HELICAL PLC
Annual Report and Accounts 2019
01
STRATEGIC REPORT
The Helical Difference
Creating Inspiring Spaces
Chief Executive’s Statement
Our Market
Our Strategy
Strategy in Action
Business Model
Key Performance Indicators
The London Portfolio
The Manchester Portfolio
The Property Portfolio in Numbers
Financial Review
Principal Risks Review
Sustainability at Helical
66
GOVERNANCE
Chairman’s Review
Board of Directors
Governance Review
Nominations Committee Report
Audit and Risk Committee Report
Directors’ Remuneration Report
Report of the Directors
Statement of Directors’ Responsibilities
101
FINANCIAL STATEMENTS
Independent Auditor’s Report to the Members of Helical plc
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
141
ADDITIONAL INFORMATION
Appendix 1 – See-through Analysis
Appendix 2 – Total Accounting Return and Total Property Return
Appendix 3 – Five Year Review
Appendix 4 – Property Portfolio
Appendix 5 – EPRA Performance Measures
Shareholder Information
Glossary of Terms
Financial Calendar and Advisors
1
2
8
12
14
18
26
28
30
38
42
46
52
58
66
68
70
76
78
81
98
100
101
108
108
109
110
111
112
141
143
144
145
146
147
148
149
FINANCIAL HIGHLIGHTS
A STRONG YEAR
OF PROGRESS
The results for the year to 31 March 2019
reflect significant progress for Helical,
now an office-led investment and
development company focused purely
on London and Manchester.
NET ASSETS (£M)
567
+6.3%
EPRA NET ASSET
VALUE PER SHARE1 (P)
482
+3.0%
2018
£534m
2018
468p
PROFIT BEFORE
TAX (£M)
TOTAL DIVIDEND
PER SHARE (P)
43.5
+41.2%
10.10
+6.3%
2018
£30.8m
2018
9.50p
1 See Glossary for definition of terms.
PORTFOLIO
OVERVIEW
Helical divides its property activities
into two core markets: London and
Manchester offices.
LONDON
MANCHESTER
86%
14%
TOTAL PORTFOLIO BY FAIR VALUE1
£876m
IFRS EARNINGS PER SHARE
35.8p
TOTAL PROPERTY
RETURN1
£81.4m
2018
22.3p
2018
£68.8m
SEE-THROUGH LOAN
TO VALUE1
EPRA TRIPLE NET ASSET
VALUE PER SHARE1
30.6%
465p
2018
39.9%
2018
448p
TOTAL SHAREHOLDER
RETURN
EPRA LOSS
PER SHARE1
5.2%
8.4p
2018
6.1%
2018
7.0p
1 See Glossary for definition of terms.
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Our portfolio is a select
showcase for London
and Manchester.
We create buildings for today’s occupiers
who demand more inspiring space with
distinctive architectural detail, carefully
curated public realm, market leading
amenities, high quality management
and our flexible approach to leasing.
Applying this philosophy we seek to
maximise Shareholder returns through
delivering income growth from creative
asset management and capital gains
from our development activity.
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HELICAL PLC
Annual Report and Accounts 2019
1
CREATING INSPIRING SPACES
Helical understands that attracting and retaining
the best people is at the heart of our customers’
priorities when choosing their offices. Our buildings
are designed to the highest connectivity and
sustainability standards, to provide space for
creativity and collaboration. This helps our
customers in winning the “war for talent”.
2
Photograph Philip Vile
HELICAL PLCAnnual Report and Accounts 2019 CONNECTIVITY
We have achieved either a
Gold or Platinum WiredScore
on all our completed offices.
This benchmark ensures the
high quality of the buildings’
digital infrastructure.
SUSTAINABILITY
We always aim to achieve either
an Excellent or Very Good BREEAM
score on our developments and
refurbishments, demonstrating
the environmental, social and
economic sustainability
performance of our buildings.
33
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION CREATING INSPIRING SPACES
We endeavour to either
improve or introduce new public
realm at all of our developments.
Whether that is by creating the
internal walk through at The
Loom, pedestrianising new
squares at Barts Square, or
adding new landscaped pocket
parks at One Creechurch Place.
These initiatives improve the
locality for not only our tenants
but the wider public.
THERE IS ALWAYS
SOMETHING IN YOUR
LINE OF SIGHT THAT
IS QUITE CREATIVE
AND INSPIRING."
FREYA DAVIDSON, SPAREROOM,
CHURCHGATE & LEE,
MANCHESTER
THE BOWER, LONDON EC1
• A new pedestrianised street, featuring nine restaurant units
• The Hub communal square, which is open to the public
• On-site café Franze & Evans provides a relaxed atmosphere to network
• 400 cycle spaces, as well as showers and lockers
• Artwork by both local and international artists
4
HELICAL PLCAnnual Report and Accounts 2019 At Helical we take a design led approach to
both refurbishments and new developments;
this is tailored to each building to ensure that it
not only integrates with but adds to the local
environment. By working closely with leading
architects and consultants we provide high quality,
innovative and sustainable spaces that meet
occupiers’ needs.
HELICAL PLC
Annual Report and Accounts 2019
55
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION CREATING INSPIRING SPACES
Helical applies a flexible approach to
leasing as we understand the need to
accommodate our tenants’ changing
business requirements; several occupiers
have moved within the portfolio over the
last year as their businesses have grown.
66
HELICAL PLC
Annual Report and Accounts 2019
HELICAL PLCAnnual Report and Accounts 2019 One of the key elements of feedback
from our occupier survey was that
tenants felt they would benefit from
more networking opportunities on-site.
As such we have implemented various
tenant engagement initiatives including
educational talks, charity events, fitness
classes and post work drink receptions.
We take an active role in
the management of all our
buildings, meeting regularly
with individual tenants.
Equally, we understand the
importance of measuring our
performance and, as such, we
have carried out a comprehensive
occupier survey across our
portfolio. The results were
extremely positive and the
constructive feedback we received
has allowed us to improve the
service we offer our tenants.
MY HOPE FOR THE FUTURE
IS THAT WE CONTINUE
TO GROW AND FLOURISH.
IT WON’T BE LONG UNTIL
WE TAKE ADDITIONAL
SPACE HERE.''
JESSICA MAY, ARTSY,
THE LOOM, LONDON E1
HELICAL PLC
Annual Report and Accounts 2019
77
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION CHIEF EXECUTIVE’S STATEMENT
I am pleased to present the Company’s 2019 Annual Results.
A YEAR OF PROGRESS
The results for the year to 31 March 2019
reflect significant progress for Helical,
now an office-led investment and
development company focused purely
on London and Manchester. We have
completed three of our four on-site
office development schemes, have let
304,073 sq ft at rents 4.3% above ERVs
and have sold £167m of investment
assets at a 12.0% premium to book value.
We now have a collection of newly
redeveloped or refurbished assets of
premium quality which are attractive
to occupiers and situated in desirable
locations. We were delighted to announce
the acquisition, in a 50:50 joint venture,
of a major site for c.192,000 sq ft of
offices in Farringdon, London EC1. This
scheme supplements our existing assets
located in the Tech Belt in EC1 and E1.
The London investment portfolio,
following the completion of recent
office developments and the sale of
The Shepherds Building, was 83.8% let
(31 March 2018: 91.7%), with contracted
rent of £27.5m (2018: £28.4m), and with
good interest in the remaining available
space. In March we launched our
redeveloped office building in
Manchester, Trinity, to the market and
contracted rents on the Manchester
portfolio have grown from £4.7m
(87.2% let) to £5.7m (80.2% let).
Our schemes at The Tower, London EC1
and One Bartholomew, London EC1
have both received BREEAM “Excellent”
ratings from this world-leading
sustainability assessment methodology,
along with our other schemes at
The Warehouse and The Studio, London
EC1, 25 Charterhouse Square, London EC1
and One Creechurch Place, London EC3.
RESULTS FOR THE YEAR
Profit before tax for the year to 31 March
2019 increased by 41.2% from £30.8m to
£43.5m. Total Property Return increased
to £81.4m (2018: £68.8m) and included
net rents of £25.2m (2018: £36.1m), offset
by development losses, largely a result of
the impact of the collapse of Carillion plc
at Barts Square, London EC1, of £4.4m
(2018: £8.0m). The gain on sale and
revaluation of the investment portfolio
contributed £60.6m (2018: £40.7m).
OUR PREMIUM
QUALITY ASSETS
ARE ATTRACTIVE
TO OCCUPIERS
AND SITUATED IN
8
HELICAL PLCAnnual Report and Accounts 2019 NEW LETTINGS
ERV OF PORTFOLIO
304,073 sq ft
£51.5m
TOTAL PROPERTY RETURN
TOTAL DIVIDEND FOR YEAR
£81.4m
10.10p +6.3%
GERALD KAYE
CHIEF EXECUTIVE
Net finance costs of £18.4m were
substantially lower than in 2018 (£35.2m)
as a result of the reduction in borrowings
achieved in the last two years. However,
the Income Statement was adversely
affected by the reduction in medium and
long-term interest rates over the year
which led to a £3.3m charge (2018:
credit of £4.0m) arising from the valuation
of the Company’s derivative financial
instruments. The valuation of the
Company’s Convertible Bond provided a
credit of £0.9m (2018: charge of £1.6m).
Recurring administration costs were
marginally lower at £10.9m (2018: £11.0m)
whilst performance related awards
increased to £5.2m (2018: £1.7m), with
National Insurance on these awards of
£0.7m (2018: £0.1m).
HELICAL PLC
Annual Report and Accounts 2019
9
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION CHIEF EXECUTIVE’S STATEMENT
CONTINUED
The Board is confident of the letting
prospects of the remaining vacant space
in the investment portfolio and, with net
rental income increasing over the next
few years, the Board expects the Group’s
EPRA earnings to improve significantly in
the near future. This expectation has led
the Board to recommend to Shareholders
an increase in the final dividend of 7.1% to
7.50p (2018: 7.00p) which, together with
the interim dividend of 2.60p paid in
December 2018, takes the total dividend
for the year to 10.10p (2018: 9.50p), an
overall increase of 6.3%.
PERFORMANCE
We measure our performance at both
portfolio and Company level, seeking to
outperform the relevant sector indices
and our peer group in the medium and
long term.
IFRS basic earnings per share increased
to 35.8p (2018: 22.3p) with EPRA loss
per share of 8.4p (2018: 7.0p), reflecting
a reduction in net rental income as the
direct result of the sales of income
producing investment properties in the
last 18 months. On a like-for-like basis, the
investment portfolio increased in value
by 6.8% (7.4% including purchases and
gains on sales). However, with the sales in
the year of £167m, 12% above book value,
the see-through portfolio value adjusted
to £876m (31 March 2018: £910m).
The unleveraged return of our property
portfolio, as measured by MSCI, was
10.1% (2018: 11.1%). We now compare
our portfolio performance to two MSCI
benchmarks. The March MSCI Annual
All Properties Index produced a return of
3.6% (2018: 9.3%) with an upper quartile
return of 7.0% (2018: 12.0%). The MSCI
Central London Offices Total Return Index
produced a return of 4.8% (2018: 7.5%)
with an upper quartile return of 6.2%
(2018: 9.0%).
10
HELICAL PLCAnnual Report and Accounts 2019 WE HAVE A TREMENDOUS TRACK RECORD IN
LONDON, BUILT UP OVER THE LAST 25 YEARS,
AND WE BELIEVE THIS EXPERIENCE AND OUR
LONGSTANDING SECTOR RELATIONSHIPS WILL
ENABLE US TO ADD NEW OPPORTUNITIES TO
OUR PIPELINE.''
Total Accounting Return, being the
growth in the net asset value of the
Company plus dividends paid in the year,
was 8.4% (2018: 5.3%). EPRA net asset
value per share was up 3.0% to 482p
(31 March 2018: 468p), with EPRA triple
net asset value per share up 3.8% to
465p (31 March 2018: 448p).
FINANCE
The Company uses gearing on a tactical
basis throughout the property cycle,
being raised to accentuate performance
when property returns are judged to
materially outperform the cost of debt
and lowered when seeking to reduce
exposure to the property market.
During the year to 31 March 2019, the
Group generated gross proceeds of
£167m from the sale of investment
properties and £45m from the sale of
development stock. These proceeds, net
of investment in the portfolio of £124m,
were used to reduce net borrowings by
£94m, significantly reducing future
finance costs.
The see-through loan to value ratio
(“LTV”) reduced to 30.6% at the year
end (31 March 2018: 39.9%) and our
see-though net gearing, the ratio of
net borrowings to the net asset value of
the Group, has fallen to 47.3% (31 March
2018: 68.0%) over the same period.
During the year, the average debt
maturity on secured loans, on a see-
through basis, was 3.4 years (31 March
2018: 3.5 years), increasing to 4.2 years
on exercise of options to extend the
Group’s £150m RCF. No secured loan is
repayable before July 2021. The average
cost of debt at 31 March 2019 was 4.0%
(31 March 2018: 4.3%). The Group’s
remaining unsecured debt instrument,
the £100m Convertible Bond, will be
repaid in June 2019, reducing the Group’s
annual interest payments by £4.0m. The
Group has a significant level of liquidity
with see-through cash and unutilised
bank facilities of £382m (31 March 2018:
£277m) to fund the repayment of the
Convertible Bond, capital works on its
portfolio and future acquisitions.
BOARD MATTERS
At this year’s Annual General Meeting
(“AGM”) our Chairman and former Chief
Executive, Mike Slade OBE, will step down
from the Board after 35 years’ service.
Mike has been an inspiration to everyone
at Helical and to many in the property
industry during this time and, on behalf of
the rest of the Board, I thank him for his
considerable contribution to the success
of Helical and wish him well for his
retirement. He recently received an OBE
for services to charity, for his work with
LandAid, the sector’s main charity, an
award thoroughly deserved.
At the AGM, Michael O’Donnell will also
step down after eight years serving as a
Non-Executive Director. On behalf of the
Board, I would like to thank him for his
service to the Company.
In September 2018, we welcomed
Joe Lister, CFO at Unite Group, as a
Non-Executive Director. Joe will assume
the role of Chairman of the Audit and
Risk Committee (“Committee”) on
appointment to the Board at the close
of the forthcoming AGM. Joe will replace
Richard Grant as Chairman of the
Committee, with Richard replacing
Mike Slade as Chairman of the Board.
THE FUTURE
Helical is primarily a capital growth stock,
albeit one with an increasingly important
income stream as our redeveloped and
refurbished investment assets become
let. We have a tremendous track record
in London, built up over the last 25 years,
and we believe this experience and our
longstanding sector relationships will
enable us to add new opportunities to
our pipeline. Our increased financial
capacity, following the transformation
of the portfolio over the last two years,
allied to our current operational capacity,
enables us to look forward with
confidence in our ability to deliver
capital profits and increased earnings.
GERALD KAYE
Chief Executive
23 May 2019
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HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION OUR MARKET
CAPTURING
THE MARKET
TRENDS AND OPPORTUNITIES
LONDON
In our judgement, the London commercial
property market continues to provide
the best source of capital profits and we
expect this to remain the case for the
foreseeable future, notwithstanding the
current political chaos over Brexit.
In order for Helical to generate capital
profits, the Group needs to identify those
areas where it believes tenant demand is,
or will become, strong and to source
opportunities in those areas at an
appropriate entry price. Equally important,
we need to provide inspiring working
environments suited to the needs of our
customers, the tenants. Using the skills,
knowledge and expertise gained over
many years, the Helical team aims
to deliver attractive and exciting office
space in our identified locations. In a low
growth environment, stock selection needs
to reflect the granular characteristics that
will attract our target market of occupiers.
Helical’s core business is developing
and owning dynamic, well located office
space in London and Manchester. With
intelligent stock selection, we aim to
maximise returns by development and
refurbishment as well as through
significant asset management initiatives.
MATTHEW BONNING-SNOOK
PROPERTY DIRECTOR
12
HELICAL PLCAnnual Report and Accounts 2019 Helical has based its investment decisions
in London on four continuing major
developments in the office market. First,
the growth of the London population;
second, the continuing and rapid
expansion of the creative industries
(predominantly in technology and media);
third, the migration of occupiers across
Central London to the City and East
London; and fourth, a fast-growing
market in flexible leasing.
London’s population is forecast to grow
to 9.5m by 2026, a 9% increase since
mid-2016. This will present challenges,
particularly in terms of infrastructure,
but will also provide opportunities,
particularly in the demand for new and
refurbished offices. Whilst the Elizabeth
Line has again been delayed, its eventual
opening will be a boost to travelling
in London.
The UK is a global leader in the creative
industries, an area we have targeted
with our portfolio. Companies involved
in media, advertising and marketing,
technology and other creative industries
comprised 57% of our new lettings in the
year (31 March 2018: 59%).
The third factor influencing our choice of
location for our portfolio is the migration
of occupiers from West to East across
Central London to the City and East
London. The desire to be part of creative
hubs, surrounded by like-minded
individuals, located a short travelling
distance from home are common themes
in discussing requirements with tenants.
Most obviously, those hubs are in the Tech
Belt from King’s Cross to Whitechapel.
Finally, the growth of flexible leasing
is having a continuing effect on the
commercial office letting market in
London and has spread to regional cities.
At Helical we seek early and continued
engagement with customers and look to
develop long-standing relationships with
them. By offering flexible leases on our
multi-let assets, which allow them to
occupy space commensurate with their
requirements, we target long-term
retention of our customers.
In London, Helical has been building
up a portfolio of multi-tenanted office
buildings in the Tech Belt locations of
Farringdon, the Old Street roundabout
and Whitechapel. We also own two assets
in Chiswick, West London. By owning
these “clusters” or “villages” of office
buildings, the Company now has a
portfolio of assets with multiple lease
events leading to ongoing asset
management opportunities with the
potential to lock in future rental growth.
The Company is also seeking to expand
its portfolio by taking on additional
schemes in Central London either on its
own balance sheet, or in the case of larger
projects, by co-investment or by forward
selling/funding them, to create the
opportunity for significant profit shares
but with reduced balance sheet exposure.
MANCHESTER
We continue to believe that Manchester
presents an attractive opportunity for us
outside of London. The Manchester office
market continues to outperform all other
regional markets and demonstrates rich and
diverse opportunities. 2018 saw a record
year of take up with 1.75m sq ft of lettings
across 314 transactions. Manchester has
also seen the greatest volume of inward
investment deals compared to the five
other major UK regional cities and the
office market demonstrates resilience
and growth despite the background of
political uncertainty.
Manchester benefits from the highest
graduate retention rate outside of London
and population growth within the city
centre continues. Research indicates the
city will have 10,000 more office workers
by 2021 than it did in 2018, whilst
continued strong economic and
employment growth forecasts reaffirm
our belief that outside of London,
Manchester is the best regional city
in which to invest.
In Manchester we now have four assets,
following the disposal of 31 Booth Street
in December 2018. Our buildings, located
across the city centre, have proven to be
attractive to occupiers. Each building is
specific in its offering, location, size and
rental tone, with the opportunity for
Helical to apply the skills, knowledge
and property expertise gained over
many years in London. The Manchester
portfolio, of multi-tenanted office
buildings, provides Helical with a resilient
income stream outside of London.
LOOKING
FORWARD
Our ambition is to have a balanced
portfolio that generates sufficient net
rental income to first, exceed all of our
recurring costs and secondly, provide
a surplus significantly greater than our
annual dividend to Shareholders. We have
an ERV on the portfolio of £51.5m and
expect to generate this surplus once all
of our current development and asset
management activities are complete.
We are also seeking a pipeline of
opportunities to grow the balance sheet
through the creation of development
profits and capital surpluses.
HELICAL PLC
Annual Report and Accounts 2019
13
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION OUR STRATEGY
THE CORNERSTONES
OF OUR STRATEGY
How we create value for our stakeholders.
14
HELICAL PLCAnnual Report and Accounts 2019 Maximise Shareholder return by increasing
the net asset value of the Group through
capital gains and growing our rental income
stream to cover dividends.
We create buildings for today’s occupiers who
demand more inspiring space with distinctive
architectural detail, carefully curated public realm,
market leading amenities, high quality management
and our flexible approach to leasing.
Applying this philosophy we seek to maximise
Shareholder returns through delivering income
growth from creative asset management and
capital gains from our development activity.
Manage a balanced portfolio with a
clear market focus, combining assets
with significant development and asset
management potential with a strong rental
income stream.
Operate a sustainable capital structure
in which the core business costs are covered
by income from the investment portfolio.
Use gearing on a tactical basis throughout
the cycle to accentuate returns.
Attract and retain the best people
encouraging their development and
progression to ensure future succession
is secured.
Maintain our excellent reputation and
network of property sector contacts,
trusted partners and advisors.
15
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION OUR STRATEGY
GROWTH
Strategic priorities
Deliver long-term sustainable growth.
Maximise Shareholder return by increasing the
net asset value of the Group through capital
gains and growing our rental income stream
to cover dividends.
Clear focus on Total Shareholder Return, delivering capital
growth and income.
Purpose and values embedded effectively in the operational
policies and practices of the Group.
PROPERTY
Manage a balanced portfolio with a clear
market focus, combining assets with significant
development and asset management potential
with a strong rental income stream.
Incentivise management to outperform the Group’s
competitors by setting challenging levels of performance
targets, against which rewards are measured.
Strategic priorities
A focus on London and Manchester, delivering income
growth from asset management and capital gains from
development activity.
Locate sites where complexity presents opportunity to
add significant value through innovative development
and asset management.
Maximise income through attracting a diverse and
financially robust portfolio of tenants.
Continue a culture that is committed to the highest
standards in health and safety.
Improve the communities in which we are active and
ensure sustainability underpins our approach.
FINANCING
Operate a sustainable capital structure in which
the core business costs are covered by income
from the investment portfolio. Use gearing
on a tactical basis throughout the cycle to
accentuate returns.
Strategic priorities
Maintain an appropriate risk-adjusted LTV.
Use of “equity lite” structures to maximise returns.
Strong banking relationships for quick access
to finance at competitive pricing.
Build cash reserves to cope with market fluctuations
and take advantage of opportunities as they arise.
PEOPLE
Attract and retain the best people encouraging
their development and progression to ensure
future succession is secured.
Maintain our excellent reputation and network
of property sector contacts, trusted partners
and advisors.
Strategic priorities
Small and empowered core team supported
by valued advisors to allow scalability.
Clear plan for succession.
Strong relationships and a reputation which
generates off-market opportunities.
A trusted team of external consultants to enable
us to deliver quickly and to a very high standard.
Work with joint venture partners to increase project
scale and to manage risk.
16
HELICAL PLCAnnual Report and Accounts 2019 Key Performance Indicators
Other Performance Measures
TOTAL SHAREHOLDER
RETURN (1 YEAR)
TOTAL ACCOUNTING
RETURN
EPRA NAV
5.2%
8.4%
482p
EPRA LOSS PER SHARE 8.4p
Principal Associated Risks
• Poor management of
stakeholder relations
• Political risk
• The Group’s strategy is
inconsistent with the market
• Non-compliance with
prevailing legislation
Key Performance Indicators
Other Performance Measures
PORTFOLIO RETURN
– MSCI (1 YEAR)
PORTFOLIO RETURN
– MSCI (3 YEAR)
10.1%
10.2%
Other Performance Measures
SEE-THROUGH
LOAN TO VALUE
SEE-THROUGH
NET GEARING
AVERAGE COST
OF DEBT
30.6%
47.3%
4.0%
ERV
CONTRACTED
VACANCY RATE
£51.5m
RENTAL INCOME £33.2m
17.7%
7.3yrs
£81.4m
TOTAL PROPERTY
RETURN
WAULT
AVERAGE MATURITY
– SECURED DEBT 3.4 yrs
BANK FACILITIES £382m
CASH AND UNDRAWN
Principal Associated Risks
• Property values decline/reduced
tenant demand for space
• Inability to asset manage, develop
and let property assets
• Health and safety risk
• The Group carries out significant
development projects
Principal Associated Risks
• Availability and cost of bank
borrowing and cash resources
• Breach of loan covenants
Key Performance Indicators
Other Performance Measures
AVERAGE EMPLOYEE
SERVICE
AVERAGE STAFF
TURNOVER
8.7 yrs
6.3%
TRAINING AND
DEVELOPMENT 699 hrs
Principal Associated Risks
• Employment and retention
of key personnel
• Reliance on key contractors
and suppliers
• Business disruption and
cyber security
Key performance indicators — P. 28
Principal risks — P. 52
17
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION STRATEGY IN ACTION
CASE STUDY
ERV OF THE TOWER
£12.8m
ERV OF THE WAREHOUSE
AND STUDIO
£9.5m
THE TOWER
WIREDSCORE
Platinum
THE WAREHOUSE AND
THE TOWER BREEAM
Excellent
18
HELICAL PLCAnnual Report and Accounts 2019 The Bower
London EC1
The development of The Bower has seen the
transformation of two 1960s office buildings
into a landmark destination, which comprises
a contemporary mix of retail, restaurants and
three large floor plate offices.
PURCHASE PRICE
£60.8m
CAPITAL AND DEVELOPMENT
PROFIT TO 31 MARCH 2019
£122.5m
Beneath The Tower, with its innovative double height wings,
a route has been created, linking Old Street to a vibrant new
pedestrian street.
The Bower is now the cornerstone of Helical’s portfolio, serving
as a benchmark for tenant focused offices and placemaking.
The Tower and the Warehouse both achieved a BREEAM
rating of “Excellent” and a Platinum and Gold WiredScore
rating, respectively.
Area
sq ft
Passing
rent
£m
Contracted
rent
£m
The Warehouse
Offices
122,858
Restaurants/retail
5,404
The Studio
Offices
Restaurants/retail
The Tower
Offices
18,283
4,894
171,434
Restaurants/retail
10,308
6.8
0.2
0.8
0.2
1.0
–
6.8
0.3
0.8
0.2
8.4
0.5
ERV
£m
7.9
0.3
1.1
0.2
12.3
0.5
19
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION STRATEGY IN ACTION
CASE STUDY
The Bower continued
BACKGROUND
This 3.12 acre site was acquired for
£60.8m in joint venture with Crosstree
Real Estate Partners LLP (Helical share
33%). The site comprised two offices,
retail, a hotel and car park.
DEVELOPMENT/LETTING PHASE
The site was developed in two phases:
• Phase 1 comprises The Warehouse,
128,262 sq ft, The Studio, 23,177 sq ft
and Empire House, 20,726 sq ft; and
• Phase 2 the Tower, 181,742 sq ft.
PEOPLE
The Warehouse and Studio were fully
pre-let to CBS, Farfetch, Pivotal, Allegis
and Stripe (The Warehouse) and John
Brown Media (The Studio). The retail
operators are Bone Daddies, Draft House,
Enoteca da Luca, Honest Burger and
Franze & Evans.
The Tower was 52% pre-let to WeWork
and Farfetch.
PROPERTY
HELICAL BUYOUT
In November 2015, Helical bought The
Warehouse, The Studio and The Tower
from the joint venture company for
£248m. Crosstree Real Estate Partners
LLP bought the retail parade for £23m.
Empire House, let to Z Hotels and
Ceviche, was sold to Standard Life
Investments Long Lease Fund for
£20.65m, a 38% premium to
31 March 2015 book value.
FINANCING
NOV 2012
Acquired in joint venture
with Crosstree Real
Estate Partners LLP
JAN 2014
Construction of
Phase 1 commences
HELD IN JOINT VENTURE
NOV 2015
Phase 1 achieves practical
completion, 100% pre-let
Sale of Empire House
100% OWNED
NOV 2016
Phase 2
34% pre-let
to WeWork
DEC 2013
Planning consent obtained
to increase the floor space
on site by 106,000 sq ft, to
refurbish existing areas and
significantly upgrade the
public realm with the creation
of a new pedestrian street
SEP 2015
Phase 1
38% pre-let
NOV 2015
Helical buyout (see above)
Construction of
Phase 2 commences
20
HELICAL PLCAnnual Report and Accounts 2019
PORTFOLIO LETTING ACTIVITY
NIA (sq ft) of office area
The Warehouse and The Studio
141,141 sq ft
The Tower
59,035 sq ft
60,576 sq ft
51,823 sq ft
Let as at 31 March 2018
Let in the year to 31 March 2019
Vacant as at 31 March 2019
FUTURE POTENTIAL
Future growth will be achieved by
letting the remaining space in The Tower
(51,823 sq ft) and capturing the ERV
of The Warehouse and The Studio.
Transport for London is planning
the peninsularisation of the Old Street
roundabout and underground station
area, increasing the pedestrianised
public realm and complementing what
we have created within our development.
The innovative design of The Bower
has attracted a strong line up of tenants,
which we expect to drive resilient
rental growth.
GROWTH
100% OWNED
AUG 2018
Phase 2
achieves practical completion
MAR 2019
Phase 2 72% let
MAY 2018
Phase 2
A further 18%
pre-let to Farfetch
LOOKING FORWARD
Let the remaining space
in Phase 2
Benefit from redevelopment
of Old Street roundabout and
underground station
Capture the ERV on Phase 1
21
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
STRATEGY IN ACTION
CASE STUDY
The Shepherds Building
London W14
AVERAGE PASSING RENT 2001
£25.00 psf
AVERAGE PASSING RENT 2019
£43.50 psf
22
HELICAL PLCAnnual Report and Accounts 2019 The Shepherds Building is located in the heart of
Shepherd’s Bush and White City in West London,
close to Westfield Shopping Centre, Notting Hill,
Earls Court and Olympia Exhibition Centres and has
excellent transport links with both London Overground
and four Underground stations within walking distance.
The building was sold in October 2018.
PURCHASE PRICE
£12.8m
CAPITAL EXPENDITURE
AND FEES
£24.6m
SALES PRICE
£125.2m
BACKGROUND
The Shepherds Building, a former Inland Revenue tax office,
was acquired for £12.8m in 2000. At acquisition, the
138,750 sq ft building was vacant.
REFURBISHMENT/LETTING PHASE
The building underwent a full refurbishment with the
addition of a sixth floor in 2002, increasing its area by
11,250 sq ft.
In 2014, a new entrance was added along with the
refurbishment of the common parts.
As a result it has become an unrivalled hub of
creativity in West London, occupied by innovative
and creative businesses.
CAPITAL PROFIT
PROPERTY
£87.8m
FLEXIBLE LEASING
The move towards flexible leasing is not a new concept to
Helical. We have been employing this approach to this asset
since 2002.
Along with customer focused management, this strategy
enabled Helical to accommodate occupiers’ expansion and
contraction requirements, capture rental growth and
minimise voids, whilst maintaining close to 100% occupancy.
PEOPLE
EXIT
In October 2018, we sold The Shepherds Building for
£125.2m (£835 psf), crystallising a capital profit of £87.8m
and representing a net initial yield of 4.8%, rising to 5.1% on
expiry of rent free periods. The sale represented a 12.3%
premium to 31 March 2018 book value.
The disposal of The Shepherds Building has allowed Helical
to recycle equity into new projects, such as Kaleidoscope,
London EC1 and Charterhouse Street, London EC1, creating
the opportunity for future growth.
GROWTH
23
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
STRATEGY IN ACTION
CASE STUDY
31 Booth Street
Manchester
31 Booth Street is located in the prime city
core of Manchester. Helical acquired the
vacant 25,349 sq ft office building in January
2016 and, following a major refurbishment,
the building was re-launched to the market
in March 2017, fully let and sold by
December 2018.
BACKGROUND
Located in the prime city core of Manchester,
Helical acquired 31 Booth Street in January 2016
through a competitive tender process for £4.7m.
At acquisition, the building was vacant and in need
of a wholesale redevelopment.
The business plan for the asset was to undertake
a full redevelopment and repositioning exercise.
PROPERTY
REDEVELOPMENT/LETTING PHASE
Following acquisition, the scheme was fully
designed, with planning and listed building consent
obtained. The construction works commenced in
March 2016 and were completed by February 2017.
The repositioned building comprised 24,902 sq ft
of modern office space across seven floors and
was formally launched to the market in March 2017.
The asset was fully let to nine different tenants by
December 2018, at an average of £25.50 psf.
PROPERTY
24
PURCHASE PRICE
£4.7m
CAPITAL EXPENDITURE
AND FEES
£4.0m
SALES PRICE
£11.9m
CAPITAL PROFIT
£3.2m
HELICAL PLCAnnual Report and Accounts 2019
EXIT
Upon completion of the last letting, the building
was sold in December 2018 to the Mayfair Capital-
managed Property Income Trust for Charities fund
(PITCH), for £11.9m (£479 psf), reflecting a net
initial yield of 5.0%.
The project and disposal demonstrates Helical’s
ability to successfully reposition assets, completing
the whole development cycle within two years of
acquisition, and enabling capital to be recycled
into new opportunities.
GROWTH
25
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
BUSINESS MODEL
HELICAL’S
BUSINESS MODEL
RESOURCES
CORE ACTIVITIES
Assets, skills and knowledge to create
our competitive advantage.
Performed within the governance and
strategic framework set by the Board.
Property
A high quality portfolio of land, buildings
and identified future opportunities.
People and Culture
A motivated, qualified and experienced team.
Market Expertise
Comprehensive knowledge of the markets in which
we operate, built through multiple property cycles.
Relationships and Reputation
An extensive network of joint venture partners,
advisors, and industry contacts. A long-standing
reputation for speed of execution and excellence
in delivery.
Financing
A strong financial position with access to a variety
of sources of funds, from Shareholder capital
to external borrowings.
LONG TERM
Use our own capital combined with external debt where
we see value in holding an asset for long-term income
and capital growth.
SHORT/MEDIUM TERM
Identify a joint venture partner, limiting our capital
commitment and risk exposure, whilst linking our
return to performance.
Actively manage our assets throughout their development,
working with trusted suppliers and focusing on quality,
efficiency and safety.
26
Market — P. 12
Strategy — P. 14
HELICAL PLCAnnual Report and Accounts 2019 We aim to deliver market-leading returns by developing
customer focused and design led properties, letting
them to diverse tenants on flexible terms, then applying
a proactive approach to asset management.
Look to let our properties on flexible terms to
a diverse tenant base who are financially robust.
Through proactive asset management we drive the
rental value forward whilst maximising occupancy.
VALUE CREATION
Enhanced value for reinvestment
or realisation.
PROPERTY
£876.4m
SEE-THROUGH PORTFOLIO
VALUE
£81.4m
TOTAL PROPERTY RETURN
PEOPLE AND
CULTURE
699
TRAINING AND
DEVELOPMENT HOURS
MARKET
EXPERTISE
RELATIONSHIPS
AND REPUTATION
FINANCING
95%
OF TENANTS SURVEYED
WERE PLEASED TO BE IN
OUR BUILDINGS
192,000
sq ft
NEW OFFICE DEVELOPMENT
AT CHARTERHOUSE STREET,
LONDON EC1
5.2%
TOTAL SHAREHOLDER
RETURN
4.0%
SEE-THROUGH WEIGHTED
AVERAGE INTEREST RATE
Principal risks — P. 52
Governance — P. 66
Key performance indicators — P. 28
HELICAL PLC
Annual Report and Accounts 2019
27
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION KEY PERFORMANCE INDICATORS
We measure our performance
using a number of financial and
non-financial key performance
indicators (“KPIs”).
EPRA NET ASSET VALUE PER SHARE
DESCRIPTION
The Group’s main objective is to maximise growth in net
asset value per share, which we seek to achieve through
increases in investment portfolio values and from retained
earnings from other property related activity. EPRA net
asset value per share is the property industry’s preferred
measure of the proportion of net assets attributable to
each share as it includes the fair value of net assets on an
ongoing long-term basis. The adjustments to net asset
value to arrive at this figure are shown in note 35 to the
financial statements.
PERFORMANCE
The EPRA net asset value per share at 31 March 2019
increased by 3.0% to 482p (31 March 2018: 468p). EPRA
triple net asset value per share at 31 March 2019 increased
by 3.8% to 465p (31 March 2018: 448p).
LINK TO REMUNERATION
Performance Share Plan 2014
A third of the maximum Performance Share Plan (“PSP”)
award is based on the compound growth in net asset value
(“NAV”) over three years.
MSCI PROPERTY INDEX
DESCRIPTION
MSCI (formerly Investment Property Database – IPD)
produces a number of independent benchmarks of property
returns that are regarded as the main industry indices.
MSCI has compared the ungeared performance of Helical’s total
property portfolio against that of portfolios within the MSCI
Annual March All Properties Universe ("Index") for the last
20 years. The Group’s annual performance target is to exceed
the top quartile of the Index, which it has consistently achieved.
PERFORMANCE
Helical’s ungeared performance for the year to 31 March 2019
was 10.1% (2018: 11.1%) compared to the Index of 3.6%
(2018: 9.3%) and upper quartile return of 7.0% (2018: 12.0%).
In addition, the Annual Bonus Scheme 2018 performance
criteria include the comparison of the Group's performance
with the MSCI Central London Offices Total Return Index, with
target performance to match this index and outperformance
exceeding it by 3.25%. In the year to 31 March 2019, this index
showed a return of 4.8% (2018: 7.5%) with an upper quartile
return of 6.2% (2018: 9.0%).
Helical’s share of the trading and development portfolio
(6.8% of gross property assets) is included in the indices
at the lower of book cost or fair value and uplifts are only
included on the sale of an asset.
LINK TO REMUNERATION
Annual Bonus Scheme 2018
Half of the maximum bonus is payable based on the Group’s
Total Property Return (“TPR”) compared with its peers as
measured by MSCI. The Annual Bonus Scheme 2018
performance criteria include the comparison of the Group's
performance with the MSCI Central London Offices Total
28
EPRA NET ASSET VALUE PER SHARE
pence
2019
2018
2017
2016
2015
482
468
473
456
385
EPRA NET ASSET VALUE COMPOUND
ANNUAL GROWTH RATE (5 YEARS)
13.6%
12.5%
12.1%
7.2%
9.0%
2015
2016
2017
2018
2019
EPRA NAV
EPRA NNNAV
482p
465p
Return Index, with target performance to match the index
and outperformance exceeding it by 3.25%.
Performance Share Plan 2014
A third of the maximum PSP award is based on the Group’s
performance as compared with the performance of the MSCI
Annual March All Properties Universe Index over three years.
HELICAL’S UNLEVERAGED PORTFOLIO RETURNS
TO 31 MARCH 2019
1 YEAR
% pa
3 YEARS
% pa
5 YEARS
% pa
10 YEARS
% pa
20 YEARS
% pa
10.1%
10.2%
3.6%
4.8%
Helical’s Percentile Rank: 5
5.7%
4.8%
Helical’s Percentile Rank: 8
14.4%
9.1%
10.6%
Helical’s Percentile Rank: 3
11.9%
9.8%
12.9%
Helical’s Percentile Rank: 10
12.8%
8.0%
9.6%
Helical’s Percentile Rank: 2
Helical
MSCI Central London Offices
MSCI Annual March All Properties Universe
Source: MSCI Property Databank.
HELICAL PLCAnnual Report and Accounts 2019 We incentivise management to outperform the Group’s peers by setting challenging targets
and using these performance indicators to measure success. We design our remuneration
packages to align management’s interests with Shareholders’ aspirations.
TOTAL SHAREHOLDER RETURN
DESCRIPTION
Total Shareholder Return is a measure of the return on
investment for Shareholders. It combines share price
appreciation and dividends paid to show the total return
to the Shareholder expressed as an annualised percentage.
LINK TO REMUNERATION
Performance Share Plan 2014
A third of the maximum PSP award is based on the Group’s
TSR performance compared with its peers.
PERFORMANCE
The Total Shareholder Return in the year to 31 March 2019
was 5.2% (2018: 6.1%).
Helical plc1
Listed real estate sector index3
UK equity market2
Direct property – monthly data4
Source: Thomson Reuters Datastream.
HELICAL’S TOTAL RETURNS TO 31 MARCH 2019
%
2
5
.
%
4
6
.
%
6
5
.
%
)
3
0
(
.
1 YEAR
% pa
%
5
9
.
%
4
2
.
%
8
6
.
%
)
9
2
(
.
3 YEARS
% pa
%
)
1
.
0
(
%
1
.
6
%
3
4
.
5 YEARS
% pa
%
1
.
0
1
%
6
3
.
%
1
.
1
1
%
5
2
1
.
%
0
0
.
1
%
4
6
.
%
8
7.
%
7
4
.
%
3
7.
%
0
9
.
%
1
.
5
%
8
5
.
%
3
8
.
%
3
0
.
1
%
4
7.
%
2
6
.
%
7
8
.
10 YEARS
% pa
15 YEARS
% pa
20 YEARS
% pa
25 YEARS
% pa
1. Growth over all years to 31/03/19.
2. Growth in FTSE All-Share Return Index over
all years to 31/03/19.
3. Growth in FTSE 350 Real Estate Super Sector Return
4. Growth in Total Return of MSCI UK Monthly Index
Index over all years to 31/03/19. For data prior to
30 September 1999, the FTSE All Share Real Estate
Sector Index has been used.
(All Property) over all years to 31/03/19.
TOTAL ACCOUNTING RETURN
DESCRIPTION
Total Accounting Return is the growth in the net asset value
of the Group plus dividends paid in the reporting year,
expressed as a percentage of the net asset value at the
beginning of the year. The metric measures the growth
in Shareholders’ Funds each year and is expressed as an
absolute measure.
PERFORMANCE
The Total Accounting Return in the year to 31 March 2019
was 8.4% (2018: 5.3%).
AVERAGE LENGTH OF EMPLOYEE SERVICE AND STAFF TURNOVER
DESCRIPTION
A high level of staff retention remains a key feature of
Helical’s business. The Group retains a highly skilled and
experienced team. We assess our success based on two key
metrics; the average length of service of the Group’s head
office employees and average staff turnover.
PERFORMANCE
The average length of service of the Group’s head office
employees at 31 March 2019 was 8.7 years and the average
staff turnover during the year to 31 March 2019 was 6.3%.
LINK TO REMUNERATION
Annual Bonus Scheme 2018
The deferred shares awarded under the Annual Bonus Scheme
2018 are required to be held for a period of three years.
Performance Share Plan 2014
These awards have a three-year vesting period and the
participants are required to hold them for a further two
years after they vest.
LINK TO REMUNERATION
Annual Bonus Scheme 2018
A quarter of the maximum bonus is payable based on the
Total Accounting Return (growth in NAV plus dividends),
adjusted for performance-related awards.
TOTAL ACCOUNTING RETURN
%
2019
2018
2017
2016
2015
5.3
8.4
8.3
22.5
21.1
8.7
7.9
8.0
7.6
7.6
AVERAGE LENGTH OF SERVICE AT 31 MARCH
years
2019
2018
2017
2016
2015
STAFF TURNOVER DURING THE YEAR TO 31 MARCH
%
2019
2018
2017
2016
2015
6.3
5.7
15.2
14.3
12.5
29
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
THE LONDON PORTFOLIO
2
3
1
4
5 6
7
8
9
THE LONDON
PORTFOLIO
Our strategy is to continue to increase our London holdings, focusing on areas where we
see strong tenant demand and growth potential, such as the “Tech Belt” that runs from
King’s Cross through Old Street and Shoreditch to Whitechapel. Our London portfolio
comprises income-producing multi-let offices, office refurbishments and developments
and a mixed use commercial/residential scheme.
30
EAST
1 Charterhouse Street EC1
2 25 Charterhouse Square EC1
3 Kaleidoscope EC1
4 The Bower EC1
5 Barts Square EC1
6 One Creechurch Place EC3
7 The Loom E1
WEST
8 Power Road Studios W4
9 The Powerhouse W4
HELICAL PLCAnnual Report and Accounts 2019 EC1
The Bower is a landmark estate
immediately adjacent to the Old Street
roundabout and features 312,575 sq ft
of innovative, high quality office space
along with 20,606 sq ft of restaurant
and retail space.
THE WAREHOUSE AND THE STUDIO
The Warehouse comprises 122,858 sq ft
of offices and The Studio 18,283 sq ft of
offices with 10,298 sq ft of retail space
at the two buildings. Works on The
Warehouse entailed a complete
refurbishment of the building whilst
retaining its original 1960s characteristics.
The Studio was a ground up development
on the former car park site.
The works were completed in March 2015
and the offices were fully pre-let to CBS,
Farfetch, Pivotal, Allegis and Stripe
(The Warehouse) and John Brown Media
(The Studio). The retail operators are
Bone Daddies, Draft House, Enoteca da
Luca, Honest Burger, Franze & Evans,
Ejder and Good To Go.
For more information on The Bower
— P. 18
THE TOWER
The Tower offers 171,434 sq ft of
office space with a contemporary
façade and innovatively designed
interconnecting floors, along with
10,308 sq ft of retail space across
two units.
With six floors (34%) let to WeWork
when construction started, we let,
prior to completion of building works,
an additional three floors to Farfetch,
an existing tenant in The Warehouse.
Since the building completed in
August 2018, two floors have been
let to Brilliant Basics (Infosys) and
one floor to Finablr, taking the office
space to 70% let, and there is good
interest in the remaining space. In
addition, the two retail units have
been let, one to Albion & East
(trading as Serata Hall) for an urban
bar and one to restaurant operator
Wagamama.
