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

Good afternoon, ladies and gentlemen. Welcome to the First Property Group plc Annual General Meeting. Throughout this recorded meeting attendees will be on listen-only mode. Questions are encouraged. They can be submitted at any time using the Q&A tab just situated on the right-hand on your screen. Simply type in your questions at any time and press send. I'd now like to hand over to Chairman, Alasdair Locke. Good afternoon.

Ladies and gentlemen, thank you all for attending. I'd like to welcome everybody who's here and everybody listening to this presentation. My name is Alasdair Locke, I'm the Chairman. I'll be chairing the meeting, and I'm joined today by my colleagues, Peter Moon, who is a fellow non-Executive Director; Ben Habib, who is the Chief Executive Officer; Laura James, the Finance Director; Jill Aubrey, the Company Secretary, who I might suspect you can't see; and Jeremy Barkes, 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 -- 31st of March '23. 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. I will now ask and I take the report of Haines Watts to set out on Pages 28 to 32 of the report accounts as read. The company's 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 by -- during the meeting by the Investor Meet Company platform. I will deal with those questions at the end of the meeting once the formal business has concluded. 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 ordinary special resolutions being proposed and after there's been a show of hands on each resolution, I will advise you the proxy count. So resolution 1, I now propose that the report of the directors of the audited accounts for the year ending 31st of March '23, now submitted to this meeting be approved and adopted. And I'll ask Mr. Peter Moon to second the proposal.

Mr. Chairman, I have much pleasure in seconding the proposal.

I put it to the meeting. Those in favor. [Voting]

Those against. [Voting]

I declare the resolution carried. The proxy vote was 39,303,474 shares in favor, 1,910 shares against and 22,479,283 abstentions. I now hand over to our acting Chairman, Mr. Peter Moon, for the next resolution.

Thank you, Mr. Al. I now propose Resolution #2, whereby Mr. Alasdair Locke be reappointed as a Director of the company. I'll ask Mr. Ben Habib to second the proposal.

Mr. Chairman, I have much pleasure in seconding the proposal.

I put into the meeting. Those in favor. [Voting]

Those against. [Voting]

I declare the resolution carried. The proxy vote was 39,259,543 shares in favor, 22,485,776 shares against and 39,357 abstentions. I now hand back to the Chairman, Mr. Alasdair Locke.

I now propose resolution #3, whereby Mrs. Laura James being reappointed as a Director of the company. And I'll ask Mr. Jeremy Barkes to second the proposal.

Mr. Chairman, I have much pleasure in seconding the proposal.

I put it to the meeting. Those in favor. [Voting]

Those against. [Voting]

I declare the resolution carried. Proxy vote was 39,459,503 shares in favor, 22,485,557 against and 39,357 abstentions. I now propose resolution #4, whereby the directors be authorized to reappoint Haines 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. And I'll ask Mr. Peter Moon to second the proposal.

Mr. Chairman, I have much pleasure in seconding the proposal.

I put it to the meeting. Those in favor. [Voting]

Those against. [Voting]

I declare the resolution carried. The proxy vote was 39,484,679 shares in favor, 20,455 against and 22,479,283 abstentions. I now propose Resolution #5, whereby the directors be authorized to fix the remuneration of the auditors. And I'll ask Mr. Ben Habib to second the proposal.

Mr. Chairman, I have much pleasure in seconding the proposal.

I put it to the meeting. Those in favor. [Voting]

Those against. [Voting]

I declare the resolution to carried. The proxy vote was 39,484,679 shares in favor, 22,479,738 shares against and 20,000 of abstentions. I now propose resolution #6 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 to be authorized to allot shares and/or grant rights to subscribe for or to convert securities in accordance of the terms of resolution #6. And I would ask us to Mr. Jeremy Barkes to second the proposal.

Mr. Chairman, I have much pleasure in seconding the proposal.

