REG - First Property Group - Preliminary results
23/06/2022 07:00
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RNS Number : 8755P First Property Group PLC 23 June 2022
On Behalf of: First Property Group plc ("First Property", the
"Company" or the "Group")
Embargoed: 0700hrs
First Property Group plc
Preliminary results for the twelve months to 31 March 2022
First Property Group plc (AIM: FPO), the property fund manager and investor
with operations in the United Kingdom and Central Europe, today announces its
preliminary results for the twelve months ended 31 March 2022.
Highlights:
· Profit before tax of £7.08 million (2021: loss before tax of
£5.09 million)
· Value of directly owned property at market value at 31 March
2022: £42.24 million (31 March 2021: £41.57 million)
· Net debt at 31 March 2022: £17.24 million (31 March 2021:
£18.85 million)
· Market value of shares owned by the Group in FPAM managed funds
(Investments and Associates) at 31 March 2022: £30.60 million (31 March 2021:
£27.47 million)
· Cash reserves at 31 March 2022: £6.42 million (31 March 2021:
£16.24 million)
· One new fund established during the year, Fprop Fulcrum Property
LP
· Third party AUM at 31 March 2022: £516.5 million (31 March 2021:
£527.2 million)
· Total AUM at 31 March 2022: £559 million (31 March 2021: £569
million)
· Weighted average unexpired fund management contract term at 31
March 2022: 3 years, 3 months (31 March 2021: 3 years, 11 months)
· Final dividend of £0.25 pence per share (2021: £nil)
Financial summary:
Unaudited Audited Percentage
year to year to change
31 March 2022 31 March 2021
Income Statement:
Statutory profit/(loss) before tax £7.08m (£5.09m) 239.1%
Diluted earnings per share 6.01p (6.59p) 191.2%
Total dividend per share 0.50p 0.45p 11.1%
Average €/£ exchange rate 1.1754 1.1246 -
Balance Sheet at year end:
Investment properties and inventories at book value £36.20m £34.95m 3.6%
Investment properties and inventories at market value £42.24m £41.57m 1.6%
Cash balances £6.42m £16.24m (60.5%)
Cash per share 5.81p 14.71p (60.5%)
Gross debt* £23.66m £35.09m (32.6%)
Net debt* £17.24m £18.85m (8.5%)
Gearing ratio at book value** 34.90% 48.82% -
Gearing ratio at market value*** 30.69% 42.05% -
Net assets at book value £44.14m £36.79m 20.0%
Net assets at market value. £53.43m £48.36m 10.5%
Adjusted net assets per share (EPRA basis) 47.28p 42.80p 10.5%
Year-end €/£ rate 1.1834 1.1739 -
* Debt comprises Financial Liabilities and Other Financial Liabilities and
excludes Lease Liabilities
**Gearing ratio = Gross debt excluding lease liabilities divided by gross
assets at book value.
***Gearing ratio = Gross debt excluding lease liabilities divided by gross
assets at market value.
Commenting on the results, Ben Habib, Chief Executive of First Property Group
plc, said:
"The year has seen a sharp turnaround in our fortunes, principally due to the
restructuring of a finance lease secured against a property owned by the Group
in Gdynia, Poland, which resulted in our debt liability being reduced by some
£7.8 million.
"Our balance sheet remains strong with some £44 million of net assets. Of
this some £6 million is in cash.
"The investment environment is volatile at present but with adversity comes
opportunity and we are seeing some interesting market movements. Occupational
demand is picking up from the lockdown induced lows which should result in a
commensurate increase in the value of our properties."
A briefing for analysts will be held at 10:30hrs 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
Company'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 Nehal (Equity Sales)
Newgate Communications (PR) Tel: + 44 7540106366
Robin Tozer / Richard Bicknell / 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 thirteen
funds which are invested across the United Kingdom, Poland and Romania.
· Group Properties - principal investments by the Group, to earn a
return on its own capital, usually in partnership with third parties.
Investments include seven directly held properties in Poland and Romania, and
non-controlling interests in eleven of the thirteen funds.
Quoted on AIM, the Company has offices in London, Warsaw and Bucharest. Around
one third of the shares in the Company are owned by management and their
families. Further information about the Company and its properties can be
found at: www.fprop.com (http://www.fprop.com) .
CHIEF EXECUTIVE'S STATEMENT
Financial performance
I am pleased to report the Company's preliminary results for the year ended 31
March 2022.
Revenue earned during the year by the Group was £8.65 million (31 March 2021:
£12.12 million) yielding a profit before tax of £7.08 million (31 March
2021: loss before tax of £5.09 million).
The reduction in revenue was mainly due to the expiry, in February 2021, of
the lease at our office block in Gdynia, Poland, which resulted in a £3.20
million reduction in rental income from this property in the year.
Paradoxically the increase in profit before tax largely came from the same
property, where a restructuring of the finance lease resulted in a reduction
of €9.0 million (£7.81 million) in the amount owed to the lending bank
(from €25.0 million to €16.0 million). As part of the transaction €4.0
million of this debt was settled by the Group, leaving a residual liability of
€12.0 million to be paid by June 2024 on which no interest is payable.
The Group ended the year with net assets, excluding non-controlling interests,
of £44.14 million (2021: £36.79 million), equating to 40.00 pence per share
(2021: 33.33 pence per share). It is the accounting policy of the Group to
carry its properties and interests in associates at the lower of cost or
market value.
The net assets of the Group, when adjusted to their market value less any
deferred tax liabilities (EPRA basis), was £53.43 million or 47.28 pence per
share (31 March 2021: £48.36 million or 42.80 pence per share).
Gross debt at the year end reduced by 32.6% to £23.66 million (31 March 2021:
£35.09 million). Net debt reduced to £17.24 million (31 March 2021: £18.85
million). This in turn reduced the Group's gearing ratio to 34.90% with
properties at their book value (31 March 2021: 48.82%) and to 30.69% with
properties at their market value (31 March 2021: 42.05%).
Group cash balances at the year-end stood at £6.42 million (31 March 2021:
£16.24 million, 31 March 2020: £7.34 million), equivalent to 5.81 pence per
share (31 March 2021: 14.71 pence per share, 31 March 2020: 6.65 pence per
share). The reduction was mainly attributable to the payment of £3.43 million
(€4 million) in part settlement of the debt secured on Gdynia and new
investments of £3.63 million in two UK funds, Fprop UK Special Opportunities
LP and Fprop Fulcrum Property LP. Other exceptional uses of cash included
£1.93 million in respect of a rent guarantee granted over CH8, an office
building in Warsaw, as a condition of its sale, and £1.76 million in capital
expenditure, mainly to develop a mini supermarket in Wawer, a suburb of
Warsaw.
Diluted net profit per share was 6.01 pence (2021: a diluted net loss of 6.59
pence).
Dividend
In view of the marked improvement in the Group's position since the Covid
lockdown induced set-back, the Directors have resolved to pay a final dividend
of 0.25 pence per share (2021: nil), which together with the interim dividend
of 0.25 pence per share (2021: 0.45 pence per share), equates to a dividend
for the year of 0.50 pence per share.
The proposed final dividend will be paid on 29 September 2022 to shareholders
on the register at 26 August 2022 and is subject to shareholder approval at
the forthcoming annual general meeting on 27 September 2022.
The full year's dividend is covered 12 times.
