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Helical Bar plc
Annual Report & Accounts 2006
Helical Bar plc, registered office:
11-15 Farm Street, London W1J 5RS
Tel: 020 7629 0113, Fax: 020 7408 1666
email: info@helical.co.uk
website: www.helical.co.uk
Front cover: Trinity Square,
Nottingham
Contents
Financial Highlights
01 Share price chart
02 Chairman’s Statement
05 Operating Review Development programme
09 Operating Review Investment Portfolio
14 Financial Review
18 Consolidated Income Statement
19 Balance Sheets
21 Statement of Recognised Income and Expense
22 Group and Company Cash Flow Statement
23 Notes to the Financial Statements
47 Ten Year Review
48 The Board of Directors and Senior Management
49 Directors’ Report
51 Corporate Governance Report
55 Directors’ Remuneration Report
63 Report of the Independent Auditors
64 Corporate Social Responsibility
66 Glossary of Terms
67 Financial calendar
68 Advisors
Financial Highlights
*Adjusted for the 5 for 1 share on 1 September 2005
Five year summary
Notes
IFRS
31.03.06
£m
IFRS
31.03.05
£m
UK GAAP
31.03.04
£m
UK GAAP
31.03.03
£m
UK GAAP
31.03.02
£m
Net rental income
Development profits
Trading profits
Adjusted profits before tax
1
Gain/(loss) on revaluation of investment property
Gain on sale of investment properties
Pre-tax profits
Return of cash/special dividend
Investment portfolio
Shareholders’ funds
Dividend per ordinary share
Diluted earnings per share
Adjusted diluted net asset value per share
Adjusted diluted triple net asset value per share
4
4
2/4
3/4
16.5
4.6
13.4
13.6
35.7
7.8
57.1
2.4
294.6
230.1
pence
3.65
51.8
278
284
20.4
12.7
5.8
20.5
30.1
14.1
64.7
97.2
271.3
182.5
pence
3.32
53.7
224
219
23.0
–
1.0
11.7
24.2
2.0
13.7
–
334.9
234.9
pence
3.32
7.9
177
161
25.6
4.6
0.3
16.7
(13.4)
2.1
25.2
–
342.5
226.9
pence
3.00
11.8
155
141
27.8
17.1
0.2
20.3
18.5
2.5
22.6
28.4
439.9
227.7
pence
2.75
11.8
155
133
Notes
1. Excludes profit on sale of investment properties and loss on sale of subsidiary.
2. After adding back additional deferred taxation arising from the clawback of capital allowances on sale of investment properties, the deferred taxation on the revaluation surpluses of
the investment portfolio and the fair value of financial instruments.
3. Adjusted for the directors’ valuation of trading stock but after adding back the deferred taxation referred to in 3 above.
4. Comparative figures have been adjusted for the 5 for 1 share split on 1 September 2005.
Design and production Radley Yeldar (London)
Pre-tax profit £m 2002200320042005200622.625.213.764.657.1Ordinary dividend per share Pence* 200220032004200520062.753.003.323.323.65Adjusted diluted net asset value per share Pence*Net asset values per share have been restated for the impact of the adoption in 2005 of UITF38 –Accounting for ESOP Trusts.20022003200420052006155155177224278Cash returned to shareholders £mCash returned to shareholders represents special dividends, shares bought in for cancellation and the Return of Cash in December 2004 but excludes ordinary dividends per share.2002200320042005200628.4–21.596.5–Pre-tax profit £m 2002200320042005200622.625.213.764.657.1Ordinary dividend per share Pence* 200220032004200520062.753.003.323.323.65Adjusted diluted net asset value per share Pence*Net asset values per share have been restated for the impact of the adoption in 2005 of UITF38 –Accounting for ESOP Trusts.20022003200420052006155155177224278Cash returned to shareholders £mCash returned to shareholders represents special dividends, shares bought in for cancellation and the Return of Cash in December 2004 but excludes ordinary dividends per share.2002200320042005200628.4–21.596.5– Corporate Statement
Helical Bar 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.
“A property company’s share price should reflect growth
in net assets per share”.
Share price chart
01 Helical Bar plc Report & Accounts 2006
85Adjusted for the 5 for 1 share split on 1 September 2005Year878688899091929394959697989900010203040506020406080100120140160180200220240260280320340360380300400Pence80preturnof cash407p20p1st specialdividend20p2nd specialdividend Chairman’s Statement
In my first statement as Chairman I am pleased to
report that for the second year running, Helical
has produced 30% net asset value per share growth
(including trading stock surplus). This reflects profits
from a wide spread of projects and activities. We have
continued to increase our diversification investing in
15 schemes in the UK as well as forming new joint
ventures in Poland and with The Asset Factor.
Results Profits before tax, prepared under
International Financial Reporting Standards (“IFRS”)
for the first time, reduced to £57.1m (2005: £64.7m),
as lower levels of net rental income and development
profits exceeded the rise in trading profits. The return
of almost £100m to shareholders in December
2004, representing circa 40% of shareholder value,
contributed to the reduction in profits this year. As a
consequence, diluted earnings per share fell to 51.8p
(2005: 53.7p).
The gain on sale and revaluation of the investment
portfolio was steady at £43.6m (2005: £44.2m)
reflecting a like for like valuation increase of 17.3%
and sales of investment properties at 16.9% over 2005
book values.
The Group’s adjusted net asset value per share rose
by 24% (2005: 24%) to 278p (2005: 224p). This takes
no account of any surplus on the £86m of trading
and development stock which are held in our books,
in accordance with normal practice, at the lower of
cost and net realisable value. The directors’ valuation
of trading and development stock shows a surplus
of £29m (2005: £13m) which, if taken into account,
would increase adjusted net asset value per share to
309p (2005: 238p), an increase of 30%.
The Company’s prospects for 2006/2007 are
encouraging and allow the Board to recommend
to shareholders a final dividend of 2.45p per share
(2005: 2.20p), an increase of 11%. Under IFRS
dividends are accounted for once declared and,
as a consequence, this final dividend is not reflected
in these accounts. However, taken with the interim
dividend paid in December 2005 of 1.45p (2005:
1.32p) it represents a total dividend of 3.90p
(2005: 3.52p), an increase of 11%.
International Financial Reporting Standards (IFRS)
These accounts are the first annual accounts to be
prepared in accordance with IFRS. Included in the
accounts are restated comparative figures for
the year to 31 March 2005. Reconciliations to, and
explanations of the differences between these figures
and those previously reported under UK GAAP, are
provided in note 2 of these accounts.
The adoption of IFRS has changed the presentation
and format of the annual report. However, it has
no impact on the cash flows of the business or its
underlying performance.
Share capital On the 31 August 2005 shareholders
approved a five for one share split effective from
1 September 2005. As a consequence the 18,424,385
ordinary 5p shares in existence on 1 September 2005
were divided into 92,121,925 ordinary 1p shares.
The net asset value per share and earnings per share
calculations for the current and comparative periods
have all been adjusted accordingly.
Adjusted net asset value per share growth 2006
30%
02 Helical Bar plc Report & Accounts 2006
Key property performance indicators and benchmarks
A property company’s share price should reflect
growth in net assets per share. Our Company’s main
objective is to maximise growth in assets from increases
in investment portfolio values and from retained
earnings from other property related activities.
We incentivise management to outperform the
Company’s competitors by setting the right levels for
performance indicators against which rewards are
measured. We also design our remuneration packages
to align management’s interests with shareholders’
aspirations. Key to this is the monitoring and
reporting against identifiable performance targets
and benchmarks. For a number of years we have
reported on these, the most important of which are:
Investment Property Databank The Investment Property
Databank (“IPD”) produces a number of independent
benchmarks of property returns which are regarded
as the main industry indices. They have compared
the ungeared performance of Helical’s total property
portfolio against that of portfolios within IPD for the
last 16 years. The Company’s annual performance
target is to exceed the top quartile of the IPD
database. Helical’s ungeared performance for the
year to 31 March 2006 was 25.9% (2005: 28.5%)
compared to the IPD median benchmark of 20.6%
(2005: 17.2%) and upper quartile benchmark of
22.8% (2005: 20.3%).
IPD (all monthly and quarterly valued funds)
Ungeared returns
Total Returns
%
%
%
%
%
Annualised over
1 year
3 years
5 years 10 years 16 years
Helical
IPD Benchmark
Percentile rank
25.9
20.6
10
22.9
16.4
1
17.9
13.0
4
20.3
12.8
18.2
9.2
0*
0*
* “0” means the top ranked fund.
The returns on shareholder capital earned by Helical
are generally higher than those measured by IPD due
to the use of gearing. The returns noted above take no
account of the £29m (2005: £13m) surplus of trading
and development stock above book value arising from
the directors’ valuation.
Total Shareholder Return Total Shareholder Return
(“TSR”) measures the return to shareholders from
share price movements and dividend income and is
used to compare returns between companies listed
on the Stock Exchange. Management is incentivised
to exceed the top quartile of the real estate sector.
Helical’s TSR for the year to 31 March 2006 was
73.5% (2005: 35.6%) compared to the median of
the listed real estate sector of 49.3% (2005: 25.4%).
Net asset value Net asset value per share represents
the share of net assets attributable to each ordinary
share. Whilst the basic and diluted net asset per
share calculation provide a guide to performance
the property industry prefers to use an adjusted
diluted net asset per share. The adjustments
necessary to arrive at this figure are shown in
note 32 to these accounts.
Management is incentivised to exceed 15% pa growth
in net asset value per share.
The adjusted diluted net asset value per share,
excluding trading stock surplus, at 31 March 2006
was 278p (2005: 224p), an increase of 24%.
Including the surplus on valuation of trading and
development stock, the adjusted diluted net asset
value per share at 31 March 2006 was 309p (2005: 238p)
an increase of 29.7% (2005: 31.2%). Adjusted triple
net asset value per share rose by 29.6% (2005: 33.6%)
to 284p (2005: 219p).
Total Shareholder Return measures the return to shareholders from share price
movements and dividend income
Total Shareholder Return
Helical Bar plc
UK equity market
Listed real estate sector index
Direct property
Source: New Bridge Street Consultants/Datastream.
03 Helical Bar plc Report & Accounts 2006
03 Helical Bar plc Report & Accounts 2006
1 year from
31.3.05
%
3 years from
31.3.03
%
5 years from
31.3.01
%
10 years from
31.3.96
%
15 years from
31.3.91
%
20 years from
31.3.86
%
73.5
28.0
49.3
20.9
52.6
24.7
44.6
17.2
26.5
5.7
19.3
13.8
26.1
8.4
15.7
13.0
23.3
10.2
11.6
11.1
29.4
10.9
11.2
11.4
Chairman’s Statement continued
Real Estate Investment Trust (“REIT”) Legislation
The real estate sector has welcomed the Government’s
proposed legislation for the introduction of REIT’s
to the UK. This legislation is likely to be enacted in
July 2006.
Companies converting to REIT status will benefit
from a tax free status on their qualifying property
activities, subject to meeting certain conditions.
There is further consultation to be finalised before
the new legislation is enacted, but it would appear
unlikely that the Helical “model” which has generated
trading and development profits equal to investment
income, will qualify. Helical’s consistent success
throughout the last 22 years since inception suggests
that we should not alter our modus operandi solely
to reduce tax liabilities. We are confident that our
model is strong enough to continue to outperform
our peers on a net of tax basis.
The Board After serving the Company for almost
25 years, first as consultant with Laing & Cruickshank
and, since 1986, as non-executive director and
Chairman, John Southwell will step down from
the Board at the 2006 AGM. In his time with the
Company, John Southwell has been an instrumental
part of a management team that has seen the share
price increase from an equivalent 1p level to a share
price on 15 June 2006 of 407p having paid out special
dividends of 120p per share along the way. The Board
would like to express its gratitude to John for his
guidance, leadership and wise counsel over this long
period at the helm of the Company.
During the year the Board was strengthened by two
appointments. As mentioned in last year’s accounts
on 14 April 2005 Wilf Weeks joined as a non-executive
director. Wilf specialises in Government Relations
and is Chairman of European Public Affairs at Weber
Shandwick. On 1 March 2006 Andrew Gulliford
joined as a non-executive director. Andrew is a former
Deputy Senior Partner of Cushman & Wakefield
Healey & Baker where he headed up their
Investment Group.
I believe that these two appointments improve the
strength of the Board from both an operational and
a corporate governance viewpoint.
Outlook Commercial property continues to deliver
excellent returns as a result of yield compression.
At some stage this will cease. In what will become
a more challenging climate we will continue to
obtain good results by adding value whether by
refurbishment, redevelopment, active management
on change of use via the planning process.
We have increased the number of our joint ventures
enabling us to tap into specialist skills whether
geographical or sectarial. All of this activity
diversifies our risk and enables us to find deals at
reasonable prices.
Helical has demonstrated its ability to outperform
in good times and in bad. After a terrific run we
believe that the rate of yield compression will slow
and property returns will not be sustained at the
exceptional levels of recent years. However, we believe
our ability to outperform and provide good returns
for our shareholders will continue.
Giles Weaver
Chairman
Below: Retail development in Poland
04 Helical Bar plc Report & Accounts 2006
Total shareholder return in year to 31 March 2006
73.5%
Operating Review
Development
Programme
Below: Commercial Road, Bournemouth
05 Helical Bar plc Report & Accounts 2006
Development Programme
Helical’s development objective is to create profit
streams by focusing on large Central London office
schemes, major mixed-use developments and retail
schemes. As in the last cycle it is anticipated that
the retail schemes will contribute to developments
profits before the larger office and mixed use
schemes come on stream.
In the year under review the major components
of development profits recognised have come
from the retail development at Commercial Road,
Bournemouth and the mixed use retail and
student accommodation scheme at Trinity Square,
Nottingham, with a contribution from a second
phase at Stafford.
On the offices side, the Company continues to
work on schemes at Ropemaker Place EC2, Mitre
Square EC3, Clareville House SW1, as well as other
Central London opportunities and in the longer
term at White City and Amen Corner, Bracknell.
Development schemes – current and future programme
Offices
City
Mitre Square, London EC3
Ropemaker Place, London EC2
Central London – mixed use
Clareville House, London SW1
Wood Lane, White City
Thames Valley
Amen Corner, Bracknell
Retail/mixed use
Approximate
start date
Size
Sq.ft.
2008 350,000
2006 500,000
2006
60,000
2008+ 43 acres
2010 500,000
Office developments
Mitre Square, London EC3 At Mitre Square we are planning
a 350,000 sq.ft. office scheme in a joint venture with
Ansbacher Property Development Ltd. In July 2005
the City resolved to grant detailed planning consent
for the scheme subject to completion of a S.106
agreement, which is currently being negotiated.
Completing the site acquisition is underway and the
design is being worked up. The project is planned to
commence on site 2007 or 2008.
Ropemaker Place, London EC2 Demolition of the previous
building was completed last September. Helical were
acting as Development Manager for DB Real Estate.
DB Real Estate sold the site to British Land in March
and the Development Management Agreement has been
assigned to British Land who are planning to start on
site this year. The Agreement provides for a fixed fee
and a profit share dependent upon outcome.
Wood Lane, White City, London W12 Working on behalf
of the consortium of landowners the Company has,
with Rem Koolhaas of The Office of Metropolitan
Architecture and Arup, produced a masterplan scheme
for the 43 acre site. We will be looking to obtain formal
adoption of this masterplan within the next few months.
We are already proceeding with the production of an
Environmental Impact Assessment with the intention
of submitting, in early 2007, an outline planning
application for a high density mixed use scheme of
5 million sq.ft. plus.
Commercial Road, Bournemouth – completed
2005
48,000
Trinity Square, Nottingham
Bluebrick, Wolverhampton
Hatters Retail Park, Luton
Town Centre Shirley, Solihull
Shrub Hill, Worcester
2005 235,000
2006 170,000
2006 105,000
2007 200,000
2007
35,000
Below: Mitre Square, London EC3
06 Helical Bar plc Report & Accounts 2006
06 Helical Bar plc Report & Accounts 2006
06 Helical Bar plc Report & Accounts 2006
Clareville House, London SW1 We are acting as
Development Manager for Lattice Group Pension
Scheme with regard to the proposed refurbishment
of the existing listed building. A planning application
has been submitted for a scheme involving 35,000 sq.ft.
of offices, bar/nightclub of 17,000 sq.ft., restaurant
of 4,000 sq.ft. and 2,000 sq.ft. of retail space. We are
hoping to achieve planning consent shortly to allow
a start on site at the beginning of 2007.
Amen Corner, Bracknell We hold a number of properties
and options over land at Amen Corner, Bracknell
and are promoting a gateway office development off
the A329(M).
Future opportunities The Company is currently
working on several new large projects in London
which we hope to announce over the next few months.
Joint ventures
Helical Poland A joint venture vehicle has been established
with Jonathan Tinker and Peter Evans both of whom
are based in Warsaw and who have considerable
experience acquired over a number of years of the
Polish Property Market. The joint venture is concentrating
exclusively on out of town retail developments.
Currently three sites are under contract comprising
circa 1 million sq.ft. of retail space.
The Asset Factor The Company announced during
the year a new outsourcing joint venture called
The Asset Factor. The Asset Factor is a joint venture
with Matthew Punshon, Oliver Jones and Keith Perry
all of whom have considerable experience of
outsourcing. The venture will offer organisations
integrated property asset management solutions with
the aim of reducing costs, increasing efficiency and
making their accommodation work for their business.
Residential developments
Lime Tree Village, Dunchurch, Rugby At Lime Tree
Village, Dunchurch, Rugby we have refurbished,
with our joint venture partners, a Victorian country
house and are substantially through a programme
constructing a retirement village of 153 bungalows,
cottages and apartments. Phase 1 and 2 are complete
and only a few units remain unoccupied. Work on
the final phase commenced early in the new year and
the first units have been released for sale. These have
been well received at prices well in advance of phase1
and 2. A fourth phase is being planned to commence
2008/2009.
Bramshott Place, Liphook At Bramshott Place, Liphook
two resolutions to grant planning permission, one for
a retirement village of 144 units and one for 150 open
market units were granted by the local authority on
6 April subject to entering a S.106 Agreement.
The site has already been adopted by East Hampshire
District Council in its Local Plan.
We anticipate the final consent to be granted around
June 2006, whereupon the site will be sold to a
housebuilder.
Maudsley Park, Great Alne Maudsley Park, Great Alne is
a 314,000 sq.ft. industrial estate on a 20 acre site with
potential for a retirement village development use.
Stratford District Council has accepted the Local Plan
Inspector’s recommendation and this site is now in
policy terms a major development site in the green belt
upon which new forms of development are appropriate.
A planning brief is being prepared promoting a mixed
use scheme of a nursing home, small nursery units to
let and a retirement village of circa 230,000 sq.ft.
together with a Country Club facility.
It is anticipated that the outcome of this planning
application will be known in the autumn of 2006.
Below: Lime Tree Village, Dunchurch, Rugby
07 Helical Bar plc Report & Accounts 2006
07 Helical Bar plc Report & Accounts 2006
Development programme continued
Retail developments
56–76 Commercial Road, Bournemouth This £40m scheme
was completed during the year and the units handed
over to the retailers at the end of 2005 for fitting out.
The redeveloped section, comprising 48,000 sq.ft.
was let to Hennes, Zara, Republic and Ann Summers.
The scheme was pre-sold to Irish investors, and also
includes three retained shops let to Wallis, Dixons and
Carphone Warehouse.
Trinity Square, Nottingham The £45m building contract
was awarded to Shepherd Construction in 2005, and
work is now well under way on this 10 storey scheme
divided into two blocks. Completion of the works and
trading by retailers is expected by the summer of
2007. The development comprises nearly 200,000 sq.ft.
of retail accommodation, plus 700 student units
and a multi storey car park. Nearly 60% of the retail
accommodation has been pre-let to Borders, TK Maxx
and Dixons. The entire scheme has been pre-sold
to Morley for over £100m and their Beech Fund will
operate the student accommodation.
Friary Retail Park, Stafford Phase 2 of this retail park
was successfully completed in March of this year with
the construction of a 4,000 sq.ft. unit for Laura Ashley
Home Furnishings at the entrance to the scheme.
