Final Results

RNS Number : 7848I

First Property Group PLC

21 June 2011

 



Date:                      21 June 2011

On behalf of:         First Property Group plc ("First Property", the "Company" or the "Group")

Embargoed:         0700hrs

First Property Group plc

Preliminary Results for the twelve months to 31 March 2011

First Property Group plc (AIM: FPO), the property fund management group, today announces its preliminary results for the 12 months ended 31 March 2011.

Financial highlights:

	Unaudited Year to 31 March 2011	Audited Year to  31 March 2010	Percentage change
Profit  before tax - continuing operations	£2.95m	£2.61m	+13.0%
Net assets	£16.57m	£15.65m	+5.9%
Diluted earnings per share (continuing operations)	1.90p	1.90p	-
Total dividend	1.06p	1.03p	+2.9%
Profit before tax by segment:
Profit before tax from property fund management (FPAM)	£2.74m	£2.76m	-0.7%
Profit before tax from Group Properties (incl FOP)	£1.24m	£0.91m	+36.3%
Assets under management	£366m	£300m	+22.0%

Operational highlights:

·      New Pan-European fund, focused initially on Poland, Fprop Opportunities plc ("FOP"), established in October 2010, seeded by a £7 million cash investment by the Group.

·      UK Fund 72% invested with £75.5 million under management.

·      Plans afoot for a new UK fund.

·      Retained ranking as the best performing fund manager versus both the Investment Property Databank (IPD) Central and Eastern European (CEE) and Polish Benchmarks, for the five years to 31 December 2010.

·      Disposal of First Property Services Ltd, its 60% owned Mechanical & Electrical (M&E) contracting business, for £170,000.

Commenting on the results, Ben Habib, Chief Executive of First Property, said:

 "The Group has navigated the credit crunch extremely well and our funds under management have performed well against a challenging backdrop for property investment. This performance is reflected in our being ranked by IPD as the best performing fund manager in CEE and in Poland for the five years to 31 December 2010.  

The Group remains focused on growing its assets under management whilst maintaining its good performance track record. Raising new funds is not easy in this climate but we are in discussions with a number of parties in relation to investing in Fprop Opportunities plc and we hope to be in a position to report positive news in due course.

We have an excellent team of people in the UK and Poland. Our track record speaks for itself and we therefore look to the future with confidence."

A briefing and conference call for analysts will be held at 09:30hrs today at Redleaf Polhill, 11-33 St. John Street, London, EC1M, 4AA. A conference call facility will also be available; for details please register at http://tinyurl.com/3zz7nju. A recorded copy of the call will subsequently be posted on the company website, www.fprop.com.

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]
Elizabeth Baker / George Parrett / Emma Kane	[e-mail]

Notes to investors and editors

First Property Group plc is a property fund manager with operations in the United Kingdom and Central Europe. The performance of its funds under management is ranked No.1 versus the Investment Property Databank (IPD) Central & Eastern European (CEE) Benchmark for the three, four and five years to 31 December 2008, 2009 and 2010 and No.1 versus the IPD Polish Benchmark for the four and five years to 31 December 2009 and 2010.

The business model of First Property Group is to:

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

·      Co-invest in these funds;

·      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;

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

CHIEF EXECUTIVE'S STATEMENT

Financial results

I am pleased to report final results for the 12 months ended 31 March 2011.

Revenue during the period grew by 10.0% on a continuing basis to £7.11 million (2010: £6.46 million), yielding a 13.0% increase in profit before taxation of £2.95 million (2010: £2.61 million).

Diluted earnings per ordinary share from continuing operations remained static at 1.90 pence (2010: 1.90 pence).

The Group ended the period with net assets of £16.57 million (2010: £15.65 million) and a cash balance of £5.44 million (2010: £10.1 million), of which £1.9 million is held within Fprop Opportunities plc, which is 84.1% owned by the Group.

Dividend

The Directors have resolved to recommend an increased final dividend of 0.74 pence, which together with the interim dividend of 0.32 pence equates to a dividend for the year of 1.06 pence (2010: 1.03 pence). The final dividend, if approved, will be paid on 23 September 2011 to shareholders on the register at 26 August 2011.

Review of operations

Property fund management (First Property Asset Management Limited or FPAM)

At 31 March 2011 assets under management had increased by £66 million to £366 million (2010: £300 million). Of these, 22% were located in the UK (2010: 11%), 75% in Poland (2010: 85%) and the remaining 3% in Romania (2010: 4%). We completed three sales in the period with a total value of £16.2 million and 14 purchases with a total value of £87.4 million amounting to a net gain of £71.2 million in assets under management which was partly offset by negative foreign exchange and revaluation differences of £5 million.

