Preliminary Results

RNS Number : 3005B

First Property Group PLC

06 June 2019

 

Date:                      6 June 2019                                     

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 2019

First Property Group plc (AIM: FPO), the property fund manager and investor with operations in the United Kingdom and Central Europe, today announces its preliminary results for the twelve months ended 31 March 2019. These results were materially affected by the deconsolidation of Fprop Opportunities plc (FOP) from the accounts of the Group, which took effect on 12 October 2018.

Operational Highlights:

·      Sales of shares in FOP reducing the Group's interest in it to 40% and requiring its deconsolidation;

·      Re-leasing of two thirds of the 10,000 m² office space vacated (in February 2018) in Chałubińskiego 8 (CH8, previously known as Oxford Tower);

·      Establishment of two new funds: Fprop Phoenix Ltd and Fprop Cluj Ltd;

·      Total assets under management up 12.8% to £706 million (2018: £626 million);

·      Third party assets under management up 34.5% to £611 million (2018: £454 million).

Financial Highlights:

·      Group profit before tax reduced by 10% to £8.31 million (2018: £9.23 million), mainly due to the reduction in income resulting from the vacancy created in CH8;

·      Net contribution to profit before tax from non-recurring items of £2.78 million (2018: £1.32 million);

·      Threefold increase in contribution to profit before tax from the fund management division of £3.03 million (2018: £1.00 million);

·      Main effects of deconsolidation of FOP:

-       Turnover of the Group post 12 October 2018 reduced by £4.12 million;

-       Group profit before tax post 12 October 2018 reduced by £1.17 million;

-       Book cost of Group Properties reduced by £63.91 million;

-       Borrowings reduced by £49.12 million;

-       Group cash balances reduced by £2.03 million;

·      Adjusted NAV per share increased by 8.31% to 57.48 pence (2018: 53.07 pence);

·      Final dividend increased by 3.39% to 1.22 pence per share (2018: 1.18 pence per share);

·      Total dividend for the year increased by 3.75% to 1.66 pence per share (2018: 1.60 pence per share);

Financial Summary:

	Unaudited year to 31 March 2019		Audited year to 31 March 2018	Percentage change
Income Statement:
Statutory profit before tax	£8.31m		£9.23m	-9.97%
Diluted earnings per share	4.85p		5.70p	-14.91%
Total dividend per share	1.66p		1.60p	+3.75%
Average £/€ rate	0.881		0.881	-
Balance Sheet at year end:
Net debt	£56.94m		£102.31m	-44.35%
Gearing ratio at market value %	50.44%		65.40%
Gearing ratio at book value %	59.09%		71.82%
Net assets per share	41.46p		40.29p	+2.90%
Adjusted net assets per share (EPRA basis)	57.48p		53.07p	+8.31%
Cash balances	£9.74m		£15.32m	-36.42%
Year end £/€ rate	0.862		0.877
Group Wholly Owned Property Portfolio at year end:
(EXCLUDES the Group's non-controlling interests in eleven FPAM managed funds)
Book value	£82.14m		£84.10m*	-2.33%
Market value	£94.61m		£96.88m*	-2.34%
Gross debt (all non-recourse to Group)	£66.68m		£68.16m*	-2.17%
LTV at book value %	81.18%		81.04%*
LTV at market value %	70.43%		70.35%*
Weighted average unexpired lease term	2.75 yrs		3.75 yrs
*For comparative purposes 2018 excludes FOP
Total Assets Under Management:		£706m	£626m	+12.78%
United Kingdom		58.9%	62.3%
Poland		38.9%	35.8%
Romania		2.2%	1.9%
Weighted average unexpired fund life		5.75 yrs	6.41 yrs

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

"The year just ended was another one of substantial operational and financial progress.

The growth of our fund management division continued apace with third party assets under management increasing by some 35% to £611 million.

Both our divisions are trading well. The markets in which we operate are generally buoyant and offering interesting investment opportunities on which we expect to continue to capitalise."

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 158092. 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 Officer) George Digby (Group Finance Director) Jeremy Barkes (Director, Business Development)	www.fprop.com [e-mail]
Arden Partners (NOMAD & Broker)	Tel: + 44 (20) 7614 5900
John Llewelyn-Lloyd (Director, Corporate Finance) Ben Cryer (Corporate Finance)
Newgate Communications (PR)	Tel:+ 44 (20) 3757 6880
Robin Tozer / Tom Carnegie / Fiona Norman	[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. It has grown its adjusted net assets, together with dividends paid, by some 24% on an annualised basis since 2006.

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 thirteen 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 nine directly held properties in Poland and Romania, and non-controlling interests in eleven of the thirteen funds managed by FPAM.

Listed on AIM the Company has offices in London, Warsaw and Bucharest. Around one third of the shares in the Company are owned by management and their families. Further information about the Company and its products can be found at: www.fprop.com.

 

CHIEF EXECUTIVE'S STATEMENT

Financial Performance

I am pleased to report final results for the twelve months ended 31 March 2019. The complexion of these results is different to those of prior years due to a change in the accounting treatment of Fprop Opportunities plc (FOP), resulting from sales of shares in it by the Group. With effect from 12 October 2018, the date when the Group's shareholding reduced from majority to associate status, the results of FOP were deconsolidated from that of the Group. The main effects of this are summarised below and explained in detail in the Finance Director's report.

Profit before tax decreased by 10% to £8.31 million (2018: £9.23 million) mainly due to the reduction in income resulting from the vacancy created by Citi leaving Chałubińskiego 8 (CH8) immediately prior to the start of the financial year.

Diluted earnings per share decreased by 14.9% to 4.85 pence (2018: 5.70 pence), a greater decrease than profit before tax due to a higher tax charge.

The main effects of deconsolidation of FOP were:

-       Turnover of the Group post 12 October 2018 reduced by £4.12 million;

-       Group profit before tax post 12 October 2018 reduced by £1.17 million;

-       Book cost of Group Properties reduced by £63.91 million;

-       Borrowings reduced by £49.12 million;

-       Group cash balances reduced by £2.03 million.

The profit before tax was largely unaffected by foreign exchange rate movements.

The net contribution to profit before tax from non-recurring items was £2.78 million (2018: £1.32 million). A breakdown of these is provided in the Finance Director's Review.

The Group ended the year with reduced net assets excluding the non-controlling interests of £46.17 million (2018: £46.74 million). The net assets of the Group when adjusted to their market value less any deferred tax liabilities increased by 3.98% to £65.51 million (2018: £63.00 million).

Group cash at the year-end amounted to £9.74 million (2018: £15.32 million). The reduction in cash was mainly due to the deconsolidation of FOP (2018: £2.17 million) and the purchase by the Group of 4,775,000 of its own Ordinary Shares, which are now held in Treasury, for a total consideration of £2.20 million.

Dividend

The Directors have resolved to increase the final dividend to 1.22 pence per share (2018: 1.18 pence per share), an increase of 3.4%, which together with the interim dividend of 0.44 pence per share (2018: 0.42 pence per share), equates to a dividend for the year of 1.66 pence per share (2018: 1.60 pence per share), an increase of 3.75%.

The proposed final dividend will be paid on 27 September 2019 to shareholders on the register at 23 August 2019, and is subject to shareholder approval at the forthcoming annual general meeting on 9 September 2019.

