St Modwen in positive mood, despite profit slip

St Modwen delivered what its management described as a “resilient” trading performance in the first six months of its current financial year, despite posting pre-tax profits slightly down on the same period in 2016.

Speaking about the group’s £29.3m pre-tax profits, down 2.3% year-on-year, chief executive Mark Allen said the resilience was “broad-based”, with residential activity, commercial development and asset management initiatives making what he labelled “meaningful profit contributions”, while net rental income continued to cover recurring overhead and interest costs.

Allen said the firm had delivered approximately 400,000ft² of commercial space in the first half, while its residential arm had performed strongly, with operating profits of £13.4m, up 4%, supported by what he called “excellent progress” from St. Modwen Homes where profits grew 55%, “offsetting the planned decline in the Persimmon JV as it winds down”, he added.

St Modwen said contracts had been exchanged last month for the sale of the company’s interest in the 10-acre Nine Elms Square site in London to Hong Kong-based Wanda Commercial Properties, while in south Wales, it was progressing with the sale of its student accommodation assets at Bay Campus – part of Swansea University – “to take advantage of the strong investment demand for student housing”.

Following a review of the business Allen said St Modwen had a 17.3m ft² pipeline of commercial opportunities, with 7.5m ft² being “high quality industrial and logistics projects”, equating to around nine years’ worth of work, with potential profits in the region of £115m.

The group said it also planned to ramp up its residential and housebuilding activity. Its residential pipeline contains approximately 16,900 plots, with nearly 14,000 benefitting from planning recognition; more than a decade’s worth of activity, it added.