9th Jul 2007 07:00
St. Modwen Properties PLC09 July 2007 St. Modwen Properties PLC Interim results for the six months to 31 May 2007 St. Modwen Properties PLC, the UK's leading regeneration specialist, announcesrecord interim results Highlights * Profit before tax increased by 48% to £65.1m (2006: £43.9m) * Earnings per share up 60% to 42.8p (2006: 26.8p) * Net assets per share increased by 12% to 361p since 30th November 2006 (323p) * Interim dividend increased by 15% to 3.9p per share (2006: 3.4p) * Strong progress in marshalling projects for future delivery * Planning consent obtained for 4,000 homes, 1.5 million sq ft employment space at Llanwern, near Newport * Selected by BP as preferred development partner for £1.2 billion regeneration of 1,000 acre former oil refinery at Llandarcy, near Neath Anthony Glossop, Chairman, comments: "An outstanding effort throughout our various teams achieved significant successin bringing forward into the period a number of developments which had beenscheduled for the second half. "We remain on course to grow in line with our long-term financial objective ofdoubling the net asset value per share of the company every five years and welook forward with confidence to a successful outcome for the year as a whole." 9 July 2007 ENQUIRIES: St. Modwen Properties PLC www.stmodwen.co.ukAnthony Glossop, Chairman On 9 July - 020 7457 2020Bill Oliver, Chief Executive thereafter - 0121 222 9400Tim Haywood, Finance Director College Hill Tel: 020 7457 2020Gareth David A presentation for analysts and investors will be held at 11.00am today atCollege Hill, 78 Cannon Street, London EC4 Half Year Review Interim Results We are pleased to report on another record first-half performance by yourcompany. Profit before tax has increased by 48% to £65.1m (2006: £43.9m) whichincludes unrealised property valuation gains, including our share of jointventure gains, of £49.1m (2006: £21.9m). The net asset value of the company hasrisen to £435.7m (2006: £349.5m), an increase of 25% in the last twelve months,and 12% since November 2006. In the Annual Report, we stated that the results would be more second-halforientated than in previous years. All our projects depend on third partyaction, such as the granting of planning or entering into an occupationalagreement, the timing of which is difficult to predict. However, an outstandingeffort throughout our various teams achieved significant success in bringingforward into the period a number of developments which had been scheduled forthe second half. This gives us greater confidence that our results for the fullyear will be delivered in line with our plan. Dividends In the light of the prospects for the full year, the board has declared aninterim dividend of 3.9p per ordinary share (2006: 3.4p), an increase of 15%which will be paid on 31st August 2007 to shareholders on the register at 3rdAugust 2007. Auditors As mentioned in the Annual Report, we have recently undertaken a tender processfor the provision of audit services. Following the completion of this exercise,the board appointed Deloitte & Touche LLP, who have consequently performed thereview of this interim report. Delivery The 48% increase in profit before tax was driven by a 124% increase in propertyvaluation gains, and a 26% increase in profits from property disposals,including our share of joint ventures. 