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REPORT & ACCOUNTS 2016
HELICAL BAR PLC REPORT & ACCOUNTS 2016
STRATEGIC REPORT
What we do
Financial highlights
Helical’s portfolio
Operational highlights
Chief Executive’s statement
Our strategy
Performance
Helical’s property portfolio
Asset management
Financial review
Principal risks review
Corporate responsibility
GOVERNANCE
Chairman’s review
Governance structure
Board of Directors
Governance review
Nominations committee report
Audit committee report
Directors’ remuneration report
Report of the directors
Statement of directors’ responsibilities
Independent Auditor’s report
FINANCIAL STATEMENTS
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated and company balance sheets
Consolidated and company cash flow statements
Consolidated and company statements of changes in equity
Notes to the financial statements
ADDITIONAL INFORMATION
Appendix 1 – See-through analysis
Appendix 2 – See-through analysis ratios
Appendix 3 – Five year review
Appendix 4 – Property portfolio
Shareholder information
Glossary of terms
Financial calendar
Advisors
3
4
7
8
14
18
20
22
47
50
58
63
71
72
74
76
79
81
83
103
105
106
112
112
113
114
115
116
147
149
150
151
154
155
156
156
FINANCIAL CALENDAR
Year ended 31 March 2016
Annual General Meeting to be held on 25 July 2016
Final ordinary dividend payable
29 July 2016
Half year ending 30 September 2016
Results and interim ordinary dividend announced November 2016
Year ending 31 March 2017
Results and final dividend announced May 2017
Final ordinary dividend payable July 2017
Interim ordinary dividend payable December 2016
HELICAL BAR PLC REPORT & ACCOUNTS 2016
HELICAL BAR PLC REPORT & ACCOUNTS 2016
1
STRATEGIC
REPORT
WHAT WE DO
FINANCIAL HIGHLIGHTS
HELICAL’S PORTFOLIO
OPERATIONAL HIGHLIGHTS
CHIEF EXECUTIVE’S STATEMENT
OUR STRATEGY
PERFORMANCE
3
4
7
8
14
18
20
HELICAL’S PROPERTY PORTFOLIO 22
ASSET MANAGEMENT
FINANCIAL REVIEW
PRINCIPAL RISKS REVIEW
CORPORATE RESPONSIBILITY
47
50
58
63
2
WHAT WE DO
3
Helical Bar plc is a UK focused property investment
and development company.
We aim to deliver market-leading returns by acquiring
high-yielding investment properties, applying a rigorous
approach to asset management and deploying limited
equity into development situations which have the
potential to be highly profitable.
Our portfolio is primarily targeted towards London for
capital growth and development profits and the
regions for high yielding investment assets.
THE BOWER, OLD STREET, LONDON EC1
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT 4
FINANCIAL HIGHLIGHTS
TOTAL PROPERTY
RETURN
PROFIT BEFORE TAX
EPRA EARNINGS PER
SHARE
+10%
£170.6m
£155.3m
£140.1m
£35.9m
£27.5m
2016
2015
2014
2013
2012
+37%
+613%
2016
2015
2014
2013
2012
£120.1m
£87.4m
£101.7m
£5.0m
£7.4m
2016
2015
2014
2013
2012
17.1p
2.4p
33.3p
2.4p
3.4p
SEE-THROUGH
PORTFOLIO VALUE
NET ASSETS
EPRA NET ASSET
VALUE PER SHARE
+21%
£1,240.0m
£1,021.4m
£801.7m
£626.4m
£572.7m
2016
2015
2014
2013
2012
+20%
+20%
2016
2015
2014
2013
2012
£486.2m
£404.4m
£340.5m
£253.8m
£253.7m
2016
2015
2014
2013
2012
461p
385p
313p
264p
250p
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL HIGHLIGHTS
5
PORTFOLIO RETURN
– IPD
TOTAL SHAREHOLDER
RETURN
TOTAL DIVIDEND
DECLARED PER SHARE
2016
2015
2014
2013
2012
21.7%
20.4%
23.8%
8.6%
5.6%
2016
2015
2014
2013
2012
1.0%
7.6%
61.1%
28.4%
(-28.4%)
2016
2015
2014
2013
2012
+13%
8.17p
7.25p
6.75p
5.55p
5.15p
SEE-THROUGH LOAN
TO VALUE
SEE-THROUGH NET
ASSET VALUE GEARING
INTEREST COVER
RATIO
2016
2015
2014
2013
2012
55%
52%
46%
45%
49%
2016
2015
2014
2013
2012
125%
113%
99%
90%
95%
2016
2015
2014
2013
2012
5.4x
2.5x
8.3x
2.7x
2.8x
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT
6
HELICAL’S PORTFOLIO
7
DEVELOPMENT STOCK
15.1% £187.3m
LONDON OFFICES
1.5%
£18.0m
LONDON RESIDENTIAL
£60.0m
4.8%
REGIONAL OFFICES
0.1%
£1.0m
REGIONAL RETAIL
0.7%
£8.1m
RETIREMENT VILLAGES
£91.6m
7.3%
LAND
0.7%
£8.6m
INVESTMENT PROPERTIES
84.9% £1,052.7m
LONDON OFFICES
47.8%
£593.2m
RETIREMENT VILLAGES
£11.9m
1.0%
REGIONAL RETAIL
10.8%
£134.5m
REGIONAL INDUSTRIAL/LOGISTICS
£210.5m
17.0%
REGIONAL OFFICES
8.3%
£102.5m
LAND
0.0%
£0.1m
TOTAL PORTFOLIO
BY FAIR VALUE
£1,240.0m
C SPACE, LONDON EC1
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT 8
OPERATIONAL HIGHLIGHTS
LONDON PORTFOLIO
The London portfolio represents 54% of the total
property portfolio and is well positioned to provide
future valuation surpluses whilst being highly
reversionary.
54%
BELOW SHEPHERDS BUILDING,
SHEPHERDS BUSH W14
TOP THE BOWER, OLD STREET EC1
MIDDLE ONE KING STREET, HAMMERSMITH W6
BOTTOM BARTS SQUARE, EC1
HELICAL BAR PLC REPORT & ACCOUNTS 2016 OPERATIONAL HIGHLIGHTS
LONDON PORTFOLIO
9
18.8% VALUATION
INCREASE OF LONDON
INVESTMENT PORTFOLIO
(2015: 9.2%), now valued at £593m
(56% of total investment portfolio).
Lettings at The Bower EC1, Shepherds
Building W14, C-Space EC1 and
One King Street W6
INCREASED CONTRACTED
GROSS RENTS ON LONDON
PORTFOLIO TO £23.6M
(2015: £8.7m) compared to an
ERV of £45.4m (2015: £28.1m).
AT ONE BARTHOLOMEW
CLOSE EC1, THE SITE
WAS SOLD FOR £102.4M
and the 213,000 sq ft office development
forward funded, releasing £34m cash to Helical.
OFFICES AT THE BOWER
EC1 ACQUIRED FOR £248M
(with Helical reinvesting its existing one third
ownership). Joint venture partner Crosstree
acquired the retail parade for £23m and Empire
House sold for £20.65m in November 2015, a
38% premium to 31 March 2015 book value.
- First phase 100% let
- Second phase under construction
MAJOR REFURBISHMENT
COMMENCED AT
CHARTERHOUSE SQUARE
EC1 increasing the office space to 38,500
sq ft with 5,100 sq ft of retail, with delivery in
early 2017.
AT DRURY LANE &
DRYDEN STREET WC2 A
RESOLUTION TO GRANT
PLANNING WAS ISSUED
for a residential led scheme of 68 apartments.
AT BARTS SQUARE EC1,
102 RESIDENTIAL UNITS
EXCHANGED AT 23 MAY
2016 (31 March 2015: 56 units) and
two reserved on phase 1 of 144 units.
POWER ROAD STUDIOS W4,
ACQUIRED FOR £34M.
BELOW C-SPACE, 37-45 CITY ROAD EC1
TOP 23-28 CHARTERHOUSE SQUARE, SMITHFIELD EC1
BOTTOM THE LOOM, WHITECHAPEL, E1
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT 10
HELICAL BAR PLC REPORT & ACCOUNTS 2016
11
OPERATIONAL HIGHLIGHTS
REGIONAL PORTFOLIO
The Regional portfolio represents 46% of the total property
portfolio and provided 71% of the net rental income for
the year.
46%
CONTRACTED GROSS
RENTS ON REGIONAL
INVESTMENT PORTFOLIO
OF £32.4M.
REGIONAL INVESTMENT
PORTFOLIO INCREASED
WITH THE PURCHASE OF
£89M OF HIGH YIELDING
INDUSTRIAL/LOGISTICS
WAREHOUSES.
3.0% VALUATION INCREASE
ON REGIONAL OFFICES.
REGIONAL INVESTMENT
PORTFOLIO NOW
COMPRISES 22% OFFICES,
13% IN TOWN RETAIL,
17% RETAIL PARKS, 46%
INDUSTRIAL/LOGISTICS
AND 2% OTHER.
SALE OF 16 REGIONAL
ASSETS COMPRISING
EIGHT INDUSTRIAL UNITS,
THREE REGIONAL OFFICES
AND FIVE RETAIL ASSETS
FOR £67M IN TOTAL.
TOP CHURCHGATE & LEE HOUSE, MANCHESTER
LEFT CROW LANE, NORTHAMPTON
RIGHT VIKING INDUSTRIAL ESTATE, JARROW
STRATEGIC REPORT 12
OPERATIONAL HIGHLIGHTS
FINANCING
SEE-THROUGH LOAN TO VALUE OF 40%
(2015: 34%) ON A SECURED BASIS AND 55%
OVERALL (2015: 52%).
AVERAGE MATURITY OF THE GROUP’S
SHARE OF DEBT OF 4.5 YEARS (2015: 4.3 years)
AT AN AVERAGE COST OF 4.2% (2015: 4.1%).
GROUP’S SHARE OF CASH AND
UNDRAWN BANK FACILITIES OF £193M
(2015: £229m).
AGREED A NEW £200M BANK FACILITY
TO FUND THE PURCHASE AND
DEVELOPMENT OF THE BOWER,
LONDON EC1.
THE BOWER, OLD STREET, LONDON EC1
HELICAL BAR PLC REPORT & ACCOUNTS 2016
13
14
EPRA NAV INCREASE
19.7%
EPRA EPS
17.1p
GROWTH IN CONTRACTED
RENTAL INCOME
£12.7m
INCREASE IN TOTAL DIVIDEND
12.7%
TOTAL PROPERTY RETURN
£170.6m
IPD PROPERTY RETURN
21.7%
CHIEF
EXECUTIVE’S
STATEMENT
I am extremely proud to announce today’s
record results which show rental levels,
investment gains, pre-tax profits,
shareholders’ funds and EPRA net asset
value per share all at the highest level in
Helical’s 32 year history as a real estate
company. These results clearly demonstrate
that our strategy of targeting London for
capital growth and development profits and
the regions for higher yielding investment
assets provides the most appropriate
allocation of resources to enable us to
meet our long term objectives.
The greatest proportion of our performance this year has come
from London where we have increased our portfolio weighting,
primarily with the purchase of The Bower EC1. We also increased
our weighting in industrial assets whilst reducing our exposure to
retail. We sold our Polish assets and continue to deliver on our
retirement village programme.
Within the investment portfolio we have a strong and diverse tenant
profile. We have increased contracted rents by £12.7m (29% increase)
from new lettings and by capturing some of the reversionary
potential of the portfolio and expect this growth to continue. Our
London investment portfolio remains highly reversionary and its
inherent value will be unlocked through the completion of our
redevelopment and refurbishment programme and the letting of
the vacant and remaining reversionary space. London continues
to outperform the rest of the UK and our strategy is to increase
our London holdings.
We now have an investment portfolio poised for future earnings
growth which, if supported by a benign economic background,
should lead to substantial capital appreciation.
PERFORMANCE
We measure our performance at both portfolio and Company level,
seeking to outperform in the medium and long term relevant sector
indices and our peer group.
EPRA earnings per share increased from 2.4p to 17.1p, reflecting
growing net rental income and increased development profits. On
a like-for-like basis, the investment portfolio increased by 14.9%
(11.1% including sales and purchases) contributing to an overall
growth in the portfolio to £1,240m (2015: £1,021m). The unleveraged
return of our property portfolio, as measured by IPD, was 21.7%
(2015: 20.4%), compared to 11.4% (2015: 17.5%) for the benchmark
index. These investment gains contributed to an increase in EPRA
net asset value per share, up 19.7% to 461p (2015: 385p). Since the
start of 2016, the listed real estate sector has been affected by
concerns over global economic issues and the forthcoming
referendum on our membership of the European Union. Despite
this, we achieved a positive Total Shareholder Return for the year
to 31 March 2016 of 1.0% (2015: 7.6%), compared to the sector
index which fell by 6.4% (2015: increase of 22.8%).
HELICAL BAR PLC REPORT & ACCOUNTS 2016 CHIEF EXECUTIVE’S STATEMENT
15
RESULTS FOR THE YEAR
The profit before tax for the year to 31 March 2016 was £120.1m
(2015: £87.4m), the highest in the Group’s history. Total Property
Return increased by 10% to £170.6m (2015: £155.3m) and included
growing net rents of £43.4m, an increase of 12% on 2015 (£38.6m),
and development profits of £27.5m (2015: £17.6m). The gain on
sale and revaluation of the investment portfolio contributed £99.7m
(2015: £96.6m) and there were no trading profits (2015: £2.5m).
Net finance costs of £22.6m were lower than in 2015 (£24.8m),
however the income statement was adversely affected by falls in
expected future interest rates which led to a £6.9m (2015: £8.4m)
charge arising from the valuation of the Group’s derivative
financial instruments. The valuation of the Group’s Convertible
Bond provided a credit of £0.5m (2015: charge of £3.3m).
Recurring administration costs were marginally higher at £10.7m
(2015: £10.2m). Performance related awards, reflecting the success
of the Group’s activities in the year were £13.3m (2015: £13.4m).
National Insurance costs on remuneration, including performance
related awards, were £2.1m (2015: £3.0m).
These results allow the Board to continue its progressive dividend
policy and to recommend to shareholders a final dividend of 0.72p
which, together with the two interim dividends paid to date of
7.45p takes the total dividend for the year to 8.17p (2015: 7.25p),
an overall increase of 12.7%.
THE LONDON PORTFOLIO
The London investment and development portfolio continues to
contribute the greater proportion of capital growth and development
profits. In the year to 31 March 2016, London provided c. 80% of
the total property return of £170.6m (2015: £155.3m).
Since 2010 we have steadily acquired property in two “clusters”;
the Tech Belt districts of Farringdon, Shoreditch, Aldgate and
through to Whitechapel and the West London districts of
Hammersmith, Shepherds Bush and Chiswick.
The East
At The Bower EC1, we have acquired the outstanding 2/3rd interest
from our joint venture partner Crosstree Real Estate Partners LLP
(“Crosstree”), of the buildings known as The Warehouse (122,858
sq ft of offices, 5,404 sq ft of restaurant use) and The Studio
(18,283 sq ft of offices, 4,894 sq ft of restaurant use). Construction
work on these two buildings was completed in November 2015
and both are fully let at average office rents of £55.00 psf and
£43.85 psf respectively. In addition, we have acquired The Tower
at 207 Old Street, a 179,000 sq ft refurbishment and extension of
the existing building on which work has commenced and is due
for completion Q1 2018. At £248m, this purchase is our largest
ever acquisition and strongly reaffirms our belief in the London
office market. The remaining buildings at The Bower, being Empire
House and the retail parade, were sold by the joint venture to
Standard Life and Crosstree respectively.
At Barts Square EC1, our scheme in joint venture with The Baupost
Group LLC, we have now exchanged contracts for sale at an
average of £1,580 psf on 102 of the 144 residential units with a
further two units reserved in phase 1 of the development which is
due for completion in summer 2017. The office development of
212,858 sq ft at One Bartholomew Close EC1 has been forward
funded with clients of Ashby Capital, is currently under construction
and is due for completion in July 2018.
Our 272,426 sq ft office development at One Creechurch Place EC3,
equity funded with our joint venture partner HOOPP (Healthcare
of Ontario Pension Plan) is expected to complete in September
2016. C-Space EC1 completed its refurbishment in October 2015
and is 75% let at an average rent of £56 psf. At 23-28 Charterhouse
Square EC1 we have commenced construction works, due to
complete in Q1 2017 on a refurbishment which will comprise
38,500 sq ft of offices and 5,100 sq ft of retail/restaurant use.
Our 112,000 sq ft listed building at The Loom, Whitechapel E1 is
now undergoing a comprehensive refurbishment and is due for
completion in September 2016.
The West
There has been substantial growth in rents at our West London
properties. At Shepherd’s Building W14 we have completed the
lease renewal and increased the space let to our largest tenant
Endemol, increasing the rent by £1.25m pa, with average rents for
the building now £45.75 psf. At One King Street W6 following the
completion of the refurbishment works, we have achieved a
benchmark rent for the area of £55.00 psf. We have added to
our portfolio with the acquisition of Power Road Studios W4,
62,000 sq ft of offices over five buildings acquired for £34m.
THE REGIONAL PORTFOLIO
The regional investment and development portfolio provides a
growing stream of net rents from a high yielding investment
portfolio while contributing development profits from our
retirement village and retail development programmes.
The regional investment portfolio increased to £460m at 31 March
2016 (2015: £420m) with the addition of 13 distribution warehouses
and a regional office for an aggregate £94m, offset by the sale of
eight distribution warehouses, five retail assets and three regional
offices for £67m. Regional assets contributed £31.0m of net rental
income during the year (2015: £30.7m) which is expected to
continue to grow with contracted rents on the portfolio of £32m
and an ERV of £36m. Net gains on the sale and revaluation of the
regional portfolio contributed £6.7m (2015: £18.8m).
Our regional development exposure is limited to our retirement
village and out-of-town retail development programmes and our
Scottish Power project in Glasgow, where balance sheet risk is
limited. At our retirement village development programme we
continued the construction of units at Durrants Village Horsham,
Millbrook Village Exeter and Maudslay Park Great Alne, near
Stratford-upon-Avon. During the year we completed the clubhouse
at Durrants Village and sold 33 residential units at the three schemes
(2015: 25 units). In our retail development programme, we have
completed our scheme at Shirley, West Midlands and continue to
make progress on our scheme at Truro. Subsequent to the year end
we forward funded a 79,750 sq ft out-of-town retail development
at Cortonwood with a client of Aberdeen Asset Management. The
Scottish Power project is pre-let and pre-sold and due for completion
in September 2016. As part of the overall deal Helical takes on three
existing Scottish Power sites which are surplus to requirements.
One has been sold and good progress is being made on the
business plans for the other two.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT 16
CHIEF EXECUTIVE’S STATEMENT
FINANCE
The Group has expanded its activities significantly in the last three
years, seeking to increase shareholder funds through the generation
and retention of increased net rental streams, development profits
and valuation surpluses. This growth has been financed through an
increase in secured debt borrowed primarily from UK high street
banks and, since 2013, through the use of unsecured debt in the
form of a retail bond and a convertible bond. In assessing the needs
of the business the Company is conscious that it needs to manage
any risks inherent in this leveraged approach to growing the business.
It seeks to do this through the use of unsecured debt (23% of total
debt), by increasing the maturity of its debt profile and by hedging
its interest rate exposure. In addition, the Group’s debt profile
includes borrowings in respect of residential and retirement village
developments which are expected to be repaid as sales complete.
In pursuing this strategy, the Group has increased the average debt
maturity to 4.5 years (2015: 4.3 years), with no secured loan repayable
before November 2019, whilst marginally increasing the average
cost of debt at 4.2% (2015: 4.1%). The Group continues to retain a
significant level of liquidity with cash and unutilised bank facilities
of £193m (2015: £229m) to fund capital works on its portfolio.
BOARD CHANGES
As previously announced with our half year results, I will be handing
over the reins of the Company to Gerald Kaye, our senior development
director for the last 22 years, and I will stand to be elected as
Non-Executive Chairman, at the 2016 Annual General Meeting.
At that AGM, Nigel McNair Scott, our current Chairman, former
Finance Director and my close friend and confidant, will retire
after 30 years on the Board. Nigel has proved to be a constant
source of advice, support and wisdom during his time at Helical
and I wish him a long and happy retirement.
The AGM will also see the retirement of Andrew Gulliford, a
Non-Executive director for the last ten years. Andrew has also
proved to be a tremendous support to the Board and his
contribution is greatly appreciated. With these two planned
departures we have sought to strengthen the Board with the
addition of two new independent Non-Executive Directors and
were delighted to be able to announce the appointments of
Susan Clayton and Richard Cotton earlier this year.
OUTLOOK
Since 2012, we have targeted an income producing investment
portfolio representing at least 75% of our total property assets and
a development programme of the remaining 25% which is capable
of producing exceptional profits. We have now exceeded our original
targets and, as we complete the current development programme
over the next three years, our objectives are clear. We seek to:
• Complete and let our London office schemes at The Bower,
One Creechurch Place, One Bartholomew Close and 23-28
Charterhouse Square;
• Complete the residential scheme at Barts Square and sell the
remaining units;
• Take forward our London schemes in Hammersmith and Drury
Lane and at the appropriate time restock the London development
pipeline to enable us to continue to create capital growth and
development profits;
• Capture the reversion in our investment portfolio; and,
• Maintain and grow a sustainable investment income surplus.
We aim to do this against a background of increasing uncertainty,
exacerbated by the imminent possibility of the UK voting to leave
the European Union. However, with substantially increased
contracted rents on our portfolio and having de-risked our two
largest London office developments at One Creechurch Place EC3
and One Bartholomew Close EC1, Helical is well placed to deal
with any headwinds that may come its way.
Finally, this will be my last Chief Executive’s Statement after nearly
32 years with the Company. I joined the Board on the 21 August
1984 when the equivalent share price was around one pence per
share giving a market capitalisation of circa £800,000 and with
Helical Bar plc a steel company making reinforcement bars for
the construction industry. I joined the Company to change things.
A quick sale of the steel business followed by over 30 years as
an entrepreneurial property company, Helical has grown to have
a current market capitalisation of over £460m having distributed
£276m to shareholders during that period. I now look forward to
becoming Chairman and leave the Company in the excellent
hands of my successor, Gerald Kaye, and the wider executive
team who have an average tenure with the Company of a mere
19 years! I look forward to continuing both on the Board and as
the Company’s largest shareholder and am confident that Helical’s
outperformance will continue.
Michael Slade
Chief Executive
16 June 2016
HELICAL BAR PLC REPORT & ACCOUNTS 2016 CHIEF EXECUTIVE’S STATEMENT
17
LEFT ONE CREECHURCH PLACE, LONDON EC1
TOP AND BOTTOM THE BOWER, OLD STREET, LONDON EC1
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT
18
OUR STRATEGY
Helical is a UK focused property company investing in London for
capital growth and development profits and the regions for income.
LOCATE ASSETS
STRUCTURE AND FUNDING
LOCATE ASSETS
WITH SIGNIFICANT
DEVELOPMENT OR
ASSET MANAGEMENT
POTENTIAL within select
locations or asset classes.
USE OUR OWN CAPITAL
COMBINED WITH EXTERNAL
DEBT where we see value in
holding the asset for long
term income and capital
growth.
IDENTIFY A JOINT VENTURE
PARTNER, limiting our capital
commitment and risk exposure,
whilst linking our return to
performance.
MANAGE THE PROJECT on
behalf of a partner, sharing in
the profit on the successful
sale or letting, with minimal
equity invested.
We use our knowledge of the market
and our extensive network of contacts
to seek out assets where we see the
potential to add significant value. Our
development schemes are focused on
delivering innovative and modern space,
whilst retaining local character. We target
areas where we anticipate strong growth.
Our asset management opportunities
focus on maximising income through
attracting and maintaining a balanced
and diverse portfolio of tenants and driving
increases in the rental value through
refurbishment programmes that make
intelligent use of space and deliver high
yielding assets.
When the Group identifies assets that it intends to develop or asset manage and hold
for the longer term, it uses its own capital combined with appropriate external debt.
Where we see significant potential to create profit in the short to medium term and are
keen to limit our equity commitment and risk exposure, we look to bring in a partner.
Our approach to working with our partners includes:
• Co-investing alongside a larger partner where we have a minority equity stake, whilst
receiving a “waterfall” payment whereby we obtain a greater profit share than the percentage
of our investment, depending upon the profitability of the project. This strategy is used
for the developments at Barts Square, London EC1 and One Creechurch Place, London EC3.
• Managing the development process from site acquisition, through construction to letting
or sale. In these structures we do not own the asset, committing no or minimum equity.
Our return is linked to the profitability of the development, allowing us to potentially benefit
from a significant profit that reflects our contribution to the project’s success. We are using
this strategy in the development of the office at One Bartholomew Close, London EC1.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 OUR STRATEGY
19
DEVELOP, LET & ASSET MANAGE
EXIT
We actively MANAGE OUR
ASSETS THROUGHOUT
THEIR DEVELOPMENT,
working with trusted
contractors and focusing
on quality, efficiency and
safety.
We look to LET OUR
PROPERTIES to diverse
tenants who are financially
robust.
Through clever ASSET
MANAGEMENT we drive
the rental value forward
while maximising
occupancy.
EXIT through sale at the
right point in the market
or upon completion of
projects, recycling capital
into new opportunities or
repayment of finance.
We actively manage our assets from inception to completion. Our
close involvement allows us to continue to develop and improve the
design whilst being able to rapidly respond to challenges as they arise.
Key to this is working closely with trusted contractors who share our
values and are focused on quality, health and safety, sustainability and
consideration for the local community.
Building strong relationships with our tenants and having a good
understanding of their business, combined with a detailed knowledge
of the market, is fundamental to our approach to maximising rental
value and maintaining a high level of occupancy. We actively look to
redevelop space where we can see the opportunity to better meet
market demands, allowing us to drive rental value and help secure the
future of the asset.
Determining the most appropriate time to sell
an asset is critical in crystallising value. We look
to dispose of a property when we believe future
market growth is limited, where we have limited
opportunity to add further value or when we
see greater value elsewhere. Our view of the
market and the availability of other opportunities
determines whether we reinvest the equity into
new properties, repay debt or return capital to
shareholders.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT 20
PERFORMANCE
We measure our performance using a number of financial
and non-financial key performance indicators (“KPIs”).
We incentivise management to outperform the Group’s competitors by setting appropriate 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.
EPRA NAV
461p
EPRA NAV CAGR (3 YEARS)
20.4%
IPD UNLEVERAGED RETURN
21.7%
TOTAL SHAREHOLDER
RETURN (3 YEARS)
20.5%
AVERAGE EMPLOYEE
SERVICE
7.6years
EPRA NET ASSET VALUE PER SHARE (PENCE)
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. 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 EPRA adjusted net asset per share to represent the fair value of net assets
on an ongoing long term basis. The adjustments necessary to arrive at this figure
are shown in note 34 of the financial statements.
Management is incentivised to exceed 15% pa growth in net asset value per share.
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, which it has consistently achieved. Helical’s
ungeared performance for the year to 31 March 2016 was 21.7% (2015: 20.4%) compared to
the IPD median benchmark of 11.4% (2015: 17.5%) and upper quartile benchmark of 13.0%
(2015: 19.6%).
Helical’s portfolio unleveraged returns to 31 March 2016 as shown
opposite:
HELICAL
IPD
Source: Investment Property Databank.
TOTAL SHAREHOLDER RETURN
Total Shareholder Return is a measure of the return on investment for shareholders.
The table demonstrates this return compared to various indices. Over one, three, ten,
fifteen, twenty and twenty five years Helical’s Total Shareholder Return exceeded that of
the Listed Retail Estate Sector Index.
HELICAL BAR PLC Growth over all periods to 31/03/16
UK EQUITY MARKET Growth in FTSE All-Share Return Index over all periods to 31/03/16
LISTED REAL ESTATE SECTOR INDEX Growth in FTSE 350 Real Estate Super
Sector Return Index over all periods to 31/03/16. For data prior to 30 September 1999 FTSE All
Share Real Estate Sector Index has been used
DIRECT PROPERTY - MONTHLY DATA Growth in Total Return of IPD UK
Monthly Index (All Property) over all periods to 31/03/16
Source: Thomson Reuters Datastream.
AVERAGE LENGTH OF EMPLOYEE SERVICE (YEARS)
High levels of staff retention remain a key feature of Helical’s business. The Group
retains a highly skilled and experienced team. Opposite is the average length of
service of the Group’s head office employees.
The principal driver for the fall in average length of employee service is the
increased employee numbers due to the growth of the business.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 PERFORMANCE
21
EPRA NET ASSET VALUE PER SHARE (p)
EPRA NET ASSET VALUE COMPOUND
ANNUAL GROWTH RATE (3 YEARS)
461
385
313
250
264
7.4%
-1.0%
-4.4%
20.4%
15.5%
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
1 YEAR % pa
3 YEARS % pa
5 YEARS % pa
10 YEARS % pa
20 YEARS % pa
21.7
22.0
14.1
15.8
11.4
10.4
10.0
5.5
15.0
9.2
Helical’s Percentile
Rank: 4
Helical’s Percentile
Rank: 4
Helical’s Percentile
Rank: 5
Helical’s Percentile
Rank: 4
Helical’s Percentile
Rank: 1
1 YEAR % pa
3 YEARS % pa
5 YEARS % pa
10 YEARS % pa
15 YEARS % pa
20 YEARS % pa
25 YEARS % pa
20.5
14.6
13.6
11.7
1.0
-3.9 -6.4
3.7
10.0
11.5
10.5
5.7
4.7
5.0
1.7
-0.1
13.2
14.2
9.4
7.9
5.0 5.8
9.0
6.5 7.3
8.6
8.0
6.6
AVERAGE LENGTH OF EMPLOYEE SERVICE (YEARS)
AVERAGE EMPLOYEE NUMBERS
2016
2015
2014
2013
2012
7.6
7.6
8.7
10.2
9.9
2016
2015
2014
2013
2012
35
32
34
29
27
0
2
4
6
8
10 12
0
5
10 15 20 25 30 35
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT 22
HELICAL’S PROPERTY PORTFOLIO
TOTAL PROPERTY PORTFOLIO
£1,240m
TOTAL PROPERTY RETURN
£170.6m
85%
HELD AS INVESTMENT
PROPERTIES
INVESTMENT PORTFOLIO BY ASSET STATUS
REGIONAL
OFFICES
LONDON
OFFICES
RETIREMENT
VILLAGES
LONDON
OFFICES
REGIONAL
RETAIL
REGIONAL
INDUSTRIAL/
LOGISTICS
REGIONAL
OFFICES
INCOME PRODUCING
MAJOR PROJECTS
HELICAL BAR PLC REPORT & ACCOUNTS 2016
HELICAL’S PROPERTY PORTFOLIO
23
TOTAL PORTFOLIO BY FAIR VALUE
Investment
£m
Development
£m
%
London offices
London residential
Total London
Regional offices
Regional industrial/logistics
Regional retail
Retirement villages
Land
Total Regional
TOTAL
593.2
-
593.2
102.5
210.5
134.5
11.9
0.1
459.5
1,052.7
INVESTMENT PORTFOLIO BY ASSET STATUS
London offices
London residential
Total London
Regional offices
Regional industrial/logistics
Regional retail
Retirement villages
Land
Total Regional
TOTAL
Income
producing
£m
414.6
-
414.6
97.8
210.5
134.5
11.9
-
454.7
869.3
47.8
-
47.8
8.3
17.0
10.8
1.0
-
37.1
84.9
%
39.4
-
39.4
9.3
20.0
12.8
1.1
-
43.2
82.6
18.0
60.0
78.0
1.0
-
8.1
91.6
8.6
109.3
187.3
Major
projects
£m
178.6
-
178.6
4.7
-
-
-
0.1
4.8
183.4
%
1.5
4.8
6.3
0.1
-
0.7
7.3
0.7
8.8
Total
£m
611.2
60.0
671.2
103.5
210.5
142.6
103.5
8.7
568.8
15.1
1,240.0
%
17.0
-
17.0
0.4
-
-
-
-
Total
£m
593.2
-
593.2
102.5
210.5
134.5
11.9
0.1
0.4
17.4
459.5
1,052.7
%
49.3
4.8
54.1
8.4
17.0
11.5
8.3
0.7
45.9
100.0
%
56.4
-
56.4
9.7
20.0
12.8
1.1
-
43.6
100.0
Income producing assets are those assets where the majority of the space is let. Major projects are those assets that are being
developed or substantially refurbished.
TRADING AND DEVELOPMENT PORTFOLIO
London offices
London residential
Total London
Regional offices
Regional retail
Retirement villages
Land
Total Regional
TOTAL
Book value
£m
Fair value
£m
Surplus
£m
Fair value
%
14.0
56.0
70.0
0.2
8.1
83.6
5.9
97.8
167.8
18.0
60.0
78.0
1.0
8.1
91.6
8.6
109.3
187.3
4.0
4.0
8.0
0.8
-
8.0
2.7
11.5
19.5
9.6
32.0
41.6
0.5
4.3
48.9
4.7
58.4
100.0
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT
24
PROPERTY PORTFOLIO
HELICAL’S PROPERTY PORTFOLIO
THE LONDON PORTFOLIO
25
54%
OF TOTAL PORTFOLIO
18.8%
VALUATION INCREASE IN
INVESTMENT ASSETS
80%
OF TOTAL PROPERTY
RETURN
OFFICES AT THE
BOWER ACQUIRED FOR
£248m
London’s economy continues to
outperform the rest of the UK and the
proportion of our assets located in the
Capital now represents 56% of our
investment portfolio. London’s
population is expected to grow by one
million in the next ten years and 175,000
new office jobs are expected to be
created by 2020. London is a leading
technology centre and there is a “war for
talent” which is driving demand for high
quality office space. London continues
to attract overseas capital as it has a
liquid and transparent property market
with a long established rule of law.
Our strategy is to increase our London holdings, focusing on
select areas where we see strong tenant demand and growth
potential, such as the “Tech Belt” that runs from Kings Cross
through Old Street and Shoreditch to Whitechapel and in West
London, in particular Hammersmith, Shepherds Bush and Chiswick.
Our London portfolio comprises income producing multi-let offices,
office refurbishments and developments and residential
development schemes.
ONE CREECHURCH PLACE, CITY OF LONDON EC3
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT 26
HELICAL’S PROPERTY PORTFOLIO
THE LONDON PORTFOLIO
THE WEST
HELICAL BAR PLC REPORT & ACCOUNTS 2016 HELICAL’S PROPERTY PORTFOLIO
THE LONDON PORTFOLIO
27
THE EAST
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT 28
29
HELICAL’S PROPERTY PORTFOLIO
THE LONDON PORTFOLIO
THE EAST
THE BOWER
OLD STREET EC1
This 3.12 acre asset was acquired in November 2012 for £60.8m in
joint venture with Crosstree Real Estate Partners LLP. The site is in
the heart of an area which has become a “creative halo”, a district of
London which is a hub for technology, media and telecommunications
companies and which is benefitting from substantial investment in
infrastructure. A planning consent has been implemented to
increase the floor space on the site by 116,000 sq ft, to refurbish
existing areas and significantly upgrade the public realm with the
creation of a new pedestrian street.
On 20 January 2016, Helical acquired The Warehouse and The
Studio (211 Old Street) and The Tower (207 Old Street) from the
joint venture for £248m.
211 Old Street EC1
Building work started on phase 1 in January 2014 comprising
The Warehouse, 128,262 sq ft, and The Studio, 23,177 sq ft, and
was completed in November 2015.
Phase 1 is fully let:
The Warehouse
Offices
Restaurants
The Studio
Offices
Restaurants
Total
sq ft
Rent
£psf
122,858
50.25-67.50 (55.00 average)
5,404
128,262
18,283
4,894
23,177
40.00-45.00 (43.85 average)
207 Old Street EC1
Comprising The Tower, phase 2 of the redevelopment of
The Bower commenced in January 2016 and will deliver
171,000 sq ft of office space and 7,500 sq ft of retail/restaurant.
It is due for completion in Q1 2018.
183-213 Old Street EC1
This retail parade comprises 55,724 sq ft fully let to tenants
including Gymbox, Co-op Food Store, Argos, Peacock and the
Post Office generating c. £915,000 rents. The parade was acquired
from the joint venture by Crosstree for £23m in January 2016.
Empire House, City Road EC1
Empire House, fully let to Z Hotels and restaurant Ceviche, was
sold during the year to Standard Life Investments for £20.65m,
a premium of 38% to the 31 March 2015 value.
STRATEGIC REPORT 30
HELICAL BAR PLC REPORT & ACCOUNTS 2016
STRATEGIC REPORT
31
BARTS SQUARE
CITY OF LONDON EC1
In joint venture with The Baupost Group LLC we own the
freehold interest in land and buildings at Bartholomew
Close, Little Britain and Montague Street, a 3.2 acre site
adjacent to the new Barts Hospital and just south of
Smithfi eld Market. Existing buildings are let to the NHS
on a number of short term leases that expire in 2016.
Planning consent has been implemented for a comprehensive
redevelopment of 19 buildings to provide a total of 236
residential apartments, three offi ce buildings of 213,000 sq ft,
23,000 sq ft and 10,200 sq ft, 20,600 sq ft of retail/A3 at
ground fl oor as well as major public realm improvements,
which will be incorporated into the wider Smithfi eld Area
Strategy being worked up by the City of London.
PHASE 1 – Residential/offi ces/retail
Phase 1 of the redevelopment of Barts Square comprises 144
residential units, 8,800 sq ft of retail space, 23,000 sq ft of new
offi ces behind retained facades and public realm improvements.
The demolition of buildings in Bartholomew Close and Little
Britain commenced in January 2015, with the retention of various
facades behind which the buildings are being demolished.
Completion of phase 1 is expected in summer 2017. Contracts
have been exchanged for the sale of 102 residential units for a
total value of c. £132m at an average £1,580 psf, with a further
two units under off er.
PHASE 2 One Bartholomew Close – Offi ces
One Bartholomew Close was sold to clients of Ashby Capital LLP
(“Ashby”) for £102.4m in August 2015, releasing £34m of cash to
Helical. The demolition of the existing building and the construction
of a new 12 storey offi ce block of 212,858 sq ft, commenced in
January 2016. The building is due to be completed in July 2018.
Ashby’s clients fi nance the development costs and when the
building is completed and successfully let the joint venture will
be entitled to receive a profi t share payment. Helical Bar is the
development manager for delivery of the project.
PHASE 3 – Residential/retail
Phase 3 of the redevelopment of the site, involving the demolition
of Queen Elizabeth II Building, 62 Bartholomew Close, 42-44 Little
Britain and 45-47 Little Britain, is expected to commence after
vacant possession of these buildings is obtained in November
2016. In their place, 92 residential units and 11,800 sq ft of retail
space will be constructed, with completion due in early 2019.
32
HELICAL BAR PLC REPORT & ACCOUNTS 2016
HELICAL’S PROPERTY PORTFOLIO
THE LONDON PORTFOLIO
THE EAST
23-28 CHARTERHOUSE SQUARE
SMITHFIELD EC1
In January 2016, Helical was granted a new 155 year leasehold interest in 23-28
Charterhouse Square, London EC1 by the Governors of Sutton’s Hospital in
Charterhouse for £16m. Helical has received planning for and commenced a major
refurbishment of the existing building, which will increase the current 34,000 sq ft to
38,500 sq ft of offi ces, with the addition of a new sixth fl oor, and add 5,100 sq ft of
retail/restaurant. The completed building is expected to be delivered in early 2017.
C-SPACE
37-45 CITY ROAD EC1
Helical acquired C-Space in June 2013.
Planning consent was obtained for a
complete refurbishment of the building
which increased the previous existing
50,000 sq ft offi ce building to 62,000 sq ft.
The works, which were completed in October
2015, involved an additional fl oor and
extensions to the third fl oor, a landscaped
courtyard and entrance “pavilion” to the
rear and full height glazing to the raised
ground fl oor. 75% of the space was pre-let
to MullenLowe (formerly DLKW Lowe) the
creative agency, and only the top fl oor and
half of the third fl oor remain available.
ONE CREECHURCH PLACE
CITY OF LONDON EC3
One Creechurch Place, London EC3, is a
landmark City offi ce scheme in the heart
of the insurance sector in London. In May
2014, Helical signed a joint venture
agreement with HOOPP (Healthcare of
Ontario Pension Plan) to redevelop the
site. Under the terms of the joint venture,
HOOPP and Helical will jointly fund the
project on a 90:10 split, with Helical acting
as development manager for which it will
receive a promote payment depending on
the successful outcome of the scheme. It is
anticipated the completed development
will have a capital value of c. £250m. The
new building, comprising 272,000 sq ft
NIA of offi ces and 2,227 sq ft of retail, is
expected to be completed in September
2016.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
STRATEGIC REPORT
33
HELICAL’S PROPERTY PORTFOLIO
THE LONDON PORTFOLIO
THE EAST
CHART HOUSE
ISLINGTON N1
Chart House is a 10,500 sq ft offi ce
building in Islington. There is currently
planning consent for an additional fl oor
of residential on top of the building.
This building is 100% let.
THE LOOM
WHITECHAPEL E1
This 112,000 sq ft listed building was acquired in 2013 and Helical has secured planning
consent for a comprehensive refurbishment/reconfi guration of the common parts to
include a new entrance/reception, showers, bike store, refurbishment of c. 25,000 sq ft
of offi ces, including the creation of a single 11,000 sq ft unit and 4,000 sq ft of café
and restaurants. The works are underway and are due for completion in July 2016.
In addition to our holdings in East London we have a scheme in Covent Garden WC2.
DRURY LANE & DRYDEN STREET
LONDON WC2
The existing buildings, which are in offi ce and retail use, sit on an island site of approximately 0.5 acres. Approximately half of the site, adjacent to
Dryden Street, sits within the Covent Garden Conservation Area. In July 2015, contracts were exchanged with Diageo Pension Fund (a fund
managed by Savills Investment Management) for the conditional acquisition of the Drury Lane site. The contract is conditional on Helical securing
planning consent. A planning application for the residential led scheme of 68 apartments was submitted in August 2015 and resolution to grant
consent was issued at a planning committee in April 2016.
34
HELICAL BAR PLC REPORT & ACCOUNTS 2016
HELICAL’S PROPERTY PORTFOLIO
THE LONDON PORTFOLIO
THE WEST
SHEPHERDS BUILDING
SHEPHERDS BUSH W14
This 151,000 sq ft multi-let offi ce building close to
the Westfi eld London shopping centre maintains
an occupancy approaching 100%, as it has for
eight consecutive years. We have completed a
renewal of existing leases to Endemol, who have
also taken additional space and are the largest
tenant in the building, increasing the total
contracted rent roll by £1.27m and securing their
occupation of the building until December 2026,
with a tenant break option in 2021. The average
contracted rent for the building is now £45.75 psf
with total contracted net rent of £6.68m
compared to a passing net rent of £4.38m.
ONE KING STREET
HAMMERSMITH W6
One King Street, Hammersmith W6, is
a 39,000 sq ft building acquired in 2012
comprising 26,000 sq ft of offi ces and
13,000 sq ft of retail. Refurbishment of the
fourth fl oor and the addition of a fi fth fl oor of
offi ces on top of the building has completed,
providing 3,500 sq ft of additional space. The
fourth and fi fth fl oors have been let to Orion
Healthcare at a headline rent of £52.50 psf
and £55.00 psf and the building is now
fully let with total contracted rent of £1.8m.
POWER ROAD STUDIOS
CHISWICK W4
Helical acquired this asset in December 2015 for £34.2m at a NIY of 4.4%. The site
comprises 62,000 sq ft of offi ces across fi ve buildings and is multi let to a wide range
of predominantly media tenants. Recent lettings have been concluded at a rent of
£38 psf compared to an average rental of £24 psf at acquisition. Studies are currently
underway to determine how best to add further offi ce space to the site which at two
acres has substantial potential.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
STRATEGIC REPORT
35
HELICAL’S PROPERTY PORTFOLIO
THE LONDON PORTFOLIO
THE WEST
KING STREET
HAMMERSMITH W6
King Street, Hammersmith W6, is a Council led
regeneration project which is being carried out in a
50/50 joint venture with Grainger plc. Planning
permission for the scheme has been granted for 196
apartments, a three-screen cinema, new retail and
restaurant space and replacement offi ces for the
Council. A minor amendment to the existing planning
approval has been submitted and work is expected to
commence in 2017.
THE POWERHOUSE
CHISWICK W4
Helical acquired this 43,325 sq ft offi ce and recording studios by way of
sale and leaseback. The Powerhouse is a listed building on Chiswick High
Road and is fully let on a long lease to Metropolis Music Group.
SALES
ENTERPRISE HOUSE
PADDINGTON W2
Enterprise House, Paddington W2, is a freehold building adjacent
to Paddington Station in London comprising 45,000 sq ft of offi ces.
The building was acquired in 2013 on a sale and lease-back agreement
from Network Rail, which holds a 20 year lease without breaks, for
c. £31m representing a 5.7% yield generating annual rental income
of £1.8m. In October 2015, the asset was sold to a private overseas
buyer for £43m, a premium of 10% to the 31 March 2015 valuation,
crystallising an IRR in excess of 100%.
ARTILLERY LANE
BISHOPSGATE E1
Artillery Lane, Bishopsgate, E1, is an offi ce building in the City of
London. Acquired for £6.8m in 2013 the property was sold to
Standard Life in October 2015 for £15.1m following the completion
of works which provided 17,000 sq ft of newly refurbished offi ces.
36
HELICAL’S PROPERTY PORTFOLIO
THE REGIONAL PORTFOLIO
37
46%
OF TOTAL PORTFOLIO
71%
OF NET RENTAL INCOME
95%
LET
Our regional portfolio contributed 71%
of our net rental income from tenants in
diverse sectors and geographical locations.
The £568.8m regional portfolio comprises
£210.5m of industrial/logistics (37% of
the portfolio), £103.5m of offices (18%),
£142.6m of retail comprising £76.9m of
retail warehousing and £65.7m of in-town
retail, mainly the Morgan Quarter, Cardiff
(in aggregate 25%), £103.5m in our
retirement village development programme
(18%) and £8.7m of land (2%).
Our approach to regional investment is to acquire assets where occupational
demand is robust throughout the property cycle and the barriers to new
supply are high. Successfully picking the sectors and assets with these
attributes will ensure strong cash flows and rental growth. In general, yields
for regional assets are higher than those in London and these assets are
acquired to provide significant cash flow for the Group. We anticipate that
income will become an increasingly important part of total returns as yield
compression slows and, as such, we focus our attention on areas where we
believe the occupational market remains robust.
CHURCHGATE AND LEE HOUSE, MANCHESTER
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT 38
HELICAL’S PROPERTY PORTFOLIO
THE REGIONAL PORTFOLIO
1
2
3
ST VINCENT STREET, GLASGOW
Office development
PORTBURY, BRISTOL
Industrial/logistics
CHURCHGATE & LEE HOUSE,
MANCHESTER
Offices
4
5
6
THE GLASHAUS, COBHAM
Offices
WIENERBERGER HOUSE,
CHEADLE
Offices
DALE HOUSE, MANCHESTER
Offices
7
8
9
JACKNELL ROAD, HINCKLEY
Industrial/logistics
CROW LANE, NORTHAMPTON
Industrial/logistics
COTES WAY, ALFRETON
Industrial/logistics
10
OPAL WAY, STONE
Industrial/logistics
HELICAL BAR PLC REPORT & ACCOUNTS 2016 39
1
INDUSTRIAL AND LOGISTICS LOCATIONS
OFFICES
RETAIL LOCATIONS
6
3
5
10
9
7
8
2
4
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT 40
HELICAL BAR PLC REPORT & ACCOUNTS 2016
HELICAL’S PROPERTY PORTFOLIO
THE REGIONAL PORTFOLIO
REGIONAL OFFICES
Our regional offi ce investment portfolio
comprises nine assets valued at £102.5m,
with over 60% of value in Manchester.
