760
290
-
290
284
3
287
1,305
-
1,305
740
281
1,021
6
284
Lease liabilities relating to the right of use asset are £556k. Lease liabilities in relation to the
disposed of right-of-use asset are £456k. This amount was settled post year-end in full.
4 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
13. Investments in Group undertakings - Company
Year ended 30 April
Shares in Group undertakings
2022
£000
128
2021
£000
118
As at 30 April 2022, 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 11 Limited and Stratton 12
Limited.
The registered office of all the above named companies is 19-20 Great Pulteney Street, London,
W1F 9NF.
14. Financial assets – Group
Year ended 30 April
At 1 May
Decrease in fair value in year
At 30 April
2022
£000
529
-
529
2021
£000
630
(101)
529
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. 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 investment is as follows:
An amount of £529,000 (2021: £529,000) 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
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 approximately 0.53%
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.
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
15. Trade and other receivables
Year ended 30 April
Trade receivables
Other receivables
Prepayments
Accrued income
Group
2022
£000
977
46
178
128
Group
2021
£000
983
4
126
35
1,329
1,148
Company
Company
2022
£000
-
3
12
-
15
2021
£000
-
2
12
-
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 2022, there were expected credit losses of £nil (2021: £nil).
As at 30 April 2022, trade receivables of £518,000 (2021: £567,000) 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
16. Cash and cash equivalents
Cash at bank and in hand
Group
2022
£000
442
76
-
518
Group
2022
£000
3,365
3,365
Group
2021
£000
343
224
-
567
Group
2021
£000
2,892
2,892
Company
Company
2022
£000
2021
£000
-
-
-
-
-
-
-
-
Company
Company
2022
£000
1,706
1,706
2021
£000
1,291
1,291
Cash and cash equivalents are all denominated in Sterling. The effective interest rate on Group
cash balances for the year ended 30 April 2022 was 0.01% (2021: 0.07%). There is no material
difference between the fair value and book value of cash and cash equivalents.
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
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
2022
£000
421
-
169
393
141
1,124
Group
2021
£000
432
-
175
160
141
908
Company
Company
2022
£000
22
13
-
14
-
49
2021
£000
1
288
-
39
-
328
The carrying amounts of trade and other payables approximate their fair value.
18. Provisions - Group
Year ended 30 April
Current liabilities
At 30 April
2022
£000
2021
£000
25
100
The provision at 30 April 2021 and 30 April 2022 represents an assessment of potential dilapidations
expenses on termination of the lease on the company offices.
Movements in the provision were as follows:
Provision as at 1 May
(Decrease)/ increase in provision
Provision as at 30 April
2022
£000
100
(75)
25
2021
£000
-
100
100
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
19. 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
20. Share capital and other reserves
2022
£000
2021
£000
-
32
32
-
-
-
Ordinary shares of 10p each:
Issued and fully paid
30 April
2022
Number
30 April
2021
Number
10,252,209
9,209,779
30 April
2022
£000
1,025
30 April
2021
£000
921
At the AGM on 4 November 2021, an ordinary resolution was passed to remove the restriction on
the authorised share capital. The authorised share capital is therefore unrestricted.
The Company has one class of ordinary shares which carry no rights to fixed income. During the
year, 1,042,430 new ordinary shares were issued for cash consideration.
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.
The Investment Revaluation reserve recognises the unrealised loss or gain on the fair value of
financial assets.
The Share-based payment reserve relates to the fair value of the options granted which has been
charged to the statement of comprehensive income over the vesting period of the options and
related taxation recognised in equity.
Retained earnings are the accumulated, undistributed profits of the Group or Company that have
been recognised through the Statement of Comprehensive Income.
5 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
21. Share Options
A total of 920,000 share options were granted under the HMRC Enterprise Management Incentive
Scheme in October 2021. These share options have an exercise price of 50p and are exercisable
between October 2026 and October 2031, being conditional on a 20% increase in the share price of
the Company. The Company had 920,000 share options outstanding at 30 April 2022 (2021: £nil),
including those noted in Directors’ Remuneration in the Directors’ Report. Upon exercise of these
share options, the ordinary shares will rank pari passu with the existing Ordinary Shares.
