REG - First Property Group - Preliminary results
26/06/2024 07:00
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RNS Number : 8382T First Property Group PLC 26 June 2024
Date: 26 June 2024
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 2024 (Unaudited)
First Property Group plc (AIM: FPO), the property fund manager and investor
with operations in the United Kingdom and Central Europe, today announces its
unaudited preliminary results for the twelve months ended 31 March 2024.
Highlights:
· Statutory loss before tax for the year: £4.41 million (31 March
2023 profit before tax: £2.49 million)
· Cash at 31 March 2024: £4.63 million (31 March 2023: £7.65
million)
· Net debt at 31 March 2024: £22.99 million (31 March 2023:
£22.01 million)
· Third party Assets Under Management ("AUM") at 31 March 2024: £222
million (31 March 2023: £400 million)
· Total AUM at 31 March 2024: £274 million (31 March 2023: £454
million)
· Weighted average unexpired fund management contract term at 31
March 2024: 1 year, 9 months (31 March 2023: 2 years, 9 months)
Financial summary:
Unaudited Audited
year to year to Percentage
31 March 2024 31 March 2023 change
Income Statement:
Statutory (loss)/profit before tax (£4.41m) £2.49m -277.11%
Diluted (loss)/earnings per share (4.04p) 1.70p -337.65%
Total dividend per share - 0.50p -100.00%
Average €/£ exchange rate 1.1606 1.1567 -
Financial position at the year-end:
Investment properties at book value £45.76m £47.01m -2.66%
Investment properties at market value £51.90m £53.97m -3.84%
Associates and investments at book value £19.90m £22.13m -10.09%
Associates and investments at market value £20.26m £25.27m -19.83%
Cash balances £4.63m £7.65m -39.48%
Cash per share 4.18p 6.90p -39.42%
Gross debt £27.62m £29.66m -6.88%
Net debt £22.99m £22.01m 4.45%
Gearing ratio at book value* 41.47% 40.57% -
Gearing ratio at market value* 38.28% 36.08% -
Net assets at book value** £38.98m £43.44m -10.27%
Net assets at market value £44.53m £52.54m -15.25%
Adjusted net assets per share (EPRA basis) 39.41p 46.50p -15.25%
Year-end €/£ rate 1.1697 1.1381 -
*Gearing ratio = Gross debt divided by gross assets
**Attributable to the owners of the parent, excludes non-controlling interests
Commenting on the results, Ben Habib, Chief Executive of First Property Group
plc, said:
"The last year has been a challenging time for investing in commercial
property.
"The combination of higher interest rates in the US, attracting capital out of
other markets (including Poland), higher interest rates generally putting
pressure on values and availability of bank debt, weaker economies and a
burdensome regulatory environment with the drive to Net Zero has resulted in
reduced occupancy demand, higher capital investment requirements, reduced
values and an exodus of institutional investors from the markets.
"As a result, the capital values of our properties have been under pressure
and leasing activity has not been as strong as we would have hoped and
expected.
"Nevertheless, we are managing the situation and once US interest rates begin
to ease we would expect a recovery in the UK and Europe."
A briefing for analysts and shareholders will be held at 11.00hrs today via
Investor Meet Company. To participate it is necessary to register at
https://www.investormeetcompany.com/first-property-group-plc/register-investor
(https://www.investormeetcompany.com/first-property-group-plc/register-investor)
and select to meet the Company. Those who have already registered and selected
to meet the Company will be automatically invited. A copy of the accompanying
investor presentation and a recording of the call will be posted on the
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 / Daniel Dearden-Williams (Corporate Finance)
Amrit Nahal / Tony Quirke (Sales and Corporate Broking)
Notes to Investors and Editors:
First Property Group plc is an award-winning property fund manager and
investor with operations in the United Kingdom and Central Europe. Its focus
is on higher yielding commercial property with sustainable cash flows. The
Company is flexible and takes an active approach to asset management. Its
earnings are derived from:
· Fund Management - via its FCA regulated and AIFMD approved
subsidiary, First Property Asset Management Ltd ("FPAM"), which earns fees
from investing for third parties in property. FPAM currently manages twelve
funds which are invested across the United Kingdom, Poland and Romania.
· Group Properties - principal investments by the Group, to earn a
return on its own capital, usually in partnership with third parties.
Investments include six directly held properties in Poland, one in Romania,
and non-controlling interests in nine of the twelve funds.
Quoted on AIM, the Company has offices in London and Warsaw. 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 2024.
Revenue earned by the Group during the year increased by 8% to £7.85 million
(31 March 2023: £7.25 million) yielding a loss before tax of £4.41 million
(31 March 2023: profit before tax: £2.49 million).
The loss was mainly caused by two non-cash items:
1. an impairment of £3.72 million to the value of the Group's office
property in Gdynia in order to match its value to the value of the liability
secured against it as announced on 17 May 2024; and
2. a reduction of £0.97 million in the fair value of the Group's
investment in Fprop Opportunities plc ('FOP'), of which £0.82 million was
reported in the Group's interim accounts.
The Group ended the year with net assets calculated under the cost basis of
accounting, excluding non-controlling interests, of £38.98 million (31 March
2023: £43.44 million), equating to 35.15 pence per share (31 March 2023:
39.18 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), amounted to £44.53 million or 39.41
pence per share at 31 March 2024 (31 March 2023: £52.54 million or 46.50
pence per share).
Gross debt at the year-end amounted to £27.62 million (31 March 2023: £29.66
million), £17.10 million of which was non-interest bearing and represents
deferred consideration payable for the purchase of two office properties in
Poland. Net debt stood at £22.99 million (31 March 2023: £22.01 million).
The debt was secured against six properties in Poland.
The Group's gearing ratio with its properties at their book value was 41.47%
(31 March 2023: 40.57%) and with its properties at their market value was
38.28% (31 March 2023 36.08%).
Group cash balances at the year-end stood at £4.63 million (31 March 2023:
£7.65 million), equivalent to 4.18 pence per share (31 March 2023: 6.90 pence
per share). The reduction was mainly due to capital expenditure of £1.67
million associated with letting vacant space at Blue Tower in Warsaw and the
repayment of the £0.80 million loan previously secured against the Group's
directly held office property in Bucharest, Romania.
The diluted loss per share was (4.04) pence (2023: earnings of 1.70 pence).
Dividend
The Directors have resolved not to pay a dividend (31 March 2023: 0.50 pence
per share) until the Group returns to profitability.
REVIEW OF OPERATIONS
PROPERTY FUND MANAGEMENT
Third party assets under management ended the year at £221.8 million (31
March 2023: £400.4 million).
The decrease in value of third party funds was mainly due to:
1. the write down in value of properties held by Fprop Phoenix Ltd
("FPL") of £45.71 million and those held by Fprop Offices LP ("Fprop
Offices") of £37.55 million and a reduction in the value of properties held
by other funds of £28.69 million. These were also impacted by foreign
exchange losses of £4.56 million; and
2. the sale by two funds of fourteen properties in the United Kingdom
valued at a total of £62.66 million.
