First Property Group Plc · LSE:FPO
First Property — H1 FY2019 Earnings Presentation
42 slides from First Property's earnings presentation, Nov 22, 2018
Slide 1: Interim Results for the six months ended 30 September 2018
Interim Results for the six months ended 30 September 2018 First Property Group plc 22 November 2018 FPAM funds rank No.1 versus MSCI’s Central & Eastern European (CEE) Benchmark for the thirteen years from the commencement of its operations in Poland in 2005 to December 2017, and for the periods fr
Slide 2: Contents
First Property Group plc Contents Company Description 3 Markets 25-28 Investment Approach 4-5 Investment Markets – Poland 26 Group Structure 6 Investment Markets – Romania 27 Investment Markets – United Kingdom 28 Interim Results 7 Financial Performance Summary 8 Outlook - Why invest in Fprop plc? 2
Slide 3: Company Description
First Property Group plc Company Description First Property Group plc (AIM: FPO) is an award winning property fund manager and investor with offices in London, Warsaw and Bucharest. It has grown its adjusted net assets, together with dividends paid, by some 28% per annum since 2006. Its focus is o
Slide 4: Investment Approach
First Property Group plc Investment Approach Sustainable income is a priority: The yield at purchase of any property investment must ALWAYS exceed debt service costs; We assess investments with an emphasis on ROE as opposed to IRR (because IRR’s require an exit price assumption); Over the lo
Slide 5: Investment Approach (cont.)
First Property Group plc Investment Approach (cont.) Property is illiquid – but this illiquidity can be mitigated by rental income – liquidity through income; Flexibility in the light of market changes; An active approach to asset management (where possible): 2005: Largely exited the UK comm
Slide 6: Group Structure
First Property Group plc Group Structure Total AUM: £730m Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 6
Slide 7: Interim Results - Highlights
Interim Results - Highlights Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 7
Slide 8: Financial Performance Summary
Interim Results Financial Performance Summary Audited Unaudited 6 months to Unaudited 6 months to Year to Percentage change 30 September 2018 30 September 2017 31 March 2018 Income Statement: Revenue £11.16m £12.09m -7.69% £25.46m Statutory profit before tax £3.82m £4.98m -23.29% £9.23m Diluted earn
Slide 9: Financial Performance Summary (cont.)
Interim Results Financial Performance Summary (cont.) Audited Unaudited six months to Unaudited six months to Percentage change Year to 30 September 2018 30 September 2017 31 March 2018 Group Direct Property Portfolio at period end: Group Properties held at Book value £152.4m £146.3m +4.17% £147.8m
Slide 10: CEO comments
Interim Results CEO comments Commenting on the results, Ben Habib, Chief Executive of First Property Group, said: “This has been a good six months for First Property. The reduction in profit before tax should only be temporary and is due virtually entirely to the expiry of Citi Group’s lease at one
Slide 11: NAV per share 2007-2018
Interim Results NAV per share 2007-2018 70 EPRA NAV NAV Cash • Adjusted NAV: 62.21p; 60 • Adjusted NAV 50 growth, together with dividends paid: Pence per share 40 28% per annum since 2006. 30 External valuers: 20 • CBRE; • BNP Paribas; 10 • Polish Properties Sp. z o.o. 0 Mar-07 Mar-08 Mar-09 Mar-10
Slide 12: Continued Growth in Dividend
Interim Results Continued Growth in Dividend 1.8 Interim dividend: 1.6 0.44p (2017: 0.42p) +4.8% 1.4 Ex div date: 29 Nov 1.2 Record date: 30 Nov Pence per share Payment date: 28 Dec 1 Final 0.8 Interim Total dividend for year to Mar-2018: 0.6 1.60p (2017: 1.55p) 0.4 +3.2% 0.2 0 FY13/14 FY14/15 FY15/
Slide 13: Segmental Analysis
Segmental Analysis Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 13
Slide 14: Profit before Tax by segment
Segmental Analysis Profit before Tax by segment 8 FPAM (excl fees from FOP) Group Properties (incl FOP) 7 0.80 6 0.27 1.19 5 0.80 £ Million 2.90 4 3 5.84 6.08 5.22 2 4.26 1.41 2.97 1 0.89 - Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 14
Slide 15: Fund Management - summary
Segmental Analysis Fund Management - summary Fund Segment PBT: £798,000* • AUM: £730m; (2017: £804,000) Management • Third party AUM: £551m; 15.8% of Group PBT* • 13 funds invested across UK, Poland & Romania; * = prior to deduction of • Annualised fee income of £2.90 unallocated central overhea
