FINANCIAL (OVERVIEW)
We have worked hard to maintain our investment income and whilst void levels have increased to just over five percent, our overall rent roll has improved slightly over the year from £6.1million p.a. to £6.3 million p.a.
In addition, we have recently completed a new banking facility of £40 million with Royal Bank of Scotland (RBS) which replaces the previous facility with Allied Irish Bank (GB) and the RBS. The new facility - of which £10.3 million has been drawn down at the year-end - will give us additional flexibility within the business and the ability to potentially gear into a market off a low value base in anticipation of future recovery.
Results
Net asset value has fallen to £84.6 million (2008: £116.6 million) largely as a result of a 26 per cent fall in the value of our investment portfolio that is independently valued by CBRE. The effect of rising valuation yields was partially offset by rental performance, where £437,000 was achieved above our budgeted figure for the year.
Our net profit before tax (prior to Shareholders distributions and exceptional items) was £5.2 million (which was 24% per cent above budget target for the year), and during the year shareholder distributions of £4.4 million were made. The decline in the property market has inevitably impacted the value of our development portfolio this year. A write-down of £6.7 million as been recognised as an exceptional item in the year with our Veridion Park development, where we have experienced challenging planning obligations and relative high historic values accounting for some £6.3 million of the total.
Future Strategy
The current property market outlook is uncertain with the economy continuing to deteriorate. In these circumstances any forecasting is fraught with difficulty but our business plan seeks both to anticipate further falls in value and manage the risk associated with this, and to position ourselves to take advantage of what may be the best purchasing opportunity in the last 15 years.
At the operational level preservation of income and cost control is critical. We have conducted a review of our 181 tenancies providing investment income to analyse current arrears, payment histories and lease expiry profiles to try and make an objective assessment of business risk.
Looking forward we expect our voids to increase given the current economic climate from the current level of around five per cent. We have, therefore, made an increased allowance of 10 per cent for the next financial year as there is an ongoing risk as the credit crunch impacts the real economy.
