STOCKHOLM, Sweden, Aug. 14, 2002 (PRIMEZONE) -- Fletcher King plc announces today its preliminary results for the 12 months ended April 30, 2002.
Key points:
-- Turnover: 5 million pounds (2001: 6.255 million pounds).
-- PBT: 25,000 pounds (2001: 461,000 pounds).
-- Total dividend: 1p per share (2001: 4p).
-- Results adversely affected by market conditions and a 130,000
pounds write off of two bad debts at Fletcher King Howard.
David Fletcher, Chairman of Fletcher King, commented: "Following our Trading Statement on May 3, 2002, it should come as no surprise that this set of results is disappointing. Turnover and profitability have been hit as a result of the slowdown that has affected the whole market plus the 130,000 pounds write off of two bad debts at Fletcher King Howard.
Whilst the market in which we operate is unlikely to be much easier in the coming year, we have experienced and talented teams running all the divisions within the company and I am confident we will be able to grow profits by exploiting all opportunities that present themselves in the coming year."
CHAIRMAN'S STATEMENT - RESULTS
Following our Trading Statement on May 3, 2002 it will come as no surprise to shareholders that the results for the year ending April 30, 2002 are disappointing. Turnover and profitability are down as a result of the slowdown in the market. Profitability has been further affected by the exceptional item in the accounts of Fletcher King Howard of 130,000 pounds write off of two bad debts.
Turnover for the year was 5 million pounds (2001 6.255 million pounds) and profits before tax 25,000 pounds (2001 461,000 pounds). The Board is proposing a final dividend of 0.75p (2001 2.5p) which, subject to shareholders approval at the Annual General Meeting, will be paid on September 23, 2002 to shareholders on the register at the close of business on August 23, 2002.
With an interim dividend already paid the total dividend for the year will amount to 1p per share (2001 4p per share)
THE COMMERCIAL PROPERTY MARKET
Last year the market was characterised by conflicting economic indicators and uncertain conditions. Demand for well let commercial property investments grew, and values rose as property continued to deliver performance well above gilts and equities.
Conversely the letting markets became more difficult as the year progressed and demand eased. Offices in Central London and the Western approaches were hardest hit as the financial services and high technology industries down sized
Owners of vacant property, who were prepared to be realistic in pricing their product and to act quickly in doing so, achieved lettings.
As interest rates remained low, the debt driven purchasers of investment property continued to be active, and they were joined later in the year by some of the institutions, who increased their allocation to property.
OUTLOOK FOR 2002/03
As predicted in my Report last year, the supply of good investment property continues to be restricted. The trend is for investors to be buyers rather than sellers, and this is likely to continue for some time to come, with the resultant increase in values.
Interest rates are predicted to remain stable for some time to come and the 5 and 10 year swap rates have been falling recently. The debt driven sector of the investment market should therefore continue to be strong with returns at acceptable levels compared to those likely from equities and gilts.
We believe the occupational market will continue to be steady with demand at similar levels to last year. If owners are to be successful in achieving lettings they will have to be realistic on quoting terms, and if they are, the rewards will come.
We have not yet launched our commercial property investment vehicle. Most of our potential small institutional investors were not prepared to liquidate their equities in a falling market in order to invest in property. We have therefore reconfigured the scheme to make it more suitable for high net worth individuals and hope to report positive progress in my Interim Report.
The market in which we are involved will not be much easier in the coming year but we are building our core property fund and asset management activities. Fletcher King Howard have cut costs and are forecasting a profitable year.
We have experienced and ambitious teams managing all divisions of the company and I am confident that they will exploit all avenues to grow profits from the opportunities that occur during the coming year. I therefore look forward to seeing a recovery in the Group's fortunes next year with a resultant increase in the dividend payment.
DAVID FLETCHER CHAIRMAN
14 August 2002
DIVISIONAL REVIEW
FLETCHER KING LONDON
Investment and Fund Management
In a year when institutional buyers were relatively quiet, the market was driven largely by debt financed property companies, overseas buyers and high net worth individuals who had become disillusioned with the equity market.
With interest rates continuing at historically low levels, properties securely let and yielding 7% plus became very attractive. The existence of more buyers than sellers, combined with a severe lack of good quality stock, has resulted in fewer transactions and the turnover of the department was lower.
