Half Yearly Report

Date of issue: 30th June 2015

ST. MODWEN PROPERTIES PLC

("St. Modwen", the "Company" or the "Group")

Half Year Results for the six months to 31st May 2015

ST. MODWEN DELIVERS 306% INCREASE IN HALF YEAR PROFITS TO £203.1M

St. Modwen Properties PLC (LSE: SMP), the UK's leading regeneration specialist, announces its half year results for the six months to 31st May 2015.

Financial Highlights

- 306% increase in profit before all tax to £203.1m (H1 2014: £50.0m)

- 21% increase in NAV per share to 394p (Nov 2014: 325p) and EPRA NAV per share up 25% to 427p (Nov 2014: 342p)

- Earnings per share up 281% to 75.4p (H1 2014: 19.8p)

- Initial recognition of New Covent Garden Market (NCGM) contributes £128.0m to net valuation increase of £170.2m (H1 2014: £33.7m)

- Realised property profits of £41.3m (H1 2014: £19.1m)

- 30% increase in interim dividend to 1.9p per share (2014: 1.463p per share)

Operational Highlights

- Major projects reaching significant milestones:

o NCGM - unconditional status achieved on 57-acre Nine Elms site in April 2015, with project now included on balance sheet

o Swansea University, Bay Campus - initial development phases on schedule to complete, ready to welcome first students in September 2015

o Longbridge - 150,000 sq ft Marks & Spencer store on track to open in November 2015

- Commercial property development pipeline delivers strong flow of profits

- Continued activity across the residential market, with good sales rates achieved across the Persimmon joint venture and for St. Modwen Homes, with continued housebuilder appetite for residential land

Bill Oliver, Chief Executive, St. Modwen said:

"These record-breaking results are underpinned by the growth in the UK property sector and are testament to our continued belief in the regional marketplace and our long-term approach to regeneration as a whole. They are positively supported by our three major projects reaching significant milestones in the period. Most notably the New Covent Garden Market site in Nine Elms, London reached unconditional status in April.

"We continue to increase our levels of both residential and commercial development and to add further value to our major projects and our broader £1.5bn property portfolio, delivering maximum returns for the business and for our shareholders."

Enquiries:

stmodwen@fticonsulting.co.uk Tel: 020 3727 1000

As the Group utilises a number of joint venture arrangements, additional disclosures are provided to give a better understanding of our business. These include information on the Group including its share of joint ventures together with non-statutory measures such as trading profit and profit before all tax. A full reconciliation of such measures is provided in Note 2 to the Condensed Financial Statements.

A presentation for analysts and investors will be held at 9.30am today at the offices of

FTI Consulting, 200 Aldersgate, Aldersgate Street, London EC1A 4HD. If you would like to attend, please contact Jenni Nkomo at FTI on +44 (0)20 3727 1000

or jenni.nkomo@fticonsulting.com 

Alternatively, the dial-in details are as follows:

Webcast Link:

http://www.axisto-live.com/investis/clients/st-modwen/presentations/556dbc2eccba32d94005ad0a/hy15 

HALF YEAR REVIEW

Our long-term approach to regeneration and development and our continued ability to deliver value has produced another set of record-breaking results. In the period, we have achieved an increase in profit before all tax of 306% to £203.1m (H1 2014: £50.0m). This reflects an increase in shareholders' NAV per share of 21% to 394p (Nov 2014: 325p per share).

These results are a testament to our long-standing business model which focusses on sustainable, long-term development of our 6,000 acre UK-wide land bank to which we continually seek to add value at every stage of the development life cycle. The highlight of the period is undoubtedly achieving unconditional status for the New Covent Garden Market (NCGM) project which has contributed £128.0m of value to these results and supported total added value gains across the portfolio of £149.8m.

