First Property Group Plc · LSE:FPO
First Property — H1 FY2021 Earnings Presentation
57 slides from First Property's earnings presentation, Nov 26, 2020
Slide 1: Interim Results for the six months ended 30 September 2020
Interim Results for the six months ended 30 September 2020 First Property Group plc 26 November 2020 Email jeremy.barkes@fprop.com Phone +44 20 7340 0270
Slide 2: Contents
First Property Group plc Contents Company Description and Structure 3-7 Markets 45-48 Investment Markets – Poland 46 Interim Results 8 Investment Markets – Romania 47 Highlights 9 Investment Markets – United Kingdom 48 Financial Performance Summary 9-14 NAV 15-16 Dividend 17 APPENDIX 49-56 CEO Comme
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 operations in the United Kingdom and Central Europe. Its earnings are derived from: Fund Management - via its FCA regulated and AIFMD approved subsidiary, Fi
Slide 4: Group Structure
First Property Group plc Group Structure Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 4
Slide 5: Typical Fund Management Fees / Selection Of Clients
First Property Group plc Typical Fund Management Fees / Selection Of Clients Typical fees in UK: Typical fees in Poland & Romania: Selection of clients: • Management: 0.6-1% of GAV p.a.; • Management: 1% of GAV p.a.; • Outperformance: 20% of excess returns • Outperformance: 20% of excess >IRR equiva
Slide 6: FPAM Track Record - Closed Funds
First Property Group plc FPAM Track Record - Closed Funds IRR pa - Actual 120% 100% 80% 60% 40% 20% 0% 1PT 2PT 3PT USS PDR RPT -20% Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 6
Slide 7: FPAM Track Record - Existing Funds
First Property Group plc FPAM Track Record - Existing Funds IRR pa - Implied Average ROE pa - since inception Annualised ROE 2020/21 - on original equity 40% 30% 20% 10% 0% 5PT UK PPP FOP SIPS FRS FGC FKR UK SPEC OPPS FPROP OFFICES FCL Cluj FPL -10% -20% Implied IRR’s: assumed sale price = NAVs as
Slide 8: Interim Results
Interim Results Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 8
Slide 9: Interim Results - Highlights
First Property Group plc Interim Results - Highlights Highlights: Significant cash reserves at period end: £21.21 million (31 March 2020: £7.34 million); Substantially reduced net debt: £19.83 million (31 March 2020: £57.19 million); Well positioned to weather the crisis and make judicious inv
Slide 10: Interim Results - Income Statement
First Property Group plc Interim Results - Income Statement Unaudited Unaudited Audited Six months to 30 Six months to 30 Percentage change Year to Sept 2020 Sept 2019 31 March 2020 Income Statement: Statutory profit before tax £2.08m £2.98m -30.20% £5.52m Diluted earnings per share 0.46p 2.07p -77.
