FULL YEAR RESULTS TO 30TH NOVEMBER 2013 PRESENTATION Disclaimer
This presentation does not contain or constitute an invitation or inducement to any person to underwrite, subscribe for, or otherwise acquire or dispose of any shares in St. Modwen Properties PLC or other securities and should not be relied on for such purposes.
This presentation may contain certain ‘forward-looking’ statements. By their nature, forward-looking statements 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 St. Modwen Properties PLC speak only as of the date they are made and 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. St. Modwen Properties PLC does not undertake to update forward-looking statements to reflect any changes in St. Modwen Properties PLC's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.
Statements are made in this presentation about the price and past performance of shares in St. Modwen Properties PLC. Past performance cannot be relied upon as a guide to future performance.
2 Agenda
1. Highlights
2. About St. Modwen
3. Financial Results
4. Operational Review
3 Highlights
Financial Operational • 56% increase in profit before all tax to £82.2m • Elephant & Castle Shopping Centre sold for £80m (2012: £52.8m) compared to £52.5m book value at start of the • 11% increase in NAV per share to 279p (2012: year (SMP 50%) 251p per share) and EPRA NAV up 10% to 298p • Significant milestones completed across major (2012: 272p per share) projects: • Realised property profits of £40m (2012: £29m) − Longbridge - 150,000 sq ft full offer store pre-let to Marks & Spencer • Net valuation increase of £42m (2012: £28m) − Swansea University, Bay Campus – first • Successful £49m equity raise completed in March phase of works on schedule with student 2013 accommodation now underway • 10% increase in total dividend for the year to 4.0p − NCGM – expect to secure planning per share (2012: 3.63p) approval in 2015 • Residential market continues to improve across the country • Improving commercial market
Another strong set of full year results with continued improvement in commercial and residential markets across the UK 4 About St. Modwen Properties PLC
• The UK’s leading regeneration specialist: • Residential development: Residential income Wholly focused upon regeneration stream experiencing strong growth via three routes – residential land sales, Persimmon Joint • An established business: A FTSE 250 company with a 25 year track record Venture and St. Modwen Homes • Consistent long- • Experienced management team: Extensive Commercial development: operational expertise in regeneration and term, high-value commercial redevelopment brownfield renewal activity. A strong pipeline of development opportunities • A stable and growing business with a solid • balance sheet: A property portfolio of £1.1bn with Diverse UK-wide portfolio and long-term a see-through loan-to-value ratio of 33% development: Land bank of over 5,900 acres. No over-exposure to any single scheme, tenant • Running costs underpinned by recurring or sector revenue streams from a £514m portfolio of • income producing assets: Net rental income has Active management to increase portfolio grown steadily since 2009 and typically covers the value and to reduce development risk: running costs of the business Through planning gains, pre-let and pre-sold opportunities and increasing the number of design and build projects
An established, stable business and the leader in its field
5 How we generate value
Ratio of rental and other income to Property valuation increases through Continuous delivery of property operating costs including interest active management profits £m £m % 40 40 100 60 35 102 97 50 30 80 89 92 86 48 25 29 40 60 24 20 22 30 33 40 15 20 27 28 10 20 18 10 5 8 0 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Strong recurring income complemented by active asset management and property profits 6 St. Modwen’s business model
Invest Dividend Assets St. Modwen payment
Income Commercial Receive cash producing Residential land and 45% 42% development 13%
JV, Scheme either pre-sold or Generate marketed income and cover costs Remediate land sales Regenerate Regenerate Persimmon St. St. Modwen Homes, Construction expertise Planning and change of use expertise Development Finished scheme - add value through the planning process schemes
Business model generates regular income and drives portfolio value
7 FINANCIAL RESULTS 8 Financial highlights
