Wates in pounds 72m write-down

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The Independent Online
MORE than 15 per cent was wiped off the value of Wates City of London Properties as the group disclosed that it had been forced to write off pounds 71.9m of the fall in value of its portfolio against profits because its revaluation reserve has been exhausted.

The write-down pushed the group into a pounds 74.9m loss before tax in the year to December, after an pounds 8.2m profit last time. That left it with a deficit on reserves of pounds 34m, which meant it was unable to pay a final dividend (3.73p). It paid 0.77p a share at the interim stage.

The shares fell 7p to 39p, valuing the group at just pounds 46.8m. At their peak in 1987, the shares were worth 295p. Net assets more than halved from 151p to 74.4p a share.

Wates has been more severely affected by the property slump than some of its rivals because its assets are exclusively in the City, which is the worst affected area.

The value of its investment property - where only 5,000 sq ft is unlet - fell 21 per cent over the year, slightly higher than the 18 per cent decline in 1991. But its development portfolio - which includes Vintners Place and City Place House, both of which are slowly being let, as well as a number of undeveloped sites - dropped 44 per cent, the same as last year.

Wates' revaluation reserve stood at pounds 16.1m at the beginning of the year, which meant that the bulk of the pounds 88m write-down had to be charged against distributable profits.

John Nettleton, finance and commercial director, said that, if values increase, the group can take up to pounds 71.9m of the uplift to distributable profits.

The group's net borrowings stood at pounds 90.8m, compared with net assets of pounds 89m. It has agreed a five-year facility with its bankers.

Two properties were sold last year and, although Mr Nettleton said the group was 'not a willing seller,' disposals are likely in order to cut borrowings. Rental income rose 5 per cent to pounds 15.8m, but the disposals mean that will fall by pounds 3m this year.