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Regeneration specialist St Modwen took a £38m writedown on the value of its residential landbank, and vowed not to sell any more residential sites until the end of 2009, when it anticipates the market will return.
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St Modwen holds 1,365 acres of land earmarked for residential development, which is now valued at just £14m above historical cost. However, two-thirds is carried at a nominal value, which should increase when residential planning consent is won.
"There just isn't a market today, as none of the housebuilders are buying," said chief executive Bill Oliver. Residential has historically accounted for 20-25 per cent of St Modwen's profits. The group's commercial activities have also been affected, with retailers' shelved expansion plans delaying the company's retail regeneration schemes.
The group is now concentrating on winning change of use planning consents for development land within its 'hopper' of sites, and made £27m from asset management over the year. "We are preparing ourselves for when the market comes back," Mr Oliver added.
Net assets have fallen 4 per cent since November's full year results, and house broker Landsbanki now expects full-year NAV of 355p.
| St Modwen Properties (SMP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 318p | MARKET VALUE: | £384m | |
| TOUCH: | 313-319p | 12M HIGH: | 660p | LOW: 267p |
| DIVIDEND YIELD: | 1.25% | TRADING STOCK: | £227m | |
| DISCOUNT TO NAV: | 12% | |||
| INVEST PROPERTIES: | £815m | NET DEBT: | 94% | |
| Half-year to 31 May |
Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 361 | 65.1 | 42.80 | 3.90 |
| 2008 | 363 | -20.0 | -8.90 | 3.90 |
| % change | +1 | - | - | - |
Ex-div: 6 Aug Payment: 5 Sep |
||||
Click here for a guide to the terms used in IC results tables.
The shares nudged up on the results, but deferred disposals and falling land values mean recovery is far from imminent, and the discount to NAV should widen. Fairly priced.
Last IC view: Good value, 480p, 12 Feb 2008
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
