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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| First Property Group Plc | LSE:FPO | London | Ordinary Share | GB0004109889 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 19.60 | 19.20 | 20.00 | 19.60 | 19.60 | 19.60 | 40,074 | 07:34:45 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Agents & Mgrs | 7.25M | 1.92M | 0.0173 | 11.33 | 21.73M |
TIDMFPO
RNS Number : 4821H
First Property Group PLC
08 June 2017
Hot Features
Premium
Date: 8 June 2017
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 2017
First Property Group plc (AIM: FPO), the property fund manager and investor with operations in the United Kingdom and Central Europe, today announces its preliminary results for the twelve months ended 31 March 2017.
Financial Highlights:
-- Profit before tax up 24% to a record GBP9.14 million;
-- Total assets under management up 35% to GBP477 million (2016: GBP353 million), third party assets under management up 60% to GBP313 million;
-- Annualised fund management fee income at year end up 46% to GBP2.45 million and rising (2016: GBP1.68 million);
-- Group cash balances increased to GBP15.95 million (2016: GBP8.98 million); -- Final dividend increased by 3.1% to 1.15 pence per share (2016: 1.115 pence per share).
Operational Highlights:
-- Ranked No.1 versus MSCI's Central & Eastern Europe (CEE) Benchmark over the eleven years to 31 December 2016;
-- UK Pension Property Portfolio LP ranked "Best Small Specialist Fund" at the MSCI/IPF Awards over the three years to 31 December 2016;
-- Two new funds established (with aggregate equity commitments of GBP21 million) and the Shipbuilding Industries Pension Scheme (SIPS) fund enlarged from GBP125 million to GBP170 million.
Financial Summary:
Unaudited Audited year Percentage
year to to change
31 March 31 March 2016
2017
Income Statement:
-------------------------------------------------------------
Revenue GBP23.66m GBP21.96m +7.7%
Statutory profit
before tax GBP9.14m GBP7.35m +24.4%
Diluted earnings
per share 6.61p 4.28p +54.4%
Total dividend
per share 1.55p 1.50p +3.3%
Average GBP/EUR
rate 0.841 0.733 +14.7%
Balance Sheet at year end:
-------------------------------------------------------------
Net assets* GBP43.43m GBP34.09m +27.4%
Net assets
per share 34.84p 27.75p +25.5%
Adjusted net
assets per
share (EPRA
basis) 47.64p 43.01p +10.8%
Cash balances GBP15.95m GBP8.98m +77.6%
Year end GBP/EUR
rate 0.855 0.793 +7.8%
Group Direct Property Portfolio at year end:
(excludes the Group's non-controlling interests
in eight other FPAM managed funds)
-------------------------------------------------------------
Book value GBP143.52m GBP134.53m +6.7%
Market value GBP164.48m GBP156.92m +4.8%
Gross debt
(non-recourse
to Group) GBP117.54m GBP114.82m +2.4%
LTV 71.46% 73.17% -1.7%
Total Assets Under Management:
-------------------------------------------------------------
GBP477m GBP353m
Poland 45.4% 51.5%
Romania 3.2% 4.7%
United Kingdom 51.4% 43.8%
* Including non-controlling interests in
the net asset values of Fprop Opportunities
plc and Corp Sp z o.o.
Commenting on the results, Ben Habib, Chief Executive of First Property Group, said:
"This has been a record year for First Property with profits up by a quarter. Furthermore, third party funds under management increased by 60% in value and we have additional mandates yet to be invested.
The markets in which we operate are generally buoyant. In the UK in particular I believe the decision to leave the EU will create opportunities on which we, as a niche fund manager, will be well placed to capitalise. The establishment of our new UK Special Opportunities Fund in January is an example of this, and a reflection of our confidence in the UK market and the returns available to be earned."
A video recording and investor presentation to accompany these results can be accessed on the Company's website, www.fprop.com.
For further information please contact:
First Property Group plc Tel: +44 (20)
7340 0270
Ben Habib (Chief Executive www.fprop.com
Officer) investor.relations@fprop.com
George Digby (Group Finance
Director)
Jeremy Barkes (Director,
Business Development)
Arden Partners (NOMAD & Broker) Tel: + 44 (20)
7614 5900
Chris Hardie (Director, Corporate
Finance)
Ben Cryer (Corporate Finance)
Redleaf Communications (PR) Tel:+ 44 (20)
7382 4734
Rebecca Sanders-Hewett / firstproperty@redleafpr.com
Robin Tozer /
Susie Hudson
Notes to Investors and Editors:
First Property Group plc is an award winning property fund manager and investor with operations in the United Kingdom and Central Europe. Around one third of the shares in the Company are owned by management and their families.
Its focus is on higher yielding commercial property with sustainable cash flows. The company is flexible and takes an active approach to asset management. Its earnings are derived from:
-- Fund management - via its FCA regulated and AIFMD approved subsidiary, First Property Asset Management Ltd (FPAM), which earns fees from investing for third parties in property. FPAM currently manages eleven funds which are invested across the United Kingdom, Poland and Romania. FPAM funds rank No.1 versus MSCI's Central & Eastern Europe (CEE) universe for the eleven years from the commencement of its operations in Poland in 2005 to 31 December 2016, and for the annualised periods from 2005 to the end of each of the years between 31 December 2008 and 31 December 2016. In addition, FPAM's UK Pension Property Portfolio (UK PPP) was awarded best "Small Specialist Fund" by MSCI at its UK Property Investment Awards 2017. FPAM was also one of ten fund managers, out of a pool of 95, to be awarded a Data Quality Award by MSCI.
-- Group Properties - principal investments by the Group, to earn a return on its own capital, usually in partnership with third parties. Investments include ten directly held properties in Poland and Romania (including five held by Fprop Opportunities plc [FOP], in which the Group is currently the majority shareholder), and interests in eight other funds managed by FPAM.
Listed on AIM the Company has offices in London and Warsaw. Further information about the Company and its products can be found at: www.fprop.com.
CHIEF EXECUTIVE'S STATEMENT
Performance
I am pleased to report the final results for the twelve months ended 31 March 2017.
Revenue earned by the Group increased to GBP23.66 million (2016: GBP21.96 million) contributing to a 24% increase in profit before tax of GBP9.14 million (2016: GBP7.35 million), a new record for the Group. The results benefitted from a stronger Euro which was, on average, 14.7% higher against Sterling at GBP0.841/ EUR1 (2016: GBP0.733/ EUR1) increasing profit before tax by some GBP1.39 million than if on a constant currency basis.
Diluted earnings per share increased by 54.4% to 6.61 pence (2016: 4.28 pence).
The Group ended the period with reported net assets up by 27.4% to GBP43.43 million (2016: GBP34.09 million). It is the accounting policy of the Group to carry its directly held properties and interests in associates at the lower of cost or market value. The net assets of the Group, when adjusted to their market value less any deferred tax liabilities, stood at GBP56.55 million (2016: GBP51.03 million).