Revenue earned by this division grew by 2.1% to £3.97 million (2010: £3.89 million), generating an operating profit of £2.74million (2010: £2.76 million). This represents 68.9% of Group profit before tax (2010: 75.3%) prior to the deduction of unallocated central overheads. Our management fee income is currently running at some £4.2 million per annum on an annualised basis.  

The earnings of this division did not grow in line with the growth in assets under management for a number of reasons. First, the growth in assets under management was phased during the year and the fee income earned on the growth in assets under management was accordingly phased. Second, fee income, which is a function of the value of assets under management, was held back by weakness in the Euro during the year. The €/ £ exchange rate at the beginning and end of the year under review was € 1.12/ £1 and €1.13/ £1 respectively but the average €/£ rate for the year was some 5% weaker at 1.18 (2010: 1.13). The Euro is not the only foreign currency to which we have an exposure but the exposure we have is significant, with 78% of our assets denominated in Euros. Finally, the fee rate we levy on our UK fund is lower than the fee rate we levy on our other funds.

We currently manage six closed ended funds. A brief synopsis of the value of assets under management and maturity of each of these funds is set out below.

Fund	Established	Fund life	Assets under management	% of total assets under management
SAM Property Company Ltd (SAM)	Aug 2004	Rolling	Not subject to recent revaluation	Not subject to recent revaluation
Regional Property Trading Ltd (RPT)	Aug 2004	5 years to Aug 2009, extended to Aug 2012	£8.1 million	2.2%
5th Property Trading Ltd (5PT)	Dec 2004	7 years to Dec 2011, extended to Dec 2014	£9.5 million	2.6%
USS Fprop Managed Property Portfolio LP	Aug 2005	10 years to Aug 2015	£249.9 million	68.2%
UK Pension Property Portfolio LP (UK PPP LP)	Feb 2010	7 years to Feb 2017	£75.5 million	20.6%
Fprop Opportunities plc (FOP)	Oct 2010	10 years to Oct 2020	£23.3 million	6.4%
Total			£366.3 million	100%

UK PPP LP and FOP are both in investment phases.

UK PPP LP will, once fully invested, have some £106 million of assets under management. There is therefore capacity of £30 million for further purchases.

UK PPP LP is nearly 75% invested and we will therefore soon be taking steps to raise another fund targeting UK assets. The investment criteria for this new UK fund are likely to be very similar to those of UK PPP LP. We remain concerned about the macro-economic outlook for the UK but yields on commercial properties located outside central London can be attractive and the new fund will target recessionary resilient properties, ideally let in 2009 or later and being sold on high yields.

FOP has thus far made two investments, both of which are high yielding retail properties in Poland. The first was a hypermarket let to Carrefour in Lodz (a purchase price of €19.9 million), Poland's second largest city, and the second was a shopping centre in Krasnystaw (a purchase price of €5.3 million), a small town in the East of Poland.

We expect further growth in our assets under management this year. We do not plan to sell any properties during the year and we will be acquiring properties in the UK on behalf of UK PPP LP. We should also grow our assets under management in Poland as we raise new funds and invest these on behalf of FOP. In view of the above, and the fact that the properties acquired last year on behalf of these two funds will make a full year's contribution to earnings this year, we expect earnings from our fund management activities will also increase this year.

I am pleased to report that the Company has retained its ranking as the best performing fund manager versus both the Investment Property Databank (IPD) Central and Eastern Europe (CEE) and Polish Benchmarks over the period of our activities in Central and Eastern Europe, now for the five years ended 31 December 2010.

Group properties

Group properties comprise two directly held properties and shareholdings in four of the Group's six managed funds (as set out in the tables below). It is the Group's policy to carry its investments at the lower of cost or valuation for accounting purposes.

Directly held properties:

	Purchase date	Purchase price	Bank loan	Valuation at 31 March 2011	Net rent	Contribution to pre-tax profit during the year
Bacha St, Mokotow, Warsaw	Nov 2007	PLN 11.7 million (£2.3 million)	Nil	PLN 12.8 million (£2.8 million)	£299,000	£281,000
Blue Tower, Central Business District, Warsaw	Dec 2008	US$ 12.9 million (£8.5 million)	US$ 10.6 million (£6.6 million)	US$ 18.4 million (£11.5 million)	£745,000	£498,000
Total		£10.8 million	£6.6 million	£14.3 million (Net: £7.7 million)	£1.04 million	£779,000

Our directly held assets have performed very well for the Group throughout their period of ownership. Since acquiring these assets we have been able to increase rents as well as reduce costs.

The Blue Tower property in particular has proven to be a very profitable investment. During the year under review we significantly cut the costs of managing this property. The full benefit of these savings is not reflected in the above earnings figures and should accrue to the Group in the current year. There are further asset management gains which we expect to derive from this property, on which we hope to report in due course.

