First Property Group Preliminary Results

RNS Number : 0468F

First Property Group PLC

11 June 2012

 



Date:                     11 June 2012

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 2012

First Property Group plc (AIM: FPO), the commercial property fund management group, today announces its preliminary results for the 12 months ended 31 March 2012.

Financial highlights:

	Unaudited Year to 31 March 2012	Audited Year to 31 March 2011	Percentage change
Profit before tax - continuing operations	£3.97m	£2.95m	+35%
Diluted earnings per share (continuing operations)	2.73p	1.90p	+44%
Total dividend	1.08p	1.06p	+2%
Profit before tax by segment:
Profit before tax from property fund management (FPAM)	£3.07m	£2.74m	+12%
Profit before tax from Group Properties (incl FOP)	£2.54m	£1.24m	+105%
Net assets	£17.36m	£16.57m	+5%
Assets under management	£365m	£366m	-
Poland	70%	75%
UK	27%	22%
Romania	3%	3%

Operational highlights:

·     Although headline assets under management remained broadly unchanged year on year there was underlying movement in funds with assets in the UK increasing to 27% of total assets under management whilst a weakening Euro versus Sterling resulted in a 6% reduction in assets in Poland to 70% of total assets under management;

·      Material increased contribution to earnings from Group Properties, resulting from a full year's contribution from properties acquired by Fprop Opportunities plc (FOP) in 2010;

·      UK PPP fund, established in February 2010, 90% invested with £93.5 million under management at year end;

·      In receipt of expressions of interest to invest in a new UK fund to pursue the same higher yielding investment strategy as UK PPP;

·      Funds under management once again rated by Investment Property Databank (IPD) as the best performing versus the IPD Central & Eastern European (CEE) universe, now for the six years to 31 December 2011.

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

"It has now been over four years since the credit crunch began. Throughout this period First Property Group's client funds have delivered positive overall returns to their investors and the Company has remained profitable at all times, having increased its dividend payment every year since 2008. Our funds have, once again, been ranked as the best performing versus the IPD Central & Eastern European universe, now for the six year period to December 2011. We are proud of this track record, which results from judicious investing and the hard work of our excellent team.

"The investment landscape remains difficult with eurozone problems overhanging all capital markets. However, within Europe, Poland still stands out as one of, if not the best investment markets. Our intention remains to concentrate on Poland and the UK, where we see good value and we have considerable expertise in delivering attractive returns to investors."

A briefing and conference call for analysts will be held at 09.30hrs today at the Group's headquarters, 35 Old Queen Street, London, SW1H 9JA. A conference call facility will also be available on [phone], passcode 7499797. 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 (Business Development)	[e-mail]
Arden Partners	Tel: [phone]
Chris Hardie (Director, Corporate Finance)
Redleaf Polhill	Tel: [phone]
Emma Kane / George Parrett	[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 Group's investment performance is ranked No.1 versus the Investment Property Databank's (IPD) Central & Eastern European (CEE) universe over the three, four, five and six years to 31 December 2008, 2009, 2010 and 2011.

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 twelve months ended 31 March 2012.

Revenue earned by the Group increased by 31% to £9.34 million (2011: £7.11 million) yielding a 35% increase in profit before tax of £3.97 million (2011: £2.95 million). Diluted earnings per share grew by 44% to 2.73 pence (2011: 1.90 pence).

The Group ended the period with net assets of £17.36 million (2011: £16.57 million) and a cash balance of £9.98 million (2011: £5.44 million), of which £4.76 million (2011: £1.9 million) is held within Fprop Opportunities plc, (84.1% owned by the Group) and £669,000 (2011: £545,000) is held within Corp SA (68.3% owned by the Group), the property management company for Blue Tower in Warsaw.

Dividend

The Directors have resolved to recommend an increased final dividend of 0.75 pence (2011: 0.74 pence), which together with the interim dividend of 0.33 pence (2011: 0.32 pence) equates to a dividend for the year of 1.08 pence (2011: 1.06 pence). The final dividend, if approved, will be paid on 21 September 2012 to shareholders on the register at 24 August 2012.

Review of operations

Property Fund Management (First Property Asset Management Ltd or FPAM)

At 31 March 2012 aggregate assets under management remained broadly unchanged year on year at £365 million (2011: £366 million). The lack of movement in this headline figure masks the underlying movement in funds. Assets under management in the UK increased to 27% (2011: 22%) of total assets under management, whilst a weakening of Euro versus Sterling resulted in a 6% reduction in assets under management in Poland to 70% (2011: 75%) of total assets under management.