Encouragingly, even excluding the positive impact on initial recognition of NCGM, we would still be announcing record half year results with profit before all tax excluding this gain up 50% to £75.1m (H1 2014: £50.0m). This highlights the growing strength of the UK property market and in particular the commercial sector which is now gathering good momentum in the regions, both in terms of occupancy levels and investor interest. This has delivered market-driven valuation increases of £20.4m across the portfolio.

We have taken advantage of the investor appetite in the commercial sector and in line with our core strategy, have disposed of a number of mature assets in the period. There is good interest from businesses for new and secondary space and our portfolio of income producing assets continues to provide good returns with rental income increased to £18.6m (H1 2014: £18.5m) with consistent occupancy levels which remain at 89% (H1 2014: 89%). At the same time, we continue to build on our £1.5bn portfolio by remaining acquisitive and securing the right opportunities as they arise across the UK.

Two of our other major projects, the regeneration of Longbridge and the development of Swansea University's, Bay Campus, have also played their part in this record half year. Both are progressing well and illustrate the good momentum across our major projects and our UK project portfolio as a whole.

As an innovative business we regularly review our routes to market across the portfolio to ensure that we are exploiting the full potential of our 6,000 acre land bank. In particular, the Private Rental Sector is an area on which we are focussing our attentions currently as a growing number of sites across our UK portfolio lend themselves to this particular sub-sector and could offer additional development opportunities. We also continue to explore ways to use our land bank to support energy sector opportunities.

We are continuing to see good appetite for our residential land and this is supporting good levels of development and positive sales rates. As our joint venture with Persimmon nears its conclusion in 2017/18, we are increasing the number of sites across the UK delivered by our own housebuilding brand St. Modwen Homes.

Whilst we are not immune to the challenges of the current planning system, we remain successful in our ability to secure planning consents for schemes across our land bank which in turn, continue to deliver value for the business.

Today we see a more stable property market following the outcome of the UK General Election in May this year and whilst any longer-term uncertainty may remain regarding the Eurozone and adjustments to interest rates, we are already sensing a more positive market outlook.

This record performance and the prospects for the year have given the Board the confidence to increase the Company's interim dividend in line with NAV growth. Together with the impact of the full year 2014 increase, this results in an interim dividend of 1.9p per share, up 30% on H1 2014 (1.463p per share). This will be paid on 3rd September 2015 to shareholders on the register at 7th August 2015.

PORTFOLIO

Our £1.5bn property portfolio comprises the following categories of assets:

- Commercial land and development

- Residential land and development

- Income producing properties

COMMERCIAL LAND AND DEVELOPMENT - continued growth across the UK

We continue to grow our pipeline of development opportunities through an increasing number of enquiries for new property and through our selection as Development Partner for a range of emerging projects, including our appointment by the Defence Infrastructure Organisation as its development manager for the redevelopment of MOD Ashchurch into a new mixed-use community comprising around 2,100 new homes. Our prepared land continues to put us on the front foot in terms of our ability to react quickly to enquiries and deliver properties for businesses seeking additional or alternative premises. In turn, this approach continues to impact positively on our property profits which are then reinvested into the business to acquire new opportunities for delivery.

Highlights in the period include:

New Covent Garden Market, Nine Elms, London - we achieved unconditional status in April 2015 and this project is now included on the balance sheet. Based on a forecast average sale price of £1,333 per sq ft for private residential, as determined by our valuers Jones Lang LaSalle LLP, the project has contributed £128.0m to the half year net valuation increase of £170.2m (H1 2014: £33.7m).

This long-term project, expected to take up to 10 years to complete, is one of the largest in the Nine Elms opportunity area. It will secure the future of the UK's largest fruit, vegetable and flower market and delivers development of 3,019 new homes (600 affordable), 100,000 sq ft of commercial space and new community facilities on 19 acres of land surplus to the market's requirements. Enabling works for the new 500,000 sq ft market are due to begin this summer.

The entire project will contribute around 5% of the new employment created across the whole opportunity area. It therefore plays a major part in supporting the economy both in this important area of London and across the rest of the Capital.