31
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION THE LONDON PORTFOLIO
CONTINUED
EC1
The over-station development at the
Farringdon East Elizabeth Line station will
comprise a six storey 86,183 sq ft office
building, with a 2,497 sq ft restaurant unit
on the ground floor. The building will sit
immediately east of Smithfield Market
with views over Charterhouse Square and
towards St Paul’s Cathedral. Following the
grant of a 150-year lease, development
commenced in August 2018 and
completion is due in December 2019.
EC1
In January 2016, Helical was granted a
new 155 year leasehold interest in 25
Charterhouse Square from the Governors
of Sutton’s Hospital in Charterhouse for
£16m. The building is a Grade A office
adjacent to the new Farringdon East
station on the Elizabeth Line and
overlooks the historic Charterhouse
Square. Helical carried out a major
refurbishment of the existing building,
which increased the previous 34,000 sq ft
to 38,355 sq ft of offices with the addition
of a new sixth floor, and 5,138 sq ft of
retail space. The building achieved
practical completion in March 2017 and
was fully let to Anomaly, Peakon, Hudson
Sandler and Senator International by
December 2017, less than two years after
it was acquired.
32
HELICAL PLCAnnual Report and Accounts 2019 EC1
After the year end, we acquired in a 50:50
joint venture with AshbyCapital the long
leasehold interest in a major development
site in the heart of Farringdon, further
enhancing our presence in this vibrant
area. The site is situated on the corner
of Charterhouse Street and Farringdon
Road, just 100m from Farringdon Station
and 350m from our development at Farringdon
East, now named Kaleidoscope, at the opposite
end of the Farringdon Elizabeth Line platform.
The site has an existing planning consent for
c.192,000 sq ft of offices and ground floor retail.
Demolition has already been undertaken and the
site is vacant. Construction will commence later
this year with completion anticipated early in 2022.
N
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33
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
THE LONDON PORTFOLIO
CONTINUED
EC1
In a joint venture with The Baupost Group LLC, Helical owns the freehold interest
of Barts Square, a 3.2 acre site between St Paul’s and Smithfield Market, situated
a short walk from Farringdon East Crossrail station.
Barts Square provides a new quarter in the City, consisting of 236 residential apartments,
three office buildings of 214,434 sq ft, 24,013 sq ft and 10,286 sq ft together with
21,330 sq ft of retail/A3 at ground floor as well as major public realm improvements.
PHASE ONE
PHASE TWO
RESIDENTIAL/RESTAURANT
Phase One of Barts Square comprises 144
residential units, 3,101 sq ft of retail space
and extensive public realm improvements.
By the year end, 134 residential units, with
a total value of £171.8m, have been sold at
an average price of £1,558 psf, leaving just
10 apartments to sell, one of which has
exchanged since the year end. The retail
space was let to Stem + Glory and
Halfcup during the year.
90 BARTHOLOMEW CLOSE –
OFFICE/RESTAURANT
The 24,013 sq ft office building, with
6,414 sq ft of restaurant space, completed
in March 2018. During the year the first
floor was let and the fourth and fifth
floors are under offer. The ground and
lower ground restaurant, let to Lino,
opened in November 2018.
ONE BARTHOLOMEW – OFFICE
One Bartholomew was sold to clients of
AshbyCapital for £102.4m in August 2015.
The demolition of the existing building and
the construction of a new 12 storey Grade A
office block of 214,434 sq ft commenced in
January 2016 and completed in December
2018. AshbyCapital’s clients financed the
development costs and, when the building
is completed and successfully let, the joint
venture will be entitled to receive a profit
share payment. Helical is the development
manager for delivery of the project. During
the year, the top three floors (9th-11th) were
let to The Trade Desk, who subsequently
took an additional floor (8th). Since the
year end the ground, first and second
floors have been let to The Chicago Booth
School of Business and the seventh floor
has been let to Infrared Capital Partners,
taking the building to 64% let.
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34
PHASE THREE
RESIDENTIAL/RETAIL
Construction works on Phase Three
of Barts Square are well underway.
This phase will comprise 92 apartments
and 11,815 sq ft of retail space. Marketing
of the units commenced in March 2018
and, during the year, contracts were
exchanged on 23 units, taking the total
number of units exchanged to 37, at a
value of £63.0m and an average price
of £1,810 psf.
Since the year end contracts have
been exchanged on a further seven
units, leaving 47 units left to sell and
one additional unit that will be released
at a later date.
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R
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54 BARTHOLOMEW CLOSE – OFFICE
The refurbishment of 54 Bartholomew
Close is ongoing and will provide
10,286 sq ft of offices, with completion
expected in Q4 2019.
n
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t
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B
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Bartholomew’s
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t
i
L
HELICAL PLCAnnual Report and Accounts 2019
Helical will shortly exercise its option to
sell its 10% shareholding in the joint
venture to HOOPP, with completion of
this sale expected in the next few months.
EC3
One Creechurch Place is a landmark
City office scheme in the heart of the
insurance district 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 jointly funded the project
on a 90:10 split, with Helical acting as
development manager, for which it will
now receive the final instalment of the
promote payment following the successful
completion and letting of the scheme.
The building, comprising 272,505 sq ft
of offices and 786 sq ft of retail, achieved
practical completion on 7 November 2016
and, following the letting of 86,311 sq ft
during the year, the building is now fully let.
E1
This 108,640 sq ft building is one of
London’s few remaining former Victorian
wool warehouses and was acquired in
2013. Works to transform this asset
completed in September 2016 and
included a new entrance and reception
onto Gowers Walk, a café, showers and
a bike store. The Loom has won both a
RIBA London and National Award as well
as an Architects Journal Retrofit Award.
Due to careful asset management, the
building remained at an average of 78%
let throughout the refurbishment. Since
1 April 2018, we have let 37,080 sq ft at
4.5% above 31 March 2018 ERVs, such
that the building is now 97% let.
35
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION THE LONDON PORTFOLIO
CONTINUED
W14
In October 2018, after successfully
completing new lettings on 12,375 sq ft,
this 150,072 sq ft multi-let office building
was sold for £125.2m. This price
represented a net initial yield of 4.8% and
a 12.3% premium to 31 March 2018 book
value. The building had been acquired
in 2000 for £12.8m and was fully
refurbished with an extra floor added.
W4
The site comprises 57,585 sq ft of offices
across four studio buildings and is
multi-let to a wide range of predominantly
media tenants. In October 2017 we
completed the refurbishment of Studio 1,
a project comprising c.16,000 sq ft of
Grade A space, refurbished common
parts and added two new lift shafts to
accommodate a consented future roof
extension of 13,000 sq ft. In the year, we
have let 6,072 sq ft at average rents of
£39.15 psf, with a further 2,007 sq ft let
following the year end. Preliminary
works have been completed for a new
30,000 sq ft office building which
secured planning consent in August 2017.
36
W6
Hammersmith & Fulham Borough
Council, who had been opposed to this
regeneration project since the Council
became Labour controlled, exercised
their option to terminate the development
agreement. During the year, the sale of
the land held by the Group (which is a
50/50 joint venture with Grainger plc)
completed, resulting in a profit to Helical
of £2.2m.
HELICAL PLCAnnual Report and Accounts 2019 W4
Helical acquired this 24,288 sq ft office
and recording studios by way of sale and
leaseback in 2013. The Powerhouse is a
listed building on Chiswick High Road and
is fully let on a long lease to Metropolis
Music Group.
37
WC2
This is a 0.5 acre office and retail site
which sits within the Covent Garden
Conservation Area. The Group agreed
with Savills Investment Management to
act as development manager to obtain
a revised office planning consent, which
it achieved in February 2019. The Group
will receive a fee for this which is
dependent on the agreed value of the
property with the benefit of the new
planning permission.
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION THE MANCHESTER PORTFOLIO
L
L
W E
R I R
E
R I V
1
PICCADILLY
GARDENS
2
A
6
6
5
4
3
MANCHESTER
PICCADILLY
A57 (M)
A
6
THE MANCHESTER
PORTFOLIO
Manchester is a city with a diverse, thriving and growing
economy that is widely regarded as England’s second city
and the centre of the “Northern Powerhouse”. Helical has
found that the approach it applies to development and
asset management in London is equally well received by
the tenants in Manchester.
1 Trinity
2 Churchgate & Lee
3 35 Dale Street
4 Fourways House
38
HELICAL PLCAnnual Report and Accounts 2019 This asset comprises 244,627 sq ft of
multi-let offices. The asset was 64% let
when acquired in March 2014. Since its
purchase, we have refurbished the
reception and 73,374 sq ft of office space.
Following the letting of 8,208 sq ft since
the year end, all available space is now let.
We continue to actively manage the
building, with planning permission
approved for a full refurbishment of the
Lee reception.
39
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION THE MANCHESTER PORTFOLIO
CONTINUED
35 Dale Street is a 54,112 sq ft office
building situated in the Northern Quarter
of Manchester, acquired in March 2015.
The building underwent a comprehensive
refurbishment which completed in June
2018. During the year, 10,134 sq ft was let
and the building is now fully occupied.
40
Trinity, purchased in May 2017
for £12.9m, underwent a full
redevelopment which completed
in January 2019. The repositioned
building comprises 54,651 sq ft
of office space and 4,300 sq ft
of retail/restaurant space.
HELICAL PLCAnnual Report and Accounts 2019 This 24,902 sq ft office located in the
prime city core was acquired in January
2016 for £4.7m. The building has been
fully refurbished and was launched to the
market in March 2017.
During the year, all of the newly
refurbished space was let and the
building was sold in December 2018
for £11.9m, a premium of 29.6% to
March 2018 book value.
This 59,067 sq ft brick built Grade 2 listed
former packing warehouse was acquired
in July 2018 for £16.5m, representing a
net initial yield of 5.3%. We have begun
to apply our asset management skills
and completed three new lettings of
5,057 sq ft at average rents of £24.00 psf,
compared to average rents on acquisition
of £16.00 psf.
RETAIL AND REGIONAL
OFFICE INVESTMENTS
We sold our three remaining non-core
investment assets at Sevenoaks (retail),
Reading and Glasgow (both regional
offices) during the year, for a total
consideration of £28.5m, representing
a 6.2% premium to book value and an
aggregate net initial yield of 7.6%.
RETAIL DEVELOPMENTS
We continue to progress our retail
schemes at Kingswinford and East Ham.
We have assigned our land option in
Evesham, with a profit share dependent
on the success of the scheme, which is
due for completion in August 2019. These
schemes require no capital input from
Helical beyond fees to design, pre-let and
pre-sell the consented development.
41
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION THE PROPERTY PORTFOLIO IN NUMBERS
SEE-THROUGH TOTAL PORTFOLIO BY FAIR VALUE
London Offices
– Completed, let and available to let
– Being redeveloped
– Held for redevelopment
London Residential
Total London
Manchester Offices
– Completed, let and available to let
Total Manchester
Investment
£m
Development
£m
%
615.2
78.6
–
–
693.8
122.7
122.7
75.3
9.7
–
–
85.0
15.0
15.0
14.0
–
0.3
42.9
57.2
–
–
%
23.5
–
0.4
71.7
95.6
–
–
Total
£m
629.2
78.6
0.3
42.9
751.0
122.7
122.7
Total Core Portfolio
816.5
100.0
57.2
95.6
873.7
Other
Regional Retail
Land
Total Non-Core Portfolio
0.1
–
–
0.1
0.0
–
–
0.0
–
0.8
1.8
2.6
–
1.4
3.0
4.4
0.1
0.8
1.8
2.7
%
71.8
9.0
0.0
4.9
85.7
14.0
14.0
99.7
0.0
0.1
0.2
0.3
Total
816.6
100.0
59.8
100.0
876.4
100.0
SEE-THROUGH TRADING AND DEVELOPMENT PORTFOLIO
London Offices
London Residential
Total Core Portfolio
Regional Retail
Land
Total Non-Core Portfolio
Total
Book value
£m
Fair value
£m
Surplus
£m
Fair value
%
14.3
42.9
57.2
0.8
1.2
2.0
14.3
42.9
57.2
0.8
1.8
2.6
59.2
59.8
–
–
–
–
0.6
0.6
0.6
23.9
71.7
95.6
1.4
3.0
4.4
100.0
CAPITAL EXPENDITURE
We have a planned development and refurbishment programme.
Property
Investment – committed
The Tower, London EC1
Kaleidoscope, London EC11
Charterhouse Street, London EC12
54 Bartholomew Close, London EC1
Development – committed
Barts Square, London EC1 – Phase One
Barts Square, London EC1 – Phase Three
Capex
budget
(Helical share)
£m
Remaining
spend
(Helical share)
£m
Pre-
redeveloped
space
sq ft
108.8
58.7
96.1
2.1
64.6
39.8
10.5
35.2
96.1
1.6
1.0
16.6
114,000
–
–
9,000
–
–
New space
sq ft
67,742
88,680
192,000
1,286
127,323
90,427
Total
completed
space
sq ft
181,742
88,680
192,000
10,286
Completion
date
Completed
December 2019
March 2022
October 2019
127,323
Completed
90,427
From September 2019
to January 2020
1 Includes deferred consideration payment due in April 2020.
2 Acquired after 31 March 2019 – see Note 34.
42
HELICAL PLCAnnual Report and Accounts 2019 ASSET MANAGEMENT
Asset management is a critical component in driving Helical’s performance. Through having well considered business plans
and maximising the combined skills of our management team, we are able to create value in our assets without relying on
market movements.
See-through investment portfolio
London Offices
– Completed, let and available to let
– Being redeveloped
Total London
Manchester Offices
– Completed, let and available to let
Total Manchester
Other
Total
Fair
value
weighting
%
Passing
rent
£m
Contracted
rent
£m
%
ERV change
like-for-like
%
%
75.3
9.7
85.0
15.0
15.0
0.0
100.0
17.3
–
17.3
4.6
4.6
0.0
78.8
–
78.8
21.1
21.1
0.1
27.5
–
27.5
5.7
5.7
0.0
%
82.6
–
82.6
17.3
17.3
0.1
ERV
£m
34.8
7.6
42.4
9.0
9.0
0.1
67.7
14.7
82.4
17.4
17.4
0.2
0.9
14.0
3.0
2.6
2.6
0.0
3.0
21.9
100.0
33.2
100.0
51.5
100.0
During the year, total contracted income reduced by £2.3m as a result of the sale of investment properties and losses from
breaks and lease expiries, offset by the purchase of one investment property and rent from new lettings and rent reviews.
Contracted rent reduced through disposals of London offices
Contracted rent reduced through disposals of Manchester offices
Contracted rent reduced through disposals of Non-Core assets
Contracted rent increased from purchases of investment properties
Total contracted rental change from sales and purchases
Rent lost at break/expiry
Rent reviews and uplifts on lease renewals
New lettings
– London
– Manchester
Total increase in the year from asset management activities
Net decrease in contracted rents in the year
See-through
total portfolio
contracted rent
£m
(7.4)
(0.1)
(2.3)
0.9
(8.9)
(1.7)
0.1
7.6
0.6
6.6
(2.3)
43
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION THE PROPERTY PORTFOLIO IN NUMBERS
CONTINUED
INVESTMENT PORTFOLIO
PORTFOLIO YIELDS
London Offices
– Completed, let and available to let
– Being redeveloped
Total London
Manchester Offices
– Completed, let and available to let
– Being redeveloped
Total Manchester
Total
EPRA topped
up NIY
31 March 2019
%
True equivalent
yield
31 March 2019
%
Reversionary
yield
31 March 2019
%
EPRA topped
up NIY
31 March 2018
%
True equivalent
yield
31 March 2018
%
Reversionary
yield
31 March 2018
%
4.2
n/a
4.2
4.2
n/a
4.2
4.2
5.1
4.9
5.1
6.1
n/a
6.1
5.2
5.2
5.7
5.3
6.3
n/a
6.3
5.4
4.5
n/a
4.5
5.3
n/a
5.3
4.6
5.4
5.2
5.3
6.4
6.2
6.4
5.5
5.3
5.6
5.4
6.5
7.0
6.7
5.6
SEE-THROUGH CAPITAL VALUES, VACANCY RATES AND UNEXPIRED LEASE TERMS
London Offices
– Completed, let and available to let
– Being redeveloped
Total London
Manchester Offices
– Completed, let and available to let
Total Manchester
Other
Total
SEE-THROUGH VALUATION MOVEMENTS
London Offices
– Completed, let and available to let
– Being redeveloped
Total London
Manchester Offices
– Completed, let and available to let
– Being developed
Total Manchester
Total Core
Regional Offices/ Retail/ Other
Total
Capital value psf
31 March 2019
£
Vacancy rate
31 March 2019
%
WAULT
31 March 2019
Years
WAULT
31 March 2018
Years
1,061
805
1,021
295
295
–
753
16.2
n/a
16.2
19.8
19.8
–
17.7
8.0
n/a
8.0
3.9
3.9
–
7.3
5.8
n/a
5.8
4.2
4.2
3.8
5.4
Val change
inc purchases &
gains on sales
%
Val change
excl purchases &
gains on sales
%
Investment
portfolio
weighting
31 March 2019
%
Investment
portfolio
weighting
31 March 2018
%
6.8
13.3
7.4
7.3
–
7.3
7.4
6.0
7.4
5.8
13.3
6.6
7.8
–
7.8
6.8
–
6.8
75.3
9.7
85.0
15.0
–
15.0
100.0
–
100.0
59.2
25.6
84.8
10.1
1.8
11.9
96.7
3.3
100.0
SEE-THROUGH LEASE EXPIRIES OR TENANT BREAK OPTIONS
% of rent roll
Number of leases
Average rent per lease (£)
Year to
2020
5.9
36
Year to
2021
6.4
19
Year to
2022
11.7
28
Year to
2023
7.9
15
Year to
2024
13.4
25
54,309
111,037
138,860
175,870
178,434
44
HELICAL PLCAnnual Report and Accounts 2019 We have a strong rental income stream and a diverse tenant base. The top 10 tenants account for 51.6% of the total rent roll
and the tenants come from a variety of industries.
Rank
Tenant
1
2
3
4
5
6
7
8
9
10
Total
Farfetch
WeWork
Pivotal
Infosys
Anomaly
CBS
Allegis
Finablr
Stripe Payments
The Growth Company
PRINCIPAL LETTINGS
Property
The Tower, London EC1
The Tower, London EC1
The Loom, London E1
The Tower, London EC1
Tenant industry
Online retail
Co-working
Technology
Technology
Marketing
Media
Recruitment
Financial services
Technology
Community development
Tenant
Farfetch
Infosys
Hey Habito
Finablr
90 Bartholomew Close, London EC1
The Loom, London E1
The Loom, London E1
The Tower, London EC1
Wright & Bell (trading as Lino)
The Fairtrade Foundation
G-Star
Albion & East (trading as Serata Hall)
90 Bartholomew Close, London EC1
The Loom, London E1
Northridge Law
Vidsy
Contracted rent
£m
Rent roll
%
3.9
3.8
2.0
1.4
1.4
1.0
1.0
0.9
0.8
0.8
11.8
11.5
6.0
4.2
4.2
3.1
3.0
2.8
2.5
2.5
17.0
51.6
Area
sq ft
29,671
19,576
15,907
11,329
6,414
6,400
5,691
5,395
4,642
3,619
Lease term
to expiry
years
9
10
5
10
25
10
5
25
5
3
LETTING ACTIVITY
Investment properties
London Offices
The Tower, The Bower, EC1
The Loom, E1
The Powerhouse, W4
Power Road Studios, W4
25 Charterhouse Square, EC1
90 Bartholomew Close, EC1
London Retail
The Warehouse and Studio, The Bower, EC1
The Tower, The Bower, EC1
Barts Square, EC1
90 Bartholomew Close, EC1
Manchester Offices
Churchgate & Lee
35 Dale Street
Trinity
Fourways House
Total
Development properties
London Offices
One Creechurch Place, EC3
One Bartholomew, EC1
Area
sq ft
Contracted rent
(Helical’s share)
£
Rent
per sq ft
£
% above
31 March 2018
ERV
60,576
37,080
–
6,072
–
4,642
277
10,308
3,101
6,414
–
10,134
–
5,057
143,661
4,400,000
1,919,000
–
238,000
–
152,000
15,000
526,000
57,000
88,000
–
241,000
–
121,000
7,757,000
72.63
51.76
–
39.14
–
75.00
55.69
51.03
41.92
40.88
–
23.72
–
23.98
56.65
86,311
74,101
445,000
–
64.43
84.62
1.3
4.5
–
11.8
–
15.4
–
18.3
-16.2
0.0
–
24.2
–
2.0
4.3%
2.1
n/a
45
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION FINANCIAL REVIEW
OVERVIEW
Our development and asset management
programme has driven the results for
the year, principally through revaluation
gains at The Tower, London EC1 and
Kaleidoscope, London EC1, and from the
sale of The Shepherds Building, London
W14, at a significant premium to 31 March
2018 book value.
With the sale of the final three non-core
assets in the year, the Group has
completed its transformation to a London
and Manchester investment and
development company. Whilst the sales
of £477m of investment assets over the
last two years have reduced the Group’s
net rental income, the cash generated
has been used to fund its development
programme and repay debt, substantially
reducing its LTV and finance costs. Going
forward, we expect this income stream
to grow as we work to capture the
portfolio’s ERV of £51.5m.
Helical aims to deliver market leading returns
by investing in and developing real estate
that best serves the needs of its tenants
and maximises value for its Shareholders.
TIM MURPHY
FINANCE DIRECTOR
IFRS PERFORMANCE
EPRA PERFORMANCE
PROFIT BEFORE TAX
EPRA EPS
£43.5m
(2018: £30.8m)
Loss 8.4p
(2018: loss 7.0p)
IFRS EPS
35.8p
(2018: 22.3p)
EPRA NAV
482p
(31 March 2018: 468p)
IFRS DILUTED NAV
EPRA TRIPLE NAV
469p
465p
(31 March 2018: 445p)
(31 March 2018: 448p)
46
HELICAL PLCAnnual Report and Accounts 2019 RESULTS FOR THE YEAR
The year to 31 March 2019 includes
net rental income of £25.2m and a
net gain on sale and revaluation of the
investment portfolio of £60.6m, offset by
development losses of £4.4m, leading to
a Total Property Return of £81.4m (2018:
£68.8m). Total administration costs of
£17.2m (2018: £13.2m) and significantly
reduced net finance costs of £18.4m
(2018: £35.5m) contributed to a pre-tax
profit of £43.5m (2018: £30.8m). EPRA
net asset value per share increased by
3.0% to 482p (31 March 2018: 468p).
The proposed final dividend of 7.50p
takes the total dividend for the year to
10.10p, a 6.3% increase on the previous
year. With growing rents from our
London and Manchester portfolios, the
Company aims to continue to increase
its annual dividend going forward.
The Group’s real estate portfolio,
including its share of assets held in joint
ventures, reduced to £876.4m (31 March
2018: £909.6m) as gains from its annual
revaluation and capital expenditure on
the investment portfolio and development
programme were offset by the sale of
assets with a book value of £194m. One
asset was purchased during the year,
Fourways House, Manchester for £16.5m.
The cash generated from the sale of
property assets during the year allowed
the repayment of debt and reduced
the Group’s see-through loan to value
to 30.6% (31 March 2018: 39.9%). The
Group’s weighted average cost of debt
reduced to 4.0% (31 March 2018: 4.3%)
and a weighted average debt maturity,
excluding the Convertible Bond, of 3.4
years (2018: 3.5 years). The average
maturity of the facilities would increase to
4.2 years following the two one-year
extensions of the revolving credit facility.
The £100m unsecured Convertible Bond
is to be repaid in June 2019.
At 31 March 2019, the Group had
unutilised bank facilities of £176m and
£205m of cash on a see-through basis.
The bank facilities are primarily available
to fund the development of Kaleidoscope,
London EC1, the construction of the last
phase of residential at Barts Square,
London EC1, future property acquisitions
and to repay the £100m Convertible
Bond in June 2019.
TOTAL PROPERTY RETURN
We calculate our Total Property Return
to enable us to assess the aggregate of
income and capital profits made each
year from our property activities. Our
business is primarily aimed at producing
surpluses in the value of our assets
through asset management and
development, with the income side of
the business seeking to cover our
annual administration and finance costs.
EARNINGS PER SHARE
The IFRS earnings per share increased
from 22.3p to 35.8p and are based on the
after tax earnings attributable to ordinary
Shareholders divided by the weighted
average number of shares in issue during
the year.
On an EPRA basis, losses per share were
8.4p (2018: loss 7.0p), reflecting the
Group’s share of net rental income of
£25.2m (2018: £36.1m) and development
losses of £4.4m (2018: £8.0m), but
excluding gains on sale and revaluation
of investment properties of £60.6m
(2018: £40.7m).
TOTAL PROPERTY RETURN
£m
155.3
164.6
79.9
68.8
81.4
2015
2016
2017
2018
2019
INCOME STATEMENT
£m
70
60
50
40
30
20
10
0
-10
-20
7.1
25.2
(11.5)
(17.2)
4.2
0.6
(10.0)
(18.4)
60.6
(1.5)
(3.4)
(2.2)
43.5
N et rents
D evelo p m ent
Provisio nin g
pro fits
a g ainst sto ck
A d m inistratio n
N et fi nance
costs
costs
E P R A E P S tax
a djust m ents
O ther
E P R A loss
N et g ain o n sale
E x p ense o n
D erivative fi nancial
cancellatio n of lo ans
an d revaluatio n
instru m ents
IF R S pro fit
O ther
b efore tax
The financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS). In common with usual and best practice in our sector,
alternative performance measures have also been provided to supplement IFRS, some of
which are based on the recommendations of the European Public Real Estate Association
("EPRA"), with others designed to give more relevant information about the Group’s share
of assets and liabilities, income and expenses in subsidiaries and joint ventures. The terms
used are defined in the Glossary of Terms on page 148.
HELICAL PLC
Annual Report and Accounts 2019
47
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION Development Profits
In the year under review the Group let
the remaining space at One Creechurch
Place, London EC3 which, under its role
as development manager, allowed it to
recognise £4.1m of profit. A further profit
of £0.8m was recognised for carrying out
a similar role at Barts Square, London EC1.
Provisions of £6.5m against our legacy
retail development programme, non-core
residential land and to satisfy cost
indemnities given on the sale of our
Retirement Villages in the prior year,
combined with other costs of £0.2m,
contributed to a net development loss
of £1.8m (2018: £4.2m).
Share of Results of Joint Ventures
The revaluation of our investment assets
held in joint ventures generated a surplus
of £1.3m (2018: £3.3m). Under our
development management agreement for
One Bartholomew, Barts Square, London
EC1, we recognised a net development
fee of £3.9m as a result of achieving
practical completion and letting progress,
but an assessment of the book value of
our land holdings at Barts Square resulted
in development provisions of £7.2m. A
profit of £2.2m was recognised on the sale
of the site at Hammersmith Town Hall.
Finance, administration, taxation and
other sundry items added a further £4.8m
(2018: £1.5m) of losses. Accounting
adjustments to our interest in the One
Creechurch Place joint venture generated
surpluses of £1.4m, leaving a net loss from
our joint ventures of £3.2m (2018: profit
of £3.2m).
FINANCIAL REVIEW
CONTINUED
NET ASSET VALUE
IFRS diluted net asset value per share
increased from 445p to 469p and is a
measure of Shareholders’ Funds divided
by the number of shares in issue at the
year end, adjusted to allow for the effect
of all dilutive share awards.
EPRA net asset value per share increased
by 3.0% to 482p per share (31 March
2018: 468p). This movement arose
principally from a total comprehensive
income (retained profits) of £42.6m
(2018: £26.3m), less £11.4m of dividends
(31 March 2018: £10.2m) and the
crystallisation of a £13.5m tax charge
on the capital gain from the sale of
The Shepherds Building, London W14.
EPRA triple net asset value per share
increased by 3.8% to 465p (31 March
2018: 448p).
INCOME STATEMENT
Rental Income and Property Overheads
Gross rental income receivable by the
Group in respect of wholly owned
properties reduced by 29.9% to £28.2m
(2018: £40.2m), reflecting the partial
capture of the investment portfolio’s
reversionary potential offset by sales of
assets during the current and prior years.
In the joint ventures, gross rents rose from
£0.2m to £1.0m. Property overheads in
respect of wholly owned assets and in
respect of those assets in joint ventures
remained steady at £4.1m (2018: £4.1m).
After taking account of net rents
receivable from our profit share partners
of £0.1m (2018: payable of £0.1m),
see-through net rents reduced by 30.2%
to £25.2m (2018: £36.1m).
EPRA NAV
pence
520
500
480
460
440
420
400
468.0p
(8.4p)
50.1p
(1.4p)
(3.2p)
(11.7p)
482.0p
(9.6p)
(1.7p)
31 March 2018
EPRA
EPS
Investment
property
gains
Development
surpluses
realised
Derivative
financial
instruments
Taxation
Dividends
Other
31 March 2019
IFRS DILUTED NAV PER SHARE
pence
EPRA NAV PER SHARE
pence
431
445
469
456
473
468
482
385
405
332
2015
Growth
2016
+22%
2017
+6%
2018
+3%
2019
+5%
2015
Growth
2016
+18%
2017
+4%
2018
-1%
2019
+3%
48
HELICAL PLCAnnual Report and Accounts 2019 NET GAIN ON SALE AND REVALUATION
OF INVESTMENT PROPERTIES
£m
97
94
93
50
39
37
41
27
61
46
2016
2015
Gain on revaluation
Gain on sale
2017
2018
2019
Gain on Sale and Revaluation
of Investment Properties
During the year, we sold five investment
assets for gross proceeds of £167.0m,
generating a net overall profit of £15.0m.
In London, we sold The Shepherds
Building, W14 for £125.2m, a 12.3%
premium to its 31 March 2018 book value.
31 Booth Street, Manchester was sold for
£11.9m, a 29.6% premium to its 31 March
2018 book value, and we also sold three
non-core assets for a combined price of
£28.5m at a 6.2% premium to 31 March
2018 book value.
The valuation of our investment portfolio,
on a see-through basis, continued to
reflect the benefit of our refurbishment
activities in London where we generated
a valuation surplus of 7.4% overall
(including purchases and gains on sales)
and 6.6% on a like-for-like basis. In
Manchester, the portfolio generated a
surplus of 7.8% on a like-for-like basis.
In total, the see-through investment
portfolio showed a valuation surplus of
7.4% (including purchases and gains on
sales), or 6.8% on a like-for-like basis.
The total impact on our results of the gain
on sale and revaluation of our investment
portfolio, including in joint ventures, was
a net gain of £60.6m (2018: £40.7m).
Administration Costs
Administration costs in the Group, before
performance-related awards, reduced
slightly from £11.0m to £10.9m.
Performance related share awards and
bonus payments, before National
Insurance costs, were £5.2m (2018:
£1.7m). Of this amount, the £2.3m (2018:
£1.4m) charge for share awards under
the Performance Share Plan is expensed
through the Income Statement but added
back to Shareholders’ Funds through the
Statement of Changes in Equity.
2019
£000
2018
£000
Administration costs
10,858
11,023
Share awards
Directors’ and senior
executives’ bonuses
NIC on share awards
and bonuses
2,274
2,929
1,388
289
692
65
Group
16,753
12,765
In joint ventures
406
468
Total
17,159
13,233
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, reduced to £12.9m (2018: £18.5m).
Interest payable in respect of the
unsecured bonds was £4.0m (2018:
£8.4m). Bank charges, commitment fees,
sundry interest and the amortisation of
refinancing costs decreased to £5.8m
(2018: £17.8m) due to the prior year’s
redemption of the 6% Retail Bond (£8.7m
premium) and the repayment of bank
debt. Capitalised interest reduced from
£5.2m to £3.2m as development schemes
progressed and as a result of the sale of
the Retirement Village portfolio in the
prior year, as well as the completion of The
Tower, London EC1 in August 2018. Total
finance costs, including joint ventures,
decreased to £19.5m (2018: £39.5m).
Finance income earned, including in joint
ventures, was £1.1m (2018: £4.3m). The
movement in medium and long-term
interest rate projections during the year
contributed to a charge of £3.3m (2018:
credit of £4.0m) on their mark-to-market
valuation. The mark-to-market valuation
of the Convertible Bond resulted in a
credit of £0.9m (2018: charge of £1.6m).
Taxation
Helical pays corporation tax on its UK
sourced net rental income, trading
and development profits and realised
chargeable gains, after offsetting
administration and finance costs.
The current tax charge for the year of
£9.0m (2018: credit of £0.4m) is primarily
a result of the tax charge on the capital
gain on the sale of The Shepherds
Building, London W14. The majority of
this tax liability had been recognised as a
deferred tax liability in the prior year and
this liability was reversed as a deferred tax
credit during the year. This deferred tax
credit was offset by an increased liability
on the investment property revaluation
surpluses recognised in the year.
Dividends
Helical follows a progressive dividend
policy of increasing its dividends whilst
retaining the majority of funds generated
for investment to grow the business. As
the Group completes and lets its current
development programme, it expects to
be able to reflect the growth in earnings
in increased dividends paid to
Shareholders. The interim dividend paid
on 31 December 2018 of 2.60p was an
increase of 4.0% on the previous interim
dividend of 2.50p. The Company has
proposed a final dividend of 7.50p, an
increase of 7.1% on the previous year
(2018: 7.00p), for approval by
Shareholders at the 2019 AGM. In total,
the dividend paid or payable in respect
of the results for the year to 31 March 2019
will be 10.10p (2018: 9.50p), an increase of
6.3%. Since 2015, the compound annual
growth rate of the Company’s dividends
has been 7.3%.
TOTAL DIVIDENDS
pence
8.17
8.60
7.25
9.50
10.1
2015
2016
Growth
+12.7%
2017
+5.3%
2018
+10.5%
2019
+6.3%
49
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION FINANCIAL REVIEW
CONTINUED
INVESTMENT PORTFOLIO
Valuation at 31 March 2018
802,134
22,623
824,757
2,189 (12,375)
814,571
Wholly
owned
£000
In joint
venture
£000
See-
through
£000
Head leases
capitalised
£000
Lease
incentives
£000
Book
value
£000
Acquisitions
Wholly owned
Capital expenditure
Wholly owned
Joint ventures
Disposals
29,500
60,820
-
-
-
1,377
29,500
60,820
1,377
Wholly owned
(149,051)
- (149,051)
Revaluation surplus
Wholly owned
Joint ventures
Profit share partners
(250)
-
48,097
-
48,097
-
1,382
1,382
(250)
-
-
-
-
-
-
-
-
-
-
29,500
60,820
1,377
1,501 (147,550)
(3,813)
44,284
(94)
-
1,288
(250)
Valuation at 31 March 2019
791,250
25,382
816,632
2,189 (14,781)
804,040
SEE-THROUGH DEBT MATURITY PROFILE
£m
200
Available Facility
Secured Debt
Unsecured Debt
252
246
100
93
nil
nil
nil
40
nil
nil
<1 year
1–2 years
2–3 years
3–4 years
4–5 years
5–6 years
6–7 years
7–8 years
DEBT PROFILE AT 31 MARCH 2019 – EXCLUDING THE EFFECT OF ARRANGEMENT FEES
Total
facility
£000
Total
utilised
£000
Available
facility
£000
Weighted
average
interest
rate
%
Average
maturity
Years
Extended1
average
maturity
Years
Investment facilities
443,000
309,679
133,321
Development facilities
50,400
20,023
30,377
Total wholly owned
In joint ventures
Total secured debt
Convertible Bond
Working capital
Fair value of
Convertible Bond
493,400
329,702
163,698
51,684
48,980
2,704
545,084
378,682
166,402
100,000
100,000
–
10,000
–
10,000
–
468
–
Total unsecured debt
110,000
100,468
10,000
Total debt
655,084
479,150
176,402
3.9
6.3
4.1
4.0
4.1
4.0
–
–
4.0
4.0
3.5
4.4
3.5
2.8
3.4
0.2
–
–
0.2
2.7
4.4
4.4
4.3
2.8
4.2
0.3
1.0
–
0.3
3.6
1 Calculated on a fully utilised basis with the two one-year extensions of the revolving credit facility included.
50
BALANCE SHEET
Shareholders’ Funds
Shareholders’ Funds at 1 April 2018 were
£533.9m. The Group’s results for the year
added £42.6m (2018: £26.3m), net of tax,
representing the total comprehensive
income for the year. Movements in
reserves arising from the Group’s share
schemes increased funds by £2.3m. The
Company paid dividends to Shareholders
amounting to £11.4m leaving a net
increase in Shareholders’ Funds from
Group activities during the year of
£33.5m to £567.4m.
Investment Portfolio
In the year to 31 March 2019, the Group
acquired Fourways House, Manchester
for £16.5m and paid additional
consideration of £13.0m for Kaleidoscope,
London EC1. The Group spent £62.2m on
capital works on the investment portfolio,
mainly at Kaleidoscope, London EC1
(£36.0m), The Tower, London EC1
(£10.5m), Barts Square, London EC1
(£1.4m), Trinity, Manchester (£6.9m)
and 35 Dale Street, Manchester (£1.6m).
The aggregate book value of the five
investment assets sold during the year
was £149.1m. Revaluation gains added
£49.5m (£0.3m loss for our partners)
to increase the see-through value of
3the portfolio, before lease incentives, to
£816.6m (2018: £824.8m). The accounting
for head leases and lease incentives
resulted in a book value of the see-
through investment portfolio of £804.0m
(31 March 2018: £814.6m).
Debt and Financial Risk
In total, Helical’s outstanding debt at
31 March 2019 of £479.2m (31 March 2018:
£470.7m) had a weighted interest cost
of 4.0% (31 March 2018: 4.3%) and a
weighted average debt maturity excluding
the Convertible Bond, of 3.4 years
(31 March 2018: 3.5 years). The average
maturity of the facilities would increase
to 4.2 years following exercise of the two
one-year extensions of the Group’s
£150m revolving credit facility. The
£100m unsecured Convertible Bond
is to be repaid in June 2019.
HELICAL PLCAnnual Report and Accounts 2019 DEBT PROFILE AT 31 MARCH 2019 – INTEREST RATES
Fixed rate debt
Secured borrowings
Convertible Bond
Fair value of Convertible Bond
Total
Floating rate debt
Secured
Total
In joint ventures
Floating rate
Total borrowings
Effective
interest
rate
%
3.6
4.0
-
3.7
5.71
4.0
4.0
4.0
2019
£m
262.5
100.0
0.5
363.0
67.2
430.2
49.0
479.2
Effective
interest
rate
%
4.1
4.0
-
4.1
7.01
4.4
3.6
4.3
2018
£m
265.3
100.0
1.3
366.6
54.2
420.8
49.9
470.7
¹ This includes commitment fees on undrawn facilities. Excluding these would reduce the effective rate to 3.7%
(31 March 2018: 3.9%).
Secured Debt
The Group arranges its secured
investment and development facilities
to suit its business needs as follows:
Unsecured Debt
The Group’s utilised unsecured debt
is £100.5m (31 March 2018: £101.3m),
as follows:
• Investment Facilities
• Convertible Bond
We have £150m of revolving credit
facilities that enable the Group to
acquire, refurbish, reposition and hold
significant parts of our investment
portfolio. Our London investment assets
are primarily held in £293m of term
loan secured facilities. The value of the
Group’s properties secured in these
facilities at 31 March 2019 was £698m
(31 March 2018: £706m) with a
corresponding loan to value of 44.4%
(31 March 2018: 45.3%). The average
maturity of the Group’s investment
facilities at 31 March 2019 was 3.5 years
(31 March 2018: 3.8 years), increasing to
4.4 years following the two one-year
extensions of the revolving credit facility
with a weighted average interest rate of
3.9% (31 March 2018: 4.5%).
• Development Facilities
This facility finances the over-station
development at Kaleidoscope, London
EC1. The maturity of the Group’s
development facility at 31 March 2019
was 4.4 years with a weighted average
interest rate of 6.3%. Excluding the
impact of commitment fees, the
weighted average interest rate of this
facility is 4.2%.
• 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
2019 was 2.8 years (31 March 2018: 1.7
years) with a weighted average interest
rate of 4.0% (31 March 2018: 3.6%).
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 2019, as
determined by the listed market price,
was £100.5m (31 March 2018: £101.3m).
The Group expects to repay the £100m
Bond in June 2019 from existing cash
resources.
• Short-term Working Capital Facilities
These facilities provide access to
additional working capital for the Group.
Cash and Cash Flow
At 31 March 2019, the Group had £382m
(31 March 2018: £277m) of cash and
agreed, undrawn, committed bank
facilities including its share in joint
ventures, as well as £25m (31 March 2018:
£105m) 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 £470.7m to £479.2m during the year
to 31 March 2019. After deducting cash
balances of £205.2m (31 March 2018:
£103.7m) and unamortised refinancing
costs of £5.4m (31 March 2018: £4.1m),
net borrowings reduced from £362.9m
to £268.6m. The gearing of the Group,
including in joint ventures, reduced from
68.0% to 47.3%.
See-through gross
borrowings
See-through cash
balances
Unamortised
refinancing costs
See-through net
borrowings
31 March
2019
31 March
2018
£479.2m £470.7m
£205.2m £103.7m
£5.4m
£4.1m
£268.6m £362.9m
Shareholders’ Funds
£567.4m £533.9m
See-through gearing
– IFRS net asset
value
47.3%
68.0%
Hedging
At 31 March 2019, the Group had £363.0m
(31 March 2018: £366.6m) of fixed rate
debt with an average effective interest
rate of 3.7% (31 March 2018: 4.1%) and
£67.2m (31 March 2018: £54.2m) of
floating rate debt with an average
effective interest rate, excluding
commitment fees, of 3.7% (31 March
2018: 3.9%). In addition, the Group had
£240m of interest rate caps at an average
of 1.69% (31 March 2018: £15.0m at 0.75%).
In our joint ventures, the Group’s share of
fixed rate debt was £nil (31 March 2018:
£nil) and £49.0m (31 March 2018: £49.9m)
of floating rate debt with an effective rate
of 4.0% (31 March 2018: 3.6%) with
interest rate caps set at 0.5% plus margin
on £11.0m (31 March 2018: £58.0m).
HEDGING PROFILE
£m
700
600
500
400
300
200
100
0
Mar
’19
£433m
£388m
£243m
£143m
£50m
Mar
’20
Mar
’21
Mar
’22
Mar
’23
Mar
’24
Mar
’25
Mar
’26
Mar
’27
Fixed Rate
Swap
Cap
TIM MURPHY
Finance Director
23 May 2019
51
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION 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 it faces is fundamental to its financial
stability, current and future 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 APPROACH
TOP-DOWN
APPROACH
OVERSIGHT,
IDENTIFICATION,
ASSESSMENT
AND MITIGATION
OF RISKS AT A
STRATEGIC LEVEL
The Board has ultimate responsibility for risk management within the Group. The Board sets
the risk appetite of the Group, establishes a risk management strategy and is responsible for
maintaining a robust internal controls system.
The Board continually monitors and reviews the risk management strategy to ensure that it remains
appropriate and consistent with the Group’s overall strategy and external market conditions.
The Audit and Risk Committee supports the Board by evaluating the effectiveness of the risk
management procedures and internal controls throughout the year.
The Executive Committee is responsible for the day-to-day operational application of
the risk management strategy and ensuring that all staff are aware of their responsibilities.
Helical’s management team runs the business in line with the risk management strategy
established by the Board and reports to the Board on how it operates.
The small size of the team and Helical’s flat management structure allow the Executive Committee
to have close contact with all aspects of the business and ensure that the identification and
management of risks and opportunities are at the forefront of decision makers’ minds.
Individual asset managers are responsible for identifying and assessing risks relating
to the properties they manage and reporting to the Executive Committee as appropriate.
All staff members are responsible for complying with risk management procedures
and internal control measures, reporting to the Executive Committee as necessary.
BOTTOM-UP
APPROACH
OVERSIGHT,
IDENTIFICATION,
ASSESSMENT AND
MITIGATION OF
RISKS AT AN
OPERATIONAL
LEVEL
52
HELICAL PLCAnnual Report and Accounts 2019 PRINCIPAL RISKS
1
The Group's strategy is inconsistent with the market
2 The Group carries out significant development projects
3 Property values decline/reduced tenant demand for space
4 Political risk
5 Availability and cost of bank borrowing and cash resources
6 Breach of loan covenants
7 Employment and retention of key personnel
8 Reliance on key contractors and suppliers
9 Inability to asset manage, develop and let property assets
10 Health and safety risk
11 Business disruption and cyber security
12 Poor management of stakeholder relations
13 Non-compliance with prevailing legislation
d
o
o
h
i
l
e
k
L
i
4
8
9
11
10
13
3
6
2
12
7
5
1
VIABILITY STATEMENT
The Directors have assessed the viability
of the Group for a period of five years to
March 2024, being the period for which
the Board regularly reviews forecasts
and which encompasses the lifetime of
the Group’s major development projects.
The Board considers the future
performance of the Group beyond five
years but less certainty inevitably exists
over the forecasting assumptions for
any period beyond five years.
