Standard Motor Products, Inc. Annual Report 2003

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FY2003 Annual Report · Standard Motor Products, Inc.

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St. MODWEN PROPERTIES PLC
Head Office and Midlands Regional Office:

Lyndon House, Hagley Road, Edgbaston, Birmingham B16 8PE

Telephone: (0121) 456 2800 Facsimile: (0121) 456 1829

www: stmodwen.co.uk e-mail: info@stmodwen.co.uk

Regional Offices:

London and South East: Telephone: (020) 7499 5666 Facsimile: (020) 7629 4262

North Staffordshire: Telephone: (01782) 281844 Facsimile: (01782) 283670

Northern: Telephone: (01925) 825950 Facsimile: (01925) 284808

St. MODWEN PROPERTIES PLC

Annual Report 2003

Access 18, Avonmouth, Bristol — a 212-acre former smelting plant acquired May 2003 for regeneration as a major employment park.
Phase I (4 acres) — completed. Phase II (34 acres) — planning application submitted. Phase III (174 acres) — site clearance and demolition under way.

Castle Hill, Dudley — a 148-acre leisure and heritage scheme to be developed in partnership with Dudley Metropolitan Borough Council.

Contents

Financial Highlights

Chairman’s Statement

The Chairmanship of Sir Stanley Clarke

Chief Executive’s Operational Review

Review of Major Projects

Environmental Impact

Financial Review

Analysis of the Portfolio

Directors and Advisers

Shareholder Information

Directors’ Report

Directors’ Responsibilities

Corporate Governance

Directors’ Remuneration Report

Group Profit and Loss Account

Balance Sheets

Group Cash Flow Statement

Supplementary Statements

Accounting Policies

Notes to the Accounts

Five Year Record

Auditors’ Report to the Members

Annual General Meeting

Notice of Meeting

Visit our website on www.stmodwen.co.uk

“The key to the strategy
is to maintain a growing
hopper of well-located
future opportunities.”

Financial Highlights

Profit before tax up 17%
to £35m

Earnings per share up 18%
to 20.1p

“Eleventh
successive year
of record results.”

Net assets per share up 16%
to 186.0p

Dividend per share up 16%
to 6.6p

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St. MODWEN PROPERTIES PLC

Longbridge, Birmingham: 228 acres (edged red) — acquired and leased back to MG Rover in December 2003.
40 acres (edged yellow) — appointed as developer by Advantage West Midlands.

“The hopper of land and
property opportunities is
at its highest level ever.”

Chairman’s Statement

to pass

RESULTS
After 18 years as Executive Chairman of your
company, I intend to retire from that position at the
Annual General Meeting and
the
chairmanship on to Anthony Glossop with great
confidence for the company’s future. I am delighted
to report on an eleventh successive year of record
results and confirm to you that the company is in
good heart and in its strongest position ever.
Profits before tax increased by 17% to £35.0m
(2002: £30.0m), earnings per share grew by 18% to
20.1p (2002: 17.1p) and net assets per share
increased by 16% to 186.0p (2002: 160.9p).
The results include a 38% growth in net rental income,
a 5% growth in property profits and a £14.5m (4%)
revaluation uplift on the investment property portfolio.
We have worked hard to bring forward the latent
value in two of our associated operations. We
exchanged our 35% holding in Northern Racing for a
27.2% holding in The Chepstow Racecourse PLC,
an AIM listed company, thus giving greater financing
flexibility for our racecourse operations in the future,
establishing a value for our interest and creating a
cleaner exit opportunity if ever that was appropriate.
Immediately after the year end, we sold our
investment in the Pubmaster operation to Punch
Taverns realising a profit of £4.9m which will be
recognised in the 2004 accounts.
Our key performance measurement of total pre-tax
return on average shareholder funds was 24.1%
(2002: 25.2%).

DIVIDEND
Your board is recommending a final dividend of 4.4p
(2002: 3.8p) per ordinary share, making a total
distribution for the year of 6.6p (2002: 5.7p), an
increase of 16%. This final dividend will be paid on
30 April 2004 to shareholders on the register on
13 April 2004.

STRATEGY
Your board continues to have total confidence in the
company’s strategy of adding value through active
management and regeneration in our specialised
areas of property expertise via a network of regional
offices. The key to the strategy is to maintain a
growing land and property bank of well-located
future opportunities.
We were again successful in adding to the hopper
including major acquisitions at Avonmouth, Kirkby,
Longbridge and Llanwern. Additionally, we have been
successful in being selected as preferred developer
by several more local authorities and regional
development agencies. The total estate continues to
expand, which underpins the company’s long-term
future profitability.

throughout

DIRECTORS AND EMPLOYEES
These results, and indeed the repeated success of
the company
the period of my
chairmanship, could not have been achieved without
an exceptional team of people at all levels. My
personal appreciation goes to my board colleagues,
all the employees and to you, our shareholders, for
your continued support over my time as Chairman of

your company. It has been a source of great
encouragement to me.
The succession plans have been considered carefully
and have been implemented over recent years. When
I step down as chairman following the Annual General
Meeting, it is intended that Anthony Glossop, currently
Deputy Chairman and Chief Executive, will become
Executive Chairman and Bill Oliver will succeed him as
Chief Executive. I will remain on the board as a non-
executive director and am very pleased to have been
invited to become Life President.
Going forward, your company will continue to be led
by a strong, well-balanced team, committed to the
continuation of the company’s successful strategy,
in which I intend to play my part.
At the Annual General Meeting, Sir David Trippier
will step down as non-executive director, having
completed 12 years’ service. I would like to thank
him for his valued contribution to the success of the
company.

PROSPECTS
The company’s hopper of land and property
opportunities is at its highest level ever, and the
current financial year has started exceptionally well.
Including the surplus arising from the Pubmaster
transaction, we have already exchanged or
completed on transactions that will give rise to
profits in excess of £20m.
Once again, I am delighted to be looking forward
with confidence to your company achieving another
record year.

Sir Stanley W. Clarke CBE, DL, Hon. D.Univ.
Chairman
16 February 2004

St. MODWEN PROPERTIES PLC

The Chairmanship of Sir Stanley Clarke

(1986–2004)

St. Modwen originated in 1966 with the creation by
Sir Stanley Clarke and his brother-in-law, Jim
Leavesley of a development company to undertake
the redevelopment of a large maltings complex in
Burton upon Trent, Staffordshire.

The company prospered and was later absorbed into
Sir Stanley Clarke’s private group of construction
and house-building operations, Clarke Securities. By
the mid 1980s St. Modwen was a well respected
developer of industrial and distribution sheds from
Devon and Kent to the North West, operating
through a network of regional offices often in
partnership with local authorities.

In 1986, St. Modwen came to the market with its
reverse into Redman Heenan International plc, a
former engineering group, whose chief executive
was Anthony Glossop, which had been restructured
into a property investment operation. The company
at that time had net assets of 10p per share and was
projecting a pre-tax profit of £1m.

In its early quoted years, St. Modwen may have
looked like a conventional property developer/
trader of the period with profits growing rapidly from
£1m to £10m in 1989. However, the seeds of its
future shape were already being sown with its
selection in 1987 as the developer of the Stoke
National Garden Festival site, the acquisition of
Uttoxeter Racecourse in 1988 and the development
of the Octagon shopping centre, Burton upon Trent
in 1989.

St. Modwen was not unaffected by the property
collapse in 1990 but it always remained profitable

and never ceased active development. As a result,
with a revised strategy based on regeneration and
rental income, it came out of that period stronger
than before.

From 1992 onwards, with the acquisition of Leegate
shopping centre in South London, it established a
strong position in regenerating tired town centres. It
is now involved in more than a dozen such projects.

It took advantage of the decline in the country’s
heavy industries to develop, either outright or in joint
venture, numerous former collieries and steelworks,
reclaiming hundreds of acres of brownfield land for
residential and commercial use.

Elsewhere, it has worked in close partnership with
many of the leading manufacturers to restructure
for
their
regeneration.

releasing surplus

businesses,

land

Throughout this period the principles established by
Sir Stanley Clarke in those early years, have stood
the company in good stead – a network of regional
offices, partnerships with local authorities and
landowners, a reputation for delivery and integrity
and the building up of a team of committed
executives and surveyors capable of taking the
business forward into the future.

In all this, the company has benefited immeasurably
from the vision and leadership of its Chairman,
Sir Stanley Clarke, who also contributed significantly
to the community during this time, being awarded
the CBE in 1990 and receiving a knighthood in 2001
for services to the community in Staffordshire.

1986 –2004

Eighteen years of vision and leadership

Highlights from the Annual Reports

Festival Park, Stoke-on-Trent, 1988

Uttoxeter Racecourse, 1989

Total Shareholder
Return 18.5% p.a.

Ex Marconi
Ex Alstom

Rugby, 2002

Octagon Shopping Centre, Burton upon Trent, 1990

Trentham Gardens, 2001

Trentham Lakes, 1996

Festival Park, Stoke-on-Trent, 1995

Leegate Shopping Centre, 1992

St. MODWEN PROPERTIES PLC
St. MODWEN PROPERTIES PLC

Chief Executive’s Operational Review

Left to right:

Anthony Glossop Deputy Chairman and Chief Executive, Richard Froggatt Executive Director, Bill Oliver Managing Director

HIGHLIGHTS OF THE YEAR

3 distribution facilities: 152,000 sq. ft. constructed for

Another year of record property profits has been

Pets at Home, 317,000 sq. ft. for Screwfix and

achieved from a broad-based development and

37,135 sq. ft. for Littlewoods.

disposal programme. Over 50

transactions

contributed to total property profits of £25.2m with

no single scheme dominating and eight schemes

earning in excess of £1m.

We continued to concentrate on the distribution,

retail and residential land sectors, where demand for

our development products remained strong.

Stoke-on-Trent continued to emerge as a major

In retail development, we were particularly active

with the sale of the second phase of our 121,500

sq. ft. town centre scheme at Castle Walk,

Newcastle under Lyme and the sale of our retail

schemes at Belle Vale, Tipton, Connahs Quay and

Mold, following the completion of their programmes

of redevelopment or refurbishment. In Widnes,

through our joint venture company with Halton

Borough Council, we completed an extremely

distribution hub, based upon the A50 link between the

complex site assembly process for the provision of

M6 and M1 motorways. Our 400-acre Trentham

an 87,000 sq. ft. store for Asda, and the

Lakes development is well positioned to take

construction and sale of a 50,000 sq. ft. leisure and

advantage of this demand and during the year we sold

retail complex for JJB Sports.

A 317,000 sq. ft. warehouse and office facility, constructed and fitted out for Screwfix at Trentham Lakes, Stoke-on-Trent.

“Over 50
transactions
contributed to
total property
profits of £25.2m.”

A 50,000 sq. ft. leisure and retail complex developed in joint venture with
Halton Borough Council and pre-let to JJB Sports at Widnes.

St. MODWEN PROPERTIES PLC

Chief Executive’s Operational Review

A 70,000 sq. ft. industrial building constructed for Mapei at Coombs Wood, Halesowen
on a 43-acre former steelworks site developed through a joint venture with Corus plc.

The Government’s requirement that 60% of new

ft. phase of the Etruria Valley Trade Park, Stoke-on-

housing be built on previously used land has further

Trent, of which three of the four units were sold to

strengthened the commitment to our brownfield

occupiers in the year. At the Orbital Centre,

residential land programme. During the year we

Cannock, we completed the sale of the 80,000 sq.

completed

the ground reclamation and site

ft. factory and headquarters building, let to Finning

modelling at Norton Colliery, Stoke-on-Trent, which

UK which we constructed in 2002.

enabled two residential land sales totalling 18 acres

to be completed. At Newton-le-Willows, St Helens,

on a site purchased from Alstom in December 2002,

we have entered into a joint venture agreement with

At Avonmouth, Bristol on the 212-acre former

Britannia Zinc site, the first phase of development

comprising two industrial buildings totalling 62,000

sq. ft. was completed and the first building was let

an adjoining landowner and have submitted a

to Travis Perkins and sold to an investor during

planning application for 40 acres of residential

the year.

development. We anticipate carrying out demolition

and site infrastructure during 2004.

At Coombs Wood, Halesowen, two units were

constructed and sold during the year: a 70,000 sq.

Our 2003 development programme also included

ft. industrial unit for Mapei and a 10,000 sq. ft. office

the speculative construction of a further 57,000 sq.

for Accessible Hire.

New retail units constructed at Edmonton Green Shopping Centre, Enfield, where
a major £60m mixed-use redevelopment scheme will commence in 2004.

A 121,500 sq. ft. shopping centre development at Castle Walk,
Newcastle-under-Lyme, completed and sold in 2003.

“Adding value through
active management
and regeneration.”

Development was also carried out at Watling Street
Business Park, Cannock with the speculative
construction of six small business units totalling
11,118 sq. ft.; at Edmonton Green Shopping
Centre, Enfield where three new retail units totalling
12,000 sq. ft. were constructed, two of which have
been let to Bon Marche and Ethel Austin; and at
Kirkby Shopping Centre, Liverpool, where the
Market Hall was redeveloped to provide three
additional retail units and eight kiosks were
constructed in the malls.

Construction commenced on a speculative 18,000
sq. ft. hi-tech building at Woodingdean Business
Park, Brighton and upon a 270,000 sq. ft.
manufacturing, distribution and head office complex
for Duraflex at Tewkesbury. Both projects are due
for completion in 2004.

St. MODWEN PROPERTIES PLC

Chief Executive’s Operational Review

As reported in the Chairman’s Statement, significant

large mixed-use schemes, continues to become

progress was also made during the year with our

more complex and protracted, but the range and

property-related investments in Northern Racing and

extent of the hopper gives us the ability to operate

Pubmaster.

successfully within these constraints.

The revaluation of our investment properties by

During the year, we were successful in progressing

£14.5m equates to an increase of 3.7%. This arose

planning permissions at Trentham Gardens, Stoke

partly from an improvement in yields on our

on-Trent; at Friars Terrace, Stafford for an 86,000

shopping centres of around 0.5% in the period, but

sq. ft. Tesco supermarket; and for a 95,000 sq. ft.

also by adding value through new construction, new

expansion of the industrial space at the Wigan

lettings and rent reviews at Cranfield, Edmonton,

Enterprise Park.

Thurleigh and Wythenshawe.

Planning permission was also obtained, in principle,

One of the indicators within our business of the

for the redevelopment of the Brighton West Pier.

potential for future property profits is that year-on

However, uncertainty on future costs and delays

year we continue to make progress in obtaining

caused the Heritage Lottery Fund to withdraw their

planning consents. This process, particularly for the

support in January 2004. Without this support, the

A 270,000 sq. ft. manufacturing, distribution and head office complex under
construction for Duraflex at Tewkesbury, Gloucestershire. Completion due in 2004.

1010

Cranfield Technology Park, a joint venture with Cranfield University, where we manage 77,000 sq. ft. of high tech/office space on flexible leases.

project is not viable. Although we still intend to see

whether there is any possibility of resuscitating the

scheme, we have made full provision in these

accounts for all costs incurred.

On our larger schemes, extensive master planning,

ground

investigation and environmental and

transport assessments are often required prior to

the submission of specific planning applications.

Significant progress was made during 2003 at

Rugby, upon the sites acquired from Marconi and

Alstom; at Longbridge where an outline planning

permission over 40 acres has now been submitted;

and at Dursley, where we are intending to create an

exemplar urban village.

THE HOPPER

We continued to fill the hopper throughout the year.

The acquisition of a £113m portfolio of nineteen

sites on 500 acres from Alstom through our KPI joint

venture; 73 acres from Corus at Darlington and 212

acres at Avonmouth, Bristol from Britannia Zinc,

boosted the hopper to record levels.

