Interim Results
First Property Group PLC
30 October 2003
FIRST PROPERTY GROUP PLC
INTERIM RESULTS
for the six months to 30 September 2003
30 October 2003
First Property Group plc ('fprop' or 'the Group'), the online commercial
property transaction platform and property asset manager, announces interim
results for the six months to 30 September 2003.
Financial Highlights
• Turnover for the six month period to 30 September 2003 of £1,597,000
(2002: £386,000)
• Profit on ordinary activities before taxation and goodwill amortisation of
£175,000 (2002: loss of £116,000)
• Revenue earned by FPAM during the period to 30 September 2003 of £67,000
(2002: nil)
Corporate Highlights
• Two fully invested funds with £7 million of assets under management
• A third fund raised, nearly twice the size of either of the first two
• Indications of interest for a fourth fund
• Expansion of the Commercial Property Database data entry team in Pakistan
Ben Habib, Chief Executive of fprop, said: 'We continue to be pleased by the
rate at which revenue generation is increasing and, subject to market
conditions, we would expect this growth to continue during the year to 31 March
2004 and beyond.'
For further information:
Ben Habib Jeremy Carey / Marylene Guernier
First Property Group plc Tavistock Communications Limited
Tel: 020 7731 2844 Tel: 020 7920 3150
www.fprop.com mguernier@tavistock.co.uk
CHIEF EXECUTIVE'S STATEMENT
Results and dividend
I am pleased to report that turnover during the six month period to 30 September
2003 was £1,597,000 (2002: £386,000), providing a profit on ordinary activities
before taxation and goodwill amortisation of £175,000 (2002: loss of £116,000).
Gross profit during the period was £652,000 (2002: £341,000).
Net assets amounted to £2,371,000 at 30 September 2003, as opposed to £1,929,000
on a comparable basis, excluding goodwill, at 30 September 2002.
The Group commenced paying a final dividend last year. In light of our
continuing profitability, the Directors have resolved to maintain this policy
with the payment of a final dividend. This will be determined later in the year.
Review of operations
Commercial Property Database
CPD continues to trade satisfactorily in a difficult environment. This division
earned revenue of £168,000 (2002: £205,000).
Earlier this month we recruited a new head of sales and marketing, David Thomas,
who joined us from Estates Gazette. In the short time he has been with us he has
initiated a number of promising projects.
A key aspect of the success of a business such as CPD is the quality of the data
on the database. Most operators of such businesses have found it difficult to
maintain high levels of data quality, in part due to the relatively high cost of
doing so. We are therefore looking to expand our data entry capability by
recruiting a number of employees in this activity in Pakistan. The quality of
personnel in Pakistan can be very high whilst the costs of employment are
substantially less than in the UK. We anticipate that, by expanding our data
entry team in this way, enabled by sophisticated software, we aim to develop the
best commercial property database in the UK and give CPD a large competitive
advantage.
We expect the division to contribute a healthy result for the year to 31 March
2004.
First Property Asset Management
Our fund management business, FPAM, which commenced trading in October last
year, is rapidly gaining momentum. Revenue earned by FPAM during the period to
30 September 2003 was £67,000 (2002: nil). We expect this to rise significantly
as assets under management increase.
FPAM now has two fully invested funds with an aggregate of £7 million under
management.
The weighted average annualised pre-tax rates of return on equity currently
being earned purely from rental income on the properties held in our first two
funds is c17.2% per annum. I am pleased to say that this weighted average rate
of return increases to c26.4% per annum when capital gains made thus far are
also included. We are confident of earning further capital gains.
We have also raised our third fund, Third Property Trading Ltd, which is nearly
twice the size of either of our first two funds. We have begun to invest this
fund and would anticipate it being fully invested within the next few months.
We already have indications of interest for our fourth fund, which we will close
once our third fund is fully invested.
Property transaction underwriting
Our underwriting activities have continued to create profitable opportunities
for the Group. Turnover from this activity amounted to £1,352,000 (2002:
£177,000) producing a gross profit of £368,000 (2002: £137,000).
In the absence of any material adverse change in the UK economy, we expect this
division to make a further improved contribution to profits for the remainder of
the year.
