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First Property Group - Final Results

RNS Number : 8390P
First Property Group PLC
11 June 2015
 

Date:                      11 June 2015

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 2015

 

First Property Group plc (AIM: FPO), the property fund manager and investor, today announces its preliminary results for the twelve months ended 31 March 2015.

 

 

Financial highlights:


Unaudited

Year to

31 March 2015

Audited

Year to

31 March 2014

Percentage change





Profit before tax 

£8.08m

£6.60m

+22.4%

Diluted earnings per share

6.93p

4.53p

+53.0%

Total dividend per share

1.35p

1.12p

+20.5%





 

Profit before unallocated central overheads and tax by segment:


 

 

 


Property fund management (FPAM)

£4.44m

£2.63m

+68.8%

Group Properties*

£6.57m

£6.32m

+4.0%

Average €/£ rate used

1.285

1.188

-8.2%





Net assets

£31.02m

£23.46m

+32.2%

Cash Balances

£12.24m

£11.28m

+8.5%





Group Properties* at market value

£142.04m

£69.08m


Group Properties*at book value

£126.90m

£61.06m


Gross Debt secured against Group Properties

£107.78m

£49.33m


LTV %

75.89%

71.41%


Net assets per share

26.30p

20.00p

+31.5%

Adjusted net assets per share** 

35.75p

24.80p

+44.2%

Year-end €/£ rate used

1.382

1.210

-14.2%





Assets under management (including Group Properties)

£327m

£357m

-8.4%

          Poland

65%

69%


          UK

33%

28%


          Romania

2%

3%


 

 

*   Excludes the Group's non-controlling interests in four other FPAM managed funds.

 

** Calculated according to EPRA triple net valuation methodology, which includes fair values of i) financial instruments ii) debt and iii) deferred taxes.

 

Operational Highlights (and explanatory notes):

 

·      The increase in profit before tax to £8.08 million (2014: £6.60 million) was largely attributable to the contribution made to earnings by:

 

Fund Management - The performance fee earned by the Group of £3.2 million (2014: nil) on profits realised by Fprop PDR.

 

Group Properties:

 

i.      The purchase by the Group and FOP of six properties in Poland and Romania during the year which made a contribution to the Group's profit before unallocated overheads and tax of £2.27 million (2014: nil). These acquisitions also resulted in £1.84 million of negative goodwill, a non-cash item which has been credited to the Income Statement; and

 

ii.    The full year contribution to profit before unallocated overheads and tax from the additional properties purchased by the Group and FOP in the previous year of £1.83 million (2014: £676,000).

 

·      Final dividend increased to 1 penny per share (2014: 0.79 pence per share), an increase of 27%, which together with the interim dividend of 0.35 pence (2014: 0.33 pence) equates to a dividend for the year of 1.35 pence per share (2014: 1.12 pence per share).

 

·      New fund established in January 2015 on behalf of Shipbuilding Industry Pension Scheme (SIPS) with a commitment of £125 million for an initial term of ten years targeting investments in the United Kingdom. The Group's UK efforts are now concentrated on investing this.

 

·      Funds under management in Central and Eastern Europe (CEE) once again rated by Investment Property Databank (IPD) as the best performing versus the IPD CEE universe, now for the annualised periods from 2005 to the end of each of the years between 31December 2008 and 31 December 2014.

 

·      The impact of a weaker Euro versus Sterling during the year resulted in profit before tax being some £258,000 lower than it would otherwise have been.

 

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

 

"The financial year just ended has been transformational for the Group principally because of the six investments made by it and FOP in Poland and Romania, which should yield recurring profit before unallocated overheads and tax of just over £6 million per annum. These earnings will more than replace the fee income we used to earn from the USS fund which expires in August 2015 and which at its peak amounted to some £3 million per annum.

 

"The Group's future earnings are substantially underpinned, its balance sheet is strong, the economies in which we operate are growing, we have investment mandates which will result in the Group's earnings growing and we are working on new interesting transactions. I therefore look to the future with excitement and confidence."

 

 

A briefing for analysts will be held at 10.00hrs today at the Group's headquarters, 35 Old Queen Street, London, SW1H 9JA. A conference call facility will also be available on +44 (20) 7984 7578,  passcode: 540877. A copy of the accompanying investor presentation can be accessed simultaneously at  http://www.fprop.com/plc-results/81/88/. A recorded copy of the call will subsequently be posted on the Company website, www.fprop.com.

