First Property Group (LSE:FPO) — Annual General Meeting

0:00 Good afternoon, and welcome to the FIRST PROPERTY GROUP PLC Annual General Meeting. Throughout this recorded meeting, attendees will be in listen only mode. Questions can be submitted by clicking on the Q and A tab situated on the right hand side of your screen. I'd now like to hand you over to Alastair Locke, Chairman. Good afternoon, sir. Thank you very much. And ladies and gentlemen, I'd like to welcome everybody to the AGM of the company and also all of those who are listening via the live presentation. My name is Alastair Locke. I'm the Chairman of the Group's Chairman, I'll be chairing the meeting, and I'm joined today by my colleagues Peter Moon, fellow Non Executive Director Ben Habib, who is the CEO Laura Howarth, our Finance Director Jill Aubrey, the Company Secretary and Jeremy Marcus, the Business Development Director. And with the consent of those shareholders present, I would like to take the notice of the meeting as set out on pages 73 to four of the report and accounts as read.

0:55 Thank you. Company shareholders have been able to submit questions in advance of this meeting and will also have the opportunity to submit questions during the meeting via the Investor Meet company platform or in person for those shareholders in the room. But we'll deal with any questions and answers at the end of the meeting once the formal business is 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. For those joining by live presentation, you will see on your screens the ordinary resolutions being proposed. To accurately reflect the views of shareholders of the company, voting today will be done by way of a poll on each of the resolutions put to the meeting. As it will take some time to complete the poll procedure, the final results of the voting will be announced through our regulatory information service as soon as reasonably practical.

1:51 When you registered before the meeting today, each shareholder, proxy, and corporate representative will have been issued with a poll card. If there's anyone here who thinks they should have a poll card but does not, please raise your hand. I should mention that for those shareholders who have already lodged a proxy, they do not, of course, need to complete a poll card unless they want to change their vote. You have three options for each resolution. You can vote for, against, or you may withhold your vote. Withheld vote is not a vote in law. It will not be counted in the calculation of the proportion of the votes for or against. So please complete your poll card by ticking the appropriate box next to the relevant resolution depending on how you wish to cast your vote. Once all votes have been taken on the resolutions, please would you sign the poll card and hand it to mister Aubrey.

2:43 I now propose resolution one, that the report of the directors of the audited accounts for the year ended thirty first of March twenty sixth now submitted to this meeting be approved and adopted. I will ask Mr. Peter Moon to second the proposal. Mister chairman, I have pleasure in seconding the proposal. As I explained to you Yep. I have one question on this, a more technical question. Can we do that at the end? Okay. Yes. Fine. Thank you. Unless it's actually on the poll itself. No. No. Right. As I explained, to vote, please, would you take the appropriate box on your poll card? Please vote now. I declare the vote the poll on this resolution closed. You don't have a poll card, do you?

3:29 So nobody's voting here by poll cards. So I don't need to do all that bit. I've already voted. I've noted that. The proxy vote was 69,369,316 shares in favor, 37,500 shares against, and 44,123,225 thousand abstentions. So I declare the resolution passed. Resolution two. I now propose, resolution number two, which is to declare and approve a total final dividend of naught 0.25p per ordinary share for the financial year ending 03/31/2026. I'll ask Mr. Bernard Bean to second the proposal. Mr Chairman, I have much pleasure in seconding the proposal.

4:16 So we've all voted. I declare the poll on this resolution closed. The proxy vote was 69,369,189 in favor, 42,138 shares against and 44,125,722 abstentions. I will now hand over to our acting chairman, Mr. Peter Moon, for the next resolution. Thank you. I now propose resolution number three, whereby Mr. Anastair Locke be reappointed as a director of the company. I'll ask mister Ben Habib to second the proposal. Mister chairman, I have much pleasure in seconding the proposal. Would you please vote now?