Chepstow, one of nine racecourses owned by The Chepstow
Racecourse PLC, in which the company has a 27.2% shareholding.

St. MODWEN PROPERTIES PLC

Chief Executive’s Operational Review

Equally importantly during 2003 we continued to form
additional development relationships with government
bodies and local authorities. These joint ventures,
often structured via development agreements and
hence not as capital intensive as direct acquisition, are
becoming an increasingly important part of our bank of
future development opportunities.

A development agreement was signed during the
year for an urban village on 92 acres at Dursley,
Gloucestershire with South West Regional
Development Agency (SWRDA) and heads of terms
agreed for the regeneration of Hatfield Town Centre
with Welwyn Hatfield District Council and English
Partnerships. At Harpurhey, Manchester, we
acquired an existing Asda store and in partnership

with Asda and Manchester City Council, we have

commenced redevelopment of this District Centre

to provide 120,000 sq. ft. of new retail space

together with a new leisure centre and market for

the Council.

After the year end, the hopper was boosted further

with the completion of three major acquisitions and

we are pursuing a number of smaller sites.

At Longbridge, Birmingham, we purchased 228 acres

from MG Rover on a sale and leaseback basis for

£42.5m. MG Rover have been granted a 35-year

lease at an initial rent of £3.6m with 2.5% fixed annual

uplifts. The lease allows MG Rover flexibility to

surrender land surplus to its operational requirements.

A 92-acre former manufacturing site being redeveloped as an urban village at Dursley, Gloucestershire, in joint venture with SWRDA.

A mixed-use regeneration of Hatfield town centre in joint venture with English Partnerships and Welwyn Hatfield District Council.

The company has also acquired the remaining 50%
share of the Kirkby Shopping Centre, Merseyside
from our joint venture partner Mars Pension Trustees,
with whom we have jointly owned the centre since
2001. The consideration was £11.25m with an initial
yield of 7.6%. Master plans are being prepared for a
redevelopment of the centre and surrounding area for
discussion with Knowsley Borough Council.

At Llanwern, South Wales, we have acquired 600
acres of non-operational land from Corus for £17.5m.

We are also extremely pleased to confirm that we
have been selected as the preferred development
partner by Bedford Borough Council
for a
comprehensive renewal and redevelopment of
Bedford’s bus station area comprising a new food
supermarket, a department store, additional retail,
leisure and residential uses; and by SWRDA for a 33
acre industrial development at Ludgershall, Wiltshire.

“We continued to
form additional
development
relationships with
government
bodies and local
authorities.”

St. MODWEN PROPERTIES PLC

Chief Executive’s Operational Review

The Mead — an initial phase of redevelopment, completed and let during the year at Farnborough, Hampshire.

FUTURE YEARS

heritage and leisure development at Trentham

We have made our strongest-ever start to a new

Gardens, Stoke-on-Trent. These and numerous

financial year, with the sales completed after the

other schemes currently being worked on will form

year end of our Pubmaster investment, the first

the backbone of our development programme for

phase of our Worcester retail park development and

2005 and onwards.

8 acres of residential land at Springfields, Stoke-on-

Trent, contributing to a total of over £20m of profits

already completed or under contract.

Beyond 2004, we are marshalling the progress of

the major schemes in the hopper to meet the growth

required. Significant progress is expected to be

made during 2004 on our town centre schemes at

Anthony Glossop

Edmonton, Farnborough and Wembley; a factory

Deputy Chairman and Chief Executive

outlet scheme and superstore at Walsall; and our

16 February 2004

Review of Major Projects

CASTLE HILL, DUDLEY, WEST MIDLANDS

148-acre mixed heritage, leisure and residential scheme which will comprise:

■ A state-of-the-art zoo, a separate attraction based on the medieval castle,

and a new dinosaur attraction

■ 60,000 sq. ft. of heritage craft and tourism merchandising
■ 40,000 sq. ft. of restaurants
■ 80,000 sq. ft. of garden centre
■ 281 dwellings
■ Additional leisure opportunities

PARTNER: Dudley Metropolitan Borough Council

COMPLETED VALUE: £100m

TIMESCALE: Planning application submitted for potential start on site in phases from 2005.
Completion of main phases by 2010.

CRANFIELD UNIVERSITY TECHNOLOGY PARK,
CRANFIELD, BEDFORDSHIRE

100-acre technology park adjoining university campus and airfield

Managed complex of 77,000 sq. ft. comprising:

■ Cranfield Innovation Centre — 37,000 sq. ft. in suites from 250 to 1,750 sq. ft.

on extremely flexible lease terms

■ Derwent House & Trent House — accommodation in suites from 2,000 to 6,000 sq. ft.

on medium term leases

■ Buildings from 5,000 sq. ft. to 200,000 sq. ft. to meet the individual needs of businesses and

further speculative phases

PARTNER: Cranfield University

TIMESCALE: Further speculative phase in 2004. Completion over next decade.

EDMONTON GREEN SHOPPING CENTRE
London N19

Mixed use extension of existing shopping centre, comprising:

■ 65,000 sq. ft. foodstore
■ 150,000 sq. ft. of additional retail/leisure and restaurants
■ 55,000 sq. ft. leisure centre with 25 m. swimming pool
■ Primary health care centre
■ 177 residential apartments
■ Bus terminal
■ 1,000 car parking spaces
■ Refurbishment of existing mall

PARTNER: London Borough of Enfield

COMPLETED VALUE: £65m

TIMESCALE: Initial phases and enabling works completed. Start on site in phases from 2004.
Completion of main phases by 2006.

ELEPHANT & CASTLE SHOPPING CENTRE
London SE1

Mixed use shopping centre comprising:

■ 135,000 sq. ft. retail
■ 90,000 sq. ft. leisure
■ 95,000 sq. ft. offices
■ 125 car parking spaces

PARTNER: A Key Property Investments development

TIMESCALE: The shopping centre lies at the heart of a major regeneration initiative being
promoted by the London Borough of Southwark for implementation over the next decade.

St. MODWEN PROPERTIES PLC

Review of Major Projects

ETRURIA VALLEY, FESTIVAL PARK, STOKE-ON-TRENT

A major extension of the company’s flagship Festival Park development. Opened in 1999 after £5m
of reclamation and infrastructure work. Over 200,000 sq. ft. of offices and business space has been
completed. Further speculative phases are planned in 2004. Planning on the final 90 acres is being
discussed.

PARTNERS: Stoke-on-Trent City Council and Corus plc

COMPLETED VALUE: £150m

TIMESCALE: Completion over the next decade.

FARNBOROUGH TOWN CENTRE, HAMPSHIRE

Mixed use extension/redevelopment of existing shopping area, comprising:

■ 65,000 sq. ft. foodstore
■ 150,000 sq. ft. of additional retail/leisure and restaurants
■ Hotel
■ 130 residential apartments
■ Leisure complex

PARTNERS: A Key Property Investments development in collaboration with
Rushmoor Borough Council

COMPLETED VALUE: £75m

TIMESCALE: Early enabling phases completed in 2003. Detailed planning submitted for main
development with potential commencement in late 2004 and completion in 2006.

HATFIELD TOWN CENTRE, HERTFORDSHIRE

Mixed use regeneration comprising:

■ 165,000 sq. ft. of retail/leisure and restaurants
■ 25,000 sq. ft. healthy living centre
■ 162 residential apartments
■ 543 multi-storey car parking spaces
■ 10,000 sq. ft. market hall

PARTNERS: Welwyn Hatfield District Council and English Partnerships

COMPLETED VALUE: £65m

TIMESCALE: Detailed planning submitted with potential commencement in 2006 and completion
in 2007.

LEICESTER ROAD AND MILL ROAD, RUGBY

70-acre employment sites adjoining Rugby railway station.

■ Existing buildings in excess of 1m sq. ft. for short/medium term income.

Medium term strategy to:

■ Develop master plan for site in conjunction with planning authority and rail authority
■ Bring forward site for mixed-use development including:

— Housing
— Retained and new employment
— Retail and local amenities
— Community facilities

PARTNERS: A Key Property Investments development in collaboration with Alstom and Marconi

COMPLETED VALUE: £60m

TIMESCALE: Master planning to commence in early 2004. Scheme has 6–8 year delivery programme.

For further details of the above projects,

QUINTON BUSINESS PARK, BIRMINGHAM

Business Park at western gateway to Birmingham city. Immediately adjacent to J3, M5.

■ 260,000 sq. ft. high quality space with generous car parking
■ Proceeding in phases
■ Phase I — 55,000 sq. ft. completed and let
■ Phase II — 50,000 sq. ft. planned for 2004

PARTNER: Birmingham City Council

COMPLETED VALUE: £65m

TIMESCALE: Next phase from late 2004. Overall completion by 2007.

SHANNONS MILL, WALSALL, WEST MIDLANDS

The West Midlands Factory Outlet Centre.

■ 250,000 sq. ft. of outlet shopping incorporating character 4 storey Victorian clothing mill
■ 100,000 sq. ft. superstore
■ 1,500 car park spaces
■ Local highway improvement to speed access to J9 and J10 of the M6.

PARTNER: Domalex Properties Limited

COMPLETED VALUE: £75m

TIMESCALE: Start mid-2004. Trading October 2005.

TRENTHAM LAKES, STOKE-ON-TRENT

Mixed use development of 400-acre former collery site for a wide range of leisure, office, industrial
and warehouse development.

Developments to date include distribution centres for Screwfix Direct (317,000 sq. ft.), HW Plastics
(178,000 sq.ft) and Pets at Home (152,000 sq. ft.) as well as an Express Holiday Inn Hotel, Harvester
Restaurant, Greens Health & Fitness Club and car showrooms.

Over one million sq. ft. has been developed on this site.

PARTNER: Stoke-on-Trent City Council

COMPLETED VALUE: £200m

TIMESCALE: Further speculative phase in 2004. Completion over next decade.

VULCAN INDUSTRIAL ESTATE, NEWTON-LE-WILLOWS

Regeneration of redundant employment complex to provide:

■ 630 dwellings
■ A local centre comprising: convenience foodstore, public house, health centre, pharmacy,

nursery, veterinary surgery

■ Sports and recreational facilities

PARTNERS: A Key Property Investments development in collaboration with Alstom and
Ashtenne PLC

COMPLETED VALUE: £75m

TIMESCALE: Start on site from 2004. Completion by 2008.

see our website www.stmodwen.co.uk

St. MODWEN PROPERTIES PLC

Environmental Impact

St. Modwen is committed to improving the built
environment of the country. The company’s projects
seek to transform areas of dereliction and decay into
sustainable communities. The company’s commitment
to the environment is demonstrated in many ways:

REGENERATION
The company acquires opportunities in tired town
centres and brownfield industrial sites, often with
significant contamination issues. The company uses
its expertise to remediate sites by seeking wherever
possible to treat or recycle materials on site, removing
them to landfill only as a last resort. Infrastructure will
be provided or upgraded to alleviate traffic problems.
Public transport and alternative transport solutions will
be adopted wherever practicable. New developments
are built with good quality landscaping and provision of
public open spaces.

The company enters into long-term land recycling
projects, such as the 165-acre former British Steel
site at Festival Park, Stoke-on-Trent, the home of
the 1986 National Garden Festival. This was
acquired in 1988 and has since been developed to
provide around one million square feet of retail
warehouse, office and industrial accommodation. It
has been extended by a further 145 acres of derelict
land, the remediation and development of which will
continue over the next decade. Similarly, the 400
acre site at Trentham Lakes which was acquired
from British Coal in 1996 and 1999 has been
substantially reclaimed to transform a colliery into a
business, leisure and distribution park, and a
residential area. In the period under review, the
acquisition of a heavily contaminated 212-acre site
from Britannia Zinc offers significant opportunities
for regeneration of the site of a former zinc smelter.

The company uses its remediation skills to create
good quality residential land from land previously
used by heavy industry. This is of significant benefit
in avoiding the use of greenfield sites
for
development, and is strongly supported by current
government policy. The company has brought into
development approximately 150 acres of this type of
land over the past five years and potentially has a
further 800 acres in the Hopper.

All property developed by the company has a fully
traceable audit trail resulting in a Land Quality
Statement for the end user which identifies ground
conditions, gas and other monitoring, remediation
work done, and test results. Remediation activity is
based on a thorough assessment of the sources,
pathways and targets of risk factors. Wherever
possible, the company uses on-site containment or
treatment techniques, and avoids merely moving
waste to landfill sites.

LOCAL COMMUNITIES
The company seeks to build and develop sustainable
communities from its regeneration projects. This is
achieved by putting in place a robust infrastructure,
including transport links, and community facilities
including schools, medical and leisure centres, social
clubs, libraries, and local shops. Some of these are
provided through planning agreements, others on a
voluntary basis. Recent examples include:

● The provision of land for the Donna Louise Trust
Children’s Hospice at Trentham Lakes, Stoke
on-Trent for a consideration of 50% of the
market value.

● The provision of rent-free accommodation for a
credit union and arts workshops in Edmonton
Green Shopping Centre.

● The construction of community and recreation
facilities at Hilton Business Park, value £500,000,
part of a £7.5m package of community and
infrastructure benefits funded by this scheme.

Demolition in progress at Britannia Zinc, Avonmouth.

SUSTAINABILITY BY DESIGN
The company embraces the philosophy that
“sustainable development is about creating a better
life for everyone, now and for generations to come.
It means that our economy, environment and social
well-being are interdependent. It means protecting,
and where possible, enhancing the environment;
ensuring we satisfy people’s basic needs, such as
providing warm homes and safe streets, and giving
the opportunity to achieve their potential through
education, good health and employment” (The joint
Government/Local Government report “Local
Quality of Life Count — in a Nutshell”)

The company seeks to use sustainable designs in its
developments, to minimise the impact of new buildings
on the environment. Recent examples include:

● Improving the flow characteristics of the Barton
Brook and flood storage to the River Trent at
Barton Business Park, by the construction of
three lakes and 2.4 kilometres of ditches (all
designed to encourage native flora and fauna).

● Improving the water quality at Barton Business

Park by the use of reed beds.

● Recycling over 100,000 tonnes of foundations
and slab roadway materials at Hem Heath
Colliery, for re-use on site.

The Dursley Urban Village Project (under a
development agreement with the South West
Regional Development Agency for the former Lister
Petter site) has been designed as an exemplar
scheme of sustainability, involving:

● Reclaiming the site, including tips and foundry

sand deposits.

● Harnessing the river Cam for hydroelectricity,
and opening up the river to provide an ecological
corridor through the site.

● Installing photovoltaic cells and water conservation

measures in at least 50% of the houses.

● Recovering energy from the Lister Petter engine

test beds.

● Building a sustainable urban drainage system
incorporating swales and a balancing lake.

● Providing live/work units within the residential
element, and small units for start-up businesses
and training facilities.

MANAGEMENT RESPONSIBILITY
Because of the importance to the company of
environmental and social issues, these areas are the
responsibility of the Chief Executive.

Master plan of the heritage leisure project at Trentham Gardens, Stoke-on-Trent.

Community involvement in the company’s projects is
essential for their ultimate success. Consequently,
extensive consultation is undertaken via public and
individual meetings with tenants’ associations,
residents’ groups and local councillors. Local press
are kept informed of all developments, and planning
issues are freely and openly debated with interested
parties. The company has built strong and enduring
relationships over many years in those areas in which
it operates, and is proud to be seen as a key member
of these communities.

HERITAGE
The company’s heritage activities enable buildings
and facilities of national significance, such as
Trentham Gardens, to be restored for the future
enjoyment of the nation. Working in partnership with
local authorities and national organisations, including
English Heritage and English Nature, the company
aims to deliver sensitive restoration underpinned by
a sustainable, commercial rationale.

