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RNS
First Property Group PLC  -  FPO   

Preliminary Results

Released 07:00 08-Jun-2018

RNS Number : 7212Q
First Property Group PLC
08 June 2018
 

Date:                     8 June 2018                                     

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 2018

 

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 2018.

 

Financial Highlights:

 

·      Group profit before tax of £9.23 million (2017: £9.14 million);

·      Total assets under management up 31% to £626 million (2017: £477 million);

·      Third party assets under management up 45% to £454 million (2017: £313 million);

·      Adjusted NAV per share increased by 11% to 53.07 pence (2017: 47.64 pence);

·      Final dividend increased by 2.6% to 1.18 pence per share (2017: 1.15 pence per share).

 

Operational Highlight:

 

·      Investment performance ranked No.1 versus MSCI's Central & Eastern Europe (CEE) Benchmark over the twelve years to 31 December 2017.

 

 

Financial Summary:

 

 

Unaudited year to 31 March 2018

Audited year to

31 March 2017

Percentage

change

Income Statement:

Statutory profit before tax

£9.23m

£9.14m

+1.0%

Diluted earnings per share

5.70p

6.61p

-13.8%

Total dividend per share

1.60p

1.55p

+3.2%

Average £/€ rate

0.881

0.841

+4.8%

 

 

 

 

Balance Sheet at year end:

Net assets per share

40.29p

34.84p

+15.6%

Adjusted net assets per share (EPRA basis)

53.07p

47.64p

+11.4%

Cash balances

£15.32m

£15.95m

-3.9%

Year end £/€ rate

0.877

0.855

+2.6%

 

 

 

 

Group Direct Property Portfolio at year end:

(excludes the Group's non-controlling interests in nine other FPAM managed funds)

Group Properties at Book value

£147.80m

£143.52m

+3.0%

Group Properties at Market value

£171.34m

£164.48m

+4.2%

Gross debt (all non-recourse to Group)

£117.62m

£117.54m

-%

LTV %

68.65%

71.46%

-3.9%

 

 

 

 

 

Total Assets Under Management: 

£626m

£477m

+31.2%

United Kingdom

62.3%

51.4%

 

Poland

35.8%

45.4%

 

Romania

1.9%

3.2%

 

 

 

 

 

         

 

 

 

 

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

 

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

 

The growth of our fund management division continued apace with third party assets under management increasing by some 45%.

 

Both divisions are trading well and although we have had a significant vacancy in a Group property, Chalubinskiego 8 (previously known as Oxford Tower) in February 2018, we have already re-leased some 26% of this space and are experiencing healthy interest in the remaining space which we expect to re-let in due course.

 

We have a number of exciting opportunities both in the UK and Central Europe and we hope to report positively on these as the year unfolds."

 

 

A briefing for analysts will be held at 10:30hrs today at the headquarters of First Property Group plc, 32 St James's Street, London, SW1A 1HD. Participants can also attend by telephone on +44 (0)330 336 9104, passcode 084930. A copy of the accompanying investor presentation can be accessed simultaneously at http://www.fprop.com/media-news/presentations/. An audio recording of the call will subsequently be posted on the company website, www.fprop.com/audio/.

 

 

For further information please contact:

 

First Property Group plc  

Tel: +44 (20) 7340 0270

Ben Habib (Chief Executive Officer)

George Digby (Group Finance Director)

Jeremy Barkes (Director, Business Development)

www.fprop.com

investor.relations@fprop.com

 

 

Arden Partners (NOMAD & Broker)

Tel: + 44 (20) 7614 5900

Chris Hardie (Director, Corporate Finance)

Ben Cryer (Corporate Finance)

 

 

 

Redleaf Communications (PR)

Tel:+ 44 (20) 3757 6880

Elisabeth Cowell/ Fiona Norman

firstproperty@redleafpr.com

 

Notes to Investors and Editors:

 

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

 

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

 

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

 

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

 

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

 

 

 

 

CHIEF EXECUTIVE'S STATEMENT

               

Performance

 

I am pleased to report final results for the twelve months ended 31 March 2018.

 

Revenue earned by the Group increased to £25.46 million (2017: £23.66 million) contributing to a 1.0% increase in profit before tax of £9.23 million (2017: £9.14 million), a new record for the Group. The results benefitted from a stronger Euro which was, on average, 4.8% higher against Sterling at £0.881/ €1 (2017: £0.841/ €1) increasing profit before tax by some £435,000 million than if on a constant currency basis.

 

Diluted earnings per share decreased by 13.77% to 5.70 pence (2017: 6.61 pence). The decline is mainly due to the impact of a deferred tax credit in 2017 (of £608,000) compared to a deferred tax charge in the current year of £90,000.

 

The Group ended the year with reported net assets up 21.86% to £52.92 million (2017: £43.43 million). It is the accounting policy of the Group to carry its directly held 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, increased by 11.41% to £63.00 million (2017: £56.55 million).

 

Dividend

 

The Directors have resolved to increase the final dividend to 1.18 pence per share (2017: 1.15 pence per share), an increase of 2.60%, which together with the interim dividend of 0.42 pence per share (2017: 0.40 pence per share), equates to a dividend for the year of 1.60 pence per share (2017: 1.55 pence per share), an increase of 3.23%.

 

The proposed final dividend will be paid on 28 September 2018 to shareholders on the register at 24 August 2018, and is subject to shareholder approval at the forthcoming annual general meeting.

