Tradehold back in the black

Investment holding company Tradehold, which is listed on the JSE, has returned to profitability in the six months to 31 August 2009 mainly due to an increase in the value of its investments. The company, whose investments are all outside South Africa, declared income attributable to shareholders of £2,6m. This compares with a loss of £8,4m in the corresponding period in 2008.

As all its income is generated in pounds sterling, the company reports its results in that currency.

Tradehold’s major investments are in property and in retail. It owns a controlling interest in the Moorgarth group of property companies and 15,9% in Instore plc, a British retail group listed on the London Stock Exchange. Its investment that benefited most from the stabilising financial markets was in UBS AG of which the value increased by £3,0m when marked up to market value.

Moorgarth reported a net loss of £1,0m compared to a loss of £1,3m in the corresponding period, mainly due to a revaluation which saw the value of its property portfolio reduce by £860 000 to £45,8m. During the review period it was exposed to all the vagaries of the British property market which remained in turmoil and saw values plummet to the lowest level in many years. Banks remained extremely wary of lending money for development while very few properties became available for sale. Moorgarth management consequently focused on enhancing the value of the existing portfolio and securing tenants to fill existing vacant space. No acquisitions were made but one property was sold to bring the number of properties in the portfolio to 20.

Tradehold chairman Christo Wiese said owners of commercial and retail properties were confronted during the review period by tenant losses caused by bankruptcies and businesses going into administration. “Being in a strong bargaining position the remaining tenants used the opportunity to exert strong pressure on landlords for rental concessions which considerably reduced profit margins. Due to the compounding effect of reduced rentals and greater incentives, many developers have put projects on hold as they were not considered viable at present.”

Wiese said predictions for the UK property market remained highly speculative and no sustained recovery was expected until late 2010 and into 2011. “Against this background and in order to preserve cash the board does not recommend paying a dividend to shareholders.”