Investments in managed funds:

Revenue and earnings arising for the Group from our investments in the four funds is, for funds in which we do not have a controlling interest (being three out of the four funds), accounted for either on an associated or investment basis and for FOP, in which we currently have a controlling 84.1% shareholding, on a consolidated basis.

Fund	% owned by First Property Group	Book value of First Property's share in fund	First Property's share of pre-tax profits earned by fund
5th Property Trading Ltd (5PT)	37.8%	£495,000	£168,000
Regional Property Trading Ltd (RPT)	28.6%	£190,000	£53,000
UK Pension Property Portfolio LP (UK PPP LP)	0.9%	£711,000	£14,000
Fprop Opportunities plc (FOP)	84.1%	£7.0 million	£215,000
Total		£8.4 million	£450,000

FOP's revenue and profit before tax consolidated in these accounts amounted to £907,000 and £256,000 respectively, whereas the Group's 84.14% share of these was £763,000 and £215,000 respectively. In line with the Group's policy to account for investment assets at the lower of cost or book value, we have excluded revaluation gains from these earnings figures. It is expected that the Group's majority shareholding in FOP will be diluted down to a minority shareholding over time as FOP grows and raises additional third party investment. Once the Group's interest is reduced to a minority, FOP will also be accounted for on an associated basis.

The earnings arising from investments made by the Group in UK PPP LP and FOP during the year under review do not represent a full year's worth of earnings. We therefore expect the earnings derived from these investments to rise this year. These earnings should also benefit from any further property purchases made by these funds during the current year.

Discontinued activities - First Property Services Ltd (FPS) & Commercial Property Database (CPD)

As announced during the year, we sold our 60% interest in First Property Services Ltd (FPS) for £170,000 on 17 March 2011 resulting in a profit on sale of £16,000. FPS made a post-tax loss during the period of £98,000 (2010: profit £137,000). Our share of this loss was £59,000 (2010: profit of £83,000). The carried value of our shareholding in FPS at the date of the sale was £154,000 (2010: £213,000). The consideration of £170,000 was partly settled by a cash payment of £20,000 on the date of sale, with the remaining £150,000 payable in cash over the following twenty four months.

In April 2010 the Group also disposed of Commercial Property Database Ltd for a nominal consideration. This subsidiary had been in runoff for several years and the sale price represented the book value of its assets and liabilities, with the consequence that there was no impact on the Group's year-end figures.

UK head office relocation

In November 2010 the London office of the Group relocated to Westminster where all UK staff are now based. The total cost of this relocation amounted to £33,000. This sum has been charged to the income statement as part of unallocated central overheads.

Fund raising market outlook

Our ability to raise funds is naturally crucial to our growth.

We are currently raising funds for FOP and anticipate raising funds for a new UK fund soon.

The fund raising market for blind pool funds, such as the type we have raised to date, is challenging. However our excellent track record should be of assistance in raising new funds. Investor appetite for Polish commercial real estate is growing again and we do have expressions of interest to invest in FOP. These discussions are not yet finalised but we hope to report positively on these efforts in due course.

Commercial property markets outlook

Poland:

Poland's GDP growth slowed in 2009 to a rate of 1.7% but it did not go into recession, making it the only member state of the 27 member European Union to escape recession that year. Poland's GDP growth accelerated to 3.8% in 2010. The IMF forecasts GDP growth of 3.8% again for 2011 with a number of other forecasters anticipating a figure in excess of 4%. Retail sales growth in Poland has continued its strong upwards trend with growth of 18.6% in the year to April 2011 and manufacturing output grew by 10.7% in the year to February 2011.

As a result of its strong economy and a relatively slow delivery of new properties to the market, the retail and office markets in Poland are beginning to experience rental growth again. Investor interest in Polish commercial property is also rising with some €1.73 billion of assets trading in 2010 (2009: €631 million).

The combined effect of a strong economy, rising rents and investor demand makes Poland an attractive jurisdiction in which to invest and we will continue to concentrate on Poland for FOP's future investments. In particular we will be targeting retail property where the increasing prosperity of the Polish consumer should be quickly reflected in rent increases.

United Kingdom:

Our view on the UK commercial property market is largely unchanged from this time last year. We remain cautious about the UK's economic outlook, and whilst its commercial property market has recovered significantly from the lows of 2009 these increases in value in many cases mask the economic pressure on occupants. In particular, prime central London properties have risen dramatically in value on the back of international investor demand and a perception that rents are and will continue to rise. We do not fully share this optimism. With prime yields at levels not seen since 2007, we fear that the prime end of the central London market is overheated.