We completed six purchases in the period, all in the UK, with a total value of £20.3 million and no sales.

Revenue earned by this division grew by 9% to £4.34 million (2011: £3.97 million), generating a 12% increase in profit before tax of £3.07 million (2011: £2.74 million). This represents 55% of Group profit before tax and unallocated central overheads. Earnings increased even though assets under management remained unchanged from March 2011 principally because:

-       we had the benefit of a full year's worth of fees on assets acquired on behalf of our UK fund, UK PPP, in 2010/11; and

-       the €/ £ rate was at an average of €1.16/ £1 during the year whereas at the year end the €/ £ exchange rate was €1.20/ £1. For the majority of the first half of the year assets under management averaged £370 million.

A substantial proportion of our income is earned in Euros and should the €/ £ rate remain at current levels, or weaken, our earnings in Sterling would be adversely affected. It is too early to judge the effect of this, if any, on Group earnings in the current year.

We currently manage six closed end funds. A brief synopsis of the value of assets 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)	August  2004	Rolling	Not subject to recent revaluation	Not subject to recent revaluation
Regional Property Trading Ltd (RPT)	August  2004	5 years to August 2009, extended to August 2012	£7.0 m	1.9%
5th Property Trading Ltd (5PT)	December  2004	7 years to December 2011, extended to December  2014	£9.2 m	2.5%
USS Fprop Managed Property Portfolio LP	August 2005	10 years to August  2015	£233.1 m	63.9%
UK Pension Property Portfolio  LP (UK PPP LP)	February 2010	7 years to February  2017	£93.5 m	25.6%
Fprop Opportunities plc (FOP)	October  2010	10 years to October  2020	£22.2 m	6.1%
Total			£365.0 m	100%

In the UK, the core income fund (UK PPP) which we established in February 2010 is generating an un-geared dividend yield of 6.3% per annum for its investors and is nearly fully invested.  We are now raising a new UK fund to replicate this investment strategy and have held preliminary discussions with a number of potential investors from whom we have received favourable responses. We hope to report on this further during the course of the year.

Our funds under management have once again been ranked by Investment Property Databank (IPD) as the best performing against the Central & Eastern European universe, now for the six years to December 2011. All four of our funds invested there have come through the credit crunch well and are generating an average pre-tax income return on equity in excess of 20% per annum.

Fprop Opportunities plc (FOP) has some £4.8 million of equity at its disposal for further purchases. It also has access to significant but unspecified amounts of additional equity from institutional investors which have expressed an interest in joint venturing the purchase of properties with FOP. We remain cautious, as ever, particularly in view of the troubles in the eurozone but we are continually evaluating potential investments. We are confident that as and when we identify suitable investment opportunities we will be able to raise the requisite equity capital to acquire them.

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	Book cost	Bank loan	Valuation at 31 March 2012	Net rent	Contribution to pre-tax profit during the year
Bacha St, Mokotow Warsaw	Nov 2007	PLN 11.7 m (£2.4 m)	Nil	PLN 11.8 m (£2.4 m)	£344,000	£243,000
Blue Tower, Central Business District, Warsaw	Dec 2008	US$ 12.9 m (£8.3 m)	US$ 10.6 m (£6.6 m)	US$19.7 m (£12.3 m)	£1,292,000	£831,000
Total		£10.7 m	£6.6 m	£14.7 m (Net: £8.1 m)	£1.64 m	£1.07m

The pre-tax profit generated by these two properties during the period represents a rate of return on the equity invested of some 10.1% and 48.9% per annum respectively; both are multi-let office buildings located in Warsaw.