The full year's dividend is covered 2.98 times (2018: 3.64).

REVIEW OF OPERATIONS

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

As at 31 March 2019 aggregate assets under management amounted to £706 million (2018: £626 million), an increase of 12.8% from the prior year. Of this, £611 million (2018: £454 million) was managed on behalf of third-party clients, an increase of 34.5% from the prior year. A further £85.35 million of equity commitments is still available for investment in funds managed on behalf of third parties. 

The reconciliation of movement in funds under management during the year 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 31 March 2018	389.90			64.46	454.36	68		171.34	10		625.70	78
Purchases:
-Existing funds	32.04			-	32.04	2		-	-		32.04	2
-New funds	-			69.78	69.78	5		-	-		69.78	5
Property sales	-			(5.57)	(5.57)	(5)		-	-		(5.57)	(5)
Transfer to Group Properties	-			(5.31)	(5.31)	(4)		5.31	4		-	-
Transfer from Group Properties	-			74.46	74.46	5		(74.46)	(5)		-	-
Capital expenditure	0.87			0.95	1.82	-		1.54	-		3.36	-
Property depreciation and write down	-			(0.38)	(0.38)	-		(5.17)	-		(5.55)	-
Property revaluation	(6.86)			(0.41)	(7.27)	-		(1.12)	-		(8.39)	-
FX revaluation	-			(2.86)	(2.86)	-		(2.83)	-		(5.69)	-
As at 31 March 2019		415.95	195.12		611.07	71		94.61	9		705.68	80

Fund management fees are levied monthly by FPAM by reference to the value of funds under management excluding cash and cash commitments. The effect of any increase (or decrease) in fund management fee income associated with increased (or decreased) funds under management is not realised in full until the financial year following investment (or sale), because of the timing of draw down (or sale) during the year.

In the case of Fprop Offices LP, the Group is entitled to a share of total profits in lieu of fund management fees and to receive annual payments on account equivalent to 10% of total cumulative income profits and realised capital gains. Under its accounting policy the Group will not recognise unrealised property revaluations above the properties' original cost. These payments are adjusted annually, if necessary, for any overpayments made in previous years up to a maximum of total past cumulative payments received. In the year just ended the Group recognised £961,000 (2018: Nil), the maximum that could be subject to clawback. Future entitlements to payment in respect of this fund are being earned at an annualised rate of £950,000 per annum before property revaluations, and thus act as a buffer against possible refund liabilities in the future.  

Revenue earned by this division amounted to £4.96 million (2018: £2.92 million), resulting in a profit before unallocated central overheads and tax of £3.03 million (2018: £1.00 million), representing 36.5% of Group profit before unallocated central overheads and tax (2018: 10.9%). The increase in revenue and profit earned by this division included performance related fees of £500,000 in respect of Fprop Romanian Supermarkets Ltd and £79,000 in respect of Fprop Cluj Ltd.

At the year-end FPAM's fund management fee revenue, excluding any eligible profit share from Fprop Offices LP, was being earned at an annualised rate of £3.34 million (2018: £2.60 million), an increase of some 28% from the prior year.

First Property Asset Management Ltd (FPAM) now manages thirteen property investment funds, having established two new funds during the year. The weighted average unexpired fund management contract term at the year-end was 5 years, 9 months (2018: 6 years, 5 months).

 

A brief synopsis of the value of assets and maturity of each of the funds managed by FPAM is set out below:

Fund	Country of investment	Fund expiry	Assets under management at market value at 31 March 2019	% of total assets under management	Assets under management at market value at 31 March 2018
Fund management division			£m.		£m.
SAM & DHOW	UK	Rolling	*	*	*
RPT & EAS	Poland	Aug 2020	***	***	5.31
5PT	Poland	Dec 2022	7.90	1.12	7.63
UK PPP	UK	Feb 2022	87.22	12.36	93.53
OFFICES	UK	Jun 2024	146.60	20.77	114.35
SIPS	UK	Jan 2025	163.13	23.12	165.74
FOP**	Poland	Oct 2025	71.84	10.18	-
FRS	Romania	Jan 2026	1.01	0.14	6.69
FGC	Poland	Mar 2026	21.59	3.06	21.84
SPEC OPPS	UK	Jan 2027	19.00	2.69	16.28
FKR	Poland	Mar 2027	23.00	3.26	22.99
FCL	Romania	Jun 2028	7.67	1.09	-
FPL	Poland	Jun 2028	62.11	8.80	-
Sub Total			611.07	86.59	454.36
Group properties division
RPT & EAS	Poland	Aug 2020	5.34	0.76	***
FOP**	Poland	Oct 2025	**	**	74.46
Wholly owned by the Group	Poland	n/a	82.52	11.69	91.72
Wholly owned by the Group	Romania	n/a	6.75	0.96	5.16
Sub Total			94.61	13.41	171.34
Total			705.68	100.00	625.70

* Not subject to recent revaluation;

** With effect from 12 October 2018 FOP was accounted for as an associate;

***With effect from 1 August 2018 RPT and E&S were transferred to Group Properties.

GROUP PROPERTIES

At 31 March 2019 Group Properties comprised:

1.     Nine (2018: ten) wholly owned commercial properties in Poland and Romania accounted for under the cost model as set out in the table below.

Property / Country		No. of properties	Book value	Market value	Contribution to Group profit before tax - year to 31 March 2019	Contribution to Group profit before tax - year to 31 March 2018
			£m.	£m.	£m.	£m.
Poland	3		72.85	82.52	2.3	6.9
Romania	2		4.04	6.75	0.2	0.6
RPT/E&S (all in Poland)	4		5.25	5.34	(0.1)	**
FOP (all in Poland)	*		*	*	2.2	3.4
Total	9		82.14	94.61	4.6	10.9

* With effect from 12 October 2018 FOP was accounted for as an associate, following its deconsolidation;

2.     Non-controlling interests in eleven of the thirteen funds managed by FPAM accounted for under the cost model as set out in the table below.

Fund	% owned by First Property Group			Book value of First Property's share in fund	Current market value of holdings	Group's share of post-tax profits/(losses) earned by fund 31 March 2019			Group's share of post-tax profits/(losses) earned by fund 31 March 2018
				£'000	£'000	£'000			£'000
Interest in associates
5PT	40.6%			980	1,098	54			113
RPT/E&S	***			**	**	***(9)			(93)
FRS	24.1%			150	247	116			539
FGC	28.2%			2,089	2,350	302			270
FKR	18.1%			1,308	1,791	156			121
FCL	17.4%			458	458	17			-
FPL	23.4%			2,049	10,006	1,051			-
FOP	40.0%			10,020	10,020	(87)			*
Share of results in associates				17,054	25,970	1,600			950
**With effect from 1 August 2018 RPT and E&S were transferred to Group Properties; ***Representing the Group's 28.6% share of the loss from its associate share in RPT/E&S prior to its consolidation into the accounts of the Group on 1 August.
Investments
UKPPP		0.9%	828		828	59		63
SPEC OPPS		4.0%	777		777	45		-
OFFICES		1.6%	1,934		1,934	169		-
Sub Total			3,539		3,539	273		63

Total

20,593

29,509

1,873

1,013

Group Properties generated a profit before unallocated central overheads and tax of £7.99 million (2018: £11.18 million), representing 72.5% (2018: 91.76 %) of Group profit before unallocated central overheads and tax. The reduction in profit was mainly due to a lower contribution from CH8.

