THE UK’S LEADING REGENERATION SPECIALIST LEADING REGENERATION THE UK’S Annual Report and Accounts 2012 ReportAnnual Accounts and
St. Modwen Properties PLC Annual Report and Accounts 2012 St. Modwen Properties PLC Annual Report and Accounts 2012 Introduction
St. Modwen is the UK’s How we have performed leading regeneration Pro t before all tax £m Trading pro t £m specialist. The Company 52.8 operates across the full 51.7 25.5 22.8
38.2 spectrum of the property 17.4 industry from a network of seven offices, a residential business and 2010 2011 2012 2010 2011 2012 through joint ventures Equity net assets per share p Gearing (on balance sheet) % with public sector and 73 72 71 251 industry leading partners. 232 213
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 2010 2011 2012 2010 2011 2012 all tax. A full reconciliation of such measures is provided in Note 2 to the Group Financial Statements.
C ontents
Overview Corporate Governance Financial Statements Additional Information IFC Introduction 64 The Board 99 Independent Auditor’s Report 149 Glossary of Terms 01 What we do 67 Corporate Governance Report 100 Group Income Statement 151 Notice of Annual General 02 Where we operate 76 Audit Committee Report 101 Group Balance Sheet Meeting 04 Our Business Model 79 Nomination Committee Report 102 Group Statement of 158 Information for Shareholders 14 Our Strategy 81 Directors’ Remuneration Report Comprehensive Income 95 Other Governance and 102 Group Statement of Changes Business Review Statutory Disclosures in Equity 98 Statement of Directors’ 103 Group Cash Flow Statement 18 Chairman’s Statement Responsibilities 104 Accounting Policies 20 Chief Executive’s Review 110 Notes to the Accounts 22 Residential 138 Company Balance Sheet 28 C ommercial Land 139 Notes to the Company Accounts and Development 147 Independent Company Auditor’s 32 Income Producing Properties Report 36 Major Project Opportunities 148 Five Year Record 44 Our Partnerships 46 Financial Review 54 Risks and Uncertainties 58 Corporate Social Responsibility
For further detail on our business please visit: www.stmodwen.co.uk of Hednesford Town Centre, Cannock. Cannock. Town Centre, of Hednesford regeneration £50m the of heart the at sits 2012 of which end and the at completed store Tesco ft sq 85,000 The Front Cover: the running costs of the Group’s business. income priortodevelopmentandindoingso,typicallycovers value butwedomakesure thatamajorproportion generates this portfolioare heldwitha viewtogeneratingsignificantfuture producing portfoliomakes up51%ofourlandbank.Allassetsin Comprising industrial,retail and office assetsourincome inC for development at the most appropriate time. taking advantageoflocalmarketconditionstorelease theland its developmentthrough the remediation andplanningprocess, We acquire thislandatreduced capitaloutlayandthenmanage Our commercial landportfolio makesup12%ofourlandbank. a CommeRC plans forcirca 21,000plots. portfolio, we have planning permission or allocationsof which50%islocatedinsidetheM25.Across theentire within local Our residential portfoliomakesup37%ofourlandbankbyvalue, – – – realising valuethrough three routes tomarket: add valuetothelandthroughout thedevelopmentprocess, We acquire siteswithpotentialforresidential developmentand Residential 2012 Accounts and Report Annual PLC Properties Modwen St. 01 What wedo St. ModwenHomes Persimmon jointventur Residential landsales nd For more detailseepage32 For more detailseepage28 For more detailseepage22 ome ome de velopment pR i al landal o
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Additional Information Financial Statements Corporate Governance Business Review Overview 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.
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North Midlands South West and South Wales Northern Home Countries London and South East 1 3 2 4 Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 03 oppoRTunITIES MA for phase two. for phasetwo. centre, wehave recently submittedaplanning application works welladvanced onphaseoneofthe£70mtown and the£5myouthcentre knownasTheFactory. With CollegewhichopenedinSeptember2011 sq ftBournville over 95%occupied.We havealsodelivered the250,000 than 150,000sqftofoffice andindustrialspacewhichis programme, wehavecompleteddevelopmentofmore acres. Followinganintensivefouryearremediation MG Rover car manufacturing facility This significantschemeislocatedonthesiteofformer and comprises 468 longb retail andleisure spaceandaround 1,000newhomes. project which will provide up to 350,000 sq ft ofnow new commenced the process to redevelop this landmarkplanned regeneration forthe Southwarkarea, wehave Providing thecentrepiece ofthewider220acre master- e a major plankinSt.Modwen’s developmentpipeline. milestone developmentproject forSouthWales and of theNewScienceandInnovationCampus–a its development partnertodeliverthe£150mfirstphase Swansea UniversityhasnowselectedSt.Modwenas sw in theLondonmarket. Elms area, puttingusfirmlyonthemapasa majorplayer the largestschemewithinregeneration oftheNine high profile schemesinourdevelopmentportfolioand Market siteinNineElms,London.Thisisoneof themost Market Authoritytoredevelop theNewCoventGarden We havesignedthecontractwithCoventGarden ne joR lephant &Castle For more detailseepage40 For more detailseepage38 For more detailseepage36 For more detailsee page42 w Covent gaR ansea ansea Ri dge pR un ive R ojECT si den den ty maR ket
Additional Information Financial Statements Corporate Governance Business Review Overview 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. Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 05 generate in generate C Pr over over in 51% odu a CoMe add va add nd PL CoStS C
a ing CoMe nning and Ch and nning REGu buSIn Lu e through the PL the e through re ange o ange aSSetS Si regenerate 37% dentia LAR InCo ESS M poRTfoLIo vALuE F u a St. ModWen hoMeS, L Se nning PerSiMMon jv, Land SaLeS xPe Co a ProCeSS rti nd MMer de Se –
regenerate 12% odEL ve inve
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reMediate e nd nd nt GEn deve S nd dRIv t. t. SCheMeS M LoPM od W ERATES en en t ConS ex retained in P tr CoMe erti uC ES Se tion Fi SC ni re P M re he She
dividend dividend
Pa Ce ar -SoLd Me YM ive CaSh ive d SC keted either either e nt he or or Me
Additional Information Financial Statements Corporate Governance Business Review Overview 06 St. Modwen Properties PLC Annual Report and Accounts 2012
The Land bank OKur U -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.
• By taking a long-term land bank – view, we acquire land developable acres at low cost and then maximise its potential 5,801 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. Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 07
Additional Information Financial Statements Corporate Governance Business Review Overview 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. Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 09 • now 100% occupied. village shopping the with operational income, of £3.9m generated year this and per annum th tr including attractions leisure other hotel and village, shopping centre, garden amajor gardens, italian famous restored completely the include th to create a major tourist and leisure destination. sympathetic and supportive commercial facilities es the to restore £100m project i pi of the du w n 2003, we secured planning permission for a a for permission planning we secured n 2003, entham entham ctured: ctured: e acquired the 725 acre former country estate estate country 725 the former acre e acquired long term. the and the short our land bank in maximum value from we extract ensuring and business the to build which upon footing financial a firm providing us with part of our strategy, th e estate now attracts over 400,000 visitors and now complete are ofworks the e majority is is an important important an is is ke of su th monkey Forest. e tr entham entham therland from br from therland es tate, tate, £36.2m renta net st tate and to add to add tate and oke-on- itish Coal in 1996. 1996. in Coal itish L in CoMe trent –
Additional Information Financial Statements Corporate Governance Business Review Overview 10 St. Modwen Properties PLC Annual Report and Accounts 2012
ASSET MA nAGEMEnT our teams of professionals across the country are intrinsic to realising maximum value from our retained assets in our portfolio. Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen 11 St. • station. and train tube enhanced asignificantly hotel and square, anew public 240 apartments, accommodation, 175,000 include of commercial scheme ft sq £90m key project. regeneration featurescentre of this town significant this together to bring management asset and site assembly planning, master key of including our skills anumber employed down 1960stown we run have this centre, acquiring pi ctured: ctured: variety of occupiers. to a draw continuing economy and local the on positively change, impacting serve as a catalyst for to continue projects o For more detailseepage31 ur regeneration we mbley Central, lo Central, mbley roLL 5% L ik ndon –sindon e-
F gro or -L Wth ik e rent nce nce
Additional Information Financial Statements Corporate Governance Business Review Overview 12 St. Modwen Properties PLC Annual Report and Accounts 2012
d elivery We are continually adding to our pipeline of development opportunities and are actively developing a number of major development projects across the UK. Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen 13 St. pi • ki pe pa 12the 25 of business this acre phase third acre vo former ft sq 225,000 of the Following demolition the demand. occupier to meet continues site that of awell-located example park where it also occupies a 23,629 sq ft unit. unit. a23,629 ft sq occupies also it park where ctured: ctured: perk planning gain. planning gain. benefit from sites that already development our with meet their demands and quickly to react weable are premises, requirements for new have immediate commercial occupiers wh development. on speculative reliant are not that opportunities development good commercial w trophysics was completed in no in wascompleted trophysics rk, this 21,642 this kirk for rk, building bespoke ft sq For more detailseepage31 e continue to find to find e continue ere industrial and and ere industrial trophysics has doubled its space on the the on space its doubled has trophysics he nley nley bu siness pa siness kes factory, making way for waykes factory, for making • rk, gu rk, appeal for occupiers. for appeal which adds to their locations, centre city bigger the than terms lease attractive more to offer we able are areas, disadvantaged down or run often in schemes, of our due to the location vember 2012.vember ildford –an ildford
Additional Information Financial Statements Corporate Governance Business Review Overview 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. stRategy 2012 outComes
key peRFoRmanCe indiCatoRs pRioRity (kpis) applied
Invest at a point in the property lifecycle Pro t before tax £m Shareholders’ Equity from where maximum development returns NAV % can be extracted. Maximise individual asset values through our locally based expertise. 50.4 251 47.4 232 Recycle assets where significant 213 1 opportunities are exhausted. 37.5
secure excellent returns 2010 2011 2012 2010 2011 2012
Build land bank to bring through future Land bank acres Proportion of assets opportunities and secure planning gain. at the start of the year recycled by the Continued programme of recycling end of the year %
and reinvestment. 5,736 5,762 5,801 194
Create predictable, dependable and 159 cash backed income streams. 134 2 through a focus on long-term significant added value 2010 2011 2012 2010 2011 2012
Maintain sufficient income to cover Ratio of rental and Gearing % business running costs. Have financing other income to cost and availability certainty. operating costs including interest % 97 92 3 89 72 73 71
while protecting existing assets 2010 2011 2012 2010 2011 2012 15 St. Modwen Properties PLC Annual Report and Accounts 2012 Overview 2012 outComes pRioRities FoR 2013 key peRFoRmanCe indiCatoRs (kpis) applied taRgets pRinCipal Risks
Dividend p Continue to grow development profits Wider economic issues affect property and create valuation gains, particularly values and equity valuations. in residential. The management of developments is a
3.41 Strive to demonstrate the Group’s complex process with successful delivery Review Business 3.10 inherent value and long-term prospects. depending on continued excellence in the application of our expertise. Grow net assets so that dividends can also grow. Continue to secure profitable development to generate consistent future returns. 1.00
2010 2011 2012 Corporate Governance Corporate
Selective and capital efficient acquisitions. As our work is conducted in a complex legal and regulatory environment we need Continued recycling of assets with limited to be able to successfully adapt our asset opportunity for significant added value. strategies over the long term. Financial Statements Financial
See-through loan Committed facilities Effective asset management to Significant contraction in available to value % to cover drawn debt maximise returns. banking facilities reduces the opportunity months for strategic investment. Continue to put in place extended and flexible financing facilities. 36 Additional Information Additional 41 34 39 39 32
2010 2011 2012 2010 2011 2012 16 St. Modwen Properties PLC Annual Report and Accounts 2012
Image: The Innovation Centre at the £1bn Longbridge development in Birmingham. B usiness R eview
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 financial Highlights • Valuation gains of £48m (2011: £33m) generated • Shareholders’ NAV up 8% to 251p per share through active asset management and planning (Nov 2011: 232p per share), and EPRA NAV gains, offsetting £20m market-driven valuation up 9% to 272p per share (2011: 250p per share) loss (2011: £1m gain) • Profit before all tax £52.8m (2011: £51.7m) • Continued positive outlook for residential land with London residential transactions driving • Realised property profits up 22% to £29.0m valuation gains (2011: £23.8m) • On track to deliver target of shareholder equity • Net rental income continues to grow to £36.2m NAV of 300p per share by November 2015 (2011: £35.5m) • £2bn regeneration of New Covent Garden Market • 12% increase in net trading profit to £25.5m signed, providing a major opportunity in Central (2011: £22.8m) London and considerable potential to add further • Gearing at year end of 71% (2011: 73%) and upside to targeted NAV completion of a successful £80m retail bond issue • Swansea University £150m development providing substantial headroom in facilities to commence on site in H1 2013 • Final dividend for the year increased by 10% to 2.42p per share, providing a total dividend for 2012 of 3.63p Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen 17 St.
Additional Information Financial Statements Corporate Governance Business Review Overview 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: 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 A: 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 Q: for St. Modwen?
We see further improvement in the South East as a whole and some recovery in the regional A: 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 Q: 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 A: 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. our financial structure. a longertermfacility, anddiversifies of seven years,thisbondprovides uswith aduration increasing ourgearing.With to diversify oursources offundingwithout successful retail bondissue,enablingus In October we raised £80m from a set of results. we have again delivered a very strong our growing residential business,iswhy producing assetsandthesuccessof the revenue generated by our income value from our land bank. This expertise, illustration ofourabilitytoextractmaximum brownfield sitesandthelatter, aclear track record ofregenerating complexand expertise: theformer, atestamenttoour Both dealsdemonstratekeyfacetsofour to a major institutional investor. of 50%thestudentaccommodation and St. Modwen has secured the pre-sale secured funding for the academic space apartments. The University has already associated retail spaceand 899student 430,000 sq ft of academic space, 700,000 sq ft of development including acre site,thismajorproject comprises Innovation Campus. Located on our 65 £150m firstphaseoftheNewScienceand Swansea University for the provision of the Secondly, we havejustagreed termswith coming years. revenue streams and NAV growth over the marketplace and is set to deliver attractive growing presence intheLondon multi-phased project underlines our Elms, London. This £2bn, landmark, New Covent Garden Market site in Nine Authority (CGMA) to redevelop the 57 acre agreement withtheCoventGarden Market January 2013ofthedevelopment projects. The firstwasoursigningin this positivesetofresults andtwomajor I am extremely pleased to be announcing year (2011: 3.10p). dividends of3.41ppershare duringthe 251p per share (2011: 232p) after paying net asset value per share growing 8% to (2011: £51.7m) with shareholders’ equity Profit before all tax increased to £52.8m increased profits across theGroup. report anotherstrong setofresults, with It is with great pleasure that I am able to 2012 Accounts and Report Annual PLC Properties Modwen 19 St. DIv As announcedon29 expertise to theBoard. is already bringingadditionalandrelevant and experienceof theUKproperty industry Centres Group PLCandherknowledge Kay spent 27 years at Capital Shopping non-executive director inOctober2012. Kay ChaldecotttotheBoard asa We were therefore delightedtowelcome next stagesofitsevolution. invaluable resource totheCompanyin on theBoard. We believethiswillbean on deepeningfurthertheproperty expertise assets, weare placingincreased emphasis manage ourincomeproducing investment portfolio ofdevelopmentschemesand As wecontinuetogrow and expandour Code. Governance in accordance withtheUK Corporate Board andwereport onourcompliance ensure thecontinuedeffectiveness ofthe measures in place which are designed to this report wedescribethe structures and sectionof In the CorporateGovernance high standards ofcorporate governance. The Board iscommittedto maintaining THE GOvErNa and residential development. profits both in commercial expertise enablesustogenerate on opportunities where our regeneration In particular, our regional teamsfocus asset managementanddevelopment. management oftheplanningprocess, we add valuethrough remediation, Through ourmarket-leadingexpertise, environment inwhichweare operating. quality returns,despitethechallenging control isworkinganddeliveringgood long-term value totheproperties thatwe Our strategyofaddingsignificant ST 4 3.30p). Thisfinaldividendwillbepaidon distribution fortheyearof3.63p(2011: share (2011: 2.20p), making a total the finaldividendforyearto2.42pper Board isrecommending a10%increase in As aresult ofasuccessful2012,your conclusion of the Company’s Annual from theBoard witheffect from the the SeniorIndependent Director, willretire non-executive director, andDavidGarman, Katherine InnesKer, anindependent register at8 th April 2013 to shareholders on the April 2013toshareholders onthe raTEGy IDEND bOarD th March 2013. NCE aND th January 2013, January2013,
4 Chairman Bill Shannon returns in the yearsahead. on anddeliverstrong revenue streams and confidence tofacemarketchallengeshead business strategy, provides uswiththe beyond. This,togetherwithourrobust to grow ourNAV furtherin2013and We haveaverysolidplatformfrom which of this year. the Swansea University Campus in April look forward tostartingon site with and developmentpipelineinparticular, to generatefurthervaluefrom ourassets the UK,wecanseeattractiveopportunities in thesemarkets.Atthesametime,across in goodshapetobenefitfrom future growth success ofourresidential business, weare Market project, combinedwith theongoing increased bytheNewCovent Garden and theSouthEastnowsignificantly Furthermore, withourpresence inLondon of theirspecialistreal estate skills. shareholder returnsthrough theapplication our managementteamtodeliverstrong success ofourstrategyandtheability sector, ourtrack record demonstratesthe impact thismayhaveontheproperty UK economy will develop in 2013 and what Whilst Iobviouslycannotpredict howthe pr for makingSt.Modwensuchasuccess. take thisopportunitytothankourpeople continues tooutperform.Iwouldlike Company andensures St.Modwen delivered thesestrong results foryour It istheirhard workanddedicationthathas individuals workingthroughout ourGroup. such dedicatedandhighlyskilled We are veryfortunatetohaveateamof pEOplE in due course. and anannouncementwillbemade Senior IndependentDirector isunderway for thefuture. Thesearch toidentifya their timeontheBoard andwishthemwell and Davidfortheircontributionsduring 2013. IwouldliketothankbothKatherine General Meetingtobeheldon27 th February2013 OSp
ECTS
th March March
Additional Information Financial Statements Corporate Governance Business Review Overview 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: 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 A: 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 Q: 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 A: 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 Q: ANY OTHER SIMILAR OPPORTUNITIES IN 2013?
Our financial base is secure and we are continually exploring options for asset specific funding and A: alternative sources of finance in the long term. Q: 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 A: 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. portfolio of income producing assets (each portfolio ofincome producing assets(each All of thisactivity issupportedbyour management, development and delivery. remediation, planninggain,asset of adding valuetothelandbank through We continue to implement our strategy value at any one time. opportunities thatwillgeneratethe most market demands and focus on those provides uswithflexibilitytomove Our landbankofover£1.1bnassets ST (2011: £51.7m). in a profit before all tax of £52.8m throughout theyearhaveculminated These activities and our performance to investors throughout the transaction. portfolio which proved extremely attractive a testament to our income producing strength ofthebusinessas awholeandis result of the issue demonstrates the finance tobankfunding.Thesuccessful provides source uswithanalternative of enhances ourfinancingstructure and raised £80monsevenyearterms.It further The retail bond issue in October 2012 residential-led opportunities. permissions, predominantly for assets hard and securing planning land bankbysuccessfullyworkingour continue toaddvalueour5,800acre Furthermore, across thecountry, we of development profits. will further enhance our pipeline been fully remediated. Both projects from BP in 2009 and which has since within the2,500acre portfolio acquired 65 acre Transit site,oneoftheholdings This development willbesituatedonour New Science and Innovation Campus. provision of the £150m first phase of the terms with Swansea University for the Garden Marketsite.We havealsoagreed redevelopment ofthe57acre NewCovent agreement withtheCGMAfor East withthesigningofdevelopment our commitmentsinLondonandtheSouth our major projects thisyearandincreased We havemadeexcellentprogress with market challenges. and create value whilst withstanding remain wellpositionedtodeliverprofits skilled employees have ensured that we strategy coupled with our teams of highly specialist. Ourstrong androbust business position astheUK’s leadingregeneration set of results thisyearreinforces our We are pleasedthatanotherverygood 2012 Accounts and Report Annual PLC Properties Modwen St. 21 raTEGy OvE rv IEw
and co-operation. We are fortunateto be collective approach drivenby engagement Planning PolicyFramework is foundedona still appears to be difficult. The National planning systemremain astheprocess country butourfrustrationswith the UK planning approvals forsitesacross the We continuetobesuccessfulinsecuring venture withPersimmon. so farbySt.ModwenHomesandourjoint resourced to build on the success achieved appointments to ensure that we are well therefore madeanumberofnew has hadasuccessfulyear. We have London presence, ourresidential business On the back of this and our increasing sell landintothemarket. select where andwhenwestartonsiteor residential landbankenablesustocarefully worked inourfavour, asour‘ovenready’ The lackofavailablehousinglandhas to go before afullrecovery startstosetin. terms. However, there isstillsomeway banks tooffer more flexiblemortgage time buyersandthemovementby initiativestoencouragefirst Government which isdueinparttolowinterest rates, seeing improvement inhousing sales, housebuilding marketisimproving. We are strongest marketplace,the regional UK While LondonandtheSouthEastis such as Swansea University. together playingdirectly to our skills, expertise andfundingcanbebrought be foundwhere landownership, planning but specificdevelopmentopportunitiescan The market outlook in the regions is weaker market throughout 2013. to benefitfrom theongoing resilience ofthis November 2012),weare in agoodposition assets locatedinthisregion (asat30 our portfolio and 50% of our residential faster thanotherareas and,withathird of London and the South East are recovering m coming years. coming years. intend to buildonthissuccessoverthe to the difficult economicclimateandwe played amajorrole inourongoingresilience low-cost landbankaffords ushaveboth advantage thatourhighlydiversifiedand This proven strategyandtheflexible deliver significantlong-term returns. and residential assetswhichwebelievecan business while we invest in commercial largely coverstherunningcostsof of whichhasdevelopmentpotential)that arkET OvE rv IEw th
4 Chief Executive Bill Oliver Innovation Campus. University’s NewScienceand Market anddevelopmentofSwansea redevelopment ofNewCoventGarden our largestschemes,includingthe optimal returns,aswelldrivingforward year ontheseareas inorder todrive focus ourattentionthroughout thecoming our residential portfolio.We willtherefore South Eastortheprospects arisingfrom development activityinLondonandthe upsurge ininvestorappetitefor In themeantime,wecannotignore the regional economies. simultaneously helpingtosupportthese to takeadvantageofthis,whilst a fuller recovery andwewill bebestplaced when thesemarketplaceswillstarttosee comes tothefore, asthetime willcome our long-termapproach to development regions remain important,andthisiswhere to unlock valuewithinourlandbank.The Looking aheadto2013,wewillcontinue well-priced product. in the regions forwell-placed and prove that there are stillopportunities London andSouthEastmarket underline ourgrowing presence inthe development projects. These achievements portfolio and,inparticularonourmajor significant milestonesrightacross our during whichwehaveachievedsome This hasbeenanothersuccessfulyear bUSINESS OUTl stagnation in the property market. stagnation intheproperty market. alienates developers andleadsto increases the housingshortage, authorities thatfrustratesgrowth, adopted bycertainotherlocalplanning the opposite; the‘no-can-do’approach but sadly, weare alsosuffering from developments underthenewregime of collaborations should underpin all many regions oftheUK.Thesetypes officers, membersandcommunitiesacross working relationships wehaveforgedwith growth andweare proud oftheproductive developers andencouragemuchneeded ‘can-do’ authoritieswhowelcome working with a number of exceptional th February2013
OOk
Additional Information Financial Statements Corporate Governance Business Review Overview 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.
va lue of residential percentage of portfolio portfolio with planning £397m 79%
value added to number of plots with residential land planning recognition £36m 20,850 Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 23
Additional Information Financial Statements Corporate Governance Business Review Overview 24 St. Modwen Properties PLC Annual Report and Accounts 2012 Residential (continued)
number of plots with planning recognition 20,850
“Throughout the year we have added considerable value to our residential assets with significant gains achieved in London and the South East.”
Above right and previous pages: Our residential business continues to grow, Residential land Park View, St. Modwen Homes’ with good sales rates, an increased development of 134 homes at Demonstrating the active residential land Longbridge, Birmingham. number of developments coming on market during the year, 79% of our stream and increased demand for our land. portfolio (20,850 plots) has either planning permissions or allocations Strategy and Active within local plans. Management During 2012, we experienced good activity We acquire sites with potential for in residential land sales with 126 acres residential development and seek to of land now committed for sale, achieving add value to the land throughout the a Group share of £110m of value. development process crystallising that All transactions were conducted at value via three clear routes to market: or above book value. 1) Residential land sales Throughout the year, we have added 2) St. Modwen Homes considerable value to our residential assets with significant gains achieved in London 3) Persimmon joint venture. and the South East. Through our own Combined with our asset management efforts £36m has been added to the value capabilities, ability to progress land through of our residential portfolio, a 38% increase the planning process and our remediation from 2011 (£26m). Key residential land and development skills, these three transactions in the year included: routes highlight our practical approach • RAF Uxbridge – under our VSM to development and make us an Uxbridge joint venture arrangement with attractive partner to land owners VINCI, we accelerated the outright and the public sector. 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. • • • • Planning consentsachieved: • • • • Outofthetotal45developableacres 2012 Accounts and Report Annual PLC Properties Modwen St. 25 opening up oftheRiverArrow. units inthefirstphaseand Longbridgee building 208. 282 homes,ofwhichPersimmonis food retail unitandthesecondphaseof – permissiongrantedforan18,000sqft v commercial units. restaurants, publichouse,offices and comprising 289homes,ahotel, site inBurtonuponTrent and on disusedpartsofthePirelli Factory Pirelli, Burtonupontr and allotments. of publicopenspace,playareas for a newprimaryschooland75acres site will comprise 700 homes, a site Pyeg now completed. Persimmon fora sumof£3.1mhas outright sale of 4.2 acres of land to SouthOckenden,e exchanged contracts. solicitors’ hands. This deal has since Taylor for£5.5mwasin Wimpey end, the sale of 6.26 acres of land to Langford Mead,t for£6.4m. Wimpey for thesaleof9.5acres toTaylor securing a detailed planning permission, exchanged contracts, subject to r are targetedfor2013. for a total valueof£35m.Furthersales 15 acres, completedearlierintheyear Barnet Council. Two land sales, totalling Homes andtheLondonBorough of in consortiumwithpartnersAnnington share ofthis100acre sitewhichisheld rafMillh house sales are expected in H2 2013. towards theendof 2012andfirst arrangement. Constructionstarted Persimmon’s existing joint venture 453 homesunderSt. Modwen’s and Persimmon forthedevelopmentofover acquired, 23 acres were committed to ulcan w ugby, w reen, Cannock – this 142 acre orks, n arwickshir – VSM Estates has a 57% ill –VSMEstateshasa57% ast – 229 residential ewton-le-w – at the year aunton –attheyear ssex – the e – we have –wehave – situated ent –situated illows
• • • • f • • a • • • • • uture opportunities: pplications submitted: pplications submitted: e residential development. Sheffield, bothidentifiedforhighend scheme, andtwofurthersitesin mixed use employment and residential facilities andtheotherproposed fora development withcommunityleisure one earmarked for a residential sites: twoinSwadlincote,Derbyshire, applications beingworkedupforfour d of newretail space. apartments inadditionto350,000sqft e this £2bnregeneration project. apartments tobedelivered as partof n residential development. 32 acres are earmarkedfor homes onthis50acre site of which for community andleisure use. and a newretail parkwithfacilities housing complexof20apartments a 100 bedroom care home,asheltered MeltonPark,h units, onthis280acre site. manufacturing, storageanddistribution employment space, including – to build 660 homes and new Branston,Burtonupontr – 94 homes. d comprising 150 homes. – second residential phase w LockingParklands,Phasetwo, – 152 residential units. LowfieldLane,St.h – 170residential units. g distribution space. office, lightindustrial,storageand homes and up to 95,000 sq ft of small use developmentdeliveringupto 215 Cadleyh ddison Place,r lephant &Castle – up to 1,000 yson Portfolio – planning ew Coventg ursley, g regory’s Bank,w eston-super-Mare – a mixed ill, Swadlincote–amixed loucestershire arden Market – 2,800 ull – ugby – for 175 orcestershire
for 510 homes, for 510homes, elens
ent
residential phase. second the in 150 the homes for secured been now has Planning Parklands, Weston-super-Mare. Locking at Homes Modwen St. ab of development. shortly be starting on phase two Central, London where we will Wembley at apartment show The to p: p: ove: ove:
Additional Information Financial Statements Corporate Governance Business Review Overview 26 St. Modwen Properties PLC Annual Report and Accounts 2012 Residential (continued)
Residential Development In its first full year of building, this approach St. Modwen Homes has proved very successful for St. Modwen Our own housebuilding brand, St. Modwen Homes which has experienced excellent Homes, differentiates itself from larger housing sales rates, well above the national national housebuilders by adopting average. We have now started work on the a local developer mentality, delivering a second phase of housing at Park View, maximum of 250 units per annum and Longbridge, with just one house remaining following a design-led approach which for sale in the first phase of 113 units and is reflected in both the built form and the we are also on site with the second phase external environment. at Locking Parklands, Weston-super-Mare. Including these two projects, we are now Our extensive residential land bank gives active on four sites and are shortly us a competitive advantage, firstly by to commence work on a further two sites, allowing us to select the sites that are best subject to planning: suited to the St. Modwen Homes brand and, secondly, with land acquired • U nder construction – Edison Place, pre-planning at minimum values, we are Rugby (175 units); phase one and two, able to focus on providing a higher quality Park View, Longbridge (134 units); and bespoke product. Dursley, Gloucestershire (94 units). • Imminent site starts – Coalville, Leicester (190 units); Gregory's Bank, Above: Worcestershire (155 units). Akron Gate, Goodyear, Wolverhampton, a scheme of 453 units and built by Persimmon as part of our joint venture.
