Uncertainty to blame as profits fall at St Modwen

PROFITS have taken a massive hit at Birmingham property group St Modwen, despite the firm posting a solid year of revenue.

The listed group has blamed “external market factors” in its annual report after pre-tax profit fell from £235.2 million to £66.9 million for the year to November 20, 2016.

This was despite group revenue staying almost unchanged at £287 mil- lion and net rental income growing from £32.8 million to £40.5 million.

St Modwen specialises in regeneration projects and is leading the long-running redevelopment at Longbridge following the collapse of MG Rover in 2005. The project started in 2004 and St Modwen said in its annual report it expected development to continue there for at least another ten years.

Chairman Bill Shannon said: “The year saw St Modwen deliver a solid performance in an uncertain market environment.

“The results are below those reported for last year and this is due largely to a combination of external market factors and significant valuation gains booked in 2015.

“Importantly, the business continued to generate healthy cash flows and net debt and gearing levels remain carefully controlled.

“Regeneration remains at the heart of our business and our expertise in this area allows us to continue to generate value from our substantial land bank of over 6,000 developable acres.

“St Modwen is a long-term business but we operate in cyclical markets and must plan and manage our business accordingly. The past 12 months have been unsettled in this respect and the outlook for 2017 and 2018 looks to be similarly uncertain, as a range of macro-economic factors play out both globally and more locally to the UK.”

Midlands regional director Stephen Prosser added: “The Midlands region experienced continued growth during 2016 with the majority of our secondary industrial stock seeing increased demand, with a dramatic rise in occupier rate and an improvement in rentals achieved.

“This demand was also present in relation to our speculatively delivered space and especially noticeable in the industrial and logistics market.”