 

REVIEW OF OPERATIONS

 

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

 

As at 31 March 2018 aggregate assets under management stood at £626 million (2017: £477 million), an increase of 31% from the prior year. Of this, £454 million (2017: £313 million) was managed on behalf of third party clients, an increase of 45% from the prior year. A further £67 million of equity commitments is still available for investment in funds managed on behalf of third parties. 

 

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

 

 

Funds managed for third parties (including funds in which the Group is a minority shareholder)

 

Group Properties (including FOP)

 

Totals

 

UK

£m.

CEE

£m.

Total

£m.

No. of prop's

All CEE

£m.

No. of prop's

AUM

£m.

No. of prop's

As at 31

March 2017

245.3

67.7

313.0

63

164.5

10

477.5

73

Purchases:

 

 

 

 

 

 

 

 

 -Existing funds

34.0

-

34.0

5

-

-

34.0

5

 -New funds

114.4

-

114.4

4

-

-

114.4

4

Property sales

(11.4)

(3.7)

(15.1)

(4)

-

-

(15.1)

(4)

Capital expenditure

0.2

-

0.2

-

2.6

-

2.8

-

Property depreciation

-

-

-

-

(2.3)

-

(2.3)

-

Property revaluation

7.4

(1.3)

6.1

-

4.5

-

10.6

-

FX  revaluation

-

1.8

1.8

-

2.0

-

3.8

-

As at 31 March 2018

389.9

64.5

454.4

68

171.3

10

625.7

78

                         

 

Fund management fees are levied monthly by FPAM by reference to the value of funds under management excluding cash and cash commitments. The effect of any increase (or decrease) in fund management fee income associated with increased (or decreased) funds under management is not realised in full until the financial year following investment (or sale), because of the timing of draw down (or sale) during the year. In the case of Fprop Offices LP, the Group is entitled to a share of profits in lieu of fund management fees. Fprop Offices LP is still in its investment phase and with property purchase costs in the UK at 6.8% of the purchase price, insufficient profits were earned in the year to completely absorb these acquisition costs.

 

Revenue earned by this division amounted to £2.92 million (2017: £2.05 million), resulting in a profit before unallocated central overheads and tax of £1.00 million (2017: £404,000). The increase in revenue and profit earned by this division results from the growth in funds under management and the payment of a performance fee of £189,000 (2017: £Nil).

 

At the year end FPAM's fund management fee revenue, excluding performance fees, was being earned at an annualised rate of £2.60 million (2017: £2.45 million), an increase of some 6% from the prior year, a level that would have been higher if Fprop Offices LP had earned a performance fee. The corresponding weighted average unexpired fund management contract term at the year end was 6 years, 5 months (2017: 6 years, 5 months). We expect the contribution to Group profit from fund management to increase as we continue to invest fund management mandates.

 

First Property Asset Management Ltd (FPAM) now manages twelve (2017: eleven) property investment funds, following the establishment of one new fund during the year, Fprop Offices LP. A brief synopsis of the value of assets and maturity of each of these funds is set out below:

 

Fund

Country of investment

Fund expiry

Assets under management at market value at 31 March 2018

% of total assets under management

Assets under management at market value at 31 March 2017

 

 

 

£m.

 

£m.

SAM & DHOW

UK

Rolling

*

*

*

RPT & EAS

Poland

Aug  2020

5.31

0.85%

6.88

5PT

Poland

Dec  2022

7.63

1.22%

8.46

UK PPP

UK

Feb  2022

93.53

14.95%

93.13

PDR

UK

May 2018

-

-

-

SIPS

UK

Jan 2025

165.74

26.49%

152.15

FRS

Romania

Jan 2026

6.69

1.07%

10.08

FGC

Poland

Mar 2026

21.84

3.49%

20.66

SPEC OPPS

UK

Jan 2027

16.28

2.60%

-

FKR

Poland

Mar 2027

22.99

3.67%

21.64

OFFICES

UK

Jun 2024

114.35

18.28%

-

Sub Total

 

 

454.36

72.62%

313.00

 

 

 

 

 

 

FOP**

Poland

Oct  2020

74.46

11.90%

68.52

GRP PROPS

 

Poland & Romania

n/a

96.88

15.48%

95.96

Sub Total

 

 

171.34

27.38%

164.48

 

 

 

 

 

 

Total

 

 

625.70

100.00%

477.48

 

* Not subject to recent revaluation

** Fprop Opportunities plc, a fund which is invested in five commercial properties in Poland in which the Group is a 51.46% shareholder.

 

Independent Fund Performance Analysis:

 

Our investments in Poland and Romania once again ranked No.1 versus MSCI's Central & Eastern Europe (CEE) Benchmark, now for the twelve years from the commencement of our operations in Poland in 2005 to 31 December 2017.

 

 

 

GROUP PROPERTIES

 

Group Properties comprised ten (2017: ten) commercial properties held directly by the Group (including five held by FOP, in which the Group is a 51.46% shareholder), and non-controlling interests in nine of the twelve funds and joint ventures managed by FPAM, as set out in the tables below. It is the Group's accounting policy to carry its direct properties at the lower of cost or market value and its investments in associates at cost plus its share of post-acquisition profits/ (losses) less dividends paid.

 

1.     Directly held Properties (including five held by FOP) at 31 March 2018:

 

Property / Country

No. of properties

Book value

Market value

Contribution to Group profit before tax - year to
31 March 2018

Contribution to Group profit before tax - year to
31 March 2017

 

 

£m.

£m.

£m.

£m.

