Disposal

RNS Number : 0980D

First Property Group PLC

17 March 2011

 



Date:	17 March 2011
On behalf of:	First Property Group plc ("First Property" or the "Group")
Embargoed for:	0700hrs

First Property Group plc

Disposal of 60% shareholding in First Property Services Limited

The Board of First Property announces that it has sold its entire shareholding in First Property Services Limited ("FPS"), its mechanical & electrical (M&E) installation and maintenance contractor, to FPS's Managing Director, Philip Moore, for £170,000 in cash.

The sale to Philip Moore (who currently holds 40% of the shares in FPS) is a related party transaction under the AIM Rules.

The Board has concluded that the disposal is in the best interests of the Group for the following reasons:

1) FPS's activities are distinct from the main business of First Property and there are no material synergies between the businesses. 

2) Recent results of FPS reflect the increasingly difficult environment for installation and maintenance contractors. Pre-tax profit in the year ended 31 March 2010 was £179,000. However, the continuing difficult markets have resulted in FPS making an un-audited pre-tax loss of £137,000 in the first eleven months of the current year.

The consideration is payable as to £20,000 on completion and the balance over a 24 month period, attracting interest at a rate of 2.5% per annum over Barclays bank base rate on the outstanding balance for the first 12 months and 7% per annum over Barclays Bank base rate thereafter. In addition, First Property will share proportionately in any profits of FPS based on the amount earned by it in each successive accounting period until the entire consideration has been paid.

The Directors, having consulted First Property's NOMAD, Arden Partners plc, believe that the terms of the disposal are fair and reasonable insofar as its shareholders are concerned.

Shareholders' funds of FPS, at 31 March 2010, were some £355,000, of which £213,000 were attributable to First Property. As a result of losses made by FPS during the year, the carrying value of First Property's 60 per cent interest in FPS immediately prior to the sale, was approximately £150,000. The Board does not, therefore, expect a material profit or loss to emerge from the sale.

Commenting on the disposal Ben Habib, Chief Executive of First Property Group plc, said:

"We acquired our interest in FPS for a nominal consideration in February 2006. Since then we have earned £475,000 in dividends from it. Together with the sales proceeds of £170,000, our total earnings from this investment have been £645,000; an excellent return for the Group.

"The current trading environment for FPS is difficult and there are no material synergies between its business and our property fund management activities. This sale allows FPS to develop its business as an independent entity and allows us to concentrate on our core business of property fund management.

"We wish Phil Moore all the very best of luck with his business."

-Ends-

For further information please contact:

First Property Group plc	Tel: [phone]
Ben Habib (Chief Executive) Jeremy Barkes (Director, FJB Capital Advisers)	[e-mail]
Arden Partners	Tel: [phone]
Chris Hardie (Director, Corporate Finance)
Redleaf Polhill	Tel: [phone]
Mike Ward	[e-mail]

Notes to investors and editors     

First Property Group plc is a commercial property fund manager with operations in the United Kingdom and Central Europe. The performance of its funds under management ranked No.1 versus the IPD benchmarks for CEE and Poland for the 4 year period to 31 December 2009.

The business model of First Property Group is:

·     To raise third party funds to invest in income producing commercial property;

·     To co-invest in these funds;

·     To earn fees for the management of these funds. Fees earned are a function of the value of assets under management as well as the performance of the funds;

·     To earn a return on its own capital invested in these funds.

Further information about the Company and its products can be found at: www.fprop.com.

 

END

 

 

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