• Post dividend, shareholders’ equity NAV up 11% to 279p (2012: 251p per share) • EPRA NAV up 10% to 298p (2012: 272p) • 56% increase in profit before all tax to £82.2m (2012: £52.8m) • Trading profit up 31% to £33.3m (2012: £25.5m) • Property profits of £39.8m (2012: £29.0m) • Gearing now 54% (2012: 71%) and LTV at 33% (2012: 41%) • Added value gains of £28m (2012: £48m), coupled with £14m market driven valuation gain (2012: £20m loss). Net valuation increase of £42m (2012: £28m) • Total dividend up 10% to 4.00p per share (2012: 3.63p per share) • Successful £49m equity raise will further support redevelopment of NCGM and give substantial headroom in facilities
An excellent platform for further growth across the business
9 Profit and loss
30 November 2013 30 November 2012 Total £m Total £m Net Rental Income 36.3 36.2 Property Profits 39.8 29.0 Other Income 2.9 2.8 Overheads (20.2) (18.6) Operating Profit 58.8 (+18%) 49.4 (+8%)
Interest (25.5) (23.9)
Trading Profit 33.3 (+31%) 25.5 (+12%)
Added Value Property Valuation Gains 28.1 47.6 Market Property Valuation Movement 13.9 (19.6) Other Finance Gains/(Charges) 6.9 (0.7) Profit Before All Tax 82.2 (+56%) 52.8 (+2%) Continued focus on generating value across the land bank while working our income producing assets hard 10 Income producing portfolio
• A £514m portfolio of income producing assets (45% of Stable net rental income total portfolio): £m • affordable rents on flexible leases 40 35.5 36.2 36.3 • diversified rent roll and tenant base 35 33.5 33.7 30 • Expertise in managing sites to generate income that 25 typically covers the running costs of the business 20 15
• Reduced level of churn and good level of occupancy 10 17.1 17.4 17.8 18.3 18.2 (88%) maintained through to development 5 0 2009 2010 2011 2012 2013 • Average rental lease length of 5.0 years (2012: 5.0 years) Occupancy rates HY FY % • Voids deliberately maintained on properties being 100 prepared for redevelopment as vacant possession is 80 88 88 87 88 required 83 60 • Investment properties at high yields with an equivalent yield of 9.2% on income producing properties 40
20 • Elephant & Castle sale for £80m at 4.25% yield 0 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY Gross rent roll maintained
11 Rental income and recurring costs
30 November 2013 30 November 2012 £m £m Rent Roll at Start of Period / Year 45.6 46.4 Acquisitions / (Disposals) (4.7) (2.8) 40.9 43.6 Tenant Vacations (5.4) (6.9) £m Coverage of business running costs Tenant Administrations (0.1) (1.4) 50
Rent Reviews 0.3 0.6 45.7 41.2 42.5 38.7 39.7 39.0 39.2 36.8 New Lettings 9.0 9.7 35.3 34.5 Closing Rent Roll 44.7 45.6 Void Percentage 12% 13%
0 Net Rental Income 36.3 36.2 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY Other Rental Style Income 2.9 2.8 Income Producing Portfolio Business Running Costs 39.2 39.0 Overheads and Interest 45.7 42.5 % Coverage 86% 92%
Annualised rent roll stable with little impact from £80m disposal of Elephant & Castle Shopping Centre 12 Valuation movements £m
+40 Asset mgt. of income Active Management Valuation Increases producing property £6m (2012: £12m) £m
60 Planning & +30 structural 55 value added to 50 residential land £22m 45 (2012: £36m) 40
35 +20 30 36 25 Positive 20 market 26 22 +10 value increase 15 8 on residential 10 land £21m (2012: £8m) 5 10 12 7 6 0 0 Income producing property & 2010 FY 2011 FY 2012 FY 2013 FY commercial land (£7m) (2012 (£28m)) Commercial active management Residential active management
-10
Valuation increase driven by active management, increased residential focus and improvement in both commercial and residential markets 13 Strong balance sheet
Full Year to 30 November Full Year to 30 November 2013 2012 £m £m Property assets 1,019 946 Investments in JVs and other 102 82 assets Debtors 77 68 Pensions - - Gross assets 1,198 1,096 Net debt (341) (366) Trade payable etc. (230) (216) Gross liabilities (571) (582) Net assets 627 514 Non-controlling interests (13) (11) Shareholders’ funds 614 503
NAV per share 279p (+11%) 251p (+8%)
EPRA NAV per share 298p (+10%) 272p (+9%) A successful business with a robust balance sheet
14 NAV movements
£m
650
14 (8) (4) 614 28
600 39 (46) 40
48 550
503 500 At Nov 2012 Equity placing Net rents & other Overheads & Development Value added Underlying Dividend Tax / other At Nov 2013 income interest profit valuation movements movement
Valuation gains reflect active management and overall improvement in property market 15 Net debt movements
£m 540 (177) 172
