REG - First Property Group - Interim Results
23/11/2023 07:00
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RNS Number : 3750U First Property Group PLC 23 November 2023
Date: 23 November 2023
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
2023
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 2023.
Highlights:
· Statutory loss before tax: £0.65 million (30 September 2022
profit before tax: £2.39 million)
· Cash: £6.71 million (31 March 2023: £7.65 million)
· Net debt: £22.22 million (31 March 2023: £22.01 million)
· Third party Assets Under Management ("AUM"): £304 million (31
March 2023: £400 million)
· Total AUM: £358 million (31 March 2023: £454 million)
· Weighted average unexpired fund management contract term at 30
September 2023: 2 years, 1 month (31 March 2023: 2 years, 9 months)
Financial summary:
Unaudited Unaudited Percentage change Audited
six months to six months to 30 Sep 2022 year to
30 Sep 2023 31 Mar 2023
Income Statement:
Statutory (loss)/ profit before tax (£0.65m) £2.39m -127.2% £2.49m
Diluted (loss)/ profit earnings per share (0.99p) 1.83p -154.1% 1.70p
Total dividend per share 0.00p 0.25p -100% 0.50p
Average €/ £ rate 1.1590 1.1698 - 1.1567
Unaudited Audited Percentage change Unaudited
six months to 30 Sep 2023 year to six months to 30 Sep 2022
31 Mar 2023 (restated)
Balance Sheet at period end:
Investment properties at book value £47.13m £47.01m +0.3% £42.56m
Investment properties at market value £53.28m £53.97m -1.3% £48.67m
Associates and investments at book value £20.03m £22.13m -9.5% £25.33m
Associates and investments at market value £22.30m £25.27m -11.8% £29.83m
Cash balances £6.71m £7.65m -12.3% £5.98m
Cash per share 6.05p 6.90p -12.3% 5.39p
Gross debt* £28.93m £29.66m -2.5% £29.53m
Net debt* £22.22m £22.01m +1.0% £23.55m
Gearing ratio at book value** 41.0% 40.6% - 40.5%
Gearing ratio at market value*** 37.0% 36.1% - 35.7%
Net assets at book value £41.65m £43.44m -4.1% £43.47m
Net assets at market value £49.22m £52.54m -6.3% £53.25m
Adjusted net assets per share (EPRA basis) 43.56p 46.50p -6.3% 47.12p
Period end €/ £ rate 1.1528 1.1381 - 1.1395
*Debt comprises financial liabilities and other financial liabilities
including those of 5(th) Property Trading Limited ("5PT").
** Gearing ratio = Gross debt divided by Gross assets.
*** Attributable to the owners of the parent, excludes non-controlling
interest.
Commenting on the results, Ben Habib, Chief Executive of First Property, said:
"Markets have been as challenging over the last year as I have ever known
them. The rapid increase in interest rates, with a commensurate collapse in
demand for commercial property, both occupationally and for investment, had
created a perfect storm. For fifteen years interest rates had been near zero
and global markets supported by borrowings in dollars with investment in
developing countries and more "risky" assets - the so called carry trade.
"With the Federal Reserve aggressively increasing interest rates, that carry
trade has reversed equally aggressively with capital flooding back to the
United States.
"So, whilst it is disappointing to report a loss, this was created by a mark
down in property values and not as a result of a deterioration in trading. The
Group is robust.
"Inflation is now reducing, and interest rates are likely to be close to their
peak. They have already been reduced in Poland.
"Markets are steadying and we are seeing an uptick in investment demand,
though it is too early to be certain.
"We also have occupational demand for the vacant space in the office blocks we
own in Warsaw and Gdynia, with particular demand for the former. As we lease
up this space, we will start again to generate good levels of cash, as we have
historically done.
"In the meantime, our cash balance is good, with over £6 million on the
balance sheet, giving us the firepower we need to fitout the space as it is
leased.
"We are also seeing some interesting lending propositions for our new debt
division. We have yet to make a loan but our market knowhow and the number of
deals we are considering has considerably increased.
"I am once again beginning to be excited about the future."
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 (Director, Compliance & Company Secretary)
Allenby Capital (NOMAD & Broker) Tel: + 44 (0) 20 3328 5656
Nick Naylor / Daniel Dearden-Williams (Corporate Finance)
Amrit Nahal / Tony Quirke (Sales and Corporate Broking)
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 one in Romania,
and non-controlling interests in nine 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 directors, 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
2023.
Revenue earned by the Group was £3.97 million (30 September 2022: £4.19
million) yielding a loss before tax of £0.65 million (30 September 2022
profit before tax: £2.39 million). The loss was caused by a reduction of
£0.82 million in the fair value of the Group's investment in one of its
associates, Fprop Opportunities plc ("FOP"). Otherwise, the Group has been
trading in line with market expectations.
