Standard Motor Products, Inc. Annual Report 2012

FY2012 Annual Report · Standard Motor Products, Inc.

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THE UK’S LEADING REGENERATION SPECIALIST

Annual Report and Accounts 2012

St. Modwen Properties PLC
Annual Report and Accounts 2012

Introduction

St. Modwen is the UK’s
leading regeneration
specialist. The Company
operates across the full
spectrum of the property
industry from a network
of seven offices, a
residential business and
through joint ventures
with public sector and
industry leading partners.

non-statutory information

As the Group utilises a number of joint venture arrangements, additional
disclosures are provided to give a better understanding of our business.
These include information on the Group including its share of joint ventures
together with non-statutory measures such as trading profit and profit before
all tax. A full reconciliation of such measures is provided in Note 2 to the
Group Financial Statements.

HOw we HAve peRFORmed

Profit before all tax £m

Trading profit £m

51.7

52.8

25.5

22.8

38.2

17.4

2010

2011

2012

2010

2011

2012

Equity net assets per share p

Gearing (on balance sheet) %

251

232

213

2010

2011

2012

2010

2011

2012

COntentS

Overview

IFC Introduction

01 What we do

02 Where we operate

04 Our Business Model

14 Our Strategy

Business Review

18 Chairman’s Statement

20 Chief Executive’s Review

22 Residential

Commercial Land
and Development

Income Producing Properties

Major Project Opportunities

44 Our Partnerships

46 Financial Review

54 Risks and Uncertainties

Corporate Social Responsibility

Corporate Governance

Financial Statements

Additional Information

64 The Board

Independent Auditor’s Report

149 Glossary of Terms

Corporate Governance Report

100 Group Income Statement

151 Notice of Annual General

76 Audit Committee Report

101 Group Balance Sheet

Nomination Committee Report

102 Group Statement of

Meeting

158 Information for Shareholders

Directors’ Remuneration Report

Other Governance and
Statutory Disclosures

Statement of Directors’
Responsibilities

Comprehensive Income

102 Group Statement of Changes

in Equity

103 Group Cash Flow Statement

104 Accounting Policies

110 Notes to the Accounts

138 Company Balance Sheet

139 Notes to the Company Accounts

147 Independent Company Auditor’s

Report

148 Five Year Record

For further detail on our business please visit:

www.stmodwen.co.uk

01 St. Modwen Properties PLC
Annual Report and Accounts 2012

What we do

Residential

We acquire sites with potential for residential development and
add value to the land throughout the development process,
realising value through three routes to market:

– Residential land sales
– Persimmon joint venture
– St. Modwen Homes

Our residential portfolio makes up 37% of our land bank by value,
of which 50% is located inside the M25. Across the entire
portfolio, we have planning permission or allocations within local
plans for circa 21,000 plots.

For more detail see page 22

CommeRCial land
and development

Our commercial land portfolio makes up 12% of our land bank.
We acquire this land at reduced capital outlay and then manage
its development through the remediation and planning process,
taking advantage of local market conditions to release the land
for development at the most appropriate time.

For more detail see page 28

inCome pRoduCing pRopeRties

Comprising industrial, retail and office assets our income
producing portfolio makes up 51% of our land bank. All assets in
this portfolio are held with a view to generating significant future
value but we do make sure that a major proportion generates
income prior to development and in doing so, typically covers
the running costs of the Group’s business.

For more detail see page 32

Front Cover:
The 85,000 sq ft Tesco store completed
at the end of 2012 and which sits at
the heart of the £50m regeneration
of Hednesford Town Centre, Cannock.

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02 St. Modwen Properties PLC
Annual Report and Accounts 2012

Where we operate

STRATEGICALLY
poSITIonEd

our diverse uk-wide portfolio and our 5,800 acre land bank are
controlled by highly skilled professionals via a network of seven offices
and a residential business, located across the country. this provides us
with local knowledge and expertise that keeps us in tune with the needs
of the local community and ensures that we remain politically and
economically sensitive to each individual area.

a third of our portfolio is in London and the South east where around
50% by value of our residential assets are also located. of our major
project opportunities, two are located in London, one in South Wales
and one in Birmingham.

north
WeSt

YorkYork
YorkShire
YorkYorkS
YorkYorkSS
and north eaSt

north
StaFFordShire

MidLandS

South WeSt
and South WaLeS

4
4

2
2

northern
hoMe
CountieS

1
1

London and
South eaSt

3
3

North
Midlands
South West and South Wales
Northern Home Countries
London and South East

03 St. Modwen Properties PLC
Annual Report and Accounts 2012

MAjoR pRojECT
oppoRTunITIES
1 new Covent gaRden maRket

We have signed the contract with the Covent Garden
Market Authority to redevelop the New Covent Garden
Market site in Nine Elms, London. This is one of the most
high profile schemes in our development portfolio and
the largest scheme within the regeneration of the Nine
Elms area, putting us firmly on the map as a major player
in the London market.

For more detail see page 36

swansea univeRsity

Swansea University has now selected St. Modwen as
its development partner to deliver the £150m first phase
of the New Science and Innovation Campus – a
milestone development project for South Wales and
a major plank in St. Modwen’s development pipeline.

For more detail see page 38

elephant & Castle

Providing the centrepiece of the wider 220 acre master-
planned regeneration for the Southwark area, we have
now commenced the process to redevelop this landmark
project which will provide up to 350,000 sq ft of new
retail and leisure space and around 1,000 new homes.

For more detail see page 40

longbRidge

This significant scheme is located on the site of the former
MG Rover car manufacturing facility and comprises 468
acres. Following an intensive four year remediation
programme, we have completed development of more
than 150,000 sq ft of office and industrial space which is
over 95% occupied. We have also delivered the 250,000
sq ft Bournville College which opened in September 2011
and the £5m youth centre known as The Factory. With
works well advanced on phase one of the £70m town
centre, we have recently submitted a planning application
for phase two.

For more detail see page 42

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04 St. Modwen Properties PLC
Annual Report and Accounts 2012

Our Business Model

the land bank

An actively managed ‘bank’ of assets and pipeline of
development opportunities (principally acquired in their raw
un-remediated state) and a key driver of future growth.

ReCuRRing inCome

Core rental and other income on assets awaiting
redevelopment underpin the running costs of the Group,
ensuring that commitments can be met if development
profits are reduced.

asset management

Creating value through a full-cycle approach to property
development which leverages St. Modwen’s:

• expertise in managing retained sites to maximise

income

• expertise in site assembly, public consultation and
navigating a wide range of complex and long-term
projects through the planning process

• ability to assess and manage remediation risk.

deliveRy

Adding value to sites via remediation and regeneration
and in turn transforming once run down areas into thriving
destinations which have a positive impact socially,
environmentally and economically. As part of this, building
out pre-let and speculative buildings in response to market
conditions, creating a stream of assets to be sold once no
further significant value can be added, thereby providing
recycled capital for new schemes.

05 St. Modwen Properties PLC
Annual Report and Accounts 2012

buSInESS ModEL GEnERATES
REGuLAR InCoME And dRIvES
poRTfoLIo vALuE

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aSSetS

St. ModWen

inveSt

dividend
PaYMent

inCoMe
ProduCing

51%

reSidentiaL
37%

CoMMerCiaL Land
and deveLoPMent

12%

generate inCoMe
and
Cover CoStS

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retained
inCoMe

reCeive CaSh

SCheMe either
Pre-SoLd or
Marketed

ConStruCtion
exPertiSe

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PLanning and Change oF uSe exPertiSe –
add vaLue through the PLanning ProCeSS

deveLoPMent
SCheMeS

FiniShed SCheMe

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06 St. Modwen Properties PLC
Annual Report and Accounts 2012

ThE LAnd bAnk

our uk-wide 5,800 acre land bank provides us with
flexibility to move with market demands and focus
on those opportunities that generate the most value
at any one time.

pictured: glan llyn, newport, south wales –
demonstrating our active land bank, since acquiring
this 600 acre site from Corus in 2004, we have
secured planning permission for the redevelopment
of this former steelworks site into a £1bn major new
community comprising 4,000 homes, 1.5m sq ft of
employment space, education facilities and leisure
and retail accommodation. this 20 year phased
project is set to create around 6,000 jobs.

we have also carried out a planned and phased
programme of remediation and with works now
complete, persimmon has started on site with
the first phase of 307 homes as part of our joint
venture partnership.

Land Bank –
deveLoPaBLe aCreS

5,801

• by taking a long-term
view, we acquire land
at low cost and then
maximise its potential
by working our assets
hard, remediating land
and securing planning
gain. then at an
appropriate time we
either dispose of the
asset or take on the
development ourselves,
or in joint venture.

07 St. Modwen Properties PLC
Annual Report and Accounts 2012

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08 St. Modwen Properties PLC
Annual Report and Accounts 2012

RECuRRInG
InCoME

our land bank comprises £1.1bn of assets of which
51% provides us with rental and other income that
covers the running costs of the business.

09 St. Modwen Properties PLC
Annual Report and Accounts 2012

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pictured: the trentham estate, stoke-on-trent –
we acquired the 725 acre former country estate
of the duke of sutherland from british Coal in 1996.
in 2003, we secured planning permission for a
£100m project to restore the estate and to add
sympathetic and supportive commercial facilities
to create a major tourist and leisure destination.
the majority of the works are now complete and
include the completely restored famous italian
gardens, a major garden centre, shopping village,
hotel and other leisure attractions including
trentham monkey Forest.

the estate now attracts over 400,000 visitors
per annum and this year generated £3.9m of
operational income, with the shopping village
now 100% occupied.

net rentaL inCoMe

£36.2m

• this is an important
part of our strategy,
providing us with
a firm financial footing
upon which to build
the business and
ensuring we extract
maximum value from
our land bank in
the short and the
long term.

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10 St. Modwen Properties PLC
Annual Report and Accounts 2012

ASSET
MAnAGEMEnT

our teams of professionals across the country are intrinsic
to realising maximum value from our retained assets in
our portfolio.

11 St. Modwen Properties PLC
Annual Report and Accounts 2012

pictured: wembley Central, london – since
acquiring this run down 1960s town centre, we have
employed a number of our key skills including
master planning, site assembly and asset
management to bring together this significant town
centre regeneration project. key features of this
£90m scheme include 175,000 sq ft of commercial
accommodation, 240 apartments, a new public
square, hotel and a significantly enhanced tube
and train station.

For more detail see page 31

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Like-For-Like rent
roLL groWth

• our regeneration

projects continue to
serve as a catalyst for
change, impacting
positively on the local
economy and
continuing to draw a
variety of occupiers.

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12 St. Modwen Properties PLC
Annual Report and Accounts 2012

dELIvERY

We are continually adding to our pipeline
of development opportunities and are
actively developing a number of major
development projects across the uk.

13 St. Modwen Properties PLC
Annual Report and Accounts 2012

pictured: henley business park, guildford – an
example of a well-located site that continues to meet
occupier demand. Following the demolition of the
225,000 sq ft former vokes factory, making way for
the 12 acre third phase of this 25 acre business
park, this 21,642 sq ft bespoke building for kirk
petrophysics was completed in november 2012.
kirk petrophysics has doubled its space on the
park where it also occupies a 23,629 sq ft unit.

For more detail see page 31

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• due to the location
of our schemes,
often in run down or
disadvantaged areas,
we are able to offer
more attractive lease
terms than the bigger
city centre locations,
which adds to their
appeal for occupiers.

• we continue to find
good commercial
development
opportunities that
are not reliant
on speculative
development.
where industrial and
commercial occupiers
have immediate
requirements for new
premises, we are able
to react quickly and
meet their demands
with our development
sites that already
benefit from
planning gain.

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14 St. Modwen Properties PLC
Annual Report and Accounts 2012

Our Strategy

STRATEGICALLY AGILE To TAkE
AdvAnTAGE of oppoRTunITIES

through being the uk’s leading regeneration specialist with
a focus on long-term added value, secure, dependable and
consistently strong returns.

2012 outComes

key peRFoRmanCe indiCatoRs
(kpis) applied

Profit before tax £m

Shareholders’ Equity
NAV %

pRioRity

Invest at a point in the property lifecycle
from where maximum development returns
can be extracted.

Maximise individual asset values through
our locally based expertise.

Recycle assets where significant
opportunities are exhausted.

37.5

50.4

47.4

251

232

213

stRategy

secure excellent
returns

opportunities and secure planning gain.

2 Build land bank to bring through future

Create predictable, dependable and
cash backed income streams.

Continued programme of recycling
and reinvestment.

through a focus on
long-term significant
added value

3 Maintain sufficient income to cover

business running costs. Have financing
cost and availability certainty.

2010

2011

2012

2010

2011

2012

Land bank acres

Proportion of assets
at the start of the
year recycled by the
end of the year %

5,736

5,762

5,801

194

159

134

2010

2011

2012

2010

2011

2012

Ratio of rental and
other income to
operating costs
including interest %

Gearing %

while protecting
existing assets

2010

2011

2012

2010

2011

2012

15 St. Modwen Properties PLC
Annual Report and Accounts 2012

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2012 outComes

key peRFoRmanCe indiCatoRs

(kpis) applied

Dividend p

3.41

3.10

1.00

2010

2011

2012

pRioRities FoR 2013

taRgets

pRinCipal Risks

Continue to grow development profits
and create valuation gains, particularly
in residential.

Strive to demonstrate the Group’s
inherent value and long-term prospects.

Grow net assets so that dividends can
also grow. Continue to secure profitable
development to generate consistent
future returns.

Wider economic issues affect property
values and equity valuations.

The management of developments is a
complex process with successful delivery
depending on continued excellence in
the application of our expertise.

Selective and capital efficient acquisitions.

Continued recycling of assets with limited
opportunity for significant added value.

As our work is conducted in a complex
legal and regulatory environment we need
to be able to successfully adapt our asset
strategies over the long term.

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See-through loan
to value %

Committed facilities
to cover drawn debt
months

Effective asset management to
maximise returns.

Continue to put in place extended
and flexible financing facilities.

Significant contraction in available
banking facilities reduces the opportunity
for strategic investment.

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2010

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2012

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2012

16 St. Modwen Properties PLC
Annual Report and Accounts 2012

image:
the innovation Centre at the
£1bn longbridge development
in birmingham.

buSInESS
REvIEw

this has been another successful year during which
we have achieved some significant milestones
across our portfolio and, in particular, on our major
development projects. these achievements
underline our growing presence in the london and
the south east market while also proving that there
are still opportunities in the regions for well-placed
and well-priced product.

oPerationaL highLightS
• valuation gains of £48m (2011: £33m) generated
through active asset management and planning
gains, offsetting £20m market-driven valuation
loss (2011: £1m gain)

• Continued positive outlook for residential land
with london residential transactions driving
valuation gains

• on track to deliver target of shareholder equity

nav of 300p per share by november 2015

• £2bn regeneration of new Covent garden market
signed, providing a major opportunity in Central
london and considerable potential to add further
upside to targeted nav

• swansea university £150m development

to commence on site in h1 2013

FinanCiaL highLightS
• shareholders’ nav up 8% to 251p per share
(nov 2011: 232p per share), and epRa nav
up 9% to 272p per share (2011: 250p per share)

• profit before all tax £52.8m (2011: £51.7m)

• Realised property profits up 22% to £29.0m

(2011: £23.8m)

• net rental income continues to grow to £36.2m

(2011: £35.5m)

• 12% increase in net trading profit to £25.5m

(2011: £22.8m)

• gearing at year end of 71% (2011: 73%) and

completion of a successful £80m retail bond issue
providing substantial headroom in facilities

• Final dividend for the year increased by 10%
to 2.42p per share, providing a total dividend
for 2012 of 3.63p

17 St. Modwen Properties PLC
Annual Report and Accounts 2012

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18 St. Modwen Properties PLC
Annual Report and Accounts 2012

Chairman’s Statement

“We have a very solid
platform from which
to grow our NAV further
in 2013. This, together
with our robust
business strategy,
provides us with the
confidence to face
market challenges head
on and deliver strong
revenue streams.”

bIll SHaNNON, Chairman

CONTINUING THE DISCUSSION

Q:
A:

HaS THE bUSINESS CHaNGED IN THE laST 12 mONTHS?

Our results prove that our retained strategy of adding significant value to our 5,800 acre land bank and
our £1.1bn portfolio of assets is a successful one and we do not envisage changing our approach in the
year ahead.

We remain a UK-wide business and the benefit our land bank affords us is an ability to move with market
demands and focus on those opportunities that generate the most value at any one time. Last year we
saw good opportunities coming through in the residential market and the London and South East region
and during 2012 have progressed many of these, including New Covent Garden Market.

DO yOU SEE aNy ImprOvEmENT IN THE ECONOmy aND wHaT arE THE OppOrTUNITIES
fOr ST. mODwEN?

We see further improvement in the South East as a whole and some recovery in the regional
housebuilding market, with better housing sales achieved across the country as initiatives to improve
this market start to take effect. This presents obvious opportunities for St. Modwen’s residential business
which continues to flourish and for the business as a whole as we prepare our sites for development and
continually add value to our portfolio.

wHaT arE yOUr vIEwS ON THE rETaIl markET aND THE CONTINUED DISappEaraNCE Of
SOmE wEll-kNOwN braNDS frOm OUr HIGH STrEETS OvEr THE laST 12 mONTHS?

This does remain a difficult market and it is disappointing to have to say goodbye to some familiar faces
on our high streets. However, out of the recent round of retail administrations, we have been fortunate
that only one unit across our portfolio has been affected.

Our schemes act as the catalyst for wide scale, comprehensive regeneration in the areas across the
UK that need it the most. Bringing investment, growth and a better environment for businesses and the
community, these projects mostly provide space for the value retail sector which is currently benefitting
from people’s changed attitude to spending.

19 St. Modwen Properties PLC
Annual Report and Accounts 2012

It is with great pleasure that I am able to
report another strong set of results, with
increased profits across the Group.

Profit before all tax increased to £52.8m
(2011: £51.7m) with shareholders’ equity
net asset value per share growing 8% to
251p per share (2011: 232p) after paying
dividends of 3.41p per share during the
year (2011: 3.10p).

DIvIDEND
As a result of a successful 2012, your
Board is recommending a 10% increase in
the final dividend for the year to 2.42p per
share (2011: 2.20p), making a total
distribution for the year of 3.63p (2011:
3.30p). This final dividend will be paid on
4th April 2013 to shareholders on the
register at 8th March 2013.

I am extremely pleased to be announcing
this positive set of results and two major
projects. The first was our signing in
January 2013 of the development
agreement with the Covent Garden Market
Authority (CGMA) to redevelop the 57 acre
New Covent Garden Market site in Nine
Elms, London. This £2bn, landmark,
multi-phased project underlines our
growing presence in the London
marketplace and is set to deliver attractive
revenue streams and NAV growth over the
coming years.

Secondly, we have just agreed terms with
Swansea University for the provision of the
£150m first phase of the New Science and
Innovation Campus. Located on our 65
acre site, this major project comprises
700,000 sq ft of development including
430,000 sq ft of academic space,
associated retail space and 899 student
apartments. The University has already
secured funding for the academic space
and St. Modwen has secured the pre-sale
of 50% of the student accommodation
to a major institutional investor.

Both deals demonstrate key facets of our
expertise: the former, a testament to our
track record of regenerating complex and
brownfield sites and the latter, a clear
illustration of our ability to extract maximum
value from our land bank. This expertise,
the revenue generated by our income
producing assets and the success of
our growing residential business, is why
we have again delivered a very strong
set of results.

In October we raised £80m from a
successful retail bond issue, enabling us
to diversify our sources of funding without
increasing our gearing. With a duration
of seven years, this bond provides us with
a longer term facility, and diversifies
our financial structure.

STraTEGy
Our strategy of adding significant
long-term value to the properties that we
control is working and is delivering good
quality returns, despite the challenging
environment in which we are operating.
Through our market-leading expertise,
we add value through remediation,
management of the planning process,
asset management and development.
In particular, our regional teams focus
on opportunities where our regeneration
expertise enables us to generate
profits both in commercial
and residential development.

GOvErNaNCE aND
THE bOarD
The Board is committed to maintaining
high standards of corporate governance.
In the Corporate Governance section of
this report we describe the structures and
measures in place which are designed to
ensure the continued effectiveness of the
Board and we report on our compliance
in accordance with the UK Corporate
Governance Code.

As we continue to grow and expand our
portfolio of development schemes and
manage our income producing investment
assets, we are placing increased emphasis
on deepening further the property expertise
on the Board. We believe this will be an
invaluable resource to the Company in the
next stages of its evolution.

We were therefore delighted to welcome
Kay Chaldecott to the Board as a
non-executive director in October 2012.
Kay spent 27 years at Capital Shopping
Centres Group PLC and her knowledge
and experience of the UK property industry
is already bringing additional and relevant
expertise to the Board.

As announced on 29th January 2013,
Katherine Innes Ker, an independent
non-executive director, and David Garman,
the Senior Independent Director, will retire
from the Board with effect from the
conclusion of the Company’s Annual

General Meeting to be held on 27th March
2013. I would like to thank both Katherine
and David for their contributions during
their time on the Board and wish them well
for the future. The search to identify a
Senior Independent Director is underway
and an announcement will be made
in due course.

pEOplE
We are very fortunate to have a team of
such dedicated and highly skilled
individuals working throughout our Group.
It is their hard work and dedication that has
delivered these strong results for your
Company and ensures St. Modwen
continues to outperform. I would like to
take this opportunity to thank our people
for making St. Modwen such a success.

prOSpECTS
Whilst I obviously cannot predict how the
UK economy will develop in 2013 and what
impact this may have on the property
sector, our track record demonstrates the
success of our strategy and the ability of
our management team to deliver strong
shareholder returns through the application
of their specialist real estate skills.

Furthermore, with our presence in London
and the South East now significantly
increased by the New Covent Garden
Market project, combined with the ongoing
success of our residential business, we are
in good shape to benefit from future growth
in these markets. At the same time, across
the UK, we can see attractive opportunities
to generate further value from our assets
and development pipeline and in particular,
look forward to starting on site with
the Swansea University Campus in April
of this year.

We have a very solid platform from which
to grow our NAV further in 2013 and
beyond. This, together with our robust
business strategy, provides us with the
confidence to face market challenges head
on and deliver strong revenue streams and
returns in the years ahead.

Bill Shannon
Chairman
4th February 2013

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20 St. Modwen Properties PLC
Annual Report and Accounts 2012

Chief Executive’s Review

“We are pleased that
another very good set of
results this year reinforces
our position as the UK’s
leading regeneration
specialist. Our strong
and robust business
strategy coupled with
our teams of highly
skilled employees have
ensured that we remain
well positioned to deliver
profits whilst withstanding
market challenges.”

bIll OlIvEr, Chief Executive

CONTINUING THE DISCUSSION

Q:
A:

wHaT, IN yOUr vIEw, HaS bEEN THE bIGGEST SUCCESS STOry Of 2012 fOr ST. mODwEN?

There have been many highlights in 2012, however being selected by the Covent Garden Market
Authority (CGMA) to redevelop New Covent Garden Market is a real success story for the business.
Not only does it underline our growing presence in London and the South East but it is testament to
our track record of regenerating complex and brownfield sites and is a true example of regeneration
which is set to deliver excellent returns over the long term.

THE bUSINESS HaS pErfOrmED wEll OvEr THE laST 12 mONTHS, HOw DO yOU INTEND
TO bUIlD ON THIS SUCCESS DUrING 2013?

We will continue to adhere to our robust business strategy of adding long-term value to the properties
we control via remediation, planning gain, asset management and delivery. The real benefit our highly
diversified and low cost land bank affords us is the ability to move with market demands and focus
our attention on those opportunities that generate the most value at any one time. At present, those
opportunities are in London and the South East and the residential market and it is here that we will
continue to focus our efforts during 2013.

yOU SUCCESSfUlly laUNCHED a rETaIl bOND IN 2012, arE yOU INTENDING TO pUrSUE
aNy OTHEr SImIlar OppOrTUNITIES IN 2013?

Our financial base is secure and we are continually exploring options for asset specific funding and
alternative sources of finance in the long term.

IS THE laND baNk prESENTING aNy NEw OppOrTUNITIES fOr THE bUSINESS IN 2013?

Already this year, we have signed the development agreement with the CGMA for the £2bn
redevelopment of New Covent Garden Market and we have agreed terms for the provision of the first
phase of Swansea University’s New Science and Innovation Campus on our 65 acre site in South Wales.
We are constantly working hard to extract maximum value from our land bank of over £1.1bn of assets
and will continue to do so throughout 2013, realising opportunities right across the country.

21 St. Modwen Properties PLC
Annual Report and Accounts 2012

We are pleased that another very good
set of results this year reinforces our
position as the UK’s leading regeneration
specialist. Our strong and robust business
strategy coupled with our teams of highly
skilled employees have ensured that we
remain well positioned to deliver profits
and create value whilst withstanding
market challenges.

We have made excellent progress with
our major projects this year and increased
our commitments in London and the South
East with the signing of the development
agreement with the CGMA for
redevelopment of the 57 acre New Covent
Garden Market site. We have also agreed
terms with Swansea University for the
provision of the £150m first phase of the
New Science and Innovation Campus.
This development will be situated on our
65 acre Transit site, one of the holdings
within the 2,500 acre portfolio acquired
from BP in 2009 and which has since
been fully remediated. Both projects
will further enhance our pipeline
of development profits.

Furthermore, across the country, we
continue to add value to our 5,800 acre
land bank by successfully working our
assets hard and securing planning
permissions, predominantly for
residential-led opportunities.

The retail bond issue in October 2012
raised £80m on seven year terms. It further
enhances our financing structure and
provides us with an alternative source of
finance to bank funding. The successful
result of the issue demonstrates the
strength of the business as a whole and is
a testament to our income producing
portfolio which proved extremely attractive
to investors throughout the transaction.

These activities and our performance
throughout the year have culminated
in a profit before all tax of £52.8m
(2011: £51.7m).

STraTEGy OvErvIEw
Our land bank of over £1.1bn assets
provides us with flexibility to move with
market demands and focus on those
opportunities that will generate the most
value at any one time.

We continue to implement our strategy
of adding value to the land bank through
remediation, planning gain, asset
management, development and delivery.
All of this activity is supported by our
portfolio of income producing assets (each

of which has development potential) that
largely covers the running costs of the
business while we invest in commercial
and residential assets which we believe can
deliver significant long-term returns.

This proven strategy and the flexible
advantage that our highly diversified and
low-cost land bank affords us have both
played a major role in our ongoing resilience
to the difficult economic climate and we
intend to build on this success over the
coming years.

markET OvErvIEw
London and the South East are recovering
faster than other areas and, with a third of
our portfolio and 50% of our residential
assets located in this region (as at 30th
November 2012), we are in a good position
to benefit from the ongoing resilience of this
market throughout 2013.

The market outlook in the regions is weaker
but specific development opportunities can
be found where land ownership, planning
expertise and funding can be brought
together playing directly to our skills,
such as Swansea University.

working with a number of exceptional
‘can-do’ authorities who welcome
developers and encourage much needed
growth and we are proud of the productive
working relationships we have forged with
officers, members and communities across
many regions of the UK. These types
of collaborations should underpin all
developments under the new regime
but sadly, we are also suffering from
the opposite; the ‘no-can-do’ approach
adopted by certain other local planning
authorities that frustrates growth,
increases the housing shortage,
alienates developers and leads to
stagnation in the property market.

bUSINESS OUTlOOk
This has been another successful year
during which we have achieved some
significant milestones right across our
portfolio and, in particular on our major
development projects. These achievements
underline our growing presence in the
London and South East market and
prove that there are still opportunities
in the regions for well-placed and
well-priced product.

While London and the South East is the
strongest marketplace, the regional UK
housebuilding market is improving. We are
seeing improvement in housing sales,
which is due in part to low interest rates,
Government initiatives to encourage first
time buyers and the movement by the
banks to offer more flexible mortgage
terms. However, there is still some way
to go before a full recovery starts to set in.

Looking ahead to 2013, we will continue
to unlock value within our land bank. The
regions remain important, and this is where
our long-term approach to development
comes to the fore, as the time will come
when these marketplaces will start to see
a fuller recovery and we will be best placed
to take advantage of this, whilst
simultaneously helping to support these
regional economies.

The lack of available housing land has
worked in our favour, as our ‘oven ready’
residential land bank enables us to carefully
select where and when we start on site or
sell land into the market.

On the back of this and our increasing
London presence, our residential business
has had a successful year. We have
therefore made a number of new
appointments to ensure that we are well
resourced to build on the success achieved
so far by St. Modwen Homes and our joint
venture with Persimmon.

We continue to be successful in securing
planning approvals for sites across the
country but our frustrations with the UK
planning system remain as the process
still appears to be difficult. The National
Planning Policy Framework is founded on a
collective approach driven by engagement
and co-operation. We are fortunate to be

In the meantime, we cannot ignore the
upsurge in investor appetite for
development activity in London and the
South East or the prospects arising from
our residential portfolio. We will therefore
focus our attention throughout the coming
year on these areas in order to drive
optimal returns, as well as driving forward
our largest schemes, including the
redevelopment of New Covent Garden
Market and development of Swansea
University’s New Science and
Innovation Campus.

Bill Oliver
Chief Executive
4th February 2013

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22 St. Modwen Properties PLC
Annual Report and Accounts 2012

residential

Our residential business continues to grow,
with good sales rates, an increased number
of developments coming on stream and
increased demand for our land.

vaLue Of reSidentiaL
POrtfOLiO

PerCentage Of POrtfOLiO
with PLanning

£397m

vaLue added tO
reSidentiaL Land

£36m

79%

nuMBer Of PLOtS with
PLanning reCOgnitiOn

20,850

23 St. Modwen Properties PLC
Annual Report and Accounts 2012

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24 St. Modwen Properties PLC
Annual Report and Accounts 2012

Residential (continued)

nuMBer Of PLOtS with
PLanning reCOgnitiOn

20,850

above right and previous pages:
Park View, St. Modwen Homes’
development of 134 homes at
Longbridge, Birmingham.

“Throughout the year we have added considerable
value to our residential assets with significant gains
achieved in London and the South East.”

Our residential business continues to grow,
with good sales rates, an increased
number of developments coming on
stream and increased demand for our land.

STraTEGy aND aCTIvE
maNaGEmENT
We acquire sites with potential for
residential development and seek to
add value to the land throughout the
development process crystallising that
value via three clear routes to market:

1) Residential land sales

2) St. Modwen Homes

3) Persimmon joint venture.

Combined with our asset management
capabilities, ability to progress land through
the planning process and our remediation
and development skills, these three
routes highlight our practical approach
to development and make us an
attractive partner to land owners
and the public sector.

rESIDENTIal laND
Demonstrating the active residential land
market during the year, 79% of our
portfolio (20,850 plots) has either
planning permissions or allocations
within local plans.

During 2012, we experienced good activity
in residential land sales with 126 acres
of land now committed for sale, achieving
a Group share of £110m of value.
All transactions were conducted at
or above book value.

Throughout the year, we have added
considerable value to our residential assets
with significant gains achieved in London
and the South East. Through our own
efforts £36m has been added to the value
of our residential portfolio, a 38% increase
from 2011 (£26m). Key residential land
transactions in the year included:

• raf uxbridge – under our VSM

Uxbridge joint venture arrangement with
VINCI, we accelerated the outright
acquisition of RAF Uxbridge from the
Ministry of Defence. This 110 acre site
has a planning consent for 1,340
residential units and circa 200,000 sq ft
of commercial office and retail
development, as well as a new primary
school, a 1,500 seat theatre and a 40
acre public park.

25 St. Modwen Properties PLC
Annual Report and Accounts 2012

Out of the total of 45 developable acres
acquired, 23 acres were committed to
Persimmon for the development of over
453 homes under St. Modwen’s and
Persimmon’s existing joint venture
arrangement. Construction started
towards the end of 2012 and the first
house sales are expected in H2 2013.

• Cadley hill, Swadlincote – a mixed
use development delivering up to 215
homes and up to 95,000 sq ft of small
office, light industrial, storage and
distribution space.

• gregory’s Bank, worcestershire

– 170 residential units.

• raf Mill hill – VSM Estates has a 57%
share of this 100 acre site which is held
in consortium with partners Annington
Homes and the London Borough of
Barnet Council. Two land sales, totalling
15 acres, completed earlier in the year
for a total value of £35m. Further sales
are targeted for 2013.

• rugby, warwickshire – we have
exchanged contracts, subject to
securing a detailed planning permission,
for the sale of 9.5 acres to Taylor
Wimpey for £6.4m.

• Langford Mead, taunton – at the year
end, the sale of 6.26 acres of land to
Taylor Wimpey for £5.5m was in
solicitors’ hands. This deal has since
exchanged contracts.

• South Ockenden, essex – the

outright sale of 4.2 acres of land to
Persimmon for a sum of £3.1m has
now completed.

Planning consents achieved:
• Pye green, Cannock – this 142 acre
site will comprise 700 homes, a site
for a new primary school and 75 acres
of public open space, play areas
and allotments.

• Pirelli, Burton upon trent – situated
on disused parts of the Pirelli Factory
site in Burton upon Trent and
comprising 289 homes, a hotel,
restaurants, public house, offices and
commercial units.

• vulcan works, newton-le-willows

– permission granted for an 18,000 sq ft
food retail unit and the second phase of
282 homes, of which Persimmon is
building 208.

• Longbridge east – 229 residential
units in the first phase and the
opening up of the River Arrow.

• Lowfield Lane, St. helens

– 152 residential units.

• Locking Parklands, Phase two,

weston-super-Mare
– second residential phase
comprising 150 homes.

• dursley, gloucestershire

– 94 homes.

applications submitted:
• Branston, Burton upon trent
– to build 660 homes and new
employment space, including
manufacturing, storage and distribution
units, on this 280 acre site.

• Melton Park, hull – for 510 homes,

a 100 bedroom care home, a sheltered
housing complex of 20 apartments
and a new retail park with facilities
for community and leisure use.

• eddison Place, rugby – for 175

homes on this 50 acre site of which
32 acres are earmarked for
residential development.

future opportunities:
• new Covent garden Market – 2,800
apartments to be delivered as part of
this £2bn regeneration project.

• elephant & Castle – up to 1,000

apartments in addition to 350,000 sq ft
of new retail space.

• dyson Portfolio – planning

applications being worked up for four
sites: two in Swadlincote, Derbyshire,
one earmarked for a residential
development with community leisure
facilities and the other proposed for a
mixed use employment and residential
scheme, and two further sites in
Sheffield, both identified for high end
residential development.

top:
The show apartment at Wembley
Central, London where we will
shortly be starting on phase two
of development.

above:
St. Modwen Homes at Locking
Parklands, Weston-super-Mare.
Planning has now been secured
for the 150 homes in the second
residential phase.

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26 St. Modwen Properties PLC
Annual Report and Accounts 2012

Residential (continued)

rESIDENTIal DEvElOpmENT
St. Modwen homes
Our own housebuilding brand, St. Modwen
Homes, differentiates itself from larger
national housebuilders by adopting
a local developer mentality, delivering a
maximum of 250 units per annum and
following a design-led approach which
is reflected in both the built form and the
external environment.

Our extensive residential land bank gives
us a competitive advantage, firstly by
allowing us to select the sites that are best
suited to the St. Modwen Homes brand
and, secondly, with land acquired
pre-planning at minimum values, we are
able to focus on providing a higher quality
and bespoke product.

In its first full year of building, this approach
has proved very successful for St. Modwen
Homes which has experienced excellent
housing sales rates, well above the national
average. We have now started work on the
second phase of housing at Park View,
Longbridge, with just one house remaining
for sale in the first phase of 113 units and
we are also on site with the second phase
at Locking Parklands, Weston-super-Mare.
Including these two projects, we are now
active on four sites and are shortly
to commence work on a further two sites,
subject to planning:

• under construction – Edison Place,
Rugby (175 units); phase one and two,
Park View, Longbridge (134 units);
Dursley, Gloucestershire (94 units).

• imminent site starts – Coalville,

Leicester (190 units); Gregory's Bank,
Worcestershire (155 units).

above:
Akron Gate, Goodyear, Wolverhampton, a scheme
of 453 units and built by Persimmon as part of our
joint venture.

residential land bank

with planning recognition

allocated in local plan or similar

resolution to grant

Outline permission

Detailed permission

No planning recognition

total residential land

november 2012

November 2011

acres

units

Acres

Units

178

140

794

169

3,396

1,942

13,175

2,337

1,281

20,850

523

5,694

1,804

26,544

227

870

1,193

453

1,646

4,410

246

14,349

1,366

20,371

4,351

24,722

27 St. Modwen Properties PLC
Annual Report and Accounts 2012

Persimmon joint venture
Our joint venture with Persimmon,
established in 2010, is progressing
extremely well. Under the agreement, we
plan to develop over 2,000 residential plots
on eight sites over the course of a seven
year period. During this time we expect to
achieve a steady stream of profits as
detailed in the table below.

Progress to date:
• under construction – St. Andrew’s

Gate, RAF Uxbridge, London
(453 units); Goodyear, Wolverhampton
(314 units); Glan Llyn, South Wales
(307 units); Coed Darcy, South Wales
(302 units); Longbridge East (229 units);
Sunderland (212 units); Vulcan Works,
Newton-le-Willows (211 units).

• imminent site starts – Long Marston,

Warwickshire (284 units).

• in planning – Trentham, Stoke-on-Trent
(300 units), Victoria Ground, Stoke-on-
Trent (113 units).

residential development sales
For both St. Modwen Homes and the
Persimmon joint venture, we have
experienced strong sales rates across the
UK. This is in part due to restricted supply
and is also the result of our regional teams’
awareness of local needs and our proven
ability to select the right sites for
development, at the right time and
in the right place.

In the financial year we have achieved
259 house sale completions
(St. Modwen Homes: 158 and
Persimmon joint venture: 101).

OUTlOOk
On the back of an excellent first year,
we expect another positive year in 2013
with an increase in the total number of
active developments expected,
notwithstanding the impact of the current
planning regime which is still causing
delays in actual site starts. We will continue
to capitalise on our growing presence in
London and the South East whilst adding
value to our residential land bank across
the UK, securing the best opportunities
for the Group.

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residential development

St. Modwen homes

Persimmon
joint venture

No. of sites

Units

Units completed (as at 30th November 2012)

Cash received £m

future land revenue estimate £m

potential St. modwen share of
future development profit £m
total

Active

Planned

Active Committed

total

651

173

15
27

345

n/a

8
17

2,028

101

36
112

284

n/a

5
20

3,308

274

112

64
176

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28 St. Modwen Properties PLC
Annual Report and Accounts 2012

COMMerCiaL Land vaLue

COMMerCiaL Land aCreage

£139m

3,000+

CommerCial
land and
development

we continue to identify and secure opportunities for our
development pipeline, ensuring they have good potential
to deliver value over the long term.

image:
The £50m transformation of Hednesford Town Centre, Cannock where we completed the sale of the 85,000 sq ft
Tesco foodstore which opened for business, along with associated retail, in December 2012.

29 St. Modwen Properties PLC
Annual Report and Accounts 2012

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30 St. Modwen Properties PLC
Annual Report and Accounts 2012

Commercial Land and Development (continued)

Developable land bank acres

5,801

5,762

5,736

2010

2011

2012

STraTEGy
We continue to identify and secure
opportunities for our development pipeline,
ensuring our schemes are well positioned
to deliver value over the long term.

markET COmmENTary
In general, the UK commercial property
market remains difficult. Well financed
investors are scarce with many others
struggling to fund their purchases.

By taking a long-term view, we can acquire
land at a minimal capital outlay and then
maximise its potential by steadily adding
value over time via remediation and
planning gain. In line with our long proven
business model, we will then, at
an appropriate time, decide whether to
dispose of certain schemes to crystallise
any value uplift or take on the development
ourselves. In each instance, we will benefit
from the low entry costs we have secured.

The occupier market remains challenging
with many businesses not prepared to
invest in new or larger premises and banks
appearing unwilling to provide funding to
them. The retail market is also difficult with
many retailers putting a stop to new store
openings and many downsizing their
requirements. In addition, the market
has said goodbye to some well-known
high street names during and after the
reporting period.

Future uses for our land are increasingly
residentially driven. Our growing residential
business, combined with our strong track
record in commercial development, equip
us with the right mix of skills to identify
which route to take and then exploit these
opportunities to their fullest potential.

Despite the broader economic challenges,
we are finding that our proven approach to
development, combined with our extensive
and active land bank is standing us in good
stead to face up to the current climate.
Our funding structure is not dependent on
development finance and our network of
regional offices means that we remain
sensitive to local requirements and any
new opportunities coming through.

We continue to find good commercial
development opportunities that are not
reliant on speculative development. Where
industrial and commercial occupiers have
immediate requirements for new premises,
we are able to react quickly and meet their
demands with our development sites that
already benefit from planning.

right:
Construction works are well
advanced at the first phase of the
£70m Longbridge Town Centre.