Fund management fees are generally levied monthly by reference to the value of
properties. We do not earn a fixed fee from Fprop Offices and the reduction in
value of the fund does not reduce our recurring income. Fprop Offices has
reached the end of its fund life and is in the process of being wound up.
Revenue earned by this division increased by 17% to £2.95 million (2023:
£2.52 million), resulting in profit before unallocated central overheads and
tax increasing by £0.70 million to £0.82 million (2023: £0.12 million). The
increase was mainly due to the advance payment of £411,000 of fund management
fees by SIPS, in respect of properties sold prior to the end of the fund's
life.
At the year end fund management fee income, excluding performance fees, was
being earned at an annualised rate of £1.83 million (31 March 2023: £2.55
million).
The weighted average unexpired fund management contract term at the year-end
was 1 year, 9 months (31 March 2023: 2 years, 9 months).
The reconciliation of movement in third party funds managed by FPAM 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 2023 241.38 159.00 400.38 53
Purchases - - - -
Property sales (62.66) - (62.66) (18)
Reclassified as Group properties - - - -
Capital expenditure 0.29 0.27 0.56 -
Property revaluation (64.00) (47.95) (111.95) -
FX revaluation - (4.56) (4.56) -
As at 31 March 2024 115.01 106.76 221.77 35
An overview of the value of assets and maturity of each of the funds managed
by FPAM is set out below:
Fund Country of investment Fund expiry Assets under management at market value at No. of properties % of total third-party assets under management Assets under management at market value at
31 March 2024 31 March 2023
£m. £m.
SAM & DHOW UK Rolling * * * *
FPROP OFFICES UK Jun 2024 47.4 4 21.4 84.9
SIPS UK Jan 2025 33.8 10 15.3 104.7
FOP Poland Oct 2025 60.3 5 27.2 64.5
FGC Poland Mar 2026 21.7 1 9.8 22.0
UK PPP UK Jan 2027 13.6 7 6.1 28.1
SPEC OPPS UK Jan 2027 12.7 4 5.7 14.9
FKR Poland Mar 2027 16.4 1 7.4 16.8
FCL Romania Jun 2028 8.3 1 3.7 8.7
FPL Poland Jun 2028 - - - 47.0
FULCRUM UK Indefinite 7.6 2 3.4 8.8
Total Third-Party AUM 221.8 35 100.0 400.4
* Not subject to recent revaluation.
The sub sector weightings of investments in FPAM funds is set out in the table
below:
UK Poland Romania Total % of Total
£m. £m. £m. £m.
Offices 89.1 37.2 8.3 134.6 60.7%
Retail warehousing 16.6 - - 16.6 7.5%
Supermarkets 9.3 12.1 - 21.4 9.6%
Shopping centres - 49.2 - 49.2 22.2%
Total 115.0 98.5 8.3 221.8 100.0%
% of Total Third-Party AUM 51.9% 44.4% 3.7% 100.0%
GROUP PROPERTIES DIVISION
The Group Properties division is made up of the Group's principal investments
to earn a return on its own capital. At 31 March 2024, Group Properties
comprised seven directly owned commercial properties in Poland and Romania
valued at £51.90 million (31 March 2023: £53.97 million) and interests in
nine of the twelve funds managed by FPAM (classified as Associates and
Investments) valued at £20.26 million (31 March 2023: £25.27 million).
The net equity invested in the Group's seven directly owned properties
totalled £24.28 million at market value, of which £14.02 million was
invested in Blue Tower, an office tower in Central Warsaw. The Group's net
equity in Blue Tower equates to 58% of the net equity invested in its seven
directly owned properties.
This division lost £3.79 million before tax and unallocated central overheads
during the year (year ended 31 March 2023: contributed £3.43 million). The
loss was mainly due to:
· a non-cash impairment of the value of the Group's office property
in Gdynia, Poland, by £3.72 million, and
· a non-cash reduction in the fair value of the Group's investment
in FOP by £0.97 million.
1. Directly owned Group Properties (all accounted for under the cost
model):
The book value of the Group's seven directly owned properties was £45.76
million (31 March 2023: £47.01 million). Their market value, based on
valuations at 31 March 2024, was £51.90 million (31 March 2023: £53.97
million).
Country Sector Property/ No. of props 31 March 2024 Book value 31 March 2024 Market value 31 March 2024 *Contribution to Group profit before tax *Contribution to Group
Fund Name 31 March 2024 profit before tax
31 March 2023
£m. £m. £m. £m.
Poland Office Blue Tower 1 23.11 26.69 0.82 1.13
Poland Office Gdynia 1 10.25 10.25 (0.15) (0.39)
Romania Office Dr Felix 1 2.21 3.61 0.11 0.27
Poland Supermarket Praga 1 2.07 3.09 0.10 0.12
Poland Multi use 5PT 3 8.12 8.26 0.33 0.28
Total* 7 45.76 51.90 1.21 1.41
Profit from the sale of three investment properties - 1.78
Property impairment (3.75) -
Reversal of provision in respect of rental guarantee 0.13 0.51
Interest expense (0.78) (0.53)
Other overhead costs allocated to the Group Property division (0.71) (0.61)
Total contributions to PBT from Group Properties (3.90) 2.56
* Prior to the deduction of direct overhead and unallocated central overhead
expenses.
Two of the Group's seven directly owned properties account for 71% (£36.94
million) of the Group's directly owned portfolio at market value. Both are
office buildings in Poland. One is Blue Tower in Warsaw (in which the Group's
80.3% share totals circa 18,000 square metres) and the other is in Gdynia
(circa 13,500 square metres).
By size, 90% of the Group's seven directly owned properties (39,000 square
metres out of a total 43,000 square metres) is invested in offices. Nearly
half of this space (some 22,000 square metres) was acquired in 2021 (Gdynia)
and 2022 (32% of Blue Tower) for around €20 million, of which nearly all
(19,000 square metres) was vacant at purchase. We have since let some 6,100
square metres of this (net c4,000 square metres after accounting for lease
expiries) but with 15,000 square metres remaining to be let, progress has been
slower than initially anticipated. Once fully let, net operating income should
improve by some €3 million per annum and capital values should also improve.
The debt secured against these seven properties at the year-end totalled
£27.62 million (31 March 2023: £29.66 million), of which only £10.52
million was interest bearing. The remainder (£17.10 million) represents
deferred consideration in respect of:
· the purchase in 2021 of the office block in Gdynia (€12 million
equating to £10.25 million). Payment was due in June 2024. We are in
discussions with the lender to extend this date. In the meantime, we have
impaired the holding value of this property by £3.72 million so that its
carrying value equals the value of the loan secured against it; and
· the purchase in 2022 of an additional 32% or 7,171 square metres
in Blue Tower (PLN 34.40 million equating to £6.85 million). Payment is due
in phases until August 2028.