REVIEW OF OPERATIONS
PROPERTY FUND MANAGEMENT
Third party assets under management ended the year at £516.5 million (31
March 2021: £527.2 million). The decrease was attributable to sales of
properties valued at some £32.7 million offset by purchases of properties
worth some £10.0 million and an increase in the value of the remainder of the
portfolio of some £12.0 million.
One new fund was raised during the year, Fprop Fulcrum Property LP, which had
invested £10.0 million by year end, purchasing two properties in the UK. The
fund is open ended and further subscriptions and investments are expected.
Notices for redemptions may not be given before August 2024, with redemptions
taking place 12 months after any such notices are served.
During the year two other funds managed by FPAM sold, for £39.2 million,
eight properties in the UK which had been valued at £32.7 million.
One fund, Fprop Romanian Supermarkets Ltd, was closed during the year having
earned an internal rate of return over its seven-year life of 42% per annum.
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 annually, if necessary,
for any overpayments made in previous years up to a maximum of total past
cumulative payments received.
Revenue earned by this division increased by 19% to £4.04 million (2021:
£3.39 million), resulting in profit before unallocated central overheads and
tax increasing by 11% to £1.44 million (2021: £1.30 million). The increase
was primarily due to an increase in performance fees to £578,000 (2021:
£40,000) in the form of profit share earned from Fprop Offices LP.
At the year end fund management fee income, excluding performance fees and the
profit share from Fprop Offices LP, was being earned at an annualised rate of
£2.66 million (31 March 2021: £2.90 million).
The weighted average unexpired fund management contract term at the year-end
was 3 years, 3 months (31 March 2021: 3 years, 11 months).
The reconciliation of movement in third party funds under management during
the year is shown below:
Funds managed for third parties (including funds in which the Group is a
minority shareholder)
UK CEE Total No. of properties
£m £m £m
As at 1 April 2021 349.8 177.4 527.2 68
Purchases 10.0 - 10.0 2
Property sales (32.7) - (32.7) (8)
Capital expenditure 3.3 2.2 5.5 -
Property revaluation 15.1 (7.3) 7.8 -
FX revaluation - (1.3) (1.3) -
As at 31 March 2022 345.5 171.0 516.5 62
An overview of the value of assets and maturity of each of the funds 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
31 March 2022 31 March 2021
£m. £m.
SAM & DHOW UK Rolling * * * *
5PT Poland Dec 2022 7.7 3 1.5 7.7
OFFICES UK Jun 2024 136.4 5 26.4 133.5
SIPS UK Jan 2025 140.6 24 27.2 134.3
FOP Poland Oct 2025 64.5 5 12.5 61.6
FRS Romania Jan 2026 ** ** ** **
FGC Poland Mar 2026 21.3 1 4.1 21.1
UK PPP UK Jan 2027 41.5 12 8.0 64.8
SPEC OPPS UK Jan 2027 17.0 4 3.3 17.2
FKR Poland Mar 2027 19.4 1 3.8 20.7
FCL Romania Jun 2028 8.5 1 1.7 8.7
FPL Poland Jun 2028 49.6 4 9.6 57.6
FULCRUM UK Indefinite 10.0 2 1.9 -
Total Third-Party AUM 516.5 62 100.0 527.2
* Not subject to recent revaluation.
** Fund closed during the year and in the process of being liquidated.
The sub sector weightings of investments by funds is set out in the table
below:
UK Poland Romania Total % of Total
£m. £m. £m. £m.
Offices 204.2 93.2 8.6 306.0 59.2
Retail warehousing 93.3 - - 93.3 18.1
Supermarkets 48.0 17.9 - 65.9 12.8
Shopping centres - 51.3 - 51.3 9.9
Industrial - - - - -
Total 345.5 162.4 8.6 516.5 100.0
% of Total Third-Party AUM 66.9% 31.4% 1.7% 100.0%
GROUP PROPERTIES
Group Properties comprised seven directly owned commercial properties in
Poland and Romania valued at £42.24 million (31 March 2021: seven valued at
£41.57 million) and interests in eleven of the thirteen funds (classified as
Associates and Investments) in which the Group's share is valued at £30.60
million (31 March 2021: £27.47 million).
The contribution to Group profit before tax and unallocated central overheads
from this division was £8.60 million (2021: loss £5.14 million) representing
85.70% of Group profit before unallocated central overheads and tax. The
increase was mainly driven by the restructuring of the finance lease secured
against our office property in Gdynia, Poland, which resulted in the amount
owed reducing by €9.00 million (£7.81 million), as previously
described.
1. Directly owned Group Properties (all accounted for under the cost
model):
Two of the Group's seven directly owned properties account for 68% by market
value (£28.84 million) of their total value. Both are office buildings in
Poland of which one is in Warsaw (11,000 m(2)) and the other in Gdynia (13,500
m(2)). The other five properties, representing 32% by market value (£13.40
million), comprise three mini-supermarkets in Poland (one recently developed),
an office block in Bucharest and a warehouse in Tureni, Romania.
Country Sector No. of properties as at 31 March 2022 Book value as at 31 March 2022 Market value as at 31 March 2022 No. of properties as at 31 March 2021 Market value as at 31 March 2021 *Contribution to Group profit before tax *Contribution to Group
31 March 2022 profit before tax
31 March 2021
£m. £m. £m. £m. £m.
Poland Offices 2 25.87 28.84 2 29.46 **8.14 (4.59)
Poland Supermarkets 3 6.42 7.47 3 5.85 ***0.20 0.12
Romania Office and logistics 2 3.92 5.93 2 6.26 0.37 0.32
Total 7 36.21 42.24 7 41.57 8.71 (4.15)
*Prior to the deduction of direct overhead and unallocated central overhead
expenses.
**Includes €9.00 million (£7.81 million) debt reduction following
restructuring of the finance lease at Gdynia.
***Of which two are let and the third is being redeveloped, scheduled for
completion in FY2023.
The seven directly owned properties generated a profit before unallocated
central overheads and tax of £7.48 million (31 March 2021: loss of £5.80
million). The increase was almost entirely attributable to the restructuring
of the finance lease secured against the office block in Gdynia, as already
described. This debt restructuring is the main explanation for the reduction
in Group debt by 33% to £23.66 million (31 March 2021: £35.09 million. The
loans secured against the seven properties are held in separate non-recourse
special purpose vehicles.
Interest costs on the Group's debt amounted to £0.33 million (2021: £0.74
million) in the year. This equates to an average borrowing cost of 1.39% per
annum when expressed as a percentage of total outstanding Group debt of
£23.66 million, or 2.44% if the deferred consideration of €12.00 million
(£10.14 million) in respect of the Group property in Gdynia, on which no
interest is payable, is excluded.
Of the Group's interest-bearing loans, the interest rate is fixed on 25%
(2021: 27%) and is floating on the balance of 75% (2021: 73%). 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
£0.10 million per annum (2021: £0.31 million). The fixed rate loans expire
in 2025 (£2.79 million) and 2029 (£0.62 million).
31 March 2022 31 March 2021
£m. £m.
Book value of directly owned properties 36.21 34.95
Market value of directly owned properties 42.24 41.57
Gross debt (all non-recourse to Group) 23.66 35.09
LTV at book value 65.34% 100.41%
LTV at market value 56.01% 84.41%
Weighted average borrowing cost 1.39% 1.60%
The average vacancy rate across all seven properties is 35%. If the office
property in Gdynia were to be excluded, due to its high level of vacancy, the
vacancy rate would reduce to 5%. As announced on 13 May 2022, the property in
Gdynia is now 20% let and we expect the new main tenant, the District Court in
Gdynia, to attract other tenants to the building.
