First Property Group Plc · LSE:FPO

First Property — H1 FY2018 Earnings Presentation

41 slides from First Property's earnings presentation, Nov 23, 2017

  1. Slide 1: Interim Results for the half year ended 30 September 2017

    Interim Results for the half year ended 30 September 2017 First Property Group plc 23 November 2017 FPAM funds rank No.1 versus MSCI’s Central & Eastern European (CEE) Benchmark for the eleven years from the commencement of its operations in Poland in 2005 to December 2016, and for the periods from

  2. Slide 2: Contents

    First Property Group plc Contents Company Description 3 Markets 24-27 Investment Approach 4-5 Investment Markets – Poland 25 Business Model 6 Investment Markets – Romania 26 Investment Markets – United Kingdom 27 Interim Results 7 Financial performance summary 8-9 Outlook - Why invest in Fprop plc?

  3. 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. Around one third of the shares in the Company are owned by management and their families.  Its focus is o

  4. 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

  5. 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

  6. Slide 6: Group Structure

    First Property Group plc Group Structure The Company operates via two divisions: Fund Management Group (FPAM) Properties AUM: £382m Market value: £172m  FCA regulated and  10 commercial properties AIFMD approved; in Poland & Romania, including 5 held by  12 funds. consolidated undertaking, FOP (i

  7. Slide 7: Interim Results - Highlights

    Interim Results - Highlights  Email jeremy.barkes@fprop.com  Phone +44 20 7340 0270 7

  8. Slide 8: Financial Performance Summary

    Interim Results Financial Performance Summary Unaudited six months to Unaudited six months to Audited year to Percentage change 30 September 2017 30 September 2016 31 March 2017 Income Statement: Revenue £12.09m £11.12m +8.7% £23.66m Statutory profit before tax £4.98m £4.47m +11.4% £9.14m Diluted ea

  9. Slide 9: Financial Performance Summary (cont.)

    Interim Results Financial Performance Summary (cont.) Unaudited six months to Unaudited six months to Audited year to Percentage change 30 September 2017 30 September 2016 31 March 2017 Group Direct Property Portfolio at year end: Book value £146.3m £144.3m +1.4% £143.5m Market value £171.9m £170.3m

  10. Slide 10: Highlights: Financial Highlights

    Interim Results Highlights Financial Highlights:  Profit before tax up 11% to £4.98million;  Contribution by Group Properties: £6.08 million (2016: £5.84 million) prior to deduction of unallocated central overheads and tax;  Fund management fee income up 42% to £1.49 million (2016: £0.92 million)

  11. Slide 11: Highlights: Operational Highlights

    Interim Results Highlights Operational Highlights:  Total assets under management up 37% to £554 million (2016: £405 million);  Third party assets under management up 63% to £382 million (2016: £235 million);  Weighted average unexpired fund management contract term: 6.08 years (2016: 6.42 years)

  12. Slide 12: NAV per share 2007-2017

    Interim Results NAV per share 2007-2017 60 • Adjusted NAV: EPRA NAV NAV Cash 51.25p; 50 • Adjusted NAV growth, together 40 with dividends Pence per share paid: 30 26% on an annualised basis since 2006. 20 10 External valuers: • CBRE; 0 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Sep-14 M

  13. Slide 13: Continued Growth in Dividend

    Interim Results Continued Growth in Dividend 1.80 Total Dividend Proposed Interim 1.60 dividend: 1.40 0.42p (2016: 0.40p) 1.20 +5.0% Pence per share 1.00 Ex div date: 30 Nov 0.80 Record date: 1 Dec Payment date: 29 Dec 0.60 0.40 Total dividend for 0.20 year to Mar-2017: 0.00 1.55p (2016: 1.50p) FY03

  14. Slide 14: Segmental Analysis

    Segmental Analysis  Email jeremy.barkes@fprop.com  Phone +44 20 7340 0270 14

  15. Slide 15: Segmental Analysis - Profit before Tax by segment

    Interim Results - Segmental Analysis Profit before Tax by segment £8 PBT (prior to deduction of unallocated central overheads) £7 £0.80m £6 £0.27m £1.19m £5 FPAM (excl fees from FOP) £2.90m £4 £3 £6.08m Group Properties £5.84m £5.22m (incl FOP) £2 £1.41m £2.97m £1 £0.89m £0 Sep-13 Sep-14 Sep-15 Sep-