31 St. Modwen Properties PLC
Annual Report and Accounts 2012

Furthermore, our regeneration projects
continue to serve as a catalyst for change,
impacting positively on the local economy
and attracting a variety of occupiers,
although we have to work slightly harder
today to capture limited new demand.

The retail market is challenging but, in
our experience, there is demand for
well-placed and well-priced product.
This is illustrated keenly by our retail
developments at Longbridge, Hednesford
in Cannock and Wembley Central in
London, where we are experiencing good
retailer demand for our space. The
overwhelming appetite for units in our
secondary shopping centres such as
Elephant & Castle, Edmonton Green and
Wythenshawe also demonstrates the
appeal of our shorter lease terms which
enable us to progress our plans towards
their redevelopment in due course.

DEvElOpmENT prOGrESS
developments completed during
the year:
• edmonton green – works were

completed on the £1.5m refurbishment
of the North Square. These included the
constitution of a new 22,000 sq ft store
pre-let to Wilkinsons, as well as
significant improvements to elevations
and public realm.

• hednesford, Cannock – the £50m
transformation of Hednesford Town
Centre comprises two development
phases known as ‘Victoria Shopping
Park’ and ‘Chase Gateway’. At the
Shopping Park, we have now
completed the sale of the 85,000 sq ft
Tesco foodstore which opened for
business, along with associated retail,
in time for Christmas trading. At Chase
Gateway, Aldi has agreed to purchase
a 15,650 sq ft store which will open
in late spring 2013. Across the two
phases we continue to attract a series
of well-known retailers.

• henley Business Park, guildford
– the demolition of the 225,000 sq ft
former Vokes factory made way for the
12 acre third phase of this 25 acre
Business Park where construction has
completed on a 21,642 sq ft bespoke
building for Kirk Petrophysics, a
business doubling its space on the Park
where it already occupies 23,629 sq ft.
This latest phase of construction follows
the sale of six units, totalling 78,128 sq
ft on phases one and two, to
Threadneedle Property Unit Trust.

• wembley Central, London – interest
for the retail space in this major town
centre scheme is gaining momentum,
with further lettings, totalling 53,000
sq ft, to Tesco Metro, Sports Direct,
The Gym and an undisclosed national
retailer. The national retailer will take
16,000 sq ft to anchor the final
development phase for which
construction has now started and which
also comprises 26,000 sq ft of retail, an
86 bedroom hotel pre-let to Travelodge
and 38 private apartments.

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• teal Park, Lincoln – we have now
handed over this 135,000 sq ft office
and production facility to Siemens. The
subsequent investment sale to a Middle
Eastern purchaser, represented by 90
North Real Estate Partners LLP, and the
payment received from Siemens in
respect of their fit out has generated
cash receipts of £18.5m for our KPI joint
venture. In recognition of its sustainable
design, the servicing facility has recently
been awarded a ‘BREEAM
Outstanding’ rating.

future developments
• great homer Street – the Compulsory
Purchase Order (CPO) for land in the
area has now been confirmed by the
Government following a public inquiry in
July. The scheme has planning consent
for a 114,000 sq ft Sainsbury’s
supermarket, set to be Liverpool’s
largest foodstore, 80,000 sq ft of
additional retail, 80,000 sq ft of
industrial, 480 new homes and 40,000
sq ft of community facilities including
a new library, market and community
health centre. Following the CPO award,
a reserved matters planning application
will be made to approve the final detail
of the new Sainsbury’s store and other
retail units.

• Chaddesden triangle, derby – we

have been selected by Network Rail to
form a joint venture for the
redevelopment of this 70 acre
brownfield site located next to Pride
Park football stadium. With the freehold
owned by Network Rail, the site has
been identified by the City Council as a
strategic mixed-use development site.

• Solar Park, Baglan Bay, South

wales – detailed planning consent now
secured for this £15m solar park on 30
acres of our Baglan Bay site. It will
house over 21,000 photovoltaic panels,
which will generate five megawatts of
power to provide enough electricity for
over 1,200 homes per year. This will be
sold into the Grid providing an additional
income stream for the Group from
previously non-income producing
surplus land at Baglan Bay.

OUTlOOk
Whilst this market is proving difficult, we
have enough active developments to
provide us with a stream of development
profits to 2015 and beyond.

London and the South East is the most
dominant market at the moment but there
still exists opportunities for well-placed,
predominantly residential-led schemes
in the regions. Opportunities are also
emerging in the power and energy sector,
particularly for cleaner fuels such as
gas-fired power stations and renewable
energy, including solar, and this is a market
we intend to pursue further.

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32 St. Modwen Properties PLC
Annual Report and Accounts 2012

inCome
produCing
properties

the firm financial footing which our income producing
assets afford us, sets us apart from other development
businesses and underpins the strength of our portfolio
as a whole.

image:
The £1.5m refurbished North Square at Edmonton Green, london which opened in November 2012.

33 St. Modwen Properties PLC
Annual Report and Accounts 2012

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nuMBer Of tenantS

average equivaLent yieLd

1,700+

9.2%

tOtaL vaLue Of inCOMe
PrOduCing PrOPertieS

£562m

34 St. Modwen Properties PLC
Annual Report and Accounts 2012

Income Producing Properties (continued)

STraTEGy
Our income producing assets make up
51% of our portfolio. These assets are held
in the short-term to provide the Group with
a steady income stream as we prepare
these sites for future development. This
approach ensures that we are not focused
solely on Estimated Rental Value (ERV) but
instead on securing tangible revenues that
cover our running costs and can be
reinvested into the business.

Each of our regional teams is responsible
for managing their own ‘bank’ of assets
and are tasked with extracting maximum
value via rent reviews, re-gearing of leases
and ultimately ensuring that voids remain
at their lowest possible levels.

As at 30th November 2012, the Group’s
income producing properties were
occupied by over 1,700 tenants, ranging
from multinational businesses to sole
traders. The diversity of this portfolio helps
us to avoid over exposure to a single
scheme, tenant or sector.

ExISTING pOrTfOlIO
All of our properties are held with a long
term view for development and typically
held at higher yields, with low affordable
rents on relatively short leases. Whilst the
commercial lettings market remains
problematic within the context of the
broader economic climate, we continue
to experience good occupier demand
across our portfolio with our short
tenancies and affordable rents proving
particularly attractive.

At the year end we owned over 100
income producing properties with a total
value of £562m (2011: £549m). We have
experienced some administrations during
the year but have been able to fill any
vacancies relatively quickly and our average
lease length has, in fact, improved at 5.0
years (2011: 4.6 years). Occupancy levels,
at 87% have been maintained (2011: 88%)
and we have managed the churn in our
portfolio, achieving £9.7m of new lettings
during the course of the year (2011:
£7.1m), with a good performance from
retail. Furthermore, in the recent round of
retail administrations since the start of
2013, we have been fortunate that, to
date, only one unit across our portfolio
has been affected.

Occupancy rates %

2010

2011

2012

Net rental income £m

33.2

33.5

33.7

35.5

36.2

2008

2009 2010 2011 2012

Portfolio yield analysis

retail

Office

Industrial

Portfolio

equivalent

net initial

value £m

nov 2012

Nov 2011

nov 2012

Nov 2011

9.0%

9.4%

9.2%

8.4%

8.7%

9.1%

8.8%

7.6%

7.0%

7.9%

7.7%

7.4%

6.4%

7.7%

7.4%

240

261

562

35 St. Modwen Properties PLC
Annual Report and Accounts 2012

highlights include:
• edmonton green – in addition to the
new 22,000 sq ft Wilkinsons store
which anchors the refurbished North
Square, we let a 1,500 sq ft unit to JD
Sports on a 10 year lease. The national
retailer joins a host of established
brands at the centre including
Sports Direct, Asda, Argos, Home
Bargains, Costa Coffee, Lidl,
Poundland and Specsavers.

• Longbridge – our largest individual
lease for Shanghai Automotive at
Longbridge in Birmingham has been
extended until at least 2024 at an
annual rent of £1.5m per annum.

Since the year end we have progressed
three asset disposals, all of which achieved
sales at or above book value:

• hounslow – we have completed on

the sale of this retail parade for £10.5m.

• Phoenix Park – we have exchanged
on the sale of this retail park for £8.3m.

• Cauldwell house – we have

completed the sale of this office
block for £2.9m.

As we dispose of assets we also add to
our property portfolio, carefully selecting
our acquisitions and ensuring that they will
deliver long-term value. Acquisitions during
the period included:

• Bridgwater, Somerset – a 12 acre

site, comprising a total of 250,081 sq ft
of industrial accommodation with
ancillary office space and currently let to
BFF Nonwovens. The site forms part of
the wider urban extension area of north
east Bridgwater where planning
permission has already been granted for
2,000 houses, a Morrisons distribution
hub and further employment space.

OUTlOOk
The firm financial footing which these
assets afford sets us apart from other
development businesses through largely
covering our operating costs and
underpinning the strength of our portfolio
as a whole.

Whilst there is market pressure on yields,
this reduced in the second half of 2012 as
compared to the first half of the year, and
our portfolio contains some substantial
development opportunities and we will
continue to work hard to realise these as
part of our overall business strategy.

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top:
The 22,000 sq ft Wilkinsons store
which opened at Edmonton Green
as part of the refurbishment of the
North Square at the end of 2012.

above:
One of the latest additions to our
income producing portfolio is this
250,081 sq ft industrial estate
at Bridgwater, Somerset.

Left:
Phoenix Retail Park, Stoke-on-Trent,
sold for £8.3m.

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Annual Report and Accounts 2012

Major Project Opportunities

new Covent
garden market

vinCi St. Modwen has now signed the contract
with the Covent garden Market authority to be
the development partner for the new Covent
garden Market site in Central London.

This landmark multi-phased project has a gross
development value of around £2bn and will entail the
rationalisation and master planning of the entire 57
acre site situated next to vauxhall Cross, Nine Elms.

The regeneration of the existing New Covent Garden
market site will see the development of 550,000 sq ft
of modern facilities which will house the circa 200
businesses that make up the Uk’s largest fruit,
vegetable and flower market. These new facilities will
be funded through the release of 20 acres of surplus
land which will then be developed to create a new
high quality residential led mixed-use regeneration
scheme, providing up to 2,800 new homes and
115,000 sq ft of commercial accommodation.

grOSS deveLOPMent
vaLue

tiMeSCaLe

£2bn

10-15 yrs

37 St. Modwen Properties PLC
Annual Report and Accounts 2012

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Annual Report and Accounts 2012

Major Project Opportunities

swansea
university

we have agreed terms for the provision of the
£150m first phase of Swansea university’s new
Science and innovation Campus. the entire
campus will be located on our 65 acre transit
site, formerly a BP oil storage depot, which we
have fully remediated since acquiring it in 2009
as part of the 2,500 acre portfolio of former BP
sites. the first phase of the project comprises
700,000 sq ft of development, including 430,000
sq ft of academic space, 899 student
apartments and associated retail space. the
university has already secured over £80m of
european and welsh government funding for
the academic space whilst St. Modwen has
secured the investment sale of 50% of the
student accommodation to a major institutional
investor. we expect to start on site in april 2013,
with a view to full student occupation by
September 2015.

tOtaL firSt PhaSe
deveLOPMent
SiZe (Sq ft)

firSt PhaSe deveLOPMent
vaLue

700,000

£150m

39 St. Modwen Properties PLC
Annual Report and Accounts 2012

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40 St. Modwen Properties PLC
Annual Report and Accounts 2012

Major Project Opportunities

elephant
& Castle

41 St. Modwen Properties PLC
Annual Report and Accounts 2012

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we are close to concluding our legal agreement
with the London Borough of Southwark (LBS)
which is a key stepping stone in the
redevelopment process. additionally, we expect
shortly to sign the co-operation agreement
between St. Modwen, LBS and Lend Lease.

During 2012 we spoke to a number of potential
investors about the Shopping Centre as part of an
exercise to review our various options for the
property. we have been very encouraged by the
initial response from potential investors and continue
to evaluate our options. In the meantime, we are
continuing to pursue a planning application
independently with the aim of delivering the
maximum value for shareholders. This application
for a scheme which, on completion, will provide
350,000 sq ft of retail and leisure space and up to
1,000 new homes, will hopefully be submitted during
the latter part of 2013.

new retaiL SPaCe (Sq ft)

350,000

nuMBer Of new hOMeS
tO Be deveLOPed

up to
1,000

42 St. Modwen Properties PLC
Annual Report and Accounts 2012

Major Project Opportunities

we have submitted a planning application for
135,000 sq ft of retail space on phase two of the
£70m town centre. Construction is already well
advanced on the first phase which includes an
80,000 sq ft food store pre-sold to Sainsbury’s,
a 75 bedroom Premier inn, including a Beefeater
grill, 24 shops, a number of restaurants and
circa 35,000 sq ft of offices. Of this total space,
75% is now either pre-sold, pre-let or under
offer. we have also recently started on site with
the construction of 229 homes at Longbridge
east as part of our joint venture agreement with
Persimmon. additionally, the last unit now
remains at the first phase of St. Modwen homes’
Park view development and works have recently
started on phase two which comprises another
19 homes.

grOSS deveLOPMent
vaLue

£1bn

jOB CreatiOn

10,000

43 St. Modwen Properties PLC
Annual Report and Accounts 2012

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44 St. Modwen Properties PLC
Annual Report and Accounts 2012

Our Partnerships

LONG-TERM REGENERATION
THROUGH LONG-TERM
PARTNERSHIPS

Over time, we have formed strong
relationships with many public
sector and commercial partners,
with whom we work closely to
unlock the development potential
from their sites.

As we are a long-term business,
these long-term partnerships
are key to the success of our
regeneration projects and are
often connected by skills
and culture.

Established through joint ventures,
sale and leasebacks, strategic land
acquisitions and straightforward
development agreements, these
partnerships consistently lead to
successful regeneration projects
that bring about major economic
change to the areas across the UK
that need it the most – stimulating
investment, growth and creating a
better environment for businesses
and communities.

The facing page provides examples of some of our most
successful and long lasting partnerships.

Public sector
Be it the creation of a new town centre,
a business district, or transforming a
redundant area into a key residential site,
we work hand in hand with many public
sector organisations across the country
to transform a variety of different locations
via regeneration.

The most recent example of a public sector
partnership is with Swansea University for
the provision of the £150m first phase of
the New Science and Innovation Campus.
This is an example of a true development
partnership where we have supplied the
land and our development expertise to an
institution in need of a regenerative solution
to meet its expanding educational needs.

We also work directly with Local
Authorities, some with which we have been
in partnership for over 10 years either via
joint venture initiatives or development
agreements, all with the aim of delivering
multi-million pound projects that will
encourage inward investment and provide
a boost to the regional and local economy
via regeneration.

Right:
Turf cutting ceremony with Persimmon as
part of our joint venture housing development
at Coed Darcy, South Wales.
From left to right: Rupert Joseland,
St. Modwen’s South West & South Wales
regional director; Andrew Crompton
of Persimmon; John Flower, Environment
Director for Neath Port Talbot Council;
and Councillor Ali Thomas, Leader,
Neath Port Talbot Council.

45 St. Modwen Properties PLC
Annual Report and Accounts 2012

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Key Property Investments (KPI)
In 1997, St. Modwen entered into
a joint venture with Salhia Real Estate
Company K.S.C. to establish an
investment partnership.

Known as Key Property Investments (KPI),
the joint venture now holds a number
of schemes with long-term development
potential, the most high profile being
the Elephant & Castle Shopping Centre,
the regeneration of Farnborough Town
Centre and the recently completed
and sold 135,000 sq ft facility for
Siemens in Lincoln.

VINCI St. Modwen
Our partnership with VINCI PLC was
established in 2006 when we were
selected by the Ministry of Defence (MoD)
to deliver Project MoDEL This partnership
was designed specifically to enable the
MoD to consolidate over 1,000 military
personnel and operations from six surplus
sites across North West London, through
the construction of £180m of new facilities
at RAF Northolt, creating the MoD’s first
integrated core site in London.

Of the six sites, we sold four to third party
developers and are progressing land sales
and development at RAF Mill Hill and
RAF Uxbridge.

Project MoDEL is an excellent example
of the private sector working closely with
the public sector; Prime Plus Contracting
is an innovative means of funding a high
profile property project, designed to
maximise results and minimise costs.
Beyond this project, we are now
working together with VINCI on the
£2bn redevelopment of New Covent
Garden Market.

Persimmon PLC
Of St. Modwen’s major joint venture
agreements one of the most prominent
involves housebuilder Persimmon PLC.

Aware of the enormous lack of residential
development being built across the UK,
St. Modwen recognised that a joint venture
agreement with a sector-leading
housebuilder would capitalise on our
financial strength and well-located land
bank to bridge this housing gap.

In 2010 St. Modwen realised its vision and
entered into a joint venture agreement with
Persimmon PLC. Initially this agreement
covers 2,000 plots on seven St. Modwen
sites, across 120 acres of land. It is already
progressing well; the original target of
building out seven sites has now grown
to eight, of which seven have received
detailed planning approval and are
now under construction.

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46 St. Modwen Properties PLC
Annual Report and Accounts 2012

Financial Review

AcTIvE PROPERTy PORTfOLIO

“Through our active
property portfolio
management, we have
been able to grow net
assets by 8% in 2012
despite the problematic
economic environment.”

michael dunn, Group Finance Director

As we use a number of our joint venture
arrangements, the statutory financial
statement disclosures do not always
provide a straightforward way of
understanding our business. To enable
a better understanding, we have also
provided information including the Group’s
share of joint ventures and a full
reconciliation is provided in Note 2
to the Group Financial Statements.

income statement
A core part of our business model is
ensuring that a large proportion of our
assets generates income prior to
development. This income consists of core
rental income and other revenue stemming
from our £562m portfolio of income
producing assets, comprising more than
100 commercial properties and making
up 51% of our total portfolio. These cash
streams typically cover the running costs
of the business and provide a firm
platform from which we can add value
to our portfolio through planning and
asset management activities with the
aim of realising profits from our
development activities.

47 St. Modwen Properties PLC
Annual Report and Accounts 2012

Overheads
Our cost base is driven by the employment
of skilled teams of professionals to manage
current and potential assets.

The advantage that our UK-wide land bank
gives us is flexibility to adapt to market
demands and consequently pursue only
those opportunities that generate the
greatest value at any time. London and the
South East, where over a third of our
portfolio is located, and the residential
market, of which 50% of our portfolio by
value is located in this region, are both
areas which we have identified as
experiencing a more rapid recovery.
Consequently, we have adjusted our cost
base accordingly to support these growth
areas, placing greater emphasis on the
South and boosting our residential team
via new appointments.

Administrative expenses for 2012 (including
the Group’s share of joint ventures and
associates) is £18.6m (2011: £16.7m).
The increase is driven by share-based
payments and bonus provisions following
a successful year.

Profits
Rental and recurring income
This fundamental part of our business
continues to support our resilience to
challenging economic times and I am
again pleased to report an increase
in the Group’s share of net rental income
to £36.2m (2011: £35.5m), an increase
of 2% year-on-year. We have achieved this
growth thanks to our successful asset
management capabilities. We anticipate
rents will remain steady throughout the
course of 2013 as we complete the sale
of some of our mature assets.

Occupancy levels are at 87% (2011: 88%),
which is broadly constant with last year and
our average lease length has improved at
5.0 years (2011: 4.6 years). Due to the
nature of our business, where we retain
assets for income prior to development, we
tend to maintain voids at a reasonably high
level as we require properties to be vacant
whilst we prepare them for development.
Our void levels remain in line with
our expectations.

Property profits
We have achieved a 22% increase in
realised property profits to £29m
(2011: £24m) from development, of
which residential housing sales have
contributed nearly £6m. The residential
contribution reflects how this area of the
business has grown throughout the year
and highlights the success we have
achieved across two of our key St.
Modwen Homes developments: at Park
View in Longbridge, Birmingham and
Locking Parklands at Weston-super-Mare.
We have commenced construction on the
second phase of housing at both schemes,
having completed the sales at the first
phases during the course of 2012.

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48 St. Modwen Properties PLC
Annual Report and Accounts 2012

Financial Review (continued)

Property valuation movements in the year

Property valuation
movements
£m

Residential

Commercial land

income producing:

Retail

Office

Industrial

Total

2012

2011

Value
added by
St. Modwen

Market
value
movements

Total

Value
added by
St. Modwen

Market
value
movements

–

(1)

(8)

(6)

(13)

(20)

(1)

(7)

–

(2)

–

Total

(1)

–

Finance costs and income
As we have become more active on the
development of our schemes throughout
the year, this has been reflected in a slight
increase in net debt and higher average
borrowing levels for the year.

Trading profit for the year
Trading profit has therefore increased
again this year by 12% to £25.5m
(2011: £22.8m) which is an extremely
positive result given the ongoing
challenging economic climate.

Looking forward, we will continue to focus
on generating value across our land bank
and ensure that our rental income and
recurring other income underpins the
running costs of the business. Supported
by our firm financial footing, with new
projects within our development pipeline
(such as Swansea University’s New
Science and Innovation Campus) coming
on line during the course of 2013, along
with other major schemes, we expect
to be in a good position to take on an
increase in workload.

ProPerty Valuation
moVements in the year
Property valuation movements are made
up of two main elements: those resulting
from our own actions that we undertake
specifically to add value to our assets, and
those resulting from changes in the overall
property market. Jones Lang LaSalle LLP
provides this valuation split for us.

Market-driven valuation movements
In line with market movements, outward
yield shifts in the year have had a negative
influence on the valuations of our income
producing portfolio reducing its value by
5%. This reduction has been partially offset
by a significant increase in the value of our
residential portfolio, notably in the South
East, to £8m (2011: £2m) which has
resulted in an overall net market-driven
reduction in our property portfolio of £20m
(2011: £1m increase).

Trading profit £m

Added value valuation
increases £m

25.5

22.8

17.4

2010

2011

2012

2010

2011

2012

49 St. Modwen Properties PLC
Annual Report and Accounts 2012

Valuation improvements as a
result of St. Modwen actions
Our ability to add value to our existing
portfolio by actively managing our asset
base is a crucial part of our business model
and this year has delivered some excellent
results, which substantially outweighed the
market-driven reduction.

This success comes from managing
commercial and residential land
through the planning process and
enabling delivery, despite the challenges
posed by the system.

The most notable contribution stemmed
from RAF Uxbridge, where we accelerated
the purchase of this 110 acre site from the
Ministry of Defence. This was financed by
a £60m, five year debt facility, with
additional equity provided equally by
St. Modwen and VINCI. Of the 45
developable acres of land on this site,
23 were committed to Persimmon for the
development of 453 homes under our
existing joint venture arrangements.

We also continue to attract tenants
across our portfolio, achieving £9.7m
in new tenant income throughout the
year, helping to maintain and improve
the value of our portfolio.

Based on independent valuations
from Jones Lang LaSalle we have
therefore been able to generate
revaluation gains of £48m, an increase
of 45% from 2011 (£33m).

Profit before all tax
Our profit before all tax is stated before tax
on joint venture income and stated after
movements in the market value of our
interest rate derivatives (hedges and
swaps).The valuations are based on the
financial market’s forward prediction curves
for interest rates. At the end of the financial
reporting period, these curves implied a
substantially reduced expectation of future
interest rate increases, meaning that their
rate of unwind to the Income Statement
was slow. As these hedges reach the end
of their terms we expect this to be shown
as credits to the Income Statement.

Set in the context of the above
considerations, profit before all tax has
increased by 2% to £52.8m (2011:
£51.7m), an extremely positive result
against the backdrop of continued difficult
economic conditions.

taxation and Profits
Valuation gains in our joint venture assets
led to an increased tax charge in the year
of £10.5m (2011: £6.2m). Nevertheless this
is a strong result with profits before tax of
£47.4m and profits after tax of £42.3m, a
comparable result with 2011 (profit before
tax: £50.4m, profit after tax: £45.5m).

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LTV (on balance sheet) %

Equivalent LTV
(including JV debt) %

Gearing (on balance sheet) %

Gearing (including JV debt) %

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2012

2010

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2012

2010

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2012

2010

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2012

50 St. Modwen Properties PLC
Annual Report and Accounts 2012

Financial Review (continued)

Equity net assets per share p

251

232

213

2010

2011

2012

EPRA net asset
value per share p

272

250

229

2010

2011

2012

ProPerty Portfolio
Our property portfolio is now worth
£1.098bn (2011: £1.103bn). During the
period we have continued to actively
manage our property portfolio, spending
£122m on acquisitions and capital
expenditure and £129m realised from
asset disposals.

Basis of property valuation
All our investment properties are
independently valued every six months
by Jones Lang LaSalle LLP, a global real
estate professional services business,
one of whose specialisations is property
valuation. Jones Lang LaSalle based
its valuations upon an open market
transaction between a willing buyer and
a willing seller at the balance sheet date.
Therefore, no value is taken for any future
expectations of value increases but
discounts are applied to reflect future
uncertainties. Where appropriate we will
also independently assess our work in
progress for any impairment issues. In
accordance with accounting standards,
valuation movements are put through the
Income Statement as gains or losses.
Valuations in all our asset classes have
been substantiated by open market
transactions during the course of the year.
Yields on our income producing properties
have moved out slightly in the market
during the year, offset by our success in
attracting tenants.

balance sheet
Two transactions in the first half of 2012
altered the shape of our balance sheet:

1 – We accelerated the purchase of RAF
Uxbridge, via VSM Uxbridge, a new joint
venture vehicle in partnership with VINCI.
This is accounted for as a joint venture
whereas the land and its associated
purchase price liability were previously
consolidated.

2 – From our previous joint venture partner,
we have acquired full ownership of the
Sowcrest and Holaw investments that own
our Wembley properties and consequently,
these assets and the remaining debt
in both entities are now fully consolidated
into St. Modwen’s results.

Net assets
At the year end, the shareholders’ equity
value of net assets was £503m or 251p
per share. In spite of adverse market
valuation movements, this represents an
8% increase over the year (2011: £464m
or 232p per share). In addition to this
increase, dividends of £6.8m or 3.41p per
share were paid during 2012 (2011: £6.2m
or 3.10p per share).

EPRA net asset value
In line with industry best practice we
also report net assets per share using the
EPRA (European Public Real Estate
Association) methodology*. Our diluted
EPRA net asset value also rose 9% to
272p from 250p per share.

A full reconciliation of our net assets
is provided in Note 2 to the Group
Financial Statements.

*Note: as a development business many of the
EPRA metrics are inappropriate as they are geared
to property investment.

51 St. Modwen Properties PLC
Annual Report and Accounts 2012

Trade payables
As the VSM Estates joint venture with
VINCI progresses and land is sold off for
development, our trade payables amounts
associated with this arrangement will
reduce. As a result of the accelerated
purchase of RAF Uxbridge, as referred
to earlier, the deferred payment
arrangements related to land owned by
the joint venture have now reduced to
around a third of our trade payables
balance (2011: two thirds). Other trade
payables relate to development activities
in the normal course of our business.

As our development activity has increased
throughout 2012, our net debt has
remained steady. The consolidation of
the Sowcrest and Holaw debt brings this
to £366m (2011 equivalent: £374m).
In addition, we continue to progress
selective asset disposals and have recently
completed the sale of a parade of retail
units in Hounslow for £10.5m.

Taking into account these transactions,
equivalent gearing levels have reduced
slightly compared to the end of 2011
(2012: 71%, 2011: 79%).

Value created by St. Modwen
through planning and asset
management in 2012

£48m

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corPorate facilities
Throughout 2012, we have extended and
diversified our sources of funding with the
successful outcome of the retail bond issue
in the last quarter playing a major part in
this. Throughout 2013 and beyond we will
seek to continue to increase the range of
our funding sources to ensure that we are
delivering best value for the business and
our shareholders.

Our current banking facilities have an
average life of 3.4 years (2011: 3.5 years)
and none are due to mature before
November 2014.

Pension scheme
Our defined benefit pension scheme
continues to be fully funded on an IAS19
basis. The results of the triennial valuation
from April 2011 are now complete and
show a fully funded scheme. With the
scheme being closed to new entrants and
closed to future accrual we do not currently
expect any significant material future
increase in scheme contributions.

Funding
We keep a series of bilateral revolving credit
facilities with clearing banks that have a
large UK presence. We do this because,
as a development business, it is important
for us to retain a degree of flexibility within
our funding structures. We also have
appropriate funding arrangements in
place for each of our joint ventures.

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52 St. Modwen Properties PLC
Annual Report and Accounts 2012

Financial Review (continued)

Retail bond raised

£80m

Facility headroom

£134m

corPorate facilities
Retail bond
Our successful retail bond issue in
October raised £80m, with a duration
of seven years.

The issue has enabled us to diversify our
sources of funding, without increasing our
gearing and provides longer term debt as
the cornerstone of our financing. The funds
raised have been used to reduce our
drawings under our existing bank revolving
credit facilities, namely the cancellation
of the Kennedy Wilson facility.

Headroom in corporate facilities
Following the retail bond issue and
subsequent cancellation of the Kennedy
Wilson facility, we have ample headroom
within our corporate facilities allowing us
to meet future development and funding
needs. Excluding the VSM joint venture,
we have £500m of facilities against net
debt of £366m at the year end.

The VSM Estates facility is now extendable
until at least March 2017 and has £30m of
debt drawn against a remaining facility of
£31m. Since the balance sheet date, VSM
Estates has received a further £14m of land
sale receipts. The joint venture and its
associated debt are treated as on balance
sheet for the purposes of the financial
accounts. We have reduced this facility in
order to reduce the costs of unnecessary
undrawn facilities, but still provide sufficient
funding to meet future obligations.

Hedging and cost of debt
We hedge the majority of our interest rate
risk as we aim to have predictable costs
attached to our borrowing. At the year end
we were 93% hedged against our
corporate debt (2011: 86%).

With the retail bond providing a fixed cost
of debt this is now effectively fully hedged.
The proportion of fixed debt has matured
but we expect this to reduce in the future
as our hedging slowly drops away.

current banking facilities

£m

500

450

400

350

300

250

200

150

100

Lloyds

RBS

Barclays

Santander

HSBC

VSM

Retail
Bond

Pbb

2012
Debt

FY 2013
Renewal

FY 2014
Renewal

FY 2015
Renewal

FY 2016
Renewal

FY 2017
Renewal

FY 2018
Renewal

FY 2019
Renewal

53 St. Modwen Properties PLC
Annual Report and Accounts 2012

Corporate funding covenants
We are operating well within the covenants
that apply to both our corporate banking
facilities and now, more recently, to the
retail bond. These are:

Bank:
• Net assets must be greater than £250m

(actual £514m).

• Gearing must not exceed 175%

(actual 71%).

• Interest cover ratio (that excludes

non-cash items such as revaluation
movements) must be greater than
1.25x (actual 2.1x).

Bond:
• See-through loan to value ratio must not

exceed 75% (actual 41%).

• Interest cover ratio must be greater than

1.5x (actual 2.8x).

Although the current challenging economic
environment still has an element of
uncertainty, we have considered available
market information, consulted with our
advisers and applied our own knowledge
and experience. Consequently, we believe
that covenant levels are adequate for our
possible negative scenarios.

Joint venture facilities
Our principal joint venture facilities are
VSM Uxbridge and Key Property
Investments (KPI):

In the longer term, we will continue to look
at options to increase the diversity of our
funding sources and explore alternative
sources of finance.

Principal risks and uncertainties
The principal risks and uncertainties which
could have a material impact on the Group
and the corresponding mitigating actions
are set out on pages 54 to 57.

Outlook
Our ability to generate strong returns
through our own efforts is now very
apparent. Throughout the year and against
the backdrop of a challenging economic
environment, we have continued to work
smartly, maximising and growing our
income. At the same time we are
diversifying our funding sources, increasing
the longevity of our debt and, consequently,
our gearing levels should continue to fall.
These factors combined provide us with
a sound financial platform from which we
can drive the business forward.

Michael Dunn
Group Finance Director
4th February 2013

• VSM Uxbridge – our 50/50 joint venture
with VINCI PLC has evolved out of
Project MoDEL, whereby we acquired
and developed a portfolio of sites in
north London which were formerly
owned by the Ministry of Defence.
The aforementioned acquisition of the
Uxbridge land was financed with a
new £60m facility which runs to at least
2017. We are also working together
with VINCI in a separate joint venture
for New Covent Garden Market.

• KPI – our 50/50 joint venture with Salhia
Real Estate Company K.S.C. holds
significant retail and commercial assets
with long-term development potential,
including the Elephant & Castle
Shopping Centre in London. During
the period we refinanced our KPI joint
venture with a new five year £135m
debt facility that runs until 2017.

Consequently, we have no corporate or
joint venture facilities that require renewal
before November 2014.

Throughout the next year we do not expect
the absolute levels of debt to increase from
our core business and on this basis both
gearing and loan to value levels should fall.
As we evaluate the various routes for our
major projects, it might be appropriate for
us to consider funding that is designed
specifically for each opportunity.

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54 St. Modwen Properties PLC
Annual Report and Accounts 2012

Risks and Uncertainties

HOw wE MANAGE OUR RISkS

economic and
market risk

Uncertainty in the economic
and market environment
increases the risk attached
to property valuation and
development returns

risk and Potential imPact

mitigation

Market/economic changes such as higher
interest rates, reduced demand for land
and new properties (e.g. residential),
reduced availability of credit and declining
investment yields restrict business
development and cause valuation falls.

•

Regional spread and portfolio diversity mitigates
sector or location-specific risks
Active portfolio management achieves a better
than market utilisation of assets

• Hedging policy reduces interest rate risk

Failure to identify a pipeline of future
residential sites reduces our supply of
homes or reduced availability of mortgage
finance adversely impacts demand for
homes in our residential business.

Poor market intelligence (i.e. failure to
anticipate market changes) leads to
selection of inappropriate and, ultimately,
unprofitable schemes.

•

•
•
•

•

Team of professionals with residential experience
and expertise
Extensive land bank with a continuing stream
of planning applications
Flexible approach to mortgage financing
(e.g. shared equity schemes)
Use of JV partners with residential expertise
(e.g. Persimmon)

Regional offices in touch with their local market
Dedicated central resource supporting regional teams
Flexible and innovative approach to acquisitions
and schemes in order to adapt to market changes
Projects, acquisitions and disposals are reviewed
(and financially appraised) within clearly defined
authority limits

We choose to operate only in the UK, which is subject to relatively low risk and low returns from a

stable and mature, albeit cyclical economy and property market. By involvement with all sectors of

that economy and property market, we are as diversified as possible, without venturing overseas.

Over the course of the last year, the continuing sovereign debt problems within the Eurozone means

that the overall market position continues to represent a high risk.

The planning environment is becoming more difficult with an increased likelihood of delays in the

planning process. However, our scale and expertise means that we are still being successful in this

area, although individual schemes may suffer delay. Demand for new homes remains strong, although

one of the main factors restricting this demand is the lack of availability of new mortgage finance.

Any progress in this area would be helpful.

The excellent reputation and financial capacity of the Company have enabled us to continue to win

schemes and grow the land bank to record levels, even in the current financially-constrained climate.

In this environment, with a reduced number of active competitors, we expect to be able to continue to

source attractive acquisitions.

Declining rental yields and/or loss of key
tenants results in reduced profitability and
cash flow.

Diverse and extensive rent roll (over 1,700 tenants)

•
• Financial checks carried out on new tenants
• Rents at affordable end of scale

Our diverse tenant base mitigates this risk but uncertain UK economic growth prospects and low

business confidence means that there is a continuing high risk in this area.

Financial collapse of, or dispute with, a key
joint venture partner leads to financial loss.

•

Monthly review of performance to identify if senior
management intervention is required

• Flexible but legally secure contracts with partners

Our key partners are Persimmon PLC, VINCI PLC and Salhia Real Estate K.S.C. of Kuwait. These are

financially strong partners with good prospects, even in the current economic environment. Where we

have financially weaker partners, we are exiting from these arrangements, meaning that the overall risk

has reduced year-on-year.

financial risk

Our geared financial structure
means that there are inevitable
risks attached to the
availability of funding and the
management of fluctuations
in our cash flows

Availability of funding reduces, causing
a lack of liquidity that impacts borrowing
capacity and reduces the saleability
of assets.

Unforeseen significant changes to cash
flow requirements (e.g. operating cost
increases, pension fund shortfall) limit the
ability of the business to meet its ongoing
commitments.

Failure to value properties fairly, leading to
lower than anticipated profits/yields.

•

Recurring income from rents provides funding
for ongoing overhead and interest costs

• Strong relationships with key banks
Financial headroom maintained to
•
provide flexibility

• Alternative sources of funding (e.g. retail bond)
Weighted average expiry of bank facilities is
•
3.4 years at November 2012

•

Regular and detailed cash flow forecasting
enables monitoring of performance and
management of future cash flows

•

Independent valuation by external experts and
validation by external auditors
Professionally conducted and conservative
property valuation process

Our prudent approach to forward commitments, speculative development and asset disposals has

enabled us to optimise operational cash flows and to offset the impact of fluctuating market

conditions. Furthermore, we have once again recorded a trading profit in the year, demonstrating our

ability to succeed in varying markets. Despite the ongoing sovereign debt issues continuing to restrict

general bank funding, the successful launch of our first retail bond has diversified our debt financing

profile by providing access to unsecured long-term funding.

Our year end cash position is in line with the guidelines that we set at the start of the year.

The valuation of our properties is undertaken externally every six months. Our methodologies are

consistent and cautious, always allowing for future uncertainties and for housebuilder profit on our

residential land.

55 St. Modwen Properties PLC
Annual Report and Accounts 2012

commentary

change since 2011
annual rePort

We choose to operate only in the UK, which is subject to relatively low risk and low returns from a
stable and mature, albeit cyclical economy and property market. By involvement with all sectors of
that economy and property market, we are as diversified as possible, without venturing overseas.
Over the course of the last year, the continuing sovereign debt problems within the Eurozone means
that the overall market position continues to represent a high risk.

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e
v
O

economic and

market risk

Uncertainty in the economic

and market environment

increases the risk attached

to property valuation and

development returns

Market/economic changes such as higher

•

Regional spread and portfolio diversity mitigates

interest rates, reduced demand for land

and new properties (e.g. residential),

reduced availability of credit and declining

investment yields restrict business

development and cause valuation falls.

sector or location-specific risks

•

Active portfolio management achieves a better

than market utilisation of assets

• Hedging policy reduces interest rate risk

Failure to identify a pipeline of future

residential sites reduces our supply of

homes or reduced availability of mortgage

finance adversely impacts demand for

homes in our residential business.

Poor market intelligence (i.e. failure to

anticipate market changes) leads to

selection of inappropriate and, ultimately,

unprofitable schemes.

•

Team of professionals with residential experience

and expertise

•

Extensive land bank with a continuing stream

of planning applications

•

Flexible approach to mortgage financing

(e.g. shared equity schemes)

•

Use of JV partners with residential expertise

(e.g. Persimmon)

•

Regional offices in touch with their local market

Dedicated central resource supporting regional teams

Flexible and innovative approach to acquisitions

and schemes in order to adapt to market changes

•

Projects, acquisitions and disposals are reviewed

(and financially appraised) within clearly defined

authority limits

The planning environment is becoming more difficult with an increased likelihood of delays in the
planning process. However, our scale and expertise means that we are still being successful in this
area, although individual schemes may suffer delay. Demand for new homes remains strong, although
one of the main factors restricting this demand is the lack of availability of new mortgage finance.
Any progress in this area would be helpful.

The excellent reputation and financial capacity of the Company have enabled us to continue to win
schemes and grow the land bank to record levels, even in the current financially-constrained climate.
In this environment, with a reduced number of active competitors, we expect to be able to continue to
source attractive acquisitions.

Declining rental yields and/or loss of key

•

Diverse and extensive rent roll (over 1,700 tenants)

tenants results in reduced profitability and

• Financial checks carried out on new tenants

cash flow.

• Rents at affordable end of scale

Our diverse tenant base mitigates this risk but uncertain UK economic growth prospects and low
business confidence means that there is a continuing high risk in this area.

Financial collapse of, or dispute with, a key

•

Monthly review of performance to identify if senior

joint venture partner leads to financial loss.

management intervention is required

• Flexible but legally secure contracts with partners

Our key partners are Persimmon PLC, VINCI PLC and Salhia Real Estate K.S.C. of Kuwait. These are
financially strong partners with good prospects, even in the current economic environment. Where we
have financially weaker partners, we are exiting from these arrangements, meaning that the overall risk
has reduced year-on-year.

financial risk

Our geared financial structure

means that there are inevitable

risks attached to the

availability of funding and the

management of fluctuations

in our cash flows

Availability of funding reduces, causing

a lack of liquidity that impacts borrowing

capacity and reduces the saleability

of assets.

Unforeseen significant changes to cash

flow requirements (e.g. operating cost

increases, pension fund shortfall) limit the

ability of the business to meet its ongoing

commitments.