Dividend
The Directors have resolved to increase the final dividend to 1.15 pence per share (2016: 1.115 pence per share), an increase of 3.1%, which together with the interim dividend of 0.40 pence per share (2016: 0.385 pence per share) equates to a dividend for the year of 1.55 pence per share (2016: 1.50 pence per share).
The proposed final dividend will be paid on 29 September 2017 to shareholders on the register at 1 September 2017, and is subject to shareholder approval at the forthcoming annual general meeting.
REVIEW OF OPERATIONS
PROPERTY FUND MANAGEMENT (First Property Asset Management Ltd or FPAM)
As at 31 March 2017 aggregate assets under management, calculated by reference to independent third party valuations, stood at GBP477 million (2016: GBP353 million). Of this, GBP313 million (2016: GBP196 million) was managed on behalf of third party clients, an increase of 60% from the prior year. Since the year end a further GBP5 million has been invested in funds managed on behalf of third parties, with GBP22 million of equity commitments still available for investment.
The reconciliation of movement in funds under management during the year is shown below:
Funds managed for Group Properties Totals
third parties (including (including
funds in which the FOP)
Group is a minority
shareholder)
---------------- ----------------------------------- ------------------- -----------------
UK CEE Total No. All No. AUM No.
GBPm. GBPm. GBPm. of CEE of GBPm. of
prop's GBPm. prop's prop's
---------------- ------- ------- ------- -------- -------- --------- ------- --------
As at
1 April
2016 154.7 41.5 196.2 50 156.9 11 353.1 61
---------------- ------- ------- ------- -------- -------- --------- ------- --------
Purchases 96.2 - 96.2 12 - - 96.2 12
Sales - - - - (3.4) (1) (3.4) (1)
New fund
mandates - 21.6 21.6 1 - - 21.6 1
Property
Depreciation - - - - (1.9) - (1.9) -
Property
Revaluation (5.6) 1.4 (4.2) - 1.1 - (3.1) -
FX Revaluation - 3.2 3.2 - 11.8 - 15.0 -
As at
31 March
2017 245.3 67.7 313.0 63 164.5 10 477.5 73
---------------- ------- ------- ------- -------- -------- --------- ------- --------
Fund management fees are levied monthly by FPAM by reference to the value of funds under management excluding cash and cash commitments. The effect of any increase (or decrease) in fund management fee income associated with increased (or decreased) funds under management is not felt in full until the financial year following draw down (or sale), because of the timing of draw down (or sale) during the year.
Revenue earned by this division amounted to GBP2.05 million (2016: GBP2.90 million), resulting in a profit before unallocated central overheads and tax of GBP404,000 (2016: GBP1.38 million). The decline in revenue and profit earned by this division is explained by an absence of performance fees (2016: GBP1.13 million).
At the year end FPAM's fund management fee revenue, excluding performance fees was being earned at an annualised rate of GBP2.45 million (2016: GBP1.68 million), an increase of some 46% from the prior year. The corresponding weighted average unexpired fund management contract term at the year end was 6 years, 5 months (2016: 6 years, 6 months). We expect fund management fee revenue to increase as we continue to invest fund management mandates.
First Property Asset Management Ltd (FPAM) now manages eleven (2016: nine) property investment funds, following the establishment of two new funds during the year, and the enlargement of one existing fund. A brief synopsis of the value of assets and maturity of each of these funds is set out below:
Fund Country Fund Assets % of total Assets
of investment expiry under assets under under
management management management
at market at market
value value
at 31 at 31
March March
2017 2016
----------- ---------------- --------- ------------ -------------- ------------
GBPm. GBPm.
----------- ---------------- --------- ------------ -------------- ------------
SAM & UK Rolling * *
DHOW
Aug
RPT Poland 2020 6.88 1.44% 6.83
Dec
5PT Poland 2022 8.46 1.77% 7.77
Feb
UKPPP UK 2022 93.13 19.50% 94.93
PDR UK May - - -
2018
(commitment of GBP42m)
Jan
SIPS UK 2025 152.15 31.87% 59.80
(commitment of GBP170m)
Jan
FRS Romania 2026 10.08 2.11% 8.17
Mar
FGC Poland 2026 20.66 4.33% 18.68
SPEC OPPS UK Jan - - -
2027
(commitment of GBP15m)
Mar
FKR Poland 2027 21.64 4.53% -
----------- ---------------- --------- ------------ -------------- ------------
Sub Total 313.00 65.55% 196.18
---------------------------------------- ------------ -------------- ------------
Oct
FOP Poland 2020 68.52 14.35% 61.46
Poland
GRP PROPS & Romania n/a 95.96 20.10% 95.47
----------- ---------------- --------- ------------ -------------- ------------
Sub Total 164.48 34.45% 156.93
---------------------------------------- ------------ -------------- ------------
Total 477.48 100.00% 353.11
---------------------------------------- ------------ -------------- ------------
* Not subject to recent revaluation
Independent Fund Performance Analysis:
Our investments in Poland and Romania once again ranked No.1 versus MSCI's Central & Eastern Europe (CEE) Benchmark, now for the eleven years from the commencement of our operations in Poland in 2005 to 31 December 2016. In the United Kingdom, our UK Pension Property Portfolio LP was ranked Best Small Specialist Fund over the three years to 31 December 2016 at the MSCI/ IPF Awards. FPAM was also one of ten fund managers, out of a pool of 95, to be awarded a Data Quality Award by MSCI.
Other accolades include being awarded "Best fund manager" by Alternative Investment Awards, and being shortlisted for awards by Pensions Age, European Pensions, Property Week and Property Investor Europe. In addition, I was nominated for the second year running as "Best CEO Capital Allocator (UK)" at The Value Investor Awards. Also for the second time, the Group was listed as one of "1000 Companies to inspire Britain" in 2017.
GROUP PROPERTIES
Group Properties comprised ten (2016: eleven) commercial properties held directly by the Group (including five held by FOP, in which the Group is a 69.2% shareholder), and non-controlling interests in eight of the eleven funds and joint ventures managed by FPAM, as set out in the tables below. It is the Group's policy to carry its direct properties and interest in associates at the lower of cost or market value for accounting purposes and to recognise dividends when received.
1. Directly held Properties (including five held by FOP) at 31 March 2017:
Property No. Book Market Contribution Contribution
/ Country of properties value value to Group to Group
profit profit
before before
tax - tax -
year to year to
31 March 31 March
2017 2016
------------ --------------- ------- ------- ------------- -------------
GBPm. GBPm. GBPm. GBPm.
