Annual Report • Mar 31, 2010
Annual Report
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Profit before tax, property write-downs and investments gains
Diluted EPRA earnings per share
Final dividend per share
1 Pre-tax loss as adjusted for property write-downs and net gain on sale and revaluation of investment properties (see Results for the year section of the Financial Review on page 31)
2 Calculated in accordance with the best practice recommendations of EPRA
| Performance measured over | ||||||||
|---|---|---|---|---|---|---|---|---|
| Total Returns | 1 year %pa |
3 years %pa |
5 years %pa |
10 years %pa |
15 years %pa |
20 years %pa |
25 years5 %pa |
|
| Helical Bar plc | 1 | 20.2 | -6.1 | 9.5 | 14.6 | 16.8 | 15.6 | 31.2 |
| UK Equity Market | 2 | 52.3 | -0.2 | 7.2 | 2.6 | 7.8 | 8.8 | 10.2 |
| Listed Real Estate Sector Index | 3 | 56.7 | -25.3 | -5.2 | 4.4 | 5.8 | 4.6 | 6.5 |
| Direct Property – monthly data | 4 | 16.3 | -8.2 | 1.6 | 6.4 | 8.0 | 7.2 | 8.8 |
1 Growth over 1 year, 3 years etc. to 31.03.10
2 Growth in FTSE All-Share Return Index over 1 year, 3 years etc. to 31.03.10
3Growth in FTSE 350 Real Estate Super Return Index over 1 year, 3 years, 5 years and 10 years to 31.03.10
For data prior to 31 March 2000 FTSE All Share Real Estate Sector Index has been used
4 Growth in Total Return of IPD UK Monthly Index (All Property) over 1 year, 3 years etc to 31.03.10
5 Growth in UK Equity Markets, Listed Real Estate Sector Index and Direct Property since inception (1 January 1986, 1 January 1986 and December 1986 respectively)
| Annualised over | ||||||
|---|---|---|---|---|---|---|
| 1 year %pa |
2 years %pa |
3 years %pa |
5 years %pa |
10 years %pa |
20 years %pa |
|
| Helical | 8.5 | 0.8 | 0.0 | 9.9 | 13.5 | 15.7 |
| IPD Benchmark | 17.4 | (7.7) | (7.4) | 2.2 | 6.5 | 6.9 |
| Helical's percentile rank | 90 | 5 | 3 | 2 | 2 | 0 |
Source: Investment Property Databank "0"= top ranked fund
£9.7m1
2.9p
1
2
2
0.25p
272p
Note: excludes the surplus but includes writedowns arising from the directors' valuation of trading and development stock.
The Investment Property Databank ("IPD") produces a number of independent benchmarks which are regarded as the main indices of unleveraged commercial property returns. The IPD Benchmark referred to above is the IPD Universe of March Valued Funds.
Helical Bar is a property development and investment company. We create shareholder value through a wide variety of high margin activities with property investment at our core. The intention is that property investment should provide a stable income stream to cover overheads and interest costs.Our spread of activities gives us the flexibility to deploy capital rapidly across our business and focus on whatever opportunities offer the best returns at different points of the property cycle.
51 Report of independent auditor
Riverbank House, EC4 is a 320,000 sq ft new office building built for the City of London / Pace Investments and pre-let in its entirely to Man Group. Building work started in late 2006 and recently completed with the building handed over to the tenant for its fit-out. Helical has a development management agreement with the owners under which it received a profit related fee.
04
Since we last reported to shareholders, the Group has successfully re-entered the investment market by acquiring, with joint venture partners, properties valued at more than £120m at yields that offer substantial potential for capital growth, whilst providing excellent cash returns.
This move back into investment properties marks the start of a re-alignment of the Group's activities as we realise cash from the sale of our industrial and change of use development portfolio and re-invest these funds into high yielding investment assets with good growth prospects as well as Central London offices and other development opportunities.
We have protected our balance sheet by not having a dilutive and deeply discounted rights issue, preferring to rely on the successful placing in January 2009, which raised £26m at a small premium to net asset value per share. The result is that our net asset value performance over the last two years shows a decline of 21.2% in adjusted diluted net asset value per share which comfortably outperforms our peer group. In addition, over this two year period, our property portfolio provided an unleveraged return of 0.8% p.a. compared to a decline in the IPD benchmark of 7.7% p.a.
King Street, Hammersmith London W6
The profit before tax, property write-downs and investment gains reduced to £9.7m (2009: £16.2m). Development profits, before stock write downs, reduced to £8.7m (2009: £15.6m). There were no trading property profits (2009: loss of £0.5m) and an increased contribution from the Group's share in the results of joint ventures of £3.7m (2009: £1.8m). However, write-downs of trading and development stock of £10.0m, mainly resulting from a reduction in the carrying value of land held for industrial and change of use potential, are set against these profits. Net rental income fell to £14.2m (2009: £17.7m), mainly the result of the sale of Rex House, London SW1. Profit before tax was £7.9m (2009: £71.9m).
Administration costs increased from £8.1m to £8.7m with the costs of share awards higher at £1.2m (2009: credit £0.4m). Net finance costs before capitalised interest reduced from £14.5m to £11.5m due to a lower average level of borrowings during the year and lower average interest rates. Capitalised interest reduced to £3.2m from £6.9m. There was a profit on mark to market valuation of the Company's financial instruments of £1.2m (2009: loss of £13.4m). The Company made a loss on currency movements of £1.1m (2009: gain of £4.0m) on its Polish operations.
Valuation yields on our investment portfolio fell by 70 basis points (2009: rise of 180). This created a like for like rise in values of 7.9% (2009: fall of 25.7%), reflected as a gain on revaluation of £13.1m (2009: loss of £68.0m). A loss on sale of investment properties of £4.9m compares with a gain of £1.3m in the previous year.
Diluted earnings per share were 9.1p (2009: loss 56.6p) and diluted EPRA earnings per share were 2.9p (2009: 9.0p).
to 272p (2009: 286p). The directors' valuation of trading and development stock showed a surplus of £33m (2009: £45m) and excluding this surplus the adjusted diluted net asset value per share reduced to 241p (2009: 242p).
A second interim dividend of 2.75p was paid to shareholders on 1 April 2010, originally in lieu of the final dividend. However, the Board is recommending to shareholders an additional final dividend of 0.25p per share, payable, if approved, after the Annual General Meeting in July. IFRS dividends are accounted for once approved and, as a consequence, these accounts include the final dividend from 2009 and both of the interim dividends from 2010, thereby reducing diluted EPRA net asset value per share by 2.75p more than if the second interim had been paid as a final dividend in July. However, taken with the interim dividend paid in December 2009 of 1.75p (2009: 1.75p) and the final dividend of 0.25p it represents a total dividend of 4.75p (2009: 4.50p), an increase of 5.6% for the year.
In the year to 31 March 2010, Helical strengthened its financial position by re-negotiating the terms on £183m of secured loans, repaying £29m and removing loan covenants for between two and three years. Whilst property values have recovered from their low point in August 2009, the Group will continue to monitor loan to value covenants, where applicable, and all income covenants to ensure that any potential breaches are avoided. Helical has repaid £68m of debt during the period, partly as a result of its renegotiation of loans and partly arising from the sale of Rex House and industrial units at Southampton, Southall and Kidlington. Since the year end, the Group has repaid £9m of loans from the sale of Watford, Paignton and Whitstable and will repay a further £10m on the sale of Fieldgate Street, London E1 in June 2010.
At 31 March 2010 the Group had net borrowings of £203.0m (2009: £224.7m) and gross property values of £435.5m (2009: £497.2m). The ratio of net borrowings to the value of the property portfolio (including directors' valuation of stock) was 46.6% (2009: 45.2%). Net debt to equity gearing at 31 March 2010 was 84% (2009: 95%).
At 31 March 2010, the Group had £92.6m (2009: £147.9m) of fixed rate borrowings with an average effective interest rate of 6.43% (2009: 6.31%) and an average length of 2.3 years (2009: 3.2 years) and £34m of interest rate caps at an average of 6.00% (2009: 6.73%). In addition, the Group had a £34m floor at 4.50% until 2013.
Despite the recovery in commercial property values since August 2009 there remain significant uncertainties over the current strength and future direction of the UK economy. Continued volatility in Europe and its impact on the Euro, and uncertainty surrounding the new UK Government's plans to stabilise the domestic economy, threaten to slow the recent rise in property values. However, the next 18 months should see an increase in activity as the domestic banks seek to sell assets following recent rises in values. The Helical brand is ideally placed to take advantage of any opportunities as a result of its strong balance sheet, well-established industry, banking and investor partnerships coupled with the experience and skills of its management team.
Giles Weaver Chairman 16 June 2010
2-4 Eastcheap, London EC3 – acquired June 2010
Battersea Studios
05
06
In the year to 31 March 2010, commercial property started to recover from the 44% decline in capital values between their peak in June 2007 and their trough in July 2009. Since then, capital values have improved by approximately 14%. This recovery is now stalling as buyers digest the potential clouds on the horizon. The derivative market points to negligible capital growth for the foreseeable future and IPF forecasts are no more optimistic. The overwhelming concern centres on the banking crisis spilling over into a sovereign wealth problem whilst on a domestic level, the market remains worried over tenant demand/failure, forced sales as the banks slowly unload and a constipated new planning regime.
Set against good gains by the majors with a strong London weighting, Helical's efforts this year at first may seem pedestrian. This is a function of how we have managed our way through the last three years of crisis. I draw your attention to the Chairman's Statement on our adjusted net asset value per share outperformance over the last two difficult years which demonstrates the virtues of avoiding hugely dilutive rights issues. That path never was and never will be Helical's way. Shareholders can be grateful that your management team maintains a sizeable shareholding in the company.
In every market cycle, Helical has experienced a period during which it repositions its business to prepare for opportunities in forthcoming years. It is no accident that half of our portfolio is made up of development and trading property rather than mainstream investment stock. Now is the time to be working up major projects, both in Central London offices and in large residential plays in West London, as well as keeping an eye open for attractive investment opportunities as and when they arise. Interestingly, we made our first major investment acquisition in four and a half years when buying the Clyde Shopping Centre in Glasgow with joint venture partners last autumn. This was followed by the purchase of nine industrial and office investments last month. More recently we have been appointed 'asset and development manager' at the 360,000 sq ft City office property, 200 Aldersgate, reflecting our long experience of City development. Legal agreements have been exchanged to acquire the site at Mitre Square, London EC3 from the City of London and Ansbacher and a planning application for a new, high quality office development of 270,000 sq ft NIA has been submitted. A start on site could be as early as the first quarter of 2011. With responsibility for some 3,500 residential units to be built in West London at Fulham Wharf, Hammersmith Town Hall and White City, in addition to our growing Retirement Villages portfolio, we look also to benefit from an improving residential market.
Having successfully navigated our way through the crisis period and in doing so outperformed our peers, we now look to monetising our portfolio of opportunity, sharing risk with partners, and maintaining a strong balance sheet.
Michael Slade Chief Executive 16 June 2010
| London offices % |
Provincial offices % |
In town retail % |
Out of town retail % |
Industrial % |
Change of use % |
Retirement villages % |
Total % |
|
|---|---|---|---|---|---|---|---|---|
| Investment | 19.6 | 2.4 | 22.5 | 4.2 | 6.1 | - | 0.9 | 55.7 |
| Trading and development | 0.4 | 4.3 | 2.1 | 11.2 | 7.5 | 5.0 | 13.8 | 44.3 |
| Total | 20.0 | 6.7 | 24.6 | 15.4 | 13.6 | 5.0 | 14.7 | 100.0 |
Note: excludes the surplus arising from the directors' valuation of trading and development stock.
Business review Helical Bar plc Report & accounts 2010
07
Mitre Square, London EC3
Our overriding long term strategy is to make excellent returns for our shareholders through a broadly based, diversified property business, which has access to a very wide range of opportunities.