The weighted average unexpired lease term (WAULT) as at 31 March 2022 was 5
years, 7 months (2021: 4 years, 9 months).
2. Associates and Investments
These comprise non-controlling interests in eleven of the thirteen funds
managed by FPAM and are valued at £30.60 million (31 March 2021: £27.47
million). Of these, seven are accounted for as Associates and held at the
lower of cost or fair value (the "cost model"), and four are accounted for as
Investments in funds and held at fair value.
The contribution to Group profit before tax and unallocated central overheads
from its seven Associates and four Investments increased by 71% to £1.12
million (31 March 2021: £0.66 million) mainly due to an increase in the value
of the Group's 44% share in Fprop Opportunities plc (FOP).
Fprop Phoenix Ltd made a loss after tax of which the Group's share amounted to
£0.62 million (2021: loss of £0.38 million). This is a turnaround investment
which has been impacted by a combination of lockdowns and corresponding
working from home, together with a near 50% increase in the supply of office
space in Krakow since we first acquired the park out of administration in
2017. We have done much to improve the asset during our ownership: we have
resolved legacy legal issues including obtaining clean title over parts which
were deficient and upgraded the rental proposition to include first class
amenities such as a creche, kindergarten, gym, sports ground, BBQ area and
conference centre, amongst other things. However, it is 80% vacant and with a
16% office vacancy rate in Krakow, we expect it will take some time to lease
up. We do however expect this investment to generate substantial profits in
due course.
An overview of the Group's Associates and Investments is set out in the table
below:
Fund % owned by Book value of First Property's share in Current market value of holdings Group's share Group's share
First Property fund of post-tax profits earned by fund of post-tax profits earned by fund
Group 31 March 2022 31 March 2021
% £'000 £'000 £'000 £'000
a) Associates
5PT 40.6 1,344 1,344 97 119
FRS 24.1 - - 47 50
FOP 43.8 11,983 11.983 1,044 256
FGC 28.2 2,700 2.826 221 179
FKR 18.1 1,580 1,580 (12) 166
FPL 23.4 913 4,619 (617) (378)
FCL 17.4 615 798 67 78
Sub Total 19,135 23,150 847 470
b) Investments
UK PPP 0.9 431 431 100 54
FULCRUM 2.5 262 262 - -
SPEC OPPS 11.1 4,754 4,754 23 34
OFFICES 1.6 1,998 1,998 148 97
Sub Total 7,445 7,445 271 185
Total 26,580 30,595 1,118 655
Commercial Property Markets Outlook
Poland:
GDP is expected to grow by 4% in 2022. The annual rate of inflation reached
13.9% in May but is expected to moderate to around 6% in 2023. The National
Bank of Poland has led interest rate rises in Europe, with its benchmark
reference rate now standing at 6.0%. It has also indicated that it is closer
to the end of its interest rate raising cycle than the beginning, 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 forcing rents to rise.
Rental values in Poland are contractually mostly linked to Eurozone inflation,
which also offers protection from inflation as long as the economy remains
buoyant.
Prime commercial yields generally range from 5-6% but may soften as interest
rates rise.
United Kingdom:
The UK is forecast to fall into recession. Inflation is running at over 10%
per annum. The Bank of England base interest rate is still low at 1.25%,
having risen from 0.1% in December 2021. Further increases in interest rates
are expected. The yield curve currently flattens out at just under 3%.
Investor demand for commercial property polarised during the lockdown induced
lows, between those sectors which benefit from online trading and could
operate during lockdowns, such as logistics and essential retailers, and other
sectors such as offices, hotels and non-essential retailers which depend on
physical trading. The disparity in valuations between sectors is still wide.
The values of offices have been adversely impacted by changing working habits.
However, the supply of offices has also reduced due to conversions to
alternative uses and a substantial increase in building costs. Any increase in
tenant demand should therefore result in rental growth.
Current Trading and Prospects
The year has seen a sharp turnaround in our fortunes, principally due to the
restructuring of a finance lease secured against a property owned by the Group
in Gdynia, Poland, which resulted in our debt liability being reduced by some
£7.8 million.
Our balance sheet remains strong with some £44 million of net assets. Of this
some £6 million is in cash.
The investment environment is volatile at present but with adversity comes
opportunity and we are seeing some interesting market movements. Occupational
demand is picking up from the lockdown induced lows which should result in a
commensurate increase in the value of our properties.
Ben Habib
Chief Executive
23 June 2022
FINANCE DIRECTOR'S REVIEW
Profit before tax for the year was £7.08 million (2021: loss before tax
£5.09 million).
The results were dominated by an exceptional gain of €9.00 million (£7.81
million) from the restructuring in June 2021 of the finance lease secured
against the Group's office block in Gdynia, Poland. The loss in the prior year
was mainly due to the recognition of an impairment of £7.02 million in the
value of this property following the expiry of the lease to its sole tenant.
The contribution from Associates and Investments increased to £1.12 million
(2021: £0.65 million). The explanation for this increase is in the 'Share of
results in associates' section below.
Group net assets excluding non-controlling interests increased by 20.0% to
£44.14 million (31 March 2021: £36.79 million) mainly due to the reduction
in borrowings which resulted from the restructuring of the finance lease at
Gdynia.
Gross debt excluding IFRS 16 lease liabilities reduced to £23.66 million (31
March 2021: £35.09 million) mainly due to the restructuring of the finance
lease at Gdynia. Of this £10.14 million is deferred consideration on which no
interest is payable. Net debt excluding IFRS 16 lease liabilities reduced to
£17.24 million (31 March 2021: £18.85 million).
GOING CONCERN
Information on our approach and the result of our assessment is included in
note 1 of the Financial Statements.
INCOME STATEMENT
A review of the operating and financial performance of the two trading
divisions are included in the Chief Executive's Statement.
Revenue and Gross Profit
Revenue for the year reduced by £3.47 million or 29% to £8.65 million (2021:
£12.12 million) mainly due to the expiry in February 2021 of the sole lease
at the Group's office block in Gdynia. The contribution to rental income from
this property reduced by £3.20 million in the year.
Gross profit (revenue less the cost of sales) reduced by £2.27 million or
28.4% to £5.72 million (2021: £7.99 million) due mainly to the property in
Gdynia making a loss of £0.56 million (2021: profit £2.85 million).
Performance fee income
Performance fees totalled £0.56 million (2021: £0.04 million) and were
entirely attributable to Fprop Offices LP (2021: £nil). Accumulated income in
respect of this fund amounts to £1.97 million (2021: £1.38 million), all of
which is subject to clawback in the event of losses by the Limited
Partnership.
Operating expenses
Operating expenses increased by £0.10 million or 1% to £7.46 million (2021:
£7.36 million).
Share of results in associates
The contribution from the Group's seven associates amounted to £0.85 million
(2021: £0.47 million). The increase was mainly attributable to the Group's
44% share in Fprop Opportunities plc (FOP), which benefitted from an increase
of £0.91 million in the fair value of the Group's interest (2021: decreased
by £2.99 million).
