Helical Annual Report 2003

Plain-text annual report

Helical Bar Public Limited Company Report and Accounts 2003 H e l i c a l B a r p l c R e p o r t a n d A c c o u n t s 2 0 0 3 Registered ofﬁce 11-15 Farm Street London W1J 5RS Tel: 020 7629 0113 www.helical.co.uk Corporate Statement Helical Bar plc is a property development and investment company. Our objective is to maximise growth in assets per share using a recurring stream of development and trading proﬁts to build up the investment portfolio. Contents 1-3 4-5 Financial Highlights Chairman’s Statement 6-11 Development Programme 12-17 Investment Portfolio 18-21 Financial Review The Waterfront Business Park, Fleet 43 44 44 Ten Year Review Governance and Corporate Social Responsibility Ofﬁcers and Senior Management 45-46 Directors’ Report 47-49 Corporate Governance Report 50-51 Independent Auditors Report 52-56 Directors’ Remuneration Report Consolidated Proﬁt and Loss Account Balance Sheets 22 23 24 25 Statement of Total Recognised Gains and Losses 57 Corporate Social Responsibility Consolidated Cash Flow Statement 58-59 Notice of Annual General Meeting 26-42 Notes to Financial Statements 60 Financial Calendar Front cover: The Heights, Weybridge Financial Highlights Pre-tax proﬁt £m . 8 5 2 . 2 5 2 . 6 2 2 . 0 2 2 . 0 0 2 Ordinary dividend per share Pence 5 7 3 1 . 0 5 2 1 . 5 1 1 1 . 0 0 0 1 . 0 0 5 1 . 99 00 01 02 03 99 00 01 02 03 Adjusted diluted net asset value per share Pence 4 5 7 9 6 7 0 7 7 Special dividends of 100.0p were declared in respect of the periods ended 31 March 1999 and 31 March 2002. 1 8 5 3 7 4 99 00 01 02 03 Helical Bar plc – ﬁve year summary Rental income Development proﬁts Proﬁts before taxation, sale of investment properties, loss on sale of subsidiary and negative goodwill 31.3.03 £000 29,334 31.3.02 £000 31,384 31.03.01 £000 31.03.00 £000 31.03.99 £000 28,642 26,656 21,482 4,630 17,072 29,507 19,345 21,601 16,739 20,305 25,115 17,465 19,629 Proﬁt on sale of investment properties 2,126 2,463 709 4,555 415 Pre-tax proﬁts Investment portfolio Shareholders’ funds Dividend per ordinary share Special dividend per ordinary share Diluted earnings per share Adjusted diluted net asset value per share Adjusted diluted triple net asset value 25,227 22,573 25,824 22,020 20,044 342,484 439,911 453,607 419,570 332,457 235,881 237,252 233,152 176,636 137,011 15.00p 13.75p 12.50p 11.15p 10.00p – 100.00p – – 100.00p 59.2p 57.8p 67.7p 68.9p 51.5p 770p 702p 769p 663p 754p 655p 581p 516p 473p 406p Contact details Address: 11-15 Farm Street, London W1J 5RS Telephone: 020 7629 0113 Fax: 020 7408 1666 Website: www.helical.co.uk HELICAL BAR PLC REPORT AND ACCOUNTS 2003 1 Financial Highlights continued Performance measures In order to evaluate its overall performance against other small to mid-size capital companies, both here and abroad, Helical looks at equity value added, shareholder’s return and total shareholder return as shown below. The total return from activities and the performance of the property portfolio as measured by the Investment Property Databank are noted on page 3. Equity value added Year ended 31 March Capital employed Return on capital Weighted average cost of capital Spread Equity value added/(lost) Shareholders’ return £m % % % £m 2003 377 3.9 6.1 (2.2) (8.5) 2002 390 10.5 6.3 4.2 19.6 2001 466 18.2 5.9 12.3 52.9 2000 430 19.8 6.0 13.8 43.7 1999 316 18.6 6.2 12.4 32.2 Shareholders’ return shows the increase in adjusted diluted net assets per share plus dividends paid and payable in respect of each year as a percentage of the adjusted diluted net assets per share at the start of each year. Increase/(decrease) in adjusted diluted net asset per share Add: dividends Adjusted diluted net asset value per share at start of year Shareholders’ return Total shareholder return 2003 pence 1.00 15.00 16.00 769 2002 pence 15.00 2001 pence 2000 pence 173.00 108.00 1999 pence (8.00) 113.75 12.50 11.15 110.00 128.75 185.50 119.15 102.00 754 581 473 481 2.1% 17.1% 31.9% 25.2% 21.2% Total shareholder return measures the return to shareholders from share price movements and dividend income. The returns were as follows: Total shareholder return Helical Bar plc UK equity market Listed real estate sector index Direct property Source: New Bridge Street Consultants 1 year from 2002 % pa (26.0) (29.8) (22.2) 10.6 3 years from 2000 % pa 6.7 (15.4) 0.9 9.0 5 years from 1998 % pa 9.3 (6.6) (4.2) 10.6 10 years from 1993 % pa 20.5 5.5 6.9 11.5 15 years from 1988 % pa 10.6 8.5 3.7 9.8 2 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Total return from activities Total return from activities shows the annual portfolio valuation movement plus net earnings before interest, tax and dividends and, for the year to 31 March 2003, negative goodwill. Portfolio valuation movements 2003 £000 2002 £000 2001 £000 2000 £000 1999 £000 (13,434) 18,528 39,320 30,404 19,176 Net earnings before interest, tax and dividends 34,865 37,352 45,065 38,368 32,559 Less: negative goodwill Total return from activities Investment Property Databank (“IPD”) (6,362) – – – – 15,069 55,880 84,385 68,772 51,735 Helical has compared its ungeared property performance against that of portfolios within the Investment Property Databank for the last thirteen years. Despite this year’s results Helical has still managed to outperform all other parties over 3, 5, 10 and 13 years. The returns on shareholder capital earned by Helical are generally higher than those measured by IPD due to the use of gearing. IPD (monthly and quarterly valued funds) ungeared returns Total returns % In year to 31 March Helical IPD benchmark Percentile rank Total returns % Annualised over Helical IPD benchmark Percentile rank ‘0’ means the top ranked fund 2003 6.0 9.9 90 2002 15.6 7.0 1 3yrs 14.7 8.7 0 2001 23.2 9.9 0 5yrs 17.5 10.4 0 2000 23.6 15.1 2 10yrs 18.2 11.4 0 1999 20.1 10.9 1 13yrs 17.2 7.5 0 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 3 Chairman’s Statement The year to 31 March 2003 continued the repositioning of the Company in preparation for the impact of the next economic cycle on the property development and investment sectors. The ofﬁce development programme account of the contingent liabilities of of any future market weakness will more narrowed as buildings were completed deferred tax and the market value of than compensate in the future. The and only one new scheme started during ﬁnancial instruments) rose 6 per cent Company is, in many respects, at a turning the year. At the same time strategic to 702p per share (2002: 663p). point. The sale of over £190m of London positions were taken in several major and South East ofﬁces since January projects which are expected to come to The continued level of proﬁts enables the 2002 has signiﬁcantly reduced the fruition in the second half of the decade. Board to recommend to shareholders a gearing of the Company, strengthening its On the investment side the Company ﬁnal dividend of 9.00p per share (2002: balance sheet and preparing it to take continued to degear, switching away from 8.25p) an increase of 9%. This proposed advantage of the opportunities the start Central London ofﬁces towards the retail dividend, together with the interim of the next cycle will bring. With gearing and industrial sectors. This process has dividend of 6.00p (2002: 5.50p) paid in at its lowest level since it became a continued since the year end with the December 2002, makes a total dividend property company and high levels of £41m sale of Capital House, London NW1. of 15.00p per share (2002: 13.75p). unutilised cash resources, loan facilities Results The year to 31 March 2003 produced a good level of proﬁts with pre-tax proﬁts up This is an increase of 9% on last year. and ungeared investment properties, The total dividend is covered over four the Company has the ability to make times by proﬁts after tax. substantial investment in its chosen 12 per cent to £25.2m. Diluted earnings per share rose to 59.2p per share (2002: The future At a time of cyclical downturn in the sectors. The development programme is de-risked with only one major scheme, at 40 Berkeley Square, London W1, under 57.8p). Falling rental levels in Central London ofﬁce market we have sought to construction, whilst future schemes are London resulted in a revaluation deﬁcit protect our long term growth record by being worked up. Opportunities will come; for the ﬁrst time since January 1996. scaling down our development activity timing is everything. Despite this the Company’s adjusted net and de-risking our investment portfolio. asset value remained steady at 770p per We have accepted more pedestrian short share (2002: 769p) and the Company’s term returns because we believe our John Southwell adjusted triple net asset value, (taking enhanced capacity to take advantage Chairman 4 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 4 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 1. Caption styling 2. Caption styling 40 Berkeley Square, London W1 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 5 Development Programme It is our objective to provide a continuing ﬂow of development proﬁts from pre-let and speculative ofﬁce, retail and industrial schemes in partnership with funding institutions. Whilst a small number of schemes are ﬁnanced with bank funding and, therefore, remain on our balance sheet, the majority of our schemes are forward sold to institutional investors. This policy has a signiﬁcant effect on our return on capital employed and has enabled us to create and sustain one of the largest development programmes in the country. The development process The success of Helical’s development In general, the earlier that acceptable terms can be agreed with a tenant, the Year to 31 March 2003 Proﬁts from the Company’s development programme is dependent upon ﬁnding greater the level of development proﬁt programme have fallen from £17.1m to good sites in attractive locations at the available to the Company. If no tenant is £4.6m to reﬂect both the decreased level right time in the economic cycle which found within a period of time established of development and the worsening ofﬁce our partners, the institutions that buy the in the funding agreement, the Company’s occupational market in our main sphere developments from us, are happy to fund. involvement in the development ceases. of activity being London and the Western Typically, once a site is found and plans Corridor. The Company ﬁnances the are drawn up for a scheme, the Company This development process has two main majority of its development programme will enter into discussions with ﬁnancial characteristics which allow Helical to with institutions thereby sharing the risk institutions that wish to purchase new operate a larger development programme with these partners. With only one developments. These institutions may be than would otherwise be the case. First, scheme currently on site the Company is pension funds, insurance companies, unit the Company’s cash outlay is minimised concentrating for the future on acquiring trusts or investment funds. Once a being usually limited to legal fees, key positions in several major schemes to funding contract is signed the planning fees and option payments. This enable a development pipeline to be built development process can continue with has a signiﬁcant effect on our return on up ready for when the market improves. the institution funding the acquisition of capital employed. Secondly, the the site and the construction of the Company’s ability to walk away from a development. Helical makes its proﬁt development at the end of the process if from completing the development within a tenant is not found without incurring the budget provided by the funding ongoing expenditure reduces its exposure agreement and ﬁnding tenants for the to signiﬁcant development losses. completed building as soon as possible. 6 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 6 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 3 Bunhill Row, London EC1 Ofﬁces The ofﬁce letting market remains in a new schemes at Mitre Square, London development was forward sold for EC3, Wood Lane, White City and Amen £63.5m, reﬂecting a yield of 6.65%, state of lethargy with rental levels in Corner, Bracknell. London and the South-East falling as landlords compete for the few potential tenants that are around. Completed ofﬁce developments Since the Company recommenced to a limited partnership formed by Matrix Securities on behalf of its investors. Under the terms of the sale the total sale proceeds were paid to Helical in advance its development activity in 1993, its of construction with an obligation to The focus of the Company over the last development team has completed new provide the limited partnership with a year has been to complete those schemes ofﬁce developments with a value at rental stream to the date the tenant starts under construction, looking for tenants for completion of over £925m. During the to pay rent. Consequently, the Company’s this space and to prepare a small number year to 31 March 2003 the Company cash balances at the year end include a of major new schemes for the future. completed the following ofﬁce sum of £4.8m (2002: £28.3m) payable During the year the Company has developments: to third parties over the period until the completed the ofﬁce developments at tenant starts to pay rent. 3 Bunhill Row London EC1, The Heights, 3 Bunhill Row, London EC1 Weybridge and The Waterfront Business 3 Bunhill Row is a 95,000 sq.ft. ofﬁce The Heights, Weybridge Park, Fleet. Its only remaining ofﬁce development completed in January 2003. The Heights, Weybridge is a 22 acre development under construction is at The building was pre-let to solicitors ofﬁce campus development of the highest 40 Berkeley Square, London W1. The site Linklaters with an option for them to hand quality comprising 337,000 sq.ft. of at Bridge Wharf, Chertsey was sold during back circa 30,000 sq.ft. to the Company: speculative space in ﬁve distinct the year at cost with a share in any this option was not exercised so the whole buildings. The scheme, which is adjacent potential proﬁts from a future sale of the building has been handed over to the to the UK headquarters of Proctor & site. Preparations continue in respect of tenant. Shortly after the pre-letting the Gamble, was completed in April 2003 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 7 Development Programme continued The Meadows, Camberley and is forward funded with Prudential Park. Completed in March 2002 and Portfolio Managers. currently available to let, the development The Waterfront Business Park, Fleet The ofﬁce development at The Waterfront Business Park, Fleet comprises three buildings completed in October 2002, was funded by Scottish Widows. Current ofﬁce development programme 40 Berkeley Square, London W1 Future ofﬁce development programme Former Dairy Crest Site, Wood Lane, White City A former milk processing plant and distribution unit, this 10.3 acre site was purchased from Dairy Crest in conjunction forward funded by Aberdeen Property 40 Berkeley Square is a prime ofﬁce with Morley Fund Management in October Investors. The smallest building of 12,000 development of 75,000 sq.ft. on the west 2002. The site lies to the south of the sq.ft. has been sold to Conair Group for side of Berkeley Square. Comprising eight A40(M) and is adjacent to the White its own occupation. The two remaining ﬂoors of high speciﬁcation ofﬁces, the City Underground station. The area is buildings comprising 17,400 sq.ft. and building is being redeveloped in a joint emerging as one of Central London’s most 26,700 sq.ft. are available to let. venture with owners Morley Fund signiﬁcant regeneration opportunities, Management. During the year the top with Chelsﬁeld’s 1.3m sq.ft. retail and The Meadows, Camberley three ﬂoors, comprising 20,000 sq.ft., leisure scheme to the south and the BBC The Meadows, Camberley comprises four were let to The Blackstone Group at a proposing a further 1.45m sq.ft. of ofﬁce buildings totalling 140,000 sq.ft. rent of £80 p.s.f. This development broadcasting and production space located by the Blackwater railway station, is due to be completed in Spring 2004. opposite the site. A major mixed use Camberley opposite the Meadows Retail development is planned and detailed 8 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Friary Retail Park, Stafford discussions are taking place with the own part of the site. It is the intention to Market Square, Accrington London Borough of Hammersmith and submit a planning application for circa Market Square, Accrington is a new town Fulham, the Greater London Authority 350,000 sq.ft. net internal area of ofﬁces centre