St. MODWEN PROPERTIES PLC

Financial Review

PROFIT AND LOSS ACCOUNT
Net rental income received in the year, including our
share of rent from joint ventures, increased by 38%
(£10.1m) to £36.5m. The portfolio of 19 industrial
properties, acquired from Alstom in December
2002, accounted for £5.3m. Other properties
acquired or constructed during the year accounted
for £1.1m of this increase, while the full-year impact
of acquisitions made in 2002 was £3.0m.

On an annualised basis, the gross portfolio rent
receivable as at 30 November 2003, including our
share of rent from joint ventures, increased by 13%
(£4.4m) to £38.9m. Acquisitions net of disposals
added £4.1m, with new lettings and rent reviews net
of vacations and surrenders increasing the portfolio
rent by £0.3m.

Property profits (which comprise profits on sale of
both development and investment properties,
whether classified as work in progress or fixed
assets) increased by 5% in the year to £25.2m
(2002: £24.0m). These profits were achieved from a
broad range of more than 50 projects, of which 8
contributed more than £1m. The large number of
transactions reflects both the company’s proactive
approach to selling any assets to which value can no
longer be added, and the strong market conditions
into which we were able to sell. In accordance with
our prudent accounting policies we have made full
provision against our exposure to the Brighton West
Pier project, from which the Heritage Lottery Fund
withdrew support in January 2004.

Overheads increased significantly during the year by
£4.5m to £13.3m, principally as a result of
accounting for share options and pensions costs,
and the impact of increased employee numbers.

As reported last year, the board has adopted the
policy of satisfying employee share options, when
exercised, by purchasing the required number of
shares in the market, rather than issuing new share
capital, which would dilute returns for existing
shareholders. With 6.2m shares under option (held
by 110 employees), and a significant share price
increase in the year, the impact has been a charge to
the profit and loss account of £4.2m (2002: £1.8m).

The triennial valuation of the company’s final salary
pension scheme was undertaken as at 5 April 2003.
This showed a deficit of £3.9m. In common with
most other similar schemes, the deficit arose from a
combination of poor equity investment returns and
increasing liabilities. The company has therefore
provided £1.2m in the accounts for the year ended
30 November 2003, a sum which includes the

Tim Haywood Finance Director

RESULTS SUMMARY
2003 was our eleventh consecutive year of profits
growth. The pre-tax profit
for the year to
30 November 2003 increased by 17% to £35.0m
(2002: £30.0m).

Earnings per share increased by 18% to 20.1p
(2002: 17.1p), and total dividends increased by 16%
to 6.6p per share (2002: 5.7p).

Retained profits of £16.2m combined with £15.4m of
total revaluation surpluses to produce a 16% increase
in net assets per share to 186.0p (2002: 160.9p).

Our corporate objective remains to double net asset
value per share every five years. In the five years
ended 30 November 2003 we have exceeded this
target, with net asset value per share increasing by
127%, pre-tax profit by 124% and dividends per
share by 100%.

“Our corporate
objective remains
to double net
asset value per
share every five
years.”

Comparison of Actual Investment Portfolio Returns with the Investment Property Databank (IPD)

Periods to 30 November 2003

Capital Returns (%)

Income Returns (%)

Total Returns (%)

1 Yrs

3 Yrs

5 Yrs

10 Yrs

1 Yrs

3 Yrs

5 Yrs

10 Yrs

1 Yrs

3 Yrs

5 Yrs

10 Yrs

regular cost of current service, and the amortisation
of the past service deficit, as required under SSAP
24. Previously the company and its employees had
enjoyed many years’ contribution holiday, as the
scheme had been in surplus.

Finance Costs have increased to £15.9m (2002:
£13.2m). Average group borrowings increased by
£9m to £165m in the year, and average joint venture
borrowings increased by £92m to £160m as a result
of the Alstom acquisition. The cost of this increase
in total debt was partially offset by falling interest
rates. The weighted average rate of interest payable
as at 30 November 2003 remains at 6.4% for
company borrowings (2002: 6.4%) and has fallen to
5.3% for joint ventures (2002: 6.2%).

The group’s borrowings are at variable rates of
interest. However we actively manage our interest
rate exposure, primarily by way of interest rate
swaps, and have been able to lock in to the recent
favourably low rates for a three to five year period.
At the year end, 96% of company net borrowings
were hedged in this way (2002: 62%), and 58% of
joint venture borrowings (2002: 75%)

The Group does not capitalise interest on its
developments or its investments. All interest is
written off as it arises.

Taxation — the effective rate of tax charge for the
year, including provision for deferred taxation, was
28.4% (2002: 28.1%). It is anticipated that, with the
continued utilisation of capital allowances, the
effective rate will remain below the standard rate of
Corporation Tax.

BALANCE SHEET
Investment Properties — the total value of
investment properties, including 100% of joint
ventures, increased by £109m during the year to
£475m. Expenditure on the portfolio totalled £128m,
of which £113m was in our 50% joint venture
company Key Property Investments Limited, in
respect of the acquisition of the Alstom portfolio.

revaluation

(£14.5m). This

The independent valuation at 30 November 2003
resulted in an uplift on our share of this portfolio of
3.7%
increase
represents real added value from the management
and development of specific assets within the
portfolio, and includes £6m as a result of yield shifts
on the retail properties. Although many of our sites
are situated in disadvantaged areas that currently
qualify for relief from Stamp Duty Land Tax, this
temporary benefit has not been recognised within
the valuation.

The Group measures the ungeared returns from its
investment portfolio against the Investment Property
Data Bank (IPD) all property total return index. St.
Modwen continues strongly to out-perform this
index, as shown by the chart above.

Investments — during

Other
the year we
exchanged our 35% investment in Northern Racing
Limited in exchange for a 27.2% stake in The
Chepstow Racecourse PLC, an AIM-listed
company. This transaction has been accounted for
in accordance with UITF 31 (Exchanges of
businesses). As a result, the Statement of Total
Recognised Gains and Losses includes a gain of

St. MODWEN PROPERTIES PLC

Financial Review

£0.9m relating to the profit made on the notionally
realised proportion of the sale. The carrying value of
our investment in The Chepstow Racecourse PLC
at 30 November 2003 is £8.6m. This represents the
fair value of the assets acquired, plus post-
acquisition profits. Under UITF 31, we are not
permitted to recognise the AIM market value of our
27.2% stake, which, at the share price of 203.5p on
30 November 2003, was £19.5m.

Our investment in Pubmaster was sold in December
2003, realising a surplus of £4.9m.

Current assets — the value of work in progress fell
to £77.5m (2002: £101.1m). This reduction reflects
the active programme of development completions
in the year.

GEARING AND FINANCING
As a result of the strong programme of sales
towards the end of the year, group net borrowings
have decreased
(2002: £174m),
to £135m
representing a gearing ratio of 60% (2002: 89%).
This was lower than our preferred gearing range of
75% to 125%, but gave us ample headroom and
flexibility to move swiftly to undertake the post-year
end programme of acquisitions. Following the
Longbridge, Kirkby and Llanwern acquisitions, which
have been partly financed by further disposals in
December, group borrowings stand at £170m and
gearing at 71%. At this level, we still have
uncommitted existing facilities in excess of £90m,
which provides significant resources for current
developments and further acquisitions.

In addition, the group’s share of debt within joint
ventures, which is secured solely upon the assets
within the relevant joint venture, was £97.2m (2002:
£42.1m).

The group is financed by shareholders’ funds and
bank debt of varying maturity profiles, appropriate to
the needs of the group and reflecting the type of
assets in which it invests. At 30 November 2003,
the weighted average debt maturity was 5 years
(2002: 6 years).

Bank facilities, excluding joint ventures, totalled
£219m at the year end (2002: £228m), with a further
facility of £32m having been provided post year-end
by Royal Bank of Scotland for the Edmonton Green
Shopping Centre development.

Net Asset Value per share
In calculating the net assets per share of 186.0p, a
provision has been made for the deferred tax that
would become payable should all the capital
allowances claimed to date be clawed back. The
company actively manages its tax affairs to ensure
that this situation will not arise, and accordingly has
calculated an adjusted net asset value without such an
adjustment. This provides a notional uplift of £3.9m or
3.2p per share (2002: £3.6m or 3.0p per share).

The effect of the fair value adjustment (FRS13) of
marking the group’s interest rate derivatives to current
market value would be to produce a notional liability
after tax of £0.3m or 0.2p per share (2002: £2.0m or
1.7p per share). The effect of providing deferred tax on
future disposals of investment properties would be to
produce a notional liability of £18.3m or 15.1p per
share (2002: £17.1m or 14.2p per share).

The calculation of adjusted net asset value also
contains an adjustment to restate the company’s
investment in The Chepstow Racecourse PLC to
market value, which provides a notional uplift after
tax of £7.6m or 6.3p per share.

The adjusted net asset value after
these
adjustments has increased by 22% to 180.2p (2002:
148.0p) (see Note 22). Triple net asset value has
increased by 18% to 170.7p (2002: 145.0p).

SHAREHOLDER RETURNS
Over the five year period ended 31 December 2003,
the total shareholder return was 34.7% per annum
compared with 0.4%% from the FTSE Real Estate
index, and –3.4% from the All-Share index. (source:
HSBC/Datastream).

The increase in the share price during the year, to
258.5p at 30 November 2003, lifted the company
into the FTSE 250.

Tim Haywood
Finance Director
16 February 2004

Analysis of the Portfolio
as at 30 November 2003

Portfolio Book Value

South
£m

Midlands
£m

Retail

147.1

30.1

Industrial

Office

64.1

30.2

147.3

8.3

North
£m

27.7

82.6

1.0

Held by
Group
Total Companies*
£m

£m

Held by
Joint
Ventures
£m

204.9

118.0

86.9

294.0

154.8

139.2

39.5

28.6

10.9

Rent-
Roll
£m

17.9

28.4

3.0

Square
Feet
’000

2,634

18,340

430

241.4

185.7

111.3

538.4

301.4

237.0

49.3

21,404

* includes £34.8m of properties included in development stock

Portfolio Analysis

■ Retail

■ Industrial

■ Office

38%

55%

36%

58%

Capital Value by Sector

Rental Income by Sector

■ South
■ Midlands
■ North

45%

34%

21%

Capital Value by Region

“The 3.7%
revaluation increase
represents real
added value from
the management
and development
of specific assets.”

St. MODWEN PROPERTIES PLC

Directors and Advisers

Auditors

Ernst & Young LLP

Registrars

Lloyds TSB
Registrars

Stockbrokers

HSBC

Non-Executive Directors Left to right

Christopher Roshier*† MA, FCA
Aged 57. Appointed a Director in 1987. He is a
Chartered Accountant with over 20 years’ experience
in Corporate Finance. Chairman of the company’s
Audit and Remuneration Committees and Senior
Independent Director. Currently he is a director of
Gibbs & Dowdy PLC, Cypresstree International Fund
PCC Limited, Equity Holdings Limited and chairman of
Global Computer Holdings Limited.

Sir David Trippier* RD, JP, DL, MSI
Aged 57. Appointed a Director in 1992. Minister for
Construction and Urban Affairs 1987–1989. He is
currently Chairman of W. H. Ireland Group PLC,
stockbrokers, and Murray V.C.T. Plc. He is also a
director of a number of other listed and private
companies, including Granada Television Limited. He is
retiring from the board in 2004.

Ian Menzies-Gow* MA
Aged 61. Appointed a Director in 2002. Formerly
Chairman of Geest PLC and prior to that held senior
executive positions within the Hanson Group. Currently
Chairman of Derbyshire Building Society.

James Shaw* FRICS
Aged 59. Appointed a Director in 2001. Previously
Property Director of Associated British Ports Holdings
plc, Managing Director of Thorn High Street Properties
and Property Director of Courage.

Executive Directors

Sir Stanley Clarke*† CBE, DL, Hon. D.Univ.

Chairman

Aged 70. Appointed a Director in 1986. Formed St.

Modwen Developments Limited in 1966. He will retire

as Chairman at the conclusion of the Annual General

Meeting, but it is intended that he will remain on the

board as a non-executive director and Life President.

He is also chairman of The Chepstow Racecourse PLC.

Anthony Glossop† MA

Deputy Chairman, Chief Executive

Aged 62. Appointed a Director in 1976. Previously

Chief Executive of Redman Heenan International plc. It

is intended that he will be appointed Executive

Chairman to succeed Sir Stanley Clarke. He is also a

non-executive director of The Chepstow Racecourse

PLC, and of Robinson & Sons Limited.

Bill Oliver BSc, FCA
Managing Director
Aged 47. Appointed a Director in 2000. Previously
Finance Director of Dwyer Estates plc. It is intended that
he will succeed Anthony Glossop as Chief Executive.

Richard Froggatt FRICS
Executive Director
Aged 54. Appointed a Director in 1995. Previously a
director of Savills and Managing Director of Wilson
Bowden Properties Limited.

Tim Haywood MA, FCA
Finance Director
Aged 40. Appointed a Director in 2003. Previously Chief
Financial Officer of Hagemeyer (UK) Limited.

* Member of Audit and Remuneration Committees
† Member of Nomination Committee

Shareholder Information

Financial Calendar

Record date for 2003 final dividend

Annual General Meeting

Payment of 2003 final dividend

Announcement of 2004 interim results

Payment of 2004 interim ordinary dividend

Announcement of 2004 final results

Ordinary Shareholdings at 30 November 2003

By shareholder
Directors and connected persons
Individuals
Insurance companies, nominees and pension funds
Other limited companies and corporate bodies

Shareholders

No.

20
4,305
512
96

4,933

0.4
87.3
10.4
1.9

100.0

Shareholders

No.

25.4
18.4
37.1
8.5
7.4
1.1
1.2
0.5
0.4

By shareholding
Up to 500

1,000
501 to
5,000
1,001 to
10,000
5,001 to
50,000
10,001 to
100,000
50,001 to
100,001 to
500,000
500,001 to 1,000,000

1,000,001 and above

1,250
909
1,832
421
366
55
57
22
21

4,933

Principal institutional shareholders at 30 November 2003

Henderson Global Investors
Legal & General Investment Management Limited
Co-operative Insurance Society Limited
M & G Investment Management Limited
ING Investment Management
Barclays Global Investors Limited
Threadneedle Asset Management Limited
Framlington Investment Management Limited
Baring Asset Management Limited
Merrill Lynch Investment Managers

13 April 2004

23 April 2004

30 April 2004

July 2004

September 2004

February 2005

No.

52,601,385
17,032,848
49,240,507
1,899,214

43.5
14.1
40.8
1.6

120,773,954

100.0

No.

315,961
706,191
4,355,484
3,082,917
7,584,289
3,892,281
11,813,932
16,650,307
72,372,592

0.3
0.6
3.6
2.5
6.3
3.2
9.8
13.8
59.9

100.0

120,773,954

100.0

No.

8,437,358
3,748,059
3,211,000
2,928,440
2,351,343
2,214,929
1,670,100
1,670,000
1,551,032
1,467,838

7.0
3.1
2.7
2.4
2.0
1.8
1.4
1.4
1.3
1.2

St. MODWEN PROPERTIES PLC

Directors’ Report

The directors present their report together with the audited

Richard Froggatt and Tim Haywood will retire from the board in

accounts for the year ended 30 November 2003.

accordance with the provisions of the company’s Articles of

Association and offer themselves for re-election.

REVIEW OF RESULTS, ACTIVITIES AND FUTURE PROSPECTS

Sir David Trippier will retire as a director of the company at the

The pre-tax profit for the year was £35.0m. The retained profit of

Annual General Meeting, and will not seek re-election.

£16.2m is to be transferred to revenue reserves.