The rapid increase in interest rates and consequent flight of capital from our
markets has materially impacted property values. The Group has been shielded
from much of this by its accounting policy of holding properties at the lower
of cost or value. However, the cost of the Group's share in FOP, which is
invested in five commercial properties in Poland, was rebased in October 2018
when the Group's share in it reduced below 50%, resulting in it being
deconsolidated from the accounts of the Group and recognised as an associate
at the then prevailing property values. In the six months to 30 September 2023
the five properties owned by FOP decreased in value by £2.2 million, of which
the Group's share amounted to £0.82 million.
Diluted loss per share amounted to 0.99 pence (30 September 2022 earnings per
share: 1.83 pence).
The Group ended the period with net assets calculated under the cost basis of
accounting of £41.65 million (31 March 2023: £43.44 million), equating to
37.56 pence per share (31 March 2023: 39.18 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 £49.22 million, or 43.56 pence per
share (31 March 2023: £52.54 million, or 46.50 pence per share). The market
values of Group properties are independently assessed once a year, on 31
March, except for the five properties held by FOP which are also assessed as
at 30 September.
Gross debt at the period end amounted to £28.93 million (31 March 2023:
£29.66 million), which was secured against six commercial properties in
Poland and one in Romania. Of this, £16.95 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 seven directly owned properties
at book value, was 40.99% (31 March 2023: 40.57%). Using market values for
these properties the gearing ratio was 37.02% (31 March 2023: 36.08%).
The Group's seven directly owned properties are held in separate non-recourse
special purpose vehicles without any cross collateralisation of the debt or
Group guarantees.
Group cash balances at the period end stood at £6.71 million (31 March 2023:
£7.65 million), equivalent to 6.05 pence per share (31 March 2023: 6.90 pence
per share).
Dividend:
The Directors have resolved not to pay a dividend (30 September 2022: 0.25
pence per share) until the Group returns to profitability. Our cash balances
are good and it is important we preserve this until we emerge from these
turbulent times.
REVIEW OF OPERATIONS
PROPERTY FUND MANAGEMENT ("First Property Asset Management Ltd" or "FPAM")
Third party assets under management at the period end decreased by 24% to
£304.6 million (31 March 2023: £400.4 million). The decrease was
attributable mainly to the decrease in value of properties held in third party
managed funds of £87.1 million.
The large decrease in value of third-party funds was mainly related to the
write down in value of properties held by Fprop Offices LP ("Fprop Offices")
and Fprop Phoenix Ltd ("Fprop Phoenix"), which experienced write downs of
£28.8 million and £47.0 million, respectively. We do not earn a fixed fee
from Fprop Offices, and the reduction in value of the fund does not reduce our
recurring fee income. Fprop Offices is due to be wound up next year.
63.3% of third-party assets under management were located in the UK, 33.9% in
Poland and 2.8% in Romania.
Revenue earned by this division decreased to £1.26 million (30 September
2022: £1.66 million), resulting in profit before unallocated central
overheads and tax decreasing to £0.16 million (30 September 2022: £0.52
million).
At the period end fund management fee income, excluding performance fees, was
being earned at an annualised rate of £2.06 million (31 March 2023: £2.55
million).
FPAM's weighted average unexpired fund management contract term at the
period-end was 2 years, 1 month (31 March 2023: 2 years, 9 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 Apr 2023 241.4 159.0 400.4 53
Property purchases - - - -
Property sales (6.7) - (6.7) (2)
Capital expenditure - - - -
Property revaluation (41.9) (45.2) (87.1) -
FX revaluation - (2.0) (2.0) -
As at 30 Sep 2023 192.8 111.8 304.6 51
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 Sep 31 Mar 2023
2023
£m. % £m.
SAM & DHOW UK Rolling * * * *
OFFICES UK Jun 2024 53.0 4 17.4 84.9
SIPS UK Jan 2025 96.8 21 31.8 104.7
FOP Poland Oct 2025 61.6 5 20.2 64.5
FGC Poland Mar 2026 21.7 1 7.1 22.0
UKPPP UK Jan 2027 20.5 8 6.7 28.1
SPEC OPPS UK Jan 2027 14.4 4 4.7 14.9
FKR Poland Mar 2027 16.5 1 5.4 16.8
FCL Romania Jun 2028 8.6 1 2.8 8.7
FPL Poland Jun 2028 3.4 4 1.2 47.0
FUL UK Indefinite 8.1 2 2.7 8.8
Total Third Party AUM 304.6 51 100.0 400.4
* 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 109.3 41.5 8.6 159.4 52.3
Retail warehousing 56.9 - - 56.9 18.7
Shopping centres - 49.7 - 49.7 16.3
Supermarkets 26.6 12.0 - 38.6 12.7
Total 192.8 103.2 8.6 304.6 100.0
% of Total 63.3 33.9 2.8 100.0
GROUP PROPERTIES DIVISION
At the period end the Group Properties division comprised seven directly owned
commercial properties in Poland and Romania valued at £53.28 million (31
March 2023: £53.97 million), and interests in nine of the twelve funds
managed by FPAM (classified as Associates and Investments) valued at £22.30
million (31 March 2023: £25.27 million).