Fprop Phoenix Ltd, in which the Group owns 23.4%, made a loss after tax of
which the Group's share amounted to £0.62 million (2021: loss of £0.38
million).
Investment income (from other financial assets and investments)
Investment income from the Group's four investments in four (of the five) UK
funds managed by FPAM increased by 42% to £0.27 million. (2021: £0.19
million).
Financing costs
Finance costs reduced to £0.33 million (2021: £0.74 million) mainly due to
lower Group debt following restructuring of the financing of the property in
Gdynia. All bank loans are denominated in Euros and all are used to finance
properties valued in Euros.
Current tax
The current tax charged reduced marginally to £0.17 million (2021: £0.18
million).
The charge includes Polish and Romanian corporation tax where headline rates
remain at 19% and 16% respectively.
STATEMENT OF FINANCIAL POSITION
Investment Properties and Property held as Inventory (all held using the cost
model)
The Group has adopted the "cost model" of valuation whereby investment
properties are accounted for at the lower of cost less accumulated
depreciation and impairments or fair market value.
The book value of the Group's seven directly owned properties at the year-end
was £36.20 million (31 March 2021: £34.95 million). Their fair market value
was £42.24 million (31 March 2021: £41.57 million).
Capital expenditure incurred on the Group's seven directly owned properties
amounted to £1.76 million (2021: £0.37 million).
Foreign exchange revaluations amounted to £0.32 million (2021: £2.52
million).
Borrowings
Bank and other borrowings reduced to £23.66 million (31 March 2021: £35.09
million) mainly due to the restructuring of a debt secured on our property in
Gdynia, whereby a payment of €16.00 million was agreed to be made in final
settlement of the debt of €25.00 million. Of this €4.00 million was paid
during the year and the remaining €12.00 million was deferred, interest
free, for payment by June 2024. The €9.00 million reduction in the face
value of the loan from €25.00 million down to €16.00 million was credited
to the Income Statement.
The ratio of debt to gross assets at their market value (the gearing ratio)
reduced to 30.69% (31 March 2021: 42.05%).
All bank loans are denominated in Euros and are non-recourse to the Group's
assets.
Deposits of €0.65 million (31 March 2021: €0.75million) are held by
lending banks in respect of four bank loans (31 March 2021: five) as security
for Debt Service Cover Ratio (DSCR) covenants, of which €62,000 (31 March
2021: €98,000) are accounted for as prepayments.
Trade and Other Receivables
Trade and other receivables decreased by 16% to £4.33 million (31 March 2021:
£5.15 million) due to a reduction in a tenant deposit at the property in
Gdynia, following the expiry of the lease to its former tenant.
Provisions
Provisions decreased to £0.92 million (31 March 2021: £2.08 million) and are
entirely in respect of the guaranteed space at CH8, Warsaw. Payments of £1.93
million in respect of fit out and rent guarantee costs were made in the year.
The reduction in the provision is due to some 73% of the office space which is
subject to the guarantee having been leased, as announced by RNS on 23
September 2021. The provision represents our best estimate of the Group's
remaining liability over the life of the rent guarantee (until April 2025).
Non-controlling Interests
The value of the Group's two non-controlling interests (10% of the share
capital of Corp Sp. z o. o., the property management company to Blue Tower,
Warsaw, and 23% of the share capital of E and S Estates Ltd, a fund invested
in three properties in Poland) increased to £0.23 million (31 March 2021:
£0.20 million).
Investment Revaluation Reserve
The investment revaluation reserve increased by £1.04 million to £0.68
million (2021: decreased by £0.36 million) mainly due to an increase of
£0.90 million in the value of the Group's investment in Fprop UK Special
Opportunities LP. In addition, the value of the Group's share in the other
investments increased by £0.14 million of which the largest increase is in UK
PPP LP, which increased by £0.10 million.
Foreign Exchange Translation Reserve
A weakening of the Polish Zloty against Sterling to PLN/ GBP 5.4868 (31 March
2021: PLN/ GBP 5.4443) resulted in the deficit in the foreign exchange
translation reserve increasing to £3.30 million (31 March 2021: £3.11
million).
CASH and CASH FLOW
The Group's cash balance reduced to £6.42 million (31 March 2021: £16.24
million: 31 March 2020 £7.34 million) mainly as a result of investing and
financing activities.
Net cash flow by activity in the year was:
· Operating activities: -£1.44 million (2021: £38.73 million)
· Investing activities: -£4.27 million (2021: £1.05 million)
· Financing activities: -£4.08 million (2021: -£30.66 million)
· Currency translation: loss of -£0.03 million (2021: loss of
-£0.21 million)
· Net cash flow: -£9.82 million (2021: £8.91 million)
The significant cash outflows in the year were:
· £3.63 million: Investment in two UK funds (Fprop Special
Opportunities LP and Fprop Fulcrum Property LP).
· £3.43 million (€4 million): Debt restructuring at Group
property in Gdynia;
· £1.76 million: Capital expenditure, mainly at one of the Group's
mini supermarkets held in the consolidated entity, E and S Estates Sp. z o.o.;
· £1.30 million: Scheduled bank loan repayments;
· £0.28 million: Interim dividend.
Significant cash inflows in the year included:
· £1.29 million: Refinancing of the bank loan secured against the
Group's two directly owned properties in Romania;
· £1.08 million: Partial repayment of shareholder loan by FOP and
payment of corresponding interest;
Laura James
Group Finance Director
CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2022
Year ended Year ended
31 March 2022 31 March 2021
Notes Total results Total results
£'000 £'000
Revenue 2 8,645 12,119
Cost of sales (2,928) (4,128)
Gross profit 5,717 7,991
Debt reduction following restructuring of finance lease 3 7,809 -
Profit on sale of an investment property - 161
Recycled foreign exchange gain - 1,163
Impairment loss to an investment property 7 - (7,023)
Operating expenses (7,464) (7,363)
Operating profit/ (loss) 6,062 (5,071)
Share of associates' (loss)/profit after tax 9 (29) 3,467
Share of associates' revaluation gains/ (losses) 9 876 (2,997)
Investment income 271 185
Interest income 4 230 67
Interest expense 4 (330) (740)
Profit/ (loss) before tax 7,080 (5,089)
Tax charge 5 (245) (2,312)
Profit/ (loss) for the year 6,835 (7,401)
Attributable to:
Owners of the parent 6,779 (7,449)
Non-controlling interests 56 48
6,835 (7,401)
Earnings/ (loss) per share:
Basic 6 6.14p (6.75p)
Diluted 6 6.01p (6.59p)
All operations are continuing.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2022
Year ended Year ended
31 March 2022 31 March 2021 Total results
Total results
£'000 £'000
Profit/ (loss) for the year 6,835 (7,401)
Other comprehensive income
Items that may subsequently be reclassified to profit or loss
Exchange differences on retranslation of foreign subsidiaries (189) (685)
Foreign exchange profit recycled to the Income Statement - (1,163)
Net profit/ (loss) on financial assets at fair value through other 1,039 (119)
comprehensive income
Taxation - -
Total comprehensive income for the year 7,685 (9,368)
Total comprehensive income for the year attributable to:
Owners of the parent 7,623 (9,440)
Non-controlling interests 62 72
7,685 (9,368)
All operations are continuing.