 

 

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

[email protected]



Arden Partners (NOMAD & Broker)

Tel: + 44 (20) 7614 5900

Chris Hardie (Director, Corporate Finance)

Michael McNeilly (Corporate Finance)




Redleaf Polhill (PR)

Tel:+ 44 (20) 382 4734

Richard Gotla / Henry Columbine

[email protected]

 

 

Notes to investors and editors:

 

First Property Group plc is a property fund manager and investor with operations in the United Kingdom and Central Europe. 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 in the UK and Central Europe;

 

·      Group Properties - principal investments by the Group, currently comprising:

 

Six directly owned properties in Poland and Romania;

Five properties in Poland held by Fprop Opportunities plc (FOP), an FPAM managed fund in which the Group is a 76.2% shareholder;

Non-controlling interests in four other funds managed by FPAM.

 

FPAM funds have ranked No.1 versus the Investment Property Databank (IPD) Central & Eastern Europe (CEE) universe for the annualised periods from the commencement of its operations in Poland in 2005 to the end of each of the years between 31 December 2008 and 31 December 2014.

 

First Property Asset Management Limited is authorised and regulated by the Financial Conduct Authority. Further information about the Company and its products can be found at: www.fprop.com.



CHIEF EXECUTIVE'S STATEMENT

               

Financial results

 

I am pleased to report final results for the twelve months ended 31 March 2015.

 

Revenue earned by the Group increased to £18.52 million (2014: £18.05 million) yielding a profit before tax of £8.08 million (2014: £6.60 million). The increase in profit before tax is principally attributable to the contribution to earnings made by:

 

·      Fund Management - the performance fee earned by the Group of £3.2 million (2014: nil) on profits realised by Fprop PDR.

 

·      Group Properties:

 

i.      The purchase by the Group and FOP of six properties in Poland and Romania during the year which made a contribution to the Group's profit before unallocated overheads and tax of £2.27 million (2014: nil). These acquisitions also resulted in £1.84 million of negative goodwill, a non-cash item which has been credited to the Income Statement; and

 

ii.     The full year contribution to profit before unallocated overheads and tax from the additional properties purchased by the Group and FOP in the previous year of £1.83 million (2014: £676,000).

 

Diluted earnings per share were 6.93 pence (2014: 4.53 pence).

 

The Group ended the period with net assets of £31.02 million (2014: £23.46 million).

 

Its cash balances increased to £12.24 million (2014: £11.28 million) despite having made some £80 million of new, leveraged property investments. Of this cash, £3.26 million (2014: £4.14 million) was held by Fprop Opportunities plc (FOP), which is 76.2% owned by the Group and £573,000 (2014: £528,000) was held by Corp SA (90% owned by the Group), the property management company for Blue Tower in Warsaw.

 

Dividend

 

The Directors have resolved to recommend increasing the final dividend to 1 penny per share (2014: 0.79 pence per share), an increase of 27%, which together with the interim dividend of 0.35 pence per share (2014: 0.33 pence per share) equates to a dividend for the year of 1.35 pence per share (2014: 1.12 pence per share). The substantial increase in the final dividend results from the material increase in the Group's underlying recurring earnings and the Directors' confidence in the sustainability of these.

 

The proposed final dividend will be paid on 30 September 2015 to shareholders on the register at 21 August 2015, and is subject to shareholder approval at the forth coming annual general meeting.

 

 

REVIEW OF OPERATIONS

 

Key Points

 

The annualised earnings before unallocated overheads and tax of just over £6 million which the Group expects to earn from the six properties acquired by it and FOP during the year, more than replaces the fee income we used to earn from the USS fund which expires in August 2015 and which, at its peak, amounted to some £3 million per annum.

 

When the earnings from the six new property investments are combined with the Group and FOP's existing investments, the annualised recurring contribution to the Group's profit before unallocated overheads and tax will amount to some £9.5 million.

 

Our development activity in the United Kingdom, via Fprop PDR, made a contribution to the Group of £3.86 million and yielded investors in that fund a total return of £16.6 million on equity deployed of £30.35 million, translating into a net return on equity of 53% and an IRR of 98% per annum. Fprop PDR is likely to make a further contribution to profit before unallocated central overheads and tax of some £1 million for the year to 31 March 2016, resulting from transactions concluded last year. However, the Permitted Development Rights legislation is due to expire in May 2016 and we do not therefore expect any further transactions to be undertaken by Fprop PDR, unless the legislation is extended in some way. 

 

The Group's UK efforts are now concentrated on investing the £125 million fund management mandate awarded to us by SIPS.

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

 

As at 31 March 2015 aggregate assets under management, calculated by reference to independent third party valuations, stood at £327 million (2014: £357 million), including some £142 million (2014: £69 million) of properties held by the Group. Of these, 33% were located in the UK, 65% in Poland and 2% in Romania. With the exception of Fprop PDR, fees are levied by FPAM by reference to funds under management excluding cash and cash commitments.