Poland

3

79.9

91.7

6.9

6.0

Romania

2

4.2

5.1

0.6

0.9

FOP (Poland)

5

63.7

74.5

3.4

3.4

Total

10

147.8

171.3

10.9

10.3

                   

 

 

2.     Non-controlling interests in funds and joint ventures managed by FPAM at 31 March 2018:

 

Fund

% owned by

First Property

Group

Book value of First Property's share in

fund

Current market value of holdings

Group's share

of pre-tax profits/(losses) earned by fund

31 March 2018

Group's share

of pre-tax profits earned by fund

31 March 2017

 

 

£'000

£'000

£'000

£'000

Interest in associates

5PT

37.8%

721

824

113

129

RPT

28.6%

105

105

(87)

45

EAS

27.0%

116

116

(6)

-

FRS

24.1%

624

782

539

125

FGC

28.2%

1,920

2,214

270

220

FKR

18.1%

1,239

1,695

121

-

Share of results in

associates

4,725

5,736

950

519

 

Investments

 

 

 

 

 

UKPPP

0.9%

887

887

63

60

PDR

4.9%

2

2

-

-

SPEC OPPS

4.0%

768

768

-

-

OFFICES

1.6%

1,960

1,960

-

-

KBP

-

900

900

-

-

Sub Total

 

4,517

4,517

63

60

 

Total

 

9,242

10,253

1,013

579

 

Revenue from Group Properties, including FOP, amounted to £22.54 million (2017: £21.62 million), generating a profit before unallocated central overheads and tax of £11.18 million (2017: £11.53 million). This represents 91.76% (2017: 96.61%) of Group profit before unallocated central overheads and tax.

 

 

 

 

 

The contribution to Group profit before tax prior to the deduction of unallocated central overheads by the ten directly held properties is detailed below:

 

 

Year to

31 March 2018

Year to

31 March 2017

 

€m.

€m.

Net operating income (NOI)

18.77

19.47

Interest expense on bank loans / finance leases 

(3.15)

(3.42)

NOI after interest expense

15.62

16.05

Capital expenditure

(2.83)

(2.47)

Free cash

3.55

4.98

 

 

 

Vacancy rate

                                                                                  13.77%

2.18%

 

The year on year reduction in net operating income by €700,000 (or 3.6%) was caused mainly by the sale of a warehouse in Ploesti, Romania, in March 2017, and the subsequent lease expiry of another warehouse in Tureni, Romania, in December 2017. Around 40% of the vacant space at Tureni has been re-let (for some €135,000 per annum) to a UK manufacturer of automotive control systems and we are currently marketing the remainder of the space.

 

The loans secured against our Group Properties are each held in separate non-recourse special purpose vehicles. In order to mitigate potential interest rate rises we have fixed the interest rate on a proportion (49%) of these loans. A one percentage point increase from current market interest rates would increase the annual interest bill by £610,000 per annum (2017: £825,000).  The current weighted average borrowing cost is 2.34% (2017: 2.35%).

 

In February 2018 we obtained vacant possession of 10,000 m2 of space in Chalubinskiego 8, Warsaw (previously known as Oxford Tower) following the expiry of a lease which previously generated some €3.00 million of income per annum. Encouragingly, we have already re-let some 26% of this newly vacant space which will generate some €1.21 million per annum, though this will not be payable until we have re-fitted out the space. As a result of this vacancy we expect the Group's earnings from this property to reduce for the year to 31 March 2019. There is also other tenant demand for the remaining vacant space and we hope to report positively on this in due course. 

 

Fprop Opportunities plc ("FOP"):

 

The contribution by FOP to Group profit before tax amounted to £2.16 million (2017: £2.26 million). FOP is earning a pre-tax rate of return on equity invested (at current market values) of some 16% per annum. We expect this rate to increase this year as new tenants at Galeria Ostrowiec begin to pay rent.

 

We have continued to sell shares held by the Group in FOP. Such sales during the year amounted to £4.27 million (2017: £1.70 million), representing 17.77% of FOP's issued share capital and resulting in a capital profit for the Group of £1.11 million (2017: £552,000).

 

The Group's shareholding in FOP at the year-end represented 51.46% (2017: 69.23%) of FOP's issued share capital.

 

Associates and Investments:

 

The contribution to Group profit before tax, prior to the deduction of unallocated central overheads, from our nine minority shareholdings in funds managed by FPAM increased by 75% to £1.01 million (2017: £579,000). The increased contribution largely arose from the Group's share of profits in Fprop Romanian Supermarkets Ltd, which sold three of its nine properties at a profit. The contribution from associates and investments represented 9.06% of the total contribution by Group properties.

 

 

 

 

 

Krakow Business Park ("KBP")

 

On 20 September 2017 the Group acquired a number of Polish companies which own properties located in Krakow Business Park in Krakow for a total consideration of £900,000. These properties mainly comprised four office buildings with a gross leasable area of some 50,000 m2, half of which was vacant. At the time of purchase the value of these properties was compromised by the debt secured on them, which was in default. As a result of this default, the results of these companies have not been consolidated into the results of the Group as at 31 March 2018. Instead they have been accounted for as a trade investment.

 

On 25 May 2018, after the year end, the bank loan was restructured and is no longer in default. The value of the debt secured on these properties is €47 million.

 

With effect from later in June/ July 2018 the park is to be renamed Eximius Park.

 

Commercial Property Markets Outlook

 

Poland:

 

GDP growth in Poland, which is forecast at 3.8% in 2018 and 3.1% in 2019, continues to exceed that of most other EU member states, as it has done since its entry into the EU.

