Sir David Murray’s PPG seesanother £5m writedown over debt

PPG, which is part of Murray International Holdings (MIH), generated £68.3m in sales and cut its bank loans from £457.7m to £403.4m, according to its latest accounts.

Overall, Murray’s portfolio was estimated to be worth £418.1m in the period, down from £488.1m the previous year, which also reflects the sale of ten properties in Edinburgh, Glasgow and Nottingham.

The firm narrowed pre-tax losses significantly to £1.5m in the year to the end of 30 June 2011 from £35.4m in the previous year.

The latest set of figures do not include £150m in sales made subsequent to the end of the financial year, such as the sale of Plumtree Court in London’s Holborn. PPG agreed to sell the office building – which was the home of Pricewaterhousecoopers until its lease expired in December – to investment banking giant Goldman Sachs early in 2011 but the £92.5m deal did not complete until January.

PPG had acquired the building in 2006 for £120m in a joint venture with HBOS.

The company said the income from the deal would appear as part of its annual report for 2012.

PPG’s existing portfolio, which includes the Princes Mall next to Waverley Station in Edinburgh, took a further £5.8m writedown in the year, after losing £5.7m off its value last year and a whopping £156m in 2009.

Without this exceptional charge in 2011, the firm made a small operating profit of £4.3m.

The company said the review of the value of its portfolio found a “number of positive and negative valuation adjustments” and that the write down was primarily attributed to “the weak market for development land”.

Turnover for the company fell 20 per cent to £98.1m, amounting to about a quarter of parent company MIH’s total income of £394.6m, which was revealed earlier this week. At the height of the property boom, PPG was the most profitable part of MIH.

Income from rents were slightly higher at £28.6m. In a statement, the company said that as the “majority of rental income is generated by the group’s retail assets this represented a strong performance in a challenging retail market”.

The reduction in its debt pile reduced the amount PPG had to pay its lender and co-owner, Lloyds Banking Group, from £19.8m in 2010 to £11.4m in interest and charges only.

Earlier this week a spokesman for Murray indicated net debt for the MIH group had been slimmed down to £636m to the end of June 2011. Subsequent to this in March, MIH revealed agreed a further £117.7m debt for equity swap with Lloyds, while the sale of Plumtree Court could see its bank debt reduced to as low as £470m, sources indicated.

Lloyds initially hiked its stake in MIH from 12 per cent to 30 per cent with a capital injection of £150m in 2010.

In the bank’s latest round of investment in MIH, Murray and his family retain 70 per cent of voting equity in the firm, as Lloyds upped its stake through non-voting shares. According to the PPG accounts, the deal incurred “amendment fees” of £7.3m, payable by MIH.