development comprising 11 shops and adjoining landowners. shortly. A substantial pre-let will be including stores for Wilkinsons, JJB and Amen Corner, Bracknell Helical has acquired a number of residential properties and options sought before commencing on site. Poundland. The scheme has a ﬂoor area Retail developments During the year Helical’s retail subsidiary, £7.6m. Forward sold to private investor Bilsdale Properties Ltd the scheme is of 62,000 sq.ft. and an end value of over adjoining land to the extent Helical Retail renewed its joint venture due to be completed in July 2003. that ownership or control extends to with Oswin Developments, run by Jonathan approximately 24 acres of land at Amen Cox, David Egan and Adrian Russell and Friary Retail Park, Stafford Corner, Bracknell. The Company is entered into a new joint venture with Friary Retail Park, Stafford is a retail working to bring forward this site for Overton Developments run by Jim Kelly. scheme due to start on site in late 2003. commercial / residential development. The scheme has the beneﬁt of open A1 After a quiet period consolidating its consent for 38,500 sq.ft. and terms have Mitre Square, London EC3 position Helical Retail now has a number been agreed for a pre-letting to PC World The Company is working in partnership of retail schemes in various stages of for a unit of 15,000 sq.ft. and Pizza Hut with Ansbacher Property Holdings who development. for a restaurant of 3,189 sq.ft. HELICAL BAR PLC REPORT AND ACCOUNTS 2003 9 Development Programme continued Development schemes Current programme Ofﬁces West End Completion Size Sq.ft. Funding Institution Tenants Space Let Sq.ft. 40 Berkeley Square, London W1 March 2004 75,000 Morley The Blackstone Group 20,000 Thames Valley The Meadows, Camberley March 2002 140,000 Scottish Widows The Waterfront Business Park, Fleet October 2002 56,000 Aberdeen Property Investors One building sold 12,000 to Conair The Heights, Weybridge April 2003 337,000 Prudential Portfolio Managers Retail Market Square, Accrington July 2003 62,000 Bilsdale Wilkinsons, JJB Sports, 50,000 Towy Retail Park, Carmarthen Friary Retail Park, Stafford January 2004 May 2004 35,000 38,500 Poundland and others Private individuals Currys, PC World 35,000 Discussions are under way with a number with a view to securing an anchor tenant planning application will be submitted of other retailers for the remaining space. after which a planning application will be in June 2003 and construction is due to Towy Retail Park, Carmarthen signed up by the end of 2003 the scheme 18 month build programme in time for Towy Retail Park, Carmarthen is a could start in 2005 with a target opening trading late 2005 and early 2006. progressed. If an anchor tenant can be commence during March 2004 with an development of two stores totalling date of pre-Christmas 2006. 35,000 sq.ft. for the Dixon Stores Group. Currys will occupy one unit of 20,000 Trinity Square, Nottingham Residential developments The Company has from time to time acquired sq.ft. and PC World the second unit of Trinity Square is a retail led mixed-use sites and created value through obtaining 15,000 sq.ft. Building work is due to development in the heart of the city planning consent for retirement villages. commence in June 2003 with completion centre shopping district adjoining the in January 2004. Victoria Centre. Comprising approximately Lime Tree Village, Dunchurch, Rugby 175,000 sq.ft. of retail space, 60,000 This development involves the The Mint Quarter, Ipswich sq.ft. of leisure and restaurants, 500 refurbishment of a Victorian country house The Mint Quarter, Ipswich is an in-town residential units and 450 parking spaces and the construction of 150 bungalows, retail development of approximately it will be a dramatic landmark building cottages and apartments for retirement. 295,000 sq.ft. in partnership with NCP. constructed of glass and steel offering Work has commenced on the site and is The scheme is currently being marketed double height retail frontages. A full due to be completed by late 2004. 10 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Former Dairy Crest site, Wood Lane, White City Chelsﬁeld’s White City Shopping Centre A40 BBC TV Centre BBC White City Bramshott Place, Liphook, Hampshire Development schemes Planning negotiations continue for a retirement village development comprising 144 apartments, cottages and bungalows. Subject to planning, work is due to start in 2004/05. Future programme Ofﬁces City Size Sq.ft. Mitre Square, London EC3 350,000 West End Wood Lane, White City Thames Valley Amen Corner, Bracknell Retail The Mint Quarter, Ipswich Trinity Square, Nottingham Up to 1m mixed use 500,000 mixed use 295,000 235,000 Gerald Kaye Development Director HELICAL BAR PLC REPORT AND ACCOUNTS 2003 11 Investment Portfolio Our investment philosophy is based on four guiding principles. Helical actively manages its investment portfolio, rotating between sectors to maximise its exposure to growth stock. Gearing is used on a tactical basis, being raised to accentuate property performance when property returns are judged to materially outperform the cost of debt. The average number of properties held is kept small to facilitate fast repositioning of the portfolio and encourage management focus on key assets. Finally, there is a preference for multi-let stock where value can be added through refurbishment and lease restructuring. Investment Portfolio – valuation statistics Central London ofﬁces South East ofﬁces Industrial Out of town retail Town centre retail Total portfolio Sector weightings West End City Other London All Central London ofﬁces South East ofﬁces Industrial Out of town retail Town centre retail 12 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Capital value movements -9.4% +6.4% +0.3% +11.6% -3.3% -4.1% Valuation Yields Initial Reversionary Equivalent 8.1% 7.5% 8.4% 6.4% 7.0% 7.9% 9.0% 8.0% 10.7% 7.5% 9.1% 9.2% 8.6% 8.6% 10.3% 7.3% 8.4% 8.9% True equivalent 9.1% 9.1% 11.0% 7.6% 8.8% 9.4% June 2003 June 2002 Change 12% 6% 25% 43% 5% 32% 13% 7% 36% 15% 20% 71% 5% 18% 6% 0% -24% -9% +5% -28% 0% +14% +7% +7% Otford Road Retail Park, Sevenoaks Over recent years we have maintained a break clauses and lease expiries in 2004. was provided by our retail warehouses up large exposure in Central London ofﬁces The proﬁt over historic cost on these 11.6%, and our South East ofﬁces, which as the boom in rents has delivered transactions (all acquired 1997-1999) rose 6.4% due to restructuring the principal exceptional returns. By the start of 2002 is well over £50m. the cycle appeared to be turning – occupational lease at High Wycombe. A town centre retail decline of 3.3% was due vacancy rates were beginning to rise and As a result of the sales only 6.3% of the to writing off the acquisition costs of the rental values starting to fall. Taking such net ofﬁce income is now vulnerable to breaks purchase of Garden Square, Letchworth warning signals to heart, we embarked on or lease expiries over the next three years made at the year end. a sales programme and have raised when occupational market conditions are £190m, cutting our capital invested in likely to be weakest. London and South East ofﬁces by more A major setback for the year was the loss of a 90,000 sq.ft. letting to Metronet at than half. The net surplus of sales over valuation was Shepherds Building which aborted after £2.1m over the ﬁnancial year. Over the last nearly a year of negotiations. Had the During the ﬁnancial year we sold six years we have sold £464m of property letting signed, the uplift in value on this 60 Sloane Avenue, SW3 for £65.6m, representing turnover of 148% based on property would have extinguished most of Cheapside House, EC2 for £47.8m and the current portfolio size. In every year we this year’s valuation decline across the 141/3 Drury Lane, WC2 for £13.3m. The have exceeded valuations on sales. entire portfolio. combined initial yield on these sales was 6.7%. Further ofﬁce sales in Basingstoke Despite our sales programme, we were The current valuation yields of 7.9% initial, and Epsom, which were also subject to unable to insulate ourselves fully from the 9.2% reversionary and an equivalent yield of imminent lease expiries, raised an impact of the downturn in the ofﬁce market. 8.9% allow for notional purchasers’ costs of additional £7.3m. Since the ﬁnancial year We are disappointed to report a valuation 5.75%. In practice, Helical earns a yield of end we have sold Capital House, NW1 for decline of 4.1% due to a write down of 8.3%, anticipated to rise to 9.8% on assuming £41m where the leases were subject to 9.4% on our London ofﬁces. Some comfort full occupancy at current rental values. HELICAL BAR PLC REPORT AND ACCOUNTS 2003 13 Investment Portfolio continued Wednesﬁeld, West Midlands Investment Portfolio Address Central London Ofﬁces Rex House SW1 71 Kingsway WC2 5-10 Bury Street EC3 66 Prescot Street E1 61 Southwark Street SE1 4/5 Paris Gardens SE1 Interchange NW1 Rotunda Complex NW1 Shepherds Building W14 South East Ofﬁces Waterfront Business Park, Fleet Westﬁelds House, High Wycombe Out of Town Retail Weston Retail Pk, Weston Super Mare Sainsbury’s Superstore, Wednesﬁeld 1&2 Spruceﬁeld Retail Pk, Lisburn Otford Road Retail Pk, Sevenoaks Homebase, St Austell 14 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Size Average Passing Rent (p.s.f.) (sq.ft.) Vacancy Rate Year Acquired % Ownership (where not 100%) 91,000 30,000 28,000 110,000 65,000 45,000 65,000 51,000 155,000 640,000 45,000 27,000 72,000 140,000 69,000 52,000 43,000 36,000 340,000 £57 £37 £34 £22 £18 £25 £32 £22 £25 £30 £22 £12 £19 £8 £10 £15 £14 £8 £10 0% 27% 14% 0% 0% 0% 0% 10% 65% 15% 0% 7% 2% 0% 0% 0% 0% 0% 0% 2000 1998 1997 2001 1998 2000 1999 1998 2000 2000 2001 1999 2001 2001 2003 2002 50% 90% 75% 75% 50% 75% 75% Garden Square, Letchworth Address Town Centre Retail Garden Square, Letchworth WH Smiths, Chiswick Industrial Aycliffe Portfolio Peterlee Portfolio Hawtin Park, Blackwood Sawston, Cambridge Avonbridge, Avonmouth Walton Summit, Preston Standard Estate, Woolwich Golden Cross, Hailsham Waterfront Business Park, Fleet Size Average Passing Rent (p.s.f.) (sq.ft.) Vacancy Rate Year Acquired % Ownership (where not 100%) 165,000 5,000 170,000 1,570,000 640,000 251,000 235,000 234,000 142,000 105,000 102,000 45,000 3,324,000 £35ZA £85ZA £40ZA £2.60 £2.50 £2.85 £4.30 £4.75 £3.75 £6.30 £5.00 £6.50 £3.10 10% 0% 9% 17% 25% 0% 0% 8% 0% 57% 0% 0% 16% 2003 2000 1987 1987 2003 2003 1995 1990 2002 2001 2000 67% 70% All properties are freehold except Rex House (expires 2035), Avonbridge (expires 2071), Letchworth (expires 2187) and Blackwood (expires 3002). HELICAL BAR PLC REPORT AND ACCOUNTS 2003 15 Investment Portfolio continued Trading properties Address Description Year % Acquired Ownership Bus Depot, Milton Keynes Optioned site, pre-let to Homebase (80,000 sq.ft.) subject to planning. Leisure Plaza, Milton Keynes 119,000 sq.ft. leisure scheme with potential for residential or supermarket use. 2001 2003 Mill Street, Slough Barrows Road, Harlow 164,000 sq.ft. industrial estate to be refurbished and redeveloped this year in 13 units. 2002 125,000 sq.ft. industrial estate in course of refurbishment and redevelopment for owner occupier sales. 50% 50% 90% 2002 80% 2002 1988 2001 2002 100% 75% 50% 50% Southﬁeld Road, Dunstable 103,000 sq.ft. vacant industrial shed with residential potential plus a let 34,000 sq.ft. ofﬁce. Cardiff Royal Inﬁrmary Vacant hospital let on a peppercorn lease with residential potential. 2/6 Curtain Road, London EC2 7,000 sq.ft. ofﬁce forming part of a 700,000 sq.ft. development site. Computer Centre, Wythenshawe 111,000 sq.ft. vacant computer centre. All properties are freehold except Wythenshawe (expires 2067). Weighted average unexpired lease term on investment and trading properties Ofﬁces 10.2 Industrial Retail Total 7.9 12.4 9.6 During the ﬁnancial year we made seven • Two pre-let developments and two lease material purchases – four industrial estates, restructurings of retail warehouses at two retail warehouses and a shopping Weston Super Mare, Milton Keynes and centre amounting to £48m, with a further Sevenoaks. £10m industrial estate acquired after the • A shopping centre at Letchworth with year end. We continue to take a cautious terms agreed to change the anchor view of market conditions and are only tenant and scope for inﬁll development. seeking to acquire properties where value can be added through change of use, lease Over the coming year we would anticipate restructurings and lettings, refurbishment our ofﬁce weighting to fall further. In the and owner occupier sales. meantime, our current level of gearing Despite the downturn in the ofﬁce market, Helical’s history as a property company, we have managed to assemble a collection places us in a strong position to capitalise of properties with potential. These include: on any market weakness. which at 45% is the lowest at any time in • Industrial estates at Slough and Harlow with schemes ongoing or planned for owner occupier sales at premium prices. • Properties in Fleet, Dunstable, Cardiff and Milton Keynes with latent value to be released via change of use to residential. Michael Brown Investment Director 16 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Mill Street, Slough Standard Estate, Woolwich HELICAL BAR PLC REPORT AND ACCOUNTS 2003 17 Financial Review Proﬁts Proﬁts before tax, including exceptional items, increased by 12% to £25.2m (2002: £22.6m). Proﬁts after tax and minority interest rose by 2% to £17.4m (2002: £17.1m). Rental income Gross rental income for the year fell to £29.3m (2002: £31.4m) reﬂecting the Company’s decision to sell some of its main Central London ofﬁce investments. During the year £131m of investment properties, yielding £8.8m of rental income were sold. £50m was used to add to the investment and trading portfolio with passing rent of £3.4m. Rent reviews and new lettings, net of lease expiries and rent free periods, added rental income of £3.6m on the remaining portfolio. These additions to the Company’s rental stream did not compensate for the loss of rental income as the Company continued its drive to de-gear and reduce its exposure to the Central London ofﬁce market. Rental costs rose from £3.6m to £3.7m. Net rents, after deduction of these rental costs, fell to £25.6m from £27.8m. Trading proﬁts Trading proﬁts of £0.3m were up on last year (2002: £0.2m) and came from the sale of a small industrial unit in Slough purchased last year and a small ofﬁce in Cardiff. The Company made £0.4m from short term dealing in the shares of listed property companies. Development proﬁts Proﬁts from the Group’s funded development programme were substantially down on the previous year at £4.6m (2002: £17.1m). In the year to 31 March 2003 the Group recognised the remaining ofﬁce development proﬁt at 1 Bunhill Row, London EC1, 200 Hammersmith Road, London W6 and One Plough Place, London EC4. In addition it booked proﬁts at its ofﬁce development at 3 Bunhill Row, London EC1. This latter development provided the majority of the development proﬁts in the year as City solicitors, Linklaters, committed themselves to the remaining ﬂoors in the building. Developments Proﬁts 2003 £000 2002 £000 2001 £000 2000 £000 1999 £000 4,630 17,072 29,507 19,345 21,601 Administrative expenses Administrative expenses, before an exceptional negative goodwill credit, fell by 41% from £10.9m to £6.4m due to the reduced level of performance related bonuses. Administrative expenses, before goodwill and executive bonuses fell by 3% from £6.1m to £5.9m. The result for the year included the write back of negative goodwill of £6.4m as a consequence of the disposal of 60 Sloane Avenue, London SW3 by a subsidiary, Glenlake Limited. As was explained in last year’s annual report and accounts this negative goodwill arose as a result of the restatement of the acquisition of Glenlake following the adoption of FRS19 by the Group and the recognition of a deferred tax asset in Glenlake as at the date of its acquisition. The tax losses giving rise to this deferred tax asset have been used during the period (against proﬁts arising on the disposal of investment properties) and the deferred tax asset of £5.7m has therefore been written off as part of the tax charge for the period resulting in an increase in the deferred tax provision in the consolidated balance sheet. The net impact of the write back of negative goodwill and the increase in deferred tax is an increase in distributable proﬁts of £0.7m. Proﬁt on sale of investment properties During the year to 31 March 2003 the Group sold £134.7m of investment property on which it made £2.1m (2002: £2.5m) of proﬁt over book value and sale costs. The properties sold included ofﬁce investments at 60 Sloane Avenue, London SW3, Cheapside House, London EC2, 141-143 Drury Lane, London WC2, Dextra Court, Basingstoke and West Street Epsom. In addition a small industrial unit in Hailsham was sold. 18 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Net interest payable The Company has always sought to protect itself against adverse movements in interest rates through the use of interest rate caps and short to medium term ﬁxed rates when rates are low rather than through the issue of expensive longer term debentures and other ﬁxed rate borrowings. This policy has continued to bear fruit in the year under review where the application of prevailing low rates of interest to the reduced level of borrowings resulted in a reduction in interest payable to £11.9m (2002: £18.0m). Interest receivable during the year on cash balances was £2.2m (2002: £2.6m). The Company tends to keep actual cash balances to the minimum to reduce the costs of borrowing but as with last year there was a higher than normal level of cash on deposit throughout the year due to the forward sale of 3 Bunhill Row. The proceeds received at the time of the pre-sale have now been expended on the construction of the ofﬁces resulting in much reduced cash balances at the year end. Finance arrangement costs of £0.8m (2002: £0.4m) reﬂect a higher than normal write off of reﬁnancing costs in respect of cancelled bank facilities. Interest has been capitalised in respect of the development sites at Amen Corner, Bracknell and Liphook but is much reduced from previous periods. Net interest payable Interest payable on bank loans Other interest payable Finance arrangement costs Interest capitalised Interest receivable Loan termination costs 2003 £000 9,543 2,351 783 2002 £000 2001 £000 2000 £000 1999 £000 14,804 19,514 17,893 14,097 3,215 408 1,343 572 2,350 365 1,760 256 (795) (1,006) (1,597) (2,661) (2,088) (2,244) (2,642) (591) (1,563) (1,510) – – – (36) – 9,638 14,779 19,241 16,348 12,515 Taxation The corporation tax charge for the year is greater than the standard rate of 30% due to the sale of £134.7m of investment property. However, despite these sales and the release of revaluation gains of £34.0m, the use of tax losses and the impact of indexation has reduced the taxable element of these proﬁts to £10.0m. The use of available tax losses is expected to mean that a corporation tax charge to the proﬁt and loss account in the year to 31 March 2004 will not arise out of the sale of Capital House, London NW1. The deferred tax charge for the year reﬂects the write off of the deferred tax asset referred to above and the additional provision required in respect of capital allowances claimed in the year. These charges have been offset by a reduction in the provision where we have sold investment property and no longer have the potential for a clawback of the allowances claimed to date. Dividends The Board is recommending to shareholders at the Annual General Meeting on 23 July 2003 a ﬁnal dividend of 9.00p per share (2002: 8.25p) to be paid on 24 July 2003 which, with the interim dividend of 6.00p, makes a total of 15.00p. This is an increase of 9% on the previous year’s dividend of 13.75p. This is covered over four times by proﬁts after tax. Dividends Interim Final Special 2003 pence 6.00 9.00 2002 pence 5.50 8.25 2001 pence 5.00 7.50 2000 pence 4.40 6.75 1999 pence 4.00 6.00 15.00 13.75 12.50 11.15 10.00 – 100.00 – – 100.00 15.00 113.75 12.50 11.15 110.00 Including special dividends, the Company’s average dividend over the last ﬁve years was 52p or 8% on the current share price. HELICAL BAR PLC REPORT AND ACCOUNTS 2003 19 Financial Review continued Earnings per share Earnings per share in the year to 31 March 2003 were 61.2p (2002: 60.0p) per share and on a diluted basis were 59.2p (2002: 57.8p) per share. Earnings per share Earnings per share Diluted earnings per share 2003 pence 61.2 59.2 2002 pence 60.0 57.8 2001 pence 70.0 67.7 2000 pence 55.0 53.7 1999 pence 66.7 50.7 Investment portfolio During the year the investment portfolio changed signiﬁcantly with sales of over £130m of Central London ofﬁces and the purchases of over £42m of retail and industrial units. In addition around £5m of capital expenditure was spent on refurbishing various ofﬁce, industrial and retail buildings. At 31 March 2003 there was a revaluation deﬁcit of £13.4m (2002: surplus £18.5m) on the investment portfolio. Investment portfolio Cost or valuation at 1 April Additions at cost Disposals Revaluation Cost or valuation at 31 March 2003 £000 2002 £000 2001 £000 2000 £000 1999 £000 439,911 453,607 419,570 332,457 250,718 47,175 32,838 24,341 163,029 76,920 (131,168) (65,062) (29,624) (106,320) (14,357) (13,434) 18,528 39,320 30,404 19,176 342,484 439,911 453,607 419,570 332,457 Since the year end Capital House has been sold at its 31 March 2003 valuation of £41m. Net asset values The retained proﬁts of £13.1m (2002: retained losses £15.3m) less the revaluation deﬁcit of £13.4m (2002: surplus £18.5m) and movements in minority interest led to a reduction in net assets to £238.5m (2002: £239.1m after payment of £28.4m special dividend). In calculating the net assets per share a provision has been made for the deferred tax which would become payable should all the capital allowances claimed to date be clawed back as a taxable adjustment in the Company’s tax computations. The Company believes this clawback is unlikely and accordingly, has calculated the diluted net asset value assuming this not to be the case in line with current practice. Adjusted diluted net assets per share of 770p compare to 769p in 2002. After allowing for the unprovided deferred tax on revaluation surpluses and the value ascribed to ﬁnancial instruments, the adjusted diluted triple net asset value of the Company has increased from 663p to 702p at 31 March 2003. Net asset values per share Diluted net asset value – 1 Diluted net asset value – 2 2003 pence 770 702 2002 pence 769 663 2001 pence 754 655 2000 pence 581 516 1999 pence 473 406 1 – net asset value diluted for share options, but adding back the provision of deferred tax on clawback of capital allowances. 2 – net asset value diluted for share options, unprovided deferred tax, FRS13 value of ﬁnancial instruments but adding back the provision of deferred tax on clawback of capital allowances. 20 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Borrowings and ﬁnancial risk The Company’s ongoing reduction in its exposure to the Central London ofﬁce market has continued the reduction in debt and, at 31 March 2003, net debt had fallen to £140.9m from £152.4m. The Company’s net gearing fell to 59% from 64% at 31 March 2002. The sale of Capital House since the year end has further reduced net debt and gearing to £105.6m and 45% at 12 June 2003. Net debt and gearing Net debt Gearing 2003 2002 2001 2000 1999 £140.9m £152.4m £232.8m £243.1m £174.5m 59% 64% 99% 131% 123% The Company seeks to manage ﬁnancial risk by ensuring that there is sufﬁcient ﬁnancial liquidity to meet foreseeable needs and to invest surplus cash safely and proﬁtably. At the year end, Helical had £53m of undrawn bank facilities and cash of £16.1m (2002: £75.5m). In addition it had £115m of uncharged property on which the Company could borrow funds. Helical insures against adverse movements in interest rates through the use of a number of interest rate hedging instruments. Borrowings of £49m are capped until 2004 and £111m until 2006 at interest rates between 6.00% and 7.50%. A further £80m is capped at 7.00% from January 2006 until September 2009. The Company has £18.5m of interest rate swaps at rates which vary from 5.0% to 5.8% and a ﬁxed rate loan of £8.8m at 9.05% until 2009. The Company has interest rate ﬂoors at 4.73% on £80m until January 2006, at 4.83% on £80m from January 2004 to January 2006, and on £80m at 4.80% from January 2006 until September 2009. As at 12 June 2003 Helical average interest rate was 5.6%. FRS13 requires disclosure of ﬁnancial instruments on a fair value basis and at 31 March 2003 an adjustment to reﬂect this basis would reduce net assets, after tax relief, by £5.1m (2002: £3.6m) which, if provided for, would reduce diluted net assets by 15p (2002: 6p). Nigel McNair Scott Finance Director HELICAL BAR PLC REPORT AND ACCOUNTS 2003 21 Consolidated Proﬁt and Loss Account Helical Bar plc and subsidiary undertakings for the year ended 31 March 2003 Turnover (including share of joint ventures’ turnover) Less: share of joint ventures’ turnover Turnover Cost of sales Gross proﬁt Administrative expenses – administration – negative goodwill Operating proﬁt Share of operating proﬁt in joint ventures Proﬁt on sale of investment properties Loss on sale of subsidiary Proﬁt on ordinary activities before interest Net interest payable and similar charges Proﬁt on ordinary activities before taxation Tax on proﬁt on ordinary activities Proﬁt on ordinary activities after taxation Equity minority interests Proﬁt for the year Dividends paid and proposed Retained proﬁt/(loss) for the year By company By subsidiaries By joint ventures Earnings per share Diluted earnings per share Note 2 2 3 3/10 4 5 6 7 22 8 9 9 Year Ended 31.3.03 £000 Year Ended 31.3.02 £000 136,758 137,618 (1,566) (986) 135,192 136,632 (103,968) (91,646) 31,224 44,986 (6,391) (10,888) 6,362 – 31,195 34,098 1,544 2,126 – 986 2,463 (195) 34,865 37,352 (9,638) (14,779) 25,227 22,573 (7,660) (5,353) 17,567 17,220 (160) (164) 17,407 17,056 (4,275) (32,328) 13,132 (15,272) 43,234 (4,857) (30,432) (10,457) 330 61.2p 59.2p 42 60.0p 57.8p The notes on pages 26 to 42 form part of these ﬁnancial statements. 22 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Balance Sheets Helical Bar plc and subsidiary undertakings at 31 March 2003 Fixed assets Intangible assets Tangible assets Investments Investment in joint ventures – share of gross assets – share of gross liabilities Current assets Stock Debtors Investments Cash at bank and in hand Creditors: amounts falling due within one year Net current (liabilities)/assets Total assets less current liabilities Creditors: amounts falling due after more than one year Provisions for liabilities and charges Capital and reserves Called-up share capital Share premium account Revaluation reserve Capital redemption reserve Other reserves Proﬁt and loss account Equity shareholders’ funds Equity minority interests Note 10 11 12 13 14 15 16 17 18 20 21 22 22 22 22 22 The ﬁnancial statements were approved by the Board of Directors on 12 June 2003. M.E. Slade Director N.G. McNair Scott Director The notes on pages 26 to 42 form part of these ﬁnancial statements. Group Company 31.3.03 £000 31.3.02 £000 31.3.03 £000 31.3.02 £000 912 (6,240) 343,098 440,685 9,011 1,762 9,599 1,937 23,244 23,184 (21,482) (21,247) – 614 – 774 12,329 12,163 – – – – – – 354,783 445,981 12,943 12,937 41,112 25,793 13 29,585 – 141 21,289 183,032 118,674 16,137 75,514 1 – 345 – 39,021 83,055 126,389 183,377 157,836 (85,643) (107,936) (18,246) (35,946) (2,588) 18,453 165,131 121,890 352,195 464,434 178,074 134,827 (110,992) (224,597) (2,706) (728) – (69) – (56) 238,497 239,109 178,005 134,771 1,496 35,271 93,599 7,101 291 1,496 1,496 35,271 35,271 142,100 7,101 291 – 7,101 1,987 1,496 35,271 – 7,101 1,987 98,123 50,993 132,150 88,916 235,881 237,252 178,005 134,771 2,616 1,857 – – 238,497 239,109 178,005 134,771 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 23 Statement of Total Recognised Gains and Losses Helical Bar plc and subsidiary undertakings for the year ended 31 March 2003 Statement of total recognised gains and losses Proﬁt for the year after taxation Minority interest Revaluation of investment properties – subsidiaries – joint ventures Minority interest in revaluation surplus Total recognised gains and losses Prior year adjustment – negative goodwill – deferred tax Total recognised gains and losses since last ﬁnancial statements Notes on historical cost proﬁts and losses Reported proﬁt on ordinary activities before taxation Realisation of property revaluation gains of previous years Historical cost proﬁt on ordinary activities before taxation Year Ended 31.3.03 £000 Year Ended 31.3.02 £000 17,567 17,220 (160) (164) (13,434) 18,792 (470) (599) 2,904 – – 1,477 (905) 36,420 (6,892) (187) 2,904 29,341 31.3.03 £000 31.3.02 £000 25,227 33,998 22,573 5,606 59,225 28,179 Historical cost proﬁt/(loss) for the year retained 47,130 (9,666) 31.3.03 £000 31.3.02 £000 17,407 17,056 (4,275) (32,328) 13,132 (15,272) (13,434) 19,110 (470) 1,477 – (599) – (318) (905) 8 (1,371) 4,100 237,252 233,152 235,881 237,252 Reconciliation of movements in shareholders’ funds Proﬁt for the year Dividends paid and proposed Revaluation of investment property – subsidiaries – joint ventures Revaluation deﬁcit realised on sale of subsidiary Minority interest in revaluation surplus Issue of shares Net movement in shareholders’ funds Opening shareholders’ funds Closing shareholders’ funds The notes on pages 26 to 42 form part of these ﬁnancial statements. 24 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Consolidated Cash Flow Statement Helical Bar plc and subsidiary undertakings for the year ended 31 March 2003 Net cash (outﬂow)/inﬂow from operating activities Returns on investment and servicing of ﬁnance Taxation Capital expenditure and ﬁnancial investment Acquisitions Equity dividends paid Cash ﬂow before management of liquid resources and ﬁnancing Management of liquid resources Financing – issue of shares – decrease in debt – reﬁnancing costs (Decrease)/increase in cash Note 23 24 24 24 25 26 Reconciliation of net cash ﬂow to movement in net debt (Decrease)/increase in cash in the year Cash (inﬂow)/outﬂow from management of liquid resources Cash outﬂow from change in debt Debt arrangement expenses Movement in net debt in the year Net debt 1 April 2002 Net debt 31 March 2003 Year Ended 31.3.03 £000 Year Ended 31.3.02 £000 (27,133) 65,634 (9,910) (16,062) (3,945) (4,967) 86,588 40,068 (841) (178) (32,470) (3,694) 12,289 28,634 80,801 (20,285) – 8 (71,594) (37,046) (57) (96) (30,728) 23,382 31.3.03 £000 (30,728) (28,634) 71,651 31.3.02 £000 23,382 20,285 37,142 (783) (408) 11,506 80,401 (152,399) (232,800) (140,893) (152,399) The notes on pages 26 to 42 form part of these ﬁnancial statements. HELICAL BAR PLC REPORT AND ACCOUNTS 2003 25 Notes to the Financial Statements 1. Principal accounting policies Basis of preparation The ﬁnancial statements have been prepared in accordance with applicable United Kingdom accounting standards and under the historical cost convention, as modiﬁed by the revaluation of investment properties. The principal accounting policies of the Group are set out below. The policies have remained unchanged from the previous year. Basis of consolidation The Group ﬁnancial statements consolidate those of the Company and its subsidiary undertakings drawn up to 31 March 2003. Proﬁts or losses on intra group transactions are eliminated in full. Turnover Turnover represents rental income, the proceeds from the sale of trading properties and developments and proceeds from the sale of listed investments. For funded developments, turnover comprises the increase in the valuation of work during the year and proﬁt recognised on each development. Income from the sale of trading properties is included in the proﬁt and loss account when, in the opinion of the directors, a binding contract of sale exists. Depreciation Depreciation is calculated to write down the cost to residual value of all ﬁxed assets, excluding investment properties, by equal annual instalments over their expected useful economic lives. The annual rates generally applicable are: – short leasehold property – leasehold improvements – vehicles & ofﬁce equipment length of lease 10% 25% Developments The attributable proﬁt on developments is recognised once their outcome can be assessed with reasonable certainty. In the case of developments funded by institutions this proﬁt is recognised on the letting of the developments. Stock Stock is stated at the lower of cost and net realisable value. Long-term contract balances included in stock are stated at cost, after provision has been made for any foreseeable losses and the deduction of applicable payments on account. Deferred taxation In accordance with FRS19 the Group makes full provision for timing differences which are primarily in respect of capital allowances on plant and machinery and industrial buildings allowances, both types of allowances derived from assets acquired with, or subsequently purchased for, the Group’s investment property portfolio. Deferred tax assets and liabilities provided for under FRS19 are discounted to reﬂect the time value of money between the balance sheet date and the dates that it is estimated that the underlying timing differences will reverse. Following the sale of a property, any deferred tax provisions not required will be released to the proﬁt and loss account. Interest capitalised on development properties Interest costs incurred on development properties are capitalised until the earliest of: – the date when the development becomes fully let; – the date when the income exceeds outgoings; and, – the date of completion of the development. Investment property Completed investment properties are included in the balance sheet at their open market values. Any surplus arising is credited to the revaluation reserve and any temporary deﬁcits are netted off against the remaining balance on the reserve. Permanent diminutions in value below original cost are reﬂected through the proﬁt and loss account. In accordance with the Statement of Standard Accounting Practice No. 19 – Accounting for Investment Properties, freehold investment properties and leasehold investment properties where the unexpired term is over twenty years are not depreciated but are valued by an external valuer at least every three years. In years where an external valuation is not commissioned, a valuation is undertaken by a suitably qualiﬁed member of the Company’s staff. 26 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 This policy represents a departure from statutory accounting principles which require depreciation to be provided on all ﬁxed assets. The directors consider that this policy is necessary in order that the ﬁnancial statements may give a true and fair view because current values and changes in current values are of prime importance rather than the calculation of systematic annual depreciation. Depreciation is only one of many factors affecting annual valuation. Financing costs The Group uses derivative ﬁnancial instruments to manage exposure to ﬂuctuations in interest rates. Financial assets are recognised in the balance sheet at the lower of cost and net realisable value. Provision is made for diminution in value where appropriate. The costs of arranging ﬁnance for the Group, including ﬁnancial instruments entered into to protect against the effects of interest rate movements, are written off to the proﬁt and loss account over the terms of, and in proportion to, the associated ﬁnance. Goodwill Goodwill arising on acquisition is treated as an intangible asset and the cost written off in equal instalments over its useful economic life. The useful economic life is estimated to be 15 years. Employees share ownership plan trust (the “Trust”) Shares in Helical Bar plc owned by the Trust are stated at cost less provision for any permanent diminution in value. Any deﬁcit arising in the future between the original cost of the shares and their net realisable value will be funded by the Company. Joint venture companies The Group’s share of the proﬁts or losses and other recognised gains or losses of the joint ventures are included in the Group proﬁt and loss account and statement of total recognised gains and losses, respectively. Where the accounting periods covered by audited ﬁnancial statements are not coterminous with those of the Group, the share of proﬁts or losses of the joint ventures has been arrived at from the last audited ﬁnancial statements available and unaudited management accounts to the Group’s balance sheet date. The Group balance sheet includes the investment in the joint ventures and the Group’s share of net assets and the goodwill arising on the acquisition of the interest in so far as it has not already been amortised. The Company balance sheet shows the investment in the joint ventures at cost less amounts written off. Liquid resources Liquid resources are managed by the Group by investing as short-term cash deposits at prevailing deposit rates whilst ensuring appropriate access to such funds to meet foreseeable needs. 2. Turnover and gross proﬁt on ordinary activities before taxation The analysis of turnover and gross proﬁt by function is as follows: Trading property sales Rental income Developments Other income and provisions Gross proﬁt Central overheads Interest payable less receivable Share of joint venture company proﬁts Turnover Gross proﬁt Year Ended 31.3.03 £000 Year Ended 31.3.02 £000 Year Ended 31.3.03 £000 Year Ended 31.3.02 £000 2,588 29,334 91,412 11,858 2,282 349 31,384 25,619 102,803 163 4,630 626 154 27,827 17,072 (67) 31,224 44,986 (6,391) (10,888) (9,638) (14,779) 1,544 986 Proﬁt before taxation, proﬁt on sale of investment properties, loss on sale of subsidiary and negative goodwill 16,739 20,305 All sales were within the UK. All turnover is attributable to continuing operations. An analysis of property assets can be found in note 11 and the directors do not consider a further analysis of net assets to be appropriate. HELICAL BAR PLC REPORT AND ACCOUNTS 2003 27 Notes to the Financial Statements continued 3. Administrative expenses Administration Negative goodwill Total administrative expenses Operating proﬁt on ordinary activities is stated after: Staff costs during the year: – salaries and other remuneration – social security costs – other pension costs Depreciation and amortisation – tangible ﬁxed assets – goodwill Auditors’ remuneration: – audit services – non-audit services Year Ended 31.3.03 £000 Year Ended 31.3.02 £000 6,391 10,888 (6,362) – 29 10,888 3,426 7,590 323 104 604 100 3,853 8,294 230 51 108 18 267 52 106 58 Details of directors’ remuneration are included in the Directors’ Remuneration Report on pages 52 to 56. With the exception of the pension contributions referred to in the Directors’ Remuneration Report, other pension costs relate to payments to individual pension plans. The average number of employees of the Group during the year was: Management and administration 4. Sale of investment properties Net proceeds from the sale of investment properties Book value (note 11) Proﬁt on sale of investment properties 5. Net interest payable and similar charges Interest payable on bank loans and overdrafts Finance arrangement costs Other interest payable and similar charges Interest capitalised Interest receivable and similar income 31.3.03 31.3.02 25 25 31.3.03 £000 31.3.02 £000 133,294 67,525 (131,168) (65,062) 2,126 2,463 31.3.03 £000 9,543 783 2,351 (795) (2,244) 31.3.02 £000 14,804 408 3,215 (1,006) (2,642) 9,638 14,779 Interest payable on bank loans and overdrafts includes the Company’s share of interest payable by joint ventures of £935,000 (2002: £708,000). 28 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 6. Taxation on proﬁt on ordinary activities The tax charge is based on the proﬁt for the year and represents: – United Kingdom corporation tax at 30% (2002: 30%) – Adjustments in respect of prior periods Current tax charge Deferred tax – origination of timing differences (note 20) Tax on proﬁt on ordinary activities Year Ended 31.3.03 £000 Year Ended 31.3.02 £000 8,337 (2,847) 5,490 2,170 4,811 1 4,812 541 7,660 5,353 The deferred tax charge includes the Company’s share of deferred tax provision of joint ventures of £192,000 (2002: nil). Factors affecting tax charge for period: The tax assessed for the period is lower than the standard rate of corporation tax in the UK (30%). The differences are explained below: Proﬁt on ordinary activities before tax Proﬁt on ordinary activities multiplied by standard rate of corporation tax in the UK of 30% (2002: 30%) Effect of: – Payments for use of tax losses – Expenses not deductible for tax purposes – Capital allowances for period in excess of depreciation – Chargeable gain in excess of proﬁt on sale of investment property – Capitalised interest – Other timing differences – Utilisation of losses Current tax charge for period 7. Dividends Attributable to equity share capital Ordinary – interim paid 6.00p (2002: 5.50p) per share – ﬁnal proposed 9.00p (2002: 8.25p) per share Total 15.00p (2002: 13.75p) per share – special payable nil (2002: 100.00p) per share 31.3.03 £000 31.3.02 £000 25,227 22,573 7,568 6,772 3,112 86 911 102 (2,586) (2,947) 264 – (107) – 787 (109) (100) (605) 8,337 4,811 31.3.03 £000 31.3.02 £000 1,705 2,570 4,275 – 1,563 2,345 3,908 28,420 4,275 32,328 The interim dividend of 6.00p was paid on 19 December 2002 to shareholders on the register on 29 November 2002. The ﬁnal dividend, if approved at the AGM on 23 July 2003, will be paid on 24 July 2003 to shareholders on the register on 13 June 2003. HELICAL BAR PLC REPORT AND ACCOUNTS 2003 29 Notes to the Financial Statements continued 8. Parent company The Company has taken advantage of section 230 of the Companies Act 1985 and has not included its own proﬁt and loss account in the ﬁnancial statements. The ﬁnancial proﬁt for the year of the Company was £47,509,000 (2002: £27,471,000). 9. Earnings per share The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. Shares held by the ESOP, which has waived its entitlement to receive dividends, are treated as cancelled for the purposes of this calculation. The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends on the assumed exercise of all dilutive options. Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below. Basic earnings per share Dilutive effect of share options 17,407,000 28,421,537 964,200 61.2 17,056,000 28,419,782 1,090,450 Year Ended 31.3.03 Weighted average no. of shares Earnings £ Per share amount pence Earnings £ Year Ended 31.3.02 Weighted average no. of shares Per share amount pence 60.0 Diluted earnings per share 17,407,000 29,385,737 59.2 17,056,000 29,510,232 57.8 10. Intangible ﬁxed assets Group Cost at 1 April 2002 Additions Disposals Cost at 31 March 2003 Amortisation at 1 April 2002 Provision for the year Eliminated on disposals Amortisation at 31 March 2003 Net book amount at 31 March 2003 Net book amount at 31 March 2002 Goodwill £000 767 841 – Negative goodwill £000 Total £000 (6,238) (5,471) – 6,238 841 6,238 1,608 – 1,608 645 51 – 696 912 122 124 – (124) – – 769 51 (124) 696 912 (6,362) (6,240) Additions in the year include the acquisition of the minority 25% shareholding in Helical Retail Limited which is now a 100% subsidiary of Helical Bar plc. Negative goodwill was recognised, at 31 March 2002, as a consequence of the adoption of FRS19 and represented the excess of the value of the assets of Glenlake Limited over the consideration paid for those assets in June 1999. The assets included a sum of £6,362,000 (net of acquisition costs) representing the fair value of tax losses acquired with Glenlake Limited. The non-monetary assets of Glenlake Limited were disposed of during the year and, consequently, the negative goodwill has been written off. 30 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 11. Tangible ﬁxed assets Group Cost or valuation at 1 April 2002 Additions at cost Disposals Revaluation Cost or valuation at 31 March 2003 Depreciation at 1 April 2002 Provision for the year Eliminated on disposals Depreciation at 31 March 2003 Net book amount at 31 March 2003 Net book amount at 31 March 2002 Investment Properties Freehold £000 Short leasehold property & Leasehold improvements £000 £000 397,061 23,929 (131,168) 42,850 23,246 – (10,138) (3,296) 279,684 62,800 – – – – – – – – 279,684 62,800 397,061 42,850 646 – – – 646 319 47 – 366 280 327 Vehicles & ofﬁce equipment £000 Total £000 968 152 441,525 47,327 (256) (131,424) – (13,434) 864 343,994 521 183 (174) 530 840 230 (174) 896 334 343,098 447 440,685 Interest capitalised in respect of the development of investment properties is included in tangible ﬁxed assets to the extent of £1,013,000 (2002: £2,244,000). Interest capitalised during the year in respect of investment properties in the course of development was £nil (2002: £365,000). Company Cost at 1 April 2002 Additions at cost Disposals Cost at 31 March 2003 Depreciation at 1 April 2002 Provision for the year Eliminated on disposals Depreciation at 31 March 2003 Net book amount at 31 March 2003 Net book amount at 31 March 2002 Short leasehold property & improvements £000 Vehicles & ofﬁce equipment £000 Total £000 646 – – 646 319 47 – 366 280 327 968 152 (256) 1,614 152 (256) 864 1,510 521 183 (174) 530 334 447 840 230 (174) 896 614 774 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 31 Notes to the Financial Statements continued 11. Tangible ﬁxed assets continued The investment properties have been valued on an open market basis at 31 March 2003 as follows: Cushman & Wakeﬁeld Healey & Baker, International Real Estate Consultants Allsop & Co, Chartered Surveyors DTZ Debenham Tie Leung, International Property Advisors Jones Lang LaSalle, International Real Estate Consultants Drivers Jonas, Chartered Surveyors Knight Frank, Chartered Surveyors Directors’ valuation The net deﬁcit arising of £13,434,000 (2002: surplus £18,528,000) has been transferred to the revaluation reserve. The historical cost of investment property is £249,441,000 (2002: £299,435,000). £000 258,585 35,000 21,000 16,000 8,400 3,060 439 342,484 12. Fixed asset investments Employees’ Share Ownership Plan Trust – own shares Shares in subsidiary undertakings at cost The movement in the year was as follows: At 1 April 2002 Acquired during year Disposed of during year Provisions released At 31 March 2003 Group Company 31.3.03 £000 9,011 – 31.3.02 £000 9,599 – 31.3.03 £000 9,011 3,318 31.3.02 £000 9,599 2,564 9,011 9,599 12,329 12,163 31.3.03 £000 31.3.02 £000 31.3.03 £000 31.3.02 £000 9,599 9,546 12,163 11,837 – (588) – – – 53 846 (680) – 273 – 53 9,011 9,599 12,329 12,163 Following approval at the 1997 Annual General Meeting the Company established the Helical Bar Employees’ Share Ownership Plan Trust (the “Trust”) to be used as part of the remuneration arrangements for employees. The purpose of the Trust is to facilitate and encourage the ownership of shares by or for the beneﬁt of employees by the acquisition and distribution of shares in the Company. At 31 March 2003 the Trust held 1,361,939 (2002: 1,491,939) ordinary shares in Helical Bar plc over which options had been granted. At 31 March 2003 the Trust held nil (2002: nil) ordinary shares over which no options had been granted. Interests in joint venture companies At 31 March 2003 the Group and the Company had interests in the following joint venture companies: Prescot Street Investments Ltd Grosvenor Hill (Spruceﬁelds) Ltd United Kingdom United Kingdom Ordinary Ordinary 50% 50% Property investment 50% 50% Property investment Country of incorporation Class of share capital held Proportion held Group Company Nature of business 32 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 12. Fixed asset investments continued The Company’s principal subsidiary undertakings, all of which have been consolidated, are: Name of undertaking 61 Southwark Street Ltd* Nature of business Investment Aycliffe and Peterlee Development Company Ltd Development and trading Aycliffe and Peterlee Investment Company Ltd* Baylight Developments Ltd Dencora (Docklands) Ltd Dencora (Dunstable) Ltd Dencora (Harlow) Ltd Chancerygate (Albion) Ltd Chancerygate (Mill Street) Ltd Glenlake Ltd* Harbour Developments (Bracknell) Ltd Helical Bar (Berkeley Square) Ltd Helical Bar (Bunhill Row) Ltd Helical Bar (Chiswell Street) Ltd* Helical Bar (CL) Investments Ltd* Investment Investment Investment Trading Trading Trading Trading Investment Development Development Development Development Investment Helical Bar Developments (South East) Ltd Development and trading Helical Bar (Hawtin Park) Ltd Helical Bar (Rex House) Ltd Helical Bar Services Ltd Helical Bar Trustees Ltd Helical Bar (Wales) Ltd* Helical Bar (White City) Ltd Helical Properties Ltd Helical Properties (Basingstoke) Ltd* Helical Properties Investment Ltd Helical Properties Retail Ltd Helical Retail Ltd Helical Retail (RBS) Ltd* Helical (CR) Ltd Helical (Fleet) Ltd Helical (HIS) Ltd Helical (Letchworth) Ltd Helical (Liphook) Ltd Helical (SA) Ltd Helical (Sevenoaks) Ltd Helical (St Austell) Ltd Helical (Wednesﬁeld) Ltd Helical (Westﬁelds) Ltd Investment Investment Management Services Trustee of Proﬁt Sharing Scheme Trading Development Investment and trading Investment Investment Investment Development and trading Development and trading Development and trading Investment Investment Investment Development (Jersey) Investment Investment Investment Investment Investment Intercontinental Land and Development Co. Ltd* Investment development and trading Networth Ltd* Helical (Interchange) Ltd Helical Properties (WSM) Ltd* Investment Investment Investment Percentage of ordinary share capital held 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 90% 75% All principal subsidiary undertakings operate in the United Kingdom and, unless otherwise indicated, are incorporated and registered in England and Wales. *Ordinary capital is held by a subsidiary undertaking. HELICAL BAR PLC REPORT AND ACCOUNTS 2003 33 Notes to the Financial Statements continued 13. Stock Development sites Properties held as trading stock Group Company 31.3.03 £000 20,593 20,519 31.3.02 £000 15,464 14,121 41,112 29,585 31.3.03 £000 31.3.02 £000 – – – 141 – 141 Interest capitalised in respect of the development of sites is included in stock to the extent of £1,141,000 (2002: £633,000). Interest capitalised during the year in respect of development sites amounted to £795,000 (2002: £641,000). 