Poland 3 79.2 90.7 6.0 5.7
Romania 2 4.2 5.3 0.9 0.9
FOP 5 60.1 68.5 3.4 3.3
------------ --------------- ------- ------- ------------- -------------
Total 10 143.5 164.5 10.3 9.9
------------ --------------- ------- ------- ------------- -------------
2. Non-controlling interests in funds and joint ventures managed by FPAM at 31 March 2017:
Fund % owned Book Current Group's Group's
by value market share share
First of First value of pre-tax of pre-tax
Property Property's of holdings profits profits
Group share earned earned
in by fund by fund
fund 31 March 31 March
2017 2016
------- ----------- ------------ ------------- ------------ ------------
GBP'000 GBP'000 GBP'000 GBP'000
------- ----------- ------------ ------------- ------------ ------------
Interest in associates
5PT 37.8% 608 1,058 129 121
RPT 28.6% 192 233 45 20
FRS 24.1% 750 1,030 125 12
FGC 28.2% 1,678 1,827 220 17
FKR* 18.1% 1,119 1,119 - -
------- ----------- ------------ ------------- ------------ ------------
Share of results
in
associates 4,347 5,267 519 170
-------------------- ------------ ------------- ------------ ------------
*shares allotted but issued post year end.
Investments UKPPP 0.9% 884 884 60 60 PDR 4.9% 13 13 - 163 SPEC OPPS 4.8% - - - - ------------- ----- ---- ---- --- ---- Sub Total 897 897 60 223 ------------- ----- ---- ---- --- ---- Total 5,244 6,164 579 393 ------- ------ ------ ---- ----
Revenue from Group Properties, including FOP, amounted to GBP21.62 million (2016: GBP19.06 million), generating a profit before unallocated central overheads and tax of GBP11.53 million (2016: GBP8.85 million) and representing 96.6% (2016: 86.5%) of Group profit before unallocated central overheads and tax. The increase in underlying revenue and profit before tax prior to the deduction of unallocated central overhead costs was primarily attributable to the strengthening of the Euro versus Sterling, but also to the full year contribution from the two investments made in the second half of the previous financial year in Fprop Romanian Supermarkets Ltd ("FRS") and Fprop Galeria Corso Ltd ("FGC").
The contribution to Group profit before tax prior to the deduction of unallocated central overheads by the ten directly held properties is detailed below:
Year to Year to
31 March 2017 31 March 2016
EURm. EURm.
--------------------- --------------- ---------------
Net operating
income (NOI) 19.47 19.74
Interest expense
on bank loans
/ finance leases (3.42) (3.59)
--------------------- --------------- ---------------
NOI after interest
expense 16.05 16.15
Current tax (1.40) (1.25)
Debt amortisation (7.20) (7.11)
Capital expenditure (2.47) (1.94)
--------------------- --------------- ---------------
Free cash 4.98 5.85
--------------------- --------------- ---------------
Market value
of properties EUR192.29 EUR197.92
Average yield
on market value 9.45% 9.97%
Bank loans/ finance
leases outstanding EUR137.41 EUR144.82
Loan to value
(LTV) 71.46% 73.17%
Weighted average 3yrs, 7mths 4 yrs, 1 mth
unexpired lease
term (WAULT)
Vacancy rate 2.2% 2.4%
--------------------- --------------- ---------------
The loans secured against these properties are each held in separate non-recourse special purpose vehicles. In order to mitigate potential interest rate rises we have fixed the interest rate on a proportion of these loans. A one percentage point increase from current market interest rates would increase the annual interest bill by GBP825,000 per annum (2016: GBP663,000). The current weighted average borrowing cost is 2.35% (2016: 2.47%).
During the year we sold one Group Property, a warehouse in Ploiesti, Romania, resulting in a profit of GBP890,000, thereby reducing the number of properties held directly by the Group to ten.
Fprop Opportunities plc ("FOP"):
The contribution by FOP to Group profit before tax amounted to GBP2.26 million (2016: GBP2.46 million), a level impacted by some GBP219,000 of fair value impairment (2016: credit of GBP462,000), a non cash item. FOP is earning a pre-tax return on equity invested from rent alone in the region of 15.5% per annum; a level which we expect will increase following completion of the extension at Galeria Ostrowiec, and the subsequent sale or refinancing of this asset. The gallery's extension, which is 95% pre-let, is scheduled for completion on 30 September 2017, and is forecast, once fully let, to increase the net operating income of this investment from EUR2.17 million per annum to EUR2.75 million per annum.
As reported at our interim results, we have begun to sell the shares held by the Group in FOP because it is not the Group's business model to be a controlling shareholder in funds managed by it, and to simplify the Group's structure. Sales of shares in FOP during the year amounted to GBP1.64 million, representing 7.9% of FOP's issued share capital and resulting in a capital profit for the Group of GBP552,000.
The Group's shareholding in FOP at the year end represented 69.2% (2016: 76.2%) of the issued share capital in FOP. It is our intention to continue to sell the Group's shares in FOP until its shareholding reaches some 25-30%.
Associates and Investments:
The contribution to Group profit before tax prior to the deduction of unallocated central overheads from our eight minority shareholdings in funds managed by FPAM increased by 47% to GBP579,000 (2016: GBP393,000). This contribution represents 5% of the contribution by Group Properties and should increase as we benefit from a full period contribution from our co-investment in the two new funds, Fprop UK Special Opportunities LP ("SPEC OPPS") and Fprop Krakow Ltd ("FKR"), which were established in the second half of the year.
Commercial Property Markets Outlook
Poland:
GDP growth in Poland, which is forecast at 3.2% in 2017 and 3.4% in 2018, continues to exceed that of most other EU member states, as it has done since its entry into the EU. Inflation turned positive in November 2016 and is now running in excess of 2% on an annualised basis.
This continued economic growth has resulted in a property development boom over the last few years and in turn rents coming under pressure, especially in the office sector.
Investor demand for commercial property has been steadily increasing since the credit crunch (turnover in 2016 is estimated at some EUR4.5 billion) with the yields available on good secondary property, of the sort we favour, remaining attractive at around 7.5% plus per annum.
We have appointed Del Chandler as senior adviser to our Warsaw office. Del has a longstanding broad experience of property deal making and financing in Central Europe, with a career in the region spanning over twenty five years. He was most recently managing director of the Central European real estate financing business of ING and then head of capital markets at BNP Paribas in Warsaw.
Romania:
GDP growth in Romania has rebounded over the past couple of years and is once again expected to exceed 4% in 2017. Inflation turned positive in January 2017 and is now running at in excess of 1% on an annualised basis.
As a result of the improved economic outlook, new development is beginning to pick up, but the take-up rate is, at least at the moment, matching this increased supply.
In the secondary market a mismatch persists in pricing expectations between buyers and sellers, mainly due to the higher debt finance costs and amortisation rates prevalent in Romania. This has made making new investment a challenging task. Nevertheless, we remain keen on investing in Romania and recently appointed Catalin Ana to head up our operations in the country.
United Kingdom:
GDP growth in the UK remained robust in the aftermath of the vote for Brexit in June 2016. It has slowed in the first quarter of 2017 but the forecast rate for the year is still a respectable 1.5%. Commercial property values fell in the second half of 2016, in particular for properties with shorter leases, or requiring asset management, or those located in Scotland, due to heightened political fears. The Group took immediate advantage of this nervousness by increasing the size of the mandate awarded to it by the Shipbuilding Industries Pension Scheme from GBP125 million to GBP170 million, most of which was invested in supermarkets and retail warehousing.