Under the terms of the agreement with the Covent Garden Market Authority, VINCI St. Modwen will take possession of the first 10 acres of the surplus land in 2017, with possession of the additional remaining tranches of land anticipated in 2022.

Swansea University, Bay Campus - the initial phases, comprising 1m sq ft of research, innovation and education facilities and 899 student apartments are nearing completion and will be ready for the first students in September 2015. St. Modwen has agreed with the University to manage the student apartments and associated facilities under its newly established 'St. Modwen Student Living' brand which will provide an annualised £2m net rental income stream from 2015, increasing to £3m by the end of 2016. Further demonstrating our ability to extract maximum value from long-term development sites, additional future phases are expected to start on site in 2016.

Longbridge, Birmingham - having marked 10 years since the closure of MG Rover in April this year, the regeneration of this 468 acre site continues to progress well. The second phase of the Town Centre is now nearing completion as the 150,000 sq ft store has been handed over to Marks & Spencer and fit out has commenced in time for opening in November 2015. Within the same phase, we are progressing lettings to national occupiers for the remaining 45,000 sq ft of retail space available at the scheme.

Also in the period, ExtraCare is advancing works to its £35m retirement village and planning has been granted for One Park Square, a 90,000 sq ft HQ-style office building. Furthermore, planning has been submitted for 180-bed accommodation for the Royal Centre for Defence Medicine for the Defence Industry Organisation (DIO) at Longbridge West, adjacent to the Town Centre.

Across our broader portfolio we continue to make good progress on our development projects. We are also gradually increasing the amount of speculative development undertaken across the UK. Key commercial development highlights in the period include:

Whitley Business Park, Coventry - following the £14.5m sale of land to Jaguar Land Rover for expansion of its global headquarters, we completed a £10.7m land sale, coupled with a build agreement, to national builders' merchant Travis Perkins for a 214,000 sq ft regional distribution centre across 21 acres of this site. Works are anticipated to start this summer.

DPD (UK) - endorsing our well-located portfolio of sites, works are now progressing to completion on three distribution centres for express delivery service DPD (UK). The centres are located at our Skypark scheme situated adjacent to Exeter airport (60,000 sq ft), at Etruria Valley in Stoke-on-Trent (60,000 sq ft), and at Stonebridge, Liverpool (69,000 sq ft). All three investments are already in solicitors' hands for sale.

Letchworth Business Park, Letchworth - we commenced construction on 90,000 sq ft of speculative development at this 4.5 acre former RWE site in December 2014 for which works are scheduled to complete in July 2015. We have since agreed terms to lease 100% of this space, comprising four buildings and providing 15,000 sq ft to 30,000 sq ft of B8 industrial warehousing and distribution accommodation.

RESIDENTIAL LAND AND DEVELOPMENT - sustained levels of activity

Our residential development pipeline continues to grow and good sales rates are being consistently achieved. Our three clear routes to market provide us with a focussed approach to residential development which enables us to maximise the opportunities inherent in our residential land bank:

· Residential Land Sales - the development and sale of predominantly brownfield sites that have been cleaned up, serviced and prepared for market with viable implementable planning permissions in place

· St. Modwen Homes - in-house development under our own brand, using our extensive housebuilding expertise to capture additional development profits, and;

· Persimmon Joint Venture - maximising value through development with one of the UK's leading large housebuilders.

Residential Land Sales

We continue to achieve a steady stream of sales of our land to housebuilders keen to meet the current demand for housing across the UK. In the first half of the year we agreed five land sales, representing 53.5 acres and £54m of value. For the second half of the year, we have already agreed three land sales totalling 24 acres and £13m of value.

Residential Development

In line with our expectations, the residential market has continued to improve but at more stable levels than those experienced during 2014.