 

Investor demand for commercial property remains robust. Investment volumes in 2017 exceeded €5 billion, the highest since 2006. The yield for prime offices and retail properties is sub 6% per annum but the yields available on good secondary property, of the sort we favour, remain attractive at around 7.5% plus per annum.

 

Romania:

 

GDP growth in Romania surged in 2017 to 6.7% and is forecast at 4.5% in 2018 and 4.0% in 2019.

 

Investor demand for commercial property is increasing but remains low. Transaction volumes in 2017 amounted to some €1 billion (2016:  €0.9 billion), of which c40% was invested in Bucharest.

 

In the secondary market a mismatch persists in pricing expectations between buyers and sellers, mainly due to the higher debt finance costs and amortisation rates prevalent in Romania. This has made making new investment a challenging task.

 

United Kingdom:

 

GDP growth in the UK slowed in the first quarter of 2018 to 0.1% per annum but the forecast rate for the year is still around 1.2%.

 

Commercial property transactions in 2017 exceeded £65 billion, up 25% from £52 billion in 2016. The office sector accounted for 37% (£24 billion) of all investment whilst retail volumes declined to £11.5 billion and are forecast to remain under pressure this year. Retail warehouse volumes were virtually unchanged in 2017 at £2.8 billion, reflecting ongoing appetite for relatively stable long income, coupled with vacancy rates falling to their lowest level since 2007.

 

Current Trading and Prospects

 

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

 

The growth of our fund management division continued apace with third party assets under management increasing by some 45%.

 

Both divisions are trading well and although we have had a significant vacancy in a Group property, Chalubinskiego 8 (previously known as Oxford Tower) in February 2018, we have already re-leased some 26% of this space and are experiencing healthy interest in the remaining space which we expect to re-let in due course.

 

We have a number of exciting opportunities both in the UK and Central Europe and we hope to report positively on these as the year unfolds.

 

 

Ben Habib

Chief Executive

8 June 2018

 

 

FINANCE DIRECTOR'S REVIEW

 

The financial year ended 31 March 2018, was a second successive record one for the Group with profit before tax advancing to £9.23 million from £9.14 million and a more significant increase in net assets (with properties held at cost) of 21.86% to £52.92 million (2017: £43.43 million) The results were aided by an improved performance from the Fund Management division and again by a stronger Euro.

 

The annualised growth in adjusted net assets together with dividends paid to shareholders over the last five years equates to 25.26% per annum (2017: 24.68% per annum).

 

Revenue and Gross profit

An operating and financial review of the two trading divisions' results for the year is included in the Chief Executive's Statement above.

 

Operating expenses

An overall increase in expenses of 11.59% to £9.16 million was incurred as the Group continued to invest in its employees. This included the costs of an increased headcount in the UK and Poland. Wage inflation in Poland and Romania is increasing more rapidly than the UK. In relation to last year the overall cost of all staff incentives increased by 4.00%. The overseas overhead costs also suffered from a stronger Polish and Romanian local currency when these costs are translated into GBP sterling (our reporting currency) to the extent of £473,000 compared to last year.   

 

Profit on sale of shares in 'FOP'

As part of the Group's aim to simplify its structure and achieve a more balanced contribution from each of its two trading divisions the Group continued to sell shares in FOP reducing the Group's holding from 69.23% to 51.46%. These sales resulted in a profit of £1.11 million (2017: £552,000).

 

Impairment loss to investment property

The charge of £183,000 (2017: £219,000), relates to the reduction in fair value below original cost of one property located in Poland owned by the FOP fund.

 

Share of results of associates

The Group's share of profits after tax of its associates of £950,000 (2017: £519,000) included the Group's share of profit from the sale of 3 of the 9 supermarkets, owned by Fprop Romanian Supermarkets Ltd, of £397,000, the first year of contribution from Fprop Krakow Ltd, a fund launched in April 2017 and a £193,000 impairment loss (2017: Nil) associated with the Group's investments in Regional Property Trading Ltd and E & S Estates Ltd.   

 

Financing costs

The Group's finance costs are in line with previous years. All bank loans and finance leases are denominated in Euros and all are used to finance properties which are all valued in Euros.

 

Current tax

The current tax charge of £1.38 million (2017: £1.16 million) is in line with previous years and is incurred entirely in Poland and Romania where the mainstream tax rates are 19% and 16% respectively. No UK corporation tax was incurred as brought forward losses of £6.4 million (2017: £4.60 million) were available to be utilised.

 

Deferred tax

A deferred tax charge of £90,000 (2017: credit of £608,000) is the main cause of the increase in the total tax charge. This was due to a reduction in the deferred tax asset in respect of foreign bank loans and investment properties (both denominated in Euros).

 

Non-controlling interests

The sale of shares in FOP has increased the non-controlling interest in FOP from 30.77% to 48.54%. The effect has been to increase the profit for the year attributable to the non-controlling interest to £1.00 million (2017: £757,000).

 

The other non-controlling interest in CORP of 10% has remained the same as last year.

 

Earnings per share

Basic earnings per share have decreased by 13.78% to 5.82 pence per share (2017: 6.75 pence per share), a larger decrease than the 9.66% decrease in the profit (after tax) for the year. This is due to the increase in the non-controlling interest mentioned above.