I put it to the meeting. Those in favor. [Voting]

Those against. [Voting]

I declare the resolution carried, the proxy vote was 39,352,730 shares in favor, 22,625,203 shares against and 6,484 abstentions. Resolution #7. I'm going to demand a poll to be taken as I am entitled to do on the Article 74.1 of the company's Articles of Association. I will mention that the proxy vote was 39,165,601 shares in favor, 22,812,332 shares against 6,484 abstentions. Each shareholder, proxy or corporate representative, will be issued with a poll card. There's anyone who thinks they should have a poll card, but doesn't please raise your hand. I'll do that online. And I should mention that for those shareholders who have already lost a proxy, they do not, of course, need to complete the poll card unless they want to change their vote. You have 3 options for each resolution. You can vote for, against or you may withhold your vote. 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. Would you please complete your poll card for resolution #7 by ticking the appropriate box depending on how you wish to cast your vote. Please sign the poll card, indicate you're done so by raising your hand. The company secretary will then come around and collect your completed poll card. Poll card, right. So I'm now going to -- do I do this proposal resolution -- I propose resolution #7 is 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 allotment of shares and the sale of treasury shares. I now propose that the directors be authorized in accordance with the terms of the resolution #7, and I'd ask Mr. Peter Moon to second the proposal.

Mr. Chairman, I have much pleasure in seconding the proposal.

Would you please vote now. [Voting]

So the results of the polls have now been calculated with 39,165,601 shares in favor, 22,812,332 shares against and 6,400 abstentions. I therefore declare the resolution has not been passed. For Resolution 8. It's also a special resolution. I've gated 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 100,000 abstentions. Each shareholder, proxy and corporate representative has already been issued with poll card. I shall mentioned again, for those shareholders who have already lodged the proxy, they do not, of course, need to complete a poll card unless they want to change their vote. So you have the same 3 options for each resolution. You can vote for, against or you can withhold your vote. 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 a resolution. Would you please complete your poll card for Resolution #8 by ticking the appropriate box depending on how you wish to cast your vote. Please then sign the poll card indicating you've done so by raising your hand. The company secretary will then come around and collect your completed poll card. I now propose resolution #8, set out at 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 and according to the terms of the resolution #8. And I'd ask us to Mr. Ben Habib to second the proposal.

Mr. Chairman, I have much pleasure in seconding the proposal.

Would you please vote now. [Voting]

