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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| St.modwen Properties Plc | LSE:SMP | London | Ordinary Share | GB0007291015 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 559.00 | 559.00 | 560.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSMP
RNS Number : 9974J
St. Modwen Properties PLC
04 July 2017
Date of issue: 4(th) July 2017
LEI: 213800WMV4WVES8TQH05
Classification: Half yearly financial reports and audit reports and Inside information
This announcement contains inside information
ST. MODWEN PROPERTIES PLC
("St. Modwen" or "the Company")
Half Year Results for the period ended 31(st) May 2017
BUSINESS SHOWS CONTINUED RESILIENCE
Mark Allan, Chief Executive of St. Modwen, commented:
"The business continued its resilient performance across the first six months of the year, despite an uncertain market environment, with all parts of the Group contributing positively. We also concluded our strategy and portfolio review, which has confirmed the significant potential present in our business and pipeline and we are now focused on realising these opportunities in the months and years ahead."
Financial highlights
Hot Features
Premium
Non-statutory measures(*) May Prior Statutory measures May Prior
2017 period 2017 period
EPRA NAV per share 468.4 460.5 NAV per share (pence) 439.6 431.0
(pence)
Total accounting 2.6 1.8 Interim dividend per 2.02 1.94
return (%) share (pence)
Profit before all 29.3 30.0 Profit before tax (GBPm) 31.6 35.5
tax (GBPm)
Trading profit (GBPm) 26.4 34.4 Earnings per share 12.1 11.8
(pence)
-- EPRA NAV per share up 1.7% to 468.4 pence (Nov 2016: 460.5 pence) and NAV per share up 2.0% to 439.6 pence from 431.0 pence.
-- Total accounting return for the six months of 2.6% (2016: 1.8%).
-- Profit before all tax of GBP29.3m (2016: GBP30.0m), reflecting a more stable valuation environment.
-- Earnings per share of 12.1 pence (2016: 11.8 pence). -- Interim dividend increased by 4.1% to 2.02 pence per share (2016: 1.94 pence per share).
Operational highlights
-- Resilient commercial performance with approximately 400,000 sq ft of commercial space delivered in the first half.
-- Strong residential performance with operating profits of GBP13.4m (2016: GBP12.9m) supported by excellent progress from St. Modwen Homes which achieved 55% growth in profits, offsetting the planned decline in the Persimmon JV as it winds down.
-- Good progress with major projects:
o Nine Elms Square, New Covent Garden Market, London - in June, exchanged contracts for the sale of our interest in the 10-acre Nine Elms Square site in London to Wanda Commercial Properties (Hong Kong) Co Ltd.
o Bay Campus, Swansea University - progressing with the sale of our student accommodation assets to take advantage of the strong investment demand for student housing.
Strategy and portfolio review
-- Review of strategy and portfolio now complete and highlighting significant potential within business and portfolio.
-- Upon completion, sale of Nine Elms Square releases significant capital to pursue strategic opportunities.
Enquiries:
St. Modwen Properties PLC
Mark Allan, Chief Executive Tel: 0121 222 9400 Rob Hudson, Group Finance Director www.stmodwen.co.uk
Charlotte McCarthy, Head of Corporate Communications
FTI Consulting
Dido Laurimore Tel: 020 3727 1000
Tom Gough stmodwen@fticonsulting.com
Ellie Sweeney
A presentation for analysts and investors will be held at 9.30am today at FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD.
If you would like to attend please contact Ellie Sweeney at FTI on +44 (0)20 3727 1622 or stmodwen@fticonsulting.com. A live webcast of the presentation will be available at www.stmodwen.co.uk and presentation slides will also be available to download.
Alternatively, details for the live dial-in facility are as follows:
Participants (UK): Tel: +44(0)20 3059 8125 Passcode: St Modwen
This announcement contains inside information as set out in Article 17 of the Market Abuse Regulation (MAR).
(*) Reconciliations between all the statutory and non-statutory measures and the explanations as to why the non-statutory measures give valuable further insight into the Group's performance are given in note 2 to the condensed Group financial statements. In particular, profit before all tax is used because it reflects the way the Group is run on a proportionally consolidated basis, and because it also removes the taxation effects on equity accounted entities from the statutory profit before tax figure. Prior period measures are for the equivalent period in the prior year other than NAV per share and EPRA NAV per share, which are as at 30th November 2016.
This announcement contains certain forward looking statements which, by their nature, involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward looking statements. Any forward looking statements made by or on behalf of the Company are made in good faith based on the information available at the time the statement is made; no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. The Company does not undertake to update forward looking statements to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Nothing in this announcement should be construed as a profit forecast.
OVERVIEW
Performance
St. Modwen continued to deliver a resilient performance during the first six months of the 2017 financial year, despite ongoing uncertainty in the broader economy. Profit before all tax was GBP29.3m (2016: GBP30.0m), resulting in earnings per share of 12.1 pence for the six months (2016: 11.8 pence) and the Group delivered a total accounting return (NAV growth plus dividends) of 2.6%, taking NAV per share to 439.6 pence (Nov 2016: 431.0 pence) or EPRA NAV of 468.4 pence per share (Nov 2016: 460.5 pence). An interim dividend of 2.02 pence per share (2016: 1.94 pence) is proposed. This will be paid on 5(th) September 2017 to shareholders on the register at 11(th) August 2017.
Our resilience was broad-based with residential activity, commercial development and asset management initiatives all making meaningful profit contributions, while net rental income continued to cover recurring overhead and interest costs. Our key performance metrics for the period are set out below:
Measure May 2017 Prior period EPRA NAV per share* 468.4 pence 460.5 pence NAV per share 439.6 pence 431.0 pence Total accounting return* 2.6% 1.8% Interim dividend per share 2.02 pence 1.94 pence Trading profit* GBP26.4m GBP34.4m Profit before all tax* GBP29.3m GBP30.0m Profit before tax GBP31.6m GBP35.5m Earnings per share 12.1 pence 11.8 pence Net borrowings* GBP554.6m GBP470.0m See-through net borrowings* GBP580.3m GBP517.0m See-through LTV ratio* 33.1% 30.5%
*Reconciliations between all the statutory and non-statutory measures and the explanations as to why the non-statutory measures give valuable further insight into the Group's performance are given in Note 2 to the condensed Group financial statements. In particular, profit before all tax is used because it reflects the way the Group is run on a proportionally consolidated basis, and because it also removes the taxation effects on equity accounted entities from the statutory profit before tax figure. Prior period measures are for the equivalent period in the prior year other than NAV per share, EPRA NAV per share, net borrowings, see-through net borrowing and see-through LTV ratio, which are as at 30(th) November 2016.
Although overall profit performance was broadly in line with the prior year, its constituent parts looked somewhat different. Commercial development profits reduced by GBP9.6m, reflecting a deliberate slowdown in activity following the Brexit referendum and non-cash interest charges were GBP8.9m higher, principally because a higher share price increases the fair value of the liability for our Convertible Bond. These movements were offset by a more stable valuation environment, with a total positive movement of GBP10.8m (2016: a total negative movement of GBP5.4m) including an increase in the provision for NCGM market costs of GBP9.2m.
Strategy and portfolio
During the six month period we concluded our strategy and portfolio review, which clearly demonstrates the depth and breadth of potential within the portfolio and business. As a result of the review we have established four strategic objectives, against which future performance and prospects will be measured and reported, and these are set out below. They combine to create a strategy which builds on our clear areas of competitive advantage: our deep and diverse land bank and pipeline of projects and our unrivalled expertise in creating valuable developments and development land from challenging situations. Our core purpose as a business is: Changing places. Creating better futures.
-- Accelerating our commercial development activity. We have a 17.3m sq ft pipeline of opportunities capable of delivery in the medium term, of which 7.5m sq ft represents high quality industrial and logistics projects (where fundamentals are strong) that are deliverable over the next few years. These projects alone equate to nine years' worth of work at recent levels of activity so, provided that market conditions remain supportive, we believe there is clear opportunity to accelerate. Assuming a profit on cost in line with our historic performance, the potential profit in this pipeline could be approximately GBP115m;
-- Growing our residential and housebuilding business. Our residential pipeline contains approximately 16,900 plots (of which nearly 14,000 benefit from planning recognition), plus a further 10,730 plots across three larger sites that require a different strategic approach. Based on recent levels of housebuilding and land sales activity, the 16,900 plot pipeline equates to over ten years' worth of activity and, provided that the new homes market (particularly in the regions) remains robust, we believe there is a clear opportunity to accelerate. Of this total pipeline opportunity, we have identified 7,700 units for St. Modwen Homes. In the half year period, St. Modwen Homes delivered 230 units with an operating profit of GBP9.0m and we expect to deliver approximately 700 units for 2017. The rate of volume growth in St. Modwen Homes thereafter is unlikely to exceed 25% per annum;
-- Cementing and growing our regeneration reputation. Our major projects at Longbridge, Swansea and New Covent Garden Market have contributed approximately 30% of our returns over the past five years and collectively, are still only approximately half complete. We will continue to add value through these major projects as our activities progress but we will also pursue new opportunities to apply our unique skills set;
-- Portfolio focus and capital discipline. We intend to (i) rebalance our portfolio towards sectors with strong structural growth prospects, principally through asset recycling to allow us to retain a greater proportion of our industrial and logistics focused pipeline; (ii) focus on fewer, larger projects to ensure our capabilities are not diluted and (iii) reduce leverage further beyond its already low levels and thus recognising the importance of a strong balance sheet in a development-led business.
The above strategic objectives will require meaningful levels of investment and we believe there are clear liquidity opportunities within our portfolio to achieve this. Since the period end, we have exchanged contracts for the sale of Nine Elms Square, within our VSM joint venture, with our share of gross proceeds equating to GBP190m and completion expected later in the summer. We are also progressing with the sale of our student accommodation assets at the Bay Campus, Swansea University, to take advantage of the strong investment demand for student housing and we would expect a successful sale to release over GBP90m in proceeds. Together, these disposals provide the capital required to pursue our strategic objectives.
People
Our unrivalled expertise in creating valuable developments and development land from challenging situations is rooted firmly in our people; they have formed the basis of the Group's success to date and will continue to do so in the future. It is therefore important that we invest in them and ensure we provide an environment that fosters their sustained success.
With this in mind, we have recently made some changes to the way our business is organised. The changes establish a stronger link to the four strategic objectives outlined above while also seeking to create a framework of clearer accountability, more empowerment and appropriate support for our teams. The changes will be concluded by late summer and be followed with investment in leadership and management development, such that we can be confident of building a team capable of delivering on the significant potential ahead.
In March this year we were devastated by the sudden passing of Steve Burke, our Group Construction Director. Steve was with the business for over 20 years, serving on the Board since 2006, and he was instrumental in delivering many of the large scale projects that form the basis of St. Modwen's success. He is sorely missed but it is testament to his approach that he developed a highly capable team which, together with other senior colleagues, have stepped up to assume his responsibilities. Our thoughts remain with his family and friends.
Financing
It is crucial that a development-led business with significant land investments maintains a strong balance sheet. Sustainable borrowing levels and healthy covenant headroom are key to this.
Over the six months our net borrowings increased by GBP85m, principally reflecting the fact that acquisition and development capex exceeded proceeds from asset sales. As at 31 May 2017 see-through net borrowings were GBP580.3m (Nov 2016: GBP517.0m) and see through loan to value was 33.1%. Adjusting for the sale of Nine Elms Square mentioned above, see through net borrowings would reduce to GBP390m on a pro-forma basis and see through loan to value to 25%.
Outlook
We remain in uncertain times, particularly politically, and consequently we will maintain an agile approach to delivering our strategy, ensuring that we can adapt quickly if the circumstances demand.
However, our strategy and portfolio is underpinned by dynamics that go beyond simple political and economic considerations; the UK housing shortage, the need for a sustainable approach to brownfield regeneration and the significant shift in how consumers and businesses buy and behave are all clear, longer-term trends that we are well positioned to benefit from. As a result, we feel optimistic about the future.
OPERATING AND PORTFOLIO REVIEW
Portfolio summary
Total portfolio(1) Commercial Residential Income generating Total
land/ development land/ development
Nov 2016 valuation 223.6. 742.0. 786.7. 1,752.3.
Additions/ other movements(2) 66.8. 118.7. 10.9. 196.4.
Disposals (38.3) (90.8) (26.2) (155.3)
Added value gains 3.2. 3.5. 6.1. 12.8.
Market valuation gains (0.1) 9.4(3) (2.1) 7.2.
May 2017 valuation 255.2. 782.8. 775.4. 1,813.4.