The contribution to Group profit before tax and unallocated central overheads
from this division was £0.09 million (30 September 2022: £2.40 million), of
which the seven directly owned properties contributed £0.27 million (30
September 2022: £0.98 million) and the Associates and Investments contributed
a loss of £0.18 million (30 September 2022 profit: £1.42 million).
The reduced contribution from the Associates and Investments was mainly due to
the write down by £0.82 million in value of the Group's share in FOP. In
addition, distributions in respect of the Group's 11.1% share in Fprop UK
Special Opportunities LP ("SPEC OPPS") of £0.08 million were less than the
contribution in the same period last year of £1.20 million. Last year's
higher contribution was driven by property sales.
Nearly one third of the vacant office space in the Group's directly held
office properties in Gdynia and Warsaw (Blue Tower), which it acquired in 2021
and 2022 respectively and which totalled some 20,000 square metres, has been
leased. Net operating income should improve by some €2 million per annum
once this vacant space is fully let. Tenant demand remains steady in both
cities.
1. Directly owned properties (all accounted for under the cost model):
The book value of the Group's seven directly owned properties was £47.13
million. Their market value, as at 30 September 2023, was £53.28 million.
Country Sector Property/ fund name No. of properties as at 30 Sep Book value as at 30 Sep 2023 Market value as at 30 Sep 2023 *Contribution to Group profit before tax - *Contribution to Group profit before tax -
2023 period to period to
30 Sep 2023
30 Sep 2022
£m. £m. £m. £m.
Poland Offices Gdynia 1 14.20 14.32 (0.14) (0.21)
Poland, Offices Blue Tower 1 20.71 23.89 0.46 0.64
Poland Supermarkets Praga 1 1.96 2.91 0.05 0.20
Romania Office Dr Felix 1 2.32 3.82 0.05 0.02
Poland Multi-let 5PT 3 7.94 8.34 0.18 **
Total* 7 47.13 53.28 0.60 0.65
Profit on the sale of investment properties - 1.06
Other overhead costs allocated to the direct property division (0.33) (0.73)
Total contributions to PBT from Group Properties 0.27 0.98
*Prior to the deduction of unallocated central overhead expenses.
**5PT, a fund in which the Group gained a controlling interest in financial
year ended 31 March 2023 (previously recognised as an associate).
The debt secured against these seven properties amounted to £28.93 million
(31 March 2023: £29.66 million), including deferred consideration of £16.95
million (31 March 2023: £17.02 million) which is non-interest bearing.
Interest costs on the £11.99 million of interest-bearing debt amounted
to £0.38 million in the period (30 September 2022: £0.19 million). This
equates to an average borrowing cost of 2.6% per annum when expressed as a
percentage of total Group debt, or 6.3% 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 some £120,000 per annum (31 March 2023: £127,000).
All five bank loans are held in separate non-recourse special purpose vehicles
and are not guaranteed by the Group.
Directly owned Properties 30 Sep 2023 31 Mar 2023
Book value £47.13m £47.01m
Market value £53.28m £53.97m
Debt (all non-recourse to the Group) £28.93m £29.66m
LTV at book value % 61.38% 63.09%
LTV at market value % 54.30% 54.96%
Average borrowing cost (including non-interest-bearing loans) 2.6% 1.8%
The Weighted Average Unexpired Lease Term (WAULT) of the seven properties as
at 30 September 2023 was 4 years, 3 months (31 March 2023: 3 years, 6 months).
In July the Group acquired for £0.21 million the minority interest (being
23%) in E and S Estates Ltd ("E and S"), a fund managed by the Group,
resulting in it owning 100% of the shares in issue. E and S owns a supermarket
in Praga, a suburb of Warsaw, valued at €3.36 million. It contributed some
£50,000 in net profit in the six months just ended, a return on net equity of
around 7% on an annualised basis.
Associates and Investments ("A&I's")
These comprise non-controlling interests in nine of the twelve funds managed
by FPAM, of which five 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 from this segment amounted to a loss before tax and
unallocated central overheads of £0.18 million (30 September 2022: profit
£1.42 million), mainly due to the write down by £0.82 million of the Group's
45.71% share in FOP. At their new value of £61.5 million, the properties held
by FOP yield income of some 8.5% per annum, they are 97% leased by net
lettable area and the vast majority of rent payable is subject to annual
increases linked to inflation.
The book value of the five associates was £17.06 million (31 March 2023:
£17.59 million). Their market value was £19.33 million (31 March 2023:
£20.73 million).
The value of the four investments in funds reduced to £2.97 million (31 March
2023: £4.54 million). The reduction was mainly due to the decrease in value
by £1.0 million of the Group's co-investment in Fprop Offices, an explanation
for which is in the section entitled "Fund Management Division".
