Capital & Regional Plc, the retail and leisure property manager, reported that for FY 2011 its pre-tax profit fell by half to £23.4 million due to a much lower valuation uplift this year.

C&R property is primarily held in 3 funds, The Mall (£1128 million), The Junction (£476 million) and X-Leisure (£528 million) in the UK with other business properties worth £204 million. In Germany C&R is in a joint venture of property worth £496 million. During the year it made disposals of £158 million from the Mall fund and £211 million from the Junction fund at or above book value. Its task has been primarily to recover further from the brink it found itself at in 2008-9 when values crashed and it was in danger of covenant breaches.It has some substantial tax losses from those years to offset any tax it might pay.

Occupancy in the UK has improved 0.6% over the year to 96.8%, despite tenants falling into administration affecting 73 units with a passing rent of £4.1 million (3.0% of the UK funds passing rent) of which 33 units have been re-let for rent of £1.3 million and a further £0.6 million is still being received from tenants in administration. The more notable administrations during the year related to T J Hughes, Hawkins Bazaar, Jane Norman, Officers Club, Barratts Shoes and World of Sofas. Since the year end there have been further administrations, notably Peacocks which involves 20 units, where the business has now been sold to Edinburgh Woolen Mill.

The Group LTV has fallen slightly from 66% to 64%  but a swing in property values is a significant risk, especially in the Junction fund where there are some older properties and the X Leisure fund which relies heavily on cinema popularity to drive income.

Chairman John Clare said: "I am delighted to report an increase in net asset value of 12% to 56p per share and an increase of 10% in recurring pre-tax profits to £16.4 million.  These results are all the more encouraging as they reflect the impact of asset management initiatives which have boosted income not only in the UK funds but also in the joint ventures."