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 and Audit and Risk
Committee review the principal risks
of the Group at least twice a year,
reassessing the severity of each risk
and determining the Group’s proposed
response and planned mitigation;
• The five-year forecasts for the Group
are updated and reviewed by the Board
and Executive Committee on a quarterly
basis; and
• Management reviews the short-term
(three–four months) cash requirements
of the Group on a bi-monthly basis and
cash balances and movements are
monitored daily.
In making its assessment, the Board
considers the Group’s principal risks
and assesses the combined potential
impact in severe, but plausible, downside
scenarios together with the likely
effectiveness of mitigating actions
that the Group has at its disposal.
The most relevant risks, their potential
impact on the Group and the sensitivity
analyses performed in order to assess
their likelihood and impact are:
• A significant reduction in the fair value
of the Group’s property portfolio, which
could result in the Group breaching loan
covenants, requiring the repayment of a
proportion of borrowings. The Group’s
loan covenants were subjected to
sensitivity analysis including severe
reductions in property valuations in
order to establish the quantum of cash
required to cure any resulting breaches.
The sensitivity analysis included
modelling the impacts of both a
disruptive and disorderly Brexit.
Impact
Management then assessed how such
breaches could be cured practically.
Finally, management determined the
level of valuation fall which would result
in an inability to cure the respective
covenant breach and assessed the
likelihood of such a fall to be remote; and
• An inability to maintain sufficient levels
of rental income, which could present
a short-term liquidity risk for the Group
and impact on profitability. Management
subjects the Group’s long-term cash
flow and profit forecasts to sensitivity
analysis including severe reductions in
rental income, assessing the impact on
the Group’s ability to meet its liabilities as
they fall due and its income cover ratios.
Based on the outcomes of the procedures
outlined above and other matters
considered by the Board, the Directors
hold 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.
53
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION PRINCIPAL RISKS REVIEW
CONTINUED
OUR PRINCIPAL RISKS
The principal risks faced by the Group, and the
steps taken by the Group to mitigate these
risks, are as follows:
STRATEGIC
RISKS
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.
The Group’s strategy is
inconsistent with the market
Link to strategy
GROWTH
Risk description
Changing market conditions could hinder the Group’s ability to buy and sell properties envisioned in its
strategy. The location, size and mix of properties in Helical’s portfolio determine the impact of the risk.
If the Group’s chosen markets underperform, the impact on the Group’s liquidity, investment property
revaluations and rental income is greater.
Mitigation/action
Management constantly monitors the market and makes changes to the Group’s strategy in light of market
conditions. The Group conducts an annual strategic review and maintains rolling forecasts with inbuilt
sensitivity to model anticipated economic conditions.
The Group’s management team is highly experienced and has a strong track record of understanding the
property market.
Due to the Group’s small management team, strategic change can be implemented quickly.
The Group carries out
significant development
projects
Link to strategy
PROPERTY
Risk description
The Group carries out significant development projects over a number of years and is therefore exposed
to fluctuations in the market and tenant demand levels over time.
Mitigation/action
Management carefully reviews the risk profile of individual developments and in some cases builds
properties in several phases to minimise the Group’s exposure to reduced demand for particular asset
classes or geographical locations over time. The Group carries out developments in partnership with other
organisations and pre-lets space to reduce development risk, where considered appropriate.
Property values decline/
reduced tenant demand
for space
Risk description
The property portfolio is at risk of valuation falls through changes in market conditions, including
underperforming sectors or locations, lack of tenant demand or general economic uncertainty.
Mitigation/action
The Group’s property portfolio has tenants from diverse industries, reducing the risk of over-exposure
to one sector. We carry out occupier financial covenant checks ahead of approving leases in order to
limit our exposure to tenant failure.
Management reviews external data, seeks the advice of industry experts and monitors the performance of
individual assets and sectors in order to dispose of non-performing assets and rebalance the portfolio to
suit the changing market. Management regularly models different property revaluation scenarios through
its forecasting process in order to prepare a considered approach to mitigating the potential impact.
Risk description
There is a risk that regulatory and tax changes could adversely affect the market in which the Group
operates and changes in legislation could lead to delays in receiving planning permission.
There remains uncertainty over the outcome of the United Kingdom’s decision to leave the European
Union. The result could adversely affect the case for investment in the UK, depressing the property
investment and occupational market, negatively impacting the Group’s performance.
Mitigation/action
Management seeks advice from experts to ensure it understands the political environment and the impact
of emerging regulatory and tax changes on the Group. It maintains good relationships with planning
consultants and local authorities. Where appropriate, management joins with industry representatives
to contribute to policy and regulatory debate relevant to the industry.
Link to strategy
PROPERTY
Political risk
Link to strategy
GROWTH
54
HELICAL PLCAnnual Report and Accounts 2019 FINANCIAL
RISKS
Financial risks are those that could prevent the Group from funding
its chosen strategy, both in the long and short term.
Availability and cost of bank
borrowing and cash resources
Link to strategy
FINANCING
Risk description
The inability to roll over existing facilities or take out new borrowing could impact on the Group’s ability
to maintain its current portfolio and purchase new properties. The Group may forego opportunities if it
does not maintain sufficient cash to take advantage of them as they arise.
The Group is at risk of increased interest rates on unhedged borrowings.
Mitigation/action
The Group maintains a good relationship with many established lending institutions and borrowings
are spread across a number of these.
Funding requirements are reviewed bi-monthly by management, who seek to ensure that the maturity
dates of borrowings are spread over several years.
Management monitors the cash levels of the Group on a daily basis and maintains sufficient levels of cash
resources and undrawn committed bank facilities to fund opportunities as they arise.
The Group hedges the interest rates on the majority of its borrowings, effectively fixing or capping the
rates over several years.
Breach of loan covenants
Link to strategy
FINANCING
Risk description
If the Group breaches debt covenants, lending institutions may require the early repayment of borrowings.
Mitigation/action
Covenants are closely monitored throughout the year. Management carries out sensitivity analyses to
assess the likelihood of future breaches based on significant changes in property values or rental income.
55
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION PRINCIPAL RISKS REVIEW
CONTINUED
OPERATIONAL
RISKS
Employment and retention
of key personnel
Link to strategy
PEOPLE
Reliance on key contractors
and suppliers
Link to strategy
PEOPLE
Operational risks are internal risks that could prevent
the Group from delivering its strategy.
Risk description
The Group’s continued success is reliant on its management and staff and successful relationships with
its joint venture partners.
Mitigation/action
The senior management team is very experienced with a high average length of service. The Nominations
Committee and Board regularly review succession planning issues and remuneration is set to attract and
retain high calibre staff. Staff are encouraged to undertake personal development and training courses,
which the Company supports.
The Group has well established relationships with joint venture partners.
Risk description
The Group is dependent on the performance of its key contractors and suppliers for successful delivery
of its development property assets.
Mitigation/action
The Group actively monitors its development projects and uses external project managers to provide
support. Potential contractors are vetted for their quality, health and safety record and financial viability
prior to engagement. Their performance is closely monitored throughout the development process, with
bi-weekly reporting to management. The Group often works with contractors with whom it has previously
worked successfully.
Inability to asset manage,
develop and let property
assets
Risk description
The Group relies on external parties to support it in asset managing, developing and letting its properties,
including planning consultants, architects, project managers, marketing agencies, lawyers and managing agents.
Link to strategy
PROPERTY
Health and safety risk
Link to strategy
PROPERTY
Business disruption
and cyber security
Link to strategy
PEOPLE
56
Mitigation/action
The Group has a highly experienced team managing its properties, who regularly conduct on-site reviews
and monitor cash flows against budget. The Group seeks to maintain excellent relationships with its specialist
professional advisors. Management actively monitors these parties to ensure they are delivering the required
quality on time. Where appropriate, the Group engages parties it has worked with successfully previously.
Risk description
The nature of the Group’s operations and markets expose it to potential health and safety risks both
internally and externally within the supply chain.
Mitigation/action
The Group reviews and updates its Health and Safety policy regularly and it is approved by the Board
annually. The Group engages an external health and safety consultant to review contractor agreements
prior to appointment and ensures they have appropriate policies and procedures in place, then monitors
the adherence to such policies and procedures throughout the project’s lifetime.
The Executive Committee reviews the report by the external consultant every month and the Board reviews
them at every scheduled meeting. The internal asset managers carry out regular site visits.
Risk description
The Group relies on Information Technology to perform effectively and a cyber-attack could result in IT
systems being unavailable, adversely affecting the Group’s operations.
Commercially sensitive and personal information is electronically stored by the Group. Theft of this
information could adversely impact the Group’s commercial advantage and result in penalties where the
information is governed by law (GDPR and Data Protection Act 2018).
The Group is at risk of being a victim of social engineering fraud.
An external event such as extreme weather, environmental incident, power shortage or terrorist attack could
cause significant damage, disruption to the business or reputational damage.
Mitigation/action
The Group engages and actively manages external Information Technology experts to ensure IT systems
operate effectively and that we respond to the evolving IT security environment. This includes regular off-site
backups and a comprehensive disaster recovery process. The external provider also ensures the system is
secure and this is subject to routine testing including bi-annual disaster recovery tests.
There is a robust control environment in place for invoice approval and payment authorisations including
authorisation limits and a dual sign off requirement for large invoices and bank payments.
The Group provides training, and there are procedures in place, to identify emails of a suspicious nature
ensuring these are flagged to the IT providers and employees do not open attachments or follow instructions
within the email.
The Group has a disaster recovery plan, on-site security at its properties and insurance policies in place in
order to deal with any external events and mitigate their impact.
HELICAL PLCAnnual Report and Accounts 2019 REPUTATIONAL
RISKS
Reputational risks are those that could affect the Group in all aspects
of its strategy.
Poor management of
stakeholder relations
Link to strategy
GROWTH
Risk description
The Group risks suffering from reputational damage resulting in a loss of credibility with key stakeholders
including Shareholders, analysts, banking institutions, contractors, managing agents, tenants, property
purchasers/sellers and employees.
Mitigation/action
The Group believes that by successfully delivering its strategy and mitigating its strategic, financial and
operational risks its good reputation will be protected.
The Group regularly reviews its strategy and risks to ensure it is acting in the interests of its stakeholders.
The Group maintains a strong relationship with investors and analysts through regular meetings.
Management closely monitors day-to-day business operations and the Group has a formal approval
procedure for all press releases and public announcements.
A Group Disclosure Policy and Share Dealing Code, Policy & Procedures have been circulated to all staff
in accordance with the EU Market Abuse Regulation (MAR).
Non-compliance with prevailing
legislation, regulation and best
practice
Risk description
The nature of the Group’s operations and markets expose it to potential bribery and corruption risks
(including money laundering and tax evasion) both internally and externally within the supply chain.
Link to strategy
GROWTH
The Group is exposed to the potential risk of acquiring or disposing of a property where the owner/
purchaser has been involved in criminal conduct or illicit activities.
The Group would attract criticism and negative publicity were any instances of modern slavery and human
trafficking identified within its supply chain.
The Group would attract criticism and negative publicity if instances of non-compliance with GDPR
and the Data Protection Act 2018 were identified. Non-compliance may also result in financial penalties.
Mitigation/action
The Group’s anti-bribery and corruption and whistleblowing policies and procedures are reviewed and
updated annually and projects with greater exposure to bribery and corruption are monitored closely.
The Group avoids doing business in high risk territories.
The Group has related policies and procedures designed to mitigate bribery and corruption risks including:
Know Your Client checks; due diligence processes; capital expenditure controls; contracts risk assessment
procedures; and competition and anti-trust guidance. The Group engages legal professionals to support
these policies where appropriate.
All employees are required to complete anti-bribery and corruption training and to submit details of
corporate hospitality and gifts received.
All property transactions are reviewed and authorised by the Executive Committee.
Our Modern Slavery Act statement, which is prominently displayed on our website, gives details of our
policy and our approach.
The Group monitors its GDPR and Data Protection Act 2018 compliance to ensure appropriate safeguards,
policies, procedures, contractual terms and records are implemented and maintained in accordance with
the regulation.
57
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION SUSTAINABILITY
AT HELICAL
Creating a sustainable and responsible business is at the core
of our activities. We are committed to managing the balance
of the needs of our tenants, investors, employees and the
communities in which we work, and this outlook is key to
maintaining the long-term value of our business.
RESPONSIBLE ENVIRONMENTAL
AND SOCIAL PRACTICES
We acknowledge that our activities have
direct and indirect environmental, social
and economic benefits and impact.
Through the entire lifecycle of our buildings
from design through to asset management
we continue to look for innovative ways to
reduce our carbon emissions and running
costs for the benefit of both Helical and our
tenants. Our proactive approach to asset
management seeks to maximise our asset
performance, deliver resource efficiency
and enable our tenants to use their spaces
as effectively as possible. We take great
pride in developing high quality public
realm and we believe creating places where
communities can work, meet and socialise
is key in creating a sustainable building.
To provide transparency when reporting
our sustainability performance, we use
a number of external benchmark indices
and ratings, including;
• FTSE4Good; and
• Carbon Disclosure Project
We also align our reporting with EPRA
Best Practice in Sustainability Reporting
Guidelines and in 2019/2020 will be
participating in GRESB. Maintaining listed
status on these benchmark indices remains
a key priority for Helical, and informs
the evolving approach to Corporate
Responsibility and Sustainability.
58
HELICAL PLCAnnual Report and Accounts 2019 WE RECOGNISE THAT SUSTAINABILITY IS A PRIORITY,
NOT JUST FOR OUR INVESTORS AND TENANTS, BUT
ALSO FOR THE COMMUNITIES IN WHICH WE OPERATE.
AS A RESPONSIBLE BUSINESS WE HAVE RESPONDED
TO THIS BY CREATING A SUSTAINABILITY FRAMEWORK
WHICH FOCUSES ON FOUR CORE PILLARS: OUR PEOPLE;
OUR ENVIRONMENT; HEALTH AND SAFETY; AND OUR
COMMUNITY. WE BELIEVE THAT BY APPLYING THESE
PILLARS TO INVESTMENT, DEVELOPMENT AND ASSET
MANAGEMENT ACTIVITIES, WE ARE CREATING A
SUSTAINABLE BUSINESS WHICH MEETS THE NEEDS
OF OUR KEY STAKEHOLDERS.''
GERALD KAYE
CHIEF EXECUTIVE
U R P E O P L E
O
O
U
R
E
N
V
I
R
O
N
M
E
N
T
SUSTAINABILITY
O
U
R
C
O
M
M
U
N
I
T
Y
H E A L T H
D S A F E T Y
N
A
MANAGING CORPORATE
RESPONSIBILITY
We recognise that there is a direct link
between sustainability and shareholder
value through enhancing the long-term
value of the business. We continue to
review our Environmental Management
processes to ensure they continue
to effectively monitor legislative
requirements, minimise risks of pollution,
facilitate the management of key
environmental risks, and assist in
achieving specific objectives and targets.
The Environmental Management System
is available on the Company website and
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 by the
Board and are implemented by the
Executive Committee;
• Annual (and ongoing) performance
targets to enable Helical to focus
its efforts throughout the year
on measurable and achievable
performance goals;
• Key Performance Measures to help
Helical monitor progress towards these
targets and to ensure we can report in
line with investor disclosure requirements;
• Checklists to assist in applying minimum
sustainability requirements across the
Group's 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 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.
59
As investor scrutiny of
sustainability business
activities and reporting grows
further, we are committed to
expanding our benchmarks
and availability of data.
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
SUSTAINABILITY AT HELICAL
CONTINUED
At Helical, our people are intrinsic to
delivering the ambitions of the business
and driving long-term growth.
Our employees
Helical has a small core team, working
closely with trusted partners in multiple
disciplines. Our success is built on the
skills of our staff and therefore finding,
developing, rewarding, and retaining
our people is a key element of our
corporate strategy.
During the year staff participated in
Property Week’s Best Places to Work in
Property survey and awards programme.
The results of that survey have earned
Helical the distinction of being ranked
one of the Best Places to Work in
Property for 2019.
Our culture
At Helical we encourage an open and
inclusive culture as we believe this creates
a collaborative and focused approach
to achieving the Group’s aims and
aspirations, encouraging individuals
to proactively suggest ideas and
opportunities for the benefit of the
business and the people.
Diversity is important in supporting
Helical in achieving its strategic aims. By
ensuring that Helical is a diverse business,
the Group benefits from a variety of
experiences and perspectives, stimulating
creativity and contributing to our open
and cohesive culture.
Our approach
Not only do we offer our staff a
competitive remuneration and benefits
package, but we also support part-time,
job-sharing and flexible working requests
where possible. During the year under
review, 19% of the workforce carried out
their roles on a part-time basis in order to
meet family commitments. We
believe this competitive approach to
remuneration, alongside an attractive
working environment, has continued to
keep staff turnover low at 6.25%, with an
average length of service of 8.7 years.
To ensure a highly skilled and experienced
team, Helical continues to evaluate
training needs in line with business
objectives. Our employees are actively
encouraged to attend training that
enhances their knowledge and benefits
the business. Over the year, our staff
undertook 699 hours of training and
development, an average of 3.5 days
per employee.
We promote wellbeing through a number
of benefits including a paid-for gym
membership, medical insurance, a cycle
to work scheme and the availability of
fruit and healthy snacks at the office.
As Helical operates with a small team,
our ability to establish excellent long-term
relationships with our advisors, agents
and other suppliers is very important.
As part of this, fair treatment of suppliers
remains a key priority for Helical and the
Group’s policy is to settle all agreed
liabilities as soon as possible and within
the terms established with them.
EXECUTIVE DIRECTORS
EXECUTIVES
ALL EMPLOYEES
3
as at 31 March 2019
TENURE
17
as at 31 March 2019
32
as at 31 March 2019
24.6 YEARS
6.8 YEARS
8.7 YEARS
GENDER SPLIT %
BOARD
MALE 89% FEMALE 11%
MALE 59% FEMALE 41%
MALE 44% FEMALE 56%
60
Helical has a duty to care for the
environment, which leads us to constantly
seek innovative ways in which we can
reduce any adverse impact.
The Group’s corporate commitments to
environmental issues are outlined in the
Group’s Environmental Policy which can
be found on the Company’s website.
The policy details Helical’s commitments
across a range of impact areas and its
development and property management
activities. The Group sets itself targets to
guide its environmental responsibilities,
including resource use and waste
production, pollution, biodiversity, timber
sourcing, flood risk and sustainable
design and construction.
Full details of the Group’s performance
against the targets during the year are
available in the Environment section of
the Company’s website. Due to changes
in the portfolio over the year, it is difficult
to provide meaningful overall like-for-like
(LfL) statistics. However, of the properties
that can be compared:
• Churchgate & Lee, Manchester, has
shown reductions in energy
consumption, compared with last
year, of 25% for electricity and 21% for
gas. These are principally attributed
to improvements to LED lighting and
refurbished heating systems. Churchgate
& Lee has seen an increase in water
consumption for the reporting year.
• The Warehouse, London EC1, has shown
a good decrease in both electricity (12%)
and gas (29%) usage over the reporting
period. This is a considerable improvement
on last year’s LfL performance.
HELICAL PLCAnnual Report and Accounts 2019 The table below highlights that overall
GHG emissions have decreased by 9.3%
year-on-year. The primary reason for this
is the consolidation of Helical’s managed
assets to more core buildings, alongside
the reduction in conversion factors
resulting from the increased inclusion
of renewable energy in the UK grid.
As noted in the previous section,
considerable reductions have been
made owing to improvements in
energy efficient devices and fittings.
Due to the changing portfolio, the
like-for-like GHG emissions are only
reported for a small number of properties
(six properties for electricity and three
properties for gas). Both like-for-like
consumption and associated GHG
emissions have reduced across the
portfolio for the reporting period.
Like-for-like Scope 1 and 2 emissions
have decreased by over 25% which
demonstrates that the improvements
made through increased awareness and
engagement with tenants/personal impact
on consumption, and energy efficient
design measures such as LED light fittings,
have proved effective across the portfolio.
Greenhouse gas (GHG)
emissions reporting
For the reporting year to 31 March 2019
the 2018 UK Government’s Conversion
Factors for Company Reporting has
been followed as the majority of Helical’s
consumption has occurred within 2018
and has followed the UK Government
environmental reporting guidance.
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, when the data
is available.
Scope 2
Indirect energy emissions includes
purchased electricity throughout the
Group’s 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.
Greenhouse gas emissions (tonnes CO2e)
Total portfolio
Tonnes CO2e
Like-for-like portfolio
Tonnes CO2e
Year ended
31.3.19
Year ended
31.3.18
Year ended
31.3.19
Year ended
31.3.18
Scope 1: Direct emissions
Scope 2: Indirect emissions
Total all scopes
739
1,794
2,533
796
1,997
2,793
362
959
1,321
487
1,459
1,946
The specific target set by Helical is to reduce energy consumption by 2% pa 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. Like-for-like has seen an improvement of 12% on the 2018
baseline performance achieving the 2% reduced energy consumption target.
Emissions intensity based on floor area
Reporting year
2017-18
2018-19
Portfolio floor area
(NLA) m2
202,785
179,298
Scope 1&2 emissions
Tonnes CO2e
2,793
Scope 1 & 2
Tonnes CO2e/m2
0.014
2,533
0.014
61
• The Loom, London E1, has shown a good
decrease in electricity consumption
(15%) which can be attributed to
variations in occupancy rates and
completion of commissioning of the
mechanical and engineering plant at
the property.
• 25 Charterhouse Square, London EC1,
has seen an decrease in common
parts energy consumption across both
electricity (25%) and gas (19%) over
the year. Due to increasing occupancy
rates and a warm summer the water
consumption for the site rose by 115%.
• The Group continues to offer recycling
facilities at the larger of its managed
assets and there has been great success
in working with tenants to roll out
initiatives to avoid single use plastics;
including the use of paper straws,
biodegradable cutlery and reusable
cups. Most properties exceeded the
ongoing target of a recycling rate of
50%, including at Shepherds Building,
The Warehouse, The Tower, The Loom,
25 Charterhouse Square in London and
Fourways House in Manchester. All
properties where waste is collected
achieved 100% diversion from landfill.
Churchgate & Lee, Manchester, 35 Dale
Street, Manchester and Power Road
Studios, London W4 will look to increase
the scope of their site recycling to
exceed the Helical target.
In line with the mandatory requirement
for reporting its greenhouse gas
emissions, Helical provides a separate
disclosure in this report opposite. This
is based on all the data that has been
made available to us.
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION SUSTAINABILITY AT HELICAL
CONTINUED
We believe ongoing engagement
with the communities where our
buildings are located is key to the
success of the assets.
Helical takes a strong interest in
charitable, community and social issues.
As a Group, we recognise that the
buildings we own and develop have
an impact on the local environment and
the communities that live and work there.
We believe that engagement with those
communities is an important part of our
activities. Community engagement is
an ongoing priority throughout the
whole development process.
Helical Bursary
The Helical Bursary was established
in 2017/18 to support Real Estate and
Planning students studying at Henley
Business School, University of Reading.
The Bursary was awarded to Aurora
Bennet, an exceptional student, who
would not otherwise have had sufficient
financial resource to support her study.
Helical has paid a total of £10,000
to date, with an additional £5,000
pledged for the next academic year.
MONEY PAID
£10,000
MONEY PLEDGED FOR THE
NEXT ACADEMIC YEAR
£5,000
“ I can say, without a doubt, that
if it wasn’t for the support of this
foundation, for the inspiring individuals
and firms in this industry, I wouldn’t
be as inspired to work as hard as
I do and be as successful as I am.”
Aurora Bennet
62
• Helical also entered a hand-decorated
rubber duck in the 2019 Manchester
Duck Race to help raise funds for
Brainwave, a charity that exists to
help children with disabilities and
additional needs;
• Helical continues to be a member
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 an environment that produces
a safe, convenient and inspiring
destination for all employees,
residents and visitors; and
• To help encourage young people to
enter the property industry, for over ten
years Helical has held a work experience
event comprising a two-day intensive
introductory programme into London
Real Estate run by Helical’s Chief
Executive with support from the senior
members of the Property team. The
package is available to 8-10 students
studying either a BA or Masters in Real
Estate or equivalent qualification.
Other activities
As part of our commitment to the areas
in which we operate, we regularly support
community initiatives. Some examples
from the year to 31 March 2019 include:
• At The Bower, London EC1, there has
been a focus on wellness over the last
12 months. In January we held “The
Wellness Month” which included yoga,
talks and laughter workshops for tenants;
• At Power Road Studios, London W4, we
have held numerous successful events
to promote health awareness, sporting
events such as table tennis tournaments
and food truck pop ups;
• At Barts Square, London EC1, the
residential scheme has been designed
with the goal of creating a new
community in the heart of the City.
Comprehensive amenities give residents
the opportunity to come together,
become acquainted and socialise.
The lounge, gardens and screening
room provide the opportunity to meet
residents, friends and family. An informal
residents committee has been set up
to allow residents to raise concerns,
share experiences and plan upcoming
scheme-wide events. The online
residents’ portal also provides a forum
for communication, both to management
and between residents;
• Dale Street, Manchester, participated in
this year’s “Halloween in the City”. This is
a city-wide event featuring giant rooftop
monster invasions, trick or treat trials,
a skeleton parade and family friendly
performances. The event attracted an
additional 30,000 people to the city
centre with Dale Street showcasing its
very own monster invasion (above);
HELICAL PLCAnnual Report and Accounts 2019 On 27 September 2018 a 15 strong team
of Helical employees embarked on a four
day Charity Trek to the Atlas Mountains,
reaching the top of northern Africa’s
tallest peak – Jbel Toubkal at 4,167m.
This incredibly rewarding challenge
stretched the team both physically and
mentally, raising over £140,000 for two
notable charities, LandAid and The Lord
Mayor’s Appeal, with 100% of funds raised
split equally between the two charities.
LandAid is the property industry charity
working to end youth homelessness in the
UK. LandAid brings together businesses
and individuals from across the industry
to support charities delivering life-
changing projects for young people who
are or have been homeless, or who are at
risk of homelessness.
The Lord Mayor’s Appeal partners
(each year) with three organisations
who are leading experts in addressing
social issues to deliver ground breaking
programmes, which will not only change,
but also save, people’s lives. This year’s
appeal supports Place2Be, OnSide Youth
Zones and Samaritans.
“ Having never walked this far before, let
alone scaled a mountain in altitude, the
trek was both a physical and emotional
challenge. However, through the
immense support, humour and
resilience of the Helical team we all
successfully reached the 4,167m
summit. Knowing we were raising
money for two amazing charities made
every creaky knee, blister and altitude
headache completely worth it.”
Laura Beaumont, Helical employee
MONEY RAISED
£140,000
63
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION SUSTAINABILITY AT HELICAL
CONTINUED
CASE STUDY
THE
BOWER
London, EC1
The Bower has contributed to making Old
Street a new contemporary destination for
both business and leisure alike, inviting
tenants and local communities to enjoy
the facilities on offer.
Sustainability is at the heart of The Bower.
Through the redevelopment of an existing
building we have minimised resource use
and where possible kept parts of the
original façade. Throughout the
development stage 100% of the timber
used was sourced sustainably and
ongoing management of the site has
resulted in 100% of waste being diverted
from landfill.
The Tower has a BREEAM rating of
“Excellent” with many stand out design
features created with tenant wellness in
mind. A double-height ceiling has been
installed which creates exceptional natural
light and ceiling mounted fan coil units
provide maximum occupier comfort in
all areas. The building’s innovative and
flexible design facilitates the possibility
to easily connect multiple floors via open
mezzanines and connecting stairways
encouraging collaborative working.
As part of our commitment to the Old
Street area we are a contributing partner
to “The Old Street District”. This is a
voluntary business-led partnership who
use their collective voice to influence
policy in the area, focusing on issues such
as public realm and the environment. The
partnership aims are to create a district in
which tenants and the local community
can benefit from improved wayfinding,
cleaner streets, lower air pollution and
long-term sustainability. In the past year
an “Urban Card” was launched, offering
discounts at local establishments to those
that live and work in the area.
At a tenant level we hold a number
of events throughout the year such
as summer drinks and table tennis
tournaments. In January 2019 we held
our first “Wellness Month” at The Bower,
encouraging tenants to partake in yoga,
laughter workshops and talks.
As with all our developments, Health
and Safety is considered paramount in
delivering a successful site. During the
redevelopment of The Bower, from its
commencement in 2013 to the practical
completion of The Tower this year, there
have been two “Lost Time Accidents”
and one “RIDDOR” reportable incident,
significantly outperforming the
industry benchmarks.
SUSTAINABLY SOURCED TIMBER
100%
BREEAM OFFICES
EXCELLENT
BREEAM RETAIL
VERY GOOD
CONSTRUCTION WASTE
DIVERTED FROM LANDFILL
>2,000 t
64
HELICAL PLCAnnual Report and Accounts 2019 Our commitment to health and safety
is embedded in the culture and all
activities at Helical.
Helical has a corporate culture that is
committed to the prevention of injuries
and ill health to its employees or other
people that may be affected by its
activities. The Group’s Health & Safety
Policy reflects this commitment. The
Board of Directors and senior executives
are responsible for implementing this
policy and they look to ensure that health
and safety considerations are always
given priority in both planning and
day-to-day activities.
The Group’s Health & Safety Policy was
last reviewed and updated in February
2019 to reflect the latest legislative and
regulatory developments. Training of
Helical staff in the updated Health &
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’s website and
a summary of performance for the active
sites is below. This is based on all the
data that has been made available to us.
Helical has delivered over two million
construction hours during the year with
no fatalities or major accidents and only
one RIDDOR reportable incident. The
majority of Helical projects are managed
by principal contractors holding ISO
45001 certification and that maintain
100% Construction Skills Certification
Scheme (CSCS) accreditation for all
full time and subcontracted staff.
CONSTRUCTION SKILLS
CERTIFICATION SCHEME
ACCREDITATION FOR ALL FULL
TIME AND SUBCONTRACTED STAFF
100%
Future environmental risks
and opportunities
Helical recognises that changing social
and environmental factors need to be
taken into account when considering our
broad business strategies, as these may
give rise to opportunities to be exploited
or risks to be mitigated.
Such factors include:
• The uncertainties surrounding future
changes to environmental and social
legislation and potential changes to
labour markets following the UK’s
decision to leave the European Union;
• The implications for the property sector
of global agreements to tackle climate
change and more local actions that may
be taken to tackle specific environmental
issues (for example measures to reduce
air pollution in city centres); and
• Broader technological and social
changes that may impact on our tenants,
our partners and the wider communities
where our properties are situated.
As a Group, we keep such matters under
review and act as necessary to ensure
that we meet our obligations.
Number of
Lost Time
accidents
Number of
RIDDOR
reportable
Number of
fatalities
Number
of hours
Accident
frequency rate
for Lost Time
accidents
Accident
frequency rate
for RIDDOR
reportable
The Strategic Report, on pages 1 to 65,
was approved by the Board on
23 May 2019.
Year ended 31.3.18
Year ended 31.3.19
5
11
5
1
–
–
1,959,183
2,038,505
0.41
0.54
0.15
0.05
On behalf of the Board
GERALD KAYE
CHIEF EXECUTIVE
65
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION CHAIRMAN’S REVIEW
MICHAEL SLADE
CHAIRMAN
Helical has continued to grow in
strength since last year, having
completed a number of development
schemes, achieved strong lettings
success and secured new opportunities
for future development.
66
DEAR SHAREHOLDER,
During the year to 31 March 2019 Helical
has achieved a strong level of performance
despite the uncertainty caused by the
current political climate. The Company
has continued to create value for investors
in addition to growing its portfolio and is
now seeking new opportunities to add to
the pipeline of schemes.
CHANGES TO THE BOARD
During the year under review, Richard
Gillingwater has stepped down from the
Board and Joe Lister appointed in his place.
The year to 21 March 2020 will see more
changes to the Board, including Michael
O’Donnell stepping down at this year’s
Annual General Meeting ("AGM") and my
retirement from the Board after 35 years.
Following Richard Grant’s appointment
as Deputy Chairman in 2018 he will be
proposed as my successor as Chairman at
the 2019 AGM. We have started the process
to identify a new Non-Executive Director,
in light of my retirement from the Board,
and will announce the results of this search
in due course. Helical understands the
benefits to be gained from diversity on its
Board and aims to make further progress
in this area in the future, including in relation
to the Non-Executive Director recruitment
process currently underway. We will
continue to monitor best practice and
industry standards relating to diversity and
inclusion in the workplace and on the Board
as part of our governance programme.
REFLECTING ON MY TIME AT HELICAL
During my 35 years with Helical I have seen
its growth and development to a business
far removed from the one I arrived at in
1984 and I am immensely proud of its
success over the last 35 years. Having
spent most of that time as the Company’s
Chief Executive, I have been its Chairman
for the last three years. Stepping down
from the Board is an important milestone
in my life and I would like to express my
thanks to everyone I have worked with
during this time.
It has been a privilege to serve as Helical’s
Chairman and I have every faith that I leave
the Company in safe hands, with Gerald
and Richard at the helm, continuing to
direct Helical towards future opportunities
and further success.
HELICAL PLCAnnual Report and Accounts 2019 1919
Helical Bar and
Engineering Company
Limited is incorporated
1965
Change of name to
Helical Bar Limited
100 YEARS OF HELICAL
1986
Helical transformation
from steel manufacturer
to property development
and investment company
2019
100th anniversary
of Helical
1957
Admission
to the London
Stock Exchange
1982
Re-registration as
a Public Company,
Helical Bar Limited
becomes Helical Bar plc
1984-2019
Growth in market
cap. of Helical from
c.£0.5m to c.£425m
100 YEARS OF HELICAL
2019 marks the 100th anniversary for
Helical. The Company was incorporated
as Helical Bar and Engineering Company
Limited in July 1919 and its main business
was the manufacture and sale of reinforced
steel to the construction industry; herein
lies the root of the Company’s name:
Helical Bar – a steel spiral strengthening
rod, used to reinforce concrete blocks.
That core strength remains within the
spirit of Helical today. I joined Helical in
1984 during a difficult period. At that
time, we carried out a strategic shift to
preserve the organisation; it quickly
changed from its steel roots to become
a property development and investment
business, which is how the Company now
operates. Since its re-birth as a property
development and investment company,
Helical has been steered through
numerous national financial crises and
government changes, continuing to grow
and create value for investors. It has
increased in value since 1984 from
c.£0.5m to c.£425m today and is one
of the UK’s premier office developer
and investment companies.
BOARD DECISIONS
During the year to 31 March 2019,
the Board focused on oversight of the
strategic direction of the Company in
the light of the economic and political
environment and the changes within
the real estate sector.
In addition, the Board meeting agendas
during the year contained a variety of
issues including:
• a review of the Group’s corporate,
property and financial strategy;
• consideration and approval of changes
required for compliance with the
General Data Protection Regulation;
• a pre-emptive review of the Company’s
compliance with the 2018 UK Corporate
Governance Code and The Companies
(Miscellaneous Reporting) Regulations
2018 to identify required action for
future compliance;
• a complete review of the Company’s
compliance with the 2016 UK Corporate
Governance Code for the year to
31 March 2019;
• consideration and approval of significant
property transactions; and
• approval of changes to the composition
The Company’s Directors’ Remuneration
Report was also approved at the 2018
AGM with 85.5% in favour.
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.
The Chief Executive, Gerald Kaye,
and the Finance Director, Tim Murphy,
attended the majority of these meetings
during the year, with the Property
Director, Matthew Bonning-Snook, and
Company Secretary, James Moss, also
attending as appropriate. Richard Grant,
Richard Cotton and I are available to meet
Shareholders if they wish to discuss any
matters with us.
SUMMARY
Finally, I would like to thank my fellow
Non-Executive Directors, Gerald Kaye and
his Executive team, the senior property
professionals, finance team and all the
staff for their hard work during the year.
I would also like to thank our stakeholders
for their contribution to our success
for the year to 31 March 2019. Helical
is well positioned to take advantage of
opportunities in the forthcoming year
and I look forward to following the
achievements of the business and the
ongoing success of Helical.
The following pages describe in greater
detail our governance structure and the
work of the Board and its Committees.
MICHAEL SLADE OBE
Chairman
23 May 2019
of the Board.
ANNUAL STRATEGY REVIEW
In September 2018, the Board carried
out its annual strategic review of the
business, which included consideration
of the economic, geopolitical, societal
and environmental risks affecting the
business. This review involved an
assessment of the Company’s position
in the listed sector, its strengths and
weaknesses and options for business
growth. The strategic review confirmed
that the decision taken to focus on
development and investment in London
and Manchester would maximise the
potential future performance of the
Group, given the talent, knowledge
and experience of the current executive
team and was, and continues to be,
in the best interests of Shareholders.
BOARD EVALUATION
In the year to 31 March 2019, an internal
Board performance evaluation was
undertaken. The overall findings from that
appraisal have concluded that Helical’s
Board, Committees and individual
Directors continue to operate effectively.
Active steps have been taken to meet the
recommendations arising out of the 2018
Board evaluation and suggested
enhancements have been noted following
this year’s evaluation process. Further
information can be found on pages 73
and 77. It is intended that an external
evaluation will be undertaken in the year
to 31 March 2020.
BOARD COMMITTEES
The work of the Nominations,
Remuneration and Audit and Risk
Committees is discussed in detail in their
individual reports on pages 76 to 97. At
the 2018 AGM a new Remuneration Policy
was proposed and approved with 97%
in favour. This policy was designed to
simplify the Company’s remuneration
schemes, reduce award levels and to
reflect continued developments in
best practice. No changes are being
proposed in relation to the Company’s
Remuneration Policy at the 2019 AGM.
67
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION BOARD OF DIRECTORS
OUR
BOARD
A AUDIT AND RISK COMMITTEE MEMBER
N
MICHAEL SLADE
CHAIRMAN
GERALD KAYE
CHIEF EXECUTIVE
E V
N NOMINATIONS COMMITTEE MEMBER
Board meetings attended 6/6
Board meetings attended 6/6
R REMUNERATION COMMITTEE MEMBER
Tenure 35 years
Tenure 25 years
V PROPERTY VALUATIONS
COMMITTEE MEMBER
E EXECUTIVE COMMITTEE MEMBER
COMMITTEE CHAIRMAN
S SECRETARY TO THE BOARD
AND BOARD COMMITTEES
CHANGES TO THE BOARD
DURING THE YEAR
Richard Gillingwater stepped down
from the Board at the 2018 AGM on
12 July 2018.
Joe Lister was appointed to
the Board and as a member of the
Audit and Risk, Nominations and
Remuneration Committees with
effect from 1 September 2018.
Skills and experience
Michael Slade OBE, BSc (Est Man) FRICS,
joined the Board as an Executive Director in
1984, was appointed Chief Executive in 1986
and Chairman in 2016. He is to step down
from the Board at the 2019 AGM.
Skills and experience
Gerald Kaye, BSc (Est Man) FRICS, was
appointed Chief Executive in 2016. He joined
the Board as an Executive Director in 1994,
responsible for the Group’s development
activities.
Other external appointments
Mike is President of LandAid, 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. In April 2017, Mike was
appointed Chairman of The Royal Marsden
Cancer Charity’s Clinical Care and Research
Centre Appeal to build a £50m global cancer
treatment and research centre at The Royal
Marsden NHS Foundation Trust.
Other external appointments
Gerald is a member of the Investment
Committee at Guy’s & St Thomas’ Charity, and 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.
TIM MURPHY
FINANCE DIRECTOR
MATTHEW BONNING-SNOOK
PROPERTY DIRECTOR
E
E V
Board meetings attended 6/6
Board meetings attended 6/6
Tenure 7 years
Tenure 12 years
Skills and experience
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.
He is responsible for the financial statements
and reporting, treasury and taxation.
Skills and experience
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).
68
HELICAL PLCAnnual Report and Accounts 2019 RICHARD GRANT
DEPUTY CHAIRMAN, CHAIRMAN
OF THE AUDIT AND RISK COMMITTEE
AND CHAIRMAN OF THE
NOMINATIONS COMMITTEE
SUE CLAYTON
CHAIRMAN OF THE PROPERTY
VALUATIONS COMMITTEE
JOE LISTER
NON-EXECUTIVE DIRECTOR
V A N R
A N R
A N R
Board meetings attended 6/6
Board meetings attended 3/4*
Board meetings attended 6/6
Tenure 3 years
Tenure 9 months
Tenure 7 years
Skills and experience
Richard Grant, BA (Oxon), ACA, has more
than 40 years’ financial experience including
as Finance Director of Cadogan Estates
Limited and as Corporate Finance Partner at
PricewaterhouseCoopers. He is the Chairman of
the Audit and Risk Committee and Nominations
Committee. Richard is Deputy Chairman of the
Company and will become Chairman at the
2019 AGM.
Other external appointments
Chairman of Stenprop Limited.
Skills and experience
Sue Clayton, FRICS, was appointed to the
Board as a Non-Executive Director in February
2016. Sue is a 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.
Skills and experience
Joe Lister was appointed to the Board in
September 2018. He is Chief Financial Officer
at Unite Group plc, a position he has held
since January 2008 after joining the company
in 2002. Prior to joining Unite Group plc,
Joe qualified as a Chartered Accountant
at PricewaterhouseCoopers.
Other external appointments
Executive Director, CBRE (part-time) and
Chair of CBRE UK’s Women’s Network, Board
Member of the Committee of Management
of Hermes Property Unit Trust and
a Non-Executive Director of SEGRO plc.
Other external appointments
Executive Director, Unite Group plc.
* At the time of the May and July 2018 Board
meetings, Joe Lister was not a Helical Director.
Joe was unable to attend the November 2018
Board meeting due to a commitment which
predated his appointment date.
RICHARD COTTON
SENIOR INDEPENDENT DIRECTOR
MICHAEL O’DONNELL
CHAIRMAN OF THE
REMUNERATION COMMITTEE
JAMES MOSS
COMPANY SECRETARY AND
GROUP FINANCIAL CONTROLLER
A N R
R N
S E
Board meetings attended 6/6
Board meetings attended 6/6
Board meetings attended 6/6
Tenure 3 years
Tenure 8 years
Tenure 4 years
Skills and experience
Richard Cotton was appointed to the Board
as a Non-Executive Director in March 2016
and as Senior Independent Director in March
2018. Richard was formerly head of UK Real
Estate at J.P. Morgan Cazenove which he left
in 2009 and spent the subsequent five years at
Forum Partners. He was previously Chairman
of Centurion Properties and a Non-Executive
Director of Hansteen Holdings plc.
Other external appointments
Non-Executive Director of Big Yellow Group
plc and Ormonde Gate Amsterdam BV. and
a member of the Commercial Development
Advisory Group of Transport for London.
Skills and experience
Michael O’Donnell was appointed to the Board
in June 2011. He is a former Managing Director
of LGV Capital, a private equity firm.
Michael has notified the Company that after
eight years on the Board, he does not intend
to offer himself for re-election at the 2019 AGM.
Other external appointments
Through his company, Ebbtide Partners,
he acts as a consultant to, and investor in,
private companies.
Skills and experience
James Moss, MChem (Hons) (Oxon) FCA,
joined Helical in September 2014 as Group
Financial Controller and was appointed
Company Secretary in May 2015 and
to the Executive Committee in March 2018.
He was previously at Grant Thornton, where
he was responsible for leading audit and
other assurance assignments in their Real
Estate sector.
69
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
GOVERNANCE REVIEW
CORPORATE GOVERNANCE CODE COMPLIANCE
Throughout the year under review, the Group has applied the Main Principles of UK Corporate Governance Code 2016 (the "Code")
and, except where stated below in relation to Michael Slade OBE, has fully complied with the Provisions of the Code. A full version
of the Code can be found on the Financial Reporting Council’s website: www.frc.org.uk.
This year has seen the introduction of key corporate governance reforms including the UK Corporate Governance Code 2018 (the
"2018 Code") and The Companies (Miscellaneous Reporting) Regulations 2018 (SI 2018/860) ("secondary legislation") both of
which will apply to the Group’s financial year beginning on 1 April 2019. The FRC is currently consulting on changes to the UK
Stewardship Code and a final version of the updated code is expected in July 2019.
The Group has taken, and is continuing to take, proactive steps to ensure compliance with the 2018 Code and secondary legislation
for the financial year ended 31 March 2020. As part of this exercise, the Group is working to incorporate the best practice
recommendations from the FRC Guidance on Board Effectiveness where possible. The Group has updated its schedule of matters
reserved for the Board, Committees’ Terms of Reference and corporate policies/practices for compliance with the governance reforms.
Our Board and its Committees
The Board has a duty, and is committed,
to promoting the long-term success
of the Company for the benefit of our
Shareholders and other stakeholders.
Our Board is composed of the Chairman,
three Executive Directors (including the
Chief Executive) and five Non-Executive
Directors, supported by the Company
Secretary. Biographies of all Directors
and details of their shareholdings in the
Company can be found on pages 68 to
69 and 97 respectively.