The loans secured against our Group Properties are each held in separate non-recourse special purpose vehicles. In order to mitigate potential interest rate rises we have fixed the interest rate on a proportion (47%) of these loans. A one percentage point increase in interest rates would increase the annual interest bill by £485,000 per annum (2018: £610,000). The current weighted average borrowing cost is 2.15% (2018: 2.34%).

Chałubińskiego 8 (CH8, previously known as Oxford Tower), Poland

In February 2018, immediately prior to the start of the year under review, Citi vacated some 10,000 m² of office space in CH8, resulting in the net operating income generated by this investment reducing by €2.89 million. We have since re-leased some 7,000 m² of this space, the benefits of which should be experienced by the Group in the current and next year. Negotiations with interested parties are continuing for the remaining vacant space.

Office Building in Gdynia, Poland

The Group has, since its acquisition, been depreciating the holding value of the office block in Gdynia at a rate of £1.74 million (€1.97 million) per annum to take account of its over rented nature. In view of the shortening lease on this property, the Directors resolved to further write down the property during the year by an amount of £3.02 million (€3.50 million). It is anticipated that the original rate of depreciation will not change in future periods.

Associates and Investments

The contribution to Group profit before tax prior to the deduction of unallocated central overheads from our eleven minority shareholdings in funds managed by FPAM increased by 68% to £1.60 million (2018: £0.95 million). This increase was mainly attributable to Fprop Phoenix Ltd which contributed £1.05 million (2018: nil).

The contribution from associates and investments represented 23.45% of the total contribution by Group properties (2018: 9.06%).

Regional Property Trading Ltd (RPT) and E and S Estates Ltd (E&S)

On 1 August 2018 the Group acquired full ownership of RPT and 77% of E and S, which jointly own four properties in Poland, at a cost of £527,000. With effect from 1 August 2018 the results of RPT and E&S were consolidated into those of the Group.

Commercial Property Markets Outlook

Poland:

Poland's economy continues to expand at a faster rate than its western European neighbours, as it has done since its entry into the EU in 2004. It recorded GDP growth of 5.1% in 2018 and is forecast to grow by 4.2% in 2019.

Transaction volumes for commercial property reached €7.2 billion in 2018, an all-time high. The banking market remains healthy and yields for good secondary property, of the sort we favour, remain attractive at around 7.5% per annum or more. Rents have remained broadly stable for several years.

Romania:

GDP growth moderated in 2018 to 4.1% (from 7% in 2017). It is forecast to grow by 3.3% in 2019 and 3.1% in 2020. Wage-led private consumption growth continues to be the key driver.

International investment in commercial property remains steady with transaction volumes in 2018 broadly unchanged from 2017 at around €900 million.

United Kingdom:

GDP in the UK is growing at around 1.8% on an annualised basis.

The total return from all commercial property in 2018 was 6.3%. The total return from offices was 7.9% whilst the retail sector posted its first negative total return since 2012 of -1.8%.

Occupier and investor demand is generally strong for office property but has generally softened for retail property, as evidenced by the valuation movements referenced above. Yields are generally reasonable for investment property.

Current Trading and Prospects

The year just ended was another one of substantial operational and financial progress.   

The growth of our fund management division continued apace with third party assets under management increasing by some 35% to £611 million.

Both our divisions are trading well. The markets in which we operate are generally buoyant and offering interesting investment opportunities on which we expect to continue to capitalise.

Ben Habib

Chief Executive

6 June 2019

 

FINANCE DIRECTOR'S REVIEW

The financial results for the year ending 31 March 2019 were significantly influenced by the deconsolidation of FOP in October 2018, which has subsequently been accounted for as an associate. A summary of the main financial effects of this deconsolidation are set out in the Chief Executive's Statement.

The Group produced a profit before tax of £8.31 million, a reduction of 10.0% compared to last year's record £9.23 million. This reduction was mainly a result of the reduction in income of €2.89 million being earned from the Group's investment in CH8 following the 10,000 m² vacancy created by Citi Group when it left the property in February 2018, immediately prior to the start of the year under review.

Total Group Net assets (excluding the non-controlling interest) decreased by 1.2% to £46.17 million (2018: £46.74 million).

The annualised growth in adjusted net assets together with dividends paid to shareholders over the last five years equates to 23.6% (2018: 25.0%) per annum. 

INCOME STATEMENT

Revenue and Gross Profit

A review of the operating and financial performance of the results of the two trading divisions for the year are included in the Chief Executive's Statement.

Operating Expenses

Operating expenses increased by 1.8%, mainly due to an increase in headcount in Poland to 41 at 31 March 2019 (2018: 29). 

Investment Property Write Down

The Directors have reviewed the residual value of the Group property located in Gdynia and in addition to the depreciation charged within operating expenses of £1.74 million  (2018: £1.74 million), they have concluded, after due consideration, to apply a further write down of £3.02 million (2018: £nil) to reflect its expected market value when the current lease terminates in 2020, given that the property is substantially over rented.

Share of Results in Associates

The contribution for the year of £1.60 million (2018: £0.95 million) comprises the Group's share of post-tax profits from seven investments including the post deconsolidation share of post-tax profits from FOP. This includes a first contribution of £1.05 million from the Group's investment in Fprop Phoenix Ltd that is the UK holding company to Eximius Business Park in Krakow, Poland (formerly known as Krakow Business Park).  

Investment Income (from other financial assets and investments)

The increase from £63,000 to £273,000 represents a full year contribution from the Group's investments in Fprop Offices LP and Fprop UK Special Opportunities LP.

Financing Costs

The Group's finance costs show a reduction on last year from £3.06 million to £2.18 million as a result of the deconsolidation of FOP's borrowings of £49.12 million. All bank loans and finance leases are denominated in Euro and all are used to finance properties valued in Euro.

Net Contribution to Group Profit Before Tax from Non-recurring Items

These comprised a total £2.78 million (2018: £1.32 million) of which the main items were:

-       the gain on loss of control of FOP - £4.83 million;

-       the contribution from Fprop Phoenix Ltd of £1.05 million;

-       less the write down of the property in Gdynia of £3.02 million;

-       less the fair value impairment of £0.73 million.

Current Tax

The current tax charge of £1.28 million (2018: £1.38 million) decreased partly as a result of the deconsolidation of FOP but was adversely affected by an under provision in UK corporation tax last year of £0.13 million. The charge includes Polish and Romanian corporation tax where the headline rates remain at 19% and 16% respectively. Unused trading tax losses in the UK of £6.35 million are available to be carried forward and utilised wherever possible.

Deferred Tax

An increased deferred tax charge of £659,000 (2018: £90,000) has arisen mainly through a reduction in the deferred tax assets recognition in relation to the Euro bank loans, resulting from different respective year-end foreign exchange rates.

Earnings per Share

Basic earnings per share decreased 14.9% from 5.82p to 4.95p per share, a larger decrease than the 10.0% decrease in the profit before tax for the year due to a higher total effective tax charge.

BALANCE SHEET

Deconsolidation of FOP

The net assets of FOP at deconsolidation at 12 October 2018 amounted to £13.63 million at cost of which £7.60 million was attributable to the non-controlling interest. The remaining 40.03% interest in FOP was held in the balance sheet at £10.02 million on 31 March 2019, following a mark up to fair value of £4.22 million.