None of the directors had any material interest in contracts with

The company acts as the holding company of a group of property

the group, except as disclosed below:

investment and development companies.

During the year, the company disposed of its shareholding in

A review of activities is given in the Operational and Financial

Northern Racing Limited in exchange for shares in The

Reviews on pages 6 to 23. The Chairman comments on future

Chepstow Racecourse PLC. The company’s Chairman, Sir

prospects in his statement on page 3.

DIVIDEND

The directors recommend the payment of a final dividend of 4.4p

(2002: 3.8p) per ordinary share to be paid on 30 April 2004 to

shareholders on the register on 13 April 2004. An interim

dividend of 2.2p (2002: 1.9p) was paid on 12 September 2003.

GOING CONCERN

The directors are of the opinion that, having regard to the bank

and loan facilities available to the group, there is a reasonable

expectation that the group has sufficient working capital to

continue in operational existence for the foreseeable future. For

this reason, they continue to adopt the going concern basis in

preparing the accounts.

DIRECTORS AND THEIR INTERESTS

The names of the directors of the company are set out on

page 24.

Sir Stanley Clarke, who is aged 70, will retire as Chairman of the

company at the conclusion of the Annual General Meeting but will

continue as a non-executive director, subject to re-election in

accordance with Companies Act requirements. The board

proposes to appoint Sir Stanley as Life President of the company,

In accordance with the provisions set out in Section 1 of the

Combined Code on Corporate Governance issued by the

Financial Reporting Council in July 2003 (“the Code”),

Christopher Roshier and Anthony Glossop offer themselves for

Stanley Clarke, had a material interest in this transaction as a

result of his 65% shareholding in Northern Racing and his

29.9% shareholding in The Chepstow Racecourse PLC.

Although this transaction did not fall within the definition of a

transaction with a related party within the meaning of the

Listing Rules of the UKLA, the board nevertheless, as a

matter of good governance, sought and obtained approval to

the transaction from shareholders at an Extraordinary General

Meeting held on 6 October 2003.

DIRECTORS’ INTERESTS IN ORDINARY SHARES

The interests of the directors, and their families, in the issued

share capital of the company are shown below:

Beneficial

Sir Stanley Clarke

C. C. A. Glossop

R. L. Froggatt

C. E. Roshier

J. N. Shaw

Sir David Trippier

Non-beneficial

Sir Stanley Clarke

C. C. A. Glossop

30 November 30 November

2003

2002

27,043,854

1,130,299

92,000

10,417

10,000

18,400

90,000

10,417

10,000

18,400

849,567

30,000

The above interests do not include shares held under the share

option schemes described in the Directors’ Remuneration Report

on pages 31 to 35.

re-election to the board. The reasons for this are set out on

There has been no change in these interests since 30 November

page 28.

2003.

SUBSTANTIAL INTERESTS

EMPLOYEES

As at 16 February 2004 in addition to those noted above, the

The group encourages employee involvement and places

company had been notified of the following interests in more than

emphasis on keeping its employees informed of the group’s

3% of its issued share capital:

Shareholder

Percentage of

Ordinary Share Capital

J. D. Leavesley and connected parties

Henderson Global Investors

14.3%

7.0%

CREDITOR PAYMENT POLICY

activities and performance. A performance related annual bonus

scheme and share option arrangements are designed to

encourage employee involvement in the success of the group.

The group operates a non-discriminatory employment policy under

which full and fair consideration is given to disabled applicants and

to the continued employment of staff who become disabled.

The group operates a pension scheme which is open to all

employees — see page 44.

It is the group’s policy to agree terms and conditions for its

Approved by the board of directors and signed on behalf of

business transactions with its suppliers. The group seeks to abide

the board

by the payment terms agreed with suppliers whenever it is

satisfied that the supplier has provided the goods and services in

accordance with the agreed terms and conditions.

During the year ended 30 November 2003 trade creditors

represented an average of 32 days’ purchases (2002: 26 days).

Tim Haywood

Secretary

16 February 2004

Registered Office:

Lyndon House

Hagley Road

Birmingham B16 8PE

Company number 349201

Directors’ Responsibilities in Relation to Financial Statements

The following statement, which should be read in conjunction with the Auditors’ Report to the Members set out on page 57, is made
with a view to distinguishing for shareholders the respective responsibilities of the directors and of the auditors in relation to the financial
statements. Company law requires the directors to prepare financial statements for each financial year which give a true and fair view
of the state of affairs of the company and the group as at the end of the financial year and of the profit or loss of the group for that
period. In preparing these financial statements, the directors have

— selected suitable accounting policies and then applied them consistently;

— made judgements and estimates that are reasonable and prudent;

— followed applicable accounting standards.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial
position of the group and enable them to ensure that the financial statements comply with the Companies Act 1985. They are also
responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.

St. MODWEN PROPERTIES PLC

Corporate Governance

St. Modwen is committed to good corporate governance. The
board of directors exercises effective control over the group and
its activities while recognising its responsibility to shareholders
and other interested parties. The procedures for applying these
principles within the group are set out below. This should be read
in conjunction with the Directors’ Remuneration Report on pages
31 to 35.

Throughout the year ended 30 November 2003 the company has
been in compliance with the Code, except for the following matters:

● The Code recommends that at least half the board, excluding
the Chairman, should comprise non-executive directors
determined by the board to be independent. The board of St.
Modwen, excluding the Chairman, comprises four executive
and four non-executive directors. Neither Christopher Roshier
nor Sir David Trippier would qualify under the Code to be
considered independent as each has served as a director for
more than nine years. However, all non-executive directors are
considered by the board to be independent of management
and free from any business or other relationship which could
interfere with the exercise of their independent judgement. The
length of service of Christopher Roshier (16 years) is not
considered to impair his independence, but rather to provide a
depth of knowledge, insight into the business and commitment
to the company which enables him more fully to carry out his
duties. In accordance with the Code, he is standing for re
election at the forthcoming Annual General Meeting. Sir David
Trippier is not seeking re-election this year, and will be replaced
in due course by a suitably qualified independent individual.

● The Code recommends that a chief executive should not go
on to be chairman of the same company. The business model
which the company has adopted since 1986 has required two
experienced individuals active in the business in the roles of
Executive Chairman and Chief Executive. The latter is wholly
responsible for the profitability of the company and its internal
operations. The Executive Chairman, in addition to his normal
role as Chairman, supports the Chief Executive in key external
business relationships, on major projects, and in matters
affecting the company’s reputation and integrity. Taking into
account his detailed knowledge of the business, and his
reputation in the wider business community, the board
believes that the current Chief Executive and Deputy
Chairman, Anthony Glossop, is the best candidate for the
position of Chairman. The board has consulted with major
shareholders who fully support this view. In order to endorse
this decision, an ordinary resolution to reappoint Anthony
Glossop as a director will be placed before shareholders at the
Annual General Meeting.

BOARD COMPOSITION AND COMMITTEES
The board currently comprises five executive directors (including
the Chairman) and four non-executive directors. This composition
provides an appropriate blend of experience and qualifications,
and the number of non-executives provides a strong base for
ensuring appropriate corporate governance of the company. The
board meets formally 11 times a year and its decisions are
implemented by the executive directors. Every director attended
all 11 meetings in the year, except for Sir Stanley Clarke and
James Shaw (10), and Tim Haywood (appointed in April 2003) (8).

The board has agreed that in view of his chairmanship of both the
Remuneration and Audit Committees, Christopher Roshier is
identified as the senior independent director. He is available for
consultation by shareholders, whenever appropriate.

The reappointment of non-executive directors is not automatic. It
is intended that appointments will be for an initial term of three
years, which may be extended by mutual agreement. Prior to each
non-executive offering himself to the members for re-election his
reappointment must be confirmed by the Chairman in consultation
with the remainder of the board. The terms and conditions of
appointment of non-executive directors are available for
inspection at the company’s registered office during normal
business hours, and at the AGM.

The board is supplied with timely and relevant information
regarding the business, by monthly and ad hoc reports, by site
visits and presentations from members of the management team
and by meetings with key partners. Where appropriate, the
company provides the resources to enable directors to update
and upgrade their knowledge. Through the company secretary,
the board is informed of all corporate governance issues.

The criteria used for evaluating individual executive directors’
performance are included in the Directors’ Remuneration Report.
Individual non-executive directors’ performance is reviewed by the
Chairman and Chief Executive. The performance of the board as a
whole is continuously assessed in the context of the company’s
achievement of its strategic objectives and total shareholder return
targets. Feedback is sought through external surveys from
shareholders, analysts and other professionals within the
investment community following the regular briefings, presentations
and site visits undertaken by the company. In support of the
principles of good corporate governance, the board has appointed
the following committees, all of which have formal terms of
reference which are available for inspection by shareholders.

a) Remuneration Committee
The composition and function of the Remuneration Committee are
set out in the Directors’ Remuneration Report on pages 31 to 35.

The Remuneration Committee met formally once during the year,
the meeting being attended by all members.

b) Audit Committee
The Audit Committee is chaired by the senior independent
director and comprises all of the non-executive directors. Two
meetings were held during the year and additional meetings may
be requested by either the auditors or the non-executive
directors. Both meetings were attended by all members of the
Committee. The Finance Director attends part of these meetings
but the Committee does meet without executive directors being
present. The Committee has direct access to the auditors.

The Audit Committee’s functions include:

● Ensuring that appropriate accounting systems and financial
controls are in operation and that the company’s financial
statements comply with statutory and other requirements

● Receiving reports from and consulting with the external

auditors

● Reviewing the interim and annual results and considering any

matters raised by the auditors

● Monitoring the scope, cost-effectiveness and objectivity of

the audit

● Monitoring the nature, scope and cost-effectiveness of non-
audit services provided by the external auditors and ensuring
that, where such services are provided, the objectivity and
independence of the external auditors is safeguarded

● Securing development and investment opportunities

● Prior identification of macroeconomic and property market

trends

● Changes in planning policy

● Structuring the financing of the company in an innovative and

competitive manner

● Recruitment and retention of key executives with the skills
necessary to implement the company strategy successfully

● Maintaining the company’s high reputation.

The board believes that, although some of these issues are
outside its control, it has clear strategies for identifying, dealing
with, and mitigating the impact of each of these risks. The main
strategies deployed include:

● Having a devolved management structure with regional offices
covering local markets, whilst maintaining strong central control

● Marshalling its bank of development opportunities (the

Hopper) to ensure a steady programme of activity

● Working in close partnership with local authorities and

development agencies

● Committed financing arrangements with key banks

● Ensuring that excellent performance is rewarded with top

quartile remuneration

● Aligning individual and corporate objectives via long-term and

● Making an annual assessment of the external auditors and

share-based incentive schemes

recommending, or not, their reappointment

● Ensuring a culture, led from the board, of honesty, fairness

● Considering the need for an internal audit function.

and integrity throughout the company.

c) Nominations Committee
The Nominations Committee comprises the Chairman, the Chief
Executive and the senior independent director. The board’s
policy is for the Chairman to agree selection criteria for new
members with all existing board members. The final decision on
appointments rests with the full board, acting on the
recommendations of the Nominations Committee.

RISK MANAGEMENT AND INTERNAL CONTROL
The board recognises that it has overall responsibility for the
identification and mitigation of risks and the development and
maintenance of an appropriate system of internal control.

Accordingly, as part of the annual strategic review process, a
top-down risk assessment is undertaken, which has identified
the following principal risks faced by the company:

During the period under review the directors have reviewed the
effectiveness of the system of internal control in accordance with
the Turnbull guidance, through the production of a detailed report
which covered: the group’s control environment; the manner in
which key business risks are identified; the adequacy of
information systems and control procedures; and the manner in
which any required corrective action is to be taken.

The group’s key internal controls are centred on comprehensive
monthly reporting from all activities which includes a detailed
portfolio analysis, development progress reviews, a cash flow
report and a comparison of committed expenditure against
available facilities. These matters are reported to the board
monthly, with reasons for any significant variances from budget.
Detailed annual budgets are reviewed by the board and revised
forecasts for the year are prepared on a regular basis.

St. MODWEN PROPERTIES PLC

Corporate Governance

There are clearly defined procedures for the authorisation of
capital expenditure, purchases and sales of development and
investment properties, contracts and commitments and there is a
formal schedule of matters, including major investment and
development decisions and strategic matters, that are reserved
for board approval. Formal policies and procedures are in place
covering all elements of health and safety and IT. The company’s
IT policies have been developed in co-operation with The
Federation Against Software Theft.

Internal control, by its nature, provides only reasonable and not
absolute assurance against material misstatement or loss. The
directors continue, however, to strive to ensure that internal
control and risk management are further embedded into the
operations of the business by dealing with areas for improvement
as they are identified.

In accordance with the Code, the board has reviewed the need to
establish an internal audit function, but continues to believe that in
a company of its size, where close control over operations is
exercised by the executive directors, the benefits likely to be gained
would be outweighed by the costs of establishing such a function.

SHAREHOLDER RELATIONS
The executive directors have a programme of meetings with
institutional shareholders and analysts at which the company’s
strategy and most recently reported performance are explained
and questions and comments made are relayed to the whole
board. Annual visits are also arranged to sites of particular
interest or significance to assist investors’ understanding of the
company’s business. The company’s Annual General Meeting is
also used as an opportunity to communicate with private
investors. In addition to the usual period for questions which is
made available for shareholders at the Annual General Meeting,
Christopher Roshier, the chairman of the Audit and Remuneration
Committees, will be available to answer appropriate questions.

Copies of all press releases, investor presentations and Annual
company’s website
Reports
(www.stmodwen.co.uk), together with additional details of major
projects, key financial information and company background.

posted

the

are

During the year the company was delighted to win the European
Public Real Estate Best Performer 2002 award, in recognition of
its outstanding performance, good active management and
transparency for investors.

BUSINESS STANDARDS
The company demands the highest standards of integrity and
professionalism, does not condone any form of corrupt behaviour
in business dealings and has disciplinary procedures in place to
deal with any illegal or inappropriate activities by employees.

HEALTH AND SAFETY
The company aims to safeguard the health and safety of the
public and its employees by pursuing a policy which ensures that:

● Its business is conducted in accordance with standards that
are in compliance with relevant statutory provisions for health
and safety of staff and any other persons on company
premises

● A safe and healthy working environment is established and

maintained at all of the company’s locations

● Managers at all levels regard health and safety matters as a

prime management responsibility

● Sufficient financial resources are provided to ensure that

policies can be carried out effectively

● Good standards of training and instruction in matters of health
and safety are provided and maintained at all levels of
employment

● Risk assessments are carried out where appropriate

● Co-operation of staff in promoting safe and healthy conditions

and systems of work is required

● An adequate advisory service in matters of health and safety

is provided and maintained

Detailed policies and procedures are documented and made
available to all staff. The Health and Safety Forum, chaired by the
Assistant Company Secretary, and reporting to the Chief
Executive, meets regularly to discuss and resolve implementation
issues. These procedures are reviewed by the board annually.

Directors’ Remuneration Report

This report has been drawn up in accordance with the Code and has been approved by both the Remuneration Committee and the board.

Shareholders will be invited to approve this report at the AGM. The Remuneration Committee’s terms of reference are available for

inspection on request.

The Companies Act requires certain parts of the Directors’ Remuneration Report to be audited. The audited sections are highlighted.

COMPOSITION AND FUNCTION OF THE REMUNERATION COMMITTEE

The Remuneration Committee comprises Christopher Roshier, Ian Menzies-Gow, James Shaw and Sir David Trippier, who are all

independent non-executive directors of the company, although Christopher Roshier and Sir David Trippier are not recognised as such

by the Code due to their length of service. The Committee considers all aspects of the executive directors’ remuneration and administers

the company’s share option schemes. The remuneration of the non-executive directors is considered by the board following

recommendations by the executive directors. No director participates in setting his own remuneration. The Committee is also aware of

the remuneration paid to executives below board level.

