Profit surge at St Modwen as major project work kicks in
DEVELOPER St Modwen has seen a 32% increase in pre-tax profit on a year on year basis.
Announcing its half year results for the six months to May 31, the Birmingham-based firm reported pre-tax profit of £51.3m (H1 2013: £38.8m)
Realised property profits were also up at £19.1m (H1 2013: £16.1m).
St Modwen launched a £100m convertible bond in February and refinanced its debt portfolio, extending the average life to 4.2 years (Nov 2013: 2.5 years).
It also reduced the weighted average cost of debt to 5.1% (Nov 2013: 5.6%).
St Modwen suggests it is benefiting from its major projects gathering momentum and growth in the commercial property sector.
Its increasing commercial development pipeline across the UK reflects the gradual, overall improvement of this market, it says.
Highlights from the last six months include the submission of a planning application in May for the redevelopment of the New Covent Garden Market site in London, the next phase of the £450m Bay Campus scheme being agreed with Swansea University, comprising an additional 545 student apartments, and winning a resolution to grant planning permission for the second phase of the new Longbridge town centre in Birmingham, comprising a 150,000 sq ft Marks & Spencer store and 45,000 sq ft of additional retail.
Bill Oliver, chief executive of St Modwen, said: “Against a backdrop of improving optimism across the country, we are prudently increasing our pipeline of development activities and actively pursuing new opportunities to meet growing investor interest and occupier demand.
“Whilst we are still some way from a wholesale UK recovery, confidence is starting to return to the regions.
“Here our traditional engine of growth, commercial development, is beginning to gain momentum with over 1m sq ft of regional commercial projects in progress.
“This, combined with our improving valuations particularly in the residential sector, underpin our confidence for continued outperformance as we work towards the full year.”
Midlands regional director John Dodds said: “St Modwen enjoys continuing strong performance in the Midlands, based on a growing pipeline of development projects and property transactions, reflecting the strength of the company nationally.
“Land sales, property purchases and lease agreements have enjoyed a 25% increase this year, reflecting growing confidence in the market.
“Key highlights include an agreement to build a 20,000 sq ft fire station on behalf of Hereford & Worcester Fire Authority at Great Western Business Park in Worcester and a 114,000 sq ft lease to international white goods manufacturer and supplier Beko at Heartlands Park in Washwood Heath.”
