Final Results

First Property Group PLC 08 June 2005 FIRST PROPERTY GROUP PLC PRELIMINARY RESULTS For Year Ended 31 March 2005 8 June 2005 Record results reflect continued growth and a 63% increase in profit First Property Group plc ('First Property' or 'the Company') (AIM: FPO), the online property transaction platform and property fund and asset manager, announces preliminary results for the year ended 31 March 2005. Highlights of the results are as follows: Financial Highlights • Turnover grew 51% to £5,650,000 (2004: £3,745,000) • Profit on ordinary activities before tax increased 63% to £955,000 (2004: £586,000) • Dividend per share up 25% to 0.125p (2004: 0.1p) • Net assets increased by 131% to £6,375,000 (2004: £2,756,000) Corporate Highlights • Property transaction underwriting activities have continued to grow, with a 33% gross profit contribution increase to £1,307,000 (2004: £983,000) • First Property Asset Management now has £21 million of assets under management. The first three funds, which had traded throughout the year under review, earned rates of return on equity of 30%, 27% and 23% respectively in the reporting period • A further fund is planned, which will be launched when the latest fund is fully invested • Commercial Property Database Membership increased following initiatives to target local boroughs and development authorities • Polish office due to open with further international expansion under consideration Commenting on the results, Ben Habib, chief executive of First Property, said: ' The performance of the Company over the period has been strong and has continued into the current year. We look forward to continuing to build the Group both organically and, where appropriate, through acquisitions which meet the high standards we require. Our international aspirations and, notably, the office we are setting up in Warsaw, give me particular encouragement. I look forward to delivering further shareholder value going forward.' For further information: Ben Habib Jeremy Carey / Richard Sunderland / Rachel Drysdale First Property Group plc Tavistock Communications Tel 020 7731 2844 Tel: 020 7920 3150 www.fprop.com rsunderland@tavistock.co.uk CHIEF EXECUTIVE'S STATEMENT Results and dividend I am pleased to report that the results for the year to 31 March 2005 show another period of progress for the Group. Turnover for the year grew to £5,650,000 (2004: £3,745,000), providing an increased gross profit of £1,881,000 (2004: £1,501,000) and a profit on ordinary activities before taxation of £955,000 (2004: £586,000). During the period, net assets more than doubled to £6,375,000 (2004: £2,756,000). On the basis of these results and our continued confidence in the Company's performance, the Directors have resolved to recommend an increased dividend for the year of 0.125 pence per share (2004: 0.1 pence per share), which, if approved, will be paid on 16 September 2005 to shareholders on the register at 19 August 2005. Review of operations Property transaction underwriting Profits earned from our underwriting activities have continued to grow and this division made another substantial contribution during the year. Turnover from this activity improved to £5,058,000 (2004: £3,186,000), producing a gross profit contribution of £1,307,000 (2004: £983,000). As many shareholders will be aware, the commercial property investment market in the UK has risen sharply over the last few years and a large proportion of properties for sale are, in our view, overvalued. A reason often given for the sustainability of higher values is the currently low interest rate environment. However, this two dimensional analysis of the market fails to take into account the relatively poor occupational markets both for offices and retail, where there is a serious risk of marked reductions in value if properties become vacant. Opportunities continue to present themselves but we remain judicious in our decisions. However, the underwriting business has made a good start to the current year having entered into a number of what we anticipate will be profitable transactions already. In the absence of any material adverse change in the UK economy, we expect this division to make a further strong contribution to profits during the year to 31 March 2006. Property asset management Revenue earned by this division during the year amounted to £334,000 (2004: £208,000). Of the fees earned, £146,000 (2004: £139,000) was in respect of super performance fees. We now have over £21 million of property assets under management (2004: £13 million). We are in the process of investing our most recent fund which, when fully invested, will amount to an additional sum of £10 million under management. We are taking steps to raise a further fund, which we will close once our existing funds are fully invested. The pre-tax rates of return on equity earned by our first three funds in the last year (being the three funds which had been in existence for the full year) were 30%, 27% and 23% respectively. It may not be possible to sustain such high levels of returns but we are confident of continuing to