There is now a definite sense of a more balanced UK-wide recovery. This is reflected in the good sales rates achieved by our joint venture with Persimmon and our St. Modwen Homes business, the latter bringing an increasing number of sites to the market. Whilst the long-awaited potential adjustment in interest rates is yet to happen, this recovery is further assisted by an increasingly supportive mortgage market, growing consumer confidence and the continued success of the Government's Help to Buy scheme.

This activity has resulted in a half year increase in residential development profit of 36% to £12.8m (H1 2014: £9.4m) from residential houesbuilding.

Persimmon Joint Venture

There are eight sites under the agreement, comprising 2,364 plots of which a total of 1,221 are now complete and 319 of these were achieved in the first half of the year (H1 2014: 231). This highly successful joint venture is scheduled to conclude as sites are completed by 2017/18.

St. Modwen Homes

Our own housebuilding brand continues to build its presence across the UK and in the period has experienced good customer interest and visitor levels leading to 110 completions in the period (H1 2014: 121).

Currently under construction, St. Modwen Homes has 10 sites, of which nine have been launched to the market for sale. An additional four sites are scheduled to commence in the second half of the year.

Our overall sales position for both St. Modwen Homes and our joint venture with Persimmon for the first six months of the year is shown in the table below:

INCOME PRODUCING PROPERTIES - increasing investor appetite and growing income stream

Our net rental income of £18.6m (H1 2014: £18.5m) remains robust, demonstrating the continued good health of the market and the ongoing improvement in business confidence.

In the period, we have continued to grow our gross rent roll, both organically and through acquisitions, to £47.7m (Nov 2014: £45.4m). Acquisitions include Old Mill Industrial Estate, Preston; Moorgate Point, Liverpool and Great Wyrley, South Staffordshire which deliver a combined gross rent roll of £1.9m.

In the second half of the year, we expect this to further improve as income from Swansea University, Bay Campus and Marks & Spencer at Longbridge come online.

Occupancy levels have been maintained at 89% (H1 2014: 89%) whilst the average lease length is now 4.6 years (H1 2014: 5.1 years), reflecting the sale of mature assets and acquisition of new properties with shorter lease terms where we have the ability to add value.

FINANCE

At the foundation of our business model the running costs of the business (property outgoings, overheads and interest) are substantially covered by core rental and other income. This provides us with a firm base on which we can add value to the portfolio through planning gain, strong asset management and from which we can maximise our development profits.

We operate a number of joint venture arrangements and consequently, the statutory financial statement disclosures do not always provide a straightforward way of understanding our business. To provide clarity, information that includes the Group's share of joint ventures is also provided in Note 2 to the Condensed Financial Statements which forms the basis for comments in this Half Year Review.

During the period we were required to adopt a number of new accounting standards including IFRS 10 Consolidated Financial Statements. The adoption of this standard requires that we equity account for VSM Estates (Holdings) Limited on the basis this is jointly controlled with our joint venture partner, VINCI PLC. This entity was previously consolidated under SIC 12 as a result of our greater economic interest. Comparative information has been restated accordingly and details are included in the Accounting Policies note to the Condensed Financial Statements.

Financial Performance

Continuing the momentum from the full year announced in February 2015, we have once again produced a record set of results, achieving an exceptional 306% increase in profit before all tax to £203.1m (H1 2014: £50.0m).

Our major project, New Covent Garden Market, achieved unconditional status in April 2015 and has played a significant part in these results, contributing, on initial recognition, £128.0m of valuation gain to a total of £170.2m.

Furthermore, two of our other major projects, the development of Swansea University, Bay Campus and the regeneration of the Longbridge site, will both generate a strong income stream. The Bay Campus will open its doors to the first students in September 2015, whereupon it will secure an annualised net rental income stream of £2m, increasing to £3m by the end of 2016. In addition, within phase II of Longbridge Town Centre, the 150,000 sq ft Marks & Spencer and additional retail space is due to open in November 2015, at which point the rental income of the Town Centre will increase to £4m per annum.

