First Property Group (LSE:FPO) — Annual General Meeting

0:01 Good afternoon, ladies and gentlemen. Welcome to the FIRST PROPERTY GROUP PLC Annual General Meeting. Throughout this recorded meeting, attendees will be in listen only mode. Questions are encouraged. They can be submitted at any time using the Q and A tab just situated on the right hand corner of your screen. Simply type in your questions at any time and press send. I'd now like to hand over to chairman, Alastair Locke. Good afternoon.

0:21 Thank you. Ladies and gentlemen, thank you all for attending. I'd like to welcome everybody that's here and everybody listening to this, presentation. My name is Alice Alok. I'm the chairman. I'll be chairing the meeting, and I'm joined today by my colleagues Peter Moon, who's a fellow nonexecutive director Ben Habib, who is the chief executive officer, Laura James, the finance director, Jill Aubrey, the company secretary, who might suspect you can't see, and Jeremy Barks, business development director. So we will be handling the formal matters first. So the formal matters of this meeting relate to the report and accounts for the year to March 03/21/2023. And with the consent of those shareholders present, I'd like to take the notice of the meeting as set out on pages 73 to 74 of the report accounts as read.

1:13 Yep. Thank you. I will now ask that I take the report of Hanes Watts as set out on pages 28 to 32 of the report accounts as read. Thank you. The company shareholders have been able to submit questions in advance of this meeting and will also have the opportunity to submit questions as was just said via during the meeting via the investor meet company platform. I will deal with those questions at the end of the meeting once the formal business is concluded.

1:42 I declare that the quorum required by the articles of association of the company is present and that the meeting is therefore properly constituted. On your screens, you will see the order in special resolutions being proposed. And after there's been a show of hands on each resolution, I will advise you of the proxy count.

2:00 So resolution one. I now propose that the report of the directors and the audited accounts for the year ending 03/31/2023, now submitted to this meeting, be approved and adopted. And I'll ask mister Peter Moon to second the proposal. Mister chairman, I have much pleasure in seconding the proposal. I put into the meeting those in favor. Those against,

2:25 I declare the resolution carried. The proxy vote was 39,303,474 shares in favor, 1,910 shares against, and $22,000,479,283 abstentions.

2:44 I now hand over to our acting chairman, mister Peter Moon, for the next resolution. Thank you, minister. I now propose resolution number two whereby at mister Alastair Locke be reappointed as a director of the company. I'll ask mister Ben Habib to sec second the proposal. Mister chairman, I have much pleasure in seconding the proposal. I put into the meeting those in favor.

3:12 Those against, I declare the resolution carried. The proxy vote was 39,259,543 shares in favor. 22,485,776 shares against, and 39,357 abstentions.

3:36 I now hand back to the chairman, mister Alister Locke. Thank you. I now propose resolution number three, whereby missus Laura James be reappointed as a director of the company. And I'll ask mister Jeremy Marcus to second the proposal. Mister chairman, I have much pleasure in seconding the proposal. I put it to the meeting. Those in favor?

3:58 Those against? I declare the resolution carried. Proxy vote was 39,459,503 shares in favor, 22,485,557 against, and 39,357 abstentions.

4:20 I now propose resolution number four, whereby the directors be authorized to reappoint Haynes Watts as auditors of the company to hold office from the conclusion of the meeting until the conclusion of the next general meeting of the company at which accounts are laid. I'll ask mister Peter Moon to second the proposal. Mister chairman, I have much pleasure in seconding the proposal. I put it to the meeting. Those in favor?

4:45 Those against? I declare the resolution carried. The proxy vote was 39,484,679 shares in favor, 20,455 against, and 22,000,479 and 283 val pensions.

5:08 I now propose resolution number five whereby the directors be authorized to fix the remuneration of the auditors. I'll ask mister Ben to be able to second the proposal. Mister chairman, I have much pleasure in seconding proposal. I put it to the meeting. Those in favor?

