IMAGE TO BE CHANGED The MVMNT, Greenwich Development Securities PLC Interim results for six months ended 31st August 2013
Contents Slide number Overview and highlights 3 – 10 Financial results 11 – 15 Operating review 16 - 28 - Overview - Legacy assets - Development and trading - Investment portfolio - Major development Appendix 29 – 36 2
OVERVIEW AND HIGHLIGHTS
Headline numbers EPRA NON-EPRA Six Six Six Six Year Year months months months months ended ended ended ended ended ended 28th Feb 31st Aug 28th Feb 31st Aug 31st Aug 31st Aug 2013 2013 2012 2013 2013 2012 320.5 312.6 Net Asset Value (£’m) 317.5 317.4 306.6 304.4 Net Asset Value per share 262 260 259 255 251 249 (pence) Earnings/(loss) per share 5.1 5.9 10.5 0.6 2.0 (1.4) (pence) Development and trading 13.3 28.1 11.9 13.3 28.1 11.9 profits (£’m) 4
Group highlights • Pre-tax profit of £8.1 million (28th February 2013: pre-tax profit of £0.8 million) • EPRA NAV of £320.5 million equivalent to 262 pence per share increased from £317.5 million (260 pence per share) as at 28th February 2013 • After deducting £2.9 million of 2013 final dividend, basic NAV of £312.6 million increased by £6.0 million (2.0 per cent) from £306.6 million • Development and trading gains of £13.3 million (six months to 31st August 2012: £11.9 million) delivered with good visibility on further gains in the second half of the year and beyond – diversified portfolio of assets continuing to generate steady profits with risk spread across multiple opportunities • Investment portfolio valuations stabilised and set to recapture value - increase of £0.5 million in investment portfolio including our share of JV assets • Conservative balance sheet maintained – gearing reduced to 45.7 per cent (28th February 2013: 47.9 per cent). Gearing including share of JVs at 56.5 per cent (28th February 2013: 63.9 per cent) • Interim dividend of 2.4 pence per share declared. (31st August 2013: 2.4 pence per share) 5
Operational highlights • On track with strategy of generating gains through regeneration - £13.3 million of development and trading gains delivered in the period with more to follow over the next half of financial year and beyond ‒ £6.4 million of gains from concluding agreement at PaddingtonCentral (net of associated costs) ‒ £6.9 million of gains from other development and trading assets and Chrome portfolio • Good progress made to release cash from legacy assets - £11.4 million payment received in the period from sale of Broughton residential land and planning success at 399 Edgware Road • Seven planning consents achieved from 28th February 2013 to date – significant value creator in process of regeneration, enabling a profit stream for future periods • Progress on major developments projects – 10 and 12 Hammersmith Grove and Southwark • Element of realised gains recycled into further real estate opportunities with regeneration potential 6
Development and trading contribution Year ended Six months ended Six months ended 28th Feb 2013 31st Aug 2013 31st Aug 2012 £m £m £m Rock portfolio 0.3 2.7 4.3 PaddingtonCentral 6.4 - - HDD projects 2.0 - 0.9 Wick Site, Littlehampton - 2.4 2.5 - 1.5 1.9 Westminster Palace Gardens, London Project Management Fees/Net Rental Income 1.5 1.2 2.5 Gains arising from additional trading asset realisations 3.2 1.6 12.7 Other (0.1) 2.5 3.3 Gross contribution 13.3 11.9 28.1 7
Gains delivered across portfolio and more to follow Current expectations of gains to be released across portfolio £ millions 8
Strong pipeline of disposals established FY 2014 FY 2015 FY 2016+ FY 2014 FY 2015 FY 2016+ DEVELOPMENT AND TRADING PORTFOLIO MAJOR DEVELOPMENTS PORTFOLIO Hale Barns X X Cambridge Science Park X X Marsh Mills X 10 Hammersmith Grove X Romford* X Barnstable X 12 Hammersmith Grove X X Beyond Green - Norwich X X PaddingtonCentral X Beyond Green - Pincents Hill, Tilehurst X Southwark X X Launceston X Luneside East X INVESTMENT PORTFOLIO Sandbanks X Manchester Arena X Tranmere - HDD X Wick Lane Wharf X X Lawley - HDD X Buckshaw - HDD X X Newport - HDD X Llanelli - HDD X HDD - other X X Abbey Wood X X 399 Edgware Road X Dartmouth X Rock Portfolio X Rembrandt House, Watford X X Woking X Wind Farms X X Shepherds Bush X The MVMNT, Greenwich X Kensington Church Street X Real estate loan portfolios X The Old Vinyl Factory, Hayes X X X Morden Wharf X Axis, Manchester X Essex foodstore* X Dublin mixed-use scheme* X *New acquisitions made since 28th February 2013 Atlantic Park X 9