We substantially cover our recurring overhead and interest costs with revenue from our income producing portfolio. In the first half of the year, coverage of 92% (H1 2014: 89%) demonstrates a good rate particularly given the ongoing growth of the business, most notably St. Modwen Homes, bringing headcount of the entire business to 343 employees (H1 2014: 315 employees).

This cost base also fully absorbs the housebuilding business, income from which is included in property profits. Were these costs to be excluded from the ratio calculation, the recurring costs of the business would be fully covered by recurring income.

Property profits for the half year of £41.3m (H1 2014: £19.1m) comprise:

· £21.6m (H1 2014: £3.9m) from commercial development as our pipeline delivers into a strong market and converts into realised profits;

· £6.9m (H1 2014: £5.8m) from continued delivery at Swansea University, Bay Campus; and

· £12.8m (H1 2014: £9.4m) from residential development which continues to provide positive, tangible returns and improved levels of delivery.

Our resultant trading profit for the six months of £39.4m represents a 137% increase on the £16.6m achieved in the first half of H1 2014 and represents a strong underlying performance from the business in the last six months.

Property Valuation Movements

Our property valuations are made up of two distinct parts: movements resulting from activities we undertake to add value to our assets (land renewal, planning gain, robust asset management), and those resulting from changes in the overall property market. Our valuers provide this valuation split for us as part of the independent property valuations that they undertake every six months.

The most significant added value movement in the six months is the recognition of the New Covent Garden Market site which achieved unconditional status in April and contributes £128.0m of added value.

The gain represents the Group's share of the value of the 19 acres of surplus land in Nine Elms (after overage and enabling costs) less the obligations of our VSM (NCGM) Limited joint venture to deliver a new market for the Covent Garden Market Authority.

Jones Lang LaSalle LLP has valued the VSM (NCGM) Limited land interest at a net £440m. This is after deducting £220m for enabling costs and overage and implies a current serviced land value of £660m for the 19 acres of surplus land. The resultant gross valuation gain of £256m (Group share £128m) represents the excess of the £440m valuation over the initial land value recognised of £184m, being equal to the net present value of the liability to CGMA for delivery of the new market.

In addition to this gain, we have continued to generate significant added value from the balance of our portfolio with further residential-led gains of £21.8m taking total added value in the period to £149.8m (H1 2014: £14.5m).

For the first six months of the year, in line with market movements, yields for our income producing portfolio have improved with equivalent yields now at 8.5% (Nov 2014: 8.9% ).

This yield compression, and some limited regional rental growth, led to a market driven valuation increase for our portfolio of £20.4m (H1 2014: £19.2m). This highlights the continuing improvement in this area of the market and also benefits future prospects for our commercial land.

Financial Results

Profit before all tax has increased by 306% to £203.1m (H1 2014: £50.0m). This record result shows excellent growth, and even without the impact of New Covent Garden Market is 50% ahead of the levels achieved in the first half of 2014 at £75.1m (H1 2014: £50.0m).

Profit before all tax is also stated after movements in the market value of our interest rate swaps and convertible bonds. The majority of our net £5.7m charge relates to our convertible bonds where the market valuation has increased as a result of lower yield expectations increasing the value of our coupon coupled with our share price performance making the conversion option more valuable to the bond holder.

After allowing for the above and tax costs for both joint ventures, most notably VSM (NCGM) Limited, the Group profit after tax was £167.1m (H1 2014: £44.0m). The resultant earnings per share of 75.4p is up 281% on the same period of the prior year (H1 2014: 19.8p).

Balance Sheet - New Covent Garden Market

With the contract for New Covent Garden Market now fully unconditional as of April 2015, we now recognise the value of the extra 19 acres of land as an asset and the cost of developing and building 500,000 sq ft of new market facilities as a liability. The contract is in joint venture with VINCI PLC and so appears in the joint venture line of our balance sheet. This represents a step change to our asset base and on a see-through basis, with the value of our property portfolio now exceeding £1.5bn.

