First Property warns of loss in year just ended

17th May 2024 15:35

(Sharecast News) - First Property Group said in an update on Friday that its underlying trading profits for the year ended 31 March were expected to align with market forecasts.

The AIM-traded firm said it would, however, report a reduction in the carrying value of its net assets due to specific write-downs.

Two primary factors contributed to the reduction - a previously-reported devaluation of its share in Fprop Opportunities (FOP) on 8 November, and a decrease in the market value of the group's office block in Gdynia, Poland.

The board said the Gdynia property, currently 30% leased, up from 2% at purchase, incurred a small annual operating loss of about €30,000.

First Property said it owes €12m in deferred consideration for the Gdynia property, due on 12 June.

The group said it was actively negotiating to restructure that deferred payment, and remained hopeful of a favourable outcome.

In light of the impending due date, the directors said they had resolved to impair the property's value by £3.7m, aligning it with the liability.

As a result, the impairment would cause a £3.7m charge to the profit and loss account for the year ended 31 March, leading to an overall reported loss for the financial year, pending audit.

The impairment would be a non-cash item, and did not reflect a decline in the group's underlying trading performance, the board explained.

At 1516 BST, shares in First Property Group were down 6.58% at 17.65p.

Reporting by Josh White for Sharecast.com.