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First Property Group expecting a loss despite solid annual performance

17th May 2024 14:18

(Alliance News) - First Property Group PLC on Friday said that trading was in line with expectations for its recent financial year, though the firm added that its results will reflect a write down on a major holding and impairment charges on a Polish property.

The London-based investor and property fund manager said that its underlying trading profits for the financial year ended March 31 are expected to be in line with market forecasts.

However, First Property said that its results will also reflect a reduction in the carrying value of its net assets, due to the write down of the firm's stake in Fprop Opportunities PLC.

In its interim results, First Property said the fair value of its investment in Fprop had declined by around GBP820,000 in the six months to September 30. As at that date, Fprop comprised 20% of the firm's total assets under management, with a carrying value of GBP61.6 million.

The company also expects its net asset value to be hurt by a reduction in the market value of its office block in Gydnia, Poland.

First Property owes a deferred consideration of EUR12 million in respect of the Gydnia asset, due for payment on June 12.

The Gydnia property is around 30% leased, up from 2% at purchase, and makes an operating loss of around EUR30,000 on an annual basis, the company said.

First Property is in discussions to restructure this deferred consideration and "is hopeful of a positive outcome".

However, the firm has decided to impair the value of the property by GBP3.7 million to "match its value against the value of the liability".

As a result, GBP3.7 million will be taken from the profit and loss account of the company's annual results, and will lead to a reported loss for the period, First Property said.

However, the company added that "this deduction is not as a result of a deterioration in the underlying trading performance of the group and comprises a non-cash item."

First Property is scheduled to publish its annual results on June 26.

Shares in First Property were down 2.2% at 18.58 pence each in London on Friday afternoon.

By Hugh Cameron, Alliance News reporter

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