First Property Regulatory News (FPO)

30 Nov 2006 07:01

First Property Group PLC30 November 2006 30 November 2006 First Property Group plc 275% increase in assets under management underpins strong interim performance First Property Group plc ("the Group") (AIM: FPO), the property asset manager,announces interim results for the six months to 30 September 2006. Financial Highlights: • Assets under management grew 275% to £90 million (2005: £24 million) • Turnover increased 103% to £5,148,000 (2005: £2,537,000) • Profit on ordinary activities before goodwill amortisation and taxation grew 11% to £559,000 (2005: £505,000) • Income from asset management increased 180% to £375,000 (2005: £134,000) • Online activities continued to make progress with revenues increasing to £163,000 (2005: £142,000) • Newly acquired First Property Services generated a pre-tax profit of £79,000 (2005: nil) Operational Highlights: • The Group now manages €110 million (£74 million) of property in Central and Eastern Europe, representing 82% of the total portfolio • Portfolio is earning a pre-tax return on equity of 9% per annum from rent alone • Strong pipeline of a further €90 million (£61 million) of property under offer • Recently acquired facilities management and buildings services company, First Property Services, has secured a number of new contracts • Strategic shift to grow asset management division, reducing dependence on income from transaction underwriting and trading, is being successfully progressed. Commenting on the results, Ben Habib, Chief Executive of First Property, said,"First Property moves from strength to strength. Our portfolio has grownimmensely and is producing high returns. The Group has proved itself to be acapable investor in its chosen regions and we believe the decision we made twoyears ago to focus on Central and Eastern Europe was the right one." "Going forward, we expect to see another period of marked growth in the assetmanagement division and once our existing asset management mandates have beenfully invested, we expect the Group's profit to materially exceed the level weare currently experiencing." For further information: Ben Habib Richard Sunderland/Rachel DrysdaleFirst Property Group plc Tavistock CommunicationsTel 020 7731 2844 Tel: 020 7920 3150www.fprop.com rsunderland@tavistock.co.uk CHIEF EXECUTIVE'S STATEMENT Results and dividend I am pleased to report our interim results for the six month period to 30September 2006. They show that the Group has made significant progress in itsaim to grow its sustainable lines of revenue, most notably from the continuedsuccess of its asset management division where assets under management grew 275%to £90 million (2005: £24 million). Turnover for the period was £5,148,000 (2005: £2,537,000), producing an increaseof 11% in profit on ordinary activities before goodwill amortisation andtaxation of £559,000 (2005: £505,000). Excluding First Property Services Ltd, inwhich we acquired a 60% interest in February 2006, turnover for the period was£3,575,000. Earnings per share decreased by 5% from the same period last year and amountedto 0.36 pence (2005: 0.38 pence), largely as a result of an increase in theeffective rate of tax payable by the Group, now that brought forward losses havebeen utilised. The Directors have resolved to maintain the dividend policy established inprevious years of only declaring a final dividend. Accordingly, there is nointerim dividend. Review of operations Property asset management------------------------- The rate of growth of our asset management activities has accelerated withrevenues earned by this division increasing by 180% to £375,000 (2005:£134,000). We now have £90 million (2005: £24 million) under management, an increase of275%. Virtually half of this was acquired towards the end of the period underreview and will therefore markedly improve the performance of this division inthe second half of the year. The greater part of our efforts continues to be on buying properties in Centraland Eastern Europe rather than the UK. We now manage some €110 million (£74million) of property in Central and Eastern Europe representing 82% of ourportfolio. We have a further €90 million (£61 million) under offer and goingthrough our due diligence processes. Our portfolio is earning its investors a pre-tax return on equity of some 9% perannum from rent alone, giving us confidence that the portfolio should producesignificantly higher returns if and when capital gains are realised. Given the healthy returns we are earning for our investors and the pipeline ofproperties under offer, I expect this division to continue its rapid growth. Property transaction underwriting and trading--------------------------------------------- The property underwriting division made a better start to the year than we hadanticipated. Turnover from this activity amounted to £3.04 million (2005: £2.2million), producing a gross profit of £480,000 (2005: £605,000). When I reported in June, I forecast that the profit earned from this activitywould reduce, which it has. However, turnover for this division is equivalent tothe value of properties sold and because the value of properties sold in theperiod exceeded the value of those sold last year, turnover is shown asincreasing. This has no bearing on the underlying trend of this division, whichremains one of lower profit. We are working on reversing this trend but by virtue of the nature of thisbusiness it is difficult to predict. First Property Services Ltd--------------------------- First Property Services (FPS), which we acquired in February 2006, had a goodfirst half, earning revenues of £1.57 million (2005: £ nil) and a pre-tax profitof £79,000 (2005: £ nil) during the period. FPS is engaged in the provision of facilities maintenance and building servicesto clients in the commercial property sector. I expect FPS to make a further contribution in the second half of the year. Online Activities----------------- Our online activities, particularly the online sales of properties, also had agood first half and earned revenues of £163,000 (2005: £142,000). Current trading and prospects As mentioned when we reported our annual results in June, we are experiencingmajor changes in our business as our assets under management grow and we becomeless dependent on underwriting and trading income. Shareholders will alreadyhave noticed this shift as evidenced by the changes in the source of ourearnings. Given the current level of assets under management, the rate of return theseassets are earning for their owners and the number of attractive properties wehave under offer and are negotiating to acquire on behalf of our funds, I lookforward to 2007/8 and beyond with confidence. Ben HabibChief Executive30 November 2006 CONSOLIDATED PROFIT & LOSS ACCOUNT for the six months to 30 September 2006 Notes Six months Six months Six months Year to to to to 30 Sept 30 Sept 30 Sept 31 March 2006 2005 2005 2006 (unaudited) (unaudited) (unaudited) (audited) Total Before Total Total Results Goodwill Results Results Amortisation £'000 £'000 £'000 £'000------------------------------------------------------------------------------- Turnover - continuing operations 3,575 2,537 2,537 8,176 - acquired operations 1,573 - - 136Total turnover 2 5,148 2,537 2,537 8,312Cost of sales - continuing operations (2,629) (1,611) (1,611) (5,881) - acquired operations (1,264) - - (113)------------------------------------------------------------------------------- Gross profit 1,255 926 926 2,318Net operating expenses (775) (430) (821) (1,517)------------------------------------------------------------------------------- Operating profit- continuing operations 480 496 105 801-------------------------------------------------------------------------------Total operating profit 480 496 105 801Income from fixed asset investments 46 - - 2Share of associated companies'profits before tax 26 24 24 23Net interest payable 7 (15) (15) (50)-------------------------------------------------------------------------------Profit on ordinary activitiesbefore taxation 559 505 114 776Taxation on profit on ordinary activities 3 (133) (78) (78) (236)-------------------------------------------------------------------------------Profit on ordinary activitiesbefore minority interest 426 427 36 540Equity minority interest (28) - - 20-------------------------------------------------------------------------------Profit for the period 398 427 36 560-------------------------------------------------------------------------------Earnings per Ordinary 1p share - basic before goodwill amortisation 4 0.36p 0.38p - 0.85pEarning per Ordinary 1p share - basic after goodwill amortisation 4,5 0.36p - 0.04p 0.50pEarnings per Ordinary 1p share - diluted before goodwill amortisation 4 0.35p 0.37p - 0.83pEarnings per Ordinary 1p share - diluted after goodwill amortisation 4,5 0.35p - 0.04p 0.49p------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEET as at 30 September 2006 Notes As at As at As at 30 Sept 30 Sept 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000------------------------------------------------------------------------------- Fixed assetsIntangible assets 25 - 16Tangible assets 152 22 220Investments - Share of associates net assets 259 124 230------------------------------------------------------------------------------- 436 146 466-------------------------------------------------------------------------------Current assetsStocks - land and buildings 2,103 5,423 2,698Debtors 5,673 1,604 5,706Cash at bank and in hand 3,046 789 1,189------------------------------------------------------------------------------- 10,822 7,816 9,593-------------------------------------------------------------------------------Creditors: amounts falling due within one year (3,888) (1,473) (2,962)-------------------------------------------------------------------------------Net current assets 6,934 6,343 6,631Total assets less current liabilities 7,370 6,489 7,097Creditors: amounts fallingdue after more than one year (194) (78) (92)-------------------------------------------------------------------------------Net assets 7,176 6,411 7,005-------------------------------------------------------------------------------Capital and reservesCalled up share capital 6 1,116 1,116 1,116Share premium 6 5,298 5,298 5,298Merger reserve 6 5,823 5,823 5,823Foreign Exchange Translation Reserve 6 11 - 70Profit and loss account 6 (5,072) (5,826) (5,302)-------------------------------------------------------------------------------Equity shareholders' funds 7,176 6,411 7,005------------------------------------------------------------------------------- SUMMARISED CONSOLIDATED CASH FLOW STATEMENT for the six months to 30 September 2006 Notes Six months to Six months Year to 31 30 Sept to 30 Sept March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000-------------------------------------------------------------------------------Net cash inflow/(outflow) from operating activities 7 995 (1,169) (850)-------------------------------------------------------------------------------Returns on investment andservicing of financeEquity dividends paid (168) (139) (138)Interest received 28 32 101Interest paid (21) (47) (151)-------------------------------------------------------------------------------Net