Interim Results

RNS Number : 9945X
First Property Group PLC
26 November 2014
 

Date:

26 November 2014

On behalf of:

First Property Group plc ("First Property" or "the Group")

Embargoed:

0700hrs

 

First Property Group plc

Interim Results for the six months to 30 September 2014                                

 

First Property Group plc (AIM: FPO), the property fund management group, today announces its interim results for the six months to 30 September 2014.

 

Financial Highlights:

 


Unaudited

Six months to

30 September 2014

Unaudited

Six months to

30 September 2013

Percentage change

Audited

Year to

31 March

2014






Profit before tax 

£5.42m

£1.91m

+184%

£6.6m

Diluted earnings per share

4.07p

1.27p

+220%

4.53p

Dividend per share

0.35p

0.33p

+6%

1.12p






Profit before tax and central overheads by segment:





Property fund management (FPAM)

£2.90m

£1.41m

+106%

£2.63m

Group Properties (incl FOP)

£2.97m

£0.89m

+234%

£6.32m






Average €/ £ rate in the period

1.250

1.171

-7%

1.188

Period-end €/ £ rate

1.283

1.196

-7%

1.210






Net assets

£26.62m

£19.45m

+37%

£23.46m

Cash Balances

£12.05m

£10.60m

+14%

£11.28m

Gross Debt

£56.66m

           £25.11m

+126%

      £51.56m

 

Assets under management:               

 

£309m

 

£338m

 

-9%

 

£341m

   Poland

66%

71%


67%

   UK

34%

26%


30%

   Romania

-

3%


3%

 

Explanatory Notes and Highlights:

 

·      The impact of a weaker Euro versus Sterling during the period compared to the same period last year resulted in profit before tax being c£177,000 lower than it would otherwise have been.

 

·      The increase in profit before tax to £5.42 million (2013: £1.91 million) was largely attributable to the contribution made to earnings by:

 

Fund Management:

 

The performance fee earned by the Group of £1.9 million (2013: nil) on profits made by Fprop PDR. Fprop PDR sold six properties during the period with a total value of £28.2 million and earned a net profit, after the deduction of the Group's performance fee, of £7.7 million for its investors.

 

Group Properties:

 

i.    The two investments made by FOP in the second half of last year resulted in a contribution to the Group's profit before tax during the period of £585,000 (2013: nil).

 

ii.    The increase in the Group's interest in Blue Tower from 28.5% to 48.2% in the second half of last year resulted in an increased contribution to the Group's profit before tax during the period of £741,000 (2013: £566,000).

 

iii.   The purchase and subsequent refinancing by the Group of three properties in Romania made a contribution to the Group's profit before tax during the period of £1.26 million (2013: nil). It should be noted that of the £1.26 million, £1.12 million represents a non-cash item on the recognition of negative goodwill created by the refinancing of the bank loan secured on the properties.

 

·      Interim dividend increased by 6% to 0.35 pence per share (2013: 0.33 pence per share).

 

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

 

"I am very pleased by the continued good progress made by the Group.

 

"The investments made by Fprop Opportunities Plc and ourselves last year have made a material contribution to the Group's earnings in the first half and we expect this to continue. In addition, Fprop PDR has delivered some excellent trading profits for its investors and the Group.

 

"The opportunities available to Fprop PDR are not as plentiful as they were last and earlier this year but we expect it to continue to earn trading profits from its activities.

 

"Our balance sheet is strong, the visibility of our earnings into 2015 and beyond is continually improving and I look to the future with confidence."                                                                                                                         

 

A briefing for analysts will be held at 09:30hrs today at the headquarters of First Property Group plc, 35 Old Queen Street, London, SW1H 9JA. Participants can also attend by telephone on +44 (20) 3364 5719 (pin 868413) or online via http://www.livemeeting.com/cc/premconfeurope/ by entering name, meeting ID 3719600 and password pw3556. A recorded copy of the audio call will subsequently be posted on the company website, www.fprop.com.