With the exception of certain pockets of the UK, we expect occupier demand to remain subdued until the banking sector has recapitalised itself, the Government has reduced its budget deficit and the economy resumes sustained growth. We expect this will take many years.

Our focus in the UK therefore remains risk averse and on discount or mainstream retailers where rents have been established since 2009, or where the yield properly compensates for higher rents established in earlier years. We remain opportunistic in our asset selection but are naturally keener on properties which are let on long leases to tenants of strong credit worthiness.

Current trading and prospects

The Group has navigated the credit crunch extremely well and our funds under management have performed well against a challenging backdrop for property investment. This performance is reflected in our being ranked by IPD as the best performing fund manager in CEE and in Poland for the five years to 31 December 2010.  

The Group remains focused on growing its assets under management whilst maintaining its good performance track record. Raising new funds is not easy in this climate but we are in discussions with a number of parties in relation to investing in Fprop Opportunities plc and we hope to be in a position to report positive news in due course.

We have an excellent team of people in the UK and Poland. Our track record speaks for itself and we therefore look to the future with confidence.

Ben Habib

Chief Executive

21 June 2011

CONSOLIDATED INCOME STATEMENT

for the year ended 31 March 2011

Continuing operations	Notes	Year ended 31 March 2011 (unaudited) Total results £'000	Year ended 31 March 2010 (audited) Total results £'000
Revenue	2	7,110	6,461
Cost of sales		(1,050)	(1,333)
Gross profit		6,060	5,128
Operating expenses		(2,852)	(2,571)
Operating profit		3,208	2,557
Share of results in associates		221	233
Dividend income		14	9
Interest income		109	134
Interest expense		(602)	(323)
Profit on ordinary activities before taxation	3	2,950	2,610
Tax expense	4	(621)	(436)
Profit for the year from continuing operations		2,329	2,174
Discontinued operations Profit/(loss) for year from discontinued operations	5	(82)	137
Continuing and discontinued operations
Profit for the year		2,247	2,311
Attributable to:
Owners of the company		2,178	2,243
Non-controlling interest		69	68
		2,247	2,311

Profit for the year from continuing operations attributable to:
Owners of the company		2,221		2,161
Non-controlling interest		108		13
		2,329		2,174
Profit/(loss) for the year from discontinued operations attributable to:
Owners of the company	5	(43)		82
Non-controlling interest	5	(39)		55
		(82)		137
Earnings per share
Basic   - from continuing operations - from discontinued operations	7 7	2.02p (0.04)p		2.00p 0.07p
- from continuing and discontinued operations	7	1.98p		2.07p
Diluted
-from continuing operations	7	1.90p		1.90p
-from discontinued operations	7	(0.04)p		0.07p
-from continuing and discontinued operations	7	1.86p		1.97p

CONSOLIDATED SEPARATE STATEMENT OF

OTHER COMPREHENSIVE INCOME

for year ended 31 March 2011

		Year ended 31 March 2011 (unaudited)	Year ended 31 March 2010 (audited)
	Notes	Total results	Total results
		£'000	£'000
Profit for the year		2,247	2,311
Other comprehensive income
Exchange differences on retranslation of foreign subsidiaries		171	681
Taxation		-	-
Total comprehensive income for the year		2,418	2,992
Total  comprehensive income for the year attributable to:
Owners of the company		2,354	2,918
Non-controlling interests		64	74
		2,418	2,992

CONSOLIDATED BALANCE SHEETS

as at 31 March 2011

	Notes	As at 31 March 2011 (unaudited) £'000	As at 31 March 2010 (audited) £'000
Non-current assets
Goodwill		114	139
Investment properties	8	22,061	-
Property, plant and equipment		79	107
Interest in associates	9	377	337
Other financial assets	9	711	99
Other receivables	11	473	-
Deferred tax assets		199	142
Total non - current Assets		24,014	824
Current assets
Inventories - land and buildings	10	10,896	11,365
Current tax assets		95	-
Trade and other receivables	11	1,660	2,902
Cash and cash equivalents		5,441	10,126
Total current assets		18,092	24,393
Current liabilities
Trade and other payables	12	(1,859)	(2,490)
Financial liabilities	13	(500)	(25)
Current tax liabilities		(39)	(7)
Total current liabilities		(2,398)	(2,522)
Net current assets		15,694	21,871
Total assets less current liabilities		39,708	22,695
Non-current liabilities: Financial liabilities	13	(22,946)	(7,029)
Deferred tax liabilities		(191)	(12)
Net assets		16,571	15,654
Equity
Called up share capital		1,146	1,136
Share premium		5,463	5,423
Foreign Exchange Translation Reserve		678	844
Share-based payment reserve		140	105
Retained earnings		8,950	7,895
Equity  attributable to the owners of the company		16,377	15,403
Non-controlling interest		194	251
Total equity		16,571	15,654