Values have now stabilised and there are some signs that they may increase in due course as a result of the healthy occupier market and loose monetary policy.
We therefore remain bullish about the prospects of the UK commercial property market.
Current Trading and Prospects
This has been a record year for First Property with profits up by a quarter. Furthermore, third party funds under management increased by 60% in value and we have additional mandates yet to be invested.
The markets in which we operate are generally buoyant. In the UK in particular I believe the decision to leave the EU will create opportunities on which we, as a niche fund manager, will be well placed to capitalise. The establishment of our new UK Special Opportunities Fund in January is an example of this, and a reflection of our confidence in the UK market and the returns available to be earned.
Ben Habib
Chief Executive
8 June 2017
FINANCE DIRECTOR'S REVIEW
The financial year ending 31 March 2017, was a record one for the Group which saw profit before tax advancing 24.4% to GBP9.14m and net assets (with assets held at the lower of cost or value) increasing by 27.4% to GBP43.43m. The results were aided by a strong Euro and improved underlying performances from both trading divisions. The quality of earnings has continued to improve with 100.0% (2016: 94.8%) of top line revenue being of a recurring nature.
It is also noteworthy that, the annualised growth in adjusted net assets together with dividends paid to shareholders over the last five years equates to some 24.9% per annum.
INCOME STATEMENT
Revenue and gross profit
A review of the revenue and profits earned by our two trading divisions is included within the Chief Executive's Statement.
Operating expenses
Operating expenses decreased by 2.3% to GBP8.2m (2016: GBP8.4m) despite increases in staff related costs and an unfavourable exchange rate for costs, but benefited from the reversal of certain previously charged bad debts and a reduced charge for other provisions.
Capital profit on sale of shares in FOP and sale of an investment property
A capital profit of GBP552,000 (2016: nil) was made from the sale of some of the Group's shares in FOP, reducing the Group's holding from 76.2% to 69.2%.
In addition, a capital profit of GBP890,000 (2016: nil) was made on the sale of an investment property, a warehouse located in Ploiesti, Romania. Consideration for this sale is payable by quarterly instalments over the next six years, and the debtor as stated, has been discounted to reflect its current value.
Fair value adjustment on properties
The charge of GBP219,000 (2016: credit GBP462,000), relates to the reduction in fair value below the original cost of one property located in Poland and owned by FOP.
Financing costs
The current weighted average of the Group's borrowing costs is 2.35% per annum, a level in line with previous years as the Group continues to benefit from the low interest rate environment in the Euro zone. All bank loans and finance leases are denominated in Euro. Of these Euro borrowings, 39% at year end were subject to a fixed interest rate.
Current tax
The current tax charge of GBP1.15m is in line with previous years and was incurred entirely in Poland and Romania where the mainstream tax rates are 19% and 16% respectively. No UK corporation tax was incurred in the UK where brought forward tax losses of GBP4.5m remain available for utilisation.
Deferred tax
A deferred tax credit of GBP608,000 (2016: charge of GBP484,000) has arisen primarily due to a reduction in the value of two Group properties, which has created a higher deferred tax asset.
Earnings per share
Basic earnings per share increased by 54.5% to 6.75p per share (2016: 4.37p per share), a much larger increase than the 24.4% increase in profit before tax. This was due to the deferred tax credit of GBP608,000 mentioned above, which resulted in a much lower overall tax charge.
Dividends
The total proposed dividend for the year of 1.55p (2016: 1.50p), or GBP1.8 million in aggregate will be the fourth consecutive year of dividend growth.
BALANCE SHEET AND CASHFLOW
Investment properties
Investment properties owned by the Group, and indirectly via FOP are stated at cost less depreciation and accumulated impairment losses. The properties were valued by CBRE, Polish Properties and BNP Paribas at the Group's financial year end at EUR168.66 million (2016: EUR177.73 million).
The reduction in fair value in Euro terms noted above includes a reduction of EUR5.1 million in the value of Oxford Tower, Warsaw due to an expected lease expiry in February 2018, a depreciation charge of EUR1.97m in respect of the property located in Gdynia and the disposal of the warehouse in Ploiesti, Romania.
The reduction in value of Oxford Tower is expected to reverse once the pending lease expiry has been resolved.
Capital expenditure
Capital expenditure of GBP1.99m on investment properties comprised development expenditure of GBP1.6m on the enlargement of the shopping centre in Ostrowiec owned by FOP. Property held within stock incurred GBP0.13m of capital expenditure relating to ongoing refurbishment and modernisation.
Cash, cash flow and liquidity
Group cash balances stood at GBP15.95 million (2016: GBP8.98 million) at the year end, after the deduction for capital expenditure of GBP2.12 million, bank loan repayments of GBP6.08 million and dividend payments of GBP1.8 million. Of the Group's cash, GBP4.37 million (2016: GBP4.76 million) was held by Fprop Opportunities plc (FOP, 69.2% owned by the Group) and GBP595,000 (2016: GBP635,000) was held by Corp Sp. z o.o. (the property management company for Blue Tower in Warsaw, 90% owned by the Group).
The prior year's figure for cash balances of GBP8.98 million was reduced as a result of a bridging loan of EUR6.5 million (GBP5.15m) made by the Group to Fprop Romanian Supermarkets Limited, an associated company. This loan was repaid in May 2016.
Borrowings
There have been no new bank loans drawn, or refinancings during the year, resulting in overall bank borrowings being reduced by GBP6.08 million through scheduled loan repayments. All Loan-To-Value covenants have been respected.
Key performance indicators (KPI's)
The Group monitors its performance through the following key indicators:
2017 2016 ----- -----
Group:
Cash levels GBP15.95m GBP8.98m
Adjusted net asset
value per share 47.64p 43.01p
Recurring revenue 100% 94.8%
Fund Management Division:
Asset under management GBP477m GBP353m
Weighted average 6yrs 5mths 6yrs 6mths
fund length
Group Properties:
Weighted average 3yrs 7mths 4yrs 1mth
lease length
Non-controlling interests
As previously mentioned in this review the sale of the Group's shares in FOP has increased the non-controlling interest in FOP from 23.8% to 30.8%. The other non-controlling interest in CORP of 10% has remained at this level throughout the year.
George Digby
Group Finance Director
8 June 2017
CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2017
Notes Year ended Year ended
31 March 31 March
2017 (unaudited) 2016
Total (audited)
results
Total
results
GBP'000 GBP'000
-------------------------------- ------ ------------------- -----------
Revenue 3 23,663 21,955
Cost of sales (5,065) (4,255)
-------------------------------- ------ ------------------- -----------
Gross profit 18,598 17,700
Profit on sale of a property 890 -
Profit on the sale of 552 -
'FOP' shares
Fair value adjustment
to investment properties (219) 462
Operating expenses (8,207) (8,404)
-------------------------------- ------ ------------------- -----------
Operating profit 11,614 9,758
-------------------------------- ------ ------------------- -----------
Share of results in associates 9 519 170
Distribution income 60 223
Interest income 4 135 126
Interest expense 4 (3,191) (2,931)
-------------------------------- ------ ------------------- -----------
Profit before tax 9,137 7,346
Tax charge 5 (547) (1,687)
-------------------------------- ------ ------------------- -----------
Profit for the year 8,590 5,659
-------------------------------- ------ ------------------- -----------
Attributable to:
Owners of the parent 7,833 5,008
Non-controlling interests 757 651
-------------------------------- ------ ------------------- -----------
8,590 5,659
-------------------------------- ------ ------------------- -----------
Earnings per share:
Basic 6 6.75p 4.37p
Diluted 6 6.61p 4.28p
-------------------------------- ------ ------------------- -----------
All operations are continuing.