 

For further information please contact:

 

First Property Group plc

Tel: 020 7340 0270

Ben Habib (Chief Executive & Chief Investment Officer)

George Digby (Group Finance Director)

Jeremy Barkes (Director, Business Development)

www.fprop.com



Arden Partners

Tel: 020 7614 5917

Chris Hardie




Redleaf Polhill

Tel:  020 7382 4747

George Parrett/ Henry Columbine

firstproperty@redleafpr.com

 

Notes to Investors and Editors:

 

First Property Group plc is a property fund manager with operations in the United Kingdom and Central Europe. The investment performance of its funds under management is ranked No.1 versus the Investment Property Databank (IPD) universe for Central & Eastern Europe (CEE) over the eight years to 31 December 2013, having previously ranked No.1 versus the IPD CEE universe over the three, four, five, six and seven years to 31 December 2008, 2009, 2010, 2011 and 2012 respectively.

 

The business model of First Property Group is to:

 

·    Raise and manage third party funds to invest in property;

·    Co-invest in these funds and thereby earn a return on its own capital invested; and

·    Earn fees for the management of these funds. Fees earned are typically a function of the value of assets under management as well as the performance of the funds.

 

Further information about the Company can be found at: www.fprop.com.

 

 

CHIEF EXECUTIVE'S STATEMENT

 

Financial Results

 

I am pleased to report interim results for the six months ended 30 September 2014.

 

Revenue earned by the Group amounted to £7.79 million (2013: £4.27 million) yielding a profit before tax of £5.42 million (2013: £1.91 million). The increase in revenue and profit before tax is mainly attributable to the contribution made to earnings by:

 

·    Fund Management:

 

The performance fee of some £1.9 million (2013: nil) on profits made by Fprop PDR.

 

 

·    Group Properties:

 

 

 

 

Diluted earnings per share were 4.07 pence (2013: 1.27 pence).

 

The Group ended the period with net assets of £26.62 million (2013: £19.45 million). Its cash balance was £12.05 million (2013: £10.60 million), of which £4.28 million (2013: £8.51 million) was held by Fprop Opportunities plc (76.2% owned by the Group) and £481,000 (2013: £539,000) 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 increase the interim dividend by 6% to 0.35 pence per share (2013: 0.33 pence per share) which will be paid on 15 January 2015 to shareholders on the register at 19 December 2014, with an ex-dividend date of 18 December 2014.

 

Review of Operations

 

Property Fund Management (First Property Asset Management Ltd or FPAM)

 

As at 30 September 2014 assets under management were valued at £309 million (2013: £338 million). Of these, 66% were located in Poland and 34% in the UK. There were ten property sales and three property purchases made by funds under management during the period. The reduction in the value of assets under management is primarily attributable to the value of properties sold exceeding the value of properties purchased.

 

Revenue earned by this division increased by 82% to £3.55 million (2013: £2.02 million), resulting in a profit before tax and unallocated central overhead costs of £2.90 million (2013: £1.41 million). This represents 49.4% (2013: 61.3%) of Group profit before tax and unallocated central overhead costs. The increase in profit before tax of this division is largely attributable to the performance fee earned by the Group of £1.9 million, on profits made by Fprop PDR. The performance fee was received after the period end but is recognised in these accounts.

 

Fprop PDR acquired two properties with a total value of £11.2 million during the period and sold six properties with a total value of £28.2 million. The net profit earned for its investors from these sales, after the deduction of the performance fee, amounted to £7.7 million, representing an un-geared IRR of 46.8%.

 

A synopsis of each of the funds managed by the Group is set out below:

 

Fund

Country of investment

Established

Fund expiry

Assets under management

% of total assets

 under management

SAM Property Company Ltd (SAM)

UK

August

2004

Rolling

*

*

Regional Property Trading Ltd (RPT)

Poland

August

2004

August

2015

£6.7m

2.2%

5th Property Trading Ltd (5PT)

Poland

December  2004

December  2017

£8.5m

2.8%

USS Fprop Managed Property Portfolio LP

Poland

August

2005

August 

2015

£145.8m

47.1%

UK Pension Property Portfolio  LP (UK PPP)

UK

February 2010

February  2017

£93.4m

30.2%

Fprop Opportunities plc (FOP)

Poland

October

2010

October 

2020

£43.7m

14.1%

Fprop PDR LP

UK

October

2013

May

2018

£11.2m

 

3.6%

Total




£309.3m

100%

 

* Not subject to recent revaluation

 

The expiry of our fund management contract with USS in August 2015 is now less than a year away. This fund has so far sold seven properties, which have been acquired either by the Group or funds managed by FPAM. The anticipated earnings derived from these purchases should materially mitigate the decline in fee income the Group will experience when this fund management mandate comes to an end next year. Further sales by this fund are expected this and next year. Recurring annual fund management fee income has declined year on year by some £1.1 million per annum, caused largely by property disposals by the USS fund, but also by a weaker Euro and lower Polish property values.

