"Improving the quality of earnings is key," says Ben Habib, chief executive of First Property (FPO). The strategy has seen the group move away from one-off revenue sources, such as performance fees and development profits, which sent non-recurring revenue down 82 per cent in the first half of the financial year. But even without the £1.3m contribution from these sources the group managed to keep operating profit broadly level at £5.5m.
The decision to prioritise more predictable revenue streams was always likely to have some negative effects in the short term, but it was partially mitigated by favourable currency movements, which added around £0.6m to headline pre-tax profit. But the group also added £0.2m of income from its co-investment in two new property funds established in Poland and Romania in the last financial year. Fund management fees rose 46 per cent to £1.9m as a result of these new funds and increased investment by the Shipbuilding Industries Pension Scheme.
Adjusted net asset value rose by a fifth to 45.9p, as all but one of the group's wholly-owned funds increased assets under management (AUM). The joint venture Fprop Opportunities has also grown, but the group's own property portfolio gave the standout performance with AUM up by a quarter, largely thanks to strong economic growth in Poland.
Broker Arden Partners has upgraded forecasts for the financial year to March 2017 and now expects pre-tax profit of £9.2m and EPS of 5.6p (from £7.7m and 5.1p in FY2016).
FIRST PROPERTY (FPO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 47p | MARKET VALUE: | £55m | |
| TOUCH: | 46-48p | 12-MONTH HIGH: | 56p | LOW: 36p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 29p | NET DEBT: | 301% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 10.9 | 4.5 | 3.0 | 0.39 |
| 2016 | 11.1 | 4.5 | 2.5 | 0.40 |
| % change | +2 | +0 | -18 | +4 |
Ex-div: 1 Dec Payment: 30 Dec | ||||
