Results for the half year ended 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 |
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
o Continued to grow industrial & logistics exposure to 39% of total portfolio by value (Nov 2018: 33%) driven by successful developments and underlying growth.
o 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.
o 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.
o 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
o 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).
o 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.
o 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
o 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.
o Completed latest phase of 411 student beds at Swansea Bay Campus and commenced latest phase of fully pre-let office development at Longbridge.
o 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.