REG - First Property Group - Interim Results
29/11/2022 07:00
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RNS Number : 8475H First Property Group PLC 29 November 2022
Date: 29 November 2022
On behalf of: First Property Group plc ("First Property" or the "Group" or the "Company")
Embargoed: 0700hrs
First Property Group plc
Interim results for the six months to 30 September
2022
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 ended 30 September 2022.
Highlights:
· Profit before tax: £2.39 million (6 months ended 30 September
2021: £6.67 million)
· Cash reserves: £5.98 million (31 March 2022: £6.42 million)
· Net debt: £23.55 million (31 March 2022: £17.24 million)
· Purchased additional 32% of Blue Tower, Warsaw, for £7.44
million increasing the Group's share in the building to 80%
· Sold a warehouse in Tureni, Romania for £3.05 million,
generating a profit on disposal of £1.06 million
· Leased a further 9% of office block in Gdynia
· Third party assets under management ("AUM"): £493 million (31
March 2022: £517 million)
· Total AUM: £542 million (31 March 2022: £559 million)
· Weighted average unexpired fund management contract term at 30
September 2022: 2 years, 9 months (31 March 2022: 3 years, 3 months)
· Interim dividend: 0.25 pence per share (30 September 2021: 0.25
pence per share).
Financial Summary:
Unaudited Unaudited Percentage change Audited
Six months to 30 Sept 2022 Six months to 30 Sept 2021 Year to
31 March 2022
Income Statement:
Statutory profit before tax £2.39m £6.67m -64.2% £7.08m
Diluted earnings per share 1.83p 5.72p -68.0% 6.01p
Total dividend per share 0.25p 0.25p 0% 0.50p
Average €/ £ rate 1.1698 1.1632 - 1.1754
Unaudited Audited Percentage change Unaudited
Six months to 30 Sept 2022 Year to Six months to 30 Sept 2021
31 March 2022
Balance Sheet at period end:
Investment properties and Inventories at book value £42.56m £36.20m 17.6% £36.87m
Investment properties and Inventories at market value £48.67m £42.24m 15.2% £42.91m
Associates and investments at book value £25.33m £26.58m -4.7% £21.63m
Associates and investments at market value £29.83m £30.60m -2.5% £28.38m
Cash balances £5.98m £6.42m -6.9% £12.24m
Cash per share 5.39p 5.81p -7.2% 11.09p
Gross debt £29.53m £23.66m 24.8% £24.80m
Net debt £23.55m £17.24m 36.6% £12.56m
Gearing ratio at book value* 39.71% 34.90% - 36.48%
Gearing ratio at market value** 35.09% 30.69% - 30.99%
Net assets at book value £44.84m £44.14m 1.6% £43.20m
Net assets at market value £54.62m £53.43m 2.2% £55.23m
Adjusted net assets per share (EPRA basis) 48.34p 47.28p 2.2% 48.88p
Period end €/ £ rate 1.1395 1.1834 - 1.1634
* Gearing ratio at book value = Gross debt excluding lease liabilities divided
by gross debt plus net assets with properties at book value.
** Gearing ratio at market value = Gross debt excluding lease liabilities
divided by gross debt plus net assets with properties at market value.
Commenting on the results, Ben Habib, Chief Executive of First Property, said:
"Economies across the World are experiencing the aftershocks of lockdowns.
Employment markets and supply chains were broken, and fuel reserves were
neglected. When economies eventually unlocked, the resultant demand created a
spike in inflation.
"Instead of moving to relax fiscal constraints, the UK Government is raising
taxes. At the same time, the Bank of England is raising interest rates.
"This has caused the price of debt to rise significantly from the lows created
by loose monetary policy. A re-pricing of the property market is underway, and
it is as yet unclear where this might settle.
"There is bound to be a period of weakness, but things should settle during
2023 as long as there are no other shocks to the system. In time, higher
inflation should result in rents increasing across the board, though a
recession may slow down this adjustment.
"Our financial position remains strong with some £54.6 million of adjusted
net assets at market value, some £6 million in cash and modest leverage, most
of which is interest free."
Investor Presentation:
A briefing for analysts and investors will be held at 11.00hrs today via
Investor Meet Company. To participate it is necessary to register at
https://www.investormeetcompany.com/first-property-group-plc/register-investor
(https://www.investormeetcompany.com/first-property-group-plc/register-investor)
and select to meet the Company. Those who have already registered and selected
to meet the Company will be automatically invited. A copy of the accompanying
investor presentation and a recording of the call will be posted on the
Group's website.
For further information please contact:
First Property Group plc Tel: +44 (20) 7340 0270
Ben Habib (Chief Executive Officer) www.fprop.com (http://www.fprop.com)
Laura James (Group Finance Director) investor.relations@fprop.com (mailto:investor.relations@fprop.com)
Jeremy Barkes (Director, Business Development)
Jill Aubrey (Company Secretary)
Allenby Capital (NOMAD & Broker) Tel: + 44 (0) 20 3328 5656
Nick Naylor / Freddie Wooding (Corporate Finance)
Amrit Nahal (Equity Sales)
SEC Newgate (PR) Tel: + 44 7540106366
Robin Tozer / Max Richardson firstproperty@secnewgate.co.uk (mailto:firstproperty@secnewgate.co.uk)
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. 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 six directly held properties in Poland and Romania, and
non-controlling interests in ten of the twelve funds managed by FPAM.
Quoted on AIM, First Property has offices in London and Warsaw. Around one
third of the shares in First Property are owned by management and their
families. Further information about the Group and its properties can be found
at: www.fprop.com (http://www.fprop.com) .
CHIEF EXECUTIVE'S STATEMENT
Performance:
I am pleased to report interim results for the six months ended 30 September
2022.
