Helical Annual Report 2010

Plain-text annual report

1 1 0 2 s t n u o c c a & t r o p e r c l p r a B l a c i l e H Helical Bar plc report & accounts 2011 Contents Report of the directors Report of independent auditor Investors 2 Performance indicators 4 Chairman’s statement 6 Chief Executive’s statement 9 Business review 24 Portfolio statistics 26 Property portfolio 32 Performance and risk 36 Financial review 39 Corporate responsibility 41 The board of directors and senior management 43 Shareholder information 44 Corporate governance report 48 Directors’ remuneration report 55 Report of independent auditor Financial statements 57 Index to the ﬁnancial statements 58 Consolidated income statement 59 Consolidated statement of comprehensive income 60 Group and company balance sheets 62 Group and company cash ﬂow statements 63 Group and company statements of changes in equity 64 Notes to the ﬁnancial statements 89 Ten year review 90 Investor information 91 Glossary of terms 92 Financial calendar 92 Advisors Front cover and inside cover 200 Aldersgate Street, London EC1 Helical Bar plc 2011 page 1 Helical Bar is a property development and investment company. We create shareholder value through a wide variety of high margin activities with property investment at our core. The intention is that property investment should provide a stable income stream to cover overheads and interest costs. Our spread of activities gives us the ﬂexibility to deploy capital rapidly across our business and focus on whatever opportunities offer the best returns at different points of the property cycle. Financial highlights Group’s share of net rental income1 Proﬁt before tax, property write-downs and investments gains2 Final proposed dividend per share3 Diluted EPRA net asset value per share4 2011 £17.8m £2.9m 3.15p 253p 2010 £14.9m £9.7m 0.25p 272p 1 Group’s share of net rental income includes the consolidated net rental income and the Group’s share of net rental income of Joint Ventures 2 Pre-tax loss as adjusted for property write-downs and net gain on sale and revaluation of investment properties (see Results for the year section of the Financial Review on page 36) 3 For 2010 a second interim dividend of 2.75p was paid 4 Calculated in accordance with the best practice recommendations of EPRA. page 2 Helical Bar plc 2011 performance indicators Total Portfolio - Unleveraged Returns Helical IPD Benchmark Helical’s percentile rank Source: Investment Property Databank Annualised over 1 year %pa 3 years %pa 5 years %pa 10 years %pa 20 years %pa 2.7 11.7 96 1.4 -0.9 24 5.5 0.7 4 11.5 14.9 6.7 4 8.2 0 “0” = top ranked fund Note: excludes the surplus but includes writedowns arising from the directors’ valuation of trading and development stock. The Investment Property Databank (“IPD”) produces a number of independent benchmarks which are regarded as the main indices of unleveraged commercial property returns. The IPD Benchmark referred to above is the IPD Universe of March Valued Funds. Total Gross Shareholder Return Total Returns Helical Bar plc UK Equity Market Listed Real Estate Sector Index Direct Property - Monthly data 1 Growth over 1 year, 3 years etc. to 31.03.11 1 year %pa -19.3 8.7 12.6 10.7 1 2 3 4 Performance measured over 15 years %pa 10 years %pa 5 years %pa 3 years %pa 20 years 25 years5 %pa %pa -9.0 5.4 -6.0 3.7 -11.6 -10.4 -1.4 -0.2 9.0 4.7 3.1 6.6 14.3 15.2 21.4 6.8 6.0 8.4 8.6 5.4 8.1 9.5 6.4 8.9 2 Growth in FTSE All-Share Return Index over 1 year, 3 years etc. to 31.03.11 3 Growth in FTSE 350 Real Estate Super Return Index over 1 year, 3 years, 5 years and 10 years to 31.03.11 For data prior to 30 September 1999 FTSE All Share Real Estate Sector Index has been used 4 Growth in Total Return of IPD UK Monthly Index (All Property) over 1 year, 3 years etc to 31.03.11 5 Growth in Direct Property since inception (December 1986) Source: Hewitt New Bridge Street/Thomson Reuters Net Asset Values Diluted EPRA net asset value per share 2011 p 253 2010 p 272 2009 p 286 2008 p 352 2007 p 374 performance indicators Helical Bar plc 2011 page 3 Group’s share of investment properties 2009 £213.0m 2010 £235.2m 2011 £315.0m page 4 Helical Bar plc 2011 chairman’s statement In the year to 31 March 2011 Helical has continued to transform its property holdings, realising cash from the sales of both non-income producing properties and assets with limited potential going forward, and reinvesting in growth assets which offer much promise for future years. 2010 £14.9m 2011 £17.8m Group’s share of net rental income This rolling of the “drum” as we rotate out of the old and into the new has changed the shape of the Group’s property portfolio and its prospects for the future, albeit at a cost of limited write-downs and losses. The last four years have been a difﬁcult period for property companies but, by protecting our shareholders, with limited calls for new capital and only at net asset value per share or at a premium, we believe we have now set a solid platform for future growth. Results The proﬁt before tax, property write-downs and investment gains reduced to £2.9m (2010: £9.7m). Development losses, before stock write-downs, totalled £1.7m (2010: proﬁts of £8.7m). There were trading losses of £0.4m (2010: £nil) and a reduced contribution from the Group’s share in the results of joint ventures of £2.9m (2010: £3.7m). However, write-downs of trading and development stock of £14.9m (2010: £10.0m), mainly resulting from a write-down of the Group’s ofﬁce developments in Glasgow and Crawley and reductions in the carrying value of land held for industrial and change of use potential, and an impairment of the group’s available-for-sale investments of £1.8m (2010: £nil) are set against these proﬁts. The Group’s share of net rental income was £17.8m (2010: £14.9m). Net rental income, excluding that in joint ventures, remained steady at £14.2m (2010: £14.2m). Loss before tax was £6.3m (2010: proﬁt £7.9m). Administration costs reduced from £8.7m to £7.1m with a credit for share awards of £0.2m (2010: charge £1.2m). Net ﬁnance costs before capitalised interest reduced from £11.5m to £10.5m due to a lower average level of borrowings during the year and lower average interest rates. Capitalised interest increased to £4.2m from £3.2m. There was a proﬁt on the mark to market valuation of the Group’s ﬁnancial instruments of £1.8m (2010: £1.2m). The Group made a loss on currency movements of £0.1m (2010: £1.1m) on its Polish operations. The investment portfolio rose 2.5% including sales and purchases (2010: 5%) or 1.7% on a like-for-like basis, reﬂected as a gain on revaluation of £2.7m (2010: £13.1m). A proﬁt on sale of investment properties of £4.8m compares with a loss of £4.9m in the previous year. Diluted loss per share was 3.6p (2010: earnings 9.1p) and diluted EPRA loss per share was 6.4p (2010: 0.1p). The Group’s diluted EPRA net asset value per share fell by 7% to 253p (2010: 272p). The directors’ valuation of trading and development stock showed a surplus of £32m (2010: £33m). The Board is recommending to shareholders an additional ﬁnal dividend of 3.15p per share, payable, if approved, after the Annual General Meeting in July. Taken with the interim dividend paid in December 2010 of 1.75p (2009: 1.75p) it represents a total dividend of 4.90p (2010: 4.75p), an increase of 3.2% for the year. chairman’s statement Helical Bar plc 2011 page 5 Silverthorne Road, Battersea, London SW8 Financing In the year to 31 March 2011, Helical repaid £45m of debt from the sale of properties including Fieldgate Street, Paignton, Watford, Crawley and industrial units at Southampton, Southall and Kidlington. Since the year end, the Group has repaid £10m of loans from the sale of 61 Southwark Street. At 31 March 2011 the Group had net borrowings of £241.3m (2010: £228.8m) and gross property values of £532.2m (2010: £494.5m), with these property values and net borrowings including the Group’s share of its joint venture properties and borrowings. The ratio of net borrowings to the value of the property portfolio (including directors’ valuation of stock) was 45.3% (2010: 46.3%). Net debt to equity gearing at 31 March 2011 was 81% (2010: 84%). At 31 March 2011, the Group had £75.3m (2010: £92.6m) of ﬁxed rate borrowings with an average effective interest rate of 5.77% (2010: 6.43%) and an average maturity of 2.3 years (2010: 2.3 years) and £91m of interest rate caps at an average of 4.9% (2010: £34m at 6.00%). In addition, the Group has a £40m interest rate ﬂoor at 4.50% until 2013. Placing In December 2010, Helical issued 10,730,000 ordinary 1p shares at 270p per share, raising £28.0m net of costs. The Group was delighted that over 30 institutional investors participated in this Placing, including many new shareholders. The Placing was also supported by the Group’s management with each director participating in a total management investment of over £1.1m. Outlook As outlined in our half year statement, Helical is now actively pursuing new investment and development opportunities. We are pleased with the number and quality of investment purchases, in particular our acquisition at Barts, London EC1, making full use of the proceeds from our recent placing. The number of sales achieved during the year, and subsequently, draw a line under the difﬁculties of the last four years and the Group can move forward conﬁdently. Giles Weaver Chairman 15 June 2011 page 6 Helical Bar plc 2011 Clyde Shopping Centre, Clydebank chief executive’s statement Property is a long term game. It always has been and always will be. In the early 90s it took Helical six years to recover fully from the bottom of the market in 1991 to strong growth in 1997. Then, having reached the point where income covered interest, overheads and dividends from investment buying in 1994-95, we set about rebuilding our development portfolio. Whilst doing so, we lagged our peer group but by 1997 we were a major participant in the City and one of the largest suppliers of out-of-town retail in the UK in 1997 and 1998. By 2001, we had trebled the size of the Company and by the end of 2004 had returned £156 million to our shareholders. I now ﬁnd us in a similar situation to that which faced us in 1996. By prudent use of our limited capital and making full use of the proceeds of our two small and accretive fund raisings, we have regained our ground so that once more our net rental income covers our interest, overhead and dividends. Once again we are preparing an extraordinary and diverse development programme. I cannot promise to quite match our accelerated performance of the late 90s. I see no “driver” in our economy equal to the dot. com boom of those days but I am pleased to report that we have cleared the decks of our ‘legacy’ properties and can now concentrate on moving forward free of the shackles of the past. We see ongoing value in the good secondary market where, for example, shopping centre equivalent yields at 7.75% are at a record premium to bond rates. Whilst interest rates remain low, we are enjoying the cash ﬂow from our recent investment purchases. Buying £125m of property at an average 8% yield plus whilst borrowing at an average 4.4% provides an historic differential. Experience suggests you buy, buy, buy in such unusual circumstances, but the key is choosing your targets carefully, having full regard to the difﬁculties being encountered by tenants and the pitfalls of ever shortening leases. We will continue to buy good secondary shopping centres and industrial estates although we are witnessing more interest in these sectors and a gradual reduction in yields. Targeted assets are of institutional quality which could generally beneﬁt from capital expenditure and value enhancing initiatives. Key to our acquisition strategy are affordable occupational costs for our tenants (low rents) and good tenant demand for space. Careful, disciplined stock picking remains our key focus and the value of detailed due diligence before bidding cannot be underestimated. London has always been our major playground. We are making good progress on lettings at 200 Aldersgate (370,000 sq ft of ofﬁces) and our current development programme in the City comprises two schemes of circa 750,000 sq ft at Mitre Square and Barts which will be coming forward over the next few years. In West London, our residential/mixed use portfolio is looking promising. We are conﬁdent of gaining planning consent at Fulham Wharf (100,000 sq ft Sainsbury’s store, 463 residential units) where we act for Sainsburys, and at our joint venture with Grainger at Hammersmith Town Hall (110,000 sq ft council ofﬁces, 40,000 sq ft retail, 320 residential units). After several years of negotiation with other land owners and the planning authorities, we are now able to move forward and apply for planning at our White City site of 10 acres with a mixed use scheme of up to two million sq ft held jointly with our partner, Aviva. We hope to be ready to start on site by the end of 2012. chief executive’s statement Helical Bar plc 2011 page 7 In all these cases we see values moving positively forward. Our total equity invested in these six London schemes is less than £30m so we continue our well proven theme of maximising the return on our equity. As the development market recovers, we are also now able to rekindle our retail projects under the Helical Retail banner, working with the supermarket chains to obtain planning on optioned schemes throughout the UK, and continue our town-centre development at Shirley, Birmingham anchored by an 80,000 sq ft Asda store. Poland offers opportunity and will remain on our target list as we develop and complete our two out-of-town retail schemes (a 1.1 million sq ft programme) and we look to expand our involvement in this region with large scale warehouse/logistics developments, similarly on a pre-let/pre-sold basis with our partners, Thameling, who are ex-Prologis. In December I referred to our ‘retirement village’ portfolio and that we were reviewing our options. As we ﬁnalise our successful scheme at Liphook (generating a total estimated proﬁt of £13m, with £7m still to come), we will now look to start to develop out schemes this year at Horsham (154 units) and Exeter (159 units), with Great Alne in Warwickshire (132 units) to follow in 2012. All three have now received planning consent with similar £10m to £15m plus proﬁt projections spread over three to ﬁve years. To recapture equity, we plan to sell our sites at Milton in Cambridge and part of Exeter, as well as a site for open market housing at Telford upon ﬁnalising planning later this year. A 40-acre residential site at Cawston (50% share) will follow in 2013/14. These sale receipts, subject to planning, are estimated to total £25m plus. It has been a long and hard four years since the warning bells sounded in mid 2007. It has required patience and discipline, however, the slate is now clean and the platform established to enable us to return to our outperforming ways. A special thanks to our shareholders and to our banks for their support throughout. Michael Slade Chief Executive 15 June 2011 page 8 Helical Bar plc 2011 200 Aldersgate Street London EC1 Helical Bar plc 2011 page 9 business review Helical Bar is a property development and investment company; our aim is to make excellent returns for our shareholders (which include the management team who own 16% of the company) through a wide variety of high margin activities. Property portfolio - how we invest our capital Retail In town 31% Out of town Poland 11% Ofﬁces 4% Retirement villages 13% London 25% Provincial 3% While our core areas include London ofﬁce and mixed use development, we are able to deploy capital to whichever part of the property market we believe offers the best returns at different points in the cycle. Industrial 11% 2% Change of use/ mixed use page 10 Helical Bar plc 2011 business review Our Portfolio – how we invest our capital Helical seeks to provide a continuing ﬂow of development proﬁts. It has good experience across the different sectors of Village Retail ofﬁces, retail, industrial, mixed use and residential schemes. % % These developments are either pre let or speculative and 29 Investment 12 2 Trading and development ﬁnanced either by Helical or by third party funding partners. 13 Total London Provincial In Town Out of Town Ofﬁces % Retail Poland % Change Mixed Retirement Industrial % Ofﬁces % of Use % Use % 31 23 25 11 11 11 % 1 3 2 3 4 1 2 1 1 2 1 9 1 1 – – – Total % 67 33 100 Note: excludes the surplus arising from the directors’ valuation of trading and development stock. The tables below describe how we allocate our resources between investment and development, and between the various sectors. The property portfolio tables on pages 26 to 31 explain which properties sit in each category and give more detail on these properties. Investment The investment portfolio, which is mainly let and income producing, has two main purposes: 1. To provide a steady income stream to cover overheads, dividends and interest 2. To produce above average capital growth over the cycle to contribute to growth in the Group’s net asset value. We seek to achieve these aims through careful, disciplined stock picking, generally of multi-let London ofﬁces, shopping centres, industrial estates and mixed portfolios. Our key aim is to be conﬁdent that there is sustainable demand from occupiers for all of our assets. We frequently reposition our properties through signiﬁcant refurbishment or extensions. We work closely with our tenants to maintain full occupancy and these relationships often lead to opportunities to increase value through re-gearing leases or moving tenants within a building as they expand or contract. Finally, at certain points in the cycle we may buy entirely vacant buildings (such as The Morgans, Cardiff or Shepherds Building, London W14) with a view to carrying out a major refurbishment, where we are conﬁdent that the occupational market is strong enough to allow the whole building to be let quickly. London ofﬁces Provincial ofﬁces Industrial In-town retail Out-of-town retail Retirement villages Total Note: Barts, London EC1 is held as an investment Value £m 108.9 7.6 42.1 137.7 14.3 4.4 315.0 Equity £m 44.2 2.0 19.7 57.2 6.2 0.7 130.0 business review Helical Bar plc 2011 page 11 Development We employ a wide variety of approaches in our development activities. The principal aim is to maximise our share of proﬁts leveraging our capital employed and managing the risks inherent in the development process given the size of our balance sheet. The table below explains how the process works and some of the different ways in which we are involved in our schemes. Deal type Planning Pre-letting Acquire, solely or in joint venture Barts, White City Acquire via option/ conditional purchase agreement (e.g. subject to planning) or be appointed as ‘preferred developer’ Shirley Town Centre, King Street Hammersmith, Mitre Square Appointed as Development Manager (proﬁt payable at certain milestones e.g. planning, letting or completion of construction) Fulham Wharf Barts, Fulham Wharf, White City, King Street Hammersmith, Shirley Town Centre, Telford, Cawston (Rugby) ‘Forward fund’ i.e. sell site to an investor who meets development costs with Helical receiving a proﬁt share Turawa (Poland) Gliwice (Poland), Mitre Square Bring in JV partner to share percentage of costs and proﬁts with Helical retaining an equity interest and proﬁt share Retirement villages 200 Aldersgate, Southall, Hailsham (industrial development), The Hub (Glasgow) Delivery options Develop ourselves, complete lettings/ sales and retain/ sell Retirement villages Construction Stockport, Liphook Post construction - Letting/sale page 12 Helical Bar plc 2011 business review Trading & development Helical seeks to provide a continuing ﬂow of development As highlighted at the half year, our primary concern over the last two years has been to recover equity from those assets proﬁts. It has good experience across the different sectors of with limited potential and, in particular, from those assets which are either non-income producing or where void costs exceed ofﬁces, retail, industrial, mixed use and residential schemes. income. In today’s market the only way to achieve sales of these assets is to be competitive on pricing and this has involved write-downs and sales below book value. These developments are either pre let or speculative and Since March 2009 we have sold circa £120m of trading and development stock of which £85m has been non-income producing, with £76m and £60m sold respectively in the year to 31 March 2011. This sales programme has generated ﬁnanced either by Helical or by third party funding partners. signiﬁcant cash surpluses, which we have re-deployed into new investment opportunities. London ofﬁces Provincial ofﬁces Industrial In-town retail Out-of-town retail Retirement villages Change of use Mixed use Poland Total Book Value £m Fair Value £m Surplus of Fair Value over Book Value £m Equity (calculated from Fair Value) £m 12.5 7.9 9.5 9.6 3.5 59.6 4.2 4.2 50.1 161.1 14.5 8.0 9.5 9.8 3.5 73.6 6.3 12.9 55.4 193.5 2.0 0.1 – 0.2 – 14.0 2.1 8.7 5.3 32.4 14.5 1.1 9.5 8.3 1.4 35.2 6.3 12.9 34.6 123.8 Note: The tables above include the Group’s share of investment, trading and development properties held in joint ventures. Losses from the Group’s development programme of £1.7m (2010: proﬁts of £8.7m) were increased by provisions of £14.9m (2010: £10.0m) made against the carrying value of development stock. Of the total provisions, £10.2m were recognised at 30 September 2010. Although proﬁts were generated at our successful retirement village scheme at Bramshott Place, Liphook, losses were made on the sales of Crawley and Fieldgate Street and our industrial developments at Oxford, Kidlington and Southampton as we greatly reduced our stock of non-income producing ofﬁce and retail developments. These losses were increased by the overhead costs of our retail development joint ventures in the UK and Poland. At both the half year and year end we assessed the carrying value of our remaining trading and development stock and this led to total write-downs of £14.9m, (of which £4.7m was in the second half of the year) primarily against ofﬁce buildings in Crawley and Glasgow and our industrial developments. business review Helical Bar plc 2011 page 13 Ofﬁces The focus of the Group over the last year has been on those schemes recently completed or under construction, looking for tenants for the space, where vacant, and progressing a small number of major schemes for the future. Mitre Square, London EC3 The Hub, Paciﬁc Quay, Glasgow Mitre Square, London EC3 The Hub, Paciﬁc Quay, Glasgow 200 Aldersgate Street, London EC1 Mitre Square, London EC3 The Hub, Paciﬁc Quay, Glasgow Originally developed in the late 1980’s, this 370,000 sq ft ofﬁce building has remained vacant since Clifford Chance left for Canary Wharf in 2005. In 2010, we were appointed under an asset and development management agreement with the owners of the building. We have re-freshed and re-clad parts of the building, creating a “vertical village” for ofﬁce users. These works were completed in November 2010 and the building is being marketed to potential tenants with an encouraging level of interest already being shown. Legal agreements have been signed to acquire the site at Mitre Square, London EC3 from the City of London and Ansbacher. Planning permission has been granted for a new Grade A ofﬁce development of 270,000 sq ft and we now have a deliverable scheme which we are able to start once a pre-let or funding partner is found. The Hub, Paciﬁc Quay, Glasgow was completed in 2009. This 60,000 sq ft building offers ﬂexible ofﬁce space with an onsite cafe and events area. Located in the midst of a media hotbed with BBC Scotland and STV as neighbours, this scheme has been partly let to The Digital Design Studio, the commercial arm of Glasgow School of Art, Shed Media and other high-tech, media-orientated tenants. Letting has been slower over the last 12 months but we expect interest to pick up as the market improves. page 14 Helical Bar plc 2011 business review Barts, London EC1 In joint venture with the Baupost Group LLC we have purchased the freehold interest in land and buildings at Bartholomew Close, Little Britain and Montague Street. business review Helical Bar plc 2011 page 15 page 16 Helical Bar plc 2011 business review Retail Europa Centralna, Gliwice In the UK we have two retail schemes: This scheme is being developed on land to the south of Gliwice at the intersection of the A4 and A1 motorways. This highly visible site has unparalleled accessibility and will be a major regional shopping destination. The retail park and shopping centre, comprising approximately 67,000 sq m (720,000 sq ft) of retail space, will incorporate three distinct parts, being a foodstore, DIY and household goods and fashion. The scheme has been 50% pre-let to Tesco, Castorama, H & M, Media Expert and others. Construction is due to commence by Q3 2011 with completion expected in Q3 2012. Parkgate, Shirley, West Midlands At Parkgate, Shirley we have revised our plans for the redevelopment of this site and have submitted a new planning application to Solihull Metropolitan Borough Council, the results of which we expect in Summer 2011. The development will, however, continue to include an 85,000 sq ft Asda supermarket, 64,000 sq ft of retail and circa 120 residential apartments and townhouses. Leisure Plaza, Milton Keynes At Leisure Plaza, Milton Keynes, we have planning consent for a 165,000 sq ft retail store, 65,000 sq ft casino, 50,000 sq ft ice rink and 25,000 sq ft of other leisure. We are working with the various interested parties in this development to bring it forward with a view to starting construction later this year. In Poland we have three schemes totalling over 117,600 sq m (1.2m sq ft): Park Handlowy Mlyn, Wroclaw Wroclaw is a large city in West Poland, some 100km from the German border and 470km south of Warsaw. This 9,600 sq m (103,000 sq ft) out of town retail development was completed in December 2008 and is fully let to a number of domestic and international retailers including T K Maxx, Media Expert, Makro, Deichmann, Smyk, Komfort and others. Park Handlowy Turawa, Opole Opole is located approximately 40km to the west of Wroclaw along the A4 motorway and is the administrative centre of the Opole province. This shopping centre and retail park is anchored by a Carrefour Hypermarket and a Praktiker DIY store and comprises approximately 41,000 sq m (440,000 sq ft) of retail space. The scheme has been forward funded and sold to Standard Life and was completed in March 2011. Negotiations continue with potential tenants to let the remaining space. business review Helical Bar plc 2011 page 17 Park Handlowy Mlyn, Wroclaw page 18 Helical Bar plc 2011 business review Mixed use Industrial development Fulham Wharf, Fulham Wharf, London SW6 London SW6 King Street, King Street, Hammersmith Hammersmith London W6 London W6 Tiviòt Way, Stockport King Street, Hammersmith, London W6 We have a development agreement with the London Borough of Hammersmith & Fulham, in partnership with residential specialist Grainger plc, for the regeneration of the west end of King Street, Hammersmith. We submitted a planning application in November 2010 for new council ofﬁces, a foodstore and restaurants around a new public square, over 320 new homes and a new public footbridge across the Great West Road, which will re-connect Hammersmith Town Centre to the River Thames and Furnival Gardens. We have built 120 units totalling over 570,000 sq ft for onward sale to owner occupiers at two sites in Oxford, as well as at Southampton, Southall (West London) and Hailsham. We have sold 111 of these units (543,000 sq ft) including all of Southampton and the two Oxford sites, with just nine units remaining at Southall, of which three have been sold since the year end. In addition, we own a site in Stockport with planning permission for trade counters, industrial units and a builders’ merchant, self storage and car showroom. Infrastructure works have recently completed at this site and parcels of land have been sold to Big Yellow and Inﬁniti (a car dealership). White City, London W12 Following the publication of the draft White City Opportunity Area Planning Framework for public consultation we are now seeking to progress with a planning application for the redevelopment of the 10 acre site which we hold with our partner Aviva. A full professional team is currently being appointed with a view to submitting in the Spring of 2012. The project will involve 1.5 – 2m sq ft of mixed use space with a residential bias. Fulham Wharf, London SW6 At Fulham Wharf we have submitted, with landowner Sainsbury’s, a planning application for a 100,000 sq ft new foodstore, together with 463 residential units at Sands End in Fulham. The proposal is to demolish the adjacent dilapidated buildings, construct a new store with housing above and turn the existing store into new housing, creating new public spaces and enhancing access to a Thames riverside walkway within the development. Helical will receive a fee once planning permission is secured together with a proﬁt share. business review Helical Bar plc 2011 page 19 Retirement villages A retirement village is a private residential community in which active over-55s are able to live independently in retirement. Residents have typically down-sized from a larger family home into a cottage or apartment with no maintenance or security issues. With access to a central clubhouse containing a bar and restaurant facilities and health and ﬁtness rooms and surrounded by maintained grounds, this retirement option is proving increasingly popular. Bramshott Place, Liphook, Hampshire Bramshott Place, Liphook, Hampshire The original Bramshott Place Village was an Elizabethan mansion built in 1580 by a local merchant. Whilst this was demolished in the mid 19th Century and replaced by Bramshott Grange, the original Grade II listed Tudor Gatehouse remains and has been fully restored. Bramshott Grange operated most recently as a hospital for the elderly but closed in 1987. The land and buildings remained derelict until Helical acquired them in 2001. Changing planning from its previously designated employment use to a retirement village took several years but was eventually achieved in 2006. The development of 151 cottages and apartments, and the new clubhouse, started in late 2007 and has proceeded in phases as units are sold. Currently, we have sold 69 units with reservations on a further 20 units. Construction of the ﬁnal phase of 55 units has started. Cherry Tree Yard, Faygate, Horsham, West Sussex Cherry Tree Yard, a 30 acre site, had operated as a sawmill with outside storage for many years. Now vacant, we were granted planning permission, at appeal, in May 2009 following a public inquiry where the Inspector allowed a development comprising a retirement village of 148 units, eight affordable housing units, a 50 bed residential care home and a central facilities clubhouse building. Demolition has been completed and enabling works will commence shortly with construction of the retirement village and clubhouse, to be built in phases, expected to commence in late 2011. Following changes the scheme is now for 154 retirement village units. Maudsley Park, Great Alne, Warwickshire This is a Green Belt site which has 320,000 sq ft of built footprint and beneﬁts from Major Development Site planning policy. Measuring 82 acres this site received outline planning permission in April 2011 for a retirement village of 132 units plus 47 extra care units. Demolition and enabling works will commence in late 2011 with construction to follow in 2012. St Loye’s College, Exeter This 19 acre site was acquired in 2007 from the St Loye’s Foundation, a long established rehabilitation college in the city of Exeter. Resolution to grant planning permission was obtained in October 2009 for a retirement village of 206 units, a 50 bed residential care home, an affordable “extra-care” block of 50 units and a central facilities clubhouse building. Construction of the retirement village and clubhouse in phases is expected to commence