 

Revenue earned by this division amounted to £6.14 million (2014: £4.27 million), resulting in a profit before unallocated central overheads and tax of £4.44 million (2014: £2.63 million) and representing 40% (2014: 29%) of Group profit before unallocated central overheads and tax.

 

Revenue from the USS fund reduced to £1.54 million (2014: £2.5 million) as a result of disposals by the fund. Following the expiry of the USS fund management contract FPAM's fund management fee income, excluding performance fees, will amount to some £1.35 million per annum.

 

First Property Asset Management Ltd (FPAM) now manages eight closed-end funds, having established one new fund during the year under review. A brief synopsis of the value of assets and maturity of each of these funds is set out below:

 

Fund

Country of investment

Established

Fund Expiry

Assets under management at market value

% of total assets

 under management

SAM Property Company Ltd (SAM)

UK

Aug-2004

Rolling

*

*

Regional Property Trading Ltd (RPT)

Poland

Aug-2004

Aug-2020

£6.21m

1.9%

5th Property Trading Ltd (5PT)

Poland

Dec-2004

Dec-2017

£7.68m

2.4%

USS Fprop Managed Property Portfolio LP

Poland

Aug-2005

Aug-2015

£62.91m

19.2%

UK Pension Property Portfolio  LP (UK PPP)

UK

Feb-2010

Feb-2017

£94.35m

28.8%

Fprop PDR LP

UK

Oct-2013

May-2018

£3.61 m* (commitment of £42m)

 

1.1%

SIPS Property Nominee Ltd

UK

Jan-2015

Jan-2025

£10.33m (commitment of  £125m)

 

3.2%

Sub total

£185.09m

56.6%


Fprop Opportunities plc (FOP)

Poland

Oct-2010

Oct-2020

£54.44m

16.6%

Group Properties (excluding FOP)

Poland & Romania

n/a

n/a

£87.60m

26.8%

Sub total

£142.04m

43.4%




Total

£327.13m

100%

 

*Not subject to recent revaluation

 

 

 

 

 

Independent fund performance analysis:

 

Our investments in Central and Eastern Europe (CEE) have once again been ranked No.1 by Investment Property Databank (IPD) against the IPD CEE universe, now for the annualised periods from the commencement of FPAM's operations in Poland in 2005 to the end of each of the years between 31 December 2008 and 31 December 2014.

 

New business:

 

Poland - we are in preliminary discussions with potential investors to establish a new fund targeting minimum rates of return on equity invested of 15% per annum.

 

 

TOTAL GROUP PROPERTIES

 

The Group increased its property holdings (including those held by FOP) from five to eleven during the year under review, as set out below:

 

Property

No. of properties

Book value

 

Market

value

Contribution to Group profit before tax and overheads

Continuing





Blue Tower

1

£12.64m

£14.18m

£1,461,000

FOP

4

£42.76m

£45.76m

£1,135,000

Sub total

5

£55.40m

£59.94m

£2,596,000

New investments during the year





Poland

2

£58.00m

£66.19m

£1,263,0001

Romania

3

£5.08m

£7.23m

£634,0002

FOP

1

£8.42m

£8.68m

£369,0003

Sub total

6

£71.50m

£82.10m

£2,266,000






Total

11

£126.90m

£142.04m

£4,862,000

 

1 The contribution to Group profit from its two new property investments in Poland was for the period from 15 December 2014 to 31 March 2015.

 

2 The contribution to Group profit from its three new property investments in Romania was for the period from 27 July 2014 to 31 March 2015.

 

3 The contribution to FOP's profit (which is consolidated into the accounts of the Group) from its one new property investment in Poland was for the period from 19 September 2014 to 31 March 2015.

 

It is the Group's policy to carry its investments at the lower of cost or market value for accounting purposes.

 

 

 

 

 

 

 

Other Property Interests:

Group Properties also comprises non-controlling interests in four other funds managed by FPAM, as set out in the table below.

 

Non controlling interest in funds managed by FPAM at 31 March 2015:

 

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 profit

earned by fund FY2015

Investments





UK Pension Property Portfolio LP (UK PPP)

0.9%

£893,000

£893,000

£64,000

Fprop PDR LP

4.9%

£638,000

£638,000

£630,000






Interest in associates





5th Property Trading Ltd (5PT)

37.8%

£519,000

£998,000

£153,000

Regional Property Trading Ltd (RPT)

25.8%

£152,000

£177,000

£32,000

Share of results in associates


£671,000

£1,175,000

£185,000






Total


£2,202,000

£2,706,000

£879,000

 

Revenue from Group Properties, including FOP, amounted to £12.38 million (2014: £13.78 million), generating a profit before unallocated central overheads and tax of £6.57 million (2014: £6.32 million) and representing 60% (2014: 71%) of Group profit before unallocated central overheads and tax.