(1) Stated on a proportionally consolidated basis, including our share of joint ventures and associates. See Note 2 to the condensed Group financial statements
(2) Additions/ other movements include purchases, capital expenditure and reclassifications
(3) Residential land market valuation gain includes GBP9.4m relating to NCGM
Commercial land and development
Our commercial development activity is proceeding in line with expectations, with good ongoing levels of occupier demand across the UK for both new and existing commercial space, particularly in the industrial and logistics sector where rents have remained robust.
We invested GBP70m into commercial development activity in the six months to 31 May 2017, booking profits of GBP11.5m and delivering approximately 400,000 sq ft of new commercial space. Highlights include:
-- Bet 365, Etruria Valley, Stoke-on-Trent - completed the pre-sale and design and build of a 33,000 sq ft training and leisure facility for Bet 365 which will serve the company's corporate headquarters.
-- Tamworth West, Staffordshire - works now complete on the final 153,000 sq ft industrial/logistics unit with strong levels of occupier interest received.
Commercial development pipeline (May 2017)
No. of Sq ft Pre-let/ Cost to Total GDV
schemes (000) sold (%) complete cost
------------------------ --------- ------- ---------- ---------- -------- --------
Industrial/ logistics 19 1,253 27% GBP55m GBP116m GBP140m
------------------------ --------- ------- ---------- ---------- -------- --------
Retail 7 247 56% GBP12m GBP46m GBP52m
------------------------ --------- ------- ---------- ---------- -------- --------
Student accommodation/
other 5 307 94% GBP42m GBP84m GBP103m
------------------------ --------- ------- ---------- ---------- -------- --------
Total 31 1,807 43% GBP109m GBP246m GBP295m
------------------------ --------- ------- ---------- ---------- -------- --------
As at 31 May 2017, the anticipated value on completion of our committed development pipeline was GBP295m (Nov 2016: GBP237m) and weighted towards sectors with healthy long-term structural growth prospects (47% industrial/logistics and 35% student accommodation).
Our anticipated yield on cost for the full committed development pipeline is approximately 8% with an expected valuation yield on completion of approximately 6.5% and a profit on cost of approximately 20%. We expect the rate of delivery of the pipeline to increase in the second half of the year. The total cost is approximately GBP246m, with an associated profit still to book of approximately GBP45m, to be delivered over the next 18 months.
Occupier demand for commercial property remains steady and we continue to complete a range of design and build projects for a mix of tenants. In addition, we continue to undertake a proportion of development activity speculatively, particularly for industrial and logistics assets where we believe the immediacy of availability is an important factor for prospective occupiers. In response to this anticipated demand, of our 1.3m sq ft of committed industrial/logistics pipeline, 73% is being developed speculatively (Nov 2016: 79%). For the full-year, we expect to deliver 1m sq ft, of which 50% is sold, let or pre-let and there are good levels of interest on the remaining vacant space.
Commercial pipeline - medium term potential
As part of our strategic review, we analysed the potential of our existing commercial land bank over the medium-term (five years) and categorised it in terms of strength of location and readiness of deliverability:
Deliverability (sq ft)
------------------ ---------------------------- -------
Location/demand 1 2 3 Total
------------------ -------- -------- -------- ------- -----
A 7.5m 3.0m 2.2m 12.7m 74%
B 1.9m 1.8m - 3.7m 21%
C - 0.8m 0.1m 0.9m 5%
------------------ -------- -------- -------- ------- -----
Total 9.4m 5.6m 2.3m 17.3m
------------------ -------- -------- -------- -------
55% 32% 13%
-------- -------- --------
Key:
Location/ demand Deliverability
----------------------------------- ----------------------------------
A Strong sustained demand 1 Immediately deliverable,
due to a combination with excellent demand
of macro and micro economic potential. Vast majority
factors with outline or detailed
planning consent.
------------------------------- ------------------------------
B Good sustained demand 2 Subject to detailed planning,
due to a combination answering ongoing demand.
of macro and micro economic
factors
------------------------------- ------------------------------
C Site offers future development 3 Subject to planning and
potential infrastructure.
------------------------------- ------------------------------
Going forward, our commercial development activity will be focused primarily on those 7.5m sq ft of sites with the greatest potential in terms of demand (A) and near-term deliverability (1) which at current rates of development, represent over nine years' of supply. This represents a clear opportunity to accelerate our development activity in these areas whilst carefully managing the risks of delivery. The rate of production in 2017 is expected to be around 1m sq ft, with near term (one to two years) growth unlikely to exceed 25% per annum, subject to demand and risk management.
The 7.5m sq ft of A1 sites have an end GDV of approximately GBP700m, GBP45m of rental value, build capex of approximately GBP425m, land capex of around GBP65m and a current land book value of GBP90m. Assuming profit on cost of our commercial developments is approximately 20%, this would equate to GBP115m potential profit across these sites.
In the first half of the year, commercial land values demonstrated ongoing resilience, with values holding firm, reflecting investment market conditions.
Residential land and development
Our residential business continues to have three streams of activity:
-- The sale of 'oven ready' development sites to third party housebuilders -- St. Modwen Homes -- Persimmon joint venture
The UK housebuilding market has remained resilient to date in 2017, particularly in the regions, with continued good demand for new homes delivered by the Group's housebuilding business, St. Modwen Homes, coupled with good levels of ongoing demand from third party house builders for 'oven ready' land for development.
Housebuilding
May May Nov
2017 2016 2016
Total units sold SMH:
Private 220 182 438
Affordable 10 20 47
Private sales rate SMH 0.8 0.6 0.8
Sales active sites 13 9 11
Average selling price
SMH:
Private GBP262k GBP199k GBP217k
Affordable GBP86k GBP83k GBP90k
Share of profit GBPm:
SMH 9.0 5.8 15.3
Persimmon JV (SMP share) 4.4 7.1 11.8
Total residential (GBPm) 13.4 12.9 27.1
SMH Operating profit
margin 15.3% 15.2% 13.4%
St. Modwen Homes is currently build-active on 17 sites across the UK, three of which were launched this year including a scheme of 85 homes at the Group's St. Andrews Park development in Uxbridge, Greater London. We anticipate this figure to grow to 20 sites by the end of 2017.
Sales volumes for St. Modwen Homes in the first half increased by 14% over the same period last year, with the associated growth in profits more than offsetting the reducing returns from the Persimmon JV as it concludes activity on the majority of the sites under the agreement and in line with plan.
Overall, housebuilding contributed GBP13.4m (2016: GBP12.9m) to profit before all tax comprising GBP9.0m from St. Modwen Homes (2016: GBP5.8m). These results are based on 230 units sold (2016: 202 units sold) and GBP4.4m (2016: GBP7.1m) from our Persimmon JV, based on a 50% share of 121 (2016: 259) units sold.
During the half year period, demonstrating the strength of demand for quality housing in the regions, the average private selling price of a St. Modwen Homes unit increased by 21% to GBP262,000 (2016: GBP217,000). This reflects a 4% increase in average selling prices, with the balance due to an increase in average unit size.
As previously indicated, activity in the Persimmon JV will reduce in line with plan over the next two years as it reaches its conclusion, with expected unit volumes reducing by 40% in 2017. Conversely, we expect St. Modwen Homes to increase unit volumes meaningfully and this should at least offset the reduced returns from the JV, with unit volumes in St. Modwen Homes anticipated to increase to approximately 700 units in 2017.
In the period, net operating margins for St. Modwen Homes were 15.3% (2016: 15.2%). Land is transferred to St. Modwen Homes from the Group at current market value rather than cost. Including the approximate GBP5m per annum of residential planning gains we generate each year, the margins would be approximately three percentage points higher.
Over the near term, margins are expected to remain close to current levels, reflecting our focus on maintaining our reputation for quality and brand, having recently been awarded with a 5* customer service and quality award from the Homebuilders Federation (HBF). In the medium term, opportunities have been identified to improve margins by approximately 2-3%, these include driving a reduction in site overhead costs, supply chain initiatives and buying, adding value through sales extras and ongoing efficiencies in overheads as the business scales up.
Residential land
In the period, we made GBP47m of acquisitions, principally into land for residential development at St. Andrew's Park, Uxbridge.
In response to ongoing appetite from third party housebuilders we have continued to agree and complete sales of residential land for prices at or above book value. Over the last six months, including our share of joint ventures, we sold or agreed for sale 35 acres of land representing 500 units for proceeds of GBP17m, in line with, or slightly above book value. For the full year we anticipate total sales proceeds of around GBP40m.
Residential pipeline - medium-term potential
As part of our strategic review, we also analysed the potential of our existing residential land bank over the medium-term (five years) and categorised it in terms of strength of location and readiness of deliverability. Our pipeline is summarised below:
Total residential pipeline - medium-term potential (excluding NCGM and South Wales)
Total plots 25,230
----------------------------------- ---------
NCGM / South Wales (10,730)
----------------------------------- ---------
Total plots excl. NCGM / South
Wales 14,500
----------------------------------- ---------
Third-party controlled 2,400
----------------------------------- ---------
Pipeline: total residential plots 16,900
----------------------------------- ---------
Deliverability (units)
------------ ---------------------------- --------
Location/
demand 1 2 3 Total
------------ --------- -------- ------- -------- -----
A 6,450 1,750 1,760 9,960 59%
B 4,300 940 1,240 6,480 38%
C 340 120 - 460 3%
------------ --------- -------- ------- -------- -----
Total 11,090 2,810 3,000 16,900
------------ --------- -------- ------- --------
66% 17% 17%
--------- -------- -------
These plots are broadly balanced between 9,200 identified for third party land sales and a pipeline of 7,700 for St. Modwen Homes. More than one third of our residential land bank is identified in A1 sites which are particularly well positioned in terms of location (concentrated in the Midlands and South) and readiness for delivery.
At current activity levels, the potential supply equates to approximately 10 years' of build for St. Modwen homes and 11 years' of third party sales, highlighting the opportunity to accelerate activity in both areas.
This year, we anticipate St. Modwen Homes will deliver up to 700 units. Growth in St. Modwen Homes will be carefully managed to balance against risk and protecting our brand and quality, with volume growth in the near term unlikely to exceed 25% per annum. The current average private selling price per unit is approximately GBP262,000 with operating margins of around 14%, build capex per unit of approximately GBP140,000 and land capex per unit of GBP22,000.
We expect residential land sales to other housebuilders over the medium term to increase to approximately GBP50-GBP60m per annum, with associated capital expenditure costs of GBP30-GBP40m to be netted off in bringing the land forward for sale. Our larger land holdings in South Wales are likely to require a different strategic approach to accelerate development activity and we are considering our options carefully.
Income generating portfolio
Representing GBP775m of value (43% of the portfolio), our income generating properties provided a robust and diverse see-through net rental and other income of GBP27.0m for the six months (2016: GBP26.9m) from over 1,700 occupiers. Managed by our skilled team of asset managers, the portfolio covers a broad range of sectors, such as industrial/ logistics, student accommodation and retail and can be separated into two distinct categories of assets:
- High yielding - comprising GBP320m of high yielding assets that provide opportunity for further development and value creation in the longer term; and
- Investment portfolio - comprising GBP455m of assets where our development and asset management activities are substantially complete.
As at 31st May 2017 our income generating portfolio was made up as follows:
High yielding portfolio Total income generating
Investment portfolio
Category Valuation Eq. Initial Valuation Eq. Initial Valuation Eq. Initial
(GBPm) yield yield (GBPm) yield yield (GBPm) yield yield
Industrial/
Logistics 204 8.6% 6.5% 64 7.4% 6.0% 268 8.4% 6.4%
Retail 103 9.5% 7.1% 238 6.8% 5.8% 341 7.7% 6.2%
Student/
PRS/ Other 13 9.5% 4.7% 153 5.4% 5.4% 166 5.9% 5.8%
Total 320 8.8% 6.6% 455 6.6% 5.9% 775 7.6% 6.7%
During the first half of the year, our income producing portfolio demonstrated continued resilience in both our industrial and logistics, and student accommodation sectors. Equivalent yields in industrial/ logistics remained steady at 8.4% (Nov 2016: 8.4%) and student accommodation equivalent yields moved inwards slightly to 5.9% (2016: 6.0%). Conversely and as previously indicated for 2017, there was some weakness in our retail portfolio in the first half, with some outward yield movement to 7.7% (Nov 2016: 7.5%) as inflation puts pressure on consumer spending. We expect a continuation of these themes by sector into the second half.
Realising value from the portfolio is an important element of our business model. During the first half we completed or agreed a number of notable sales totaling GBP36m of proceeds with GBP2m income and including Celtic Business Park in Newport, South Wales where specialist warehouse firm, Tilstone, acquired a 50,000 sq ft unit let to Amazon for GBP3.9m, representing a net initial yield of 6.3%.