during 2012. Ely Road, Milton, Cambridge This 21 acre site was acquired from EDF in 2006 and was previously used as a training centre and depot. Located within the Green Belt, planning permission has been obtained for a retirement village of 101 units and a central facilities clubhouse building. page 20 Helical Bar plc 2011 Morgans Arcade, Cardiff Inset: Clyde Shopping Centre, Clydebank business review Helical Bar plc 2011 page 21 Idlewells, Sutton-in-Ashﬁeld The Guineas, Newmarket Investment Portfolio In recent years we have retained those assets identiﬁed as having potential for future growth, or which provided a strong cash ﬂow to the business, having disposed of assets which had reached their maximum potential. The remaining portfolio provides a source of income to cover overheads and ﬁnance costs as well as the potential for future capital growth. Acquisitions Having made our ﬁrst signiﬁcant investment property acquisition for four and a half years in January 2010, acquiring Clyde Shopping Centre in Glasgow with joint venture partners, we bought a mainly industrial portfolio for £46.5m in June 2010 (£48.6m gross cost). The portfolio comprised nine assets, of which six are multi-let industrial units, one is a single let industrial and two are ofﬁces (one located in Eastcheap in the City). Two of these assets were sub-sold for £15.8m pre-completion, leaving seven assets yielding 10.5% net. Four further assets have been sold since acquisition for a proﬁt of £5.1m and there are valuation gains on the retained assets of £0.5m. One further asset is currently under offer for sale at its book value. The remaining portfolio yields 10% on cost. In addition, in the year to 31 March 2011, we bought two shopping centres, in Newmarket and Sutton-in-Ashﬁeld (with the contracts to purchase a further retail parade having just been exchanged) and an industrial estate in East Kilbride. Newmarket was acquired for a NIY of 8.0% from the Administrators acting for Lloyds Bank. The centre has been undermanaged for some time and potential asset management initiatives include letting vacant units and implementing the consented extension. Sutton-in-Ashﬁeld was acquired for a NIY of 8.5% with scope to implement rent reviews and amalgamate units. We also acquired an ofﬁce property adjacent to our development site at White City, which forms a key part of the proposed development, for £9.6m, a yield of 7.25%. Barts, London EC1 In joint venture with the Baupost Group LLC (Baupost 66.7%, Helical 33.3%) we have purchased for £55m the freehold interest in land and buildings at Bartholomew Close, Little Britain and Montague Street. The existing buildings comprise 387,000 sq ft. The current income from the NHS is circa £3.5m per annum which reﬂects an initial yield of 6.3%. A major mixed use development comprising over 450,000 sq ft of ofﬁces, residential and retail is proposed and it is intended to submit a planning application later this year. Vacant possession will be obtained from 2014 enabling redevelopment to commence. Sales Since last year we have completed sales at Eastcheap London EC3, Witham, Woking and Sawston (from the industrial portfolio) at circa 30% above acquisition cost, and at Crawley and Paignton at 2% above the 31 March 2010 valuation. There was a valuation increase of 2.5% in the year to 31 March 2011 including capex, sales and purchases which compares to the IPD monthly index of 5.4% over the same period. The breakdown of the investment portfolio is as follows: Portfolio weighting Initial Reversionary Yield Yield Yield on letting voids Equivalent Yield (AiA) Industrial London Ofﬁces South East ofﬁces Retail Total % 14 31 3 52 100 % 7.9 6.3 7.4 7.2 7.0 % 9.5 8.1 8.6 8.0 8.2 % 9.6 7.7 7.4 8.0 8.1 % 8.8 7.7 7.5 7.6 7.8 page 22 Helical Bar plc 2011 business review Shepherds Building, London W14 Silverthorne Road, London W8 Helical seeks to provide a continuing ﬂow of development proﬁts. It has good experience across the different sectors of ofﬁces, retail, industrial, mixed use and residential schemes. These developments are either pre let or speculative and ﬁnanced either by Helical or by third party funding partners. We hold 51% of our investment portfolio (£160m, our share) in four assets: The Morgans, Cardiff A prime retail asset on the Hayes opposite St David’s 2, let to White Stuff, Moss Bros, Schoon and TK Maxx. New lettings to Urban Outﬁtters, Joules and Dr Martens in the year have increased rental values from £135 psf to £171 psf. With current contracted rent of £3.1m versus ERV of £4.17m, we see many opportunities for asset management initiatives and further rental growth over the medium term. Clydebank Shopping Centre, Clyde In January 2010, we completed the acquisition of Clydebank Shopping Centre, North West of Glasgow for £68m (8.3% net yield) from AXA/CIS (£72.1m gross cost) in a joint venture with Prime Commercial Properties, with Helical taking a 60% equity stake. Value has increased 12.5% since acquisition. The current annual gross rent is £7.75m and there is a vacant ERV of £1.5m pa. There is considerable upside potential both by way of yield shift and letting vacant units. Net of head rents, rental income has moved from £5.8m at acquisition to £5.75m, but with £500,000 of net income contracted once rent frees expire, letting progress is positive. Shepherds Building, London W14 151,000 sq ft refurbished ofﬁce just south of Shepherds Bush Green and Westﬁeld shopping centre. The building is let, mainly to media related tenants, on an average rent of £22.40 psf. A break clause was served in December on £331,000 of income, but by the time the tenant actually vacates at the end of May we will have let £305,000 of this and expect to get a further £65,000 from the remaining three studio units. These are the only vacancies in the building. Ongoing tenant demand is strong with recent lettings at £25 to £30 psf depending on size, giving good prospects for rental growth over the next three to ﬁve years. Silverthorne Road, Battersea, London SW8 Acquired with vacant possession in 2005 we subsequently fully refurbished this ofﬁce and TV studio complex to create a multi let TV production and media ofﬁce hub of approximately 56,000 sq ft. In 2007 we secured planning consent for a further 50,000 sq ft of raised ﬂoor, air conditioned ofﬁce accommodation over 5 ﬂoors which was developed out during 2008 and concluded in early 2009. The site is currently 56% let by ﬂoor area. New lettings of circa 15,000 sq ft in the last three months and the signiﬁcant increase in viewings for larger requirements of 10,000 sq ft to 20,000 sq ft suggests that the low total occupational cost of circa £40psf is making the building increasingly attractive to those occupiers no longer able to afford more central locations. Future Investment Acquisitions The three tier market we have previously referred to continues and, if anything, the categorisation becomes more deﬁned, namely: 1. Prime/trophy ‘institutional’ assets which have limited opportunities to add value, characterised by competitive bidding and, especially, by signiﬁcant money ﬂows from foreign investors. These are, generally, prime retail, South-East industrial and London. 2. Well located ‘institutional’ secondary assets, which would beneﬁt from capex and value enhancing initiatives with good occupational demand. 3. Weak secondary / tertiary assets, which will in many cases show dramatic falls in rents, lack of occupational demand and increasing voids, a market which Helical is continuing to avoid. The opportunity to buy assets with substantial surplus rental income over the cost of debt still exists, but demand is already getting stronger for properties ﬁtting category 2 above. This is good news for our existing portfolio, but will mean that we are facing greater competition when bidding. We continue to seek multi-let properties, including good quality shopping centres, retail parks, industrial estates and inner- London ofﬁces, at yields of between 7.5% and 9.5% as well as portfolios offering opportunities for medium term trading proﬁts (as with our recent industrial portfolio purchase). Park Handlowy Turawa, Opole business review Helical Bar plc 2011 page 23 Careful, disciplined stock picking of active management opportunities which are temporarily below the institutional radar but out of reach of buyers who are unable to raise debt is our key focus. Whilst some of these opportunities will come from banks selling distressed assets, we believe they are more likely to come from over-geared private property companies and from institutions and larger REITs looking to rebalance their portfolios. Quotient In January 2007 we acquired a research facility near Newmarket in a joint venture with the majority shareholder of Quotient Biosciences Group Ltd which occupies the buildings. As part of the transaction, we acquired a minority stake in Quotient, a private biosciences company. Previously held at a value of £13.3m (cost £1.8m), we have now written down our investment to £nil to reﬂect concerns over trading conditions and its ﬁnancial position. page 24 Helical Bar plc 2011 portfolio statistics Investment portfolio Valuation movements Sector London ofﬁces Provincial ofﬁces Total ofﬁces In town retail Out of town retail Total retail Industrial Total Note: Including sales, purchases and capex Valuation yields Sector Ofﬁces Retail Industrial All Capital values, vacancy rates and lease terms Sector All ofﬁces London ofﬁces Retail Industrial Total Lease expiries and tenant break options in: Percentage of rent roll Number of leases Average rent per lease Valuation increase/ (decrease) % 6.7 1.6 5.9 2.1 1.9 2.1 (3.8) 2.5 Weighting % 31 3 34 47 5 52 14 100 On letting voids % On rack rental value % Equivalent % True equivalent % 7.6 8.0 9.6 8.1 8.2 8.0 9.5 8.2 7.9 7.6 8.8 7.8 8.2 7.5 9.3 8.2 Initial % 6.4 7.2 7.9 7.0 Capital value psf £ Vacancy rate % Average unexpired lease term Years 230 257 144 42 120 2013 8.8% 50 18 15 7 11 10 2014 6.8% 44 4.7 2.2 11.1 4.1 8.4 2015 5.9% 41 2011 14.8% 112 2012 6.7% 73 £37,200 £26,400 £49,400 £43,400 £40,200 Lease expiries and tenant breaks in year Leases renewed Options not exercised Tenants holding over Rents lost at break/expiry Rents at risk Contracted rent changes in the year Rent lost at break/expiry Rent lost through administration Leases renewed Fixed uplifts New lettings portfolio statistics Helical Bar plc 2011 page 25 Year to 31 March 2011 £ 1,445,300 164,200 699,600 2,309,100 1,039,000 3,348,100 Rent £ (1,039,000) (145,300) 1,445,300 1,249,500 1,531,200 % 69 31 100 Change £ (1,039,000) (145,300) 251,400 194,800 1,531,200 793,100 Investment Portfolio – changes in rental value March 2010 – March 2011 % March 2010- September 2010 % September 2010 - March 2011 % Industrial Out of town retail In town retail Total retail Provincial ofﬁces London ofﬁces Total ofﬁces Total Development and trading portfolio1, 2 Project type Change of use Industrial development for freehold sales Retirement village development Ofﬁce development Retail development (Helical Poland) Others – mainly mixed development Total -5.4 2.4 2.7 2.6 – 1.6 1.4 1.3 Book cost £m 17 13 62 14 50 2 -5.6 -0.3 -0.6 -0.6 – -2.2 -1.9 -1.6 0.2 2.7 3.3 3.2 – 3.9 3.4 2.9 Write down £m Written down book cost £m Directors’ valuation £m Surplus over book cost £m – (3) (2) (5) – – 17 10 60 9 50 2 28 10 74 11 55 2 11 – 14 2 5 – 32 158 (10) 148 180 (Excluding Group’s share of trading and development properties held in joint ventures) Notes: 1. Total writedowns in the year were £15m of which £5m were in respect of assets sold by 31 March 2011. 2. Basis of valuation – the Directors’ valuation of the properties is based on current site values. page 26 Helical Bar plc 2011 property portfolio Income producing assets OFFICES Address Shepherds Building, Shepherds Bush, London W14 61 Southwark Street, London SE1 200 Great Dover Street, London SE1 80 Silverthorne Road, Battersea, London SW8 82 Silverthorne Road, Battersea, London SW8 Fordham, Newmarket Barts, London EC1 RETAIL - SHOPPING CENTRE Address The Guineas, Newmarket Idlewells Shopping Centre, Sutton-in-Ashﬁeld Clyde Shopping Centre, Clydebank RETAIL - IN TOWN Address Morgan Department Store, Cardiff 1 - 5 Queens Walk, East Grinstead RETAIL - OUT OF TOWN Address Otford Road Retail Park, Sevenoaks Stanwell Road, Ashford INDUSTRIAL Address Standard Industrial Estate, North Woolwich E16 Westgate, Aldridge Waterfront Business Park, Fleet, Hampshire Dales Manor Business Park, Sawston, Cambridge Hawtin Park, Blackwood Winterhill Industrial Estate, Milton Keynes Merlin Business Park, Manchester Crownhill Business Centre, Milton Keynes Motherwell Food Park, Bellshill Golden Cross, Hailsham East Kilbride Region London London London London London South East London Region South East Midlands Scotland Tenure Freehold Freehold Leasehold Freehold Freehold Freehold Freehold Tenure Leasehold Freehold Leasehold Region Wales South East Tenure Freehold Freehold Region South East South East Tenure Freehold Leasehold Region London Midlands South East South East Wales Midlands North Midlands Scotland South East Scotland Tenure Freehold Freehold Freehold Freehold Freehold Freehold Leasehold Leasehold Leasehold Freehold Feuhold Acquired 2000 1998 2008 2005 2008 2007 2011 Acquired 2011 2011 2010 Acquired 2005 2005 Acquired 2003 2004 Acquired 2002 2006 2000 2003 2003 2004 2010 2010 2010 2001 2011 Area Sq. ft. (NIA) 151,000 67,000 36,000 56,000 51,000 70,000 387,000 818,000 Area Sq. ft. (NIA) 111,000 185,000 627,000 923,000 Area Sq. ft. (NIA) 246,000 37,000 283,000 Area Sq. ft. (NIA) 42,000 32,000 74,000 Area Sq. ft. (NIA) 50,000 184,000 45,000 62,000 249,000 24,000 62,000 108,000 79,000 102,000 153,000 1,118,000 property portfolio Helical Bar plc 2011 page 27 Helical interest 100% 100% 100% 75% 75% 53% 33% Helical interest 100% 100% 60% Helical interest 100% 89% Helical interest 75% 75% Helical interest 60% 90% 100% 67% 100% 50% 100% 100% 100% 100% 100% Description Media style ofﬁces refurbished in 2001 Refurbished with added penthouse suite Re-development/refurbishment potential Media style ofﬁces refurbished in 2006 Media style ofﬁces built in 2008 R & D space and ofﬁces on 32 acres Ofﬁces let to NHS, subject to future development Description Multi-let shopping centre Multi-let regional shopping centre Multi-let regional shopping centre Description Refurbished store let as prime retail units + arcades Retail units 95% let to Sainsbury’s Description Retail park let to Wickes, Currys & Carpetright Solus unit let to Focus DIY store Description Multi-let industrial estate Single-let refurbished industrial unit Multi-let industrial estate Multi-let industrial estate Ofﬁces and industrial units Ofﬁces and industrial units Single let industrial unit Multi-let industrial estate Multi-let industrial estate Industrial units Multi-let industrial estate Average passing rent £22.42 £21.03 £19.95 £13.98 £20.48 £15.37 £8.81 Average passing rent £35-£75 £35-£60 £35-£80 Average passing rent £13.14 £12.00 Average passing rent £17.37 £17.76 Average passing rent £8.18 £2.93 £6.11 £7.28 £2.70 £5.28 £5.50 £5.28 £5.10 £4.26 £3.92 Vacancy rate 0% 11% 0% 12% 90% 0% 0% Vacancy rate 13% 1% 7% Vacancy rate 14% 6% Vacancy rate 0% 0% Vacancy rate 5% 0% 21% 0% 16% 0% 0% 0% 18% 76% 14% page 28 Helical Bar plc 2011 property portfolio Development programme OFFICES Address 200 Aldersgate Street, London EC1 Mitre Square, London EC3 The Hub, Paciﬁc Quay, Glasgow INDUSTRIAL Address Scotts Road, Southall, West London Tiviot Way, Stockport Ropemaker Park, Hailsham RETAIL - POLAND Address Wroclaw Opole Europa Centralna, Gliwice RETAIL - OUT OF TOWN Address Leisure Plaza, Milton Keynes RETAIL - IN TOWN Address Parkgate, Shirley, West Midlands C4.1, Milton Keynes Bluebrick, Wolverhampton CHANGE OF USE POTENTIAL Address Cawston, Rugby Arleston, Telford Region London London Scotland Region London North West South East Region Poland Poland Poland Region Midlands Region Midlands Midlands Midlands Region Midlands Midlands Area Sq. ft. 370,000 270,000 60,000 700,000 Area Sq. ft. 18,000 189,000 70,000 277,000 Area Sq. ft. 103,000 440,000 720,000 1,263,000 Area Sq. ft. 305,000 305,000 Area Sq. ft. 149,000 33,000 27,000 209,000 Helical interest Dev. Man. 100% 100% Helical interest 100% 100% 90% Helical interest 50% 50% 50% Helical interest 50% Helical interest 50% 50% 50% Helical interest 100% 100% property portfolio Helical Bar plc 2011 page 29 Fund/owner Type of development Deutsche Pfandbriefbank Refurbishment completed in Oct 2010 Helical New ofﬁce building completed 2009 New ofﬁce building Description Industrial units Industrial, trade counter etc Industrial and food store/rest Type of development New build New build New build Fund/owner Helical Standard Life Helical Description Description Type of development Completed development, fully let Completed To commence 2011 New build New build New build Consent for 165,000 sq ft retail store, 65,000 sq ft casino, 75,000 sq ft other leisure Description 85,000 sq ft Asda, 64,000 sq ft retail, 120 residential units Remaining retail and ofﬁce units Refurbished railway station with permission for casino use Description 32 acre greenﬁeld site with residential potential 19 acre greenﬁeld site with residential potential page 30 Helical Bar plc 2011 property portfolio Bramshott Place, Liphook, Hampshire Development programme RETIREMENT VILLAGES Address Region Units Bramshott Place, Liphook, Hampshire South East St Loye’s College, Exeter Maudsley Park, Great Alne South West Midlands 151 159 132 Helical interest 100% 100% 100% Description 69 units sold, 20 under offer Cleared site with detailed consent for a retirement village 320,000 sq ft industrial estate on a 82 acre site with resolution to grant outline consent for a retirement village Ely Road, Milton, Cambridge South East 101 100% Site with detailed consent for a retirement village Cherry Tree Yard, Faygate, Horsham South East 154 100% Cleared site with detailed consent for retirement village 697 property portfolio Helical Bar plc 2011 page 31 King Street, Hammersmith, London MIXED USE DEVELOPMENTS Address Region Helical interest White City, London W12 London Consortium Consortium interest in a 1.5m – 2m sq ft commercial and residential scheme King Street, Hammersmith, London London 50% Planning application submitted for new council ofﬁces, food store, restaurants and 320 residential units Fulham Wharf, London SW6 London Dev. Man. 100,000 sq ft foodstore and 463 residential units page 32 Helical Bar plc 2011 performance & risk A property company’s share price should reﬂect growth in net assets per share. Our Group’s main objective is to maximise growth in assets from increases in investment portfolio values and from retained earnings from other property related activities. Key performance indicators and benchmarks We incentivise management to outperform the Group’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. IPD has compared the ungeared performance of Helical’s total property portfolio against that of portfolios within IPD for the last 20 years. The Group’s annual performance target is to exceed the top quartile of the IPD database. Helical’s ungeared performance for the year to 31 March 2011 was 2.7% (2010: 8.5%) compared to the IPD median benchmark of 11.7% (2010: 17.4%) and upper quartile benchmark of 12.1% (2010: 21.5%). As referred to in the Chairman’s Statement, the year to 31 March 2011 was a period during which the Group continued to transform its property holdings and this has had an impact on performance in the year. However, over three, ﬁve and ten years the Group’s property portfolio continued to outperform the IPD benchmark. IPD (all monthly and quarterly valued funds) Net asset value Ungeared returns 31.3.11 31.3.10 31.3.09 % % % Helical 2.7 8.5 (6.3) IPD upper quartile 12.1 21.5 (21.9) Percentile rank 96 90 1 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 calculations 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 34 to these accounts. To 31 March 2011 3 years 5 years 10 years Helical IPD benchmark Percentile rank 1.4 (0.9) 24 5.5 0.7 4 11.5 6.7 4 Management is incentivised to exceed 15% p.a. growth in net asset value per share. The adjusted diluted net asset value per share, excluding trading stock surplus, at 31 March 2011 was 225p (2010: 241p). Including the surplus on valuation of trading and development stock, the diluted EPRA net asset value per share at 31 March 2011 was 253p (2010: 272p). Diluted EPRA triple net asset value per share was 246p (2010: 259p). Other key performance indicators include: (cid:115)(cid:229)(cid:229)(cid:65)(cid:229)(cid:83)(cid:85)(cid:82)(cid:80)(cid:76)(cid:85)(cid:83)(cid:229)(cid:79)(cid:70)(cid:229)(cid:78)(cid:69)(cid:84)(cid:229)(cid:82)(cid:69)(cid:78)(cid:84)(cid:65)(cid:76)(cid:229)(cid:73)(cid:78)(cid:67)(cid:79)(cid:77)(cid:69)(cid:229)(cid:79)(cid:86)(cid:69)(cid:82)(cid:229)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:229) costs, overheads and dividends (cid:115)(cid:229)(cid:83)(cid:84)(cid:65)(cid:70)(cid:70)(cid:229)(cid:82)(cid:69)(cid:84)(cid:69)(cid:78)(cid:84)(cid:73)(cid:79)(cid:78)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:229)(cid:76)(cid:69)(cid:78)(cid:71)(cid:84)(cid:72)(cid:229)(cid:79)(cid:70)(cid:229)(cid:83)(cid:69)(cid:82)(cid:86)(cid:73)(cid:67)(cid:69) (cid:115)(cid:229)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:83)(cid:73)(cid:79)(cid:78)(cid:229)(cid:73)(cid:78)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:38)(cid:52)(cid:51)(cid:37)(cid:20)(cid:229)(cid:39)(cid:79)(cid:79)(cid:68)(cid:229)(cid:41)(cid:78)(cid:68)(cid:69)(cid:88) 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 £32m (2010: £33m) 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 London Stock Exchange. Helical’s TSR for the year to 31 March 2011 was -19.3% (2010: 20.2%) compared to the median of the listed real estate sector of 12.6% (2010: 56.7%). However, over three, ﬁve, ten, ﬁfteen, twenty and twenty-ﬁve years Helical’s TSR has outperformed the Listed Real Estate Sector Index as shown on page 2 of this Report and Accounts. performance & risk Helical Bar plc 2011 page 33 Risk management summary How we manage our risks Risk is an integral part of any company’s business activities and Helical’s ability to identify, assess, monitor and manage each risk to which it is exposed is fundamental to its ﬁnancial stability, current and future ﬁnancial performance and reputation. Strategic risks Risk Reputation Impact Action taken to mitigate Inability to raise new share capital Deal ﬂow dries up Management in regular communication with all shareholders and with major institutional shareholders in face to face meetings. Maintain high proﬁle in the market. Continue close contact with all major deal ﬂow sources. Ensure depth of management. Long term underperformance of real estate sector Share price falls Pursue outperformance within sector compared with peers. Regulatory changes eg SDLT, abolition of Empty Property rates relief Transactional and holding costs increase Lobby Government and industry representatives to mitigate. Retention of key senior employees Inability to access and exploit deal ﬂow Remuneration packages that retain and motivate. Operational risks Risk People related issues Impact Low morale Computer software/hardware failure Loss of transactional history Action taken to mitigate Key management ably assisted by a loyal group of long-standing employees whose remuneration is designed to retain staff with full participation in the Company’s Share Incentive Plan. External IT consultancy used, backed up by technical support from a number of hardware and software suppliers. Breaches of authorisation levels Inappropriate use of Company resources All signiﬁcant transactions approved at appropriate level. Market risks Risk Inappropriate balance between investment and development and between sectors Liquidity risks Risk Impact Action taken to mitigate Returns lower than market Selecting the most appropriate level of exposure to each sector is fundamental to the long term success of the company. Impact Action taken to mitigate Inadequate ﬁnancial resources Unable to meet liabilities as they fall due Unable to undertake investment decisions arising from the Company’s assessment of the market Company ﬁnances its operations from the cash ﬂow generated by its property portfolio, bank borrowings, third party ﬁnancing and from the capital markets through share issues. The guiding principle is to ensure that funding is obtained from diverse providers with a range of maturities backed up by interest rate protection, where appropriate. Financing and interest rate protection is discussed further in note 28 on pages 83 and 84. Credit risks Risk Counterparty ﬁnancial failure Impact Action taken to mitigate Loss arising from failed tenants, lenders, suppliers etc The ﬁnancial assessment of tenants, contractors and potential partners is part of the daily routine of the Company. Operational risks Operational risks are those that the Group may suffer a loss from inadequate internal processes, systems, resources, incorrect decision-making or through external events. Losses from operational risk can arise from: – people-related issues such as inadequate resources, skills or departure of key personnel; – software or hardware failure, inadequate IT security, failure of back-up facilities; – incorrect or inappropriate use of valuation models, inappropriate gearing levels, breaches of authorisation levels; – fraud from internal or external sources; – external events leading to a loss of a major provider of services e.g. contractor failure. The Group’s approach is not to eliminate operational risk, but rather to identify the areas in which it might arise and to contain it within acceptable limits through the application of effective controls. Ultimately, the management of operational risk is dependent upon the application of sound management judgement. The close involvement of the executive directors in the day-to-day running of the business is critical to that judgement. The Group has not suffered any material losses arising from exposure to operational risks in the year under review. page 34 Helical Bar plc 2011 performance & risk Risk governance The responsibility for the governance of the Group’s risk proﬁle lies with the Board of Directors of Helical. The Board is responsible for setting the Group’s risk strategy by assessing risks, determining its willingness to accept those risks and ensuring that the risks are monitored and that the Group is aware of and, if appropriate, reacts to changes in those risks. The Board is also responsible for allocating responsibility for risk within the Group’s management structure. Risk register The Group maintains a risk assessment register which enables the Board to focus on perceived speciﬁc key risks, assessing their magnitude and the probability of negative outcomes. This risk register is reviewed regularly and strategies are adopted to minimise and eliminate the risks identiﬁed. Strategic risks Strategic risks are those risks that may adversely affect the Group’s ﬁnancial performance by following an inappropriate strategy or by the failure to execute an appropriate strategy. Strategic risks arise over a long time frame where there are fundamental differences between the business environment in which the Group operates and the environment assumed on the establishment of that strategy. The Group’s reputation is a key component of its ability to achieve its strategic goals and success in meeting these goals depends not only on the effective management of risks but also on the maintenance of its reputation among stakeholders i.e. employees, investors, regulators, business partners, ﬁnancial institutions and the public. Measuring the impact of the Group’s reputation is not a science and, in the view of the Group, may best be measured by the willingness of stakeholders to continue to deal with Helical. During the last year there have been no signs that we are not seeing all the opportunities to deal in property that it would expect and recent transactions suggest that we continue to be a Group that others want to deal with. Internally, risks to the Group’s reputation are mitigated by the application of an internal Code of Conduct and “whistle blowing” procedures which are reviewed annually. The other main strategic risks identiﬁed by the Group include: – long-term under-performance of the real estate sector compared to alternative forms of investment e.g. equities, gilts; – regulatory changes which signiﬁcantly impact on the attractiveness of real estate as an investment compared to alternative forms of investment, or on the attractiveness of investing in real estate through a listed group; and, – retention of key senior employees. The principal strategic risks noted above, and the underlying drivers of such risks, are monitored by management and discussed regularly in the Business Plan presented by the Group’s Finance Director to the full Board each year. In addition the Group receives regular updates on the impact of economic scenarios on the real estate sector as well as subscribing to a number of economic journals in order that senior employees are kept up-to-date. 