Net Assets (NAV)

At the period end, the shareholders' equity value of net assets was £870.3m or 394p per share (Nov 2014: 325p per share), reflecting an increase of 21%. In line with industry best practice we also report net assets per share using EPRA (European Public Real Estate Association) methodology*. In the period our diluted EPRA NAV increased 25% to 427p per share (Nov 2014: 342p per share).

*As a development business many of the EPRA metrics are inappropriate as they are geared to property investors. EPRA metrics are reported in Note 2 (f) to the Condensed Financial Statements.

Funding

We continue to benefit from substantial headroom in our banking facilities with £170.4m of undrawn facilities in place.

The weighted average facility maturity now stands at 4.1 years (Nov 2014: 4.6 years), and the weighted average interest rate continues to reduce at 4.4% (Nov 2014: 4.8%).

As expected our debt levels have increased in the period as we remain acquisitive and continue to invest in site development in order to generate future returns. Net debt now stands at £383.6m (Nov 2014: £337.4m) however, as a result of the increase in our net assets, gearing levels have reduced to 44% (Nov 2014: 47%). Similarly, our increased property portfolio results in a see-through loan-to-value ratio of 29% (Nov 2014: 31%).

Principal Risks and Uncertainties

The key risks which could have a material impact on the Group's performance, together with the corresponding mitigating actions, are set out on pages 40 to 43 of the Annual Report for the year ended 30th November 2014, which is available at www.stmodwen.co.uk.

These risks comprise uncertainty in the economic, political and market environment; the availability of funding and the management of cash flow fluctuations; management of construction and development (including joint venture arrangements); regulatory, operational and compliance risk; and recruiting, developing and retaining highly skilled staff.

These risks are expected to continue to remain relevant for the second half of the financial year.

OUTLOOK

The regional, residential and commercial property markets continue to gather momentum which is leading to good returns across the business. As we realise our pipeline of development opportunities these are contributing positively to property profits.

Investor appetite continues to increase for commercial property and we will selectively dispose of mature assets and seek to replenish these with new opportunities in the marketplace. Combined with a residential market that is performing at more sustainable levels, we anticipate continued positive momentum in the second half of the year with good prospect to further add to the net asset value of the Group.

Bill Oliver Andy Taylor

Chief Executive Acting Group Finance Director

29th June 2015

Group Income Statement

for the period to 31st May 2015

Group Statement of Comprehensive Income

for the period to 31st May 2015

Group Balance Sheet

as at 31st May 2015

Group Statement of Changes in Equity

for the period to 31st May 2015

Group Cash Flow Statement

for the period to 31st May 2015

(1) Cash and cash equivalents at end of period comprises cash balances only.

Accounting Policies

for the period to 31st May 2015

The annual Financial Statements of St. Modwen Properties PLC are prepared in accordance with IFRSs issued by the International Accounting Standards Board, as adopted by the European Union (EU) and applied in accordance with the provisions of the Companies Act 2006. The Condensed Financial Statements included in this Half Year Report have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the EU.

Adoption of new Accounting Standards

Except as described below, the Condensed Financial Statements have been prepared on the basis of the accounting policies, significant judgements, key assumptions and estimates as set out in the notes to the Group's annual Financial Statements for the year ended 30th November 2014.

The following accounting standards or interpretations were effective for the financial year beginning 1st December 2014 and have been applied in preparing these Condensed Financial Statements to the extent they are relevant to the preparation of interim financial information:

IFRS 10 'Consolidated Financial Statements'

IFRS 11 'Joint Arrangements'

IFRS 12 'Disclosure of Interests in Other Entities'

IAS 27 (revised) 'Separate Financial Statements'

IAS 28 (revised) 'Investments in Associates and Joint Ventures'

IAS 32 (amendment) 'Financial instruments: Presentation' (assets and liability offsetting)

IAS 36 (amendment) 'Impairment of Assets'

IAS 39 (amendment) 'Financial Instruments: Recognition and Measurement'

Amendments to IFRS 10, IFRS 11, IFRS 12 (transition guidance)

IFRS 10 replaces those parts of IAS 27 that relate to consolidated Financial Statements and SIC 12 in its entirety. It outlines the requirements for the preparation of consolidated Financial Statements, requiring an entity to consolidate the results of all investees it is considered to control. Control exists where an entity is exposed to variable returns and has the ability to affect those returns through its power over the investee.