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 Sep 2022
30 Sep 2023
% £'000 £'000 £'000 £'000
a) Associates
5PT Poland 47.20 * * * 59
FOP Poland 45.71 12,305 12,305 442 347
FGC Poland 29.09 2,918 3,136 92 119
FKR Poland 18.07 1,181 1,253 27 (2)
FPL Poland 23.38 - 1,730 (60) (435)
FCL Romania 21.17 652 901 16 29
Sub Total 17,056 19,325 517 117
b) Investments
UK PPP UK 0.94 196 196 14 23
SPEC OPPS UK 11.06 2,142 2,142 82 1,196
OFFICES UK 1.64 461 461 18 74
FUL UK 2.50 174 174 - 9
Sub Total 2,973 2,973 114 1,302
Total 20,029 22,298 631 1,419
*Consolidated into the Group
New Loan Division (secured lending against commercial property):
Since its establishment in June 2023, this division has originated over £600
million in enquiries for new senior loans. It has yet to complete its first
loan but we are hopeful of doing so soon.
The division is offering senior loans at a relatively high loan to value of
65% without obliging the borrower to amortise the debt during its term. This
enables the properties against which such loans are advanced to support
relatively high interest rates of 9% to 10% per annum.
As previously reported, no new employees will, initially, be required to be
employed to roll out this product and the Group does not intend to use its own
cash to make such loans. It may, however, invest alongside third parties in
any fund structures set up to make such loans.
Commercial Property Market Outlook
Poland:
GDP growth contracted by 0.8% per annum in the first half of 2023, resulting
in forecasters downgrading their full year GDP growth estimates to 0.2% per
annum, the lowest it has been in our entire time investing in that country.
GDP growth is expected to rebound in 2024, to 2.8% per annum (previous
forecasts were at 2.2% per annum).
Unemployment was at a historic low of 5.0% in August, which, in combination
with strong nominal wage increases, is expected to drive economic activity in
2024.
The National Bank of Poland's key policy interest rate was cut in September by
75bp and in October by 25bp and now stands at 5.75% per annum. Inflation has
fallen from some 17% year on year to around 4%.
Investment demand for commercial property remains weak but occupational demand
remains steady. The development of new property is at a cyclical low.
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 their contractual increases.
United Kingdom:
The Bank of England held interest rates at 5.25% per annum in September and
again in October, unchanged for the first time in 15 meetings of the Monetary
Policy Committee ("MPC"). The Consumer Price Index ("CPI") increased by 4.7%
on an annualised basis in October, a rate which is less than half of its peak
of 11.1% in October 2022, but still above the 2% target of the Bank of
England. Economic growth is close to nil.
The commercial property investment market remains generally weak, in
particular for offices and shopping centres. The occupier market is also
generally weak, including for industrial property, where strong demand over
the last several years has stalled.
Current Trading and Prospects
Markets have been as challenging over the last year as I have ever known them.
The rapid increase in interest rates, with a commensurate collapse in demand
for commercial property, both occupationally and for investment, had created a
perfect storm. For fifteen years interest rates had been near zero and global
markets supported by borrowings in dollars with investment in developing
countries and more "risky" assets - the so called carry trade.
With the Federal Reserve aggressively increasing interest rates, that carry
trade has reversed equally aggressively with capital flooding back to the
United States.
So, whilst it is disappointing to report a loss, this was created by a mark
down in property values and not as a result of a deterioration in trading. The
Group is robust.
Inflation is now reducing, and interest rates are likely to be close to their
peak. They have already been reduced in Poland.
Markets are steadying and we are seeing an uptick in investment demand, though
it is too early to be certain.
We also have occupational demand for the vacant space in the office blocks we
own in Warsaw and Gdynia, with particular demand for the former. As we lease
up this space, we will start again to generate good levels of cash, as we have
always historically done.
In the meantime, our cash balance is good, with over £6 million on the
balance sheet, giving us the firepower we need to fitout the space as it is
leased.
We are also seeing some interesting lending propositions for our new debt
division. We have yet to make a loan but our market knowhow and the number of
deals we are considering has considerably increased.
I am once again beginning to be excited about the future.
Ben Habib
Chief Executive
CONSOLIDATED INCOME STATEMENT
for the six months to 30 September 2023
Notes Six months to 30 Sep 2023 Six months to Year to
(unaudited) 30 Sep 2022 31 Mar 2023
(unaudited) (audited)
£'000 £'000 £'000
Revenue 3,966 4,188 7,249
Cost of sales (1,763) (1,697) (2,257)
Gross profit 2,203 2,491 4,992
Profit on sale of investment properties - 1,061 1,779
Operating expenses (2,386) (2,466) (4,767)
Operating (loss)/profit (183) 1,086 2,004
Share of results in associates 8a 517 117 273
Share of associates' revaluation (loss)/gain 8a (816) - (901)
Investment income 114 1,302 1,497
Interest income 3 95 75 145
Interest expense 3 (379) (188) (530)
(Loss)/profit before tax (652) 2,392 2,488
Tax charge 4 (257) (297) (449)
(Loss)/profit for the period (909) 2,095 2,039
Attributable to:
Owners of the parent (1,122) 2,065 1,919
Non-controlling interests 213 30 120
(909) 2,095 2,039
(Loss)/Earnings per share
Basic 5 (1.01p) 1.86p 1.73p
Diluted 5 (0.99p) 1.83p 1.70p
All operations are continuing.