COMPLIANCE

With the exceptions noted on page 28, the company has complied throughout the period with the Code, and with the Directors’

Remuneration Report Regulations 2002.

REMUNERATION POLICY

The objective of St. Modwen’s remuneration policy is to attract, retain and motivate high calibre senior executives through competitive

pay arrangements which are also in the best interests of shareholders. These include performance-related elements to align the interests

of directors and shareholders and to motivate the highest performance.

The policy requires the highest level of performance from executives, based on individual performance assessments and by reference

to pay levels in similar companies. Independent professional advice is sought from time to time to ensure that the policy remains

appropriate. Such advice was last sought in January 2003.

BASE SALARIES

Each executive director receives a salary which reflects his responsibilities, experience and performance. Base salaries are reviewed

annually and are established by reference to the median base salary for similar positions in comparable companies.

SERVICE CONTRACTS

All of the executive directors have notice periods of twelve months.

No director has any rights to compensation (apart from payment in lieu of notice, where appropriate).

The non-executive directors do not have service contracts.

Unless specifically approved by the board, executive directors are not permitted to hold external non-executive directorships.

St. MODWEN PROPERTIES PLC

Directors’ Remuneration Report

PERFORMANCE-RELATED REMUNERATION

The Remuneration Committee has approved all performance-related remuneration in respect of the year to 30 November 2003, and the

targets for achievement of such remuneration which were set at the beginning of the financial year.

Annual Bonus

Executive directors, with the exception of the Chairman, participate in a performance linked annual bonus scheme. The levels of bonus

are determined by the Remuneration Committee, taking into account both the level of profit and other personal targets. Executive

directors were eligible to receive a maximum bonus of 70% of salary in 2003, payable on the achievement by the company of a

demanding budget for profit for the year to 30 November 2003, and on the achievement of a number of personal targets, set individually

for each executive director. These include the achievement of a target net asset value per share, creation of a development programme

for future years, support for the regional offices, and replacement of land used. The Chief Executive makes recommendations to the

Remuneration Committee for the levels of bonus payable to executive directors (other than himself) for the achievement of these

personal targets, and the levels of bonus payable are set by the the Remuneration Committee. Annual bonuses do not form part of

pensionable pay.

For the year to 30 November 2003, the annual bonuses paid to directors as a percentage of annual salary were as follows: Anthony

Glossop 70%; Bill Oliver 70%; Richard Froggatt 64%; Tim Haywood 61%.

Total Shareholder Return 1998 – 2003
St Modwen Properties vs FTSE Real Estate vs FTSE 250

St Modwen Properties
FTSE Real Estate
FTSE MID 250

4000

3500

3000

2500

2000

1500

1000

500

1999

2000

2001

2002

2003

Source: DATASTREAM

Deferred Bonus

In order to continue to attract and retain key executives, and to align their interests with those of shareholders, the board believes that

long-term incentives should form an important part of a competitive benefits package.

Consequently, a resolution will be put before the Annual General Meeting, seeking shareholders’ approval for the introduction of a

performance-related bonus scheme for Mr Oliver, Mr Froggatt and Mr Haywood. Under the terms of the scheme, the annual

performance bonus paid under the existing scheme will be matched and this amount held for payment at the end of three years. Payment

of this deferred amount will be subject to the company’s net asset value growth over the relevant three year period exceeding RPI plus

5% per annum and the continued employment by the company of the director concerned (except in certain circumstances, such as death

during the deferral period). This scheme replicates arrangements already in place for senior management of the company below board

level, under which a maximum of 100% of annual salary can be earned as bonus, of which 50% is deferred for three years.

The board has consulted on this scheme with major shareholders.

Share Options

The Remuneration Committee is responsible for supervising the company’s Executive Share Option and Savings Related Share Option

schemes in accordance with rules previously approved by shareholders. Executive directors (as well as other senior employees) are

granted options over the company’s shares. For options granted in 2003 under the company’s Executive Share Option Scheme (as in

other recent awards), the performance target set was 5% per annum real growth in net asset value per share over the three year period

from the date of grant.

Executive directors may also participate in the company’s savings-related share schemes on the same terms as all other employees.

Executive Share Option Schemes

Date of Grant

C. C. A. Glossop W. A. Oliver R. L. Froggatt T. P. Haywood Exercise Price

Exercise Period

March 1999*

August 1994

September 1995

November 1999

March 2000

September 2001

September 2002

132,878

150,000

300,000

500,000

—

200,000

160,000

172,000

—

200,000

100,000

110,000

159,000

As at 30 November 2002

1,082,878

August 2003

—

532,000

112,000

569,000

90,000

—

50.5p

51.5p

99.0p

106.0p

113.5p

134.0p

Mar 2002–Mar 2005

Aug 1997–Aug 2004

Sept 1998–Sept 2005

Nov 2003–Nov 2009

Mar 2004–Mar 2010

Sept 2004–Sept 2011

Sept 2005–Sept 2012

—

70,000

200.0p

Aug 2006–Aug 2013

As at 30 November 2003

1,082,878

644,000

659,000

70,000

* Granted under a long-term incentive plan which was discontinued in 1999.

Savings Related Schemes

Balance at

30 Nov 2002

Exercised

Granted

30 Nov 2003

Exercise Price

Exercise Period

C. C. A. Glossop

W. A. Oliver

R. L. Froggatt

T. P. Haywood

19,236

16,304

13,240

—

3,500

19,236

84.5p/103.5p

Oct 2004–Oct 2006

16,304

13,240

3,500

103.5p May 2006–Oct 2006

125.0p

182.0p

Oct 2007–Mar 2008

Oct 2008–Mar 2009

The share price as at 30 November 2003 was 258.5p. The highest price during the year was 258.5p and the lowest price was 148p.

St. MODWEN PROPERTIES PLC

Directors’ Remuneration Report

DIRECTORS’ REMUNERATION

The remuneration of the directors for the year ended 30 November 2003 was as follows:

Salary/Fees

£’000

Annual

bonus

£’000

Gains on

contributions

Benefits

share options

£’000

2003

£’000

2002

£’000

Total emoluments excluding

pensions and pension

Executive

Sir Stanley Clarke

C. C. A. Glossop

W. A. Oliver

R. L. Froggatt

T. P. Haywood

Non-Executive

R. I. Menzies-Gow

C. E. Roshier

J. N. Shaw

Sir David Trippier*

J. D. Leavesley

C. H. Lewis

I. J. G. Napier

221

255

217

180

—

178

157

115

—

1,072

500

157

—

301

454

396

317

151

—

293

418

294

344

—

1,729

1,451

All benefits arise from employment with the company, and do not form part of directors’ final pensionable pay.

The figures above represent emoluments earned during the relevant financial year. Such emoluments are paid in the same financial year

with the exception of performance related bonuses, which are paid in the year following that in which they are earned.

* Payments in respect of the services of Sir David Trippier as a director include amounts paid to Sir David Trippier & Associates Limited,

a company which he controls.

During the year, payments of £3,000 each in respect of consultancy services provided were made to former directors J. D. Leavesley

and C. H. Lewis

Total non-executive directors’ fees have been set at a maximum of £100,000 (adjusted for RPI) since 1998. With the increasing

complexity of the role, and the requirements of the Combined Code for additional numbers of non-executives, such a limit is no longer

appropriate if the company is to attract and retain individuals of sufficient calibre. Consequently, a resolution will be put before the Annual

General Meeting to increase this limit to £250,000.

The salaries of the executive directors have been increased with effect from 1 December 2003 to:

C. C. A. Glossop

W. A. Oliver

£267,500

£250,000

R. L. Froggatt

T. P. Haywood

£189,000

£155,000

PENSIONS

The company operates a pension scheme with both a defined benefits and defined contribution section, covering the majority of

employees, including executive directors. In relation to the defined benefits section, benefits are based on years of credited service and

final pensionable pay. The maximum pension generally payable under the scheme is two-thirds of final pensionable pay. It is not

anticipated that there will be any further entrants to the defined benefits section of the scheme.

Membership of the defined contribution section is available to all permanent employees including directors joining the company after

6 April 1999. Contributions are invested by an independent investment manager.

Pension benefits earned by the director who is a member of the defined benefits scheme:

Increase in

Accrued pension

Age at

accrued pension

at 30 November 2003

30 November 2003

£ p.a.

3,116

£ p.a.

31,075

R. L. Froggatt

Notes relating to the defined benefits scheme:

1. No contributions are paid by members.

2. The increase in accrued pension during the year excludes any increase for inflation.

3. Accrued pension is that which would be paid annually at retirement age based on service to 30 November 2003.

4. Members have the option to pay Additional Voluntary Contributions; neither the contributions nor the resulting benefits are included above.

5. Normal retirement age is 60.

6. Death in service benefits amount to a lump sum equal to the greater of four times basic salary at death and four times the average of gross earnings
in the last four years. In addition, a spouse’s pension would be payable, equivalent to 50% of the full pension the member would have been entitled
to had he worked to normal retirement age.

7. A spouse’s pension of 50% of the full pension is payable after the death in retirement of a member.

8. Pension payments increase annually by the lower of the RPI increase and 5%.

W. A Oliver and T. P. Haywood are members of the defined contribution section of the Pension Scheme and contributions of £32,500

and £13,381 were made in respect of each of them during the period.

Sir Stanley Clarke is receiving a pension from the scheme equal to the maximum permitted by the Inland Revenue from an approved

scheme based on his earnings and length of service.

C. C. A. Glossop, having attained the age of 60, has ceased to accrue rights to further pensionable service and he is deferring his

entitlement to receive his pension.

Further information on the company’s pension scheme is shown in note 10 on page 44.

Approved by the board and signed on its behalf by

Christopher Roshier
Chairman, Remuneration Committee
16 February 2004

St. MODWEN PROPERTIES PLC

Group Profit and Loss Account

For the year ended 30 November

Turnover
Group and share of joint ventures
Less: share of joint ventures turnover

Operating profit
Group operating profit
Share of operating profit in joint ventures
Share of operating profit in associates

Profit on sale of investment properties

Net interest payable

Profit on ordinary activities before taxation

Taxation on profit on ordinary activities

Profit on ordinary activities after taxation

Equity minority interest

Profit attributable to shareholders

Dividends

Transferred to reserves

Basic earnings per ordinary share
Dividend per ordinary share

All activities derive from continuing operations.

A statement of the movement in reserves is shown in note 20 on page 54.

Notes

8
7

2003
£’000

136,081
(13,304)

122,777

34,538
9,486
1,550

45,574

5,389

2002
£’000

136,893
(28,728)

108,165

28,561
12,687
1,093

42,341

832

(15,937)

(13,161)

35,026

30,012

(9,954)

(8,448)

25,072

21,564

(989)

(1,016)

24,083

(7,914)

16,169

20,548

(6,846)

13,702

20.1p
6.6p

17.1p
5.7p

Balance Sheets

At 30 November

Fixed assets
Tangible assets
Investments

Joint ventures

Share of gross assets
Share of gross liabilities
Share of net assets
Associated companies
Other investments

Current assets
Stocks
Debtors
Cash at bank and in hand

Current liabilities

Notes

GROUP

COMPANY

2003
£’000

2002
£’000

2003
£’000

2002
£’000

269,023

270,007

1,399

1,517

12
12
12

13
14

123,795
(100,480)
23,315
9,198
6,436

77,348
(53,650)
23,698
7,514
6,615

307,972

307,834

77,510
23,801
92

101,403

101,179
10,072
2,927

114,178

23,315
8,598
237,424

270,736

—
77,395
34

77,429

23,698
6,914
200,024

232,153

—
62,921
38

62,959

Creditors: amounts falling due within one year

(50,881)

(53,091)

(115,148)

(66,023)

Net current assets/(liabilities)

50,522

61,087

(37,719)

(3,064)

Total assets less current liabilities
Creditors: amounts falling due after more
than one year
Provisions for liabilities and charges
Equity minority interests

Net assets

Capital and reserves
Called up share capital
Share premium account
Merger reserve
Capital redemption reserve
Revaluation reserve
Profit and loss account

Equity shareholders’ funds

Net assets per ordinary share
Fair value net assets per ordinary share
Gearing

16
18

19
20
20
20
20
20

358,494

368,921

233,017

229,089

(127,941)
(2,970)
(2,981)

(168,020)
(3,979)
(2,605)

(8,500)
85
—

(34,500)
(272)
—

224,602

194,317

224,602

194,317

12,077
9,167
9
356
89,974
113,019

224,602

186.0p
180.2p
60%

12,077
9,167
9
356
80,191
92,517

194,317

160.9p
148.0p
89%

12,077
9,167
9
356
188,234
14,759

224,602

12,077
9,167
9
356
148,485
24,223

194,317

The Report and Accounts were approved by the board of directors on 16 February 2004.

Signed on behalf of the board of directors by

Sir Stanley Clarke
T. P. Haywood

St. MODWEN PROPERTIES PLC

Group Cash Flow Statement

For the year ended 30 November

Notes

£’000

2003

2002

Net cash inflow from operating activities

21(a)

Dividends received from joint ventures

31,327

6,000

Returns on investments and servicing of finance
Interest received
Interest paid

Net cash outflow from returns on
investments and servicing of finance

Taxation

Capital expenditure and financial investment
Additions to investment properties
Additions to operating properties and
other tangible assets
Sale of investment properties
Sale of operating properties and other tangible assets

Acquisitions and disposals
Investment in joint ventures and associates
Equity dividends paid
Dividends paid to minority shareholders

Cash inflow/(outflow) before use
of liquid resources and financing

Financing
Redemption of loan notes
(Decrease)/increase in debt

Net cash (outflow)/inflow from financing

(Decrease)/increase in cash in the year

21(b)

Reconciliation of net cash flow
to movement in net debt
(Decrease)/increase in cash
Cash flow from change in debt
Loan notes redeemed

Change in net debt resulting from cash flows
Net debt at 1 December

Net debt at 30 November

176
(11,124)

72
(10,312)

(13,177)

(165)
38,347
10

(48,848)

(112)
5,612
36

(10,948)

(4,571)

25,015

(217)
(7,187)
(613)

38,806

(19)
(44,839)

(48)
36,046

(44,858)

(6,052)

(6,052)
44,839
19

38,806
(173,774)

(134,968)

38,793

—

(10,240)

(7,170)

(43,312)

(4,861)
(6,266)
—

(33,056)

35,998

2,942

2,942
(36,046)
48

(33,056)
(140,718)

(173,774)

Supplementary Statements

For the year ended 30 November

Group Statement of Total Recognised Gains and Losses
Profit for the year
Taxation on realisation of prior years’ revaluation surpluses
Unrealised surplus on revaluation of group investment properties
Unrealised surplus on revaluation of properties held by joint ventures
Unrealised surplus arising on acquisition by associate

Total recognised gains and losses since last annual report

Note of Historical Cost Profits and Losses
Reported profit on ordinary activities before taxation
Realisation of property revaluation gains/(losses) of earlier years

2003

£’000

24,083
(1,231)
12,272
2,189
886

38,199

2003
£’000

35,026
5,564

40,590

2002

£’000

20,548
—
13,837
1,417
—

35,802

2002
£’000

30,012
(1,657)

28,355

Historical cost profit for the year after taxation, minority interests
and dividends

21,733

12,045

Group Reconciliation of Movements in Shareholders’ Funds
Profit attributable to shareholders
Dividends

Unrealised surplus on revaluation of group investment properties
Unrealised surplus on revaluation of properties held by joint ventures
Unrealised surplus arising on acquisition by associate
Taxation on realisation of prior years’ revaluation surpluses

Net addition to shareholders’ funds

Opening shareholders’ funds

Closing shareholders’ funds

2003
£’000

24,083
(7,914)

16,169

12,272
2,189
886
(1,231)

30,285

194,317

224,602

2002
£’000

20,548
(6,846)

13,702

13,837
1,417
—
—

28,956

165,361

194,317

St. MODWEN PROPERTIES PLC

Accounting Policies

The accounts and notes have been prepared in accordance with applicable
accounting standards.

