Interim Results

RNS Number : 2913X

First Property Group PLC

23 November 2017

 

Date:	23 November 2017
On behalf of:	First Property Group plc ("First Property" or "the Group")
Embargoed:	0700hrs

First Property Group plc

Interim Results for the six months to 30 September 2017                                                                                

First Property Group plc (AIM: FPO), the award winning property fund manager and investor with operations in the United Kingdom and Central Europe, today announces its interim results for the six months to 30 September 2017.

Financial Highlights:

·      Profit before tax up 11% to £4.98 million (2016: £4.47 million);

·      Contribution to profit by Group Properties was £6.08 million (2016: £5.84 million) prior to deduction of unallocated central overheads and tax;

·      Fund management fee revenue up 63% to £1.49 million (2016: £0.92 million);

·      Cash reduced to £10.00 million (2016: £14.12 million) due to investments and capital expenditure of £5.14 million;

·      Interim dividend up 5% to 0.42 pence per share (2016: 0.40 pence per share);

·      Adjusted NAV per share up 12% to 51.25 pence per share (2016: 45.86 pence per share);

·      Growth in adjusted NAV, together with dividends paid, since 2006 has equated to 26% per annum on an annualised basis.

Operational Highlights:

·      Total assets under management up 37% to £554 million (2016: £405 million);

·      Third party assets under management up 63% to £382 million (2016: £235 million);

·      Weighted average unexpired fund management contract term: 6.08 years (2016: 6.42 years);

·      New fund management contract, Fprop Offices LP: £182 million in equity (of which £51 million has been invested so far) to be invested in office properties in England.

Financial Summary:

	Unaudited Six months to 30 Sept 2017	Unaudited Six months to 30 Sept 2016	Percentage change	Audited Year to 31 March 2017
Income Statement:
Revenue	£12.09m	£11.12m	+8.7%	£23.66m
Statutory profit before tax	£4.98m	£4.47m	+11.4%	£9.14m
Diluted earnings per share	2.84p	2.40p	+18.3%	6.61p
Dividend per share	0.42p	0.40p	+5.0%	1.55p
Average £/€ rate	0.881	0.822	+7.2%	0.841
Balance Sheet at period end:
Net assets per share	35.68p	29.50p	+21.0%	34.84p
Adjusted net assets per share (EPRA basis)	51.25p	45.86p	+11.8%	47.64p
Cash Balances	£10.00m	£14.12m	-29.2%	£15.95m
Period end £/€ rate	0.881	0.865	+1.8%	0.855
Group Property portfolio at period end:
Group Properties at book value	£146.3m	£144.3m	+1.4%	£143.5m
Group Properties at market value	£171.9m	£170.3m	+0.9%	£164.5m
Gross Debt (non-recourse to the Group)	£117.8m	£122.0m	-3.4%	£117.5m
LTV%	68.6%	71.6%		71.5%
Total assets under management:	£554m	£405m	+36.8%	£477m
Poland	40.8%	48.6%		45.4%
United Kingdom	57.0%	46.6%		51.4%
Romania	2.2%	4.8%		3.2%

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

"This has been another excellent six months for First Property.

"All our funds under management and the properties we own are performing well and third party assets under management have increased by 63% since last year.

"Our prospects are excellent, underpinned by our bedrock of recurring income streams and the opportunities open to us in the various markets in which we operate.

"We look forward to delivering continued growth and increasing levels of profitability for our clients and shareholders."

A briefing for analysts will be held at 10:30hrs today at the headquarters of First Property Group plc, 32 St James's Street, London, SW1A 1HD. Participants can also attend by telephone on [phone], passcode 787807. A copy of the accompanying investor presentation can be accessed simultaneously at http://www.fprop.com/media-news/presentations/. An audio recording of the call will subsequently be posted on the company website, www.fprop.com/audio/.

For further information please contact:

First Property Group plc	Tel: [phone]
Ben Habib (Chief Executive & Chief Investment Officer) George Digby (Group Finance Director) Jeremy Barkes (Director, Business Development)	www.fprop.com
Arden Partners	Tel: [phone]
Chris Hardie/ Ben Cryer
Redleaf Communications	Tel: [phone]
Robin Tozer/ Elisabeth Cowell	[e-mail]

Notes to Investors and Editors:

First Property Group plc is an award winning property fund manager and investor with operations in the United Kingdom and Central Europe. Around one third of the shares in the Company are owned by management and their families.

Its focus is on higher yielding commercial property with sustainable cash flows. The company is flexible and takes an active approach to asset management. Its earnings are derived from:

·      Fund management - via its FCA regulated and AIFMD approved subsidiary, First Property Asset Management Ltd (FPAM), which earns fees from investing for third parties in property. FPAM currently manages twelve funds which are invested across the United Kingdom, Poland and Romania.

·      Group Properties - principal investments by the Group, to earn a return on its own capital, usually in partnership with third parties. Investments include ten directly held properties in Poland and Romania (including five held by Fprop Opportunities plc [FOP], in which the Group is currently the majority shareholder), and non-controlling interests in nine other funds managed by FPAM.