We do this with a small, long serving management team who have a significant proportion of their own wealth invested in a 17% stake in the Company and have no competing interests. We try to keep execution risk to a minimum, working with first rate joint venture partners when we move into new areas of property business.
Helical seeks to provide a continuing flow of development profits. It has good experience across the different sectors of offices, retail, industrial, mixed use and residential/retirement village schemes. These developments are either pre let or speculative and financed either by Helical or by third party funding partners. Helical tends to develop smaller schemes on its own and works on larger schemes either as development manager, typically being paid a small fee in return for a greater share of profit to incentivise a successful outcome, or with equity invested alongside our partner.
Profits from the Group's development programme of £8.7m (2009: £15.6m) were again turned into net losses by provisions of £10.0m (2009: £23.3m) made against the carrying value of development stock. The profits generated during the year came from a range of developments including the retail schemes at Opole, Poland and Trinity Square, Nottingham; industrial schemes at Kidlington and Southall and at Aycliffe industrial estate; our office scheme at Riverbank House, London EC1 and at Bramshott Place Retirement Village. Provisions were made against the carrying value of land held for industrial and change of use potential. In addition to these schemes the Group's efforts were directed towards progressing our position in a range of schemes across the portfolio, details of which are outlined over the following pages.
Fulham Wharf, London SW6
The Hub, Pacific Quay, Glasgow
The focus of the Group over the last year has been on those schemes recently completed or under construction, looking for tenants for the space, where vacant, and progressing a small number of major schemes for the future.
Riverbank House, London EC4 See page 2.
Originally developed in the late 1980's, this 360,000 sq ft office building has remained vacant since Clifford Chance left for Canary Wharf in 2005. We have been appointed as asset and development managers with a view to refreshing and re-cladding parts of the building and creating a "vertical village" for office users. It is anticipated that the works will be completed in late 2010, following which the building will be re-launched on the market.
Legal agreements have been signed to acquire the site at Mitre Square, London EC3 from the City of London and Ansbacher. A planning application for a new high quality office development of 270,000 sq ft NIA has been submitted. A start on site could be as early as the first quarter of 2011.
The Hub, Pacific Quay, Glasgow See opposite.
This 75,000 sq ft office refurbishment for the National Grid UK Pension Fund was completed in February 2008. During the year, we have achieved lettings to restaurant Busaba Eathai and office tenants Novus Leisure Ltd and good progress is being made on the remainder of the vacant space. Due to movements in rental and yield pricing it is very unlikely a further profit payment will be forthcoming.
The Hub, Pacific Quay, Glasgow was completed in 2009. This new 60,000 sq ft building offers flexible office space with an onsite cafe and events area. Located in the midst of a media hotbed with BBC Scotland and STV as neighbours, this scheme has been partly let to The Digital Design Studio, the commercial arm of Glasgow School of Art, Shed Media and other high-tech, media-oriented tenants. business review Helical Bar plc
Helical Bar plc Report & accounts 2010
Shepherds Building, Shepherds Bush, London W14
Recently refurbished Shepherds Building is West London's answer to the creative working spaces that have proved so popular on the east side of town. Close to the BBC, Notting Hill and Hammersmith and with easy access to the West End via the Central Line on Shepherds Bush Green, Shepherds Building is ideal for new creative businesses. The new Westfield shopping centre has transformed the area into a major destination in the capital. Shepherds Building offers spaces from 200 sq.ft. in a striking refurbished 1950s building brought up-to-date with an exciting scheme.
Exterior of Shepherds Building
Europa Centralna, Gliwice
In Poland we have three schemes totalling over 117,600 sq m (1.2m sq ft):
Opole is located approximately 40km to the west of Wroclaw along the A4 motorway and is the administrative centre of the Opole province. This shopping centre and retail park is anchored by a Carrefour Hypermarket and a Praktiker DIY store and comprises approximately 41,000 sq m (440,000 sq ft) of retail space. The scheme has been forward funded and sold to Standard Life and is due for completion in the first quarter of 2011.
This scheme is being developed on land to the south of Gliwice at the intersection of the A4 and A1 motorways. This highly visible site has unparalleled accessibility and will be a major regional shopping destination. The retail park and shopping centre, comprising approximately of 67,000 sq m (720,000 sq ft) of retail space, will incorporate three distinct parts, being a foodstore, DIY and household goods and fashion. The scheme has been part pre-let to Castorama, Media Expert and others. We are currently in detailed discussions with potential joint venture partners. Construction is due to commence by the end of 2010 with completion in the first quarter of 2012.
Wroclaw is a large city in West Poland, some 100km from the German border and 470km south of Warsaw. This 9,600 sq m (103,000 sq ft) out of town retail development was completed in December 2008 and is fully let to a number of domestic and international retailers including Halfords, Media Expert, Deichmann, Komfort and others. The scheme is currently under offer for sale to a private property investment fund.
retail
Clyde Shopping Centre is the dominant retail location in Clydebank and for the north west of Glasgow. The centre comprises in excess of 625,000 sq ft of net retail floor space with 121 shops, six anchor stores (Asda, Primark, BHS, Dunnes, Boots and Argos), cafes, a multiplex cinema (not part of the acquired property) and parking for nearly 1,700 cars. The centre was originally opened in 1978 and subsequent phases were built in 1980, 1987 and 2003.
A retirement village is a private residential community in which active over-55s are able to live independently in retirement. Residents have typically down-sized from a larger family home into a cottage or apartment with no maintenance or security issues. With access to a central clubhouse containing a bar and restaurant facilities and health and fitness rooms and surrounded by maintained grounds, this retirement option is proving increasingly popular.
Bramshott Place, Liphook, Hampshire See opposite
Cherry Tree Yard, a 30 acre site, had operated as a sawmill with outside storage for many years. Now vacant, we were granted planning permission, at appeal, in May 2009 following a public inquiry where the Inspector allowed a development comprising a retirement village of 148 units, eight affordable housing units, a 50 bed residential care home and a central facilities clubhouse building. Demolition and enabling works will commence shortly with construction of the retirement village and clubhouse, to be built in phases, expected to commence in late 2010.
This 19 acre site was acquired in 2007 from the St Loye's Foundation, a long established rehabilitation college in the city of Exeter. Resolution to grant planning permission was obtained in October 2009 for a retirement village of 206 units, a 50 bed residential care home, an affordable "extra-care" block of 50 units and a central facilities clubhouse building. Construction of the retirement village and clubhouse in phases is expected to commence during 2011.
This 21 acre site was acquired from EDF in 2006 and was previously used as a training centre and depot. Located within the Green Belt, planning permission has been obtained for a retirement village of 101 units and a central facilities clubhouse building.
The original Bramshott Place Village was an Elizabethan mansion built in 1580 by a local merchant. Whilst this was demolished in the mid 19th Century and replaced by Bramshott Grange, the original Grade II listed Tudor Gatehouse remains and has been fully restored. Bramshott Grange operated most recently as a hospital for the elderly but closed in 1987. The land and buildings remained derelict until Helical acquired them in 2001. Changing planning from its previously designated employment use to a retirement village took several years but was eventually achieved in 2006.
The development of 151 cottages and apartments, and the new clubhouse, started in late 2007 and has proceeded in phases as units are sold. Currently, we have sold 33 units in phases 1 & 2 with reservations on a further 28 units out of a total of 96 units built or under construction. The remaining 55 units are expected to be built in 2010/11.
Helical Bar plc Report & accounts 2010
17
We continue to work with the London Borough of Hammersmith and Fulham and the GLA in the production of an Opportunity Area Planning Framework for White City which will set out a blueprint for the area's potential. The aspiration for us and our landowning consortium (Aviva, M&S, BBC and Land Securities) is a major mixed use scheme east of Wood Lane, London W12 incorporating some 3.5m sq ft of residential and commercial floorspace with a creative industries bias. The ownership interests of our consortium lie immediately opposite BBC Television Centre and just north of Westfield's new shopping centre.
At Fulham Wharf we are finalising, with landowner Sainsbury's, a planning application for a 100,000 sq ft new foodstore together with circa 475 residential units. The proposal is to demolish the adjacent dilapidated buildings, construct a new store with housing above and turn the existing store into new housing, creating new public spaces and enhancing access to a Thames riverside walkway within the development.
We have a development agreement with the London Borough of Hammersmith & Fulham, in partnership with residential specialist Grainger plc, for the regeneration of the west end of King Street, Hammersmith. We will submit a planning application in Summer 2010 for new council offices, a foodstore and restaurants around a new public square, over 320 new homes and a new public footbridge across the Great West Road, which will re-connect Hammersmith to the River Thames and Furnival Gardens.
At Parkgate, Shirley we have revised our plans for the redevelopment of this site and will be submitting a new planning application to Solihull Metropolitan Borough Council later this Summer. The development will, however, continue to include an 85,000 sq ft Asda supermarket, 64,000 sq ft of retail and circa 120 residential apartments and townhouses.
At Bluebrick, Wolverhampton, we currently own a refurbished disused railway station with planning permission for casino use and are looking for a tenant and/or purchaser for this building. In previous years, we have sold off parcels of land for student housing, residential, hotel, car showroom and public house use.
At Leisure Plaza, Milton Keynes, we have planning consent for a 165,000 sq ft retail store, 65,000 sq ft casino, 50,000 sq ft ice rink and 25,000 sq ft of other leisure.
Completion of the sale of our site at Fieldgate Street, London, E1, which has planning consent for 340 student rooms, is due in June 2010. At 200 Great Dover Street, London, SE1, currently an investment property, let to Conoco Phillips until June 2011, we are appealing against a planning refusal for a new development of 35,000 sq ft of offices and 245 student rooms.
We have built 120 units totalling over 570,000 sq ft for onward sale to owner occupiers at two sites in Oxford as well as at Southampton, Southall (West London) and Hailsham. We have sold 43 of these units (220,000 sq ft), and have let a further seven units (29,000 sq ft). These schemes include sales of parcels of land for car showrooms, builders merchants and self-storage uses and the development of trade counter schemes. In addition, we own a vacant site in Stockport with planning permission for trade counters, industrial units and a builders merchant, self storage and car showroom. Infrastructure works have recently commenced at this site.
Helical Governetz was formed in 2007 in anticipation of demand for the wholesale reform of the government estate which is inefficient, outdated and poorly located. The intention is to provide office campus accommodation where civil service, local government, wider public sector bodies, and private sector servicing organisations can share facilities, accommodation and services. The buildings will meet all the requirements of SOGE – Sustainability on the Government Estate.
Whilst these initiatives will take time to come to fruition we have been encouraged by our preliminary discussions with government bodies. At Keele, Staffordshire we are planning a sustainable business park within Keele University Science and Business Park. At Waverley, Rotherham, South Yorkshire in partnership with Harworth Estates, a division of UK Coal plc, we are planning a sustainable mixed use development of up to 600,000 sq ft of offices. Other projects are under discussion at Newport, Preston and Porton Down.
In January 2007 we acquired a research facility near Newmarket in a joint venture with the majority shareholder of Quotient who occupy the buildings. As part of the transaction we acquired a minority stake in Quotient, a fast growing biosciences company.
Parkgate, Shirley
Mixed use development at Trinity Square, Nottingham
In recent years we have retained those assets identified as having potential for future growth, or which provided a strong cash flow to the business, having disposed of assets which had reached their maximum potential. The remaining portfolio provided a source of income to cover overheads and finance costs but this, as with the rest of the property sector, suffered from valuation falls in 2007 and 2008.
By July 2009, the cycle appeared to be turning with capital values increasing despite continuing falls in rental values. This is reflected in a like-for-like increase in values of 7.9% on the investment portfolio over the year.
During this financial year we sold our short leasehold interest in Rex House, London SW1 to the freeholders, The Crown Estate, for £34m. The sale price, reflecting an initial yield of 12% on a head lease with just 26 years remaining, was at 8% below the 31 March 2009 valuation.