•

Recurring income from rents provides funding

for ongoing overhead and interest costs

• Strong relationships with key banks

•

Financial headroom maintained to

provide flexibility

• Alternative sources of funding (e.g. retail bond)

•

Weighted average expiry of bank facilities is

3.4 years at November 2012

•

Regular and detailed cash flow forecasting

enables monitoring of performance and

management of future cash flows

Our prudent approach to forward commitments, speculative development and asset disposals has
enabled us to optimise operational cash flows and to offset the impact of fluctuating market
conditions. Furthermore, we have once again recorded a trading profit in the year, demonstrating our
ability to succeed in varying markets. Despite the ongoing sovereign debt issues continuing to restrict
general bank funding, the successful launch of our first retail bond has diversified our debt financing
profile by providing access to unsecured long-term funding.

Our year end cash position is in line with the guidelines that we set at the start of the year.

Failure to value properties fairly, leading to

•

Independent valuation by external experts and

lower than anticipated profits/yields.

validation by external auditors

•

Professionally conducted and conservative

property valuation process

The valuation of our properties is undertaken externally every six months. Our methodologies are
consistent and cautious, always allowing for future uncertainties and for housebuilder profit on our
residential land.

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56 St. Modwen Properties PLC
Annual Report and Accounts 2012

Risks and Uncertainties (continued)

HOw wE MANAGE OUR RISkS (continued)

risk and Potential imPact

mitigation

construction
risk

Inadequate due diligence on major new
schemes leads to unforeseen exposures,
costs and liabilities, which prevent effective
delivery and result in financial loss.

The management of
developments is a complex
process

Inadequate construction delivery and
procurement leads to quality issues
and cost overruns causing customer
dissatisfaction and/or financial damage.

•

•
•

•

Use and close supervision of a preferred
supply chain of high quality trusted suppliers
and professionals
Projects, acquisitions and disposals are reviewed
and financially appraised in detail, with clearly
defined authority limits
Contractual liability clearly defined

Strong internal construction management team
Clearly defined formal tender process that
evaluates qualitative and quantitative factors
in bid assessment
Use and close supervision of a preferred
supply chain of high quality trusted suppliers
and professionals

regulatory and
compliance
risk

Our work is undertaken in a
complex environment with
consequent compliance risks

National Planning Policy Framework
changes adversely impact on our business
strategy by limiting our ability to secure
viable permissions and/or by removing
our competitive advantage.

Failure to manage long-term environmental
issues relating to brownfield and
contaminated sites leads to a major
environmental incident, resulting in financial
and/or reputational damage.

HS&E culture leads to a major incident
(e.g. serious injury to, or death of, an
employee, client, contractor or member
of the public) or non-compliance with
legislation, resulting in financial penalties
and/or reputational damage.

• Use of high quality professional advisers
• Active involvement in public consultation
•

Constant monitoring of all aspects of the planning
process by experienced in-house experts
Contacts in place with central and
local government

•

• Use of high quality external advisers
• Highly qualified internal staff
•

Risk assessments conducted as part of due
diligence process
Full warranties from professional consultants and
remediation contractors
Defined business processes to proactively
manage issues

Performance indicators are reviewed monthly at
Board level

• Use of high quality external HS&E advisers
Defined business processes to proactively
•
manage issues

•

Our programme for the year has been delivered successfully and we have conducted robust

processes in selecting contractors for future projects.

During the year, all of our developments have been completed on time and within budget.

Our contractor selection processes are rigorous. However, given the economic environment and the

consequentially increased risk of contractor insolvency, we have this year increasingly biased our

contractor selection in favour of financially stable and robust contractors.

Our daily exposure to all aspects of the planning process, and internal procedures for spreading best

practice, ensure we remain abreast of most developments. Furthermore, we continue our efforts to

influence public policy debate. Although the current fluctuations in proposed planning legislation mean

that future rules are uncertain, our expertise should enable us to prosper relative to our competitors,

whatever the planning environment.

We are willing to accept a degree of environmental risk, enabling higher returns to be made.

The inherent risks are passed on or minimised where possible but cannot be eliminated, although the

residual risks have been acceptably low in recent years.

Health and safety continues to be a high priority. The assessment of environmental costs (and the

subsequent optimising of remediation solutions) is an integral part of our acquisition and post-

acquisition process. We seek to minimise or pass on any such environmental risks, and believe that

the residual risk remains acceptably low. In other social and ethical areas, our operations are

underpinned by a simple but rigorous set of operating commitments.

Lack of succession planning and/or over
reliance on key people causes loss of/
failure to attract good people and/or
significant disruption/loss of IP.

•

Succession planning monitored at Board level
and below
Targeted recruitment with competitive,
performance-driven remuneration packages

We continue to offer attractive and competitive remuneration packages as is evidenced by the lack of

vacancies. We continue to adapt our recruitment strategy to source the skills that will support the

Company’s long-term business objectives.

organisational
risk

Our activities require highly skilled
and motivated people in order to
deliver consistently and effectively

57 St. Modwen Properties PLC
Annual Report and Accounts 2012

commentary

Our programme for the year has been delivered successfully and we have conducted robust
processes in selecting contractors for future projects.

change since 2011
annual rePort

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During the year, all of our developments have been completed on time and within budget.
Our contractor selection processes are rigorous. However, given the economic environment and the
consequentially increased risk of contractor insolvency, we have this year increasingly biased our
contractor selection in favour of financially stable and robust contractors.

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National Planning Policy Framework

• Use of high quality professional advisers

changes adversely impact on our business

strategy by limiting our ability to secure

viable permissions and/or by removing

our competitive advantage.

• Active involvement in public consultation

•

Constant monitoring of all aspects of the planning

process by experienced in-house experts

•

Contacts in place with central and

local government

Our daily exposure to all aspects of the planning process, and internal procedures for spreading best
practice, ensure we remain abreast of most developments. Furthermore, we continue our efforts to
influence public policy debate. Although the current fluctuations in proposed planning legislation mean
that future rules are uncertain, our expertise should enable us to prosper relative to our competitors,
whatever the planning environment.

Failure to manage long-term environmental

• Use of high quality external advisers

Our work is undertaken in a

complex environment with

consequent compliance risks

issues relating to brownfield and

contaminated sites leads to a major

environmental incident, resulting in financial

and/or reputational damage.

We are willing to accept a degree of environmental risk, enabling higher returns to be made.
The inherent risks are passed on or minimised where possible but cannot be eliminated, although the
residual risks have been acceptably low in recent years.

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Health and safety continues to be a high priority. The assessment of environmental costs (and the
subsequent optimising of remediation solutions) is an integral part of our acquisition and post-
acquisition process. We seek to minimise or pass on any such environmental risks, and believe that
the residual risk remains acceptably low. In other social and ethical areas, our operations are
underpinned by a simple but rigorous set of operating commitments.

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Lack of succession planning and/or over

•

Succession planning monitored at Board level

reliance on key people causes loss of/

failure to attract good people and/or

significant disruption/loss of IP.

and below

•

Targeted recruitment with competitive,

performance-driven remuneration packages

We continue to offer attractive and competitive remuneration packages as is evidenced by the lack of
vacancies. We continue to adapt our recruitment strategy to source the skills that will support the
Company’s long-term business objectives.

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HOw wE MANAGE OUR RISkS (continued)

Inadequate due diligence on major new

•

Use and close supervision of a preferred

schemes leads to unforeseen exposures,

supply chain of high quality trusted suppliers

costs and liabilities, which prevent effective

and professionals

delivery and result in financial loss.

construction

The management of

developments is a complex

process

Inadequate construction delivery and

procurement leads to quality issues

and cost overruns causing customer

dissatisfaction and/or financial damage.

•

Projects, acquisitions and disposals are reviewed

and financially appraised in detail, with clearly

defined authority limits

•

Contractual liability clearly defined

•

Strong internal construction management team

Clearly defined formal tender process that

evaluates qualitative and quantitative factors

in bid assessment

•

Use and close supervision of a preferred

supply chain of high quality trusted suppliers

and professionals

• Highly qualified internal staff

•

Risk assessments conducted as part of due

diligence process

•

Full warranties from professional consultants and

remediation contractors

•

Defined business processes to proactively

manage issues

•

Performance indicators are reviewed monthly at

Board level

• Use of high quality external HS&E advisers

•

Defined business processes to proactively

manage issues

HS&E culture leads to a major incident

(e.g. serious injury to, or death of, an

employee, client, contractor or member

of the public) or non-compliance with

legislation, resulting in financial penalties

and/or reputational damage.

risk

regulatory and

compliance

risk

organisational

Our activities require highly skilled

and motivated people in order to

deliver consistently and effectively

58 St. Modwen Properties PLC
Annual Report and Accounts 2012

Corporate
soCial
responsibility

We choose to abide by a CSR philosophy which is founded
on a commitment to make a positive change to the
economy, socially and to the environment via our
regeneration projects and right across the land bank.

59 St. Modwen Properties PLC
Annual Report and Accounts 2012

Pictured: The 135,000 sq ft new facility for Siemens
in Lincoln. Comprising 50,000 sq ft of office space
and an 85,000 sq ft technologically advanced
service workshop, the exacting standards of St.
Modwen and its partners resulted in the facility
achieving a BREEAM ‘Outstanding’ rating
in recognition of its sustainable design.

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60 St. Modwen Properties PLC
Annual Report and Accounts 2012

Corporate Social Responsibility

Acquiring brownfield sites, remediating and
transforming them into cleaner, greener
and brighter environments where
businesses and communities can thrive:
this is the essence of what we do and it
brings about job creation, provides new
amenities, infrastructure and affordable
housing stocks and helps to improve
and enhance the environment. In turn,
it promotes positive social, economic
and environmental change.

As a long-term business with a diverse
portfolio of assets, it is difficult for us to
capture a true picture of the positive
differences we make by compiling tables
of annual Corporate Social Responsibility
(CSR) targets. Instead, we choose to abide
by a CSR philosophy which is founded on
a commitment to make a positive change
to the economy, socially and to the
environment via our regeneration projects
and right across our land bank.

ECONOMIC
Our network of regional offices means
we can be sensitive to local needs and
understand the economic requirements
in any given area. Where possible, we
seek to employ local skills on our
schemes either directly, across our supply
chain, or by offering construction-related
apprenticeships.

Apprenticeships – Rugby and
Longbridge
At both of our sites in Rugby and in
Longbridge we have built new Colleges –
Warwickshire College and Bournville
College, respectively. Both offer courses
in construction and to ensure we leave a
legacy beyond the built environment, we
have entered into agreements with both
institutions to appoint a number of local
students to work on our sites, learn
important skills, gain site experience and
ultimately employment opportunities.

In addition to working with schools and
colleges, we work together with Local
Authorities to promote employment locally.
Our partnership with Enfield Borough
Council to promote their ‘Jobsnet’ via our
Edmonton Green Shopping Centre, an
initiative to help unemployed Enfield
residents back in to work, has been
running for around five years. It provides
CV advice and printing, application form
completion and interview techniques,
signposting to relevant free training
schemes and a job search facility.
Through the opening of new shops and
encouraging new businesses to the area –
for example Wilkinsons which opened
earlier in 2012 – we encourage the
employment of local residents via Jobsnet.

Due to their location, we are also able
to offer affordable rents across many
of our sites which encourage smaller
and more local businesses to the area
and in doing so, helping them to thrive
within the newly built infrastructure
and improved environment.

Above:
Bournville College, Longbridge –
we appoint a number of students to
work on our sites as apprentices.

61 St. Modwen Properties PLC
Annual Report and Accounts 2012

SUSTAINABILITY
We have a responsibility to employ the
most sustainable and environmentally
friendly techniques across our build
projects. One of the reasons why we are
successful with planning gain is because
we work closely with the Environment and
the Highways Agencies to make sure our
schemes meet their high standards and
to ensure that they meet the requirements
of planning authorities.

We pay particular attention to recycling
materials on site, using sustainable
materials, conserving energy, reducing our
consumption of raw materials and
minimising waste production. This year
we have achieved some excellent results
for recycling and reusing materials on
site: 99% of remediated materials
(2011: 99%) and 90% of construction
waste (2011: 88%) have been used again
on our sites, minimising disposal to landfill
and reducing the need for heavy
construction traffic on the roads. There was
a slight decline in the percentage of
demolition products reclaimed for retention
on site or recycling (2011: 96%). This is a
direct result of demolishing a series of
dilapidated former MoD, car manufacturing
and town centre buildings which
comprised materials unfit for recycling
elsewhere on site.

SOCIAL
Many of our sites are located in deprived or
run down areas and in transforming these
areas we instantly provide people with
a sense of place, crime rates reduce
and people start to feel proud of the
community in which they live and/or work.
For example, in Wythenshawe, Manchester
for example, crime rates have steadily
decreased by around 20% over the last
five years.

We aim to help local charities and
community groups, not only financially
through donations but by offering them
the use of our buildings across some of
our sites that are awaiting redevelopment.
At Long Marston, Warwickshire, we were
able to offer the local Police the use of
some of the former Ministry of Defence
buildings and the surrounding space
to train Police dogs.

It is fundamental to the success of our
developments that they create a sense of
belonging. We take public consultation
seriously and listen to the views of the local
community and wherever possible,
implement their constructive suggestions
into our schemes. Beyond securing
planning gain, we want to create places
that make communities proud and leave
a legacy for generations to enjoy.

Our own housebuilding brand, St. Modwen
Homes, differentiates itself from larger
national housebuilders by assuming a
local developer mentality and allowing
a design-led approach to be taken to
both the built form and the external
environment. By adopting this approach,
we give considerable thought to public
realm and how we deliver it, to ensure
we create a real heart for the communities
we are developing.

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Recycling / reclamation on site

2012 Achieved

2011 Achieved

2010 Achieved

Percentage of remediated materials
reused or recycled

Percentage of demolition products
reclaimed for retention on site or recycling

Percentage of construction waste
reused or recycled

99%

93%

96%

94%

90%

88%

75%

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Wythenshawe, Manchester – where
our £100m investment in the town
centre has resulted in a steady
decrease in crime rates.

62 St. Modwen Properties PLC
Annual Report and Accounts 2012

Corporate Social Responsibility (continued)

CASE STUdY, SIEMENS
Perhaps the best example of St. Modwen’s
sustainability ethos is our delivery of a new
135,000 sq ft office and workshop facility
for Siemens in Lincoln which was
completed towards the end of 2012.

A long-standing tenant of St. Modwen
already located in Lincoln, Siemens’ gas
turbine service business decided to
relocate its operations from four sites to
one facility that would meet its current
business needs and enable future growth.
Our existing relationship with Siemens
meant we were well placed to act as its
development partner for the relocation.

Together, we concluded that the new
facility must provide the right balance of
viability and aesthetics in building materials,
a highly sustainable design and operational
ethic, and high standards of ecological and
landscape management.

The new facility comprises 50,000 sq ft
of office space and an 85,000 sq ft
technologically advanced service
workshop. It includes the benefits of low
or zero carbon technology with just under
9,700 sq ft of photovoltaic solar panels
fitted across the service workshop roof.
Thermal and lighting zoning will further
contribute to the annual energy savings
at the facility.

Situated in one of the driest areas of
the country, the team carried out careful
selection of sanitary appliances with
reduced flush volumes and flow rates
to save considerable amounts of water.

A and A+ Green Guide rated building
materials were selected and all stone
and aggregates used at the facility were
sourced from within 30 km of the site.
Supply chain and key process materials
were selected exclusively from
manufacturers with ISO 14001 EMS
certification, whilst more than 90% of
waste generated during construction was
diverted from landfill to a specialist waste
contractor to sort and recycle.

The reuse of topsoil locally and arisings
remaining on site further minimised landfill
use. These measures all contributed to the
development being able to achieve a score
of 36 out of 40 under the ‘Considerate
Constructors Scheme’.

St. Modwen’s project team took great care
to preserve the natural habitat at the site
and implemented measures for long-term
mitigation of biodiversity, including the
reintroduction of tree and flower species.
The site was designed with consideration
for noise attenuation, so that noise levels
only ever rise by five decibels above
background levels during construction.
This was achieved through regular
noise readings, no out-of-hours deliveries
and liaison with the local Environmental
Health Officer.

St. Modwen and the project team also
devised a plan to promote alternative
modes of transport, including discounted
public transport, secure cycle parking and
car sharing schemes. In line with the
innovative plan of the building and
Siemens’ own strong sustainable transport
focus in Lincoln, the design team also
included Siemens advanced two-hour,
twin-headed electric vehicle charging
equipment in the car park to ensure the
facility can support low-emission transport
and remain future-proof for the
foreseeable future.

The exacting standards of the project,
which have been met by St. Modwen
and its partners have resulted in the
facility achieving the BREEAM
‘Outstanding’ rating in recognition
of its sustainable design.

A multi-million pound pre-let and
development deal was agreed with
Siemens on a 12 year lease. It is
anticipated that Siemens’ relocation has
the potential to attract £500m of business
investment to the region over the next 10
to 15 years, which could equate to many
thousands of jobs. This will not only
significantly bolster Lincolnshire’s
manufacturing and construction industries,
but should also lead to much-needed
opportunities for highly-skilled workers in
challenging market conditions.

Top:
The new 135,000 sq ft Siemens facility
benefits from zero carbon technology.

Left:
Thermal and lighting zoning will
further contribute to the annual
energy savings at the facility.

63 St. Modwen Properties PLC
Annual Report and Accounts 2012

SUSTAINABILITY (continued)
Trees and open spaces
St. Modwen recognises that with a land
bank of over 5,800 acres, there are huge
opportunities to maximise the use of green
spaces both within its own developments
and also on any undevelopable acreage
and in doing so bringing cultural, social,
economic and environmental value to
this land bank.

Some of the interesting environmental
projects that are taking place across our
across our land bank are illustrated by the
following two examples:

• Diamond Woods – Trentham Estate,
Stoke-on-Trent – The North Park,
within the Trentham Estate, Stoke-on-
Trent is one of just 60 Diamond Woods
across the country in The Woodland
Trust’s Jubilee Woods project, which
marks HM The Queen’s 60 years
as a monarch.

Parkland and heathland restoration will
include revealing both the hidden 18th
century parkland landscape designed
by Capability Brown, as well as the
remains of the Patte d’Oie (Goose’s
Foot) Lime Tree Avenues and historic
drive to the west.

The first phase of this five-year scheme
commenced in February 2012 and
included the removal of the commercial
Pine Tree Forest, so that this area could
be restored and planted with native
Sessile Oak Trees. Planting commenced
in November 2012 and with another
7,000 trees to get into the ground
during the winter, will continue during
the first few months of 2013. As part of
this initiative, the Trentham Estate offers
opportunities for the local community
and visitors to either plant trees on
‘Community Planting Days’, or dedicate
a tree to support the Douglas Macmillan
Hospice, for which over £30,000 has
already been raised.

Demonstrating the potential that our sites
hold to enhance the green environment,
our site at RAF Uxbridge was also selected
by the Woodland Trust as the location for
one of its Jubilee Woods in conjunction
with Hillingdon Council.

• New Austin Park – Longbridge,
Birmingham – We have just
commenced work on the £2m Austin
Park that will be the green heart of
Longbridge town centre and will feature
a 255 metre stretch of the River Rea
which has been buried for nearly
100 years.

This is the first public park to be built in
South West Birmingham in the last fifty
years and when complete in 2013, will
feature footpaths, seating areas, a
pedestrian footbridge over the river and
more than 20,000 plants and 550 trees.

St. Modwen Environmental Trust
Affiliated to the Government’s Landfill Tax
Credit Scheme and regulated by
ENTRUST, the St. Modwen Environmental
Trust provides valuable support to
community and environmental projects
across the UK. In 2012, over £65,000
was committed to eight projects across
the country.

However, after six years the Environmental
Trust is coming to a close, and 2013 will be
its last year of operation. We intend
to identify other environmental and
community projects to support in
the future.

Energy efficiency
At the outset of development the methods
of reducing the energy demands of our
buildings are considered carefully.
Also, we continually explore ways in which
we can create efficient ways of supplying
energy to our tenants which benefits
the businesses themselves as
well as the broader environment.

We are due to start on site in 2013 with our
first Solar Park. This will be situated on 30
acres of surplus land at our 10,050 acre
Baglan Bay site in South Wales, formerly
the site of a BP petrochemicals plant which
we have fully remediated since acquiring it
in 2009. The Park will house over 21,000
photovoltaic panels which will generate five
megawatts of power, enough to provide
electricity for over 1,200 homes per year.

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Left:
Community tree planting at the North
Park, Trentham Estate, Stoke-on-Trent.

Right:
Works have recently commenced on
the new Austin Park, Longbridge.

64 St. Modwen Properties PLC
Annual Report and Accounts 2012

The Board

Bill Shannon

Chairman

Bill olivEr

Chief Executive

MiChaEl Dunn

Group Finance Director

Appointed to the Board as non-executive
director and Chairman Designate in November
2010 and became Chairman in March 2011.

Committee Membership
Chairs the Nomination Committee and is a
member of the Remuneration Committee.

Experience
A 30 year career at Whitbread plc which
culminated in his appointment as a main Board
director for 10 years until his retirement in 2004.
Former Chairman of AEGON UK plc (previously
Scottish Equitable), Gaucho Grill Holdings Ltd
and Pizza Hut (UK) Ltd, and former non-
executive director of The Rank Group plc,
Barratt Developments plc and Matalan plc.
Currently a non-executive director of Johnson
Service Group plc. A qualified Chartered
Accountant (Scotland).

Appointed to the Board in January 2000.

Appointed to the Board in December 2010.

Committee Membership
None.

Experience
Has over 30 years’ experience in the property
industry with residential and commercial
development companies such as Alfred
McAlpine, Barratt and The Rutland Group.
Finance Director of Dwyer Estates plc from 1994
to 2000. Joined St. Modwen in 2000 as Finance
Director, and was subsequently appointed
Managing Director in 2003 and Chief Executive
in 2004. A qualified Chartered Accountant.

Experience
Joined Coopers & Lybrand on graduating before
moving to The National Grid Company in 1994.
Joined Carillion plc in 1997 and was Finance
Director of Carillion Private Finance and Carillion
Building. Joined St. Modwen in 2010 from May
Gurney Integrated Services plc where he spent
five years as Group Finance Director. A qualified
Chartered Accountant.

StEvE BurkE

DaviD GarMan

Construction Director

Senior Independent Director

Appointed to the Board in November 2006.

Committee Membership
None.

Experience
Joined St. Modwen in 1995 as a Contracts
Surveyor after a number of years’ construction
experience in senior roles with national
contracting companies including Balfour Beatty
and Clarke Construction. Appointed
Construction Director in 1998 and joined
the Board as a director in 2006.

Appointed to the Board in April 2010
and became Senior Independent Director
in April 2011.

Committee Membership
Member of the Audit, Remuneration
and Nomination Committees.

Experience
Chief Executive of the Allied Bakeries subsidiary
of Associated British Foods plc from 1993 to
1999 and TDG plc from 1999 to 2008. Former
non-executive director of Kewill plc and former
Senior Independent Director of Victoria plc and
Carillion plc. Currently Senior Independent
Director of Phoenix IT Group plc. A founder
member of The Oakwood Partnership and a
Fellow of the Chartered Institute of Logistics
and Transport.

65 St. Modwen Properties PLC
Annual Report and Accounts 2012

kay ChalDECott

SiMon ClarkE

kathErinE innES kEr

Independent non-executive director

Non-executive director

Independent non-executive director

Appointed to the Board in October 2012.

Appointed to the Board in October 2004.

Appointed to the Board in October 2009.

Committee Membership
Member of the Audit and
Remuneration Committees.

Experience
Joined Capital Shopping Centres Group plc
on graduating and held a number of senior
management positions, including Managing
Director, during a career spanning 27 years.
Also served as a main Board director from 2005
until leaving the group in 2011. Currently a
non-executive director of New River Retail
Limited. A member of the Royal Institution
of Chartered Surveyors.

Committee Membership
None.

Experience
Former Deputy Chairman of Northern Racing plc
and director and Vice-Chairman of The
Racecourse Association Ltd. Currently Chairman
of Dunstall Holdings Ltd. The son of Sir Stanley
Clarke, founder and former Chairman of St.
Modwen, and represents the interests of the
Clarke and Leavesley families, the Company’s
largest shareholders, on the Board.

Committee Membership
Member of the Audit and
Remuneration Committees.

Experience
Has held director roles as a media analyst with
both SBC Warburg and Dresdner Kleinwort
Benson. Former non-executive director of
ITVDigital plc, The Television Corporation plc,
Fibernet Group plc, Gyrus Group plc, Taylor
Wimpey plc and Ordnance Survey. Former
Chairman of Shed Media plc and Victoria plc.
Currently Senior Independent Director of Tribal
Group plc and a non-executive director of
The Go-Ahead Group plc.

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lESlEy JaMES, CBE

John SalMon

tanya StotE

Independent non-executive director

Company Secretary

Appointed to the Board in October 2009.

Appointed to the Board in October 2005.

Committee Membership
Chairs the Remuneration Committee
and is a member of the Audit and
Nomination Committees.

Experience
HR Director for Tesco plc from 1985 to 1999
and a main Board director from 1994. Former
non-executive director for a number of
companies including Care UK plc, Alpha Airports
Group plc, Inspicio plc, Liberty International plc
and the West Bromwich Building Society.
Former Trustee of the charity I CAN. Currently a
non-executive director of Anchor Trust. A
Companion of the Chartered Institute of
Personnel and Development.

Committee Membership
Chairs the Audit Committee and is a member
of the Remuneration Committee.

Experience
Admitted to partnership of Price Waterhouse
in 1976 and was a senior client partner at
PricewaterhouseCoopers LLP with lead
responsibility for a range of major listed
companies until his retirement in 2005.
A former member and Deputy Chairman of
PwC’s Supervisory Board. Currently a Trustee
and Council Member of the British Heart
Foundation. A qualified Chartered Accountant.

Joined St. Modwen as Company Secretary
in March 2012. Has held senior Company
Secretary roles in a number of FTSE listed
companies including Taylor Woodrow plc,
Travis Perkins plc and, most recently, GKN plc
where she was Deputy Company Secretary
and Head of Secretarial Department. A Fellow
of the Institute of Chartered Secretaries
and Administrators.

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66 St. Modwen Properties PLC
Annual Report and Accounts 2012

Regional Directors

John DoDDS FriCS

Guy GuStErSon MBa

MikE hErBErt

Regional Director –
Midlands

Residential Director

Regional Director –
The Trentham Estate

rupErt JoSElanD MriCS

StEphEn proSSEr MriCS

tiM SEDDon MriCS

Regional Director –
South West and South Wales

Regional Director –
North

Regional Director –
London and South East

rupErt wooD MriCS

Regional Director –
Northern Home Counties

67 St. Modwen Properties PLC
Annual Report and Accounts 2012

Corporate Governance Report

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Bill Shannon, Chairman

ChairMan’S ovErviEw

As a Board, we are responsible for the
stewardship of the business and are
committed to maintaining high standards
of corporate governance across the Group.
We believe good governance enhances
business performance as well as our
reputation within our marketplace and
across relationships with our stakeholders.

Our approach to governance is outlined in
the following report, which describes how
we integrate into our business the main
principles of the five sections of the UK
Corporate Governance Code (the Code),
namely leadership, effectiveness,
accountability, remuneration and relations
with shareholders. I am pleased to report
that, following a change to membership of
the Audit and Remuneration Committees
during 2012, the Company now complies
in full with the Code.

In line with the development of our
business, our governance framework is
kept under close review in order to ensure
that shareholders’ interests are
safeguarded and to sustain the success
of the Company over the longer term.
As reported in my Chairman’s statement
on page 19, we have deepened further the
property expertise on the Board by the
appointment of Kay Chaldecott as a

non-executive director, who joins us
following a career in the UK retail property
sector spanning 27 years. In September
2012 I commissioned an independent
external review of the effectiveness of the
Board and its Committees, which was
conducted between October and
December. The review was designed to
encourage the directors to step back from
the normal business of the Board and
provide them with an opportunity to
question the Board’s approach, assess its
impact and contribution and consider how
best it can develop. The results of this
review are being analysed as this report is
finalised and therefore an update on the
results of this assessment will be disclosed
in next year’s report.

In my second year as Chairman I am
pleased with the progress that has been
made in respect of our approach to
governance and I expect that this will
continue to develop and strengthen
during 2013.

Bill Shannon
Chairman

Allocation of time spent at
Board meetings in 2011/2012
%

Strategy
Operations
Finance & risk
Governance

68 St. Modwen Properties PLC
Annual Report and Accounts 2012

Corporate Governance Report (continued)

What is the Board’s role?

lEaDErShip
Q:
A:

The Board’s role is to provide leadership of the Company and direction for
management. It is collectively responsible and accountable to shareholders for the
long-term success of the Company. It sets the strategy and reviews performance,
ensuring that only acceptable risks are taken and the appropriate resources are in
place to deliver the strategy.

Q:
A:

What responsibilities does the Board have?

A formal schedule of matters specifically reserved for Board approval has
been adopted by the Board. Principal matters reserved for authorisation by
the Board include:
• long-term strategy, both commercial and financial;
• annual operating and capital budgets;
• major property acquisitions and disposals;
• risk management and internal control;
• dividend policy;
• matters relating to the capital structure of the Company; and
• the appointment of directors.

The Board delegates responsibility for overseeing the implementation of strategy
and policies to the executive directors. It also delegates certain responsibilities to
a number of Board Committees.

How does the Board carry out its responsibilities?

The Board discharges its responsibilities through an annual programme of Board
and Committee meetings. Directors’ attendance at meetings held in the year is
set out on page 70. At least one meeting is combined with a Board visit to sites
within the Company’s property portfolio; in 2012 the Board visited the Trentham
Estate, Phoenix Business Park and the Hednesford Town Centre development.
During the year the Board approved an annual agenda plan to ensure that all
necessary matters are reserved for Board decision and are afforded adequate
time for discussion.

What is the Chairman’s role?

As Chairman, Bill Shannon’s role is to lead the Board. He is responsible for ensuring
both an effective Board and effective contribution from the directors based on a
culture of openness, debate and constructive challenge. In particular, the Chairman:
• chairs the Board meetings, sets the agenda and ensures that information packs
containing comprehensive briefing papers are distributed to the Board sufficiently
in advance of each Board meeting;

• takes the lead in providing a comprehensive, formal and tailored induction

programme for new directors and regularly reviewing and agreeing with each
director any training and development needs;

• leads on Board performance evaluation, including the evaluation of the directors

individually and the Board Committees;

• maintains an effective working relationship with the Chief Executive by providing

support and advice;

• ensures effective communication with shareholders; and
• as Chairman of the Nomination Committee, initiates change and plans

succession in relation to Board appointments (other than in relation to the
appointment of a successor as Chairman).

69 St. Modwen Properties PLC
Annual Report and Accounts 2012

Q:
A:

Does the Chairman hold any other appointments?

Yes, Bill Shannon is currently a non-executive director of Johnson Service Group
plc, a FTSE AIM listed company.

What is the Chief Executive’s role?

Bill Oliver has day to day management responsibility for the Group and for the
implementation of strategy and policies approved by the Board. In particular he:
• develops and presents to the Board the long-term commercial and financial

strategy of the Company;

• recommends to the Board annual operating and capital budgets;
• approves property acquisitions and disposals in accordance with authority levels

delegated by the Board;

• reviews and reports to the Board on operational performance; and
• provides input to the Remuneration Committee on the policy for the

remuneration of the executive directors.

In carrying out his responsibilities, the Chief Executive is assisted by Michael Dunn,
Group Finance Director, and Steve Burke, Construction Director.

What are the Committees of the Board and what do they do?

Subject to those matters reserved for its decision, the Board delegates certain
responsibilities to a number of standing Committees:

Committee

Role

Audit Committee
(comprising independent
non-executive directors)

Nomination Committee
(comprising the Chairman and
independent non-executive
directors)

Remuneration Committee
(comprising independent
non-executive directors)

Monitors the integrity of the financial
reporting and audit processes, reviews
external valuations of the property
portfolio and assesses the Company’s
risk management and internal control
systems. a report on its activities during
the year is given on pages 76 to 78.

recommends Board and Board
Committee appointments which ensure
an appropriate mix of skills and
experience and reviews succession
planning against the leadership needs of
the Group. a report on its activities during
the year is given on pages 79 and 80.

Determines and agrees with the Board
the Group’s general policy on executive
and senior management remuneration
and designs the Company’s share
incentive schemes. the Directors’
remuneration report is set out on pages
81 to 94.

Membership of the Committees is set out on pages 64 and 65. Each Committee
has written terms of reference which have been approved by the Board and are
reviewed periodically to ensure that they continue to comply with the latest legal
and regulatory requirements and best practice guidance.

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70 St. Modwen Properties PLC
Annual Report and Accounts 2012

Corporate Governance Report (continued)

lEaDErShip ContinuED
Q:

How many Board and Committee meetings did directors attend in
2011/12?

Details of Board and Committee attendances by all directors who held office during
the year are set out below 1:

Director

Bill Shannon (Chairman)

Bill oliver (Chief
Executive)

Michael Dunn (Group
Finance Director)

Steve Burke
(Construction Director)

kay Chaldecott (nED)

Simon Clarke (nED) 2

David Garman (Senior
independent Director)

katherine innes ker
(nED) 3

lesley James (nED)

John Salmon (nED)

Main Board

Audit
Committee

Remuneration
Committee

Nomination
Committee

10/10

2/2

8/10

10/10

9/10

10/10

–

1/1

3/3

5/5

3/3

–

2/2

5/5

–

0/1

3/3

1/1

3/3

1/1

1 Actual attendance / maximum number of meetings a director could attend.

2 Simon Clarke was unable to attend the Board and Nomination Committee meetings in February due

to illness and the Board meeting in May due to prior business commitments.

3 Katherine Innes Ker was unable to attend the Board meeting in October due to illness.

Directors’ independence

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Independent
Non-independent

71 St. Modwen Properties PLC
Annual Report and Accounts 2012

What is the profile of the Board?

EFFECtivEnESS
Q:
A:

The Board currently comprises three executive and seven non-executive directors,
including the Chairman. With the exception of Simon Clarke, the Board considers
that all of the non-executive directors are independent and is not aware of any
relationship or circumstance likely to affect the judgement of any director.

Independence and a broad range of skills, experience, knowledge and diversity
(including gender diversity) are represented on the Board. Biographical details
of all directors are given on pages 64 and 65.

At the 2013 Annual General Meeting (AGM), and in accordance with the
Company’s Articles of Association, shareholders will be asked to elect Kay
Chaldecott to the Board. All other directors, with the exception of Katherine Innes
Ker and David Garman who both retire at the conclusion of the AGM, will seek re-
election in accordance with the provisions of the Code.

What is the Board’s view on gender diversity?

Q:
A:

The Board acknowledges the importance of diversity in all forms and recognises
the benefits that it can bring to both the Board and throughout the business. With
regard to gender diversity, the Company currently has 30% female representation
on the Board which is ahead of the 25% target outlined by Lord Davies in his report
“Women on Boards” published in February 2011.

Skills

As at 30th November 2012 gender diversity was as follows:

At Board level

women holding directorships:

women Chairs (Board and Committees):

women executive directors:

women non-executive directors (including the Chairman):

Below Board level

percentage of women in senior executive positions:

percentage of women in the organisation:

Number (%)

3 (30%)

1 (25%)

0 (0%)

3 (50%)

(%)

13%

45%

Q:
A:

How has membership of the Board changed during the year?

Board composition continues to develop and was further strengthened during
the year with the appointment of Kay Chaldecott as a non-executive director
in October 2012. She has a long and distinguished career in the UK retail
property sector enabling her to bring additional industry expertise to the Board.
In accordance with the Company’s Articles of Association, shareholders will be
asked to elect her to the Board at the 2013 AGM. Further information on the
process followed in respect of this appointment can be found in the Nomination
Committee report on pages 79 to 80.

Finance
Operations
HR

Board gender split

Men
Women

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72 St. Modwen Properties PLC
Annual Report and Accounts 2012

Corporate Governance Report (continued)

EFFECtivEnESS ContinuED
Q:
A:

Are any further changes to Board composition anticipated?

As announced on 29th January 2013 Katherine Innes Ker, an independent non-
executive director, and David Garman, the Senior Independent Director, will retire
from the Board with effect from the conclusion of the 2013 AGM. The search
for David’s replacement is underway and an announcement will be made in
due course.

Q:
A:

What is the induction process for new directors?

The Chairman, assisted by the Company Secretary, is responsible for the induction
of all new directors. On joining the Board, a director receives a comprehensive
induction pack which includes background information on the Company,
material on matters relating to the activities of the Board and its Committees
and governance-related information (including the duties and responsibilities of
directors). The director meets with the executive directors to be briefed on strategy
and performance and site visits are scheduled. Major shareholders are also offered
the opportunity to meet newly appointed directors should they express a desire
to do so.

What arrangements are in place for director training and development?

The Company is committed to the continuing development of directors in
order that they may build on their expertise and develop an ever more detailed
understanding of the business and the markets in which St. Modwen operates.
Training and development needs are discussed with each director by the
Chairman as part of the individual performance evaluation process and kept under
review. Development activities include visits to sites within the Company’s property
portfolio, both as a Board and individually, regular presentations to the Board by
Regional Directors on key projects, and meetings with Jones Lang LaSalle to
review their external property valuation reports. The attendance by members of
Board Committees on courses relevant to aspects of their respective Committee
specialisms is also encouraged.

Can the directors seek independent professional advice?

In addition to having direct access to the advice and services of the Company
Secretary, all directors are able to seek independent professional advice in the
course of their professional duties at the Company’s expense.

How do you assess the effectiveness of the Board and its Committees?

In 2012 an independent external review of the effectiveness of the Board and its
Committees was conducted by Dr Tracy Long of Boardroom Review. Boardroom
Review does not provide any other services to the Company. The review focused
on the activities of the Board in terms of its approach to strategy and operations,
risk and control and performance management, together with Board culture and
dynamics and the way in which it optimises its use of time. The process involved
in-depth confidential interviews with each director, observation of Board and
Committee meetings and a review of selected papers. The results of the evaluation
exercise were presented to the Board in December 2012. The output remains
under consideration by the Board and any agreed changes will be implemented as
soon as practicable. Board and Committee terms of reference will also be reviewed
in light of any changes adopted.

Board turnover / refreshment %

2010

2011

2012

Tenure of directors as at
30th November 2012
Years

Less than 3
3–6
7–9
More than 9

73 St. Modwen Properties PLC
Annual Report and Accounts 2012

How is the performance of the directors assessed?

EFFECtivEnESS ContinuED
Q:
A:

The individual performance of the directors is evaluated through one-to-one
discussions with the Chairman. David Garman, as Senior Independent Director,
led the review by the non-executive directors of the Chairman’s performance,
which took into account the views of the executive directors. No actions were
considered necessary as a result of these evaluations and the Chairman confirms
that the performance of each director continues to be effective, that they continue
to demonstrate commitment to their respective roles and that their respective skills
complement one another to enhance the overall operation of the Board.

aCCountaBility
Q:
A:

What is the Board’s approach to financial and business reporting?

When reporting to shareholders the Board aims to present a fair, balanced and
understandable assessment of the Company’s position and prospects and is
assisted in this by the Audit Committee. This responsibility covers the annual and half
year Report and Accounts, other price sensitive public reports, reports to regulators
and information required to be presented by statutory requirements. The assessment
for the year ended 30th November 2012 is provided in the Business Review
sections of this Annual Report. The responsibilities of the directors in respect of the
preparation of the Annual Report are set out on page 98 and the auditor’s report
on page 99 includes a statement by Deloitte about their reporting responsibilities.
As set out on page 97, the directors are of the opinion that the Company is a going
concern. The Board considers that the 2011/12 Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company’s performance, business model
and strategy.

Q:
A:

What is the Board’s responsibility for managing risk?

The Board is ultimately responsible for maintaining sound risk management and
internal control systems. Its policy is to have systems in place which optimise the
Company’s ability to manage risk in an effective and appropriate manner. These
systems also include financial controls, controls in respect of the financial reporting
process and controls of an operational and compliance nature. The Board’s
approach to risk management is supported by an oversight structure which includes
the Audit Committee. St. Modwen’s risk management and internal control systems
are designed to identify, manage and, where practicable, reduce and mitigate the
effect of the risk of failure to achieve business objectives. They are not designed to
eliminate such risk and can only provide reasonable, not absolute, assurance against
material misstatement or loss.

What are the Company’s key internal controls?

The risk management and internal control system includes comprehensive monthly
reporting to the Board on all activities through detailed portfolio analysis, property
development progress reviews, management accounts and a comparison of
committed expenditure against available facilities. Detailed annual budgets are
reviewed by the Board and revised forecasts for the year are prepared on a regular
basis, including explanations of any variances between actual and budgeted
performance. There are clearly defined procedures for the authorisation of capital
expenditure, purchases and sales of development and investment properties,
construction activity, contracts and commitments together with 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 bribery and anti-corruption, fraud prevention,
whistleblowing, health and safety, employment and IT.