Co-investments:

Fund	% owned by First Property Group	Book value of First Property's share in fund	Current market value of holdings	Group's share of pre-tax profit earned by fund
Interest in associates
5th Property Trading Ltd (5PT)	37.8%	£594,000	£1,165,000	£141,000
Regional Property Trading Ltd (RPT)	28.6%	£213,000	£239,000	£41,000
Share of results in associates				£182,000
Investments
UK Pension Property Portfolio LP (UK PPP LP)	0.9%	£903,000	£906,000	*£63,000
Consolidated undertaking
Fprop Opportunities plc (FOP)	84.1%	£6.6 m	£8.5 m	**£1.03 m
Total		£8.3 m	£10.8 m	£1.3 m

*represents dividend received

**after non-controlling interest

The results of FOP, of which 84.1% is owned by the Group, are consolidated in these accounts. FOP's revenue and profit before tax for the year to 31 March 2012 amounted to £2.33 million (2011: £907,000) and £1.22 million (2011: £256,000) respectively, whereas the Group's 84.1% share of these amounted to £1.96 million (2011: £763,000) and £1.03 million (2011: £215,000) respectively. The substantial increase in revenue and profit contribution from FOP results from the company having held its two investments for a full year.

The profit before tax earned by FOP equates to a pre-tax return on equity of 15% per annum, even though FOP has only invested half its capital.

Our shareholdings in our two other Polish funds, 5^th Property Trading and Regional Property Trading, contributed £182,000 (2011: £221,000) to the Group's profit before tax. We do not have a controlling interest in these funds and they are accounted for as "shares in associates".

Our co-investment in UK PPP contributed £63,000 (2011: £14,000) of dividend income to the Group and is accounted for as a separate line item in our Income Statement.

Fund raising outlook

The fund raising market remains challenging. However, the two funds we have been marketing, our new UK fund and FOP, have both been well received by potential investors.

We are in the process of determining a suitable fund structure for our new UK fund and intend to firm up demand for it once this structure is in place.

We are also in receipt of expressions of interest to invest in FOP on an asset by asset basis. The eurozone troubles last and this year have made us particularly cautious at the moment but we are exploring some interesting investments. If we should proceed with these, we would be confident in raising the required funding. In any event, FOP is currently only half invested.

As mentioned at the time of our interim results, we are considering launching a retail bond in order to assist the Group with seeding new funds under management. We intend to conduct a feasibility study for such a bond shortly.

I am delighted to report that we have appointed Laure Duhot as a non-executive director of First Property Asset Management Ltd, in order to benefit from her experience in fund raising for real estate. Laure is Director of Strategic Capital Markets at Grainger plc and until recently was Head of Equity Raising for Pradera and sat on its executive board.

Commercial property markets outlook

The sovereign debt crisis in the eurozone continues to weigh heavily on the capital markets across Europe and in the UK. In view of the collective failure of eurozone governments to act decisively, we expect this situation to continue for some time to come.

Poland:

The Polish Zloty (PLN) has weakened against the Euro since the middle of last year, from a level of circa PLN 4/ €1 to PLN 4.30/ €1. This increases pressure on tenants who typically pay their rent in Euros. We have not yet experienced any such stress in our portfolios and, as shareholders may recall, our portfolios stood the test of a weakening PLN in 2009 very well, when it reached a low of PLN 4.95/ €1. At its current level we do not therefore think the PLN is likely to adversely impact property values.

Poland's GDP growth in 2011 was 4.3%. This rate of growth is expected to slow this year to 3% (source: IMF) but such a rate would still leave Poland at close to, if not at, the top of all EU member countries. Interest rates are likely to remain low for some time. This factor, coupled with Poland's faster rate of economic growth and the higher yields available in its investment property market, should result in Polish commercial property continuing to deliver attractive rates of return.

United Kingdom:

The outlook for the UK economy is poor.

The UK's GDP contracted by 0.3% in both the last quarter of 2011 and the first quarter of 2012, putting the country back into recession. Property values declined by 0.7% in the first quarter of 2012 (according to IPD) and we expect the tone of the market to remain weak. We do not, however, expect a collapse in prices.

The UK economy re-entering recession is of little consequence to our UK investment strategy which has been predicated on a protracted recessionary environment. We have been typically acquiring well located regional retail warehouses with a strong emphasis on discount retailers, good covenants and long leases. We particularly favour properties which have been recently let and where rents have been set at a low level. This emphasis will continue.

Contrary to most investor interest, we are wary of investing in central London because generally values are too high and yields too low to make it attractive. We can, relatively safely, earn yields of one and a half to twice those available on London property by investing in the regions, where property values have not recovered in the way that they have in London.

Current Trading and Prospects

It has now been over four years since the credit crunch began. Throughout this period First Property Group's client funds have delivered positive overall returns to their investors and the Company has remained profitable at all times, having increased its dividend payment every year since 2008. Our funds have, once again, been ranked as the best performing versus the IPD Central & Eastern European universe, now for the six year period to December 2011. We are proud of this track record, which results from judicious investing and the hard work of our excellent team.