We made our first significant investment property acquisition for four and a half years at the end of 2009, acquiring Clyde Shopping Centre in Glasgow with joint venture partners, and, following the year end, bought a portfolio of nine industrial and office assets located predominantly in London and the South East.
| Valuation movements | ||
|---|---|---|
| Sector | Valuation increase/ (decrease % |
Weighting % |
| London offices | 7.9 | 44 |
| Provincial offices | (5.9) | 6 |
| Total offices | 6.2 | |
| In town retail | 10.7 | 27 |
| Out of town retail | 19.9 | 9 |
| Total retail | 13.0 | |
| Industrial | 1.7 | 14 |
| Total | 7.9 | 100 |
| Sector | Initial % |
On letting voids % |
On rack rental value % |
Equivalent % |
True equivalent % |
|
|---|---|---|---|---|---|---|
| Offices | 6.6 | 8.2 | 8.2 | 7.9 | 8.3 | |
| Retail | 6.6 | 7.9 | 7.9 | 7.6 | 7.9 | |
| Industrial | 6.3 | 9.4 | 10.1 | 9.2 | 9.7 | |
| All | 6.6 | 8.2 | 8.3 | 7.9 | 8.3 |
| Sector | Capital value psf £ |
Vacancy rate % |
Average unexpired lease term Years |
|||
|---|---|---|---|---|---|---|
| All offices | 232 | 14 | 4.2 | |||
| London offices | 249 | 17 | 2.6 | |||
| Retail | 151 | 8 | 13.9 | |||
| Industrial | 44 | 18 | 4.6 | |||
| Total | 132 | 13 | 10.1 | |||
| Lease expiries and tenant break options in: | 2010 | 2011 | 2012 | 2013 | 2014 | |
| Percentage of rent roll | 8.9% | 15.0% | 5.1% | 9.5% | 5.6% | |
| Number of leases | 70 | 58 | 31 | 26 | 20 | |
| Average rent per lease | £26,300 | £53,900 | £34,400 | £76,300 | £58,300 | |
21
Helical Bar plc Report & accounts 2010
219,792
| Lease expiries and tenant breaks in year | ||
|---|---|---|
| 2010 | ||
| £ | % | |
| Leases renewed | 2,235,900 | |
| Break options not exercised | 763,400 | |
| Tenants holding over | 182,700 | |
| 3,182,000 | 87 | |
| Rents lost at break/expiry | 498,500 | 13 |
| 3,680,500 | 100 | |
| Passing rent changes in the year | ||
| Rent | Change | |
| £ | £ | |
| Rent lost at break/expiry | (498,485) | (498,485) |
| Rent lost through administration | (638,105) | (638,105) |
| Leases renewed | 2,235,916 | 157,508 |
| Tenants holding over | 182,730 | – |
| Fixed uplifts | 1,918,904 | 184,737 |
| March 2009 – March 2010 % |
|
|---|---|
| Industrial | 8.1 |
| Out of town retail | 0.3 |
| In town retail | 7.5 |
| Total retail | 5.4 |
| Provincial offices | -5.6 |
| London offices | -3.7 (+2.3% since September 2009) |
| Total offices | -4.1 |
| Total | 0.8 |
New lettings 1,014,137 1,014,137
| Project type | Book cost £m |
Write down £m |
Written down book cost £m |
Directors' valuation £m |
Surplus over book cost £m |
|---|---|---|---|---|---|
| Change of use | 23 | (1) | 22 | 32 | 10 |
| Industrial development for freehold sales | 38 | (6) | 32 | 32 | - |
| Retirement village development | 61 | (2) | 59 | 72 | 13 |
| Office development | 20 | (1) | 19 | 19 | - |
| Retail development (Helical Poland) | 45 | - | 45 | 55 | 10 |
| Others – Mainly mixed development | 6 | - | 6 | 6 | - |
| Total | 193 | (10) | 183 | 216 | 33 |
Basis of valuation – the Directors' valuation of the properties is based on current site values.
22
Income producing assets
| Offices | ||||
|---|---|---|---|---|
| Address | Region | Tenure | Acquired | Area Sq. ft. (NIA) |
| Shepherds Building, Shepherds Bush, London W14 | London | Freehold | 2000 | 151,000 |
| 61 Southwark Street, London SE1 | London | Freehold | 1998 | 67,000 |
| 200 Great Dover Street, London SE1 | London | Leasehold | 2008 | 36,000 |
| 80 Silverthorne Road, Battersea, London SW8 | London | Freehold | 2005 | 56,000 |
| 82 Silverthorne Road, Battersea, London SW8 | London | Freehold | 2008 | 52,000 |
| Fordham, Newmarket | South East | Freehold | 2007 | 70,000 |
| Amberley Court, Crawley | South East | Freehold | 2006 | 31,000 |
| 463,000 | ||||
| Retail - Shopping Centre | Area | |||
| Address | Region | Tenure | Acquired | Sq. ft. (NIA) |
| Clyde Shopping Centre, Clydebank | Scotland | Leasehold | 2010 | 627,000 |
| 627,000 | ||||
| Retail - In town | Area | |||
| Address | Region | Tenure | Acquired | Sq. ft. (NIA) |
| Morgan Department Store, Cardiff | Wales | Freehold | 2005 | 246,000 |
| 1 - 5 Queens Walk, East Grinstead | South East | Freehold | 2005 | 37,000 |
| 283,000 | ||||
| Retail - Out of town | Area | |||
| Address | Region | Tenure | Acquired | Sq. ft. (NIA) |
| Otford Road Retail Park, Sevenoaks | South East | Freehold | 2003 | 42,000 |
| Stanwell Road, Ashford | South East | Leasehold | 2004 | 32,000 |
| Brixham Road, Paignton | South West | Freehold | 2005 | 24,000 |
| 98,000 | ||||
| Industrial | ||||
| Address | Region | Tenure | Acquired | Area Sq. ft. (NIA) |
| Standard Industrial Estate, North Woolwich E16 | London | Leasehold | 2002 | 50,000 |
| Westgate, Aldridge | Midlands | Freehold | 2006 | 184,000 |
| Waterfront Business Park, Fleet, Hampshire | South East | Freehold | 2000 | 54,000 |
| Dales Manor Business Park, Sawston, Cambridge | South East | Freehold | 2003 | 62,000 |
| Hawtin Park, Blackwood | Wales | Freehold | 2003 | 249,000 |
| Winterhill Industrial Estate, Milton Keynes | Midlands | Freehold | 2004 | 24,000 |
| Golden Cross, Hailsham | ||||
| South East | Freehold | 2001 | 102,000 | |
| 725,000 |
| Helical interest |
Description | Average passing rent |
Vacancy rate |
|---|---|---|---|
| 100% | Media style offices refurbished in 2001 | £22.50 | 2% |
| 100% | Refurbished with added penthouse suite | £18.65 | 0% |
| 100% | Fully let, re-development potential | £19.95 | 0% |
| 75% | Media style offices refurbished in 2006 | £18.37 | 13% |
| 75% | Media style offices built in 2008 | £0.00 | 100% |
| 53% | R & D space and offices on 32 acres | £15.37 | 0% |
| 95% | Partial refurbishment of office campus | £13.88 | 12% |
| Helical | Description | Average | Vacant |
|---|---|---|---|
| interest | passing rent | space | |
| 60% | Multi-let regional shopping centre | £13.74 | 7% |
| Helical interest |
Description | Average passing rent |
Vacant space |
|
|---|---|---|---|---|
| 100% | Refurbished store let as retail units + arcades | £12.84 | 15% | |
| 89% | Retail units 95% let to Sainsbury's | £8.37 | 0% | |
| Helical interest |
Description | Average passing rent |
Vacant space |
|
|---|---|---|---|---|
| 75% | Retail park let to Wickes, Currys & Carpetright | £17.37 | 0% | |
| 75% | Solus unit let to Focus DIY store | £17.76 | 0% | |
| 77% | Solus unit let to Focus DIY store, sold In May 2010 | £8.75 | 0% |
| Helical interest |
Description | Average passing rent |
Vacant space |
|
|---|---|---|---|---|
| 60% | Multi-let industrial estate | £8.95 | 10% | |
| 90% | Single-let refurbished industrial unit | £2.93 | 0% | |
| 100% | Multi-let industrial estate | £5.93 | 47% | |
| 67% | Multi-let industrial estate | £7.28 | 0% | |
| 100% | Offices and industrial units | £2.04 | 0% | |
| 50% | Offices and industrial units | £0.00 | 51% | |
| 100% | Industrial units | £4.36 | 89% |
| 1,153,000 | ||||
|---|---|---|---|---|
| Forest Gate, Crawley | South East | 63,000 | 100% | |
| The Hub, Pacific Quay, Glasgow | Scotland | 60,000 | 100% | |
| Clareville House, London SW1 | London | 75,000 | Dev. Man. | |
| Mitre Square, London EC3 | London | 275,000 | 100% | |
| 200 Aldersgate Street, London EC1 | London | 360,000 | Dev. Man. | |
| Riverbank House, London EC4 | London | 320,000 | Dev. Man. | |
| Address | Region | Area Sq. ft. (NIA) |
Helical interest |
|
| Offices |
| Address | Region | Area Sq. ft. (NIA) |
Helical interest |
|
|---|---|---|---|---|
| Scotts Road, Southall, West London | London | 167,000 | 100% | |
| Millbrook Trading Estate, Southampton | South East | 110,000 | 100% | |
| Langford Lane, Kidlington, Oxford | South East | 72,000 | 100% | |
| Tiviot Way, Stockport | North West | 189,000 | 100% | |
| Watlington Road, Cowley, Oxford | South East | 71,000 | 100% | |
| Ropemaker Park, Hailsham | South East | 70,000 | 90% | |
| 679,000 |
| Area | Helical | |||
|---|---|---|---|---|
| Address | Region | Sq. ft. (NIA) | interest | |
| Wroclaw | Poland | 103,000 | 50% | |
| Opole | Poland | 440,000 | 50% | |
| Europa Centralna, Gliwice | Poland | 720,000 | 50% | |
| 1,263,000 |
| Address | Region | Area Sq. ft. (NIA) |
Helical interest |
|---|---|---|---|
| White City, London W12 | London | 3,500,000 | Consortium |
| Fieldgate Street, London E1 | London | - | 100% |
| Cawston, Rugby | Midlands | - | 100% |
| Arleston, Telford | Midlands | - | 100% |
| 3,500,000 |
25
| Fund/owner | Type of development |
|---|---|
| City of London /Pace Investments | New office building completed May 2010 |
| Deutsche Pfandbriefbank | Refurbishment to be completed in Oct 2010 |
| New office building | |
| National Grid UK Pension Fund | Refurbishment completed 2009 |
| Helical | New office building completed 2009 |
| Helical | Refurbished and new offices |
| Fund/owner | Type of development | Description |
|---|---|---|
| Helical | New build | Industrial units |
| Helical | New build | Industrial and trade counter |
| Helical | New build | Industrial units |
| Helical | New build | Industrial, trade counter etc |
| Helical | New build | Industrial and offices |
| Helical | New build | Industrial and food store/rest |
| Fund/owner | Type of development | Description |
|---|---|---|
| Helical | New build | Completed development, fully let |
| Standard Life | New build | Under construction |
| Helical | New build | To commence late 2010 |
| Fund/owner | Type of development | Description |
|---|---|---|
| Consortium | Site | Commercial and residential |
| Helical | Site | Sold since year end |
| Helical | Site | 32 acre greenfield site with residential potential |
| Helical | Site | 19 acre greenfield site with residential potential |
| Address | Region | Units | Helical interest |
Description |
|---|---|---|---|---|
| Bramshott Place, Liphook, Hampshire |
South East | 151 | 100% | 33 units sold, 28 under offer |
| Lime Tree Village, Rugby | Midlands | 154 | 33% | 153 units sold |
| St Loye's College, Exeter | South West | 206 | 100% | Resolution to grant planning consent for a retirement village granted in October 2009 |
| Maudsley Park, Great Alne | Midlands | 150 | 100% | 314,000 sq ft industrial estate on a 20 acre site with potential for a retirement village |
| Ely Road, Milton, Cambridge | South East | 101 | 100% | Planning consent for a retirement village granted in 2009 |
| Cherry Tree Yard, Faygate, Horsham |
South East | 148 | 100% | Planning consent for a retirement village granted in May 2009 |
| 910 |
| Address | Region | Helical interest |
Description |
|---|---|---|---|
| C4.1, Milton Keynes | Midlands | 50% | 110,000 sq ft Sainsbury's, 440 residential units and 35,000 sq ft retail and offices |
| King Street, Hammersmith, London |
London | 50% | Planning application to be made for new council offices, foodstore and restaurants |
| Fulham Wharf, London SW6 | London | Dev. Man. | 100,000 sq ft foodstore and 475 residential units |
| Leisure Plaza, Milton Keynes | Midlands | 50% | Consent for 165,000 sq ft retail store, 65,000 sq ft casino, 75,000 sq ft other leisure |
| Parkgate, Shirley, West Midlands | Midlands | 50% | 80,000 sq ft Asda supermarket, 70,000 sq ft retail, 100 residential units |
| Bluebrick, Wolverhampton | Midlands | 75% | Refurbished railway station with permission for casino use |
| Hagley Road, Quinton, Birmingham |
Midlands | 75% | Consent for 16,000 sq ft retail. Site under offer |
A property company's share price should reflect growth in net assets per share. Our Group's main objective is to maximise growth in assets from increases in investment portfolio values and from retained earnings from other property related activities.