Other products and services
Our bespoke loan arrangement and online marketing of commercial property
services continue to assist the Group in the provision of its other services
although revenue from these activities remains small. Turnover from both
activities during the period was £10,000 (2002: £4,000). However, it is becoming
increasingly clear that the use of the Internet by the property industry is
rapidly growing and I am confident that these services will contribute to our
profitability over time.
I remain optimistic about the online marketing of commercial property, which has
scored some notable successful sales recently. In the last three months we have
sold £2.6 million of property online, without the assistance of any conventional
marketing. A further £1.9 million of property is under offer and £5.3 million of
property is currently being marketed online. We also have mandates to sell £4.9
million of property, which we will bring to market shortly. We will benefit from
fees on the successful sale of all these properties.
Current trading and prospects
We are pleased that our growth in revenue has been matched by a continued tight
control of costs, with costs lower than in the same period last year. The cost
base of the Company should not grow significantly as our various divisions and
products grow. The principal challenge that lies ahead for us is to increase
revenue and fully exploit this operational gearing.
Our emphasis will be on growing the asset management and CPD businesses and
bolster this income by profits made from our underwriting activities. We will
also consider strategic acquisitions where such opportunities present
themselves.
We continue to be pleased by the rate at which revenue generation is increasing
and, subject to market conditions, we would expect this growth to continue
during the year to 31 March 2004 and beyond.
Ben Habib
Chief Executive
30 October 2003
CONSOLIDATED PROFIT & LOSS ACCOUNT
for the six months to 30 September 2003
Six months to Six months to Year to
30 September 2003 30 September 2002 31 March 2003
(unaudited) (unaudited) (audited)
Notes Total Goodwill Total Results Good- Total Results Good- Total
Results Amorti- Results before will Results before will Results
sation Goodwil Amorti- Goodwill Amor-
Amorti- sation Amortisation tisation
sation £'000
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Turnover
- continuing
operations 1,597 - 1,597 386 - 386 2,281 - 2,281
Total
turnover 2 1,597 - 1,597 386 - 386 2,281 - 2,281
Cost of sales (1,186) - (1,186)
- continuing
operations (945) - (945) (45) - (45)
Gross profit 652 - 652 341 - 341 1,095 - 1,095
Net operating
expenses (428) - (428) (442) (1,717) (2,159) (929) (2,915) (3,844)
Operating
profit/
(loss)
- continuing
operations 224 - 224 (101) (1,717) (1,818) 166 (2,915) (2,749)
Total
operating
profit/
(loss) 224 - 224 (101) (1,717) (1,818) 166 (2,915) (2,749)
Net interest
(payable)/
receivable (49) - (49) (15) - (15) (64) - (64)
Profit/(loss)
on ordinary
activities
before
taxation 175 - 175 (116) (1,717) (1,833) 102 (2,915) (2,813)
Taxation on
profit on
ordinary
activities (10) - (10) - - - - 292 292
Profit/(loss)
on ordinary
activities
before
minority
interest 165 - 165 (116) (1,717) (1,833) 102 (2,623) (2,521)
Equity
minority
interest (15) - (15) - - - 4 - 4
Profit/(loss)
for the
period 150 - 150 (116) (1,717) (1,833) 106 (2,623) (2,517)
Dividend on
ordinary
shares - - - - - - (46) - (46)
Profit/(loss)
transferred
to/(from)
reserves 150 - 150 (116) (1,717) (1,833) 60 (2,623) (2,563)
Earnings/
(loss) per
Ordinary 1p
share
- basic
before
goodwill
amortisation 3 0.16p - - (0.12p) - - 0.11p -
Earnings/
(loss) per
Ordinary
1p share
- basic
after
goodwill
amortisation 3 - - 0.16p - - (1.98p) - - (2.72p)
CONSOLIDATED BALANCE SHEET
as at 30 September 2003
Notes As at As at As at
30 Sept 30 Sept 31 March
2003 2002 2003
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Fixed assets
Intangible assets - 1,010 -
Tangible assets 10 38 19
Investments 25 238 25
35 1,286 44
Current assets
Stocks - land and buildings 3,416 3,925 3,190
Debtors 473 324 652
Cash at bank and in hand 724 139 314
4,613 4,388 4,156
Creditors: amounts falling due within one
year (621) (1,574) (1,316)
Net current assets 3,992 2,814 2,840
Total assets less current liabilities 4,027 4,100 2,884
Creditors: amounts falling due after more
than one year (1,656) (1,161) (675)