 

UK PPP, which is fully invested in 21 recessionary-resilient UK properties, continues to generate an un-geared dividend yield of some 6.3% per annum. Capital values of the properties held by UKPPP have risen during the course of this year as the market for secondary property recovers. We expect this trend to continue. The portfolio of properties, which was assembled after the onset of the credit crunch, has an occupancy ratio of 98.9% and a weighted average unexpired lease term of over nine years.

 

FOP is invested in five Polish properties which are generating an aggregate annualised rate of return on equity in excess of 30% per annum.

 

Group Properties

 

Group Properties comprises four commercial properties held directly by the Group and shareholdings at the period end in five of the seven funds managed by FPAM.

 

Profit before tax and unallocated central overhead costs from Group Properties, including FOP (in which the Group is a 76.2% shareholder), was £2.97 million (2013: £0.89 million). This represents 50.6% (2013: 38.7%) of Group profit before tax and unallocated central overhead costs.

 

The increase in profit before tax earned by Group Properties resulted mainly from:

 

·    The two investments made by FOP in the second half of last year which contributed £585,000 (2013: nil).

 

·    The increase in the Group's interest in Blue Tower from 28.5% to 48.2% in the second half of last year which contributed £741,000 (2013: £566,000).

 

·    The purchase and subsequent refinancing by the Group of three properties in Romania which made a contribution of £1.26 million (2013: nil). It should be noted that, of the £1.26 million, £1.12 million represents a non-cash item on the recognition of negative goodwill created by the refinancing of the bank loan secured on the properties.

 

Co-investments in FPAM managed funds at the year-end:

 

Fund

% owned by

First Property

Group

Book value of First Property's share in

fund

Current market value of holdings

Group's share

of earnings by fund

Investments





UK Pension Property Portfolio LP (UK PPP)

0.9%

£900,000

£900,000

£30,000

Fprop PDR LP

5%

£1.2m

£1.2m

£nil

Interest in associates





5th Property Trading Ltd (5PT)

37.8%

£868,000

£1.21m

£81,000

Regional Property Trading Ltd (RPT)

28.6%

£147,000

£214,000

£26,000

Share of results in associates




£107,000

Consolidated undertaking





Fprop Opportunities plc (FOP)

76.2%

£7.1m

£10.9m

£607,000

 

 

Our interests in FPAM's managed funds are accounted for, in the case of UK PPP as "dividend income", in the cases of 5th Property Trading Ltd and Regional Property Trading Ltd as "shares in associates", and in the case of FOP, on a consolidated basis because of the Group's majority shareholding. It is the Group's policy to carry its investments at the lower of cost or market value for accounting purposes, and to recognise dividends when received.

 

FOP's revenue and profit before tax for the half year to 30 September 2014 amounted to £2.65 million (2013: £1.05 million) and £796,000 (2013: £466,000) respectively, and the Group's 76.2% share of profit before tax amounted to £607,000 (2013: £355,000).

 

FOP's most recent investment was made on 19 September, when it acquired an office block in Warsaw valued at some €12 million, for an initial consideration of £294,000. The property is currently being refinanced following which FOP will be fully invested. We expect it to contribute some €450,000 (£355,000) to FOP's profit before tax during the second half of the year, of which the Group's share would amount to some €340,000 (£270,000).

 

Our shareholdings in our two other Polish funds, 5th Property Trading and Regional Property Trading, contributed £107,000 (2013: £96,000) to the Group's profit before tax.

 

Our co-investment in UK PPP contributed £30,000 (2013: £30,300) of dividend income to the Group and is accounted for as a separate line item in our Income Statement.

 

Our co-investment in Fprop PDR earned a dividend after the period end of £390,000, which will be accounted for in the results for the year to March 2015.

