FULL YEAR RESULTS TO 30 TH NOVEMBER 2015 PRESENTATION
Agenda 1. Highlights 2. Financial Results 3. Operational Review 4. Outlook Comparative information: 1. During the period we were required to adopt IFRS 10 Consolidated Financial Statements. This requires that we change the basis of accounting for VSM Estates (Holdings) Ltd from consolidation to equity accounting. Comparative information has been restated accordingly. 2. During the period, further consideration was given to the revenue streams associated with the first two phases of student accommodation at the Bay Campus, Swansea University. It has been concluded that the transaction with M&G for 50% of income associated with this accommodation is more appropriately accounted for as a finance lease arrangement, rather than the sale of 50% of the assets. To reflect this, our 2014 results have been restated. Further detail on restatements is included in the Appendix. Disclaimer This presentation does not contain or constitute an invitation or inducement to any person to underwrite, subscribe for, or otherwise acquire or dispose of any shares in St. Modwen Properties PLC or other securities and should not be relied on for such purposes. This presentation may contain certain forward looking statements. By their nature, forward looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward looking statements. Any forward looking statements made by or on behalf of St. Modwen Properties PLC speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. St. Modwen Properties PLC does not undertake to update forward looking statements to reflect any changes in St. Modwen Properties PLC's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Statements are made in this presentation about the price and past performance of shares in St. Modwen Properties PLC. Past performance cannot be relied upon as a guide to future performance. 2
Highlights Financial Operational • 91% increase in profit before all tax to £258m • Major projects achieving significant milestones: (2014: £135m) − NCGM – unconditional status achieved in • 27% increase in NAV per share to 414p (2014: H1, now reflected on balance sheet. Procurement of new market gaining 325p) and EPRA NAV per share up 30% to 446p momentum marking step forward to vacant (2014: 342p) possession of first 10 acres • Earnings per share up 82% to 97.9p (2014: 53.8p) − Bay Campus, Swansea University – opened • Property profits up 31% to £67m (2014: £51m) in September 2015 to 917 new students. Next phase opened in January 2016 and • New Covent Garden Market (NCGM) contributes third phase started on site bringing total £127m to net valuation increase of £202m (2014: number of rooms to 2,000 by 2017 £94m) − Longbridge – 150,000 sq ft Marks & Spencer • 25% increase in total dividend for the year to store and Phase 2 of Town Centre now open 5.75p per share (2014: 4.6p per share) and trading • Commercial property development pipeline continues to deliver strong flow of profits • Continued growth in residential development profits to £29m (up 21%) (2014: £24m) Strategy for growth has produced another year of record results 3
FINANCIAL RESULTS 4
Financial highlights • Shareholders’ equity NAV per share up 27% to 414p (2014: 325p) • EPRA NAV per share up 30% to 446p (2014: 342p) • 91% increase in profit before all tax to £258m (2014: £135m) • Trading profit up 39% to £63m (2014: £46m) • NCGM recognised on balance sheet in H1, contributing a net gain of £127m in the year • Further added value gains of £39m coupled with market driven gains of £36m taking total valuation gain to £202m (2014: £94m) • Adjusted gearing at 48% (Nov 2014: 47%) and see-through LTV at 30% (Nov 2014: 31%) • Total dividend payable for the year up 25% to 5.75p per share (2014: 4.6p per share) Excellent year of portfolio-wide delivery 5