Other assets are located in Crawley,
Glasgow, Reading, Cobham, Castle
Donington and Cheadle. During the
year we sold three assets for £11.2m,
a 16% premium to book value.
We now have three offi ces in Manchester
having acquired Fountain Court, 31 Booth
Street earlier this year. Manchester is a
city with a diverse, thriving and growing
economy and is widely regarded as
England’s second city and the centre
of the “Northern Powerhouse”.
CHURCHGATE & LEE HOUSE,
MANCHESTER
Helical acquired Churchgate and Lee House,
two interlinked offi ce buildings comprising
248,000 sq ft of offi ces, in March 2014. We
have refurbished the reception, café and a
number of offi ce fl oors and continue to
reposition the asset as fl oors become vacant.
We have concluded 14,000 sq ft of new
lettings in the year, including letting a
refurbished second fl oor Churchgate suite
at £16.50 psf, with a further 19,300 sq ft
since year end. The building is now 92%
occupied.
ST VINCENT STREET,
GLASGOW
In partnership with local development partner, Dawn Developments
Ltd, Helical is the development manager for the construction of the
new headquarters building for Scottish Power at St Vincent Street,
Glasgow. The completed building will comprise c. 220,000 sq ft of
prime offi ce space in the heart of the City’s commercial district.
Funded by M&G Investments, the scheme is under construction and all
works, including Scottish Power’s fi t out, are due to be completed by
Autumn 2016. As part of the overall deal, Helical took on three existing
Scottish Power sites which were surplus to requirements. We have
received planning permission for a change of use of the grounds of
Cathcart House to 158 residential units and are in discussions with a
number of parties in relation to a sale. At Yoker, we have exchanged
contracts, subject to planning, with a supermarket operator to sell the
site, and we sold the site at Falkirk during the year.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
STRATEGIC REPORT
41
HELICAL’S PROPERTY PORTFOLIO
THE REGIONAL PORTFOLIO
REGIONAL OFFICES AND INDUSTRIAL/LOGISTICS
DALE HOUSE
MANCHESTER
Dale House is a 42,000 sq ft offi ce building situated in the
Northern Quarter of Manchester. It is 85% let to a number of
tenants with an average rent of £12.00 psf and was acquired in
March 2015 for £7.4m. The property is a long term hold with plans
to refurbish the building over time and move rents upwards as the
location improves.
FOUNTAIN COURT
31 BOOTH STREET, MANCHESTER
This vacant offi ce located in the prime city core was acquired in
January 2016 for £4.7m. Refurbishment of this 25,349 sq ft
building is underway and we anticipate having it available to let
before the end of 2016.
REGIONAL
INDUSTRIAL/
LOGISTICS
Helical has 36 distribution and light industrial units located
around major UK transport networks, a net increase of fi ve units
with 13 acquisitions (£89m) being off set by sales of eight units
with (£28m) at a small premium to book value. These units
generally have few bespoke features making them straightforward
to re-let if vacancies occur with minimal capital expenditure
required. The majority of the assets are single let. Signifi cant
assets within the portfolio include a 256,000 sq ft distribution
warehouse let to Sainsbury’s in Yate, Bristol, a 203,000 sq ft
facility in Leighton Buzzard, Bedfordshire, a 210,000 sq ft
distribution warehouse in Northampton and a 183,000 sq ft
distribution warehouse let to the Royal Mail in Chester.
42
HELICAL’S PROPERTY PORTFOLIO
THE REGIONAL PORTFOLIO
RETAIL
During the year, five retail properties
were sold for a total of £27.0m. At the
year end the portfolio consisted of
assets in Cardiff, Ellesmere Port, Great
Yarmouth, Harrogate, Huddersfield,
Leicester, Scarborough, Sevenoaks,
Southend and Stockport. Harrogate
has been sold since the year end at
its book value.
Our retail assets total £142.6m, 11.5%
of our portfolio (31 March 2015: £171.7m).
This part of the portfolio includes a
prime retail asset in Cardiff, eight retail
parks (one of which has been sold since
the year end), one retail unit and a
number of pre let and/or prefunded
retail developments.
The retail market is undergoing major
structural changes with high profile
companies going into administration.
There is a continued migration of
customers and retailers to prime centres
where the leisure offer and quality of
environment are a big driver of footfall
which is benefitting our most
substantial retail holding in Cardiff.
THE MORGAN QUARTER AND
ROYAL ARCADES, CARDIFF
Tenant demand for the property is strong
and rents are steadily increasing. The
creative quarter office refurbishment is
now largely complete generating £116,000
of rent from previously unusable space,
with a further c. £80,000 of rent to follow
as the remainder of the new space is let.
The Morgan Quarter was originally
purchased in 2005 and comprised the
David Morgan Department Store and two
Victorian Arcades. The main ground floor
retail units fronting The Hayes, a prime
fashion pitch in Cardiff, have been completely
reconfigured and they are now let to
tenants such as White Stuff, Urban
Outfitters, Molton Brown, Jack Wills
and Fred Perry.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 HELICAL’S PROPERTY PORTFOLIO
THE REGIONAL PORTFOLIO
RETAIL
43
PARKGATE
SHIRLEY, WEST MIDLANDS
The shopping centre at Parkgate, Shirley,
where Helical has a 50% interest, was
completed in 2014 and the 80,000 sq ft
Asda, which had been pre-sold to the
food-store, together with a number of
other retailers have all opened successfully
for trade. The space beyond the food-store
is let to occupiers such as B&M, Peacocks,
Poundland, Pizza Express, JD Wetherspoon,
Prezzo, Shoe Zone and Shirley Library.
A second phase of high density residential
is being progressed on a 10 acre site opposite
the Parkgate scheme. Terms have been
agreed with a care home provider, a
residential developer and a supermarket
operator for a petrol filling station. Planning
consent has been achieved subject to a
S106 Agreement.
TRURO
Helical has entered into a
Conditional Purchase Agreement
on the six acre Truro City Football
Club site which has planning
consent, subject to a S106
Agreement, for a 78,000 sq ft
non-food retail park. The scheme
proposals provide for the
relocation of the football club and
we anticipate starting on site in
summer 2017.
CORTONWOOD
This 79,750 sq ft retail park has been 95% pre-let to tenants including Outfit, H&M,
New Look, River Island and Marks and Spencer. The scheme has been forward funded
with clients of Aberdeen Asset Management and construction on site has started with
completion due in June 2017.
POLAND
During the year, we completed the sale of
our 50% share in the 720,000 sq ft retail
development at Europa Centralna, Gliwice,
Poland, to our joint venture partners, clients
of Standard Life, in accordance with a
pre-arranged contractual exit two years
post completion of the scheme. The sale,
at book value, reduced gross property
assets by £41m and reduced net debt by
£26m. In July 2015, we also completed the
sale of our 103,000 sq ft retail development
at Wroclaw, Poland at €17m, a small premium
to book value. The sale of these two assets
completed the exit of our joint venture in
Poland.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT
44
HELICAL’S PROPERTY PORTFOLIO
THE REGIONAL PORTFOLIO
RETIREMENT
VILLAGES
4
2
1
3
Our retirement village portfolio consists of four villages.
We design each of the villages with an active, independent
retirement in mind and the communities that we create are
the ideal place to live a social and varied lifestyle. Each
private, age-exclusive retirement community is centred
around a residents’ clubhouse, and feature many amenities
including an indoor pool and gym, landscaped gardens, bar,
restaurant and library. With an increasing UK population
over 65 years old, and a severe under supply in retirement
housing, this sector creates significant opportunities for
investors and developers. This year has seen us bring the
management of this portfolio entirely in house which has
led to an increase in sales rates.
1 BRAMSHOTT PLACE
LIPHOOK, HAMPSHIRE
This village is situated amongst natural parkland near the village
of Liphook on the border of Hampshire, West Sussex and Surrey.
The village features a selection of two and three bedroom cottages
and one, two and three bedroom apartments arranged around a
residents’ clubhouse. All 151 units in Phase 1-3 have been completed
and sold. Phase 4 will commence in 2016 with the construction of
40 additional cottages. Enabling works have commenced on site
with completion due in June 2018.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 HELICAL’S PROPERTY PORTFOLIO
THE REGIONAL PORTFOLIO
RETIREMENT VILLAGES
45
2 DURRANTS VILLAGE
FAYGATE, WEST SUSSEX
Durrants Village is set within 30 acres of private parkland in the
hamlet of Faygate, near Horsham in West Sussex. The village
features a selection of cottages and apartments. Phase 2 of the
construction completed in January 2016 with 105 units located
around the residents’ clubhouse. Phase 3 consists of an additional
50 units towards the front of the site and construction is due to
commence in late 2016 with completion in early 2019. Sales are
progressing at a good rate with 51 units sold and an additional
24 reserved.
3 MILLBROOK VILLAGE
EXETER, DEVON
Millbrook Village is nestled close to the river in the heart of the
historic cathedral city of Exeter. The village features a selection of
two and three bedroom cottages and one, two and three bedroom
apartments. The site will comprise 164 units once completed. The
clubhouse will include a restaurant and bar, games room, gym, cinema
and a swimming pool. The build programme is well advanced with
43 units currently completed with more units becoming available
for sale at regular three month intervals. We anticipate that the
village will be fully constructed by early 2018. Contracts have been
exchanged on 14 units with an additional 13 units reserved.
4 MAUDSLAY PARK
GREAT ALNE, WARWICKSHIRE
Maudslay Park is set in 90-acres of parkland in the Warwickshire
village of Great Alne, near Stratford-upon-Avon. The village will
comprise 150 units with a mixture of cottages and apartments
built around the central clubhouse facility. Following the
administration of our main contractor, progress was delayed
last year. We have now appointed a new main contractor and
we anticipate the first units will be available for sale at the start
of 2017.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT 46
ASSET MANAGEMENT
47
£12.7m
INCREASE IN CONTRACTED
RENTAL INCOME
ERV
£81.0m
WEIGHTED AVERAGE
UNEXPLAINED LEASE TERM
6.3years
Asset management is a critical component
in driving Helical’s performance. Through
having intelligent business plans and by
maximising the combined skills of our
management team, we are able to create
value in our assets without relying on
market movements.
During the year contracted income increased by £12.7m as a result
of new lettings and rent reviews, net of any losses from breaks and
lease expiries (2015: £1.1m). With notable contributions from some
regional assets, in particular Churchgate and Lee House in Manchester,
the majority of these rental increases come from our London assets.
The completion and letting of phase 1 at The Bower EC1 and
C-Space EC1 contributed £10.5m of new lettings, while the renewal
of the Endemol lease in the Shepherds Building W14 added a
further £1.3m to the rent roll. The London portfolio remains highly
reversionary and this value will continue to be unlocked through
refurbishment and leasing activities.
There was significant activity within the investment portfolio with
165 lease events.
Contracted rent (£)
13.3m
2.0m
0.1m
(2.5m)
(0.2m)
12.7m
NEW
LETTINGS
UPLIFT AT
LEASE
RENEWALS
RENT
REVIEWS
RENT LOST
AT BREAK/
EXPIRY
RENT LOST
TO ADMINIS-
TRATIONS
TOTAL
INCREASE
Fair
value
weighting
%
Passing
rent
£m
London offices
London residential
Total London
Regional offices
Regional industrial/logistics
Regional retail
Retirement villages
Land
Total Regional
TOTAL
49.3
4.8
54.1
8.4
17.0
11.5
8.3
0.7
45.9
100.0
11.2
n/a
11.2
6.5
15.0
9.2
n/a
n/a
30.7
41.9
Contracted
rent
£m
23.6
n/a
23.6
7.0
15.9
9.5
n/a
n/a
32.4
56.0
%
26.7
n/a
26.7
15.6
35.7
22.0
n/a
n/a
73.3
100.0
%
42.1
n/a
42.1
12.6
28.3
17.0
n/a
n/a
57.9
100.0
ERV change
since
March 2015
%
%
56.0
n/a
56.0
10.9
20.6
12.5
n/a
n/a
44.0
100.0
7.6
n/a
7.6
2.8
1.1
3.5
n/a
n/a
2.2
4.4
ERV
£m
45.4
n/a
45.4
8.8
16.7
10.1
n/a
n/a
35.6
81.0
THE MORGAN ARCADE, CARDIFF
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT
48
ASSET MANAGEMENT
CAPITAL EXPENDITURE
We have a planned development and refurbishment programme to drive the rental value and secure the future of our assets.
Capex
Budget
(Helical Share)
£m
Remaining
spend
(Helical share)
£m
91.0
88.7
9.7
55.0
15.0
75.0
10.0
2.3
85.0
76.8
2.6
55.0
13.0
74.0
2.0
2.0
Current
total
space
sq ft
Refurbished
space
sq ft
114,000
114,000
-
-
-
-
-
-
34,000
34,000
-
112,000
25,500
-
37,500
25,500
New
space
sq ft
65,000
236,000
273,000
300,000
9,600
80,000
-
-
Completion
date
Mar 2018
Mar 2019
Sept 2016
Dec 2021
Mar 2017
Jun 2019
July 2016
Dec 2016
Capex Budget
£m
Remaining
spend
£m
Total number
of units
Completed
units
Under
construction
Completion
date
40.1
41.0
57.5
15.9
154.5
19.2
12.4
49.9
15.6
97.1
164
156
150
40
510
29
105
5
0
139
Mar 2018
Feb 2019
Dec 2020
Jun 2018
88
0
0
0
88
Property
207 Old Street, London EC1
Barts Square, London EC1
One Creechurch Place, London EC1
King Street, London W6
Charterhouse Square, London EC1
Drury Lane, London WC2
The Loom, London EC1
Booth St, Manchester
Retirement Villages
Property
Millbrook Village, Exeter
Durrants Village, Faygate
Maudslay Park, Great Alne
Bramshott Place, Liphook
TOTAL
PORTFOLIO YIELDS
London offices
Regional offices
Regional industrial/logistics
Regional retail
TOTAL
CAPITAL VALUES, VACANCY RATES AND UNEXPIRED LEASE TERMS
London offices
London residential
Total London
Regional offices
Regional industrial/logistics
Regional retail
Total Regional
TOTAL
EPRA topped
up NIY
%
Reversionary
%
2.50
5.92
6.42
6.12
3.97
6.14
7.48
7.20
6.50
6.60
Capital value
psf
£
Vacancy rate
%
WAULT
Years
656
n/a
656
197
56
183
93
180
19.3
n/a
19.3
6.5
5.9
0.2
5.0
7.1
7.1
n/a
7.1
5.6
5.3
6.1
5.6
6.3
HELICAL BAR PLC REPORT & ACCOUNTS 2016
ASSET MANAGEMENT
49
VALUATION MOVEMENTS
London offices
Total London
Regional offices
Regional industrial/logistics
Regional retail
Retirement villages
Total Regional
TOTAL
Val change inc
capex, sales &
purchases
%
Val change
inc capex, excl
sales &
purchases
%
Investment
portfolio
weighting 2016
%
Investment
portfolio
weighting 2015
%
18.8
18.8
3.0
1.1
(0.3)
4.9
1.1
11.1
30.8
30.8
2.0
2.8
0.0
4.9
1.2
56.4
56.4
9.7
20.0
12.8
1.1
43.6
46.9
46.9
13.1
18.5
20.1
1.4
53.1
14.9
100.0
100.0
LEASE EXPIRIES OR TENANT BREAK OPTIONS
% of rent roll
Number of leases
Year to
2017
5.4
88
Year to
2018
11.1
95
Year to
2019
11.3
79
Year to
2020
9.3
32
Year to
2021
3.9
22
Average rent per lease (£)
31,652
59,707
73,463
149,346
90,768
We have a strong rental income stream and a diverse tenant base, with the largest tenant in the portfolio accounting for only 7.1% of the
rent roll. The top 10 tenants account for 30.4% of the total rent roll and the tenants come from a variety of industries.
Rank
Tenant
Endemol UK Ltd
MullenLowe Ltd
Gopivotal (UK) Limited
Farfetch UK Ltd
DSG Retail Limited
Tenant Industry
Media
Marketing Communications
Technology
Online Retail
Retail
Sainsbury’s Supermarkets Ltd
Food retail
CBS Interactive Limited
B&M Retail Limited
Media
Retail
Allegis Group Limited
Recruitment
Economic Solutions Ltd
Employment and Skills Training
1
2
3
4
5
6
7
8
9
10
TOTAL
Rent
£m
Rent Roll
%
4.0
2.6
2.0
1.9
1.3
1.2
1.0
1.0
1.0
1.0
7.1
4.6
3.6
3.4
2.3
2.2
1.9
1.8
1.8
1.7
17.0
30.4
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT
50
PROFIT BEFORE TAX
£120m
EPRA EPS
17.1p
EPRA NAV
461p
CASH AND UNDRAWN
BANK FACILITIES
£193m
AVERAGE DEBT MATURITY
4.5years
AVERAGE COST OF DEBT
4.2%
FINANCIAL REVIEW
Helical aims to deliver market leading
returns by committing to projects with
the potential for substantial capital
growth and by deploying limited equity
into development situations which have
the potential to be highly profitable.
Risks associated with our development programme are mitigated
through limited equity exposure, options, forward funding,
conditional contracts and joint ventures with major UK and global
institutions. We have an active asset management programme for
the investment portfolio with a clear strategy of increasing net
operating income.
Our aim is to have a stable platform with all recurring operational
and finance costs and dividends fully covered by revenue streams
from our investment portfolio. Gearing is used on a tactical basis
throughout the property cycle, being raised to accentuate
property performance when property returns are judged to
materially outperform the cost of debt and lowered when seeking
to reduce exposure to the property cycle.
SEE-THROUGH ANALYSIS
Since 2010 Helical has held a significant proportion of its property
assets in joint ventures with partners that provide the majority of
the equity required to purchase the assets, whilst relying on the
Group to provide asset management or development expertise.
Accounting convention requires Helical to account under IFRS for
our share of the net results and net assets of joint ventures in
limited detail in the income statement and balance sheet. Net
asset value per share, a key performance measure used in the real
estate industry, as reported in the financial statements under IFRS,
does not provide stakeholders with the most relevant information
on the fair value of assets and liabilities within an ongoing real
estate company with a long term investment strategy.
In this review and elsewhere in this statement, we have incorporated
the separate components into a more detailed “see-through” analysis
of our property portfolio and debt profile and the associated
income streams and financing costs to assist in providing a more
comprehensive overview of the Group’s activities. This see-through
analysis can be found in Appendix 1.
RESULTS FOR THE YEAR
For the third year running we are delighted to be able to report on
excellent results with record pre-tax profits of £120m in the year to
31 March 2016 (2015: £87m). Continued rental growth, good
development profits and strong valuation surpluses arose from of the
implementation of our London development and asset
management strategies.
The Group’s real estate portfolio, including its share of assets held in
joint venture, increased to £1,240m (2015: £1,021m) largely the result
of acquiring the remaining 2/3rd share of The Bower, London EC1,
plus substantial gains on sales and revaluation of the investment
portfolio.
The continued expansion of the Group’s activities has resulted in an
increase in its loan to value to 55% (2015: 52%) and an increase in
see-through net gearing to 140% (2015: 132%). The Group
lengthened its borrowings profile, repaying short term facilities and
extending existing secured loans. These actions enabled the
Group to extend its overall debt maturity profile to 4.5 years
(2015: 4.3 years) with a weighted average cost of debt marginally
increasing to 4.2% (2015: 4.1%).
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL REVIEW
40
30
20
£m
10
50
0
40
£m
50
FINANCIAL REVIEW
23
24
30
43
39
3
51
50
40
30
20
10
50
0
40
30
3
INCOME STATEMENT
20
0
10
4
RENTAL INCOME AND PROPERTY OVERHEADS
Gross rental income receivable by the Group in respect of wholly
owned properties increased by 19% to £45.5m (2015: £38.3m)
reflecting the growth in the investment portfolio and the partial
capture of its reversionary potential. In the joint ventures, gross
rents fell from £6.1m to £1.8m reflecting the sale of Clyde Shopping
Centre in March 2015. Property overheads in respect of wholly
owned assets and in respect of those assets in joint ventures fell
significantly from £5.4m to £3.4m reflecting the rotation out of
management intensive secondary shopping centres to high
yielding distribution warehouses, regional offices and out-of-town
retail parks. After taking account of net rents payable to our profit
share partners of £0.5m (2015: £0.3m), see-through net rents
increased by 12.4% to £43.4m (2015: £38.6m).
4
35
30
Net rental income
£m
50
1
40
30
20
10
1
0
25
20
15
10
23
5
35
0
30
25
20
15
2012
10
500
43
39
30
24
2013
2014
2015
2016
80
200
97
100
0
300
2
400
DEVELOPMENT PROFITS
5
£m
Developments profits increased by 56% from £17.6m to £27.5m on
a see-through basis. The main contributor was in respect of the
development management fees of £23.2m crystallised by the
acquisition of The Bower, London EC1. We also received development
management fees of £3.7m in respect of the development at the
Scottish Power headquarters in Glasgow and at One Creechurch
Place, London EC3. Our retirement village programme contributed
£0.4m of profits. In our joint ventures we recognised £3.2m of
development profit on our schemes at Leisure Plaza and Shirley.
Set against these profits was a write-down of £0.9m against a site
in Telford and £1.8m against our retail development programme.
100
45
400
500
40
60
300
20
100
0
4
4
0
8
6
30
35
100
200
2012
2015
2013
2016
2014
10
33.3
5
SHARE OF RESULTS OF JOINT VENTURES
The results of the joint ventures include our share of The Bower,
£m
London EC1 until it was acquired and fully consolidated in January
2016; our development schemes at Barts Square, London EC1;
One Creechurch Place, London EC3; Shirley Town Centre, West
Midlands; Leisure Plaza and C.4.1, both Milton Keynes; and King
Street, London W6. Detailed analysis of our share of these joint
ventures is provided in note 19 to this report and in the see-through
analysis in Appendix 1. In the year under review, net rents of £1.3m
(2015: £4.4m) were received, offset by net finance costs of £3.7m
(2015: £3.6m). Gains on the sale or revaluation of the investment
assets of £43.9m (2015: £27.2m) arose primarily in respect of The
Bower, London EC1 and Barts Square, London EC1. Net of taxes,
our joint ventures contributed £50.5m (2015: £27.5m).
2
10
0
8
17.1
3.4
10
15
20
25
4
5
2.4
2.4
6
2
0
2012
2013
2014
2015
39
43
2016
0
60
30
23
24
20
100
30
£m
At 31 March 2016, the Group had unutilised bank facilities of
£106m and £87m of cash. These facilities are primarily available to
fund phase 2 of the Group’s redevelopment of The Bower, London
EC1, its retirement village development programme and the phase
1 construction works at Barts Square, London EC1.
100
10
80
97
40
2012
2015
2013
2014
EPRA EARNINGS PER SHARE
45
EPRA earnings per share were 17.1p (2015: 2.4p), reflecting the
Group’s share of net rental income of £43.4m (2015: £38.6m) and
£m
20
development profits of £27.5m (2015: £17.6m) but excluding gains
100
97
on sale and revaluation of investment properties of £99.7m (2015:
£96.6m) and trading profits of £nil (2015: £2.5m).
2015
100
2014
2016
2016
4
4
0
80
2013
EPRA earnings per share
2012
£m
60
35
40
30
20
25
20
0
15
10
£m
5
35
0
30
25
45
33.3
4
4
2012
2013
2014
2015
3.4
2012
2.4
2013
33.3
2014
2.4
2015
17.1
2016
2016
15
500
20
£m
EPRA NET ASSET VALUE
EPRA net asset value per share increased by 19.7% to 461p per
461
share (2015: 385p). This increase arose principally from a total
comprehensive income (retained profits) of £110.3m (2015:
£74.9m) less dividends paid of £14.4m (2015: £7.9m) and reflecting
a reduction in the surplus on valuation of the trading and
development stock to £19.4m (2015: £36.2m).
10
400
5
385
2.4
17.1
313
3.4
2.4
300
0
264
2013
250
2012
2014
2016
2015
200
EPRA NAV per share
£m
100
500
2012
2013
250
264
2012
5.15
5.55
2013
2014
313
6.75
2014
461
2016
2015
385
8.17
7.25
2015
2016
0
400
300
£m
200
10
100
8
0
6
4
£m
2
10
0
8
2012
Increase
5.1%
5.15
6
£m
4
£400.0
2
£300.0
0
2014
21.6%
6.75
2015
7.25
7.4%
8.17
2016
12.7%
2013
7.8%
5.55
£371.3m
0
5
£200.0
Increase
2012
5.1%
2013
7.8%
2014
£219.5m
21.6%
2015
7.4%
2013
2014
2015
2016
461
385
313
4
2
0
2012
400
350
300
250
200
150
50
400
0
350
300
250
150
100
50
0
2016
12.7%
£71.1m
£71.1m
£219.5m
£80.0m
4-5
years
£80.0m
4-5
years
£m
500
400
6
300
200
100
£m
10
8
6
4
2
0
£96.0m
£m
£400.0
£96.0m
£300.0
£200.0
5-6
years
£m
£400.0
£300.0
£200.0
£100.0
£0.0
£m
£100.0
£400.0
£0.0
£300.0
£200.0
£100.0
£m
£0.0
£400.0
£300.0
£200.0
£m
£100.0
£400.0
£0.0
£300.0
£200.0
£100.0
£0.0
£34.2m
£96.0m
£102.7m
£371.3m
£80.0m
£0.9m £3.6m
3.6m
£1.1m
£1.1m £1.1m
<1
1-2
2-3
3-4
4-5
5-6
6-7
7-8
8-9
9-10
year
years
years
years
years
years
years
years
years
years
■ Secured ■ In Joint Venture (non recourse) ■ Unsecured
£219.5m
£34.2m
£96.0m
£102.7m
£80.0m
£0.9m £3.6m
3.6m
£1.1m
£1.1m £1.1m
<1
1-2
2-3
3-4
4-5
5-6
6-7
£371.3m
7-8
8-9
9-10
year
years
years
years
years
years
years
years
years
years
■ Secured ■ In Joint Venture (non recourse) ■ Unsecured
250
100
264
0
6
2012
200
2013
2014
2015
2016
6.75
7.25
8.17
5.15
5.55
£34.2m
£102.7m
£371.3m
3-4
years
£34.2m
£102.7m
3-4
years
£0.9m
<1
year
£3.6m
1-2
years
3.6m
2-3
years
Increase
5-6
years
2012
5.1%
2013
7.8%
£1.1m
6-7
years
2014
21.6%
£1.1m
7-8
years
2015
7.4%
£1.1m
8-9
years
■ Secured ■ In Joint Venture (non recourse) ■ Unsecured
£219.5m
£371.3m
£0.9m
<1
year
£3.6m
1-2
years
3.6m
2-3
years
■ Secured ■ In Joint Venture (non recourse) ■ Unsecured
£100.0
£1.1m
6-7
years
£1.1m
£219.5m
7-8
years
£1.1m
8-9
years
£34.2m
£96.0m
£102.7m
£80.0m
£0.0
£0.9m £3.6m
3.6m
£1.1m
£1.1m £1.1m
<1
1-2
2-3
3-4
4-5
5-6
6-7
7-8
8-9
9-10
year
years
years
years
years
years
years
years
years
years
■ Secured ■ In Joint Venture (non recourse) ■ Unsecured
£71.1m
2016
12.7%
9-10
years
£71.1m
9-10
years
£71.1m
£371.3m
£34.2m
£102.7m
3-4
years
£219.5m
£80.0m
4-5
years
£96.0m
5-6
years
£0.9m
<1
year
£3.6m
1-2
years
3.6m
2-3
years
■ Secured ■ In Joint Venture (non recourse) ■ Unsecured
£1.1m
6-7
years
£1.1m
7-8
years
£1.1m
8-9
years
£71.1m
9-10
years
3
4
1
2
5
6
50
40
30
20
10
0
35
30
25
20
15
10
5
0
500
400
300
200
100
0
10
8
6
4
2
0
400
350
300
250
200
150
100
50
0
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT
52
FINANCIAL REVIEW
£m
50
40
30
20
10
0
£m
100
80
60
43
39
23
24
30
2012
2013
2014
2015
2016
97
100
GAIN ON SALE AND REVALUATION OF INVESTMENT
PROPERTIES
During the year we sold two London assets, Enterprise House W2,
a 45,000 sq ft office building let to Network Rail for 20 years and
£m
Artillery Lane E1, a 17,000 sq ft refurbished office building, for
total gross proceeds of £57m, a small premium to book value. In
the regions we sold eight industrial units, three offices and five
retail assets, a total of 16 regional assets, for £67m at a small net
premium to book value.
43
39
40
50
30
The valuation of our investment portfolio reflected our increased
exposure to London offices where we generated an increase of
18.8% overall and 30.8% on a like-for-like basis. The regions
contributed 1.1% overall and 1.2% on a like-for-like basis. In total,
the investment portfolio showed a valuation increase of 11.1%, or
14.9% on a like-for-like basis.
30
24
23
20
10
0
The total impact on our financial statements of the gain on sale
and revaluation of our investment portfolio was a net gain of
2016
2012
£99.7m (2015: £96.6m).
2014
2013
2015
Net gain on sale and revaluation of investment properties
£m
100
80
60
40
20
0
97
100
45
4
4
2012
2013
2014
2015
2016
35
£m
ADMINISTRATION COSTS
Administration costs, before performance related awards, increased
by 5% from £10.2m to £10.7m. This increase arose from employing a
greater number of asset managers, development executives and in
the finance team as the portfolio increased and we move through
the delivery phase of the development programme.
33.3
25
30
20
17.1
15
5
10
3.4
Performance related share awards and bonus payments, before
National Insurance costs, were £13.3m (2015: £13.4m). Of this
amount, the £6.7m (2015: £6.4m) charge for share awards under the
Performance Share Plans is expensed through the Income Statement
but added back to Shareholders’ Funds through the Statement of
Changes in Equity. The £6.6m (2015: £6.9m) charge for bonus
2016
payments comprises £5.5m (2015: £5.8m) which will be paid in
June 2016 and £1.1m (2015: £1.1.m) which will be paid in deferred
shares to be held for a minimum of three years. In addition, National
£m
Insurance of £2.1m (2015: £3.0m) has been accrued in the year.
2014
2013
2015
2012
2.4
2.4
0
500
400
2016
£000
385
461
2015
£000
313
10,717
10,156
Administration Costs
300
250
264
Share awards
200
Directors and senior executives’ bonuses
NIC on share awards and bonuses
100
Total
6,666
6,633
2,087
6,432
6,920
3,022
26,103
26,530
45
0
4
4
20
40
2012
FINANCE COSTS, FINANCE INCOME AND DERIVATIVE
FINANCIAL INSTRUMENTS
Interest payable on secured bank loans including our share of loans
on assets held in joint ventures, but before capitalised interest,
increased to £20.2m (2015: £16.7m). Interest payable in respect of
the unsecured Retail and Convertible Bonds was £8.8m (2015: £8.0m).
The continued fall in medium and long term interest rate projections
at 31 March 2016 contributed to a charge of £6.9m (2015: £8.4m)
£m
on the derivative financial instruments which have been valued on a
mark to market basis. Capitalised interest increased from £3.6m to
£4.9m as development schemes progressed. Other interest payable
reduced to £3.7m from £6.3m (which includes £2.8m of costs incurred
in issuing the Convertible Bond). Total finance costs increased from
£27.3m to £27.8m. Finance income earned was £5.1m (2015: £2.5m).
3
33.3
20
30
40
50
2014
2016
2013
2015
25
35
30
20
15
10
17.1
10
TAXATION
Helical pays corporation tax on its net rental income, trading and
development profits and realised chargeable gains, after offset of
administration and finance costs.
3.4
2.4
2.4
0
5
0
2012
The deferred tax charge for the year is principally derived from
2016
the revaluation surpluses recognised in the year offset by the
recognition of tax losses which the Group believes will be utilised
against profits in the foreseeable future.
£m
2014
2013
2015
500
400
300
313
461
385
250
4
DIVIDENDS
Helical follows a progressive dividend policy increasing its dividends
in line with its results, whilst retaining the majority of funds generated
for investment in growing the business. The interim dividend paid
on 30 December 2015 of 2.30p was an increase of 9.5% on the
previous interim dividend of 2.10p. On 4 April 2016, the Company
paid a second interim of 5.15p and together with the final dividend
of 0.72p payable on 29 July 2016, this is an increase of 14.0% on
the previous year (2015: 5.15p). In total, the dividend paid or payable
in respect of the results for the year to 31 March 2016 is 8.17p
(2015: 7.25p), an increase of 12.7%. Since 2013 the compound
annual growth rate of the Company’s dividends has been 13.8%.
264
2014
2016
2013
2015
100
200
0
Pence per share
2012
35
30
25
20
15
10
5.15
5
0
6.75
7.25
8.17
5.55
£m
10
1
8
6
4
2
0
2012
Increase
5.1%
£m
£400.0
2
£300.0
£200.0
£100.0
500
400
300
200
100
0
2013
7.8%
2014
21.6%
2015
7.4%
2016
12.7%
£371.3m
£219.5m
£34.2m
£96.0m
£102.7m
£80.0m
£71.1m
£0.0
£0.9m £3.6m
3.6m
£1.1m
£1.1m £1.1m
<1
10
1-2
2-3
3-4
4-5
5-6
6-7
7-8
8-9
9-10
year
years
years
years
years
years
years
years
years
years
■ Secured ■ In Joint Venture (non recourse) ■ Unsecured
3
4
1
2
5
6
50
40
30
20
10
0
35
30
25
20
15
10
5
0
500
400
300
200
100
0
10
8
6
4
2
0
400
350
300
250
200
150
100
50
0
2012
2013
2014
2015
2016
6.75
7.25
8.17
5.15
5.55
0
£m
10
8
6
4
2
0
£m
£400.0
£300.0
£200.0
£100.0
£m
£400.0
£300.0
£200.0
£100.0
£0.0
8
6
4
2
0
5
£m
£400.0
£300.0
£200.0
£100.0
£0.0
6
400
350
£0.9m
300
<1
250
year
200
150
100
50
0
2012
Increase
5.1%
2013
7.8%
2014
21.6%
2015
7.4%
2016
12.7%
£371.3m
£219.5m
£34.2m
£96.0m
£102.7m
£80.0m
£71.1m
£0.0
£0.9m £3.6m
3.6m
£1.1m
£1.1m £1.1m
<1
1-2
2-3
3-4
4-5
5-6
6-7
7-8
8-9
9-10
year
years
years
years
years
years
years
years
years
years
■ Secured ■ In Joint Venture (non recourse) ■ Unsecured
£371.3m
£34.2m
£102.7m
3-4
years
£219.5m
£80.0m
4-5
years
£96.0m
5-6
years
£3.6m
1-2
years
3.6m
2-3
years
■ Secured ■ In Joint Venture (non recourse) ■ Unsecured
£1.1m
6-7
years
£1.1m
7-8
years
£1.1m
8-9
years
£71.1m
9-10
years
£371.3m
£34.2m
£102.7m
3-4
years
£219.5m
£80.0m
4-5
years
£96.0m
5-6
years
£0.9m
<1
year
£3.6m
1-2
years
3.6m
2-3
years
■ Secured ■ In Joint Venture (non recourse) ■ Unsecured
£1.1m
6-7
years
£1.1m
7-8
years
£1.1m
8-9
years
£71.1m
9-10
years
HELICAL BAR PLC REPORT & ACCOUNTS 2016
FINANCIAL REVIEW
53
BALANCE SHEET
INVESTMENT PORTFOLIO
Sales of £55m of London assets and £64m of regional assets provided funds, net of loan repayments, for £377m of acquisitions. Included
in these acquisitions was the purchase of The Bower EC1, from the joint venture with Crosstree, where the existing cash equity and share of
profits to date remained invested in the scheme. The acquisition was funded through new bank finance of £200m, of which £149.5m was
drawn down to complete the purchase with the remaining facility available to fund the redevelopment of The Tower at 207 Old Street EC1.
Revaluation surpluses of £53.5m (£0.3m attributable to our profit share partners) and £2.3m in our joint ventures contributed to an
increase in the overall size of the investment portfolio on a see-through basis to £1,053m (2015: £790m).
Valuation at 31 March 2015
Acquisitions
Capital Expenditure
Disposals
Transfer from stock
Revaluation Surplus - Helical
- Profit Share Partners
Valuation at 31 March 2016
Wholly owned
£000
In joint venture
£000
See-through
£000
701,521
376,899
28,234
88,305
-
16,260
789,826
376,899
44,494
(119,385)
(96,687)
(216,072)
-
53,508
323
1,358
2,316
-
1,358
55,824
323
1,041,100
11,552
1,052,652
DEBT AND FINANCIAL RISK
In seeking to finance Helical’s recent expansion, the Group has used a combination of new secured facilities, whose purpose and terms
reflect the nature of the assets charged to the lenders, and unsecured bonds which have provided the firepower to acquire many of the
assets which have contributed to the recent growth in shareholders’ funds. The composition of the Group’s debt structure has
significantly changed since 31 March 2014 with unsecured debt now representing 23% of debt drawn at 31 March 2016.
In total, Helical’s outstanding debt at 31 March 2016 of £778m (2015: £675m) had an average maturity of 4.5 years (2015: 4.3 years)
and a weighted interest cost of 4.2% (2015: 4.1%).
Debt profile at 31 March 2016 – excluding the effect of arrangement fees
Investment facilities
Development facilities
Total wholly owned
In joint ventures
Total secured debt
Retail Bond
Convertible Bond
Working capital
Fair Value of Convertible Bond
Total unsecured debt
Total debt
Total
facility
£000’s
568,635
65,000
633,635
58,035
691,670
80,000
100,000
10,000
2,747
192,747
884,417
Total
utilised
£000’s
509,331
50,501
559,832
35,302
595,134
80,000
100,000
-
2,747
182,747
777,881
Available facility
£000’s
Net LTV
%
Weighted
average
interest rate
%
Average
maturity
Years
59,304
14,499
73,803
22,733
96,536
-
-
10,000
-
10,000
106,536
-
-
-
-
40.2
-
-
-
-
-
55.0
3.8
5.5
4.0
3.4
3.9
6.0
4.0
-
-
4.9
4.2
5.0
4.0
4.8
3.7
4.7
4.2
3.2
-
3.7
4.5
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT
54
FINANCIAL REVIEW
SECURED DEBT
The Group arranges its secured investment and development
facilities to suit its business needs as follows:
UNSECURED DEBT
The Group’s unsecured debt, including the Convertible Bond at
its mark to market valuation, is £182.7m (2015: £183.9m) as follows:
• Investment facilities
• Retail Bond
In June 2013, the Group raised £80m from the issue of an
unsecured Retail Bond with a 6.00% coupon. This bond is
repayable in June 2020.
• Convertible Bond
In June 2014, the Group raised £100m from the issue of a listed
unsecured Convertible Bond with a 4.0% coupon, repayable in
June 2019, or, subject to certain conditions, convertible at the
option of the bond holders into ordinary shares, unless a cash
settlement option is exercised by the Company. The initial
conversion price has been set at £4.9694 per share, representing
a 35% premium above the price on the day of the issue and a
premium of 59% above the Company’s EPRA net asset value
per share at 31 March 2014. The value of the Bond at 31 March
2016, as determined by the listed market price, was £102.7m
(2015: £103.3m).
• Short term working capital facilities
These facilities provide access to additional working capital
for the Group.
We have £190m of revolving credit facilities which enable the
group to acquire, refurbish, reposition and hold significant parts of
our investment portfolio. We have used these facilities to finance
our regional portfolio. Our London investment assets are primarily
held in £380m of term loan secured facilities which, where
appropriate, allow us to finance refurbishment projects. The
value of the Group’s properties secured in these facilities at
31 March 2016 was £945m (2015: £639m) with a corresponding
loan to value of 54% (2015: 58%). The average maturity of the
Group’s investment facilities at 31 March 2016 was 5.0 years
(2015: 4.6 years) with a weighted average interest rate of 3.8%
(2015: 3.7%).
• Development facilities
These facilities finance the redevelopment of The Tower at
The Bower, Old Street, London EC1 and the construction of the
retirement villages at Durrants Village, Horsham; Maudslay Park,
Great Alne; and Milbrook Village, Exeter. The average maturity
of the Group’s development facilities at 31 March 2016 was
4.0 years (2015: 2.0 years) with a weighted average interest rate
of 5. 5% (2015: 3.7%).
• Joint venture facilities
We hold a number of investment and development properties
in joint venture with third parties and include in our reported
figures our share, in proportion to our economic interest, of the
debt associated with each asset. The average maturity of the
Group‘s share of bank facilities in joint ventures at 31 March
2016 was 3.7 years (2015: 3.0 years) with a weighted average
interest rate of 3.4% (2015: 4.5%).
£m
400
300
200
100
0
£371.3m
£219.5m
£0.9m
£3.6m
£3.6m
£102.7m
£80.0m
£1.1m
£1.1m
£1.1m
£34.2m
£96.0m
£71.1m
<1 YEAR
1-2 YEARS
2-3 YEARS
3-4 YEARS
4-5 YEARS
5-6 YEARS
6-7 YEARS
7-8 YEARS
8-9 YEARS
9-10 YEARS
SECURED
IN JOINT VENTURE (NON RECOURSE)
UNSECURED
HELICAL BAR PLC REPORT & ACCOUNTS 2016
FINANCIAL REVIEW
55
HEDGING
At 31 March 2016, the Group had £635.5m (2015: £500.2m) of
fixed rate debt with an average effective interest rate of 4.2%
(2015: 4.4%) and £107.1m (2015: £103.4m) of floating rate debt
with an average effective interest rate of 3.9% (2015: 2.8%). In
addition, the Group has £157m of interest rate caps at an average
of 4.0% (2015: £143.2m at 4.0%), all of which expire within 12 months.
In our joint ventures, the Group’s share of fixed rate debt was £nil
(2015: £23.3m) with an effective rate of nil% (2015: 6.8%) and
£35.3m (2015: £47.9m) of floating rate debt with an effective rate
of 3.4% (2015: 3.3%).
CASH AND CASH FLOW
At 31 March 2016, the Group had £193m (2015: £229m) of cash
and agreed, undrawn, committed bank facilities including its share
in joint ventures as well as £153m (2015: £131m) of uncharged
property on which it could borrow funds.
NET BORROWINGS AND GEARING
Total gross borrowings of the Group, including in joint ventures,
have increased from £674.6m to £777.9m during the year to
31 March 2016. After deducting cash balances of £86.8m (2015:
£136.3m) and unamortised refinancing costs of £9.3m (2015:
£6.4m), net borrowings increased from £531.9m to £681.8m. The
gearing of the Group, including in joint ventures, increased from
132% to 140%. Including EPRA adjustments to IFRS shareholders’
funds, the see-through net asset value gearing increases from
113% to 125%. This gearing measure, the ratio of see-through net
borrowings to EPRA net asset value, represents a longer term
view of gearing than the standard measure.
Fixed rate debt
- Secured borrowings
- Retail Bond
- Convertible Bond
2016
2015
- Fair value of Convertible Bond
See-through gross borrowings
See-through cash balances
Unamortised refinancing costs
See-through net borrowings
Shareholders’ funds
EPRA shareholders’ funds
See-through gearing - IFRS
See-through gearing - EPRA
£777.9m
£86.8m
£9.3m
£681.8m
£486.2m
£546.8m
140%
125%
£674.6m
£136.3m
Total
Floating rate debt
£6.4m
- Secured
£531.9m
£404.3m
£469.1m
132%
113%
Total
In joint ventures
- Fixed rate
- Floating rate
Total borrowings
2016
£m
2015
£m
%
452.8
80.0
100.0
2.7
3.9 316.9
6.0
80.0
4.0 100.0
-
3.3
635.5
4.2 500.2
107.1
742.6
3.9 103.4
4.2 603.6
-
35.3
777.9
-
3.4
23.3
47.9
4.2 674.8
%
4.1
6.0
4.0
-
4.4
2.8
4.1
6.8
3.3
4.2
INTEREST COVER
In assessing the results of the Group for each financial year, Helical
considers its interest cover as a measure of its performance and its
ability to finance its annual interest payments from its net operating
income, before revaluation gains or losses on the investment portfolio
and net realisable provisions on the trading and development stock.
In the year to 31 March 2016, this interest cover was 5.4 times
(2015: 2.5 times).
2016
2015
See-through net operating income
£121.3m
See-through net finance costs
Interest cover
£22.6m
5.4x
£62.7m
£24.8m
2.5x
Tim Murphy
Finance Director
15 June 2016
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT
56
VIEW LOOKING SOUTH FROM ONE CREECHURCH PLACE, LONDON EC3
57
58
PRINCIPAL RISKS REVIEW
Risk is an integral part of any group’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. As well as seeing changes
in our internal and external environment
as potential risks, we also see them as
being opportunities which can drive
performance.
Risk management starts at Board level where the Directors set
the overall risk appetite of the Group and the risk management
strategies. Helical’s management runs the business within these
guidelines and part of its role is to act within these strategies and
to report to the Board on how they are being operated.
The Group’s risk appetite and risk management strategies are
continually assessed by the Board to ensure that they are
appropriate and consistent with the Group’s overall strategy and
with external market conditions. The effectiveness of the Group’s
risk management strategy is reviewed every six months by the
Audit Committee and by the full Board.
The Board has ultimate responsibility for risk within the business.
However, the small size of our team and our flat management
structure allows the Executive Directors to have close contact
with all aspects of the business and allows us to ensure that the
identification and management of risks and opportunities is part
of the mindset of all decision makers at Helical.
The principal risks faced by the Group, and the steps taken by the
Group to mitigate these risks, are as follows:
HELICAL BAR PLC REPORT & ACCOUNTS 2016
HELICAL BAR PLC REPORT & ACCOUNTS 2016
STRATEGIC REPORT
59
PRINCIPAL RISKS REVIEW
STRATEGIC RISKS
STRATEGIC RISKS
Strategic risks are external risks that could prevent the Group delivering its strategy. These risks principally impact our decision
Strategic risks are external risks that could prevent the Group delivering its strategy. These risks principally impact our decision
to purchase or exit from a property asset.
to purchase or exit from a property asset.
RiskRisk
Risk description
Risk description
Mitigation/action
Mitigation/action
The Group’s
The Group’s
strategy is
strategy is
inconsistent
inconsistent
with the market.
with the market.
Changing market conditions could hinder the Group’s
Changing market conditions could hinder the Group’s
ability to buy and sell properties envisioned in its strategy.
ability to buy and sell properties envisioned in its strategy.
The location, size and mix of properties in the Helical
The location, size and mix of properties in the Helical
portfolio determine the impact of the risk. If the Group’s
portfolio determine the impact of the risk. If the Group’s
chosen markets underperform, the impact on the
chosen markets underperform, the impact on the
Group’s liquidity, investment property revaluations and
Group’s liquidity, investment property revaluations and
rental income is greater.
rental income is greater.
The Group carries out signifi cant development projects
The Group carries out signifi cant development projects
over several years and is therefore exposed to
over several years and is therefore exposed to
fl uctuations in the market over time.
fl uctuations in the market over time.
Property values
Property values
decline/reduced
decline/reduced
tenant demand
tenant demand
for space.
for space.
The property portfolio is at risk of revaluation falls
The property portfolio is at risk of revaluation falls
through changes in market conditions, including
through changes in market conditions, including
under-performing sectors or locations and lack of
under-performing sectors or locations and lack of
tenant demand.
tenant demand.
Management constantly monitors the market and
Management constantly monitors the market and
makes changes to the Group’s strategy in light of
makes changes to the Group’s strategy in light of
market shifts.
market shifts.
The Group’s management is highly experienced and has a
The Group’s management is highly experienced and has a
good track record of calling the property market.
good track record of calling the property market.