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended  31 March 2011

Group	Share capital £'000	Share premium £'000	Share-based payment reserve £'000	Foreign exchange translation reserve £'000	Purchase of own shares £'000	Retained earnings £'000	Non-controlling interest £'000	Total
At 1 April 2010	1,136	5,423	105	844	(625)	8,520	251	15,654
Profit for the period	-	-	-	-	-	2,247	-	2,247
Sale of discontinued business	-	-	-	-	-	-	(103)	(103)
Issue of new shares	10	39	-	-	-	-	-	49
Movement on foreign exchange	-	-	-	(166)	-	-	(5)	(171)
Sale/ purchase of treasury shares	-	1	-	-	4	-	-	5
Issue of share options	-	-	35	-	-	-	-	35
Non-controlling interest in FOP share capital	-	-	-	-	-	-	13	13
Non-controlling  interest	-	-	-	-	-	(69)	69	-
Dividends paid	-	-	-	-	-	(1,127)	(31)	(1,158)
At 31 March 2011	1,146	5,463	140	678	(621)	9,571	194	16,571
At 1 April 2009	1,116	5,307	80	169	(564)	7,370	126	13,604
Profit for the period	-	-	-	-	-	2,311	-	2,311
Issue of new shares	20	116	-	-	-	-	-	136
Movement on foreign exchange	-	-	-	675	-	-	6	681
Sale/ purchase of treasury shares	-	-	-	-	(61)	-	-	(61)
Issue of share options	-	-	25	-	-	-	-	25
Non-controlling  interest on acquisition	-	-	-	-	-	-	89	89
Non-controlling interest	-	-	-	-	-	(68)	68	-
Dividends paid	-	-	-	-	-	(1,093)	(38)	(1,131)
At 31 March 2010	1,136	5,423	105	844	(625)	8,520	251	15,654

CONSOLIDATED CASH FLOW STATEMENTS

for the year ended 31 March 2011

		2011	2010
	Notes	Group £'000	Group £'000
Cash flows from operating activities
Operating profit		3,208	2,557
Adjustments for:
Depreciation of property, plant & equipment		28	26
(Profit)/loss on sale of property, plant & equipment		-	-
(Profit)/loss on sale of associates		(27)	-
Released (profit) from sale to associate	9	(26)	-
Share based payments		35	25
(Increase)/decrease in inventories		(171)	(18)
(Increase)/decrease in trade and other receivables		483	(513)
Increase/(decrease) in trade and other payables		671	(843)
Other non-cash adjustments		-	(42)
Cash generated from operations		4,201	1,192
Taxes paid		(582)	(524)
Net cash from/(used in) operating activities of continuing operations  Net cash from/(used in) operating activities by discontinued activities	6	3,619            (465)	668 148
Net cash flow from/(used in) operating activities		3,154	816
Cash flow from/(used in) investing activities
Proceeds from sale of subsidiary company -discontinued activity	5	20	-
Cash and cash equivalents disposed on sale of subsidiary	5	(110)	-
Purchase of investments		(612)	(99)
Proceeds from sale of associates		131	-
Cash paid on acquisition of new subsidiary		-	(260)
Cash and cash equivalents received on acquisition of new subsidiary		-	368
Purchase of investment properties		(21,955)	-
Purchase of property, plant & equipment		(75)	(11)
Interest received		109	134
Dividends from associates		103	-
Dividends received		14	9
Net cash from/(used in) investing activities of continuing operations  Net cash from/(used in) investing activities by discontinued activities	6	(22,375) -	141                (20)
Net cash flow from/(used in) investing activities		(22,375)	121
Cash flow from/(used in) financing activities
Proceeds from issue of shares		49	136
Proceeds from shareholder loans in subsidiary		1,267	-
Proceeds from finance lease		15,394	-
Repayment of finance lease		(187)	-
Sale/(Purchase) of shares held in Treasury		4	(61)
Interest paid		(602)	(323)
Dividends paid		(1,127)	(1,093)
Dividends paid to non-controlling interest		(31)	-
Net cash from/(used in) financing activities of continuing operations  Net cash from/(used in) financing activities by discontinued activities	6	14,767              (33)	(1,341)              (62)
Net cash flow from/(used in) financing activities		14,734	(1,403)
Net increase/(decrease) in cash and cash equivalents		(4,487)	(466)
Cash and cash equivalents at the beginning of period		10,126	10,096
Currency translation gains/losses on cash and cash equivalents		(198)	496
Cash and cash equivalents at the end of the period		5,441	10,126

1.         Basis of preparation

·     These preliminary financial statements have not been audited and are derived from the statutory accounts within the meaning of section 434 of the Companies Act 2006. They have been prepared in accordance with the Group's accounting policies that will be applied in the Group's annual financial statements for the year ended 31 March 2011. These are consistent with the policies applied for the year ended 31 March 2010. These accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and as adopted by the European Union (EU). Whilst the financial information included in this preliminary statement has been prepared in accordance with IFRS, this announcement does not itself contain sufficient information to fully comply with IFRS. The comparative figures for the financial year ended 31 March 2010 are not the statutory accounts for the financial year but are derived from those accounts prepared under IFRS which have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified, did not include references to any matter to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985.