Listed on AIM the Company has offices in London, Warsaw and Bucharest. Further information about the Company and its products can be found at: www.fprop.com.

CHIEF EXECUTIVE'S STATEMENT

Performance:

I am pleased to report interim results for the six months ended 30 September 2017.

Revenue earned by the Group amounted to £12.09 million (2016: £11.12 million) yielding a profit before tax of £4.98 million (2016: £4.47 million). Diluted earnings per share were 2.84 pence (2016: 2.40 pence).

The Euro was on average 7.2% stronger versus Sterling during the period at an average rate of £0.881 (2016: £0.822). This resulted in Group profit before tax being £392,000 higher than it would have been on a constant currency basis.

The Group ended the period with reported net assets of £44.91 million (2016: £36.43 million). It is the accounting policy of the Group to carry its properties and interests in associates at the lower of cost or market value. The net assets of the Group when adjusted to their market value less any deferred tax liabilities, stood at £60.84 million (2016: £54.43 million). The growth in adjusted net assets, together with dividends paid, since 2006 has equated to 26% per annum on an annualised basis.

Group cash balances stood at £10.00 million (2016: £14.12 million) at the period end. The reduction in cash balances was primarily attributable to investments of £3.48 million and capital expenditure of £1.66 million. Of the cash held, £2.83 million (2016: £5.34 million) was held by FOP (67.3% owned by the Group) and £750,000 was held by Corp Sp. z o.o. (90% owned by the Group), the property management company for Blue Tower in Warsaw.

Dividend:

The Directors have resolved to increase the interim dividend by 5% to 0.42 pence per share (2016: 0.40 pence per share) which will be paid on 30 December 2017 to shareholders on the register at 2 December 2017, with an ex-dividend date of 1 December 2017.

Review of Operations:

PROPERTY FUND MANAGEMENT - (First Property Asset Management Ltd or FPAM)

As at 30 September 2017 aggregate assets under management, calculated by reference to independent third party property valuations, stood at £554 million (2016: £405 million), including some £172 million (2016: £170 million) of properties held by the Group and FOP. Of these 57% were located in the UK, 41% in Poland, and 2% in Romania.

Fund management fees are generally levied monthly by FPAM by reference to the value of properties under management. In the case of Fprop Offices LP the Group does not receive any fees but instead shares in the profits earned by the fund.

Revenue earned from fund management amounted to £1.49 million (2016: £0.92 million), resulting in a profit before unallocated central overheads and tax of £804,000 (2016: £273,000). This represents 11.7% (2016: 4.5%) of Group profit before unallocated central overheads and tax.

At the period end FPAM's fund management fee income, excluding performance fees, was being earned at an annualised rate of £2.64 million (2016: £1.90 million), a year on year increase of 38.9%.

FPAM's weighted average unexpired fund management contract term at the period end was 6.08 years (2016: 6.42 years).

Third party funds under management grew by some 22% since 31 March 2017 to £382 million, and by some 63% since 30 September 2016.

During the period we were awarded a new fund management contract by Fprop Offices LP, to invest in office properties in England. The fund received equity commitments of £182 million and is entitled to borrow up to a further £80 million enabling it to invest up to £262 million in property. Of this amount we have thus far invested £51 million, leaving a further £211 million to be invested.

The reconciliation of movement in funds under management during the period is shown below:

	Funds managed for third parties (including funds in which the Group is a minority shareholder)					Group Properties (including FOP)			Totals
	UK £m.	CEE £m.	Total £m.	No. of prop's		All CEE £m.	No. of prop's		AUM £m.	No. of prop's
As at 1 April 2017	245.3	67.7	313.0	63		164.5	10		477.5	73
Purchases	15.4	-	15.4	3		-	-		15.4	3
New fund mandates	51.1	-	51.1	3		-	-		51.1	3
Property sales	-	(3.7)	(3.7)	(3)		-	-		(3.7)	(3)
Capital expenditure	-	-	-	-		1.8	-		1.8	-
Property depreciation	-	-	-	-		(1.1)	-		(1.1)	-
Property revaluation	4.1	-	4.1	-		1.6	-		5.7	-
FX  revaluation	-	2.0	2.0	-		5.1	-		7.1	-
As at 30 Sept 2017	315.9	66.0	381.9	66		171.9	10		553.8	76

FPAM now manages twelve (2016: nine) closed-end funds. A brief synopsis of the value of assets and maturity of each of these vehicles is set out below:

Fund	Country of investment	Fund expiry	Assets under management at market value at 30 Sept 2017	% of total assets  under management	Assets under management at market value at 30 Sept 2016
SAM & DHOW	UK	Rolling	*	*	*
RPT	Poland	Aug 2020	£7.1m	1.3%	£7.0m
5PT	Poland	Dec  2022	£8.7m	1.6%	£8.5m
UK PPP	UK	Feb 2022	£93.3m	16.9%	£93.1m
PDR	UK	May 2018	Nil	-	Nil
SIPS	UK	Jan 2025	£156.1m	28.2%	£95.3m
FRS	Romania	Sept 2025	£6.7m	1.2%	£10.2m
FGC	Poland	Aug 2024	£21.2m	3.8%	£20.4m
FKR	Poland	Apr 2024	£22.3m	4.0%	-
SPEC OPPS	UK	Jan 2027	£15.4m	2.8%	-
OFFICES	UK	Jun 2024	£51.1m (Commitment of £182m)	9.2%	-
Sub Total			£381.9m	69.0%	£234.5m
FOP	Poland	Oct 2025	£73.9m	13.3%	£67.0m
GRP PROPS	Poland & Romania	n/a	£98.0m	17.7%	£103.3m
Sub Total			£171.9m	31.0%	£170.3m
Total			£553.8m	100%	£404.8m