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the six months to 30 September 2023
Notes Six months to 30 Sep 2023 Six months to Year to
30 Sep 2022 31 Mar 2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
(Loss)/ profit for the period (909) 2,095 2,039
Other comprehensive income
Items that may subsequently be reclassified to profit or loss:
Exchange differences on retranslation of foreign subsidiaries 91 (86) 944
Net (loss) on financial assets at fair value through Other Comprehensive 8b (1,137) (1,047) (1,412)
Income
Taxation - - -
Total comprehensive income for the period (1,955) 962 1,571
Total comprehensive income for the period attributable to:
Owners of the parent (2,110) 923 1,324
Non-controlling interests 155 39 247
(1,955) 962 1,571
All operations are continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2023
Notes As at As at As at
30 Sep 2023 (unaudited) 31 Mar 2023 (audited) 30 Sep 2022
(unaudited)
(restated)
£'000 £'000 £'000
Non-current assets
Investment properties 6 47,134 47,009 22,839
Right of use Asset 647 197 790
Property, plant and equipment 67 80 106
Investment in associates 8a 17,056 17,588 19,834
Other financial assets at fair value through OCI 8b 2,973 4,544 5,493
Goodwill 153 153 153
Deferred tax assets 970 930 913
Total non-current assets 69,000 70,501 50,128
Current assets
Inventories - land and buildings 7 - - 19,722
Current tax assets 113 79 7
Right of use assets 457 457 444
Trade and other receivables 9 5,354 3,729 6,113
Cash and cash equivalents 6,707 7,647 5,977
Total current assets 12,631 11,912 32,263
Current liabilities
Trade and other payables 10 (4,713) (3,310) (4,486)
Provisions 11 (113) (158) (773)
Lease liabilities (469) (469) (408)
Financial liabilities 12 (1,067) (1,116) (5,648)
Other financial liabilities 13 (12,286) (939) (907)
Current tax liabilities (41) (28) (93)
Total current liabilities (18,689) (6,020) (12,315)
Net current assets (6,058) 5,892 19,948
Total assets less current liabilities 62,942 76,393 70,076
Non-current liabilities
Financial liabilities 12 (10,921) (11,519) (7,114)
Other financial liabilities 13 (4,660) (16,082) (15,863)
Lease liabilities (658) (267) (890)
Deferred tax liabilities (3,203) (3,050) (2,509)
Net assets 43,500 45,475 43,700
Equity
Called up share capital 1,166 1,166 1,166
Share premium 5,635 5,635 5,635
Share-based payment reserve 497 179 179
Foreign exchange translation reserve (2,204) (2,353) (3,392)
Purchase of own shares reserve (2,440) (2,440) (2,440)
Investment revaluation reserve (1,865) (728) (363)
Retained earnings 40,861 41,983 42,683
Equity attributable to the owners of the parent 41,650 43,442 43,468
Non-controlling interests 1,850 2,033 232
Total equity 43,500 45,475 43,700
Net assets per share 5 37.56p 39.18p 39.20p
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months to 30 September 2023
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
Restated £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 Apr 2022 1,166 5,791 179 (3,297) (2,653) 684 40,895 229 42,994
Profit for the period - - - - - - 2,095 - 2,095
Net (loss) 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 Sep 2022 1,166 5,635 179 (3,392) (2,440) (363) 42,683 232 43,700
Profit for the period - - - - - - (56) - (56)
Net gain/ (loss) on financial assets at fair value through other comprehensive - - - - - (365) - - (365)
income
Movement on foreign exchange - - - 1,039 - - - 118 1,157
Non-controlling interest in 5PT - - - - - - - 1,606 1,606
Total Comprehensive Income - - - 1,039 - (365) (56) 1,724 2,342
Sale of treasury shares - - - - - - - - -
Purchase of treasury shares - - - - - - - - -
Non-controlling interests - - - - - - (90) 90 -
Dividends paid - - - - - - (554) (13) (567)
At 1 Apr 2023 1,166 5,635 179 (2,353) (2,440) (728) 41,983 2,033 45,475
Profit for the period - - - - - - (909) - (909)
Net (loss) on financial assets at fair value through other comprehensive - - - - - (1,137) - - (1,137)
income
Change in the proportion held in non-controlling interests - - - - - - - (265) (265)
Movement on foreign exchange - - - 149 - - - (58) 91
Total Comprehensive Income - - - 149 - (1,137) (909) (323) (2,220)