5:04 I declare the poll on this resolution closed. Proxy vote was 60,234,139 shares in favor, 53,013,227 shares against, and 2,082,683 abstentions. Resolution is carried. I now hand back to the chairman, mister Alexander Lock. Thank you, Peter. I now propose resolution number four, whereby Mrs. Laura Howarth be reappointed as the Director of the company. And I will ask Mr. Peter Moole to second the proposal. Mr. Chairman, I have much pleasure in seconding the proposal.

5:53 Please vote now. I declare the poll on this resolution closed. Proxy vote was 67,457,094 shares in favor, 1,670,051 shares against, and 44,402,904 abstentions. I now propose resolution number five whereby the directors be authorized to reappoint coup Cooper Perry 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 made. I will ask mister Peter Boone to second the proposal. Mister chairman, I have much pleasure in seconding the proposal.

6:38 Please vote now. I declare the poll of this resolution closed. The proxy vote was 69,358,006 shares in favor, 48,818 shares against, and 44,123,225 abstentions. I now propose resolution number six whereby the directors be authorized to fix the remuneration of the auditors. And I will ask mister Peter Moon to second the proposal. Mister chairman, I have much pleasure in seconding the proposal. Please vote now. I declare the poll on this resolution closed. 69,369,316 shares in favor, 37,508 shares against, 44,123,225 abstentions.

7:35 So resolution is passed, obviously. Ladies and gentlemen, that concludes the formal business of this meeting. And the final results of the meeting will be announced to the markets through our regulatory information service as soon as practical. I'm now required to read the AGM statement, which was released on the regulatory news service this morning. As reported in our preliminary results announced on the 06/25/2026, the group's performance continued to recover in the year to 03/31/2026, with profits increasing and our balance sheet strengthening. As a result, the directors are proposing, subject to shareholder approval at today's AGM, a resumption of dividend payments with a payment of a final dividend of 0.25p per share or some £370,000 in total.

8:25 The group expects to announce its results for the six months ended thirtieth of September twenty sixth of the twenty fourth of November twenty twenty six. We will now answer any questions, including those that have been submitted in advance or during the meeting. So, sir, would you like to start with your question? Okay. First question is with regard to page 50, unrecognized deferred tax. I can see that between 2026 and 2025, it rose from 2.3537 2,375,000 to 2.864. Obvious question is, what is the reason for the rise? I'm aware it's not included in assets.

9:15 How much is there any view on the probability of being able to utilize this particular asset or not? You know, what is the belief that it's unrecoverable? And given the rise of 500,000, it's obviously recent from year to year. What's the reasoning behind it? So the bulk of deferred tax assets are in Poland. We don't recognize any deferred tax assets within The UK themselves. And typically, the the majority of that is is on value, property values. And we'll only recognize the tax asset up to the level of the deferred tax liability as well. So we are being very cautious, and it's typically on the values of properties where they're above the cost. So there's obviously no view. You know, it's unlikely that the situation will change in Poland then?

10:05 It's obviously determined by valuation of the properties, but we're confident with the deferred tax assets that we have recognized today. Okay. It bulbs up and down depending on what the values of the properties are doing. So if the property value goes up, obviously, your deferred tax asset reduces. If they drop in value, then you get more of a deferred tax asset. So you want the deferred tax asset to disappear, I think. Because it means values have gone up. Does that make sense? Fingers crossed. Yes. My next question is, obviously, having looked at the presentation again, has any progress been made with with regard to the vacancy for the Blue Tower property at Warsaw? How is that going? Yeah. It's going well. This has been an extraordinarily good building in terms of occupancy levels.

10:55 The vacancy we've now got is vacancy that we bought all the to the extent that any part of that property was occupied. We we made a series of purchases in the building, as you probably know. And at every point where the building had occupancy, it's retained occupancy pretty much a 100% ever since we bought the property. But then we bought 7,000 odd square meters of vacant space in 2022, and we've been leasing that up. There's about 2,400 square meters left, and we are in advanced negotiations with a tenant to take that remaining space. So we hope to have some positive news on Blue Tower at that point. Okay. So I presume there's going to be fit out costs before the Yes. Intense move There will be fit out costs, unfortunately.