 

The reduction in revenue was attributable to the Group ceasing its development activities in the UK, which were instead carried out by Fprop PDR.

 

The increase in profit before unallocated central overheads and tax was attributable to:

 

i.      The purchase by the Group and FOP of six properties in Poland and Romania during the year which made a contribution to the Group's profit before unallocated overheads and tax of £2.27 million (2014: nil). These acquisitions also resulted in £1.84 million of negative goodwill, a non-cash item which has been credited to the Income Statement; and

 

ii.     The full year contribution to profit before unallocated overheads and tax from the additional properties purchased by the Group and FOP in the previous year of £1.83 million (2014: £676,000).

 

Commercial property markets outlook

 

Poland:

 

GDP growth in Poland, Europe's sixth largest economy, accelerated to 3.4% in 2014 and is forecast to grow by the same amount in 2015 and 2016. Rent levels for commercial property are generally sustainable, subject to location. Capital values remain largely unchanged from their credit crunch lows and yield some 2-3% more than equivalent property in Western Europe. In addition, Poland's banking sector is well capitalised and keen to lend against property at record low interest rates.

 

Poland is a tangential beneficiary of the quantitative easing taking place in the euro zone, which has boosted economic activity in Germany and by association Poland; some 40% of Poland's trade is with Germany. QE has also, amongst other things, suppressed euro interest rates and the value of the euro (the currency in which most Polish commercial property transacts and in which rents are paid), translating into reduced capital values for non-euro based investors. Given this confluence of circumstances, we believe the business case for property investment in Poland to be highly compelling.

 

 

United Kingdom:

 

The UK was the fastest growing major advanced economy in 2014, growing at 2.8%, and is forecast by the OBR to grow by 2.5% in 2015. Consumer confidence is at a twelve year high and occupier demand for commercial property is growing across the board. This is slowly manifesting itself in increasing property values and rising rents. Investment demand, including from international investors, continues to spread into the regions.

 

We expect the newly elected Government to continue its efforts to loosen the planning system to enable higher rates of new development. We shall be looking out in particular for any news of its intention to extend Permitted Development Rights (PDR) beyond its current scheduled expiry in May 2016.

 

 

Current Trading and Prospects

 

The financial year just ended has been transformational for the Group principally because of the six investments made by it and FOP in Poland and Romania, which should yield recurring profit before unallocated overheads and tax of just over £6 million per annum. These earnings will more than replace the fee income we used to earn from the USS fund which expires in August 2015 and which at its peak amounted to some £3 million per annum.

 

The Group's future earnings are substantially underpinned, its balance sheet is strong, the economies in which we operate are growing, we have investment mandates which will result in the Group's earnings growing and we are working on new interesting transactions. I therefore look to the future with excitement and confidence.

 

Ben Habib

Chief Executive

11 June 2015



 

CONSOLIDATED INCOME STATEMENT

for the year ended 31 March 2015

 


Notes

Year ended

31 March 2015 (unaudited)

Total results

Year ended

31 March 2014  

(audited)

Total results



£'000

£'000





Revenue  - existing operations

                 - business acquisitions                   


14,325

4,198

              17,004

1,041



18,523

18,045

Cost of sales


(3,156)

(5,800)

Gross profit

 


15,367

12,245

Recognition of negative goodwill on refinancing of subsidiary


1,123

-

Recognition of negative goodwill on acquisition of subsidiaries


716

-

Fair value adjustment to investment properties


(876)

-

Operating expenses


(6,925)

(5,019)

Operating profit


9,405

7,226

Share of results in associates


185

190

Distribution income


694

63

Re-classification of profit


-

35

Loss on disposal of asset held for resale


-

(7)

Interest income


145

148

Interest expense


(2,346)

(1,057)

Profit before tax


8,083

6,598

Tax credit/(charge)

5

328

(962)

Profit for the year


8,411

5,636

 

Attributable to:

Owners of the parent

Non-controlling interest


 

 

8,172

239

 

 

5,281

355



8,411

5,636

 

Earnings per share:

 




Basic

 

Diluted

6

 

6

7.21p

 

6.93p

4.75p

 

4.53p

 

All operations are continuing.

