First Property Regulatory News (FPO)

Date: 6 June 2019

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 2019

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 2019. These results were materially affected by the deconsolidation of Fprop Opportunities plc (FOP) from the accounts of the Group, which took effect on 12 October 2018.

Operational Highlights:

· Sales of shares in FOP reducing the Group's interest in it to 40% and requiring its deconsolidation;

· Re-leasing of two thirds of the 10,000 m2 office space vacated (in February 2018) in Chałubińskiego 8 (CH8, previously known as Oxford Tower);

· Establishment of two new funds: Fprop Phoenix Ltd and Fprop Cluj Ltd;

· Total assets under management up 12.8% to £706 million (2018: £626 million);

· Third party assets under management up 34.5% to £611 million (2018: £454 million).

Financial Highlights:

· Group profit before tax reduced by 10% to £8.31 million (2018: £9.23 million), mainly due to the reduction in income resulting from the vacancy created in CH8;

· Net contribution to profit before tax from non-recurring items of £2.78 million (2018: £1.32 million);

· Threefold increase in contribution to profit before tax from the fund management division of £3.03 million (2018: £1.00 million);

· Main effects of deconsolidation of FOP:

- Turnover of the Group post 12 October 2018 reduced by £4.12 million;

- Group profit before tax post 12 October 2018 reduced by £1.17 million;

- Book cost of Group Properties reduced by £63.91 million;

- Borrowings reduced by £49.12 million;

- Group cash balances reduced by £2.03 million;

· Adjusted NAV per share increased by 8.31% to 57.48 pence (2018: 53.07 pence);

· Final dividend increased by 3.39% to 1.22 pence per share (2018: 1.18 pence per share);

· Total dividend for the year increased by 3.75% to 1.66 pence per share (2018: 1.60 pence per share);

Financial Summary:

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

"The year just ended was another one of substantial operational and financial progress.

The growth of our fund management division continued apace with third party assets under management increasing by some 35% to £611 million.

Both our divisions are trading well. The markets in which we operate are generally buoyant and offering interesting investment opportunities on which we expect to continue to capitalise."

A briefing for analysts will be held at 10:30hrs today at the headquarters of First Property Group plc, 32 St James's Street, London, SW1A 1HD. Participants can also attend by telephone on +44 (0)330 336 9401 passcode 158092. A copy of the accompanying investor presentation can be accessed simultaneously at http://www.fprop.com/media-news/presentations/. An audio recording of the call will subsequently be posted on the company website, www.fprop.com/audio/.

For further information please contact:

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. It has grown its adjusted net assets, together with dividends paid, by some 24% on an annualised basis since 2006.

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 thirteen funds which are invested across the United Kingdom, Poland and Romania.

· Group Properties - principal investments by the Group, to earn a return on its own capital, usually in partnership with third parties. Investments include nine directly held properties in Poland and Romania, and non-controlling interests in eleven of the thirteen funds managed by FPAM.

Listed on AIM the Company has offices in London, Warsaw and Bucharest. Around one third of the shares in the Company are owned by management and their families. Further information about the Company and its products can be found at: www.fprop.com.

CHIEF EXECUTIVE'S STATEMENT

Financial Performance

I am pleased to report final results for the twelve months ended 31 March 2019. The complexion of these results is different to those of prior years due to a change in the accounting treatment of Fprop Opportunities plc (FOP), resulting from sales of shares in it by the Group. With effect from 12 October 2018, the date when the Group's shareholding reduced from majority to associate status, the results of FOP were deconsolidated from that of the Group. The main effects of this are summarised below and explained in detail in the Finance Director's report.

Profit before tax decreased by 10% to £8.31 million (2018: £9.23 million) mainly due to the reduction in income resulting from the vacancy created by Citi leaving Chałubińskiego 8 (CH8) immediately prior to the start of the financial year.

Diluted earnings per share decreased by 14.9% to 4.85 pence (2018: 5.70 pence), a greater decrease than profit before tax due to a higher tax charge.