Interest costs on the Group's debt amounted to £0.78 million (2023: £0.53
million). This equates to an average borrowing cost of 2.8% per annum when
expressed as a percentage of total outstanding Group debt of £27.62 million,
or 7.4% per annum if the deferred consideration of £17.10 million, on which
no interest is payable, is excluded.
31 March 2024 31 March 2023
£m. £m.
Book value of directly owned properties 45.76 47.01
Market value of directly owned properties 51.90 53.97
Gross debt undiscounted (all non-recourse to Group) 27.62 29.66
LTV at book value 60.36% 63.09%
LTV at market value 53.22% 54.96%
Average borrowing cost 2.8% 1.8%
The vacancy rate across all seven properties is 20.34%.
The weighted average unexpired lease term ("WAULT") as at 31 March 2024 was 4
years, 10 months (2023: 5 years, 2 months).
2. Associates and Investments
The associates and investments comprise non-controlling interests in nine of
the twelve funds managed by FPAM of which five 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 Associates and Investments was £0.11 million (year ended 31 March
2023: £0.87 million). The contribution was impacted by aggregate impairment
provisions of £1.07 million in the book value of the Group's investment in
FOP by £0.97 million and in Fprop Krakow Ltd ("FKR") by £0.10 million.
At the year-end the associates and investments were valued at £20.26 million
(31 March 2023: £25.27 million). The reduction in their market value by some
£5.01 million from last year was mainly due to:
· write downs in the value of properties held by FPL and Fprop Offices
which resulted in the market value of the Group's share in these funds
reducing by some £3.80 million;
· property sales by UK funds in which the Group holds an investment
which resulted in the repayment of capital totalling £0.45 million plus
reductions in property values which resulted in the value of the Group's share
reducing by £0.34 million; and
· a reduction in the value of properties held by FOP, Fprop Corso
("FGC"), FKR and Fprop Cluj ("FCL"), which resulted in the market value of the
Group's share in these funds reducing by £0.42 million.
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 2024 31 March 2023
% £'000 £'000 £'000 £'000
a) Associates (all invested in Poland and Romania)
FOP 45.7 12,539 12,539 (141) 293
FGC 29.1 2,968 3,189 202 289
FKR 18.1 1,090 1,090 (64) (426)
FPL 23.4 - - (60) (848)
FCL 21.2 678 818 41 64
Sub Total 17,275 17,636 (22) (628)
b) Investments (all invested in the United Kingdom)
UK PPP 0.9 161 161 23 40
FULCRUM 2.5 156 156 5 9
SPEC OPPS 11.1 1,965 1,965 83 1,353
FPROP OFFICES 1.6 341 341 23 95
Sub Total 2,623 2,623 134 1,497
Total 19,898 20,259 112 869
Commercial Property Markets Outlook
Poland:
GDP growth in Poland in 2023 decreased to 0.2% (2022: 5.3%), lower even than
during the global financial crisis in 2009. It is forecast to grow by 2.6% in
2024.
Unemployment has been at around 5.0% since mid-2023 (a historic low), which,
in combination with strong nominal wage increases of around 30% since 2021, is
sustaining economic activity.
The National Bank of Poland's key policy interest rate reduced from 6.75% to
5.75% in October 2023, where it remains. Inflation has fallen from the high
teens in late 2022 to sub 3% from February 2024. Notwithstanding this downward
trend, interest rates remain elevated from previous levels.
Increased interest rates in the US and Europe have attracted capital out of
Poland and, with bank lending constrained, investment demand for commercial
property remains very weak.
In 2023 investment transaction volume for commercial property reduced to €2
billion, the lowest turnover since 2009. Average annual turnover is typically
€6 billion. The development of new property is at a cyclical low.
Rental values in Poland are contractually mostly linked to inflation, which
offers some protection from inflation as long as the economy remains buoyant
and tenants can afford to pay their contractual increases.
United Kingdom:
Continued elevated interest rates, coupled with, inter alia, the cost of
capital improvements in order to meet net zero emissions targets, and reduced
tenant demand for regional offices and regional retail units, continue to
exert sustained pressure on the commercial property market. As a result total
transaction levels in 2023 reduced to £44bn (2022: £62bn), 27% below the
10-year average of £60bn. Office transactions in particular were weak,
suffering their second weakest quarter in Q1 2024 since 2009, the weakest
being Q2 2020 during covid. Capital values have generally reduced across the
board, in many cases by more than 50% since the onset of lockdowns during the
covid pandemic.
Tenant demand for offices is focused on class A city centre space. Vacancy
rates for such space is low at some 2.3%, even though the average tenant
requirement is some 25% smaller than prior to covid. In contrast, demand for
offices in outer or non-prime locations is minimal. Vacancy levels for
regional offices stands at 10.5% versus a long term average of 6.6%, though
take-up is improving. The value of many regional offices has declined to
little more than land value.
Retail rental growth averaged 0.6% in the 12 months to March 2024, led by the
retail warehouse sector where rental values rose by an average of 1.1%, but
held back by shopping centres where rental values fell by 2%.
Current Trading and Prospects
The last year has been a challenging time for investing in commercial
property.
The combination of higher interest rates in the US, attracting capital out of
other markets (including Poland), higher interest rates generally putting
pressure on values and availability of bank debt, weaker economies and a
burdensome regulatory environment with the drive to Net Zero has resulted in
reduced occupancy demand, higher capital investment requirements, reduced
values and an exodus of institutional investors from the markets.
As a result, the capital values of our properties have been under pressure and
leasing activity has not been as strong as we would have hoped and expected.
Nevertheless, we are managing the situation and once US interest rates begin
to ease we would expect a recovery in the UK and Europe.
Ben Habib
Chief Executive
26 June 2024
GROUP FINANCE DIRECTOR'S REVIEW
The loss before tax for the year of £4.41 million (2023: profit before tax
£2.49 million) was largely driven by a non-cash property impairment of £3.72
million in respect of a directly held Group property in Gdynia and a reduction
of £0.97 million in the fair value of the Group's investment in one of its
associates, FOP. Otherwise, the Group traded in line with market expectations.
The Group owes deferred consideration of £10.25 million (€12 million) in
respect of the Gdynia property, which was due for repayment on 11 June 2024
and for which payment was not made. The Group is in discussions to restructure
the deferred consideration and is hopeful of a positive outcome. However, in
view of the non-payment of this liability and the uncertainty over its
payment, the Directors resolved to impair the value of the property by £3.72
million to match its value to the value of the outstanding liability.
Group net assets excluding non-controlling interests at 31 March 2024
decreased to £38.98 million (31 March 2023: £43.44 million).