 

 

 



 

CONSOLIDATED SEPARATE STATEMENT

OF OTHER COMPREHENSIVE INCOME

for the year ended 31 March 2015

 



Year ended

31 March 2015

(unaudited)

Total results

Year ended

31 March 2014

(audited)

Total results



£'000

£'000





Profit for the year


8,411

5,636

Other comprehensive income




Exchange differences on retranslation of foreign subsidiaries


272

(128)

Re-classification of profit


-

(35)

Revaluation of available-for-sale financial assets


37

-

Taxation


-

-

Total comprehensive income for the year


8,720

5,473





Total comprehensive income for the year attributable to:




Owners of the parent

Non-controlling interest


8,505

215

5,327

146



8,720

5,473

 

 



 

CONSOLIDATED BALANCE SHEETS

As at 31 March 2015

 


Notes

As at

31 March 2015

(unaudited)

£'000

As at

31 March 2014

(audited)

£'000

Non-current assets




Goodwill

7

153

153

Investment properties

8

114,262

48,759

Property, plant and equipment


43

65

Interest in associates

9 (a)

671

675

Other financial assets

9 (b)

1,531

1,706

Other receivables

11

283

400

Deferred tax assets


3,803

839

Total non-current assets


120,746

52,597





Current assets




Inventories - land and buildings

10

12,639

12,304

Current tax assets


236

76

Trade and other receivables

11

5,744

4,135

Cash and cash equivalents


12,240

11,279

Total current assets


30,859

27,794





Current liabilities




Trade and other payables

12

(8,134)

(4,224)

Financial liabilities

13

(11,788)

(4,349)

Current tax liabilities


(108)

(247)

Total current liabilities


(20,030)

(8,820)

Net current assets


10,829

18,974

Total assets less current liabilities


131,575

71,571

Non-current liabilities:




Deferred tax liabilities

Financial liabilities

 

13

(2,631)

(97,925)

(897)

(47,212)

Net assets


31,019

23,462





Equity




Called up share capital


1,149

1,149

Share premium


5,505

5,498

Foreign exchange translation reserve


(618)

(914)

Revaluation reserve


(49)

(86)

Share-based payment reserve


203

203

Retained earnings


23,735

16,717

Equity attributable to the owners of the parent


29,925

22,567

Non-controlling interest


1,094

895

Total equity


31,019

23,462



 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2015

 

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 interest

 

 

£'000

Total

 

 

 

 

£'000

At 1 April

2014

1,149

5,498

203

(914)

(310)

(86)

17,027

895

23,462

Profit for the period

-

 

-

-

-

-

-

8,411

-

8,411

Net change in available for sale financial assets

-

-

-

-

-

37

-

-

37

Movement on foreign exchange

-

-

-

296

-

-

-

(24)

272

Sale of treasury shares

-

7

-

-

137

-

-

-

144

Non-controlling interest

-

-

-

-

-

-

(239)

239

-

Dividends

paid

-

-

-

-

-

-

(1,291)

(16)

(1,307)

At 31 March 2015

1,149

5,505

203

(618)

(173)

(49)

23,908

1,094

31,019





















At 1 April

2013

1,149

5,492

203

(995)

(603)

(51)

12,947

401

18,543

Profit for the period

-

-

-

-

-

-

5,636

-

5,636

Net change in available for sale financial assets

-

-

-

-

-

(35)

-

-

(35)

Movement on foreign exchange

-

-

-

81

-

-

-

(209)

(128)

Sale of treasury shares

-

6

-

-

293

-

-

-

299

Non-controlling interest

-

-

-

-

-

-

(355)

355

-

Decrease in non-controlling interest (acquisition of CORP)

-

-

-

-

-

-

-

(63)

(63)

Increase in non-controlling interest (FOP)

-

-

-

-

-

-

-

507

507

Dividends

paid

-

-

-

-

-

-

(1,201)

(96)

(1,297)

At 31 March 2014

1,149

5,498

203

(914)

(310)

(86)

17,027

895

23,462



CONSOLIDATED CASH FLOW STATEMENTS 

for the year ended 31 March 2015







2015

2014


Notes

Group

£'000

Group

£'000

Cash flows from operating activities




Operating profit


9,405

7,226

Adjustments for:




Depreciation of investment property, plant & equipment


387

31

Fair value adjustment on investment properties


876

-

Negative goodwill


(1,839)

-

Share based payments


-

-

(Increase)/decrease in inventories


(258)

(4,474)

(Increase)/decrease in trade and other receivables


(486)

(2,604)

Increase/(decrease) in trade and other payables


577

1,547

Other non-cash adjustments


81

203

Cash generated from operations


8,743

1,929

Taxes paid


(826)

(552)

Net cash flow from operating activities


7,917

1,377





Cash flow from/(used in) investing activities




Purchase of investments


(353)

(849)

Proceeds from investments


565

-

Proceeds from sale of financial assets


-

28

Capital expenditure  investment properties


(383)

(46)

Proceeds from sale of shares in associates


-

23

Cash paid on acquisitions of new subsidiaries

4

(4,638)

(4,415)

Cash and cash equivalents received on acquisitions

of new subsidiaries

4

3,055

786

Purchase of non-controlling interest


-

(126)