The entire development of 42,400 sq.ft. is fully let to
PC World, T K Maxx, Choices and Laura Ashley with
rents now reaching £20 per sq.ft. reflecting the strong
trading location. The park was funded by Arlington
Investment Managers last year for £12m.
Bluebrick, Wolverhampton Building work has commenced
on the first phase of the 11 acre site which is a major
mixed-use regeneration scheme. Planning consent was
received in spring 2006 and an infrastructure contract is
underway to prepare the sites that have been pre-sold
to Reg Vardy for a 20,000 sq.ft. car showroom and
Whitbread for an 88 bed hotel and a 7,000 sq.ft. public
house. The three acre residential site of 208 apartments
is being marketed for sale and the listed Low Level
Station buildings are under offer to a casino operator
subject to obtaining a gaming licence. A further two
phases are under discussion with potential tenants and
with planning authorities.
Current retail development programme (sq,ft.)
745,000
Hatters Retail Park, Luton This former brownfield site
of approx. 8.5 acres received planning consent last year
for a mixed retail and industrial scheme. The site was
acquired in two stages with the final purchase completing
in October 2005. Phase 1 will comprise a bulky goods
retail park of 80,000 sq.ft. and so far lettings have been
secured with anchor tenants DFS, SCS, Carpetright
and P Simon Furnishings. Two further units are under
offer to Harveys and Pizza Hut. Enabling works on site
were completed in April 2006 and the main contract
will commence in the autumn with completion
due April 2007. Phase 2 will comprise approximately
25,000 sq.ft. of industrial space split into small starter
units with completion estimated for April 2008.
Parkgate, Shirley, Solihull The scheme which comprises
200,000 sq.ft. of retail anchored by an 80,000 sq.ft.
Asda foodstore and some 200 apartments is being
progressed through a 50:50 joint venture with Coltham
Developments Ltd. Development agreements have
been exchanged with Solihull Metropolitan Borough
Council and Asda and a planning application has been
submitted. Marketing of the retail units will commence
in summer 2006 with a view to starting on site in
summer 2007. A further phase offers the opportunity
for a major leisure/residential project.
Shrub Hill, Worcester A purchase contract has been
exchanged with First Bus on the four acre site close
to the centre of Worcester which has the benefit of
planning consent for 35,000 sq.ft. of retail warehousing
and 45 apartments. A relocation site has been
identified for the bus depot and vacant possession
of the site should be achieved in spring 2007.
Gerald Kaye
Development Director
Below: Hatters Retail Park, Luton
08 Helical Bar plc Report & Accounts 2006
08 Helical Bar plc Report & Accounts 2006
08 Helical Bar plc Report & Accounts 2006
Operating Review
Investment
Portfolio
Below: C4.1, Milton Keynes
Investment portfolio
In-town retail
Out-of-town retail
Offices
Industrial
Total
Valuation yields
In-town retail
Out of town retail
Offices
Industrial
Total
Like for like
Average
valuation unexpired
term
increase
years
22.1%
28.7%
14.9%
6.1%
17.3%
9.5
11.4
7.8
8.3
8.7
True
Initial Reversionary Equivalent equivalent
3.4%
4.4%
6.8%
5.7%
5.3%
6.3%
5.4%
7.2%
7.8%
6.8%
6.0%
5.3%
6.6%
7.7%
6.4%
6.2%
5.5%
6.9%
8.1%
6.7%
Investment Portfolio
The investment and trading portfolio had another
good year with a like for like valuation increase
of 17.3%, sales of investment properties at 16.9%
over 2005 valuation and trading profits of £13.4m.
In all, this produced an unleveraged total return of
27.2% as against 27.6% in the previous year. All figures
exclude the surplus arising from the valuation of
trading and development stock referred to in the
Chairman’s Statement.
Retail The first phase of our refurbishment of the
225,000 sq.ft. Morgan Department Store in Cardiff is
due to complete in the autumn. Pre-lets to Borders and
SportsWorld make up over 60% of the anticipated new
income with two further lettings in solicitors’ hands
increasing this to 80%. The conversion of the top
floors to 55 flats will complete next year. The Royal
and Morgan Arcades, which form the final part of this
holding, comprise 55 retail units which forge a link
between the main public transport nodes and the
proposed St David’s 2 Shopping Centre.
Further growth was secured at our shopping centre
in Letchworth with five new lettings setting rentals at
double the level pertaining at the time of our purchase
in 2003. Meanwhile, our retail holding at Chiswick was
sold at circa 150% over original purchase cost having
obtained a residential consent at the rear of the site
and regeared the retail lease.
Unleveraged total return on
investment and trading portfolio
27.2%
Below: Morgan Department Store, Cardiff
10 Helical Bar plc Report & Accounts 2006
10 Helical Bar plc Report & Accounts 2006
10 Helical Bar plc Report & Accounts 2006
10 Helical Bar plc Report & Accounts 2006
10 Helical Bar plc Report & Accounts 2006
A portfolio of 95 small off-licences acquired for
£25.5m in 2005 was traded out at auction over the
year to show a profit of circa £9m, over 30% on cost.
Our retail warehouse park in Weston-super-Mare was
sold during the year for £42.65m. This price included
the forward purchase of a new 29,000 sq.ft. unit,
currently under construction and prelet to Wickes.
The transaction showed a profit of circa 200% on 1999
purchase cost plus capital expenditure.
At Crowborough, a property acquired last year, we
regeared the occupational lease to Focus and sold on
at a 30% profit on cost. Our retail warehouse in
Sheffield, also acquired last year, was traded on to a
residential developer at over 50% above purchase cost.
In joint venture with local developers Abbeygate we
have recently commenced construction of the £100m
C4.1 mixed use project in Milton Keynes. The retail
element, a 110,000 sq.ft. supermarket, has been
forward sold to Sainsbury’s and the social element of
the 440 unit residential scheme pre-sold to Genesis.
We have also recently submitted a planning application
in Milton Keynes for a 300,000 sq.ft. retail and leisure
scheme anchored by furniture retailer ILVA on the site
of our existing 120,000 sq.ft. Leisure Plaza.
Investment Properties
Town Centre Retail
Morgans
Department Store,
Cardiff
Morgan & Royal
Arcades, Cardiff
Garden Square,
Letchworth
Average
passing
(sq.ft.) rent (psf)
Size
Vacancy
rate
Ownership
interest/
acquired Comments
Year
160,000
£14
37%
2005
Prelets
to
Borders &
SportsWorld
65,000
£40ZA
3%
2005
165,000
£45ZA
6%
2003
New
lettings
@ £65
psf ZA
East Grinstead
37,000
£9
0%
Adjoins
proposed
development
Glasgow Portfolio
23,000
£30
450,000
10%
16%
Out-of-town retail
Otford Road
Retail Park,
Sevenoaks
43,000
£14
0%
2003
Homebase, St Austell 36,000
£8
0%
2002
Focus, Ashford
32,000
£15
0%
2004
Focus, Paignton
24,000
£12
0%
2005
Wickes, Worthing
26,000
£11
0%
2003
161,000
£12
0%
75%
interest
75%
interest
75%
interest
67%
interest
75%
interest
Below: Leisure Plaza, Milton Keynes
11 Helical Bar plc Report & Accounts 2006
11 Helical Bar plc Report & Accounts 2006
11 Helical Bar plc Report & Accounts 2006
11 Helical Bar plc Report & Accounts 2006
Offices At Shepherds Building we have in recent years
converted a large 150,000 sq.ft. office building in an
unconventional location in Shepherds Bush into a
thriving media related hub. Over 50 tenants occupy
units from 200 sq.ft. to 35,000 sq.ft. anchored around
a communal bar café. We have a waiting list of
tenants seeking to move into the building and lettings
recently agreed show a 25% increase in rental value.
We have now rolled this format out in Battersea where
we have just finished converting a 60,000 sq.ft. disused
TV Studios. Ten lettings have been secured to date and
after the year end planning consent was granted for a
further 50,000 sq.ft. of floorspace on site.
Our 80,000 sq.ft. Rex House in St James’s, which was
refurbished and let in 2001, has been enjoying a strong
underlying rental recovery and has considerable
marriage value potential – comprising a 30 year
leasehold interest.
At 61 Southwark Street the location of our holding
continues to improve with the imminent completion
of the Bankside development nearby, adding to the
Southbank’s renaissance.
Investment Portfolio continued
Investment Properties
London Offices
Average
passing
(sq.ft.) rent (psf)
Size
Vacancy
rate
Ownership
interest/
acquired Comments
Year
Rex House, SW1
80,000
£56
0%
2000 Leasehold
expires
2035
Shepherds
Building, W14
151,000
£20
0%
2000
61Southwark Street, 66,000
SE1
£20
10%
1998
Battersea Studios,
SW8
Amberley Court,
Crawley
53,000
£17
73%
2005
31,000
£11
43%
2006
90%
interest
50%
interest
90%
interest
381,000
£28
16%
Industrial
Hawtin Park,
Blackwood
Aldridge,
Walsall
Sawston,
Cambridge
Golden Cross,
Hailsham
Waterside,
Fleet
251,000
£2.85
63%
2003
208,000
£2.40
29%
2006
188,000
£4.40
0%
2003
90%
interest
67%
interest
102,000
£5.50
0%
2001
54,000
£7.00
9%
1999Residential
potential
Standard Estate,
N Woolwich
50,000
£9.00
35%
2002
60%
interest
Mailcom,
28,000
£6.00
0%
2004
Retail
881,000
£4.10
27%
warehouse
potential
Milton Keynes
Other
Cardiff Royal Infirmary – vacant hospital on a peppercorn lease with
redevelopment potential
Below: Battersea Studios, SW8
12 Helical Bar plc Report & Accounts 2006
12 Helical Bar plc Report & Accounts 2006
12 Helical Bar plc Report & Accounts 2006
12 Helical Bar plc Report & Accounts 2006
12 Helical Bar plc Report & Accounts 2006
Trading Properties
Address
Description
C4.1,
Milton Keynes
Leisure Plaza,
Milton Keynes
Upper
High Street,
Epsom
Sandiacre,
Nottingham
Great Alne,
Maudslay Park
Aycliffe
& Peterlee
Sawston,
Cambridge
110,000 sq.ft. supermarket
+ 440 residential units under
construction
119,000 sq.ft. leisure scheme
with potential for retail
warehouse use
Residential site with
supermarket potential
145,000 sq.ft. industrial with
supermarket potential
314,000 sq.ft. industrial estate
on a 20 acre site with potential
for a retirement home use
Industrial sites with residential
or retail potential
65,000 sq.ft. offices/industrial
developed for owner occupier
sales
Watlington Road, 73,000 sq.ft. offices/industrial
Oxford
in course of refurbishment/
redevelopment for owner
occupier sales
Kidlington,
Oxford
Southall,
West London
Millbrook,
Southampton
140,000 sq.ft. industrial
to be developed for owner
occupier sales
250,000 sq.ft. industrial
to be developed for owner
occupier sales
135,000 sq.ft. industrial
to be developed for owner
occupier sales
Year
acquired
%
interest
2006
50%
2003
50%
2005
100%
2005
75%
2004
100%
1987
100%
2003
67%
2005
80%
2006
80%
2006
80%
2006
80%
Industrials During the year, sites have been acquired
for schemes at Southall, West London (250,000 sq.ft.),
Kidlington, Oxford (140,000 sq.ft.) and Southampton
(135,000 sq.ft.) in joint venture with Chancerygate to
develop small units for freehold sales.
Final sales were completed at our existing schemes in
Slough and Edenbridge and good progress made on
sales in Sawston, Cambridge (65,000 sq.ft./73% sold)
and Cowley, Oxford (73,000 sq.ft./43% sold). Our site
in Newmarket, acquired in 2005, was sold on to an
owner occupier at a 25% profit on cost. All these
projects are held as trading stock.
From within the investment portfolio we sold our
holdings in Preston at 12% over valuation and 150%
over historic purchase cost. We also sold just over half
of our Woolwich estate at more than the whole cost of
purchase in 2002 and subsequent refurbishment.
We are hopeful of securing this year a retirement
village consent on our twenty acre industrial holding
in Great Alne, Warwickshire. We also continue to
make progress in pursuing a residential consent for
our industrial estate in Fleet, having recently acquired
an amenity site to overcome objections by English
Nature. Over the year we assembled a site in Sandiacre,
Nottingham acquiring three separate interests which is
now under offer to be sold to a supermarket operator.
Michael Brown
Investment Director
Like-for-like valuation increase on
investment and trading portfolio
17.3%
13 Helical Bar plc Report & Accounts 2006
13 Helical Bar plc Report & Accounts 2006
13 Helical Bar plc Report & Accounts 2006
13 Helical Bar plc Report & Accounts 2006
Financial Review
International Financial Reporting Standards (“IFRS”) In common with all companies listed on European Union stock
exchanges, Helical adopted IFRS with effect from 1 April 2004, although for practical purposes these Reports and Accounts
are the first to be prepared in accordance with IFRS. Included in these accounts are restated comparative figures for the year
to 31 March 2005.
Prior to the adoption of IFRS, the financial statements of the Group had been prepared in accordance with the United
Kingdom Generally Accepted Accounting Principles (“UK GAAP”). UK GAAP differs in certain respects from IFRS and
certain accounting valuation and consolidation methods have been amended, when preparing these financial statements, to
comply with IFRS. Reconciliations to, and explanations of the differences between these figures and those previously reported
under UK GAAP are provided in note 2 of these accounts.
The adoption of IFRS has changed the presentation and format of the annual report. However, it has no impact on the cash
flows of the business or its underlying performance.
The principal changes arising from the presentation of these accounts under IFRS are as follows:
Disclosure of financial information under IFRS A Consolidated Income Statement replaces the Consolidated Profit and
Loss Account. This Income Statement provides a more detailed sectional analysis of gross profit and includes revaluation
movements where previously they had been shown through the revaluation reserve. The impact on deferred tax associated
with the revaluation movements are taken to the Income Statement whereas previously they were shown as unprovided
contingent liabilities or assets. Movements in the fair value of financial instruments, previously disclosed as contingent assets
and liabilities are now taken to the Income Statement and Balance Sheet.
The Consolidated Balance Sheet under IFRS analyses assets and liabilities between current and non-current.
The Consolidated Cash Flow Statement is restated to reconcile opening and closing cash balances, reconciling cash from
operating activities with cash generated from investing and financial activities.
Changes in accounting policies under IFRS In addition to the changes in disclosure relating to investment property
revaluation surpluses, their associated deferred tax liabilities, the fair value of financial instruments and deferred tax assets,
the adoption of IFRS has resulted in changes to the accounting policies on goodwill, amortisation of rent free periods and
other lease incentives and letting costs. The provisions of IFRS2 on Share Based Payments have also been applied in respect
of equity settled awards granted since 7 November 2002 where those awards had not vested by 1 January 2005.
Details of the accounting policies adopted by the Group and Company under IFRS are included in note 1 on pages 23 to 25.
Share capital On 31 August 2005 shareholders approved a five for one share split effective from 1 September 2005. As a
consequence the 18,424,385 ordinary 5p shares in existence on 1 September 2005 were divided into 92,121,925 ordinary 1p
shares. Net asset values per share, earnings per share, dividends and share awards for the current and comparative periods
have all been adjusted accordingly.
Consolidated Income Statement
Profits Profits before tax fell to £57.1m (2005: £64.7m) as reduced levels of net rental income and development profits
exceeded the increase in trading profits.
Adjusted profits before tax, which excludes the gain on sale and revaluation of investment properties, fell to £13.6m
(2005: £20.5m). Profits after tax and minority interest fell to £47.6m (2005: £65.5m).
Rental income Net rental income for the year fell to £16.5m (2005: £20.4m) reflecting the sale of let investment and trading
properties and their replacement with vacant or partially let properties with refurbishment and rental growth prospects.
During the year £110m of investment and trading properties, yielding £5.3m of rental income were sold. £40m was used to
add to the investment portfolio and £37m was used to purchase income producing properties to be re-developed or traded.
Together these currently produce a passing rent of £2.0m. Rent reviews and new lettings, net of lease expiries and rent free
periods, added rental income of £1.4m on the remaining portfolio.
Rental costs increased from £2.3m to £3.6m, reflecting the costs of vacant space at properties undergoing refurbishment.
Trading and other profits Trading profits of £13.4m were up on last year (2005: £5.8m) and arose from the sale of a number of
properties at Harlow, Sawston, Edenbridge, Newmarket, Dunstable, Oxford, Slough and Sheffield, as well as a portfolio of
Unwins retail outlets.
14 Helical Bar plc Report & Accounts 2006
Development profits The development programme produced profits at the retail schemes at Bournemouth, Nottingham
and Stafford.
Developments
Profits
IFRS
2006
£000
4,594
IFRS
2005
£000
12,664
UK GAAP
2004
£000
38
UK GAAP
2003
£000
4,630
UK GAAP
2002
£000
17,072
Share of results of joint ventures The major contributor to the results of the joint ventures during the period was the recognition
of the remaining profit (net of tax) at the Homebase development at Winterhill, Milton Keynes.
Administrative expenses Administrative expenses increased from £15.8m to £16.6m due to an increased charge for share based
payments offsetting a lower level of performance related cash bonuses. Administrative expenses, before impairment of
goodwill and executive bonuses, increased to £6.1m (2005: £5.6m).
Gain on sale and revaluation of investment properties During the year to 31 March 2006 the Group sold investment properties with
book values of £57.6m (2005: £124.2m) on which it made £7.8m (2005: £14.1m) of profit. The properties sold included the
retail park at Weston-Super-Mare, a Focus DIY store at Crowborough, a retail unit in Chiswick and a number of industrial units
at Woolwich, Sawston and Preston. The revaluation surplus for the year was £35.7m (2005: £30.1m).
Finance costs and finance income Lower levels of debt throughout the year reduced finance costs to £7.4m (2005: £8.7m), after
capitalising £2.8m (2005: £2.3m) of interest. Finance income earned on cash deposits reduced from £1.9m to £1.3m.
Net finance costs
Interest payable on bank loans
Other interest payable
Finance arrangement costs
Interest capitalised
Interest receivable
IFRS
2006
£000
7,638
2,346
234
(2,797)
(1,295)
6,126
IFRS
2005
£000
8,330
2,243
457
(2,296)
(1,948)
6,786
UK GAAP
2004
£000
UK GAAP
2003
£000
7,548
1,741
170
(1,817)
(1,070)
6,572
9,543
2,351
783
(795)
(2,244)
9,638
UK GAAP
2002
£000
14,804
3,215
408
(1,006)
(2,642)
14,779
Taxation The corporation tax charge for the year is less than the standard rate of 30% due to the use of capital allowances and
tax losses. It is expected that the corporation tax charge in the year to 31 March 2007 will be less than the standard rate of
30% due to the use of capital allowances.
The deferred tax charge for the year reflects a provision for tax on revaluation surpluses and on temporary differences
between the carrying amount of assets and liabilities in the financial statements and their corresponding tax bases in
accordance with IFRS.
Dividends The Board is recommending to shareholders at the Annual General Meeting on 20 July 2006 a final dividend of
2.45p per share (2005: 2.20p) to be paid on 21 July 2006 to shareholders on the register on 23 June 2006. This final dividend,
amounting to £2.2m (2005: £1.8m) has not been included as a liability at 31 March 2006, in accordance with IFRS.
Dividends
Interim
Prior period final
Total
Special
IFRS
2006
pence
1.45
2.20
3.65
–
3.65
IFRS
2005
pence
1.32
2.00
3.32
–
3.32
UK GAAP
2004
pence
UK GAAP
2003
pence
UK GAAP
2002
pence
1.32
2.00
3.32
–
3.32
1.20
1.80
3.00
–
3.00
1.10
1.65
2.75
20.00
22.75
In the year to 31 March 2005 a 400p per share dividend was paid to shareholders holding 14,143,020 A ordinary 5p shares as
part of the Return of Cash on 23 December 2004.
15 Helical Bar plc Report & Accounts 2006
Financial Review continued
Earnings per share Earnings per share in the year to 31 March 2006 were 54.7p (2005: 56.3p) per share and on a diluted basis
were 51.8p (2005: 53.7p) per share.