Gross debt at the year end was £27.62 million (31 March 2023: £29.66
million). The decrease was largely due to the repayment in full of the Group's
loan secured against its directly owned office property in Bucharest, Romania
totalling £0.80 million. Of this gross debt, £17.10 million represents
deferred consideration on which no interest is payable. Net debt increased to
£22.99 million (31 March 2023: £22.01 million).
GOING CONCERN
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 reverse stress 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. Further
details of this analysis are set out in the "Basis of Preparation" note below.
Based on the results of the analysis conducted 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.
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 increased by £0.60 million or 8% to £7.85 million (year
ended 31 March 2023: £7.25 million).
Gross profit (revenue less the cost of sales) reduced by £0.02 million to
£4.97 million (year ended 31 March 2023: £4.99 million).
No performance fees were recognised during the financial year to 31 March 2024
(year ended 31 March 2023: charge of (£0.59) million).
Operating Expenses
Operating expenses increased by £0.39 million or 8% to £5.16 million (year
ended 31 March 2023: £4.77 million) mainly due to a non-cash charge of £0.64
million (year ended 31 March 2023: £Nil) being recognised in respect of share
options. See note 6 of the notes to the accounts for more information on the
share-based payment scheme.
Share of Results in Associates
The contribution from the Group's associates amounted to a loss of £0.02
million (year ended 31 March 2023: loss £0.63 million). The contribution was
impacted by two fair value adjustments of £0.97 million in respect of the
Group's 45.7% holding in FOP and £0.10 million in respect of the Group's
18.1% holding in FKR.
The cost of the Group's share in FOP, which is invested in five commercial
properties in Poland, was rebased in October 2018 when the Group's share in it
reduced below 50%, resulting in it being deconsolidated from the accounts of
the Group and recognised as an associate at the prevailing property values. In
the year to 31 March 2024, the five properties owned by FOP decreased in value
by €2.97 million which resulted in the Group recognising a fair value
adjustment of £0.97 million.
Investment Income (from other financial assets and investments)
Investment income from the Group's four investments in five of the UK funds
managed by FPAM decreased by 91% to £0.13 million (31 March 2023: £1.50
million). The prior year figure was bolstered by distributions of £1.35
million from Fprop UK Special Opportunities LP (Spec Opps).
Financing Costs
Finance costs increased to £0.78 million (31 March 2023: £0.53 million)
mainly due to higher interest rates payable on the Group's floating rate
loans. All bank loans are denominated in Euros and all are used to finance
properties valued in Euros.
STATEMENT OF FINANCIAL POSITION
Investment Properties (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 at fair market value.
The Group owes deferred consideration of £10.25 million (€12 million) in
respect of the Gdynia property, which was due for repayment on 11 June 2024
and for which payment was not made. The Group is in discussions to restructure
the deferred consideration and is hopeful of a positive outcome. However, in
view of the non-payment of this liability and the uncertainty over its
payment, the Directors impaired the value of the property by £3.72
million to match its value to the value of the outstanding liability.
At the year end the Group held seven properties. Their book value was £45.76
million (31 March 2023: £47.01 million). Their fair market value was £51.90
million (31 March 2023: £53.97 million).
Capital expenditure incurred on the Group's seven directly owned properties
amounted to £1.67 million (31 March 2023: £1.02 million).
Foreign exchange revaluations amounted to a debit of £1.17 million (31 March
2023: debit £1.32 million).
Borrowings
Bank and other borrowings (including deferred consideration) decreased to
£27.62 million (31 March 2023: £29.66 million). The decrease was largely
driven by the repayment in full of one loan secured against the Group's
directly owned property in Bucharest, Romania, totalling £0.80 million.
The Group's current financial liabilities have increased to £13.08 million
(31 March 2023: £2.06 million) mainly due to:
1. deferred consideration of £10.25 million (€12 million) in
respect of the Gdynia property, which was due for repayment on 11 June 2024
and for which payment was not made; and
2. deferred consideration of £1.00 million in respect of one delayed
instalment payment relating to the purchase of the additional share in Blue
Tower plus the next instalment of £1.00 million due in August 2024.
Both debts are non-recourse to the Group.
The ratio of debt to gross assets at their market value (the gearing ratio)
increased to 38.28% (31 March 2023: 36.08%).
All bank loans are denominated in Euros and are non-recourse to the Group's
assets.
Deposits of £0.32 million (31 March 2023: £0.64 million) are held by lending
banks as security for Debt Service Cover Ratio (DSCR) covenants in respect of
four bank loans (31 March 2023: five). Consequently this cash was restricted
as at 31 March 2024.
Trade and Other Receivables
Trade and other receivables decreased by £0.65 million to £4.15 million (31
March 2023: £4.80 million).
Trade and Other Payables
Trade and other payables decreased by £0.59 million to £3.79 million (31
March 2023: £4.38 million). It includes £1.11 million payable to Fprop
Offices in respect of performance fees eligible to be clawed back by the fund.
Non-controlling Interests
The value of the Group's two non-controlling interests decreased by £0.08
million to £1.95 million (31 March 2023: £2.03 million). The two
non-controlling interests consist of:
1. 10% of the share capital of Corp Sp. z o. o., the property
management company to Blue Tower, Warsaw; and
2. 47.20% of the share capital of 5th Property Trading Ltd ("5PT"), a
fund invested in three commercial properties in Poland.
In July 2023 the Group acquired for £0.21 million the minority interest
(being 23%) in E and S Estates Ltd ("E and S"), a fund managed by the Group,
resulting in it owning 100% of the shares in issue. E and S owns a supermarket
in Praga, a suburb of Warsaw, valued at €3.61 million.
Investment Revaluation Reserve
The investment revaluation reserve decreased by £1.46 million to a debit
balance of £2.19 million (31 March 2023: £0.73 million) mainly due to a
decrease in value of the Group's co-investment in Fprop Offices resulting from
a reduction of £37.55 million in the value of the properties held by this
fund. The life of this fund expired in June 2024 and the fund is currently in
the process of selling all of its assets. We expect to recycle the £1.07
million debit balance which was attributable to Fprop Offices at 31 March 2024
from the investment revaluation reserve to the profit and loss account during
the financial year to 31 March 2025.
Foreign Exchange Translation Reserve
A strengthening of the Polish Zloty against Sterling to PLN 5.0375/ GBP (31
March 2023: PLN 5.3267/ GBP) resulted in a reduction in the deficit in the
foreign exchange translation reserve to £1.41 million (31 March 2023: £2.35
million).
Cash and Cash Equivalents
The Group's cash balance decreased to £4.63 million (31 March 2023: £7.65
million) due to:
· £1.67 million of capital expenditure at the Group's directly
held property, Blue Tower, Warsaw;
· £1.01 million of capital repayments in respect of the Group's
bank loans;
· £0.80 million to fully repay a bank loan which was secured
against the Group's directly held property in Bucharest, Romania; and
· £0.49 million clawed back by Fprop Offices in respect of
previously paid profit share.