* Not subject to recent revaluation

GROUP PROPERTIES

Group Properties comprises ten commercial properties in Poland and Romania, five of which are held by FOP (in which the Group is currently the majority shareholder), and non-controlling interests in nine of the twelve funds managed by FPAM, as set out in the tables below.

It is the Group's policy to carry its properties and interests in associates at the lower of cost or market value for accounting purposes, and to recognise dividends when received.

1.     Directly held properties (including five held by FOP) held at 30 September 2017:

Country	No. of properties	Book value	Market value	Contribution to Group profit before tax period to 30 Sept 2017		Contribution to Group profit before tax period to 30 Sept 2016
Poland	3	£79.6m	£92.5m		£3.46m	£3.15m
Romania	2	£4.2m	£5.5m		£0.46m	£0.58m
FOP (all in Poland)	5	£62.5m	£73.9m		£1.90m	£1.92m
Total	10	£146.3m	£171.9m		£5.82m	£5.65m

2.     Non-controlling interests in funds and joint ventures managed by FPAM at 30 September 2017:

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 profits earned by fund 30 Sept 2017	Group's share of pre-tax profits earned by fund 30 Sept 2016
Interest in associates
5PT	37.8%	£664,000	£1,151,000	£56,000	£61,000
RPT	28.6%	£218,000	£270,000	£27,000	£26,000
FRS	24.1%	£649,000	£803,000	£482,000	£83,000
FGC	28.2%	£1,784,000	£1,987,000	£134,000	£101,000
FKR	18.1%	£1,160,000	£1,598,000	£41,000	-
Sub Total		£4,475,000	£5,809,000	£740,000	£271,000

Investments
UK PPP	0.9%	£884,000	£884,000	£33,000	£18,000
PDR	5.0%	£13,000	£13,000	-	-
SPEC OPPS	4.8%	£760,000	£760,000	-	-
OFFICES	1.6%	£908,000	£908,000	-	-
OTHER		£693,000	£693,000	-	-
Sub Total		£3,258,000	£3,258,000	£33,000	£18,000

Total

£7,733,000

£9,067,000

£773,000

£289,000

Revenue from Group Properties amounted to £10.60 million (2016: £10.20 million), generating a profit before unallocated central overheads and tax of £6.08 million (2016: £5.84 million) and representing 88.3% (2016: 95.5%) of Group profit before unallocated central overheads and tax.

The contribution to earnings by the Group's ten properties, including the five held by FOP (in which the Group held 67.3%), is detailed below. The table below excludes the Group's non-controlling interests in funds managed by FPAM. The reduction in net operating income is very largely as a result of the sale of a Group property located in Ploiesti, Romania in March 2017.

	Six months to 30 Sept 2017	Six months to 30 Sept 2016
	€m.	€m.
Net operating income (NOI)	9.41	9.66
Interest expense on bank loans/ finance leases	(1.59)	(1.67)
NOI after interest expense	7.82	7.99
Current tax	(0.71)	(0.61)
Debt amortisation	(3.66)	(3.60)
Capital expenditure	(2.10)	(0.46)
Free cash	1.35	3.32
Market value of properties	€195.08	€196.87
Average yield on market value	9.6%	9.8%
Bank loans/ finance leases outstanding	€133.74	€141.00
Loan to value (LTV)	68.6%	71.6%
Weighted average unexpired lease term (WAULT)	3.13 yrs	3.73 yrs
Vacancy rate	1.5%	1.8%

The loans secured against these ten properties are each held in separate non-recourse special purpose vehicles. 

In order to mitigate the effects of potential interest rate rises we have fixed the interest rate on around 40% of the loans. A one percentage point increase from current market interest rates would increase the annual interest bill by £563,000 per annum (2016: £602,000). The current weighted average borrowing cost is 2.46% (2016: 2.59%) per annum.

Fprop Opportunities plc (FOP):

The contribution by FOP to Group profit before tax amounted to £1.51 million (2016: £1.65 million).

Galeria Ostrowiec, FOP's largest asset, was revalued by CBRE at €35.1 million, an uplift of €7.1 million (£6.26 million) from its previous appraised value, following the completion of the works to create some 4,800 m² of additional retail space at the centre. Capital expenditure incurred to date in this development amounted to £3.2 million, all of which has been capitalised. The net uplift in value is not reflected in the Group's accounts because of the Group's accounting policy to hold its assets at the lower of cost or market value. The new tenants are now completing their respective fit-outs and are expected to commence trading over the next few months. FOP's net operating income will increase as a result of this expansion and the new tenancies.