Earnings per share
Earnings per share
Diluted earnings per share
Adjusted diluted earnings per share
IFRS
2006
pence
54.7
51.8
8.5
IFRS
2005
pence
56.3
53.7
11.5
UK GAAP
2004
pence
UK GAAP
2003
pence
UK GAAP
2002
pence
8.2
7.9
–
12.2
11.8
–
12.0
11.6
–
Adjusted diluted earnings per share excludes from earnings the IFRS effects of including the gain on sale and revaluation of
investment properties and fair value movement on derivative financial instruments.
Consolidated Balance Sheet
Investment portfolio During the year investment properties with a book value of £57.6m were sold and partly replaced by £30.8m
of new properties. In addition around £9.4m of capital expenditure was spent on refurbishing various office, industrial and
retail buildings. At 31 March 2006 there was a revaluation surplus of £35.7m (2005: £30.1m) on the investment portfolio.
Investment portfolio
Cost or valuation at 1 April
Additions at cost
Disposals
Revaluation
IFRS
2006
£000
IFRS
2005
£000
UK GAAP
2004
£000
UK GAAP
2003
£000
UK GAAP
2002
£000
271,315
335,114
342,484
439,911
453,607
45,100
30,314
50,464
47,175
32,838
(57,565)
(124,210)
(82,178)
(131,168)
(65,062)
35,733
30,097
24,162
(13,434)
18,528
Cost or valuation at 31 March
294,583
271,315
334,932
342,484
439,911
Net asset values The adoption of IFRS, with effect from 1 April 2004, reduced net assets at that date by £15.9m, and by £10.5m
as at 31 March 2005. The individual adjustments are included in note 2 d) on page 27.
The performance of the Group in the year to 31 March 2006 has increased equity shareholders’ funds, on which the net asset
value per share is calculated, by £47.6m and this has led to a 23% increase in diluted net assets per share to 253p and a 24%
increase in adjusted diluted net assets per share to 278p. Taking into account the directors’ valuation of trading and
development stock of £29m (2005: £13m) the adjusted diluted net assets per share increased by 30% to 309p (2005: 238p).
Net asset values per ordinary share
Diluted – 1
Adjusted diluted – 2
Adjusted diluted plus stock – 3
1 – net asset value diluted for share options.
IFRS
2006
pence
253
278
309
IFRS
2005
pence
205
224
238
IFRS
2004
pence
164
182
n/a
UK GAAP
2003
pence
UK GAAP
2002
pence
155
141
n/a
155
133
n/a
2 – net asset value diluted for share options and adding back deferred tax on revaluation surpluses and capital allowances and fair value of financial instruments.
3 – net asset value as per 2, plus the surplus on directors’ valuation of trading and development stock.
Borrowings and financial risk The Group’s increased trading activity and net sales of investment property have continued the
reduction in debt and, at 31 March 2006, net debt had fallen from £125.0m to £112.7m.
Taken with an increase in net assets of £43.9m, the reduction in net debt combined to reduce the Group’s net gearing from
67% to 49%.
Net debt and gearing
Net debt
Gearing
IFRS
2006
IFRS
2005
UK GAAP
2004
UK GAAP
2003
UK GAAP
2002
£112.7m
£125.0m
£129.8m
£140.9m
£152.4m
49%
67%
55%
62%
67%
The Group seeks to manage liquidity 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 £56m of undrawn bank facilities and cash of £10.1m
(2005: £28.2m). In addition it had £158m (2005: £130m) of uncharged property on which the Group could borrow funds.
As at 16 June 2006 Helical’s average interest rate was 5.83%.
16 Helical Bar plc Report & Accounts 2006
Performance Measures
Key performance indicators, such as the Company's performance against an Investment Property Databank
("IPD") benchmark, Total Shareholder Return and net asset value growth, are included in the Chairman's
Statement. In addition, in order to evaluate its overall performance against other small to mid-size companies,
both here and abroad, Helical looks at equity added value.
Equity value added
Year ended 31 March
Capital employed
Return on capital
Weighted average cost of capital
Spread
Equity value added/(lost)
IFRS
2006
336
21.7
6.9
14.8
49.6
IFRS
2005
347
22.1
6.7
15.4
53.4
UK GAAP
2004
UK GAAP
2003
UK GAAP
2002
348
11.5
7.0
4.5
15.6
377
3.9
6.1
(2.2)
(8.5)
390
10.5
6.3
4.2
19.6
£m
%
%
%
£m
Nigel McNair Scott
Finance Director
17 Helical Bar plc Report & Accounts 2006
Consolidated Income Statement
Helical Bar plc and subsidiary undertakings for the year ended 31 March 2006
Revenue
Net rental income
Trading profits
Development profits
Share of results of joint ventures
Other operating income
Gross profit before gain on investment properties
Gain on sale and revaluation of investment properties
Gross profit
Administrative expenses
Operating profit
Finance costs
Finance income
Change in fair value of derivative financial instruments
Profit before tax
Tax
Profit after tax
– attributable to minority interests
– attributable to equity shareholders
Profit for the year
Basic earnings per share
Diluted earnings per share
Year ended
31.3.06
£000
Year ended
31.3.05
£000
119,274
101,469
16,524
13,441
4,594
437
235
35,231
43,551
78,782
20,440
5,771
12,664
2,699
235
41,809
44,204
86,013
(16,582)
(15,757)
62,200
(7,421)
1,295
1,046
57,120
(9,676)
47,444
(124)
47,568
47,444
54.7p
51.8p
70,256
(8,734)
1,948
1,225
64,695
844
65,539
17
65,522
65,539
56.3p
53.7p
Note
3
4
5
6
7
7
8
12
12
18 Helical Bar plc Report & Accounts 2006
18 Helical Bar plc Report & Accounts 2006
Balance Sheets
Helical Bar plc and subsidiary undertakings at 31 March 2006
Note
Group
31.3.06
£000
Group
31.3.05
£000
Company
31.3.06
£000
Company
31.3.05
£000
13
14
15
16
17
18
19
20
21
22
26
23
23
9
25
294,583
271,315
489
–
295
68
540
–
2,195
182
–
489
–
540
15,300
15,300
150
–
–
–
295,435
274,232
15,939
15,840
86,076
95,568
66
33,925
10,135
130,202
425,637
161
41,528
28,203
165,460
439,692
522
–
472
–
310,148
226,147
3,030
20,776
313,700
329,639
247,395
263,235
(49,506)
(75,833)
(183,277)
(174,159)
(3,394)
–
(5,787)
(2,451)
(42,683)
(21,136)
(1,743)
–
–
(4,919)
(2,451)
–
(95,583)
(105,207)
(185,020)
(181,529)
(80,160)
(132,043)
(610)
(1,657)
(19,005)
(14,438)
(182)
(182)
(99,957)
(148,320)
–
–
(276)
–
(276)
–
–
(124)
–
(124)
(195,540)
(253,527)
(185,296)
(181,653)
230,097
186,165
144,343
81,582
Non-current assets
Investment properties
Owner occupied property, plant and equipment
Investments
Investment in joint ventures
Goodwill
Current assets
Land, developments and trading properties
Available-for-sale investments
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade payables and other payables
Tax liabilities
Redeemable preference shares
Borrowings
Non-current liabilities
Borrowings
Derivative financial instruments
Deferred tax provision
Obligations under finance leases
Total liabilities
Net assets
19 Helical Bar plc Report & Accounts 2006
Group
31.3.05
£000
Company
31.3.06
£000
Company
31.3.05
£000
1,170
39,110
54,530
7,467
291
86,822
(6,893)
1,209
42,490
–
7,478
1,987
98,318
(7,139)
1,170
39,110
–
7,467
1,987
38,741
(6,893)
81,582
–
Equity attributable to equity holders of the parent
230,097
182,497
144,343
Minority interests
Total equity
–
3,668
–
230,097
186,165
144,343
81,582
Balance Sheets continued
Helical Bar plc and subsidiary undertakings at 31 March 2006
Equity
Called-up share capital
Share premium account
Revaluation reserve
Capital redemption reserve
Other reserves
Retained earnings
Investment in own shares
Group
31.3.06
£000
1,209
42,490
64,820
7,478
291
120,948
(7,139)
Note
29
29
29
29
29
29
29
The financial statements were approved by the Board of Directors on 16 June 2006.
M.E. Slade
Director
N.G. McNair Scott
Director
20 Helical Bar plc Report & Accounts 2006
20 Helical Bar plc Report & Accounts 2006
Statement of Recognised Income and Expense
Helical Bar plc and subsidiary undertakings for the year ended 31 March 2006
Profit for the year
Fair value movements on available-for-sale investments
Total recognised income and expense for the year
– attributable to equity shareholders
– attributable to minority interest
Group
Year ended
31.3.06
£000
Group
Year ended
31.3.05
£000
Company
Year ended
31.3.06
£000
Company
Year ended
31.3.05
£000
47,444
65,539
62,715
29,622
(14)
47,430
47,554
(124)
38
65,577
65,560
17
–
62,715
62,715
–
–
29,622
29,622
–
47,430
65,577
62,715
29,622
21 Helical Bar plc Report & Accounts 2006
Group and Company Cash Flow Statements
Cash flows from operating activities
Operating profit
Depreciation
Gain on investment properties
Other non-cash items
Cash flows from operations before changes in working capital
Change in trade and other receivables
Change in land, developments and trading properties
Change in trade and other payables
Cash generated from operations
Finance costs
Finance income
Minority interest dividends paid
Dividends from joint ventures
Dividends from subsidiaries
Tax paid
Cash flows from operating activities
Cash flows from investing activities
Purchase of investment property
Sale of investment property
Purchase of shares
Purchase of shares by ESOP
Acquisitions
Sale of plant and equipment
Purchase of plant and equipment
Cash flows from financing activities
Issue of shares
Borrowings drawn down
Borrowings repaid
Equity dividends paid
Repurchase of shares
Group
Year to
31.3.06
£000
62,200
179
Group
Year to
31.3.05
£000
70,256
190
(43,551)
(44,204)
(454)
18,374
3,232
11,989
(30,779)
2,816
(3,428)
22,814
(14,375)
(21,366)
42,188
29,261
(10,256)
(10,408)
1,295
(3,545)
2,337
–
(4,743)
(14,912)
(12,096)
1,942
(1,249)
846
–
(42)
(8,911)
20,350
(39,055)
(54,515)
65,991
138,305
–
(85)
–
47
(140)
–
(4,078)
(124)
47
(231)
26,758
79,404
3,418
35,146
(65,647)
(3,127)
–
3,965
51,114
(46,255)
(60,798)
(4,467)
Company
Year to
31.3.06
£000
Company
Year to
31.3.05
£000
158
179
–
(34)
303
(616)
190
–
(43)
(469)
(60,932)
118,114
(50)
(380)
9,340
(53,127)
(51,339)
64,138
(123)
7,525
–
2,488
31,205
(4,853)
36,242
(453)
7,490
–
–
45,403
(473)
51,967
(15,097)
116,105
–
–
(311)
(85)
–
47
(140)
(489)
–
–
(7,104)
(4,078)
–
47
(231)
(11,366)
3,418
3,965
–
–
–
–
(3,127)
(60,798)
–
(4,467)
Return of Cash – B share repurchase
(2,451)
(32,465)
(2,451)
(32,465)
– expenses
Refinancing costs
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 April 2005
Cash and cash equivalents at 31 March 2006
–
(69)
(32,730)
(18,068)
28,203
10,135
(709)
(220)
–
–
(709)
–
(89,835)
(2,160)
(94,474)
9,919
18,284
28,203
(17,746)
20,776
3,030
10,265
10,511
20,776
22 Helical Bar plc Report & Accounts 2006
Notes to the Financial Statements
1. Principal accounting policies – group and company
Basis of preparation The consolidated financial statements have, for the first time, been prepared in accordance with
applicable International Financial Reporting Standards (“IFRS”), as adopted by the European Union and IFRS as issued
by the International Accounting Standards Board.
The parent company’s financial statements have also been prepared in accordance with IFRS, as adopted by the European
Union. The directors have taken advantage of the exemption offered by S.230 of the Companies Act not to present a separate
income statement for the parent company.
The financial statements have been prepared under the historical cost convention as modified by the revaluation of
investment properties, available for sale investments and derivative financial instruments. The measurement bases and
principal accounting policies of the Group are set out below.
The policies have changed from the previous year when the financial statements were prepared under applicable United
Kingdom Generally Accepted Accounting Principles (“UK GAAP”). The comparative information has been restated in
accordance with IFRS. The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS are provided in
note 2. The date of transition to IFRS was 1 April 2004.
The Group has taken advantage of certain exemptions available under IFRS 1 First-time adoption of International Financial
Reporting Standards. The exemptions used are explained under the respective accounting policy.
Basis of consolidation The Group financial statements consolidate those of the Company and all of its subsidiary undertakings
drawn up to 31 March 2006. Subsidiary undertakings are those entities over which the Group has the ability to govern the
financial and operating policies through the exercise of voting rights.
Unrealised gains on transactions between the Company and its subsidiaries and between subsidiaries are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Revenue recognition Property revenue consists of gross rental income on an accruals basis, together with sales of trading
and development properties, excluding sales of investment properties. Rental income receivable in the period from
lease commencement to the earlier of lease expiry and any tenant option to break is spread evenly over that period.
Any incentive for lessees to enter into a lease agreement and any costs associated with entering into the lease are spread
over the same period.
Revenue in respect of investment and other income represents investment income, fees and commissions earned on an
accruals basis and profits or losses recognised on investments held for the short-term. Dividends are recognised when the
shareholders’ right to receive payment has been established. Interest income is accrued on a time basis, by reference to the
principal outstanding and the effective interest rate.
A property is regarded as sold when the significant risks and returns have been transferred to the buyer. For conditional
exchanges, sales are recognised when the conditions are satisfied.
Share-based payments The Group provides share-based payments in the form of share options, performance share plan awards
and a share incentive plan. These payments are discussed in greater detail in the Directors’ Remuneration Report on pages
55 to 62.
All share-based payment arrangements granted after 7 November 2002 that had not vested prior to 1 January 2005 are
recognised in the financial statements. The Group uses a stochastic valuation model and the resulting value is amortised
through the Consolidated Income Statement (“Income Statement”) over the vesting period of the share-based payments.
For the performance share plan and share incentive plan awards, where non-market conditions apply, the expense is allocated
over the vesting period, to the Income Statement based on the best available estimate of the number of awards that are
expected to vest. Estimates are subsequently revised if there is any indication that the number of awards expected to vest
differs from previous estimates.
Depreciation In accordance with IAS40 Investment Property, depreciation is not provided for on freehold investment
properties or on leasehold investment properties. The Group does not own the freehold land and buildings which it occupies.
Costs incurred in respect of leasehold improvements to the Group’s head office at 11-15 Farm Street, London W1J 5RS are
capitalised and held as short leasehold improvements. Leasehold improvements, plant and equipment are stated at cost less
accumulated depreciation and any recognised impairment loss. Residual values are reassessed annually.
Depreciation is charged so as to write off the cost of assets less residual value, over their estimated useful lives, using the
straight line method, on the following basis:
Short leasehold improvements – 10% or length of lease, if shorter
Plant and equipment
– 25%
Taxation The taxation charge represents the sum of tax currently payable and deferred tax. The charge for current taxation is
based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using rates that
have been enacted or substantively enacted by the balance sheet date. Tax payable upon realisation of revaluation gains
recognised in prior periods is recorded as a current tax charge with a release of the associated deferred taxation.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is
accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary differences arise from the initial recognition of goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
23 Helical Bar plc Report & Accounts 2006
23 Helical Bar plc Report & Accounts 2006
Notes to the Financial Statements continued
1. Principal accounting policies (continued)
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered.
Deferred tax is determined using tax rates that have been enacted or substantively enacted by the balance sheet date and are
expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. It is recognised in the
Income Statement except when it relates to items credited or charged directly to equity, in which case the deferred tax is also
dealt with in equity.
Dividends Dividend distributions to the Company’s shareholders are recognised as a liability in the financial statements in the
period in which dividends are declared.
Investment properties Investment properties are properties owned or leased by the Group which are held for long-term rental
income and for capital appreciation. Investment properties are initially recognised at cost and revalued at the balance sheet
date to fair value as determined by professionally qualified external valuers. In accordance with IAS40, investment properties
held under leases are stated gross of the recognised finance lease liability.
Gains or losses arising from changes in the fair value of investment properties are included in other operating income in
the Income Statement of the period in which they arise.
In accordance with IAS40, as the Group uses the fair value model, no depreciation is provided in respect of investment
properties including integral plant.
When the Group redevelops an existing investment property for continued future use as investment property, the property
remains an investment property measured at fair value and is not reclassified. Interest is capitalised before tax relief until the
date of practical completion.
Investment in joint ventures Entities whose economic activities are controlled jointly by the Group and by other ventures
independent of the Group are accounted for using the equity method of accounting. Under IFRS the Group’s share of the
results and of the net assets of the joint ventures are shown in the Income Statement and Consolidated Balance Sheet
(“Balance Sheet”) respectively. Under IFRS the Company’s cost of investment in joint ventures is shown in the Company
Balance Sheet.
Investments in subsidiaries Investments in subsidiaries are held in the Company balance sheet at cost and reviewed annually
for impairment.
Goodwill Goodwill representing the excess of the cost of acquisition over the fair value of the Group’s share of the identifiable
net assets acquired, is capitalised and reviewed annually for impairment. Goodwill is carried at cost less accumulated
impairment losses. Negative goodwill is recognised immediately after acquisition in the Income Statement.
Land, developments and trading properties Land, developments and trading properties held for sale are inventory and are
included in the Balance Sheet at the lower of cost and net realisable value.
Investments Investments are classified as available-for-sale investments or trading investments dependent on the purpose
for which they were acquired. Available-for-sale investments, being investments intended to be held for an indefinite
period, are revalued to fair value at the balance sheet date. For listed investments, fair value is the bid market listed value
ruling at the balance sheet date. Gains or losses arising from changes in fair value are included in the revaluation reserve
except to the extent that losses are attributable to impairment, in which case they are recognised in the Income Statement.
Upon disposal, accumulated fair value adjustments are included in the Income Statement.
Trade receivables Trade receivables do not carry any interest and are stated at fair value and subsequently at amortised cost as
reduced by appropriate allowances for estimated irrecoverable amounts.
Cash and cash equivalents Cash and cash equivalents are carried in the Balance Sheet at cost. For the purposes of the cash flow
statement, cash and cash equivalents comprise cash in hand, deposits with banks, other short-term, highly liquid investments
with original maturities of three months or less, net of bank overdrafts.
Trade and other payables Trade and other payables are not interest bearing and are initially recognised at fair value and
subsequently at amortised cost.
Borrowing and borrowing costs Interest bearing bank loans and overdrafts are initially recorded at fair value, net of finance and
other costs yet to be amortised. Finance and other costs incurred in respect of the obtaining and maintenance of borrowings
are accounted for on an accruals basis and written-off to the Income Statement over the length of the associated borrowings.
Borrowing costs directly attributable to the acquisition and construction of new development and investment properties are
added to the costs of such properties until the earliest of:
• the date when the development or investment becomes fully let;
• the date when the income exceeds outgoings; and,
• the date of completion of the development or investment.
All other borrowing costs are recognised in the Income Statement in the period in which they are incurred.
24 Helical Bar plc Report & Accounts 2006
1. Principal accounting policies (continued)
Derivative financial instruments Derivative financial assets and financial liabilities are recognised on the Balance Sheet when the
Group becomes a party to the contractual provisions of the instrument.
The Group enters into derivative transactions such as interest rate caps and floors in order to manage the risks arising from its
activities. Derivatives are initially recorded at fair value and are subsequently remeasured to fair value based on market prices,
estimated future cash flows and forward rates as appropriate. Any change in the fair value of such derivatives is recognised
immediately in the Income Statement as a finance cost.
Leases Leases are classified according to the substance of the transaction. A lease that transfers substantially all the risks and
rewards of ownership to the lessee is classified as a finance lease. All other leases are classified as operating leases.
