Terrace Hill's results look pretty awful at first glance. The supermarket developer made a substantial loss and its reported net asset value (NAV) has plunged 18 per cent since the September year-end.
Yet there are mitigating circumstances. The adjusted NAV figure – which marks trading assets up to market value rather than keeping them at cost – only slipped 1.4 per cent to finish the half at 27.7p. Since Terrace Hill makes its money almost purely through its trading portfolio, the adjusted figure is more meaningful. Moreover, the operating loss merely reflects a quiet half in a lumpy business during which no major transactions were completed. However, since the period-end, the company has signed two major deals with Sainsbury's in Whitchurch and Sunderland that will feed into the full-year numbers.
One reason the NAV slipped was Terrace Hill's disposal of a big chunk of its legacy residential portfolio at a 4 per cent discount to book value. But gearing remains the big shadow hanging over Terrace Hill. Net debt rose slightly over the period, though chief executive Philip Leach stresses it would have fallen had the period included the two deals with Sainsbury.
House broker Oriel Securities expects year-end adjusted NAV of 28p.
TERRACE HILL GROUP (THG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 10p | MARKET VALUE: | £20.7m | |
| TOUCH: | 9.5-10p | 12M HIGH: | 24p | LOW: 8p |
| DIVIDEND YIELD: | nil | TRADING PROP: | £72.8m | |
| DISCOUNT TO NAV: | 48% | |||
| INVESTMENT PROP: | £16.2m | NET DEBT: | 139% | |
| Half-year to Mar 31 | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011* | 28.4 | -10.2 | -4.9 | nil |
| 2012 | 18.6 | -8.4 | -4.4 | nil |
| % change | -35 | - | - | - |
*NAV restated to reflect let rather than vacant value of residential portfolio | ||||