CONSOLIDATED SEPARATE STATEMENT
OF OTHER COMPREHENSIVE INCOME
for the year ended 31 March 2017
Year ended Year ended
31 March 31 March
2017 2016
(unaudited) (audited)
Total Total
results results
GBP'000 GBP'000
----------------------------------- ---- ------------- -----------
Profit for the year 8,590 5,659
----------------------------------------- ------------- -----------
Other comprehensive income
Exchange differences
on retranslation of foreign
subsidiaries 2,008 (1,346)
Revaluation of available-for-sale
financial assets (29) 11
Taxation - -
----------------------------------- ---- ------------- -----------
Total comprehensive income
for the year 10,569 4,324
Total comprehensive income
for the year attributable
to:
Owners of the parent 9,974 3,486
Non-controlling interests 595 838
----------------------------------------- ------------- -----------
10,569 4,324
---------------------------------------- ------------- -----------
CONSOLIDATED BALANCE SHEET
As at 31 March 2017
Notes As at As at
31 March 31 March
2017 2016
(unaudited) (audited)
GBP'000 GBP'000
Non-current assets
Goodwill 7 153 153
Investment properties 8 128,428 120,718
Property, plant and
equipment 97 186
Interest in associates 9a) 4,347 3,044
Other financial assets 9b) 897 914
Other receivables 11 2,108 186
Deferred tax assets 13 4,341 3,016
------------------------------ -------- ------------- -----------
Total non-current assets 140,371 128,217
------------------------------ -------- ------------- -----------
Current assets
Inventories - land and
buildings 10 15,115 13,894
Current tax assets 160 56
Trade and other receivables 11 4,890 10,128
Cash and cash equivalents 15,946 8,975
------------------------------ -------- ------------- -----------
Total current assets 36,111 33,053
------------------------------ -------- ------------- -----------
Current liabilities
Trade and other payables 12 (9,848) (7,938)
Financial liabilities 14 (19,641) (7,668)
Current tax liabilities (314) (200)
------------------------------ -------- ------------- -----------
Total current liabilities (29,803) (15,806)
------------------------------ -------- ------------- -----------
Net current assets 6,308 17,247
------------------------------ -------- ------------- -----------
Total assets less current
liabilities 146,679 145,464
------------------------------ -------- ------------- -----------
Non-current liabilities:
Financial liabilities 14 (100,043) (108,992)
Deferred tax liabilities 13 (3,208) (2,382)
Net assets 43,428 34,090
------------------------------ -------- ------------- -----------
Equity
Called up share capital 1,166 1,166
Share premium 5,781 5,773
Foreign exchange translation
reserve 19 (2,151)
Investment revaluation
reserve (67) (38)
Share-based payment
reserve 203 203
Retained earnings 33,311 27,231
------------------------------ -------- ------------- -----------
Equity attributable
to the owners of the
parent 40,413 32,184
Non-controlling interests 3,015 1,906
------------------------------ -------- ------------- -----------
Total equity 43,428 34,090
------------------------------ -------- ------------- -----------
Net assets per share 6 34.84p 27.75p
------------------------------ -------- ------------- -----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2017
Group Share Share Share-based Foreign Purchase Investment Retained Non-controlling Total
capital premium payment exchange of own revaluation earnings interests
reserve translation shares reserve
reserve
GBP'000 GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- -------- -------- ------------ ------------ --------- ------------ --------- ---------------- --------
At 1
April
2016 1,166 5,773 203 (2,151) (103) (38) 27,334 1,906 34,090
Profit
for
the
period - - - - - - 8,590 - 8,590
Fair
value
(or
revaluation)
gains
on
available-for-sale
financial
assets
to profit
or loss - - - - - (29) - - (29)
Change
in proportion
held
by NCI - - - - - - - 556 556
Movement
on foreign
exchange - - - 2,170 - - - (162) 2,008
Sale
of treasury
shares - 8 - - 4 - - - 12
New - - - - - - - - -
shares
issued
Non-controlling
interests - - - - - - (757) 757 -
Dividends
paid - - - - - - (1,757) (42) (1,799)
-------------------- -------- -------- ------------ ------------ --------- ------------ --------- ---------------- --------
At 31
March
2017 1,166 5,781 203 19 (99) (67) 33,410 3,015 43,428
-------------------- -------- -------- ------------ ------------ --------- ------------ --------- ---------------- --------
At 1
April
2015 1,149 5,505 203 (618) (173) (49) 23,908 1,094 31,019
Profit
for
the
period - - - - - - 5,659 - 5,659
Fair
value
(or
revaluation)
gains
on
available-for-sale
financial
assets
to profit
or loss - - - - - 11 - - 11
Movement
on foreign
exchange - - - (1,533) - - - 187 (1,346)
Sale
of treasury
shares - 10 - - 70 - - - 80
New
shares
issued 17 258 - - - - - - 275
Non-controlling
interests - - - - - - (651) 651 -
Dividends
paid - - - - - - (1,582) (26) (1,608)
-------------------- -------- -------- ------------ ------------ --------- ------------ --------- ---------------- --------
At 31
March
2016 1,166 5,773 203 (2,151) (103) (38) 27,334 1,906 34,090
-------------------- -------- -------- ------------ ------------ --------- ------------ --------- ---------------- --------
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2017
2017 2016
Group Group
GBP'000 GBP'000
----------------------------------- --------- ---------
Cash flows from operating
activities
----------------------------------- --------- ---------
Operating profit 11,614 9,758
Adjustments for:
Depreciation of investment
property and property,
plant & equipment 1,960 1,704
Profit on the sale of (890) -
an investment property
Profit on the sale of (552) -
FOP shares
Fair value adjustment
on investment properties 219 (462)
(Increase)/ decrease
in inventories (130) (291)
Decrease/ (increase)
in trade and other receivables 305 903
Increase/ (decrease)
in trade and other payables 1,637 (356)
Other non-cash adjustments 615 460
Cash generated from operations 14,778 11,716
Taxes paid (1,156) (922)
------------------------------------ --------- ---------
Net cash flow from operating
activities 13,622 10,794
------------------------------------ --------- ---------
Cash flow from/ (used
in) investing activities
----------------------------------- --------- ---------
Capital expenditure on
investment properties (1,990) (1,216)
Proceeds from partial
disposal of available-for-sale
assets 239 628
Purchase of property,
plant & equipment (26) (197)
Consideration from the 1,108 -
sale of 'FOP' shares
Investment in shares
of new associates (1,119) (2,293)
Interest received 135 126
Dividends from associates 96 90
Distributions received 64 223
Net cash flow used in
investing activities (1,493) (2,639)
------------------------------------ --------- ---------
Cash flow from/ (used
in) financing activities
Net repayment of shareholder
loan in subsidiary (227) (95)
Proceeds from bank loan - 8,993
Repayment of bank loans (3,125) (9,341)
Repayment from the sale 534 -
of FOP shareholder loan
Repayment of a short
term loan to an associate 5,083 (4,729)
Repayment of finance
lease (2,950) (2,446)
Sale of shares held in
treasury 12 80
Proceeds from the issue
of share capital - 275
Interest paid (3,100) (2,825)
Dividends paid (1,757) (1,582)
Dividends paid to non-controlling
interests (42) (26)
------------------------------------ --------- ---------
Net cash flow used in
financing activities (5,572) (11,696)
------------------------------------ --------- ---------