STATEMENT OF FINANCIAL POSITION
First Property Group plc
Registered No. 02967020
As at 31 March 2022
2022 2021
Notes Group Group
£'000 £'000
Non-current assets
Investment properties 7 23,849 22,456
Right of use assets 8 1,018 686
Property, plant and equipment 128 157
Investment in Group undertakings - -
Investment in associates 9 19,135 18,577
Other financial assets at fair value through OCI 9 7,445 3,061
Other receivables 13 95 487
Goodwill 10 153 153
Deferred tax assets 11 1,599 1,518
Total non-current assets 53,422 47,095
Current assets
Inventories - land and buildings 12 12,352 12,494
Current tax assets 14 296
Right of use assets 8 446 -
Trade and other receivables 13 4,329 5,149
Cash and cash equivalents 6,419 16,244
Total current assets 23,560 34,183
Current liabilities
Trade and other payables 14 (3,388) (3,447)
Provisions 15 (922) (2,076)
Lease Liabilities 8 (410) -
Financial liabilities 16 (4,212) (22,637)
Current tax liabilities (20) (12)
Total current liabilities (8,952) (28,172)
Net current assets 14,608 6,011
Total assets less current liabilities 68,030 53,106
Non-current liabilities
Financial liabilities 16 (9,309) (12,457)
Other financial liabilities 17 (10,141) -
Lease Liabilities 8 (1,098) (686)
Deferred tax liabilities 11 (3,112) (2,974)
Net assets 44,370 36,989
Equity
Called up share capital 1,166 1,166
Share premium 5,791 5,791
Share-based payment reserve 179 179
Foreign exchange translation reserve (3,297) (3,108)
Purchase of own shares reserve (2,653) (2,653)
Investment revaluation reserve 684 (355)
Retained earnings 42,271 35,768
Equity attributable to the owners of the parent 44,141 36,788
Non-controlling interests 229 201
Total equity 44,370 36,989
Net assets per share 6 40.00p 33.33p
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2022
Group Share capital Share premium Share-based payment reserve Foreign exchange translation reserve Purchase of own shares Investment revaluation Retained earnings Non-controlling interests Total
reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 1,166 5,791 179 (3,108) (2,653) (355) 35,768 201 36,989
2021
Profit for the year - - - - - - 6,835 - 6,835
Net profit on financial assets at fair value through other comprehensive - - - - - 1,039 - - 1,039
income
Exchange differences arising on translation of foreign subsidiaries - - - (189) - - - 6 (183)
Foreign exchange profit recycled to the Income Statement - - - - - - - - -
Total comprehensive income - - - (189) - 1,039 6,835 6 7,691
Sale of treasury shares - - - - - - - - -
Purchase of treasury shares - - - - - - - - -
Exercise of Share Options - - - - - - - - -
Non-controlling interests - - - - - - (56) 56 -
Dividends - - - - - - (276) (34) (310)
paid
At 31 March 2022 1,166 5,791 179 (3,297) (2,653) 684 42,271 229 44,370
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2021
Group Share capital Share premium Share-based payment reserve Foreign exchange translation reserve Purchase of own shares Investment revaluation Retained earnings Non-controlling interests Total
reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 1,166 5,791 179 (1,260) (2,653) (236) 45,060 157 48,204
2020
Loss for the year - - - - - - (7,401) - (7,401)
Net (loss) on financial assets at fair value through other comprehensive - - - - - (119) - - (119)
income
Exchange differences arising on translation of foreign subsidiaries - - - (685) - - - 24 (661)
Foreign exchange profit recycled to the Income Statement - - - (1,163) - - - - (1,163)
Total comprehensive income - - - (1,848) - (119) (7,401) 24 (9,344)
Sale of treasury shares - - - - - - - - -
Purchase of treasury shares - - - - - - - - -
Exercise of Share Options - - - - - - - - -
Non-controlling interests - - - - - - (48) 48 -
Dividends - - - - - - (1,843) (28) (1,871)
paid
At 31 March 2021 1,166 5,791 179 (3,108) (2,653) (355) 35,768 201 36,989
Foreign Exchange Translation Reserve
The translation reserve comprises all foreign exchange differences arising
from the translation of the financial statements of foreign Group companies.
This reserve is non distributable.
Share Based Payment Reserve
The Group grants certain of its employees' rights to its equity instruments as
part of its share-based payment incentive plans. The value of these rights has
been charged to the Income Statement and has been credited to the share-based
payment reserve (which is a distributable reserve).
Purchase of Own Ordinary Shares
The cost of the Company's Ordinary Shares purchased by the Company for
treasury purposes is held in this reserve. The reserve is non distributable.
Investment Revaluation Reserve
The change in fair value of the Group's financial assets measured at fair
value through Other Comprehensive Income is held in this reserve and is non
distributable.
CASH FLOW STATEMENTS
for the year ended 31 March 2022
2022 2021
Notes Group Group
£'000 £'000
Cash flows from operating activities
Operating profit/(loss) 6,062 (5,071)
Adjustments for:
Depreciation of investment property and property, plant & equipment 90 1,362
Debt reduction following restructuring of finance lease 3 (7,809) -
Profit on the sale of investment property - (161)
Loss on the sale of inventory - 217
Impairment loss on an investment property - 7,023
Decrease/(increase) in inventories 38 (129)
Decrease/ (increase) in trade and other receivables 1,208 38,858
(Decrease)/ increase in trade and other payables (1,213) (2,607)
Other non-cash adjustments 65 (126)
Cash generated from operations (1,559) 39,366
Taxes paid 118 (640)
Net cash flow from operating activities (1,441) 38,726
Cash flow (used in)/ from investing activities
Capital expenditure on investment properties 7 (1,642) (160)
Proceeds from partial disposal of financial assets held at fair value through - -
Other Comprehensive Income
Purchase of property, plant & equipment 2 (33) (134)
Proceeds from the sale of investment property - 1,505
Investment in shares of new associates - (605)
Investment in funds 9b) (3,633) -
Proceeds from funds 9b) 290 -
Proceeds from investments in associates 9a) 48 172
Interest received 187 67
Dividends from associates 9a) 241 24
Distributions received 266 179
Net cash flow (used in)/ from investing activities (4,276) 1,048
Cash flow (used in)/ from financing activities
Proceeds from bank loan 1,289 -
Repayment of bank loans (1,297) (25,077)
Repayment of finance lease (3,434) (2,970)
Sale of shares held in treasury - -
Purchase of new treasury shares - -
Exercise of share options - -
Interest paid 4 (330) (740)
Dividends paid (276) (1,843)
Dividends paid to non-controlling interests (34) (28)
Net cash flow (used in)/ from financing activities (4,082) (30,658)
Net (decrease)/increase in cash and cash equivalents (9,799) 9,116
Cash and cash equivalents at the beginning of the year 16,244 7,337
Currency translation (losses) on cash and cash equivalents (26) (209)
Cash and cash equivalents at the year end 6,419 16,244
Basis of Preparation
These preliminary financial statements have not been audited and are derived
from the statutory accounts within the meaning of section 434 of the Companies
Act 2006. They have been prepared in accordance with the Group's accounting
policies that will be applied in the Group's annual financial statements for
the year ended 31 March 2022. The policies have been consistently applied to
all years presented unless otherwise stated below. These accounting policies
are drawn up in accordance with UK-adopted International Accounting Standards
('IFRS'). Whilst the financial information included in this preliminary
statement has been prepared in accordance with IFRS, this announcement does
not itself contain sufficient information to fully comply with IFRS. The
comparative figures for the financial year ended 31 March 2021 are not the
statutory accounts for the financial year but are derived from those accounts
prepared under IFRS which have been reported on by the Group's auditors and
delivered to the Registrar of Companies. The report of the auditors was
unqualified, did not include references to any matter to which the auditors
drew attention by way of emphasis without qualifying their report and did not
contain a statement under section 498 (2) or (3) of the Companies Act 2006.