The main effects of deconsolidation of FOP were:

- Turnover of the Group post 12 October 2018 reduced by £4.12 million;

- Group profit before tax post 12 October 2018 reduced by £1.17 million;

- Book cost of Group Properties reduced by £63.91 million;

- Borrowings reduced by £49.12 million;

- Group cash balances reduced by £2.03 million.

The profit before tax was largely unaffected by foreign exchange rate movements.

The net contribution to profit before tax from non-recurring items was £2.78 million (2018: £1.32 million). A breakdown of these is provided in the Finance Director's Review.

The Group ended the year with reduced net assets excluding the non-controlling interests of £46.17 million (2018: £46.74 million). The net assets of the Group when adjusted to their market value less any deferred tax liabilities increased by 3.98% to £65.51 million (2018: £63.00 million).

Group cash at the year-end amounted to £9.74 million (2018: £15.32 million). The reduction in cash was mainly due to the deconsolidation of FOP (2018: £2.17 million) and the purchase by the Group of 4,775,000 of its own Ordinary Shares, which are now held in Treasury, for a total consideration of £2.20 million.

Dividend

The Directors have resolved to increase the final dividend to 1.22 pence per share (2018: 1.18 pence per share), an increase of 3.4%, which together with the interim dividend of 0.44 pence per share (2018: 0.42 pence per share), equates to a dividend for the year of 1.66 pence per share (2018: 1.60 pence per share), an increase of 3.75%.

The proposed final dividend will be paid on 27 September 2019 to shareholders on the register at 23 August 2019, and is subject to shareholder approval at the forthcoming annual general meeting on 9 September 2019.

The full year's dividend is covered 2.98 times (2018: 3.64).

REVIEW OF OPERATIONS

PROPERTY FUND MANAGEMENT (First Property Asset Management Ltd or FPAM)

As at 31 March 2019 aggregate assets under management amounted to £706 million (2018: £626 million), an increase of 12.8% from the prior year. Of this, £611 million (2018: £454 million) was managed on behalf of third-party clients, an increase of 34.5% from the prior year. A further £85.35 million of equity commitments is still available for investment in funds managed on behalf of third parties.

The reconciliation of movement in funds under management during the year is shown below:

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 realised in full until the financial year following investment (or sale), because of the timing of draw down (or sale) during the year.

In the case of Fprop Offices LP, the Group is entitled to a share of total profits in lieu of fund management fees and to receive annual payments on account equivalent to 10% of total cumulative income profits and realised capital gains. Under its accounting policy the Group will not recognise unrealised property revaluations above the properties' original cost. These payments are adjusted annually, if necessary, for any overpayments made in previous years up to a maximum of total past cumulative payments received. In the year just ended the Group recognised £961,000 (2018: Nil), the maximum that could be subject to clawback. Future entitlements to payment in respect of this fund are being earned at an annualised rate of £950,000 per annum before property revaluations, and thus act as a buffer against possible refund liabilities in the future.

Revenue earned by this division amounted to £4.96 million (2018: £2.92 million), resulting in a profit before unallocated central overheads and tax of £3.03 million (2018: £1.00 million), representing 36.5% of Group profit before unallocated central overheads and tax (2018: 10.9%). The increase in revenue and profit earned by this division included performance related fees of £500,000 in respect of Fprop Romanian Supermarkets Ltd and £79,000 in respect of Fprop Cluj Ltd.

At the year-end FPAM's fund management fee revenue, excluding any eligible profit share from Fprop Offices LP, was being earned at an annualised rate of £3.34 million (2018: £2.60 million), an increase of some 28% from the prior year.

First Property Asset Management Ltd (FPAM) now manages thirteen property investment funds, having established two new funds during the year. The weighted average unexpired fund management contract term at the year-end was 5 years, 9 months (2018: 6 years, 5 months).

