Hidden Liabilities8 Mar 2013 22:45
To understand the SP drop, you need to read Note 20 from the Annual Report.
This is an extract : "......As described above, currency swap derivatives have been entered into to protect, to an extent, the Sterling equity invested from fluctuations in the Euro exchange rate. As the property portfolio is acquired and mortgaged in Euros the swap is designed to provide some certainty on the net equity invested and provide some hedge on the Euro income generated on these properties, hence the Group considers it appropriate from a risk perspective to review currency exposure on a net assets basis. For illustrative purposes, therefore, the effect of a strengthening of the Euro by 5 cents would decrease Group net assets by £3.8 million (2010: £4.0 million). A weakening of the Euro by 5 cents would increase net assets by £3.5 million (2010: £3.5 million)."
Since the Euro has substantially strengthened against Sterling, the hidden cost of this transaction becomes ever larger and diminishes the value of the business. I believe it is due to crystalise and be settled in Oct.2013. DYOR