The current Chairman is Michael Slade
and the Deputy Chairman is Richard
Grant. Michael will be stepping down as
Chairman at the 2019 Annual General
Meeting ("AGM") after a three-year term
in the role and 35 years on the Board. The
Board is recommending his successor to
be Richard Grant, subject to Shareholder
approval at the 2019 AGM. Upon Richard’s
successful appointment as the Chairman,
Joe Lister will become Chairman of the
Audit and Risk Committee with effect from
11 July 2019; Richard will continue his role as
Chairman of the Nominations Committee.
The Chief Executive is Gerald Kaye and the
two remaining Executive Directors are
Tim Murphy (Finance Director) and
Matthew Bonning-Snook (Property
Director). The current Non-Executive
Directors are Richard Cotton (Senior
Independent Director), Sue Clayton, Joe
Lister and Michael O’Donnell. Michael
O’Donnell has indicated that, after eight
years on the Board, he does not intend to
offer himself for re-election at the 2019
AGM. We thank Michael for his valuable
contribution to the Group, he has been an
asset to the Board. All Directors, with the
exception of Michael Slade and Michael
O’Donnell, will be offering themselves for
election or re-election, as appropriate,
at the 2019 AGM.
Michael Slade OBE, former Chief
Executive of Helical, is the current
Chairman following his re-election as
such at the 2018 AGM (with 94.17% votes
cast in favour). As noted in the 2016, 2017
and 2018 Annual Reports, Michael is not
considered to have been independent on
appointment as Chairman as required by
the Code. During the year the Board has
ensured that safeguards remain in place
to counter any concerns regarding his
independence. In particular, he does not
act as Chairman of the Nominations
Committee and is not a member of the
Audit and Risk or Remuneration
Committees. In addition, the Board
Evaluation process was led by Richard
Grant, the Deputy Chairman, with the
annual appraisal of the Chairman led
by Richard Cotton, both of whom are
considered to be independent.
Executive Committee
The Executive Committee, led by the
Chief Executive, is responsible for ensuring
the Group’s strategy is communicated
and implemented. It is comprised of the
three Executive Directors and two senior
managers; and usually meets monthly,
or more frequently if required.
Change of Chairmanship
As referred to above, Michael Slade OBE
will be retiring from the Board of Helical
after 35 years of service to the Group.
In preparation for the change in
Chairmanship, Richard Grant was
appointed as Deputy Chairman in 2018 to
facilitate a smooth transition. Richard has
more than 40 years' experience including
as Finance Director of Cadogan Estates
Limited and as a corporate finance
partner at PwC and has served on the
Board for seven years. Richard Grant
will be considered independent upon
appointment, if successfully appointed as
Chairman at the close of the 2019 AGM.
Since his appointment as Chairman in
July 2016, Michael Slade OBE has
provided excellent leadership for the
Company, continuing to provide a wealth
of experience and property related
knowledge in his role as Non-Executive
Chairman. We owe him a great debt and
he has our gratitude for all he has done
for Helical and its Shareholders over the
last 35 years.
70
Key Roles and Responsibilities
on the Board
Chairman and Chief Executive
The positions of Chairman and Chief
Executive are held separately, and their
roles and responsibilities are clearly
established, set out in writing and agreed
by the Board. The Chairman is responsible
for the leadership of the Board and
ensuring its effectiveness in all aspects
of its role. The Chief Executive is
responsible for the leadership of the
business and managing it within the
authorities delegated by the Board.
Alongside boardroom discussions, the
Chairman maintains contact with the
Non-Executive Directors by telephone
and, at least annually, will hold meetings
with the Non-Executive Directors
without the Executive Directors present.
Senior Independent Director
The Senior Independent Director (SID)
has acted, and continues to act, as a
sounding board for the Chairman and
an intermediary for other Directors
and Shareholders. The SID is available
to Shareholders for meetings or to
discuss any concerns which have not
been resolved through, or would be
inappropriate to resolve through,
the normal channels of the Chairman,
Chief Executive or other Directors.
Non-Executive Directors
The Non-Executive Directors are
responsible for constructively challenging
and helping to develop proposals on
strategy. They are also responsible for
applying independent and objective
judgement and scrutiny to all matters
before the Board and its Committees.
During the year to 31 March 2019, the
Non-Executive Directors received
presentations from JP Morgan Cazenove
and Numis Securities Limited to help the
Board enhance its understanding of the
views of Helical’s major Shareholders.
HELICAL PLCAnnual Report and Accounts 2019 The Code requires the Board and its Committees to have an appropriate balance of skills, experience, independence and knowledge
of the Company to enable the effective discharge of their respective duties and responsibilities. The Nominations Committee is
responsible for reviewing whether the composition of the Board is appropriate in accordance with this requirement. During the year
the Nominations Committee introduced a skills matrix to support this process and to provide guidance as to appropriate criteria
for appointing new Directors. The Board and Committees are considered to possess the required balance of skills, experience,
independence and knowledge required by the Code.
LEADERSHIP
Governance Structure
BOARD OF DIRECTORS
The Board is responsible for matters including, but not limited to:
• providing overall leadership of the Group and for setting its long-term strategic aims;
• approving changes to the Group’s capital, corporate and governance structures;
• oversight and approval of the Group’s financial reporting;
• ensuring the maintenance of a robust system of controls and risk management;
• approving major capital projects, investments and contracts above limits of authority
delegated by the Board;
• approving resolutions and corresponding documentation to be put to Shareholders
at general meetings; circulars and listing particulars;
• ensuring satisfactory dialogue with shareholders; and
• oversight of all corporate governance matters.
Board members
Michael Slade (Chairman)
Gerald Kaye (Chief Executive)
Richard Grant (Deputy Chairman)
Richard Cotton (Senior Independent Director)
Sue Clayton (NED)
Joe Lister (NED)
Michael O’Donnell (NED)
Tim Murphy (Finance Director)
Matthew Bonning-Snook (Property Director)
Secretary to the Board
James Moss
EXECUTIVE COMMITTEE
Assists the Chief Executive in the performance of his duties and ensures
that the Group’s strategy is implemented, subject to the limitations of
authority set out in the schedule of matters reserved for the Board.
Committee members
Gerald Kaye (Chairman and Chief Executive)
Tim Murphy (Finance Director)
Matthew Bonning-Snook (Property Director)
James Moss (Group Financial Controller
and Company Secretary)
Tom Anderson (Senior
Investment Executive)
COMMITTEES
AUDIT AND RISK COMMITTEE
Assists the Board in fulfilling
its oversight responsibilities by
reviewing and monitoring:
• the integrity of financial
information provided to
Shareholders;
• the Company’s system of
internal controls and risk
management;
• the external audit process and
auditors; and
• the processes for compliance
with laws, regulations and
ethical codes of practice.
Committee members
Richard Grant (Chairman)
Sue Clayton (NED)
Richard Cotton (NED)
Joe Lister (NED)
REMUNERATION COMMITTEE
Assists the Board in fulfilling
its responsibility to Shareholders
to ensure that the Remuneration
Policy and practices of the
Company reward fairly and
responsibly, with a clear link
to corporate and individual
performance, having regard
to statutory and regulatory
requirements.
Committee members
Michael O’Donnell (Chairman)
Sue Clayton (NED)
Richard Cotton (NED)
Richard Grant (NED)
Joe Lister (NED)
NOMINATIONS COMMITTEE
Ensures there is a formal,
rigorous and transparent
procedure for the appointment
and induction of new Directors
to the Board, leads the process
for Board appointments and
succession planning (including
the development of a diverse
succession pipeline), supports
the annual Board evaluation
process.
Committee members
Richard Grant (Chairman)
Sue Clayton (NED)
Richard Cotton (NED)
Joe Lister (NED)
Michael O’Donnell (NED)
Michael Slade (NED)
PROPERTY VALUATIONS
COMMITTEE
Reviews the valuations of the
Company’s property portfolio
and reports to the Audit and
Risk Committee on its findings.
Committee members
Sue Clayton (Chairman)
Gerald Kaye (Chief Executive)
Matthew Bonning-Snook
(Property Director)
Tom Anderson (Senior
Investment Executive)
See Audit and Risk
Committee report
on page 78
See Remuneration
Committee report
on page 81
See Nominations
Committee report
on page 76
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HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
GOVERNANCE REVIEW CONTINUED
positions were held by women, providing
a positive balance of gender in our talent
pool. In order to maintain a diverse and
inclusive business, Helical supports
part-time, job-sharing and flexible working
requests where possible. During the year
under review 19% of the workforce carried
out their roles on a part-time basis in order
to meet family commitments. The overall
gender balance of the workforce can be
found on page 60. Helical maintains an
Employment Policy which is reviewed
on an annual basis. This policy supports
our employment practice of equal
opportunities, whereby all employment
candidates are considered fairly and
without prejudice or discrimination.
The policy also supports the treatment
of individuals, with respect to the
enhancement of their development and
remuneration, on merit alone. Helical’s
Employment Policy can be found on our
website: https://www.helical.co.uk/
sustainability/policies-reports/.
As described in the Nominations
Committee report on page 76, whilst
Helical does not set specific targets for
diversity on the Board, it gives full regard
to the benefits of, and aspires to boost
the level of, diversity on the Board. Our
consideration of diversity extends beyond
gender and the Group considers diversity
to also include: social and ethnic
backgrounds, religious belief, sexual
orientation and disability, cognitive and
personal strengths. The benefits of
diversity are borne in mind when reviewing
the composition of the Board, and ensuring
that the Board and its Committees are
suitably skilled, experienced and
knowledgeable is the ultimate objective
when making appointments thereto.
As such, no formal objectives are set in
relation to diversity on the Board.
Helical is a signatory to Real Estate
Balance CEO’s Commitments for Diversity
and the Group supports the principles
on leadership, culture and opportunity
contained in the Real Estate Balance
Toolkit, designed to support a more
diverse workplace. Helical will continue
to monitor best practice and industry
standards relating to diversity to identify
ways to enhance our business during the
forthcoming year.
EFFECTIVENESS
KEY BOARD ACTIVITIES
Board matter
Activity
Strategy
• Review of corporate objectives
• Review of market trends, opportunities and risks
• Annual strategy meeting
People
• Executive and Non-Executive development and succession planning
• Evaluation of the Board’s effectiveness
• Review of staff resource and development of the Group’s employees
Financial
• Approval of half year and annual results
• Review of dividend policy
• Review of Group’s capital and debt structure
Governance
• Assessment of viability and going concern, including sensitivity analysis
• Assessment of impact of the UK corporate governance reforms –
2018 UK Corporate Governance Code, FRC’s Guidance on Board
Effectiveness and The Companies (Miscellaneous Reporting)
Regulations 2018
• Implementation of General Data Protection Regulation
• Approval of Board policies and procedures, schedule of matters
reserved for the Board and Committee terms of reference
Risk
management
• Financial crime risks review and mitigation
• Internal controls system review
• Review of principal risks
Property transactions
and operations
• Approval of material property transactions and opportunities –
including the sale of remaining non-core assets, sale of The Shepherds
Building, London W14, sale of 31 Booth Street, Manchester, and the
acquisition of Fourways House, Manchester
• Review of independent valuations of assets
Culture
The Board is responsible for defining the
culture of Helical and ensuring that this
aligns with the Group’s strategy and
purpose. As such, the Board encourages
an open culture, enabling the strategic
direction and the key drivers of the
business to be fully understood by
all members of the Helical team. This
environment creates a collaborative
and focused approach to achieving
the Group’s aims and aspirations,
encouraging individuals to proactively
suggest ideas and opportunities for the
benefit of the business and the team. To
support this culture, the key points arising
from strategic discussions held by the
Board and Executive Committee are
communicated to staff members,
ensuring strategic engagement at all
levels within the Group. At an operational
level, the Executive Committee met with
Helical’s Property Executives in January
2019 to seek their views and encourage
their input into the strategy for the
forthcoming year and beyond.
In addition to defining Helical’s culture,
the Board is responsible for monitoring
and overseeing that culture, including its
own internal dynamics. As such, a review
of the relationships and the culture within
the Board was included in its evaluation
process. The results of the Board
Evaluation can be found on page 73. A
review of the wider organisation’s culture
was also undertaken through staff
participation in Property Week’s Best
Places to Work in Property survey and
awards programme. The results of that
survey have earned Helical the distinction
of being ranked one of the Best Places
to Work in Property for 2019. The Board
recognises that Helical’s culture is vitally
important to the success of the business
in the long term and directly influences
the Group’s ability to meet the
expectations of our Shareholders and
wider stakeholders. More detail relating
to Helical’s Shareholders and
stakeholders, and our engagement
therewith, can be found on page 74.
Diversity and inclusion
Diversity and inclusion are important
factors to support the achievement
of Helical’s strategic aims. By ensuring
that Helical is an inclusive and diverse
business, the Group benefits from a
variety of experiences and perspectives,
stimulating creativity and contributing
to our open and cohesive culture.
In addition, benefits extend to the
development of a diverse succession
pipeline, necessary for future
sustainability. During the year under
review, 41% of the Group’s professional
72
HELICAL PLCAnnual Report and Accounts 2019 BOARD ATTENDANCE
Regular Board meetings are scheduled each year and the Directors allocate sufficient
time to the Company to discharge their responsibilities effectively. During the year
ended 31 March 2019, six scheduled Board meetings were held, with an additional
three unscheduled meetings held to discuss specific issues and events.
The Board also held its annual offsite strategy event during September 2018, which
enabled focused discussions relating to the Group’s strategy. The strategy event was
structured to facilitate formal discussions during the day followed by informal
discussions in the evening.
The table below sets out the scheduled Board meeting attendance of each Director:
Board Meeting Attendance
Director
Michael Slade
Richard Grant
Gerald Kaye
Richard Cotton
Sue Clayton
Joe Lister 1
Michael O’Donnell
Tim Murphy
Matthew Bonning-Snook
Former Director
Richard Gillingwater (retired 12 July 2018)
1 At the time of the May and July 2018 Board meetings, Joe Lister was not a Helical Director. Joe was unable
to attend the November 2018 Board meeting due to a commitment which predated his appointment date.
BOARD EVALUATION
As reported on page 67, during the year,
an internal evaluation was undertaken to
consider the effectiveness of the Board,
its Committees and individual Directors
led by the Deputy Chairman and Senior
Independent Director. The evaluation
process was externally facilitated in 2017
and the next external evaluation is
scheduled for 2020. The results of the
evaluation were presented to the Board
for discussion at its meeting held in
March 2019.
A summary of the key outcomes from the
2019 internal evaluation is set out below,
together with a summary of progress
made against the recommendations
arising out of the 2018 internal evaluation.
Key outcomes from 2019 evaluation
• The Board and its Committees continue
to operate successfully, and each
Director contributes effectively and
demonstrates commitment to the role;
• The Board has increased the amount
of time devoted to corporate strategy
and will seek to improve its focus
on delivering enhanced returns to
Shareholders; and
• It was acknowledged that enhancements
to communication within the Board
could be made and that the Board
should seek to further maximise the
use of the wide-ranging experience
and expertise of all its members.
PROGRESS ON 2018 RECOMMENDATIONS
Recommendation
Progress
Strategy and progress against the agreed
strategy should be discussed at every
Board meeting
Succession planning for staff below
Board level should be reviewed regularly
There has been a greater focus on strategy, and
progress against the agreed strategy, and it has
been discussed at each Board meeting during
the year
There have been more regular discussions
relating to succession planning for staff below
Board level
Risk should be a key area of focus in the
review of Group strategy
A significantly enhanced risk assessment and
review procedure has been implemented
ACCOUNTABILITY
Risk management and internal controls
The Board recognises that it is
responsible for maintaining and
monitoring the Company’s system
of internal controls. Such a system
is designed to manage, rather than
eliminate, the risk of failure to achieve
business objectives. Oversight of our
control system is delegated to the Audit
and Risk Committee which identifies,
monitors and manages the principal risks
faced by the Group (the Group’s principal
risks can be found on pages 52 to 57) and
reviews the effectiveness of all material
controls, including financial, operational
and compliance controls in light of the
risks.
The key features of the Group’s system
of internal controls are listed below:
• 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;
• The Audit and Risk Committee meets
with the Auditor and deals with any
significant internal control matters –
during the year under review the Audit
and Risk Committee met with the
Auditor on three occasions, including
two meetings without management
present; and
• The Board is responsible for the
management of the Group’s risk profile
which is reviewed by the Audit and Risk
Committee during the year.
Fair, balanced and understandable –
the Board’s responsibility
The Code requires the Board to ensure
that, taken as a whole, the Annual Report
and Accounts present a fair, balanced
and understandable assessment of the
Group’s position and prospects. In
reviewing the Annual Report and
Accounts, the Audit and Risk Committee
considered the points set out in its report
on page 78. After such a review, the Audit
and Risk Committee reported its findings
to the Board. Subsequently, the Directors
have included their statement on ‘fair,
balanced and understandable’ on
page 100.
73
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION
GOVERNANCE REVIEW CONTINUED
Engagement with Helical’s Stakeholders and Shareholders
The Board recognises the importance of effective stakeholder engagement for the long-term success of the business. In addition,
the Board directly connects its duty to promote the success of the Company as a whole, under section 172 Companies Act 2006
(‘CA 2006’), with stakeholder engagement. Helical’s key stakeholders are: its Shareholders, customers and tenants, employees,
the local communities situated in the areas in which the Group operates, suppliers and contractors and the government and other
regulatory bodies such as the Health and Safety Executive, the Financial Reporting Council and the UK Listing Authority.
MATERIAL ISSUES AND CONSIDERATIONS FOR OUR STAKEHOLDERS
GOVERNMENT AND OTHER
REGULATORY BODIES
• Corporate responsibility
and accountability
• Compliance with applicable laws
and regulations
• Monitoring updates to legal and
regulatory environment, and
impact of Brexit
SUPPLIERS AND CONTRACTORS
• Agreement of and compliance
with appropriate payment terms
• Collectively prevent and mitigate
risk of modern slavery, bribery
and corruption in our supply chain
• Ethical and fair dealings
SHAREHOLDERS
• Financial performance
• Environmental, Social and
Governance Practice
• Generation of long-term
sustainable returns
THE BOARD
The Board takes into
consideration the material
issues for each stakeholder
group when making decisions,
supporting its duty under
s.172 CA 2006 – to promote
the success of the Company
as a whole.
LOCAL COMMUNITIES
• Ethical and responsible
corporate behaviour
• Environmental impact
of development
• Positive impact to local
areas, including development
of public realm
CUSTOMERS AND TENANTS
• Quality of service provided
• Delivery of quality space
to meet needs
• Ability to meet needs
of changing market
• Value for money
EMPLOYEES
• Opportunities for development
• Fulfilling and rewarding work
in a safe and comfortable
environment
• Fair treatment, recognition
and remuneration
• Diverse and positive culture
74
HELICAL PLCAnnual Report and Accounts 2019 During the year, the following investor
relations activities took place to ensure
that Helical maintained contact with its
Shareholders. In addition to this activity,
the Directors receive regular reports from
sector analysts and investor relations
advisors on how the Group is viewed by
its Shareholders throughout the year.
The Group also communicates with
Shareholders and stakeholders through
the issue of regular press releases and
through its website at www.helical.co.uk.
KEY INVESTOR RELATIONS
ACTIVITIES
2018
May
• Annual results announcement
and analysts’ presentation
for 2018
May/June
• Investor Roadshow presentations
July
and meetings in London
• AGM Trading Update
• Annual General Meeting
September • US Investor Roadshow –
New York and Boston
• City and Tech Belt Property Tour
• Portfolio and trading update
November • Manchester Property Tour
• Half year results announcement
and analysts’ presentation 2018
• Post half year results investor
meetings
December • EPRA Corporate Access Day
investor meetings
2019
March
• Portfolio and trading update
Annual General Meeting
Our 2018 AGM was held on 12 July 2018 at
which all the Directors, with the exception
of Michael Slade, were re-elected with
over 97% of the votes cast in favour of
their re-election. Michael Slade received
94.17% of votes cast in favour of his
re-election. The resolution to appoint
Deloitte LLP as Auditor of the Company
received over 99% of votes cast in favour.
The non-binding vote in respect of the
Company’s Directors’ Remuneration
Report received 85.56% votes in favour
and the resolution to approve the
Company’s new Remuneration Policy
received 97.05% votes in favour. Details of
the policy can be found in the Directors’
Remuneration Report on pages 81 to 97.
All remaining resolutions were approved
with votes cast in favour by between
90% and 100%.
The 2019 AGM will be held on 11 July 2019
at The Connaught, Carlos Place, Mayfair,
London W1K 2AL and we encourage our
Shareholders to attend. The AGM provides
Shareholders with the opportunity to ask
questions and a number of Directors,
including the Chairman, will be available
on the day should Shareholders wish to
raise any issues. At the 2019 AGM, the
Company will be seeking election and
re-election of the current members of the
Board, as appropriate, with the exception
of Michael O’Donnell and Michael Slade.
Subject to his re-election, Richard Grant
will be appointed as Chairman at the close
of the meeting following the retirement of
Michael Slade.
Section 172 Responsibilities
Section 172 Companies Act 2006 requires
Directors to act in the way that they
consider, in their good faith judgement,
would be most likely to promote the
success of the Company for the benefit of
its Shareholders as a whole. When making
decisions, the Board pays due regard to:
the likely consequences of its decisions
in the long term; the interests of the
Company’s employees and wider
stakeholders; the need to foster the
Company’s business relationships with
suppliers, customers and others; the
impact of the Company’s operations on
the community and the environment; the
desirability of the Company maintaining a
reputation for high standards of business
conduct; and the need to act fairly as
between members of the Company.
The Board understands that this duty
applies across the full spectrum of each
Director’s role, from setting the Group’s
strategy and shaping its culture to
approving significant business transactions,
policies and procedures and any changes
to the Group’s governance structure.
During the forthcoming year, the Board
will continue to fulfil its obligations under
section 172 and will look to enhance
current practice to further embed the
underlying principles of these obligations.
By Order of the Board
JAMES MOSS
Company Secretary
23 May 2019
75
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION NOMINATIONS COMMITTEE REPORT
Committee membership and attendance
Committee
meeting
attendance
Independent
Richard Grant
Sue Clayton
Richard Cotton
Joe Lister
Michael O’Donnell1
Michael Slade1
Yes
Yes
Yes
Yes
Yes
No
3/3
3/3
3/3
3/3
3/3
3/3
1 Michael Slade and Michael O'Donnell will not
be standing for re-election at the 2019 AGM.
The Company Secretary acts as Secretary
to the Committee.
The Committee’s role and responsibilities
are set out in its terms of reference which
are available at: www.helical.co.uk/
investors/corporate-governance/
KEY HIGHLIGHTS FOR 2018/19
• Recruitment and induction of
Joe Lister, Non-Executive Director
• Full compliance with the 2016 UK
Corporate Governance Code, with
the exception of Michael Slade’s
continued appointment as Board
Chairman (see page 70 for details)
• Proactive work towards compliance with
2018 UK Corporate Governance Code
• One to one meetings between the
Committee Chairman and all Directors
following 2019 Board Evaluation
• Creation of a skills matrix to support
succession planning
FOCUS AREAS FOR 2019/20
• Continue to focus on succession planning
• Oversee the external Board evaluation
in early 2020
• Recruit a new Non-Executive Director
and support their induction
Annual General Meeting. In addition to
recruitment activities, the Committee
supported the annual evaluation of the
Board and its Committees and discussed
recommendations arising therefrom, and
developed a skills matrix to support its
review of the Board’s skill set, knowledge,
experience and diversity of backgrounds,
cognitive and personal strengths and to
aid in succession planning at Board level
and below.
CHANGES TO THE BOARD
Several changes to the composition of the
Board were announced in 2018 and will
come into effect during 2019. Michael
Slade will not be standing for re-election
at the Annual General Meeting in July
2019 after 35 years’ service on the Board
and after three years as our Chairman.
More detail about the change of
Chairmanship can be found on page 70.
It is intended that I will be appointed as
Mike’s successor as the Board Chairman
at the close of the 2019 Annual General
Meeting, subject to Shareholder approval
of my re-election. In line with broader
succession planning, as referred to above, it
is intended that Joe Lister will be appointed
as my successor as the Chairman of the
Audit and Risk Committee.
In addition, as announced on 22 May
2019, Michael O’Donnell, Chairman of
the Remuneration Committee, intends
to step down from the Board at the 2019
Annual General Meeting after eight years’
service. Helical is currently seeking to
appoint a new Non-Executive Director
to replace Michael.
DIRECTOR APPOINTMENT PROCESS
Role Requirements and Criteria: The
Committee, in conjunction with the Chief
Executive, agrees objective criteria for
appointees – skills, knowledge, experience
and personal attributes relevant to the
Group’s strategy.
Search Process: Under the direction of
the Committee, an independent executive
search provider (Norman Broadbent and Korn
Ferry in 2018/19; and Korn Ferry in 2019/20)
is engaged to facilitate the search process.
Review: Details of preferred candidates are
presented to, and considered by, the Committee.
Shortlisted candidates are interviewed by
a sub-committee of the Board.
Recruitment: Committee considers feedback
from interviews and, after careful consideration,
recommends appointments to the Board.
Induction: Newly appointed Directors
undergo an induction schedule bespoke
to their needs.
BOARD COMPOSITION
Director appointments are made against
objective criteria and are based on
experience and merit. This supports
the Group’s strategy to maintain an
appropriate combination of skills, experience,
independence and knowledge on the
Board and its Committees. The Committee
keeps the composition of our Board and its
Committees under review throughout
the year. We have introduced the use
of a skills matrix to support this review.
RICHARD GRANT
CHAIRMAN OF THE
NOMINATIONS COMMITTEE
DEAR SHAREHOLDER,
I am pleased to present this report of the
Nominations Committee after my first
year as the Committee Chairman.
GOVERNANCE
We welcome the corporate governance
reforms introduced in 2018, including the
UK Corporate Governance Code 2018,
the FRC’s 2018 Guidance on Board
Effectiveness and The Companies
(Miscellaneous Reporting) Regulations
2018. Although the changes are effective
for financial years beginning on or after
1 January 2019, Helical took steps during
the year under review to adopt early
compliance where possible. More detail
about Helical’s compliance with the
UK Corporate Governance Code 2016
and work carried out to adopt early
compliance with the 2018 Code can
be found on page 70.
THE WORK OF THE NOMINATIONS
COMMITTEE IN THE YEAR
2019 has been a busy year for the
Committee, during which it met three
times, and paid particular focus on
succession planning, Board composition
and the recruitment of a new Non-
Executive Director following Richard
Gillingwater’s decision to step down
from the Board in July. Joe Lister was
our preferred candidate to replace
Richard Gillingwater following a rigorous
recruitment process, as outlined below.
We were delighted to welcome Joe to the
Board in September. Subject to his election
by Shareholders, Joe will replace me as the
Chairman of the Audit and Risk Committee
with effect from the close of the 2019
76
HELICAL PLCAnnual Report and Accounts 2019 DIVERSITY
The Board and Nominations Committee
pay full regard to the benefits of diversity
and inclusion in the widest sense, including
in relation to gender, social and ethnic
backgrounds, religious belief, sexual
orientation and disability, cognitive and
personal strengths when recommending to
the Board any future Board appointments
and in considering succession planning
below Board level. When seeking to fill
vacant Board positions, the Committee
considers both internal and external
candidates as appropriate. The executive
search firms that we have engaged are
signatories to: the UK Voluntary Code
for “Women on Boards”, The Hampton-
Alexander Review’s Voluntary Code of
Conduct and/or the Voluntary Code
of Conduct for Executive Search Firms.
The Board is a signatory to Real Estate
Balance, a cross-industry organisation
which has focused on helping companies
put more women into senior positions
since 2017. In 2019, Helical became a
signatory to Real Estate Balance CEO’s
Commitments for Diversity. The Board is
committed to strengthening the pipeline
of senior female executives within the
business and will continue to develop the
Group’s policies and practices to remove
barriers to women succeeding at the
highest levels possible at Helical.
DIRECTOR INDEPENDENCE
AND EFFECTIVENESS
Following due consideration of each
Director’s tenure, alongside the
commitment and effective contribution
demonstrated in relation to their respective
roles, the Committee has recommended
to the Board that resolutions to elect
or re-elect, as appropriate, each Non-
Executive Director (other than Michael
Slade OBE and Michael O’Donnell who
do not intend to stand for re-election) be
proposed at the AGM alongside resolutions
to re-elect the Executive Directors.
The Committee ensures that Board
appointees have enough time available
to devote to the job on appointment.
To enable the Board to identify any
potential conflicts of interest and ensure
that Directors continue to have sufficient
time available to devote to the Company,
Directors are required to inform the Board
of any changes to their other significant
commitments. In June 2018, Sue Clayton
joined the Board of SEGRO plc as a
Non-Executive Director. The Board is
satisfied that Sue will continue to have
sufficient time to devote to her role
(particularly as her Executive role at
CBRE is performed on a part time basis)
and that the appointment does not give
rise to a conflict of interest.
NON-EXECUTIVE DIRECTORS’
TENURES (AS AT 31 MARCH 2019)
NON-EXECUTIVE RECRUITMENT
PROCESS
JOE LISTER
NON-EXECUTIVE
DIRECTOR
Under 1 year
1-3 years
3-6 years
Over 6 years
17%
0%
33%
50%
SUCCESSION PLANNING
As Directors, we have a duty to ensure the
long-term success of the Company which
includes ensuring succession plans for, and
a steady supply of, talent at Board level and
below. The Committee regularly considers
the Group’s succession planning, ensuring
a diverse pipeline of talent which supports
the Group’s strategy and sustainability.
In March 2018 James Moss, Company
Secretary and Group Financial Controller,
and Tom Anderson, Senior Investment
Executive, were appointed to the Executive
Committee in recognition of their
contribution to Helical and their ability to
support the implementation of the Group's
strategic aims. The Executive Committee
reviews the suitability of the Group’s
succession plans below Board level at least
once a year, as part of its annual strategic
review and planning session, and updates
the Committee accordingly. For the
coming year, the Committee will continue
to review and develop succession planning
at Board level, through the search for a
new Non-Executive Director to replace
Michael O’Donnell.
BOARD EVALUATION 2019
Although the Group is not formally required
to undertake an external Board evaluation
every three years (not being within the
FTSE 350), the Board has decided that it will
voluntarily follow the provisions of the UK
Corporate Governance Code in this respect.
An external evaluation was undertaken
in the year ended 31 March 2017 and it is
intended that a further external evaluation
will be undertaken for the year to
31 March 2020. This year the evaluation
was conducted internally and in two parts.
Firstly, Directors were asked to complete an
appraisal questionnaire covering matters
such as: the Group’s strategy and risk
management; the appropriateness of
the Board composition, independence,
collective knowledge and skills,
communication and relationships;
performance relating to Shareholder value;
the performance of each of the Board
Committees and the performance of
The Committee led the process
to recruit a new Non-Executive, Joe Lister,
during the year. Norman Broadbent was
chosen as our executive search provider
due to the firm’s specialist knowledge and
experience of recruiting at board level.
Norman Broadbent has been a signatory
to the Voluntary Code of Conduct for
Executive Search Firms since its launch in
2013 and has no connection with Helical.
A shortlist of candidates provided by
Norman Broadbent was judiciously
considered and interviews carried out with
five individuals; the Committee unanimously
agreed to recommend the appointment of
Joe based on the quality of knowledge, skill
and experience he can contribute to the
Board and its Committees. Joe’s biography
can be found on page 69.
The Committee is actively seeking to
appoint a new Non-Executive Director to
replace Michael O’Donnell who has
communicated his intention to step down
from the Board at the 2019 AGM and has
appointed an independent executive search
provider, Korn Ferry, to support this
recruitment process. Helical does not have
any connection to Korn Ferry other than in
respect of this appointment.
individual Directors and the Chairman.
Second, one to one discussions were held
between myself and each Director to follow
up on any issues raised and to ensure a
thorough evaluation process was carried
out. At the March 2019 meeting, the
Committee and Executive Directors
discussed feedback collected during the
evaluation process and recommendations
made as a result. The Senior Independent
Director supported the evaluation process by
leading the annual appraisal of the Chairman.
I am pleased to confirm that the conclusion
from this year’s Board evaluation was that
the Board and its Committees continue
to operate at a high standard and work
effectively. Feedback ranged from
positive to very positive and there were
no specific concerns raised. Key outcomes
from the 2019 evaluation can be found
on page 73.
RICHARD GRANT
Chairman of the Nominations Committee
23 May 2019
77
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION AUDIT AND RISK COMMITTEE REPORT
Committee membership1 and attendance
Committee
meeting
attendance
Independent
ROLE OF THE COMMITTEE
Assists the Board in fulfilling its
oversight responsibilities by reviewing
and monitoring:
• The integrity of the financial information
provided to Shareholders;
• The Company’s system of internal
controls and risk management;
• The external audit process and
Auditor; and
• The processes for compliance with
laws, regulations and ethical codes
of practice.
Richard Grant*
Joe Lister*
Sue Clayton
Richard Cotton
Yes
Yes
Yes
Yes
5/5
4/4
5/5
5/5
1 All of whom are independent Non-Executive
Directors and all served throughout the year with
the exception of Joe Lister who was appointed to
the Committee on 1 September 2018. The Company
Secretary acts as secretary to the Committee.
* Considered as having recent and relevant
financial expertise.
The Company Secretary acts as Secretary
to the Committee.
The Committee’s role and responsibilities
are set out in its terms of reference which
are available at: www.helical.co.uk/
investors/corporate-governance/
RICHARD GRANT
CHAIRMAN OF THE
AUDIT AND RISK COMMITTEE
DEAR SHAREHOLDER,
I am pleased to present this Audit and
Risk Committee report which outlines key
activities and areas of focus for the year
to 31 March 2019.
The Committee endorses the principles
set out in the FRC Guidance on Audit and
Risk 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 Auditor.
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 risk, financial reporting and internal
controls. Appointments to the
Committee are made by the Board on
the recommendation of the Nominations
Committee in consultation with the
Audit and Risk Committee Chairman.
THE WORK OF THE AUDIT AND
RISK COMMITTEE IN THE YEAR
The Committee met five times during the
year and a record of attendance at these
meetings is shown above. It is common
practice at Helical for Audit and Risk
Committee meetings to be attended by
all Board members, 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 and Risk Committee reviewed
the following matters during the year:
• Risk and internal controls (see page 52
for more detail);
• The financial statements of the Group
and the announcement of the annual
results and the interim statement
on the half year results;
• A review of the findings of the
new external Auditor, Deloitte LLP,
following their work on their transition;
The Audit and Risk Committee met the
external Auditor on three occasions to
discuss the results of their transition onto
the audit, to discuss their appointment
to the annual audit and interim review
and matters arising from the annual
audit and interim review.
Other matters formally reviewed and
discussed by the Committee during
the year included:
• Review of the Company policies,
including those relating to anti-bribery
and corruption, anti-facilitation of tax
evasion and the Modern Slavery Act;
• The Company’s Whistleblowing Policy
and procedures to ensure that they
remain effective. Under the Company’s
Whistleblowing Policy, employees
and workers within the Group may
raise concerns about malpractice
or misconduct in confidence, either
internally or outside the Company, to
the independent Audit Partner; and
• Review of IT risk and business
• The Annual Report to ensure it is fair,
continuity planning.
balanced and understandable;
• The performance of the external
Auditor and their programme of work;
• The external Auditor's independence
and the provision of non-audit services
by the external Auditor; and
• The consideration of the requirement
for an internal audit function.
SIGNIFICANT AREAS OF REVIEW
In discharging its responsibilities
in connection with the preparation
of the financial statements for the
year to 31 March 2019, 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:
78
HELICAL PLCAnnual Report and Accounts 2019 • Internal Controls The Committee
annually reviews the need for an internal
audit function and recently reaffirmed its
stance that, in view of the small scale
and relative simplicity of the business, it
does not consider that an internal audit
function would be cost effective. The
Audit and Risk Committee reviewed
Helical's internal control environment
and confirmed that the key controls
had been implemented for the year.
This review did not highlight any
material weaknesses in the design
and effectiveness of the Group's
systems and controls.
• Property 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 determining the net realisable
value of the Group’s assets. 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
Sheet, nor is any movement reflected
in the Income Statement. However,
in accordance with the best practice
recommendations of the European
Public Real Estate Association ("EPRA"),
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 order to assist the Audit and
Risk Committee in considering the
valuations, the fair values of the
investment, trading and development
property portfolios are reviewed and
approved by the Property Valuations
Committee which is chaired by
Sue Clayton, FRICS, an independent
Non-Executive Director.
• Revenue Recognition Revenue
recognition is a presumed significant
risk under International Standards on
Auditing (UK) and where the Group
enters into complex transactions,
judgement must be applied in
determining when, and to what extent,
revenue should be recognised, see
note 39. For material transactions and
development management contracts,
technical papers are presented to the
Committee by management and the
Committee also requests that the
Group’s external Auditor reviews and
reports on these judgements. The
Committee assesses the appropriateness
of the proposed revenue recognition
for each transaction and these are
discussed between the external
Auditor and the Committee.
In addition to the significant issues
discussed, the Committee also considered,
and concluded upon, the Group’s ability
to continue as a going concern, its
viability for the next five-year period,
the estimates and judgements discussed
in note 39 to these Accounts and the
Report of the Directors on page 98.
REVIEW OF THE 2019 ANNUAL REPORT
The Committee has reviewed and
concluded that the Group’s Annual
Report and Accounts, taken as a whole,
are fair, balanced and understandable.
The Committee asked the following
questions during its review of the Annual
Report and Accounts.
Performance
• Is it clear how outcomes are measured
using key performance indicators?
• Is there a good mix of financial and
non-financial key performance
indicators?
• Is there an appropriate balance between
statutory and non-statutory
performance measures?
• Is it clear that the stated key
performance indicators measure the
achievement of the Company’s strategy
and how they are linked to Directors’
remuneration?
• Are movements in key performance
indicators over time, both favourable
and adverse, fair and well-explained?
• Are key performance risks explained?
Strategy
• Is the Company’s purpose clearly
articulated?
• Does the strategy discuss how
the business intends to achieve its
objectives in the context of the
market outlook?
• Are the value drivers explained clearly?
• Is there enough information to assess
the strategic risks?
AUDIT TRANSITION
Following approval of the appointment
of Deloitte LLP as the Company’s
Auditor, led by Georgina Robb, Audit
Partner, at the July 2018 AGM, they
commenced their work on the
transition in August 2018.
The transition process was designed
by Deloitte to allow them to gain a
detailed understanding of the nature
of the Company’s business, its key
systems and controls, the March 2018
closing balances and to determine a
detailed approach to the audit for the
year ended 31 March 2019.
Their transition work included:
• Meeting with management and the
wider team;
• Property site visits;
• Review of the outgoing Auditor’s
31 March 2018 files; and
• Review of the Company’s accounting
policies, accounting areas subject to
judgement and estimation and
systems and controls.
As a result of this work Deloitte
presented the Board with a report
of their findings and their proposed
approach to their Interim Review and
audit for the year ended 31 March 2019.
Business model
• Are the key elements of the business
model clearly explained?
• Are business model risks and disruptions
adequately disclosed?
• Do the business risks disclosed link to
sensitivities set out within the financial
statements?
Updates included in the Annual Report:
• updating the Group’s strategy to
highlight the importance of growth;
• the addition of a heat map to the
Principal Risks;
• greater information in relation to the
impact of Brexit; and
• the inclusion of more information on
how Helical differentiates itself
(pages 1 to 7).
79
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION AUDIT AND RISK COMMITTEE REPORT CONTINUED
EFFECTIVENESS OF THE
EXTERNAL AUDITOR
Following Deloitte’s first year as external
Auditor, the Audit and Risk Committee
reviewed their fees, effectiveness and
whether the agreed audit plan had been
fulfilled and the reasons for any variation
from the plan.
As part of the Committee’s review of
the external Auditor’s effectiveness the
Committee considered the following:
• the audit plan (presented to the
Committee in November 2018)
with focus on the quality of planning,
whether the plan was designed to suit
Helical and whether the agreed plan
was fulfilled;
• the Auditor’s assessment of its
independence;
• the quality of the Auditor’s reporting
during the year; and
• the relationship between the Auditor
and the Group, ensuring objectivity
and independence were maintained.
Two meetings were held between the
Auditor and the Committee without
management present to enable open
and objective discussions to be held,
enhancing assurance of Auditor
effectiveness.
The Audit and Risk 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.
As a result of their review the
Committee concluded that the audit
process was effective and efficient and
the re-appointment of Deloitte as the
Company's Auditor will be proposed
at the 2019 AGM.
AUDITOR INDEPENDENCE
The Audit and Risk Committee considers
the external Auditor to be independent.
The Committee’s policy is not to award
non-audit services where the outcome
of the work is relevant to a future audit
judgement or that could impact the
independence or objectivity of the audit
firm. The assignment of non-audit
services to the Company's Auditor must
be approved by the Committee where
the fees for that assignment amount to
more than £50,000 or more than 50% of
the relevant year's cumulative audit fee.
The assignment of non-audit services
with fees below this threshold may be
approved by the Committee Chairman.
This policy is designed to ensure that
the Group receives the most appropriate
advice without compromising the
independence of the Auditor. As part of
this policy prior approval of all non-audit
services is required. During the year,
the following non-audit services were
undertaken by Deloitte:
• review of the Half Year Results
(£53,745); and
• review of the Performance Share Plan
and Directors’ Bonus Scheme (£9,000).
The Committee considered all the
services to be appropriate, that they were
an extension to the role of the external
Auditor; and they did not impact
Deloitte's independence. The ratio of
audit vs non-audit fees during the year
was 19%, 16% of which was for the Interim
Review.
ANNUAL GENERAL MEETING
At the Annual General Meeting to
be held on 11 July 2019, the following
resolutions relating to the Auditor are
being proposed:
• The re-appointment of Deloitte 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 and Risk
Committee
23 May 2019
80
HELICAL PLCAnnual Report and Accounts 2019 DIRECTORS’ REMUNERATION REPORT
Committee membership and attendance
Committee
meeting
attendance
Independent
Michael O’Donnell
(Chairman)1
Sue Clayton
Richard Cotton
Richard Grant
Joe Lister 2
Yes
Yes
Yes
Yes
Yes
3/3
3/3
3/3
3/3
2/2
1 Michael O’Donnell will not be standing for re-election
to the Board at the 2019 AGM.
2 All served throughout the year except Joe Lister,
who joined the Board and the Committee on
1 September 2018.
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/investors/
corporate-governance.
FOCUS AREAS
• Remuneration policies, including basic
pay, long and short-term incentives
• Remuneration practice and its cost
to the Company
• Recruitment, service contracts and
severance policies
• Compliance with the new UK Corporate
Governance Code
• The engagement and independence
of external remuneration advisors
ROLE OF THE COMMITTEE
The Committee assists the Board to
fulfil its responsibility to Shareholders
to ensure that the Remuneration Policy
and practices of the Company reward
fairly and responsibly, with a clear link
to corporate and individual performance,
having regard to statutory and regulatory
requirements.
MICHAEL O’DONNELL
CHAIRMAN OF THE
REMUNERATION COMMITTEE
ANNUAL STATEMENT
DEAR SHAREHOLDER,
I am pleased to present the Remuneration
Committee’s Directors’ Remuneration
Report for the year to 31 March 2019. As
this will be my final Report as Chairman of
the Remuneration Committee, I would like
to take this opportunity to thank my
colleagues for all of their support. This
Report has been approved by the Board
of Helical plc.
This Directors’ Remuneration Report
has been divided into the following three
sections:
• This Annual Statement, which
summarises the remuneration outcomes
in the year to 31 March 2019;
• The Remuneration Policy Report, which
sets out the Remuneration Policy for
Executive and Non-Executive Directors,
which was approved by Shareholders
at the 2018 AGM. No changes are
proposed for the 2019 AGM; and
• The Annual Report on Remuneration,
which discloses how the Remuneration
Policy was implemented in the year to
31 March 2019 and how the policy will be
operated in the year to 31 March 2020.
WORK OF THE COMMITTEE
DURING THE YEAR
The Committee considered the following
during the year under review:
• The Committee consulted with its major
investors and the main representative
bodies in respect of the revised
Remuneration Policy, which was
approved by Shareholders at the
2018 AGM;
• The impact of the new UK Corporate
Governance Code (both in terms of the
impact on the Committee’s operation
and remit and the current Remuneration
Policy);
• The bonuses payable under the terms
of the Annual Bonus Scheme 2016 for
the year to 31 March 2018 were finalised.