Purchase of investment property


-

(555)

Purchase of property, plant & equipment


(14)

(60)

Interest received


145

148

Dividends from associates


189

107

Distributions received


694

63

Net cash flow from investing activities


(740)

(4,896)





Cash flow (used in)/from financing activities




Proceeds from issue of shares to non-controlling interest


-

507

Proceeds from non-controlling interest shareholder loan in subsidiary


-

1,206

Repayment of shareholder loan in subsidiary


(293)

(107)

Proceeds from bank loan


3,547

3,136

Repayment of bank loan


(4,574)

(387)

Repayment of finance lease


(1,202)

(463)

Sale of shares held in Treasury


144

299

Interest paid


(2,266)

(1,029)

Dividends paid


(1,291)

(1,201)

Dividends paid to non-controlling interest


(16)

(96)

Net cash flow (used in)/from financing activities


(5,951)

1,865





Net increase in cash and cash equivalents


1,226

(1,654)

Cash and cash equivalents at the beginning of the year


11,279

12,979

Currency translation gains/(losses) on cash and cash equivalents


(265)

(46)

Cash and cash equivalents at the year-end


12,240

11,279



 

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 2015. These are consistent with the policies applied for the year ended 31 March 2014. 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 2014 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 10 June 2015.

 

 

2.             Revenue

 

Revenue from continuing operations consists of revenue arising in the United Kingdom 20% (2014: 53%), Poland 74% (2014: 47%) and Romania 6% (2014: nil). All revenue relates solely to the Group's principal activities.

3.             Segment reporting 2015

 


Property fund management

Group properties and other co-investments

Group fund properties "FOP"

Unallocated central overheads

Total


£'000

£'000

£'000

£'000

£'000

External revenue

- Existing operations

- Sale of  inventory

- Business acquisitions

 

6,140

-

-

 

2,968

-

3,479

 

5,217

-

719

 

-

-

-

 

14,325

-

4,198

Total

6,140

6,447

5,936

-

18,523







Depreciation and amortisation

18

363

6

-

387

Operating Profit

4,435

5,454

2,454

(2,938)

9,405







Share of results in associates

-

185

-

-

185

Distribution income

-

694

-

-

694

Interest income

-

36

89

20

145

Interest payable

-

(730)

(1,616)

-

(2,346)

Profit/(loss) before tax

4,435

5,639

927

(2,918)

8,083


Analysed as:






Before performance  fees and related items

1,605

4,489

2,272

(963)

7,403

Negative goodwill Felix

-

1,123

-

-

1,123

Negative goodwill Gdynia Podolska and Corktree

-

716

-

-

716

Fair value adjustment

-

-

(876)

 

-

(876)

Depreciation

-

(357)

-

-

(357)

Performance fees

3,365

-

-

-

3,365

Staff incentives

(535)

(194)

(184)

(1,955)

(2,868)

Realised foreign currency gain

-

(138)

(285)

-

(423)

Total

4,435

5,639

927

(2,918)

8,083


Assets - Group

1,633

84,478

58,522

6,301

150,934

Assets- associates

-

979

-

(308)

671

Liabilities

(289)

(72,437)

(45,666)

(2,194)

(120,586)

Net assets

1,344

13,020

12,856

3,799

31,019

Additions to

non-current assets






Property, plant and equipment

14

-

-

-

14

Investment properties

-

66,909

8,864

-

75,773

Investments

-

353

-

-

353

Interest in associates

-

-

-

-

-



 

Segment reporting 2014

 


Property fund management

Group properties and other co-investments

Group fund properties "FOP"

Unallocated central overheads

Total


£'000

£'000

£'000

£'000

£'000

External revenue

- Existing operations

- Sale of  inventory

- Business acquisitions

 

4,268

-

-

 

2,440

8,050

-

 

2,246

-

1,041

 

-

-

-

 

8,954

8,050

1,041

Total

4,268

10,490

3,287

-

18,045







Depreciation and amortisation

(21)

(7)

(3)

-

(31)

Operating Profit

 - Existing operations

 - Business acquisitions

 

2,630

-

 

5,010

-

 

1,388

611

 

(2,413)

-

 

6,615

611

Total

2,630

5,010

1,999

(2,413)

7,226







Share of results in associates

-

190

-

-

190

Profit on disposal of asset held for resale

-

-

-

28

28

Dividend income

-

63

-

-

63

Interest income

-

76

40

32

148

Interest payable

-

(251)

(806)

-

(1,057)

Profit/(loss) before tax

2,630

5,088

1,233

(2,353)

6,598







Analysed as:






Before performance  fees and related items

2,592

5,157

1,288

(830)

