St Modwen confident despite losses
DEVELOPER St Modwen Properties today revealed it made a £100m loss last year as the recession devastated the commercial property sector.
The Birmingham company, announcing its annual results for the year ending November 30, said the full loss after tax amounted to £101.7m.
The figure is almost double that of 2008 when losses amounted to £50.7m.
Despite the figure, Chairman Anthony Glossop was mostly upbeat in his statement.
He said that the bulk of the loss (£80.6m) had been incurred in the first half of the year when conditions were at their most difficult.
Since then he said the markets appeared to have stabilised – although they remained fragile – and despite the difficulties, the firm had still managed to achieve an £8.4m trading profit although this was significantly down on 2008’s figure of £19.5m.
In May, the Quinton-based company announced a major refinancing of the business comprising new banking covenants and a firm placing and placing and open offer of new shares.
Mr Glossop said he was pleased with the positive reaction to this, which attracted a number of significant new investors and which raised £101.6m net.
“This new equity finance, together with the relaxation of banking covenants, enabled us both to reduce our gearing levels and to continue to operate well within our banking covenants,” said Mr Glossop.
In his statement today, Mr Glossop outlined how the property sector was fairing and said that despite the firm not seeing the resurgence in values enjoyed in other parts of the property market, there were important signs of improvement.
“Property market prospects still remain uncertain. The economy may be slowly emerging from recession, but business confidence remains fragile, with continued pressure on rents and occupancy levels.
“However, St Modwen is well prepared for such conditions: our financial position is sound; our business model will increasingly create value; and we are in a good position to seize attractive opportunities to add further to the Hopper,” he said.
He said he was confident that 2010 would see the company returning to growth in profits and net asset value.
The company’s land bank, in common with other developers, has taken a major hit although it said that towards the end of the year, values appeared to have stabilised and November saw no further writedowns.
Development highlights for the year included the completion of Rugby College after the main contraction went into insolvency and the granting of planning consent and confirmation of funding for the flagship Bournville College.
Work began on the latter in October and the two-year project is expected to have great strategic importance for the area following the demise of MG Rover and the Longbridge site.
The 250,000 sq ft six-storey building will create hundreds of jobs for the construction industry.
The completion of important sites in Etruria Valley and Trentham Lakes in North Staffordshire were also significant, said the company.
