St. Modwen Properties PLC, the UK’s leading regeneration specialist, announces continued progress in uncertain market conditions
Prior to entering its close period, the company is pleased to advise that significant progress has been made since the Interim Management Statement issued on 1st October, in a number of important areas:-
We will be in full compliance with banking covenants at 30th November 2008, our year end.
We have agreed revised covenant definitions, at no extra cost, with all of our banks, whereby the realisation of previous years’ revaluation gains, which otherwise would not be recognised, is added to current year’s cash profits for interest cover purposes. This amendment gives the company significantly greater headroom in our forward projections of loan covenant compliance.
We remain totally focussed on cash management, and have benefitted from strong levels of rental income (up 8% on the first half of the year). We have additionally achieved annualised cost savings of £3m by reducing our headcount to meet current lower levels of activity. We have also continued to scale back our speculative development programme.
Following the recent base rate cut, our average cost of debt has fallen to 5.6%, down from 6.3%.
The cash management initiatives, overhead and interest cost reductions, combined with a strong forward sales position, give us confidence that we will remain compliant with all our banking covenants throughout 2009. As a result of an extensive refinancing programme in 2007, we have no material refinancing requirements until 2011.
We are also continuing to trade actively and profitably at the operating level, despite the very slow market conditions, realising more than £150m from development and asset disposals in this financial year in accordance with our usual policy of disposing of those assets to which we can add no further value,
Our recently-announced selection by BP as preferred partner for the acquisition of a further 2,500 acres demonstrates both the strength of the company’s business model and its reputation, as well as our ability to structure self-financing deals for the hopper.
An interim dividend of 3.9p per share was paid in August. A decision on the level of the final dividend will be made in February 2009. This will take into account cash generation, the strength of the balance sheet, and the outlook for the business at that time