As part of the six month strategic review, we have identified a GBP100m portfolio of 93 smaller value assets, equating to only 6% of our portfolio by value. We now intend to dispose of this portfolio over the next few years and in doing so, free up our resources to concentrate on fewer, larger projects as well as generating liquidity for reinvestment. We made good progress in the first half of the year, disposing of GBP15m of these assets.
Furthermore, we have also identified the opportunity to reposition the income producing portfolio over time towards sectors with good structural growth prospects by retaining a greater proportion of our higher yielding industrial/ logistics development pipeline as it completes, where the average yield on cost is approximately 8%. This will be substantially funded through the sale of our drier, lower yielding investment assets over time, principally in the retail sector, where the average yield is 7.7%.
Finally, as a result of sustained investor appetite for student housing, we are progressing with the sale of our student accommodation assets at the Bay Campus, Swansea University and we would expect a successful sale to release over GBP90m in proceeds.
Asset Management
During the half year, we have continued to add value through our actions to the portfolio, delivering GBP12.8m of added-value gains in the period, principally in our student accommodation and industrial and logistics assets, where we have delivered low single digit rental growth.
FINANCIAL REVIEW
Presentation of financial information
As we use a number of joint venture arrangements, the statutory financial statement disclosures do not always provide a straightforward way of understanding our business. Reconciliations between all the statutory and non-statutory measures and the explanations as to why the non-statutory measures give valuable further insight into the Group's performance are given in Note 2 to the condensed Group financial statements. In particular, profit before all tax is used because it reflects the way the Group is run on a proportionally consolidated basis, and because it also removes the taxation effects on equity accounted entities from the statutory profit before tax figure.
Income statement
2017 2016
(GBPm) (GBPm)
Net rental and other income 27.0. 26.9.
Property profits
11.5. 21.1.
* commercial
13.4. 12.9.
* residential(1)
Overheads (14.0) (14.9)
Operating profit 37.9. 46.0.
Interest (11.5) (11.6)
Trading profit 26.4. 34.4.
Valuation - added value 12.8. 14.9.
Valuation - market (2.2) 0.5.
Valuation - NCGM 9.4. (20.8)
Increase in provision for NCGM (9.2) -
market costs
Other finance (charges)/credits (7.9) 1.0.
Profit before all tax 29.3. 30.0.
Earnings per share (pence) 12.1. 11.8.
Cost coverage(2) 106% 101%
1. Residential property profits include direct residential overheads of GBP3.2m (2016: GBP2.1m)
2. Cost coverage - the ratio of recurring rental and other income to operating costs comprising interest and overheads, excluding the direct overheads relating to the residential business.
Net rental and other income
Our cost coverage is now 106% (2016: 101%), covering recurring overheads and interest costs with revenue from our income generating portfolio. We expect some short-term variability in this ratio as we execute strategic sales. The Group's share of net rental and other income increased marginally to GBP27.0m (2016: GBP26.9m) as asset management activity offset the loss of income from asset sales.
This proactive asset management also saw our occupancy levels maintained at 90% and, excluding the Bay Campus student accommodation at Swansea University, the average lease length has been maintained at five years.
Overheads
Administrative expenses for the period decreased to GBP14.0m (2016: GBP14.9m) through cost control and a reduction in one-off costs compared to the prior period.
Profit before all tax
Profit before all tax for the period was GBP29.3m (2016: GBP30.0m), and is stated before tax on joint venture income but after other finance charges, comprising non-cash movements, principally for discount unwinds and the market value of both our interest rate swaps and our convertible bond. The fair value of the convertible bond increased in the period to be trading slightly above par to 31(st) May 2017, principally as a result of our higher share price, resulting in a charge of GBP4.0m (2016: credit of GBP5.2m). This GBP9.2m variance from the prior period is the chief component of the increase in other finance charges, which together with the other non-cash financial items, totaled GBP7.9m (2016: GBP1.0m credit).
Taxation and profits after tax
Our total tax charge (including joint venture tax and deferred tax included in negative goodwill) for the year reduced to GBP2.4m (2016: GBP3.7m) resulting in profit after tax on a proportionally consolidated basis of GBP26.9m (2016: GBP26.3m). Basic earnings per share were 12.1 pence (2016: 11.8 pence). As a property group, tax and its treatment is often an integral part of transactions. The outcome of tax treatments, including tax planning, is recognised by the Group to the extent that the outcome is probable. The effective rate of tax for the period excluding our JVs decreased slightly to 15.1% (2016: 16.8%) due to higher indexation allowances from a higher inflationary environment. We expect our effective tax rate to remain slightly below the standard rate of tax of 19%, due to normal trading reliefs from which the Group can benefit.
Balance sheet
At the period end the shareholders' equity value of net assets was GBP974.3m (Nov 2016: GBP955.2m) or 439.6 pence per share (Nov 2016: 431.0 pence per share) representing a 2.0% increase after the 2016 final dividend payment of GBP9.0m (4.06 pence per share). Our interim dividend payable for 2017 is 2.02 (2016: 1.94) pence, an increase of 4.1% in line with management expectations of our full year result. Our EPRA net asset value rose 1.7% to 468.4 pence per share (Nov 2016: 460.5 pence per share).
May 2017 Nov 2016
Group JV Total Total
GBPm GBPm GBPm GBPm
Property portfolio 1,462.0 351.4 1,813.4. 1,752.3
Other assets 135.4 33.0 168.4. 166.4
Gross assets 1,597.4. 384.4. 1,981.8. 1,918.7.
Net borrowings (554.6) (25.7) (580.3) (517.0)
Finance leases (56.2) (0.9) (57.1) (57.7)
Other liabilities (187.1) (177.6) (364.7) (381.9)
Gross liabilities (797.9) (204.2) (1,002.1) (956.6)
Net assets 799.5. 180.2. 979.7. 962.1.
Non-controlling interests (5.4) - (5.4) (6.9)
Equity attributable to owners of the Company 794.1. 180.2. 974.3. 955.2.
NAV per share (pence) 439.6. 431.0
EPRA NAV per share (pence) 468.4. 460.5
See-through LTV 33.1% 30.5%
Total accounting return 2.6% 1.8%
This table is presented on a proportionally consolidated basis, including the Group's share of assets and liabilities of Joint Ventures and Associates in the Balance Sheet categories to which they relate, rather than on a statutory basis as one line representing the share of net assets of those joint ventures and associates. The comparative for total accounting return is for the equivalent six month period in the prior year.
NCGM
Since the period end we have exchanged contracts for the sale of our interest in Nine Elms Square, London. Our expected share of VSM's cash proceeds after overage, enabling costs and tax will be GBP190m upon contractual completion, of which GBP70m will be held in a restricted development account to fund our share of future obligations in respect of the completion of the new market facilities. The transaction is in line with our net book value.
The pro-forma impact on the key lines of the balance sheet is as follows:
NCGM post disposal pro-forma
May 2017 NCGM disposal Pro-forma post disposal
Total
GBPm GBPm GBPm
Property portfolio 1,813.4 (202.5) 1,610.9.
Net borrowings (580.3) 190.0 (390.3)
Other assets and liabilities (258.8) 12.5 (246.3)
Equity attributable to owners of the Company 974.3 - 974.3.
LTV 33.1% 25.2%
LTV (excl. residential land) 59.7% 40.2%
Financing
Taking into account growth in the valuation of the Group's portfolio, see-through loan-to-value increased to 33.1% (Nov 2016: 30.5%) and adjusted gearing (at amortised cost and excluding finance leases) increased to 56.6% (Nov 2016: 48.9%). Excluding residential land value, the Group's see-through loan-to-value ratio rose to 59.7% (Nov 2016: 54.3%). Although the Company's capital structure remains strong, we intend to reduce our see-through loan-to-value (excluding residential land) to below 40% over time by retaining a portion of the proceeds from both major asset sales highlighted above and normal cash generation.
Nov Nov Nov Nov May
2013 2014 2015 2016 2017
Group adjusted gearing 54.3% 46.6% 48.1% 48.9% 56.6%
See-through loan-to-value 32.7% 30.6% 29.9% 30.5% 33.1%
See-through loan-to-value excluding
residential land value 56.6% 55.4% 55.6% 54.3% 59.7%
Group adjusted gearing, see-through loan-to-value and see-through loan-to-value excluding residential land value are reconciled in Note 2i to the condensed Group financial statements.
Corporate facilities
Our weighted average facility life is 3.2 years (Nov 2016: 3.7 years) and we have no facility maturities until 2019. We have reduced our weighted average cost of debt to 3.7% (Nov 2016: 3.8%) and, with GBP722m of see-through committed facilities against see-through net borrowings of GBP580.3m, we have ample funding to transact.
Hedging, cost of debt and corporate funding covenants
We aim to have predictable costs attached to our borrowing and therefore hedge a significant portion of our interest rate risk. At the period end, 65% (Nov 2016: 50%) of our borrowings were fixed or hedged. As any new financing is put in place we will ensure that our hedging positions are appropriate for our future development expectations. Covenant compliance continues at all levels and across all metrics and we continue to operate with considerable headroom against all measures.
Principal risks and uncertainties
The key risks which could have a material impact on the Group's performance, together with the corresponding mitigating actions, are set out on pages 49 to 52 of the Annual Report for the year ended 30th November 2016, which is available at www.stmodwen.co.uk.
These risks comprise uncertainty in the economic, political and market environment; the availability of funding and the management of cash flow fluctuations; management of construction and development (including joint venture arrangements); regulatory, operational and compliance risk; and recruiting, developing and retaining highly skilled staff. These risks are expected to continue to remain relevant for the second half of the financial year.