These were the last bonuses awarded
under this scheme;
• The three-year performance conditions
in respect of Performance Share Plan
awards granted in 2015, which vested in
2018, were assessed. The performance
conditions were partially satisfied and
45.65% of awards vested;
• Performance Share Plan awards
were granted in June 2018 which are
expected to vest in June 2021, subject
to performance conditions;
• Changes to the basic salaries of the
Executive Directors with effect from
1 April 2019, as noted below, were
approved;
• The fees paid to the Chairman of the
Company were reviewed and it was
determined that on his succession to
the role of Chairman at the 2019 AGM,
the fee payable to Richard Grant should
be set at £150,000 pa. This is lower than
the remuneration paid to Michael Slade
(2019: £223,000 including benefits); and
PREPARATION OF THIS REPORT
This Report, prepared by the Remuneration Committee on behalf of the Board,
takes full account of the prevailing UK Corporate Governance Code and the latest
Investment Association (IA) Principles of Remuneration and Institutional
Shareholder Services (ISS) UK and Ireland Proxy Voting Guidelines, and has been
prepared in accordance with the provisions of the Companies Act 2006 (“the Act”),
the Listing Rules of the Financial Conduct Authority and the Large and Medium-
Sized Companies and Groups (Accounts and Reports) (Amendment) Regulations
2013. The Act requires the Auditor to report to the Group’s Shareholders on the
audited information within this Report and to state whether in their opinion those
parts of the Report have been prepared in accordance with the Act. Those parts of
the Report which have been subject to audit are clearly marked.
81
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION DIRECTORS’ REMUNERATION REPORT CONTINUED
• For completeness, although not a
Committee responsibility, the Board,
excluding the Non-Executive Directors,
set the fee payable to Joe Lister on his
appointment as a Non-Executive
Director on 1 September 2018 at
£45,000 pa. The Executive Directors
also reviewed the current fees payable
to the Non-Executive Directors and
increased the base fee payable to them
by 6.7% from £45,000 pa to £48,000 pa
with effect from 1 April 2019. This
increase does not apply to the
Chairman, Deputy Chairman or Senior
Independent Director. Further, the
additional fee payable to the Chairmen
of the Audit and Risk, Remuneration
and Property Valuation Committees
are to remain at £10,000 pa.
PERFORMANCE, DECISIONS
AND REWARD OUTCOMES
Executive performance measures and
pay are closely aligned to Shareholders’
interests with a high proportion of total
available remuneration based on variable
pay designed to award the achievement
of long-term strategic objectives. As
noted in the Strategic Report on pages 1
to 65, the EPRA net assets per share of
the Group has increased by 3.0%
(2018: reduced by 1.1%) in the year under
review. The Group’s total portfolio return,
as reported by MSCI (formerly IPD) was
10.1% (2018: 11.1%). The Total Accounting
Return (growth in net asset value plus
dividends paid in the year) was 8.4%
(2018: 5.3%).
Annual Bonus Scheme 2018
Subsequent to the year end, and in
accordance with the rules of the Helical
Annual Bonus Scheme 2018, cash and
deferred shares have been approved for
inclusion in the financial statements for
the year to 31 March 2019 for Gerald Kaye,
Tim Murphy and Matthew Bonning-
Snook. Half of the maximum bonus
payable was dependent on the relative
Total Property Return of the Group, as
calculated by MSCI, compared with the
MSCI Central London Offices Total Return
Index, one quarter was determined by the
Total Accounting Return of the Group and
the remaining quarter was payable based
on strategic/personal objectives. In
accordance with these performance
criteria, bonuses were calculated for the
Executive Directors as follows: Gerald
Kaye will receive £727,156 (£532,000 in
cash, £195,156 deferred into shares for
three years), Tim Murphy will receive
£387,045 (£309,600 in cash, £77,445 in
deferred shares) and Matthew Bonning-
Snook will receive £524,423 (£413,800
in cash, £110,623 in deferred shares).
Full details of the targets and the
performance against these targets
are set out in the Annual Report
on Remuneration.
For the year to 31 March 2019, the
Remuneration Committee did not
consider it appropriate to exercise
discretion, reflecting the encouraging
performance of the business, particularly
in relation to the key Total Property
Return and Total Accounting Return KPIs,
which form 75% of the bonus targets.
In the previous year, the Committee
applied negative discretion to reduce
the bonus awards by 25% in light of
the Shareholder experience during
the corresponding bonus year.
Performance Share Plan 2014
Share awards granted in 2016 under
the terms of the 2014 Performance Share
Plan were subject to three performance
conditions over the three years to
31 March 2019. One third of the awards
was based on absolute net asset value
performance, the second third of the
awards was based on a comparison of
the Group’s portfolio return to the MSCI
Total Return Index and the final third of
the awards was based on a comparison
of the Group’s Total Shareholder Return
to that of a basket of companies in
the Real Estate Super Sector. The
performance criteria were measured
at the end of the three-year period and
the MSCI conditions were met in full.
Neither the net asset value condition,
nor the TSR condition, were met.
Consequently 33.3% of the awards
are expected to vest in June 2019.
Full details of the targets and Helical’s
performance are set out in the Annual
Report on Remuneration.
The Committee believes that the
provision for annual cash and deferred
share bonuses and the expected vesting
of the PSP award in respect of the
three-year performance period ended
31 March 2019 accurately and fairly
represents the reward determined by
the Group’s remuneration schemes based
on the performance of the Group over
the respective annual and three-year
performance periods.
EPRA NET ASSETS PER SHARE
pence
456
473
468
482
385
2015
Growth
2016
+18%
2017
+4%
2018
-1%
2019
+3%
SHAREHOLDERS’ FUNDS
£m
517
534
567
481
404
2015
Growth
2016
+19%
2017
+7%
2018
+3%
2019
+6%
PORTFOLIO RETURN
%
21.7
13.0
11.4
12.0
11.1
9.4
9.3
6.9
5.3
10.1
7.1
5.5
2016
2017
2018
2019
MSCI Median
MSCI Upper Quartile
Helical
TOTAL ACCOUNTING RETURN
%
21.1%
22.5%
8.3%
8.4%
5.3%
2015
2016
2017
2018
2019
82
HELICAL PLCAnnual Report and Accounts 2019 2019 ANNUAL GENERAL MEETING
RESOLUTION
The following resolution relating to
remuneration will be presented at the
2019 AGM to be held on 11 July 2019:
• An advisory resolution in respect of the
Annual Statement and Annual Report
on Remuneration for the year to
31 March 2019.
I trust that Shareholders will support
the Committee and vote in favour of
this resolution.
I will be available at the AGM to respond
to any questions Shareholders may
have on this report or in relation to any
Committee activities. In the meantime,
if you would like to discuss any aspect
of the Remuneration Policy, please feel
free to contact me through James Moss
(Company Secretary) at jm@helical.co.uk.
MICHAEL O’DONNELL
Chair of the Remuneration Committee
23 May 2019
IMPLEMENTATION OF THE POLICY
FOR THE YEAR TO 31 MARCH 2020
The Remuneration Policy will be
implemented for the year to 31 March
2020 as follows:
• Executive Director basic salaries were
increased by 2.4%, reflecting the
increase in RPI to 31 March 2019. The
average salary increase for all other staff
was 3.1%. All increases were effective
from 1 April 2019 (the normal salary
review date). As such, Gerald Kaye’s
current salary is £544,750, Matthew
Bonning-Snook’s current salary is
£423,750 and Tim Murphy’s current
salary is £317,050. No changes will be
made to the provision of benefits;
• The policy of not providing separate
pension provision, with Executive
Directors expected to provide for their
retirement from remuneration provided
through the Company’s incentive
schemes, continues unchanged;
• For the year to 31 March 2020, annual
bonuses will continue to be capped at
150% of salary with targets based on
Total Property Return (50% of potential),
Total Accounting Return (25% of
potential) and strategic/personal
objectives (25% of potential). To the
extent that there is low or no bonus
payable on the portfolio/financial
measures, the Committee will retain
discretion to reduce (including to zero)
the payout under the strategic/personal
targets. One third of any bonus will
continue to be deferred into shares
for three years, unless the Executive
Director has met the shareholding
guideline, in which case the annual
bonus will be payable in cash up to 100%
of salary and in deferred shares from
100% to 150% of salary;
• The Remuneration Committee will
review the stretch target for the
Total Property Return measure, which
accounts for 50% of the total bonus
weighting and is currently set at MSCI
Central London Offices index +3.25%,
to ensure it remains appropriate;
• The 2019 award under the PSP will
be granted over shares equal to 250%
of annual salary. The proposed
performance targets, which are set
out in detail in the Annual Report on
Remuneration, will continue to be linked
to net asset value per share growth,
Total Property Return versus MSCI
and relative Total Shareholder Return.
A two-year post vesting holding period
will apply to these awards to the extent
that they vest;
• Shareholding guidelines will remain at
500% of salary; and
• Malus and clawback provisions will
continue to operate.
The Committee is committed to ensuring
that its Remuneration Policy remains
aligned to the long-term interests of
Shareholders – incentivising management
to increase total returns and grow 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 that its policy strikes
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.
Further details of the proposed
implementation of the Remuneration
Policy for the year to 31 March 2020
can be found on page 94.
83
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION DIRECTORS’ REMUNERATION REPORT CONTINUED
REMUNERATION POLICY REPORT
This section of the Remuneration Report sets out the
Remuneration Policy of the Group. The Committee believes
that the policy continues to support the Group’s strategy
and is aligned with Shareholders’ interests.
POLICY SCOPE
The Remuneration Policy applies to the Chairman,
Executive Directors and Non-Executive Directors.
POLICY DURATION
The Remuneration Policy report was approved by Shareholders
at the Annual General Meeting held on 12 July 2018 for a
maximum period of three years. No changes are proposed
for the 2019 Annual General Meeting.
REMUNERATION POLICY
Helical’s approach to the remuneration of its Executive Directors
is to provide a basic remuneration package combined with an
incentive-based bonus and share scheme structure aligned with
the interests of its Shareholders. The majority of performance-
based awards are judged on the relative performance of the
Group’s real estate portfolio against an industry benchmark
or on the absolute performance of the Group and its Total
Shareholder Return against appropriate industry benchmarks.
The remaining awards are judged on strategic/personal
objectives. 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
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. It also considers
environmental, social, governance and risk issues.
The objective of the Remuneration Policy is 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 and hurdles for any performance related remuneration
schemes; and
• Service agreements incorporating termination payments and
compensation commitments.
PEER GROUP
The Remuneration Committee has determined a peer group
of companies which is used for benchmarking (albeit with some
caution, given the variances in size and nature of operations in
the sector and more general risk of pay inflation where too great
a reliance is placed on published data) and as a reference point
in ensuring that performance targets are appropriately
stretching and when reviewing the Group’s relative performance.
The peer group, which remains unchanged from that disclosed
last year, is as follows: Capital & Counties Properties plc; Capital
& Regional plc; Derwent London plc; Great Portland Estates plc;
Hammerson plc; Hansteen Holdings plc; Intu Properties plc;
LondonMetric Property plc; McKay Securities plc; NewRiver
REIT plc; RDI REIT plc; Shaftesbury plc; U+I Group plc;
Urban&Civic plc; St. Modwen Properties plc; and Workspace
Group plc.
Directors’ Remuneration Policy Table
The table below summarises the Directors’ Remuneration Policy. No changes to the policy approved at the 2018 AGM
are being proposed.
Purpose and link to strategy
Operation
Maximum
Performance targets
• 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
• Normally reviewed annually,
effective 1 April
• No minimum or maximum
salary increase is operated
• N/A
• Paid in cash on a monthly
basis; not pensionable
• Takes periodic account
against companies with
similar characteristics and
sector comparators
• Reviewed in context of
the salary increases across
the Group
• Salary increases will normally
be aligned to 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
Element
Salary
84
HELICAL PLCAnnual Report and Accounts 2019 Element
Purpose and link to strategy
Operation
Maximum
Performance targets
Annual bonus
• Provides focus on delivering
returns from the Group’s
property portfolio
• Rewards and helps retain
key Executive Directors and
is aligned with the Group’s
risk profile
• Maximum bonus only
payable for achieving
demanding targets
• Payable in cash (two thirds)
and deferred shares (one
third) unless the
shareholding guideline has
been met, in which case the
annual bonus will be payable
in cash up to 100% of salary
and in deferred shares from
100% to 150% of salary
• Non-pensionable
• Dividend equivalent
payments (in cash or in
shares) may be payable
on deferred shares
Long-term
incentive awards
• Aligned to main strategic
objective of delivering
long-term value creation
• Discretionary annual grant
of conditional share awards
under the 2014 PSP Scheme
• Aligns Executive Directors’
• Executive Directors are
interests with those of
Shareholders
• Rewards and helps retain
key Executives and is aligned
with the Group’s risk profile
required to retain PSP shares
acquired for at least two
years after vesting
• Dividend equivalent
payments (in cash or in
shares) may be payable
• 150% of salary pa for
all Executive Directors
• Performance normally
measured over one year
• The majority of the bonus
potential will be based on
portfolio and financial
targets (50% on Total
Property Return, 25% on
Total Accounting Return)
• Strategic/personal
objectives form the
remaining 25% of targets
• Malus and clawback
provisions apply
• 250% of salary pa for
all Executive Directors
• Performance normally
measured over three years
• 10% of an award vests at
threshold performance
• Performance targets linked
equally to net asset value per
share, Total Property Return
and Total Shareholder Return
• Malus and clawback
provisions apply
Pensions
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
Share ownership
guidelines
• To provide alignment of
interests between 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
• N/A
• N/A
• N/A
• Benefits provided through
• N/A
• N/A
third party providers
• Insured benefits include:
private medical cover, life
assurance and permanent
health insurance
• Other benefits may be
provided where appropriate
• Executive Directors are
required to build and
maintain a specified
shareholding through the
retention of the post-tax
shares received on the
vesting of awards
• Cash fee paid monthly
• Fees are reviewed on a
• N/A
• Aim to hold a shareholding
to equal or exceed 500% of
basic salary
• No minimum or maximum
fee increase is operated
• N/A
regular basis
• Fee increases may be guided
• Benefits may be provided
where appropriate
• Fixed three-year contracts
with three-month notice
periods
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
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 Executive Directors who participate in the Group’s long-term incentive
awards are excluded from the Helical Bar 2010 Approved Share Option Scheme.
85
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION DIRECTORS’ REMUNERATION REPORT CONTINUED
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
Policy
The salary of newly appointed Executive Directors would reflect the individual’s experience and skills, taking into
account internal comparisons. On initial appointment and depending on experience, 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 under the terms of the 2018 Annual Bonus Scheme will be made in accordance with the
terms of that scheme, with the Committee retaining the right to pro-rata any bonus payable in respect of the year of
appointment.
Long-term incentives
Annual awards under the terms of the 2014 PSP will be made in accordance with the terms of that Plan.
Share Incentive Plan
In line with that of existing Executive Directors.
Buy-out awards
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.
SHAREHOLDER CONSULTATION
In proposing the changes to the Remuneration Policy in advance
of the 2018 AGM, the Committee consulted with Helical’s top 17
Shareholders representing 65% of issued share capital at
31 March 2018 and the major Shareholder representative bodies.
Positive and constructive feedback was received and after
considering the feedback, the Committee agreed to remove one
of the proposed changes and continue compulsory deferral for
all Executive Directors. The policy was subsequently approved
with 97.1% of votes cast in favour. No changes to the policy are
being proposed for the current year, therefore no further
Shareholder consultation was required.
HOW EMPLOYEE PAY IS TAKEN INTO ACCOUNT
AND COMPARED WITH THE REMUNERATION POLICY
OF EXECUTIVE DIRECTORS
All permanent employees of the Group, including Executive
Directors, receive a basic remuneration package including basic
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. There is no Group pension scheme for
Directors and no contributions are payable into Directors’ own
pension schemes. For all permanent employees below Board
level, the Company pays pension contributions of either 10.0%
or 12.5% into either a Group Pension Scheme or individual
employees’ own pension scheme. 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 HMRC 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 the Group’s employees when drawing up
its Remuneration Policy.
86
HELICAL PLCAnnual Report and Accounts 2019 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
Gerald Kaye
Tim Murphy
Matthew Bonning-Snook
Notice period
6 months
6 months
6 months
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 of
alternative income received to the Group. Instalment payments
will be reduced by any alternative income.
Under the Annual Bonus Scheme 2018, participants will not
normally be entitled to receive any payment under the scheme
following cessation of employment 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 the Group; or any other reason
permitted by the Committee). For good leavers, individuals
would cease to accrue amounts in respect of any period after
cessation of employment but would receive any amounts
previously deferred into shares under the terms of the Annual
Bonus Scheme 2018.
Date of 1st
employment
6 March 1994
1 March 1994
Board
appointment
Date of
current contract
28 September 1994
25 July 2016
24 July 2012
25 July 2016
25 July 2016
13 March 1995
1 August 2007
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
Executive 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, ongoing
participation in awards previously made in bonus and share
schemes will be subject to the rules of those schemes and to
the discretion of the Committee.
NON-EXECUTIVE DIRECTORS’ LETTERS OF APPOINTMENT
Non-Executive Director
Michael Slade 1 – Chairman
Board appointment
Commencement date of current term
21 August 1984
25 July 2016
Sue Clayton – Chairman of the Property Valuations Committee
1 February 2016
1 February 2016
Richard Cotton – Senior Independent Director
Richard Grant – Deputy Chairman, Chairman of the Audit and Risk
Committee and Chairman of the Nominations Committee
1 March 2016
24 July 2012
1 March 2016
1 April 2015
Joe Lister
1 September 2018
1 September 2018
Michael O’Donnell 1 – Chairman of the Remuneration Committee
24 June 2011
1 April 2015
1 Michael Slade and Michael O’Donnell are not standing for re-election at the 2019 AGM.
87
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION DIRECTORS’ REMUNERATION REPORT CONTINUED
PSP POST VESTING HOLDING PERIOD AND SHARE
OWNERSHIP GUIDELINES
Directors will not normally be permitted to sell shares received
through the 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 500% of basic salary.
A shareholding guideline of 100% of salary operates for
other senior management below Board level.
REWARD SCENARIOS
The charts below show how the composition of the Executive
Directors’ remuneration packages varies under four different
performance scenarios, namely, at minimum (i.e. fixed pay),
target (assumed to be 50% of the maximum incentive levels),
maximum levels, all assuming no share price appreciation,
and the maximum levels assuming 50% share price appreciation
across the performance period of long-term incentive awards.
The chart is based on:
• Salary levels effective 1 April 2019;
• An approximated annual value of benefits (no pension
is provided);
• A 150% of salary maximum annual bonus (with target assumed
to be 50% of the maximum);
• A 250% of salary award under the 2014 PSP in line with the
normal maximum award (with target assumed to be 50%
of the maximum); and
• In the final chart only, share appreciation of 50% across the
three-year performance period of the awards made under
Performance Share Plan 2014.
VALUE OF REMUNERATION PACKAGES AT DIFFERENT LEVELS OF PERFORMANCE
£’000
3,469
20%
2,788
49%
39%
29%
24%
1,699
40%
24%
609
100%
36%
22%
17%
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2,013
20%
1,616
49%
39%
29%
22%
24%
17%
982
40%
24%
36%
348
100%
2,701
20%
2,171
49%
39%
29%
24%
1,324
40%
24%
476
100%
36%
22%
17%
Minimum Target Maximum Maximum
Minimum Target Maximum Maximum
Minimum Target Maximum Maximum
with
share price
growth
with
share price
growth
with
share price
growth
GERALD KAYE
TIM MURPHY
MATTHEW BONNING-SNOOK
Basic salary & benefits
Bonus
PSP
Maximum with 50% share price growth
88
HELICAL PLCAnnual Report and Accounts 2019 ANNUAL REPORT ON REMUNERATION
This part of the Directors’ Remuneration Report explains how the Group has implemented the Remuneration Policy in the year
to 31 March 2019 and how the policy is intended to be implemented in the year to 31 March 2020.
APPLICATION OF THE REMUNERATION POLICY IN THE YEAR TO 31 MARCH 2019
This section has been subject to audit unless otherwise stated.
BALANCE OF FIXED VERSUS VARIABLE PAY (UNAUDITED)
In line with its policy, the Committee seeks to ensure that the balance of remuneration provides a basic salary 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 2019, the balance of fixed versus variable pay on an actual basis for the Executive Directors in office throughout
the year compared to the maximum payable was as follows:
Basic salaries and benefits-in-kind
Annual Bonus Scheme 2018
Performance Share Plan shares vested
Deferred bonus dividend shares
Actual
£000
1,403
1,639
918
56
4,016
Share of total
Maximum
Share of total
%
35
41
23
1
100
£000
1,403
1,884
2,754
56
6,097
%
23
31
45
1
100
Note: Performance Share Plan shares 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 2019 in accordance with the terms of the Performance Share Plan 2014.
DIRECTORS’ REMUNERATION
Total remuneration in respect of the Directors was as follows:
Year to 31 March 2019
Executive Directors
Gerald Kaye
Tim Murphy
Matthew Bonning-Snook
Non-Executive Directors
Michael Slade
Sue Clayton
Richard Cotton
Richard Gillingwater 4
Richard Grant
Michael O’Donnell
Joe Lister
Total
Fixed
Variable
Basic
salary/fees
£000
Benefits 1
£000
Share
Incentive
Plan 2
£000
Sub-total
£000
Annual
cash
bonus
£000
Deferred
bonus
shares
£000
Share 3
awards
£000
Sub-total
£000
Total
£000
532
310
414
1,256
57
24
45
126
155
68
55
70
16
70
55
26
–
–
–
–
–
–
7
7
7
21
–
–
–
–
–
–
–
596
341
466
532
310
414
1,403
1,256
223
55
70
16
70
55
26
–
–
–
–
–
–
–
195
77
111
383
–
–
–
–
–
–
–
380
243
351
974
1,107
630
876
2,613
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,703
971
1,342
4,016
223
55
70
16
70
55
26
1,703
194
21
1,918
1,256
383
974
2,613
4,531
1 Benefits include the provision of a car/car allowance, fuel allowance, private medical cover, life assurance and permanent health insurance. Significant individual benefits
included £38,000 and £32,000 car allowance for Gerald Kaye and Michael Slade respectively.
2 The Share Incentive Plan figure relates to the free and matching shares awarded under the Helical Bar 2002 Approved Share Incentive Plan, details of which are on page 93.
3 Value of share awards based on average share price over three months to 31 March 2019 of 335.02p. Dividend shares awarded to Directors on 26 July 2018 under the term
of the Annual Bonus Scheme 2012 are included at their vesting price of 334.0p.
4 Richard Gillingwater stepped down from the Board on 12 July 2018.
89
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION DIRECTORS’ REMUNERATION REPORT CONTINUED
Year to 31 March 2018
Executive Directors
Gerald Kaye
Tim Murphy
Matthew Bonning-Snook
Former Executive Director
Duncan Walker 1
Non-Executive Directors
Michael Slade
Sue Clayton
Richard Cotton
Richard Gillingwater
Richard Grant
Michael O’Donnell
Total
Sub-total
£000
Total
£000
Fixed
Variable
Basic
salary/fees
£000
Benefits 2
£000
Share
Incentive
Plan 3
£000
Sub-total
£000
Annual
cash
bonus
£000
Deferred
bonus
shares
£000
515
300
401
1,216
112
155
55
48
55
57
55
57
25
60
142
8
69
–
–
–
–
–
7
7
7
21
4
–
–
–
–
–
–
579
332
468
773
–
601
1,379
1,374
124
224
55
48
55
57
55
–
–
–
–
–
–
–
386
–
300
686
–
–
–
–
–
–
–
Share 4
awards
£000
471
305
435
1,211
1,630
305
1,336
3,271
20
20
251
251
–
–
–
–
–
–
–
–
–
–
2,209
637
1,804
4,650
144
475
55
48
55
57
55
1,753
219
25
1,997
1,374
686
1,482
3,542
5,539
1 Duncan Walker stepped down from the Board on 11 July 2017 and ceased employment on 11 January 2018.
2 Benefits include the provision of a car/car allowance, fuel allowance, private medical cover, life assurance and permanent health insurance. Significant individual benefits
included £38,000, £32,000 and £38,000 car allowance for Gerald Kaye, Michael Slade and Matthew Bonning-Snook respectively.
3 The Share incentive Plan figure relates to the free and matching shares awarded under the Helical Bar 2002 Approved Share Incentive Plan, details of which are on page 93.
4 Share awards are included at their actual vesting values in July 2018 of 334.00p. The table included in the 2018 financial statements included share awards
at the average share price over three months to 31 March 2018 of 335.07p. Dividend shares awarded to Directors on 22 June 2017 under the terms of the Annual Bonus
Scheme 2012 are included at their actual vesting price of 299.50p.
The information in this section has been audited.
HELICAL ANNUAL BONUS SCHEME 2018
Gerald Kaye, Tim Murphy and Matthew Bonning-Snook
participate in the Annual Bonus Scheme 2018, which was
approved by Shareholders at the 2018 AGM. This scheme
provides annual bonuses based on the performance of the
property portfolio, the Group and the individual Directors and
is aligned with Shareholders’ interests with appropriate hurdles
and Shareholder protections.
The main features of the Annual Bonus Scheme 2018 are
as follows:
• 50% of the maximum annual bonus will be payable if the Total
Property Return (“TPR”) of the Group’s property portfolio
matches or exceeds the performance of the MSCI Central
London Offices Total Return Index (“Index”) plus 3.25%, with
20% of this part of the award paid out if the performance
matches the performance of the Index;
• 25% of the maximum annual bonus will be payable if the Total
Accounting Return (“TAR”) of the Group (Growth in IFRS NAV
plus dividends), calculated annually, is or exceeds 10.0%, with
20% of this part of the award paid out if the TAR is 5.0%; and
• 25% of the maximum annual bonus will be payable if strategic/
personal objectives, to be determined by the Committee and
reported on retrospectively each year, are met.
The Committee will regularly review the threshold and maximum
TPR and TAR targets to ensure they remain appropriate to the
Group’s strategy and market conditions.
Shareholder Protections
• Annual bonus payments to individual Directors will be
restricted in any financial year to 150% of salary;
• Until the minimum shareholding guideline of 500% of salary
is met, two thirds of any payment is made in cash after the
relevant year end and one third is deferred for three years into
Helical plc shares. Once the minimum shareholding guideline is
met, any bonus payment is made in cash up to 100% of salary
and in deferred shares from 100% to 150% of salary;
• The Committee will have a general negative discretion
surrounding bonus payments and, to the extent there is a low
or no bonus payable on the financial measures, it will retain the
discretion to reduce (including to zero) the payment under the
strategic/personal targets;
• The scheme will operate malus and clawback provisions,
whereby amounts deferred, or the net of tax amounts paid,
may be recovered or withheld in the event of a misstatement
of results, an error being made in assessing the calculation or
in the event of gross misconduct; and
• The Committee will have discretion to award annual bonuses in
deferred shares (in full or in part) irrespective of an Executive
Director’s shareholding guidelines, although it is expected that
this discretion would only be used in exceptional circumstances.
Other matters
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 standard 5% in ten-year dilution
limit will apply.
90
HELICAL PLCAnnual Report and Accounts 2019 Determination of annual bonus outcome
The first table below sets out the financial measures and their respective outcomes under the terms of the Annual Bonus Scheme
2018. These measures apply to all Executive Directors equally. The second table sets out the strategic/personal objectives for each
Executive Director, which account for 25% of the maximum bonus payable. The sum of these provides each Director with a
percentage payout of their maximum bonus, capped at 150% of basic salary. This is set out in the third table below.
Metric
Performance condition
TPR
TAR
Total Property Return v MSCI property
20% of the maximum bonus available pays out if the Group’s TPR matches the
performance of the Index increasing pro-rata to 50% for matching or exceeding
the Index plus 3.25%.
Total Accounting Return
20% of the maximum bonus available pays out if the Group’s TAR, adjusted
for performance related awards and calculated annually, exceeds 5.0%
increasing pro-rata to 25% for a TAR of 10.0% or greater.
Subtotal from financial measures
Weighting
Threshold
target
50%
4.80%
Stretch
target
8.05%
Outcome
10.12%
% of bonus
payable
50.0%
25%
5.0%
10.0%
8.83%
20.3%
70.3%
Executive Director Weighting
Target
Committee’s assessment of the extent
to which the performance targets have been met
% of bonus
payable
Gerald
Kaye
6.7%
3.3%
Seek to acquire at least one high quality project in the
year which complements the existing portfolio and
which is consistent with Helical’s strategy and long-term
plans.
Achieve a BREEAM benchmark of between “Very
Good” (threshold target) and “Excellent” (stretch
target) on any new developments or major
refurbishment completed in the year.
15.0%
Threshold and stretch targets across recently
completed properties.
Subtotal for Gerald Kaye
Tim
Murphy
6.7%
10.0%
3.3%
5.0%
Seek appropriate financing solutions (i.e. debt, equity,
JVs) to enable Helical to increase its deal capacity.
Extend average debt maturity and reduce average cost
of debt.
Ensure satisfactory progress in respect of refinancing
or repayment (as appropriate) of the Convertible Bond
maturing in June 2019.
Threshold and stretch targets to reduce recurring
administration costs.
Subtotal for Tim Murphy
Matthew
Bonning-Snook
6.7%
3.3%
10.0%
5.0%
Seek to acquire at least one high quality project in
the year which complements the existing portfolio and
which is consistent with Helical’s strategy and long-term
plans.
Complete an occupier satisfaction survey in 2018/19
and demonstrate an improvement in respect of both
the process and results versus the prior year survey.
Threshold and stretch targets for developmental
milestones on selected properties.
Threshold and stretch targets for recently completed
property.
Subtotal for Matthew Bonning-Snook
50%
100%
94%
50%
50%
75%
44%
50%
100%
75%
–
3.3%
3.3%
14.1%
20.7%
3.3%
5.0%
2.5%
2.2%
13.0%
3.3%
3.3%
7.5%
–
14.1%
91
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION DIRECTORS’ REMUNERATION REPORT CONTINUED
The total annual bonus for the year ended 31 March 2019 is set out below:
Executive Director
Gerald Kaye
Tim Murphy
Matthew Bonning-Snook
Basic
salary
£000
532
310
414
Maximum
bonus payable
(150% basic salary)
£000
798
464
621
Actual %
of bonus
payable
%
91.0
83.3
84.4
Bonus
payable
£000
727
387
525
Cash
£000
532
310
414
Deferred
shares
£000
195
77
111
All Executive Directors satisfy the minimum shareholding guideline of 500% of salary, therefore the bonus payment is made in cash
up to 100% of salary with the remainder in deferred shares.
HELICAL ANNUAL BONUS SCHEME – DEFERRED SHARES
Under the terms of the Annual Bonus Scheme 2012 and Annual Bonus Scheme 2016, one third of annual bonuses awarded to
scheme participants each year were deferred for three years into Helical plc shares. Under the Annual Bonus Scheme 2018, the
same applies unless an Executive Director satisfies the minimum shareholding guideline, in which case up to 100% of any bonus is
payable in cash with the remainder in deferred shares. Deferred shares awarded under the terms of these schemes, and which
vested during the year to 31 March 2019, are as noted in the table below:
Executive Director
Gerald Kaye
Tim Murphy
Matthew Bonning-Snook
Deferred shares
1 April 2018
358,025
42,434
314,374
2015 award
vesting
26 July 2018
2018 bonus
award
26 July 2018
(96,619)
115,643
–
(89,285)
–
89,955
Deferred shares
31 March 2019
Expected 1
2019
award
Dividend shares
awarded on 2015
vesting
377,049
42,434
315,044
58,252
23,117
33,020
8,660
–
8,002
1 The expected 2019 deferred share award represents the deferred share element of the annual bonus awarded in respect of the year to 31 March 2019 at 335.02p per share,
the average share price over the three months to 31 March 2019.
PSP AWARDS VESTING IN 2019
The PSP award granted on 1 June 2016 will vest after 2 June 2019. The expected vesting percentage is as follows:
Metric
Performance condition
NAV
(fully diluted
triple net)
Net Asset Value Growth
10% of this part of an award vests for pre-dividend compound NAV
growth of 7.5% pa increasing pro-rata to 100% of this part of an award
vesting for pre-dividend compound NAV growth of 15% pa
Weighting
33.33%
Threshold
target
7.5%
Stretch
target
15.0%
Actual
% vesting
5.8%
0.00%
TPR
TSR
Total
Total Property Return v MSCI 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 Shareholder Return
10% of this part of an award vests for median ranking increasing
pro-rata to 100% of this part of an award for upper quartile or above
performance
33.33%
Median
7.2%
33.33%
Median
15.2%
Upper
quartile
8.3%
Upper
quartile
29.4%
10.1%
33.33%
-9.3%
0.00%
33.33%
Based on the above and given that net asset 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 are as follows:
Executive Director
Gerald Kaye
Tim Murphy
Matthew Bonning-Snook
Number of
shares at grant
Number of
shares expected
to lapse
Number of
shares expected
to vest
Estimated value
at vesting1
£’000
314,354
217,291
290,506
209,569
144,861
193,671
104,785
72,430
96,835
351
243
324
1 The share price used to calculate the expected value at vesting was 335.02p, based on the average share price over the three months to 31 March 2019.
The share awards presented for the comparatives in the remuneration table on page 90 are based on the 2014 PSP scheme awards
granted on 8 June 2015. The three-year performance period to 31 March 2018 showed that the net asset value per share, calculated
in accordance with the terms of the 2014 PSP, had increased by 12.32% pa. During this three-year period the total return of Helical’s
property portfolio, as determined by IPD (now MSCI), was 13.9% compared to the upper quartile of the IPD Benchmark which
showed a return of 10.1%. The TSR of the Company during the period was minus 7.1% compared to the median of plus 9.8% and
upper quartile of 35.5%. Therefore, 45.65% of the shares vested. The share price used to calculate the expected value at vesting for
the 2015 PSP awards was 335.07p (based on the average share price over the three months to 31 March 2018). The actual share
price at vesting on 26 July 2018 was 334.00p and the comparative figures reflect these actual vesting share prices.
92
HELICAL PLCAnnual Report and Accounts 2019 PSP AWARDS GRANTED IN THE YEAR
The following conditional awards were granted on 1 June 2018 under the 2014 PSP:
Executive Director
Gerald Kaye
Tim Murphy
Matthew Bonning-Snook
Basis of award
(as a % of salary)
Face value
£000
Vesting at
threshold
Vesting at
maximum
250%
250%
250%
1,288
749
1,002
10%
10%
10%
100%
100%
100%
Performance period
3 years to 31 March 2021
3 years to 31 March 2021
3 years to 31 March 2021
Details of the performance targets attached to the awards are set out on pages 94 to 95.
The total number of awards made to Directors under the terms of the 2014 PSP which have not yet vested are as follows:
Executive Director
Gerald Kaye
Tim Murphy
Matthew Bonning-Snook
Shares awarded
Shares awarded
Shares awarded
01.06.16
at 395.00p
06.06.17
at 320.00p
01.06.18
at 375.00p
314,354
217,291
290,506
445,312
272,531
364,312
343,333
199,800
267,066
Total shares
awarded
1,102,999
689,622
921,884
It is currently expected that 33.3% of the shares awarded on 1 June 2016, 28.0% of the shares awarded on 6 June 2017 and 43.6% of
the shares awarded on 1 June 2018 will vest.
VESTING OF PSP AWARDS OVER THE LAST TEN YEARS (UNAUDITED)
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 and 2014 PSP schemes in the last ten years are as follows:
2004 PSP Scheme
2014 PSP Scheme
100%
80%
60%
40%
20%
0%
67%
67%
29%
33%
12%
Nil
2010
Nil
2011
Nil
Nil
33%
33%
33%
33%
33%
33%
2012
2013
2014
2015
2016
2017
2018
2019
MSCI
NAV
TSR
The 2004 PSP Scheme operated with two vesting conditions. The TSR condition was an addition brought into the 2014 PSP Scheme.
To date, this condition has not vested.
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:
Executive Director
Gerald Kaye
Tim Murphy
Matthew Bonning-Snook
1 June 2018
at 375.00p
26 July 2018
at 334.00p
19 September 2018
7 December 2018
at 334.50p
at 317.00p
9 January 2019 at
317.00p
7 March 2019
at 335.0p
1,326
1,326
1,326
1,087
637
1,078
402
405
402
426
426
426
437
258
433
405
402
402
Shares held by the Trustees of the Plan at 31 March 2019 were 517,996 (2018: 462,996).The information in this section has
been audited.
93
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION DIRECTORS’ REMUNERATION REPORT CONTINUED
IMPLEMENTATION OF THE REMUNERATION POLICY FOR THE YEAR TO 31 MARCH 2020
This section has not been subject to audit unless otherwise stated.
FIXED REMUNERATION
PERFORMANCE RELATED REMUNERATION
EXECUTIVE DIRECTORS’ BASIC ANNUAL SALARY
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 2019 and increases
from 1 April 2019 are as follows:
Executive Director
Gerald Kaye
Tim Murphy
Matthew Bonning-Snook
At
31 March 2019
Increases wef
1 April 2019
At
1 April 2019
£
532,000
309,600
413,800
£
12,750
7,450
9,950
£
544,750
317,050
423,750
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 Price
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.
The Committee has determined that the basic salaries for the
Executive Directors should increase from 1 April 2019 by 2.4%,
being the increase in RPI to 31 March 2019, compared to an
average 3.1% awarded to other employees.
BENEFITS-IN-KIND AND PENSION PROVISION
Benefits-in-kind provided to Executive Directors comprise the
provision of a company car or car allowance, fuel allowance,
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.
HELICAL ANNUAL BONUS SCHEME 2018
Gerald Kaye, Tim Murphy and Matthew Bonning-Snook will
participate in the Annual Bonus Scheme 2018 which was
approved by Shareholders at the 2018 AGM. This scheme
provides annual bonuses based on the performance of the
property portfolio, the Group and the individual Directors and
is aligned with Shareholders’ interests with appropriate hurdles
and Shareholder protections. The main features and
Shareholder protections of this scheme are set out on page 90.
The Scheme will operate the same way in the year to 31 March
2020 as it did in the year to 31 March 2019. The strategic/
personal objectives for each Executive Director are set by the
Remuneration Committee and will be reported on
retrospectively in the Annual Report for the year ended 31 March
2020.
PERFORMANCE SHARE PLAN 2014
It is anticipated that long-term incentives will be granted to all
Executive Directors and senior management in June 2019 in the
form of nil cost options awarded under the terms of the 2014
PSP Scheme. For Executive Directors the awards will be granted
at 250% of basic salary as at 31 March 2019.
Awards will normally vest no earlier than the third anniversary
of their grant to the extent that the applicable performance
conditions (see below) have been satisfied and the participant
is still employed by the Group. Directors are required to hold
vested shares for a further two years after vesting.
Performance conditions for the awards to be granted in 2019
will be equally weighted and measured over the three years to
31 March 2022 as follows:
Growth in Net Asset Value
The “fully diluted triple net” asset value as at the start of the
financial year in which a grant takes place will be compared to
the value three years later (having added back dividends and
changes in issued share capital):
Annual compound increase
after three years
12.5% pa or more
% of award vesting
33.3
Between 5.0% pa and 12.5% pa
Pro-rata between 3.3 and 33.3
5.0% pa
Below 5.0% pa
3.3
nil
If UK inflation (RPI) is higher than 3% pa over the three-year
period then the required compound increases will be raised
by the excess over the 3% pa average.
94
HELICAL PLCAnnual Report and Accounts 2019 Total Property Return Versus MSCI Property Funds
The Total Property Return of the Group’s property portfolio
will be compared to the MSCI Central London Offices Total
Return Index.
Ranking after three years
Upper quartile or above
% of award vesting
33.3
Between median and upper quartile
Pro-rata between 3.3 and 33.3
Median
Less than median
3.3
nil
Relative Total Shareholder Return
The comparator group for the awards to be granted in 2019 will
be the companies noted under Peer Group on page 84.
Ranking after three years
Upper quartile or above
% of award vesting
33.3
Between median and upper quartile
Pro-rata between 3.3 and 33.3
Median
Less than median
3.3
nil
OTHER REMUNERATION MATTERS
SHARE PRICE PERFORMANCE AND
TOTAL SHAREHOLDER RETURN
The market price of the ordinary shares of Helical plc at
31 March 2019 was 330.50p (2018: 323.00p). This market price
varied between 301.50p and 398.00p and at an average of
339.23p during the year.
The Total Shareholder Returns for a holding in the Group’s
shares in the three, ten and 12 years to 31 March 2019 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 2019
The graph showing the relative performance of Helical during
the three years to 31 March 2019 matches the performance
period for the 2016 PSP award granted on 1 June 2016 and
which will be assessed against its performance criteria after
2 June 2019.
Share awards will lapse in full where:
TOTAL SHAREHOLDER RETURN
• Net asset value per share (having added back dividends and
changes in issued share capital) does not increase over the
three-year performance period; or
• The gross return falls below the MSCI median, the growth
in triple net asset value is below 5.0% pa and relative TSR
is below median over the three-year period.
NON-EXECUTIVE DIRECTORS’ FEES
Michael Slade and Michael O’Donnell are not standing for
re-election at the 2019 AGM. The base fee payable to Non-
Executive Directors, excluding the Chairman, Deputy Chairman
and Senior Independent Director, was increased by 6.7% from
£45,000 pa to £48,000 pa with effect from 1 April 2019. The
additional fees payable to the Chairman of the Audit and Risk,
Remuneration and Property Valuations Committees remains
at £10,000 pa. The changes to fees payable to Non-Executive
Directors are shown in the table below:
150
125
100
75
50
25
0
Mar
2016
Mar
2017
Mar
2018
Mar
2019
Helical
FTSE 350 Supersector Real Estate Index
Source: Datastream (Thomson Reuters).
This graph shows the value, by 31 March 2019, of £100 invested in Helical on 31 March
2016, compared with the value of £100 invested in the FTSE 350 Super-Sector Real
Estate Index.
Director
Michael Slade 1
Sue Clayton
Richard Cotton
Richard Grant
Michael O’Donnell
Joe Lister2
31 March
2019
£
155,000
55,000
70,000
70,000
55,000
45,000
Change wef
1 April
2019
£
Change wef
11 July
2019
£
–
(155,000)
11 July
2019
£
–
58,000
70,000
–
–
80,000
150,000
(58,000)
–
10,000
58,000
3,000
–
–
3,000
3,000
1 Michael Slade is paid a fee of £155,000 and has the use of administrative staff
in connection with non-Helical matters, the value of which is estimated at
£20,000 pa.
2 Joe Lister will receive an increased fee of £10,000 pa subject to his appointment
as Chairman of the Audit and Risk Committee at the AGM.
PAYMENTS FOR LOSS OF OFFICE
No payments were made to Directors in the year for loss of
office or to past Directors.
95
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION DIRECTORS’ REMUNERATION REPORT CONTINUED
REMUNERATION OF THE CHIEF EXECUTIVE
Comparing the ten-year TSR of the Company, set out opposite,
to the remuneration of the Chief Executive, the table below
presents single figure 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:
Year ended
Name
31 March 2019 Gerald Kaye
31 March 2018 Gerald Kaye
31 March 2017 Gerald Kaye
31 March 2016 Michael Slade
31 March 2015 Michael Slade
31 March 2014 Michael Slade
31 March 2013 Michael Slade
31 March 2012 Michael Slade
31 March 2011 Michael Slade
Total
remuneration
£000
Annual
bonus
(% of max
payout)
LTIP
(% of max
vesting)
1,703
2,209
2,6351
3,867
5,534
3,343
1,523
541
538
91
75
100
100
100
100
65
–
–
–
33
46
66
100
100
62
–
–
–
–
31 March 2010 Michael Slade
1,5002
1 The total remuneration of Gerald Kaye includes the period whilst he was an
Executive Director but prior to his appointment as CEO on 25 July 2016.
2 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.
CHIEF EXECUTIVE’S REMUNERATION COMPARED
TO REMUNERATION OF HELICAL EMPLOYEES
Percentage increases in Chief Executive remuneration:
2019
£000
2018
£000
Change
%
Average
change for
Helical
employee
%
532
64
727
515
64
+3.3
+0.5
7.8%
+6.6%
1,159
-37.3%
+8.1%
Chief Executive
Salary
Benefits and share
incentive plan
Annual bonus
CEO PAY RATIO
As Helical has fewer than 250 employees, there is no
requirement to disclose the CEO pay ratio. Given the very low
number of employees and the pay data required to be disclosed,
voluntary disclosure is not considered appropriate at this time
but this will be kept under review.
RELATIVE IMPORTANCE OF THE SPEND ON PAY
Staff costs
Distributions to Shareholders1
2019
£000
9,289
12,055
2018
£000
6,294
11,236
Net asset value of the Group
567,425
533,894
1 In respect of the financial year to which they relate.
Change
%
47.6%
7.3%
+6.3
TEN YEARS TO 31 MARCH 2019
The base position at 31 March 2009, from which subsequent
performance is measured as required by the Regulations,
is the nearest accounting period end to the bottom of the last
property cycle. Helical’s share price at that date was 287.50p per
share, a small premium to the EPRA net asset value per share
of 286.00p per share. The Company’s share price, at that stage,
had not fallen as much as the average of the FTSE 350 Super-
Sector Real Estate Index and remained at a premium until 2012.
The subsequent performance of the Company’s TSR reflects
the relatively higher base position of Helical’s share price.
TOTAL SHAREHOLDER RETURN
350
300
250
200
150
100
50
0
Mar
’09
Mar
’10
Mar
’11
Mar
’12
Mar
’13
Mar
’14
Mar
’15
Mar
’16
Mar
’17
Mar
’18
Mar
’19
Helical
FTSE 350 Supersector Real Estate Index
Source: Datastream (Thomson Reuters).