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74 St. Modwen Properties PLC
Annual Report and Accounts 2012

Corporate Governance Report (continued)

Is there an internal audit function?

aCCountaBility ContinuED
Q:
A:

Yes, the Company has a full time Internal Audit Manager. During the year, the
Audit Committee approved the Group Internal Audit Charter which sets out the
objectives, accountability and independence, authority, responsibilities, scope
of work, and standards and performance for internal audit. The activities of the
function are focused on the controls that mitigate the principal risks faced by the
Group. Reports are prepared for the executive management and the findings are
reported to the Audit Committee, which also reviews, approves and monitors the
progress of internal audit plans for the year. Further information can be found in
the Audit Committee Report on pages 76 to 78.

How does the Board ensure that its risk management and internal control
systems are effective?

The Audit Committee is responsible for reviewing the ongoing control process.
During the year it considered the effectiveness of the systems of internal control
through a detailed report from senior management which sets out 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. Key internal controls are also reviewed
by internal audit as part of the annual audit plan and the Audit Committee receives
and considers regular reports in respect of these reviews.

Both the Board and the Audit Committee review and approve the Group Risk
Register, which is maintained by executive management, on an annual basis.
During the year, the Internal Audit Manager facilitated workshops in the business
to embed further the risk management system. A summary of the principal risks
which could have a material impact on the Group is given on pages 54 to 57.

The Board has reviewed the effectiveness of the Group’s systems of internal control
and risk management during the period covered by this Annual Report. It confirms
that the processes described above, which accord with the guidance on internal
control (the revised Turnbull Guidance), have been in place throughout that period
and up to the date of approval of this report. The Board also confirms that no
significant failings or weaknesses have been identified.

rEMunEration

The primary objective of the Company’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
with demanding targets in order to align the interests of directors and shareholders and to
reward financial success appropriately. The policy is structured so as to be aligned with
key strategic priorities and to be consistent with a Board-approved level of business risk.
Details of the Company’s policy on remuneration and the elements of directors’
remuneration are set out in the Directors’ Remuneration Report on pages 81 to 94.

75 St. Modwen Properties PLC
Annual Report and Accounts 2012

How does the Board engage with shareholders?

rElationS with SharEholDErS
Q:
A:

The Board has a comprehensive investor relations programme which aims
to provide existing and potential investors with a means of developing their
understanding of St. Modwen. The programme is split between institutional
shareholders (which make up the majority of shareholders), private shareholders
and debt investors. Feedback from the programme of events is provided to
the Board to ensure that they develop an understanding of the Company’s
major investors.

As part of the programme, presentations on the half year and annual results are
given in face to face meetings and conference calls with institutional investors,
analysts and the media. Copies of these presentations are published on the
Company’s website at www.stmodwen.co.uk together with interim management
statements. In 2012 the Company held an investor day for institutional investors
and analysts which included presentations on current trading, the Company’s
residential development business and a tour of the Longbridge site in Birmingham.
Meetings with principal shareholders, including the Clarke and Leavesley families,
were also held and the Company had regular dialogue with its key relationship
banks. The Chairman is available to meet with institutional shareholders and
investor representatives to discuss matters relating to strategy and governance.
Private shareholders are encouraged to give feedback and communicate with
the Board through the Company Secretary.

To whom do shareholders address any concerns?

The Chief Executive and Group Finance Director are available to meet shareholders
throughout the year. The Chairman and Senior Independent Director are also
available to discuss any issues or concerns that shareholders may have. During
the year no investor concerns were raised.

What is the purpose of the AGM?

The AGM provides an opportunity for all shareholders to vote on the resolutions
proposed and to question the Board and the Chairs of the Board Committees on
matters put to the meeting. The results of voting at general meetings are published
on the Company’s website, www.stmodwen.co.uk. The notice of meeting for the
2013 AGM can be found on pages 151 to 157.

Q:
A:

CoMplianCE StatEMEnt

This Corporate Governance statement, together with the Audit Committee report, the
Nomination Committee report and the Directors’ Remuneration Report, provide a
description of how the main principles of the Code have been applied by St. Modwen
in 2011/12. The Code is published by the Financial Reporting Council and is available
on its website at www.frc.org.uk

Throughout the financial year ended 30th November 2012, St. Modwen was in
compliance with the relevant provisions set out in the Code with the exception of
provisions C.3.1 and D.2.1 which require that membership of the Audit and
Remuneration Committees respectively should comprise independent non-executive
directors. As noted in the 2010/11 Annual Report, Simon Clarke was a member of both
the Audit and Remuneration Committees but was not regarded as an independent
non-executive director within the meaning of the Code given that he represents the
interests of the Clarke and Leavesley families, who together hold approximately 21.4% of
the Company’s issued share capital. Noting feedback received from institutional investor
groups in relation to Simon’s Committee membership, the Board agreed that he should
step down from both Committees with effect from 23rd April 2012. Since then the
Company has been in compliance with provisions C.3.1 and D.2.1.

This statement complies with sub-sections 2.1, 2.2(1), 2.3(1), 2.5, 2.7 and 2.10 of Rule 7
of the Disclosure Rules and Transparency Rules of the Financial Services Authority. The
information required to be disclosed by sub-section 2.6 of Rule 7 is shown in the section
entitled Other Governance and Statutory Information.

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76 St. Modwen Properties PLC
Annual Report and Accounts 2012

Audit Committee Report

John SalMon

Chairman of the Audit Committee

CoMMittEE MEMBErShip

The Committee comprises the following directors, all of whom served throughout the financial year unless indicated otherwise below:

Director

John Salmon

kay Chaldecott

David Garman

katherine innes ker

lesley James

Audit Committee Position

Chairman

Member (with effect from 17th December 2012)

Member

Simon Clarke was a member of the Committee until 23rd April 2012 when he stood down; he continues to attend meetings of the
Committee as an observer.

As a former partner of PricewaterhouseCoopers LLP, John Salmon, the Committee Chairman, is considered by the Board to have
recent and relevant financial experience as required by the Code.

rolE oF thE CoMMittEE

The Committee is responsible for monitoring the integrity of the Financial Statements, including formal announcements relating to its
performance, and considers the appropriateness of accounting policies. The Committee also reviews the adequacy and effectiveness
of the Company’s internal controls and risk management systems. It considers the work and plans of the Group’s internal audit function
and assesses the function’s effectiveness, and reviews reports and plans from, and consults with, the external auditor, monitoring their
independence and the effectiveness of the external audit process.

The Committee’s terms of reference are available on the Company’s website at www.stmodwen.co.uk. The terms of reference were
reviewed during 2012 to ensure that they continue to reflect accurately the Committee’s remit.

aDviCE proviDED to thE CoMMittEE

The Committee has direct access to both the Internal Audit Manager and external auditor outside formal Committee meetings.
Whilst permitted to do so, no member of the Committee, nor the Committee collectively, sought outside professional advice beyond
that which was provided directly to the Committee by the external auditor and the external valuer during 2011/12.

77 St. Modwen Properties PLC
Annual Report and Accounts 2012

CoMMittEE’S aCtivitiES

The Committee met on three occasions in 2011/12; members’ attendance at meetings
is set out in the table on page 70. The Chairman of the Board, Group Finance Director,
Construction Director, Group Financial Controller, Internal Audit Manager, the audit
engagement partner and other representatives from Deloitte LLP and the Company
Secretary attended meetings of the Committee by invitation.

The Committee also met without any executive management present and on two
occasions held private sessions with the Internal Audit Manager and external auditor.

Matters formally reviewed and discussed by the Committee during the financial year
are set out below.

Financial reporting
• monitoring the financial reporting process, including the review of the half year and
annual results, commentary and announcements together with the Annual Report.
Following its review, the Committee has advised the Board that it is of the view that
the 2011/12 Annual Report and Accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to assess
the Company’s performance, business model and strategy;

• considering the continuing appropriateness of accounting policies and key

judgements. Particular consideration was given to the Project MoDEL contract to
redevelop RAF Uxbridge, the acquisition of full ownership of the Sowcrest and Holaw
investments from the Company’s previous joint venture partner, and share-based
payment accounting;

• receiving independent property valuation reports prepared by Jones Lang LaSalle
which detailed movements resulting from activities undertaken by the Company
and those arising from changes in the property market;

• a going concern review; and

• considering reports prepared by the external auditor on the half year and

annual results.

Risk management and internal control
• receiving updates on corporate risk assessment management activities;

• reviewing the Group’s risk register, including appropriate mitigating actions;

• receiving an annual report on internal control;

• considering reports on the Group’s tax compliance position; and

• approval of a formal policy on fraud prevention.

Internal audit
• receiving updates on the activities of internal audit;

• assessing implementation status reports on internal audit recommendations;

• considering and approving the internal audit programme of reviews of the Group’s

processes and controls, including coverage and allocation of resource; and

• reviewing the Group Internal Audit Charter which sets out the objectives,

accountability and independence, authority, responsibilities, scope of work,
and standards and performance for internal audit.

Allocation of time spent at
Audit Committee meetings
in 2011/2012
%

1. Financial reporting
2. Valuation
3. Risk management
& internal control
4. External audit
5. Internal audit

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78 St. Modwen Properties PLC
Annual Report and Accounts 2012

Audit Committee Report (continued)

External auditor
• considering and approving the proposed audit plan prepared by the external auditor;

• review of the external auditor management letter containing observations arising from the annual audit leading

to recommendations for control or financial reporting improvement; and

• monitoring the independence of the external auditor and the effectiveness of the external audit process.

The Committee is responsible for the development, implementation and monitoring of the Company’s policies on external audit.
The policies, designed to maintain the objectivity and independence of the external auditor, regulate the appointment of former
employees of the external audit firm and set out the approach to be taken when using the external auditor for non-audit work.

Non-audit services provided by the external auditor are monitored throughout the year by the Committee. The Committee
recognises that whilst it is cost effective for the external auditor to provide tax compliance and tax planning services to the
Group, other services may only be provided where alternative providers do not exist or where it is cost effective or in the Group’s
interest for the external auditor to provide such services. The external auditor would not be invited to provide any non-audit
services where it was felt that this could adversely affect their independence or objectivity; such services would include the
provision of internal audit and management consulting activities.

During 2011/12 non-audit work included tax compliance and advisory services together with property and planning advice
provided by Drivers Jonas Deloitte (now Deloitte Real Estate, part of Deloitte LLP). The Committee concluded that undertaking
such work did not compromise auditor independence or objectivity. Given their detailed understanding of the business, the
external auditor was able to provide this work more cost efficiently and effectively than an alternative provider who would not
have benefitted from pre-existing knowledge of the business. Further analysis of external auditor remuneration is disclosed in
Note 3b to the Group Financial Statements.

The Group’s current external auditor, Deloitte LLP was appointed in 2007 following a tender process. The audit engagement
partner responsible for the Group’s audit was rotated in 2012 in line with ethical standards published by the Auditing Practices
Board. Having considered Deloitte’s independence, compliance with relevant statutory, regulatory and ethical standards and
assessed its objectivity, the Committee unanimously recommended to the Board that a resolution for the reappointment of
Deloitte LLP as the Company’s external auditor be proposed to shareholders at the 2013 AGM. The external audit contract will
be tendered again in line with the transitional arrangements for audit tendering published by the Financial Reporting Council.
There are no contractual obligations which would restrict the Company’s selection of external auditor.

79 St. Modwen Properties PLC
Annual Report and Accounts 2012

Nomination Committee Report

Bill Shannon

Chairman of the Nomination
Committee

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CoMMittEE MEMBErShip

The Committee comprises the following directors, all of whom served throughout the financial year:

Director

Bill Shannon

David Garman

lesley James

Nomination Committee Position

Chairman

Member

Bill Shannon chairs the Committee except when the Committee is dealing with the appointment of a successor as Chairman when the
Senior Independent Director chairs the Committee.

Simon Clarke, Katherine Innes Ker and John Salmon were members of the Committee until 25th June 2012 when they stood down
following a review of Committee composition; Simon continues to attend meetings of the Committee as an observer.

rolE oF thE CoMMittEE

The Committee is responsible for reviewing the structure, size and composition of the Board, succession planning (including the
retirement and appointment of Board members) and making appropriate recommendations to ensure there are suitable levels of
independence and diversity of skills, knowledge, experience and gender on the Board. It also makes recommendations to the Board
both on the composition of the Audit and Remuneration Committees and on the re-appointment of any non-executive director at the
conclusion of his or her specified term of office.

The Committee’s terms of reference are available on the Company’s website at www.stmodwen.co.uk

aDviCE proviDED to thE CoMMittEE

From time to time the Committee appoints external search consultants to provide support in recruiting and selecting potential
candidates for appointment to the Board. During 2011/12 The Zygos Partnership was retained by the Committee as outlined
on page 80; the firm has no other connection with the Company.

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80 St. Modwen Properties PLC
Annual Report and Accounts 2012

Nomination Committee Report (continued)

CoMMittEE’S aCtivitiES

The Committee met on three occasions in 2011/12; members’ attendance at meetings is set out in the table on page 70.

The Committee’s main focus in the financial year was on the structure, size and composition of the Board. Having agreed that the
Board would benefit from a non-executive director with property sector experience, a role profile was prepared. The Zygos Partnership
was engaged to assist with the search and a number of candidates were interviewed. The Committee identified Kay Chaldecott as the
preferred candidate, following which arrangements were made for her to meet the other members of the Board. The Board
unanimously approved the Committee’s recommendation that Kay be appointed and she joined the Board with effect from 22nd
October 2012. The Committee’s recommendation that she be appointed as a member of the both the Audit and Remuneration
Committees was approved with effect from 17th December 2012.

Following a review, the Committee also recommended to the Board (which was unanimously approved) the re-appointment of Lesley
James for a further three year period. The potential approaches to the 2012 Board and Committee effectiveness review were also
considered by the Committee.

In light of his growing portfolio of business interests, David Garman is to step down from the Board with effect from the conclusion of
the 2013 AGM. The Zygos Partnership has been retained to assist with the search for his replacement.

BoarDrooM DivErSity

The search for Board candidates is conducted, and appointments made, on merit, against objective selection criteria. Diversity, whether
in terms of skills, knowledge, experience or gender, is considered by the Nomination Committee when reviewing Board composition
and making recommendations for Board appointments or re-appointments. As stated in the corporate governance report on page 71
the Company currently has 30% female representation on the Board which is ahead of the 25% target outlined by Lord Davies in his
report “Women on Boards” published in February 2011.

Allocation of time spent at
Nomination Committee
meetings in 2011/2012
%

Board composition
Succession planning
Effectiveness

81 St. Modwen Properties PLC
Annual Report and Accounts 2012

Directors’ Remuneration Report

lESlEy JaMES

Chairman of the Remuneration Committee

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ChairMan’S SuMMary StatEMEnt

I am pleased to present the Report on Directors’ Remuneration. This sets out the remuneration paid to the directors in the financial year
ended 30th November 2012 and the policy for the forthcoming year.

The focus on executive pay over the last 12 months has increased to unprecedented levels. In the first half of 2012 the UK
Government’s Department for Business Innovation & Skills (BIS) responded by announcing a far reaching programme of legislative
reforms in remuneration practice. These proposals change the way that we will be required to report to you on directors’ remuneration.
The Remuneration Committee (the Committee) endorses, in principle, the BIS proposals and has agreed to adopt some of the key
requirements early in advance of the formal regulations coming into force. The report therefore follows a new structure this year (and
includes this summary statement) which the Committee hopes you will find helpful and informative.

Despite the challenging economic climate, 2011/12 has been another strong year for St. Modwen. As described in the Business
Review, the results for the year ended 30th November 2012 demonstrate the strength of the Company and the robustness of its
strategy and business model. Our growing exposure to residential development and our ability to take advantage of the resilient market
in London and the South East has helped us to deliver an increase in shareholders’ equity net asset value (NAV) per share of 8% over
the year to 251p and a 10% increase in dividends to 3.63p per share. These results would not have been possible without the
considerable and consistent efforts of each employee, including the executive directors.

Remuneration in 2011/12
In 2011/12, the executive directors had the opportunity to earn a bonus of up to 125% of base salary. As a result of strong individual
performance, aligned with corporate performance that was ahead of budget and market expectations, the annual bonus pay out for
2011/12 awarded to each executive director was 112.5% of base salary (2010/11: between 112.5% and 118.75%).

During the year the 2009 Performance Share Plan awards (measuring performance from 1st June 2009 to 31st May 2012) vested at
45.64%. 50% of this award was based on absolute growth in NAV per share, with a requirement of 20% growth over the three year
period to deliver full vesting. Over the relevant period growth was 18.25% resulting in the 45.64% vesting level. The remainder of the
award was dependent on the Company’s Total Shareholder Return (TSR) performance relative to the FTSE 350 Real Estate Index.
Unfortunately, the Company underperformed the Index over this period resulting in this portion of the award lapsing.

The performance period for the 2010 Performance Share Plan awards ended on 30th November 2012. These awards were subject to
the same performance conditions as the 2009 awards. To reflect the absolute growth in NAV per share of 27.53% over the three year
performance period, awards will vest at 45.89%. The portion of the award dependent on TSR performance relative to FTSE 350 Real
Estate Index will lapse as the Company underperformed the Index over the period.

Remuneration policy for 2012/13
We believe that the remuneration policy and incentive framework currently in place is working well to support the Company’s strategy in
the current economic environment, is helping to retain and motivate our management team and is helping to drive strong returns for our
shareholders. We were pleased to see the vast majority of our shareholders supporting our Directors’ Remuneration Report at the 2012
AGM (99% in favour) and the Committee is proposing that the remuneration policy and structure of the incentive arrangements for
2012/13 remain largely unchanged from those applied in 2011/12.

We look forward to hearing your views in the future and hope to receive your continued support at the AGM.

On behalf of the Board

Lesley James
Chairman of the Remuneration Committee
4th February 2013

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82 St. Modwen Properties PLC
Annual Report and Accounts 2012

Directors’ Remuneration Report (continued)

ForMat oF rEportinG

The Directors’ Remuneration Report has been prepared in accordance with the requirements of the Companies Act 2006 (the 2006
Act), Schedule 8 to the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 (Statutory
Instrument 2008/410) (the Regulations), the Listing Rules and Disclosure Rules of the Financial Services Authority, the principles of the
UK Corporate Governance Code (June 2010) and best practice guidelines.

Furthermore, in response to the UK Government’s proposed legislation regarding the reporting of directors’ remuneration and changes
to associated shareholder voting expected to come into force in October 2013 (the Proposed Regulations), the Directors’
Remuneration Report has been split into two distinct sections: a Policy Report (from page 82) and an Implementation Report (from
page 88). The Policy Report provides details of the Company’s forward looking remuneration policy for 2012/2013 and the
Implementation Report describes how the 2011/12 remuneration policy was implemented during the course of the year. The entire
Directors’ Remuneration Report will be put to an advisory shareholder vote at the AGM on 27th March 2013. It is anticipated that, in line
with the Proposed Regulations, the Policy Report will be put to a binding shareholder vote and the Implementation Report to an
advisory shareholder vote at the 2014 AGM.

The Regulations require the auditor to report to the Company’s shareholders on the audited information within the Directors’
Remuneration Report and to state whether, in their opinion, those parts of the report have been prepared in accordance with the 2006
Act. The auditor’s opinion is set out on page 99 and the sections of the report which have been subject to audit are clearly marked.

rEMunEration poliCy rEport

This part of the Directors’ Remuneration Report sets out the remuneration policy for the Company with effect from 1st December 2012.

How the Remuneration Committee sets the remuneration policy
The primary objective of the Company’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 with
demanding targets in order to align the interests of directors and shareholders and to reward appropriately financial success. The policy
is structured so as to be aligned with key strategic priorities and to be consistent with a Board-approved level of business risk.

In setting the remuneration policy for the executive directors, the Committee takes into consideration the remuneration practices found
in other UK companies with similar market capitalisation and operating in the same sector. It also ensures that the remuneration
arrangements for executive directors are compatible with those for other senior executives.

The overall aim is that executive directors’ remuneration should be market competitive relative to comparable companies with a
significant element being performance related and, therefore, only payable if stretching short-term and long-term performance targets
are achieved.

The Committee considers shareholder feedback received in relation to the Directors’ Remuneration Report each year at a meeting
immediately following the AGM. This feedback, plus any additional feedback received from time to time, is then considered as part of
the Committee’s annual review of remuneration policy.

83 St. Modwen Properties PLC
Annual Report and Accounts 2012

Remuneration policy for executive directors – at a glance
The table below summarises our 2012/13 remuneration policy that will apply for the financial year commencing 1st December 2012.

Element

Purpose & link
to strategy

Operation

Maximum
potential value

Performance targets

Changes for 2012/13

• 2.5% in line with
increases for the
Group’s
employees

• CEO: increase

from £445,832 to
£456,978

• FD: increase from

£267,800 to
£274,495

• Construction

Director: increase
from £294,168 to
£301,522

• No change

Base salary

• To attract, retain

• Reviewed annually

• Other than when

• N/A

and motivate high
calibre individuals
for the role and
duties required

• To provide market

competitive
salaries relative
to the external
market

• To reflect

appropriate skills,
development and
experience over
time

effective 1st
December

• Takes account of

the external
market and other
relevant factors
including internal
relativities and
individual
performance

an executive
director changes
roles or where
benchmarking
indicates individual
salaries require
realignment,
annual increases
will not exceed the
general level of
increases for the
Group’s
employees

Annual bonus

• To provide a clear

• Bonus level is

• 125% of salary for

all executive
directors

and direct
incentive linked
to annual
performance
targets

• To incentivise

determined by the
Committee after
the year end
based on
performance
against targets

annual delivery
of financial,
operational and
strategic measures
at Company and
personal levels

• Committee
discretion to
ensure payouts
reflect corporate
performance

• Non-pensionable

• Clawback

provisions apply

• One third of net

bonus invested in
shares which must
be held for three
years

• Corporate

measures selected
are consistent with
and complement
the budget and
strategic plan

• Alignment with
shareholders
through
investment in
shares

• Growth in profit
before all tax

• Growth in NAV per

• Growth in dividend

• Gearing

maintained at
acceptable level

• Personal targets

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84 St. Modwen Properties PLC
Annual Report and Accounts 2012

Directors’ Remuneration Report (continued)

Element

Long-term
incentives

Purpose & link
to strategy

• Performance

Share Plan aligned
to key strategic
objective of
delivering strong
returns to
shareholders and
sustained,
long–term
performance

Pension

Other benefits

• To help attract and
retain high calibre
individuals

• To provide market

consistent
retirement benefits

• To help attract and
retain high calibre
individuals

Maximum
potential value

• Awards over
shares worth
125% of salary
for all executive
directors

Performance targets

Changes for 2012/13

• Performance

• No change

measured over
three years

• Performance

targets based on
relative and
absolute TSR
targets

• Employer

• N/A

• No change

contribution of
15% of base salary
for all executive
directors

Operation

• Annual award of
performance
shares

• Committee
discretion to
ensure payouts
reflect corporate
performance

• Clawback

provisions apply

• Executive directors

also eligible to
participate in the
Company’s SAYE
scheme on the
same terms as
other employees

• Choice of
Company
contribution to the
defined
contribution
scheme or cash
supplement

• Provision of private
medical insurance

• N/A

• Company car/fuel

• Non-pensionable

• N/A

• No change

• N/A

• No change

Share ownership
guidelines

• To provide

alignment between
executive directors
and shareholders

• Shareholding of
100% of base
salary for all
executive directors

• Executive directors
are expected to
build up a
shareholding worth
100% of base
salary over a five
year period

The above policy also forms the basis on which a new executive director would be remunerated on appointment. However, the
Committee retains flexibility to offer remuneration on appointment outside the above policy in order to facilitate the recruitment of high
calibre individuals.

Further detail on the elements of the remuneration policy can be found on pages 85 to 87.

On the basis of expected value of long-term incentives and achievement of on-target performance against objectives for the annual
bonus arrangements, the total annual remuneration (excluding pension benefits) of each executive director under the remuneration
policy is weighted between performance-related and non performance-related elements, valued as at the time of award of long-term
incentives, at around 60% and 40% respectively.

85 St. Modwen Properties PLC
Annual Report and Accounts 2012

Remuneration policy for executive directors – in detail
Base salary

Base salaries are reviewed (though not necessarily increased) annually having regard to market conditions, benchmark data and other
relevant factors such as pay increases for the Group’s employees, internal relativities and individual performance. The Committee is
mindful of institutional investors’ concerns on the upward ratchet of base salaries and does not consider benchmark data in isolation.

In line with the average salary increase awarded to the Group’s employees, the executive directors received an annual salary increase of
2.5% with effect from 1st December 2012. Base salaries payable from this date are as follows:

Executive director

Bill oliver

Steve Burke

Michael Dunn

Annual bonus

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Salary £

456,978

301,522

274,495

In 2012/13, the executive directors will have the opportunity to earn a bonus of up to 125% of base salary.

The structure of the bonus plan is consistent with the structure operated in the previous year:

• Bonus payments determined by achievement of a mixture of corporate measures and personal targets.

• The corporate measures selected are consistent with and complement the budget and strategic plan for the year. NAV performance
has the largest weighting amongst the corporate measures and other measures include profit, dividend growth and gearing levels.

• Notwithstanding performance against individual targets, the Committee will retain an overriding discretion to ensure that overall

bonus payouts reflect its view of corporate performance during the year.

• Payment of the bonus will be conditional upon the executive directors undertaking to invest at least one third of the bonus received,
after payment of income tax and national insurance, in the Company’s shares and to retain those shares for a minimum period of
three years.

• All bonuses paid are subject to potential clawback, at the Committee’s discretion, for a period of four years following the end of the
bonus year in the event that a later restatement of accounts occurs or there is other discovered misconduct which, if known at the
time, would have meant that a lower or nil bonus would have been paid.

Payment of bonus will not be dependent on achievement of any single target in isolation, since the measures and targets are all of key
importance to the short and longer-term health of the Company and the Committee does not wish to distort behaviour by focusing on
a single element.

The executive directors’ performance will be assessed individually by the Committee against the measures and targets, relying on
audited information where appropriate, and having regard to the value which has been created for shareholders.

Long-term incentives – Performance Share Plan (PSP)

In 2012/13, PSP awards granted to the executive directors will be over shares worth 125% of salary.

Awards are subject wholly to TSR-related performance targets measured over three financial years, with 50% of the award based on
relative performance and 50% based on absolute growth. The Committee believes that this combination provides strong alignment with
the interests of shareholders and complements the focus on operational performance measures in the annual bonus plan.

In respect of absolute TSR performance, TSR growth over the three year performance period of 20% will earn 12.5% of the shares
awarded and growth of 50% will earn 50% of the shares awarded, with straight line vesting between these points. For relative TSR
performance, TSR equal to the FTSE All-Share Real Estate Investment & Services Index over the three year performance period will
earn 12.5% of the shares awarded and TSR of 120% of the Index will earn 50% of the shares awarded, with straight line vesting
between these points.

In calculating TSR, a three month average is used at both the start and the end of the performance period to ensure that the calculation
is not impacted by potential volatility arising from day-to-day share price fluctuations.

The TSR data and St. Modwen’s relative positioning is obtained from JP Morgan Cazenove to ensure that performance is
independently verified.

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86 St. Modwen Properties PLC
Annual Report and Accounts 2012

Directors’ Remuneration Report (continued)

Notwithstanding TSR performance, the Committee also has to be satisfied that two underpin conditions are met before permitting the
2012/13 PSP awards to vest, namely:

• that the extent of vesting under the TSR conditions is appropriate given the general financial performance of the Company over the

performance period; and

• if no dividend has been paid on the last normal dividend date prior to the vesting date or if the Committee believes that no dividend

will be paid in respect of the year in which the award vests, the award will not vest at that time and vesting will be delayed (subject to
continued employment) until dividend payments are resumed.

The Committee reviews these performance conditions when determining PSP awards in each year, in order to reflect changes
in the outlook for the sector and the Company, and to ensure that targets remain challenging.

The PSP includes a clawback facility whereby the value (calculated at vesting) of any PSP awards that were granted after 1st January
2012 may be reduced where the value of future annual bonus cash payments are insufficient to recover fully any clawback applicable
to the annual bonus arrangements or, at the Committee’s discretion, within a period of four years following the end of the performance
period for an award, there is material misstatement of the accounts or an error in the calculation of any performance condition which
resulted in excess PSP awards vesting to the participant or there is other misconduct which, if known at the time, would have meant
that a lower or nil award would have vested.

During the year the Company received approval from HM Revenue & Customs (HMRC) to structure the PSP so as to enable
participants to benefit from UK tax efficiencies under HMRC agreed share schemes legislation. Accordingly awards may be structured
as Approved Performance Share Plan awards and comprise an HMRC approved option (in respect of the first £30,000 worth of an
award) and a PSP award for amounts that exceed this limit. The number of shares that may be delivered under the PSP award will be
adjusted at vesting/exercise to ensure that the total pre-tax value delivered to participants remains unchanged.

Executive directors may also participate in the Company’s Saving-Related Share Option Scheme on the same terms as all other employees.

Pension

Retirement benefits take the form of a supplementary allowance, expressed as a percentage of basic salary, which may be delivered by
means of either a cash payment or as a payment to the defined contribution section of the Company’s pension scheme. As a result of
historical contractual commitments, retirement benefits for Steve Burke are also delivered by membership of the defined benefit section
of the Company’s pension scheme.

Other benefits

Benefits in kind comprise mainly the provision of company car, fuel and health insurance. The level of benefits provided to executive
directors is consistent with that provided by other UK listed companies. These benefits do not form part of pensionable earnings.

Share ownership guidelines

In order to reinforce the alignment of their interests with those of shareholders, executive directors are expected to build up a
shareholding in the Company over a five year period worth at least 100% of their base salary.

Service contracts

All executive directors have service contracts of no fixed term, with notice periods of 12 months from the Company and either 12
months (Michael Dunn) or six months (Bill Oliver and Steve Burke) from the individual. Bill Oliver and Steve Burke’s service contracts
reflect terms agreed on their appointment to the Company. For all future recruits notice periods will be 12 months from both the
Company and the individual.

No executive director has any contractual rights to compensation on loss of office (apart from payment in lieu of notice of salary and
benefits, where appropriate). Rights to outstanding incentive awards would be dealt with by the Committee in accordance with the
rules of the relevant scheme.

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

The dates of the executive directors’ service contracts are as follows: Bill Oliver – 24th January 2000; Steve Burke – 1st January 2006;
Michael Dunn – 9th November 2010.

87 St. Modwen Properties PLC
Annual Report and Accounts 2012

Remuneration policy for Chairman and non-executive directors
The remuneration policy for the Chairman and the other non-executive directors is to pay fees in line with those paid by other UK listed
companies of comparable size. Such fees may include additional payments to the Senior Independent Director and the Chairmen of
Board Committees to reflect the significant additional responsibilities attached to these positions.

Fees

The Chairman’s fee is determined by the Board on the recommendation of the Committee and the fees of the non-executive directors
are determined by the Board following recommendations by the executive directors. Neither the Chairman nor the other non-executive
directors participate in the annual bonus or long-term incentive arrangements or in the pension scheme, nor do they receive benefits
in kind.

A review of the non-executive directors’ fees was undertaken by the Board in 2012 save in relation to the Chairman’s fee which was
approved by the Board in 2010 on his appointment. Following the review, the standard base fee for 2012/13 is £40,000 with additional
fees of £9,000 being paid to the Chairmen of the Audit and Remuneration Committees and £6,000 to the Senior Independent Director.
The Chairman’s fee is £135,000.

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Terms of appointment

The terms of service of the Chairman and the other non-executive directors are contained in letters of appointment. The current policy
is for non-executive directors to serve on the Board for, typically, two three-year terms, subject to mutual agreement and performance
reviews. Appointments may be terminated upon three months’ notice by either party and there are no provisions for compensation in
the event of termination.

The dates of the Chairman’s and other non-executive directors’ letters of appointment and of expiry of current terms are as follows:

Non-executive director

Bill Shannon

kay Chaldecott

Simon Clarke

David Garman

katherine innes ker

lesley James

John Salmon

Date of current letter
of appointment

Expiry of current term

18th October 2010

30th October 2013

22nd October 2012

21st October 2015

31st October 2011

10th October 2013

19th April 2010

27th March 2013

19th October 2009

27th March 2013

24th October 2012

18th October 2015

31st October 2011

16th October 2014

Following her appointment to the Board in October 2012 and in accordance with the Company’s Articles of Association, Kay
Chaldecott will retire and offer herself for election at the 2013 AGM. With the exception of Katherine Innes Ker and David Garman, who
will retire at the conclusion of the 2013 AGM, all other directors will retire and offer themselves for re-election in accordance with the UK
Corporate Governance Code.

Dilution limits
In accordance with the recommendations of the Association of British Insurers, the number of new shares that may be issued to satisfy
awards granted under the PSP and any other employee share scheme is restricted to 10% of the issued ordinary share capital of the
Company over any 10 year period. At 30th November 2012 the Company had used 5.59% of the share capital available.

The Company currently satisfies awards under all employee share schemes from market-purchased shares sourced from the
St. Modwen Properties PLC Employee Share Trust (the Trust). The Trust currently holds a total of 215,754 shares in the Company
(2011: 215,754 shares) and has waived the right to receive dividends paid on these shares.

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88 St. Modwen Properties PLC
Annual Report and Accounts 2012

Directors’ Remuneration Report (continued)

iMplEMEntation rEport

Committee membership
The Committee comprises the following directors, all of whom served throughout the financial year unless indicated otherwise below:

Director

lesley James

kay Chaldecott

David Garman

katherine innes ker

John Salmon

Bill Shannon

Remuneration Committee position

Chairman

Member (from 17th December 2012)

Member

Simon Clarke was a member of the Committee until 23rd April 2012 when he stood down; he continues to attend meetings of the
Committee as an observer.

The Committee was also assisted in its deliberations by the Chief Executive and the Company Secretary, who were not present when
their own remuneration arrangements were discussed.

Role of the Committee
The principal role of the Committee is to determine and agree with the Board the policy for the remuneration of the executive directors.
Within the framework of the agreed policy the Committee is responsible for all aspects of the executive directors’ remuneration, for
setting the Company Chairman’s fee, for monitoring the remuneration of other senior executives and administering the Company’s
long-term incentive arrangements. It undertakes a regular review of the incentive plans to ensure that they remain appropriate to the
Company’s current circumstances, prospects and strategic priorities and that, in particular, the remuneration policy adopted is aligned
with and based on the creation of value for shareholders and provides appropriate incentives for management to achieve this objective
without taking inappropriate business risks. The Committee also reviews and notes annually the remuneration trends across the
Company and any major changes in employee benefit structures.

Advice provided to the Committee
New Bridge Street (NBS), a trading name of Aon Hewitt Limited (the parent company of NBS) has been appointed by the Committee
as its independent remuneration advisers. Neither NBS nor Aon Hewitt Limited undertakes any other work for the Company. NBS is a
signatory to the Remuneration Consultants’ Code of Conduct. Representatives from NBS attend Committee meetings as necessary.

Committee’s activities
The Committee met on five occasions in 2011/12; members’ attendance at meetings is
set out in the table on page 70. The key matters that were considered by the Committee
during the financial year were as follows:

• a review of executive directors’ base salaries for 2011/12 and 2012/13;

• corporate and personal objectives for the 2011/12 annual bonus arrangements

for executive directors and an assessment of performance against targets for both
2010/11 and 2011/12;

• PSP awards granted in 2012, the outturn of awards made in 2009 and performance

conditions for awards to be granted in 2013;

• approval of awards made during 2012 under the Executive Share Option Scheme

and the Saving-Related Share Option Scheme;

• review of a benchmarking report prepared by external advisers in respect of executive

director and senior executive remuneration;

• external advisers’ review of executive remuneration practices, trends and governance;

• approval of the 2010/11 remuneration report; and

• UK Government consultative documentation relating to the reporting of remuneration.

The Committee’s terms of reference are available on the Company’s website at
www.stmodwen.co.uk. The terms of reference were reviewed during 2012 to
ensure that they continue to reflect accurately the Committee’s remit.

Allocation of time spent at
Remuneration Committee
meetings
%

Policy

Implementation &
performance review
Disclosure
Administration

89 St. Modwen Properties PLC
Annual Report and Accounts 2012

Statement of shareholder voting at the AGM
At the 2012 AGM the Directors’ Remuneration Report received the following votes from shareholders:

For

against

Total votes cast (for and against)

votes withheld1

Total votes cast (including withheld votes)

Total number of votes

% of votes cast

140,694,541

1,555,851

142,250,392

6,174,040

148,424,432

98.91%

1.09%

100.00%

4.16%

N/A

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1 A vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes cast ‘For’ and ‘Against’ a resolution.

Performance graph
The graph below is prepared in accordance with the Regulations. It shows the Company’s TSR and that of the FTSE 250 and the FTSE
All-Share Real Estate Investment & Services Indices based on an initial investment of £100 over a five year period to 30th November
2012. Since the Company was a constituent of both the FTSE 250 and the FTSE All-Share Real Estate Investment & Services Indices
during the year, these are considered to be appropriate benchmarks for the graph.

140

120

100

2007

2008

2009

2010

2011

2012

St. Modwen

FTSE 250

FTSE All-Share Real Estate Investment & Services

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90 St. Modwen Properties PLC
Annual Report and Accounts 2012

Directors’ Remuneration Report (continued)

Directors’ remuneration 2011/12
With the exception of the section headed ‘Share Interests’ on page 94, the information set out on pages 90 to 94 represents the
auditable disclosures required by the Regulations which have been audited by the Company’s auditor, Deloitte LLP.

Directors’ remuneration for the year ended 30th November 2012 was as follows:

Base salary/
fees £000

Annual bonus
£000

Benefits
£0001

20122
£000

Director

Executive

Bill oliver

Steve Burke

Michael Dunn

Non-executive

Bill Shannon

kay Chaldecott3

Simon Clarke

David Garman

katherine innes ker

lesley James

John Salmon

total

446

294

268

135

502

331

301

–

20122
£000

984

652

628

977

646

579

135

–

1,362

1,134

2,556

2,666

1 All benefits for the executive directors (comprising mainly the provision of company car, fuel and health insurance) arise from employment with the Company and do not
form part of final pensionable pay.

2 The figures represent total emoluments earned during the relevant financial year, excluding Company pension contributions and supplementary pension allowances.
Emoluments are paid in the same financial year with the exception of annual bonuses which are paid in the financial year following that in which they are earned.

3 Appointed 22nd October 2012.

No director left during the year and no compensation for loss of office was paid.

Annual bonus

In 2011/12, the executive directors had the opportunity to earn a bonus of up to 125% of base salary. The structure of the bonus plan
was the same as that described in the Policy Report on page 85.

The executive directors’ performance was assessed individually by the Committee against the targets, relying on audited information
where appropriate, and having regard to the value which has been created for shareholders.

Despite the challenging economic environment, corporate performance for 2011/12 was ahead of both budget and market
expectations as follows:

• 2% increase in profit before all tax;

• 8% increase in NAV per share;

• 10% increase in total dividends; and

• gearing maintained at below 75%.

On the basis of the Committee’s assessment of corporate and individual performance, bonus payments made to each of the executive
directors were as follows:

Executive director

Bill oliver

Steve Burke

Michael Dunn

% of maximum bonus

% of base salary

90%

112.5%

91 St. Modwen Properties PLC
Annual Report and Accounts 2012

Long-term incentives
Performance Share Plan

During the year the 2009 PSP awards (which measured performance from 1st June 2009 to 31st May 2012) vested at 45.64%. The
performance conditions which applied to the 2009 PSP award together with actual performance are summarised in the table below:

Performance measure

Cumulative growth in nav per share

tSr relative to FtSE 350 real Estate index

total

Threshold

100%
of Index

Vesting at
threshold

12.5%

Maximum

20%

120%
of Index

Vesting at
maximum

Actual
performance

Proportion of
award to vest

50%

18.25%

45.64%

72.81%
of Index

0.00%

45.64%

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The number of shares which vested from the 2009 PSP awards is set out in the table below.

