Equity One PLC, a Carsons property company, has posted a loss of Rs.60.5 million in the six months ended September 30, 2009, down from a profit of Rs.2.5 million a year earlier with its managers saying that market values and demand for real estate properties "are yet to witness a growth."

"The customers are still holding back their real estate purchases due to the prevailing high interest rates and lack of credit for property loans," the managers said.

In this context the company, having evaluated market conditions, decided to suspend all its property development activities and convert project land into land bank status during the last financial year.

As a result, Equity One will be required to provide continuous financial support to its subsidiaries to finance and repay bank borrowings and operational expenditure.

This compelled making doubtful debt provisions for such inter-company funding for subsidiaries as a matter of prudence, the managers explained in an interim financial statement.

Accordingly, provision of nearly Rs.83 million had been made during the period for amounts due from these related companies.

The managers explained that the increase in group turnover to nearly Rs.82 million from Rs.49.3 million a year earlier was due to Equity Nine (Pvt) Limited disposing a considerable amount of residential land plots in their Kotte project generating a turnover of Rs.40.2 million.

"The main reason for the group’s net loss during the period was the finance cost charged to the income statement amounting to Rs.45.72 million being interest cost paid to banks on property development loans," the managers said.

High occupancy was maintained in the buildings owned by the company generating a turnover of Rs.42.1 million rental income with average occupancy during the half year running at 88%.

The managers said that before provisions there was a net profit of Rs.18.4 million against the previous year’s profit of Rs.13.7 million.

"We will continue to focus on reducing the gearing level of the group by selling the identified non-core land bank of the group and focus on value enhancing opportunities whilst striving to maintain high occupancy levels at all our rental properties ensuring long term rent agreements," they said.

Equity One had a stated capital of nearly Rs.1.1 billion, capital reserves of Rs.13.2 million and revenue reserves of Rs.377.3 million in its books as at September 30, 2009.

Long-term bank borrowings were running at Rs.214 million with such borrowings repayable within one year at Rs.229 million.

Carson Cumberbatch with 96.3 of Equity One is the dominant shareholder with all other individual shareholders owning less than one percent. The percentage of shares held by the public as at September 30, 2009 was 3.73%.

Net assets per share were down to Rs.37.96 from Rs.48.28 a year earlier and the Equity One share traded at a high of Rs.26 and a low of Rs.21 during the period under review.