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 Group, should only be decided by the Board of Directors as a whole. The Board monitors the ﬁnancial performance of the Group at regular Board meetings where comparisons against budgets and forecasts are made together with a review of key performance indicators. The remuneration packages of senior directors and employees are seen as the key to their retention and motivation. These remuneration packages are designed to provide a basic level of salary at or below the median of the Group’s peer group but with cash bonuses and share awards at the top end of the peer group rewarding outperformance compared to that peer group. The most recent annual review of the strategic risks faced by the Group indicate that the business of Helical is appropriate to the business environment in which it competes. performance & risk Helical Bar plc 2011 page 35 Market risks Liquidity risks Credit risks Market risks arise from the possibility that the Group may suffer reduced income or a loss resulting from ﬂuctuations in the values of, or income from, its real estate portfolio. Market risk is a key component of the Group’s long-term strategy with exposure to the various real estate sectors ﬂuctuating as perceptions of the future performance of each of those sectors change. Net asset value growth, a key performance indicator, is dependent upon an ability to move easily between sectors at the appropriate time. The Group’s directors constantly analyse ﬂuctuations in market movements using evidence gathered from a variety of public and personal sources, using this analysis to determine the future direction of real estate investment. Selecting the most appropriate level of exposure to each sector is fundamental to the success of the Group. Measuring that success is undertaken by comparing the Group’s portfolio returns over short-, medium- and long-term periods with those as reported by Investment Property Databank (“IPD”), the source of the main real estate sector indices. In the year under review, the Group’s real estate portfolio underperformed compared to the majority of property funds in the IPD index. However, over the medium- and long-term, the Group’s performance compares favourably with the rest of the sector as reported by IPD on pages 2 and 32. Liquidity risks arise from having insufﬁcient ﬁnancial resources to enable the Group to meet its obligations as they fall due, or can only secure them at an excessive cost. Liquidity risks also arise where the Group has insufﬁcient resources to enable investment decisions, arising from its assessment of market risks, to be executed. The Group ﬁnances its operations from the cash ﬂow generated by its operations, bank borrowings, both secured and unsecured and over short-, medium- and long-term periods, and from the capital markets through share issues. The management of cash and debt is monitored daily with medium-term cash ﬂows prepared weekly and long-term cash ﬂows discussed regularly in management meetings and presented to the Board at each quarterly Board meeting. The Group’s overall approach is to provide sufﬁcient liquidity to be able to meet, from cash resources and available facilities, the expected requirements of the business. The guiding principle is to ensure that funding is obtained from diverse providers with a range of maturities, backed up by interest rate protection where appropriate. This is to ensure that a stable ﬂow of ﬁnancing is available and to provide protection in the event of market disruption. The Group’s cash resources, bank borrowings, interest rate protection and gearing are noted on pages 78 to 84. Credit risk is the possibility that the Group may suffer a loss from the failure of its tenants, borrowers, suppliers or other counterparties to meet their ﬁnancial obligations to the Group, including their failure to meet them in a timely manner. It includes the risks that the Group may suffer a loss as a result of guarantees to third parties. Credit risk in order to earn a return is not a central feature of the Group’s business activities, rather it is a consequence of those activities. The Group is exposed to credit risk in respect of the ﬁnancial stability of the tenants and potential tenants in its real estate portfolio. It is also exposed to credit risk where cash ﬂows from the sales of real estate, whether investment or trading properties or funded developments, are deferred. The potential failure of major suppliers such as contractors or sub-contractors also exposes the Group to credit risk. Guarantees to third parties, such as banks, where the Group is in joint venture with partners expose the Group to risks that those partners are unable to fulﬁl their obligations. The ﬁnancial assessment of tenants, potential tenants, contractors and potential partners are part of the daily routine of the Group. The assessment of these third parties is undertaken by the ﬁnance department in discussion with the executive responsible for the real estate decision. In the year under review bad debts constituted less than 2% of gross rental income. page 36 Helical Bar plc 2011 ﬁnancial review Consolidated income statement Results for the year The proﬁt before tax, property write-downs, investment property gains and impairment of investments reduced to £2.9m (2010: £9.7m). Investment property gains comprised a revaluation surplus of £2.7m (2010: £13.1m) and a gain on the sale of investment properties of £4.8m (2010: loss of £4.9m). Offset against these proﬁts were property write-downs of trading and development stock of £14.9m (2010: £10.0m), mainly resulting from a write-down of the Group’s ofﬁce developments in Glasgow and Crawley and reductions in the carrying value of land held for industrial and change of use potential, and an impairment of available-for-sale investments of £1.8m (2010: £nil). Loss before tax was £6.3m (2010: proﬁt of £7.9m). Development losses, before stock write-downs, totalled £1.7m (2010: proﬁts of £8.7m). There were trading losses of £0.4m (2010: £nil) and there was a reduced contribution from the Group’s share in the results of joint ventures of £2.9m (2010: £3.7m). Net rental income, excluding that in joint ventures, remained steady at £14.2m (2010: £14.2m). Net rental income The Group’s share of net rental income increased to £17.8m (2010: £14.9m) including its share of net rental income of joint ventures. Excluding joint ventures, net rental income remained at £14.2m. Rental costs decreased to £4.4m (2010: £4.7m). Tenant bad debts remain low at less than 2% of gross rental income. Development proﬁts Development proﬁt from the scheme in Liphook was offset by stock write-downs of £14.9m (2010: £10.0m) and below book value sales at Crawley and Southampton to give a development loss for the year of £16.6m (2010: £1.3m). Trading losses Trading losses for the year were £0.4m (2010: £nil). Share of results of joint ventures During the year the Group’s share of results from joint venture partners was £2.9m (2010: £3.7m) mainly due to the Group’s share of net income and the revaluation surplus from its investment in the Clyde Shopping Centre. Gain on sale and revaluation of investment properties During the year the Group sold investment properties with book values of £27.9m (2010: £40.4m) on which it made a £4.8m gain (2010: loss of £4.9m). The properties sold included Eastcheap, Sawston Trade Park, Witham and Woking (which were bought in the year as part of the Focus portfolio), and Paignton. The revaluation surplus for the year was £2.7m (2010: £13.1m). Administrative expenses Administrative expenses decreased to £7.0m (2010: £8.7m) primarily driven by a reduction in the cost of share awards. Administrative expenses, before share based payments credit increased to £7.3m (2010: £6.7m). Finance costs, ﬁnance income and derivative ﬁnancial instruments Interest payable on bank loans, before capitalised interest, decreased from £11.0m to £9.7m due to a fall of average interest rates and a small reduction in the level of borrowings. Capitalised interest increased to £4.2m from £3.2m. Finance income earned on cash deposits decreased to £0.7m (2010: £1.0m). Net ﬁnance costs Interest payable on bank loans Other interest payable Finance arrangement costs Interest capitalised Finance costs Interest receivable 2011 £000 9,690 675 806 (4,179) 6,992 (652) 2010 £000 10,956 696 872 (3,196) 9,328 (1,039) 2009 £000 15,890 362 321 (6,855) 9,718 (2,082) Derivative ﬁnancial instruments have been valued on a mark to market basis and a credit of £1.8m (2010: £1.2m) has been recognised in the Income Statement. Foreign exchange losses and gains A foreign exchange loss of £0.1m (2010: £1.1m) has been recognised in respect of the Group’s retail developments in Poland. ﬁnancial review Helical Bar plc 2011 page 37 Taxation The deferred tax asset is principally derived from tax losses which the Group believe will be utilised against proﬁts in the foreseeable future. Dividends The Board is recommending to shareholders at the Annual General Meeting on 26 July 2011 a ﬁnal dividend of 3.15p per share to be paid on 28 July 2011 to shareholders on the register on 1 July 2011. This ﬁnal dividend, amounting to £3,213,000 has not been included as a liability at 31 March 2011, in accordance with IFRS. During the year the Group paid the 2010 ﬁnal dividend of 0.25p per share and an interim dividend for 2011 of 1.75p per share. Dividends First interim Second interim Prior period ﬁnal Total (Loss)/earnings per share 2011 pence 2010 pence 2009 pence 1.75 – 0.25 2.00 1.75 2.75 2.75 7.25 1.75 – 2.75 4.50 Loss per share in the year to 31 March 2011 was 3.6p (2010: earnings per share of 9.1p) per share and on a diluted basis was 3.6p (2010: earnings of 9.1p) per share. Diluted EPRA loss per share increased to 6.4p (2010: 0.1p) per share. (Loss)/earnings per share (Loss)/earnings per share Diluted (loss)/earnings per share Diluted EPRA (loss)/earnings per share 2011 pence (3.6) (3.6) (6.4) 2010 pence 9.1 9.1 (0.1) 2009 pence (56.6) (56.6) 9.0 (Loss)/earnings per share calculations are based on the weighted average number of shares held in the year. This is a different basis to the net asset value per share calculations which are based on the number of shares at 31 March 2011. In accordance with IAS 33 on Earnings per Share, no weighting adjustment has been made for share awards in existence during the years to 31 March 2011 and 31 March 2009 as losses were made during those years. Accordingly, the basic and diluted loss per share for these years are the same. Consolidated balance sheet Investment portfolio During the year investment properties with a book value of £27.9m were sold. New properties of £74.6m were acquired (including the Focus portfolio, East Kilbride and two shopping centres in Sutton-in-Ashﬁeld and Newmarket). The purchase of Barts is included in these accounts as an investment in joint ventures. In addition, around £3.2m of capital expenditure was spent on refurbishing various ofﬁce, industrial and retail buildings. At 31 March 2011 there was a revaluation surplus, net of joint venture share, of £2.7m (2010: £13.1m) on the investment portfolio. Investment portfolio Cost or valuation at 1 April Additions at cost Transferred from land, trading and development properties Disposals Proﬁt share partners’ share of revaluation Revaluation Cost or valuation at 31 March 2011 £000 2010 £000 2009 £000 219,901 241,287 306,778 77,864 4,192 16,011 – – (27,902) (40,438) (657) 1,756 1,514 (9,005) (6,006) 2,670 13,104 (68,005) 271,876 219,901 241,287 page 38 Helical Bar plc 2011 ﬁnancial review Net asset values After removing the effect of the Placing in the year, equity shareholders’ funds, on which the net asset value per share is calculated, have decreased by £15.2m. This has led to a 7% decrease in adjusted diluted net assets per share to 225p (2010: 241p). Taking into account the directors’ valuation of trading and development stock of £32m (2010: £33m), the diluted EPRA net assets per share decreased by 7% to 253p (2010: 272p). Net asset values per ordinary share Diluted Adjusted diluted Diluted EPRA Diluted EPRA triple net asset value 2011 pence 2010 pence 2009 pence 218 225 253 246 228 241 272 259 226 242 286 269 The net asset value per share calculations are included in Note 34 of this statement. Borrowings and ﬁnancial risk Net debt has increased from £203.0m to £206.1m. Taken with an increase in net assets of £12.8m, the Group’s net gearing has fallen from 84% to 81%. The fair value of the Group’s investment, trading and development portfolio at 31 March 2011 was £451.9m (2010: £435.4m). With net borrowings of £206.1m (2010: £203.0m) the ratio of net borrowings to the value of the property portfolio was 45.6% (2010: 46.6%). At 31 March 2011 the Group had £75.4m (2010: £92.6m) of ﬁxed rate borrowings with an average effective interest rate of 5.77% (2010: 6.43%) and an average length of 2.3 years (2010: 2.3 years), and £91m of interest rate caps at an average of 4.9% (2010: £34m at 6.00%). In addition, the Group had a £40m interest rate ﬂoor at 4.50% until 2013. Net debt and gearing Net debt Gearing 2011 2010 2009 £206.1m £203.0m £224.7m 81% 84% 95% The Group seeks to manage ﬁnancial risk by ensuring that there is sufﬁcient ﬁnancial liquidity to meet foreseeable needs and to invest surplus cash safely and proﬁtably. As at 15 June 2011 the Group has over £95m of cash and agreed, unutilised, bank facilities as well as £59m (2010: £32m) of uncharged property on which it could borrow funds. Helical’s average interest rate is 4.35%. Going concern The directors have reviewed the current and projected ﬁnancial position of the Group making reasonable assumptions about future trading performance. The key areas of sensitivity are: (cid:115)(cid:229)(cid:84)(cid:73)(cid:77)(cid:73)(cid:78)(cid:71)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:86)(cid:65)(cid:76)(cid:85)(cid:69)(cid:229)(cid:79)(cid:70)(cid:229)(cid:80)(cid:82)(cid:79)(cid:80)(cid:69)(cid:82)(cid:84)(cid:89)(cid:229)(cid:83)(cid:65)(cid:76)(cid:69)(cid:83) (cid:115)(cid:229)(cid:65)(cid:86)(cid:65)(cid:73)(cid:76)(cid:65)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:229)(cid:79)(cid:70)(cid:229)(cid:76)(cid:79)(cid:65)(cid:78)(cid:229)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:82)(cid:69)(cid:76)(cid:65)(cid:84)(cid:69)(cid:68)(cid:229)(cid:67)(cid:65)(cid:83)(cid:72)(cid:229)(cid:109)(cid:79)(cid:87)(cid:83) (cid:115)(cid:229)(cid:70)(cid:85)(cid:84)(cid:85)(cid:82)(cid:69)(cid:229)(cid:80)(cid:82)(cid:79)(cid:80)(cid:69)(cid:82)(cid:84)(cid:89)(cid:229)(cid:86)(cid:65)(cid:76)(cid:85)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:73)(cid:84)(cid:83)(cid:229)(cid:73)(cid:77)(cid:80)(cid:65)(cid:67)(cid:84)(cid:229)(cid:79)(cid:78)(cid:229)(cid:67)(cid:79)(cid:86)(cid:69)(cid:78)(cid:65)(cid:78)(cid:84)(cid:83)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:80)(cid:79)(cid:84)(cid:69)(cid:78)(cid:84)(cid:73)(cid:65)(cid:76)(cid:229)(cid:76)(cid:79)(cid:65)(cid:78)(cid:229)(cid:82)(cid:69)(cid:80)(cid:65)(cid:89)(cid:77)(cid:69)(cid:78)(cid:84) (cid:115)(cid:229)(cid:67)(cid:79)(cid:77)(cid:77)(cid:73)(cid:84)(cid:84)(cid:69)(cid:68)(cid:229)(cid:70)(cid:85)(cid:84)(cid:85)(cid:82)(cid:69)(cid:229)(cid:69)(cid:88)(cid:80)(cid:69)(cid:78)(cid:68)(cid:73)(cid:84)(cid:85)(cid:82)(cid:69)(cid:229) (cid:115)(cid:229)(cid:70)(cid:85)(cid:84)(cid:85)(cid:82)(cid:69)(cid:229)(cid:82)(cid:69)(cid:78)(cid:84)(cid:65)(cid:76)(cid:229)(cid:73)(cid:78)(cid:67)(cid:79)(cid:77)(cid:69)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:80)(cid:79)(cid:84)(cid:69)(cid:78)(cid:84)(cid:73)(cid:65)(cid:76)(cid:229)(cid:66)(cid:65)(cid:68)(cid:229)(cid:68)(cid:69)(cid:66)(cid:84) (cid:115)(cid:229)(cid:82)(cid:69)(cid:80)(cid:65)(cid:89)(cid:77)(cid:69)(cid:78)(cid:84)(cid:229)(cid:84)(cid:73)(cid:77)(cid:73)(cid:78)(cid:71)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:86)(cid:65)(cid:76)(cid:85)(cid:69)(cid:229)(cid:79)(cid:70)(cid:229)(cid:84)(cid:82)(cid:65)(cid:68)(cid:69)(cid:229)(cid:82)(cid:69)(cid:67)(cid:69)(cid:73)(cid:86)(cid:65)(cid:66)(cid:76)(cid:69)(cid:83) The forecast cashﬂows have been sensitised to eliminate those cash inﬂows which are less certain and to take account of a potential further deterioration of property valuations. From their review the directors believe that the Group has adequate resources to continue to be operational as a going concern for the foreseeable future. Placing On 8 December 2010 the Company placed 10,730,000 ordinary 1p shares (the “Placing Shares”) at a price of 270 pence per share, raising net proceeds of £28.0m. These Placing shares represented 9.9% of the Company’s issued ordinary share capital prior to the Placing and were admitted to trading on 13 December 2010. The shares rank pari passu with existing ordinary shares. Nigel McNair Scott Finance Director 15 June 2011 Helical Bar plc 2011 page 39 corporate responsibility Introduction Helical recognises that our business activities impact on the environment and the wider communities in which we operate. As our business involves working with joint ventures partners and outsourcing partners, our direct impacts as a business are relatively small. However, we are aware of the inﬂuence we can exert through the implementation of responsible environmental and social practices via our partners, contractors and suppliers. Review of progress in the year to 31st March 2011 We manage our environmental and social impacts because there are business beneﬁts in doing so. These beneﬁts include increased ability to secure planning consent, improved marketability of assets to prospective tenants, reduced operating costs of assets, mitigating the risk of future legislation and regulation, and enhanced corporate reputation. An endorsement of Helical’s commitment to managing environment and social impacts is our continued listing in the FTSE4Good Index. The FTSE4Good Index measures the performance of companies that meet globally recognised corporate responsibility standards and facilitates investment in those companies. Maintaining listed status on this Index remains a key priority for Helical, and informs our evolving approach to Corporate Responsibility. Managing Corporate Responsibility In 2009 we revised and updated our environmental management system, which has been in place since 2003 and the updated environmental management system, available on the company website, has been embedded within the operations for Helical through the course of 2010-11. Key elements of the system include: (cid:115)(cid:229)(cid:229)(cid:64)(cid:37)(cid:78)(cid:86)(cid:73)(cid:82)(cid:79)(cid:78)(cid:77)(cid:69)(cid:78)(cid:84)(cid:7)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:64)(cid:35)(cid:79)(cid:82)(cid:80)(cid:79)(cid:82)(cid:65)(cid:84)(cid:69)(cid:229)(cid:50)(cid:69)(cid:83)(cid:80)(cid:79)(cid:78)(cid:83)(cid:73)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:7)(cid:229)(cid:80)(cid:79)(cid:76)(cid:73)(cid:67)(cid:73)(cid:69)(cid:83)(cid:229)(cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:229)(cid:83)(cid:69)(cid:84)(cid:229)(cid:79)(cid:85)(cid:84)(cid:229) Helical’s high-level commitment across a number of impact areas. (cid:115)(cid:229)(cid:229)(cid:33)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:229)(cid:8)(cid:65)(cid:78)(cid:68)(cid:229)(cid:82)(cid:79)(cid:76)(cid:76)(cid:73)(cid:78)(cid:71)(cid:9)(cid:229)(cid:80)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:78)(cid:67)(cid:69)(cid:229)(cid:84)(cid:65)(cid:82)(cid:71)(cid:69)(cid:84)(cid:83)(cid:229)(cid:84)(cid:79)(cid:229)(cid:69)(cid:78)(cid:65)(cid:66)(cid:76)(cid:69)(cid:229)(cid:85)(cid:83)(cid:229)(cid:84)(cid:79)(cid:229)(cid:70)(cid:79)(cid:67)(cid:85)(cid:83)(cid:229)(cid:79)(cid:85)(cid:82)(cid:229) efforts throughout the year on measurable, yet achievable performance goals. Improved environmental performance disclosure was also a key piece of investor feedback. This year we have reported on energy and water consumption at our large managed multi-let assets and head ofﬁce, which will now form the baseline for improvement targets going forward for 2011-12. (cid:115)(cid:229)(cid:229)(cid:43)(cid:69)(cid:89)(cid:229)(cid:48)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:78)(cid:67)(cid:69)(cid:229)(cid:41)(cid:78)(cid:68)(cid:73)(cid:67)(cid:65)(cid:84)(cid:79)(cid:82)(cid:83)(cid:229)(cid:8)(cid:43)(cid:48)(cid:41)(cid:83)(cid:9)(cid:229)(cid:84)(cid:79)(cid:229)(cid:72)(cid:69)(cid:76)(cid:80)(cid:229)(cid:85)(cid:83)(cid:229)(cid:77)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:229)(cid:80)(cid:82)(cid:79)(cid:71)(cid:82)(cid:69)(cid:83)(cid:83)(cid:229)(cid:84)(cid:79)(cid:87)(cid:65)(cid:82)(cid:68)(cid:83)(cid:229) these targets and to ensure that we are able to report in line with investor disclosure requirements, notably FTSE4Good. (cid:115)(cid:229)(cid:229)(cid:33)(cid:229)(cid:67)(cid:72)(cid:69)(cid:67)(cid:75)(cid:76)(cid:73)(cid:83)(cid:84)(cid:229)(cid:84)(cid:79)(cid:229)(cid:65)(cid:83)(cid:83)(cid:73)(cid:83)(cid:84)(cid:229)(cid:85)(cid:83)(cid:229)(cid:73)(cid:78)(cid:229)(cid:65)(cid:80)(cid:80)(cid:76)(cid:89)(cid:73)(cid:78)(cid:71)(cid:229)(cid:77)(cid:73)(cid:78)(cid:73)(cid:77)(cid:85)(cid:77)(cid:229)(cid:83)(cid:85)(cid:83)(cid:84)(cid:65)(cid:73)(cid:78)(cid:65)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:229)(cid:82)(cid:69)(cid:81)(cid:85)(cid:73)(cid:82)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:229) across our development activities. In collaboration with our consultants, we developed a sustainability project management checklist to ensure that sustainability issues are incorporated into all decisions throughout the development lifecycle. (cid:115)(cid:229)(cid:229)(cid:37)(cid:70)(cid:70)(cid:69)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:229)(cid:85)(cid:83)(cid:69)(cid:229)(cid:79)(cid:70)(cid:229)(cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:229)(cid:65)(cid:85)(cid:68)(cid:73)(cid:84)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:82)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:229)(cid:84)(cid:72)(cid:82)(cid:79)(cid:85)(cid:71)(cid:72)(cid:229)(cid:81)(cid:85)(cid:65)(cid:82)(cid:84)(cid:69)(cid:82)(cid:76)(cid:89)(cid:229)(cid:77)(cid:69)(cid:69)(cid:84)(cid:73)(cid:78)(cid:71)(cid:83)(cid:229)(cid:79)(cid:70)(cid:229) key Helical personnel, their external corporate responsibility advisors and principal managing agents to ensure effective delivery of the objectives and targets. The management system we have developed has been designed speciﬁcally to reﬂect the ﬂexibility of Helical’s business model. It also reﬂects the key role that our partners play in delivering enhanced sustainability outcomes in all our business ventures, be they large-scale developments such as the ongoing Stockport Gateway project, or in the management of individual multi-let assets such as at Shepherds Building or Battersea Studios. Below we outline our progress in relation to the each of our Corporate Responsibility impact areas. Environment Our high-level corporate commitments to environmental issues is outlined in the Group’s Environmental Policy which can be found on the Group website. The Policy details our commitments across a range of impact areas and our development and property management activities. In 2009-10, Helical set itself 18 targets to guide its Corporate Responsibility programme over the following 12 months. These targets address a range of impacts arising from our development and property management activities, including resource use and waste production, pollution, biodiversity, tenant engagement, ﬂood risk and sustainable design and construction. A full list of these targets can be found on the Helical website. The performance against the key targets is summarised below. (cid:115)(cid:229)(cid:229)(cid:33)(cid:84)(cid:229)(cid:79)(cid:85)(cid:82)(cid:229)(cid:40)(cid:69)(cid:65)(cid:68)(cid:229)(cid:79)(cid:70)(cid:108)(cid:67)(cid:69)(cid:229)(cid:65)(cid:84)(cid:229)(cid:38)(cid:65)(cid:82)(cid:77)(cid:229)(cid:51)(cid:84)(cid:12)(cid:229)(cid:87)(cid:69)(cid:229)(cid:67)(cid:79)(cid:77)(cid:70)(cid:79)(cid:82)(cid:84)(cid:65)(cid:66)(cid:76)(cid:89)(cid:229)(cid:65)(cid:67)(cid:72)(cid:73)(cid:69)(cid:86)(cid:69)(cid:68)(cid:229)(cid:79)(cid:85)(cid:82)(cid:229)(cid:84)(cid:65)(cid:82)(cid:71)(cid:69)(cid:84)(cid:83)(cid:229) of a 5% reduction in water use and energy. This reﬂects an increased efﬁciency and internal awareness of how we use and manage our ofﬁces. (cid:115)(cid:229)(cid:229)(cid:33)(cid:84)(cid:229)(cid:79)(cid:85)(cid:82)(cid:229)(cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:68)(cid:229)(cid:77)(cid:85)(cid:76)(cid:84)(cid:73)(cid:13)(cid:76)(cid:69)(cid:84)(cid:229)(cid:80)(cid:82)(cid:79)(cid:80)(cid:69)(cid:82)(cid:84)(cid:73)(cid:69)(cid:83)(cid:12)(cid:229)(cid:87)(cid:69)(cid:229)(cid:67)(cid:79)(cid:78)(cid:84)(cid:73)(cid:78)(cid:85)(cid:69)(cid:229)(cid:84)(cid:79)(cid:229)(cid:73)(cid:77)(cid:80)(cid:82)(cid:79)(cid:86)(cid:69)(cid:229)(cid:69)(cid:78)(cid:69)(cid:82)(cid:71)(cid:89)(cid:229) and water efﬁciency through the implementation of low and no cost measures. The speciﬁc target for 2010-11 was to deﬁne the baseline against which 5% improvement in efﬁciencies could be achieved. A review of the data in the table below shows that 61 Southwark St showed a reduction in use of gas and water and an increase in use in electricity but given it was not fully tenanted throughout the ﬁnancial year it demonstrates the difﬁculties of assessing year on year comparisons for managed multilet properties. Within the other properties assessed, performance was variable but generally reﬂected the level of occupancy. (cid:115)(cid:229)(cid:229)(cid:47)(cid:78)(cid:69)(cid:229)(cid:75)(cid:69)(cid:89)(cid:229)(cid:84)(cid:65)(cid:82)(cid:71)(cid:69)(cid:84)(cid:229)(cid:70)(cid:79)(cid:82)(cid:229)(cid:18)(cid:16)(cid:17)(cid:16)(cid:13)(cid:17)(cid:17)(cid:12)(cid:229)(cid:87)(cid:65)(cid:83)(cid:229)(cid:84)(cid:79)(cid:229)(cid:80)(cid:82)(cid:79)(cid:65)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:76)(cid:89)(cid:229)(cid:69)(cid:78)(cid:71)(cid:65)(cid:71)(cid:69)(cid:229)(cid:87)(cid:73)(cid:84)(cid:72)(cid:229)(cid:79)(cid:85)(cid:82)(cid:229)(cid:84)(cid:69)(cid:78)(cid:65)(cid:78)(cid:84)(cid:83)(cid:229) to encourage improvements in efﬁciency of use of the buildings. A tenants’ engagement poster has been designed for use within each of the principal managed assets and will be displayed in public areas to help achieve this aim. (cid:115)(cid:229)(cid:229)(cid:55)(cid:69)(cid:229)(cid:67)(cid:79)(cid:78)(cid:84)(cid:73)(cid:78)(cid:85)(cid:69)(cid:229)(cid:84)(cid:79)(cid:229)(cid:79)(cid:70)(cid:70)(cid:69)(cid:82)(cid:229)(cid:82)(cid:69)(cid:67)(cid:89)(cid:67)(cid:76)(cid:73)(cid:78)(cid:71)(cid:229)(cid:70)(cid:65)(cid:67)(cid:73)(cid:76)(cid:73)(cid:84)(cid:73)(cid:69)(cid:83)(cid:229)(cid:65)(cid:84)(cid:229)(cid:65)(cid:76)(cid:76)(cid:229)(cid:79)(cid:85)(cid:82)(cid:229)(cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:68)(cid:229)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:14)(cid:229)(cid:33)(cid:84)(cid:229) Battersea, for instance, the provision of recycling facilities for tenants ensured that on average 25% of the waste generated was recycled. At Shepherds Building, following engagement with the tenants, a number have taken up their own recycling contracts thereby being in direct control of the management of their waste. As a result the waste being disposed to landﬁll has reduced by approximately 30%. Similarly, proactive engagement with tenants at the Hub has increased the proportion of waste being recycled to approximately 40%. In addition, the company is required to comply with the Carbon Reduction Commitment and during 2010-11 has registered for the scheme and undertaken its obligations to date. page 40 Helical Bar plc 2011 corporate responsibility Below we present our utility consumption performance for 4 multi-let buildings under management as well as our head ofﬁce (where data availability permits). Electricity 2008-09 kWh Electricity 2009-10 kWh Electricity 2010 -11 kWh Gas 2008 -09 kWh Gas 2009-10 kWh Gas 2010-11 kWh Water 2008-09 m3 Water 2009-10 m3 Water 2010 -11 m3 11-15 Farm Street, London W1 209,439 161,822 134,531 66,929 78,659 45,904 Battersea Studios, 1 & 2, London SW8 2,226,416 2,398,007 2,250,701 1,194,606 1,331,818 1,255,766 61 Southwark St, London SE1 900,553 906,531 992,777 567,217 567,370 525,614 Shepherds Building, London W14 3,376,730 3,367,740 3,397,545 No gas No gas No gas 3,857 5,366 3,772 9,092 2,800 4,703 6,706 6,989 2,479 5,017 4,506 8,494 The Hub – – 328,436 – – 392,587 – Not available Not available Notes: (cid:115)(cid:229)(cid:47)(cid:78)(cid:76)(cid:89)(cid:229)(cid:49)(cid:19)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:20)(cid:229)(cid:71)(cid:65)(cid:83)(cid:229)(cid:82)(cid:69)(cid:65)(cid:68)(cid:73)(cid:78)(cid:71)(cid:83)(cid:229)(cid:70)(cid:79)(cid:82)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:40)(cid:85)(cid:66)(cid:229)(cid:66)(cid:69)(cid:67)(cid:65)(cid:85)(cid:83)(cid:69)(cid:229)(cid:83)(cid:85)(cid:80)(cid:80)(cid:76)(cid:73)(cid:69)(cid:82)(cid:229)(cid:85)(cid:78)(cid:73)(cid:68)(cid:69)(cid:78)(cid:84)(cid:73)(cid:108)(cid:69)(cid:68)(cid:229)(cid:85)(cid:78)(cid:84)(cid:73)(cid:76)(cid:229)(cid:84)(cid:72)(cid:65)(cid:84)(cid:229)(cid:80)(cid:79)(cid:73)(cid:78)(cid:84) (cid:115)(cid:229)(cid:64)(cid:46)(cid:79)(cid:229)(cid:71)(cid:65)(cid:83)(cid:7)(cid:229)(cid:82)(cid:69)(cid:70)(cid:69)(cid:82)(cid:83)(cid:229)(cid:84)(cid:79)(cid:229)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:229)(cid:87)(cid:72)(cid:69)(cid:82)(cid:69)(cid:229)(cid:71)(cid:65)(cid:83)(cid:229)(cid:73)(cid:83)(cid:229)(cid:78)(cid:79)(cid:84)(cid:229)(cid:85)(cid:83)(cid:69)(cid:68)(cid:229)(cid:79)(cid:78)(cid:229)(cid:83)(cid:73)(cid:84)(cid:69) (cid:115)(cid:229)(cid:64)(cid:13)(cid:7)(cid:229)(cid:82)(cid:69)(cid:70)(cid:69)(cid:82)(cid:83)(cid:229)(cid:84)(cid:79)(cid:229)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:229)(cid:84)(cid:72)(cid:65)(cid:84)(cid:229)(cid:87)(cid:65)(cid:83)(cid:229)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:229)(cid:67)(cid:79)(cid:78)(cid:83)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:229)(cid:65)(cid:84)(cid:229)(cid:84)(cid:73)(cid:77)(cid:69)(cid:229)(cid:79)(cid:70)(cid:229)(cid:68)(cid:65)(cid:84)(cid:65)(cid:229)(cid:82)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:73)(cid:78)(cid:71) (cid:115)(cid:229)(cid:64)(cid:46)(cid:79)(cid:84)(cid:229)(cid:65)(cid:86)(cid:65)(cid:73)(cid:76)(cid:65)(cid:66)(cid:76)(cid:69)(cid:7)(cid:229)(cid:82)(cid:69)(cid:70)(cid:69)(cid:82)(cid:83)(cid:229)(cid:84)(cid:79)(cid:229)(cid:68)(cid:65)(cid:84)(cid:65)(cid:229)(cid:78)(cid:79)(cid:84)(cid:229)(cid:65)(cid:86)(cid:65)(cid:73)(cid:76)(cid:65)(cid:66)(cid:76)(cid:69)(cid:229)(cid:65)(cid:84)(cid:229)(cid:84)(cid:73)(cid:77)(cid:69)(cid:229)(cid:79)(cid:70)(cid:229)(cid:82)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:73)(cid:78)(cid:71)(cid:229)(cid:69)(cid:14)(cid:71)(cid:14)(cid:229)(cid:73)(cid:78)(cid:65)(cid:67)(cid:67)(cid:69)(cid:83)(cid:83)(cid:73)(cid:66)(cid:76)(cid:69)(cid:229)(cid:87)(cid:65)(cid:84)(cid:69)(cid:82)(cid:229)(cid:77)(cid:69)(cid:84)(cid:69)(cid:82)(cid:83) Going forward for 2011 -12, the suitability of the targets will be reviewed against the performance for 2010-11 and revised accordingly to remain challenging yet achievable. Employees As at 31st March 2011, in the UK, we employed a team of 26 people, 38% of whom are women. We continue to enforce our equal opportunities, harassment and sexual discrimination policies. We also continue to monitor compliance with our whistle blowing policy. There have been no incidents to report against this policy to date. High levels of staff retention remains a key feature of our business. Consequently, we retain a highly skilled and experienced team. The table below shows a breakdown of our UK staff by length of service. Directors and management Finance Administration Total number Average length of of service (years) of staff 10 7 9 13 9 6 Our staff retention levels not only reﬂect competitive remuneration and beneﬁts packages but also our commitment to enhancing the professional and personal skills of our team. During 2010-11 we provided an average of 9.33 hours of training per employee, including funding for one staff member to complete a Master’s degree in Real Estate. As in previous years, we continue to evaluate training needs in line with business objectives. Communities Helical takes a strong interest in community issues. Community engagement is an on-going concern throughout the development process, from planning until development completion and operation. The following examples demonstrate how community engagement has beneﬁted the communities that we have worked with over the past year. (cid:115)(cid:229)(cid:229)(cid:55)(cid:69)(cid:229)(cid:72)(cid:65)(cid:86)(cid:69)(cid:229)(cid:77)(cid:65)(cid:68)(cid:69)(cid:229)(cid:65)(cid:229)(cid:78)(cid:85)(cid:77)(cid:66)(cid:69)(cid:82)(cid:229)(cid:79)(cid:70)(cid:229)(cid:73)(cid:78)(cid:13)(cid:75)(cid:73)(cid:78)(cid:68)(cid:229)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:73)(cid:66)(cid:85)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:229)(cid:84)(cid:72)(cid:82)(cid:79)(cid:85)(cid:71)(cid:72)(cid:229)(cid:79)(cid:85)(cid:82)(cid:229)(cid:35)(cid:76)(cid:89)(cid:68)(cid:69)(cid:229) Shopping Centre in Clydebank alongside our joint venture partner Prime Commercial Properties. The Shopping Centre had a week of fundraising events on the week leading up to Comic Relief with Funky Hair Day, Dress Down Day, Guess the Birthday and a Glasgow to London cycle ride involving all staff, stores and the general public to raise cash for Comic Relief. Along with Rymans, Comic Relief pen sales raised £9,500 in the centre. Other initiatives include facilitating public collections for charities such as Guide Dogs for the Blind, the Rotary Club, Marie Curie Daffodil Appeal, Nazareth House and Yorkhill Childrens Foundation. (cid:115)(cid:229)(cid:229)(cid:33)(cid:84)(cid:229)(cid:79)(cid:85)(cid:82)(cid:229)(cid:46)(cid:69)(cid:87)(cid:77)(cid:65)(cid:82)(cid:75)(cid:69)(cid:84)(cid:229)(cid:83)(cid:72)(cid:79)(cid:80)(cid:80)(cid:73)(cid:78)(cid:71)(cid:229)(cid:67)(cid:69)(cid:78)(cid:84)(cid:82)(cid:69)(cid:229)(cid:87)(cid:69)(cid:229)(cid:74)(cid:79)(cid:73)(cid:78)(cid:84)(cid:76)(cid:89)(cid:229)(cid:83)(cid:80)(cid:79)(cid:78)(cid:83)(cid:79)(cid:82)(cid:69)(cid:68)(cid:229)(cid:64)(cid:40)(cid:79)(cid:82)(cid:83)(cid:69)(cid:229)(cid:65)(cid:66)(cid:79)(cid:85)(cid:84)(cid:229) Newmarket’, a community art event, featuring life size acrylic horses, which are creatively designed and painted by local artists, companies and schools. Once completed, the equine works of art will be displayed to the general public at various locations throughout the town. Each horse will have a plaque with the artist and sponsor names. The horses will be displayed from July till autumn, and then they will be auctioned. All proﬁts will be shared between Racing Welfare and St Nicholas Hospice. We allowed a number of the horses to be stored and decorated within the centre. We have also facilitated charitable collections for