The investment landscape remains difficult with eurozone problems overhanging all capital markets. However, within Europe, Poland still stands out as one of, if not the best investment markets. Our intention remains to concentrate on Poland and the UK, where we see good value and we have considerable expertise in delivering attractive returns to investors.

Ben Habib

Chief Executive

11 June 2012

CONSOLIDATED INCOME STATEMENT

for the year ended 31 March 2012

	Notes	Year ended 31 March 2012 (unaudited ) Total results	Year ended 31 March 2011   (audited) Total results
Continuing operations		£'000	£'000
Revenue	2	9,342	7,110
Cost of sales		(1,308)	(1,050)
Gross profit		8,034	6,060
Operating expenses		(3,604)	(2,852)
Operating profit		4,430	3,208
Share of results in associates		182	221
Dividend income		63	14
Interest income		131	109
Interest expense		(837)	(602)
Profit on ordinary activities before taxation	3	3,969	2,950
Tax expense	4	(527)	(621)
Profit for the year from continuing operations		3,442	2,329
Discontinued operations Profit/(loss) for year from discontinued operations		-	(82)
Continuing and discontinued operations
Profit for the year		3,442	2,247
Attributable to:
Owners of the company		3,196	2,178
Non-controlling interest		246	69
		3,442	2,247
Profit for the year from continuing operations attributable to:
Owners of the company		3,196	2,221
Non-controlling interest		246	108
		3,442	2,329
Profit/(loss) for the year from discontinued operations attributable to:
Owners of the company		-	(43)
Non-controlling interest		-	(39)
		-	(82)
Earnings per share
Basic
-from continuing operations	5	2.88p	2.02p
-from discontinued operations	5	-	(0.04)p
-from continuing and discontinued operations	5	2.88p	1.98p
Diluted
-from continuing operations	5	2.73p	1.90p
-from discontinued operations	5	-	(0.04)p
-from continuing and discontinued operations	5	2.73p	1.86

CONSOLIDATED SEPARATE STATEMENT OF

OTHER COMPREHENSIVE INCOME

for the year ended 31 March 2012

		Year ended 31 March 2012 (unaudited)	Year ended 31 March 2011 (audited)
	Notes	Total results	Total results
		£'000	£'000
Profit for the year		3,442	2,247
Other comprehensive income
Exchange differences on retranslation of foreign subsidiaries		(1,531)	(171)
Taxation		-	-
Total comprehensive income for the year		1,911	2,076
Total comprehensive income for the year attributable to:
Owners of the company		1,803	2,012
Non-controlling interests		108	64
		1,911	2,076

CONSOLIDATED BALANCE SHEETS

As at 31 March 2012

	Notes	As at 31 March 2012 (unaudited) £'000	As at 31 March 2011 (audited) £'000
Non-current assets
Goodwill		114	114
Investment properties	6	20,161	22,061
Property, plant and equipment		67	79
Interest in associates	7	499	377
Other financial assets	7	903	711
Other receivables	9	432	473
Deferred tax assets		259	199
Total non-current assets		22,435	24,014
Current assets
Inventories - land and buildings	8	10,714	10,896
Current tax assets		53	95
Trade and other receivables	9	1,256	1,660
Cash and cash equivalents		9,975	5,441
Total current assets		21,998	18,092
Current liabilities
Trade and other payables	10	(2,160)	(1,859)
Financial liabilities	11	(608)	(500)
Current tax liabilities		-	(39)
Total current liabilities		(2,768)	(2,398)
Net current assets		19,230	15,694
Total assets less current liabilities		41,665	39,708
Non-current liabilities:
Financial liabilities	11	(24,310)	(22,946)
Deferred tax liabilities		-	(191)
Net assets		17,355	16,571
Equity
Called up share capital		1,149	1,146
Share premium		5,491	5,463
Foreign exchange translation reserve		(715)	678
Share-based payment reserve		195	140
Retained earnings		10,967	8,950
Equity attributable to the owners of the company		17,087	16,377
Non-controlling interest		268	194
Total equity		17,355	16,571