A brief synopsis of the value of assets and maturity of each of the funds managed by FPAM is set out below:

* Not subject to recent revaluation;

** With effect from 12 October 2018 FOP was accounted for as an associate;

***With effect from 1 August 2018 RPT and E&S were transferred to Group Properties.

GROUP PROPERTIES

At 31 March 2019 Group Properties comprised:

1. Nine (2018: ten) wholly owned commercial properties in Poland and Romania accounted for under the cost model as set out in the table below.

2. Non-controlling interests in eleven of the thirteen funds managed by FPAM accounted for under the cost model as set out in the table below.

Group Properties generated a profit before unallocated central overheads and tax of £7.99 million (2018: £11.18 million), representing 72.5% (2018: 91.76 %) of Group profit before unallocated central overheads and tax. The reduction in profit was mainly due to a lower contribution from CH8.

The loans secured against our Group 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 (47%) of these loans. A one percentage point increase in interest rates would increase the annual interest bill by £485,000 per annum (2018: £610,000). The current weighted average borrowing cost is 2.15% (2018: 2.34%).

Chałubińskiego 8 (CH8, previously known as Oxford Tower), Poland

In February 2018, immediately prior to the start of the year under review, Citi vacated some 10,000 m2 of office space in CH8, resulting in the net operating income generated by this investment reducing by €2.89 million. We have since re-leased some 7,000 m2 of this space, the benefits of which should be experienced by the Group in the current and next year. Negotiations with interested parties are continuing for the remaining vacant space.

Office Building in Gdynia, Poland

The Group has, since its acquisition, been depreciating the holding value of the office block in Gdynia at a rate of £1.74 million (€1.97 million) per annum to take account of its over rented nature. In view of the shortening lease on this property, the Directors resolved to further write down the property during the year by an amount of £3.02 million (€3.50 million). It is anticipated that the original rate of depreciation will not change in future periods.

Associates and Investments

The contribution to Group profit before tax prior to the deduction of unallocated central overheads from our eleven minority shareholdings in funds managed by FPAM increased by 68% to £1.60 million (2018: £0.95 million). This increase was mainly attributable to Fprop Phoenix Ltd which contributed £1.05 million (2018: nil).

The contribution from associates and investments represented 23.45% of the total contribution by Group properties (2018: 9.06%).

Regional Property Trading Ltd (RPT) and E and S Estates Ltd (E&S)

On 1 August 2018 the Group acquired full ownership of RPT and 77% of E and S, which jointly own four properties in Poland, at a cost of £527,000. With effect from 1 August 2018 the results of RPT and E&S were consolidated into those of the Group.

Commercial Property Markets Outlook

Poland:

Poland's economy continues to expand at a faster rate than its western European neighbours, as it has done since its entry into the EU in 2004. It recorded GDP growth of 5.1% in 2018 and is forecast to grow by 4.2% in 2019.

Transaction volumes for commercial property reached €7.2 billion in 2018, an all-time high. The banking market remains healthy and yields for good secondary property, of the sort we favour, remain attractive at around 7.5% per annum or more. Rents have remained broadly stable for several years.

Romania:

GDP growth moderated in 2018 to 4.1% (from 7% in 2017). It is forecast to grow by 3.3% in 2019 and 3.1% in 2020. Wage-led private consumption growth continues to be the key driver.

International investment in commercial property remains steady with transaction volumes in 2018 broadly unchanged from 2017 at around €900 million.

United Kingdom:

GDP in the UK is growing at around 1.8% on an annualised basis.

The total return from all commercial property in 2018 was 6.3%. The total return from offices was 7.9% whilst the retail sector posted its first negative total return since 2012 of -1.8%.

Occupier and investor demand is generally strong for office property but has generally softened for retail property, as evidenced by the valuation movements referenced above. Yields are generally reasonable for investment property.

Current Trading and Prospects

The year just ended was another one of substantial operational and financial progress.

The growth of our fund management division continued apace with third party assets under management increasing by some 35% to £611 million.

Both our divisions are trading well. The markets in which we operate are generally buoyant and offering interesting investment opportunities on which we expect to continue to capitalise.