Residential land bank November 2012 November 2011
Acres Units Acres Units With planning recognition allocated in local plan or similar 178 3,396 227 4,410 Resolution to grant 140 1,942 14 246 Outline permission 794 13,175 870 14,349 Detailed permission 169 2,337 82 1,366 1,281 20,850 1,193 20,371 No planning recognition 523 5,694 453 4,351 Total residential land 1,804 26,544 1,646 24,722 • • • Progress to date: detailed in the table below. achieve asteadystream ofprofits as year period. During this time we expect to on eightsitesoverthecourseofaseven plan todevelopover2,000residential plots extremely well. Under the agreement, we established in 2010, is progressing Our joint venture with Persimmon, Persimmon jointventure 2012 Accounts and Report Annual PLC Properties Modwen St. 27 Units f Cash received £m future development profit £m p t Units completed No. ofsites r otal uture landrevenue estimate £m otential St.m esidential development Trent (113units). Ground,(300 units),Victoria Stoke-on- i Warwickshire (284units). i (211units). Newton-le-Willows Sunderland (212 units); Vulcan Works, (302 units); Longbridge East (229 units); (307 units); CoedDarcy, SouthWales (314 units);GlanLlyn,SouthWales (453 units); Goodyear, Wolverhampton Gate, RAFUxbridge,London u n planning – Trentham, Stoke-on-Trent mminent sitestarts– Long Marston, nder construction–St.Andrew’s odwen share of odwen share of (as at30 th November2012) St. Modwen h Modwen St. Active 651 173 27 20 15 12 for the Group. for the Group. the UK,securingbestopportunities value toourresidential land bankacross London andtheSouthEastwhilstadding to capitaliseonourgrowing presence in delays inactualsitestarts.We willcontinue planning regime which is still causing notwithstanding theimpactofcurrent active developmentsexpected, with anincrease inthetotal numberof we expect another positive year in 2013 On thebackofanexcellentfirstyear, O Persimmon joint venture: 101). (St. Modwen Homes: 158and 259 house salecompletions In thefinancialyearwehaveachieved in the right place. development, at therighttimeand ability to selecttherightsitesfor awareness oflocalneedsandourproven and isalsotheresult ofourregional teams’ UK. Thisisinpartduetorestricted supply experienced strong salesratesacross the Persimmon jointventure, wehave For bothSt.ModwenHomesandthe r 6271 esidential developmentsales UTl Planned omes OOk 345 n/a 17 0 9 8 2,028 Active 101 112 36 76 12 joint venture P ersimmon Committed 284 n/a 20 15 0 5 3,308 to 274 176 112 64 32 16 tal
Additional Information Financial Statements Corporate Governance Business Review Overview 28 St. Modwen Properties PLC Annual Report and Accounts 2012
commercial land value commercial land acreage £139m 3,000+
Commer cial 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. Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 29
Additional Information Financial Statements Corporate Governance Business Review Overview 30 St. Modwen Properties PLC Annual Report and Accounts 2012 Commercial Land and Development (continued)
Strategy Market Commentary Developable land bank acres We continue to identify and secure In general, the UK commercial property opportunities for our development pipeline, market remains difficult. Well financed ensuring our schemes are well positioned investors are scarce with many others to deliver value over the long term. struggling to fund their purchases. 5,801 By taking a long-term view, we can acquire The occupier market remains challenging 5,762 land at a minimal capital outlay and then with many businesses not prepared to maximise its potential by steadily adding invest in new or larger premises and banks
5,736 value over time via remediation and appearing unwilling to provide funding to planning gain. In line with our long proven them. The retail market is also difficult with business model, we will then, at many retailers putting a stop to new store an appropriate time, decide whether to openings and many downsizing their dispose of certain schemes to crystallise requirements. In addition, the market any value uplift or take on the development has said goodbye to some well-known ourselves. In each instance, we will benefit high street names during and after the from the low entry costs we have secured. reporting period. 2010 2011 2012 Future uses for our land are increasingly Despite the broader economic challenges, residentially driven. Our growing residential we are finding that our proven approach to business, combined with our strong track development, combined with our extensive record in commercial development, equip and active land bank is standing us in good us with the right mix of skills to identify stead to face up to the current climate. which route to take and then exploit these Our funding structure is not dependent on opportunities to their fullest potential. 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. • • the year: developments completed during DEvElO their redevelopment in due course. enable ustoprogress ourplanstowards appeal ofourshorterleasetermswhich Wythenshawe alsodemonstratesthe Elephant &Castle,EdmontonGreen and secondary shoppingcentres suchas overwhelming appetitefor unitsinour retailer demand for our space. The London, where weare experiencinggood in CannockandWembley Centralin developments atLongbridge,Hednesford This is illustrated keenlybyourretail well-placed and well-priced product. our experience, there isdemandfor The retail marketischallengingbut,in today to capture limited new demand. although wehavetoworkslightlyharder and attractingavarietyofoccupiers, impacting positively on the local economy continue to serve as a catalyst for change, Furthermore, ourregeneration projects 2012 Accounts and Report Annual PLC Properties Modwen 31 St. of well-known retailers. phases wecontinuetoattracta series in late spring 2013. Across the two a 15,650 sqftstore whichwillopen Gateway, Aldi has agreed to purchase in time for Christmas trading. At Chase business, alongwithassociatedretail, Tesco foodstore whichopenedfor completed thesaleof85,000sqft Shopping Park, we have now Park’ and‘ChaseGateway’.Atthe phases known as ‘Victoria Shopping Centre comprisestwodevelopment transformation ofHednesford Town h and public realm. significant improvements to elevations aswell pre-let toWilkinsons, constitution ofanew22,000sqftstore of theNorthSquare. These includedthe completed onthe£1.5mrefurbishment e dmonton g ednesford, Cannock – the £50m pmENT prOGr reen –workswere ESS • f • • uture developments retail units. of thenewSainsbury’s store andother will be made to approve the final detail a reserved mattersplanning application health centre. Following the CPO award, a new library, marketandcommunity sq ft of community facilities including industrial, 480 new homes and 40,000 additional retail, 80,000sq ft of largest foodstore, 80,000sq ftof supermarket, settobeLiverpool’s for a114,000sqftSainsbury’s July. Thescheme hasplanningconsent followingapublicinquiryin Government area hasnowbeenconfirmed bythe Purchase Order (CPO)for landinthe g Outstanding’ rating. been awarded a‘BREEAM design, theservicingfacilityhasrecently venture. Inrecognition ofitssustainable cash receipts of£18.5mfor ourKPIjoint respect oftheirfitouthas generated payment received from Siemensin North RealEstatePartnersLLP, andthe Eastern purchaser, represented by 90 subsequent investmentsaletoaMiddle and production facilitytoSiemens.The handed overthis135,000sqftoffice t Threadneedle Property UnitTrust. ft onphasesoneandtwo,to the saleofsixunits,totalling78,128sq This latestphaseofconstructionfollows where italready occupies23,629sqft. business doubling its space on the Park building forKirkPetrophysics, a completed ona21,642sqftbespoke Business Parkwhere constructionhas 12 acre third phaseofthis25acre former Vokes factorymadewayforthe – thedemolitionof225,000sqft h eal Park,Lincoln – we have now enley BusinessPark,g reat h – the Compulsory omer Street –theCompulsory uildford
we intendtopursuefurther. energy, includingsolar, andthisisamarket gas-fired powerstationsand renewable particularly forcleanerfuelssuchas emerging inthepowerandenergysector, in the regions. Opportunitiesare also predominantly residential-led schemes still existsopportunitiesforwell-placed, dominant marketatthemomentbutthere London andtheSouthEastismost profits to2015andbeyond. provide uswithastream ofdevelopment have enoughactivedevelopmentsto Whilst thismarketisproving difficult, we O • • • UTl Chaddesdent and 38 privateapartments. 86 bedroom hotelpre-let toTravelodge also comprises26,000sqftofretail, an construction hasnowstartedandwhich development phaseforwhich 16,000 sq ft to anchor the final retailer. Thenationalretailer willtake The Gym and an undisclosed national sq ft, toTesco Metro, SportsDirect, with furtherlettings,totalling53,000 centre schemeisgainingmomentum, for theretail spaceinthismajortown w surplus landatBaglanBay. previously non-incomeproducing income stream fortheGroup from sold into the Grid providing an additional over 1,200homesperyear. Thiswillbe power toprovide enoughelectricity for which willgeneratefivemegawattsof house over21,000photovoltaicpanels, acres of our Baglan Bay site. It will secured forthis£15msolar parkon30 w SolarPark,BaglanBay, South strategic mixed-usedevelopmentsite. a been identifiedbytheCityCouncilas owned byNetworkRail,thesitehas thefreehold Park footballstadium.With brownfield sitelocatednexttoPride redevelopment ofthis70acre form ajointventure forthe have beenselectedbyNetworkRailto – interest embley Central,London–interest – detailed planning consent now ales –detailedplanningconsentnow OOk riangle, d – we erby –we
Additional Information Financial Statements Corporate Governance Business Review Overview 32 St. Modwen Properties PLC Annual Report and Accounts 2012
in come produ cing 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. Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 33 PrO £562m tOtaL 1,700+ nuMB du er Of er va C in Lu g Pr e O tenant f i OP nC e rtie OM S e S 9.2% average equivaLe nt yie nt Ld
Additional Information Financial Statements Corporate Governance Business Review Overview 34 St. Modwen Properties PLC Annual Report and Accounts 2012 Income Producing Properties (continued)
Strategy Existing portfolio Occupancy rates % Our income producing assets make up All of our properties are held with a long 51% of our portfolio. These assets are held term view for development and typically in the short-term to provide the Group with held at higher yields, with low affordable a steady income stream as we prepare rents on relatively short leases. Whilst the these sites for future development. This commercial lettings market remains 88 88 87 approach ensures that we are not focused problematic within the context of the solely on Estimated Rental Value (ERV) but broader economic climate, we continue instead on securing tangible revenues that to experience good occupier demand cover our running costs and can be across our portfolio with our short reinvested into the business. tenancies and affordable rents proving particularly attractive. Each of our regional teams is responsible for managing their own ‘bank’ of assets At the year end we owned over 100 and are tasked with extracting maximum income producing properties with a total value via rent reviews, re-gearing of leases value of £562m (2011: £549m). We have and ultimately ensuring that voids remain experienced some administrations during 2010 2011 2012 at their lowest possible levels. the year but have been able to fill any vacancies relatively quickly and our average As at 30th November 2012, the Group’s lease length has, in fact, improved at 5.0 Net rental income £m income producing properties were years (2011: 4.6 years). Occupancy levels, occupied by over 1,700 tenants, ranging at 87% have been maintained (2011: 88%) from multinational businesses to sole and we have managed the churn in our traders. The diversity of this portfolio helps portfolio, achieving £9.7m of new lettings us to avoid over exposure to a single during the course of the year (2011: 35.5 36.2 scheme, tenant or sector. 33.2 33.5 33.7 £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.
2008 2009 2010 2011 2012
Portfolio yield analysis
Equivalent Net Initial Value £m Nov 2012 Nov 2011 Nov 2012 Nov 2011 Retail 9.0% 8.4% 7.6% 7.4% 240 Office 9.4% 8.7% 7.0% 6.4% 61 Industrial 9.2% 9.1% 7.9% 7.7% 261 Portfolio 9.2% 8.8% 7.7% 7.4% 562 • • • sales at or above book value: three assetdisposals,allof which achieved Since theyearendwehaveprogressed • • highlights include: 2012 Accounts and Report Annual PLC Properties Modwen St. 35 block for £2.9m. completed the sale of this office Cauldwellh on thesaleofthisretail park for£8.3m. PhoenixPark–wehaveexchanged the saleofthisretail parade for£10.5m. h annual rent of£1.5mperannum. extended untilatleast2024an Longbridge inBirminghamhasbeen lease forShanghaiAutomotiveat Longbridge – our largest individual Poundland and Specsavers. Bargains, CostaCoffee, Lidl, Sports Direct, Asda,Argos,Home brands at the centre including retailer joinsahostofestablished Sports on a 10 year lease. The national Square, we let a 1,500 sq ft unit to JD which anchorstherefurbished North new 22,000 sq ft Wilkinsons store e dmonton g – we have completed on ounslow –wehavecompletedon – we have ouse –wehave – in addition to the reen –inadditiontothe part ofouroverallbusinessstrategy. continue toworkhard torealise theseas development opportunities and we will our portfolio contains some substantial compared tothefirsthalf of theyear, and this reduced inthesecond halfof2012as Whilst there ismarketpressure onyields, as awhole. underpinning thestrength of ourportfolio covering ouroperatingcostsand development businessesthrough largely assets afford setsusapartfrom other The firmfinancialfootingwhichthese O • the periodincluded: deliver long-termvalue.Acquisitionsduring our acquisitions and ensuring that they will our property portfolio,carefully selecting As we dispose of assets we also add to UTl hub and further employment space. hub andfurtheremploymentspace. 2,000 houses,aMorrisonsdistribution permission hasalready beengrantedfor east Bridgwater where planning the widerurbanextensionarea ofnorth BFF Nonwovens.Thesiteformspartof ancillary office space and currently let to of industrialaccommodationwith site, comprisingatotalof250,081sqft Bridgwater, Somerset–a12acre OOk sold for £8.3m. for sold Stoke-on-Trent, Park, Retail Phoenix Left: Somerset. at Bridgwater, estate industrial ft 250,081 sq this is portfolio producing income to our additions latest the of One ab 2012. of end the at Square North the of refurbishment the of as part Green Edmonton at opened which store Wilkinsons ft sq 22,000 The to p: p: ove: ove:
Additional Information Financial Statements Corporate Governance Business Review Overview 36 St. Modwen Properties PLC Annual Report and Accounts 2012 Major Project Opportunities new covent garden market
VIN CI 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 Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 37
Additional Information Financial Statements Corporate Governance Business Review Overview 38 St. Modwen Properties PLC 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 first phase development SIZE (SQ FT) value 700,000 £150m Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 39
Additional Information Financial Statements Corporate Governance Business Review Overview 40 St. Modwen Properties PLC Annual Report and Accounts 2012 Major Project Opportunities
elephant & castle Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen 41 St. 350,000 retai new of 2013. part latter the during submitted be willhopefully 1,000 new homes, to up and space leisure and of retail ft sq 350,000 will provide completion, on which, ascheme for application This shareholders. for value maximum the of delivering aim the with independently continuing to pursue a planning application we are meantime, the In to evaluate options. our continue and investors potential from response initial property. the for options exercise to various review our of an part as Centre Shopping the about investors 2012During of potential we spoke to anumber between St. Modwen, LBS and Lend Lease. agreement co-operation the sign to shortly ad process. redevelopment the in stone akey stepping is which (LBS) Southwark of Borough London the with w e are close to concluding our legal agreement agreement legal our concluding to close e are L w SP e have been very encouraged by the by the encouraged very e have been aC e ( Sq ft ) 1,000 up to t nu O B ditionally, we expect expect we ditionally, MB e er deve O f L new OP ed hOMeS
Additional Information Financial Statements Corporate Governance Business Review Overview 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 job creation £1bn 10,000 Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 43 longbridge
Additional Information Financial Statements Corporate Governance Business Review Overview 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 Public sector from their sites. Be it the creation of a new town centre, a business district, or transforming a As we are a long-term business, redundant area into a key residential site, these long-term partnerships we work hand in hand with many public sector organisations across the country are key to the success of our to transform a variety of different locations regeneration projects and are via regeneration. often connected by skills The most recent example of a public sector and culture. partnership is with Swansea University for the provision of the £150m first phase of the New Science and Innovation Campus. Established through joint ventures, This is an example of a true development sale and leasebacks, strategic land partnership where we have supplied the acquisitions and straightforward land and our development expertise to an institution in need of a regenerative solution development agreements, these to meet its expanding educational needs. partnerships consistently lead to We also work directly with Local successful regeneration projects Authorities, some with which we have been in partnership for over 10 years either via that bring about major economic joint venture initiatives or development change to the areas across the UK agreements, all with the aim of delivering multi-million pound projects that will that need it the most – stimulating encourage inward investment and provide investment, growth and creating a a boost to the regional and local economy better environment for businesses via regeneration. and communities. The facing page provides examples of some of our most successful and long lasting partnerships.
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. Garden Market. £2bn redevelopment ofNewCovent working together with VINCI on the Beyond this project, we are now maximise results and minimise costs. profile property project, designed to is an innovativemeansoffundingahigh the public sector; Prime Plus Contracting of the privatesectorworkingcloselywith Project MoDEL is an excellent example RAF Uxbridge. and developmentatRAFMillHill developers andare progressing landsales Of the six sites, we sold four to third party integrated core site in London. at RAFNortholt,creating the MoD’s first the constructionof£180mnewfacilities sites across NorthWest London,through personnel andoperationsfrom sixsurplus MoD to consolidate over 1,000 military was designed specifically to enable the to deliverProject MoDELThis partnership selected by the Ministry of Defence (MoD) established in 2006 when we were Our partnershipwithVINCIPLCwas VINCI St.Modwen 2012 Accounts and Report Annual PLC Properties Modwen St. 45 now under construction. now under construction. detailed planningapproval and are to eight, ofwhichsevenhavereceived building outsevensiteshasnowgrown progressing well;theoriginaltargetof sites, across 120acres ofland.Itisalready covers 2,000plotsonsevenSt.Modwen Persimmon PLC.Initiallythisagreement entered intoajointventure agreement with In 2010St.Modwenrealised itsvisionand bank tobridgethishousinggap. financial strength andwell-located land housebuilder wouldcapitaliseonour agreement with a sector-leading St. Modwen recognised that ajointventure development beingbuiltacross theUK, Aware of the enormous lack of residential involves housebuilderPersimmonPLC. agreements oneofthemost prominent Of St.Modwen’s majorjointventure Persimmon PLC Siemens in Lincoln. and sold 135,000sqftfacilityfor Centre andtherecently completed the regeneration ofFarnborough Town the Elephant &CastleShoppingCentre, potential, themosthighprofile being of schemes withlong-termdevelopment the jointventure nowholds anumber Known asKeyProperty Investments (KPI), investment partnership. Company K.S.C.toestablishan a joint venture withSalhiaReal Estate In 1997, St. Modwen entered into Key Property Investments(KPI)
Additional Information Financial Statements Corporate Governance Business Review Overview 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
Income Statement As we use a number of our joint venture A core part of our business model is arrangements, the statutory financial ensuring that a large proportion of our statement disclosures do not always assets generates income prior to provide a straightforward way of development. This income consists of core understanding our business. To enable rental income and other revenue stemming a better understanding, we have also from our £562m portfolio of income provided information including the Group’s producing assets, comprising more than share of joint ventures and a full 100 commercial properties and making reconciliation is provided in Note 2 up 51% of our total portfolio. These cash to the Group Financial Statements. 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. phases during the course of 2012. having completedthesalesatfirst second phase of housing at both schemes, We have commenced construction on the Locking Parklands at Weston-super-Mare. inLongbridge,Birminghamand View Modwen Homes developments: at Park achieved across two of our key St. and highlights the success we have business hasgrown throughout theyear contribution reflects howthisarea ofthe contributed nearly £6m. The residential which residential housingsales have (2011: £24m) from development, of realised property profits to £29m We haveachieveda22% increase in Property profits our expectations. Our voidlevelsremain inline with whilst we prepare them for development. level aswerequire properties tobevacant tend tomaintainvoidsatareasonably high assets for income prior to development, we nature ofourbusiness,where weretain 5.0 years (2011: 4.6 years). Due to the our averageleaselengthhasimproved at which is broadly constant with last year and Occupancy levels are at 87% (2011: 88%), of some of our mature assets. course of 2013aswecompletethesale rents will remain steady throughout the management capabilities. We anticipate growth thankstooursuccessful asset of 2% year-on-year. We haveachievedthis to £36.2m (2011: £35.5m), an increase in the Group’s share of net rental income again pleased to report an increase challenging economic times and I am continues to support our resilience to This fundamentalpartofourbusiness Rental andrecurring income Profits 2012 Accounts and Report Annual PLC Properties Modwen 47 St. a successful year. payments andbonusprovisions following The increase isdrivenbyshare-based associates) is£18.6m(2011:£16.7m). the Group’s share ofjointventures and Administrative expensesfor2012(including via new appointments. South andboostingourresidential team areas, placinggreater emphasisonthe base accordingly tosupport thesegrowth Consequently, wehaveadjustedourcost experiencing a more rapidrecovery. areas whichwehaveidentified as value islocatedinthisregion, are both market, ofwhich50%ourportfolioby portfolio is located, and the residential South East,where overathird ofour greatest valueatanytime.Londonandthe those opportunitiesthatgeneratethe demands andconsequentlypursueonly gives usisflexibilitytoadaptmarket The advantage that our UK-wide land bank current andpotentialassets. of skilledteamsprofessionals tomanage Our costbaseisdrivenbytheemployment Overheads
Additional Information Financial Statements Corporate Governance Business Review Overview 48 St. Modwen Properties PLC Annual Report and Accounts 2012 Financial Review (continued)
Property Valuation Property valuation movements in the year Movements in the Year 2012 2011 Property valuation movements are made Property valuation Value Market Value Market movements added by value added by value up of two main elements: those resulting £m St. Modwen movements Total St. Modwen movements Total from our own actions that we undertake specifically to add value to our assets, and Residential 36 8 44 26 2 28 those resulting from changes in the overall Commercial land – (1) (1) 1 (2) (1) property market. Jones Lang LaSalle LLP Income producing: provides this valuation split for us. Retail 7 (8) (1) 2 1 3 Market-driven valuation movements Office (1) (6) (7) – – – In line with market movements, outward Industrial 6 (13) (7) 4 – 4 yield shifts in the year have had a negative influence on the valuations of our income Total 48 (20) 28 33 1 34 producing portfolio reducing its value by 5%. This reduction has been partially offset Finance costs and income Looking forward, we will continue to focus by a significant increase in the value of our As we have become more active on the on generating value across our land bank residential portfolio, notably in the South development of our schemes throughout and ensure that our rental income and East, to £8m (2011: £2m) which has the year, this has been reflected in a slight recurring other income underpins the resulted in an overall net market-driven increase in net debt and higher average running costs of the business. Supported reduction in our property portfolio of £20m borrowing levels for the year. by our firm financial footing, with new (2011: £1m increase). projects within our development pipeline Trading profit for the year (such as Swansea University’s New Trading profit has therefore increased Science and Innovation Campus) coming again this year by 12% to £25.5m on line during the course of 2013, along (2011: £22.8m) which is an extremely with other major schemes, we expect positive result given the ongoing to be in a good position to take on an challenging economic climate. increase in workload.
Trading pro t £m Added value valuation increases £m
48
25.5 22.8
33 17.4
18
2010 2011 2012 2010 2011 2012 existing jointventure arrangements. development of453homesunderour 23 were committed to Persimmon for the developable acres of land on this site, St. Modwen and VINCI. Of the 45 additional equity provided equally by a £60m, fiveyeardebtfacility, with Ministry of Defence. This was financed by the purchase of this 110 acre site from the from RAFUxbridge,where weaccelerated The mostnotablecontributionstemmed posed by the system. enabling delivery, despitethechallenges through the planningprocess and commercial andresidential land This successcomesfrom managing market-driven reduction. results, which substantially outweighed the and thisyearhasdelivered someexcellent base is a crucial part of our business model portfolio byactivelymanagingourasset Our ability to add value to our existing result of St. Modwenactions Valuation improvements asa 2012 Accounts and Report Annual PLC Properties Modwen St. 49 LTV (onbalancesheet) 35 2010 2011 36 40 2012 % (including JVdebt) Equivalent LTV 36 2010 of 45% from 2011 (£33m). of 45% from 2011(£33m). revaluation gains of £48m,anincrease therefore been abletogenerate from Jones LangLaSallewehave Based onindependentvaluations the value ofourportfolio. year, helping tomaintainandimprove in new tenantincomethroughout the across our portfolio,achieving£9.7m We alsocontinuetoattracttenants 2011 38 % 40 2012 Gearing (onbalancesheet) 72 2010 73 2011 71 2012 economic conditions. economic conditions. against thebackdrop ofcontinued difficult £51.7m), anextremely positive result increased by2%to£52.8m (2011: considerations, profit before alltaxhas Set inthecontextofabove as credits totheIncomeStatement. of theirtermsweexpectthistobeshown was slow. Asthesehedgesreach theend rate ofunwindtotheIncomeStatement interest rateincreases, meaningthattheir substantially reduced expectationoffuture reporting period,thesecurvesimplieda for interest rates. At the end of the financial financial market’s forward prediction curves swaps).The valuationsare basedonthe interest ratederivatives(hedgesand movements inthemarketvalueofour on jointventure incomeandstatedafter Our profit before alltaxisstatedbefore tax Profit b tax: £50.4m,profit after tax: £45.5m). comparable result with2011 (profit before a £47.4m andprofits aftertax of£42.3m, is astrong result withprofits before tax of of £10.5m(2011:£6.2m).Neverthelessthis led toanincreased taxcharge intheyear Valuation gainsinourjointventure assets t axation andProfits % Gearing (includingJVdebt) 94 2010 efore all t 91 2011 ax 87 2012 %
Additional Information Financial Statements Corporate Governance Business Review Overview 50 St. Modwen Properties PLC Annual Report and Accounts 2012 Financial Review (continued)
Balance Sheet Property Portfolio Equity net assets per share p Two transactions in the first half of 2012 Our property portfolio is now worth altered the shape of our balance sheet: £1.098bn (2011: £1.103bn). During the period we have continued to actively 1 – We accelerated the purchase of RAF manage our property portfolio, spending Uxbridge, via VSM Uxbridge, a new joint £122m on acquisitions and capital venture vehicle in partnership with VINCI. expenditure and £129m realised from 251 This is accounted for as a joint venture 232 asset disposals. 213 whereas the land and its associated purchase price liability were previously Basis of property valuation consolidated. All our investment properties are independently valued every six months 2 – From our previous joint venture partner, by Jones Lang LaSalle LLP, a global real we have acquired full ownership of the estate professional services business, Sowcrest and Holaw investments that own one of whose specialisations is property our Wembley properties and consequently, valuation. Jones Lang LaSalle based these assets and the remaining debt its valuations upon an open market 2010 2011 2012 in both entities are now fully consolidated transaction between a willing buyer and into St. Modwen’s results. a willing seller at the balance sheet date. EPRA net asset value per share p Net assets Therefore, no value is taken for any future At the year end, the shareholders’ equity expectations of value increases but value of net assets was £503m or 251p discounts are applied to reflect future per share. In spite of adverse market uncertainties. Where appropriate we will 272 valuation movements, this represents an also independently assess our work in 250 8% increase over the year (2011: £464m progress for any impairment issues. In 229 or 232p per share). In addition to this accordance with accounting standards, increase, dividends of £6.8m or 3.41p per valuation movements are put through the share were paid during 2012 (2011: £6.2m Income Statement as gains or losses. or 3.10p per share). Valuations in all our asset classes have been substantiated by open market EPRA net asset value transactions during the course of the year. In line with industry best practice we Yields on our income producing properties also report net assets per share using the have moved out slightly in the market EPRA (European Public Real Estate during the year, offset by our success in Association) methodology*. Our diluted 2010 2011 2012 attracting tenants. 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. place for each of our joint ventures. appropriate fundingarrangements in our funding structures. We also have for ustoretain adegree offlexibilitywithin as a developmentbusiness,itisimportant large UK presence. We do this because, facilities with clearing banks that have a We keepaseriesofbilateral revolving credit Funding increase inschemecontributions. expect any significant material future closed to future accrual we do not currently scheme beingclosedtonewentrantsand show a fully funded scheme. With the from April2011are nowcompleteand basis. Theresults ofthetriennial valuation continues to be fully funded on an IAS19 Our defined benefit pension scheme Pension s in the normal course of our business. payables relate todevelopmentactivities balance (2011:twothirds). Othertrade around athird ofourtradepayables the joint venture have now reduced to arrangements related to land owned by to earlier, thedeferred payment purchase ofRAFUxbridge,asreferred reduce. Asaresult oftheaccelerated associated with this arrangement will development, ourtradepayablesamounts VINCI progresses andlandissoldoff for As theVSMEstatesjointventure with Trade payables 2012 Accounts and Report Annual PLC Properties Modwen 51 St. cheme November 2014. and noneare duetomature before average lifeof3.4years(2011:3.5years) Our current bankingfacilities havean our shareholders. delivering bestvalueforthebusinessand our fundingsources toensure thatweare seek tocontinueincrease therangeof this. Throughout 2013 and beyond we will in thelastquarterplayingamajorpart successful outcomeoftheretail bondissue diversified oursources offundingwiththe Throughout 2012,wehaveextendedand c (2012: 71%, 2011: 79%). (2012: 71%,2011:79%). slightly compared totheendof2011 equivalent gearinglevelshavereduced Taking intoaccountthesetransactions, units inHounslowfor£10.5m. completed the sale of a parade of retail selective assetdisposalsandhaverecently In addition, wecontinuetoprogress to £366m (2011equivalent:£374m). the Sowcrest andHolawdebtbringsthis remained steady. Theconsolidationof throughout 2012,ournetdebthas As ourdevelopmentactivityhasincreased orP orate f acilities £48m management in2012 through planningandasset Value created bySt.Modwen
Additional Information Financial Statements Corporate Governance Business Review Overview 52 St. Modwen Properties PLC Annual Report and Accounts 2012 Financial Review (continued)
Retail bond raised Corporate Facilities The VSM Estates facility is now extendable Retail bond until at least March 2017 and has £30m of £80m Our successful retail bond issue in debt drawn against a remaining facility of October raised £80m, with a duration £31m. Since the balance sheet date, VSM Estates has received a further £14m of land Facility headroom of seven years. sale receipts. The joint venture and its The issue has enabled us to diversify our associated debt are treated as on balance £134m sources of funding, without increasing our sheet for the purposes of the financial gearing and provides longer term debt as accounts. We have reduced this facility in the cornerstone of our financing. The funds order to reduce the costs of unnecessary raised have been used to reduce our undrawn facilities, but still provide sufficient drawings under our existing bank revolving funding to meet future obligations. credit facilities, namely the cancellation of the Kennedy Wilson facility. Hedging and cost of debt We hedge the majority of our interest rate Headroom in corporate facilities risk as we aim to have predictable costs Following the retail bond issue and attached to our borrowing. At the year end subsequent cancellation of the Kennedy we were 93% hedged against our Wilson facility, we have ample headroom corporate debt (2011: 86%). within our corporate facilities allowing us to meet future development and funding With the retail bond providing a fixed cost needs. Excluding the VSM joint venture, of debt this is now effectively fully hedged. we have £500m of facilities against net The proportion of fixed debt has matured debt of £366m at the year end. but we expect this to reduce in the future as our hedging slowly drops away.
current banking facilities
£m Lloyds 500
450
400
350 RBS
300 Barclays 250
200 HSBC 150 Santander VSM Retail 100 Bond
50 Pbb 0 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Debt Renewal Renewal Renewal Renewal Renewal Renewal Renewal possible negative scenarios. that covenantlevelsare adequate forour and experience.Consequently, webelieve advisers andappliedourownknowledge market information,consultedwithour uncertainty, we have considered available environment stillhasanelement of Although the current challenging economic • • Bond: • • • Bank: retail bond.Theseare: facilities and now, more recently, to the that apply to both our corporate banking We are operatingwellwithinthecovenants Corporate fundingcovenants 2012 Accounts and Report Annual PLC Properties Modwen St. 53 1.5x (actual2.8x). Interest coverratiomustbe greater than exceed 75%(actual41%). See-through loantovalueratiomustnot 1.25x (actual 2.1x). movements) mustbegreater than non-cash itemssuchasrevaluation Interest coverratio(thatexcludes (actual 71%). Gearingmustnotexceed175% (actual £514m). Netassetsmustbegreater than£250m
specifically foreachopportunity. us toconsiderfundingthatisdesigned major projects, itmightbe appropriate for As weevaluatethevariousroutes forour gearing andloantovaluelevelsshouldfall. our core businessandonthis basisboth the absolutelevelsofdebttoincrease from Throughout thenextyearwe donotexpect before November2014. joint venture facilities that require renewal Consequently, wehavenocorporateor • • Investments (KPI): VSM Uxbridge andKeyProperty Our principaljointventure facilitiesare Joint venture facilities debt facilitythatrunsuntil2017. venture withanewfiveyear £135m the period werefinanced our KPIjoint Shopping Centre in London. During including theElephant&Castle with long-termdevelopmentpotential, significant retail andcommercial assets Real EstateCompanyK.S.C.holds KPI–our50/50jointventure withSalhia for New CoventGarden Market. with VINCIinaseparatejointventure 2017. We are alsoworkingtogether new £60m facilitywhichrunstoatleast a Uxbridge landwasfinancedwith The aforementioned acquisitionofthe owned bytheMinistryofDefence. north Londonwhichwere formerly and developedaportfolioofsitesin Project MoDEL,whereby weacquired with VINCIPLChasevolvedoutof VSMUxbridge–our50/50jointventur e 4 Group FinanceDirector Michael Dunn can drivethebusinessforward. a sound financialplatformfrom whichwe These factorscombinedprovide uswith our gearinglevelsshouldcontinuetofall. the longevity of our debt and, consequently, diversifying ourfundingsources, increasing income. Atthesametimeweare smartly, maximisingandgrowing our environment, we have continued to work the backdrop ofachallengingeconomic apparent. Throughout theyearandagainst through ourownefforts isnowvery Our abilitytogeneratestrong returns Outlook are setoutonpages54to57. and thecorresponding mitigatingactions could haveamaterialimpactontheGroup The principalrisksanduncertaintieswhich Principal risksanduncertainties sources offinance. funding sources andexplore alternative at optionstoincrease thediversityofour In the longer term, we will continue to look th February2013
Additional Information Financial Statements Corporate Governance Business Review Overview 54 St. Modwen Properties PLC Annual Report and Accounts 2012 Risks and Uncertainties how we manage our risks
Risk AND Potential Impact mitigation
Market/economic changes such as higher • Regional spread and portfolio diversity mitigates We choose to operate only in the UK, which is subject to relatively low risk and low returns from a interest rates, reduced demand for land sector or location-specific risks stable and mature, albeit cyclical economy and property market. By involvement with all sectors of and new properties (e.g. residential), • Active portfolio management achieves a better that economy and property market, we are as diversified as possible, without venturing overseas. reduced availability of credit and declining than market utilisation of assets Over the course of the last year, the continuing sovereign debt problems within the Eurozone means 1 investment yields restrict business • Hedging policy reduces interest rate risk that the overall market position continues to represent a high risk. Economic and development and cause valuation falls. Market Risk Failure to identify a pipeline of future • Team of professionals with residential experience The planning environment is becoming more difficult with an increased likelihood of delays in the residential sites reduces our supply of and expertise planning process. However, our scale and expertise means that we are still being successful in this Uncertainty in the economic homes or reduced availability of mortgage • Extensive land bank with a continuing stream area, although individual schemes may suffer delay. Demand for new homes remains strong, although and market environment finance adversely impacts demand for of planning applications one of the main factors restricting this demand is the lack of availability of new mortgage finance. increases the risk attached homes in our residential business. • Flexible approach to mortgage financing Any progress in this area would be helpful. to property valuation and (e.g. shared equity schemes) development returns • Use of JV partners with residential expertise (e.g. Persimmon)
Poor market intelligence (i.e. failure to • Regional offices in touch with their local market The excellent reputation and financial capacity of the Company have enabled us to continue to win anticipate market changes) leads to • Dedicated central resource supporting regional teams schemes and grow the land bank to record levels, even in the current financially-constrained climate. selection of inappropriate and, ultimately, • Flexible and innovative approach to acquisitions In this environment, with a reduced number of active competitors, we expect to be able to continue to unprofitable schemes. and schemes in order to adapt to market changes source attractive acquisitions. • Projects, acquisitions and disposals are reviewed (and financially appraised) within clearly defined authority limits
Declining rental yields and/or loss of key • Diverse and extensive rent roll (over 1,700 tenants) Our diverse tenant base mitigates this risk but uncertain UK economic growth prospects and low tenants results in reduced profitability and • Financial checks carried out on new tenants business confidence means that there is a continuing high risk in this area. cash flow. • Rents at affordable end of scale
Financial collapse of, or dispute with, a key • Monthly review of performance to identify if senior Our key partners are Persimmon PLC, VINCI PLC and Salhia Real Estate K.S.C. of Kuwait. These are joint venture partner leads to financial loss. management intervention is required financially strong partners with good prospects, even in the current economic environment. Where we • Flexible but legally secure contracts with partners have financially weaker partners, we are exiting from these arrangements, meaning that the overall risk has reduced year-on-year.
Availability of funding reduces, causing • Recurring income from rents provides funding Our prudent approach to forward commitments, speculative development and asset disposals has a lack of liquidity that impacts borrowing for ongoing overhead and interest costs enabled us to optimise operational cash flows and to offset the impact of fluctuating market capacity and reduces the saleability • Strong relationships with key banks conditions. Furthermore, we have once again recorded a trading profit in the year, demonstrating our of assets. • Financial headroom maintained to ability to succeed in varying markets. Despite the ongoing sovereign debt issues continuing to restrict 2 provide flexibility 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. Financial Risk • Alternative sources of funding (e.g. retail bond) • Weighted average expiry of bank facilities is Our geared financial structure 3.4 years at November 2012 means that there are inevitable risks attached to the Unforeseen significant changes to cash • Regular and detailed cash flow forecasting Our year end cash position is in line with the guidelines that we set at the start of the year. availability of funding and the flow requirements (e.g. operating cost enables monitoring of performance and management of fluctuations increases, pension fund shortfall) limit the management of future cash flows in our cash flows ability of the business to meet its ongoing commitments.