Revenue earned by the Group was £4.19 million (6 months ended 30 September
2021: £4.03 million) yielding a profit before tax of £2.39 million (6 months
ended 30 September 2021: £6.67 million). The profit last year was flattered
by a loan restructuring which resulted in the amount owed reducing by £7.81
million. The profit in this period was mainly from property sales.
Diluted earnings per share decreased to 1.83 pence (6 months ended 30
September 2021: 5.72 pence).
The Group ended the period with net assets calculated under the cost basis of
accounting of £44.84 million (31 March 2022: £44.14 million), equating to
40.44 pence per share (31 March 2022: 40.00 pence per share). The net assets
of the Group with property values adjusted to their market value less any
deferred tax liabilities (EPRA basis) was £54.62 million, or 48.34 pence per
share (31 March 2022: £53.43 million, or 47.28 pence per share). The market
values of Group properties are independently assessed at least once a year, on
31 March.
It is worth noting that some 17,000 square metres of the Group's two directly
owned offices in Warsaw and Gdynia are vacant, which, once let, should
generate in excess of €3 million per annum.
Gross debt at the period end amounted to £29.53 million (31 March 2022:
£23.66 million), which was secured against five commercial properties in
Poland and one in Romania. Of this, £16.77 million was non-interest bearing
and represents deferred consideration payable for the purchase of two
properties in Poland.
The Group's gearing ratio, calculated with its six directly owned properties
at book value, was 39.71% (31 March 2022: 34.90%). Using market values for
these properties the gearing ratio was 35.09% (31 March 2022: 30.69%).
The Group's six directly owned properties are held in separate non-recourse
special purpose vehicles without any cross collateralisation or Group
guarantees.
Group cash balances at the period end stood broadly stable at £5.98 million
(31 March 2022: £6.42 million), equivalent to 5.39 pence per share (31 March
2022: 5.81 pence per share).
Major cash movements in the period included:
· expenditure of £1.07 million for the purchase of an additional
32% of Blue Tower in Warsaw;
· expenditure of £0.76 million for the purchase of additional
shares in Associates; and
· receipt of £0.60 million in net cash proceeds from the sale of a
warehouse in Tureni, Romania.
Dividend:
The Directors have resolved to pay an interim dividend of 0.25 pence per share
(6 months ended 30 September 2021: 0.25 pence per share). It will be paid on
30 December 2022 to shareholders on the register at 9 December 2022, with an
ex-dividend date of 8 December 2022.
REVIEW OF OPERATIONS
PROPERTY FUND MANAGEMENT (First Property Asset Management Ltd or FPAM)
Third party assets under management at the period end decreased by 4.6% to
£493 million (31 March 2022: £517 million). The decrease was attributable
to the sale of four properties, all in the United Kingdom, valued at
some £25.5 million for £28.2 million. These were offset by the purchase of
one property, also in the United Kingdom, for £5.8 million. In addition,
there was a decrease in the value of the properties held in third party
managed funds of £11.6 million offset by a £6.5 million foreign exchange
gain.
64.0% of third-party assets under management were located in the UK, 34.2% in
Poland and 1.8% in Romania.
Fund management fees are generally levied monthly by reference to the value of
properties. 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. These payments are adjusted, if necessary, for any
overpayments made in previous years up to a maximum of total past cumulative
payments received. Cumulative payments received totalled £1.97 million as at
30 September 2022 (31 March 2022: £1.97 million).
Revenue earned by this division decreased to £1.66 million (30 September
2021: £1.91 million), resulting in profit before unallocated central
overheads and tax decreasing to £0.52 million (30 September 2021: £0.83
million).
At the period end fund management fee income, excluding performance fees and
the profit share from Fprop Offices LP, was being earned at an annualised rate
of £2.53 million (31 March 2022: £2.66 million).
FPAM's weighted average unexpired fund management contract term at the
period-end was 2 years, 9 months (31 March 2022: 3 years, 3 months).
The reconciliation of movement in third party funds under management during
the period is shown below:
Funds managed for third parties (including funds in which the Group is a
minority shareholder)
UK CEE Total No. of prop's
£m. £m. £m.
As at 1 April 2022 345.5 171.0 516.5 62
Property purchases 5.8 - 5.8 1
Property sales (25.5) - (25.5) (4)
Capital expenditure - 1.2 1.2 -
Property revaluation (10.1) (1.5) (11.6) -
FX revaluation - 6.5 6.5 -
As at 30 Sept 2022 315.7 177.2 492.9 59
An overview of the value 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 No of properties % of total third-party assets under management Assets under management at market value at
30 Sept 31 March 2022
2022
£m. % £m.
SAM & DHOW UK Rolling * * * *
5PT Poland Dec 2022 8.0 3 1.6 7.7
OFFICES UK Jun 2024 131.8 5 26.8 136.4
SIPS UK Jan 2025 126.8 23 25.7 140.6
FOP Poland Oct 2025 66.6 5 13.5 64.5
FGC Poland Mar 2026 22.1 1 4.5 21.3
SPEC OPPS UK Jan 2027 16.9 4 3.4 17.0
UK PPP UK Jan 2027 30.2 10 6.1 41.5
FKR Poland Mar 2027 20.1 1 4.1 19.4
FCL Romania Jun 2028 8.9 1 1.8 8.5
FPL Poland Jun 2028 51.6 4 10.5 49.6
FUL UK Indefinite 9.9 2 2.0 10.0
Total Third-Party AUM 492.9 59 100.0 516.5
* Not subject to recent revaluation.
The sub sector weightings of investments in FPAM funds is set out in the table
below:
UK Poland Romania Total % of Total
£m. £m. £m. £m.