Mark Allan Rob Hudson Chief Executive Group Finance Director
3(rd) July 2017
Condensed Group income statement
for the six months ended 31st May 2017
Unaudited Unaudited Audited
31st May 31st May 30th Nov
2017 2016 2016
Notes GBPm GBPm GBPm
--------------------------------------------- ----- --------- --------- --------
Revenue 1 151.4 159.7 287.7
--------------------------------------------- ----- --------- --------- --------
Net rental income 1 22.4 21.8 40.5
Development profits 1 25.0 34.9 51.7
Gains on disposals of investments/investment
properties 1 1.0 0.5 9.5
Investment property revaluation gains 9.3 16.8 30.3
Other net income 1 2.0 2.1 4.2
Profits/(losses) of joint ventures
and associates (post-tax) 3 0.4 (19.4) (28.2)
Administrative expenses (17.0) (16.8) (33.0)
--------------------------------------------- ----- --------- --------- --------
Profit before interest and tax 43.1 39.9 75.0
Finance costs 4 (17.0) (11.2) (23.0)
Finance income 4 5.5 6.8 14.9
--------------------------------------------- ----- --------- --------- --------
Profit before tax 31.6 35.5 66.9
Taxation 7a (4.7) (9.2) (13.3)
--------------------------------------------- ----- --------- --------- --------
Profit for the year 26.9 26.3 53.6
--------------------------------------------- ----- --------- --------- --------
Attributable to:
Owners of the Company 26.8 26.1 53.4
Non-controlling interests 0.1 0.2 0.2
--------------------------------------------- ----- --------- --------
Profit for the year 26.9 26.3 53.6
--------------------------------------------- ----- --------- --------- --------
Unaudited Unaudited Audited
31st May 31st May 30th Nov
2017 2016 2016
Notes Pence Pence Pence
--------------------------------------------- ----- --------- --------- --------
Basic earnings per share 5 12.1 11.8 24.1
Diluted earnings per share 5 12.0 9.1 19.8
--------------------------------------------- ----- --------- --------- --------
Condensed Group statement of comprehensive income
for the six months ended 31st May 2017
Unaudited Unaudited Audited
31st May 31st May 30th Nov
2017 2016 2016
GBPm GBPm GBPm
--------------------------------------- --------- --------- --------
Profit for the year 26.9 26.3 53.6
Items that will not be reclassified
to profit and loss:
Pension fund actuarial losses - - (0.1)
--------- --------- --------
Total comprehensive income for the
year 26.9 26.3 53.5
---------------------------------------- --------- --------- --------
Attributable to:
Owners of the Company 26.8 26.1 53.4
Non-controlling interests 0.1 0.2 0.2
---------------------------------------- --------- --------- --------
Total comprehensive income for the
year 26.9 26.3 53.6
---------------------------------------- --------- --------- --------
Condensed Group balance sheet
as at 31st May 2017
Unaudited Unaudited Audited
31st May 31st May 30th Nov
2017 2016 2016
Notes GBPm GBPm (restated) GBPm (restated)
----------------------------------------- ----- --------- --------------- ---------------
Non-current assets
Investment properties 1,167.2 1,136.2 1,144.7
Operating property, plant and equipment 4.4 4.2 4.2
Investments in joint ventures and
associates 180.2 194.3 184.8
Trade and other receivables 2.1 6.4 8.2
1,353.9 1,341.1 1,341.9
----------------------------------------- ----- --------- --------------- ---------------
Current assets
Inventories 298.7 186.1 229.7
Trade and other receivables 123.6 95.5 104.1
Derivative financial instruments 6 1.4 0.8 1.6
Cash and cash equivalents 8.8 4.5 4.2
432.5 286.9 339.6
----------------------------------------- ----- --------- --------------- ---------------
Current liabilities
Trade and other payables (144.9) (130.9) (150.5)
Derivative financial instruments 6 (8.7) (8.5) (8.8)
Borrowings and finance lease obligations (0.4) (0.4) (0.4)
Current tax liabilities (8.9) (12.8) (7.1)
(162.9) (152.6) (166.8)
----------------------------------------- ----- --------- --------------- ---------------
Non-current liabilities
Trade and other payables (3.7) (3.9) (3.6)
Borrowings and finance lease obligations (619.6) (513.6) (527.0)
Deferred tax (20.5) (18.5) (22.0)
(643.8) (536.0) (552.6)
----------------------------------------- ----- --------- --------------- ---------------
Net assets 979.7 939.4 962.1
----------------------------------------- ----- --------- --------------- ---------------
Capital and reserves
Share capital 22.2 22.2 22.2
Share premium account 102.8 102.8 102.8
Retained earnings 797.5 756.6 779.7
Share incentive reserve 6.3 5.5 4.9
Own shares (0.7) (0.9) (0.6)
Other reserves 46.2 46.2 46.2
----------------------------------------- ----- --------- --------------- ---------------
Equity attributable to owners of the
Company 974.3 932.4 955.2
Non-controlling interests 5.4 7.0 6.9
Total equity 979.7 939.4 962.1
----------------------------------------- ----- --------- --------------- ---------------
Condensed Group statement of changes in equity
for the six months ended 31st May 2017
Six months ended 31st May 2017 (unaudited)
Share Share Retained Share Own Other Equity Non-control-ling Total
capital premium earnings incentive shares reserves attribut-able interests equity
account reserve to owners
of the
Company
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- -------- -------- --------- --------- ------- --------- ------------- ---------------- -------
Equity at 1st
December
2016 22.2 102.8 779.7 4.9 (0.6) 46.2 955.2 6.9 962.1
Profit for the
year
attributable
to
shareholders - - 26.8 - - - 26.8 0.1 26.9
Total
comprehensive
income
for the
period - - 26.8 - - - 26.8 0.1 26.9
-------------- -------- -------- --------- --------- ------- --------- ------------- ---------------- -------
Share-based
payments - - - 1.2 - - 1.2 - 1.2
Deferred tax
on
share-based
payments - - - 0.3 - - 0.3 - 0.3
Settlement of
share-based
payments - - - (0.1) (0.1) - (0.2) - (0.2)
Dividends paid - - (9.0) - - - (9.0) (1.6) (10.6)
-------------- -------- -------- --------- --------- ------- --------- ------------- ---------------- -------
Equity at 31st
May 2017 22.2 102.8 797.5 6.3 (0.7) 46.2 974.3 5.4 979.7
-------------- -------- -------- --------- --------- ------- --------- ------------- ---------------- -------
Six months ended 31st May 2016 (unaudited)
Share Share Retained Share Own Other Equity Non-control-ling Total
capital premium earnings incentive shares reserves attribut-able interests equity
account reserve to owners
of the
Company
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- -------- -------- --------- --------- ------- --------- ------------- ---------------- -------
Equity at 1st
December
2015 22.2 102.8 739.3 5.2 (1.0) 46.2 914.7 6.8 921.5
Profit for the
year
attributable
to
shareholders - - 26.1 - - - 26.1 0.2 26.3
Total
comprehensive
income
for the
period - - 26.1 - - - 26.1 0.2 26.3
-------------- -------- -------- --------- --------- ------- --------- ------------- ---------------- -------
Share-based
payments - - - 0.9 - - 0.9 - 0.9
Deferred tax
on
share-based
payments - - - (0.5) - - (0.5) - (0.5)
Settlement of
share-based
payments - - (0.3) (0.1) 0.1 - (0.3) - (0.3)
Dividends paid - - (8.5) - - - (8.5) - (8.5)
--------------
Equity at 31st
May 2016 22.2 102.8 756.6 5.5 (0.9) 46.2 932.4 7.0 939.4
-------------- -------- -------- --------- --------- ------- --------- ------------- ---------------- -------
Year ended 30th November 2016 (audited)
Share Share Retained Share Own Other Equity Non-control-ling Total
capital premium earnings incentive shares reserves attribut-able interests equity
account reserve to owners
of the
Company
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- -------- -------- --------- --------- ------- --------- ------------- ---------------- -------
Equity at 1st
December
2015 22.2 102.8 739.3 5.2 (1.0) 46.2 914.7 6.8 921.5
Profit for the
year
attributable
to
shareholders - - 53.4 - - - 53.4 0.2 53.6
Pension fund
actuarial
losses - - (0.1) - - - (0.1) - (0.1)
Total
comprehensive
income
for the year - - 53.3 - - - 53.3 0.2 53.5
-------------- -------- -------- --------- --------- ------- --------- ------------- ---------------- -------
Share-based
payments - - - 1.6 - - 1.6 - 1.6
Deferred tax
on
share-based
payments - - - (0.8) - - (0.8) - (0.8)
Settlement of
share-based
payments - - (0.1) (1.1) 0.4 - (0.8) - (0.8)
Dividends paid - - (12.8) - - - (12.8) (0.1) (12.9)
--------------
Equity at 30th
November
2016 22.2 102.8 779.7 4.9 (0.6) 46.2 955.2 6.9 962.1
-------------- -------- -------- --------- --------- ------- --------- ------------- ---------------- -------
Own shares represent the cost of 251,820 (31st May 2016: 603,303,
30th November 2016: 269,334) shares held by The St. Modwen Properties
PLC Employee Share Trust. The open market value of the shares held
at 31st May 2017 was GBP875,830 (31st May 2016: GBP1,969,784, 30th
November 2016: GBP754,135).
The other reserves comprise a capital redemption reserve of GBP0.3m
(31st May 2016: GBP0.3m, 30th November 2016: GBP0.3m) and the balance
of net proceeds in excess of the nominal value of shares arising from
an equity placing in 2013 of GBP45.9m (31st May 2016: GBP45.9m, 30th
November 2016: GBP45.9m).
Condensed Group cash flow statement
for the six months ended 31st May 2017
Unaudited Unaudited Audited
31st May 31st May 30th Nov
2017 2016 2016
GBPm GBPm GBPm
---------------------------------------------------- --------- --------- --------
Operating activities
Profit before interest and tax 43.1 39.9 75.0
Gains on disposal of investments/investment
properties (1.0) (0.5) (9.5)
(Profits)/losses of joint ventures and associates
(post-tax) (0.4) 19.4 28.2
Investment property revaluation gains (9.3) (16.8) (30.3)
Depreciation 0.3 0.3 0.7
Impairment losses on inventories 0.2 0.3 0.3
Increase in inventories (55.0) (2.7) (31.2)
(Increase)/decrease in trade and other receivables (15.2) 3.2 (14.3)
(Decrease)/increase in trade and other payables (11.3) (15.0) 4.3
Share options and share awards 1.3 0.1 -
Tax paid (4.4) (4.4) (10.7)
Net cash (outflow)/inflow from operating activities (51.7) 23.8 12.5
---------------------------------------------------- --------- --------- --------
Investing activities
Proceeds from investment property disposals 15.5 22.8 64.3
Investment property additions (34.6) (54.9) (90.0)
Interest received 5.1 1.1 5.4
Property, plant and equipment additions (0.5) (0.3) (0.6)
Dividends received from joint ventures and
associates 5.0 14.3 14.3
Net cash outflow from investing activities (9.5) (17.0) (6.6)
---------------------------------------------------- --------- --------- --------
Financing activities
Dividends paid (9.0) (8.5) (12.8)
Dividends paid to non-controlling interests (1.6) - (0.1)
Interest paid (11.2) (10.9) (20.7)
Amounts advanced under finance lease arrangements (1.6) 1.7 0.6
Borrowings drawn 133.2 51.6 160.5
Repayment of borrowings (44.0) (41.0) (134.0)
Net cash inflow/(outflow) from financing activities 65.8 (7.1) (6.5)
---------------------------------------------------- --------- --------- --------
Increase/(decrease) in cash and cash equivalents 4.6 (0.3) (0.6)
---------------------------------------------------- --------- --------- --------
Cash and cash equivalents at start of period 4.2 4.8 4.8
Cash and cash equivalents at end of period 8.8 4.5 4.2
---------------------------------------------------- --------- --------- --------
Cash 8.8 4.5 4.2
Bank overdrafts - - -
Cash and cash equivalents at end of period 8.8 4.5 4.2
---------------------------------------------------- --------- --------- --------
Condensed Group accounting policies
for the six months ended 31st May 2017
Basis of preparation
The annual financial statements of the St. Modwen Properties PLC group
(the Group) are prepared in accordance with International Financial
Reporting Standards (IFRSs) as issued by the International Accounting
Standards Board (IASB) and as adopted by the European Union (EU),
applied in accordance with the provisions of the Companies Act 2006.
The condensed Group financial statements included in this Half Year
Results Announcement have been prepared in accordance with IAS 34
Interim Financial Reporting as adopted by the EU.
The condensed Group financial statements have been prepared on the
basis of the accounting policies and methods of computation as set
out in the notes to the Group's annual financial statements for the
year ended 30th November 2016, except for the presentation of lease
incentive assets on the balance sheet as set out below.
In the six months ended 31st May 2017 the Group has adopted:
-- Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities:
Applying the Consolidation Exception
-- Amendments to IFRS 11 Accounting for Acquisitions of Interests
in Joint Operations
-- Amendments to IAS 1 and IAS 7 Disclosure Initiative
-- Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods
of Depreciation and Amortisation
-- Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants
-- Amendments to IFRSs Annual Improvements to IFRSs 2012 - 2014 Cycle
The adoption of the above amendments has had no material impact on
the condensed Group financial statements.
The financial information for the year ended 30th November 2016 does
not constitute statutory accounts as defined in section 434 of the
Companies Act 2006, but is derived from those accounts. A copy of
the statutory accounts for that year has been delivered to the Registrar
of Companies. The auditors reported on those accounts: their report
was unqualified, did not draw attention to any matters by way of emphasis
and did not contain a statement under sections 498(2) or (3) of the
Companies Act 2006.
All results are derived from continuing activities, which the directors
do not consider to be seasonal.
Prior period restatement
During the six months ended 31st May 2017, the presentation of lease
incentive assets arising from rent-free periods, stepped rent agreements
and cash tenant incentives has been reviewed and compared with industry
peers. These assets were previously reported as a separate receivable
on the balance sheet and deducted from the external property valuation
in arriving at the reported investment properties balance. In order
to better reflect the property portfolio balance reported in note
2 and to align the presentation with that adopted by many industry
peers, these assets of GBP11.8m have been reclassified from trade
and other receivables to investment properties in the six months ended
31st May 2017.
As a result of this change in accounting policy, the balance sheets
as at both 31st May 2016 and 30th November 2016 have been retrospectively
restated in these condensed financial statements by reclassifying
GBP11.7m from trade and other receivables to investment properties.
This restatement has had no impact on the income statement, total
assets, net assets or any of the numbers or metrics disclosed in note
2.
Going concern
The Group's business activities, together with the factors likely
to affect its future development, performance and position are set
out in the half year results. The directors have considered these
factors and reviewed the financial position of the Group, including
its joint ventures.
The review included an assessment of future funding requirements based
on cash flow forecasts extending to 30th November 2018, valuation
projections and the ability of the Group to meet covenants on existing
borrowing facilities. The directors were satisfied that the forecasts
and projections were based on realistic assumptions and that the sensitivities
applied in reviewing downside scenarios were appropriate.
There are no Group or joint venture facilities that require renewal
before 2019. Principal risks and uncertainties are discussed in the
Financial review.
Based on their assessment, the directors are of the opinion that the
Group has adequate committed resources to fund its operations for
the foreseeable future and so determine that it remains appropriate
for the condensed Group financial statements to be prepared on a going
concern basis.