Share options charge - - 318 - - - - - 318
Non-controlling interests - - - - - - (213) 213 -
Dividends paid - - - - - - - (73) (73)
At 30 Sep 2023 1,166 5,635 497 (2,204) (2,440) (1,865) 40,861 1,850 43,500
CONSOLIDATED CASH FLOW STATEMENT
for the six months to 30 September 2023
Notes Six months to Six months to 30 Sep 2022 (unaudited) Year to
30 Sep 2023 (unaudited) 31 Mar 2023
(audited)
£'000 £'000 £'000
Cash flows from/ (used in) operating activities
Operating (loss)/ profit (183) 1,086 2,004
Adjustments for:
Depreciation of investment property, and property, plant & equipment 34 14 99
Profit on the sale of investment property - (1,061) (1,779)
(Increase)/ decrease in inventories - (59) -
(Increase)/ Decrease in trade and other receivables (1,626) (1,679) 777
(Decrease)/ increase in trade and other payables 1,348 (415) 2,813
Share options charge 318 - -
Other non-cash adjustments 194 3 180
Cash generated from operations 85 (2,111) 4,094
Income taxes paid (169) (124) (616)
Net cash flow (used in)/ from operating activities (84) (2,235) 3,478
Cash flow from/ (used in) investing activities
Capital expenditure on investment properties 6 (315) (81) (1,017)
Purchase of property, plant and equipment (21) (8) (10)
Purchase of inventories - (1,070) -
Proceeds from the sale of an investment property - 2,967 8,612
Purchase of investment property - - (7,443)
Cash paid on acquisition of new subsidiaries - - (165)
Cash and cash equivalents received on acquisitions - - 83
Investment in funds 8b - (2) (3)
Proceeds from funds 8b 434 907 1,492
Proceeds from Investment in shares of associates 8a 233 175 176
Interest received 3 95 7 145
Investment in shares of associates 8a - (757) (606)
Dividends from associates 8a - - -
Distributions received 114 1,300 1,494
Net cash flow from/ (used in) investing activities 540 3,438 2,758
Cash flow from/ (used in) financing activities
Proceeds from bank loan - 1,686 1,474
Repayment of bank loans (911) (2,977) (5,215)
Sale of shares held in treasury - 119 57
Interest paid 3 (369) (188) (530)
Dividends paid - (277) (831)
Dividends paid to non-controlling interests (73) (36) (49)
Net cash flow (used in)/ from financing activities (1,353) (1,673) (5,094)
Net (decrease)/ increase in cash and cash equivalents (897) (470) 1,142
Cash and cash equivalents at the beginning of period 7,647 6,419 6,419
Currency translation gains/ (losses) on cash and cash equivalents (43) 28 86
Cash and cash equivalents at the end of the period 6,707 5,977 7,647
NOTES TO THE ACCOUNTS
for the six months ended 30 September 2023
1. Basis of Preparation
· These interim consolidated financial statements for the six months
ended 30 September 2023 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 2023 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 2023
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 23 November 2023.
2. Segmental Analysis
Segment reporting for the six months to 30 September 2023
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 - 2,030 - - 2,030
Service charge income - 673 - - 673
Asset management fees 1,263 - - - 1,263
Performance related fee income - - - - -
Total revenue 1,263 2,703 - - 3,966
Depreciation and amortisation (21) (13) - - (34)
Operating profit 158 558 - (899) (183)
Share of results in associates - - 517 - 517
Fair value adjustment to associate - - (816) - (816)
Investment income - - 114 - 114
Interest income - 95 - - 95
Interest expense - (379) - - (379)
Profit/ (loss) before tax 158 274 (185) (899) (652)
Analysed as:
Underlying profit/ (loss) before tax before adjusting for the following items: 96 39 631 (570) 196
Interest on loan to associates - 63 - - 63
Share option charge - - - (318) (318)
Fair value adjustment to associate - - (816) - (816)
Realised foreign currency (losses)/ gains 62 172 - (11) 223
Profit/ (loss) before tax 158 274 (185) (899) (652)
Revenue for the six months to 30 September 2023 from continuing operations
consists of revenue arising in the United Kingdom 18% (30 September 2022: 27%)
and Central and Eastern Europe 82% (30 September 2022: 73%) and all relates
solely to the Group's principal activities.