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2012

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 £'000
At 1 April 2011	1,146	5,463	140	678	(621)	9,571	194	16,571
Profit for the period	-	-	-	-	-	3,442		3,442
Issue of new shares	3	27	-	-	-	-	-	30
Movement on foreign exchange	-	-	-	(1,393)	-	-	(138)	(1,531)
Sale of treasury shares	-	1	-	-	9	-	-	10
Issue of share options	-	-	55	-	-	-	-	55
Non-controlling interest	-	-	-	-	-	(246)	246	-
Dividends paid	-	-	-	-	-	(1,188)	(34)	(1,222)
At 31 March 2012	1,149	5,491	195	(715)	(612)	11,579	268	17,355
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 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

CONSOLIDATED CASH FLOW STATEMENTS 

for the year ended 31 March 2012

		2012	2011
	Notes	Group £'000	Group £'000
Cash flows from operating activities
Operating profit		4,430	3,208
Adjustments for:
Depreciation of property, plant & equipment		41	28
(Profit)/loss on sale of property, plant & equipment		(3)	-
Profit/(loss) on sale of associates		-	(27)
Released (profit) from sale to associate	7	-	(26)
Share based payments		55	35
(Increase)/decrease in inventories	8	(113)	(171)
(Increase)/decrease in trade and other receivables		256	483
Increase/(decrease) in trade and other payables		291	671
Other non-cash adjustments		-	-
Cash generated from operations		4,957	4,201
Taxes paid		(791)	(582)
Net cash from/(used in) operating activities of continuing operations Net cash from/(used in) operating activities by discontinued activities		4,166 -	3,619 (465)
Net cash flow from/(used in) operating activities		4,166	3,154
Cash flow from/(used in) investing activities
Proceeds from sale of subsidiary company-discontinued activity		-	20
Cash and cash equivalent disposed on sale of subsidiary		-	(110)
Purchase of investments	7	(192)	(612)
Proceeds from sale of associates		-	131
Proceeds from sale of property, plant & equipment		3	-
Purchase of investment properties		-	(21,955)
Purchase of property, plant & equipment		(33)	(75)
Interest received		131	109
Dividends from associates	7	60	103
Dividends received		63	14
Net cash from/(used in) investing activities of continuing operations Net cash from/(used in) investing activities by discontinued activities		32 -	(22,375) -
Net cash flow from/(used in) investing activities		32	(22,375)
Cash flow from/(used in) financing activities
Proceeds from issue of shares		31	49
Proceeds from shareholder loan in subsidiary		-	1,267
Repayment of shareholder loan in subsidiary		(71)	-
Proceeds from bank loan		3,197	-
Repayment of bank loan		(64)	-
Proceeds from finance lease		-	15,394
Repayment of finance lease		(447)	(187)
Sale/(Purchase) of shares held in Treasury		9	4
Interest paid		(837)	(602)
Dividends paid		(1,188)	(1,127)
Dividends paid to non-controlling interest		(34)	(31)
Net cash from/(used in) financing activities of continuing operations Net cash from/(used in) financing activities by discontinued activities		596 -	14,767 (33)
Net cash flow from/(used in) financing activities		596	14,734
Net increase/(decrease) in cash and cash equivalents		4,794	(4,487)
Cash and cash equivalents at the beginning of period		5,441	10,126
Currency translation gains/losses on cash and cash equivalents		(260)	(198)
Cash and cash equivalents at the end of the period		9,975	5,441

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 2012.These are consistent with the policies applied for the year ended 31 March 2011. 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 2011 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 498 (2) or (3) of the Companies Act 2006.

·      These preliminary financial statements were approved by the Board of Directors on 8 June 2012.

2.             Revenue

Revenue from continuing operations consist of revenue arising in the United Kingdom 10% (2011: 9%) and Central and Eastern Europe 90% (2011: 91%), and all relates solely to the Group's principal activities. All revenue from discontinued activities relates to the UK, both in 2012 and 2011.