The Group has continued to sell shares held by it in FOP because it is not the Group's business model to be a controlling shareholder in funds which it manages and to simplify the Group's structure. Sales of shares in FOP during the period resulted in a capital profit for the Group of £101,000 (2016: £144,000). At the period end the Group held 67.3% (31 March 2017: 69.2%) of the issued share capital in FOP.

Associates and Investments:

The Group's non-controlling interests in funds managed by FPAM contributed £740,000 (2016: £271,000) to Group profit before tax prior to the deduction of unallocated central overheads. The bulk of this increase (£397,000) was received from Fprop Romanian Supermarkets Ltd, which sold three of its nine properties and distributed the profit to shareholders.

Commercial Property Markets Outlook

Poland:

GDP growth in Poland is expected to exceed 4% in 2017 and continues to exceed that of most other EU nations. Inflation has picked up but at just over 2% per annum is manageable. Government debt remains low by international standards at some 54% of GDP.

Investor demand for commercial property remains high. Volumes are expected to match or exceed that of 2016 (around €5 billion), itself the second highest year on record. Rental growth has been more elusive, particularly in some sub sectors, such as offices in Warsaw, where there has been considerable new development in recent years. Capital values for good secondary property remain attractive, yielding around one third more than equivalent property in Western Europe at around 7-9% per annum.

Romania:

The economic outlook for Romania is at its best since before the credit crunch. GDP growth accelerated to 8.8% year on year in the third quarter just ended and is comfortably set to exceed 4% for the year.

Investor demand for commercial property continues to improve but volumes remain slim. Around €1 billion of commercial property is expected to transact in 2017. The occupier market is picking up too, as the economy continues to expand but, as in Poland, rental growth remains elusive given the scale of new development.

Bank lending margins are beginning to reduce, which should boost investment demand for commercial property.

United Kingdom:

The Bank of England's recent decision to raise interest rates by 0.25% should have little impact on the commercial property market given the Bank's continued loose monetary policy program, and the continued limited availability of bank debt.

The buying window for commercial property which we identified last year following the UK's referendum on its membership of the EU remains opens for specific kinds of property, in particular the larger institutional lot sizes.

We therefore remain bullish about the prospects of the UK commercial property market and particularly Fprop Offices LP which is currently in the process of investing its capital commitments.

Current Trading and Prospects

This has been another excellent six months for First Property.

All our funds under management and the properties we own are performing well and third party assets under management have increased by 63% since last year.

Our prospects are excellent, underpinned by our bedrock of recurring income streams and the opportunities open to us in the various markets in which we operate.

We look forward to delivering continued growth and increasing levels of profitability for our clients and shareholders.

Ben Habib

Chief Executive

23 November 2017

CONSOLIDATED INCOME STATEMENT

for the six months to 30 September 2017

		Six months to 30 Sept 2017 (unaudited)	Six months to 30 Sept 2016 (unaudited)	Year to 31 March 2017 (audited)
		Total results	Total results	Total results
		£'000	£'000	£'000
Revenue		12,089	11,121	23,663
Cost of sales		(2,179)	(1,893)	(5,065)
Gross profit		9,910	9,228	18,598
Profit on sale of an investment property		-	-	890
Profit on sale of FOP shares		101	144	552
Reversal of impairment loss /(impairment loss) to investment properties	6	167	142	(219)
Operating expenses		(4,415)	(3,897)	(8,207)
Operating profit		5,763	5,617	11,614
Share of results in associates	7	740	271	519
Distribution income		33	18	60
Interest income	3	75	81	135
Interest expense	3	(1,631)	(1,514)	(3,191)
Profit before tax		4,980	4,473	9,137
Tax charge	4	(1,122)	(1,220)	(547)
Profit for the period		3,858	3,253	8,590
Attributable to:
Owners of the parent		3,364	2,849	7,833
Non-controlling interest		494	404	757
		3,858	3,253	8,590
Earnings per share
Basic	5	2.90p	2.46p	6.75p
Diluted	5	2.84p	2.40p	6.61p

CONDENSED CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

for the six months to 30 September 2017

		Six months to 30 Sept 2017	Six months to 30 Sept 2016	Year to 31 March 2017
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
Profit for the period		3,858	3,253	8,590
Other comprehensive income
Exchange difference on retranslation of foreign subsidiaries		(1,245)	286	2,008
Revaluation of available-for-sale financial assets		-	-	(29)
Taxation		-	-	-
Total comprehensive income for the period		2,613	3,539	10,569
Total comprehensive income for the period:
Owners of the parent		2,306	3,321	9,974
Non-controlling interest		307	218	595
		2,613	3,539	10,569

All operations are continuing.
 