5:24 Those against? I declare the resolution carried. The proxy vote was thirty nine million four hundred and eighty four six hundred and seventy nine shares in favor. 22,479,738 shares against, and 20,000 abstentions.

5:43 I now propose resolution number six set out in full on page 73, which is an ordinary resolution and requires authority to authorize the directors to allot shares and or grant rights to subscribe for or to convert any security into shares. I now propose the directors be authorized to allot shares and or grant rights to subscribe for or to convert securities in accordance with the terms of resolution number six, and I would ask mister Jeremy Marcus to second the proposal. Mister chairman, I have much pleasure in seconding

6:15 the proposal. I put it to the meeting. Those in favor? Those against? I declare the resolution carried. The proxy vote was 39,352,730 shares in favor, 22,625,203 shares against, and 6,484 extensions.

6:40 The resolution number seven, I'm gonna demand a poll to be taken as I'm entitled to do under article 74.1 of the company's articles of association. I will mention that the proxy vote was 39,165,601 shares in favor, 22,812,002 332 shares against six thousand 484 abstentions. Each shareholder, proxy, and corporate representative will be issued with a poll card. If there's anyone who thinks they should have a poll card but doesn't, please raise your hand. I can't do that online, can I? No. I should mention that for those shareholders who've already lost the proxy, they do not, of course, need to complete the poll card unless they want to change their vote.

7:27 You have three options for each resolution. You can vote for, against, or you may withhold your vote. A vote that held is not a vote in law and will not be counted in the calculation of proportion of votes for or against the resolution.

7:44 Will you please complete your poll card for resolution number seven by ticking the appropriate box depending on how you wish to pass your vote. Please then just sign the poll card, indicate you've done so by raising your hand. Company secretary will then come around and collect your completed poll card.

8:05 I hope I got poll card here somewhere. What do I do with it? Poll card. Right. So I now go to do I do this proposal resolution number here? I propose resolution number seven as set out in full on page 73. It's a special resolution and requires authority to authorize the directors to disapply statutory preemption rights in respect of new allotments of shares and the sale of treasury shares. I now propose that the directors be authorized in accordance with the terms of the resolution number seven, and I'd ask mister Peter Moon to second the proposal.

8:51 Mister chairman, I have much pleasure in seconding the proposal.

8:56 Will you please vote now?

9:01 Alright. So the results of the poll have now been calculated with 39,165,601 shares in favor, $22,000,812,332 shares against, and 6,400 abstentions. I therefore declare the resolution has not been passed. For resolution eight, it's also a special resolution. I'm going to demand a poll to be taken as I entitled to do so under the article 74.1 of the company's articles of association. I should mention that the proxy vote was 39,328,134 shares in favor, 22,556,283 shares against, and a 100,000 of sanctions.

9:56 Each shareholder proxy and corporate representative has already been issued with a poll card. I should mention again that for those shareholders who've already lodged a proxy, they do not, of course, need to complete a poll card unless they want to change their vote. So you have the same three options for each resolution. You can vote for, against, or you can hold your vote, but a vote withheld is not a vote in law and will not be counted in the calculation of the proportion of the votes for or against the resolution. Will you please complete your poll card for resolution number eight by ticking the appropriate box depending on how you wish to cast your vote? Please then sign the poll card, indicate you've done so by raising your hand. The company secretary will then come around and collect your completed poll card.

10:43 I now propose resolution number eight set out in full on page 74, which is a special resolution and requires authority to authorize the directors to purchase on behalf of the company its own shares in accordance with the terms of the resolution number eight. And I'd ask mister Bentley to second the proposal. Mister chairman, I have much pleasure in seconding the proposal. Will you please vote now?

11:07 Alright. Well, I declare the poll closed. The results of the poll results results of the poll have now been calculated with 39,328,134 shares in favor, 22,556,283 against, 100,000 withheld.

