LONDON (Alliance News) - St Modwen Properties PLC Tuesday reported a 56% increase in profit for its recent full year, as it looks to further expand its portfolio of residential and commercial properties.
The property developer posted profit before all tax of GBP82.2 million for the year ended November 30, 2013, up from GBP52.8 million a year earlier, while profit before interest and tax amounted to GBP94.7 million, compared with GBP64.5 million in 2012.
Profit before all tax is stated before tax on joint venture income and after movements in the market value of the firm's interest rate derivatives.
Profit during the period was boosted by revaluation gains on property of GBP42.0 million, compared with GBP26.7 million a year earlier.
The company also achieved a 37% increase in realised property profits of GBP40 million, up from GBP29.0 million in 2012, including significant contributions from a contract to build student accommodation for Swansea University and the sale of the Elephant & Castle Shopping Centre for GBP80 million.
The shopping centre in south London was acquired for GBP29 million in 2002 and was sold at a premium to its book value of GBP52.2 million.
Despite a number of commercial deals, Chief Executive Bill Oliver said the company also has benefited from a recovery in the housing market.
However, he warned that the London residential market has been given an unnecessary "extra push" while the rest of the England sits in a more "healthy" position.
"It's almost like two different markets," Oliver said in a telephone interview, referring to London and the rest of England. "The residential market whether you are talking about sales, house prices or land value is increasing rapidly in London, and I think the stimulus that is being given to the housing market generally is not needed London but its getting that extra push."
Oliver said the UK government's flagship mortgage financing scheme Help to Buy had fuelled an "unsustainable" housing market in the capital and the firm would not be seeking to take advantage.
"You just can't get enough of the product [in London]. Most of our transactions, most of our acquisitions are outside of London, and we can make pretty good profit without house inflation outside of London," he said
"In a strange sort of way I think supply and demand self moderates. However, if an opportunity came to buy more product in London, we'll take it, but we are more likely to find that outside of London so it self levels. We certainly won't be switching to more of our property into London," Oliver said.
St Modwen said revenue declined to GBP161.1 million from GBP219.1 million in the corresponding period.
Rental development revenue for the firm's residential and commercial business both declined.
The group operates exclusively in the UK, and all of its revenues derive from its portfolio of properties which the group manages internally.
St Modwen said its EPRA net asset value rose 10% to 298 pence from 272 pence per share
EPRA is the European Public Real Estate Association, the industry body for European REITs.
In February, the firm raised GBP49 million in a share placing, with the proceeds used to fund the redevelopment of New Covent Garden Market which will incorporate 2,900 homes and 115,00 square feet of commercial accommodation and community facilities.
Looking ahead, the firm said it received planning consent on a number of sites, including for 660 homes in Branston, Burton upon Trent, and 175 homes in Edison Place, Rugby, while there are plans to develop 111 homes along with a restaurant and shops in Hartshill, Stoke-on-Trent.
St Modwen said its joint venture with housebuilder Persimmon PLC continues to perform well and it is now building or selling on all eight sites that were planned under the agreement. This will see over 2,300 residential plots delivered by 2017, it said.
The board proposed a final dividend increase of 10% to 2.67 pence per share, providing a total dividend for 2013 of 4.00 pence per share, also up 10% from 3.63 pence per share in 2012.
St Modwen shares were trading at 385.80 pence Tuesday afternoon, up 1.40 pence or 0.4%.
By Anthony Tshibangu; anthonytshibangu@alliancenews.com; @AnthonyAllNews
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