PSP awards held by the executive directors who served during the year, together with any movements, are shown below:

Executive director

Date of grant

Awards held on
1st December
2011

Awards made
during year1

Awards vested
during year2

Awards lapsed
during year

Awards held
on 30th
November
2012

End of
performance
period3

Exercise
period

Bill oliver

24/07/09

294,694

22/02/10

282,154

21/03/11

319,774

–

17/02/12 4

–

363,259

134,498

160,196

134,498

–

282,154

319,774

363,259

896,622

363,259

134,498

160,196

1,099,685

Steve Burke

24/07/09

194,444

22/02/10

186,170

21/03/11

210,992

–

17/02/12 4

–

239,863

88,744

105,700

88,744

–

186,170

210,992

239,863

591,606

239,863

88,744

105,700

725,769

Michael Dunn

21/03/11

230,496

–

17/02/12 4

–

218,362

230,496

218,362

–

230,496

218,362

448,858

N/A 24/07/12 to
23/07/19

30/11/12 22/02/13 to
19/02/20

30/11/13 21/03/14 to
20/03/21

30/11/14 17/02/15 to
16/02/22

N/A 24/07/12 to
23/07/19

30/11/12 22/02/13 to
19/02/20

30/11/13 21/03/14 to
20/03/21

30/11/14 17/02/15 to
16/02/22

30/11/13 21/03/14 to
20/03/21

30/11/14 17/02/15 to
16/02/22

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1 The share price used to calculate the number of shares awarded, under the rules of the PSP, was 153.3p. The closing mid-market share price on the date of the award
was 157p. The performance conditions for the 2012 award mirror those for the 2013 award as described on pages 85 to 86.

2 The share price used to calculate the number of shares which vested when originally awarded, under the rules of the PSP, was 180p. The closing mid-market share
price on the date the shares vested was 177.75p. The performance conditions for the 2009 award are described in the first table above.

3 Performance conditions for the 2009 and 2010 awards are described in the first table above and on page 92 respectively. The performance conditions for 2011 and
2012 mirror those for the 2013 awards as described on pages 85 to 86. In previous Annual Reports the comparator index for the 2011 and 2012 awards was incorrectly
disclosed as the FTSE 350 Real Estate Investment & Services Index.

4 Awards subject to clawback as described on page 86. Awards comprise an HMRC approved option over 19,769 shares with an exercise price of 151.75p and an
unapproved award for the balance; further details can be found on page 86.

No PSP awards were exercised by directors in the year. Dividends are treated as accruing from the date of grant to the date of exercise;
on exercise the total dividend accrued is converted into shares using the average market price for the three dealing days immediately
prior to the date of exercise and released to the director.

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92 St. Modwen Properties PLC
Annual Report and Accounts 2012

Directors’ Remuneration Report (continued)

The three year performance period for the 2010 PSP awards ended on 30th November 2012. The performance conditions which
applied to the 2010 PSP award together with actual performance are summarised in the table below:

Performance measure

Cumulative growth in nav per share

tSr relative to FtSE 350 real Estate index

total

Threshold

7.5%

100%
of Index

Vesting at
threshold

12.5%

Maximum

30%

120%
of Index

Vesting at
maximum

Actual
performance

Proportion of
award to vest

50%

27.53%

45.89%

Negative
to Index

45.89%

Following assessment of the performance conditions, 45.89% of the total awards made will vest on the third anniversary of grant
(22nd February 2013) subject to continued employment. Further details can be found in the table below:

Executive director

Bill oliver

Steve Burke

Total number of shares granted

Number of shares to vest

282,154

186,170

129,480

85,433

Executive Share Option Schemes (ESOS)

ESOS awards held by the executive directors who served during the year, together with any movements, are shown below:

Executive director

Date of grant

Options held on
1st December
2011

Options
granted
during year

Options
exercised
during year1

Options lapsed
during year

Bill oliver

13/08/04

105,610

15/08/05

102,955

208,565

Steve Burke

13/08/04

46,315

15/08/05

39,825

86,140

–

Options held
on 30th
November
2012

105,610

102,955

208,565

46,315

39,825

86,140

Exercise price2 Exercise period

236.31p 13/08/07 to
12/08/14

375.22p 15/08/08 to
14/08/15

236.31p 13/08/07 to
12/08/14

375.22p 15/08/08 to
14/08/15

1 All options have vested in full, having met the performance conditions, but have not been exercised.
2 Adjusted to take account of the dilutive effect of the 2009 equity issue.

No further grants under the ESOS will be made to executive directors other than in very exceptional circumstances.

93 St. Modwen Properties PLC
Annual Report and Accounts 2012

Saving-Related Share Option Scheme (SAYE)

SAYE awards held by the executive directors who served during the year, together with any movements, are shown below:

Options held on
1st December
2011

Options
granted
during year

Options
exercised
during year

Options
lapsed
during year

Executive director

Bill oliver

Date of grant

15/09/09

6,941

Steve Burke

16/08/11

9,887

Michael Dunn

16/08/11

9,887

–

Options held
on 30th
November
2012

6,941

9,887

Exercise price Exercise period

224p 01/10/14 to
31/03/15

156p 01/10/16 to
31/03/17

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The closing mid-market share price on 30th November 2012 was 217.8p and the price range during the year was 108.25p to 220.3p.

Pensions
The Company operates a pension scheme with both defined benefit and defined contribution sections, covering the majority of
employees, including executive directors. As an alternative to a Company contribution scheme, executive directors can receive
a cash supplement.

In relation to the defined benefit 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. The defined benefit section of the scheme was
closed to new members in 1999 and to future accrual in 2009. Steve Burke became a deferred member of the defined benefit scheme
on 1st September 2009.

The information below sets out the disclosures under the UK Listing Rules and the Regulations for the defined benefit scheme:

Accrued
pension at
30th November
20111
£pa

Accrued
pension at
30th November
20121
£pa

Increase
in accrued
pension during
the year
£pa

Increase in
accrued pension
during the year
(excluding
inflation)
£pa

Transfer value
of accrued
benefits at 30th
November 2011
£

Transfer value
of accrued
benefits at 30th
November 2012
£

Increase in
transfer value of
accrued benefits
(excluding
director’s own
contribution)
£

N/A

25,3732

26,6712

N/A

1,297

N/A

504,217

512,798

N/A

8,581

N/A

Bill oliver

Steve Burke

Michael Dunn

1 The accrued annual pension includes entitlements earned as an employee prior to becoming an executive director as well as for qualifying services after becoming

an executive director.

2 These figures have been calculated by applying deferred revaluation to Steve Burke’s deferred pension as at the date that accrual ceased under the defined benefits

section of the scheme.

Membership of the defined contribution section of the pension scheme is available to all permanent employees including executive
directors joining the Company after 6th April 1999. Contributions are invested by an independent investment manager.

Company contributions, at the rate of 15% of base salary, into the defined contribution section of the pension scheme during the
financial year ended 30th November 2012 for executive directors were as follows: Steve Burke £44,125 (2011: £42,900); and Michael
Dunn £40,170 (2011: £39,000). Cash allowances in lieu of pension contributions paid to Bill Oliver during the year were £66,875
(2011: £64,950).

Further information on the Company’s pension scheme is shown in Note 18 to the Group Financial Statements.

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94 St. Modwen Properties PLC
Annual Report and Accounts 2012

Directors’ Remuneration Report (continued)

Share interests
The interests of the directors and their connected persons in the issued ordinary share capital of the Company are shown below:

Director

Executive

Bill oliver

Steve Burke

Michael Dunn

Non-executive

Bill Shannon

kay Chaldecott1

Simon Clarke

David Garman

katherine innes ker

lesley James

John Salmon

1 Appointed 22nd October 2012.

Shareholding as at
30th November 2012

Shareholding as at
30th November 2011

494,819

264,153

76,168

50,000

–

4,612,657

10,000

–

10,000

25,000

442,819

228,249

45,000

50,000

–

6,112,657

10,000

–

10,000

25,000

The above interests do not include shares held under the long-term incentive arrangements as set out on pages 91 to 93.

There were no changes in these interests between 30th November 2012 and the date of this report.

95 St. Modwen Properties PLC
Annual Report and Accounts 2012

Other Governance and Statutory Disclosures

Annual General Meeting
The AGM of the Company will be held at 12.00 noon on 27th March 2013 at the Marketing Suite, Innovation Centre, 1 Devon Way,
Longbridge Technology Park, Birmingham B31 2TS.

The notice of meeting, which includes the special business to be transacted and an explanation of all the resolutions to be considered
at the meeting, is set out on pages 151 to 157.

Dividend
The directors recommend a final dividend of 2.42p per ordinary share in respect of the year ended 30th November 2012, to be paid
on 4th April 2013 to ordinary shareholders on the register on 8th March 2013 which, together with the interim dividend of 1.21p paid on
3rd September 2012, brings the total dividend for the year to 3.63p for the year (2011: 3.3p).

Share capital
The Company has one class of ordinary share (10p) and all shares rank equally, have equal voting rights and are fully paid. The issued
share capital of the Company is set out in Note (K) of the Company Financial Statements. The Company does not currently hold any
shares in treasury.

At the Company’s 2012 AGM, shareholders authorised the Company to make market purchases of up to 20,036,093 ordinary shares,
representing 10% of the issued share capital at that time, and to allot up to 49,639,069 ordinary shares representing 24.7% of the
issued share capital at that time. These authorities expire at the 2013 AGM. During the year ended 30th November 2012, no shares
were allotted or repurchased. Resolutions to renew these authorities will be proposed at the 2013 AGM.

St. Modwen operates an Employee Share Trust (Trust) to satisfy the vesting and exercise of awards of ordinary shares made under the
Company’s share-based incentive arrangements. As at 30th November 2012, the Trust held 215,754 shares (2011: 215,754 shares),
representing 0.11% (2011: 0.11%) of the Company’s issued share capital. The Trust deed contains a dividend waiver provision in
respect of these shares. Any voting or other similar decisions relating to shares held by the Trust would be taken by the Trustees, who
may take account of any recommendations of the Company. There were no purchases of shares by the Trust during the financial year.

Rights and obligations attaching to shares
The holders of ordinary shares in the Company are entitled to receive dividends when declared, to receive the Company’s annual
and half year reports, to attend and speak at general meetings of the Company, to appoint proxies and to exercise voting rights.

Restrictions on the transfer of shares
As at 30th November 2012 and as at the date of this report, except as referred to below, there are no restrictions on the transfer
of ordinary shares in the Company, no limitations on the holding of ordinary shares and no requirements to obtain the approval
of the Company, or of other holders of ordinary shares in the Company, for a transfer of shares.

The directors may refuse to register the transfer of a share in certificated form which is not fully paid or on which the Company has a
lien, where the instrument of transfer does not comply with the requirements of the Company’s Articles of Association, or if the transfer
is in respect of more than one class of share or is in favour of more than four joint holders. The directors may also refuse to register
a transfer of a certificated share, which represents an interest of at least 0.25% in a class of shares, following the failure by the member
or any other person appearing to be interested in the shares to provide the Company with information requested under section 793 of
the Companies Act 2006.

Transfers of uncertificated shares must be carried out using CREST and the directors can refuse to register the transfer
of an uncertificated share in accordance with the regulations governing the operation of CREST.

The Company is not aware of any agreements between shareholders that may result in restrictions on the transfer of shares
or on voting rights.

Substantial shareholders
As at 30th November 2012, the Company had been notified of the following direct and indirect holdings of voting rights in its shares
under Rule 5 of the Disclosure Rules and Transparency Rules of the Financial Services Authority:

Shareholder

Number of shares

% of voting rights

lady Clarke and family holdings (excluding Simon Clarke)

J.D. leavesley and connected parties

Blackrock, inc.

t.r. property investment trust plC

19,962,539

18,263,382

10,028,322

6,802,638

9.96%

9.12%

5.01%

3.40%

On 21st December 2012, the Company received notification of a holding by Norges Bank of 6,090,499 shares, representing 3.04%
of voting rights. As at 4th February 2013, the Company had not been advised of any further changes or additions to the interests set
out above.

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96 St. Modwen Properties PLC
Annual Report and Accounts 2012

Other Governance and Statutory Disclosures (continued)

Directors
The following served as directors during the year ended 30th November 2012:

• Bill Shannon

• Bill Oliver

• Steve Burke

• Michael Dunn

• Simon Clarke

• David Garman

• Katherine Innes Ker

• Lesley James

• Kay Chaldecott (appointed 22nd October 2012)

• John Salmon

The biographical details of all the directors serving at 30th November 2012, including details of their relevant experience and other
significant commitments, are shown on pages 64 and 65. As announced on 29th January 2013, both Katherine Innes Ker and David
Garman will be retiring from the Board at the close of the AGM on 27th March 2013.

Following her appointment to the Board in October 2012 and in accordance with the Company’s Articles of Association, Kay
Chaldecott will retire and offer herself for election at the 2013 AGM. With the exception of Katherine Innes Ker and David Garman,
all other directors will retire and offer themselves for re-election in accordance with the Code.

The Articles of Association provide that a director may be appointed by an ordinary resolution of shareholders or by the existing
directors, either to fill a casual vacancy or as an additional director.

The Directors’ Remuneration Report, which includes details of directors’ service agreements and their interests in the Company’s
shares, is set out on pages 81 to 94. Copies of the service contracts of the executive directors and the letters of appointment for the
non-executive directors are available for inspection at the Company’s registered office during normal business hours and will be
available for inspection at the Company’s AGM.

Powers of the directors
The powers of the directors are determined by the Company’s Articles of Association, UK legislation including the Companies Act 2006
and any directions given by the Company in general meeting.

The directors have been authorised by the Company’s Articles of Association to issue and allot ordinary shares and to make market
purchases of its own shares. These powers are referred to shareholders for renewal at each AGM. Further information is set out under
the heading ‘Share capital’ on page 95.

Directors’ interests in contracts
No contract existed during the year in relation to the Company’s business in which any director was materially interested, with the
exception of those detailed in Note 22 to the Group Financial Statements.

Conflicts of interest
Under the Companies Act 2006, directors have a statutory duty to avoid conflicts of interest with the Company. As permitted
by the Act, the Company’s Articles of Association enable directors to authorise actual or potential conflicts of interest. Company policy
requires that if a director becomes aware that he or she has a direct or indirect interest in an existing or proposed transaction with
the Company they should notify the Board at the next Board meeting or provide a written declaration. Directors have a continuing
duty to update any changes to such interests. No conflicts of interest were recorded during the year.

Directors’ liability insurance and indemnity
The Company has arranged appropriate insurance cover in respect of potential legal action taken against its directors. To the extent
permitted by law and in accordance with its Articles of Association, the Company also indemnifies the directors against any claims
made against them as a consequence of the execution of their duties as directors of the Company.

Articles of Association
The Company’s Articles of Association, which may only be amended by a special resolution of the shareholders, are available
on its website www.stmodwen.co.uk

Change of control
The Company is party to a number of committed bank facilities which, upon a change of control, are terminable at the bank’s
discretion. Under such circumstances, awards made under the Company’s share-based incentive arrangements would normally vest
or become exercisable subject to the satisfaction of any performance conditions. In addition, the Company’s retail bondholders have an
option to require the Company to redeem the bonds should a change of control event occur.

97 St. Modwen Properties PLC
Annual Report and Accounts 2012

Creditor payment policy
It is the Group’s policy to agree specific payment terms for its business transactions with its suppliers and to abide by those terms
whenever it is satisfied that the supplier has performed its obligations under the relevant contract. The Group does not follow any
specific code or standard in relation to payment practice.

At 30th November 2012, the Company’s aggregate level of ‘creditor days’ amounted to 30 days (2011: 29 days). Creditor days are
calculated by expressing year end trade creditors as a fraction of the amounts the Company was invoiced by suppliers during the year
and multiplying the resulting fraction by 365 days.

Employees
St. Modwen is committed to regular communication and consultation with its employees and encourages employee involvement
in its performance. News concerning St. Modwen, its activities and performance is published on the Company’s intranet. Quarterly
management meetings are held to inform staff about matters affecting them as employees, at which their feedback is sought on
decisions likely to affect their interests, and where a common awareness of the financial and economic factors affecting the Company’s
performance is developed. This information is then cascaded to all employees based at the Company’s head office and regional offices.
A performance-related annual bonus scheme and share option arrangements are designed to encourage employee involvement in the
success of the Company.

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Employment of disabled persons
It is the policy of the Company to give full and fair consideration to applications for employment received from disabled persons, having
regard to their particular aptitudes and abilities and wherever possible to continue the employment of, and to arrange appropriate
training for, employees who have become disabled during the period of their employment. The Company provides the same
opportunities for training, career development and promotion for disabled as for other employees.

Political and charitable donations
In accordance with the Company’s policy, no political donations were made and no political expenditure was incurred during the year.
Direct charitable donations during the year, excluding donations made by the St. Modwen Environmental Trust (see page 63), totalled
£6,000 (2011: £11,000).

Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in
the Directors’ Report (defined below). The directors have considered these factors and reviewed the financial position of the Group,
including its joint ventures.

The review included an assessment of future funding requirements based on cash flow forecasts extending to 30th November 2014,
valuation projections and the ability of the Group to meet covenants on existing borrowing facilities. The directors were satisfied that
the forecasts and projections were based on realistic assumptions and that the sensitivities applied in reviewing downside scenarios
were appropriate.

As described in the Financial Review on pages 51 to 53, there are no corporate or joint venture facilities that require renewal before
November 2014.

Based on their assessment, the directors are of the opinion that the Group has adequate committed resources to fund its operations
for the foreseeable future and so determine that it remains appropriate for the Financial Statements to be prepared on a going
concern basis.

Auditor and disclosure of information
Resolutions to reappoint Deloitte LLP as auditor of the Company and to authorise the directors to determine their remuneration
will be proposed at the 2013 AGM.

Each of the directors in office at the date of approval of this Directors’ Report confirms that, so far as he or she is aware, there is no
relevant audit information of which the Company’s auditor is unaware. Each such director also confirms that he or she has taken all the
steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to
establish that the Company’s auditor is aware of that information.

This Directors’ Report comprises inside front cover and pages 1 to 98 and is the ‘management report’ for the purposes of the Financial
Services Authority’s Disclosure Rules and Transparency Rules (DTR 4.1.8).

Approved by the Board and signed on its behalf by

Tanya Stote
Company Secretary
4th February 2013

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98 St. Modwen Properties PLC
Annual Report and Accounts 2012

Statement of Directors’ Responsibilities

The directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the Group and Company
Financial Statements in accordance with applicable law and regulations.

Company law requires the directors to prepare Group and Company Financial Statements for each financial year. Under that law the
directors are required to prepare the Group Financial Statements in accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union and Article 4 of the IAS Regulation and have elected to prepare the Company Financial Statements in
accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).

Under company law the directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and the Company and of their profit or loss for that period.

In preparing the Company Financial Statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed

and explained in the Financial Statements; and

• prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue

in business.

In preparing the Group Financial Statements, International Accounting Standard 1 requires that directors:

• properly select and apply accounting policies;

• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable

information;

• provide additional disclosures when compliance with the specific requirements of IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial
performance; and

• make an assessment of the Company’s ability to continue as a going concern.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that
the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s
website. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from
legislation in other jurisdictions.

Responsibility statement
We confirm that to the best of our knowledge:

• the Financial Statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of

the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken
as a whole; and

• the management report, which comprises the Directors’ Report, includes a fair review of the development and performance

of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together
with a description of the principal risks and uncertainties that they face.

By order of the Board

Bill Oliver
Chief Executive
4th February 2013

Michael Dunn
Group Finance Director

99 St. Modwen Properties PLC
Annual Report and Accounts 2012

Independent Auditor’s Report

to the members of St. Modwen Properties PLC in respect of the Group Financial Statements

We have audited the Group Financial Statements of St. Modwen Properties PLC for the year ended 30th November 2012 which
comprise the Group Income Statement, the Group Balance Sheet, the Group Statement of Comprehensive Income, the Group
Statement of Changes in Equity, the Group Cash Flow Statement, the Accounting Policies and the related Notes 1 to 23. The financial
reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs)
as adopted by the European Union.

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
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 auditor’s 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.

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Respective responsibilities of directors and auditor

As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the Group
Financial Statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion
on the Group Financial Statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the Financial Statements

An audit involves obtaining evidence about the amounts and disclosures in the Financial Statements sufficient to give reasonable
assurance that the Financial Statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the Group’s circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation
of the Financial Statements. In addition, we read all the financial and non-financial information in the Annual Report and Accounts to
identify material inconsistencies with the audited Financial Statements. If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.

Opinion on Financial Statements

In our opinion the Group Financial Statements:
• give a true and fair view of the state of the Group’s affairs as at 30th November 2012 and of its profit for the year then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation.

Separate opinion in relation to IFRSs as issued by the IASB

As explained in the Accounting Policies to the Group Financial Statements, the Group in addition to complying with its legal obligation
to apply IFRSs as adopted by the European Union, has also applied IFRSs as issued by the International Accounting Standards Board
(IASB). In our opinion the Group Financial Statements comply with IFRSs as issued by the IASB.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors’ Report for the financial year for which the Group Financial Statements are prepared
is consistent with the Group Financial Statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

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Under the Listing Rules we are required to review:
• the directors’ statement, contained within the Corporate Governance Statement, in relation to going concern;
• the part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the UK Corporate

Governance Code specified for our review; and

• certain elements of the report to shareholders by the Board on directors’ remuneration.

Other matter

We have reported separately on the parent company Financial Statements of St. Modwen Properties PLC for the year ended
30th November 2012 and on the information in the Directors’ Remuneration Report that is described as having been audited.

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Jonathan Dodworth (Senior Statutory Auditor)
for and on behalf of Deloitte LLP, Chartered Accountants and Statutory Auditor
Birmingham, United Kingdom. 4th February 2013.

100 St. Modwen Properties PLC
Annual Report and Accounts 2012

Group Income Statement

for the year ended 30th November 2012

Revenue

Net rental income

Development profits

Gains on disposal of investments/ investment properties

Investment property revaluation gains

Goodwill written off on corporate acquisition of investment properties

Other net income

Profits of joint ventures and associates (post tax)

Administrative expenses

Profit before interest and tax

Finance cost

Finance income

Profit before tax

Tax charge

Profit for the year

Attributable to:

Equity attributable to owners of the Company

Non-controlling interests

Basic earnings per share

Diluted earnings per share

Notes

2012
£m

219.1

28.3

22.4

1.4

6.4

(1.3)

2.8

22.6

(18.1)

64.5

(22.3)

5.2

47.4

(5.1)

42.3

42.7

(0.4)

42.3

2012
pence

21.3

21.2

2011
£m

109.6

27.5

20.4

0.5

36.2

–

3.2

2.9

(16.6)

74.1

(26.2)

2.5

50.4

(4.9)

45.5

43.5

2.0

45.5

2011
pence

21.7

All results are derived from continuing operations. A reconciliation of non-statutory measures used in the Overview and Business Review
is included in Note 2 to the Group Financial Statements.

101 St. Modwen Properties PLC
Annual Report and Accounts 2012

Group Balance Sheet

as at 30th November 2012

Non-current assets

Investment property

Operating property, plant and equipment

Investments in joint ventures and associates

Trade and other receivables

Current assets

Inventories

Trade and other receivables

Cash and cash equivalents

Current liabilities

Trade and other payables

Borrowings

Tax payables

Non-current liabilities

Trade and other payables

Borrowings

Deferred tax

Net assets

Capital and reserves

Share capital

Share premium account

Capital redemption reserve

Retained earnings

Share incentive reserve

Own shares

Equity attributable to owners of the Company

Non-controlling interests

Total equity

Notes

2012
£m

2011
£m

770.4

848.7

6.8

75.2

21.6

7.1

50.3

8.4

874.0

914.5

175.2

46.5

8.9

230.6

191.1

51.2

5.2

247.5

(155.6)

(132.2)

(3.3)

–

(0.2)

(162.2)

(132.4)

(48.6)

(371.6)

(8.5)

(428.7)

513.7

20.0

102.8

0.3

377.6

2.4

(0.5)

502.6

11.1

513.7

(192.6)

(352.3)

(8.7)

(553.6)

476.0

20.0

102.8

0.3

341.8

–

(0.5)

464.4

11.6

476.0

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These Financial Statements were approved by the Board of Directors on 4th February 2013 and were signed on its behalf by Bill Oliver
and Michael Dunn.

Bill Oliver
Chief Executive Group Finance Director

Michael Dunn

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102 St. Modwen Properties PLC
Annual Report and Accounts 2012

Group Statement of Comprehensive Income

for the year ended 30th November 2012

Profit for the year

Pension fund:

– Actuarial losses

– Deferred tax thereon

Total comprehensive income for the year

Attributable to:

– Owners of the Company

– Non-controlling interests

Total comprehensive income for the year

Group Statement of Changes in Equity

for the year ended 30th November 2012

Share
capital
£m

Share
premium
account
£m

Capital
redemption
reserve
£m

Retained
Earnings
£m

Share
Incentive
Reserve
£m

At 30th November 2010

20.0

102.8

0.3

304.7

Profit for the year attributable
to shareholders

Pension fund actuarial losses
(Note 18)

Total comprehensive
income

Net shares disposed of

Dividends paid

–

43.5

(0.2)

43.3

–

(6.2)

At 30th November 2011

20.0

102.8

0.3

341.8

Profit for the year attributable
to shareholders

Pension fund actuarial losses
(Note 18)

Total comprehensive income

Transfer share based
payments provision to share
incentive reserve

Share-based payment charge

Dividends paid

–

42.7

(0.1)

42.6

–

(6.8)

At 30th November 2012

20.0

102.8

0.3

377.6

–

2.1

0.3

–

2.4

Notes

2012
£m

42.3

(0.1)

–

42.2

42.6

(0.4)

42.2

2011
£m

45.5

(0.2)

–

45.3

43.3

2.0

45.3

Equity
attributable
to owners
of the
Company
£m

Own
shares
£m

Non-
controlling
interest
£m

Total
Equity
£m

(0.6)

427.2

9.6

436.8

43.5

2.0

45.5

(0.2)

–

(0.2)

43.3

0.1

(6.2)

2.0

–

45.3

0.1

(6.2)

464.4

11.6

476.0

42.7

(0.4)

42.3

(0.1)

42.6

–

(0.4)

(0.1)

42.2

2.1

0.3

(6.8)

–

(0.1)

11.1

2.1

0.3

(6.9)

513.7

(0.5)

502.6

–

0.1

–

(0.5)

–

Own shares represent the cost of 215,754 (2011: 215,754) shares held by the Employee Benefit Trust. The open market value of the
shares held at 30th November 2012 was £469,912 (2011: £225,463).

103 St. Modwen Properties PLC
Annual Report and Accounts 2012

Group Cash Flow Statement

for the year ended 30th November 2012

Operating activities

Profit before interest and tax

Gains on disposals of investments/investment properties

Share of profits of joint ventures and associates (post-tax)

Investment property revaluation gains

Goodwill written off on corporate acquisition of investment properties

Depreciation

Impairment losses on inventories

Decrease/(increase) in inventories

Increase in trade and other receivables

Decrease in trade and other payables

Share options and share awards

Tax paid

Net cash inflow from operating activities

Investing activities

Investment property disposals

Investment property additions

Acquisition of subsidiary undertaking

Property, plant and equipment additions

Cash and cash equivalents acquired with subsidiary

Interest received

Dividends received

Net cash outflow from investing activities

Financing activities

Dividends paid

Dividends paid to non-controlling interests

Interest paid

New borrowings drawn

Repayment of borrowings

Net cash outflow from financing activities

Increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at start of year

Cash and cash equivalents at end of year

Notes

5(c)

2012
£m

64.5

(1.4)

(22.6)

(6.4)

1.3

0.5

3.8

55.7

(4.0)

(51.0)

0.3

(2.2)

38.5

29.5

(37.4)

–

(0.3)

0.4

3.1

–

(4.7)

(6.8)

(0.1)

(20.6)

98.8

(101.4)

(30.1)

3.7

5.2

8.9

2011
£m

74.1

(0.5)

(2.9)

(36.2)

–

0.5

2.6

(2.7)

(6.3)

(3.3)

0.1

(6.0)

19.4

19.2

(42.7)

(4.4)

(0.3)

1.1

0.8

2.0

(24.3)

(6.2)

–

(21.1)

131.3

(105.2)

(1.2)

(6.1)

11.3

5.2

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104 St. Modwen Properties PLC
Annual Report and Accounts 2012

Accounting Policies

for the year ended 30th November 2012

Basis of preparation

The Group’s Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as issued
by the International Accounting Standards Board (IASB) and as adopted by the EU as they apply to the Group for the year ended
30th November 2012, applied in accordance with the provisions of the Companies Act 2006.

The Financial Statements have been prepared on the historical cost basis except for the revaluation of certain properties, derivative
financial instruments and the defined benefit section of the Group’s pension scheme.

The Group’s functional currency is pounds sterling and its principal IFRSs accounting policies are set out below.

Basis of consolidation

The Group’s Financial Statements consolidate the Financial Statements of St. Modwen Properties PLC and the entities it controls.
Control comprises the power to govern the financial and operating policies of the investee and is achieved through direct or indirect
ownership of voting rights or by contractual agreement. A list of the principal entities controlled is given in Note (F) of the Company’s
Financial Statements.

VSM Estates (Holdings) Limited is 50% owned by St. Modwen Properties PLC. However, under the funding agreement, the Group
obtains the majority of the benefits of the entity and also retains the majority of the residual risks. This entity is therefore consolidated
in accordance with SIC 12 ‘Consolidation — Special Purpose Entities’.

All entities are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such
control ceases. All intra-Group transactions, balances, income and expense are eliminated on consolidation.

Non-controlling interests represent the portion of profit or loss and net assets that are not held by the Group and are presented
separately within equity in the Group Balance Sheet.

Interests in joint ventures

The Group recognises its interests in joint ventures, being those entities over which the Group has joint control, using the equity method
of accounting. Under the equity method, the interest in the joint venture is carried in the Balance Sheet at cost plus post-acquisition
changes in the Group’s share of its net assets, less distributions received, less any impairment in value of individual investments. The
Income Statement reflects the Group’s share of the jointly controlled entities’ results after interest and tax.

Financial Statements of joint ventures are prepared for the same reporting period as the Group. Where necessary, adjustments are
made to bring the accounting policies used into line with those of the Group.

The Group Statement of Comprehensive Income reflects the Group’s share of any income and expense recognised by the jointly
controlled entities outside the Income Statement.

Interests in associates

The Group’s interests in its associates, being those entities over which it has significant influence and which are neither subsidiaries
nor joint ventures, are accounted for using the equity method of accounting, as described above.

Business combinations

The acquisition method of accounting is used to account for business combinations. The consideration transferred for the acquisition of
a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The
consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing
equity interest in the subsidiary.

Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.

On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-
controlling interest’s proportionate share of the acquiree’s net identifiable assets.

The excess of the consideration transferred and the amount of any non-controlling interest in the acquiree over the fair value of the
Group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net
identifiable assets of the acquired subsidiary and the measurement of all amounts has been reviewed, the difference is recognised
directly in the Income Statement as a bargain purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value
as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, which is the rate that a similar borrowing
could be obtained from an independent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently
remeasured to fair value with changes in fair value recognised in the Income Statement.

105 St. Modwen Properties PLC
Annual Report and Accounts 2012

Properties

Investment properties

Investment properties, being freehold and leasehold properties held to earn rental income, for capital appreciation and/or for
undetermined future use, are carried at fair value following initial recognition at the present value of the consideration payable.
To establish fair value, investment properties are independently valued on the basis of market value. Any surplus or deficit arising
is recognised in the Income Statement for the period.

Once classified as an investment property, a property remains in this category until development with a view to sale commences,
at which point the asset is transferred to inventories at current valuation.

Where an investment property is being redeveloped for continued use as an investment property, the property remains within
investment property and any movement in valuation is recognised in the Income Statement.

Investment property disposals are recognised on completion. Profits and losses arising are recognised through the Income Statement
and the profit or loss on disposal is determined as the difference between the sales proceeds and the carrying amount of the asset.

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Investment properties are not depreciated.

Inventories

Inventories principally comprise properties held for sale, properties under construction and land under option. All inventories are carried
at the lower of cost and net realisable value.

Cost comprises land, direct materials and, where applicable, direct labour costs that have been incurred in bringing the inventories
to their present location and condition. When inventory includes a transfer from investment properties, cost is recorded as the book
value at the date of transfer. Net realisable value represents the estimated selling price less any further costs expected to be incurred
to completion and disposal.

Operating property, plant and equipment

Operating property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses.
Such cost includes costs directly attributable to making the asset capable of operating as intended.

Depreciation is provided on all operating property, plant and equipment at rates calculated to write off the cost less estimated residual
value of each asset evenly over its expected useful life as follows:

Leasehold operating properties — over the shorter of the lease term and 25 years

Plant, machinery and equipment — over two to five years

Leases

The Group as lessee

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee. All other leases are classified as operating leases.

Non-property assets held under finance leases are capitalised at the inception of the lease with a corresponding liability being
recognised for the fair value of the leased asset or, if lower, the present value of the minimum lease payments. Lease payments are
apportioned between the reduction of the lease liability and finance charges in the Income Statement so as to achieve a constant rate
of interest on the remaining balance of the liability. Non-property assets held under finance leases are depreciated over the shorter
of the estimated useful life of the asset and the lease term.

Freehold interests in leasehold investment properties are accounted for as finance leases with the present value of guaranteed minimum
ground rents included within the carrying value of the property and within long-term liabilities. On payment of a guaranteed ground rent,
virtually all of the cost is charged to the Income Statement as interest payable, and the balance reduces the liability.

Rentals payable under operating leases are charged in the Income Statement on a straight-line basis over the lease term.

The Group as lessor

Rental income from operating leases is recognised in the Income Statement on a straight-line basis over the lease term.

Income taxes

Current tax assets and liabilities are measured at the amount expected to be recovered from, or paid to, the taxation authorities,
based on tax rates and laws that are enacted or substantively enacted by the Balance Sheet date.

The tax currently payable is based on the taxable result for the year. The taxable result differs from the result as reported in the Income
Statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items
that are never taxable or deductible.

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106 St. Modwen Properties PLC
Annual Report and Accounts 2012

Accounting Policies (continued)

for the year ended 30th November 2012

Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the Financial Statements, using the rates of tax expected to apply based on legislation enacted or substantively enacted
at the Balance Sheet date, with the following exceptions:

• in respect of taxable temporary differences associated with investments in subsidiaries, joint ventures and associates, where

the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not
reverse in the foreseeable future; and

• deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which

the deductible temporary differences, carried forward tax credits or tax losses can be utilised.

Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, based on tax rates and laws substantively enacted at the Balance Sheet date. Deferred
tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same authority and the Group intends to settle its current tax assets and liabilities
on a net basis.

Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise, income tax
is recognised in the Income Statement.

Pensions

The Group operates a pension scheme with defined benefit and defined contribution sections. The defined benefit section is closed
to new members and to future accrual.

The cost of providing benefits under the defined benefit section is determined using the projected unit credit method, which attributes
entitlement to benefits to the current period (to determine current service cost) and to the current and prior periods (to determine the
present value of defined benefit obligation) and is based on actuarial advice. Past service costs are recognised in the Income Statement
immediately if the benefits have vested.

The interest element of the defined benefit cost represents the change in present value of scheme obligations resulting from the passage
of time and is determined by applying the discount rate to the opening present value of the benefit obligation, taking into account
material changes in the obligation during the year. The expected return on plan assets is based on an assessment made at the
beginning of the year of long-term market returns on scheme assets, adjusted for the effect on the fair value of plan assets of
contributions received and benefits paid during the year. The difference between the expected return on plan assets and the interest
cost is recognised in the Income Statement as other finance income or expense.

Actuarial gains and losses are recognised in full in the Statement of Comprehensive Income in the year in which they occur. The defined
benefit pension asset or liability in the Balance Sheet comprises the present value of the defined benefit obligation, less any past service
cost not yet recognised and less the fair value of plan assets out of which the obligations are to be settled directly.

When a pension asset (net surplus) arises and the directors consider it is controlled by the Company such that future economic benefits
will be available to the Company, it is carried forward in accordance with the requirements of IFRIC14.

Contributions to defined contribution schemes are recognised in the Income Statement in the year in which they become payable.

Own shares

St. Modwen Properties PLC shares held by the Group are classified in equity attributable to owners of the Company and are recognised
at cost.

Dividends

Dividends declared after the Balance Sheet date are not recognised as liabilities at the Balance Sheet date.

Revenue recognition

Revenue is recognised to the extent that it is probable that economic benefits will flow to the Group and the revenue can be reliably
measured. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, VAT and other sales taxes
or duty. The following criteria must also be met before revenue is recognised:

Sale of property

Revenue arising from the sale of property is recognised on legal completion of the sale. Where revenue is earned for development
of property assets not owned, this is recognised when the Group has substantially fulfilled its obligations in respect of the transaction.

Construction contracts

Revenue arising from construction contracts is recognised in accordance with the Group’s accounting policy on construction contracts
(see below).

Rental income

Rental income arising from investment properties is accounted for on a straight-line basis over the lease term.

107 St. Modwen Properties PLC
Annual Report and Accounts 2012

Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable,
which is the rate that exactly discounts estimated future cash receipts over the expected life of the financial asset to that asset’s net
carrying amount.

Dividend income

Dividend income from joint ventures is recognised when the shareholders’ rights to receive payment have been established.

Construction contracts

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage
of completion of the contract activity at the Balance Sheet date. The extent to which the contract is complete is determined by the total
costs incurred to date as a percentage of the total anticipated costs of the entire contract. Variations in contract work, claims and
incentive payments are included only to the extent they have been agreed with the purchaser.

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of
contract costs incurred where it is probable they will be recoverable. Contract costs are recognised as expenses in the period in which
they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an
expense immediately.

Government grants

Government grants relating to property are treated as deferred income and released to profit or loss over the expected useful life
of the assets concerned.

Share-based payments
Prior to 1st December 2011, when employee share options were exercised, the employee had the choice whether to have the liability
settled by way of cash or the retention of shares. As it had been the Company’s experience to satisfy the majority of its share options in
cash, the Group accounted for its share-based payments as cash-settled. The cost of cash-settled transactions was measured at fair
value using an appropriate option pricing model and amortised through the Income Statement over the vesting period. The liability was
remeasured at each Balance Sheet date. Revisions to the fair value of the accrued liability after the end of the vesting period were
recorded in the Income Statement of the year in which they occurred.

On 1st December 2011, it was resolved that the settlement practice should be changed and that the Company would expect to satisfy
its share options using shares. Accordingly, the Group has amended its accounting policy to account for its share-based payments as
equity-settled. Equity-settled share-based payments are measured at fair value at the date of grant using an appropriate option pricing
model. For those share options that had previously been accounted for as cash-settled, the fair value at the date of transition became
the fair value at the date of grant for the equity-settled share-based options. The fair value at the date of grant is expensed on a straight-
line basis over the vesting period based on the Group’s estimate of shares that will eventually vest.

Financial instruments

Financial assets and financial liabilities are recognised on the Group’s Balance Sheet when the Group becomes a party to the
contractual provisions of the instrument. The Group derecognises a financial asset only when the contractual rights to the cash flows
from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to
another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the
transferred asset, the Group recognises its retained interest in the asset and an associated liability for any amounts it may have to pay. If
the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise
the financial asset and also recognises a collateralised borrowing for the proceeds received. The Group derecognises financial liabilities
when, and only when, the Group’s obligations are discharged, cancelled, or expire.

Trade and other receivables

Trade receivables are recognised and carried at the lower of their original invoiced value or recoverable amount. Provision is made when
there is evidence that the Group will not be able to recover balances in full. Balances are written off when the probability of recovery
is assessed as being remote.

Cash and cash equivalents

Cash and cash equivalents comprises cash balances and short-term deposits with banks.

Trade and other payables

Trade and other payables on deferred payment terms are initially recorded by discounting the nominal amount payable to net present
value. The discount to nominal value is amortised over the period of the deferred arrangement and charged to finance costs.

Interest bearing loans and borrowings

All loans and borrowings are initially recognised at fair value less directly attributable transaction costs. After initial recognition, loans
and borrowings are measured at amortised cost.

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108 St. Modwen Properties PLC
Annual Report and Accounts 2012

Accounting Policies (continued)

for the year ended 30th November 2012

Gains and losses arising on the repurchase, settlement or otherwise cancellation of liabilities are recognised in finance income or finance
expense as appropriate.

The effective interest rate method is used to charge interest to the Income Statement.

Derivative financial instruments and hedging

The Group uses derivative financial instruments such as interest rate swaps to hedge its risks associated with interest rate fluctuations.
Such instruments are initially recognised at fair value on the date on which a contract is entered into and are subsequently remeasured
at fair value. The Group has determined that the derivative financial instruments in use do not qualify for hedge accounting and,
consequently, any gains or losses arising from changes in the fair value of derivatives are taken to the Income Statement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all its liabilities.
Equity instruments issued by the Group are recorded at the proceeds received less direct issue costs.

Use of estimates and judgements

To be able to prepare accounts according to generally accepted accounting principles, management must make estimates
and assumptions that affect the asset and liability items and revenue and expense amounts recorded in the financial accounts.
These estimates are based on the Group’s systems of internal control, historical experience and the advice of external experts
(including qualified professional valuers and actuaries) together with various other assumptions that management and the Board of
Directors believe are reasonable under the circumstances. The results of these considerations form the basis for making judgements
about the carrying value of assets and liabilities that are not readily available from other sources.