This graph shows the value, by 31 March 2019, of £100 invested in Helical on 31 March
2009, compared with the value of £100 invested in the FTSE 350 Super-Sector Real
Estate Index.
12 YEARS TO 31 MARCH 2019
The 12 years to 31 March 2019 covers the end of the previous
property cycle, the impact of the Financial Crisis of 2008 and
the subsequent economic recovery and the impact of the
decision of the UK to leave the European Union in June 2016.
Helical’s share price remained at a premium to NAV per share
until 2012, following which it fell to a low of 164.00p before
recovering and growing to 474.75p at 31 December 2015. Since
then the share price has fallen to a low of 230.00p before
increasing to 330.50p at 31 March 2019.
TOTAL SHAREHOLDER RETURN
150
125
100
75
50
25
0
Mar
’07
Mar
’08
Mar
’09
Mar
’10
Mar
’11
Mar
’12
Mar
’13
Mar
’14
Mar
’15
Mar
’16
Mar
’17
Mar
’18
Mar
’19
Helical
FTSE 350 Supersector Real Estate Index
Source: Datastream (Thomson Reuters).
This graph shows the value, by 31 March 2019, of £100 invested in Helical on 31 March
2007, compared with the value of £100 invested in the FTSE 350 Super-Sector Real
Estate Index.
96
HELICAL PLCAnnual Report and Accounts 2019 DIRECTORS’ SHARE INTERESTS AND SHAREHOLDING GUIDELINES (AUDITED)
Executive Director
Gerald Kaye
Tim Murphy
Matthew Bonning-Snook
1 Salaries as at 31 March 2019.
2 Shareholding requirement is 500% of salary.
3 Value as per the weighted average share price for the three months to 31 March 2019 of 335.02p.
DIRECTORS’ SHAREHOLDINGS (AUDITED)
Salary1
£
532,000
309,600
413,800
Shareholding
requirement2
£
2,660,000
1,548,000
2,069,000
Value
of beneficially
held shares3
£
5,818,000
2,264,000
3,353,000
Ratio of
shares held
to salary
%
1,094
731
810
Executive Directors
Gerald Kaye
Tim Murphy
Matthew Bonning-Snook
Non-Executive Directors
Michael Slade
Sue Clayton
Richard Cotton
Richard Grant
Michael O’Donnell
Joe Lister
Past Directors
Legally
owned
31.3.18
Legally
owned
31.3.19
Share
Incentive Plan
unrestricted
31.3.19
Beneficially
held total
31.3.19
Deferred
shares
31.3.19
Share
Incentive Plan
restricted
31.3.19
PSP
awards
unvested
31.3.19
1,574,326
1,700,252
636,120
848,522
659,594
964,890
36,269
16,310
35,862
1,736,521
675,904
1,000,752
377,049
42,434
315,044
18,347
16,227
18,297
1,102,999
689,622
921,884
12,164,203
11,996,777
–
25,000
15,000
67,000
–
–
25,000
15,000
67,000
–
–
–
–
–
–
–
–
11,996,777
–
25,000
15,000
67,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Richard Gillingwater1
11,500
11,500
1 Richard Gillingwater retired from the Board on 12 July 2018.
The three Executive Directors of Helical have an average length of service of over 24 years and have built up a shareholding during
that time of circa 3.4m shares with a market value at 31 March 2019 of circa £11.3m.
ADVISORS TO THE COMMITTEE
The Committee consults the Chief Executive and Finance Director about its proposals and has access to professional advice from
FIT Remuneration Consultants LLP, who are members of the Remuneration Consultants Group, which is responsible for developing
and maintaining the Code of Conduct for Consultants to Remuneration Committees of UK listed companies. FIT Remuneration
Consultants are independent of both the Group and its Directors and as such, the Committee is satisfied that the advice received
was objective and independent. Terms of reference for the remuneration consultants, which provided no other services to the
Company, are available from the Company Secretary on request. Fees paid to FIT in the year to 31 March 2019 amounted to £45,561
(2018: £39,777). Fees are charged on a time plus disbursements basis.
SHAREHOLDER VOTING AT THE LAST AGM
Details of the 2018 binding Remuneration Policy vote, binding Annual Bonus Scheme 2018 vote and advisory Annual Remuneration
Report vote were as follows:
Remuneration Policy
Annual Bonus Scheme 2018
Issued
For
118,610,741
89,918,397
118,610,741
91,055,513
Annual Remuneration Report
118,610,741
77,566,882
%
97.0
98.3
85.6
Against
2,736,254
1,611,998
%
3.0
1.7
Withheld
Total
12,860
92,667,511
–
92,667,511
13,088,693
14.4
2,011,935
92,667,510
The Committee was pleased to note the level of Shareholder support for the Remuneration Policy, Annual Bonus Scheme 2018 and
the Annual Report on Remuneration. The majority of the 14.4% votes against the Annual Remuneration Report resolution were in
respect of the operation of the Annual Bonus Scheme 2016 under the previous Remuneration Policy. Noting that the policy and bonus
plan were both replaced in 2018, the Committee was comfortable that no further actions were required in respect of these votes.
Approved by the Board on 23 May 2019 and signed on its behalf.
MICHAEL O’DONNELL
Chairman of the Remuneration Committee
97
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION REPORT OF THE DIRECTORS
STRATEGIC REPORT
A review of the Company’s business
during the year, the principal risks and
uncertainties it faces as well as future
prospects and developments are included
in the Strategic Report on pages 1 to 65
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
108 and Consolidated Statement of
Comprehensive Income on page 108. An
interim dividend of 2.60p (2018: 2.50p) was
paid on 31 December 2018 to Shareholders
on the Shareholder register on
30 November 2018. A final dividend
of 7.50p (2018: 7.00p) per share is
recommended for approval at the Annual
General Meeting (“AGM”) to be held on
11 July 2019 and, if approved, will be paid on
19 July 2019 to Shareholders on the register
on 14 June 2019. The total ordinary
dividend declared and paid in the year
of 9.60p (2018: 8.70p) per share amounts
to £11,406,000 (2018: £10,195,000).
CORPORATE GOVERNANCE
During the year ended 31 March 2019 the
Group has applied the main principles of
the UK Corporate Governance Code 2016
and has fully complied with the provisions
of the Code apart from in relation to
Michael Slade’s continued appointment
as Chairman. See page 70 for more detail.
DIRECTORS
The Directors who held office during
the year and up to the date of this report
are listed alongside their biographical
details on pages 68 and 69. All the
Directors currently serving, except for
Michael Slade and Michael O'Donnell, will
offer themselves for election or re-election,
as appropriate, at the AGM to be held
on 11 July 2019. Details of Directors’
remuneration and their interests in share
awards are set out in the Directors’
Remuneration Report on pages 81 to 97.
Details of the Directors’ interests in the
ordinary shares of the Company are
shown on page 97.
GOING CONCERN
Under provision C.1.3 of the UK Corporate
Governance Code 2016, the Board is
required to report whether the business
is a going concern. In considering this
requirement the Directors took into
account the matters set out in the Group’s
viability statement on page 53. Having
due regard to these matters, the Directors
consider it appropriate to continue to
adopt the going concern basis in
preparing the financial statements.
98
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 2019.
Substantial shareholdings
Michael E Slade
Baillie Gifford
Janus Henderson Investors
Merian Global Investors
BlackRock
M&G Investment Management
Dimensional Fund Advisors
Aviva Investors
NBIM
Schroder Investment Management
Aberdeen Standard Investments
Artemis Investment Management
Vanguard Group
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 37.
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 81 to 97.
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.
CONVERTIBLE BOND
Further to the issue on 17 June 2014
of a £100m 4.00% Convertible Bond
due for redemption in June 2019 (the
“Convertible Bond”), upon a change of
control event as defined by the terms and
conditions of the Convertible Bond, the
Bondholders will have the right to require
the issuer to redeem the Convertible
Bond at their principal amount together
with their accrued interest.
Number of
ordinary shares
11,996,777
Percentage
10.05%
9,003,170
8,967,073
7,777,234
7,402,052
5,189,738
5,128,229
4,762,617
4,573,316
4,560,300
4,076,266
3,789,519
3,595,104
7.54%
7.51%
6.52%
6.20%
4.35%
4.30%
3.99%
3.83%
3.82%
3.42%
3.17%
3.01%
SUBSTANTIAL SHAREHOLDINGS
As at 14 May 2019, the Shareholders listed above had notified the Company of a
disclosable interest of 3% or more in the nominal value of the ordinary share capital
of the Group.
HELICAL PLCAnnual Report and Accounts 2019 EMPLOYMENT AND
ENVIRONMENTAL MATTERS
Information in respect of the Group’s
employment and environmental matters
as well as greenhouse gas reporting is
contained in the Sustainability Report on
pages 58 to 65.
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.
POST BALANCE SHEET EVENTS
Details of post balance sheet events
are set out in note 34 to the Financial
Statements.
GROUP STRUCTURE
Details of the Group’s subsidiary
undertakings are disclosed in note 40
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 2019 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 2018 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 2019 AGM, at which a resolution
will be proposed to renew this authority.
ANNUAL GENERAL MEETING
The Annual General Meeting of the
Company will be held on 11 July 2019
at 11:30 am at The Connaught, Carlos
Place, Mayfair, London W1K 2AL. The
special business at the 2019 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 and the authority
to call General Meetings on not less than
14 clear days’ notice. 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 Company's Auditor, Deloitte LLP,
appointed at the 2018 AGM, 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 2019 AGM.
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 Auditor is
aware of that information.
By Order of the Board
JAMES MOSS FCA
Company Secretary
23 May 2019
99
HELICAL PLCAnnual Report and Accounts 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATION STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Strategic Report,
Governance 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 prepared the financial
statements in accordance with
International Financial Reporting
Standards (IFRSs) as adopted by the
European Union and Article 4 of the
IAS Regulation. 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
of the profit or loss of the Company
and Group for that period.
In preparing these financial statements,
International Accounting Standard 1
requires the Directors to:
• properly select and apply accounting
policies;
• present information, including
accounting policies, in a manner that
provides relevant, reliable, comparable
and understandable information;
• provide additional disclosures
when compliance with the specific
requirements of IFRSs are insufficient to
enable users to understand the impact
of particular transactions, other events
and conditions on the Group’s financial
position and financial performance; and
• make an assessment of the Company’s
ability to continue as a going concern.
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 Annual
Report complies with the Companies Act
2006 and, as regards the financial
statements, 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.
DIRECTORS’ RESPONSIBILITY
STATEMENT UNDER THE DISCLOSURE
AND TRANSPARENCY RULES
Each of the Directors, whose names and
roles appear on page 68 to page 69,
confirm that to the best of their
knowledge:
• the Group financial statements, which
have been 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
Group and the undertakings included
in the consolidation taken as a whole,
together with a description of the
principal risks and uncertainties that
they face.
Directors’ statement under the
UK Corporate Governance Code
Each of the Directors confirm that to
the best of their knowledge the Annual
Report, taken as a whole, is fair, balanced
and understandable and provides the
information necessary for Shareholders
to assess the Group’s and Company’s
performance, business model
and strategy.
A copy of the financial statements is
placed on the Group’s website and
the Directors are responsible for the
maintenance and integrity of the
corporate and financial information
on that website (www.helical.co.uk).
Information published on the internet
is accessible in multiple countries with
differing legal requirements. Legislation
in the United Kingdom governing the
preparation and dissemination of financial
statements may differ from legislation in
other jurisdictions.
This statement of Directors’
Responsibilities was approved by the
Board of Directors on 23 May 2019 and
is signed on its behalf by:
GERALD KAYE
Chief Executive
TIM MURPHY
Finance Director
23 May 2019
23 May 2019
100
HELICAL PLCAnnual Report and Accounts 2019 INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF HELICAL PLC
OPINION
In our opinion:
• the financial statements of Helical plc (the “Parent
Company”) and its subsidiaries (together the “Group”)
give a true and fair view of the state of the Group’s and
of the Parent Company’s affairs as at 31 March 2019 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.
We have audited the financial statements which comprise:
• the Consolidated Income Statement;
• the Consolidated Statement of Comprehensive Income;
• the Consolidated and Company Balance Sheets;
Materiality
• the Consolidated and Company Cash Flow Statements;
• the Consolidated and Company Statements of Changes
in Equity; and
• the related notes 1 to 40.
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.
BASIS FOR OPINION
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described
in the auditor’s responsibilities for the audit of the financial
statements section of our report.
We are independent of the Group and the Parent Company in
accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
Financial Reporting Council’s (the “FRC’s”) Ethical Standard as
applied to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements. We confirm that the non-audit services prohibited
by the FRC’s Ethical Standard were not provided to the Group
or the Parent Company.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
SUMMARY OF OUR AUDIT APPROACH
Key audit
matters
The key audit matters that we identified in
the current year were:
• Investment property valuation
• Revenue recognition for promote fee
The materiality that we used for the Group
financial statements was £10,650,000
which was determined on the basis of 1%
of total assets.
In addition to total assets, we tested all
items impacting the income statement,
except for the revaluation of investment
properties, at a lower measure for the
Group and we applied a lower threshold of
£2,484,000, being 5% of profit before tax.
Scoping
We performed a full scope audit of the
financial statements of the Parent Company
and the Group.
CONCLUSIONS RELATING TO GOING CONCERN, PRINCIPAL RISKS AND VIABILITY STATEMENT
Going concern
We have reviewed the Directors’ statement within the financial statements about whether
they 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 and Company’s ability
to continue to do so over a period of at least 12 months from the date of approval of the
financial statements.
We considered as part of our risk assessment the nature of the Group, its business model and
related risks including where relevant the impact of Brexit, the requirements of the applicable
financial reporting framework and the system of internal control. We evaluated the Directors’
assessment of the Group’s ability to continue as a going concern, including challenging the
underlying data and key assumptions used to make the assessment, and evaluated the Directors’
plans for future actions in relation to their going concern assessment.
We are required to state whether we have anything material to add or draw attention to in
relation to that statement required by Listing Rule 9.8.6R(3) and report if the statement is
materially inconsistent with our knowledge obtained in the audit.
We confirm that we have
nothing material to report,
add or draw attention to in
respect of these matters.
101
HELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF HELICAL PLC
CONTINUED
We confirm that we have
nothing material to report,
add or draw attention to in
respect of these matters.
CONCLUSIONS RELATING TO GOING CONCERN, PRINCIPAL RISKS AND VIABILITY STATEMENT
Principal risks and viability statement
Based solely on reading the Directors’ statements and considering whether they were consistent
with the knowledge we obtained in the course of the audit, including the knowledge obtained in
the evaluation of the Directors’ assessment of the Group’s and the Company’s ability to continue
as a going concern, we are required to state whether we have anything material to add or draw
attention to in relation to:
• the disclosures on pages 52 to 57 that describe the principal risks and explain how they are
being managed or mitigated;
• the Directors' confirmation on page 53 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; or
• the Directors’ explanation on page 53 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.
We are also required to report whether the Directors’ statement relating to the prospects of the
Group required by Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained
in the audit.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
INVESTMENT PROPERTY VALUATION
Key audit matter
description
At 31 March 2019, the Group held wholly owned investment property valued at £778.75m
(31 March 2018: £791.95m).
Investment properties are held at fair value on the Group balance sheet. During the year, a net
valuation gain of £44.3m (31 March 2018: £23.8m) was recorded (excluding acquisitions and
disposals). Investment property valuation represents the most significant area of estimation
and judgement within the Group financial statements, which is why we consider this to be a
significant risk of material misstatement as well as a potential fraud risk.
The fair values are calculated by third party valuation experts using factual information, such
as lease agreements and tenancy data, and their professional judgement concerning market
conditions and factors impacting individual properties. The key estimates associated with this
balance which can lead to significant valuation movements relate to property yields, estimated
rental values and the level of expenditure required to maintain a property.
See also key sources of estimation uncertainty in note 39, the investment property in note 15
of the financial statements and the Audit and Risk Committee report on page 78.
102
HELICAL PLCAnnual Report and Accounts 2019 INVESTMENT PROPERTY VALUATION
How the scope of our
audit responded to the key
audit matter
We evaluated the appropriateness of the design and implementation of the Group’s key controls
to address the risk over property valuations. Management’s process for challenging
the appropriateness of property valuations has been assessed.
We met with the third party valuers appointed by management to value the property portfolio.
With the assistance of our internal real estate valuation specialists we challenged the significant
judgements and assumptions applied in their valuation model, verified the movements in the key
judgements and benchmarked the inputs against market data. We assessed the state of local
markets from publicly available market commentaries.
We analysed the individual property valuations to understand significant movements against
prior year and comparative market evidence considered by the valuers.
We tested the integrity of data and information pertaining to rental income, purchasers’ costs
and occupancy provided by management to external valuers and utilised in the valuation.
We have assessed the competence and objectivity of the external valuers.
Key observations
Based on our audit work, we are satisfied that the judgements and assumptions used in the
investment property valuation are supported by the evidence obtained during the audit.
REVENUE RECOGNITION FOR PROMOTE FEE
Key audit matter
description
How the scope of our
audit responded to the key
audit matter
The Group has individual joint venture arrangements in relation to the Creechurch Place and
Barts Square developments. Within these agreements, the Group is engaged by the joint venture
to manage the development and letting for One Creechurch Place, whilst the Barts joint venture
is engaged to develop and let One Bartholomew. The Group is remunerated in respect of these
services through a promote fee, calculated based upon the contractual agreement and the
overall profit of the development. The Group recognises the Creechurch Place promote fee within
revenue with the Barts Square promote fee recognised within share of results of joint ventures.
The calculation of promote fees includes both a fixed and variable consideration, within
the context of IFRS 15. There are two underlying performance obligations in relation to the
development and letting of the building, these being the fixed and variable considerations
respectively. The promote fee is therefore allocated proportionally to their standalone fair value.
The key judgements associated with the promote fee calculations are based on the following
key areas:
• the allocation of the promote fee between each performance obligation;
• the expected rent to be contracted in each development; and
• the magnitude of constraint, if any, to apply to the promote fee.
As at 31 March 2019, the Group has recognised £7.1m (2018: £10.1m) in respect of the One
Creechurch Place promote fee and £6.0m (2018: £nil) in respect of One Bartholomew
(Helical share).
See also key sources of estimation uncertainty in note 39, revenue from contracts with customers
in note 2 of the financial statements and the Audit and Risk Committee report on page 78.
We evaluated the appropriateness of the design and implementation of the Group’s key controls
to address the risk over the income arising from promote fees.
We have critically assessed the assumptions made by management in the calculation and
recognition of the promote fee by agreeing to underlying contractual and recent market data
in relation to lettings contracted.
We have assessed the allocation of the promote fee to each performance obligation, considering
this allocation against standalone selling prices for equivalent services.
We have agreed the overall accounting treatment and disclosure to the requirements of the
newly implemented IFRS 15 revenue standard.
Key observations
Based on our audit work, we are satisfied that the judgements and assumptions used in revenue
recognition for promote fee were supported by the evidence obtained during the audit.
103
HELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF HELICAL PLC
CONTINUED
OUR APPLICATION OF 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 both in planning the scope
of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
GROUP FINANCIAL STATEMENTS
Materiality
£10,650,000
£2,484,000 for balances affecting the income statement
PARENT COMPANY FINANCIAL
STATEMENTS
£6,243,000
Basis for
determining
materiality
1% of total assets.
1% of total assets.
The lower materiality used for balances impacting the income
statement, excluding revaluation of investment property, was
determined using 5% of profit before tax.
Rationale for the
benchmark applied
Total assets is the most appropriate benchmark because it
appropriately reflects the valuation of investment property
which is of key interest to the users of the financial statements.
Total assets is the most appropriate
benchmark as this Company is a
holding company.
Profit before tax (“PBT”) is deemed an appropriate benchmark
for items impacting the income statement as these are more
sensitive to the users of the financial statements.
TOTAL SHAREHOLDER RETURN
Total assets
£1,065m
Group materiality
£10.65m
Component
materiality range
£6.2m to £3.50m
Audit and Risk Committee
reporting threshold
£0.53m
Total assets
Group materiality
We agreed with the Audit and Risk Committee that we would
report to the Committee all audit differences in excess of
£0.53m, as well as differences below that threshold that, in
our view, warranted reporting on qualitative grounds. We also
report to the Audit and Risk Committee on disclosure matters
that we identified when assessing the overall presentation of
the financial statements.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
We performed a full scope audit of the financial statements
of the Parent Company and Group, which includes the audits
of joint ventures which are treated as components.
A Group materiality is adopted for all subsidiary entities within
the Group, unless a subsidiary is partially owned by a third party.
There are three Group components that are subject to audit.
The materiality range for the joint ventures is £3.5m to £6.2m.
Audit work to respond to the risks of material misstatement
was performed directly by the Group audit engagement team.
Our Group audit was scoped by obtaining an understanding
of the Group and its environment, including Group-wide
controls, and assessing the risks of material misstatement at
the Group level. We have audited the material balances which
support the Group’s Annual Report, which includes auditing
the consolidation and performing a desktop review over the
non-significant components.
104
HELICAL PLCAnnual Report and Accounts 2019 OTHER INFORMATION
The Directors are responsible for the other information. The other information comprises the
information included in the Annual Report, other than the financial statements and our auditor’s
report thereon.
We have nothing to report
in respect of these matters.
Our opinion on the financial statements does not cover the other information and, except to
the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required
to determine whether there is a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
In this context, matters that we are specifically required to report to you as uncorrected material
misstatements of the other information include where we conclude that:
• Fair, balanced and understandable – the statement given by the Directors that they consider the
Annual Report and financial statements taken as a whole is fair, balanced and understandable
and provides the information necessary for Shareholders to assess the Group’s position and
performance, business model and strategy, is materially inconsistent with our knowledge
obtained in the audit;
• Audit and Risk Committee reporting – the section describing the work of the Audit and Risk
Committee does not appropriately address matters communicated by us to the Audit and Risk
Committee; or
• Directors’ statement of compliance with the UK Corporate Governance Code – the parts of
the Directors’ statement required under the Listing Rules relating to the Company’s compliance
with the UK Corporate Governance Code containing provisions specified for review by the
auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from
a relevant provision of the UK Corporate Governance Code.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Statement of Directors’
Responsibilities, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and the Parent Company’s
ability to continue as a going concern, disclosing as applicable,
matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate
the Group or the Parent Company or to cease operations, or
have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
Details of the extent to which the audit was considered capable
of detecting irregularities, including fraud, are set out below.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
105
HELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF HELICAL PLC
CONTINUED
EXTENT TO WHICH THE AUDIT WAS CONSIDERED CAPABLE
OF DETECTING IRREGULARITIES, INCLUDING FRAUD
We identify and assess the risks of material misstatement of
the financial statements, whether due to fraud or error, and
then design and perform audit procedures responsive to those
risks, including obtaining audit evidence that is sufficient and
appropriate to provide a basis for our opinion.
Identifying and assessing potential risks related
to irregularities
In identifying and assessing risks of material misstatement in
respect of irregularities, including fraud and non-compliance
with laws and regulations, our procedures included the following:
• enquiring of management and the Audit and Risk Committee,
including obtaining and reviewing supporting documentation,
concerning the Group’s policies and procedures relating to:
– identifying, evaluating and complying with laws and
regulations and whether they were aware of any instances
of non-compliance;
– detecting and responding to the risks of fraud and whether
they have knowledge of any actual, suspected or alleged
fraud; and
– the internal controls established to mitigate risks related
to fraud or non-compliance with laws and regulations;
• discussing among the engagement team and involving
relevant internal specialists, including tax, valuations, IT and
industry specialists regarding how and where fraud might
occur in the financial statements and any potential indicators
of fraud. As part of this discussion, we identified potential for
fraud in the following areas: Investment property valuation
and Revenue recognition of the promote fee; and
• obtaining an understanding of the legal and regulatory
frameworks that the Group operates in, focusing on those
laws and regulations that had a direct effect on the financial
statements or that had a fundamental effect on the operations
of the Group. The key laws and regulations we considered in
this context included the Companies Act 2006. In addition,
compliance with terms of the Group’s operating licence and
the Landlord and Tenant Act 1985 were fundamental to the
Group’s ability to continue as a going concern.
Audit response to risks identified
As a result of performing the above, we identified “Investment
property valuation” and “Revenue recognition for promote fee”
as key audit matters. The key audit matters section of our
report explains the matters in more detail and also describes
the specific procedures we performed in response to those
key audit matters.
In addition to the above, our procedures to respond to risks
identified included the following:
• reviewing the financial statement disclosures and testing to
supporting documentation to assess compliance with relevant
laws and regulations discussed above;
• enquiring of management, the Audit and Risk Committee and
external legal counsel concerning actual and potential litigation
and claims;
• performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material
misstatement due to fraud;
• reading minutes of meetings of those charged with
governance and reviewing correspondence with HMRC; and
• in addressing the risk of fraud through management override
of controls, testing the appropriateness of journal entries and
other adjustments; assessing whether the judgements made
in making accounting estimates are indicative of a potential
bias; and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course
of business.
We also communicated relevant identified laws and
regulations and potential fraud risks to all engagement team
members, including internal specialists, and remained alert
to any indications of fraud or non-compliance with laws and
regulations throughout the audit.
REPORT ON OTHER LEGAL AND REGULATORY
REQUIREMENTS
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course
of the audit:
• the information given in the Strategic Report and the Report
of the Directors for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
• the Strategic Report and the Report of the Directors have been
prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and
the Parent Company and their environment obtained in the course
of the audit, we have not identified any material misstatements
in the Strategic Report or the Report of the Directors.
106
HELICAL PLCAnnual Report and Accounts 2019 MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
We have nothing to report in respect
of these matters.
• we have not received all the information and explanations we require for our audit;
• 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 are not in agreement with the accounting
records and returns.
Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain
disclosures of Directors’ remuneration have not been made or the part of the Directors’
Remuneration Report to be audited is not in agreement with the accounting records
and returns.
We have nothing to report in respect
of these matters.
OTHER MATTERS
Auditor tenure
Following the recommendation of the Audit and Risk
Committee, we were appointed by Helical plc on 12 June 2018
to audit the financial statements for the year ending 31 March
2019 and subsequent financial periods. The period of total
uninterrupted engagement including previous renewals and
reappointments of the firm is one year, covering the year ending
31 March 2019.
Consistency of the audit report with the additional report
to the Audit and Risk Committee
Our audit opinion is consistent with the additional report to
the Audit and Risk Committee we are required to provide in
accordance with ISAs (UK).
USE OF OUR REPORT
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.
GEORGINA ROBB (SENIOR STATUTORY AUDITOR)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
23 May 2019
107
HELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2019
Revenue
Net rental income
Development property loss
Share of results of joint ventures
Other operating income
Gross profit before net gain on sale and revaluation of investment properties
Gain on sale of investment properties
Revaluation of investment properties
Fair value movement 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 gain/(loss)
Profit before tax
Tax on profit on ordinary activities
Profit for the year
Earnings per share
Basic
Diluted
All the activities of the Group are from continuing operations.
Year ended
31.3.19
£000
Year ended
31.3.18
£000
Notes
3
4
5
19
6
15
21
7
9
9
37
10
14
44,175
24,599
(1,781)
(3,217)
–
19,601
15,008
44,284
144
79,037
(16,753)
62,284
(17,407)
983
(3,322)
865
53
43,456
(836)
42,620
175,596
36,329
(4,174)
3,196
111
35,462
13,567
23,848
1,385
74,262
(12,765)
61,497
(37,438)
4,303
4,029
(1,559)
(10)
30,822
(4,537)
26,285
35.8p
35.3p
22.3p
22.1p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2019
Profit for the year
Exchange difference on retranslation of net investments in foreign operations
Total comprehensive income for the year
Year ended
31.3.19
£000
Year ended
31.3.18
£000
42,620
(51)
42,569
26,285
(15)
26,270
The exchange differences on retranslation of net investments in foreign operations will be reclassified to the Income Statement
on disposal.
108
HELICAL PLCAnnual Report and Accounts 2019 CONSOLIDATED AND COMPANY BALANCE SHEETS
At 31 March 2019
Non-current assets
Investment properties
Owner occupied property, plant and equipment
Investment in subsidiaries
Investment in joint ventures
Derivative financial instruments
Deferred tax asset
Current assets
Land, developments and trading properties
Corporation tax receivable
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Corporation tax payable
Borrowings
Non-current liabilities
Borrowings
Derivative financial instruments
Long leasehold liability
Trade and other payables
Deferred tax liability
Total liabilities
Net assets
Equity
Called-up share capital
Share premium account
Revaluation reserve
Capital redemption reserve
Other reserves
Retained earnings
Total equity
Notes
15
17
18
19
37
11
20
22
23
24
25
25
37
27
24
11
28
Group
31.3.19
£000
778,752
1,747
–
24,676
915
–
Group
31.3.18
£000
791,948
1,825
–
27,809
123
–
Company
31.3.19
£000
–
1,747
157,621
–
270
–
Company
31.3.18
Restated
£000
–
1,820
156,173
15
–
564
806,090
821,705
159,638
158,572
2,311
–
58,726
197,570
258,607
6,042
3,736
100,757
91,871
202,406
1,064,697
1,024,111
–
–
299,814
164,885
464,699
624,337
–
–
360,407
63,350
423,757
582,329
(43,159)
(2,561)
(100,468)
(146,188)
(51,378)
(190,723)
(297,056)
–
–
–
(98,767)
–
–
(51,378)
(289,490)
(297,056)
(324,814)
(416,992)
(4,158)
(2,189)
(11,405)
(8,518)
(351,084)
(497,272)
(2,874)
(2,189)
–
(16,784)
(438,839)
(490,217)
–
–
–
–
(159)
(159)
(289,649)
(98,694)
(2,404)
–
–
–
(101,098)
(398,154)
567,425
533,894
334,688
184,175
1,459
101,304
131,050
7,478
291
325,843
567,425
1,451
98,798
162,753
7,478
291
263,123
533,894
1,459
101,304
–
7,478
1,987
222,460
334,688
1,451
98,798
–
7,478
1,987
74,461
184,175
The profit in the year for the Company was £159,405,000 (2018: restated loss of £35,228,000).
The financial statements were approved by the Board and authorised for issue on 23 May 2019.
TIM MURPHY
Finance Director
Company number 156663
109
HELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
For the year ended 31 March 2019
Cash flows from operating activities
Profit/(loss) before tax
Depreciation
Revaluation surplus on investment properties
Gain on sales of investment properties
Profit on sale of subsidiaries
(Profit)/loss on sale of plant and equipment
Net financing costs
Change in fair value of derivative financial instruments
Change in fair value of Convertible Bond
Share-based payment charge
Share of results of joint ventures
Fair value movement of available-for-sale assets
Impairment of investments
Dividends received from subsidiaries
Foreign exchange movement
Cash inflows/(outflows) from operations before changes in working capital
Change in trade and other receivables
Change in land, developments and trading properties
Change in trade and other payables
Cash inflows generated from operations
Finance costs
Finance income
Tax (paid)/received
Cash flows from operating activities
Cash flows from investing activities
Additions to investment property
Sale of investment property
Investment in joint ventures and subsidiaries
Proceeds from sale of subsidiaries
Dividends from joint ventures
Receipts in respect of available-for-sale assets
Sale of plant and equipment
Purchase of owner occupied property, plant and equipment
Net cash generated from/(used by) investing activities
Cash flows from financing activities
Borrowings drawn down
Borrowings repaid
Shares issued
Sale of own shares
Equity dividends paid
Net cash used by financing activities
Net increase/(decrease) in cash and cash equivalents
Exchange gains on cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
Group
31.3.19
£000
43,456
296
(44,284)
(15,008)
–
(52)
16,424
3,322
(865)
2,274
3,217
(144)
–
–
(52)
8,584
40,561
3,731
(3,176)
49,700
(25,358)
461
(2,200)
(27,097)
22,603
(79,742)
164,058
–
–
416
144
155
(320)
84,711
Group
31.3.18
£000
Company
31.3.19
£000
Company
31.3.18
Restated
£000
30,822
291
(23,848)
(13,567)
–
81
33,135
(4,029)
1,559
1,185
(3,196)
(1,385)
–
–
(19)
21,029
(25,126)
82,801
(6,917)
71,787
(45,537)
162
6
(45,369)
26,418
(95,821)
337,570
(5,403)
–
671
1,385
–
(73)
160,524
(34,728)
296
–
–
291
–
–
(14,435)
(2,847)
(52)
4,695
–
(2,674)
–
–
–
–
17,248
–
(146)
–
–
–
5,459
37,041
(157,591)
–
(3,778)
58,560
–
63,546
118,328
(2,719)
438
(2,200)
(4,481)
113,847
–
–
(3,249)
–
–
–
149
(320)
–
–
16,859
240,390
45
(119,118)
138,176
(9,935)
106
–
(9,829)
128,347
–
–
(56,365)
22,538
–
–
–
(73)
238,329
(3,420)
(33,900)
64,089
94,196
(54,306)
(356,670)
–
–
–
(80,000)
8
–
(11,406)
(1,615)
105,699
–
91,871
197,570
4
521
(10,195)
(272,144)
(7,397)
6
99,262
91,871
2,514
–
(11,406)
(8,892)
101,535
–
63,350
164,885
–
–
(10,195)
(90,195)
4,252
–
59,098
63,350
110
HELICAL PLCAnnual Report and Accounts 2019 CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY
At 31 March 2019
Group
At 31 March 2017
Total comprehensive income
Revaluation surplus
Realised on disposals
Issued share capital
Performance Share Plan
Performance Share Plan – deferred tax
Share settled bonus
Dividends paid
Sale of own shares
Own shares held reserve transfer
At 31 March 2018
Total comprehensive income
Revaluation surplus
Realised on disposals
Issued share capital
Performance Share Plan
Performance Share Plan – deferred tax
Share settled bonus
Share settled Performance Share Plan
Dividends paid
At 31 March 2019
Share
capital
£000
1,447
–
–
–
4
–
–
–
–
–
–
Share
premium
£000
Revaluation
reserve
£000
Capital
redemption
reserve
£000
Other
reserves
£000
Retained
earnings
£000
Own shares
held
£000
98,798
164,190
7,478
291
244,693
–
–
–
–
–
–
–
–
–
–
–
23,848
(25,285)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
26,270
(23,848)
25,285
–
1,185
(55)
(733)
(10,195)
–
521
1,451
98.798
162,753
7,478
291
263,123
–
–
–
8
–
–
–
–
–
–
–
–
2,506
–
–
–
–
–
–
44,284
(75,987)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
42,569
(44,284)
75,987
2,274
94
(1,837)
(677)
(11,406)
1,459
101,304
131,050
7,478
291
325,843
–
(2,514)
Total
£000
516,897
26,270
–
–
4
1,185
(55)
(733)
(10,195)
521
–
533,894
42,569
–
–
–
2,274
94
–
–
–
–
–
–
–
–
–
–
–
521
(521)
–
–
–
–
–
–
1,837
677
–
–
(11,406)
567,425
For a breakdown of total comprehensive income see the Consolidated Statement of Comprehensive Income.
The adjustment against retained earnings of £2,274,000 (2018: £1,185,000) adds back the share-based payments charge in
accordance with IFRS 2 Share Based Payments.
There were net transactions with owners of £9,038,000 (2018: £9,273,000) made up of the Performance Share Plan credit of
£2,274,000 (2018: £1,185,000) and related deferred tax credit of £94,000 (2018: charge of £55,000), dividends paid of £11,406,000
(2018: £10,195,000), issued share capital of £8,000 (2018: £4,000) and corresponding share premium of £2,506,000 (2018: £nil), the
sale of own shares of £nil (2018: £521,000), share settled PSP awards charge of £1,837,000 (2018: £nil) and the share settled bonus
charge of £677,000 (2018: £733,000).
Company
At 31 March 2017
Total comprehensive income
Issued share capital
Dividends paid
At 31 March 2018
Total comprehensive income
Issued share capital
Dividends paid
At 31 March 2019
Share
capital
£000
1,447
Share
premium
£000
98,798
Capital
redemption
reserve
£000
Other
reserves
£000
Retained
earnings
restated
£000
Total
restated
£000
7,478
1,987
119,884
229,594
–
4
–
–
–
–
–
–
–
–
–
–
1,451
98,798
7,478
1,987
–
8
–
–
2,506
–
–
–
–
–
–
–
(35,228)
(35,228)
–
4
(10,195)
(10,195)
74,461
159,405
–
184,175
159,405
2,514
(11,406)
(11,406)
1,459
101,304
7,478
1,987
222,460
334,688
Total comprehensive income is made up of the profit after tax of £159,405,000 (2018: restated loss of £35,228,000).
Refer to Note 38 for information regarding the prior year restatement.
Included within changes in equity are net transactions with owners of £8,892,000 (2018: £10,191,000) being dividends
paid of £11,406,000 (2018: £10,195,000) and issued share capital of £2,514,000 (2018: £4,000).
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/Company.
111
HELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT 1. BASIS OF PREPARATION
Helical plc (the Company) is a public company limited by shares incorporated in the United Kingdom under the Companies Act and
registered in England. The address of the Company’s registered office is shown on page 147. The principal activities of the Company
and its subsidiaries (the Group) and the nature of the Group’s operations are set out in the Strategic Report on pages 1 to 65.
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 assets, Convertible Bonds and derivative financial
instruments. The measurement bases and principal accounting policies of the Group are set out in Note 39. These accounting
policies are consistent with those applied in the year to 31 March 2018, as amended to reflect any new standards. Amendments
to standards and interpretations which are mandatory for the year ended 31 March 2019 are detailed below:
• IFRS 9 Financial Instruments (effective for periods beginning on or after 1 January 2018);
• IFRS 15 Revenue from Contracts with Customers (effective for periods beginning on or after 1 January 2018);
• Annual Improvements to IFRS Standards 2014–2016 Cycle – amendments to IFRS 1 and IAS 28 (effective for accounting periods
beginning on or after 1 January 2018);
• Amendments to IFRS 2 Share Based Payments – amendments to clarify the classification and measurement of share-based
payment transactions (effective for accounting periods beginning on or after 1 January 2018);
• Amendments to IAS 40 Investment Property – transfer of investment property (effective for accounting periods beginning on
or after 1 January 2018); and
• IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective for accounting periods beginning on or after
1 January 2018).
The following standards, interpretations and amendments have been issued but are not yet effective and will be adopted at the
point they are effective:
• IFRS 16 Leases (effective for periods beginning on or after 1 January 2019);
• Amendments to IFRS 9 Financial Instruments – prepayment features with negative compensation (effective for periods beginning
on or after 1 January 2019);
• Amendments to IAS 28 Investments in Associates and Joint Ventures – long-term interest in associates and joint ventures
(effective for periods beginning on or after 1 January 2019);
• Annual Improvements to IFRS Standard 2015-2017 Cycle – amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23 (effective for periods
beginning on or after 1 January 2019); and
• IFRIC 23 Uncertainty over Income Tax Treatments (effective for periods beginning on or after 1 January 2019).
The most significant of these, and their impact on the Group’s reporting, are set out below:
IFRS 9 Financial instruments
This standard applies to the classification, measurement and recognition of financial assets and financial liabilities, impairment
provisioning and hedge accounting and replaces the guidance in IAS 39 Financial Instruments: Recognition and Measurement. The
adoption of IFRS 9 has led to changes in neither the carrying amount of financial instruments nor their classification. The standard
introduces an expected credit loss model, which replaces the incurred loss impairment model. However, the Group concluded that
this has no material impact on its financial statements. The table below reflects the classification categories under IAS 39 and IFRS 9.
Financial Instrument
Cash and cash equivalents
IAS 39 classification and measurement
Loans and receivables at amortised cost
IFRS 9 classification and measurement
Financial assets held at amortised cost
Trade and other receivables
Loans and receivables at amortised cost
Financial assets held at amortised cost
Trade and other payables
Financial liabilities at amortised cost
Financial liabilities at amortised cost
Profit share partner accruals
Designated as at fair value through profit and loss
Designated as at fair value through profit and loss
Derivative financial instruments
Fair value through profit and loss
Fair value through profit and loss
Borrowings
Convertible Bond
Financial liabilities at amortised cost
Financial liabilities at amortised cost
Designated as at fair value through profit and loss
Designated as at fair value through profit and loss
IFRS 15 Revenue from Contracts with Customers
IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with
customers. The core principle of IFRS 15 is that the Group should recognise revenue to reflect the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the Group expects to be entitled in exchange for those
goods or services.
The standard sets out a five–step model:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations within a contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations within the contract.
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.
112
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019 The standard is applicable to investment property disposals, development property disposals, property development management/
advisory services and service charge income, but excludes rental income, which is within the scope of IAS 17 (until the adoption of
IFRS 16 for accounting periods beginning on 1 January 2019). There has been no change to the measurement of revenue as a result
of the adoption of IFRS 15. Additional disclosures have been made in Notes 2, 22 and 39 in accordance with IFRS 15.
Prior year adjustment
An adjustment to the revenue reported for the year to 31 March 2018 has been made to reflect the gross up of service charges
in rental income and costs, where the net amount had previously been recognised in rental costs. This adjustment is due to the
adoption of IFRS 15 Revenue from Contracts with Customers and has no net impact on the profit for the year or on the Group’s Net
asset position.
IFRS 16 Leases
This standard does not affect the accounting for rental income earned by the Group as a lessor, but from the Group’s initial
assessment of its head office lease, it believes adoption will result in the recognition on the Consolidated and Company Balance
Sheets of: a right of use asset of £5,600,000; a lease liability of £7,300,000; the reversal of lease incentive accrual of £1,300,000;
and a net asset decrease of £400,000.
2. REVENUE FROM CONTRACTS WITH CUSTOMERS
Development management services
Development property sales
Corporate sale – retirement village portfolio
Development property income
Service charge income
Other income
Total revenue from contracts with customers
Year ended
31.3.19
£000
7,963
–
–
7,963
8,058
–
Year ended
31.3.18
£000
17,309
21,660
86,709
125,678
9,623
138
16,021
135,439
The total revenue from contracts with customers is the revenue recognised in accordance with IFRS 15 Revenue from Contracts with
Customers. This reflects the development property income, Service charge income and other revenue in Note 3 Segmental Information.
No impairment of contract assets was recognised in the year to 31 March 2019 (2018: £nil).
3. SEGMENTAL INFORMATION
IFRS 8 Operating Segments 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
• development properties, which include sites, developments in the course of construction, completed developments available
for sale, and pre-sold developments.
Revenue
Rental income
Development property income
Service charge income
Other revenue
Revenue
Investment
and trading
Year ended
31.03.19
£000
28,154
–
8,058
–
36,212
Developments
Year ended
31.03.19
£000
Total
Year ended
31.03.19
£000
–
7,963
–
–
7,963
28,154
7,963
8,058
–
44,175
Investment
and trading
Year ended
31.03.18
£000
40,157
Developments
Year ended
31.03.18
£000
–
–
125,678
9,623
138
49,918
–
–
Total
Year ended
31.03.18
£000
40,157
125,678
9,623
138
125,678
175,596
All revenue is from external sales and is attributable to continuing operations. There were no inter-segmental sales.
Revenue for the year comprises revenue from the sale of goods of £nil (2018: £108,369,000), revenue from other income £nil
(2018: £138,000), revenue from services of £7,963,000 (2018: £17,309,000), service charge income of £8,058,000 (2018:
£9,623,000) and rental income of £28,154,000 (2018: £40,157,000).
113
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT Investment
and trading
Year ended
31.03.19
£000
24,599
–
5,203
59,292
Developments
Year ended
31.03.19
£000
Total
Year ended
31.03.19
£000
–
(1,781)
(8,420)
–
24,599
(1,781)
(3,217)
59,292
Investment
and trading
Year ended
31.03.18
£000
36,329
–
5,135
37,415
Developments
Year ended
31.03.18
£000
Total
Year ended
31.03.18
£000
–
(4,174)
(1,939)
–
89,094
(10,201)
78,893
78,879
(6,113)
3. SEGMENTAL INFORMATION CONTINUED
Profit before tax
Net rental income
Development property loss
Share of results of joint ventures
Gain on sale and revaluation of investment
properties
Fair value movement 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 gain/(loss)
Profit before tax
Investment
and trading
31.03.19
£000
778,752
–
17,556
796,308
Developments
31.03.19
£000
–
2,311
7,120
9,431
Net assets
Investment properties
Land, development and trading properties
Investment in joint ventures
Owner occupied property, plant and equipment
Derivative financial instruments
Trade and other receivables
Corporation tax receivable
Cash and cash equivalents
Total assets
Liabilities
Net assets
36,329
(4,174)
3,196
37,415
72,766
1,385
111
74,262
(12,765)
(37,438)
4,303
4,029
(1,559)
(10)
30,822
Total
31.03.18
£000
791,948
6,042
27,809
825,799
1,825
123
100,757
3,736
91,871
1,024,111
(490,217)
533,894
144
–
79,037
(16,753)
(17,407)
983
(3,322)
865
53
43,456
Total
31.03.19
£000
778,752
2,311
24,676
805,739
1,747
915
58,726
–
197,570
1,064,697
(497,272)
567,425
Investment
and trading
31.03.18
£000
791,948
28
12,352
804,328
Developments
31.03.18
£000
–
6,014
15,457
21,471
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 £nil (31 March 2018: £5,000).