Notes to the condensed Group financial statements
for the six months ended 31st May 2017
1. Segmental information
a. Reportable segments
IFRS 8 Operating Segments requires the identification of the Group's
operating segments, defined as being discrete components of the Group's
operations whose results are regularly reviewed by the Chief Operating
Decision Maker (being the Chief Executive) to allocate resources to
those segments and to assess their performance. The Group divides its
business into the following segments:
-- residential development, being housebuilding activity through St.
Modwen Homes and the Persimmon joint venture; and
-- the balance of the Group's portfolio of properties which the Group
manages internally, and reports, as a single business segment.
The accounting policies of the reportable segments are the same as
the Group's accounting policies.
b. Segment revenues and results
Six months ended 31st May
2017 (unaudited)
Portfolio Residential Total
development
GBPm GBPm GBPm
-------------------------------------------- ----------- ------------- -----
Rental income 27.2 - 27.2
Development 43.7 77.6 121.3
Other income 2.9 - 2.9
Revenue 73.8 77.6 151.4
-------------------------------------------- ----------- ------------- -----
Six months ended 31st May
2016 (unaudited)
Portfolio Residential Total
development
GBPm GBPm GBPm
-------------------------------------------- ----------- ------------- -----
Rental income 26.7 - 26.7
Development 60.2 69.8 130.0
Other income 3.0 - 3.0
Revenue 89.9 69.8 159.7
-------------------------------------------- ----------- ------------- -----
Year ended 30th November
2016 (audited)
Portfolio Residential Total
development
GBPm GBPm GBPm
-------------------------------------------- ----------- ------------- -----
Rental income 53.1 - 53.1
Development 77.8 150.0 227.8
Other income 6.8 - 6.8
Revenue 137.7 150.0 287.7
-------------------------------------------- ----------- ------------- -----
All revenues in the table above are derived from continuing
operations exclusively in the UK.
Six months ended 31st May
2017 (unaudited)
Portfolio Residential Total
development
(1)
GBPm GBPm GBPm
----------------------------------------------- ---------- -------------- -------
Net rental income 22.4 - 22.4
Development profits 8.4 16.6 25.0
Gains on disposal of investments/investment
properties 1.0 - 1.0
Investment property revaluation gains 9.3 - 9.3
Other net income 2.0 - 2.0
Profits of joint ventures and associates
(2) 0.5 - 0.5
Administrative expenses (13.8) (3.2) (17.0)
Allocation of administrative expenses 2.0 (2.0) -
Finance costs (3) (11.1) - (11.1)
Finance income (4) 5.1 - 5.1
Attributable profit 25.8 11.4 37.2
----------------------------------------------- ---------- -------------- -------
Other losses of joint ventures and associates
(2) (0.1)
Other finance costs (3) (5.9)
Other finance income (4) 0.4
Profit before tax 31.6
----------------------------------------------- ---------- -------------- -------
Six months ended 31st May
2016 (unaudited)
Portfolio Residential Total
development
(1)
GBPm GBPm GBPm
----------------------------------------------- ---------- -------------- -------
Net rental income 21.8 - 21.8
Development profits 19.9 15.0 34.9
Gains on disposal of investments/investment
properties 0.5 - 0.5
Investment property revaluation gains 16.8 - 16.8
Other net income 2.1 - 2.1
Losses of joint ventures and associates (2) (22.5) - (22.5)
Administrative expenses (14.7) (2.1) (16.8)
Allocation of administrative expenses 2.4 (2.4) -
Finance costs (3) (8.1) (0.8) (8.9)
Finance income (4) 1.1 - 1.1
Attributable profit 19.3 9.7 29.0
----------------------------------------------- ---------- -------------- -------
Other profits of joint ventures and associates
(2) 3.1
Other finance costs (3) (2.3)
Other finance income (4) 5.7
Profit before tax 35.5
----------------------------------------------- ---------- -------------- -------
Year ended 30th November
2016 (audited)
Portfolio Residential Total
development
(1)
GBPm GBPm GBPm
----------------------------------------------- ---------- -------------- -------
Net rental income 40.5 - 40.5
Development profits 20.1 31.6 51.7
Gains on disposal of investments/investment
properties 9.5 - 9.5
Investment property revaluation gains 30.3 - 30.3
Other net income 4.2 - 4.2
Losses of joint ventures and associates (2) (18.4) - (18.4)
Administrative expenses (28.5) (4.5) (33.0)
Allocation of administrative expenses 5.2 (5.2) -
Finance costs (3) (19.2) - (19.2)
Finance income (4) 5.4 - 5.4
Attributable profit 49.1 21.9 71.0
----------------------------------------------- ---------- -------------- -------
Other losses of joint ventures and associates
(2) (9.8)
Other finance costs (3) (3.8)
Other finance income (4) 9.5
Profit before tax 66.9
----------------------------------------------- ---------- -------------- -------
(1) In the half year results, housebuilding profit of GBP13.4m (six
months ended 31st May 2016: GBP12.9m, year ended 30th November 2016:
GBP27.1m) is stated before the allocation of administrative expenses
and finance costs of GBP2.0m (six months ended 31st May 2016: GBP3.2m,
year ended 30th November 2016: GBP5.2m).
(2) Stated before non-cash finance costs and income (being amortisation
and movements in the fair value of derivative financial instruments)
and tax of GBP0.1m (six months ended 31st May 2016: GBP3.1m, year ended
30th November 2016: GBP9.8m). These amounts are reclassified to other
profits/(losses) of joint ventures and associates.
(3) Finance costs represent interest payable on borrowings and finance
lease obligations. Other finance costs represent non-cash items, being
amortisation, movements in the fair value of financial instruments
and interest on pension scheme liabilities, as set out in note 4.
(4) Finance income represents interest receivable. Other finance income
represents non-cash items, being movements in the fair value of financial
instruments and interest on pension scheme assets, as set out in note
4.
c. Segment assets and liabilities
As at 31st May 2017 (unaudited)
Portfolio Residential Total
development
GBPm GBPm GBPm
----------------------------------------------- ---------- -------------- -------
Investment property 1,167.2 - 1,167.2
Inventories 141.9 156.8 298.7
Investments in joint ventures and associates 180.2 - 180.2
Attributable assets 1,489.3 156.8 1,646.1
----------------------------------------------- ---------- -------------- -------
Operating property plant and equipment 4.4
Trade and other receivables 125.7
Cash and cash equivalents 8.8
Trade and other payables (148.6)
Derivative financial instruments (7.3)
Borrowings and finance lease obligations (620.0)
Tax payable (8.9)
Deferred tax (20.5)
Net assets 979.7
----------------------------------------------- ---------- -------------- -------
As at 31st May 2016 (unaudited
and restated)
Portfolio Residential Total
development
GBPm GBPm GBPm
----------------------------------------------- ---------- -------------- -------
Investment property 1,136.2 - 1,136.2
Inventories 76.7 109.4 186.1
Investments in joint ventures and associates 194.3 - 194.3
Attributable assets 1,407.2 109.4 1,516.6
----------------------------------------------- ---------- -------------- -------
Operating property plant and equipment 4.2
Trade and other receivables 101.9
Cash and cash equivalents 4.5
Trade and other payables (134.8)
Derivative financial instruments (7.7)
Borrowings and finance lease obligations (514.0)
Tax payable (12.8)
Deferred tax (18.5)
Net assets 939.4
----------------------------------------------- ---------- -------------- -------
As at 30th November 2016
(audited and restated)
Portfolio Residential Total
development
GBPm GBPm GBPm
--------------------------------------------- --------- ------------ -------
Investment property 1,144.7 - 1,144.7
Inventories 103.5 126.2 229.7
Investments in joint ventures and associates 184.8 - 184.8
Attributable assets 1,433.0 126.2 1,559.2
--------------------------------------------- --------- ------------ -------
Operating property plant and equipment 4.2
Trade and other receivables 112.3
Cash and cash equivalents 4.2
Trade and other payables (154.1)
Derivative financial instruments (7.2)
Borrowings and finance lease obligations (527.4)
Tax payable (7.1)
Deferred tax (22.0)
Net assets 962.1
--------------------------------------------- --------- ------------ -------
2. Non-statutory information
The purpose of this note is to explain, analyse and reconcile a number
of non-statutory financial performance and financial position metrics,
which are used extensively by the Group to monitor its performance.
These metrics reflect the way in which the Group is run and in particular
that the Group reviews and reports performance of its joint ventures
and associates in the same way as it would if they were subsidiaries.
This means that proportionally consolidated measures (often referred
to as see-through in the half year results) are particularly relevant,
whilst also having the benefit of removing the taxation effects on
equity accounted entities from the statutory profit before tax figure.
A number of these measures are explained below:
Profit before all tax (See note 2a): This proportionally consolidated
measure adjusts profit before tax to remove taxation on joint venture
and associate profits from the profit before tax figure.
Trading profit (See note 2a): Trading profit is derived similarly
to profit before all tax, but is stated before the principal non-cash
income statement items included in this measure, being revaluation
gains and losses, changes in the estimate of the obligation to establish
the new Covent Garden flower market and non-cash financing charges.
For a property company with a low depreciation charge and no intangible
amortisation charge, this therefore represents a more useful measure
than the EBITDA alternative performance measure used by many other
companies. We also disclose a trading cash flow measure in note 2f,
which represents cash flows before the non-trading items of finance
leases, net borrowings and dividends.
Property profits (See note 2a): This measure represents proportionally
consolidated development profits plus proportionally consolidated
gains on disposals of investment properties and therefore, like profit
before all tax, ostensibly represents the proportionally consolidated
amounts in respect of these two income statement lines, after a (historically
de minimis) adjustment for net realisable value provisions.
EPRA NAV per share (See note 2g): Whilst it is a non-GAAP measure,
EPRA NAV is a standard real estate measure. Its objective is to highlight
the fair value of net assets on an ongoing, long-term basis. Assets
and liabilities that are not expected to crystallise in normal circumstances
such as the fair value of derivative financial instruments and deferred
taxes on property valuation surpluses are therefore excluded, which
facilitates a more objective comparison with peer companies.
Total accounting return (See note 2g): Our shareholders measure their
returns in terms of both the Group's growth and the dividend return.
Total accounting return combines these two items by adding EPRA NAV
per share (defined above) to the dividend paid per share during the
period and measuring this against opening EPRA NAV per share. Whilst
this is often measured by Total Shareholder Return which combines
share price growth and dividend return, in the real estate sector,
it is also insightful to consider net asset growth, which therefore
directly reflects the most recent valuation of assets.
a. Trading profit and profit before all tax
The non-statutory measures of trading profit and profit before all
tax, which include the Group's share of joint ventures and associates,
have been calculated as set out below:
Six months ended 31st May
2017 (unaudited)
Group Joint ventures Total
and associates
GBPm GBPm GBPm
----------------------------------------------- ------ --------------- ------
Net rental income 22.4 2.6 25.0
Development profits (1) 25.2 0.9 26.1
Gains on disposal of investments/investment
properties 1.0 1.0 2.0
Other net income 2.0 - 2.0
Administrative expenses (17.0) (0.2) (17.2)
Finance costs (2) (11.1) (5.5) (16.6)
Finance income (3) 5.1 - 5.1
Trading profit/(loss) 27.6 (1.2) 26.4
----------------------------------------------- ------ --------------- ------
Investment property revaluation gains (1) 9.1 10.9 20.0
Change in estimated cost to establish a market
in Nine Elms - (9.2) (9.2)
Other finance costs (2) (5.9) (2.7) (8.6)
Other finance income (3) 0.4 0.3 0.7
Profit/(loss) before all tax 31.2 (1.9) 29.3
----------------------------------------------- ------ --------------- ------
Taxation (4.7) 2.3 (2.4)
Profit for the year 26.5 0.4 26.9
----------------------------------------------- ------ --------------- ------
Effective tax rate 15.1% 121.1% 8.2%
----------------------------------------------- ------ --------------- ------
Six months ended 31st May
2016 (unaudited)
Group Joint ventures Total
and associates
GBPm GBPm GBPm
----------------------------------------------- ------ --------------- ------
Net rental income 21.8 3.0 24.8
Development profits (1) 35.2 - 35.2
Gains on disposal of investments/investment
properties 0.5 0.4 0.9
Other net income 2.1 - 2.1
Administrative expenses (16.8) (0.2) (17.0)
Finance costs (2) (8.9) (3.9) (12.8)
Finance income (3) 1.1 0.1 1.2
Trading profit/(loss) 35.0 (0.6) 34.4
----------------------------------------------- ------ --------------- ------
Investment property revaluation gains/(losses)
(1) 16.5 (21.9) (5.4)
Other finance costs (2) (2.3) (2.4) (4.7)
Other finance income (3) 5.7 - 5.7
Profit/(loss) before all tax 54.9 (24.9) 30.0
----------------------------------------------- ------ --------------- ------
Taxation (9.2) 5.5 (3.7)
Profit/(loss) for the year 45.7 (19.4) 26.3
----------------------------------------------- ------ --------------- ------
Effective tax rate 16.8% 22.1% 12.3%
----------------------------------------------- ------ --------------- ------
Year ended 30th November
2016 (audited)
Group Joint ventures Total
and associates
GBPm GBPm GBPm
------------------------------------------------- ------ --------------- ------
Net rental income 40.5 5.4 45.9
Development profits (1) 52.0 - 52.0
Gains on disposal of investments/investment
properties 9.5 0.5 10.0
Other net income 4.2 - 4.2
Administrative expenses (33.0) (0.8) (33.8)
Finance costs (2) (19.2) (9.2) (28.4)
Finance income (3) 5.4 0.8 6.2
Trading profit/(loss) 59.4 (3.3) 56.1
------------------------------------------------- ------ --------------- ------
Investment property revaluation gains/(losses)
(1) 30.0 (25.9) 4.1
Other finance costs (2) (3.8) (5.8) (9.6)
Other finance income (3) 9.5 0.7 10.2
Profit/(loss) before all tax 95.1 (34.3) 60.8
------------------------------------------------- ------ --------------- ------
Taxation (13.3) 6.1 (7.2)
Profit/(loss) for the year 81.8 (28.2) 53.6
------------------------------------------------- ------ --------------- ------
Effective tax rate 14.0% 17.8% 11.8%
------------------------------------------------- ------ --------------- ------
(1) Stated before the deduction of net realisable valuation provisions
within the Group of GBP0.2m (six months ended 31st May 2016: GBP0.3m,
year ended 30th November 2016: GBP0.3m) and for joint ventures and
associates of GBPnil (six months ended 31st May 2016: GBPnil, year
ended 30th November 2016: GBPnil). These items are reclassified to
investment property revaluation gains/(losses).