CONDENSED CONSOLIDATED BALANCE SHEET

as at 30 September 2017

	Notes	As at 30 Sept 2017 (unaudited)	As at 30 Sept 2016 (unaudited)	As at 31 March 2017 (audited)
		£'000	£'000	£'000
Non-current assets
Goodwill		153	153	153
Investment properties	6	130,892	129,333	128,428
Property, plant and equipment		78	181	97
Interest in associates	7a	4,475	3,098	4,347
Other financial assets	7b	3,258	918	897
Other receivables	8	1,905	139	2,108
Deferred tax assets		4,213	3,430	4,341
Total non-current assets		144,974	137,252	140,371
Current assets
Inventories - land and buildings		15,391	14,998	15,115
Current tax assets		78	123	160
Trade and other receivables	8	5,308	5,307	4,890
Cash and cash equivalents		9,998	14,115	15,946
Total current assets		30,775	34,543	36,111
Current liabilities
Trade and other payables	9	(7,283)	(7,685)	(9,848)
Financial liabilities	10a	(8,861)	(8,383)	(19,641)
Current tax liabilities		(165)	(187)	(314)
Total current liabilities		(16,309)	(16,255)	(29,803)
Net current assets		14,466	18,288	6,308
Total assets less current liabilities		159,440	155,540	146,679
Non-current liabilities
Financial liabilities	10b	(111,104)	(115,519)	(100,043)
Deferred tax liabilities		(3,423)	(3,593)	(3,208)
Net assets		44,913	36,428	43,428
Equity
Called up share capital		1,166	1,166	1,166
Share premium		5,785	5,777	5,781
Share-based payment reserve		203	203	203
Foreign exchange translation reserve		(1,039)	(1,679)	19
Investment revaluation reserve		(67)	(38)	(67)
Retained earnings		35,343	28,789	33,311
Equity attributable to the owners of the parent		41,391	34,218	40,413
Non-controlling interest		3,522	2,210	3,015
Total equity		44,913	36,428	43,428
Net assets per share	5	35.68p	29.50p	34.84p

CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY

for the six months to 30 September 2017

 

	Share Capital	Share Premium	Share Based Payment Reserve	Foreign Exchange Translation Reserve	Purchase of own Shares	Investment Revaluation Reserve	Retained Earnings	Non-controlling Interest	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 April 2016	1,166	5,773	203	(2,151)	(103)	(38)	27,334	1,906	34,090
Profit for the period	-	-	-	-	-	-	3,253	-	3,253
Fair value (or revaluation) gains on available-for-sale financial assets to profit or loss	-	-	-	-	-	-	-	-	-
Movement on foreign exchange	-	-	-	472	-	-	-	(186)	286
Total comprehensive income	-	-	-	472	-	-	3,253	(186)	3,539
Change in proportion held by non-controlling interests	-	-	-	-	-	-	-	100	100
Sale of treasury shares	-	4	-	-	2	-	-	-	6
Non-controlling interest	-	-	-	-	-	-	(404)	404	-
Dividends paid	-	-	-	-	-	-	(1,293)	(14)	(1,307)
At 30 Sept 2016	1,166	5,777	203	(1,679)	(101)	(38)	28,890	2,210	36,428
Profit for the period	-	-	-	-	-	-	5,337	-	5,337
Fair value (or revaluation) gains on available-for-sale financial assets to profit or loss	-	-	-	-	-	(29)	-	-	(29)
Movement on foreign exchange	-	-	-	1,698	-	-	-	24	1,722
Total comprehensive income	-	-	-	1,698	-	(29)	5,337	24	7,030
Change in proportion held by non-controlling interests	-	-	-	-	-	-	-	456	456
Sale of treasury shares	-	4	-	-	2	-	-	-	6
Non-controlling interest	-	-	-	-	-	-	(353)	353	-
Dividends paid	-	-	-	-	-	-	(464)	(28)	(492)
At 1 April 2017	1,166	5,781	203	19	(99)	(67)	33,410	3,015	43,428
Profit for the period	-	-	-	-	-	-	3,858	-	3,858
Fair value (or revaluation) gains on available-for-sale financial assets to profit or loss	-	-	-	-	-	-	-	-	-
Movement on foreign exchange	-	-	-	(1,058)	-	-	-	(187)	(1,245)
Total comprehensive income	-	-	-	(1,058)	-	-	3,858	(187)	2,613
Change in proportion held by non-controlling interests	-	-	-	-	-	-	-	224	224
Sale of treasury shares	-	4	-	-	2	-	-	-	6
Non-controlling interest	-	-	-	-	-	-	(494)	494	-
Dividends paid	-	-	-	-	-	-	(1,334)	(24)	(1,358)
At 30 Sept 2017	1,166	5,785	203	(1,039)	(97)	(67)	35,440	3,522	44,913