11:33 And that I therefore declared that the resolution has not been passed. Ladies and gentlemen, that concludes the formal part of this business. I'm now required to read a statement which was released on the regulatory news service this morning. So oh, thank you. So I'm afraid this goes on a bit, but we are required by law to read this to you. FIRST PROPERTY GROUP, the property fund manager and investor with operations. Oh, no. I beg your pardon. I can start again. The group continues to steward shareholder funds with great care. Net asset value per share has been broadly maintained in the face of extremely challenging market conditions for the property sector over the last few years, In particular, from lockdowns and the subsequent working from home trend, interest rate rises, rampant inflation, and the drive to net zero.

12:30 In spite of these headwinds, the group has reported continuing leasing progress at its group properties over the past couple of years, which will be reflected in income and capital value growth in due course. The internal rate of return earned by the group is impressive. 19% on an annualized basis after the admission of its shares to trading on AIM in 2001. 19% on an annualized basis since the peak of the boom in 2007 before the onset of the credit crunch, and only negative 3% since March 2019 before the onset of COVID related lockdowns and the consequential market difficulties. And since the financial year end on 03/31/2023, the group has achieved leasing prop progress at Blue Tower, its directly held office property in Warsaw, and at Maestro Business Center, an office building in Klutz, Romania, in which the group is a 21% shareholder.

13:28 It has also acquired a mon minority share interest in E and S Estates Limited, which owns a supermarket in Praga, which is a suburb of Warsaw, resulting in the company now earning a 100% of the shares in E and S. Total funds under management at 08/31/2023, including properties owned directly by the group, amounted to £436,000,000. At the end of March twenty three, was £454,000,000. Third party funds under management at 08/31/2023 amounted to 383,000,000, which was 400,000,000 at the end of March twenty three. Of those funds, 60% was were invested are invested in The United Kingdom. The reduction since the financial year end is explained by the sale of one property in a UK fund valued at 5,400,000.

14:18 Reductions in property values of 7,980,000 and a weakening of the euro, the currency in which our Polish and Romanian properties are valued of that amounts to £3,620,000. Group cash at 08/31/2023 amounted to 6,640,000. The end of March twenty three, was £7,650,000. This equates to 5.66p per share, 6.82p per share at the end of March. The reduction was mainly due to capital expenditure incurred at Bluetar, Warsaw in respect of upgrades to the heating and cooling system, tenant fit outs associated with new leases, and the cost of buying out the minority shareholders in E and S. Group remains vigilant to market opportunities, in particular with respect to its new activity as a lender.

15:10 Thank you for that. I will now hand over to and then it's a formal part of the business. So I will now hand over to my colleague, Ben Habib, for a brief presentation. And following this, we will answer any questions that have been submitted in advance or during the meeting. Thank you very much, Alister. So you should all have access to and can see online a presentation for this AGM. I'm going to start on page

15:42 I'm gonna start on page five of the presentation, which sets out the net asset value per share of the company from 03/31/2007 to 03/31/2023. And as you can see, just by a quick look at that graph, everything was heading upwards effectively until we hit, you know, COVID induced lockdowns in 2020 ever since you know? And then and ever since then, we've had effectively, you know, significant headwinds for the group initially in terms of occupancy levels in the various properties we own and manage. And then paradoxically, actually, things got much worse after the end of lockdown.

16:34 Lockdown, by enough, wasn't so bad for us. We collected, I think, 97% of all income that was due to us, Jill, something of that order. And and so when when lockdowns ended, you know, we all kind of thought, right. We're back to business as normal, and no one had predicted the damage that had been done to the global economic ecosystem by lockdowns, breaking supply chains, breaking labor markets, and the geopolitical stress that they also brought to brought to bear. So we emerged from lockdown into a new crisis in which inflation was rampant, interest rates were obviously increased in order to, meet that inflationary problem.