cash (outflow) from returns on investment andservicing of finance beforetaxation (161) (154) (188)-------------------------------------------------------------------------------Taxation (47) - (1)Capital expenditure and financial investmentPurchase of tangible fixedassets (13) (8) (222)Purchase of intangible fixed assets (9) - (16)Sale of tangible fixed assets 44 - 7Purchase of fixed asset investments (30) (1) (111)Sale of fixed asset investments 74 - -Purchase of minority interest - (336) (336)-------------------------------------------------------------------------------Net cash inflow/(outflow) fromcapital expenditure and financial investment 66 (345) (679)-------------------------------------------------------------------------------Cash inflow/(outflow) before management of liquid resources and financing 853 (1,668) (1,717)-------------------------------------------------------------------------------Management of liquid resources(Increase)/decrease in term deposits (1,346) 596 508Financing Issue of Ordinary share capital - - -Bank overdraft (3) - 3Finance Lease (60) - 145Loans received 1,067 1,003 1,304Loans repayments - (134) (134)-------------------------------------------------------------------------------Net cash inflow/(outflow) from management of liquidresources and financing (342) 1,465 1,826-------------------------------------------------------------------------------(Decrease)/increase in cash in period 511 (203) 109------------------------------------------------------------------------------- RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET (DEBT)/ FUNDS Notes Six months to Six months Year to 31 30 Sept to 30 Sept March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000------------------------------------------------------------------------------- Increase/(Decrease) in cashin period 511 (203) 109Movement in short term deposits 1,346 (596) (508)Movement in finance leases 60 - (145)Movement in overdrafts 3 - (3)Movement in loans (1,067) (869) (1,170)-------------------------------------------------------------------------------Movement in net funds in period 853 (1,668) (1,717) Net funds at beginning of period (263) 1,454 1,454-------------------------------------------------------------------------------Net funds/(debt) at end of period 590 (214) (263)------------------------------------------------------------------------------- NOTES TO THE CONSOLIDATED RESULTS for the six months ended 30 September 2006 1. The interim accounts have been prepared on a basis which is consistent with the accounting policies adopted for the year ended 31 March 2006. 2. Turnover consists of revenue arising in the United Kingdom 58% (2005:99%) and Central and Eastern Europe 42% (2005: 1%) and all relates solely to the Group's principal activities. 3. The tax charge is based on the effective rate that is expected to apply to the profits for the full year. 4. The basic earnings per Ordinary Share is calculated on the profit on ordinary activities after taxation on the weighted average number of Ordinary Shares in issue, during the period, of 111,601,115 (30 September 2005: 111,601,115 and 31 March 2006: 111,601,115). The diluted earnings per Ordinary Share is calculated on an adjusted profit on ordinary activities after taxation of £401,000 and an adjusted number of Ordinary shares in issue of 115,051,115. 5. The Group charged goodwill amortisation in the six months to 30 September 2006 of nil (2005: £391,000). 6. Capital and Reserves Share Share Merger Foreign Profit capital premium reserve Exchange and loss Translation account £'000 £'000 £'000 Reserve £'000----------------------------------------------------------------------------------- At 1 April 2006 1,116 5,298 5,823 70 (5,302)Profit/(Loss) for the period - - - - 398Movement on Foreign Exchange Translation Reserve - - - (59) - Dividends Paid - - - - (168)-----------------------------------------------------------------------------------At 30 Sept 2006 1,116 5,298 5,823 11 (5,072)----------------------------------------------------------------------------------- 7. Reconciliation of operating profit to net cash inflow/(outflow) from operating activities Six months to Six months Year to 31 30 Sept to 30 Sept March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000------------------------------------------------------------------------------- Operating profit 480 105 801Depreciation and profit/loss ondisposal of fixed assets 34 7 18Amortisation of goodwill - 391 391Movement in foreign exchange translation reserve (59) - 70Decrease/ (increase) in stocks 595 (1,422) 1,303Decrease/ (increase) in debtors 14 (303) (4,153)(Decrease)/ increase in creditors (69) 53 720-------------------------------------------------------------------------------Net cash inflow/(outflow) from operating activities 995 (1,169) (850)------------------------------------------------------------------------------- 8. The financial information contained in this interim report does notconstitute statutory accounts within the meaning of section 240 of the CompaniesAct 1985. This information has been neither audited nor reviewed within themeaning of APB Bulletin 1999/4 by the Company's auditors. The financialstatements for the year ended 31 March 2006, incorporating an unqualified reportof the auditors, have been filed with the Registrar of Companies. 9. The interim results are being circulated to all shareholders. Further copiescan be obtained from the registered office at 17 Quayside Lodge, William MorrisWay, London SW6 2UZ. This information is provided by RNS The company news service from the London Stock Exchange