Risk is an integral part of any company's business activities and Helical's ability to identify, assess, monitor and manage each risk to which it is exposed is fundamental to its financial stability, current and future financial performance and reputation.
We incentivise management to outperform the Group's competitors by setting the right levels for performance indicators against which rewards are measured. We also design our remuneration packages to align management's interests with shareholders' aspirations. Key to this is the monitoring and reporting against identifiable performance targets and benchmarks. For a number of years we have reported on these, the most important of which are:
The Investment Property Databank ("IPD") produces a number of independent benchmarks of property returns which are regarded as the main industry indices. They have compared the ungeared performance of Helical's total property portfolio against that of portfolios within IPD for the last 20 years. The Group's annual performance target is to exceed the top quartile of the IPD database. Helical's ungeared performance for the year to 31 March 2010 was 8.5% (2009: -6.3%) compared to the IPD median benchmark of 17.4% (2009: -24.2%) and upper quartile benchmark of 21.5% (2009: -21.9%).
As referred to in the Chief Executive's statement, the year to 31 March 2010 was a period during which the Group repositioned its business, and this had an impact on performance. However, over two, three and five years the Group's property portfolio continued to outperform the IPD benchmark.
| 31.3.10 % |
31.3.09 % |
31.3.08 % |
|
|---|---|---|---|
| Helical | 8.5 | (6.3) | (1.6) |
| IPD upper quartile | 21.5 | (21.9) | (6.3) |
| Percentile rank | 90.0 | 1 | 8 |
| To 31 March 2010 | 2 years | 3 years | 5 years |
| Helical | 0.8 | 0.0 | 9.9 |
| IPD benchmark | (7.7) | (7.4) | 2.2 |
| Percentile rank | 5 | 3 | 2 |
The returns on shareholder capital earned by Helical are generally higher than those measured by IPD due to the use of gearing.
The returns noted above take no account of the £33m (2009: £45m) surplus of trading and development stock above book value arising from the directors' valuation.
Total Shareholder Return ("TSR") measures the return to shareholders from share price movements and dividend income and is used to compare returns between companies listed on the London Stock Exchange. Helical's TSR for the year to 31 March 2010 was 20.2% (2009: 22.3%) compared to the median of the listed real estate sector of 56.7% (2009: -62.2%).
However, over three, five, ten, fifteen, twenty and twenty-five years Helical's TSR has outperformed the Listed Real Estate Sector Index as shown on the inside front cover of this Report and Accounts.
Net asset value per share represents the share of net assets attributable to each ordinary share. Whilst the basic and diluted net asset per share calculations provide a guide to performance the property industry prefers to use an adjusted diluted net asset per share. The adjustments necessary to arrive at this figure are shown in note 34 to these accounts.
Management is incentivised to exceed 15% p.a. growth in net asset value per share.
The adjusted diluted net asset value per share, excluding trading stock surplus, at 31 March 2010 was 241p (2009: 242p).
Including the surplus on valuation of trading and development stock, the diluted EPRA net asset value per share at 31 March 2010 was 272p (2009: 286p). Diluted EPRA triple net asset value per share was 259p (2009: 269p).
The responsibility for the governance of the Group's risk profile lies with the Board of Directors of Helical. The Board is responsible for setting the Group's risk strategy by assessing risks, determining its willingness to accept those risks and ensuring that the risks are monitored and that the Group is aware of and, if appropriate, reacts to, changes in those risks. The Board is also responsible for allocating responsibility for risk within the Group's management structure.
The Group maintains a Risk Register which enables the Board to focus on perceived specific key risks, assessing their magnitude and the probability of negative outcomes. This Risk Register is reviewed at each quarterly Board meeting and strategies are adopted to minimise and eliminate the risks identified.
Strategic risks are those risks that may adversely affect the Group's financial performance by following an inappropriate strategy or by the failure to execute an appropriate strategy. Strategic risks arise over a long time frame where there are fundamental differences between the business environment in which the Group operates and the environment assumed on the establishment of that strategy.
The Group's reputation is a key component of its ability to achieve its strategic goals and success in meeting these goals depends not only on the effective management of risks but also on the maintenance of its reputation among stakeholders i.e. employees, investors, regulators, business partners, financial institutions and the public.
Measuring the impact of the Group's reputation on its business dealings is not a science and, in the view of the Group, may best be measured by the willingness of stakeholders to continue to deal with Helical. During the last year there have been no signs that we are not seeing all the opportunities in property that we would expect and recent transactions suggest that we continue to be a Group that others want to deal with. Internally, risks to the Group's reputation are mitigated by the application of an internal Code of Conduct and "whistle blowing" procedures which are reviewed annually.
The other main strategic risks identified by the Group include:
The principal strategic risks noted above and the underlying drivers of such risks are monitored by management and discussed regularly in the Business Plan presented by the Group's Finance Director to the full Board each year.
In addition the Group receives regular updates on the impact of economic scenarios on the real estate sector as well as subscribing to a number of economic journals in order that senior employees are kept up-to-date.
The Board has a schedule of matters specifically reserved to it for decision. The Board controls the business but delegates day-to-day responsibility to the executive management. However, there are a number of matters which are required to be or, in the interests of the Group, should only be decided by the Board of Directors as a whole.
The Board monitors the financial performance of the Group at regular Board meetings where comparisons against budgets and forecasts are made together with a review of key performance indicators.
The remuneration packages of senior directors and employees are seen as the key to their retention and motivation. These remuneration packages are designed to provide a basic level of salary below the median of the Group's peer group but with cash bonuses and share awards at the top end of the peer group rewarding outperformance compared to that peer group.
The most recent annual review of the strategic risks faced by the Group indicate that the business of Helical is appropriate to the business environment in which it competes.
During the year under review, commercial property started to recover from the 44% decline in capital values between their peak in June 2007 and their trough in July 2009. Since then capital values have improved by approximately 14%.
Operational risks are those that the Group may suffer a loss from inadequate internal processes, systems, resources, incorrect decision-making or through external events.
Losses from operational risk can arise from:
The Group's approach is not to eliminate operational risk, but rather to identify the areas in which it might arise and to contain it within acceptable limits through the application of effective controls. Ultimately, the management of operational risk is dependent upon the application of sound management judgement. The close involvement of the executive directors in the day-to-day running of the business is critical to that judgement.
The Group has not suffered any material losses arising from exposure to operational risks in the year under review.
– retention of key senior employees.
30
Market risks arise from the possibility that the Group may suffer reduced income or a loss resulting from fluctuations in the values of, or income from, its real estate portfolio.
Market risk is a key component of the Group's long-term strategy with exposure to the various real estate sectors fluctuating as perceptions of the future performance of each of those sectors change. Net asset value growth, a key performance indicator, is dependent upon an ability to move easily between sectors at the appropriate time.
The Group's directors constantly analyse fluctuations in market movements using evidence gathered from a variety of public and personal sources, using this analysis to determine the future direction of real estate investment.
Selecting the most appropriate level of exposure to each sector is fundamental to the success of the Group. Measuring that success is undertaken by comparing the Group's portfolio returns over short-, medium- and long-term periods with those as reported by Investment Property Databank ("IPD"), the source of the main real estate sector indices.
In the year under review, the Group's real estate portfolio underperformed compared to the majority of property funds in the IPD index. However, over the medium- and long-term, the Group's performance compares favourably with the rest of the sector as reported by IPD on the inside front cover and page 28.
Liquidity risks arise from having insufficient financial resources to enable the Group to meet its obligations as they fall due, or can only secure them at an excessive cost. Liquidity risks also arise where the Group has insufficient resources to enable investment decisions, arising from its assessment of market risks, to be executed.
The Group finances its operations from the cash flow generated by its operations, bank borrowings, both secured and unsecured and over short-, medium- and long-term periods, and from the capital markets through share issues.
The management of cash and debt is monitored daily with medium-term cash flows prepared weekly and long-term cash flows discussed regularly in management meetings and presented to the Board at each quarterly Board meeting.
The Group's overall approach is to provide sufficient liquidity to be able to meet, from cash resources and available facilities, the expected requirements of the business. The guiding principle is to ensure that funding is obtained from diverse providers with a range of maturities, backed up by interest rate protection where appropriate. This is to ensure that a stable flow of financing is available and to provide protection in the event of market disruption.
The Group's cash resources, bank borrowings, interest rate protection and gearing are noted on pages 74 to 80.
Credit risk is the possibility that the Group may suffer a loss from the failure of its tenants, borrowers, suppliers or other counterparties to meet their financial obligations to the Group, including their failure to meet them in a timely manner. It includes the risks that the Group may suffer a loss as a result of guarantees to third parties. Credit risk in order to earn a return is not a central feature of the Group's business activities, rather it is a consequence of those activities.
The Group is exposed to credit risk in respect of the financial stability of the tenants and potential tenants in its real estate portfolio. It is also exposed to credit risk where cash flows from the sales of real estate, whether investment or trading properties or funded developments, are deferred. The potential failure of major suppliers such as contractors or subcontractors also exposes the Group to credit risk. Guarantees to third parties, such as banks, where the Group is in joint venture with partners expose the Group to risks that those partners are unable to fulfil their obligations.
The financial assessment of tenants, potential tenants, contractors and potential partners are part of the daily routine of the Group. The assessment of these third parties is undertaken by the finance department in discussion with the executive responsible for the real estate decision.
In the year under review bad debts constituted less than 3% of gross rental income.
The Group made profits of £9.7m (2009: £16.2m) before revaluation of its investment portfolio, writedown of its trading and development properties and its loss on sale of investment properties. A revaluation surplus of £13.1m (2009: deficit £68.0m) less a £10.0m (2009: £23.3m) writedown of trading and development stock, a gain on sale of investments of £nil (2009: £1.9m) and a £4.9m loss on sale of investment property (2009: profit £1.3m) reduced this profit to £7.9m (2009: loss £71.9m). Profit after tax was £9.6m (2009: loss £53.5m).
Net rental income fell by 20% to £14.2m (2009: £17.7m) reflecting the sale of Rex House, London SW1 during the year. Rental costs increased to £4.7m (2009: £3.1m) as irrecoverable service charges on vacant units increased. Tenant bad debts remain low at less than 3% of gross rental income.
