Annual Report 2012 - Cadogan

CHIEF ExECUTIVE’S REVIEW 31 DECEMBER 2012
Financial Review
trading highlights
• Rental income rose to £104.7 million
Increase of 5.6 %
• Residential enfranchisement sales increased to £90.1
million Increase of 8.9%
• Profit on ordinary activities before taxation reduced
to £57.3 million Reduction of 19.9%
• earnings per share reduced to 40.9 pence per share
Reduction of 19.3%
All sectors of the business contributed to the growth in
rental income.
During the course of 2012 the annual rental income
derived from our residential market let portfolio increased
from just under £17 million at the beginning of the year
to nearly £20.3 million at the year end. The number of
active tenancies increased from 468 to 529 over the same
period. These increases principally reflected acquisitions
made during 2010 and 2011 which, after refurbishment
works, were added to our letting portfolio during 2012.
We also benefited from an overall increase of circa 6% in
rental values during the year and from reducing the time
taken between vacation and re-letting.
Within the commercial portfolio the principal driver in our
rental growth was from index linked rents. The rents on
the majority of our retail units are linked to increases in
retail prices and these averaged around 3.5% over 2012.
Rental income in 2012 also benefited from the new leases
signed towards the end of 2011 with Massimo Dutti, Rag
and Bone and Café Colbert.
The artistic success of Cadogan Hall continues. We take
great care to attract a high quality and varied artistic
programme to the hall, while carefully managing the
significant cost of this enterprise. In 2014 the hall will be
celebrating its 10th anniversary and is planning an eclectic
programme of events throughout the year to celebrate this
milestone.
Last year's financial results benefited to the extent of
£16.0 million from the write back to the profit and loss
account of provisions made in previous years to reflect
impairments in the value of our investment properties. The
equivalent and much reduced figure in 2012 is £3.9 million,
and this is the most significant factor in explaining the
overall reduction in the reported profit before taxation,
down from £71.6 million in 2011 to £57.3 million in 2012.
With the rise in property values over the last three years
virtually all of the provisions made previously to reflect
impairment in the value of investment properties have
now been reversed.
Net interest payable increased marginally from £28.8 million
to £28.9 million; the level of borrowings outstanding
during the course of the year remained fairly steady, and
with rates of interest fixed on virtually all our borrowings,
the charge for the year remained stable.
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