17:21 Capital exited developing countries. Indeed, capital pretty much ex exited the entire world with the exception of one country, which is The United States Of America, where which have been the source of what people might be familiar with and is called the carry trade for many years since about 2008. Effectively, with US interest rates being so low from o eight onwards, The the essential trade had been to short US dollars and then to invest in higher earning currencies, including, of course, developing countries such as Poland, Romania where we are, and to a lesser extent in The United Kingdom. But with interest rates in The US going up, that carry trade reversed with a vengeance.

18:15 So we saw in the first phases of the sterling and all other major currencies dropping, in relation to the dollar. We saw capital evaporate from from Poland, Romania, other developing markets back to The US, and that's been reflected in a number of ways in Poland, which is where we owe owe the bulk of our bulk of properties to which FIRST PROPERTY GROUP itself has in which FIRST PROPERTY GROUP itself has a direct interest or indirect interest. And the impact has been as follows. As interest rates go up, obviously, the the the return you earn out of rent from your properties reduces. And as capital evaporates and interest rates go up, capital values drop.

19:02 Banks become less ready to lend. Investors, therefore, become less ready to invest. You get a standoff between buyers and sellers, and that's roughly where we are in the markets. And I think the best stat to exemplify the net result of all of that is that investment volumes in Poland have dropped by about 60% this year compared to last year. And remember last year was already slightly subdued because we were just coming out of lockdown. So,

19:32 there's been a complete disruption of the capital markets at least in which we operate, as a result of lockdowns and then the broken supply chains and ramp inflation that followed. And it's these headwinds that we're now navigating. Turning to page six. We're therefore actually very proud of the rate of return that we've earned for shareholders ever since our admission to AIM in late two thousand in the year in the year 2000 and late latter part of the year 2000. Having earned

20:13 an an not in it. Yes. Well, having in it earned an 18.77% internal rate of return, which, by the way, takes payment of dividends into account ever since we've been on the market. That's 18.77% per annum every year since the 04/01/2001. And then from the peak of the, of the market just before the global financial crisis in 2007, we've earned an even higher rate of return. And I think part of the reason for that, that higher rate of return since o seven, was that the central bank response to the problems that were created in 2007, 2008 or manifested themselves in 2007, 2008 was, of course, to slash interest rates.

21:00 So it had the opposite effect of what increases in interest rates are now having. And even though we all feared greatly back in o seven, o eight, what the future held for us given the financial meltdown that we were experiencing then, looking back now at it, that was a relative walk in the park compared to where we are today. And it's no surprise then that since 2019, having gone through lockdowns and the difficulties there followed by the ones I've just described after lockdowns ended, that now has dropped by 3% per annum since then, which, by the way, is a market beating reduction. You know, the markets generally have taken a much bigger pounding, than our NAV has.

21:48 Of course, we still live in extremely uncertain times, and we will find out in fact what the future holds for us, but it's relatively unpredictable at the moment. On page seven, we have a chart which breaks down broadly between the various investments we have where NAV comes from. And the interesting, the interesting bits here to look at are FPOP where which is, you know, the largest contributor to our NAV. For both FPOP PLC, is a Polish fund in which we have about a 45% interest. And that owns a number of properties, all of which are doing quite well.

22:34 They've gone through lockdowns. They've come out the other end of it with rents up, very largely occupied, small vacancies here and there, but otherwise very largely occupied. And that's a key component for the group. The other big contributor now is Blue Tower, which is a central, Warsaw office block. Warsaw is doing much better than the other cities in Poland. There are problems in Krakow where there's an oversupply of property, but Warsaw, there's demand from tenants continuing.

23:06 The economy of Warsaw is ahead of the economy of Poland, which in itself is doing relatively well compared to other economies. Though, of course, the withdrawal of capital from Poland is not without its effects. But Blue Tower, we think, is a really good core property for the group to own. Gdynia is a property which was the subject of a complex restructuring a couple of years ago where shareholders will remember we restructured the debt on it with the bank and effectively took complete control of it, at a value of 16,000,000, euros with a deferred consideration from the bank of €12,000,000.