 

Commercial Property Markets Outlook

 

Poland:

 

Poland's economic success continues despite headwinds from the rest of Europe and Ukraine. Growth in GDP for 2014 is expected to be some 3% and is forecast to grow by a similar amount in 2015, building on its cumulative growth since 2009 of some 16%. This compares to a contraction in GDP across the Euro zone over the same period of -1.2%. Inflation is close to nil and the reference interest rate stands at 2% (following a recent 0.5% cut). The Polish Zloty/Euro exchange rate has been relatively stable at around PLN 4.1-4.3 for a number of years. 

 

Occupational demand for commercial property has risen but so too has new supply across all property sectors. The rate of increase in supply is exceeding the rate of take-up and vacancy rates are forecast to rise, in particular for offices in Warsaw and regional shopping centres.

 

Investment demand is mainly from German, US and UK investors and is for prime properties of large lot sizes. The transaction volume for 2014 is expected to exceed €3 billion, similar to 2013, itself the highest volume since 2006.

 

Our investment focus remains on properties which international investors are not focused on and from which we can earn high rates of income return from rent alone.

 

United Kingdom:

 

The rate of GDP growth in the UK would appear to be moderating but it is still growing faster than most of Europe and at a faster rate than was expected a year ago. The growth rate for 2014 is expected to be around 3%, dropping to 2.7% in 2015.

 

Occupational demand has increased across all property sectors and rental growth is beginning to materialise, albeit from multi-year lows.

 

The weight of money in the investment market has resulted in rising values across all property sectors. Total returns have now exceeded the long term average for five consecutive quarters, a trend which we expect to continue but which makes us wary. 

 

House prices have risen in all regions but price increases generally appear to have stalled, with some commentators suggesting price falls next year, in part due to the introduction of stricter mortgage lending criteria. However, the number of new housing starts, running at some 138,000 in the year to June 2014 (up by some 20% over the prior year), is still insufficient to address the structural imbalance between supply and demand, in particular in the south of England.

 

 

Current Trading and Prospects

 

I am very pleased by the continued good progress made by the Group.

 

The investments made by FOP and ourselves last year have made a material contribution to the Group's earnings in the first half and we expect this to continue. In addition, Fprop PDR has delivered some excellent trading profits for its investors and the Group.

 

The opportunities available to Fprop PDR are not as plentiful as they were last and earlier this year but we expect it to continue to earn trading profits from its activities.

 

Our balance sheet is strong, the visibility of our earnings into 2015 and beyond is continually improving and I look to the future with confidence.

           

 

Ben Habib

Chief Executive

25 November 2014



CONDENSED CONSOLIDATED INCOME STATEMENT

for the six months to 30 September 2014

 


 

 

 

 

 

 

Notes

Six months to

30 Sept 2014 (unaudited)

 

Total results

£'000

Six months to

 30 Sept 2013 (unaudited)

 

Total results

£'000

Year to

31 March 2014

(audited)

 

Total results

£'000






Revenue

2

7,785

4,272

18,045

Cost of sales


(910)

(656)

(5,800)

Gross profit


6,875

3,616

12,245

Recognition of negative goodwill on

refinancing of subsidiary

6

1,123

-

-

Fair value adjustment to investment

properties


(89)

-

-

Operating expenses


(1,726)

(1,468)

(5,019)

Operating profit

2

6,183

2,148

7,226

Share of results in associates


107

96

190

Dividend income


30

30

63

Re-classification of gains previously

recognised as equity


-

-

35

Loss on disposal of assets held for resale


-

-

(7)

Interest income


35

56

148

Interest expense


(934)

(419)

(1,057)

Profit on ordinary activities before tax

2

5,421

1,911

6,598

Tax expense

3

(433)

(270)

(962)

Profit for the period


4,988

1,641

5,636






Attributable to:





Owners of the parent


4,792

1,492

5,281

Non-controlling interest


196

149

355



4,988

1,641

5,636






Earnings per Ordinary 1p share





-basic

4

4.24p

1.34p

4.75p

-diluted

4

4.07p

1.27p

4.53p

 

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

for the six months to 30 September 2014

 


Notes

Six months to 30 Sept 2014

Six months to

30 Sept 2013

Year to

31 March 2014



unaudited

unaudited

audited



£'000

£'000

£'000






Profit for the period


4,988

1,641

5,636






Other comprehensive income





Exchange differences on retranslation of foreign subsidiaries

Revaluation of available-for-sale financial assets


(1,091)

 

43

(376)

 

7

(128)

 