Ben Habib

Chief Executive

6 June 2019

FINANCE DIRECTOR'S REVIEW

The financial results for the year ending 31 March 2019 were significantly influenced by the deconsolidation of FOP in October 2018, which has subsequently been accounted for as an associate. A summary of the main financial effects of this deconsolidation are set out in the Chief Executive's Statement.

The Group produced a profit before tax of £8.31 million, a reduction of 10.0% compared to last year's record £9.23 million. This reduction was mainly a result of the reduction in income of €2.89 million being earned from the Group's investment in CH8 following the 10,000 m2 vacancy created by Citi Group when it left the property in February 2018, immediately prior to the start of the year under review.

Total Group Net assets (excluding the non-controlling interest) decreased by 1.2% to £46.17 million (2018: £46.74 million).

The annualised growth in adjusted net assets together with dividends paid to shareholders over the last five years equates to 23.6% (2018: 25.0%) per annum.

INCOME STATEMENT

Revenue and Gross Profit

A review of the operating and financial performance of the results of the two trading divisions for the year are included in the Chief Executive's Statement.

Operating Expenses

Operating expenses increased by 1.8%, mainly due to an increase in headcount in Poland to 41 at 31 March 2019 (2018: 29).

Investment Property Write Down

The Directors have reviewed the residual value of the Group property located in Gdynia and in addition to the depreciation charged within operating expenses of £1.74 million (2018: £1.74 million), they have concluded, after due consideration, to apply a further write down of £3.02 million (2018: £nil) to reflect its expected market value when the current lease terminates in 2020, given that the property is substantially over rented.

Share of Results in Associates

The contribution for the year of £1.60 million (2018: £0.95 million) comprises the Group's share of post-tax profits from seven investments including the post deconsolidation share of post-tax profits from FOP. This includes a first contribution of £1.05 million from the Group's investment in Fprop Phoenix Ltd that is the UK holding company to Eximius Business Park in Krakow, Poland (formerly known as Krakow Business Park).

Investment Income (from other financial assets and investments)

The increase from £63,000 to £273,000 represents a full year contribution from the Group's investments in Fprop Offices LP and Fprop UK Special Opportunities LP.

Financing Costs

The Group's finance costs show a reduction on last year from £3.06 million to £2.18 million as a result of the deconsolidation of FOP's borrowings of £49.12 million. All bank loans and finance leases are denominated in Euro and all are used to finance properties valued in Euro.

Net Contribution to Group Profit Before Tax from Non-recurring Items

These comprised a total £2.78 million (2018: £1.32 million) of which the main items were:

- the gain on loss of control of FOP - £4.83 million;

- the contribution from Fprop Phoenix Ltd of £1.05 million;

- less the write down of the property in Gdynia of £3.02 million;

- less the fair value impairment of £0.73 million.

Current Tax

The current tax charge of £1.28 million (2018: £1.38 million) decreased partly as a result of the deconsolidation of FOP but was adversely affected by an under provision in UK corporation tax last year of £0.13 million. The charge includes Polish and Romanian corporation tax where the headline rates remain at 19% and 16% respectively. Unused trading tax losses in the UK of £6.35 million are available to be carried forward and utilised wherever possible.

Deferred Tax

An increased deferred tax charge of £659,000 (2018: £90,000) has arisen mainly through a reduction in the deferred tax assets recognition in relation to the Euro bank loans, resulting from different respective year-end foreign exchange rates.

Earnings per Share

Basic earnings per share decreased 14.9% from 5.82p to 4.95p per share, a larger decrease than the 10.0% decrease in the profit before tax for the year due to a higher total effective tax charge.

BALANCE SHEET

Deconsolidation of FOP

The net assets of FOP at deconsolidation at 12 October 2018 amounted to £13.63 million at cost of which £7.60 million was attributable to the non-controlling interest. The remaining 40.03% interest in FOP was held in the balance sheet at £10.02 million on 31 March 2019, following a mark up to fair value of £4.22 million.

Investment Properties and Property Held Under Inventory (all held at cost)

The book value of the Group's nine wholly owned properties (excluding FOP) is £82.14 million (2018: £84.10 million) compared to fair value of £94.61 million (2018: £96.88 million).