I declare the poll closed. The result of the poll has now been calculated with 39,328,134 shares in favor, 22,556,283 against, 100,000 withheld and I therefore declare that the resolution has not been passed. Ladies and gentlemen, that concludes the formal part of this business. I am now required to read the statement that was released on the regulatory news service this morning. So -- thank you. So I'm afraid this goes on a little bit, but we are required by law to read this to you. First Property Group, the property fund manager and investor with operations -- 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, ramped inflation and the drive to net zero. 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 31st of March '23, the group has achieved leasing progress at Blue Tower, as directly held office property at Warsaw and at Maestro Business Center, an office building in Cluj Romania, in which the group is a 21% shareholder. It has also acquired a minority share interest in E&S Estates Limited, which owns a supermarket in Praga, which is a suburb of Warsaw, resulting in the company now earning 100% of the shares in E&S. Total funds under management at 31st of August '23, including properties owned directly by the group amounts to GBP 436 million. At the end of March '23, it was GBP 454 million. Third-party funds under management at 31st of August '23, amounted to GBP 383 million, which was GBP 400 million at the end of March '23. Of those 60% 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 U.K. fund valued at GBP 5.4 million, reductions in property values of GBP 7.98 million and a weakening of the euro, the currency in which our Polish and Romanian properties are valued of that amounts to GBP 3.62 million. Group cash at 31st of August '23 amounted to GBP 6.64 million at the end of March '23, it was GBP 7.65 million. This equates to 5.66p per share, 6. 82p at the end of March. The reduction was mainly due to capital expenditure incurred at Blue Tower, Warsaw in respect of upgrades to the heating and cooling systems, tenant fit-outs associated with new leases and the cost of buying out the minority shareholders in E&S. Group remains vigilant to market opportunities, in particular with respect to its new activity as a lender. Thank you for that. I will now hand over to -- it ends the 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, Alasdair. So you should all have access to, you can see online a presentation for this AGM. I'm going to start on page -- again starting on Page 5 of the presentation, which sets up a net asset value per share of the company from 31st March 2007 to 31st March 2023. And as you can see, just by a quick look at that graph, everything was heading upwards effectively until we hit COVID-induced lockdown in 2020. Ever since we had effectively -- 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, not done by enough. Wasn't so bad for us. We collected, I think 97% of all income that was due to us, still something of that order. And so we're not different ended. We all kind of thought, right, we're back to business as normal. No one had predicted the damage that has been done to the global economic ecosystem by lockdowns, breaking supply chains, breaking labor markets and the geopolitical stress that they also 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, capital exited developing countries. Indeed, capital pretty much 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 a carry trade for many years since about 2008. Effectively, with U.S. interest rates being so low from '08 onwards. The essential trade has been to short U.S. 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 U.S. going up, that carry trade reversed with a vengeance so we saw, in the first phase of the sterling and all other major currencies dropping in relation to the dollar. We saw capital evaporate from Poland, Romania, other developing markets back to the U.S. And that's been reflected in a number of ways in Poland, which is where we own the bulk of our -- bulk of properties which First Property Group itself is -- 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 return you earn out of rent from your properties reduces and as capital evaporates and interest rates go up, capital values drop, 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 market. 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 there's been a complete disruption of the capital markets, at least in which we operate, as a result of lockdowns and then the growth in supply chains and rampant inflation that followed. And it's these headwinds that we're now navigating. Turning to Page 6. We therefore -- actually very proud for the rate of return that we've earned for shareholders ever since our admission to a -- in late 2000 -- in the year 2000 -- in later part of the year 2000. Having earned -- and not -- yes, well, I think it earned an 18.7% 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 first of April 2001. And then from the peak 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 '07, 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. So it had the opposite effect of what increases in interest rates are now having. And even though we all feared greatly back in '07 '08 what the future held for us given the financial meltdown that we were experiencing them. Looking back now at it, that was a relative walk in the park compared to where we are today. And so 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 NAV has dropped by 3% per annum since then, which, by the way, is a market-beating reduction. The markets generally have taken a much bigger pounding than our NAV has. Of course, we still live in extremely uncertain times and we will find out what the future holds for us, but it's relatively unpredictable at the moment. On Page 7, we have a chart which breaks down broadly between the various investments we have where NAV comes from. And the interesting bit is to look at a FOP where -- which is the largest contributor to our NAV. FOP, Fprop Opportunities 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. 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 no supply of property, but Warsaw, there's demand from tenants continuing. The economy of Warsaw is ahead of the economy of Poland, which in itself has been relatively well compared to other economies, though, of course, the withdrawal of capital component is not without its effect. 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 compete control of it at a value of EUR 16 million with the deferred consideration for the bank of EUR 12 million. 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 2 there quite soon. But it is not as buoyant, but Gdynia market for occupational demand is not as buoyant as Warsaw, and it may take a little time to get that property leased off. 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 7-year lease is taken complete -- is taking the lease over the entirety of the properties. We had got 470 square meters vacant then a property of about 2,500 square meters. But now it's fully leased on the 7-year term to a good covenant, so we're pleased with the way Felix is performing. E&S is one supermarket, I won't go into it. 5PT is -- I think we've got a 40% share of 5PT, which owns 3 properties in Poland, again, very largely let, doing well. We've owned it for a long time. It just keeps doing what it says on the tin. Corso, Fprop Galeria Corso, is a minority share that we own in the shopping center in the northwest of Poland. Again, it's doing extremely well. It's a holiday town Swinoujscie, which is the place where it's located. It's a seasonal shopping center but does extremely well. Fprop Krakow Ltd 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, a lease to Axel Springer that occupied about [ 5-and-a-bit thousand ] square meters of the building, so nearly half of it expired. And since then, we -- in these headwinds, we've leased up about 3,000 square meters, and we've got other tenant interest. So we do think that's a core property that should over time produced good results, notwithstanding the difficulties that we've been through. Fprop Cluj is an office block that we, again, have a minority interest in Cluj, which is the second city, if you like, in Romania. We've had a number of vacancies during the quarter of the last year. And every time we've had a vacancy there, we've leased it up. There's been no problem. So another great property in the group. Fprop Phoenix is a 23% share that we have in an office park in Krakow. This is arguably the most difficult asset of the lot that we are in the process of repositioning. 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 16%, 17% vacancy in Krakow, it's -- oversupply of office is creating a 16%, 17% vacancy in Krakow. It's been very difficult to re-lease it. So we've got ongoing discussions with the bank there, fraught discussions with the bank, frankly. And that may result in an opportunity presenting itself over time. I don't know one of the questions online is, are you -- is there any chance of opportunities coming out of adversity? And 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 assets is held in cash, 6.77p per share. And then we have other minority interests in U.K. funds. But overall, actually, the group is 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 -- we would say 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, what do you say, Alasdair? In the last 23-year?

