Industrial landlord Segro (SGRO) gave the bad news away - that its property portfolio haemorrhaged value in the second half of last year - in a shock profit warning in January. That left chief executive David Sleath somewhat freer to focus on the good news in these annual results. Operationally, the group is performing well, with hard work on lettings and tight cost control feeding into 4.6 per cent growth in adjusted pre-tax profits.
Mr Sleath's broad strategy - unveiled back in November 2011 - is to sell older industrial estates in peripheral locations (the 'non-core' portfolio) and plough the proceeds into modern logistics warehouses, data centres and light industrial space around European hubs such as London, Paris, Hamburg and Warsaw. So far the disposal programme has raised £700m - about half the non-core portfolio - of which £207m was used to fund acquisitions last year, with a further £218m invested in development projects.
This should improve the group's future performance by moving its portfolio up the quality scale. But it has involved writing down the non-core portfolio to levels where it is sellable in an extremely bearish environment for sub-prime commercial property. The disposals have to date been at a 3.6 per cent discount to December 2011 valuations, and the surveyors have slashed the holding value of the remaining non-core assets even more aggressively.
Broker Investec Securities expects adjusted net asset value of 301p at the year-end (294p in 2012).
SEGRO (SGRO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 253p | MARKET VALUE: | £1.87bn | |
| TOUCH: | 252.5-252.9p | 12-MONTH HIGH: | 260p | LOW: 208p |
| DIVIDEND YIELD: | 5.9% | TRADING PROPERTIES: | £193m | |
| DISCOUNT TO NAV: | 16% | |||
| INVESTMENT PROPERTIES: | £4.14bn* | NET DEBT: | 93% | |
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 462 | -939 | -216.0 | 13.7 |
| 2009 | 354 | -248 | -41.3 | 14.0 |
| 2010 | 366 | 197 | 28.5 | 14.3 |
| 2011 | 345 | -54 | -4.1 | 14.8 |
| 2012 | 302 | -202 | -26.6 | 14.8 |
| % change | -12 | - | - | |
Ex-div: 20 Mar Payment: 26 Apr *Includes £343m within joint ventures | ||||