Compliance with SSAP19 “Accounting for Investment Properties”

requires departure from the Companies Act 1985 relating to depreciation

and an explanation of the departure is given below.

The Companies Act 1985 requires all properties to be depreciated.

However, this requirement conflicts with the generally accepted accounting

principle set out in SSAP19. The directors consider that, because these

properties are not held for consumption but for their investment potential, to

depreciate them would not give a true and fair view, and that it is necessary

Accounting Convention
The accounts have been prepared under the historical cost convention,
modified by the revaluation of investment properties and shares in
subsidiary and associated companies.

Basis of Consolidation
The group accounts consolidate the accounts of the company and its
subsidiaries for the financial period ended 30 November 2003. Newly
acquired subsidiaries are consolidated from the date control passes.
Associated companies are consolidated using the equity accounting
method and joint ventures are consolidated using the gross equity
accounting method as required by FRS9.

Turnover and Profit Recognition
Turnover represents sales of development properties, rental income
receivable in accordance with UITF28, other recoveries and income from
leisure activities. Profit on development properties is recognised on legal
completion of sale.

Tangible Fixed Assets
Depreciation is not provided on investment properties which are subject to
annual revaluations. Other tangible fixed assets are depreciated by equal
instalments over their expected useful lives at annual rates varying
between 2% and 50%.

Investment in Subsidiary and Associated Companies
The investments in subsidiary and associated companies are included in
the company’s balance sheet at the company’s share of net asset value.
The valuation recognises the cost of acquisition, together with any
unamortised goodwill and changes in the book values of the underlying net
assets. The surplus or deficit arising on revaluation is transferred to
reserves.

Acquisitions
On the acquisition of a business, including an interest in an associated
undertaking, fair values are attributed to the group’s share of the separable
net assets. Any goodwill arising is amortised over its expected useful life,
not exceeding 20 years.

The results and cash flows relating to a business are included in the
consolidated profit and loss account and the consolidated cash flow
statement from the date control passes.

Investment Properties
In accordance with SSAP19, investment properties are revalued annually
and the aggregate surplus or temporary deficit is transferred to the
revaluation reserve. No depreciation is provided in respect of investment
properties.

to adopt SSAP19 in order to give a true and fair view.

If this departure from the Act had not been made, the profit for the financial

year would have been reduced by depreciation. However, the amount of

depreciation cannot reasonably be quantified because depreciation is only one

of many factors reflected in the annual valuation and the amount which might

otherwise have been shown cannot be separately identified or quantified.

Stocks

Stocks and work in progress are stated at the lower of cost and net

realisable value, less amounts invoiced on account. Transfers from

investment properties to stock are made at value not cost.

Deferred Taxation

In accordance with FRS19, deferred taxation is provided at the rate ruling

at the balance sheet date on timing differences which arise from the

recognition of income and expenditure in differing periods for taxation and

accounting purposes. Under this policy no provision has been made for the

potential further liability to taxation which would arise in the event of the

realisation of investment properties included at valuation in the accounts at

the values attributed to them.

Interest

Interest incurred on properties in the course of development, whether for

sale or retention as investments, is charged to the profit and loss account.

Pension Costs

Retirement benefits to employees in the group are provided by a scheme

comprising both defined benefit and defined contribution sections which is

funded by contributions from group companies and employees. Payments to

pension funds are made in accordance with periodic calculations by

professionally qualified actuaries in the case of the defined benefit section, and

regularly as defined by the rules in the case of the defined contribution section.

The costs are charged to the profit and loss account, so as to spread the

cost over the service lives of employees in the scheme in such a way that

the pension cost is a substantially level percentage of current and

expected future pensionable payroll.

Financial Instruments

Derivative instruments utilised by the group are interest rate caps, floors

and swaps. The group does not enter into speculative derivative contracts.

All such instruments are used for hedging purposes to alter the interest

rate risk profile of underlying borrowings. Amounts payable or receivable in

respect of such derivatives are recognised as adjustments to interest

expense over the period of the contracts.

Notes to the Accounts

Turnover and Profit Analysis

Rental income
Group
Share of joint ventures

Property development
Group
Share of joint ventures

Other activities

2003

Cost
of sales
£’000

Profit
£’000

Turnover
£’000

(4,644)
(1,370)

26,964
9,482

(68,792)
(2,347)

(1,533)

19,703
105

1,141

25,835
4,852

79,777
23,876

2,553

2002

Cost
of sales
£’000

(3,532)
(799)

(65,351)
(15,135)

(1,920)

Turnover
£’000

31,608
10,852

88,495
2,452

2,674

Profit
£’000

22,303
4,053

14,426
8,741

633

136,081

(78,686)

57,395

136,893

(86,737)

50,156

1,550

(13,270)
(101)

45,574

5,213
176

50,963

Share of operating profit in associates

Administrative and other operating expenses
Group
Share of joint ventures

Operating profit

Profit on sale of investment properties — group

— joint ventures

2. Net Interest Payable

Interest payable on bank and other loans and overdrafts
Interest receivable

Group interest charge
Share of joint ventures’ net interest
Share of associated companies’ net interest

Profit on Ordinary Activities before Taxation

The profit on ordinary activities before taxation is stated after charging:

Depreciation of tangible fixed assets
Amortisation of investment in own shares
Amortisation of goodwill arising on acquisition of associate
Auditors’ remuneration — audit services
— taxation advice
— advice on Chepstow transaction

1,093

(8,801)
(107)

42,341

832
—

43,173

2002
£’000

10,742
(72)

10,670
2,320
171

13,161

2003
£’000

11,065
(176)

10,889
4,746
302

15,937

2003
£’000

2002
£’000

194
330
12
49
41
20

221
651
—
55
27
—

Remuneration for audit services for the company was £4,300 (2002: £4,200). For taxation advice the charge was £1,350 (2002: £27,000).

As disclosed in last year’s Annual Report, Ernst & Young LLP, the auditors to the company, were paid an introductory fee of £500,000 and fees
associated with the bank finance of £12,000 by our joint venture company Key Property Investments Limited, in connection with the acquisition
in December 2002 of a group of property investment companies from the Alstom Group.

St. MODWEN PROPERTIES PLC

Notes to the Accounts

4. Directors’ Remuneration

Directors’ emoluments
Non-executive directors’ fees
Executive directors’ salaries and benefits
Executive directors’ performance related payments

Gains on the exercise of share options
Value of shares transferred in respect of long-term share incentive scheme
Pension to former directors
Consultancy payments to former directors

Disclosure of individual directors’ remuneration, is shown in the Directors’ Remuneration Report on pages 31 to 35.

Employees
The average number of full-time employees (including directors) employed by the group during the year was as follows:

Administration
Property
Other activities

The total payroll costs of these employees were:

Wages and salaries
Social security costs
Pension costs

The total payroll costs were dealt with in the accounts as follows:

Property recoveries
Cost of sales
Overheads

2003
£’000

110
1,119
500

1,729
—
—
1
6

1,736

2002
£’000

102
907
442

1,451
—
246
1
—

1,698

2003
Number

2002
Number

18
151
43

212

£’000

7,261
757
1,269

9,287

1,673
310
7,304

9,287

18
178
35

231

£’000

5,644
538
15

6,197

1,106
309
4,782

6,197

Taxation on Profit on Ordinary Activities

2003

2002

£’000

(a) Analysis of Charge in Period
Current tax
UK corporation tax on profits of the period
Adjustments in respect of previous periods

Share of joint ventures’ taxation
Adjustments in respect of previous periods

Share of associates’ taxation
Adjustments in respect of previous periods

Total current tax (note (b))

Deferred tax
Origination and reversal of timing differences (note 18)
Share of joint ventures’ origination and reversal of timing differences

Taxation on profits on ordinary activities

(b) Factors Affecting Tax Charge For Period

9,124
(165)

1,214
34

312
204

8,959

1,248

516

10,723

(1,009)
240

9,954

4,513
(192)

3,122
20

—
—

2003
£’000

4,321

3,142

—

7,463

985
—

8,448

2002
£’000

Profit on ordinary activities before tax

35,026

30,012

Profit on ordinary activities at the standard rate of UK Corporation Tax
Disallowed expenses and non-taxable income
Capital allowances for period in excess of depreciation
Short-term timing differences
Net capital gains on disposal of investment properties
Other
Adjustments to tax charge in respect of previous periods (including joint ventures)

10,508
(142)
(496)
1,265
(375)
(110)
73

10,723

9,004
(207)
(443)
(636)
(115)
32
(172)

7,463

(c) Factors That May Affect Future Tax Charges
Based on current capital investment plans, the group expects to continue to be able to claim capital allowances in excess of depreciation in future years.

No provision has been made for deferred tax on gains recognised on revaluing investment properties to market value. Such tax would become
payable only if the properties were sold. The total amount unprovided is £18.3m including share of joint ventures (2002: £17.1m).

7. Dividends

Ordinary 10p shares — proposed final dividend of 4.4p (2002: 3.8p)

— interim dividend of 2.2p (2002: 1.9p)

2003
£’000

5,274
2,640

7,914

2002
£’000

4,547
2,299

6,846

St. MODWEN PROPERTIES PLC

Notes to the Accounts

8. Earnings per Share

Earnings per ordinary share are calculated as follows:
(a) Basic earnings per ordinary share are calculated by dividing the profit attributable to ordinary shareholders of £24,083,000 (2002:
£20,548,000) by the weighted average number of shares in issue during the year (excluding the shares held for share incentive schemes
which are owned by the company) of 119,820,493 (2002: 120,310,795).

(b) As the group does not currently intend to issue shares to satisfy outstanding share options, there will be no dilution of earnings arising from

the exercise of employee share options.

9. Profit of Parent Company

As permitted by Section 230 of the Companies Act 1985, the profit and loss account of the parent company is not presented as part of these
accounts. The loss for the financial year of the parent company was £485,000 (2002: £26,728,000 profit).

10. Pensions

The group operates a pension scheme in the UK with both defined benefit and defined contribution sections. The defined benefit section is closed
to new members.

The pension cost figures used in these accounts comply with the current pension cost accounting standard SSAP24. The last formal actuarial
valuation of the scheme was as at 5 April 2003, when the market value of the net assets of the scheme was £18,864,000. The valuation was performed
using the projected unit method. The main actuarial assumptions were:

Investment rate of return: pre-retirement
post-retirement
Investment rate of return:
Increase in earnings
Increase in pensions

The valuation showed a funding level of 82%.

6.2% p.a.
4.7% p.a.

5.6% p.a.

2.6% p.a.

Under transitional arrangements the group is required to disclose the following information about the scheme and the figures that would have
been shown under FRS17 in the current balance sheet and profit & loss account.

A full actuarial valuation of the defined benefit section was carried out at 5 April 2003 and updated to 30 November 2003 by a qualified
independent actuary. The major assumptions used by the actuary for FRS17 purposes were:

At 30 November 2003

At 30 November 2002

At 30 November 2001

Rate of increase in salaries
Rate of increase in deferred pensions
Rate of increase in pensions in payment
Discount rate
Inflation assumption

5.77%
2.77%
2.77%
5.59%
2.77%

5.34%
2.34%
2.34%
5.72%
2.34%

The fair values of assets in the defined benefit section of the scheme and the expected rate of return were:

2003

2002

2001

Equities
Bonds
Property
Cash and other assets

Actuarial value of liabilities

(Deficit)/surplus in the scheme
Related deferred tax asset/(liability)

Fair value pension (liability)/asset

6.12
4.62
6.12
4.62

6.52
5.42
6.52
5.02

£’000

12,002
308
7,327
637

20,274
(21,625)

(1,351)
405

(946)

6.26
4.76
6.26
4.76

£’000

10,327
819
6,854
633

18,633
(17,154)

1,479
(444)

1,035

5.30%
2.30%
2.30%
5.54%
2.30%

£’000

13,288
662
7,161
389

21,500
(17,133)

4,367
(1,310)

3,057

10. Pensions continued

If the above pension liability/asset was recognised in the financial statements, the group’s net assets and profit and loss reserve would be as follows:

Net assets excluding pension liability/asset
Pension (liability)/asset

Net assets including pension liability/asset

At 30 November 2003 At 30 November 2002

224,602
(946)

223,656

194,317
1,035

195,352

At 30 November 2003 At 30 November 2002

Profit and loss reserve excluding pension liability/asset
Pension (liability)/asset

Profit and loss reserve including pension liability/asset

113,019
(946)

112,073

Had FRS 17 been fully implemented, the amount which would be charged to operating profit is as follows:

Current service cost
Employee contributions

Total operating charge

The amount which would be credited to other finance income is as follows:

Expected return on pension scheme assets
Interest on pension scheme liabilities

Net return

The amounts which would be included within the statement of total recognised gains and losses are as follows:

Difference between expected and actual return on assets (6.3%)

Experience gains and losses arising on the present value of scheme liabilities (6.9%)

Effects of changes in the demographic and financial assumptions underlying the present value
of the scheme liabilities (9.8%)

Total actuarial loss (10.9% of present value of scheme liabilities)

The movement in the scheme surplus during the year is as follows:

Surplus in scheme at beginning of the year
Movement in year:

Current service cost
Employee contributions
Employer contributions
Other finance income

Actuarial loss

(Deficit)/surplus in scheme at the year end

2003
£’000

(704)
13

(691)

2003
£’000

1,118
(978)

140

2003
£’000

1,270

(1,496)

(2,124)

(2,350)

2003
£’000

1,479

(704)
13
71
140
(2,350)

(1,351)

92,517
1,035

93,552

2002
£’000

(543)
9

(534)

2002
£’000

1,266
(937)

329

2002
£’000

(3,052)

(48)

403

(2,697)

2002
£’000

4,367

(543)
9
14
329
(2,697)

1,479

St. MODWEN PROPERTIES PLC

Notes to the Accounts

10. Pensions continued

Reconciliation of fall in value of scheme’s assets to FRS 17 disclosures:

Value of scheme’s assets:
(Deficit)/surplus in scheme at the end of year
Surplus in scheme at the start of year

Total fall in value during year

FRS 17 disclosure:
Profit and Loss Account — operating charge

— other finance income

Statement of Total Recognised Gains and Losses
Employer contributions

Gross
£’000

(1,351)
1,479

(2,830)

(691)
140
(2,350)
71

(2,830)

Tax
£’000

405
(444)

849

207
(42)
705
(21)

849

Freehold
investment
properties
£’000

167,315
8,195
6,740
(19,729)
5,592

168,113

—
—
—

—

Long
leasehold
investment
properties
£’000

100,165
4,982
—
(13,405)
6,680

98,422

—
—
—

—

168,113

167,315

98,422

100,165

Operating
properties
£’000

Plant,
machinery
and
equipment
£’000

1,026
165
—
(36)
—

1,155

781
152
(26)

907

248

245

2,380
—
—
—
—

2,380

98
42
—

140

2,240

2,282

482
1,758

2,240

11. Tangible Fixed Assets

(a) Group

Cost or valuation
At 30 November 2002
Additions
Transfers from work in progress
Disposals
Surplus on revaluation

At 30 November 2003

Depreciation
At 30 November 2002
Charge for the year
Disposals

At 30 November 2003

Net book value
At 30 November 2003

At 30 November 2002

Tenure of operating properties:
Freehold
Long leasehold

Net
£’000

(946)
1,035

(1,981)

(484)
98
(1,645)
50

(1,981)

Total
£’000

270,886
13,342
6,740
(33,170)
12,272

270,070

879
194
(26)

1,047

269,023

270,007

11. Tangible Fixed Assets continued

(b) Company

Cost or valuation
At 30 November 2002
Additions
Deficit on revaluation

At 30 November 2003

Depreciation
At 30 November 2002
Charge for the year

At 30 November 2003

Net book value
At 30 November 2003

At 30 November 2002

Long
leasehold
investment
properties
£’000

Plant,
machinery
and
equipment
£’000

1,380
—
(130)

1,250

—
—

—

1,250

1,380

733
107
—

840

596
95

691

149

137

Total
£’000

2,113
107
(130)

2,090

596
95

691

1,399

1,517

(c) Freehold and long leasehold investment properties were valued as at 30 November 2003 by King Sturge & Co., Chartered Surveyors in accordance

with the Appraisal and Valuation Manual of the Royal Institution of Chartered Surveyors, on the basis of open market value.