Slide 11: Interim Results – Profit Before Tax
First Property Group plc Interim Results – Profit Before Tax The decrease in profit before tax was mainly attributable to: A loss incurred by Chałubińskiego 8 (CH8) which reduced profit before tax by £135,000 following completion of its sale on 24 April 2020 (Sept 2019: profit £600,000); Reduced
Slide 12: Average rent collection rates of third party managed funds 1H 2021
First Property Group plc Average rent collection rates of third party managed funds 1H 2021 UK Poland Romania 92.3% 90.1% 98.0% Rent collected as a percentage of what would have been invoiced prior to COVID related Offices Retail Offices Retail Offices Retail concessions 95.9% 88.3% 97.2% 75.4% 100%
Slide 13: Rent collection rates from the properties owned by the Group
First Property Group plc Rent collection rates from the 8 properties owned by the Group Poland Romania Rent collected as a percentage of what would have been invoiced 98.8% 94.2% prior to COVID related concessions Rent collected after adjustments for concessions granted due to 98.8% 94.5% COVID The
Slide 14: Interim Results – Balance Sheet at period end
First Property Group plc Interim Results – Balance Sheet at period end Unaudited 6 months Unaudited 6 months to Audited Year to Balance Sheet at period end: to 30 September Percentage change 30 September 2020 2019 31 March 2020 Investment properties and £47.48m £82.98m -42.78% £47.10m Inventories at
Slide 15: NAV per share 2007-2020
First Property Group plc NAV per share 2007-2020 (excluding any value attributable to FPAM) 70 Share Price EPRA NAV Book NAV Cash • NAV per share at 60 book value: 42.68p 50 • EPRA NAV per share: 54.28p Pence per share 40 • Cash per share: 19.21p 30 External valuers: 20 • CBRE; 10 • BNP Paribas; • P
Slide 16: NAV Bridge
Preliminary Results NAV Bridge (excluding any value attributable to FPAM) 70 Group properties less loans Associates and other investments Cash Other working capital Share Price 59.65 60 57.48 55.00 54.28 53.07 2.22 0.07 0.46 1.21 0.00 -0.68 -0.44 -1.18 -1.20 50 47.64 43.01 -5.82 40 35.75 Pence per s
Slide 17: Continued Growth in Dividend
First Property Group plc Continued Growth in Dividend 1.80 Final Proposed Interim dividend: 1.60 Interim Total Dividend 0.45p (30 September 2019: 1.40 0.45p) 1.20 Interim dividend cover: Pence per share 1.00 1.02X (30 September 2019: 4.69X) 0.80 Ex div date: 3 Dec 2020 0.60 Record date: 4 Dec 2020 P
Slide 18: CEO Comment
Commenting on the results, Ben Habib, Chief Executive of First Property Group, said: “The sale of Chałubińskiego 8 (CH8) in April released some £17 million in cash and has put the Group in a strong position from which to navigate the economic fallout from of the COVID pandemic. “As a consequence of
Slide 19: 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: >20% p.a. growth in net assets (incl dividends paid) over past 10 years. 2. Reliable earnings: Diversified income streams from investment returns an
Slide 20: Segmental Analysis
Segmental Analysis Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 20
Slide 21: Fund Management (FPAM)
Fund Management (FPAM) Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 21
Slide 22: Segmental Analysis: Fund Management Summary
Segmental Analysis: Fund Management Summary Fund • Third party AUM: £557m (31 Mar: £567m); Revenue: £1.66m (1H 2020: £2.03m); Management • Twelve third party funds invested across Contribution to PBT UK, Poland & Romania; prior to deduction of unallocated central • Weighted average fund manageme
Slide 23: Fund Management Revenue and AUM
Segmental Analysis: Fund Management Revenue and AUM 10 Performance Fee FPAM Revenue Third Party AUM 700 Annualised fee income: 9 600 £3.02 million 8 (31 Mar: £3.13m) 500 EXCLUDING 7 performance fees Revenue (£ Million) AUM (£ Million) 6 and the profit 400 share from 5 Fprop Offices LP. 300 4 3 200 2
Slide 24: Breakdown of AUM by geography, by fund, by client type
Segmental Analysis: Fund Management Breakdown of AUM by geography, by fund, by client type Romania FPL UK PPP 2% Poland SPEC OPPS 11% 12% 33% 3% FCL FKR 1% 5PT 4% 2% FGC 4% FRS 0% OFFICES 25% UK 65% FOP 13% Endowments 6% Private Clients SIPS 25% 25% Pension Funds 69% Email jeremy.barkes@fprop.com
Slide 25: Third Party funds under management
Segmental Analysis: Fund Management Third Party funds under management Assets under % of total third- Assets under Country of management at party assets management at Fund Fund expiry No of properties investment market value at 30 under market value at Sept 2020 management 31 March 2020 SAM & DHOW U
Slide 26: Reconciliation of movement in funds under management