Due to the Group’s small management team, changes in
Due to the Group’s small management team, changes in
strategy can be implemented quickly.
strategy can be implemented quickly.
Management carefully reviews the risk profi le of
Management carefully reviews the risk profi le of
individual developments and builds properties in several
individual developments and builds properties in several
phases to minimise the exposure to reduced demand for
phases to minimise the exposure to reduced demand for
particular asset classes or geographical locations over
particular asset classes or geographical locations over
time. The Group limits the number of speculative
time. The Group limits the number of speculative
developments it does on its own balance sheet.
developments it does on its own balance sheet.
The Group’s property portfolio is diverse in asset type,
The Group’s property portfolio is diverse in asset type,
location and tenant industries, reducing over-exposure
location and tenant industries, reducing over-exposure
to one sector. Management reviews external data, seeks
to one sector. Management reviews external data, seeks
the advice of industry experts and monitors the
the advice of industry experts and monitors the
performance of individual assets and sectors in order to
performance of individual assets and sectors in order to
dispose of non-performing assets and rebalance the
dispose of non-performing assets and rebalance the
portfolio for the changing market.
portfolio for the changing market.
Political risk
Political risk
There is a risk that regulatory and tax changes could
There is a risk that regulatory and tax changes could
adversely aff ect the market in which the Group
adversely aff ect the market in which the Group
operates and changes in legislation could lead to delays
operates and changes in legislation could lead to delays
in receiving planning permission.
in receiving planning permission.
Management seeks advice from experts to ensure
Management seeks advice from experts to ensure
continued monitoring of upcoming regulatory and tax
continued monitoring of upcoming regulatory and tax
changes and to understand the potential impact on the
changes and to understand the potential impact on the
Group. It maintains good relationships with planning
Group. It maintains good relationships with planning
consultants and local authorities.
consultants and local authorities.
FINANCIAL RISKS
FINANCIAL RISKS
Financial risks are those that could prevent the Group from funding its chosen strategy, both in the long and short term.
Financial risks are those that could prevent the Group from funding its chosen strategy, both in the long and short term.
RiskRisk
Risk description
Risk description
Mitigation/action
Mitigation/action
Availability of
Availability of
bank borrowing
bank borrowing
and cash
and cash
resources
resources
The inability to roll over existing facilities or take out
The inability to roll over existing facilities or take out
new borrowing would impact on the Group’s ability to
new borrowing would impact on the Group’s ability to
maintain its current portfolio and purchase new properties.
maintain its current portfolio and purchase new properties.
The Group may forego opportunities if it does not
The Group may forego opportunities if it does not
maintain suffi cient cash to take advantage of
maintain suffi cient cash to take advantage of
opportunities as they arise.
opportunities as they arise.
The Group maintains a good relationship with many
The Group maintains a good relationship with many
established lending institutions and borrowings are
established lending institutions and borrowings are
spread across a number of these.
spread across a number of these.
Funding requirements are regularly reviewed by
Funding requirements are regularly reviewed by
management, who ensure that the maturity dates of
management, who ensure that the maturity dates of
borrowings are spread over several years.
borrowings are spread over several years.
Management monitors the cash levels of the Group on a
Management monitors the cash levels of the Group on a
daily basis and maintains suffi cient levels of cash
daily basis and maintains suffi cient levels of cash
resources and undrawn committed bank facilities to
resources and undrawn committed bank facilities to
fund opportunities as they arise.
fund opportunities as they arise.
Breach of loan
Breach of loan
and bond
and bond
covenants
covenants
If the Group breaches debt covenants, lending
If the Group breaches debt covenants, lending
institutions may require the early repayment of
institutions may require the early repayment of
borrowings.
borrowings.
Covenants are closely monitored throughout the year.
Covenants are closely monitored throughout the year.
Management carries out sensitivity analysis to assess
Management carries out sensitivity analysis to assess
the likelihood of future breaches based on signifi cant
the likelihood of future breaches based on signifi cant
changes in property values or rental income.
changes in property values or rental income.
Increase in cost
Increase in cost
of borrowing
of borrowing
The Group is at risk of increased interest rates on
The Group is at risk of increased interest rates on
unhedged borrowings.
unhedged borrowings.
The Group hedges the interest rates on the majority of
The Group hedges the interest rates on the majority of
its borrowings, eff ectively fi xing the rates over several
its borrowings, eff ectively fi xing the rates over several
years.
years.
60
HELICAL BAR PLC REPORT & ACCOUNTS 2016
PRINCIPAL RISKS REVIEW
OPERATIONAL RISKS
OPERATIONAL RISKS
Operational risks are internal risks that could prevent the Group from delivering its strategy.
Operational risks are internal risks that could prevent the Group from delivering its strategy.
RiskRisk
Risk description
Risk description
Mitigation/action
Mitigation/action
Employment
Employment
and retention
and retention
of key
of key
personnel
personnel
The Group’s continued success is reliant on its
The Group’s continued success is reliant on its
management and staff and successful relationships
management and staff and successful relationships
with its joint venture partners.
with its joint venture partners.
The senior management team is very experienced and
The senior management team is very experienced and
the average length of service is high. The Nominations
the average length of service is high. The Nominations
Committee and Board regularly review succession
Committee and Board regularly review succession
planning issues and remuneration is set to attract and
planning issues and remuneration is set to attract and
retain high calibre staff .
retain high calibre staff .
The Group has well established relationships with joint
The Group has well established relationships with joint
venture partners.
venture partners.
Inability to
Inability to
asset manage,
asset manage,
develop and
develop and
let property
let property
assets
assets
The Group relies on external parties when asset
The Group relies on external parties when asset
managing, developing and letting its properties,
managing, developing and letting its properties,
including planning consultants, contractors, architects,
including planning consultants, contractors, architects,
project managers, marketing agencies, lawyers and
project managers, marketing agencies, lawyers and
managing agents.
managing agents.
The Group has a highly experienced team managing its
The Group has a highly experienced team managing its
properties. It seeks to maintain excellent relationships with its
properties. It seeks to maintain excellent relationships with its
specialist professional advisors. Management actively
specialist professional advisors. Management actively
monitors these parties to ensure they are delivering the
monitors these parties to ensure they are delivering the
required quality on time.
required quality on time.
Health and
Health and
safety /
safety /
Bribery and
Bribery and
corruption risk
corruption risk
The nature of the Group’s operations and markets
The nature of the Group’s operations and markets
expose it to potential health and safety and bribery
expose it to potential health and safety and bribery
and corruption risks.
and corruption risks.
The Group updates its Health and Safety policy
The Group updates its Health and Safety policy
annually, which is approved by the Board. The Group
annually, which is approved by the Board. The Group
engages an external health and safety consultant to
engages an external health and safety consultant to
review contractor contracts prior to appointment to
review contractor contracts prior to appointment to
ensure they have appropriate policies and procedures in
ensure they have appropriate policies and procedures in
place, then monitors the adherence to policies
place, then monitors the adherence to policies
throughout the project.
throughout the project.
The Executive Committee reviews the report by the
The Executive Committee reviews the report by the
external consultant every month and the Board reviews
external consultant every month and the Board reviews
them at every meeting. The internal asset managers
them at every meeting. The internal asset managers
carry out regular site visits.
carry out regular site visits.
The Group’s Anti-bribery policy is updated annually and
The Group’s Anti-bribery policy is updated annually and
projects with greater exposure to bribery and
projects with greater exposure to bribery and
corruption are monitored closely. The Group avoids
corruption are monitored closely. The Group avoids
doing business in high risk territories.
doing business in high risk territories.
REPUTATIONAL RISKS
REPUTATIONAL RISKS
Reputational risks are those that could aff ect the Group in all aspects of its strategy.
Reputational risks are those that could aff ect the Group in all aspects of its strategy.
RiskRisk
Risk description
Risk description
Mitigation/action
Mitigation/action
Poor
Poor
management of
management of
stakeholder
stakeholder
relations
relations
The Group risks suff ering from reputational damage
The Group risks suff ering from reputational damage
resulting in a loss of credibility with key stakeholders
resulting in a loss of credibility with key stakeholders
including shareholders, analysts, banking institutions,
including shareholders, analysts, banking institutions,
contractors, managing agents, tenants, property
contractors, managing agents, tenants, property
purchasers/sellers and employees.
purchasers/sellers and employees.
The Group believes that by successfully delivering its
The Group believes that by successfully delivering its
strategy and mitigating its strategic, fi nancial and
strategy and mitigating its strategic, fi nancial and
operational risks its strong reputation will be protected.
operational risks its strong reputation will be protected.
The Group regularly reviews its strategy and risks to
The Group regularly reviews its strategy and risks to
ensure it is acting in the interests of its stakeholders.
ensure it is acting in the interests of its stakeholders.
The Group maintains a strong relationship with
The Group maintains a strong relationship with
investors and analysts through regular meetings.
investors and analysts through regular meetings.
PRINCIPAL RISKS REVIEW
STRATEGIC REPORT
61
VIABILITY STATEMENT
The Directors have assessed the viability of the Group for a period
of five years to March 2021, being the period for which the Board
regularly reviews forecasts and which encompasses the lifetime of
the Group’s major development projects. The Board does consider
the future performance of the Group beyond the five years but a
longer timeframe involves less certainty over the forecasting
assumptions.
The viability of the Group is reviewed throughout the year and
through multiple channels, detailed below:
• The strategic direction of the Group is established by the Board
once a year and is captured in the Business Plan which forms
the basis of the detailed budgets and actions for the year;
• The Board reviews the principal risks of the Group twice a year,
reassessing the severity of each risk and determining the
Group’s proposed response;
• The five year forecasts for the Group are updated and reviewed
by the Board on a quarterly basis; and
• Management reviews the short term (three-four months) cash
requirements of the Group on a weekly basis and cash balances
and movements are monitored daily.
In making their assessment, the Board considers the principle risks
and then assesses the potential impacts in severe, but plausible,
downside scenarios together with the likely effectiveness of
mitigating actions that the Group would have at its disposal.
The most relevant risks and the potential impact of them on the
viability of the Group are considered to be:
• A significant reduction in the fair value of the Group’s property
portfolio, which could result in the Group breaching loan covenants
and being required to repay a proportion of borrowings;
• A lack of demand from tenants as the Group’s development
properties near practical completion, which could reduce the
Group’s levels of rental income and profitability; and
• An inability to maintain sufficient levels of rental income, which
could present a short term liquidity risk for the Group.
The Group subjected the five year cashflow forecasts to sensitivity
analysis in which it assessed the impact of significant reductions
to the property portfolio fair value and associated rental income
on the Group’s loan covenants. Management also modelled the
rental income profile of the Group, taking into account expected
changes to leases and contracted rents, comparing expected
income over a five year period with the loan covenant requirements
in order to determine points of potential pressure.
Based on the outcomes of the procedures outlined above and
other matters considered by the Board, it has a reasonable
expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the five year period of
their assessment.
TOP CREATIVE QUARTER, CARDIFF
MIDDLE THE BOWER, OLD STREET,
LONDON EC1
BOTTOM ONE BARTHOLOMEW CLOSE,
LONDON EC1
HELICAL BAR PLC REPORT & ACCOUNTS 2016 62
HELICAL BAR PLC REPORT & ACCOUNTS 2016
STRATEGIC REPORT
63
CORPORATE RESPONSIBILITY
Helical implements responsible
environmental and social practices
across its direct business, via partners,
contractors and suppliers and through
its joint venture activities.
An endorsement of Helical’s commitment to managing
environmental and social impacts is its 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 the evolving approach to
Corporate Responsibility and sustainability.
MANAGING CORPORATE RESPONSIBILITY
Each year Helical reviews and updates its environmental
management system, which has been in place since 2003. The
environmental management system, which is available on the
Company website, is embedded within the operations of Helical.
Key elements of the system include:
• ‘Environment’ and ‘Corporate Responsibility’ policies which set
out the Group’s high-level commitment across a number of
impact areas. These are reviewed annually at Board level and
are implemented by the senior management team;
• Annual (and ongoing) performance targets to enable Helical to
focus its efforts throughout the year on measurable, yet achievable,
performance goals. This year Helical has continued to report on
energy and water consumption at the larger managed multi-let
assets, and measured performance against quantitative targets
set in 2015. In addition, the proportion of waste recycled has
been measured at managed assets and Group owned
developments projects;
• Key Performance Indicators (KPIs) to help Helical monitor progress
towards these targets and to ensure they are able to report in
line with investor disclosure requirements, notably FTSE4Good.
It should be acknowledged that the particular business model
of the buying and selling of assets means that absolute performance
measures can be difficult to compare year on year, hence this
year the reporting against selected intensity (resource
consumption) and like for like KPIs is being used;
• Checklists to assist in applying minimum sustainability requirements
across its development activities. Helical has developed a
sustainability project management checklist to ensure that
sustainability issues are incorporated into all decisions throughout
the development lifecycle. In addition, an Environmental Impact
Checklist is issued to individual contractors in order to address
corporate goals at the construction stage; and
• Effective use of internal audit and review through quarterly
meetings of key Helical personnel, external corporate responsibility
advisors and principal managing agents to ensure effective
delivery of the objectives and targets.
The management system has been designed specifically to reflect
the flexibility of Helical’s business model. It also reflects the key
role that Helical’s partners play in delivering enhanced
sustainability outcomes in all its business ventures, be they
developments/refurbishments or in the management of individual
multi-let assets.
REVIEW OF PROGRESS IN THE YEAR TO 31 MARCH 2016
The benefits of managing environmental and social impacts 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. We outline below the progress in relation to
each of Helical’s Corporate Responsibility impact areas.
ENVIRONMENT
The Group’s corporate commitments to environmental issues are
outlined in the Group’s Environmental Policy which can be found
on the Company website. The policy details Helical’s commitments
across a range of impact areas and its development and property
management activities. The Group set itself a number of targets
to guide its Corporate Responsibility. These targets address a
range of impacts arising from development and property
management activities, including resource use and waste
production, pollution, biodiversity, timber sourcing, tenant
engagement, flood risk and sustainable design and construction.
A full list of these targets can be found on the Group website.
The performance against the key targets is summarised below:
• Previously, year on year improvement targets have been reported
for the Head Office. Following the relocation of the Head Office
to 5 Hanover Square in August 2014, year on year data has been
collated for energy. However, as the office is a serviced let
property, waste and water consumption data are not available
going forward;
• The Group’s managed multi-let offices continue to improve
energy and water efficiency through the implementation of low
and no cost measures. The specific target for 2016 was to
achieve a 2% improvement against the 2015 baseline. For this
year, only those properties that can be compared on a like –
for- like have been included: The Hub, Glasgow, Shepherds
Building, London W14 and Churchgate and Lee House,
Manchester. The Loom, London E1 and The Morgan Quarter, Cardiff,
data cannot be compared year on year due to partial
refurbishment taking place during 2015;
• Of those that can be compared, Shepherds Building, London
W14 has shown a drop in energy consumption of 18%, although
this can be partially attributed to the closure of the café for part
of the year. Water consumption increased by
6% with the addition of new showers in the common parts.
The Hub, Glasgow has shown a small decrease in electricity
consumption and a 5% decrease in water consumption but a
22% increase in gas consumption attributable to boiler down
time in the prior year. Churchgate and Lee House, Manchester is
difficult to assess in terms of year on year performance as there
have been a number of issues with metering resulting in a large
increase in electricity consumption. Gas consumption, however,
has shown a 17% reduction;
• The Group’s retail portfolio has been reduced over the year with
only The Morgan Quarter, Cardiff and Parkgate, Shirley retained
to enable year on year comparison. Of these, The Morgan Quarter,
Cardiff has shown a 13% decrease in electricity consumption
through implementing a successful awareness raising programme
for staff regarding the role they can play in reducing costs and
lessening environmental impact. Parkgate, Shirley has shown a
59% increase which is attributed to increased occupancy and
a malfunctioning meter. With respect to water consumption
year on year comparison is not possible at The Morgan Quarter,
Cardiff due to the impact of the ongoing refurbishment work
and at Parkgate, Shirley water consumption is not monitored;
THE BOWER, OLD STREET, LONDON EC1
64
CORPORATE RESPONSIBILITY
• The Group continues to offer recycling facilities at the larger of
its managed assets. Where data is available Helical comfortably
exceeded its ongoing target of a recycling rate of at least 35%
at the majority of properties and achieved 80% at the Hub,
Glasgow. The exceptions were Parkgate, Shirley and Churchgate
and Lee House, Manchester which will be reviewed in the
forthcoming year;
• One of Helical’s ongoing targets is to proactively engage with
tenants to encourage improvements in the efficient use of the
buildings. Individual property managers have engaged with
tenants to try to see if there are ways in which efficiency
initiatives can be introduced and, particularly, to encourage
increased recycling within the portfolio;
• In compliance with legal requirements, the Group undertook an
audit of its operations in accord with Energy Savings Opportunity
Scheme (ESOS) and is currently implementing the key findings
where potential payback savings have been identified. Given
the nature of the portfolio, the focus of improvements is in the
core managed multi-let buildings which have the largest energy
consumption. Examples of the initiatives that are being pursued
include a rolling programme of upgrading to LED lighting in The
Hub, Glasgow and Shepherds Building, London W14 and a
£75,000 capital spend on a new boiler system at The Hub,
Glasgow; and
HEAD OFFICE AND MULTI-LET OFFICES
• An ongoing objective is to improve the effectiveness of building
management systems (BMS) and the use of smart meters. Of
the larger multi-let buildings all have an operating BMS with the
exception of The Loom, London E1.
Helical has maintained its registration with the Carbon Reduction
Commitment Energy Efficiency Scheme (CRC). The confirmed
purchased allowance for year to 31 March 2015 was 9,447 tonnes.
The projected allowance for the year to 31 March 2016 is in the
order of 7,974 tonnes based on the current reported emissions for
the portfolio as a whole. The Group has again reported to the
Carbon Disclosure Project in the year and achieved an improvement
in its disclosure, scoring 86%, above the index average of 84%. In
line with the mandatory requirement for reporting its greenhouse gas
emissions, Helical has provided a separate disclosure in this report.
Helical presents its utility consumption performance for multi-let
buildings under management as well as the Head Office (where
data availability permits) below. As previously, the data provision
focuses on energy consumption that is the responsibility of the
landlord within common parts, vacant space and during
refurbishment. Buildings that have been sold during the reporting
year are not reported.
5 Hanover Square, London W1S 1
11-15 Farm St (until August 2014)
Shepherds Building, London W14
The Hub, Glasgow
Churchgate & Lee House, Manchester
The Loom, London E1
Creative Quarter, Cardiff
Notes:
N/A refers to data not available or not applicable
‘No gas’ refers to assets where gas is not used on site
1 refers to part year occupancy due to office move
2 restated figure for 2014-15
RETAIL
Parkgate, Shirley
Morgan Quarter, Cardiff
Notes:
Electricity
2014-15
kWh
51,3971
44,820
559,366
171,868
445,7132
266,449
46,223
Electricity
2015-16
kWh
100,142
N/A
458,228
170,840
706,951
167,362
64,697
Gas
2014-15
kWh
N/A
10,182
No gas
659,465
32,6222
No gas
No gas
Gas
2015-16
kWh
N/A
N/A
No gas
805,203
27,225
No gas
No gas
Water
2014-15
m3
N/A
190
6,387
5,569
12,9942
5,137
143
Water
2015-16
m3
N/A
N/A
6,773
5,283
11,556
5,162
202
Electricity
2014-15
kWh
38,616
335,978
Electricity
2015-16
kWh
61,365
293,181
Gas
2014-15
kWh
No gas1
No gas
Gas
2015-16
kWh
No gas1
No gas
Water
2014-15
m3
N/A
374
Water
2015-16
m3
N/A
116
‘No gas’ refers to assets where gas is not used on site within landlord control
N/A refers to data not available at time of reporting e.g. inaccessible water meters or property not in Helical’s ownership for full year
HELICAL BAR PLC REPORT & ACCOUNTS 2016
CORPORATE RESPONSIBILITY
65
WASTE
Multi-let offices
Shepherds Building, London W14
The Hub, Glasgow
Churchgate & Lee House, Manchester
The Loom, London E1
Creative Quarter, Cardiff1
1 restated figure for 2014-15
N/A refers to data not available or not applicable
Retail
Parkgate Shirley
Morgan Quarter, Cardiff
N/A refers to data not available or not applicable
The suitability of the targets will be reviewed against the
performance for the reporting year and revised accordingly to
ensure that they remain challenging yet achievable.
The specific target set by Helical is to reduce energy consumption
by 2% per annum in the principal managed assets. As discussed
earlier in this section of the report, year on year performance is
variable across the portfolio and complicated by the changing
nature of the portfolio through acquisition and divestment,
increasing occupancy and ongoing refurbishment of the
component assets.
CONSTRUCTION SITE PERFORMANCE
As part of the ongoing refurbishment and development
programme, a number of key performance indicators are also
measured and recorded for the Group’s schemes above a
£500,000 project value threshold. During the reporting year, this
encompassed eighteen commercial and residential schemes and
the performance is summarised below.
BREEAM / Considerate Constructors Scheme (CCS)
In accordance with Helical’s corporate objectives, five out of the
eligible six commercial developments are registered under the
BREEAM scheme to meet a minimum of BREEAM Very Good. The
Bower, Old Street London EC1, One Creechurch Place, London EC3,
St Vincent Street, Glasgow and 23-28 Charterhouse Square, London
EC1 have indicated that they are expecting to achieve an ‘Excellent’
rating. Of the twelve developments registered with CCS, all are
above the minimum requirement for compliance and the majority
are above the current industry average of 35.4/50 (for the year to
March 2016), with four schemes scoring in excess of 40.
Waste
segregated
on site
2014-15
%
Waste
segregated
on site
2015-16
%
Weight of
waste diverted
from landfill
2014-15
tonnes
Weight of
waste diverted
from landfill
2015-16
tonnes
60
61
121
50
60
80
12
53
N/A
N/A
126
N/A
129
N/A
N/A
133
35
115
88
N/A
Waste
segregated on
site 2014-15
%
Waste
segregated on
site 2015-16
%
Waste diverted
from landfill
2014 - 15
tonnes
Waste diverted
from landfill
2015-16
tonnes
N/A
33.25
23
50
N/A
30
24
23
Energy and water consumption
Eleven of the sites monitor purchased water and energy
consumption and have set themselves reduction targets over the
course of the project. The remaining seven developments report
purchased water and energy use through the managed buildings
data set.
Electricity
2015-16
kWh
1,244,736
Gas
2015-16
kWh
37
Water
2015-16
m3
13,300
Total
Resource use
A strong performance is shown by all sites that reported against
the key performance indicator for sourcing sustainable timber. All
sites which used timber sourced 100% from certified sustainable
sources.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT 66
CORPORATE RESPONSIBILITY
Waste
Eleven out of eighteen developments have implemented a Site
Waste Management Plan and the majority of these divert more
than 85% of waste disposal from landfill, well in excess of the
corporate target of 50% diversion from landfill.
Biodiversity
Biodiversity improvement is included within Helical’s schemes
where feasible and during the reporting period this applied to nine
of the eighteen schemes. To encourage biodiversity in urban areas,
features such as green and brown roofs, bat boxes and bird boxes
are included at C-Space, London EC1, The Bower Old Street,
London EC1, One King Street, London W6, One Creechurch Place,
London EC3 and St Vincent Street, Glasgow. Biodiversity
improvement at the Durrants Retirement Village includes
enhancing the wildlife area closest to the Mill Race, the provision of
a bat house and the installation of additional bat boxes on retained
trees. At Millbrook Retirement Village biodiversity enhancement
includes the provision of a new otter holt and associated habitat, in
addition to preserving the existing otter holt.
Sustainable travel
The majority of the Group’s developments are within 650m of a
bus service and/or within 1000m of a rail station and for the
reporting year eleven developments include cycle provisions on
site to maximise sustainable travel options.
Climate change and flood risk
It is a Group objective to ensure that Sustainable Drainage
Systems (SuDS) are included into the design to mitigate against
flooding. Half of the developments assessed have incorporated
SuDS where appropriate.
Site management
There have been no prosecutions or fines for environmental
pollution incidents reported on the operational sites during the
reporting period. Certified Environmental Management Systems
(EMS) are implemented where appropriate to the size and capital
value of the developments. This applied to two thirds of the
projects during the reporting period.
GREENHOUSE GAS (GHG) EMISSIONS REPORTING
For the reporting year to 31 March 2016 the 2014 UK
Government’s Conversion Factors for Company Reporting has
been followed. Greenhouse gas emissions are reported using the
following parameters to determine what is included within the
reporting boundaries.
• Scope 1 – direct emissions includes any gas data for landlord
controlled parts and fuel use for Group owned vehicles. Fugitive
emissions from air conditioning are included where it is Helical’s
responsibility within the managed portfolio, providing the data
is available.
• Scope 2 – indirect energy emissions includes purchased
electricity throughout the Group operations within landlord
controlled parts. Electricity used in refurbishment projects has
been recorded separately where appropriate. In the majority of
cases the electricity consumed is recorded for the individual
properties as part of the data collection for the management of
common parts, and contractors have been required to collect
project specific data.
The table below highlights that overall GHG emissions have
decreased by 33% year on year. The reason for this is primarily
due to selling a number of larger multi-let properties during the
reporting period and the diversity of the portfolio. Data for last
year has been restated due to metering and billing issues at a
number of properties. For Scope 1 this represents a reduction of
120 tonnes and for Scope 2 a reduction of 138 tonnes.
Due to the changing portfolio, only three multi-let office buildings
and one shopping centre can report on carbon intensity. At
Churchgate and Lee House, Manchester, The Hub, Glasgow and
Shepherds Building, London W14 the average carbon intensity
equates to 0.09 tCO2e/m2, whilst The Morgan Quarter, Cardiff
has a carbon intensity of 0.02 tCO2e/m2. These levels are
consistent with last year’s performance.
Greenhouse gas emissions (tonnes CO2e) are set out below for
the year:
Year ended
31 March 2015
tonnes
Year ended
31 March 2016
tonnes
Scope 1: Direct emissions
Scope 2: Indirect emissions
Total All Scopes
727
3,741
4,468
570
2,408
2,978
The specific target set by Helical is to reduce energy consumption
by 2% per annum in the principal managed assets. As discussed
earlier in this section of the report, year on year performance is
variable across the portfolio and complicated by the changing
nature of the portfolio through acquisition and divestment,
increasing occupancy and ongoing refurbishment of the
component assets.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 CORPORATE RESPONSIBILITY
67
Wales developing a sales strategy, sourcing products and
designing their retail space. On the third day, with support and
guidance from academics and industry experts, the students
launched a pop up shop in The Morgan Quarter, Cardiff putting
all of their knowledge and skills into practice; and
• The Morgan Quarter, Cardiff also ran ‘Morgan Quarter Memories’
- a community-based project capturing the reminiscences of
people who had been involved with the centre over the years to
show what effect the scheme has had on people’s lives.
Interviews with five people with particularly captivating stories
were filmed by Liana Stewart, a Cardiff born and raised local
film producer with strong local community links and her own
special memories of the Morgan Arcades. The project attracted
a wide ranging media response, including being featured on the
local TV station Made in Cardiff. The success of the project was
recognised by the winning of a Purple Apple Award.
At the 2016 Cardiff Life Awards (the city’s most prestigious, high
profile and sought after business awards), The Morgan Quarter,
Cardiff was awarded a Special Recognition Award for its
contribution to supporting independent business in Cardiff. Other
community and social activities during the year included:
• Helical’s continued membership of The Aldgate Partnership (TAP”),
formed in 2014 to help drive a powerful agenda for change.
Membership of the group currently includes landowners,
commercial occupiers, and developers. TAP works in partnership
with its members to develop Aldgate as ‘One Location’,
delivering a range of interventions to support community
development and develop a premier business hub with high
quality public realm and environment that produces a safe,
convenient and inspiring destination for all employees, residents
and visitors.
CHARITABLE ACTIVITIES
During the year to 31 March 2016 Helical donated £36,300 to
charities including LandAid, The Lord Mayor’s Appeal, Muscular
Dystrophy UK and Great Ormond Street Hospital. The Group’s
principal charitable activity is to raise money for LandAid (the
official charity of the property industry) and a total of £11,420 was
donated to LandAid during the year. In addition to this, £10,376 was
raised during the annual LandAid day on 15 October, when a
number of Helical Directors and staff, dressed as popular science
fiction characters, toured the streets of Mayfair by pedibus and
collected donations from fellow members of the property industry.
Alongside the Group’s formal charitable activities, Helical employees
fundraise for charities on a personal basis and, where appropriate, the
Group will make donations to help the staff reach their fundraising goals.
EMPLOYEES
As at 31 March 2016, Helical had 32 permanent and 3 temporary
employees (8.5% of the staff), based at the Group’s head office in
London. In addition, there were 5 employees in the Polish
subsidiary and 48 full and part-time employees of the retirement
village companies acquired in December 2015. The information set
out below is in respect of the head office only.
Gender diversity of the Board and the Company as at 31 March
2016 is set out below:
Board (including Non-Executive Directors)
Executives
All employees
Male
Female
92%
56%
47%
8%
44%
53%
Helical continues to enforce its equal opportunities, harassment
and sexual discrimination policies. We also continue to monitor
compliance with its anti-bribery and whistle blowing policies.
There have been no incidents to report against these policies to
date.
A high level of staff retention remains a key feature of the business.
Helical has retained a highly skilled and experienced team and the
table below shows a breakdown of staff by length of service:
Executive directors
Executives
All employees
Total number
of staff as at
31 March 2016
Average
length of
service (years)
5
16
32
21.1
4.9
7.6
Helical’s staff retention levels not only reflect competitive
remuneration and benefits packages but also its commitment to
enhancing the professional and personal skills of its team by
supporting employee training and development, by means of
training courses, seminars and mentoring where appropriate. As
in previous years, Helical continues to evaluate training needs in
line with business objectives. There are no human rights issues of
which the Board are aware that are considered relevant to the
Group.
COMMUNITY AND SOCIAL INITIATIVES
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 from The Morgan Quarter, Cardiff
demonstrate how community engagement has benefited the
communities that we work with over the past year:
• During November and December 2015, The Morgan Quarter,
Cardiff ran Trading Places - a collaborative project between the
Further Education Enterprise Hub and First Campus in partnership
with The Morgan Quarter Cardiff, NatWest, EE and the Higher
Education Enterprise Hub, which aims to develop entrepreneurial
skills and attitudes through practical experiences among college
students in South East Wales. The “Apprentice”-style challenge
aimed to give students some real life enterprise and industry
experience and offer an insight into the world of retail including
exposure to essential business skills such as communication,
negotiation and decision making. It culminated in a three day final
with the winning applicants from each of the six participating
colleges spending the first two days at the University of South
HELICAL BAR PLC REPORT & ACCOUNTS 2016 STRATEGIC REPORT 68
CORPORATE RESPONSIBILITY
HEALTH & SAFETY
Helical has 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 and the Group’s Health & Safety
policy reflects this commitment. The Board of Directors and
senior staff are responsible for implementing this policy and they
look to ensure that health and safety considerations are always
given priority in planning and in day-to-day activities. The Group’s
Health & Safety Policy was last reviewed and updated in February
2016 to reflect the latest legislative and regulatory developments.
Training of Helical staff in the updated Health and Safety Policy
and supporting CDM requirements has been undertaken during
the reporting year. The Group’s Health & Safety policy can be
found on the Company website and a summary of performance
for the eighteen active sites is below.
Helical has delivered over two million man hours of construction
during the year (an increase of 115% over the previous year) with
no fatalities or major accidents and only 13 RIDDOR reportable
incidents. Overall Health and Safety performance using Lost Time
Accident Frequency Rate is a 29% improvement over last year. The
majority of Helical projects are managed by principal contractors
holding OHSAS 18001 certification and that maintain 100%
Construction Skills Certification Scheme (CSCS) accreditation for
all full time and subcontracted staff.
Only one RIDDOR incident occurred in the year across the
managed portfolio.
No of
RIDDOR
Reportable
No of
Lost Time
accidents
No of
Fatalities
No of hours
worked
Accident
Frequency
Rate for Lost
Time Accidents
[LTAFR]
RIDDOR
Incident
Frequency Rate
[RIFR]
2014 - 2015
2015 - 2016
7
13
15
23
0
0
1,186,224
2,557,524
1.26
0.90
0.59
0.51
SUPPLIERS
Fair treatment of suppliers remains a key priority for Helical and
the Group’s policy is to settle all agreed liabilities within the terms
established with suppliers.
As required under the Modern Slavery Act, Helical will publish a
statement later this year describing the steps taken during the year
to prevent slavery and human trafficking within the Group’s supply
chains and business. There will be a link to the statement on the
homepage of the Company website.
The Strategic Report contained on pages 1-68, was approved
by the Board on 15 June 2016.
On behalf of the Board
Michael Slade
Chief Executive
HELICAL BAR PLC REPORT & ACCOUNTS 2016 HELICAL BAR PLC REPORT & ACCOUNTS 2016
69
GOVERNANCE
CHAIRMAN’S REVIEW
GOVERNANCE STRUCTURE
BOARD OF DIRECTORS
GOVERNANCE REVIEW
NOMINATIONS COMMITTEE REPORT
AUDIT COMMITTEE REPORT
DIRECTORS’ REMUNERATION REPORT
REPORT OF THE DIRECTORS
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
INDEPENDENT AUDITOR’S REPORT
71
72
74
76
79
81
83
103
105
106
70
HELICAL BAR PLC REPORT & ACCOUNTS 2016 HELICAL BAR PLC REPORT & ACCOUNTS 2016
GOVERNANCE
71
CHAIRMAN’S REVIEW
Dear Shareholder,
This Annual Report reflects on a record year for Helical
with pre-tax profits, shareholders’ funds and our total
property portfolio at their highest level in the Company’s
history as a real estate company.
The greatest proportion of this performance has come from our
London portfolio, which now constitutes over 54% of our total
portfolio. These results reflect a balance between a high yielding
regional investment portfolio and a London investment and
development programme providing both capital and rental
growth.
COMPOSITION OF THE BOARD
As Chairman of the Nominations Committee, I have reported in
detail on page 79 of this Annual Report regarding the present and
proposed future constitution of your Board of Directors.
Having been on the Board of Helical for over 30 years, the last
four as Chairman, I intend to retire from the Board and will not be
seeking re-election at this year’s Annual General Meeting (“AGM”).
My fellow Non-Executive Director, Andy Gulliford, who has served
on the Board for over 10 years will also retire from the Board at
the same time. I would very much like to thank him for his expert
advice and support to the Board over the years.
Chief Executive Officer (“CEO”), Mike Slade, joined the Board of
Helical Bar plc in 1984, and has turned this previously small
engineering company into a highly successful real estate
company. He has led the Company for nearly 32 years and is the
Company’s largest shareholder but has indicated that he wishes
to step down as Chief Executive. I am, however, pleased that Mike
has accepted the request of the Nominations Committee to
continue his close involvement with the Group and to stand for
election at the 2016 AGM as Non-Executive Chairman following
my retirement. On behalf of the Board I would like to thank Mike
for his outstanding contribution to the business during his long
tenure as Chief Executive and am delighted that he will continue
to be part of Helical’s future as Non-Executive Chairman.
Gerald Kaye, Development Director of the Company since 1994, will
stand for election as Chief Executive of the Company at the AGM.
Gerald has delivered many highly profitable schemes during his
career with Helical which have played an integral part in delivering
strong returns for the Company’s shareholders over the last 22
years. Gerald is highly respected within the property industry and I
am confident he will lead this Company with distinction.
I share the Board’s view that the appointments of Gerald and Mike
to their new roles are in the best interests of the Company and its
shareholders.
Following the changes announced in November and as Mike Slade
will not be regarded as an independent Chairman, the
Nominations Committee engaged a firm of external consultants to
carry out an extensive search for two new independent Non-
Executive Directors. The Committee wanted to appoint
candidates with expertise in the property or financial sectors, who
could challenge the Board effectively and who would complement
the remaining independent Non-Executive Board members. I am
extremely pleased that two exceptional candidates, Susan Clayton
and Richard Cotton, were identified and subsequently appointed
and I am confident that they will be valuable additions to the
Board. Immediately following the AGM, the Board will consist of a
Chairman, four Executive Directors and five independent
Non-Executive Directors.
MAJOR DECISIONS
The Board meeting agendas during the year contained many
issues including:
• Consideration and approval of significant property acquisitions
and disposals, most notably the acquisition of Crosstree’s 66.7
per cent interest in The Bower, Old Street, London EC1;
• A review of the Group’s corporate, property and financial
strategy; and
• Changes to the composition of the Board as outlined above.
ANNUAL STRATEGY REVIEW
In April 2016, the Board considered the Executive Directors
Annual Strategy Review of the business examining the economic,
geopolitical, societal and environmental risks affecting the
business. This review reaffirmed the Company’s principal objective
of combining investment and development activity to ensure
maximum shareholder returns whilst managing risks appropriately.
BOARD EVALUATION
In order that we may implement our strategy successfully, the
Board annually evaluates its own performance and that of its
committees and Directors. This evaluation concluded that the
Board and its committees continue to operate effectively. As
Helical is currently not in the FTSE 350 the Code does not require
the Company to undertake the Board evaluation process
externally. However, for the year to 31 March 2017 the Board has
committed to appoint an external consultant to conduct its Board
evaluation process.
INVESTOR RELATIONS
We have an extensive programme of meetings and presentations
with shareholders throughout the year with the majority of these
taking place in the periods following our annual and half year
results. Either the Chief Executive, Michael Slade or the CEO
Designate, Gerald Kaye, and the Finance Director, Tim Murphy,
attend the majority of meetings with the remaining Executive
Directors, Duncan Walker and Matthew Bonning-Snook, also
attending as appropriate.
The Senior Independent Director, Richard Gillingwater, and I are
available to meet shareholders if they wish to discuss any matters
with us.
It has been a privilege to serve on this exceptional Company’s
Board for 30 years and to be Chairman for 4 years. I shall be sad
to relinquish my association with such a dynamic and successful
team of people after so long. However, I believe that the Company,
the executives and the portfolio of developments and investment
properties are poised for a successful future. This success should
be further enhanced by a new Chairman, new Chief Executive and
a refreshed Board.
The following pages describe in greater detail our governance
structure and the work of the Board and its Committees.
Nigel McNair Scott
Chairman
15 June 2016
ONE BARTHOLOMEW CLOSE, LONDON EC1
72
GOVERNANCE STRUCTURE
BOARD OF DIRECTORS
EXECUTIVE
COMMITTEE1
NOMINATIONS
COMMITTEE1
AUDIT
COMMITTEE
REMUNERATION
COMMITTEE
VALUATIONS
COMMITTEE
Gerald Kaye - Chairman
Matthew Bonning-Snook
Richard Gillingwater -
Chairman
Tim Murphy
Duncan Walker
Susan Clayton
Richard Cotton
Richard Grant
Michael O’Donnell
Richard Grant - Chairman
Susan Clayton
Richard Cotton
Richard Gillingwater
Michael O’Donnell
Michael O’Donnell -
Chairman
Susan Clayton
Richard Cotton
Richard Gillingwater
Richard Grant
Susan Clayton - Chairman
Gerald Kaye
Duncan Walker
1 Proposed membership of committees following the 2016 AGM.
The Board of Helical is collectively responsible for providing
the leadership of the Company within a framework of controls
and reporting structures which assist in pursuing its strategic
aims and business objectives. Following the 2016 AGM, it
will comprise the Chairman, the Chief Executive, five
Non-Executive Directors and three Executive Directors. The
Board delegates operational responsibilities to an
Executive Committee and governance responsibilities to
Nominations, Audit, Remuneration and Valuations
Committees whilst retaining overall responsibility for the
running of the Company.
LEADERSHIP
Following the proposed changes to the Board noted above and
subject to shareholder support for all of the Directors standing for
election or re-election at the 2016 AGM, the Chairman of the
Company will be Michael Slade. The Chief Executive will be Gerald
Kaye and the three Executive Directors will be Matthew Bonning-
Snook, Tim Murphy (Finance Director) and Duncan Walker. The
Non-Executive Directors will be Richard Gillingwater (Senior
Independent Director), Susan Clayton, Richard Cotton, Richard
Grant and Michael O’Donnell. All the current Directors, except for
Nigel McNair Scott and Andy Gulliford, who intend to retire from
the Board, will offer themselves for election or re-election at the
2016 AGM.
Biographies of all Directors and details of their shareholdings in
the Company are on pages 74 to 75 and 102 respectively.
ROLES OF CHAIRMAN AND CHIEF EXECUTIVE
The Chairman and the Chief Executive are responsible for the
leadership of the Company. The Chairman’s primary responsibility
is to lead the Board and ensure 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 is approved by the Board.
BOARD RESPONSIBILITIES
The main purpose of the Board is to create and deliver the long
term success of the Group and returns for its shareholders. The
Board 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 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 also 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.
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
the Executive Directors and have a prime role in appointing and,
where necessary, removing Executive Directors. In conjunction
with the Nominations Committee, the Board considers succession
planning of Board members and senior management. In addition
to Boardroom discussions, the Chairman maintains contact with
other Non-Executive Directors by telephone and at least annually,
will hold meetings with the Non-Executive Directors without the
Executive Directors present. Richard Gillingwater (Senior
Independent Director) holds meetings of the independent
Non-Executive Directors separately from the rest of the Board at
least once a year to ensure that any issues may be discussed
without the presence of a non-independent Director.
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. An Executive Committee,
comprising all the Executive Directors, meets regularly to discuss
the development of strategy, to review and implement proposed
transactions, to review policies and procedures (including health and
safety), to monitor budget and financial performance and to assess
risk. The full Board reviews all minutes of proceedings at Executive
Committee meetings and receives reports from the Executive
Committee Chairman at every Board meeting.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOvERNANCE STRuCTuRE
73
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 as a whole. A summary of the schedule of matters reserved
for the Board is set out below:
• Strategy and management - responsibility for the overall
management of the Group; approval of the Group’s long-term
strategic aims and objectives; approval of annual operating and
capital expenditure budgets; oversight of the Group’s operations
and review of performance; extension of the Group’s activities
into new business areas; approval of major capital projects and
projects outside the normal course of business; any decision to
cease to operate all or any material part of the Group’s business;
• Structure and capital - changes to the Group’s capital structure;
major changes to the Group’s corporate structure; changes to
the Group’s management and control structure; changes to the
Group’s listing or plc status;
• Financial reporting and controls - approval of half yearly report,
approval of interim and final results announcements; approval
of annual report and accounts, including the directors’ report,
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;
approval of material unbudgeted capital or operating expenditures;
• Internal controls - ensuring maintenance of a sound system
of control and risk management;
• Contracts - approval of major capital projects; approval of
contracts above limits of authority delegated by the Board;
• Communication - approval of resolutions and corresponding
documentation to be put to shareholders in general meeting;
approval of all circulars and listing particulars;
• Board membership and other appointments to senior
management - appointment and removal of the Company
Secretary; membership of Board committees following
recommendations from the Nominations Committee;
• Corporate governance matters - including Directors’
performance evaluations and review of the Company’s
corporate governance arrangements;
• Remuneration - determine the remuneration policy for the
Chairman, Executive Directors, Company Secretary and other
senior executives following recommendation from the
Remuneration Committee; determine the remuneration of the
Non-Executive Directors subject to the Articles of Association
and shareholder approval as appropriate; and
• Approval of policies - including anti-bribery policy; anti-slavery
policy; whistleblowing procedures; equal opportunities policy;
diversity policy; share dealing code; health and safety policy;
environmental and corporate social responsibility policy; charitable
donations policy.
ONE CREECHURCH PLACE, LONDON EC3
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE
74
BOARD OF DIRECTORS
CHAIRMAN
NIGEL MCNAIR SCOTT
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 was appointed Chairman of the Company after the 2012 AGM
and chairs the Nominations Comittee. Nigel intends to retire from the Board at the 2016 AGM. He is
Chairman of Reaction Engines Limited, a former Chairman of Avocet Mining plc and a former director of
Johnson Matthey plc and Govett Strategic Investment Trust.
CHIEF EXECUTIVE/CHAIRMAN DESIGNATE
MICHAEL SLADE
Michael Slade, BSc (Est Man) FRICS FSvA, joined the Board as an executive director in 1984 and was
appointed Chief Executive in 1986. Mike will step down as an executive director and stand for election as
Non-Executive Chairman at the AGM on 25 July 2016. He is President of Land Aid, the property industry
charity, a Fellow of the College of Estate Management, Fellow of Wellington College, a Trustee of Purley
Park charity and Sherborne School Foundation and vice Admiral of the Marie Rose Trust.
CEO DESIGNATE
GERALD KAYE
Gerald Kaye, BSc (Est Man) FRICS, was appointed to the Board as an executive director in 1994 and is
jointly responsible for the Group’s development activities. Gerald will stand for election as Chief Executive
at the AGM on 25 July 2016. He is a past President of the British Council for Offices, a former director of
London & Edinburgh Trust Plc and former Chief Executive of SPP. LET. EuROPE Nv.
FINANCE DIRECTOR
TIM MURPHY
Tim Murphy, BA (Hons) FCA, joined the Group in 1994 and became Finance Director of the Company in
2012. Prior to joining Helical, he worked for accountants Grant Thornton and KPMG. He has
responsibility for financial strategy and reporting, treasury and taxation.
DIRECTOR
MATTHEW BONNING-SNOOK
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 was a Development Agent and Consultant at Richard
Ellis (now CBRE). He is jointly responsible for the Group’s development activities.
DIRECTOR
DUNCAN WALKER
Duncan Walker, MA (Hons) (Oxon), PG Dip Surveying, joined the Group in 2007 and was appointed to
the Board as an executive director in 2011. Prior to joining Helical, Duncan led Edinburgh House Estate’s
investment team. He is responsible for the Group’s investment portfolio.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 BOARD OF DIRECTORS
75
SENIOR INDEPENDENT DIRECTOR
RICHARD GILLINGWATER
Richard Gillingwater, CBE, is the non-executive Chairman of Henderson Group plc and of SSE plc. He
was, until 2013, Dean of Cass Business School. Prior to this he was Chief Executive and later Chairman
of the Shareholder Executive, after a career in investment banking at Kleinwort Benson and then at
BZW/Credit Suisse First Boston. He has also been a non-executive director of P&O, Debenhams,
Tomkins, Qinetiq Group, Kidde Hiscox and Morrisons. Richard is the Senior Independent Director
of Helical and is a member of the Nominations, Audit and Remuneration Committees.
CHAIRMAN OF THE AUDIT COMMITTEE
RICHARD GRANT
Richard Grant, BA (Oxon), ACA is the Finance Director at Cadogan Estates Limited and former
corporate finance partner at PricewaterhouseCoopers, whom he joined in 1975. Richard chairs the
Audit Committee and is a member of the Nominations and Remuneration Committees.
CHAIRMAN OF THE REMUNERATION COMMITTEE
MICHAEL O’DONNELL
Michael O’Donnell was appointed to the Board in June 2011. He is a former Managing Director of LGv
Capital, a private equity firm. Through his company, Ebbtide Partners, he acts as a consultant to, and
investor in, private companies. Michael chairs the Remuneration Committee and is a member of the
Nominations and Audit Committees.
CHAIRMAN OF THE VALUATIONS COMMITTEE
SUSAN CLAYTON
Susan Clayton, FRICS, was appointed to the Board in February 2016. Susan is an Executive Director at
CBRE and former Managing Director of CBRE’s Capital Markets Team. She has sat on the CBRE uK
Management and Executive Boards and on the CBRE Group Inc. Board as Employee Director. Susan
currently chairs CBRE uK’s Women’s Network. In addition to her roles at CBRE, Susan is a Board
member of the Committee of Management of Hermes Property unit Trust, and a Trustee and Chair
of the Development Committee of Reading Real Estate Foundation. Susan chairs Helical’s valuations
Committee and is a member of the Nominations, Audit and Remuneration Committees.