Laura James
Group Finance Director
26 June 2024
CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2024
Year ended Year ended
31 March 2024 31 March 2023
Notes Unaudited Audited
Total results Total results
£'000 £'000
Revenue 1 7,851 7,249
Cost of sales (2,884) (2,257)
Gross profit 4,967 4,992
Profit on sale of investment properties - 1,779
Operating expenses (5,156) (4,767)
Operating profit (189) 2,004
Share of associates' profit/(loss) after tax 9 1,050 273
Share of associates' revaluation (losses)gains 9 (1,072) (901)
Investment income 134 1,497
Interest income 3 194 145
Interest expense 3 (780) (530)
Loss from impairment of investment properties 7 (3,746) -
(Loss)/profit before tax (4,409) 2,488
Tax charge 29 (449)
Profit for the year (4,380) 2,039
Attributable to:
Owners of the parent (4,582) 1,919
Non-controlling interests 202 120
(4,380) 2,039
(Loss)/earnings per share:
Basic 5 (4.13p) 1.73p
Diluted 5 (4.04p) 1.70p
All operations are continuing.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2024
Year ended Year ended
31 March 2024 31 March 2023 Total results
Total results
£'000 £'000
Profit for the year (4,380) 2,039
Other comprehensive income
Items that may subsequently be reclassified to profit or loss
Exchange differences on retranslation of foreign subsidiaries 946 944
Net (loss)/ profit on financial assets at fair value through other (1,465) (1,412)
comprehensive income
Taxation - -
Total comprehensive income for the year (4,899) 1,571
Total comprehensive income for the year attributable to:
Owners of the parent (5,149) 1,324
Non-controlling interests 250 247
(4,899) 1,571
All operations are continuing.
STATEMENT OF FINANCIAL POSITION
First Property Group plc
Registered No. 02967020
As at 31 March 2024
Unaudited Audited
2024 2023
Notes Group Group
£'000 £'000
Non-current assets
Investment properties 7 45,756 47,009
Right of use assets 8 17 197
Property, plant and equipment 40 80
Investment in associates 9a) 17,275 17,588
Other financial assets at fair value through OCI 9b) 2,623 4,544
Goodwill 10 153 153
Deferred tax assets 11 992 930
Total non-current assets 66,856 70,501
Current assets
Current tax assets 127 79
Right of use assets 8 51 457
Trade and other receivables 12 4,145 4,797
Cash and cash equivalents 4,628 7,647
Total current assets 8,951 12,980
Current liabilities
Trade and other payables 13 (3,788) (4,378)
Provisions (125) (158)
Lease Liabilities 8 (52) (469)
Financial liabilities 14 (832) (1,116)
Other financial liabilities 15 (12,244) (939)
Current tax liabilities (48) (28)
Total current liabilities (17,089) (7,088)
Net current assets (8,138) 5,892
Total assets less current liabilities 58,718 76,393
Non-current liabilities
Financial liabilities 14 (9,690) (11,519)
Other financial liabilities 15 (4,851) (16,082)
Lease Liabilities 8 (17) (267)
Deferred tax liabilities 11 (3,229) (3,050)
Net assets 40,931 45,475
Equity
Called up share capital 1,166 1,166
Share premium 5,635 5,635
Share-based payment reserve 815 179
Foreign exchange translation reserve (1,407) (2,353)
Purchase of own shares reserve (2,440) (2,440)
Investment revaluation reserve (2,193) (728)
Retained earnings 37,401 41,983
Equity attributable to the owners of the parent 38,977 43,442
Non-controlling interests 1,954 2,033
Total equity 40,931 45,475
Net assets per share 5 35.15p 39.18p
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2024
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 5,635 179 (2,353) (2,440) (728) 41,983 2,033 45,475
2023
Profit for the year - - - - - - (4,380) - (4,380)
Net loss on financial assets at fair value through other comprehensive income - - - - - (1,465) - - (1,465)
Exchange differences arising on translation of foreign subsidiaries - - - 946 - - - 48 994
Change in the proportion held in non-controlling interests - - - - - - - (265) (265)
Total comprehensive income - - - 946 - (1,465) (4,380) (217) (5,116)
Share options charge - - 636 - - - - - 636
Non-controlling interests - - - - - - (202) 202 -
Dividends - - - - - - - (64) (64)
paid
At 31 March 2024 1,166 5,635 815 (1,407) (2,440) (2,193) 37,401 1,954 40,931
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2023
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 (3,297) (2,653) 684 40,895 229 42,994
2022
Profit for the year - - - - - - 2,039 - 2,039
Net loss on financial assets at fair value through other comprehensive income - - - - - (1,412) - - (1,412)
Purchase from treasury shares - (156) - - 213 - - - 57
Exchange differences arising on translation of foreign subsidiaries - - - 944 - - - 127 1,071
Transfer 5PT to subsidiary undertaking - - - - - - - 1,606 1,606
Total comprehensive income - (156) - 944 213 (1,412) 2,039 1,733 3,361
Non-controlling interests - - - - - - (120) 120 -
Dividends - - - - - - (831) (49) (880)
paid
At 31 March 2023 1,166 5,635 179 (2,353) (2,440) (728) 41,983 2,033 45,475
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 2024
2024 2023
Notes Group Group
£'000 £'000
Cash flows from operating activities
Operating (loss)/profit (189) 2,004
Adjustments for:
Depreciation of property, plant & equipment 64 99
Share options charge 636 -
Profit on the sale of investment properties - (1,779)
Decrease in trade and other receivables 903 777
(Decrease)/ increase in trade and other payables (759) 2,813
Other non-cash adjustments (73) 180
Cash generated from operations 582 4,094
Taxes paid (193) (616)
Net cash flow from/(used in) operating activities 389 3,478
Cash flow (used in)/ from investing activities
Capital expenditure on investment properties 7 (1,670) (1,017)
Purchase of property, plant & equipment (22) (10)
Proceeds from the sale of investment property 7 - 8,612
Purchase of investment property - (7,443)
Cash paid on acquisition of new subsidiaries (214) (165)
Cash and cash equivalents received on acquisitions - 83
Investment in shares of new associates 9a) - (606)
Investment in funds 9b) - (3)
Proceeds from investments in funds 9b) 456 1,492
Proceeds from investments in associates 9a) 291 176
Interest received 3 194 145
Dividends from associates 9a) - -
Investment income 134 1,494
Net cash flow (used in)/from investing activities (831) 2,758
Cash flow (used in)/ from financing activities
Proceeds from bank loan - 1,474
Repayment of bank loans (1,814) (5,215)
Sale of shares held in Treasury - 57
Interest paid 3 (780) (530)
Dividends paid - (831)
Dividends paid to non-controlling interests (64) (49)
Net cash flow (used in) financing activities (2,658) (5,094)
Net (decrease)/increase in cash and cash equivalents (3,100) 1,142
Cash and cash equivalents at the beginning of the year 7,647 6,419
Currency translation gains on cash and cash equivalents 81 86
Cash and cash equivalents at the year end 4,628 7,647
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 2024. 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 2023 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
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 reverse stress 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 (52%), 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) a clawback of income can been triggered. The
combination of inflationary pressures, higher interest rates, a cost of living
crisis and an increase in employees working from home has caused severe
disruption to economic activity and a reduction in the value of commercial
property. As a result, the Group has, in previous years reversed a total of
£1.97 million of performance fee income of which £0.59 million was clawed
back in the year to 31 March 2023. As the performance fees have now been fully
clawed backed there is no further exposure to the income statement, however,
included within trade and other payables is a balance of £1.1 million owed to
Fprop Offices.