Slide 16: Fund Management Revenue and AUM
Segmental Analysis Fund Management Revenue and AUM 10 Performance Fee FPAM Revenue AUM 800 AUM set to continue to rise; 9 700 8 Underlying 600 annualised fee 7 income (excl perf Revenue (£ Million) AUM (£ Million) 500 6 fees) = £2.90m (2017: £2.64m); 5 400 4 Weighted average 300 fund managemen
Slide 17: Fund Management Breakdown of AUM By Fund
Segmental Analysis Fund Management Breakdown of AUM By Fund E&S 0.7% 5PT 1.1% Fprop Special Opps 2.6% FOP 10.3% Fprop Offices 20.0% 14 Properties 13.4% FRS 0.3% FGC 3.1% FKR 3.2% SIPS 22.8% FCL 1.1% FPL 8.8% UK PPP 12.6% Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 17
Slide 18: Breakdown of AUM by Investor Category and Geography
Segmental Analysis Fund Management Breakdown of AUM By Investor Category By Geography Fprop Pension Funds Private Clients Endowments 2% 10% 5% 9% 40% Poland UK 58% Romania 76% Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 18
Slide 19: Group Properties - summary
Segmental Analysis Group Properties - summary Group Segment PBT: £4.26m* 14 commercial properties in Poland & Properties (2017: £6.08m) Romania, including 5 held by FOP and 4 held jointly by RPT and E&S: o Book value: £152.4m 84.2% of PBT* o Market value: £178.3m * = prior to deduction of No
Slide 20: Group Properties contributions to Profit before tax
Segmental Analysis Group Properties contributions to Profit before tax (prior to deduction of unallocated central overheads) 7 Contribution to PBT from 14 properties 6 in Poland and Romania 5 4 £ Million Contribution to PBT from Group's share in FOP 3 2 Contribution to PBT from non- controlling inte
Slide 21: Group Properties - Cash flows from the properties owned by the Group
Segmental Analysis Group Properties - Cash flows from the 14 properties owned by the Group Six months to 30 Sept 2018 Six months to 30 Sept 2017 €m €m Net operating income (NOI) €7.91m €9.41m Interest expense on bank loans / finance leases (€1.58m) (€1.59m) NOI after interest expense €6.33m €7.82m C
Slide 22: Group Properties Loan terms and yield
Segmental Analysis Group Properties Loan terms and yield of the 14 properties owned by Group Properties held in separate non-cross collateralised SPV’s which are non-recourse to the Group; Interest rates: Current weighted average borrowing cost = c2.83% (2017: 2.46%) per annum; A 1% increase
Slide 23: Group Properties Tenant exposure
Segmental Analysis Group Properties Tenant exposure Tenant Sector % 1 Technology Asseco S.A. 32.4 2 Food Retail Carrefour 9.7 3 Construction Skanska S.A. 6.7 4 Food Retail Tesco (Polska) sp z o.o. 3.9 5 Healthcare Narodowego Funduszu Zdrowia 3.4 6 Santander (BZ WBK SA) Bank 2.4 7 First Property Pola
Slide 24: Group Properties Breakdown of Assets by Geography
Segmental Analysis Group Properties Breakdown of Assets by Geography Tureni Felix 1% Praga 2% Blonie 1% 1% Nastroj/Lodz Blue Tower, Romania Poland Warsaw 0.8% 12% Wawer 1% CH8, Warsaw Marki 22% 0.1% ZANA Lublin 7% Galeria Ostrowiec Office, Gdynia 18% 17% Carrefour, Lodz 9% Panorama, Zoliborz Plaza,
Slide 25: Markets
Markets Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 25
Slide 26: Investment Markets Poland
Investment Markets Poland GDP Growth – again at forefront of EU member states 2018: >5% (F); 2019: >4% (F); Inflation: >2.5% per annum; Government debt remains low by international standards at c54% of GDP. Commercial Property: Investor demand for commercial property remains high. Volu
Slide 27: Investment Markets Romania
Investment Markets Romania GDP Growth: 2018: >7% (F) – fastest in EU 2019/20: >3.5% per annum (F) Commercial Property: Investor demand for commercial property continues to improve but volumes remain slim. Around €1 billion of commercial property is expected to transact in 2018, as it did i
Slide 28: Investment Markets United Kingdom
Investment Markets United Kingdom GDP Growth: 2018: c1.8% (F) 2019: c1.6% (F) Commercial Property: The Bank of England’s decision to raise the base rate by 0.25% to 0.75% in August has had limited impact on the commercial property market so far and nor do we expect it to given the Bank’s c
Slide 29: Outlook - Why invest in Fprop plc?