(2) Finance costs represent interest payable on borrowings and finance
lease obligations. Other finance costs represent non-cash items, being
amortisation, movements in the fair value of financial instruments
and interest on pension scheme liabilities, as set out in note 4.
(3) Finance income represents interest receivable. Other finance income
represents non-cash items, being movements in the fair value of financial
instruments and interest on pension scheme assets, as set out in note
4.
b. Property valuations
Property valuations, including, the Group's share of joint ventures
and associates, have been calculated as set out below, with the split
of property valuation gains/(losses) between added value and market
movements being based on an analysis of total property valuation movements
provided by the Group's external valuers:
Six months ended 31st May
2017 (unaudited)
Group Joint ventures Total
and associates
GBPm GBPm GBPm
------------------------------------------------- ------ --------------- ------
Property revaluation gains 9.3 10.9 20.2
Net realisable value provisions (0.2) - (0.2)
Property valuation gains 9.1 10.9 20.0
------------------------------------------------- ------ --------------- ------
Added value 10.2 2.6 12.8
Market movements (1.1) 8.3 7.2
Property valuation gains 9.1 10.9 20.0
------------------------------------------------- ------ --------------- ------
Six months ended 31st May
2016 (unaudited)
Group Joint ventures Total
and associates
GBPm GBPm GBPm
------------------------------------------------- ------ --------------- ------
Property revaluation gains/(losses) 16.8 (21.9) (5.1)
Net realisable value provisions (0.3) - (0.3)
Property valuation gains/(losses) 16.5 (21.9) (5.4)
------------------------------------------------- ------ --------------- ------
Added value 14.9 - 14.9
Market movements 1.6 (21.9) (20.3)
Property valuation gains/(losses) 16.5 (21.9) (5.4)
------------------------------------------------- ------ --------------- ------
Year ended 30th November
2016 (audited)
Group Joint ventures Total
and associates
GBPm GBPm GBPm
--------------------------------------------- ------- --------------- ---------
Property revaluation gains/(losses) 30.3 (25.9) 4.4
Net realisable value provisions (0.3) - (0.3)
Property valuation gains/(losses) 30.0 (25.9) 4.1
--------------------------------------------- ------- --------------- ---------
Added value 27.5 0.8 28.3
Market movements 2.5 (26.7) (24.2)
Property valuation gains/(losses) 30.0 (25.9) 4.1
--------------------------------------------- ------- --------------- ---------
c. Balance sheet
The balance sheet, including the Group's share of joint ventures and
associates, is derived from the Group balance sheet as detailed below:
As at 31st May 2017 (unaudited)
Group Joint ventures Total
and associates
GBPm GBPm GBPm
--------------------------------------------- ------- --------------- ---------
Property portfolio 1,462.0 351.4 1,813.4
Other assets 135.4 33.0 168.4
Gross assets 1,597.4 384.4 1,981.8
--------------------------------------------- ------- --------------- ---------
Net borrowings (554.6) (25.7) (580.3)
Finance leases (56.2) (0.9) (57.1)
Other liabilities (187.1) (177.6) (364.7)
Gross liabilities (797.9) (204.2) (1,002.1)
--------------------------------------------- ------- --------------- ---------
Net assets 799.5 180.2 979.7
--------------------------------------------- ------- --------------- ---------
Non-controlling interests (5.4) - (5.4)
Equity attributable to owners of the Company 794.1 180.2 974.3
--------------------------------------------- ------- --------------- ---------
As at 31st May 2016 (unaudited)
Group Joint ventures Total
and associates
GBPm GBPm GBPm
--------------------------------------------- ------- --------------- ---------
Property portfolio 1,318.4 380.5 1,698.9
Other assets 110.8 42.6 153.4
Gross assets 1,429.2 423.1 1,852.3
--------------------------------------------- ------- --------------- ---------
Net borrowings (453.8) (46.8) (500.6)
Finance leases (56.8) (1.8) (58.6)
Other liabilities (173.5) (180.2) (353.7)
Gross liabilities (684.1) (228.8) (912.9)
--------------------------------------------- ------- --------------- ---------
Net assets 745.1 194.3 939.4
--------------------------------------------- ------- --------------- ---------
Non-controlling interests (7.0) - (7.0)
Equity attributable to owners of the Company 738.1 194.3 932.4
--------------------------------------------- ------- --------------- ---------
As at 30th November 2016
(audited)
Group Joint ventures Total
and associates
GBPm GBPm GBPm
--------------------------------------------- ------- --------------- ---------
Property portfolio 1,370.5 381.8 1,752.3
Other assets 122.0 44.4 166.4
Gross assets 1,492.5 426.2 1,918.7
--------------------------------------------- ------- --------------- ---------
Net borrowings (470.0) (47.0) (517.0)
Finance leases (56.8) (0.9) (57.7)
Other liabilities (188.4) (193.5) (381.9)
Gross liabilities (715.2) (241.4) (956.6)
--------------------------------------------- ------- --------------- ---------
Net assets 777.3 184.8 962.1
--------------------------------------------- ------- --------------- ---------
Non-controlling interests (6.9) - (6.9)
Equity attributable to owners of the Company 770.4 184.8 955.2
--------------------------------------------- ------- --------------- ---------
d. Property portfolio
The property portfolio, including the Group's share of joint ventures
and associates, is derived from the Group balance sheet as detailed
below:
As at 31st May 2017 (unaudited)
Group Joint ventures Total
and associates
GBPm GBPm GBPm
-------------------------------------------------- --------- --------------- --------
Investment properties 1,167.2 346.3 1,513.5
Less assets held under finance leases not subject
to revaluation (3.9) (0.9) (4.8)
Inventories 298.7 6.0 304.7
Property portfolio 1,462.0 351.4 1,813.4
-------------------------------------------------- --------- --------------- --------
As at 31st May 2016 (unaudited
and restated)
Group Joint ventures Total
and associates
GBPm GBPm GBPm
-------------------------------------------------- --------- --------------- --------
Investment properties 1,136.2 379.7 1,515.9
Less assets held under finance leases not subject
to revaluation (3.9) (1.2) (5.1)
Inventories 186.1 2.0 188.1
Property portfolio 1,318.4 380.5 1,698.9
-------------------------------------------------- --------- --------------- --------
As at 30th November 2016
(audited and restated)
Group Joint ventures Total
and associates
GBPm GBPm GBPm
-------------------------------------------------- --------- --------------- --------
Investment properties 1,144.7 376.3 1,521.0
Less assets held under finance leases not subject
to revaluation (3.9) (0.9) (4.8)
Inventories 229.7 6.4 236.1
Property portfolio 1,370.5 381.8 1,752.3
-------------------------------------------------- --------- --------------- --------
As at 31st May 2017 the Group had assets of GBP351.9m (31st May 2016:
GBP650.1m, 30th November 2016: GBP328.3m) included within the Group
property portfolio (excluding joint ventures and associates) which
were wholly owned, unencumbered and able to be pledged as security
for the Group's debt facilities.
The Group's property portfolio, including share of joint ventures can
be split by category as detailed below:
Unaudited Unaudited Audited
31st May 31st May 30th Nov
2017 2016 2016
GBPm GBPm GBPm
-------------------------------------------------- --------- --------------- --------
Industrial and logistics 267.8 301.3 283.5
Retail 341.9 344.7 342.2
Residential and other 165.7 158.1 161.0
Income producing property 775.4 804.1 786.7
Residential land 782.8 737.7 742.0
Commercial land 255.2 157.1 223.6
Property portfolio 1,813.4 1,698.9 1,752.3
-------------------------------------------------- --------- --------------- --------
e. Movement in net debt
The movement in net debt is set out below:
Unaudited Unaudited Audited
31st May 31st May 30th Nov
2017 2016 2016
GBPm GBPm GBPm
-------------------------------------------------- --------- --------------- --------
Movement in cash and cash equivalents 4.6 (0.3) (0.6)
Borrowings drawn (133.2) (51.6) (160.5)
Repayment of borrowings 44.0 41.0 134.0
Increase in net borrowings (84.6) (10.9) (27.1)
Fair value movement on convertible bonds (4.0) 5.2 7.7
Finance leases 0.6 (1.7) (1.7)
-------------------------------------------------- --------- --------------- --------
Increase in net debt (88.0) (7.4) (21.1)
-------------------------------------------------- --------- --------------- --------
f. Trading cash flow
Trading cash flows are derived from the Group cash flow statement
as set out below:
Six months ended 31st May 2017 (unaudited)
Operating Investing Financing Total Joint Total
activities activities activities ventures
and associates
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------- ----------- ----------- ----------- ------- --------------- -------
Net rent and other income 24.4 - - 24.4 2.6 27.0
Property disposals 119.8 15.5 - 135.3 45.8 181.1
Property acquisitions (34.6) (12.4) - (47.0) - (47.0)
Property expenditure (118.4) (22.7) - (141.1) (3.5) (144.6)
Working capital and other movements (23.1) - - (23.1) (11.9) (35.0)
Overheads and interest (15.4) 5.1 (11.2) (21.5) (5.7) (27.2)
Taxation (4.4) - - (4.4) (1.0) (5.4)
-------------------------------------- ----------- ----------- ----------- ------- ---------------
Trading cash flow (51.7) (14.5) (11.2) (77.4) 26.3 (51.1)
-------------------------------------- ----------- ----------- ----------- ------- --------------- -------
Finance leases - - (1.6) (1.6) - (1.6)
Net borrowings - - 89.2 89.2 (6.6) 82.6
Net dividends - 5.0 (10.6) (5.6) (5.0) (10.6)
Movement in cash and cash equivalents (51.7) (9.5) 65.8 4.6 14.7 19.3
-------------------------------------- ----------- ----------- ----------- ------- --------------- -------
Six months ended 31st May 2016 (unaudited)
Operating Investing Financing Total Joint Total
activities activities activities ventures
and associates
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------- ----------- ----------- ----------- ------- --------------- -------
Net rent and other income 23.9 - - 23.9 3.0 26.9
Property disposals 177.1 22.8 - 199.9 12.5 212.4
Property acquisitions - (20.1) - (20.1) - (20.1)
Property expenditure (157.8) (35.1) - (192.9) (5.1) (198.0)
Working capital and other movements 1.4 - - 1.4 6.8 8.2
Overheads and interest (16.4) - (9.8) (26.2) (4.0) (30.2)
Taxation (4.4) - - (4.4) (0.5) (4.9)
-------------------------------------- -------
Trading cash flow 23.8 (32.4) (9.8) (18.4) 12.7 (5.7)
-------------------------------------- ----------- ----------- ----------- ------- --------------- -------
Finance leases - - 10.6 10.6 0.6 11.2
Net borrowings - - 1.7 1.7 (2.1) (0.4)
Net dividends - 14.3 (8.5) 5.8 (14.3) (8.5)