490
440
70 390 (366) 48
(341) 340 (11) 1 (40) (318) 32
290
240 At Nov 2012 Equity Placing Equivalent Net Rents & Overheads & Tax & Working Acquisitions & Disposals At Nov 2013 Nov 2012 Other Income Interest Dividends Paid Capital Capex
Debt levels continue to decrease
16 Facilities
Equity placing and facilities • Successful £49m equity placing completed in March 2013 providing opportunity to maximise potential of development at New Covent Garden Market without increasing leverage • Substantial facility headroom and flexibility to use existing resources to fund other developments and major projects • Sale of Elephant & Castle reduces KPI debt (St. Modwen 50% share under KPI JV)
Future facilities • Banks continue to be very supportive. All banking relationships are strong • Continue to explore options for asset specific funding and alternative longer-term sources of finance
Proactive management to enhance and diversify robust financing
17 Financial resources - Group
Nov Nov 2013 2012 Net debt Nov 2012 £366m See-through loan-to-value (including share of JVs) Net equity placing March 2013 £48m % 100 Equivalent net debt £341m £318m
Average facility maturity (years) 2.5 3.4 80 Weighted average interest rate 5.6% 5.6% 60 Interest cover: 40 - Actual 2.8x 2.1x 42 39 40 41 33 - Covenant 1.25x 1.25x 20 Gearing: 0 - Group 54% 71% 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY - Covenant 175% 175% - See-through including share of JVs 60% 87% % Debt hedged (excl. VSM, inc. Retail Bond) 86% 93% Loan-to-value: - Group 34% 40% - See-through including share of JVs 33% 41% Sound financial base for further growth
18 Current banking facilities
Group facilities at 30/11/13 £m Lloyds £100m November 2014 £m 500 Lloyds RBS £95m November 2015 450 Barclays £84m September 2015 400 Retail Bond £80m November 2019 VSM
RBS HSBC £75m December 2015 350
Santander £30m January 2016 300 …. Deutsche pbb £5m June 2019 250 Barclays Barclays VSM £10m March 2015 200 Total facilities £479m HSBC 150 Undrawn facility headroom £138m …. Net debt (excl. JVs) £341m 100 Santander Retail Bond JV Facilities: 50 KPI £135m (SMP share 50% of £29m Expires 2017 Pbb …. drawn) 0 2013 FY 2014 HY 2014 FY 2015 HY 2015 FY 2016 HY 2016 FY 2017 HY 2017 FY 2018 HY 2018 FY 2019 HY 2019 FY Debt Renewal Renewal Renewal Renewal Renewal Renewal Renewal Renewal Renewal Renewal Renewal Renewal VSM Uxbridge £40m (SMP share 50% of Expires 2017 £40m drawn)
Significant headroom on existing facilities
19 Financial summary
• NAV per share up 11% • Secure revenue from income producing properties pays for running costs of business • Proactive portfolio management generating significant value whilst market valuations indicate upturn in commercial property market as well as value within London and South East and residential assets • Reduction in KPI debt to £29m as a result of £80m Elephant & Castle sale • Dividend increased by 10%
£m HY Secure – Net rental income FY Reducing gearing 40 % 35 100 30 17.7 17.9 18.1 90 25 16.4 16.3 75 82 79 20 71 50 15 54 10 17.1 17.4 17.8 18.3 18.2 25 5 0 0 2009 2010 2011 2012 2013 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY Solid performance places Company in an excellent position for growth throughout 2014 20 OPERATIONAL REVIEW 21 Highlights
• Major milestones achieved across flagship projects: • Elephant & Castle - sold to Delancey/APG JV for £80m crystallising value following 11 years ownership • NCGM – expect to achieve a planning permission in 2015 • Swansea University – works progressing well • Longbridge – major 150,000 sq ft store pre-let to Marks & Spencer secured to anchor the second phase of the Town Centre. First phase launched in August 2013 • Improved sentiment in the commercial property market • Positive residential land outlook with good sales achieved across the portfolio for both St. Modwen Homes and the Persimmon joint venture
Consistent profit generation with significant, positive milestones achieved across all major projects 22 Portfolio - Shape
Updated £m Nov ‘12 Additions Reductions Portfolio Nov ‘13
Residential (42%) 397 138 (96) 439 21 22 482
Commercial Land (13%) 139 24 (13) 150 (4) - 146
Income Producing (45%)
Retail 240 11 (53) 198 (1) 4 201
Office 61 4 (5) 60 (1) - 59
Industrial 261 6 (14) 253 (1) 2 254
1,098 183 (181) 1,100 14 28 1,142
• NCGM not yet included in balance sheet • 30% of gross portfolio by value located in London and South East
