First Property warns of loss in year just ended

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.