NON-EXECUTIVE DIRECTOR
RICHARD COTTON
Richard Cotton was appointed to the Board as a non-executive director in March 2016. Richard was
formally head of uK Real Estate at J.P. Morgan Cazenove which he left in 2009 and spent the
subsequent 5 years at Forum Partners. Richard is a non-executive director of Big Yellow Group plc,
Chairman of Centurion Properties and a member of the Commercial Development Advisory Group of
Transport for London. He was previously a non-executive director of Hansteen Holdings plc and a
member of the Advisory Board of the Corporate Real Estate Business Support unit at Lloyds Banking
Group. Richard is a member of the Nominations, Audit and Remuneration Committees.
NON-EXECUTIVE DIRECTOR
ANDREW GULLIFORD
Andrew Gulliford, BSc (Est.Man), FRICS, was appointed to the Board as a non-executive director in
2006. A former Deputy Senior Partner of Cushman & Wakefield Healey & Baker (now Cushman &
Wakefield LLP), he is a non-executive director of F&C uK Real Estate Investments Limited and various
other companies. Andrew is to retire from the Board at the 2016 AGM.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE
76
GOVERNANCE REVIEW
At Helical we believe that robust corporate governance is
of fundamental importance in delivering for shareholders
the long-term success of the Company through the
effective, entrepreneurial and prudent management of the
Company. The Board of Helical is collectively responsible
for providing the leadership of the Company within a
framework of controls and reporting structures which assist
in pursuing its strategic aims and business objectives.
THE UK CORPORATE GOVERNANCE CODE 2014
(THE “CODE”)
The Board is accountable to the Group’s shareholders for good
corporate governance and we believe in applying the highest
principles of corporate governance. We have complied
throughout the year with the principles as set out in the section of
the Code headed “The Main Principles of the Code”. The Group
also takes into account the corporate governance guidelines of
institutional shareholders and their representative bodies.
INDUCTION OF NEW DIRECTORS
Following their appointments, Susan Clayton and Richard Cotton
received a comprehensive induction, which included visits to
properties and meetings with the Company’s senior managers.
COMPOSITION OF THE BOARD
The Code requires a Board and its committees to have an
appropriate balance of skills, experience, independence and
knowledge of the Company to enable them to discharge their
duties and responsibilities effectively. Helical operates with a
strong management team of senior decision makers backed up by
a finance team and other support staff. 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.
Provision B.1.2 of the Code notes that companies such as Helical,
which are below the FTSE350, are required to have at least two
independent Non-Executive Directors. Following the proposed
change to the Board at the 2016 AGM, the Board will comprise the
Chairman, four Executive Directors and five independent
Non-Executive Directors. The independent Non-Executive
Directors will be Susan Clayton, Richard Cotton. Richard
Gillingwater, Richard Grant and Michael O’Donnell,
In the Board’s view, the composition of the Board has an
appropriate balance of skills, experience, independence and
knowledge of the Company as required by the Code.
ANNUAL EVALUATION OF THE BOARD AND ITS
COMMITTEES
During the year the Board undertook a formal evaluation process,
led by the Senior Independent Director, which involved each
director submitting an appraisal in respect of the performance of
the main Board, its committees and Directors, including the
Chairman. The Senior Independent Director reported the results
of that evaluation process to the Board. The process reviewed
criteria including real estate matters, Board composition and
Board and Committee processes. There were no significant areas
of concern raised by the Directors and any points raised have
been dealt with appropriately.
Since the Company is not in the FTSE350 and as permitted by the
Code, it does not currently use external consultants to undertake
its evaluation process. However, following the changes to the
Board, it is proposed that the 2017 Board Evaluation will be
carried out externally.
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 Directors have access to the services
of a Company Secretary who is responsible for advising the Board
on all governance matters and ensuring compliance with Board
procedures and applicable laws and regulations. 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 of new
Directors and assisting with professional development as required.
The Board ensures that 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 all directors as necessary.
NOMINATIONS COMMITTEE
The report of the Nominations Committee, which describes the
work of the Committee, is on pages 79 and 80.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOvERNANCE REvIEW
77
deterioration of property valuations. In addition, the forecasts have
been subject to sensitivity analysis in which the impact of significant
reductions to the property portfolio fair value and associated rental
income on the Group’s loan covenants was assessed. 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.
ATTENDANCE AT BOARD AND COMMITTEE
MEETINGS DURING THE YEAR
Six scheduled meetings of the Board were held during the year
ended 31 March 2016. In addition, several unscheduled meetings
were arranged to discuss particular transactions and events. On
occasions, Directors who are not members of the Committees
attend at the invitation of the Committee Chairman. The attendance
record of the Directors at the scheduled meetings and at meetings
of the Board’s committees is shown in the table below:
Full
Board
Audit
Committee
Remuneration
Committee
Nominations
Committee
Chairman
Nigel McNair Scott 6/6
Executive directors
Michael Slade
5/61
Tim Murphy
Gerald Kaye
Matthew Bonning
- Snook
6/6
6/6
6/6
Duncan Walker
5/61
Non-executive directors
Richard
Gillingwater
5/61
Andrew Gulliford 6/6
Michael O’Donnell 6/6
Richard Grant
Susan Clayton2
Richard Cotton2
6/6
1/1
-
-
-
-
-
-
-
5/5
-
5/5
5/5
1/1
-
-
-
-
-
-
-
3/3
-
3/3
3/3
1/1
-
2/2
-
-
-
-
-
2/2
-
2/2
2/2
1/1
-
1 Michael Slade was absent from the July meeting due to an operation
which had to be performed at short notice. Richard Gillingwater was
absent from the November meeting and Duncan Walker from the July
meeting due to unavoidable diary commitments.
2 Susan Clayton and Richard Cotton were appointed to the Board on 1
February 2016 and 1 March 2016 respectively. Their attendance relates to
the period from the dates of their appointment to 31 March 2016.
AUDIT COMMITTEE
The Audit Committee Chairman is Richard Grant, the Finance
Director of Cadogan Estates Limited and a former partner of
PWC. As a result, the Board considers that he has recent and
relevant financial experience as required by the Code. The report
of the Chairman of the Audit Committee describing the issues
considered by the Committee in the year under review is on
pages 81 and 82.
RISK MANAGEMENT AND INTERNAL CONTROLS
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 matters. In the year under review the
Audit Committee met with the auditors on two occasions; and
• The Board is responsible for the management of the Group’s
risk profile which is reviewed by the Audit Committee during
the year. An analysis of the Group’s principal risks can be found
on pages 58 to 61.
INTERNAL AUDIT
The Board reviewed its position for the year to 31 March 2016 and
reaffirmed its stance that in view of the relatively small size of the
Group it does not consider an internal audit function would
provide any significant additional assistance in maintaining a
system of internal controls.
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:
• Timing and value of property sales;
• Availability of loan finance and related cash flows;
• Future property valuations and their impact on covenants
and potential loan repayments;
• Committed future expenditure;
• Future rental income; and
• Receipt, amount and timings of development profits.
The forecast cash flows have been sensitised to reflect those cash
inflows which are less certain and to take account of a potential
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE
78
GOvERNANCE REvIEW
The directors receive regular reports from sector analysts and
investor relations advisors on how the Group is viewed by its
shareholders. The Group communicates with all shareholders
through the issue of regular press releases and through its
website at www.helical.co.uk.
Principal Investor Relation Activities
May 2015
June 2015
July 2015
Annual results announcement and
presentation for 2014/15
Investor Roadshow presentation London,
Edinburgh and Netherlands
Q1 Interim Management Statement
Annual General Meeting
September 2015 London portfolio property tour
November 2015 Half year results announcement and
presentation
December 2015 Investor roadshow presentation, London,
Edinburgh and Netherlands
January 2016
JPMC Investor Conference
February 2016 Q3 Interim Management Statement
By order of the Board
James Moss ACA
Company Secretary
15 June 2016
REMUNERATION
This information is contained in the Directors’ Remuneration
Report on pages 83 to 102.
NOTICE OF ANNUAL GENERAL MEETING
The Code recommends that the Notice of AGM and related
papers be sent to shareholders at least 20 working days before
the meeting. For the 2015 AGM the Notice and related papers
were sent out 22 working days before the AGM.
ENGAGEMENT WITH SHAREHOLDERS
The Directors value the views of the Company’s shareholders and
recognise their interest in the Group’s strategy and performance,
Board membership and quality of management. They hold regular
meetings with, and give presentations to, the Company’s institutional
shareholders to discuss the Group’s results and objectives. The
directors regularly meet, with the help of the Company’s brokers,
institutions that do not currently hold shares in the Group to
inform them of the Company’s objectives. Michael Slade, as Chief
Executive or Gerald Kaye as CEO Designate have attended most
of the meetings during the year and they are usually accompanied
by at least one of the other executive directors.
During the year under review Nigel McNair Scott, Chairman, and
Richard Gillingwater, Senior independent Director, engaged with
principal investors (holding more than 3% of the Company’s shares)
and shareholder representative bodies to discuss the proposed
Board changes intended to take effect at the 2016 AGM.
Michael O’Donnell, Chairman of the Remuneration Committee, also
engaged with Helical’s principal shareholders and shareholder
representative bodies to discuss the conclusions of a review of the
Company’s Remuneration Policy.
The Senior Independent Director, Richard Gillingwater, was
available to meet with shareholders throughout the year under
review and will hold meetings with shareholders whenever
requested in order to ensure sufficient understanding of any
issues and concerns they may have.
The AGM is used to communicate with investors and they are
encouraged to participate. The Chairman, Senior Independent
Director and members of the Audit, Remuneration and Nominations
Committees will attend the AGM and will be available to answer
questions. Separate resolutions are proposed on each issue in order
that they can be given proper consideration and there is a separate
resolution to consider the annual report and accounts. All proxy
votes are counted and the level of proxies lodged on each resolution
will be indicated after it has been dealt with by a show of hands.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
NOMINATIONS COMMITTEE
REPORT
79
Whilst considering the Non-Executive Chairman appointment, the
Board was fully mindful of the uK Corporate Governance Code’s
recommendation for a new Chairman to be independent upon
appointment. In light of this the Committee conducted an extensive
consultation exercise with the Company’s largest investors and
representative bodies, to explain the reasons for the changes. The
Committee is confident that Mike Slade is the most appropriate
candidate for this role. In discharging the role of Non-Executive
Chairman, he will be assisted by five independent Non-Executive
directors, from whom the next Chairman of the Company is
expected to be identified.
Andy Gulliford, who has been a Non-Executive Director of the
Company since 2006, has informed the Committee that he will
not be offering himself for re-appointment at the 2016 AGM.
On behalf of the Board, I congratulate Mike for his outstanding
contribution to the business during his long tenure, and at the
same time thank Andy for his expert advice and support over the
years.
The appointments of Susan Clayton and Richard Cotton as
additional Non-Executive Directors on 1 February and 1 March
2016 respectively met our aim of bringing further independence
and balance to the Board. Executive Search Consultants, Norman
Broadbent were appointed to advise on the search for two new
independent Non-Executive Directors. Their brief was to identify
potential candidates with a background in the real estate sector
or the financial sector. Having met with a number of strong
candidates, the Committee was pleased to appoint Susan Clayton
on 1 February 2016 and Richard Cotton on 1 March 2016. Both Susan
and Richard were appointed as members of the Nominations,
Audit and Remuneration Committees. In addition, Susan was
appointed Chairman of the valuation Committee. Susan has an
impressive track record in the real estate sector and Richard has
a strong corporate finance and real estate background. The Board
looks forward to benefitting from their considerable experience
and fresh perspectives in the years to come.
Appointments to the Board and its Committees are made against
objective criteria. Care is taken to ensure that appointees have
enough time available to devote to the job. The Committee controls
the process for Board appointments and makes recommendations
to the Board. The Board is mindful of the Group’s diversity policy
and the Committee gives full consideration to diversity, including
gender diversity, when recommending to the Board any future
Board appointments. All Board appointments are be based on
experience and will be made on merit.
Dear Shareholder,
In accordance with the UK Corporate Governance Code,
the role of the Nominations Committee, and my primary
responsibility as its Chairman, is to ensure that the
Company is headed by an effective Board which is
collectively responsible for the long-term success of the
Company. This is best achieved through the provision of
entrepreneurial leadership and a talented executive team,
supported by committees with an appropriate balance of
skills, experience, independence and knowledge of the
Company to be able to constructively challenge and assist
the executive team in achieving its objectives. Alongside me,
the Committee comprises Susan Clayton, Richard Cotton
Richard Gillingwater, Richard Grant and Michael O’Donnell.
The terms of reference of the Nominations Committee, which
were reviewed during the year, are available on request and
are included on the Group’s website at www.helical.co.uk.
CHANGES TO THE BOARD
Our principal area of focus during the year was succession
planning for the Board. On 26 November 2015 the Company
announced the Board changes planned, subject to shareholder
approval, to take effect at the 2016 Annual General Meeting
(“AGM”). Gerald Kaye, Development Director and a member of the
Board since 1994, is standing for election as Chief Executive. I
intend to stand down from the Board at the 2016 AGM and Mike
Slade, current Chief Executive is standing for election as my
successor as Non-Executive Chairman.
These decisions were taken after careful consideration by the
Committee and with independent external professional advice
regarding what is in the best long term interests of the Company
and its shareholders.
We retained Sam Allen Associates, who have done extensive work
in the FTSE 250 conducting both Executive and Non-Executive
searches, and advising on CEO and Chair succession. With the
assistance of Sam Allen Associates, and having considered the
options of both external and internal candidates for the position
of Chief Executive, it became clear that Helical’s senior
management team offered the strongest possible candidates.
After a thorough process, the Committee proposed Gerald Kaye
as the new Chief Executive.
Gerald’s 22 year career with Helical has seen him deliver substantial
realised profits for shareholders, often with little or no equity
contribution from the Company. He has all the skills needed to
head the Company in the next phase of its growth. Most recently
he has been responsible for the developments at Barts Square
EC1 and The Bower EC1, two major mixed use London schemes.
With regard to my replacement as Non-Executive Chairman,
we again used Sam Allen Associates who carried out another
benchmarking exercise, against a full job specification and list
of required attributes. The Committee assessed both internal and
external candidates for the Non-Executive Chairman role, considering
individuals across the property industry and from a wider financial
and uK industry background. ultimately, we believed that Mike Slade
would offer the Company the best possible level of experience,
access to important relationships and knowledge of property
markets and understanding of the culture of Helical Bar, as well as
a degree of continuity which is important during a time of change.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE 80
NOMINATIONS COMMITTEE REPORT
ANNUAL GENERAL MEETING
The Board believes that the requirements of Code Provision B.7.1
of the uK Corporate Governance Code should be fulfilled. This
provision requires all directors of FTSE350 companies to be
subject to annual re-election by shareholders. Whilst the Company
is not 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 election or re-election to the Board.
The Nominations Committee confirms to shareholders that,
following the annual formal performance evaluation and taking
into account their qualifications and experience, these directors
continue to be effective and demonstrate commitment to their
roles. Biographical details of the directors are given on pages 74
and 75.
I trust that shareholders will support the Committee and vote in
favour of these resolutions.
At the Annual General Meeting to be held on 25 July 2016, the
following resolutions relating to the appointment of Directors are
being proposed:
• The election of Mike Slade as Non-Executive Chairman;
Nigel McNair Scott
Chairman of the Nominations Committee
• The election of Gerald Kaye as Chief Executive Officer;
15 June 2016
• The re-election, as Executive Directors, of Tim Murphy, Matthew
Bonning-Snook and Duncan Walker;
• The election of Susan Clayton, who was appointed by the Board
as a Non-Executive Director on 1 February 2016;
• The election of Richard Cotton, who was appointed by the
Board as a Non-Executive Director on 1 March 2016; and
• The re-election, as Non-Executive Directors, of Richard
Gillingwater, Richard Grant and Michael O’Donnell.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 AUDIT COMMITTEE REPORT
81
Dear Shareholder,
• Internal controls
I chair the Audit Committee and the other members are
Susan Clayton, Richard Cotton, Richard Gillingwater and
Michael O’Donnell. Further details of these Directors may
be found on pages 74 and 75. None of the Committee
members have any personal or financial interests in the
matters to be decided (other than as shareholders), potential
conflicts of interest arising from cross-directorships, or any
day-to-day involvement in running the business.
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, this
Committee has a particular role, acting independently from the
Executive Directors, to ensure that the interests of shareholders
are properly protected in relation to financial reporting and
internal control. Appointments to the Committee are made by the
Board on the recommendation of the Nominations Committee in
consultation with the Audit Committee Chairman.
The terms of reference of the Audit Committee, which were
reviewed during the year, are available on request and are
included on the Company’s website at www.helical.co.uk.
THE WORK OF THE AUDIT COMMITTEE IN THE YEAR
The Committee met five times during the year and a record of
attendance at these meetings is shown on page 77. 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 Committee, so that their contribution to the
matters discussed may be obtained.
In conjunction with the Board, the Audit Committee reviewed the
following matters during the year:
• Review of risk and internal controls;
• The financial statements of the Group and the announcement
of the annual results to 31 March 2015 and the interim statement
on the half year results to 30 September 2015;
• The re-appointment of the Group’s external auditor; and
• The external auditors’ independence and the provision of
non-audit services by the external auditor.
The Audit Committee met the external auditor on two occasions
to discuss matters arising from the annual and interim audits.
Other matters formally reviewed and discussed by the Committee
during the year included:
• Review of various company policies including those relating to
anti-bribery, share dealing and whistleblowing; and
• Review of the Group’s need for an internal audit function and
issues related to IT risk and business continuity planning.
In discharging its responsibilities in connection with the
preparation of the financial statements for the year to 31 March
2016, the Committee is responsible for reviewing the
appropriateness of the Group’s accounting policies, assumptions,
judgements and estimates as applied by the executive
management to the financial statements. During this review the
following significant issues were considered:
The Committee annually reviews the need for an internal audit
function and recently reaffirmed its stance that, in view of the
close involvement of the Executive Directors in the running of
the Group and the scale and complexity of the business, it does
not consider that an internal audit function is required. However,
periodically, the Committee asks the Group’s auditors to review
its internal controls and their most recent report was presented
to the Committee in April 2015. Grant Thornton’s ‘Report on the
Design and Operating Effectiveness of Internal Controls of
Helical Bar plc’ provided a review of the Group’s control
environment and internal controls. This report did not highlight
any material weaknesses in the design and effectiveness of the
Group’s systems and controls. Its key recommendations, where
appropriate, have been introduced during the year;
• Valuation
The valuation of the Group’s investment and trading and
development portfolio is a key area of judgement in preparing
the annual and half yearly financial statements and reports. For
this reason the fair value of the Group’s investment portfolio is
determined by independent third party experts who are familiar
with the markets in which the Group operates and have suitable
professional qualifications.
The Group’s trading and development stock is accounted for in
the financial statements at the lower of cost and net realisable
value. Accordingly, the Committee reviews the assumptions
made in considering whether an asset should be written down
to its net realisable value, if lower than cost. In addition, the
Committee reviews those instances where stock is considered
to have a fair value above its current book value. The surplus of
fair value above book value is not included in the Group’s
Balance Sheets, nor is any movement reflected in the Income
Statement. However, in accordance with the best practice
recommendations of the European Public Real Estate
Association, the surplus is included in the calculation of the
EPRA Net Asset value per share at each reporting date. The fair
value calculation of the trading and development stock is
reviewed by a suitably qualified independent third party valuer.
In addition, the fair values of the investment, trading and
development property portfolios are reviewed and approved by
the valuations Committee which is chaired by Susan Clayton,
FRICS, an independent Non-Executive Director.
• Revenue Recognition
Revenue recognition is a presumed significant risk under
International Standard on Auditing (uK and Ireland) and where
the Group enters into complex transactions, judgment must be
applied in determining when, and to what extent, revenue
should be recognised. For material transactions technical
papers are presented to the Committee by Management and
the Committee also requests that the Group’s external auditors
review and report on these judgments.
The Committee assesses the appropriateness of the proposed
revenue recognition for each transaction and these are
discussed between the external auditor and Richard Grant, ACA
and independent Non-Executive Chairman of the Audit
Committee.
In addition to the significant issues discussed above, the
Committee also considered the Group’s ability to continue as a
going concern and the estimates and judgements discussed in
note 38 to these accounts.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE
82
AuDIT COMMITTEE REPORT
EFFECTIVENESS OF THE EXTERNAL AUDITOR
During the year, the Audit Committee reviewed Grant Thornton
uK LLP’s fees, effectiveness and whether the agreed audit plan
had been fulfilled and the reasons for any variation from the plan.
The Audit Committee also considered their robustness and the
degree to which they were able to assess key accounting and
audit judgements and the content of their reports. This was
performed through reviewing their reports and meeting with
them to discuss their audit approach and findings. The Audit
Committee concluded that both the audit and the audit process
were effective.
ANNUAL GENERAL MEETING
At the Annual General Meeting to be held on 25 July 2016 the
following resolutions relating to the auditor are being proposed:
• The re-appointment of Grant Thornton uK LLP as Independent
Auditor; and
• To authorise the Directors to set the remuneration of the
Independent Auditor.
I hope that shareholders will support the Committee and vote
in favour of these resolutions.
Richard Grant
Chairman of the Audit Committee
15 June 2016
AUDIT INDEPENDENCE
The Audit Committee considers the external auditor to be
independent. The Audit Committee has noted the rules on
mandatory audit firm rotation contained in the Eu Audit
Regulation and the requirements under the uK Corporate
Governance Code. Mandatory auditor rotation is not required until
after the reporting year ended 31 March 2020. Grant Thornton uK
LLP has been the auditor of the Group for longer than ten years
and there has been no audit tender during this time. However, the
Committee will continue to monitor the effectiveness of the
external auditor and will act in accordance with the Eu regulations
and the Code as appropriate.
The Group’s policy on awarding non-audit work to its auditor is
designed to ensure that the Group receives the most appropriate
advice without compromising the independence of the auditor. A
policy of reviewing audit independence has been adopted whereby
non-audit services undertaken by the auditor are approved prior
to work being carried out. Fees for non-audit work cannot exceed
£20,000 without the appointment being approved by the Audit
Committee. During the year, non-audit fees of £39,000 were paid
to Grant Thornton uK LLP for advisory services in relation to the
Group’s Polish operations. This work was carried out by a team
separate to the audit team and the work was not relied on by the
audit team in reaching their opinion.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
3 year
3 year
Total shareholder return
Source: Datastream (Thomson Reuters)
Total shareholder return
Source: Datastream (Thomson Reuters)
Helical
FTSE 350 Supersector Real Estate Index
Helical
FTSE 350 Supersector Real Estate Index
Mar-14
Mar-15
Mar-16
Mar-13
60
40
l
7 year
a
20
Total shareholder return
0
Source: Datastream (Thomson Reuters)
Mar-14
Mar-13
7 year
350
Total shareholder return
Source: Datastream (Thomson Reuters)
Helical
FTSE 350 Supersector Real Estate Index
Mar-15
Mar-16
Helical
FTSE 350 Supersector Real Estate Index
Mar 09
100
Mar 10
Mar 11
Mar 12
Mar 13
Mar 14
Mar 15
Mar 16
Mar 09
Mar 10
Mar 11
Mar 12
Mar 13
Mar 14
Mar 15
Mar 16
Helical
FTSE 350 Supersector Real Estate Index
Total shareholder return
Source: Datastream (Thomson Reuters)
Helical
FTSE 350 Supersector Real Estate Index
Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16
of £100 invested in the FTSE 350 Supersector Real Estate Index.
Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16
of £100 invested in the FTSE 350 Supersector Real Estate Index.
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This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2013, compared with the value
o
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Total shareholder return
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2013, compared with the value
Source: Datastream (Thomson Reuters)
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2009, compared with the value
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2009, compared with the value
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2006, compared with the value
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2006, compared with the value
HELICAL BAR PLC REPORT & ACCOUNTS 2016
GOVERNANCE
83
DIRECTORS’
REMUNERATION REPORT
ANNUAL STATEMENT
Dear Shareholder
EPRA net assets per share
I am pleased to present the Remuneration Committee’s Report
on directors’ remuneration for the year to 31 March 2016.
This report has been approved by the Board of Helical Bar plc.
COMMITTEE MEMBERS
Michael O’Donnell (Chairman)
Susan Clayton
Richard Cotton
Richard Gillingwater
Richard Grant
The main duty of the Remuneration Committee (“Committee”) is
to determine and agree with the Board, the framework or broad
policy for the remuneration of the Chairman and the Executive
Directors and, subject to proposals being submitted by the Chief
Executive, recommend and monitor the level and structure of
remuneration for such other members of the executive management
that report directly to the Chief Executive. The remuneration of
Non-Executive Directors is a matter for the Chairman and the
executive members of the Board.
This Directors’ Remuneration Report has been divided into the
following three sections:
• This Annual Statement;
• Remuneration Policy Report, which sets out the Group’s policy on
the remuneration of Executive and Non-Executive Directors; and,
• Annual Report on Remuneration, which discloses how the
remuneration policy was implemented in the year ended 31
March 2016 and how the policy will be operated in the year
ending 31 March 2017.
As discussed in the Chairmans Review on page 71, there are
changes to the Board to be implemented at the Company’s AGM
on 25 July 2016 when the current Chief Executive, Michael Slade,
is to step down from the role and off er himself for election as
Non-Executive Chairman of the Company. Gerald Kaye, currently
an Executive Director responsible for the Group’s major development
projects, will stand for election as Chief Executive of the Company.
The current Chairman, Nigel McNair Scott, and Non-Executive
Director, Andy Gulliford, are to retire at the AGM.
In addition to these Board changes, the Executive Bonus Plan 2011
reached the end of its shareholder approved life on 31 March 2016. As
a consequence, the Committee resolved to review and simplify its
remuneration policy and has consulted major shareholders and
representative bodies. Following the completion of the consultation
process and noting the constructive and pragmatic responses of
investors consulted, the Company will be seeking shareholder
approval at the 2016 AGM for a new Remuneration Policy which
will include an amended Annual Bonus Scheme 2012 (to be
renamed Annual Bonus Scheme 2016) for all Executive Directors.
The proposed changes to the Annual Bonus Scheme 2012 include
signifi cant concessions from its Executive Director participants.
PERFORMANCE AND REWARD
IN THE YEAR TO 31 MARCH 2016
As noted in the Strategic Report on pages 1 to 68, the Group has
delivered an increase in EPRA net assets per share of 19.7% (2015:
23.0%) in the year under review with a CAGR over the three years
to 31 March 2016 of 20.4% (2015: 15.5%). The Group’s total
portfolio return, as reported by IPD was 21.7% (2015: 20.4%).
Pre-tax profi ts of the Group, before performance related awards,
were £135m (2015: £104m).
Pence
per share
500
450
400
Pence
per share
350
500
300
450
250
400
200
350
150
300
100
250
50
200
0
150
100
50
0
461
461
385
385
313
313
250
264
250
264
2012
2013
2014
2015
2016
2013
2014
2015
2016
2012
Annual increase
%
Three year CAGR
23.8
25
2013
Helical
Portfolio return
20
15.6
2014
5.6%
18.6%
IPD Upper Quantile
2015
23.0%
7.4%
15.5%
(1.0%)
2016
19.7%
IPD Median
20.4%
20.4
19.7
17.5
21.7
Helical
13.4
IPD Upper Quantile
23.8
15.6
13.4
20.4
19.7
17.5
21.7
2014
2015
IPD Median
13.0
11.4
13.0
2016
11.4
%
15
25
10
20
5
15
0
10
5
0
2014
2015
2016
Subsequent to the year end, and in accordance with the rules of
the Executive Bonus Plan 2011 and the Helical Bar Annual Bonus
Scheme 2012, cash and deferred shares have been approved for
inclusion in the fi nancial statements for the year to 31 March 2016.
Details of these annual bonus awards are disclosed in the Annual
Report on Remuneration.
Awards made in 2013 under the terms of the 2004 Performance
Share Plan (“PSP”) were subject to two performance conditions
over the three years to 31 March 2016. Two thirds of the awards
were based on absolute net asset value performance. The remaining
third of the awards were based on a comparison of the Group’s
portfolio return to the IPD Total Return index. The performance
criteria were measured at the end of the three year period and
100% of the awards are expected to vest.
3,750
3,500
The Committee believes that the provision for annual cash and
deferred share bonuses and the expected vesting of the 2013 PSP
award in respect of the three-year performance period ended 31
March 2016 accurately and fairly represents the reward determined
by the Group’s remuneration schemes based on the performance
of the Group over the respective performance periods.
3,000
3,250
3,750
2,750
42%
Basic salary & benefits
Bonus
PSP
Basic salary & benefits
Bonus
PSP
42%
42%
42%
16%
42%
37%
37%
37%
26%
42%
42%
42%
16%
42%
37%
37%
26%
37%
37%
42%
42%
16%
42%
37%
37%
37%
26%
37%
49%
33%
49%
18%
33%
18%
42%
28%
30%
42%
28%
30%
Minimum Target Maximum
Minimum Target Maximum
Minimum Target Maximum
37%
Minimum Target Maximum
GERALD KAYE
26%
16%
TIM MURPHY
MATTHEW BONNING-SNOOK
DUNCAN WALKER
26%
16%
26%
16%
Minimum Target Maximum
Minimum Target Maximum
Minimum Target Maximum
Minimum Target Maximum
GERALD KAYE
TIM MURPHY
MATTHEW BONNING-SNOOK
DUNCAN WALKER
3,500
2,500
3,250
0 2,250
0
0
£
3,000
2,000
2,750
1,750
2,500
1,500
0 2,250
1,250
0
0
£
2,000
1,000
1,750
750
1,500
500
1,250
250
1,000
0
750
500
250
0
84
DIRECTORS’ REMuNERATION REPORT
ANNuAL STATEMENT
SUMMARY OF THE PROPOSED CHANGES
In light of the reshaping of the Board and the Executive Bonus
Plan 2011 reaching the end of its shareholder approved life, the
Committee undertook to review the Company’s remuneration
policy to reflect these changes. In conducting its review, the
Committee restated its overall policy with regard to Executive
Directors’ remuneration as follows:
• Maintaining fixed remuneration packages below the median
level of its peers; and
• Aligning variable incentive based bonus and share schemes
with the long term success of the Company and the interests of
its shareholders.
Recognising the reduction in the number of Executive Directors
and the current sensitivities surrounding executive pay quantum
and transparency in the external environment, the Committee has
sought to reduce the total quantum of variable pay, introduce
additional, and strengthen existing, shareholder protections and
simplify the bonus scheme calculations whilst continuing to
operate bonus arrangements which incentivise the Executive
Directors. The main changes to the remuneration policy are as
follows:
• On becoming Chairman, Mike Slade will receive an annual fee of
£155,000, plus an additional benefit in kind of £20,000 for use
of secretarial support for non-business use, to reflect his
Non-Executive Director role. He ceased accruing bonus from 1
April 2016 and is no longer entitled to receive PSP awards.
Outstanding PSP awards will continue to vest on the normal
vesting dates subject to continued service and performance
targets in line with the PSP rules approved by shareholders;
• Gerald Kaye’s annual salary will increase from £413,900 to
£515,000. This is £20,800 lower than Michael Slade’s current
annual salary and, reflecting best practice in respect of an internal
promotion, will be phased over a two year period, with the second
increase subject to the Committee being satisfied in respect of
his individual performance. It is envisaged that Gerald Kaye’s
salary will increase in line with RPI annually thereafter;
• Duncan Walker’s annual salary will increase from £324,600
to be the same as that of Matthew Bonning-Snook (currently
£382,500) to reflect his additional responsibilities within the new
Board structure. Again, reflecting best practice, this increase
will be phased over a two year period with the second increase
subject to the Committee being satisfied in respect of his
individual performance;
• The salary review date will be changed from 1 July to 1 April
to align it to the financial year and the rest of the workforce
although bonus calculations and new share awards will
continue to be calculated with reference to salaries at 31 March;
• The Executive Bonus Plan 2011, which was designed to reward
the Chief Executive and Finance Director, will not be renewed
so that in future only one Executive Director bonus
arrangement will be operated. The terms of the proposed
Annual Bonus Plan 2016 will be amended to permit the Chief
Executive and Finance Director to participate;
• The potential additional awards of up to 300% of salary in year
five (2017) and year ten (2022) of the Annual Bonus Scheme
2012 will be removed;
• The calculation of the bonus under the proposed Annual Bonus
Scheme 2016 will be simplified by operating one profit pool,
(previously based on two pools) comprising all annual net rents,
profits/losses on the sale and revaluation of assets, loan finance and
administration costs and the costs of equity (to be fixed at 7% pa
but subject to regular review). In addition, as a further
amendment, distributions will continue to be restricted to a
maximum of 300% of salary but with the previous additional
restriction of bonuses being no more than 70% of the balance
of the bonus pool being removed.
In considering shareholder protections:
• The maximum potential annual bonus will be set at 200% of salary for
the Finance Director and will remain at 300% for all other participants;
• Rather than an unlimited carry forward in respect of the bonus
pool, as currently operated, a maximum of 6.5 times the aggregate
Executive Director salary pool may be carried forward;
• Rather than a carry forward of the bonus pool of up to five
years, the carry forward of any bonus pool not utilised in the
year it is generated will be reduced to two years, with any
remaining pool foregone. Reflecting this reduction in the carry
forward, the minimum period during which losses can be
carried forward will be reduced from three to two years;
• Good Leavers will receive allocations and deferred share awards
for up to two years (previously three years); and
• A cap will be introduced on amounts payable upon a change of
control (currently, amounts are uncapped).
Further details of the proposed new Annual Bonus Scheme 2016
are shown on page 98 below and are set out in the 2016 Notice of
Annual General Meeting (“AGM”).
In addition to these changes to remuneration, and reflecting
consensus from a number of shareholders regarding the length of
Executive Director notice periods, the Committee has agreed with
all Executive Directors that their notice periods will be reduced
from twelve months to six months without compensation.
The Company policy of not providing pension provision will
continue and no changes are being proposed in respect of the
operation of the PSP.
REMUNERATION POLICY
FOR THE YEAR TO 31 MARCH 2017
The Committee is committed to ensuring that its remuneration
policy remains aligned to the interests of shareholders –
incentivising management to increase total returns and growing
net asset value per share – whilst ensuring that an appropriate
balance is maintained between the targets set for management
and the risk profile of the Group. The Committee believes it has
struck the right balance between fixed annual remuneration and
an incentive structure with challenging targets which seek to
reward outperformance with a mixture of cash-based bonus
payments and longer term share awards set for management and
the risk profile of the Group.
In addition to the changes made to the salaries of Gerald Kaye and
Duncan Walker, referred to above, the Committee determined that
the basic salaries of the remaining executive directors should be
increased from 1 April 2016 by 1.6% (2015: 2.0%), which is below the
average 7% (2015: 8%) awarded to all other employees of the Group.
Further details of the implementation of the proposed remuneration
policy for the year to 31 March 2017 can be found on pages 97 to 99.
ANNUAL GENERAL MEETING
At the AGM to be held on 25 July 2016, the following resolutions
relating to remuneration are being proposed:
• The approval of the Remuneration Policy Report;
• The approval of the Annual Statement and Annual Report on
Remuneration for the year to 31 March 2016; and,
• The approval of the Annual Bonus Scheme 2016.
I trust that shareholders will support the Committee and vote in
favour of these resolutions.
Michael O’Donnell
Chairman of the Remuneration Committee
15 June 2016
HELICAL BAR PLC REPORT & ACCOUNTS 2016 DIRECTORS’ REMuNERATION REPORT
REMUNERATION POLICY REPORT
85
The Report of the Remuneration Committee has been
prepared in accordance with the Large and Medium-sized
Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013 (the “Regulations”). The
Company’s remuneration policy follows the principles and
guidelines of the Listing Rules and the UK Corporate
Governance Code 2012 as they relate to directors’
remuneration.
The Company’s Remuneration Policy Report was previously
approved by shareholders at the Annual General Meeting
held on 25 July 2014 for a maximum period of three years.
However, in view of changes to the remuneration of the
Executive Directors, the expiry of the Executive Bonus Plan
2011 and proposed replacement of the Annual Bonus
Scheme 2012 with the Annual Bonus Scheme 2016, the
Committee is seeking the approval of shareholders for an
amended Remuneration Policy Report.
REMUNERATION POLICY REPORT
This section of the Remuneration Report sets out the
remuneration policy of the Group. Changes to this policy since its
2014 approval are outlined in the report but the Committee
believes that the policy continues to support the Group’s strategy
and is aligned with shareholders’ interests.
REMUNERATION POLICY
Helical’s approach to the remuneration of its Executive Directors is
to provide a basic remuneration package below the median level
of its peers within the listed real estate sector (the FTSE 350
Super Sector Real Estate Index, excluding storage companies and
agencies) combined with an incentive based bonus and share
scheme structure aligned with the interests of its shareholders.
Remuneration within the real estate sector is monitored and
reviewed regularly to ensure that the Group’s positioning of its
remuneration remains in line with these objectives. In addition to this
external view, the Committee also monitors the remuneration levels of
senior management below Board level and the remuneration of
other employees to ensure that these are taken into account in
determining the remuneration of Executive Directors and
considers environmental, social, governance and risk issues.
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:
• The total individual remuneration packages of each executive
director including, where appropriate, basic salaries, bonuses,
share awards, and other benefits;
• Targets for any performance related remuneration schemes; and,
• Service agreements incorporating termination payments and
compensation commitments.
THE BOWER OLD STREET, LONDON EC1
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE 86
DIRECTORS’ REMuNERATION REPORT
REMuNERATION POLICY REPORT
DIRECTORS’ REMUNERATION POLICY TABLE
The table below summarises the directors’ remuneration policy which will be put to shareholders for approval at the 2016 AGM.
The proposed policy differs from that approved by shareholders at the 2014 AGM as follows:
• The salary review date will be changed from 1 July to 1 April to align it to the financial year and the rest of the workforce;
• The Executive Bonus Plan 2011, which was designed to reward the Chief Executive and Finance Director, will not be renewed so that in
future only one Executive Director bonus arrangement will be operated. The terms of the proposed Annual Bonus Plan 2016 will allow
all Executive Directors, including the Chief Executive and Finance Director, to participate; and,
• The proposed Annual Bonus Plan 2016 simplifies the bonus calculation and introduces a number of additional shareholder protections.
Element
Salary
Purpose and link to strategy
Operation
- Reflects the value of the individual and their
role and responsibilities
- Reflects delivery against key personal
objectives and development
- Provides an appropriate level of basic fixed
income avoiding excessive risk arising from
over reliance on variable income
Annual bonus
- Provides focus on delivering returns from the
Long term incentive awards
Group’s property portfolio
- Aligned with shareholders through a profit
sharing model, with appropriate hurdles and
shareholder protections
- Rewards and helps retain key executives and
is aligned to the Group’s risk profile
- Maximum bonus only payable for achieving
demanding targets
- Aligned to main strategic objective of
delivering long-term value creation
- Aligns Executive Directors’ interests with
those of shareholders
- Rewards and helps retain key Executives and
is aligned to the Group’s risk profile
- Normally reviewed annually, effective 1 April
- Paid in cash on a monthly basis; not pensionable
- Takes periodic account against companies with
similar characteristics and sector comparators
- Targeted below median level of its peers
- Reviewed in context of the salary increases
across the Group
- Payable in cash and deferred shares
- Non-pensionable
- Discretionary annual grant of conditional share
awards under the 2014 PSP
- 300% of salary p.a. for all Executive Directors
- Performance normally measured over three years
- Dividend equivalent payments (in cash or in shares) may be
- 10% of an award vests at threshold performance
Maximum
Performance targets
- No maximum or maximum salary increase is operated
- N/A
- Salary increases will be linked to RPI and will not normally
exceed the average increase awarded to other employees
- Increases may be above this level if there is an increase in the
scale, scope or responsibility of the role or to allow the basic
salary of newly appointed Executives to move towards market
norms as their experience and contribution increases
- 300% of salary p.a. (200% for Finance Director)
- Performance normally measured over one year
- Dividend equivalent payments (in cash or in shares) may be
Targets based on:
payable on deferred shares
- Profits/losses of the business plus growth in values of the
investment, trading and development portfolio after charging
for the Group’s finance, administration costs and the use of the
Group’s equity
- Clawback provisions apply
- Details of profit sharing arrangements are set out on page 98
- Performance targets linked to net asset value per share, total
property return and total shareholder return
- Details of actual targets for the awards to be granted in 2016 are
set out on page 99
- Clawback provisions apply
- N/A
- Aim to hold a shareholding to equal or exceed 200% of basic
salary (increasing to 300% on the first vesting of awards granted
under the 2014 PSP)
payable
- N/A
- No maximum or maximum fee increase is operated
- N/A
- Fee increases may be guided by the average increase awarded
to Executive Directors and other employees and/or general
movements in the market
- Increases may be above this level if there is an increase in the
scale, scope or responsibility of the role
Other benefits
- There is no Group pension scheme for
Directors and no contributions are payable to
Directors’ own pension schemes
- Provide insured benefits to support the
individual and their family during periods of ill
health, accidents or death
- Cars or car allowances and fuel allowances to
facilitate effective travel
- Benefits provided through third party providers
- Insured benefits include: private medical cover,
life assurance and permanent health insurance
- Other benefits may be provided where
appropriate
Share ownership guidelines
- To provide alignment of interests between
- Executive Directors are required to build and
- N/A
Executive Directors and shareholders
Non-Executive Director fees
- Reflects time commitments and
responsibilities of each role and fees paid by
similarly sized companies
- The remuneration of the Non-Executive
Directors is determined by the Executive
Board
maintain a specified shareholding through the
retention of the post-tax shares received on the
vesting of awards
- PSP participants are required to retain shares
acquired for at least two years after vesting
- Cash fee paid monthly
- Fees are reviewed on a regular basis
- Benefits may be provided where appropriate
- Fixed three year contracts with three month
notice periods
In addition to the above, Executive Directors may also participate in any all-employee share arrangement operated by the Company, up
to prevailing HMRC limits. However, employees including Directors who participate in the Group’s long term incentive awards are
excluded from the Helical Bar 2010 Approved Share Option Scheme.
The Executive Bonus Plan 2011 was discontinued on 31 March 2016 at the end of its shareholder approved life.
The 2004 PSP expired in 2014 and was replaced by the 2014 PSP. Awards made under the terms of the 2004 PSP which remain
outstanding and subject to performance criteria are noted on page 94.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
DIRECTORS’ REMuNERATION REPORT
REMuNERATION POLICY REPORT
87
Element
Salary
- Reflects the value of the individual and their
- Normally reviewed annually, effective 1 April
role and responsibilities
- Reflects delivery against key personal
objectives and development
- Provides an appropriate level of basic fixed
income avoiding excessive risk arising from
over reliance on variable income
- Paid in cash on a monthly basis; not pensionable
- Takes periodic account against companies with
similar characteristics and sector comparators
- Targeted below median level of its peers
- Reviewed in context of the salary increases
Annual bonus
- Provides focus on delivering returns from the
- Payable in cash and deferred shares
across the Group
- Non-pensionable
Group’s property portfolio
- Aligned with shareholders through a profit
sharing model, with appropriate hurdles and
shareholder protections
- Rewards and helps retain key executives and
is aligned to the Group’s risk profile
- Maximum bonus only payable for achieving
demanding targets
- Aligns Executive Directors’ interests with
those of shareholders
- Rewards and helps retain key Executives and
is aligned to the Group’s risk profile
Directors and no contributions are payable to
Directors’ own pension schemes
- Provide insured benefits to support the
individual and their family during periods of ill
health, accidents or death
- Cars or car allowances and fuel allowances to
facilitate effective travel
Executive Directors and shareholders
- Insured benefits include: private medical cover,
life assurance and permanent health insurance
- Other benefits may be provided where
appropriate
maintain a specified shareholding through the
retention of the post-tax shares received on the
vesting of awards
- PSP participants are required to retain shares
acquired for at least two years after vesting
Purpose and link to strategy
Operation
Maximum
- No maximum or maximum salary increase is operated
- Salary increases will be linked to RPI and will not normally
exceed the average increase awarded to other employees
- Increases may be above this level if there is an increase in the
scale, scope or responsibility of the role or to allow the basic
salary of newly appointed Executives to move towards market
norms as their experience and contribution increases
- 300% of salary p.a. (200% for Finance Director)
- Dividend equivalent payments (in cash or in shares) may be
payable on deferred shares
Long term incentive awards
- Aligned to main strategic objective of
- Discretionary annual grant of conditional share
delivering long-term value creation
awards under the 2014 PSP
- 300% of salary p.a. for all Executive Directors
- Dividend equivalent payments (in cash or in shares) may be
payable
Other benefits
- There is no Group pension scheme for
- Benefits provided through third party providers
- N/A
Performance targets
- N/A
- Performance normally measured over one year
Targets based on:
- Profits/losses of the business plus growth in values of the
investment, trading and development portfolio after charging
for the Group’s finance, administration costs and the use of the
Group’s equity
- Clawback provisions apply
- Details of profit sharing arrangements are set out on page 98
- Performance normally measured over three years
- 10% of an award vests at threshold performance
- Performance targets linked to net asset value per share, total
property return and total shareholder return
- Details of actual targets for the awards to be granted in 2016 are
set out on page 99
- Clawback provisions apply
- N/A
Share ownership guidelines
- To provide alignment of interests between
- Executive Directors are required to build and
- N/A
- Aim to hold a shareholding to equal or exceed 200% of basic
salary (increasing to 300% on the first vesting of awards granted
under the 2014 PSP)
Non-Executive Director fees
- Reflects time commitments and
- Cash fee paid monthly
responsibilities of each role and fees paid by
similarly sized companies
- The remuneration of the Non-Executive
Directors is determined by the Executive
Board
- Fees are reviewed on a regular basis
- Benefits may be provided where appropriate
- Fixed three year contracts with three month
notice periods
- No maximum or maximum fee increase is operated
- Fee increases may be guided by the average increase awarded
to Executive Directors and other employees and/or general
movements in the market
- Increases may be above this level if there is an increase in the
scale, scope or responsibility of the role
- N/A
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE
88
DIRECTORS’ REMuNERATION REPORT
REMuNERATION POLICY REPORT
RECRUITMENT POLICY
In considering the structure of the Board, the balance between Executive Directors and independent Non-Executive Directors and the
skills, knowledge and experience required to ensure the Board functions in accordance with the Group’s objectives, the Committee will
seek to apply the following principles in relation to the remuneration of new directors, whether by internal promotion or external appointment:
Element
Salary
Benefits
Pension
Annual bonus
Long term incentives
Share Incentive Plan
Buy-out awards
Policy
The salary of newly appointed Executive Directors would reflect the individual’s experience and
skills, and be targeted below the median of appropriate sector comparables, taking into account
internal comparisons. On initial appointment, salaries would generally be set at a level lower than
benchmarked for that role to allow for pay increases to market levels subject to satisfactory progress
and contribution.
Benefits would be as are currently provided and periodically reviewed, being car or car allowance, car
fuel allowance, private medical cover, permanent health insurance and life assurance.
There is no Group pension scheme for Directors and no contributions are payable to Directors’ own
pension schemes.
Annual bonus arrangements would be set in line with arrangements as approved by shareholders, with
the Committee retaining the right to pro-rata any bonus payable in respect of the year of appointment.
Annual awards under the terms of the 2014 PSP will be made in accordance with the terms of that Plan.
In line with that of existing Executive Directors.
Should it be deemed necessary to compensate a new director for loss of bonus or incentives from a
previous employer, the Committee may structure the remuneration of such director to buy-out any
such bonus or incentives on a like-for-like basis in respect of currency (i.e. cash versus shares), timing
and performance targets. Where possible such buy-out will be structured within the Company’s
existing incentive arrangements but the Committee has the discretion to implement the exemption
under rule 9.4.2 of the Listing Rules.
