Property developer St Modwen posted strong numbers for 2011 and was justly rewarded with a 6 per cent jump in the share price. The 9 per cent increase in net asset value (NAV) was particularly impressive as it had almost nothing to do with the property market, which remains flat.
St Modwen's strategy is to cover its operating and debt interest costs (£40m last year) using the rent (£39m) from its income-generating assets, which account for about half the value of its portfolio. That leaves it free to make profits by developing commercial buildings and by securing planning permission for houses on its vast brownfield land bank, which often involves complex decontamination work.
It is this last operation that yielded a bumper harvest in 2011, with revaluation gains of £34m, of which only £1m was attributable to wider market movements. Chief executive Bill Oliver expects these gains to continue into 2012 - he stresses they stem from planning work carried out over many years and can therefore be anticipated in advance.
Development has been a tougher business, but St Modwen still managed to pick up £23.8m of profits (£21.9m in 2010) by building supermarkets for Tesco, for example.
Brokerage Numis expects adjusted NAV of 249p at the year-end (232p in 2011).
ST. MODWEN PROPERTIES (SMP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 153p | MARKET VALUE: | £307m | |
| TOUCH: | 152-155p | 12-MONTH HIGH / LOW | 199p | 100p |
| DIVIDEND YIELD: | 2.2% | INVENTORIES: | £191m | |
| DISCOUNT TO NAV: | 36% | |||
| INVEST PROPERTIES: | £849m | NET DEBT: | 73%** | |
| Year to 30 Nov | Net asset value (p)* | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 284 | 100.1 | 73.3 | 11.7 |
| 2008 | 251 | -73.1 | -37.3 | 3.9 |
| 2009 | 200 | -119.0 | -59.7 | nil |
| 2010 | 218 | 37.5 | 18.6 | 3.0 |
| 2011 | 238 | 50.4 | 21.7 | 3.3 |
| % change | +9 | +34 | +17 | +10 |
Ex-div: 7 Mar Payment: 4 Apr *Including shares held by minority interests **91 per cent, including debt held within joint ventures | ||||