Investment Properties and Property Held Under Inventory (all held at cost)

The book value of the Group's nine wholly owned properties (excluding FOP) is £82.14 million (2018: £84.10 million) compared to fair value of £94.61 million (2018: £96.88 million).

Capital Expenditure (investment and trade properties)

Capital expenditure of £1.54 million (2018: £2.61 million) mostly comprised office fit-outs for new tenants in CH 8.

Business Acquisitions

With effect from 1 August 2018, following the Group acquiring full ownership of Regional Property Trading Ltd and 77% of E and S Estates Ltd for a combined aggregate cost of £527,000, the combined net assets of £841,000 (including the non-controlling interest) have been consolidated in the results of the Group.

Borrowings

All bank and finance lease borrowings are denominated in Euro and decreased from €134.16 million (£117.62 million) to €77.37 million (£66.68 million) after the deconsolidation of FOP and scheduled bank loan repayments of €7.25 million.  On an adjusted NAV basis, the Group had a gearing ratio of 50.6%. Bank deposits of £1.39 million have been made in respect of four bank loans to redress Debt Service Cover Ratio (DSCR) covenant shortfalls of which £1.03 million are held in prepayments.

Non-controlling Interests

The deconsolidation of FOP resulted in a reduction in non-controlling interests (NCI) of £6.08 million from £6.19 million at 31 March 2018 to £114,000 at 31 March 2019. The remaining NCI represents the 10% interest in Corp Sp. z o. o., (the property management company to Blue Tower, Warsaw), not owned by the Group and the 23% of E and S Estates Ltd (acquired during the year), also not owned by the Group.

Foreign Exchange Translation Reserve

Due to both Sterling and Euro closing rate strength against the Polish Zloty there has been a £2.13 million reduction in this reserve during the year to a deficit of £0.73 million. There was also a foreign exchange profit of £721,000 recycled to the income statement on the disposal of FOP which was included in the mark up to fair value of FOP to £4.22 million.

Treasury Shares

First Property Group plc purchased 4,775,000 Ordinary Shares in itself in April 2018, at a price of 46 pence per share or £2.20 million. This purchase resulted in a reduction of equal quantum in the Group's net assets.

CASH and CASHFLOW

Cash

Cash levels decreased from £15.32 million to £9.74 million. This reduction arose largely as a result of:

-       The deconsolidation of FOP's cash of some £2.03 million; and

-       The share buy-back, referred to above, at a price of some £2.20 million.

 

CONSOLIDATED INCOME STATEMENT

for the year ended 31 March 2019

	Notes	Year ended 31 March 2019 (unaudited) Total results	Year ended 31 March 2018   (audited) Total results
		£'000	£'000
Revenue	3	20,437	25,460
Cost of sales		(4,491)	(6,030)
Gross profit		15,946	19,430
Profit on the sale of 'FOP' shares		64	1,112
Gain on loss of control of subsidiary	8	4,827	-
Impairment of goodwill on acquisition of subsidiary	6	(27)	-
Loss on disposal of subsidiary	7	(5)	-
Write down/ Impairment loss to investment property	11	(2,984)	(183)
Operating expenses		(9,320)	(9,158)
Operating profit		8,501	11,201
Share of results in associates	12	1,600	950
Investment income		273	63
Interest income	4	114	82
Interest expense	4	(2,180)	(3,063)
Profit before tax		8,308	9,233
Tax charge	5	(1,943)	(1,473)
Profit for the year		6,365	7,760
Attributable to:
Owners of the parent		5,514	6,755
Non-controlling interests		851	1,005
		6,365	7,760
Earnings per share:
Basic	9	4.95p	5.82p
Diluted	9	4.85p	5.70p

All operations are continuing.

 

CONSOLIDATED SEPARATE STATEMENT

OF OTHER COMPREHENSIVE INCOME

for the year ended 31 March 2019

		Year ended 31 March 2019 (unaudited) Total results	Year ended 31 March 2018 (audited) Total results
		£'000	£'000
Profit for the year		6,365	7,760
Other comprehensive income
Exchange differences on retranslation of foreign subsidiaries		(1,784)	1,590
Foreign exchange profit recycled to the income statement on disposal		(721)	-
Net gain/(loss) on financial assets at fair value through other comprehensive income		29	(3)
Taxation		-	-
Total comprehensive income for the year		3,889	9,347
Total comprehensive income for the year attributable to:
Owners of the parent		3,414	8,131
Non-controlling interests		475	1,216
		3,889	9,347

All operations are continuing.

 

CONSOLIDATED BALANCE SHEET

As at 31 March 2019

	Notes	As at 31 March 2019 (unaudited) £'000	As at 31 March 2018 (audited) £'000
Non-current assets
Goodwill	10	153	153
Investment properties	11	67,348	132,180
Property, plant and equipment		58	66
Investment in associates	12a)	17,054	4,725
Other financial assets	12b)	3,539	4,517
Other receivables	14	1,312	1,766
Deferred tax assets	16	2,779	4,518
Total non-current assets		92,243	147,925
Current assets
Inventories - land and buildings	13	14,817	15,586
Current tax assets		28	100
Trade and other receivables	14	5,918	5,154
Cash and cash equivalents		9,738	15,315
Total current assets		30,501	36,155
Current liabilities
Trade and other payables	15	(7,078)	(8,298)
Financial liabilities	17	(6,329)	(8,319)
Current tax liabilities		(80)	(230)
Total current liabilities		(13,487)	(16,847)
Net current assets		17,014	19,308
Total assets less current liabilities		109,257	167,233
Non-current liabilities:
Financial liabilities	17	(60,348)	(110,768)
Deferred tax liabilities	16	(2,623)	(3,543)
Net assets		46,286	52,922
Equity
Called up share capital		1,166	1,166
Share premium		5,791	5,789
Share-based payment reserve		179	203
Foreign exchange translation reserve		(731)	1,398
Investment revaluation reserve		(41)	(70)
Retained earnings		39,808	38,249
Equity attributable to the owners of the parent		46,172	46,735
Non-controlling interests		114	6,187
Total equity		46,286	52,922
Net assets per share	9	41.46p	40.29p

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2019

Group	Share capital £'000	Share premium £'000	Share-based payment reserve £'000	Foreign exchange translation reserve £'000	Purchase of own shares £'000	Investment revaluation reserve £'000	Retained earnings £'000	Non-controlling interests £'000	Total £'000
At 1 April 2018	1,166	5,789	203	1,398	(95)	(70)	38,344	6,187	52,922
Profit for the year	-	-	-	-	-	-	6,365	-	6,365
Net gain/(loss) on financial assets at fair value through other comprehensive income	-	-	-	-	-	29	-	-	29
Change in proportion held by NCI (FOP)	-	-	-	-	-	-	-	978	978
Change in proportion held by NCI (EAS)	-	-	-	-	-	-	-	95	95
Deconsolidation of FOP	-	-	-	-	-	-	-	(7,598)	(7,598)
Movement on foreign exchange	-	-	-	(1,408)	-	-	-	(376)	(1,784)
Foreign exchange profit recycled to the income statement	-	-	-	(721)	-	-	-	-	(721)
Sale of treasury shares	-	2	-	-	10	-	-	-	12
Purchase of treasury shares	-	-	-	-	(2,201)	-	-	-	(2,201)
Exercise of Share Options	-	-	(24)	-	38	-	-	-	14
New shares issued	-	-	-	-	-	-	-	-	-
Non-controlling interests	-	-	-	-	-	-	(851)	851	-
Dividends paid	-	-	-	-	-	-	(1,802)	(23)	(1,825)
At 31 March 2019	1,166	5,791	179	(731)	(2,248)	(41)	42,056	114	46,286