Appendix Reconciliation of movement in funds under management Funds managed for third parties (including funds in which the Group is a minority shareholder) UK CEE Total No. of prop’s £m. £m. £m. As at 1 April 2020 375.7 191.3 567.0 69 Purchases - - - - New fund mandates - - - - Property sales - - -
Slide 27: Split of third party funds managed by asset class
Segmental Analysis: Group Properties Split of third party funds managed by asset class UK Poland Romania TOTALS % of Total Offices £209.3m £108.1m £8.0m £325.4m 58.4% Retail warehousing £92.8m - - £92.8m 16.7% Supermarkets £50.8m £20.0m £1.0m £71.8m 12.9% Shopping centres - £58.4m - £58.4m 10.5% Ind
Slide 28: Group Properties
Group Properties Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 28
Slide 29: Group Properties Overview
Segmental Analysis: Group Properties Overview Group 1. Eight directly owned properties: Contribution to PBT prior to deduction Properties o Six in Poland valued at £50m; of unallocated central overheads: £2.3m o Two in Romania valued at £6.8m (2019: £3.1m) Gross asset value: From 8 directly ow
Slide 30: Explanation for reduced contribution from 1H 2020
Segmental Analysis: Group Properties Explanation for reduced contribution from 1H 2020 The reduction from 1H 2020 was mainly attributable to: A loss incurred by Chałubińskiego 8 (CH8) which reduced Group profit before tax by £135,000 following completion of its sale on 24 April 2020 (Sept 2019: pr
Slide 31: Group Properties Contribution to PBT
Segmental Analysis: Group Properties Contribution to PBT Contribution to PBT Corresponding net equity invested (prior to deduction of unallocated central overheads) 7 Directly Contribution to PBT from Owned 6 directly owned properties Properties , £15.8m 5 4 Contribution to PBT from £ Million non-co
Slide 32: 8 directly owned properties
8 directly owned properties Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 32
Slide 33: 8 directly owned properties
Segmental Analysis: Group Properties 8 directly owned properties Contribution to Contribution to No. of Group profit before Group profit before Country Sector Book value Market value properties tax year to tax year to 30 September 2020* 30 September 2019* Poland Offices 2 37.8 43.9 1.9 2.6 Poland Mi
Slide 34: Directly owned properties by geography, property, asset class
Segmental Analysis: Group Properties 8 directly owned properties by geography, by property, by asset class Poland, 88% Praga, Poland Tureni, Romania Felix, Bucharest, 4% Wawer 5% Romania 4% 7% Nastroj/Lodz 2% Gdynia 44% Romania, Marki 12% 1% Industrial, 5% Retail, 11% Blue Tower 33% Office, 84% Em
Slide 35: Directly owned properties
Segmental Analysis: Group Properties 8 directly owned properties Two account for 80% by value (£37.8m); Both are office buildings in Poland; one in Warsaw (11,000 m2), the other in Gdynia (15,500 m2). Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 35
Slide 36: Directly owned properties
Segmental Analysis: Group Properties 8 directly owned properties The balance of 20% by value (£9.6m) is invested in three mini-supermarkets in Poland, a development site in Warsaw, an office in Bucharest and a logistics warehouse in Romania. Email jeremy.barkes@fprop.com Phone +44 20 7340 0270
Slide 37: Top tenants of the directly owned properties
Segmental Analysis: Group Properties Top 10 tenants of the 8 directly owned properties Tenant Sector Jurisdiction % 1 Asseco S.A. IT Poland 74.2 2 HRK HR Poland 4.0 3 Teconnex Manufacturing Romania 3.4 4 Jeronimo Martins Polska Supermarket chain Poland 3.3 5 Vulpoi & Toader Management SRL Profession
Slide 38: Cash flows from the properties owned by the Group
Segmental Analysis: Group Properties Cash flows from the 8 properties owned by the Group 6 months to 30 Sept 2020 6 months to 30 Sept 2019* 12 months to 31 March 2020* €’000 €’000 €’000 Net operating income (NOI) 3,945 3,979 8,024 Interest expense on bank loans/ finance (356) (397) (775) leases NOI
Slide 39: Directly owned properties: values and leverage
Segmental Analysis: Group Properties 8 directly owned properties: values and leverage 30 September 2020 30 September 2019 Book value £47.4m £49.4m* Market value £56.8m £60.9m* Gross debt (all non-recourse to Group) £41.0m £44.1m* LTV at book value % 86.5% 89.3% LTV at market value % 72.2% 72.4% Weig
Slide 40: Prokom Building, Gdynia, Poland
Segmental Analysis: Group Properties Prokom Building, Gdnyia, Poland Holding value being depreciated at a rate of £1.74m (€1.97m) per annum in anticipation of the near simultaneous expiry of: The over-rented lease to its sole tenant (on 28 January 2021); The bank financing on 21 February 2021.