earn attractive rates. As mentioned above, the commercial property investment market in the UK has risen sharply over the last few years. As with our underwriting activities, we continue to find good investment opportunities, even in this climate, although they are harder to come by. Given the above, we have been exploring the possibility of buying properties in other parts of the world, where we believe the rate of growth will be better than in the UK and where our skills can be effectively deployed. In particular, we are attracted by the opportunities available in Poland and, following a number of trips to the country, we are in the process of opening an office in Warsaw, for which a general manager has already been recruited. It is early days but if we are successful in expanding our asset management activities internationally, we would expect to grow this division at a materially faster rate than at present. Commercial Property Database CPD, our online property database and web design division, continues to trade satisfactorily, though, as mentioned at the interim stage, the loss of certain website design mandates was felt particularly in the first half of the year. This division earned revenue of £204,000 (2004: £289,000). We have a number of initiatives underway which we expect will boost the revenue of this division, including the continued targeting of local boroughs and regional development authorities. Since we reported in November, we have secured the City of Sunderland and Portsmouth Harbour Forum as members and created a new Client Relationship Management system for each of them. In addition, we have gained fourteen new agents as members. We expect this division to continue to trade satisfactorily for the year to 31 March 2006. Online sales of commercial property During the period, we continued to sell properties successfully through our online system. Revenue earned from the online sale of commercial properties was £54,000 (2004: £63,000). Given the reach of the Internet, our system lends itself well to selling residential and international property. Indeed, we have already successfully marketed English residential properties and, most recently, a retail parade in Marbella in Spain. Our email database of property agents and principals is also becoming increasingly broader and more international. In order to accelerate the expansion of this division, we would ideally like to recruit a dedicated team. This has proved very difficult given the strength of the commercial property investment market, though we continue to work on identifying and recruiting such a team. We remain convinced that, with or without a dedicated team, this division will prove to be very valuable for the Company. Strategy Our strategy remains to grow our sustainable lines of revenue, most notably our asset management, CPD and online sales divisions. We will also continue to target interesting properties through our underwriting service. In order to bolster CPD and the online sales division, we continue to look for earnings enhancing acquisitions, although none that we have considered have thus far been of a sufficiently high quality to pursue. Current trading and prospects We continue to be pleased by the rate of growth of the Company and, subject to market conditions we expect this growth to continue during the current year. Ben Habib Chief Executive 8 June 2004 CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 March 2005 2005 2004 (Unaudited) (Audited) Notes Total Total results results £'000 £'000 Turnover - continuing operations 5,650 3,745 Total turnover 5,650 3,745 Cost of sales (3,769) (2,244) Gross profit 1,881 1,501 Net operating expenses (931) (868) Operating profit - continuing operations 950 633 Total operating profit 950 633 Income - fixed asset investment 1 10 Share of associated company's profit before 11 - tax Net interest payable (7) (57) Profit on ordinary activities before 955 586 taxation Taxation on ordinary activities (2) (2) Profit for the year before minority 953 584 interest Equity minority interest 17 34 Profit for the year 970 618 Dividend on ordinary shares 3 (158) (93) Profit transferred to reserves 5,6 812 525 Earnings per Ordinary 1p share - basic 2 0.92p 0.67p - diluted 2 0.90p 0.65p The Group has no recognised gains and losses other than those above and therefore no separate statement of total recognised gains and losses has been presented. CONSOLIDATED BALANCE SHEET at 31 March 2005 2005 2004 (Unaudited) (Audited) Notes Group Group £'000 £'000 Fixed assets Tangible assets 21 8 Investments 100 5 121 13 Current assets Stocks 4,001 3,728 Debtors 1,355 1,207 Cash at bank and in hand 1,588 469 6,944 5,404 Creditors: amounts falling due (690) (2,661) within one year Net current assets 6,254 2,743 Total assets less current 6,375 2,756 liabilities Net assets 6,375 2,756 Capital and reserves Called up share capital 4 1,116 931 Share premium 5 5,298 2,676 Merger reserve 5 5,823 5,823 Profit and loss account 5 (5,862) (6,674) Equity shareholders' funds 6 6,375 2,756 CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 March 2005 Notes 2005 2004 £'000 £'000 (Unaudited) (Audited) Net cash inflow/(outflow) from operating activities 7 565 (354) Returns on investments and servicing of finance - Dividends paid (112) (46) - Dividends received 1 10 - Interest received 53 13 - Interest paid (60) (70) Net cash (outflow) from returns on investments and servicing (118) (93) of finance before taxation Taxation (2) - Capital expenditure and financial investment - Purchase of tangible fixed assets (19) (6) - Sale of tangible fixed assets - - - Purchase of fixed asset investments (85) - - Sale of fixed asset investments - 20 Net cash (outflow)/inflow from capital expenditure and (106) 14 financial investment Cash inflow/(outflow) before management of liquid resources 341 (433) and financing Management of liquid resources - (Increase) in short term deposits 8 (995) (1) Financing - Issue of shares net of expenses 2,807 22 - Bank overdraft - (9) - Loans advanced 134 2,163 - Loan repayments (2,163) (1,588) Net cash (outflow) / inflow from management of liquid (217) 587 resources and financing Increase in cash in the year 8 124 154 Reconciliation of net cash flow to movement in net funds Notes 2005 2004 £'000 £'000 Increase in cash in the year 124 154 Movement in short term deposits 995 1 Movement in loans and bank overdraft 2,029 (566) Movement in net funds in the year 3,148 (411) Net funds at 1 April (1,694) (1,283) Net funds at 31 March 8 1,454 (1,694) NOTES TO THE FINANCIAL STATEMENTS 1. Basis of preparation The figures for the year ended 31 March 2005 are unaudited and are not full financial statements. The figures for the years ended 31 March 2005 and 31 March 2004 are non-statutory. The figures for the year ended 31 March 2004 are extracts from the full financial statements delivered to the Registrar of Companies. The report of the auditors on those financial statements was unqualified and contained no statements under either Section 237(2) or 237(3) of the Companies Act 1985. 2. Earnings per share The calculation of basic earnings per share on the net basis is based on the profit for the year of £970,000 (2004: £618,000) and on 105,642,729 (2004: 92,742,244) ordinary shares being the weighted average number of ordinary shares in issue and ranking for dividend during the year. The calculation of diluted earnings per share on the net basis is based on an adjusted profit for the year of £980,000 (2004: £627,000) and on 108,842,729 (2004: 96,123,302) ordinary shares being the adjusted weighted average number of ordinary shares at the year-end including shares under option which are exercisable at less than the market price at the year-end. Dividend on ordinary shares 2005 2004 £'000 £'000 Final Dividend for 2004, paid on new issues 18 - Proposed Final Dividend of 0.125 pence per share 140 93 (2004: 0.10 pence per share) 158 93 4. Called-up share capital 2005 2004 £'000 £'000 Authorised 240,000,000 (2004: 120,000,000) Ordinary shares of 1p each 2,400 1,200 Allotted, called up and fully paid 111,601,115 (2004: 93,085,698) Ordinary shares of 1p each 1,116 931 5. Share premium account and reserves Group Share premium Merger Profit account reserve and loss account £'000 £'000 £'000 At 1 April 2004 2,676 5,823 (6,674) Shares issued during year 2,726 - - Cost of share issue (104) - - Profit for the year - - 812 At 31 March 2005 5,298 5,823 (5,862) 6. Reconciliation of movements in equity shareholders' funds Group 2005 2004 £'000 £'000 Opening shareholders' funds 2,756 2,209 Profit/(loss) for the financial year 812 525 New share capital issued 185 7 Share Premium 2,726 15 Increase in merger reserve - - Share issue costs (104) - Closing shareholders' funds 6,375 2,756 7. Reconciliation of operating profit to net cash inflow/(outflow) from operating activities 2005 2004 £'000 £'000 Operating profit 950 633 Depreciation and profit on disposal of fixed assets 6 17 (Increase) in stocks (273) (538) (Increase)/decrease in trade debtors (241) 199 Decrease/(increase) in prepayments and other debtors 110 (720) (Decrease)/increase in trade creditors (32) 172 Increase/(decrease) in taxation and social security 1 (50) Increase/(decrease) in other creditors, accruals and deferred income 44 (67) Net cash inflow/(outflow) from operating activities 565 (354) 8. Reconciliation of movement in net funds 1 April Cash flow 31 March 2004 2005 £'000 £'000 £'000 Cash at bank and in hand 469 1,119 1,588 Short term deposits (14) (995) (1,009) Cash (excluding short term deposits) 455 124 579 Short term deposits 14 995 1,009 Debt due within one year - Property loan (2,163) 2,029 (134) (1,694) 3,148 1,454 9. Report circulation Copies of this preliminary results announcement are available from the Company's registered office at 17 Quayside Lodge, William Morris Way, London SW6 2UZ. Copies of the Annual Report and Accounts will be sent to shareholders by 2 August 2005 for approval at the Annual General Meeting to be held on 6 September 2005 and will also be available at the Company's registered office. This information is provided by RNS The company news service from the London Stock Exchange

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