Market context • Consensus emerging about GDP growth • Confidence returning to secondary markets as investors are looking outside of Central London in search of higher yielding, good quality assets – supports our strategy of regional secondary investment • Strengthening market in Greater London where we are active • Residential prices growing – Government initiatives providing additional boost to housing value and supply with residential land prices set to further benefit – our exposure to this market is established and increasing • Near-term interest rates remain at historically low levels 10
FINANCIAL RESULTS
Results for the six months ended 31st August 2013 Six months Six months ended ended Year ended 31st Aug 2012 31st Aug 2013 28th Feb 2013 £m £m £m Profit before revaluations, interest & taxation 12.7 9.5 23.8 Net finance costs (5.8) (4.9) (9.3) 6.9 4.6 14.5 Profit before revaluations and taxation Swap mark-to-market valuations 0.7 (0.9) (0.8) Property revaluation gains/(loss) (including joint ventures) 0.5 (4.4) (12.9) Profit/(Loss) before tax 8.1 (0.7) 0.8 Profit/(Loss) per share 5.9p (1.4)p 2.0p Dividend per share 2.4p 2.4p 4.8p 12
Contribution to NAV change Cash-related in Non cash-related in the period the period £m £m £m Net assets attributable to Shareholders at 28th February 2013 306.6 6.5 6.5 - Contribution from investment property 0.5 - 0.5 Property revaluations Contribution from development and trading portfolio 13.3 13.3 - Operating costs (6.5) (6.5) - Net interest costs (5.8) (5.8) - Swap revaluations 2.9 - 2.9 (0.6) (0.6) - Other Sub-total 10.3 6.9 3.4 (1.4) (1.4) - Taxation Dividends (2.9) (2.9) - Total movement 6.0 2.6 3.4 Net assets attributable to Shareholders at 31st August 2013 312.6 13
Change in NAV through the period (pence per share) 268 266 264 (5.8) 262 10.9 260 (4.8) Pence per share (1.1) 258 2.3 0.4 (2.4) 256 254 5.3 255 252 251 250 14
Net Debt 31st Aug 2013 28th Feb 2013 £m £m Gross debt 212.0 206.0 Cash (69.0) (59.2) Net debt 143.0 146.8 Gearing 45.7% 47.9% Share of net debt in joint ventures 33.7 49.3 Net debt including joint ventures 176.7 196.1 Gearing including joint ventures 56.5% 63.9% Analysis of gross debt Fixed rate 46.1% 48.0% Capped / SWAP 43.9% 42.1% Floating rate 10.0% 9.9% Weighted average interest rate 5.7% 5.9% Weighted average maturity 7.6 years 8.3 years 15
OPERATING REVIEW 1) Overview 2) Legacy assets 3) Development and trading portfolio 4) Major development portfolio 5) Investment portfolio
1) Overview – the three aspects of our portfolio Development and trading Major developments Typically late cycle Objective Objective activity – Strong pipeline focus in this of value - To create value through the To deliver prime developments area is enhancing deals that achieve maximum returns regeneration of redundant or increasing with reduced risk exposure developed undervalued real estate, creating a product that can be sold into the prime or near-prime market • Real estate loan portfolios Investment portfolio Investment Objective portfolio held Objective for consistent To realise gains through the To sustain and grow a stable cash yield and acquisition of loan portfolios income stream from higher to support secured against underlying yielding investment assets with real estate assets, from banks and overheads enhancement potential financial services providers 17
Our focus - delivering gains by regenerating real estate • Applying equity – in a capital constrained environment, our equity resource commands a powerful position in the market as terms of trade move towards us • Arbitrage opportunities - transformation of secondary real estate into prime/near-prime product to capture value uplift and deliver strong returns. This can be achieved by: ‒ Repositioning redundant/functionally obsolete real estate into sectors of demand through change of use and/or redevelopment ‒ Acquisition of real estate loans or portfolios from financial institutions which can be sold individually with or without adding value through the development process • Risk diversification – acquisition of assets across multiple sectors and locations where demand is in evidence achieving risk diversification as opposed to concentration of value in a few individual assets – target IRRs of 20 per cent and above • Reinvestment of gains – equity released from disposals of assets is recycled into further arbitrage and development opportunities in an environment of strengthening GDP and economic outlook 18
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