The areas requiring the use of estimates and critical judgements that may significantly impact the Group’s earnings and financial
position are:

Going concern The Financial Statements have been prepared on a going concern basis. This is discussed in the Business Review and
adoption of the going concern assumption is confirmed on page 97.

Valuation of investment properties Management has used the valuation performed by its independent valuers as the fair value
of its investment properties. The valuation is performed according to RICS rules, using appropriate levels of professional judgement
for the prevailing market conditions.

Net realisable value of inventories The Group has ongoing procedures for assessing the carrying value of inventories and identifying
where this is in excess of net realisable value. Management’s assessment of any resulting provision requirement is, where applicable,
supported by independent information supplied by the external valuers. The estimates and judgements used were based on information
available at, and pertaining to, 30th November 2012. Any subsequent adverse changes in market conditions may result in additional
provisions being required.

Estimation of remediation and other costs to complete for both development and investment properties. In making an assessment
of these costs there is inherent uncertainty and the Group has developed systems of internal control to assess and review carrying
values and the appropriateness of estimates made. Any changes to these estimates may impact the carrying values of investment
properties and/or inventories.

Calculation of the net present value of pension scheme liabilities In calculating this liability it is necessary for actuarial assumptions
to be made, including discount and mortality rates and the long-term rate of return upon scheme assets. The Group engages a qualified
actuary to assist with determining the assumptions to be made and evaluating these liabilities.

Adoption of new and revised standards

Standards and interpretations adopted not affecting the Financial Statements

The following standards, amendments and interpretations have been adopted in the current year but have had no impact on the
amounts reported or the disclosures in the Financial Statements:

IAS24 (revised 2009)

Related Party Disclosures

IFRIC14 (amended 2009)

Prepayments of a Minimum Funding Requirement

IFRS1 (amended 2010)

Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters

IFRS7 (amended 2010)

Disclosures – Transfers of Financial Assets

In addition, minor amendments to existing standards were made under Improvements to IFRSs (issued May 2010) which have been
adopted during the year.

109 St. Modwen Properties PLC
Annual Report and Accounts 2012

Impact of standards and interpretations in issue but not yet effective

At the date of authorisation of these Financial Statements, the following standards, amendments and interpretations which have
not been adopted in these Financial Statements were in issue but not yet effective (and in some cases had not yet been adopted
by the EU):

IAS1 (amended 2011)

Presentation of Items of Other Comprehensive Income

IAS12 (amended 2010)

Deferred Tax: Recovery of Underlying Assets

IAS19 (revised 2011)

Employee Benefits

IAS27 (revised 2011)

Separate Financial Statements

IAS27 (amended 2012)

Investment Entities

IAS28 (revised 2011)

Investments in Associates and Joint Ventures

IAS32 (amended 2011)

Offsetting Financial Assets and Financial Liabilities

IFRIC20

Stripping Costs in the Production Phase of a Surface Mine

IFRS1 (amended 2012)

Government Loans

IFRS7 (amended 2011)

Disclosures – Offsetting Financial Assets and Financial Liabilities

IFRS9

IFRS10

Financial instruments

Consolidated Financial Statements

IFRS10 (amended 2012)

Investment Entities

IFRS11

IFRS12

Joint Arrangements

Disclosure of Interest in Other Entities

IFRS12 (amended 2012)

Investment Entities

IFRS13

Fair Value Measurement

In addition, Improvements to IFRSs (issued May 2012) is the 2011 tranche of the Improvements to IFRSs project and these have a
number of minor amendments to existing IAS and IFRSs, which have not yet been adopted.

While the directors are still assessing the impact that the adoption of these standards, amendments and interpretations will have on the
financial statements of the Group in future periods, they do not currently believe that adoption will have a material impact on the reported
results of the Group, although amended disclosures may be required.

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110 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Accounts

for the year ended 30th November 2012

1. REVENUE AND GROSS PROFIT

Revenue

Cost of sales

Gross profit

Revenue

Cost of sales

Gross profit

2012

Rental
£m

Development
£m

39.3

(11.0)

28.3

Rental
£m

36.6

(9.1)

27.5

174.1

(151.7)

22.4

2011

Development
£m

67.0

(46.6)

20.4

Other
£m

5.7

(2.9)

2.8

Other
£m

6.0

(2.8)

3.2

Total
£m

219.1

(165.6)

53.5

Total
£m

109.6

(58.5)

51.1

The Group operates exclusively in the UK and all of its revenues derive from its portfolio of properties which the Group manages
internally, and reports to the Board, as one business. Therefore, the Financial Statements and related notes represent the results and
financial position of the Group's sole business segment.

The Group's total revenue for 2012 was £229.3m (2011: £116.9m) and in addition to the amounts above included service charge
income of £6.9m (2011: £6.3m), for which there was an equivalent expense and interest income of £3.3m (2011: £1.0m). In the year
ended 30th November 2012 both development revenue and cost of sales include £60.9m in relation to amounts settled by the Ministry
of Defence in respect of RAF Northolt under Project MoDEL. This amount was settled as a result of the transfer of RAF Uxbridge to VSM
Estates Uxbridge (Group) Limited, a joint venture between St. Modwen Properties PLC and VINCI PLC (see Note 10).

Cost of sales in respect of rental income, as disclosed above, comprise direct operating expenses (including repairs and maintenance)
related to the investment property portfolio and include £0.2m (2011: £0.3m) in respect of properties that did not generate any
rental income.

During the year the following amounts were recognised (as part of development revenue and cost of sales) in respect of
construction contracts:

Revenue

Cost of sales

Gross profit

2012
£m

77.7

(63.2)

14.5

2011
£m

52.7

(39.0)

13.7

Amounts recoverable on contracts as disclosed in Note 11 comprise £7.2m (2011: £7.4m) of contract revenue recognised and £0.9m
(2011: £1.5m) of retentions.

There were no amounts due to customers (2011: £nil) included in trade and other payables in respect of contracts in progress at
the Balance Sheet date.

111 St. Modwen Properties PLC
Annual Report and Accounts 2012

2. NON-STATUTORY INFORMATION
(a) Trading profit

The non-statutory measures of trading profit and profit before all tax, which includes the Group’s share of joint ventures and associates,
have been calculated as set out below:

Net rental income

Development profit

Gains on disposal of investments/
investment properties

Other income

Administrative expenses

Finance costs

Finance income

Trading profit

Investment property revaluation gains

Other finance costs

Other finance income

Profit before all tax

Taxation

Profit for the year

Notes

2012

Joint
ventures and
associates
£m

7.9

1.2

0.2

–

(0.5)

(6.2)

–

2.6

26.7

(1.3)

–

28.0

(5.4)

22.6

Group
£m

28.3

26.2

1.4

2.8

(18.1)

(18.8)

1.1

22.9

1.3

(3.5)

4.1

24.8

(5.1)

19.7

Total
£m

36.2

27.4

1.6

2.8

(18.6)

(25.0)

1.1

25.5

28.0

(4.8)

4.1

52.8

(10.5)

42.3

2011

Joint
ventures and
associates
£m

8.0

0.3

–

(0.1)

(4.2)

–

4.0

0.3

(0.1)

–

4.2

(1.3)

2.9

Group
£m

27.5

23.0

0.5

3.2

(16.6)

(19.5)

0.7

18.8

33.6

(6.7)

1.8

47.5

(4.9)

42.6

Total
£m

35.5

23.3

0.5

3.2

(16.7)

(23.7)

0.7

22.8

33.9

(6.8)

1.8

51.7

(6.2)

45.5

(1) Stated before the deduction of net realisable value provisions of: Group £3.8m (2011: £2.6m); joint ventures and associates £0.1m (2011: £0.1m). These items

are reclassified to investment property revaluations, together with goodwill written off on the corporate acquisition of investment properties.

(2) Stated before mark-to-market of derivatives and other non-cash items of: Group £3.5m (2011: £6.7m); joint ventures and associates £1.3m (2011: £0.1m).

These amounts are reclassified to other finance costs.

(3) Stated before mark-to-market of derivatives, loan settlement fees and other non-cash items of: Group £4.1m (2011: £1.8m); joint ventures and associates £nil

(2011: £nil). These items are reclassified to other finance income.

(b) Property valuations

Property valuations, including the Group’s share of joint ventures and associates, have been calculated as set out below:

Investment property revaluation gains

Net realisable value provisions

Property valuation gains

Added value

Market movements

Property valuation gains

2012

Joint
ventures and
associates
£m

26.8

(0.1)

26.7

27.8

(1.1)

26.7

Group
£m

5.1

(3.8)

1.3

19.8

(18.5)

1.3

Total
£m

31.9

(3.9)

28.0

47.6

(19.6)

28.0

2011

Joint
ventures and
associates
£m

0.4

(0.1)

0.3

(0.5)

0.8

0.3

Group
£m

36.2

(2.6)

33.6

33.4

0.2

33.6

Total
£m

36.6

(2.7)

33.9

32.9

1.0

33.9

The split of property valuation gains between added value and market movements is based on an analysis of total property valuation
movements provided by our external valuers: Jones Lang LaSalle LLP, Chartered Surveyors.

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112 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Accounts (continued)

for the year ended 30th November 2012

2. NON-STATUTORY INFORMATION (CONTINUED)
(c) Property portfolio

The property portfolio, including the Group's share of joint ventures and associates, is derived from the Balance Sheet as detailed below:

Investment properties

Less assets held under
finance leases

Add back lease incentives
(recorded in receivables)

Inventories

Less ‘barter’ properties(1)

Property portfolio

2012

Joint
ventures and
associates
£m

174.9

Group
£m

770.4

Total
£m

945.3

Group
£m

848.7

(3.9)

(1.2)

(5.1)

(3.9)

4.5

175.2

(30.8)

915.4

1.6

7.5

–

6.1

182.7

(30.8)

182.8

1,098.2

3.1

191.1

(86.3)

952.7

2011

Joint
ventures and
associates
£m

Total
£m

140.3

989.0

(0.4)

1.2

9.1

(0.4)

(4.3)

4.3

200.2

(86.7)

149.8

1,102.5

(1) Represents deductions for ‘barter’ properties, principally RAF Northolt as part of the Project MoDEL arrangements between VSM Estates Limited

and the Ministry of Defence.

The Group property portfolio, including share of joint ventures and associates can be split by category as detailed below:

Retail

Offices

Industrial

Income producing

Residential land

Commercial land

Property portfolio

(d) Movement in net debt

Movement in net debt as discussed in the Business Review is calculated as set out below:

Movement in cash and cash equivalents

Borrowings drawn

Repayment of borrowings

Joint venture debt repaid between 30th November 2011
and acquisition as a subsidiary undertaking

Decrease/(increase) in equivalent net debt

Joint venture debt at 30th November 2011 now consolidated

Increase in net debt

2012
£m

240.2

60.7

260.6

561.5

397.4

139.3

2011
£m

209.3

70.2

269.3

548.8

404.4

149.3

1,098.2

1,102.5

2012
£m

3.7

(98.8)

101.4

1.6

7.9

(26.8)

(18.9)

2011
£m

(6.1)

(131.3)

105.2

–

(32.2)

–

(32.2)

Included in the increase in net debt for the year ended 30th November 2012 is £24.8m as a result of the Group obtaining control of, and
now consolidating, both Sowcrest Limited and Holaw 462 Limited as subsidiary undertakings. Both entities were previously accounted
for as joint ventures with net debt of £26.8m as at 30th November 2011.

113 St. Modwen Properties PLC
Annual Report and Accounts 2012

2. NON-STATUTORY INFORMATION (CONTINUED)
(e) Trading cash flow

Trading cash flows are derived from the Group Cash Flow Statement as set out below:

2012

Operating
activities
£m

Investing
activities
£m

Financing
activities
£m

Net rent and other income

Property disposals

Property acquisitions

Capital expenditure

Working capital and other movements

Overheads and interest

Taxation

Trading cash flow

Net borrowings

Joint venture debt at 30th November 2011 now consolidated

Net dividends

31.1

97.5

(10.7)

(73.3)

13.4

(17.3)

(2.2)

38.5

–

29.5

(6.5)

(31.2)

0.4

3.1

–

(4.7)

–

Movement in cash and cash equivalents

38.5

(4.7)

–

1.6

–

(20.6)

–

(19.0)

22.6

(26.8)

(6.9)

(30.1)

Net rent and other income

Property disposals

Property acquisitions

Capital expenditure

Working capital and other movements

Overheads and interest

Taxation

Trading cash flow

Net borrowings

Net dividends

Operating
activities
£m

30.7

75.5

(0.2)

(48.8)

(15.8)

(16.0)

(6.0)

19.4

–

Movement in cash and cash equivalents

19.4

(24.3)

2011

Investing
activities
£m

Financing
activities
£m

–

19.2

(6.5)

(40.9)

1.1

0.8

–

(26.3)

–

2.0

–

(21.1)

–

(21.1)

26.1

(6.2)

(1.2)

Total
£m

31.1

128.6

(17.2)

(104.5)

13.8

(34.8)

(2.2)

14.8

22.6

(26.8)

(6.9)

3.7

Total
£m

30.7

94.7

(6.7)

(89.7)

(14.7)

(36.3)

(6.0)

(28.0)

26.1

(4.2)

(6.1)

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114 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Accounts (continued)

for the year ended 30th November 2012

2. NON-STATUTORY INFORMATION (CONTINUED)
(f) Group Balance Sheet

VSM Estates (Holdings) Limited and its subsidiary undertakings (VSM) are party to a series of contracts with the Ministry of Defence
known as Project MoDEL. The property assets of VSM are subject to purchase on deferred terms and, to increase disclosure of the
impact of these arrangements, an additional split of the Group Balance Sheet showing the proportion attributable to VSM has been
provided below.

During the year ended 30th November 2012 RAF Uxbridge was transferred from VSM and the Project MoDEL arrangements to VSM
Estates Uxbridge (Group) Limited, a separate joint venture between St. Modwen Properties PLC and VINCI PLC. This transfer had a
limited effect on the net assets of VSM but as a result of the Project MoDEL arrangements results in reductions to the investment
property, inventories and liability components of the VSM balance sheet.

2012

2011

Investment property

Other non-current assets

Inventory

Cash and cash equivalents

Other current assets

Total assets

Current liabilities

Borrowings

Other non-current liabilities

Total liabilities

Net assets

Equity attributable to owners of
the Company

Non-controlling interests

Total equity

(g) Net assets per share

Group
£m

703.6

88.0

148.3

5.0

26.9

971.8

(125.0)

(344.5)

(12.4)

(481.9)

489.9

485.3

4.6

489.9

VSM
£m

66.8

15.6

26.9

3.9

19.6

Total
£m

770.4

103.6

175.2

8.9

46.5

132.8

1,104.6

(33.9)

(30.4)

(44.7)

(109.0)

23.8

17.3

6.5

23.8

(158.9)

(374.9)

(57.1)

(590.9)

513.7

502.6

11.1

513.7

Group
£m

687.4

65.8

108.7

5.2

23.9

891.0

(121.6)

(307.7)

(11.0)

(440.3)

450.7

445.4

5.3

450.7

Net assets per share are calculated as set out below:

Total equity (£m)

Less: Non-controlling interest

Equity attributable to owners of the Company

Deferred tax on capital allowances and revaluations

Mark-to-market of interest rate swaps

Fair value of inventories

Diluted EPRA net assets

Shares in issue (number)

Total equity net assets per share (pence)

Percentage increase

Total equity attributable to owners of the Company net assets per share (pence)

Percentage increase

Diluted EPRA net assets per share (pence)

Percentage increase

VSM
£m

161.3

–

82.4

–

27.3

271.0

(10.8)

(44.6)

(190.3)

(245.7)

25.3

19.0

6.3

25.3

2012

513.7

(11.1)

502.6

18.7

19.1

3.9

544.3

Total
£m

848.7

65.8

191.1

5.2

51.2

1,162.0

(132.4)

(352.3)

(201.3)

(686.0)

476.0

464.4

11.6

476.0

2011

476.0

(11.6)

464.4

13.0

18.6

4.1

500.1

200,360,931 200,360,931

256.4

250.8

271.7

237.6

231.8

249.6

115 St. Modwen Properties PLC
Annual Report and Accounts 2012

2. NON-STATUTORY INFORMATION (CONTINUED)
(h) Gearing and LTV

The following table shows the calculation of:

• gearing being the ratio of net debt to total equity; and

• loan to value being the ratio of net debt to the property portfolio (representing amounts that could be used as security for that debt).

In addition equivalent net debt and associated metrics are discussed in the Business Review. These figures assume that both Sowcrest
Limited (Sowcrest) and Holaw (462) Limited (Holaw) were consolidated at 30th November 2011. Adjustments to derive these figures are
also detailed below.

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Property portfolio (Note 2c)

Adjustment assuming Sowcrest and
Holaw consolidated

Comparable property portfolio

Total equity

Adjustment assuming Sowcrest and
Holaw consolidated

Comparable equity

Net debt

Adjustment assuming Sowcrest and
Holaw consolidated

Comparable debt

Gearing

LTV

Equivalent Gearing

Equivalent LTV

2012

Joint
ventures and
associates
£m

Total
£m

182.8

1,098.2

–

182.8

N/A

82.5

–

82.5

–

1,098.2

513.7

–

513.7

448.5

–

448.5

87%

41%

87%

41%

Group
£m

915.4

–

915.4

513.7

–

513.7

366.0

–

366.0

71%

40%

71%

40%

2011

Joint
ventures and
associates
£m

Total
£m

149.8

1,102.5

(20.2)

129.6

N/A

84.5

(13.4)

71.1

20.2

1,122.7

476.0

(2.3)

473.7

431.6

13.4

445.0

91%

39%

94%

40%

Group
£m

952.7

40.4

993.1

476.0

(2.3)

473.7

347.1

26.8

373.9

73%

36%

79%

38%

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116 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Accounts (continued)

for the year ended 30th November 2012

3. OTHER INCOME STATEMENT DISCLOSURES
(a) Administrative expenses

Administrative expenses have been arrived at after charging:

Depreciation

Operating lease costs

(b) Auditor’s remuneration

The analysis of auditor’s remuneration is as follows:

Fees payable for the audit of the Company's annual accounts

The audit of subsidiary companies and joint ventures pursuant to legislation

Total audit fees

Audit related assurance services

Other assurance services

Tax compliance services

Tax advisory services

Property consulting

Total non-audit fees

Total fees

2012
£m

0.5

1.0

2012
£000

118

137

255

150

171

443

698

2011
£m

0.5

1.0

2011
£000

115

132

247

–

160

108

401

648

Amounts above include £67,000 (2011: £82,000) that was paid to Drivers Jonas Deloitte, the property consulting business of Deloitte.
The business uses Drivers Jonas Deloitte (now Deloitte Real Estate) for property consulting work where they are cost effective and the
most appropriate firm for the work required.

The above amounts include all amounts charged in respect of joint venture undertakings.

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

Property

Leisure and other activities

Administration

The total payroll costs of these employees were:

Wages and salaries

Social security costs

Pension costs

Details of the directors' remuneration are given in the Directors' Remuneration Report.

2012
Number

2011
Number

136

240

2012
£m

12.5

1.6

0.8

14.9

134

234

2011
£m

10.9

1.5

0.7

13.1

117 St. Modwen Properties PLC
Annual Report and Accounts 2012

3. OTHER INCOME STATEMENT DISCLOSURES (CONTINUED)
(d) Share-based payments

The Group has a Save As You Earn share option scheme open to all employees. Employees must remain in service for a period of five
years from the date of grant before exercising their options. The option period ends six months following the end of the vesting period.
The Group also has an executive share option scheme and performance share plan (PSP), full details of which are given in the Directors'
Remuneration Report.

The following table illustrates the movements in share options during the year. As the PSP includes the grant of options at £nil exercise
price the weighted average prices below are calculated including and excluding the options under this plan.

Outstanding at start of year

Granted

Forfeited

Lapsed

Exercised

Outstanding at end of year

Exercisable at year end

2012

2011

Weighted average price

Number of
options

8,623,043

3,021,762

(197,768)

(360,588)

(155,784)

10,930,665

2,672,736

All
options
£

Excluding
PSP
£

1.57

1.25

(2.33)

(0.49)

(1.66)

1.49

2.01

1.96

1.77

(2.33)

(1.85)

–

1.90

2.20

Number of
options

6,459,561

2,882,784

(656,834)

(12,908)

(49,560)

8,623,043

958,918

All
options
£

1.66

1.32

(1.41)

(3.68)

(1.00)

1.57

2.87

Excluding
PSP
£

2.01

1.79

(1.92)

(3.68)

(1.00)

1.96

2.87

Share options are priced using a Black-Scholes valuation model. The fair values calculated and the assumptions used are as follows:

30th November 2012

30th November 2011

Charge to
Income
Statement
£m

Risk-free
interest rate
%

Expected
volatility
%

Dividend
yield
%

Share
price
£*

0.3

0.2

0.4-1.1

37.6-56.9

0.4-1.1

23.4-56.1

1.6

2.4

1.23-2.00

1.23

* For 2012 based on the earlier of the 90 day average to 30th November 2011 or the closing share price at the date of grant. For 2011 based on the 90 day average to
30th November 2011.

The fair value of the Balance Sheet liability in respect of share options outstanding at the year end was £2.4m (2011: £2.1m) and
included £0.4m (2011: £0.1m) in respect of options that had vested at the year end.

In arriving at fair value it has been assumed that, when vested, shares options are exercised in accordance with historical trends.
Expected volatility was determined by reference to the historical volatility of the Group's share price over a period consistent with
the expected life of the options.

The weighted average share price at the date of exercise was £1.97 (2011: £1.37). The executive share options outstanding at the year
end had a range of exercise prices between £1.14 and £3.75 (2011: £1.14 and £4.10) with PSP options exercisable at £nil (2011: £nil).
Outstanding options had a weighted average maximum remaining contractual life of 9 years (2011: 8.7 years).

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118 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Accounts (continued)

for the year ended 30th November 2012

4. FINANCE COST AND FINANCE INCOME

Interest payable on borrowings

Amortisation of loan arrangement fees

Amortisation of discount on deferred payment arrangements

Head rents treated as finance leases

Movement in fair value of interest rate derivatives

Interest on pension scheme liabilities (Note 18)

Total finance cost

2012
£m

(18.6)

(1.2)

(1.1)

(0.2)

–

(1.2)

(22.3)

The finance cost/income on interest rate derivatives derives from financial liabilities held at fair value through profit or loss. All other
finance costs derive from financial liabilities measured at amortised cost.

Interest receivable on cash deposits

Credit in respect of loan settlement fees

Credit in respect of discount on deferred receivables

Movement in fair value of interest rate derivatives

Expected return on pension scheme assets (Note 18)

Total finance income

5. TAXATION
(a) Tax on profit on ordinary activities

Tax charge/(credit) in the Income Statement:

Corporation tax

Current year tax

Adjustments in respect of previous years

Deferred tax

Reversal of temporary differences

Impact of current year revaluations and indexation

Utilisation of tax losses

Change in rate for provision of deferred tax

Adjustments in respect of previous years

Total tax charge in the Income Statement

Tax relating to items in the Statement of Comprehensive Income:

Deferred tax

Actuarial losses on pension schemes

Tax credit in the Statement of Total Recognised Income and Expense

2011
£m

(19.3)

(1.3)

(2.3)

(0.2)

(1.8)

(1.3)

(26.2)

2011
£m

0.7

–

0.3

–

1.5

2.5

2012
£m

1.1

2.0

0.2

0.6

1.3

5.2

2012
£m

2011
£m

3.4

1.9

5.3

(0.4)

2.7

0.9

(0.5)

(2.9)

(0.2)

5.1

–

0.2

(3.3)

(3.1)

(0.2)

2.9

5.1

–

0.2

8.0

4.9

–

119 St. Modwen Properties PLC
Annual Report and Accounts 2012

5. TAXATION (CONTINUED)
(b) Reconciliation of effective tax rate

Profit before tax

Less: Joint ventures and associates

Pre-tax profit attributable to the Group

Corporation tax at 24.7% (2011: 26.7%)

Permanent differences

Short-term timing differences

Impact of current year revaluations and indexation

Difference between chargeable gains and accounting profit

Change in rate used for provision of deferred tax

Utilisation of tax losses not previously recognised

Current year charge

Adjustments in respect of previous years

2012
£m

47.4

(22.6)

24.8

6.1

(0.7)

(1.7)

2.2

0.7

(0.5)

–

6.1

(1.0)

5.1

2011
£m

50.4

(2.9)

47.5

12.7

(0.8)

–

(6.6)

3.4

–

(0.7)

8.0

(3.1)

4.9

Effective rate of tax

21%

10%

The post tax results of joint ventures and associates are stated after a tax charge of £5.4m (2011: £1.3m). The effective tax rate for
the Group including joint ventures and associates is a charge of 19.9% (2011: 12.0% credit).

The Finance Act 2012 was enacted on 17th July 2012 and included provisions which reduced the main rate of corporation tax to 24%
from 1st April 2012 and 23% from 1st April 2013. Current tax has therefore been provided at 24.67% and deferred tax at 23%. Further
reductions to the main rate are proposed to reduce the rate to 21% by 1st April 2014. This has not been enacted at the Balance Sheet
date and, therefore, is not included in these Financial Statements.

The proposed reductions of the main rate of corporation tax to 21% by 1st April 2014 are expected to be enacted substantively in
Finance Act 2013. If the deferred tax assets and liabilities of the Group were all to reverse after 1st April 2014, the effect of the changes
from 23% to 21% would be to reduce the net deferred tax liability by £0.7m.

Balance at start of the year

Charge/(credit) to the Income Statement

Net payment

Balance at end of the year

An analysis of the deferred tax provided by the Group is given below:

Property revaluations

Capital allowances

Appropriations to trading stock

Unutilised tax losses

Other temporary differences

2012

Asset
£m

Liability
£m

–

(0.1)

(5.4)

(5.5)

9.5

3.6

0.9

–

14.0

2012

2011

Corporation
tax
£m

Deferred
tax
£m

Corporation
tax
£m

Deferred
tax
£m

0.2

5.3

(2.2)

3.3

Net
£m

9.5

3.6

0.9

(0.1)

(5.4)

8.5

8.7

(0.2)

–

8.5

Asset
£m

–

(4.2)

9.3

(3.1)

(6.0)

0.2

2011

Liability
£m

7.3

5.1

0.5

–

12.9

0.7

8.0

–

8.7

Net
£m

7.3

5.1

0.5

–

(4.2)

8.7

At the Balance Sheet date, the Group has unused tax losses in relation to 2012 and prior years of £1.8m (2011: £1.6m), of which £0.1m
(2011: £nil) has been recognised as a deferred tax asset. A deferred tax asset of £1.7m (2011: £1.6m) has not been recognised in
respect of current and prior year tax losses as it is not considered sufficiently certain that there will be taxable profits available in the short
term against which these can be offset.

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120 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Accounts (continued)

for the year ended 30th November 2012

5. TAXATION (CONTINUED)
(d) 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.

The benefits of any tax planning are not recognised by the Group until the outcome is reasonably certain. Where tax matters are subject
to review by HMRC, management has applied judgement to determine the level of provision, if any, required.

6. EARNINGS PER SHARE
The calculation of basic and diluted earnings per share is set out below:

Weighted number of shares in issue

Weighted number of dilutive shares

Profit attributable to equity shareholders (basic and diluted)

Basic earnings per share

Diluted earnings per share

2012
Number of
shares

2011
Number of
shares

200,145,177 200,110,380

1,534,599

520,113

201,679,776 200,630,493

2012
£m

42.7

2012
pence

21.3

21.2

2011
£m

43.5

2011
pence

21.7

Shares held by the Employee Benefit Trust are excluded from the above calculations.

As the Group is principally a development business EPRA Earnings per share on a basic and diluted basis are not provided.
These calculations exclude development profits and would not provide a meaningful measure of the performance of the Group.

7. DIVIDENDS
Dividends paid during the year were in respect of the final dividend for 2011 and interim dividend for 2012. The proposed final dividend
is subject to approval at the Annual General Meeting and has not been included as a liability in these Financial Statements.

Paid

Final dividend in respect of previous year

Interim dividend in respect of current year

Total

Proposed

Current year final dividend

The Employee Benefit Trust waives its entitlement to dividends.

2012

2011

p per share

£m

p per share

2.20

1.21

3.41

2.42

4.4

2.4

6.8

4.8

2.00

1.10

3.10

2.20

£m

4.0

2.2

6.2

4.4

121 St. Modwen Properties PLC
Annual Report and Accounts 2012

8. INVESTMENT PROPERTY

Fair value

At 30th November 2010

Additions – new properties

Other additions

Net transfers to inventories (Note 12)

Reclassification of assets on transfer

Disposals

Gain on revaluation

At 30th November 2011

Additions – new properties

Other additions

Net transfers to inventories (Note 12)

Disposals

Gain/(loss) on revaluation

At 30th November 2012

Freehold
investment
properties
£m

Leasehold
investment
properties
£m

507.3

8.1

29.1

(7.4)

2.7

(2.8)

23.7

560.7

35.0

31.8

(46.7)

(16.2)

11.1

320.7

–

6.2

(12.0)

(2.7)

(36.7)

12.5

288.0

–

11.5

(4.1)

(96.0)

(4.7)

575.7

194.7

Total
£m

828.0

8.1

35.3

(19.4)

–

(39.5)

36.2

848.7

35.0

43.3

(50.8)

(112.2)

6.4

770.4

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Investment properties were valued at 30th November 2012 by Jones Lang LaSalle LLP, Chartered Surveyors, in accordance with the
Appraisal and Valuation Manual of the Royal Institution of Chartered Surveyors, on the basis of market value. Jones Lang LaSalle LLP
are professionally qualified independent external valuers and have recent experience in the relevant location and category of the
properties being valued.

Additions – new properties include £31.6m (2011: £3.5m) acquired through business combinations.

The historical cost of investment properties at 30th November 2012 was £680.5m (2011: £744.1m).

As at 30th November 2012, £632.8m (2011: £756.9m) of investment property was pledged as security for the Group's loan facilities.

Included within leasehold investment properties are £3.9m (2011: £3.9m) of assets held under finance leases.

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122 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Accounts (continued)

for the year ended 30th November 2012

9. OPERATING PROPERTY, PLANT AND EQUIPMENT

Cost

At 30th November 2010

Additions

Disposals

At 30th November 2011

Additions

At 30th November 2012

Depreciation

At 30th November 2010

Charge for the year

Disposals

At 30th November 2011

Charge for the year

At 30th November 2012

Net book value

At 30th November 2010

At 30th November 2011

At 30th November 2012

Tenure of operating properties:

Freehold

Leasehold

Operating
properties
£m

Operating
plant
and
equipment
£m

6.9

–

6.9

0.1

7.0

0.6

0.1

–

0.7

0.1

0.8

6.3

6.2

4.8

0.3

(0.2)

4.9

0.1

5.0

3.7

0.4

(0.1)

4.0

0.4

4.4

1.1

0.9

0.6

2012
£m

3.5

2.7

6.2

Total
£m

11.7

0.3

(0.2)

11.8

0.2

12.0

4.3

0.5

(0.1)

4.7

0.5

5.2

7.4

7.1

6.8

2011
£m

3.5

2.7

6.2

123 St. Modwen Properties PLC
Annual Report and Accounts 2012

10. JOINT VENTURES AND ASSOCIATES
The Group's share of the trading results for the year of its joint ventures and associates is:

2012

VSM
Estates
Uxbridge
(Group)
Limited
£m

Other
joint
ventures
and
associates
£m

Key
Property
Investments
Limited
£m

18.9

7.3

1.3

0.2

(0.4)

(0.3)

8.1

(4.8)

3.3

0.3

3.6

0.1

(0.1)

–

27.2

(0.1)

27.0

(2.4)

24.6

(5.5)

19.1

0.8

0.7

(0.2)

–

(0.1)

0.4

(0.3)

0.1

(0.2)

(0.1)

2011

VSM
Estates
Uxbridge
(Group)
Limited
£m

Other
joint
ventures
and
associates
£m

Key
Property
Investments
Limited
£m

12.1

7.3

0.2

–

0.4

(0.1)

7.8

(3.4)

4.4

(1.2)

3.2

–

7.3

0.7

–

0.7

(0.9)

(0.2)

(0.1)

(0.3)

Total
£m

19.8

7.9

1.1

0.2

26.8

(0.5)

35.5

(7.5)

28.0

(5.4)

22.6

Income statements

Revenue

Net rental income

Development profits/(losses)

Gains on disposal of investment
properties

Investment property revaluation
(losses)/gains

Administrative expenses

Profit before interest and tax

Finance cost

Profit/(loss) before tax

Taxation

Profit/(loss) for the year

Included in other joint ventures and associates above are losses from associated companies of £0.1m (2011: profits of £0.3m).

The Group's share of the Balance Sheet of its joint ventures and associates is:

2012

VSM
Estates
Uxbridge
(Group)
Limited
£m

Other
joint
ventures
and
associates
£m

Key
Property
Investments
Limited
£m

116.8

13.6

(19.2)

(62.0)

49.2

45.6

–

3.6

–

49.2

58.9

2.9

(6.2)

(36.5)

19.1

–

19.1

–

19.1

3.8

4.8

(0.9)

(0.8)

6.9

4.7

2.3

(0.1)

–

6.9

2011

VSM
Estates
Uxbridge
(Group)
Limited
£m

Other
joint
ventures
and
associates
£m

Key
Property
Investments
Limited
£m

120.4

10.7

(11.1)

(74.4)

45.6

44.4

–

3.2

(2.0)

45.6

–

23.7

6.1

(21.6)

(3.5)

4.7

5.0

–

(0.3)

–

4.7

Total
£m

179.5

21.3

(26.3)

(99.3)

75.2

50.3

2.3

22.6

–

75.2

Balance Sheets

Non-current assets

Current assets

Current liabilities

Non-current liabilities

Net assets

Equity at start of year

Transfer from joint venture to
subsidiary undertaking

Profit/(loss) for the year

Dividends paid

Equity at end of year

Total
£m

19.4

8.0

0.2

–

0.4

(0.1)

8.5

(4.3)

4.2

(1.3)

2.9

Total
£m

144.1

16.8

(32.7)

(77.9)

50.3

49.4

–

2.9

(2.0)

50.3

Included in other joint ventures and associates above are net assets of £2.9m (2011: £3.0m) in relation to associated companies.
These net assets comprise total assets of £3.6m (2011: £4.0m) and total liabilities of £0.7m (2011: £1.0m).

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124 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Accounts (continued)

for the year ended 30th November 2012

10. JOINT VENTURES AND ASSOCIATES (CONTINUED)
Joint venture companies and associates comprise:

Name

Status

Interest

Activity

Key Property Investments Limited

VSM Estates Uxbridge (Group) Limited

Barton Business Park Limited

Sky Park Developments LLP

Wrexham Land

Wrexham Power

Coed Darcy Limited

Baglan Bay Company Limited

Joint venture

Associate

50%

49%

25%

Property investment and development

Property development

Property investment and development

Property management

In the Business Review a series of commercial contracts with Persimmon is referred to as the ‘Persimmon JV.’ This is not a statutory
entity and the results from these commercial contracts are not included in the figures disclosed above. Revenue and profit from the
Persimmon JV are recognised in Group development profit on legal completion of housing unit sales to third party customers.

Many of the joint ventures and associates contain change of control provisions, as is common for such arrangements.

On 31st May 2012 the Group increased its shareholding in Sowcrest Limited, Holaw (462) Limited and Chertsey Road Property Limited
to 100%. As set out in Note 19, net goodwill of £1.3m arose on increasing the Group’s stake in the entities, which are now accounted
for as subsidiaries.

11. TRADE AND OTHER RECEIVABLES

Non-current

Other debtors

Amounts due from joint ventures

Current

Trade receivables

Prepayments and accrued income

Other debtors

Amounts recoverable on contracts

Amounts due from joint ventures

IFRS 7 disclosures in respect of financial assets included above are provided in Note 16.

2012
£m

15.6

6.0

21.6

4.9

7.1

18.2

8.1

8.2

46.5

2011
£m

8.4

–

8.4

8.1

5.2

14.1

8.9

14.9

51.2

125 St. Modwen Properties PLC
Annual Report and Accounts 2012

12. INVENTORIES

Properties held for sale

Properties under construction

Land under option

The movement in inventories during the two years ended 30th November 2012 is as follows:

At 30th November 2010

Additions

Net transfers from investment property (Note 8)

Disposals (transferred to development cost of sales) (Note 1)

At 30th November 2011

Additions

Net transfers from investment property (Note 8)

Disposals (transferred to development cost of sales) (Note 1)

At 30th November 2012

2012
£m

9.6

143.1

22.5

175.2

2011
£m

16.0

152.8

22.3

191.1

£m

171.6

46.7

19.4

(46.6)

191.1

85.0

50.8

(151.7)

175.2

The directors consider all inventories to be current in nature. The operational cycle is such that a proportion of inventories will not be
realised within 12 months. It is not possible to determine with accuracy when specific inventory will be realised as this will be subject
to a number of issues including the strength of the property market.

Included within disposals of inventories are net realisable value provisions made during the year of £3.8m (2011: £2.6m) .

As at 30th November 2012 £41.0m (2011: £41.0m) of inventory was pledged as security for the Group's loan facilities.

13. TRADE AND OTHER PAYABLES

Current

Trade payables

Amounts due to joint ventures

Other payables and accrued expenses

Provision for share options

Other payables on deferred terms

Derivative financial instruments

Non-current

Other payables and accrued expenses

Provision for share options

Other payables on deferred terms

Finance lease liabilities (head rents)

2012
£m

20.4

13.1

74.8

–

27.8

19.5

155.6

–

44.7

3.9

48.6

2011
£m

19.3

4.5

79.7

0.8

7.8

20.1

132.2

47.7

1.0

140.0

3.9

192.6

IFRS 7 disclosures in respect of financial liabilities included above are provided in Note 16.

The payment terms of the other payables on deferred terms are subject to contractual commitments. In the normal course of events
the payments will be made in line with either the disposal of investment properties held on the Balance Sheet, or the commencement
of development. Net cash outflows on the settlement of the deferred consideration will therefore be limited.

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126 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Accounts (continued)

for the year ended 30th November 2012

14. BORROWINGS

Current

Bank overdrafts

Non-current

Amounts repayable between one and two years

Amounts repayable between two and five years

Amounts repayable after more than five years

Total

2012
£m

3.3

85.1

201.6

84.9

371.6

374.9

Where borrowings are secured, the individual bank facility has a fixed charge over a discrete portfolio of certain of the Group's
property assets.

Maturity profile of committed borrowing facilities

The Group's debt is provided by floating rate bilateral revolving credit facilities (providing the flexibility to draw and repay loans as
required) and an unsecured 6.25% fixed rate retail bond. The maturity profile of the Group's committed borrowing facilities is set
out below:

Secured floating rate borrowings:

Less than one year†

One to two years

Two to three years

Three to four years

Four to five years

More than five years

Unsecured fixed rate borrowings:

More than five years

Drawn
£m

3.3

85.1

120.3

81.3

–

4.9

2012

Undrawn
£m

2011

Total
£m

Drawn
£m

Undrawn
£m

1.7

14.9

84.7

23.7

–

0.1

5.0

100.0

205.0

105.0

–

5.0

–

165.1

105.9

81.3

–

5.0

–

33.3

68.1

23.7

–

294.9

125.1

420.0

352.3

130.1

482.4

80.0

374.9

–

125.1

80.0

500.0

–

352.3

130.1

482.4

† In addition to the principal amounts included above, £0.9m (2011: £1.8m) of interest payable was committed at the year end. These amounts all fall due within three

months of the year end.

£0.6m (2011: £3.8m) of the undrawn committed facilities are ring-fenced for VSM Estates (Holdings) Limited.

2011
£m

–

352.3

–

352.3

Total
£m

5.0

–

198.4

174.0

105.0

–

127 St. Modwen Properties PLC
Annual Report and Accounts 2012

14. BORROWINGS (CONTINUED)
Interest rate profile

The interest rate profile of the Group's borrowings after taking into account the effects of hedging is:

Floating rate bank debt

Fixed rate bank debt

Fixed rate retail bond

At 30th November 2012

£m

2012
Applicable interest rate

64.9 Margin + 3 month LIBOR

Margin + 3.34%
weighted average swap rate

6.25% Fixed rate

230.0

80.0

374.9

£m

92.3

260.0

–

352.3

2011
Applicable interest rate

Margin + 3 month LIBOR

Margin + 3.29%
weighted average swap rate

N/A

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The average margin on the Group's bank debt is 2.1% (2011: 2.0%).

Interest rate swaps

The Group's derivative financial instruments, which are classified as fair value through profit or loss, consist of sterling denominated
interest swaps from floating rate to fixed rate and range from 2.01% to 5.16% (2011: 2.01% to 5.42%). In addition the Group has a cap
at 7.5% on a further £0.1m (2011: £0.1m) of floating rate debt. Details of the maturity profile of derivative financial instruments are given
below and the change in fair value of these instruments as charged to the Income Statement is disclosed in Note 4.