the RSPB. (cid:115)(cid:229)(cid:229)(cid:41)(cid:68)(cid:76)(cid:69)(cid:87)(cid:69)(cid:76)(cid:76)(cid:83)(cid:229)(cid:51)(cid:72)(cid:79)(cid:80)(cid:80)(cid:73)(cid:78)(cid:71)(cid:229)(cid:35)(cid:69)(cid:78)(cid:84)(cid:82)(cid:69)(cid:12)(cid:229)(cid:51)(cid:85)(cid:84)(cid:84)(cid:79)(cid:78)(cid:13)(cid:73)(cid:78)(cid:13)(cid:33)(cid:83)(cid:72)(cid:108)(cid:69)(cid:76)(cid:68)(cid:229)(cid:72)(cid:65)(cid:83)(cid:229)(cid:67)(cid:79)(cid:78)(cid:86)(cid:69)(cid:82)(cid:84)(cid:69)(cid:68)(cid:229)(cid:65)(cid:229)(cid:76)(cid:79)(cid:78)(cid:71)(cid:13)(cid:84)(cid:69)(cid:82)(cid:77)(cid:229) void unit into an Art Gallery for the local Sutton Centre Community College. They are using it for the exhibition of art work created by their students, and as a base for members of their staff to promote the services offered by the college to the local community. A grand opening was organised, to which the local media were invited. A competition was launched among the student population to suggest a name for the gallery, with the winning name decided as ‘S.C.C.Cribble’ – a play on the college’s initials. Other intiatives include facilitating events for the Ashplorers RSPB Wildlife Explorer group and the Ashﬁeld Fair Share Trust. We continue to make corporate donations to charity. We contributed £12,987 to charitable causes last year, including donations to King Sturge Charitable Trust, Land Aid and the sponsorship of an Under 13 football team. Health & Safety Helical’s Health & Safety policy aims to develop a corporate culture 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 and ensure that health and safety considerations are always given priority in planning and in day-to-day activities. In 2009, we updated our Health & Safety Policy to reﬂect the latest legislative and regulatory developments and there have been no reportable incidents within the portfolio during 2010 -11. All employees are expected to co-operate with the Company to achieve the objectives of this policy and must ensure that their own work, so far as is reasonably practicable, is carried out without risk to themselves or others. The Company is committed to providing relevant information and necessary ongoing training to employees in respect of risks to health and safety, which may arise out of their activities or at their workplace. Our Health & Safety policy can be found on the company website at www. helical.co.uk. Suppliers Fair treatment of suppliers remains a key priority for Helical, particularly in challenging market conditions where smaller suppliers in particular may rely on our payments for balanced cash ﬂow. The company’s policy is to settle all agreed liabilities within the terms established with suppliers. During the past year, our average payment period to suppliers was 14 days. the board of directors and senior management Helical Bar plc 2011 page 41 The Board of Helical Bar plc is collectively responsible for providing the entrepreneurial leadership of the Group within a framework of controls and reporting structures which assist the Group in pursuing its strategic aims and business objectives. The Board of Helical Bar plc comprises ﬁve executive directors and four non-executive directors. Board of Directors and other ofﬁcers Executive directors Chief Executive Michael Slade, BSc (Est Man) FRICS FSVA, joined the Board as an executive director in 1984 and was appointed Chief Executive in 1986. He is President of Land Aid, the property industry charity, Chairman of the Property Forum, a Fellow of the College of Estate Management, Fellow of Wellington College, a Trustee of Purley Park and Sherborne School Foundation and Vice Admiral of the Marie Rose Trust. Mike was given the Property Personality of the Year award at the Property Awards 2011. Aged 64. Finance Director Nigel McNair Scott, MA FCA FCT, joined the Board as a non-executive director in 1985 and was subsequently appointed Finance Director in 1987. He is a former Chairman of Avocet Mining plc and former director of Johnson Matthey plc. Aged 65. Director Gerald Kaye, BSc (Est Man) FRICS, was appointed to the Board as an executive director in 1994 and is responsible for the Group’s development activities. He has been responsible for completing over 4 million sq ft of ofﬁces, retail, leisure and industrial developments. Gerald is the President of the British Council for Ofﬁces, a member of the Investment Advisory Committee of Rockspring Hanover Property Unit Trust and a trustee of The Prince’s Regeneration Trust. He is a former director of London & Edinburgh Trust Plc and former Chief Executive of SPP. LET. EUROPE NV. Aged 53. Director Matthew Bonning-Snook, BSc (Urb Est Surveying) MRICS, was appointed to the Board as an executive director in 2007. Prior to joining Helical in 1995 he worked for Richard Ellis (now CB Richard Ellis), and oversees many of Helical’s ofﬁce and mixed use developments. Aged 43. Director Jack Pitman, MA (Cantab) MRICS, was appointed to the Board as an executive director in 2007. Before joining the Group in 2001 he was a director of Chester Properties Ltd. He is responsible for the Group’s investment activities. Aged 42. Non-executive directors Chairman Giles Weaver, FCA, was appointed to the Board as a non-executive director in 1993 and was appointed Chairman following the 2005 AGM. He is Chairman of the Nominations and Appointments Committee. A past Chairman of Murray Johnstone Ltd, he is Chairman of Tamar European Industrial Fund Limited and a director of Aberdeen Asset Management plc and IRP Property Investments Limited as well as being Chairman or a director of a number of investment companies. Aged 65. Antony Beevor, MBE, BA, was appointed to the Board as a 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 and former Chairman of Croda International Plc, he is a Deputy Chairman of the Takeover Panel. Aged 71. Wilf Weeks, OBE, was appointed to the Board as a non-executive director in 2005. He is a member of the Audit, Remuneration and Nominations and Appointments Committees. Founder and Chairman of GJW Government Relations, he is a former Chairman of European Public Affairs at Weber Shandwick. Aged 63. Andrew Gulliford, BSc (Est.Man), FRICS, was appointed to the Board as a non-executive director in 2006. He is Chairman of the Remuneration Committee and a member of the Audit 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, IRP Property Investments Limited and various other companies. Aged 64. Deputy Finance Director and Company Secretary Tim Murphy, BA (Hons) FCA, joined the Group in 1994. Prior to joining Helical, he worked for accountants Grant Thornton and KPMG. Aged 51. Senior management Duncan Walker, MA (Hons) (Oxon), PG Dip Surveying, joined the Group in 2007 and oversees a portfolio of investments and developments. In particular, he was responsible for the recent acquisition of Helical’s shopping centres and a number of industrial properties. Prior to joining Helical, Duncan led Edinburgh House Estate’s investment team. Aged 32. John Inwood, BSc (Hons) MRICS, joined the Group from Cushman and Wakeﬁeld in 1995 and is the Head of Asset Management. Aged 45. Tom Anderson, BSc (Hons) MRICS, joined the Group in 2009 from Allsops where he worked in the National Investment Team. Aged 32. Oliver Rippier, BA (Hons) MSc Real Estate MRICS, formerly employed by Jones Lang LaSalle and Lloyds Banking Group, joined as a property analyst and development executive in 2010. Aged 29. Alastair Oastler, BSc (Hons) ACA, joined the Group as Financial Controller in 2007 having previously worked for Invensys plc and Compagnie Financiere Richemont SA. Aged 34. page 42 Helical Bar plc 2011 the board of directors and senior management Directors and their interests The directors, all of whom were in ofﬁce during the year, and their interests, all of which were beneﬁcial, in the ordinary shares of the Company are listed below. Other than in respect of the award of shares under the terms of the Company’s Share Incentive Plan on 14 June 2011, there have been no changes in the directors interests in the period from 31 March 2011 to 15 June 2011. Ordinary 1p shares 31 March 2011 Ordinary 1p shares 31 March 2010 The directors are responsible for keeping adequate accounting records that are sufﬁcient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the ﬁnancial position of the Group and enable them to ensure that the ﬁnancial statements comply with the Companies Act 2006 and article 4 of the IAS Regulations. They are also responsible for safeguarding the assets of the Group 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 Group’s auditors are Giles Weaver Michael Slade 132,313 113,794 unaware; and, 13,623,760 13,669,498 – 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. We, the directors listed below, conﬁrm that to the best of our knowledge: – the ﬁnancial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, ﬁnancial position and proﬁt and loss of the group and the undertakings included in the consolidation taken as a whole; and, – the management report includes a fair review of the development and performance of the business and the position of the group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. The directors are responsible for the maintenance and integrity of the corporate and ﬁnancial information included on the Group’s website. Legislation in the United Kingdom governing the preparation and dissemination of ﬁnancial statements may differ from legislation in other jurisdictions. On behalf of the Board Michael Slade Chief Executive Nigel McNair Scott Finance Director 15 June 2011 Nigel McNair Scott 2,706,398 2,518,195 Gerald Kaye 1,526,855 1,449,764 Matthew Bonning-Snook Jack Pitman Antony Beevor Wilf Weeks Andrew Gulliford 276,533 441,319 19,569 7,213 255,004 401,263 14,013 3,509 14,328 8,772 Total directors’ interests 18,748,288 18,433,812 Issued share capital 118,137,522 107,407,522 Percentage of issued share capital 15.9% 17.2% 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. Statement of directors’ responsibilities The directors are responsible for preparing the Annual Report and the ﬁnancial statements in accordance with applicable law and regulations. Company law requires the directors to prepare ﬁnancial statements for each ﬁnancial year. Under that law the directors have to prepare ﬁnancial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs). Under company law the directors must not approve the ﬁnancial statements unless they are satisﬁed that they give a true and fair view of the state of affairs of the Group and Company 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 IFRSs 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. Helical Bar plc 2011 page 43 shareholder information Dividends Takeovers Directive An interim dividend of 1.75p (2010: 1.75p) was paid on 23 December 2010 to shareholders on the shareholder register on 3 December 2010. A ﬁnal dividend of 3.15p (2010: second interim of 2.75p and ﬁnal of 0.25p) per share is recommended for approval at the Annual General Meeting on 26 July 2011. The total ordinary dividend paid in the year of 2.00p (2010: 7.25p) per share amounts to £2,122,000 (2010: £7,657,000). Share Capital At 1 April 2010 there were 107,407,522 ordinary 1p shares in issue. On 8 December 2010 the Company issued 10,730,000 new ordinary 1p shares in a Placing to existing shareholders and other institutions. At 31 March 2011 and 15 June 2011 there were 118,137,522 ordinary shares in issue. Substantial Shareholdings At 9 June 2011, the shareholders listed below had notiﬁed the Company of a disclosable interest of 3% or more in the nominal value of the ordinary share capital of the Group: Michael Slade – Chief Executive Baillie Gifford & Co Ltd Aberdeen Asset Managers Threadneedle Asset Management Number of ordinary shares at 9 June 2011 13,623,760 9,915,933 9,704,402 4,898,117 Legal & General Investment Management 4,356,872 Artemis Investment Management BlackRock Inc. PGGM Investments Dimensional Fund Advisors 4,326,358 4,203,705 4,034,863 3,945,921 % 11.5 8.4 8.2 4.2 3.7 3.7 3.6 3.4 3.3 Where not provided elsewhere in this Directors’ report, the following provides the additional information required for shareholders as a result of the implementation of the Takeovers Directive into English law. The Company’s share capital consists of both ordinary shares and deferred shares. Each class of shares rank pari passu between themselves. Details of the Company’s share capital can be found in note 29 to the ﬁnancial statements. There are no restrictions on the transfer of the ordinary shares in the Company other than certain restrictions which may from time to time be imposed by laws and regulations (for example: insider trading laws) and pursuant to the Listing Rules of the Financial Services Authority whereby certain employees of the Group require the approval of the Company to deal in the ordinary shares. On a show of hands at a general meeting of the Company, every holder of ordinary shares present in person and entitled to vote shall have one vote and on a poll every member present in person or by proxy and entitled to vote shall have one vote for every ordinary share held. The Notice of the Annual General Meeting speciﬁes deadlines for exercising voting rights and appointing a proxy or proxies to vote in relation to resolutions to be passed at the meeting. The rules governing the appointment and replacement of Directors and changes to the articles of association accord with usual English company law provisions. Subject to the Company’s memorandum of association, the articles of association, any statute or subordinate legislation for the time being in force concerning companies and affecting the company, and directions given by special resolution, the business of the Group shall be managed by the Directors, who may exercise all the powers of the Group. Annual general meeting The Annual General Meeting of the Company will be held on 26 July 2011 at 11.30 a.m. at The Connaught, Carlos Place, Mayfair, London W1K 2AL. The notice of meeting and the resolutions to be proposed at that meeting are set out in the enclosed circular and can be found on the Group’s website at www.helical.co.uk. Amendment of articles of association The Company’s articles of association can be amended only by a special resolution of the members, requiring a majority of not less than 75% of such members voting in person or by proxy. Grant Thornton UK LLP have expressed their willingness to continue in ofﬁce. In accordance with section 489(4) of the Companies Act 2006 a resolution to reappoint Grant Thornton UK LLP will be proposed at the Annual General Meeting. Auditors page 44 Helical Bar plc 2011 corporate governance report The Combined Code The Group is committed to applying the highest principles of corporate governance and, except where stated, has complied throughout the year with the Code provisions set out in Section I of the Combined Code (2008). The Group will look to implement the additional provisions incorporated in the UK Corporate Governance Code, issued in June 2010, during 2011 and has chosen to adopt at this year’s Annual General Meeting, the requirement that all directors should be subject to annual re-election by shareholders. The Group also takes into account the corporate governance guidelines of institutional shareholders and their representative bodies. The Board is accountable to the Group’s shareholders for good corporate governance. This report and the Directors’ Remuneration Report describe how the Group complies with the provisions of the Combined Code (2008) (the “Code”). Board of Directors Compliance Helical has 26 employees in the UK, including ﬁve executive directors. It operates with a strong management team of senior decision-makers backed up by ﬁnance and other support staff. Given its size the Board do not consider it appropriate to operate both a main board and a separate executive committee, a structure commonly seen in larger companies. However, despite its size, the Group is keen to promote exceptional talent to Board level at the earliest opportunity to expose such individuals to the broader issues facing the business, encourage their long term commitment to the Group and to provide for future succession. It is for these reasons that Helical’s Board of ﬁve executive directors’ is larger than those of other comparable listed real estate companies. Code provision A.3 requires a Board to have a balance of executive and non-executive directors and A.3.2 stipulates that at least half the Board, excluding the Chairman, should comprise independent non- executive directors. In the Group’s view, this provision would, given the number of executive directors as noted above, create an unnecessarily large and unwieldy Board. Accordingly, it has long held the view that the appointment of non-executive directors should reﬂect a desire to add complementary skills and experience to the Board and not be driven by a requirement to match the number of executive directors, provided always that the interests of shareholders and other stakeholders are adequately protected. In the Board’s view, the current composition of the Board meets the criteria that it is comprised of directors with the appropriate balance of skills, experience, independence and knowledge of the Group to enable it to discharge its duties and responsibilities effectively. However, given the requirements of A.3.2, the Group is actively seeking to further strengthen the Board and has appointed an independent search ﬁrm, Hanson Green, to assist in the recruitment of a new non-executive director. Chairman and Chief Executive The Chairman and the Chief Executive collectively are responsible for the leadership of the Company. The Chairman’s primary responsibility is for leading the Board and ensuring its effectiveness, whilst the Chief Executive is responsible for running the Company’s business. The division of responsibilities is clearly established at Helical, is set out in writing and approved by the Board. The Chairman of Helical is Giles Weaver and the Chief Executive is Michael Slade. Board composition The Board currently consists of a Chairman, ﬁve executive directors and three independent non-executive directors. The Chairman, Giles Weaver, has been a non-executive director of Helical since 1993 and was appointed Chairman in July 2005. He is a Chartered Accountant by training and has had a career in the ﬁnancial services sector, including as a current and former Chairman or director of several listed companies in that sector. The experience he brings to the Group and the skills of leadership and guidance shown in Board meetings, together with his detachment from day-to-day issues within the Group, provide the Board with the necessary comfort that despite his time as a non-executive director, he provides an independent approach to the role of Chairman of Helical. Giles Weaver is Chairman of the Nominations and Appointments Committee. The Senior Independent Director is Antony Beevor who was ﬁrst appointed to the Board in April 2000. He is a solicitor by training and worked in the City throughout his career, most recently as Head of Corporate Finance at Hambros Bank. A former Chairman of Croda International Plc, he is currently a Deputy Chairman of the Takeover Panel. He was awarded an MBE in January 2010 for services to Fairbridge youth charity. Antony Beevor is Chairman of the Audit Committee and a member of the Remuneration and Nominations and Appointments Committees. He has served on the Board for more than nine years and accordingly the company has considered whether there are any reasons why he should not be regarded as independent. In the view of the Board, Antony Beevor continues to provide a robustly independent approach to his position as a non-executive director and to his roles as Senior Independent Director and Chairman of the Audit Committee. For this reason the Board continues to regard Antony Beevor as an independent non-executive director. Wilf Weeks has been a non-executive director of Helical since April 2005. A former Chairman of European Public Affairs at Weber Shandwick he provides the Board with an in-depth understanding of central and local government and the Civil Service. He is a member of the Audit, Remuneration and Nominations and Appointments Committees. Andrew Gulliford has been a non-executive director of Helical since March 2006. A former Deputy Senior Partner of Healey & Baker (now Cushman & Wakeﬁeld) he headed up their Investment Group. He is Chairman of the Remuneration Committee and a member of the Audit and Nominations and Appointments Committees. corporate governance report Helical Bar plc 2011 page 45 Board responsibilities The Group supports the concept of an effective Board leading and controlling the Group. 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 Group’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 pages 41 and 44. All directors take decisions objectively in the interests of the Group. As part of their roles as members of the Board, non-executive directors constructively challenge and help develop proposals on strategy and the risk appetite of the Group. 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 Boardroom discussions, the Chairman contacts other non-executive directors by telephone and, if appropriate, will hold meetings with the non executive directors without the executive directors present. (cid:115)(cid:229) (cid:229)(cid:51)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:85)(cid:82)(cid:69)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:67)(cid:65)(cid:80)(cid:73)(cid:84)(cid:65)(cid:76)(cid:229)(cid:110)(cid:229)(cid:67)(cid:72)(cid:65)(cid:78)(cid:71)(cid:69)(cid:83)(cid:229)(cid:84)(cid:79)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:39)(cid:82)(cid:79)(cid:85)(cid:80)(cid:7)(cid:83)(cid:229)(cid:67)(cid:65)(cid:80)(cid:73)(cid:84)(cid:65)(cid:76)(cid:229)(cid:83)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:85)(cid:82)(cid:69)(cid:27)(cid:229)(cid:77)(cid:65)(cid:74)(cid:79)(cid:82)(cid:229) changes to the Group’s corporate structure; changes to the Group’s management and control structure; changes to the Group’s listing or plc status. (cid:115)(cid:229) (cid:229)(cid:38)(cid:73)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:229)(cid:82)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:73)(cid:78)(cid:71)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:79)(cid:76)(cid:83)(cid:229)(cid:110)(cid:229)(cid:65)(cid:80)(cid:80)(cid:82)(cid:79)(cid:86)(cid:65)(cid:76)(cid:229)(cid:79)(cid:70)(cid:229)(cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:73)(cid:77)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:80)(cid:82)(cid:69)(cid:76)(cid:73)(cid:77)(cid:73)(cid:78)(cid:65)(cid:82)(cid:89)(cid:229) 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. (cid:115)(cid:229) (cid:229)(cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:229)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:79)(cid:76)(cid:83)(cid:229)(cid:110)(cid:229)(cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:229)(cid:77)(cid:65)(cid:73)(cid:78)(cid:84)(cid:69)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:229)(cid:79)(cid:70)(cid:229)(cid:65)(cid:229)(cid:83)(cid:79)(cid:85)(cid:78)(cid:68)(cid:229)(cid:83)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:229)(cid:79)(cid:70)(cid:229)(cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:229) control and risk management. (cid:115)(cid:229) (cid:229)(cid:35)(cid:79)(cid:77)(cid:77)(cid:85)(cid:78)(cid:73)(cid:67)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:229)(cid:110)(cid:229)(cid:65)(cid:80)(cid:80)(cid:82)(cid:79)(cid:86)(cid:65)(cid:76)(cid:229)(cid:79)(cid:70)(cid:229)(cid:82)(cid:69)(cid:83)(cid:79)(cid:76)(cid:85)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:68)(cid:79)(cid:67)(cid:85)(cid:77)(cid:69)(cid:78)(cid:84)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:229)(cid:84)(cid:79)(cid:229)(cid:66)(cid:69)(cid:229) put to shareholders in general meeting; approval of press releases concerning matters decided by the Board. (cid:115)(cid:229) (cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:229)(cid:77)(cid:69)(cid:77)(cid:66)(cid:69)(cid:82)(cid:83)(cid:72)(cid:73)(cid:80)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:79)(cid:84)(cid:72)(cid:69)(cid:82)(cid:229)(cid:65)(cid:80)(cid:80)(cid:79)(cid:73)(cid:78)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:229)(cid:84)(cid:79)(cid:229)(cid:83)(cid:69)(cid:78)(cid:73)(cid:79)(cid:82)(cid:229)(cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:14) (cid:115)(cid:229) (cid:34)(cid:79)(cid:84)(cid:72)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:65)(cid:80)(cid:80)(cid:79)(cid:73)(cid:78)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:82)(cid:69)(cid:77)(cid:79)(cid:86)(cid:65)(cid:76)(cid:229)(cid:79)(cid:70)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:229)(cid:51)(cid:69)(cid:67)(cid:82)(cid:69)(cid:84)(cid:65)(cid:82)(cid:89)(cid:14) (cid:115)(cid:229) (cid:229)(cid:35)(cid:79)(cid:82)(cid:80)(cid:79)(cid:82)(cid:65)(cid:84)(cid:69)(cid:229)(cid:71)(cid:79)(cid:86)(cid:69)(cid:82)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:229)(cid:77)(cid:65)(cid:84)(cid:84)(cid:69)(cid:82)(cid:83)(cid:229)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:73)(cid:78)(cid:71)(cid:229)(cid:68)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)(cid:7)(cid:229)(cid:80)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:78)(cid:67)(cid:69)(cid:229) evaluations. (cid:115)(cid:229) (cid:229)(cid:33)(cid:80)(cid:80)(cid:82)(cid:79)(cid:86)(cid:65)(cid:76)(cid:229)(cid:79)(cid:70)(cid:229)(cid:80)(cid:79)(cid:76)(cid:73)(cid:67)(cid:73)(cid:69)(cid:83)(cid:229)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:73)(cid:78)(cid:71)(cid:229)(cid:67)(cid:79)(cid:68)(cid:69)(cid:229)(cid:79)(cid:70)(cid:229)(cid:67)(cid:79)(cid:78)(cid:68)(cid:85)(cid:67)(cid:84)(cid:229)(cid:73)(cid:78)(cid:67)(cid:79)(cid:82)(cid:80)(cid:79)(cid:82)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:229) whistle-blowing procedures; share dealing code; health and safety policy; environmental and corporate social responsibility policy; implementation of procedures required by the Bribery Act 2010 and equal opportunity policy. In addition to ad hoc meetings arranged to discuss particular transactions and events and the 2010 AGM, the full Board met on ﬁve occasions during the year under review. The attendance record of the directors is shown in the table below. 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. 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 Group, 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: 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. Schedule of matters reserved for the Board: (cid:115)(cid:229) (cid:229)(cid:51)(cid:84)(cid:82)(cid:65)(cid:84)(cid:69)(cid:71)(cid:89)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:229)(cid:110)(cid:229)(cid:82)(cid:69)(cid:83)(cid:80)(cid:79)(cid:78)(cid:83)(cid:73)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:229)(cid:70)(cid:79)(cid:82)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:79)(cid:86)(cid:69)(cid:82)(cid:65)(cid:76)(cid:76)(cid:229)(cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:229) 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. The Board ensures that directors, especially non-executive directors, have access to independent professional advice at the Group’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 Group has arranged appropriate insurance cover in case of legal action against its directors. Meetings Full Board Audit Committee Remuneration Committee Nominations and Appointments Committee Giles Weaver Michael Slade Nigel McNair Scott Matthew Bonning- Snook Gerald Kaye Jack Pitman Antony Beevor Wilf Weeks Andrew Gulliford 5 n/a n/a 1 5 n/a n/a n/a 4 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 2 3 1 5 2 3 1 5 2 3 1 page 46 Helical Bar plc 2011 corporate governance report Directors – performance evaluation 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, of each member of the Board and in respect of each Board Committee of which they are a member. The non-executive directors, led by the Senior Independent Director, are responsible for the performance evaluation of the Chairman, taking into account views of executive directors. Each director completes an evaluation of the Chairman’s performance and provides this evaluation to the senior independent non-executive director. During the year the Board undertook a formal evaluation of its own performance and that of its Committees and individual directors in the period and the Chairman reported the results of that evaluation process to the Board. There were no signiﬁcant matters arising out of the annual evaluation process which required action by the Board. The Senior Independent Director reported that there were no matters arising from the evaluation of the Chairman that necessitated any action or required a meeting to be held without the Chairman present. Relations with shareholders The Group values the views of its shareholders and recognises their interest in the Group’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 Group also regularly meets, with the help of its brokers, institutions that do not currently hold shares in the Group to inform them of its objectives. During the year Antony Beevor and Andrew Gulliford met with shareholders to discuss certain matters relating to the Group. 