 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

for the six months to 30 September 2017

		Six months to  30 Sept 2017 (unaudited)	Six months to 30 30 Sept 2016 (unaudited)	Year to 31 March 2017  (audited)
	Notes	£'000	£'000	£'000
Cash flows from operating activities
Operating profit		5,763	5,617	11,614
Adjustments for:
Depreciation of investment property, and property, plant & equipment		1,138	976	1,960
Profit on the sale of an investment property		-	-	(890)
Profit on the sale of FOP shares		(101)	(144)	(552)
(Reversal of impairment loss)/ impairment loss to investment properties	6	(167)	(142)	219
(Increase)/ decrease in inventories		(149)	(135)	(130)
(Increase)/ decrease in trade and other receivables		(122)	(122)	305
(Decrease)/ increase in trade and other payables		(2,649)	(364)	1,637
Other non-cash adjustments		86	(112)	615
Cash generated from operations		3,799	5,574	14,778
Income taxes paid		(727)	(667)	(1,156)
Net cash flow from operating activities		3,072	4,907	13,622
Cash flow from investing activities
Capital expenditure on investment properties Proceeds from partial disposal of available-for-sale assets		(1,663) 612	(176) 153	(1,990) 239
Purchase of property, plant and equipment		(13)	(16)	(26)
Consideration from the sale of FOP shares		326	244	1,108
Purchase of investments		(2,361)	-	-
Investment in shares of new associates		-	-	(1,119)
Interest received	3	75	81	135
Dividends from associates	7a	-	64	96
Distributions received		33	18	64
Net cash flow (used in)/ from investing activities		(2,991)	368	(1,493)
Cash flow from financing activities
Net repayment of shareholder loans in subsidiaries		(158)	(75)	(227)
Proceeds from bank loan		-	-	-
Repayment of finance leases/ bank loans		(3,243)	(2,958)	(6,075)
Repayment from the sale of FOP shareholder loan		131	152	534
Short term loan to an associate		-	5,083	5,083
Sale of shares held in Treasury		6	6	12
Interest paid		(1,486)	(1,455)	(3,100)
Dividends paid		(1,334)	(1,293)	(1,757)
Dividends paid to non-controlling interest		(24)	(14)	(42)
Net cash flow (used in)/ from financing activities of continuing operations		(6,108)	(554)	(5,572)
Net (decrease)/ increase in cash and cash equivalents		(6,027)	4,721	6,557
Cash and cash equivalents at the beginning of period		15,946	8,975	8,975
Currency translation gains/ (losses) on cash and cash equivalents		79	419	414
Cash and cash equivalents at the end of the period		9,998	14,115	15,946

 

NOTES TO THE ACCOUNTS

for the six months ended 30 September 2017

1.     Basis of Preparation

·     These interim consolidated financial statements for the six months ended 30 September 2017 have not been audited or reviewed and do not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. They have been prepared in accordance with the Group's accounting policies as set out in the Group's latest annual financial statements for the year ended 31 March 2017 and are in compliance with IAS 34 "Interim Financial Reporting". 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).

·     The comparative figures for the financial year ended 31 March 2017 are not the full statutory accounts for the financial year but are abridged 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 interim financial statements were approved by a committee of the Board on 22 November 2017.

 

2.               Segmental Analysis 

Segment reporting six months to 30 September 2017

Head office costs and overheads that are common to all segments are shown separately under unallocated central costs. The staff incentive accrual is included under unallocated central costs but will be reallocated across all segments at the year end.

	Fund Management Division	Group Properties Division
	Property fund management	Group properties	Group fund properties ("FOP")	Unallocated central overheads	TOTAL
	£000	£000	£000	£'000	£'000
Rental income	-	6,262	3,000	-	9,262
Service charge income	-	626	708	-	1,334
Asset management fees	1,304	-	-	-	1,304
Performance fees	189	-	-	-	189
Total Revenue	1,493	6,888	3,708	-	12,089
Depreciation and amortisation	(19)	(997)	(122)	-	(1,138)
Operating profit	804	4,526	2,334	(1,901)	5,763
Share of results in associates	-	740	-	-	740
Distribution income	-	33	-	-	33
Interest income	-	21	54	-	75
Interest expense	-	(749)	(882)	-	(1,631)
Profit/ (loss) before tax	804	4,571	1,506	(1,901)	4,980
Analysed as:
Underlying profit/ (loss) before tax before adjusting for the following items:	615	5,111	1,465	(486)	6,705
Sale of FOP shares	-	101	-	-	101
FPG's share in an associates profit from the sale of investment properties	-	397	-	-	397
Reversal of impairment loss to investment properties	-	-	167	-	167
Performance and related fees	189	-	-	-	189
Depreciation	-	(870)	-	-	(870)
Staff incentive accrual	-	-	-	(1,256)	(1,256)
Realised foreign currency (losses)/ gains	-	(168)	(126)	(159)	(453)
Profit/ (loss) before tax	804	4,571	1,506	(1,901)	4,980

Revenue for the six months to 30 September 2017 from continuing operations consists of revenue arising in the United Kingdom 8% (2016: 6%) and Central and Eastern Europe 92% (2016: 94%) and all relates solely to the Group's principal activities.