11:43 But they tend to be a small proportion of the benefit that there will be they will be, not tend to be, there will be a small proportion of the benefit that the property will get through the tenancy. Okay. In terms of fund management, I mean, listening to the presentation, it's clear that yourselves company's moving on for it from it to some extent. Yeah. So I understand that the annualized fee income is 1,300,000, and I can see it in the notes. It says this turns out to be naught point $3.02 profits before central overheads and so on. Having looked at the different funds, by definition, they will run out of time.

12:35 Is there one or two funds where due to whether there's an ownership of 46% or a joint ownership of 23 or Felix or yourself on about 70%? Will those mandates continue? Is there a plan to have it continued? Or if the income drops below a certain level and it's not possible to recover the overheads, will a decision potentially be made to say this is no longer for us? So one of the great benefits, if I may say so, of the team at FIRST PROPERTY GROUP is that we are fund managers, but we're also by nature proprietors. And if you look at our fund management model, the way we practiced it, we've always been co investors alongside shareholders.

13:20 Or most of the time, if not all the time, we've had a small stake in each fund. In fact, I think the largest proportion is 45% in FPOP opportunities. So we're not shy to deploy our cash, and this makes us quite distinct from most fund managers who are not proprietors by nature, but advised advisers. They come from the advisory part of the world as opposed to the proprietary part. And this is not the first time that fund management has been under pressure in the twenty six year history of FIRST PROPERTY GROUP. Between o eight and twenty ten, twenty eleven, there was huge pressure on the fund management business. And Blue Tower, which has done so well for us, for example, was bought then because we we we couldn't raise third party money. All the institutions had vacated the the the, you know, the the the playing field as it were. And so we put our own money into action.

14:18 And we're seeing what we've experienced over the last three or four years, five years maybe, is huge structural and market changes in property, commercial property right across Europe, including in The United Kingdom, obviously. And those the structural changes are regulatory, and they come from capital adequacy requirements foisted on pension funds and institutions that have now basically left property pretty much and have mostly invested in corporate and government bonds. There's been a huge move towards bonds, which I think is deeply damaging to the British economy. But anyway, that's what's happened. And that's a regulatory shift. The other regulatory shift that has been deeply damaging to property is the drive towards net zero, which has effectively made lots of properties obsolete or requiring huge CapEx in order to keep them functional.

15:12 But the other impact of ESG has been a withdrawal of capital from the sector as well because banks don't want to lend on property that isn't top notch ESG compliant. And so paradoxically, instead of repurposing per perfectly otherwise perfectly good buildings, what's happening is that you're getting a withdrawal of capital from these buildings and exacerbating problems both from a tenancy perspective as well as from an investment market perspective in commercial property. Those are the structural changes that have taken place, And there's no light at the end of that tunnel. It doesn't look like the governments are going to row back on net zero or suddenly release the capital adequacy requirements that pension funds need to make and so on.

15:58 The other market change that, of course, has taken place is after twelve, thirteen years of close to zero interest rates. We're now seeing interest rates normalizing, you know, quite dramatically. And that's as interest rates rise, the value of a property drops as an inverse relationship. So that's those are the hits that we've experienced, not just as a fund manager, but as a company as well. And in order to hold our position to be able to continue to exist, we've necessarily had to sell some assets. We did a fundraising ourselves in 2024, and the and we are faced with difficulties raising third party client money at the moment. There's no doubt about that. But we won't let FIRST PROPERTY ASSET MANAGEMENT LIMITED fail or we won't cease our asset management capabilities because there is every possibility, every likelihood indeed that over time, governments see sense. They change these regulations, and money comes back into the sector. You know, commercial property is a fundamentally crucial part of the British economy. So I do think that it would be peremptory and wrong to close down our asset management division simply because we're having problems at the moment.