(d) Historical cost of investment properties

Group

Company

Freehold investment properties
Long leasehold investment properties

12.

Investments held as Fixed Assets

2003
£’000

116,203
70,375

2002
£’000

116,145
77,021

186,578

193,166

2003
£’000

—
2,770

2,770

2002
£’000

—
2,770

2,770

(a) Group

At 30 November 2002
Investments in year
Share of revaluation of ass
Share of post-tax profits les
Dividends receivable
Amortisation and appropriat

ion

ets
s losses

At 30 November 2003

Investment
in joint
ventures
£’000

Investment
in associated
companies
£’000

Investment
in own
shares
£’000

Other
investments
£’000

23,698
—
2,189
3,428
(6,000)
—

23,315

7,514
66
886
744
—
(12)

9,198

615
151
—
—
—
(330)

436

6,000
—
—
—
—
—

6,000

(b) Company

Investment
in subsidiary
companies
£’000

Investment
in joint
ventures
£’000

Investment
in associated
companies
£’000

Investment
in own
shares
£’000

Other
investments
£’000

At 30 November 2002
Investments in year
Revaluation of investments
Amortisation and
appropriation

193,409
—
37,579

—

23,698
—
(383)

—

At 30 November 2003

230,988

23,315

6,914
66
1,618

—

8,598

615
151
—

(330)

436

6,000
—
—

—

6,000

Total
£’000

37,827
217
3,075
4,172
(6,000)
(342)

38,949

Total
£’000

230,636
217
38,814

(330)

269,337

St. MODWEN PROPERTIES PLC

Notes to the Accounts

12.

Investments held as Fixed Assets continued

Key
Properties
Investments
Limited
£’000

100,732
14,112
(2,613)

Holaw
(462)
Limited
£’000

3,850
102
(116)

(89,961)

(3,310)

22,270

526

Fixed assets
Current assets
Current liabilities
Non-current
liabilities

Barton
Business
Park
Limited
£’000

—
1,918
(503)

(932)

483

Clarke
London
Limited
£’000

—
20
—

—

Sowcrest
Limited
£’000

—
2,004
(83)

(1,758)

163

Great British

Kitchen

Shaw Park

Company Developments

Limited
£’000

Total
£’000

104,655
19,140
(3,315)

—
984
—

(984)

(97,165)

—

23,315

73
—
—

(220)

(147)

(d) Associated Companies
At 30 November 2003, the associated companies, which were registered and operated in England and Wales, were as follows:

Percentage shareholding

Nature of principal business

The Chepstow Racecourse PLC
Stoke-on-Trent Community Stadium Development Company Limited

27%
15%

Racecourse operator

Stadium operator

The majority shareholder in The Chepstow Racecourse PLC is Sir Stanley Clarke.

The other shareholders in Stoke-on-Trent Community Stadium Development Company Limited are Stoke City Football Club Limited (49%) and
the Council of the City of Stoke-on-Trent (36%). Stoke-on-Trent Regeneration Limited holds the remaining 15% of the equity in this company.

The accounts of The Chepstow Racecourse PLC are drawn up to 31 December each year. The accounts of Stoke-on-Trent Community Stadium
Development Company Limited are drawn up to 31 May each year, and management accounts to 30 November 2003 have been used for
consolidation purposes.

(e) Own Shares
Investment in own shares represents shares acquired by Mourant & Co. Trustees Limited in respect of share incentive schemes.

These shares are held at the lower of market value and residual value (being the lowest exercise price of any outstanding options).

908,689 shares with a market value of 258.5p per share were held at 30 November 2003 (2002: 1,128,858). Dividends have been waived on
these shares. 132,878 of the shares are held under option to employees in the long-term share incentive scheme (2002: 132,878).

12.

Investments held as Fixed Assets continued

(f) Subsidiary companies
At 30 November 2003, the principal subsidiaries, all of whom, with the exception of St. Modwen Enterprises Limited, were registered and
operated in England and Wales, were as follows:

Proportion of ordinary shares held

Nature of principal business

Blackpole Trading Estate (1978) Limited
Boltro Properties Limited
Chaucer Estates Limited
Lawnmark Limited
Leisure Living Limited
Redman Heenan Properties Limited
St. Modwen Developments Limited
St. Modwen Developments (Belle Vale) Limited
St. Modwen Developments (Edmonton) Limited
St. Modwen Developments (Kirkby) Limited
St. Modwen Developments (Quinton) Limited
St. Modwen Enterprises Limited
St. Modwen Investments Limited
St. Modwen Securities Limited
St. Modwen Ventures Limited
Walton Securities Limited
Worcester Retail Park (One) Limited
Worcester Retail Park (Two) Limited
Stoke-on-Trent Regeneration Limited
Stoke-on-Trent Regeneration (Investments) Limited
Uttoxeter Estates Limited
Widnes Regeneration Limited
Trentham Leisure Limited
Norton & Profit Developments Limited

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
81%
81%
81%
81%
80%
75%

Property investors
Property investors
Property investors
Investment company
Leisure operator
Property investors
Property developers
Property investors
Property investors
Property investors
Property developers
Property investors
Property investors
Property developers
Property investors
Property investors
Property investors
Property investors
Property developers
Property investors
Property developers
Property developers
Property and leisure operator
Property developers

St. Modwen Enterprises Limited was registered and operated in the Isle of Man.

The company is also the beneficial owner of the entire issued share capital of a number of non-trading companies.

13. Stocks

Work in progress:

Developments in progress
Income-producing development property

Goods for resale

Group

Company

2003
£’000

2002
£’000

2003
£’000

2002
£’000

42,643
34,833

77,476
34

81,339
19,803

101,142
37

77,510

101,179

—
—

—

—
—

—

St. MODWEN PROPERTIES PLC

Notes to the Accounts

14. Debtors:

Amounts falling due within one year

Trade debtors
Amounts due from subsidiaries
Amounts due from joint venture and associated companies
Other debtors
Prepayments and accrued income

15. Creditors:

Amounts falling due within one year

Bank overdraft (secured on specific property assets)
Bank loan (secured on specific property assets)
Floating Rate Guaranteed Unsecured Loan Notes 2009
Floating Rate Unsecured Loan Notes 2005
Payments on account
Trade creditors
Amounts due to subsidiaries
Amounts due to joint venture and associated companies
Corporation tax
Other taxation and social security
Other creditors
Accruals and deferred income
Proposed dividend

Group

Company

2003
£’000

2,822
—
17,948
2,553
478

2002
£’000

1,022
—
4,086
2,454
2,510

2003
£’000

1,072
53,247
14,849
4,983
3,244

2002
£’000

19
53,274
3,206
4,361
2,061

23,801

10,072

77,395

62,921

2003
£’000

3,664
3,000
55
400
11,564
1,721
—
—
8,918
2,164
766
13,355
5,274

Group

Company

2002
£’000

447
7,760
74
400
8,886
5,861
—
9,456
3,299
3,481
232
8,648
4,547

2003
£’000

17,107
—
—
—
—
—
83,752
—
—
—
486
8,529
5,274

2002
£’000

12,902
—
—
—
—
—
35,514
9,456
—
26
13
3,565
4,547

50,881

53,091

115,148

66,023

16. Creditors:

Amounts falling due after more than one year

Bank and other loans

Group

Company

2003
£’000

2002
£’000

127,941

168,020

2003
£’000

8,500

2002
£’000

34,500

17. Financial Instruments

The group’s policies on derivatives and financial instruments are set out in the Financial Review on pages 20 to 22 and the accounting policies

on page 40. The group does not trade in financial instruments. All financial instruments are denominated in sterling.

Short-term debtors and creditors have been omitted from all disclosures.

(a) Maturity Profile of Committed Financial Liabilities

One year
One to two years
Two to five years
More than five years

Drawn
£’000

7,119
14,244
68,744
44,953

Group 2003

Undrawn
£’000

3,633
9,339
69,194
1,714

Total
£’000

10,752
23,583
137,938
46,667

Group 2002

Drawn
£’000

Undrawn
£’000

8,681
2,963
115,057
50,000

5,053
1,797
44,228
—

Total
£’000

13,734
4,760
159,285
50,000

Gross financial liabilities

135,060

83,880

218,940

176,701

51,078

227,779

Interest payable on the loans repayable in more than five years is 1.425% above LIBOR. The weighted average period to maturity of borrowings
was 5 years (2002: 6 years).

(b) Interest Rate Profile
The following interest rate profiles of the group’s financial liabilities are after taking into account interest rate swaps entered into by the group.

Floating rate
financial
liabilities*
£’000

Fixed rate
financial
liabilities
£’000

Total
£’000

At 30 November 2003

135,060

15,060

120,000

At 30 November 2002

176,701

96,701

80,000

* Of which £8,860,000 was hedged by interest rate options (2002: £28,100,000).

Fixed Rate Borrowings

Weighted Weighted average
time for which
the rate is fixed
(years)

average
interest rate
%

5.11

5.64

Primary financial instruments:
Fixed asset investments
Loans to joint ventures and associates
Income due from other investments
Cash
Loans from joint ventures and associates
Short-term loans
Long-term loans

Derivative financial instruments:

Interest rate swaps and options

2003

2002

Book
Value
£’000

6,000
17,948
1,187
92
—

(7,119)
(127,941)

Fair
Value
£’000

6,000
17,948
1,187
92
—
(7,119)
(127,941

Book
Value
£’000

6,000
4,086
1,032
2,927
(9,456)
(8,681)
(168,020)

Fair
Value
£’000

6,000
4,086
1,032
2,927
(9,456)
(8,681)
(168,020)

—

(328)

—

(2,863)

Market rates have been used to determine the fair value of derivative financial instruments.

St. MODWEN PROPERTIES PLC

Notes to the Accounts

17. Financial Instruments continued

(d) Hedging
As explained in the financial review on pages 20 to 22, the group’s policy is to hedge interest rate exposure by using derivative financial
instruments.

Gains and losses on instruments used for hedging are not recognised until the exposure that is being hedged is itself recognised. Unrecognised
gains and losses on instruments used for hedging, and the movements therein, are as follows:

2003

Losses
£’000

Net
£’000

Gains
£’000

2002

Losses
£’000

Net
£’000

Unrecognised gains and losses at

1 December
Gains and losses from previous

years that were recognised in the year

Gains and losses arising before

1 December that were not

recognised in the year
Gains and losses arising in the year

which were not recognised in the year

Unrecognised gains and losses on

hedges at 30 November

Gains and losses expected to be

recognised in the next financial year
Gains and losses expected to be

recognised after the next financial year

18. Deferred taxation

Gains
£’000

—

(2,863)

1,027

—

(1,836)

1,374

134

1,508

1,374

(1,702)

(328)

441

933

(647)

(206)

(1,055)

(122)

—

(2,585)

801

(1,784)

(1,079)

(2,863)

(1,027)

(1,836)

Provided

Unprovided

2003
£’000

2002
£’000

2003
£’000

2002
£’000

3,911
(941)

2,970
—

2,970

3,655
324

3,979
—

3,979

—
—

—
18,295

18,295

—

—
17,091

17,091

The amounts of deferred taxation provided and unprovided in the accounts are:

Group

Capital allowances in excess of depreciation
Other timing differences

Revaluation of properties and gains rolled over (including share of joint ventures)

18. Deferred taxation continued

Company

Capital allowances in excess of depreciation
Other timing differences
Revaluation of properties

Reconciliation of movement on deferred tax liability

Balance as at 30 November 2002
Profit and loss account

Balance as at 30 November 2003

19. Called up share capital

Authorised:
Equity share capital
150,000,000 Ordinary 10p shares

Allotted and fully paid:
Equity share capital
120,773,954 Ordinary 10p shares:

Provided

Unprovided

2003
£’000

2002
£’000

2003
£’000

2002
£’000

275
(360)
—

(85)

272
—
—

272

—
—
(348)

(348)

—

(522)

Group
£’000

Company
£’000

3,979
(1,009)

2,970

272
(357)

(85)

2003
£’000

2002
£’000

15,000

12,077

Details of options, outstanding at 30 November 2003, to acquire ordinary shares in the company under the option schemes were as follows:

Executive share option schemes

Price per share

Options outstanding

Exercisable between

Savings related schemes

50.5p
51.5p
81.5p
103.5p
99.0p
106.0p
113.5p
134.0p
200.0p

84.5p
103.5p
125.0p
182.0p

150,000
500,000
235,000
500,000
700,000
575,000
1,022,500
955,000
862,000

112,621
179,325
218,445
146,125

6,156,016

August 1997 – August 2004
August 1998 – August 2005
March 2002 – March 2008
September 2003 – September 2009
November 2003 – November 2009
March 2004 – March 2010
September 2004 – September 2011
September 2005 – September 2012
August 2008 – August 2015

October 2004 – April 2005
May 2006 – November 2006
October 2007 – April 2008
August 2008 – February 2009

St. MODWEN PROPERTIES PLC

Notes to the Accounts

20. Reserves

Group
At 30 November 2002
Revaluation of investment properties
Realisation of prior years’ revaluations
Share of joint ventures’ revaluation of investment properties
Revaluation of associate
Retained profit for the year
Taxation on realisation of prior years’ revaluations

At 30 November 2003

Company
At 30 November 2002
Revaluation of investment properties
Realisation of prior years’ revaluations
Revaluation of investments
Retained loss for the year

At 30 November 2003

21. Group Cash Flow Statement

(a) Reconciliation of operating profit to operating cash flows

Operating profit
Depreciation and amortisation charges
(Increase)/decrease in debtors
Decrease/(increase) in stocks
(Decrease)/increase in creditors

Net cash inflow from operating activities

(b) Analysis of net debt

Cash
Cash at bank and in hand
Bank overdraft

Debt
Debt due within one year
Debt due after one year

Share
premium
account
£’000

Merger
reserve
£’000

Capital
redemption
reserve
£’000

Revaluation
reserve
£’000

Profit
& loss
account
£’000

9,167
—
—
—
—
—
—

9,167

9,167
—
—
—
—

9,167

9
—
—
—
—
—
—

9
—
—
—
—

356
—
—
—
—
—
—

356

356
—
—
—
—

356

80,191
12,272
(5,564)
2,189
886
—
—

92,517
—
5,564
—
—
16,169
(1,231)

89,974

113,019

148,485
(130)
1,065
38,814
—

24,223
—
(1,065)
—
(8,399)

188,234

14,759

2003
£’000

34,538
536
(13,729)
16,929
(6,947)

31,327

2002
£’000

28,561
872
345
(7,139)
16,154

38,793

At
30 November
2002
£’000

Cash
Flows
£’000

At
30 November
2003
£’000

2,927
(447)

2,480

(2,835)
(3,217)

(6,052)

92
(3,664)

(3,572)

(8,234)
(168,020)

4,779
40,079

(3,455)
(127,941)

(176,254)

44,858

(131,396)

(173,774)

38,806

(134,968)

22. Net asset value

Net assets per share
FRS 19 deferred tax provision for disposal of investment properties
Fair value of interest rate derivatives (post-tax)

Fair value of investment in The Chepstow Racecourse PLC (post-tax)
FRS 19 deferred tax provision on potential clawback of capital allowances

Adjusted net assets per share

2003
p

186.0
(15.1)
(0.2)

170.7
6.3
3.2

180.2

2002
p

160.9
(14.2)
(1.7)

145.0
—
3.0

148.0

23. Commitments and contingencies

The company has guaranteed the loans and overdrafts of subsidiary companies, which at 30 November 2003 amounted to £122,441,000
(2002: £143,435,000), and has granted a fixed charge over its investment properties as security.