 

Segment reporting six months to 30 September 2016

	Fund Management Division	Group Properties Division
	Property fund management	Group properties	Group fund properties ("FOP")	Unallocated central overheads	TOTAL
	£'000	£'000	£'000	£'000	£'000
Rental income	-	5,960	2,640	-	8,600
Service charge income	-	840	763	-	1,603
Asset management fees	918	-	-	-	918
Performance fees	-	-	-	-	-
Total revenue	918	6,800	3,403	-	11,121
Depreciation and amortisation	(17)	(864)	(95)	-	(976)
Operating profit	273	4,566	2,427	(1,649)	5,617
Share of results in associates	-	271	-	-	271
Distribution income	-	18	-	-	18
Interest income	-	51	20	10	81
Interest expense	-	(719)	(795)	-	(1,514)
Profit/ (loss) before tax	273	4,187	1,652	(1,639)	4,473
Analysed as:
Underlying profit/ (loss) before tax before adjusting for the following items:	273	5,091	1,576	(445)	6,495
Reversal of impairment loss to investment properties	-	-	142	-	142
Sale of FOP shares	-	144	-	-	144
Performance and related fees	-	-	-	-	-
Depreciation	-	(812)	-	-	(812)
Provision	-	-	-	-	-
Staff incentive accrual	-	-	-	(1,113)	(1,113)
Realised foreign currency gains/ (losses)	-	(236)	(66)	(81)	(383)
Profit/ (loss) before tax	273	4,187	1,652	(1,639)	4,473

 

Segment reporting year to 31 March 2017

	Fund Management Division	Group Properties Division
	Property fund management	Group properties	Group fund properties ("FOP")	Unallocated central overheads	TOTAL
	£'000	£'000	£'000	£'000	£'000
Rental income	-	12,165	5,229	-	17,394
Service charge income	-	2,464	1,759	-	4,223
Asset management fees	2,046	-	-	-	2,046
Performance fees	-	-	-	-	-
Total revenue	2,046	14,629	6,988	-	23,663
Depreciation and amortisation	(41)	(1,786)	(133)	-	(1,960)
Operating profit	404	10,192	3,866	(2,848)	11,614
Share of results in associates	-	519	-	-	519
Distribution income	-	60	-	-	60
Interest income	-	37	48	50	135
Interest expense	-	(1,535)	(1,656)	-	(3,191)
Profit/ (loss) before tax	404	9,273	2,258	(2,798)	9,137
Analysed as:
Underlying profit/ (loss) before tax before adjusting for the following items:	907	9,993	2,791	(857)	12,834
Impairment loss to investment properties	-	-	(219)	-	(219)
Sale of FOP shares	-	552	-	-	552
Sale of property	-	890	-	-	890
Performance and related fees	-	-	-	-	-
Depreciation	-	(1,662)	-	-	(1,662)
Provision	-	-	-	(44)	(44)
Staff incentive accrual	(503)	(172)	(173)	(1,922)	(2,770)
Realised foreign currency gain/ (loss)	-	(328)	(141)	25	(444)
Profit/ (loss) before tax	404	9,273	2,258	(2,798)	9,137
Assets - Group	792	95,923	67,026	8,394	172,135
Share of net assets of associates	-	4,655	-	(308)	4,347
Liabilities	(189)	(79,817)	(50,652)	(2,396)	(133,054)
Net assets	603	20,761	16,374	5,690	43,428

 

3.       Interest Income/ (Expense)

	Six months ended 30 Sept 2017	Six months ended 30 Sept 2016	Year ended 31 March 2017
	£'000	£'000	£'000
Interest income - bank deposits	14	18	35
Interest income - other	61	63	100
Total interest income	75	81	135

	Six months ended 30 Sept 2017	Six months ended 30 Sept 2016	Year ended 31 March 2017
	£'000	£'000	£'000
Interest expense - property loans	(1,049)	(982)	(2,192)
Interest expense - bank and other	(87)	(100)	(160)
Finance charges on finance leases	(495)	(432)	(839)
Total interest expense	(1,631)	(1,514)	(3,191)

4.       Tax Expense

The tax charge is based on a combination of actual current and deferred tax charged at an effective rate that is expected to apply to the profits for the full year. 

	Six months ended 30 Sept 2017	Six months ended 30 Sept 2016	Year ended 31 March 2017
	£'000	£'000	£'000
Current  tax	(687)	(575)	(1,155)
Deferred tax	(435)	(645)	608
Total	(1,122)	(1,220)	(547)

5.       Earnings/ NAV Per Share

The basic earnings per ordinary share is calculated on the profit on ordinary activities after taxation and after non-controlling interests on the weighted average number of ordinary shares in issue, during the period.

Figures in the table below have been used in the calculations.

	Six months ended 30 Sept 2017	Six months ended 30 Sept 2016	Year  ended 31 March 2017
Basic -  pence per share	2.90p	2.46p	6.75p
Diluted - pence per share	2.84p	2.40p	6.61p
	Number	Number	Number
Weighted average number of ordinary shares in issue for basic	115,992,763	115,967,888	115,975,959
Share options	2,700,000	2,700,000	2,700,000
Total for diluted	118,692,763	118,667,888	118,675,959
	£'000	£'000	£'000
Basic earnings	3,364	2,849	7,833
Notional interest on share options assumed to be exercised	4	4	8
Diluted earnings	3,368	2,853	7,841

	Six months ended 30 Sept 2017		Six months ended 30 Sept 2016		Year  ended 31 March 2017
Net assets per share	35.68p	29.50p		34.84p
Adjusted net assets per share	51.25p	45.86p		47.64p

The following numbers have been used to calculate both the net assets and adjusted net assets per share.