 

 

 

 

 

 

BALANCE SHEET and CASHFLOW

 

Investment Properties and Property held under inventory (all held at cost)

All properties have been revalued at the year end, the result of which was a net increase in value of €3.14 million compared to 2017. This increase was primarily due to an increase in the values of the shopping centre at Ostrowiec and Blue Tower, the office block in Warsaw, both independently valued by professional valuers.

 

Capital expenditure (investment and trade properties)

Capital expenditure of £2.48 million (2017: £2.12 million) comprised development expenditure of £2.00 million (2017: £1.64 million) on the expansion of the shopping centre located in Ostrowiec, Poland. This development was completed during the year and has been open for trade since the autumn of 2017. The development has been reflected in an upward revaluation of the shopping centre from €31.25 million to €36.20 million but is carried at cost in these accounts.

 

Cash, cash flow and liquidity

Cash levels decreased by £630,000 from £15.95 million to £15.32 million despite total capital expenditure of £2.48 million, bank loan repayments of £6.90 million, new investments in new UK and Polish funds of £3.75 million and dividends paid of £1.80 million, thus retaining the Group's ability to exploit investment opportunities as they arise.

 

Borrowings

All bank and finance lease borrowings are denominated in Euros. The overall level of debt decreased from €137.41 million to €134.16 million after scheduled bank loan repayments of €7.84 million and taking into account a new top up loan of €4.50 million in FOP and accrued interest. All loan-to-value covenants to which these loans are subject have been respected. On an adjusted NAV basis, the Group's total gearing ratio was 65.12%.

 

POST BALANCE SHEET EVENT

 

After the year end, on 6 April 2018, the Group purchased into treasury 4,775,000 Ordinary shares of 0.01p each which reduced the number of shares in issue to 111,241,546 Ordinary shares, a reduction of 4.1%. This should serve to enhance our earnings per share and adjusted net asset value per share results for the year to 31 March 2019.

 

 

 

 

 

 

 

CONSOLIDATED INCOME STATEMENT

for the year ended 31 March 2018

 

 

Notes

Year ended

31 March 2018 (unaudited)

Total results

Year ended

31 March 2017  

(audited)

Total results

 

 

£'000

£'000

 

 

 

 

Revenue

3

25,460

23,663

Cost of sales

 

(6,030)

(5,065)

Gross profit

 

 

19,430

18,598

Profit on sale of an investment property

 

-

890

Profit on the sale of 'FOP' shares

 

1,112

552

Impairment loss to an investment property

 

(183)

(219)

Operating expenses

 

(9,158)

(8,207)

Operating profit

 

11,201

11,614

Share of results in associates

9

950

519

Distribution income

 

63

60

Interest income

4

82

135

Interest expense

4

(3,063)

(3,191)

Profit before tax

 

9,233

9,137

Tax charge

5

(1,473)

(547)

Profit for the year

 

7,760

8,590

 

 

 

 

Attributable to:

 

 

 

Owners of the parent

 

6,755

7,833

Non-controlling interests

 

1,005

757

 

 

7,760

8,590

 

Earnings per share:

 

 

 

 

Basic

6

5.82p

6.75p

Diluted

6

5.70p

6.61p

 

 

 

 

All operations are continuing.

 

 

 

 

 

CONSOLIDATED SEPARATE STATEMENT

OF OTHER COMPREHENSIVE INCOME

for the year ended 31 March 2018

 

 

 

Year ended

31 March 2018

(unaudited)

Total results

Year ended

31 March 2017

(audited)

Total results

 

 

£'000

£'000

 

 

 

 

Profit for the year

 

7,760

8,590

Other comprehensive income

 

 

 

Exchange differences on retranslation of foreign subsidiaries

 

1,590

2,008

Revaluation of available-for-sale financial assets

 

(3)

(29)

Taxation

 

-

-

Total comprehensive income for the year

 

9,347

10,569

 

 

 

 

Total comprehensive income for the year attributable to:

 

 

 

 

Owners of the parent

 

8,131

9,974

Non-controlling interests

 

1,216

595

 

 

9,347

10,569

 

 

 

 

CONSOLIDATED BALANCE SHEET

As at 31 March 2018

 

 

Notes

As at

31 March 2018

(unaudited)

£'000

As at

31 March 2017

(audited)

£'000

 

 

 

 

Non-current assets

 

 

 

Goodwill

7

153

153

Investment properties

8

132,180

128,428

Property, plant and equipment

 

66

97

Interest in associates

9a)

4,725

4,347

Other financial assets

9b)

4,517

897

Other receivables

11

1,766

2,108

Deferred tax assets

13

4,518

4,341

Total non-current assets

 

147,925

140,371

 

 

 

 

Current assets

 

 

 

Inventories - land and buildings

10

15,586

15,115

Current tax assets

 

100

160

Trade and other receivables

11

5,154

4,890

Cash and cash equivalents

 

15,315

15,946

Total current assets

 

36,155

36,111

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

12

(8,298)

(9,848)

Financial liabilities

14

(8,319)

(19,641)

Current tax liabilities

 

(230)

(314)

Total current liabilities

 

(16,847)

(29,803)

Net current assets

 

19,308

6,308

Total assets less current liabilities

 

167,233

146,679

 

 

 

 

Non-current liabilities:

 

 

 

Financial liabilities

14

(110,768)

(100,043)

Deferred tax liabilities

13

(3,543)

(3,208)

Net assets

 

52,922

43,428

 

 

 

 

Equity

 

 

 

Called up share capital

 

1,166

1,166

Share premium

 

5,789

5,781

Share-based payment reserve

 

203

203

Foreign exchange translation reserve

 

1,398

19

Investment revaluation reserve

 