3.             Segment reporting 2012

	Property fund management	Group properties and other co-investments	Group fund properties "FOP"	Unallocated central overheads	Total
	£'000	£'000	£'000	£'000	£'000
External revenue - Existing operations	4,341	2,671	2,330	-	9,342
Less: Discontinued operations	-	-	-	-	-
	4,341	2,671	2,330	-	9,342
Depreciation and amortisation	(28)	(13)	-	-	(41)
Operating Profit - existing operations	3,072	1,247	1,829	(1,718)	4,430
Share of results in associates	-	182	-	-	182
Dividend income	-	63	-	-	63
Interest income	-	11	45	75	131
Interest payable	-	(184)	(653)	-	(837)
Profit/(loss) before tax	3,072	1,319	1,221	(1,643)	3,969
Analysed as:
Before performance  fees and related items	3,232	1,344	1,028	(941)	4,663
Performance fees	-	-	-	-	-
Staff incentives	(160)	(25)	(20)	(702)	(907)
Realised foreign currency gain	-	-	213	-	213
Total	3,072	1,319	1,221	(1,643)	3,969
Assets - Group	608	12,853	25,855	4,618	43,934
Assets- associates	-	807	-	(308)	499
Liabilities	(352)	(7,050)	(18,868)	(808)	(27,078)
Net assets	256	6,610	6,987	3,502	17,355
Additions to non-current assets
Property, plant and equipment	23	10	-	-	33
Investment properties	-	-	-	-	-
Investments	-	192	-	-	192
Interest in associates	-	182	-	-	182

Segment reporting 2011

	Property fund management	Group properties and other co-investments	Group fund properties "FOP"	Property facilities management ("FPS")	Unallocated central overheads	Total
	£'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)
Operating Profit - existing operations	2,735	1,022	581	(114)	(1,130)	3,094
Share of results in associates	-	221	-	-	-	221
Dividends income	-	14	-	-	-	14
Interest income	-	-	-	1	109	110
Interest payable	-	(277)	(325)	(7)	-	(609)
Less: Discontinued operations	-	-	-	120	-	120
Profit/(loss) before tax	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 incentives	(91)	(15)	(12)	-	(368)	(486)
Total	2,735	980	256	-	(1,021)	2,950
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

A new segment arose last year with the launch of the new pan European fund, Fprop Opportunities plc ("FOP") in October 2010. The Group owns 84.1% 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 has 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 from the cash that is 100% controlled, 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 £1,442,000 (2011:  £1,140,000) and Poland £21,008,000 (2011: £22,874,000).

4.             Tax expense

Analysis of tax change in period	2012 £'000	2011 £'000
Current tax	786	499
Deferred tax	(259)	122
Total tax charge for period	527	621

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

Deferred tax assets have been recognised on foreign currency property loans as a result of the weakening in the Polish zloty, the currency in which all Polish taxes are paid.

There was insufficient taxable income earned in the UK with 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 decreased to 13% (2011:  21%).

5.             Earnings per share

	2012	2011
Basic earnings per share - continuing operations	2.88p	2.02p
Basic earnings per share - total continuing and discontinued operations	2.88p	1.98p
Diluted earnings per share - continuing operations	2.73p	1.90p
Diluted earnings per share - total continuing and discontinued operations	2.73p	1.86p
	2012 £'000	2011 £'000
Basic earnings - continuing operations	3,196	2,221
Basic earnings - total continuing and discontinued operations	3,196	2,178
Diluted earnings assuming full dilution - continuing operations	3,212	2,238
Diluted earnings assuming full dilution - total continuing and discontinued operations	3,212	2,195

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

	2012 Number	2011 Number
Weighted average number of ordinary shares in issue (used for basic earnings per share calculation)	111,056,118	109,890,897
Number of share options assumed to be exercised	6,500,000	7,790,000
Total number of ordinary shares used in the diluted earnings per share calculation	117,556,118	117,680,897

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

Basic earnings per share	2012 £'000	2011 £'000
Basic earnings  - continuing operations - discontinued operations	3,196 -	2,221 (43)
Basic earnings - total continued and discontinued operations	3,196	2,178
Diluted earnings per share	2012 £'000	2011 £'000
Basic earnings - continuing operations	3,196	2,221
Notional interest on share options assumed to be exercised	16	17
Diluted earnings - continuing operations - discontinued operations	3,212 -	2,238                   (43)
Diluted earnings - total continued and discontinued operations	3,212	2,195

6.             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 values at the Group's financial year and at a fair value of €26.6 million (2011: €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.