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 Group 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 Group communicates with all shareholders through the issue of regular press releases and through its website at www.helical.co.uk. The Group receives regular reports from sector analysts and its investor relations advisors on how it is viewed by its shareholders. Nominations and Appointments Committee The terms of reference of the Nominations and Appointments Committee are available by request and are included on the Group’s website at www. helical.co.uk. The membership of the Committee is as follows: Giles Weaver (Chairman) Antony Beevor Wilf Weeks Andrew Gulliford 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 and Appointments Committee controls the process for Board appointments and makes recommendations to the Board. Directors’ re-election The Board has decided to fulﬁl the requirement of Code Provision B.7.I of the UK Corporate Governance Code, issued in June 2010 and applicable in full for all accounting periods beginning on or after 29 June 2010. This provision requires all directors of FTSE350 companies to be subject to annual re-election by shareholders. Whilst the Company is no longer in the FTSE350 the Board has chosen to comply with this provision as it accepts that shareholders should annually have the right to vote on each director’s re-election to the board. The Nominations and Appointments Committee conﬁrms to shareholders that, following the annual formal performance evaluation, these directors continue to be effective and demonstrate commitment to their roles. Biographical details of the directors are given on pages 41 and 44. The work of the Nominations and Appointments Committee in the year The Committee met once during the period and a record of attendance at this meeting is shown above. During this meeting the Committee resolved that Giles Weaver, Antony Beevor, and Gerald Kaye be recommended to shareholders for re-appointment as directors at the 2010 AGM. corporate governance report Helical Bar plc 2011 page 47 Accountability and audit Financial reporting The Board presents a balanced and understandable assessment of the Group’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 The directors have reviewed the current and projected ﬁnancial position of the Group making reasonable assumptions about future trading performance. The key areas of sensitivity are: (cid:115)(cid:229) (cid:84)(cid:73)(cid:77)(cid:73)(cid:78)(cid:71)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:86)(cid:65)(cid:76)(cid:85)(cid:69)(cid:229)(cid:79)(cid:70)(cid:229)(cid:80)(cid:82)(cid:79)(cid:80)(cid:69)(cid:82)(cid:84)(cid:89)(cid:229)(cid:83)(cid:65)(cid:76)(cid:69)(cid:83) (cid:115)(cid:229) (cid:65)(cid:86)(cid:65)(cid:73)(cid:76)(cid:65)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:229)(cid:79)(cid:70)(cid:229)(cid:76)(cid:79)(cid:65)(cid:78)(cid:229)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:82)(cid:69)(cid:76)(cid:65)(cid:84)(cid:69)(cid:68)(cid:229)(cid:67)(cid:65)(cid:83)(cid:72)(cid:229)(cid:109)(cid:79)(cid:87)(cid:83) (cid:115)(cid:229) (cid:229)(cid:70)(cid:85)(cid:84)(cid:85)(cid:82)(cid:69)(cid:229)(cid:80)(cid:82)(cid:79)(cid:80)(cid:69)(cid:82)(cid:84)(cid:89)(cid:229)(cid:86)(cid:65)(cid:76)(cid:85)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:73)(cid:84)(cid:83)(cid:229)(cid:73)(cid:77)(cid:80)(cid:65)(cid:67)(cid:84)(cid:229)(cid:79)(cid:78)(cid:229)(cid:67)(cid:79)(cid:86)(cid:69)(cid:78)(cid:65)(cid:78)(cid:84)(cid:83)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:80)(cid:79)(cid:84)(cid:69)(cid:78)(cid:84)(cid:73)(cid:65)(cid:76)(cid:229) loan repayments (cid:115)(cid:229) (cid:67)(cid:79)(cid:77)(cid:77)(cid:73)(cid:84)(cid:84)(cid:69)(cid:68)(cid:229)(cid:70)(cid:85)(cid:84)(cid:85)(cid:82)(cid:69)(cid:229)(cid:69)(cid:88)(cid:80)(cid:69)(cid:78)(cid:68)(cid:73)(cid:84)(cid:85)(cid:82)(cid:69)(cid:229) (cid:115)(cid:229) (cid:70)(cid:85)(cid:84)(cid:85)(cid:82)(cid:69)(cid:229)(cid:82)(cid:69)(cid:78)(cid:84)(cid:65)(cid:76)(cid:229)(cid:73)(cid:78)(cid:67)(cid:79)(cid:77)(cid:69)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:80)(cid:79)(cid:84)(cid:69)(cid:78)(cid:84)(cid:73)(cid:65)(cid:76)(cid:229)(cid:66)(cid:65)(cid:68)(cid:229)(cid:68)(cid:69)(cid:66)(cid:84)(cid:83) (cid:115)(cid:229) (cid:82)(cid:69)(cid:80)(cid:65)(cid:89)(cid:77)(cid:69)(cid:78)(cid:84)(cid:229)(cid:84)(cid:73)(cid:77)(cid:73)(cid:78)(cid:71)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:86)(cid:65)(cid:76)(cid:85)(cid:69)(cid:229)(cid:79)(cid:70)(cid:229)(cid:84)(cid:82)(cid:65)(cid:68)(cid:69)(cid:229)(cid:82)(cid:69)(cid:67)(cid:69)(cid:73)(cid:86)(cid:65)(cid:66)(cid:76)(cid:69)(cid:83) The forecast cashﬂows have been sensitised to eliminate those cash inﬂows which are less certain and to take account of a further deterioration of property valuations. From their review the directors believe that the Group has adequate resources to continue to be operational as a going concern for the foreseeable future. Audit Committee and auditors The terms of reference of the Audit Committee are available by request and are included on the Group’s website at www.helical.co.uk. It is common practice at Helical for Audit Committee meetings to be attended by all Board members who are available, whether or not they are members of the Audit Committee so that their input may be obtained. Internal control The Board is responsible for maintaining a sound system of internal control to safeguard shareholders’ investment and the Group’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 Group’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 receives regular and comprehensive reports on the day-to-day running of the business; – an Audit Committee which meets with the auditors and deals with any signiﬁcant internal control matter. In the year under review the Committee met with the Auditors on two occasions. Internal audit The Board reviewed its position during the year to 31 March 2011 and reafﬁrmed its stance that in view of the relatively small size of the Group it does not consider that an Internal Audit function would provide any signiﬁcant additional assistance in maintaining a system of internal controls. The membership of the Committee is as follows: Audit independence A policy of reviewing audit independence has been adopted whereby non-audit services undertaken by the auditors are approved prior to work being carried out. During the year under review non-audit services comprised a review of ﬁnancial performance as required by the Group’s Performance Share Plan. The audit committee considers the external auditors to be independent and has satisﬁed itself of the effectiveness of the external auditors. The Group’s policy on awarding non-audit work to its auditors is designed to ensure that the Group receives the most appropriate advice without compromising the independence of the auditors. Whilst no fee caps or limits have been set by the Committee, the level of fees would be a factor in considering whether the auditors’ independence could be affected by the award of non-audit work. Giles Weaver Chairman, on behalf of the Board Antony Beevor (Chairman) Wilf Weeks Andrew Gulliford The Committee endorses the principles set out in the FRC Guidance on Audit Committees. The Board has formal and transparent arrangements for considering how it applies the Group’s ﬁnancial reporting and internal control principles and for maintaining an appropriate relationship with its auditors. Whilst all directors have a duty to act in the interests of the Group, 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 twice during the year. A record of attendance at these meetings is shown on page 45. The Audit Committee met the external auditors on both occasions to discuss matters arising from the annual and interim audits, and with the executive board members and Chairman, reviewed and approved: – the ﬁnancial statements of the Group and the Preliminary Announcement of the annual results to 31 March 2010 and the Interim Statement on the half year results to 30 September 2010; – the re-appointment of the Group’s external auditors; and, – the external auditors independence and the provision of non-audit services by the external auditors. page 48 Helical Bar plc 2011 directors’ remuneration report The Board recognises that directors’ remuneration is of legitimate concern to shareholders and is committed to following current best practice. This report has been prepared in accordance with the Companies Act 2006 and Schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008. It has been approved by the Board and will be submitted to shareholders for approval at the Group’s Annual General Meeting to be held on 26 July 2011. Grant Thornton LLP has audited the disclosures of directors’ remuneration and share awards on pages 50 to 53. Remuneration Committee The terms of reference of the Remuneration Committee are available on request and are included on the Group’s website at www.helical.co.uk. Remuneration Committee responsibilities The Remuneration Committee (“Committee”) has responsibility for determining and agreeing with the Board the framework or broad policy for the remuneration of the Chairman, Chief Executive and the Executive Directors and, subject to proposals submitted by the Chief Executive, shall recommend and monitor the level and structure of remuneration for such other members of the senior management as report directly to the Board. The remuneration of Non-Executive Directors shall be a matter for the Chairman and the Executive Directors to be decided at a meeting of the Board. In determining such policy, the Committee shall take into account all factors which it deems necessary. The objective of the remuneration policy shall be to ensure that Executive Directors and senior management are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the Group. Within the terms of the agreed policy, the Committee shall determine, for the Executive Directors: (cid:115)(cid:229) (cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:84)(cid:79)(cid:84)(cid:65)(cid:76)(cid:229)(cid:73)(cid:78)(cid:68)(cid:73)(cid:86)(cid:73)(cid:68)(cid:85)(cid:65)(cid:76)(cid:229)(cid:82)(cid:69)(cid:77)(cid:85)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:229)(cid:80)(cid:65)(cid:67)(cid:75)(cid:65)(cid:71)(cid:69)(cid:83)(cid:229)(cid:79)(cid:70)(cid:229)(cid:69)(cid:65)(cid:67)(cid:72)(cid:229)(cid:37)(cid:88)(cid:69)(cid:67)(cid:85)(cid:84)(cid:73)(cid:86)(cid:69)(cid:229)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:229) including, where appropriate, basic salaries, bonuses, share awards, pensions and other beneﬁts; (cid:115)(cid:229) (cid:84)(cid:65)(cid:82)(cid:71)(cid:69)(cid:84)(cid:83)(cid:229)(cid:70)(cid:79)(cid:82)(cid:229)(cid:65)(cid:78)(cid:89)(cid:229)(cid:80)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:78)(cid:67)(cid:69)(cid:229)(cid:82)(cid:69)(cid:76)(cid:65)(cid:84)(cid:69)(cid:68)(cid:229)(cid:82)(cid:69)(cid:77)(cid:85)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:229)(cid:83)(cid:67)(cid:72)(cid:69)(cid:77)(cid:69)(cid:83)(cid:27)(cid:229)(cid:65)(cid:78)(cid:68)(cid:12) (cid:115)(cid:229) (cid:229)(cid:83)(cid:69)(cid:82)(cid:86)(cid:73)(cid:67)(cid:69)(cid:229)(cid:65)(cid:71)(cid:82)(cid:69)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:229)(cid:73)(cid:78)(cid:67)(cid:79)(cid:82)(cid:80)(cid:79)(cid:82)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:229)(cid:84)(cid:69)(cid:82)(cid:77)(cid:73)(cid:78)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:229)(cid:80)(cid:65)(cid:89)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229) compensation commitments. In determining such packages and arrangements the Committee gives due regard to the recommendations of the Combined Code and the UK Listing Authority’s Listing Rules. Members of the Committee The Committee is chaired by Andrew Gulliford. The remaining members of the Committee are Antony Beevor and Wilf Weeks. All 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 interests arising from cross-directorships nor any day-to-day involvement in running the business. Advisors to the Committee The Committee consults the Chief Executive and Finance Director about its proposals and has access to professional advice from Hewitt New Bridge Street to help it determine appropriate remuneration levels. Remuneration Committee meetings during the year During the year the Committee met on three occasions to consider and approve the Directors’ Remuneration Report for the year to 31 March 2010, approve the terms of the Helical Bar 2010 Approved Share Option Scheme, approve the making and vesting of share awards under the terms of the Group’s Performance Share Plan and the annual review of salaries and bonuses. Remuneration policy The Group 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 Group’s position as a market leader and to reward them for enhancing shareholder value and returns. The performance measurement of the Executive Directors and the determination of their annual remuneration package is undertaken by the Committee. In determining remuneration packages the Committee considers Group and individual performance and responsibility levels and remuneration at comparable companies within the property sector. It also takes into account the remuneration structure below Board level. 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. A substantial proportion of the maximum level of total remuneration available to the executive directors upon full vesting of all share awards and payment of cash bonuses is dependent on corporate and individual performance. In setting the remuneration of directors the Committee seeks to agree basic salary levels below the median for the listed real estate sector. This policy helps to limit ﬁxed costs, including associated employment costs such as national insurance. In addition, the Group makes no pension payments in respect of its directors, who are obliged to provide for their retirement through basic salary and performance related payments. Performance related cash bonus schemes operate for all Executive Directors. The Chief Executive and Finance Director participate in the Executive Bonus Plan from which bonuses are payable on the satisfaction of corporate targets and hurdles. The remaining directors participate in a cash bonus scheme which has speciﬁc hurdles to meet before bonuses start to accrue. Bonuses are paid based on individual performance during the year. These two schemes are designed to supplement the annual salary of the Executive Directors by making cash payments when performance criteria have been met. Share incentives are designed so that they recognise the long-term growth of the Group. The performance periods are longer term, being three to ﬁve years, and participants receive shares in Helical if performance criteria are met. Share incentive schemes are also designed to encourage long term investment in Helical by the directors. Participants in the Group’s Performance Share Plan are required to retain any shares which vest until they own shares to the value of 2x salary for Directors. In addition, and whilst it is not a condition of their award, Directors are encouraged to retain the shares received on the vesting of share awards, net of any requirements to pay personal taxes. To date, all shares received by the Executive Directors under the terms of the group’s Performance Share Plan and Share Incentive Plan have been retained, net of taxes paid, thereby increasing the management’s shareholding in Helical. Executive Directors’ remuneration packages Performance related cash bonus payments directors’ remuneration report Helical Bar plc 2011 page 49 The Committee establishes the objectives which must be met for performance related cash bonuses to be paid. The calculations of the performance related cash bonuses payable to each participant are directly related to the proﬁts generated by the participants. In each case these proﬁts are recognised in the accounts of the year in which the bonus is accrued and these proﬁts will have been received by the time the bonuses are paid. Any losses on other projects are deducted from the proﬁts, as are all costs directly attributable to the generation of the proﬁts, including all ﬁnance costs and an apportionment of central overheads. The net proﬁts generated by each participant are available as a bonus pool and bonus payments are made based on individual performance. Bonuses are calculated in a range of 0 to 10% of the bonus pool with appropriate percentages depending on the level of equity contributed to each property and risks assumed. Gerald Kaye, Matthew Bonning-Snook and Jack Pitman were eligible for performance related cash bonuses in the period under review. The maximum amount payable in each year is a total of £5m. Payment of these performance related cash bonuses is at the discretion of the Committee. In the year under review a performance related cash bonus was paid to only one director. Gerald Kaye received a bonus of £542,000. Executive Bonus Plan During the year the Group operated an Executive Bonus Plan (“2006 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 Group’s property portfolio. The Plan operated over a ﬁve year period from 1 April 2006 and cash bonuses were paid annually subject to the achievement of challenging performance targets. Michael Slade and Nigel McNair Scott were eligible for Executive Bonus Plan bonuses. No Executive Plan Bonuses have been paid in respect of the year to 31 March 2011 (2010: nil). Included in the proposals to be put forward by the Company at the AGM to be held on 26 July 2011, is a resolution to renew the Executive Bonus Plan for a further ﬁve years with the same rules and criteria as used for the 2006 Plan. The proposed Executive Bonus Plan (“2011 Plan”) is to be adopted from 1 April 2011, if approved by shareholders, and Michael Slade and Nigel McNair Scott will be eligible for bonuses under the 2011 Plan. The rules of the 2011 Plan will be as follows: As explained earlier, there are three main elements to the Executive Directors’ remuneration packages: i basic annual salary and beneﬁts-in-kind; ii cash bonus payments, both performance related payments and those made in accordance with the terms of the Executive Bonus Plan; and, iii share awards, being the Performance Share Plan and the all-employee Share Incentive Plan. Basic annual salary and beneﬁts-in-kind Basic annual salaries for Executive Directors reﬂect their responsibilities and experience. They are set at a level below the median of other quoted real estate companies. Basic salary levels were last increased on 1 July 2009 and the Committee agreed with all Executive and Non-Executive Directors’ that there would be no increases in basic salary during the year to 31 March 2011. Executive Directors’ annual basic salaries in the year to 31 March 2011 were: Michael Slade Nigel McNair Scott Gerald Kaye Matthew Bonning-Snook Jack Pitman £ 500,000 335,000 325,000 275,000 275,000 Beneﬁts-in-kind provided to Executive Directors comprise the provision of a company car and health insurance. The Group makes no pension contributions in respect of the Executive Directors. Balance of ﬁxed versus variable pay In line with its policy, the Committee seeks to ensure that the balance of remuneration provides a basic salary below the median, and performance related bonuses and share awards that reward outperformance of the Group’s peer group. In the year to 31 March 2011 the balance of ﬁxed versus variable pay on an actual basis for the Executive Directors compared to the maximum payable was as follows: Basic salaries and beneﬁts in-kind Annual cash bonus payments Executive Bonus Plan Share awards Actual £ Maximum £ 1,861,000 77% 1,861,000 17% 542,000 23% 5,000,000 46% – – 0% 2,000,000 18% 0% 2,134,000 19% 2,403,000 100% 10,995,000 100% Note: Share awards reﬂect the market value of shares that vested during the year in accordance with the terms of the Group’s Performance Share Plan. page 50 Helical Bar plc 2011 directors’ remuneration report 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 the ﬁnancial growth of the Group over that ﬁnancial year. 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”). 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 £2m 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% 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 year. Financial accounts The audited ﬁnancial accounts which record the ﬁnancial performance on which the Plan operates are those accounts prepared in accordance with International Financial Reporting Standards. 2011 Plan and individual limits The total amount payable under the 2011 Plan in any one year will be limited to £2m (2010: £2m). An individual employee’s participation in the 2011 Plan will be limited so that the bonus which may be paid to him under the 2011 Plan will not exceed £1.5m per annum. There is a further limit that payments under the 2011 Plan in any year may not exceed 20% of the Group’s pre-tax proﬁts plus any payments under the 2011 Plan. Among other constraints the Committee could restrict the bonuses if payment would affect the ﬁnancial or trading position of the Group. 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 2011 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. 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. Information subject to audit: Remuneration of directors Share awards Share options The Helical Bar 2010 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. This scheme was approved by shareholders at the 2010 Annual General Meeting and no options have yet been granted to employees. Share price The market price of the ordinary shares at 31 March 2011 was 270.8p (2010: 337.9p). This market price varied between 262.0p and 358.8p during the year. directors’ remuneration report Helical Bar plc 2011 page 51 Performance share plan At the 2004 AGM the Group received approval for the adoption of a Performance Share Plan (“PSP”). General The operation of the PSP is supervised by 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 Group 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 Group 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. An award consists of the right to acquire shares in the Group 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 Group’s net asset value per share and the other based on the gross (ungeared) 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). Applicable conditions (a) Absolute net asset value per share (having added back dividends) condition Annual compound increase after three years % of award vesting 15% p.a. or more 66.7 Between 7.5% p.a. and 15% p.a. Pro rata between 6.7 and 66.7 7.5% p.a. Below 7.5% p.a. 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. page 52 Helical Bar plc 2011 directors’ remuneration report (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. Share awards will lapse 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. 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 Group (measured as the increase in the net asset value plus cash returned as dividends to shareholders) that could accrue to all executives through the Group’s long and short-term incentive and bonus plans at the point at which the maximum awards vest might be of the order of 20%. At this point, in absolute terms, the Group will have increased its triple net asset value by at least 15% per annum with the Group’s relative performance placing it in the top quartile of IPD, over the three year period. Vesting of Awards During the year the performance conditions relating to the fourth award, granted on 6 July 2007, were considered. The three year performance period to 31 March 2010 showed that the net asset value per share, calculated in accordance with the terms of the PSP, had reduced by 4.6% p.a. During this three year period the total return of Helical’s property portfolio, as determined by IPD, was 0.0% compared to the upper quartile of the IPD Benchmark which had reduced by 5.3%. Therefore, although the IPD comparison performance criteria had been met, no shares could vest as the net asset value per share had fallen. Awards made to directors under the terms of the PSP which have not yet vested are as follows: Director Michael Slade Nigel McNair Scott Gerald Kaye Matthew Bonning-Snook Jack Pitman Shares awarded 14.07.08 at 276.25p Shares awarded 09.07.09 at 300.25p Shares awarded 13.07.10 at 276.10p Total shares awarded Total award value £ 325,792 499,584 543,281 1,368,657 3,900,000 217,195 334,721 363,998 915,914 2,610,000 298,643 324,729 353,132 976,504 2,775,000 255,204 274,771 298,804 828,779 2,355,000 255,204 274,771 298,804 828,779 2,355,000 It is currently expected that no shares will vest in respect of the share awards made on 14 July 2008 and 9 July 2009 and that 33% of the shares awarded on 13 July 2010 will vest. 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 Group 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 Group. Provided participants remain employed by the Group 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 Matthew Bonning-Snook Jack Pitman Shares held by the Trustees of the Plan at 31 March 2011 were 315,624 (2010: 223,624). 1,919 1,919 1,919 1,915 1,919 1,099 1,099 1,098 1,096 1,099 1,917 1,917 1,917 1,917 1,917 8 June 2010 7 January 2011 14 June 2011 at 254.6p at 282.0p at 284.0p Directors’ Remuneration Remuneration in respect of the directors was as follows: directors’ remuneration report Helical Bar plc 2011 page 53 Salary/ Beneﬁts- Cash in-kind bonuses £000 £000 2011 Total £000 Salary/ Beneﬁts- fees £000 Cash in-kind bonuses £000 £000 2010 2010 2011 Total Pensions Pensions £000 £000 £000 Salaries and bonuses Chairman Giles Weaver Non-executive directors Antony Beevor Wilf Weeks Andrew Gulliford Executive directors Michael Slade Nigel McNair Scott Gerald Kaye Matthew Bonning-Snook Jack Pitman Former Director Michael Brown fees £000 75 42 35 42 500 335 325 275 275 – – – – – 75 75 – – 42 35 – 42 42 35 36 38 – 538 488 32 – 367 326 36 542 903 312 21 – 296 265 24 – 299 265 – – – – 39 34 34 20 20 – – – – – – – 75 42 35 36 527 360 346 880 1,165 – – 285 79 – – – – – – – – – – – – – – – – – – – – – – – – – – 74 5 1,904 151 542 2,597 1,918 152 880 2,950 Gerald Kaye was the highest paid director during the year with a total remuneration of £903,000 (2010: Michael Slade £1,890,000 including gains on share awards). Directors Fees Fees receivable by Nigel McNair Scott in his capacity as former Chairman of Avocet Mining Plc are shown in the ﬁnancial statements of that Company. Share awards Executive directors Michael Slade Nigel McNair Scott Gerald Kaye Matthew Bonning-Snook Jack Pitman Former Director Michael Brown Vesting of PSP awards £000 Gain on exercise of share options £000 2011 Total gains £000 Vesting of PSP awards £000 Gain on exercise of share options £000 2010 Total gains £000 – – – – – – – – – – – – – – – – – – – – – 390 244 210 105 101 210 1,260 973 – 663 407 623 – 2,666 1,363 244 873 512 724 210 3,926 page 54 Helical Bar plc 2011 directors’ remuneration report Information not subject to audit Other Remuneration Matters Service contracts The service contracts of Michael Slade and Nigel McNair Scott operate from 1 April 2007, and of Gerald Kaye, Matthew Bonning- Snook and Jack Pitman from 1 March 2010. No service contract provides for more than 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 i.e. provision of car and health insurance. The Company may make payments in lieu of notice as one lump sum or in instalments, at its own discretion. If the Company chooses to pay in instalments the director is obliged to seek alternative income over the relevant period and to disclose the amount to the Company. Instalment payments will be reduced by any alternative income. Non-Executive Directors Non-Executive Directors are appointed by a Letter of Appointment. The remuneration of the Non-Executive Directors is determined by the Board and was last increased in April 2007. The appointment of Non-Executive Directors is terminable on three months notice. Non- Executive Directors do not participate in any of the Group’s bonus or share award schemes. Total shareholder return The performance criteria of the Helical Bar 2010 Approved Share Option Scheme requires the Group to exceed certain targets of total shareholder return. The total shareholder return for a holding in the Group’s shares in the ﬁve years to 31 March 2011 compared to a holding in a broad equity index is shown in the graph below. Total shareholder return Source: Thomson Reuters 225 175 125 (cid:1) 100 75 25 31 Mar 06 123 (cid:1) (cid:1) 110 97 (cid:1) (cid:1) 83 91 (cid:1) (cid:1) 51 75 (cid:1) (cid:1) 33 73 58 (cid:1) (cid:1) 31 Mar 07 31 Mar 08 31 Mar 09 31 Mar 10 31 Mar 11 This graph looks at the value, by 31 March 2011, of £100 invested in Helical Bar on 31 March 2006 compared with the value of £100 invested in the FTSE 350 Super-sector Real Estate Index. The other points plotted are the values at intervening financial year-ends. (cid:1) Helical Bar FTSE 350 Super-sector Real Estate Index (cid:1) Andrew Gulliford Chairman of the Remuneration Committee 15 June 2011 Helical Bar plc 2011 page 55 report of independent auditor To the Members of Helical Bar plc We have audited the ﬁnancial statements of Helical Bar plc for the year ended 31 March 2011 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the group and company balance sheets, the group and company cash ﬂow statements and the group and company statement of changes in equity, and the related notes. The ﬁnancial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company ﬁnancial statements, as applied in accordance with the provisions of the Companies Act 2006. This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the Statement of Directors’ Responsibilities set out on page 42, the directors are responsible for the preparation of the ﬁnancial statements and for being satisﬁed that they give a true and fair view. Our responsibility is to audit and express an opinion on the ﬁnancial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. Scope of the audit of the ﬁnancial statements A description of the scope of an audit of ﬁnancial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm. Opinion on ﬁnancial statements In our opinion: (cid:115)(cid:229)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:229)(cid:83)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:229)(cid:71)(cid:73)(cid:86)(cid:69)(cid:229)(cid:65)(cid:229)(cid:84)(cid:82)(cid:85)(cid:69)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:70)(cid:65)(cid:73)(cid:82)(cid:229)(cid:86)(cid:73)(cid:69)(cid:87)(cid:229)(cid:79)(cid:70)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:83)(cid:84)(cid:65)(cid:84)(cid:69)(cid:229)(cid:79)(cid:70)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229) group’s and of the company’s affairs as at 31 March 2011 and of the group’s loss for the year then ended; (cid:115)(cid:229)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:71)(cid:82)(cid:79)(cid:85)(cid:80)(cid:229)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:229)(cid:83)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:229)(cid:72)(cid:65)(cid:86)(cid:69)(cid:229)(cid:66)(cid:69)(cid:69)(cid:78)(cid:229)(cid:80)(cid:82)(cid:79)(cid:80)(cid:69)(cid:82)(cid:76)(cid:89)(cid:229)(cid:80)(cid:82)(cid:69)(cid:80)(cid:65)(cid:82)(cid:69)(cid:68)(cid:229)(cid:73)(cid:78)(cid:229) accordance with IFRSs as adopted by the European Union; (cid:115)(cid:229)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:67)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:229)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:229)(cid:83)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:229)(cid:72)(cid:65)(cid:86)(cid:69)(cid:229)(cid:66)(cid:69)(cid:69)(cid:78)(cid:229)(cid:80)(cid:82)(cid:79)(cid:80)(cid:69)(cid:82)(cid:76)(cid:89)(cid:229)(cid:80)(cid:82)(cid:69)(cid:80)(cid:65)(cid:82)(cid:69)(cid:68)(cid:229)(cid:73)(cid:78)(cid:229) accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and, (cid:115)(cid:229)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:229)(cid:83)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:229)(cid:72)(cid:65)(cid:86)(cid:69)(cid:229)(cid:66)(cid:69)(cid:69)(cid:78)(cid:229)(cid:80)(cid:82)(cid:69)(cid:80)(cid:65)(cid:82)(cid:69)(cid:68)(cid:229)(cid:73)(cid:78)(cid:229)(cid:65)(cid:67)(cid:67)(cid:79)(cid:82)(cid:68)(cid:65)(cid:78)(cid:67)(cid:69)(cid:229)(cid:87)(cid:73)(cid:84)(cid:72)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229) requirements of the Companies Act 2006 and, as regards the group ﬁnancial statements, Article 4 of the IAS Regulation. Separate opinion in relation to IFRSs as issued by the IASB As explained in Note 1 to the group ﬁnancial statements, the group in addition to complying with its legal obligation to apply IFRSs as adopted by the European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB). In our opinion the group ﬁnancial statements comply with IFRSs as issued by the IASB. Opinion on other matters prescribed by the Companies Act 2006 In our opinion: (cid:115)(cid:229)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:80)(cid:65)(cid:82)(cid:84)(cid:229)(cid:79)(cid:70)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)(cid:7)(cid:229)(cid:50)(cid:69)(cid:77)(cid:85)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:229)(cid:50)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:229)(cid:84)(cid:79)(cid:229)(cid:66)(cid:69)(cid:229)(cid:65)(cid:85)(cid:68)(cid:73)(cid:84)(cid:69)(cid:68)(cid:229)(cid:72)(cid:65)(cid:83)(cid:229)(cid:66)(cid:69)(cid:69)(cid:78)(cid:229) properly prepared in accordance with the Companies Act 2006; (cid:115)(cid:229)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:229)(cid:71)(cid:73)(cid:86)(cid:69)(cid:78)(cid:229)(cid:73)(cid:78)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:50)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:229)(cid:79)(cid:70)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:68)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)(cid:229)(cid:70)(cid:79)(cid:82)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:229)(cid:89)(cid:69)(cid:65)(cid:82)(cid:229) for which the ﬁnancial statements are prepared is consistent with the ﬁnancial statements; and, (cid:115)(cid:229)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:229)(cid:71)(cid:73)(cid:86)(cid:69)(cid:78)(cid:229)(cid:73)(cid:78)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:35)(cid:79)(cid:82)(cid:80)(cid:79)(cid:82)(cid:65)(cid:84)(cid:69)(cid:229)(cid:39)(cid:79)(cid:86)(cid:69)(cid:82)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:229)(cid:50)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:229)(cid:83)(cid:69)(cid:84)(cid:229)(cid:79)(cid:85)(cid:84)(cid:229)(cid:79)(cid:78)(cid:229) pages 44 to 47 with respect to internal control and risk management systems in relation to ﬁnancial reporting