Not for the first time, results by Development Securities (DSC) give the impression of someone running up a descending escalator. It has been generating a lot of clever profits by repositioning development sites - but not enough to offset revaluation losses on its standing portfolio and interest rate hedges.
That said, development profits are now gathering pace. They totalled £11.9m for the half year, compared to £8.6m during the entire 14-month period to 29 February 2012 and £5m in 2010. Big contributors were the sale of a supermarket to Morrisons in Littlehampton (£2.4m gain), disposals of flats and shops at a prime site in Westminster (£1.5m) and progress on a large regeneration scheme in Greenwich (£1.3m) - a typically varied assortment.
After the 45 per cent crash in property values that petered out in mid-2009, Development Securities raised equity to buy projects for the current cycle. Many of these are now coming to fruition, and it expects a further £16.4m of profit to be realised in the current half year. But the company also owns an investment portfolio, the income from which covers some of its ongoing costs. This was marked down by £4.4m in value, and swap revaluations cost reduced net asset value by a further £3.7m, or 3p per share.
DEVELOPMENT SECURITIES (DSC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 165p | MARKET VALUE: | £202m | |
| TOUCH: | 162-165p | 12-MONTHHIGH: | 199p | LOW: 115p |
| DIVIDEND YIELD: | 3.4% | TRADING PROP: | £147m | |
| DISCOUNT TO NAV: | 34% | |||
| INVESTMENT PROP: | £276m** | NET DEBT: | 48% | |
| Half-year to 31 Aug | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011* | 269 | -1.3 | -0.9 | 2.4 |
| 2012 | 249 | -0.7 | -1.4 | 2.4 |
| % change | -7 | - | - | - |
Ex-div: 31 Oct Payment: 30 Nov *Half-year to 30 Jun **Including investments in joint ventures | ||||