Movement in cash and cash equivalents 23.8 (18.1) (6.0) (0.3) (3.1) (3.4)
-------------------------------------- ----------- ----------- ----------- ------- --------------- -------
Year ended 30th November 2016 (audited)
Operating Investing Financing Total Joint Total
activities activities activities ventures
and associates
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------- ----------- ----------- ----------- ------- --------------- -------
Net rent and other income 44.7 - - 44.7 5.4 50.1
Property disposals 244.9 64.3 - 309.2 25.1 334.3
Property acquisitions - (38.5) - (38.5) - (38.5)
Property expenditure (208.8) (52.1) - (260.9) (10.1) (271.0)
Working capital and other movements (25.3) - - (25.3) 3.8 (21.5)
Overheads and interest (32.3) 5.4 (20.7) (47.6) (9.2) (56.8)
Taxation (10.7) - - (10.7) (1.0) (11.7)
-------------------------------------- -------
Trading cash flow 12.5 (20.9) (20.7) (29.1) 14.0 (15.1)
-------------------------------------- ----------- ----------- ----------- ------- --------------- -------
Finance leases - - 0.6 0.6 (0.3) 0.3
Net borrowings - - 26.5 26.5 (2.8) 23.7
Net dividends - 14.3 (12.9) 1.4 (14.3) (12.9)
Movement in cash and cash equivalents 12.5 (6.6) (6.5) (0.6) (3.4) (4.0)
-------------------------------------- ----------- ----------- ----------- ------- --------------- -------
g. Net assets per share and total
accounting return
Net assets per share and total accounting return are calculated
as set out below:
Movement
GBPm Pence per Pence per %
share (1) share (1)
--------------------------------------- ------- ---------- --------------- ----
Total equity 979.7
Less non-controlling interests (5.4)
--------------------------------------- ------- ---------- --------------- ----
Equity attributable to owners of the
Company 974.3 439.6 8.6 2.0%
Adjustments of inventories to fair
value 10.7
--------------------------------------- ------- ---------- --------------- ----
EPRA triple net assets 985.0 444.4 7.2 1.6%
Deferred tax on capital allowances
and revaluations 45.8
Mark-to-market of derivative financial
instruments 7.4
--------------------------------------- ------- ---------- --------------- ----
EPRA net assets 1,038.2 468.4 7.9 1.7%
Dividend paid per share 4.1
--------------------------------------- ------- ----------
Total accounting return 12.0 2.6%
--------------------------------------- ------- ---------- --------------- ----
Movement
GBPm Pence per Pence per %
share (1) share (1)
--------------------------------------- ------- ---------- --------------- ----
Total equity 939.4
Less non-controlling interests (7.0)
--------------------------------------- ------- ---------- --------------- ----
Equity attributable to owners of the
Company 932.4 421.4 7.9 1.9%
Adjustments of inventories to fair
value 10.4
--------------------------------------- ------- ---------- --------------- ----
EPRA triple net assets 942.8 426.1 7.2 1.7%
Deferred tax on capital allowances
and revaluations 48.0
Mark-to-market of derivative financial
instruments 6.9
--------------------------------------- ------- ---------- --------------- ----
EPRA net assets 997.7 450.9 4.5 1.0%
Dividend paid per share 3.9
---------------------------------------
Total accounting return 8.4 1.8%
--------------------------------------- ------- ---------- --------------- ----
Movement
GBPm Pence per Pence per %
share (1) share (1)
--------------------------------------- ------- ---------- --------------- ----
Total equity 962.1
Less non-controlling interests (6.9)
--------------------------------------- ------- ---------- --------------- ----
Equity attributable to owners of the
Company 955.2 431.0 17.5 4.2%
Adjustments of inventories to fair
value 13.6
--------------------------------------- ------- ---------- --------------- ----
EPRA triple net assets 968.8 437.2 18.3 4.4%
Deferred tax on capital allowances
and revaluations 47.9
Mark-to-market of derivative financial
instruments 3.8
--------------------------------------- ------- ---------- --------------- ----
EPRA net assets 1,020.5 460.5 14.1 3.2%
Dividend paid per share 5.8
---------------------------------------
Total accounting return 19.9 4.5%
--------------------------------------- ------- ---------- --------------- ----
(1) The number of shares in issue used to calculate the net asset
values per share is 221,625,168 (31st May 2016: 221,273,685, 30th
November 2016: 221,607,654), excluding those shares held by The St.
Modwen Properties PLC Employee Share Trust.
h. Net borrowing and net debt
Net borrowing and net debt are calculated
as set out below:
Unaudited Unaudited Audited
31st May 31st May 30th Nov
2017 2016 2016
GBPm GBPm GBPm
---------------------------------------------- --------- --------------- --------
Cash and cash equivalents 8.8 4.5 4.2
Borrowings due within one year - - -
Borrowings due after more than one
year (563.8) (457.2) (470.6)
Adjustment to restate convertible
bonds at book value 0.4 (1.1) (3.6)
----------------------------------------------- --------- --------------- --------
Net borrowings (554.6) (453.8) (470.0)
Reversal of adjustment to restate convertible
bonds at book value (0.4) 1.1 3.6
Finance lease liabilities due within
one year (0.4) (0.4) (0.4)
Finance lease liabilities due after
more than one year (55.8) (56.4) (56.4)
--------- --------------- --------
Net debt (611.2) (509.5) (523.2)
----------------------------------------------- --------- --------------- --------
i. Gearing and loan to value
The Group's capacity to borrow is primarily linked to the value of
the property portfolio excluding assets held under finance leases.
Accordingly both adjusted gearing and see-through loan-to-value are
calculated using the comparable measure of net borrowings and see-through
net borrowings respectively. Reflecting that residential land is a
less attractive asset for security purposes, we also disclose see-through
loan-to-value (excluding residential land) using the comparable measure
of see-through net borrowings. These terms are defined as follows:
Net borrowings: total borrowings (at amortised cost and excluding
finance leases and fair value movements on the Group's convertible
bonds) less cash and cash equivalents.
See-through net borrowings: total borrowings (at amortised cost and
excluding finance leases and fair value movements on the Group's convertible
bonds) less cash and cash equivalents (all including the Group's share
of its joint ventures and associates). This includes the development
account beneficially owned by one of our joint ventures, VSM (NCGM)
Ltd, held for the purpose of funding the establishment of a market
at Nine Elms, which would otherwise need to be funded by injecting
cash into the joint venture in the future.
Adjusted gearing: the ratio of net borrowings
to total equity.
See-through loan-to-value: see-through net borrowings expressed as
a percentage of the Group's property portfolio excluding valued assets
held under finance leases, calculated on a proportionally consolidated
basis (including the Group's share of its joint ventures and associates).
See-through loan-to-value (excluding residential land): see-through
net borrowings expressed as a percentage of the Group's property portfolio
excluding assets held under finance leases and residential land, calculated
on a proportionally consolidated basis (including the Group's share
of its joint ventures and associates).
As at 31st May 2017 (unaudited)
Group Joint ventures Total
and associates
GBPm GBPm GBPm
---------------------------------------------- --------- --------------- --------
Property portfolio (note 2d) 1,462.0 351.4 1,813.4
Less valued assets held under finance
leases (59.3) - (59.3)
----------------------------------------------- --------- --------------- --------
Net property portfolio 1,402.7 351.4 1,754.1
Less residential land (note 2d) (518.6) (264.2) (782.8)
----------------------------------------------- --------- ---------------
Net property portfolio (excluding
residential land) 884.1 87.2 971.3
----------------------------------------------- --------- --------------- --------
Total equity 979.7 N/A 979.7
Net debt (note 2h) 611.2 26.6 637.8
Net borrowings (note 2h) 554.6 25.7 580.3
----------------------------------------------- --------- --------------- --------
Gearing 62.4% 65.1%
Adjusted gearing 56.6% 59.2%
Loan to value 39.5% 33.1%
Loan to value (excluding residential
land) N/A 59.7%
----------------------------------------------- --------- --------------- --------
As at 31st May 2016 (unaudited)
Group Joint ventures Total
and associates
GBPm GBPm GBPm
---------------------------------------------- --------- --------------- --------
Property portfolio (note 2d) 1,318.4 380.5 1,698.9
Less valued assets held under finance
leases (57.4) - (57.4)
----------------------------------------------- --------- --------------- --------
Net property portfolio 1,261.0 380.5 1,641.5
Less residential land (note 2d) (451.6) (286.1) (737.7)
----------------------------------------------- --------- ---------------
Net property portfolio (excluding
residential land) 809.4 94.4 903.8
----------------------------------------------- --------- --------------- --------
Total equity 939.4 N/A 939.4
Net debt (note 2h) 509.5 48.6 558.1
Net borrowings (note 2h) 453.8 46.8 500.6
----------------------------------------------- --------- --------------- --------
Gearing 54.2% 59.4%
Adjusted gearing 48.3% 53.3%
Loan to value 36.0% 30.5%
Loan to value (excluding residential
land) N/A 55.4%
----------------------------------------------- --------- --------------- --------
As at 30th November 2016
(audited)
Group Joint ventures Total
and associates
GBPm GBPm GBPm
---------------------------------------------- --------- --------------- --------
Property portfolio (note 2d) 1,370.5 381.8 1,752.3
Less valued assets held under finance
leases (57.8) - (57.8)
----------------------------------------------- --------- --------------- --------
Net property portfolio 1,312.7 381.8 1,694.5
Less residential land (note 2d) (460.2) (281.8) (742.0)
----------------------------------------------- --------- ---------------
Net property portfolio (excluding
residential land) 852.5 100.0 952.5
----------------------------------------------- --------- --------------- --------
Total equity 962.1 N/A 962.1
Net debt (note 2h) 523.2 47.9 571.1
Net borrowings (note 2h) 470.0 47.0 517.0
----------------------------------------------- --------- --------------- --------
Gearing 54.4% 59.4%
Adjusted gearing 48.9% 53.7%
Loan to value 35.8% 30.5%
Loan to value (excluding residential
land) N/A 54.3%
----------------------------------------------- --------- --------------- --------
Bank covenant compliance is based on the ratio of gearing being net
debt to equity of 62.4% (31st May 2016: 54.2%, 30th November 2016:
54.4%) against a covenant of 175.0% (31st May 2016: 175.0%, 30th November
2016: 175.0%).
