Developer pressing on with plans for Weston and Clevedon despite losses

Property developer St Modwen said it saw "important signs of improvement" in the property market despite wider annual losses.

The firm, which specialises in town centre regeneration and bringing former industrial sites back into use, made a pre-tax loss of £119.4 million for the year to November 30, up from £73.1m the previous year.

But St Modwen added that prices had stabilised after a 20 per cent decline in assets over the year, and predicted a return to profit growth despite uncertain market prospects and "fragile" business confidence.

Shares in the firm rose after it also grew rental income in "very challenging" conditions, with asset sell-offs and tenant failures more than offset by new lettings and income from newly-completed developments.

Most of the firm's losses were taken in the first half when the recession was at its worst, but the performance of the business has "significantly improved" since then.

In December, the firm won permission to build a mixture of homes and industrial units on the 160-acre former RAF Locking base in Weston.

The site was purchased in 2002 in a £10m joint venture between the South West Regional Development Agency and English Partnerships.

Within the area 25 hectares – around 60 acres – have also been allocated for hi-tech research and development type units.

In August, St Modwen bought a 22-acre site on the outskirts of Clevedon to develop a business park, which could create 450 jobs.

The site already has outline planning permission for a business park after Bristol-developer Rok got the green light in 2006.

St Modwen raised £101.6m to cut debts and has scaled back development activity to weather the downturn, as well as cutting costs through a pay freeze and closing its final salary pension scheme.

But St Modwen also had an "excellent year" for acquisitions despite the financial pressure on the business, taking advantage of depressed prices to spend £13m on 705 acres of developable land for its "hopper", or land bank.

The group bought sites in Doncaster and Sunderland as well as a portfolio of 566 sites from oil firm BP.

Rupert Joseland, South West regional director, St. Modwen said: "We're pleased to announce that St Modwen has made a £8.4m trading profit this year and we look forward to continuing development across our South West schemes in the year ahead.

"In Weston-super-Mare, we are progressing with the £400m Locking Parklands scheme and also acquired Westlands Distribution Park. We purchased a site in Clevedon which will be a business park."

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