Terrace Hill profits sink after 'transformational year'

AIM-listed property firm Terrace Hill Group (THG) reported a significant fall in annual profits during a 'transformational year' as it moves away from residential and into the commercial markets.The firm reported a profit before tax, including discontinued operations, of £6.2m for the 12 months to September 30th, down from £11.8m the year before, mainly due to lower foodstore profits. The company explained that most of the profits from its Sunderland, Sedgefield and Skelton foodstore development projects were recognised in 2012.THG completed the sale of nearly all its residential properties during the year, which - along with certain commercial development activities - led to a sharp reduction in its level of gearing, which fell to 28.6% from 78.2% on September 30th 2012. Net debt, meanwhile, dropped 62.9% to £17.5m from £47.2m a year earlier.Net asset value increased by 1.7% to 28.8p by the end of the year, from 28.3p previously."During 2013 we have achieved significant success in delivering against our strategy, making excellent progress with our development pipeline, while at the same time positioning the group strongly for the future by reducing debt and gearing levels and disposing of almost all of our residential assets," said Chairman Robert Adair. He said that the company expects to "shortly to recommence payment of dividends".The stock, which has risen by around 160% so far in 2013, was down 7.69% by 08:29 on Thursday.BC