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A time for change and progression

PFK land farming property lake district

Our vision

To deliver sustainable long-term value for all our stakeholders, by having a clear strategy to grow our investment portfolio as well as providing integrated property services delivered by expert teams to clients seeking increased value by owning, occupying, developing, investing, or realising the value of residential, commercial or agricultural property.

Our strategy

Our strategy positions PFK for sustainable growth in both existing and emerging sectors, it is designed to consolidate our existing Property Services business and grow net rental income, as well as simplifying and focusing all aspects of the business, and building on the Company’s operational strength and foundations of over 140 years of trading.

I have the full support of the leadership teams within the business as well as the PFK Board.

In developing this strategy I have been pragmatically inclusive with the leadership teams and reviewed all departments and all aspects of the business fully.

My results support our view that there remains significant continued market opportunity in the Property Services sector where PFK has knowledge, skills and strong provenance.

We also identified the need for PFK to focus on growing net rental income, either through development of existing assets or acquisition. The conclusion being that leased Commercial property with robust cash flows remains a compelling investment.

The retention of these assets with predictable cash flows and the ability to capture the reversionary value will provide financing for PFK’s evolution as we seek to progress to a position which will ameliorate any effects to the business as a result of a variable market.

Suitable protection measures against volatile pricing in respect of debt or equity finance shall be taken as appropriate and will be commensurate with the Company’s financial position.

At the appropriate time, policy defining the investment strategy of PFK will be implemented. This policy is to consider fund and retain models versus fund and trade, as well as options in relation to direct land/investment disposals which will correlate to debt-to-equity levels and cash exposure/risk during any evolution stage of the business.

There remains significant continued market opportunity in the Property Services sector where PFK has knowledge, skills and strong provenance.

Dovetailed with this will be an agreed hedging policy/position which manages exposure to interest rate volatility.

As the Company progresses the move toward a hybrid dividend policy (blended stability and residual policies), this process shall have regard to debt-to-equity levels, but through a longer term lens. This ensures a focus is kept on the longer term growth of the Company.

Given the cyclical nature of the Property services part of the business this policy will recognise business economics can fluctuate and as such the policy should allow for a regular maintainable dividend payable, with extra dividend payable when set thresholds are within acceptable tolerances (including debt-to-equity and profitability).

This more progressive strategy will further establish PFK as an income generating non-quoted trading PLC, which provides shareholders access to a dynamic, service driven Property services business as well as the benefits gained though investment in the region’s strong local Commercial market, which otherwise would only be achievable through direct real estate investment.

To achieve this PFK have a clear and effective three pillar strategy:

  1. Safeguard and grow net rental income.
  2. Leverage assets to grow rental income.
  3. Consolidate and organically grow and increase profitability of property services.

 

Safeguard and grow net rental income

Review existing leases, increase rents and extend terms on existing leases terms when appropriate.

Re-invest in existing property when out of lease prior to re-letting to maximise rent in short/medium term whilst adding value to the reversionary interest.

This investment plan requires no additional capital raising.

 

Leverage assets to grow rental income

Leverage assets and utilise lines of credit to develop land to create Commercial Investment Assets which are developed on a pre-let or speculative basis.

The occupied Commercial investments to be converted onto term loans with appropriate amortisation periods which will be serviced by strong predictable cash flows. Under this model these assets, will, over time will capture the full reversionary interest, whilst in the interim will provide potential portfolio security for other opportunities.

 

Consolidate and organically grow and increase profitability of property services

PFK property services strategy is to be the leading advisor in the key markets in which we operate.

Our strategy is delivered locally by our experts on the ground with flexibility to adapt quickly to changes in circumstances and opportunities.

More recently the Property Services market in the UK has become uncertain, in particular we retain a cautious view in relation to the effect of the Brexit negotiation period on sentiment in the UK residential market.

PFK have adopted an approach of the consolidation of services through our existing offices, as we focus on refining the simplicity and scalability of what we do and how we do it, this in term will drive economies of scale, customer satisfaction and profitability.

PFK will seek to enhance scalability through simplification and continue to push to enhance our offer utilising digital and online services without losing either our identity or level of customer service.

 

Business planning

PFK have developed a business planning process, which is conducted annually and comprises of a five year strategic plan, a financial forecast for the current year and a financial projection for the next five years. The plan is reviewed each year as part of its budget and strategy review process.

Once approved by the Board, the plan is cascaded down across the Company and provides a basis for setting all detailed financial budgets and strategic actions.

Corporate social responsibility

At PFK, we believe that in order to secure a successful, long-term future for the business, it is important to make a positive impact, both on those around us and the environment. Our focus on Corporate Social Responsibility is part of our wider Corporate Strategy and focuses on three key areas; inclusivity and fairness with our stakeholders; promoting a thriving local community and managing our environmental impact.

1. Inclusivity and fairness

We are committed to building strong, loyal relationships with our employees, customers and other stakeholders.

We aim to recruit and support the highest quality people from the widest pool of individuals whilst always promoting inclusion and diversity. We thrive to create an environment which nurtures talent and promotes development and progression.

We take a long-term approach with our customers so that relationships can grow in to genuine partnerships, built on mutual respect and a thorough understanding of each other’s goals and objectives. Through this, we are determined that these relationships are positive, strong and ultimately, long-lasting.

Case study: Promotion from within

2. Promoting a Thriving Local Community

Our roots in the local community are deep and strong and we are proud of our history. PFK was founded in 1876 and has traded successfully throughout Cumbria ever since. We feel we have an important role to play in the community and communicate regularly with other community stakeholders to generate positive outcomes.

Staff operating in their respective areas of Cumbria are encouraged to support local initiatives and through this develop themselves through learning and contributing to making a real difference to their community.

3. Managing our environmental impact

PFK operate throughout a wide range of different landscapes and environments, ranging from National Parks and agricultural land through to large towns and cities.

Throughout our various operational divisions, we have procedures and initiatives in place for minimising the adverse effects our activities have on both the local environment we operate in and the wider environment in general. We regularly review how our approach can be modified to improve our environmental impact which can include financial investment if deemed to fit in with PFK’s overall Corporate Strategy.

Case study: Biomass boiler implementation at the PFK saleroom

 

STEPHEN LANCASTER
Managing Director

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