23:47 That property was completely vacant when we had carried out that restructuring with the bank. It's now about 30% let. We continue to have tenant demand, and we expect to sign a lease or two there quite soon.

24:01 But it is not as buoyant. The Gdynia market for occupational demand is not as buoyant as Warsaw, and it may take a little time to get that property leased up. Felix is an office block that we own in Bucharest where we restructured the lease with the main tenant a couple of months ago. And, actually, we've extended the lease to a seven year lease. He's taken complete he's taken the lease over the entirety of the property. We had got 470 square meters vacant there in a property of about two and a half thousand square meters, but now it's fully leased on a seven year term to a good covenant. So we're pleased with the way Felix is performing. E and S is one supermarket. I won't go into it. Five p t is I think we've got a 40% share of five p t, which owns three properties in Poland. Again, very largely let, doing well.

24:57 We've owned it for a long time. It just keeps doing what it says on the tin.

25:03 Corso Eprop Galleria Corso is a a minority share that we own in a shopping center in the Northwest Of Poland. Again, it's doing extremely well. It's a it's a holiday town, Svinayucie, which is the place where it's located. It's a seasonal shopping center, but does extremely well. FPOC Krakow Limited is a minority interest that we have in an office block in Krakow. Now Krakow is a slightly difficult market, and this is an 11,000 square meter building where we got a major vacancy during lockdowns at at least to Axel Springer that occupied about five and a bit thousand square meters of the building. So nearly half of it expired. And since then, we've in these headwinds, we've leased up about 3,000 square meters, and we've got other tenant interest.

25:54 So we do think that's a core property that should over time produce good results, notwithstanding the difficulties that we've been through. FPOC Cluj is an office block that we, again, have a minority interest in in in Cluj, which is the second city, if you like, in Romania. We've had a number of wait vacancies during the course of the last year, and every time we've had a vacancy there, we've we've leased it up. It's been no problem. So another great property, in the group. FPOP Phoenix is a 23% share that we have in in, an office park in Krakow. This is arguably the most difficult asset of the lot that we are in the process of repositioning.

26:46 And the problem with this asset is that it's not Downtown Krakow, which is where most people want to be. And with the oversupply of around 17% vacancy in Krakow, it's oversupply of offices creating a 17% vacancy in Krakow, it's been very difficult to release it. So we've got ongoing discussions with the bank there, fraught discussions with the bank, frankly, and we and that may result in an opportunity presenting itself over time. I think one of the questions online is, you know, are you are you is there any chance of opportunities coming out of adversity? And, you know, who knows? But, that is proving to be a particularly difficult asset at the moment. And then, of course, we have quite a lot of our asset is held in cash, 6.77p per share, and then we have other minority interest in UK funds.

27:43 But all overall, actually, the group is in a in a really good place given that we're in commercial property in a market where interest rates have skyrocketed over the last year, and there's been a major withdrawal of capital. I would just caveat that with not with with saying that we can't these are perhaps the most challenging times I think we faced as a company since we were founded. I don't think any of the directors would disagree with me. I think this is probably the most challenging time, wouldn't you say, Alastair? Definitely. In the last twenty three years we've had. And so but what we are good at is is being a guardian of our assets and making value where value presents itself.

28:31 And I actually move forward with cautious optimism, and we will continue working night and day to make sure that we deliver returns to shareholders. Page eight is a NAV bridge, as they call it, which shows how NAV moved from March 2022 to March 2023. I don't propose I go through it. It's just helpful for shareholders to be able to track that movement. I'm sure shareholders would be interested to know what kind of impact increasing interest rates are having directly as a cost on the group, and this is set out on page nine. So in the financial year 2023, interest cost on the group's debt amounted to only £500,000. In 2022, it was 330,000, equating to an average borrowing cost of 1.8% per annum when expressed as a percentage of the total outstanding group debt of 30,000,000.