NOTE: • Analysis provided by Jones Lang LaSalle LLP • Additions includes purchases, capital expenditure and inward reclassifications • Reductions includes disposals and outward reclassifications (land sales exchanged but not completed at full year not included)
Continued growth in London / South East and improvement in residential and commercial markets creating gains across the portfolio 23 Commercial development opportunities
• £146m book value of commercial land held for development potential – largest part of Company by acreage (approx. 3,000 acres vs. total of over 5,900 acres)
• Pipeline of strong development schemes for delivery by 2015: Swansea University, Longbridge, Project MoDEL, Great Homer Street, Wembley Central, Baglan Bay
• Increasing number of developments coming through across the regions. Improving tenant demand coupled with good investor Quedgeley West Business Park, Gloucestershire appetite
• Increasing number of acquisition opportunities using development agreements and partnerships to defer land acquisition costs
Growing pipeline of development already generating cash and profits
24 Major Project: New Covent Garden Market
Background: • New Covent Garden Market is the UK’s largest wholesale fruit, vegetable and flower market operating from outdated premises at Nine Elms, Central London • In January 2013, VINCI St. Modwen (VSM) signed conditional contracts to become the Covent Garden Market Authority’s (CGMA) preferred development partner: − In return for delivering the new market for CGMA, VSM secures 20 acres of surplus freehold land • The regeneration of the existing 57 acre New Covent Garden Market site will see the development of 550,000 sq ft of modern facilities • The surplus land will be developed to create a new high quality residential led mixed-use regeneration scheme, providing up to 2,937 new homes and 115,000 sq ft of commercial accommodation Progress: • Public consultation progressed and planning application to be submitted during the first half of 2014 with contract expected to go unconditional in 2015 • Development of the market expected to start in 2015 and development of surplus land expected to commence from 2017 • Further enhances our London and South East development assets, with positive impact on valuations
Continued momentum, with planning targeted for early 2015
25 26 Major Project: Swansea University, Bay Campus
• Works to phase one of £450m Bay Campus progressing well: – Steelworks and superstructure advancing – Construction of student accommodation underway – On track to welcome new students in September 2015 • First phase GDV of £150m procured by a fixed price contract with VINCI • 50% of income from 899 student units forward sold to M&G Investments for £32m (4.5% yield) • As of 2013, generating c. £10m returns per annum to run until 2015 • Acquisition of the University’s 52 acre ‘Hendrefolian’ campus provides opportunity to develop 300 high quality homes • Future phases of campus development under discussion
Realising future potential of land bank 27 St. Modwen in Wales
Regenerating over 3,500 acres across South Wales
28 Major Project: Longbridge, Birmingham
• Acquired in 2003, fully vacant in 2005 following collapse of MG Rover. Total 468 acres Current Status (commercial): • 150,000 sq ft office and industrial space developed and occupied, followed by completion of 250,000 sq ft Bournville College • Detailed planning application submitted on behalf of Bournville College for 30,000 sq ft specialist Construction Centre The new 150,000 sq ft Marks & Spencer store • Town Centre (circa £4m per annum rental income): • Phase 1 - launched in August 2013, anchored by 80,000 sq ft Sainsbury’s and including Costa Coffee, Greggs, Beefeater and Hungry Horse restaurants, a Premier Inn hotel and £2m Austin Park • Phase 2 – to be anchored by 150,000 sq ft Marks & Spencer store, for which a planning application (incl. proposals for 45,000 sq ft of additional retail units, plus parking) was submitted in December 2013
Delivering shareholder value from long-term development
29 Major Project: Longbridge, Birmingham
Current Status (residential): • St. Modwen Homes: • Phases I & II of 122 unit Park View development now sold out • Planning granted for future residential phases totalling 392 units • Persimmon JV: • On site with 229 homes at Longbridge East with good sales rates achieved throughout the year. Land value £14m, profit share £5m
Parkview, Longbridge
Transformational regeneration project encourages growth and investment
30