However, the department has been active during the year and has sold landmark office buildings in Bristol and Edinburgh of approximately 100,000 sq.ft each with a combined capital value of 45 million pounds.
During the year there was a bias towards transactions in office buildings, four of which were in Central London. Further significant buildings were in Wokingham and Reigate together with a 75,000sq.ft office property in Camberley, the values of which approached 20 million pounds. We also dealt with industrial investments in Windsor, Bristol, and Chandlers Ford, together with retail warehouses in Falkirk, Brislington and Arbroath. The wide geographical spread of these properties is a good indication of our national presence.
In the forthcoming year it is likely that the investment market will continue very much as it did last year, with the lack of buying opportunities remaining a concern.
We have a good pipeline of sales instructions which include a regional shopping centre in East Anglia, a department store in Newport, Isle of Wight, and a number of well let market town shops for which there is a very strong demand.
Asset Management
Our existing clients generally continue to expand their portfolios and we were successful in securing a number of major new instructions during the year.
In particular we have taken on the management of a portfolio of eight industrial estates with a rental income in excess of 500,000 pounds per annum and a portfolio of nine, predominantly retail properties in the east of England with a rental income approaching 750,000 pounds. We have also won the management of 100,000 sq.ft prime office building in Edinburgh.
Towards the end of the year we were appointed to manage the property portfolio of a significant Family Trust and, in addition to managing the properties, we are tasked with rebalancing and expanding the portfolio.
We currently have a number of potential instructions for which we are bidding and expect the current year to show sustainable growth within the Department.
Rating and Valuation
The financial year was a busy and successful one for the department with over 300 appeals negotiated. Notable successes were gained for Standard Bank, London where a saving of over 300,000 pounds in rate payments was achieved on Canon Bridge House in the City. A renegotiation of the tone in Bracknell resulted in over 400,000 pounds saving in rate payments for Avis Europe on their Headquarters and 350,000 pounds for GMAC on their 60,000 sq. ft. office building.
The volume of valuation instructions continued to grow throughout the year and over 60 were undertaken, for loan security purposes, for Barclays Bank alone with a total value of over 330m pounds. The strength of the residential market has generated many instructions particularly in London and the South East where the clearing banks remain the main lenders.
The commercial lending market has had a quieter year, despite very low interest rates. However we have undertaken notable valuations for all the clearers and many of the building societies and foreign banks including the valuation of a portfolio of High Street shops for the Cheshire Building Society, the valuation of a large headquarters office building in St James's Square for Barclays Bank and the appraisal and valuation of Phase I of a 90,000 sq. ft. call centre in Wellingborough for NatWest.
There remain outstanding a large number of appeals under the April 2000 Rating List and we therefore expect an active year to come. The level of valuation instructions is buoyant and we expect to be as busy this year as last so that overall the department should have an excellent year.
Agency and Development
As already mentioned in this report, the market has been difficult during the last twelve months with much lower demand than seen in previous periods.
Clients have generally taken our advice on pricing and, during the first four months of this calendar year, we have achieved some notable success in the Central London market, which is one of the most difficult. Lettings have been achieved in Cassini House, St James's, Greville Street, EC1 and in Piccadilly, W1 at rents close to, but below 2001 peaks.
Out of town successes include the disposal of over 70,000 sq.ft in Guildford for BP International, and a 30,000 sq.ft freehold sale for SAAB at Globe Park, Marlow.
The coming financial year will, we believe, be characterised by a slowing in the pace of enquiries as prospective tenants and purchasers take longer to make decisions. The quality of the enquiries in the market has improved, as has the department's market share. We have a good order book and are currently budgeting to improve the department's performance over last year.
FLETCHER KING HOWARD
Our wholly owned construction services subsidiary continued to have a difficult year although it traded profitably during the second half. Despite its difficulties it still completed some significant projects which included Scantruck's 3.5million pounds headquarters office and workshop facility at Purfleet, Northampton Saints Rugby Club's 3 million pounds stand (completed in just 16 weeks), a 300,000 sq.ft distribution park in Thurrock and Computacenter's 2million pounds fit-out at Hatfield.
The forward order book has improved significantly over the previous year and the company is also winning orders in new industry sectors, such as pharmaceuticals where it is currently building a 10 million pounds manufacturing facility for Ivax Pharmaceuticals in Cheshire.
