St. Modwen rebuilds momentum with focus on structural growth sectors
Rob Hudson, Interim Chief Executive of St. Modwen, commented:
“Since the start of the COVID-19 pandemic our focus has been on protecting our people and customers and preserving our strong financial position. Whilst our results for the half year reflect the disruption of the crisis, our decisive actions have worked to rebuild the momentum achieved over recent years, with strong demand for industrial/logistics space and new homes. Although the wider economic outlook will remain uncertain for some time to come, structural growth trends in these key markets for us remain positive and, to an extent, have even accelerated further. With our proven strategy and solid balance sheet, we stand well placed for future growth.”
|Non-statutory measures(1)||May 2020||Prior period(2)||Statutory measures||May 2020||Prior period(2)|
|EPRA NTA per share (pence)(3)||430.8||490.8||NAV per share (pence)||423.1||484.2|
|Total accounting return (%)||(12.6)||2.2||Interim dividend per share (pence)||1.1||3.6|
|Adjusted EPRA earnings (£m)||4.7||16.2||(Loss)/profit for the half year (£m)||(134.5)||23.1|
|Adjusted EPRA EPS (pence)||2.1||7.3||Basic EPS (pence)||(60.5)||10.5|
|See-through loan-to-value (%)||28.1||19.6||Group net debt (£m)||418.3||314.1|
- NAV per share down 12.6% to 423.1 pence (Nov 2019: 484.2 pence) due to pressure on land/retail values.
- Total accounting return of (12.6)% (2019: 2.2%), in line with reduction in NAV.
- Adjusted EPRA EPS of 2.1 pence (2019: 7.3 pence), in line with guidance in June.
- Interim dividend of 1.1 pence (2019: 3.6 pence), reflecting our standard dividend policy.
- Half year loss of £134.5m (2019: £23.1m profit), 43% of which revaluation of large, complex Wales sites.
- See-through LTV of 28.1% (Nov 2019: 19.6%), or 25.7% including cash held on short-term deposit.
Momentum has been rebuilt after initial disruption, resulting in operational performance being ahead of initial expectations, whilst positive structural trends in industrial/logistics have accelerated even further and residential demand has returned since lockdown. With a solid financial base, this leaves us well placed for future growth.
Industrial & Logistics:
- Industrial and logistics exposure now accounts for 48% of portfolio (Nov 2019: 44%) following new developments, improving overall resilience, with valuations largely stable and 95% of March and 86% of June rent received, ahead of this point last quarter, and the overall Group collection of 82% and 71%.
- On track to deliver 1.2m sq ft of new space this year, with 53% of associated £7.7m ERV let or under offer, up from 18% of committed pipeline at start of 2020, reflecting continued strong demand.
- Preparing to grow committed pipeline to c. 1.5m sq ft in 2021, with significant further potential in 19m sq ft future pipeline and attractive c. 8% yield on cost and c. 9% yield on incremental capex.
St. Modwen Homes:
- Sold 280 units (2019: 411 units) reflecting a pause in build activity during lockdown, with margins down by similar proportion to 10.7% (2019: 14.8%) as operating costs are spread over lower number of sales.
- Overall private sales, including reserved and exchanged units, on par vs this time last year, with sales rate of 0.8 per week since end of March, ASP in line with book value and private order book up 31%.
- Home Builders Federation customer satisfaction rating tracking over 95%, supporting 5* rating, and net promotor score of 70 (2019: 76), underlining high quality and continued focus on customer service.
Strategic Land & Regeneration:
- Residual retail assets impacted by mandatory closure of non-essential shops during lockdown, with 65% of March rent received and, so far, 51% of June, ahead of this time last quarter.
- Exchanged contracts to sell £47m of residential land, £17m of which in July at pricing in line with pre-COVID levels, plus £12m of non-core assets, with c. £200m of disposals planned for the next c. 3 years.
- Valuation of retail assets and residential land down £113m, 61% driven by large, complex Wales sites.
Responding to the current climate:
- Protected financial strength, with see-through cash of £157m and no Group debt maturing until 2023.
- Amended interest cover covenants of Group debt facilities and eligible to access CCFF funding scheme, which remains unutilised but provides assurance in the event of a severe market deterioration.
- Reduced cost base, resulting in c. £6-7m saving this year, or c. 15% of 2019 business unit operating and central administrative expenses; St. Modwen decided not to use Government CJRS furlough support.
St. Modwen Properties PLC
Rob Hudson, Interim Chief Executive
Tom Gough, Head of External Communications and Stakeholder Relations
Tel: +44 (0)121 222 9400
Tel: +44 (0)20 3727 1000
A webcast for analysts and investors will be held at 9.00am today and presentation slides will be available to download via www.stmodwen.co.uk. Details for the live dial-in facility and webcast are as follows:
Participants (UK): Tel: +44 (0)330 336 9105
Webcast link: https://webcasting.brrmedia.co.uk/broadcast/5efb0d30c61412571796328f
(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 2019 other than EPRA NTA per share, NAV per share, see-through loan-to-value and Group net borrowings, which are as at 30 November 2019. Comparative references to 2019 are for the six months ended 31 May 2019 and comparative references to Nov 2019 are as at 30 November 2019.
(3) In October 2019, EPRA issued new best practice recommendations that replaced EPRA net asset value (NAV) with three new measures of net asset value. The Group has determined that EPRA net tangible assets (NTA) is the most relevant measure hence this is now reported in place of EPRA NAV. Prior period comparatives are stated under the new definition on EPRA NTA. Further detail is given in note 3 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.
The person responsible for arranging the release of this information on behalf of the Company is Rob Hudson, Interim Chief Executive.