A number of the funds are in the process of winding up and as a result we
anticipate asset management fees to fall over the coming 12 months. This
reduction in asset management fees has been included within the forecasts
reviewed by the Board as part of the going concern assessment.
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. 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 borrowings 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 1 year, 9 months.
b) Rental Income from Group Properties
All seven Group Properties are located in Poland or Romania. These properties
consist of four office blocks, a mini-supermarket, one multi-let property and
ground-floor retail property. All were independently valued on 31 March 2024
at £51.90 million (31 March 2023: £53.97 million).
The rental income has been reviewed when setting the forecast revenues and no
significant falls in collection rates are expected. The tenants are of good
quality, as proven by excellent cash collection rates. Any renegotiation of
rental payment terms that have been agreed are reflected in the forecasting
analysis.
On 12 August 2022 the Group acquired some 7,171 square meters in Blue Tower in
Warsaw at a price of £7.20 million. The purchase resulted in the Group's
interest in the building increasing from 48.2% to 80.3%. Some 5,159 square
metres of the newly acquired space was vacant at purchase. Since purchase a
total of 2,100 square meters has been leased, but at the same time 2,300
square meters of space was vacated. Income however has increased by c€200k
per annum as a result of higher rates at which the new tenants leased the
space.
The Group's office property in Gdynia is now 30% leased, up from 28% at 31
March 2023. A further 10,000 square metres of the office space in the building
remains to be leased.
When the vacant space is fully let, it is anticipated that both buildings net
operating income should improve by €3 million per annum.
c) Income from Associates and Investments
Analysis was also conducted on the returns from the Group's investment in its
four (31 March 2023: four) Associates. 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.
d) Liquidity
The Group has two deferred consideration liabilities which it has not met.
These are as follows:
I. The Group owes deferred consideration of €12 million in respect
of the Gdynia property, which was due for repayment on 11 June 2024 and for
which the payment was not made. The plan has always been for the Group to
secure a new bank loan against this property to then repay this amount.
However the situation in the office market has meant that letting the vacant
space at this property has been slower than anticipated.
The Group is in discussions to restructure the deferred consideration and is
hopeful of a positive outcome but is aware that this subsidiary has defaulted
on this payment deadline. As a result of the default the bank could take
possession of the property.
The net operating loss of this property is around €30,000 on an annualised
basis and our forecasting has considered the impact of this on the Group's
cashflows. There is no restricted cash within this subsidiary.
The debt itself is non-interest bearing and non-recourse to the Group.
II. In August 2022, a subsidiary of the Group purchased an additional
holding in Blue Tower with a deferred consideration payment which totalled
40.4 million PLN. This was non-interest bearing and payable in seven
instalments over six years. The first instalment was paid in August 2022. As
at 31 March 2024, £1.00 million is owed to the bank in a delayed instalment
payment and another instalment is due in August 2024.
In the event that management fails to come to a new arrangement with the
lender regarding its instalment plan, the lender could take control of the
property.
The net operating loss of this property is around €130,000 on an annualised
basis and our forecasting has considered the impact of this on the Group.
There is no restricted cash within this subsidiary.
The debt itself is non-recourse to the Group.
The Group monitors overall debt requirements by reviewing current borrowing
levels, debt maturity and interest rate exposure. The Group does not have any
other debt other than disclosed above due for renewal in the next 12 months.
A one percentage point increase in interest rates would increase the annual
interest bill by £0.11 million per annum (31 March 2023: £0.13 million).
Deposits of £0.32 million (31 March 2023: £0.64 million) are held by lending
banks in respect of four bank loans (31 March 2023: five) as security for Debt
Service Cover Ratio (DSCR) covenants and consequently this amount of cash was
restricted as at 31 March 2024.
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
We do not consider there to be any relevant new standards, amendments to
standards or interpretations, that are effective for the financial year
beginning on 1 April 2023, which would have had a material impact on the
financial statements.
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 18 June 2024.
1. Revenue
Revenue from continuing operations consists of revenue arising in the United
Kingdom 19% (31 March 2023: 12%), Poland 72% (31 March 2023: 75%) and Romania
9% (31 March 2023: 13%). All revenue relates solely to the Group's principal
activities.
2. Segment Reporting 2024
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 - 3,078 - - 3,078
Service charge income - 1,826 - - 1,826
Asset management fees 2,947 - - - 2,947
Performance related fee income - - - - -
Total revenue 2,947 4,904 - - 7,851
Depreciation and amortisation (38) (26) - - (64)
Operating profit 824 586 - (1,599) (189)
Share of results in associates - - 1,050 - 1,050
Fair value adjustment on associates - - (1,072) - (1,072)
Property impairment - (3,746) - - (3,746)
Investment income - - 134 - 134
Interest income - 36 - 158 194
Interest expense - (780) - - (780)
Profit/(loss) before tax 824 (3,904) 112 (1,441) (4,409)
Analysed as:
Underlying profit/(loss) before tax before adjusting for the following items: 350 (87) 1,184 (1,031) 416
Interest received on loan to associates - - - 158 158
Fair value adjustment on associates - - (1,072) - (1,072)
Property impairment - (3,746) - - (3,746)
Payment in lieu of Management Fees due to end of life 411 - - - 411
Interest provision - (102) - - (102)
Performance related fee income - - - - -
Reversal of provision in respect of rental guarantee - 130 - - 130
Share option charge - - - (636) (636)
Realised foreign currency (losses)/gains 63 (99) - 68 32
Total 824 (3,904) 112 (1,441) (4,409)
Assets - Group 515 49,869 2,623 5,525 58,532
Share of net assets of associates - - 17,275 - 17,275
Liabilities (56) (34,820) - - (34,876)
Net assets 459 15,049 19,898 5,525 40,931
Additions to non-current assets
Property, plant and equipment - 22 - - 22
Investment properties - 1,670 - - 1,670
Segment Reporting 2023
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 - 3,614 - - 3,614
Service charge income - 1,115 - - 1,115
Asset management fees 2,892 - - - 2,892
Performance related fee income (372) - - - (372)
Total revenue 2,520 4,729 - - 7,249
Depreciation and amortisation (36) (24) - - (60)
Operating profit 120 3,069 - (1,185) 2,004
Share of results in associates - - 273 - 273
Fair value adjustment on associates - - (901) - (901)
Investment income - - 1,497 - 1,497
Interest income - 20 - 125 145
Interest expense - (530) - - (530)
Profit/(loss) before tax 120 2,559 869 (1,060) 2,488
Analysed as:
Underlying profit/(loss) before tax before adjusting for the following items: 513 752 273 (1,089) 449
Provision in respect of rent guarantee - 511 - - 511
Profit on the sale of investment properties - 1,779 - - 1,779
Interest received on loan to FOP @12% - 125 - - 125
Fair value adjustment on associates - - (901) - (901)
UK fund distributions following sales of properties - - 1,497 - 1,497
Performance related fee income 222 - - - 222
Clawback of Office income (594) - - - (594)
Staff incentives (44) (65) - - (109)
Realised foreign currency (losses)/gains 23 (543) - 29 (491)
Total 120 2,559 869 (1,060) 2,488
Assets - Group 795 54,525 4,544 4,727 64,591
Share of net assets of associates - - 17,588 - 17,588
Liabilities (71) (36,574) - (59) (36,704)
Net assets 724 17,951 22,132 4,668 45,475
Additions to non-current assets
Property, plant and equipment 8 2 - - 10
Investment properties - 1,017 - - 1,017
Trading stock - 7,443 - - 7,443
3. Interest Income/(Expense)
2024 2023
Group Group
£'000 £'000
Interest income - bank deposits 62 7
Interest income - other 132 138
Total interest income 194 145
2024 2023
Group Group
£'000 £'000
Interest expense - property loans (761) (516)
Interest expense - bank and other (19) (14)
Total interest expense (780) (530)
4. Tax Expense
2024 2023
Group Group
£'000 £'000
Analysis of tax charge for the year
Current tax (244) (559)
Deferred tax 273 110
Total tax charge for the year 29 (449)
The tax charge includes current and deferred tax for continuing operations.