Major Project: Project MoDEL
Background Elephant & Castle Shopping Centre, London • 2006 - VINCI St. Modwen (VSM) was appointed by the MoD to deliver Project MoDEL • The project saw the relocation of six former RAF sites across north London into an integrated site at RAF Northolt • VSM primed all six sites for development, disposed of four, retaining RAF Uxbridge and RAF Mill Hill
RAF Uxbridge: St Andrew’s Gate, RAF Uxbridge • Developed in a 50 / 50 joint venture with VINCI • 110 acres (45 net) with planning consent for 1,340 homes, c. 200,000 sq ft of commercial office and retail space, new primary school, a 1,500 seat theatre, GP surgery, 90 bed hotel and 40 acre public park RAF Mill Hill: • Developed in partnership with Annington Property and the London Borough of Barnet • 100 acres (83 net) with planning consent for 2,174 homes, a GP surgery, primary school and district energy centre, 11,800 sq ft of retail and 37,500 sq ft for employment plus extensive open space
Well developed strategy for both sites, already delivering returns
32 Major Project: Project MoDEL - progress
RAF Uxbridge (St Andrew’s Park): • May 2012 – VSM accelerated the outright acquisition of the site from the MoD with 23 acres of land committed to the Persimmon JV for the development of c. 500 homes • December 2012 – Persimmon started construction on first phase of 500 homes • November 2013 – works to new primary school commenced (to open September 2014), infrastructure works advancing to release land for new hotel, theatre and care home • 2014 – introduce additional housebuilder
RAF Mill Hill (Millbrook Park): • Summer 2012 – completion of two land sales for £35m to Linden Homes and Taylor Wimpey, totalling 15 acres and will deliver 133 and 58 homes, respectively • July 2013 – completion of land sale to Linden Homes for £25.5m to deliver 113 homes on 7 acres and start of works to new primary school • November 2013 – contracts exchanged on circa 3 acres with Cala Homes for £13m • 2014 – further land sales
Well-located London sites, both experiencing strong demand
33 Residential planning
• Strong and growing residential land bank now increased to 21,900 plots with planning status • Planning process continues to present challenges with three appeals progressing at the moment • However, stream of residential land continues to progress through planning process with major milestones including:
Secured 2013 Targeted 2014 - Branston, Burton-on-Trent 660 - New Covent Garden 2,937
- Pirelli, Burton-on-Trent 300 - Clay Cross, Derbyshire 600
- Church Gresley, Leicestershire 300 - Uttoxeter, Staffordshire 700
- Edison Place, Rugby 175 - Faverdale, Darlington 600
- Other sites 212 - Hilton, Derbyshire 485
Planning process remains challenging but St. Modwen’s expertise continues to secure results 34 Residential Development: Completions / Target
St. Modwen Homes 2014 Reserved 800 St. Modwen Homes 750 Exchanged Persimmon JV 700 260 Completed Remaining 600
500 Persimmon JV 2014 Reserved 400 365 Exchanged 126 Completed 300 259 Remaining 490 158 200
100 239 101 15 • Good residential sales rates and strong exchange / 0 reservation rates with increased production 2011 2012 2013 2014 (Target) targeted for 2014 onwards • Reservation rates running at above one per site per week Increasing sales momentum across the UK
35 Residential development
• Generating significant future cash flows and St. Modwen Persimmon joint profit of £8m (2012: £6m) Homes venture TOTAL • Steady sales resulting in 365 completions Active (2012: 259), comprising 126 for St. Modwen As at 30/11/13 (unless and Active Homes (2012: 158) and 239 for Persimmon otherwise stated) completed joint venture (2012: 101) No. of sites 8 8 16 • Liquidity of the existing land bank increasing, Units 1,236 2,323 3,559 evidenced by 57 acres sold or committed in period for £58m Units completed 299 340 639 Land revenue • New sites being developed 7 41 48 received £m
Sales profits and land revenue estimate £m 40 35 Future land revenue 26 62 88 30 estimate £m 25 20 15 Potential SMP share of future 10 29 45 74 development 5 profits £m 0 2012 2013 2014 2015 2016 TOTAL 55 107 162 Residential sales profits Land revenue Growing residential revenue stream
36 Outlook
• Major milestones completed across flagship schemes • Increasing opportunities to enhance value through planning gains and development • Demand for residential land increasing • Increasing returns from Persimmon JV and St. Modwen Homes • Strong financial base for NCGM secured via equity raise • Emphasis on increasing revenue from income producing properties to pay for business running costs • Dividend raised 10%