·     These preliminary financial statements were approved by the Board of Directors on 17 June 2011.

2.         Revenue

Revenue from continuing operations consists of revenue arising in the United Kingdom 9% (2010: 6%) and Central and Eastern Europe 91% (2010: 94%), and all relates solely to the Group's principal activities. All revenue from discontinued activities relates to the UK, both in 2011 and 2010.

3.         Segment reporting 2011

	Property fund management	Group properties	Group fund properties "FOP"	Property facilities management ("FPS")	Other fees & income	Unallocated central overheads	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
External revenue - Existing operations	3,970	2,233	907	2,305	-	-	9,415
Less: Discontinued operations	-	-	-	(2,305)	-	-	(2,305)
	3,970	2,233	907	-	-	-	7,110
Depreciation and amortisation	(18)	(10)	-	(32)	-	-	(60)
Profit/(loss) before tax - existing operations	2,735	759	256	(120)	-	(1,021)	2,609
Less: Discontinued operations	-	-	-	120	-	-	120
-Share of results in associates	-	221	-	-	-	-	221
	2,735	980	256	-	-	(1,021)	2,950
Analysed as:
Before performance fees and related items	2,826	995	268	-	-	(653)	3,436
Performance fees	-	-	-	-	-	-	-
Staff bonus	(91)	(15)	(12)	-	-	(368)	(486)
Assets - Group	1,151	12,159	22,824	-	-	5,595	41,729
Assets -associates	-	685	-	-	-	(308)	377
Liabilities	(563)	(7,538)	(17,167)	-	-	(267)	(25,535)
Net assets	588	5,306	5,657	-	-	5,020	16,571
Additions to non-current assets
Property, plant and equipment	64	11	-	8	-	-	83
Investment properties	-	-	22,061	-	-	-	22,061
Investments	-	612	-	-	-	-	612
Interest in associates	-	221	-	-	-	-	221

             Segment Reporting 2010

	Property fund management	Group properties	Group fund properties ("FOP")	Property facilities management ("FPS")	Other fees & income	Unallocated central overheads	Total
External revenue - Existing operations	3,888	1,710	-	3,863	59	-	9,520
- Business acquisitions	-	863	-	-	-	-	863
- Discontinued operations	-	-	-	(3,863)	(59)	-	(3,922)
	3,888	2,573	-	-	-	-	6,461
Depreciation and amortisation	(14)	(3)	-	(34)	(2)	-	(53)
- Discontinued operations	-	-	-	34	2	-	36
Profit/(loss) before tax - Existing operations	2,755	620	-	183	0	(1,050)	2,508
Less: Discontinued operations	-	-	-	(183)	-	-	(183)
- business acquisitions	-	52	-	-	-	-	52
-Share of results in associates	-	233	-	-	-	-	233
	2,755	905	-	-	-	(1,050)	2,610
Analysed as:
Before performance fees and related items:	2,821	1,227	-	-	-	(827)	3,221
Performance fees	-	-	-	-	-	-	-
Staff bonus	(66)	(19)	-	-	-	(346)	(431)
Assets -Group	610	11,709	-	1,280	24	11,257	24,880
Assets -associates	-	671	-	-	-	(334)	337
Liabilities	(113)	(7,650)	-	(1,435)	(2)	(363)	(9,563)
Net assets	497	4,730	-	(155)	22	10,560	15,654
Additions to non-current assets
Property, plant and equipment	21	2	-	38	-	-	61
Goodwill	-	114	-	-	-	-	114
Interest in associates	-	233	-	-	-	-	233

A new segment has arisen this year with the launch of the new pan European fund, Fprop Opportunities plc (''FOP') in October 2010. The group owns 84.2% of this fund through seed capital with the intention of raising further third party investment from co-investees, thereby diluting its stake to associate status. Management have concluded that it does not suit the criteria for existing segments and that for purposes of transparency and clarity it should be reported as a separate segment.

Interest income is not allocated to a separate segment because all cash is managed centrally and is netted off against unallocated central overheads. Head office costs and overheads that are common to all segments are shown separately under unallocated central overheads. Assets, liabilities and costs which relate to Group central activities have not been allocated to business segments.