Going Concern
In a financial year impacted by COVID-19 and the economic adversity brought
about by governments' policy responses to it, the Directors have carried out
an analysis to support their view that the Group is a going concern and under
which basis these financial statements have been prepared.
Analysis and scenario testing, was carried out on the Group's main divisional
income streams, being asset management fees from the asset management
division, rental income from its seven directly owned group properties and
cash returns from its associates and investments.
a) Asset Management Fee Income
Asset management fee income is primarily derived from its UK funds (53%), four
of which are limited partnerships whose limited partners are a mix of pension
funds and registered charities.
With one exception, fees are invoiced monthly and are calculated based on a
percentage of the latest valuation, which for the UK funds is performed
quarterly. In the one fund from which fees are not levied by reference to the
properties valuation (Fprop Offices LP) a 7% decrease in property values in
this fund would trigger a clawback of a proportion of the fees received. A 27%
decrease would trigger the maximum clawback of fees recognised to date of
£1.97 million.
In the two UK funds with borrowing there is headroom of 14% on current
property values within the LTV covenant agreed with the lenders. The Directors
believe all funds have access to adequate resources to remedy the remote
possibility of any loan covenant breaches.
Asset management fees on the Group's Polish and Romanian managed funds are
also levied as a percentage of funds under management, with reference to the
most recent valuations, again with one exception where the fee is fixed (Fprop
Phoenix Ltd). These funds are set up under the ownership of a UK limited
company which in turn owns the company domiciled in the country that owns the
property. Each of these local companies has borrowing secured on the property
and is therefore ring fenced from the Group.
The longevity of this asset management fee income is determined by the fund's
life which is fixed by agreement when each fund is first established. The
weighted average unexpired fund management contract term is 3 years, 3 months.
b) Rental Income from Group Properties
All seven Group Properties are located in Poland or Romania. These properties
consist of three office blocks, a logistics warehouse, two mini-supermarkets
and one plot of land currently under development into a mini-supermarket. All
were independently valued on 31 March 2022 at £42.24 million (31 March 2021:
£41.57 million).
The rental income has been reviewed and evaluated and no significant falls in
collection rates are expected. The tenants are of good quality, as proven by
excellent cash collection rates through and after the lockdown periods. Any
renegotiation of rental payment terms that have been agreed are reflected in
the analysis. Exposure to non-food retailers is very limited.
The property in Gdynia, Poland, was 97% vacant at 31 March 2022. As at 23 June
2022 it was 20% let however it could be a couple of years before this property
again yields a significant income.
c) Income from Associates and Investments
Analysis was also conducted on the returns from the Group's investment in its
seven Associates. All funds invested in Poland and Romania have temporarily
suspended distributions to shareholders and consequently no income for the
Group was assumed from this source for the purposes of this test. All bank
loan covenants were reviewed and tested against future decreases in valuation
and net operating income.
Dividend income from the Group's UK investments was also stress tested and
found not to have a significant impact.
Going Concern Statement
Based on the results of the analysis conducted as outlined above the Board
believes that the Group has the ability to continue its business for at least
twelve months from the date of approval of the financial statements and
therefore has adopted the going concern basis in the preparation of this
financial information.
New Standards and Interpretations
These preliminary financial statements have not been audited and are derived
from the statutory accounts within the meaning of section 434 of the Companies
Act 2006. They have been prepared in accordance with the Group's accounting
policies that will be applied in the Group's annual financial statements for
the year ended 31 March 2022. On 31 December 2020, IFRS as adopted by the
European Union at that date was brought into UK law and became UK-adopted
International Accounting Standards, with future changes being subject to
endorsement by the UK Endorsement Board. The Group transitioned to UK-adopted
International Accounting Standards in its consolidated financial statements on
1 April 2022. This change constitutes a change in accounting framework
however, there is no impact on recognition, measurement or disclosure.
The financial statements have been prepared in accordance with UK-adopted
International Accounting Standards, (the 'applicable framework'), and have
been prepared in accordance with the provisions of the Companies Act 2006 (the
'applicable legal requirements'). The policies have been consistently applied
to all years presented unless otherwise stated below. Whilst the financial
information included in this preliminary statement has been prepared in
accordance with IFRS, this announcement does not itself contain sufficient
information to fully comply with IFRS. The comparative figures for the
financial year ended 31 March 2021 are not the statutory accounts for the
financial year but are derived from those accounts prepared under IFRS which
have been reported on by the Group's auditors and delivered to the Registrar
of Companies. The report of the auditors was unqualified, did not include
references to any matter to which the auditors drew attention by way of
emphasis without qualifying their report and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
New standards impacting the Group have been adopted in the preliminary
financial statements for the year ended 31 March 2022. These have given rise
to the following changes in the Group's accounting policies, which have not
had a material impact on the financial statements for the year ending 31 March
2022:
· IFRS 16 (amended) - Covid-19-related Rent Concessions;
· IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (amended) - Interest
Rate Benchmark Reform - Phase 2.
The Group has not adopted any new IFRSs that are issued but not yet effective
and it does not expect any of these changes to impact the group.
These preliminary financial statements were approved by the Board of Directors
on 22 June 2022.
1. Revenue
Revenue from continuing operations consists of revenue arising in the United
Kingdom 27% (2021: 20%), Poland 59% (2021: 71%) and Romania 14% (2021: 9%).
All revenue relates solely to the Group's principal activities.
2. Segment Reporting 2022
Fund Management Division Group Properties Division
Property fund management Group properties Associates and investments Unallocated central overheads Total
£'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 payable - (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)
Debt reduction following restructuring of finance lease - 7,809 - - 7,809
Interest received on loan to FOP @12% - 202 - - 202
Fair value adjustment on associates - - 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
Additions to non-current assets
Property, plant and equipment 5 28 33
Investment properties - 1,642 - - 1,642
Trading stock - 119 - - 119
Segment Reporting 2021
Fund Management Division Group Properties Division
Property fund management Group properties Associates and investments Unallocated central overheads Total
£'000 £'000 £'000 £'000 £'000
Rental income - 6,087 - - 6,087
Service charge income - 1,544 - - 1,544
Sale of a property held in inventory - 1,103 - - 1,103
Asset management fees 3,345 - - - 3,345
Performance related fee income 40 - - - 40
Total revenue 3,385 8,734 - - 12,119
Depreciation and amortisation (21) (1,425) - - (1,446)
Operating profit 1,304 (5,090) - (1,285) (5,071)
Share of results in associates - - 3,467 - 3,467
Fair value adjustment on associates - - (2,997) - (2,997)
Investment income - - 185 - 185
Interest income - 31 - 36 67
Interest payable - (740) - - (740)
Profit/(loss) before tax 1,304 (5,799) 655 (1,249) (5,089)
Analysed as:
Underlying profit/(loss) before tax before adjusting for the following items: 1,294 3,023 1,472 (1,213) 4,576
Provision in respect of rent guarantee - (1,030) - - (1,030)
Profit on the sale of a Group Property - 161 - - 161
Loss on the sale of a Group Property held in inventory - (217) - - (217)
Impairment to investment property - (7,023) - - (7,023)
One-off additional income from our share of an associate (FOP) - - 2,180 - 2,180
Fair value adjustment on associates (FOP) - - (2,997) - (2,997)
Recycled foreign exchange gain - 1,163 - - 1,163
Depreciation - (1,327) - - (1,327)
Performance related fee income 40 - - - 40
Staff incentives - - - - -
Realised foreign currency (losses)/gains (30) (549) - (36) (615)
Total 1,304 (5,799) 655 (1,249) (5,089)
Assets - Group 836 43,873 3,061 14,931 62,701
Share of net assets of associates - - 18,885 (308) 18,577
Liabilities (120) (44,001) - (168) (44,289)
Net assets 716 (128) 21,946 14,455 36,989
Additions to non-current assets
Property, plant and equipment 27 110 - - 137
Investment properties - 160 - - 160
Trading stock - 213 - - 213
3. Debt reduction following restructuring of finance
lease
The results 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 by June 2024. The deferred consideration is reflected as an Other
Financial Liability in the Statement of Financial Position.