Net assets 2,371 2,939 2,209
Capital and reserves
Called up share capital 5 928 924 924
Share premium 5 2,669 2,661 2,661
Merger reserve 5 5,823 5,823 5,823
Profit and loss account 5 (7,049) (6,469) (7,199)
Equity shareholders' funds 2,371 2,939 2,209
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
for the six months to 30 September 2003
Notes Six months Six months Year to 31
to 30 Sept to 30 Sept March
2003 2002 2003
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net cash inflow/(outflow) from
operating activities 6 272 (2,737) (2,068)
Returns on investment and servicing
of finance
Interest received 6 17 19
Interest paid (55) (32) (83)
Net cash (outflow) from returns on
investment and servicing of finance (49) (15) (64)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (2) (2) (6)
Sale of tangible fixed assets - - 8
Purchase of fixed asset investments - - (5)
Sale of fixed asset investments - - 30
Net cash (outflow)/inflow from capital
expenditure and financial investment (2) (2) 27
Equity Dividends paid (46) - -
Cash inflow/(outflow) before
management of liquid resources
and financing 175 (2,754) (2,105)
Management of liquid resources
(Increase)/decrease in short term deposits (522) 1,430 1,429
Financing
Issue of Ordinary share capital 12 - -
Minority interest (15) - 4
Loans advanced 981 1,244 871
Loans repaid (743) - (105)
Net cash (outflow)/inflow from
management of liquid resources
and financing (287) 2,674 2,199
(Decrease)/ increase in cash in period (112) (80) 94
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET (DEBT)/ FUNDS
Notes Six months Six months to Year to
to 30 Sept 30 Sept 31 March
2003 2002 2003
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
(Decrease)/ increase in cash in period (112) (80) 94
Movement in short term deposits 522 (1,430) (1,429)
Movement in loans (238) (1,244) (766)
Movement in net funds in period 172 (2,754) (2,101)
Net funds at beginning of period (1,283) 818 818
Net (debt)/ funds at end of period (1,111) (1,936) (1,283)
NOTES TO THE CONSOLIDATED RESULTS
For the six months ended 30 September 2003
1. The interim accounts have been prepared on a basis which is consistent
with the accounting policies adopted for the year ended 31 March 2003.
2. Turnover consists entirely of revenue arising in the United Kingdom and
relates solely to the Group's principal activities.
3. The basic earnings per Ordinary Share is calculated on the profit on
ordinary activities after taxation and minority interest on the weighted
average of Ordinary Shares in issue during the period of 92,580,782 (30
September 2002: 92,441,254 and 31 March 2003: 92,441,254).
4. The company has no recognised gains or losses other than those disclosed
in the profit and loss account.
5. Capital and Reserves
Share Share Merger Shares Profit
capital premium reserve to be and loss
issued account
£'000 £'000 £'000 £'000 £'000
At 1 April 2003 924 2,661 5,823 - (7,199)
Issue of shares 4 8 - - -
Profit for the period - - - - 150
At 30 Sept 2003 928 2,669 5,823 - (7,049)
6. Reconciliation of operating profit/(loss) to net cash inflow/(outflow)
from operating activities
Six months Six months Year
to 30 Sept to 30 Sept to 31 March
2003 2002 2003
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating profit/(loss) 224 (1,818) (2749)
Depreciation and profit on
disposal of fixed assets 11 22 37
Amortisation - 1,717 2,727
Decrease in book value of fixed
asset investments - - 188
(Increase) in stocks (226) (2,804) (2,069)
(Increase)/decrease in debtors 179 57 (231)
Increase in creditors 84 89 29
Net cash inflow/(outflow) from
operating activities 272 (2,737) 2,068
7. The financial information contained in this interim report does not
constitute statutory accounts within the meaning of section 240 of the
Companies Act 1985. This information has been neither audited nor reviewed
within the meaning of APB Bulletin 1999/4 by the Company's auditors. The
financial statements for the year ended 31 March 2003, incorporating an
unqualified report of the auditors, have been filed with the Registrar of
Companies.
8. The Board of First Property Group plc approved these interim results on 30
October 2003. The interim results are being circulated to all shareholders.
Further copies can be obtained from the registered office at 17 Quayside
Lodge, William Morris Way, London SW6 2UZ.
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