2012

2011

Earliest termination

Latest termination

Earliest termination

Latest termination

£m

30.0

60.0

50.0

60.0

20.0

10.0

230.0

4.83%

3.60%

2.91%

2.99%

2.01%

4.32%

3.34%

£m

10.0

50.0

60.0

20.0

40.0

230.0

4.65%

3.34%

2.91%

2.99%

2.01%

4.76%

3.34%

£m

30.0

70.0

50.0

60.0

20.0

260.0

4.97%

4.66%

3.63%

2.91%

2.99%

2.01%

3.29%

£m

10.0

20.0

60.0

50.0

60.0

260.0

5.42%

4.65%

3.45%

2.91%

2.99%

3.81%

3.29%

Less than one year

One to two years

Two to three years

Three to four years

Four to five years

More than five years

* Weighted average interest rate.

Certain of the interest rate swaps are extendable at the bank's option; the tables above therefore show the dates of normal termination
and extended termination. The weighted average maturity of interest rate swaps to the earliest termination date is 2.8 years
(2011: 3.1 years).

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128 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Accounts (continued)

for the year ended 30th November 2012

15. LEASING
Operating lease commitments where the Group is the lessee

The Group leases certain of its premises, motor vehicles and office equipment under operating leases. Future aggregate minimum lease
rentals payable under non-cancellable operating leases are as follows:

In one year or less

Between one and five years

In five years or more

2012
£m

0.8

2.9

0.1

3.8

2011
£m

0.7

3.4

0.5

4.6

Operating leases where the Group is the lessor

The Group leases out its investment properties under operating leases. The future aggregate minimum rentals receivable under non-
cancellable operating leases are as follows:

In one year or less

Between one and five years

In five years or more

2012
£m

29.2

87.1

167.6

283.9

2011
£m

28.4

71.2

174.6

274.2

Contingent rents, calculated as a percentage of turnover for a limited number of tenants, of £0.4m (2011: £0.4m) were recognised
during the year.

Obligations under finance leases

Finance lease liabilities payable in respect of certain leasehold investment properties are as follows:

Less than one year

Between one and five years

More than five years

Less than one year

Between one and five years

More than five years

Minimum
lease
payments
£m

0.2

1.0

66.1

67.3

Minimum
lease
payments
£m

0.2

0.9

67.3

68.4

2012

Interest
£m

Principal
£m

0.2

1.0

62.2

63.4

2011

Interest
£m

0.2

0.9

63.4

64.5

–

3.9

Principal
£m

–

3.9

Finance leases are for periods of up to 999 years from inception and a discount rate of 6.0% (2011: 6.0%) has been used to derive the
fair value of the principal amount outstanding. All lease obligations are denominated in sterling.

129 St. Modwen Properties PLC
Annual Report and Accounts 2012

16. FINANCIAL INSTRUMENTS
Categories and classes of financial assets and liabilities

Financial assets

Loans and receivables:

Cash and cash equivalents

Trade and other receivables

Financial liabilities

Derivative financial instruments held at fair value through profit or loss

Amortised cost:

Bank loans and overdrafts

Retail bond

Trade and other payables

Other payables on deferred terms

Finance lease liabilities (head rents)

2012
£m

8.9

46.1

55.0

2012
£m

19.5

2011
£m

5.2

40.6

45.8

2011
£m

20.1

294.9

352.3

80.0

68.0

72.5

3.9

538.8

–

103.6

147.8

3.9

627.7

Trade and other receivables above comprise other debtors, trade receivables and amounts due from joint ventures as disclosed in
Note 11, for current and non-current amounts, after deduction of £6.8m (2011: £4.9m) of non-financial assets.

Trade and other payables above comprise trade payables, amounts due to joint ventures and other payables and accrued expenses
as disclosed in Note 13, for current and non-current amounts, after deduction of £40.3m (2011: £47.6m) of non-financial liabilities.

a. The directors consider that the carrying amount recorded in the Financial Statements approximates their fair value.

b. Derivative financial instruments are carried at fair value. The fair value is calculated using quoted market prices relevant for the term

and instrument.

Fair value hierarchy of financial assets and liabilities

Financial assets and financial liabilities that are measured subsequent to initial recognition at fair value, are required to be grouped into
Levels 1 to 3 based on the degree to which the fair value is observable.

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets;

• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable

for the asset, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset that are not based on

observable market data (unobservable inputs).

Derivative financial instruments held at fair value through profit or loss are the only financial instruments held by the Group at fair value.
The net liability of £19.5m recognised as at 30th November 2012 (2011: £20.1m) is categorised as a Level 2 fair value measurement.

Capital risk

The Group manages its capital to ensure that the entities in the Group will be able to continue as a going concern while maximising
the return to shareholders through the optimisation of the debt and equity balance. The capital structure of the Company consists
of debt (as disclosed in Note 14), cash and cash equivalents and equity, comprising issued capital, reserves and retained earnings
as disclosed in the Group Statement of Changes in Equity.

Market risk

Market risk is the potential adverse change in Group income or the Group net worth arising from movements in interest rates or other
market prices. Interest rate risk is the Group's principal market risk and is considered below.

Interest rate risk management: The Group is exposed to interest rate risk as it borrows funds at variable interest rates. The Group uses
a combination of variable rate borrowings and interest rate swaps to manage the risk.

Interest rate sensitivity: The following table details the Group's sensitivity, after tax, to a 1% change in interest rates based on year end
levels of debt.

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130 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Accounts (continued)

for the year ended 30th November 2012

16. FINANCIAL INSTRUMENTS (CONTINUED)

1% increase in interest rates

Interest on borrowings

Effect of interest rate swaps

1% decrease in interest rates

Interest on borrowings

Effect of interest rate swaps

Credit risk

2012
£m

(2.1)

1.7

(0.4)

2012
£m

2.1

(1.7)

0.4

2011
£m

(2.6)

1.9

(0.7)

2011
£m

2.6

(1.9)

0.7

Credit risk is the risk of financial loss where counterparties are not able to meet their obligations as they fall due.

The credit risk on the Group's liquid funds and derivative financial instruments is limited because the counterparties are banks with
acceptable (generally A and above) credit ratings. Bank deposits are only placed with banks in accordance with Group policy that
specifies minimum credit rating and maximum exposure. Credit risk on derivatives is closely monitored.

Trade and other receivables consist of amounts due from a large number of parties spread across geographical areas. The Group does
not have any significant concentrations of credit risk as the tenant base is large and diverse with the largest individual tenant accounting
for £1.6m (2011: £1.5m) of gross rental income.

The carrying amount of financial assets, as detailed above, represents the Group’s maximum exposure to credit risk at the reporting date.

Included within trade and other receivables is £0.4m (2011: £0.5m) which is provided against as it represents estimated irrecoverable
amounts. This allowance has been determined by a review of all significant balances that are past due considering the reason for non-
payment and the creditworthiness of the counterparty. A reconciliation of the changes in this account during the year is provided below.

Movement in the allowance for doubtful debts

At start of year

Impairment losses recognised

Amounts written off as uncollectable

Impairment losses reversed

At end of year

2012
£m

0.5

0.4

(0.2)

(0.3)

0.4

2011
£m

0.7

0.5

(0.2)

(0.5)

0.5

Trade and other receivables include £1.0m (2011: £0.9m) which are past due as at 30th November 2012 for which no provision has
been made because the amounts are considered recoverable. The following table provides an ageing analysis of these balances.

Number of days past due but not impaired

1–30 days

31–60 days

60 days +

2012
£m

0.3

0.4

1.0

2011
£m

0.4

0.2

0.3

0.9

131 St. Modwen Properties PLC
Annual Report and Accounts 2012

16. FINANCIAL INSTRUMENTS (CONTINUED)
Liquidity risk

Liquidity risk is the risk that the Group does not have sufficient financial resources available to meet its obligations as they fall due.
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows, matching the maturity profiles of financial
assets and liabilities and through the use of bilateral facilities, overdrafts and cash with a range of maturity dates to ensure continuity
of funding.

The economic climate continues to provide a difficult backdrop to the Group's operations. As such, the focus continues to be on
managing cash flows and forward commitments, whilst continuing to marshal sites through the planning and remediation process
and undertaking development on largely pre-let or pre-sold opportunities.

The maturity profile of the anticipated future cash flows for bank loans and overdrafts is shown in Note 14. The maturity profile for
the Group's other non-derivative financial liabilities, on an undiscounted basis, is as follows:

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2012

Trade and other payables (including finance
lease liabilities)

Other payables on deferred terms

2011

Trade and other payables (including finance
lease liabilities)

Other payables on deferred terms

Less than
one month
£m

1-3
months
£m

3 months
to 1 year
£m

1–5
years
£m

More than
five years
£m

37.3

–

37.3

1.9

10.4

12.3

32.5

17.4

49.9

3.9

45.8

49.7

63.4

–

63.4

Less than
one month
£m

1-3
months
£m

3 months
to 1 year
£m

1–5
years
£m

More than
five years
£m

26.7

2.5

29.2

3.1

–

3.1

22.3

5.3

27.6

47.7

142.3

190.0

67.3

–

67.3

Total
£m

139.0

73.6

212.6

Total
£m

167.1

150.1

317.2

The Group's approach to cash flow, financing and bank covenants is discussed further in the Financial Review section of the Business
Review.

17. SHARE CAPITAL

Allotted and fully paid:

Equity share capital

At start and end of year

See Note 3d for details of outstanding options to acquire ordinary shares.

Ordinary
10p shares
Number

£m

200,360,931

20.0

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132 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Accounts (continued)

for the year ended 30th November 2012

18. PENSIONS
The Group operates a pension scheme with both defined benefit and defined contribution sections. The defined benefit section is closed
to new members and future accrual. The Income Statement includes:

• a charge of £0.1m (2011: £nil) for the defined benefit section; and

• a charge of £0.6m (2011: £0.5m) for the defined contribution section.

The last formal actuarial valuation of the scheme was at 5th April 2011, when the market value of the net assets of the scheme was
£33.5m, a funding level of 104% based on the Trustees' proposed assumptions for technical provisions (these are yet to be finalised).
The valuation was performed using the 'Projected Unit Credit Method' under IAS 19. The main actuarial assumptions were:

Investment rate of return:

Increase in pensions

pre-retirement

post-retirement

6.3 % pa

4.8 % pa

3.6 % pa

The actuarial valuation of the defined benefit section, a final salary scheme, was updated to 30th November 2012 on an IAS basis by
a qualified independent actuary. The major assumptions used by the actuary were:

Rate of increase in deferred pensions

Rate of increase in pensions in payment

Pre 6th April 1997 benefits

Post 5th April 1997 benefits

Discount rate

Inflation assumption

2012

2.0%

2.7%

4.3%

2.0%

2011

2.4%

3.0%

3.1%

4.9%

2.4%

2010

2.8%

3.0%

3.5%

5.5%

2.8%

Following the closure of the defined benefit section to future accrual, the assumption regarding the rate of increase in salaries is no
longer applicable as retirement benefits will be based on salaries at 31st August 2009. Benefits earned up to the point of the scheme
closure will be protected and will be increased in line with inflation, subject to a maximum of 5% per annum. From 2010 the basis of the
inflation assumption has been amended, in line with market practice, from the Retail Price Index to the Consumer Price Index.

The mortality rates adopted are from the S1 year of birth and medium cohort tables with an underpin to future improvements of 1.5% to
reflect the fact that medium cohort improvements will reduce over time. The resultant assumptions are, for example, male members
who are currently retired are expected to draw their pensions for 26.3 years and non-retired members for 28.7 years, based on a normal
retirement age of 60.

The Group made a contribution of £0.2m to the defined benefit section of the scheme in 2012 and expects contributions to remain at
similar levels in future years.

The fair values of assets in the defined benefit section of the scheme and the expected rates of return, based on market
expectations, were:

Equities

Bonds

Property

Cash and other assets

Actuarial value of liabilities

Unrecognised surplus

Surplus in the scheme

Related deferred tax liability

Fair value of pension asset net of deferred tax

2012

2011

2010

4.5

4.2

4.5

3.2

£m

11.0

9.7

6.4

1.0

28.1

(27.0)

(1.1)

–

5.1

4.8

5.1

4.0

£m

9.5

7.9

8.2

1.5

27.1

(24.8)

(2.3)

–

5.7

5.5

5.7

4.2

£m

10.3

7.6

8.5

0.8

27.2

(24.7)

(2.5)

–

The cumulative amount of actuarial gains and losses (before unrecognised surplus of £1.1m) recorded in the Group Statement of
Comprehensive Income is a loss of £0.1m (2011: £0.2m).

133 St. Modwen Properties PLC
Annual Report and Accounts 2012

18. PENSIONS (CONTINUED)
Analysis of the amount charged to operating profit

Current service cost and total operating charge

Analysis of the amount credited to finance costs and income

Expected return on pension scheme assets

Interest on pension scheme liabilities

2012
£m

(0.2)

2012
£m

1.3

(1.2)

0.1

2011
£m

(0.2)

2011
£m

1.5

(1.3)

0.2

2010
£m

(0.2)

2010
£m

1.5

(1.4)

0.1

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The actual return on pension scheme assets was a gain of £2.4m (2011: £1.1m). The expected return on pension scheme assets
was calculated assuming cash and gilts will make returns in line with the yield on the 20 year gilt index and that equities and properties
will return 2% above this. Corporate bonds have been assumed to return in line with the yield on the iboxx over 15 year corporate
bond index.

Analysis of the amount recognised in the Group Statement of Comprehensive Income

Difference between expected and actual return on assets

Experience gains and losses arising on fair value of scheme liabilities

Effects of changes in the demographic and financial assumptions underlying
the fair value of the scheme liabilities

Change in unrecognised surplus

Total actuarial loss

Analysis of the movement in the present value of the scheme liabilities

Beginning of year

Movement in year:

Current service cost

Employee contributions

Interest cost

Actuarial gains and losses

Benefits paid

Curtailment gain

End of year

2012
£m

24.8

0.2

–

1.2

2.3

(1.5)

–

27.0

2011
£m

24.7

0.2

–

1.3

–

(1.4)

–

24.8

2012
£m

1.1

(0.5)

(1.8)

1.1

(0.1)

2010
£m

26.9

0.2

–

1.4

(1.3)

(2.5)

–

24.7

2011
£m

(0.4)

(1.8)

1.8

0.2

(0.2)

2009
£m

23.6

0.2

0.1

1.4

3.7

(1.4)

(0.7)

26.9

2010
£m

0.9

(0.7)

2.0

(2.3)

(0.1)

2008
£m

29.0

0.4

0.1

1.6

(3.9)

(3.6)

–

23.6

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134 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Accounts (continued)

for the year ended 30th November 2012

18. PENSIONS (CONTINUED)
Analysis of the movement in the fair value of the scheme assets

Beginning of year

Movement in year:

Expected return on scheme assets

Contributions by employer

Employee contributions

Actuarial gains and losses

Benefits paid

End of year

Surplus in scheme at the year end

Unrecognised surplus

Net surplus

History of experience gains and losses

Difference between expected and actual return on
scheme assets:

Amount

Percentage of scheme assets

Experience gains and losses on scheme liabilities:

Amount

Percentage of fair value of scheme liabilities

2012
£m

27.1

1.3

0.2

–

1.0

(1.5)

28.1

1.1

(1.1)

–

2012
£m

2011
£m

27.2

1.5

0.2

–

(0.4)

(1.4)

27.1

2.3

(2.3)

–

2010
£m

27.1

1.5

0.2

–

0.9

(2.5)

27.2

2.5

(2.5)

–

2009
£m

24.9

1.4

0.3

0.1

1.8

(1.4)

27.1

0.2

(0.2)

–

2008
£m

35.0

2.0

0.4

0.1

(9.0)

(3.6)

24.9

1.3

(1.3)

–

2011
£m

2010
£m

2009
£m

2008
£m

1.1

3.9%

(0.5)

1.9%

(0.4)

(1.5%)

(1.8)

7.3%

0.9

3.3%

1.8

6.6%

(9.0)

(35.7%)

(0.7)

3.7

(3.8)

2.8%

(13.8%)

16.1%

135 St. Modwen Properties PLC
Annual Report and Accounts 2012

19. ACQUISITION OF SUBSIDIARY
On 31st May 2012, the Company acquired the power to govern the financial and operating policies of its joint venture entities Sowcrest
Limited (Sowcrest), Chertsey Road Property Limited (Chertsey) and Statedale Limited together with its 100% subsidiary Holaw (462)
Limited (together Holaw). These linked transactions were facilitated by entering into a sale and purchase agreement to simultaneously
acquire the remaining 50% equity interest in each company for nil consideration.

As required by IFRS 3 (2008) Business Combinations, these deemed acquisitions of control have resulted in the joint venture interests
being remeasured to their fair values at the acquisition date and the net goodwill arising, which is not deemed to be recoverable, has
been written off to the Income Statement. The acquisitions provide the Group with full control of Sowcrest and Holaw, enabling it to
develop the second phase at Wembley Central as well as providing it with additional rental income from the investment property held by
those entities.

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Fair values are reported as provisional for 12 months to allow the incorporation of subsequent amendments.

The recognised amounts of identifiable assets acquired and liabilities assumed are set out in the table below:

Net assets acquired:

Investment property

Work in progress

Trade and other receivables

Cash at bank

Trade and other payables

Bank borrowings

Total identifiable net assets

Net goodwill

Total consideration

Satisfied by:

Sowcrest
£m

Chertsey
£m

Holaw
£m

23.6

7.2

0.2

–

(16.9)

(20.2)

(6.1)

2.5

(3.6)

–

(0.2)

–

(0.2)

0.1

(0.1)

8.0

–

0.4

(1.1)

(5.0)

2.7

(1.3)

1.4

Total
£m

31.6

7.2

0.6

0.4

(18.2)

(25.2)

(3.6)

1.3

(2.3)

Fair value of joint venture interest previously owned

(3.6)

(0.1)

1.4

(2.3)

The goodwill is not considered to be recoverable and has been written off to the Income Statement.

If the acquisitions had been completed on the first day of the financial year, they would have increased group revenue by £1m and the
Group's profit before tax by £0.2m.

20. CAPITAL COMMITMENTS
At 30th November 2012 the Group had contracted capital expenditure of £11.0m (2011: £19.9m). In addition the Group's share of the
contracted capital expenditure of its joint venture undertakings was £5.6m (2011: £0.1m). All capital commitments relate to investment
properties.

21. CONTINGENT LIABILITIES
The Group has a joint and several unlimited liability with VINCI PLC and the Ministry of Defence under guarantees in respect of the
financial performance of VSM Estates (Holdings) Limited (VSM). This is a guarantee in the ordinary course of business and would require
the guarantors to step into VSM's place in the event of a default on Project MoDEL. Completion of the project is not considered onerous
as the forecast revenues exceed the anticipated costs and it is not expected that there would be any net outflow in this regard.

The Group, together with Salhia Real Estate K.S.C. (Salhia) has provided a parent company guarantee in respect of the £135m bank
facility provided to Key Property Investments Limited. The guarantee provided by the Group is capped at 50% of the total commitment
under the agreement from time to time, limiting the Group guarantee to £67.5m as at 30th November 2012.

The Group, together with VINCI UK PLC has provided a joint and several parent company guarantee in respect of the £50m bank facility
provided to VSM Estates Uxbridge Limited, a subsidiary of VSM Estates Uxbridge (Group) Limited.

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136 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Accounts (continued)

for the year ended 30th November 2012

21. CONTINGENT LIABILITIES (CONTINUED)
The Group has taken advantage of the exemption from audit under Section 479A of the Companies Act 2006. As a result, for the year
ended 30th November 2012, the following subsidiaries are entitled to exemption from audit.

St. Modwen Developments (Chorley) Limited

Company Number:

05727011

St. Modwen Developments (Colne) Limited

Company Number:

05726325

St. Modwen Developments (Connah’s Quay) Limited

Company Number:

05726352

St. Modwen Developments (Daresbury) Limited

Company Number:

06163550

St. Modwen Developments (Hull) Limited

Company Number:

05593517

St. Modwen Developments (Longbridge) Limited

Company Number:

02885028

St. Modwen Developments (Long Marston) Limited

Company Number:

05294589

St. Modwen Developments (Queens Market) Limited

Company Number:

05289380

St. Modwen Developments (Quinton) Limited

Company Number:

01479159

St. Modwen Developments (St. Helens) Limited

Company Number:

05726666

St. Modwen Developments (Wythenshawe) Limited

Company Number:

05594279

St. Modwen Developments (Wythenshawe 2) Limited

Company Number:

05851760

St. Modwen Investments Limited

Shaw Park Developments Limited

Company Number:

00528657

Company Number:

04625000

22. RELATED PARTY TRANSACTIONS
Transactions between the Group and its non-wholly owned subsidiaries, joint ventures and associates are all undertaken on an arms
length basis and are detailed as follows:

Key Property Investments Limited (KPI)

During the year the Group provided management and construction services to KPI for which it received fees totalling £0.7m
(2011: £0.2m). The balance due to the Group at year end was £4.3m (2011: £0.3m). No interest is charged on this balance.

VSM Estates Uxbridge (Group) Limited (VSM Uxbridge)

During the year the Group set up VSM Uxbridge as a new joint venture with VINCI PLC to hold the former RAF Uxbridge site. VSM
entities holding the former RAF Uxbridge sites were transferred to this joint venture together with the related liabilities to settle the
deferred consideration due to the MoD.

VSM Uxbridge is funded by loan notes and short term funding provided by the Group and VINCI PLC together with bank debt.
The balance due to the Group at the year end was £8.6m, of which £6m is loan notes on which interest is chargeable. Interest
charged in the year ended 30th November 2012 was £0.7m.

Sowcrest Limited (Sowcrest), Holaw (462) Limited (Holaw) and Chertsey Road Properties Limited (CRP)
On 31st May 2012, the Group acquired the power to govern the financial and operating policies of these joint ventures, bringing
Sowcrest, Holaw and CRP into the Group as subsidiaries from this date.

Barton Business Park Limited (Barton)

During the year the Group repaid £nil to Barton (2011: repaid £0.1m). The balance due to Barton at the year end was £3.8m
(2011: £3.8m). No interest is charged on this balance.

Skypark Developments LLP (Skypark)

The balance due to the Group from Skypark at the year end was £0.5m (2011: £0.5m), of which £0.5m (2011: £0.5m) relates to loan
notes issued to the Group. No interest is charged on this balance.

Wrexham Power Limited (Wrexham Power)

During the year the Group provided funding to Wrexham Power of £0.2m (2011: £nil). The balance due to the Group at the year end
was £0.2m (2011: £nil). No interest is charged on this balance.

St. Modwen Pension Scheme

The Group occupies offices owned by the pension scheme with a value of £0.4m (2011: £0.5m) with an annual rental payable of £0.1m
(2011: £0.1m). The balance due to the Group at year end was £0.1m (2011: £0.1m).

137 St. Modwen Properties PLC
Annual Report and Accounts 2012

22. RELATED PARTY TRANSACTIONS (CONTINUED)
Non-wholly owned subsidiaries

The Company provides administrative and management services and provides a central purchase ledger system to subsidiary
companies. In addition, the Company also operates a central treasury function which lends to and borrows from subsidiary undertakings
as appropriate. Management fees and interest charged/(credited) during the year and net balances due (to)/from subsidiaries in which
the Company has an interest of less than 90% were as follows:

Stoke-on-Trent Regeneration Limited

Stoke-on-Trent Regeneration (Investments) Limited

Uttoxeter Estates Limited

Widnes Regeneration Limited

Trentham Leisure Limited

Norton & Proffitt Developments Limited

VSM Estates (Holdings) Limited

Management fees

Interest

Balance

2012
£m

2011
£m

–

0.2

–

0.3

2012
£m

(0.1)

–

1.4

–

0.8

2.1

2011
£m

(0.1)

–

1.7

–

1.6

2012
£m

(3.7)

0.8

(0.4)

2.4

19.7

(0.4)

(7.3)

11.1

2011
£m

(4.0)

(0.4)

(0.5)

2.4

20.4

(0.2)

(11.5)

6.2

All amounts due to the Group are unsecured and will be settled in cash. All amounts above are stated before provisions for doubtful
debts of £nil (2011: £nil). No guarantees have been given or received from related parties.

Transactions in which directors have an interest

Branston Properties Limited (Branston)

In 2010 the Group entered into an option to acquire the entire issued share capital of Branston, a company in which the family of Simon
Clarke has a financial interest, at market value. The price paid for the option was £0.1m and exercise of this is contingent on certain
planning milestones being achieved.

Property acquisition – Lickey Road, Longbridge

During 2012, the daughter of David Garman (Senior Independent Director) acquired a new-build residential unit at Lickey Road,
Longbridge from the Group. The property was acquired on an arms length basis for £0.2m.

Key management personnel

The directors are considered to be the Group's key management personnel and their remuneration is disclosed in the Directors'
Remuneration Report.

23. POST BALANCE SHEET EVENT
Since the year end the Group has set up VSM (NCGM) Limited, a joint venture with VINCI UK PLC. This Company has signed a contract
with the Covent Garden Market Authority to be the development partner for the New Covent Garden Market site in Central London. The
landmark multi-phased project will entail the rationalisation and master planning of the entire 57 acre site situated next to Vauxhall Cross,
Nine Elms. This contract was not in place at the year end and remains conditional. As such no adjustments have been made to reflect
this in the Financial Statements.

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138 St. Modwen Properties PLC
Annual Report and Accounts 2012

Company Balance Sheet

as at 30th November 2012

Fixed assets

Tangible fixed assets

Investments held as fixed assets

Current assets

Debtors (including amounts falling due after more than one year of £221.0m (2011: £205.7m)

Cash at bank and in hand

Current liabilities

Creditors: amounts falling due within one year

Net current assets

Total assets less current liabilities

Creditors: amounts falling due after more than one year

Net assets

Capital and reserves

Called up share capital

Share premium account

Capital redemption reserve

Revaluation reserve

Profit and loss account

Share incentive reserve

Own shares

Equity shareholders' funds

Notes

2012
£m

2011
£m

0.5

650.4

650.9

437.8

2.9

(293.0)

147.7

798.6

(271.1)

527.5

20.0

102.8

0.3

380.6

21.9

2.4

(0.5)

0.7

602.6

603.3

410.0

3.4

(284.8)

128.6

731.9

(242.5)

489.4

20.0

102.8

0.3

329.2

37.6

–

(0.5)

527.5

489.4

These Financial Statements were approved by the Board of Directors on 4th February 2013 and were signed on its behalf by Bill Oliver
and Michael Dunn.

Bill Oliver
Chief Executive Group Finance Director

Michael Dunn

139 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Company Accounts

for the year ended 30th November 2012

(A). ACCOUNTING POLICIES
Basis of preparation

The accounts and notes have been prepared in accordance with applicable UK GAAP on a going concern basis, as discussed in
the Business Review.

The principal accounting policies are summarised below and have been applied consistently in the current and preceding year.

Compliance with SSAP19 “Accounting for Investment Properties” requires departure from the Companies Act 2006 relating to
depreciation and an explanation of the departure is given below.

Accounting convention

The Financial Statements have been prepared under the historical cost convention except for the revaluation of certain properties,
derivative financial instruments and the defined benefit section of the Company’s pension scheme.

Revenue recognition

Revenue is recognised to the extent that the Company obtains the right to consideration in exchange for its performance. Revenue
is measured at the fair value of the consideration received, excluding discounts and VAT.

Rental income

Rental income arising from investment properties is accounted for on a straight-line basis over the lease term.

Interest receivable

Interest receivable is recognised on an accruals basis.

Tangible fixed assets

Tangible fixed assets, other than investment properties, are stated at cost less accumulated depreciation and accumulated impairment
losses. Such cost includes costs directly attributable to making the asset capable of operating as intended.

Depreciation is provided on all plant, machinery and equipment at rates calculated to write off the cost less estimated residual value,
based on prices prevailing at the Balance Sheet date, of each asset evenly over its expected useful life as follows:

Plant, machinery and equipment – over 2 to 5 years

Depreciation is not provided on investment properties which are subject to annual revaluations.

Long leasehold investment properties

In accordance with SSAP19, investment properties are revalued annually and the aggregate surplus or temporary deficit is transferred
to the revaluation reserve. Permanent diminutions are recognised through the Profit and Loss Account. No depreciation is provided in
respect of investment properties.

The Companies Act 2006 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 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.

Investment in subsidiary, joint venture and associated companies

The investments in subsidiary, joint venture 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 and changes in the book values of the underlying net assets.
The surplus or deficit arising on revaluation is reflected in the Company’s reserves.

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Current taxation

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140 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Company Accounts (continued)

for the year ended 30th November 2012

(A). ACCOUNTING POLICIES (CONTINUED)
Deferred taxation

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the Balance Sheet date where
transactions or events have occurred at that date that will result in an obligation to pay less or to receive more tax, with the
following exceptions:

• provision is made for tax on gains arising from the revaluation (and similar fair value adjustments) of fixed assets and gains on disposal
of fixed assets that have been rolled over into replacement assets only to the extent that, at the Balance Sheet date, there is a binding
agreement to dispose of the assets concerned. However, no provision is made where, on the basis of all available evidence at the
Balance Sheet date, it is more likely than not that the taxable gain will be rolled over into replacement assets and charged to tax only
where the replacement assets are sold; and

• deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable

taxable profits from which the future reversal of the underlying timing differences can be deducted.

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences
reverse based on tax rates and laws enacted or substantively enacted at the Balance Sheet date.

Interest

Interest paid is charged to the Profit and Loss Account on an accruals basis.

Finance costs of debt are allocated over the term of the debt at a constant rate on the carrying amount.

Pensions

The Company operates a pension scheme with both defined benefit and defined contribution sections. The defined benefit section
is closed to new members and, from 1st September 2009, to future accrual.

The cost of providing benefits under the defined benefit section is determined using the projected unit credit method, which attributes
entitlement to benefits to the current period (to determine current service cost) and to the current and prior periods (to determine the
present value of the defined benefit obligation) and is based on actuarial advice. Past service costs are recognised in the Profit and Loss
Account immediately if the benefits have vested.

The interest element of the defined benefit cost represents the change in present value of scheme obligations. The expected return
on plan assets is based on an assessment made at the beginning of the year of long-term market returns on scheme assets, adjusted
for the effect on the fair value of plan assets of contributions received and benefits paid during the year. The difference between the
expected return on plan assets and the interest cost is recognised in the Profit and Loss Account as other finance income or expense.

Actuarial gains and losses are recognised in full in the Statement of Total Recognised Gains and Losses in the year in which they occur.
The defined benefit pension asset or liability in the Balance Sheet comprises the present value of the defined benefit obligation, less any
past service cost not yet recognised and less the fair value of plan assets out of which the obligations are to be settled directly.

Contributions to defined contribution schemes are recognised in the Profit and Loss Account in the period in which they become
payable.

Derivative financial instruments and hedging

The Company uses derivative financial instruments such as interest rate swaps to hedge its risks associated with interest rate
fluctuations. Such instruments are initially recognised at fair value on the date on which a contract is entered into and are subsequently
remeasured at fair value. The Company has determined that the derivative financial instruments in use do not qualify for hedge
accounting and, consequently, any gains or losses arising from changes in the fair value of derivative financial instruments are taken
to the Profit and Loss Account.

Full details of the Company’s derivative financial instruments are given in Note 16 to the Group Financial Statements.

141 St. Modwen Properties PLC
Annual Report and Accounts 2012

(A). ACCOUNTING POLICIES (CONTINUED)
Own shares

St. Modwen Properties PLC shares held by the Company are classified in equity and are recognised at cost.

Interest bearing loans and borrowings

All loans and borrowings are initially recognised at fair value less directly attributable transaction costs. After initial recognition, loans and
borrowings are measured at amortised cost.

Gains and losses arising on the repurchase, settlement or otherwise cancellation of liabilities are recognised respectively in finance
income and expense.

Operating leases

Rentals payable under operating leases are charged to the Profit and Loss Account on a straight-line basis over the lease term.

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Cash Flow Statement

The Company has taken advantage of the exemption permitted by FRS1 not to present a Cash Flow Statement.

(B). RESULT FOR THE FINANCIAL YEAR
The Company has taken advantage of Section 408 of the Companies Act 2006 and has not included its own Profit and Loss Account
in these Financial Statements. The Company's loss for the year ended 30th November 2012 was £9.0m (2011: £18.0m).

(C). OPERATING EXPENSES
(i) Audit fees

Fees paid to Deloitte LLP in respect of:

Fees payable for the audit of the Company's annual accounts

Total audit fees

Audit related assurance services

Other assurance services

Tax compliance services

Tax advisory services

Total non-audit fees

Total fees

(ii) Employees

2012
£'000

2011
£'000

137

139

276

132

–

114

246

The average number of full-time employees (including executive directors) employed by the Company during the year were as follows:

Property

Leisure and other activities

Administration

Wages and salaries

Social security costs

Pension costs

2012
Number

2011
Number

136

215

2012
£m

11.4

1.5

0.7

13.6

134

211

2011
£m

10.1

1.4

0.7

12.2

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142 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Company Accounts (continued)

for the year ended 30th November 2012

(D). DIVIDENDS
Dividends paid during the year were a final dividend for 2011 and an interim dividend for 2012. The proposed final dividend is subject
to approval at the Annual General Meeting and has not been included as a liability in these Financial Statements.

Paid

Final dividend in respect of previous year

Interim dividend in respect of current year

Total

Proposed

Current year final dividend

The Employee Benefit Trust waives its entitlement to dividends.

(E). TANGIBLE FIXED ASSETS

Cost or valuation

At 30th November 2011 and 30th November 2012

Depreciation

At 30th November 2011

Charge for the year

At 30th November 2012

Net book value

At 30th November 2011

At 30th November 2012

2012

2011

p per share

£m

p per share

2.20

1.21

3.41

2.42

4.4

2.4

6.8

4.8

2.00

1.10

3.10

2.20

Long
leasehold
investment
properties
£m

Plant,
machinery
and
equipment
£m

0.3

–

0.3

2.5

2.1

0.2

2.3

0.4

0.2

£m

4.0

2.2

6.2

4.4

Total
£m

2.8

2.1

0.2

2.3

0.7

0.5

Long leasehold investment properties are currently let under operating leases for the purpose of generating rental income.

143 St. Modwen Properties PLC
Annual Report and Accounts 2012

(F). INVESTMENTS HELD AS FIXED ASSETS

Valuation

At 30th November 2011

Additions

Disposals

Revaluation of investments

At 30th November 2012

At 30th November 2011

Cost at 30th November 2012

Investment
in subsidiary
companies
£m

Investment
in joint
ventures
£m

547.6

4.0

(5.5)

18.9

565.0

283.8

278.3

55.0

(2.1)

–

32.5

85.4

26.5

Total
£m

602.6

1.9

(5.5)

51.4

650.4

310.3

304.8

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Subsidiary companies
At 30th November 2012 the principal subsidiaries, all of which were held directly by the Company, were as follows:

Country of incorporation

Proportion of ordinary
shares held

Nature of
principal business

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Chaucer Estates Limited

Leisure Living Limited

Redman Heenan Properties Limited

St. Modwen Developments Limited

St. Modwen Ventures Limited

St. Modwen Properties Sarl

Sowcrest Limited

Holaw (462) Limited

Stoke-On-Trent Regeneration Limited

Uttoxeter Estates Limited

Trentham Leisure Limited

Norton & Proffitt Developments Limited

VSM Estates (Holdings) Limited

Joint ventures
At 30th November 2012 the principal joint ventures were:

Key Property Investments Limited

VSM Estates Uxbridge (Group) Limited

Barton Business Park Limited

Skypark Development Partnership LLP

England & Wales

Luxembourg

England & Wales

100%

81%

80%

75%

50%

Property investment

Leisure operator

Property investment

Property development

Property investment

Property development

Property investment

Property development

Leisure operator

Property development

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shareholding

50%

Nature of
business

Property investment and development

Property development

Many of the joint ventures contain change of control provisions, as is common for such arrangements.

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144 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Company Accounts (continued)

for the year ended 30th November 2012

(G). DEBTORS

Amounts falling due after more than one year:

Amounts falling due from subsidiaries

Amounts due from joint venture and associated companies

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

Corporation tax

Deferred tax asset (see Note J)

(H). CREDITORS

Amounts falling due within one year:

Bank overdrafts

Trade creditors

Amounts due to subsidiaries

Amounts due to joint venture and associated companies

Other tax and social security

Other creditors

Accruals and deferred income

Derivative financial instruments

Amounts falling due after more than one year:

Bank loans

Other loans

Accruals and deferred income

All bank borrowings are secured by a fixed charge over the property assets of the Company and its subsidiaries.

Other loans comprise an unsecured 6.25% fixed rate retail bond maturing in November 2019.

2012
£m

2011
£m

215.0

6.0

221.0

205.7

–

205.7

2012
£m

2011
£m

0.3

196.5

6.8

1.2

3.8

2.9

5.3

0.4

171.4

12.0

1.4

3.1

10.1

5.9

216.8

204.3

2012
£m

5.4

1.2

2011
£m

–

1.4

252.1

246.3

3.9

0.8

10.3

18.5

293.0

4.5

0.4

1.3

10.8

20.1

284.8

2012
£m

2011
£m

191.1

80.0

–

241.4

–

1.1

271.1

242.5

145 St. Modwen Properties PLC
Annual Report and Accounts 2012

(I). BORROWINGS
The maturity profile of the bank borrowings, all of which are wholly repayable within five years, is as follows:

Less than one year

One to two years

Two to five years

More than five years

Total

2012
£m

5.4

100.0

91.1

80.0

276.5

2011
£m

–

241.4

–

241.4

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(J). DEFERRED TAXATION
The amounts of deferred taxation provided and unprovided in the accounts are:

Provided

Unprovided

Other timing differences

Reconciliation of movement on deferred tax asset included in debtors

Balance as at 30th November 2011

Profit and Loss Account

Balance as at 30th November 2012

Reconciliation of deferred tax liability included in pension scheme asset

Balance as at 30th November 2011

Profit and Loss Account

Statement of Total Recognised Gains and Losses

Balance as at 30th November 2012

(K). SHARE CAPITAL

Allotted and fully paid:

Equity share capital

At start and end of year

2012
£m

(5.3)

2011
£m

(5.9)

2012
£m

–

Ordinary
10p shares
Number

2011
£m

0.8

£m

(5.9)

0.6

(5.3)

£m

–

£m

200,360,931

20.0

See Note 3d of the Group Financial Statements for details of outstanding options to acquire ordinary shares.

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146 St. Modwen Properties PLC
Annual Report and Accounts 2012

Notes to the Company Accounts (continued)

for the year ended 30th November 2012

(L). RESERVES

At 30th November 2011

Surplus on revaluation of investments

Retained loss for the year (Note B)

Transfer share-based payments provision to share incentive reserve

Share-based payment charge

Dividends paid (Note D)

Actuarial loss on pension scheme (Note M)

Movement on deferred tax relating to pension asset (Note J)

Share
premium
account
£m

Capital
redemption
reserve
£m

Revaluation
reserve
£m

Profit
& loss
account
£m

Share
incentive
reserve
£m

102.8

0.3

–

329.2

51.4

–

37.6

–

(9.0)

–

(6.8)

0.1

–

2.1

0.3

–

Own
shares
£m

(0.5)

–

At 30th November 2012

102.8

0.3

380.6

21.9

2.4

(0.5)

Own shares represents the cost of 215,754 (2011: 215,754) shares held by the Employee Benefit Trust. The open market value of the
shares held at 30th November 2012 was £469,912 (2011: £225,463). In addition the Employee Benefit Trust has £0.1m (2010: £0.1m)
of cash and £3.5m (2011: £6.4m) due from the Company that can only be used for the benefit of employees.

(M). PENSIONS
The Company's pension schemes are the principal pension schemes of the Group and details are set out in Note 18 of the Group
Financial Statements. The directors are satisfied that this note, which contains the required IAS 19 "Employee Benefits" disclosures
for the Group, also covers the requirements of FRS17 "Retirement Benefits" for the Company.

(N). OPERATING LEASE COMMITMENTS
Operating lease commitments where the Company is the lessee

Annual commitments under non-cancellable operating leases are as follows:

Operating leases which expire:

In one year or less

Between one and five years

In more than five years

2012

2011

Land and
buildings
£m

Other
£m

Land and
buildings
£m

–

0.1

0.5

0.6

0.1

0.4

0.2

0.7

–

0.5

Other
£m

–

0.6

–

0.6

(O). CONTINGENT LIABILITIES
The Company has a joint and several unlimited liability with VINCI PLC and the Ministry of Defence under guarantees in respect of the
financial performance of VSM Estates (Holdings) Limited (VSM). This is a guarantee in the ordinary course of business and would require
the guarantors to step into VSM's place in the event of a default on Project MoDEL. Completion of the project is not considered onerous
as the forecast revenues exceed the anticipated costs and it is not expected that there would be any net outflow in this regard.