16 property disposals were completed inthe period with 4 projects each contributing profits of over £1m. Net rentalincome, again including our share of joint ventures, increased by 2% to £17.6m(2006: £17.3m). Significant transactions completed in the period included: • Accrington - Junction 7 Business Park, a 50 acre managed estate, acquired in 2001 as part of the Marconi portfolio through Key Property Investments ("KPI"), successfully asset managed and 4 acres retained for new speculative development. The remainder was sold to GE Capital for £25m. • Trafford Park, Manchester -A pre-let of a 360,000 sq ft distribution centre to adidas for its UK headquarters forward sold to NFU Mutual for £33m. The building is scheduled for completion in November. • RAF Eastcote - the first disposal from the MoDEL portfolio, a 19 acre residential land sale to George Wimpey for £60m • Boughton Road, Rugby -a 10 acre residential land sale for £15m We have also ended our 18-year association with horse racing with NRAcquisition's offer for Northern Racing PLC being declared unconditional on 30thMay. The amount realised for the group's 27.2% shareholding was £17.7m, anuplift of £6.7m on our carrying value - a very successful conclusion to theearliest of our property related operating activities. For the first time for many years this period's valuation gains have no benefitfrom any market related yield compression. All of the property valuationsurpluses arise from our marshalling and asset management activities. Marshalling We have continued to make good progress in marshalling projects for futuredelivery. In particular, we have had success on a number of planningapplications: • Llanwern - Newport City Council has resolved to grant outline planning consent for the transformation of the 600-acre former Corus steelworks site at Llanwern, into a £1 billion sustainable, mixed use development, comprising a new urban village of 4,000 homes with full supporting community facilities and 1.5m sq.ft of employment space. Redevelopment of this site is expected to take 20 years to complete. The initial phase of the infrastructure works should commence later this year with the first dwellings and employment buildings being developed in 2008. • Rugby - Planning consent has been obtained for the mixed use redevelopment by KPI of 100 acres of the former GEC industrial estates in Rugby, including a new campus for Warwickshire College, 100,000 sq ft of employment accommodation and 770 dwellings. • Meaford - planning consent has been obtained for 1.2 million sq.ft of employment space at this 100 acre former power station site near Stone, Staffordshire. • Great Homer Street, Liverpool - Outline planning has been obtained for the £150 million mixed use project on 45 acres in North Liverpool. Work is now underway on land acquisition and detailed planning of the scheme on which construction is expected to begin in summer 2008. The development will comprise a 115,000 sq ft superstore, 80,000 sq ft of non-food retail stores, a new market and market hall, 480 homes, and facilities for a Primary Care Trust centre, new library, leisure facilities as well as 80,000 sq ft of employment space. • Goodyear, Wolverhampton - Planning consent has been obtained for this project comprising a smaller 18 acre Goodyear facility, 660 homes and 1.5 acres of neighbourhood retail. Work on site clearance will start later this year. • Vulcan Works, Newton le Willows - Part of the KPI Alstom portfolio and also a joint venture with Ashtenne Ltd on our combined sites. The successful outcome of the calling in enquiry resulted in planning permission for 630 homes on the overall 64 acre site. Work on the initial infrastructure will commence later this year. Additionally at Farnborough, another KPI property, the £80 million redevelopmentof the town centre began in May and the current phases should be completed in2009. We have also finalised our joint venture with AXA Property which enables theredevelopment of the 60 acre Taunton Trading Estate to commence which willdeliver 550 homes and 170,000 sq. ft of employment space. The Hopper We continued to add to the hopper with acquisitions of 155 acres in the firsthalf. The hopper now comprises 7,700 acres, of which some 5,100 acres aredevelopable. Our principal acquisitions have been:- • Whitley - The acquisition of 53 acres of surplus land at Jaguar Engineering