Failure to value properties fairly, leading to • Independent valuation by external experts and The valuation of our properties is undertaken externally every six months. Our methodologies are lower than anticipated profits/yields. validation by external auditors consistent and cautious, always allowing for future uncertainties and for housebuilder profit on our • Professionally conducted and conservative residential land. property valuation process in our cashflows management offluctuations availability of fundingandthe risks attachedtothe means thatthere are inevitable Our geared financialstructure financial risk 2 development returns to property valuationand increases theriskattached and marketenvironment Uncertainty intheeconomic market risk economic and 1 homes inour residential business. finance adverselyimpactsdemandfor homes orreduced availabilityofmortgage residential sitesreduces oursupplyof Failure toidentifyapipelineoffuture development andcausevaluationfalls. investment yieldsrestrict business reduced availabilityofcredit anddeclining and newproperties (e.g.residential), interest rates,reduced demandforland Market/economic changessuchashigher lower thananticipatedprofits/yields. Failure tovalueproperties fairly, leadingto commitments. ability ofthebusinesstomeetitsongoing increases, pensionfundshortfall)limitthe flow requirements (e.g.operatingcost Unforeseen significantchanges tocash of assets. capacity andreduces thesaleability a lack ofliquiditythatimpactsborrowing Availability offundingreduces, causing joint venture partnerleadstofinancialloss. Financial collapseof,ordisputewith,akey cash flow. tenants results inreduced profitability and Declining rental yieldsand/orlossofkey unprofitable schemes. selection ofinappropriate and,ultimately, anticipate marketchanges)leadsto Poor marketintelligence(i.e.failure to • • • • • • • • • • • • • • • • • • • • • • • • Dedicated centralresourcesupportingregionalteams authority limits (and financially appraised)withinclearlydefined Projects, acquisitionsanddisposalsare reviewed and schemes in order to adapt to market changes Flexibleandinnovativeapproach toacquisitions (e.g. Persimmon) UseofJVpartnerswithresidential expertise (e.g. shared equity schemes) Flexibleapproach tomortgagefinancing of planning applications Extensivelandbankwithacontinuingstream and expertise Team ofprofessionals withresidential experience Hedging policyreduces interest raterisk than market utilisationofassets Activeportfoliomanagementachievesabetter sector orlocation-specificrisks Regionalspread andportfoliodiversitymitigates property valuation process Professionally conductedandconservative auditors validation byexternal expertsand Independentvaluationbyexternal management offuture cashflows enables monitoringofperformanceand Regular and detailed cash flow forecasting 3.4 years atNovember2012 Weighted averageexpiryof bankfacilitiesis sourcesAlternative offunding(e.g.retail bond) provide flexibility Financial headroom maintained to Strong relationships withkeybanks for ongoing overheadandinterest costs Recurring income from rents provides funding Flexible butlegallysecure contractswithpartners management interventionisrequired Monthlyreview ofperformancetoidentifyifsenior Rents ataffordable endofscale Financial checkscarriedoutonnewtenants Diverseandextensiverent roll (over1,700tenants) Regionaloffices intouchwiththeirlocalmarket Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 55 commentary residential land. consistent andcautious,alwaysallowing forfuture uncertainties andforhousebuilderprofit onour The valuationofourproperties everysixmonths.Ourmethodologiesare isundertakenexternally Our yearendcashpositionisinlinewiththeguidelinesthatwesetat thestartofyear. profile byproviding accessto unsecured long-termfunding. general bankfunding,thesuccessfullaunchofourfirst retail bondhasdiversifiedourdebtfinancing ability tosucceedinvaryingmarkets.Despitetheongoingsovereign debtissuescontinuingtorestrict conditions. Furthermore, we haveonceagainrecorded atradingprofit intheyear, demonstrating our enabled ustooptimiseoperationalcashflowsandoffset theimpactoffluctuatingmarket Our prudentapproach toforward commitments,speculativedevelopmentandassetdisposalshas has reduced year-on-year. have financially weaker partners, we are exitingfinancially strong partnerswithgoodprospects, even inthecurrent economicenvironment. from Where we these arrangements, meaning that the overallOur keypartnersare PersimmonPLC,VINCIPLCandSalhiaRealEstateK.S.C.ofKuwait.Theseare risk business confidencemeansthatthere isacontinuinghighriskinthisarea. Our diversetenantbasemitigatesthisriskbutuncertainUKeconomicgrowth prospects andlow source attractiveacquisitions. In thisenvironment, withareduced numberofactive competitors, weexpecttobeablecontinue schemes andgrow thelandbanktorecord levels,eveninthecurrent financially-constrainedclimate. The excellentreputation andfinancialcapacityoftheCompanyhaveenabledustocontinuewin Any progress inthisarea wouldbehelpful. one ofthemainfactorsrestricting thisdemandisthelackofavailabilitynewmortgagefinance. area, althoughindividualschemesmaysuffer delay. Demandfornewhomesremains strong, although planning process. However, ourscaleandexpertisemeansthatweare stillbeingsuccessfulinthis The planningenvironment isbecomingmore difficult withanincreased likelihoodofdelaysinthe that theoverallmarketpositioncontinuestorepresent ahighrisk. Over thecourseoflastyear, thecontinuingsovereign debtproblems withintheEurozone means that economyandproperty market,weare asdiversifiedpossible,withoutventuringoverseas. stable andmature, albeitcyclicaleconomyandproperty market.Byinvolvementwithallsectorsof We choosetooperateonlyintheUK,whichissubjectrelatively lowriskandreturnsfrom a annual reP change since 2011 ort
Additional Information Financial Statements Corporate Governance Business Review Overview 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
Inadequate due diligence on major new • Use and close supervision of a preferred Our programme for the year has been delivered successfully and we have conducted robust schemes leads to unforeseen exposures, supply chain of high quality trusted suppliers processes in selecting contractors for future projects. costs and liabilities, which prevent effective and professionals delivery and result in financial loss. • Projects, acquisitions and disposals are reviewed 3 and financially appraised in detail, with clearly Construction defined authority limits Risk • Contractual liability clearly defined Inadequate construction delivery and • Strong internal construction management team During the year, all of our developments have been completed on time and within budget. The management of procurement leads to quality issues • Clearly defined formal tender process that Our contractor selection processes are rigorous. However, given the economic environment and the developments is a complex and cost overruns causing customer evaluates qualitative and quantitative factors consequentially increased risk of contractor insolvency, we have this year increasingly biased our process dissatisfaction and/or financial damage. in bid assessment contractor selection in favour of financially stable and robust contractors. • Use and close supervision of a preferred supply chain of high quality trusted suppliers and professionals
National Planning Policy Framework • Use of high quality professional advisers Our daily exposure to all aspects of the planning process, and internal procedures for spreading best changes adversely impact on our business • Active involvement in public consultation practice, ensure we remain abreast of most developments. Furthermore, we continue our efforts to strategy by limiting our ability to secure • Constant monitoring of all aspects of the planning influence public policy debate. Although the current fluctuations in proposed planning legislation mean viable permissions and/or by removing process by experienced in-house experts that future rules are uncertain, our expertise should enable us to prosper relative to our competitors, 4 our competitive advantage. whatever the planning environment. • Contacts in place with central and Regulatory and local government Compliance Risk Failure to manage long-term environmental • Use of high quality external advisers We are willing to accept a degree of environmental risk, enabling higher returns to be made. issues relating to brownfield and • Highly qualified internal staff The inherent risks are passed on or minimised where possible but cannot be eliminated, although the Our work is undertaken in a contaminated sites leads to a major • Risk assessments conducted as part of due residual risks have been acceptably low in recent years. complex environment with environmental incident, resulting in financial diligence process consequent compliance risks and/or reputational damage. • Full warranties from professional consultants and remediation contractors • Defined business processes to proactively manage issues
HS&E culture leads to a major incident • Performance indicators are reviewed monthly at Health and safety continues to be a high priority. The assessment of environmental costs (and the (e.g. serious injury to, or death of, an Board level subsequent optimising of remediation solutions) is an integral part of our acquisition and post- employee, client, contractor or member • Use of high quality external HS&E advisers acquisition process. We seek to minimise or pass on any such environmental risks, and believe that of the public) or non-compliance with • Defined business processes to proactively the residual risk remains acceptably low. In other social and ethical areas, our operations are legislation, resulting in financial penalties manage issues underpinned by a simple but rigorous set of operating commitments. and/or reputational damage.
Lack of succession planning and/or over • Succession planning monitored at Board level We continue to offer attractive and competitive remuneration packages as is evidenced by the lack of reliance on key people causes loss of/ and below vacancies. We continue to adapt our recruitment strategy to source the skills that will support the failure to attract good people and/or • Targeted recruitment with competitive, Company’s long-term business objectives. 5 significant disruption/loss of IP. performance-driven remuneration packages Organisational Risk
Our activities require highly skilled and motivated people in order to deliver consistently and effectively HOw wE deliver consistently and effectively and motivated people in order Our activitiesrequire highly skilled to risk organisational 5 consequent compliancerisks complex environment with Our workisundertakenina risk compliance regulatory and 4 process developments isacomplex The managementof risk construction 3 dissatisfaction and/orfinancialdamage. and cost overrunscausingcustomer procurement leadstoqualityissues Inadequate constructiondeliveryand delivery andresult infinancialloss. costs andliabilities,whichprevent effective schemes leadstounforeseen exposures, Inadequate duediligenceonmajornew significant disruption/lossofIP. failure toattractgoodpeople and/or reliance onkeypeoplecauses lossof/ Lack ofsuccessionplanningand/orover and/or reputational damage. legislation, resulting infinancial penalties of the public)ornon-compliancewith employee, client,contractorormember (e.g. serious injuryto,ordeathof,an HS&E culture leadstoamajorincident and/or reputational damage. environmental incident,resulting infinancial contaminated sitesleadstoamajor issues relating tobrownfield and Failure tomanagelong-termenvironmental our competitive advantage. viable permissionsand/orbyremoving strategy bylimitingourabilityto secure changes adverselyimpactonourbusiness National Planning Policy Framework MANAGE OUR • • • • • • • • • • • • • • • • • • • • and professionals supply chain ofhighqualitytrustedsuppliers Useandclosesupervisionofapreferred in bid assessment evaluates qualitativeandquantitativefactors Clearlydefinedformaltenderprocess that Strongconstructionmanagementteam internal Contractualliabilityclearlydefined defined authoritylimits and financiallyappraisedindetail,withclearly Projects, acquisitionsanddisposalsare reviewed and professionals supply chain ofhighqualitytrustedsuppliers Useandclosesupervisionofapreferred performance-driven remuneration packages Targeted recruitment with competitive, and below Succession planning monitored at Board level manage issues Definedbusinessprocesses toproactively HS&Eadvisers Use ofhighqualityexternal Board level Performanceindicatorsare reviewed monthlyat manage issues Definedbusinessprocesses toproactively remediation contractors Fullwarrantiesfrom professional consultantsand diligence process Riskassessmentsconductedaspartofdue staffHighly qualifiedinternal advisers Use ofhighqualityexternal local government Contactsinplacewithcentraland process byexperiencedin-houseexperts Constantmonitoringofallaspectstheplanning Active involvementinpublicconsultation Use ofhighqualityprofessional advisers RISkS
(continued) Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 57 commentary Company’s long-termbusinessobjectives. vacancies. We continueto adapt ourrecruitment strategytosource theskillsthat willsupportthe We continuetooffer attractiveandcompetitiveremuneration packagesasisevidenced bythelackof underpinned byasimplebutrigorous setofoperatingcommitments. the residual riskremains acceptablylow. Inothersocialandethicalareas, ouroperations are acquisition process. We seektominimiseorpassonanysuchenvironmental risks, andbelievethat subsequent optimisingofremediation solutions)isanintegralpartofouracquisitionandpost- Health andsafetycontinuestobeahighpriority. The assessmentofenvironmental costs(and the residual riskshavebeenacceptablylowinrecent years. The inherent risksare passedonorminimisedwhere possiblebutcannotbeeliminated,althoughthe We are willingtoacceptadegree ofenvironmental risk,enablinghigherreturnstobemade. whatever theplanningenvironment. that future rulesare uncertain,ourexpertiseshouldenable ustoprosper relative toourcompetitors, influence publicpolicydebate.Althoughthecurrent fluctuationsin proposed planninglegislationmean practice, ensure weremain abreast ofmostdevelopments.Furthermore, wecontinueourefforts to Our dailyexposure toallaspectsoftheplanningprocess,procedures andinternal forspreading best contractor selectioninfavouroffinanciallystableand robust contractors. consequentially increased riskofcontractorinsolvency, wehavethisyearincreasingly biasedour Our contractor selectionprocesses are rigorous. However, giventheeconomicenvironment and the During theyear, allofourdevelopmentshavebeencompletedontimeandwithinbudget. processes inselectingcontractorsforfuture projects. Our programme fortheyearhasbeendelivered successfullyandwehaveconductedrobust annual reP change since 2011 ort
Additional Information Financial Statements Corporate Governance Business Review Overview 58 St. Modwen Properties PLC Annual Report and Accounts 2012
Corporate so cial 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. Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 59 in recognition of its sustainable design. design. sustainable of its in recognition rating ‘Outstanding’ a BREEAM achieving Modwen and its partners resulted in the facility service workshop, the exacting standards of St. advanced technologically ft sq 85,000 an and space of office sq ft 50,000 Comprising Lincoln. in Pictured: The 135,000 sq ft new facility for Siemens change. environmental and economic social, positive promotes it we of do. what turn, In thrive: essence the is this can environments where businesses and communities brighter and into cleaner, them greener transforming and remediating sites, brownfield Acquiring
Additional Information Financial Statements Corporate Governance Business Review Overview 60 St. Modwen Properties PLC Annual Report and Accounts 2012 Corporate Social Responsibility
Acquiring brownfield sites, remediating and Apprenticeships – Rugby and transforming them into cleaner, greener Longbridge and brighter environments where At both of our sites in Rugby and in businesses and communities can thrive: Longbridge we have built new Colleges – this is the essence of what we do and it Warwickshire College and Bournville brings about job creation, provides new College, respectively. Both offer courses amenities, infrastructure and affordable in construction and to ensure we leave a housing stocks and helps to improve legacy beyond the built environment, we and enhance the environment. In turn, have entered into agreements with both it promotes positive social, economic institutions to appoint a number of local and environmental change. students to work on our sites, learn important skills, gain site experience and As a long-term business with a diverse ultimately employment opportunities. portfolio of assets, it is difficult for us to capture a true picture of the positive In addition to working with schools and differences we make by compiling tables colleges, we work together with Local of annual Corporate Social Responsibility Authorities to promote employment locally. (CSR) targets. Instead, we choose to abide Our partnership with Enfield Borough by a CSR philosophy which is founded on Council to promote their ‘Jobsnet’ via our a commitment to make a positive change Edmonton Green Shopping Centre, an to the economy, socially and to the initiative to help unemployed Enfield environment via our regeneration projects residents back in to work, has been Above: and right across our land bank. running for around five years. It provides Bournville College, Longbridge – CV advice and printing, application form we appoint a number of students to work on our sites as apprentices. ECONOMIC completion and interview techniques, signposting to relevant free training Our network of regional offices means schemes and a job search facility. we can be sensitive to local needs and Through the opening of new shops and understand the economic requirements encouraging new businesses to the area – in any given area. Where possible, we for example Wilkinsons which opened seek to employ local skills on our earlier in 2012 – we encourage the schemes either directly, across our supply employment of local residents via Jobsnet. chain, or by offering construction-related apprenticeships. 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. decrease in crime rates. crime in decrease asteady in resulted has centre town the in investment £100m our –where Manchester Wythenshawe, Top: to train Police dogs. buildings and the surrounding space some of the former Ministry of Defence able tooffer thelocalPolice theuseof At Long Marston, Warwickshire, we were our sites that are awaiting redevelopment. the use ofourbuildingsacross someof through donations but by offering them community groups, not only financially We aimtohelplocalcharities and five years. decreased byaround 20%overthelast for example, crime rates have steadily For example,inWythenshawe,Manchester community inwhichtheyliveand/orwork. and people starttofeelproud ofthe a sense of place, crime rates reduce areas weinstantlyprovide peoplewith run down areas and in transforming these Many ofoursitesare located indeprivedor SOCIAL 2012 Accounts and Report Annual PLC Properties Modwen St. 61
we are developing. we are developing. we create areal heartforthecommunities realm andhowwedeliver it, toensure we giveconsiderablethoughttopublic environment. Byadopting this approach, both the built form and the external a design-led approach tobe takento local developer mentalityandallowing national housebuildersbyassuminga Homes, differentiates itselffrom larger Our ownhousebuildingbrand,St.Modwen a legacy forgenerationsto enjoy. that makecommunitiesproud andleave planning gain,wewantto create places into ourschemes.Beyondsecuring implement theirconstructivesuggestions community andwherever possible, seriously and listen to the views of the local belonging. We takepublic consultation developments thattheycreate asenseof It isfundamentaltothesuccessofour reclaimed forretention onsiteorrecycling Percentage ofdemolitionproducts reused orrecycled Percentage of remediated materials Recycling / reclamation on site reused orrecycled Percentage ofconstructionwaste
elsewhere on site. elsewhere onsite. comprised materialsunfitfor recycling and towncentre buildingswhich dilapidated formerMoD,carmanufacturing direct result ofdemolishingaseries on siteorrecycling (2011:96%). Thisisa demolition products reclaimed forretention a slightdeclineinthepercentage of construction traffic onthe roads. There was and reducing theneedfor heavy on our sites, minimising disposal to landfill waste (2011: 88%)havebeenusedagain (2011: 99%) and90%ofconstruction site: 99% ofremediated materials for recycling andreusing materialson we have achievedsomeexcellentresults minimising wasteproduction. Thisyear consumption ofrawmaterialsand materials, conservingenergy, reducing our materials onsite,usingsustainable We payparticularattentiontorecycling of planningauthorities. to ensure thattheymeettherequirements schemes meettheirhighstandards and the HighwaysAgenciestomakesure our we workcloselywiththeEnvironment and successful withplanninggainisbecause projects. Oneofthereasons whyweare friendly techniquesacross ourbuild most sustainableandenvironmentally We havearesponsibility toemploythe SUSTAINABILITY 2012 Achieved 90% 99% 93% 01Ahee 2010 Achieved 2011 Achieved 96% 9 99% 99% 88% 94% 75%
Additional Information Financial Statements Corporate Governance Business Review Overview 62 St. Modwen Properties PLC Annual Report and Accounts 2012 Corporate Social Responsibility (continued)
Case study, Siemens The new facility comprises 50,000 sq ft The reuse of topsoil locally and arisings Perhaps the best example of St. Modwen’s of office space and an 85,000 sq ft remaining on site further minimised landfill sustainability ethos is our delivery of a new technologically advanced service use. These measures all contributed to the 135,000 sq ft office and workshop facility workshop. It includes the benefits of low development being able to achieve a score for Siemens in Lincoln which was or zero carbon technology with just under of 36 out of 40 under the ‘Considerate completed towards the end of 2012. 9,700 sq ft of photovoltaic solar panels Constructors Scheme’. fitted across the service workshop roof. St. Modwen’s project team took great care A long-standing tenant of St. Modwen Thermal and lighting zoning will further to preserve the natural habitat at the site already located in Lincoln, Siemens’ gas contribute to the annual energy savings and implemented measures for long-term turbine service business decided to at the facility. relocate its operations from four sites to mitigation of biodiversity, including the one facility that would meet its current Situated in one of the driest areas of reintroduction of tree and flower species. business needs and enable future growth. the country, the team carried out careful The site was designed with consideration Our existing relationship with Siemens selection of sanitary appliances with for noise attenuation, so that noise levels meant we were well placed to act as its reduced flush volumes and flow rates only ever rise by five decibels above development partner for the relocation. to save considerable amounts of water. background levels during construction. This was achieved through regular A and A+ Green Guide rated building Together, we concluded that the new noise readings, no out-of-hours deliveries materials were selected and all stone facility must provide the right balance of and liaison with the local Environmental and aggregates used at the facility were viability and aesthetics in building materials, Health Officer. a highly sustainable design and operational sourced from within 30 km of the site. ethic, and high standards of ecological and Supply chain and key process materials St. Modwen and the project team also landscape management. were selected exclusively from devised a plan to promote alternative manufacturers with ISO 14001 EMS modes of transport, including discounted certification, whilst more than 90% of public transport, secure cycle parking and waste generated during construction was car sharing schemes. In line with the diverted from landfill to a specialist waste innovative plan of the building and contractor to sort and recycle. 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. • following two examples: across our land bank are illustrated by the projects thatare takingplaceacross our Some of the interesting environmental this land bank. economic and environmental value to and in doing so bringing cultural, social, and also on any undevelopable acreage spaces bothwithinitsowndevelopments opportunities tomaximisetheuseofgreen bank of over 5,800 acres, there are huge St. Modwenrecognises thatwithaland Trees andopenspaces SUSTAINABILITY (continued) 2012 Accounts and Report Annual PLC Properties Modwen St. 63 already been raised. Hospice, forwhichover£30,000has a tree tosupporttheDouglasMacmillan ‘Community Planting Days’, or dedicate and visitorstoeitherplanttrees on opportunities for the local community this initiative,theTrentham Estateoffers the firstfewmonthsof2013.Aspart during the winter, will continue during 7,000 trees togetintothe ground in November2012andwithanother Sessile Oak Trees. Planting commenced be restored and planted with native Pine Tree Forest, sothatthisarea could included the removal of the commercial commenced inFebruary2012and The first phase of this five-year scheme drive to the west. Foot) Lime Tree Avenues and historic remains ofthePatted’Oie (Goose’s by CapabilityBrown, aswell asthe century parklandlandscapedesigned include revealing boththehidden 18 Parkland and heathland restoration will as a monarch. marks HMTheQueen’s 60years Trust’s JubileeWoods project, which across thecountryinTheWoodland Trent isoneofjust60DiamondWoods within theTrentham Estate,Stoke-on- Stoke-on-Trent –TheNorthPark, DiamondW oods – Trentham Estate, th
• with HillingdonCouncil. one ofitsJubileeWoods inconjunction by theWoodland Trust asthelocationfor our siteatRAFUxbridgewasalsoselected hold toenhancethegreen environment, Demonstrating thepotentialthatoursites more than20,000plantsand 550trees. pedestrian footbridgeovertheriverand feature footpaths,seatingareas, a years and when complete in 2013, will South West Birminghaminthelastfifty This isthefirstpublicparktobebuiltin 100 years. which hasbeenburiedfornearly a 255metre stretch oftheRiverRea Longbridge towncentre andwillfeature Park thatwillbethegreen heartof commenced workonthe£2mAustin Birmingham –We havejust NewAustinPark–Longbridge, the new Austin Park, Longbridge. Park, Austin new the on commenced recently have Works Right: Stoke-on-Trent. Estate, Trentham Park, North the at planting tree Community Left: electricity forover1,200homesperyear. megawatts ofpower, enoughtoprovide photovoltaic panelswhichwillgeneratefive in 2009.TheParkwillhouseover21,000 we havefullyremediated since acquiringit the siteofaBPpetrochemicals plantwhich Baglan BaysiteinSouthWales, formerly acres ofsurpluslandatour 10,050acre first SolarPark.Thiswillbesituatedon30 We are duetostartonsitein2013withour well as the broader environment. the businesses themselves as energy to ourtenantswhichbenefits we cancreate efficient waysofsupplying Also, we continually explore waysinwhich buildings are considered carefully. of reducing theenergydemands ofour At theoutsetofdevelopmentmethods Energy efficiency the future. community projects tosupportin to identify otherenvironmental and its lastyearofoperation.We intend Trust iscomingtoaclose,and2013willbe However, aftersixyearstheEnvironmental the country. was committed toeightprojects across across theUK.In2012,over£65,000 community andenvironmental projects Trust provides valuable support to ENTRUST, the St. Modwen Environmental Credit Schemeandregulated by Affiliated totheGovernment’s Landfill Tax St. ModwenEnvironmental Trust
Additional Information Financial Statements Corporate Governance Business Review Overview 64 St. Modwen Properties PLC Annual Report and Accounts 2012 The Board
Bill Shannon Bill Oliver Michael Dunn Chairman Chief Executive Group Finance Director Appointed to the Board as non-executive Appointed to the Board in January 2000. Appointed to the Board in December 2010. director and Chairman Designate in November Committee Membership Committee Membership 2010 and became Chairman in March 2011. None. None. Committee Membership Experience Experience Chairs the Nomination Committee and is a Has over 30 years’ experience in the property Joined Coopers & Lybrand on graduating before member of the Remuneration Committee. industry with residential and commercial moving to The National Grid Company in 1994. Experience development companies such as Alfred Joined Carillion plc in 1997 and was Finance A 30 year career at Whitbread plc which McAlpine, Barratt and The Rutland Group. Director of Carillion Private Finance and Carillion culminated in his appointment as a main Board Finance Director of Dwyer Estates plc from 1994 Building. Joined St. Modwen in 2010 from May director for 10 years until his retirement in 2004. to 2000. Joined St. Modwen in 2000 as Finance Gurney Integrated Services plc where he spent Former Chairman of AEGON UK plc (previously Director, and was subsequently appointed five years as Group Finance Director. A qualified Scottish Equitable), Gaucho Grill Holdings Ltd Managing Director in 2003 and Chief Executive Chartered Accountant. and Pizza Hut (UK) Ltd, and former non- in 2004. A qualified Chartered Accountant. 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).
Steve Burke David Garman Construction Director Senior Independent Director Appointed to the Board in November 2006. Appointed to the Board in April 2010 Committee Membership and became Senior Independent Director None. in April 2011. Experience Committee Membership Joined St. Modwen in 1995 as a Contracts Member of the Audit, Remuneration Surveyor after a number of years’ construction and Nomination Committees. experience in senior roles with national Experience contracting companies including Balfour Beatty Chief Executive of the Allied Bakeries subsidiary and Clarke Construction. Appointed of Associated British Foods plc from 1993 to Construction Director in 1998 and joined 1999 and TDG plc from 1999 to 2008. Former the Board as a director in 2006. 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. Personnel andDevelopment. Companion ofthe Chartered Instituteof non-executive director ofAnchorTrust. A Former Trustee of the charity I CAN. Currentlyand a the West Bromwich Building Society. Group plc, Inspicio plc, Liberty International plc companies includingCare UKplc,AlphaAirports non-executive director foranumberof and amainBoard director from 1994.Former HR Director for Tesco plc from 1985 to 1999 Experience Nomination Committees. and is a member oftheAuditand Chairs the Remuneration Committee Committee Membership Appointed totheBoard inOctober2009. Independent non-executivedirector lESlE 2012 Accounts and Report Annual PLC Properties Modwen St. 65 of Chartered Surveyors. Limited. AmemberoftheRoyalInstitution non-executive director of New River Retail until leaving the group in 2011. Currently a Also served as a main Board director from 2005 Director, during a career spanning 27 years. management positions, including Managing on graduating andheldanumberofsenior Joined Capital Shopping Centres Group plc Experience Remuneration Committees. Member oftheAuditand Committee Membership Appointed totheBoard inOctober2012. Independent non-executivedirector k ay ChalDECott y JaMES,CBE
Foundation. Aqualified Chartered Accountant. and CouncilMemberoftheBritishHeart PwC’s Supervisory Board. Currently a Trustee A former member andDeputyChairman of companies until his retirement in 2005. responsibility forarangeofmajorlisted PricewaterhouseCoopers LLPwithlead in 1976 andwasaseniorclientpartnerat Admitted to partnership of Price Waterhouse Experience of the RemunerationCommittee. Chairs theAuditCommitteeandisamember Committee Membership Appointed totheBoard inOctober2005. Independent non-executivedirector John SalM largest shareholders, ontheBoard. Clarke andLeavesleyfamilies,theCompany’s Modwen, and represents the interests of the Clarke, founder and former Chairman of St. of Dunstall Holdings Ltd. The son of Sir Stanley Racecourse AssociationLtd.Currently Chairman and director and Vice-Chairman of The Former Deputy Chairman of Northern Racing plc Experience None. Committee Membership Appointed totheBoard inOctober2004. Non-executive director SiM on ClarkE
on
and Administrators. of the InstituteofChartered Secretaries and Head of Secretarial Department. A Fellow where she was Deputy Company Secretary Travis Perkins plc and, most recently, GKNcompanies plc including Taylor Woodrow plc, Secretary roles inanumberofFTSElisted in March 2012. Has held senior Company Joined St. Modwen as Company Secretary Company Secretary t The Go-Ahead Group plc. Group plcandanon-executivedirector of Currently Senior Independent Director of TribalChairman of Shed Media plc and Victoria plc. plcandOrdnance Survey.Wimpey Former GroupFibernet plc,GyrusGroup plc,Taylor ITVDigital plc, The Television Corporation plc, Benson. Formernon-executivedirector of both SBCWarburg andDresdner Kleinwort Has helddirector roles asamediaanalystwith Experience Remuneration Committees. Member oftheAuditand Committee Membership Appointed totheBoard inOctober2009. Independent non-executivedirector k anya StotE ath E rinE i
nnES
kEr
Additional Information Financial Statements Corporate Governance Business Review Overview 66 St. Modwen Properties PLC Annual Report and Accounts 2012 Regional Directors
john dodds FRICS guy gusterson MBA MIKE HERBERT Regional Director – Residential Director Regional Director – Midlands The Trentham Estate
rupert joseland MRICS STEPHEN PROSSER MRICS TIM SEDDON MRICS Regional Director – Regional Director – Regional Director – South West and South Wales North London and South East
rupert wood MRICS Regional Director – Northern Home Counties appointment of Kay Chaldecott as a appointment ofKay Chaldecottasa property expertise on the Board by the on page 19, we have deepened further the As reported inmyChairman’s statement of the Company over the longer term. safeguarded andtosustainthesuccess that shareholders’ interests are kept under close review in order to ensure frameworkis business, ourgovernance In linewiththedevelopmentofour in fullwiththeCode. during 2012,theCompanynowcomplies the AuditandRemunerationCommittees that, followingachangetomembershipof with shareholders. Iampleasedtoreport accountability, remuneration andrelations namely leadership, effectiveness, Corporate Governance Code (the Code), principles of the five sections of the UK we integrateintoourbusinessthemain the following report, which describes how Our approachisoutlinedin togovernance across relationships withourstakeholders. reputation withinourmarketplace and business performanceaswellour We enhances believegoodgovernance of corporate governance across the Group. committed tomaintaininghighstandards stewardship of the business and are As a Board, we are responsible for the C 2012 Accounts and Report Annual PLC Properties Modwen St. 67 Corporate Governance Report Corporate Governance Bill Shannon hairM an’S ovE rvi , Chairman Ew Chairman Bill Shannon during 2013. continue todevelopandstrengthen governance and I expect that this will made in respect of our approach to pleased withtheprogress thathasbeen In mysecondyearasChairmanIam in nextyear’s report. results ofthisassessmentwillbedisclosed finalised andtherefore anupdateonthe review are beinganalysedasthisreport is best itcandevelop.Theresults ofthis impact and contribution and consider how question theBoard’s approach, assess its provide them with an opportunity to the normalbusinessofBoard and encourage thedirectors to step backfrom December. The review was designed to conducted betweenOctoberand Board anditsCommittees, whichwas review external oftheeffectiveness ofthe 2012 I commissionedanindependent sector spanning27years.InSeptember following a career intheUK retail property non-executive director, whojoinsus
Additional Information Financial Statements Corporate Governance Business Review Overview 68 St. Modwen Properties PLC Annual Report and Accounts 2012 Corporate Governance Report (continued)
LEADERSHIP Allocation of time spent at What is the Board’s role? Board meetings in 2011/2012 Q: % The Board’s role is to provide leadership of the Company and direction for A: management. It is collectively responsible and accountable to shareholders for the long-term success of the Company. It sets the strategy and reviews performance, 10 ensuring that only acceptable risks are taken and the appropriate resources are in 30 place to deliver the strategy. 30 Q: What responsibilities does the Board have? A formal schedule of matters specifically reserved for Board approval has A: been adopted by the Board. Principal matters reserved for authorisation by 30 the Board include: Strategy • long-term strategy, both commercial and financial; Operations • annual operating and capital budgets; Finance & risk Governance • 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. Q: How does the Board carry out its responsibilities? The Board discharges its responsibilities through an annual programme of Board A: 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. Q: What is the Chairman’s role? As Chairman, Bill Shannon’s role is to lead the Board. He is responsible for ensuring A: 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). A: Q: A: Q: A: Q: 2012 Accounts and Report Annual PLC Properties Modwen St. 69 responsibilities toanumberof standingCommittees: Subject tothosemattersreserved foritsdecision,theBoard delegatescertain Group FinanceDirector, andSteveBurke,ConstructionDirector. In carryingouthisresponsibilities, theChiefExecutiveisassistedbyMichaelDunn, • • • • • implementation ofstrategyandpoliciesapproved bytheBoard. Inparticularhe: Bill Oliverhasdaytomanagementresponsibility fortheGroup andforthe plc, aFTSEAIMlistedcompany. Yes, BillShannoniscurrently anon-executivedirector ofJohnsonServiceGroup and regulatory requirements andbestpracticeguidance. reviewed periodically to ensure that they continuehas writtentermsofreference whichhavebeenapproved bytheBoard andare to comply with the latest legal Membership oftheCommitteesissetoutonpages64 non-executive directors) (comprising independent Remuneration Committee directors) independent non-executive (comprising theChairmanand Nomination Committee non-executive directors) (comprising independent Audit Committee Committee What are theCommittees oftheBoard andwhatdotheydo? What istheChiefExecutive’s role? Does theChairmanholdanyotherappointments? r r remuneration oftheexecutivedirectors. provides inputtotheRemunerationCommitteeonpolicyfor delegated bytheBoard; approves property acquisitionsanddisposalsinaccordance withauthoritylevels strategy oftheCompany; develops andpr eviews andreports totheBoard onoperationalperformance; and ecommends totheBoard annualoperatingandcapitalbudgets; esents to the Board the long-term commercial and financial
Role 81 to94. r incentive schemes.t and designstheCompany’s share and seniormanagementremuneration the Group’s generalpolicyonexecutive Determines andagrees with theBoard the yearisgivenonpages79 the Group. a planning againsttheleadershipneedsof experience and reviews succession an appropriate mixofskills and Committee appointmentswhichensure r the yearisgivenonpages76to78. systems. a control risk managementandinternal portfolio and assesses the Company’s external valuations of the property reporting andauditprocesses, reviews Monitors theintegrityoffinancial emuneration report is set out on pages ecommends Board andBoard report on its activities during report onitsactivitiesduring report on its activities during report onitsactivitiesduring and Each Committee 65. EachCommittee he Directors’ he Directors’ and 80.
Additional Information Financial Statements Corporate Governance Business Review Overview 70 St. Modwen Properties PLC Annual Report and Accounts 2012 Corporate Governance Report (continued)
LEADERSHIP continued How many Board and Committee meetings did directors attend in Q: 2011/12?