Development profits from the schemes in Turawa Poland, Liphook, Riverbank House and Trinity Square Nottingham were offset by stock write-downs of £10.0m (2009: £23.3m) to give a development loss for the year of £1.3m (2009: £7.7m).
There were no trading profits in the year (2009: £0.5m).
During the year the Asset Factor sold its investment in NB Entrust and this, together with profits from the Group's share of net income and revaluation surplus from its investment in Clyde Shopping Centre, and profits at C4.1, Milton Keynes contributed to the Group's share of the results of its joint ventures of £3.7m (2009: £1.8m).
During the year the Group sold investment properties with book values of £40.4m (2009: £9.0m) on which it made a £4.9m loss (2009: £1.3m profit). The properties sold included Rex House, London SW1, residential units in Cardiff and offices in Glasgow. The revaluation surplus for the year was £13.1m (2009: deficit £68.0m).
Administrative expenses increased to £8.7m (2009: £8.1m) with the increased cost of share awards offsetting a reduction in other costs. Administrative expenses, before impairment of goodwill, share based payments charge and executive bonuses, reduced to £6.7m (2009: £7.4m).
Interest payable on bank loans, before capitalised interest, decreased from £15.9m to £11.0m due to a fall in average interest rates and the repayment of the bank loan secured on Rex House. Capitalised interest reduced to £3.2m from £6.9m as interest rates fell and developments were completed.
| Net finance costs | 2010 £000 |
2009 £000 |
2008 £000 |
|---|---|---|---|
| Interest payable on bank loans | 10,956 | 15,890 | 11,901 |
| Other interest payable | 696 | 362 | 265 |
| Finance arrangement costs | 872 | 321 | 163 |
| Interest capitalised | (3,196) | (6,855) | (9,296) |
| 9,328 | 9,718 | 3,033 |
Finance income earned on cash deposits decreased to £1.0m (2009:£2.1m).
| Interest receivable | (1,039) | (2,082) | (2,579) |
|---|---|---|---|
Derivative financial instruments have been valued on a mark to market basis and a surplus of £1.2m (2009: deficit £13.4m) has been recognised in the Income Statement.
A foreign exchange loss of £1.1m (2009: gain of £4.0m) has been recognised in respect of the Group's retail developments in Poland. Taxation
The Group corporation tax charge for the year is less than the standard rate of 28% due to the use of capital allowances, tax relief on share awards and tax losses. The adjustment in respect of prior periods related to corporation tax recoverable from previous years.
The deferred tax credit for the year reflects a reduction in the provision for tax on temporary differences between the carrying amount of assets and liabilities in the financial statements and their corresponding tax bases in accordance with IFRS.
The deferred tax asset is principally derived from tax losses which the Group believe will be utilised against profits in the foreseeable future.
The Board is recommending to shareholders at the Annual General Meeting on 21 July 2010 a final dividend of 0.25p per share to be paid on 23 July 2010 to shareholders on the register on 25 June 2010. This final dividend, amounting to £265,000 has not been included as a liability at 31 March 2010, in accordance with IFRS.
During the year the Group paid the 2009 final dividend of 2.75p per share and an initial interim dividend for 2010 of 1.75p per share. On 3 March 2010 a second interim dividend was declared at 2.75p per share and was paid on 1 April 2010. This dividend was included in current liabilities at 31 March 2010.
| 2010 | 2009 | 2008 | |
|---|---|---|---|
| Dividends | pence | pence | pence |
| First interim | 1.75 | 1.75 | 1.75 |
| Second interim | 2.75 | - | - |
| Prior period final | 2.75 | 2.75 | 2.75 |
| Total | 7.25 | 4.50 | 4.50 |
Earnings per share in the year to 31 March 2010 were 9.1p (2009: loss of 56.6p) per share and on a diluted basis were 9.1p (2008: loss of 56.6p) per share. Diluted EPRA earnings per share decreased to 2.9p (2009: 9.0p) per share.
| Earnings/(loss) per share | 2010 pence |
2009 pence |
2008 pence |
|---|---|---|---|
| Earnings/(loss) per share | 9.1 | (56.6) | (13.5) |
| Diluted earnings/(loss) per share | 9.1 | (56.6) | (13.5) |
| Diluted EPRA earnings per share | 2.9 | 9.0 | 11.6 |
Earnings/(loss) per share calculations are based on the weighted average number of shares held in the year. This is a different basis to the net asset value per share calculations which are based on the number of shares at 31 March 2010.
In accordance with IAS 33 on Earnings per Share, no weighting adjustment has been made for share awards in existence during the years to 31 March 2009 and 31 March 2008 as a loss was made during that year. Accordingly, the basic and diluted loss per share for these years are the same.
Diluted EPRA earnings per share excludes from earnings the IFRS effects of including the gain on sale and revaluation of investment properties (net of tax) and fair value movement on derivative financial instruments (net of tax).
During the year investment properties with a book value of £40.4m were sold. No new properties were acquired (Clyde Shopping Centre is included in these accounts as an investment in joint ventures). In addition, around £4.2m of capital expenditure was spent on refurbishing various office, industrial and retail buildings. At 31 March 2010 there was a revaluation surplus, net of joint venture share, of £13.1m (2009: deficit £68.0m) on the investment portfolio.
| Investment portfolio | 2010 £000 |
2009 £000 |
2008 £000 |
|---|---|---|---|
| Cost or valuation at 1 April | 241,287 | 306,778 | 316,025 |
| Additions at cost | 4,192 | 16,011 | 31,601 |
| Transferred from land, trading and development properties | - | 1,514 | - |
| Disposals | (40,438) | (9,005) | (6,250) |
| Joint venture share of revaluation | 1,756 | (6,006) | (2,044) |
| Revaluation | 13,104 | (68,005) | (32,554) |
| Cost or valuation at 31 March | 219,901 | 241,287 | 306,778 |
33
The performance of the Group in the year to 31 March 2010 has increased equity shareholders funds, on which the net asset value per share is calculated, by £5.5m. This has led to a 1% increase in diluted net assets per share to 228p (2009: 226p). Taking into account the directors' valuation of trading and development stock of £33m (2009: £45m), the diluted EPRA net assets per share decreased by 5% to 272p (2009: 286p).
| 2010 | 2009 | 2008 | |
|---|---|---|---|
| Net asset values per ordinary share | pence | pence | pence |
| Diluted | 228 | 226 | 289 |
| Adjusted diluted | 241 | 242 | 306 |
| Diluted EPRA | 272 | 286 | 352 |
| Diluted EPRA triple NAV | 259 | 269 | 335 |
The net asset value per share calculations are included in Note 34 of this statement.
The Group's sales of investment properties and development sites have decreased debt and, at 31 March 2010, net debt had decreased from £224.7m to £203.0m. Taken with an increase in net assets of £5.5m, the decrease in net debt combined to decrease the Group's net gearing from 95% to 84%.
The fair value of the Group's investment, trading and development portfolio at 31 March 2010 was £435.4m (2009: £497.2m). With net borrowings of £203.0m (2009: £224.7m) the ratio of net borrowings to the value of the property portfolio was 46.6% (2009: 45.2%).
At 31 March 2010 the Group had £92.6m (2009: £147.9m) of fixed rate borrowings with an average effective interest rate of 6.43% (2009: 6.31%) and an average length of 2.3 years (2009: 3.2 years), and £34m of interest rate caps at an average of 6.00% (2009: £110m at 6.73%).
| Net debt and gearing | 2010 | 2009 | 2008 |
|---|---|---|---|
| Net debt | £203.0m | £224.7m | £205.5m |
| Gearing | 84% | 95% | 76% |
The Group seeks to manage financial risk by ensuring that there is sufficient financial liquidity to meet foreseeable needs and to invest surplus cash safely and profitably. At the year end, Helical had £8.2m (2009: £38.6m) of undrawn bank facilities and cash of £39.8m (2009: £72.8m). In addition it had £32m (2009: £64m) of uncharged property on which the Group could borrow funds.
As at 16 June 2010, Helical's average interest rate was 4.51%.
The directors have reviewed the current and projected financial position of the Group making reasonable assumptions about future trading performance.
The key areas of sensitivity are:
The forecast cashflows have been sensitised to eliminate those cash inflows which are less certain and to take account of a potential further deterioration of property valuations. From their review the directors believe that the Group has adequate resources to continue to be operational as a going concern for the foreseeable future.
Nigel McNair Scott Finance Director 16 June 2010
Helical recognises that its business activities impact on the environment and the wider communities in which we operate. As our business involves working with joint venture partners and outsourcing partners, our direct impacts as a business are relatively small. However, we are aware of the influence we can exert through the implementation of responsible environmental and social practices via our partners, contractors and suppliers.
An endorsement of Helical's commitment to managing environment and social impacts is our continued listing in the FTSE4Good Index. The FTSE4Good Index measures the performance of companies that meet globally recognised corporate responsibility standards and facilitates investment in those companies. Maintaining listed status on this Index remains a key priority for Helical, and informs our evolving approach to Corporate Responsibility.
In our 2009 Annual Report, we provided an update on how we had analysed the way that our business manages environmental and social issues. Based on feedback from investors and evolving corporate and investor-led disclosure requirements, we revised and updated our environmental management system, which has been in place since 2003. The updated environmental management system is available on the Group website and includes the following:
The management system we have developed has been designed specifically to reflect the flexibility of Helical's business model. It also reflects the key role that our partners play in delivering enhanced sustainability outcomes in all our business ventures, be they large-scale developments such as the King Street redevelopment project in Hammersmith, or in the management of individual multi-let assets such as at 61 Southwark Street, London SE1 or Battersea Studios, London SW8.
We manage our environmental and social impacts because there are business benefits in doing so. These benefits include increased ability to secure planning consent, improved marketability of assets to prospective tenants, reduced operating costs of assets, mitigating the risk of future legislation and regulation, and enhanced corporate reputation.
Below we outline our progress in relation to the each of our Corporate Responsibility impact areas.
Our high-level corporate commitments to environmental issues are outlined in the company's Environmental Policy which can be found on the company website. The Policy details our commitments across a range of impact areas and our development and property management activities. The following examples provide a snapshot of some of the environmental initiatives undertaken over the past 12 months.
In response to investor feedback, below we present our utility consumption performance for 3 of our multi-let buildings under management as well as our head office.
| Electricity 2008/09 kWh |
Electricity 2009/10 kWh |
Gas 2008/09 kWh |
Gas 2009/10 kWh |
Water 2008/09 m3 |
Water 2009/10 m3 |
|
|---|---|---|---|---|---|---|
| 11-15 Farm Street, London W1 | 209,439 | 161,822 | 66,929 | 78,659 | 3,857 | 2,800 |
| Battersea Studios 1 & 2, London SW8 | 2,226,416 | 2,398,007 | 1,194,606 | 1,331,818 | 5,366 | 4,703 |
| 61 Southwark Street, London SE1 | 900,553 | 906,531 | 567,217 | 567,370 | 3,772 | 6,706 |
| Shepherds Building, London W14 | 3,376,730 | 3,367,740 | no gas | no gas | 9,092 | 6,989 |
Helical has set itself 18 targets to guide its Corporate Responsibility programme over the next 12 months. These targets address a range of impacts arising from our development and property management activities, including resource use and waste production, pollution, biodiversity, tenant engagement, flood risk and sustainable design and construction. A full list of these targets can be found on the Helical Bar website.
As at 31st March 2010, we employed a team of 24 people, 42% of whom are women. We continue to enforce our equal opportunities, harassment and sexual discrimination policies. We also continue to monitor compliance with our whistle blowing policy which was implemented last year. There have been no incidents to report against this policy to date.
High levels of staff retention remains a key feature of our business. Consequently, we retain a highly skilled and experienced team. The table below shows a breakdown of our staff by length of service.
| Total number of staff |
Average length of of service (years) |
|
|---|---|---|
| Directors and management | 9 | 14 |
| Finance | 7 | 8 |
| Administration | 8 | 6 |
Our staff retention levels not only reflect competitive remuneration and benefits packages but also our commitment to enhancing the professional and personal skills of our team. During 2009 we provided an average of 5.8 hours of training per employee, including funding for one staff member to complete a Masters degree in Real Estate. As in previous years, we continue to evaluate training needs in line with business objectives.