Developer work continues with an 80,000 sq.ft retail development for City and County Developments in Bedford . The company's work in the educational sector is expanding with the start of a sports complex for Berkhamstead School and a 13 million pounds project on the City Academy in Hornsey. Other notable new commissions are a 7 million pounds Call Centre in Wellingborough, and a 10 million pounds cold storage facility, for Christian Salvesen, in Lincolnshire.
Instructions have also been won from NatWest, Barclays and Investec to provide loan monitoring valuations on development sites.
FLETCHER KING BRAITHWAITE
Fletcher King Braithwaite in Manchester have enjoyed another good year and benefited from the cross selling between divisions in the Group, by acquiring a site in Runcorn for the new Ivax Pharmaceuticals facility that will be construction managed by Fletcher King Howard.
A 200,000 sq.ft multi-storey mill complex on the edge of the City sold for a new residential development and one of the final industrial plots in North Warrington was acquired for a 70,000 sq.ft speculative industrial scheme. The company will arrange both the lettings and the financing of this project.
The largest pre-letting in Haydock last year was achieved on a multi-unit development on which the company has also been instructed to arrange the financing.
The company's long involvement on Trafford Park continues with a 60,000 sq.ft four-unit scheme for Green Property Plc.
The market in the North-West continues to be comparatively strong and our office has a good pipeline of work for the coming year.
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 APRIL 2002
2002 2001
'000 P '000 P
TURNOVER 5,000 6,255
Staff costs (3,014) (3,976)
Depreciation (120) (143)
Other operating charges (1,904) (1,767)
OPERATING (LOSS) / PROFIT (38) 369
Share of results of associated 23 -
undertakings
Loss on disposals of shares in (2) -
associated undertakings
Interest receivable and similar income 47 94
Interest payable and similar charges (5) (2)
PROFIT ON ORDINARY ACTIVITIES BEFORE
TAXATION 25 461
Tax charge on profit on ordinary (24) (177)
activities
PROFIT FOR THE FINANCIAL YEAR 1 284
Dividends (88) (352)
AMOUNT DEDUCTED FROM RESERVES (87) (68)
Earnings per share - basic 0.01p 3.2p
- diluted 0.01p 3.1p
The basic earnings per share is based on the profit for the financial year ended 30 April 2002 of 1,000 pounds (2001: 284,000 pounds) and on 8,807,279 (2001: 8,807,279) ordinary shares in issue throughout the year. The diluted earnings per share is based on the profit for the financial year ended 30 April 2002 of 1,000 pounds (2001: 284,000 pounds) and on 8,926,473 (2001: 8,926,619) ordinary shares in issue during the year adjusted for the weighted average number of options outstanding at the end of each period.
CONSOLIDATED BALANCE SHEET AS AT 30 APRIL 2002
2002 2001
'000 P '000 P
FIXED ASSETS
Tangible assets 294 390
Investment in associated undertakings 39 49
Other investments 3 903
336 1,342
CURRENT ASSETS
Debtors 1,946 1,974
Cash at bank and in hand 1,305 1,066
3,251 3,040
CREDITORS: amounts falling due within (1,140) (1,875)
one year
NET CURRENT ASSETS 2,111 1,165
TOTAL ASSETS LESS CURRENT
LIABILITIES 2,447 2,507
CREDITORS: amounts falling due after (38) -
one year
PROVISION FOR LIABILITIES AND (1) (12)
CHARGES
NET ASSETS 2,408 2,495
CAPITAL AND RESERVES
Called up share capital 881 881
Share premium account 76 76
Profit and loss account 1,451 1,538
EQUITY SHAREHOLDERS' FUNDS 2,408 2,495
CASH FLOW STATEMENT FOR THE YEAR ENDED 30 APRIL 2002
2002 2001
'000 P '000 P
Net cash (outflow)/inflow from (297) 506
operating activities
Dividends received from associated 21 -
undertakings
Returns on investments and servicing of 43 92
finance
Taxation (163) (202)
Capital expenditure and financial 893 (880)
investment
Equity dividends paid (242) (352)
Cash inflow/(outflow) before financing 255 (836)
Financing (16) (16)
Increase/(decrease) in cash in the year 239 (852)
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