processes and about share capital structures is consistent with the ﬁnancial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following: Under the Companies Act 2006 we are required to report to you if, in our opinion: (cid:115)(cid:229)(cid:229)(cid:65)(cid:68)(cid:69)(cid:81)(cid:85)(cid:65)(cid:84)(cid:69)(cid:229)(cid:65)(cid:67)(cid:67)(cid:79)(cid:85)(cid:78)(cid:84)(cid:73)(cid:78)(cid:71)(cid:229)(cid:82)(cid:69)(cid:67)(cid:79)(cid:82)(cid:68)(cid:83)(cid:229)(cid:72)(cid:65)(cid:86)(cid:69)(cid:229)(cid:78)(cid:79)(cid:84)(cid:229)(cid:66)(cid:69)(cid:69)(cid:78)(cid:229)(cid:75)(cid:69)(cid:80)(cid:84)(cid:229)(cid:66)(cid:89)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:67)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:12)(cid:229)(cid:79)(cid:82)(cid:229) returns adequate for our audit have not been received from branches not visited by us; or (cid:115)(cid:229)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:67)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:229)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:229)(cid:83)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:80)(cid:65)(cid:82)(cid:84)(cid:229)(cid:79)(cid:70)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)(cid:7)(cid:229) Remuneration Report to be audited are not in agreement with the accounting records and returns; or (cid:115)(cid:229)(cid:229)(cid:67)(cid:69)(cid:82)(cid:84)(cid:65)(cid:73)(cid:78)(cid:229)(cid:68)(cid:73)(cid:83)(cid:67)(cid:76)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:83)(cid:229)(cid:79)(cid:70)(cid:229)(cid:68)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)(cid:7)(cid:229)(cid:82)(cid:69)(cid:77)(cid:85)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:229)(cid:83)(cid:80)(cid:69)(cid:67)(cid:73)(cid:108)(cid:69)(cid:68)(cid:229)(cid:66)(cid:89)(cid:229)(cid:76)(cid:65)(cid:87)(cid:229)(cid:65)(cid:82)(cid:69)(cid:229)(cid:78)(cid:79)(cid:84)(cid:229) made; or (cid:115)(cid:229)(cid:229)(cid:87)(cid:69)(cid:229)(cid:72)(cid:65)(cid:86)(cid:69)(cid:229)(cid:78)(cid:79)(cid:84)(cid:229)(cid:82)(cid:69)(cid:67)(cid:69)(cid:73)(cid:86)(cid:69)(cid:68)(cid:229)(cid:65)(cid:76)(cid:76)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:69)(cid:88)(cid:80)(cid:76)(cid:65)(cid:78)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:229)(cid:87)(cid:69)(cid:229)(cid:82)(cid:69)(cid:81)(cid:85)(cid:73)(cid:82)(cid:69)(cid:229)(cid:70)(cid:79)(cid:82)(cid:229) our audit; or (cid:115)(cid:229)(cid:229)(cid:65)(cid:229)(cid:35)(cid:79)(cid:82)(cid:80)(cid:79)(cid:82)(cid:65)(cid:84)(cid:69)(cid:229)(cid:39)(cid:79)(cid:86)(cid:69)(cid:82)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:229)(cid:50)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:229)(cid:72)(cid:65)(cid:83)(cid:229)(cid:78)(cid:79)(cid:84)(cid:229)(cid:66)(cid:69)(cid:69)(cid:78)(cid:229)(cid:80)(cid:82)(cid:69)(cid:80)(cid:65)(cid:82)(cid:69)(cid:68)(cid:229)(cid:66)(cid:89)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:67)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:14) Under the Listing Rules, we are required to review: (cid:115)(cid:229)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:68)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)(cid:7)(cid:229)(cid:83)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:12)(cid:229)(cid:83)(cid:69)(cid:84)(cid:229)(cid:79)(cid:85)(cid:84)(cid:229)(cid:79)(cid:78)(cid:229)(cid:80)(cid:65)(cid:71)(cid:69)(cid:229)(cid:20)(cid:23)(cid:12)(cid:229)(cid:73)(cid:78)(cid:229)(cid:82)(cid:69)(cid:76)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:229)(cid:84)(cid:79)(cid:229)(cid:71)(cid:79)(cid:73)(cid:78)(cid:71)(cid:229)(cid:67)(cid:79)(cid:78)(cid:67)(cid:69)(cid:82)(cid:78)(cid:27)(cid:229) (cid:115)(cid:229)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:80)(cid:65)(cid:82)(cid:84)(cid:229)(cid:79)(cid:70)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:35)(cid:79)(cid:82)(cid:80)(cid:79)(cid:82)(cid:65)(cid:84)(cid:69)(cid:229)(cid:39)(cid:79)(cid:86)(cid:69)(cid:82)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:229)(cid:50)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:229)(cid:82)(cid:69)(cid:76)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:229)(cid:84)(cid:79)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:67)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:7)(cid:83)(cid:229) compliance with the nine provisions of the June 2008 Combined Code speciﬁed for our review; and, (cid:115)(cid:229)(cid:229)(cid:67)(cid:69)(cid:82)(cid:84)(cid:65)(cid:73)(cid:78)(cid:229)(cid:69)(cid:76)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:229)(cid:79)(cid:70)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:82)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:229)(cid:84)(cid:79)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:72)(cid:79)(cid:76)(cid:68)(cid:69)(cid:82)(cid:83)(cid:229)(cid:66)(cid:89)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:229)(cid:79)(cid:78)(cid:229) directors’ remuneration. Charles Hutton-Potts B.Sc., FCA Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants London 15 June 2011 page 56 Helical Bar plc 2011 index to the ﬁnancial statements Helical Bar plc 2011 page 57 58 Consolidated income statement 59 Consolidated statement of comprehensive income 60 Group and company balance sheets 62 Group and company cash ﬂow statements 63 Group and company statements of changes in equity 64 Notes to the ﬁnancial statements 89 Ten year review 90 Investor information 91 Glossary of terms 92 Financial calendar 92 Advisors page 58 Helical Bar plc 2011 consolidated income statement For the year ended 31 March 2011 Revenue Net rental income Development property loss Trading property loss Share of results of joint ventures Other operating (expense)/income Gross (loss)/proﬁt before net gain on sale and revaluation of investment properties Net gain on sale and revaluation of investment properties Impairment of available-for-sale assets Gross proﬁt Administrative expenses Operating (loss)/proﬁt Finance costs Finance income Change in fair value of derivative ﬁnancial instruments Foreign exchange losses (Loss)/proﬁt before tax Taxation on (loss)/proﬁt on ordinary activities (Loss)/proﬁt after tax – attributable to non-controlling interests – attributable to equity shareholders (Loss)/proﬁt for the year Basic (loss)/earnings per share Diluted (loss)/earnings per share Year ended Year ended 31.3.10 £000 31.3.11 £000 Note 3 4 5 6 21 7 19 119,059 14,187 67,354 14,151 (16,642) (1,293) (367) 2,886 (358) (294) 7,512 (1,817) (10) 3,745 26 16,619 8,195 – 5,401 24,814 8 (7,050) (8,680) (1,649) 16,134 (6,992) (9,328) 652 1,776 1,039 1,157 (67) (1,127) (6,280) 2,391 (3,889) 7,875 1,711 9,586 (2) (33) (3,887) (3,889) (3.6p) (3.6p) 9,619 9,586 9.1p 9.1p 10 10 23 11 15 15 consolidated statement of comprehensive income For the year ended 31 March 2011 Helical Bar plc 2011 page 59 Year ended Year ended 31.3.10 £000 31.3.11 £000 Note (Loss)/proﬁt for the year Other comprehensive (expense)/income Fair value movements and impairment of available-for-sale investments Associated deferred tax on impairment Exchange difference on retranslation of net investments in foreign operations Total comprehensive (expense)/income for the year – attributable to equity shareholders – attributable to non-controlling interests 19 19 (3,889) 9,586 (12,169) 2,962 3,222 (14) (12,850) (12,848) (829) (131) 11,588 11,621 (2) (33) (12,850) 11,588 page 60 Helical Bar plc 2011 group and company balance sheets As at 31 March 2011 Group 31.3.11 £000 Group Company 31.3.11 £000 31.3.10 £000 Company 31.3.10 £000 Note Non-current assets Investment properties held for sale Investment properties Owner occupied property, plant and equipment Available-for-sale investments Investment in subsidiaries Investment in joint ventures Derivative ﬁnancial instruments Goodwill Deferred tax asset Total non-current assets Current assets Land, developments and trading properties Available-for-sale investments Trade and other receivables Corporation tax receivable Cash and cash equivalents Total assets Current liabilities Trade and other payables Borrowings Non-current liabilities Borrowings Derivative ﬁnancial instruments Deferred tax provision Total liabilities Net assets 16 16 18 19 20 21 23 22 19 24 19,350 19,350 – – 252,526 219,901 – – – 1,497 – – 1,638 13,325 1,336 – – 30,994 36,064 26,384 793 14 1,944 16 12 8,879 3,169 165 715 – 717 – – – 1,476 13,325 31,822 5,383 1,944 – – 299,773 266,377 319,123 266,377 33,927 33,927 53,950 53,950 147,542 182,576 1,125 10,505 35,783 1,069 10,959 – 38,691 375,751 376,609 1,098 1,069 1,170 968 – 25 31,327 39,800 22,243 25,258 226,226 273,124 400,188 404,005 545,349 539,501 434,115 457,955 26 27 27 23 12 (45,224) (43,651) (168,911) (189,394) (37,500) (72,459) (4,500) (20,163) (82,724) (116,110) (173,411) (209,557) (199,917) (170,299) (7,311) (10,485) – – (9,910) (3,373) – (7,354) (3,299) (3,282) (207,228) (180,784) (13,283) (13,935) (289,952) (296,894) (186,694) (223,492) 255,397 242,607 247,421 234,463 group and company balance sheets As at 31 March 2011 Helical Bar plc 2011 page 61 Equity Called-up share capital Share premium account Revaluation reserve Capital redemption reserve Other reserves Retained earnings Group 31.3.11 £000 Group Company 31.3.11 £000 31.3.10 £000 Company 31.3.10 £000 1,447 1,339 1,447 1,339 98,678 70,828 98,678 70,828 3,495 7,478 291 – 7,478 291 – 7,478 1,987 – 7,478 1,987 143,886 162,547 137,831 152,831 Equity attributable to equity holders of the parent 255,275 242,483 247,421 234,463 Non-controlling interests Total equity 122 124 – – 255,397 242,607 247,421 234,463 The ﬁnancial statements were approved by the Board of Directors on 15 June 2011. Michael Slade Director Nigel McNair Scott Director page 62 Helical Bar plc 2011 group and company cash ﬂow statements For the year to 31 March 2011 Cash ﬂows from operating activities (Loss)/proﬁt before tax Depreciation Revaluation gain on investment properties (Gain)/loss on sales of investment properties Net ﬁnancing costs/(income) Impairment of available-for-sale assets Impairment of investments Change in value of derivative ﬁnancial instruments Share based payment (credit)/charge Share of results of joint ventures Foreign exchange movement 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 inﬂow/(outﬂow) generated from operations Finance costs Finance income Tax received Tax paid Cash ﬂows from operating activities Cash ﬂows from investing activities Purchase of investment property Sale of investment property Proceeds from sale of derivative ﬁnancial instruments Cost of acquiring derivative ﬁnancial instruments Cost of cancelling interest rate swap Investment in joint ventures Return of investment in joint ventures Dividends from joint ventures Sale of plant and equipment Purchase of leasehold improvements, plant and equipment Cash ﬂows from ﬁnancing activities Issue of shares Borrowings drawn down Borrowings repaid Equity dividends paid Net decrease in cash and cash equivalents Cash and cash equivalents at 1 April Cash and cash equivalents at 31 March Group 31.3.11 £000 Group Company 31.3.11 £000 31.3.10 £000 Company 31.3.10 £000 (6,280) 328 (2,670) (4,842) 6,340 1,817 – (1,776) (196) (2,886) 131 2 (10,032) 2,822 38,867 5,079 36,736 (11,264) 465 – (68) (10,867) 25,869 (77,864) 32,810 568 (744) (71) (9,520) 1,970 756 2 (189) (52,282) 27,958 56,536 (61,523) (5,031) 17,940 (8,473) 39,800 31,327 7,875 334 (13,104) 4,909 8,289 – – (1,157) 1,151 (3,745) (1,153) 2 3,401 358 30,707 (11,555) 22,911 (12,345) 1,231 834 (77) (10,357) 12,554 (4,192) 36,704 – (1,437) (3,202) (18,641) – 3,926 28 (237) 12,949 453 13,739 (67,923) (4,748) (58,479) (32,976) 72,776 39,800 17,627 284 – – (2,929) 1,817 5,295 1,287 – – – – 23,381 (23,042) (157) (16,542) (16,360) (2,066) 5,237 – (68) 3,103 (13,257) – – 568 (552) – – – 756 2 (146) 628 27,958 6,850 (20,163) (5,031) 9,614 (3,015) 25,258 22,243 3,736 296 – – (1,846) – 1,100 16 – – – (12) 3,290 (27,661) (115) (7,436) (31,922) (1,936) 4,189 808 (77) 2,984 (28,938) – – – (1,437) – – – 3,926 28 (62) 2,455 453 10,000 (9,757) (4,748) (4,052) (30,535) 55,793 25,258 group and company statements of changes in equity For the year to 31 March 2011 Helical Bar plc 2011 page 63 Share capital premium £000 Capital Share Revaluation redemption reserve reserve £000 £000 £000 Group At 31 March 2009 Total comprehensive income Revaluation surplus Realised on disposals Non-controlling interests Performance share plan Issue of shares Dividends paid Purchase of shares Own shares held At 31 March 2010 Total comprehensive expense Revaluation surplus Realised on disposals Non-controlling interests Performance share plan Issue of shares Dividends paid 1,336 – – – – – 3 – – – 1,339 – – – – – 108 – 70,378 – – – – – 450 – – – 70,828 – – – – – 27,850 – 529 – 13,104 (13,633) – – – – – – – – 2,670 825 – – – – At 31 March 2011 1,447 98,678 3,495 Other reserves £000 Retained earnings £000 291 – – – – – – – – – 291 – – – – – – – 291 158,494 11,588 (13,104) 13,633 33 1,151 – (7,657) – (1,591) 162,547 (12,850) (2,670) (825) 2 (196) (2,122) 143,886 Own Non- shares controlling interests £000 held £000 (1,597) – – – – – – – 6 1,591 – – – – – – – – – 157 – – – (33) – – – – – 124 – – – (2) – – – 122 Total £000 237,066 11,588 – – – 1,151 453 (7,657) 6 – 242,607 (12,850) – – – (196) 27,958 (2,122) 255,397 7,478 – – – – – – – – – 7,478 – – – – – – – 7,478 For a breakdown of Total comprehensive income/expense see the Consolidated Statement of Comprehensive Income on page 59. Included within changes in equity are net transactions with owners of £25,640,000 (2010: £6,047,000) made up of: the performance share plan credit of £196,000 (2010: charge of £1,151,000), issue of shares of £27,958,000 (2010: £453,000), dividends paid of £2,122,000 (2010: £7,657,000) and purchase of shares of £nil (2010: £6,000). The adjustment to retained earnings of £196,000 adds back the share-based payments credit (2010: charge of £1,151,000), in accordance with IFRS 2 Share-Based Payments. Company At 31 March 2009 Total comprehensive income Issue of shares Dividends Purchase of shares Own shares held At 31 March 2010 Total comprehensive income Issue of shares Dividends At 31 March 2011 Share capital £000 1,336 – 3 – – – 1,339 – 108 – 1,447 Capital Share Revaluation redemption reserve reserve £000 £000 premium £000 Other reserves £000 Retained earnings £000 70,378 – 450 – – – 70,828 – 27,850 – 98,678 – – – – – – – – – – – 7,478 – – – – – 7,478 – – – 1,987 – – – – – 1,987 – – – 158,093 3,986 – (7,657) – (1,591) 152,831 (12,878) – (2,122) 7,478 1,987 137,831 Own shares held £000 (1,597) – – – 6 1,591 – – – – – Total £000 237,675 3,986 453 (7,657) 6 – 234,463 (12,878) 27,958 (2,122) 247,421 Total comprehensive income includes the loss after tax of £4,592,000 (2010: proﬁt of £3,975,000), the loss on fair value movements on available-far-sale investments of £11,508,000 (2010: gain of £15,000), and the deferred tax credit on these fair value movements of £3,222,000 (2010: charge of £4,000). Included within changes in equity are net transactions with owners of £25,836,000 (2010: £7,198,000) made up of: the issue of shares of £27,958,000 (2010: £453,000), dividends paid of £2,122,000 (2010: £7,657,000) and purchase of shares of £nil (2010: £6,000). 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 – represents the accumulated retained earnings of the Group. Own shares held – relates to the shares purchased by the Helical Bar Employees’ Share Ownership Plan Trust. page 64 Helical Bar plc 2011 notes to the ﬁnancial statements 1. Basis of preparation These ﬁnancial statements have been prepared in accordance with applicable International Financial Reporting Standards (“IFRS”), including International Financial Reporting Interpretations Committee (“IFRIC”) interpretations as adopted by the European Union and as issued by the International Accounting Standards Board (“IASB”). The directors have taken advantage of the exemption offered by Section 408 of the Companies Act 2006 not to present a separate income statement for the parent company. The ﬁnancial statements have been prepared in Sterling (rounded to the nearest thousand) 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. These accounting policies are consistent with those applied in the year to 31 March 2010, as amended to reﬂect any new Standards, Amendments to Standards and interpretations which are mandatory for the year ended 31 March 2011. Status of Adoption of Signiﬁcant New or Amended IFRS Standards or Interpretations IFRIC 17 Distributions of Non-cash Assets to Owners; IFRIC 18 Transfer of Assets from Customers. There has been no material impact as a result of adopting the above. The following standards, interpretations and amendments have been issued but are not yet effective. They will be adopted at the point they are effective: IAS 24 (revised) Related Party disclosures (effective 1 January 2013); Disclosures - Transfer of Financial Assets - Amendments to IFRS 7; (effective 1 July 2011); Deferred Tax: Recovery of Underlying Assets - Amendments to IAS 12; Income Taxes (effective 1 January 2012) IFRS 9 Financial Instruments: Classiﬁcation and measurement (effective 1 January 2011); and, Improvements to IFRSs issued May 2010 (effective 1 July 2010/1 January 2011). The Directors do not expect that the adoption of these Standards and Interpretations in future periods will have a material impact on the ﬁnancial statements of the Group. notes to the ﬁnancial statements Helical Bar plc 2011 page 65 2. Principal accounting policies Basis of consolidation The Group ﬁnancial statements consolidate those of Helical Bar plc (the “Company”) and all of its subsidiary undertakings (together the “Group”) drawn up to 31 March 2011. 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. Subsidiaries are accounted for under the purchase method and are held in the Company balance sheet at cost and reviewed annually for impairment. Joint Ventures are entities whose economic activities are controlled jointly by the Group and by other ventures independent of the Group and are accounted for using the equity method of accounting, whereby the Group’s share of proﬁt after tax in the Joint Venture is recognised in the Consolidated Income Statement and the Group’s share of the Joint Venture’s net assets are incorporated in the Consolidated Balance Sheet. The Company’s cost of investment in Joint Ventures less any provision for permanent impairment loss is shown in the Company Balance Sheet. Associates are those entities over which the Group has signiﬁcant inﬂuence but which are neither subsidiaries nor joint ventures. Intra-group balances and any 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. Going concern The accounts have been prepared on a going concern basis as explained in the Financial Review on pages 36 to 38. Revenue recognition Rental income - rental income receivable is recognised in the Income Statement on a straight line basis over the lease term. 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. Sale of goods - assets, such as trading properties, development sites and completed developments, are regarded as sold upon the transfer of the signiﬁcant risks and rewards of ownership to the purchaser, in accordance with IAS 18 Revenue. This occurs on exchange of unconditional contracts for the sale of the site, on satisfaction of any and all conditions on a conditional contract for the sale of the site or on completion of the contract on a conditional sale where those conditions are satisﬁed at completion. Measurements of revenue arising from the sale of such assets are derived from the fair value of the consideration received in accordance with IAS 18 Revenue. Construction contracts - where an asset is constructed under a speciﬁc contract with a purchaser (a “pre-sold development”) the initial sale of the site to that purchaser is recognised as a sale of goods in accordance with IAS 18 Revenue. The construction element of the contract is treated, for the purposes of revenue recognition, as a construction contract in accordance with IAS 11 Construction Contracts. Revenue is recognised by reference to the stage of completion which is typically determined by reference to project appraisals, normally supported by independent valuation certiﬁcates provided by quantity surveyors. The Company’s principal other responsibility on pre-sold developments is the identiﬁcation of and agreement of terms with potential tenants of the completed building(s). The revenue recognition of this additional component of the funding agreements is considered separately to reﬂect the substance of the transaction as the rendering of services, in accordance with IAS 18 Revenue. The amount of revenue recognised is determined by reference to the percentage of the building(s) that are let. Investment income - revenue in respect of investment and other income represents investment income, fees and commissions earned on an accruals basis and the fair value of the consideration received/receivable 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. Share-based payments The Group provides share-based payments in the form of performance share plan awards and a share incentive plan. These payments are discussed in greater detail in the Directors’ Remuneration Report on pages 48 to 54. The fair value of share-based payments related to employees’ service are determined indirectly by reference to the fair value of the related instrument at the grant date. 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 the 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 IAS 40 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-term 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% page 66 Helical Bar plc 2011 notes to the ﬁnancial statements 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. The measurement of deferred tax assets and liabilities reﬂects the tax consequences of the manner in which Helical expects, at the balance sheet date, to recover or settle the carrying amount of those assets and liabilities. 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. 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. The deferred tax asset relating to share based payment awards reﬂects the estimated value of tax relief available on the vesting of the awards at the balance sheet date. 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. The Group recognises a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except to the extent that both of the following conditions are satisﬁed: a) the Group is able to control the timing of the reversal of the temporary difference; and, b) it is probable that the temporary difference will not reverse in the foreseeable future. Dividends Dividend distributions to the Company’s shareholders are recognised as a liability in the ﬁnancial statements in the period in which dividends are approved. 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, including associated transaction costs, and revalued at the balance sheet date to fair value. These fair values are based on market values as determined by professionally qualiﬁed external valuers or are determined by the directors of the Group based on their knowledge of the property. In accordance with IAS 40, 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 recognised as gains or losses on revaluation in the Income Statement of the period in which they arise. In accordance with IAS 40, as the Group uses the fair value model, no depreciation is provided in respect of investment properties including integral plant. Property that is being constructed or developed for future use as an investment property is treated as investment property in accordance with IAS 40. 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. Details of the valuation of investment properties can be found in note 16. 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. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs to completion and estimated costs necessary to make the sale. Gross borrowing costs associated with expenditure on properties under development or undergoing major refurbishment are capitalised. The interest capitalised is calculated using the Group’s weighted average cost of borrowings. Interest is capitalised from the date of commencement of the development work until date of practical completion. Investments Available-for-sale investments are revalued to fair value at the balance sheet date. Gains or losses arising from changes in fair value are recognised in the Statement of Comprehensive Income 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. notes to the ﬁnancial statements Helical Bar plc 2011 page 67 Trade receivables Trade receivables do not carry any interest and are stated initially 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 amortised cost. For the purposes of the cash ﬂow statement, cash and cash equivalents comprise cash in hand, deposits with banks, and other short-term, highly liquid investments with original maturities of three months or less. 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. Borrowing costs directly attributable to the acquisition and construction of new developments and investment properties are added to the costs of such properties until the date of completion of the development or investment. After initial recognition borrowings are carried at amortised cost. This treatment has been adopted since transition to IFRS. 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, and forward foreign currency contracts 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. Further information on the categorisation of ﬁnancial instruments can be found in note 23. 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 IAS 40, ﬁnance 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. Foreign currencies Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Non-monetary items that are measured at historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognised in the Income Statement in the period in which they arise. Exchange differences on non-monetary items are recognised in the Statement of Comprehensive Income to the extent that they relate to a gain or loss on that non-monetary item which is included in the Statement of Comprehensive Income, otherwise such gains and losses are recognised in the Income Statement. The assets and liabilities in the ﬁnancial statements of foreign subsidiaries are translated at the rate of exchange ruling at the balance sheet date. Income and expenses are translated at the average rate. The exchange differences arising from the retranslation of the opening net investment in subsidiaries are taken directly to retained earnings in equity. On disposal of a foreign operation the cumulative translation differences (including, if applicable, gains and losses on related hedges) are transferred to the Income Statement as part of the gain or loss on disposal. Net asset values per share Net asset values per share have been calculated in accordance with the best practice recommendations of the European Public Real Estate Association (“EPRA”). Earnings/(loss) per share Earnings /(loss) per share have been calculated in accordance with IAS 33 and the best practice recommendations of EPRA. 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. Purchases and sales of own shares increase or decrease the book value of “Own shares held” in the Balance Sheet. At each period end the Group assesses and recognises the fair value of “Own shares held” and accounts for movement between book value and fair value as a reserves transfer. Use of estimates and judgements To be able to prepare accounts according to the 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. page 68 Helical Bar plc 2011 notes to the ﬁnancial statements Areas requiring the use of estimates and critical judgement that may signiﬁcantly impact on the Group’s earnings and ﬁnancial position are: – revenue on construction contracts where the valuation is spread over the construction period using estimates of the ﬁnal outcome (note 3); – valuation of investment properties, where external valuers are used to provide third party valuations (note 16); – recognition of share-based payments which is dependent upon the estimated number of performance share plan awards that will vest at the end of the performance periods (note 31); – calculation and assessment of the recoverability of deferred tax assets, where it has been assumed that sufﬁcient taxable proﬁts will be available in future periods to allow all of the assets to be recovered (note 12); – valuation of the investment in Quotient Bioscience Group Limited, which is based on a valuation method (note 19); – valuation of the investment in a property developer which is based on a valuation method (note 19); and, – directors’ valuation of land, development and trading properties include subjective assumptions including the results of future planning decisions and future sales values and timings (note 22). 3. Segmental information IFRS 8 requires the identiﬁcation of the Group’s operating segments which are deﬁned as being discrete components of the Group’s operations whose results are regularly reviewed by the Chief Operating Decision Maker (being the Chief Executive) to allocate resources to those segments and to assess their performance. The Group divides its business into the following segments: (cid:115)(cid:229) (cid:229)(cid:41)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:229)(cid:80)(cid:82)(cid:79)(cid:80)(cid:69)(cid:82)(cid:84)(cid:73)(cid:69)(cid:83)(cid:12)(cid:229)(cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:229)(cid:65)(cid:82)(cid:69)(cid:229)(cid:79)(cid:87)(cid:78)(cid:69)(cid:68)(cid:229)(cid:79)(cid:82)(cid:229)(cid:76)(cid:69)(cid:65)(cid:83)(cid:69)(cid:68)(cid:229)(cid:66)(cid:89)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:39)(cid:82)(cid:79)(cid:85)(cid:80)(cid:229)(cid:70)(cid:79)(cid:82)(cid:229)(cid:76)(cid:79)(cid:78)(cid:71)(cid:13)(cid:84)(cid:69)(cid:82)(cid:77)(cid:229)(cid:73)(cid:78)(cid:67)(cid:79)(cid:77)(cid:69)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:70)(cid:79)(cid:82)(cid:229)(cid:67)(cid:65)(cid:80)(cid:73)(cid:84)(cid:65)(cid:76)(cid:229)(cid:65)(cid:80)(cid:80)(cid:82)(cid:69)(cid:67)(cid:73)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:12)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:52)(cid:82)(cid:65)(cid:68)(cid:73)(cid:78)(cid:71)(cid:229)(cid:80)(cid:82)(cid:79)(cid:80)(cid:69)(cid:82)(cid:84)(cid:73)(cid:69)(cid:83)(cid:229)(cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:229)(cid:65)(cid:82)(cid:69)(cid:229) owned or leased with the intention to sell; and, (cid:115)(cid:229) (cid:229)(cid:36)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:229)(cid:80)(cid:82)(cid:79)(cid:80)(cid:69)(cid:82)(cid:84)(cid:73)(cid:69)(cid:83)(cid:12)(cid:229)(cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:229)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:69)(cid:229)(cid:83)(cid:73)(cid:84)(cid:69)(cid:83)(cid:12)(cid:229)(cid:68)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:229)(cid:73)(cid:78)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:67)(cid:79)(cid:85)(cid:82)(cid:83)(cid:69)(cid:229)(cid:79)(cid:70)(cid:229)(cid:67)(cid:79)(cid:78)(cid:83)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:12)(cid:229)(cid:67)(cid:79)(cid:77)(cid:80)(cid:76)(cid:69)(cid:84)(cid:69)(cid:68)(cid:229)(cid:68)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:229)(cid:65)(cid:86)(cid:65)(cid:73)(cid:76)(cid:65)(cid:66)(cid:76)(cid:69)(cid:229)(cid:70)(cid:79)(cid:82)(cid:229)(cid:83)(cid:65)(cid:76)(cid:69)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:80)(cid:82)(cid:69)(cid:13)(cid:83)(cid:79)(cid:76)(cid:68)(cid:229) developments. Revenue Rental income Development property income Trading property sales Other revenue Total revenue Investment and trading Developments Year ended Year ended 31.3.11 31.3.11 £000 £000 16,988 – 15,915 32,903 1,602 84,311 – Total Year ended 31.3.11 £000 18,590 84,311 15,915 Investment and trading Developments Year ended Year ended 31.3.10 31.3.10 £000 £000 Total Year ended 31.3.10 £000 16,689 – 525 2,192 47,822 – 85,913 118,816 17,214 50,014 243 119,059 18,881 47,822 525 67,228 126 67,354 All revenue is from external sales and is attributable to continuing operations. There were no inter-segmental sales. Revenue for the year comprises revenue from construction contracts of £22,978,000 (2010: £7,670,000), revenue from the sale of goods of £75,824,000 (2010: £37,926,000), revenue from services of £1,667,000 (2010: £2,877,000), and rental income of £18,590,000 (2010: £18,881,000). All revenues are within the UK other than £23,011,000 (2010: £19,482,000) of development income derived from the Group’s operations in Poland. notes to the ﬁnancial statements Helical Bar plc 2011 page 69 Investment and trading Developments Year ended Year ended 31.3.11 31.3.11 £000 £000 Total Year ended 31.3.11 £000 Investment and trading Developments Year ended Year ended 31.3.10 31.3.10 £000 £000 Total Year ended 31.3.10 £000 13,776 411 – (16,642) (367) 2,905 7,512 23,826 – (19) – (16,250) 31.3.11 £000 19,350 252,526 10,289 31,401 313,566 31.3.11 £000 – – 137,253 4,663 141,916 14,187 (16,642) (367) 2,886 7,512 7,576 (1,817) (358) 5,401 (7,050) 652 (5,216) (67) (6,280) 31.3.11 £000 19,350 252,526 147,542 36,064 455,482 89,867 545,349 (289,952) 255,397 12,904 – (10) 3,158 8,195 24,247 1,247 (1,293) – 587 – 541 31.3.10 £000 – 219,901 273 20,953 241,127 31.3.10 £000 – – 182,303 5,431 187,734 14,151 (1,293) (10) 3,745 8,195 24,788 – 26 24,814 (8,680) 1,039 (8,171) (1,127) 7,875 31.3.10 £000 – 219,901 182,576 26,384 428,861 110,640 539,501 (296,894) 242,607 Loss before tax Net rental income Development property loss Trading property loss Share of results of joint ventures Gain on sale and revaluation of investment properties Impairment of available-for-sale investments Other operating (expense)/income Gross proﬁt Administrative expenses Finance income Finance costs Foreign exchange losses (Loss)/proﬁt before tax Balance sheet Investment properties held for sale Investment properties Land, development and trading properties Investment in joint ventures Other assets Total assets Liabilities Net assets All non-current assets are derived from the Group’s UK operations. 