Offices 204.2 96.8 8.9 309.9 62.9
Retail warehousing 73.8 - - 73.8 15.0
Shopping centres - 52.9 - 52.9 10.7
Supermarkets 37.7 18.6 - 56.3 11.4
Total 315.7 168.3 8.9 492.9 100.0
% of Total 64.0% 34.2% 1.8% 100.0%
GROUP PROPERTIES DIVISION
At the period end the Group Properties division comprised six directly owned
commercial properties in Poland and Romania valued at £48.67 million (31
March 2022: seven valued £42.24 million), and interests in ten of the twelve
funds managed by FPAM (classified as Associates and Investments) valued at
£29.83 million (31 March 2022: £30.60 million).
The contribution to Group profit before tax and unallocated central overheads
from the Group Properties division was £2.40 million (30 September 2021:
£8.13 million), of which the six directly owned properties contributed £0.98
million (30 September 2021: £7.72 million) and the Associates and Investments
contributed £1.42 million (30 September 2021: £0.41 million).
The profit earned by the six directly owned properties last year was flattered
by a loan restructuring which resulted in the amount owed reducing by €9
million (£7.81 million).
The increase in profit earned by the Associates and Investments was mainly due
to the Group receiving £1.20 million in distributions from its 11.1 %
interest in Fprop UK Special Opportunities LP (Spec Opps), following the
sale of two properties by UK Pension Property Portfolio LP, in which Spec Opps
has an interest of 49.7%.
During the period the Group increased its shareholding in Blue Tower in Warsaw
to 80% by the purchase of a further 32% in the building for a consideration of
£7.44 million.
The Group sold a property in Romania for £3.05 million, realising a profit of
£1.06 million.
The Group also leased a further 9% of its office property in Gdynia, Poland.
Once this space is handed over to the tenant, anticipated in January 2023, the
building will be circa 28% occupied.
1. Directly owned properties (all accounted for under the cost model):
The book value of the Group's six directly owned properties was £42.56
million. Their market value, based on their valuation at 31 March 2022,
together with the price paid in August 2022 for an additional 32% of Blue
Tower, was £48.67 million.
Country Sector No. of properties as at 30 Sept Book value as at 30 Sept 2022 Market value as at 30 Sept 2022 *Contribution to Group profit before tax - *Contribution to Group profit before tax -
2022 period to period to
30 Sept 2022
30 Sept 2021
£m. £m. £m. £m.
Poland, Gdynia Offices 1 14.04 14.04 (0.21) **7.51
Poland, Warsaw Offices 1 19.72 23.24 0.64 0.67
Poland Supermarkets 3 6.44 7.75 0.20 0.02
Romania Offices & logistics 1 2.36 3.64 0.02 0.17
Profit on sale of Tureni - - - 1.06 -
Other overhead costs allocated to the direct property division - - - (0.73) (0.65)
Total 6 42.56 48.67 0.98 7.72
*Prior to the deduction of unallocated central overhead expenses;
**Includes €9 million (£7.81 million) debt reduction following
restructuring of the finance lease at Gdynia;
The Group's acquisition of an additional 32% interest in Blue Tower (7,171
m(2), of which 5,159 m(2) was vacant) for £7.44 million was financed by a
cash payment of £1.07 million and deferred consideration of £6.24 million.
This deferred consideration, which is non-interest bearing, is payable in six
instalments over six years.
The debt secured against these properties increased to £29.53 million (31
March 2022: £23.66 million), mainly as a result of this deferred
consideration. The increase in debt was partially offset by the repayment
of €2.52 million (£2.14 million) of the loan against the warehouse
property in Tureni, Romania, which was sold during the period.
Only £12.76 million of the debt was interest bearing.
Interest costs amounted to £0.19 million in the period (30 September
2021: £0.16 million). This equates to an average borrowing cost of 1.48% per
annum when expressed as a percentage of the Group debt, or 3.04% if the
non-interest bearing element is excluded. A one percentage point increase in
interest rates would impact the cost of the floating rate loans and would
increase the Group's annual interest bill by £80,000 per annum (31 March
2022: £100,000).
All six loans are held in separate non-recourse special purpose vehicles and
are not guaranteed by the Group.
Directly owned Properties 30 Sept 2022 31 March 2022
Book value £42.56m £36.20m
Market value £48.67m £42.24m
Debt (all non-recourse to the Group) £29.53m £23.66m
LTV at book value % 69.39% 65.34%
LTV at market value % 60.68% 56.01%
Weighted average borrowing cost excluding deferred considerations 3.04% 3.06%
Weighted average borrowing cost - all debt 1.48% 1.39%
The weighted average unexpired lease term (WAULT) of the six properties as at
30 September 2022 was 4 years, 3 months (31 March 2022: 5 years, 7 months).
2. Associates and Investments (A&I's)
These comprise non-controlling interests in ten of the twelve funds managed by
FPAM, of which six are accounted for as "associates" under the cost model and
four are accounted for as "investments in funds" and held at fair value. It is
the accounting policy of the Group to carry its interests in associates at the
lower of cost or market value.
The contribution to Group profit before tax and unallocated central overheads
from A&Is increased to £1.42 million (30 September 2021: £0.41 million).
The increase was mainly attributable to receipt of £1.20 million in
distributions from Fprop UK Special Opportunities LP (Spec Opps).
The book value of the six associates was £19.83 million (31 March 2022:
£19.14 million). Their market value was £24.34 million (31 March 2022:
£23.15 million). The increase in the book value was mainly due to the
purchase by the Group of additional shares in four associates for £0.76
million.
The value of the four investments in funds was £5.49 million (31 March 2022:
£7.45 million). The decrease was mainly due to the payment of £1.20 million
in distributions and the repayment of £0.77 million in shareholder loans by
Spec Opps, both of which served to reduce its net asset value.
