Trident Estates plc - Interim Results
On 16 September 2020, Trident Estates plc published its interim financial results covering the six-month period ended 31 July 2020.
Performance Overview
During the period under review, Trident registered a 2.3% drop in revenues to €0.56 million reflecting measures which the company accepted to take on in support of its tenants in view of the COVID-19 pandemic.
On the expenditure side, total operating costs increased by 3.5% to €0.35 million primarily due to increased regulatory fees following the €15 million rights issue which was successfully concluded in Q4 2019. Meanwhile, finance costs eased slightly to €0.09 million compared to €0.1 million in H1 2019.
Overall, the company reported a 13.3% drop in pre-tax profits to €0.12 million. After accounting for tax charges of €0.12 million, Trident posted a minimal loss of just €0.005 million.
The condensed Statement of Financial Position as at 31 July 2020 (compared to the figures as at 31 January 2020) shows that total assets increased by 3.8% to €66.4 million and total liabilities increased from €11.4 million to €13.9 million. Total equity remained virtually unchanged at €52.5 million. This translates into a net asset value per share of €1.2507.
Trident Park project
In their commentary, the Directors of Trident explained that after awarding the last two major contracts for the Trident Park project in the previous financial year, works with these contractors have gathered momentum and are progressing in parallel with the civil works which are now nearing the final stages of completion. Certain pressures and disruptions have been experienced on the availability of raw materials, human resources and delivery of equipment as a result of the COVID-19 pandemic, and these have caused some delays in the progress of certain works being carried out on site. Nevertheless, the overall progress of works has remained satisfactory, and the company and its contractors have been active in deploying the necessary mitigating measures to minimise disruption to the completion programme.
As previously indicated in the 2019/20 Annual Report, works are expected to be completed by the first half of 2021, provided that there is no further deterioration in so far as the availability of labour, raw material and equipment delivery dates are concerned, or as a result of any further restrictions that may be imposed by government regulation, which could further delay the completion date of the project. Over the current reporting period, the Trident Park project has been financed by the funds raised in the rights issue of 2019, without recourse to the use of loan proceeds from the remaining available €26 million facility. It is anticipated that drawdowns from the loan facility will commence later this year once the majority of the rights issue funds would have been expended.
During the first six months of the year, Trident Estates concluded negotiations with a number of tenants and operators of amenities. As previously announced on 29 July 2020, Trident Park was selected as the preferred bidder to house the offices of the Financial Intelligence Analysis Unit (FIAU). The total area committed for office use so far stands at 4,462 sqm out of an available total upon completion of 15,745 sqm. The operators for the gym, wellness areas, restaurant and child-care centre have also been selected. Trident Estates will be launching its comprehensive marketing campaign for the project in the coming months in its endeavour to continue attracting high quality tenants. In this regard, the company is presently in discussions with certain prospective tenants despite the fact that the current adverse economic conditions brought about by the COVID-19 pandemic have caused a number of businesses to delay decisions concerning the relocation of their business operations.
As noted in the 2019/20 Annual Report, once completed, the financial outcome of the development will depend on two main factors: (i) the rate at which the property achieves occupancy; and (ii) the rental rates and related charges negotiated. The company has reassessed the viability of the business model for Trident Park and stress tested it under different scenarios. The current expectation continues to be that the take up of space will be at a slower pace than that originally projected, and that rental rates will be faced with downward pressure. However, the extent to which this expectation comes to fruition is highly dependent on the timing and outcome of the eventual post-COVID economic recovery. In this respect, Trident Estates will continue to examine the various possible outcomes, taking into account any changes in circumstances and will keep the situation under constant review. It remains the Board’s belief that the excellent environmental credentials and unique proposition of the project bodes well for the eventual success of Trident Park. The interest in the quality and uniqueness of the project from prospective tenants, as well as the recently signed on tenants and other stakeholders, gives further encouragement to the decision taken by the company last year to press forward with the expeditious completion of the project.