As disclosed in Note 21 to the Group Financial Statements the Company has taken advantage of the exemption available under Section
479A of the Companies Act 2012 in respect of the requirement for audit of certain 100% subsidiaries. Further, the Company guarantees
the performance of its subsidiaries in the course of their usual commercial activities.

The Group, together with Salhia Real Estate K.S.C. (Salhia) has provided a parent company guarantee in respect of the £135m bank
facility provided to Key Property Investments Limited. The guarantee provided by the Group is capped at 50 per cent of the total
commitment under the agreement from time, limiting the Group guarantee to £67.5m as at 30th November 2012.

(P). RELATED PARTY TRANSACTIONS
Details of related party transactions are provided in Note 22 to the Group Financial Statements.

147 St. Modwen Properties PLC
Annual Report and Accounts 2012

Independent Company Auditor’s Report

to the members of St. Modwen Properties PLC in respect of the parent company Financial Statements.

We have audited the parent company Financial Statements of St. Modwen Properties PLC for the year ended 30th November 2012
which comprise the Company Balance Sheet and the related Notes A to P. The financial reporting framework that has been applied
in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting
Practice).

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
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 auditor’s 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 auditor

As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the parent
company Financial Statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express
an opinion on the parent company Financial Statements in accordance with applicable law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the Financial Statements

An audit involves obtaining evidence about the amounts and disclosures in the Financial Statements sufficient to give reasonable
assurance that the Financial Statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the parent company’s circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall
presentation of the Financial Statements. In addition, we read all the financial and non-financial information in the Annual Report to
identify material inconsistencies with the audited Financial Statements. If we become aware of any apparent material misstatements
or inconsistencies we consider the implications for our report.

Opinion on Financial Statements

In our opinion the parent company Financial Statements:
• give a true and fair view of the state of the Company’s affairs as at 30th November 2012;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:
• the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act

2006; and

• the information given in the Directors’ Report for the financial year for which the Financial Statements are prepared is consistent with

the parent company Financial Statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if,
in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received

from branches not visited by us; or

• the parent company Financial Statements and the part of the Directors’ Remuneration Report to be audited are not in agreement

with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

Other matter

We have reported separately on the Group Financial Statements of St. Modwen Properties PLC for the year ended
30th November 2012.

Jonathan Dodworth (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Birmingham, United Kingdom. 4th February 2013.

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148 St. Modwen Properties PLC
Annual Report and Accounts 2012

Five Year Record

Rental income*

Property profits/(losses)* †

Revaluation gains/(losses)* ††

Profit/(loss) before all tax**

Earnings/(loss) per share (pence)

Dividends paid per share (pence)

Dividend cover (times)

Net assets per share (pence)***

Increase/(decrease) on prior year

Net assets employed

Investment properties

Investments

Inventories

Other net liabilities

Net borrowings

Minority interests

Equity attributable to owners of the Company

Financed by

Share capital

Reserves

Own shares

Including share of joint ventures

Including pre-tax profit of joint ventures

2008
£m

33.2

20.9

(75.9)

(80.1)

(37.3)†

3.90

(11.0)

251.4

(12%)

814.3

64.2

228.1

(282.9)

(421.5)

(9.5)

392.7

12.1

380.7

(0.1)

392.7

2009
£m

33.5

7.6

(122.3)

(120.2)

(59.7)

–

200.1

(20%)

762.9

41.3

192.7

(277.1)

(318.8)

(8.7)

392.3

20.0

372.7

(0.4)

392.3

2010
£m

33.7

21.9

23.0

38.2

18.6

1.00

18.6

218.6

828.0

49.4

171.6

(297.3)

(314.9)

(9.6)

427.2

20.0

407.8

(0.6)

427.2

2011
£m

35.5

23.8

33.9

51.7

21.7

3.10

7.0

237.6

848.7

50.3

191.1

(267.0)

(347.1)

(11.6)

464.4

20.0

444.9

(0.5)

464.4

2012
£m

36.2

29.0

28.0

52.8

21.3

3.41

6.2

256.4

770.4

75.2

175.2

(141.1)

(366.0)

(11.1)

502.6

20.0

483.1

(0.5)

502.6

*** 2008 restated for comparability purposes on the assumption that the 2009 Firm Placing and Placing and Open Offer had occurred on 1st December 2007

† Stated before net realisable value provisions

††

Including net realisable value provisions

The figures above are all presented under IFRSs.

149 St. Modwen Properties PLC
Annual Report and Accounts 2012

Glossary of Terms

Annualised net rents — gross rents as at a reporting date plus, where rent reviews are outstanding, any increases to estimated rental
value (as determined by the Group’s external valuers), less any ground rents payable under head leases.

Active management — the component of property revaluations delivered as a direct result of management actions and initiatives e.g.
obtaining planning consent, achieving remediation milestones and improving lease terms.

BREEAM — Building Research Establishment Environmental Assessment Method is an industry-wide system of standards to assess
sustainable developments and measure the environmental impact of buildings.

Building Regulations — the procedural regulations that set out what kind of work needs Building Regulations approval and how that
approval should be obtained, together with the technical requirements that set the standards that should be achieved by the building
work.

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Compulsory purchase order (CPO) — the compulsory acquisition of land by a planning authority, undertaken in the public interest
and with pre-defined timescales and compensation arrangements.

CSR — Corporate Social Responsibility.

EPRA — the European Public Real Estate Association, a body that has put forward recommendations for best practice for financial
reporting by real estate companies.

EPRA net asset value (EPRA NAV) — the balance sheet net assets, excluding fair value adjustments for debt and related derivatives
together with deferred taxation on revaluations and capital allowances.

EPRA net asset value per share — EPRA net asset value divided by the diluted number of shares at the period end.

Estimated net rental income — the passing cash rent less ground rent at the balance sheet date, estimated non-recoverable
outgoings and void costs including service charges, insurance costs and void rates.

Estimated rental value (ERV) — the Group’s external valuers’ opinion as to the open market rent which, on the date of valuation,
could reasonably be expected to be obtained on a new letting or rent review of the property.

Equivalent yield — a weighted average of the initial yield and reversionary yield and represents the return a property will produce
based on the timing of the income received.

Gearing — the level of the Group’s bank borrowing (excluding finance leases) expressed as a percentage of net assets.

Gross Development Value (GDV) — the sale value of property after construction.

IFRIC — International Financial Reporting Interpretations Committee.

IFRSs — International Financial Reporting Standards.

Initial yield — the annualised net rent expressed as a percentage of the valuation.

IPD — Investment Property Databank Ltd., a company that produces an independent benchmark of property returns.

Land bank — the bank of property comprising all of the land under the Group’s control, whether wholly owned or through joint
ventures or development agreements.

LIBOR — the London Interbank Offered Rate is the average interest rate that leading banks in London charge when lending to other
banks.

Loan-to-value ratio (LTV) — the ratio of Group net debt to the Group property portfolio (excluding joint ventures and associates).

Market value — an opinion of the best price at which the sale of an interest in the property would complete unconditionally for cash
consideration on the date of valuation (as determined by the Group’s external valuers). In accordance with usual practice, the Group’s
external valuers report valuations net, after the deduction of the prospective purchaser’s costs, including stamp duty, agent and legal
fees.

NED — non-executive director.

Net asset value (NAV) per share — equity attributable to owners of the Parent divided by the number of ordinary shares in issue at
the period end.

Net debt — total borrowings less cash and cash equivalents.

Net rental income — the rental income receivable in the period after payment of ground rents and net property outgoings.

Net initial yield — a calculation by the Group’s external valuers as the yield that would be received by a purchaser, based on the
estimated net rental income expressed as a percentage of the acquisition cost, being the market value plus assumed actual
purchasers’ costs at the reporting date. The calculation is in line with EPRA guidance.

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150 St. Modwen Properties PLC
Annual Report and Accounts 2012

Glossary of Terms (continued)

Occupancy rates — the ERV attributable to vacant units as a proportion of total ERV (including the Group’s share of joint ventures
and associates).

Operating income — the total of net rental income, other income and property profits.

Operating costs/business running costs — administrative expenses plus net finance costs (excluding the mark-to-market of
derivative financial instruments and other non-cash items) for the Group (including its share of joint ventures and associates).

Persimmon joint venture — a contractual arrangement with Persimmon to develop residential units on agreed sites within the
St. Modwen land bank.

Pre-sold projects — those projects where we are constructing buildings that have been specified by, and designed for, or adapted
by, a specific client under a specific construction contract. On such projects, profit is recognised using the stage completion method.

Project MoDEL — a project run for the Ministry of Defence (MoD) by the ministry’s Defence Infrastructure Organisation and VSM
Estates, a joint venture established between VInCI PLC and St. Modwen Properties. The project involves the consolidation and sale of
surplus Ministry of Defence properties around Greater London and the redevelopment of RAF northolt.

Property portfolio — the property components of investment properties and inventories of the Group (including its share of joint
ventures and associates).

Property profits — development profit (before the deduction of net realisable value provisions) plus gains on disposals of investments/
investment properties for the Group, including its share of joint ventures and associates.

Rental lease length — the weighted average lease term to the first tenant break.

Rent roll — the gross rent plus rent reviews that have been agreed as at the reporting date.

RICS — Royal Institution of Chartered Surveyors.

Section 106 agreements — legally binding agreements reached with local planning authorities under S106 of the Town and Country
Planning Act 1990. They address the impact of proposed developments on the local community and often involve a financial
contribution by the developer.

See-through gearing — the ratio of see-through net debt to net assets.

See-through loan-to-value ratio — the ratio of see-through net debt to the property portfolio.

See-through net debt — net debt of the Group together with its share of the net debt of joint ventures and associates.

SIC — Standards and Interpretations Committee.

Trading profit — operating income less operating costs.

TSR — total shareholder return represents the growth in value of a shareholding over a specified period, assuming that dividends are
reinvested to purchase additional units of stock.

Voids — the ERV of vacant properties expressed as a percentage of the total ERV of the portfolio, excluding development properties.

Weighted average debt maturity — each tranche of Group debt is multiplied by the remaining period to its maturity and the result is
divided by total Group debt in issue at the period end.

Weighted average interest rate — the Group loan interest and derivative costs per annum at the period end, divided by total Group
debt in issue at the period end.

151 St. Modwen Properties PLC
Annual Report and Accounts 2012

notice of Annual General Meeting

notice is hereby given that the 72nd Annual General Meeting (AGM) of St. Modwen Properties PLC (the Company) will be held at the
Marketing Suite, Innovation Centre, 1 Devon Way, Longbridge Technology Park, Birmingham B31 2TS on Wednesday 27th March 2013
at 12.00 noon to consider and, if thought fit, to pass the following resolutions. Resolutions 1 to 14 inclusive will be proposed as ordinary
resolutions and resolutions 15, 16 and 17 will be proposed as special resolutions.

Ordinary business
1. That the report of the directors and the accounts for the year ended 30th november 2012 be received.

2. That the Directors’ Remuneration Report for the year ended 30th november 2012 be approved.

That a final dividend of 2.42p per ordinary share for the year ended 30th november 2012 be declared and payable to shareholders
on the register of members at the close of business on 4th April 2013.

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4. That Kay Chaldecott be elected as a director.

5. That Steve Burke be re-elected as a director.

6. That Simon Clarke be re-elected as a director.

7. That Michael Dunn be re-elected as a director.

8. That Lesley James be re-elected as a director.

9. That Bill Oliver be re-elected as a director.

10. That John Salmon be re-elected as a director.

11. That Bill Shannon be re-elected as a director.

12. That Deloitte LLP be reappointed as auditor of the Company to hold office until the conclusion of the next general meeting at

which accounts are laid before the Company.

13. That the directors be authorised to determine the remuneration of the Company’s auditor.

special business
14. That, in substitution for all existing authorities and without prejudice to previous allotments or offers or agreement to allot made

pursuant to such authorities, the directors be generally and unconditionally authorised in accordance with section 551 of the
Companies Act 2006 to exercise all the powers of the Company to:

(a)

(b)

allot shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company up to an
aggregate nominal amount of £6,678,698 (the Section 551 amount); and

allot equity securities (within the meaning of section 560 of the Companies Act 2006) up to a further aggregate nominal amount of
£6,678,698 in connection with an offer by way of a rights issue to:

(i) ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and

(ii) holders of other equity securities, as required by the rights of those securities or, subject to such rights, as the directors

otherwise consider necessary,

subject to such exclusions or other arrangements as the directors may deem necessary or expedient to deal with treasury shares,
fractional entitlements or legal or practical problems under the laws of, or the requirements of any regulatory body or any stock
exchange in, any country or territory,

such authorities to expire at the conclusion of the AGM of the Company to be held after the date of the passing of this resolution or 26th
June 2014, whichever is the earlier, but, in each case, so that the Company may make offers and enter into agreements before the
expiry of such authority which would or might require shares to be allotted or rights to subscribe for or to convert any security into
shares to be granted after such expiry and the directors may allot shares or grant such rights under any such offer or agreement as if
the authority had not expired.

Special resolution
15. That, in substitution for all existing powers and subject to the passing of resolution 14, the directors be generally empowered

pursuant to section 570 of the Companies Act 2006 to allot equity securities (within the meaning of section 560 of the Companies
Act 2006) for cash pursuant to the authority granted by resolution 14 and/or where the allotment constitutes an allotment of equity
securities by virtue of section 560(3) of the Companies Act 2006, in each case free of the restriction in section 561 of the
Companies Act 2006, such power to be limited to:

(a)

the allotment of equity securities pursuant to the authority granted by paragraph (a) of resolution 14 and/or an allotment which
constitutes an allotment of equity securities by virtue of section 560(3) of the Companies Act 2006 (in each case otherwise than in
the circumstances set out in paragraph (b) of this resolution) up to a nominal amount of £1,001,805 (the Section 561 amount); and

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152 St. Modwen Properties PLC
Annual Report and Accounts 2012

notice of Annual General Meeting (continued)

(b)

the allotment of equity securities in connection with an offer of equity securities (but in the case of an allotment pursuant to the
authority granted by paragraph (b) of resolution 14, such power shall be limited to the allotment of equity securities in connection
with an offer by way of a rights issue only):

(i)

to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and

(ii) to holders of other equity securities, as required by the rights of those securities or, subject to such rights, as the directors

otherwise consider necessary,

such power to expire at the conclusion of the AGM of the Company to be held after the date of the passing of this resolution or 26th
June 2014, whichever is the earlier, but so that the Company may make offers and enter into agreements before the power expires
which would or might require equity securities to be allotted after such power expires and the directors may allot equity securities under
any such offer or agreement as if the power had not expired.

Special resolution
16. That the Company be generally and unconditionally authorised for the purposes of section 701 of the Companies Act 2006 to

make market purchases (as defined in section 693 of the 2006 Act) of ordinary shares of 10p each in its capital (Ordinary Shares)
on such terms and in such manner as the directors may from time to time determine provided that:

(a)

the maximum aggregate number of Ordinary Shares hereby authorised to be purchased is 20,036,093;

(b)

the minimum price which may be paid for an Ordinary Share is 10p (exclusive of expenses);

(c)

the maximum price which may be paid for an Ordinary Share is the highest of (in each case exclusive of expenses):

(i)

an amount equal to 105% of the average market value of an Ordinary Share for the five business days immediately preceding
the day on which the Ordinary Share is contracted to be purchased; and

(ii) the higher of the price of the last independent trade and the highest current independent bid for any number of Ordinary

Shares on the London Stock Exchange; and

(d)

this authority shall, unless previously renewed, expire at the conclusion of the AGM of the Company to be held after the date of the
passing of this resolution or 26th June 2014, whichever is the earlier, except in relation to the purchase of any Ordinary Shares the
contract for which was concluded before the date of expiry of the authority and which would or might be contemplated wholly or
partly after that date.

Special resolution
17. That a general meeting other than an AGM may be called on not less than 14 clear days’ notice.

By order of the Board

Tanya Stote
Company Secretary
21st February 2013

St. Modwen Properties PLC
Registered number: 349201

Registered Office:
Sir Stanley Clarke House
7 Ridgeway
Quinton Business Park
Birmingham
B32 1AF

153 St. Modwen Properties PLC
Annual Report and Accounts 2012

explanatOry nOtes tO prOpOsed resOlutiOns
Resolution 1 – Report and accounts
Resolution 1 is an ordinary resolution to receive the accounts and the report of the directors for the year ended 30th november 2012.
Copies will be available at the AGM.

Resolution 2 – Directors’ Remuneration Report
Resolution 2 is an ordinary resolution to approve the Directors’ Remuneration Report for the year ended 30th november 2012. Section
439 of the Companies Act 2006 requires that quoted companies put before shareholders in general meeting a resolution to approve
the Directors’ Remuneration Report. As the vote is advisory, it does not affect the actual remuneration paid to any individual director.
The report, which summarises the Company’s policy on directors’ remuneration, is set out on pages 81 to 94.

Resolution 3 – Declaration of final dividend
Resolution 3 is an ordinary resolution by which shareholders are asked to declare a final dividend. The directors recommend a final
dividend of 2.42p per ordinary share in respect of the year ended 30th november 2012. If approved, this will be paid on 4th April 2013 to
shareholders on the register at the close of business on 8th March 2013.

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Resolutions 4 to 11 – Election and re-election of directors
Resolutions 4 to 11 are ordinary resolutions which deal with the election and re-election of the directors.

Following her appointment to the Board on 22nd October 2012 and in accordance with the Company’s Articles of Association,
Kay Chaldecott will retire and offer herself for election at the 2013 AGM. Katherine Innes Ker and David Garman will retire from
the Board at the end of the AGM. All other directors will retire and offer themselves for re-election in accordance with the UK
Corporate Governance Code.

Biographical details of all directors are set out on pages 64 and 65.

The performance of the Board as a whole, as well as the contribution made by individual directors, has been reviewed during the
course of the year. After considering this evaluation, the Chairman has confirmed that the performance of every executive and non-
executive director continues to be effective, that they continue to demonstrate commitment to their respective roles and that their
respective skills complement one another to enhance the overall operation of the Board.

Resolutions 12 and 13 – Auditor appointment and remuneration
At last year’s AGM shareholders reappointed Deloitte LLP as auditor of the Company to hold office until the conclusion of the 2013
AGM. Deloitte have indicated that they are willing to continue as the Company’s auditors and the Audit Committee has reviewed the
effectiveness of the audit process and recommends their reappointment. Therefore resolutions 12 and 13 are ordinary resolutions to
reappoint Deloitte LLP as auditor until the conclusion of the next general meeting at which accounts are laid before the Company and
to authorise the directors to determine their remuneration.

Resolution 14 – Authority to allot shares
The authority conferred on the directors at last year’s AGM to allot shares in the Company expires at the conclusion of the 2013 AGM.
Resolution 14 is an ordinary resolution to renew this authority.

The Association of British Insurers (ABI) guidelines on directors’ authority to allot shares state that ABI members will permit, and treat as
routine, resolutions seeking authority to allot new shares representing up to one-third of a company’s issued share capital. In addition,
they will treat as routine a request for authority to allot shares representing an additional one-third of a company’s issued share capital
provided that it is only used to allot shares pursuant to a fully pre-emptive rights issue.

Paragraph (a) of resolution 14 will, if passed, authorise the directors to allot shares up to a maximum aggregate nominal amount of
£6,678,698 which represents one-third of the Company’s issued ordinary share capital as at 11th February 2013 (being the latest
practicable date prior to the publication of the notice of AGM). Paragraph (b) of resolution 14 proposes that, in accordance with ABI
guidance, an additional authority be conferred on the directors to allot shares in connection with a rights issue up to a further maximum
aggregate nominal amount of £6,678,698.

The authorities sought in paragraphs (a) and (b) of resolution 14 are in substitution for all existing authorities granted in the Company’s
Articles of Association or otherwise, and are without prejudice to previous allotments or agreements or offers to allot made under such
existing authorities. The authorities will each expire at the earlier of the conclusion of the next AGM of the Company and 26th June 2014.

The directors have no present intention of exercising these authorities other than to fulfil the Company’s obligations under its share
incentive schemes approved previously by shareholders, but believe that it is in the best interests of the Company to have the
authorities available to respond to market developments and to enable allotments to take place without the need for a general meeting
should they determine that it is appropriate to do so.

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154 St. Modwen Properties PLC
Annual Report and Accounts 2012

notice of Annual General Meeting (continued)

explanatOry nOtes tO prOpOsed resOlutiOns (cOntinued)
Resolution 15 – Disapplication of pre-emption rights
If the directors wish to allot new shares and other equity securities company law requires that these shares are offered first to shareholders
in proportion to their existing holdings.

Resolution 15 is a special resolution which seeks to renew the authority conferred on the directors at last year’s AGM to issue equity
securities of the Company for cash without application of the pre-emption rights as provided by section 561 of the Companies
Act 2006.

Paragraph (a) of resolution 15 will, if passed, authorise the directors to allot new shares pursuant to the authority given in paragraph
(a) of resolution 14 for cash (i) in connection with a pre-emptive offer or rights issue or (ii) otherwise up to a maximum aggregate nominal
value of £1,001,805, equivalent to 5% of the Company’s issued ordinary share capital as at 11th February 2013 (being the latest
practicable date prior to the publication of the notice of AGM) in each case without the shares first being offered to existing shareholders
in proportion to their existing holdings.

In light of the ABI guidance described in the explanation of resolution 14 above, paragraph (b) of resolution 15 will, if passed, authorise
the directors to allot new shares pursuant to the authority given by paragraph (b) of resolution 14 for cash in connection with a rights
issue without the shares first being offered to existing shareholders in proportion to their existing holdings.

The authorities sought in paragraphs (a) and (b) of resolution 15 are in substitution for all existing authorities granted in the Company’s
Articles of Association or otherwise, and are without prejudice to previous allotments or agreements or offers to allot made under such
existing authorities. The authorities will each expire at the earlier of the conclusion of the next AGM of the Company and 26th June 2014.

In accordance with the Pre-Emption Group’s Statement of Principles dated July 2008, the directors confirm their intention not to issue
more than 7.5% of the Company’s issued ordinary share capital for cash other than to existing shareholders in any rolling three-year
period without prior consultation with shareholders.

Resolution 16 – Authority to purchase shares
Resolution 16 is a special resolution to renew the authority granted to the directors at last year’s AGM to make market purchases
of its own ordinary shares through the market as permitted by the Companies Act 2006 and within institutional shareholder guidelines.
no shares were purchased during the year and the Company does not currently hold any shares in treasury.

If passed, the resolution gives authority for the Company to purchase up to 20,036,093 of its ordinary shares, which represents 10%
of the Company’s issued ordinary share capital as at 11th February 2013 (being the latest practicable date prior to the publication of the
notice of AGM). The resolution specifies the minimum and maximum prices which may be paid for any ordinary shares purchased
under this authority. The authority will expire at the earlier of the conclusion of the next AGM of the Company and 26th June 2014.

The directors have no present intention for the Company to exercise the authority granted by this resolution to purchase its own shares.
They would do so only after taking account of the overall financial position of the Company and in circumstances where to do so would
be regarded by the Board as being in the best interests of shareholders generally and result in an increase in earnings per ordinary
share. The Company may either cancel any shares it purchases under this authority or transfer them into treasury (and subsequently
sell or transfer them out of treasury or cancel them).

As at 11th February 2013 (being the latest practicable date prior to the publication of the notice of AGM), the Company had options
outstanding over 10,600,424 ordinary shares, representing 5.29% of the issued share capital on that date. If the Company was to
purchase the maximum number of shares permitted pursuant to this resolution, the options outstanding at 11th February 2013 would
represent 6.61% of the issued share capital.

Resolution 17 – Notice period of general meetings
Resolution 17 is a special resolution to renew an authority granted at last year’s AGM to allow the Company to hold general meetings
(other than AGMs) on not less than 14 clear days’ notice.

Changes made to the Companies Act 2006 by The Companies (Shareholders’ Rights) Regulations 2009 increased the notice period
required for general meetings of the Company to 21 clear days unless shareholders approve a shorter notice period, which cannot be
less than 14 clear days. This approval will be effective until the Company’s next AGM when it is intended that a similar resolution will be
proposed.

The shorter notice period would not be used as a matter of routine for such meetings, but only where the flexibility is merited by the
business of the meeting and is thought to be to the advantage of shareholders as a whole. AGMs will continue to be held on at least
21 clear days’ notice.

155 St. Modwen Properties PLC
Annual Report and Accounts 2012

sharehOlder nOtes
1. Entitlement to attend and vote
To be entitled to attend and vote at the AGM (and for the purpose of determining the number of votes they may cast), shareholders
must be entered on the Company’s register of members at 6.00pm on Monday 25th March 2013 (or, in the event of any adjournment,
at 6.00pm on the date which is two days before the date of the adjourned meeting). Changes to the register of members after the
relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting in respect of the
number of shares registered in their name at that time.

2. Appointment of proxies – general
A shareholder entitled to attend and vote at the meeting convened by the notice of AGM is entitled to appoint a proxy to exercise all or
any of his or her rights to attend and to speak and vote on his or her behalf at the meeting. A shareholder may appoint more than one
proxy in relation to the meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held
by that shareholder. A proxy need not be a shareholder of the Company but must attend the meeting in person.

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For the appointment to be effective, a proxy form (or electronic appointment of proxy, see note 4) must be received by the Company’s
registrar not less than 48 hours before the time of the meeting, i.e. not later than 12.00 noon on Monday 25th March 2013. The
appointment of a proxy will not prevent a shareholder from subsequently attending the meeting and voting in person if he or she is
entitled to do so and so wishes.

3. Appointment of proxies – proxy form
A proxy form which may be used to make such appointment and give proxy instructions has been sent to shareholders. If you do not
have a proxy form and believe that you should have one, or if you require additional forms to appoint more than one proxy, please
contact the Company’s registrars, Equiniti, on 0871 384 2198 (calls to this number are charged at 8p per minute from a BT landline.
Call charges may vary if using other telephone providers. Overseas callers should dial +44 121 415 7047. Lines are open from 8.30am
to 5.30pm, Monday to Friday). Alternatively photocopy the proxy form which has been sent to you. All forms must be signed and
should be returned together in the same envelope.

The notes to the proxy form explain how to direct your proxy to vote on each resolution or withhold their vote. Please note that the vote
withheld option on the proxy form is provided to enable you to abstain on any particular resolution; it is not a vote in law and will not be
counted in the calculation of votes for or against the resolution. If you sign the proxy form and return it without any specific directions
your proxy will vote or abstain from voting at his or her discretion. If you wish to appoint a proxy other than the Chairman of the meeting,
please insert the name of your chosen proxy holder in the space provided on the proxy form. If the proxy is being appointed in relation
to less than your full voting entitlement, please enter in the box next to the proxy holder’s name the number of shares in relation to
which they are authorised to act as your proxy. If left blank your proxy will be deemed to be authorised in respect of your full voting
entitlement (or if the proxy form has been issued in respect of a designated account for a shareholder, the full voting entitlement for that
designated account).

In the case of joint holders, the vote of the senior joint holder who tenders a vote, whether in person or by proxy, in respect of the
holding will be accepted to the exclusion of the votes of the other joint holders. For this purpose seniority is determined by the order in
which the names appear in the Company’s register of members in respect of the joint holding. In the case of a corporation, the proxy
form must be executed under its common seal or under the hand of a duly authorised officer or attorney. In the case of an individual,
the proxy form must be signed by the appointing shareholder. Any alterations made to the proxy form should be initialled.

4. Appointment of proxies electronically
Shareholders who would prefer to register the appointment of their proxy electronically via the internet can do so through Equiniti’s
website at www.sharevote.co.uk using their personal Voting ID, Task ID and Shareholder Reference number (which are printed on the
proxy form). Alternatively, shareholders who have already registered with Equiniti’s online portfolio service, Shareview, can appoint their
proxy electronically by logging on to their portfolio at www.shareview.co.uk and clicking on the link to vote under their St. Modwen
Properties PLC holding details. Full details and instructions on these electronic proxy facilities are given on the respective websites. A
proxy appointment made electronically will not be valid if sent to any address other than those provided or if received after 12.00 noon
on Monday 25th March 2013.

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156 St. Modwen Properties PLC
Annual Report and Accounts 2012

notice of Annual General Meeting (continued)

sharehOlder nOtes (continued)
5. Appointment of proxies through CREST
CREST members who wish to appoint a proxy or proxies for the AGM, and any adjournment(s) thereof, through the CREST electronic
proxy appointment service may do so by using the procedures described in the CREST Manual. CREST Personal Members or other
CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their
CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a CREST
Proxy Instruction) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s (EUI) specifications and must
contain the information required for such instructions, as described in the CREST Manual (available at www.euroclear.com/CREST). The
message, regardless of whether it relates to the appointment of a proxy or an amendment to the instruction given to a previously
appointed proxy must, in order to be valid, be transmitted so as to be received by Equiniti (ID RA19) by the latest time for receipt of
proxy appointments specified above. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp
applied to the message by the CREST Applications Host) from which Equiniti is able to retrieve the message by enquiry to CREST in
the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be
communicated to the appointee through other means.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that EUI does not make
available special procedures in CREST for any particular messages. normal system timings and limitations will therefore apply in relation
to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a
CREST Personal Member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or
voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST
system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service
providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and
timings.

The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.

6. Changing and revoking proxy instructions
To change your proxy instruction simply submit a new proxy appointment using the methods set out above. The deadline for receipt of
proxy appointments (see note 2) also applies in relation to amended instructions. Where two or more valid separate appointments of
proxy are received in respect of the same share and for the same meeting, those received last by Equiniti will take precedence.

In order to revoke a proxy instruction, a shareholder will need to inform the Company by sending a signed hard copy notice clearly
stating his/her intention to revoke a proxy appointment to Equiniti Limited, Aspect House, Spencer Road, Lancing Bn99 6DA. In the
case of a corporate shareholder, the revocation notice must be executed under its common seal or signed on its behalf by an officer of
the Company or an attorney for the Company. Any power of attorney or any other authority under which the revocation notice is signed
(or a duly certified copy of such power of attorney) must be included with the revocation notice. The revocation must be received no
later than 12.00 noon on Monday 25th March 2013. If a shareholder attempts to revoke his or her proxy appointment but the revocation
is received after the time specified then the original proxy appointment will remain valid. Termination of proxy appointments made
through CREST must be made in accordance with the procedures described in the CREST Manual.

7. Corporate representatives
A corporate shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a
shareholder provided that they do not do so in relation to the same shares. Representatives of shareholders that are corporations will
have to produce evidence of their proper appointment when attending the AGM. Please contact Equiniti for further guidance.

8. Nominated persons
Any person to whom this notice is sent who is not a shareholder but is a person nominated by a shareholder under section 146 of the
Companies Act 2006 to enjoy information rights (a nominated Person) may, under an agreement with the shareholder who nominated
him/her, have a right to be appointed, or have someone else appointed, as a proxy for the AGM. If a nominated Person has no such
right or does not wish to exercise it, he/she may, under any such agreement, have a right to give voting instructions to the shareholder.

The statement of the rights of shareholders in relation to the appointment of proxies set out in notes 2 to 7 does not apply to
nominated Persons. The rights described in those notes can only be exercised by shareholders of the Company. If you are a
nominated Person it is important to remember that your main contact in terms of your investment remains the registered shareholder or
the custodian or broker who administers the investment on your behalf.

157 St. Modwen Properties PLC
Annual Report and Accounts 2012

9. Shareholder participation
Any shareholder attending the AGM has the right to ask questions relating to the business of the meeting and the Company has an
obligation to answer such questions unless (i) to do so would interfere unduly with the preparation for the meeting or involve the
disclosure of confidential information, (ii) the answer has already been given on a website in the form of an answer to a question, or (iii) it
is undesirable in the interests of the Company or the good order of the meeting that the question be answered.

10. Availability of information on website
A copy of this notice of AGM, and other information required by section 311A of the Companies Act 2006, can be found on the
Company’s website at www.stmodwen.co.uk

11. Website publication of audit concerns
Shareholders satisfying the threshold requirements in section 527 of the Companies Act 2006 can require the Company to publish a
statement on its website setting out any matter that such shareholder proposes to raise at the meeting relating to (a) the audit of the
Company’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before the AGM or (b) any
circumstances connected with an auditor of the Company ceasing to hold office since the last AGM. The Company cannot require the
shareholders requesting the publication to pay its expenses in complying with the request. Any statement placed on the website must
also be sent to the Company’s auditor no later than the time it makes its statement available on the website. The business which may
be dealt with at the meeting includes any statement that the Company has been required to publish on its website under section 527 of
the Companies Act 2006.

12. Total voting rights
As at 11th February 2013 (being the latest practicable date prior to the publication of the notice of AGM), the Company’s issued share
capital consisted of 200,360,931 shares carrying one vote each. Therefore the total voting rights in the Company as at 11th February
2013 was 200,360,931.

13. Documents available for inspection
The following documents are available for inspection at the registered office of the Company during normal business hours and will be
at the place of the AGM from 11.45am until the end of the meeting:

(i) copies of the directors’ service contracts with the Company;

(ii) copies of the non-executive directors’ letters of appointment; and

(iii) a copy of the Company’s Articles of Association.

14. Communication with the Company
You may not use any electronic address provided in this notice of AGM or any related documents (including the proxy form) to
communicate with the Company for any purposes other than those expressly stated.

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158 St. Modwen Properties PLC
Annual Report and Accounts 2012

Information for Shareholders

Financial calendar
Ordinary shares quoted ex-dividend

2011/12 final dividend record date

AGM

2011/12 final dividend payment date

Announcement of 2013 half year results

6th March 2013

8th March 2013

27th March 2013

4th April 2013

2nd July 2013

Announcement of 2013 final results

February 2014

annual General MeetinG
The AGM will be held on Wednesday, 27th March 2013 at the Marketing Suite, Innovation Centre, 1 Devon Way, Longbridge
Technology Park, Birmingham B31 2TS, commencing at 12.00 noon. The notice of meeting, together with an explanation of the
resolutions to be considered at the meeting, is set out on pages 151 to 157.

website
Information about St. Modwen, including this and prior years’ Annual Reports, half year reports, results announcements and
presentations, together with the latest share price information, is available on our website at www.stmodwen.co.uk/investor_information

sharehOldinG enquiries and inFOrMatiOn
All general enquiries concerning holdings of shares in St. Modwen should be addressed to our registrar:

Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
Bn99 6DA
Telephone: 0871 384 2198* (+44 (0)121 415 7047 from outside the UK).

A range of shareholder information is available online at Equiniti’s website www.shareview.co.uk. Here you can also view information
about your shareholding and obtain forms that you may need to manage your shareholding, such as a change of address form or a
stock transfer form.

dividend Mandate
If you are a shareholder who has a UK bank or building society account, you can arrange to have dividends paid direct via a bank/
building society mandate. There is no fee for this service and a tax voucher confirming details of the dividend payment will be sent to
your registered address. Please contact Equiniti on 0871 384 2198* or go to www.shareview.co.uk for further information.

Overseas dividend payMent service
If you are resident outside the UK, Equiniti (by arrangement with Citibank Europe PLC) can provide dividend payments that are
automatically converted into your local currency and paid direct to your bank account. For more information on this overseas payment
service please contact Equiniti on +44 (0)121 415 7047 or download an application form at www.shareview.co.uk

share dealinG service
If you are a UK resident, you can buy and sell shares in St. Modwen through Shareview Dealing, a telephone and internet based service
provided by Equiniti Financial Services Ltd. For further details please visit www.shareview.co.uk/dealing or call Equiniti on 08456
037037. Equiniti Financial Services Ltd is authorised and regulated by the Financial Services Authority. Other brokers and banks or
building societies also offer share dealing facilities.

electrOnic cOMMunicatiOns
As an alternative to receiving documents in hard copy, shareholders can elect to be notified by email as soon as documents such as
our Annual Report are published. This notification includes details of where you can view or download the documents on our website.
Shareholders who wish to register for email notification can do so via Equiniti’s website at www.shareview.co.uk

159 St. Modwen Properties PLC
Annual Report and Accounts 2012

sharehOlder security
Shareholders are advised to be very wary of unsolicited mail or telephone calls offering free investment advice, offers to buy shares at a
discount or sell shares at a premium, or offers of free company reports. Such contact is typically from overseas based ‘brokers’ who
target UK shareholders through operations commonly known as ‘boiler rooms’. These ‘brokers’ can be very persistent and extremely
persuasive and often have websites to support their activities.

If you receive any unsolicited investment advice:

• obtain the name of the person calling and the organisation they represent and make a note of any other information they give you,

e.g. telephone number, address, website address;

• check that the caller is properly authorised by the Financial Services Authority (FSA) by visiting www.fsa.gov.uk/register/. If you deal

with an unauthorised firm, you will not be eligible to receive payment under the Financial Services Compensation Scheme;

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• call the organisation back to verify their identity using the telephone number listed for them on the FSA register;

• report any suspicions to the FSA either by calling 0845 606 1234 or visiting www.fsa.gov.uk/pages/consumerinformation; and

• if the calls persist, hang up.

sharehOlder analysis
Holdings of ordinary shares at 30th november 2012:

By shareholder

individuals

directors and connected persons

insurance companies, nominees and pension funds

Other limited companies and corporate bodies

By shareholding

up to 500

501 to 1,000

1,001 to 5,000

5,001 to 10,000

10,001 to 50,000

50,001 to 100,000

100,001 to 500,000

500,001 to 1,000,000

1,000,001 and above

Shareholders
no.

Shareholders
%

Shares
no.

Shares
%

3,409

83.70

12,961,145

542

0.81

42,746,575

13.31

142,025,600

2.18

2,627,611

Shareholders
no.

Shareholders
%

Shares
no.

25.83

18.00

253,882

565,322

35.23

3,344,083

8.57

7.44

1.25

2,559,525

6,517,899

3,665,271

2.06

19,764,691

0.64

19,770,173

1,052

733

1,435

349

303

0.98 143,920,085

71.83

6.47

21.34

70.88

1.31

Shares
%

0.13

0.28

1.67

1.28

3.25

1.83

9.86

9.87

* Calls to this number are charged at 8p per minute from a BT landline. Call charges may vary if using other telephone providers. Lines are open 8.30am to 5.30pm,

Monday to Friday.

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160 St. Modwen Properties PLC
Annual Report and Accounts 2012

Shareholder notes

Forward Looking Statements

This Annual Report and Accounts has been prepared for the members of St. Modwen Properties
PLC and should not be relied upon by any other party or for any other purpose.

The Annual Report and Accounts contains certain forward looking statements which, by their
nature, involve risk and uncertainty because they relate to future events and circumstances. Actual
outcomes and results may differ materially from any outcomes or results expressed or implied by
such forward looking statements. Any forward looking statements made by or on behalf of the
Company are made in good faith based on the information available at the time the statement is
made; no representation or warranty is given in relation to them, including as to their completeness
or accuracy or the basis on which they were prepared. The Company does not undertake to update
forward looking statements to reflect any changes in its expectations with regard thereto or any
changes in events, conditions or circumstances on which any such statement is based.

Photography:

Steve Townsend – front cover, pages 6, 10, 28, 32, 40

Craig Holmes – pages 16, 22, 24, 25, 26, 30, 42

Matt Livey – page 12

Matthew Nichol – pages 58, 61

The paper used in this report is elemental chlorine free and is FSC accredited.
It is printed to ISO 14001 environmental procedures, using vegetable based inks.

The Forest Stewardship Council (FSC) is an international network which promotes
responsible management of the world’s forests. Forest certification is combined with
a system of product labelling that allows consumers to readily identify timber based
products from certified sources.

Designed and produced by Radley Yeldar www.ry.com

ST. MODWEN PROPERTIES PLC

OFFICES

Yorkshire and North East

Company No. 349201

HEAD OFFICE & MIDLANDS
REGIONAL OFFICE

Sir Stanley Clarke House
7 Ridgeway
Quinton Business Park
Birmingham
B32 1AF
0121 222 9400

Ground Floor, Unit 2
Landmark Court
Elland Road
Leeds
LS11 8JT
0113 272 7070

North Staffordshire

The Trentham Estate
Management Suite
Stone Road
Trentham
Stoke-on-Trent
ST4 8AX
01782 281844

North West

Chepstow House
Trident Business Park
Daten Avenue
Risley
Warrington
WA3 6BX
01925 825950

Residential

2 Devon Way
Longbridge Technology Park
Longbridge
Birmingham
B31 2TS
0121 222 5747

London and South East

180 Great Portland Street
London
W1W 5QZ
020 7788 3700

South West and South Wales

Green Court
King’s Weston Lane
Avonmouth
Bristol
BS11 8AZ
0117 316 7780

Northern Home Counties

First Floor, Unit E1
The Courtyard
Alban Park
Hatfield Road
St Albans
Hertfordshire
AL4 0LA
01727 732690