4. NET RENTAL INCOME
Gross rental income
Rents payable
Property overheads
Net rental income
Net rental costs/(income) attributable to profit share partner
Net rental income
Year ended
31.3.19
£000
Year ended
31.3.18
£000
28,154
(285)
(3,410)
24,459
140
24,599
40,157
(144)
(3,549)
36,464
(135)
36,329
Property overheads include lettings costs, vacancy costs and bad debt provisions. The amounts above include gross rental income
from investment properties of £28,154,000 (2018: £40,157,000) and net rental income from investment properties of £24,599,000
(2018: £36,329,000).
114
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019 5. DEVELOPMENT PROPERTY LOSS
Development property income
Cost of sales
Sales expenses
Provision against book values
Development property loss
6. GAIN ON SALE 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
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
Auditor’s remuneration:
Audit fees
Payable to the Company’s auditor for the audit of Parent Company and consolidated financial statements
Payable to the Company’s auditor for the audit of Company’s subsidiaries
Audit related assurance services
Other non-audit services
Operating lease costs
8. STAFF COSTS
Staff costs during the year:
Wages and salaries
Social security costs
Other pension costs
Year ended
31.3.19
£000
7,963
(5,399)
–
(4,345)
(1,781)
Year ended
31.3.18
£000
125,678
(125,085)
(2,554)
(2,213)
(4,174)
Year ended
31.3.19
£000
164,058
Year ended
31.3.18
£000
341,911
(147,550)
(324,002)
(1,500)
15,008
(4,342)
13,567
Year ended
31.3.19
£000
16,753
Year ended
31.3.18
£000
12,765
296
2,274
291
1,388
171
99
54
9
170
84
58
19
1,214
1,201
Year ended
31.3.19
£000
Year ended
31.3.18
£000
7,654
1,379
256
9,289
5,214
882
198
6,294
Details of the remuneration of Directors amounting to £4,531,000 are included in the Directors’ Remuneration Report on
pages 81 to 97. The amount of the share-based payments charge relating to share awards made to Directors is £1,687,000
(2018: £921,000). Included within wages and salaries are Directors’ bonuses of £1,639,000 (2018: £2,060,000) as discussed
in the Directors’ Remuneration Report on pages 81 to 97.
Other pension costs relate to payments to individual pension plans.
The average monthly number of employees of the Group during the year was 32 (2018: 36) all of whom are UK head office
staff. There were an average of five (2018: six) management, seven (2018: seven) property executives and 20 (2018: 23)
administrative staff.
Of the staff costs of £9,289,000 (2018: £6,294,000), £9,289,000 is included within administrative expenses (2018: £6,124,000)
and £nil is included within development costs (2018: £170,000).
Within administrative costs is the share-based payment charge for the year of £2,274,000 (2018: £1,388,000) which is not included
in the staff costs above.
115
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT 9. FINANCE COSTS AND FINANCE INCOME
Interest payable on bank loans, bonds and overdrafts
Retail Bond redemption premium
Other interest payable and similar charges
Interest capitalised
Finance costs
Interest receivable and similar income
Finance income
Year ended
31.3.19
£000
Year ended
31.3.18
£000
(16,414)
(26,873)
–
(4,208)
3,215
(17,407)
983
983
(8,708)
(7,053)
5,196
(37,438)
4,303
4,303
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 4.35% (2018: 3.19%).
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 3.79% (2018: 4.19%).
10. TAX ON PROFIT ON ORDINARY ACTIVITIES
The tax charge is based on the profit for the year and represents:
United Kingdom corporation tax at 19% (2018: 19%)
Group corporation tax
Adjustment in respect of prior periods
Use of tax losses
Current tax (charge)/credit
Deferred tax
Capital allowances
Tax losses
Unrealised chargeable gains
Other temporary differences
Deferred tax credit/(charge)
Total tax charge for the year
Year ended
31.3.19
£000
Year ended
31.3.18
£000
(8,813)
315
(509)
(9,007)
(1,003)
(677)
10,647
(796)
8,171
(836)
(831)
1,253
–
422
709
(5,478)
2,525
(2,715)
(4,959)
(4,537)
Factors Affecting the Tax Charge for the Year
The tax assessed for the year is lower than (2018: 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 19% (2018: 19%)
Effect of:
Net expenses not deductible for tax purposes
Adjustment to capital allowances – disposals
Tax movements on share awards
Movement on tax losses not previously recognised in deferred tax
Operating (loss)/profit of joint ventures
Current tax charge adjustment in respect of prior periods
Movement on sale and revaluation not recognised through deferred tax
Chargeable gain in excess of profit or loss on investment property
Deferred tax adjustment in respect of prior periods
Loss on disposal of retirement villages
Change of rate of corporation tax
Total tax charge for the year
Year ended
31.3.19
£000
Year ended
31.3.18
£000
43,456
(8,257)
(542)
623
48
205
(737)
315
8,073
(775)
(791)
–
1,002
(836)
30,822
(5,856)
(650)
1,544
8
–
607
–
5,732
(568)
–
(5,354)
–
(4,537)
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. In addition, following changes to the legislation governing the taxation of
Non-Resident Landlords, chargeable gains on disposals of investment property held by these companies will become subject to UK
corporation tax with effect from 1 April 2019 and their income profits will become subject to corporation tax with effect from April
2020. Neither change has an impact in the current year.
116
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019 11. DEFERRED TAX
Deferred tax provided for in the financial statements is set out below:
Capital allowances
Tax losses
Unrealised chargeable (gains)/losses
Other temporary differences
Deferred tax (liability)/asset
Group
31.3.19
£000
(3,263)
2,019
(9,159)
1,885
(8,518)
Group
31.3.18
£000
(2,260)
2,696
(19,806)
2,586
(16,784)
Company
31.3.19
£000
Company
31.3.18
£000
(159)
(137)
–
–
–
(159)
420
281
–
564
Note: all deferred tax balances have been calculated at an effective rate of corporation tax of 17% (2018: 19%) which is the substantively enacted future rate for the period in
which the deferred tax is expected to be realised.
Under IAS 12 Income Taxes, deferred tax provisions are made for the tax that would potentially be payable on the realisation of
investment properties and other assets at book value. Other 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 £94,000 (2018: £55,000) in respect of future tax relief for share awards has been
recognised in reserves in accordance with IAS 12 Income Taxes. Together with the charge through the Consolidated Income
Statement, this movement explains the change in the deferred tax liability for the year.
The Group contains entities with tax losses for which no deferred tax asset is recognised. The total unrecognised losses amount to
approximately £6,430,000 (31 March 2018: £6,597,000). 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 £3,263,000 (31 March 2018: £2,260,000) would be released and further capital allowances of £65,906,000
(31 March 2018: £40,921,000) would be available to reduce future tax liabilities.
12. DIVIDENDS PAID AND PAYABLE
Attributable to equity share capital
Ordinary
Interim paid 2.60p per share (2018: 2.50p)
Prior year final paid 7.00p per share (2017: 6.20p)
Year ended
31.3.19
£000
Year ended
31.3.18
£000
3,103
8,303
11,406
2,934
7,261
10,195
A final dividend of 7.50p, if approved at the AGM on 11 July 2019, will be paid on 19 July 2019 to Shareholders on the register on
14 June 2019. This final dividend, amounting to £8,952,000, has not been included as a liability as at 31 March 2019, 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 £159,405,000 (2018: restated loss of £35,228,000).
117
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT 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.
The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and
the post tax effect of dividends on the assumed exercise of all dilutive options.
The EPRA earnings per share is 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:
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 issued on share settled bonuses
Weighted average ordinary shares to be issued under Performance Share Plan
Year ended
31.3.19
000
119,363
Year ended
31.3.18
000
118,611
(307)
(997)
119,056
117,614
862
778
920
478
Weighted average ordinary shares in issue for calculation of diluted earnings per share
120,696
119,012
Earnings used for calculation of basic and diluted earnings per share
Basic earnings per share
Diluted earnings per share
Earnings used for calculation of basic and diluted earnings per share
£000
42,620
35.8p
35.3p
£000
42,620
£000
26,285
22.3p
22.1p
£000
26,285
Net gain on sale and revaluation of investment properties – subsidiaries
(59,292)
(37,415)
Tax on profit on disposal of investment properties
Gain on movement in share of joint ventures
Fair value movement on derivative financial instruments
– subsidiaries
– joint ventures
– joint ventures
Fair value movement on Convertible Bond
Profit on cancellation of derivative financial instruments
Expense on cancellation of loans
Retail Bond redemption premium
Fair value movement of available-for-sale assets
Deferred tax on adjusting items
Loss used for calculation of EPRA loss per share
(1,288)
14,130
–
3,322
35
(865)
(72)
1,458
–
(144)
(9,935)
(10,031)
(3,317)
3,931
(1,693)
(4,029)
(7)
1,559
(1,756)
2,296
8,708
(1,385)
(1,431)
(8,254)
EPRA loss per share
(8.4)p
(7.0)p
The loss used for the calculation of EPRA earnings per share includes net rental income and development property profits/losses
but excludes trading property gains.
15. INVESTMENT PROPERTIES
Group
Book value at 1 April
Additions and transfers at cost
Disposals
Revaluation surplus
Revaluation (deficit)/ surplus attributable to
profit share partners
Freehold
31.3.19
£000
714,817
40,894
(137,864)
34,403
–
Leasehold
31.3.19
£000
77,131
49,426
(9,686)
9,881
(250)
Total
31.3.19
£000
791,948
90,320
Freehold
31.3.18
£000
873,595
85,476
Leasehold
31.3.18
£000
113,965
15,566
Total
31.3.18
£000
987,560
101,042
(147,550)
(264,172)
(59,830)
(324,002)
44,284
(250)
19,918
–
3,930
3,500
23,848
3,500
Book value at 31 March
652,250
126,502
778,752
714,817
77,131
791,948
Investment properties are stated at fair value as at 31 March 2019 as follows:
Group
Book value at 31 March
Lease incentives and costs included in trade
and other receivables
Head leases capitalised
Fair value at 31 March
Freehold
31.3.19
£000
652,250
13,050
–
665,300
Leasehold
31.3.19
£000
126,502
1,637
Total
31.3.19
£000
778,752
14,687
(2,189)
125,950
(2,189)
791,250
Freehold
31.3.18
£000
714,817
11,183
–
726,000
Leasehold
31.3.18
£000
77,131
1,192
Total
31.3.18
£000
791,948
12,375
(2,189)
76,134
(2,189)
802,134
118
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019
Interest capitalised during the year in respect of the refurbishment of investment properties amounted to £3,215,000
(2018: £3,661,000).
Interest capitalised in respect of the refurbishment of investment properties is included in investment properties to the extent
of £11,357,000 (31 March 2018: £9,057,000).
Investment properties with a total fair value of £767,800,000 (31 March 2018: £705,500,000) 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
2019 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, ie. as prices,
or indirectly, ie. 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.
Valuation Methodology
The fair value of the Group’s investment property as at 31 March 2019 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.
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 44.
A sensitivity analysis was performed to ascertain the impact of a 25 basis point shift in the equivalent yield and a £2.50 psf shift
in London ERVs and a £1.00 psf shift in Manchester ERVs for the wholly owned investment portfolio:
Equivalent yield
+ 25 bps
- 25 bps
ERV
+ £2.50 (London) & £1.00 (Manchester)
- £2.50 (London) & £1.00 (Manchester)
The investment properties have been valued at 31 March 2019 as follows:
Cushman & Wakefield LLP
Directors’ valuation
The historical cost of investment property is £645,521,000 (31 March 2018: £622,226,000).
Percentage change in portfolio value
London
%
Manchester
%
(5.4)
6.0
3.7
(3.8)
(4.8)
5.2
4.6
(4.7)
Total
%
(5.3)
5.8
3.9
(4.0)
Group
31.3.19
£000
791,100
150
791,250
Group
31.3.18
£000
790,550
11,584
802,134
119
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT 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
31.3.19
£000
28,539
91,839
103,489
223,867
Group
31.3.18
£000
27,827
79,698
52,032
159,557
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
17. OWNER OCCUPIED PROPERTY, PLANT AND EQUIPMENT
31.3.19
£000
818
3,273
3,682
7,773
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
31.3.19
£000
Plant and
equipment
31.3.19
£000
2,065
9
–
2,074
538
147
–
685
1,389
1,154
311
(649)
816
856
149
(547)
458
358
Short
leasehold
improvements
31.3.18
£000
Plant and
equipment
31.3.18
£000
2,073
–
(8)
2,065
404
144
(10)
538
1,527
1,203
73
(122)
1,154
748
147
(39)
856
298
Total
31.3.19
£000
3,219
320
(649)
2,890
1,394
296
(547)
1,143
1,747
31.3.18
£000
818
3,273
4,500
8,591
Total
31.3.18
£000
3,276
73
(130)
3,219
1,152
291
(49)
1,394
1,825
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 £nil as at 31 March 2019 (31 March 2018: £5,000).
18. INVESTMENT IN SUBSIDIARIES
Cost at 1 April
Additions
Disposals
Cost at 31 March
Impairment at 1 April
Impaired during the year
Disposals
Impairment at 31 March
Net book amount at 31 March
Group
31.3.19
£000
Group
31.3.18
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Company
31.3.19
£000
195,425
3,249
(6)
198,668
39,252
1,795
–
41,047
157,621
Company
31.3.18
£000
138,516
125,764
(68,855)
195,425
13,117
29,685
(3,550)
39,252
156,173
A list of all the Company’s subsidiary undertakings, all of which have been consolidated, are shown in Note 40 to the financial
statements.
120
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019 19. INVESTMENT IN JOINT VENTURES
Summarised consolidated income statements
Revenue
Gross rental income
Property overheads
Net rental (costs)/income
Development profit/(loss)
Provision against book value of development stock
Gain on revaluation of investment properties
Other operating income/(expense)
Gross profit/(loss)
Administrative expenses
Operating profit/(loss)
Interest payable on bank loans and overdrafts
Other interest payable and similar charges
Finance income
Change in fair value movement of derivative financial instruments
Profit/(loss) before tax
Tax
Profit/(loss) after tax
Reversal of Creechurch loss 1
Uplift for Barts Square economic interest 2
Share of results of joint ventures
Summarised consolidated balance sheets
Non-current assets
Investment properties
Owner occupied property, plant and equipment
Derivative financial instruments
Deferred tax
Current assets
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
Net assets pre-adjustments
Reversal of Creechurch net liability position 1
Net assets
4,284
94
(246)
(152)
–
–
1,636
–
1,484
(183)
1,301
(504)
–
11
–
808
205
1,013
–
–
Investment
and trading
31.3.19
£000
Development
31.3.19
£000
Total
31.3.19
£000
52,402
971
(411)
560
4,570
(7,198)
1,288
9
(771)
(406)
Investment
and trading
31.3.18
£000
–
–
(53)
(53)
3
–
3,439
10
3,399
(43)
Development
31.3.18
£000
37,667
189
(359)
(170)
(1,942)
(1,880)
(122)
(41)
(4,155)
(425)
Total
31.3.18
£000
37,667
189
(412)
(223)
(1,939)
(1,880)
3,317
(31)
(756)
(468)
48,118
877
(165)
712
4,570
(7,198)
(348)
9
(2,255)
(223)
(2,478)
(1,177)
3,356
(4,580)
(1,224)
(7)
(511)
(1,576)
(1,576)
81
(35)
(4,015)
(1,604)
(5,619)
1,389
–
92
(35)
(3,207)
(1,399)
(4,606)
1,389
–
(21)
–
12
(1)
3,346
95
3,441
–
1,693
5,134
1,013
(4,230)
(3,217)
(3)
(24)
(2,012)
(2,012)
4
8
16
7
(6,583)
(3,237)
1,160
1,255
(5,423)
(1,982)
3,485
–
(1,938)
3,485
1,693
3,196
Total
31.3.18
£000
Investment
and trading
31.3.19
£000
Development
31.3.19
£000
Total
31.3.19
£000
Investment
and trading
31.3.18
£000
Development
31.3.18
£000
24,106
1,183
25,289
21,133
1,490
22,623
–
–
514
24,620
106
23
1,260
2,572
–
56,935
4,726
570
5,296
5,828
7,042
69,805
106
23
1,774
27,192
56,935
10,554
7,612
75,101
–
–
309
21,442
–
384
4,074
4,458
39
59
2,762
4,350
76,474
5,725
7,716
89,915
39
59
3,071
25,792
76,474
6,109
11,790
94,373
(952)
(952)
(12,647)
(13,599)
(12,647)
(13,599)
(933)
(933)
(17,733)
(18,666)
(17,733)
(18,666)
–
(20,419)
(20,419)
(2,231)
(25,421)
(27,652)
(12,181)
(36,292)
(48,473)
(10,384)
(39,139)
(49,523)
(12,181)
(56,711)
(68,892)
(12,615)
(64,560)
(77,175)
16,783
–
16,783
3,019
4,874
7,893
19,802
4,874
24,676
12,352
–
12,352
11,972
3,485
15,457
24,324
3,485
27,809
1
This is an adjustment that has been made to add back the Group’s share of the loss incurred in one of its joint ventures, arising from finance and other costs in the year,
to ensure the Group’s interest is shown at its recoverable amount.
2 This is an adjustment to reflect the impact of the consolidation of a joint venture at its economic interest of 43.8% rather than its actual ownership interest of 33.3%.
The Directors’ valuation of land, development and trading properties shows a surplus of £nil (31 March 2018: £1,700,000) above
book value.
Dividends of £416,000 were received from joint venture companies during the year (2018: £672,000). The joint venture companies
are private companies, therefore no quoted market prices are available for their shares.
The cost of the Company’s investment in joint ventures was £nil (31 March 2018: £15,000).
The Group has one material joint venture (31 March 2018: one). The full results and position of this joint venture are set out overleaf,
of which we have included our share in the above table.
121
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT 19. INVESTMENT IN JOINT VENTURES CONTINUED
Summarised income statement
Revenue
Gross rental income
Property overheads
Net rental costs
Development gain/(loss)
Gain on revaluation of investment properties
Provision against book values
Other operating expense
Administrative expenses
Finance costs
Finance income
Change in fair value movement of derivative financial instruments
Loss before tax
Tax
Loss after tax
Summarised balance sheet
Non-current assets
Investment properties
Owner occupied property, plant and equipment
Deferred tax
Derivative financial instruments
Current assets
Land, development and trading properties
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Non-current liabilities
Borrowings
Net assets
Barts LP Group
31.03.19
£000
Barts LP Group
31.03.18
£000
44,040
37,493
247
(806)
(559)
6,946
2,941
(16,434)
(2)
(716)
(1,167)
172
(79)
(8,898)
627
(8,271)
34
(622)
(588)
(3,193)
7,573
(4,292)
(45)
(348)
(54)
33
16
(898)
754
(144)
Barts LP Group
31.03.19
£000
Barts LP Group
31.03.18
£000
57,736
241
4,023
56
62,056
97,943
20,240
13,021
131,204
51,650
90
3,397
135
55,272
130,849
11,502
21,206
163,557
(26,624)
(26,624)
(41,524)
(41,524)
(110,670)
(110,670)
55,966
(113,065)
(113,065)
64,240
At 31 March 2019 the Group and the Company had legal interests in the following joint venture companies:
Barts, L.P.
Barts Close Office Limited
Barts Square First Office Limited
Barts Square Active One Limited
Barts Square First Limited
Barts Square Land One Limited
Country of
incorporation
United States
Jersey
Jersey
Jersey
Class of share
capital held
n/a
Ordinary
Ordinary
Ordinary
United Kingdom Ordinary
United Kingdom Ordinary
OBC Development Management Limited
United Kingdom Ordinary
Old Street Holdings LP
Jersey
n/a
Abbeygate Helical (Leisure Plaza) Limited
United Kingdom Ordinary
Abbeygate Helical (C4.1) LLP
Shirley Advance LLP
United Kingdom n/a
United Kingdom n/a
King Street Developments (Hammersmith) Limited
United Kingdom Ordinary
Helical Grainger Limited
Helical Grainger Holdings Limited
Creechurch Place Limited
United Kingdom Ordinary
United Kingdom Ordinary
Jersey
Ordinary
Proportion
held Group
33%
Proportion
held Company
–
33%
33%
33%
33%
33%
33%
33%
50%
50%
50%
50%
50%
50%
10%
–
–
–
–
–
–
–
50%
50%
–
–
–
–
–
Nature of
business
Investment
Investment
Investment
Investment
Development
Development
Development
Investment
Development
Development
Development
Development
Development
Development
Development
122
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019 Significant Judgements and Estimates
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. Key business decisions require
unanimous agreement from the Group and its partner, therefore management judges that both parties control the entity equally
and it is therefore considered appropriate to account for our interest as a joint venture.
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 33.3% 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.
Under the Creechurch Place joint venture arrangement, whilst the Group holds a legal share of 10% of Creechurch Place Limited,
a third party acquired the right to step in to take 20% of the Group’s share of the effective economic interest, ie 2%. Therefore, the
Group reflects this in the share of joint venture that it accounts for at 8%.
In addition, the joint venture agreement for Creechurch Place Limited provides for a put and call option, whereby the Group can
put its 10% share or the joint venture partner can call the Group’s 10% share. Under IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations, the Group’s investment in Creechurch Place Limited is a non-current asset held for sale. It is carried at the
lower of its carrying amount and fair value less costs to sell of £nil at the balance sheet date. The sale is expected to complete within
12 months of the balance sheet date.
20. LAND, DEVELOPMENTS AND TRADING PROPERTIES
Group
At 1 April
Acquisitions and construction costs
Interest capitalised
Disposals
Provision
At 31 March
Development
properties
31.3.19
£000
6,014
1,444
–
(1,567)
(3,608)
2,283
Trading
stock
31.3.19
£000
28
–
–
–
–
28
Total
31.3.19
£000
6,042
1,444
–
(1,567)
(3,608)
2,311
Development
properties
31.3.18
£000
86,652
36,640
2,188
(118,426)
(1,040)
6,014
Trading
stock
31.3.18
£000
28
–
–
–
–
28
Total
31.3.18
£000
86,680
36,640
2,188
(118,426)
(1,040)
6,042
The Directors’ valuation of land, developments and trading properties shows a surplus of £578,000 (31 March 2018: £628,000)
above book value.
Total interest in respect of the development of sites is included in stock to the extent of £nil (31 March 2018: £nil). Interest
capitalised during the year in respect of development sites amounted to £nil (2018: £2,188,000 relating to assets which were
sold during the year).
Land, developments and trading properties with carrying values totalling £nil (31 March 2018: £nil) were held as security
against borrowings.
The Company had £nil (31 March 2018: £nil) of land, developments or trading properties.
21. AVAILABLE-FOR-SALE ASSETS
The gain of £144,000 (2018: 1,385,000) recognised in the year is the result of cash received in relation to a previously fully
impaired asset.
123
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT 22. TRADE AND OTHER RECEIVABLES
Due within 1 year
Trade receivables
Amounts owed by joint venture undertakings
Amounts owed by subsidiary undertakings
Other receivables
Prepayments
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
31.3.19
£000
9,680
22,511
–
345
4,173
22,017
58,726
Group
31.3.19
£000
55,358
1,884
434
57,676
1,050
58,726
Group
31.3.18
£000
35,883
28,193
–
1,890
3,841
30,950
100,757
Group
31.3.18
£000
98,132
1,408
255
99,795
962
Company
31.3.19
£000
–
22,340
276,147
400
927
–
Company
31.3.18
£000
–
20,096
312,383
27,078
850
–
299,814
360,407
Company
31.3.19
£000
298,887
–
–
Company
31.3.18
£000
359,557
–
–
298,887
359,557
927
850
100,757
299,814
360,407
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 £7,211,000 of rental deposits at 31 March 2019 (31 March 2018: £5,167,000).
Movements in the loss allowance of trade receivables are as follows:
Gross receivables being financial assets
Provisions for receivables impairment
Net receivables being financial assets
Group
31.3.19
£000
57,751
(75)
57,676
Group
31.3.18
£000
99,818
(23)
99,795
Company
31.3.19
£000
305,413
(6,526)
298,887
Company
31.3.18
£000
366,630
(7,073)
359,557
Receivables written off during the year as uncollectable
24
22
4,191
24,780
The Group has assessed that the loss allowance under IFRS 9 Financial Instruments is not materially different to the impairment
allowance under IAS 39 Financial Instruments: Recognition and Measurement. The Group has considered the likelihood of default
for each tenant and for each contract balance, either on a 12-month basis, if there has been no significant change in credit risk, or
on a lifetime basis, where credit risk has changed. This requires a forward looking assessment based on past performance and the
Group’s knowledge of its debtor profile.
Included in Total receivables being financial assets above are contract balances and receivables from contracts with customers,
as defined by IFRS 15 Revenue from Contracts with Customers, as follows:
Contract assets from contracts with customers
At 1 April
Additions
Received during the year
Change in loss allowance
At 31 March
Receivables from contracts with customers
At 1 April
Additions
Received during the year
Change in loss allowance
At 31 March
Company
31.3.19
£000
Company
31.3.18
£000
Group
31.3.19
£000
16,275
–
(10,042)
–
6,233
Group
31.3.19
£000
27,809
–
Group
31.3.18
£000
622
15,658
(5)
–
16,275
Group
31.3.18
£000
12,763
27,800
–
–
–
–
–
Company
31.3.19
£000
25,837
–
(27,809)
(12,754)
(25,837)
–
–
–
27,809
–
–
–
–
–
–
–
Company
31.3.18
£000
–
25,387
–
–
25,387
Contract assets are typically recognised when the Group recognises revenue on partial completion of performance obligations,
ordinarily the construction and letting of buildings in its role as development manager. Receivables are recognised when the Group
has an unconditional right to consideration. Cash is typically received once a building is practically complete and a large proportion
of the lettable area is subject to leases. This may be done in tranches.
124
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019 23. CASH AND CASH EQUIVALENTS
Cash held at managing agents
Restricted cash
Cash deposits
Group
31.3.19
£000
2,599
2,678
192,293
197,570
Group
31.3.18
£000
5,371
2,713
83,787
91,871
Company
31.3.19
£000
–
–
164,885
164,885
Company
31.3.18
£000
–
–
63,350
63,350
Restricted cash is made up of cash held by solicitors and cash in blocked/restricted bank accounts.
24. TRADE AND OTHER PAYABLES
Trade payables
Social security costs and other taxation
Amounts owed to subsidiary undertakings
Other payables
Accruals
Deferred income
Current trade and other payables
Accruals
Non-current trade and other payables
Group
31.3.19
£000
13,009
1,333
–
536
23,368
4,913
43,159
11,405
11,405
Group
31.3.18
£000
11,175
1,321
–
311
32,735
5,836
51,378
–
–
Company
31.3.19
£000
734
–
Company
31.3.18
£000
849
–
183,689
292,294
589
5,711
–
–
3,913
–
190,723
297,056
–
–
–
–
Total trade and other payables
54,564
51,378
190,723
297,056
25. 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
Total borrowings
Group
31.3.19
£000
100,468
Group
31.3.18
£000
–
Company
31.3.19
£000
98,767
–
272,501
195,410
–
37,399
92,005
–
324,814
425,282
–
–
21,878
–
122,613
416,992
416,992
–
–
–
–
–
–
–
98,767
Company
31.3.18
£000
–
98,694
–
–
–
–
–
98,694
98,694
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 fair value of £767,800,000 (31 March 2018: £705,500,000). 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 £48,473,000 (31 March 2018: £49,523,000).
Convertible Bond
On 17 June 2014 the Group issued £100m of Convertible Bonds at par with a 4% coupon rate which are due for settlement on
17 June 2019 (the ‘‘Bonds”). The Bond 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 Bonds is included at its fair value of £100,468,000 (31 March 2018: £101,333,000) within Current
borrowings (31 March 2018: Borrowings repayable within one to two years).
125
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT 26. FINANCING AND DERIVATIVE FINANCIAL INSTRUMENTS
The policies for dealing with liquidity and interest rate risk are noted in the Principal Risks Review on pages 52 to 57.
Borrowings maturity
Due after more than one year
Due within one year
Group
31.3.19
£000
324,814
100,468
425,282
Group
31.3.18
£000
416,992
–
416,992
The Group has various undrawn committed borrowing facilities. The facilities available at 31 March 2019 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
Group
31.3.19
£000
10,000
–
3,321
–
160,377
–
Group
31.3.18
£000
10,000
77,285
–
–
77,326
–
173,698
164,611
Interest rates – Group
Fixed rate borrowings:
fixed rate Convertible Bond
swap rate plus bank margin
swap rate plus bank margin
swap rate plus bank margin
swap rate in excess of loan balance
fixed rate plus margin
fixed rate plus margin
Weighted average
Floating rate borrowings
Unamortised finance costs
Fair value adjustment of Convertible Bond
%
Expiry
4.000
3.650
4.150
2.880
2.382
3.480
3.210
3.745
5.650
Jun 2019
Nov 2019
Nov 2019
Apr 2024
Apr 2024
Dec 2024
Dec 2024
Apr 2021
Feb 2022
31.3.19
£000
100,000
105,000
44,500
50,000
(30,000)
71,000
22,000
362,500
67,202
(4,888)
468
%
Expiry
4.000
3.650
5.650
3.850
2.372
3.480
3.210
4.052
6.991
Jun 2019
Nov 2019
Nov 2019
Apr 2022
Apr 2022
Dec 2024
Dec 2024
Mar 2021
Sep 2022
31.3.18
£000
100,000
105,000
44,500
50,000
(27,227)
71,000
22,000
365,274
54,115
(3,730)
1,333
Total borrowings
4.056
Dec 2021
425,282
4.432
Jun 2021
416,992
Floating rate borrowings bear interest at rates based on LIBOR.
During the year, one interest rate swap was terminated and in February 2019 a £50,000,000 interest rate swap was entered into
at 1.230% expiring in April 2024. Interest is fixed on the 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.
In addition to the fixed rates, borrowings are also hedged by the following financial instruments:
Instrument – Group
Current:
cap
cap
cap
cap
cap
floor
Future:
cap
cap
cap
Value
£000
15,000
20,000
35,000
35,000
50,000
50,000
22,500
22,500
40,000
Rate
%
0.750
1.750
1.750
1.750
1.750
0.830
1.750
1.750
1.750
Start
Expiry
Jun 2016
Aug 2018
Jul 2018
Aug 2018
Feb 2019
Feb 2019
Nov 2019
Nov 2019
Jan 2020
Nov 2019
Jul 2023
Jul 2023
Jul 2023
Apr 2024
Apr 2024
Jul 2021
Jul 2021
Jul 2023
At 31 March 2019 the Company had no interest rate swaps, caps or floors (31 March 2018: nil).
126
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019 Net gearing
Total borrowings
Cash
Net borrowings
Group
31.3.19
£000
425,282
(197,570)
227,712
Group
31.3.18
£000
416,992
(91,871)
325,121
Net borrowings excludes the Group’s share of borrowings in joint ventures of £48,473,000 (31 March 2018: £49,523,000) and cash
of £7,612,000 (31 March 2018: £11,790,000). All borrowings in joint ventures are secured.
Net assets
Gearing
Group
31.3.19
£000
Group
31.3.18
£000
567,425
533,894
40%
61%
27. LONG LEASEHOLD LIABILITY
Finance lease obligations in respect of the Group’s leasehold properties are payable as follows:
Not later than one year
Later than one year but not more than five years
More than five years
Minimum lease
payments
31.3.19
£000
104
416
15,600
16,120
Present value
of minimum
lease
payments
31.3.19
£000
99
354
1,736
2,189
Minimum lease
payments
31.3.18
£000
104
416
15,600
16,120
Interest
31.3.19
£000
(5)
(62)
(13,864)
(13,931)
Present value
of minimum
lease
payments
31.3.18
£000
99
354
1,736
2,189
Interest
31.3.18
£000
(5)
(62)
(13,864)
(13,931)
The long leasehold liability relates to ground rents payable in respect of the head lease at 25 Charterhouse Square, London EC1.
The lease term is 155 years. The associated asset of £2,189,000 (31 March 2018: £2,189,000) is shown in Note 15.
28. SHARE CAPITAL
Authorised
31.3.19
£000
39,577
31.3.18
£000
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:
119,363,349 (31 March 2018: 118,610,741) ordinary shares of 1p each
212,145,300 deferred shares of 1/8p each
Ordinary shares
At 1 April
Issued share capital
At 31 March
Deferred shares
At 1 April and 31 March
31.3.19
£000
1,194
265
1,459
31.3.18
£000
1,186
265
1,451
Shares in issue
31.3.19
Number
Share capital
31.3.19
£000
Shares in issue
31.3.18
Number
Share capital
31.3.18
£000
118,610,741
1,186
118,196,215
752,608
8
414,526
119,363,349
1,194
118,610,741
1,182
4
1,186
212,145,300
265
212,145,300
265
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 (2019: £559,947,000, 2018: £526,416,000). The Group continually monitors its gearing level to ensure that it
is appropriate. Gearing decreased from 61% to 40% in the year as the Group repaid debt from the proceeds of sale of property.
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.
127
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT 29. SHARE OPTIONS
At 31 March 2019 and 31 March 2018 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 2018: none).
30. SHARE-BASED PAYMENTS
The Group provides share-based payments to employees in the form of Performance Share Plan (PSP) awards and a Share
Incentive Plan. The Group uses a combination of the Black-Scholes and stochastic valuation models and the resulting value is
amortised through the Consolidated Income Statement over the vesting period of the share-based payments. Details of the
performance criteria are set out on page 94 to 95.
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
Awards
3,734,498
(750,029)
(454,897)
1,133,530
3,663,102
2019 Weighted
average award
value
313p
353p
353p
375p
319p
Awards
4,743,684
(1,235,491)
(1,186,942)
1,413,247
3,734,498
2018 Weighted
average award
value
320p
295p
315p
271p
313p
All awards have an exercise price of £nil (2018: £nil).
The weighted average share price at the date of exercise for the share options exercised during the year was 334p (2018: 300p).
The PSP awards outstanding at 31 March 2019 had a weighted average remaining contractual life of one year and two months.
The fair value of the awards made in the year to 31 March 2019 was £3,676,000 (2018: £3,835,000). These were granted on
1 June 2018.
The inputs into the Black-Scholes and stochastic models of valuation of the PSP awards made in the year to 31 March 2019 were
as follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk free rate
Expected dividends
2019
375.0p
–
30%
3 years
0.65%
0.00%
2018
320.0p
–
28%
3 years
0.08%
0.00%
2017
391.5p
–
22%
3 years
0.40%
0.00%
The Group recognised a charge of £2,274,000 (2018: £1,388,000) 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. There is a two-year holding period for vested awards.
31. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
The table below details changes in the Group’s liabilities from financing activities, including both cash and non-cash changes.
Liabilities arising from financing activities are those whose cash flows were, or future cash flows will be, classified in the
Consolidated and Company Cash Flow Statements as cash flows from financing activities.
Borrowings
At 31 March 2017
Financing cash flows
Fair value moment of Convertible Bond
Other changes
At 31 March 2018
Financing cash flows
Fair value moment of Convertible Bond
Other changes
At 31 March 2019
Group
£000
673,701
(262,474)
1,559
4,206
416,992
9,783
(865)
(628)
Company
£000
173,604
(80,000)
–
5,090
98,694
–
–
73
425,282
98,767
Financing cash flows comprise borrowings drawn down and repaid in the Consolidated and Company Cash Flow Statements.
Other changes include the rolling up of interest and the change in unamortised refinancing costs.
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 2019 for the Group or the Company (31 March 2018: £nil).
128
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019 33. CAPITAL COMMITMENTS
The Group has a commitment of £64,900,000 (31 March 2018: £63,143,000) in relation to construction contracts, which are due
to be completed in the year to March 2020, of which £19,200,000 (31 March 2018: £520,000) relates to the Group’s share of
commitments in joint ventures.
34. POST BALANCE SHEET EVENTS
In May 2019 the Group completed its acquisition of the site at Charterhouse Street, London EC1, in joint venture with AshbyCapital,
for £75,000,000 (Helical’s share: £37,500,000).
35. NET ASSETS PER SHARE
Net asset value
Less: deferred shares
Basic net asset value
Add: share settled bonus
Add: dilutive effect of the Performance Share Plan
Diluted net asset value
Adjustment for:
fair value of financial instruments
fair value movement on Convertible Bond
deferred tax
Adjusted diluted net asset value
Adjustment for:
fair value of trading and development properties
EPRA net asset value
Adjustment for:
fair value of fixed rate loans
fair value of financial instruments
deferred tax
EPRA triple net asset value
31.3.19
£000
567,425
(265)
Number
of shares
000
119,363
31.3.19
pence
per share
567,160
119,363
475
862
734
567,160
120,959
469
3,218
468
11,687
582,533
578
120,959
482
583,111
120,959
482
(5,449)
(3,218)
(11,687)
562,757
120,959
465
The adjustment for the fair value of land, development and trading properties represents the surplus of fair value over carrying
value as at 31 March 2019.
Net asset value
Less: deferred shares
Basic net asset value
Add: share settled bonus
Add: dilutive effect of the Performance Share Plan
Diluted net asset value
Adjustment for:
fair value of financial instruments
fair value movement on Convertible Bond
deferred tax
Adjusted diluted net asset value
Adjustment for:
fair value of trading and development properties
EPRA net asset value
Adjustment for:
fair value of financial instruments
deferred tax
EPRA triple net asset value
31.3.18
£000
533,894
(265)
Number
of shares
000
118,611
31.3.18
pence
per share
533,629
118,611
450
920
478
533,629
120,009
445
2,692
1,333
21,662
559,316
2,328
561,644
(2,692)
(21,662)
537,290
120,009
466
120,009
468
120,009
448
The net asset values per share have been calculated in accordance with guidance issued by the European Public Real Estate
Association (“EPRA”).
The adjustments to the net asset value comprise the amounts relating to the Group and its share of joint ventures.
The calculation of EPRA triple net asset value per share reflects the fair value of all the assets and liabilities of the Group at
31 March 2019. One of the loans held by the Group is at a fixed rate and therefore not at fair value, the adjustment of £5,449,000
is the increase from book to fair value.
129
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT 36. RELATED PARTY TRANSACTIONS
At 31 March 2019 and 31 March 2018 the following amounts were due from the Group’s joint ventures:
King Street Developments (Hammersmith) Limited
Shirley Advance LLP
Barts Square companies
Old Street Holdings LP
Creechurch Place Limited
31.3.19
£000
71
330
34
3
22,073
31.3.18
£000
9,916
249
2,205
3
32,096
In the year, interest on bonds of £451,000 (2018: £1,590,000) was charged by the Group to Creechurch Place Limited. In addition,
a development management fee £7,142,000 (2018: £14,008,000) was charged to Creechurch Place Limited and £821,000 (2018:
£1,924,000) to the Barts Square companies. An amount of £237,000 (2018: £nil) was written off the balance owed from King Street
Developments (Hammersmith) Limited.
All balances are repayable on demand, other than the amount owed from Creechurch Place Limited, which is due for repayment
on the sale of the Group’s share of that company (Note 19). No provisions have been recognised in respect of amounts owed from
joint ventures.
At 31 March 2019 and 31 March 2018 there were the following balances between the Company and its subsidiaries:
Amounts due from subsidiaries
Amounts due to subsidiaries
31.3.19
£000
276,147
183,689
31.3.18
£000
312,383
292,294
During the years to 31 March 2019 and 31 March 2018 there were the following transactions between the Company and its
subsidiaries:
Management charges receivable
Interest receivable
Interest payable
31.3.19
£000
3,307
1,611
3,998
31.3.18
£000
6,721
2,887
3,986
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 balance sheet date 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 22. Amounts owed to subsidiaries by the Company are identified in Note 24.
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
Share-based payments
31.3.19
£000
3,612
1,481
5,093
31.3.18
£000
3,808
2,386
6,194
The total dividends paid to Directors of the Group in the year were £1,480,124 (2018: £1,381,737).
37. FINANCIAL INSTRUMENTS
Categories of Financial Instruments
Financial assets in the Group include derivative financial assets and available-for-sale 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 financial assets measured at amortised cost.
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 categories.
IFRS 9 Financial Instruments is applicable for the year to 31 March 2019 and IAS 39 Financial Instruments: Recognition and
Measurement for the year to 31 March 2018. In accordance with IFRS 7: 42Q, disclosure is not made of the line item amounts that
would have been reported in accordance with the classification and measurement requirements under IFRS 9 for prior year and IAS
39 for the current year.
Financial assets
Measured at amortised cost (2018: Loans and receivables)
Fair value through the Profit or Loss
Total financial assets
Group
31.3.19
£000
Group
31.3.18
£000
255,246
191,666
915
123
Company
31.3.19
£000
463,772
270
Company
31.3.18
£000
422,907
–
256,161
191,789
464,042
422,907
130
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019 These financial assets are included in the Balance Sheet within the following headings:
Trade and other receivables
Cash and cash equivalents
Derivative financial asset
Total financial assets
Group
31.3.19
£000
57,676
197,570
915
Group
31.3.18
£000
99,795
91,871
123
Company
31.3.19
£000
298,887
164,885
270
Company
31.3.18
£000
359,557
63,350
–
256,161
191,789
464,042
422,907
Financial assets are stated in accordance with IAS 32 Financial Instruments: Presentation.
The carrying value of the trade and other receivables and cash and cash equivalents is not deemed to be materially different from
the fair value.
Financial liabilities
Fair value through the Profit or Loss
Designated at Fair value through the Profit or Loss
Measured at amortised cost
Total financial liabilities
Group
31.3.19
£000
4,158
100,468
375,320
479,946
Group
31.3.18
£000
3,721
101,333
361,223
466,277
Company
31.3.19
£000
–
–
289,490
289,490
Company
31.3.18
£000
2,404
–
395,750
398,154
The Convertible Bond has been designated at fair value through the 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 £100,468,000 (31 March 2018: £101,333,000)
and this settlement amount is an additional liability of £468,000 (31 March 2018: £1,333,000).
The financial liabilities are included in the Balance Sheet within the following headings:
Trade and other payables
Borrowings – current
Borrowings – non-current
Long leasehold liability
Derivative financial instruments
Total financial liabilities
Group
31.3.19
£000
48,317
100,468
324,814
2,189
4,158
Group
31.3.18
£000
44,222
–
416,992
2,189
2,874
Company
31.3.19
£000
190,723
98,767
–
–
–
479,946
466,277
289,490
Company
31.3.18
£000
297,056
–
98,694
–
2,404
398,154
The carrying value of trade and other payables and borrowings is not deemed to be materially different from the fair value,
other than for one fixed rate loan, whose fair value is £5,449,000 greater than its carrying value. Financial liabilities are stated in
accordance with IAS 32 Financial Instruments: Presentation.
The Group and Company financial instruments that are measured subsequent to initial recognition at fair value are interest rate
swaps, caps and floors, and those designated on initial recognition.
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 three 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; and
• Level 3: values cannot be derived from observable market data.
Assets and liabilities measured at fair value are classified as below:
Level 1 Convertible Bond (Note 25)
Level 2 Derivative financial instruments (Note 37)
Investment property (Note 15)
Level 3
There were no transfers between categories in the current or prior year.
Derivative financial instruments
Interest rate caps
Interest rate floors
Interest rate swaps
Convertible Bond derivative element
Group
31.3.19
£000
915
(579)
(3,579)
–
Group
31.3.18
£000
123
–
(2,874)
–
(3,243)
(2,751)
Company
31.3.19
£000
Company
31.3.18
£000
–
–
–
270
270
–
–
–
(2,404)
(2,404)
The Group’s movement in the fair value of the derivative financial instruments in the year was a loss of £3,322,000 (2018: gain of
£4,029,000) due to interest rate caps, floors and swaps. In accordance with IFRS 9 Financial Instruments, the Convertible Bond is
split into a loan and derivative element in the Company Balance Sheet. On initial recognition the derivative element had a liability
value of £8,190,000. At 31 March 2019, the derivative element had an asset value of £270,000 (2018: liability value of £2,404,000)
with a corresponding gain of £2,674,000 (2018: £146,000) recognised in the Company Income Statement.
131
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT 37. FINANCIAL INSTRUMENTS CONTINUED
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. It is Group policy to assess the financial viability of potential tenants where their rent roll is individually significant
before entering into lease agreements. This review involves the latest available set of financial statements, other publicly available
financial information and management accounts where appropriate. The covenant strength of each tenant is determined based
on this information and a deposit or guarantee is sought if necessary. The Group’s tenants are spread across a wide variety of
industries, reducing the Group’s risk to any individual industry. The Group works closely with its agents, who advise where a loss
allowance is required for individual tenants, based on their credit control procedures.
