Muted earnings for Daejan Holdings

A disappointing period for Daejan Holdings, as the property investment firm reported muted earnings in its half-year report on Wednesday.

The profit before tax to 30 September was £58.86m, down from £135.5m last year and £277.5m in March.

Daejan’s board were clearly disappointed with the portfolio’s net valuation gain as well, which at £35.5m was well down from £107.7m last year.

This was put down to “the anticipated slowdown in the rates of growth in property values in both the UK and USA, and the absence of the one-off benefit to capital values of the letting of Africa House and the Strand Palace rent review which arose last year,” according to chairman Benzion Freshwater.

Freshwater blamed the period’s lower reported profit on a lower level of realised disposal profits.

Investors were warned in Daejan’s last report that the board was taking a cautious stance going forward, and this remains the case.

“Whilst economic circumstances at present are relatively benign in both the UK and USA, it seems likely that before long we will see the start of the rise in USA interest rates to be followed in due course by the UK”, said Freshwater.

“Nevertheless the business should in the short term continue to benefit from the current favourable combination of low interest rates, low inflation and positive economic growth.”

Daejan will pay an interim dividend of 35p per share on 4 March 2016.

Previous earnings were restated due to a change in accounting policy for fixed rate loans and borrowing.