Litigation charge pushes Frogmore into earnings dip: Shares rise as dividend boosted

FROGMORE Estates, the property company that spent pounds 13.1m buying back its own shares, yesterday reported a 4 per cent fall in pre-tax profits to pounds 4.2m in the six months to December, writes Heather Connon.

The results were hit by a pounds 1.5m ( pounds 503,000) charge for settling litigation following the acquisition of Land Investors by BCPH in 1986, which also accounted for pounds 1.4m litigation costs in last year's accounts. Frogmore said the dispute was settled in October and 'no further costs are likely to occur.'

The group, which fought off a bid approach by its rival Southend Property, spent pounds 13.2m buying 5.2 million shares, 13.1 per cent of its capital, from Markheath, the troubled property company owned by Adelaide Steamship. That contributed to a rise in debt from pounds 45.8m to pounds 55m, or 36 per cent of net assets. Phillip Davies, managing director, said there were no significant property deals in the period. 'Although there is a lot available, we are looking for things with growth prospects or where we can achieve capital growth through active management. There are a number on the boil, but nothing firm yet.'

The group has been developing its housing business, where it acts as financial partner for builders, and Mr Davies said the contribution should increase from the pounds 3m earned from this activity last year.

Earnings per share fell from 7.1p to 6.9p but the dividend was increased from 3.4p to 3.6p. The cancellation of the shares, however, means the cost of the dividend has fallen from pounds 1.36m to pounds 1.25m. The shares rose, despite the falling market, and closed 7p higher at 404p.