8,207

Performance fees

451

-

-

-

451

Staff incentives

(413)

(69)

(55)

(1,523)

(2,060)

Realised foreign currency gain

-

-

-

-

-

Total

2,630

5,088

1,233

(2,353)

6,598


Assets - Group

1,241

16,983

54,890

6,602

79,716

Assets- associates

-

983

-

(308)

675

Liabilities

(884)

(10,935)

(43,587)

(1,523)

(56,929)

Net assets

357

7,031

11,303

4,771

23,462

Additions to

non-current assets






Property, plant and equipment

41

19

-

-

60

Investment properties

-

-

28,717

-

28,717

Investments

-

849

-

-

849

Interest in associates

-

-

-

-

-

 

 

Interest income from the cash that is 100% controlled is not allocated to a separate segment, because cash is managed centrally, and is netted off against unallocated central overheads. Head office costs and overheads that are common to all segments are shown separately under unallocated central overheads. Assets, liabilities and costs which relate to Group central activities have not been allocated to business segments.

 

The geographic location of physical non-current assets is UK £2,229,000 (2014: £2,424,000), Poland £109,568,000 (2014: £48,934,000) and Romania £5,080,000 (2014: £Nil).

4.             Business acquisitions

 

The Group directly made three acquisitions:

 

-       On 27 July 2014 the Group took control of Felix Development SRL. Felix owns three properties located in Romania; and

 

-       On 15 December 2014 the Group acquired a beneficial interest in the entire issued share capital in Corktree Sp z.o.o and Gdynia Podolska Sp. z.o.o. for €2.65m and €2.25m respectively. Both Corktree's and Gdynia Podolska's main assets are office buildings in Poland.

 

The Group's subsidiary Fprop Opportunities plc (FOP) made one further acquisition during the year. On 19 September 2014 it acquired all the share capital in Zinga Poland Sp. z.o.o for €378,000. Zinga's main asset is an office block in Warsaw, Central Poland.

 

Following all four purchases a total of £1.84m of negative goodwill was generated.

  


Felix

 

£'000

Zinga

 

£'000

Gydnia

Podolska

£'000

Corktree

 

£'000

31 March 2015

£'000

Acquisitions of net assets acquired at fair value






Cash

437

310

1,501

807

3,055

Trade and other receivables

102

438

1,029

1,048

2,617

Share in subsidiary

-

-

-

19

19

Investment property

5,547

8,846

33,137

27,860

75,390

Trade and other payables

(369)

(204)

(389)

(972)

(1,934)

Tax liabilities

(53)

(52)

(52)

99

(58)

Financial liabilities

(3,566)

(9,013)

(32,204)

(26,401)

(71,184)

Tenant deposits

(440)

(29)

(885)

(74)

(1,428)

Fair value of goodwill

(1,123)

(2)

(392)

(322)

(1,839)

Foreign exchange reserve

-

-

-

-

-

Total purchase price paid in cash

535

294

1,745

2,064

4,638

Cash paid on acquisitions

Cash and cash equivalents acquired on purchases

(535)

 437

(294)

310

(1,745)

 1,501

(2,064)

807

(4,638) 3,055

Acquisitions net of cash and cash equivalents acquired

(98)

16

(244)

(1,257)

(1,583)

 

 

5.             Tax expense

 


2015

£'000

2014

£'000

Analysis of tax charge for the year



Current tax

(525)

(761)

Deferred tax

853

(201)

Total tax charge for the year

328

(962)

 

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

 

Brought forward tax losses, have been utilised and partially offset against profits arising in the UK. These tax losses were not previously recognised as a deferred tax asset due to insufficient foreseeable taxable income being earned in the UK.

 

As a result of the above the effective tax rate for the Group is -4.1% (2014:15%).

 

The deferred tax credit is largely attributable to the acquisitions of Corktree and Gdynia Podolska during the year. This has been created as a result of the nil value paid for the deferred tax asset on acquisition. The deferred tax asset has been restricted to two years worth of profits.

 

 

 

 

 

 

 

 

6.             Earnings/NAV per share

 


2015

2014

Basic earnings per share

7.21p

4.75p

Diluted earnings per share

6.93p

4.53p





£'000

£'000

Basic earnings

8,172

5,281

Diluted earnings assuming full dilution

8,187

5,298

 

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

 


2015

Number

2014

Number

Weighted average number of Ordinary shares in issue

(used for basic earnings per share calculation)

113,348,847

111,265,093

Number of share options assumed to be exercised

4,850,000

5,750,000

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

118,198,847

117,015,093

 

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

 


2015

£'000

2014

£'000

Basic earnings per share



Basic earnings 

8,172

5,281




Diluted earnings per share



Basic earnings

8,172

5,281

Notional interest on share options assumed to be exercised

15

17

Diluted earnings

8,187

5,298

 