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2018

Group	Share capital £'000	Share premium £'000	Share-based payment reserve £'000	Foreign exchange translation reserve £'000	Purchase of own shares £'000	Investment revaluation reserve £'000	Retained earnings £'000	Non-controlling interests £'000	Total £'000
At 1 April 2017	1,166	5,781	203	19	(99)	(67)	33,410	3,015	43,428
Profit for the year	-	-	-	-	-	-	7,760	-	7,760
Net gain/(loss) on financial assets at fair value through other comprehensive income	-	-	-	-	-	(3)	-	-	(3)
Change in proportion held by NCI	-	-	-	-	-	-	-	2,000	2,000
Movement on foreign exchange	-	-	-	1,379	-	-	-	211	1,590
Sale of treasury shares	-	8	-	-	4	-	-	-	12
New shares issued	-	-	-	-	-	-	-	-	-
Non-controlling interests	-	-	-	-	-	-	(1,005)	1,005	-
Dividends paid	-	-	-	-	-	-	(1,821)	(44)	(1,865)
At 31 March 2018	1,166	5,789	203	1,398	(95)	(70)	38,344	6,187	52,922

 

CONSOLIDATED CASH FLOW STATEMENT 

for the year ended 31 March 2019

		2019	2018
		Group £'000	Group £'000
Cash flows from operating activities
Operating profit		8,501	11,201
Adjustments for:
Depreciation/write down of investment property and property, plant & equipment		5,167	2,272
Profit on the sale of FOP shares		(64)	(1,112)
Gain on loss of control of subsidiary		(4,827)	-
Impairment loss on an investment property		(32)	183
Impairment of goodwill on acquisition of subsidiary		27	-
Loss on disposal of subsidiary		5	-
(Increase)/decrease in inventories		96	(107)
Decrease/(increase) in trade and other receivables		(1,285)	240
(Decrease)/increase in trade and other payables		(187)	(1,746)
Other non-cash adjustments		599	263
Cash generated from operations		8,000	11,194
Taxes paid		(1,268)	(1,407)
Net cash flow from operating activities		6,732	9,787
Cash flow from/(used in) investing activities
Capital expenditure on investment properties		(1,531)	(2,375)
Proceeds from partial disposal of other financial assets held at fair value through other comprehensive income		549	633
Purchase of property, plant & equipment		(36)	(19)
Proceeds from the sale of 'FOP' shares		2,630	3,112
Cash paid on acquisitions of new subsidiaries		(527)	-
Cash and cash equivalents received on acquisitions of new subsidiaries		421	-
Cash disposed following deconsolidation of subsidiaries		(2,046)	-
Investment in shares of new associates		(527)	(122)
Payment of Rights Issue in 5PT		(138)	-
Investment in funds		(468)	(3,623)
Proceeds from funds		569	-
Interest received		114	82
Dividends from associates		590	61
Distributions received		273	68
Net cash flow used in investing activities		(127)	(2,183)
Cash flow from/(used in) financing activities
Net repayment of shareholder loan in subsidiary		(121)	(1,841)
Proceeds from bank loan		-	3,994
Repayment of bank loans		(3,179)	(3,498)
Repayment from the sale of FOP shareholder loan		326	1,157
Repayment of finance lease		(3,065)	(3,403)
Sale of shares held in treasury		12	12
Purchase of new treasury shares		(2,201)	-
Exercise of share options		47	-
Interest paid		(2,180)	(2,915)
Dividends paid		(1,802)	(1,821)
Dividends paid to non-controlling interests		(23)	(44)
Net cash flow used in financing activities		(12,186)	(8,359)
Net increase/(decrease) in cash and cash equivalents		(5,581)	(755)
Cash and cash equivalents at the beginning of the year		15,315	15,946
Currency translation gains on cash and cash equivalents		4	124
Cash and cash equivalents at the year end		9,738	15,315

 

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 2019. The policies have been consistently applied to all years presented unless otherwise stated below. 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 2018 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.

New standards impacting the Group which have been adopted in the preliminary financial statements for the year ended 31 March 2019, and which have given rise to changes in the Group's accounting policies are:

IFRS 9 Financial Instruments

The Group has adopted IFRS 9 with effect from 1 April 2018. IFRS 9 replaces the provisions of IAS 39 that relates to the recognition, classification and measurement of financial assets and financial liabilities, impairment of financial assets and hedge accounting.

The Group has assessed whether it intends to hold its financial assets to collect the contractual cash flows, or whether it intends to sell them before maturity and has classified its financial instruments into the appropriate IFRS 9 categories.

While some accounting policies have been amended on adoption of the standard there have been no adjustments required to the Group's income statement or balance sheet.

Financial Asset	Classification - IAS 39	Classification - IFRS 9	Measurement
Trade receivables	Loans and receivables	Financial assets at amortised cost	Amortised cost
Cash and cash equivalents	Amortised cost	Financial assets at amortised costs	Amortised cost
Other investments	Available for sale	Financial assets at fair value through other comprehensive income	Fair value, with changes recognised in other comprehensive income

IFRS 15 Revenue from Contracts with Customers

The Standard introduces a five-step model for recognising revenue, which consists of identifying the contract with the customer, identifying the relevant performance obligations, determining the amount of consideration to be received under the contract, allocating the consideration to each performance obligation, and earning the revenue as the performance obligation is satisfied.

The standard is applicable to asset management fee income, service charge income, proceeds from the sale of investment properties and performance related fee income, but not rental income arising from the Group's leases with tenants.

The Group has undertaken a comprehensive review of its contracts and concluded that there is no impact on the way in which the Group recognises its revenues. IFRS 15 constrains the amount of revenue that is recognised when estimating variable consideration. As such the Group has considered constraining the amount of revenue that is recognised in relation to performance related fees that are subject to future reversal so as to reduce the risk of such reversal occurring. In the Directors' judgement no such reduction was considered necessary in the current year as there is a built-in cushion in future years to absorb the negative effects of future downward property revaluations that may cause such reversal. For the previous year, no such income was recognised and therefore no comparative restatements are necessary in this respect.

The Group has applied IFRS 15 retrospectively and concluded that no adjustment is necessary to the opening profit and loss reserve as at 1 April 2018 and that no comparative information need be restated.

The Group did not apply any of the practical expedients available under the full retrospective method.

Revenue

Revenue recognition is on an accruals basis in the income statement when it can be reliably measured, but depends on the type of revenue concerned, and excludes VAT.

Rental income is recognised over the term of the lease on a straight- line basis and is adjusted for lease incentives such as rent-free periods and fit out contributions such that their cost is apportioned evenly over the full lease term.

Turnover rents and other such contingent rents are recorded as revenue in the periods to which they relate.

Service charge income is recognised in the period in which it is earned according to the terms of the individual lease agreement.

Income from the sale of properties is recognised generally on unconditional exchange of contracts when the significant risks and rewards of ownership are transferred to the buyer and there are no significant outstanding obligations between exchange of contract and completion.