29:27 And 4.2% per annum is the deferred consideration of 17,000,000. That's on the Gudinia property and the other bit of Blue Tower that we bought last year on which no interest is payable is excluded. And I do think, he says with great hope and optimism, that we're at the top of the interest rate cycle and that things can't, you know, I don't think we're gonna see many more increases in interest rates, if any, in the, you know, any material increases anyway coming out in the next few months. Page 10 was a graph of which we were very proud as management until we were forced as a result of headwinds to cut our dividend. And the reason we were proud was that we'd always increased dividends every time our profits had gone up. As we grew, we increased dividends, and it is our firm intention to be as generous as we possibly can with dividends for shareholders, but always making sure that we retain the requisite amount of cash so that the group can go forward with confidence and take advantage of opportunities as they present themselves.

30:37 Page 11 gives you a brief synopsis of the investment highlights since the preliminary results. I've talked through a bit of these already, but I'll just, I'll just drop through this. The most significant event was the leasing of 2,100 square meters at Blue Tower. You remember that last year, we bought another we we own 48% of Blue Tower. We bought another 32% taking our ownership to 80%. The 32% we bought was about seven odd thousand square meters, 5,000 square meters of which was vacant. We've now leased 2,100 square meters of that vacancy. The building part of the building that we bought was in particularly bad physical shape. Its previous owner hadn't invested in it at all for many years.

31:26 And the CapEx and the reduction in cash that you've seen from the group, over the last six months has really been in relation to fitting out this area that we bought last year. And now that we've done that, any further capital expenditure on this building, is going to be effectively income led. So, you know, we're going to see if there is more outlay, income coming straight through as a result of that. And we do have confidence, as I mentioned earlier, in the Warsaw market where the the the supply of new offices is basically completely dried up since interest rates went up. Developers have stopped producing vacant new speculative offices, and we would hope that rents will, you know, actually go up, frankly, from where they are at the moment. FPOC Cluj, I've mentioned, we had a few vacancies. We've relented during the course of the year. And E and S Estates, we bought out the minority shareholders in it, and that's just one supermarket in a location called Praga in Warsaw, a supermarket we've actually owned since our first, foray into Poland and one in which we have great faith.

32:43 Investors are obviously not keen on piling into property at the moment for reasons which should be self evident given what I've been saying. So AUM has been under pressure, frankly. So at August 31, we had 383,000,000 under management, which compares to 400,000,000 in 2023. We're doing a few sales in the various funds that we own, and we would expect AUM to continue to reduce a little as we go forward. But please be aware that the vast majority of the company's profits come from our direct investments. So that's investments in the properties we own, some of which are partially vacant at the moment. And as they lease up, our profit should go up accordingly.

33:29 And, you know, significantly also from our investments in the various funds that we have in Poland where we have various levels of minority interest. And we would expect the cash generation and those assets, you know, to continue producing good profits for us. The sale of one property took place from a UK fund, was 5,400,000, and the other reductions came from property value reductions of 8,000,000 and a weakening of the euro of 3,620,000. Total AUM, including assets we own ourselves, was £436,000,000 compared to 454,000,000 last year. And the weighted average unexpired fund management contract term is two years, nine months. Now it's gonna be interesting to see how this plays out going forward. But what we've been doing as a team, as shareholders will also be aware, is that we haven't actually been targeting. The same reason that no one else wants to buy property right now, we're not that keen on buying property right now. So what we've been targeting and what is the provision of new debt to owners of property in the market who we think may be feeling the pressure, the same pressure that all property companies are subject to at the moment and where we might be able to facilitate owners of property getting through this difficult period.