In accordance with IAS40, finance and operating leases of investment property are accounted for as finance leases and
recognised as an asset and an obligation to pay future minimum lease payments. The investment property asset is included in
the balance sheet at fair value, gross of the recognised finance lease liability. Lease payments are allocated between the liability
and finance charges so as to achieve a constant financing rate.
Assets leased out under operating leases are included in investment property, with rental income recognised on a straight-line
basis over the lease term.
Employee Share Ownership Plan Trust Shares held in the Helical Bar Employee Share Ownership Plan Trust (“ESOP”) are shown
as a deduction in arriving at equity funds. Assets, liabilities and reserves of the ESOP are included in the statutory headings to
which they relate.
Use of estimates and judgements To be able to prepare accounts according to generally accepted accounting principles,
management must make estimates and assumptions that affect the asset and liability items and revenue and expense amounts
recorded in the financial accounts. These estimates are based on historical experience and various other assumptions that
management and the Board of Directors believe are reasonable under the circumstances. The results of these considerations
form the basis for making judgements about the carrying value of assets and liabilities that are not readily available from
other sources.
Areas requiring the use of estimates and critical judgement that may significantly impact on the Group’s earnings and
financial position are:
– revenue and cost recognition on developments where profits, recognised only when developments are sold and let, are
spread over the construction period using estimates of the final outcome;
– valuation of investment properties, where external valuers are used to provide third party valuations;
– calculation of deferred tax liabilities, where indexation is used to reduce the provision for deferred tax on revaluation
surpluses;
– calculation and assessment of recoverability of deferred tax assets, where it has been assumed that the provision for
ESOP purchases of shares in the Company will be tax deductible on the vesting of share awards made by the Performance
Share Plan; and,
– recognition of share-based payments charge, where it has been assumed that the share awards made under the terms of the
Performance Share Plan will vest in full and require the purchase of shares in the Company by the ESOP.
2. Reconciliations between UK GAAP and IFRS
The principal changes arising from the presentation of the 31 March 2004 and 31 March 2005 results under IFRS are:
(a) Profit after tax
Group
Year to
31.3.05
£000
26,814
29,844
8,881
65,539
Company
Year to
31.3.05
£000
23,281
6,343
(2)
29,622
As previously reported under UK GAAP
IFRS adjustments to profit before taxation
IFRS adjustments to taxation
IFRS profit after tax
25 Helical Bar plc Report & Accounts 2006
Notes to the Financial Statements continued
2. Reconciliations between UK GAAP and IFRS (continued)
(b) Profit before tax
As previously reported under UK GAAP
Goodwill amortisation
Amortisation of rent free periods and other lease incentives
Amortisation of letting costs
Share-based payments
Joint venture share of taxation
Revaluation gains on investment properties reported as income
– subsidiaries
– associated companies
Movement in fair value of derivative financial instruments
Dividends
IFRS adjustments
IFRS profit before tax
Notes
1
2
3
4
5
6
6
7
8
Group
Year to
31.3.05
£000
34,851
86
(1,029)
(82)
(75)
(570)
30,098
191
1,225
–
29,844
64,695
Company
Year to
31.3.05
£000
27,695
–
–
–
–
–
–
–
–
6,343
6,343
34,038
Notes:
1 Under IFRS, goodwill, representing the excess of cost of acquisition over the fair value of the Group’s share of identifiable net assets acquired, is capitalised
and reviewed annually for impairment rather than amortised equally in annual instalments over its estimated useful life.
2 Under IFRS, property lease rent free periods, stepped rents and other incentives are amortised over the full lease term rather than the period to first open
market rent review.
3 Under IFRS, the costs of letting properties are amortised over the lease term rather than the period to first open market rent review.
4 Under IFRS, share-based payments are amortised over their vesting period and are recognised at fair value.
5 Under IFRS, the joint venture share of taxation is netted off the Group’s share of profit rather than disclosed in the Group’s taxation charge.
6 Under IFRS, gains and losses arising on revaluation of investment properties are recorded as operating income in the Income Statement rather than as a
movement on reserves.
7 Under IFRS, derivative financial instruments are carried in the balance sheet at fair value with gains or losses dealt with in the Income Statement.
8 Under IFRS, proposed dividends, receivable and payable, are not recognised as assets and liabilities at the balance sheet date.
(c) Taxation
Current tax
Joint venture share of current tax
Deferred tax
Investment property surpluses
Capital allowances
Financial instruments
Tenants incentives
Letting costs
Performance share plan award
Share option gains
Deferred tax adjustments
IFRS tax adjustments
As previously reported under UK GAAP
Tax as restated under IFRS
26 Helical Bar plc Report & Accounts 2006
Group
Year to
31.3.05
£000
(570)
(5,825)
(93)
368
(309)
(24)
(303)
(2,125)
(8,311)
(8,881)
8,037
(844)
Company
Year to
31.3.05
£000
–
–
2
–
–
–
–
–
2
2
4,413
4,415
2. Reconciliations between UK GAAP and IFRS (continued)
(d) Net assets
As previously reported under UK GAAP
Amortisation of rent free periods and other lease incentives
Amortisation of letting costs
Fair value of financial instruments
Tax effect of the above
Goodwill impairment
Share-based payment
Fair value of available-for-sale investments
Preference shares
Dividends
Provision for contingent tax liability
– on revaluation surplus
– on capital allowances
– other temporary differences
IFRS adjustments
As at 31 March under IFRS
Notes:
Notes
9
10
11
12
13
14
15
16
17
18
19
Group
At 31.3.05
£000
196,712
3,240
1,606
Group
At 01.4.04
£000
238,615
4,269
1,687
(1,657)
(2,882)
(957)
(491)
(24)
38
(2,451)
1,831
(922)
(576)
51
–
–
Company
At 31.3.05
£000
102,458
Company
At 01.4.04
£000
177,176
–
–
–
–
–
–
–
(2,451)
–
–
–
–
–
–
–
–
2,524
(18,407)
(24,058)
(14,684)
(20,509)
(306)
3,308
(399)
880
–
(18)
–
–
(15)
–
(10,547)
(15,877)
(20,876)
(24,073)
186,165
222,738
81,582
153,103
9 Under IFRS, property lease rent free periods, stepped rents and other incentives are amortised over the full lease term rather than the period to first open
market rent review.
10 Under IFRS, the costs of letting properties are amortised over the lease term rather than the period to first open market rent review.
11 Under IFRS, derivative financial instruments are carried in the balance sheet at fair value with gains or losses dealt with in the Income Statement.
12 Under IFRS. the impact on the Group’s tax charge of the IFRS adjustments in 9, 10 and 11 is reflected in the deferred tax provision.
13 Under IFRS, goodwill representing the excess cost of acquisition over the fair value of the Group’s share of identifiable net assets acquired, is capitalised and
reviewed annually for impairment rather than amortised equally in annual instalments over its estimated useful life.
14 Under IFRS, share-based payments are amortised over their vesting period and are recognised at fair value.
15 Under IFRS, available-for-sale investments are valued at fair value rather than at historic cost.
16 Under IFRS, the non-cumulative preference shares of 17⁄8p each are treated as debt.
17 Under IFRS, proposed dividends, receivable and payable, are not recognised as assets and liabilities at the balance sheet date.
18 Under IFRS, provision is made for the deferred tax liability associated with the revaluation of investment properties and other temporary differences,
whereas UK GAAP requires that the contingent liability on the sale of the property be disclosed as contingent tax but not provided in the balance sheet.
19 Under IFRS, deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary
differences can be utilised.
(e) Adjusted net asset value per share – group
As previously reported
Amortisation period of lease incentives (net of tax)
Amortisation of letting costs (net of tax)
Dividend adjustment
Deferred tax on other timing differences
Restated under IFRS
At 31.3.05
pence
216
At 01.04.04
pence
177
2
1
2
3
2
1
2
–
224
182
(f) Cash flows – group and company Under IFRS, the cash flow statements reconcile the movements in cash and cash equivalents,
whereas in the last audited UK GAAP financial statements they reconciled the movements in cash only. Other than this there
are no material differences in the restated statements of cash flow from those previously reconciled.
27 Helical Bar plc Report & Accounts 2006
Total
Year ended
31.3.05
£000
22,745
25,432
52,916
101,093
376
101,469
31.3.05
£000
20,440
5,771
12,664
2,699
44,204
85,778
235
86,013
(15,757)
(5,561)
64,695
Notes to the Financial Statements continued
3. Segmental information
Revenue
Rental income
Trading property sales
Developments
Other
Revenue
Investment
and trading
Year ended
31.3.06
£000
20,102
72,101
–
92,203
Developments
Year ended
31.3.06
£000
–
–
26,756
26,756
Total
Year ended
31.3.06
£000
20,102
72,101
26,756
Investment
and trading
Year ended
31.3.05
£000
22,745
25,432
–
118,959
48,177
Developments
Year ended
31.3.05
£000
–
–
52,916
52,916
315
119,274
All sales were within the UK. All revenue is attributable to continuing operations.
Profit before tax
Net rental income
Trading profits
Development profits
Share of results of joint venture
Gain on sale of investment properties
Other operating income
Gross profit
Unallocated administrative expenses
Unallocated net finance costs
Profit before tax
Balance sheet
Investment properties
Land, development and
trading properties
31.3.06
£000
16,524
13,441
–
437
43,551
73,953
31.3.06
£000
294,583
45,508
340,091
31.3.05
£000
20,440
5,771
31.3.05
£000
–
–
–
12,664
2,699
44,204
73,114
–
–
12,664
31.3.06
£000
–
–
4,594
–
–
4,594
31.3.06
£000
16,524
13,441
4,594
437
43,551
78,547
235
78,782
(16,582)
(5,080)
57,120
31.3.06
£000
31.3.06
£000
31.3.05
£000
31.3.05
£000
31.3.05
£000
–
294,583
271,315
–
271,315
40,568
40,568
86,076
60,857
380,659
332,172
34,711
34,711
95,568
366,883
Borrowings
(122,843)
–
(122,843)
(153,179)
–
(153,179)
217,248
40,568
257,816
178,993
34,711
213,704
Unallocated assets
Unallocated liabilities
Net assets
44,978
(72,697)
230,097
72,809
(100,348)
186,165
The segmental information has been provided in respect of the two main divisions of the Group, the investment and trading
department and the development department. Details of capital expenditure are included in notes 13 and 14.
28 Helical Bar plc Report & Accounts 2006
4. Net rental income
Gross rental income
Rents payable
Other property outgoings
Net rental income
5. Gain on sale and revaluation of investment properties
Net proceeds from the sale of investment properties
Book value (note 13)
Lease incentive and letting costs adjustment
Gain on sale of investment properties
Revaluation gains on investment properties
Gain on sale and revaluation of investment properties
6. Administrative expenses
Administrative expenses
Operating profit is stated after:
Staff costs during the year:
– salaries and other remuneration
– social security costs
– other pension costs
Depreciation:
– owner occupied property, plant and equipment
Share-based payments charge
Auditors’ remuneration:
– audit services
– non-audit services (IFRS and internal controls advice)
Year ended
31.3.06
£000
Year ended
31.3.05
£000
20,102
22,745
(489)
(3,089)
16,524
(396)
(1,909)
20,440
31.3.06
£000
65,992
31.3.05
£000
140,183
(57,565)
(124,210)
(609)
(1,867)
7,818
35,733
43,551
31.3.06
£000
16,582
7,700
1,501
287
9,488
179
3,458
137
16
14,106
30,098
44,204
31.3.05
£000
15,757
9,940
1,455
76
11,471
190
1,010
110
47
Details of the remuneration of Directors’ amounting to £13,358,000 (2005: £13,810,000) are included in the Directors’
Remuneration Report on pages 55 to 62. The amount of the share-based payments charge incurred in relation to share
awards made to Directors is £2,524,000 (2005: £747,000).
Other pension costs relate to payments to individual pension plans.
The average number of employees (management and administration) of the Group during the year was 22 (2005: 22).
29 Helical Bar plc Report & Accounts 2006
Notes to the Financial Statements continued
7. Finance costs and finance income
Interest payable on bank loans and overdrafts
Other interest payable and similar charges
Finance arrangement costs
Interest capitalised
Finance costs
Interest receivable and similar income
Finance income
8. 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% (2005: 30%)
– Group corporation tax
– adjustment in respect of prior periods
Current tax charge
Deferred tax – capital allowances
– other temporary differences
– revaluation surpluses
Deferred tax
Tax on profit on ordinary activities
Factors affecting tax charge for period:
Year ended
31.3.06
£000
Year ended
31.3.05
£000
7,638
2,346
234
10,218
(2,797)
7,421
1,295
1,295
8,330
2,243
457
11,030
(2,296)
8,734
1,948
1,948
31.3.06
£000
31.3.05
£000
5,983
–
5,983
(804)
(872)
5,369
3,693
9,676
6,100
1,913
8,013
(639)
(2,393)
(5,825)
(8,857)
(844)
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% (2005: 30%)
Effect of:
– Payments for use of tax losses
– Expenses not deductible for tax purposes
– Capital allowances not reflected through deferred tax
– Tax relief on share options
– Capital losses utilised
– Operating profit of joint ventures
– Prior year adjustment
– Other temporary differences
Total tax charge for period
31.3.06
£000
57,120
31.3.05
£000
64,695
17,136
19,409
3,633
(263)
(591)
(2,260)
(7,879)
(131)
–
31
9,676
3,586
579
(787)
(3,891)
(19,646)
(810)
1,509
(793)
(844)
Factors that may affect future tax charges The tax charge is expected to be less than the full rate in future years, primarily due to
the Group continuing to claim capital allowances in respect of eligible expenditure on investment properties.
30 Helical Bar plc Report & Accounts 2006
9. Deferred tax
Deferred taxation provided for in the financial statements is set out below:
Capital gains
Capital allowances
Other temporary differences
Deferred tax provision
Group
31.3.06
£000
20,927
2,175
(4,097)
19,005
Group
31.3.05
£000
14,684
2,105
(2,351)
14,438
Company
31.3.06
£000
Company
31.3.05
£000
–
276
–
276
–
124
–
124
Under IAS12, deferred tax provisions are made for the tax that would potentially be payable on the realisation of investment
properties and other assets at book value.
Other timing differences represent deferred tax assets arising from future tax relief available to the Group from capital
allowances and when Performance Share Plan awards vest.
If upon sale of the investment properties the Group retained all the capital allowances the deferred tax provision in respect
of capital allowances of £2.2m would be released and further capital allowances of £16.7m would be available to reduce future
tax liabilities.
The provision in respect of capital gains tax has been reduced by indexation.
10. Dividends paid
Attributable to equity share capital
Ordinary
– interim paid of 1.45p (2005: 1.32p) per share
– prior period final paid of 2.20p (2005: 2.00p) per share
Total ordinary paid 3.65p (2005: 3.32p) per share
A shares – Return of Cash
– paid 23 December 2004
Total dividends paid in year
Year ended
31.3.06
£000
Year ended
31.3.05
£000
1,296
1,831
3,127
–
3,127
1,702
2,524
4,226
56,572
60,798
The interim dividend of 1.45p was paid on 22 December 2005 to shareholders on the register on 2 December 2005.
The final dividend, if approved at the AGM on 20 July 2006, will be paid on 21 July 2006 to shareholders on the register
on 23 June 2006. This final dividend, amounting to £2,174,000, representing 2.45p per share, has not been included as
a liability at 31 March 2006.
11. 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 profit for the year of the Company was £62,715,000 (2005: £29,622,000).
31 Helical Bar plc Report & Accounts 2006
Notes to the Financial Statements continued
12. 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
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.
Ordinary shares in issue
Weighting adjustment
Weighted average ordinary shares in issue for calculation of basic earnings per share
Weighted average ordinary shares issued on exercise of share options
Weighted average ordinary shares to be issued on exercise of share options
Weighted average ordinary shares to be issued under performance share plan
Year end
31.3.06
000’s
90,506
Year end
31.3.05
000’s
135,740
(3,540)
(19,430)
86,966
116,310
1,087
2,535
1,296
1,250
4,185
250
Weighted average ordinary shares in issue for calculation of diluted earnings per share
91,884
121,995
Earnings used for calculation of basic and diluted earnings per share
Basic earnings per share
Diluted earnings per share
Earnings used for calculation of basic and diluted earnings per share
Less gain on sale and revaluation of investment properties
Less fair value movement on derivative financial instruments
Add back deferred tax in respect of investment properties
Add back deferred tax in respect of derivative financial instruments
Earnings used for calculation of adjusted earnings per share
Adjusted earnings per share
Adjusted diluted earnings per share
31.3.06
£000
47,568
31.3.05
£000
65,522
54.7p
56.3p
51.8p
53.7p
47,568
65,522
(43,551)
(44,204)
(1,046)
4,565
314
7,850
(1,225)
(6,463)
368
13,998
9.0p
12.0p
8.5p
11.5p
32 Helical Bar plc Report & Accounts 2006
13. Investment properties
Group
Fair value at 1 April
Additions at cost
Disposals
Revaluation surplus
Fair value at 31 March
Freehold
31.3.06
£000
Leasehold
31.3.06
£000
Total
31.3.06
£000
Freehold
31.3.05
£000
Leasehold
31.3.05
£000
Total
31.3.05
£000
203,683
39,800
(57,565)
25,533
211,451
67,632
5,300
271,315
270,182
64,932
335,114
45,100
29,324
990
30,314
–
(57,565)
(117,853)
(6,357)
(124,210)
10,200
83,132
35,733
22,030
8,067
30,097
294,583
203,683
67,632
271,315
Interest capitalised during the year in respect of the refurbishment of investment properties amounted to £300,000
(2005: £nil).
Interest capitalised in respect of the development of investment properties is included in investment properties to the extent
of £1,313,000 (2005: £1,013,000).
The investment properties have been valued on an open market basis at 31 March 2006 as follows:
Cushman & Wakefield Healey & Baker, International Real Estate Consultants
DTZ Debenham Tie Leung, International Property Advisors
Jones Lang LaSalle, International Real Estate Consultants
Drivers Jonas, Chartered Surveyors
Directors’ valuation
The net surplus arising of £35,733,000 (2005: £30,097,000) has been transferred to the revaluation reserve.
The historical cost of investment property is £209,527,000 (2005: £201,919,000).
14. Owner occupied property, plant and equipment – group and company
Company
Cost at 1 April
Additions at cost
Disposals
Cost at 31 March
Depreciation at 1 April
Provision for the year
Eliminated on disposals
Depreciation at 31 March
Net book amount at 31 March
646
–
–
646
458
47
–
505
141
Short
leasehold
improvements
31.3.06
£000
Plant and
equipment
31.3.06
£000
Total
31.3.06
£000
1,499
142
(129)
1,512
959
179
Short
leasehold
improvements
31.3.05
£000
Plant and
equipment
31.3.05
£000
646
–
–
646
412
46
–
458
188
820
232
(199)
853
551
144
(194)
501
352
853
142
(129)
866
501
132
(115)
(115)
518
348
1,023
489
£000
194,200
17,850
75,400
5,250
1,883
294,583
Total
31.3.05
£000
1,466
232
(199)
1,499
963
190
(194)
959
540
Plant and equipment include vehicles, fixtures and fittings and other office equipment.
33 Helical Bar plc Report & Accounts 2006
Notes to the Financial Statements continued
15. Investments
At 1 April
Acquired during year
Further investment in existing subsidiaries
At 31 March
The Company’s principal subsidiary undertakings, all of which have been consolidated, are:
Name of undertaking
Nature of business
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 (Edenbridge) Ltd
Dencora (Harlow) Ltd
Chancerygate (Albion) Ltd
Chancerygate (Mill Street) Ltd
HB Sawston No. 3 Ltd
HB Dales Manor No. 3 Ltd
HB Cambs No. 3 Ltd
Harbour Developments (Bracknell) Ltd
Helical Bar (Berkeley Square) Ltd
Helical Bar (CL) Investments Ltd*
Investment
Investment
Investment
Trading
Trading
Trading
Trading
Trading
Investment
Investment
Investment
Development
Development
Investment
Helical Bar Developments (South East) Ltd
Development and trading
Helical Bar (Hawtin Park No. 3) Ltd
Helical Bar (Rex House) Ltd
Helical Bar Services Ltd
Helical Bar Trustees Ltd
Helical Bar (Wales) Ltd*
Helical Properties Ltd
Helical Properties Investment Ltd
Helical Properties Retail Ltd
Helical Retail Ltd
Helical Retail (RBS) Ltd*
Helical (Cardiff) Ltd
Helical (CR) Ltd
Helical (Crowborough) Ltd
Helical (Fleet) No. 2 Ltd*
Helical (HIS) Ltd
Helical (Letchworth) Ltd*
Helical (Liphook) Ltd
Helical (Sevenoaks) Ltd
Helical (St Austell) Ltd
Helical (Wednesfield) Ltd
Helical (Westfields) Ltd
Helical (Worthing) Ltd
34 Helical Bar plc Report & Accounts 2006
Investment
Investment
Management Services
Trustee of Share Incentive Plan
Investment
Investment and trading
Investment
Investment
Development and trading
Development and trading
Investment
Development and trading
Investment
Investment
Investment
Investment
Development (Jersey)
Investment
Investment
Investment
Investment
Investment
Company
31.3.06
£000
15,300
–
–
Company
31.3.05
£000
8,337
1,303
5,660
15,300
15,300
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%
15. Investments (continued)
Name of undertaking
Intercontinental Land and Development Co. Ltd*
Nature of business
Investment development and trading
Percentage of ordinary
share capital held
100%
Networth Ltd*
Maudslay Park Ltd
Prescot Street Investments Ltd
56/76 CR (Holdings) Ltd
61 Southwark Street Ltd*
Helical (Interchange) Ltd
Helical Properties (WSM) Ltd*
Investment
Development
Investment
Development
Investment
Investment
Investment
100%
100%
100%
100%
100%
100%
75%
All principal subsidiary undertakings operate in the United Kingdom and, unless otherwise indicated, are incorporated and
registered in England and Wales. A full list of all subsidiaries is lodged with the Annual Return at Companies House.
*Ordinary capital is held by a subsidiary undertaking.
16. Investment in joint ventures
Summarised income statements
Revenue
Operating profit
Net finance costs
Profit before tax
Tax
Profit after tax
Summarised balance sheets
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Group
31.3.06
£000
1,067
997
(285)
712
(275)
437
8
5,562
(2,792)
(2,483)
295
Group
31.3.05
£000
3,078
3,269
–
3,269
(570)
2,699
–
7,861
(3,184)
(2,482)
2,195
The cost of the Company’s investment in joint ventures was £150,000 (2005: £nil).
At 31 March 2006 the Group and the Company had interests in the following joint venture companies:
Abbeygate Helical (Leisure Plaza) Ltd
Abbeygate Helical (Winterhill) Ltd
Grosvenor Hill (Sprucefields) Ltd
The Asset Factor Ltd
Shirley Advance LLP
Country of
incorporation
Class of share Proportion held
Group
capital held
Proportion held
Company
Nature of
business
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
Ordinary
Ordinary
Ordinary
Ordinary
n/a
50%
50%
50%
50%
50%
Property
50% development
Property
50% development
Property
50% investment
50% Outsourcing
Property
50% development
35 Helical Bar plc Report & Accounts 2006
Notes to the Financial Statements continued
17. Goodwill
Cost at 1 April
Additions
Cost at 31 March
Impairment at 1 April
Impairment for the year
Impairment at 31 March
Fair value at 31 March
Group
At 31.3.06
£000
1,515
–
1,515
1,333
114
1,447
68
Group
At 31.3.05
£000
1,391
124
1,515
1,095
238
1,333
182
The carrying values of the Group’s goodwill is reassessed at least annually or whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. If analysis indicates that the carrying value is too high, then this is
reduced to its recoverable amount which is the higher of fair value and its value in use.
18. Land, developments and trading properties
Development sites
Properties held as trading stock
Group
31.3.06
£000
40,568
45,508
86,076
Group
31.3.05
£000
34,711
60,857
95,568
Company
31.3.06
£000
Company
31.3.05
£000
522
–
522
472
–
472
The directors’ valuation of trading and development stock shows a surplus of £29m above book value (2005: £13m).
Interest capitalised in respect of the development of sites is included in stock to the extent of £2,867,000 (2005: £2,185,000).
Interest capitalised during the year in respect of development sites amounted to £2,497,000 (2005: £2,296,000).
19. Available-for-sale investments
UK listed investments at fair value
20. Trade and other receivables
Trade receivables
Amounts owed by joint venture undertakings
Amounts owed by subsidiary undertakings
Other receivables
Prepayments and accrued income
Group
31.3.06
£000
66
66
Group
31.3.06
£000
13,156
3,712
–
2,287
14,770
33,925
Group
31.3.05
£000
161
161
Group
31.3.05
£000
16,056
2,939
Company
31.3.06
£000
Company
31.3.05
£000
–
–
–
–
Company
31.3.06
£000
406
2,616
Company
31.3.05
£000
423
2,939
–
301,370
219,956
9,040
13,493
41,528
1,507
4,249
1,232
1,597
310,148
226,147
Included in prepayments is £nil (2005: £3.6m) which relates to payments made by the Group to potentially reduce capital gains
tax liabilities. The prepayment has been written off as part of the Group’s tax charge in proportion to the capital losses utilised.
36 Helical Bar plc Report & Accounts 2006
21. Cash and cash equivalents
Rent deposits and cash held at managing agents
Cash secured against debt and cash held at solicitors
Cash held to fund future development costs
Cash deposits
22. Trade payables and other payables
Trade creditors
Social security costs and other taxation
Amounts owed to joint venture undertakings
Amounts owed to subsidiary undertakings
Other payables
Accruals and deferred income
23. Borrowings
Current borrowings
Bank loans repayable within:
– one to two years
– two to three years
– three to four years
– four to five years
– after five years
Deferred arrangement costs
Non-current borrowings
Group
31.3.06
£000
1,980
189
382
7,584
10,135
Group
31.3.06
£000
8,424
(262)
–
–
7,634
33,710
49,506
Group
31.3.06
£000
42,683
24,355
31,988
14,324
5,200
4,536
Group
31.3.05
£000
2,612
2,368
364
22,859
28,203
Group
31.3.05
£000
32,149
1,574
–
–
7,336
34,774
75,833
Group
31.3.05
£000
21,136
32,060
45,535
37,356
17,500
–
80,403
132,451
(243)
(408)
80,160
132,043
Company
31.3.06
£000
Company
31.3.05
£000
–
–
–
–
–
–
3,030
3,030
20,776
20,776
Company
31.3.06
£000
857
–
114
Company
31.3.05
£000
146
1,465
–
180,923
171,011
187
1,196
358
1,179
183,277
174,159
Company
31.3.06
£000
Company
31.3.05
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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 £205,070,000 (2005: £237,942,000). These will be
repayable when the underlying properties are sold. Bank overdrafts and term loans exclude the Group’s share of borrowings
in joint venture companies of £2,500,000 (2005: £2,500,000).
37 Helical Bar plc Report & Accounts 2006
Notes to the Financial Statements continued
24. Financing and financial instruments
The policies for dealing with liquidity and interest rate risk are noted in the Financial Review on page 16.
Bank overdraft and loans – maturity
Due after more than one year
Due within one year
Group
31.3.06
£000
80,160
42,683
Group
31.3.05
£000
132,043
21,136
122,843
153,179
The Group has various undrawn committed borrowing facilities. The facilities available at 31.3.06 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
– swap rate plus bank margin
– 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
%
Expiry
9.050
4.965
5.846
5.819
5.939
6.329
5.439
5.759
6.279
Feb 2009
Mar 2007
Jun 2006
Sep 2007
Sep 2009
Feb 2008
Jun 2011
Nov 2010
Feb 2009
31.3.06
£000
7,388
5,925
3,500
3,460
14,324
5,800
4,536
5,200
50,133
72,953
123,086
(243)
122,843
Group
31.3.06
£000
45,000
2,011
8,691
55,702
%
Expiry
9.050
4.965
5.846
5.819
5.939
6.329
5.901
6.004
6.311
Feb 2009
Mar 2007
Jun 2006
Sep 2007
Sep 2009
Feb 2008
Dec 2007
Oct 2008
May 2008
Group
31.3.05
£000
30,578
–
20,625
51,203
31.3.05
£000
7.913
5,925
3,500
3,460
17,500
5,800
26,750
3,100
73,948
79,639
153,587
(408)
153,179
Floating rate borrowings bear interest at rates based on LIBOR.
Hedging In addition to the fixed rates, borrowings are also hedged by the following financial instruments:
Instrument
Current:
– cap
Value
£000
Rate
%
Start
Expiry
80,000
7.000
Jan. 2006
Sep. 2009
38 Helical Bar plc Report & Accounts 2006
24. Financing and financial instruments (continued)
Gearing
Total borrowings
Cash
Net borrowings
31.3.06
£000
31.3.05
£000
122,843
153,179
(10,135)
(28,203)
112,708
124,976
Net borrowings exclude the Group’s share of borrowings in joint ventures of £2,500,000 (2005: £2,500,000).
Net assets
Gearing
25. Obligations under finance leases
Lease payments under finance leases fall due:
Not later than one year
Later than one year and not later than five years
Later than five years
Present value of finance lease obligations
26. Share capital
Authorised
31.3.06
£000
31.3.05
£000
230,097
186,165
49%
67%
31.3.06
£000
31.3.05
£000
14
46
122
182
31.3.06
£000
39,577
39,577
14
46
122
182
31.3.05
£000
39,577
39,577
The authorised share capital of the Company is £39,576,626.60 divided into ordinary shares of 1p each, 5.25p convertible
cumulative redeemable preference shares 2012 of 70p each, deferred shares of 1⁄8p each.
Allotted, called up and fully paid
– 94,371,925 ordinary shares of 1p each (2005: 18,101,164 ordinary shares of 5p each)
– 212,145,300 deferred shares of 1⁄8p each
31.3.06
£000
31.3.05
£000
944
265
905
265
1,209
1,170
39 Helical Bar plc Report & Accounts 2006
Notes to the Financial Statements continued
26. Share capital (continued)
As at 1 April 2005 the Company had 18,101,164 ordinary 5p shares in issue. On 17 June 2005 options over 323,221
ordinary 5p shares were exercised increasing the issued share capital of the Company to 18,424,385 ordinary 5p shares.
On 1 September 2005, following approval by shareholders at an EGM on 31 August 2005, each 5p share was split into
five 1p shares. Following this share split there were 92,121,925 ordinary 1p shares in issue. On 7 September options over
1,750,000 ordinary 1p shares were exercised. On 16 December options over 300,000 ordinary 1p shares were exercised.
On 6 January 2006 options over 102,173 ordinary 1p shares were exercised. On 13 January 2006 options over 97,827
ordinary 1p shares were exercised. At 31 March 2006 there were 94,371,925 ordinary 1p shares in issue.
1 September 2005 share split – five 1p shares for each one 5p share
92,121,925
Ordinary shares
At 1 April
New shares issued
Shares purchased
At 20 December 2004
21 December 2004 – share consolidation
New shares issued
At 31 August 2005
New shares issued
At 31 March
Preference shares
At 1 April
New shares issued
Shares purchased
At 31 March
Deferred shares
At 1 April
New shares issued
Shares purchased
At 31 March
Shares
in issue
31.3.06
Number
Share
capital
31.3.06
£000
Shares
in issue
31.3.05
Number
Share
capital
31.3.05
£000
18,101,164
905
27,147,903
1,357
323,221
16
538,622
–
–
–
18,424,385
2,250,000
94,371,925
27
(26)
1,358
887
18
–
–
–
–
921
921
23
(530,000)
27,156,525
17,731,164
370,000
–
–
–
944
18,101,164
905
612,704
2,451
–
–
–
10,586,829
42,347
(612,704)
(2,451)
(9,974,125)
(39,896)
–
–
612,704
2,451
212,145,300
–
–
265
–
–
–
212,145,300
–
212,145,300
265
212,145,300
–
265
–
265
The non-cumulative preference shares of 17⁄8p each are disclosed in current liabilities at 31 March 2005.
40 Helical Bar plc Report & Accounts 2006
27. Share options
Share options At 31 March 2006 unexercised options over 3,655,510 (2005: 7,521,615) new ordinary 1p shares in the
Company and 6,234,695 (2005: 6,484,695) purchased ordinary 1p shares held by the ESOP had been granted to Directors
and employees under the Company’s share option schemes. During the period no new options were granted. Options over
323,221 new ordinary 5p shares, 2,250,000 new ordinary 1p shares and 250,000 purchased ordinary 1p 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
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
At 1 April
Options granted
Options exercised
Option expired/lapsed
At 31 March
41 Helical Bar plc Report & Accounts 2006
90.5
55,000 27 Nov. 2001 26 Nov. 2007
113.0
2,000,000
10 Jul. 2002
9 Jul. 2008
88.5
2,990,525
8 Mar. 2004
7 Mar. 2009
156.0
141.5
88.5
150.0
156.0
153.3
150,000
8 Jan. 2006
7 Jan. 2011
299,310 21 Nov. 2007 20 Nov. 2012
215,000
8 Mar. 2004
7 Mar. 2009
2,645,000 18 Dec. 2005 17 Dec. 2010
170,510
8 Jan. 2006
7 Jan. 2011
1,149,185 15 Nov. 2006 14 Nov. 2011
88.5
194,475
8 Mar. 2002
7 Mar. 2009
141.50
21,200 21 Nov. 2005 20 Nov. 2012
9,890,205
Weighted
average
exercise
price
31.3.06
Number
31.3.06
Number
31.3.05
14,006,310
112p
18,874,420
–
–
–
(4,116,105)
89p
(4,868,110)
–
–
–
9,890,205
121p
14,006,310
Weighted
average
exercise
price
31.3.05
105p
–
87p
–
112p
Notes to the Financial Statements continued
28. Share-based payments
The Company provides share-based payments to employees in the form of share options, performance share plan awards and
a share incentive plan. All share-based payment arrangements granted after 7 November 2002 that had not vested prior to
1 January 2005 are recognised in the financial statements. The Company uses a stochastic valuation model and the resulting
value is amortised through the Income Statement over the vesting period of the share-based payments.
Share options granted after 7 November 2002
Outstanding at beginning and end of period
2006
Weighted
average
exercise
price
141.50
Options
320,510
320,510
2005
Weighted
average
exercise
price
141.50
Options
320,510
320,510
The options outstanding at 31 March 2006 had a weighted average remaining contractual life of six years and eight months.
The input into the stochastic model of valuation of the options were as follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk free rate
Expected dividends
2006
146.72
141.50
16%
6 years
4.48%
1.99%
2005
146.72
141.50
16%
6 years
4.48%
1.99%
Expected volatility was determined by calculating the historical volatility of the Company’s shares over the last six years.
The expected life used in the model has been adjusted, based on the Company’s best estimate, for the effects of employee
changes (subject to good leaver provisions), exercise restrictions and behavourial considerations.
Performance share plan awards
Outstanding at beginning of period
Awards made during the period
Outstanding at end of period
2006
Weighted
average
award
value
192p
277p
229p
Awards
–
2,549,760
2,549,760
2005
Weighted
average
award
value
–
192p
192p
Awards
2,549,760
1,964,620
4,514,380
The performance share plan awards outstanding at 31 March 2006 had a weighted average remaining contractual life of
two years nine months.
The inputs into the stochastic model of valuation of the PSP awards were as follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk free rate
Expected dividends
2006
229p
–
n/a
3 years
n/a
1.53%
2005
229p
–
n/a
3 years
n/a
1.53%
The Company recognised total expenses of £3,458,000 (2005: £1,010,000) in relation to share-based payments.
42 Helical Bar plc Report & Accounts 2006
29. Statement of changes in equity
At 1 April 2004
Issue of shares
Purchase of shares
Revaluation surplus
Realised on disposals
Return of cash
Provision released
Total recognised income
Dividends paid
Minority interest
Performance share plan
Provision for ESOP purchase
At 31 March 2005
Issue of shares
Revaluation surplus
Realised on disposals
Total recognised income
Dividends paid
Minority interest
Purchase of shares
Share options exercised
Performance share plan
Provision for ESOP purchase
Share
capital
£000
Capital
Share Revaluation redemption
reserve
reserve
£000
£000
premium
£000
Other
reserves
£000
Retained
earnings
£000
Investment
in own
shares
£000
Total
£000
1,357
35,900
68,814
7,246
291
115,538
(10,106)
219,040
45
(26)
–
–
(206)
–
–
–
–
–
–
3,210
–
–
–
–
–
–
–
–
–
–
–
–
–
221
36,114
(49,438)
–
–
–
–
(960)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,255
(46,802)
(3,776)
(50,383)
(36,114)
49,438
–
–
–
–
–
–
7,431
7,225
(442)
(442)
65,577
(60,798)
(17)
707
(707)
–
–
–
–
–
65,577
(60,798)
(977)
707
(707)
1,170
39,110
54,530
7,467
291
86,822
(6,893)
182,497
39
3,380
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30,364
(20,074)
–
–
–
–
–
–
–
–
–
–
–
–
–
11
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(30,364)
20,074
47,430
(3,127)
124
(11)
–
3,128
(3,128)
–
–
–
–
–
–
3,419
–
–
47,430
(3,127)
124
(472)
(472)
226
–
–
226
3,128
(3,128)
At 31 March 2006
1,209
42,490
64,820
7,478
291
120,948
(7,139) 230,097
The provision released in the year to 31 March 2005 of £442,000 is in respect of the shares held by the Helical Bar Employee
Share Ownership Plan Trust (“ESOP”).
The adjustment to retained earnings of £3,128,000 (2005: £707,000) adds back the share based payments charge, net of tax,
in accordance with IFRS 2 Share Based Payments. The Group has made a provision of £3,835,000 (2005: £707,000) in respect
of future purchases of shares by the ESOP in anticipation of the vesting of share awards under the Group’s Performance
Share Plan.
Notes:
Share capital – represents the nominal value of issued share capital
Share premium – represents the excess of value of shares issued over their nominal value
Revaluation reserve – represents the surplus of fair value of investment properties over their historic cost
Capital redemption reserve – represents amounts paid to purchase issued shares for cancellation at their nominal value
Retained earnings – is distributable and represents the accumulated profit of the Group
Investment in own shares – represents the shares purchased by the Helical Bar Employees’ Share Ownership Plan Trust
43 Helical Bar plc Report & Accounts 2006
Notes to the Financial Statements continued
29. Statement of changes in equity (continued)
Share
capital
£000
Capital
Share Revaluation redemption
reserve
reserve
£000
£000
premium
£000
Other
reserves
£000
Retained
earnings
£000
Investment
in own
shares
£000
Total
£000
Company
At 1 April 2004
Issue of shares
Purchase of shares
Return of cash
Total recognised income
Provisions released
Dividends paid
At 31 March 2005
Issue of shares
Total recognised income
Dividends paid
Shares purchased
Share options exercised
1,357
35,900
45
(26)
(206)
–
–
–
3,210
–
–
–
–
–
1,170
39,110
39
3,380
–
–
–
–
–
–
–
–
At 31 March 2006
1,209
42,490
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,246
1,987
116,719
(10,106)
153,103
–
221
–
–
–
–
–
–
–
–
–
–
–
–
3,255
(46,802)
(3,776)
(50,383)
–
7,431
7,225
29,622
–
29,622
–
(442)
(442)
(60,798)
–
(60,798)
7,467
1,987
38,741
(6,893)
81,582
–
–
–
11
–
–
–
–
–
–
–
62,715
(3,127)
–
–
–
3,419
62,715
(3,127)
(11)
(472)
(472)
–
226
226
7,478
1,987
98,318
(7,139) 144,343
30. Investment in own shares
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.
The Trust purchases shares in the Company to satisfy the Company’s obligations under its Share Option Schemes and
Performance Share Plan.
At 31 March 2006 the Trust held 5,648,080 (2005: 5,695,580) ordinary 1p shares in Helical Bar plc.
At 31 March 2006 options over 6,234,695 (2005: 6,484,695) ordinary 1p shares in Helical Bar plc had been granted through
the Trust. At 31 March 2006 awards over 4,514,380 (2005: 2,549,750) ordinary 1p shares in Helical Bar plc had been made
under the terms of the Performance Share Plan.
31. Contingent liabilities
The Company has entered into cross guarantees in respect of the banking facilities of its subsidiaries.
Other than these contingent liabilities there were no contingent liabilities at 31 March 2006 (2005: nil).
44 Helical Bar plc Report & Accounts 2006
32. Net assets per share
Net asset value
Less: deferred shares
Basic net asset value
Add: unexercised share options
Diluted net asset value
Adjustment for:
– deferred tax
on capital allowances
– deferred tax on capital gains
– fair value of
financial instruments
31.3.06
£000
230,097
(265)
229,832
3,506
233,338
2,175
20,927
427
Number*
of shares
000s
88,724
88,724
3,655
92,379
31.3.06
pence
per share
31.3.05
£000
182,497
(265)
259
182,232
6,925
253
189,157
Number*
of shares
000s
84,810
84,810
7,522
92,332
31.3.05
pence
per share
215
205
2,105
14,684
1,160
Adjusted diluted net asset value
256,867
92,379
278
207,106
92,332
224
Adjustment for:
– directors’ valuation
of trading stock
Adjusted diluted net asset
value plus stock surplus
Adjustment for:
– deferred tax on
capital allowances
– deferred tax on capital gains
– fair value of
financial instruments
28,704
12,884
285,571
92,379
309
219,990
92,332
238
(2,175)
(20,927)
(427)
(2,105)
(14,684)
(1,160)
Adjusted diluted triple NAV
262,042
92,379
284
202,041
92,332
219
*The shares held by the Company’s ESOP Trust are excluded from this calculation.
45 Helical Bar plc Report & Accounts 2006
Notes to the Financial Statements continued
33. Related party transactions
At 31 March 2006 and 31 March 2005 the following amounts were due from the Group’s joint ventures
Abbeygate Helical (Leisure Plaza) Ltd
Abbeygate Helical (Winterhill) Ltd
Grosvenor Hill (Sprucefield) Ltd
Shirley Advance LLP
The Asset Factor Ltd
At
31.3.06
£000
572
(895)
(4)
3,921
119
At
31.3.05
£000
352
238
(4)
2,353
–
The amounts due from the Group’s joint ventures represent interest free loans which are repayable once the underlying
property has been sold.
At 31 March 2006 and 31 March 2005 there were the following balances between the Company and its subsidiaries.
Amounts due from subsidiaries
Amounts due to subsidiaries
At
31.3.06
£000
301,370
180,923
At
31.3.05
£000
219,956
171,011
During the years to 31 March 2006 and 31 March 2005 there were the following transactions between the Company and its
subsidiaries:
Management charges
Interest receivable
Interest payable
Year ended
31.3.06
£000
Year ended
31.3.05
£000
2,513
6,358
–
1,621
5,665
332
All of these transactions, and the year end balance sheet amounts arising from these transactions were conducted on an arm’s
length basis and on normal commercial terms.
46 Helical Bar plc Report & Accounts 2006
Ten Year Review
IFRS
31.3.06
£000
IFRS UK GAAP UK GAAP UK GAAP UK GAAP UK GAAP UK GAAP UK GAAP UK GAAP
31.3.97
31.3.01
£000
£000
31.3.98
£000
31.3.99
£000
31.3.00
£000
31.3.02
£000
31.3.03
£000
31.3.04
£000
31.3.05
£000
Revenue
119,274 101,469
54,566 135,192 136,632 165,259 149,922 121,244 214,416 100,529
Net rental income
16,524
20,440
22,980
25,619
27,827
25,532
23,652
18,475
18,598
18,759
Trading profits
13,441
5,771
1,031
349
154
920
372
72
4,363
2,359
Development profits
4,594
12,664
38
4,630
17,072
29,507
19,345
21,601
16,686
9,152
Share of results
of joint ventures
Other income
Gross profit before gain
on investment properties
Gain on sale of and
revaluation of
investment properties
437
235
2,699
1,636
1,544
235
601
626
986
(67)
86
342
–
–
–
–
113
(1,144)
(872)
(986)
35,231
41,809
26,286
32,768
45,972
56,387
43,482
39,004
38,775
29,284
43,551
44,204
2,035
2,126
2,463
709
4,555
415
838
(558)
Administrative expenses
(16,582) (15,757)
(8,037)
(6,391) (10,888) (12,031)
(9,669)
(6,860)
(6,904)
(5,566)
Loss on sale of subsidiary
Negative goodwill
Net finance costs
Profit before tax
–
–
–
–
(59)
–
(195)
–
6,362
–
–
–
–
–
–
–
–
–
–
–
(5,080)
(5,561)
(6,572)
(9,638) (14,779) (19,241) (16,348) (12,515) (14,215) (11,127)
57,120
64,695
13,653
25,227
22,573
25,824
22,020
20,044
18,494
12,033
Tax
(9,676)
844
(2,199)
(7,660)
(5,353)
(5,471)
(6,032)
(3,899)
(3,884)
(3,001)
Profit after tax
47,444
65,539
11,454
17,567
17,220
20,353
15,988
16,145
14,610
9,032
Investment portfolio
294,583 271,315 334,932 342,484 439,911 453,607 419,570 332,457 250,718 201,570
Shareholders’ funds
230,097 186,165 234,917 226,870 227,653 223,606 171,770 132,652 132,289 101,080
Dividend per ordinary share
3.65p
3.32p
3.32p
3.00p
2.75p
2.50p
2.23p
2.00p
1.80p
1.6p
Special dividend
per ordinary share
Diluted earnings
per ordinary share
Adjusted diluted
net assets per share
–
–
–
–
20.0p
–
–
20.0p
–
0.4p
51.8p
53.7p
7.9p
11.8p
11.8p
13.5p
13.8p
10.3p
8.1p
5.7p
278p
224p
177p
155p
155p
151p
116p
94p
96p
74p
The financial statements to 31 March 1997 were for a 14 month accounting period.
The financial statements for the year to 31 March 2005 have been restated to reflect the adoption of International Financial Reporting Standards.
The financial statements for the year to 31 March 1998 and subsequently have been restated to reflect the impact of the 5 for 1 share issue on 1 September 2005.
47 Helical Bar plc Report & Accounts 2006
47 Helical Bar plc Report & Accounts 2006
47 Helical Bar plc Report & Accounts 2006
The Board of Directors and Senior Management
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.
The Board of Helical Bar plc comprises four executive directors and five 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 59.
Finance Director Nigel McNair Scott, MA FCA FCT, joined the Board as non-executive director in 1985 and was subsequently
appointed Finance Director in 1987. A former director of Johnson Matthey plc and Govett Strategic Investment Trust plc he is
Chairman of Avocet Mining Plc. Aged 60.
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 48.
Investment Director Michael Brown, BSc (Est Man) MRICS, 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 45.
Non-executive directors
Chairman Giles Weaver, FCA, was appointed to the Board as non-executive director in 1993 and was appointed Chairman
following the 2005 AGM. He is Chairman of the Remuneration and Nominations and Appointments Committees. A recent
Chairman of Murray Johnstone Ltd, he is a director of Aberdeen Asset Management plc, James Finlay Ltd, Isotron plc,
ISIS Property Trust 2 Ltd as well as being Chairman or director of a number of investment companies. Aged 60.
John Southwell, MA, joined the Board of Helical Bar plc as non-executive director in 1986 and was non-executive Chairman
between 1988 and July 2005. He is to retire from the Board at the AGM on 20 July 2006. He is a former director of Laing &
Cruickshank, Corporate Finance. Aged 73.
Antony Beevor, BA, was appointed to the Board as non-executive director in 2000. He is the Senior Independent Director
and Chairman of the Audit Committee. He is also a member of the Remuneration and Nominations and Appointments
Committees. A former Head of Corporate Finance at Hambros Bank, he is a Deputy Chairman of the Takeover Panel.
Aged 66.
Wilf Weeks, was appointed to the Board as non-executive director on 14 April 2005. He was appointed to the Audit,
Remuneration and Nominations and Appointments Committees on 1 June 2005. He is the Chairman of European Public
Affairs at Weber Shandwick and has specialised in Government Relations throughout his career. Aged 58.
Andrew Gulliford, BSc(Est.Man), FRICS, was appointed to the Board as an independent non-executive director on 1 March
2006. He is a member of the Audit, Remuneration and Nominations and Appointments Committees. A former Deputy Senior
Partner of Cushman & Wakefield Healey & Baker, he is a non-executive director of McKay Securities PLC, ISIS Property Trust
2 Ltd and various other companies. Aged 59.
Company Secretary Tim Murphy, ACA, was appointed Company Secretary in 1994. Aged 46.
Senior management
Matthew Bonning-Snook joined the Company as a development executive in 1995. Aged 38.
Jack Pitman joined the Company as an investment executive in 2001. Aged 37.
John Inwood joined the Company as a management executive in 1995. Aged 40.
48 Helical Bar plc Report & Accounts 2006
48 Helical Bar plc Report & Accounts 2006
48 Helical Bar plc Report & Accounts 2006
Directors’ Report
The directors’ present their report and financial statements for the year ended 31 March 2006.
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 2 to 17.
Trading results
The results for the year are set out on page 18. The profit after tax amounts to £47,444,000 (2005: £65,539,000).
Share capital
The detailed movements in share capital are set out in note 26 to these financial statements. At 31 March 2006 and
16 June 2006 there were 94,371,925 ordinary 1p shares in issue.
Dividends
A final dividend of 2.45p (2005: 2.20p) per share is recommended for approval at the Annual General Meeting on
20 July 2006. The total ordinary dividend paid in the year of 3.65p (2005: 3.32p) per share amounts to £3,127,000
(2005: £4,226,000).
Charitable donations
Donations to charities amounted to £40,220 (2005: £14,010). No contributions 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 2006 there were
75 days’ (2005: 61 days’) purchases outstanding in respect of the Company’s creditors.
Auditors
Grant Thornton UK LLP offer themselves for re-appointment as auditors in accordance with Section 385 of the Companies
Act 1985.
Substantial shareholdings
At 7 June 2006 the shareholders listed in Table A on page 50 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 awards, service contracts and pension contributions are noted in the Directors’
Remuneration Report on pages 55 to 62.
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 50.
Shares purchased on behalf of directors under the terms of the Share Incentive Plan are disclosed in the Directors’
Remuneration Report on pages 55 to 62.
There have been no changes in the directors’ interests in the period from 31 March 2006 to 16 June 2006.
Corporate governance
The Company’s application of the principles of corporate governance is noted in the Corporate Governance Report on
pages 51 to 54.
Financial risk
Financial risk policies and objectives are discussed in the Corporate Governance Report on page 54.
Directors’ responsibilities for the financial statements
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law
and International Financial Reporting Standards as adopted by the European Union.
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 these
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;
– prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will
continue in business.
49 Helical Bar plc Report & Accounts 2006
49 Helical Bar plc Report & Accounts 2006
49 Helical Bar plc Report & Accounts 2006
Directors’ Report continued
Directors’ responsibilities for the financial statements (continued)
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time
the financial position of the Company and enable them to ensure that the financial statements comply with the Companies
Act 1985. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
In so far as the directors are aware:
– there is no relevant audit information of which the Company’s auditors are unaware; and,
– the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information
and to establish that the auditors are aware of that information.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Annual General Meeting
The Annual General Meeting of the Company will be held on 20 July 2006 at 11.30 a.m. at The Westbury, Bond Street,
London W1S 2YF.
The notice of meeting and the resolutions to be proposed at that meeting are set out in the enclosed circular.
Table A – Substantial shareholdings
Michael Slade
Helical Bar Share Ownership Plan Trust
Barclays Global Investors
Schroder Investment Management
Legal & General
Fidelity
Table B – Directors’ interests
Giles Weaver
Michael Slade
Nigel McNair Scott
John Southwell
Antony Beevor
Wilf Weeks
Andrew Gulliford
Gerald Kaye
Michael Brown
Total directors’ interests
Issued share capital
Percentage of issued share capital
By Order of the Board
T.J. Murphy
Secretary
16 June 2006
50 Helical Bar plc Report & Accounts 2006
50 Helical Bar plc Report & Accounts 2006
50 Helical Bar plc Report & Accounts 2006
Number of
ordinary shares
12,747,203
5,702,797
3,552,007
3,519,804
3,249,398
2,870,506
%
13.5
6.0
3.8
3.7
3.4
3.0
Ordinary
1p shares
31 March 2006
Ordinary
5p shares
1 April 2005
96,250
19,250
12,747,203
2,548,939
2,013,001
401,264
114,840
22,968
8,750
923
–
–
–
–
977,858
907,063
195,070
180,912
16,864,965
3,369,326
94,371,925
18,101,164
17.9
18.6
Corporate Governance Report
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 (2003) (the “Code”).
Compliance
The Company has complied throughout the year with the Code provisions set out in Section 1 of the Combined Code (2003).
Application of the principles
The Board consists of four executive directors who hold the key operational positions in the Company and five 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.
Chairman and Chief Executive The Chairman of the Board is Giles Weaver. The Company’s business is run by Michael Slade,
the Managing Director.
Board balance and independence As noted above the four executive directors are balanced by five non-executive directors
(reducing to four at the 2006 AGM). The Chairman, Giles Weaver, has been a non-executive director of Helical since 1993.
In the Company’s view, the experience gained as a chairman or director of several listed companies in the financial sector
provides him with the necessary skills of leadership and guidance that the role of Chairman of this Company requires.
These skills together with his detachment from day-to-day issues within the Company, and his robustly independent approach
to the role of Chairman provide the Board with the necessary comfort that despite his time as a non-executive director
he could properly be regarded as independent at the time of his appointment as Chairman.
The senior independent director is Antony Beevor. The remaining non-executive directors, after John Southwell’s retirement
at the 2006 AGM, are Wilf Weeks (appointed 14 April 2005) and Andrew Gulliford (appointed 1 March 2006). The breadth of
experience provided by the non-executive directors 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 all the non-executive directors are independent and for the purposes of this report are referred to
below as independent directors.
The Board of Directors The Company supports the concept of an effective Board leading and controlling the Company.
The Board provides entrepreneurial leadership of the Group within a framework of prudent and effective controls which
enables risk to be assessed and managed. The Board sets the Group’s strategic aims, ensures that the necessary financial and
human resources are in place for the Group to meet its objectives and reviews management performance. The Board sets
the Group’s values and standards and ensures that the Company’s obligations to its shareholders and others are understood
and met.
The members of the Board, and the roles of each director are given in the biographical details of the directors on page 48.
All directors take decisions objectively in the interests of the Company.
As part of their role as members of the Board, non-executive directors constructively challenge and help develop proposals
on strategy. Non-executive directors scrutinise the performance of management in meeting agreed goals and objectives and
monitor the reporting of performance. They satisfy themselves on the integrity of financial information and that financial
controls and systems of risk management are robust and defensible. They are responsible for determining appropriate
levels of remuneration of executive directors and have a prime role in appointing, and where necessary removing, executive
directors, and in succession planning.
In addition to ad hoc meetings arranged to discuss particular transactions and events and the 2005 AGM and 31 August 2005
and 14 December 2005 EGM’s, the full Board met on five occasions during the year under review. All directors attended every
meeting of the Board and its Committees during their term of office on those Committees. The attendance record of the
directors is shown in the table below.
Mr. C.G.H.
Weaver
Mr. N.G.
Slade McNair Scott
Mr. J.P.
Southwell
Mr. A.
Gulliford
Mr. P.M.
Brown
Mr. A.R.
Beevor
Mr. G.A.
Kaye
Mr. W.
Weeks
Mr. M.E.
Meetings
Full Board
Audit Committee
Remuneration Committee
Nominations and
Appointments Committee
5
1
3
3
5
n/a
n/a
n/a
5
n/a
n/a
n/a
5
n/a
n/a
n/a
5
n/a
n/a
n/a
5
1
2
2
5
3
3
3
5
2
2
1
1
1
n/a
n/a
The Board has a schedule of matters specifically reserved to it for decision. The Board controls the business but delegates
day-to-day responsibility to the executive management. However, there are a number of matters which are required to be or,
in the interests of the Company, should only be decided by the Board of Directors as a whole. A summary of the decisions
reserved for the Board is set out below:
Schedule of matters reserved for the Board:
• Strategy and management – responsibility for the overall management of the Group; approval of the Group’s long-term
objectives and commercial strategy; approval of annual administration budgets; oversight of the Group’s operations;
extension of the Group’s activities into new business areas; any decision to cease to operate all or any material part of the
Group’s business.
• Structure and capital – changes to the Group’s capital structure; major changes to the Group’s corporate structure; changes
to the Group’s management and control structure; changes to the Company’s listing or plc status.
51 Helical Bar plc Report & Accounts 2006
51 Helical Bar plc Report & Accounts 2006
51 Helical Bar plc Report & Accounts 2006
Corporate Governance Report continued
• Financial reporting and controls – approval of interim and preliminary announcements; approval of annual report and
accounts, including the corporate governance statement and the directors’ remuneration report; approval of dividend
policy; approval of significant changes in accounting policies or practices; approval of treasury policies.
• Internal controls – ensuring maintenance of a sound system of internal control and risk management.
• Communication – approval of resolutions and documentation to be put to shareholders in general meeting; approval of
press releases concerning matters decided by the Board.
• Board membership and other appointments to senior management.
• Both the appointment and removal of the Company Secretary.
• Corporate governance matters including directors’ performance evaluations.
• Approval of policies including code of conduct; share dealing code; health and safety policy; environmental and corporate
social responsibility policy and equal opportunity policy.
Nominations and Appointments Committee
The terms of reference of the Nominations and Appointments Committee are available by request and are included on the
Company’s website at www.helical.co.uk.
The membership of the Committee is as follows:
Giles Weaver (Chairman)
Antony Beevor
Wilf Weeks (appointed 1 June 2005)
Andrew Gulliford (appointed 1 March 2006)
Directors – appointments to the Board Appointments are made on merit and against objective criteria. Care is taken to ensure that
appointees have enough time available to devote to the job.
The Nominations Committee controls the process for Board appointments and makes recommendations to the Board.
A majority of the Committee are independent non-executive Directors.
The work of the Nominations Committee in the year The Committee met three times during the period, and all eligible members
of the Committee were in attendance at each meeting. During the first of these meetings, the Committee concluded its
consideration with regard to the appointment of a new non-executive and recommended to the Board the appointment of
Wilf Weeks on 14 April 2005.
At the second meeting it was resolved that Giles Weaver, John Southwell and Wilf Weeks be recommended to shareholders for
re-appointment as directors at the 2005 AGM. At this meeting the Committee also considered potential candidates for the role
of Chairman to be appointed immediately following the 2005 AGM, upon John Southwell’s retirement from that position.
It was resolved that Giles Weaver be proposed, subject to his re-appointment as a director at the 2005 AGM.
At the third meeting during the year the Committee considered additional candidates for the position of non-executive
director. In view of his extensive experience of the property sector it was resolved that Andrew Gulliford be recommended to
the Board for appointment as a non-executive director on 1 March 2006.
Directors – information and professional development The Board is supplied in a timely manner with information in a form and
of a quality appropriate to enable it to discharge its duties and its directors are free to seek any further information they
consider necessary.
Under the direction of the Chairman, the Company Secretary’s responsibilities include ensuring good information flows
within the Board and its Committees and between senior management and non-executive directors, as well as facilitating
induction and assisting with professional development as required. The Company Secretary is responsible for advising the
Board through the Chairman on all governance matters.
The Board ensures that directors, especially non-executive directors, have access to independent professional advice at the
Company’s expense where they judge it necessary to discharge their responsibilities as directors. Training is available for new
directors and other directors as necessary.
All directors have access to the advice and services of the Company Secretary, who is responsible to the Board for ensuring
that board procedures are complied with.
The Company has arranged appropriate insurance cover in case of legal action against its directors.
Directors – performance evaluation The Board undertook a formal evaluation of its own performance and that of its Committees
and individual directors in the period.
The Chairman is responsible for the annual evaluation process, and will act on its outcome. This process involves each
director submitting an appraisal to the Chairman in respect of the performance of the main Board, and in respect of each
Board Committee of which they are a member.
The non-executive directors, led by the senior independent non-executive director, are responsible for performance
evaluation of the Chairman, taking into account views of executive directors. Each director completed an evaluation of
the Chairman’s performance and provided this evaluation to the senior independent non-executive director.
Directors re-election All directors are subject to re-election, after receiving the recommendation of the Nominations and
Appointments Committee, every three years and, on appointment, at the first AGM after appointment. The Nominations
and Appointments Committee have recommended the re-appointment of the following directors:
– Giles Weaver has served more than nine years on the Board and in accordance with the Code offers himself for re-election;
– Andrew Gulliford, appointed on the 1 March 2006, seeks formal re-election for the first time;
52 Helical Bar plc Report & Accounts 2006
52 Helical Bar plc Report & Accounts 2006
52 Helical Bar plc Report & Accounts 2006
– Antony Beevor is due to retire by rotation and offers himself for re-election;
– Michael Slade is due to retire by rotation and offers himself for re-election; and,
– Nigel McNair Scott is due to retire by rotation and offers himself for re-election.
Biographical details of the directors are given on page 48.
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
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.
The AGM is used to communicate with private investors and they are encouraged to participate. The members of the Audit,
Remuneration and Nominations and Appointments 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. 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 Board presents 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.
Going concern After making enquiries, the directors have a reasonable expectation that the Company 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.
Audit Committee and auditors The terms of reference of the Audit Committee are available by request and are included on the
Company’s website at www.helical.co.uk.
The membership of the Committee is as follows:
Antony Beevor (Chairman)
Wilf Weeks (appointed 1 June 2005)
Andrew Gulliford (appointed 1 March 2006)
The Committee endorses the principles set out in the Smith Guidance for Audit Committees.
The Board has formal and transparent arrangements for considering how it applies the financial reporting and internal
control principles and for maintaining an appropriate relationship with the Company’s auditors.
Whilst all directors have a duty to act in the interests of the Company, the Audit Committee has a particular role, acting
independently from the executive, to ensure that the interests of shareholders are properly protected in relation to financial
reporting and internal control.
Appointments to the Audit Committee are made by the Board on the recommendation of the Nominations and
Appointments Committee in consultation with the Audit Committee Chairman.
The work of the Audit Committee in the year The Audit Committee met three times during the year and each meeting was attended
by all eligible members of the Committee. The Audit Committee met the external auditors three times to discuss matters
arising from the annual and interim audits. In addition to matters discussed in relation to the annual and interim audits, the
scope of the auditors review of the design effectiveness of internal controls, as required under International Standards on
Auditing, was discussed and agreed by the Audit Committee. The report was presented to the Audit Committee on 1 March
2006, and the key findings and recommendation of this report, which cover governance, operational controls and financial
reporting, have been considered and, where appropriate, will be implemented during the second half of 2006.
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 cannot 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.
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;
– 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 three occasions.
53 Helical Bar plc Report & Accounts 2006
53 Helical Bar plc Report & Accounts 2006
53 Helical Bar plc Report & Accounts 2006
Corporate Governance Report continued
Internal audit The Board reviewed its position during 2005/06 and reaffirmed its stance that in view of the relatively small size
of the Company it does not consider that an Internal Audit function would provide any significant additional assistance in
maintaining a system of internal controls.
Business risk In accordance with the guidance of the Turnbull Committee, a review group of the UK Financial Reporting Council,
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. These key risks include net gearing and interest rate
exposure, control over cash and other liquid assets and security of ownership of key assets. 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 January 2006.
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 risk assessment, interest rate risks,
taxation, and matters reserved for Board approval.
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, 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.
Audit independence A policy of reviewing audit independence has been adopted whereby non-audit services undertaken by the
auditors is approved prior to work being carried out. During the year under review non-audit services comprised VAT and other
taxation advice, accounting and financial reporting advice on the implications of adopting International Financial Reporting
Standards and a review of internal controls.
Financial risk management objectives and policies
The Group principally uses secured bank loans, overdraft facilities, cash resources generated directly from its operations and
credit control of its trade debtors and creditors to raise finance for the Group’s operations.
The existence of these financial assets and liabilities exposes the Company to a number of financial risks, which are described in
more detail below. In order to manage the Company’s exposure to those risks, in particular the Company’s exposure to interest
rate risk, the Company enters into a number of derivative transactions including, but not limited to, variable and fixed rate
interest swaps.
All transactions in derivatives are undertaken to manage the risks arising from underlying business activities and no
transactions of a speculative nature are undertaken.
The main risks arising from the Company’s financial assets and liabilities are cash flow interest rate risk, credit risk and liquidity
risk. The directors review and agree policies for managing each of these risks and they are summarised below. These policies
have remained unchanged from previous years.
Liquidity risk
The Company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest
cash assets safely and profitably.
Short-term flexibility is achieved by overdraft facilities.
The maturity of borrowings is set out in note 23 to the financial statements. In addition to these borrowings the Company
has access to undrawn committed borrowing facilities of an additional £56m and is able to raise additional funds on £158m
of property, not currently secured on borrowings.
Interest rate risk
The Company finances its operations through a mixture of retained profits and bank borrowings. The Company exposure to
interest rate fluctuations on its borrowings is managed by the use of both fixed and floating facilities. At the year end 41% of the
borrowings were at fixed rates; this percentage is calculated without reference to the financial liabilities on which no interest
is charged. The Company has an interest rate cap at 7% on £80m of borrowings until September 2009.
The interest rate exposure of the financial assets and liabilities of the Group is shown in note 24 above.
Credit risk
The Company’s principal financial assets are cash and trade debtors. The credit risk associated with cash is limited as the
counterparties have high credit ratings assigned by international credit-rating agencies. The principal credit risk arises
therefore from its trade debtors. Trade debtors due from sales of property are secured against those properties until the
proceeds are received. Rental debtors are unsecured but the Group’s exposure to tenant default is limited as no tenant
accounts for more than 5% of the total rent.
54 Helical Bar plc Report & Accounts 2006
54 Helical Bar plc Report & Accounts 2006
54 Helical Bar plc Report & Accounts 2006
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 shareholder approval.
Information not subject to audit
Remuneration Committee The terms of reference of the Remuneration Committee are available on request and are included on
the Company’s website at www.helical.co.uk.
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 three times. All meetings of the
Committee were attended by all its members.
The membership of the Committee is as follows:
Giles Weaver (Chairman)
Antony Beevor
Wilf Weeks (appointed 1 June 2005)
Andrew Gulliford (appointed 1 March 2006)
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 and the renewal of the Company’s five year Executive Bonus Plan.
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 incentives 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 to the executive directors’ remuneration packages:
i basic annual salary, pension contributions and benefits-in-kind;
ii annual sector bonus payments;
iii Executive Bonus Plan; and,
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 2005.
The remuneration packages of each executive director include a payment of 20% of basic salary as pension entitlement.
Each director takes this entitlement as additional salary.
Benefits-in-kind provided to executive directors include the provision of a company car and health insurance.
Annual sector 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. A proportion of the Group’s total administration costs is deducted in arriving at
each sector bonus. The maximum amount payable in each year is £1m to each of the Development and Investment Directors.
The sector bonus payable to the Development Director is based on the development profits generated in the year. The Sector
Bonus payable to the Investment Director is based on the profits and gains made on the investment and trading portfolio in the
year net of associated finance costs. Payment of annual sector bonuses is at the discretion of the Committee.
55 Helical Bar plc Report & Accounts 2006
55 Helical Bar plc Report & Accounts 2006
55 Helical Bar plc Report & Accounts 2006
Directors’ Remuneration Report continued
Executive Bonus Plan The Company operates an Executive Bonus Plan designed to align the 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. Shareholders voted to continue the Executive Bonus Plan (“Plan”), previously known as the “Incentive
Plan”, at an EGM on 14 December 2005. The Plan operates over a five year period from 1 April 2006 and cash bonuses will be
paid annually subject to the achievement of challenging performance targets.
The performance conditions, which are identical to the Incentive Plan that it replaces, are as follows:
Performance conditions The Committee may, at its discretion, award bonuses in respect of a financial year subject to
performance conditions, the aim of which is to link the size of bonuses paid to financial growth of the Group over that
financial year. For the first bonuses, namely those due for the financial year ending 31 March 2007 or such other date to
which the Group shall make up audited accounts (pro rata for less than or more than a 12 month period) and the four
following years until 31 March 2011, the Committee proposes that no bonus will be payable unless the following conditions
are satisfied:
i
Increase in net asset value
net asset value at the end of the financial year exceeds net asset value at the beginning of the financial year;
ii Absolute Performance of the Portfolio – ungeared total return
the percentage increase in the total return on property assets of the Group over the financial year (the “Performance
Period”) is greater than the percentage increase achieved by the portfolio ranked nearest to three-quarters up the
performance table (taken in ascending order of return) (the “Upper Quartile”) of the portfolios of all quarterly
valued funds measured by the Investment Property Databank at the beginning of the relevant Performance Period
and compounded monthly during the Performance Period (the “IPD Total Return Benchmark”); and,
iii Performance of the net asset value per share
the percentage increase in net asset value per share for the Performance Period must be greater than the percentage
increase achieved by the Upper Quartile of the portfolios of all quarterly valued funds measured by the Investment
Property Databank at the beginning of the relevant Performance Period and compounded monthly during the
Performance Period (the “IPD Capital Growth Benchmark”).
As before, the Committee will recommend the size of the bonus payable by reference to the same sliding scale based on the
amount by which the increase in net asset value per share exceeds the increase in the Upper Quartile of the IPD Capital
Growth Benchmark subject to a cap.
Calculation of amounts payable The total amount of the bonuses payable in any one year shall be determined by:
• calculating the difference between the percentage increase in net asset value per share for the Performance Period
and the percentage increase in the Upper Quartile of the IPD Capital Growth Benchmark over the same period
(the “Difference”); and,
• calculating the sum of the amounts payable in relation to each 1% of the Difference on the following basis:
Amount of Difference
Less than 1%
1 per cent. to less than 2%
% of base net asset value payable
0.01
0.02
And thereafter for every additional 1%
An increment of 0.01
For example:
From 4% to less than 5%
0.05
If the net asset value at the end of a financial year is less than the net asset value at the beginning of that year, the bonus
payable for any subsequent year will be calculated by reference to the highest net asset value in the preceding years.
Financial accounts The audited financial accounts which record the financial performance on which the Plan operates will be
those accounts prepared in accordance with International Financial Reporting Standards.
2006 Plan and individual limits The total amount payable under the 2006 Plan in any one year is limited to £4 million.
An individual employee’s participation in the 2006 Plan is limited so that the bonus which may be paid to him under the
2006 Plan will not exceed £2m per annum. There is a further limit that payments under the 2006 Plan in any year may not
exceed 20% of the Group’s pre-tax profits and payments under the 2006 Plan. Among other constraints the Committee could
restrict the bonuses if payment would affect the financial or trading position of the Company.
Timing of bonuses Bonuses will ordinarily be paid, subject to the performance conditions being satisfied, and provided that the
participant remains a director or employee of the Group at the time of payment on a specified bonus date, which will fall
within four months of the end of the relevant Performance Period. Bonuses are not transferable, nor will benefits obtained
under the 2006 Plan be pensionable.
Termination of employment If a participant dies, the bonus that would have been paid for the relevant financial year may, at the
discretion of the Committee, be paid to the participant’s personal representatives, but will be scaled down pro rata to reflect
the period elapsed since the start of the Performance Period. If a participant’s employment ends in any other circumstances
prior to the payment of the bonus, no entitlement will arise.
56 Helical Bar plc Report & Accounts 2006
56 Helical Bar plc Report & Accounts 2006
56 Helical Bar plc Report & Accounts 2006
Change of control In the event of a change in control of the Group, bonuses in respect of the financial year in which the change
of control falls may be paid to the extent that the relevant performance target(s) have been satisfied over an adjusted
Performance Period.
Termination of the 2006 Plan The Committee will not recommend the making of bonuses under the 2006 Plan in connection
with a financial year later than the year ended 31 March 2011 without further shareholder authority.
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 basic salary and other contractual entitlements ie
provision of car and health insurance.
Non-executive directors Non-executive directors are subject to re-appointment by shareholders at the Company’s AGM at least
every three years. The remuneration of the non-executive directors is determined by the Board and was last increased in
April 2005. Non-executive directors do not participate in any of the Company’s share option schemes. The former 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 58 to 60
below, require the Company to exceed certain targets of total shareholder return. The total shareholder return for a holding
in the Company’s shares in the five years to 31 March 2006 is shown in the graph below.
This graph looks at the value, by 31 March 2006, of £100 invested in Helical Bar on 31 March 2001 compared with the value
of £100 invested in the FTSE All-Share Real Estate Index. The other points plotted are the values at intervening financial
year-ends. Dividends received are re-invested in shares.
Information subject to audit: Remuneration of directors
Remuneration in respect of the directors was as follows:
Salary/fees
£000
Benefits-
in-kind
£000
Cash
bonuses
£000
Gain on
exercise
of share
options
£000
Incentive
plan
£000
2006
Total
£000
2005
Total
£000
Pensions
2006
Total
£000
Pensions
2005
Total
£000
Chairman
Giles Weaver
Non-executive directors
John Southwell
Antony Beevor
Wilf Weeks
(appointed 14/4/05)
Andrew Gulliford
(appointed 1/3/06)
Executive directors
Michael Slade
Nigel McNair Scott
Gerald Kaye
Michael Brown
47
36
33
28
–
480
300
258
258
–
15
–
–
–
35
19
30
30
1,440
129
–
–
–
–
–
–
–
188
785
973
–
–
–
–
–
–
–
–
–
–
3,322
1,448
483
483
483
549
2,758
1,075
7,704
47
51
33
28
–
28
65
28
–
–
5,285
1,351
3,717
2,631
4,055
2,536
3,344
3,754
2,897
13,143
13,810
–
–
–
–
–
–
–
–
215
215
–
–
–
–
–
–
–
–
–
–
Michael Slade was the highest paid director during the year with a total remuneration of £5,285,000 (including gain on
exercise of share options) (2005: Michael Slade £4,055,000).
57 Helical Bar plc Report & Accounts 2006
57 Helical Bar plc Report & Accounts 2006
57 Helical Bar plc Report & Accounts 2006
Total shareholder return value (Value £)35030020025015010050Helical BarFTSE All-Share Real Estate Index31/3/200131/3/200331/3/200231/3/200431/3/200531/3/2006Source: Thomson Financial Directors’ Remuneration Report continued
The £1,000,000 sector bonus awarded to Michael Brown has been partly paid in cash (£785,000) and partly paid by pension
contributions (£215,000).
In order to compensate option holders for the payment of the special dividend in April 2002, the Company pays a cash bonus
of 20p per share on the date option holders exercise their options, as noted on page 60. The gain on exercise of share options
of the directors includes cash bonuses of £693,000 arising out of the exercise of options during the year. The cost of these cash
bonuses is included in administrative expenses.
Directors’ fees Fees receivable by Nigel McNair Scott in his capacity as Chairman of Avocet Mining Plc are shown in the financial
statements of that Company.
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 27. 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. All the performance criteria of the options granted under the terms of this scheme have been
met and option holders are, therefore, able to exercise their options at any date prior to their expiry.
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 27.
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 27.
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.
These share option schemes have been replaced by the Performance Share Plan, details of which are included on pages
61 and 62, and future share option grants will only be made in exceptional circumstances and only following consultation
with principal shareholders on the key terms of those options.
58 Helical Bar plc Report & Accounts 2006
58 Helical Bar plc Report & Accounts 2006
58 Helical Bar plc Report & Accounts 2006
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
Date from
which
price exercisable
Expiry
date
Profit if
options
exercised at
31 March
2006
Michael Slade
Senior Executive
1988 Share Option Scheme
Senior Executive
1988 Share Option Scheme
Helical Bar
1999 Share Option Scheme
Helical Bar
1999 Share Option Scheme
Helical Bar Approved
1999 Share Option Scheme
Nigel McNair Scott
Senior Executive
1988 Share Option Scheme
Helical Bar
1999 Share Option Scheme
Helical Bar
1999 Share Option Scheme
Helical Bar
1999 Share Option Scheme
Helical Bar Approved
1999 Share Option Scheme
Gerald Kaye
Helical Bar
1999 Share Option Scheme
Helical Bar
1999 Share Option Scheme
Helical Bar
1999 Share Option Scheme
Helical Bar Approved
1999 Share Option Scheme
Purchase
30,000
–
30,000
90.5p 27.11.01 26.11.07
91,350
Purchase 2,000,000
– 2,000,000
113.0p 10.07.02 09.07.08 5,640,000
Subscription 2,466,105(1,500,000) 966,105
88.5p 08.03.04 07.03.09 2,961,112
Purchase
740,000
Subscription
33,895
–
–
740,000
150.0p 18.12.05 17.12.10
*
33,895
88.5p 08.03.02 07.03.09
103,888
5,270,000(1,500,000)3,770,000
8,796,350
Purchase
250,000 (250,000)
–
– 27.11.01 26.11.07
–
Purchase
215,000
–
215,000
88.5p 08.03.04 07.03.09
658,975
Subscription 1,176,105
– 1,176,105
88.5p 08.03.04 07.03.09 3,604,762
Purchase
360,000
Subscription
33,895
–
–
360,000
150.0p 18.12.05 17.12.10
*
33,895
88.5p 08.03.02 07.03.09
103,888
2,035,000 (250,000)1,785,000
4,367,625
Subscription 1,466,105(1,216,105) 250,000
88.5p 08.03.04 07.03.09
766,250
Purchase
635,000
Purchase
647,095
Subscription
33,895
–
–
–
635,000
150.0p 18.12.05 17.12.10
647,095
153.3p 15.11.06 14.11.11
*
*
33,895
88.5p 08.03.02 07.03.09
103,888
2,782,095(1,216,105)1,565,990
870,138
*Performance conditions not satisfied as at 31 March 2006.
Share options outstanding at 31 March 2005 and 31 March 2006, number of options exercised and exercise prices have all
been adjusted for the five for one share split on 1 September 2005.
59 Helical Bar plc Report & Accounts 2006
59 Helical Bar plc Report & Accounts 2006
59 Helical Bar plc Report & Accounts 2006
Directors’ Remuneration Report continued
Michael Brown
Helical Bar
1999 Share Option Scheme
Helical Bar
1999 Share Option Scheme
Helical Bar
1999 Share Option Scheme
Helical Bar Approved
1999 Share Option Scheme
Type
At start
of year
Options
exercised
in year
At end
of year
Exercise
Date from
which
price exercisable
Expiry
date
Profit if
options
exercised at
31 March
2006
Subscription 966,105 (500,000) 466,105
88.5p 08.03.04 07.03.09 1,428,612
Purchase
530,000
Purchase
502,090
Subscription
33,895
–
–
–
530,000
150.0p 18.12.05 17.12.10
502,090
153.3p 15.11.06 14.11.11
*
*
33,895
88.5p 08.03.02 07.03.09
103,888
2,032,090 (500,000)1,532,090
1,532,500
*Performance conditions not satisfied as at 31 March 2006.
Share options outstanding at 31 March 2005 and 31 March 2006, number of options exercised and exercise prices have all
been adjusted for the five for one share split on 1 September 2005.
The following share options were exercised during the year by directors:
Date of
exercise
Type of
option
Number of
shares
Exercise
price
Sale
price
Gain
Director
Michael Slade
Nigel McNair Scott
Gerald Kaye
Gerald Kaye
Gerald Kaye
Gerald Kaye
Gerald Kaye
07.09.05 Subscription
1,500,000
07.09.05
Purchase
17.06.05 Subscription
07.09.05 Subscription
16.12.05 Subscription
06.01.06 Subscription
13.01.06 Subscription
250,000
466,105
250,000
300,000
102,173
97,827
88.5p
90.5p
88.5p
88.5p
88.5p
88.5p
88.5p
88.5p
290.0p
3,322,500
290.0p
548,750
283.5p
1,002,033
290.0p
310.0p
310.0p
305.1p
553,750
724,500
246,748
231,458
283.5p
1,074,900
Michael Brown
17.06.05 Subscription
500,000
The number of options exercised and exercise prices have all been adjusted for the five for one share split on
1 September 2005.
The market price of the ordinary shares at 31 March 2006 was 395p (2005: 230p). This market price varied between 233p and
398p during the year (adjusted for the five for one share split on 1 September 2005.
The gain on exercise of share options includes a cash bonus of 20p per 1p share in accordance with the matter referred to
under special dividend below.
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 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 20p per 1p share (previously 100p per
5p share), equivalent to the special dividend. In the year under review compensation of £823,221 was paid following the
exercise of options over 4,116,105 1p shares.
60 Helical Bar plc Report & Accounts 2006
60 Helical Bar plc Report & Accounts 2006
60 Helical Bar plc Report & Accounts 2006
Performance Share Plan
At the 2004 Annual General Meeting the Company received approval for the adoption of a Performance Share Plan (“PSP”).
General The operation of the PSP is supervised by the Remuneration Committee (the “Committee”).
The PSP is capable of delivering shares to an executive after a period of not less than three years, other than in exceptional
circumstances and with the approval of the Committee, subject to meeting pre-specified performance targets.
Eligibility All employees of the Company and its subsidiaries (including directors who are required to devote substantially the
whole of their working time to the business of the Group) who are not under notice nor within six months of any contractual
retirement ages will be eligible to receive invitations to participate in the PSP at the discretion of the Remuneration Committee.
Grant of awards Awards may be made within the six weeks following approval at a general meeting, the announcement by the
Company of its results for any period, or the removal of any statutory or regulatory restriction which had previously prevented
an award being granted or any other times considered by the Remuneration Committee to be exceptional.
No awards may be made more than ten years after the adoption of the PSP by the Company. The Remuneration Committee
will formally review the operation of the PSP after no more than five years.
An award consists of the right to acquire shares in the Company for either no payment or payment of a nominal sum.
Awards are neither transferable nor pensionable.
Limit on individual participation No awards may be granted over shares in any financial year whose value is greater than three
times an employee’s annual rate of salary.
Exercise of awards Other than in exceptional circumstances, an award will vest no earlier than the third anniversary of its grant to
the extent that the applicable performance conditions (see below) have been satisfied and the participant is still employed by
the Group. Once exercisable, awards will then remain capable of exercise for a period of normally no more than six months.
The Remuneration Committee has set demanding performance conditions for the vesting of shares. There are two
performance conditions, one based on absolute growth in the Company’s net asset value per share and the other based on
the gross total property return per share relative to other property funds as determined by IPD but excluding those funds
worth less than £50m at the start of the three year period. Performance will be measured over the three years following grant.
Participants will not normally be permitted to sell shares received through the PSP, other than to meet taxation (and national
insurance contributions) liabilities, until they own shares to the value of 2 x salary for directors and 1 x salary for other executives.
For the growth in net asset value, the “fully diluted triple net” net asset value as at the start of the financial year in which a
grant takes place will be compared to the value three years later (having added back dividends).
(a) Absolute net asset value per share (having added back dividends) condition
Annual compound increase after three years
15% pa or more
Between 7.5% pa and 15% pa
7.5% pa
Below 7.5% pa
% of award vesting
66.7%
Pro rata between 6.7% and 66.7%
6.7%
Zero
If UK inflation (RPI) is higher than 3% per annum over the three year period then the required compound increases will be
raised by the excess over the 3% per annum average.
(b) Total property return v IPD property funds condition
Ranking after three years
Upper quartile or above
% of award vesting
33.3%
Between median and upper quartile
Pro rata between 3.3% and 33.3%
Median
Less than median
3.3%
Zero
Provided the net asset value per share (having added back dividends) increases over the three year period.
Alignment with shareholders’ interests The Remuneration Committee has analysed the potential gains that may be made by
executives (directors and those below Board level) through the PSP and other incentive arrangements currently in place.
It has concluded that the share of the increase in the value of the Company (measured as the increase in the net asset value
plus cash returned as dividends to shareholders) that could accrue to all executives through the Company’s long and short-
term incentive and bonus plans (excluding gains on share options granted before December 2002) at the point at which the
maximum awards vest might be of the order of 20%. At this point, in absolute terms, the Company will have increased its
triple net asset value by at least 15% per annum with the Company’s relative performance placing it in the top quartile of IPD,
over the three year period. Share awards will be cancelled where the gross return falls below the IPD median and where the
growth in triple net asset value is below 7.5% per annum over the three year period.
Relationship to the Company’s share option schemes The PSP has replaced future share option grants which will only be made in
exceptional circumstances and only following consultation with principal shareholders on the key terms of those options.
61 Helical Bar plc Report & Accounts 2006
61 Helical Bar plc Report & Accounts 2006
61 Helical Bar plc Report & Accounts 2006
Directors’ Remuneration Report continued
Awards made to directors under the terms of the PSP were as follows:
Director
Michael Slade
Nigel McNair Scott
Gerald Kaye
Michael Brown
Shares
awarded
18.08.04
Shares
awarded
06.07.05
Total
750,000
519,855
1,269,855
375,000
324,910
699,910
375,000
279,420
654,420
375,000
279,420
654,420
Helical Bar 2002 Approved Share Incentive Plan On 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
Shares held by the Trustees of the Plan at 31 March 2006 were 200,015 (2005: 164,085).
6 July
2005
at 277.0p
26 January
2006
at 325.25p
1,890
1,890
1,890
1,890
618
618
618
618
62 Helical Bar plc Report & Accounts 2006
62 Helical Bar plc Report & Accounts 2006
62 Helical Bar plc Report & Accounts 2006
Report of the Independent Auditors
to the Members of Helical Bar plc
We have audited the Group and parent company financial statements (the “financial statements”) of Helical Bar plc for the year
ended 31 March 2006 which comprise the principal accounting policies, the Consolidated income statement, the Group and
parent balance sheets, the Group and parent cash flow statements, the Group and parent company statements of recognised
income and expense and notes 1 to 33. 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 applicable law and International Financial Reporting Standards (IFRSs) as adopted for use
in the European Union are set out in the statement of directors’ responsibilities.
Our responsibility is to audit the financial statements and the part of the Directors’ Remuneration Report to be audited in
accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view, 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 and article 4 of the IAS Regulation and whether the information given in the Directors’ Report is
consistent with the financial statements. We also report to you if, in our opinion, 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 other transactions is not disclosed.
We review whether the corporate governance statement reflects the Company’s compliance with the nine provisions of the
2003 FRC 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. The other information comprises only the Directors’ Report, the unaudited part of the Directors’ Remuneration
Report, the Chairman’s statement, operating and financial review, the corporate governance statement and corporate social
responsibility report and financial highlights. 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 International Standards on Auditing (UK and Ireland) 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 and Company’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary
in order to provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of
the Directors’ Remuneration Report to be audited are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in
the financial statements and the part of the Directors’ Remuneration Report to be audited.
Opinion
In our opinion:
– the financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state
of the Group’s affairs as at 31 March 2006 and of its profit for the year then ended;
– the parent company financial statements give a true and fair view, in accordance with IFRSs as adopted by the European
Union as applied in accordance with the provisions of the Companies Act 1985, of the state of the parent company’s affairs
as at 31 March 2006;
– 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 and article 4 of the IAS Regulation; and,
– the information given in the Directors’ Report is consistent with the financial statements for the year ended 31 March 2006.
Separate opinion in relation to IFRSs
As explained in the notes to the Group financial statements, the Group in addition to complying with its legal obligation to
comply with IFRSs as adopted by the European Union, has also complied with the IFRSs as issued by the International
Accounting Standards Board.
In our opinion the Group financial statements give a true and fair view, in accordance with IFRSs, of the state of the Group’s
affairs as at 31 March 2006 and of its profit for the year then ended.
Grant Thornton UK LLP
Registered Auditors
Chartered Accountants
London
16 June 2006
63 Helical Bar plc Report & Accounts 2006
63 Helical Bar plc Report & Accounts 2006
63 Helical Bar plc Report & Accounts 2006
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 page 51 above and on the
environment on page 65. 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 page 53 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.
Statement of General Health and Safety Policy
Helical Bar’s policy is to develop a culture throughout its organisation that is committed to the prevention of injuries and
ill health to 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.
Helical Bar 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 information and necessary ongoing training to employees in respect of risks to
health and safety, which may arise out of their activities or at their workplace.
This policy statement will be displayed prominently at all Company offices and the organisation and arrangements for
implementing this policy will be available at all Company offices for reference.
The policy will be reviewed and updated as necessary and any revisions will be communicated to those affected by
the changes.
Community involvement
Helical Bar plc has for many years joined in efforts to raise money for charitable causes. In 2005 the Company organised an
entry under the Helical banner into the London to Brighton Bike Ride raising over £91,000 for the British Heart Foundation.
The Company’s Managing Director, Mr Michael Slade, is a Trustee of the Land Aid Charitable Trust, a charity established in
1985 to focus the fundraising efforts of the property industry. Land Aid’s mission is to support the homeless and vulnerable
by raising funds to help provide accommodation, assist in refurbishment projects and give financial assistance where needed.
In 2005 the charity was relaunched and organised several fundraising events during the year. The Company also makes
charitable donations in its own right and in the year under review the donations amounted to £40,220 (2005: £14,010).
Ethical concerns
The Company has adopted a Code of Ethics which 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.
The Company also formally adopted during the year an Equal Opportunities Policy which sets out its determination to treat
all employees in accordance with that policy.
64 Helical Bar plc Report & Accounts 2006
64 Helical Bar plc Report & Accounts 2006
64 Helical Bar plc Report & Accounts 2006
Environmental policy and objectives
Helical Bar recognises its responsibility to reduce any adverse environmental impacts arising from its business activities.
The corporate commitment is encapsulated by the environmental policy and objectives, which are listed at www.helical.co.uk.
The Company is keen to comply with all applicable environmental legislation, and seeks to continuously improve its
environmental performance, achieving good practice in both development and management activities.
Annual targets are set to drive further improvements in management and performance, and to track progress over time.
It should be noted that, to be consistent with the Company’s financial reporting period, the environmental reporting period
has been altered from a calendar year basis to a financial year basis (i.e. April to March).
In 2005, 56% of all the environmental targets were fully achieved, with just 6% remaining un-progressed. A detailed review
of progress against individual targets can be found at www.helical.co.uk and specific highlights and challenges are
outlined below.
Building design and construction
• Helical has extended its engagement with principal contractors and joint venture partners to inform them of Helical Bar’s
environmental policy and targets for the year. On larger projects (e.g. Cardiff), the tender process has specifically requested
contractors to disclose previous pollution incidents and fines incurred.
• Helical Bar continues to use the BREEAM tool to evaluate the environmental performance of designs for larger schemes.
In 2005, a preliminary assessment was undertaken by the architects for the mixed use scheme being developed in
Nottingham. The pre-assessment BREEAM report for Helical’s development in Milton Keynes also indicates that this is
capable of achieving a Very Good or an Excellent BREEAM rating.
Property management
• Through its managing agent, Helical continues to engage proactively with tenants on the issue of waste management.
During 2005, this received a positive response from tenants at Rex House where a more coordinated approach to waste
recycling may be introduced, and Helical will seek to extend this approach in future to other tenants and buildings.
The Company’s ambition is to provide tenants with a direct cost-comparison between recycling and not recycling to
inform future discussions.
• Similar albeit slower engagement is taking place with tenants over energy use, but there have been some positive responses
and Helical Bar’s managing agents hope to work with two key tenants in the coming months to identify and prioritise
energy saving measures that can be taken by both the tenant and Helical Bar to improve energy efficiency.
Own-occupation
• Helical has increased the amount of waste recycled at head office by 15% and other types of waste are now being recycled
using a maxi-waste system.
• In 2005-06 the Company conducted a survey of staff travel to work. This will be reviewed with a view to identifying
sustainable transport initiatives where appropriate.
Future priorities
Key priorities for the next reporting period will include:
• Further engagement with tenants on improving efficiencies in multi-let offices, in particular extending waste recycling
schemes, and better understanding of energy use patterns and potential reduction measures.
• Development of environmental information packs tailored for joint venture partners (with a particular focus on sustainable
procurement), and for tenants regarding environmental matters relating to the use of Helical’s buildings.
• Further reducing the adverse environmental impacts of Helical’s own head office, and ensuring more effective
communication with all interested stakeholders.
A full list of targets for 2005-06 can be found on the Company website at www.helical.co.uk.
65 Helical Bar plc Report & Accounts 2006
65 Helical Bar plc Report & Accounts 2006
65 Helical Bar plc Report & Accounts 2006
Glossary of Terms
Adjusted diluted net assets per share
Diluted net asset value per share adjusted to exclude fair value of financial instruments and deferred tax on capital allowances
and on investment properties revaluation.
Adjusted diluted triple net asset value
Diluted net asset value per share adjusted to include the surplus of value from the directors’ valuation of trading stock.
Adjusted earnings per share
Earnings per share adjusted to exclude gains on sale and revaluation of investment properties, fair value movements on
derivative financial instruments and their deferred tax adjustments, on a diluted basis.
Average Unexpired Lease Term
The average unexpired lease term expressed in years.
BREEAM
Building Research Establishment’s Environmental Assessment Method.
Diluted figures
Reported amounts adjusted to include the effects of potential shares issuable under the employee share option schemes.
Earnings per share
Profit after tax divided by the weighted average number of ordinary shares in issue.
Estimated rental value (ERV)
The market rental value of lettable space as estimated by the Company’s valuers at each balance sheet date.
Initial yield
Annualised net rents on investment properties as a percentage of the investment property valuation.
IPD
The Investment Property Databank Limited (IPD) is a company that produces an independent benchmark of property returns.
Like-for-like portfolio
Properties that have been held for the whole of the period of account.
Net assets per share or net asset value (NAV)
Equity shareholders’ funds divided by the number of ordinary shares at the balance sheet date.
Net gearing
Total borrowings less short-term deposits and cash as a percentage of equity shareholders’ funds.
REIT
Real Estate Investment Trust.
Return on capital employed (ROCE)
Return on capital employed is measured as profit before financing costs plus revaluation surplus on investment property
divided by the opening gross capital.
Reversionary yield
The anticipated yield, which the initial yield will rise to once the rent reaches the ERV.
Total shareholder return (TSR)
The growth in the ordinary share price as quoted on the London Stock Exchange plus dividends per share received for the
period expressed as a percentage of the share price at the beginning of the period.
True equivalent yield
The constant capitalisation rate which, if applied to all cash flows from an investment property, including current rent,
reversions to current market rent and such items as voids and expenditures, equates to the market value. Assumes rent is
received quarterly in advance.
Weighted Average Cost of Capital (WACC)
The weighted average pre-tax cost of the Group’s debt and the notional cost of the Group’s equity used as a benchmark to
assess investment returns.
66 Helical Bar plc Report & Accounts 2006
66 Helical Bar plc Report & Accounts 2006
66 Helical Bar plc Report & Accounts 2006
Financial Calendar
Year ended 31 March 2006
Annual General Meeting to be held 20 July 2006
Final ordinary dividend payable 21 July 2006
Half year ending 30 September 2006
Results and interim ordinary dividend announced November 2006
Interim ordinary dividend payable December 2006
Year ending 31 March 2007
Results and final dividend announced June 2007
Final ordinary dividend payable July 2007
67 Helical Bar plc Report & Accounts 2006
67 Helical Bar plc Report & Accounts 2006
Advisors
Registrars
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Bankers
Barclays Bank plc
Hypo Real Estate
The Royal Bank of
Scotland plc
Aareal Bank AG
Stockbrokers
JP Morgan Cazenove
20 Moorgate
London EC2R 6DA
Auditors
Grant Thornton UK LLP
Grant Thornton House
Melton Street
Euston Square
London NW1 2EP
Merchant bankers
Lazard
50 Stratton Street
London W1J 8LL
Solicitors
Ashurst
Clifford Chance
Dechert
Lawrence Graham
Mishcon de Reya
Norton Rose
Olswang
68 Helical Bar plc Report & Accounts 2006
Front cover: Trinity Square,
Nottingham
Contents
Financial Highlights
01 Share price chart
02 Chairman’s Statement
05 Operating Review Development programme
09 Operating Review Investment Portfolio
14 Financial Review
18 Consolidated Income Statement
19 Balance Sheets
21 Statement of Recognised Income and Expense
22 Group and Company Cash Flow Statement
23 Notes to the Financial Statements
47 Ten Year Review
48 The Board of Directors and Senior Management
49 Directors’ Report
51 Corporate Governance Report
55 Directors’ Remuneration Report
63 Report of the Independent Auditors
64 Corporate Social Responsibility
66 Glossary of Terms
67 Financial calendar
68 Advisors
Financial Highlights
*Adjusted for the 5 for 1 share on 1 September 2005
Five year summary
Notes
IFRS
31.03.06
£m
IFRS
31.03.05
£m
UK GAAP
31.03.04
£m
UK GAAP
31.03.03
£m
UK GAAP
31.03.02
£m
Net rental income
Development profits
Trading profits
Adjusted profits before tax
1
Gain/(loss) on revaluation of investment property
Gain on sale of investment properties
Pre-tax profits
Return of cash/special dividend
Investment portfolio
Shareholders’ funds
Dividend per ordinary share
Diluted earnings per share
Adjusted diluted net asset value per share
Adjusted diluted triple net asset value per share
4
4
2/4
3/4
16.5
4.6
13.4
13.6
35.7
7.8
57.1
2.4
294.6
230.1
pence
3.65
51.8
278
284
20.4
12.7
5.8
20.5
30.1
14.1
64.7
97.2
271.3
182.5
pence
3.32
53.7
224
219
23.0
–
1.0
11.7
24.2
2.0
13.7
–
334.9
234.9
pence
3.32
7.9
177
161
25.6
4.6
0.3
16.7
(13.4)
2.1
25.2
–
342.5
226.9
pence
3.00
11.8
155
141
27.8
17.1
0.2
20.3
18.5
2.5
22.6
28.4
439.9
227.7
pence
2.75
11.8
155
133
Notes
1. Excludes profit on sale of investment properties and loss on sale of subsidiary.
2. After adding back additional deferred taxation arising from the clawback of capital allowances on sale of investment properties, the deferred taxation on the revaluation surpluses of
the investment portfolio and the fair value of financial instruments.
3. Adjusted for the directors’ valuation of trading stock but after adding back the deferred taxation referred to in 3 above.
4. Comparative figures have been adjusted for the 5 for 1 share split on 1 September 2005.
Design and production Radley Yeldar (London)
Pre-tax profit £m 2002200320042005200622.625.213.764.657.1Ordinary dividend per share Pence* 200220032004200520062.753.003.323.323.65Adjusted diluted net asset value per share Pence*Net asset values per share have been restated for the impact of the adoption in 2005 of UITF38 –Accounting for ESOP Trusts.20022003200420052006155155177224278Cash returned to shareholders £mCash returned to shareholders represents special dividends, shares bought in for cancellation and the Return of Cash in December 2004 but excludes ordinary dividends per share.2002200320042005200628.4–21.596.5–Pre-tax profit £m 2002200320042005200622.625.213.764.657.1Ordinary dividend per share Pence* 200220032004200520062.753.003.323.323.65Adjusted diluted net asset value per share Pence*Net asset values per share have been restated for the impact of the adoption in 2005 of UITF38 –Accounting for ESOP Trusts.20022003200420052006155155177224278Cash returned to shareholders £mCash returned to shareholders represents special dividends, shares bought in for cancellation and the Return of Cash in December 2004 but excludes ordinary dividends per share.2002200320042005200628.4–21.596.5– H
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Helical Bar plc
Annual Report & Accounts 2006
Helical Bar plc, registered office:
11-15 Farm Street, London W1J 5RS
Tel: 020 7629 0113, Fax: 020 7408 1666
email: info@helical.co.uk
website: www.helical.co.uk