14. Debtors Trade debtors Amounts owed by joint venture undertakings Amounts owed by subsidiary undertakings Other debtors Prepayments and accrued income 15. Current asset investments UK listed investments at cost The market value of listed investments at 31.3.03 was £13,000 (2002: £1,000). 16. Cash at bank and in hand Rent deposits and cash secured against debt repayable within one year Cash held to fund future development costs Free cash Group Company 31.3.03 £000 4,412 6,552 – 2,995 11,834 31.3.02 £000 5,155 6,487 31.3.03 £000 1,193 6,552 31.3.02 £000 – 6,487 – 173,570 111,892 151 9,496 466 1,251 85 210 25,793 21,289 183,032 118,674 Group Company 31.3.03 £000 31.3.02 £000 31.3.03 £000 31.3.02 £000 13 13 1 1 – – – – Group Company 31.3.03 £000 2,142 5,087 8,908 31.3.02 £000 3,247 28,300 43,967 16,137 75,514 31.3.03 £000 31.3.02 £000 – – 345 345 – – 39,021 39,021 34 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 17. Creditors: amounts falling due within one year Bank overdrafts and term loans Trade creditors Corporation tax Social security costs and other taxation Dividends payable Other creditors Accruals and deferred income 18. Creditors: amounts falling due after more than one year Bank loans repayable within: – 1 – 2 years – 2 – 5 years – after 5 years Deferred arrangement costs Group Company 31.3.03 £000 31.3.02 £000 31.3.03 £000 46,038 3,316 12,027 31.3.02 £000 – 568 3,961 – 201 2,847 – 2,570 30,765 162 439 112 540 6,217 5,598 1,152 2,570 4,685 19,383 11,021 4,053 207 30,765 4,820 53,754 85,643 107,936 18,246 35,946 Group Company 31.3.03 £000 31.3.02 £000 31.3.03 £000 31.3.02 £000 15,105 81,925 14,720 3,438 124,261 98,382 111,750 226,081 (758) (1,484) 110,992 224,597 – – – – – – – – – – – – Bank overdrafts and term loans in creditors falling due within one year and after one year are secured against properties held in the normal course of business by subsidiary undertakings to the value of £284,109,000 (2002: £378,416,000). These will be repayable when the underlying properties are sold. Bank overdrafts and term loans exclude the Groups’ share of borrowings in joint venture companies of £14,355,000 (2002: £14,520,000). HELICAL BAR PLC REPORT AND ACCOUNTS 2003 35 Notes to the Financial Statements continued 19. Financing and ﬁnancial instruments The policies for dealing with liquidity and interest rate risk are noted in the Financial Review on pages 18 to 21. Short-term debtors and creditors Short-term debtors and creditors have been excluded from the following disclosures. Bank overdraft and loans – maturity Due after more than one year Due within one year Group 31.3.03 £000 31.3.02 £000 110,992 224,597 46,038 3,316 157,030 227,913 The Group has various undrawn committed borrowing facilities. The facilities available at 31.3.03 in respect of which all conditions precedent had been met were as follows: Expiring in one year or less Expiring in more than one year but not more than two years Expiring in more than two years Interest rates Fixed rate borrowings – ﬁxed – swap rate plus bank margin – swap rate plus bank margin – swap rate plus bank margin Weighted average Floating rate borrowings Total borrowings Deferred arrangement costs Floating rate borrowings bear interest at rates based on LIBOR. Group 31.3.03 £000 9,500 10,000 33,560 31.3.02 £000 10,000 10,000 86,233 53,060 106,233 % Expiry 9.050 Feb. 2009 5.656 Sep. 2005 4.965 Mar. 2007 5.846 Jun. 2006 31.3.03 £000 8,830 9,040 5,925 3,500 % Expiry 31.3.02 £000 9.050 Feb. 2009 9,231 – – 6.890 Oct. 2002 6.450 July 2002 – 50,000 49,000 7.140 Apr. 2007 27,295 8.090 Mar. 2003 108,231 130,493 157,788 (758) 157,030 121,166 229,397 (1,484) 227,913 36 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 19. Financing and ﬁnancial instruments continued Hedging In addition to the ﬁxed rates, borrowings are also hedged by the following ﬁnancial instruments: Instrument Current – cap – cap – collar – ﬂoor Future – ﬂoor – collar Gearing Total borrowings Cash Net borrowings Net assets Gearing Value £000 Rate % Start Expiry 49,000 6.000-6.100 80,000 7.500 31,000 4.730-6.500 49,000 4.730 July 2004 Jan. 2006 Jan. 2006 Jan. 2006 80,000 4.830 Jan. 2004 Jan. 2006 80,000 4.800-7.000 Jan. 2006 Sept. 2009 31.3.03 £000 31.3.02 £000 157,030 227,913 (16,137) (75,514) 140,893 152,399 238,497 239,109 59% 64% If the payment of the special dividend on 26 April 2002 were to be taken into account, the Group’s gearing level at 31 March 2002 would have been 76%. Fair value of ﬁnancial assets and ﬁnancial liabilities Borrowings Interest rate swaps Other ﬁnancial instruments 31.3.03 31.3.02 Book Value £000 Fair Value £000 Book Value £000 Fair Value £000 157,788 159,127 229,383 230,256 – 555 (223) 5,185 – (223) 1,242 565 157,565 164,867 229,160 232,063 The fair value of ﬁnancial assets and ﬁnancial liabilities represents the mark to market valuations at 31 March 2003 and 31 March 2002. The adjustment to net assets from a recognition of these values, net of tax relief, would be to reduce diluted net asset value per share by 15p (2002: 6p). HELICAL BAR PLC REPORT AND ACCOUNTS 2003 37 Notes to the Financial Statements continued 20. Provision for liabilities and charges – deferred taxation Deferred taxation provided for in the ﬁnancial statements is set out below: Accelerated capital allowances Other timing differences Less: – tax losses carried forward – discount Discounted provision for deferred tax Group Company 31.3.03 £000 3,124 42 3,166 – (460) 31.3.02 £000 5,822 754 6,576 (5,684) (164) 2,706 728 31.3.03 £000 31.3.02 £000 81 – 81 – (12) 69 69 – 69 – (13) 56 The Group has applied the provisions of FRS19 Deferred Tax, which requires that deferred tax be recognised as a liability or asset if the transactions or events that give the Group an obligation to pay more or less tax in the future have occurred by the balance sheet date. In accordance with FRS19, the Group makes full provision for timing differences which are primarily in respect of capital allowances on plant and machinery, industrial buildings allowances and tax losses. Amounts unprovided are: Unrealised capital gains Group Company 31.3.03 £000 31.3.02 £000 31.3.03 £000 31.3.02 £000 17,144 32,102 17,144 32,102 – – – – No provision has been made for taxation which would accrue if the investment properties were sold at their revalued amounts. The adjustment to net assets resulting from a recognition of these amounts would be to reduce diluted net asset value per share by 53p (2002: 99p). 38 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 21. Share capital Authorised – 688,954,752 (2002: 688,954,752) ordinary shares of 5p each Allotted, called up and fully paid Attributable to equity interests: – 29,913,476 (2002: 29,913,476) ordinary shares of 5p each 31.3.03 £000 31.3.02 £000 34,448 34,448 34,448 34,448 1,496 1,496 1,496 1,496 Share options At 31 March 2003 options over 2,553,323 (2002: 2,489,221) new ordinary shares in the Company and 1,361,939 (2002: 1,491,939) purchased shares held by the ESOP had been granted to directors and employees under the Company’s share option schemes. During the year options over 64,102 new ordinary shares were granted and options over 130,000 purchased shares were exercised. Exercise price per share pence Number of shares Date from which exercisable Expiry date of options Senior Executive 1988 Share Option Scheme Subscription options Options granted: – 11 July 1997 – 29 September 1997 – 27 November 1997 Purchase options Options granted: – 27 November 1997 – 10 July 1998 Helical Bar 1999 Share Option Scheme Subscription options Options granted: – 8 March 1999 – 8 January 2001 – 21 November 2002 Purchase options Options granted: – 8 March 1999 – 18 December 2000 – 8 January 2001 – 15 November 2001 Helical Bar 1999 Approved Share Option Scheme Subscription options Options granted: – 8 March 1999 – 21 November 2002 412.5 467.5 452.5 452.5 565.0 365,000 11 July 2002 10 July 2007 100,000 29 September 2002 28 September 2007 394,000 27 November 2002 26 November 2007 76,000 27 November 2001 26 November 2007 400,000 10 July 2002 9 July 2008 442.5 1,547,768 8 March 2004 7 March 2009 780.0 707.5 30,000 59,862 8 January 2006 7 January 2011 21 November 2007 20 November 2012 442.5 750.0 780.0 766.5 93,000 8 March 2004 7 March 2009 529,000 18 December 2005 17 December 2010 34,102 8 January 2006 7 January 2011 229,837 15 November 2006 14 November 2011 442.5 707.5 52,453 8 March 2002 7 March 2009 4,240 21 November 2005 20 November 2012 3,915,262 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 39 Notes to the Financial Statements continued 22. Share premium and reserves Non-distributable Distributable Group At 1 April 2002 Proﬁt retained Revaluation of investment property – subsidiaries – joint ventures Minority interest in revaluation of investment property Realised on disposals At 31 March 2003 Company At 1 April 2002 Proﬁt retained At 31 March 2003 Proﬁt & loss account £000 50,993 13,132 – – – Share premium account £000 Capital redemption reserve £000 Other reserves £000 Revaluation reserve £000 35,271 7,101 291 142,100 – – – – – – – – – – – – – – – – (13,434) (470) (599) (33,998) 33,998 35,271 7,101 291 93,599 98,123 35,271 7,101 1,987 – – – 35,271 7,101 1,987 – – – 88,916 43,234 132,150 23. Reconciliation of operating proﬁt to net cash inﬂow from operating activities Operating proﬁt Depreciation of ﬁxed assets Release of provision Loss on sale of ﬁxed assets Amortisation of goodwill Negative goodwill Dividends from joint ventures (Increase)/decrease in debtors (Decrease)/increase in creditors Increase in stock Net cash (outﬂow)/inﬂow from operating activities Year Ended 31.3.03 £000 Year Ended 31.3.02 £000 31,195 34,098 230 – 38 51 (6,362) 150 (3,704) (37,999) (10,732) 267 (53) 7 52 – 179 10,429 22,212 (1,557) (27,133) 65,634 40 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 24. Analysis of cash ﬂows for headings netted in the cash ﬂow statement Return on investments and servicing of ﬁnance Interest received Interest paid Minority interest dividends paid Taxation Tax received Tax paid Capital expenditure and ﬁnancial investment Purchase of property Sale of property Purchase of tangible ﬁxed assets Sale of tangible ﬁxed assets Purchase of investments Sale of investments 25. Management of liquid resources Decrease/(increase) in short-term deposits 26. Analysis of net debt Cash at bank and in hand Bank overdraft Debt due within one year Debt due after more than one year Less: arrangement expenses Total Year Ended 31.3.03 £000 Year Ended 31.3.02 £000 1,416 2,632 (11,289) (18,567) (37) (127) (9,910) (16,062) – 106 (3,945) (5,073) (3,945) (4,967) (47,175) (30,816) 133,295 70,535 (152) 44 – 576 (76) 525 (100) – 86,588 40,068 31.3.03 £000 31.3.02 £000 28,634 (20,285) 28,634 (20,285) At 31.3.02 £000 Other non Cash Flow cash changes £000 £000 75,514 (59,377) (15) 15 75,499 (59,362) (3,301) (42,737) (226,081) 114,331 1,484 57 – – – – – (783) At 31.3.03 £000 16,137 – 16,137 (46,038) (111,750) 758 (227,898) 71,651 (783) (157,030) (152,399) 12,289 (783) (140,893) 27. Contingent liabilities The Company has entered into cross guarantees in respect of the banking facilities of its subsidiaries. The Company has also entered into interest rate ﬂoors on £80m at 4.83% from January 2004 to January 2006, on £80m at 4.73% from July 1999 to January 2006 and on a further £80m at 4.80% from January 2006 to September 2009. Other than these contingent liabilities and the deferred tax referred to in note 20 there were no contingent liabilities at 31 March 2003 (2002: nil). HELICAL BAR PLC REPORT AND ACCOUNTS 2003 41 Notes to the Financial Statements continued 28. Net assets per share Net asset value Add: potential exercise of options Diluted net asset value Adjustment for: 31.3.03 £000 235,881 11,525 Number of shares 000s 29,913 2,554 247,406 32,467 – capital allowances provided for but unlikely to be clawed back 2,706 Adjusted diluted net asset value Adjustment for: – potential capital gains not provided for – mark to market value of interest rate hedging agreements Adjusted diluted triple net asset value 29. Capital commitments At 31 March 2003 nil (2002: nil). 250,112 32,467 (17,144) (5,111) 227,857 32,467 31.3.03 pence per share Change since 31.3.02 +/(-) % 789 (0.5) 762 8 770 (53) (15) 702 (0.5) 0.1 5.9 30. Related party transactions At 31 March 2003 there is an amount due from Prescot Street Investments Ltd of £4,692,000 (2002: £4,721,000) and an amount due from Grosvenor Hill (Spruceﬁelds) Ltd of £1,510,000 (2002: £1,517,000). 42 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Ten Year Review Turnover Rental income Gross proﬁt Proﬁt before taxation Proﬁt after taxation Ordinary dividends Proﬁt/(loss) retained Dividend per ordinary share Special dividend per ordinary share Diluted earnings per ordinary share Investment portfolio Shareholders’ funds 31.3.03 £000 31.3.02 £000 31.3.01 £000 31.3.00 £000 31.3.99 £000 31.3.98 £000 31.3.97* £000 31.1.96 £000 31.1.95 £000 31.1.94 £000 135,192 136,632 165,259 149,922 121,244 214,416 100,529 22,374 21,482 26,656 22,009 28,642 29,334 31,384 65,948 50,521 24,982 19,186 16,294 12,118 31,224 25,227 17,567 44,986 22,573 17,220 4,275 32,328 13,132 (15,272) 13.75p 15.00p 56,301 43,482 39,004 38,775 29,284 21,697 16,475 12,713 25,824 22,020 20,044 18,494 12,033 20,353 20,501 16,392 14,436 3,570 3,223 31,338 16,657 17,201 (18,414) 1,552 7,811 9,032 1,666 3,564 9,200 7,892 1,189 3,666 8,187 7,655 1,058 3,785 6,578 6,049 944 3,451 12.50p 11.15p 10.0p 9.0p 8.0p 7.3p 6.5p 5.8p – 100.0p – – 100.0p – 2.0p – – – 59.2 57.8p 67.7p 68.9p 51.5p 40.3p 28.3p 26.6p 26.3p 24.3p 342,484 439,911 453,607 419,570 332,457 250,718 201,570 180,765 156,579 118,690 83,747 235,881 237,252 233,152 176,636 137,011 134,223 101,080 92,662 91,429 Adjusted diluted net assets per share 770p 769p 754p 582p 473p 481p 372p 330p 326p 299p *The ﬁnancial statements to 31 March 1997 were for a 14 month accounting period. The ﬁnancial statements for the year to 31 March 1998 and subsequently have been restated to reﬂect the impact of the adoption of FRS19 on Deferred Tax. HELICAL BAR PLC REPORT AND ACCOUNTS 2003 43 Governance and Corporate Social Responsibility The Board of Helical Bar plc is collectively responsible for providing the entrepreneurial leadership of the Company within a framework of controls and reporting structures which assist the Company in pursuing its strategic aims and business objectives. This report sets out the governance and corporate social responsibilities of the Board and the systems and structures in place to ensure that the Company meets its obligations to shareholders and other stakeholders. The Board of Helical Bar plc comprises four executive directors and three non-executive directors. Board of directors and other ofﬁcers Executive directors Managing director Michael Slade, BSc (Est. Man) FRICS FSVA, joined the Board as executive director in 1984 and was appointed Managing Director in 1986. Aged 56. Finance director Nigel McNair Scott, MA FCA FCT, joined the Board as non-executive director in 1985 and was appointed Finance Director in 1986. A former director of Johnson Matthey plc, he is Chairman of Avocet Mining Plc and a Director of Govett Strategic Trust. Aged 57. Development director Gerald Kaye, BSc (Est. Man) FRICS, was appointed to the Board as Executive Director in 1994 and is responsible for the Company’s development activities. He is a former director of London & Edinburgh Trust Plc. Aged 45. Investment director Michael Brown, BSc (Est. Man), was appointed to the Board as Executive Director in 1998 and is responsible for the Company’s property investment activities. He is a former director of Threadneedle Property Fund Managers. Aged 42. Non-executive directors Chairman John Southwell, MA, joined the Board of Helical Bar plc as non-executive director in 1986 and was appointed non-executive Chairman in 1988. He is the Chairman of the Audit, Remuneration and Nominations and Appointments Committees. A former director of Laing & Cruickshank, Corporate Finance, he currently acts as a consultant to Credit Lyonnais Securities Europe (UK). He is Chairman of Lochain Patrick Holdings Ltd and director of James Cropper PLC. Aged 70. Giles Weaver, FCA, was appointed to the Board as non-executive director in 1993. He is a member of the Audit, Remuneration and Nominations and Appointments Committees. A recent Chairman of Murray Johnstone Ltd, he is Chairman of Murray Emerging Growth & Income Trust plc and Charter Pan European Trust plc and a director of Aberdeen Asset Managers plc, Gartmore Capital Strategy Fund Limited, James Finlay Ltd and Atrium Underwriting Plc. Aged 57. Antony Beevor, BA, was appointed to the Board as non-executive director in 2000. He is the senior independent non-executive director and a member of the Audit, Remuneration and Nominations and Appointments Committees. He is a deputy Chairman of the Takeover Panel, the Chairman of Croda International Plc and the Chairman of Nestor Healthcare Group plc. Aged 63. Company secretary Tim Murphy, ACA, was appointed Company Secretary in 1994. Aged 43. Senior management Matthew Bonning-Snook joined the Company as a development executive in 1995. Aged 35. Michael Butcher joined the Company as a construction executive in 1985. Aged 59. Jack Pitman joined the Company as an investment executive in 2001. Aged 34. John Inwood joined the Company as a management executive in 1985. Aged 37. 44 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Directors’ Report The directors’ present their report and ﬁnancial statements for the year ended 31 March 2003. Principal activities The principal activity of the Company is that of a holding company and the principal activities of the subsidiaries are property investment, dealing and development. A full review of these activities and the Group’s future prospects are given on pages 4 to 21. Trading results The results for the year are set out on page 22. The proﬁt on ordinary activities before taxation amounts to £25,227,000 (2002: £22,573,000). Share capital At 31 March 2003 there were 29,913,476 ordinary 5p shares in issue. Dividends A ﬁnal dividend of 9.00p (2002: 8.25p) per share is recommended for approval at the Annual General Meeting on 23 July 2003. The total ordinary dividend of 15.00p (2002: 113.75p, including 100.00p special dividend) per share amounts to £4,275,000 (2002: £32,328,000). Donations Donations to charities amounted to £13,936 (2002: £3,685). No contributions (2002: £10,000 to Conservative Party) were made to any political party. Creditor payment policy The Company’s policy is to settle all agreed liabilities within the terms established with suppliers. At 31 March 2003 there were 20 days’ (2002: 26 days’) purchases outstanding in respect of the Company’s creditors. Auditors Grant Thornton offer themselves for re-appointment as auditors in accordance with Section 385 of the Companies Act 1985. Substantial shareholdings At 2 June 2003 the shareholders listed in Table A on page 46 had notiﬁed the Company of a disclosable interest of 3% or more in the nominal value of the ordinary share capital of the Company. Directors’ remuneration Details of directors’ remuneration, share options, service contracts and pension contributions are noted in the Directors’ Remuneration Report on pages 52 to 56. Directors and their interests The directors who were in ofﬁce during the year and their interests, all of which were beneﬁcial, in the ordinary shares of the Company are listed in Table B on page 46. Shares purchased on behalf of directors’ under the terms of the Share Incentive Plan are disclosed in the Directors’ Remuneration Report on pages 52 to 56. There have been no changes in the directors’ interests, other than as shown in the Directors’ Remuneration Report, in the period from 31 March 2003 to 12 June 2003. Re-election of directors Messrs M.E. Slade, N.G. McNair Scott and A.R. Beevor are due to retire by rotation and offer themselves for re-election. Mr J.P. Southwell, having reached the age of 70, also offers himself for re-election. Going concern After making enquiries, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the ﬁnancial statements. Corporate governance The Company’s application of the principles of corporate governance is noted in the Corporate Governance Report on pages 47 to 49. HELICAL BAR PLC REPORT AND ACCOUNTS 2003 45 Directors’ Report continued Directors’ responsibilities for the ﬁnancial statements Company law requires the directors to prepare ﬁnancial statements for each ﬁnancial year which give a true and fair view of the state of affairs of the Company and the Group and of the proﬁt or loss of the Group for that period. In preparing those ﬁnancial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the ﬁnancial statements. The directors are responsible for maintaining proper accounting records, for safeguarding the assets of the Group and for taking reasonable steps for the prevention and detection of fraud and other irregularities. Annual general meeting The Annual General Meeting of the Company will be held on 23 July 2003 at 11.30am at The Westbury, Conduit Street at New Bond Street, London W1A 4UH. The notice of meeting is set out on pages 58 to 59 below. There are three resolutions concerning special business. The ﬁrst gives the Board the authority, for a further ﬁve years, to allot 9,971,158 shares (one third of the existing issued share capital as at the date hereof). The second gives the Board the power for a further ﬁve years to issue shares pursuant to a rights issue and a modest number (approximately ﬁve per cent of the existing issued share capital as at the date hereof) for cash other than to existing shareholders. The third extends, for a further year, the authority given at the Annual General Meeting last year for the Company to buy in, for cancellation, 14.99 per cent of its ordinary share capital. There have been no instances of the Company purchasing its own shares since the last Annual General Meeting. By Order of the Board T.J. Murphy Secretary 12 June 2003 Table A – Substantial shareholdings Michael Slade Schroder Investment Management Threadneedle Asset Management Fidelity Investments Helical Bar Share Ownership Plan Trust M & G Investment Management Hermes Legal & General T R Property Investment Trust ISIS Asset Management Table B – Directors interests John Southwell Michael Slade Nigel McNair Scott Giles Weaver Antony Beevor Gerald Kaye Michael Brown Total directors’ interests Percentage of issued share capital 46 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 No of Ordinary shares 3,016,408 1,783,563 1,747,200 1,621,729 1,361,939 1,070,956 1,033,687 1,021,296 972,000 965,622 % 10.1 6.0 5.8 5.4 4.6 3.6 3.5 3.4 3.2 3.2 Ordinary 5p shares 31.03.03 31.03.02 34,750 34,750 3,016,408 3,014,938 628,087 626,617 18,000 18,000 1,477 1,477 310,673 309,215 188,021 186,551 4,197,416 4,191,548 14.0 14.0 Corporate Governance Report Since the publication of the Company’s last report and accounts we have seen the publication of the “Review of the role and effectiveness of non-executive directors” (the “Higgs Report”) and the “Audit Committees Combined Code Guidance” (the “Smith Report”). The recommendations of these two reports have yet to be incorporated into a revised Combined Code. The Company is committed to applying the highest principles of corporate governance. The Board is accountable to the Company’s shareholders for good corporate governance. This report and the Directors’ Remuneration Report describe how the Company complies with the provisions of the Combined Code. Compliance The Company has complied throughout the year with the Code provisions set out in Section 1 of the Combined Code except in respect of provision A 2.1. Provision A 2.1 states that a non-executive director other than the Chairman should be the senior independent non-executive director. During the year the Chairman of the Company, John Southwell, has acted as senior independent non-executive director. This situation has been reviewed and on 4 June 2003 Antony Beevor was appointed senior independent non-executive director. Application of the principles The Board of directors The Board consists of four executive directors who hold the key operational positions in the Company and three non-executive directors, who bring a breadth of experience and knowledge to their roles. This provides a balance whereby the Board’s decision making cannot be dominated by an individual or small group. The Chairman of the Board is John Southwell and the Company’s business is run by Michael Slade, the Managing Director. All of the Company’s non-executive directors act independently of management. John Southwell, however, has been a Board member for more than nine years and is a consultant to one of the Company’s brokers. In addition Giles Weaver has been a non-executive director for more than nine years. It is noted that some shareholder advisory bodies such as PIRC (Pensions Investment Research Consultants) and NAPF (National Association of Pension Funds) take the view that independence of action is likely to be lost the longer the director serves on the Board. The arbitrary period of nine years has been put forward by these two bodies as a time by which independence may be deemed to be compromised. In our view the breadth of experience of these two directors and their detachment from the day to day issues within the company provide, with the third non-executive director Antony Beevor, a sufﬁciently strong and experienced balance with the executive members of the Board. This breadth of experience allied to the management information provided by the Company enable the non-executive Board members to assess and advise the full Board on the major risks faced by the Company. In view of this we continue to believe that shareholders should regard all our non-executive directors as independent. Board meetings The Company supports the concept of an effective Board leading and controlling the Company. The Board is responsible for approving company policy and strategy. In addition to ad hoc meetings arranged to discuss particular transactions and events and the AGM, the full Board met ﬁve times during the year under review. All Board members attended each of the meetings with the exception of the February 2003 meeting when Michael Slade was absent overseas. The Board has a schedule of matters speciﬁcally reserved to it for decision which is reviewed annually. All directors have access to advice from the company secretary and independent professionals at the company’s expense. Training is available for new directors and other directors as necessary. Nominations and Appointments Committee The Nominations and Appointments Committee meets as required to select and recommend to the Board suitable candidates for both executive and non-executive appointments to the Board. It comprises John Southwell, Chairman, and the two other non-executive directors, Giles Weaver and Antony Beevor. The Committee did not meet during the year under review. All directors are subject to re-election every three years and, on appointment, at the ﬁrst AGM after appointment. All directors over 70 face annual re-election. Relations with shareholders The Company values the views of its shareholders and recognises their interest in the Company’s strategy and performance, Board membership and quality of management. It therefore holds regular meetings with, and ﬁnancial presentations to, its institutional shareholders to discuss its objectives. The Board also regularly meets, with the help of its brokers, institutions that do not currently hold shares in the Company to inform them of its objectives. HELICAL BAR PLC REPORT AND ACCOUNTS 2003 47 Corporate Governance Report continued The AGM is used to communicate with private investors and they are encouraged to participate. The members of the Audit, Remuneration and Nomination and Appointment Committees are available to answer questions. Separate resolutions are proposed on each issue so that they can be given proper consideration and there is a resolution to consider the annual report and accounts. The Company counts all proxy votes and will indicate the level of proxies lodged on each resolution, after it has been dealt with by a show of hands. The Company communicates with all shareholders through the issue of regular press releases and through its website at www.helical.co.uk. Shareholders may also keep informed of developments at the Company through the investor relations website at www.itrufﬂe.co.uk. The Company receives regular reports from sector analysts and its investor relations advisors on how it is viewed by its shareholders. Accountability and audit Financial reporting The Combined Code requires the Company to present a balanced and understandable assessment of the company’s position and prospects. It seeks to do so in all published information and in particular in interim and preliminary announcements and other price-sensitive reports and reports to regulators as well as in the information required to be presented by statutory requirements. Internal control The Board is responsible for maintaining a sound system of internal control to safeguard shareholders’ investment and the Company’s assets. Such a system is designed to manage, but not eliminate, the risk of failure to achieve business objectives. There are inherent limitations in any control system and, accordingly, even the most effective system can provide only reasonable, and not absolute, assurance against material misstatement or loss. In accordance with the guidance of the Turnbull Committee on Internal Control, an ongoing process has been established for identifying, evaluating and managing risks faced by the Company. This process has been in place from the start of the ﬁnancial year under review to the date of approval of these ﬁnancial statements. As part of this process the Board has identiﬁed key risks faced by the Company. The risks have been prioritised and a strategy has been set out to deal with them. The Board papers produced for each Board meeting include reports by each of the executive directors together with management accounts, proﬁt and cash ﬂow forecasts. The annual business development plan was presented to the Board in February 2003. This document discusses the commercial environment in which the Company operates, undertakes a SWOT analysis on the Company and sets short, medium and long-term targets for the business. The Board papers also include regular updates on corporate governance matters and during the year under review has received reports on internal ﬁnancial control, risk assessment, interest rate risks, taxation, matters reserved for Board approval and the Higgs Report. In addition, since the year end, the Board has received a copy of a report on the internal ﬁnancial controls and systems of the Company prepared for the Audit Committee by Grant Thornton, and the Smith Report. In between Board meetings the non-executive directors receive copies of the minutes of weekly management meetings between the executive Board members and senior management at which the property portfolio, ﬁnancial and other matters are discussed and minutes of meetings with the Company’s major joint venture partners. Non-executive directors also receive copies of analysts reports on the company. The directors are free to seek any further information they consider necessary. The key features of the Company’s system of internal control are as follows: • • • • clearly deﬁned organisational responsibilities and limits of authority. The day-to-day involvement of the executive directors in the running of the business ensures that these responsibilities and limits are adhered to; ﬁnancial controls and review procedures. Internal ﬁnancial controls are reviewed annually by the Board; ﬁnancial information systems including cash ﬂow, proﬁt and capital expenditure forecasts. The Board receive regular and comprehensive reports on the day-to-day running of the business; an Audit Committee which meets with the auditors and deals with any signiﬁcant internal control matter. In the year under review the Committee met with the Auditors on two occasions and received a paper on the internal ﬁnancial controls of the Company. 48 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Audit Committee The Audit Committee comprises John Southwell, Giles Weaver and Antony Beevor, all independent non-executive directors. Since the last report and accounts we have seen the publication of the Smith Report which seeks to offer guidance on the Combined Code to Audit Committees. The recommendations of the Smith Report include a requirement to review the company’s internal ﬁnancial control system and risk management systems. In the year under review, Grant Thornton, the Company’s auditors, were asked to conduct a systems review of the internal ﬁnancial controls operating within the ﬁnance department at the Company. In April 2003, Grant Thornton reported to the Audit Committee on the key ﬁndings of their review. These key ﬁndings were: • • • • the control environment over ﬁnancial controls is robust; the general environment, size and culture of the organisation means that reliance for the operation of controls is placed on a few key individuals; a high level of autonomy is given to directors and senior management; and, the volume of management information generated and provided to the non-executives directors is signiﬁcant. Grant Thornton did not review the quality of this information. Ethical concerns The Company has adopted a Code of Ethics which has been distributed to all staff and joint venture partners. This Code sets out its approach to its business principles and provides details of good business practices promoted by the Company. It includes a clear policy statement that the Company does not condone any form of corrupt behaviour in its business dealings. HELICAL BAR PLC REPORT AND ACCOUNTS 2003 49 Report of the Independent Auditors to the Members of Helical Bar plc We have audited the ﬁnancial statements of Helical Bar plc for the year ended 31 March 2003 which comprise the principal accounting policies, the consolidated proﬁt and loss account, the balance sheets, the consolidated cash ﬂow statement, the consolidated statement of total recognised gains and losses and notes 1 to 30. These ﬁnancial statements have been prepared under the accounting policies set out therein. We have also audited the information in the directors’ remuneration report that is described as having been audited. This report is made solely to the Company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditors report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors The directors’ responsibilities for preparing the annual report, the directors’ remuneration report and the ﬁnancial statements in accordance with United Kingdom law and accounting standards are set out in the statement of directors’ responsibilities. Our responsibility is to audit the ﬁnancial statements and the part of the directors’ remuneration report to be audited in accordance with the relevant legal and regulatory requirements and United Kingdom auditing standards. We report to you our opinion as to whether the ﬁnancial statements give a true and fair view and whether the ﬁnancial statements and the part of the directors’ remuneration report to be audited have been properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the directors’ report is not consistent with the ﬁnancial statements, if the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information speciﬁed by law regarding directors’ remuneration and transactions with the group is not disclosed. We review whether the corporate governance statement reﬂects the Company’s compliance with the seven provisions of the Combined Code speciﬁed for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to consider whether the board’s statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the Group’s corporate governance procedures or its risk and control procedures. We read other information contained in the annual report and consider whether it is consistent with the audited ﬁnancial statements. This other information comprises the directors’ report, the unaudited part of the directors’ remuneration report, the chairman’s statement, the development programme, investment portfolio, ﬁnancial review and the corporate governance statement. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the ﬁnancial statements. Our responsibilities do not extend to any other information. Basis of opinion We conducted our audit in accordance with United Kingdom auditing standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the ﬁnancial statements and the part of the directors’ remuneration report to be audited. It also includes an assessment of the signiﬁcant estimates and judgements made by the directors in the preparation of the ﬁnancial statements, and of whether the accounting policies are appropriate to the Group’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufﬁcient evidence to give reasonable assurance that the ﬁnancial statements and the part of the directors’ remuneration report to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the ﬁnancial statements and the part of the directors’ remuneration report to be audited. 50 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Opinion In our opinion: • • the ﬁnancial statements give a true and fair view of the state of affairs of the Company and the Group as at 31 March 2003 and of the group’s proﬁt for the year then ended; and the ﬁnancial statements and the part of the directors’ remuneration report to be audited have been properly prepared in accordance with the Companies Act 1985. Grant Thornton Registered Auditors Chartered Accountants London 12 June 2003 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 51 Directors’ Remuneration Report Directors’ remuneration The Board recognises that directors’ remuneration is of legitimate concern to shareholders and is committed to following current best practice. In accordance with Section 241A of the Companies Act 1985, the Board presents the Directors’ Remuneration Report for approval. Remuneration Committee The Remuneration Committee (“Committee”) has responsibility for making recommendations to the Board to determine the Company’s general policy on salary, bonuses, pensions and other remuneration issues for individual directors. It carries out the policy on behalf of the Board and in the year under review the Committee met twice. The membership of the Committee is as follows: John Southwell (Chairman) Giles Weaver Antony Beevor All the members of the Committee are independent non-executive directors. None of the Committee has any personal ﬁnancial interest in the matters to be decided (other than as shareholders), potential conﬂicts of interest arising from cross-directorships nor any day-to-day involvement in running the business. The Committee consults the Managing Director and Finance Director about its proposals and has access to professional advice from inside and outside the Company. During the year under review the Committee were advised by New Bridge Street Consultants in relation to the performance criteria of the Company’s share option schemes. Deloitte & Touche provided the Committee with advice regarding the remuneration packages of the executive directors. Policy on executive directors’ remuneration The Company operates within a competitive environment and its performance depends on the individual contributions of the directors and employees. Executive remuneration packages are designed to attract, motivate and retain directors of the calibre necessary to maintain the Company’s position as a market leader and to reward them for enhancing shareholder value and return. The performance measurement of the executive directors and the determination of their annual remuneration package is undertaken by the Committee. The remuneration packages of individual directors are structured so that the performance-related elements form a signiﬁcant proportion of the total and are designed to align their interests with those of the shareholders. Share options are designed so that they recognise the long-term growth of the Company. No director has a service contract of more than one year. There are four main elements of the executive directors’ remuneration packages: i ii basic annual salary, pension contributions and beneﬁts in kind annual bonus payments iii long-term incentives iv share incentives Basic annual salary, pension contributions and beneﬁts in kind Basic annual salaries for executive directors are reviewed having regard to individual performance and market practice and were last reviewed in April 2003. The remuneration packages of the executive directors include a payment of 20% of basic salary as pension entitlement. The Company uses this entitlement to make annual contributions into a Small Self Administered Pension Scheme on behalf of Michael Slade and Nigel McNair Scott. The remaining entitlements of each of the executive directors are paid as additional salary to each director. Beneﬁts in kind provided to directors’ include the provision of a company car or car allowance and health insurance. 52 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Annual bonus payments The Committee establishes the objectives which must be met for annual cash bonuses to be paid. Performance-related cash bonuses, which recognise the relative success of the different parts of the business, may be paid to the executive directors responsible for their parts. In the year under review a cash bonus was paid to Gerald Kaye, development director. Long-term incentive plan The Company operates a long-term Incentive Plan designed to align the long-term motivations of the senior management team with the interests of shareholders and to link their remuneration to the performance of the Company’s property portfolio. The Incentive Plan operates over a ﬁve year period from 1 April 2001 and awards will vest annually subject to the achievement of challenging performance targets. Awards will vest only if there is an increase in the net asset value of the Company and that increase is greater than that achieved by the upper quartile of the Investment Property Databank Index for capital growth of all properties, an ungeared benchmark. Awards are calculated in bands with the amount of the award increasing with the level of outperformance. Among other constraints, the Committee could restrict the awards if payment would affect the ﬁnancial or trading position of the Company. The targets will be compared with the ungeared and geared performance of the Company’s property portfolio. Awards will only vest if the Company’s performance, geared and ungeared, is in the top quartile. For disclosure purposes the vesting value of awards is included in remuneration. For the year under review the performance criteria were not met and no awards vested. Service contracts The service contracts of Michael Slade, Nigel McNair Scott and Gerald Kaye operate from 1 July 1997 and of Michael Brown from 8 September 1997. Each service contract provides for a one year notice period. On termination of employment each director is entitled to a payment in lieu of notice of a sum including basic salary and other contractual entitlements or the monetary equivalent. Non-executive directors Non-executive directors are appointed for a three year term until re-appointment by shareholders at the Company’s AGM. The remuneration of the non-executive directors is determined by the Board and was last increased in April 2003. Non-executive directors do not participate in any of the Company’s share option schemes. The Chairman, John Southwell, is provided with a company car. Total shareholder return The performance criteria of the Company’s 1999 share option schemes, referred to on pages 54 and 55 below, require the Company to exceed certain set targets of total shareholder return. The total shareholder return for a holding in the Company’s shares in the ﬁve years to 31 March 2003 is shown in the graph below. Value (£) 200 150 100 50 Helical Bar FTSE All-Share Real Estate Index 31.03.98 31.03.99 31.03.00 31.03.01 31.03.02 31.03.03 Source: Datastream This graph looks at the value, by 31 March 2003, of £100 invested in Helical on 31 March 1998 compared with the value of £100 invested in the FTSE All-Share Real Estate Index. HELICAL BAR PLC REPORT AND ACCOUNTS 2003 53 Directors’ Remuneration Report continued Information subject to audit: Remuneration of Directors Remuneration in respect of the directors was as follows: Chairman John Southwell Non-executive directors Giles Weaver Antony Beevor Executive directors Michael Slade Nigel McNair Scott Gerald Kaye Michael Brown Salary/ Fees £000 Beneﬁts in kind £000 Cash bonuses £000 Incentive plan £000 45 25 25 478 175 210 175 13 – – 32 26 28 35 1,133 134 – – – – – 474 – 474 – – – – – – – – Gain on exercise of share options – – – – – – 393 393 Pensions 2002 Total £000 2003 Total £000 2002 Total £000 2003 Total £000 58 25 25 510 201 712 603 60 25 25 1,906 664 2,299 1,672 2,134 6,651 – – – 2 35 – – 37 – – – 2 35 – – 37 The pension contributions were paid into a Small Self Administered Scheme. The assets of this money purchase scheme are administered by trustees in a fund independent from the assets of the Group. Gerald Kaye was the highest paid director during the year with a total remuneration of £712,000 (2002: Gerald Kaye £2,299,000). In order to compensate share option holders for the payment of the 100p special dividend in April 2002, the Company pays a cash bonus of 100p per share on the date option holders exercise their options. The gain on exercise of share options of Michael Brown includes a £100,000 cash bonus arising out of the exercise on 28 January 2003 of an option over 100,000 shares. Special dividend In order to compensate option holders for the payment of a special dividend or a distribution of capital, the Board has, under the terms of the Executive 1988 Option Scheme and the Helical Bar 1999 Share Option Scheme (“the Schemes”), the authority to adjust the number of shares subject to option or the exercise price of those options. The Company is currently unable to increase the number of shares under option in sufﬁcient quantity to satisfy the requirement to compensate option holders for the special dividend of 100p paid in April 2002. An adjustment to the exercise price of the existing options would result in an increased national insurance cost to the Company. Accordingly, the Board has considered alternative ways of compensating option holders and, as a result, the Company will compensate holders of options at the time the special dividend was declared, on the dates they exercise their options by 100p per share, equivalent to the special dividend. In the year under review compensation of £130,000 was paid following the exercise of options over 130,000 shares. Share Options The Company operated three share option schemes during the year. The Senior Executive 1988 Share Option Scheme ceased to be able to grant options over new shares (“subscription shares”) and shares held by the Helical Bar Share Ownership Plan Trust (“purchase shares”) in June 2001. Share options granted in respect of this scheme are included in note 21. Under this scheme options only vest if the increase in the net asset value per share is greater than that achieved by the upper quartile of the Investment Property Databank index for capital growth of all funds over a ﬁve year period. The Helical Bar 1999 Share Option Scheme operates in respect of the grant of share options which exceed the Inland Revenue limit of £30,000. Under this scheme the aggregate market value of shares issued or issuable to an individual under this and other option schemes may not exceed eight times his annual earnings. Share options granted in respect of this scheme are included in note 21. The Helical Bar 1999 Approved Share Option Scheme is an Inland Revenue approved scheme. Under the terms of this scheme options up to a maximum value of £30,000 per individual may be granted. Share options granted in respect of this scheme are included in note 21. The performance criteria of the two 1999 schemes require total shareholder return over a set period to exceed a certain percentile of the aggregate performance of companies in the Real Estate Sector Index of the FTSE All Share Index. For the approved scheme the relevant period is three years and the 50th percentile. For the unapproved scheme the relevant period is ﬁve years and 25th percentile. 