First Property Group Plc · LSE:FPO
First Property — H1 FY2020 Earnings Presentation
47 slides from First Property's earnings presentation, Nov 21, 2019
Slide 1: Interim Results for the six months ended 30 September 2019
Interim Results for the six months ended 30 September 2019 First Property Group plc 21 November 2019 Email jeremy.barkes@fprop.com Phone +44 20 7340 0270
Slide 2: Contents
First Property Group plc Contents Company Description 3 Loan terms and yields 25 Investment Approach 4-5 Top 10 tenants 26 Group Structure 6 3 largest directly owned properties 27 Associates and investments 30 Interim Results 7 Non-controlling interest in funds managed by FPAM 31 Financial Performan
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: 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): Largely exited the UK commercial
Slide 6: Group Structure
First Property Group plc Group Structure Fund Management Group (FPAM) Properties AUM: £602m Market value: £96m FCA regulated and 9 directly owned AIFMD approved (full commercial properties in scope); Poland & Romania; 13 funds invested Non-controlling interests across the UK, Poland in 10 of
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 Unaudited 6 months to Unaudited 6 months to Unaudited 6 months Percentage change 30 Sept 2019 30 Sept 2018 PROFORMA to 30 Sept 2018 Revenue £8.08m £7.36m* £11.16m +9.8%* Statutory profit before tax £2.98m £2.76m* £3.82m +8.0%* Diluted earnings per share
Slide 9: Financial Performance Summary
Interim Results Financial Performance Summary Unaudited 6 months to Unaudited Six months to Percentage change vs. Audited Year to 30 Sept 2018 30 Sept 2019 31 Mar 2019 31 March 2019 (NOT PROFORMA) Balance Sheet at period end: Adjusted net assets per share 59.65p 62.21p +3.8% 57.48p (EPRA basis) Cash
Slide 10: Financial Performance Summary
Interim Results Financial Performance Summary Unaudited Unaudited Six months to 30 Sept 2019 Six months to 30 Sept 2018 Total Assets Under Management: £698m £730m United Kingdom 57.5% 58.0% Poland 40.2% 39.9% Romania 2.3% 2.1% Weighted average unexpired fund life 5.2yrs 6.3yrs 1 Nov 2019 - approved
Slide 11: NAV per share 2007-2019
Interim Results NAV per share 2007-2019 (excluding any value attributable to FPAM) 70 • NAV per share at EPRA NAV Book NAV Cash Share Price book value: 41.90p 60 • EPRA NAV per 50 share: 59.65p Pence per share 40 • Cash per share: 7.7p 30 20 External valuers: 10 • CBRE; • BNP Paribas; 0 • Polish Pro
Slide 12: NAV bridge
Interim Results NAV bridge (excluding any value attributable to FPAM) Group properties less loans Associates and other investments Cash Other working capital Share price 70 +9.11 62.21 59.65 10 60 57.48 53.07 +1.69 2.07 1.31 47.64 -0.80 -1.15 +0.29 -0.55 -2.48 -1.26 -0.43 -0.01 -0.09 -1.20 0.08 0 50
Slide 13: Continued Growth in Dividend
Interim Results Continued Growth in Dividend 1.80 Final Proposed Interim 1.60 Interim dividend: Total Dividend 0.45p (2018: 0.44p) 1.40 +2.3% 1.20 Pence per share Dividend cover: 1.00 4.7X (annualised) 0.80 Ex div date: 28 Nov 2019 0.60 Record date: 29 Nov 2019 0.40 Payment date: 03 Jan 2020 0.20 To
Slide 14: Segmental Analysis
Segmental Analysis Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 14
Slide 15: Profit before Tax by segment
Segmental Analysis Profit before Tax by segment 8 Contribution to PBT by FPAM Contribution to PBT by Group Properties 7 0.80 6 0.27 1.19 5 £ Million 2.90 4 0.80 1.00 3 5.84 6.08 5.22 2 1.41 2.97 3.20 3.10 1 0.89 - Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 PROFORMA NB: Figures shown prior to d
Slide 16: Fund Management Summary
Segmental Analysis: Fund Management Summary Contribution to PBT* • Third party AUM: £602 million; Fund £1.00 million (2018 proforma: • Twelve third party funds invested Management across UK, Poland & Romania; £0.8 million) • Weighted average fund management 24.4% of PBT* contract term: 5.2 years
