DEVELOPER Langtree Group says it will take advantage of the “challenging” property market to invest in more property after it reported a strong rise in profits.
The Newton-le-Willows business reported pre-tax profits of £12.9m for the year to June, 2012 – up 46% on the previous year.
The profit hike came despite turnover falling from £54.7m to £40.3m, accounts newly filed at Companies House show, as key developments completed and the value of the group’s investments were hit by the continuing downturn.
During the year, the group completed work on the new Langtree Park rugby stadium and neighbouring Tesco superstore, in St Helens.
And, in May last year, it completed the restoration of the Festival Gardens in Otterspool, Liverpool. Langtree is now focusing on its plans for a residential development on the rest of the former International Garden Festival site.
Chairman Bill Ainscough said conditions remained tough – but insisted that Langtree was well placed to take advantage.
He said: “A depressed property market is not necessarily all bad news.
“A sound financial base has allowed us to actively look for new investment opportunities and in the year we have invested approaching £10m in acquiring further property assets to add to the group property and development portfolio. As market conditions remain favourable for acquisitions, we will continue to be active in the market, and expect to see further significant additions to both the development and the property portfolio during the coming year.”
Mr Ainscough said it was “particularly pleasing” that profits had risen throughout the downturn, while the net asset value of the business also increased by 3.2% to £76.4m.
He added: “The property market remains very subdued, with still further downward pressure being applied to rents and values. During the year, we have absorbed a further erosion of the gross asset value of our existing property portfolio and in our share of the assets contained within our strategic joint ventures.
“While we have hopefully seen the worst of the fall in property values, I expect the market to remain challenging with no significant value movement in the short term.
“However, we operate a robust business model, retaining a modern cash generative property portfolio accommodating over 1,100 tenants with no over-dependency on any individual sector, tenant or geography.
“We operate within modest levels of gearing, 44% across the group as a whole, allowing our development activity to be linked to strategic investments in longer-term regeneration activities that have the ability to unlock significant latent value.”
During the year, the group successfully renewed its banking facilities at its Network Space subsidiary with Lloyds Banking Group. Since the year ended, the group has also renewed its main banking facility with Lloyds.
Langtree is also leading plans to expand Sci-Tech Daresbury, the science and business campus where dozens of small firms work alongside Government scientists.
Langtree, which runs the campus in a joint venture with the Science and Technology Facilities Council and Halton Council, wants to create a “technology village” there. Group chief executive John Downes hopes it could attract as many as 15,000 jobs.
Those plans were given a boost in 2011 when the campus was given Enterprise Zone status by the Government, meaning it will benefit from tax breaks.