Net increase/ (decrease)
in cash and cash equivalents 6,557 (3,541)
------------------------------------ --------- ---------
Cash and cash equivalents
at the beginning of the
year 8,975 12,240
------------------------------------ --------- ---------
Currency translation
gains on cash and cash
equivalents 414 276
------------------------------------ --------- ---------
Cash and cash equivalents
at the year end 15,946 8,975
------------------------------------ --------- ---------
1. Basis of preparation
These preliminary financial statements have not been audited and are derived from the statutory accounts within the meaning of section 434 of the Companies Act 2006. They have been prepared in accordance with the Group's accounting policies that will be applied in the Group's annual financial statements for the year ended 31 March 2017. These are consistent with the policies applied for the year ended 31 March 2016. These accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and as adopted by the European Union (EU). Whilst the financial information included in this preliminary statement has been prepared in accordance with IFRS, this announcement does not itself contain sufficient information to fully comply with IFRS. The comparative figures for the financial year ended 31 March 2016 are not the statutory accounts for the financial year but are derived from those accounts prepared under IFRS which have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified, did not include references to any matter to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
These preliminary financial statements were approved by the Board of Directors on 7 June 2017.
2. Revenue
Revenue from continuing operations consists of revenue arising in the United Kingdom 7% (2016: 10%), Poland 85% (2016: 82%) and Romania 8% (2016: 8%). All revenue relates solely to the Group's principal activities.
3. Segment reporting 2017
Fund Management Group Properties
Division Division
------------------------
Property Group Group Unallocated Total
fund management properties fund central
and other properties overheads
co-investments "FOP"
----------------- ---------------- ------------ ------------ ----------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ----------------- ---------------- ------------ ------------ ----------
Total revenue 2,046 14,629 6,988 - 23,663
-------------------- ----------------- ---------------- ------------ ------------ ----------
Depreciation
and amortisation (41) (1,786) (133) - (1,960)
-------------------- ----------------- ---------------- ------------ ------------ ----------
Operating
profit 404 10,192 3,866 (2,848) 11,614
-------------------- ----------------- ---------------- ------------ ------------ ----------
Share of results
in associates - 519 - - 519
-------------------- ----------------- ---------------- ------------ ------------ ----------
Distribution
income - 60 - - 60
-------------------- ----------------- ---------------- ------------ ------------ ----------
Interest income - 37 48 50 135
-------------------- ----------------- ---------------- ------------ ------------ ----------
Interest payable - (1,535) (1,656) - (3,191)
-------------------- ----------------- ---------------- ------------ ------------ ----------
Profit/ (loss)
before tax 404 9,273 2,258 (2,798) 9,137
-------------------- ----------------- ---------------- ------------ ------------ ----------
Analysed as:
-------------------- ----------------- ---------------- ------------ ------------ ----------
Underlying
profit/(loss)
before tax
before adjusting
for the following
items: 907 9,993 2,791 (857) 12,834
-------------------- ----------------- ---------------- ------------ ------------ ----------
Fair value
adjustment
to investment
properties - - (219) - (219)
-------------------- ----------------- ---------------- ------------ ------------ ----------
Sale of 'FOP'
shares - 552 - - 552
-------------------- ----------------- ---------------- ------------ ------------ ----------
Sale of property - 890 - - 890
-------------------- ----------------- ---------------- ------------ ------------ ----------
Depreciation - (1,662) - - (1,662)
-------------------- ----------------- ---------------- ------------ ------------ ----------
Provision - - - (44) (44)
-------------------- ----------------- ---------------- ------------ ------------ ----------
Performance - - - - -
and related
fees
-------------------- ----------------- ---------------- ------------ ------------ ----------
Staff incentives (503) (172) (173) (1,922) (2,770) -------------------- ----------------- ---------------- ------------ ------------ ---------- Realised foreign currency loss - (328) (141) 25 (444) -------------------- ----------------- ---------------- ------------ ------------ ---------- Total 404 9,273 2,258 (2,798) 9,137 -------------------- ----------------- ---------------- ------------ ------------ ---------- Assets - Group 792 95,923 67,026 8,394 172,135 -------------------- ----------------- ---------------- ------------ ------------ ---------- Share of net assets of associates - 4,655 - (308) 4,347 -------------------- ----------------- ---------------- ------------ ------------ ---------- Liabilities (189) (79,817) (50,652) (2,396) (133,054) -------------------- ----------------- ---------------- ------------ ------------ ---------- Net assets 603 20,761 16,374 5,690 43,428 -------------------- ----------------- ---------------- ------------ ------------ ---------- Additions to non-current assets ------------------------------------------------------------------------------------------------- Property, plant and equipment 26 - - - 26 -------------------- ----------------- ---------------- ------------ ------------ ---------- Investment properties - 325 1,665 - 1,990 -------------------- ----------------- ---------------- ------------ ------------ ---------- Interest in associates - 1,119 - - 1,119 -------------------- ----------------- ---------------- ------------ ------------ ----------
Segment reporting 2016
Fund Group Properties
Management Division
Division
------------ ------------------------------ ------------ ----------
Property Group Group Unallocated Total
fund properties fund central
management and other properties overheads
co-investments "FOP"
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------------ ---------------- ------------ ------------ ----------
Total revenue 2,895 12,894 6,166 - 21,955
-------------------- ------------ ---------------- ------------ ------------ ----------
Depreciation
and amortisation (31) (1,535) (138) - (1,704)
-------------------- ------------ ---------------- ------------ ------------ ----------
Operating
profit 1,384 7,316 3,962 (2,904) 9,758
-------------------- ------------ ---------------- ------------ ------------ ----------
Share of results
in associates - 170 - - 170
-------------------- ------------ ---------------- ------------ ------------ ----------
Distribution
income - 223 - - 223
-------------------- ------------ ---------------- ------------ ------------ ----------
Interest income - 101 5 20 126
-------------------- ------------ ---------------- ------------ ------------ ----------
Interest payable - (1,424) (1,507) - (2,931)
-------------------- ------------ ---------------- ------------ ------------ ----------
Profit/ (loss)
before tax 1,384 6,386 2,460 (2,884) 7,346
-------------------- ------------ ---------------- ------------ ------------ ----------
Analysed as:
-------------------- ------------ ---------------- ------------ ------------ ----------
Underlying
profit/(loss)
before tax
before adjusting
for the following
items: 783 8,268 2,321 (899) 10,473
-------------------- ------------ ---------------- ------------ ------------ ----------
Fair value
adjustment
to investment
properties - - 462 - 462
-------------------- ------------ ---------------- ------------ ------------ ----------
Depreciation - (1,450) - - (1,450)
-------------------- ------------ ---------------- ------------ ------------ ----------
Provision (49) (17) (17) (663) (746)
-------------------- ------------ ---------------- ------------ ------------ ----------
Performance
and related
fees 1,131 - - - 1,131
-------------------- ------------ ---------------- ------------ ------------ ----------
Staff incentives (481) (169) (164) (1,610) (2,424)
-------------------- ------------ ---------------- ------------ ------------ ----------
Realised foreign
currency loss - (246) (142) 288 (100)
-------------------- ------------ ---------------- ------------ ------------ ----------
Total 1,384 6,386 2,460 (2,884) 7,346
-------------------- ------------ ---------------- ------------ ------------ ----------
Assets - Group 497 88,670 62,283 6,776 158,226
-------------------- ------------ ---------------- ------------ ------------ ----------
Share of net
assets of
associates - 3,352 - (308) 3,044
-------------------- ------------ ---------------- ------------ ------------ ----------
Liabilities (249) (76,454) (48,132) (2,345) (127,180)
-------------------- ------------ ---------------- ------------ ------------ ----------
Net assets 248 15,568 14,151 4,123 34,090
-------------------- ------------ ---------------- ------------ ------------ ----------
Additions to non-current
assets
---------------------------------- ---------------- ------------ ------------ ----------
Property,
plant and
equipment 197 - - - 197
-------------------- ------------ ---------------- ------------ ------------ ----------
Investment
properties - 968 248 - 1,216
-------------------- ------------ ---------------- ------------ ------------ ----------
Interest in
associates - 2,293 - - 2,293
-------------------- ------------ ---------------- ------------ ------------ ----------
4. Interest income
2017 2016
Group Group
GBP'000 GBP'000
Interest income - bank deposits 35 36
Interest income - other 100 90
--------------------------------- --------- ---------
Total interest income 135 126
--------------------------------- --------- ---------
2017 2016
Group Group
GBP'000 GBP'000
----------------------------- --------- ---------
Interest expense - property
loans (2,192) (2,254)
Interest expense - bank and
other (160) (106)
Finance charges on finance
leases (839) (571)
----------------------------- --------- ---------
Total interest expense (3,191) (2,931)
----------------------------- --------- ---------
5. Tax expense
2017 2016
GBP'000 GBP'000
---------------------------- --------- ---------
Analysis of tax charge for
the year
Current tax (1,155) (1,203)
Deferred tax 608 (484)
Total tax charge for the
year (547) (1,687)
---------------------------- --------- ---------
The tax charge includes actual current and deferred tax for continuing operations.
As in prior years, brought forward and current UK tax losses have not been recognised as a deferred tax asset due to insufficient foreseeable taxable income being earned in the UK.
A deferred tax credit of GBP608,000 (2016: charge of GBP484,000) has arisen primarily due to a reduction in the value of two Group Properties, which has created a higher deferred tax asset.
6. Earnings/ NAV per share
2017 2016
Basic earnings per share 6.75p 4.37p
Diluted earnings per share 6.61p 4.28p
GBP'000 GBP'000
Basic earnings 7,833 5,008
Diluted earnings assuming
full dilution 7,841 5,016
The following numbers of shares have been used to calculate both the basic and diluted earnings per share:
2017 2016
Number Number
--------------------------------- ------------ ------------
Weighted average number
of Ordinary shares in issue
(used for basic earnings
per share calculation) 115,975,959 114,543,523
--------------------------------- ------------ ------------
Number of share options 2,700,000 2,700,000
--------------------------------- ------------ ------------
Total number of Ordinary
shares used in the diluted
earnings per share calculation 118,675,959 117,243,523
--------------------------------- ------------ ------------
The following earnings have been used to calculate both the basic and diluted earnings per share:
2017 2016
GBP'000 GBP'000
---------------------------------- --------- ---------
Basic earnings per share
Basic earnings 7,833 5,008
---------------------------------- --------- ---------
Diluted earnings per share
Basic earnings 7,833 5,008
Notional interest on share
options assumed to be exercised 8 8
---------------------------------- --------- ---------
Diluted earnings 7,841 5,016
---------------------------------- --------- ---------
2017 2016
Net assets per share 34.84p 27.75p
Adjusted net assets per share 47.64p 43.01p
------------------------------- ------- -------
The following numbers have been used to calculate
both the net assets and adjusted net assets
per share:
For net assets per share GBP'000 GBP'000
-------------------------------------- -------- --------
Net assets excluding non-controlling
interests 40,413 32,184
GBP'000 GBP'000
For adjusted net assets per
share
Net assets excluding non-controlling
interests 40,413 32,184
Investment properties at
fair value net of deferred
tax 10,740 16,338
Inventories at fair value
net of deferred tax 4,128 1,795
Other items 1,267 716
-------------------------------------- -------- --------
Total 56,548 51,033
-------------------------------------- -------- --------
Number Number
--------------------------------- ------------ ------------
Number of shares in issue
at year end 115,992,699 115,967,111
Number Number
--------------------------------- ------------ ------------
Number of shares in issue
at year end 115,992,699 115,967,111
Number of share options assumed
to be exercised 2,700,000 2,700,000
--------------------------------- ------------ ------------
Total 118,692,699 118,667,111
--------------------------------- ------------ ------------
7. Goodwill
2017 2016
Group Group
GBP'000 GBP'000
------------- --------- ---------
At 1 April 153 153
------------- --------- ---------
At 31 March 153 153
------------- --------- ---------
The Directors have carried out an annual impairment test and concluded that no impairment write down is necessary because the estimated recoverable amount was higher than the value stated.
8. Investment properties
2017 2016
Group Group
GBP'000 GBP'000
------------------------------ --------- ---------
Investment properties
At 1 April 120,718 114,262
Capital expenditure 1,990 1,216
Disposal (1,711) -
Depreciation (1,891) (1,654)
Fair value adjustment (219) 462
Foreign exchange translation 9,541 6,432
------------------------------ --------- ---------
At 31 March 128,428 120,718
------------------------------ --------- ---------
Investment properties owned by the Group, and indirectly via FOP are stated at cost less depreciation and accumulated impairment losses. The properties were valued by CBRE, Polish Properties and BNP Paribas at the Group's financial year end at EUR168.66 million (2016: EUR177.73 million), the Sterling equivalent at closing foreign exchange rates being GBP144.26 million (2016: GBP140.91 million).