Capital Expenditure (investment and trade properties)

Capital expenditure of £1.54 million (2018: £2.61 million) mostly comprised office fit-outs for new tenants in CH 8.

Business Acquisitions

With effect from 1 August 2018, following the Group acquiring full ownership of Regional Property Trading Ltd and 77% of E and S Estates Ltd for a combined aggregate cost of £527,000, the combined net assets of £841,000 (including the non-controlling interest) have been consolidated in the results of the Group.

Borrowings

All bank and finance lease borrowings are denominated in Euro and decreased from €134.16 million (£117.62 million) to €77.37 million (£66.68 million) after the deconsolidation of FOP and scheduled bank loan repayments of €7.25 million. On an adjusted NAV basis, the Group had a gearing ratio of 50.6%. Bank deposits of £1.39 million have been made in respect of four bank loans to redress Debt Service Cover Ratio (DSCR) covenant shortfalls of which £1.03 million are held in prepayments.

Non-controlling Interests

The deconsolidation of FOP resulted in a reduction in non-controlling interests (NCI) of £6.08 million from £6.19 million at 31 March 2018 to £114,000 at 31 March 2019. The remaining NCI represents the 10% interest in Corp Sp. z o. o., (the property management company to Blue Tower, Warsaw), not owned by the Group and the 23% of E and S Estates Ltd (acquired during the year), also not owned by the Group.

Foreign Exchange Translation Reserve

Due to both Sterling and Euro closing rate strength against the Polish Zloty there has been a £2.13 million reduction in this reserve during the year to a deficit of £0.73 million. There was also a foreign exchange profit of £721,000 recycled to the income statement on the disposal of FOP which was included in the mark up to fair value of FOP to £4.22 million.

Treasury Shares

First Property Group plc purchased 4,775,000 Ordinary Shares in itself in April 2018, at a price of 46 pence per share or £2.20 million. This purchase resulted in a reduction of equal quantum in the Group's net assets.

CASH and CASHFLOW

Cash

Cash levels decreased from £15.32 million to £9.74 million. This reduction arose largely as a result of:

- The deconsolidation of FOP's cash of some £2.03 million; and

- The share buy-back, referred to above, at a price of some £2.20 million.

CONSOLIDATED INCOME STATEMENT

for the year ended 31 March 2019

All operations are continuing.

CONSOLIDATED SEPARATE STATEMENT

OF OTHER COMPREHENSIVE INCOME

for the year ended 31 March 2019

All operations are continuing.

CONSOLIDATED BALANCE SHEET

As at 31 March 2019

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2019

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2018

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 March 2019

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 2019. The policies have been consistently applied to all years presented unless otherwise stated below. 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 2018 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.

New standards impacting the Group which have been adopted in the preliminary financial statements for the year ended 31 March 2019, and which have given rise to changes in the Group's accounting policies are:

IFRS 9 Financial Instruments

The Group has adopted IFRS 9 with effect from 1 April 2018. IFRS 9 replaces the provisions of IAS 39 that relates to the recognition, classification and measurement of financial assets and financial liabilities, impairment of financial assets and hedge accounting.

The Group has assessed whether it intends to hold its financial assets to collect the contractual cash flows, or whether it intends to sell them before maturity and has classified its financial instruments into the appropriate IFRS 9 categories.

While some accounting policies have been amended on adoption of the standard there have been no adjustments required to the Group's income statement or balance sheet.

IFRS 15 Revenue from Contracts with Customers

The Standard introduces a five-step model for recognising revenue, which consists of identifying the contract with the customer, identifying the relevant performance obligations, determining the amount of consideration to be received under the contract, allocating the consideration to each performance obligation, and earning the revenue as the performance obligation is satisfied.

The standard is applicable to asset management fee income, service charge income, proceeds from the sale of investment properties and performance related fee income, but not rental income arising from the Group's leases with tenants.

