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Development Securities has seen pre-tax profits plunge from 拢22.8m in 2006 to just 拢200,000 this year.

The developer, which is building the 拢1bn Paddington Central development in West London, said 2007 was 鈥渢he year the chickens came home to roost鈥� in the financial services sector, with the property sector worst hit.

The fall in pre-tax profits came from a lower gain on the re-evaluation of Dev Secs鈥� investment property portfolio. This was 拢21.8m last year, and 拢5.1m in 2007.

The company saw its net assets fall marginally from 拢231.4m in 2006 to 拢228.9m this year, but still plans to pay out a dividend of 7.2p per share for the year, a 6.7% rise from last year鈥檚 pay-out. Dev Secs strengthened its balance sheet with the issue of e47m worth of loan notes in September, which has allowed it to keep shareholders happy.

David Jenkins, chairman of Development Securities, said: 鈥淔or the first time in many years, the contribution from our development and investment activities was insufficient to generate a significant surplus over our operating and financing costs.鈥�

He sounded a note of warning about the future: 鈥淭he impact that the projected economic slowdown in the UK will have on the strength of occupier demand for office accommodation has not yet been revealed鈥� It is here that we must be at our most vigilant.鈥�

As well as Paddington Central, Development Securities has large-scale office developments under construction in Manchester, Southampton and St Bride鈥檚, London. Its 拢250m Hammersmith Grove scheme 鈥� known locally as the Strawberry 鈥� is awaiting 鈥渢he completion of appropriate development bank finance.鈥