4. Net rental income Gross rental income Rents payable Property overheads Net rental income Net rental income attributable to proﬁt share partner Group share of net rental income Property overheads include lettings costs, vacancy costs and bad debt provisions. 5. Development property loss Development property income Cost of sales Sales expenses Provision against book values Development property loss Year ended 31.3.11 £000 Year ended 31.3.10 £000 18,590 (24) (3,662) 14,904 (717) 14,187 18,881 (12) (3,732) 15,137 (986) 14,151 Year ended 31.3.11 £000 Year ended 31.3.10 £000 84,311 (85,041) (999) (14,913) (16,642) 47,822 (38,638) (436) (10,041) (1,293) page 70 Helical Bar plc 2011 notes to the ﬁnancial statements 6. Trading property loss Trading property sales Cost of sales Sales expenses Trading property loss 7. Net gain on sale and revaluation of investment properties Net proceeds from the sale of investment properties Book value (note 16) Tenants incentives on sold investment properties Gain/(loss) on sale of investment properties Revaluation surplus on investment properties Gain on sale and revaluation of investment properties 8. Administrative expenses Administrative expenses Operating loss/proﬁt is stated after the following items that are contained within administrative expenses: Depreciation – owner occupied property, plant and equipment Share-based payments (credit)/charge Auditors’ remuneration: Audit fees – audit of parent company and consolidated ﬁnancial statements – audit of company’s subsidiaries – interim audit of consolidated ﬁnancial statements – ﬁnancial accounts review Non-audit fees – PSP review 9. Staff costs Staff costs during the year: – salaries and other remuneration – social security costs – other pension costs Year ended 31.3.11 £000 Year ended 31.3.10 £000 15,915 (16,181) (101) (367) 525 (525) (10) (10) Year ended 31.3.11 £000 Year ended 31.3.10 £000 32,810 36,704 (27,902) (40,438) (66) 4,842 2,670 7,512 (1,175) (4,909) 13,104 8,195 Year ended 31.3.11 £000 Year ended 31.3.10 £000 (7,050) (8,680) 328 (196) 334 1,151 140 51 41 – 3 143 71 39 3 3 Year ended 31.3.11 £000 Year ended 31.3.10 £000 4,199 4,263 625 120 589 115 4,944 4,967 Details of the remuneration of Directors amounting to £2,597,000 (2010: £6,876,000) are included in the Directors’ Remuneration Report on pages 48 to 54. The amount of the share-based payments credit relating to share awards made to Directors is £165,000 (2010: charge £921,000). 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 34 (2010: 34) of which 25 are UK staff and 9 are based in Poland. Of the staff costs of £4,944,000 (2010: £4,967,000), £4,544,000 is included within administrative expenses (2010: £4,597,000) and £400,000 is included within development costs (2010: £370,000) 10. 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 notes to the ﬁnancial statements Helical Bar plc 2011 page 71 Year ended 31.3.11 £000 Year ended 31.3.10 £000 (9,690) (10,956) (675) (806) 4,179 (6,992) 652 652 (696) (872) 3,196 (9,328) 1,039 1,039 All interest payable relates to interest on borrowings and all interest receivable relates to interest on cash and cash equivalents. On projects where speciﬁc third party loans have been arranged, interest has been capitalised at the rate for the individual loan. The weighted average capitalised interest rate of such loans was 2.43% (2010: 2.81%). Where general ﬁnance has been used to fund the acquisition and construction of properties the rate used was a weighted average of the ﬁnancing costs for the applicable borrowings of 4.93% (2010: 3.61%). 11. Taxation on loss on ordinary activities The tax credit is based on the loss/proﬁt for the year and represents: United Kingdom corporation tax at 28% – Group corporation tax – adjustment in respect of prior periods – overseas tax Current tax (charge)/credit Deferred tax at 26% – capital allowances – tax losses – other temporary differences Deferred tax credit Tax credit on loss/proﬁt on ordinary activities Year ended 31.3.11 £000 Year ended 31.3.10 £000 – – (97) (97) 442 1,823 223 2,488 2,391 – 1,152 – 1,152 (52) 2,121 (1,510) 559 1,711 Factors affecting the tax credit for the period: The tax assessed for the period is higher than the standard rate of corporation tax in the UK (28%). The differences are explained below: (Loss)/proﬁt on ordinary activities before tax (Loss)/proﬁt on ordinary activities multiplied by standard rate of corporation tax in the UK of 26%/28% Effect of: – expenses not deductible for tax purposes – income not subject to UK corporation tax – capital allowances not reﬂected through deferred tax – tax relief on share awards – tax losses utilised – operating proﬁt of joint ventures – prior year adjustment – revaluation surplus not recognised through deferred tax – chargeable gain in excess of loss on investment property – overseas tax – effect of change in rate of corporation tax – other temporary differences Total tax credit for the period Year ended 31.3.11 £000 Year ended 31.3.10 £000 (6,280) 1,633 (1,281) 469 553 (123) (212) 751 – 694 (538) (97) (568) 1,110 2,391 7,875 (2,205) (532) 910 672 483 (146) 1,082 1,152 3,669 (3,308) – – (66) 1,711 Note: all deferred tax balances have been calculated at the rate of corporation tax for the year to 31 March 2012 of 26%. Accordingly, the tax reconciliation also uses this rate of corporation tax. page 72 Helical Bar plc 2011 notes to the ﬁnancial statements 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 allowances in respect of eligible expenditure on investment properties and unrealised capital losses at 31 March 2011 of £12m. 12. Deferred tax Deferred tax provided for in the ﬁnancial statements is set out below: Capital allowances Available-for-sale assets Tax losses Other temporary differences Deferred tax asset/(liability) Group 31.3.11 £000 (2,815) – 9,527 2,167 8,879 Group 31.3.10 £000 Company 31.3.11 £000 Company 31.3.10 £000 (3,257) (4,782) 7,704 3,504 3,169 (29) – – 746 717 (228) (3,222) 168 – (3,282) Other temporary differences represent deferred tax assets arising from the recognition of the fair value of derivative ﬁnancial instruments and future tax relief available to the Group from capital allowances and when share 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 £2.8m (2010: £3.3m) would be released and further capital allowances of £10.6m (2010: £12.2m) would be available to reduce future tax liabilities. 13. Dividends paid and payable Attributable to equity share capital Ordinary – ﬁrst interim paid of 1.75p (2010: 1.75p) per share – second interim paid of nil (2010: 2.75p) per share – prior period ﬁnal paid of 0.25p (2010: 2.75p) per share Total dividends paid and payable in year – 2.00p (2010: 7.25p) per share Year ended 31.3.11 £000 Year ended 31.3.10 £000 1,857 – 265 2,122 1,851 2,909 2,897 7,657 An interim dividend of 1.75p was paid on 23 December 2010 to shareholders on the register on 3 December 2010. The ﬁnal dividend, if approved at the AGM on 26 July 2011, will be paid on 28 July 2011 to shareholders on the register on 1 July 2011. This ﬁnal dividend, amounting to £3,213,000, has not been included as a liability as at 31 March 2011, in accordance with IFRS. 14. Parent company The Company has taken advantage of Section 408 of the Companies Act 2006 and has not included its own income statement in the ﬁnancial statements. The loss for the year of the Company was £4,592,000 (2010: proﬁt of £3,975,000). 15. 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. This is a different basis to the net asset per share calculations which are based on the number of shares at the year end. 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. The (loss)/earnings per share are calculated in accordance with IAS 33, Earnings per Share and the best practice recommendations of the European Public Real Estate Association (“EPRA”). Reconciliations of the (loss)/earnings and weighted average number of shares used in the calculations are set out below. notes to the ﬁnancial statements Helical Bar plc 2011 page 73 Ordinary shares in issue Weighting adjustment Weighted average ordinary shares in issue for calculation of basic (loss)/earnings per share Weighted average ordinary shares issued on exercise of share options Weighted average ordinary shares to be issued under performance share plan Year ended 31.3.11 000s Year ended 31.3.10 000s 118,138 107,408 (8,700) (1,852) 109,438 105,556 – – 294 406 Weighted average ordinary shares in issue for calculation of diluted and diluted EPRA (loss)/earnings per share 109,438 106,256 (Loss)/earnings used for calculation of basic and diluted earnings per share (3,887) 9,619 Basic (loss)/earnings per share Diluted (loss)/earnings per share (Loss)/earnings used for calculation of basic and diluted earnings per share Net gain on sale and revaluation of investment properties Share of net gain on revaluation of investment properties in the results of joint ventures Tax on proﬁt on disposal of investment properties Trading property loss Fair value movement on derivative ﬁnancial instruments Share of fair value movements on derivative ﬁnancial instruments in the results of joint ventures Impairment of available-for-sale investment Deferred tax Loss used for calculation of diluted EPRA earnings per share Diluted EPRA loss per share (3.6p) 9.1p (3.6p) 9.1p (3,887) (7,512) (583) 1,162 367 9,619 (8,195) (2,015) (1,374) 10 (1,776) (1,157) 162 1,817 3,241 (7,009) 130 – 2,853 (129) (6.4p) (0.1p) In accordance with IAS 33 no dilutive weighting adjustments have been made for share awards in existence during the year to 31 March 2011 as a loss was made during that year making the adjustments anti-dilutive. Accordingly, the basic and diluted losses per share for that year are the same. The loss used for calculation of diluted EPRA earnings per share includes net rental income and development property proﬁts/losses but excludes trading property losses. 16. Investment properties Group Fair value at 1 April Property acquisitions Disposals Revaluation surplus/(deﬁcit) Revaluation surplus/(deﬁcit) attributable to proﬁt share partner Freehold Leasehold 31.3.11 £000 31.3.11 £000 Total 31.3.11 £000 Freehold 31.3.10 £000 Leasehold 31.3.10 £000 Total 31.3.10 £000 198,801 21,100 219,901 182,812 58,475 241,287 41,583 36,281 77,864 3,853 339 4,192 (24,902) (3,000) (27,902) (3,263) (37,175) (40,438) 6,861 (667) (4,191) 2,670 13,756 10 (657) 1,643 (652) 113 13,104 1,756 Fair value at 31 March 221,676 50,200 271,876 198,801 21,100 219,901 Within Investment Properties is one property which is classiﬁed as being held for sale per IFRS 5. This property was being marketed for sale at 31 March 2011 and was sold on 17 May 2011. At 31 March 2011 the value of this property was £19,350,000. A disposal of the investment property portfolio at its stated fair value would crystallise a net payment of £1,062,000 due to the Group’s joint venture partners in respect of their share of the revaluation surplus (2010: £1,748,000). Interest capitalised during the year in respect of the refurbishment of investment properties amounted to £nil (2009: £nil). Interest capitalised in respect of the refurbishment of investment properties is included in investment properties to the extent of £5,767,000 (2010: £5,767,000). page 74 Helical Bar plc 2011 notes to the ﬁnancial statements Investment properties with a total fair value of £257,725,000 were held as security against borrowings. Properties are stated at market value as at 31 March 2011, valued by professionally qualiﬁed external valuers except for investment properties valued by the Directors. The valuations have been prepared in accordance with the Valuation Standards (6th edition) published by the Royal Institution of Chartered Surveyors (“the Standards”). In their valuation reports, the valuers have noted, in accordance with Guidance Note 5 of the Standards, that the primary source of evidence for valuations is recent, comparable market transactions on arms length terms. The Directors have valued £4,401,000 (2%) of the investment portfolio on a discounted cashﬂow basis representing the present value of future income receivable upon the disposal by residents of units in the Group’s retirement village portfolio. The investment properties have been valued at 31 March 2011 as follows: Cushman & Wakeﬁeld LLP Drivers Jonas Deloitte Directors’ valuation £000 261,975 5,500 4,401 271,876 The historical cost of investment property is £264,947,000 (2010: £218,893,000). 17. Operating lease arrangements The Group earns rental income by leasing its investment properties to tenants under non-cancellable operating leases. At the balance sheet date the Group had contracted with tenants to receive the following future minimum lease payments: Group 31.03.11 £000 Group 31.03.10 £000 17,881 47,581 54,615 120,077 14,908 38,063 38,983 91,954 Not later than one year Later than one year but not more than ﬁve years More than ﬁve years The Company has no operating lease arrangements. 18. Owner occupied property, plant and equipment - Group Short leasehold Plant and improvements equipment 31.3.11 £000 31.3.11 £000 Short leasehold Plant and Total improvements equipment 31.3.10 £000 31.3.10 £000 31.3.11 £000 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 2,071 – – 2,071 708 189 – 897 1,174 670 189 (132) 727 395 139 (130) 404 323 2,741 2,071 189 (132) 2,798 1,103 328 (130) 1,301 1,497 – – 2,071 518 190 – 708 1,363 554 237 (121) 670 362 144 (111) 395 275 Plant and equipment include vehicles, ﬁxtures and ﬁttings and other ofﬁce equipment. All short leasehold improvements, plant and equipment relate to the Company except for plant and equipment with a net book value of £161,000 as at 31 March 2011 (2010: £162,000). Total 31.3.10 £000 2,625 237 (121) 2,741 880 334 (111) 1,103 1,638 19. Available-for-sale investments At 1 April 2010 Impairment in the year Interest receivable Fair value adjustments At 31 March 2011 notes to the ﬁnancial statements Helical Bar plc 2011 page 75 Non-Current Non-Current Company £000 Group £000 Current Group £000 Current Company £000 13,325 13,325 10,959 (13,325) (13,325) – – – – – – – 207 (661) 10,505 – – – – – Included in non-current available-for-sale investments is an investment of 18% in the ordinary shares of Quotient Biosciences Group Limited, a private bioscience company. At 31 March 2010 the valuation of the investment in Quotient was derived using a valuation technique as there was no active market for the shares. During the year trading conditions and its ﬁnancial position deteriorated and, accordingly, the investment has been assessed as having a fair value of £nil (31 March 2010: £13.3m). Of the fall in value, £1,817,000, representing the cost of our investment, has been written off through the Income Statement as Impairment of available-for-sale investments. The remaining £11,508,000 (£8,286,000 net of deferred tax), which represents prior period fair-value increases from cost, was reversed in Other Comprehensive Income. Included within current available-for-sale investments is an amount lent to a company promoting a mainly residential mixed-use development and an investment of 20% of the equity of this company. The loan and the equity are classed as available-for-sale investments and are held at fair value. The Group has determined its fair value by considering both the loan and the equity element separately. The loan element is valued at the fair value of the consideration receivable. The equity element is given a nil value with the Group valuing the underlying company on a break up basis at £nil as it is believed that this is the most probable outcome. This nil valuation is derived because the Group believe that the value of the property and any other of the company’s assets, after the repayment of the loan payable to the Group, would be required to repay the outstanding creditors leaving negligible value to the shareholders. Of the movement in the fair value of the loan and equity and the associated deferred tax movement, loan interest, calculated using the effective interest method, of £207,000 has been recognised in the Income Statement as interest receivable and £661,000 of other fair value movement has been recognised in Other Comprehensive Income. Movements in the Statement of Comprehensive Income comprise: Fair value movements of available-for-sale investments Impairment movements of available-for-sale investments Deferred tax on fair value movements Deferred tax on impairments 20. Investment in subsidiaries At 1 April Acquired during year Impairment in the carrying value of investments At 31 March 2011 £000 (661) (11,508) (12,169) – 3,222 3,222 2010 £000 2,962 – 2,962 (829) – (829) Group 31.3.11 £000 Group 31.3.10 £000 Company 31.3.11 £000 Company 31.3.10 £000 – – – – – – – – 31,822 32,896 5 26 (833) (1,100) 30,994 31,822 page 76 Helical Bar plc 2011 notes to the ﬁnancial statements The Company’s principal subsidiary undertakings, all of which have been consolidated, are: Name of undertaking Albion Land (Bushey Mill) Ltd Baylight Developments Ltd* Cranmer Investments (Whitstable) Ltd Dencora (Docklands) Ltd Dencora (Fordham) Ltd Downtown Space Properties LLP Harbour Developments (Bracknell) Ltd HB Sawston No. 3 Ltd Helical (Aldridge) Ltd Helical (Ashford) Ltd Helical Bar Developments (South East) Ltd Helical Bar (East Grinstead) Ltd Helical Bar (Great Dover Street) Ltd Helical Bar (Hawtin Park No. 3) Ltd Helical Bar Services Ltd Helical Bar (Wales) Ltd* Helical Bar (White City) Ltd Helical (Battersea) Ltd Helical (Bramshott Place) Ltd Helical (Cardiff) Ltd Helical (Colchester) Ltd Helical (Cowley) Ltd Helical (Crawley) Ltd Helical (Crownhill) Ltd Helical (Eastcheap) Ltd Helical (East Kilbride) Ltd Helical (Exeter) Ltd Helical (Faygate) Ltd Helical (Fleet) No. 2 Ltd* Helical (Glasgow) Ltd Helical (Hailsham) Ltd Helical (Kidlington) Ltd Helical (Liphook) Ltd Helical (Merlin Park) Ltd Helical (Milton) Ltd Helical (Motherwell) Ltd Helical (Paignton) Ltd Helical Retail Ltd Helical Retail (RBS) Ltd* Helical (Sawston) Ltd Helical (Sevenoaks) Ltd Helical Sosnica Sp. z.o.o.* Helical (Southall) Ltd Helical (Southampton) Ltd Helical (Stockport) Ltd Helical (Telford) Ltd Helical (West Drayton) Ltd Helical (Winterhill) Ltd Helical (Witham) Ltd Helical (Woking) Ltd Helical Wroclaw Sp. z.o.o.* Newmarket LP* Prescot Street Investments Ltd 14 Fieldgate Street Ltd 61 Southwark Street Ltd* Sutton-in-Ashﬁeld LP* Wood Lane (Stadium) Ltd Nature of business Percentage of ordinary share capital held 100% 100% 100% 100% 100% 70% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Development Investment Development Investment Investment Development Development Investment Investment Investment Development Investment Investment Investment Management Services Investment Development Investment Development Investment Trading Development Investment Investment Investment Investment Development Development Investment Investment/Trading Development Development Development (Jersey) Investment Development Investment Investment Development Development Investment Investment Development (Poland) Development Development Development Development Trading Investment Investment Investment Development (Poland) Investment Investment Development Investment Investment Trading All principal subsidiary undertakings operate in the United Kingdom other than Helical Sosnica Sp. z.o.o. and Helical Wroclaw Sp. z.o.o. and, unless otherwise indicated, are incorporated and registered in England and Wales. In line with s410(2) of the Companies Act 2006 a full list of all subsidiaries is lodged with the Annual Return at Companies House. *Ordinary capital is held by a subsidiary undertaking. Investments in subsidiaries have been impaired based on a review of their fair value at the balance sheet date. A review of the fair value of the investments is undertaken periodically. The fair value of the investment in subsidiaries is based on the value of the subsidiaries underlying assets. 21. Investment in joint ventures Summarised statements of consolidated income Revenue Operating proﬁt Sale of investment 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 notes to the ﬁnancial statements Helical Bar plc 2011 page 77 Group 31.3.11 £000 Group 31.3.10 £000 5,754 4,460 – (1,693) 2,767 119 2,886 1,835 3,207 1,147 (490) 3,864 (119) 3,745 65,875 24,713 45,305 27,507 (27,840) (18,528) (26,684) (27,900) 36,064 26,384 The cost of the Company’s investment in joint ventures was £165,000 (2010: £165,000). At 31 March 2011 the Group and the Company had interests in the following joint venture companies: Country of Class of share capital held incorporation Proportion held Group Proportion held Company Nature of business Abbeygate Helical (Leisure Plaza) Ltd Abbeygate Helical (Winterhill) Ltd Abbeygate Helical (C4.1) LLP The Asset Factor Ltd Shirley Advance LLP United Kingdom United Kingdom United Kingdom Ordinary Ordinary n/a United Kingdom Ordinary United Kingdom n/a King Street Developments (Hammersmith) Ltd United Kingdom PH Properties Limited (BVI) Barts Two Investment Property Limited British Virgin Islands Jersey Ordinary Ordinary Ordinary 50% 50% 50% 50% 50% 50% 60% 33% 50% Development 50% Development 50% Development 50% Outsourcing – Development – Development – – Investment Investment During the year the Group acquired a 33% economic interest in Barts Two Investment Property Limited, a jointly controlled entity which owns an investment property in the UK. The results and ﬁnancial position of Barts Two Investment Property Limited at the balance sheet date have been accounted for as a joint venture. Following the purchase of Barts in the year, the joint venture company has a contingent liability to pay up to a further £35m which will be dependent upon the timing of vacant possession and the ﬂoor area of any future redevelopment scheme for which planning permission is received. The meeting of the conditions in which an extra payment is required will almost certainly result in an increase in the valuation of the property equal to or above the amount of the additional payment. page 78 Helical Bar plc 2011 notes to the ﬁnancial statements 22. Land, developments and trading properties Group At 1 April Construction costs Interest capitalised Disposals Foreign exchange movements Provision At 31 March Company At 1 April Construction costs Provision At 31 March Development properties 31.3.11 £000 Trading stock 31.3.11 £000 Development properties 31.3.10 £000 Total 31.3.11 £000 Trading stock 31.3.10 £000 Total 31.3.10 £000 182,303 273 182,576 209,537 878 210,415 25,026 26,196 51,222 14,958 4,179 – 4,179 3,196 – – 14,958 3,196 (58,995) (16,181) (75,176) (32,983) (525) (33,508) (346) (14,913) – – (346) (14,913) (2,444) (9,961) 137,254 10,288 147,542 182,303 – (80) 273 (2,444) (10,041) 182,576 Development Development properties properties 31.3.10 31.3.11 £000 £000 968 171 (14) 1,125 853 115 – 968 The directors’ valuation of trading and development stock shows a surplus of £32m above book value (2010: £33m). Interest capitalised in respect of the development of sites is included in stock to the extent of £6,827,000 (2010: £8,482,000). Land, developments and trading properties with carrying values totalling £102,299,000 (2010: £154,917,000) were held as security against borrowings. 23. Financial instruments Categories of ﬁnancial instruments Financial assets in the Group include derivative ﬁnancial assets which are designated as ‘Fair value through the Income Statement’. Financial assets also include ﬁnance lease receivables, other receivables and cash and cash equivalents all of which are included within loans and receivables as well as available-for-sale investments. Financial liabilities in the Group comprise derivative ﬁnancial liabilities which are categorised as fair value through the Income Statement (non hedge). Financial liabilities also include secured bank loans, unsecured bond issues, unsecured loan notes, and bank loans and overdrafts, all of which are categorised as debt at amortised cost, and trade and other payables, provisions and current tax liabilities, which are classiﬁed as other ﬁnancial liabilities. Financial assets and liabilities by category The ﬁnancial instruments of the Group as classiﬁed in the ﬁnancial statements can be analysed under the following IAS 39 Financial Instruments: Recognition and Measurement, categories: Financial assets Loans and receivables Fair value through the Income Statement Available-for-sale ﬁnancial assets Total ﬁnancial assets Group 31.3.11 £000 Group 31.3.10 £000 Company 31.3.11 £000 Company 31.3.10 £000 67,325 79,440 397,932 402,788 793 1,944 10,505 24,284 715 – 1,944 13,325 78,623 105,668 398,647 418,057 These ﬁnancial assets are included in the balance sheet within the following headings: Available-for-sale investments Derivative ﬁnancial instruments Trade and other receivables Corporation tax receivable Cash and cash equivalents Total ﬁnancial assets notes to the ﬁnancial statements Helical Bar plc 2011 page 79 Group 31.3.11 £000 Group 31.3.10 £000 Company 31.3.11 £000 Company 31.3.10 £000 10,505 24,284 793 1,944 – 715 13,325 1,944 34,929 38,542 374,620 376,360 1,069 1,098 1,069 1,170 31,327 39,800 22,243 25,258 78,623 105,668 398,647 418,057 Financial assets are stated in accordance with IAS 32 Financial Instruments: Presentation. For fair value of available-for-sale investments see note 19. The carrying value of the trade and other receivables and cash and cash equivalents is deemed not to be materially different from the fair value. Financial liabilities Fair value through the Income Statement Other ﬁnancial liabilities Total ﬁnancial liabilities These ﬁnancial liabilities are included in the balance sheet within the following headings: Trade and other payables Borrowings - current Borrowings - non current Derivative ﬁnancial instruments Total ﬁnancial liabilities Group 31.3.11 £000 Group 31.3.10 £000 Company 31.3.11 £000 Company 31.3.10 £000 (7,311) (10,485) (3,373) (3,299) (281,782) (280,748) (183,321) (216,911) (289,093) (291,233) (186,694) (220,210) Group 31.3.11 £000 Group 31.3.10 £000 Company 31.3.11 £000 Company 31.3.10 £000 (44,365) (37,990) (168,911) (189,394) (37,500) (72,459) (4,500) (20,163) (199,917) (170,299) (7,311) (10,485) (9,910) (3,373) (7,354) (3,299) (289,093) (291,233) (186,694) (220,210) The carrying value of trade and other payables and borrowings is not deemed to be materially different from the fair value. Financial liabilities are stated in accordance with IAS 32. The Group and Company ﬁnancial instruments that are measured subsequent to initial recognition at fair value are available-for-sale assets, forward exchange contracts and interest rate swaps, caps and ﬂoors. Forward foreign exchange contracts are externally measured using quoted forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contracts. Interest rate swaps, caps and ﬂoors are measured at the present value of future cash ﬂows estimated and discounted based on the applicable yield curves derived from quoted interest rates. IFRS 7 categorises ﬁnancial assets and liabilities as being valued in 3 hierarchical levels: – Level 1: values are unadjusted quoted prices in active markets for identical assets or liabilities – Level 2: values are derived from observing market data – Level 3: values cannot be derived from observable market data The derivative ﬁnancial instruments above have been valued using a Level 2 methodology and the available-for-sale investments, which are described in note 19, are classiﬁed as Level 3 fair value measurements, being those not based on observable market data. There were no transfers between categories in the current or prior year. page 80 Helical Bar plc 2011 notes to the ﬁnancial statements Derivative ﬁnancial instruments Derivative ﬁnancial assets Interest rate caps Foreign exchange contracts Derivative ﬁnancial liabilities Interest rate swaps Interest rate ﬂoors Group Year ended 31.3.11 £000 Group Company Year ended Year ended 31.3.11 £000 31.3.10 £000 629 164 793 94 1,850 1,944 551 164 715 (4,764) (2,547) (7,186) (3,299) (7,311) (10,485) (826) (2,547) (3,373) Company Year ended 31.3.10 £000 94 1,850 1,944 – (3,299) (3,299) The group’s movement in the fair value of the derivative ﬁnancial instruments in the year was a gain of £1,776,000 (2010: £1,157,000); Company: loss of £1,287,000 (2010: £16,000). Credit risk Credit risks arise from the possibility that customers may not be able to settle their obligations as agreed. To manage this risk the Group periodically assesses the ﬁnancial reliability of customers, taking into account the ﬁnancial position, past experience and other factors. As at 31 March 2011 Helical has total credit risk excluding cash of £46.5m of which £10.5m is available-for-sale assets and £36.0m is loans and receivables. Available-for-sale assets are analysed in note 19. Of the trade receivables held at 31 March 2011, two amounts of £8.2m and £3.9m were due from the sale of investment properties and were both received on 1 April 2011 and a further £1.6m related to rent due from tenants which was received post year-end. All other debtors are deemed to be recoverable. The Group is not reliant on any major customer for its ability to continue as a going concern. For further information on trade and other receivables, see note 24. Liquidity risk Liquidity risk is deﬁned as the risk that the Group would not be able to settle or meet its obligations on time or at a reasonable price. Liquidity and funding risks, related processes and policies are overseen by management. Helical manages its liquidity risk on a consolidated basis based on business needs, tax, capital or regulatory considerations, if applicable, and through numerous sources of ﬁnance in order to maintain ﬂexibility. Management monitors the Group’s net liquidity position through rolling forecasts on the basis of expected cash ﬂows. The Group’s cash and cash equivalents are held with major regulated ﬁnancial institutions and the directors regularly monitor the ﬁnancial institutions that the group uses to ensure its exposure to liquidity risk is minimised. For further information on borrowing facilities, see notes 27 and 28. The maturity proﬁle of the Group’s contracted ﬁnancial liabilities is as follows: Payable within 3 months Payable between 3 months and 1 year Payable between 1 and 3 years Payable after 3 years Total contracted liabilities Group 31.3.11 £000 66,099 29,042 Group 31.3.10 £000 Company 31.3.11 £000 Company 31.3.10 £000 59,464 169,556 192,428 79,548 6,401 178,910 121,256 13,173 37,785 69,651 627 311,836 329,919 189,757 224,146 19,880 11,438 400 At 31 March 2011 Helical had £8.0m of undrawn borrowing facilities, £59.4m of uncharged property assets and cash balances of £31.3m. The above contracted liabilities assume that no loans are extended beyond their current facility expiry date. The management believe that these facilities, together with anticipated sales and the renewal of some of these loan facilities, mean that Helical can meet its contracted liabilities as they fall due. Market risk Helical is exposed to market risk, primarily related to interest rates, foreign currency exchange movements, the market value of the investments and accrued development proﬁts. The Group actively monitors these exposures. notes to the ﬁnancial statements Helical Bar plc 2011 page 81 Interest rate risk It is the Group’s policy and practice to minimise interest rate cash ﬂow exposures on long-term ﬁnancing. Helical does this by using a number of derivative ﬁnancial instruments including interest rate swaps and interest rate caps. The purpose of these derivatives is to manage the interest rate risks arising from the Group’s sources of ﬁnance. The Group does not use ﬁnancial instruments for speculative purposes. Details of ﬁnancing and ﬁnancial instruments can be found in note 28. In the year to 31 March 2011, if interest rates had moved by 0.5%, this would have resulted in the following movement to pre-tax losses and equity due to movements in interest charges and mark-to-market valuations of derivatives. 