The Group has undertaken a comprehensive review of its contracts and concluded that there is no impact on the way in which the Group recognises its revenues. IFRS 15 constrains the amount of revenue that is recognised when estimating variable consideration. As such the Group has considered constraining the amount of revenue that is recognised in relation to performance related fees that are subject to future reversal so as to reduce the risk of such reversal occurring. In the Directors' judgement no such reduction was considered necessary in the current year as there is a built-in cushion in future years to absorb the negative effects of future downward property revaluations that may cause such reversal. For the previous year, no such income was recognised and therefore no comparative restatements are necessary in this respect.

The Group has applied IFRS 15 retrospectively and concluded that no adjustment is necessary to the opening profit and loss reserve as at 1 April 2018 and that no comparative information need be restated.

The Group did not apply any of the practical expedients available under the full retrospective method.

Revenue

Revenue recognition is on an accruals basis in the income statement when it can be reliably measured, but depends on the type of revenue concerned, and excludes VAT.

Rental income is recognised over the term of the lease on a straight- line basis and is adjusted for lease incentives such as rent-free periods and fit out contributions such that their cost is apportioned evenly over the full lease term.

Turnover rents and other such contingent rents are recorded as revenue in the periods to which they relate.

Service charge income is recognised in the period in which it is earned according to the terms of the individual lease agreement.

Income from the sale of properties is recognised generally on unconditional exchange of contracts when the significant risks and rewards of ownership are transferred to the buyer and there are no significant outstanding obligations between exchange of contract and completion.

Asset management and administration fees are recognised in the income statement as they are earned.

Performance related fees are recognised when the performance period has ended and the performance calculation can be performed with reasonable certainty. In cases where performance related revenue is subject to potential future reversal the Directors will apply their judgement to the amount of revenue recognised in the income statement such that in their judgement there is a high probability that this revenue will not reverse in subsequent years. They will ignore all unrealised upward property revaluations above original cost (including acquisition costs) used to determine the total entitlement but include any downward revaluation below total original historic acquisition and subsequent capitalised property costs.

Transaction fees are recognised once the relevant transaction has completed.

All revenue is classified in the revenue line of the income statement except for revenue from the sale of property which is netted off against costs and shown under profit on sale of property.

Interest income and expense recognised on an accruals basis.

These preliminary financial statements were approved by the Board of Directors on 5 June 2019.

2. Revenue

Revenue from continuing operations consists of revenue arising in the United Kingdom 11% (2018: 8%), Poland 82% (2018: 87%) and Romania 7% (2018: 5%). All revenue relates solely to the Group's principal activities. 

3. Segment Reporting 2019

Segment Reporting 2018

4. Interest Income

5. Tax Expense

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.

6. Business Acquisitions

These entities were consolidated into the accounts of the Group with effect 1 August 2018, following the Group acquiring full ownership of RPT and 77% of E&S. The net assets of the companies acquired were as follows:

The goodwill on acquisition of £27,000 which has come about as a result of a premium being paid for the shares has been impaired and written off the income statement given the uncertainty over future lettings at two of the four properties.  

7. Disposal of Subsidiary

On 5 June 2018 the First Property Group plc sold its 100% ownership of Scaup Sp. z o. o. to Fprop Phoenix Ltd for consideration £18,858. Fprop Phoenix Ltd is an associate of the Group.

8. Disposal of Subsidiaries (following change of status from subsidiary to associate)

With effect from 12 October 2018, and following disposals of its shareholding in Fprop Opportunities plc (FOP), a fund which it manages and which is fully invested in five commercial properties in Poland; the Group's share in FOP reduced to 44.3%. The Directors judged that, in their opinion and after considering all the relevant facts and circumstances, the Group could no longer exercise control over FOP and therefore required that FOP be deconsolidated from the Group's accounts. The Group are accounting for its remaining share of the profits of FOP as an associate undertaking. The Group has continued to sell down its shareholding in FOP and currently owns 40.03%.

Summary of Net Assets disposed of following the deconsolidation of FOP from the Group accounts: