THE UK’S LEADING REGENERATION SPECIALIST Annual report and financial statements 2016 St. Modwen Properties PLC Annual report and financial statements 2016 Financial Contents highlights EPRA NAV per share* Strategic report Financial statements 1 What we do 104 Independent auditor’s report 12 Group at a glance 110 Group income statement 460.5p +3.2% 14 Chairman’s statement 110 Group statement of 16 Chief Executive’s review comprehensive income 20 Regeneration across 111 Group balance sheet NAV per share the generations 112 Group statement 22 Our markets of changes in equity 24 Our business model 113 Group cash flow statement 431.0p +4.2% 26 Our resources 114 Group accounting policies and relationships 121 Notes to the Group 30 Our strategy and key financial statements Total accounting return* performance indicators 151 Company balance sheet 34 Operating and 152 Company statement portfolio review of changes in equity 41 Financial review 153 Company accounting policies 4.5% -27.4ppts 45 Risk management 154 Notes to the Company 49 Principal risks and financial statements Total dividend per share uncertainties 163 Five year record Corporate governance Additional information 53 Chairman’s introduction 164 Glossary of terms 6.00p +4.3% to governance 166 Notice of annual 54 The Board general meeting Profit before all tax* 56 The Property Board 178 Information for shareholders 58 Corporate governance report 64 Audit Committee report 71 Nomination Committee report £60.8m -76.5% 74 Directors’ remuneration report 99 Directors’ report Profit before tax £66.9m -71.6% Trading profit* £56.1m -11.4% Earnings per share 24.1p -75.4% See-through loan-to-value 30.5% +0.6ppts Financial review See page 41 * Reconciliations between all the statutory and non-statutory measures and the explanations as to why the non-statutory measures give valuable further insight into the Group’s performance are given in note 2 to the Group financial statements. In particular, profit before all tax is used because it reflects the way the Group is run on a proportionally consolidated basis, and because it also removes the taxation effects on equity accounted entities from the statutory profit before tax figure. What we do Strategic report We respect We take a principled, responsible and long-term approach to transforming governance Corporate brownfield land into cleaner, greener and brighter environments where businesses and communities can thrive. Financial statements Financial We revive We breathe new life into areas of the UK that need it the most, working closely with communities, businesses and government information Additional organisations to create sustainable places for people to live and work. We resource We bring together everything needed to deliver a successful project; our skilled people, trusted suppliers and financial stability make us an attractive partner to work with. We realise We continually reinvest in the business through actively enhancing the value of our property assets at all stages of the development lifecycle. Partners can rely on us to deliver on our promises. Above from left The regeneration of Coed Darcy, a 1,060 acre scheme and the former site of the Llandarcy oil refinery. The Trentham Estate, Stoke-on-Trent continues to attract a growing number of visitors year on year. St. Modwen Properties PLC Annual report and financial statements 2016 1 Branston Leas, Burton upon Trent Creating new communities 1,500 new jobs created A disused barren area of land, lacking any environmental or economic benefits, the site was previously extracted for gravel and filled with pulverised fuel ash, making it a less appealing option for many developers. Progress to date In 2013, St. Modwen secured planning permission for the new Branston Leas community, which includes a total of 660 new homes. The first phase of 64 homes sold within 14 months of being launched, and there was a waiting list of over 200 people for the second phase of 205 homes. Demonstrating that the development is answering the shortfall in new homes in this area, 100% of occupiers are local of which 53% have used Help to Buy. The entire development is set to create 1,500 jobs. The retail centre is already 80% let and an 87,000 sq ft distribution unit has recently been leased to Cimpress, a leading mass customisation company. We will start on site with a further phase of speculative development in the first quarter of 2017, having secured planning permission during 2016 for two industrial and distribution units comprising 328,000 sq ft. Branston Leas Wood is also being delivered, and comprises 175 acres of Creating new communities public realm, which includes play areas, parkland and an 82 acre woodland. The latter is being created in partnership with that enhance the environment The Woodland Trust, the National Forest Company and Staffordshire Wildlife Trust. as well as the local and broader The wood has enabled us to further engage with the local community with the creation economy is a fundamental of a Peace Wood and we have involved approximately 100 volunteers with the part of regeneration. Extending planting of some 17,000 (of 21,000) trees and scattering of 8,000 bluebell seeds. over 280 acres, Branston Next steps We will continue to develop the next phase Leas demonstrates our skill of housing starting on site in 2017. Over the next 12 months, we anticipate the retail at transforming brownfield land centre being fully let and we will consider developing out further speculative phases into sustainable mixed-use of industrial space to answer demand. Planting of the wood will also continue with the new environment being overseen developments. by the Staffordshire Wildlife Trust. Above from left St. Modwen Homes is now progressing with the second phase of 205 homes. The first phase of St. Modwen Homes sold out in just 14 months. We continue to engage with the local community with tree planting events. St. Modwen Properties PLC 2 Annual report and financial statements 2016 82 acres of new woodland Strategic report Corporate governance Corporate Financial statements Financial Additional information Additional 660 new homes St. Modwen Properties PLC Annual report and financial statements 2016 3 St. Andrew’s Park, Uxbridge Tackling complex sites Home to the Battle of Britain, the formal closure of RAF Uxbridge on 31st March 2010 ended 95 years of continuous military service, but the closing of one chapter was the catalyst of a new, more public and community focused feature. VSM, a JV partnership between St. Modwen and VINCI plc, was appointed by the MoD in 2006 as the principal contractor for ‘Project MoDEL’, a task involving the relocation of six London-based MoD units to an integrated site at RAF Northolt. We were charged with delivering the new facilities at RAF Northolt as well as securing planning consent for the six redundant sites, which were available for development for residential, commercial and community uses. Of the six sites, we retained two, including RAF Uxbridge (St. Andrew’s Park) which we are now transforming into a new residential-led mixed-use community. Progress to date Extending over 110 acres, we secured planning consent for the new St. Andrew’s Park community in 2010, to include new homes, commercial space and community facilities. Construction started in 2011 on 470 homes, delivered through our JV with Persimmon plc of which over 275 are sold. In 2016, St. Modwen Homes started on site with a phase of 85 family homes, forming part of the town centre extension. Planning permission was secured in the period for 120,000 sq ft of office space Our innovative approach which will create around 1,000 jobs and enables us to tackle complex could be delivered as early as 2018. Next steps and challenging sites whilst In 2017, we anticipate starting work on the first phase of the consented 249 managing risk throughout apartments. As the town centre begins to take shape, the offices will be developed the development lifecycle, to reflect occupier demand. The 40 acre public park, the largest new to create inspirational and park in Greater London, will come to fruition in 2017 with 167 new trees planted, over 4,800 cubic metres of top soil moved and thriving new business and almost 20 acres seeded. Works to the landscaping will also progress well into residential communities. 2017 as St. Modwen Homes continues to develop the new phase of housing. Above from left St. Modwen Homes started on site with 85 homes in 2016. Over 275 homes built by Persimmon plc are already sold. The John Locke Academy primary school opened in 2014. St. Modwen Properties PLC 4 Annual report and financial statements 2016 1,340 New new homes to be created primary school Strategic report Corporate governance Corporate Financial statements Financial Additional information Additional 40 acre new park St. Modwen Properties PLC Annual report and financial statements 2016 5 Longbridge, Birmingham A long-term commitment to the areas in which we build The birthplace of classic British motoring, the 468 acre Longbridge site was acquired by St. Modwen in 2004, in partnership with the Homes We have a proven strategy and Communities Agency. Since then, the site has been subject to a long treatment process, painstakingly of adding value to the land removing hydrocarbons from the soil and ground water. we own and generating Progress to date returns through commercial We have already added £134m of value to the regional economy and created and residential development 3,700 jobs, following a comprehensive redevelopment programme that has seen: at every stage of the property § delivery of 400 new homes and six acres of new parkland; lifecycle. The regeneration § completion of a £70m town centre; § creation of the Longbridge Technology of Longbridge, Birmingham Park and the Cofton Centre, collectively creating almost 1,000 jobs; reflects this skillset well.