The prior year corporation tax includes a one off charge in respect of the
profit on the sales of three directly held properties, two in Poland and one
in Romania.
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.
5. (Loss)/Earnings/NAV per Share
2024 2023
Basic (loss)/earnings per share (4.13p) 1.73p
Diluted (loss)/earnings per share (4.04p) 1.70p
The following (losses)/earnings have been used to calculate both the basic and
diluted (loss)/earnings per share:
£'000 £'000
Basic (loss)/earnings (4,582) 1,919
Notional interest on share options assumed to be exercised 16 2
Diluted (loss)/earnings assuming full dilution (4,566) 1,921
The following numbers of shares have been used to calculate the basic and
diluted (loss)/earnings per share:
2024 2023
Number Number
Weighted average number of Ordinary shares in issue 110,875,483 110,875,483
(used for basic (loss)/earnings per share calculation)
Number of share options 2,110,000 2,110,000
Total number of Ordinary shares used in the diluted (loss)/earnings per share 112,985,483 112,985,483
calculation
For the purpose of calculating diluted (loss)/earnings per share, the number
of Ordinary Shares is the weighted average number of Ordinary Shares, plus the
weighted average number of Ordinary Shares that would be issued on the
conversion of all the dilutive potential Ordinary Shares into Ordinary Shares.
Options have a dilutive effect only when the average market price of the
Ordinary Shares during the period exceeds the exercise price of the options
and thus they are 'in the money'. For the year to 31 March 2024, the average
market price of the Ordinary Shares did not exceed the exercise price and
therefore the options were not included in the diluted (loss)/earnings per
share calculation.
2024 2023
Net assets per share 35.15p 39.18p
Adjusted net assets per share 39.41p 46.50p
The following numbers have been used to calculate both the net assets and
adjusted net assets per share:
2024 2023
£'000 £'000
For net assets per share
Net assets excluding non-controlling interests 38,977 43,442
Number of shares Number Number
Number of shares in issue at the year end 110,882,332 110,882,332
Number of share options assumed to be exercised 2,110,000 2,110,000
Total 112,992,332 112,992,332
The adjusted net assets is a measure based on IFRS net assets to include the
fair value of i) financial instruments, ii) debt and iii) deferred taxes. The
metric adjusts for the dilutive impact of share options. The calculation
assumes the share options which vested during the period did not have a
dilutive impact as they were not 'in the money' at any point during the
financial year.
£'000 £'000
For adjusted net assets per share
Net assets excluding non-controlling interests 38,977 43,442
Uplift of investment properties at fair value net of deferred tax 4,872 5,639
Uplift of investments in associates and other financial investments to fair 362 3,139
value
Other items 323 324
Total 44,534 52,544
Adjusted net assets per share are calculated using the fair value of all
investments.
6. Share Based Payments
The Company has one share-based payment arrangement scheme in place which is
described below:
Date of grant 31 March 2023
Number granted 10,450,000
Contractual life 10 years to 31 March 2033
Vesting conditions The options vest as follows:
·33.3% on the first anniversary of grant;
·33.3% on the second anniversary of grant; and
· the remainder on the third anniversary of grant.
The estimated fair value of each share option granted has been calculated
using the Black-Scholes pricing model. The model inputs were the share price
at grant date and the exercise price based on the mid- market closing price
on 30 March 2023 of 23.5 pence per Ordinary Share, expected volatility of 30%,
a dividend yield of 1%, a contractual life of 10 years and a risk-free
interest rate of 4.25%.
2024 2023
Group Group
£'000 £'000
Expenses arising from share based payments 636 -
7. Investment Properties
2024 2023
Group Group
£'000 £'000
Investment properties
At 1 April 47,009 23,849
Reclassification of Inventory - 19,795
Additions arising on consolidation - 7,621
Property impairment (3,746) -
Capital expenditure 1,670 1,017
Disposal - (6,459)
Depreciation (350) (134)
Foreign exchange translation 1,173 1,320
At 31 March 45,756 47,009
At the year end the Group held seven properties.
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 €60.72 million (31 March 2023: €61.43
million), the Sterling equivalent at closing foreign exchange rates being
£51.90 million (31 March 2023: £53.97 million).
The Group owes deferred consideration of £10.25 million (€12 million) in
respect of the Gdynia property, which was due for repayment on 11 June 2024
and for which the payment was not made. The Group is in discussions to
restructure the deferred consideration and is hopeful of a positive outcome.
However, in view of the non payment of this liability and the uncertainty over
its future, the Directors have resolved to impair the value of the property
by £3.72 million to match its value to the value of the €12 million
liability. The property was independently valued at 31 March 2024 at €16.04
million with an enforced sales value of €13.13 million.
