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–Martin Greenslade discusses this year’s results

As we all know, this has been an exceptionally turbulent year for the global economy and the business environment as a whole. The UK commercial property market has certainly endured its share of very tough conditions and our financial results have been impacted significantly as a result, with a loss after tax of £5.2bn largely due to a revaluation deficit of £4.7bn. With property values suffering sharp falls, we saw our adjusted net assets decline and our gearing rise. We ended the year with adjusted diluted net assets (NAV) per share of 593p, down 66.4%.

While our numbers demonstrate the challenging year we have had, they also reflect a strong and decisive response from management. Rapidly deteriorating market conditions required us to take tough decisions, and by acting quickly we mitigated the very worst effects of the current market. These actions included: the drawing down of our bank facilities, which ensured that funds remained available to us even if property values continued to fall; the disposal of Trillium, which, although at a loss, raised additional cash at a critical time; and the rebasing of our quarterly dividend from 14.9p per share (restated) to a final proposed dividend of 7.0p per share, reflecting a realistic view of the pressure on income ahead.

Through these and other actions we have achieved a substantial reduction in net debt, down 27% over the year.

The numbers also reflect the support provided by our shareholders, with the £755.7m of cash generated from the Rights Issue helping to strengthen our balance sheet.

Despite very difficult operating conditions, we increased revenue profit by 10.6% in the year. This is a positive achievement, but it is unlikely to be maintained. This year’s figure was driven, in part, by lower interest rates on our floating rate debt. Interest rates will not remain at current levels indefinitely and margins will rise as and when we renew our banking facilities. Rental income is also likely to come under downward pressure from falling rental values and voids from tenant insolvencies, lease expiries, partially let developments and pre-development properties. And some of our actions to maintain liquidity and a sound capital base may also have a negative impact on our income statement. An example of this might be the sale of properties to fund our existing committed capital expenditure. Nevertheless, ensuring we have sufficient capital and liquidity will enable us to capitalise on opportunities which will undoubtedly arise in the coming years.

The pages that follow provide you with a detailed review of our figures. Given the scale of events during the year, I hope this overview helps put the results in context and conveys a clear picture of current financial dynamics.

  • Martin Greenslade
  • Finance Director
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