The decrease in fair value in Euro terms noted above includes a reduction of EUR5.1 million in the value of Oxford Tower, Warsaw due to an expected lease expiry in February 2018, a depreciation charge of EUR1.97 million in respect of the property located in Gdynia, and the disposal of the warehouse in Ploiesti, Romania.
The reduction in value of Oxford Tower is expected to reverse once the pending lease expiry has been resolved.
On acquisition of the Gdynia Podolska property the Directors took the decision to depreciate the property over the lease term. In the Director's opinion the property's estimated residual value at the end of the period of ownership will be lower than the carrying value. No other property has been depreciated as the estimated residual value is expected to be higher than the carrying value.
9. Investment in associates and other financial assets and investments
The Group has the following investments:
2017 2016
Group Group
GBP'000 GBP'000
---------------------------- --------- ---------
a) Associates
At 1 April 3,044 671
Additions 1,119 2,293
Disposals (239) -
Share of associates profit
after tax 519 170
Dividends received (96) (90)
---------------------------- --------- ---------
At 31 March 4,347 3,044
---------------------------- --------- ---------
The Group's investments in associated companies is held at cost plus its share of post-acquisition profits assuming the adoption of the cost model for accounting for investment properties under IAS40 and comprises the following:
2017 2016
Group Group
GBP'000 GBP'000
----------------------------------- --------- ---------
Investments in associates
5(th) Property Trading Ltd 916 871
Regional Property Trading
Ltd 192 159
Fprop Romanian Supermarkets
Ltd 750 737
Fprop Galeria Corso Ltd 1,678 1,585
Fprop Krakow Ltd 1,119 -
----------------------------------- --------- ---------
4,655 3,352
----------------------------------- --------- ---------
Less: Share of profit after
tax withheld on sale of property
to 5(th) Property Trading
Ltd in 2007 (308) (308)
----------------------------------- --------- ---------
4,347 3,044
----------------------------------- --------- ---------
If the Group had adopted the alternative fair value model for accounting for investment properties, the carrying value of the investment in associates would have increased to GBP5.27 million (2016: GBP3.55 million).
2017 2016
Group Group
GBP'000 GBP'000
------------------------------ --------- ---------
b) Other financial assets
and investments
At 1 April 914 1,531
Additions 12 -
Disposals - (628)
(Decrease)/ increase in fair
value during the year (29) 11
------------------------------ --------- ---------
At 31 March 897 914
------------------------------ --------- ---------
The Group holds two unlisted investments in funds managed by it. Both are held at fair value. All of the assets have been classified as available for sale. In the Directors' view the fair value has been estimated to be not materially different from their carrying value. Fair value has been arrived at by applying the Group's percentage holding in the investments of the fair value of their net assets.
10. Inventories - land and buildings
2017 2016
Group Group
GBP'000 GBP'000
------------------------------ --------- ---------
Group properties for resale
at cost
At 1 April 13,894 12,639
Capital expenditure 130 291
Foreign exchange translation 1,091 964
------------------------------ --------- ---------
At 31 March 15,115 13,894
------------------------------ --------- ---------
The Group's total interest in Blue Tower (an office block in Warsaw) is 48.2% of the building. The fair value of this interest is GBP20.21 million (EUR23.63 million) up from GBP16.01 million (EUR20.19 million) in 2016 but is stated at cost as above.
11. Trade and other receivables
2017 2016
Group Group
GBP'000 GBP'000
----------------------------------- ---------- ---------
Current assets
Trade receivables 2,003 2,589
Less provision for impairment
of receivables (626) (905)
----------------------------------- ---------- ---------
Trade receivables net 1,377 1,684
Other receivables 2,435 7,554
Prepayments and accrued income 1,078 890
----------------------------------- ---------- ---------
4,890 10,128
----------------------------------- ---------- ---------
In 2016, other receivables included a short
term loan to an associate for EUR6.5m (GBP5.15m)
which was repaid after the year end in May
2016.
Non-current assets
----------------------------------- ---------- ---------
Other receivables 2,108 186
----------------------------------- ---------- ---------
In 2017, other receivables include a balance
of GBP2.02m relating to the deferred consideration
from the sale of an investment property located
in Romania, which is receivable after one
year. This has been discounted to reflect
its current value.
12. Trade and other payables
2017 2016
Group Group
GBP'000 GBP'000
----------------------------- --------- ---------
Current liabilities
Trade payables 2,941 2,189
Other taxation and social
security 799 575
Other payables and accruals 5,275 5,163
Deferred income 833 11
----------------------------- --------- ---------
9,848 7,938
----------------------------- --------- ---------
13. Deferred tax
Deferred tax assets and liabilities are attributable to the following items:
2017 2017 2017 2016 2016 2016
Group Group Group Group Group Group
net assets liabilities net assets liabilities
assets GBP'000 GBP'000 assets GBP'000 GBP'000
GBP'000 GBP'000
------------------ --------- --------- ------------- --------- --------- -------------
Accrued interest
payable (1,114) 457 (1,571) (1,456) 151 (1,607)
Accrued income (4) - (4) (108) 9 (117)
Foreign bank
loan 1,945 2,086 (141) 2,199 2,255 (56)
Investment
properties
and inventories 203 1,473 (1,270) (393) 209 (602)
Other temporary
differences 103 325 (222) 392 392 -
------------------ --------- --------- ------------- --------- --------- -------------
1,133 4,341 (3,208) 634 3,016 (2,382)
------------------ --------- --------- ------------- --------- --------- -------------
14. Financial liabilities
2017 2016
Group Group
GBP'000 GBP'000
------------------------------------ --------- ---------
Current liabilities
Loans repayable by subsidiary
(FOP) to third party shareholders 2,148 1,841
Bank loan 3,180 3,014
Finance leases 14,313 2,813
------------------------------------ --------- ---------
19,641 7,668
------------------------------------ --------- ---------
Non-current liabilities
Bank loans 63,850 62,038
Finance leases 36,193 46,954
------------------------------------ --------- ---------
100,043 108,992
------------------------------------ --------- ---------
2017 2016
Group Group
GBP'000 GBP'000
------------------------------- --------- ---------
Total obligations under bank
loans and finance leases
Repayable within one year 19,642 7,668
Repayable within one and five
years 65,725 93,150
Repayable after five years 34,317 15,842
------------------------------- --------- ---------
119,684 116,660
------------------------------- --------- ---------
Loans repayable by FOP to third party shareholders are unsecured and repayable on demand.
Eight bank loans and three finance leases all denominated in Euros totalling GBP117.54 million (2016: GBP114.82 million) included within financial liabilities are secured against investment properties owned by the Group and Fprop Opportunities plc (FOP) and the property owned by the Group shown under inventories. These bank loans and finance leases are otherwise non-recourse to the Group's assets.
The preliminary results are being circulated to all shareholders and can be downloaded from the Company's web-site (www.fprop.com). Further copies can be obtained from the registered office at 32 St James's Street, London, SW1A 1HD.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAFKXESAXEAF
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