Half year results presentation To 31 st May 2017
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.
Balanced and diverse portfolio, well positioned for growth May 2017 May 2016 Nov 2016 • Commercial development proceeding in line with expectations, growing pipeline for future delivery: EPRA NAV per share 468.4p 450.9p 460.5p – active regional pipeline of 1.8m sq ft – delivered approx. 400,000 sq ft in H1 with Total Accounting Return 2.6% 1.8% 4.5% rate of delivery increasing in H2 – weighted to sectors with good structural Commercial development growth prospects £11.5m £21.1m £30.4m profits • Continued residential growth: Residential development £13.4m £12.9m £27.1m profits – 55% growth in St. Modwen Homes profits – average sales rates remain strong Profit before all tax £29.3m £30.0m £60.8m • Good progress with major projects: Dividend per share 2.02p 1.94p 6.00p – exchanged contracts on the sale for the Nine Elms Square, NCGM See-through net – £580.3m £500.6m £517.0m progressing the sale of student borrowings accommodation at the Bay Campus, Swansea See-through LTV ratio 33.1% 30.5% 30.5% 3
Four strategic objectives Changing places. Creating better futures Accelerate our Cement and grow our Portfolio focus and Grow our residential and commercial development regeneration reputation capital discipline housebuilding business activity • • Reduce borrowings Deliver brilliantly on • • Potential >7,500 Potential >7.5m sq further our existing major units for St. ft to build out in regeneration Modwen Homes to medium term projects build out in medium • Focus on fewer, term o Longbridge larger projects • Industrial/ o Swansea logistics focus • Potential >9,000 o NCGM • Focus on sectors units third party • o Town centres with best structural Need to manage land sales in growth prospects risk carefully medium term • Unlock the next • Levels of activity to generation of • Need to manage be carefully regeneration risk carefully balanced vs market conditions 4
Business and market overview
Commercial development Near term committed pipeline Near term pipeline Medium term pipeline • Increased development pipeline to 1.8m sq ft from 1.6m sq ft in November 2016, deliverable over next 18 months £91m 9% £51m • Focus on ‘sheds and beds’ – increase in industrial / 17% £144m 15% logistics and continued delivery at Bay Campus £140m £52m 47% £50m £689m 18% 5% 71% • £246m total project cost, average yield on cost of approx. £52m 8%, yield on completion of 6.5% and profit on cost of 18% approx. 20% – approx. £45m profits still to book GDV £295m GDV £974m • Pipeline is 43% pre-let / pre-sold (November 2016: 41%) – expect further progress Industrial / logistics Student / PRS Retail Office / Other Medium term pipeline • Prioritising 7.5m sq ft of Industrial / Logistics development Medium term opportunity in A1 locations Deliverability (sq ft)* Location / • GDV of these sites approx. £700m, rental value approx. demand 1 2 3 Total £45m, land book value approx. £90m, land capex approx. A 7.5m 3.0m 2.2m 12.7m 74% £65m, build capex at approx. £425m and profit of approx. B 1.9m 1.8m 0.0m 3.7m 21% £115m C 0.0m 0.8m 0.1m 0.9m 5% • Volume growth unlikely to exceed 25% per annum Total 9.4m 5.6m 2.3m 17.3m 55% 32% 13% • Offers potential to rebalance portfolio over time * See slide 31 of appendix for definitions 6
Delivering value from the residential land bank Residential land bank – total value £783m • Residential land values stable in the first half of the year • Continue to add value through planning gains Total residential plots (excl. NCGM and South Wales) • Achieved residential land sales of £17m at or above book in H1 (H1 2016: £14m), with approx. £40m anticipated for the full Total plots 25,230 year NCGM / South Wales (10,730) • Rate of disposal expected to be approx. £50m - £60m per annum over medium term, with capex of £30m - £40m Total plots excl. NCGM / South Wales 14,500 Third-party controlled 2,400 Medium term pipeline Pipeline: total residential plots 16,900 • 16,900 units deliverable in the medium term (excl. NCGM and South Wales) – balanced between 7,700 units in the pipeline for St. Modwen Homes and 9,200 units for third party land sales Deliverability (units)* • Considering strategic options for large South Wales sites Location / demand 1 2 3 Total • Opportunity to accelerate activity but likely to limit volume A 6,450 1,750 1,760 9,960 59% growth of St. Modwen Homes to 25% per annum B 4,300 940 1,240 6,480 38% – prioritise A1 sites C 340 120 0 460 3% – larger sites require strategic approach Total 11,090 2,810 3,000 16,900 66% 17% 17% * See slide 31 of appendix for definitions 7
Continued strength in housebuilding May May Nov St. Modwen Homes 2017 2016 2016 • Total units sold SMH: Continued growth will at least offset reduction in profits from planned Persimmon JV in wind-down - private 220 182 438 • Build active on 17 sites with 3 new sites to be - affordable 10 20 47 added in H2 - private sales rate SMH 0.8 0.6 0.8 • Focus remains on quality Average number of sales – 5 star housebuilder 13 9 11 active sites SMH • Targeting approx. 700 units in 2017 with approx. Average selling price SMH: 80% of our target exchanged or reserved at the - private £262k £199k £217k end of May - affordable £86k £83k £90k • Approx. 20% increase in private average selling price Share of profit £m: – 4% increase on a like-for-like basis - SMH 9.0 5.8 15.3 – balance due to increase in average unit size - Persimmon JV (SMP 4.4 7.1 11.8 share) • Margin will fall slightly in H2 due to higher affordable completions Total residential (£m) 13.4 12.9 27.1 SMH operating profit 15.3% 15.2% 13.4% margin 8
Major regeneration projects New Covent Garden Market Bay Campus, Swansea University • Contracts exchanged for sale • Over 2,000 student rooms of our interest in Nine Elms completed by September 2017 Square, to complete in the Summer as old flower market • Progressing with the sale of is demolished student accommodation assets, taking advantage of strong • Works to interim flower market investment demand for student now complete and facility is housing open and trading • 30 acres (46% of site) remains for future development, to • Works to Food Exchange progressing well and construction of complement University growth plans with planning for a further fruit and vegetable market to commence this year 2,000 student rooms • St. Modwen Homes, 300 homes on site at Hendrefoilan Applying our skills more broadly ... Longbridge, Birmingham • • 227 acre site already secured 40% of 468 acre site now in Wantage, Oxfordshire. delivered following extensive Planning for 1,500 home to be remediation programme and delivered over next 10 – 15 providing excellent potential for years future value creation • • Other large scale residential Works to Extra Care and opportunities being pursued RCDM close to completion • Plans submitted for delivery of 65,000 sq ft phase 3 of Longbridge town centre, a leisure led scheme with cinema, gym and restaurants • Future phases of housing planned for St. Modwen Homes 9
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