St Modwen accelerates construction work as profits rise

Unveiling full year figures this morning showing higher profits and lower debt, the company said it had delivered 1.4m sq ft of new commercial space worth £216 million last year and had a committed pipeline of 1.6m sq ft at the start of this year.

Over the following two years its pipeline is set to grow to around 7.5m sq ft, worth £700m, most of which St Modwen intends to keep in its portfolio.

The company said it would also expand its home building businesses. Its St Modwen Hopmes arm sold 695 homes last year, up 43%, driving pre-tax profits up 52% to £23.3m.

That helped boost overall group pre-tax profits to £70.3m, up from £66.9m the year before.

As a result, total dividend payouts to shareholders this year will be 6.29p per share, a rise of 4.7%.

Meanwhile its regeneration operations are seeing new work at Swansea university campus, at Longbridge and two new major residential schemes of 4,500 homes secured in Wantage and Buckover.

Chief executive Mark Allan said: "2017 has been a positive year for us.

"Having established our new, more focused strategy, we started to shift our portfolio towards sectors with better structural growth characteristics, we increased commercial development activity, grew housebuilding profits and reduced net borrowings.

"This will continue in 2018 and beyond, so despite continuing uncertainty in the external environment, the significant potential in our existing pipeline means we expect to deliver a meaningful improvement in earnings and return on capital in the medium term."

During the year St Modwen sold its land at Nine Elms Square for £470m, as well as making £87m in proceeds from its more recent sale of student housing at Swansea. In the coming year it is targeting sales of £100m-£150m, most of smaller assets and retail properties

Its construction work will be focused on industrial warehousing and logistics, property for rent and student housing.

Meanwhile company chairman Bill Shannon has said he will stand down at the company AGM in March 2019. The search for his replacement will start shortly.

Chairman since 2011, Mr Shannon said: "I have thoroughly enjoyed my time with St Modwen and believe that the company is well placed for the future. Mark Allan is now firmly established as chief executive following his appointment in December 2016, the business is performing well and we have a new, more focused strategy that I believe is appropriate to the current environment.

"It is therefore appropriate that the Board thinks ahead and plans for chair succession. By announcing my intentions at this time, the board will be able to approach the process in an orderly and timely manner to ensure that the right candidate is identified. In the meantime, I remain fully committed to the business and will continue to support the board and management team in the delivery of our strategy."