View from City Road: Greycoat on thin ice

GREYCOAT'S interims provide a timely reminder of the weakness of company accounts. In May the property group crystallised a pounds 15m loss when it sold its 40 per cent stake in its Finsbury Avenue development for pounds 27.5m compared with a book value of pounds 42.5m. But - after exhaustive discussions with Ernst & Young, its auditors - Finsbury continued to be shown at its (March) balance sheet value of pounds 42.5m when the accounts were released in July. It was left to a note on 'associated undertakings' to disclose the deal.

Given the thin ice on which Greycoat was skating - its banking covenants would have been breached had its 152 per cent gearing risen by just 14 percentage points - Ernst's decision that this was acceptable must have come as a relief.

But the ice is even thinner now, judging by yesterday's figures, which included the pounds 15m shortfall. After-tax losses of pounds 39.2m ( pounds 8.1m) also reflected pounds 13m of losses on sales of other properties and a further pounds 7m provision against remaining sites.

A 15 per cent decline in value since March hardly bodes well for this year's gearing calculation. Mind you, at 12p a share the City has pretty well given up hope anyway.