Non-Executive Directors
Newly appointed Non-Executive Directors will be paid fees at a level consistent with existing Non-
Executive Directors. Fees would be paid pro-rata in the year of appointment.
HOW EMPLOYEE PAY IS TAKEN INTO ACCOUNT AND
HOW IT COMPARES TO THE REMUNERATION POLICY
OF EXECUTIVE DIRECTORS
All permanent employees of the Group, including Executive
Directors, receive a basic remuneration package including base
salary, private medical cover, permanent health insurance, life
assurance and membership of the Share Incentive Plan. In
addition, Directors and senior management are entitled to the use
of company cars or the payment of a car allowance and a car fuel
allowance. Whilst employees below Board level are not entitled to
participate in the Annual Bonus Scheme, discretionary bonuses
are paid to employees on an individual basis depending on their
performance and contribution. The Performance Share Plan is
available to all employees but is primarily utilised to incentivise
Executive Directors and senior management. An Inland Revenue
approved Share Option Scheme is available for the Committee to
grant options to those who do not receive awards under the
Performance Share Plan. Consequently, Directors are not granted
awards under this scheme. In determining executive remuneration,
the Committee considers the overall remuneration of all the
Group’s employees and, other than in exceptional circumstances,
seeks to award increases in salaries at levels below those made to
other staff and within its own guidelines. The remaining
remuneration is weighted towards performance related awards.
The Committee does not consult with its employees when
drawing up the Group’s remuneration policy.
PERFORMANCE METRICS
The performance metrics used in the annual bonus scheme and
the long term incentive plan are aligned with the Group’s Key
Performance Indicators, discussed on pages 20 to 21.
The proposed Annual Bonus Scheme 2016 (and previously the
Annual Bonus Scheme 2012), if approved at the 2016 AGM, is a
profit sharing model which takes the results of the Company,
including valuation movements on its property portfolio, and, after
charging all finance costs, non-performance related administration
costs and a charge for the use of the Group’s equity (initially set
at 7% but subject to regular review), allocates the net results into
a profit pool for payment to participants with maximum limits,
deferral, clawback and other shareholder protections. The scheme
will be open to all Executive Directors.
Long term incentives, awarded in accordance with the rules of the
2014 PSP are subject to an absolute net asset value growth test, a
relative performance metric based on the performance of the
Group’s property portfolio compared to an IPD index and a
relative performance metric based on Total Shareholder Return.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 DIRECTORS’ REMuNERATION REPORT
REMuNERATION POLICY REPORT
89
EXECUTIVE DIRECTORS’ DATES OF APPOINTMENT AND SERVICE CONTRACTS
All service contracts are available for inspection at the registered offices of the Company. Original dates of appointment to the Board,
are as follows:
Executive Director
Michael Slade
Gerald Kaye
Tim Murphy
Matthew Bonning- Snook
Duncan Walker
Notice Period
Date of
Employment
Board
Appointment
Date of current
contract
12m1
21 August 1984
21 August 1984
6m
6m
6m
6m
6 March 1994
28 September 1994
1 March 1994
24 July 2012
13 March 1995
1 August 2007
28 August 2007
24 June 2011
1 August 2007
1 March 2010
24 July 2012
1 March 2010
24 June 2011
1 The notice period for Michael Slade will reduce to three months subject to his election as Chairman at the 2016 AGM.
LEAVER POLICY
On termination of employment each Director may be entitled to a
payment in lieu of notice of basic salary and other contractual
entitlements i.e. provision of a car, health and life insurance etc.
The Group may make payments in lieu of notice as one lump sum
or in instalments, at its own discretion. If the Group chooses to
pay in instalments the Director is obliged to seek alternative income
over the relevant period and to disclose the amount to the Group.
Instalment payments will be reduced by any alternative income.
under the Annual Bonus Scheme 2016, participants shall not
normally be entitled to receive any distribution under the scheme
following cessation and shall immediately cease to have any
interests, benefits, rights and/or entitlements under the scheme
howsoever arising on the date of such cessation except where
good leaver status applies (i.e. death; injury, disability; redundancy;
retirement; sale or transfer of employing company or business
outside of the Group or any other reason permitted by the
Committee). For good leavers, individuals would cease to accrue
future amounts into Bonus Award Pool although would continue
to receive deferred share awards and any remaining amounts held
in the Bonus Award Pool for a period of two years after cessation.
Any share-based entitlements granted to an Executive Director
under the Group’s share plans will be determined based on the
relevant plan rules.
For awards granted under the 2014 PSP, awards held by good
leavers will vest on the normal vesting date subject to performance
conditions and time pro-rating, unless the Committee determines
that awards should vest at cessation and/or time pro-rating
should not apply.
NON-EXECUTIVE DIRECTORS
Non-Executive Directors are appointed by a Letter of
Appointment and their remuneration is determined by the Board.
Current Letters of Appointment, setting out the terms of
appointment, operate from 1 April 2015 or, if later, the date of
appointment. The appointment of Non-Executive Directors is
terminable on three months’ notice. Non-Executive Directors are
not eligible to participate in any new share awards made under
the terms of the Group’s bonus or share award schemes. In
exceptional circumstances, where an Executive Director becomes
a Non-Executive Director e.g. Michael Slade becoming Chairman
in 2016 (subject to his re-election at the 2016 AGM), ongoing
participation in awards previously made in bonus and share
schemes will be subject to the rules of those schemes and will be
subject to the discretion of the Committee.
NON-EXECUTIVE DIRECTOR’S LETTERS OF APPOINTMENT
Non-executive director
Nigel McNair Scott1 – Chairman
Andy Gulliford1 – Property Advisor to the Board
Richard Gillingwater – Senior Independent Director
Michael O’Donnell – Chairman of the Remuneration Committee
Richard Grant – Chairman of the Audit Committee
Susan Clayton – Chairman of the valuation Committee
Richard Cotton
Board appointment
17 December 1985
1 March 2006
24 July 2012
24 June 2011
24 July 2012
1 February 2016
1 March 2016
1 Nigel McNair Scott and Andy Gulliford are to retire from the Board at the AGM on 25 July 2016.
Commencement date
of current term
1 April 2015
1 April 2015
1 April 2015
1 April 2015
1 April 2015
1 February 2016
1 March 2016
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE 3 year
Total shareholder return
Source: Datastream (Thomson Reuters)
Helical
FTSE 350 Supersector Real Estate Index
)
d
e
s
a
b
e
R
(
n
r
u
t
e
R
r
e
d
l
o
h
e
r
a
h
S
l
a
t
o
T
200
180
160
140
120
100
80
60
40
20
0
7 year
)
d
e
s
a
b
e
R
(
n
r
u
t
e
R
r
e
d
l
o
h
e
r
a
h
S
l
a
t
o
T
350
300
250
200
150
100
50
0
)
d
e
s
a
b
e
R
(
n
r
u
t
e
R
r
e
d
l
o
h
e
r
a
h
S
l
a
t
o
T
140
120
100
80
60
40
20
0
Mar-13
Mar-14
Mar-15
Mar-16
Total shareholder return
Source: Datastream (Thomson Reuters)
Helical
FTSE 350 Supersector Real Estate Index
Mar 09
Mar 10
Mar 11
Mar 12
Mar 13
Mar 14
Mar 15
Mar 16
Total shareholder return
Source: Datastream (Thomson Reuters)
Helical
FTSE 350 Supersector Real Estate Index
Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16
of £100 invested in the FTSE 350 Supersector Real Estate Index.
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2013, compared with the value
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2009, compared with the value
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2006, compared with the value
461
385
313
250
264
Pence
per share
500
450
400
350
300
250
200
150
100
50
90
HELICAL BAR PLC REPORT & ACCOUNTS 2016
0
2012
2013
2014
2015
2016
DIRECTORS’ REMuNERATION REPORT
REMuNERATION POLICY REPORT
Helical
IPD Upper Quantile
IPD Median
23.8
15.6
13.4
20.4
19.7
17.5
21.7
13.0
11.4
%
25
20
15
10
5
0
2014
2015
2016
SHARE OWNERSHIP GUIDELINES
Senior Executives will not normally be permitted to sell shares
received through the 2004 PSP/2014 PSP, other than to meet
taxation (and national insurance contributions) liabilities, for at
least two years and until they own shares to the value of 200% of
basic salary for Executive Directors and 100% of salary for other
Executives. The 200% of salary guideline for Executive Directors
will increase to 300% on the fi rst vesting of share awards granted
under the 2014 PSP.
increase in the net asset value, before incentives, 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 over
the term of the plans 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 and Total
Shareholder Return, over each three year period.
ALIGNMENT WITH SHAREHOLDER INTERESTS
The Remuneration Committee has analysed the potential gains
that may be made by Executives (Directors and those below
Board level) through the 2004 PSP/2014 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
REWARD SCENARIOS
The charts below show how the composition of the Executive
Directors’ remuneration packages varies at three performance
levels, namely, at minimum (i.e. fi xed pay), target (assumed to be
50% of the maximum incentive levels) and maximum levels, under
the policy set out in the table overleaf.
VALUE OF REMUNERATION PACKAGES AT DIFFERENT LEVELS OF PERFORMANCE
Basic salary & benefits
Bonus
PSP
3,750
3,500
3,250
3,000
2,750
2,500
0 2,250
0
0
£
2,000
1,750
1,500
1,250
1,000
750
500
250
0
42%
42%
37%
37%
26%
16%
49%
33%
18%
42%
28%
30%
42%
42%
37%
37%
42%
42%
37%
37%
26%
16%
26%
16%
Minimum Target Maximum
Minimum Target Maximum
Minimum Target Maximum
Minimum Target Maximum
GERALD KAYE
TIM MURPHY
MATTHEW BONNING-SNOOK
DUNCAN WALKER
The chart is based on:
• salary levels eff ective 1 April 2016.
• an approximated annual value of benefi ts (no pension is
provided).
• a 300% of salary maximum annual bonus for the CEO and
other directors and 200% for the Finance Director (with target
assumed to be 50% of the maximum).
• a 300% of salary award under the 2014 PSP in line with the
normal maximum award (with target assumed to be 50% of the
maximum).
• No share price appreciation in respect of deferred bonus and
PSP awards has been assumed.
REMUNERATION COMMITTEE
The Committee comprises Michael O’Donnell, as Chairman, and
Richard Gillingwater and Richard Grant, all of whom have served
throughout the year, Susan Clayton and Richard Cotton, both of
whom have served on the Committee since their appointment to
the Board. Each member of the Committee is an independent Non-
Executive Director. The Company Secretary acts as Secretary to
the Committee. The terms of reference of the Committee are
available on request and are included on the Group’s website at
www.helical.co.uk.
ADVISORS TO THE COMMITTEE
The Committee consults the Chief Executive and Finance Director
about its proposals and has access to professional advice from
independent remuneration consultants, New Bridge Street, to help
it determine appropriate remuneration arrangements. Terms of
reference for New Bridge Street, which provided no other services to the
Company, are available from the Company Secretary on request.
Their fees for the year to 31 March 2016 amounted to £20,384
(2015: £42,710).
DIRECTORS’ REMuNERATION REPORT
ANNUAL REPORT ON REMUNERATION
91
APPLICATION OF THE REMUNERATION POLICY IN THE YEAR TO 31 MARCH 2016
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 absolute performance and outperformance relative to the Group’s peer
group. In the year to 31 March 2016, the balance of fixed versus variable pay on an actual basis for the Executive Directors in office
during the year compared to the maximum payable was as follows:
Basic salaries and benefits-in-kind
Annual Bonus Scheme 2012
Executive Bonus Plan 2011
Performance Share Plan shares vested
Actual
£
2,537,000
3,364,000
2,000,000
8,320,000
Share
of total
%
16
21
12
51
Maximum
£
2,537,000
3,364,000
2,000,000
8,320,000
16,221,000
100
16,221,000
Share
of total
%
16
21
12
51
100
Note: Performance Share Plan shares vested reflect the market value of shares that are expected to vest (actual) or could vest (maximum) in respect of
the three year performance period to 31 March 2016 in accordance with the terms of the Group’s Performance Share Plan.
DIRECTORS’ REMUNERATION
Remuneration in respect of the directors was as follows:
Fixed
Variable
Year to 31 March 2016
EXECUTIVE DIRECTORS
Michael Slade
Tim Murphy
Gerald Kaye
Matthew Bonning-Snook
Duncan Walker
NON-EXECUTIVE DIRECTORS
Nigel McNair Scott
Andrew Gulliford
Richard Gillingwater
Richard Grant
Michael O’Donnell
Susan Clayton1
Richard Cotton2
Basic
salary/
fees
£000
Benefits
£000
Sub-total
£000
Annual
cash
bonus
£000
Deferred
bonus
shares
£000
533
285
412
381
323
155
52
52
52
52
9
4
42
30
49
54
29
23
-
-
-
-
-
-
575
315
461
435
352
178
52
52
52
52
9
4
1,500
500
828
765
649
-
-
-
-
-
-
-
-
-
414
383
325
-
-
-
-
-
-
-
Share
awards
£000
2,454
1,227
1,896
1,516
1,227
-
-
-
-
-
-
-
Sub-total
£000
Total
£000
3,954
1,727
3,138
2,664
2,201
-
-
-
-
-
-
-
4,529
2,042
3,599
3,099
2,553
178
52
52
52
52
9
4
Total
2,310
227
2,537
4,242
1,122
8,320
13,684
16,221
1 Susan Clayton joined the Board on 1 February 2016.
2 Richard Cotton joined the Board on 1 March 2016.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE 92
DIRECTORS’ REMuNERATION REPORT
ANNuAL REPORT ON REMuNERATION
Fixed
Variable
Year to 31 March 2015
EXECUTIVE DIRECTORS
Michael Slade
Tim Murphy
Gerald Kaye
Matthew Bonning-Snook
Duncan Walker
NON-EXECUTIVE DIRECTORS
Nigel McNair Scott
Andrew Gulliford
Richard Gillingwater
Richard Grant
Michael O’Donnell
FORMER DIRECTOR
Jack Pitman1
Total
Basic
salary/fees
£000
Benefits2
£000
Sub-total
£000
Annual
cash
bonus
£000
Deferred
bonus
shares
£000
523
279
404
375
307
152
51
51
51
42
43
31
49
54
29
26
-
-
-
-
566
310
453
429
336
178
51
51
51
42
1,500
500
811
750
637
-
-
-
-
-
323
2,558
25
257
348
2,815
974
5,172
-
-
406
375
318
-
-
-
-
-
-
1,099
Share
awards
£000
3,468
1,456
2,601
2,081
1,734
Sub-total
£000
Total
£000
4,968
1,956
3,818
3,206
2,689
5,534
2,266
4,271
3,635
3,025
1,630
1,630
1,808
-
-
-
-
-
-
-
-
51
51
51
42
2,081
15,051
3,055
21,322
3,403
24,137
1 Jack Pitman stepped down from the Board on 13 February 2015 and left the Company on 31 March 2015.
2 The benefits in the year to 31 March 2015 have been adjusted to include Share Incentive Plan Shares and life assurance costs.
The information in this section has been audited.
EXECUTIVE BONUS PLAN 2011
In 2011, shareholders approved the renewal of the Executive Bonus
Plan (the “2011 Plan”) for a further five years. Michael Slade and Tim
Murphy were eligible for 2011 Plan bonuses during the year. Total
2011 Plan bonuses for the year to 31 March 2016 of £2,000,000
(2015: £2,000,000) have been accrued in the financial statements
for the year to 31 March 2016 and are payable in June 2016.
The performance conditions which applied for the year ended 31
March 2016 were as follows:
• 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;
• absolute performance of the portfolio – un-geared 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,
• 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 total amount of bonus payable in the year to 31 March 2016
was 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.
Applying this methodology to the results for the year to 31 March
2016, the bonus for the year was calculated as follows:
1. Increase in net asset value per share, pre dividends and
performance related awards
Net asset value per share at 1 April 2015
Net asset value per share at 31 March 2016*
Increase in net asset value per share
385p
475p
23.6%
*Adjusted for dividends and performance related awards paid or accrued
during the year.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
DIRECTORS’ REMuNERATION REPORT
ANNuAL REPORT ON REMuNERATION
93
2. Absolute performance of the portfolio
Performance of portfolio as measured by IPD
upper quartile of IPD Total Return Benchmark
3. Performance of net asset value per share
Increase in net asset value per share
upper quartile of IPD Capital Growth Benchmark
21.7%
13.0%
23.6%
8.0%
Applying these percentages to the net asset value base, the
percentage increase in the actual net asset value above that was
derived by applying the upper quantile of the IPD Capital Growth
Benchmark is 14.43%. Applying this outperformance to the base
net asset value results in a potential payment of £4,606,000
(2015: £4,612,000). This was reduced to the maximum amount
payable of £2,000,000 (2015: £2,000,000).
Bonuses paid under the terms of this 2011 Plan in the last seven
years are as follows:
Year
2016
2015
2014
2013
2012
2011
2010
Amount Paid £
2,000,000
2,000,000
2,000,000
1,297,000
nil
nil
nil
The Executive Bonus Plan 2011 reached the end of its shareholder
approved life at 31 March 2016 and no further payments will be
made in respect of this scheme for subsequent periods.
HELICAL BAR ANNUAL BONUS SCHEME 2012
The Helical Bar Annual Bonus Scheme 2012 was approved by
shareholders at the 2012 AGM. This scheme provides annual cash
bonuses based on the performance of the Group’s property
portfolio and is aligned with shareholders through a profit sharing
model, with appropriate hurdles and shareholder protections
(including deferral and clawback). Total 2012 Bonus Scheme
Bonuses have been accrued in the financial statements for the
year to 31 March 2016 and the cash element will be payable in
June 2016.
The main features of the 2012 Bonus Scheme as applied to the
year to 31 March 2016 were as follows:
• the scheme participants were Gerald Kaye, Matthew Bonning-
Snook and Duncan Walker. Former director, Jack Pitman,
remained eligible for a bonus in respect of the bonus pool
carried forward from 31 March 2015. Neither the Chief Executive
nor the Finance Director participated in the Scheme given their
participation in the 2011 Plan;
• all property assets held during the year were allocated to one of
two pools namely the “Investment Pool” or the “Development
Pool” (“Profit Pools”);
• investment assets were included at valuation as at 31 March 2015
with subsequent valuation movements increasing or decreasing the
size of the relevant Profit Pool. Development assets were also
included at valuation as at 31 March 2015 with subsequent valuation
movements increasing or decreasing the size of the Profit Pool. Any
opening surpluses or deficits in the value of the trading and
development assets as at the introduction of the scheme on 1 April
2012 were only included in the Profit Pools if they were realised;
• development profits, development management fees, net rents,
other income and profits/losses on the sale of property assets
were allocated to the relevant Profit Pools; and,
• profits in the two Profit Pools were eligible for the award of
bonuses once they were sufficient to exceed the recovery of all
related finance costs, a charge for the use of the Company’s
equity at a rate equivalent to the Company’s weighted average
cost of debt plus a margin (reviewed regularly to reflect any
changes in the cost of debt and the risk profile of the
Company’s activities), the Group’s total administrative costs
(excluding performance related remuneration) and any
unallocated losses from the previous three financial years.
Shareholder Protections
• no more than 10% of profits were available to participants for
distribution (“Bonus Award Pool”) at the end of the relevant
financial year. Pool allocations between participants were based
on a set formula agreed at the start of the financial year;
• the distribution of the Bonus Award Pools to participants were
restricted in any financial year to the lower of 70% of the balance
of the Bonus Award Pool and 300% of salary. Any excess is
deferred and carried forward to the subsequent year to form
part of the Bonus Award Pool for the subsequent year(s);
• two thirds of any payment is made in cash after the relevant
financial year end and one third is deferred for three years into
Helical Bar plc shares; and,
• other shareholder protections as noted on page 98 in respect of
the Annual Bonus Scheme 2016.
Bonus Scheme Pool – Year to 31 March 2016
The amount transferred to the Bonus Pool based on the results of the Group for the year to 31 March 2016 and its allocation to cash and
deferred share awards is as follows:
Bonus Pool brought forward
Amount transferred to Bonus Pool based on the results for the year
Bonus Pool available for distribution
Amount paid as cash bonuses
Amount paid as deferred shares
Bonus Pool carried forward
2016
£
15,812,000
12,533,000
28,345,000
2015
£
7,295,000
12,788,000
20,083,000
(3,216,000)
(3,172,000)
(1,122,000)
(1,099,000)
24,007,000
15,812,000
The proposed changes to this bonus scheme, to be reflected in the Annual Bonus Scheme 2016, are expected to reduce the Bonus Pool
carried forward at 31 March 2016 to c. £10,400,000.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE
94
DIRECTORS’ REMuNERATION REPORT
ANNuAL REPORT ON REMuNERATION
Other matters
• whilst shareholder approval for the Plan was obtained for ten
years from 1 April 2012, the Remuneration Committee has
reviewed the operation of the Plan early in light of the various
Board changes, the expiry of the Executive Bonus Plan 2011 and
general sensitivities surrounding executive pay and, subject to
shareholder approval, intends replacing the Plan with the Helical
Annual Bonus Plan 2016 with additional shareholder
protections. Further details of this new plan are noted on page 98
and are set out in the 2016 Notice of AGM;
• awards may be satisfied through shares purchased in the
market or by new issue or treasury shares. Where new issue or
treasury shares are used, the ABI’s 5% in ten year dilution limit
will apply; and,
• on a change of control of the Company, any amounts accrued
over the financial year up to the relevant date, and any amounts
held within the Bonus Award Pools will be paid out, subject to a
cap on those awards of 600% of base salary, Any deferred
shares would vest immediately.
PSP AWARDS VESTING IN 2016
The PSP award (granted under the 2004 PSP), granted on 24 June 2013, will vest after 25 June 2016. The expected vesting percentage is as follows:
Metric
NAv
Performance Condition
Net asset value growth
(fully diluted
triple net)
10% of this part of an award vests for compound NAv
growth of 7.5% p.a. increasing pro-rata to 100% of this
part of an award vesting for compound NAv growth
of 15% p.a.
TPR
Total property return v IPD property
10% of this part of an award vests for median ranking
increasing pro-rata to 100% of this part of an award
vesting for upper quartile or above performance
Total
Threshold
Target
7.5%
Stretch
Target
15.0%
Actual
22.2%
% Vesting
66.67%
Median
13.8%
upper
quartile
15.7%
22.0%
33.33%
100.00%
Based on the above and given that net value per share (having added back dividends) increased over the three year performance
period, details of the shares under award and the expected value at vesting is as follows:
Executive directors
Michael Slade
Tim Murphy
Gerald Kaye
Matthew Bonning-Snook
Duncan Walker
Number of
shares at grant
Number of
shares
expected to
lapse
Number of
shares
expected to
vest
Estimated
value
at vesting1
£’000
615,384
307,692
475,384
380,307
307,692
-
-
-
-
-
615,384
307,692
475,384
380,307
307,692
2,454
1,227
1,896
1,516
1,227
Jack Pitman – former director
380,307
126,769
253,538
1,011
1The share price used to calculate the expected value at vesting was 398.75p, based on the average share price over the three months to 31 March 2016.
The 2004 PSP numbers presented for the comparatives in the
remuneration table above are based on the 2004 PSP awards
granted on 31 May 2012. The three year performance period to 31
March 2015 showed that the net asset value per share, calculated
in accordance with the terms of the 2004 PSP, had increased by
18.1% p.a. During this three year period the total return of Helical’s
property portfolio, as determined by IPD, was 17.4% compared to
the upper quantile of the IPD Benchmark which showed a return of
12.3%. Therefore, 100% of the shares vested. The share price used to
calculate the expected value at vesting for the 2012 PSP awards
was 387.24p (based on the average share price over the three
months to 31 March 2015). The actual share price at vesting on 15
September 2015 was 421.00p.
The information in this section has been audited.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 DIRECTORS’ REMuNERATION REPORT
ANNuAL REPORT ON REMuNERATION
95
PSP AWARDS GRANTED IN THE YEAR
The following conditional awards were granted on 8 June 2015 under the 2014 PSP in the year:
Individual
Michael Slade
Tim Murphy
Gerald Kaye
Matthew Bonning-Snook
Duncan Walker
Basis of Award
(as a % of
salary)
Face Value
£000
Vesting at
threshold
Vesting at
Maximum
Performance Period
300%
300%
300%
300%
300%
1,576
842
1,217
1,125
955
10%
10%
10%
10%
10%
100%
3 years to 31 March 2018
100%
3 years to 31 March 2018
100%
3 years to 31 March 2018
100%
3 years to 31 March 2018
100%
3 years to 31 March 2018
The total number of awards made to directors under the terms of the 2004 PSP and 2014 PSP which have not yet vested are as follows:
Director
Michael Slade
Tim Murphy
Gerald Kaye
Matthew Bonning-Snook
Duncan Walker
Jack Pitman – former director
Shares
awarded
24.06.13
at 243.75p
Shares
awarded
25.07.14
at 358.00p
Shares
awarded
08.06.15
at 420.00p
615,384
307,692
475,384
380,307
307,692
380,307
440,195
235,055
340,055
314,245
266,706
272,053
375,214
200,357
289,857
267,857
227,335
-
Total
shares
awarded
1,430,793
743,104
1,105,296
962,409
801,733
652,360
It is currently expected that 100% of the shares awarded on 24 June 2013, 83% of the shares awarded on 25 July 2014 and 72% of the
shares awarded on 8 June 2015 will vest.
As detailed below, Jack Pitman, a former director, has been treated as a good leaver under the 2004 PSP and 2014 PSP. Awards will vest
under terms of the relevant plans, subject to performance and time pro-rating.
The information in this section has been audited.
VESTING OF PSP AWARDS
Awards to Executive Directors, in office during each year and excluding leavers, which have vested or are expected to vest in
accordance with the terms of the 2004 PSP in the last seven years are as follows:
Year
2016 – value based on average share price over three months to 31 March 2016 of 389.75p
Value
£
8,320,000
2015 – value based on average share price over three months to 31 March 2015 of 387.24p. Actual vesting share price was 421.00p.
15,051,000
2014 – value based on average share price over three months to 31 March 2016 of 359.60p. Actual vesting share price was 351.00p.
5,623,000
2013
2012
2011
2010
nil
nil
nil
nil
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE 96
DIRECTORS’ REMuNERATION REPORT
ANNuAL REPORT ON REMuNERATION
HELICAL BAR 2002 APPROVED SHARE INCENTIVE PLAN
under the terms of this Plan employees of the Group are given annual awards of free shares with a value of £3,600 and participants are
allowed to purchase additional shares up to a value of £1,800, to be matched in a ratio of 2:1 by the Company. 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
Tim Murphy
Gerald Kaye
Matthew Bonning-Snook
Duncan Walker
9 March
2016
at 379.00p
8 January
2016
at 462.25p
2 December
2015
at 451.00p
15 September
2015
at 421.00p
18 August
2015
at 441.75p
9 June
2015
at 413.5p
-
354
354
354
354
210
109
210
208
122
297
297
297
297
297
318
318
318
318
318
479
244
479
473
276
1,197
1,197
1,197
1,197
1,197
Shares held by the Trustees of the Plan at 31 March 2016 were 437,597 (2015: 438,898).
The information in this section has been audited.
PAYMENTS TO FORMER DIRECTORS – DEPARTURE OF JACK PITMAN
As disclosed last year, Jack Pitman stepped down from the Board on 13 February 2015 and ceased employment on 31 March 2015. No
payments in respect of salary and car allowance were made after 31 March 2015 although in line with his termination arrangements, Jack
Pitman’s Group health insurance continued until the end of the policy in October 2015.
In respect of his incentives, it was determined by the Remuneration Committee that Jack Pitman should be treated as a Good Leaver for
the purposes of the Annual Bonus Scheme 2012 and his outstanding PSP awards.
He will receive cash bonuses in respect of the Annual Bonus Scheme 2012 in respect of the balance remaining in that scheme at 31
March 2015 for a further three years in line with the plan rules, subject to offset of future losses and clawback. A payment of £973,950
will be made in June 2016 at the normal payment date.
The 2013 PSP (granted under the 2004 PSP) is expected to vest in full, subject to time pro-rating. The estimated value, based on the average share
price over the three months to 31 March 2016 of 398.75p is £1,010,983. The 2014 PSP award (granted under the 2014 PSP) is expected to vest in June
2017, again subject to performance and time pro-rating and full details will be disclosed in next year’s Annual Report on Remuneration.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 DIRECTORS’ REMuNERATION REPORT
ANNuAL REPORT ON REMuNERATION
97
IMPLEMENTATION OF THE REMUNERATION POLICY FOR THE YEAR TO 31 MARCH 2017
EXECUTIVE DIRECTORS’ BASIC ANNUAL SALARY
AND BENEFITS-IN-KIND
The basic package of salary and benefits is designed to match the
experience and responsibilities of each director and is reviewed
annually to ensure that it is consistent with and appropriate to their
responsibilities and expectations. The Group does not provide any
separate pension provision for Executive Directors and expects
individuals to provide for their retirement through their basic salaries
and incentive payments. Executive Directors’ basic annual salaries at
31 March 2016 and increases from 1 April 2016 are as follows:
At
31 March
2016
£
535,800
286,100
413,900
Michael Slade
Tim Murphy
Gerald Kaye
Matthew Bonning-Snook
382,500
Duncan Walker
324,600
Increases
wef
1 April 2016
£
At
1 April 2016
£
-
4,600
61,100
6,100
32,400
535,800
290,700
475,000
388,600
357,000
The Committee’s policy in respect of basic salaries is that they
should be reviewed annually and increased to reflect an
appropriate level of inflation (being linked to the Retail Prices
Index) or greater to reflect increases in the scale, scope or
responsibility of their roles or to allow recently appointed
Executives to move to market norms as their experience and
contributions increase. At the 2016 AGM to be held on 25 July
2016, Michael Slade is to step down as Chief Executive. His salary
will remain at its current level of £535,800 until the AGM, from
which date he will be remunerated (subject to his re-election) as
Non-Executive Chairman. Gerald Kaye, subject to his re-election,
will become the Chief Executive from 25 July 2016. In recognition
of his increased responsibilities, his basic salary is to increase to
£515,000 pa, £20,800 below that of the current Chief Executive
salary, in two stages. This basic salary increased to £475,000 pa
on 1 April 2016 and will be increased to £515,000 pa on 1 April
2017 subject to the Committee being satisfied in respect of his
individual performance. Thereafter, he is expected to receive
inflationary increases each year. Duncan Walker has taken on
increased responsibilities over the last twelve months and in
recognition of this it is intended that his basic salary will increase
to that of Matthew Bonning-Snook over the course of two salary
reviews. He received an increase to £357,000 pa on 1 April 2016
and is expected to receive a further increase to c. £391,350 pa,
subject to RPI, on 1 April 2017, and subject to the Committee
being satisfied in respect of his individual performance. Thereafter,
he is expected to receive inflationary increases each year. In
addition to these two changes, the Committee has determined
that the remaining two Executive Directors will receive increases
of 1.6%, being the increase in RPI to 31 March 2016, from 1 April
2016, compared to an average 6.8% awarded to other employees.
BENEFITS-IN-KIND
Benefits-in-kind provided to Executive Directors comprise the
provision of a company car or car allowance, car fuel, private
medical cover, permanent health insurance, life insurance and
participation in the Company’s Share Incentive Plan. There is no
Group pension scheme for Directors and no contributions will be
paid by the Group to the Directors’ own pension schemes.
NON-EXECUTIVE DIRECTORS’ FEES
Michael Slade, subject to his re-election at the 2016 AGM, will
become Non-Executive Chairman on 25 July 2016, replacing Nigel
McNair Scott who is retiring. Fees payable to him for the role will
be £155,000 pa plus an additional benefit-in-kind of £20,000 for
use of secretarial support for non-business use. The fees payable
to the remaining independent Non-Executive Directors have been
reviewed and an increase of £3,000 pa has been awarded with
effect from 1 April 2016. This increase takes the base fee to
£45,000 pa with an additional £10,000 pa payable to the Senior
Independent Director and the Chair of each Committee.
Non-Executive Directors’ annual fees at 31 March 2016 and changes at 1 April 2016 and 25 July 2016, are as follows:
Michael Slade – Chairman Elect
Nigel McNair Scott – Chairman
Richard Gillingwater – Senior Independent Director
Richard Grant – Chairman of the Audit Committee
Andy Gulliford – Property Advisor to the Board
Michael O’Donnell – Chairman of the Remuneration Committee
Susan Clayton – Chairman of the valuation Committee
Richard Cotton
31 March 2016
£
1 April 2016
£
25 July 2016
£
-
-
155,000
156,000
156,000
52,000
52,000
52,000
52,000
52,000
42,000
55,000
55,000
55,000
55,000
55,000
45,000
-
55,000
55,000
-
55,000
55,000
45,000
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE 98
DIRECTORS’ REMuNERATION REPORT
ANNuAL REPORT ON REMuNERATION
ANNUAL BONUSES
EXECUTIVE BONUS PLAN 2011
The Executive Bonus Plan 2011 reached the end of its shareholder
approved life at 31 March 2016 and ceased operation at this date.
Of the two participants in the Plan in the year to 31 March 2016,
Michael Slade is stepping down as Chief Executive and will no
longer be eligible for annual bonuses and Tim Murphy, subject to
shareholder approval, will be eligible to participate in the Annual
Bonus Scheme 2016.
The main features of the 2011 Plan, and details of how it operated
for the year ended 31 March 2016, are set out on pages 92 to 93.
ANNUAL BONUS SCHEME 2012
This scheme has been reviewed by the Committee and, following
consultation with major shareholders, will be replaced by the
Helical Annual Bonus Scheme 2016, subject to shareholder
approval at the 2016 AGM.
The main features of the 2012 Bonus Scheme and how it operated
for the year ended 31 March 2016 are set out on pages 93 to 94.
As disclosed last year, Jack Pitman, a former director, will continue
to receive annual bonuses out of the Bonus Award Pool accrued up
to 31 March 2015, in accordance with the “Good Leaver” provisions
of the scheme.
ANNUAL BONUS SCHEME 2016
Gerald Kaye, Tim Murphy, Matthew Bonning-Snook and Duncan
Walker will, subject to shareholder approval, participate in the
Annual Bonus Scheme 2016 which is to be considered by
Shareholders at the 2016 AGM. This scheme provides annual
bonuses based on the performance of the Group’s property
portfolio and is aligned with shareholders’ interests through a
profit sharing model, with appropriate hurdles and shareholder
protections (including deferral and clawback).
The main features of the Annual Bonus Scheme 2016, as applied
to the year to 31 March 2017, are as follows:
• all property assets held at 1 April 2016 or acquired during the
year will be allocated to a Profit Pool;
• investment assets will be included at valuation as at 31 March 2016
with subsequent valuation movements increasing or decreasing the
size of the Profit Pool. Development assets will also be included at
valuation as at 31 March 2016 with subsequent valuation
movements increasing or decreasing the size of the Profit Pool;
• development profits, development management fees, net rents,
other income and profits/losses on the sale of property assets
will be allocated to the Profit Pools; and,
• profits in the Profit Pool will be eligible for the award of bonuses
once they are sufficient to exceed the recovery of all related finance
costs, a charge for the use of the Company’s equity at a rate of 7%
(reviewed regularly to reflect any changes in the risk profile of the
Company’s activities), and the Group’s total administrative costs
(excluding performance related remuneration).
Shareholder Protections
• no more than 10% of profits will be available to participants for
distribution (“Bonus Award Pool”) at the end of the relevant
financial year;
• the distribution of the Bonus Award Pool to participants will be
restricted in any financial year to 300% of salary (200% for Tim
Murphy). Any excess is deferred and carried forward to the
subsequent year to form part of the Bonus Award Pool for the
subsequent two year(s);
• a maximum of 6.5 times the aggregate Executive Director
salary pool may be carried forward to form part of the Bonus
Award Pool for the subsequent year;
• two thirds of any payment is made in cash after the relevant
financial year end and one third is deferred for three years into
Helical Bar plc shares;
• no payments will be made where the Company has not generated
a profit (amounts will be deferred until a profit is generated). In
addition, the Remuneration Committee will retain discretion to
increase the deferred share amount (up to 100% of the payment)
or not to make a payment at all (with any amounts reverting
back to the Company rather than remaining in the Bonus
Award Pool) where it is considered appropriate to do so;
• net losses will be carried forward for offset against future net profits.
Carry forward of losses will be for a minimum of two years, subject to
extension at the request of the Remuneration Committee;
• the scheme will operate a clawback provision whereby amounts
deferred, amounts held in Bonus Award Pools or the net of tax
amounts paid may be recovered in the event of a misstatement
of results, an error being made in assessing the calculation of
Bonus Award Pools or in the event of gross misconduct; and,
• the share of any increase in value of the Company (measured
as the increase in net asset value plus cash returned as
dividends) that could accrue to all Executives through the
Group’s long and short-term incentive and bonus plans at
maximum vesting/payouts during the lifetime of the plans will
continue to be no more than 20%.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 HELICAL BAR PLC REPORT & ACCOUNTS 2016
GOVERNANCE
99
DIRECTORS’ REMuNERATION REPORT
ANNuAL REPORT ON REMuNERATION
LONG-TERM INCENTIVES
PERFORMANCE SHARE PLAN
It is anticipated that long-term incentives will be granted to all
Executive Directors and senior management in the form of shares
awarded under the terms of the 2014 PSP Scheme. For Executive
Directors the awards will be granted at 300% of base salary.
The main features of the 2014 PSP are as follows:
Relative TSR
Ranking after three years
% of award vesting
upper quartile or above
Between median and
upper quartile
Pro rata between 3.3 and 33.3
33.3
• awards will normally vest no earlier than the third anniversary of
Median
Less than median
3.3
Zero
their grant to the extent that the applicable performance
conditions (see below) have been satisfi ed and the participant
is still employed by the Group. Once exercisable, awards will
remain capable of exercise for a period of normally no more
than six months;
• no award may be granted to an individual in any fi nancial year
over shares worth more than three times salary;
• there are three performance conditions, one based on absolute
growth in the Group’s net asset value per share, one based on
the gross (ungeared) total property return per share relative to
other property funds as determined by IPD and one based on
relative total shareholder return; and,
• performance conditions for the awards to be granted in 2016
will, subject to shareholder approval, be measured over the
three years following grant as follows.
Growth in net asset value
The “fully diluted triple net” net asset value as at the start of the fi nancial
year in which a grant takes place will be compared to the value three years
later (having added back dividends and changes in issued share capital):
Annual compound increase after
three years
15% p.a. or more
3 year
% of award vesting
33.3
Between 7.5% p.a. and 15% p.a. Pro rata between 3.3 and 33.3
7.5% p.a.
Below 7.5% p.a.
3.3
Zero
If uK infl ation (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.
Total property return versus IPD property funds
Ranking after three years
% of award vesting
upper quartile or above
Between median and
upper quartile
Median
Less than median
Pro rata between 3.3 and 33.3
33.3
3.3
Zero
The comparator group for the awards to be granted in 2016 will
be the companies included in the FTSE 350 Super Sector Real
Estate Index, excluding storage companies and agencies.
Share awards will lapse in full where:
• net asset value per share (having added back dividends) does
not increase over the three year performance period; or
• the gross return falls below the IPD median, the growth in triple
net asset value is below 7.5% per annum and relative TSR is
below median over the three year period.
TOTAL SHAREHOLDER RETURN AND CHIEF
EXECUTIVE’S REMUNERATION
The total shareholder returns for a holding in the Group’s shares in
the three, seven and ten years to 31 March 2016 compared to a
holding in the FTSE 350 Super-sector Real Estate Index are
shown in the graphs below. This index has been chosen because it
includes the majority of listed real estate companies.
Three years to 31 March 2016
The graph showing the relative performance of Helical during the
three years to 31 March 2016 matches the performance period for
the 2004 PSP Award granted on 24 June 2013 and which will vest
after 25 June 2016. The graph shows that Helical outperformed
the benchmark index during this period.
Total shareholder return
Source: Datastream (Thomson Reuters)
Helical
FTSE 350 Supersector Real Estate Index
)
d
e
s
a
b
e
R
(
n
r
u
t
e
R
r
e
d
o
h
e
r
a
h
S
l
l
a
t
o
T
200
180
160
140
120
100
80
60
40
20
0
Mar-13
Mar-14
Mar-15
Mar-16
This graph shows the value, by 31 March 2016, of £100 invested in
7 year
Helical Bar on 31 March 2013, compared with the value of £100
invested in the FTSE 350 Super-sector Real Estate Index.
Total shareholder return
Source: Datastream (Thomson Reuters)
Helical
FTSE 350 Supersector Real Estate Index
)
d
e
s
a
b
e
R
(
n
r
u
t
e
R
r
e
d
o
h
e
r
l
a
h
S
l
a
t
o
T
350
300
250
200
150
100
50
0
)
d
e
s
a
b
e
R
(
n
r
u
t
e
R
r
e
d
l
o
h
e
r
a
h
S
l
a
t
o
T
140
120
100
80
60
40
20
0
Mar 09
Mar 10
Mar 11
Mar 12
Mar 13
Mar 14
Mar 15
Mar 16
Total shareholder return
Source: Datastream (Thomson Reuters)
Helical
FTSE 350 Supersector Real Estate Index
Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16
of £100 invested in the FTSE 350 Supersector Real Estate Index.
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2013, compared with the value
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2009, compared with the value
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2006, compared with the value
461
385
313
250
264
2012
2013
2014
2015
2016
Helical
IPD Upper Quantile
IPD Median
23.8
15.6
13.4
20.4
19.7
17.5
21.7
13.0
11.4
2014
2015
2016
Pence
per share
500
450
400
350
300
250
200
150
100
50
0
%
25
20
15
10
5
0
0 2,250
0
0
£
3,750
3,500
3,250
3,000
2,750
2,500
2,000
1,750
1,500
1,250
1,000
750
500
250
0
Basic salary & benefits
Bonus
PSP
42%
42%
37%
37%
26%
16%
49%
33%
18%
42%
28%
30%
42%
42%
37%
37%
42%
42%
37%
37%
26%
16%
26%
16%
Minimum Target Maximum
Minimum Target Maximum
Minimum Target Maximum
Minimum Target Maximum
GERALD KAYE
TIM MURPHY
MATTHEW BONNING-SNOOK
DUNCAN WALKER
3 year
)
d
e
s
a
b
e
R
(
n
r
u
t
e
R
r
e
l
d
o
h
e
r
a
h
S
l
a
t
o
T
200
180
160
140
120
100
80
60
40
20
0
Mar-13
100
HELICAL BAR PLC REPORT & ACCOUNTS 2016
Mar-14
Mar-15
Mar-16
Total shareholder return
Source: Datastream (Thomson Reuters)
Helical
FTSE 350 Supersector Real Estate Index
3 year
DIRECTORS’ REMuNERATION REPORT
ANNuAL REPORT ON REMuNERATION
7 year
Total shareholder return
Source: Datastream (Thomson Reuters)
Helical
FTSE 350 Supersector Real Estate Index
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2013, compared with the value
350
300
250
200
150
100
50
)
d
e
s
a
b
e
R
(
n
r
u
t
e
R
r
e
d
o
h
e
r
a
h
S
l
l
a
t
o
T
Total shareholder return
Source: Datastream (Thomson Reuters)
Helical
FTSE 350 Supersector Real Estate Index
200
l
80
120
180
160
140
100
)
d
e
s
a
b
e
R
Seven years to 31 March 2016
(
n
r
u
The base position at 31 March 2009, from which subsequent
t
e
R
performance is measured as required by the Regulations, is the
r
e
d
nearest accounting period end to the bottom of the property
o
h
cycle. Helical’s share price at that date was 287.50 per share, a
e
r
a
small premium to the EPRA net asset value per share of 286.00
h
S
pence per share. The Company’s share price, at that stage, had
a
t
o
not fallen as much as the average of the FTSE 350 Super-Sector
T
Real Estate Index and remained at a premium until 2012. The
subsequent performance of the Company’s TSR refl ects the
relatively higher base position of Helical’s share price.
7 year
0
Mar-13
Mar-14
Mar-15
40
60
20
l
Total shareholder return
Source: Datastream (Thomson Reuters)
Helical
FTSE 350 Supersector Real Estate Index
Mar-16
)
d
e
s
a
b
e
R
(
n
r
u
t
e
R
r
e
d
o
h
e
r
a
h
S
l
l
a
t
o
T
350
300
250
200
150
100
50
0
Mar 09
Mar 11
0
Mar 09
Ten years to 31 March 2016
Mar 10
The ten years to 31 March 2016 covers the end of the previous
property cycle, the impact of the Financial Crisis of 2008 and the
subsequent economic recovery. The graph below shows that
Helical’s share price remained at a premium until 2012, following
which it fell to a low of 164p before recovering.
Mar 14
Mar 13
Mar 15
Mar 12
Mar 16
Total shareholder return
Source: Datastream (Thomson Reuters)
Helical
FTSE 350 Supersector Real Estate Index
)
d
e
s
a
b
e
R
(
n
r
u
t
e
R
r
e
d
o
h
e
r
a
h
S
l
l
a
t
o
T
140
120
100
80
60
40
20
0
Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16
Mar 10
Mar 11
Mar 12
Mar 13
Mar 14
Mar 15
Mar 16
of £100 invested in the FTSE 350 Supersector Real Estate Index.
This graph shows the value, by 31 March 2016, 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.
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2013, compared with the value
This graph shows the value, by 31 March 2016, of £100 invested in
Helical Bar on 31 March 2009, compared with the value of £100
invested in the FTSE 350 Super-Sector Real Estate Index.
REMUNERATION OF THE CHIEF EXECUTIVE
Total shareholder return
Source: Datastream (Thomson Reuters)
120
140
100
Helical
FTSE 350 Supersector Real Estate Index
Comparing the seven year TSR of the Company, as noted above, to the remuneration of the Chief Executive, the table below presents
single fi gure remuneration for the Chief Executive over the period, since 31 March 2009, together with past annual bonus payouts and
the vesting of long term incentive share awards. There is a clear alignment between the TSR performance of the Company and the levels
)
d
e
of total remuneration paid to the Chief Executive.
s
a
b
e
R
(
n
r
u
t
80
e
R
Year ended
r
e
60
d
31 March 2016
o
h
e
r
31 March 2015
a
h
S
31 March 2014
a
t
o
T
31 March 2013
Annual Bonus
(% of max
payout)
Total
Remuneration
£000
LTIP
(% of max
vesting)
Michael Slade
Michael Slade
Michael Slade
Michael Slade
5,534
3,343
4,529
1,523
Name
100
100
100
100
100
65
62
40
20
-
l
l
0
Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16
31 March 2012
of £100 invested in the FTSE 350 Supersector Real Estate Index.
31 March 2011
31 March 2010
Michael Slade
Michael Slade
Michael Slade
541
538
1,500*
-
-
-
-
-
-
*The total remuneration in the year to 31 March 2010 includes £973,000 in respect of share options granted in 2000 and eligible to vest between 2005
and 2010.