The geographic location of non-current assets is UK £1,140,000 (2010: £463,000) and Poland £22,874,000 (2010: £361,000).

4.         Tax expense

The tax charge includes actual current and deferred tax for continuing operations.

There was insufficient income earned in the UK against which to relieve operating costs incurred in the UK. This should have given rise to a deferred tax asset. However, the Group was not able to recognise this deferred tax asset in these accounts because there is not a reasonable prospect of earning sufficient taxable income in the UK in the near future.

As a result of the above the effective tax rate payable by the Group increased to 21.0% (2010:16.7%).

5.         Discontinued operations

The Group sold its 60% interest in First Property Services Ltd ("FPS"), for £170,000 on 17 March 2011 resulting in a profit on sale of £16,000. The carried value of the Group's shareholding in FPS at the date of the sale was £154,000 (March 2010: £213,000). The consideration of £170,000 was partly settled by a cash payment of £20,000 on the date of sale, with the remaining £150,000 payable in cash over the following twenty four months.

Year ended 31 March 2011

The pre-tax loss during the year up to the date of the disposal of discontinued operations amounted to £136,000.

Year ended 31 March 2010

The pre-tax profit during the year to 31 March 2010 was earned by operations discontinued during the year to 31 March 2011 and has been shown for comparative purposes.

Financial performance of discontinued operations	2011 £'000	2010 £'000
Trading  performance of discontinued operations
External revenue	2,305	3,922
Operating costs	(2,435)	(3,740)
Operating profit	(130)	182
Interest income	1	4
Interest expense	(7)	(8)
(Loss)/profit before tax	(136)	178
Tax (expense)/credit	38	(41)
(Loss)/profit after tax	(98)	137
Non-controlling interest	39	(55)
(Loss)/profit attributable to owners of the parent	(59)	82
Profit/(loss)  for the year from discontinued operations
Profit/(loss) after tax	(98)	137
Profit on disposal of discontinued operations	16	-
Tax on profit on disposal of discontinued operations	-	-
	(82)	137

Net assets disposed and disposal proceeds of discontinued operations	2011 £'000	2010 £'000
Increase/(decrease) in retained liabilities	-	-
Cash and cash equivalents disposed on sale of subsidiary	(110)	-
Profit/(loss) on disposal before tax	16	-
Cash consideration received, net of costs	20	-
Consideration deferred to future periods	150	-
Total consideration	170
Net assets of discontinued operations disposed of	(154)
Profit/(loss) on disposal before tax	16	-
Net cash inflow/(outflow) from disposals	(90)	-

Summary of net assets disposed of
	2011	2010
	£'000	£'000
Non-current assets	63
Debtors	955	-
Cash	110	-
Current liabilities	(854)	-
Non-current liabilities	(17)	-
Non-controlling interest	(103)	-
	154	-

6.         Cash flow from discontinued operations for the year ended 31 March 2011

		2011	2010
		Group £'000	Group £'000
Cash flows from operating activities (discontinued operations)	Note
Operating profit /(loss) (discontinued operations)	5	(130)	182
Adjustments for:
Depreciation of property, plant and equipment		32	34
Profit/(loss) on sale of property, plant and equipment		(1)	2
(Increase)/decrease in inventories		(23)	5
(Increase)/decrease in trade and other receivables		254	742
Increase/(decrease) in trade and other payables		(547)	(551)
Cash generated from discontinued operations		(415)	414
Total tax paid (discontinued operations)		(50)	(266)
Net cash from/(used in) operating activities by discontinued operations		(465)	148
Cash flow from/(used in) investing activities (discontinued operations)
Proceeds on disposal of property, plant and equipment		7	14
Purchase of property, plant and equipment		(8)	(38)
Interest received		1	4
Net cash from/(used in) operating activities by discontinued operations		-	(20)
Cash flow from/(used in) financing activities (discontinued operations)
Interest paid		(7)	(8)
Repayment of finance lease		(26)	(41)
Proceeds from finance lease		-	25
Dividend paid to minority interest		-	(38)
Net cash from/(used in) financing activities by discontinued operations		(33)	(62)

7.         Earnings per share

	2011	2010
Basic earnings per share  - continuing operations	2.02p	2.00p
Basic earnings per share - total continuing and discontinued operations	1.98p	2.07p
Diluted earnings per share - continuing operations	1.90p	1.90p
Diluted earnings per share - total continuing and discontinued operations	1.86p	1.97p
	2011 £'000	2010 £'000
Basic earnings - continuing operations	2,221	2,161
Basic earnings - total continuing and discontinued operations	2,178	2,243
Diluted earnings assuming full dilution - continuing operations	2,238	2,173
Diluted earnings assuming full dilution - total continuing and discontinued operations	2,195	2,255

