Write-downs lead to £45m loss at Gladman
INDUSTRIAL property specialist Gladman Developments declared a pre-tax loss of £45.3m in the year to March 31, 2010 (2009: £9.1m loss) on sales of £28.7m (£19.3m).
The loss is due to a large write-down in the value of the Congleton-based company’s portfolio following a revaluation of all of its assets, including undeveloped land, part-built and completed schemes.
The write-down saw £44.1m being wiped off the value of Gladman’s portfolio. It finished the period with current assets of £123.1m, as opposed to £184.5m at the start of the period.
The company, which was founded by David Gladman in 1987, specialises in developing offices, warehouses and other commercial properties.
A statement accompanying the firm’s accounts prepared by directors state that apart from the write-down, Gladman Developments had managed to operate at break-even which they said was a “satisfactory” result, given the state of the property market.
It added that conditions remained “very difficult” for property developers, particularly for speculative developers such as Gladman who tend not to hold onto stock.
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“The demand for new build developments, both for end users and investors, has shrunk substantially as as reduced levels of bank funding and loss of investor confidence impacted on markets,” the directors said.
Given such a backdrop, the firm said that it was continuing with its policy of reducing the amount of work in progress and the finished stock it holds. It has also been cutting back on its own overheads, including staffing levels, and said that it would only start on speculative new build projects where it believed demand would be “exceptional”. It is also concentrating on adding value to existing assets by achieving “planning gain” – ie. securing planning permission to build on land already owned by the business.
The write-down led to the value of Gladman Developments’ net assets shrinking to £12.5m, from £58.1m at the start of the period. Improved cashflows also helped to reduce net debt to £60.4m (£70.1m).
“The directors remain extremely confident that their track record will ensure that adequate banking facilities will continue to be available to them for the foreseeable future,” the company said.
