Scottish Met seeks 27m pounds: Shares fall as property group announces reduced losses

SHARES in Scottish Metropolitan fell 9p to 105p after the property group accompanied news of a cut in annual pre-tax losses with a pounds 26.8m rights issue.

Scott Cairns, managing director, said the one-for-three cash call at 85p was to finance acquisition of investment properties after what he said was the group's healthier financial state and improvements in the UK property market.

Reduced administrative and interest costs helped the company cut its losses for the year to 15 August to pounds 1.78m, against pounds 3.91m, on an FRS3 basis. The deficit includes a loss on sale of investment properties of pounds 3.53m ( pounds 1.83m loss). On a pre- FRS3 basis and taking into account new accounting policy for gross rental income, the results would have shown a taxable profit of pounds 2.06m.

Money from the rights issue will fund acquisitions in Scotland, following a costly expansion in southern England. Further disposals of properties in the South are planned.

The company recently renegotiated its short-term bank facilities and said it was now able to gear up for the right investment opportunities.

Of the 32.4 million shares being issued, Royal Insurance Asset Management and Guardian Royal Exchange are taking their full entitlement, 13.7 million shares. David Walton, chairman of Scottish, and his wife, are subscribing to 731,000 shares, their full entitlement.

Net assets were pounds 80m ( pounds 104m), making a net asset value per share of 82.4p (108.1p). The figures do not include a pounds 5m surplus on the sale of Saltire Court, the company's largest single asset. A final dividend of 1.1p makes 1.5p for the year (1.5p).