(70)

(67)

Retained earnings

 

38,249

33,311

Equity attributable to the owners of the parent

 

46,735

40,413

Non-controlling interests

 

6,187

3,015

Total equity

 

52,922

43,428

 

 

 

 

Net assets per share

6

40.29p

34.84p

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2018

 

Group

Share capital

 

 

 

£'000

Share premium

 

 

 

£'000

Share-based payment reserve

 

£'000

Foreign exchange translation reserve

 

£'000

Purchase of own shares

 

 

£'000

Investment revaluation

reserve

 

 

£'000

Retained earnings

 

 

 

£'000

Non-controlling interests

 

 

£'000

Total

 

 

 

 

£'000

At 1 April

2017

1,166

5,781

203

19

(99)

(67)

33,410

3,015

43,428

Profit for the year

-

-

-

-

-

-

7,760

-

7,760

Fair value (or revaluation) gains/ (losses) on available-for-sale financial assets to profit or loss

-

-

-

-

-

(3)

-

-

(3)

Change in proportion held by NCI

-

-

-

-

-

-

-

2,000

2,000

Movement on foreign exchange

-

-

-

1,379

-

-

-

211

1,590

Sale of treasury shares

-

8

-

-

4

-

-

-

12

New shares issued

-

-

-

-

-

-

-

-

-

Non-controlling interests

-

-

-

-

-

-

(1,005)

1,005

-

Dividends

paid

-

-

-

-

-

-

(1,821)

(44)

(1,865)

At 31 March 2018

1,166

5,789

203

1,398

(95)

(70)

38,344

6,187

52,922

 

 

 

 

 

 

 

 

 

 

At 1 April

2016

1,166

5,773

203

(2,151)

(103)

(38)

27,334

1,906

34,090

Profit for the year

-

-

-

-

-

-

8,590

-

8,590

Fair value (or revaluation) gains/ (losses) on available-for-sale financial assets to profit or loss

-

-

-

-

-

(29)

-

-

(29)

Change in proportion held by NCI

-

-

-

-

-

-

-

556

556

Movement on foreign exchange

-

-

-

2,170

-

-

-

(162)

2,008

Sale of treasury shares

-

8

-

-

4

-

-

-

12

New shares issued

-

-

-

-

-

-

-

-

-

Non-controlling interests

-

-

-

-

-

-

(757)

757

-

Dividends

paid

-

-

-

-

-

-

(1,757)

(42)

(1,799)

At 31 March 2017

1,166

5,781

203

19

(99)

(67)

33,410

3,015

43,428

 

CONSOLIDATED CASH FLOW STATEMENT 

for the year ended 31 March 2018

 

 

1.             Basis of preparation

 

 

These preliminary financial statements have not been audited and are derived from the statutory accounts within the meaning of section 434 of the Companies Act 2006. They have been prepared in accordance with the Group's accounting policies that will be applied in the Group's annual financial statements for the year ended 31 March 2018. These are consistent with the policies applied for the year ended 31 March 2017. These accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and as adopted by the European Union (EU). Whilst the financial information included in this preliminary statement has been prepared in accordance with IFRS, this announcement does not itself contain sufficient information to fully comply with IFRS. The comparative figures for the financial year ended 31 March 2017 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.

 

These preliminary financial statements were approved by the Board of Directors on 7 June 2018.

 

 

2.             Revenue

 

Revenue from continuing operations consists of revenue arising in the United Kingdom 8% (2017: 7%), Poland 87% (2017: 85%) and Romania 5% (2017: 8%). All revenue relates solely to the Group's principal activities.
 

3.             Segment reporting 2018

 

 

Fund Management Division

Group Properties Division

 

 

Property fund management

Group properties and other co-investments

Group fund properties "FOP"

Unallocated central overheads

Total

 

£'000

£'000

£'000

£'000

£'000

Rental income

-

12,132

6,177

-

18,309

Service charge income

-

2,498

1,733

-

4,231

Asset management fees

2,731

-

-

-

2,731

Performance fees

189

-

-

-

189

Total revenue

2,920

14,630

7,910

-

25,460

 

 

 

 

 

 

Depreciation and amortisation

(40)

(1,983)

(249)

-

(2,272)

 

 

 

 

 

 

Operating profit

1,004

9,404

3,749

(2,956)

11,201

Share of results in associates

-

950

-

-

950

Distribution income

-

63

-

-

63

Interest income

-

53

20

9

82

Interest payable

-

(1,455)

(1,608)

-

(3,063)

Profit/ (loss) before tax

1,004

9,015

2,161

(2,947)

9,233

 

Analysed as:

 

 

 

 

 

Underlying profit/(loss) before tax before adjusting for the following items:

1,329

9,975

2,843

(941)

13,206

Impairment losses

-

(193)

(183)

-

(376)

Profit on the sale of 'FOP' shares

-

1,112

-

-

1,112

FPG's share in associate's profit from the sale of investment properties

-

397

-

-

397

Depreciation

-

(1,739)

-

-

(1,739)

Performance and related fees

189

-

-

-

189

Staff incentives

(538)

(214)

(213)

(1,915)

(2,880)

Realised foreign currency (loss)/gains

24

(323)

(286)

(91)

(676)

Total

1,004

9,015

2,161

(2,947)

9,233

 

Assets - Group

1,362

100,072

68,147

9,774

179,355

Share of net assets of associates

-

5,033

-

(308)

4,725

Liabilities

(204)

(75,337)

(53,562)

(2,055)