Slide 17: Fund Management Revenue and AUM
Segmental Analysis: Fund Management Revenue and AUM Annualised fee income: 10 Performance Fee FPAM Revenue AUM 800 £3.56 million 9 700 (2018: £2.90 million) EXCLUDING 8 600 performance fees and 7 the profit share from Revenue (£ million) AUM (£ million) 500 Fprop Offices LP; 6 5 400 Likely annua
Slide 18: 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 2% Poland 40% Fprop Galeria Fprop UK Special Corso Ltd Fprop Offices LP UK PPP Opportunities LP Fprop Krakow Ltd Fprop Phoenix SIPS Property Ltd Nominee Ltd Fprop Opportunities UK plc (FOP) 58% Pension
Slide 19: Typical Fees / Selection of clients
Segmental Analysis: Fund Management Typical 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 equivalent
Slide 20: Group Properties Overview
Segmental Analysis: Group Properties Overview Group £3.10m to PBT* • 9 wholly owned commercial properties in Poland Properties (2018 proforma: & Romania: o Market value: £96.3 million £3.20m) o Debt: £67.5 million o Equity invested: £28.8 million 75.6% of PBT* (2018 proforma: • Non-controlling i
Slide 21: 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) to generate the returns shown Contribution to PBT from 9 directly owned properties Contribution to PBT from non-controlling interests i
Slide 22: 9 directly owned properties
Segmental Analysis: Group Properties 9 directly owned properties Contribution to Contribution to No. of Group profit before Group profit before Country Sector Book value Market value properties tax period to tax period to 30 Sept 2019* 30 Sept 2018* Poland Offices 3 £72.5m £83.9m £2.6m £2.0m Conveni
Slide 23: 9 directly owned properties by geography, by property, by asset class
Segmental Analysis: Group Properties 9 directly owned properties by geography, by property, by asset class Poland, 93% Oxford Tower, Warsaw, Poland Gdynia, Poland 37% 27% Romania, 7% Blue Tower, Warsaw, Poland Marki, Poland 23% 0.3% Wawer, Poland 2% 91% Nastroj/Lodz, Poland Praga, Poland 2% 2% Felix
Slide 24: 9 directly owned properties
Segmental Analysis: Group Properties 9 directly owned properties Felix, Bucharest, Tureni, Romania Romania Blue Tower, Warsaw Prokom Building, Lodz, Praga, Gdynia Poland Warsaw Oxford Tower, Warsaw Marki, Wawer, Poland Warsaw Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 24
Slide 25: Loan terms and yields
Segmental Analysis: Group Properties Loan terms and yields Market value of 9 directly owned properties: £96.3 million (yield: circa 10%); Total debt secured against 9 directly owned properties: £67.7 million (Equity invested: £28.8 million); Properties and corresponding bank loans held in sepa
Slide 26: Top tenants of the directly owned properties
Segmental Analysis: Group Properties Top 10 tenants of the 9 directly owned properties Tenant Sector % 1 Technology Asseco S.A. 32.8 2 Insurance Mazowiecki Odział Wojewódzkiego Narodowego Funduszu Zdrowia 19.0 3 Government Agency Miasto Stołeczne Warszawa 12.7 4 Government Agency First Property Pola
Slide 27: Chałubińskiego 8 / CH8, Warsaw
Segmental Analysis: Group Properties 3 largest directly owned properties Chałubińskiego 8 / CH8, Warsaw (value circa €40 million) Excellent location in Warsaw’s central business district (CBD), some 300 metres from Warsaw’s central station; In recent years the property has benefitted from capi
Slide 28: Prokom Building, Gdynia, Poland
Segmental Analysis: Group Properties 3 largest directly owned properties Prokom Building, Gdynia, Poland (net book value circa €30 million) Has been single let to Warsaw Stock Exchange listed Asseco since it was first built in 2005; Contributes some €2.6 million per annum to Group PBT; Lease
Slide 29: Blue Tower, Warsaw
Segmental Analysis: Group Properties 3 largest directly owned properties Blue Tower, Warsaw, value circa €25 million 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 bu
