HALF YEAR RESULTS Great Hall, Bay Campus, Swansea University PRESENTATION TO 31 st MAY 2016
DISCLAIMER This presentation does not contain or constitute an invitation or inducement to any person to underwrite, subscribe for, or otherwise acquire or dispose of any shares in St. Modwen Properties PLC or other securities and should not be relied on for such purposes. This presentation may contain certain forward looking statements. By their nature, forward looking statements 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 St. Modwen Properties PLC speak only as of the date they are made and 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. St. Modwen Properties PLC does not undertake to update forward looking statements to reflect any changes in St. Modwen Properties PLC's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Statements are made in this presentation about the price and past performance of shares in St. Modwen Properties PLC. Past performance cannot be relied upon as a guide to future performance.
INTRODUCTION Welcome to St. Modwen Properties PLC Half year results presentation The UK’s leading regeneration specialist Contents: Presenters: Highlights 4 Bill Oliver Chief Executive Operational Overview 5 Financial Results 13 Rob Hudson Group Finance Director Outlook 22 Appendices 23 3
HIGHLIGHTS PERFORMANCE AND OPERATIONS • Commercial property development contributes £21m to strong property profits of £36m (H1 2015: £37m) • 15% increase in residential profits to £15m (H1 2015: £13m), supported by good sales rates across the UK NCGM under construction, Nine Elms, London • Increased investment in Private Rented Sector • Major projects reaching important milestones and all holding good potential for long-term development opportunities FINANCIAL HIGHLIGHTS • Shareholders’ equity NAV per share up 2% to 421p (Nov 2015: 414p) Longbridge, Birmingham and EPRA NAV up 1% to 451p (Nov 2015: 446p) • Profit before all tax of £30m (H1 2015: £206m including £128m NCGM valuation gain) • Results include one-off £13m impact from SDLT increase and £21m reduction from NCGM re-valuation Bay Campus, Swansea University • Interim dividend increased by 2% to 1.94p per share (H1 2015: 1.9p) STRONG RESULTS DRIVEN BY ROBUST UNDERLYING PERFORMANCE 4
Access 18, Avonmouth OPERATIONAL OVERVIEW 5
LANDBANK AND PORTFOLIO – VALUE GENERATION • 6,000 acre land bank sits at the core of the business • 64% wholly owned and 36% under development agreement/JV • Provides opportunity to continually add value • Over the last three years, over £40m has been generated from secured planning permissions • £1.7bn property portfolio, predominantly regional and superbly placed to generate value for the Group through our own actions Commercial • 1.7m sq ft pipeline land and development • Representing £236m GDV £157m Residential 9% land and • A further 13m sq ft with • 26,167 plots with planning development planning permission £738m recognition* already secured, to be Income 44% delivered over time producing • Realised via land sales £804m and St. Modwen Homes • A further 6.5m sq ft already 47% identified for future pipeline, subject to planning * Allocated in local plan or similar, resolution to grant, outline permission or detailed permission – see slide 41 6 CONTINUALLY PROVIDING OPPORTUNITIES FOR LONG-TERM VALUE CREATION
REGIONAL COMMERCIAL HIGHLIGHTS North West North East & Yorkshire Key acquisitions (£4.7m net Active development : rental income) : Over 100,000 sq ft retail and • Crosby Town Centre industrial space, Doncaster • Kirkby Town Centre (£11m GDV) • 17 acres for development & 260,000 sq ft industrial estate, Bury, Greater Northern Home Counties Manchester Development agreement: 1m sq ft industrial Midlands development, part of £900m Stanton Cross regeneration, Active development: Wellingborough Over 450,000 sq ft across four projects, incl. new facilities for Travis Perkins and DFS (£37m GDV) London & South East Development agreement: South Wales £200m development of Spray Street, Woolwich in 50/50 JV Active development: with Notting Hill Housing Phase 1c Bay Campus, South West Swansea University, 538 rooms, £2.2m net rental Development agreement: income £90m development of 1m sq ft industrial park, Chippenham, Wiltshire 7 £1.7BN PROPERTY PORTFOLIO DELIVERING STRONG REGIONAL ACTIVITY