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2009, compared with the value
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2009, compared with the value
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2006, compared with the value
This graph shows the value, by 31 March 2016, of £100 invested in Helical Bar on 31 March 2006, compared with the value
461
385
313
250
264
2012
2013
2014
2015
2016
Helical
IPD Upper Quantile
IPD Median
23.8
15.6
13.4
20.4
19.7
17.5
21.7
13.0
11.4
2014
2015
2016
Pence
per share
500
450
400
350
300
250
200
150
100
50
0
%
25
20
15
10
5
0
0 2,250
0
0
£
3,750
3,500
3,250
3,000
2,750
2,500
2,000
1,750
1,500
1,250
1,000
750
500
250
0
Basic salary & benefits
Bonus
PSP
42%
42%
37%
37%
26%
16%
49%
33%
18%
42%
28%
30%
42%
42%
37%
37%
42%
42%
37%
37%
26%
16%
26%
16%
Minimum Target Maximum
Minimum Target Maximum
Minimum Target Maximum
Minimum Target Maximum
GERALD KAYE
TIM MURPHY
MATTHEW BONNING-SNOOK
DUNCAN WALKER
Basic salary & benefits
Bonus
PSP
461
385
313
250
264
2012
2013
2014
2015
2016
Helical
IPD Upper Quantile
IPD Median
23.8
15.6
13.4
20.4
19.7
17.5
21.7
13.0
11.4
2014
2015
2016
Pence
per share
500
450
400
350
300
250
200
150
100
50
0
%
25
20
15
10
5
0
0 2,250
0
0
£
3,750
3,500
3,250
3,000
2,750
2,500
2,000
1,750
1,500
1,250
1,000
750
500
250
0
42%
42%
37%
37%
26%
16%
49%
33%
18%
42%
28%
30%
42%
42%
37%
37%
42%
42%
37%
37%
26%
16%
26%
16%
Minimum Target Maximum
Minimum Target Maximum
Minimum Target Maximum
Minimum Target Maximum
GERALD KAYE
TIM MURPHY
MATTHEW BONNING-SNOOK
DUNCAN WALKER
HELICAL BAR PLC REPORT & ACCOUNTS 2016
GOVERNANCE
101
DIRECTORS’ REMuNERATION REPORT
ANNuAL REPORT ON REMuNERATION
CHIEF EXECUTIVE’S REMUNERATION COMPARED TO REMUNERATION OF HELICAL EMPLOYEES
PERCENTAGE INCREASES IN CHIEF EXECUTIVE REMUNERATION
Chief Executive
Salary
Benefi ts
Annual bonus
Relative importance of the spend on pay
Staff costs
Distributions to shareholders1
Net asset value of the Group
1 In respect of the fi nancial year to which they relate.
2016
£000
533
42
1,500
2015
£000
523
43
1,500
2016
£000
Average
change for
Helical
employee
%
7
1
110
Change
%
2
(2)
-
2015
£000
Changes
%
15,622
9,361
16,101
8,305
486,189
404,363
(3)
13
20
DIRECTORS’ SHARE INTERESTS AND SHAREHOLDING GUIDELINES
Michael Slade
Gerald Kaye
Tim Murphy
Matthew Bonning-Snook
Duncan Walker
1 Salaries as at 31 March 2016.
Shareholding
Requirement
£
Value of
Benefi cially
Held Shares2
£
Ratio of Shares
Held to
Requirement
%
1,071,600
50,547,000
4,717
827,800
572,200
765,000
649,200
4,283,000
1,425,000
1,712,000
1,257,000
517
249
224
194
Salary1
£
535,800
413,900
286,100
382,500
324,600
2 value as per the weighted average share price for the three months to 31 March 2016 of 398.75p.
102
DIRECTORS’ REMuNERATION REPORT
ANNuAL REPORT ON REMuNERATION
DIRECTORS’ SHAREHOLDINGS
Legally
owned
31.3.15
Legally
owned
31.3.16
Deferred
shares
All-employee
restricted
All-employee
unrestricted
Total
31.3.16
PSP
awards
unvested
Executive Directors
Michael Slade
12,648,820
12,649,357
Tim Murphy
Gerald Kaye
152,257
351,600
1,046,753
1,047,722
Matthew Bonning - Snook
118,034
Duncan Walker
67,145
402,809
304,458
Non-Executive Directors
Nigel McNair Scott
2,620,941
2,777,433
Andrew Gulliford
Richard Gillingwater
Richard Grant
Michael O’Donnell
Susan Clayton
Richard Cotton
14,328
11,500
15,000
62,000
-
-
14,328
11,500
15,000
62,000
-
-
The information in this table has been audited.
-
6,731
305,658
291,507
187,605
15,449
16,606
16,268
15,728
14,268
26,943
12,691,749
1,430,793
5,690
26,436
26,553
10,740
373,896
743,104
1,090,426
1,105,296
445,090
329,466
962,409
801,733
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,777,433
14,328
11,500
15,000
62,000
-
-
-
-
-
-
-
-
-
SHAREHOLDER VOTING AT THE LAST AGM
At the 2015 AGM the Annual Statement and Annual Report on Remuneration received the following votes from shareholders:
For
Against
Total votes cast (for and against)
votes withheld
Total votes cast (including withheld votes)
Report Total
Number of
Votes % of Votes Cast
89,087,021
7,333,603
96,420,624
5,543,231
101,963,855
92%
8%
100%
-
-
The Committee was pleased to note the level of shareholder support for the 2015 Annual Statement and Annual Report on Remuneration.
SHARE PRICE
The market price of the ordinary shares at 31 March 2016 was 386.00p (2015: 394.25p). This market price varied between 365.00p and
474.75p during the year.
Approved by the Board on 15 June 2016 and signed on its behalf.
Michael O’Donnell
Chairman of the Remuneration Committee
HELICAL BAR PLC REPORT & ACCOUNTS 2016 REPORT OF THE DIRECTORS
103
STRATEGIC REPORT
A review of the Company’s business during the year, the principal
risks and uncertainties facing the Group and future prospects and
developments are included in the Chairman’s Review on page 71,
the Chief Executive’s statement on pages 14 to 17, the Strategic
Report on pages 1 to 68 and the Principal Risks report on pages
58 to 61, which should be read in conjunction with this report.
RESULTS AND DIVIDENDS
The results for the year are set out in the Consolidated Income
Statement on page 112 and Consolidated Statement of
Comprehensive Income on page 112. An interim dividend of 2.30p
(2015: 2.10p) was paid on 30 December 2015 to shareholders on
the shareholder register on 4 December 2015. A second interim
dividend of 5.15p was paid on 4 April 2016 to shareholders on the
shareholder register on 11 March 2016. A final dividend of 0.72p
(2015: 5.15p) per share is recommended for approval at the Annual
General Meeting (“AGM”) to be held on 25 July 2016 and, if
approved, will be paid on the 29 July 2016 to shareholders on the
register on 1 July 2016. The total ordinary dividend paid or
declared in the year of 12.60p (2015: 6.85p) per share, including
the second interim dividend paid on 4 April 2016, amounts to
£14,437,000 (2014: £7,944,000).
DIRECTORS
The Directors who held office during the year and up to the date
of this report are listed below:
Age
Date of
appointment
Title
Chairman
Nigel McNair Scott
Executive Directors
Michael Slade
Gerald Kaye
Tim Murphy
Matthew Bonning-Snook
Duncan Walker
Non-Executive Directors
Susan Clayton
Richard Cotton
Richard Gillingwater
Richard Grant
Andrew Gulliford
Michael O’Donnell
70
69
58
56
48
37
58
60
59
62
69
49
December 1985
Chairman
August 1984
Chief Executive/Chairman Designate
September 1994
Chief Executive Designate
July 2012
Finance Director
August 2007
Executive Director
June 2011
Executive Director
February 2016
Non-Executive Director, Chairman valuations Committee
March 2016
Non-Executive Director
July 2012
July 2012
Non-Executive Director, Senior Independent Director
Non-Executive Director, Chairman Audit Committee
March 2006
Non-Executive Director
June 2011
Non-Executive Director, Chairman Remuneration Committee
Details of the Directors’ interests in the ordinary shares of the
Company are shown on page 102.
Biographical details of all Directors are shown on pages 74 and 75.
With the exception of Nigel McNair Scott and Andrew Gulliford,
who retire at the AGM, all the Directors will offer themselves for
election or re-election at the AGM to be held on 25 July 2016. Details
of Directors’ remuneration and their interests in share awards are
set out in the Directors’ Remuneration Report on pages 83 to 102.
CORPORATE GOVERNANCE
The Group’s corporate governance policies, compliance with the
uK Corporate Governance Code and Going Concern statement
are set out on pages 76 to 78.
DIRECTORS’ CONFLICT OF INTEREST
under the Companies Act 2006 (the “Act”), Directors are subject
to a statutory duty to avoid a situation where they have, or can
have, a direct or indirect interest that conflicts, or may possibly
conflict, with the interests of the Company. As is permissible
under the Act, the Company’s Articles of Association allow the
Board to consider, and if it sees fit, to authorise situations where a
Director has an interest that conflicts, or may possibly conflict,
with the interests of the Company. Directors are required to notify
the Company of any conflict or potential conflict of interest under
an established procedure and any conflicts or potential conflicts
are noted at each Board meeting.
DIRECTORS’ LIABILITY INSURANCE AND INDEMNITY
The Company maintains Directors and Officers Liability Insurance.
To the extent permitted by uK Law, the Company also indemnifies
the Directors against claims made against them as a consequence
of the execution of their duties as directors of the Company.
POLITICAL DONATIONS
The Company’s policy with regard to political donations is to
ensure that shareholder approval is sought before making any
such payments. No shareholder approval has been sought and,
accordingly, the Company made no political donations in the year
to 31 March 2016.
FINANCIAL INSTRUMENTS, CAPITALISED INTEREST
AND LONG TERM INCENTIVE SCHEMES
The information required in respect of financial instruments, as
required by Schedule 7 of the Large and Medium Sized
Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013 is shown in note 36.
Interest capitalised on the Group property portfolio is shown in
notes 15 and 20. Long term incentive schemes are explained in the
Directors’ Remuneration Report on pages 83 to 102.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE 104
REPORT OF THE DIRECTORS
CHANGE OF CONTROL
Certain agreements between the Company or its subsidiaries and
entities including lending banks, joint venture partners and
development partners contain termination rights to take effect in
the event of a change of control of the Group. Given the
commercial sensitivity of these agreements, the Directors do not
intend to disclose specific details.
The Company’s Employee Share Incentive Plan, Annual Bonus
Scheme and Performance Share Plan contain provisions relating
to the vesting and exercise of options or share awards in the event
of a change of control of the Company.
Further to the issue on 24 June 2013 of £80 million 6.00% bonds
due in 2020 (the “Bonds”), upon a change of control event as
defined by the terms and conditions of the Bonds, the
bondholders will have the option to require the Company to
redeem or, at the Company’s option, purchase the Bonds at their
nominal amount together with accrued interest.
Similarly, if a change of control event occurs, the holders of the
Convertible Bonds of £100m, issued on 17 June 2014 at 4.00% and
due for redemption in June 2019, have the right to require the
issuer to redeem the Convertible Bonds at their principal amount
and accrued interest.
EMPLOYMENT AND ENVIRONMENTAL MATTERS
Information in respect of the Group’s employment and
environmental matters and greenhouse gas reporting is contained
in the Corporate Responsibility Report on pages 63 to 68.
POST BALANCE SHEET EVENTS
There were no material post balance sheet events.
GROUP STRUCTURE
Details of the Group’s subsidiary undertakings are disclosed in note
39 to the Financial Statements.
SHARE CAPITAL
Details of the Company’s issued share capital are shown in note 28
to the Financial Statements. The Company’s share capital consists
of both ordinary shares and deferred shares. Each class of shares
rank pari passu between themselves. There are no restrictions on
the transfer of shares in the Company other than those specified
by law or regulation (for example: insider trading laws) and
pursuant to the Listing Rules of the Financial Conduct 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 2016 Annual General Meeting (AGM) specifies
deadlines for exercising voting rights and appointing a proxy or
proxies to vote in relation to resolutions to be passed at the
meeting. There are no restrictions on voting rights other than as
specified by the Company’s Articles of Association.
PURCHASE OF OWN SHARES
The Company was granted authority at the 2015 Annual General
Meeting to make market purchases of its own ordinary shares. No
ordinary shares were purchased under this authority during the
year and up to the date of this report. The authority will expire at
the conclusion of the 2016 AGM, at which a resolution will be
proposed to renew this authority.
SUBSTANTIAL SHAREHOLDINGS
As at 1 June 2016, 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 E Slade
Aberdeen Group
Old Mutual
Baillie Gifford & Co
Blackrock Inc.
Investec Group
Aviva plc
Dimensional Fund Advisors
Number of
ordinary shares
at 31 May 2016
%
12,649,357
10.7%
10,496,503
7,345,029
7,342,611
6,460,753
5,332,915
5,453,294
4,719,268
8.8%
7.1%
6.0%
5.3%
4.7%
4.6%
3.8%
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.
ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held on 25
July 2016 at 11.30 a.m. at The Connaught, Carlos Place, Mayfair,
London W1K 2AL. The special business at the 2016 AGM will
include resolutions dealing with the authority to issue shares, the
disapplication of pre-emption rights, the authority for the
Company to purchase its own shares, the authority to call general
meetings on not less than 14 clear days’ notice and the approval
of the Annual Bonus Scheme 2016. The notice of meeting,
containing explanations of all the resolutions to be proposed at
that meeting, is enclosed with this Annual Report and can be
found on the Group’s website at www.helical.co.uk.
AUDITORS
The Group’s auditors, Grant Thornton uK LLP, have expressed
their willingness to continue in office and resolutions to reappoint
them and to authorise the Directors to determine their
remuneration will be proposed at the AGM.
DISCLOSURE OF INFORMATION TO AUDITORS
The Directors who held office at the date of approval of this
Directors’ report confirm that, so far as they are aware, there is no
relevant audit information of which the Company’s auditors are
unaware, and each Director has taken all the steps that he ought
to have taken as a Director to make himself aware of any relevant
information and to establish that the Company’s auditors are
aware of that information.
By order of the Board
James Moss ACA
Company Secretary
15 June 2016
HELICAL BAR PLC REPORT & ACCOUNTS 2016
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
105
The Directors are responsible for
preparing the Strategic Report, Annual
Report, the Remuneration 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 the financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted
by the European Union. 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 and profit or loss of the Company and 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 accounting 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; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and enable them to ensure
that the financial statements and the Remuneration Report
comply with the Companies Act 2006 and Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors confirm that:
• so far as each Director is aware, there is no relevant audit
information of which the company’s auditor is unaware; and
• the Directors have taken all the steps that they ought to have
taken as directors in order to make themselves aware of any
relevant audit information and to establish that the auditors are
aware of that information.
The Directors consider the Annual Report and the financial
statements, taken as a whole, provides the information necessary to
assess the Company’s performance, business model and strategy
and is fair, balanced and understandable.
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.
We confirm to the best of our knowledge:
• the Group financial statements, prepared in accordance with
IFRSs as adopted by the European union, give a true and fair
view of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
• the Annual Report including the Strategic Report, includes a fair
review of the development and performance of the business and
the position of the Company and the undertakings included in
the consolidation taken as a whole, together with a description
of the principal risks and uncertainties that they face.
Michael Slade
Chief Executive
Tim Murphy
Finance Director
15 June 2016
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE 106
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF HELICAL BAR PLC
OUR OPINION ON THE FINANCIAL STATEMENTS IS
UNMODIFIED
In our opinion:
• the financial statements give a true and fair view of the
state of the Group’s and of the Parent Company’s affairs
as at 31 March 2016 and of the Group’s profit for the year
then ended;
• the Group financial statements have been properly
prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the
European Union;
• the Parent Company financial statements have been
properly prepared in accordance with IFRSs as adopted
by the European Union and as applied in accordance
with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006 and,
as regards the Group financial statements, Article 4 of
the IAS Regulation.
WHO WE ARE REPORTING TO
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.
WHAT WE HAVE AUDITED
Helical Bar plc’s financial statements comprise the Consolidated
Income Statement, the Consolidated Statement of Comprehensive
Income, the Consolidated and Company Balance Sheets, the
Consolidated and Company Cash Flow Statements, the Consolidated
and Company Statements of Changes in Equity and the related notes.
The financial reporting framework that has been applied in their
preparation is applicable law and 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.
OVERVIEW OF OUR AUDIT APPROACH
• Overall group materiality: £4.858 million which represents
approximately 1% of the Group’s net assets;
• We performed full scope audit procedures at all material
locations; and
• Key audit risks were identified as revenue recognition;
investment property valuation; carrying value of land,
development and trading properties and the disclosures made
in respect of unrecognised development surpluses; and
employee remuneration, including charges in respect of the
Performance Share Plan and Bonuses.
OUR ASSESSMENT OF RISK
In arriving at our opinions set out in this report, we highlight the
following risks that, in our judgement, had the greatest effect on
our audit.
Audit risk
How we responded to the risk
REVENUE RECOGNITION
The risk: The revenue cycle includes
fraudulent transactions.
under International Standards on
Auditing (uK and Ireland) 240 there
is a presumed risk that revenue may
be misstated owing to the improper
recognition of revenue. The Group has
complex contracts for which the timing
and quantum of revenue recognition
require the exercise of management
judgement.
Dependent upon the nature of the
contract, this risk applies to development
property profit, share of results of
joint ventures and net gain on sale and
revaluation of investment properties.
We therefore identified revenue
recognition as a risk requiring special
audit consideration.
Our work included, but was not limited to:
• evaluating the Group’s revenue recognition policies to confirm that they comply with
International Financial Reporting Standards and have been applied consistently;
• testing property sales, and on a sample basis residential units in retirement villages,
to contracts, completion statements and proceeds received;
• agreeing, on a sample basis, net rental income to managing agents’ reports and the
underlying lease agreements;
• testing development profits to the underlying contracts having regard to the stage
of completion - this included challenging development profits where the project
appraisals had changed from previous years and obtaining explanations and
supporting third-party evidence where practicable;
• assessing the challenges made by the valuations Committee where changes in
development project appraisals occurred; and
• in respect of the development contract that involved the exercise of the greatest
degree of management judgement, challenging the judgements made and
undertaking sensitivity analysis to evaluate the level of precision of the development
profit recognised; the Senior Statutory Auditor made a physical inspection of this site
and made enquiries of on-site personnel to confirm that the accounting judgements in
respect of the stage of completion aligned with the physical status of the development.
The Group’s accounting policy on revenue recognition is shown in note 38. The
components of revenue and profits are included in notes 3 to 6 and 19. The Audit
Committee also identified revenue recognition as a key area of judgement on page
81, where the Committee describes how it addressed the issue.
We were satisfied that:
• based on our audit work the judgements made, and assumptions used, by
management in determining the revenue recognised, were balanced and supported
by the evidence obtained from our testing.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 INDEPENDENT AuDITOR’S REPORT
107
Audit risk
How we responded to the risk
INVESTMENT PROPERTY VALUATION
Our work included, but was not limited to:
The risk: Investment properties are not
valued appropriately.
valuers and whether the basis of their valuations was consistent with the RICS “red
book” as required by International Accounting Standard 40;
• examining the qualifications and experience of the Group’s independent external
Investment property is held at fair value
under International Accounting Standard
40. The fair value of all of the Group’s
investment properties is determined
based on level 3 fair value inputs as
defined by International Financial
Reporting Standard 13 which means that
the inputs used in valuing investment
properties are unobservable and are
therefore subject to estimation.
We therefore identified investment
property valuation as a risk requiring
special audit consideration.
Investment properties are valued at
£1,041 million.
• discussions with the independent valuers and challenging the estimates,
assumptions and valuation methodology used;
• obtaining the information provided by management to the independent valuers to
confirm it was consistent with information obtained during our audit;
• evaluating evidence of the reliability of valuation estimations by comparing the
historical trend of investment property sales with the related carrying values;
• evaluating the challenge to valuations made by the valuations Committee; and
• comparing, on a sample basis, valuation yields used in preparing valuations with
yields for comparable properties published in the CBRE Monthly Index.
The Group’s accounting policy on investment properties is shown in note 38.
Disclosures on investment properties are set out in note 15. Disclosures in respect of
investment properties held by joint ventures are set out in note 19. The Audit Committee
also identified the valuation of the Group’s investment property as a key area of
judgement on page 81, where the Committee describes how it addressed the issue.
We were satisfied that:
• investment property valuations were made by suitably qualified and experienced
independent valuations experts and subject to challenge by the valuations Committee;
• the judgements made, and assumptions used, in determining the investment
property valuations were balanced and supported by the evidence obtained from
our testing; and
• for the sample of properties selected, yields used by management and the
independent valuers were consistent with or more prudent than those published in
the CBRE Monthly Index, but not to a significant extent.
Our work included, but was not limited to:
• assessing the qualifications and experience of the Group’s internal and external,
independent valuers and whether the basis of their valuations was consistent with
the Group’s accounting policy as required by International Accounting Standard 2;
• challenging the estimates, assumptions and valuation methodology used by
management; this included challenging development profits where project
appraisals had changed from previous years and obtaining explanations and
supporting third-party evidence where practicable;
• discussing with the independent valuers the basis of management’s valuations of all
properties in excess of £2m; and
• evaluating the challenge to valuation made by the valuations Committee.
The Group’s accounting policy on land, development and trading properties is shown
in note 38. Disclosures on investment properties are set out in note 20. Disclosures
in respect of land, trading and development properties held by joint ventures are
set out in note 19. The Audit Committee also identified the valuation of the land,
development and trading properties as a key area of judgement on page 81, where
the Committee describes how it addressed the issue.
We were satisfied that:
• land, development and trading property valuations, and disclosures in respect
of unrecognised surpluses, were made by suitably qualified and experienced
management personnel and subject to challenge by the valuations Committee and
by suitably qualified and experienced independent valuations experts; and
• the judgements made, and assumptions used, by management in determining
the land and development and trading property valuations were balanced and
supported by the evidence obtained from our testing.
CARRYING VALUE OF LAND,
DEVELOPMENT AND TRADING
PROPERTIES AND THE DISCLOSURES
MADE IN RESPECT OF UNRECOGNISED
DEVELOPMENT SURPLUSES
The risk: Land, developments and trading
properties are inventory and are included
in the Balance Sheet at the lower of cost
and net realisable value in accordance
with International Accounting Standard
2. The notes include disclosures about
Directors’ valuations of unrecognised
surpluses in these properties and those
valuations impact certain non-statutory
key performance indicators disclosed by
the Group (eg “EPRA” net asset values).
These unrecognised surpluses (and net
realisable value assessments) are based
upon estimation methodologies used by
management.
We therefore identified the carrying
value of land, development and trading
properties and the disclosures made
in respect of unrecognised property
development surpluses as a risk requiring
special audit consideration.
Land, development and trading
properties are carried in the balance sheet
at £92 million.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE
108
INDEPENDENT AuDITOR’S REPORT
Audit risk
How we responded to the risk
EMPLOYEE REMUNERATION,
INCLUDING CHARGES IN RESPECT OF
THE PERFORMANCE SHARE PLAN AND
BONUSES
The risk: The Group operates three
Directors’ bonus and share plans, being
the Executive Bonus Plan 2011, the
Helical Bar Annual Bonus Scheme 2012
and the Performance Share Plan (“PSP”).
Determining the charge in respect of
the PSP in accordance with International
Financial Reporting Standard 2 involves
complex calculations and elements of
management judgement. The key inputs
to the bonus calculations are the results
of the Group and the performance of the
property portfolio, the latter of which is
considered to be an area of significant
management judgement and estimation.
We therefore identified employee
remuneration, including charges in
respect of the Performance Share Plan
and Bonuses as a risk requiring special
audit consideration.
Our work included, but was not limited to:
• confirming that calculation methodologies adopted are in accordance with the
Schemes’ rules;
• challenging the fair value assumptions in respect of options at the grant date
by reference to independent valuations commissioned by management and an
independent assessment by our own share valuation experts;
• challenging management judgements over key inputs into the bonus calculations
and PSP charge, including assumptions with regard to future vesting;
• meeting with the Chairman of the Remuneration Committee to evaluate areas of
management judgement; and
• confirming that Directors salaries, as set out in the Directors’ Remuneration
Report, have been approved.
The Group’s accounting policy in respect of share based payments is shown in note
38. Disclosures in respect of Employee and Directors’ Remuneration are set out in
note 8 and the Directors’ Remuneration Report on pages 83 to 102.
We were satisfied that:
• Directors’ salaries were approved;
• bonus calculations were made in accordance with the Schemes’ rules; and
• the judgement made by management in respect of the Helical Bar Annual Bonus
Scheme 2012 accrual included in the income statement and balance sheet was
calculated around the mid-point of likely outcomes. This judgement did not affect
the Directors’ emoluments set out in the Directors’ Remuneration Report.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 INDEPENDENT AuDITOR’S REPORT
109
OUR APPLICATION OF MATERIALITY AND AN
OVERVIEW OF THE SCOPE OF OUR AUDIT
MATERIALITY
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be
changed or influenced. We use materiality in determining the
nature, timing and extent of our audit work and in evaluating the
results of that work.
We determined materiality for the audit of the Group financial
statements as a whole to be £4.858 million, which is
approximately 1% of net assets. In determining this level of
materiality we had regard to the Group’s status as a listed entity.
This benchmark is considered the most appropriate because this
is a key performance measure used by the Board of Directors to
report to shareholders on the financial position of the Group, as
well as being generally regarded by investors in the property
sector as a key performance indicator.
Materiality for the current year is at the same percentage of net
assets as we determined for the year ended 31 March 2015 as we
had not identified any reason for users of the accounts to change
their view of the appropriate level of materiality.
We use a different level of materiality, performance materiality, to
drive the extent of our testing and this was set at 75% of financial
statement materiality for the audit of the Group financial
statements. We also determine a lower level of specific materiality
for certain areas such as Directors’ remuneration and related party
transactions.
We determined the threshold at which we will communicate
misstatements to the Audit Committee to be £242,000. In
addition we communicate misstatements below that threshold
that, in our view, warrant reporting on qualitative grounds.
OVERVIEW OF THE SCOPE OF OUR AUDIT
A description of the generic scope of an audit of financial
statements is provided on the Financial Reporting Council’s
website at www.frc.org.uk/auditscopeprivate.
We conducted our audit in accordance with International
Standards on Auditing (uK and Ireland). Our responsibilities under
those standards are further described in the ‘Responsibilities for
the financial statements and the audit’ section of our report. We
believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with the Auditing
Practices Board’s Ethical Standards for Auditors, and we have
fulfilled our other ethical responsibilities in accordance with those
Ethical Standards.
Our audit approach was based on a thorough understanding of
the Group’s business and is risk-based. The Group’s properties are
spread across 134 wholly owned statutory entities and the Group’s
21 joint ventures. The components of the Group were evaluated by
the group audit team based on a measure of materiality,
considering each as a percentage of total Group assets, revenues
and profit before tax, to assess the significance of each
component and to determine the planned audit response. For
those components that were deemed significant either a full
scope or targeted audit approach was determined based on their
relative materiality to the Group and our assessment of audit risk.
For significant components requiring a full scope approach we
evaluated controls over the financial reporting systems identified
as part of our risk assessment, reviewed the accounts production
process and addressed critical accounting matters.
In order to address the audit risks described above, as identified
during our planning procedures, we performed a full scope audit
of the consolidated financial statements of the Parent Company,
Helical Bar plc, and of the financial information of the Group’s
operations throughout the united Kingdom. Statutory audits of
subsidiaries are performed to lower materiality where applicable.
The components that were subject to full scope audit procedures
make up 94% of the Group’s net assets at the balance sheet date,
100% of the Group’s revenue for the year and 58% of the Group’s
profit before tax for the year. In total our full scope and targeted
procedures covered 100% of the Group’s net assets at the balance
sheet date, 100% of the Group’s revenue for the year and 100% of
the Group’s profit before tax for the year.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 GOVERNANCE 110
INDEPENDENT AuDITOR’S REPORT
OTHER REPORTING REQUIRED BY REGULATIONS
OUR OPINION ON OTHER MATTERS PRESCRIBED BY
THE COMPANIES ACT 2006 IS UNMODIFIED
In our opinion:
• the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with
the Companies Act 2006; and
• the information given in the Strategic Report and Report
of the Directors for the financial year for which the
financial statements are prepared is consistent with the
financial statements.
MATTERS ON WHICH WE ARE REQUIRED TO
REPORT BY EXCEPTION
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
• adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the Parent Company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law
are not made; or
• we have not received all the information and explanations we
require for our audit.
Under the Listing Rules, we are required to review:
• the Directors’ statements in relation to going concern and
longer-term viability set out on pages 61 and 77; and
• the part of the Corporate Governance Statement relating to the
company’s compliance with the provisions of the uK Corporate
Governance Code specified for our review.
Under the International Standards on Auditing (UK and Ireland)
we are required to report to you if, in our opinion, information in
the annual report is:
• materially inconsistent with the information in the audited
financial statements; or
• apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the Group acquired in the
course of performing our audit; or
• otherwise misleading.
We also confirm that we do not have anything material to add or
to draw attention to in relation to:
• the Directors’ confirmation in the annual report that they have
carried out a robust assessment of the principal risks facing the
Group including those that would threaten its business model,
future performance, solvency or liquidity;
• the disclosures in the annual report that describe those risks
and explain how they are being managed or mitigated;
• the Directors’ statement in the financial statements about
whether they have considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the Group’s ability
to continue to do so over a period of at least twelve months
from the date of approval of the financial statements; and
• the Directors’ explanation in the annual report as to how they
have assessed the prospects of the Group, over what period
they have done so and why they consider that period to be
appropriate, and their statement as to whether they have a
reasonable expectation that the Group will be able to continue
in operation and meet its liabilities as they fall due over the
period of their assessment, including any related disclosures
drawing attention to any necessary qualifications or
assumptions.
RESPONSIBILITIES FOR THE FINANCIAL
STATEMENTS AND THE AUDIT
What the Directors are responsible for:
As explained more fully in the Statement of Directors’
Responsibilities set out on page 105, the Directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view.
What we are responsible for:
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 Ethical Standards for Auditors.
Stephen Maslin
Senior Statutory Auditor
for and on behalf of Grant Thornton uK LLP
Statutory Auditor, Chartered Accountants
London
In particular, we are required to report to you if:
15 June 2016
• we have identified any inconsistencies between our knowledge
acquired during the audit and the Directors’ statement that
they consider the annual report is fair, balanced and
understandable; or
• the annual report does not appropriately disclose those matters
that were communicated to the Audit Committee which we
consider should have been disclosed.
We have nothing to report in respect of any of the above matters.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
HELICAL BAR PLC REPORT & ACCOUNTS 2016
111
FINANCIAL
STATEMENTS
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED AND COMPANY BALANCE SHEETS
CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY
NOTES TO THE FINANCIAL STATEMENTS
112
112
113
114
115
116
FINANCIAL STATEMENTS 112
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2016
Revenue
Net rental income
Development property profit
Trading property gain
Share of results of joint ventures
Other operating income
Gross 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 profit
Finance costs
Finance income
Change in fair value of derivative financial instruments
Change in fair value of convertible bond
Foreign exchange gains/(losses)
Profit before tax
Taxation on profit on ordinary activities
Profit after tax
- attributable to equity shareholders
- attributable to non-controlling interests
Profit for the year
Basic earnings per share
Diluted earnings per share
Year ended
31.3.16
£000
Note
2
3
4
5
19
6
22
7
9
9
36
26
10
14
14
116,500
42,164
24,252
-
50,469
20
116,905
55,893
(1,370)
171,428
(26,103)
145,325
(24,113)
5,128
(6,860)
516
100
120,096
(9,745)
110,351
110,411
(60)
110,351
96.1p
92.6p
Year ended
31.3.15
£000
106,341
34,233
15,674
2,503
27,497
368
80,275
69,384
(773)
148,886
(26,530)
122,356
(23,678)
2,480
(8,389)
(3,263)
(2,061)
87,445
(12,669)
74,776
74,489
287
74,776
64.6p
60.8p
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2016
Profit for the year
Exchange difference on retranslation of net investments in foreign operations
Total comprehensive income for the year
- attributable to equity shareholders
- attributable to non-controlling interests
Total comprehensive income for the year
Year ended
31.3.16
£000
Year ended
31.3.15
£000
110,351
(16)
110,335
110,395
(60)
110,335
74,776
149
74,925
74,638
287
74,925
The exchange differences on retranslation of net investments in foreign operations will be reclassified to the Income Statement in the future.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 CONSOLIDATED AND COMPANY
BALANCE SHEETS
AS AT 31 MARCH 2016
113
Note
Group
31.3.16
£000
Group
31.3.15
£000
Company
31.3.16
£000
Company
31.3.15
£000
Non-current assets
Investment properties
Owner occupied property, plant and equipment
Investment in subsidiaries
Investment in joint ventures
Derivative financial instruments
Trade and other receivables
Deferred tax asset
Current assets
Land, developments and trading properties
Property derivative financial asset
Available-for-sale investments
Corporate tax receivable
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Corporate tax payable
Borrowings
Non-current liabilities
Borrowings
Derivative financial instruments
Deferred tax liability
Total liabilities
Net assets
Equity
Called-up share capital
Share premium account
Revaluation reserve
Capital redemption reserve
Other reserves
Retained earnings
Equity attributable to equity holders of the parent company
Non-controlling interests
Total equity
-
2,166
68,212
15
-
-
1,334
71,727
-
-
-
-
815,721
36,225
851,946
923,673
-
2,292
36,585
15
-
-
1,233
40,125
-
-
-
1,418
777,728
13,942
793,088
833,213
1,041,100
2,200
-
27,990
-
-
-
701,521
2,361
-
71,585
1
1,555
-
1,071,290
777,023
92,578
16,388
4,342
1,418
65,216
120,993
300,935
1,077,958
92,035
-
3,114
-
73,057
74,670
242,876
1,314,166
(71,000)
(1,592)
(885)
(73,477)
15
17
18
19
36
23
11
20
21
22
23
24
25
26
26
36
11
(65,802)
(516,557)
(416,696)
-
(1,554)
(45,428)
(111,230)
-
(518,111)
-
(6,120)
(422,816)
(169,109)
(11,080)
-
(180,189)
(603,005)
(733,178)
(552,813)
(171,313)
(14,955)
(6,367)
(754,500)
(827,977)
(8,096)
(1,456)
(562,365)
(673,595)
(7,134)
-
(178,447)
(696,558)
2
486,189
404,363
227,115
230,208
28
1,447
98,798
149,766
7,478
291
228,409
486,189
-
1,447
98,798
108,060
7,478
291
188,229
404,303
60
1,447
98,798
-
7,478
1,987
117,405
227,115
-
1,447
98,798
-
7,478
1,987
120,498
230,208
-
486,189
404,363
227,115
230,208
The financial statements were approved by the Board of Directors on 15 June 2016.
Michael Slade
Director
Tim Murphy
Director
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
114
CONSOLIDATED AND COMPANY
CASH FLOW STATEMENTS
FOR THE YEAR TO 31 MARCH 2016
Cash flows from operating activities
Profit/(loss) before tax
Depreciation
Revaluation gain on investment properties
Gain on sales of investment properties
Profit on sale of plant and equipment
Net financing costs
Change in value of derivative financial instruments
Profit on forward property contract
Change in fair value of Convertible Bond
Share based payment charge
Share of results of joint ventures
Impairment of available for sale assets
Foreign exchange movement
Other non-cash items
Cash inflow from operations before changes in working capital
Change in trade and other receivables
Change in forward property contract
Change in land, developments and trading properties
Change in trade and other payables
Cash inflow/(outflow) generated from operations
Finance costs
Finance income
Tax paid
Cash flows from operating activities
Cash flows from investing activities
Purchase of investment property
Sale of investment property
Investment in subsidiaries
Investment in joint ventures
Return of investment in joint ventures
Dividends from joint ventures
Available-for-sale asset additions
Sale of plant and equipment
Purchase of leasehold improvements, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Borrowings drawn down
Shares issued
Borrowings repaid
Purchase of own shares
Equity dividends paid
Net cash generated from financing activities
Net (decrease) /increase in cash and cash equivalents
Exchange losses on cash and cash equivalents
Cash and cash equivalents at 1 April
Cash and cash equivalents at 31 March
Group
31.3.15
£000
Company
31.3.16
£000
Company
31.3.15
£000
Group
31.3.16
£000
120,096
338
(53,508)
(2,385)
-
18,985
6,860
-
(516)
6,666
87,445
544
(66,904)
(2,480)
(23)
20,806
8,389
(16,388)
3,263
6,432
(50,469)
(27,497)
1,370
250
-
47,687
(5,074)
16,388
306
5,314
64,621
(25,312)
3,915
(4,712)
(26,109)
38,512
773
2,213
-
16,573
(25,975)
-
4,125
13,162
7,885
(22,277)
2,480
(7,064)
(26,861)
(18,976)
11,286
318
-
-
-
5,639
(1,898)
-
(2,049)
-
-
-
-
-
13,296
(30,992)
-
-
99,929
82,233
(9,388)
5,815
(4,000)
(7,573)
74,660
(405,133)
121,770
(271,093)
133,209
-
-
-
-
11,495
82,569
(142)
70
(263)
-
(31,627)
(10,141)
11,778
17,013
(144)
23
(1,859)
-
-
-
-
70
(263)
(189,634)
(121,214)
(31,820)
299,754
-
375,503
120
-
-
(161,648)
(156,381)
(6,120)
(18,857)
(14,437)
104,812
(46,310)
(13)
120,993
74,670
(13,349)
(7,944)
197,949
57,759
(3)
63,237
120,993
-
(14,437)
(20,557)
22,283
-
13,942
36,225
(1,780)
517
-
-
-
6,260
3,014
-
-
-
-
-
-
(23)
7,988
(286,291)
-
-
182,976
(95,327)
(12,216)
5,157
(6,841)
(13,900)
(109,227)
-
-
(1)
-
-
-
-
23
(1,859)
(1,837)
104,200
120
(1,746)
-
(7,944)
94,630
(16,434)
-
30,376
13,942
HELICAL BAR PLC REPORT & ACCOUNTS 2016 CONSOLIDATED AND COMPANY
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR TO 31 MARCH 2016
115
Group
Share
capital
£000
Share
premium
£000
Revaluation
reserve
£000
Capital
redemption
reserve
£000
Other
reserves
£000
Retained
earnings
£000
Own
shares
held
£000
Non-
controlling
interests
£000
Total
£000
At 31 March 2014
1,447
98,678
33,106
Total comprehensive income
Revaluation surplus
Realised on disposals
Payment to minority interest
Performance share plan
Performance share plan deferred tax
Share settled bonus
New share capital issued
Dividends paid
Purchase of own shares
Own shares held reserve transfer
At 31 March 2015
Total comprehensive income
Revaluation surplus
Realised on disposals
Performance share plan
Performance share plan deferred tax
Share settled bonus
Dividends paid
Movement on foreign exchange reserve
Purchase of own shares
Own shares held reserve transfer
At 31 March 2016
-
-
-
-
-
-
-
-
-
-
-
1,447
-
-
-
-
-
-
-
-
-
-
1,447
-
-
-
-
-
-
-
120
-
-
-
98,798
-
-
-
-
-
-
-
-
-
-
98,798
-
66,904
8,050
-
-
-
-
-
-
-
-
108,060
-
53,508
(11,802)
-
-
-
-
-
-
-
149,766
7,478
-
-
-
-
-
-
-
-
-
-
-
7,478
-
-
-
-
-
-
-
-
-
-
7,478
291 200,455
(950)
22 340,527
-
-
-
-
-
-
-
-
-
-
-
74,638
(66,904)
(8,050)
-
6,432
2,477
1,424
-
(7,944)
-
-
-
-
-
-
-
-
-
-
(13,349)
(14,299) 14,299
-
291 188,229
- 110,411
(53,508)
-
11,802
-
6,666
-
(3,002)
-
-
1,121
(14,437)
-
(16)
-
-
-
-
-
-
-
-
-
-
-
-
(18,857)
(18,857) 18,857
-
291 228,409
74,925
287
-
-
-
-
(249)
(249)
6,432
-
2,477
-
1,424
-
120
-
-
(7,944)
- (13,349)
-
-
60 404,363
(60) 110,351
-
-
-
-
6,666
-
(3,002)
-
1,121
-
(14,437)
-
(16)
-
(18,857)
-
-
-
- 486,189
For a breakdown of Total Comprehensive Income, see the Consolidated Statement of Comprehensive Income.
Included within changes in equity are net transactions with owners of £28,509,000 (2015: £10,840,000) made up of: the performance
share plan charge of £6,666,000 (2015: £6,432,000) and related deferred tax of charge of £3,002,000 (2015: credit of £2,477,000),
dividends paid of £14,437,000 (2015: £7,944,000), the purchase of own shares of £18,857,000 (2015: £13,349,000), new share capital
issued of £nil (2015: £120,000) and the share settled bonuses of £1,121,000 (2015: £1,424,000).
The adjustment to retained earnings of £6,666,000 adds back the performance share plan charge (2015: £6,432,000), in accordance
with IFRS 2 Share-Based Payments.
Company
At 31 March 2014
Total comprehensive expense
Dividends paid
New share capital issued
At 31 March 2015
Total comprehensive income
Dividends paid
At 31 March 2016
Share
capital
£000
Share
premium
£000
Revaluation
reserve
£000
Capital
redemption
reserve
£000
Other
reserves
£000
Retained
earnings
£000
Total
£000
1,447
-
-
-
1,447
-
-
1,447
98,678
-
-
120
98,798
-
-
98,798
-
-
-
-
-
-
-
-
7,478
-
-
-
7,478
-
-
7,478
1,987 129,758 239,348
(1,316)
(1,316)
(7,944)
(7,944)
120
-
1,987 120,498 230,208
-
-
-
-
-
11,344
11,344
(14,437) (14,437)
1,987 117,405 227,115
Total Comprehensive Income is made up of the profit after tax of £11,344,000 (2015: loss of £1,316,000).
Included within changes in equity are net transactions with owners of £14,437,000 (2015: £7,824,000) made up of dividends paid of
£14,437,000 (2015: £7,944,000) and new share capital issued of £nil (2015: £120,000).
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/deficit 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.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS 116
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.
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, convertible bonds and derivative financial
instruments. The measurement bases and principal accounting policies of the Group are set out in note 38. These accounting policies
are consistent with those applied in the year to 31 March 2015, as amended to reflect any new Standards. Amendments to Standards and
interpretations which are mandatory for the year ended 31 March 2016 are detailed below:
Annual improvements to IFRSs 2011-2013 cycle (effective period commencing after 1 July 2014);
There has been no material impact as a result of adopting the above other than additional disclosure on the fair value measurement of
Investment Properties.
The following standards, interpretations and amendments have been issued but are not yet effective and will be adopted at the point
they are effective:
Amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (effective for periods beginning on or after 1 January 2016);
Amendments to IFRS 7 Financial Instruments: Disclosures (effective for periods beginning on or after 1 January 2016);
IFRS 9: Financial instruments (effective for periods beginning on or after 1 January 2018);
Amendments to IFRS 10 Consolidated Financial Statements regarding the application of the consolidation exception (effective for
periods beginning on or after 1 January 2016);
Amendments to IFRS 11 Joint Arrangements Accounting for acquisitions of interests in joint operations (effective for periods beginning
on or after 1 January 2016);
Amendments to IFRS 12 Disclosure of Interest in Other Entities regarding the application of the consolidation exception (effective for
periods beginning on or after 1 January 2016);
IFRS 14 Regulatory Deferral Accounts (effective for periods beginning on or after 1 January 2016);
IFRS 15 Revenue from Contracts with Customers (effective for periods beginning on or after 1 January 2018);
IFRS 16 Leases (effective for periods beginning on or after 1 January 2019);
Amendments to IAS 1 Presentation of Financial Statements (effective for periods beginning on or after 1 January 2016);
Amendments to IAS 7 Statement of Cash Flows (effective for periods beginning on or after 1 January 2017);
Amendments to IAS 12 Income Taxes (effective for periods beginning on or after 1 January 2017);
Amendments to IAS 16 Property, Plant and Equipment (effective for periods beginning on or after 1 January 2016);
Amendments to IAS 19 Employee Benefits (effective for periods beginning on or after 1 January 2016);
Amendments to IAS 27: Separate Financial Statements (effective for periods beginning on or after 1 January 2016);
Amendments to IAS 28: Investments in Associates and Joint Ventures (effective for periods beginning on or after 1 January 2016); and
Amendments to IAS 34: Interim Financial Reporting (effective for periods beginning on or after 1 January 2016).
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.
2. 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:
• Investment properties, which are owned or leased by the Group for long-term income and for capital appreciation, and Trading
properties which are owned or leased with the intention to sell; and,
• Developments, which include sites, developments in the course of construction, completed developments available for sale, pre-sold
developments and interests in third party developments.
Revenue
Rental income
Development property income
Trading property sales
Other revenue
Total revenue
Investment
and trading
Year ended
31.3.16
£000
45,158
-
-
119
45,277
Developments
Year ended
31.3.16
£000
Total
Year ended
31.3.16
£000
347
70,876
-
-
45,505
70,876
-
119
71,223
116,500
Investment
and trading
Year ended
31.3.15
£000
37,246
-
37,394
199
74,839
Developments
Year ended
31.3.15
£000
Total
Year ended
31.3.15
£000
1,086
30,416
-
-
38,332
30,416
37,394
199
31,502
106,341
All revenue is from external sales and is attributable to continuing operations. There were no inter-segmental sales.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 NOTES TO THE FINANCIAL STATEMENTS
117
2. SEGMENTAL INFORMATION CONTINUED
Revenue for the year comprises revenue from construction contracts of £nil (2015: £nil), revenue from the sale of goods of £42,910,000
(2015: £63,953,000), revenue from services of £28,085,000 (2015: £4,056,000), and rental income of £45,505,000 (2015: £38,332,000).
All revenues are within the UK other than proceeds from the sale of a development property in Poland of £12,351,000 (2015: £nil), rental
income from development properties in Poland of £347,000 (2015: £1,086,000) and £225,000 (2015: £630,000) of development income
derived from the Group’s operations in Poland.
Profit before tax
Net rental income
Development property profit
Trading property profit
Share of results of joint ventures
Gain on sale and revaluation of investment properties
Impairment of available for sale assets
Other operating income
Gross profit
Administrative expenses
Finance costs
Finance income
Change in fair value of derivative financial instruments
Change in fair value of convertible bond
Foreign exchange gains/(losses)
Profit before tax
Net assets
Investment properties
Land, developments and trading properties
Investment in joint ventures
Property derivative financial asset
Owner occupied property, plant and equipment
Derivative financial instruments
Available-for-sale investments
Trade and other receivables
Corporation tax receivable
Cash and cash equivalents
Total assets
Liabilities
Net assets
Investment
and trading
Year ended
31.3.16
£000
42,010
-
-
47,592
55,893
145,495
Developments
Year ended
31.3.16
£000
Total
Year ended
31.3.16
£000
154
24,252
-
2,877
-
42,164
24,252
-
50,469
55,893
Investment
and trading
Year ended
31.3.15
£000
33,270
-
2,503
27,398
69,384
Developments
Year ended
31.3.15
£000
Total
Year ended
31.3.15
£000
963
15,674
-
99
-
34,233
15,674
2,503
27,497
69,384
27,283
172,778
132,555
16,736
149,291
(1,370)
20
171,428
(26,103)
(24,113)
5,128
(6,860)
516
100
120,096
(773)
368
148,886
(26,530)
(23,678)
2,480
(8,389)
(3,263)
(2,061)
87,445
Investment
and trading
At 31.3.16
£000
1,041,100
28
14,162
-
Developments
At 31.3.16
£000
Total
At 31.3.16
£000
Investment
and trading
At 31.3.15
£000
Developments
At 31.3.15
£000
Total
At 31.3.15
£000
-
1,041,100
701,521
-
701,521
92,007
13,828
-
92,035
27,990
-
28
57,209
-
92,550
14,376
16,388
92,578
71,585
16,388
1,055,290
105,835 1,161,125
758,758
123,314
882,072
2,200
-
3,114
73,057
-
74,670
1,314,166
(827,977)
486,189
2,361
1
4,342
66,771
1,418
120,993
1,077,958
(673,595)
404,363
All non-current assets are derived from the Group’s UK operations except for owner occupied property, plant and equipment with a net
book value of £31,600 (2015: £69,000).
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
118
NOTES TO THE FINANCIAL STATEMENTS
3. 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
Year ended
31.3.16
£000
Year ended
31.3.15
£000
45,505
(80)
(2,728)
42,697
(533)
42,164
38,332
(269)
(3,489)
34,574
(341)
34,233
Property overheads include lettings costs, vacancy costs and bad debt provisions. The amounts above include gross rental income from
investment properties of £45,158,000 (2015: £37,246,000) and net rental income from investment properties of £42,010,000 (2015:
£33,270,000). No contingent rental income was received in the year (2015: £nil).
