Corbo is a large family property company owned and registered in Northern Ireland.
A considerable part of the property owned by this parent company and its subsidiaries is located in Great Britain.
Corbo owns a controlling part of the share capital of three other companies: Murray House, Lemon Quay group and ASM (NI) Developments. The registered accounts for Corbo do not consolidate the results for the subsidiary or related companies.
The nature of the property business and the way in which it registers accounts has the effect of showing operating profits as a large proportion of turnover. The turnover figures reflect the rental income from the property owned by the company. Operating profit is calculated before the deduction of net interest payments on borrowed funds. Pre-tax profits are shown after interest is deducted which in 2008-9 amounted to £23.8m.
The latest registered accounts show how Corbo was affected by the rise in property values until 2006-7 and then by the fall in values in the following two years. The capital assets of the company are held on the balance sheet at £696m at the end of February 2009. Even though £105m was spent on acquiring new assets in the last three years, the balance sheet values fell by some £9m.
This adjustment to the value of capital assets is illustrated by the note in the accounts showing that, in 2006-7 and 2007-8, there was an unrealised reduction in the valuation of assets of £114m. By comparison, an unrealised increase in the value of assets of £184m was noted in 2005-6.
Of particular interest in a large property company is the way in which bank borrowing relates to the balance sheet value of assets. Bank borrowing in February 2006, at £282m, represented 40% of the balance sheet values. In February 2009, this ratio had risen to over 64% and reciprocally, shareholders funds had declined as a proportion of assets.
A welcome feature of the most recent accounts is that the company has not had to make any further revaluation of assets and pre-tax profits have returned to the ‘black’. In comparison with other property companies this is a creditable outcome.