4. Interest Income
2022 2021
Group Group
£'000 £'000
Interest income - bank deposits - 26
Interest income - other 230 41
Total interest income 230 67
2022 2021
Group Group
£'000 £'000
Interest expense - property loans (326) (467)
Interest expense - bank and other (4) (47)
Finance charges on finance leases - (226)
Total interest expense (330) (740)
5. Tax Expense
2022 2021
Group Group
£'000 £'000
Analysis of tax charge for the year
Current tax (172) (179)
Deferred tax (73) (2,133)
Total tax charge for the year (245) (2,312)
The tax charge includes current and deferred tax for continuing operations.
The deferred tax charge in 2021 arose mainly as a result of the reversal of a
previously recognised deferred tax asset following the repayment of the bank
loan secured against the property CH8 in April 2020.
As in prior years, brought forward and current UK tax losses have not been
recognised as a deferred tax asset due to insufficient foreseeable taxable
income being earned in the UK.
6. Earnings/NAV per Share
2022 2021
Basic earnings per share 6.14p (6.75p)
Diluted earnings per share 6.01p (6.59p)
The following earnings have been used to calculate both the basic and diluted
earnings per share:
£'000 £'000
Basic earnings 6,779 (7,449)
Notional interest on share options assumed to be exercised 7 7
Diluted earnings assuming full dilution 6,786 (7,442)
The following numbers of shares have been used to calculate the basic and
diluted earnings per share and the net assets and adjusted net assets per
share:
2022 2021
Number Number
Weighted average number of Ordinary shares in issue 110,382,332 110,382,332
(used for basic earnings per share calculation)
Number of share options 2,610,000 2,610,000
Total number of Ordinary shares used in the diluted earnings per share 112,992,332 112,992,332
calculation
2022 2021
Net assets per share 40.00p 33.33p
Adjusted net assets per share 47.28p 42.80p
The following numbers have been used to calculate both the net assets and
adjusted net assets per share:
2022 2021
£'000 £'000
For net assets per share
Net assets excluding non-controlling interests 44,141 36,788
£'000 £'000
For adjusted net assets per share
Net assets excluding non-controlling interests 44,141 36,788
Investment properties at fair value net of deferred tax 2,486 2,663
Inventories at fair value net of deferred tax 2,403 2,701
Investments in associates and other financial investments 4,016 5,827
Other items 381 381
Total 53,427 48,360
7. Investment Properties
2022 2021
Group Group
£'000 £'000
Investment properties
At 1 April 22,456 32,537
Capital expenditure 1,642 160
Disposal - (241)
Depreciation (30) (1,327)
Impairment loss to an investment property - (7,023)
Foreign exchange translation (219) (1,650)
At 31 March 23,849 22,456
Investment properties owned by the Group are stated at cost less depreciation
and any accumulated impairment in value. The properties were valued at the
Group's financial year end at €31.85 million (31 March 2021: €30.22
million), the Sterling equivalent at closing foreign exchange rates being
£26.92 million (31 March 2021: £25.74 million).
In 2015 the Directors resolved to depreciate the value of the property in
Gdynia over the remaining term of the lease, (which expired in February 2021)
to reflect its residual value. No other property has been depreciated as their
respective estimated residual values are expected to be higher than their
carrying value.
An impairment in value of £7.02 million was recognised in 2021 in respect of
the property in Gdynia.
Amounts recognised in the income statement:
2022 2021
Group Group
£'000 £'000
Rental income from operating leases 2,926 6,087
i. Leasing arrangements where the group is a lessor:
2022 2021
Group Group
£'000 £'000
Minimum lease receipts under non-cancellable operating leases to be received:
Not later than one year 2,043 1,898
Later than one year and not later than five years 6,790 5,366
Later than five years 3,758 3,866
12,591 11,130
Investment properties and property held within stock are comprised of
commercial properties that are leased to third parties. The Group has
approximately 38 leases granted to its tenants. These vary depending on the
individual tenant and the respective property and demise but typically are let
for a term of five years. The weighted average lease length of the leases
granted was 5 years and 7 months (2021: 4 years and 9 months). No contingent
rents are charged.
8. Right of Use Assets and Lease Liabilities
This note provides information for leases where the group is a lessee. For
leases where the group is a lessor, see note 7.
The amounts recognised in the financial statements in relation to the leases
are as follows:
i. Amounts recognised in the balance sheet:
31 Mar 2022 31 Mar 2021
£'000 £'000
Right of use assets
Current 446 -
Non-current 1,018 686
31 Mar 2022 31 Mar 2021
£'000 £'000
Lease Liabilities
Current 410 -
Non-current 1,098 686
There was one addition of £754,000 (2021: £nil) to the right of use assets
and one addition to the lease liability of £767,999 (2021: £nil) during the
financial year.
ii. Amounts recognised in the Income Statement:
2022 2021
£'000 £'000
Depreciation/ Rent charge of right-of use-assets
Buildings 446 197
446 197
2022 2021
£'000 £'000
Interest expense
Buildings 186 20
186 20
iii. Summary of the groups leasing activity:
The Group has reviewed the terms of its leases and has identified:
The lease of the UK office on St. James's Street, London, SW1A 1HD which
commenced on 2 July 2020. A discount rate of 2.00% has been applied.
The lease by First Property Poland Sp. z o. o. (FPP), a subsidiary entity
leasing office space from 5th Property Trading Poland Sp. z o. o. (a related
party to the Group) which terminates on 31 March 2025. A discount rate of
2.75% has been applied representing its incremental borrowing rate.
The lease by First Property Poland Sp. z o. o. (FPP), a subsidiary entity
leasing office space from Lublin Zana (a related party to the Group) which
terminates on 31 December 2024
As at 31 March 2022 the Group has recognised a lease liability under IFRS 16
of £1.51 million (31 March 2021: £0.69 million) and a right of use asset of
£1.46 million (2021: £0.69 million). The net credit to the Income Statement
was £44,000. Rental contracts are typically made for fixed periods of six
months to four years but may have extension options.