Asset management and administration fees are recognised in the income statement as they are earned.

Performance related fees are recognised when the performance period has ended and the performance calculation can be performed with reasonable certainty. In cases where performance related revenue is subject to potential future reversal the Directors will apply their judgement to the amount of revenue recognised in the income statement such that in their judgement there is a high probability that this revenue will not reverse in subsequent years. They will ignore all unrealised upward property revaluations above original cost (including acquisition costs) used to determine the total entitlement but include any downward revaluation below total original historic acquisition and subsequent capitalised property costs.

Transaction fees are recognised once the relevant transaction has completed.

All revenue is classified in the revenue line of the income statement except for revenue from the sale of property which is netted off against costs and shown under profit on sale of property.

Interest income and expense recognised on an accruals basis.

These preliminary financial statements were approved by the Board of Directors on 5 June 2019.

2.             Revenue

Revenue from continuing operations consists of revenue arising in the United Kingdom 11% (2018: 8%), Poland 82% (2018: 87%) and Romania 7% (2018: 5%). All revenue relates solely to the Group's principal activities.
 

3.             Segment Reporting 2019

	Fund Management Division	Group Properties Division
	Property fund management	Group properties and other co-investments	Group fund properties "FOP"	Unallocated central overheads	Total
	£'000	£'000	£'000	£'000	£'000
Rental income	-	9,658	3,272	-	12,930
Service charge income	-	1,748	798	-	2,546
Asset management fees	3,420	-	-	-	3,420
Performance related fee income	1,541	-	-	-	1,541
Total revenue	4,961	11,406	4,070	-	20,437
Depreciation and amortisation	(37)	(1,991)	(200)	-	(2,228)
Operating profit	3,031	2,048	6,136	(2,714)	8,501
Share of results in associates	-	1,687	(87)	-	1,600
Investment income	-	273	-	-	273
Interest income	-	78	31	5	114
Interest payable	-	(1,387)	(793)	-	(2,180)
Profit/(loss) before tax	3,031	2,699	5,287	(2,709)	8,308
Analysed as:
Underlying profit/(loss) before tax before adjusting for the following items:	1,981	7,467	2,058	(1,012)	10,494
Write down, Impairment (losses)/reversals	-	(3,043)	32	-	(3,011)
Group's share of revaluation losses on associates	-	-	(764)	-	(764)
Profit on the sale of 'FOP' shares	-	64	-	-	64
Gain on loss of control of subsidiary (note 12)	-	606	4,221	-	4,827
Depreciation on investment property	-	(1,740)	-	-	(1,740)
Performance related fee income	1,541	-	-	-	1,541
Staff incentives	(476)	(190)	(212)	(1,669)	(2,547)
Realised foreign currency (losses)/gains	(15)	(465)	(48)	(28)	(556)
Total	3,031	2,699	5,287	(2,709)	8,308
Assets - Group	1,630	98,118	-	5,942	105,690
Share of net assets of associates	-	17,362	-	(308)	17,054
Liabilities	(398)	(74,254)	-	(1,806)	(76,458)
Net assets	1,232	41,226	-	3,828	46,286
Additions to non-current assets
Property, plant and equipment	-	35	-	-	35
Investment properties	-	1,116	415	-	1,531
Trading stock	-	11	-	-	11
Investment in associates	-	1,663	11,509	-	13,172

 

Segment Reporting 2018

	Fund Management Division	Group Properties Division
	Property fund management	Group properties and other co-investments	Group fund properties "FOP"	Unallocated central overheads	Total
	£'000	£'000	£'000	£'000	£'000
Rental income	-	12,132	6,177	-	18,309
Service charge income	-	2,498	1,733	-	4,231
Asset management fees	2,731	-	-	-	2,731
Performance related fee income	189	-	-	-	189
Total revenue	2,920	14,630	7,910	-	25,460
Depreciation and amortisation	(40)	(1,983)	(249)	-	(2,272)
Operating profit	1,004	9,404	3,749	(2,956)	11,201
Share of results in associates	-	950	-	-	950
Investment income	-	63	-	-	63
Interest income	-	53	20	9	82
Interest payable	-	(1,455)	(1,608)	-	(3,063)
Profit/(loss) before tax	1,004	9,015	2,161	(2,947)	9,233
Analysed as:
Underlying profit/(loss) before tax before adjusting for the following items:	1,329	9,975	2,843	(941)	13,206
Impairment losses	-	(193)	(183)	-	(376)
Profit on the sale of 'FOP' shares	-	1,112	-	-	1,112
FPG's share in associate's profit from the sale of investment properties	-	397	-	-	397
Depreciation on investment property	-	(1,739)	-	-	(1,739)
Performance related fee income	189	-	-	-	189
Staff incentives	(538)	(214)	(213)	(1,915)	(2,880)
Realised foreign currency (losses)/gains	24	(323)	(286)	(91)	(676)
Total	1,004	9,015	2,161	(2,947)	9,233
Assets - Group	1,362	100,072	68,147	9,774	179,355
Share of net assets of associates	-	5,033	-	(308)	4,725
Liabilities	(204)	(75,337)	(53,562)	(2,055)	(131,158)
Net assets	1,158	29,768	14,585	7,411	52,922
Additions to non-current assets
Property, plant and equipment	19	-	-	-	19
Investment properties	-	371	2,004	-	2,375
Trading stock	-	232	-	-	232
Investment in associates	-	122	-	-	122

4.             Interest Income

	2019	2018
	Group £'000	Group £'000
Interest income - bank deposits	18	28
Interest income - other	96	54
Total interest income	114	82

	2019	2018
	Group £'000	Group £'000
Interest expense - property loans	(1,571)	(2,078)
Interest expense - bank and other	(49)	(142)
Finance charges on finance leases	(560)	(843)
Total interest expense	(2,180)	(3,063)

5.             Tax Expense

	2019 £'000	2018 £'000
Analysis of tax charge for the year
Current tax	(1,284)	(1,383)
Deferred tax	(659)	(90)
Total tax charge for the year	(1,943)	(1,473)

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

As in prior years, brought forward and current UK tax losses have not been recognised as a deferred tax asset due to insufficient foreseeable taxable income being earned in the UK.

 

6.             Business Acquisitions

These entities were consolidated into the accounts of the Group with effect 1 August 2018, following the Group acquiring full ownership of RPT and 77% of E&S. The net assets of the companies acquired were as follows:

	E and S Estates Ltd	Regional Property Trading Ltd	E and S Sp. z o. o.	Total
Acquisitions of net assets acquired at Fair Value	£'000	£'000	£'000	£'000
Cash	67	54	300	421
Trade Receivables	-	-	31	31
Bad Debt Provision	-	-	(17)	(17)
Other Debtors	-	-	95	95
Deferred Tax Asset	-	-	59	59
Share in Subsidiary	4	4	-	8
Investment Property	-	-	5,406	5,406
Intercompany Loans	142	134	(276)	-
Dividend Payable/Receivable	684	684	(1,368)	-
Trade and Other Payables	(3)	(4)	(195)	(202)
Tax Liabilities	(1)	-	(499)	(500)
Financial Liabilities	-	(2)	(4,485)	(4,487)
Goodwill on acquisition	18	9	-	27
Total net assets acquired before NCI	911	879	(949)	841
Non-controlling interest share of net assets	(95)	-	-	(95)
Total net assets acquired	816	879	(949)	746
Note(i)
Cash paid on buyout of investors (current year)	(226)	(301)	-	(527)
Less: cash acquired	67	54	300	421
Net cash acquired	(159)	(247)	300	(106)
Note(ii)
Cash paid on original purchase (prior years)	122	48	7	177
Share of Post Acquisition Profits to 31 July 2018 (since original purchase)	29	206	-	235
Less impairment to 31 July 2018	(40)	(153)	-	(193)
	111	101	7	219
Cash paid on buyout of investors (current year)	226	301	-	527
Total consideration	337	402	7	746

The goodwill on acquisition of £27,000 which has come about as a result of a premium being paid for the shares has been impaired and written off the income statement given the uncertainty over future lettings at two of the four properties.
 

