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DevSec industrious and changing

The developer has unveiled a strategy shift alongside its new name.
October 21, 2015

"Be united and industrious." This union motto once adorned the wall of a pub in Greenwich, where Development Securities (DSC) and Cathedral - which the developer acquired in May 2014 - worked on their first joint regeneration project. Hence the combined company's rather too cute new name 'U+I'.

IC TIP: Buy at 240p

The change of name accompanies a major strategy shift. New chief executive Matthew Weiner is looking to concentrate on fewer, bigger-ticket regeneration projects in the London region, Manchester and Dublin. He is also planning to better integrate the company's investment and development portfolios so that the former can benefit from the same capital value uplifts achieved in its regeneration work. And U+I is even working with an external long-term capital partner on an investment platform that will hold private rental sector assets.

In the reported period, the drop in value of a Cardiff shopping centre in the investment portfolio explains the fall in net assets. Excluding this asset, the portfolio would have increased in value by 2.1 per cent. Meanwhile, the development portfolio delivered £12.5m of gains, against £18.2m in the comparable period, but management pleads bad timing. By results day, a further £10m of gains had been secured, and the company reiterated its full-year £55m target.

Analysts at Peel Hunt expect adjusted net asset value of 300p at the year-end, compared with 276p in February 2015.

DEVELOPMENT SECURITIES (DSC)
ORD PRICE:240pMARKET VALUE:£300m
TOUCH:235-240p12-MONTH HIGH:293pLOW: 176p
DIVIDEND YIELD:2.3%*TRADING PROPERTIES:£261m
DISCOUNT TO NAV:12%NET DEBT:59%
INVESTMENT PROPERTIES:£295m**

Half-year to 31 AugNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20142697.46.72.4
20152741.41.22.4
% change+2-81-82-

Ex-div: 29 Oct

Payment: 27 Nov

*Not including special dividend of 8p in respect of FY 2015

**Includes £48.5m held through associates and joint ventures