-

Re-classification of fair value gains on available for sale assets and profit or loss


-

-

(35)

Taxation


-

-

-

Total comprehensive income for the year


3,940

1,272

5,473





Total comprehensive income for the year:

Owners of the parent

Non-controlling interest





4,007

(67)

1,405

(133)

5,327

146



3,940

1,272

5,473



 

CONDENSED CONSOLIDATED BALANCE SHEET

as at 30 September 2014

 


Notes

As at

30 Sept 2014 (unaudited)

£'000

As at

30 Sept 2013 (unaudited)

£'000

As at

31 March 2014 (audited)

£'000






Non-current assets





Goodwill


153

114

153

Investment properties

5

51,026

19,880

48,759

Property, plant and equipment


53

25

65

Interest in associates

7a

707

686

675

Other receivables

8

349

426

400

Other financial assets

7b

2,400

870

1,706

Deferred tax assets


846

229

839

Total non-current Assets


55,534

22,230

52,597






Current assets





Inventories - land and buildings


12,170

11,582

12,304

Current tax assets


55

-

76

Trade and other receivables 

8

3,565

1,433

4,135

Cash and cash equivalents


12,048

10,599

11,279

Total current assets

 

 

27,838

23,614

27,794

Current liabilities





Trade and other payables

9

(2,894)

(1,270)

(4,224)

Financial liabilities

10a

(2,172)

(3,305)

(4,349)

Current tax liabilities


(242)

(10)

(247)

Total current liabilities 


(5,308)

(4,585)

(8,820)

Net current assets

 

 

22,530

19,029

18,974

Total assets less current liabilities


78,064

41,259

71,571






Non-current liabilities





Financial liabilities

10b

(50,486)

(21,808)

(47,212)

Deferred tax liabilities


(962)

-

(897)

Net assets


26,616

19,451

23,462






Equity





Called up share capital


1,149

1,149

1,149

Share premium


5,503

5,493

5,498

Foreign Exchange Translation Reserve


(1,742)

(1,089)

(914)

Share-based payment reserve

Investment revaluation reserve


218

(43)

218

(44)

203

(86)

Retained earnings


20,718

13,006

16,717

Issued capital and reserves attributable to the owners of the parent


25,803

18,733

22,567

Non-controlling interest


813

718

895

Total equity


26,616

19,451

23,462



 

CONDENSED CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY

for the six months to 30 September 2014

 


Share

capital

 



£'000

Share premium

 



£'000

Share Based

Payment Reserve

 

£'000

Foreign Exchange Translation Reserve

 

£'000

Purchase/Sale of own Shares

 

£'000

Investment

Revaluation

Reserve

 

 

£'000

Retained Earnings



 

£'000

Non-controlling Interest



£'000

TOTAL

At 1 April 2013

1,149

5,492

203

(995)

(603)

(51)

12,947

401

18,543

Total comprehensive income for the period

-

-

-

(94)

-

-

1,641

(282)

1,265

Net decrease in fair value of available for sale financial assets

-

-

-

-

-

7

-

-

7

Share based payments

           -

-

15

-

-

-

-

-

15

Non-controlling interest

-

-

-

-

-

-

(149)

149

-

Increase in non-controlling interest

-

-

-

-

-

-

-

507

507

Treasury Shares

-

1

-

-

4

-

-

-

5

Dividends paid

-

-

-

-

-

-

(834)

(57)

(891)

At 30 Sept 2013

1,149

5,493

218

(1,089)

(599)

(44)

13,605

718

19,451

Total comprehensive income for the period

-

-

-

175

-

-

3,995

73

Net decrease in fair value of available for sale financial assets

 

-

 

-

 

-

 

-

 

-

 

(42)

 

-

 

-

Non-controlling interest

-

-

-

-

-

-

(206)

206

Decrease in non-controlling interest

-

-

-

-

-

-

-

(63)

Treasury Shares

-

5

-

-

289

-

-

-

Share based payments

-

-

(15)

-

-

-

-

-

Dividends paid

-

-

-

-

-

-

(367)

(39)

(406)

At 1 April 2014

1,149

5,498

203

(914)

(310)

(86)

17,027

895

23,462

Total comprehensive income for the period

Net decrease in fair value of available for sale financial assets

-

 

 

 

-

 

-

 

 

 