Amounts recognised in the income statement:
2024 2023
Group Group
£'000 £'000
Rental income from operating leases 3,078 3,614
i. Leasing arrangements where the group is a lessor:
2024 2023
Group Group
£'000 £'000
Minimum lease receipts under non-cancellable operating leases to be received:
Not later than one year 2,569 2,113
Later than one year and not later than five years 7,043 5,190
Later than five years 4,610 2,546
14,222 9,849
Investment properties are comprised of commercial properties that are leased
to third parties. The Group has approximately 55 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 4 years and 10 months
(31 March 2023: 5 years and 2 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:
2024 2023
£'000 £'000
Right of use assets
Current 51 457
Non-current 17 197
2024 2023
£'000 £'000
Lease Liabilities
Current 52 469
Non-current 17 267
ii. Amounts recognised in the Income Statement:
2024 2023
£'000 £'000
Depreciation/ Rent charge of right-of use-assets
Buildings 977 457
977 457
2024 2023
£'000 £'000
Interest expense
Buildings 1,059 154
1,059 154
iii. Summary of the groups leasing activity:
The Group has reviewed the terms of its leases and has identified that there
is only one remaining lease of the UK office on 32 St. James's Street, London,
SW1A 1HD. The lease by First Property Poland Sp. z o. o. (FPP), a subsidiary
entity, for an office in Poland was terminated in November 2023, no premium
was paid in respect of the termination of this lease.
As at 31 March 2024 the Group has recognised a lease liability under IFRS 16
of £0.07 million (31 March 2023: £0.74 million) and a right of use asset of
£0.07 million (31 March 2023: £0.65 million). The net credit to the Income
Statement was £82,245. 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:
2024 2023
Group Group
£'000 £'000
a) Associates
At 1 April 17,588 19,135
Additions - 606
Disposals - (1,349)
Shareholder loan repayments (291) (176)
Share of associates' profit (loss) after tax 1,050 273
Share of associates' revaluation gains/ (losses) (1,072) (901)
Dividends received - -
At 31 March 17,275 17,588
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:
2024 2023
Group Group
£'000 £'000
Investment in associates
FGC 2,968 3,058
FKR 1,090 1,154
FCL 678 636
FPL - 61
FOP 12,539 12,679
17,275 17,588
If the Group had adopted the alternative "fair value" model for accounting for
investment properties, the carrying value of the investments in the five
associates would be £17.64 million (31 March 2023: five associates - £20.73
million).
2024 2023
Group Group
£'000 £'000
b) Other financial assets and investments
At 1 April 4,544 7,445
Additions - 3
Disposals - -
Repayments (456) (1,492)
Increase/ (decrease) in fair value during the year (1,465) (1,412)
At 31 March 2,623 4,544
The Group holds four (31 March 2023: four) unlisted investments in funds
managed by it. Each is designated at fair value through "Other Comprehensive
Income" (OCI) as per IFRS 9. The Directors consider their fair value to 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.
10. Goodwill
2024 2023
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:
2024 2024 2024 2023 2023 2023
Group net assets £'000 Group assets £'000 Group liabilities £'000 Group net assets £'000 Group assets £'000 Group liabilities £'000
Accrued interest payable 182 182 - 106 106 -
Accrued income (14) - (14) (5) - (5)
Foreign bank loan (539) 153 (692) (480) 130 (610)
Investment properties and inventories (1,817) 496 (2,313) (1,476) 604 (2,080)
Other temporary differences (49) 161 (210) (265) 90 (355)
At 31 March (2,237) 992 (3,229) (2,120) 930 (3,050)
12. Trade and Other Receivables
2024 2023
Group Group
£'000 £'000
Current assets
Trade receivables 2,077 2,106
Less provision for impairment of receivables (220) (242)
Trade receivables net 1,857 1,864
Other receivables 1,804 1,820
Prepayments and accrued income 484 1,113
At 31 March 4,145 4,797
£976,000 of trade receivables were erroneously presented in trade payables as
at 31 March 2023 and have been reclassified to trade receivables.
13. Trade and Other Payables
2024 2023
Group Group
£'000 £'000
Current liabilities
Trade payables 2,040 2,177
Other taxation and social security 226 254
Other payables and accruals 1,405 1,819
Deferred income 117 128
At 31 March 3,788 4,378
14. Financial Liabilities
2024 2023
Group Group
£'000 £'000
Current liabilities
Bank loan 832 1,116
At 31 March 832 1,116
Non-current liabilities
Bank loans 9,690 11,519
At 31 March 9,690 11,519
2024 2023
Group Group
£'000 £'000
Total obligations under bank loans
Repayable within one year 832 1,116
Repayable within one and five years 6,948 8,080
Repayable after five years 2,742 3,439
At 31 March 10,522 12,635
Four bank loans all denominated in Euros and totalling £10.52 million (31
March 2023, five bank loans: £12.64 million), included within financial
liabilities, are secured against investment properties owned by the Group. The
reduction was largely due to the repayments in full of the remaining bank loan
secured against the Group's directly held office property in Bucharest £0.80
million, other capital repayments totalling £1.01 million and a favourable
foreign exchange movement of £0.30 million.
These bank loans are otherwise non-recourse to the Group's assets.
The interest rate profile of the Group's financial liabilities at 31 March
2024 and 31 March 2023 was as follows:
Interest bearing Non- Total
interest
£'000 bearing
£'000 £'000
Bank loans 10,522 - 10,522
Other financial liabilities - 17,095 17,095
At 31 March 2024 10,522 17,095 27,617
Bank loans 12,635 - 12,635
Other financial liabilities - 17,021 17,021
At 31 March 2023 12,635 17,021 29,656
A one percentage point increase in interest rates would increase the annual
interest bill by £0.11 million per annum (2023: £0.13 million).
15. Other Financial Liabilities
2024 2023
Group Group
£'000 £'000
Current liabilities 12,244 939
Non-current liabilities 4,851 16,082
2024 2023
Group Group
£'000 £'000
Total obligations under Other Financial Liabilities
Repayable within one year 12,244 939
Repayable within one and five years 4,851 14,317
Repayable after five years - 1,765
At 31 March 2024 17,095 17,021
Current liabilities include the balance of £10.25 million (debt denominated
in Euro, €12.00 million) which was as 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 was repayable by 11 June 2024. No interest is
payable on this current liability. This repayment was not made and the Group
is in discussions to restructure the deferred consideration and is hopeful of
a positive outcome. During the year Sterling strengthened against the Euro by
2.8% which has reduced our liability in respect of Gdynia by £0.28 million.
Other financial liabilities also includes the Group's investment in Blue
Tower, Warsaw, which was originally financed by deferred consideration
totalling £7.20 million (debt denominated in Polish Zloty, PLN 40.40 million)
This liability, which is non-interest bearing, is payable in seven
instalments, the first of which was paid in August 2022, the subsequent
instalment which was due in August 2023 was delayed and remains within current
liabilities along with the next instalment due in August 2024. During the year
Sterling weakened against the Polish Zloty by 5.4% which has increased our
liability in respect of Blue Tower by £0.35 million.
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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