7.             Disposal of Subsidiary

On 5 June 2018 the First Property Group plc sold its 100% ownership of Scaup Sp. z o. o. to Fprop Phoenix Ltd for consideration £18,858. Fprop Phoenix Ltd is an associate of the Group.

Disposal of net assets		Net Assets £'000
Financial Assets - Shares in KBP entities		900
Cash		16
Trade Receivables		9
VAT		31
Prepayments		214
Other Debtors		39,496
Deferred Tax Asset		39
Intercompany Loans		(986)
Trade Payables		(243)
Other Payables		(39,445)
Other Tax Liabilities		(7)
Total net assets disposed		24
Sale proceeds		19
Loss on disposal of subsidiary		(5)

 

8.             Disposal of Subsidiaries (following change of status from subsidiary to associate)

With effect from 12 October 2018, and following disposals of its shareholding in Fprop Opportunities plc (FOP), a fund which it manages and which is fully invested in five commercial properties in Poland; the Group's share in FOP reduced to 44.3%. The Directors judged that, in their opinion and after considering all the relevant facts and circumstances, the Group could no longer exercise control over FOP and therefore required that FOP be deconsolidated from the Group's accounts. The Group are accounting for its remaining share of the profits of FOP as an associate undertaking. The Group has continued to sell down its shareholding in FOP and currently owns 40.03%.

Summary of Net Assets disposed of following the deconsolidation of FOP from the Group accounts:

		Fprop Opportunities plc	Fprop Opportunity Lublin Ltd	Lublin Zana Sp. z o. o.	Fprop Opportunity Ostrowiec Ltd	Galeria Ostrowiec Sp. z o. o.	Fprop Ostrowiec Sp. z o. o.
		£'000	£'000	£'000	£'000	£'000	£'000
Investment property (at cost)		-	-	10,832	-	23,210	-
Trade and other debtors		-	-	43	-	308	-
Deferred tax asset		-	-	1	-	577	-
Bank		291	-	613	16	568	1
Total current assets		291	-	11,489	16	24,663	1
Trade and other payables		(2)	(53)	(354)	(4)	(156)	-
Bank loans and finance leases		-	-	(8,493)	-	(19,019)	-
Shareholder loans		(2,829)	-	-	-	-	-
Deferred tax liability		-	-	(1)	(165)	(708)	-
Provision		(1)	-	-	-	(28)	-
Total current liabilities		(2,832)	(53)	(8,848)	(169)	(19,911)	-
Total net assets		(2,541)	(53)	2,641	(153)	4,752	1
		Fprop Zinga Ltd	Zinga Fprop Poland Sp. z o. o.	Zinga Fprop Sp. z o. o.	Zinga Poland Sp. z o. o.	Fprop Opportunity Lodz Ltd	Fprop Lodz Sp. z o. o.
		£'000	£'000	£'000	£'000	£'000	£'000
Investment property (at cost)		-	9,856	-	-	-	15,631
Trade and other debtors		-	269	-	-	-	158
Deferred tax asset		-	274	81	-	-	269
Bank		27	161	3	-	4	129
Total current assets		27	10,560	84	-	4	16,187
Trade and other payables		(5)	(214)	-	-	(14)	(84)
Bank loans and finance leases		-	(6,947)	-	-	-	(11,426)
Shareholder loans		-	-	-	-	-	-
Deferred tax liability		(21)	-	(166)	-	(9)	(338)
Provision		-	(1)	-	-	-	-
Total current liabilities		(26)	(7,162)	(166)	-	(23)	(11,848)
Total net assets		1	3,398	(82)	-	(19)	4,339

 

					Fprop Opportunities Lodz II Ltd	Fprop Opportunities Krasnystaw Ltd			Fprop Krasnystaw Sp. z o.o.					Total
					£'000	£'000			£'000					£'000
Investment property (at cost)					-	-			4,378					63,907
Trade and other debtors					-	-			61					839
Deferred tax asset					-	-			107					1,309
Bank					-	6			211					2,030
Total current assets					-	6			4,757					68,085
Trade and other payables					(4)	(4)			(81)					(975)
Bank loans and finance leases					-	-			(3,234)					(49,119)
Shareholder loans					-	-			-					(2,829)
Deferred tax liability					-	(6)			(82)					(1,496)
Provision					-	-			(3)					(33)
Total current liabilities					(4)	(10)			(3,400)					(54,452)
Total net assets					(4)	(4)			1,357					13,633
Non-controlling interest disposed															(7,598)
Uplift to fair value															3,500
Accumulated foreign exchange profits															721
Gain following the loss of control recognised in the income statement															4,221
Fair value of Shares in FOP retained by the Group at 12 October 2018															10,256
Value of the Shareholder loan due from FOP retained by the Group															1,253
Cost of shares subsequently sold following deconsolidation															(982)
Shareholder loan subsequently sold following deconsolidation															(110)
Shareholder loan repayments received following deconsolidation															(310)
Share of post-tax profit to 31 March 2019 following deconsolidation															677
Group's share of the associate's revaluation losses															(764)
Cost of associate as at 31 March 2019															10,020
Gain on loss of control of subsidiary
Sale proceeds													1,487
Fair value of shares retained													10,256
Less:
Net assets of subsidiary							13,633
NCI prior to loss of control							(6,717)
													(6,916)
Gain on loss of control of subsidiary													4,827
Represented by:
Profit on sale of shares												606
Uplift to fair value							3,500
Accumulated foreign exchange profits							721
													4,221
Gain on loss of control of subsidiary													4,827

 

9.             Earnings/NAV per Share

	2019	2018
Basic earnings per share	4.95p	5.82p
Diluted earnings per share	4.85p	5.70p
	£'000	£'000
Basic earnings	5,514	6,755
Diluted earnings assuming full dilution	5,522	6,763

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

	2019 Number	2018 Number
Weighted average number of Ordinary shares in issue (used for basic earnings per share calculation)	111,353,468	116,004,730
Number of share options	2,610,000	2,700,000
Total number of Ordinary shares used in the diluted earnings per share calculation	113,963,468	118,704,730

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

	2019 £'000	2018 £'000
Basic earnings per share
Basic earnings	5,514	6,755
Diluted earnings per share
Basic earnings	5,514	6,755
Notional interest on share options assumed to be exercised	8	8
Diluted earnings	5,522	6,763

	2019	2018
Net assets per share	41.46p	40.29p
Adjusted net assets per share	57.48p	53.07p

The following numbers have been used to calculate both the net assets and adjusted net assets per share:
For net assets per share	£'000	£'000
Net assets excluding non-controlling interests	46,172	46,735
	£'000		£'000
For adjusted net assets per share
Net assets excluding non-controlling interests	46,172		46,735
Investment properties at fair value net of deferred tax	4,664		10,272
Inventories at fair value net of deferred tax	5,416		4,582
Other items	9,256		1,409
Total	65,508		62,998

	Number	Number
Number of shares in issue at year end	111,354,001	116,016,546
	Number	Number
Number of shares in issue at year end	111,354,001	116,016,546
Number of share options assumed to be exercised	2,610,000	2,700,000
Total	113,964,001	118,716,546

 

10.          Goodwill

	2019	2018
	Group £'000	Group £'000
At 1 April	153	153
At 31 March	153	153

The Directors have carried out an annual impairment test and concluded that no impairment was necessary because the estimated value in use was higher than the value stated.