VSM Estates (Holdings) Limited is 50% owned by St. Modwen Properties PLC, however under the funding agreement the Group obtains the majority of the benefits of the entity and also retains the majority of the residual risks. In prior years, this entity was consolidated in line with SIC 12 'Consolidation - Special Purpose Entities', however the conditions for consolidation set out in IFRS 10 do not exist and accordingly, the entity is now required to be accounted for using the equity method (see below).

Under the equity method, the interest is carried in the balance sheet at cost plus post-acquisition changes in the Group's share of its net assets, less distributions received and less any impairment in value of individual investments. The income statement reflects the Group's share of the results after interest and tax.

The adoption of IFRS 10 requires the restatement of the comparative financial information for the six months ended 31st May 2014 and as at 30th November 2014.

The impact on previously reported financial information is as follows:

Income statement for the six months ended 31st May 2014 and year ended 30th November 2014

Assets, Liabilities and Equity at 1st December 2013 and 2014

The impact on cash flows for the six months ended 31st May 2014 and the year ended to 30th November 2014 from these adjustments is to increase the movement on cash and cash equivalents by £0.2m and £0.9m, respectively.

The impact on other, previously reported non-statutory financial information is shown in note 2.

IFRS 11 replaced IAS 31 'Interests in Joint Ventures' and SIC 13 'Jointly Controlled Entities - Non-monetary Contributions by Venturers'. It defines two types of joint arrangement (joint operations and joint ventures) and specifies the accounting for each arrangement. Joint operations must be accounted for by including the owner's share of the assets, liabilities, income and expenses on a line by line basis. Joint ventures are equity accounted in accordance with IAS 28 (revised).

VSM Estates (Holdings) Limited is 50% owned by St. Modwen Properties PLC and is accounted for as a joint venture under IFRS 11.

None of the other standards above have impacted the Group's reporting.

Going Concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Half Year Review. The directors have considered these factors and reviewed the financial position of the Group, including its joint ventures.

The review included an assessment of future funding requirements based on cash flow forecasts extending to 30th November 2016, valuation projections and the ability of the Group to meet covenants on existing borrowing facilities. The directors were satisfied that the forecasts and projections were based on realistic assumptions and that the sensitivities applied in reviewing downside scenarios were appropriate.

As set out in the notes to the Group's annual Financial Statements for the year ended 30th November 2014, there are no corporate or joint venture facilities that require renewal before 2018.

Based on their assessment, the directors are of the opinion that the Group has adequate committed resources to fund its operations for the forseeable future and so determine that it remains appropriate for the Condensed Financial Statements to be prepared on a going concern basis.

1. segmental information

IFRS 8 requires the identification of the Group's operating segments, defined as being discrete components of the Group's operations whose results are regularly reviewed by the Chief Operating Decision Maker (being the Chief Executive) to allocate resources to those segments and to assess their performance. The Group divides its business into the following segments:

· Residential development, being housebuilding activity through St. Modwen Homes and the Persimmon joint venture arrangements; and

· The balance of the Group's portfolio of properties which the Group manages internally, and reports as a single business segment.

All revenues in the table above are derived from continuing operations exclusively in the UK.

1. segmental information continued

(1) Negative goodwill has been split between amounts relating to property revaluations arising as a result of fair value adjustments of £nil (31st May 2014: £2.6m, 30th November 2014: £2.6m) and deferred tax thereon of £nil (31st May 2014: £0.5m, 30th November 2014: £0.5m).