3. Joint ventures and associates
The Group's share of the results for the six months ended 31st May
2017 of its joint ventures and associates is:
Six months ended 31st May 2017 (unaudited)
Key Property VSM Estates VSM Estates VSM (NCGM) Other Total
Investments Uxbridge (Holdings) Ltd joint
Ltd (Group) Ltd ventures
Ltd and associates
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- ------------ ----------- ----------- ---------- --------------- ------
Revenue 6.0 - - - 1.2 7.2
----------------------------------- ------------ ----------- ----------- ---------- --------------- ------
Net rental income 2.6 (0.1) - - 0.1 2.6
Development profits 0.9 - - - - 0.9
Gains/(losses) on disposal of
investments/investment properties 1.1 - (0.1) - - 1.0
Investment property revaluation
gains/(losses) 3.7 (2.5) 0.3 9.4 - 10.9
Change in estimated cost to
establish a market in Nine Elms - - - (9.2) - (9.2)
Administrative expenses (0.1) - (0.1) - - (0.2)
----------------------------------- ------------ ----------- ----------- ---------- --------------- ------
Profit/(loss) before interest
and tax 8.2 (2.6) 0.1 0.2 0.1 6.0
Finance costs (1.0) (1.0) (0.6) (5.5) (0.1) (8.2)
Finance income 0.3 - - - - 0.3
----------------------------------- ------------ ----------- ----------- ---------- --------------- ------
Profit/(loss) before tax 7.5 (3.6) (0.5) (5.3) - (1.9)
Taxation (0.5) 0.8 - 2.0 - 2.3
Profit/(loss) for the period 7.0 (2.8) (0.5) (3.3) - 0.4
----------------------------------- ------------ ----------- ----------- ---------- --------------- ------
Six months ended 31st May 2016 (unaudited)
Key Property VSM Estates VSM Estates VSM (NCGM) Other Total
Investments Uxbridge (Holdings) Ltd joint
Ltd (Group) Ltd ventures
Ltd and associates
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- ------------ ----------- ----------- ---------- --------------- ------
Revenue 3.9 - - - 0.1 4.0
----------------------------------- ------------ ----------- ----------- ---------- --------------- ------
Net rental income 3.0 (0.1) - - 0.1 3.0
Gains/(losses) on disposal of
investments/investment properties 0.4 - (0.1) - 0.1 0.4
Investment property revaluation
gains/(losses) 0.4 (1.6) 0.2 (20.9) - (21.9)
Administrative expenses (0.1) - (0.1) - - (0.2)
----------------------------------- ------------ ----------- ----------- ---------- --------------- ------
Profit/(loss) before interest
and tax 3.7 (1.7) - (20.9) 0.2 (18.7)
Finance costs (1.1) (1.3) (0.7) (3.1) (0.1) (6.3)
Finance income 0.1 - - - - 0.1
----------------------------------- ------------ ----------- ----------- ---------- --------------- ------
Profit/(loss) before tax 2.7 (3.0) (0.7) (24.0) 0.1 (24.9)
Taxation (0.5) 0.6 - 5.4 - 5.5
Profit/(loss) for the period 2.2 (2.4) (0.7) (18.6) 0.1 (19.4)
----------------------------------- ------------ ----------- ----------- ---------- --------------- ------
Year ended 30th November 2016 (audited)
Key Property VSM Estates VSM Estates VSM (NCGM) Other Total
Investments Uxbridge (Holdings) Ltd joint
Ltd (Group) Ltd ventures
Ltd and associates
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- ------------ ----------- ----------- ---------- --------------- ------
Revenue 7.5 - - - 0.2 7.7
----------------------------------- ------------ ----------- ----------- ---------- --------------- ------
Net rental income 5.5 (0.1) - - - 5.4
Gains/(losses) on disposal of
investments/investment properties 0.8 - (0.2) - (0.1) 0.5
Investment property revaluation
gains/(losses) 1.2 (1.8) (1.1) (24.3) 0.1 (25.9)
Administrative expenses (0.3) - (0.1) (0.1) (0.3) (0.8)
----------------------------------- ------------ ----------- ----------- ---------- --------------- ------
Profit/(loss) before interest
and tax 7.2 (1.9) (1.4) (24.4) (0.3) (20.8)
Finance costs (2.2) (3.4) (1.9) (7.3) (0.2) (15.0)
Finance income 0.4 0.4 0.7 - - 1.5
----------------------------------- ------------ ----------- ----------- ---------- --------------- ------
Profit/(loss) before tax 5.4 (4.9) (2.6) (31.7) (0.5) (34.3)
Taxation (0.6) 0.9 (0.5) 6.3 - 6.1
Profit/(loss) for the year 4.8 (4.0) (3.1) (25.4) (0.5) (28.2)
----------------------------------- ------------ ----------- ----------- ---------- --------------- ------
In the half year results, a series of commercial contracts with Persimmon
is referred to as the 'Persimmon joint venture'. This is not a statutory
entity and the results from these commercial contracts are not included
in the figures disclosed in this note. Revenue and profit from the
Persimmon joint venture are recognised in Group development profit
on legal completion of housing unit sales to third party customers.
4. Finance costs and finance income
Unaudited Unaudited Audited
31st May 31st May 30th Nov
2017 2016 2016
GBPm GBPm GBPm
----------------------------------------------- --------- --------- --------
Interest payable on borrowings 10.1 8.9 18.1
Interest payable on finance lease obligations 1.0 0.5 1.1
Amortisation of loan arrangement fees 1.1 0.4 1.2
Amortisation of discount on deferred payment
arrangements 0.3 0.4 0.4
Movement in fair value of convertible bonds 4.0 - -
Movement in fair value of derivative financial
instruments 0.1 0.5 1.3
Interest on pension scheme liabilities 0.4 0.5 0.9
Total finance costs 17.0 11.2 23.0
----------------------------------------------- --------- --------- --------
Unaudited Unaudited Audited
31st May 31st May 30th Nov
2017 2016 2016
GBPm GBPm GBPm
----------------------------------------------- --------- --------- --------
Interest receivable 5.1 1.1 5.4
Movement in fair value of convertible bonds - 5.2 7.7
Movement in fair value of derivative financial
instruments - - 0.8
Interest income on pension scheme assets 0.4 0.5 1.0
Total finance income 5.5 6.8 14.9
----------------------------------------------- --------- --------- --------
5. Earnings per share
Unaudited Unaudited Audited
31st May 31st May 30th Nov
2017 2016 2016
Number Number Number
of shares of shares of shares
---------------------------------------------- ----------- ----------- -----------
Weighted number of shares in issue 221,613,476 221,233,995 221,368,096
Weighted number of diluted shares relating
to the convertible bond - 18,867,925 18,867,925
Weighted number of diluted shares relating
to share options 1,952,433 2,001,705 1,923,809
---------------------------------------------- ----------- -----------
Weighted number of shares for the purposes
of diluted earnings per share 223,565,909 242,103,625 242,159,830
---------------------------------------------- ----------- ----------- -----------
Unaudited Unaudited Audited
31st May 31st May 30th Nov
2017 2016 2016
GBPm GBPm GBPm
---------------------------------------------- ----------- ----------- -----------
Earnings for the purposes of basic earnings
per share being net profit attributable to
owners of the Company 26.8 26.1 53.4
Effect of dilutive potential ordinary shares:
Interest on convertible bond (net of tax) - 1.2 2.3
Movement in fair value of the convertible
bond - (5.2) (7.7)
Earnings for the purposes of diluted earnings
per share 26.8 22.1 48.0
---------------------------------------------- ----------- ----------- -----------
Unaudited Unaudited Audited
31st May 31st May 30th Nov
2017 2016 2016
Pence Pence Pence
---------------------------------------------- ----------- ----------- -----------
Basic earnings per share 12.1 11.8 24.1
Diluted earnings per share 12.0 9.1 19.8
---------------------------------------------- ----------- ----------- -----------
Shares held by The St. Modwen Properties PLC Employee Share Trust
are excluded from the above calculation.
As the Group is principally a development business, EPRA earnings
per share on a basic and diluted basis are not provided. These calculations
exclude all revaluation gains, including value added by management
actions, and development profits. These are the key activities of
the Group and excluding such gains and profits would not provide a
meaningful measure of the performance of the business.
6. Financial instruments held at fair
value
Derivative financial instruments and the convertible bonds are externally
valued based on the present value of future cash flows estimated and
discounted based on the applicable yield curves derived from market
expectations for future interest rates at the balance sheet date.
Where applicable, the value of early termination or conversion options
in favour of the issuing party are included in the external valuations.
The following table sets out the net assets and liabilities in respect
of financial instruments held at fair value through profit or loss:
Unaudited Unaudited Audited
31st May 31st May 30th Nov
2017 2016 2016
GBPm GBPm GBPm
-------------------------------------------- -------- --------- --------- --------
Derivative financial instrument assets Level 2 1.4 0.8 1.6
Derivative financial instrument liabilities Level 2 (8.7) (8.5) (8.8)
Convertible bonds liability Level 2 (100.4) (98.9) (96.4)
Financial instruments held at fair value through
profit or loss (107.7) (106.6) (103.6)
------------------------------------------------------ --------- --------- --------
Fair value hierarchy
Assets and liabilities that are measured subsequent to initial recognition
at fair value must be grouped into Levels 1 to 3 based on the degree
to which the fair value is observable.
-- Level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active markets for identical assets.
-- Level 2 fair value measurements are those derived from inputs other
than quoted prices included within Level 1 that are observable for
the asset, either directly (i.e. as prices) or indirectly (i.e. derived
from prices); and
-- Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset that are not based on
observable market data (unobservable inputs).
7. Other information
a. Taxation
The effective rate of Group tax for the period is 15.1% (six months
ended 31st May 2016: 16.8%, year ended 30th November 2016: 14.0%).
As a property group, this rate benefits predominantly from certain
investment gains not being taxable because of indexation, together
with capital allowances, land remediation and other reliefs on certain
property expenditure.
b. Dividends
The proposed interim dividend of 2.02 pence (six months ended 31st
May 2016: 1.94 pence) per share was approved by a Committee of the
Board on 3rd July 2017 and will amount to GBP4.5m (six months ended
31st May 2016: GBP4.3m).
c. Valuation of investment properties
Investment properties were valued at 31st May 2017, 30th November 2016
and 31st May 2016 by Cushman & Wakefield and Jones Lang LaSalle for
New Covent Garden Market, both Chartered Surveyors, in accordance with
the Appraisal and Valuation Manual of the Royal Institution of Chartered
Surveyors, on the basis of market value. Both Cushman & Wakefield and
Jones Lang LaSalle are professionally qualified independent external
valuers and had appropriate recent experience in the relevant location
and category of the properties being valued.
d. Related party transactions
There have been no material new related party transactions in the six
months ended 31st May 2017 or any material changes to those related
party transactions described in the Group financial statements for
the year ended 30th November 2016.
e. Pensions
The Group operates a UK based pension scheme, the St. Modwen Pension
Scheme, with both defined benefit and defined contribution sections.
The defined benefit section is closed to both new members and future
accrual. The unrecognised surplus arising on the fair value of assets
over the actuarial value of liabilities in the defined benefit section
of the scheme was GBP3.8m (six months ended 31st May 2016: GBP2.0m,
year ended 30th November 2016: GBP2.0m).
f. Post balance sheet event
On 21st June 2017, it was announced that one of the Group's joint ventures,
VSM (NCGM) Ltd, had exchanged contracts for the sale of its interest
in the 10-acre Nine Elms Square site in Nine Elms, London to Wanda
Commercial Properties (Hong Kong) Co. Ltd, at book value for a cash
consideration totalling GBP470m. Taking into account our share in the
joint venture and the joint venture's contractual obligations to the
Covent Garden Market Authority, the Group's share of the cash proceeds
after overage, enabling costs, and tax are expected to be GBP190m upon
contractual completion, of which GBP70m will be held in a restricted
development account to fund our share of future obligations in respect
of completion of 500,000 sq ft of new purpose built market facilities
and associated infrastructure. As the site was sold at book value,
there is not expected to be any significant profit or loss arising
from this transaction in the second half of the year ending 30th November
2017.
The Group, together with VINCI PLC, has provided a joint and several
guarantee in respect of the obligations of VSM (NCGM) Ltd relating
to the redevelopment of New Covent Garden Market, London. This is a
guarantee in the ordinary course of business and would require the
guarantors to comply with the terms of the development agreement and
to indemnify Covent Garden Market Authority against any breach of those
terms.
Directors' responsibility statement
for the six months ended 31st May 2017
We confirm that to the best of our
knowledge:
(a) the condensed Group financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the
EU; and
(b) the half year results include a fair review of the information
required by:
(i) 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first six months
of the financial year, and their impact on the condensed Group financial
statements, and a description of the principal risks and uncertainties
for the remaining six months of the financial year; and
(ii) 4.2.8R of the Disclosure and Transparency Rules, being material
related parties transactions that have taken place in the first six
months of the current financial year and any material changes in the
related parties transactions described in the last Annual Report.
A list of the current directors of St. Modwen Properties PLC is maintained
on the Company's website at www.stmodwen.co.uk.
By order of the Board
Mark Allan Rob Hudson
Chief Executive Group Finance Director
3rd July 2017
Independent review report to St. Modwen Properties PLC
for the six months ended 31st May 2017
Conclusion
We have been engaged by the company to review the condensed set of
financial statements in the half-yearly financial report for the six
months ended 31st May 2017 which comprises the condensed Group income
statement, the condensed Group statement of comprehensive income,
the condensed Group balance sheet, the condensed Group statement of
changes in equity, the condensed Group cash flow statement, the condensed
Group accounting policies and the related explanatory notes.
Based on our review, nothing has come to our attention that causes
us to believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 31st May 2017
is not prepared, in all material respects, in accordance with IAS
34 Interim Financial Reporting as adopted by the EU and the Disclosure
Guidance and Transparency Rules (the DTR) of the UK's Financial Conduct
Authority (the UK FCA).
Scope of review
We conducted our review in accordance with International Standard
on Review Engagements (UK and Ireland) 2410 Review of Interim Financial
Information Performed by the Independent Auditor of the Entity issued
by the Auditing Practices Board for use in the UK. A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical
and other review procedures. We read the other information contained
in the half-yearly financial report and consider whether it contains
any apparent misstatements or material inconsistencies with the information
in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and consequently
does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the half-yearly financial report in accordance with the
DTR of the UK FCA.
As disclosed in the condensed Group accounting policies, the annual
financial statements of the group are prepared in accordance with
International Financial Reporting Standards as adopted by the EU.
The directors are responsible for preparing the condensed set of financial
statements included in the half-yearly financial report in accordance
with IAS 34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the
condensed set of financial statements in the half-yearly financial
report based on our review. The purpose of our review work and to whom we owe our responsibilities This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. Bill Holland for and on behalf of KPMG LLP Chartered Accountants 15 Canada Square Canary Wharf London E14 5GL 3rd July 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
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