Details of Board and Committee attendances by all directors who held office during A: the year are set out below 1: Audit Remuneration Nomination Director Main Board Committee Committee Committee Bill Shannon (Chairman) 10/10 – 5/5 3/3 Bill Oliver (Chief 10/10 – – – Executive) Michael Dunn (Group 10/10 – – – Finance Director) Steve Burke 10/10 – – – (Construction Director) Kay Chaldecott (NED) 2/2 – – – Simon Clarke (NED) 2 8/10 1/1 2/2 0/1 David Garman (Senior 10/10 3/3 5/5 3/3 Independent Director) Katherine Innes Ker 9/10 3/3 5/5 1/1 (NED) 3 Lesley James (NED) 10/10 3/3 5/5 3/3 John Salmon (NED) 10/10 3/3 5/5 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. A: Q: A: Q: A: Q: EFFECtivEn 2012 Accounts and Report Annual PLC Properties Modwen 71 St. Committee report onpages79 process followedinrespect ofthisappointmentcanbefoundintheNomination asked toelecthertheBoard atthe2013AGM.Furtherinformationon In accordance withtheCompany’s ArticlesofAssociation,shareholders willbe property sectorenablinghertobringadditionalindustryexpertisetheBoard. in October 2012. She has a long and distinguished the yearwithappointmentofKayChaldecottasanon-executive director career in the UK retail Board composition continues to develop and was further strengthened during As at30 “Women on Boards” published in Februaryon theBoard whichisahead of the25%targetoutlinedbyLord Daviesinhisreport 2011. regard togenderdiversity, theCompanycurrently has30%femalerepresentation the benefitsthatitcanbringtobothBoardWith andthroughout thebusiness. The Board acknowledgesthe importanceofdiversityinallformsandrecognises election inaccordance withtheprovisions oftheCode. Ker andDavidGarmanwhobothretire attheconclusion oftheAGM,willseekre- Chaldecott totheBoard. Allotherdirectors, withtheexception ofKatherineInnes Company’s ArticlesofAssociation,shareholders willbeaskedtoelectKay At the2013AnnualGeneralMeeting(AGM),andinaccordance withthe of all directors are given on pages 64(including genderdiversity)are representedand ontheBoard. Biographicaldetails 65. Independence andabroad rangeofskills,experience,knowledgeanddiversity relationship orcircumstance likelytoaffect thejudgementofanydirector. that allofthenon-executivedirectors are independentand isnotaware ofany theexceptionofSimonClarke,Board considers including theChairman.With The Board currently comprisesthree executiveandsevennon-executivedirectors, How hasmembershipoftheBoard changedduringtheyear? p p level Board Below w w w w level Board At What istheBoard’s viewongenderdiversity? What istheprofile oftheBoard? ercentage ofwomeninthe organisation: ercentage ofwomeninsenior executivepositions: omen non-executive directors (including the Chairman): omen non-executivedirectors (includingtheChairman): omen executivedir omen Chairs(Boar omen holdingdir th November2012genderdiversitywasasfollows: ESS ectorships: d and Committees): ectors: to 80. Number (%) 3 (30%) 3 (50%) 1 (25%) 0 (0%) 45% 13 (%) % Skills Directors’ independence Board gendersplit Non-independent Independent Women Men HR Operations Finance 4 3 1 7 2 7 6
Additional Information Financial Statements Corporate Governance Business Review Overview 72 St. Modwen Properties PLC Annual Report and Accounts 2012 Corporate Governance Report (continued)
effectiveness continued Board turnover / refreshment % Q: Are any further changes to Board composition anticipated? As announced on 29th January 2013 Katherine Innes Ker, an independent non- A: executive director, and David Garman, the Senior Independent Director, will retire 20 20 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: What is the induction process for new directors? The Chairman, assisted by the Company Secretary, is responsible for the induction 10 A: 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 2010 2011 2012 the opportunity to meet newly appointed directors should they express a desire to do so. Tenure of directors as at What arrangements are in place for director training and development? 30th November 2012 Q: Years The Company is committed to the continuing development of directors in A: 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. 1 Training and development needs are discussed with each director by the 2 Chairman as part of the individual performance evaluation process and kept under 4 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 3 specialisms is also encouraged. Less than 3 3–6 Can the directors seek independent professional advice? Q: 7–9 More than 9 In addition to having direct access to the advice and services of the Company A: Secretary, all directors are able to seek independent professional advice in the course of their professional duties at the Company’s expense. Q: 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 A: 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. A: Q: A: Q: A: Q: aCCountaB A: Q: EFFECtivEn 2012 Accounts and Report Annual PLC Properties Modwen St. 73 whistleblowing, healthandsafety, employment andIT. are inplacecoveringall elementsofbriberyandanti-corruption, fraud prevention, matters, thatare reserved forBoard approval. Formalpoliciesandprocedures of matters,includingmajorinvestmentanddevelopmentdecisions andstrategic construction activity, contractsandcommitmentstogetherwithaformalschedule expenditure, purchases andsalesofdevelopmentinvestmentproperties, performance. There are clearly defined basis, includingexplanationsofanyvariancesbetweenactualand budgeted procedures for the authorisation of capitalreviewed bytheBoard andrevised forecasts for theyearare prepared onaregular committed expenditure againstavailablefacilities.Detailedannualbudgetsare development progress reviews, managementaccountsandacomparisonof reporting totheBoard onallactivitiesthrough detailedportfolioanalysis,property control The riskmanagementandinternal systemincludescomprehensive monthly material misstatementorloss. eliminate suchriskandcanonlyprovide reasonable, notabsolute,assuranceagainst effect of the risk of failure to achieveare designedtoidentify, business manageand,where practicable,reduce andmitigatethe objectives. They are not designedthe AuditCommittee.St.Modwen’s control riskmanagementandinternal systems to approach toriskmanagement issupportedbyanoversightstructure whichincludes process andcontrols ofanoperationalandcompliancenature. TheBoard’s systems also include financial controls,Company’s controls abilitytomanageriskinaneffective andappropriate manner. These in respect of the financial controlinternal systems.Itspolicyistohavesystemsinplacewhichoptimisethe reporting The Board isultimatelyresponsible formaintainingsoundriskmanagementand and strategy. necessary for shareholders to assess thetaken asawhole,isfair, Company’s balancedandunderstandableprovides theinformation performance, business TheBoardmodelconcern. considersthatthe2011/12AnnualReportandAccounts, As set out on page 97, the directors areon page99includesastatementbyDeloitteabouttheirreporting responsibilities. of the opinion that the Company is apreparation oftheAnnualReport are setoutonpage98andtheauditor’sgoing report sections ofthisAnnualReport.Theresponsibilities ofthedirectors inrespect ofthe for theyearended30 and information required to be presented by statutory requirements. The assessment year ReportandAccounts,otherpricesensitivepublicreports, reports toregulators assisted inthisbytheAuditCommittee.Thisresponsibility coverstheannualandhalf understandable assessmentoftheCompany’s positionandprospects andis When reporting toshareholders theBoard aimstopresent afair, balancedand complement oneanothertoenhancetheoveralloperationofBoard. to demonstratecommitmenttheirrespective roles and thattheirrespective skills that theperformanceofeachdirector continuestobeeffective, thattheycontinue considered necessaryasaresult oftheseevaluationsand theChairmanconfirms which tookintoaccounttheviewsofexecutivedirectors. Noactionswere led thereview bythenon-executivedirectors oftheChairman’s performance, discussions withtheChairman.DavidGarman,asSeniorIndependentDirector, The individualperformanceofthedirectors isevaluatedthrough one-to-one What are theCompany’s controls? keyinternal What istheBoard’s responsibility formanagingrisk? What istheBoard’s approach tofinancialandbusiness reporting? How istheperformanceofdirectors assessed? ESS C ility ontinuED th November 2012 is provided in the Business Review
Additional Information Financial Statements Corporate Governance Business Review Overview 74 St. Modwen Properties PLC Annual Report and Accounts 2012 Corporate Governance Report (continued)
Accountability continued Q: Is there an internal audit function? Yes, the Company has a full time Internal Audit Manager. During the year, the A: 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 Q: systems are effective?
The Audit Committee is responsible for reviewing the ongoing control process. A: 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. Throughout thefinancialyearended30 on its websiteatwww.frc.org.uk in 2011/12. TheCodeispublishedbytheFinancialReportingCouncil andisavailable description ofhowthemainprinciplesCodehavebeenapplied bySt.Modwen Nomination Committeereport andtheDirectors’ RemunerationReport,provide a statement,togetherwiththeAuditCommitteereport,This CorporateGovernance the CoM A: Q: A: Q: A: Q: rE 2012 Accounts and Report Annual PLC Properties Modwen 75 St. step downfrom bothCommitteeswitheffect from 23 groups inrelation toSimon’s Committeemembership,theBoard agreed thatheshould the Company’s issuedshare capital.Notingfeedbackreceived from institutionalinvestor interests oftheClarkeandLeavesleyfamilies,whotogetherholdapproximately 21.4%of non-executive director withinthemeaningofCodegiventhatherepresents the the AuditandRemunerationCommitteesbutwasnotregarded asanindependent directors. Asnotedinthe2010/11AnnualReport,SimonClarkewasamemberofboth Remuneration Committeesrespectively shouldcompriseindependentnon-executive provisions C.3.1andD.2.1whichrequire thatmembershipoftheAuditand compliance withtherelevant provisions setoutintheCodewithexceptionof entitled Other Governance andStatutoryInformation. entitled OtherGovernance information required tobedisclosedby sub-section2.6ofRule7isshown inthesection of theDisclosure RulesandTransparency RulesoftheFinancialServicesAuthority. The This statementcomplieswithsub-sections 2.1,2.2(1),2.3(1),2.5,2.7and2.10ofRule7 Company hasbeenincompliance withprovisions C.3.1and D.2.1. lationS 2013 AGMcanbefoundonpages151to157. on theCompany’s website,www.stmodwen.co.uk. Thenoticeofmeetingforthe matters puttothemeeting.Theresults ofvotingatgeneralmeetingsare published proposed andtoquestionthe Board andtheChairsofBoard Committeeson The AGMprovides anopportunity forallshareholders tovoteontheresolutions werethe year noinvestorconcerns raised. available to discuss any issues or concernsthroughout that shareholders the year. may The have. Chairman During and The ChiefExecutiveandGroup FinanceDirector are availabletomeetshareholders Senior Independent Director are also the Board through theCompanySecretary. Private shareholders are encouragedtogivefeedbackandcommunicatewith investor representatives todiscussmattersrelating tostrategyandgovernance. banks. TheChairmanisavailabletomeetwithinstitutionalshareholders and were alsoheldandtheCompany hadregular dialoguewithitskeyrelationship Meetings withprincipalshareholders, includingtheClarkeandLeavesleyfamilies, residential developmentbusinessandatouroftheLongbridgesiteinBirmingham. and analystswhichincludedpresentations oncurrent trading, theCompany’s statements. In2012theCompanyheldaninvestordayforinstitutionalinvestors Company’s websiteatwww.stmodwen.co.uk togetherwithinterimmanagement analysts andthemedia.Copiesofthesepresentations are publishedonthe given infacetomeetingsandconference callswithinstitutionalinvestors, As partoftheprogramme, presentations onthehalfyear andannualresults are major investors. the Board toensure thattheydevelopanunderstanding oftheCompany’s and debt investors. Feedback from the programmeshareholders (whichmakeupthemajorityofshareholders), privateshareholders of events is provided to understanding of St. Modwen. The programme to provide existingandpotentialinvestorswithameansofdevelopingtheir is split between institutional The Board hasacomprehensive investorrelations programme whichaims plianCE S What isthepurposeofAGM? To whomdoshareholders address anyconcerns? How doestheBoard engagewithshareholders? withS tat harE EMEnt EMEnt holDErS th November 2012, St. Modwen was in November2012,St.Modwenwasin rd April 2012. Since then the April2012.Sincethenthe
Additional Information Financial Statements Corporate Governance Business Review Overview 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 Audit Committee Position John Salmon Chairman Kay Chaldecott Member (with effect from 17th December 2012) David Garman Member Katherine Innes Ker Member Lesley James 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. • • • • audit Internal • • • • • controlRisk managementandinternal • • • • • Financial reporting are set outbelow. Matters formallyreviewed anddiscussedbytheCommitteeduringfinancialyear auditor. AuditManagerandexternal occasions heldprivatesessionswiththeInternal The Committee also met without any executive management present and on twoSecretary attendedmeetingsoftheCommitteebyinvitation. engagement partnerandotherrepresentatives from DeloitteLLPandtheCompany Construction Director, Group FinancialController, AuditManager, Internal theaudit is set outinthetableonpage70.TheChairmanofBoard, Group FinanceDirector, The Committeemetonthree occasionsin2011/12;members’attendanceatmeetings CoMMittEE’S 2012 Accounts and Report Annual PLC Properties Modwen St. 77 and standards audit. andperformanceforinternal accountability andindependence,authority, responsibilities, scopeofwork, r processes andcontrols, includingcoverageandallocationofresource; and consideringandapprovingauditprogramme theinternal ofreviews oftheGroup’s assessing implementationstatusreportsauditrecommendations; oninternal receiving audit; updatesontheactivitiesofinternal approval ofaformalpolicy onfraudprevention. considering reports onthe Group’s taxcomplianceposition;and receiving anannualreport control; oninternal reviewing theGroup’s riskregister, includingappropriate mitigatingactions; receiving updatesoncorporate riskassessmentmanagementactivities; annual results. consideringreports prepared auditoronthehalfyearand bytheexternal review;a goingconcern and and those arisingfrom changes intheproperty market; which detailedmovementsresulting from activitiesundertakenbytheCompany r payment accounting; investments from theCompany’s previous jointventure partner, andshare-based redevelop RAFUxbridge,the acquisitionoffullownershiptheSowcrest andHolaw judgements. ParticularconsiderationwasgiventotheProject MoDELcontractto consideringthecontinuingappropriateness ofaccountingpoliciesandkey the Company’s performance,businessmodelandstrategy; understandable andprovides theinformationnecessaryforshareholders toassess the 2011/12 AnnualReportandAccounts,takenasawhole,isfair, balancedand Following itsreview, theCommitteehasadvisedBoard thatitisofthe viewthat annual results, commentaryandannouncementstogetherwiththeAnnualReport. monitoringthefinancial reporting process, includingthe review ofthehalfyearand eviewing the Group Internal Audit Charter which sets out the objectives, eviewing theGroupAuditCharterwhichsetsoutobjectives, Internal eceiving independentproperty valuationreports prepared byJonesLangLaSalle aCtivitiES % in 2011/2012 Audit Committeemeetings Allocation oftimespentat 5. 4. control &internal 3. 2. 1. 15 Financial Financial reporting Valuation External audit External Internal Internal audit Risk management 15 15 20 35
Additional Information Financial Statements Corporate Governance Business Review Overview 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. following areview ofCommittee composition;SimoncontinuestoattendmeetingsoftheCommitteeasanobserver. on page 80; thefirmhasnootherconnectionwithCompany. candidates forappointmenttotheBoard. During2011/12TheZygosPartnershipwasretained bytheCommitteeas outlined From time to time the Committee appoints external search consultants to provideaDviCE proviDEDtothE support in recruiting and selecting potential The Committee’s termsofreference are availableontheCompany’s websiteatwww.stmodwen.co.uk conclusion of hisorherspecifiedtermofoffice. both onthecompositionofAuditandRemunerationCommitteesre-appointment ofanynon-executivedirector atthe independence anddiversityofskills,knowledge,experiencegenderontheBoard. Italsomakesrecommendations totheBoard retirement andappointmentofBoard members)andmakingappropriate recommendations toensure there are suitablelevelsof The Committeeisresponsible forreviewing thestructure, sizeandcomposition of theBoard, successionplanning(includingthe r Simon Clarke,KatherineInnesKerandJohnSalmonwere membersoftheCommitteeuntil25 Senior IndependentDirector chairstheCommittee. Bill ShannonchairstheCommitteeexceptwhenisdealingwithappointmentofasuccessorasChairman the l David Garman Bill Shannon Director The Committeecomprisesthefollowingdirectors, allofwhomservedthroughout thefinancialyear: CoMMittEE MEMBErS 2012 Accounts and Report Annual PLC Properties Modwen St. 79 Nomination CommitteeReport esley James olE oF thE CoMMittEE hip CoMMittEE Bill S Committee Chairman oftheNomination hannon Nomination Committee Position Chairman Member Member th June 2012 when they stood down June2012whentheystooddown
Additional Information Financial Statements Corporate Governance Business Review Overview 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 %
10
20
70
Board composition Succession planning Effectiveness ended 30 I ampleasedtopresent theReportonDirectors’ Remuneration. Thissetsouttheremuneration paidtothedirectors inthefinancialyear ChairM 2012 Accounts and Report Annual PLC Properties Modwen 81 St. 4 Chairman oftheRemunerationCommittee Lesley James On behalfoftheBoard We lookforward tohearingyourviewsinthefuture andhopetoreceive yourcontinuedsupportattheAGM. 2012/13 remain largelyunchangedfrom thoseappliedin2011/12. AGM (99%infavour)andtheCommitteeisproposing thattheremuneration policyandstructure oftheincentivearrangementsfor shareholders. We were pleasedtoseethevastmajorityofourshareholders supportingourDirectors’ RemunerationReportatthe2012 the current economicenvironment, ishelpingtoretain andmotivateourmanagementteamishelpingtodrivestrong returnsforour We believethattheremuneration policyandincentiveframeworkcurrently inplaceisworkingwelltosupporttheCompany’s strategyin Remuneration policyfor2012/13 Estate IndexwilllapseastheCompanyunderperformed overtheperiod. performance period, awards will vest at 45.89%. Thethe sameperformanceconditionsas2009awards. To portion reflect theabsolutegrowth inNAV pershare of27.53%overthethree year of the award dependent on TSR performance relative to FTSE 350 Real The performanceperiodforthe2010PerformanceShare Planawards endedon30 Unfortunately, theCompanyunderperformedIndexoverthisperiodresulting inthisportionoftheaward lapsing. award wasdependenton the Company’s Total Shareholder(TSR)performancerelative Return totheFTSE350RealEstateIndex. period todeliverfullvesting.Overtherelevant periodgrowth was18.25%resulting inthe45.64%vestinglevel.Theremainder ofthe 45.64%. 50%ofthisaward wasbasedonabsolutegrowth inNAV pershare, witharequirement of20%growth overthethree year During theyear2009PerformanceShare Planawards (measuringperformancefrom 1 2011/12 awarded toeach executive director was112.5%ofbasesalary(2010/11:betweenand118.75%). performance, alignedwithcorporateperformancethatwasaheadofbudgetandmarketexpectations,theannualbonuspayout for In 2011/12, the executive directors had the opportunityRemuneration in2011/12 to earn a bonus of up to 125% of base salary. As a result of strongconsiderable andconsistentefforts ofeachemployee,includingtheexecutivedirectors. individual the yearto 251panda10%increase individendsto3.63ppershare. Theseresults wouldnothavebeenpossiblewithoutthe in LondonandtheSouthEasthashelpedustodeliveranincrease inshareholders’ equitynetassetvalue(NAV) pershare of8%over strategy andbusinessmodel.Ourgrowing exposure toresidential development and ourabilitytotakeadvantageoftheresilient market Review, theresults fortheyearended30 Despite thechallengingeconomicclimate,2011/12hasbeenanotherstrong yearforSt.Modwen.AsdescribedintheBusiness includes thissummarystatement)whichtheCommitteehopesyouwillfindhelpfulandinformative. requirements earlyinadvanceoftheformalregulations comingintoforce. Thereport therefore followsanewstructure thisyear(and The RemunerationCommittee(theCommittee)endorses,inprinciple,theBISproposals andhasagreed toadoptsomeofthekey reforms inremuneration practice.Theseproposals changethewaythatwewill berequired toreport toyouondirectors’ remuneration. Government’s DepartmentforBusinessInnovation&Skills(BIS)responded byannouncingafarreaching programme oflegislative The focusonexecutivepayoverthelast12monthshasincreased tounprecedented levels.Inthefirsthalfof2012UK Directors’ RemunerationReport th February2013 th November2012andthepolicyforforthcomingyear. an’S SuMMary StatEMEnt th November2012demonstratethestrength oftheCompanyandrobustness of its l Chairman oftheRemunerationCommittee ESlE y Ja MES th November2012.Theseawards were subjectto st June2009to31 st May 2012) vested at May2012)vestedat
Additional Information Financial Statements Corporate Governance Business Review Overview 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. Element The tablebelowsummarisesour2012/13remuneration policythatwillapplyforthefinancialyearcommencing1 Remuneration policyforexecutivedirectors –ataglance 2012 Accounts and Report Annual PLC Properties Modwen St. 83 Base salary Annual bonus to strategy &link Purpose • • • • • • • T T T
Corporate To incentivise T time experience over development and appropriate skills, market to the external salaries relative competitive duties required for therole and calibre individuals and motivatehigh shares investment in through shareholders Alignment with strategic plan the budgetand and complement are consistentwith measures selected personal levels at Companyand strategic measures operational and of financial, annual delivery targets performance to annual incentive linked and direct o reflect o reflect o provide market o attract,retain o provide a clear o provide aclear
Operation • • • • • • •
T
Clawback
effective 1 Reviewed annually performance individual relativities and including internal relevant factors market andother the external December years be heldforthree shares whichmust bonus investedin One third ofnet provisions apply Non-pensionable performance reflect corporate ensure payouts discretion to Committee against targets performance based on the yearend Committee after determined bythe Bonus levelis akes account of akes accountof st
potential value Maximum • •
employees Group’s increases forthe general levelof will notexceedthe annual increases realignment, salaries require indicates individual benchmarking roles orwhere director changes an executive Other thanwhen directors directors all executive 125% ofsalaryfor
• Performance targets Changes for 2012/13 for Changes targets Performance • • • • •
Gearing
N/A Growth individend share Growth inNAV per before alltax Growth inprofit Personal targets acceptable level maintained at
st December2012. • • • • •
£301,522 from £294,168to Director: increase Construction £274,495 £267,800 to FD: increase from £456,978 from £445,832to CEO: increase employees Group’s increases forthe 2.5% inlinewith No change
Additional Information Financial Statements Corporate Governance Business Review Overview 84 St. Modwen Properties PLC Annual Report and Accounts 2012 Directors’ Remuneration Report (continued)
Purpose & link Maximum Element to strategy Operation potential value Performance targets Changes for 2012/13 Long-term • Performance • Annual award of • Awards over • Performance • No change incentives Share Plan aligned performance shares worth measured over to key strategic shares 125% of salary three years objective of • Committee for all executive • Performance delivering strong discretion to directors targets based on returns to ensure payouts relative and shareholders and reflect corporate absolute TSR sustained, performance targets long–term performance • Clawback provisions apply • Executive directors also eligible to participate in the Company’s SAYE scheme on the same terms as other employees Pension • To help attract and • Choice of • Employer • N/A • No change retain high calibre Company contribution of individuals contribution to the 15% of base salary • To provide market defined for all executive consistent contribution directors retirement benefits scheme or cash supplement Other benefits • To help attract and • Provision of private • N/A • N/A • No change retain high calibre medical insurance individuals • Company car/fuel • Non-pensionable
Share ownership • To provide • Executive directors • Shareholding of • N/A • No change guidelines alignment between are expected to 100% of base executive directors build up a salary for all and shareholders shareholding worth executive directors 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. independently verified. The TSRdataandSt.Modwen’s relative positioningisobtainedfrom JPMorganCazenovetoensure thatperformanceis is notimpactedbypotentialvolatilityarisingfrom day-to-dayshare pricefluctuations. In calculatingTSR,athree monthaverageisusedatboththestartandendofperformance periodtoensure thatthecalculation between thesepoints. 12.5%ofthesharesearn awarded 50%oftheshares andTSRof120%theIndexwillearn awarded, withstraight linevesting performance, TSR equal to the FTSE All-Share Realawarded andgrowth50%oftheshares of50%willearn awarded,Estate withstraightlinevestingbetweenthesepoints.Forrelative TSR Investment & Services Index over the threeIn respect ofabsoluteTSRperformance,growth overthethree12.5% oftheshares yearperformanceperiodof20%willearn year performance period will the interests ofshareholders andcomplementsthefocusonoperationalperformancemeasures intheannualbonusplan. relative performanceand50%basedonabsolutegrowth. TheCommitteebelievesthatthiscombinationprovides strong alignmentwith Awards are subject whollytoTSR-related performance targetsmeasured overthree financialyears, with50%oftheaward based on In 2012/13,PSPawards granted totheexecutivedirectors willbeovershares worth 125%ofsalary. Long-term incentives–PerformanceSharePlan(PSP) audited informationwhere appropriate, andhavingregard tothevaluewhichhasbeencreated forshareholders. The executivedirectors’ performance willbeassessedindividuallybytheCommitteeagainstmeasures andtargets,relying on a singleelement. importance totheshortandlonger-term healthoftheCompanyandCommitteedoesnotwishtodistortbehaviourbyfocusingon Payment ofbonuswillnotbedependentonachievementanysingletargetinisolation,sincethemeasures andtargetsare allofkey • • • • • The structure ofthebonus plan isconsistentwiththestructure operatedintheprevious year: In 2012/13,theexecutivedirectorsabonusofupto125%basesalary. willhavetheopportunitytoearn Annual bonus Michael Dunn Steve Burke Bill o director Executive 2.5% witheffect from 1 In linewiththeaveragesalaryincrease awarded tothe Group’s employees,theexecutivedirectors received anannual salaryincrease of ontheupwardmindful ofinstitutionalinvestors’concerns ratchetbasesalariesanddoesnotconsiderbenchmarkdatainisolation. relevant factorssuchaspayincreases fortheGroup’s relativities employees,internal andindividualperformance.TheCommitteeis Base salariesare reviewed (thoughnotnecessarilyincreased) annuallyhavingregard tomarketconditions,benchmarkdataandother Base salary Remuneration policyforexecutivedirectors –indetail 2012 Accounts and Report Annual PLC Properties Modwen St. 85 time, wouldhavemeantthatalowerornilbonusbeenpaid. bonus yearintheeventthatalaterrestatement ofaccountsoccursorthere isotherdiscovered misconductwhich,ifknownatthe Allbonusespaidare subject topotentialclawback,attheCommittee’s discretion, foraperiodoffouryearsfollowingtheend three years. after paymentofincometaxandnationalinsurance,intheCompany’s shares andtoretain thoseshares foraminimumperiodof Paymentofthebonuswillbeconditionaluponexecutivedirectors undertakingtoinvestatleastonethird ofthebonusreceived, bonus payoutsreflect itsview ofcorporateperformanceduringtheyear. Notwithstandingperformanceagainstindividualtargets,theCommitteewillretain anoverriding discretion toensure thatoverall has thelargestweightingamongstcorporatemeasures andothermeasures includeprofit, dividendgrowth andgearinglevels. Thecorporatemeasures selected are consistentwithandcomplementthebudgetstrategicplanforyear. NAV performance Bonuspaymentsdeterminedbyachievementofamixture ofcorporatemeasures andpersonaltargets. liver st December2012.Basesalariespayablefrom thisdateare asfollows: 4 301,522 274,495 56,978 Salary £ Salary
Additional Information Financial Statements Corporate Governance Business Review Overview 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. Company overany10yearperiod.At30 awards grantedunderthePSPandanyotheremployeeshare schemeisrestricted to10%oftheissuedordinary share capitalofthe In accordance withtherecommendations oftheAssociationBritishInsurers, thenumberofnewshares thatmaybeissuedtosatisfy Dilution limits Code. Corporate Governance will retire attheconclusionof2013AGM,allotherdirectors willretire andoffer themselvesforre-election inaccordance withtheUK Chaldecott willretire theexceptionofKatherineInnesKerandDavidGarman,who andoffer herselfforelectionatthe2013AGM.With Following herappointmenttotheBoard inOctober2012andaccordance withtheCompany’s ArticlesofAssociation,Kay David Garman k John Salmon Simon Clarke Bill Shannon Non-executive director The datesoftheChairman’s andothernon-executivedirectors’ lettersofappointmentandexpirycurrent termsare asfollows: the eventoftermination. reviews. Appointmentsmay beterminateduponthree months’noticebyeitherpartyandthere are noprovisions forcompensation in is fornon-executivedirectors toserveontheBoard for, typically, twothree-year terms,subjecttomutualagreement andperformance The termsofservicetheChairmanandothernon-executivedirectors are containedinlettersofappointment.Thecurrent policy Terms ofappointment The Chairman’s feeis£135,000. fees of£9,000beingpaidtotheChairmenAuditandRemunerationCommittees£6,000SeniorIndependentDirector. approved by the Board in 2010 on his appointment.A review ofthenon-executivedirectors’ feeswasundertaken bytheBoard in2012saverelationFollowing totheChairman’s feewhichwas the review, the standard base fee for 2012/13 is £40,000 within kind. additional directors participateintheannualbonusorlong-termincentivearrangementspensionscheme,nordotheyreceive benefits are determinedbytheBoard followingrecommendations bytheexecutivedirectors. NeithertheChairmannorothernon-executive The Chairman’s feeisdeterminedbytheBoard ontherecommendation oftheCommitteeandfeesnon-executivedirectors Fees Board Committeestoreflect thesignificantadditional responsibilitiesattachedtothesepositions. companies ofcomparablesize.SuchfeesmayincludeadditionalpaymentstotheSeniorIndependentDirector andtheChairmenof The remuneration policyfortheChairmanandothernon-executivedirectors istopayfeesinlinewiththosepaidbyotherUKlisted Remuneration policyforChairmanandnon-executivedirectors 2012 Accounts and Report Annual PLC Properties Modwen St. 87 (2011: 215,754shares) andhaswaivedtherighttoreceive dividendspaidontheseshares. St. Modwen Properties PLCEmployeeShare Trust (theTrust). TheTrust currently holdsatotalof215,754shares intheCompany The Companycurrently satisfiesawards underallemployeeshare schemesfrom market-purchased shares sourced from the l k esley James ay Chaldecott atherine i nnes k er th November2012theCompanyhadused5.59%ofshare capitalavailable. 22 19 18 24 31 31 nd th th th st st Date of current letter current of Date October 2009 October 2010 October October 2012 October 2012 October October 2011 October 2011 October 19 th of appointment of April 2010 April
30 10 18 16 21 27 27 Expiry of current term current of Expiry th th th th st October 2013 October 2013 October October 2015 October 2015 October October 2014 October th th March 2013 March 2013 March
Additional Information Financial Statements Corporate Governance Business Review Overview 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 Remuneration Committee position Lesley James Chairman Kay Chaldecott Member (from 17th December 2012) David Garman Member Katherine Innes Ker Member John Salmon Member Bill Shannon 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 Allocation of time spent at Remuneration Committee during the financial year were as follows: meetings • a review of executive directors’ base salaries for 2011/12 and 2012/13; % • corporate and personal objectives for the 2011/12 annual bonus arrangements 10 for executive directors and an assessment of performance against targets for both 10 2010/11 and 2011/12; • PSP awards granted in 2012, the outturn of awards made in 2009 and performance 50 conditions for awards to be granted in 2013; 30 • 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 Policy Implementation & director and senior executive remuneration; performance review Disclosure • external advisers’ review of executive remuneration practices, trends and governance; Administration • 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. v Total votescast(includingwithheldvotes) during theyear, theseare considered tobeappropriate benchmarksforthegraph. 2012. SincetheCompanywasaconstituentofbothFTSE250andAll-Share RealEstateInvestment&ServicesIndices Total votescast(forandagainst) a For At the2012AGMDirectors’ RemunerationReportreceived thefollowingvotesfrom shareholders: Statement ofshareholder votingattheAGM 2012 Accounts and Report Annual PLC Properties Modwen St. 89 All-Share RealEstateInvestment&ServicesIndicesbasedonaninitialinvestmentof£100overafiveyearperiodto30 The graphbelowisprepared inaccordance withtheRegulations.ItshowsCompany’s TSRandthatoftheFTSE250 Performance graph 1 100 120 140 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’ aresolution. ‘Against’ and ‘For’ cast votes of proportion the of calculation the in counted not is and law in avote not is withheld A vote otes withheld gainst 60 80 40 20 2007 1 St. Modwen St. 2008 FTSE 250 FTSE 2009 FTSE All-Share Real Estate Investment &Services Investment Estate Real All-Share FTSE 2010 Total number of votes of Total number 142,250,392 148,424,432 140,694,541 1,555,851 6,174,040 2011 th November November % of votes cast votes % of 100.00% 98.91% 1.09% 4.16% 2012 N/A
Additional Information Financial Statements Corporate Governance Business Review Overview 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/ Annual bonus Benefits 20122 20122 Director fees £000 £000 £0001 £000 £000 Executive Bill Oliver 446 502 29 977 984 Steve Burke 294 331 21 646 652 Michael Dunn 268 301 10 579 628 Non-executive Bill Shannon 135 – – 135 135 Kay Chaldecott3 5 – – 5 – Simon Clarke 38 – – 38 37 David Garman 44 – – 44 41 Katherine Innes Ker 38 – – 38 37 Lesley James 47 – – 47 46 John Salmon 47 – – 47 46 Total 1,362 1,134 60 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 % of maximum bonus % of base salary Bill Oliver 90% 112.5% Steve Burke 90% 112.5% Michael Dunn 90% 112.5% Michael Dunn Steve Burke performance conditionswhichappliedtothe2009PSPaward togetherwithactualperformanceare summarisedinthetablebelow: prior to the date of exercise and released to theon exercise thetotaldividendaccruedisconvertedintoshares usingtheaveragemarket priceforthethree dealing daysimmediately director. 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; 4 3 2 1 Bill o director Executive Cumulative growth innav Performance measure During theyear2009PSPawards (whichmeasured performancefrom 1 Performance SharePlan Long-term incentives 2012 Accounts and Report Annual PLC Properties Modwen St. 91 PSP awards heldbytheexecutivedirectors whoserved duringtheyear, togetherwithanymovements,are shownbelow: The numberofshares whichvestedfrom the2009PSP awards issetoutinthetablebelow. t tSr unapproved award for the balance; further details can be found on page 86. 86. page on found be can details further balance; the for award unapproved Awards subject to clawback as described on page 86. Awards comprise an HMRC approved option over 19,769 shares with an exercisedisclosed 2011 price the incorrectly for 2012 was asof and index the awards 151.75p FTSE comparator 350 the Real Estate Reports Investment Annual 2011 andfor an previous &and In to 86. 85 Services conditions Index. pages on described performance as 2013 The the for awards those 2012respectively. 92 mirror page on and above table first the in described are 2010 and awards 2009 the for conditions Performance share mid-market PSP, closing the of 180p. The was rules the price under on the awarded, date the originally shares when vested vested which was 177.75p. shares of number the to calculate used price The share performanceThe conditions for the 2009 award are described in the first table above. to 86. 85 pages on described 2013 as the for award those 2012 mirror the for award award the of date conditions the on price 157p. share was performance The mid-market PSP, closing the of 153.3p. The was rules the under awarded, shares of number the to calculate used price share The otal relative toFt liver SE 350r Date of grant of Date 17/02/12 17/02/12 17/02/12 22/02/10 22/02/10 pershare 24/07/09 2 21/03/11 21/03/11 21/03/11 eal Estatei 4/07/09 4 4 4 Awards held on on held Awards ndex 1 st December December 896,622 230,496 230,496 294,694 194,444 591,606 210,992 282,154 319,774 186,170 2011 – – – Awards made made Awards during year during 239,863 239,863 363,259 363,259 218,362 218,362 of Index Threshold 100% 5% – – – – – – – 1 Awards vested vested Awards during year during 134,498 134,498 Vesting at at Vesting threshold 88,744 88,744 12 12.5% 120% 120% 12.5% .5% st – – – – – – – – – June2009to31 2 Awards lapsed lapsed Awards during year during 105,700 105,700 160,196 160,196 of Index Maximum 0 50% 20% – – – – – – – – – st Awards held 1,099,685 May 2012) vested at 45.64%. The May 2012)vestedat45.64%.The November November 448,858 363,259 239,863 230,496 134,498 218,362 210,992 725,769 282,154 319,774 186,170 maximum Vesting at at Vesting 88,744 on 30 on 50% 2012 th
