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Transformation begins at Quintain

RESULTS: New chief executive Max James lays out his recovery plan for the under-funded regeneration specialist
November 26, 2012

These were Quintain's (QED) first results since the retirement of its visionary founder, Adrian Wyatt, ushered in a new management team and - it is hoped - a new focus on extracting cash from the company's vast regeneration schemes. Chief executive Max James's most notable achievement to date is a major deal with a Hong Kong investor to redevelop Greenwich peninsula within a fully-funded joint venture. But that had little impact on these results, which were marred by valuation write-downs across the board.

IC TIP: Buy at 53p

The biggest deficits came from Quintain's site at Wembley, where the investment assets and development land were marked down by 3.8 and 2 per cent, respectively, and from the regional office portfolio SeQuel, marked down 10.4 per cent. Quintain keeps SeQuel for the cash flow, but it is now haemorrhaging so much value that Mr James is considering a disposal. In time, he expects rents from regeneration projects, such as the retail centre Quintain is now building at Wembley, to replace the lost income.

Overall, the portfolio was only marked down by 1.7 per cent, buoyed up by a 5 per cent gain from Quintain's £205m stake in student accommodation fund iQ. But debt magnified the impact of the write-downs on net asset value (NAV), which fell 3.8 per cent over the six months. Lightening the debt load is one of Mr James's highest priorities. Having cut net debt from £535m in March to £465m in September, he wants it to be under £400m by March 2014.

JPMorgan Cazenove forecasts year-end NAV of 109p.

QUINTAIN ESTATES & DEVELOPMENT (QED)

ORD PRICE:53pMARKET VALUE:£277m
TOUCH:52.75-53p12-MONTH HIGH:58pLOW: 33p
DIVIDEND YIELD:nilTRADING PROPERTIES:£20.5m
DISCOUNT TO NAV:50%
INVESTMENT PROPERTIES:£948m*NET DEBT:85%

Half year to 30 SepNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20111163.70.8nil
2012106-29.1-4.3nil
% change-9---

*Including share of joint ventures