• Strong NAV growth visible through to 2016 p per Shareholders’ Equity NAV share 300 279 251 232 250 213 196 200 150 100 50 0 2009 2010 2011 2012 2013
Firmly on track for future NAV growth
37 APPENDICES 38 Portfolio overview
Property portfolio by value £1.1bn
Regenerate, manage Residential planning (currently 21,900 Generate income to land plots with planning) and cover business running sell costs 45% 42% £482m Income of portfolio Persimmon joint venture Expertise in managing producing sites to maximise St. Modwen Homes income £514m
Commercial assets of portfolio awaiting 13% redevelopment, manage planning, develop and sell
Commercial Regenerate, remediate, land and manage planning, develop and sell land development £146m Flagship projects
of portfolio Practical approach
Extensive portfolio diversifies risk and creates opportunities
39 Major schemes – Future remaining GDV
Major schemes Remaining 2014 2015 2016 2017 2018 GDV
Longbridge, Birmingham Marks & Spencer & associated development 60
Future development 300
Swansea University campus Phase 1 100
Future phases 300
New Covent Garden Market Market and Residential – planning } 2000 Market and Residential - development/sale }
Great Homer St., Liverpool Sainsbury’s 40
Other land bank opportunities Various 200
Total 3000
Demonstrating good future value contained within development pipeline
40 Performance summary
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
Rental and other income 35.3 36.8 38.7 39.0 39.2
Property profits 7.6 21.9 23.8 29.0 39.8
Overheads (14.1) (17.1) (16.7) (18.6) (20.2)
Interest (20.4) (24.2) (23.0) (23.9) (25.5)
Trading profit (before 8.4 17.4 22.8 25.5 33.3 revaluation movements)
Property portfolio 1,018.5 1,055.0 1,102.5 1,098.2 1,141.8
See-through net debt 422.7 409.2 431.6 448.7 373.7
See-through loan-to-value % 42% 39% 39% 41% 33%
Net assets 401.0 436.8 476.0 513.7 627.0
Strong operating track record consistently producing trading profit and ability to add value 41 Residential land bank at 30 November 2013
Nov 13 Nov 12
Acres Units Acres Units
With planning recognition
− Allocated in local plan or similar 238 3,669 178 3,396
− Resolution to grant 105 1,470 140 1,942
− Outline permission 892 14,191 794 13,175
− Detailed permission 190 2,579 169 2,337
1,425 21,909 1,281 20,850
No planning recognition 468 5,114 523 5,694
TOTAL RESIDENTIAL LAND 1,893 27,023 1,804 26,544
NOTE: Includes 100% of JVs (excludes NCGM)
Residential land actively managed through the planning process
42 The land bank
Land bank ownership Development timescales Developable acres Nov Nov Nov 2013 2012 2011 Within Retail 337 342 357 Development 5 years agreement 15% 21% Industrial and Commercial 2,997 2,859 2,869 Wholly 10+ years Within JV 7% 5-10 years owned 65% 20% Residential 1,893 1,804 1,646 72%
Not yet specified 716 796 890
Residential land bank Total developable 5,943 5,801 5,762
SMH £45m Persimmon JV £77m
Under management Under management - Regions - London & SE £213m £122m
Substantial land bank provides solid asset value and substantial future opportunities 43 Income producing portfolio
• Investment properties at high yields and low affordable rents • Properties held for future development profits, not investment
Income producing properties as at Nov 2013 (including Group share of JVs)
Equivalent Net Initial
Nov 13 Nov 12 Nov 13 Nov 12
Retail 9.2% 9.0% 7.7% 7.6%
Office 9.7% 9.4% 7.0% 7.0%
Industrial 9.2% 9.2% 8.0% 7.9%
Portfolio 9.2% 9.2% 7.8% 7.7%
Strong and consistent rental revenue stream
44 Profit and loss
2013 £m 2012 £m
Company JVs Total Company JVs Total
Net Rental Income 29.0 7.3 36.3 28.3 7.9 36.2
Property Profits 30.0 9.8 39.8 27.6 1.4 29.0 Other Income 2.9 - 2.9 2.8 - 2.8
Overheads (19.9) (0.3) (20.2) (18.1) (0.5) (18.6)
Operating Profit 42.0 16.8 58.8 40.6 8.8 49.4
Interest (19.0) (6.5) (25.5) (18.7) (6.2) (23.9)
Trading Profit 23.0 10.3 33.3 22.9 2.6 25.5
Property Valuation Gain 30.9 11.1 42.0 1.3 26.7 28.0
Other Finance Gain/(Charges) 4.8 2.1 6.9 0.6 (1.3) (0.7)
Profit Before All Tax 58.7 23.5 82.2 24.8 28.0 52.8
Profit growth
45 Income producing – Top 10 tenants
£m* Alstom Grid (UK) Limited 4.0 Shanghai Automotive 1.6 Knorr Bremse SFS 1.5 Paragon Automotive Services Limited 1.4 Siemens Industrial Turbomachinery Limited 1.1 Beko PLC 1.0 Arlington Fleet and Retail Group 0.7 Wireless Data Services 0.7 Blue Diamond (UK) Limited 0.6 Woking Borough Council 0.6