34:46 And I think, Jeremy, I don't know if you'd like to say a few words about the efforts you've been making because Jeremy Barker has been spearheading that effort. Talk a bit about the number of properties you've looked at, value of quotes. We haven't done a deal here, folks. Ladies and gentlemen, we have yet to do a deal on the lending side, but we're getting very close to doing one, and we still think it's an area, you know, where there should be significant growth going forward. Yeah. We have established good relationships with a network of brokers acting on behalf of borrowers. We have had inquiries for about £380,000,000 worth of loans that borrowers would like to borrow. We have made quite a few loan offers. We have, as Ben says, we've yet to make our first loan, but it feels like we're getting close. The terms of, business that we are quoting on is up to 65% loan to value.

35:46 We're quoting interest rates of 9% per annum or higher. Nine or 10 is where they most of them seem to be, and we're not getting pushback. That seems to be broadly acceptable term in in the market. We're seeking to make fixed term loans at fixed rates of interest, minimum periods of three years or more. And our USP here really is the higher LTV accompanied with no requirement for debt amortization, taking the pressure off the borrower who we we reckoned typically a refinancing what were 55% LTV positions, but are now 65% LTV positions because values have dropped.

36:32 And where banks are now at around 45%, 50%. So borrowers are experiencing a kind of gap of about 15 to 20% that needs to be filled, and it's that particular borrower that we're targeting. Yep. So we hope to to be able to announce more in the coming weeks and months. If anyone would like to join our pool of the capital providers, please get in touch with me. Yeah. Great. Thank you, Jeremy. So why would you invest in the group at this point in time? Well, the share price seems to be very low. That seems like an obvious reason to to invest in our shares, a marked difference between net asset value and where the share price is.

37:20 But, also, you know, we've had a fantastic track record since 2001. We're a well experienced, nimble management team. We will chop and change our investment strategies depending on what the markets are like, which we've done many times over the last twenty three years. We've got diversified earnings from fund management fees through to direct property investments in Poland and Romania. We've got growth coming, inbuilt growth once we lease up 14,900 to vacant office space and the groups do directly owned office buildings. As we invest our cash, that should throw up returns. And we do expect to get new fund man management mandates for the debt product that Jeremy has just described.

38:07 And indeed in the longer term when if and when we go back to raising new funds for direct investment in property. So overall, difficult times, but I think we're in a strong position, and there will be opportunities that come out of the market with you know, which we should be able to take advantage of. So I think after that, we'll move to questions. Okay. Yeah. So there are some questions online, and I'll just answer those as I Many of these questions, I think, are answered in your presentation, which investors Yeah. And I'll skip over them if if they've already been answered. Yeah.

38:53 So pre submitted questions. How are high interest rates impacting the fund management business? Well, I think I've explained that including the impacts on that. Is there an expectation of outflows? Well, we don't have open ended funds. All our funds are closed ended. So to the extent that we've got a mandate, that will continue to the end of the life of the fund, and the expiry dates of all our funds are set out in our annual report. Is there downside from negative operational gearing, lower fee income versus fixed overheads? I mean, there's always that risk in a company like ours, but, of course, we cut our costs according to our means, and, you know, we will make necessary adjustments in cost as and when we have to. How is the downturn generating opportunities for the company? Well, it's a the first opportunity is the debt product that Jeremy's mentioned. And, of course, we will look for stress in the market and see if there are deals to be done, but we're not wholesale investing in properties as I mentioned earlier. Would excess capital be better deployed in share buybacks? Absolutely not.

39:52 Right now is no time to be parting with cash. So it matters not that our ability to buy back shares wasn't passed at our annual general meeting. It's not something we would have exercised anyway. Can any real estate investment beat this trade? The the the trade of buying back shares is one which could land the group in an existential problem, so we're simply not gonna go there. Our investors actually becoming more interested in funds management FPO offers. But, again, as I mentioned, we don't have unit trusts or open ended funds, so, you know, it's neither here than there. And we're not seeking to raise new money for new mandates to invest in property because we think it's a dangerous time to be going into property like that. Valuations are depressed. Our institutional investors taking a longer term view. Institutional investors are structurally leaving the market. This is the other headwind which I didn't mention.