-

-

 

 

 

-

(828)

 

 

 

-

-

 

 

 

-

-

 

 

 

43

4,988

 

 

 

-

(263)

 

 

 

-

Share based payments

-

-

15

-

-

-

-

-

15

Non-controlling interest

-

-

-

-

-

-

(196)

196

Treasury shares

-

5

-

-

101

-

-

-

Dividends paid

-

-

-

-

-

-

(892)

(15)

(907)

At 30 Sept 2014

1,149

5,503

218

(1,742)

(209)

(43)

20,927

813

26,616

 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

for the six months to 30 September 2014

 



Six months to 30 Sept 2014 (unaudited)

Six months to 30 Sept 2013 (unaudited)

Year to

31 March 2014

 (audited)



£'000

£'000

£'000

Cash flows from operating activities

Notes




Operating profit


6,183

2,148

7,226

Adjustments for:





Depreciation of property, plant & equipment


17

17

31

Share based payments


15

15

-

Recognition of negative goodwill on refinancing of subsidiary

6

(1,123)

-

-

Fair value adjustment to investment properties


89

-

-

(Increase)/decrease in inventories


(70)

(3,483)

(4,474)

(Increase)/decrease in trade and other receivables


664

(269)

(2,604)

Increase/(decrease) in trade and other payables


(2,406)

(719)

1,547

Other non-cash adjustments


26

-

203

Cash generated from operations


3,395

(2,291)

1,929

Income taxes paid


(322)

(233)

(552)

Net cash flow from/(used in) operating activities of continuing operations


3,073

(2,524)

1,377

Net cash flow from operating activities


3,073

(2,524)

1,377






Cash flow from investing activities





Purchase of investments

Capital expenditure on investment properties

Proceeds from sale of investments


(651)

(38)

-

-

-

28

(849)

-

28

Proceeds from sale of property, plant & equipment

Proceeds from sale of shares in associates

Purchase of investments properties


-

-

-

-

-

-

(46)

23

(555)

Purchase of property, plant and equipment


(6)

(6)

(60)

Cash paid on control/acquisition of new subsidiaries

6

(218)

-

(4,415)

Cash and cash equivalents received on control/acquisition of new subsidiaries

6

437

-

786

Purchase of non-controlling interest


-

-

(126)

Dividends from associates


75

25

107

Dividends received


30

30

63

Interest received


35

56

148

Net cash flow from /(used in) investing activities


(336)

133

(4,896)






Cash flow from financing activities





Proceeds from issue of shares

Proceeds from issue of shares to non-controlling interest


-

-

1

507

-

507

Proceeds/(net payment) from shareholder loans in subsidiaries


(245)

1,154

1,099

Interest paid


(905)

(419)

(1,029)

Proceeds from bank loan


3,491

-

3,136

Repayment of finance lease/bank loans


(3,357)

(294)

(850)

Sale of shares held in Treasury


106

4

299

Dividends paid


(892)

(834)

(1,201)

Dividends paid to non-controlling interest


(15)

(57)

(96)

Net cash flow from financing activities of continuing operations


(1,817)

62

1,865

Net increase/(used in) in cash and cash equivalents


920

(2,329)

(1,654)

Cash and cash equivalents at the beginning of period


11,279

12,979

12,979

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


(151)

(51)

(46)

Cash and cash equivalents at the end of the period


12,048

10,599

11,279

 

 



NOTES TO THE CONDENSED CONSOLIDATED RESULTS

for the six months ended 30 September 2014

 

 

1.   Basis of Preparation

 

·    These interim condensed consolidated financial statements for the six months ended 30 September 2014 have not been audited or reviewed and do not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. They have been prepared in accordance with the Group's accounting policies as set out in the Group's latest annual financial statements for the year ended 31 March 2014 and are in compliance with IAS 34 "Interim Financial Reporting". 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).

 

·    The comparative figures for the financial year ended 31 March 2014 are not the statutory accounts for the financial year but are abridged 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 interim financial statements were approved by a committee of the Board on 25 November 2014.



 

2.     Segmental Analysis 

 

Segment reporting six months to 30 September 2014

 

The parent holding company costs and related listing costs are shown separately under unallocated central costs. Assets, liabilities and costs that relate to Group central activities (including free cash) have not been allocated to business segments.