An overview of the Associates and Investments is set out in the table below:
Fund Country of investment % owned by Book value of First Property's share in Current market value of holdings Group's Group's share
First Property fund share of post-tax profits earned by fund
Group of post-tax profits earned by fund 30 Sept 2021
30 Sept 2022
% £'000 £'000 £'000 £'000
a) Associates
5PT Poland 46.59 1,553 1,691 59 72
FRS Romania * - - - 47
FOP Poland 45.71 12,735 13,186 347 175
FGC Poland 29.09 2,888 3,169 119 71
FKR Poland 18.07 1,578 1,638 (2) 56
FPL Poland 23.38 478 3,788 (435) (180)
FCL Romania 21.17 602 867 29 35
Sub Total 19,834 24,339 117 276
b) Investments
UK PPP UK 0.94 295 295 23 30
SPEC OPPS UK 11.06 3,006 3,006 1,196 23
OFFICES UK 1.64 1,933 1,933 74 77
FUL UK 2.50 259 259 9 -
Sub Total 5,493 5,493 1,302 130
Total 25,327 29,832 1,419 406
*In liquidation
Commercial Property Market Outlook
Poland:
GDP is forecast to grow by 4.6% in 2022, 1% in 2023 and 2% in 2024, markedly
slower than in past years. The annual rate of inflation is currently around
18% but is expected to reduce to around 13% in 2023. The National Bank of
Poland has led interest rate rises in Europe, with its benchmark reference
rate now standing at 6.75%. It has also indicated that it is close to the end
of its interest rate raising cycle and that it may start to reverse increases
in interest rates by the end of 2023.
Investment demand for commercial property has abated but continued economic
growth and an influx of refugees and businesses from Ukraine should sustain
occupational demand. Meanwhile, the effects of inflation, in particular in the
cost of building materials and labour (which far exceeds the general rate of
inflation), should curtail new supply of properties, forcing rents to rise in
due course.
Rental values in Poland are contractually mostly linked to inflation, which
offers some protection from inflation as long as the economy remains buoyant
and tenants can afford to pay the increase.
Prime commercial yields generally range from 5-6% but are increasing.
The vacancy rate for offices in central Warsaw has fallen to around 5%. The
pace of new office development in Warsaw has all but ground to a halt but the
economy is still growing, as is demand for office space.
United Kingdom:
The Bank of England has predicted a protracted recession. Inflation is running
at over 11% per annum but forecast to moderate to 5-6% in 2023 and further
reduce in 2024. The Bank of England's base rate of interest is at 3.0% and
expected to peak at around 4.5% in 2023.
Commercial property values are falling across all sectors in response to
interest rate increases, exacerbated by an increase in the number of
redemption requests made of open ended property funds.
Current Trading and Prospects
Economies across the World are experiencing the aftershocks of lockdowns.
Employment markets and supply chains were broken and fuel reserves were
neglected. When economies eventually unlocked, the resultant demand created a
spike in inflation.
Instead of moving to relax fiscal constraints, the UK government is raising
taxes. At the same time the Bank of England is raising interest rates.
This has caused the price of debt to rise significantly from the lows created
by loose monetary policy. A re-pricing of the property market is underway and
it is as yet unclear where this might settle.
There is bound to be a period of weakness but things should settle during the
course of 2023, as long as there are no other shocks to the system. In time,
higher inflation should result in rents increasing across the board, though a
recession may slow down this adjustment.
Our financial position remains strong with some £54.6 million of adjusted net
assets at market value, some £6 million in cash and modest leverage, most of
which is interest free.
Ben Habib
Chief Executive
CONSOLIDATED INCOME STATEMENT
for the six months to 30 September 2022
Notes Six months to 30 Sept 2022 Six months to Year to
(unaudited) 30 Sept 2021 31 Mar 2022
(unaudited) (audited)
£'000 £'000 £'000
Revenue 4,188 4,033 8,645
Cost of sales (1,697) (1,298) (2,928)
Gross profit 2,491 2,735 5,717
Profit on sale of an investment property 1,061 - -
Debt reduction following restructuring of finance lease - 7,809 7,809
Operating expenses (2,466) (4,258) (7,464)
Operating profit 1,086 6,286 6,062
Share of results in associates 9a 117 234 (29)
Share of associates' revaluation gain 9a - 42 876
Investment income 1,302 130 271
Interest income 4 75 130 230
Interest expense 4 (188) (157) (330)
Profit before tax 2,392 6,665 7,080
Tax charge 5 (297) (180) (245)
Profit for the period 2,095 6,485 6,835
Attributable to:
Owners of the parent 2,065 6,457 6,779
Non-controlling interests 30 28 56
2,095 6,485 6,835
Earnings per share
Basic 6 1.86p 5.85p 6.14p
Diluted 6 1.83p 5.72p 6.01p
All operations are continuing.