Definitely, absolutely.

And so -- but what we are good at is being a guardian of our assets and making value where value presents itself. 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 8 is a NAV bridge as they call it, which shows how NAV move 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 9. So in the financial year 2023, interest cost on the group's debt amounted to only GBP 0.5 million. In 2022, it was GBP 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 GBP 30 million. And 4.2% per annum is the deferred consideration of GBP 17 million. That's on the Gdynia 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 we have great hope and optimism that we're at the top of the interest rate cycle. And that things can't -- I don't think we're going to see many more increases in interest rates, if any, in the 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 increase dividends every time our profits have gone up. As we grew, we increased dividend. And this 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. 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 chalk through this. The most significant event was the leasing of 2,100 square meters of Blue Tower. You'll remember that last year, we bought another -- we own 48% of Blue Tower. We bought another 32% taking our ownership to 80%. The 32% we bought was about 7-odd-thousand square meters, 5000 square meters of which was vacant. We've now leased 2,100 square meters of that vacancy. The building -- the 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. And the CapEx and the reduction in cash that you've seen from the group over the last 6 months has really been in relation to picking 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 we're going to see if there is more [indiscernible] income coming straight through as a result of that. And we do have confidence, as I mentioned earlier, in the Warsaw market where 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 actually go up, frankly, from where they are at the moment. As for Cluj, I've mentioned, we had a few vacancies we've relet it during the course of the year and E&S Estates, we bought out the minority shareholders in it, and that's just one supermarket and 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. 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 31st August, we had GBP 383 million under management, which compares to GBP 400 million 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 and significantly also from our investment in the various funds that we have in Poland, where we have various levels of minority interest. And we would expect the cash generation in those assets to continue producing good profits for us. The sale of one property took place from a U.K. fund, which was GBP 5.4 million, and the other reductions came from property value reductions of GBP 8 million and a weakening of the euro of GBP 3.62 million. Total AUM, including assets we own ourselves was GBP 436 million compared to GBP 454 million last year. And the weighted average unexpired fund management contract term is 2 years, 9 months. Now it's going to 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 backing 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. 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 Barkes has been spear-heading that effort. Talk a bit about the number of properties you've looked at, value of the 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 where there should be significant growth going forward.

We have established good relationships with a network of brokers acting on behalf of borrowers. We have had inquiries for about GBP 380 million worth of loans that borrowers would like to borrow. We have made quite a few lending offers. We have, as Ben said, we've yet to make our first loan. But it feels like we're getting close. The terms of business that we are encouraging on is up to 65% loan to value. Recording interest rates of 9% per annum or higher. 9% or 10% where most of them seem to be. And we're not getting pushed back. That seems to be broadly acceptable term in the market. We are seeming to make fixed term loans at fixed rates of interest, minimum period is 3 years or more.

And our USP here, really is a higher LTV of companies with no requirement for debt amortization, taking the pressure off the borrower who we reckon that typically a refinancing -- what were 55% LTV positioned, but allow 65% LTV positions because values have dropped and where banks are now at around 45%, 50%. So borrowers 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.

So we hope to be able to announce more in the coming weeks and months. If anyone would like to join our pool with the capital providers, please get in touch with me.

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. It seems like an obvious reason to invest in our shares a marked difference between net asset value and where the share price is. But also, we've had a fantastic track record since 2001, we are a well-experienced, nimble management team. We will talk and change our investment strategies depending on what the markets are like, which we've done many times over the last 23 years. We've got diversified earnings from fund management fees through to direct property investments in Poland and Romania. We've got growth coming -- in-build growth once we lease up the 14,900 of vacant office space in the group's 2 directly owned office buildings. As we invest our cash, that should throw up returns. And we do expect to get new fund management mandates for the debt product that Jeremy has just described. And indeed, in the longer term 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, which we should be able to take advantage of. So I think after that, we'll move to questions.

