First Property Group plc (FPO.L) Earnings Call Transcript & Summary

Well, the highlight for last year was really the sale of CH8 in Warsaw. That was the largest directly held asset that First Property Group had. And we made a profit of about GBP 1.5 million on the sale of that property, but that wasn't really the crucial aspect of that sale. The crucial aspect was that it released GBP 17 million of cash into our balance sheet. And that puts us in a fantastic position to navigate the pandemic and the ensuing economic problems that the United Kingdom, I think, in particular, is going to face, though Poland, of course, won't be entirely immune. And that cash gives us enormous buying power, and we would expect to emerge from this crisis actually stronger than we went into it, having been able to, I suspect, pick up some good property investments or route. And we've maintained our final dividend, which actually means that for the full year, shareholders have had a slight increase in dividend compared to the prior year, 1.67p per share versus 1.66p per share, and I am very proud of that. We held our dividend throughout the credit crunches, and we are doing it again during this pandemic-induced crisis. In terms of pretax profits reducing from GBP 7.25 million to GBP 5.5 million was really a result of 2 things. The first was that we had some one-off profits in which I didn't repeat, and the second is that Fprop Opportunities plc had a markdown in the value of its 2 shopping centers just after the pandemic kicked off, and that caused us to have a write-down in profits of about GBP 612,000. So it's the absence of one-off profits together with a slight markdown in the value of our properties. So I expect the value of those properties to bounce back once [indiscernible]. It is worth mentioning Poland, specifically, which went into this pandemic with a strong national balance sheet. Government debt as a proportion of GDP was around 49%. And they've been able, therefore, to stimulate their economy without being overburdened by debt. They were quick to lock down, they were quick to open up. They opened their economy back up on the 4th of May. And most economic commentators are forecasting that Poland will be one of the best-performing economies in Europe. And of course, the bulk of the group's profits come from investments in Poland. The group owns a large proportion of profit -- of offices, and they won't be as badly hit as the retail sector will. Our retail assets will come under some pressure. But I would hope that once the government stimulus feeds in, even if rents settle at a lower level because of adverse economic conditions, actually, asset values will hold up well because of all the QE and low interest rates. That's what we saw in 2008 after that credit crunch, and I suspect we'll see a similar pattern this time around.