4. DEVELOPMENT PROPERTY PROFIT
Development property income
Profit on forward property contract
Cost of sales
Sales expenses
Provision against book values
Development property profit
5. TRADING PROPERTY GAIN
Trading property sales
Cost of sales
Sales expenses
Trading property gain
6. NET GAIN ON SALE AND REVALUATION OF INVESTMENT PROPERTIES
Net proceeds from the sale of investment properties
Book value (note 15)
Tenants incentives on sold investment properties
Gain on sale of investment properties
Revaluation surplus on investment properties
Gain on sale and revaluation of investment properties
Year ended
31.3.16
£000
Year ended
31.3.15
£000
70,876
14
(29,519)
(10,671)
(6,448)
24,252
30,416
16,388
(30,136)
(542)
(452)
15,674
Year ended
31.3.16
£000
Year ended
31.3.15
£000
-
-
-
-
37,394
(33,512)
(1,379)
2,503
Year ended
31.3.16
£000
Year ended
31.3.15
£000
122,201
(119,385)
(431)
2,385
53,508
55,893
133,782
(130,729)
(573)
2,480
66,904
69,384
HELICAL BAR PLC REPORT & ACCOUNTS 2016
NOTES TO THE FINANCIAL STATEMENTS
7. ADMINISTRATIVE EXPENSES
Administrative expenses
Operating profit is stated after the following items that are contained within administrative expenses:
Depreciation
- owner occupied property, plant and equipment
Share-based payments charge
Auditors’ remuneration:
Audit fees
- audit of parent company and consolidated financial statements
- audit of company’s subsidiaries
- audit of interim consolidated financial statements
- audit of Company’s subsidiaries by affiliate of Group Auditor
Non-Audit fees
Operating lease costs
8. STAFF COSTS
Staff costs during the year:
- wages and salaries
- social security costs
- other pension costs
119
Year ended
31.3.16
£000
Year ended
31.3.15
£000
26,103
26,530
338
6,666
159
90
65
3
39
1,118
544
6,432
154
62
68
3
-
730
Year ended
31.3.16
£000
Year ended
31.3.15
£000
12,536
2,896
190
15,622
12,406
3,524
171
16,101
Details of the remuneration of Directors amounting to £16,221,000 (2015: £24,137,000) are included in the Directors’ Remuneration Report on
pages 83 to 102. The amount of the share-based payments charge relating to share awards made to Directors is £4,426,000 (2015:
£5,815,000).
Included within wages and salaries are directors’ bonuses of £5,364,000 (2015: £6,271,000) as discussed in the Directors’ Remuneration
Report on pages 83 to 102.
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 53 (2015: 43) of which 35 are UK
head office staff, 9 are other UK staff and 9 are based in Poland.
Of the staff costs of £15,622,000 (2015: £16,101,000), £14,810,000 is included within administrative expenses (2015: £15,663,000) and
£812,000 is included within development costs (2015: £438,000).
Within administrative costs is the share based payment charge for the year of £6,666,000 (2015: £6,432,000) which is not included in
the staff costs above.
9. FINANCE COSTS AND FINANCE INCOME
Interest payable on bank loans and overdrafts
Other interest payable and similar charges
Interest capitalised
Finance costs
Interest receivable and similar income
Finance income
Year ended
31.3.16
£000
Year ended
31.3.15
£000
(25,353)
(3,700)
4,940
(24,113)
5,128
5,128
(21,055)
(6,264)
3,641
(23,678)
2,480
2,480
On projects where specific third party loans have been arranged, interest has been capitalised in accordance with IAS 23 – Borrowing
Costs, at the rate for the individual loan. The weighted average capitalised interest rate of such loans was 3.50% (2015: 3.68%). 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 4.18% (2015: 4.62%).
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
120
NOTES TO THE FINANCIAL STATEMENTS
10. TAXATION ON PROFIT ON ORDINARY ACTIVITIES
The tax charge is based on the profit for the year and represents:
United Kingdom corporation tax at 20% (2015: 21%)
- Group corporation tax
- adjustment in respect of prior periods
- overseas tax
Current tax charge
Deferred tax at 19% (2015: 20%)
- capital allowances
- tax losses
- unrealised chargeable gains
- other temporary differences
Deferred tax charge
Tax charge on profit on ordinary activities
Factors affecting the tax charge for the period
The tax assessed for the period is lower than the standard rate of corporation tax in the UK.
The differences are explained below:
Profit on ordinary activities before tax
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 20% (2015: 21%)
Effect of:
- expenses not deductible for tax purposes
- income not subject to UK corporation tax
- adjustment to capital allowances
- tax movements on share awards
- additional tax losses unavailable
- tax losses not previously recognised in deferred tax
- operating profit of joint ventures
- prior year adjustment
- Movement on sale and revaluation not recognised through deferred tax
- chargeable gain in excess of profit or loss on investment property
- overseas tax
- other temporary differences
Effect of change of rate of corporation tax
Total tax charge for the year
Year ended
31.3.16
£000
Year ended
31.3.15
£000
(7,010)
(115)
(712)
(7,837)
(385)
500
(8,046)
6,023
(1,908)
(9,745)
(215)
(22)
(39)
(276)
(297)
3,033
(15,096)
(33)
(12,393)
(12,669)
Year ended
31.3.16
£000
Year ended
31.3.15
£000
120,096
(24,019)
87,445
(18,363)
(534)
-
707
2,807
-
1,930
10,094
(115)
1,355
(2,472)
(505)
943
64
(1,041)
285
331
609
(143)
-
5,774
(22)
(1,370)
(278)
(39)
901
687
(9,745)
(12,669)
Note: all deferred tax balances have been calculated at an effective rate of corporation tax of 19% which is the average of the substantively enacted future
rates for the periods in which the deferred tax is expected to be realised.
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.
11. DEFERRED TAX
Deferred tax provided for in the financial statements is set out below:
Capital allowances
Tax losses
Unrealised chargeable gains
Other temporary differences
Deferred tax (liability)/asset
Group
31.3.16
£000
(1,946)
12,521
(24,733)
7,791
(6,367)
Group
31.3.15
£000
(1,561)
12,021
(16,687)
4,771
(1,456)
Company
31.3.16
£000
Company
31.3.15
£000
6
1,255
73
-
1,334
60
1,173
-
-
1,233
HELICAL BAR PLC REPORT & ACCOUNTS 2016
NOTES TO THE FINANCIAL STATEMENTS
121
11. DEFERRED TAX CONTINUED
Other temporary differences include 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. A debit of £3,002,000 (2015: credit of
£2,477,000) in respect of future tax relief for share awards has been recognised in reserves in accordance with IAS 12.
The Group contains entities with tax losses for which no deferred tax asset is recognised. The total unrecognised losses amount to
approximately £9,026,000 (2015: £9,036,000). A deferred tax asset has not been recognised because the entities in which the losses have
been generated either do not have forecast taxable profits or the losses have restrictions whereby their utilisation is considered to be unlikely.
If upon sale of the investment properties the Group retained all the capital allowances, the deferred tax provision in respect of capital
allowances of £1,946,000 (2015: £1,561,000) would be released and further capital allowances of £20,340,000 (2015: £18,031,000) would
be available to reduce future tax liabilities.
12. DIVIDENDS PAID AND PAYABLE
Attributable to equity share capital
Ordinary
- interim paid of 2.30p (2015: 2.10p) per share
- second interim paid of 5.15p (2015: nil) per share
- prior period final paid of 5.15p (2015: 4.75p) per share
Total dividends paid and payable in year – 12.60p (2015: 6.85p) per share
Year ended
31.3.16
£000
Year ended
31.3.15
£000
2,652
5,886
5,899
14,437
2,406
-
5,538
7,944
An interim dividend of 2.30p was paid on 30 December 2015 to shareholders on the register on 4 December 2015 and a second interim
dividend of 5.15p was paid on 4 April 2016 to shareholders on the register on 11 March 2016. The final dividend of 0.72p, if approved at
the AGM on 25 July 2016, will be paid on 29 July 2016 to shareholders on the register on 1 July 2016. This final dividend, amounting to
£823,000, has not been included as a liability as at 31 March 2016, in accordance with IFRS.
13. 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 profit for the year of the Company was £11,344,000 (2015: loss of £1,316,000).
14. 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 effect of all dilutive
options and awards.
The 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 earnings and weighted average number of shares used in the calculations are set out below.
Earnings per share
Ordinary shares in issue
Weighting adjustment
Weighted average ordinary shares in issue for calculation of basic and EPRA earnings per share
Weighted average ordinary shares to be issued on share settled bonuses
Weighted average ordinary shares to be issued under performance share plan
Year ended
31.3.16
000
Year ended
31.3.15
000
118,184
(3,296)
114,888
1,197
3,212
118,184
(2,897)
115,287
1,016
6,182
Weighted average ordinary shares in issue for calculation of diluted earnings per share
119,297
122,485
Earnings used for calculation of basic and diluted earnings per share
Basic earnings per share
Diluted earnings per share
£000
110,411
96.1p
92.6p
£000
74,489
64.6p
60.8p
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
122
NOTES TO THE FINANCIAL STATEMENTS
14. EARNINGS PER SHARE CONTINUED
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 sale and revaluation of investment properties in the results of joint ventures
Tax on profit on disposal of investment properties
Trading property gain
Fair value movement on derivative financial instruments
Fair value movement on Convertible Bond
Share of fair value movements on derivative financial instruments in the results of joint ventures
Impairment of available-for-sale investment
Deferred tax
Earnings used for calculation of EPRA earnings per share
Year ended
31.3.16
£000
Year ended
31.3.15
£000
110,411
(55,893)
(50,210)
998
-
6,860
(516)
(211)
1,370
6,811
19,620
74,489
(69,384)
(27,225)
-
(2,503)
8,389
3,263
578
773
14,425
2,805
EPRA earnings per share
17.1p
2.4p
The earnings used for calculation of EPRA earnings per share includes net rental income and development property profits but excludes
trading property gains/losses.
15. INVESTMENT PROPERTIES
Group
Fair value at 1 April
Property acquisitions
Disposals
Revaluation surplus
Revaluation surplus attributable to
profit share partner
Freehold
31.3.16
£000
Leasehold
31.3.16
£000
Total
31.3.16
£000
Freehold
31.3.15
£000
Leasehold
31.3.15
£000
Total
31.3.15
£000
591,870
377,890
109,651
27,243
701,521
405,133
450,276
191,280
42,925
79,813
493,201
271,093
(96,237)
(23,148)
(119,385)
(112,089)
(18,640)
(130,729)
51,779
323
1,729
-
53,508
323
61,376
1,027
5,528
25
66,904
1,052
Fair value at 31 March
925,625
115,475
1,041,100
591,870
109,651
701,521
Interest capitalised during the year in respect of the refurbishment of investment properties amounted to £1,200,000 (2015: £667,000).
Interest capitalised in respect of the refurbishment of investment properties is included in investment properties to the extent of
£6,571,000 (2015: £5,449,000).
Investment properties with a total fair value of £945,400,000 (2015: £628,621,000) were held as security against borrowings.
All of the Group’s properties are level 3, as defined by IFRS 13 Fair Value Measurement, in the fair value hierarchy as at 31 March 2016 and there
were no transfers between levels during the year. Level 3 inputs used in valuing the properties, are those which are unobservable, as opposed
to level 1 (inputs from quoted prices) and level 2 (observable inputs either directly, i.e. as prices, or indirectly, i.e. derived from prices).
Transfers into and transfers out of the fair value hierarchy levels are recognised on the date of the event or change in circumstances that
caused the transfer. There were no transfers in or out of Level 3 for investment properties during the year.
Valuation methodology
The fair value of the Group’s investment property as at 31 March 2016 was determined by independent external valuers at that date, except
for investment properties valued by the Directors. The valuations are in accordance with the Royal Institution of Chartered Surveyors
(‘RICS’) Valuation – Professional Standards (“The Red Book”) and the International Valuation Standards and were arrived at by reference to
market transactions for similar properties. Fair values for investment properties are calculated using the present value income approach.
The main assumptions underlying the valuations are in relation to rent profile and yields as discussed below. A key driver of the property
valuations is the terms of the leases in place at the valuation date. These determine the cash flow profile of the property for a number of
years. The valuation assumes adjustments from these rental values to current market rent at the time of the next rent review (where a
typical lease allows only for upward adjustment) and as leases expire and are replaced by new leases. The current market level of rent is
assessed based on evidence provided by the most recent relevant leasing transactions and negotiations. The nominal equivalent yield is
applied as a discount rate to the rental cash flows which, after taking into account other input assumptions such as vacancies and costs,
generates the market value of the property. The equivalent yield applied is assessed by reference to market transactions for similar
properties and takes into account, amongst other things, any risks associated with the rent uplift assumptions.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
NOTES TO THE FINANCIAL STATEMENTS
123
15. INVESTMENT PROPERTIES CONTINUED
The net initial yield is calculated as the current net income over the gross market value of the asset and is used as a sense check and to
compare against market transactions for similar properties. The valuation output, along with inputs and assumptions, are reviewed to
ensure these are in line with what a market participant would use when pricing each asset.
The reversionary yield is the return received from an asset once the estimated rental value has been captured on today’s assessment of
market value.
There are interrelationships between all the inputs as they are determined by market conditions. The existence of an increase in more
than one input would be to magnify the input on the valuation. The impact on the valuation will be mitigated by the interrelationship of
two inputs in opposite directions.
Details of the investment portfolio yields can be found on page 48 of this report.
The graph below illustrates the sensitivity of the value of the investment portfolio to the reversionary yield.
Valuation – Reversionary Yield Sensitivity
Investment Portfolio Value - Sensitivity to Reversionary Yield
£1,300,000,000
£1,250,000,000
£1,200,000,000
£1,150,000,000
£1,100,000,000
£1,050,000,000
£1,000,000,000
£950,000,000
£900,000,000
£850,000,000
£800,000,000
)
£
(
n
o
i
t
a
u
a
V
o
l
i
l
o
f
t
r
o
P
5.52
5.77
6.02
6.27
6.52
6.77
7.02
7.72
7.52
Reversionary Yield (%)
The investment properties have been valued at 31 March 2016 as follows:
Cushman & Wakefield LLP
Colliers International UK plc
Directors’ valuation
The historical cost of investment property is £889,493,000 (2015: £590,965,000).
31.3.16
£000
801,800
239,200
100
1,041,100
31.3.15
£000
697,521
-
4,000
701,521
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
124
NOTES TO THE FINANCIAL STATEMENTS
16. 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:
Not later than one year
Later than one year but not more than five years
More than five years
Group
31.3.16
£000
43,266
157,948
115,382
316,596
Group
31.3.15
£000
39,393
104,268
159,001
302,662
The Company has no operating lease arrangements as lessor.
At the balance sheet date, the Group and Company had outstanding commitments for future minimum lease payments under non-
cancellable operating leases, which fall due as follows:
Group and Company
Not later than one year
Later than one year but not more than five years
More than five years
31.3.16
£000
818
3,273
5,319
9,410
17. OWNER OCCUPIED PROPERTY, PLANT AND EQUIPMENT
Group
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
Short
leasehold
improvements
31.3.16
£000
Plant and
equipment
31.3.16
£000
2,007
99
-
2,106
111
146
-
257
1,849
1,008
164
(160)
1,012
543
192
(74)
661
351
Short
leasehold
improvements
31.3.15
£000
Plant and
equipment
31.3.15
£000
2,373
1,695
(2,061)
2,007
1,811
361
(2,061)
111
1,896
935
164
(91)
1,008
447
183
(87)
543
465
Total
31.3.16
£000
3,015
263
(160)
3,118
654
338
(74)
918
2,200
31.3.15
£000
281
3,273
7,773
11,327
Total
31.3.15
£000
3,308
1,859
(2,152)
3,015
2,258
544
(2,148)
654
2,361
Plant and equipment include vehicles, fixtures and fittings and other office equipment.
All short leasehold improvements and plant and equipment relate to the Company except for plant and equipment with a net book
value of £34,000 as at 31 March 2016 (2015: £69,000).
18. INVESTMENT IN SUBSIDIARIES
At 1 April
Acquired during year
At 31 March
Group
31.3.16
£000
-
-
-
Group
31.3.15
£000
-
-
-
Company
31.3.16
£000
36,585
31,627
68,212
Company
31.3.15
£000
36,584
1
36,585
A list of all the Company’s subsidiary undertakings, all of which have been consolidated, are shown in Note 39 to the financial
statements.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
125
Total
31.3.15
£000
6,098
6,098
(809)
(877)
4,412
1,902
1,091
26,134
293
(951)
NOTES TO THE FINANCIAL STATEMENTS
19. INVESTMENT IN JOINT VENTURES
Investment
& trading
31.3.16
£000
Development
31.3.16
£000
Total
31.3.16
£000
Investment
& trading
31.3.15
£000
Development
31.3.15
£000
Summarised statements of consolidated income
Revenue
Gross rental income
Rents payable
Property overheads
Net rental income
Development profit
Profit on sale of property
917
917
-
(483)
434
-
41,553
Gain on revaluation of investment properties 995
Other operating income/(expense)
Administrative expenses
Finance costs
Finance income
Change in fair value movement of
derivative financial instruments
Profit before tax
Tax
Profit after tax
Economic interest adjustment*
Share of results of joint ventures
Summarised balance sheets
Non-current assets
Investment properties
196
(705)
(1,902)
12
211
40,794
458
41,252
6,341
47,593
10,107
Owner occupied property, plant and equipment 50
Deferred tax
Current assets
50
10,207
Land, development and trading properties -
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Non-current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Deferred Tax
Net assets
769
6,433
7,202
(836)
(836)
-
(2,413)
-
-
(2,413)
14,160
911
911
-
(75)
836
3,223
-
1,321
22
(435)
(1,771)
9
-
3,205
(329)
2,876
-
2,876
1,445
46
362
1,853
75,904
2,728
5,744
84,376
(13,600)
(13,600)
(26,586)
(32,213)
-
-
1,828
1,828
-
(558)
1,270
3,223
41,553
2,316
218
(1,140)
(3,673)
21
211
43,999
129
44,128
6,341
50,469
75,904
3,497
12,177
91,578
(14,436)
(14,436)
(26,586)
(34,626)
-
-
5,523
5,523
(809)
(683)
4,031
-
1,087
26,134
(1)
(291)
575
575
-
(194)
381
1,902
4
-
294
(660)
(2,254)
(1,390)
(3,644)
4
(578)
28,132
(734)
27,398
-
27,398
-
1,468
7,030
8,498
(3,947)
(3,947)
(5,590)
(29,503)
(473)
(237)
(35,803)
57,209
39
-
570
(471)
99
-
99
100
42
278
420
61,782
1,258
6,423
69,463
(20,749)
(20,749)
(19,842)
(14,916)
-
-
(34,758)
14,376
43
(578)
28,702
(1,205)
27,497
-
27,497
88,305
42
534
88,881
61,782
2,726
13,453
77,961
(24,696)
(24,696)
(25,432)
(44,419)
(473)
(237)
(70,561)
71,585
11,552
88,205
96
412
-
256
12,060
88,461
(58,799)
13,830
(61,212)
27,990
* Under the Barts Square joint venture agreement the Group is entitled to varying returns dependent upon the performance of the development. Whilst
the Group holds a 33.35% equity share in the Barts Square group, it has accounted for its share at 43.8% to reflect its expected economic interest in the
joint venture. This has changed from the 33.35% interest shown at 31 March 2015, and resulted in a gain of £6,341,000 being recognised in the
Consolidated Income Statement to reflect the Group’s increased share in the opening net assets of the joint venture.
The cost of the Company’s investment in joint ventures was £15,000 (2015: £15,000).
The Directors’ valuation of the trading and development stock shows a surplus of £7,000,000 above book value (2015: £11,013,000).
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
126
NOTES TO THE FINANCIAL STATEMENTS
19. INVESTMENT IN JOINT VENTURES CONTINUED
The Group has three material joint ventures. The full results and position of these joint ventures are set out below, of which we have
included our share in the previous table.
Barts LP
Group
31.03.16
£000
Old Street
Holdings LP
Group
31.03.16
£000
Shirley
Advance LLP
31.03.16
£000
Barts LP
Group
31.03.15
£000
Old Street
Holdings LP
Group
31.03.15
£000
Shirley
Advance LLP
31.03.15
£000
Summarised statements of consolidated income
Revenue
Gross rental income
Property overheads
Net rental income
Development profit
Profit on sale of property
Gain on revaluation of investment properties
1,681
1,681
(104)
1,577
-
20,113
5,287
1,772
1,772
(1,329)
443
-
98,232
-
Other operating income/(expense)
50
(34,506)
Administrative expenses
Finance costs
Finance income
Change in fair value movement of derivative
financial instruments
Profit/(loss) before tax
Tax
Profit/(loss) after tax
Summarised balance sheets
Non-current assets
Investment properties
Owner occupied property, plant and equipment
Deferred tax
Current assets
Land, development and trading properties
Trade and other receivables
Cash and cash equivalents
(1,044)
(1,134)
33
-
24,882
340
25,222
26,375
106
925
27,406
110,281
4,720
20,125
135,126
(1,839)
(4,738)
2
632
58,226
(95)
58,131
-
150
-
150
915
915
(59)
856
3,234
-
-
-
-
(3,192)
-
-
898
-
898
3,532
3,532
(530)
3,002
-
-
30,287
(19)
(2,324)
(1,283)
8
-
29,671
(96)
29,575
2,885
2,885
(804)
2,081
-
-
48,105
-
(367)
(2,533)
-
(1,733)
45,553
437
45,990
-
-
-
-
91,887
173,000
126
99
-
767
92,112
173,767
179
179
(16)
163
-
-
-
599
-
(912)
-
-
(150)
-
(150)
-
-
-
-
-
16,250
2,017
591
1,671
1,554
3,225
78,784
2,419
29,219
18,858
110,422
-
3,593
3,656
7,249
44,911
1,800
967
47,678
Current liabilities
Trade and other payables
Borrowings
Non-current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Deferred Tax
Net assets
(25,855)
(1,124)
(2,598)
(11,626)
(8,419)
(31,161)
-
-
-
-
-
-
(25,855)
(1,124)
(2,598)
(11,626)
(8,419)
(31,161)
-
(79,054)
-
-
(79,054)
57,623
-
-
-
-
-
(15,373)
-
-
(2)
-
(64,883)
-
-
(16,767)
(68,348)
(1,416)
-
(16,527)
-
-
-
(15,375)
(64,883)
(86,531)
(16,527)
2,251
885
126,025
86,066
(10)
HELICAL BAR PLC REPORT & ACCOUNTS 2016
NOTES TO THE FINANCIAL STATEMENTS
127
19. INVESTMENT IN JOINT VENTURES CONTINUED
At 31 March 2016 the Group and the Company had legal interests in the following joint venture companies:
Country of
incorporation
Class of share
capital held
Proportion
held Group
Proportion
held Company
Nature of
business
Barts Close Office Ltd
Barts Square First Office Ltd
Barts Square Active One Ltd
Barts Square First Ltd
Barts Square Land One Ltd
Old Street Holdings LP
Jersey
Jersey
Jersey
United Kingdom
United Kingdom
Jersey
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
n/a
Abbeygate Helical (Leisure Plaza) Ltd
United Kingdom
Ordinary
Abbeygate Helical (Winterhill) Ltd
United Kingdom
Ordinary
Abbeygate Helical (C4.1) LLP
Shirley Advance LLP
United Kingdom
United Kingdom
n/a
n/a
King Street Developments (Hammersmith) Ltd
United Kingdom
Ordinary
Creechurch Place Ltd
Jersey
Ordinary
Significant Judgements and Estimates
33%
33%
33%
33%
33%
33%
50%
50%
50%
50%
50%
10%
-
-
-
Investment
Investment
Investment
- Development
- Development
-
Investment
50% Development
50% Development
50% Development
- Development
- Development
- Development
There are a number of companies which are accounted for as joint ventures where the Group has an equity interest of less than 50%.
This typically occurs where the Group’s joint venture partner is providing a greater share of finance into the Company, with the Group
contributing a greater share towards the day to day management of the underlying project. In these cases neither party has control over
the entity and therefore it is considered appropriate to account for our interest as a joint venture.
Dividends of £82,569,000 were received from joint venture companies during the year (2015: £17,013,000). The joint venture companies
are private companies, therefore no quoted market prices are available for their shares.
At 31 March 2015, the Group had an investment in Helical Sosnica Sp. Zoo, which had been accounted for as an investment held for sale
due to a commitment to sell the Group’s share. At 31 March 2015 Helical Sosnica Sp. zoo held a development property, the fair value of
which the Directors believed to be £81,866,000 (of which Helical’s share was £40,933,000) and a bank loan of £51,156,000 (of which
Helical’s share was £25,578,000) repayable in September 2017. During the year, the Group sold its investment in Helical Sosnica Sp.Zoo.
During the year, Old Street Holdings LP sold its investments in 207 Old Street Unit Trust, 211 Old Street Unit Trust, Old Street Retail Unit
Trust and City Road Jersey Limited. The Group purchased the trust capital of 207 Old Street Unit Trust and 211 Old Street Unit Trust from
Old Street Holdings LP.
During the year, Barts Two Limited sold its investment in Barts Two Investment Property Limited.
Under the Barts Square joint venture agreement the Group is entitled to varying returns dependent upon the performance of the
development. Whilst the Group holds a 33.35% legal share in the Barts Square group, it has accounted for its share at 43.8% to reflect its
expected economic interest in the joint venture. This has changed from the 33.35% interest shown at 31 March 2015, and resulted in a
gain of £6,341,000 being recognised in the Consolidated Income Statement to reflect the Group’s increased share in the opening net
assets of the joint venture.
20. LAND, DEVELOPMENTS AND TRADING PROPERTIES
Group
At 1 April
Acquisitions and construction costs
Interest capitalised
Disposals
Foreign exchange movements
Provision
At 31 March
Development
properties
31.3.16
£000
92,550
31,465
3,740
(29,063)
(237)
(6,448)
92,007
Trading
stock
31.3.16
£000
28
-
-
-
-
-
28
Total
31.3.16
£000
92,578
31,465
3,740
(29,063)
(237)
(6,448)
92,035
Development
properties
31.3.15
£000
95,632
21,131
3,381
(25,685)
(1,457)
(452)
92,550
Trading
stock
31.3.15
£000
2,528
31,012
-
(33,512)
-
-
28
Total
31.3.15
£000
98,160
52,143
3,381
(59,197)
(1,457)
(452)
92,578
The Directors’ valuation of trading and development stock shows a surplus of £12,412,000 above book value (2015: £25,230,000).
Interest capitalised in respect of the development of sites is included in stock to the extent of £11,626,000 (2015: £9,788,000).
Land, developments and trading properties with carrying values totalling £81,870,000 (2015: £83,948,000) were held as security against
borrowings.
The Company had no land, developments or trading properties (2015: none).
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
128
NOTES TO THE FINANCIAL STATEMENTS
21. PROPERTY DERIVATIVE FINANCIAL ASSET
Group
Property derivative financial asset
31.3.16
£000
-
-
31.3.15
£000
16,388
16,388
In the year to 31 March 2015, the Group assigned its forward purchase contract on Clifton Street, London EC2 to a third party. The agreement
to assign the forward purchase contract was considered to be a derivative financial instrument. As such, under IAS 39, it was carried at
its fair value with gains and losses taken to the Income Statement. Cash of £17.3m was received during the year to 31 March 2016.
22. AVAILABLE-FOR-SALE INVESTMENTS
Group
At 1 April
Additions
Disposals
Impairment in the year
At 31 March
31.3.16
£000
4,342
142
-
(1,370)
3,114
31.3.15
£000
4,973
144
(2)
(773)
4,342
Included within available-for-sale investments is an amount lent to a company promoting a mainly residential mixed-use development
and a holding of 20% of the equity of this company.
The loan and the equity are together classed as an available-for-sale investment and held at fair value. It is considered to be Level 3 of
the IFRS 13 fair value hierarchy. 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 expected consideration to be received including anticipated future costs of recovering
this loan. This amount has been impaired in the year due to a revision in the expected receipt. The value of the available-for-sale
investment is 100% sensitive to changes in the expected repayment proceeds. 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.
The Group does not consider that it has significant influence over this company despite having 20% of the equity as another party owns
a majority shareholding and the Group does not have a representative on the board of the company.
The decline in value of £1,370,000 (2015: £773,000) has been recognised in the Income Statement.
23. TRADE AND OTHER RECEIVABLES
Due after 1 year
Trade receivables
Due within 1 year
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
31.3.16
£000
-
-
Group
31.3.16
£000
20,869
32,099
-
283
19,806
73,057
Group
31.3.16
£000
70,855
1,397
61
72,313
744
73,057
Group
31.3.15
£000
1,555
1,555
Group
31.3.15
£000
12,432
42,220
-
879
9,685
65,216
Group
31.3.15
£000
56,848
1,384
70
58,302
8,469
66,771
Company
31.3.16
£000
Company
31.3.15
£000
-
-
-
-
Company
31.3.16
£000
Company
31.3.15
£000
117
40
97
40
814,268
776,550
891
405
853
188
815,721
777,728
Company
31.3.16
£000
Company
31.3.15
£000
815,316
777,540
-
-
815,316
405
815,721
-
-
777,540
188
777,728
Past due receivables not impaired relate to a number of independent customers for whom there is no recent history of default. Against
trade receivables, Helical held £4,562,000 of rental deposits at 31 March 2016 (2015: £1,648,000).
HELICAL BAR PLC REPORT & ACCOUNTS 2016
129
NOTES TO THE FINANCIAL STATEMENTS
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
31.3.16
£000
72,385
(72)
72,313
Group
31.3.15
£000
58,390
(88)
58,302
Company
31.3.16
£000
Company
31.3.15
£000
815,721
777,540
-
-
815,721
777,540
Receivables written off during the year as uncollectable
2
9
-
-
24. CASH AND CASH EQUIVALENTS
Rent deposits and cash held at managing agents
Restricted cash
Cash deposits
Group
31.3.16
£000
4,906
17,063
52,701
74,670
Group
31.3.15
£000
3,049
91,955
25,989
120,993
Company
31.3.16
£000
-
-
36,225
36,225
Company
31.3.15
£000
3
2
13,937
13,942
Restricted cash is made up of amounts held by solicitors and amounts in blocked accounts. Included in this amount at 31 March 2015
was £70,166,000 held in a blocked account due to a bank refinancing, which was subsequently released during the year.
25. TRADE AND OTHER PAYABLES
Trade payables
Social security costs and other taxation
Amounts owed to subsidiary undertakings
Other payables
Accruals
Deferred income
26. BORROWINGS
Current borrowings
Borrowings repayable within:
- one to two years
- two to three years
- three to four years
- four to five years
- five to six years
- six to ten years
Non-current borrowings
Group
31.3.16
£000
14,463
5,774
-
2,444
39,425
8,894
71,000
Group
31.3.16
£000
885
3,617
3,650
337,098
219,523
95,981
73,309
733,178
Group
31.3.15
£000
9,868
5,156
-
3,420
37,834
9,524
65,802
Group
31.3.15
£000
45,428
136,091
3,617
83,608
175,177
80,060
74,260
552,813
Company
31.3.16
£000
421
-
Company
31.3.15
£000
440
-
512,090
412,690
-
4,046
-
44
3,522
-
516,557
416,696
Company
31.3.16
£000
-
-
-
92,088
79,225
-
-
Company
31.3.15
£000
6,120
-
-
-
90,067
79,042
-
171,313
169,109
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 book value of £1,027,270,000 (2015: £712,569,000). 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 £34,626,000 (2015: £44,419,000).
Convertible Bond
On 17 June 2014 the Group issued £100m convertible bonds at par with a 4% coupon rate which are due for settlement on 17 June 2019
(the “Bonds”). The Bonds can be converted from 28 July 2014 up to and including 7 July 2017, if the share price has traded at a level
exceeding 130% of the conversion price for a specified period, and from 8 July 2017 to (but excluding) the seventh dealing day before 17
June 2019 at any time. On conversion, the Group can elect to settle the Bonds by any combination of ordinary shares and cash. The
Convertible Bond is included at its fair value of £102,747,000 (2015: £103,263,000) in borrowings repayable within three to four years.
Retail Bond
On 24 June 2013 the Group issued an £80m fixed rate retail bond at 6% per annum and with a maturity date of 24 June 2020. Under
certain circumstances, the bonds can be repaid early. The Retail Bond is included at its amortised cost of £79,225,000 (2015:
£79,042,000) in borrowings repayable within four to five years.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
130
NOTES TO THE FINANCIAL STATEMENTS
27. FINANCING AND DERIVATIVE FINANCIAL INSTRUMENTS
The policies for dealing with liquidity and interest rate risk are noted in the Principle Risks Review on pages 58 to 61.
Borrowings maturity
Due after more than one year
Due within one year
Group
31.3.16
£000
733,178
885
734,063
Group
31.3.15
£000
552,813
45,428
598,241
The Group has various undrawn committed borrowing facilities. The facilities available at 31 March 2016 in respect of which all conditions
precedent had been met were as follows:
Expiring in one year or less
Expiring in more than one year but not more than two years
Expiring in more than two years but not more than three years
Expiring in more than three years but not more than four years
Expiring in more than four years but not more than five years
Expiring in more than five years
Interest rates – Group
Fixed rate borrowings:
- swap rate plus bank margin
- swap rate plus bank margin
- fixed rate plus margin
- fixed rate Retail Bond
- swap rate plus bank margin
- swap rate plus bank margin
- fixed rate Convertible Bond
- swap rate plus bank margin
- swap rate plus bank margin
- swap rate plus bank margin
%
Expiry
3.650
5.650
3.480
6.000
3.850
4.070
4.000
4.025
3.770
-
Nov 2019
Nov 2019
Dec 2024
Jun 2020
Jan 2020
Jul 2019
Jun 2019
Aug 2020
May 2018
-
31.3.16
£000
105,000
44,500
80,005
80,000
75,000
30,000
100,000
74,280
10,800
-
- swap rate plus bank margin
4.070
Oct 2017
20,300
- swap rate plus bank margin
- swap rate plus bank margin
Weighted average
Floating rate borrowings
Unamortised finance costs
Fair value adjustment of Convertible Bond
-
3.715
4.226
3.924
-
-
Aug 2020
Jul 2020
Sep 2018
-
-
13,000
632,885
107,109
(8,678)
2,747
%
-
-
3.480
6.000
4.500
4.070
4.000
4.525
4.020
3.365
4.070
3.510
-
4.366
2.438
-
Group
31.3.16
£000
10,000
-
-
55,697
14,499
3,445
83,641
Expiry
-
-
Dec 2024
Jun 2020
Jan 2020
Jul 2019
Jun 2019
Feb 2019
May 2018
Jan 2016
Jan 2016
May 2015
-
Mar 2019
Nov 2016
-
Group
31.3.15
£000
14,147
3,982
-
33,161
2,840
-
54,130
31.3.15
£000
-
-
80,862
80,000
75,000
30,000
100,000
75,630
10,800
9,172
11,100
21,375
-
493,939
106,291
(5,252)
3,263
Total borrowings
4.182
Sep 2020
734,063
4.026
Aug 2019
598,241
The year on year changes in fixed borrowing rates are the result of stepped increases/decreases in interest rate swaps rates. Floating
rate borrowings bear interest at rates based on LIBOR.
At 31 March 2016 the Company had £30,000,000 (2015: £30,000,000) and £20,300,000 (2015: £11,100,000) interest rate swaps, both at
4.070% and expiring in July 2019 and October 2017 respectively. Interest is fixed on the retail bond and convertible bond as shown
above, with the remaining borrowings being at floating rates.
In addition to the above, the Group has a £50,000,000 interest rate swap at 1.865% starting in January 2020 and expiring in June 2026.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
NOTES TO THE FINANCIAL STATEMENTS
27. FINANCING AND DERIVATIVE FINANCIAL INSTRUMENTS CONTINUED
In addition to the fixed rates, borrowings are also hedged by the following financial instruments:
Instrument
Current:
- cap
- cap
- cap
- cap
- cap
Value
£000
25,000
25,000
25,000 – 75,000
7,200
25,000
Rate
%
4.000
4.000
4.000
4.000
4.000
Where a range in capped values is shown, these reflect stepped increases/decreases over the life of the cap.
Gearing
Total debt
Cash
Net debt
131
Start
Expiry
Apr 2011
Jul 2013
Apr 2015
Jan 2012
Jul 2013
Group
31.3.16
£000
734,063
(74,670)
659,393
Apr 2016
Jul 2016
Jan 2017
Oct 2016
Jul 2016
Group
31.3.15
£000
598,241
(120,993)
477,248
Net debt excludes the Group’s share of debt in joint ventures of £34,626,000 (2015: £44,419,000), and cash of £12,177,000
(2015: £13,453,000).
Net assets
Gearing
28. SHARE CAPITAL
Authorised
Group
31.3.16
£000
Group
31.3.15
£000
486,189
404,363
136%
118%
31.3.16
£000
39,577
39,577
31.3.15
£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
- 118,183,806 (2015: 118,183,806) ordinary shares of 1p each
- 212,145,300 (2015: 212,145,300) deferred shares of 1 ⁄8p each
Ordinary shares
At 1 April and 31 March
Deferred shares
At 1 April and 31 March
31.3.16
£000
1,182
265
1,447
31.3.15
£000
1,182
265
1,447
Shares in issue
31.3.16
Number
Share capital
31.3.16
£000
Shares in issue
31.3.15
Number
Share capital
31.3.15
£000
118,183,806
1,182
118,183,806
1,182
212,145,300
265
212,145,300
265
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
132
NOTES TO THE FINANCIAL STATEMENTS
28. SHARE CAPITAL CONTINUED
Capital Management
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, share premium, retained earnings, revaluation
reserve and other reserves (2016: £478,711,000; 2015: £396,825,000). The Group continually monitors its gearing level to ensure that it is
appropriate. Gearing increased from 118% to 136% in the year as the Group took advantage of favourable debt market conditions.
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.
29. SHARE OPTIONS
At 31 March 2016 and 31 March 2015 there were no unexercised options over new ordinary 1p shares in the Company. 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 2015: none).
The Company uses a stochastic valuation model to value the share options.
Summary of share options
At 1 April
Options exercised
At 31 March
The share price at date of exercise was 344.25p.
Weighted
average
exercise
Price
31.3.16
-
-
-
Weighted
average
exercise
price
31.3.15
259.25p
259.25p
-
Number
31.3.15
46,284
(46,284)
-
Number
31.3.16
-
-
-
30. SHARE-BASED PAYMENTS
The Group provides share-based payments to employees in the form of performance share plan awards and a share incentive plan. 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 year
Awards vested during year
Awards lapsed during the year
Awards made during the year
Outstanding at end of year
2016
Weighted
average
award
value
221p
153p
153p
353p
284p
Awards
9,721,375
(1,707,216)
(1,021,711)
2,134,705
9,127,153
2015
Weighted
average
award
value
215p
246p
246p
295p
221p
Awards
9,127,153
(4,212,534)
-
1,642,997
6,557,616
The performance share plan awards outstanding at 31 March 2016 had a weighted average remaining contractual life of one year and one month.
The fair value of the awards made in the year to 31 March 2016 was £5,802,000 (2015: £6,305,000).
The inputs into the stochastic model of valuation of the PSP awards made in the year to 31 March 2016 were as follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk free rate
Expected dividends
2016
413.5p
-
25.7%
3 years
0.79%
0.00%
2015
355.0p
-
28.4%
3 years
1.24%
0.00%
2014
303.2p
-
n/a
3 years
n/a
2.20%
The Group recognised a charge of £6,666,000 (2015: £6,432,000) during the year in relation to share-based payments.
Volatility is measured by calculating the standard deviation of the natural logarithm of share price movements for the period prior to the
date of grant which is commensurate with the remaining length of the performance period.
At the balance sheet date there were no exercisable awards.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
NOTES TO THE FINANCIAL STATEMENTS
133
31. 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. For this purpose, 4,488,000 shares (2015: 3,790,000) in the Company were purchased during the year at a cost of
£18,857,000 (2015: £13,349,000).
At 31 March 2016, outstanding awards over 6,558,000 (2015: 9,127,000) ordinary 1p shares in Helical Bar plc had been made under the
terms of the Performance Share Plan over shares held by the Trust.
At 31 March 2016, the Trust held 3,901,000 shares (2015: 3,625,000).
32. CONTINGENT LIABILITIES
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.
There were no other contingent liabilities at 31 March 2016 for the Group or the Company (2015: £nil).
33. CAPITAL COMMITMENTS
The Group has a commitment of £34,054,000 (2015: £86,800,000) in relation to construction contracts, which are due to be completed
in the period to September 2018.
34. NET ASSETS PER SHARE
Net asset value
Less: own shares held by ESOP
deferred shares
Basic net asset value
Add: share settled bonuses
Add: dilutive effect of the Performance Share Plan
Diluted net asset value
Adjustment for:
31.3.16
£000
Number
of shares
000s
31.3.16
pence
per share
31.3.15
£000
Number
of shares
000s
31.3.15
pence
per share
486,189
118,184
404,363
118,184
(3,901)
(3,625)
(265)
(265)
485,924
114,283
425
404,098
114,559
353
1,197
3,177
1,016
6,256
485,924
118,657
410
404,098
121,831
332
- fair value of financial instruments
- fair value movement on Convertible Bond
- deferred tax
14,955
2,747
23,759
8,568
3,263
16,956
Adjusted diluted net asset value
527,385
118,657
444
432,885
121,831
355
Adjustment for:
- fair value of trading and development properties
19,412
36,243
EPRA net asset value
Adjustment for:
546,797
118,657
461
469,128
121,831
385
- fair value of financial instruments
- deferred tax
(14,955)
(23,759)
(8,568)
(16,956)
EPRA triple net asset value
508,083
118,657
428
443,604
121,831
364
The net asset values per share have been calculated in accordance with the best practice recommendations of the European Public Real
Estate Association (“EPRA”).
The adjustments to the net asset value comprise the amounts relating to the Group and its share in Joint Ventures.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
134
NOTES TO THE FINANCIAL STATEMENTS
35. RELATED PARTY TRANSACTIONS
At 31 March 2016 and 31 March 2015 the following amounts were due from the Group’s joint ventures:
King Street Developments (Hammersmith) Ltd
Shirley Advance LLP
Barts Square First Ltd
Helical Sosnica Sp. Zoo
207 Old Street Unit Trust
211 Old Street Unit Trust
Old St Retail Unit Trust
City Road (Jersey) Ltd
Old Street Holdings LP Ltd
Creechurch Place Ltd
31.3.16
£000
6,231
11,347
77
1,099
-
-
-
-
-
13,345
31.3.15
£000
5,280
12,501
42
6,000
2,325
1,801
725
738
100
12,132
All movements in joint venture balances related to loans repaid and loans advanced.
At 31 March 2016, there was £nil due to the Group (2015: £347,000) by a company under common control.
At 31 March 2016 and 31 March 2015 there were the following balances between the Company and its subsidiaries.
Amounts due from subsidiaries
Amounts due to subsidiaries
31.3.16
£000
807,268
512,090
31.3.15
£000
776,550
412,690
During the years to 31 March 2016 and 31 March 2015 there were the following transactions between the Company and its subsidiaries:
Management charges receivable
Interest receivable
Interest payable
Year ended
31.3.16
£000
Year ended
31.3.15
£000
9,734
2,205
3,881
10,795
2,294
3,125
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 23. Amounts owed to subsidiaries by the Company are identified in note 25.
The Group considers that key management personnel are the directors. The compensation paid or payable to key management is:
Salaries and other short term employee benefits
Other long-term benefits
Share based payments
Year ended
31.3.16
£000
Year ended
31.3.15
£000
7,715
-
6,314
14,029
8,656
-
8,238
16,894
The total dividends paid to directors of the Group in the year were £1,260,000 (2015: £1,181,000). On 4 April 2016, a further payment was
made of £907,000 (2015: £nil) in respect of the second interim dividend (note 12).
During the year purchases of £60,000 (2015: £50,000) were made from a partnership in which Michael Slade, a director of the company,
and his wife are partners. All transactions were carried out on an arm’s length basis.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
NOTES TO THE FINANCIAL STATEMENTS
135
36. FINANCIAL INSTRUMENTS
Categories of financial instruments
Financial assets in the Group include derivative financial assets which are designated as ‘Fair value through the Profit or Loss’. Financial
assets also include trade and 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 classed as ‘Fair value through the Profit or Loss’ include derivatives and those liabilities designated as such. Financial
liabilities also include secured bank loans and overdrafts, trade and other payables and provisions, all of which are classified as financial
liabilities at amortised cost.
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 Profit or Loss
Available-for-sale financial investments
Total financial assets
Group
31.3.16
£000
146,983
-
3,114
150,097
These financial assets are included in the balance sheet within the following headings:
Available-for-sale investments
Derivative financial instruments
Property derivative financial asset
Trade and other receivables
Cash and cash equivalents
Total financial assets
Group
31.3.16
£000
3,114
-
-
72,313
74,670
150,097
Group
31.3.15
£000
180,713
16,389
4,342
201,444
Group
31.3.15
£000
4,342
1
16,388
59,720
120,993
201,444
Company
31.3.16
£000
Company
31.3.15
£000
851,541
792,900
-
-
-
-
851,541
792,900
Company
31.3.16
£000
Company
31.3.15
£000
-
-
-
815,316
36,225
851,541
-
-
-
778,958
13,942
792,900
Financial assets are stated in accordance with IAS 32 Financial Instruments: Presentation.
For the fair value of available-for-sale investments see note 22. 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 Profit or Loss
Designated at Fair value through Profit or Loss
Measured at amortised cost
Total financial liabilities
Group
31.3.16
£000
(18,562)
(102,747)
(689,815)
(811,124)
Group
31.3.15
£000
(12,545)
(103,263)
(545,523)
(661,331)
Company
31.3.16
£000
Company
31.3.15
£000
(7,134)
(11,080)
-
(689,424)
(696,558)
-
(591,925)
(603,005)
The Convertible Bond has been designated at fair value through profit or loss. The change in fair value of the Convertible Bond is wholly
attributable to changes in market conditions. If bondholders do not exercise their conversion right, the obligation is settled by a cash
payment of £100,000,000. The difference between the carrying amount of £102,747,000 and this settlement amount is an additional
liability of £2,747,000.
The 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
31.3.16
£000
(62,106)
(885)
(733,178)
(14,955)
(811,124)
Group
31.3.15
£000
(54,994)
(45,428)
Company
31.3.16
£000
Company
31.3.15
£000
(516,557)
(416,696)
-
(552,813)
(171,313)
(8,096)
(7,134)
(661,331)
(695,004)
(6,120)
(169,109)
(11,080)
(603,005)
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
136
NOTES TO THE FINANCIAL STATEMENTS
36. FINANCIAL INSTRUMENTS CONTINUED
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, and those designated on initial recognition.
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 13 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
Assets and liabilities measured at fair value are classified as below:
Level 1
Level 2
Level 3
Convertible bond (note 26)
Derivative financial instruments (note 27)
Property derivative financial asset (note 21)
Available-for-sale investment (note 22)
Investment property (note 15)
There were no transfers between categories in the current or prior year.