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the six months to 30 September 2022
Notes Six months to 30 Sept 2022 Six months to Year to
30 Sept 2021 31 Mar 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit for the period 2,095 6,485 6,835
Other comprehensive income
Items that may subsequently be reclassified to profit or loss:
Exchange differences on retranslation of foreign subsidiaries (86) 24 (189)
Net (loss)/ gain on financial assets at fair value through Other Comprehensive 9b (1,047) (14) 1,039
Income
Taxation - - -
Total comprehensive income for the period 962 6,495 7,685
Total comprehensive income for the period attributable to:
Owners of the parent 923 6,409 7,623
Non-controlling interests 39 86 62
962 6,495 7,685
All operations are continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 September 2022
Notes As at As at As at
30 Sept 2022 (unaudited) 31 Mar 2022 (audited) 30 Sept 2021 (unaudited)
£'000 £'000 £'000
Non-current assets
Investment properties 7 22,839 23,849 24,090
Right of use Asset 790 1,018 686
Property, plant and equipment 106 128 130
Investment in associates 9a 19,834 19,135 18,580
Other financial assets at fair value through OCI 9b 5,493 7,445 3,049
Other receivables 10 - 95 293
Goodwill 153 153 153
Deferred tax assets 913 1,599 1,596
Total non-current assets 50,128 53,422 48,577
Current assets
Inventories - land and buildings 8 19,722 12,352 12,775
Current tax assets 7 14 5
Right of use assets 444 446 -
Trade and other receivables 10 6,113 4,329 4,919
Cash and cash equivalents 5,977 6,419 12,239
Total current assets 32,263 23,560 29,938
Current liabilities
Trade and other payables 11 (3,110) (3,388) (4,635)
Provisions 12 (773) (922) (1,767)
Lease liabilities (408) (410) -
Financial liabilities 13a (5,648) (4,212) (1,316)
Other financial liabilities 14 (907) - -
Current tax liabilities (93) (20) (31)
Total current liabilities (10,939) (8,952) (7,749)
Net current assets 21,324 14,608 22,189
Total assets less current liabilities 71,452 68,030 70,766
Non-current liabilities
Financial liabilities 13b (7,114) (9,309) (13,173)
Other financial liabilities 14 (15,863) (10,141) (10,314)
Lease liabilities (890) (1,098) (686)
Deferred tax liabilities (2,509) (3,112) (3,142)
Net assets 45,076 44,370 43,451
Equity
Called up share capital 1,166 1,166 1,166
Share premium 5,635 5,791 5,791
Share-based payment reserve 179 179 179
Foreign exchange translation reserve (3,392) (3,297) (3,142)
Purchase of own shares reserve (2,440) (2,653) (2,653)
Investment revaluation reserve (363) 684 (369)
Retained earnings 44,059 42,271 42,225
Equity attributable to the owners of the parent 44,844 44,141 43,197
Non-controlling interests 232 229 254
Total equity 45,076 44,370 43,451
Net assets per share 6 40.44p 40.00p 39.13p
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months to 30 September 2022
Share Share Premium Share- Based Foreign Exchange Translation Reserve Purchase of own Shares Investment Retained Earnings Non-controlling Interests Total
Capital Payment Reserve Revaluation
Reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2021 1,166 5,791 179 (3,108) (2,653) (355) 35,768 201 36,989
Profit for the period - - - - - - 6,485 - 6,485
Net (loss)/ gain on financial assets at fair value through other comprehensive - - - - - (14) - - (14)
income
Movement on foreign exchange - - - (34) - - - 58 24
Total Comprehensive Income - - - (34) - (14) 6,485 58 6,495
Purchase of treasury shares - - - - - - - - -
Non-controlling interests - - - - - - (28) 28 -
Dividends paid - - - - - - - (33) (33)
At 30 Sept 2021 1,166 5,791 179 (3,142) (2,653) (369) 42,225 254 43,451
Profit for the period - - - - - - 350 - 350
Net gain/ (loss) on financial assets at fair value through other comprehensive - - - - - 1,053 - - 1,053
income
Movement on foreign exchange - - - (155) - - - (52) (207)
Total Comprehensive Income - - - (155) - 1,053 350 (52) 1,196
Sale of treasury shares - - - - - - - - -
Purchase of treasury shares - - - - - - - - -
Non-controlling interests - - - - - - (28) 28 -
Dividends paid - - - - - - (276) (1) (277)
At 1 April 2022 1,166 5,791 179 (3,297) (2,653) 684 42,271 229 44,370
Profit for the period - - - - - - 2,095 - 2,095
Net (loss)/ gain on financial assets at fair value through other comprehensive - - - - - (1,047) - - (1,047)
income
Movement on foreign exchange - - - (95) - - - 9 (86)
Total Comprehensive Income - - - (95) - (1,047) 2,095 9 962
Sale of treasury shares - (156) - - 213 - - - 57
Non-controlling interests - - - - - - (30) 30 -
Dividends paid - - - - - - (277) (36) (313)
At 30 Sept 2022 1,166 5,635 179 (3,392) (2,440) (363) 44,059 232 45,076
CONSOLIDATED CASH FLOW STATEMENT
for the six months to 30 September 2022
Notes Six months to Six months to 30 Sept 2021 (unaudited) Year to
30 Sept 2022 (unaudited) 31 Mar 2022
(audited)
£'000 £'000 £'000
Cash flows from/ (used in) operating activities
Operating profit / (loss) 1,086 6,286 6,062
Adjustments for:
Depreciation of investment property, and property, plant & equipment 14 38 90
Profit on the sale of investment property 7 (1,061) - -
Debt reduction following restructuring of finance lease - (7,809) (7,809)
(Increase)/ decrease in inventories (59) (77) 38
(Increase)/ Decrease in trade and other receivables (1,679) 189 1,208
(Decrease)/ increase in trade and other payables (415) 811 (1,213)
Other non-cash adjustments 3 47 65
Cash generated from operations (2,111) (515) (1,559)
Income taxes paid (124) 182 118
Net cash flow (used in)/ from operating activities (2,235) (333) (1,441)
Cash flow from/ (used in) investing activities
Capital expenditure on investment properties 7 (81) (1,333) (1,642)
Purchase of property, plant and equipment (8) (2) (33)
Purchase of inventories 8 (1,070) - -
Proceeds from the sale of an investment property 2,967 - -
Investment in funds 9b (2) (2) (3,633)
Proceeds from funds 9b 907 - 290
Proceeds from Investment in shares of associates 9a 175 31 48
Interest received 4 7 130 187
Investment in shares of associates 9a (757) - -
Dividends from associates 9a - 242 241
Distributions received 1,300 130 266
Net cash flow from/ (used in) investing activities 3,438 (804) (4,276)
Cash flow from/ (used in) financing activities
Proceeds from bank loan 1,686 1,289 1,289
Repayment of bank loans (2,977) (574) (1,297)
Repayment of finance lease - (3,434) (3,434)
Exercise of share options 119 - -
Interest paid 4 (188) (157) (330)
Dividends paid (277) - (276)
Dividends paid to non-controlling interests (36) (33) (34)
Net cash flow (used in)/ from financing activities (1,673) (2,909) (4,082)
Net (decrease)/ increase in cash and cash equivalents (470) (4,046) (9,799)
Cash and cash equivalents at the beginning of period 6,419 16,244 16,244
Currency translation gains/ (losses) on cash and cash equivalents 28 41 (26)
Cash and cash equivalents at the end of the period 5,977 12,239 6,419
NOTES TO THE ACCOUNTS
for the six months ended 30 September 2022
1. Basis of Preparation
· These interim consolidated financial statements for the six months
ended 30 September 2022 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 2022 and are in compliance with IAS 34
"Interim Financial Reporting". These accounting policies are drawn up in
accordance with UK-adopted International Accounting Standards.