Direct costs incurred by First Property 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 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
Segment reporting for the year to 31 March 2023
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 - 3,614 - - 3,614
Service charge income - 1,115 - - 1,115
Asset management fees 2,892 - - - 2,892
Performance related fee income (372) - - - (372)
Total revenue 2,520 4,729 - - 7,249
Depreciation and amortisation (36) (24) - - (60)
Operating profit 120 3,069 - (1,185) 2,004
Share of results in associates - - 273 - 273
Fair value adjustment on associates - - (901) - (901)
Investment income - - 1,497 - 1,497
Interest income - 20 - 125 145
Interest expense - (530) - - (530)
Profit/ (loss) before tax 120 2,559 869 (1,060) 2,488
Analysed as:
Underlying profit/ (loss) before tax before adjusting for the following items: 513 752 273 (1,089) 449
Provision in respect of rent guarantee - 511 - - 511
Profit on the sale of investment properties - 1,779 - - 1,779
Interest received on loan to FOP - 125 - - 125
Fair value adjustment on associates FOP - - (901) - (901)
UK fund distributions following sale of properties - - 1,497 - 1,497
Performance related fee income 222 - - - 222
Clawback of Office income (594) - - - (594)
Staff incentives (44) (65) - - (109)
Realised foreign currency (losses)/ gains 23 (543) - 29 (491)
Total 120 2,559 869 (1,060) 2,488
Assets - Group 795 54,525 4,544 4,727 64,591
Share of net assets of associates - - 17,588 - 17,588
Liabilities (71) (36,574) - (59) (36,704)
Net assets 724 17,951 22,132 4,668 45,475
3. Interest Income/ (Expense)
Six months Six months Year
ended ended ended
30 Sep 2023 30 Sep 2022 31 Mar 2023
£'000 £'000 £'000
Interest income - bank deposits 22 - -
Interest income - other 73 75 145
Total interest income 95 75 145
Six months Six months Year
ended ended ended
30 Sep 2023 30 Sep 2022 31 Mar 2023
£'000 £'000 £'000
Interest expense - property loans (373) (180) (516)
Interest expense - bank and other (6) (8) (14)
Total interest expense (379) (188) (530)
4. Tax Expense
The tax charge is based on a combination of actual current and deferred tax
charged at an effective rate that is expected to apply to the profits for the
full year.
Six months Six months Year
ended ended ended
30 Sep 2023 30 Sep 2022 31 Mar 2023
£'000 £'000 £'000
Current tax (146) (204) (559)
Deferred tax (111) (93) 110
Total (257) (297) (449)
5. Earnings/ NAV Per Share
Six months Six months Year
ended ended ended
30 Sep 2023 30 Sep 2022 31 Mar 2023
Basic (loss)/ earnings per share (1.01p) 1.86p 1.73p
Diluted (loss)/ earnings per share (0.99p) 1.83p 1.70p
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.
£'000 £'000 £'000
Basic earnings per share (1,122) 2,065 1,919
Notional interest on share options assumed to be exercised 2 3 2
Diluted earnings assuming full dilution (1,120) 2,068 1,921
Number Number Number
Weighted average number of Ordinary Shares in issue 110,875,483 110,868,671 110,875,483
Number of Share options 2,110,000 2,110,000 2,110,000
Total number of Ordinary Shares used in the diluted earnings per Share 112,985,483 112,978,671 112,985,483
calculation
Six months Six months Year
ended ended ended
30 Sep 2023 30 Sep 2022 31 Mar 2023
(restated)
Net assets per share 37.56p 39.20p 39.18p
Adjusted net assets per share 43.56p 47.12p 46.50p
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 Sep 2023 30 Sep 2022 31 Mar 2023
(restated)
£'000 £'000 £'000
Net assets excluding non-controlling interest 41,650 43,468 43,442
For adjusted net assets per share £'000 £'000 £'000
Net assets excluding non-controlling interests 41,650 43,468 43,442
Investment properties at fair value net of deferred taxes 4,981 2,102 5,639
Inventories at fair value net of deferred taxes - 2,847 -
Investments in associates at fair value 2,269 4,506 3,139
Other items 323 323 324
Total 49,223 53,246 52,544
6. Investment Properties
Six months Year Six months
ended ended ended
30 Sep 2023 31 Mar 2023 30 Sep 2022
£'000 £'000 £'000
1 Apr 47,009 23,849 23,849
Reclassification of inventory - 19,795 -
Additions arising on consolidation - 7,621 -
Capital expenditure 315 1,017 81
Disposals - (6,459) (1,723)
Depreciation (134) (134) (14)
Foreign exchange translation (56) 1,320 646
Total at end of period 47,134 47,009 22,839
Investment properties owned by the Group are stated at cost less depreciation
and accumulated impairment losses.
7. Inventory - Land and Buildings
Six months Year Six months
ended ended ended
30 Sep 2023 31 Mar 2023 30 Sep 2022
£'000 £'000 £'000
1 Apr - 12,352 12,352
Purchase including acquisition costs - 7,443 7,443
Reclassified as investment property - (19,795) -
Capital expenditure - - 92
Disposals - - -
Depreciation - - (33)
Foreign exchange translation - - (132)
Total at end of period - - 19,722
During the year ended 31 March 2023 the Group acquired an additional 7,171
m(2) of office space in Blue Tower (an office block in Warsaw) for a
consideration of £7.20 million, which is payable in seven instalments over a
six-year period. Following this purchase, the Group's interest in Blue Tower
now represents 80.3% (2022: 48.2%) of the building. As a result of this
acquisition the Group reclassified the building from Inventory to Investment
Property.
8. Investments in associates and other financial investments
Six months ended Year Six months
30 Sep 2023 ended ended
31 Mar 2023 30 Sep 2022
£'000 £'000 £'000
a) Associates
Cost of investment at beginning of period 17,588 19,135 19,135
Additions - 606 757
Disposals - (1,349) -
Repayment of shareholder loan (233) (176) (175)
Share of associates profit/(loss) after tax 517 273 117
Share of associates revaluation gains (816) (901) -
Dividends received - - -
Cost of investment at end of period 17,056 17,588 19,834
The disposal in the year ended 31 March 2023 represents the Group gaining
control of 5PT. Following the purchase of additional shares in this company
the Group is now deemed to have control and has consolidated this fund into
the Group.