MAJOR PROJECTS NEW COVENT GARDEN MARKET: • Optimal location, adjacent to new Nine Elms tube station & US Embassy • A long-term (10 year) project • Value creation from land barter with minimal capital outlay • Accounts for 11% of Group NAV • SMP share of value now £106m (Nov 2015: £127m) driven by a 3.75% reduction in residential sales prices to £1,276 per sq ft (Nov 2015: £1,325 NCGM, Nine Elms, London per sq ft) LONGBRIDGE, BIRMINGHAM: • 468 acre site, 40% delivered to date • Town Centre phase 2 complete with further lettings to national retailers • Works to Royal Centre for Defence Medicine facility commenced • 350 of 2,000 homes completed Longbridge, Birmingham BAY CAMPUS, SWANSEA UNIVERSITY: • Phase 1c progressing well (538 student rooms) • Opening September 2017 when total student residents will total 2,000 • Will add £2.2m incremental income, bringing total rental income of scheme to £4.8m • Good potential for delivery of additional phases Bay Campus, Swansea University 8 MAJOR PROJECTS HOLD EXCELLENT POTENTIAL FOR FUTURE VALUE GENERATION
Hilton Valley, Derbyshire RESIDENTIAL 9
RESIDENTIAL HIGHLIGHTS Residential completions Units • Continued strong growth of residential profits to £15m 967 1000 (H1 2015: £13m), supported by growth of St. Modwen 900 820 315 Homes 800 700 258 600 • St. Modwen Homes’ profit levels now surpassing 461 500 Persimmon 365 400 202 652 259 300 126 562 • Total of 461 residential completions 200 158 259 239 100 101 • St. Modwen Homes active on 14 sites, all provided 0 FY 2012 FY 2013 FY 2014 FY2015 HY 2016 from our own land bank £m Residential development profits 30 28 • Current average selling price for St. Modwen Homes 24 25 £200k 13 20 10 15 15 9 8 10 6 15 14 5 5 4 7 4 2 0 FY 2012 FY 2013 FY 2014 FY 2015 HY 2016 Persimmon JV St. Modwen Homes RESIDENTIAL BUSINESS DELIVERING ACCELERATED GROWTH 10
RESIDENTIAL SITES 11 BROADENING REACH ACROSS THE UK
PRIVATE RENTED SECTOR (PRS) Utilising land bank to deliver both development profits and growth in rental income 9 Completed developments: Two schemes 64 apartments £0.7m annual rent £15m GDV 10 2 3 Future opportunities: Nine schemes Approx. 1,400* apartments Approx. £12m annual rent 11 5 Approx. £250m GDV 4 7 *subject to planning 1 6 8 3 4 5 9 1 Wembley Central (38 apts) Edmonton Green, Enfield Wythenshawe Town Centre, Manchester 5 2 6 10 Edison Place, Rugby (26 apts) Lee Green, Lewisham Longbridge, Birmingham 6 7 11 3 St. Andrew’s Park Phase 2, Uxbridge Edison Place Phase 2, Rugby Spray Street, Woolwich St. Andrew’s Park, Uxbridge 4 8 Farnborough Town Centre, Hampshire 12 INCREASED INVESTMENT IN PRS
Burton Gateway, Burton upon Trent FINANCIAL RESULTS 13
FINANCIAL HIGHLIGHTS • Shareholders’ equity NAV per share up 2% to 421p (Nov 2015: 414p) and EPRA NAV per share up 1% to 451p (Nov 2015: 446p) • Profit before all tax of £30m (H1 2015: £206m including £128m benefit from NCGM) • Results include one-off £13m impact from SDLT and a £21m impact from the reduction in the NCGM valuation, combined reducing NAV and EPRA NAV growth by 4% and 3%, respectively • Further added value gains of £15m coupled with market driven gains of £13m • Trading profits of £34m in line with record levels in previous year (H1 2015: £35m) • Adjusted gearing at 48% (Nov 2015: 48%) and see-through LTV at 30% (Nov 2015: 30%) • Interim dividend increased by 2% to 1.94p per share (H1 2015: 1.9p per share) EXCELLENT UNDERLYING TRADING PROFITS DEMONSTRATE THE STRENGTH OF THE BUSINESS 14
PROFIT AND LOSS 31 May 2016 31 May 2015 30 Nov 2015 £m £m £m Net rental income 24.8. 18.6. 38.7. Property profits 36.1. 37.3. 67.4. Other income 2.1. 2.1. 4.2. Overheads (17.0) (12.1) (26.5) Operating profit 46.0. 45.9. 83.8. Interest (11.6) (10.5) (20.5) Trading profit 34.4. 35.4. 63.3 . Added value valuation gains 14.9. 28.4. 38.6. Market valuation movement 13.0. 20.4. 35.7. Other finance (income/charges) 1.0. (6.5) (6.6) Underlying profit before all tax 63.3 (-19%) 77.7. 131.0. NCGM valuation movement (20.8).. 128.0... 127.4... SDLT impact (12.5) - - Profit before all tax 30.0 (-85%) 205.7. 258.4. Earnings per share 11.8p 76.0p 97.9p NOTE: the above figures are stated on a proportionally consolidated basis, including our share of JVs BUSINESS DELIVERS ROBUST PROFITS AGAINST RECORD YEAR IN 2015 15
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