Investment company Tradehold has reported a small trading profit of £281 000 for the six months to end August 2011 from £653 000 the previous year.

However, due mainly to a £2.1 million downward adjustment in the fair value of the company's investment in UBS AG and interest payments of £1.1 million, it ended the reporting period with a loss of £3.3 million from a profit of £522,000 a year ago.

Tradehold is an investment holding company with interests mainly in the Moorgarth group of property companies in which it holds the controlling interest, and in the UK retailing group Instore Limited, in which it has a 15.9% stake. Moorgarth owns and manages a portfolio of commercial properties throughout the UK.

During the period Tradehold successfully completed a rights issue in SA, which raised R650 million and this bolstered its balance sheet by £59 million.

Tradehold, which is listed in the property section of the main board of the JSE, reports its results in pound sterling as its operating subsidiaries, all located in the UK, conduct their business in that currency.

Tradehold chairman Christo Wiese said the UK's commercial property sector in which Moorgarth operates, continued to reflect the turmoil that had characterised that country's economy since 2008.

"The tentative recovery noticeable in the property market in the beginning of 2011 has faltered in recent months as the all-pervading sense of uncertainty in the economy continued to exact its toll.

The demand for retail space in particular slowed, putting increasing pressure on owners' rental income."

Wiese said Moorgarth had consequently focused primarily on marketing and managing the group's portfolio of 23 buildings, to retain existing tenants and minimise vacant space.

Rental income increased well above budget and the company ended the period with a net profit of GBP0.4 million, assisted by an increase of £0.6 million in the valuation of the portfolio to £71.2 million.

"However, as present market conditions do, on occasion, also offer exceptional value, Moorgarth's management continues to search for acquisitions that fit its criteria of value enhancement such as the retail park bought in June for £12 million in Perth, Scotland.

"Moorgarth's management does not expect the environment to change materially in the second half of the year.

"Its policies will therefore continue to be mainly defensive with the accent on maximising the existing portfolio's income potential.

"However, should opportunities for further acquisitions arise, they will be diligently pursued," Wiese said.

Source: I-Net Bridge