 

 


Property fund management

Group properties

Group fund properties ("FOP")

Unallocated central overheads

TOTAL


£'000

£'000

£000

£'000

£'000

External revenue

3,550

1,582

2,653

-

7,785








3,550

1,582

2,653

-

7,785







Depreciation and amortisation

(14)

(3)

-

-

(17)

Operating profit






-existing operations

2,903

2,218

1,525

(463)

6,183

-share of results in associates

-

107

-

-

107

-dividend income

-

30

-

-

30

-interest income

-

7

13

15

35

-interest expense

-

(192)

(742)

-

(934)

Profit before tax

2,903

2,170

796

(448)

5,421







Analysed as:






Before performance fees and related items:

792

1,047

1,085

(448)

2,476

Performance fees

2,111

-

-

-

2,111

Realised foreign currency loss

-

-

(200)

-

(200)

Recognition of negative goodwill on refinancing of subsidiary

-

1,123

-

-

1,123

Fair value adjustments to investment properties

-

-

(89)

-

(89)

Staff incentives

-

-

-

-

-

Profit before tax

2,903

2,170

796

(448)

5,421

 

 

Revenue for the six months to 30 September 2014 from continuing operations consists of revenue arising in the United Kingdom 34% (2013: 13%) and Central and Eastern Europe 66% (2013: 87%) and all relates solely to the Group's principal activities.

 



 

Segment reporting six months to 30 September 2013

 


Property fund management

Group properties

Group fund properties ("FOP")

Unallocated central overheads

TOTAL


£'000

£'000

£000

£'000

£'000

External revenue

-existing operations

 

2,021

 

1,204

 

1,047

 

-

 

4,272

-sale of inventory

-

-

-

-

-


2,021

1,204

1,047

-

4,272







Depreciation and amortisation

(14)

(3)

-

-

(17)

Operating profit






-existing operations

1,407

388

763

(410)

2,148

-share of results in associates

-

96

-

-

96

-dividend income

-

30

-

-

30

-interest income

-

12

17

27

56

-interest expense

-

(105)

(314)

-

(419)

Profit before tax

1,407

421

466

(383)

1,911







Analysed as:






Before performance fees and related items:

1,407

421

466

(383)

1,911

Performance fees

-

-

-

-

-

Realised foreign currency gain

-

-

-

-

-

Staff incentives

-

-

-

-

-

Profit before tax

1,407

421

466

(383)

1,911

 



 

Segment reporting year to 31 March 2014

 


Property fund management

Group properties

Group

 fund properties ("FOP")

Unallocated central overheads

TOTAL


£'000

£'000

£'000

£'000

£'000

External revenue






-Existing operations

4,268

2,440

2,246

-

8,954

-Sale of inventory

-

8,050

-

-

8,050

-Business acquisitions

-

-

1,041

-

1,041


4,268

10,490

3,287

-

18,045







Depreciation and amortisation 

(21)

(7)

(3)

-

(31)

Operating profit






-Existing operations

2,630

5,010

1,388

(2,413)

6,615

-Business acquisitions

-

-

611

-

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 expense

-

(251)

(806)

-

(1,057)

Profit 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

-

-

-

-

-

Profit before tax

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

 



 

3.     Tax Expense

 

The tax charge is based on a combination of actual current and deferred tax charged at an effective rate that is expected to apply to the profits for the full year. 

 


Sept 2014

Sept 2013

March 2014

Current  tax

339

                                  281

761

Deferred tax

94

(11)

201

Total

433

                                  270

962

 

 

4.     Earnings per Ordinary Share

 

The basic earnings per ordinary share is calculated on the profit on ordinary activities after taxation and after non-controlling interests on the weighted average number of ordinary shares in issue, during the period.

 

Figures in the table below have been used in the calculations.