  16. Slide 16: Segmental Analysis: Fund Management

    Segmental Analysis: Fund Management Profit before tax Fund  £804,000 to PBT* • Third party AUM: £382m; Management (2016: £273,000) • Uninvested equity commitments: £140m  11.7% of PBT* = in-built growth; (2016: 4.5%) • 12 funds; • UK, Poland & Romania; • Excellent track record; * = prior to deduct

  17. Slide 17: Fund Management: Revenue and AUM

    Segmental Analysis: Fund Management Revenue and AUM 10 Performance Fee FPAM Revenue AUM 600  AUM set to continue to rise; 9 500 8 7 400  Underlying Revenue (£ Million) AUM (£ Million) 6 annualised fee income (excl perf 5 300 fees) = £2.64m 4 (2016: £1.90m). 200 3 2 100 1 - - Sep-13 Sep-14 Sep-15 S

  18. Slide 18: Fund Management: Breakdown of AUM

    Segmental Analysis: Fund Management Breakdown of AUM Group Pension Properties UK PPP Funds (excl. FOP) UK By Fund FOP By Investor Poland By Geography Category SIPS Fprop Fprop Offices LP HNW Family FKR Offices Romania FRS Endowments FGC Other RPT 5PT SPEC OPPS  Email jeremy.barkes@fprop.com  Phone

  19. Slide 19: Group Properties: Profit before tax

    Segmental Analysis: Group Properties Profit before tax Group  £6.08m to PBT* • 10 commercial properties in Poland & Romania, Properties (2016: £5.84m) including 5 held by FOP : o Book value £146.3m gross / 28.5m net o Market value £171.9m gross / 54.1m net  88.3% of PBT* (2016: 95.5%) • Non-contro

  20. Slide 20: Group Properties: Contributors to Profit before tax

    Segmental Analysis: Group Properties Contributors to Profit before tax 7 Contribution to PBT from five 6 wholly owned properties in Poland and Romania 5 4 £ Million Contribution to PBT from Group's share in FOP 3 2 Contribution to PBT from non-controlling interests in 1 funds managed by FPAM 0 Sep-1

  21. Slide 21: Group Properties: Cash flows from directly owned properties

    Segmental Analysis: Group Properties Cash flows from the properties owned directly by the Group & FOP Six months to 30 September 2017 Six months to 30 September 2016 €m. €m. Net operating income (NOI) 9.41 9.66 Interest expense on bank loans / finance leases (1.59) (1.67) NOI after interest expense

  22. Slide 22: Group Properties: Loan terms and yield

    Segmental Analysis: Group Properties Loan terms and yield of the properties owned by Group & FOP  Properties held in separate non-cross collateralised SPV’s which are non-recourse to the Group;  Interest rates:  Current weighted average borrowing cost = c2.46% (2016: 2.59%) per annum;  Group exp

  23. Slide 23: Group Properties: Tenant exposure

    Segmental Analysis: Group Properties Tenant exposure Tenant Sector % 1 Asseco S.A. Technology 29.36% 2 Citibank Europe Plc Bank 12.32% 3 Carrefour Food Retail 8.38% 4 Skanska S.A. Construction 6.11% 5 Tesco (Polska) sp z o.o. Food Retail 3.56% 6 Mazowiecki Odział Wojewódzkiego Narodowego Funduszu Zd

  24. Slide 24: Markets

    Markets  Email jeremy.barkes@fprop.com  Phone +44 20 7340 0270 24

  25. Slide 25: Investment Markets: Poland

    Investment Markets Poland  GDP Growth - continues to exceed that of most other EU nations  2017: >4% (F);  2018: 3.4% (F);  Inflation: c2% per annum;  Government debt remains low by international standards at c54% of GDP.  Commercial Property:  Rent levels for office property have generally s