performance performance performance 30/11/13 30/11/13 30/11/13 30/11/12 30/11/12 30/11/14 30/11/14 30/11/14 of Index 18.25% 72.81% 72.81% period End of of End Actual N/A N/A 3 award to vest to award Proportion Proportion of 22/02/13 to 22/02/13 to 21/03/14 to 21/03/14 to 21/03/14 to 17/02/15 to 17/02/15 to 17/02/15 to 24/07/12 to 24/07/12to 24/07/12 to 24/07/12to 16/02/22 16/02/22 20/03/21 16/02/22 20/03/21 20/03/21 19/02/20 19/02/20 23/07/19 23/07/19 4 45.64% 0.00% 5.64% Exercise period
Additional Information Financial Statements Corporate Governance Business Review Overview 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:
Vesting at Vesting at Actual Proportion of Performance measure Threshold threshold Maximum maximum performance award to vest Cumulative growth in NAV per share 7.5% 12.5% 30% 50% 27.53% 45.89% TSR relative to FTSE 350 Real Estate Index 100% 12.5% 120% 50% Negative 0% of Index of Index to Index Total 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 Total number of shares granted Number of shares to vest Bill Oliver 282,154 129,480 Steve Burke 186,170 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:
Options held Options held on Options Options on 30th 1st December granted exercised Options lapsed November Executive director Date of grant 2011 during year during year1 during year 2012 Exercise price2 Exercise period Bill Oliver 13/08/04 105,610 – – – 105,610 236.31p 13/08/07 to 12/08/14 15/08/05 102,955 – – – 102,955 375.22p 15/08/08 to 14/08/15 208,565 – – – 208,565 Steve Burke 13/08/04 46,315 – – – 46,315 236.31p 13/08/07 to 12/08/14 15/08/05 39,825 – – – 39,825 375.22p 15/08/08 to 14/08/15 86,140 – – – 86,140
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. Steve Burke Steve Burke The closingmid-marketshare priceon30 Michael Dunn Michael Dunn The informationbelowsetsoutthedisclosures undertheUKListingRulesandRegulationsfordefinedbenefitscheme: Bill o directors joiningtheCompanyafter6 Membership ofthedefinedcontributionsectionpension scheme isavailabletoallpermanentemployeesincludingexecutive 2 1 Bill o director Executive SAYE awards heldbytheexecutivedirectors whoservedduringtheyear, togetherwithanymovements,are shownbelow: Saving-Related ShareOptionScheme(SAYE) 2012 Accounts and Report Annual PLC Properties Modwen St. 93 financial yearended30 Company contributions,attherateof15%basesalary, intothedefinedcontribution sectionofthepensionschemeduring on 1 closed tonewmembersin1999andfuture accrualin2009.SteveBurkebecameadeferred memberofthedefinedbenefitscheme pension generallypayableundertheschemeistwo-thirds offinalpensionablepay.was Thedefinedbenefitsectionofthescheme In relation tothedefinedbenefit section,benefits arebasedonyearsof credited serviceandfinalpensionable pay.Themaximum a cash supplement. employees, includingexecutivedirectors.toaCompanycontributionscheme,directors Asanalternative canreceive of The Companyoperatesapensionschemewithbothdefinedbenefitandcontributionsections,coveringthemajority Pensions Further informationontheCompany’s pension schemeisshowninNote18totheGroup FinancialStatements. (2011: £64,950). Dunn £40,170(2011:£39,000).Cashallowancesinlieuofpension contributionspaidtoBillOliverduringtheyearwere £66,875 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 The accrued annual pension includes entitlements earned as an employee prior to becoming an executive director as well as for qualifying services after becoming section of the scheme. an executive director. st liver liver September2009. th November2012forexecutivedirectors were asfollows:SteveBurke£44,125(2011:£42,900);andMichael Date of grant of Date 1 16/08/11 16/08/11 5/09/09 th April1999.Contributionsare investedbyanindependentinvestmentmanager. Options held on on held Options 30 1 st th th December December November pension at pension 25,373 November2012was217.8pandthepricerangeduringyear108.25pto220.3p. Accrued 9,887 9,887 6,941 2011 / / / / / / N/A N/A N/A N/A N/A N/A N/A N 2011 £pa ANANANANANAN/A N/A N/A N/A N/A N/A /A 2 1
30 th November during year during pension at pension 26,671 Accrued Options granted 2012 £pa – – – 2 1
pension during during year during in accrued accrued in exercised Increase the year the Options Options 1,297 £pa – – –
accrued pension during the year year the during during year during Increase in in Increase (excluding inflation) Options lapsed £pa 0 – – –
November 2011 November Options held benefits at 30 at benefits Transfer value Transfer November November 504,217 of accrued accrued of 9,887 9,887 on 30 on 6,941 2012 th £ th
November 2012 November benefits at 30 at benefits Exercise price Exercise period Exercise price Exercise Transfer value Transfer of accrued accrued of 512,798 156p 156p 224p £ th
accrued benefits transfer value of of value transfer 01/10/16 to 01/10/16to 01/10/16 to 01/10/16to 01/10/14 to 01/10/14to director’s own own director’s contribution) 31/03/15 31/03/17 31/03/17 Increase in in Increase (excluding 8,581 £
Additional Information Financial Statements Corporate Governance Business Review Overview 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:
Shareholding as at Shareholding as at Director 30th November 2012 30th November 2011 Executive Bill Oliver 494,819 442,819 Steve Burke 264,153 228,249 Michael Dunn 76,168 45,000 Non-executive Bill Shannon 50,000 50,000 Kay Chaldecott1 – – Simon Clarke 4,612,657 6,112,657 David Garman 10,000 10,000 Katherine Innes Ker – – Lesley James 10,000 10,000 John Salmon 25,000 25,000
1 Appointed 22nd October 2012. 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. issued share capitalatthattime.Theseauthoritiesexpire atthe2013AGM.Duringyearended30 representing 10%oftheissuedshare capitalatthattime,andtoallotup49,639,069ordinary shares representing 24.7%ofthe At theCompany’s 2012AGM,shareholders authorisedtheCompanytomakemarketpurchases ofupto20,036,093ordinary shares, shares intreasury. share capitaloftheCompanyissetoutinNote(K)FinancialStatements.Thedoesnotcurrently holdany The Companyhasoneclassofordinary share (10p)and allshares rankequally, haveequalvoting rightsandare fullypaid.Theissued Share capital 3 of voting rights.Asat4 Company’s share-based incentivearrangements.Asat30 St. ModwenoperatesanEmployeeShare Trust (Trust) tosatisfythevestingandexercise ofawards ofordinary shares madeunderthe were allottedorrepurchased. Resolutionstorenew theseauthoritieswillbeproposed atthe2013AGM. on 4 l Shareholder The AGMoftheCompanywillbeheldat12.00noonon27 Annual GeneralMeeting 2012 Accounts and Report Annual PLC Properties Modwen St. 95 As at30 Restrictions onthetransferofshares and half yearreports, toattend andspeakatgeneralmeetingsoftheCompany, toappointproxies andtoexercise votingrights. The holders of ordinary shares in the Company areRights andobligationsattachingtoshares entitled to receive dividends when declared, to receive the Company’smay takeaccountofanyrecommendations oftheCompany. There were nopurchases ofsharesannual bytheTrust duringthefinancialyear. respect oftheseshares. Anyvotingorothersimilardecisionsrelating toshares heldbytheTrust wouldbetakenbythe Trustees, who representing 0.11%(2011:0.11%)oftheCompany’s issuedshare capital.TheTrust deedcontainsadividendwaiverprovision in The directors recommend afinaldividendof2.42p per ordinary share in respect oftheyearended30 Dividend at themeeting,issetoutonpages151to157. The noticeofmeeting,whichincludesthespecialbusinesstobetransactedandanexplanationallresolutions tobeconsidered Longbridge Technology Park, Birmingham B31 2TS. out above. under Rule5oftheDisclosure RulesandTransparency RulesoftheFinancialServicesAuthority: As at30 Substantial shareholders or on voting rights. The Companyisnotaware ofanyagreements betweenshareholders thatmayresult inrestrictions onthetransferofshares of an uncertificated share in accordance withtheoperationofCREST.regulations governing Transfers of uncertificated shares mustbecarriedoutusingCRESTandthedirectors can refuse to register thetransfer the Companies Act 2006. or anyotherpersonappearingtobeinterested intheshares toprovide theCompany withinformationrequested undersection793of a transfer ofacertificatedshare, which represents aninterest ofatleast0.25%inaclassshares, followingthefailure bythemember is inrespect ofmore thanoneclassofshare orisinfavourofmore thanfourjointholders.Thedirectors mayalsorefuse toregister lien, where theinstrumentof transferdoesnotcomplywiththerequirements of theCompany’s ArticlesofAssociation,orifthetransfer The directors mayrefuse toregistera thetransferofashare incertificatedformwhichisnotfullypaidorontheCompanyhas of the Company, orofotherholdersordinary shares intheCompany, foratransferofshares. of ordinary shares in the Company, no limitations on the holding of ordinary shares and no requirements to obtain the approval J.D. leavesley and connected parties On 21 t.r Blackr Other Governance andStatutoryDisclosuresOther Governance ady Clarkeandfamilyholdings(excludingSimonClarke) rd September 2012, brings the total dividend for the year to 3.63p for the year (2011: 3.3p). September2012,bringsthetotaldividendforyearto3.63p(2011:3.3p). . p th April2013toordinary shareholders ontheregister on8 roperty i st December2012,theCompany received notificationofa holding byNorgesBankof6,090,499shares, representing 3.04% ock, i th th November2012,theCompanyhadbeennotifiedoffollowing direct andindirect holdingsofvotingrightsinitsshares November2012andasatthedateofthisreport, exceptasreferred tobelow, there are norestrictions onthetransfer nc. nvestment t th February 2013, the Company had not been advised of any further changes or additions to the interests set February2013,theCompanyhad notbeenadvisedofanyfurtherchangesoradditionstotheinterests set rust plC th November2012,theTrust held215,754shares (2011:215,754shares), th March 2013attheMarketingSuite,InnovationCentre, 1DevonWay, th March 2013 which, together with the interim dividend of 1.21p paid on March 2013which,togetherwiththeinterimdividendof1.21ppaidon Number of shares of Number 18,263,382 19 10,028,322 6,802,638 ,962,539 th th November 2012, to be paid November2012,tobepaid November 2012, no shares November2012,noshares % of voting rights voting % of 9.96% 3.40% 5.01% 9.12%
Additional Information Financial Statements Corporate Governance Business Review Overview 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 • Simon Clarke • Bill Oliver • David Garman • Steve Burke • Katherine Innes Ker • Michael Dunn • 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. 4 Company Secretary Tanya Stote Approved bytheBoard andsignedonitsbehalfby Services Authority’s Disclosure RulesandTransparency Rules(DTR4.1.8). This Directors’ Report comprises inside front cover and pages 1 to 98 andestablish thattheCompany’s is auditorisawarethe ofthatinformation. ‘management report’ for the purposes of steps thatheorsheoughttohavetakenasadirector inorderthe tomakehimselforherselfaware ofanyrelevant auditinformationandto Financial relevant auditinformationofwhichtheCompany’s auditorisunaware. Eachsuchdirector alsoconfirmsthatheorshe has takenall the Each ofthedirectors inoffice atthedateofapproval ofthisDirectors’ Reportconfirmsthat,sofarasheorsheisaware,no there is will be proposed atthe2013AGM. Resolutions toreappoint DeloitteLLPasauditoroftheCompanyandtoauthorisedirectors todeterminetheir remuneration Auditor anddisclosure ofinformation concern basis. for the foreseeable future and so determine thatBased ontheirassessment,thedirectors are oftheopinionthatGroupit hasadequate committedresources tofunditsoperations remains appropriate for the Financial Statements to be prepared onNovember 2014. a going As describedintheFinancialReviewonpages51to53,there are nocorporateorjointventure facilitiesthatrequire renewal before were appropriate. the forecasts andprojections were basedonrealistic assumptionsandthatthesensitivitiesappliedinreviewing downsidescenarios valuation projections andthe abilityoftheGroup tomeetcovenantsonexistingborrowing facilities.Thedirectors were satisfiedthat At 30 specific codeorstandard in relation topaymentpractice. whenever itissatisfiedthatthesupplierhasperformeditsobligationsunder relevant contract.TheGroup doesnotfollowany It istheGroup’s policytoagree specificpaymenttermsforitsbusinesstransactionswithsuppliersandtoabidebythose Creditor paymentpolicy 2012 Accounts and Report Annual PLC Properties Modwen St. 97 The review includedanassessment offuture fundingrequirements basedoncashflowforecasts extendingto30 including its joint ventures. the Directors’ Report(defined below).Thedirectors haveconsidered thesefactors and reviewed thefinancialpositionof Group, The Group’s businessactivities,togetherwiththefactorslikelytoaffect itsfuture development,performanceandpositionare setoutin Going concern £6,000 (2011:£11,000). Direct charitabledonations duringthe year, excludingdonationsmadebytheSt.ModwenEnvironmental Trust (seepage63),totalled In accordance withtheCompany’s policy, nopoliticaldonationswere madeandnopoliticalexpenditure wasincurred duringtheyear. Political andcharitabledonations opportunities fortraining,career developmentandpromotion fordisabledasotheremployees. training for, employees whohavebecomedisabledduringtheperiodoftheiremployment.TheCompanyprovides thesame regard totheirparticularaptitudesandabilitieswherever possibletocontinue theemploymentof,andtoarrangeappropriate It isthepolicyofCompanytogivefullandfairconsiderationapplicationsforemploymentreceived from disabledpersons,having Employment ofdisabledpersons success oftheCompany. A performance-related annualbonusschemeandshare optionarrangementsare designedtoencourageemployeeinvolvementinthe performance isdeveloped.ThisinformationthencascadedtoallemployeesbasedattheCompany’s headoffice and regional offices. decisions likelytoaffect theirinterests, andwhere acommonawareness ofthefinancialandeconomicfactorsaffecting theCompany’s management meetingsare heldtoinformstaff about matters affecting themasemployees,atwhichtheirfeedbackissoughton St.Modwen,itsactivitiesandperformanceispublishedon the Company’sin its performance. Newsconcerning intranet.Quarterly St. Modweniscommittedtoregular communicationandconsultationwithitsemployeesencouragesemployeeinvolvement Employees and multiplyingtheresulting fractionby365days. calculated byexpressing yearendtradecreditors asa fractionoftheamountsCompanywasinvoicedbysuppliersduringyear th February2013 th November2012,theCompany’s aggregate levelof‘creditor days’amountedto30days(2011:29days).Creditor daysare th November 2014, November2014,
Additional Information Financial Statements Corporate Governance Business Review Overview 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 Michael Dunn Chief Executive Group Finance Director 4th February 2013 • In our opinion the Group Financial Statement Financial Group the opinion our In Opinion onFinancial incon identifymaterial incon Statement Financial the of and adequately di a S a An auditAn involve s Tho Statement Financial Group the on to anyoneto other the than Companyandthe Company’ s auditor’ an in Financial Statement Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 99 Respective responsibilities of have we formed. Matters on whichon areMatters we require A (IASB). In our opinion the ouropinion In (IASB). • Underthe Companies re in report to We nothing have Underthe Li Our auditOur work ha • 30 • i given the information in Director the ouropinion In Opinion onother matter prescribe IFRSapply to S • • Birmingham, United Kingdom. 4 Kingdom. United Birmingham, andfor on behalf Deloiof Do Jonathan Statement ofChange Statement We reportedhave Other matter • • A Thi framework ha that reporting compri a Gr the audited have We s to theto member Auditor’ Independent
sse ssurancethethat FinancialStatement s s s con cope of the au eparate opinion relationin to IFR adopted theby EuropeanUnion. give a true and fair view of the the of view fair true a and give certaindi s certainelement the partthe of GovernanceCorporate have beenprepared accordancein with the requirement we have we receivednot allthe andexplanationinformation Governance Code directors the have beenproperly prepared in accordancewith IFRSs explained more fully in the Director explained thein Accounting Policie th s November 2012November on theand informationDirector the in report i report ssmentof: the whether accountingpolicie e s s i s s s i s tandard tencies ethe Group Income Statement, the Group Balance Sheet, StatementGroup the of Comprehen tent with the Group Financial Statement s s clo made ting Rule ting s report and report for otherno purpo d a ’ conwe s s worth ( worth s s s s ure obtaining evidence about the amount the about evidence obtaining require u require tatement, contained within the Corporate Governance Statement, in relation to going concern; concern; going to relation in Statement, Governance Corporate the within contained tatement, d adopted by the European Union, ha Union, byEuropean adopted the of s s s s of the report to report the of clo it of the Financial been undertaken been s eparatelyon the parent company FinancialStatement s s andbeingfor S of directors of olely to the Company’ to olely s s s s weare required review:to s Act 2006 we are required to report to you if, in our opinion: in if, toyou to report required 2006 are Act we t. Modwen Propertie i in Equity, the Group Ca the Equity, in pecifiedfor review;our and s ed;the rea s
s S S oup Financial Statement Financial oup tencie iderthe implications tatements s Accountant Chartered LLP, tte enior Group FinancialStatement s s . In addition, we read all the financial and non-financial information in the Annual Report and Account and Report Annual the in information non-financial and financial the all read we addition, In . to complyto with the Auditing Practice s been appliedintheir preparation i s s thewith audited FinancialStatement S pect of the following: following: the of pect th s ’ remuneration remuneration ’ tatutory Au d February 2013. February s tate of the Group’ the tateof inaccordance with applicablelaw andInternational Standard irectors an irectors onablene s s hareholders d ati s s reportexceptionto by s d S o that we might we might that o S ’ Res ’ s s to theto Group FinancialStatement by 2006 the Act Companies s as issue as s fied that they give a true and fair view. Our re Our view. fair and true a give they that fied are free from material mi Statement relating to the to Company’ relating Statement tatements s pon s member s of ss for our report. our for s e. To the fulle the To e. PLC re in d : s s d itor) appropriateare to Group’the s h Statement,Flow the Accounting Policie by the Board on directoron Board by the s s s s au ibilities pecifiedby law are made;not or of St. Modwen Propertie Modwen St. of . s s d Report ignificantaccounting e which the Group Financial Statement Report ’ thefor financial Financial Group the year for which s d bythe IAS s affair itor itor comply with IFRS s s , a , s s s Statement, the director al member s and di and tate to the Company’ the to tate s and Statutory Auditor Statutory and pectof the s a a body, in accordance with Chapter 3 of Part 16 of theof 16 Companie Chapter3 Part with of accordance in body, a s s s s o applied IFRS applied o s as s we require for ouraudit.wefor require t extent permitted by law, we do not accept or a or accept do by wenot extentpermitted law, t ’ Remuneration Report that i that Report Remuneration ’ of theof Companie adopted theby EuropeanUnion; and at 30 at s s clo B applicable law and International Financial Reporting Standard Reporting Financial International and law applicable s s ss Board’ as s tatement, whether tatement,whether cau ures th s G a body, for ourauditfor body,work, thi a November 2012 and of its and November2012 .weIf become aware of any apparent materialmi roup Financial Financial roup s in the FinancialStatement as s s s s s s Ethical Standard , the Group in addition to complying withtheGroup to , additioncomplying it in timate ’ remuneration. remuneration. ’ s of St. Propertie of Modwen as iss PLC forPLC year the ended 30 s s s i s compliance with the nineprovis Act 2006 and Article 4 of the IAS Regulation.IAS the Article of 2006 4 Act and member ss circum ued by the IASB. the by ued s are re are s ued by theby ued International Accounting Standard made by theby made director s pon s S s tance s pon tatements s tho s de s s and theNote related and ibilityi ed fraudby or Thierror. s s for Auditor for s s iblefor the preparation Groupthe of s cribed a e matter and have been cons profit yearthe for ended; then s s to audit and expre on Auditing (UKAuditing Ireland). on and
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Additional Information Financial Statements Corporate Governance Business Review Overview 100 St. Modwen Properties PLC Annual Report and Accounts 2012 Group Income Statement for the year ended 30th November 2012
2012 2011 Notes £m £m Revenue 1 219.1 109.6 Net rental income 1 28.3 27.5 Development profits 1 22.4 20.4 Gains on disposal of investments/ investment properties 1.4 0.5 Investment property revaluation gains 8 6.4 36.2 Goodwill written off on corporate acquisition of investment properties (1.3) – Other net income 1 2.8 3.2 Profits of joint ventures and associates (post tax) 10 22.6 2.9 Administrative expenses 3 (18.1) (16.6) Profit before interest and tax 64.5 74.1 Finance cost 4 (22.3) (26.2) Finance income 4 5.2 2.5 Profit before tax 47.4 50.4 Tax charge 5 (5.1) (4.9) Profit for the year 42.3 45.5 Attributable to: Equity attributable to owners of the Company 42.7 43.5 Non-controlling interests (0.4) 2.0 42.3 45.5
2012 2011 Notes pence pence Basic earnings per share 6 21.3 21.7 Diluted earnings per share 6 21.2 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. Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen 101 St. ilOie MichaelDunn Director Finance Group Executive Chief Bill Oliver Dunn. Michael and The Total equity intere Non-controlling owner to attributable Equity Own s Share incentivere Retained earning re redemption Capital premiumShare account Share capital Capital an assetsNet Deferredtax Borrowing otherand Trade payables Non-currentliabilities payable Tax Borrowing otherand Trade payables liabilitiesCurrent Ca andotherTrade receivable s Inventorie assets Current andotherTrade receivable Inve Operatingproperty, plantand equipment Inve Non-currentassets a GroupSheet Balance s s 30at s h andh cas s s eFinancial Statement tment tmentproperty hare th s s November 2012 November
s s d
in venturejoint s reserves
h equivalent s s
erve s s t erve s
s s s s
s s were approved theby ofBoard Director
and a and of the Company the of ssociate s
s on 4 th February 2013 and were and 2013 February s ignedon it Note 10 14 14 17 13 11 12 11 13 5 9 8 5 s
s behalf Billby Oliver (371.6) (428.7) (162.2) (155.6) 513.7 377.6 102.8 513.7 230.6 874.0 770.4 502.6 175.2 (48.6) 20.0 46.5 21.6 75.2 11.1 2012 (3.3) (3.3) (0.5) (8.5) 2.4 0.3 6.8 8.9 £m £m
(352.3) (553.6) (132.4) (192.6) (132.2) 476.0 341.8 102.8 476.0 247.5 914.5 848.7 464.4 191.1 20.0 51.2 50.3 11.6 (0.5) 2011 (0.2) (8.7) 0.3 7.1 5.2 8.4 £m – –
Additional Information Financial Statements Corporate Governance Business Review Overview 102 St. Modwen Properties PLC Annual Report and Accounts 2012 Group Statement of Comprehensive Income for the year ended 30th November 2012
2012 2011 Notes £m £m Profit for the year 42.3 45.5 Pension fund: – Actuarial losses 18 (0.1) (0.2) – Deferred tax thereon 18 – – Total comprehensive income for the year 42.2 45.3 Attributable to: – Owners of the Company 42.6 43.3 – Non-controlling interests (0.4) 2.0 Total comprehensive income for the year 42.2 45.3
Group Statement of Changes in Equity for the year ended 30th November 2012 Equity attributable Share Capital Share to owners Non- Share premium redemption Retained Incentive Own of the controlling Total capital account reserve Earnings Reserve shares Company interest Equity £m £m £m £m £m £m £m £m £m At 30th November 2010 20.0 102.8 0.3 304.7 – (0.6) 427.2 9.6 436.8 Profit for the year attributable to shareholders – – – 43.5 – – 43.5 2.0 45.5 Pension fund actuarial losses (Note 18) – – – (0.2) – – (0.2) – (0.2) Total comprehensive income – – – 43.3 – – 43.3 2.0 45.3 Net shares disposed of – – – – – 0.1 0.1 – 0.1 Dividends paid – – – (6.2) – – (6.2) – (6.2) At 30th November 2011 20.0 102.8 0.3 341.8 – (0.5) 464.4 11.6 476.0 Profit for the year attributable to shareholders – – – 42.7 – – 42.7 (0.4) 42.3 Pension fund actuarial losses (Note 18) – – – (0.1) – – (0.1) – (0.1) Total comprehensive income – – – 42.6 – – 42.6 (0.4) 42.2 Transfer share based payments provision to share incentive reserve – – – – 2.1 – 2.1 – 2.1 Share-based payment charge – – – – 0.3 – 0.3 – 0.3 Dividends paid – – – (6.8) – – (6.8) (0.1) (6.9) At 30th November 2012 20.0 102.8 0.3 377.6 2.4 (0.5) 502.6 11.1 513.7
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). Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 103 anCash Ca Increas cashNet outflowfrom financingactivities borrowing of Repayment borrowing New Intere Dividend Dividend Financingactivities cashNet outflowfrom investingactivities Dividend Intere Ca addition equipment and plant Property, A Inve Inve Investingactivities cashNet inflowfrom activitiesoperating paid Tax optionShare Decreas Increas Decreas Impairment lo Depreciation writtenGoodwill oncorporate off acqui Inve ofShare profit Gain intere before Profit Operatingactivities forthe year ended 30 GroupCa cqui s s h andh cas andh cas s s s s tment property additiontment property di tmentproperty gain revaluation tmentproperty s s s on di on t paid paid t receivedt itionof e/(decrea e tradein and other receivable e tradein payableandother e/(increa s s s d paid to non-controlling intere paid received cash equivalents at en s po s sse h equivalent h equivalent and and s s ub s of joint venture joint of s al drawn s s s s e) ine) cas s e) ine) inventorie s inventorie on s idiary undertaking of inve of s t and tax and t hareaward s s th po November 2012 November s h Flow Statement Statement Flow h s s
h and ca and h s s at s with acquired tment al s s
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Note 5(c) 10 19 12 8 9 7 s
(101.4) (37.4) (51.0) (22.6) (30.1) (20.6) 64.5 29.5 55.7 38.5 98.8 2012 (1.4) (6.4) (4.7) (2.2) (0.3) (4.0) (0.1) (6.8) 1.3 5.2 3.8 0.3 3.7 0.4 3.1 0.5 8.9 £m £m – –
(105.2) 131.3 (24.3) (42.7) (36.2) (21.1) 11.3 74.1 19.2 19.4 2011 (4.4) (0.5) (2.7) (6.0) (0.3) (6.3) (3.3) (6.1) (2.9) (1.2) (6.2) 2.0 2.6 0.1 1.1 0.8 0.5 5.2 £m – –
Additional Information Financial Statements Corporate Governance Business Review Overview 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. Freeholdintere of the e the of of intere of apportionedbetween the reduction ofthe lea recogni Non-property a Non-property to the le the to Leas Leas GroupasThe lessee Leases fiveto two over —year Plant,machinery and equipment valueof each a Depreciation i that arethat taxablenever deductible.or becauStatement payable currently i tax The Such co Such Co Operatingproperty, plantand equipment i Operatingproperty, plantand equipment tran of date the at value theirpre to s Inventorie Inventories ba at the lowerof co the at to completionto di and Inve Current taxCurrent asset Incometaxes and the profit ortheprofit lo and inve inve an Where Inve Rentalincome operatingleafrom GroupasThe lessor i at whichat pointthe a a Oncecla ssified Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 105 Rental To e To virtually all ofall the cos virtually ground rent undeterminedfuture u Inve properties Investment Properties s recogni s s s ed on tax rate tax on ed s s s s t compri t s ehold operating propertie operating ehold e tment property and any movement in valuation i movementvaluation in any and property tment tmentpropertie tment property di tmentproperty tmentpropertie tabli s s are class s s payable underoperating lea s ee. All other lea other All ssee. s edfor fairthe value of the lea timated u t ont the remaining balance of the liability. a Non-property t include t s edinthe Income Statement period.the for principally compri h fair value, inves s s entlocation andcondition. When inventoryinclude s includedthe within value carrying of property the andwithin long-term liabilitie e s s provided allon operating property, plantand equipment rate at s s ss ss tment property i property tment land,direct material t s ifieda s s et evenlyover et it s s s et in lea in s s an inve an on dis on ss and liabilitie e excludeit s t and net reali net and t and law and co eful life ofthe a s sset is t i t s s s held under finance lea finance under held are depreciated.not po ,being freehold andlea s s s s s tocharged Incomethe Statementa e,are carried fairat value following initial recognition at the pre t s po s finance lea finance s s ehold inve ehold fer. realiNet directly attributable to making the a directlythe to making attributable s al. al. s trans s s e tment property, a property remain property a property, tment s po ba al tment propertie tment s that are enactedor s are cla s s e propertie e s are recogni s s item al i — over the over — are mea are s ed on the taxable re taxable the on ed s inventorie to ferred s being redeveloped for continued u continued for redeveloped being s ablevalue. s s expected u et and the lea the and sset e s determined as s s s tmentpropertie e s s ss s is of income or expen e and, where applicable,direct labour co s s ablevalue repre s whenever the term s ed a ifieda recognis areinthecharged Income Statement a on s s uredat the amount expectedbeto recovere held for s s s et or,sset if lower, thepre ed on Profit completion.ed s
s s s are independentlyvalued theon bas e tatedco at s s operating operating lea s s s e liabilityandfinance charge ehold propertie ehold horter of theof horter lea are capitali eful life a edIncomeinthe onStatement a s ub differencethe between the s e term.e at currentat valuation. s s ale, propertie s are accounted as for ultyear.the for taxableThe re s tantively byenacted the Balance date.Sheet recogni s ent s s follows s t le s s s
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s s sse ellingprice le inthe IncomeStatement s fer fer s s t truction and land under option. All inventorie All option. under land and truction s s s ale calculated writeto co the off ari that have been incurred incurred been have that s s ub i s s tment property, the property remain theproperty property, tment s s s s traight-line bas traight-line of marketof value. Any proceed s s ult differult s s
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Additional Information Financial Statements Corporate Governance Business Review Overview 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. All loanAll bearingInterest loans andborrowings and borrowing value. The di The value. of the a the of Trade and otherand Trade payables otherand Trade payables S Government grant Government Governmentgrants expen Prior to 1 to Prior Ca Cash and cash equivalents i When i it arethey incurred. Where the outcome of a of con outcome the Where there is Group’ the when, only and when, line bas recorded thein Income Statementof the year in whichthey occurred. incentivepayment contract co Trade receivableTrade andotherTrade receivables the fair value at the date of grant for the equity- the for grant of date the at fairvalue the remea Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen 107 St. co the financial ass value u value model. model. thos For of completionof the contract activitytheat Balance date.Sheet The extentwhichto the contract i the Groupretains the Where the outcome of a of con outcome the Where Constructioncontracts equity- Dividendincome from jointventure Dividendincome carrying amount. from the a the from which i another entity. IfGroup entity. tran the neither another tran cas Financial a Financial Financialinstruments On 1 Intere Interest income it s contractualprovi s s ettled by way of ca of way by ettled ass hare-base
s s s h, theh, Group accountedfor it t s hare optionhare h andh cas s s ferred a ferred incurred to date as s e t December 2011, it was it 2011, December s s t income t i income ssed as s s s s evidencethethat Group willbenot ableto balancerecover e immediately. uredeachat Balance date.Sheet Revi sset i ettled. Equity- s the rate exactlythat di and borrowingand ing an optionpricingmodel appropriate amorti an and ing s over the ve the over s probable that total contract cos contract thattotal probable t December 2011, when employee when 2011, December ss sset s s et expire,et itwhen or tran t s ss concerned. d s count to nominal value i h equivalent incurred where i it payments payments s beingremote. s et, the Group recogni Group the et, s meaare s and financial liabilitie et and al and et s u e s s
accrued aon time ba arerecogni ion s s s s s ub are included only to the they to extent included only are hare optionhare ing relating to propertytreatedto are as relating s s s h or the retention of retention the or h s of the in the of ting period ting bas s tantially allthe ri s s ettled hares s are initially recogni a percentage of the total anticipated total co the of percentage a o recogni o on deferred paymentdeferred on term ured amortis at s compri s s s s s .Accordingly, the Group ha truction contract cannot be es be contracttruction cannot truction contractcan be e re s edand carried theat oflower their original invoiced valuerecoverableor amount. Provis s s hare-ba trument. The Group derecogni Group The trument. count that hadpreviou s s s s s
probable they willbe recoverable.Contract co olved that the the that olved s obligation s s hare-bas e is e s s s ed on the Group’ s s s are recogni e s fer recognis ca s a collaterali amorti s s e s k s fer ed paymented it s s i s edco s s s the financial a financial the s timated future ca timated future and rewards and t ,referenceby theto principalout s h balances hare s retained intere retained s retain nor will exceedwill contract total the revenue, expectedlo ed ated valuefair le edpayment s s s are di are hareoption ed over the period of the deferred period the the of over ed s s s s ed whenthe t. ettled ion . A . s ettlement practice ettlement s ly beenly accountedfor a s ed on the Group’ the on ed s ed borrowing for the proceedborrowingthe ed for s s to the fairthe to valueof accruedthe liability after the endofve the s it had been the Company’ the been had it s are mea and and charged,cancelled, expire.or deferred incomeand relea s s are initially by recorded di s s
havebeen agreed with the purcha of owner of hare-ba s e ssetand s ub s timated reliably, revenue and reliably,co and revenue timated s s s as s timate oftimate s amendedit t in the a the t in s were exerci s s hort-term depo hort-term h receipt h tantially all the ri the all tantially edIncomethroughoverthe Statement theve timatedreliably, contract revenue i s ca ss hareholder s s uredfairat value at datethe of grant u s e directly attributable tran s ed option ed s s s h- s hip of a tran a of hip et only when the contractual right contractual the a financialwhen only asset t tially all the ri the all tially ub s s s et andsset a an s s of the of entirecontract. Variation s in full. Balance ettled.The co s s hare Balance Sheet when the Group become Group the when Sheet Balance houldbe changed andthat Companythe expectwould to
over theover expected lifeoffinancial the a tan s s accountingpolicy to account it for ed,the employee hadthe choice whether to have the liability s s ’ right’ s s that will eventuallyve ca .The fair value date the at grantof i s s s it tandingand effectivethe at interes k s s s s with bank ferredfinancial a s h- and rewards and s s to receiveto payment have been e experience to experience s s counting the nominal amount payable to net pre ss arrangement and chargedfinanceco to s ed to profit or profit lo to ed t received. The derecogniGroup ettled, the fair value at the date of tran of date the at value fair the ettled, s s s ociated liabilityfor any amount arerecogni t of cas of t are written off when the probability of recovery s k s s action co action s and reward and s . t s s h- er. er. are recogni of owner of s ettled tran s ss i ss s s s recogni s ed a ati t. et, the Group continue Group the et, ss s s s
s complete is t recogni s s over theover expected u fy the majority ofmajority it the fy in contract work, claim . After . initialrecognition, loan s s s s of owner of expen ing appropriateing an option pricing hip and continues s s ed onlyed theto extentof edreferenceby the to action s s tingperiod. The wa liability s
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Additional Information Financial Statements Corporate Governance Business Review Overview 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. re financial financial Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 109 Whilethe director numberof minor amendment A1(mne 01 Pre 2011) (amended IAS1 the by EU): FS3 Improvement addition, In Inve IFRS13 2012) (amended IFRS12 DeferredTax: Recovery of UnderlyingA (amendedIAS12 2010) FS2 IFRS12 Inve IFRS11 2012) (amended IFRS10 Di IFRS10 Loans Government IFRS9 2011) (amended IFRS7 2012) (amended IFRS1 (revi IAS27 (revi IAS19 FI2 Off IFRIC20 Inve 2011) (amended IAS32 (revi IAS28 2012) (amended IAS27 the in adopted been not dateauthori of the At ofImpact standards interpretationsand issuein butyet not effective s ult s of the Group, although amended di the Group,of amended although s s tatement s s s d21) SeparateStatement Financial Benefit Employee 2011) ed 2011) ed d21) Inve 2011) ed s are s
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Additional Information Financial Statements Corporate Governance Business Review Overview 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 2012 Rental Development Other Total £m £m £m £m Revenue 39.3 174.1 5.7 219.1 Cost of sales (11.0) (151.7) (2.9) (165.6) Gross profit 28.3 22.4 2.8 53.5
2011 Rental Development Other Total £m £m £m £m Revenue 36.6 67.0 6.0 109.6 Cost of sales (9.1) (46.6) (2.8) (58.5) Gross profit 27.5 20.4 3.2 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:
2012 2011 £m £m Revenue 77.7 52.7 Cost of sales (63.2) (39.0) Gross profit 14.5 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.
Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties 111 Modwen St. movement The Propertyvaluation gains movementMarket A Propertyvaluation gains Netreali Inve valuationProperty valuations Property (b) reali net of deduction the before Stated (1) year the for Profit Taxation Profit beforeall tax income finance Other co finance Other Inve Trad Finance income Finance co A Other income Gain Development profit Netrental income Tra (a) S NON- 2. (3) Stated before mark-to-market of derivative of mark-to-market before Stated (3) (2) Stated before mark-to-market of derivative of mark-to-market before Stated (2) inve have been calculateda The non- The dded value dded dmini (2011: £nil). The £nil). (2011: are recla are s s s s s tment propertie tment ing profit profit ing tment property revaluation gain revaluation tmentproperty gain revaluation tmentproperty valuationproperty gainof s plit on di on s s d e amount e trativeexpen s ing profit profit ing s able value provi value able tatutorymea ss s s s ourby provided external valuer t TATUTORY INFORMATION INFORMATION TATUTORY ified to inves to ified po s
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s Lang LaSalleLLP, Chartered Surveyor of: Group £3.8m (2011: £2.6m); joint venture joint £2.6m); (2011: £3.8m Group of: s h item h s before all tax, which include which tax, all before and other non-ca other and s s venture joint £6.7m); (2011: £3.5m Group of: Group Group 1.)(.)(19.6) (1.1) (18.5) (25.0) (6.2) (18.8) 1.)(.)(18.6) (0.5) (18.1) 982. 47.6 27.8 19.8 621227.4 36.2 1.2 7.9 26.2 28.3 972. 42.3 52.8 22.6 28.0 19.7 25.5 24.8 2.6 22.9 51 54 (10.5) (5.4) (4.8) (5.1) (1.3) (3.5) 38 01 (3.9) (0.1) (3.8) 4.1 1.1 . 6831.9 26.8 5.1 28.0 26.7 1.3 . 6728.0 26.7 28.0 1.3 26.7 1.3 1.6 0.2 2.8 1.4 £m £m and a and venturesan venturesan s associates associates 2012 2012 h item h ssociate Joint Joint s s venture joint £1.8m); (2011: £4.1m Group of: £m £m 4.1 – 1.1 – 2.8 – d d s
,have been calculateda s i s s the Group’ the ba s s ed on an analy an on ed and a and Total Total s ition of inve of ition £m £m s . ss s ociate
anda s hare of joint ventures s tment propertie tment s ss £0.1m (2011: £0.1m). The £0.1m). (2011: £0.1m 1.) 42 (23.7) (4.2) (19.5) 1.) 01 (16.7) (0.1) (16.6) Group Group 34 05 32.9 (0.5) 33.4 30 . 23.3 35.5 0.3 8.0 23.0 27.5 62 . 36.6 0.4 36.2 45.5 51.7 2.9 4.2 42.6 33.9 22.8 47.5 0.3 4.0 33.6 18.8 36 . 33.9 0.3 33.9 33.6 0.3 33.6 ociate s 49 (.)(6.2) (1.3) (6.8) (4.9) (0.1) (6.7) 26 (.)(2.7) (0.1) (2.6) . 08 1.0 0.8 0.2 . – 1.8 – 0.7 1.8 – 0.7 . – 0.5 – 0.5 . – 3.2 – 3.2 s i £m £m s
of total propertytotal of valuation s et outet below: s £1.3m (2011: £0.1m). (2011: £1.3m venture venture s . 2011 2011 anda a a ssociate ssociate s s Joint Joint Joint Joint ss and and and associate £m £m ociate s s
s e item e s £nil £nil s
Total Total £m £m s ,
Additional Information Financial Statements Corporate Governance Business Review Overview 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:
2012 2011 Joint Joint ventures and ventures and Group associates Total Group associates Total £m £m £m £m £m £m Investment properties 770.4 174.9 945.3 848.7 140.3 989.0 Less assets held under finance leases (3.9) (1.2) (5.1) (3.9) (0.4) (4.3) Add back lease incentives (recorded in receivables) 4.5 1.6 6.1 3.1 1.2 4.3 Inventories 175.2 7.5 182.7 191.1 9.1 200.2 Less ‘barter’ properties(1) (30.8) – (30.8) (86.3) (0.4) (86.7) Property portfolio 915.4 182.8 1,098.2 952.7 149.8 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:
2012 2011 £m £m Retail 240.2 209.3 Offices 60.7 70.2 Industrial 260.6 269.3 Income producing 561.5 548.8 Residential land 397.4 404.4 Commercial land 139.3 149.3 Property portfolio 1,098.2 1,102.5
(d) Movement in net debt Movement in net debt as discussed in the Business Review is calculated as set out below:
2012 2011 £m £m Movement in cash and cash equivalents 3.7 (6.1) Borrowings drawn (98.8) (131.3) Repayment of borrowings 101.4 105.2 Joint venture debt repaid between 30th November 2011 and acquisition as a subsidiary undertaking 1.6 – Decrease/(increase) in equivalent net debt 7.9 (32.2) Joint venture debt at 30th November 2011 now consolidated (26.8) – Increase in net debt (18.9) (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. Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties 113 Modwen St. Movement in cashan Net dividend borrowing Net Trad Taxation Overhead Working capital otherand movement expenditure Capital acqui Property dis Property income other and rent Net Movement in cashan Net dividend Jointventure debt at 30 borrowing Net Trad Taxation Overhead Working capital otherand movement Capital expenditure acqui Property dis Property rentNet andincomeother Tra (e) S NON- 2. Trading Trading cas ing cash flowcash ing flowcash ing d ing cash flowcash ing s s and intere and intere and h flowh po po TATUTORY INFORMAT TATUTORY s s
s s s s s s
ition ition al al s s s
are derived from the Group Ca Group fromthe derived are s s
s s t t th d d November 2011 now now con 2011 November cash equivalentscash equivalentscash s s
ION (CONTINUED)ION s h FlowStatement a s olidated s
s et out below: etout Operating Operating activities activitie 1.)08 2.)(36.3) (21.1) 0.8 (16.0) 1.)31 2.)(34.8) (20.6) 3.1 (17.3) 7.)(12 – (104.5) – (31.2) (73.3) 1.)(.) (17.2) – (6.5) (10.7) 1.)11 (14.7) – 1.1 (15.8) 4.)(09 – (89.7) – (40.9) (48.8) 551. – 94.7 – 19.2 75.5 128.6 1.6 29.5 97.5 94(63 (11 (28.0) (21.1) (26.3) 19.4 14.8 (19.0) (4.7) 38.5 31.1 94(43 (.)(6.1) (1.2) (24.3) 19.4 3.7 (30.1) (4.7) 38.5 3404 13.8 – 0.4 13.4 30.7 22 – (2.2) – – (2.2) 60 – (6.0) – – (6.0) 02 65 – (6.7) – (6.5) (0.2) £m £m – – – . (.)(4.2) (6.2) 2.0 – – s
Investing activities Inves activitie ting ting £m £m £m 2012 2011 (68 (26.8) (26.8) – 2. 26.1 26.1 – 22.6 22.6 – 31.1 – – (.)(6.9) (6.9) – – 30.7 – – s
Financing activities Financing Financing activitie £m £m £m s
Total Total £m £m
Additional Information Financial Statements Corporate Governance Business Review Overview 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 Group VSM Total Group VSM Total £m £m £m £m £m £m Investment property 703.6 66.8 770.4 687.4 161.3 848.7 Other non-current assets 88.0 15.6 103.6 65.8 – 65.8 Inventory 148.3 26.9 175.2 108.7 82.4 191.1 Cash and cash equivalents 5.0 3.9 8.9 5.2 – 5.2 Other current assets 26.9 19.6 46.5 23.9 27.3 51.2 Total assets 971.8 132.8 1,104.6 891.0 271.0 1,162.0 Current liabilities (125.0) (33.9) (158.9) (121.6) (10.8) (132.4) Borrowings (344.5) (30.4) (374.9) (307.7) (44.6) (352.3) Other non-current liabilities (12.4) (44.7) (57.1) (11.0) (190.3) (201.3) Total liabilities (481.9) (109.0) (590.9) (440.3) (245.7) (686.0) Net assets 489.9 23.8 513.7 450.7 25.3 476.0 Equity attributable to owners of the Company 485.3 17.3 502.6 445.4 19.0 464.4 Non-controlling interests 4.6 6.5 11.1 5.3 6.3 11.6 Total equity 489.9 23.8 513.7 450.7 25.3 476.0
(g) Net assets per share Net assets per share are calculated as set out below:
2012 2011 Total equity (£m) 513.7 476.0 Less: Non-controlling interest (11.1) (11.6) Equity attributable to owners of the Company 502.6 464.4 Deferred tax on capital allowances and revaluations 18.7 13.0 Mark-to-market of interest rate swaps 19.1 18.6 Fair value of inventories 3.9 4.1 Diluted EPRA net assets 544.3 500.1 Shares in issue (number) 200,360,931 200,360,931 Total equity net assets per share (pence) 256.4 237.6 Percentage increase 8% Total equity attributable to owners of the Company net assets per share (pence) 250.8 231.8 Percentage increase 8% Diluted EPRA net assets per share (pence) 271.7 249.6 Percentage increase 9%
Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties 115 Modwen St. In additionIn equivalent netdebt and a Holaw cons Holaw cons Holaw con s • • Limited (Sowcre Limited al Equivalent LTV EquivalentGearing LTV Gearing Comparable debt A Netdebt Comparable equity A equity Total Comparable portfolioproperty A 2c) (Note portfolio Property The followingtable an Gearing (h) S NON- 2.
dju dju dju s gearing being the ratio of net debt to total equity; and and equity; total to debt theof ratio net being gearing loan to value being the ratio of net debt to the property(repre the ratioportfolio to the of debt net being value to loan o detailed below. detailed o s s s tment a tment a tment a tment olidated olidated olidated TATUTORY INFORMAT TATUTORY ss ss ss uming Sowcre uming Sowcre uming Sowcre uming d s LTV LTV t) and Holaw (462) Limited (Holaw) were cons were (Holaw) Holaw(462) Limited and t) s how s the calculation of: s s s t and t and t and ssociated metric ION (CONTINUED)ION
s are di 6. 25448.5 82.5 366.0 1,098.2 182.8 915.4 6. 25448.5 82.5 513.7 366.0 N/A 513.7 513.7 1,098.2 N/A 182.8 513.7 915.4 Group 71% 71% 40% 40% s cu £m olidatedat 30 ss ––– N/A – ––– ed ined the Bu venturesan associates 2012 s enting amount Joint £m th November 2011. Adju November2011. d s
ine Review.ss The s s 87% 87% 41% 41% that becould us Total £m – e figuree s 4. 8. 431.6 84.5 347.1 1,102.5 149.8 952.7 7. 7. 445.0 71.1 473.7 373.9 N/A 476.0 473.7 N/A 1,122.7 129.6 476.0 993.1 tment Group 79% 79% 73% 36% 36% 38% 38% 68 1.)13.4 (13.4) 26.8 20.2 (20.2) 40.4 23 NA (2.3) N/A (2.3) £m ed a s ass s to deriveto s the s
ume that both Sowcre both that ume venture s 2011 ecuritydebt).that for a ssociate s Joint Joint and £m s
94% 91% 39% 40% e figuree s are Total £m s t
Additional Information Financial Statements Corporate Governance Business Review Overview 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:
2012 2011 £m £m Depreciation 0.5 0.5 Operating lease costs 1.0 1.0
(b) Auditor’s remuneration The analysis of auditor’s remuneration is as follows:
2012 2011 £000 £000 Fees payable for the audit of the Company's annual accounts 118 115 The audit of subsidiary companies and joint ventures pursuant to legislation 137 132 Total audit fees 255 247 Audit related assurance services 55 51 Other assurance services 20 – Tax compliance services 150 160 Tax advisory services 171 108 Property consulting 47 82 Total non-audit fees 443 401 Total fees 698 648
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. (c) Employees The average number of full-time employees (including executive directors) employed by the Group during the year was as follows:
2012 2011 Number Number Property 136 134 Leisure and other activities 63 59 Administration 41 41 240 234
The total payroll costs of these employees were:
2012 2011 £m £m Wages and salaries 12.5 10.9 Social security costs 1.6 1.5 Pension costs 0.8 0.7 14.9 13.1
Details of the directors' remuneration are given in the Directors' Remuneration Report. Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties 117 Modwen St. pricethe weighted average price The weightedThe average the expectedlife optionthe of The followingtable illu s RemunerationReport. end hada range exerciof s In arrivingIn fairat valueit ha Out The Group al Group The Expectedvolatility wa The fairvalue theof BalanceSheet liability in re ba 2012 For * 30 30 optionShare Exerci Out Exerci Lap Forfeited Granted Out year ( INCOME OTHER 3. included £0.4m (2011: £0.1m) in re in £0.1m) (2011: £0.4m included The Group The ha d 30 ) th th th S s s s November 2011 November s November 2012 s November 2011. 2011. November tandingoption tandingendat of year tandingat hare-base ed ed from thefrom date grantbeforeof exerci s s ableyearat end ed s ed on the earlier of the 90 day average to 30 to average day 90 the of earlier the on ed s s s pricedare u o ha o a Save A Save a s d tart of yearof tart payments s s executivean had weighteda average maximum remaining contractuallife ofyear 9 s determined by reference to the to hi determinedreference by trate s hareprice theat ofdate exerci s S YouEarn s s e pricee been a been s TATEMENT DI TATEMENT ing a Black-Schole the movement s . s s s below are calculated including and excludingoption the between £1.14 and £3.75 (2011: £1.14 and £4.10)options and PSP (2011: £1.14 with £3.75 £1.14 and between hareoption ssumedthat, whenve s s pect of optionof pect hare option hare s ing their option their ing s in in S s s s th pectof valuation model.valuation The fairvalue s cheme and performance performance and cheme CLO November 2011 or the clo the or 2011 November hare options hare s s chemeopen to allemployee
that had ve had that 0906514 1.90 1.49 10,930,665 S s ,2,6 .51.77 1.25 3,021,762 ,2,4 .71.96 1.57 8,623,043 ,7,3 .12.20 2.01 2,672,736 s e wa e 3058 04)(1.85) (0.49) (360,588) 1778 23)(2.33) (1.66) (2.33) (155,784) (197,768) URE Number of Number hare option hare s s s torical volatilityGroup'torical the of ted, . The option period end period option The . options s during year.the A £1.97 (2011: £1.37). The £1.37). executive (2011: The £1.97 S Weighte s s (CONTINUED) hare ted at theat ted year end. s s out d option s S ing ing 2012 average price price average Charge to to Charge tatement Income options s s s tanding theat year end wa hare price at the date of grant. For 2011 ba 2011 For grant. of date the at price hare hare plan (PSP), full detail full (PSP), plan hare . .-. 345. 24 1.23 2.4 23.4-56.1 0.4-1.1 0.2 . .-. 765. 16 1.23-2.00 1.6 37.6-56.9 0.4-1.1 0.3 s £m All are exerci £ s s calculated and a the s . Employee . the PSP include PSP the s interest rate
s ix month Exclu Risk-free Risk-free s
s s hareprice aover period con ed accordancein with hi d P s s ing S under thi under s % (2011: 8.7 year 8.7 (2011: P – £ mu s following the endof the ves s ,8,8 13 1.79 1.32 2,882,784 ,2,4 15 1.96 1.57 8,623,043 2.01 1.66 6,459,561 s t remain remain in t s 6684 (.1 (1.92) (1.41) (656,834) the grant of option of grant the hare option hare 5,1 28 2.87 2.87 958,918 Expected Number ofNumber s 1,0) 36)(3.68) (3.68) (12,908) 4,6) 10)(1.00) (1.00) (49,560) volatility ss s s of which are given in the Director are the which in given of plan. plan. £2.4m (2011:£2.4m £2.1m) and option umption exerci s % Weightedaverage price s
s s s ). ed on the 90 day average to average day 90 the on ed ervice perioda for of five s s out able at £nilat £nil).able (2011: us 2011 s Divi torical trend torical ed areed a s option tandingyear the at s d yield s i s en at £nilat exerci tent with tent % All All d £ s
ting period. ting s follow s . Excluding S s price s hare : PSP PSP e £* s £ '
Additional Information Financial Statements Corporate Governance Business Review Overview 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 2012 2011 £m £m Interest payable on borrowings (18.6) (19.3) Amortisation of loan arrangement fees (1.2) (1.3) Amortisation of discount on deferred payment arrangements (1.1) (2.3) Head rents treated as finance leases (0.2) (0.2) Movement in fair value of interest rate derivatives – (1.8) Interest on pension scheme liabilities (Note 18) (1.2) (1.3) Total finance cost (22.3) (26.2)
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.
2012 2011 £m £m Interest receivable on cash deposits 1.1 0.7 Credit in respect of loan settlement fees 2.0 – Credit in respect of discount on deferred receivables 0.2 0.3 Movement in fair value of interest rate derivatives 0.6 – Expected return on pension scheme assets (Note 18) 1.3 1.5 Total finance income 5.2 2.5
5. TAXATION (a) Tax on profit on ordinary activities 2012 2011 £m £m Tax charge/(credit) in the Income Statement: Corporation tax Current year tax 3.4 0.2 Adjustments in respect of previous years 1.9 (3.3) 5.3 (3.1) Deferred tax Reversal of temporary differences (0.4) (0.2) Impact of current year revaluations and indexation 2.7 2.9 Utilisation of tax losses 0.9 5.1 Change in rate for provision of deferred tax (0.5) – Adjustments in respect of previous years (2.9) 0.2 (0.2) 8.0 Total tax charge in the Income Statement 5.1 4.9 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 – –
Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties 119 Modwen St. term again term venture joint including Group the The Finance Act 2012 wa Act 2012 Finance The the deferred tax a tax deferred If the 2013. Act Finance propos The (c) Balance Balance (c) (2011: £nil) ha £nil) (2011: Balancethe At Sheet date,Group the ha temporaryOther difference Unutili A Capital allowance revaluation Property analy An Balanceat end theof year Net payment Charge/(credit)to Incomethe Statement Balanceat po The Effectiverate of tax A charge year Current Utilis Change in rate u Differencebetween chargeablegain ofImpact revaluationcurrentyear difference timing Short-term Permanentdifference (2011: tax 24.7%26.7%) at Corporation Group attributableto profit Pre-tax the Le tax before Profit Reconciliation(b) of effectiverate tax (CONTINUED) 5. TAXATION date and, therefore, i therefore, and, date from 23% to 21% would be to reduce th reduce to be would 21% to 23% from 1 from re reduction ppropriation dju s : Joint venture Joint ss: pect ofpect current andprior year lo tax s ation of taxof loation tment s s s edtax lo t April 2012 and 23% 1 2012 from April and t tax re tax t s s i s to the main rate propothemain are to s of the deferred tax providedtheGroupi tax by deferred the of s s edreduction t which the which t tart of the year tart the of in re in S s s heet to trading s s recognibeen s sse ult s s s ed for provis for ed sse s pect ofpect previou s
s s of joint venture joint of s and a and
s
s s not includedin the s not previou not s e can be off can e s of the main rate of corporation tax to 21% by 1 21%by to tax of corporation rate main the of s ssociates tock enacted 17 on s s
ed a ion of deferred tax deferred of ion s s and a s s and indexationand year s s s recogni ly deferreda tax a s
s and a and t April 2013. Current tax Current ha 2013. April et. and accountingprofit s ss ss ed to reduce the rate to 21% by 1 by 21% to rate the reduce to ed s ssociate e et
e net deferred tax lia s s unu e Financial Statement th ssociates s as July 2012 and included provi 2012 included and July and liabilitie it i ed ed s ed tax lo tax ed s s i not con not s
a charge of 19.9% (2011: 12.0% credit). 12.0% (2011: 19.9% a of charge are et. A deferredsset.A tax a s s given below: given sse s of the Group were all to revertheto Groupwereof all tated after a tax charge of £5.4m (2011: £1.3m).of(2011: after £5.4mThetaxtated a charge effectiverate tax for s idered s Asset in relation to 2012 and prior year prior and 2012 to relation in 01 (0.1) – (0.1) 55 408.5 (5.4) 14.0 – (5.5) (5.4) bility£0.7m. by £m s s . 0.9 3.6 9.5 0.9 3.6 9.5 – – – thereforebeen provided 24.67 at . s ufficiently certain that th that certain ufficiently 2012 s Liability s s t et of £1.7mha of £1.6m) sset (2011: t April 2014. Thi 2014. April ion April 2014 are expected to be to enacted expected are 2014 April £m s which reduced the main rate of corporation tax to 24%to tax of corporation rate main the reduced which
Corporation s e aftere 1 s 22 – (2.2) ha . 8.7 0.2 . 8.5 (0.2) 3.3 5.3 Net ere willere taxablebe profit £m £m tax 2012 s s not enactedbeen at the Balance Sheet of £1.8m (2011: £1.6m), of which £0.1m which £1.8mof of £1.6m), (2011: s t s thechange of theeffect 2014, April % and deferred tax at 23%. Further and23%. % deferredat tax Deferred A 42 1. 8.7 (4.2) 12.9 – (4.2) (4.2) sset £m £m tax £m s – – – – 05 0.5 5.1 7.3 0.5 5.1 7.3 – – – not been recogni been not
Corporation Corporation 2011 s s available the in ub Liability (22.6) 21% 24.8 47.4 2012 (0.5) (1.0) (0.7) (1.7) s 31 8.0 (3.1) 60 – (6.0) . 0.7 9.3 . 8.7 0.2 5.1 6.1 2.2 0.7 6.1 tantively in £m £m £m £m tax 2011 – s ed in Deferred s 10% 47.5 50.4 12.7 2011 (3.1) (6.6) (0.8) (0.7) (2.9) hort hort 4.9 8.0 3.4 Net £m £m £m tax
– –
Additional Information Financial Statements Corporate Governance Business Review Overview 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:
2012 2011 Number of Number of shares shares Weighted number of shares in issue 200,145,177 200,110,380 Weighted number of dilutive shares 1,534,599 520,113 201,679,776 200,630,493
2012 2011 £m £m Profit attributable to equity shareholders (basic and diluted) 42.7 43.5
2012 2011 pence pence Basic earnings per share 21.3 21.7 Diluted earnings per share 21.2 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.
2012 2011 p per share £m p per share £m Paid Final dividend in respect of previous year 2.20 4.4 2.00 4.0 Interim dividend in respect of current year 1.21 2.4 1.10 2.2 Total 3.41 6.8 3.10 6.2 Proposed Current year final dividend 2.42 4.8 2.20 4.4
The Employee Benefit Trust waives its entitlement to dividends.
Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen 121 St.
The hi The Addition propertie profess are Apprais A Includedwithin lea s Inve A Gain/(lo Dis tran Net additionOther A A revaluation on Gain Dis Reclassification a of tran Net additionOther A A valueFair 8. INVES s ddition 30 t ddition 30 t t 30 t at 30 at po po s tmentpropertie th th th s s s November 2011 2011 November 2010 November al al November 2012 2012 November toricalco ) onrevaluation ss) alandValuation Manual theof Royal Ins s s s s s th s s s fer fer – new – propertie new – new – propertie new – propertie new November 2012, £632.8m (2011: £756.9m) of £756.9m) inve (2011: £632.8m 2012, November
being valued. ionallyqualified independent external valuer TMENT PROPERTY PROPERTY TMENT s s to inventorie to inventorie to s s
s t of inve of t ehold inve ehold sset s were valued 30 at s on tran on s s s s s s tment propertie tment (Note 12) 12) (Note 12) (Note include £31.6m (2011: £3.5m) acquired through bu through acquired £3.5m) (2011: £31.6m include
s tment properties tment s fer th November 2012 by Jone by 2012 November s at 30 are £3.9m (2011: £3.9m) of£3.9m) a (2011: £3.9m are titution of Surveyor Chartered titution th November wa 2012 s and haverecent experience thein s tment property wa property tment s Lang LaSalle LLP,Chartered Surveyor s £680.5m £744.1m). (2011: s ss , on, the ba s s et ine s s pledged a pledged held under finance lea combinationss i s relevantlocation andcategory theof of marketof value. Jone s
s ecurity for theecurityfor Group' investment s properties properties . Freehol 7. 147 770.4 194.7 575.7 6. 280 848.7 288.0 560.7 828.0 320.7 507.3 1.) 9.)(112.2) (96.0) (16.2) 4.) 41 (50.8) (4.1) (46.7) 50 35.0 – 35.0 18 15 43.3 11.5 36.2 31.8 12.5 35.3 23.7 6.2 29.1 11 47 6.4 (4.7) 11.1 28 (67 (39.5) (36.7) (2.8) 74 (20 (19.4) (12.0) (7.4) . (.)– (2.7) 2.7 . – 8.1 – 8.1 £m £m s d e s
s , in accordance with the with accordance in , . investment Leasehold properties properties s Lang LaSalle LLP s loan facilitie £m £m
s Total . £m
Additional Information Financial Statements Corporate Governance Business Review Overview 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 Operating plant Operating and properties equipment Total £m £m £m Cost At 30th November 2010 6.9 4.8 11.7 Additions – 0.3 0.3 Disposals – (0.2) (0.2) At 30th November 2011 6.9 4.9 11.8 Additions 0.1 0.1 0.2 At 30th November 2012 7.0 5.0 12.0 Depreciation At 30th November 2010 0.6 3.7 4.3 Charge for the year 0.1 0.4 0.5 Disposals – (0.1) (0.1) At 30th November 2011 0.7 4.0 4.7 Charge for the year 0.1 0.4 0.5 At 30th November 2012 0.8 4.4 5.2
Net book value At 30th November 2010 6.3 1.1 7.4 At 30th November 2011 6.2 0.9 7.1 At 30th November 2012 6.2 0.6 6.8
Tenure of operating properties:
2012 2011 £m £m Freehold 3.5 3.5 Leasehold 2.7 2.7 6.2 6.2
Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 123
(lo The Group' The Includedinother jointventure Equity endofat year Dividend Profit/(lo s Tran Equity at Net ass Non-current liabilitie Current liabilitie Current a Non-current a Balance S Includedinother jointventure Profit/(lo Taxation Profit/(lo Finance co intere before Profit A Inve propertie Gain Development profits Netrental income Revenue Incomestatements Group' The VENTURE JOINT 10. ub dmini sse s s s s s idiary undertaking e net a net e tment property revaluation revaluation tmentproperty fer from joint venture to venture ferfrom joint s on di on )/gain s et trativeexpen ) for thefor ss) year thefor ss) year tax before ss) s s s sset s paid
tart of tart year
s heets s s s sset t t s po
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et ofal inve compris s s
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s e sse s
s e total a e tment tment s S ) ) AND A AND s s and a and a and
sset Investments Investments s ult ssociate ssociate Property Property s SS Limited s Limited of £3.6m £4.0m of (2011: 1. 5. . 179.5 3.8 58.9 116.8 6.) 3.)(.)(99.3) (0.8) (36.5) (62.0) 1.) 62 09 (26.3) (0.9) (6.2) (19.2) for the yearthe of for it 92 916975.2 6.9 50.3 19.1 75.2 4.7 49.2 6.9 21.3 – 19.1 4.8 45.6 49.2 2.9 13.6 89 . . 19.8 0.8 0.1 18.9 04 2. 26.8 – 27.2 (0.4) 48 (.)(.)(7.5) (0.5) (0.3) (0.1) (2.4) (4.8) (0.1) (0.3) OCIATE Key . 1. 01 22.6 (0.1) 19.1 3.6 Key . 2. . 35.5 0.4 27.0 1.1 8.1 (0.2) – 1.3 . 1. 01 22.6 28.0 (0.1) 0.1 19.1 3.6 24.6 3.3 . (.)(.)(5.4) (0.2) (5.5) 0.2 0.3 – 7.9 – 0.7 0.2 (0.1) 7.3 £m £m £m £m –232.3 2.3 – – – ––– s
s s joint venture aboveare net a aboveare lo Uxbri Uxbri Estates (Group) (Group) Limited Estates (Group) (Group) Limited S
V V d d S S £m £m ge ge s ge ge M M 2012 2012 joint venture s s sse and a and associates associates sset s ) and total liabilitie total and ) ventures ventures froma ssociate Other Other s joint joint an an of £2.9m (2011: £3.0m) in relation to (2011: a £2.9m £3.0m) relation of in £m £m d d and associate s ssociated companie s is : Total Total s £m £m of £0.7m (2011: £0.7m£1.0m). of s is Inves Inves : Property Property 2. 2. 144.1 23.7 – 120.4 Limited Limited tments tments 7.)– 35 (77.9) (3.5) – (74.4) 1.)– 2.)(32.7) (21.6) – (11.1) 56– . 50.3 4.7 – 49.4 50.3 5.0 45.6 4.7 16.8 – – 6.1 44.4 – 45.6 10.7 of £0.1m (2011: profit (2011: £0.1m of 21– . 19.4 7.3 – 12.1 20 –(2.0) – – (2.0) 34 (.)(4.3) (0.1) (0.9) – – – (3.4) (0.1) 12 (.)(1.3) (0.1) – (1.2) . (.)2.9 (0.3) – 3.2 . 078.5 0.4 0.7 – – 0.2 – – 7.8 0.4 – 0.2 . (.)2.9 4.2 (0.3) (0.2) – – 3.2 4.4 . 078.0 0.7 – 7.3 Key Key £m £m –– –– –– – – – Uxbridge Uxbridge (Group) E (Group) E Limited Limited s s VSM VSM tate VSM VSM tate ssociatedcompanie £m £m 2011 2011 s s
a a s ssociate ssociate of £0.3m). of venture venture Other Other joint joint and and £m £m s s s s
s . Total Total £m £m
Additional Information Financial Statements Corporate Governance Business Review Overview 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 Joint venture 50% Property investment and development VSM Estates Uxbridge (Group) Limited Joint venture 50% Property investment and development Barton Business Park Limited Joint venture 50% Property development Sky Park Developments LLP Joint venture 50% Property development Wrexham Land Joint venture 50% Property development Wrexham Power Joint venture 50% Property development Coed Darcy Limited Associate 49% Property investment and development Baglan Bay Company Limited Associate 25% 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 2012 2011 £m £m Non-current Other debtors 15.6 8.4 Amounts due from joint ventures 6.0 – 21.6 8.4 Current Trade receivables 4.9 8.1 Prepayments and accrued income 7.1 5.2 Other debtors 18.2 14.1 Amounts recoverable on contracts 8.1 8.9 Amounts due from joint ventures 8.2 14.9 46.5 51.2
IFRS 7 disclosures in respect of financial assets included above are provided in Note 16.
Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 125 of development.of ca Net realis the paymentthe The paymentThe term di 7 IFRS Finance lea payableOther Provi payableOther Non-current Derivativefinancial ins payableOther Provi payableOther A payableTrade s Current PAYABLE OTHER 13. TRADEAND A directors The A Dis tran Net A A Dis tran Net A A movementinventorie in The Land under option Propertie Propertie 12. INVENTORIES Includedwithin di i of number a to mount s ddition 30 t ddition 30 t t 3 at 30 at po po 0 s s s month 12 within ed th th th th s s ion for ion for ion November 2011 November 2010 November al al November 2012 2012 November s s s s s th s s s s s venture to joint due fer fer
November 2012 £41.0m (2011: £41.0m) of inventory wa of £41.0m) inventory (2011: £41.0m 2012 November (tran (tran under con under for held clo s s s e liabilitie s from inve s from inve s s s con s will be made linein with theeither di hare option hare option hare s s s s ure s s deferredon term and accruedexpen deferredon term and accruedexpen
ss ferred to development co development to ferred co development to ferred s s s ue po s in re in iderall inventorie s of theof other payable ale s s s s trument including the the including (head rent (head truction truction al
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s during the two year two duringthe s s
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s s s s
) on the on s s s s to beto current in nature.The operational cyclei e e trength of the property market.property the of trength s s s are net reali net are
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ale ale s included above are provided in 16. Note s ended 30 s s s s ) (Note 1) (Note ) 1) (Note ) po ablevalue provi s al ofal inve s are th November 2012 i 2012 November s s tment properties tment ubjectcontractualto commitment s s pledged a ion s s made during the year of £3.8m (2011: £2.6m) (2011: £3.8m of theyear during made . iderationwilltherefore be limited. s pecific inventorywillbe reali s s
s a held on the Balance Sh Balance the on held ecuritythe for Group's s s follows
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: s . In. the normal cour loanfacilitie eet,or commencementthe s ed as ed
thi 155.6 175.2 143.1 s s will bewill 48.6 22.5 19.5 74.8 13.1 44.7 27.8 20.4 . 2012 2012 9.6 3.9 £m £m £m £m s s – – – will not be not will e of event of e
191.1 171.6 85.0 46.7 (151.7) 50.8 19.4 (46.6) s ubject 175.2 192.6 132.2 191.1 140.0 152.8 s 16.0 22.3 20.1 79.7 47.7 19.3 2011 2011
1.0 0.8 4.5 7.8 3.9 £m £m £m
Additional Information Financial Statements Corporate Governance Business Review Overview 126 St. Modwen Properties PLC Annual Report and Accounts 2012 Notes to the Accounts (continued) for the year ended 30th November 2012
14. BORROWINGS 2012 2011 £m £m Current Bank overdrafts 3.3 – Non-current Amounts repayable between one and two years 85.1 – Amounts repayable between two and five years 201.6 352.3 Amounts repayable after more than five years 84.9 – 371.6 352.3 Total 374.9 352.3
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:
2012 2011 Drawn Undrawn Total Drawn Undrawn Total £m £m £m £m £m £m Secured floating rate borrowings: Less than one year† 3.3 1.7 5.0 – 5.0 5.0 One to two years 85.1 14.9 100.0 – – – Two to three years 120.3 84.7 205.0 165.1 33.3 198.4 Three to four years 81.3 23.7 105.0 105.9 68.1 174.0 Four to five years –––81.3 23.7 105.0 More than five years 4.9 0.1 5.0 – – – 294.9 125.1 420.0 352.3 130.1 482.4 Unsecured fixed rate borrowings: More than five years 80.0 – 80.0 – – – 374.9 125.1 500.0 352.3 130.1 482.4
† 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.