Helical Bar takes a strong interest in community issues. Community engagement is an on-going concern throughout the development process, from planning until development completion. The following examples demonstrate how community engagement has benefited the communities that we worked with over the past year.
• We have successfully consulted at our Hammersmith and Fulham Wharf projects on a number of occasions during the course of the past 12 months. Both developments are major planning applications, and feedback from the consultations has been incorporated into the eventual design for the schemes. In particular in Hammersmith, we will be creating a new public square, the design for which was chosen through public consultation.
We continue to make corporate donations to charity. We contributed £12,923 to charitable causes last year, including donations to The Healing Foundation, Land Aid and the Coldstream Guards.
Helical's Health & Safety policy aims to develop a corporate culture that is committed to the prevention of injuries and ill health to its employees or others that may be affected by its activities. The Board of Directors and senior staff are responsible for implementing this policy and ensure that health and safety considerations are always given priority in planning and in day-to-day activities. Helical recognises its legal responsibility for health and safety. The Chief Executive has overall responsibility for policy formulation, development and implementation. The Company shall liaise and co-operate with the appropriate authorities and will obtain expert advice where necessary to determine the risks to health and safety in its activities. Facilities are provided for employer/employee consultation on health and safety matters. All employees are expected to co-operate with the Company to achieve the objectives of this Policy and must ensure that their own work, so far as is reasonably practicable, is carried out without risk to themselves or others. The Company is committed to providing relevant information and necessary ongoing training to employees in respect of risks to health and safety, which may arise out of their activities or at their workplace. In 2009, we updated our Health & Safety Policy to reflect the latest legislative and regulatory developments. Our Health & Safety policy can be found on the company website at www.helical.co.uk.
Fair treatment of suppliers remains a key priority for Helical Bar, particularly in challenging market conditions where smaller suppliers in particular may rely on our payments for balanced cash flow. The company's policy is to settle all agreed liabilities within the terms established with suppliers. During the past year, our average payment period to suppliers was 26 days.
The Board of Helical Bar plc is collectively responsible for providing the entrepreneurial leadership of the Group within a framework of controls and reporting structures which assist the Group in pursuing its strategic aims and business objectives.
The Board of Helical Bar plc comprises five executive directors and four non-executive directors.
Michael Slade, BSc (Est Man) FRICS FSVA, joined the Board as an executive director in 1984 and was appointed Chief Executive in 1986. Aged 63.
Nigel McNair Scott, MA FCA FCT, joined the Board as a nonexecutive director in 1985 and was subsequently appointed Finance Director in 1987. A former director of Johnson Matthey plc and Govett Strategic Investment Trust plc, he is Chairman of Avocet Mining Plc. Aged 64.
Gerald Kaye, BSc (Est Man) FRICS, was appointed to the Board as an executive director in 1994 and is responsible for the Group's development activities. He is a former director of London & Edinburgh Trust Plc. Aged 52.
Matthew Bonning-Snook, BSc (Urb Est Surveying) MRICS, was appointed to the Board as an executive director in 2007. Prior to joining Helical in 1995 he worked for Richard Ellis (now CB Richard Ellis), and oversees many of Helical's office and mixed use developments. Aged 42.
Jack Pitman, MA (Cantab) MRICS, was appointed to the Board as an executive director in 2007. Before joining the Group in 2001 he was a director of Chester Properties Ltd. He is responsible for overseeing a number of joint venture projects, an investment portfolio and retirement village projects. Aged 41.
Giles Weaver, FCA, was appointed to the Board as a non-executive director in 1993 and was appointed Chairman following the 2005 AGM. He is Chairman of the Nominations and Appointments Committee. A past Chairman of Murray Johnstone Ltd, he is Chairman of Kenmore European Industrial Fund Limited and a director of Aberdeen Asset Management plc and IRP Property Investments Limited as well as being Chairman or a director of a number of investment companies. Aged 64.
Antony Beevor, MBE, BA, was appointed to the Board as a non-executive director in 2000. He is the Senior Independent Director and Chairman of the Audit Committee. He is also a member of the Remuneration and Nominations and Appointments Committees. A former Head of Corporate Finance at Hambros Bank and former Chairman of Croda International Plc, he is Deputy Chairman of the Takeover Panel. He was awarded an MBE in January 2010 for services to the Fairbridge youth charity. Aged 70.
Wilf Weeks, OBE, was appointed to the Board as a non-executive director in 2005. He is a member of the Audit, Remuneration and Nominations and Appointments Committees. Founder and Chairman of GJW Government Relations, he is now the Chairman of European Public Affairs at Weber Shandwick. He was awarded an OBE in June 2006 for his services to the arts in London. Aged 62.
Andrew Gulliford, BSc (Est.Man), FRICS, was appointed to the Board as a non-executive director in 2006. He is Chairman of the Remuneration Committee and a member of the Audit and Nominations and Appointments Committees. A former Deputy Senior Partner of Cushman & Wakefield Healey & Baker, he is a non-executive director of McKay Securities PLC, IRP Property Investments Limited and various other companies. Aged 63.
Tim Murphy, BA (Hons) FCA, was appointed Company Secretary in 1994. Aged 50.
John Inwood, BSc (Hons) MRICS, joined the Group as a management executive in 1995. Aged 44.
Duncan Walker, MA (Hons) (Oxon), PG Dip Surveying, joined the Group as a development executive in 2007. Aged 31.
The directors, all of whom were in office during the year, and their interests, all of which were beneficial, in the ordinary shares of the Company are listed below. Other than in respect of the award of shares under the terms of the Company's Share Incentive Plan on 8 June 2010, there have been no changes in the directors interests in the period from 31 March 2010 to 16 June 2010.
| Ordinary 1p shares 31 March 2010 |
Ordinary 1p shares 31 March 2009 |
|
|---|---|---|
| Giles Weaver | 113,794 | 113,794 |
| Michael Slade | 13,671,417 | 13,615,240 |
| Nigel McNair Scott | 2,520,114 | 2,467,956 |
| Gerald Kaye | 1,451,683 | 1,406,048 |
| Matthew Bonning-Snook | 256,919 | 231,786 |
| Jack Pitman | 290,172 | 265,831 |
| Antony Beevor | 14,013 | 14,013 |
| Wilf Weeks | 3,509 | 3,509 |
| Andrew Gulliford | 8,772 | 8,772 |
| Total directors' interests | 18,330,393 | 18,126,949 |
| Issued share capital | 107,407,522 | 107,087,012 |
| Percentage of issued share capital |
17.1% | 16.9% |
The principal activity of the Company is that of a holding company and the principal activities of the subsidiaries are property investment, dealing and development.
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs).
The financial statements are required by law to give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies Act 2006 and article 4 of the IAS Regulations. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
In so far as the directors are aware:
We, the directors listed below, confirm that to the best of our knowledge:
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
On behalf of the Board
Michael Slade Nigel McNair Scott Chief Executive Finance Director
16 June 2010
A first interim dividend of 1.75p (2009: 1.75p) was paid on 23 December 2009 to shareholders on the shareholder register on 4 December 2009. A second interim dividend of 2.75p (2009: nil) was paid on 1 April 2010 to shareholders on the register on 12 March 2010. A final dividend of 0.25p (2009: 2.75p) per share is recommended for approval at the Annual General Meeting on 21 July 2010. The total ordinary dividend paid in the year of 7.25p (2009: 4.50p) per share amounts to £7,657,000 (2009: £4,130,000)
At 1 April 2009 there were 107,087,012 ordinary 1p shares in issue. On 30 March 2010 options over 320,510 ordinary 1p shares were exercised. At 31 March 2010 and 16 June 2010 there were 107,407,522 ordinary shares in issue.
At 8 June 2010, the shareholders listed below had notified the Group of a disclosable interest of 3% or more in the nominal value of the ordinary share capital of the Group:
| Number of ordinary shares at 8 June 2010 |
% | |
|---|---|---|
| Michael Slade – Chief Executive | 13,671,417 | 12.7 |
| Aberdeen Asset Managers | 7,754,730 | 7.2 |
| Threadneedle Asset Management | 4,670,914 | 4.4 |
| Kempen Capital Management | 4,602,525 | 4.3 |
| Legal & General Investment Management |
4,391,941 | 4.1 |
| BlackRock Inc. | 4,423,675 | 4.1 |
| Dimensional Fund Advisors | 3,881,723 | 3.6 |
| PPGM Investments | 3,334,863 | 3.1 |
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.
Where not provided elsewhere in this Directors' report, the following provides the additional information required for shareholders as a result of the implementation of the Takeovers Directive into English law.
The Group's share capital consists of both ordinary shares and deferred shares. Each class of shares rank pari passu between themselves. Details of the Group's share capital can be found in note 29 to the financial statements. There are no restrictions on the transfer of the ordinary shares in the Group other than certain restrictions which may from time to time be imposed by laws and regulations (for example: insider trading laws) and pursuant to the Listing Rules of the Financial Services Authority whereby certain employees of the Group require the approval of the Group to deal in the ordinary shares. On a show of hands at a general meeting of the Group, every holder of ordinary shares present in person and entitled to vote shall have one vote and on a poll every member present in person or by proxy and entitled to vote shall have one vote for every ordinary share held. The Notice of the Annual General Meeting specifies deadlines for exercising voting rights and appointing a proxy or proxies to vote in relation to resolutions to be passed at the meeting. The rules governing the appointment and replacement of Directors and changes to the articles of association accord with usual English company law provisions.
Subject to the Group's memorandum of association, the articles of association, any statute or subordinate legislation for the time being in force concerning companies and affecting the company, and directions given by special resolution, the business of the Group shall be managed by the Directors, who may exercise all the powers of the Group.
The Annual General Meeting of the Group will be held on 21 July 2010 at 11.30 a.m. at The Westbury Hotel, Bond Street, London W1S 2YF.
The notice of meeting and the resolutions to be proposed at that meeting are set out in the enclosed circular. A summary of the resolutions to be proposed at the meeting is as follows:
Grant Thornton UK LLP have expressed their willingness to continue in office. In accordance with section 489(4) of the Companies Act 2006 a resolution to reappoint Grant Thornton UK LLP will be proposed at the Annual General Meeting on 21 July 2010.
The Group is committed to applying the highest principles of corporate governance and, except where stated, has complied throughout the year with the Code provisions set out in Section I of the Combined Code (2008). The Group also takes into account the corporate governance guidelines of institutional shareholders and their representative bodies.
The Board is accountable to the Group's shareholders for good corporate governance. This report and the Directors' Remuneration Report describe how the Group complies with the provisions of the Combined Code (2008) (the "Code").
Helical has 24 employees, including five executive directors. It operates with a strong management team of senior decision-makers backed up by finance and other support staff. Given its size the Board do not consider it appropriate to operate both a main board and a separate executive committee, a structure commonly seen in larger companies. However, despite its size, the Group is keen to promote exceptional talent to Board level at the earliest opportunity to expose such individuals to the broader issues facing the business, encourage their long term commitment to the Group and to provide for future succession. It is for these reasons that Helical's Board of five executive directors' is larger than those of other listed real estate companies.
Code provision A.3 requires a Board to have a balance of executive and non-executive directors and A.3.2 stipulates that at least half the Board, excluding the Chairman, should comprise independent non-executive directors. In the Group's view, this provision would, given the number of executive directors as noted above, create an unnecessarily large and unwieldy Board. Accordingly, it has long held the view that the appointment of non-executive directors should reflect a desire to add complementary skills and experience to the Board and not be driven by a requirement to match the number of executive directors, provided always that the interests of shareholders and other stakeholders are adequately protected.