 


Six months

ended

30 Sept 2014

Six months

ended

30 Sept 2013

Year

 ended

31 March 2014

Basic -

pence per Share

4.24p

1.34p

4.75p

Diluted -

pence per Share

4.07p

1.27p

4.53p






Number

Number

Number

Weighted average number of ordinary shares in issue for basic

112,953,380

111,158,205

111,265,093

Share options

5,050,000

7,500,000

5,750,000

Total for diluted

118,003,380

118,658,205

117,015,093






£'000

£'000

£'000

Basic earnings

4,792

1,492

5,281

Diluted earnings assuming full dilution at closing share price

4,807

1,503

5,298

 

 

5.  Investment Properties

 


Six months

ended

30 Sept 2014

Six months

 ended

30 Sept 2013

Year

 ended

31 March 2014


£'000

£'000

£'000





1 April

48,759

20,349

20,349

Business acquisitions

5,547

-

28,116

Purchase additions

-

-

555

Capital expenditure

38

-

46

Foreign exchange translation

(3,229)

(469)

(307)

Fair value adjustment

(89)

-

-

End of period

51,026

19,880

48,759

 

 

 

 

 

6.    Business Acquisition

 

The fair value of the net assets of Felix Development S.R.L. when the Group took control of it on 27 July 2014, were as follows:

 


£'000

Cash

437

Investment properties located in Romania

5,547

Trade and other receivables

102

Trade payables and deferred income

(369)

Tax liabilities

(53)

Financial liabilities

(3,566)

Tenant deposits

(440)

Negative goodwill on refinancing of subsidiary

(1,123)

Total purchase price paid

535



Cash consideration paid

(218)

Deferred cash consideration

(317)


(535)



Cash and cash equivalents acquired on control of subsidiary

437



Net cash and cash equivalents acquired

(98)

 

 

7.    Interest in Associates and Other Financial Assets

 


Six months ended

30 Sept 2014

Six months

ended

30 Sept 2013

Year

ended

31 March 2014

a) Associated undertakings

£'000

£'000

£'000





Cost of investment  at beginning of period

675

615

615

Disposals

-

-

(23)

Share of accumulated  post tax profit  

107

96

190

Dividends received

(75)

(25)

(107)

Cost of investment  at end of period

707

686

675





Investments in Associated undertakings




5th Property Trading Ltd

868

763

863

Regional Property Trading Ltd

147

231

120


1,015

994

983

Less: share of profit withheld after tax on sale of property to associate in 2007 

(308)

(308)

(308)

Cost of investment  at end of period

707

686

675





b) Other financial assets and investments








Cost of investment  at beginning of period

1,706

892

892

Additions

Business acquisitions

Disposal

651

-

-

-

-

(25)

-

849

(35)

Impairment credit / (charge)

43

3

-

Cost of investment  at end of period

2,400

870

1,706

 

 

 

8.    Trade and Other Receivables

 


Six months ended

30 Sept 2014

Six months ended

30 Sept 2013

Year

 ended

31 March 2014


£'000

£'000

£'000

Current assets




Trade receivables

1,088

1,015

3,305

Other receivables 

2,140

97

502

Prepayments and accrued income 

337

321

328


3,565

1,433

4,135

Non-current assets

349

426

400

 

 

9.       Trade and Other Payables

 


Six months ended

30 Sept 2014

Six months ended

30 Sept 2013

Year

 ended

31 March 2014


£'000

£'000

£'000





Trade payables 

461

389

1,139

Other taxation and social security  

286

227

289

Other payables and accruals 

2,147

637

2,780

Deferred income

-

17

16


2,894

1,270

4,224

 

 

10.     Financial Liabilities

 


Six months ended

 30 Sept 2014

Six months ended

30 Sept 2013

Year

 ended

31 March  2014

a) Current liabilities

£'000

£'000

£'000





Finance lease

528

444

509

Foreign bank loans

1,644

2,861

3,840


2,172

3,305

4,349





b) Non-current liabilities








Loans repayable by subsidiary (FOP) to third party shareholders

1,984

2,284

2,229

Finance lease

11,674

13,095

12,661

Foreign bank loans

36,828

6,429

32,322


50,486

21,808

47,212





c) Total obligations under financial liabilities         








Repayable within one year

2,172

3,305

4,349

Repayable within one and five years

39,647

19,524

35,106

Repayable after five years

10,839

2,284

12,106


52,658

25,113

51,561

  

 

 

Loans repayable by FOP to third party shareholders are unsecured and repayable in August 2020.

 

Six bank loans and one finance lease (all denominated in foreign currencies) totalling £50.67 million (31 March 2014: £22.83 million) included within financial liabilities are secured against four investment properties owned by Fprop Opportunities plc (FOP), three investment properties owned by the Group and the one property owned by the Group shown under inventories.

 

The interim 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
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