St Modwen making ‘considerable progress’ on new strategy

St Modwen’s strategy of shifting away from student housing and retail and growing its industrial and logistics business has “made considerable progress”, according to the developer’s chief executive.

Mark Allan, who took over at the Midlands developer at the end of 2016, has been leading the new strategy, which is looking to accelerate its commercial development activity and grow its housebuilding business.

“Since we announced our new strategy a year ago we have made considerable progress,” said St Modwen’s chief executive Mark Allan.

“Our organisational structure is better aligned to our strategy, our forward pipeline of projects is clear, our net borrowings are down by over £220m and with the sale of £635m of assets we have seen a significant shift in our portfolio mix.

“This will continue in the years ahead, as we recycle capital out of existing assets and build up a modern industrial/logistics portfolio with better long-term growth prospects by retaining the majority of our own developments.”

Its first-half results, for the six months to May, showed an 18% drop in pre-tax profits, to £25.9m. Its key figure of net asset value per share edged up 1% to 455.4p.

Allan remains positive about the group’s ability to deliver improved returns on the foundations currently being put in place.

“The wider UK economic and political environment is still uncertain and likely to remain so for some time to come,” he added. “Although we are of course exposed to any cyclicality in the wider UK economy, the structural growth fundamentals in our key areas of regional housebuilding and industrial/logistics, remain positive.

“This provides us with confidence as we accelerate our development activity, although the short-cycle nature of our projects does mean we have flexibility to adjust our pipeline to any sudden changes in demand.”