2015

2014

Net assets per share

Adjusted Net assets per share

26.30p

35.75p

20.00p

24.80p

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

 

Net assets per share

Number

Number

Number of shares in issue at year end

113,792,541

112,952,158


£'000

£'000

Net  assets excluding non controlling  interest

29,925

22,567

Adjusted net assets per share

Number

Number

Number of shares in issue at year end

113,792,541

112,952,158

Number of share options assumed to be exercised

4,850,000

5,750,000

Total

118,642,541

118,702,158

 

Adjusted net assets per share

£'000

£'000

Net  assets excluding non controlling  interest

29,925

22,567

Adjustments for market value of assets and debt

12,488

6,869

Total

42,413

29,436

 

7.             Goodwill

 


2015

2014


Group

£'000

Group

£'000




At 1 April

153

114

Additions

-

39

At 31 March

153

153

 

 

8.             Investment properties

 

Investment properties owned by the Group, and indirectly via FOP are stated at cost less depreciation and accumulated impairment losses. The properties were valued by CBRE, Polish Properties and BNP Paribas at the Group's financial year-end at €176.73 million (2014: €63.96 million), the Sterling equivalent at closing foreign exchange rates being £127.86 million (2014: £52.88 million). On acquisition of the Gdynia Podolska property during the year the Directors took the decision to depreciate the property over the lease term. In the Director's 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.

 


2015

2014


Group

£'000

Group

£'000

Investment properties



At 1 April

48,759

20,349

Business acquisitions

75,390

28,116

Capital expenditure

383

46

Purchase additions

-

555

Depreciation

(357)

-

Fair value adjustment

(876)

-

Foreign exchange translation

(9,037)

(307)

At 31 March

114,262

48,759

 



 

9.             Investment in associates and other financial assets

 

The Group has the following investments:

 


2015

2014


Group

£'000

Group

£'000

a) Associates



At 1 April

675

615

Disposals

-

(23)

Share of associates profit after tax

185

190

Dividends received

(189)

(107)

At 31 March

671

675

 

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:

 


2015

2014


Group

£'000

Group

£'000

Investments in associates



5th Property Trading Ltd

827

863

Regional Property Trading Ltd

152

120


979

983

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

(308)

(308)


671

675

 

If the Group had adopted the alternative fair value model for accounting for investment properties, the carrying value of the investment in associates would have increased by £504,000 (2014: £775,000) to £1,175,000 (2014: £1,450,000).

 


2015

2014

 

 

Group

£'000

Group

£'000

b) Other financial assets and investments



At 1 April

1,706

892

Additions

353

849

Disposals

(565)

(35)

Increase in fair value during the year

37

-

At 31 March

1,531

1,706

 

The Group holds two unlisted investments in funds managed by it. Both 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 of the fair value of their net assets.

 

 

10.          Inventories - land and buildings

 


2015

2014


Group

£'000

Group

£'000

Group properties for resale at cost



At 1 April

12,304

8,591

Purchases

Capital expenditure

Disposals

Foreign exchange translation

-

258

-

77

4,428

46

-

(761)

At 31 March

12,639

12,304

 

 

 

 

 

 

 

 

 

11.          Trade and other receivables

 


2015

2014


Group

£'000

Group

£'000

Current assets



Trade receivables

1,655

3,305

Other receivables

3,147

502

Prepayments and accrued income

942

328


5,744

4,135




Non-current assets



Other receivables

283

400

 

 

12.          Trade and other payables

 


2015

2014


Group

£'000

Group

£'000

Current liabilities



Trade payables

2,605

1,139

Other taxation and social security

580

289

Other payables and accruals

4,938

2,780

Deferred income

11

16


8,134

4,224

 

13.          Financial liabilities

 


2015

£'000

2014

£'000

Current liabilities



Bank loan

9,382

3,840

Finance leases

2,406

509


11,788

4,349




Non-current liabilities



Loans repayable by subsidiary (FOP) to third party shareholders

1,936

2,229

Bank loans

50,610

32,322

Finance leases

45,379

12,661


97,925

47,212

 


2015

£'000

2014

£'000

Total obligations under bank loans and finance leases



Repayable within one year

11,788

4,349

Repayable within one and five years

57,928

35,106

Repayable after five years

39,997

12,106


109,713

51,561

 

Loans repayable by FOP to third party shareholders are repayable in October 2020.

 

Seven bank loans and three finance leases (all denominated in foreign currencies) totalling £107,777,000 (2014: £49,332,000) 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 35 Old Queen Street, London, SW1H 9JA.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR SFIESSFISELM

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Market Cap: £45.26 m
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