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...

And I'll skip over those if they've already been answered. So pre-submitted questions. How are high interest rates impacting the fund management business? Well, I think I've explained that, including the impact on NAV. Is there an expectation of outlook? 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 fund and the expiry date of all our funds are set out in our annual report. Is there downside from negative operational gearing, lower fee income versus fixed overhead? I mean, there's always that risk in a company like ours, but of course, we cut our costs according to our means and we will make necessary adjustments in costs as and when we have to. How is the downturn generating opportunities for the company? Well, it's the first opportunity is the debt product that Jeremy has 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. With excess capital will be better deployed in share buybacks? Absolutely not. Right now, there's no time to be parting with cash. So matters not that our ability to buy back shares wasn't passed in our Annual General Meeting. It's not something we would have exercised anyway. Can any real estate investment beat this trade? The trade of buying back shares is one which could land the group in existential problem. So we're simply not going to go there. Are investors actually becoming more interested in funds and management FPO offers? But again, as I mentioned, we don't have unit trust or open-ended funds. So it's neither over 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 right now. Valuation to depress 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. From a regulatory perspective, institutions are not incentivized to own property. And this has been creeping up on us over the last 13 years. Ever since the explosion in government debt the regulatory environment has favored institutions buying government debt, supporting government as opposed to investing in equities and investing in property and other asset classes. And so we've experienced a structural shift from institutions away from property. What's the IRR to shareholders last 5 years? Well, we gave the metrics from the start of the group's existence from the peak of the global financial crisis and before lockdown, which is about 4 years again. 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, including NAV, et cetera -- after tax, et cetera. I referred to the auctions award and as on 4th of April 2023. Can you clarify the reason why you feel the need to intently CEO already holding a 13% interest in the company with over 46% of the total auctions awarded. Thank you for continuing to do these meetings in this online format. Well, the reason for incentivizing me, is perhaps best answered by Alasdair 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 or above all of us throughout that period. And he continues to do so in a very difficult time. His skill set is such that we are, in our view, very lucky to have him because undoubtedly, he could go and sort of go elsewhere should he wish to without too much difficulty. But we feel it's appropriate. It is very much geared to the results of the company. And as you can see, obviously, he does not earn if anything like as much at the moment as he did when things were going well, and that is entirely appropriate. So we believe we have the best person for driving this business forward. And for continuing to build it for the long term because we're not very -- we're not taking a 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, Alasdair.

Peter, do you want to add anything?

Only as I think Ben has the vision, the flare and the connections and the process to take the business through very, very strongly indeed. And without it, it will be a poor business for sure.

Thank you very much. Flattered and grateful to you for that. Can you [indiscernible] with the largest shareholder, PG is [indiscernible] along with their [indiscernible] elsewhere as they are taking an active result for their investment? Well, we can't speak on behalf of PG who I believe must be [ Peter Gillingham ]. We can't speak to, I don't know what his intentions are, he is obviously at liberty to bode whichever way he wishes to. We want a constructive relationship with all shareholders, no matter how large they are in terms of their percentage shareholding in the company. Has your successful deal making with Polish bank didn't do anything -- What's the plan for refinancing Gdynia? 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 Bank that included in the IRR calculation? The IRR calculations, as already mentioned, are after taxes all other effects. Why do you think the shares are trading at 1/3 of NAV? No idea. Any view on dividend for the next financial year, saying less, more? Dividends, we -- something, as I mentioned, something we were very keen to pay, which we were very progressive in the payment of where [indiscernible] were better, and 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 repeat questions we had prior. So I think everything 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 it with answers. But unless there's anything else for everyone in the room. I think we can say that the booking is concluded and thank you all very much for your attendance.

That's great, Alasdair, Chairman of the Board of First Property Group. Thank you very much indeed for your time this afternoon. Can I please ask attendees online, not to close the session as well now automatically redirect you with the opportunity to provide your feedback in order that the Board can better understand your views and expectations. Just want to 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 would like to thank you for attending today's Annual General Meeting, and good afternoon.