In the Board's view, the current composition of the Board meets the criteria that it is comprised of directors with the appropriate balance of skills, experience, independence and knowledge of the Group to enable it to discharge its duties and responsibilities effectively. However, given the requirements of A.3.2, the Board will continue to keep this matter under review.
The Chairman and the Chief Executive collectively are responsible for the leadership of the Company. The Chairman's primary responsibility is for leading the Board and ensuring its effectiveness, whilst the Chief Executive is responsible for running the Company's business. The division of responsibilities is clearly established at Helical, is set out in writing and approved by the Board. The Chairman of Helical is Giles Weaver and the Chief Executive is Mike Slade.
The Board currently consists of a Chairman, five executive directors and three independent non-executive directors.
The Chairman, Giles Weaver, has been a non-executive director of Helical since 1993 and was appointed Chairman in July 2005. He is a Chartered Accountant by training and has had a career in the financial services sector, including as a current and former Chairman or director of several listed companies in that sector. The experience he brings to the Group and the skills of leadership and guidance shown in Board meetings, together with his detachment from day-to-day issues within the Group, provide the Board with the necessary comfort that despite his time as a non-executive director, he provides an independent approach to the role of Chairman of Helical. Giles Weaver was Chairman of the Remuneration Committee until 12 February 2010 when he stepped down from the committee. He remains Chairman of the Nominations and Appointment Committee. As Chairman of Helical, Giles Weaver offers himself for re-election at the Annual General Meeting on 21 July 2010.
The Senior Independent Director is Antony Beevor who was first appointed to the Board in April 2000. He is a solicitor by training and worked in the City throughout his career, most recently as Head of Corporate Finance at Hambros Bank. A former Chairman of Croda International Plc, he is currently a Deputy Chairman of the Takeover Panel. He was awarded an MBE in January 2010 for services to Fairbridge youth charity. Antony Beevor is Chairman of the Audit Committee and a member of the Remuneration and Nominations and Appointments Committees. He has served on the Board for more than nine years and accordingly it has considered whether there are any reasons why he should not be regarded as independent. In the view of the Board, Antony Beevor continues to provide a robustly independent approach to his position as a non-executive director and to his roles as Senior Independent Director and Chairman of the Audit Committee. For this reason the Board continues to regard Antony Beevor as an independent nonexecutive director. However, as he has been on the Board for more than nine years and has reached the age of 70, he offers himself for re-election at the Annual General Meeting.
The remaining non-executive directors, both of whom are independent, are Wilf Weeks, who was appointed to the Board in 2005, and Andrew Gulliford, who was appointed to the Board in 2006, neither of whom are standing for re-election at the Annual General Meeting.
Report & accounts 2010
The Group supports the concept of an effective Board leading and controlling the Group. The Board provides entrepreneurial leadership of the Group within a framework of prudent and effective controls which enables risk to be assessed and managed. The Board sets the Group's strategic aims, ensures that the necessary financial and human resources are in place for the Group to meet its objectives and reviews management performance. The Board sets the Group's values and standards and ensures that the Group's obligations to its shareholders and others are understood and met.
The members of the Board, and the roles of each director are given in the biographical details of the directors on page 36.
All directors take decisions objectively in the interests of the Group.
As part of their roles as members of the Board, non-executive directors constructively challenge and help develop proposals on strategy and the risk appetite of the Group. Non-executive directors scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance. They satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust and defensible. They are responsible for determining appropriate levels of remuneration of executive directors and have a prime role in appointing and, where necessary, removing executive directors, and in succession planning. In addition to Boardroom discussions, the Chairman contacts other non-executive directors by telephone and, if appropriate, will hold meetings with the non executive directors without the executive directors present.
In addition to ad hoc meetings arranged to discuss particular transactions and events and the 2009 AGM, the full Board met on five occasions during the year under review. The attendance record of the directors is shown in the table below.
The Board has a schedule of matters specifically reserved to it for decision. The Board controls the business but delegates day-to-day responsibility to the executive management. However, there are a number of matters which are required to be or, in the interests of the Group, should only be decided by the Board of Directors as a whole. A summary of the decisions reserved for the Board is set out below:
• Strategy and management – responsibility for the overall management of the Group; approval of the Group's longterm objectives and commercial strategy; approval of annual administration budgets; oversight of the Group's operations; extension of the Group's activities into new business areas; any decision to cease to operate all or any material part of the Group's business.
The Board is supplied in a timely manner with information in a form and of a quality appropriate to enable it to discharge its duties and its directors are free to seek any further information they consider necessary.
Under the direction of the Chairman, the Company Secretary's responsibilities include ensuring good information flows within the Board and its Committees and between senior management and non-executive directors, as well as facilitating induction and assisting with professional development as required. The Company Secretary is responsible for advising the Board through the Chairman on all governance matters.
The Board ensures that directors, especially non-executive directors, have access to independent professional advice at the Group's expense where they judge it necessary to discharge their responsibilities as directors. Training is available for new directors and other directors as necessary.
All directors have access to the advice and services of the Company Secretary, who is responsible to the Board for ensuring that board procedures are complied with.
The Group has arranged appropriate insurance cover in case of legal action against its directors.
| Meetings | Giles Weaver |
Michael Slade |
Nigel McNair Scott |
Gerald Kaye |
Matthew Bonning- Snook |
Jack Pitman |
Antony Beevor |
Wilf Weeks |
Andrew Gulliford |
|---|---|---|---|---|---|---|---|---|---|
| Full Board | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 |
| Audit Committee | n/a | n/a | n/a | n/a | n/a | n/a | 2 | 2 | 2 |
| Remuneration Committee | 4* | n/a | n/a | n/a | n/a | n/a | 5 | 5 | 5 |
| Nominations and Appointments Committee |
2 | n/a | n/a | n/a | n/a | n/a | 2 | 2 | 2 |
*Giles Weaver stood down from the Remuneration Committee on 12 February 2010.
The Chairman is responsible for the annual evaluation process, and will act on its outcome. This process involves each director submitting an appraisal to the Chairman in respect of the performance of the main Board, of each member of the Board and in respect of each Board Committee of which they are a member.
The non-executive directors, led by the senior independent non-executive director, are responsible for the performance evaluation of the Chairman, taking into account views of executive directors. Each director completes an evaluation of the Chairman's performance and provides this evaluation to the senior independent non-executive director.
During the year the Board undertook a formal evaluation of its own performance and that of its Committees and individual directors in the period and the Chairman reported results of that evaluation process to the Board.
The evaluation process reiterated previous concerns regarding the balance between the time spent considering the business and time spent on governance issues. The Board concluded that Board meeting timetables should be reviewed again to ensure that an appropriate amount of time is devoted to each area. The Senior Independent Director noted that there were no matters arising from the evaluation of the Chairman that necessitated any action or required a meeting to be held without the Chairman present. Otherwise, there were no significant matters arising out of the annual evaluation process which required action by the Board.
The Group values the views of its shareholders and recognises their interest in the Group's strategy and performance, Board membership and quality of management. It therefore holds regular meetings with, and presentations to, its institutional shareholders to discuss its objectives. The Group also regularly meets, with the help of its brokers, institutions that do not currently hold shares in the Group to inform them of its objectives. The Chairman and Senior Independent Director are available to shareholders, should they wish to discuss matters relating to the Group. There were no meetings during the year between shareholders and non-executive directors.
The AGM is used to communicate with private investors and they are encouraged to participate. The members of the Audit, Remuneration and Nominations and Appointments Committees are available to answer questions. Separate resolutions are proposed on each issue so that they can be given proper consideration and there is a resolution to consider the annual report and accounts. The Group counts all proxy votes and will indicate the level of proxies lodged on each resolution, after it has been dealt with by a show of hands.
The Group communicates with all shareholders through the issue of regular press releases and through its website at www.helical.co.uk. The Group receives regular reports from sector analysts and its investor relations advisors on how it is viewed by its shareholders.
The terms of reference of the Nominations and Appointments Committee are available by request and are included on the Group's website at www.helical.co.uk.
The membership of the Committee is as follows:
Giles Weaver (Chairman) Antony Beevor Wilf Weeks Andrew Gulliford
Appointments are made on merit and against objective criteria. Care is taken to ensure that appointees have enough time available to devote to the job.
The Nominations and Appointments Committee controls the process for Board appointments and makes recommendations to the Board.
All directors are subject to re-election, after receiving the recommendation of the Nominations and Appointments Committee, every three years and, on appointment, at the first AGM after appointment. The Nominations and Appointments Committee have recommended the re-appointment of the following directors at the 2010 AGM and confirms to shareholders that, following the annual formal performance evaluation, these directors continue to be effective and demonstrate commitment to their roles:
Biographical details of the directors are given on pages 36 and 39.
The Committee met twice during the period and a record of attendance at these meetings is shown above. During these meetings the Committee appointed Andy Gulliford as Chairman of the Remuneration Committee, in place of Giles Weaver who stepped down from the Committee, and resolved that Giles Weaver, Antony Beevor, Andy Gulliford, Michael Slade and Nigel McNair Scott be recommended to shareholders for re-appointment as directors at the 2009 AGM.
The Board presents a balanced and understandable assessment of the Group's position and prospects. It seeks to do so in all published information and in particular in interim and preliminary announcements and other price-sensitive reports and reports to regulators as well as in the information required to be presented by statutory requirements.
The directors have reviewed the current and projected financial position of the Group making reasonable assumptions about future trading performance.
The key areas of sensitivity are:
The forecast cashflows have been sensitised to eliminate those cash inflows which are less certain and to take account of a further deterioration of property valuations. From their review the directors believe that the Group has adequate resources to continue to be operational as a going concern for the foreseeable future.
The terms of reference of the Audit Committee are available by request and are included on the Group's website at www.helical.co.uk.
The membership of the Committee is as follows: Antony Beevor (Chairman) Wilf Weeks Andrew Gulliford
The Committee endorses the principles set out in the FRC Guidance on Audit Committees.
The Board has formal and transparent arrangements for considering how it applies the Group's financial reporting and internal control principles and for maintaining an appropriate relationship with its auditors.
Whilst all directors have a duty to act in the interests of the Group, the Audit Committee has a particular role, acting independently from the executive, to ensure that the interests of shareholders are properly protected in relation to financial reporting and internal control.
Appointments to the Audit Committee are made by the Board on the recommendation of the Nominations and Appointments Committee in consultation with the Audit Committee Chairman.
The Audit Committee met twice during the year. A record of attendance at these meetings is shown on page 40. The Audit Committee met the external auditors on both occasions to discuss matters arising from the annual and interim audits, and with the executive board members and Chairman, reviewed and approved:
It is common practice at Helical for Audit Committee meetings to be attended by all Board members who are available, whether or not they are members of the Audit Committee so that their input may be obtained. The second and fifth items in the above list were considered in depth at a full Board Meeting at which all Audit Committee members were present.
The Board is responsible for maintaining a sound system of internal control to safeguard shareholders' investment and the Group's assets. Such a system is designed to manage, but cannot eliminate, the risk of failure to achieve business objectives. There are inherent limitations in any control system and, accordingly, even the most effective system can provide only reasonable, and not absolute, assurance against material misstatement or loss.
The key features of the Group's system of internal control are as follows:
The Board reviewed its position during the year to 31 March 2010 and reaffirmed its stance that in view of the relatively small size of the Group it does not consider that an Internal Audit function would provide any significant additional assistance in maintaining a system of internal controls.
A policy of reviewing audit independence has been adopted whereby non-audit services undertaken by the auditors is approved prior to work being carried out. During the year under review non-audit services comprised a review of financial performance as required by the Group's Performance Share Plan. The audit committee considers the external auditors to be independent and has satisfied itself of the effectiveness of the external auditors, making use of information available from the Audit Inspection Unit of the Financing Reporting Council.