· The comparative figures for the financial year ended 31 March 2022
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 28 November 2022.
2. Segmental Analysis
Segment reporting for the six months to 30 September 2022
Fund Management Division Group Properties Division
Property Group properties Associates and investments Unallocated central overheads TOTAL
fund management
£'000 £'000 £'000 £'000 £'000
Rental income - 1,788 - - 1,788
Service charge income - 737 - - 737
Asset management fees 1,437 - - - 1,437
Performance related fee income 226 - - - 226
Total revenue 1,663 2,525 - - 4,188
Depreciation and amortisation (18) (12) - - (30)
Operating profit 519 1,089 - (522) 1,086
Share of results in associates - - 117 - 117
Investment income - - 1,302 - 1,302
Interest income - 75 - - 75
Interest expense - (188) - - (188)
Profit/ (loss) before tax 519 976 1,419 (522) 2,392
Analysed as:
Underlying profit/ (loss) before tax before adjusting for the following items: 294 27 223 (540) 4
Interest on loan to FOP - 68 - - 68
Profit on Sale of Group properties - 1,061 - - 1,061
Performance related fee income 226 - - - 226
Investment income resulting from sale of properties - - 1,196 - 1,196
Staff incentives - - - - -
Realised foreign currency (losses)/ gains (1) (180) - 18 (163)
Profit/ (loss) before tax 519 976 1,419 (522) 2,392
Revenue for the six months to 30 September 2022 from continuing operations
consists of revenue arising in the United Kingdom 27% (30 September 2021: 29%)
and Central and Eastern Europe 73% (30 September 2021: 71%) and all relates
solely to the Group's principal activities.
Direct costs incurred by First Property Group plc relating to the cost of the
Board and the related share listing costs are shown separately under
unallocated central costs.
Segment reporting for the six months to 30 September 2021
Fund Management Division Group Properties Division
Property Group properties Associates and investments Unallocated central overheads TOTAL
fund management
£'000 £'000 £'000 £'000 £'000
Rental income - 1,520 - - 1,520
Service charge income - 605 - - 605
Asset management fees 1,702 - - - 1,702
Performance related fee income 206 - - - 206
Total revenue 1,908 2,125 - - 4,033
Depreciation and amortisation (25) (68) - - (93)
Operating profit 829 7,788 - (2,331) 6,286
Share of results in associates - - 234 - 234
Fair value adjustment to associate - - 42 - 42
Investment income - - 130 - 130
Interest income - 94 - 36 130
Interest expense - (157) - - (157)
Profit/ (loss) before tax 829 7,725 406 (2,295) 6,665
Analysed as:
Underlying profit/ loss before tax before adjusting for the following items: 423 25 364 (411) 401
Interest on loan to FOP - 112 - - 112
Debt reduction in respect of finance lease - 7,809 - - 7,809
Group's share of revaluation gain on associates - - 42 - 42
Provision of rent guarantee - (184) - - (184)
Performance related fee income 206 - - - 206
AM fee from one off tenant deal 192 - - - 192
Staff incentives - - - (1,850) (1,850)
Realised foreign currency gains/ (losses) 8 (37) - (34) (63)
Profit/ (loss) before tax 829 7,725 406 (2,295) 6,665
Segment reporting for the year to 31 March 2022
Fund Management Division Group Properties Division
Property Group properties Associates and investments Unallocated central overheads TOTAL
fund management
£'000 £'000 £'000 £'000 £'000
Rental income - 2,926 - - 2,926
Service charge income - 1,678 - - 1,678
Sale of a property held in inventory - - - - -
Asset management fees 3,463 - - - 3,463
Performance related fee income 578 - - - 578
Total revenue 4,041 4,604 - - 8,645
Depreciation and amortisation (36) (24) - - (60)
Operating profit 1,437 7,781 - (3,156) 6,062
Share of results in associates - - (29) - (29)
Fair value adjustment on associates - - 876 - 876
Investment income - - 271 - 271
Interest income - 29 - 201 230
Interest expense - (330) - - (330)
Profit/ (loss) before tax 1,437 7,480 1,118 (2,955) 7,080
Analysed as:
Underlying profit/ (loss) before tax before adjusting for the following items: 1,182 401 242 (1,449) 376
Provision in respect of rent guarantee - (629) - - (629)
Interest received on loan to FOP - 202 - - 202
Debt reduction following restricting of finance lease - 7,809 - - 7,809
Fair value adjustment on associates FOP - - 876 - 876
Performance related fee income 578 - - - 578
Staff incentives (305) (251) - (1,472) (2,028)
Realised foreign currency (losses)/ gains (18) (52) - (34) (104)
Total 1,437 7,480 1,118 (2,955) 7,080
Assets - Group 891 44,693 7,445 4,818 57,847
Share of net assets of associates - - 19,135 - 19,135
Liabilities (143) (31,922) - (547) (32,612)
Net assets 748 12,771 26,580 4,271 44,370
3. Debt reduction following restructuring of finance lease
The results for the year ended 31 March 2022 and for the period ended and 30
September 2021 reflect the reduction of €9.00 million (£7.81 million) in
the amount owed to ING Bank (from €25 million to €16 million) in final
settlement of the finance lease secured against the Group's directly held
property in Gdynia. As part of the transaction ING was paid €4.00 million in
June 2021. The remainder of the finance lease liability was replaced by an
interest free deferred consideration of €12.00 million (£10.14 million)
repayable in financial year ended 31 March 2025. The deferred consideration is
reflected as an Other Financial Liability in the Statement of Financial
Position.
