Commercial property developer Segro Plc (SGRO.L) reported Thursday a profit for the first half compared to loss last year, helped by strong lettings momentum and rental growth in several of its major markets. Net asset value or NAV per share improved from last year. However, the company cautioned that the macro-economic environment remains uncertain, but it is well placed and will continue to focus on driving operational performance.
For the first half, the company posted profit before tax of GBP 148.9 million, compared to a loss of GBP 493.3 million in the previous year. Adjusted pre-tax profit or recurring rental profits grew to GBP 64.3 million from GBP 49.1 million in the prior year.
Profit attributable to equity holders was GBP 153 million (about US$238.42 million) or 20.8 pence per share, in comparison with a loss of GBP 480 million or 113.2 pence per share in the preceding year. Adjusted earnings or recurring rental profits declined to 8.7 pence from 11.1 pence a year ago.
NAV per share was 358 pence, up from 341 pence per share in the preceding year. Adjusted NAV increased to 366 pence per share from 353 pence per share in the year-ago period. Net asset value increased 1.1% from the end of December 2009.
Revenues for the period increased to GBP 227.2 million from GBP 168.4 million in the same period last year. Net rental income was GBP 144.3 million, up 11.3% from GBP 129.7 million a year ago.
UK business increased its retention rate to 52%, up from 45% a year ago, and Continental European retention rate remained strong at 66%. The company's portfolio of completed properties recorded a valuation gain of 1.4%, compared to a loss of 11.3% in the first half of 2009.
Ian Coull, chief executive of the company said, "Progress has been encouraging during the half and we have made good advances in lettings. The integration of the Brixton portfolio, acquired last year, has continued to benefit the SEGRO business and the exciting APP joint venture with Aviva Investors has given us an excellent position in the Heathrow market."
In June, SEGRO completed the acquisition of a 50% share of the Airport Property Partnership and the injection of GBP 237.1 million of assets into the joint venture.
"We have recently seen an encouraging increase in the levels of enquiries and growing interest in pre-let developments which we will seek to capitalise on in the second half," added Coull.
During the period, the company posted realized and unrealized property gain totaling GBP 64.8 million, compared to a loss of 519.5 million a year earlier, as the prior year had a valuation deficit on investment properties totaling GBP 492 million.
In addition, the directors have declared an interim dividend of 4.7 pence per share, to shareholders of record on September 10, 2010, payable on October 8.
SGRO.L is currently trading at 267.5 pence, down 7.5 pence or 2.73%, on a volume of 746 thousand shares. In the past 52 weeks, the shares have been trading in a range of 244 pence-403.1 pence on the LSE.
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