The following numbers of shares have been used to calculate both the basic and diluted earnings per share:

	2011 Number	2010 Number
Weighted average number of ordinary shares in issue (used for basic earnings per share calculation)	109,890,897	108,144,226
Number of share options assumed  to be exercised	7,790,000	5,950,000
Total number of ordinary shares used in the diluted earnings per share calculation	117,680,897	114,094,226

The following earnings have been used to calculate both the basic and diluted earnings per share

Basic earnings per share	2011 £'000	2010 £'000
Basic earnings - continuing operations	2,221	2,161
- discontinued operations (note 5)	(43)	82
Basic  earnings - total continued and discontinued operations	2,178	2,243

Diluted earnings per share	2011 £'000	2010 £'000
Basic  earnings - continuing operations	2,221	2,161
Notional interest  on share options assumed to be exercised	17	12
Diluted earnings - continuing operations	2,238	2,173
- discontinued operations	(43)	82
Diluted  earnings - total continued and discontinued operations	2,195	2,255

8.         Investment properties

Investment properties indirectly owned by the Group in FOP are stated at cost and both have been valued by third party professional commercial property valuers at the Group's financial year end at a fair value of €26.35 million. The properties have not been depreciated as in the directors opinion the properties estimated residual value at the end of the period of ownership will be higher.

	2011	2010
	Group £'000	Group £'000
Investment properties
1 April 2010	-	-
Additions	21,955	-
Foreign exchange translation	106	-
31 March 2011	22,061	-

9.         Investments in associates and other financial assets

The Group has the following investments:

	2011	2010
	Group £'000	Group £'000
a) Associates
At 1 April	337	104
Release of profit withheld in sale to associate in 2007	26	-
Disposals	(104)	-
Share of associates profit after tax	221	233
Dividends received	(103)	-
At 31 March	377	337

The Group's investment in associated companies is held at cost plus its share of post acquisitions profits assuming the adoption of the cost model for accounting for investment properties under IAS40 and comprises the following:

	2011	2010
	Group £'000	Group £'000
Investments in associates
5th Property Trading Ltd	495	424
Regional Property Trading Ltd	190	247
	685	671
Less: Share of profit after tax withheld on sale of property to associate in 2007	(308)	(334)
	377	337

If the Group had adopted the alternative fair value model for accounting for investment properties, the carrying value of the investment in associates would have increased by £728,000 to £1,413,000.

	2011	2010
b) Other financial assets and investments	Group £'000	Group £'000
At 1 April	99	42
Additions	612	99
Transfer to Group undertakings	-	(42)
Impairment charge	-	-
At 31 March	711	99

The addition is in respect of the Group's 0.9% interest in UK Pension Property Portfolio L.P., a fund raisedin February 2010. The Group holds two investments, one listed, the other unlisted. Both are held at fair value. All of the assets have been classified as available for sale. In the directors' view the fair value has been estimated to be not materially different from cost. Fair value for the unlisted investment has been arrived at by applying the Group's percentage holding in this investment of the fair value of the net assets of the company.

10.       Inventories - land and buildings

	2011	2010
	Group £'000	Group £'000
Directly held Group properties	10,896	11,365

11.       Trade and other receivables

	2011	2010
	Group £'000	Group £'000
Current assets
Trade receivables	1,059	986
Amounts due from associates	-	15
Other receivables	312	769
Prepayments and accrued income	289	1,132
	1,660	2,902
Non-current assets
Other receivables	473	-

12.       Trade and other payables

	2011	2010
	Group £'000	Group £'000
Current liabilities
Trade payables	831	1,258
Other taxation and social security	313	387
Other payables and accruals	698	785
Deferred income	17	60
	1,859	2,490

13.    Financial liabilities

	2011 £'000	2010 £'000
Current liabilities
Bank loan	1	-
Finance leases	499	25
	500	25
Non - current liabilities
Loans repayable by subsidiary (FOP) to third party shareholders	1,267	-
Bank loans	6,616	6,993
Finance leases	15,063	36
	22,946	7,029

	2011 £'000	2010 £'000
Total obligations under bank loans and finance leases
Repayable within one year	500	25
Repayable within one and five years	2,323	36
Repayable after five years	20,623	6,993
	23,446	7,054

Bank loans and finance leases totalling £22,179,000 (2010: £7,054,000) included within financial liabilities are secured against investment properties owned by FOP and properties owned by the Group shown under inventories.

Loans repayable by FOP to third party shareholders are repayable in August 2020. A repayment of £125,000 was made in May 2011.

The final results are being circulated to all shareholders and can be downloaded from the Company's web site (www.fprop.com). Further copies can be obtained from the registered office at 35, Old Queen Street, London SW1 H9JA.

 

END

 

 

FR SEIFUSFFSEDM