Slide 30: Associates and Investments
Segmental Analysis: Group Properties Associates and Investments Associates and Investments (minority shareholdings in 10 of FPAM’s 12 third party funds): Contributed £1.27 million (2018 Proforma: £1.36 million) to Group PBT (prior to the deduction of unallocated central overheads); Reduction i
Slide 31: 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 PROFORMA Book value Current of post-tax Group’s share % owned by First of post-tax profits Fund of First Property’s market value profits/(losses) Proper
Slide 32: Markets
Markets Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 32
Slide 33: Investment Markets: Poland
Investment Markets Poland GDP Growth - continues to exceed that of most other EU nations (up 60% since 2015) 2019: c4.0% (F); 2020: c3.5% (F); Inflation: c2.2% per annum; Government debt remains low by international standards at c49% of GDP. Commercial Property: The scale of commercial
Slide 34: Investment Markets: Romania
Investment Markets Romania GDP Growth: 2019: c4% (F) 2020: c3.5% (F) Commercial Property: The occupier market is growing with the economy but, as in Poland, rental growth remains elusive given the scale of new development; Investor demand for commercial property continues to improve but
Slide 35: Investment Markets: United Kingdom
Investment Markets United Kingdom GDP Growth: c0.5% on annualised basis, not helped by political uncertainty. Commercial Property: All commercial property generated total returns of only 1.9% in the year to 30 September (CBRE) mainly due to a reduction in capital values in the retail sector;
Slide 36: 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: circa 25% p.a. growth in net assets (incl dividends paid) since 2006. 2. Reliable earnings: Diversified income streams from investment returns and f
Slide 37: Appendix
Appendix Email jeremy.barkes@fprop.com Phone +44 20 7340 0270 37
Slide 38: Funds under management
Segmental Analysis: Fund Management Funds under management Fund Country of Investment Fund expiry % of total AUM AUM 30 Sept-2019 SAM & DHOW UK Rolling * * 5th Property Trading Poland Dec 2022 1.3 8.1 UK Pension Property Portfolio UK Feb 2022 14.0 84.2 Fprop Krakow Poland Apr 2024 3.9 23.6 Fprop Off
Slide 39: 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-2019 416.0 195.1 611.1 71 Purchases - - - - New fund mandates - - - - Property sales (8.0)
Slide 40: Shareholders > 5%
Appendix Shareholders > 5% % held (of issued No of shares and fully paid) Ben Habib (Chief Executive Officer) 14,450,000 13.2% J C Kottler Esq 9,664,283 8.7% Alasdair Locke (Non-Executive Chairman) 8,571,990 7.7% New Pistoia Income Ltd 7,507,500 6.7% Quaero Capital Funds (Lux) 6,353,581 5.7% Total 4
Slide 41: Share Statistics
Appendix Share Statistics as at 21 November 2019 HY 2019 LSE (AIM) Symbol FPO.L Issued & Fully Paid 116,601,115 Share price 42.0p Issued (excl Treasury) 110,854,001 Market Cap £49 million Shares held in Treasury 5,747,114 Dividend FY2020 FY2019 Outstanding share options over 2,610,000 Interim Ordina
Slide 42: 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 43: 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 44: 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 44
Slide 45: FPAM Track Record - existing funds
Appendix FPAM Track Record - existing funds IRR pa - Implied ROE pa - since inception ROE HY 2019/20 - on original equity 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 5PT UK PPP FOP SIPS FRS FGC FKR UK SPEC FPROP FCL Cluj FPL OPPS OFFICES Implied IRR’s: assumed sale price = NAVs as at 30-Sept-2019; ROE
Slide 46: 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 47: 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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