Green set to unveil rise in profits to £6m


GREEN Property should announce strong profit growth in the preliminary results on Thursday. Pre tax profit is expected to rise from £4 million in 1994 to around £6 million in 1995, in line with predictions.

The growth will come from both its core operations and from acquisitions. There will be a six months contribution from the Nassau Building, Setanta Centre, Dublin, which was acquired for £20 million. Other income streams will also come through in the second six months.

These will include a contribution from the joint purchase, with Irish Permanent, of Harbourmaster 3, the pre let property in the International Financial Services Centre (IFSC), for £16 million. This purchase has been important in Green's strategy to reduce taxation and boost earnings. Without it, earnings were pointing downwards.

This undesirable trend was discernible in the first half results. These showed a tax charge of £177,000, compared with a credit of £214,000. As a result, despite a rise in pre tax profit from £2.05 million to £2.9 million, earnings per share fell from 6.78p to 5.97p.

However, Green should now be able to utilise the capital allowances resulting from the IFSC's special designated status and reduce its tax charge.

The normal tax charge on £6 million would be around £2 million but this could be reduced to around £0.6 million. This would indicate a net profit of £5.4 million which would be well up on the £4.1 million in 1994. That would put the earnings per share at 11.7p, marginally ahead of the 11.5p predicted by brokers.

Another development which will boost profits in the second six months is the purchase of a British portfolio of properties, for £19.75 million, in a joint venture with GE Capital. Green's share of this development could amount to a £400,000 boost to its annual net income, together with an annual management fee of £100,000.

In addition, it should have a six weeks' contribution from a British portfolio purchased for £32 million sterling last November. The portfolio was purchased from Standard Life in another joint venture with GE Capital. Both Green and GE Capital have invested £5.5 million in subordinated loan notes, effectively equity, giving each company a 50 per cent equity stake.