	Number	Number	Number
Number of shares in issue at period end	116,004,464	115,980,040	115,992,699
	£'000	£'000	£'000
Net assets excluding non-controlling interest	41,391	34,218	40,413
Adjusted net assets per share	Number	Number	Number
Number of shares in issue at period end	116,004,464	115,980,040	115,992,699
Number of share options assumed to be exercised	2,700,000	2,700,000	2,700,000
Total	118,704,464	118,680,040	118,692,699
Adjusted net assets per share	£'000	£'000	£'000
Net assets excluding non-controlling interest	41,391	34,218	40,413
Investment properties at fair value net of deferred taxes	13,315	17,350	10,740
Inventories at fair value net of deferred taxes	4,409	2,009	4,128
Other adjustments	1,726	850	1,267
Total	60,841	54,427	56,548

6.   Investment Properties

	Six months ended 30 Sept 2017	Six months  ended 30 Sept 2016	Year  ended 31 March 2017
	£'000	£'000	£'000
1 April	128,428	120,718	120,718
Capital expenditure	1,663	176	1,990
Disposals	-	-	(1,711)
Depreciation	(1,105)	(947)	(1,891)
Fair value adjustment	167	142	(219)
Foreign exchange translation	1,739	9,244	9,541
End of period	130,892	129,333	128,428

Investment properties owned by the Group, and indirectly via FOP are stated at cost less depreciation and accumulated impairment losses.

7.      Interest in Associates and Other Financial Assets

	Six months ended 30 Sept 2017	Six months ended 30 Sept 2016	Year ended 31 March 2017
a) Associated undertakings	£'000	£'000	£'000
Cost of investment  at beginning of period	4,347	3,044	3,044
Additions	-	-	1,119
Disposals	(612)	(153)	(239)
Share of associates profit after tax	740	271	519
Dividends received	-	(64)	(96)
Cost of investment at end of period	4,475	3,098	4,347
Investments in associated undertakings
5th Property Trading Ltd	972	868	916
Regional Property Trading Ltd	218	185	192
Fprop Romanian Supermarkets Ltd	649	766	750
Fprop Galeria Corso Ltd	1,784	1,587	1,678
Fprop Krakow Ltd	1,160	-	1,119
	4,783	3,406	4,655
Less: Group share of profit after tax withheld on sale of property to an associate in 2007	(308)	(308)	(308)
Cost of investment at end of period	4,475	3,098	4,347
The withheld profit figure of £308,000 represents the removal of the percentage of intercompany profit resulting from the sale of the property in 2007 to 5th Property Trading Ltd (an associate). The figure will reduce when there is a reduction in First Property Group's stake in 5th Property Trading Ltd.
b) Other financial assets and investments
Cost of investment at beginning of period	897	914	914
Additions Disposal	2,361 -	4 -	12 -
(Decrease)/increase in fair value during the period	-	-	(29)
Cost of investment at end of period	3,258	918	897

8.      Trade and Other Receivables

	Six months ended 30 Sept 2017	Six months ended 30 Sept 2016	Year  ended 31 March 2017
	£'000	£'000	£'000
Current assets
Trade receivables	2,514	2,392	2,003
Less provision for impairment of receivables	(490)	(634)	(626)
Trade receivables net	2,024	1,758	1,377
Other receivables	2,426	3,159	2,435
Prepayments and accrued income	858	390	1,078
	5,308	5,307	4,890
Non-current assets	1,905	139	2,108

Other receivables include a balance of £1.88 million relating to the deferred consideration from the sale of an investment property located in Romania, which is receivable after one year. This has been discounted to reflect its current value.

9.          Trade and Other Payables

	Six months ended 30 Sept 2017	Six months ended 30 Sept 2016	Year  ended 31 March 2017
	£'000	£'000	£'000
Trade payables	3,457	2,787	2,941
Other taxation and social security	891	673	799
Other payables and accruals	2,272	4,214	5,275
Deferred income	663	11	833
	7,283	7,685	9,848

10.        Financial Liabilities

	Six months ended  30 Sept 2017	Six months ended 30 Sept 2016	Year  ended 31 March 2017
	£'000	£'000	£'000
a) Current liabilities
Loans repayable by subsidiary (FOP) to third party shareholders	2,121	1,918	2,148
Bank loans	3,470	3,340	3,180
Finance leases	3,270	3,125	14,313
	8,861	8,383	19,641
b) Non-current liabilities
Bank loans	63,757	66,022	63,850
Finance leases	47,347	49,497	36,193
	111,104	115,519	100,043
c) Total obligations under financial liabilities
Repayable within one year	8,861	8,383	19,642
Repayable within one and five years	78,099	99,041	65,725
Repayable after five years	33,005	16,478	34,317
	119,965	123,902	119,684

Loans repayable by Fprop Opportunities plc (FOP) to third party shareholders are unsecured and repayable on demand.

Eight bank loans and three finance leases (all denominated in Euros) totalling £117.84 million (31 March 2017: £117.54 million) included within financial liabilities are secured against investment properties owned by the Group and Fprop Opportunities plc (FOP), and one property owned by the Group shown under inventories. These bank loans and finance leases are otherwise non-recourse to the Group's assets.

The interim 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 32 St James's Street, London SW1A 1HD.

 

END

 

 

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