17:18 We need to ride this out and do the best we can as proprietors and come back to the asset management model when institutions are investing again. That's a very long answer to your simple question. If I may add one point, is that it's the same people involved in both the fund management and the proprietary activity. Yes. We don't save a lot of money by shutting it down either. Yeah. Yeah. So I presume, obviously, mentioned in the pro presentation, has the Ostrovich shopping center been refinanced? It has. Yeah. We've got agreed terms for the extension of the loan on that shopping center. Okay. And there was mention of a Romanian property? So we have entered into a preliminary purchase agreement to sell that property, which is conditional on the Monopolies Commission, believe it or not, of Romania. This is the madness of EU regulations. I won't get political.

18:14 But that we have just to sell a small office block inclusion, Transylvania. We need anti monopolies clearance monopolies clearance. I mean, it's absurd. So that that's going through the process at the moment. And forgive me if I'm mistake. Is that the final property in That's the final property in Romania. Therefore, as a move to further simplification. Yeah. Romania is over for us, really. It never really worked out. The depth of the market just to put markets into context, The UK commercial property market turns out about 100,000,000,000 a year. The Polish property market, about 5,000,000,000 in sterling or 7,000,000,000 in euros. And the the Romanian market's never broken out of 1,000,000,000 a year. And so it's been very difficult in Romania to find deals. Actually, deals we have done in Romania have all, with the exception of one or two, I think, been really profitable for us, but it it's terribly difficult to find stock.

19:10 Okay. My final question is, obviously, you know, the presentation the current situation is a case of basically looking for bargains in The UK. Yeah. My always question is, how's that going? It again, it's so hard to predict because you have to kiss a lot of frogs before a prince turns up. Not that I'm looking for a prince. A princess would be more to my liking. But, you know, we we go through that process. Jeremy's at it twenty four seven. I'm at it twenty four seven. And we bought a little property in Leatherhead for £600,000, which we hope will do well for the group. We get planning permission on it to convert it from offices to resi. We're looking at a few others of that kind of thing.

19:57 And, you know, we'll just do as many as we can, but it's impossible to give you any indication on it because it's deal led. Yes. Obviously, I'm aware of the level of profit profitability within the financial year for the AGM, which is Yeah. Turns out in earnings per share of about 1.8p. If it turned out roughly the same next year, by implication or the year we are within, I presume looking at the coverage proposals for the dividend that in effect, you're potentially looking at 0.5 a pence over the I think current year or is that as We're not we're not gonna make any sort of firm commitment because Yeah. That that that's that's not what we do. But I would just say that, you know, it is our aim as a board to make the company profitable and to pay dividends, which we would hope would increase over time.

21:02 That that's our aim and ambition. And that we did very, very successfully for many years and Yes. Until they we took a hit. There've been a number of questions that have I don't think anybody can actually see them, but that have come up. But I think we've answered pretty much all of them. There were two or three questions on the the fund management role, which I think Ben has fully covered. We've talked about where we're thinking where where the investment opportunities lies. We just talked about investment at dividends and so forth. And the other questions, I think, have been answered either in writing separately. I think there's only I don't think there are any other questions that we feel that we haven't really covered.

21:53 That's I think we're clear. We're fully covered on on all the questions that we have on the screen. There's two that have come in. Can we have the proxy number for resolution seven to nine? I don't Those are the ones that we've withdrawn them. So I'm afraid that yeah. I mean, that's that's irrelevant, frankly. And you will get a poll figure on every poll of the resolutions that we put to the meeting. We'll go out on the the the information service later. Is that right, It'll be parcel file. Yeah. Yeah. I think, unless there's anything else, that answers all my questions. K. Thank you. Thank you very much. Thank you for attending the meeting. Thanks online, and thank you for listening, if anybody was.

22:41 Sure they were. Thank you for updating attendees today. On behalf of the board of FIRST PROPERTY GROUP PLC, we would like to thank you for attending today's Annual General Meeting, and good afternoon to you all.