Legacy project issues lead to profit drop for real estate investor
St. Modwen Properties has posted a 19% fall in annual profit after its revenue slipped and the company revealed it had to recognise a provision for a potential claim against the company for a legacy project the group developed and sold around 15 years ago.
Pre-tax profit for the year through November fell to £58.9m, down from £72.4m and included an £18.5m exceptional cost.
The company said: “We recognised an exceptional item of £22.5m to provide for a potential claim against the company for a legacy project the group developed and sold approximately 15 years ago, which adjusted for tax and non-controlling interests reduced our statutory net profit attributable to owners of the company for the year by £17.3m, or 7.8 pence per share.
“Following a thorough review of our historical projects we are confident that any alleged problem would be a one-off issue which is therefore not expected to have any impact on our strategy or medium-term return expectations.”
Revenue fell 1.4% to £429.9m but St. Modwen Properties declared a full-year dividend of 8.7p per share, up 23%.
Mark Allan, chief executive of St. Modwen, said: “2019 has been a positive year for St. Modwen. Following our major portfolio repositioning, our focus shifted to growth, building on the substantial opportunities in our existing portfolio. This resulted in another year of strong growth in housebuilding volumes and growing momentum in industrial and logistics development, where structural growth drivers remain positive.
“Underpinned by a solid balance sheet and continued capital recycling, we expect the delivery of our strategy to drive a meaningful improvement in return on capital and, with 22% growth in 2019, we are well on track to broadly double our adjusted EPRA EPS in the medium term.”
