Half Year Results to 31 May 2019
St. Modwen delivers improving returns with focused growth strategy
Mark Allan, Chief Executive of St. Modwen, commented:
“We have had a positive first half of 2019 and our expectations for the full year remain unchanged. Following our significant portfolio repositioning last year through the sale of retail and other non-core assets, our focus has now shifted to growth, building on the substantial opportunities we have in our existing portfolio. This is reflected in a further increase in housebuilding volumes and industrial and logistics development activity, where the structural growth drivers remain positive despite the ongoing economic uncertainty. We continue to expect the delivery of this strategy to drive a meaningful improvement in return on capital and earnings over time.”
Financial highlights
| Non-statutory measures(1) | May 2019 |
Prior period(2) | Statutory measures | May 2019 | Prior period(2) | |
| EPRA NAV per share (pence)(3) | 492.5 | 484.0 | NAV per share (pence)(3) | 476.4 | 470.2 | |
| Total accounting return (%) | 2.2 | 2.0 | Interim dividend per share (pence) | 3.6 | 3.1 | |
| Adjusted EPRA earnings (£m) | 16.2 | 13.9 | Profit for the half year (£m) | 23.1 | 20.8 | |
| Adjusted EPRA EPS (pence) | 7.3 | 6.3 | Basic EPS (pence) | 10.5 | 9.4 | |
| See-through loan-to-value (%) | 20.7 | 16.9 | Group net debt (£m) | 326.1 | 274.3 |
- NAV per share up 1.3% to 476.4 pence (Nov 2018: 470.2 pence)(3).
- Total accounting return up to 2.2% (2018: 2.0%) despite a 1.2ppt drag from residual non-core retail.
- Adjusted EPRA EPS up 15.9% to 7.3 pence (2018: 6.3 pence) notwithstanding major disposals during 2018.
- Interim dividend up 16.1% to 3.6 pence (2018: 3.1 pence) reflecting solid growth in earnings.
- See-through LTV up 3.8ppt to 20.7% (Nov 2018: 16.9%) due to reinvestment of disposal proceeds.
Operational highlights
Strong momentum in executing our growth-focused strategy, building on the substantial opportunities in our existing portfolio across three sectors and areas with good structural growth prospects.
Industrial & logistics: substantial growth and capturing ERV
- Continued to grow industrial & logistics exposure to 39% of total portfolio by value (Nov 2018: 33%) driven by successful developments and underlying growth.
- Delivered 0.3m sq ft of new space during the period, of which 97% will be retained, with 91% of the associated £2.2m ERV let or under offer.
- Grown committed pipeline from 1.5m sq ft to 1.6m sq ft since start of 2019, of which 1.5m sq ft will be retained with an ERV of £10.4m (start of 2019: 1.3m sq ft and £9.2m), 14% of which is under offer.
- Continued to progress total pipeline of over 15m sq ft, c. 60% of which already has planning with an associated c. £60m ERV, providing clear opportunity to further accelerate development activity.
St. Modwen Homes: continued growth in volumes and margins
- Delivered 36% growth in volumes with 411 units sold in the first half (2018: 302 units) and increased margins to 14.8% (2018: 14.6%), driving 37% growth in operating profit to £15.2m (2018: £11.1m).
- Continue to target up to 25% growth in volumes and a c. 0.5ppt improvement in margins from last year’s 14.4% for the full year, with private order book up 25% compared to this time last year.
- Clear visibility and full control of pipeline to continue to grow volumes by up to 25% p.a. until 2021, with new outlets focused on more affordable locations outside London and South East.
Strategic land & regeneration: monetising residential land and good progress across major projects
- Sold 374 residential plots to third-party housebuilders for £13m during the half year (2018: £27m) and agreed terms for the sale of over 1,500 plots across two large sites in South Wales via two separate deals which are currently being progressed.
- Completed latest phase of 411 student beds at Swansea Bay Campus and commenced latest phase of fully pre-let office development at Longbridge.
- Sold £18m of non-core assets, leaving residual non-core assets of £143m including £72m of retail, with c. 25% of the latter sold or under offer and a further c. 40% in active negotiations.
- Strong growth from existing pipeline and capital base expected to deliver meaningful improvement in return on capital and potential to broadly double adjusted EPRA EPS in medium term.
Watch below as Mark Allan, Chief Executive, reviews our Half Year Results 2019:
Enquiries:
St. Modwen Properties PLC
Mark Allan, Chief Executive
Rob Hudson, Chief Financial Officer
Tom Gough, Head of External Communications and Stakeholder Relations
Tel: +44 (0)121 222 9400
FTI Consulting
Dido Laurimore
Ellie Sweeney
Tel: +44 (0)20 3727 1000
stmodwen@fticonsulting.com
This announcement contains inside information as set out in Article 17 of the Market Abuse Regulation (MAR).
To view the full press release click here.
(1) Reconciliations between all the statutory and non-statutory measures and the explanations as to why the non-statutory measures give valuable further insight into the Group’s performance are given in notes 2 and 3 to the condensed Group financial statements.
(2) Prior period measures are for the six months ended 31 May 2018 other than EPRA NAV per share, NAV per share, see-through loan-to-value and Group net borrowings, which are as at 30 November 2018. Comparative references to 2018 are for the six months ended 31 May 2018 and comparative references to Nov 2018 are as at 30 November 2018.
(3) Following the adoption of IFRS 9 Financial Instrumentsduring the six months ended 31 May 2019, the comparative values of EPRA NAV per share and NAV per share at 30 November 2018 have been reduced by 0.1 pence and 0.2 pence respectively to reflect the retrospective restatement required for recognising provisions against trade and other receivables using an expected credit loss rather than an incurred loss model. The Group has also adopted IFRS 15 Revenue from Contracts with Customersand IFRS 16 Leasesduring the six months ended 31 May 2019, but there has been no impact on the reported measures as a result of the adoption of these standards. Further detail is given in the accounting policies note to the condensed Group financial statements.
This announcement contains certain forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “anticipates”, “expects”, “intends”, “plans”, “goal”, “target”, “aim”, “may”, “will”, “would”, “could” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. Forward-looking statements by their nature, involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of the Company are made in good faith based on the information available at the time the statement is made; no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. The Company does not undertake to update forward looking statements to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Nothing in this announcement should be construed as a profit forecast.