11.          Investment Properties

	2019	2018
	Group £'000	Group £'000
Investment properties
At 1 April	132,180	128,428
Capital expenditure	1,531	2,375
Additions	5,406	-
Disposal	(63,907)	-
Depreciation	(2,111)	(2,204)
Write down/impairment loss to investment property	(2,984)	(183)
Foreign exchange translation	(2,767)	3,764
At 31 March	67,348	132,180

Investment properties owned by the Group are stated at cost less depreciation and accumulated impairment losses. The properties were valued at the Group's financial year end at €84.84 million (2018: €171.20 million), the Sterling equivalent at closing foreign exchange rates being £73.18 million (2018: £150.10 million).

On acquisition of the Gdynia property the Directors took the decision to depreciate the property over the lease term which expires in 2020. In the Directors' opinion the property's estimated residual value at the end of the period of ownership will be lower than the carrying value. No other property has been depreciated as the estimated residual value is expected to be higher than the carrying value.

The property additions represent the four properties held by E and S Estates Sp. z o. o. the Polish entity owned jointly by RPT and E&S Ltd, both of which were acquired through a step-acquisition on 1 August 2018.

The property disposals represent the deconsolidation of FOP from the Group which took effect on 12 October 2018. FOP, which consisted of five commercial properties in Poland is now treated as an associate.

 

12.          Investment in Associates and Other Financial Assets and Investments

The Group has the following investments:

	2019	2018
	Group £'000	Group £'000
a) Associates
At 1 April	4,725	4,347
Additions	13,172	122
Disposals	(1,304)	-
Shareholder loan repayments	(549)	(633)
Share of associates' profit after tax	2,364	1,143
Share of associates' revaluation losses	(764)	(193)
Dividends received	(590)	(61)
At 31 March	17,054	4,725

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

	2019	2018
	Group £'000	Group £'000
Investment in associates
5th Property Trading Ltd	1,288	1,029
Regional Property Trading Ltd	**	105
E and S Estates Ltd	**	116
Fprop Romanian Supermarkets Ltd	150	624
Fprop Galeria Corso Ltd	2,089	1,920
Fprop Krakow Ltd	1,308	1,239
Fprop Cluj Ltd	458	***
Fprop Phoenix Ltd	2,049	***
Fprop Opportunities plc	10,020	*
	17,362	5,033
Less: Share of profit after tax withheld on sale of property to 5th Property Trading Ltd in 2007	(308)	(308)
	17,054	4,725

*Fprop Opportunities plc, a fund which is invested in five commercial properties in Poland was deconsolidated from the main Group on 12 October 2018 and is now accounted for as an associate.

**With effect from 1 August 2018 RPT and E&S were consolidated into Group Properties.

***New funds established during the year.

If the Group had adopted the alternative fair value model for accounting for investment properties, the carrying value of the investments in associates would have increased to £25.97 million (2018: £5.74 million).

	2019	2018
	Group £'000	Group £'000
b) Other financial assets and investments
At 1 April	4,517	897
Additions	468	3,623
Disposals	(900)	-
Repayments	(569)	-
Increase /(Decrease) in fair value during the year	23	(3)
At 31 March	3,539	4,517

The Group holds three unlisted investments in funds managed by it. All are held at fair value. All of the assets have been designated at fair value through OCI upon the adoption of IFRS 9. In the Directors' view the fair value has been estimated to be not materially different from their carrying value. Fair value has been arrived at by applying the Group's percentage holding in the investments to the fair value of their net assets.

 

13.          Inventories - Land and Buildings

	2019	2018
	Group £'000	Group £'000
Group properties for resale at cost
At 1 April	15,586	15,115
Capital expenditure	11	232
Disposal/write off	(30)	-
Depreciation	(77)	(125)
Foreign exchange translation	(673)	364
At 31 March	14,817	15,586

The Group's total interest in Blue Tower (an office block in Warsaw) is 48.2% of the building. The fair value of this interest is £21.50 million (€24.95 million) up from £21.24 million (€24.23 million) in 2018 but is stated at cost as above.

14.          Trade and Other Receivables

	2019	2018
	Group £'000	Group £'000
Current assets
Trade receivables	1,408	2,070
Less provision for impairment of receivables	(297)	(640)
Trade receivables net	1,111	1,430
Other receivables	2,836	2,462
Prepayments and accrued income	1,971	1,262
	5,918	5,154
Non-current assets
Other receivables	1,312	1,766
Other receivables, under non-current assets, relates to the deferred consideration from the sale of an investment property located in Romania. This has been discounted to reflect its current value.

15.          Trade and Other Payables

	2019	2018
	Group £'000	Group £'000
Current liabilities
Trade payables	2,798	3,405
Other taxation and social security	855	946
Other payables and accruals	3,235	3,425
Deferred income	190	522
	7,078	8,298

 

16.          Deferred Tax

Deferred tax assets and liabilities are attributable to the following items:

	2019	2019	2019	2018	2018	2018
	Group net assets £'000	Group assets £'000	Group liabilities £'000	Group net assets £'000	Group assets £'000	Group liabilities £'000
Accrued interest payable	(919)	120	(1,039)	(1,082)	551	(1,633)
Accrued income	(5)	-	(5)	(4)	-	(4)
Foreign bank loan	1,108	1,108	-	1,678	2,121	(443)
Investment properties and inventories	(146)	1,425	(1,571)	99	1,534	(1,435)
Other temporary differences	118	126	(8)	284	312	(28)
	156	2,779	(2,623)	975	4,518	(3,543)

17.          Financial Liabilities

	2019 Group £'000	2018 Group £'000
Current liabilities
Loans repayable by subsidiary (FOP) to third party shareholders	-	1,464
Bank loan	3,780	3,411
Finance leases	2,549	3,444
	6,329	8,319
Non-current liabilities
Bank loans	35,783	65,719
Finance leases	24,565	45,049
	60,348	110,768

	2019 Group £'000	2018 Group £'000
Total obligations under bank loans and finance leases
Repayable within one year	6,329	8,319
Repayable within one and five years	54,073	96,087
Repayable after five years	6,275	14,681
	66,677	119,087

Six bank loans and one finance lease all denominated in Euros totalling £66.68 million (2018: £117.62 million), included within financial liabilities, are secured against investment properties owned by the Group and one property owned by the Group shown under inventories. These bank loans and finance lease are otherwise non-recourse to the Group's assets.

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

 

END

 

 

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