31 March 2011 0.5% increase – increase in net results and equity 0.5% decrease – decrease in net results and equity Impact on results £000 1,868 Equity impact £000 1,868 (1,086) (1,086) There would have been no signiﬁcant impact on the results or on the equity of the Company if interest rates had increased or decreased. Foreign currency exchange risk Due to its operations in Poland and its investment in a non-UK based property developer, Helical has exposure to exchange movements on foreign currencies. Helical’s management monitors its exposure to risks associated with foreign currency exchange risk and reviews any requirements to act to minimise these risks. Helical has entered into currency option contracts in order to reduce its exposure to these risks. In the year to 31 March 2011 the Group made foreign exchange losses of £67,000 resulting from foreign exchange movements related to its Polish operations. The Group’s balance sheet translation exposure is summarised as follows: Gross currency assets Gross currency liabilities Net exposure 31 March 2011 31 March 2010 Euro (£000) Zloty US dollars (£000) (£000) Euro (£000) Zloty (£000) US dollars (£000) 51,428 6,338 10,492 48,387 11,508 10,946 (22,339) (5,411) – (25,399) (3,826) – 29,089 927 10,492 22,988 7,682 10,946 The group has entered into a fair-value hedge to reduce the effects of foreign exchange translation losses on stock. Any movement in the fair value of this instrument is shown in the Income Statement as part of the change in fair value of derivative ﬁnancial instruments. The Company’s balance sheet translation exposure is almost exclusively due to intra-group loans and is summarised as follows: Gross currency assets Gross currency liabilities Net exposure 31 March 2011 31 March 2010 Euro (£000) 2,550 – Zloty (£000) 17,247 – Euro (£000) 4,025 – Zloty (£000) 14,955 – 2,550 17,247 4,025 14,955 The Group’s main currency exposure is to the euro. The sensitivity of the net assets and proﬁt of the Group to a 10% change in the value of the foreign currencies against sterling is Euro: £2,909,000 (March 2010: £2,299,000), Zloty: £93,000 (March 2010: £768,000), US dollar: net assets: £797,000 (March 2010: £788,000), proﬁt: £797,000 (March 2010: £nil). The sensitivity of the net assets and proﬁt of the Company to a 10% change in the value of the foreign currencies against sterling is Euro: £255,000 (March 2010: £402,000), Zloty: £1,725,000 (March 2010: £1,496,000). In addition to the above the Group has entered in to a number of currency option contracts to act as cashﬂow hedges against development contracts in Poland and future expected proﬁts on the development schemes. Whilst these contracts are designed to minimise foreign exchange risk on these transactions, hedge accounting has not been applied and any movement to the fair value of the options is shown in the Income Statement as part of the change in fair value of derivative ﬁnancial instruments. The details of these options is summarised below: Put euro – call sterling Hedge against anticipated development proﬁt EUR 10m 1.14 £163,000 Reason for hedging Contract value Contract Fair value at rate 31/03/2011 page 82 Helical Bar plc 2011 notes to the ﬁnancial statements 24. Trade and other receivables Trade receivables Amounts owed by joint venture undertakings Amounts owed by subsidiary undertakings Other receivables Prepayments and accrued income Receivables Fully performing Past due < 3 months Past due > 3 months Total receivables being ﬁnancial assets Total receivables being non-ﬁnancial assets Total receivables Group 31.3.11 £000 Group 31.3.10 £000 Company 31.3.11 £000 Company 31.3.10 £000 20,891 12,316 8,342 8,208 116 4,669 – 3,907 – 1,691 4,859 – 369,817 365,955 3,520 14,647 329 820 1,816 4,931 35,783 38,691 375,751 376,609 Group 31.3.11 £000 Group 31.3.10 £000 Company 31.3.11 £000 Company 31.3.10 £000 32,175 36,911 374,620 376,360 2,062 692 1,375 256 – – – – 34,929 38,542 374,620 376,360 854 149 1,131 249 35,783 38,691 375,751 376,609 Past due receivables relate to a number of independent customers for whom there is no recent history of default. Against trade receivables, Helical held £0.8m of rental deposits at 31 March 2011 (2010: £0.7m). Movements in the provision for impairment of trade receivables are as follows: Gross receivables being ﬁnancial assets Provisions for receivables impairment Net receivables being ﬁnancial assets Group 31.3.11 £000 Group 31.3.10 £000 Company 31.3.11 £000 Company 31.3.10 £000 35,418 39,192 374,620 376,360 (489) (650) – – 34,929 38,542 374,620 376,360 Receivables written off during the year as uncollectable 361 637 – – 25. Cash and cash equivalents Rent deposits and cash held at managing agents Cash secured against debt and cash held at solicitors Cash allocated to pay dividend Cash deposits Group 31.3.11 £000 3,313 – – 28,014 31,327 Group 31.3.10 £000 Company 31.3.11 £000 Company 31.3.10 £000 1,274 1,295 2,909 34,322 39,800 – – – 22,243 22,243 – – 2,909 22,349 25,258 26. Trade and other payables Trade payables Social security costs and other taxation Amounts owed to joint venture undertakings Amounts owed to subsidiary undertakings Other payables Accruals and deferred income 27. Borrowings Current borrowings Bank loans repayable within: – one to two years – two to three years – three to four years – four to ﬁve years Deferred arrangement costs Non-current borrowings notes to the ﬁnancial statements Helical Bar plc 2011 page 83 Group 31.3.11 £000 18,358 70 – – 5,371 21,425 45,224 Group 31.3.10 £000 Company 31.3.11 £000 Company 31.3.10 £000 4,635 638 – – 9,219 29,159 270 – 499 108 – 1,147 161,546 175,469 729 5,867 3,046 9,624 43,651 168,911 189,394 Group 31.3.11 £000 Group 31.3.10 £000 Company 31.3.11 £000 Company 31.3.10 £000 37,500 72,459 4,500 20,163 74,547 88,493 4,200 33,778 29,644 72,725 68,878 – 10,000 – – – 201,018 171,247 10,000 (1,101) (948) (90) 199,917 170,299 9,910 – 7,650 – – 7,650 (296) 7,354 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 £360,024,000 (2010: £370,917,000). 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 £39,384,000 (2010: £29,752,000). 28. Financing and ﬁnancial instruments The policies for dealing with liquidity and interest rate risk are noted in the Performance and Risk Review on pages 32 to 35. Bank overdraft and loans – maturity Due after more than one year Due within one year Group 31.3.11 £000 Group 31.3.10 £000 201,018 171,247 37,500 72,459 238,518 243,706 The Group has various undrawn committed borrowing facilities. The facilities available at 31 March 2011 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 Group 31.3.11 £000 Group 31.3.10 £000 6,299 1,672 7,971 8,186 – 8,186 page 84 Helical Bar plc 2011 notes to the ﬁnancial statements Interest rates - Group Fixed rate borrowings: – 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 – 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 31.3.10 £000 4,316 5,200 – 4,200 3,570 9,912 % Expiry 31.3.11 £000 % Expiry 4.480 Jun 2011 4,236 5.330 Jun 2011 – – – 5.650 Nov 2010 3.406 Jan 2015 6.401 Oct 2012 5.645 Oct 2014 12,250 28,500 6,690 – – 7.150 Oct 2012 28,500 8.295 Oct 2014 6,690 6.240 Dec 2013 10,120 6.240 Dec 2013 10,120 – – – 6.040 Jan 2011 5.290 Mar 2012 7.208 Aug 2013 – – – – 3,570 9,912 – – 5.290 Mar 2012 7.208 Aug 2013 6.270 Oct 2010 14,652 3.555 Jun 2011 5,400 5.769 Jun 2013 75,278 6.429 Jun 2012 92,560 2.974 May 2013 163,240 2.321 Jun 2012 151,146 238,518 (1,101) 237,417 243,706 (948) 242,758 Changes in ﬁxed borrowing rates are the result of the repayment of bank loans where the interest rate swaps have not been cancelled. The movement in the rate is due to the bank margin not being payable. Floating rate borrowings bear interest at rates based on LIBOR. As at 31 March 2011 and 31 March 2010 the Company’s borrowings consist of ﬁxed rate borrowings of £6,690,000 at 5.645% (2010: 8.295%) expiring in October 2014 with the remainder being ﬂoating rate borrowings. Hedging In addition to the ﬁxed rates, borrowings are also hedged by the following ﬁnancial instruments: Instrument Current: – cap – cap – cap – ﬂoor Gearing Total borrowings Cash Net borrowings Value £000 Rate % Start Expiry 30,000 – 40,950 6.000 May 2008 May 2013 50,000 4.000 Apr 2011 Apr 2015 10,613 – 11,037 4.000 Jan 2015 Jan 2016 30,000 – 40,950 4.500 May 2008 May 2013 Group 31.3.11 £000 Group 31.3.10 £000 237,417 242,758 (31,327) (39,800) 206,090 202,958 Group 31.3.11 £000 Group 31.3.10 £000 255,397 242,607 81% 84% Net borrowings exclude the Group’s share of borrowings in joint ventures of £39,384,000 (2010: £29,752,000). Net assets Gearing 29. Share capital Authorised notes to the ﬁnancial statements Helical Bar plc 2011 page 85 31.3.11 £000 39,577 39,577 31.3.10 £000 39,577 39,577 The authorised share capital of the Company is £39,576,626.60 divided into ordinary shares of 1p each and deferred shares of 1⁄8p each. Allotted, called up and fully paid – 118,137,522 ordinary shares of 1p each (2010: 107,407,522) – 212,145,300 deferred shares of 1⁄8p each 31.3.11 £000 31.3.10 £000 1,182 265 1,447 1,074 265 1,339 As at 1 April 2010 the Company had 107,407,522 ordinary 1p shares in issue. On 8 December 2010 the Company issued 10,730,000 new ordinary 1p shares to shareholders as a part of the Placing referred to in the Financial Review on page 38. At 31 March 2011 there were 118,137,522 ordinary 1p shares in issue. Ordinary shares At 1 April New shares issued At 31 March Deferred shares At 1 April At 31 March Shares in issue 31.3.11 Number Share capital 31.3.11 £000 Shares in issue 31.3.10 Number Share capital 31.3.10 £000 107,407,522 10,730,000 118,137,522 212,145,300 212,145,300 1,074 108 1,182 265 265 107,087,012 1,071 320,510 3 107,407,522 1,074 212,145,300 212,145,300 265 265 The Group’s capital management objectives are: – to ensure the Group’s ability to continue as a going concern; and, – to provide an adequate return to shareholders. The Group sets the amount of capital in proportion to its overall ﬁnancing structure. It manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt. Capital is deﬁned as being issued share capital, retained earnings and other reserves. (2011: 247,797,000; 2010: £235,005,000). The deferred shares were issued on 23 December 2004 to those shareholders electing to receive a dividend, rather than a capital repayment or further shares in the Company, as part of the Return of Cash approved by shareholders on 20 December 2004. The deferred shares carry no voting rights and have no right to a dividend or capital payment in the event of a winding up of the Company. The Company’s Articles of Association give the Company irrevocable authority to purchase all or any of the deferred shares for a maximum aggregate total of 1 penny for all deferred shares in issue on the date of such purchase. page 86 Helical Bar plc 2011 notes to the ﬁnancial statements 30. Share options At 31 March 2011 there were no unexercised options over new ordinary 1p shares in the Company (31 March 2010: nil) and no options over purchased ordinary 1p shares held by the ESOP had been granted to directors and employees under the Company’s share option schemes (31 March 2010: nil). During the period no new options were granted. Summary of share options At 1 April Options granted Options exercised Option expired/lapsed At 31 March Weighted average exercise Price 31.3.11 Number 31.3.11 – – – – – – – – – – Weighted average exercise price 31.3.10 149p – 34p – – Number 31.3.10 1,377,605 – (1,377,605) – – 31. Share-based payments The Group provides share-based payments to employees in the form of 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. Performance share plan awards Outstanding at beginning of period Awards vested during the period Awards lapsed during the period Awards cancelled during the period Awards made during the period Outstanding at end of period 2011 Weighted average award value Awards 2010 Weighted average award value Awards 4,870,283 332p 4,738,900 – – (482,065) (989,620) 473p (964,130) – – (555,644) 2,368,701 276p 2,133,222 6,249,364 284p 4,870,283 364p 377p 377p 359p 300p 332p 2009 276p – n/a The performance share plan awards outstanding at 31 March 2011 had a weighted average remaining contractual life of one year eight months. The inputs into the stochastic model of valuation of the PSP awards made in the year to 31 March 2011 were as follows: Weighted average share price Weighted average exercise price Expected volatility Expected life Risk free rate Expected dividends The Group recognised a credit of £196,000 (2010: charge £1,151,000) in relation to Share-based payments. At the balance sheet date there were no exercisable awards. 2011 2010 285.1p 297.5p – n/a – n/a 3 years 3 years 3 years n/a n/a n/a 1.05% 1.51% 1.63% notes to the ﬁnancial statements Helical Bar plc 2011 page 87 32. Own shares held 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 2011 unexercised options over nil (2010: nil) ordinary 1p shares in Helical Bar plc had been granted over shares held by the Trust. At 31 March 2011 outstanding awards over 6,294,364 (2010: 4,870,283) ordinary 1p shares in Helical Bar plc had been made under the terms of the Performance Share Plan over shares held by the Trust. 33. Contingent liabilities The Group’s share of its Joint Ventures contingent liabilities is discussed in note 21. The Group has guaranteed this payment in the event of default of the Joint Venture. The Company has entered into cross guarantees in respect of the banking facilities of its subsidiaries. These are not considered to have a material value. The Company has undertaken to provide support for some of its subsidiaries undertakings. However it does not believe that this support will be required in the foreseeable future. Other than these contingent liabilities there were no contingent liabilities at 31 March 2011 for the Group or the Company (2010: £nil). 34. Net assets per share 31.3.11 £000 Number of shares 000s 31.3.11 pence per share 31.3.10 £000 Number of shares 000s 31.3.10 pence per share Net asset value 255,397 118,138 242,607 107,408 Less: own shares held by ESOP – (1,292) – (1,292) deferred shares (265) (265) Basic and diluted net asset value 255,132 116,846 218 242,342 106,116 228 Adjustment for: – fair value of ﬁnancial instruments – deferred tax 7,071 717 9,978 3,257 Adjusted diluted net asset value 262,920 116,846 225 255,577 106,116 241 Adjustment for: – fair value of trading and development properties 32,436 32,991 Diluted EPRA net asset value 295,356 116,846 253 288,568 106,116 272 Adjustment for: – fair value of ﬁnancial instruments – deferred tax (7,071) (717) (9,978) (3,257) Diluted EPRA triple net asset value 287,568 116,846 246 275,333 106,116 259 The net asset values per share have been calculated in accordance with the best practice recommendations of the European Public Real Estate Association (“EPRA”). page 88 Helical Bar plc 2011 notes to the ﬁnancial statements 35. Related party transactions At 31 March 2011 and 31 March 2010 the following amounts were due from the Group’s joint ventures. Abbeygate Helical (Leisure Plaza) Ltd Abbeygate Helical (Winterhill) Ltd Abbeygate Helical (C4.1) LLP King Street Developments (Hammersmith) Ltd Shirley Advance LLP The Asset Factor Ltd PH Properties Limited (BVI) Barts Two Investment Property Limited All movements in joint venture balances related to loans repaid and loans advanced. At 31 March 2011 and 31 March 2010 there were the following balances between the Company and its subsidiaries. Amounts due from subsidiaries Amounts due to subsidiaries At 31.3.11 £000 At 31.3.10 £000 2,040 2,212 – 6 2,000 4,296 596 – – (12) (598) 1,634 4,372 600 – – At 31.3.11 £000 At 31.3.10 £000 369,817 365,955 161,546 175,469 During the years to 31 March 2011 and 31 March 2010 there were the following transactions between the Company and its subsidiaries: Management charges receivable Management charges payable Interest receivable Interest payable Year ended 31.3.11 £000 Year ended 31.3.10 £000 3,422 250 4,725 – 3,202 271 3,109 – Management charges relate to the performance of management services for the Company or its subsidiaries. Interest receivable relates to interest on loans made by the Company to its subsidiaries. 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. Amounts owed by subsidiaries to the company are identiﬁed in note 24. Amounts owed to subsidiaries by the company are identiﬁed in note 26. The Group consider that the key management personnel are the directors and the detail of their remuneration is disclosed in the directors’ remuneration report on pages 48 to 54. Share based payments for directors are disclosed in note 9. NOTES TO THE FINANCIAL STATEMENT Helical Bar plc 2011 page 89 ten year review IFRS 31.3.11 £000 IFRS 31.3.10 £000 IFRS 31.3.09 £000 IFRS 31.3.08 £000 IFRS 31.3.07 £000 IFRS 31.3.06 £000 IFRS UK GAAP UK GAAP UK GAAP 31.3.02 £000 31.3.03 £000 31.3.04 £000 31.3.05 £000 Revenue 119,059 67,354 81,770 65,623 123,176 119,274 101,469 54,566 135,192 136,632 Net rental income 14,187 14,151 17,682 16,400 14,771 16,524 20,440 22,980 25,619 27,827 Development (loss)/proﬁt (16,642) (1,293) (7,704) 6,068 13,587 4,594 12,664 38 4,630 17,072 Trading (loss)/proﬁt (367) (10) (514) (29) 2,094 13,441 5,771 1,031 349 154 Share of results of joint ventures 2,886 3,745 Other (expense)/income (358) 26 1,846 6,752 (98) 6,196 (315) 766 437 235 2,699 1,636 1,544 235 601 626 986 (67) Gross (loss)/proﬁt before gain/(loss) on investment properties Gain/(loss) on sale and revaluation of investment properties Gain on sale of investments (294) 16,619 18,062 22,026 37,414 35,231 41,809 26,286 32,768 45,972 7,512 8,195 (66,670) (32,790) 40,637 43,551 44,204 2,035 2,126 2,463 Impairment of available-for-sale investments (1,817) – – – 1,892 – – – – – – – – – – – – – – – Administrative expenses Loss on sale of subsidiary Negative goodwill (7,050) (8,680) (8,090) (13,659) (17,544) (16,582) (15,757) (8,037) (6,391) (10,888) – – – – – – – – – – – – – – (59) – (195) – 6,362 – Net ﬁnance costs (4,564) (7,132) (21,048) (1,724) (419) (5,080) (5,561) (6,572) (9,638) (14,779) Foreign exchange (losses)/gains (67) (1,127) 3,999 1,862 – – – – – – (Loss)/proﬁt before tax (6,280) 7,875 (71,855) (24,285) 60,088 57,120 64,695 13,653 25,227 22,573 Tax 2,391 1,711 18,359 11,971 (8,000) (9,676) 844 (2,199) (7,660) (5,353) (Loss)/proﬁt after tax (3,889) 9,586 (53,496) (12,314) 52,088 47,444 65,539 11,454 17,567 17,220 Investment portfolio 271,876 219,901 241,287 306,778 316,025 294,583 271,315 334,932 342,484 439,911 Shareholders’ funds 255,397 242,607 237,066 268,659 282,186 230,097 186,165 234,917 226,870 227,653 Dividend per ordinary share Special dividend per ordinary share Diluted (loss)/earnings per ordinary share Diluted EPRA net assets per share 2.00p 7.25p 4.50p 4.50p 4.05p 3.65p 3.32p 3.32p 3.00p 2.75p – – – – – – 80.0p – – 20.0p (3.6p) 9.1p (56.6p) (13.5p) 53.7p 51.8p 53.7p 7.9p 11.8p 11.8p 253p 272p 286p 352p 374p 309p 238p 182p 155p 155p 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 years 31 March 2001 to 31 March 2005 have been restated to reﬂect the impact of the 5 for 1 share issue on 1 September 2005 page 90 Helical Bar plc 2011 investor information The report and ﬁnancial statements, share price information, company presentations, the ﬁnancial calendar, Corporate Governance, contact details and other investor information on the Group are available in the Investor Relations and Company Proﬁle area of our website www.helical.co.uk. Registrar All general enquiries concerning holdings of ordinary shares in Helical Bar plc should be addressed to: Capita Registrars The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU Telephone: 0871 664 0300* Fax: 020 8639 2342 Website: www.capitaregistrars.com Email: shareholder.services@capitaregistrars.com *calls cost 10p per minute plus network extras. Lines are open between 8:30am and 5:30pm, Mon-Fri. e-communication UK shareholders may choose to be alerted about updates to the Financial Reports, Results, Press Releases and Events Calendar sections of the Group’s website by subscribing to the Alerting Service at www.helical. co.uk. Shareholders may also submit their proxy votes electronically. To register for this service, shareholders should visit the Shareholders area of www.capitaregistrars.com. Payment of dividends Shareholders whose dividends are not currently paid to mandated accounts may wish to consider having their dividends paid directly into their bank or building society account. This has a number of advantages, including the crediting of cleared funds into the nominated account on the dividend payment date. If shareholders would like their future dividends to be paid in this way, they should complete a mandate instruction available from the Registrars. Under this arrangement tax vouchers are sent to the shareholder’s registered address. Dividends for shareholders resident outside the UK Instead of waiting for a sterling cheque to arrive by mail, you can ask us to send your dividends direct to your bank account. For information contact the Company’s Registrar. Dividend reinvestment plan (DRIP) The Company offers shareholders the option to participate in a DRIP. This enables shareholders to reinvest their cash dividends in Helical Bar plc shares. For further details, contact the Company’s Registrar. For participants in the plan, key dates can be found in the online ﬁnancial calendar in the ‘Investor Relations’ area at www.helical.co.uk. ShareGift Shareholders with a small number of shares, the value of which makes it uneconomic to sell them, may wish to consider donating them to a charity ShareGift, (registered charity 1052686) which specialises in using such holdings for charitable beneﬁt. Further information about ShareGift is available at www.sharegift.org or by writing to: ShareGift, 17 Carlton House Terrace, London, SW1Y 5AH Telephone: 020 7930 3737 Dividends Dividend payment dates on the Company’s Ordinary 1p shares in 2010 were as follows: Dividend Record Date 2009/10 2nd interim 12 March 2010 2009/10 Final 2010/11 Interim 25 June 2010 3 Dec 2010 Payment Date 1 April 2010 23 July 2010 23 Dec 2010 Dividend payment dates in 2011 will be as follows: Dividend 2010/11 Final 2011/12 Interim Record Date 1 July 2011 Dec 2011 Payment Date 28 July 2011 Dec 2011 Amount 2.75p 0.25p 1.75p Amount 3.15p Unsolicited investment advice - warning to shareholders Many companies have become aware that their shareholders have received unsolicited phone calls or correspondence concerning investment matters. These are typically from overseas-based ‘brokers’ who target UK shareholders offering to sell them what often turn out to be worthless or high risk shares in US or UK investments. They can be very persistent and extremely persuasive. A 2006 survey by the Financial Services Authority (FSA) reported that the average amount lost by investors was around £20,000. It is not just the novice investor that has been duped in this way; many of the victims had been successfully investing for several years. Shareholders are advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers of free reports into the company. If you receive any unsolicited investment advice: (cid:115)(cid:229)(cid:45)(cid:65)(cid:75)(cid:69)(cid:229)(cid:83)(cid:85)(cid:82)(cid:69)(cid:229)(cid:89)(cid:79)(cid:85)(cid:229)(cid:71)(cid:69)(cid:84)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:67)(cid:79)(cid:82)(cid:82)(cid:69)(cid:67)(cid:84)(cid:229)(cid:78)(cid:65)(cid:77)(cid:69)(cid:229)(cid:79)(cid:70)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:80)(cid:69)(cid:82)(cid:83)(cid:79)(cid:78)(cid:229)(cid:65)(cid:78)(cid:68)(cid:229)(cid:79)(cid:82)(cid:71)(cid:65)(cid:78)(cid:73)(cid:83)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:14) (cid:115)(cid:229)(cid:229)(cid:35)(cid:72)(cid:69)(cid:67)(cid:75)(cid:229)(cid:84)(cid:72)(cid:65)(cid:84)(cid:229)(cid:84)(cid:72)(cid:69)(cid:89)(cid:229)(cid:65)(cid:82)(cid:69)(cid:229)(cid:80)(cid:82)(cid:79)(cid:80)(cid:69)(cid:82)(cid:76)(cid:89)(cid:229)(cid:65)(cid:85)(cid:84)(cid:72)(cid:79)(cid:82)(cid:73)(cid:83)(cid:69)(cid:68)(cid:229)(cid:66)(cid:89)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:38)(cid:51)(cid:33)(cid:229)(cid:66)(cid:69)(cid:70)(cid:79)(cid:82)(cid:69)(cid:229)(cid:71)(cid:69)(cid:84)(cid:84)(cid:73)(cid:78)(cid:71)(cid:229) involved. You can check at www.fsa.gov.uk/register (cid:115)(cid:229)(cid:229)(cid:52)(cid:72)(cid:69)(cid:229)(cid:38)(cid:51)(cid:33)(cid:229)(cid:65)(cid:76)(cid:83)(cid:79)(cid:229)(cid:77)(cid:65)(cid:73)(cid:78)(cid:84)(cid:65)(cid:73)(cid:78)(cid:83)(cid:229)(cid:79)(cid:78)(cid:229)(cid:73)(cid:84)(cid:83)(cid:229)(cid:87)(cid:69)(cid:66)(cid:83)(cid:73)(cid:84)(cid:69)(cid:229)(cid:65)(cid:229)(cid:76)(cid:73)(cid:83)(cid:84)(cid:229)(cid:79)(cid:70)(cid:229)(cid:85)(cid:78)(cid:65)(cid:85)(cid:84)(cid:72)(cid:79)(cid:82)(cid:73)(cid:83)(cid:69)(cid:68)(cid:229)(cid:79)(cid:86)(cid:69)(cid:82)(cid:83)(cid:69)(cid:65)(cid:83)(cid:229) ﬁrms who are targeting, or have targeted, UK investors and any approach from such organisations should be reported to the FSA so that this list can be kept up to date and any other appropriate action can be considered. (cid:115)(cid:229)(cid:229)(cid:50)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:77)(cid:65)(cid:84)(cid:84)(cid:69)(cid:82)(cid:229)(cid:84)(cid:79)(cid:229)(cid:84)(cid:72)(cid:69)(cid:229)(cid:38)(cid:51)(cid:33)(cid:229)(cid:69)(cid:73)(cid:84)(cid:72)(cid:69)(cid:82)(cid:229)(cid:66)(cid:89)(cid:229)(cid:67)(cid:65)(cid:76)(cid:76)(cid:73)(cid:78)(cid:71)(cid:229)(cid:16)(cid:19)(cid:16)(cid:16)(cid:229)(cid:21)(cid:16)(cid:16)(cid:229)(cid:21)(cid:16)(cid:16)(cid:16)(cid:229)(cid:79)(cid:82)(cid:229)(cid:66)(cid:89)(cid:229) completing an online form at: http://www.moneymadeclear.org.uk/news/scams/share_scams.html If you deal with an unauthorised ﬁrm, you would not be eligible to receive payment under the Financial Services Compensation Scheme. Share price information The latest information on the Helical Bar plc share price is available on our website www.helical.co.uk. Registered ofﬁce 11–15 Farm Street, London, W1J 5RS Registered in England and Wales No. 156663. Helical Bar plc 2011 page 91 glossary of terms Average unexpired lease term The average unexpired lease term expressed in years. Capital value (psf) The open market value of the property divided by the area of the property in square feet. Diluted EPRA earnings per share Diluted EPRA net assets per share Earnings per share adjusted to exclude losses/gains on sale and revaluation of investment properties and their deferred tax adjustments, the tax on loss/proﬁt on disposal of investment properties, trading property losses/proﬁts, impairment of available-for-sale investments and fair value movements on derivative ﬁnancial instruments, on a diluted basis. Details of the method of the calculation of the diluted EPRA earnings per share are available from EPRA. 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, but including the fair value of trading and development properties in accordance with the best practice recommendations of EPRA. Diluted EPRA triple net asset value per share Diluted EPRA net asset value per share adjusted to include fair value of ﬁnancial instruments and deferred tax on capital allowances and on investment properties revaluation. 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. EPRA Equivalent yield European Public Real Estate Association. 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 in arrears. 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 IPD Annualised net rents on investment properties as a percentage of the investment property valuation. The Investment Property Databank Limited (IPD) is a company that produces a number of independent benchmarks of unleveraged commercial property returns. 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 Passing rent Total borrowings less short-term deposits and cash as a percentage of equity shareholders’ funds. The annual gross rental income excluding the net effects of straightlining lease incentives. Rack rental value % The anticipated yield, which the initial yield will rise to once the rent reaches the ERV. Total shareholder return (TSR) True equivalent yield Unleveraged returns 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. 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. Total property gains and losses (both realised and unrealised) plus net rental income expressed as a percentage of the total value of the properties. page 92 Helical Bar plc 2011 ﬁnancial calendar Year ended 31 March 2011 Annual General Meeting to be held 26 July 2011 Final ordinary dividend payable 28 July 2011 Half year ending 30 September 2011 Year ending 31 March 2012 Results and interim ordinary dividend announced November 2011 Interim ordinary dividend payable December 2011 Results and ﬁnal dividend announced May 2012 Final ordinary dividend payable July 2012 advisors Registrars Bankers Stockbrokers Auditors Merchant bankers Solicitors Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Aareal Bank AG Allied Irish Bank Barclays Bank plc Clydesdale Bank Eurohypo AG HSBC plc Nationwide The Royal Bank of Scotland Group plc JP Morgan Cazenove Limited 10 Aldermanbury London EC2V 7RF Grant Thornton UK LLP Grant Thornton House Melton Street Euston Square London NW1 2EP Lazard Ltd 50 Stratton Street London W1J 8LL Ashurst Clifford Chance Lawrence Graham Linklaters Lovells Mishcon de Reya Nabarro Norton Rose Semple Fraser Wragge & Co FINANCIAL CALENDAR / ADVISORS Helical Bar Plc 2011 page 2 s s e r p n o c a e b t n i r p | This Report was printed by Beacon Press using their pureprint® environmental print technology. The printing inks are made using vegetable based oils. The electricity was generated from renewable sources and 90% of the waste associated with this product will be recycled. Beacon Press is registered to environmental management system ISO 14001 and EMAS (Eco Management Audit Scheme). It is printed on paper made from Elemental Chlorine Free (ECF) pulps from well managed forests. The paper mill is registered to environmental management systems ISO 14001 and EMAS. i . ] k u o c . n g s e d - g s . w w w i [ n g s e d g s n g s e d i Helical Bar plc Registered Ofﬁ ce 11-15 Farm Street London, W1J 5RS Tel: 020 7629 0113 Fax: 020 7408 1666 email: info@helical.co.uk www.helical.co.uk

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