Derivative financial instruments
Derivative financial assets
Interest rate caps
Interest rate swaps
Property derivative financial asset
Derivative financial liabilities
Interest rate swaps
Convertible bond derivative element
Group
31.3.16
£000
-
-
-
-
Group
31.3.15
£000
1
-
16,388
16,389
(14,955)
(8,096)
-
-
(14,955)
(8,096)
Company
31.3.16
£000
Company
31.3.15
£000
-
-
-
-
-
(7,134)
(7,134)
-
-
-
-
(1,898)
(9,182)
(11,080)
The Group’s movement in the fair value of the derivative financial instruments in the year was a loss of £6,860,000 (2015: gain of
£7,999,000), of which a gain of £nil (2015: £16,388,000) was due to the property derivative financial asset and a loss of £6,860,000
(2015: £8,389,000) was due to interest rate caps and swaps. In accordance with IAS 39, the convertible bond is split into a loan and
derivative element in the Company Balance Sheet. On initial recognition the derivative element had a value of £8,190,000. At 31 March
2016, the derivative element had a value of £7,134,000 (2015: £9,182,000) with a corresponding gain of £2,048,000 (2015: loss of
£992,000) recognised in the Income Statement. The movement in the Company’s interest rate swaps in the year was a gain of
£1,898,000 (2015: loss of £2,021,000).
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 their financial position, past experience and other factors.
As at 31 March 2016 the Group had total credit risk exposure excluding cash of £58,004,000 of which £3,114,000 is available-for-sale
assets and £54,890,000 is loans and receivables. Available-for-sale assets are analysed in note 22. The cash is held with reputable
banking institutions and in client accounts with solicitors and managing agents and therefore credit risk is considered low.
All other debtors are deemed to be recoverable.
All Company debtors are considered to be fully 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 23.
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.
The Group 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 debt facilities, see notes 26 and 27.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
137
NOTES TO THE FINANCIAL STATEMENTS
36. FINANCIAL INSTRUMENTS CONTINUED
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
31.3.16
£000
51,204
34,817
65,602
760,795
912,418
Group
31.3.15
£000
40,696
75,390
182,692
451,877
750,655
Company
31.3.16
£000
6,866
7,220
19,032
178,099
211,217
Company
31.3.15
£000
6,244
13,053
19,237
198,504
237,038
At 31 March 2016 the Group had £83,641,000 (2015: £54,130,000) of undrawn borrowing facilities, £105,865,000 (2015: £81,530,000) of
uncharged property assets and cash balances of £74,670,000 (2015 £120,993,000). The above contracted liabilities assume that no
loans are extended beyond their current facility expiry date. Management believe that these facilities, together with anticipated sales and
the renewal of some of these loan facilities, mean that the Group can meet its contracted liabilities as they fall due.
Market risk
The Group 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.
Interest rate risk
It is the Group’s policy and practice to minimise interest rate cash flow exposures on long-term financing. The Group 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 27.
In the year to 31 March 2016, if interest rates had moved by 0.5%, this would have resulted in the following movement to net profits and
equity due to movements in interest charges and mark-to-market valuations of derivatives.
0.5% increase – increase in net results and equity
0.5% decrease – decrease in net results and equity
Foreign currency exchange risk
Group
Impact on
results
31.3.16
£000
7,684
(7,245)
Group
Equity
impact
31.3.16
£000
7,684
(7,245)
Company
Impact on
results
31.3.16
£000
771
(185)
Company
Equity
impact
31.3.16
£000
771
(185)
Due to its operations in Poland and its investment in a non-UK based property developer, the Group has exposure to exchange
movements on foreign currencies. Management monitors its exposure to risks associated with foreign currency exchange risk and
reviews any requirements to act to minimise these risks.
In the year to 31 March 2016 the Group made foreign exchange gains of £100,000 (2015: losses of £2,061,000) resulting from movements
in foreign exchange rates during the year affecting its assets and liabilities related to its overseas operations.
The Group’s balance sheet translation exposure is summarised as follows:
Gross currency assets
Gross currency liabilities
Net exposure
Euro
31.3.16
£000
1,447
(66)
1,381
Zloty
31.3.16
£000
538
(788)
(250)
US dollars
31.3.16
£000
3,103
-
3,103
Euro
31.3.15
£000
16,897
(7,134)
9,763
Zloty
31.3.15
£000
927
(1,139)
(212)
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
Euro
31.3.16
£000
1,320
-
1,320
Zloty
31.3.16
£000
1,168
-
1,168
Euro
31.3.15
£000
6,151
-
6,151
US dollars
31.3.15
£000
4,331
-
4,331
Zloty
31.3.15
£000
4,462
-
4,462
The Group’s main currency exposure is to the US Dollar. 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: £138,000 (2015: £976,000), Zloty: £25,000 (2015: £21,000), US dollar: £310,000
(2015: £433,000).
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:
£132,000 (2015: £615,000), Zloty: £117,000 (2015: £446,000).
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
138
NOTES TO THE FINANCIAL STATEMENTS
37. POST BALANCE SHEET EVENTS
There were no material post balance sheet events.
38. 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 2016. Subsidiary undertakings are entities for which the Group is exposed to variable returns and has the
ability to control those returns. 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, where both parties are exposed to variable returns but neither has control over those returns. They 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 Governance Review on page 77.
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, where the sale of the land is not
conditional on the construction of the buildings and is not reversible in the event that the building is not constructed. 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.
Property advisory/development management services – where the Group provides these services to the third party property site owner
the Group recognises income over the period these services are provided and in accordance with the specific terms of the contract. If
the amount and payment of the consideration for these services are contingent upon a future event (such as sale of the property) and if
the fair value of the consideration can be reliably estimated, the Group recognises this income as its services are performed, discounting
for time and risk if appropriate.
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.
Deferred income – money received in advance of the provision of goods or services is held in the balance sheet until the income can be
recognised in the Income Statement.
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 83 to 102. 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. 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.
The amount charged to the Income Statement is credited to the Retained Earnings reserve.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
NOTES TO THE FINANCIAL STATEMENTS
139
38. PRINCIPAL ACCOUNTING POLICIES CONTINUED
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 5 Hanover Square, London W1S 1HQ 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%
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 the Group 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 15.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
140
NOTES TO THE FINANCIAL STATEMENTS
38. PRINCIPAL ACCOUNTING POLICIES CONTINUED
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 either based on the interest paid (where a project has a specific loan) or calculated using the
Group’s weighted average cost of borrowings (where there are no specific borrowings for the project). 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 below historic
cost, in which case they are recognised in the Income Statement. Upon disposal, accumulated fair value adjustments are included in the
Income Statement.
Held for sale investments
Investments are defined as held for sale when the Group intends to sell the investment and if sale is highly probable. Such held for sale
investments are measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair
value less costs to sell.
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, cash held at solicitors, cash in blocked accounts 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 and the Group’s retail bond are initially recorded at fair value, net of finance and other costs
yet to be amortised in accordance with IAS39. Embedded derivatives contained within the borrowing agreements are treated in
accordance with IAS39, which includes consideration of whether embedded derivatives require bifurcation. The retail bond and bank
loans are held at amortised cost.
Convertible bonds are designated as fair value through the profit and loss and so are presented on the Balance Sheet at fair value, with
all gains and losses, including the write-off of issuance costs, recognised in the Income Statement. The interest charge in respect of the
coupon rate on the bonds has been recognised within Finance Costs on an accruals basis.
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.
Gains or losses on extinguishing debt are recognised in the Income Statement in the period in which they occur.
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 swaps, 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.
A derivative property asset is recognised on the Balance Sheet when the Group has contractually assigned an existing purchase
contract. A derivative property asset is initially recorded at its fair value and is remeasured at each reporting period date to its fair value,
which is based upon the future contracted cash flow discounted for both time and risk. Any change in fair value is recognised in the
Income Statement as a development profit.
Further information on the categorisation of financial instruments can be found in note 36.
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.
In accordance with IAS17, operating leases receipts and payments are spread on a straight-line basis over the length of the lease.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
NOTES TO THE FINANCIAL STATEMENTS
141
38. PRINCIPAL ACCOUNTING POLICIES CONTINUED
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 recognised in Other Comprehensive Income. 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 per share
Earnings 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 on
consolidation. 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 value of “Own shares held” with reference to the expected cash proceeds and accounts for any difference
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 statements. These estimates are based on
historical experience and various other assumptions that management and the Board of Directors believe are reasonable under the
circumstances. The results of these considerations form the basis for making judgements about the carrying value of assets and
liabilities that are not readily available from other sources.
Areas requiring the use of estimates and critical judgement that may significantly impact on the Group’s earnings and financial position are:
Estimates
- 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 periods based on future forecast performance and employee retention (note 30);
- The provision for future bonuses payable under the Annual Bonus scheme (note 8);
- Valuation of investment properties, including Directors’ valuations and where external valuers are used to provide third party
valuations (note 15); and
- Directors’ valuation of land, development and trading properties include subjective assumptions including the results of future
planning decisions, future construction costs and future sales values and timings (note 20).
Judgements
- 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 11);
- An assessment of the most suitable accounting treatment for convertible bonds (note 26);
- Consideration of the nature of joint arrangements. In the context of IFRS 10, this involves consideration of where the control lies and
whether either party has the power to vary its returns from the arrangements. In particular, significant judgement is exercised where
the shareholding of the Group is not 50% (note 19); and
- Consideration of whether an investment property purchase that has exchanged but not completed should be recognised as
investment property under IAS 40. The judgement lies in assessing whether the exchange is unconditional, in which case it is
recognised (note 15).
- Determination of the most appropriate percentage interest in our Joint Ventures to equity account for, where our economic interest
can differ to our ownership interest (see note 19).
- Recognition of development management service income, where payment for these services is triggered by a future event (sale or
letting of the property) and where estimation is required to determine the stage of completion.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
142
NOTES TO THE FINANCIAL STATEMENTS
39. SUBSIDIARY AND RELATED UNDERTAKINGS
The Company’s subsidiary and related undertakings are listed below. All undertakings operate in the United Kingdom other than Helical
Wroclaw Sp.Z.o.o, EC Property Management Sp.Z.o.o and Helical Asset Management Sp.Z.o.o and, unless otherwise indicated, are
incorporated and registered in the United Kingdom.
Company
Direct/Indirect
Country
Ultimate %Age
Active Subsidiaries
207 Old Street Unit Trust
211 Old Street Unit Trust
61 Southwark Street Limited
Aycliffe & Peterlee Development Company Limited
Aycliffe & Peterlee Investment Company Limited
Baylight Developments Limited
Bramshott Place Management Limited
CPP Investments Limited
Dencora (Docklands) Limited
Dencora (Fordham) Limited
Downtown Space Properties LLP
Durrants Management Limited
EC Property Management SP. Z O.O.
Embankment Place (LP) Limited
G2 Estates Limited
Glenlake Limited
Harbour Developments (Bracknell) Limited
Hb Sawston No 3 Limited
Helical (Alfreton) Limited
Helical (Artillery) Limited
Helical (Ashford) Limited
Helical (Basildon Retail) LP
Helical (Basildon) B.V.
Helical (Battersea) Limited
Helical (Beacon Road) Limited
Helical (Booth St) Limited
Helical (Boss 2) Limited
Helical (Boss) Limited
Helical (Bramshott Place) Limited
Helical (Broadway) Limited
Helical (Brownhills) Limited
Helical (Cannock) Limited
Helical (Cardiff) Limited
Helical (Chart) Limited
Helical (Chester) Limited
Helical (Churchgate) Limited
Helical (Cobham) Limited
Helical (Corby Investments) Limited
Helical (Crownhill) Limited
Helical (CS Holdings) Jersey Limited
Helical (CS) Jersey Limited
Helical (Dale House) Limited
Helical (Doxford) Limited
Helical (Durrants) Limited
Helical (East Kilbride) Limited
Helical (Eastcheap) Limited
Helical (Ellesmere Port) Limited
Helical (Enterprise) Limited
Helical (Exeter) Limited
Helical (Fordham) Limited
Helical (FP) Holdings Limited
Helical (FP) Jersey Holdings Limited
Helical (Glasgow) Limited
Helical (Gracelands) Limited
Helical (Great Yarmouth) Limited
Helical (Hailsham) Limited
Helical (Halesowen) Limited
Helical (Harrogate) Limite
Helical (Havant) Limited
Helical (Hedge End) Limited
Helical (Hinckley) Limited
Helical (Huddersfield) Limited
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
Indirect
Indirect
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Direct
Indirect
Direct
Indirect
Indirect
Direct
Direct
Indirect
Direct
Direct
Direct
Direct
Direct
Indirect
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Direct
Direct
Indirect
Direct
Direct
Direct
Direct
Direct
Indirect
Direct
Indirect
Direct
Direct
Indirect
Direct
Indirect
Direct
Indirect
Indirect
Direct
Indirect
Indirect
Direct
Direct
Direct
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Jersey
Jersey
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Poland
UK
UK
UK
UK
UK
UK
UK
UK
UK
Netherlands
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Jersey
Jersey
Jersey
UK
UK
UK
UK
Jersey
UK
UK
UK
UK
UK
Jersey
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
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%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
HELICAL BAR PLC REPORT & ACCOUNTS 2016
NOTES TO THE FINANCIAL STATEMENTS
143
39. SUBSIDIARY AND RELATED UNDERTAKINGS CONTINUED
Company
Direct/Indirect
Country
Ultimate %Age
Helical (Jarrow) Limited
Helical (LB) Limited
Helical (Liphook) Limited
Helical (Merlin Park) Limited
Helical (Mint) Limited
Helical (Newmarket) B.V.
Helical (Northampton) Limited
Helical (OS Holdco) Jersey Limited
Helical (Peterborough) Limited
Helical (Porchester) Limited
Helical (Portbury) Limited
Helical (Power Road) Limited
Helical (Quartz) Limited
Helical (Salford) Limited
Helical (Scarborough) Limited
Helical (Sevenoaks) Limited
Helical (Shepherds) Limited
Helical (Shoreditch) Limited
Helical (Six) Limited
Helical (Southend) Limited
Helical (Stevenage) Limited
Helical (Stone) Limited
Helical (Sun) Limited
Helical (Sutton-In-Ashfield) B.V.
Helical (Sutton-In-Ashfield) Holdings B.V.
Helical (Telford) Limited
Helical (Wellingborough) Limited
Helical (Whitechapel) Limited
Helical (Winterhill) Ltd
Helical (Yate) Limited
Helical Asset Management SP. Z O.O.
Helical B.V.
Helical Bar (Cathcart) Limited
Helical Bar (City Investments) Limited
Helical Bar (Drury Lane) Limited
Helical Bar (Falkirk) Limited
Helical Bar (Great Dover Street) Limited
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100 Helical Bar (Jersey) Limited
101 Helical Bar (Maple) Limited
102 Helical Bar (Mitre Square) Developments Limited
103 Helical Bar (St Vincent Street) Limited
104 Helical Bar (Wales) Limited
105 Helical Bar (White City) Limited
106 Helical Bar (Yoker) Limited
107 Helical Bar Developments (South East) Limited
108 Helical Bar Developments Limited
109 Helical Bar Services Limited
110 Helical Finance (AV) Limited
111 Helical Finance (BAR) Limited
112 Helical Finance (RBS) Limited
113 Helical Food Retail Limited
114 Helical Investment Holdings Limited
115 Helical Jersey Holdings Limited
116 Helical Jersey Investment Holdings Limited
117 Helical Old Street Jersey Holdings Limited
118 Helical Old Street Jersey Limited
119 Helical Poland SP. Z O.O.
120 Helical Properties Investment Limited
121 Helical Properties Limited
122 Helical Properties Retail Limited
123 Helical Retail (RBS) Limited
124 Helical Retail Limited
125 Helical Wroclaw SP. Z O.O.
126 Maudslay Park Management Limited
127 Metropolis Property Limited
128 Millbrook Village Management Limited
129 Newmarket LP
Direct
Direct
Indirect
Indirect
Direct
Indirect
Direct
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Indirect
Direct
Direct
Direct
Direct
Direct
Indirect
Direct
Direct
Indirect
Direct
Direct
Indirect
Direct
Direct
Direct
Direct
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Indirect
Direct
Direct
Direct
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
UK
UK
Jersey
UK
UK
Netherlands
UK
Jersey
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Netherlands
Netherlands
UK
UK
UK
UK
UK
Poland
Netherlands
UK
UK
UK
UK
UK
Jersey
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Jersey
Jersey
Jersey
Jersey
Poland
UK
UK
UK
UK
UK
Poland
UK
UK
UK
UK
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%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
144
NOTES TO THE FINANCIAL STATEMENTS
39. SUBSIDIARY AND RELATED UNDERTAKINGS CONTINUED
Company
Direct/Indirect
Country
Ultimate %Age
130 Old Street Unitholder No 1 Limited
131 Old Street Unitholder No 2 Limited
132 Renaissance Villages Limited
133 Sutton-In-Ashfield LP
134 The Asset Factor Limited
1
2
3
4
5
6
7
8
9
10
11
Joint Ventures And Joint Operations
Abbeygate Helical (C4.1) LLP
Abbeygate Helical (Leisure Plaza) Limited
Barts Close Office Limited
Barts One Limited
Barts Square Active One Limited
Barts Square First Limited
Barts Square First Office Limited
Barts Square First Residential Limited
Barts Square Land One Limited
Barts Two Limited
Barts, L.P. Acting Through Its General Partner
Helical Jersey Investment Holdings Limited
Creechurch Place Limited
Dencora (Newmarket Road) LLP
Haslucks Green Limited
Helical Bar (Mitre Square) Limited
King Street Developments (Hammersmith) Limited
12
13
14
15
16
17 Obc Development Management Limited
18 Old Street Holdings Gp Limited
19 Old Street Holdings L.P.
20
21
PH Properties Limited
Shirley Advance LLP
Dormant Subsidiaries And Joint Ventures
14 Fieldgate Street Limited
Abbeygate Helical (MK) Limited
Abbeygate Helical (Willen) Limited
Abbeygate Helical (Winterhill) Limited
Albion Land (Bushey Mill) Limited
Banagate Limited
Basildon General Partner Limited
Basildon Nominee Limited
Cranmer Investments (Whitstable) Limited
Crondall Road Limited
Dencora (Harlow) Limited
Gresham Street Limited
Groovemodel Limited
Hallco 850 Limited
HB Cambs No 3 Limited
HB Dales Manor No 3 Limited
HB Group Services Limited
HB Sawston No. 1 Limited
HB Sawston No. 2 Limited
HB Sawston No. 4 Limited
Helical (Aldridge) Limited
Helical (Angel 1) Limited
Helical (Basildon) Limited
Helical (Bow) Limited
Helical (Cawston) Limited
Helical (CG) Limited
Helical (CG2) Limited
Helical (CMV) Limited
Helical (Colchester) Limited
Helical (Cowley) Limited
Helical (CR) Limited
Helical (Crawley Roadway) Limited
Helical (Crawley) Limited
Helical (East Grinstead) Limited
Helical (Fleet) Limited
Helical (Fleet) No 1 Limited
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
Indirect
Indirect
Direct
Indirect
Direct
Direct
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Direct
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Direct
Direct
Direct
Direct
Indirect
Indirect
Direct
Indirect
Indirect
Direct
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Indirect
Indirect
Direct
Direct
Direct
Direct
Indirect
Jersey
Jersey
UK
UK
UK
UK
UK
Jersey
Jersey
Jersey
UK
Jersey
Jersey
UK
Jersey
United States
Jersey
UK
UK
UK
UK
UK
Jersey
Jersey
Virgin Islands, British
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
100%
100%
100%
100%
100%
50%
50%
33%
33%
33%
33%
33%
33%
33%
33%
33%
10%
53%
50%
10%
50%
33%
33%
33%
60%
50%
100%
50%
50%
50%
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%
HELICAL BAR PLC REPORT & ACCOUNTS 2016
NOTES TO THE FINANCIAL STATEMENTS
145
39. SUBSIDIARY AND RELATED UNDERTAKINGS CONTINUED
Company
Direct/Indirect
Country
Ultimate %Age
Helical (Fleet) No 2 Limited
37
Helical (HRH) Limited
38
Helical (HUB) Limited
39
Helical (Interchange) Limited
40
Helical (Kidlington) Limited
41
Helical (Letchworth) Limited
42
Helical (Mill Street) Limited
43
Helical (Milton) Limited
44
Helical (Motherwell) Limited
45
Helical (Newmarket) Limited
46
Helical (Paignton) Limited
47
Helical (SA) Limited
48
Helical (Sawston) Limited
49
Helical (Southall) Limited
50
Helical (Southampton) Limited
51
Helical (Stockport) Limited
52
Helical (Sutton-In-Ashfield) Limited
53
Helical (West Drayton) Limited
54
Helical (West London) Limited
55
Helical (Westfields) Limited
56
Helical (Witham) Limited
57
Helical (Woking) Limited
58
Helical (Worthing) Limited
59
Helical Bar (Bunhill Row) Limited
60
Helical Bar (City Developments) Limited
61
Helical Bar (CL) Investment Company Limited
62
Helical Bar (Epsom) Limited
63
Helical Bar (Fenchurch Street) Limited
65
Helical Bar (Hawtin Park No.1) Limited
66
Helical Bar (Hawtin Park No.2) Limited
67
Helical Bar (Hawtin Park No.3) Limited
68
Helical Bar (Scotland) Limited
69
Helical Bar Trustees Limited
71
Helical Group Limited
72
Helical Nominees Limited
73
Helical Properties (HSM) Limited
74
Helical Properties (RS) Limited
75
Helical Properties (WSM) Limited
76
Helical Registrars Limited
77
Helical Retirement Homes Limited
78
HGCI (Holdco) Limited
79
HGCI (Transco) Limited
80
HGCI (UK) Limited
81
HGCI Holdings Limited
82
HGCI Intermediate Limited
83
84
HGCI Limited
85 Matchearth Limited
86 Maudslay Park Limited
87
88
89
90
91
92
93
94
95
96
97
98
99
100 Sutton-In-Ashfield General Partner Limited
101 Sutton-In-Ashfield Nominee Limited
102 The Morgan Apartments Management Company Limited
Newmarket General Partner Limited
Newmarket Nominee Limited
Paperbrick Limited
Prescot Street Investments Limited
Ratelawn Limited
Shopfile Limited
Spring (EFS) Limited
Spring (EM) Limited
Spring (Holdings) Limited
Spring (ITE) Limited
Spring (No.1) Limited
Spring (No.2) Limited
Spring (No.3) Limited
Indirect
Direct
Direct
Direct
Indirect
Indirect
Direct
Direct
Indirect
Direct
Direct
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Direct
Direct
Indirect
Indirect
Indirect
Direct
Indirect
Direct
Direct
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Direct
Indirect
Direct
Direct
Indirect
Indirect
Indirect
Indirect
Direct
Direct
Direct
Direct
Direct
Indirect
Direct
Direct
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Jersey
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
100%
100%
100%
90%
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%
75%
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%
HELICAL BAR PLC REPORT & ACCOUNTS 2016 FINANCIAL STATEMENTS
146
HELICAL BAR PLC REPORT & ACCOUNTS 2016
ADDITIONAL
INFORMATION
APPENDIX 1 – SEE-THROUGH ANALYSIS
147
APPENDIX 2 – SEE-THROUGH ANALYSIS RATIOS 149
APPENDIX 3 – FIVE YEAR REVIEW
APPENDIX 4 – PROPERTY PORTFOLIO
SHAREHOLDER INFORMATION
GLOSSARY OF TERMS
FINANCIAL CALENDAR
ADVISORS
150
151
154
155
156
156
APPENDIX 1 – SEE-THROUGH ANALYSIS
147
This analysis incorporates the separate components of the results of the consolidated subsidiaries and Helical’s share of its joint ventures
results into a ‘See-through’ analysis of our property portfolio, debt profile and the associated income streams and financing costs, to
assist in providing a comprehensive overview of the Group’s activities.
SEE-THROUGH NET RENTAL INCOME AND PROPERTY OVERHEADS
Helical’s share of the gross rental income, head rents payable and property overheads from property assets held in subsidiaries and in
joint ventures are shown in the table below.
Gross rental income
Total gross rental income
Rents payable
– subsidiaries
– joint ventures
– subsidiaries
– joint ventures
2012
£000
23,058
6,645
29,703
(418)
(848)
2013
£000
25,816
6,193
32,009
(342)
(802)
2014
£000
29,994
6,601
36,595
(476)
(625)
2015
£000
38,332
6,098
44,430
(269)
(809)
2016
£000
45,505
1,828
47,333
(80)
-
Property overheads
– subsidiaries
(3,938)
(5,186)
(4,328)
(3,489)
(2,728)
Net rental income attributable to profit share partner
Total property costs
See-through net rental income
– joint ventures
(737)
(826)
(510)
(710)
(539)
(788)
(877)
(341)
(6,767)
(7,550)
(6,756)
(5,785)
22,936
24,459
29,839
38,645
(558)
(533)
(3,899)
43,434
SEE-THROUGH NET DEVELOPMENT PROFITS
Helical’s share of development profits from property assets held in subsidiaries and in joint ventures are shown in the table below.
In parent and subsidiaries
In joint ventures
Total gross development profit
Provision against stock
See-through development profits
2012
£000
5,166
-
5,166
(4,511)
2013
£000
7,616
-
7,616
(660)
2014
£000
62,273
2,199
64,472
552
2015
£000
16,126
1,902
18,028
(452)
655
6,956
65,024
17,576
SEE-THROUGH NET GAIN ON SALE AND REVALUATION OF INVESTMENT PROPERTIES
Revaluation surplus on investment properties
– subsidiaries
– joint ventures
Total revaluation surplus
2012
£000
3,664
581
4,245
2013
£000
3,723
3,109
6,832
Net gain/(loss) on sale of investment properties
– subsidiaries
(376)
(2,388)
2014
£000
20,714
15,710
36,424
8,611
Total net gain/(loss) on sale of investment properties
(376)
(2,388)
See-through net gain on sale and revaluation of investment properties
3,869
4,444
8,580
45,004
– joint ventures
-
-
(31)
2015
£000
66,904
26,134
93,038
2,480
1,091
3,571
96,609
2016
£000
30,700
3,223
33,923
(6,448)
27,475
2016
£000
53,508
2,316
55,824
2,385
41,553
43,938
99,762
HELICAL BAR PLC REPORT & ACCOUNTS 2016 ADDITIONAL INFORMATION 148
APPeNdIx 1 – See-THRouGH ANAlySIS
SEE-THROUGH NET FINANCE COSTS
Helical’s share of the interest payable, finance charges, capitalised interest and interest receivable on bank borrowings and cash deposits
in subsidiaries and in joint ventures are shown in the table below.
Interest payable on bank loans and overdrafts
– subsidiaries
Total interest payable on bank loans and overdrafts
other interest payable and similar charges
Interest capitalised
Total finance costs
Interest receivable and similar income
– joint ventures
– subsidiaries
– subsidiaries
2012
£000
10,808
2,223
13,031
901
2013
£000
10,445
2,269
12,714
1,658
2014
£000
14,298
3,051
17,349
2,520
2015
£000
21,055
3,644
24,699
6,264
(3,300)
(2,526)
(2,835)
(3,641)
10,632
11,846
17,034
27,322
2016
£000
25,353
3,673
29,026
3,700
(4,940)
27,786
(5,128)
(21)
– subsidiaries
– joint ventures
(583)
(12)
(887)
(66)
(4,135)
(2,480)
(539)
(43)
See-through net finance costs
10,037
10,893
12,360
24,799
22,637
SEE-THROUGH PROPERTY PORTFOLIO
Helical’s share of the investment, trading and development property portfolio in subsidiaries and joint ventures are shown in the table below.
2012
£000
2013
£000
2014
£000
2015
£000
2016
£000
Investment property
– subsidiaries
326,876
312,026
493,201
701,521
1,041,100
– joint ventures
67,187
94,962
107,504
88,305
11,552
Total investment property
394,063
406,988
600,705
789,826
1,052,652
Trading and development stock
– subsidiaries
99,741
92,874
98,160
92,578
– joint ventures
*44,324
*76,698
*75,368
*102,715
92,035
75,904
Total trading and development stock
Trading and development stock surplus
Total trading and development stock surpluses
Total trading and development stock
See-through property portfolio
– subsidiaries
– joint ventures
144,065
169,572
173,528
195,293
167,939
33,107
1,435
34,542
48,837
1,028
49,865
25,719
1,760
27,479
25,230
11,013
36,243
12,412
7,000
19,412
178,607
219,437
201,007
231,536
187,351
572,670
626,425
801,712
1,021,362
1,240,003
*Trading and development stock of joint ventures includes the Group’s share of development stock of Helical Sosnica Sp. Zoo (see note 19).
SEE-THROUGH NET BORROWINGS
Helical’s share of borrowings and cash deposits in parent and subsidiaries and joint ventures are shown in the table below.
In parent and subsidiaries
– gross borrowings less than one year
59,203
39,295
2012
£000
2013
£000
2014
£000
1,275
2015
£000
45,428
– gross borrowings more than one year
203,992
220,446
374,811
552,813
Total
263,195
259,741
376,086
598,241
In joint ventures
– gross borrowings less than one year
1,500
720
12,453
-
– gross borrowings more than one year
*54,342
*72,509
*60,134
*69,997
Total
55,842
73,229
72,587
69,997
In parent and subsidiaries
Cash and cash equivalents
(35,411)
(36,863)
(63,237)
(120,993)
In joint ventures
Cash and cash equivalents
*(4,024)
*(12,757)
*(20,377)
*(15,348)
See-through net borrowings
279,602
283,350
365,059
531,897
*Gross borrowings in joint ventures include the Group’s share of borrowings of Helical Sosnica Sp. Zoo (see note 19).
2016
£000
885
733,178
734,063
-
34,626
34,626
(74,670)
(12,177)
681,842
HELICAL BAR PLC REPORT & ACCOUNTS 2016
APPENDIX 2 – SEE-THROUGH
ANALYSIS RATIOS
149
Interest cover
Net rental income
Trading profits/(losses)
development profits (before provisions)
Gain/(loss) on sale of investment properties
Net operating income
Finance costs
Interest cover
Balance sheet
Property portfolio
Net borrowings
Shareholders’ funds
ePRA net asset value
loan to value
Gearing
Gearing based on ePRA net asset value
31.03.12
£000
22,936
–
5,166
(376)
27,726
31.03.13
£000
24,459
(1)
7,616
(2,388)
29,686
31.03.14
£000
29,839
252
64,472
8,580
103,143
31.03.15
£000
38,645
2,503
18,028
3,571
62,747
31.03.16
£000
43,434
-
33,923
43,938
121,295
10,037
10,893
12,360
24,799
22,637
2.8x
2.7x
8.3x
2.5x
5.4x
572,670
279,602
253,730
294,398
49%
110%
95%
626,425
283,350
253,768
313,733
45%
112%
90%
801,712
365,059
340,527
370,062
46%
107%
99%
1,021,362
1,240,003
531,897
404,363
469,128
52%
132%
113%
681,842
486,189
546,797
55%
140%
125%
HELICAL BAR PLC REPORT & ACCOUNTS 2016 ADDITIONAL INFORMATION 150
APPENDIX 3 – FIVE YEAR REVIEW
INCOME STATEMENTS
Revenue
Net rental income
development profit
Provisions against stock
Trading profit/(loss)
Share of results of joint ventures
other income/(expense)
Gross profit before gain/(loss) on investment properties
Gain/(loss) on sale of investment properties
Revaluation surplus on investment properties
Impairment of available-for-sale investments
31.3.12
£000
52,968
17,876
5,166
(4,511)
-
2,472
113
21,116
(376)
3,664
-
Administrative expenses excluding performance related awards
(7,385)
Performance related awards
Finance costs
Finance income
Movement in fair value of derivative financial instruments
Convertible Bond adjustment
Foreign exchange gains/(losses)
Profit before tax
Tax
Profit after tax
BALANCE SHEETS
(415)
(8,409)
583
(306)
-
(1,064)
7,408
158
7,566
31.3.13
£000
65,439
19,578
7,616
(660)
(1)
3,854
(547)
29,840
(2,388)
3,723
-
(8,092)
(6,828)
(9,577)
887
(2,573)
-
17
5,009
815
5,824
31.3.12
£000
31.3.13
£000
326,876
312,026
Investment portfolio
land, developments and trading properties
Group’s share of investment properties held by joint ventures
Group’s share of land, trading and development properties held
by joint ventures
99,741
67,187
15,709
Group’s share of land, trading and development stock surpluses 34,542
Group’s share of total properties at fair value
Net debt
Group’s share of net debt of joint ventures
Group’s share of net debt
Shareholders’ funds
ePRA shareholders’ funds
dividend per ordinary share paid/payable
dividend per ordinary share declared
ePRA earnings per ordinary share
ePRA net assets per share
572,670
227,784
36,409
279,602
253,730
294,398
4.90p
5.15p
3.4p
250p
92,874
94,962
23,797
49,685
626,425
222,878
38,521
283,350
253,768
313,733
5.25p
5.55p
2.4p
264p
31.3.14
£000
31.3.15
£000
31.3.16
£000
123,637
106,341
116,500
24,402
62,273
552
252
16,448
230
104,157
8,611
20,714
(88)
(8,816)
(17,860)
(13,983)
4,135
5,312
-
(501)
101,681
(14,126)
87,555
31.3.14
£000
493,201
98,160
107,504
27,165
34,233
16,126
(452)
2,503
27,497
368
80,275
2,480
66,904
(773)
(10,156)
(16,374)
(23,678)
2,480
(8,389)
(3,263)
(2,061)
87,445
(12,669)
74,776
42,164
30,700
(6,448)
-
50,469
20
116,905
2,385
53,508
(1,370)
(10,716)
(15,387)
(24,113)
5,128
(6,860)
516
100
120,096
(9,745)
110,351
31.3.15
£000
31.3.16
£000
701,521
1,041,100
92,578
88,305
61,782
92,035
11,552
75,904
27,479
36,243
19,412
801,712
1,021,362
1,240,003
312,849
27,050
365,059
340,527
370,062
5.70p
6.75p
33.3p
313p
477,248
30,966
531,897
404,363
469,128
6.85p
7.25p
2.4p
385p
659,393
22,449
681,842
486,189
546,797
12.6p
8.17p
17.1p
461p
HELICAL BAR PLC REPORT & ACCOUNTS 2016 APPENDIX 4 – PROPERTY PORTFOLIO
151
LONDON PORTFOLIO
Address
Held As
Major
Projects
or Income
Producing Description
Area
sq ft
(NIA)
Vacancy
rate
Shepherds Building, london W14 Investment
The Bower (Ph 1), london eC1
Investment
IP
IP
The Bower (Ph 2), london eC1
Investment
MP
Multi let office building. let to media companies
office and retail buildings
office and retail buildings undergoing refurbishment
and extension
150,389
151,439
179,000
The loom, london e1
Investment
MP
Multi let office building with refurbishment underway
112,229
C-Space, london eC1
Investment
one King Street, london W6
Investment
The Powerhouse, london W4
Investment
Power Road Studios, london W4 Investment
Charterhouse Square, london eC1 Investment
Chart House, london N1
Investment
Barts Square, london eC1
Investment/
development
IP
IP
IP
IP
MP
IP
MP
office refurbishment scheme completed in october 2015
61,880
Recently refurbished office and retail building adjacent
to Hammersmith Broadway
Single let recording studios/office building
Multi let office building with redevelopment potential
39,222
43,325
61,990
office building with scope for extension and refurbishment 43,600
Single let office building with refurbishment and
extension potential
10,505
236,000 sq ft offices, 236 residential apartments and
21,000 sq ft retail/leisure development under construction
459,000
Creechurch Place, london eC3
development
New building due for completion September 2016
drury lane, london WC1
development
Planning consent for comprehensive refurbishment
scheme comprising 68 apartments and retail
273,000
16,000
King Street, london W6
development
Planning permission received for residential, office,
retail and leisure scheme. due to start on site early 2017
300,000
3%
-
n/a
25%
25%
-
-
2%
n/a
-
n/a
n/a
n/a
n/a
REGIONAL PORTFOLIO
Address
Held As
Major
Projects
or Income
Producing Description
1,901,579
Area
sq ft
(NIA)
Vacancy
rate
In Town Retail
Cardiff, The Hayes
leicester
Out-of-town Retail
ellesmere Port
Great yarmouth
Harrogate
Huddersfield
Scarborough
Sevenoaks, Kent
Southend on Sea
Stockport
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
Prime retail parade and listed retail arcades
290,394
6.6%
Town centre shop
Single let retail park
Single let retail park
Single let retail park
Retail park
Retail park
Retail park
Retail park
Single let retail park
6,060
296,454
36,258
38,771
25,290
101,491
28,970
42,490
74,954
31,803
380,027
-
-
-
-
-
-
-
-
-
HELICAL BAR PLC REPORT & ACCOUNTS 2016 ADDITIONAL INFORMATION
152
APPeNdIx 3 – FIve yeAR RevIeW
ReGIoNAl PoRTFolIo CoNTINued
Address
Held As
Major
Projects
or Income
Producing Description
Industrial/Logistics
Alfreton
Bedford
Bolton
Bristol, Portbury
Brownhills, Birmingham
Burton-on-Trent
Cannock
Cannock
Cardiff, Heol Billingsley
Chester
daventry
doncaster, Aspect Way
doncaster, Kirk Sandalls
Gloucester Quedgley
Halesowen
Havant
Hinckley
Jarrow
leighton Buzzard
Milton Keynes, Mailcom
Northampton
Northampton
Peterborough
Rugby
Salford
Stevenage
Stone, Bibby
Stone, opal Way
Sunderland, doxford
Telford
Thetford
Warrington, Calver Quay
Warrington, Raglan Court
Wellingborough
Wolverhampton
yate
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
IP
Single let distribution centre
Single let distribution centre
Single let cash and carry
Single let industrial centre
Single let distribution centre
Single let distribution centre
Single let distribution centre
Single let distribution centre
Single let distribution centre
Single let distribution centre
Single let distribution centre
Single let distribution centre
Single let distribution centre
Multi let industrial estate
Single let industrial centre
Single let distribution centre
Single let distribution centre
Single let industrial centre
Multi let industrial estate
Multi let industrial estate
Multi let industrial estate
Single let distribution centre
Single let industrial centre
Single let distribution centre
Single let industrial centre
Single let distribution centre
Single let industrial centre
Single let industrial centre
Single let industrial centre
Single let distribution centre
Single let distribution centre
Multi let industrial estate
Single let distribution centre
Single let industrial centre
Single let distribution centre
Single let distribution centre
Area
sq ft (NIA)
Vacancy
rate
167,954
36,023
73,433
64,003
52,368
92,715
153,665
103,050
50,684
183,119
44,658
122,591
153,547
43,239
73,088
38,914
188,242
101,476
202,674
25,282
210,383
45,356
158,000
45,045
52,726
74,373
122,301
130,537
139,130
65,225
127,256
70,594
81,342
67,570
119,600
255,714
3,735,877
-
-
-
-
-
100%
-
-
-
-
-
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
HELICAL BAR PLC REPORT & ACCOUNTS 2016
APPeNdIx 3 – FIve yeAR RevIeW
153
ReGIoNAl PoRTFolIo CoNTINued
Address
Held As
Regional Offices
Castle donington
Cheadle
Cobham
Crawley
Glasgow
Manchester, 31 Booth St
Manchester, Churchgate & lee
House
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Manchester, dale House
Investment
Reading
Investment
Regional Office Development
Major
Projects
or Income
Producing Description
Area
sq ft
(NIA)
Vacancy
rate
IP
IP
IP
IP
IP
MP
IP
IP
IP
offices let to National Grid
Single let office building
Single let office building
Single let office building
Multi let office building
Multi let office building to be refurbished
25,471
16,470
21,837
48,131
57,388
25,349
Multi let city centre office building with refurbishment
and asset management potential
248,342
Multi let city centre office building with refurbishment
and asset management potential
office building let to Thames Water
42,282
35,847
-
-
-
-
2%
n/a
15%
8%
-
Glasgow
Land
Bracknell
Hailsham
Telford, dawley Road
Crawley, Tilgate
Retail Development
Cortonwood Retail Park
Truro, Football Club
Shirley, Birmingham
RETIREMENT VILLAGES
development
Pre-let to Scottish Power plc. Pre-sold to M&G
development
development
development
development
development
development
development
Residential land
Commercial development site
Residential land
Commercial development site
Pre-let retail park
Retail park
Shopping centre
Address
Millbrook village, exeter
durrants village, Faygate
Held As
development
development
Major
Projects
or Income
Producing Description
Retirement village development
Retirement village development
Maudslay Park, Great Alne
development
Retirement village development
Bramshott Place, liphook
Penally Farm, liphook
development
development
Bramshott Place Clubhouse
Investment
durrants village Clubhouse
Investment
IP
IP
Retirement village development
Retirement village development
Clubhouse at retirement village
Clubhouse at retirement village
521,117
6.47%
220,000
220,000
n/a
n/a
n/a
n/a
79,750
78,000
195,000
352,750
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Units
Vacancy
rate
n/a
n/a
n/a
n/a
n/a
n/a
n/a
164
156
150
151
40
n/a
n/a
661
HELICAL BAR PLC REPORT & ACCOUNTS 2016 ADDITIONAL INFORMATION
154
SHAREHOLDER
INFORMATION
WEBSITE
The report and financial statements, a list of properties held by
the Group, Company presentations, press releases, the financial
calendar and other information on the Group are available on our
website 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.
REGISTRAR
All general enquiries concerning holdings of ordinary shares in
Helical Bar plc should be addressed to the Company’s Registrar:
Capita Asset Services
The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4Tu
Telephone: 0871 664 0300*
Fax: 020 8639 2220
From outside the uK +44 371 664 0300
Website: www.capitaassetservices.com
email: shareholderenquiries@capita.co.uk
* Calls cost 12p per minute plus your phone company’s access charge. Calls
outside the united Kingdom will be charged at the applicable
international rate. We are open between 9.00 a.m. and 5:30 p.m., Monday
to Friday excluding public holidays in england and Wales.
Further information about ShareGift is available at www.sharegift.
org or by writing to: ShareGift, Po Box 72253, london, SW1P 9lQ.
email: help@sharegift.org. Telephone: 020 7930 3737.
DIVIDENDS
dividend’s declared and paid during the year to 31 March 2016
were as follows:
Dividend
Record
date
Payment
date
2014/15 Final
3 July 2015
31 July 2015
2015/16 Interim
4 december
2015
30 december
2015
Amount
5.15p
2.30p
2015/16 2nd Interim 11 March 2016 4 April 2016
5.15p
dividend payment dates in 2016 will be as follows:
E-COMMUNICATION
Shareholders and all interested parties may choose to be alerted
about updates to the Financial Reports, Results, Press Releases
and event Calendar sections of the Group’s website by
subscribing to the Alert Service in the ‘News’ area of our website.
Dividend
Record
date
Payment
date
2015/16 Final
1 July 2016
29 July 2016
2016/17 Interim december
2016
december
2016
Amount
0.72p
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 dividend confirmation 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 dRIP, key dates of forthcoming dividends
can be found in the online financial calendar in the ‘Investors’ area
at www.helical.co.uk.
SHARE DEALING SERVICE
An online and telephone share dealing service is available to our
shareholders through Capita deal. For further information on this
service or to buy and sell shares online, please visit www.capitadeal.
com. For telephone dealing, please call 0371 664 0445. Calls cost
12p per minute plus your phone company’s access charge. Calls
outside the united Kingdom will be charged at the applicable
international rate. lines are open between 8.00 a.m. - 4.30 p.m.
Monday to Friday excluding publics holidays in england and Wales.
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. It is not just the novice
investor who 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:
• Make sure you get the correct name of the person and organisation.
• Check that they are properly authorised by the FCA (Financial
Conduct Authority) before getting involved.
you can check at www.fca.org.uk/consumers.
• Report the matter to the FCA either by calling 0800 111 6768 or
by completing an online form at:
www.fca.org.uk/consumers/scams/investment-scams/
share-fraud-and-boiler-room-scams/reporting-form.
If you deal with an unauthorised firm, you would not be eligible to
receive payment under the Financial Services Compensation
Scheme. Also keep in mind that some fraudsters use the name of
genuine firms or individuals on the FCA Register to suggest that
they are legitimate. However, authorised firms are unlikely to
contact you out of the blue offering to buy or sell shares.
SHARE PRICE INFORMATION
The latest information on the Helical Bar plc share price is
available on our website www.helical.co.uk.
REGISTERED OFFICE
5 Hanover Square, london, W1S 1HQ
Registered in england and Wales No. 156663.
HELICAL BAR PLC REPORT & ACCOUNTS 2016
GLOSSARY OF TERMS
155
Average unexpired lease term The average unexpired lease term expressed in years.
Capital value (PSF)
Company or Helical
EPRA earnings per share
The open market value of the property divided by the area of the property in square feet.
Helical Bar plc.
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 an undiluted basis. details of the method of the calculation of the
ePRA earnings per share are available from ePRA.
EPRA net assets per share
diluted net asset value per share adjusted to exclude fair value of financial instruments and deferred tax
on capital allowances and on investment properties revaluation, but including the fair value of trading and
development properties in accordance with the best practice recommendations of ePRA.
EPRA triple net asset value
per share
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 (EPS)
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 Group’s valuers at each balance sheet date.
Gearing
Group
Initial yield
IPD
Net assets value per share
(NAV)
Net gearing
Passing rent
Reversionary yield
See-through
See-through net asset value
gearing
Total property return
The normal value of Group borrowings expressed as a percentage of net assets
Helical Bar plc and its subsidiaries.
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.
equity shareholders’ funds divided by the number of ordinary shares at the balance sheet date.
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.
The income/yield from the full estimated rental value of the property on the market value of the property
grossed up to include purchaser’s costs, capital expenditure and capitalised revenue expenditure.
The net rental income, net finance cost, property portfolio and net borrowings of the Group and the
Group’s share in its Joint ventures.
The see-through net borrowings expressed as a percentage of ePRA net asset value.
The total of net rental income, trading and development profits and net gain on sale and revaluation of
investment properties on a See-through basis.
Total shareholder return (TSR) The growth in the ordinary share price as quoted on the london Stock exchange plus dividends per share
received for the period expressed as a percentage of the share price at the beginning of the period.
True equivalent yield
The constant capitalisation rate which, if applied to all cash flows from an investment property, including
current rent, reversions to current market rent and such items as voids and expenditures, equates to the
market value. Assumes rent is received quarterly in advance.
Unleveraged returns
Total property gains and losses (both realised and unrealised) plus net rental income expressed as a
percentage of the total value of the properties.
HELICAL BAR PLC REPORT & ACCOUNTS 2016 ADDITIONAL INFORMATION 156
FINANCIAL CALENDAR
2016
30 June 2016
1 July 2016
25 July 2016
29 July 2016
ex-dividend date for final ordinary dividend
Record date for final ordinary dividend
Annual General Meeting
Final ordinary dividend payable
24 November 2016 (provisional)1
Half year Results and interim ordinary dividend announced
December 2016 (provisional)2
December 2016 (provisional)2
ex-dividend date for interim ordinary dividend
Registration qualifying date for interim ordinary dividend
2017
May 2017
Notes
Announcement of Full year Results to 31 March 2017
1
The announcement date of the Half year Results will be confirmed in october 2016
2 dates for the potential interim dividend will be confirmed in the Half year Results Announcement
ADVISORS
Registrars
Bankers
Joint stockbrokers
Auditors
Merchant bankers
Corporate solicitors
CONTACT DETAILS
Helical Bar plc
Registered office
5 Hanover Square
london
W1S 1HQ
020 7629 0113
email: info@helical.co.uk
www.helical.co.uk
Capita Asset Services
Aviva Commercial Finance limited
Barclays Bank PlC
deutsche Pfandbriefbank AG
HSBC Bank PlC
The Royal Bank of Scotland PlC
Santander uK PlC
lloyds Bank PlC
J.P. Morgan Cazenove
Numis Securities limited
Grant Thornton uK llP
lazard & Co limited
Ashurst llP
HELICAL BAR PLC REPORT & ACCOUNTS 2016 Design: SG Design {sg-design.co.uk}
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HELICAL BAR PLC
Registered Office
5 Hanover Square
London
W1S 1HQ
T: 020 7629 0113
F: 020 7408 1666
E: info@helical.co.uk
www.helical.co.uk