First Property Group plc Outlook - Why invest in Fprop plc? 1. Expertise: Experienced, nimble management team; Excellent investment track record: 28% p.a. growth in net assets (incl dividends paid) since 2006; Ranked No.1 vs MSCI’s Central & Eastern European Benchmark. 2. Reliable earnings:
Slide 30: Appendix
Appendix Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 30
Slide 31: Funds under management
Appendix Funds under management Fund Country of Investment Fund expiry AUM 30 Sep-2018 % of total AUM AUM 30 Sep-2017 SAM & DHOW UK Rolling * * * RPT & E&S Poland Aug 2020 ** ** 7.1 5PT Poland Dec 2022 8.2 1.1% 8.7 UKPPP UK Feb 2022 92.0 12.6% 93.3 SIPS UK Jan 2025 166.3 22.8% 156.1 FRS Romania Sept
Slide 32: Reconciliation of movement in funds under management
Appendix Reconciliation of movement in funds under management Funds managed for third parties (including funds in Group Properties Totals which the Group is a minority shareholder) (including FOP) UK CEE Total All CEE AUM No. of No. of prop’s No. of prop’s £m. £m. £m. £m. £m. prop’s As at 1 April 20
Slide 33: 14 wholly owned / consolidated properties
Appendix 14 wholly owned / consolidated properties Property No. of Book value Market value Contribution to Group Contribution to Group properties profit before tax profit before tax period to period to 30 Sept 2018* 30 Sept 2017* Poland 3 £78.9m £92.3m £1.96m £3.46m Romania 2 £4.2m £5.3m £0.08m £0.4
Slide 34: Non-controlling interests in funds managed by FPAM
Appendix Non-controlling interests in funds managed by FPAM Group’s share Group’s share Book value Current market of pre-tax profits of pre-tax % owned by First of First Property’s value earned by fund Fund profits/(losses) Property Group share in fund of holdings 30 Sept 2017 earned by fund 30 (£’0
Slide 35: Share Statistics
Appendix Share Statistics as at 22 November 2018 HY 2018 HY 2017 LSE (AIM) Symbol FPO.L Issued & Fully Paid 116,601,115 116,601,115 Share price 50p Issued (excl Treasury) 111,253,003 116,004,464 Market Cap £55 million Shares held in Treasury 5,348,112 596,651 Dividend FY 2019 FY 2018 Outstanding sha
Slide 36: Shareholders > 3%
Appendix Shareholders > 3% % held (of issued No of shares and fully paid) Ben Habib (Chief Executive Officer) 16,850,000 15.1% New Pistoia Income Ltd 15,582,500 14.0% J C Kottler Esq 9,664,283 8.7% Alasdair Locke (Non-Executive Chairman) 8,571,990 7.7% Quaero Capital 4,775,000 4.3% Total 55,443,773
Slide 37: Plc Management Team
Appendix Plc Management Team Non-Executive Chairman — Alasdair Locke, MA (Oxon) Alasdair began his career in banking. In 1982 he established a Singapore-based business providing finance for and investing in shipping and offshore oil service companies which was subsequently acquired by Henry Ansbache
Slide 38: Plc Management Team
Appendix Plc Management Team Group Chief Executive & FPAM Chief Investment Officer — Ben Habib, MA (Cantab) Ben founded and is CEO of First Property Group plc, an award winning commercial property fund manager with operations in the United Kingdom and Central Europe. Prior to setting up First Proper
Slide 39: FPAM Track Record - closed funds
Appendix FPAM Track Record - closed funds IRR pa - Actual 110% 100% 90% 40% 30% 20% 10% 0% 1PT 2PT 3PT USS PDR -10% Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 39
Slide 40: FPAM Track Record - existing funds
Appendix FPAM Track Record - existing funds IRR pa - Implied ROE pa - since inception ROE HY 2018/19 - on original equity 80% 70% 60% 50% 40% 30% 20% 10% 0% 5PT UK PPP FOP SIPS FRS FGC FKR UK SPEC OPPS FPROP OFFICES Implied IRR’s: assumed sale price = NAVs as at 30-Sep-2018; ROE’s since inceptio
Slide 41: Awards
Appendix Awards FPAM funds rank No.1 vs MSCI’s Central & Eastern European (CEE) Benchmark for the twelve years from the commencement of its operations in Poland in 2005, and for the periods from 2005 to 31 December 2008, and to the end of each of the years thereafter. In addition, FPAM’s UK Pension
Slide 42: Disclaimer
Disclaimer Certain statements made in this presentation may not be based on historical information or facts and may be "forward- looking" statements, including those relating to the Company's general business plans and strategy, its future financial condition and growth prospects, and future develop
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