4. Interest Income/ (Expense)
Six months Six months Year
ended ended ended
30 Sept 2022 30 Sept 2021 31 Mar 2022
£'000 £'000 £'000
Interest income - bank deposits - - -
Interest income - other 75 130 230
Total interest income 75 130 230
Six months Six months Year
ended ended ended
30 Sept 2022 30 Sept 2021 31 Mar 2022
£'000 £'000 £'000
Interest expense - property loans (180) (151) (326)
Interest expense - bank and other (8) (6) (4)
Total interest expense (188) (157) (330)
5. 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 Six months Year
ended ended ended
30 Sept 2022 30 Sept 2021 31 Mar 2022
£'000 £'000 £'000
Current tax (204) (129) (172)
Deferred tax (93) (51) (73)
Total (297) (180) (245)
6. Earnings/ NAV Per Share
The basic earnings per ordinary share is calculated on the profit on ordinary
activities after taxation and after excluding 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 Six months Year
ended ended ended
30 Sept 2022 30 Sept 2021 31 Mar 2022
Basic earnings/ (loss) per share 1.86p 5.85p 6.14p
Diluted earnings/ (loss) per share 1.83p 5.72p 6.01p
The following number of shares have been used to calculate basis and diluted
earnings per share, net assets per share and adjusted net assets per share:
Six months Six months Year
ended ended ended
30 Sept 2022 30 Sept 2021 31 Mar 2022
Number Number Number
Weighted average number of Ordinary shares in issue (used for basic earnings 110,868,671 110,382,332 110,382,332
per share calculation)
Number of share options 2,110,000 2,610,000 2,610,000
Total number of Ordinary shares used in the diluted earnings per share 112,978,671 112,992,332 112,992,332
calculation
£'000 £'000 £'000
Basic earnings 2,065 6,457 6,779
Notional interest on share options assumed to be exercised 3 4 7
Diluted earnings/ (loss) 2,068 6,461 6,786
Six months Six months Year
ended ended ended
30 Sept 2022 30 Sept 2021 31 Mar 2022
Net assets per share 40.44p 39.13p 40.00p
Adjusted net assets per share 48.34p 48.88p 47.28p
The following numbers have been used to calculate both the net assets and
adjusted net assets per share:
Six months Six months Year
ended ended ended
30 Sept 2022 30 Sept 2021 31 Mar 2022
£'000 £'000 £'000
Net assets excluding Non-controlling interest 44,844 43,197 44,141
For adjusted net assets per share £'000 £'000 £'000
Net assets excluding Non-controlling interests 44,844 43,197 44,141
Investment properties at fair value net of deferred taxes 2,102 2,305 2,486
Inventories at fair value net of deferred taxes 2,847 2,590 2,403
Investments in associates at fair value 4,506 6,753 4,016
Other items 323 381 381
Total 54,622 55,226 53,427
7. Investment Properties
Six months Year Six months
ended ended ended
30 Sept 2022 31 Mar 2022 30 Sept 2021
£'000 £'000 £'000
1 April 23,849 22,456 22,456
Capital expenditure 81 1,642 1,333
Disposals (1,723) - -
Depreciation (14) (30) (3)
Impairment loss to an investment property - - -
Foreign exchange translation 646 (219) 304
Total at end of period 22,839 23,849 24,090
Investment properties owned by the Group are stated at cost less depreciation
and accumulated impairment losses. During the period the Group sold an
investment property in Tureni, Romania for £3.05 million. The sale price
represents a profit on disposal of £1.06 million after reflecting the costs
of disposal.
8. Inventory - Land and Buildings
Six months Year Six months
ended ended ended
30 Sept 2022 31 Mar 2022 30 Sept 2021
£'000 £'000 £'000
1 April 12,352 12,494 12,494
Purchase including acquisition costs 7,443 - -
Capital expenditure 92 119 132
Disposals - - -
Depreciation (33) (157) (55)
Foreign exchange translation (132) (104) 204
Total at end of period 19,722 12,352 12,775
During the period, the Group acquired a further 32.1% share in Blue Tower, an
office building in Warsaw, taking its ownership in the building to 80.3% (31
March 2022: 48.2%). The consideration for this new investment is PLN 40.4
million (£7.2 million), payable in seven instalments over a six year period.
The first instalment of PLN 6.0 million (£1.07 million) has been paid and
ownership of the property transferred to the Group.
9. Investments in associates and other financial investments
Six months ended Year Six months
30 Sept 2022 ended ended
31 Mar 2022 30 Sept 2021
£'000 £'000 £'000
a) Associates
Cost of investment at beginning of period 19,135 18,577 18,577
Additions 757 - -
Disposals - - -
Repayment of shareholder loan (175) (48) (31)
Share of associates profit/(loss) after tax 117 (29) 234
Share of associates revaluation gains - 876 42
Dividends received - (241) (242)
Cost of investment at end of period 19,834 19,135 18,580
Additions of £757,000 represent the Groups increase in investment in Fprop
Opportunities plc (£404,000), 5(th) Property Trading Ltd (£151,000), Fprop
Cluj Ltd (£133,000) and Fprop Galeria Corso Ltd (£69,000).
Six months ended Year Six months
30 Sept 2022 ended ended
31 Mar 2022 30 Sept 2021
£'000 £'000 £'000
Investments in associates
5th Property Trading Ltd 1,861 1,652 1,627
Fprop Galeria Corso Ltd 2,888 2,700 2,550
Fprop Krakow Ltd 1,578 1,580 1,648
Fprop Cluj Ltd 602 615 600
Fprop Phoenix Ltd 478 913 1,349
Fprop Opportunities plc 12,735 11,983 11,114
20,142 19,443 18,888
Less: Group share of profit after tax withheld on sale of property to an (308) (308) (308)
associate in 2007
Cost of investment at end of period 19,834 19,135 18,580
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 the Group's stake in 5th Property Trading Ltd.
Six months ended Year Six months
30 Sept 2022 ended ended
31 Mar 2022 30 Sept 2021
£'000 £'000 £'000
b) Other financial investments
Cost of investment at 1 April 7,445 3,061 3,061
Additions 2 3,633 2
Repayments (907) (290) -
Disposal - - -
(Decrease)/ increase in fair value during the period (1,047) 1,041 (14)
Cost of investment at end of period 5,493 7,445 3,049
The Group holds four unlisted investments in funds managed by it. Each is
designated at fair value through "Other Comprehensive Income" (OCI) as per
IFRS 9. The Directors' consider their fair value to not be materially
different from their carrying value. Fair value has been calculated by
applying the Group's percentage holding in the investments to the fair value
of their net assets.
10. Trade and Other Receivables
Six months ended Year Six months
30 Sept 2022 ended ended
31 Mar 2022 30 Sept 2021
£'000 £'000 £'000
Current assets
Trade receivables 1,168 1,003 953
Less provision for impairment of receivables (96) (73) (260)
Trade receivables net 1,072 930 693
Other receivables 3,587 2,299 3,253
Prepayments and accrued income 1,454 1,100 973
Total at end of period 6,113 4,329 4,919
Non-current assets
Other receivables - 95 293
The other receivables balance included in non-current assets of £nil (31
March 2022: £0.95 million) relates to the deferred consideration from the
sale of an investment property located in Romania.
11. Trade and Other Payables
Six months ended Year Six months
30 Sept 2022 ended ended
31 Mar 2022 30 Sept 2021
£'000 £'000 £'000
Current liabilities
Trade payables 755 1,105 1,108
Other taxation and social security 277 313 252
Other payables and accruals 1,921 1,917 2,906
Deferred income 157 53 369
Total at end of period 3,110 3,388 4,635
12. Provisions
Six months ended Year Six months
30 Sept 2022 ended ended
31 Mar 2022 30 Sept 2021
£'000 £'000 £'000
Current liabilities 773 922 1,767
The provision at 30 September 2022 represents a rent guarantee of £0.37
million (31 March 2022: £0.52 million) and fit out costs of £0.40 million
(31 March 2022: £0.40 million). These provisions are in respect of the
guarantee given as part of the sale of a property, Chałubińskiego 8 (CH8),
which completed in April 2020.
As a condition of the sale the Group guaranteed the rental and service charge
income up to some €1.20 million per annum for five years. In addition, the
Group guaranteed fit-out costs on the residual vacant space up to some €1.50
million.
13. Financial Liabilities
Six months ended Year Six months
30 Sept 2022 ended ended
31 Mar 2022 30 Sept 2021
£'000 £'000 £'000
Current liabilities
Bank loans 5,648 4,212 1,316
Total at end of period 5,648 4,212 1,316
Non-current liabilities
Bank loans 7,114 9,309 13,173
Total at end of period 7,114 9,309 13,173
Total obligations under financial liabilities
Repayable within one year 5,648 4,212 1,316
Repayable within one and five years 6,629 7,364 6,835
Repayable after five years 485 1,945 6,338
Total at end of period 12,762 13,521 14,489
Five bank loans (all denominated in Euros) totalling £12.76 million (31 March
2022: £13.52 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 are otherwise non-recourse to
the Group's assets.
14. Other Financial Liabilities
Six months ended Year Six months
30 Sept 2022 ended ended
31 Mar 2022 30 Sept 2021
£'000 £'000 £'000
a) Current liabilities
Other financial liabilities 907 - -
Total at end of period 907 - -
b) Non-current liabilities
Other financial liabilities 15,863 10,141 10,314
Total at end of period 15,863 10,141 10,314
c) Total obligations under financial liabilities
Repayable within one year 907 - -
Repayable within one and five years 14,159 10,141 10,314
Repayable after five years 1,704 - -
Total at end of period 16,770 10,141 10,314
Non-current liabilities represents a balance of €12.00 million which was a
result of the restructuring of a finance lease secured against the office
tower in Gdynia. The restructuring resulted in the amount owed to ING bank in
final settlement reducing by €9.00 million (£7.81 million). As part of the
deal, the Group acquired the freehold of the property for €16.00 million of
which €4.00 million has been paid and €12.00 million is payable in the
financial year ended 31 March 2025. No interest is payable on this non-current
liability.
Non-current liabilities also represent the Group's new investment in Blue
Tower, Warsaw, which was financed by deferred consideration of PLN 40.4
million (£7.44 million). This liability, which is non-interest bearing, is
payable in seven instalments over six years. The first instalment of PLN 6.0
million (£1.07 million) was paid in September 2022.
15. Financial Liabilities: Interest Rate Profile
The interest rate profile of the Group's financial liabilities is as follows:
Floating rate Fixed rate Non- Total
financial financial interest
liabilities liabilities bearing
£'000 £'000 £'000 £'000
Financial liabilities 12,575 187 - 12,762
Other financial liabilities - - 16,770 16,770
At 30 September 2022 12,575 187 16,770 29,532
Financial liabilities 10,109 3,412 - 13,521
Other financial liabilities - - 10,141 10,141
At 31 March 2022 10,109 3,412 10,141 23,662
The total financial liability, £29.53 million, comprises non-interest bearing
loan of £16.77 million (57% of total), fixed interest loans of £0.19 million
(1% of total), floating interest loans of £12.57 million (42% of total).
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.
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