Six months ended Year Six months
30 Sep 2023 ended ended
31 Mar 2023 30 Sep 2022
£'000 £'000 £'000
Investments in associates
5th Property Trading Ltd - - 1,861
Fprop Galeria Corso Ltd 2,918 3,058 2,888
Fprop Krakow Ltd 1,181 1,154 1,578
Fprop Cluj Ltd 652 636 602
Fprop Phoenix Ltd - 61 478
Fprop Opportunities plc 12,305 12,679 12,735
17,056 17,588 20,142
Less: Group share of profit after tax withheld on sale of property to an - - (308)
associate in 2007
Cost of investment at end of period 17,056 17,588 19,834
Six months ended Year Six months
30 Sep 2023 ended ended
31 Mar 2023 30 Sep 2022
£'000 £'000 £'000
b) Other financial investments
Cost of investment at 1 Apr 4,544 7,445 7,445
Additions - 3 2
Repayments (434) (1,492) (907)
(Decrease) in fair value during the period (1,137) (1,412) (1,047)
Cost of investment at end of period 2,973 4,544 5,493
The Group holds four unlisted investments in funds managed by FPAM. 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.
9. Trade and Other Receivables
Six months ended Year Six months
30 Sep 2023 ended ended
31 Mar 2023 30 Sep 2022
£'000 £'000 £'000
Current assets
Trade receivables 2,534 1,130 1,168
Less provision for impairment of receivables (225) (242) (96)
Trade receivables net 2,309 888 1,072
Other receivables 1,852 1,820 3,587
Prepayments and accrued income 1,193 1,021 1,454
Total at end of period 5,354 3,729 6,113
10. Trade and Other Payables
Six months ended Year Six months
30 Sep 2023 ended ended
31 Mar 2023 30 Sep 2022
(restated)
£'000 £'000 £'000
Current liabilities
Trade payables 1,824 1,227 755
Other taxation and social security 239 254 277
Other payables and accruals 2,462 1,701 3,297
Deferred income 188 128 157
Total at end of period 4,713 3,310 4,486
11. Provisions
Six months ended Year Six months
30 Sep 2023 ended ended
31 Mar 2023 30 Sep 2022
£'000 £'000 £'000
Current liabilities 113 158 773
The provision at 30 September 2023 represents a rent guarantee of £0.11
million (31 March 2023: £0.16 million) and fit out costs of £Nil (31 March
2023: £Nil). 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.
12. Financial Liabilities
Six months ended Year Six months
30 Sep 2023 ended ended
31 Mar 2023 30 Sep 2022
£'000 £'000 £'000
Current liabilities
Bank loans 1,067 1,116 5,648
Total at end of period 1,067 1,116 5,648
Non-current liabilities
Bank loans 10,921 11,519 7,114
Total at end of period 10,921 11,519 7,114
Total obligations under financial liabilities
Repayable within one year 1,067 1,116 5,648
Repayable within one and five years 7,890 8,080 6,629
Repayable after five years 3,031 3,439 485
Total at end of period 11,988 12,635 12,762
Five bank loans (all denominated in Euros) totalling £11.99 million (31 March
2023: £12.64 million), included within financial liabilities, are secured
against investment properties owned by the Group. These bank loans are
otherwise non-recourse to the Group's assets.
The interest rate profile of the Group's financial liabilities at 30 September
2023 and 31 March 2023 was as follows:
Interest bearing Non- Total
interest
bearing
£'000 £'000 £'000
Financial liabilities 11,988 - 11,988
Other financial liabilities - 16,946 16,946
At 30 Sep 2023 11,988 16,946 28,934
Financial liabilities 12,635 - 12,635
Other financial liabilities - 17,021 17,021
At 31 Mar 2023 12,635 17,021 29,656
A one percentage point increase in interest rates would increase the annual
interest rate bill by £0.12 million per annum (31 March 2023: £0.13 million
per annum).
13. Other Financial Liabilities
Six months ended Year Six months
30 Sep 2023 ended ended
31 Mar 2023 30 Sep 2022
£'000 £'000 £'000
Current liabilities 12,286 939 907
Non-current liabilities 4,660 16,082 15,863
Total at end of period 16,946 17,021 16,770
Total obligations under financial liabilities
Repayable within one year 12,286 939 907
Repayable within one and five years 4,660 14,317 14,159
Repayable after five years - 1,765 1,704
Total at end of period 16,946 17,021 16,770
Other financial liabilities includes a balance within current liabilities of
€12.00 million which was a result of the restructuring of a finance lease
secured against the office tower in Gdynia. 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 liability.
Other financial liabilities also represents the Group's additional 32%
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, the first of which has been paid.
The interim results are being circulated to all shareholders and can be
downloaded from the company's web site - www.fprop.com (http://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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