	2012	2011
	Group £'000	Group £'000
Investment properties
1 April 2011	22,061	-
Additions	-	21,955
Foreign exchange translation	(1,900)	106
31 March 2012	20,161	22,061

7.             Investment in associates and other financial assets

The Group has the following investments:

	2012	2011
	Group £'000	Group £'000
a) Associates
At 1 April	377	337
Release of profit withheld in sale to associate in 2007	-	26
Disposals	-	(104)
Share of associates profit after tax	182	221
Dividends received	(60)	(103)
At 31 March	499	377

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:

	2012	2011
	Group £'000	Group £'000
Investments in associates
5th Property Trading Ltd	594	495
Regional Property Trading Ltd	213	190
	807	685
Less: Share of profit after tax withheld on sale of property to associate in 2007	(308)	(308)
	499	377

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 £597,000 (2011: £728,000) to £1,404,000 (2011: £1,413,000).

	2012	2011
b) Other financial assets and investments	Group £'000	Group £'000
At 1 April	711	99
Additions	192	612
Transfer to Group undertakings	-	-
Impairment charge	-	-
At 31 March	903	711

The addition is in respect of the Group's 0.9% interest in UK Pension Property Portfolio L.P., a fund raised in 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.

8.             Inventories - land and buildings

	2012	2011
	Group £'000	Group £'000
Directly held Group properties for resale at cost
1 April	10,896	11,365
Additions	113	171
Foreign exchange translation	(295)	(640)
31 March	10,714	10,896

The fair value of these properties, both located in Warsaw, Poland at 31 March 2012 was £14.7m (2011: £14.3m) using closing foreign exchange rates and independent third party valuation.

9.             Trade and other receivables

	2012	2011
	Group £'000	Group £'000
Current assets
Trade receivables	852	1,059
Amounts due from associates	-	-
Other receivables	57	312
Prepayments and accrued income	347	289
	1,256	1,660
Non-current assets
Other receivables	432	473

10.          Trade and other payables

	2012	2011
	Group £'000	Group £'000
Current liabilities
Trade payables	734	831
Other taxation and social security	288	313
Other payables and accruals	1,121	698
Deferred income	17	17
	2,160	1,859

11.          Financial liabilities

	2012 £'000	2011 £'000
Current liabilities
Bank loan	123	1
Finance lease	485	499
	608	500
Non-current liabilities
Loans repayable by subsidiary (FOP) to third party shareholders	1,196	1,267
Bank loans	9,395	6,616
Finance lease	13,719	15,063
	24,310	22,946

	2012 £'000	2011 £'000
Total obligations under bank loans and finance leases
Repayable within one year	608	500
Repayable within one and five years	11,576	2,323
Repayable after five years	12,734	20,623
	24,918	23,446

Loans repayable by FOP to third party shareholders are repayable in August 2020.

Bank loans and finance leases totalling £23,722,000 (2011: £22,179,000) included within financial liabilities are secured against investment properties owned by Fprop Opportunities plc ("FOP") and properties owned by the Group shown under inventories.

There are two foreign currency bank loans. The first of these two is for a sum of £6,639,000 (2011: £6,617,000), is included under non-current financial liabilities and is secured against the Blue Tower office block owned by the Group. It is non-recourse and is denominated in US Dollars. Capital repayments commence in November 2013 at the rate of US$17,675 per month until its maturity in November 2015. Interest payments are charged at an annualised rate of one month US$ Libor plus a margin of 2.15%.

The second bank loan is for a sum of £2,879,000 (2011: nil) is partly included under current liabilities and partly under non-current liabilities and is secured against the Krasnystaw shopping centre owned by FOP. It is non-recourse and is denominated in Euros. The loan was drawn by FOP in June 2011. Capital repayments are made on a quarterly basis at the rate of approximately €30,000 per quarter until its maturity in 2014. Interest payments are fixed for 30% of the loan at an annualised rate of 2.4% plus a margin of 2.8% and for the remaining 70%, charged at an annualised rate of three month Euribor plus a margin of 2.8%.

The finance lease outstanding is for £14,204,000 (2011: £15,562,000) is included partly under current liabilities and partly under non-current liabilities and is secured against the Lodz hypermarket owned by FOP. It is non-recourse and is denominated in Euros. Capital repayments are made on a monthly basis at a rate of approximately €45,000 per month until its maturity in 2017. The monthly interest rate payable is fixed at an annualised rate of 3.58% until October 2013 when it reverts to a floating rate based on an annualised rate of three month Euribor plus an all in margin of 2.68%. Interest rate caps are in place with effect from October 2013 until maturity.

The preliminary 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, SW1H 9JA.

 

END

 

 

FR FMMATMBABBBT