9. Investment in Associates and Other Financial Assets
and Investments
The Group has the following investments:
2022 2021
Group Group
£'000 £'000
a) Associates
At 1 April 18,577 17,698
Additions - 605
Disposals - -
Shareholder loan repayments (48) (172)
Share of associates' profit (loss) after tax (29) 3,467
Share of associates' revaluation gains/ (losses) 876 (2,997)
Dividends received (241) (24)
At 31 March 19,135 18,577
The Group's investments in associated companies are accounted for under the
"cost model" under IAS40 whereby the Group's share is held at cost plus its
share of subsequent accumulated profits less dividends received. It comprises
the following:
2022 2021
Group Group
£'000 £'000
Investment in associates
5th Property Trading Ltd 1,652 1,555
Fprop Romanian Supermarkets Ltd - 194
Fprop Galeria Corso Ltd 2,700 2,479
Fprop Krakow Ltd 1,580 1,592
Fprop Cluj Ltd 615 596
Fprop Phoenix Ltd 913 1,530
Fprop Opportunities plc 11,983 10,939
19,443 18,885
Less: Share of profit after tax withheld on sale of property to 5th Property (308) (308)
Trading Ltd in 2007
19,135 18,577
If the Group had adopted the alternative "fair value" model for accounting for
investment properties, the carrying value of the investments in associates
would be £23.15 million (31 March 2021: £24.41 million).
The withheld profit figure of £0.31 million (2021: £0.31 million) represents
the removal of the percentage of intercompany profit resulting from the sale
of the property in 2007 to 5th Property Trading Ltd (an associate). The figure
will reduce when there is a reduction in First Property Group's stake in 5th
Property Trading Ltd.
2022 2021
Group Group
£'000 £'000
b) Other financial assets and investments
At 1 April 3,061 3,174
Additions 3,633 6
Disposals - -
Repayments (290) -
Increase/ (decrease) in fair value during the year 1,041 (119)
At 31 March 7,445 3,061
The Group holds four (2021: three) 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 be not
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.
During the year the Group invested £0.25 million in a new fund that was
established in association with Fulcrum Asset Management (Fprop Fulcrum
Property LP) and also increased its investment by £3.38 million in the Group
managed fund - Fprop UK Special Opportunities LP, increasing the Group's
equity stake to 11.1%.
10. Goodwill
2022 2021
Group Group
£'000 £'000
At 1 April 153 153
At 31 March 153 153
The Directors have conducted an annual impairment test and concluded that no
impairment was necessary because the estimated value in use was higher than
the value stated.
11. Deferred Tax
Deferred tax assets and liabilities are attributable to the following items:
2022 2022 2022 2021 2021 2021
Group net assets £'000 Group assets £'000 Group liabilities £'000 Group net assets £'000 Group assets £'000 Group liabilities £'000
Accrued interest payable 117 117 - (1,021) 118 (1,139)
Accrued income (4) - (4) (13) - (13)
Foreign bank loan (212) 203 (415) 899 902 (3)
Investment properties and inventories (1,476) 1,119 (2,595) (1,331) 427 (1,758)
Other temporary differences 62 160 (98) 10 71 (61)
At 31 March (1,513) 1,599 (3,112) (1,456) 1,518 (2,974)
12. Inventories - Land and Buildings
2022 2021
Group Group
£'000 £'000
Group properties for resale at cost
At 1 April 12,494 14,558
Capital expenditure 119 213
Disposal - (1,320)
Depreciation (157) (84)
Foreign exchange translation (104) (873)
At 31 March 12,352 12,494
The Group's total interest in Blue Tower (an office block in Warsaw) is 48.2%
of the building. The fair value of this interest is €18.13 million (£15.32
million) down from €18.58 million (£15.83 million) at 31 March 2021 but is
stated at cost as above.
The disposal in 2021 relates to the sale of another property related to Blue
Tower. Consideration of £1.10 million was received in respect of this sale
resulting in a loss on disposal of £0.22 million.
13. Trade and Other Receivables
2022 2021
Group Group
£'000 £'000
Current assets
Trade receivables 1,003 1,325
Less provision for impairment of receivables (73) (281)
Trade receivables net 930 1,044
Other receivables 2,299 3,408
Prepayments and accrued income 1,100 697
At 31 March 4,329 5,149
2022 2021
Group Group
Non-current assets £'000 £'000
Other receivables 95 487
Other receivables, under non-current assets, relates to the deferred
consideration from the sale of an investment property located in Romania. This
has been discounted to reflect its current value.
14. Trade and Other Payables
2022 2021
Group Group
£'000 £'000
Current liabilities
Trade payables 1,105 2,052
Other taxation and social security 313 557
Other payables and accruals 1,917 691
Deferred income 53 147
At 31 March 3,388 3,447
15. Provisions
2022 2021
Group Group
Current liabilities £'000 £'000
At 31 March 922 2,076
The provision at 31 March 2022 represents a rent guarantee of £0.52 million
(31 March 2021: £0.79 million) and fit-out costs of £0.40 million (31 March
2021: £1.29 million). These provisions are in respect of the rent guarantee
given as part of the sale of CH8 which completed in April 2020.
16. Financial Liabilities
2022 2021
Group Group
£'000 £'000
Current liabilities
Bank loan 4,212 1,194
Finance leases - 21,443
At 31 March 4,212 22,637
Non-current liabilities
Bank loans 9,309 12,457
Finance leases - -
At 31 March 9,309 12,457
2022 2021
Group Group
£'000 £'000
Total obligations under bank loans and finance leases
Repayable within one year 4,212 22,637
Repayable within one and five years 7,364 11,116
Repayable after five years 1,945 1,341
At 31 March 13,521 35,094
Four bank loans all denominated in Euros and totalling £13.52 million (31
March 2021: £35.09 million), included within financial liabilities, are
secured against investment properties owned by the Group and one property
owned by the Group shown under inventories. These bank loans and the finance
lease are otherwise non-recourse to the Group's assets.
During the year to 31 March 2022, terms were agreed with the Bank to
restructure the financing of Gdynia for a final repayment of €16.00 million,
of which €4.00 million was paid with the balance of €12.00 million due in
June 2024. This deferred consideration is shown as an Other Financial
Liability in the Statement of Financial Position.
The interest rate profile of the Group's financial liabilities at 31 March
2022 and 31 March 2021 was as follows:
Floating rate Fixed rate Non- Total
financial financial interest
liabilities liabilities bearing
£'000 £'000 £'000 £'000
Bank loans 10,109 3,412 - 13,521
Finance lease obligations - - - -
Other financial liabilities - - 10,141 10,141
At 31 March 2022 10,109 3,412 10,141 23,662
Bank loans 9,903 3,748 - 13,651
Finance lease obligations 21,443 - - 21,443
Other financial liabilities - - - -
At 31 March 2021 31,346 3,748 - 35,094
In order to mitigate potential interest rate increases, 57.3% of the loans are
interest free or we have fixed the interest rate of these interest-bearing
loans. A one percentage point increase in interest rates would increase the
annual interest bill on the floating rate loans by £0.10 million per annum
(2021: £0.31 million).
17. Other Financial Liabilities
2022 2021
Group Group
£'000 £'000
Non-current liabilities 10,141 -
This non-current liability represents the 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
repayable by June 2024. No interest is payable on this non-current liability.
The deferred consideration is reflected as an Other Financial Liability in the
Statement of Financial Position.
The preliminary 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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