Profit and loss Year ended Year ended 30 November 2015 30 November 2014 £m £m 38.7 37.1 Net Rental Income Property Profits 67.4 51.3 4.2 3.6 Other Income (26.5) (23.2) Overheads Operating Profit 83.8 (+22%) 68.8 Interest (20.5) (23.1) Trading Profit 63.3 (+39%) 45.7 38.6 35.9 Added Value Valuation Gains NCGM Valuation Gain 127.4 - 35.7 57.6 Market Valuation Gain (6.6) (3.8) Other Finance Charges Profit Before All Tax 258.4 (+91%) 135.4 Earnings per share 97.9p 53.8p NOTE: the above figures are stated on a proportionally consolidated basis, including our share of JVs Continued focus on value generation while working our income producing assets 6
Income producing portfolio • A £768m portfolio of income producing assets (45% of Increasing net rental income and other income total portfolio): £m - affordable rents on flexible leases HY 50 - diversified rent roll and tenant base FY 42.9 40.7 39.2 39.0 40 38.7 • Expertise in managing sites to generate income that 30 typically covers the running costs of the business 20 • Net rental and other rental style income increased to 10 20.7 19.8 20.1 £43m (2014: £41m) and driven by retained developments 19.3 19.5 (Bay Campus for Swansea University and Longbridge 0 Town Centre Phase 2) and new assets (Kirkby Town 2011 2012 2013 2014 2015 Centre), adding £9m of annualised net rental income Coverage of business running costs £m • Annualised gross rent roll increased during the year to 50 £58m (2014: £45m) 47.0 46.3 45.7 40 42.9 42.5 40.7 • 41.2 39.0 39.2 Stable level of tenant vacations and good level of 38.7 Income Producing Portfolio 30 occupancy (89%) maintained through to development Business Running Costs 20 • Average lease length 6 years (2014: 5 years) 10 • Investment properties delivering high yields with an equivalent yield of 7.7% (2014: 8.9%) on income producing 0 2011 2012 2013 2014 2015 properties Increased rent roll covering greater percentage of business running costs 7
Record property development profits £m • Commercial development 70 pipeline converting into record 67 profits Commercial 60 Swansea University, Bay Campus • Significant milestones on major Housebuilding projects reached: 51 50 34 - Bay Campus for Swansea University opened in 40 38 22 September 2015 E&C=£10m - 150,000 sq ft M&S at Commercial=£9m 29 4 * 30 Longbridge Town Centre 19 5 opened in November 2015 20 • 21% increase in total 23 29 10 housebuilding profits 24 10 9 6 0 2012 2013 2014 2015 *Profits for Swansea University are now recorded both in Development Profits and Revaluations Delivery of major projects and conversion of commercial and residential opportunities drive record property profits 8
Valuation movements £m £m Active management valuation increases Market value gains 140 50 Active management: Residential land 120 45 Active management: Income 127 producing and commercial land 40 100 38 35 80 30 25 60 20 20 20 40 15 16 17 17 10 20 22 5 22 19 6 0 0 NCGM H1 2014 H2 2014 H1 2015 H2 2015 2013 2014 2015 Exceptional year adding value to assets with significant benefit from all major and regional projects 9
Strong balance sheet 30 Nov 2015 30 Nov 2014 £m £m 1,265 1,058 Property assets 232 134 Investments in JVs and other assets 112 72 Debtors - - Pensions Gross assets 1,609 1,264 Net borrowings (443) (337) Finance leases (55) (23) Trade payable etc. (189) (180) Gross liabilities (687) (540) Net assets 922 724 Non-controlling interests (7) (6) Shareholders’ funds 915 718 NAV per share 414 ( +27%) 325p EPRA NAV per share 446 (+30%) 342p A successful business with substantial balance sheet flexibility 10
NAV movements Nov 2014 Nov 2015 £m NAV per share 325p 414p EPRA NAV per share 342p 446p 1000 (11) 36 (57) 900 127 39 800 67 43 (47) 915 700 718 600 500 At Nov 2014 Net rents & other Overheads & Development Value added NCGM Market valuation Dividend Tax / other At Nov 2015 income interest profit portfolio movement movements Valuation gains reflect NCGM impact and strong year for commercial and residential markets 11
Net borrowing movements £m 800 750 (370) 265 700 650 600 550 500 (443) 450 400 (14) 27 (51) 350 (337) 37 300 250 Nov 2014 Net rents & other Overheads & Tax & net Working capital & Acquisitions & Disposals Nov 2015 income interest dividends finance leases development expenditure Company remains acquisitive and continues to invest in development to generate future returns 12
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