At 30 November 2003 the group had no contracted capital expenditure (2002: £2,200,000).

24. Related party transactions
Key Property Investments Limited (‘KPI’)

During the year the group lent a further £9,568,000 to KPI and the balance due from KPI at the year end was £11,448,000 (2002: £1,880,000).

Holaw (462) Limited (‘Holaw’)

The balance due from Holaw at the year end was £365,000 (2002: £365,000).

Barton Business Park Limited (‘BBP’)

During the year the group repaid its £9,438,000 loan and lent £10,370,000 to BBP. This balance was outstanding at the year end.

Sowcrest Limited (‘Sowcrest’)

During the year the group repaid its £18,000 loan and lent £80,000 to Sowcrest. This balance was outstanding at the year end.

Great British Kitchen Company Limited (‘GBK’)

During the year the group advanced a further £95,000 to GBK leaving a balance outstanding at the year end of £443,000 (2002: £348,000).

The Chepstow Racecourse PLC (‘Chepstow’)

The loan of £612,000 made in previous years was outstanding at the year end (2002: £612,000).

Shaw Park Developments Limited (‘SPD’)

During the year the group lent £975,000 to SPD. The balance was outstanding at the year end (2002: £nil).

25. Post-balance sheet events

Following the year end, the company completed three acquisitions: a 228-acre site at Longbridge from MG Rover on a sale and leaseback basis;
600 acres of non-operational land at Llanwern, bought from Corus; and the remaining 50% share of the Kirkby Shopping Centre from Mars
Pension Fund. The total consideration for these transactions, which were funded within existing facilities, was £71.25m.

St. MODWEN PROPERTIES PLC

Five Year Record

Rental income
Property Profits
Pre-tax profit

Net Assets Employed
Investment properties
Investments
Work in progress
Other net liabilities
Net borrowings

Financed by
Share capital
Revaluation reserve
Profit and loss account
Other reserves

Shareholders’ Funds

Earnings per share (pence)

Dividends per share (pence)

Dividend cover (times)
Normal basis
On recurring income

Net assets per share (pence)
Increase on prior year

1999
£m

23.2
11.1
18.5

158.7
14.2
55.8
(20.4)
(87.4)

120.9

12.1
39.7
59.6
9.5

2000
£m

26.9
13.7
21.7

187.2
14.6
63.4
(24.2)
(101.3)

139.7

12.1
50.6
67.5
9.5

2001
£m

27.3
16.1
25.5

209.7
24.1
94.0
(21.7)
(140.7)

165.4

12.1
63.3
80.5
9.5

2002
£m

30.7
24.0
30.0

267.5
37.8
101.2
(38.4)
(173.8)

194.3

12.1
80.2
92.5
9.5

120.9

139.7

165.4

194.3

11.1

3.8

2.9
1.1

100.1
22%

12.6

4.3

2.9
1.1

115.7
16%

15.2

4.9

3.1
1.2

136.9
18%

17.1

5.7

3.0
0.6

160.9
18%

2003
£m

42.5

25.2

35.0

266.5

38.9

77.5

(23.3)

(135.0)

224.6

12.1

90.0

113.0

9.5

224.6

20.1

6.6

3.0

0.9

186.0
16%

Independent Auditors’ Report
to the Members of St. Modwen Properties PLC

We have audited the group’s financial statements for the year ended 30 November 2003 which comprise Group Profit and Loss Account,
Group Balance Sheet, Company Balance Sheet, Group Cash Flow Statement, Group Statement of Total Recognised Gains and Losses,
and the related notes 1 to 25. These financial statements have been prepared on the basis of the accounting policies set out therein.
We have also audited the information in the Directors’ Remuneration Report that is identified as having been audited.

This report is made solely to the company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit
work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an
auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The directors’ responsibilities for preparing the Annual Report, the Directors’ Remuneration Report and the financial statements in
accordance with applicable United Kingdom law and accounting standards are set out in the Statement of Directors’ Responsibilities.

Our responsibility is to audit the financial statements and the part of the Directors’ Remuneration Report to be audited in accordance with
relevant legal and regulatory requirements, United Kingdom Auditing Standards and the Listing Rules of the Financial Services Authority.

We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements and
the part of the Directors’ Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985.
We also report to you if, in our opinion, the Directors’ Report is not consistent with the financial statements, if the company has not kept
proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified
by law or the Listing Rules regarding directors’ remuneration and transactions with the group is not disclosed.

We review whether the Corporate Governance Statement reflects the company’s compliance with the seven provisions of the Combined
Code specified for our review by the Listing Rules, and we report if it does not. We are not required to consider whether the board’s
statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the group’s corporate governance
procedures or its risk and control procedures.

We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements.
This other information comprises the Directors’ Report, unaudited part of the Directors’ Remuneration Report, Chairman’s Statement,
Chief Executive’s Operating Review, Financial Review and Corporate Governance Statement. We consider the implications for our
report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities
do not extend to any other information.

BASIS OF AUDIT OPINION
We conducted our audit in accordance with the United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit
includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the part of the
Directors’ Remuneration Report to be audited. It also includes an assessment of the significant estimates and judgements made by the
directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the group’s
circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to
provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the Directors’
Remuneration Report to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming
our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the
Directors’ Remuneration Report to be audited.

OPINION
In our opinion the financial statements give a true and fair view of the state of affairs of the company and of the group as at
30 November 2003 and of the profit of the group for the year then ended and the financial statements and the part of the Directors’
Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985.

Ernst & Young LLP
Registered Auditor
Birmingham
16 February 2004

St. MODWEN PROPERTIES PLC

Annual General Meeting

In accordance with the Directors’ Remuneration Report

The board has no intention at present to exercise the

Regulations 2002, shareholders will be asked to approve the

authority to allot shares.

Directors’ Remuneration Report (set out on pages 31 to 35) for

the year ended 30 November 2003.

Resolution 8, which will be proposed as an Ordinary

Resolution, provides for the Section 80 amount to be

Shareholders will be asked to approve at the Annual General

£2,922,605 (being an amount equal to the authorised but

Meeting the following Resolutions as special business:

unissued share capital of the company at the date of this

— Approval of the increased limit for total non-executive

directors’ fees, as described on page 34 (resolution 6).

— Approval of the deferred bonus scheme for the executive

directors (excluding the chairman), as described on page 32

(resolution 7).

The following resolutions have become routine business at the

Annual General Meetings of most public companies, including St.

Modwen Properties PLC, and relate to:

— Renewal of the authority for the directors to allot relevant

report and representing 24% of the company’s issued share

capital at that date).

Resolution 9, which will be proposed as a Special

Resolution, provides for the Section 89 amount to be

£603,870 (representing 5% of the company’s issued share

capital).

The prescribed period for which these powers and

authorities are granted will expire at the conclusion of the

Annual General Meeting to be held next year (or on 11 July

2005 if earlier) when the directors intend to seek renewal of

securities and the renewal of the powers for the directors to

the authorities.

allot equity securities for cash (Resolutions 8 and 9).

The existing general authority of the directors to allot shares

and the current disapplication of the statutory pre-emption

rights expire at the conclusion of the forthcoming Annual

General Meeting.

Article 8.2 of the company’s Articles of Association contains

a general authority for the directors to allot shares in the

company for a period (not exceeding five years) (“the

— Renewal of the authority for the company to purchase certain

of its own shares (Resolution 10).

This resolution renews an existing authority for a further year.

The directors believe it is advantageous to have such

authority but would only exercise it if it was believed to be in

the best interests of shareholders. At present, the board has

no intention to exercise the authority.

prescribed period”) and up to a maximum aggregate nominal

AUDITORS

amount (“the Section 80 amount”) approved by a Special or

Ernst & Young LLP have expressed their willingness to remain in

Ordinary Resolution of the company. Article 8.2 also

office and a resolution to reappoint them as auditors of the

empowers the directors during the prescribed period to allot

company will be proposed at the forthcoming Annual General

shares for cash in connection with a rights issue and also to

Meeting.

allot shares for cash in any other circumstances up to a

maximum aggregate nominal amount approved by a Special

Resolution of the company (“the Section 89 amount”).

Notice of Meeting

Notice is hereby given that the sixty-third Annual General Meeting

the sum of £250,000 exclusive of value added tax (if

of St. Modwen Properties PLC will be held at noon on 23 April

applicable) and such maximum shall be increased on each

2004 at the Ironmongers’ Hall, Barbican, London EC2Y 8AA.

anniversary of the date of adoption of this resolution by the

movement in the Index of Retail Prices.

Ordinary Business

1. To receive and adopt the report of the directors and the

accounts for the year ended 30 November 2003.

7. Ordinary Resolution

That a deferred bonus scheme be introduced, in addition to

the existing annual bonus scheme, with effect from the year

2. To declare a final ordinary dividend of 4.4p per share.

commencing 1 December 2003, for the executive directors

3. To re-elect as directors:

(excluding the Chairman), under the terms of which a

maximum of 70% of salary could be earned per annum,

i. Sir Stanley Clarke (aged 70),

payable after three years.

ii. Anthony Glossop,

iii. Christopher Roshier,

iv. Richard Froggatt, and

v. Tim Haywood.

4. To reappoint Ernst & Young LLP as auditors and to authorise

the directors to determine their remuneration.

5. To approve the Directors’ Remuneration Report contained

on pages 31 to 35.

Special Business

8. Ordinary Resolution

That the authority to allot relevant securities and equity

securities conferred on the directors by Article 8.2 of the

company’s Articles of Association be and is hereby granted

for the period ending on 21 July 2005 or at the conclusion of

the next Annual General Meeting of the company to be held

after the date of the passing of this Resolution (whichever is

the earlier) and for such period the Section 80 amount shall

be £2,922,605.

9. Special Resolution

That the power to allot relevant securities and equity

To consider and, if thought fit, pass the following resolutions:

securities conferred on the directors by Article 8.2 of the

6. Ordinary Resolution

company’s Articles of Association be and is hereby granted

for the period ending on 21 July 2005 or at the conclusion of

That the authority to pay directors’ fees in accordance with

the next Annual General Meeting of the company to be held

Article 112.1 of the company’s Articles of Association be

after the date of the passing of this Resolution (whichever is

and is hereby increased so that such fees paid in the

the earlier) and for such period the Section 89 amount shall

aggregate to all such directors shall not in any year exceed

be £603,870.

St. MODWEN PROPERTIES PLC

Notice of Meeting

10. Special Resolution

case exclusive of advance corporation tax (if any) and

That, in accordance with Article 10 of its Articles of

expenses payable by the company); and

Association and Section 166 of the Companies Act 1985,

the company be and is hereby granted general and

unconditional authority to make market purchases (as

defined in Section 163 of the Companies Act 1985) of any of

its own ordinary shares on such terms and in such manner as

the board of directors may from time to time determine

PROVIDED THAT the general authority conferred by this

Resolution shall:

Annual General Meeting of the company to be held

after the date of the passing of this Resolution

(whichever is the earlier), save that if the company

should before such expiry enter into a contract of

purchase then the purchase may be completed or

executed wholly or partly after such expiry.

(a) be limited to 12,077,395 ordinary shares of 10p each;

Tim Haywood

(b) not permit the payment per share of more than 105% Secretary

of the average middle market price quotation on the

16 February 2004

London Stock Exchange for the ordinary shares on the

five previous dealing days or less than 10p (in each

Registered Office:

Lyndon House

Hagley Road

Birmingham B16 8PE

Company number 349201

Notes

In accordance with Regulation 41 of the Uncertificated

1. A member entitled to attend and vote at this meeting may

Securities Regulations 2001, the company gives notice that

appoint another person (whether a member or not) as

only those shareholders entered on the relevant register of

his/her proxy, to attend and, on a poll, vote for him/her.

members (the “Register”) for certificated or uncertificated

Forms of proxy, one of which is enclosed, must be signed by

shares of the company (as the case may be) at 6 p.m. on

the appointer and must be lodged at the registrar’s office at

Wednesday 21 April 2004 (the “Specified Time”) will be

least 48 hours before the meeting. A proxy need not be a

entitled to attend or vote at the meeting in respect of the

member of the company.

number of shares registered in their name at the time. Changes

to entries on the Register after the Specified Time will be

2. Copies of the contracts of service between the company and

disregarded in determining the rights of any person to attend or

Sir Stanley Clarke, Mr C. C. A. Glossop, Mr W. A. Oliver, Mr

vote at that meeting. Should the meeting be adjourned to a time

R. L. Froggatt and Mr T. P. Haywood and the terms and

not more than 48 hours after the Specified Time, that time will

conditions of appointment of the non-executive directors are

also apply for the purpose of determining the entitlement of

available for inspection at the registered office of the

members to attend and vote (and for the purpose of

company on each business day during normal business

determining the number of votes they may cast) at the

hours and will be available on the day of the meeting, at the

adjourned meeting. Should the meeting be adjourned for a

place of the meeting, from at least 15 minutes prior to the

longer period, then to be so entitled, members must be entered

meeting until its conclusion. A register of directors’ interests

on the Register at the time which is 48 hours before the time

will also be available for inspection from the commencement

fixed for the adjourned meeting or, if the company gives notice

of the meeting until its conclusion.

of the adjourned meeting, at the time specified in the notice.

Castle Hill, Dudley — a 148-acre leisure and heritage scheme to be developed in partnership with Dudley Metropolitan Borough Council.

Contents

Financial Highlights

Chairman’s Statement

The Chairmanship of Sir Stanley Clarke

Chief Executive’s Operational Review

Review of Major Projects

Environmental Impact

Financial Review

Analysis of the Portfolio

Directors and Advisers

Shareholder Information

Directors’ Report

Directors’ Responsibilities

Corporate Governance

Directors’ Remuneration Report

Group Profit and Loss Account

Balance Sheets

Group Cash Flow Statement

Supplementary Statements

Accounting Policies

Notes to the Accounts

Five Year Record

Auditors’ Report to the Members

Annual General Meeting

Notice of Meeting

Visit our website on www.stmodwen.co.uk

“The key to the strategy
is to maintain a growing
hopper of well-located
future opportunities.”

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St. MODWEN PROPERTIES PLC
Head Office and Midlands Regional Office:

Lyndon House, Hagley Road, Edgbaston, Birmingham B16 8PE

Telephone: (0121) 456 2800 Facsimile: (0121) 456 1829

www: stmodwen.co.uk e-mail: info@stmodwen.co.uk

Regional Offices:

London and South East: Telephone: (020) 7499 5666 Facsimile: (020) 7629 4262

North Staffordshire: Telephone: (01782) 281844 Facsimile: (01782) 283670

Northern: Telephone: (01925) 825950 Facsimile: (01925) 284808

St. MODWEN PROPERTIES PLC
Annual Report 2003