The profit before tax for the period was £58.9 million (2014: £135.5 million) after accounting for the net valuation gain on investment properties of £35.5 million (2014: £107.9 million).
The property portfolio has been valued by the Directors based on the recommendations of the Group's external advisers. The overall net valuation gain of £35.5 million (2014: £107.9 million) reflects the anticipated slowdown in the rates of growth in property values in both the UK and USA and the absence of the one-off benefit to capital values of the letting of Africa House and the Strand Palace rent review which arose last year.
Although there appears to have been little movement in gross rental income, once the one-off benefit of £7.9 million arising on the settlement last year of a major rent review is eliminated from the comparative figures it can be seen that there has been an underlying increase (before foreign exchange translation gains) of 6.75%.
The underlying profit for the period is £23.5 million, down £5.6 million on the previous period largely as a result of a lower level of realised disposal profits.
In my last annual report I took a cautious view of the outlook and this remains my stance. Whilst economic circumstances at present are relatively benign in both the UK and USA, it seems likely that before long we will see the start of the rise in USA interest rates to be followed in due course by the UK. Nevertheless the business should in the short term continue to benefit from the current favourable combination of low interest rates, low inflation and positive economic growth. We will continue with our proven strategy based on the prudent long term pursuit of growth in asset values.
The principal risk factors affecting the remainder of the financial year continue to be exposure to movements in the valuation of the Group's investment properties and financial instruments and the incidence of voids or bad debts.
An interim dividend of 35p per share will be paid on 4 March 2016 to shareholders on the register on 5 February 2016.