(2) Stated before mark-to-market of derivatives, amortisation of loan arrangement fees, other non-cash items and tax of £22.9m (31st May 2014: £1.6m, 30th November 2014: £1.5m). These amounts are reclassified to other profits of joint ventures and associates.

(3) Stated before mark-to-market of derivatives, amortisation of loan arrangement fees and other non-cash items of £7.4m (31st May 2014: £5.1m, 30th November 2014: £8.3m). These amounts are reclassified to other finance costs.

(4) Stated before mark-to-market of derivatives and other non-cash items of £0.9m (31st May 2014: £3.7m, 30th November 2014: £3.1m). These items are reclassified to other finance income.

2. NON STATUTORY INFORMATION

(a) Trading profit and profit before all tax

The non-statutory measures of trading profit and profit before all tax, which include the Group's share of joint ventures and associates, have been calculated as set out below:

(1) Stated before the deduction of net realisable valuation provisions of: Group £nil (Period to 31st May 2014: £0.2m, Year ended 30th November 2014: £0.1m); Joint ventures and associates £nil (Period to 31st May 2014: £nil, Year ended 30th November 2014: £nil). These items are reclassified to investment property revaluations together with negative goodwill arising on acquisitions as a result of fair value adjustments to property assets of £nil (Period to 31st May 2014: £2.6m, Year ended 30th November 2014: £2.6m).

(2) Stated before mark-to-market of derivatives and other non-cash items of: Group £7.4m (Period to 31st May 2014: £5.1m, Year ended 30th November 2014: £8.3m); Joint ventures and associates £0.6m (Period to 31st May 2014: £nil, Year ended 30th November 2014: £0.1m). These items are reclassified to other finance costs.

(3) Stated before mark-to-market of derivatives and other non-cash items of: Group £0.9m (Period to 31st May 2014: £3.7m, Year ended 30th November 2014: £3.1m); Joint ventures and associates £0.6m (Period to 31st May 2014: £1.1m, Year ended 30th November 2014: £1.5m). These items are reclassified to other finance income.

(4) Stated after inclusion of negative goodwill arising as a result of deferred tax on property revaluations included as part of fair value adjustments of £nil (Period to 31st May 2014: £0.5m, Year ended 30th November 2014: £0.5m).

(b) Property valuations

Property valuations, including the Group's share of joint ventures and associates, have been calculated as set out below:

The split of property valuation gains between added value and market movements is based on an analysis of total property valuation movements provided by the Group's external valuers.

(c) Property portfolio

The property portfolio, including the Group's share of joint ventures and associates, is derived from the balance sheet as detailed below:

(c) Property portfolio continued

(1) Represents deductions for non-property assets within inventory. Through to May 2014 this included deductions for 'barter' properties, principally RAF Northolt, as part of the Project MoDEL arrangements between VSM Estates Limited and the DIO.

As at 31st May 2015 the Group had assets of £488.4m (Period to 31st May 2014: £326.3m, Year ended 30th November 2014: £461.7m) included within the Group's property portfolio (excluding joint ventures and associates) which were wholly owned, unencumbered and able to be pledged as security for the Group's debt facilities.

The Group's property portfolio, including its share of joint ventures and associates can be split by category as detailed below:

(d) Movement in net debt

Movement in net debt as discussed in the Half Year Review is calculated as set out below:

 (e) Trading cash flow

Trading cash flows are derived from the Group Cash Flow Statement as set out below:

 (f) Net assets per share

Net assets per share are calculated as set out below.

* Shares in issue exclude 297,144 shares held by the Company's Employee Benefit Trust (31st May 2014: 490,349, 30th November 2014: 460,427).

 (g) Gearing and loan-to-value

The following table shows the calculation of:

· gearing being the ratio of net debt(1) to total equity; and

· loan-to-value being the ratio of net debt to the property portfolio (representing amounts that could be used as security for that debt).