Credit risk also exists due to cash and cash equivalents and deposits with banks and other financial institutions. The cash is held with
reputable banking institutions and in client accounts with solicitors and managing agents and therefore credit risk is considered low.
As at 31 March 2019 the Group had total credit risk exposure excluding cash of £57,677,000, all of which is loans and receivables.
The quantitative disclosures of trade and other receivables credit risk is shown in Note 22.
The Group has a small number of other debtors that are financial assets. Therefore, each is considered on an individual basis and
involves the Group’s detailed knowledge of the counterparties involved in order to assess the likelihood of non-recoverability. All
these debtors are deemed to be recoverable.
The amounts owed to the Company are considered on an individual basis by assessing the subsidiaries’ and joint ventures’ ability
to repay the debt at the point at which it is repayable. The Group considers the net assets of the debtor, taking into account any
potential uplifts to fair value of investments, land, development and trading properties in making its assessment.
The Group is not reliant on any major customer for its ability to continue as a going concern.
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 25 and 26.
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
31.3.19
£000
137,825
10,864
219,240
144,015
511,944
Group
31.3.18
£000
31,373
30,048
294,609
164,700
520,730
Company
31.3.19
£000
290,549
614
1,637
6,955
Company
31.3.18
£000
298,257
3,412
21,982
86,363
299,755
410,014
At 31 March 2019 the Group had £173,698,000 (31 March 2018: £164,611,000) of undrawn borrowing facilities, £25,230,000
(31 March 2018: £104,564,000) of uncharged property assets and cash balances of £197,570,000 (31 March 2018: £91,871,000).
The above contracted liabilities assume that no loans are extended beyond their current facility expiry date. Management believes
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.
132
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019 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 and floors. 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 26.
In the year to 31 March 2019, 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
Group
impact
on results
31.3.19
£000
5,620
(3,187)
Group
impact
on equity
31.3.19
£000
5,620
(3,187)
Company
impact
on results
31.3.19
£000
340
(340)
Company
impact
on equity
31.3.19
£000
340
(340)
Foreign Currency Exchange Risk
The Group and Company have no material exposure to movements in foreign currency rates.
38. PRIOR YEAR COMPANY RESTATEMENT
As part of a Group reorganisation during the year ended 31 March 2018, a number of transactions within the Company accounts
were not identified. These were in relation to the transfer of intercompany investments and associated impairments. These have
been corrected as a prior year adjustment and the net impact is set out in the table below. The impact of these adjustments results
in an increase in Parent Company profit before tax of £7,749,000. These adjustments do not have a tax impact. These adjustments
have no impact on the Group results.
The effect of the adjustment on the relevant financial statement line items for the year ended 31 March 2018 is as follows:
Company
Impact on equity – increase/(decrease) in equity
Investment in subsidiaries
Trade and other receivables
Total assets
Trade and other payables
Total liabilities
Net assets
Retained earnings
Equity
Original
31.3.18
£000
165,928
369,072
600,749
Adjustment
31.3.18
£000
(9,755)
(8,665)
(18,420)
Restated
31.3.18
£000
156,173
360,407
582,329
(323,225)
(424,323)
26,169
26,169
(297,056)
(398,154)
176,426
7,749
184,175
66,712
176,426
7,749
7,749
74,461
184,175
133
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT Ordinarily, the Group return includes both fixed and variable
consideration. These constitute the transaction price. Variable
consideration is estimated as the amount of consideration to
which the Group would be entitled in exchange for transferring
goods or services. This is done on an expected value basis. This
estimate is constrained to the extent that it is highly probable
that a significant reversal of the amount of revenue recognised
will not occur when the uncertainty is removed.
The fixed and variable consideration are allocated to the relevant
performance obligations in proportion to their estimated stand-
alone selling prices. Revenue is recognised either over time or
at a point in time, depending on the terms of the contract. The
proportion of the transaction price allocated to construction
is recognised at any given reporting date in proportion to the
costs certified to date as a percentage of the total expected
construction costs. The proportion of the transaction price
allocated to the letting of the property is recognised at any
given reporting date in proportion to the area subject to leases
as a percentage of the total lettable space.
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 81 to 97. The fair values 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 a combination of the Black-
Scholes and stochastic valuation models and the resulting value
is amortised through the Income Statement over the vesting
period of the share-based payments.
For the Performance Share Plan and Share Incentive Plan
awards, where market conditions apply, the expense is allocated
to the Income Statement evenly over the vesting period.
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.
39. PRINCIPAL ACCOUNTING POLICIES
Basis of Consolidation
The Group financial statements consolidate those of Helical plc
(the “Company”) and all of its subsidiary undertakings (together
the “Group”) drawn up to 31 March 2019. Subsidiary undertakings
are entities for which the Group has power over the investee,
is exposed to or has the rights 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
contractually 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. This exists where unanimous agreement of the
investee’s relevant activities is required. 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 (“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.
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.
The Consolidated Financial Statements are presented in sterling
which is also the functional currency of the Parent Company.
Going Concern
The accounts have been prepared on a going concern basis as
explained in the Report of the Directors on page 98.
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 at the point
at which the customer has control of the goods. This occurs
on completion of the contract for sale. Measurements of
revenue arising from the sale of such assets are derived from
the transaction price as determined by IFRS 15 Revenue from
Contracts with Customers.
Construction contracts and development management services
The Group has contracts to develop and let properties for third
parties. Where two or more contracts are entered into at or
near the same time with the same customer, the contracts
are combined and accounted for as a single contract. An
arrangement may involve the construction and letting of a third
party property or the sale and subsequent construction and
letting of a property. The construction and letting of a property
are considered to be separate performance obligations. Where
an arrangement also involves the sale of an asset, this is an
additional distinct performance obligation. The initial sale of a
site to a customer is recognised as a sale of goods in accordance
with IFRS 15, where the sale of land is not conditional on the
construction of the buildings and is not reversible in the event
that the building is not constructed.
134
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019 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.
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 subsequently
at fair value adjusted for the carrying value of lease incentive
and letting cost receivables. 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 Property, 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.
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.
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.
Investment properties are derecognised on completion of sale.
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.
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.
Deferred tax liabilities are generally recognised for all taxable
timing differences and deferred tax assets are recognised to
the extent that it is probable that taxable profits will be available
against which deductible timing 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 timing 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
timing 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
timing difference; and
b) it is probable that the timing difference will not reverse in the
foreseeable future.
135
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT
Financial assets are derecognised when the contractual rights
to the cash flows from the financial asset expire, or when
the financial asset and substantially all the risks and rewards
are transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
Further information on the categorisation of financial
instruments can be found in Note 37.
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 Investment Property, 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 IAS 17 Leases, operating leases receipts and
payments are spread on a straight-line basis over the length of
the lease.
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 Earnings per Share and the best practice
recommendations of EPRA.
Use of Judgements and Estimates
To be able to prepare accounts according to the accounting
principles, management must make estimates and assumptions
that affect the assets and liabilities and revenue and expense
amounts recorded in the financial statements. These estimates
are based on historical experience and other assumptions that
management and the Board of Directors believe are reasonable
under the particular 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.
39. PRINCIPAL ACCOUNTING POLICIES CONTINUED
Financial Assets
Financial assets do not carry any interest and are stated initially
at fair value and subsequently at amortised cost as reduced by
appropriate loss allowances. The loss allowance is based on the
lifetime expected credit losses, if the credit risk of a receivable
has increased significantly since initial recognition. This is
reduced to 12 months where the credit risk has not increased
significantly. The Group derecognises a financial asset when
the contractual rights to the cash flows from the asset expire
or on transfer of the fixed asset and of the associated risks and
rewards to another party.
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. The Group derecognises trade and other payable liabilities
when they are extinguished, which occurs when the obligation
associated with the liability is discharged, cancelled or expires.
Borrowing and Borrowing Costs
Interest bearing bank loans and overdrafts are initially recorded
at fair value, net of finance and other costs yet to be amortised,
in accordance with IFRS 9, and subsequently at amortised
cost. Embedded derivatives contained within the borrowing
agreements are treated in accordance with IFRS 9, which
includes consideration of whether embedded derivatives
require bifurcation.
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.
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 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.
136
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019 Areas requiring the use of critical judgement and estimates
that may significantly impact the Group’s earnings and financial
position are:
Significant judgements
The adoption of IFRS 15 Revenue from Contracts with Customers
requires management to make judgements in relation to the
performance obligations of its contracts, the constraints of
variable consideration, the allocation of the transaction price to
the performance obligations and an assessment of satisfaction
of the performance obligations.
The four judgements are explained below:
• The Group has entered into contracts to develop and let
property on behalf of third parties. These are judged to be
separate performance obligations under IFRS 15, satisfied at
practical completion and once a minimum level of space is
subject to lease, respectively;
• Where a contract involves both fixed and variable
consideration, judgement is exercised in determining the
level of variable consideration. IFRS 15 requires that variable
consideration is constrained to the extent that it is highly
probable that a significant reversal will not occur. Management
must make a judgement at each reporting period end based
on both the progress of the construction and letting of the
property, and its knowledge of the current rental market;
• Judgement is exercised in determining the stand–alone
sales price of each performance obligation. For construction,
the market price for build-only contracts forms the basis
for this judgement. For lettings, the Group considers the
fee chargeable by letting agents and adds a risk premium.
The stand–alone sales price is used to allocate the total
consideration, on a pro–rata basis, to determine the allocated
transaction price of each obligation; and
• At each reporting period end, the stage of completion of a
performance obligation must be assessed, which determines
the proportion of the allocated transaction price to be
recognised in any given reporting period. The stage of
completion of construction is based on an assessment of the
costs certified to date as a percentage of the total expected
construction costs, reflecting the transfer of the property to
the customer over time. The letting progress is measured as
the area subject to lease, as a proportion of the total lettable
space. This reflects the transfer of value to the customer.
Consideration of the nature of joint arrangements. In the context
of IFRS 10 Consolidated Financial Statements, 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).
Key sources of estimation uncertainty
The key areas are discussed below:
• Estimates must be made as to the expected variable
consideration under IFRS 15 Revenue from Contracts with
Customers, which is dependent upon the rental values
achieved and the quantum of construction costs incurred.
At each reporting date the expected value approach is used
to estimate the total variable consideration. One contract
was subject to estimation in the year to 31 March 2019,
with associated revenue of £6.0m. The building is completed,
so construction costs were not subject to estimation. Rental
values were the key area for estimation and if assumed rental
values on vacant floors were 5% higher, revenue for the year to
31 March 2019 would be £0.7m higher. If values were 5% lower,
revenue would be £0.7m lower;
• Recognition of share-based payments where non-market
conditions apply, is dependent upon the estimated number of
Performance Share Plan awards that will vest at the end of the
period based on future forecast performance and employee
retention (Note 30). The 2016 award is based on the 31 March
2019 results, so does not require estimation, but the 2017 and
2018 vesting percentages do require estimation. As at March
2019, the estimated vesting percentage for 2017 was 28% and
for 2018 was 44%. These have been sensitised for a range of
reasonably possible vesting outcomes. If it was estimated that
nil% of the remaining shares were expected to vest it would
result in a credit to the Income Statement of £0.7m and if it
was estimated that 100% were expected to vest it would result
in a £1.8m additional charge. A 10% variation in the estimated
vesting percentage would result in a £0.4m charge/credit
recognised in the Income Statement;
• Determination of the most appropriate percentage interest
level at which to recognise our share of joint ventures, where
our economic interest can differ to our ownership interest
(see Note 19). 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
33.3% 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. There are several estimates that contribute
to this expected economic interest, the most sensitive of
which is the estimated sales price of the residential units. If the
estimated sales prices were 10% lower, the Group’s economic
interest would fall by 1.1% (with a net asset decrease of £0.2m),
whilst an increase of 10% would result in a rise of in economic
interest of 0.7% (with a net asset increase of £0.1m);
• Valuation of investment properties. The sensitivity of these
valuations to changes in the equivalent yields and rental values
is included in Note 15; and
• The net realisable value of land and development properties
contain subjective assumptions including the results of future
planning decisions, future construction costs and future sales
values and timings. One project in the year to 31 March 2019
required significant estimates of future sales prices resulting
in a £7.2m provision being made during the year to reduce the
value of the property to its net realisable value. If the estimated
sales prices were 10% lower, an increased provision of £2.7m
would have been recognised, whilst an increase of 10% would
have resulted in a reduced provision of £2.6m.
137
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT 40. SUBSIDIARY AND RELATED UNDERTAKINGS
The Company’s subsidiary and related undertakings are listed below. Except where otherwise indicated all undertakings
are incorporated, registered and operate in the United Kingdom at 5 Hanover Square, London, W1S 1HQ.
The share capital of each of the companies, where applicable, is comprised of ordinary shares unless otherwise stated.
Company
ACTIVE SUBSIDIARIES
207 OLD STREET UNIT TRUST 1
211 OLD STREET UNIT TRUST 1
AYCLIFFE & PETERLEE INVESTMENT COMPANY LIMITED
BAYLIGHT DEVELOPMENTS LIMITED
CPP INVESTMENTS LIMITED
DOWNTOWN SPACE PROPERTIES LLP
EMBANKMENT PLACE (LP) LIMITED 8
FARRINGDON EAST (JERSEY) LIMITED 4
G2 ESTATES LIMITED
HB SAWSTON NO 3 LIMITED
HELICAL (BEACON ROAD) LIMITED
HELICAL (BOOTH ST) LIMITED
HELICAL (BOSS) LIMITED
HELICAL (BROWNHILLS) LIMITED
HELICAL (CANNOCK) LIMITED
HELICAL (CARDIFF) LIMITED
HELICAL (CHART) LIMITED
HELICAL (CHESTER) LIMITED
HELICAL (CHURCHGATE) LIMITED
HELICAL (CS HOLDINGS) JERSEY LIMITED 4
HELICAL (CS) JERSEY LIMITED 4
HELICAL (DALE HOUSE) LIMITED
HELICAL (DOXFORD) LIMITED
HELICAL (FP) HOLDINGS LIMITED
HELICAL (HALESOWEN) LIMITED
HELICAL (HINCKLEY) LIMITED
HELICAL (HUDDERSFIELD) LIMITED
HELICAL (JARROW) LIMITED
HELICAL (LB) LIMITED
HELICAL (NORTHAMPTON) LIMITED
HELICAL (NQ) LIMITED
HELICAL (OS HOLDCO) JERSEY LIMITED4
HELICAL (PETERBOROUGH) LIMITED
HELICAL (PORCHESTER) LIMITED
HELICAL (PORTBURY) LIMITED
HELICAL (POWER ROAD) LIMITED
HELICAL (QUARTZ) LIMITED
HELICAL (SEVENOAKS) LIMITED
HELICAL (SHEPHERDS) LIMITED
HELICAL (SIX) LIMITED
HELICAL (SOUTHEND) LIMITED
HELICAL (STONE) LIMITED
HELICAL (SUN) LIMITED
HELICAL (TELFORD) LIMITED
HELICAL (WELLINGBOROUGH) LIMITED
HELICAL (WHITECHAPEL) LIMITED
HELICAL (YATE) LIMITED
HELICAL ASSET MANAGEMENT SP. Z O.O. 5
HELICAL B.V. 3
HELICAL BAR (CATHCART) LIMITED
HELICAL BAR (DRURY LANE) LIMITED
HELICAL BAR (GREAT DOVER STREET) LIMITED
HELICAL BAR (JERSEY) LIMITED 4
HELICAL BAR (MAPLE) LIMITED
HELICAL BAR (MITRE SQUARE) DEVELOPMENTS LIMITED
HELICAL BAR (ST VINCENT STREET) LIMITED
HELICAL BAR (WALES) LIMITED
HELICAL BAR DEVELOPMENTS (SOUTH EAST) 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
138
Direct/
Indirect
Indirect
Indirect
Direct
Indirect
Indirect
Indirect
Direct
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Indirect
Indirect
Direct
Direct
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Direct
Indirect
Direct
Direct
Direct
Indirect
Direct
Direct
Direct
Direct
Indirect
Direct
Ultimate
%
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%
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019 Company
HELICAL BAR DEVELOPMENTS LIMITED
HELICAL FARRINGDON EAST (JERSEY) LIMITED 4
HELICAL FINANCE (AV) LIMITED
HELICAL FINANCE (BAR) LIMITED
HELICAL FINANCE (RBS) LIMITED
HELICAL INVESTMENT HOLDINGS LIMITED
HELICAL JERSEY HOLDINGS LIMITED 4
HELICAL JERSEY INVESTMENT HOLDINGS LIMITED 4
HELICAL OLD STREET JERSEY HOLDINGS LIMITED 4
HELICAL OLD STREET JERSEY LIMITED 4
HELICAL POLAND SP. Z O.O. 2
HELICAL PROPERTIES (HSM) LIMITED
HELICAL PROPERTIES INVESTMENT LIMITED
HELICAL RETAIL LIMITED
HELICAL SERVICES LIMITED
HELICAL WROCLAW SP. Z O.O. 2
METROPOLIS PROPERTY LIMITED
OLD STREET UNITHOLDER NO 1 LIMITED 4
OLD STREET UNITHOLDER NO 2 LIMITED 4
JOINT VENTURES AND JOINT OPERATIONS
ABBEYGATE HELICAL (C4.1) LLP
ABBEYGATE HELICAL (LEISURE PLAZA) LIMITED
BARTS CLOSE OFFICE LIMITED 4
BARTS ONE LIMITED 4
BARTS SQUARE ACTIVE ONE LIMITED 4
BARTS SQUARE FIRST LIMITED
BARTS SQUARE FIRST OFFICE LIMITED 4
BARTS SQUARE FIRST RESIDENTIAL LIMITED 4
BARTS SQUARE LAND ONE LIMITED
BARTS TWO LIMITED4
BARTS, L.P. 6
CREECHURCH PLACE LIMITED 7
HASLUCKS GREEN LIMITED
HELICAL GRAINGER LIMITED
HELICAL GRAINGER (HOLDINGS) LIMITED
KING STREET DEVELOPMENTS (HAMMERSMITH) LIMITED
OBC DEVELOPMENT MANAGEMENT LIMITED
SHIRLEY ADVANCE LLP
DORMANT SUBSIDIARIES AND JOINT VENTURES
AYCLIFFE & PETERLEE DEVELOPMENT COMPANY LIMITED
DENCORA (FORDHAM) LIMITED
FARRINGDON EAST LIMITED
GLENLAKE LIMITED
HB SAWSTON NO. 1 LIMITED
HB SAWSTON NO. 2 LIMITED
HB SAWSTON NO. 4 LIMITED
HELICAL (ALFRETON) LIMITED
HELICAL (ARTILLERY) LIMITED
HELICAL (BATTERSEA) LIMITED
HELICAL (BOSS 2) LIMITED
HELICAL (BROADWAY) LIMITED
HELICAL (CG) LIMITED
HELICAL (COBHAM) LIMITED
HELICAL (CORBY INVESTMENTS) LIMITED
HELICAL (ELLESMERE PORT) LIMITED
HELICAL (ENTERPRISE) LIMITED
HELICAL (FORDHAM) LIMITED
HELICAL (GRACELANDS) LIMITED
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Direct/
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Indirect
Indirect
Direct
Direct
Direct
Indirect
Indirect
Indirect
Indirect
Direct
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Direct
Indirect
Indirect
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Direct
Direct
Ultimate
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
33%
33%
33%
33%
33%
33%
33%
33%
33%
10%
50%
50%
50%
50%
33%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
139
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT 40. SUBSIDIARY AND RELATED UNDERTAKINGS CONTINUED
Company
HELICAL (GREAT YARMOUTH) LIMITED
HELICAL (HAILSHAM) LIMITED
HELICAL (HARROGATE) LIMITED
HELICAL (HAVANT) LIMITED
HELICAL (HEDGE END) LIMITED
HELICAL (HUB) LIMITED
HELICAL (JERSEY) LIMITED4
HELICAL (MINT) LIMITED
HELICAL (SA) LIMITED
HELICAL (SALFORD) LIMITED
HELICAL (SCARBOROUGH) LIMITED
HELICAL (SHOREDITCH) LIMITED
HELICAL (STEVENAGE) LIMITED
HELICAL (WEST LONDON) LIMITED
HELICAL (WINTERHILL) LIMITED
HELICAL BAR (CITY INVESTMENTS) LIMITED
HELICAL BAR (MITRE SQUARE) LIMITED
HELICAL BAR (WHITE CITY) LIMITED
HELICAL BAR LIMITED
HELICAL BAR TRUSTEES LIMITED
HELICAL FOOD RETAIL LIMITED
HELICAL GROUP LIMITED
HELICAL PROPERTIES LIMITED
HELICAL PROPERTIES (RS) LIMITED
HELICAL REGISTRARS LIMITED
HGCI (HOLDCO) LIMITED
HGCI (TRANSCO) LIMITED
HGCI (UK) LIMITED
HGCI HOLDINGS LIMITED
HGCI INTERMEDIATE LIMITED
HGCI LIMITED
OLD STREET HOLDINGS GP LIMITED 1
OLD STREET HOLDINGS L.P.1
OLD STREET UNITHOLDER LIMITED
ROPEMAKER PARK MANAGEMENT COMPANY LIMITED
SCBP MANAGEMENT COMPANY LIMITED
SPRING (HOLDINGS) LIMITED
SPRING (NO.1) LIMITED
SPRING (NO.2) LIMITED
SPRING (NO.3) LIMITED
THE ASSET FACTOR LIMITED
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
Direct/
Indirect
Direct
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Indirect
Indirect
Indirect
Direct
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Direct
Indirect
Indirect
Direct
Ultimate
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
10%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%**
100%
33%
33%
33%
100%**
75%
100%
100%
100%
100%
100%
12 Castle Street, St Helier, Jersey JE2 3RT.
13 Castle Street, St Helier, Jersey JE4 5UT.
Registered offices:
1
2 Hoża 55/45, 00-681 Warsaw, Poland.
3 Hoogoorddreef 15 1101 BA Amsterdam, The Netherlands.
4
5 B.PRUSA 10 30-109 Krakow Poland.
6 c/o Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington DE 19808, United States.
7 c/o Ocorian Limited, 26 New Street, St Helier, Jersey JE2 3RA.
8 c/o Dentons, 1 George Square, Glasgow G2 1AL.
Notes:
*
** Limited by Guarantee.
No shares in issue in the Unit Trusts. The registered office address is that of the appropriate trustee.
140
NOTES TO THE FINANCIAL STATEMENTSHELICAL PLCAnnual Report and Accounts 2019
APPENDIX 1 – SEE-THROUGH ANALYSIS
All appendices are unaudited.
Helical holds 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 Consolidated Income Statement and Consolidated 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 shareholders 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.
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
Helical’s share of the gross rental income, head rents payable and property overheads from property assets held in subsidiaries
and in joint ventures is shown in the table below:
Gross rental income
Total gross rental income
Rents payable
Property overheads
– subsidiaries
– joint ventures
– subsidiaries
– subsidiaries
– joint ventures
Net rental costs/(income) attributable to profit share partner
See-through net rental income
Year ended
31.3.19
£000
Year ended
31.3.18
£000
28,154
971
29,125
(285)
(3,410)
(411)
140
40,157
189
40,346
(144)
(3,549)
(412)
(135)
25,159
36,106
SEE-THROUGH NET DEVELOPMENT (LOSSES)/PROFITS
Helical’s share of development profits from property assets held in subsidiaries and in joint ventures is shown in the table below:
In parent and subsidiaries
In joint ventures
Total gross development profit/(loss)
Provision against stock
See-through development losses
– subsidiaries
– joint ventures
Year ended
31.3.19
£000
Year ended
31.3.18
£000
4,740
4,570
9,310
(6,521)
(7,198)
(4,409)
(1,961)
(1,939)
(3,900)
(2,213)
(1,880)
(7,993)
SEE-THROUGH NET GAIN ON SALE AND REVALUATION OF INVESTMENT PROPERTIES
Helical’s share of the net gain on sale and revaluation of investment properties held in subsidiaries and in joint ventures is shown in
the table below:
Revaluation surplus on investment properties
– subsidiaries
– joint ventures
Total revaluation surplus
Net gain on sale of investment properties
– subsidiaries
– joint ventures
Total net gain on sale of investment properties
See-through net gain on sale and revaluation of investment properties
Year ended
31.3.19
£000
Year ended
31.3.18
£000
44,284
1,288
45,572
15,008
–
15,008
60,580
23,848
3,317
27,165
13,567
–
13,567
40,732
141
HELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT
APPENDIX 1 – SEE-THROUGH ANALYSIS
CONTINUED
SEE-THROUGH NET FINANCE COSTS
Helical’s share of the interest payable, finance charges, capitalised interest and interest receivable on bank borrowings, bonds
and cash deposits in subsidiaries and in joint ventures is shown in the table below:
Interest payable on bank loans, bonds and overdrafts – subsidiaries
– joint ventures
Total interest payable on bank loans, bonds and overdrafts
Other interest payable and similar charges
Interest capitalised
Total finance costs
Interest receivable and similar income
See-through net finance costs
– subsidiaries
– joint ventures
– subsidiaries
– subsidiaries
– joint ventures
Year ended
31.3.19
£000
Year ended
31.3.18
£000
16,414
511
16,925
4,208
1,576
(3,215)
19,494
(983)
(92)
18,419
26,873
24
26,897
15,761
2,012
(5,196)
39,474
(4,303)
(16)
35,155
SEE-THROUGH PROPERTY PORTFOLIO
Helical’s share of the investment, trading and development property portfolio in subsidiaries and joint ventures is shown in the
table below:
Investment property fair value
Total investment property fair value
Trading and development stock
Total trading and development stock
Trading and development stock surplus
Total trading and development stock surpluses
Total trading and development stock at fair value
See-through property portfolio
– subsidiaries
– joint ventures
– subsidiaries
– joint ventures
– subsidiaries
– joint ventures
31.3.19
£000
791,250
25,382
816,632
2,311
56,935
59,246
578
-
578
59,824
876,456
SEE-THROUGH NET BORROWINGS
Helical’s share of borrowings and cash deposits in parent and subsidiaries and joint ventures is shown in the table below:
31.3.19
£000
100,468
324,814
425,282
-
48,473
48,473
(197,570)
(7,612)
268,573
31.3.19
£000
876,456
268,573
567,425
30.6%
47.3%
Gross borrowings less than one year
Gross borrowings more than one year
Total gross borrowings in parent and subsidiaries
Gross borrowings less than one year
Gross borrowings more than one year
Total gross borrowings in joint ventures
Cash and cash equivalents
– subsidiaries
– subsidiaries
– joint ventures
– joint ventures
– subsidiaries
– joint ventures
See-through net borrowings
SEE-THROUGH ANALYSIS RATIOS
Property portfolio
Net borrowings
Net assets
Loan to value
Gearing
142
31.3.18
£000
802,134
22,623
824,757
6,042
76,474
82,516
628
1,700
2,328
84,844
909,601
31.3.18
£000
-
416,992
416,992
-
49,523
49,523
(91,871)
(11,790)
362,854
31.3.18
£000
909,601
362,854
533,894
39.9%
68.0%
HELICAL PLCAnnual Report and Accounts 2019
APPENDIX 2 – TOTAL ACCOUNTING RETURN AND TOTAL PROPERTY RETURN
Total Accounting Return
Brought forward net assets
Carried forward net assets
Increase in net assets
Dividends paid
Total Accounting Return
Total Accounting Return Percentage
Total Property Return
See-through net rental income
See-through development losses
See-through revaluation surplus
See-through net gain on sale of investment properties
Total Property Return
Year ended
31.3.19
£m
Year ended
31.3.18
£m
533.9
567.4
33.5
11.4
44.9
516.9
533.9
17.0
10.2
27.2
8.4%
5.3%
Year ended
31.3.19
£m
Year ended
31.3.18
£m
25.2
(4.4)
45.6
15.0
81.4
36.1
(8.0)
27.2
13.5
68.8
143
HELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT APPENDIX 3 – FIVE YEAR REVIEW
INCOME STATEMENTS
Year ended
31.3.19
£000
Year ended
31.3.18
£000
Year ended
31.3.17
£000
Revenue
Net rental income
Development property profit/(loss)
Provisions against stock
Trading profit
Share of results of joint ventures
Other operating income
Gross profit before gain on investment properties
Gain on sale of investment properties
Revaluation surplus on investment properties
Fair value movement of available-for-sale assets
44,175
24,599
2,564
(4,345)
-
(3,217)
-
19,601
15,008
44,284
144
Administrative expenses excluding performance related awards
(10,858)
Performance related awards
Finance costs
Finance income
Movement in fair value of derivative financial instruments
Change in fair value of Convertible Bond
Foreign exchange gains/(losses)
Profit before tax
Tax on profit on ordinary activities
Profit after tax
BALANCE SHEETS
Investment portfolio at fair value
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
(5,895)
(17,407)
983
(3,322)
865
53
43,456
(836)
42,620
31.3.19
£000
791,250
2,311
25,382
56,935
175,596
36,329
(1,961)
(2,213)
-
3,196
111
35,462
13,567
23,848
1,385
(11,023)
(1,742)
(37,438)
4,303
4,029
(1,559)
(10)
30,822
(4,537)
26,285
99,934
46,162
7,143
(6,300)
-
(6,528)
982
41,459
1,391
39,152
(3,352)
(10,800)
(7,572)
(25,598)
3,156
789
2,973
(3)
41,595
(2,471)
39,124
Year ended
31.3.16
£000
116,500
42,164
30,700
(6,448)
-
50,469
20
116,905
2,385
47,441
(1,370)
(10,716)
(15,387)
(24,113)
5,128
(6,860)
516
100
114,029
(9,146)
104,883
31.3.18
£000
31.3.17
£000
31.3.16
£000
802,134
1,003,000
1,041,100
6,042
22,623
76,474
86,680
13,907
89,115
92,035
11,552
75,904
Year ended
31.3.15
£000
106,341
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
31.3.15
£000
701,521
92,578
88,305
102,715
Group’s share of land, trading and development stock surpluses
578
2,328
12,514
19,412
36,243
Group’s share of total properties at fair value
876,456
909,601
1,205,216
1,240,003
1,021,362
Net debt
Group’s share of net debt of joint ventures
Group’s share of net debt
Net assets
EPRA net assets
Dividend per ordinary share paid/payable
Dividend per ordinary share declared
EPRA (loss)/earnings per ordinary share
EPRA net assets per share
227,712
40,861
268,573
567,425
583,111
9.60p
10.10p
(8.4)p
482p
325,121
37,733
362,854
533,894
561,644
8.70p
9.50p
(7.0)p
468p
574,439
45,537
619,976
516,897
565,973
3.12p
8.60p
0.5p
473p
659,393
22,449
681,842
480,721
540,731
12.60p
8.17p
17.1p
456p
477,248
54,649
531,897
404,363
469,128
6.85p
7.25p
2.4p
385p
144
HELICAL PLCAnnual Report and Accounts 2019 APPENDIX 4 – PROPERTY PORTFOLIO
LONDON PORTFOLIO – INVESTMENT PROPERTIES
Address
Description
Completed, let and available to let
The Warehouse & Studio, The Bower, EC1 Multi-let office building
The Tower, The Bower, EC1
The Loom, E1
The Powerhouse, W4
Power Road Studios, W4
25 Charterhouse Square, EC1
90 Bartholomew Close, EC1
Being redeveloped
Kaleidoscope, EC1
Multi-let office building
Multi-let office building
Single-let recording studios/office building
Multi-let office building with redevelopment potential
Multi-let office building
Multi-let office building
Over-station office development
54 Bartholomew Close, EC1
Office redevelopment
1 Estimated space once developed.
LONDON PORTFOLIO – DEVELOPMENT PROPERTIES
Address
Description
Completed, let and available to let
Area
sq ft (NIA)
Vacancy rate at
31 March 2019
Vacancy rate at
31 March 2018
151,439
181,742
108,640
24,288
57,585
43,493
30,427
597,614
88,6801
10,2861
696,580
0.0%
28.5%
2.9%
0.0%
40.3%
0.0%
63.7%
16.2%
n/a
n/a
n/a
0.0%
n/a
17.0%
0.0%
29.0%
0.0%
n/a
8.3%
n/a
n/a
n/a
Area
sq ft (NIA)
Vacancy rate at
31 March 2019
Vacancy rate at
31 March 2018
One Creechurch Place, EC3
Multi-let office building
273,291
0.0%
31.0%
Being redeveloped
Barts Square, EC1
MANCHESTER OFFICES
Address
Churchgate & Lee
35 Dale Street
Fourways House
Trinity
REGIONAL PORTFOLIO
Address
Land
Dawley Road, Telford
Retail Development
Ibstock site, Kingswinford
Barking Road, East Ham
1 Estimated space once developed.
236 residential apartments and 14,916 sq ft retail/
leisure development under construction
217,750
n/a
n/a
491,041
Description
Multi-let office building
Multi-let office building
Multi-let office building
Newly completed office building
Area
sq ft (NIA)
Vacancy rate at
31 March 2019
Vacancy rate at
31 March 2018
244,627
54,112
59,067
58,951
416,757
3.4%
0.0%
25.7%
100.0%
19.8%
0.0%
38.0%
n/a
n/a
12.8%
Held as
Description
Area
sq ft (NIA)
Vacancy rate at
31 March 2019
Vacancy rate at
31 March 2018
Development
Residential land
n/a
Development
Development
Retail park
Retail/leisure
70,0001
43,0001
113,000
n/a
n/a
n/a
n/a
n/a
n/a
145
HELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT
APPENDIX 5 – EPRA PERFORMANCE MEASURES
The European Public Real Estate Association (“EPRA”) Best Practice Recommendations set out a number of EPRA Performance
Measures (“EPMs”) to aid comparability in reporting across property companies. The principal EPMs applicable to the Group are
set out below:
EPRA performance measure
EPRA Losses per share
Definition
Losses per share from operational activities.
EPRA NAV
EPRA NNNAV
EPRA NIY
EPRA Topped Up NIY
Net Asset Value adjusted to include properties and other
investment interests at fair value and to exclude certain items
not expected to crystallise in a long-term investment property
business model.
EPRA NAV adjusted to include the fair values of financial
instruments, debt and deferred taxes.
Annualised rental income based on the cash rents passing
at the Balance Sheet date, less non-recoverable property
operating expenses, divided by the market value of the
property, increased with (estimated) purchasers’ costs.
This measure incorporates an adjustment to the EPRA NIY
in respect of the expiration of rent-free periods (or other
unexpired lease incentives such as discounted rent periods
and step rents).
Note
14
35
35
31.3.19
(8.4)p
482p
31.3.18
(7.0)p
468p
465p
2.74%
448p
4.20%
4.18%
4.78%
EPRA Vacancy Rate
Estimated Market Rental Value (ERV) of vacant space divided
by ERV of the whole portfolio.
16.16%
8.63%
The note references provide the calculation of the associated measure. Other measures are calculated as follows:
EPRA Net Initial Yield and EPRA Topped Up Net Initial Yield
Investment property at fair value
Less:
Property under construction
Undeveloped land
Properties not held for rental income
Completed property portfolio
Allowance for estimated purchaser’s costs of 6.8%
Gross up completed property portfolio
– subsidiaries
– joint ventures
– subsidiaries
– joint ventures
Passing rent net of head rents
EPRA NIY
Add:
Contracted rent
Topped up annualised net rents
EPRA Topped Up NIY
EPRA Vacancy Rate
ERV of vacant space
ERV of total portfolio
EPRA Vacancy Rate
31.3.19
£000
791,250
25,382
(70,250)
(8,408)
(100)
–
31.3.18
£000
802,134
22,623
(203,334)
(22,623)
(100)
–
737,874
598,700
50,175
788,049
40,712
639,412
21,620
2.74%
11,305
32,925
4.18%
31.3.19
£000
8,324
51,497
26,875
4.20%
3,668
30,563
4.78%
31.3.18
£000
3,210
37,190
16.16%
8.63%
Below is a table setting out in greater detail the types of capital expenditure made by the Group during the year:
Acquisitions
Existing portfolio
Capitalised interest
Total capital expenditure
Year ended
31.3.19
£000
Year ended
31.3.18
£000
30,573
56,532
3,215
90,320
24,967
72,414
3,661
101,042
Note
15
There was one (2018: two) new investment property purchased during the year, Fourways House, Manchester (£17.6m including
purchase costs) and deferred consideration on the purchase of Kaleidoscope, London EC1 (£13.0m). The majority of the expenditure
on the existing portfolio was made on the London portfolio (83%) and the Manchester offices (17%). Similarly, 85% of the capitalised
interest is in London and 15% is in Manchester offices. Capitalised interest is calculated in accordance with IAS 23 Borrowing Costs.
146
HELICAL PLCAnnual Report and Accounts 2019 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
REGISTRAR
All general enquiries concerning holdings of ordinary shares in Helical plc
should be addressed to the Company’s Registrar:
Link Asset Services
The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU
Telephone: 0871 664 0300*
From outside the UK +44 371 664 0300
Website: www.linkassetservices.com
Email: enquiries@linkgroup.co.uk
For further information on this service or to buy and sell shares online,
please visit www.linksharedeal.com or 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 8.00am – 4.30pm Monday to Friday excluding public holidays in
England and Wales.
SHAREGIFT
Shareholders with a small number of shares, which are uneconomical
to sell, may wish to consider donating them to a charity, free of charge
through ShareGift (registered charity 1052686). For further information
please visit www.sharegift.org, call 020 7930 3737 or write to ShareGift,
PO Box 72253, London, SW1P 9LQ / help@sharegift.org
DIVIDENDS
Dividends declared and/or paid during the year to 31 March 2019
were as follows:
*
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 9.00am and 5:30pm, Monday to Friday excluding public holidays
in England and Wales.
Dividend
2017-18 Final
Record date
2018
15 June
Payment date
2018
20 July
E-COMMUNICATION
Shareholders and all interested parties may choose to be alerted about
press releases, regulatory news updates and financial calendar updates
by subscribing to the alert service in the “Regulatory News” area of
our website.
Shareholders may inform us how they wish to receive statutory
communications from the Company, including annual reports and notices
of general meetings, via the Shareholder portal. Further to letters of
deemed consent sent to Shareholders on 5 April 2017 and 2 May 2019,
Shareholders are notified by post by default when notices, documents
and information from the Company are available on the website at
www.helical.co.uk. If you wish to be notified by email each time the
Company places a statutory document on its website or if you would
like to receive printed copies of statutory documents in the post, please
go to www.signalshares.com. Once you have registered, click on the
“Manage your Account” link and follow the on-screen instructions.
PAYMENT OF DIVIDENDS
UK 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. Shareholders who would like their
future dividends to be paid in this way should complete a mandate
instruction available from the Registrar or register their mandate at:
www.signalshares.com. Under this arrangement dividend confirmations
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,
please 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 plc shares.
For further details, contact the Company’s Registrar (on 0371 664 0381*
or email shares@linkgroup.co.uk) or complete an application form online
at: www.signalshares.com
*
Calls are charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable international
rate. Lines are open between 09:00 – 17:30, Monday to Friday excluding public
holidays in England and Wales.
For participants in the DRIP, key dates of forthcoming dividends can be
found on the Financial Calendar page in the “Investors” section of the
website at www.helical.co.uk
SHARE DEALING SERVICE
An online and telephone share dealing service is available to our
Shareholders through Link Share Deal.
Amount
7.00p
2.60p
Amount
7.50p
TBC 1
2018-19 Interim
30 November
31 December
Dividend payment dates in 2019 will be as follows:
Dividend
2018-19 Final
Record date
2019
14 June
Payment date
2019
19 July
2019-20 Interim
December
December
1
The amount of the 2019–20 Interim Dividend will be announced in November 2019.
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 investment advice, offers to buy shares
at a discount or offers of free reports into Helical.
If you receive unsolicited investment advice:
• Exercise caution and never disclose personal details;
• Obtain the correct name of the person and organisation and make
a record of any other information they give you, such as a telephone
number, address or website address;
• Check that they are properly authorised by the FCA (Financial
Conduct Authority) before getting involved. This can be checked
at fca.org.uk/consumers. If you deal with an unauthorised firm you
will not be eligible to receive payment under the Financial Services
Compensation Scheme;
• Get impartial advice before handing over any money;
• If the caller persists, hang up;
• Inform us on 020 7629 0113 (email: reception@helical.co.uk) or our
Registrars, Link Asset Services, on 0871 664 0300 (email: enquiries@
linkgroup.co.uk). Whilst we are not able to investigate such incidents
ourselves we will record the details and will liaise with the FCA; and
• Report the suspected fraud to the FCA either by calling:
0800 111 6768 or by completing an online form at:
www.fca.org.uk/consumers/report-scam-unauthorised-firm
SHARE PRICE INFORMATION
The latest information on the Helical 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
147
HELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT GLOSSARY OF TERMS
Capital value (psf)
The open market value of the property divided by the area
of the property in square feet.
Net gearing
Total borrowings less short-term deposits and cash as a
percentage of net assets.
Company or Helical or Group
Helical plc and its subsidiary undertakings.
Passing rent
The annual gross rental income being paid by the tenant.
Reversionary yield
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.
See-through/Group share
The consolidated Group and the Group’s share in its joint
ventures (see Appendix 1).
See-through net gearing
The see-through net borrowings expressed as a percentage
of net assets (see Appendix 1).
Total Accounting Return
The growth in the net asset value of the Company plus
dividends paid in the year, expressed as a percentage of
net asset value at the start of the year (see Appendix 2).
Total Property Return
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 (see Appendix 2).
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.
WAULT
The total contracted rent up to the first break, or lease expiry
date, divided by the contracted annual rent.
Diluted figures
Reported amounts adjusted to include the effects of potential
shares issuable under the Director and employee remuneration
schemes.
Earnings per share (EPS)
Profit after tax divided by the weighted average number
of ordinary shares in issue. (see Note 14).
EPRA
European Public Real Estate Association.
EPRA earnings per share
Earnings per share adjusted to exclude gains/losses on sale
and revaluation of investment properties and their deferred tax
adjustments, the tax on profit/loss on disposal of investment
properties, trading property profits/losses, movement in fair
value of available-for-sale assets and fair value movements on
derivative financial instruments, on an undiluted basis. Details
of the method of calculation of the EPRA earnings per share
are available from EPRA (see Note 14).
EPRA net assets per share
Diluted net asset value per share adjusted to exclude fair value
surplus of financial instruments and the Convertible Bond, 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 (see Note 35).
EPRA topped-up NIY
The current annualised rent, net of costs, topped-up for
contracted uplifts, expressed as a percentage of the fair value
of the relevant property.
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 (see Note 35).
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 borrowings expressed as a percentage of net assets.
Initial yield
Annualised net passing rents on investment properties as
a percentage of their open market value.
Like-for-like valuation change
The valuation gain/loss, net of capital expenditure, on those
properties held at both the previous and current reporting period
end, as a proportion of the fair value of those properties at the
beginning of the reporting period plus net capital expenditure.
MCSI Inc. (MSCI)
MSCI Inc. is a company that produces independent benchmarks
of property returns.
Net asset value per share (NAV)
Net assets divided by the number of ordinary shares at the
balance sheet date (see Note 35).
148
HELICAL PLCAnnual Report and Accounts 2019 FINANCIAL CALENDAR AND ADVISORS
CALENDAR
2019-2020
2019
13 June 2019
14 June 2019
28 June 2019
11 July 2019
19 July 2019
November 2019 1
December 2019 2
December 2019 2
2020
May 2020
Ex-dividend date for final ordinary dividend
Record date for final ordinary dividend
Last day for DRIP elections
Annual General Meeting
Final ordinary dividend payable
Half Year Results and interim ordinary dividend announced
Ex-dividend date for interim ordinary dividend
Registration qualifying date for interim ordinary dividend
Announcement of Full Year Results to 31 March 2020
Notes
1 The announcement date of the Half Year Results will be confirmed in October 2019.
2 Dates for the potential interim dividend will be confirmed in the Half Year Results Announcement.
– Link Asset Services
– Aviva Commercial Finance Limited
– Barclays Bank PLC
– HSBC Bank PLC
– Lloyds Bank PLC
– National Westminster Bank PLC
– Santander UK PLC
– The Royal Bank of Scotland PLC
– Wells Fargo
– J.P. Morgan Cazenove
– Numis Securities Limited
– Deloitte LLP
– Clifford Chance LLP
– Mishcon de Reya LLP
ADVISORS
Registrars
Bankers
Joint stockbrokers
Auditors
Corporate solicitors
CONTACT DETAILS
Helical plc
Registered in England
and Wales No.156663
Registered Office
5 Hanover Square
London
W1S 1HQ
T: 020 7629 0113
F: 020 7408 1666
E: reception@helical.co.uk
www.helical.co.uk
149
HELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT NOTES
150
HELICAL PLCAnnual Report and Accounts 2019 NOTES
151
HELICAL PLCAnnual Report and Accounts 2019GOVERNANCEFINANCIAL STATEMENTSADDITIONAL INFORMATIONSTRATEGIC REPORT NOTES
152
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Registered in England and Wales No.156663
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W1S 1HQ
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F: 020 7408 1666
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helical.co.uk
Helical plc
@helicalplc
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