Property crash posing huge challenges for Brunswick
Brunswick (No.1), led by Andrew Creighton and Frank Boyd, was one of the largest property companies registered and trading from Northern Ireland but transactions in the latest trading period show large changes.
The principal activities of the company are the leasing and development of properties for commercial purposes. In recent years, the company has been seriously affected by the fall in property values. Capital losses on disposal of investments, or unrealised on revaluation of property and investments, exceeded £72m in 2010 and a further £34m in the last 18 months.
Brunswick (No.1) presents the consolidated accounts for a very large number of subsidiary companies and joint ventures within the same group.
In property developments, during the period to June 2012, the group disposed of investments in subsidiaries valued at £294m on a non-cash basis. The group also has reported a non-cash adjustment to its net debt of £250m. As a result, while the balance sheet value of property investments fell by £292m, the outstanding bank borrowing fell by £252m.
The balance sheet value of shareholders' funds in June 2012 was just under £5m. Five years ago it was £238m.
A consequence of the dramatic change in the value of investment property has been that interest payments on borrowed funds increased to nearly £50m in the last 18 months and exceeded the value of operating profits. Bank borrowing, which reached £615m at the end of 2007, has fallen to £364m in June 2012.
The value of fixed assets and investments reached £860m late in 2007. This balance sheet valuation fell to £644m at the end of 2010: a fall of £216m. More recently, in June 2012, the balance sheet value of fixed assets was reported as £339m.