(131,158)

Net assets

1,158

29,768

14,585

7,411

52,922

 

Additions to non-current assets

Property, plant and equipment

19

-

-

-

19

Investment properties

-

371

2,004

-

2,375

Trading stock

-

107

-

-

107

Interest in associates

-

122

-

-

122

 

Segment reporting 2017

 

 

Fund Management Division

Group Properties Division

 

 

Property fund management

Group properties and other co-investments

Group fund properties "FOP"

Unallocated central overheads

Total

 

£'000

£'000

£'000

£'000

£'000

Rental income

-

12,165

5,229

-

17,394

Service charge income

-

2,464

1,759

-

4,223

Asset management fees

2,046

-

-

-

2,046

Performance fees

-

-

-

-

-

Total revenue

2,046

14,629

6,988

-

23,663

 

 

 

 

 

 

Depreciation and amortisation

(41)

(1,786)

(133)

-

(1,960)

 

 

 

 

 

 

Operating profit

404

10,192

3,866

(2,848)

11,614

Share of results in associates

-

519

-

-

519

Distribution income

-

60

-

-

60

Interest income

-

37

48

50

135

Interest payable

-

(1,535)

(1,656)

-

(3,191)

Profit/ (loss) before tax

404

9,273

2,258

(2,798)

9,137

 

Analysed as:

 

 

 

 

 

Underlying profit/ (loss) before tax before adjusting for the following items:

907

9,993

2,791

(857)

12,834

Impairment loss to an investment property

-

-

(219)

-

(219)

Profit on the sale of 'FOP' shares

-

552

-

-

552

Profit on the sale of an investment property

-

890

-

-

890

Depreciation

-

(1,662)

-

-

(1,662)

Provision

-

-

-

(44)

(44)

Performance and related fees

-

-

-

-

-

Staff incentives

(503)

(172)

(173)

(1,922)

(2,770)

Realised foreign currency (loss)/ gains

-

(328)

(141)

25

(444)

Total

404

9,273

2,258

(2,798)

9,137

 

Assets - Group

792

95,923

67,026

8,394

172,135

Share of net assets of associates

-

4,655

-

(308)

4,347

Liabilities

(189)

(79,817)

(50,652)

(2,396)

(133,054)

Net assets

603

20,761

16,374

5,690

43,428

 

Additions to non-current assets

Property, plant and equipment

26

-

-

-

26

Investment properties

-

325

1,665

-

1,990

Trading stock

-

130

-

-

130

Interest in associates

-

1,119

-

-

1,119

 

4.             Interest income

 

 

2018

2017

 

Group

£'000

Group

£'000

Interest income - bank deposits

28

35

Interest income - other

54

100

Total interest income

82

135

 

 

 

2018

2017

 

Group

£'000

Group

£'000

Interest expense - property loans

(2,078)

(2,192)

Interest expense - bank and other

(142)

(160)

Finance charges on finance leases

(843)

(839)

Total interest expense

(3,063)

(3,191)

 

 

5.             Tax expense

 

 

2018

£'000

2017

£'000

Analysis of tax charge for the year

 

 

Current tax

(1,383)

(1,155)

Deferred tax

(90)

608

Total tax charge for the year

(1,473)

(547)

 

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

 

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

 

 

6.             Earnings/ NAV per share

 

 

2018

2017

Basic earnings per share

5.82p

6.75p

Diluted earnings per share

5.70p

6.61p

 

 

 

 

£'000

£'000

Basic earnings

6,755

7,833

Diluted earnings assuming full dilution

6,763

7,841

 

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

 

 

2018

Number

2017

Number

Weighted average number of Ordinary shares in issue

(used for basic earnings per share calculation)

116,004,730

115,975,959

Number of share options

2,700,000

2,700,000

Total number of Ordinary shares used in the diluted earnings per share calculation

118,704,730

118,675,959

 

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

 

 

2018

£'000

2017

£'000

Basic earnings per share

 

 

Basic earnings 

6,755

7,833

 

 

 

 

Diluted earnings per share

 

 

Basic earnings

6,755

7,833

Notional interest on share options assumed to be exercised

8

8

Diluted earnings

6,763

7,841

 

 

 

2018

2017

Net assets per share

40.29p

34.84p

Adjusted net assets per share

53.07p

47.64p

 

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

 

For net assets per share

£'000

£'000

Net assets excluding non-controlling interests

46,735

40,413

 

£'000

£'000

For adjusted net assets per share

 

 

Net assets excluding non-controlling interests

46,735

40,413

Investment properties at fair value net of deferred tax

10,272

10,740

Inventories at fair value net of deferred tax

4,582

4,128

Other items

1,409

1,267

Total

62,998

56,548

       

 

 

Number

Number

Number of shares in issue at year end

116,016,546

115,992,699

 

 

 

 

Number

Number

Number of shares in issue at year end

116,016,546

115,992,699

Number of share options assumed to be exercised

2,700,000

2,700,000

Total

118,716,546

118,692,699

 

 

7.             Goodwill

 

 

2018

2017

 

Group

£'000

Group

£'000

At 1 April

153

153

At 31 March

153

153

 

The Directors have carried out an annual impairment test and concluded that no impairment write down is necessary because the estimated recoverable amount was higher than the value stated.