54 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 The directors’ interests in the Share Option Schemes during the year were as follows: Type At Start of year Options exercised in year At end of year Exercise price Date from which exercisable Gross value of options at 31 March 2003 Expiry date Michael Slade Senior Executive 1988 Share Option Scheme Senior Executive 1988 Share Option Scheme Purchase 6,000 Purchase 400,000 Senior Executive 1988 Share Option Scheme Subscription 394,000 Helical Bar 1999 Share Option Scheme Subscription 493,221 Helical Bar 1999 Share Option Scheme Purchase 148,000 Helical Bar Approved 1999 Share Option Scheme Subscription 6,779 – – – – – – 6,000 452.5p 27.11.01 26.11.07 7,200 400,000 565.0p 10.07.02 09.07.08 30,000 394,000 452.5p 27.11.02 26.11.07 472,800 493,221 442.5p 08.03.04 07.03.09 641,187 148,000 750.0p 18.12.05 17.12.10 – 6,779 442.5p 08.03.02 07.03.09 8,813 1,448,000 – 1,448,000 1,160,000 Nigel McNair Scott Senior Executive 1988 Share Option Scheme Helical Bar 1999 Share Option Scheme Purchase Purchase 50,000 43,000 Senior Executive 1988 Share Option Scheme Subscription 250,000 Helical Bar 1999 Share Option Scheme Subscription 235,221 Helical Bar 1999 Share Option Scheme Purchase 72,000 Helical Bar Approved 1999 Share Option Scheme Subscription 6,779 657,000 Gerald Kaye Helical Bar 1999 Share Option Scheme Purchase 50,000 Helical Bar 1999 Share Option Scheme Subscription 393,221 Helical Bar 1999 Share Option Scheme Helical Bar 1999 Share Option Scheme Purchase 127,000 Purchase 129,419 Helical Bar Approved 1999 Share Option Scheme Subscription 6,779 706,419 – – – – – – – – – – – – – 50,000 452.5p 27.11.01 26.11.07 43,000 442.5p 08.03.04 07.03.09 60,000 55,900 250,000 412.5p 11.07.02 10.07.07 400,000 235,221 442.5p 08.03.04 07.03.09 305,787 72,000 750.0p 18.12.05 17.12.10 – 6,779 442.5p 08.03.02 07.03.09 8,813 657,000 830,500 50,000 442.5p 08.03.04 07.03.09 65,000 393,221 442.5p 08.03.04 07.03.09 511,187 127,000 750.0p 18.12.05 17.12.10 129,419 766.5p 15.11.06 14.11.11 – – 6,779 442.5p 08.03.02 07.03.09 8,813 706,419 585,000 Michael Brown Senior Executive 1988 Share Option Scheme Purchase 100,000 (100,000) – 452.5p 27.11.01 26.11.04 – Senior Executive 1988 Share Option Scheme Subscription 100,000 Helical Bar 1999 Share Option Scheme Subscription 293,221 Helical Bar 1999 Share Option Scheme Helical Bar 1999 Share Option Scheme Purchase 106,000 Purchase 100,418 Helical Bar Approved 1999 Share Option Scheme Subscription 6,779 – – – – – 100,000 467.5p 29.09.02 28.09.07 105,000 293,221 442.5p 08.03.04 07.03.09 381,187 106,000 100,418 750.0p 18.12.05 17.12.10 766.5p 15.11.06 14.11.11 – – 6,779 442.5p 08.03.02 07.03.09 8,813 706,418 (100,000) 606,418 495,000 On 28 January 2003 Michael Brown exercised a purchase option over 100,000 shares at 452.5p per share. The shares acquired were sold on the same day for 747.5p per share providing a net gain of £293,000. The market price of the ordinary shares at 31 March 2003 was 572.5p (2002: 790.0p). This market price varied between 567.5p and 837.0p during the year. HELICAL BAR PLC REPORT AND ACCOUNTS 2003 55 Directors’ Remuneration Report continued Helical Bar 2002 Approved Share Incentive Plan On the 24 July 2002 the shareholders approved the Helical Bar 2002 Approved Share Incentive Plan (the “Plan”). Under the terms of this Plan employees of the Company are given up to £3,000 of free shares in any tax year. Participants in the Plan may purchase additional shares up to a value of £1,500 which is matched in a ratio of 2:1 by the Company. Provided participants remain employed by the Company for a minimum of three years they will retain the free and matching shares. Shares allocated to, or purchased on behalf of, the directors under the rules of the Plan were as follows: Michael Slade Nigel McNair Scott Gerald Kaye Michael Brown 26.09.02 at 645p 03.12.02 at 732p 27.03.03 at 578p 10.06.03 at 632.5p 465 465 465 465 150 150 150 150 204 204 192 204 651 651 651 651 Shares held by the Trustees of the Plan at 31 March 2003 were 18,425 (2002: nil). Helical Bar Proﬁt Sharing Scheme The Helical Bar Proﬁt Sharing Scheme (“Scheme”) has operated since 1997 but was replaced by the Helical Bar 2002 Share Incentive Plan during the year. No shares were allocated to employees of the Company during the year. Shares held by the Scheme at 31 March 2003 were 63,626 (2002: 72,166). 56 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Corporate Social Responsibility Helical Bar plc recognises and acknowledges that the conduct of its business has an impact on its employees, its partners, its customers and suppliers and the economy, community and environment of its property portfolio. An indication of the Company’s commitment to good corporate social responsibility is its inclusion on the FTSE4Good UK Index, a benchmark index of companies which meet criteria set down by EIRIS (Ethical Investment Research Service) on environmental, social and ethical performance. The criteria established by EIRIS encompass corporate governance, environment, human rights, stakeholder issues, employee issues and customers and suppliers. The Company’s corporate governance policies are noted on pages 47 to 49 above and on the environment below. The Company has no business activities in any countries which have unacceptable human rights records. The Company’s relationship with its key stakeholders, its shareholders is noted on pages 47 to 48 above. Employees Helical Bar plc is committed to non-discrimination in all its forms and supports the training and development of all its employees. The Company actively encourages participation in the ownership of the business through the operation of a Share Incentive Plan authorised by shareholders at the 2002 AGM. This Plan replaced the Proﬁt Sharing Scheme which had operated since 1997. All employees are eligible to beneﬁt from Company contributions into personal pension plans or into the Company’s Stakeholder Pension Plan. Health and safety The Company’s policy is to develop a culture throughout its organisation that is committed to the prevention of injuries to and ill health of its employees or others that may be affected by its activities. The Board of Directors and senior staff are responsible for implementing this policy throughout the company and must ensure that health and safety considerations are always given priority in planning and in day to day activities. The Company recognises its legal responsibility for health and safety. The Managing Director has overall responsibility for policy formulation, development and implementation. The Company shall liaise and co-operate with the appropriate authorities and will obtain expert advice where necessary to determine the risks to health and safety in its activities. Facilities will be provided for employer/employee consultation on health and safety matters. All employees are expected to co-operate with the Company to achieve the objectives of this Policy and must ensure that their own work, so far as is reasonably practicable, is carried out without risk to themselves or others. The Company is committed to providing relevant information and necessary ongoing training to employees in respect of risks to health and safety, which may arise out of their activities or at the workplace. All employees are offered private medical insurance as well as long-term disability cover. Community involvement Helical Bar plc has for many years joined in efforts to raise money for charitable causes. Alternating each year the Company organises a mass entry under the Helical banner into the London Marathon and the London to Brighton Bike Ride raising money for the British Heart Foundation and other charities. The Company’s employees raised £3,464 for Comic Relief earlier this year. The Company also makes charitable donations in its own right and in the year under review the donations amounted to £13,936. Environmental policy and objectives Helical Bar plc is a property development and investment company. Our activities comprise the development of commercial and industrial property and the management of a portfolio of ofﬁces, retail and industrial properties in the UK. We recognise our responsibility to reduce any adverse environmental impacts arising from our business activities and will try to improve the environment wherever possible. Working within the existing regulatory framework and complying with environmental legislation that applies to our activities, we seek to continuously improve our environmental performance by moving beyond compliance, wherever practicable, and achieving good environmental standards in both our developed and managed buildings. HELICAL BAR PLC REPORT AND ACCOUNTS 2003 57 Notice of Annual General Meeting Notice is hereby given that the Annual General Meeting of Helical Bar plc will be held at The Westbury, Conduit Street at New Bond Street, London W1A 4UA on Wednesday, 23 July 2003 at 11.30 a.m. for the transaction of the following business: Ordinary Business 1 To receive and consider the ﬁnancial statements of the Company for the year ended 31 March 2003 together with the reports of the directors and the auditors thereon. 2 3 4 5 6 7 8 To receive and approve the Directors’ Remuneration Report for the year ended 31 March 2003. To declare a ﬁnal dividend of 9.00 pence per ordinary share, as recommended by the directors of the Company. To re-elect Mr M.E. Slade, who retires by rotation, as a director of the Company. To re-elect Mr N.G. McNair Scott, who retires by rotation, as a director of the Company. To re-elect Mr A.R. Beevor, who retires by rotation, as a director of the Company. To re-elect Mr J.P. Southwell, who having reached the age of 70, offers himself for re-election as a director of the Company. To re-appoint Grant Thornton as auditors until the conclusion of the next general meeting of the Company at which accounts are laid and to authorise the directors to ﬁx their remuneration. Special Business To consider and, if thought ﬁt, pass the following resolutions, of which resolution 9 will be proposed as an ordinary resolution and resolutions 10 and 11 will be proposed as special resolutions: 9 That, in substitution for all unused existing authorities, the directors be and they are hereby generally and unconditionally authorised, pursuant to Section 80 of the Companies Act 1985, to exercise all powers of the Company to allot relevant securities (as deﬁned in Section 80 of that Act) up to an aggregate nominal amount of £498,558 provided that this authority shall expire on 22 July 2008 save that the Company may before such expiry make an offer or agreement which would or might require relevant securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of any such offer or agreement as if the authority conferred hereby had not expired. 10 That, subject to the passing of resolution 9, the directors be and hereby empowered, pursuant to Section 95 of the Companies Act 1985, to allot equity securities (as deﬁned in Section 94 of that Act) for cash pursuant to the authority conferred by resolution 9 as if Section 89 of that Act did not apply to any such allotment provided that this power shall be limited to: (a) the allotment of equity securities in connection with a rights issue in favour of ordinary shareholders on the register of members at such record date or dates as the directors may determine for the purposes of the issue where the equity securities respectively attributable to the interests of all ordinary shareholders are proportionate (as nearly as may be) to the respective number of ordinary shares held by them but subject always to such exclusions or other arrangements in respect of overseas shareholders and in respect of fractional entitlements as the directors consider necessary or expedient; and (b) the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities for cash up to an aggregate maximum nominal amount of £74,783; and shall expire on 22 July 2008 save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the directors may allot equity securities in pursuance of such offer or agreement as if the power conferred hereby had not expired. 58 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 11 That the Company is hereby generally and unconditionally authorised to make one or more market purchases (within the meaning of Section 163 of the Companies Act 1985) on the London Stock Exchange of ordinary shares of 5p each in the capital of the Company (“Ordinary Shares”) on such terms and in such manner as the directors may from time to time determine, provided that: (a) the maximum number of Ordinary Shares hereby authorised to be purchased is 4,484,033; (b) the maximum price which may be paid for an Ordinary Share is an amount equal to 105 per cent of the average of the middle market quotations for an Ordinary Share as derived from The London Stock Exchange’s Daily Ofﬁcial List for the 5 business days immediately preceding the day on which the Ordinary Share is contracted to be purchased; (c) the minimum price which shall be paid for an Ordinary Share is 1p (exclusive of expenses, if any); (d) the authority hereby conferred shall be in lieu of any existing authority conferred by ordinary or special resolution to purchase Ordinary Shares (but without prejudice to any purchase of Ordinary Shares previously made pursuant to such authority); (e) the authority hereby conferred shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or on 30 September 2004, whichever is the earlier, unless such authority is renewed prior to such time; and (f) the Company may make a contract to purchase the Ordinary Shares under the authority hereby conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiry of such authority and may make a purchase of Ordinary Shares in pursuance of any such contract as if this authority had not expired. By order of the Board T J Murphy Secretary Registered ofﬁce: 11/15 Farm Street London W1X 8NP Registered No: 156663 24 June 2003 Notes: (a) Any member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and, on a poll, vote instead of him. A proxy need not be a member of the Company. (b) To be valid, the form of proxy (together with the power of attorney or other authority (if any) under which it is signed or a notarially certiﬁed copy of such power or authority) must be deposited at Capita Registrars, Proxy Department, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU not later than 48 hours before the time appointed for holding the meeting. Completion and return of the form of proxy will not preclude a member from attending and voting in person. (c) Copies of the directors’ contracts of service will be available at the registered ofﬁce of the Company during normal business hours on any weekday (Saturdays and public holidays excepted) from the date of this notice until the date of the meeting and will be available for inspection at the place of the meeting 15 minutes prior to and during the meeting. (d) The register of directors’ shareholders and transactions will be available for reference at the commencement of and during the continuance of the meeting. (e) Entitlement to attend and vote at the meeting will be determined by reference to the register of members of the Company at midnight on 21 July 2003. HELICAL BAR PLC REPORT AND ACCOUNTS 2003 59 Financial Calendar Year ended 31 March 2003 Annual General Meeting to be held Final ordinary dividend payable 23 July 2003 24 July 2003 Half year ending 30 September 2003 Results and interim ordinary dividend announced Interim ordinary dividend payable November 2003 December 2003 Year ending 31 March 2004 Results and ﬁnal dividend announced Final ordinary dividend payable June 2004 July 2004 Advisors Registrars Capita Registrars The Registry Joint stockbrokers Cazenove & Co Merchant bankers Lazard Bros & Co Ltd 12 Tokenhouse Yard 21 Moorﬁelds 34 Beckenham Road London EC2R 7AN London EC2P 2HT Beckenham Kent BR3 4TU Credit Lyonnais Securities Europe (UK) Solicitors Ashurst Morris Crisp Broadwalk House 5 Appold Street London EC2A 2DA Clifford Chance Dechert Lawrence Graham Mishcon de Reya Norton Rose Olswang Auditors Grant Thornton Grant Thornton House Melton Street Euston Square London NW1 2EP Bankers Barclays Bank plc Credit Lyonnais HVB Real Estate National Westminster Bank plc The Royal Bank of Scotland plc Aareal Bank AG 60 HELICAL BAR PLC REPORT AND ACCOUNTS 2003 Corporate Statement Helical Bar plc is a property development and investment company. Our objective is to maximise growth in assets per share using a recurring stream of development and trading proﬁts to build up the investment portfolio. Contents 1-3 4-5 Financial Highlights Chairman’s Statement 6-11 Development Programme 12-17 Investment Portfolio 18-21 Financial Review The Waterfront Business Park, Fleet 43 44 44 Ten Year Review Governance and Corporate Social Responsibility Ofﬁcers and Senior Management 45-46 Directors’ Report 47-49 Corporate Governance Report 50-51 Independent Auditors Report 52-56 Directors’ Remuneration Report Consolidated Proﬁt and Loss Account Balance Sheets 22 23 24 25 Statement of Total Recognised Gains and Losses 57 Corporate Social Responsibility Consolidated Cash Flow Statement 58-59 Notice of Annual General Meeting 26-42 Notes to Financial Statements 60 Financial Calendar Front cover: The Heights, Weybridge Helical Bar Public Limited Company Report and Accounts 2003 H e l i c a l B a r p l c R e p o r t a n d A c c o u n t s 2 0 0 3 Registered ofﬁce 11-15 Farm Street London W1J 5RS Tel: 020 7629 0113 www.helical.co.uk

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