Slide 41: Blue Tower, Warsaw
Segmental Analysis: Group Properties Blue Tower, Warsaw Excellent location in Warsaw’s central business district; The Group owns 48% of the tower and 90% of Corp Sp. z o.o., the company which is constitutionally tied to manage the building; The Group’s 48% share (valued at €20.5m) is broadly f
Slide 42: Associates and Investments
Associates and Investments (minority shareholdings in 10 of FPAM’s 12 funds) Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 42
Slide 43: Non-controlling interests in funds managed by FPAM
Segmental Analysis: Group Properties Non-controlling interests in funds managed by FPAM (accounted for as Associates and Investments) Group’s share Group’s share Book value Current of post-tax profits % owned by First of post-tax profits Fund of First Property’s market value earned by fund 30 Proper
Slide 44: Associates and Investments
Segmental Analysis: Group Properties Associates and Investments Contributed £796,000 (1H 2020: £1.27m) to Group PBT (prior to the deduction of unallocated central overheads), representing: 27% of Group profit before unallocated central overheads and tax; and 35% of the contribution by Group Pr
Slide 45: Markets
Markets Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 45
Slide 46: Investment Markets Poland
Investment Markets Poland Poland is likely to be one of the least affected in the EU by the pandemic with GDP forecast to have returned to pre-pandemic levels by early 2022. Government debt as a percentage of GDP remains low by western European standards (at around 55%), making its COVID-19 stim
Slide 47: Investment Markets Romania
Investment Markets Romania Similar to Poland, Romania is expected to return to pre-pandemic levels of economic growth early in 2022. Like Poland, Romania benefits from low government debt as a ratio of GDP (around 41%), giving it fiscal headroom to help speed its recovery. Commercial property
Slide 48: Investment Markets United Kingdom
Investment Markets United Kingdom According to Bank of England analysis of independent forecasts, GDP will have shrunk by around 10% in 2020 but will grow by 7% next year. In the meantime, the occupier market for commercial property is suffering. Notwithstanding this, office tenants are generall
Slide 49: Appendix
Appendix Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 49
Slide 50: Investment Approach
Appendix 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 long term it is in
Slide 51: Investment Approach (cont.)
Appendix 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): Largely exited the UK commercial property market
Slide 52: Shareholders > 5%
Appendix Shareholders > 5% as at 8 Sep 2020 % held (of issued No of shares and fully paid) Ben Habib (Chief Executive Officer) 14,940,000 13.5% J C Kottler Esq 9,664,283 8.8% Alasdair Locke (Non-Executive Chairman) 8,571,990 7.8% Whitehall Associated S.A. 7,747,394 7.0% Quaero Capital Funds (Lux) 6,
Slide 53: Share Statistics
Appendix Share Statistics as at 26 Nov 2020 LSE (AIM) Symbol FPO.L Issued & Fully Paid 116,601,115 Share price 40.0p Issued (excl Treasury) 110,382,332 Market Cap £41 million Shares held in Treasury 6,218,783 Dividends FY2021 FY2020 Outstanding share options over 2,610,000 Interim 0.45p 0.45p Ordina
Slide 54: 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 55: 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 56: 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 57: 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
First Property Group — H1 FY2021 Earnings Presentation on 6ix