40:45 From a regulatory perspective, institutions are not incentivized to own property. And I this has been creeping up on us over the last thirteen years. Ever since the explosion in government debt, the regulatory environment has favored institutions buying government debt, supporting governments as opposed to investing in equities and investing in property and other and other and and other asset classes. And so we've we've experienced a structural shift from institutions away from property. What's the IRR for shareholders last five years? Well, we gave the metrics, you know, from the start of the group's existence, from the peak of the global financial crisis and before lockdowns, which is about four years ago. So I think you've basically got the answer to that. Is the IRR calculated before or after bonuses? The IRR is calculated after all costs, NAV, etcetera, after tax, etcetera. I refer to the options award announced on 04/04/2023.

41:49 Can you clarify the reason why you feel the need to incentivize the CEO already holding a 13% interest in the company with over 46% of the total options awarded? Thank you for continuing to do these meetings in this online format. Well, the reason for incentivizing me is perhaps best answered by Alice or Peter. It's a clear view of, the board that, the driving force behind this business since, really since our listing on AIM has been Ben Habib. And he has worked tirelessly on behalf of all of us, throughout that period. And he continues to do so in a in a very difficult time. And his skill set is such that, we are, in our view, very lucky to have him, because undoubtedly, he he could go and sort of go elsewhere should he wish to without too much difficulty. But we feel it's appropriate. It it is very much geared to the results of the company. As you can see, obviously, he does not earn anything like as much at the moment as he did when things were going well, and that is entirely appropriate.

43:01 So we believe we have the best person for driving this business forward and for continuing to to to build it for the long term because we're not very we're not taking it quarter by quarter view here. We're taking a longer much longer term view to build a company, and we think Ben is the man to do it. Thank you very much, Alastair. Peter, do you wanna add anything? Are you comfortable with that? Only that I think Ben has the the vision, the flare, and the connections, and the process to take the business through very, very strongly indeed. And without him, it would be a poorer business for sure. Mhmm. Thank you very much, Ron. Plattered and grateful to you for that. Thank you. Can you advise on communication with the largest shareholder PG? It is clear from the voting along with their history elsewhere that they are taking an activist stance with their investment. Well, we can't speak on behalf of PG who who might believe must be Peter Gill Gillenhammer.

43:56 You know? We can't speak if we you know, I can't I don't know what his intentions are. He is obviously at liberty to vote in whichever way he wishes to. We want a constructive relationship with all shareholders no matter how large they are in terms of their percent of shareholding in the company. Has your successful deal maker with the Polish banks been included? What's the plan for refinancing for Digne? Well, that's confidential at the moment. There's that is something that we will be handling in the course of normal business going forward. Has your successful deal making with the Polish banks been included in the IRR calculations? The IRR calculations, as already mentioned, are after tax and all other effects.

44:43 Why do you think that the shares are trading at one third of NAV? No idea. Next question. Vaughn M. Any view on dividend for next financial year? Same, less, more. Dividends, we something, as I mentioned, something we're very keen to pay, which we were very progressive in the payment of when clients were better, and we will, you know, we'll continue to review review our dividend policy based on how the future appears to be at any given point in time. But just to reiterate, we're keen to pay dividends wherever we can. And I think that concludes all the questions. I think that's right. I think we've covered pretty much everything, and we've covered the some of the other written questions we had prior.

45:34 So I think everything is is fully covered. And if shareholders want to submit other questions to us after the meeting, we'll be happy to do our best to, provide them with answers. But unless there's anything else for anybody in the room, I think we can say that the meeting is concluded. And thank you all very much for your attendance. That's great. Alastair, Ben, and to the board of FIRST PROPERTY GROUP, thank you very much indeed for your time this afternoon. Could I please ask attendees online not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the board can better understand your views and expectations. This one will take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the board of FIRST PROPERTY GROUP PLC, we'd like to thank you for attending today's annual general meeting, and good afternoon,