  26. Slide 26: Investment Markets: Romania

    Investment Markets Romania  GDP Growth:  2017: >5% (F) [3Q = 8.8% yoy!]  2018: >4% (F)  Commercial Property:  Occupier and investor demand picking up from a relatively low level;  New development beginning to pick up, but take-up rate matching this increased supply for now;  Still a mismatch

  27. Slide 27: Investment Markets: United Kingdom

    Investment Markets United Kingdom  GDP Growth:  2017: c1.5% (F)  2018: c1.5% (F)  Commercial Property:  0.25% interest rate rise should have little impact on the commercial property market given the Bank’s continued loose monetary policy program, and the continued limited availability of bank d

  28. Slide 28: 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: 26% p.a. growth in net assets plus dividends since 2006;  Ranked No.1 vs MSCI’s Central & Eastern European Benchmark. 2. Reliable earnings:  Diversi

  29. Slide 29: Appendix

    Appendix  Email jeremy.barkes@fprop.com  Phone +44 20 7340 0270 29

  30. Slide 30: Funds under management

    Appendix Funds under management Fund Country of Investment Fund expiry AUM 30 Sep-2017 % of total AUM SAM & DHOW UK Rolling * * RPT Poland Aug 2020 £7.1m 1.3% 5PT Poland Dec 2022 £8.7m 1.6% UK PPP UK Feb 2022 £93.3m 16.9% PDR UK May 2018 - - SIPS UK Jan 2025 £156.1m 28.2% FRS Romania Sep 2025 £6.7m

  31. Slide 31: 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 No. of All CEE No. of AUM No. of £m. £m. £m. prop’s £m. prop’s £m. prop’s As at 1 Apr-2017

  32. Slide 32: 10 directly held Group Properties

    Appendix 10 directly held Group Properties Property No. of Book value Market value Contribution to Group Contribution to Group properties PBT before unallocated PBT before unallocated overheads – six months overheads – six months to 30 Sep-2017 to 30 Sep-2016 Poland 3 £79.6m £92.5m £3.46m £3.15m Rom

  33. Slide 33: Non-controlling interests in funds managed by FPAM

    Appendix Non-controlling interests in funds managed by FPAM Group’s share of Group’s share of Book value Current pre-tax profits % owned by First pre-tax profits Fund of First Property’s market value earned by fund Property Group earned by fund share in fund of holdings 30 Sep-2016 30 Sep-2017 Inter

  34. Slide 34: Shareholders > 3%

    Appendix Shareholders > 3% % held (of issued No of shares and fully paid) Ben Habib (Chief Executive Officer) 16,700,000 14.4% New Pistoia Income Ltd 15,090,000 13.0% J C Kottler Esq 12,206,783 10.5% Universities Superannuation Scheme Limited 9,550,000 8.2% Alasdair Locke (Non-Executive Chairman) 8,

  35. Slide 35: Share Statistics

    Appendix Share Statistics HY 2017 HY 2016 LSE (AIM) Symbol FPO.L Issued & Fully Paid 116,601,115 116,601,115 Share price 52p Issued (excl Treasury) 116,004,464 115,980,040 Market Cap £60.6 million Shares held in Treasury 596,651 621,075 Dividend HY2018 FY2017 Outstanding share options 2,700,000 2,70

  36. Slide 36: 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

  37. Slide 37: 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

  38. Slide 38: 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 38

  39. Slide 39: FPAM Track Record - existing funds

    Appendix FPAM Track Record - existing funds IRR pa - Implied ROE pa - since inception ROE HY 2017/18 - on original equity 80% 70% 60% 50% 40% 30% 20% 10% 0% RPT 5PT UK PPP FOP SIPS FRS FGC FKR UK SPEC FPROP OPPS OFFICES  Implied IRR’s: assumed sale price = NAVs as at 30-Sep-2017;  ROE’s since ince

  40. Slide 40: Awards

    Appendix Awards FPAM funds rank No.1 vs MSCI’s Central & Eastern European (CEE) Benchmark for the eleven 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

  41. Slide 41: 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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