* Gross annual rent before minority interest or joint venture accounting
Largest tenants have sound covenants
46 Timeline
1986: • St. Modwen established by reverse takeover in April 2010: • Strategic site within 2,500 acre BP Portfolio identified as 1986 by Redman Heenan International plc possible location of Swansea University’s New Science and Innovation Campus 1986 – • Rapid growth due to substantial development • programme based on enterprise zones and Establishes joint venture with Persimmon Homes plc 1990: • industrial schemes Establishes St. Modwen Homes • Programme moved to include retail schemes and 2011: • Agrees to redevelop Elephant & Castle Shopping office parks Centre as part of ongoing regeneration of area 1991: • Attention switched to increasing rental income • Selected as development partner with VINCI PLC for • Regeneration strategy established 2012: the proposed redevelopment of New Covent Garden • Major expansion of range of partnerships with Market landowners, local authorities and major companies • Retail Bond issued £80m 1997: • Joint venture with Salhia Real Estate Company • K.S.C (KPI) entered into 2013: Development Agreement signed with CGMA for redevelopment of New Covent Garden Market • Major acquisitions include portfolios from Alstom 2000 – • Development Agreement signed with Swansea and Marconi 2003: University for first phase of its £450m Science and • St. Modwen enters FTSE250 (November 2003) Innovation Campus (works start May 2013) 2005 – • Selected as preferred developer on many town • £49m equity placing 2010: centre regeneration schemes • Elephant & Castle sold for £80m • Acquisition of large industrial sites including: • Agreed 150,000 sq ft pre-let to Marks & Spencer at Longbridge, Llanwern, Project MoDEL, Coed Darcy Longbridge and BP Portfolio • £107m equity issue in 2009
Broad expertise and extensive land bank provides flexibility to move with market demands 47 Glossary • Active management: The component of • Net rental income: Rental income receivable • Property profits: Development profit (before the property revaluations delivered as a direct result less non-recoverable property costs for the deduction of net realisable value provisions) plus of management actions and initiatives e.g. Group (including its share of joint ventures and gains on disposals of investments/ investment obtaining planning consent, achieving associates) properties for the Group (including its share of remediation milestones and improving lease • Occupancy rates: Estimated rental value (ERV) joint ventures and associates) terms attributable to vacant units as a • Rental lease length: The weighted average • Compound Annual Growth Rate (CAGR): The proportion of total ERV (including the Group’s lease term to the first tenant break year over year growth rate of an investment over share of joint ventures and associates). ERV is • Trading profit: Operating income less operating a specified period of time determined by the Group’s external valuers costs • Gearing: The ratio of net debt to net assets • Other income: Other rental type income generated from the operating assets of the Group • Gross Development Value (GDV): The sale value of property after construction (including its share of joint ventures and associates) • Interest: Net finance costs (excluding the mark- to-market of derivative financial instruments and • Operating costs / business running costs: other non-cash items) for the Group (including its Administrative expenses plus net finance costs share of joint ventures and associates) (excluding the mark-to-market of derivative financial instruments and other non-cash items) • Interest cover: The ratio of operating income to for the Group (including its share of joint ventures interest and associates) • The bank of property comprising all Land bank: • Persimmon joint venture: A contractual of the land under the Group’s control, whether arrangement with Persimmon to develop wholly owned or through joint ventures or residential units on agreed sites within the St. development agreements Modwen land bank • The ratio of Group net debt Loan-to-value ratio: • Property portfolio: The property components of to the Group property portfolio (excluding joint investment properties and inventories of the venture and associates) Group (including its share of joint ventures and • Net debt: Total borrowings less cash and cash associates) equivalents
48