Detail £0.1m)debt. (2011: rate £0.1m of floating further a on 7.5% at Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen 127 St. (2011: 3.1 year 3.1 (2011: the of value fair in change the and below intere and extendedtermination. weightedThe average ofmaturity intere Group' The swaps rate Interest Certainof the intere intere Weightedaverage * thanMore five year to Four fiveyear to Three fouryear year three to Two yeartwo to One Le The average marginon Group'the A Fixedretail rate bond Fixedbank rate debt rateFloating debt bank The intere profilerate Interest 14. BORROWIN t 3 ss than one year 0 s th t November 2012 November s waps s t rate profile of theGroup'rate of s t profile s derivative financial in financial derivative from rate floating to rate fixed s s s ). ).
s s
s s
s GS t rate t t rate. rate. t (CONTINUED) s waps
are extendable theat bank' s trument s bank debt i alettriain Latesttermination Earliesttermination borrowing
3. 33%2003.34% 230.0 3.34% 230.0 s 00 .9 002.99% 60.0 3.34% 50.0 2.99% 60.0 3.60% 60.0 00 .1 002.01% 20.0 2.01% 20.0 00 .3 004.65% 10.0 4.83% 30.0 00 .2 004.76% 40.0 2.91% 4.32% 50.0 10.0 2.91% 50.0 e in e £m s , which are class and range from 2.01% to 5.16% (2011: 2.01% (2011: 2.01%5.16% from rangeto and s 230.0 374.9 trument 80.0 64.9 s £m £m s 2.1% (2011: 2.0%). (2011: 2.1% takingafter into theaccount effect
d weighte s a Margin3+ month LIBOR %* 2012 s theIncome chargedto Statement i Applicable interest rate d Fixe 6.25% Margin + 3.34% 3.34% + Margin ified a s option; the table the option; average swap rate rate swap average s s 2012 fair value through profitlo through or value fair t rate t £m s
of the maturity profile ofofmaturity derivative the financial in s rate wap s s to the to earlie the above therefore therefore above %* s of hedging i of hedging Earlie 6. .9 2003.29% 260.0 3.29% 260.0 to 5.42%). In addition the Group ha Group additionIn the 5.42%). to s 0029% 002.91% 50.0 4.65% 2.91% 20.0 50.0 4.66% 30.0 0029% 002.99% 60.0 2.99% 60.0 0049% 005.42% 10.0 4.97% 30.0 0020% 003.81% 60.0 3.45% 2.01% 60.0 20.0 3.63% 70.0 260.0 352.3 t termination date is date termination t s s 92.3 Margin + 3 month LIBOR LIBOR month 3 + Margin 92.3 £m di t termination ss, con £m s s – s clo howthe date s : s ed in Note 4. ed Note in s weightedaverage i s t of of t %* 2011 Applicable intere Applicable Margin + 3.29% 3.29% + Margin s terling denominated denominated terling of normal termination termination normal of 2.8 year 2.8 s 2011 N/A N/A trument Lates
£m t termination termination t s s s t rate rate t waprate
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Additional Information Financial Statements Corporate Governance Business Review Overview 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:
2012 2011 £m £m In one year or less 0.8 0.7 Between one and five years 2.9 3.4 In five years or more 0.1 0.5 3.8 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:
2012 2011 £m £m In one year or less 29.2 28.4 Between one and five years 87.1 71.2 In five years or more 167.6 174.6 283.9 274.2
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:
2012 Minimum lease payments Interest Principal £m £m £m Less than one year 0.2 0.2 – Between one and five years 1.0 1.0 – More than five years 66.1 62.2 3.9 67.3 63.4 3.9
2011 Minimum lease payments Interest Principal £m £m £m Less than one year 0.2 0.2 – Between one and five years 0.9 0.9 – More than five years 67.3 63.4 3.9 68.4 64.5 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. level Interest rateInterest sensitivity: a combinationa of variable rate borrowing Fair valueFair hierarchy financialof assetsan Financial a Financial Level The net ofrecogni liability£19.5m net The b. • • Derivativefinancial ins market pricemarket riMarket s riskMarket The Group i Group risk The rate Interest management: Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 129 a. • a a of debt (adebt of the returnto the Groupmanage The riskCapital Trade and otherand Trade payables Note 11, Note currentfor andnon-current amount andotherTrade receivable A Derivativefinancial ins liabilities Financial Loan Categoriesan 16. FINANCIAL IN Financialassets
s s morti
Finance lea payableOther otherand Trade payables bondRetail Bankloan s andotherTrade receivable Ca and in Derivativefinancial ins dis The directors The dis Level 1 fair value mea fairvalue 1 Level Level 2 fair value mea fairvalue 2 Level Level 3 fair value mea fairvalue 3 Level for thefor asset, either directly (i.e. a ob s s s s s of debt. of clo clo h andh cas ervable marketdata (unob and receivable 1 to 3 ba 3 to 1 s ed co ed s s s s trument. trument. k i k edinthe Group Statement of Change edin 13, Note currentfor andnon-current amount sset di s s s s the potential thepotential adver and overdraft s s . Intere. s hareholder clo e liabilitie t: s con d and financial liabilitie h equivalent s s s ed on the degree to which the fair value i value fair the which degreeto the on ed classes of financial assets an deferredon term ed in Note 14), cas 14), Note in ed s s it idercarryingthe amountthat reco s t rate rirate t trument trument The followingtable detail : s S s capital en to s s s trument (head rent (head s TRUMENT urements urements urements above compri through the optimi the through s s
above compri s
s s
s s k i k
held fairat value through profit loor held fairat value through profit loor s s s s are carried fairat value. The fair value i the Group' the e change in Group income or the Group net wortharithenet or s income Group in change e s ervable input tho are tho are tho are ed a s s s
) price s s h and ca and h that arethat mea ure that the entitie that ure S s s s at 30
etrade payables and intere and s s s s s ) or derived) indirectly(i.e. price from s e derivede quotedfrom price e derivede from inputs e derivedvaluatione from technique e other debtor other e expo s s s principal marketprincipal ri ationdebtthe of equi and s th d , after deduction of £6.8m (2011: £4.9m) of non-financial asset non-financial of , £4.9m) afterof (2011: deduction £6.8m s h equivalent November 2012 (2011: £20.1m) i £20.1m) (2011: 2012 November liabilities ). s s the Group' the in Equity. Equity. in s d s ed to intere to ed ured liabilities s t rate t rded in the Financial Statement s in the Group will be able to continuea be to thewill able in Group s s s , amount ub obs s , trade, receivable s wap and equity,compri s s s s
, afterof (2011: deduction £40.3m equentto initialrecognition at fairva s s en ervable. t rateri t s s other than quoted price quoted than other k and i to manage the ri s are theare ss only financial in ss itivity,after tax, 1% a to change inintere s due to joint venture to joint due s s k a k s s ty balance. The capital The balance. ty (unadju calculated u con s it borrowit s s s s amount and s s ideredbelow. that include input s ); and and ); s ing i ing ted) in active market in ted) s s categoris k. ss s fund s ing quoted market price market quoted ing uedcapital, re approximate ing from movement from ing s s and other payable other and included within Levelthat1 are ob s due fromdue jointventure s variableat intere ed a ed truments s s tructureof the Company cons goinga concern while maximi £47.6m) of non-financial liabilitie of non-financial £47.6m) s lue, are required to be grouped into grouped be required to are lue, for the a a Level2 fairvalue mea s s s their fair value. value. fair their heldtheby at Group fairvalue. erve for identicalfor a b b a a a a a a a a s s ssetthat are banot
t rate t s and retained earning retained and s inintere s s and accrued expen s . t rate t s relevant for the term relevant the for s s ba a s 294.9 538.8 sset . The Group The us . s 19.5 55.0 68.0 80.0 46.1 s 72.5 2012 2012 dis ed oned year end t rate t 3.9 8.9 £m £m £m s clo
; s urement. s s or otheror s ed in ervable i s s s edon t ing ing s s s s .
103.6 352.3 627.7 147.8
e 20.1 45.8 40.6 s e 2011 2011 3.9 5.2
s £m £m
–
Additional Information Financial Statements Corporate Governance Business Review Overview 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) 2012 2011 1% increase in interest rates £m £m Interest on borrowings (2.1) (2.6) Effect of interest rate swaps 1.7 1.9 (0.4) (0.7)
2012 2011 1% decrease in interest rates £m £m Interest on borrowings 2.1 2.6 Effect of interest rate swaps (1.7) (1.9) 0.4 0.7
Credit risk 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.
2012 2011 Movement in the allowance for doubtful debts £m £m At start of year 0.5 0.7 Impairment losses recognised 0.4 0.5 Amounts written off as uncollectable (0.2) (0.2) Impairment losses reversed (0.3) (0.5) At end of year 0.4 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.
2012 2011 Number of days past due but not impaired £m £m 1–30 days 0.3 0.4 31–60 days 0.3 0.2 60 days + 0.4 0.3 1.0 0.9
the Group' the 2012 2012 Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen 131 St. The maturity profile of maturity The and undertakingon development pre-letlargely or pre-s managing ca The economic climatecontinue funding. of a See Note 3d for 3d detail Note See A Equity A 17. Review. Group' The payableOther lea otherand Trade payables 2011 payableOther lea otherand Trade payables Liquidityri Liquid 16. FINANCIAL IN Groupmanage The sset t llotte s s s tart and end yea of end and tart e liabilities e liabilities S s and liabilitie HARE CAPITAL CAPITAL HARE s ityrisk d hare capital an s s k i k s other non-derivative financial liabilitie d approach to ca s s fully pai ) ) s s h flow h the ri the deferredon term deferredon term s and through the u s s s liquidity ri k that the Group doe Group the that k and commitmentforward s the anticipated future ca future anticipated the d r S of outof : TRUMENT (including finance (including finance s s h flow, financing and bank covenant tanding option tanding s s k by continuou to provide a difficult backdrop to the Group' the to backdrop difficult a provide to s s
s S ebilateralof facilitie (CONTINUED) s not have not s to ordinary acquire s s s h flow ly monitoring foreca ly monitoring s , whil , , on, an undis s s s ufficient financial re for bank loan t continuing to mar to t continuing one month one old opportunitie old one monthone Less thanLess Le s ,overdraft ss 67312. 77 73 167.1 67.3 47.7 22.3 139.0 63.4 3.1 3.9 26.7 32.5 1.9 37.3 92312. 9. 6. 317.2 67.3 190.0 27.6 212.6 3.1 63.4 49.7 29.2 49.9 12.3 37.3 than than 2.5 £m £m countedbas 041. 58 73.6 – 45.8 17.4 10.4 – s s is hare s s t and actual ca actual and t di andoverdraft s and ca and s s s months . cu . s month s ource hal ed further in the Financial Review Financial the in further ssed i s 1-3 £m 1-3 £m , i , s . 4. – 150.1 – 142.3 5.3 – operation s s s s h with a range of maturity date maturity of range a with h ite a s availableto meet it s s follows through the planning and remediation proce s s h flow is 3 months to 1 year1 to 3 month3 to 1 year 1 to
s s hown in Note 14. The maturity profile for profile maturity The 14. Note in hown . A : s £m £m , matching, maturityprofiles the s s
s uch, the focu s s obligation s years year 1–5 1–5 £m £m £m s
0,6,3 20.0 200,360,931 continue s s s to en to ectiontheof Bu 10p shares as More thanMore fiveyears More than than More Or five year five Number fallthey due. d s inary ure continuity £m £m £m to onbe s
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Additional Information Financial Statements Corporate Governance Business Review Overview 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: pre-retirement 6.3 % pa post-retirement 4.8 % pa Increase in pensions 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:
2012 2011 2010 Rate of increase in deferred pensions 2.0% 2.4% 2.8% Rate of increase in pensions in payment Pre 6th April 1997 benefits 2.7% 3.0% 3.0% Post 5th April 1997 benefits 2.7% 3.1% 3.5% Discount rate 4.3% 4.9% 5.5% Inflation assumption 2.0% 2.4% 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:
2012 2011 2010 % £m % £m % £m Equities 4.5 11.0 5.1 9.5 5.7 10.3 Bonds 4.2 9.7 4.8 7.9 5.5 7.6 Property 4.5 6.4 5.1 8.2 5.7 8.5 Cash and other assets 3.2 1.0 4.0 1.5 4.2 0.8 28.1 27.1 27.2 Actuarial value of liabilities (27.0) (24.8) (24.7) Unrecognised surplus (1.1) (2.3) (2.5) Surplus in the scheme – – – Related deferred tax liability – – – Fair value of pension asset net of deferred tax – – –
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). Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 133 s 2% thi above return will Analysisof the amountrecognise index.bond wa ofEnd year Movement year:in year of Beginning Analysisof the movement inthe present value of the schemeliabilities actuarialTotal lo unrecogni in Change the fairvalue theof Effect gain Experience Differencebetween expectedand actual return on a returnpen actual The on Intere Expectedreturn penon ofAnalysis the amountcre Current ofAnalysis the amountcharge 18. PEN Curtailmentgain Benefit Actuarialgain Intere contribution Employee Current s calculated a s s t on pen on t of change s s t cos t s ervice co paid paid s S ervice co ION t s s s ss ion ion and lo and ssuming cas and lo and S s s in the demographic andfinancial a (CONTINUED) t and total operatingtotal charge and t s s s chemeliabilitie s cheme liabilities t ed sse s ss . bond Corporate s s ion s
ion e urplu s s
s aris s s gilt and h cheme ass d cheme asset ite s
ing oning fair value of d d s to financecosts and to operating profit
d in the Group will make return et s s have a been s
wa s a gain of £2.4m (2011: £1.1m). The£1.1m). (2011: expected£2.4m of returnpen on gain a
s ss cheme liabilitie ssumption S et tatementof Comprehensive Income ss s s in line with the yield ontheyield the 20 year with gilt line indexin andthat equitie
umed to return in line with the yiel the with line in to return umed income income s underlying s
27.0 24.8 (1.5) 2012 1.2 2.3 0.2 £m – – 482. 2. 23.6 26.9 24.7 24.8 29.0 23.6 26.9 24.7 2011 14 25 (.)(3.6) (1.4) (2.5) (1.4) . . 14 1.6 1.4 1.4 1.3 . . 02 0.4 0.2 0.2 0.2 £m d ond the iboxx 15 over corporate year 13 37 (3.9) 3.7 (1.3) – – – 2012 2012 2012 2010 (1.2) (0.5) (0.2) (0.1) (1.8) 1.1 1.3 0.1 1.1 £m £m £m £m £m (.)– (0.7) – 01 0.1 0.1 –
s ion s cheme asset 2009 2011 2011 2011 s 13 (1.4) (1.3) 18 (0.7) (1.8) 02 (0.2) (0.2) 04 0.9 (0.4) 02 (0.1) (0.2) . 1.5 1.5 . 0.1 0.2 . (2.3) 0.2 . 2.0 1.8 andpropertie £m £m £m £m s
2008 2010 2010 2010 s £m £m £m £m
Additional Information Financial Statements Corporate Governance Business Review Overview 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 2012 2011 2010 2009 2008 £m £m £m £m £m Beginning of year 27.1 27.2 27.1 24.9 35.0 Movement in year: Expected return on scheme assets 1.3 1.5 1.5 1.4 2.0 Contributions by employer 0.2 0.2 0.2 0.3 0.4 Employee contributions – – – 0.1 0.1 Actuarial gains and losses 1.0 (0.4) 0.9 1.8 (9.0) Benefits paid (1.5) (1.4) (2.5) (1.4) (3.6) End of year 28.1 27.1 27.2 27.1 24.9 Surplus in scheme at the year end 1.1 2.3 2.5 0.2 1.3 Unrecognised surplus (1.1) (2.3) (2.5) (0.2) (1.3) Net surplus – – – – –
History of experience gains and losses 2012 2011 2010 2009 2008 £m £m £m £m £m Difference between expected and actual return on scheme assets: Amount 1.1 (0.4) 0.9 1.8 (9.0) Percentage of scheme assets 3.9% (1.5%) 3.3% 6.6% (35.7%) Experience gains and losses on scheme liabilities: Amount (0.5) (1.8) (0.7) 3.7 (3.8) Percentage of fair value of scheme liabilities 1.9% 7.3% 2.8% (13.8%) 16.1%
under the under toagreement fromtime time, facilityprovidedtoInve Property Key The Group, together with Salhia E Real with Group,together The Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 135 s recogni The writtenbeen off to Incomethe Statement.The acqui beingremea a Fair values s tho thedevelop propertie the guarantor the Group' A intere equity 50% theremaining acquire The (together Holaw). Limited
If the acquis the If The Group, together with VINCI UK PLC ha PLC UK VINCI with Group,together The contractedcapital expenditureof it provided to VSM E VSM to provided financial performance of VSM E VSM of performance financial Group The ha 21. CONTIN 30 At COMMITMENT 20. CAPITAL goodwill i The valueFair of joint venture interestpreviously owne Sati Total consi goodwill Net Total id Bankborrowing otherand Trade payables Ca andotherTrade receivable progre in Work Inve Net ass 31 On 19. ACQUI Limited (Sowcre Limited s s the forecathe required by IFRS 3 (2008) Bu (2008) by3 required IFRS s s h at bank h s e entitie e fiedby: tmentproperty th s November 2012 the Group had contracted capital expenditure of £11.0m (2011: £19.9m).(2011: expenditure £11.0m thecapital additionof In contracted Group' Group the had 2012 November t s May 2012, the Company acquired the powerto the acquired Company the 2012, May et profit before tax by £0.2m.by tax before profit entifiablenet assets s s . are reported a reported are acquired: acquired: s ition d s s ed amount s . econdpha s S ured to their fair value fair their to ured s eration s t revenue t to not con not ss a joint and and joint a ITION OF ITION G s s s
had been completed on the fir t), Chert t), ENT LIABILITIE ENT s tep into VSM' into tep s tate s s s s ideredto recoverablebe and ha s exceedthe anticipated co UxbridgeLimited, a of identifiable a identifiable of s s e at Wembley Central a Central Wembley at e
ey Road Property Limited(Chert ey Property Road provis s s everalunlimited liability PLCVINCI with theand Mini
S s UB e linkede tran s s s tate ional for 12 month 12 for ional ine place in the event of a default on Project MoDEL. Completion of the project i the of Completion MoDEL. onProject default a eventof place the in S s s joint venture undertaking IDIARY IDIARY atthe acqui s s ss Combination S S tment (Holding
s
s limiting theguaranteelimiting£67.5m to a Group tate K.S.C. (Salhia) ha (Salhia) K.S.C. tate sset t eachin companyfor nil con s s s action Limited.guaranteeThe provided theby Group i s provided aprovided joint and acquired and liabilitie s s ub ) LimitedThi (VSM). s s s t day of theof day t financial year, they would haveincrea s ition date and the net goodwill ari net the date itionand s well as well idiary ofidiary VSM E were facilitated by entering into a into entering by facilitated were s s s s t to allow the incorporation of incorporation the allow to s , thes ition and it is d s govern the financial and operatingpolicie the and govern financial been written offthe to Income Statement. s providingit additionalwith rental income thefrom inve
provide Groupthe with full controlSowcre of s edeemed acqui s ey) and Statedale Limited together with together it Limited with Statedale ey) and s s wa not expected that there would be any net outflow in thi outflow net any be would there that expected not provided a parent companyguarantee inre s s s s £5.6m (2011: £0.1m). All capitalAll (2011: commitment £5.6m £0.1m). everalparent companyguarantee res in tate s is a s ssumed are guaranteea ordinaryinthe cour s ideration. Uxbridge (Group) Limited. ition s s try of Defence under guarantee under Defence try of s of control have re s at 30 at ub s s et outet inthe table below: ing, which i which ing, s s Sowcres ale andpurcha equent amendment th 1.)(.) 11 (18.2) (1.1) (0.2) (16.9) 2.)– 50 (25.2) (5.0) – (20.2) 23.6 November 2012. November 61 02 27 (3.6) 2.7 (0.2) (6.1) 36 01 14 (2.3) 1.4 (0.1) (3.6) 36 01 14 (2.3) 1.4 (0.1) (3.6) 0.2 7.2 . . (.) 1.3 (1.3) 0.1 2.5 £m – s t capped at 50% of the total commitment total of the commitment 50% at capped s not deemedbeto recoverable, ha s s it of ed group revenue by £1m and the byand £1m revenue group ed s ulted in the joint venture interes Chert s s 100% e agreemente to s s e ofe bu jointventure entitie s s t andt Holaw,enabling it to £m ey ey s 04 0.6 0.4 – – 7.2 – – 04 0.4 0.4 31.6 – 8.0 – pect of the £50m bank facility bank the£50m of pect s .
pect of the £135m bank of£135m pect the s ub s s not con s s ine in re in tment property held byheld property tment s s idiary Holaw (462) idiary Holaw relate to inve to relate ss Holaw Holaw and wouldrequire s s s regard. regard. pect ofpect the £m imultaneou s s ideredonerou
s s hare of the the of hare Sowcre s tment tment s s t ly ly
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t s
Additional Information Financial Statements Corporate Governance Business Review Overview 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 Company Number: 00528657 Shaw Park Developments Limited 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). s ha Company the RemunerationReport. a The directors The managementKey personnel Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen 137 St. Longbridge from the Group. The wa property Group. the from Longbridge (Sen Garman David of thedaughter 2012, During acquisitionProperty – LickeyRoad, Longbridge which in Transactions thi debt planning mile Clarke ha i entire the to optionacquire an into entered Group the 2010 In (Branston) Properties Limited Branston Nine Elm companie landmarkmulti-pha development the be theto partner the for Ne with Covent Market Garden Authority Sinceyearthe endthe Group ha 23. PO amountAll V s Proffitt & Development Norton Lei Trentham Widnes E Uttoxeter (Inve Regeneration Stoke-on-Trent Limited Regeneration Stoke-on-Trent Non-wholly owned TRAN PARTY 22. RELATED The Company provide Company The s SM E SM s appropriate. Managementfee in the Financial Statement s of £nil (2011: £nil). No guarantee No £nil(2011: of £nil). s Regeneration Limited tate S s s s . Thi T BALANCE BALANCE T a financial intere financial a s . Inthe . addition, Company al s due Groupthe to are uns s tate (Holding s arecon s tone ure Limited s wacontract s s Limited Limited an interean s s beingachieved. ed project will entail therationali entail will project ed subsi s s s idered to be the Group' the be to idered ) Limited Limited ) admini d irectors have an interest S s s d t of le t,at value.market priceThe paid thefor option wa HEET EVENT EVENT HEET iaries inplacenot theat endyear remainand s s . Limited Limited trativeand management s s than 90% were a were 90% than ss
and intere and s s et up VSM (NCGM) Limited, a joint venture with VINCI UK PLC. Thi S tment ACTIONS ecuredand willbe s s have beenhave given receivedor relatedfrom partie s o operateo s ) Limited s s the during charged/(credited) year t and netbalance s acquired on an arm an on acquired keymanagement per ior Independent Director) acquired a new-build re a new-build Director) acquired Independent ior (CONTINUED) (CONTINUED) s
a central trea s ation and maand ation s follows s ettledin ca Management fees ervices 2012 0.2 0.2 : £m ss – – – – – – ued provide and s s ury function which lend s ter planning of theof 57 entire acre planning ter length ba length s s s s h. All amount All h. conditional. A onnel and their and onnel hare capital of capital Bran hare 2011 0.3 0.3 £m s s – – – – – – s a central purcha central a i s £0.1m and exerci for £0.2m. for w Covent GardenCovent w Market s above areabove s
remuneration i s uch no adju s . (0.1) 2012 s s 0.8 2.1 1.4 Interest Interest to and borrow to and £m ton,a companyin which the family of Simon – – – – s s tatedprovi before e ledger s s s due (to)/from due s e of thiof e identialat unit Lickey Road, tment s s dis ite s Company ha 2011 (0.1) 1.6 1.7 s clo £m s ituated next to Vauxhall Cro s s s – – – – – y from is have been made to reflect to made been have s s s edinthe Director s tem to tem contingent on certain on contingent ite in Central London. The s s ub ub s ion s s s ub s 11.1 19.7 idiary undertaking (0.4) (3.7) (7.3) (0.4) 2012 idiarie s
0.8 2.4 Balance s £m £m for doubtful s igned aigned contract idiary s in which ' (11.5) 20.4 2011 (0.5) (4.0) (0.4) (0.2) 6.2 2.4 ss, £m s
Additional Information Financial Statements Corporate Governance Business Review Overview 138 St. Modwen Properties PLC Annual Report and Accounts 2012 Company Balance Sheet as at 30th November 2012
2012 2011 Notes £m £m Fixed assets Tangible fixed assets E 0.5 0.7 Investments held as fixed assets F 650.4 602.6 650.9 603.3 Current assets Debtors (including amounts falling due after more than one year of £221.0m (2011: £205.7m) G 437.8 410.0 Cash at bank and in hand 2.9 3.4 Current liabilities Creditors: amounts falling due within one year H (293.0) (284.8) Net current assets 147.7 128.6 Total assets less current liabilities 798.6 731.9 Creditors: amounts falling due after more than one year H (271.1) (242.5) Net assets 527.5 489.4 Capital and reserves Called up share capital K 20.0 20.0 Share premium account L 102.8 102.8 Capital redemption reserve L 0.3 0.3 Revaluation reserve L 380.6 329.2 Profit and loss account L 21.9 37.6 Share incentive reserve L 2.4 – Own shares L (0.5) (0.5) Equity shareholders' funds 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 Michael Dunn Chief Executive Group Finance Director
The tax currently payable currently i tax The ba The Current taxCurrent asset taxationCurrent s The s The inve Investmentin subsi themight otherwi valuation and amount which annual reflected the in depreciation. However,the depreciationof amount cannot rea s a truea and fairview. If thi inve accountingprinciple The Companie The re re revaluation the to leaseholLong Depreciation i year 5 to 2 over – equipment and machinery Plant, In accordance with SSAP19, inve SSAP19, with accordance In ba Depreciation i lo Tangible a Tangible fixed Tangible fixe Intere receivableInterest Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 139 The principalThe accountingpolicie Compliance with SSAP19 “Accounting for Inve for “Accounting SSAP19 with Compliance Rentalincome aris Rentalincome Revenuei recognition Revenue derivative financial in The Financial Statement Accountingconvention depreciationand explanationan theof departure i arethat taxablenever deductible.or the Bu the i Statement becauStatement The account of preparation Basis ACCOUNTIN (A). s forthe year ended 30 Note hareof net a mea sse s s s pect ofinve pect ed on tax rate tax on ed ed oned price s s s tment potential, to depreciate them would not give a true and fair view and that i and it view fair would and nottotrue them a depreciate potential, give tment s urplu s . Such co Such . s s t receivablet i ured theat fairvalue theof con ine tment s s ss recogni s or deficit ari s s Review. s s ss and note and d to the Company Account Company the to s not provided on inve on provided not provided allon plant, machinery equipmentand rateat s s ss assets d tment properties tment et value.et valuationThe recogni s Act 2006 require 2006 Act prevailing the at Balancedate,Sheet of each a in in t include t s investment properties properties investment s s et and liabilitie ingfrom inve s e excludeit s and law and s s s s recognis edtheto extent that the Companyobtain s ub s erve. Permanent diminution Permanent erve. , other than inve than other , trument d G et out in SSAP19. The directorSSAP19. outThe in et iary,joint anventure s s th s POLICIES s s idiary,jointventure anda have been prepared in a in prepared been have November 2012 November ing on revaluation i revaluation on ing departure from the Act had not been made, the profit the made, been departureAct not thehad from have beenhave prepared theunder hi s s co s ba that are enactedor s ed on an accrual s s and the defined benefit s t item are mea are s ed on the taxable re taxable the on ed s . tment propertie tment are directly attributable to makingthe a s s all propertie tment propertie tment s s tment propertie tment s s s of income or expen
tment propertie tment ummari s iderationreceived, excludingdi s uredat the amount expectedbeto recovere s reflected in the Company’ the in reflected d s s s s edbelow and been have applied con s associate ba e s to depreciated.be thi However, tment Properties tment s s s i ociated companie ssociated arerecogni ccordance with ccordance applicable UK the cos the s ub s s s s given below. given accounted for aon are revalued annually andthe aggregate s i
s s s ultyear.the for taxableThe re . tantively byenacted the Balance date.Sheet con s which are are which s , are are , ection ofection the Company’ s t of acqui of t s ethat are taxable deductibleor otherin year d s iderthat, becau s toricalco companies tated at co at tated s s Account.ss Lo and i depreciation No Profit the through ed the right to theright con ss onably be quantified becau quantified be onably s ” require ” et evenlyover et it ubject to ubject annualrevaluation s itionandchange ssetcapable operatinga of s s s e have been been have e s t conventiont exceptthe for re are includedinthe Company’ s s calculated to offwrite the co s s count res traight-lineba t le s s departure the from Companie s ss
erve e the e s accumulated depreciation depreciation accumulated and VAT. VAT. and s for the financial year would havebeen reduced by s GAAP on a going concern ba concern going a on GAAP iderationin exchangeit for s s pen s s . requirementconflict e propertie expected u s s ult differult s hown cannot be cannot hown s s s i s d from, or paid to, the taxation authoritie taxation the or to, from, paid d in the book the value in ion s s tently thein currentand precedingyear. i s nece over the over lea s s cheme. e depreciatione is from the re s s s ss urplu are heldnot for con s . eful life a ary to adopt SSAP19 in order to giveto order in SSAP19 adopt to ary s intended. intended. s valuation of valuation certainpropertie or temporary deficit i deficit temporary or s s s s t le t s Balance Sheet at the Company’ the at Sheet Balance e term.e eparatelyidentified quantified.or s with generallythe accepted and it furtherexclude s s s ss s of the underlying net a net underlying the of follows ul andaccumulated impairment Act 2006 relating to Actrelating 2006 s es t a t performance. Revenue only one of many factor s timated re timated s reported Incomeinthe i s : , a s s umption but for their for but umption dis s cu s idualvalue, s provided in tran ssed in s s item s , ss ferred s , et s s
s .
s
Additional Information Financial Statements Corporate Governance Business Review Overview 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. 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. 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. The Company ha Company The Cash Flow Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen 141 St. Rental Operatingleases incomeand expen inthes All loanAll bearingInterest loans an borrowing Gain Pen Social Wage A Leis Property The average ofnumber full-time employee Employees(ii) Total fees fee non-audit Total advi Tax complianceTax a Other A audit Total fees Fees Fees Au (i) OPERATIN (C). ha Company The RE (B). Propertie Modwen St. Own shares ACCOUNTIN (A). dmini relatedudit a s ure and other activitie other and ure s payable for the audit of the Company' of audit the payable for re in to LLP paid Deloitte ionco d and lo and s s e Financial Statement s s itfees and and s payable underoperating lea ss ecurityco tration and borrowingand s S ory urance urance s ULT FOR THE FINANCIAL YEAR YEAR FINANCIAL THE FOR ULT s are mea s t S sse s s alarie tatement
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directly attributable tran ss s e cancellation liabilitieof ifiedin equity andare recogni s Act 2006 and ha and 2006 Act s Account on a Accountss on ) employedthe ) by Companyduring the year were a th November 2012 wa 2012 November s ent a Cas s s not includedit action co action s traight-lineba s are recogni h Statement.Flow s £9.0m (2011: £18.0m). (2011: £9.0m s edco at s t s . After . initialrecognition, loan s s s own Profit and Lo and Profit own edre i s s over thelea over t.
s pectively in finance finance in pectively Number 11.4 13.6 £'000 £'000 2012 2012 2012 137 137 137 137 215 215 136 276 139 0.7 1.5 s £m £m 19 50 20 41 50 38 e term.e
ss s Account follow s Number and and 10.1 12.2 £'000 2011 2011 2011 s 132 132 211 134 246 114 0.7 1.4 : 51 41 60 36 £m 3 –
Additional Information Financial Statements Corporate Governance Business Review Overview 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.
2012 2011 p per share £m p per share £m Paid Final dividend in respect of previous year 2.20 4.4 2.00 4.0 Interim dividend in respect of current year 1.21 2.4 1.10 2.2 Total 3.41 6.8 3.10 6.2 Proposed Current year final dividend 2.42 4.8 2.20 4.4
The Employee Benefit Trust waives its entitlement to dividends.
(E). TANGIBLE FIXED ASSETS Long Plant, leasehold machinery investment and properties equipment Total £m £m £m Cost or valuation At 30th November 2011 and 30th November 2012 0.3 2.5 2.8 Depreciation At 30th November 2011 – 2.1 2.1 Charge for the year – 0.2 0.2 At 30th November 2012 – 2.3 2.3
Net book value At 30th November 2011 0.3 0.4 0.7 At 30th November 2012 0.3 0.2 0.5
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. Long leasehold investment properties are currently let under operating leases for the purpose of generating rental income.
Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 143
Many of the joint venture Partners Development Skypark Bu Barton V Inve Property Key 30 At ventures Joint V s Proffitt & Development Norton Lei Trentham E Uttoxeter Regenerati Stoke-On-Trent Limited (462) Holaw Sowcre Propertie Modwen St. VentureModwen St. Development Modwen St. Propertie Heenan Redman Leis ChaucerE S 30 at Cost A A inve of Revaluation Dis A A V INVE (F). At 30 At SM E SM E SM t 30 t ddition 30 t aluation ubsi t 3 po ure Living Limited 0 th th th th th s d November 2012 the principal the 2012 November 2011 November 2011 November November 2012 the jointthe principal 2012 November venture s s al November 2012 November iary companiesiary s tate tate s s t Limited Limited t
s s S s th ine tate s s tate November 2012 November TMENT Uxbridge (Group) Limited (Group) Uxbridge (Holding s ss ureLimited s s Park Limited Park Limited Limited Limited s s tment tment s s Limited Limited s S )Limited Sarl HELD A HELD s s s containchange controlof provi Limited s
s on Limited Limited on Limited Limited Limited Limited hip LLP S s FIXED A FIXED ub s idiarie s SS , all, whichof were held directly by the Company, a were s were: ET S s
ion s , a Country of incorporationof Country s is England & Wale & England England & Wale & England England & Wale & England England & Wale & England Wale & England EnglandWale& EnglandWale& EnglandWale& EnglandWale& s EnglandWale& England & Wale EnglandWale& for common sharehold Luxembourg Percentage 50% 50% 50% 50% ing s uch arrangement s s s s s s s s s s s Proportion of or in subsiin d shareshel Property inve Property Property inve Property Investment companies s 100% Property inve Property 100% 100% Property development Property 100% 100% Property inve Property 100% 100% Property development Property 100% inve Property 100% 100% 100% Property inve Property 100% 100% Property inve Property 100% d 8. 2. 310.3 26.5 283.8 7. 2. 304.8 26.5 278.3 6. 8. 650.4 85.4 565.0 4. 5. 602.6 55.0 547.6 . 81% Property development Property 81% 50% Property development Property 50% 75% Property development Property 75% development Property 81% 80% 80% inary 89 25 51.4 32.5 18.9 55 – (5.5) – (5.5) . (.) 1.9 (2.1) 4.0 iary iary £m £m s d follow
s s Investment tment anddevelopment tment anddevelopment s : Property development Property Property development Property ventures in joint in joint £m £m Lei Lei principal business principal
s s ure operator ure ure operator ure Natureof Natureof business s s s s s tment tment tment tment tment Total £m
Additional Information Financial Statements Corporate Governance Business Review Overview 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 2012 2011 £m £m Amounts falling due after more than one year: Amounts falling due from subsidiaries 215.0 205.7 Amounts due from joint venture and associated companies 6.0 – 221.0 205.7
2012 2011 £m £m Amounts falling due within one year: Trade debtors 0.3 0.4 Amounts due from subsidiaries 196.5 171.4 Amounts due from joint venture and associated companies 6.8 12.0 Other debtors 1.2 1.4 Prepayments and accrued income 3.8 3.1 Corporation tax 2.9 10.1 Deferred tax asset (see Note J) 5.3 5.9 216.8 204.3
(H). CREDITORS 2012 2011 £m £m Amounts falling due within one year: Bank overdrafts 5.4 – Trade creditors 1.2 1.4 Amounts due to subsidiaries 252.1 246.3 Amounts due to joint venture and associated companies 3.9 4.5 Other tax and social security 0.8 0.4 Other creditors 0.8 1.3 Accruals and deferred income 10.3 10.8 Derivative financial instruments 18.5 20.1 293.0 284.8
2012 2011 £m £m Amounts falling due after more than one year: Bank loans 191.1 241.4 Other loans 80.0 – Accruals and deferred income – 1.1 271.1 242.5
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.
Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen St. 145
See Note 3d of the Group Statement the Financial of 3d Note See A Equity A (K). Balance as at 30 Recogni Total of Statement Lo and Profit Balance a Reconciliation of Balance as at 30 Lo and Profit Balance a Reconciliation movementof on timingOther difference s The amount TAXATION DEFERRED (J). Total thanMore five year year five to Two yeartwo to One Le borrowing bank profilethe of maturity The BORROWIN (I). t llotte ss than one year s tart and end yea of end and tart S HARE CAPITAL CAPITAL HARE s d hare capital an s s at 30 at 30 at d s ss ss of deferredtaxation provided andunprovided inthe account fully pai Account Account s s th th
November 2011 November 2011 th th s GS d November 2012 November 2012
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d in pension scheme asset asset scheme pension in of out of d e s d tanding option tanding in d ebtors s are: s to acquire ordinary d Provi 2012 (5.3) (5.3) £m s , i , s as follow e s d hare Unprovi 2011 (5.9) (5.9) s £m : s .
0,6,3 20.0 200,360,931 10p shares Or Number 276.5 100.0 d 91.1 80.0 inary 2012 2012 5.4 £m £m £m £m – –
d e 241.4 241.4 d 2011 2011 (5.3)
(5.9) 0.8 0.6 0.8 £m £m £m £m £m – – – – – – –
Additional Information Financial Statements Corporate Governance Business Review Overview 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
Share Capital Profit Share premium redemption Revaluation & loss incentive Own account reserve reserve account reserve shares £m £m £m £m £m £m At 30th November 2011 102.8 0.3 329.2 37.6 – (0.5) Surplus on revaluation of investments ––51.4– –– Retained loss for the year (Note B) – – – (9.0) – – Transfer share-based payments provision to share incentive reserve–––– 2.1– Share-based payment charge – – – – 0.3 – Dividends paid (Note D) – – – (6.8) – – Actuarial loss on pension scheme (Note M) – – – 0.1 – – Movement on deferred tax relating to pension asset (Note J) –––– –– 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:
2012 2011 Land and Land and buildings Other buildings Other £m £m £m £m Operating leases which expire: In one year or less – 0.1 – – Between one and five years 0.1 0.4 – 0.6 In more than five years 0.5 0.2 0.5 – 0.6 0.7 0.5 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. 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.
(P). RELATED PARTY TRANSACTIONS Details of related party transactions are provided in Note 22 to the Group Financial Statements. • ourIn parentopinionthe companyFinancial Statement Opinion onFinancial or incon or (UK and Ireland). Tho Ireland). and (UK opinionan theon parent companyFinancial Statement companyFinancial Statement identifymaterial incon pre andapplied diadequately a S anyoneto other the than Companyandthe Company’ a them anin auditor’ Annual Report and Accounts 2012 Accounts and Report Annual PLC Properties Modwen 147 St. An auditAn involve Respective responsibilities of have we formed. 30 A • • We reportedhave Other matter Our auditOur work ha • Birmingham, United Kingdom. 4 Kingdom. United Birmingham, in theirpreparationin i • • inopinion:our whichon areMatters we require AccountantChartered for Do Jonathan • opinion: our In Opinion onother matters prescribe • • Thi Practice). which compri We have auditedthe parent company FinancialStatement We have nothing to report in re in report to We nothing have to theto member Auditor’ Company Independent
sse ssurancethethat FinancialStatement s cope of the au with thewith accountingrecord s parentthe company FinancialStatement certaindi s the parentthe company FinancialStatement from branche from we have we receivednot allthe andexplanationinformation 2006; and and 2006; the information given in the the givenin Directorinformation adequate accountingrecord the part of theof part Director the give a true and fair view of the the of view fair true a and give have beenprepared accordancein with the requirement have beenproperly prepared in accordancewith United Kingdom Generally Accepted Accounting Practice; and explained more fully in the Director th s and on behalf of Deloitte LLPDeloitte of behalf on and s November 2012. November report i report entation of the Financial Statement ssmentof: the whether accountingpolicie s i s tencie s clo made s d e the Company Balance Sheet and the related Note the and Sheet Balance Company e the s s worth ( worth s s ure s obtaining evidence about the amount the about evidence obtaining not vi not d of we con s s s it of the Financial been undertaken been s eparatelyon the Group FinancialStatement report and for no other purpoother and no report for s s applicable law and KingdomUnited Accounting Standard S of directors of olely to the Company’ to olely s s e s t. Modwen Propertie i s s S and Statutory Auditor Statutory and S ited by ited u s tencie s tatements enior tandard s s ’ Remuneration Report to be audited ha to audited Report be Remuneration ’ clo iderthe implication s s s s and return s and forand being ed; the rea the ed; s thewith audited FinancialStatement S have not been kept by the parent company, or return or parent company, the by kept been not have pect of the following matters thefollowing of pect th s s ’ remuneration remuneration ’ tatutory Au s d February 2013. February ; or tatetheCompany’ of require u require irectors an irectors d s s reportexceptionto by s o that we might we might that o S Res ’ ’ Report forReport ’ the financialyear s s d are free from material mi . In. addition,we read allthe financialand non-financialinformation Annualinthe Report to tatements by the by Comp s s ; or; onablene s s s s pon member s and the part of the Director the of part the and . to comply withcomply Auditingto the Practice PLC re in d s s ati d forreport. our itor) appropriateare to parentthe company’ s s au s ibilitie pecifiedby law are made;not or s fiedthat givethey truea andfair view. Our re e. To the To e. fulle d ss itor itor s s of , a , s s s s s s Statement, the director member anies Act 2006 Act anies s and di and tate to the Company’ the to tate : in accordancewith applicablelaw and International Standard affair s pectof the parent companyFinancial s a body, in accordance with Chapter 3 of Part 16 of theof 16 Companie Chapter3 Part with of accordance in body, a s s ignificant accounting e s of St. Propertie of Modwen we require for ouraudit.wefor require of theof Companie where the Companie s as s s clo s of St. Modwen Propertie Modwen St. of s ss t extent permitted by law, we door we accept a law, by extentnot permitted t at 30 at as s s s been preparedproperly in accordancewith the Companie tatement, whether tatement,whether cau A to P. The financial reporting framework that ha framework reporting financial The P. to A ures for which the which for FinancialStatement s a body, for ourauditfor body,work, thi a .weIf become aware of any apparent materialmi th s s in the FinancialStatement November 2012; ’ Remuneration Report to be audited are not in agreement agreement be areto audited in Report not Remuneration ’ Report s s Act 2006.Act member s s (United Kingdom GenerallyAccepted Accounting are re are s s timate s Board’s Act 2006 require 2006 Act s PLC the for endedyear 30 s s adequate for our audit have not been received been not have audit for our adequate s pon s s tho circum made by the director the by made s s PLC for yearthe ended ed fraudby or Thierror. Ethical Standard s s iblefor the preparation parentthe of e matter s pon s S tance tatement s s
s ibility i s s ufficient to giveto rea ufficient u s s are prepared i s we requiredare to report, orreport, for opinion the s and havecon been to report toreport if, to you s to auditand expre s s . for Auditor for s ;andthe overall th ss November 2012 November s include umere s s s been applied con on Auditingon sstatement s s onable . s s s s i tate to tate pon s s s an an tentwith i Act 2006. s s ss tently tently Act s s
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Additional Information Financial Statements Corporate Governance Business Review Overview 148 St. Modwen Properties PLC Annual Report and Accounts 2012 Five Year Record
2008 2009 2010 2011 2012 £m £m £m £m £m Rental income* 33.2 33.5 33.7 35.5 36.2 Property profits/(losses)* † 20.9 7.6 21.9 23.8 29.0 Revaluation gains/(losses)* †† (75.9) (122.3) 23.0 33.9 28.0 Profit/(loss) before all tax** (80.1) (120.2) 38.2 51.7 52.8 Earnings/(loss) per share (pence) (37.3)† (59.7) 18.6 21.7 21.3 Dividends paid per share (pence) 3.90 – 1.00 3.10 3.41 Dividend cover (times) (11.0) – 18.6 7.0 6.2 Net assets per share (pence)*** 251.4 200.1 218.6 237.6 256.4 Increase/(decrease) on prior year (12%) (20%) 9% 9% 8% Net assets employed Investment properties 814.3 762.9 828.0 848.7 770.4 Investments 64.2 41.3 49.4 50.3 75.2 Inventories 228.1 192.7 171.6 191.1 175.2 Other net liabilities (282.9) (277.1) (297.3) (267.0) (141.1) Net borrowings (421.5) (318.8) (314.9) (347.1) (366.0) Minority interests (9.5) (8.7) (9.6) (11.6) (11.1) Equity attributable to owners of the Company 392.7 392.3 427.2 464.4 502.6 Financed by Share capital 12.1 20.0 20.0 20.0 20.0 Reserves 380.7 372.7 407.8 444.9 483.1 Own shares (0.1) (0.4) (0.6) (0.5) (0.5) 392.7 392.3 427.2 464.4 502.6
* Including share of joint ventures
** Including pre-tax profit of joint ventures
*** 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. purchasers’ costsatthereporting date.ThecalculationisinlinewithEPRAguidance. estimated net rental income expressed as a percentageNet initialyield—acalculationbytheGroup’s valuersastheyieldthatwould be received external byapurchaser, of basedonthe the acquisition cost, being the market value plus assumed actual Net rental income—therental incomereceivable intheperiodafterpaymentofground rents andnetproperty outgoings. Net debt—totalborrowings lesscashandequivalents. the period end. Net assetvalue(NAV) pershare —equityattributabletoownersoftheParent dividedbythenumberofordinary shares inissueat NED —non-executivedirector. fees. external valuers report valuations net, after theconsideration onthedateofvaluation(asdeterminedbyGroup’s deduction valuers).Inaccordance external withusualpractice,theGroup’s of the prospective purchaser’s costs,Market value—anopinionofthebestpriceatwhichsaleinterest intheproperty wouldcompleteunconditionallyforcash including stamp duty, agent and legal Loan-to-value ratio(LTV) —theratioofGroup netdebttotheGroup property portfolio(excludingjointventures andassociates). banks. LIBOR —theLondonInterbankOffered Rateistheaverageinterest ratethatleadingbanks inLondonchargewhenlendingtoother ventures ordevelopmentagreements. Land bank—theofproperty comprising allofthelandunderGroup’s control, whetherwhollyownedorthrough joint IPD —InvestmentProperty Databank Ltd.,acompanythatproduces anindependentbenchmarkofproperty returns. Initial yield—theannualisednetrent expressed asapercentage ofthevaluation. FinancialReportingStandards.IFRSs —International FinancialReportingInterpretationsIFRIC —International Committee. Gross DevelopmentValue (GDV)—thesalevalueofproperty afterconstruction. Gearing —thelevelofGroup’s bankborrowing (excludingfinanceleases)expressed asapercentage ofnetassets. based onthetimingofincomereceived. Equivalent yield—aweightedaverageoftheinitialandreversionary yieldandrepresents the returnaproperty willproduce could reasonably beexpected tobeobtainedonanewlettingorrent review of theproperty. Estimated rental —theGroup’s value(ERV) valuers’opinionastotheopenmarketrent external which,onthedateofvaluation, outgoings andvoidcostsincludingservicecharges,insurancerates. Estimated netrental income —thepassingcashrent less ground rent atthebalancesheetdate,estimated non-recoverable EPRA netassetvaluepershare —EPRAnetassetvaluedividedbythedilutednumberofshares attheperiodend. together withdeferred taxation onrevaluations andcapitalallowances. EPRA netassetvalue(EPRANAV) —thebalancesheetnetassets,excludingfairvalueadjustmentsfordebtandrelated derivatives reporting byreal estatecompanies. EPRA — the European Public Real Estate Association, a body that has put forwardCSR —CorporateSocialResponsibility. recommendations for best practice for financial and withpre-defined timescalesandcompensationarrangements. Compulsory purchase order (CPO)—thecompulsoryacquisitionoflandbyaplanningauthority, undertakeninthepublicinterest work. approval shouldbeobtained,togetherwiththetechnicalrequirements thatsetthestandards thatshouldbeachievedbythebuilding Building Regulations—theprocedural regulations thatsetoutwhatkind of workneedsBuildingRegulationsapproval andhowthat sustainable developmentsandmeasure theenvironmental impactofbuildings. BREEAM —BuildingResearch EstablishmentEnvironmental Assessment Methodisanindustry-widesystemofstandards toassess obtaining planningconsent,achievingremediation milestonesandimproving leaseterms. Active management—thecomponentofproperty revaluations delivered asadirect result ofmanagementactionsandinitiativese.g. value (asdeterminedbytheGroup’s valuers),lessanyground external rents payableunderheadleases. Annualised netrents — gross rents as at a reporting date plus, where rent reviews are outstanding, any increases to estimated rental 2012 Accounts and Report Annual PLC Properties Modwen 149 St. Glossary ofTerms
Additional Information Financial Statements Corporate Governance Business Review Overview 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. such authoritiestoexpire attheconclusionofAGMCompanytobeheldafter the dateofpassingthisresolution or26 (b) (a) 14. s 1. Ordinary business resolutions andresolutions 15,16and17willbeproposed asspecialresolutions. at 12.00noontoconsiderand,ifthoughtfit,passthefollowing resolutions. Resolutions1to14inclusivewillbeproposed asordinary n 2012 Accounts and Report Annual PLC Properties Modwen 151 St. (a) 15. Special resolution the authorityhadnotexpired. shares tobegrantedaftersuchexpiryandthedirectors mayallotshares orgrantsuchrightsunderanyoffer oragreement asif expiry ofsuchauthoritywhichwouldormightrequire shares tobeallottedorrightssubscribeforconvertanysecurityinto June 2014,whicheveristheearlier, but,ineachcase,sothattheCompany maymakeoffers andenter intoagreements before the 2. 3. Marketing Suite,InnovationCentre, 1DevonWay, LongbridgeTechnology Park,BirminghamB312TSonWednesday 27 13. 12. 11. 10. 9. 8. 7. 6. 5. 4. n otice ishereby giventhatthe72 pecial business otice ofAnnualGeneralMeeting exchange in,anycountryorterritory fractional entitlementsorlegalpracticalpr subject tosuchexclusionsorotherarrangementsasthedirectors maydeemnecessaryor expedienttodealwithtreasury shares, (ii) (i) £6,678,698 inconnectionwithanoffer bywayofarightsissueto: allot equitysecurities(withinthemeaningofsection560CompaniesAct2006)uptoafurtheraggregate nominalamountof aggregate nominalamount of£6,678,698(theSection551amount);and allot shares intheCompany orgrantrightstosubscribeforconvertanysecurityintoshares intheCompanyuptoan Companies Act2006toexercise allthepowersofCompanyto: pursuant tosuchauthorities,thedirectors begenerallyandunconditionallyauthorisedinaccordance withsection551ofthe That, insubstitutionforallexistingauthoritiesandwithoutprejudice toprevious allotmentsoroffers oragreement toallotmade That thereport ofthedirectors andtheaccountsfor the yearended30 the circumstances setoutinparagraph(b) ofthisresolution) uptoa nominal amountof£1,001,805 (theSection561amount);and constitutes anallotment ofequitysecuritiesbyvirtue ofsection560(3)theCompanies Act2006(ineachcase otherwise thanin the allotmentofequitysecurities pursuanttotheauthoritygrantedbyparagraph(a)ofresolution 14and/oranallotmentwhich Companies Act2006,suchpower tobelimitedto: securities byvirtueofsection560(3) oftheCompaniesAct2006,ineachcasefree oftherestriction insection561ofthe Act 2006)forcashpursuanttothe authoritygrantedbyresolution 14and/orwhere the allotmentconstitutesanofequity pursuant tosection570oftheCompanies Act2006toallotequitysecurities(withinthemeaning ofsection560theCompanies That, insubstitutionforallexistingpowersandsubjecttothepassing ofresolution 14,thedirectors begenerallyempowered That theDirectors’ RemunerationReportfortheyearended30 on theregister ofmembersattheclosebusinesson4 That afinaldividendof2.42pperordinary share forthe yearended30 That thedirectors beauthorised todeterminetheremuneration oftheCompany’s auditor. which accountsare laidbefore theCompany. That DeloitteLLPbereappointed asauditoroftheCompanytoholdoffice untiltheconclusionofnextgeneralmeetingat That BillShannonbere-elected asadirector. That JohnSalmonbere-elected asadirector. That BillOliverbere-elected asadirector. That LesleyJamesbere-elected asadirector. That MichaelDunnbere-elected asadirector. That SimonClarkebere-elected asadirector. That SteveBurkebere-elected asadirector. That KayChaldecottbeelectedasadirector. otherwise considernecessary, holders ofotherequitysecurities,asrequired bytherightsofthosesecuritiesor, subjecttosuchrights,asthedirectors ordinary shareholders inproportion (asnearlyasmaybepracticable)totheirexisting holdings;and nd Annual General Meeting (AGM) of St. Modwen Properties PLC (the Company) will be held at the AnnualGeneralMeeting(AGM)ofSt.ModwenProperties PLC(theCompany)willbeheldatthe , oblems under the laws of, or the requirements of any regulatory body or any stock th April2013. th n ovember 2012beapproved. th th n n ovember 2012bedeclared andpayabletoshareholders ovember 2012bereceived. th March 2013 March 2013 th
Additional Information Financial Statements Corporate Governance Business Review Overview 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, 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 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 should theydeterminethatitisappropriate todoso. authorities availabletorespond tomarketdevelopmentsand toenableallotmentstakeplacewithouttheneedfora general meeting incentive schemesapproved previously byshareholders, butbelievethatitisinthebestinterests oftheCompanytohave The directors havenopresent intentionofexercising theseauthoritiesotherthantofulfiltheCompany’s obligationsunder itsshare Resolution 2isanordinary resolution toapprove theDirectors’ RemunerationReportfortheyearended30 Resolution 2–Directors’ RemunerationReport Copies willbeavailableattheAGM. dividend of2.42pperordinary share inrespect oftheyearended30 Resolution 3 is an ordinary resolution by which Resolution 3–Declarationoffinaldividend shareholders are asked to declare a final dividend. The directors recommendThe report, whichsummarisestheCompany’s policyondirectors’ remuneration, issetoutonpages81to94. a final the Directors’ RemunerationReport.Asthevoteisadvisory, itdoesnotaffect theactualremuneration paidtoanyindividualdirector. 439 oftheCompaniesAct2006requires thatquotedcompanies putbefore shareholders ingeneralmeetingaresolution toapprove Resolution 1isanordinary resolution toreceive theaccountsandreport ofthedirectors fortheyearended30 Resolution 1–Reportandaccounts e 2012 Accounts and Report Annual PLC Properties Modwen St. 153 existing authorities. The authorities will each expire at the earlier of the conclusion of the next AGM of the Company and 26 Articles ofAssociationorotherwise,andare withoutprejudice toprevious allotmentsoragreements oroffers toallotmadeundersuch The authoritiessoughtinparagraphs(a)and(b)ofresolution 14are insubstitutionforallexistingauthoritiesgranted intheCompany’s aggregate nominalamountof£6,678,698. guidance, anadditionalauthoritybeconferred onthedirectors toallotshares inconnectionwitharightsissueuptofurthermaximum practicable datepriortothepublicationofnoticeAGM).Paragraph (b)ofresolution 14 proposes that,inaccordance withABI Following herappointmenttotheBoard on22 Resolutions 4to11are ordinary resolutions whichdealwiththeelectionandre-election ofthedirectors. Resolutions 4to11–Electionandre-election ofdirectors £6,678,698 whichrepresents one-third oftheCompany’s issuedordinary share capitalasat11 Paragraph (a)ofresolution 14will,ifpassed,authorisethedirectors toallotshares uptoamaximumaggregate nominalamountof provided thatitisonlyused toallotshares pursuanttoafullypre-emptive rights issue. they will treat as routine a request for authorityroutine, resolutions seekingauthoritytoallotnewshares representing uptoone-thirdto ofacompany’s allot issuedshare capital.Inaddition, shares representing an additional The AssociationofBritishInsurersone-third (ABI)guidelinesondirectors’ authoritytoallotshares statethatABImemberswillpermit,andtreat as of a company’s issued share capital Resolution 14isanordinary resolution torenew thisauthority. The authorityconferred onthe directors atlastyear’s AGMtoallotshares intheCompanyexpires attheconclusionof2013AGM. Resolution 14–Authoritytoallotshares to authorisethedirectors to determinetheirremuneration. reappoint DeloitteLLPasauditor untiltheconclusionofnextgeneralmeetingatwhichaccountsare laidbefore theCompanyand effectiveness oftheauditprocess andrecommends theirreappointment. Therefore resolutions 12and13are ordinary resolutions to AGM. Deloittehaveindicatedthattheyare willingtocontinueastheCompany’s auditorsandtheAuditCommitteehasreviewed the At lastyear’s AGMshareholders reappointed DeloitteLLPasauditoroftheCompanytoholdoffice untiltheconclusionof2013 Resolutions 12and13–Auditorappointmentremuneration respective skillscomplement oneanothertoenhancetheoveralloperationofBoard. executive director continues tobeeffective, thattheycontinuetodemonstratecommitmenttheirrespective roles andthattheir course oftheyear. Afterconsideringthisevaluation,theChairmanhasconfirmedthatperformanceofeveryexecutiveandnon- The performanceoftheBoard asawhole,wellthecontributionmadebyindividualdirectors, hasbeenreviewed duringthe Biographical detailsofalldirectors are setoutonpages64and65. Code. Corporate Governance the Board attheendof AGM.Allotherdirectors willretire andoffer themselvesforre-election inaccordance withtheUK Kay Chaldecott willretire andoffer herselfforelectionatthe2013AGM.Katherine InnesKerandDavidGarmanwillretire from shareholders ontheregister atthecloseofbusiness on8 xplanatO ry nO tes tO prOpO nd sed resO October2012andinaccordance withtheCompany’s ArticlesofAssociation, th March 2013. lutiO th ns n ovember 2012.Ifapproved, thiswillbepaidon4 th February 2013 (being the latest February2013(beingthelatest th n ovember 2012. Section ovember 2012.Section th n ovember 2012. ovember 2012. th April 2013 to April2013to th June 2014.
Additional Information Financial Statements Corporate Governance Business Review Overview 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. on Monday25 proxy appointmentmadeelectronically willnotbevalidifsenttoanyaddress otherthanthoseprovided orifreceived after12.00noon Properties PLCholdingdetails.Fulldetailsandinstructionsontheseelectronic proxy facilitiesare givenontherespective websites.A proxy electronically byloggingontotheirportfolioatwww.shareview.co.uk andclickingonthelinktovoteundertheirSt.Modwen proxy form).Alternatively, shareholders whohavealready registered withEquiniti’s onlineportfolioservice,Shareview, canappointtheir website atwww.sharevote.co.uk usingtheirpersonalVoting ID,Task IDandShareholder Reference n Shareholders whowouldprefer toregister theappointmentoftheirproxy electronicallycandosothrough viatheinternet Equiniti’s 4. Appointmentofproxies electronically the proxy formmustbesigned bytheappointingshareholder. Any alterationsmadetotheproxy formshouldbeinitialled. form mustbeexecutedunderitscommonsealorthehandofadulyauthorisedofficer orattorney. Inthecaseofanindividual, which thenamesappearinCompany’s register ofmembersinrespect ofthejointholding.Incaseacorporation,proxy holding willbeacceptedtotheexclusionofvotesotherjointholders.Forthispurposeseniorityisdeterminedbyorder in In thecaseofjointholders,voteseniorholderwhotendersavote,whetherinpersonorbyproxy, inrespect ofthe designated account). entitlement (oriftheproxy form hasbeenissuedinrespect ofadesignatedaccountforshareholder, thefullvotingentitlementforthat which theyare authorisedto actasyourproxy. Ifleftblankyourproxy willbedeemedtoauthorisedinrespect ofyour fullvoting to lessthanyourfullvotingentitlement,pleaseenterintheboxnextproxy holder’s namethenumberofshares inrelation to please insertthenameofyourchosenproxy holderinthespaceprovided ontheproxy form.Iftheproxy isbeingappointedinrelation your proxy willvoteorabstain from votingathisorherdiscretion. Ifyouwishto appointaproxy otherthantheChairmanofmeeting, counted inthecalculationofvotesfororagainstresolution. Ifyousigntheproxy formandreturnitwithoutanyspecificdirections withheld optionontheproxy formisprovided toenableyouabstainonanyparticularresolution; itisnotavoteinlawandwillbe The notestotheproxy form explainhowtodirect yourproxy tovoteoneachresolution orwithholdtheirvote.Pleasenotethatthevote should bereturnedtogetherinthesameenvelope. photocopytheproxyto 5.30pm,MondayFriday).Alternatively formwhichhasbeensentyou.Allformsmustbesignedand Call chargesmayvaryifusingothertelephoneproviders. Overseascallersshoulddial+441214157047.Linesare openfrom 8.30am contact theCompany’s registrars, Equiniti,on08713842198(callstothisnumberare chargedat8pperminutefrom aBTlandline. have aproxy formandbelieve thatyoushouldhaveone,orifrequire additional formstoappointmore thanoneproxy, please A proxy formwhichmaybe usedtomakesuchappointmentandgiveproxy instructionshasbeensenttoshareholders. Ifyoudonot 3. Appointmentofproxies –proxy form entitled todosoandwishes. appointment ofaproxy willnotprevent ashareholder from subsequentlyattendingthemeetingandvotinginpersonifheorsheis must beentered ontheCompany’s register ofmembersat6.00pmonMonday25 To beentitledtoattendandvoteattheAGM(andforpurposeofdeterminingnumbervotestheymaycast),shareholders 1. Entitlementtoattendandvote sharehO 2012 Accounts and Report Annual PLC Properties Modwen St. 155 registrar notlessthan48hoursbefore thetimeof meeting,i.e.notlaterthan12.00noononMonday25 For theappointmenttobeeffective, aproxy form(orelectronic appointmentofproxy, seen by thatshareholder. Aproxy neednotbeashareholder oftheCompanybutmustattend meetinginperson. proxy inrelation tothemeetingprovided thateachproxy isappointedtoexercise therightsattachedtoadifferent share orshares held any ofhisorherrightstoattendandspeakvoteonbehalfatthemeeting.Ashareholder mayappointmore thanone A shareholder entitledtoattendandvoteatthemeetingconvenedbynoticeofAGMisappointaproxy toexercise allor 2. Appointmentofproxies –general number ofshares registered intheirnameatthattime. relevant deadlineshallbedisregarded indeterminingtherightsofanypersontoattendandvoteatmeetingrespect ofthe at 6.00pmonthedatewhichistwodaysbeforemeeting).Changestoregister thedateofadjourned membersafter lder nO th March 2013. tes th March 2013(or, intheeventofanyadjournment, ote 4)mustbereceived bytheCompany’s umber (which are printed on the umber (whichare printedonthe th March 2013. The March 2013.The
Additional Information Financial Statements Corporate Governance Business Review Overview 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. communicate withtheCompanyforanypurposesotherthanthoseexpressly stated. You may not use any electronic address provided14. CommunicationwiththeCompany in this notice of AGM or any related documents (including the proxy(iii) acopyoftheCompany’s form) ArticlesofAssociation. to (ii) copiesofthenon-executivedirectors’ lettersofappointment;and (i) copiesofthedirectors’ service contractswiththeCompany; at theplaceofAGMfrom 11.45amuntiltheendofmeeting: The followingdocumentsare availableforinspectionattheregistered office oftheCompanyduringnormalbusinesshoursandwillbe 13. Documentsavailableforinspection 2013 was200,360,931. As at11 12. Total votingrights the CompaniesAct2006. be dealtwithatthemeetingincludesanystatementthatCompanyhasbeenrequired topublishonitswebsiteundersection527of also besenttotheCompany’s auditornolaterthanthetimeitmakesitsstatementavailableonwebsite.Thebusinesswhichmay shareholders requesting thepublicationtopayitsexpenses incomplyingwiththerequest. Anystatementplacedonthewebsitemust circumstances connectedwithanauditoroftheCompanyceasingtoholdoffice sincethelastAGM.TheCompanycannot require the Company’s accounts(includingtheauditor’s report andtheconductofaudit)thatare tobelaidbefore theAGMor(b)any statement onitswebsitesettingoutanymatterthatsuchshareholder proposes toraiseatthemeetingrelating to(a)theauditof Shareholders satisfyingthethreshold requirements insection527oftheCompaniesAct2006canrequire theCompanytopublisha 11. Website publicationofauditconcerns Company’s websiteatwww.stmodwen.co.uk A copyofthisnoticeAGM,andotherinformationrequired bysection311AoftheCompaniesAct2006,canbefoundon 10. Availability ofinformationonwebsite is undesirableintheinterests oftheCompanyorgoodorder ofthemeetingthatquestionbeanswered. disclosure ofconfidentialinformation,(ii)theanswerhasalready beengivenonawebsiteintheformofananswertoquestion,or(iii)it obligation toanswersuchquestionsunless(i)dosowouldinterfere undulywiththepreparation forthemeetingorinvolve Any shareholder attendingtheAGMhasrighttoaskquestionsrelating tothebusinessofmeetingandCompanyhasan 9. Shareholder participation 2012 Accounts and Report Annual PLC Properties Modwen 157 St. capital consistedof200,360,931shares carryingonevoteeach.Therefore thetotal votingrightsintheCompanyasat11 th February2013(beingthelatestpracticabledatepriortopublicationofnoticeAGM),Company’s issuedshare th February February
Additional Information Financial Statements Corporate Governance Business Review Overview 158 St. Modwen Properties PLC Annual Report and Accounts 2012 Information for Shareholders
Financial Calendar Ordinary shares quoted ex-dividend 6th March 2013 2011/12 final dividend record date 8th March 2013 AGM 27th March 2013 2011/12 final dividend payment date 4th April 2013 Announcement of 2013 half year results 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 1,000,001 and above 1,000,001 andabove 5,001 to 10,000 1,001 to 5,000 501 to 1,000 up to 500 By shareholding d i By shareholder Holdings ofordinary shares at30 s • • • • • If youreceive anyunsolicitedinvestmentadvice: persuasive andoftenhavewebsitestosupporttheiractivities. target UKshareholders through operationscommonly knownas‘boilerrooms’. These‘brokers’ canbeverypersistentandextremely discount orsellshares atapremium, oroffers offree companyreports. Suchcontactistypicallyfrom overseasbased‘brokers’ who Shareholders are advisedtobeverywaryofunsolicited mailortelephonecallsoffering free investmentadvice,offers tobuyshares ata s 2012 Accounts and Report Annual PLC Properties Modwen St. 159 * C 500,001 to 1,000,000 100,001 to 500,000 50,001 to 100,000 10,001 to 50,000 i Other limitedcompaniesandcorporatebodies ndividuals nsurance companies,nomineesandpensionfunds Monday to Friday. Monday irectors andconnectedpersons harehO harehO alls 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, to 5.30pm, 8.30am open are Lines providers. telephone other using if vary may charges Call landline. aBT from minute per 8p at charged are number to this alls if thecallspersist,hangup. r call theorganisationbacktoverifytheiridentityusingtelephonenumberlistedforthemonFSAregister; with anunauthorisedfirm,youwillnotbeeligibleto receive paymentundertheFinancialServicesCompensationScheme; checkthatthecallerispr e.g. telephonenumber, address, websiteaddress; obtainthenameofpersoncallingandorganisationtheyrepresent andmakeanoteofanyotherinformationtheygiveyou, eport anysuspicionstotheFSAeitherbycalling08456061234orvisitingwww.fsa.gov.uk/pages/consumerinformation; and lder analysis lder security operly authorised by the Financial Services Authority (FSA) by visiting www.fsa.gov.uk/register/. If you deal th n ovember 2012: Shareholders Shareholders 3,409 1,435 1,052 303 349 542 733 n n 84 33 89 40 26 51 o. o. S S hareholders hareholders 35.23 58 253,882 25.83 18.00 83.70 13.31 0.98 0.64 2.06 8.57 0.81 1.25 . 4 7.4 2.18 % % 143,920,085 142,025,600 19,764,691 42,746,575 12,961,145 12,961,145 19,770,173 3,344,083 3,665,271 2,559,525 ,1, 9 9 6,517,8 2,627,611 565,322 Shares Shares n n o. o. 70.88 21.34 71.83 Sha Sha 9.86 0.28 3.25 9.87 1.83 6.47 1.28 1.67 1.31 0.13 res res % %
Additional Information Financial Statements Corporate Governance Business Review Overview 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
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Designed and produced by Radley Yeldar www.ry.com ST. MODWEN PROPERTIES PLC OFFICEs Yorkshire and North East Company No. 349201 Ground Floor, Unit 2 Residential Landmark Court 2 Devon Way Elland Road Longbridge Technology Park Leeds HEAD OFFICE & MIDLANDS Longbridge LS11 8JT REGIONAL OFFICE Birmingham 0113 272 7070 B31 2TS Sir Stanley Clarke House 0121 222 5747 North Staffordshire 7 Ridgeway Quinton Business Park The Trentham Estate London and South East Birmingham Management Suite B32 1AF 180 Great Portland Street Stone Road 0121 222 9400 London Trentham W1W 5QZ Stoke-on-Trent 020 7788 3700 ST4 8A X 01782 281844 South West and South Wales North West Green Court King’s Weston Lane Chepstow House Avonmouth Trident Business Park Bristol Daten Avenue BS11 8AZ Risley 0117 316 7780 Warrington WA3 6BX Northern Home Counties 01925 825950 First Floor, Unit E1 The Courtyard Alban Park Hatfield Road St Albans Hertfordshire AL4 0LA 01727 732690
www.stmodwen.co.uk [email protected]