Centre, Whitley, Coventry, from Coventry City Council opens the way for the creation of a high-class business park. • Eccles - a 36-acre chemical works in Salford, Manchester. The site was purchased from Akcros Chemicals Ltd which has taken two occupational leases of 30 years and 6 years. • Worcester - 20 acres, strategically located between M5 Junctions 6 and 7. The City of Worcester Local Plan identifies the land as being a potential relocation site for Worcester City Football Club, with whom we have been having detailed discussions, together with enabling commercial development. • Widnes - The acquisition of 14 acres from Croda and the adjoining 20 acre council site, has assembled a major employment site in Widnes Waterfront We have also been selected as preferred developer for two major projects: • Coed Darcy - selected by BP, with the involvement of The Prince's Foundation, the Welsh Assembly and Neath Port Talbot County Council, to redevelop a 1000 acre site adjacent to Junction 43 of the M4 near Neath. This flagship regeneration project, to transform the former Llandarcy oil refinery into a sustainable urban village community, will involve 4000 homes, the creation of up to 3,200 jobs, and generating an economic impact of £1.2bn over the anticipated 20 year development period. • Medway - the company has been chosen as Medway Council's preferred 'investment partner' to deliver long-term investment to transform Medway into the new city of the Thames Gateway. Prospects We remain on course to grow in line with our long-term financial objective ofdoubling the net asset value per share of the company every five years and welook forward with confidence to a successful outcome for the year as a whole. For further information on our business strategy, our projects and our corporateenvironmental and social responsibility, please visit our (newly redesigned andupdated) website www.stmodwen.co.uk, on which our interim investor presentationwill be published. ANTHONY GLOSSOP BILL OLIVERChairman Chief Executive 9 July 2007 Group Income Statement for the period to 31st May 2007 Unaudited Unaudited Audited 31st May 31st May 30th November 2007 2006 2006 Notes £m £m £m Revenue 2 47.7 64.6 128.1 Net rental income 2 13.0 12.6 24.3Development profit 3 12.2 6.4 14.6Gains on disposals of investment/investment properties 2 7.0 14.4 27.2Investment property revaluation gains 47.8 17.8 49.0Other income 2 1.1 1.0 2.4Joint ventures and associates (post tax) 4 7.9 5.2 11.0Administrative expenses (12.7) (7.8) (15.6) Profit before interest and tax 76.3 49.6 112.9Finance cost 5 (15.7) (7.0) (20.0)Finance income 5 4.5 1.3 4.0 Profit before tax 65.1 43.9 96.9Taxation (10.8) (11.0) (21.0) Profit for the period 54.3 32.9 75.9 Attributable to:Equity shareholders 51.6 32.4 74.4Minority interests 2.7 0.5 1.5 54.3 32.9 75.9 Basic and diluted earnings per share (pence) 7 42.8 26.8 61.6Dividend per share (pence) 8(v) 3.9 3.4 10.2 Group statement of recognised income and expense Unaudited Unaudited Audited 31st May 31st May 30th November 2007 2006 2006 £m £m £m Profit for the period 54.3 32.9 75.9Pension fund: - actuarial gains and losses - - 2.5 - deferred tax - - (0.7) Total recognised income and expenditure 54.3 32.9 77.7 Attributable to:Equity shareholders 51.6 32.4 76.2Minority interests 2.7 0.5 1.5 54.3 32.9 77.7 Group Balance sheet as at 31st May 2007 Unaudited Unaudited Audited 31st May 31st May 30th November 2007 2006 2006 Notes £m £m £m Non-current assets Investment properties 8(i) 840.2 531.6 736.4 Operating property, plant & equipment 3.6 4.0 3.8 Investments in joint ventures, associates and 74.7 73.7 77.9other investments Trade and other receivables 2.9 0.9 4.0 921.4 610.2 822.1 Current assets Inventories 92.3 49.6 58.4 Trade and other receivables 58.9 26.0 65.9 Cash and cash equivalents 6.4 0.3 7.0 157.6 75.9 131.3 Current liabilities Trade and other payables (118.1) (44.9) (109.3) Borrowings (64.0) (4.3) (49.2) Tax payables (9.7) (6.6) (3.7) (191.8) (55.8) (162.2) Non-current liabilities Trade and other payables (103.0) (6.2) (143.7) Borrowings (290.2) (233.5) (210.7) Deferred tax (58.3) (41.1) (47.0) (451.5) (280.8) (401.4) Net assets 435.7 349.5 389.8 Capital and reserves Share capital 12.1 12.1 12.1 Share premium 9.1 9.1 9.1 Capital redemption reserve 0.3 0.3 0.3 Retained earnings 407.7 324.6 364.3 Own shares (0.5) (0.5) (0.8) Shareholders' equity 6 428.7 345.6 385.0 Minority interests 6 7.0 3.9 4.8 Total equity 6 435.7 349.5 389.8 Cash Flow Statement for the period to 31st May 2007 Unaudited Unaudited Audited 31st May 31st May 30th November 2007 2006 2006 £m £m £m Operating activities Profit for the year 76.3 49.6 112.9 Gains on investment/investment property disposals (7.0) (14.4) (27.2) Joint ventures and associates (post tax) (7.9) (5.2) (11.0) Investment property revaluation gains (47.8) (17.8) (49.0) Depreciation 0.3 0.3 0.9 Changes in inventories (24.2) (13.5) (24.8) Changes in trade and other receivables 4.0 (4.8) 1.4 Share options and share awards 0.1 0.1 0.3 Changes in trade and other payables (38.3) 9.3 (6.1) Pension funding (0.2) (0.3) (0.7) Tax refund/(paid) 6.2 - (7.5) Net cash (outflow)/inflow from operating activities (38.5) 3.3 (10.8) Investing activities Investment property disposals 21.1 32.5 87.5 Investment property additions (61.2) (50.7) (95.5) Property, plant and equipment additions (0.1) (0.3) (0.7) Interest received 1.1 - 0.1 Dividends received - - 1.6 Net cash outflow from investing activities (39.1) (18.5) (7.0) Financing activities Dividends paid (8.2) (7.1) (11.2) Dividends paid to minorities (0.5) (0.2) (0.3) Interest paid (8.9) (7.0) (14.6) Sale/(purchase) of own shares 0.3 (0.2) (1.2) Net drawing of borrowings 90.7 27.9 53.9 Net cash inflow from financing activities 73.4 13.4 26.6 Decrease in cash and cash equivalents (4.2) (1.8) 8.8 Cash and cash equivalents at start of year 7.0 (1.8) (1.8) Cash and cash equivalents at end of year 2.8 (3.6) 7.0 Cash 6.4 0.3 7.0 Bank overdrafts (3.6) (3.9) - Cash and cash equivalents at end of year 2.8 (3.6) 7.0 Notes 1. Accounting policies The interim financial statements have been prepared in accordance with therecognition and measurement criteria of International Financial ReportingStandards (IFRS) and the disclosure requirements of the Listing Rules. The sameaccounting policies, presentation and methods of computation are followed in theinterim financial statements as applied in the group's latest audited financialstatements. 2 Revenue Six months to 31st May 2007 Six months to 31st May 2006 Develop- Develop- Rental ment Rental ment income property Other Total income property Other Total £m £m £m £m £m £m £m £m Revenue 14.6 30.0 3.1 47.7 15.4 46.3 2.9 64.6 Costs (1.6) (17.8) (2.0) (21.4) (2.8) (39.9) (1.9) (44.6) Total 13.0 12.2 1.1 26.3 12.6 6.4 1.0 20.0 Year to 30th November 2006 Develop- Rental ment income property Other Total £m £m £m £m 29.4 92.9 5.8 128.1 (5.1) (78.3) (3.4) (86.8) 24.3 14.6 2.4 41.3 3. Investment sale During the period to 31st May 2007 the group disposed of its entire shareholdingin Northern Racing PLC, realising a profit of £6.7m. 4. Joint venture and associates Six months to 31st May 2007 Six months to 31st May 2006 Year to 30th November 2006 Develop- Develop- Develop- Rental ment Rental ment Rental ment income property Total income property Total income property Total £m £m £m £m £m £m £m £m £m Revenue 5.8 12.6 18.4 5.9 3.5 9.4 11.1 3.5 14.6 Costs (1.2) (9.0) (10.2) (1.2) (2.8) (4.0) (2.2) (2.6) (4.8) Net income 4.6 3.6 8.2 4.7 0.7 5.4 8.9 0.9 9.8 Gains on investment 4.3 - 1.9property disposals Investment property 1.3 4.1 6.6revaluation gains Administrative - - (0.1)expenses Finance cost (2.8) (2.2) (5.1) Profit before tax 11.0 7.3 13.1 Taxation (3.3) (2.1) (2.7) Profit after tax 7.7 