 

8.             Investment properties

 

 

 

2018

2017

 

Group

£'000

Group

£'000

Investment properties

 

 

At 1 April

128,428

120,718

Capital expenditure

2,375

1,990

Disposal

-

(1,711)

Depreciation

(2,204)

(1,891)

Fair value adjustment

(183)

(219)

Foreign exchange translation

3,764

9,541

At 31 March

132,180

128,428

 

 

 

 

 

Investment properties owned by the Group, and indirectly via FOP are stated at cost less depreciation and accumulated impairment losses. The properties were valued at the Group's financial year end at €171.20 million (2017: €168.66 million), the Sterling equivalent at closing foreign exchange rates being £150.10 million (2017: £144.26 million).

 

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

 

9.             Investment in associates and other financial assets and investments

 

The Group has the following investments:

 

 

2018

2017

 

Group

£'000

Group

£'000

a) Associates

 

 

At 1 April

4,347

3,044

Additions

122

1,119

Shareholder loan repayments

(633)

(239)

Share of associates profit after tax

1,143

519

Impairment

(193)

-

Dividends received

(61)

(96)

At 31 March

4,725

4,347

 

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

 

 

2018

2017

 

Group

£'000

Group

£'000

Investments in associates

 

 

5th Property Trading Ltd

1,029

916

Regional Property Trading Ltd

105

192

E and S Estates Ltd

116

-

Fprop Romanian Supermarkets Ltd

624

750

Fprop Galeria Corso Ltd

1,920

1,678

Fprop Krakow Ltd

1,239

1,119

 

5,033

4,655

Less: Share of profit after tax withheld on sale of property to 5th Property Trading Ltd in 2007

(308)

(308)

 

4,725

4,347

 

If the Group had adopted the alternative fair value model for accounting for investment properties, the carrying value of the investments in associates would have increased to £5.74 million (2017: £5.27 million).

 

 

2018

2017

 

 

Group

£'000

Group

£'000

b) Other financial assets and investments

 

 

At 1 April

897

914

Additions

3,623

12

Disposals

-

-

Decrease in fair value during the year

(3)

(29)

At 31 March

4,517

897

 

The Group holds four unlisted investments in funds managed by it. All are held at fair value. All of the assets have been classified as available for sale. In the Directors' view the fair value has been estimated to be not materially different from their carrying value. Fair value has been arrived at by applying the Group's percentage holding in the investments to the fair value of their net assets.

 

 

 

10.          Inventories - land and buildings

 

 

 

 

2018

2017

 

 

Group

£'000

Group

£'000

Group properties for resale at cost

 

 

At 1 April

15,115

13,894

Capital expenditure

107

130

Foreign exchange translation

364

1,091

At 31 March

15,586

15,115

 

The Group's total interest in Blue Tower (an office block in Warsaw) is 48.2% of the building. The fair value of this interest is £21.24 million (€24.23 million) up from £20.21 million (€23.63 million) in 2017 but is stated at cost as above.

 

11.          Trade and other receivables

 

 

2018

2017

 

Group

£'000

Group

£'000

Current assets

 

 

Trade receivables

2,070

2,003

Less provision for impairment of receivables

(640)

(626)

Trade receivables net

1,430

1,377

Other receivables

2,462

2,435

Prepayments and accrued income

1,262

1,078

 

5,154

4,890

 

 

 

 

Non-current assets

 

 

Other receivables

1,766

2,108

 

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.     

 

12.          Trade and other payables

 

 

2018

2017

 

Group

£'000

Group

£'000

Current liabilities

 

 

Trade payables

3,405

2,941

Other taxation and social security

946

799

Other payables and accruals

3,425

5,275

Deferred income

522

833

 

8,298

9,848

 

 

 

 

13.          Deferred tax

 

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

 

2018

2018

2018

2017

2017

2017

 

Group net assets £'000

Group assets £'000

Group liabilities £'000

Group net assets £'000

Group assets £'000

Group liabilities £'000

Accrued interest payable

(1,082)

551

(1,633)

(1,114)

457

(1,571)

Accrued income

(4)

-

(4)

(4)

-

(4)

Foreign bank loan

1,678

2,121

(443)

1,945

2,086

(141)

Investment properties and inventories

99

1,534

(1,435)

203

1,473

(1,270)

Other temporary differences

284

312

(28)

103

325

(222)

 

975

4,518

(3,543)

1,133

4,341

(3,208)

 

14.          Financial liabilities

 

 

2018

Group

£'000

2017

Group

£'000

Current liabilities

 

 

Loans repayable by subsidiary (FOP) to third party shareholders

1,464

2,148

Bank loan

3,411

3,180

Finance leases

3,444

14,313

 

8,319

19,641

 

 

 

 

 

Non-current liabilities

 

 

Bank loans

65,719

63,850

Finance leases

45,049

36,193

 

110,768

100,043

 

 

2018

Group

£'000

2017

Group

£'000

Total obligations under bank loans and finance leases

 

 

Repayable within one year

8,319

19,641

Repayable within one and five years

96,087

65,726

Repayable after five years

14,681

34,317

 

119,087

119,684

 

Loans repayable by FOP to third party shareholders are unsecured and repayable on demand.

 

Eight bank loans and three finance leases all denominated in Euros totalling £117.62 million (2017: £117.54 million), included within financial liabilities, are secured against investment properties owned by the Group and Fprop Opportunities plc (FOP) and the property owned by the Group shown under inventories. These bank loans and finance leases are otherwise non-recourse to the Group's assets.

 

The preliminary results are being circulated to all shareholders and can be downloaded from the Company's web-site (www.fprop.com). Further copies can be obtained from the registered office at 32 St James's Street, London, SW1A 1HD.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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Preliminary Results - RNS