A mixed-used development in Greenwich, a Morrisons supermarket in Littlehampton and an office-to-housing conversion in Westminster helped push Development Securities (DSC) just back into the black for the year to 28 February. These and other projects generated gains on disposal of £28.1m, marking the first wave of profits from the equity raised and deployed by the developer back in 2009 and 2010.
Sadly, those gains were substantially offset by write-downs on the company's portfolio of investment assets. Like other developers, DevSec owns a portfolio of high-yielding regional offices and shops to cover its everyday expenses. It produced net income of £12.8m over the period, but lost the same amount in value in a thin market dominated by forced sellers.
Chief executive Michael Marx is notably downbeat about market prospects - he "wouldn't be surprised" if regional valuations continued to fall for another year. At the same time, he expects the company's 40 development projects to generate profits of about £97m, or 80p A share, over the next three years. DevSec has also branched into a new area by acquiring two property-loan portfolios, together worth £143m. The bigger of these was from the Irish 'bad bank', NAMA, and consisted mainly of loans against the very hot central London residential market.
Brokerage Peel Hunt expects adjusted NAV of 262p at the year-end (from 260p in February 2013).
DEVELOPMENT SECURITIES (DSC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 147p | MARKET VALUE: | £ 180m | |
| TOUCH: | 147-148p | 12-MONTH HIGH: | 175p | LOW: 115p |
| DIVIDEND YIELD: | 3.3% | TRADING PROPERTIES: | £153m | |
| PREMIUM TO NAV: | -41% | |||
| INVESTMENT PROPERTIES: | £260m* | NET DEBT: | 48% | |
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008# | 397 | -65.6 | -135 | 4.8 |
| 2009# | 297 | -11.4 | -16.8 | 4.8 |
| 2010 | 272 | 2.6 | 1.7 | 4.8 |
| Year to 28/29 Feb | (p) | (£m) | (p) | (p) |
| 2012** | 256 | -10.2 | -10.3 | 5.6 |
| 2013 | 251 | 0.79 | 2.0 | 4.8 |
| % change | -2 | - | - | -14 |
Ex-div: 25 Sep Payment: 25 Oct *Includes £40.1m within joint ventures **14-month period #Per share figures restated following placing and rights issue | ||||