The fair value of the 920,000 share options as at the grant date was £87,000 (2021: £nil). The fair
value was calculated using the adjusted Black-Scholes model with the following key assumptions:
(i) volatility of 43% 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 50p. This value has been adjusted to reflect the impact of market-based conditions. The
Company has recognised a share based payment expense for the year of £9,815 (2021: £nil).
22. Capital Commitments
As at 30 April 2022 and 30 April 2021 neither the Group nor the Company had any capital
commitments.
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
owed amounts as follows:-
SHIPS 16 Fund
Fees
Amount Due
2022
£000
84
2021
£000
70
2022
£000
33
2021
£000
37
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
7 and in the Directors Report.
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
24. Subsequent events
The lease on the Group’s former offices in Conduit Street, London expired on 3 May 2022. In
June 2022, the Group agreed with its former landlord a settlement of outstanding rent and service
charge liabilities resulting in a reduction of lease liabilities of £125,000 and a reduction of service
charge liabilities of £46,000. Settlement was also agreed on dilapidations in the sum of £25,000.
A settlement payment of £641,000, including VAT, was made in June 2022 in relation to all
outstanding lease, service charge, utilities and dilapidations liabilities.
25. 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.
Financial assets at amortised cost
Trade receivables
Other receivables
Cash and cash equivalents
Group
2022
£000
977
46
3,365
4,388
Group
2021
£000
983
4
2,892
3,879
Company
Company
2022
£000
-
3
1,706
1,709
2021
£000
-
2
1,291
1,293
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
Financial liabilities at amortised
cost
Trade payables
Amount due to group undertakings
Accruals
Provisions
Lease liabilities
Financial assets at fair value
through other comprehensive
income
Group
2022
£000
421
-
393
25
1,012
1,851
Group
2021
£000
432
-
160
100
577
1,269
Group
2022
£000
Group
2021
£000
Unlisted investments
529
529
Company
Company
2022
£000
22
13
14
-
-
49
2021
£000
1
288
39
-
-
328
Company
Company
2022
£000
-
2021
£000
-
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:
Trade receivables
Cash and cash equivalents
Other receivables
Group
2022
£000
977
3,365
46
4,388
Group
2021
£000
983
2,892
4
3,879
Company
Company
2022
£000
-
1,706
3
1,709
2021
£000
-
1,291
2
1,293
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
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 2022, if LIBOR had increased by 0.5% with all other variables
held constant, post tax profit and equity for the Group would have been £17,000 (2021: £15,000)
higher, and for the Company £8,000 (2021: £6,000) higher. Conversely, if LIBOR had decreased
by 0.5% with all other variables held constant, post tax profit and equity for the Group would have
been £17,000 (2021: £15,000) lower, and for the Company £8,000 (2021: £6,000) lower.
The Group’s cash and cash equivalents earned interest during the year at an average of 0.01%
(2021: 0.07%), and the Company’s cash and cash equivalents earned interest during the year at an
average of 0.01% (2021: 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 tables shows the contractual maturities of the Group’s and the Company’s financial
and lease liabilities, all of which are measured at amortised cost:
Group
2022
£000
532
282
814
Group
2022
£000
536
77
444
1,057
Group
2021
£000
592
-
592
Group
2021
£000
465
112
-
577
Company
Company
2022
£000
36
-
36
2021
£000
40
-
40
Company
Company
2022
£000
2021
£000
-
-
-
-
-
-
-
-
Financial liabilities falling due:
Within 1 month
From 2 to 3 months
Lease liabilities falling due:
Within 6 months
From 6 to 12 months
After 12 months
5 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
26. 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.
27. Reconciliation of liabilities arising from financing activities - Group
Current liabilities
Lease liabilities
Non-current
liabilities
Lease liabilities
Cashflow
Non-cash
movements
As at 30
April 2021
Cashflow
Non-cash
movements
As at 30
April 2022
As at
1 May
2020
£000
£000
£000
299
262
561
-
-
-
278
(262)
16
£000
577
-
577
£000
£000
(1)
-
(1)
34
402
436
£000
610
402
1,012
5 5
5 6