5.2 10.4 Post tax profits of 0.2 - 0.6associate Profit for the 7.9 5.2 11.0period 5. Net finance cost Six months Six months Year to to to 31st 31st 30th November May May 2007 2006 2006 £m £m £m Interest payable on loans and overdrafts 9.3 6.8 14.3Amortisation of discount on deferred payment 5.4 - 3.8arrangementsAmortisation of refinancing expenses 0.1 0.1 0.2Head rents treated as finance leases 0.1 0.1 0.2Interest on pension scheme liabilities 0.8 - 1.5 Total finance costs 15.7 7.0 20.0 Interest receivable on cash deposits 1.3 0.1 0.4Movement in market value of interest rate derivatives 2.3 1.2 2.0Expected return on pension scheme assets 0.9 - 1.6 Total finance income 4.5 1.3 4.0 Net finance cost 11.2 5.7 16.0 6. Reconciliation of movements in equity Equity Minority shareholders interests TotalPeriod ended 31st May 2007 £m £m £m Total recognised income and expense 51.6 2.7 54.3Dividends paid (8.2) (0.5) (8.7)Own shares purchased 0.3 - 0.3Equity at 30th November 2006 385.0 4.8 389.8 Equity at 31st May 2007 428.7 7.0 435.7 Equity Minority shareholders interests TotalPeriod ended 31st May 2006 £m £m £mTotal recognised income and expense 32.4 0.5 32.9Dividends paid (7.1) (0.2) (7.3)Own shares purchased (0.1) - (0.1)Equity at 30th November 2005 320.4 3.6 324.0 Equity at 31st May 2006 345.6 3.9 349.5 Equity Minority shareholders interests TotalPeriod ended 30th November 2006 £m £m £m Total recognised income and expense 76.2 1.5 77.7Dividends paid (11.2) (0.3) (11.5)Own shares purchased (0.4) - (0.4)Equity at 30th November 2005 320.4 3.6 324.0 Equity at 31st November 2006 385.0 4.8 389.8 7. Earnings per share Earnings per share are calculated as follows: (a) Basic earnings per share is calculated by dividing the profit attributableto ordinary shareholders of £51.6m (May 2006: £32.4m,November 2006: £74.4m) bythe weighted average number of shares in issue during the period (which excludesthe shares held for share incentive schemes which are owned by the group) of120,634,233 (May 2006: 120,644,491, November 2006: 120,628,368). (b) In calculating diluted earnings per share, earnings have been adjusted forchanges which would have resulted from the option being classified as equitysettled. The number of shares included in the calculation has also been adjustedaccordingly. The calculations show that the majority of shares under option haveno dilutive impact on earnings per share. The number of shares so calculated was120,634,233 (May 2006: 120,644,491; November 2006: 120,704,918). 8. Other information (i) Investment properties were valued at 31st May 2007, 31st May 2006 and 30thNovember 2006 by King Sturge & Co, Chartered Surveyors, in accordance with theAppraisal and Valuation method of the Royal Institution of Chartered Surveyors,on the basis of open market value. (ii) The financial information contained in this interim statement, which isunaudited, does not constitute statutory accounts as defined in section 240 ofthe Companies Act 1985. The figures for the year ended 30th November 2006 havebeen derived from the statutory accounts, which have been filed with theRegistrar of companies and on which the auditors, Ernst & Young LLP, gave anunqualified audit opinion. The prior year audited accounts did not include astatement under section 237(2) and (3) of the Companies Act 1985. (iii) The effective tax rate used for the period is 18.9%. The full year rate isexpected to be lower than this due to the changes to the industrial buildingsallowance regime and the rate of UK corporation tax that were announced in theBudget Statement. (iv) The interim statement was approved by the board on 9th July 2007. (v) The proposed dividend of 3.9p per share was approved by the board on 9thJuly and will amount to £4.7m (6 months to 31st May 2006: 3.4p, £4.1m). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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