The Group's policy on awarding non-audit work to its auditors is designed to ensure that the Group receives the most appropriate advice without compromising the independence of the auditors. Whilst no fee caps or limits have been set by the Committee, the level of fees would be a factor in considering whether the auditors' independence could be affected by the award of non-audit work.
Giles Weaver Chairman, on behalf of the Board
42
The Board recognises that directors' remuneration is of legitimate concern to shareholders and is committed to following current best practice. This report has been prepared in accordance with the Companies Act 2006 and Schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008. It has been approved by the Board and will be submitted to shareholders for approval at the Group's Annual General Meeting to be held on 21 July 2010. Grant Thornton LLP has audited the disclosures of directors' remuneration and share awards on pages 45 to 50.
The terms of reference of the Remuneration Committee are available on request and are included on the Group's website at www.helical.co.uk.
The Remuneration Committee ("Committee") has responsibility for determining and agreeing with the Board the framework or broad policy for the remuneration of the Chairman, Chief Executive and the Executive Directors and, subject to proposals submitted by the Chief Executive, shall recommend and monitor the level and structure of remuneration for such other members of the senior management as report directly to the Board. The remuneration of Non-Executive Directors shall be a matter for the Executive Directors to be decided at a meeting of the Board.
In determining such policy, the Committee shall take into account all factors which it deems necessary. The objective of the remuneration policy shall be to ensure that Executive Directors and senior management are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the Group. Within the terms of the agreed policy, the Committee shall determine, for the Executive Directors:
In determining such packages and arrangements the Committee gives due regard to the recommendations of the Combined Code and the UK Listing Authority's Listing Rules.
The Committee was chaired by Giles Weaver from 1 April 2009 to 12 February 2010, and by Andrew Gulliford from that date. The remaining members of the Committee are Antony Beevor and Wilf Weeks. Giles Weaver stepped down from the Committee on 12 February 2010. All members of the Committee are independent Non-Executive Directors. None of the Committee has any personal financial interest in the matters to be decided (other than as shareholders), potential conflicts of interests arising from cross-directorships nor any day-to-day involvement in running the business.
The Committee consults the Chief Executive and Finance Director about its proposals and has access to professional advice from Hewitt New Bridge Street to help it determine appropriate remuneration levels.
During the year the Committee met on five occasions to consider and approve the Directors' Remuneration Report for the year to 31 March 2009, approve the making and vesting of share awards under the terms of the Group's Performance Share Plan, the exercise of share options and the annual review of salaries.
The Group operates within a competitive environment and its performance depends on the individual contributions of the directors and employees. Executive remuneration packages are designed to attract, motivate and retain directors of the calibre necessary to maintain the Group's position as a market leader and to reward them for enhancing shareholder value and returns. The performance measurement of the Executive Directors and the determination of their annual remuneration package is undertaken by the Committee. In determining remuneration packages the Committee considers advice from its remuneration consultants and remuneration at comparable companies within the property sector. It also takes into account the remuneration structure below Board level.
The remuneration packages of individual directors are structured so that the performance related elements form a significant proportion of the total and are designed to align their interests with those of the shareholders. In setting the remuneration of directors the Committee seeks to agree basic salary levels below the median for the listed real estate sector. This policy helps to limit fixed costs, including associated employment costs such as national insurance.
In addition, the Group makes no pension payments in respect of its directors, who are obliged to provide for their retirement through basic salary and performance related payments.
Performance related cash bonus schemes operate for all Executive Directors. The Chief Executive and Finance Director participate in the Executive Bonus Plan. The remaining directors participate in a cash bonus scheme which has specific hurdles to meet before bonuses start to accrue. These two schemes are designed to supplement the annual salary of the Executive Directors by making cash payments when performance criteria have been met.
Share incentives are designed so that they recognise the longterm growth of the Group. The performance periods are longer term, being three to five years, and participants receive shares in Helical if performance criteria are met. Share incentive schemes are also designed to encourage long term investment in Helical by the directors. Participants in the Group's Performance Share Plan ("Plan") are required to retain shares received through the Plan until they own shares to the value of 2x salary for Directors. In addition, and whilst it is not a condition of their award, Directors are encouraged to retain the shares received on the vesting of share awards, net of any requirements to pay personal taxes. To date, all shares received by the Executive Directors under the terms of the group's Performance Share Plan and Share Incentive Plan have been retained, net of taxes paid, thereby increasing the management's shareholding in Helical.
Executive Directors' remuneration packages As explained above, there are four main elements to the Executive Directors' remuneration packages:
Basic annual salaries for Executive Directors reflect their responsibilities and experience. They are set at a level below the median of other quoted real estate companies. During the year the Committee reviewed Executive Director's remuneration and discussed basic salary levels with Hewitt New Bridge Street. In considering whether basic salary levels should be increased, the Committee recognised that changes in responsibilities following the departure of Michael Brown, Deputy Chief Executive, in June 2009, should be reflected in the review. Reaffirming its policy of setting basic salary levels below the median of other quoted real estate companies, the Committee approved the increases noted below. Basic salary levels had not been increased for two years. Further, the Committee has agreed with all Executive and Non-Executive Directors' that there will be no increases in basic salary during the year to 31 March 2011.
Executive Directors' current annual basic salaries are as follows:
| From 1 July 2007 £ |
From 1 July 2009 £ |
|
|---|---|---|
| Michael Slade | 450,000 | 500,000 |
| Nigel McNair Scott | 300,000 | 335,000 |
| Gerald Kaye | 275,000 | 325,000 |
| Matthew Bonning-Snook | 235,000 | 275,000 |
| Jack Pitman | 235,000 | 275,000 |
Benefits-in-kind provided to Executive Directors comprise the provision of a company car and health insurance.
In line with its policy, the Committee seeks to ensure that the balance of remuneration provides a basic salary below the median, and performance related bonuses and share awards that reward outperformance of the Group's peer group. In the year to 31 March 2010 the balance of fixed versus variable pay on an actual basis compared to the maximum payable was as follows:
| Actual £ |
||||
|---|---|---|---|---|
| Basic salaries and benefits in-kind |
2,069,000 | 49% | 2,069,000 | 16% |
| Annual cash bonus payments |
880,000 | 21% | 5,000,000 | 39% |
| Executive Bonus Plan |
– | 0% | 2,000,000 | 15% |
| Share awards | 1,302,000 | 30% | 3,822,000 | 30% |
| 4,251,000 | 100% | 12,891,000 100% |
Note: Share awards reflect the market value of shares that vested during the year in accordance with the terms of the Group's Performance Share Plan and shares awarded under the terms of the Group's Share Incentive Plan. Share awards do not include share options exercised in the year which we were granted in 2000, 2001 and 2002.
The Group makes no pension contributions in respect of the Executive Directors.
The Committee establishes the objectives which must be met for performance related cash bonuses to be paid. The calculations of the performance related cash bonuses payable to each participant are directly related to the profits generated by the participants. In each case these profits are recognised in the accounts of the year in which the bonus is accrued and, generally, these profits have been received by the time the bonuses are paid. Any losses on other projects are deducted from the profits, as are all costs directly attributable to the generation of the profits, including all finance costs and an apportionment of central overheads. The net profits generated by each participant are available as a bonus pool and bonus payments are made based on individual performance. Bonuses are calculated in a range of 0 to 10% of the bonus pool with appropriate percentages depending on the level of equity contributed to each property and risks assumed. Gerald Kaye, Matthew Bonning-Snook and Jack Pitman were eligible for performance related cash bonuses in the period under review. The maximum amount payable in each year is a total of £5m. Payment of these performance related cash bonuses is at the discretion of the Committee. In the year under review a performance related cash bonus was paid to Matthew Bonning-Snook of £880,000 (2009: £735,000).
The Group operates an Executive Bonus Plan ("2006 Plan") designed to align the motivations of the senior management team with the interests of shareholders and to link their remuneration to the performance of the Group's property portfolio. The Plan operates over a five year period from 1 April 2006 and cash bonuses will be paid annually subject to the achievement of challenging performance targets. Michael Slade and Nigel McNair Scott are eligible for Executive Bonus Plan bonuses.
Performance conditions The Committee may, at its discretion, award bonuses in respect of a financial year subject to performance conditions, the aim of which is to link the size of bonuses paid to the financial growth of the Group over that financial year. No bonus will be payable unless the following conditions are satisfied:
The Committee will recommend the size of the bonus payable by reference to the same sliding scale based on the amount by which the increase in net asset value per share exceeds the increase in the Upper Quartile of the IPD Capital Growth Benchmark, subject to a cap.
Calculation of amounts payable The total amount of the bonuses payable in any one year shall be determined by:
| Amount of Difference | % of base net asset value payable |
||
|---|---|---|---|
| Less than 1% | 0.01 | ||
| 1% to less than 2% | 0.02 | ||
| And thereafter for every additional 1% | An increment of 0.01 | ||
| For example: From 4% to less than 5% | 0.05 |
If the net asset value at the end of a financial year is less than the net asset value at the beginning of that year, the bonus payable for any subsequent year will be calculated by reference to the highest net asset value in the preceding year.
Financial accounts The audited financial accounts which record the financial performance on which the Plan operates are those accounts prepared in accordance with International Financial Reporting Standards.
2006 Plan and individual limits The total amount payable under the 2006 Plan in any one year is limited to £2m (2009: £2m). An individual employee's participation in the 2006 Plan is limited so that the bonus which may be paid to him under the 2006 Plan will not exceed £1.5m per annum. There is a further limit that payments under the 2006 Plan in any year may not exceed 20% of the Group's pre-tax profits plus any payments under the 2006 Plan. Among other constraints the Committee could restrict the bonuses if payment would affect the financial or trading position of the Group. No Executive Bonus Plan bonuses have been paid in respect of the year to 31 March 2010 (2009: nil).
Timing of bonuses Bonuses will ordinarily be paid, subject to the performance conditions being satisfied, and provided that the participant remains a director or employee of the Group at the time of payment, on a specified bonus date, which will fall within four months of the end of the relevant Performance Period. Bonuses are not transferable, nor will benefits obtained under the 2006 Plan be pensionable.
Termination of employment If a participant dies, the bonus that would have been paid for the relevant financial year may, at the discretion of the Committee, be paid to the participant's personal representatives, but will be scaled down pro rata to reflect the period elapsed since the start of the Performance Period. If a participant's employment ends in any other circumstances prior to the payment of the bonus, no entitlement will arise.
Change of control In the event of a change in control of the Group, bonuses in respect of the financial year in which the change of control falls may be paid to the extent that the relevant performance target(s) have been satisfied over an adjusted Performance Period.
Termination of the 2006 Plan The Committee will not recommend the making of bonuses under the 2006 Plan in connection with a financial year later than the year ended 31 March 2011 without further shareholder authority.
The Group operated two share option schemes during the year.
The Helical Bar 1999 Share Option Scheme operated in respect of the grant of share options which exceeded the Inland Revenue limit of £30,000. Under this scheme the aggregate market value of shares issued or issuable to an individual under this and other option schemes may not exceed eight times his annual earnings. Unexercised share options granted over 1,356,405 shares at 1 April 2009 were all exercised during the year. There are no further outstanding share options and the scheme is unable to grant any further share options.
The Helical Bar 1999 Approved Share Option Scheme is an Inland Revenue approved scheme. Under the terms of this scheme options up to a maximum value of £30,000 per individual may be granted. Unexercised share options granted over 21,200 shares at 1 April 2009 were all exercised during the year. There are no further outstanding share options and the scheme is unable to grant any further share options.
The directors' interests in the share option schemes during the year were as follows:
| Michael Slade Helical Bar 1999 Share Option Scheme Purchase 500,000 (500,000) – – – – – – 500,000 (500,000) Gerald Kaye Helical Bar 1999 Share Option Scheme Purchase 347,095 (347,095) – – – – – – 347,095 (347,095) – – Matthew Bonning-Snook Helical Bar 1999 Share Option Scheme Purchase 210,000 (210,000) – – – – – – 210,000 (210,000) – – Jack Pitman Helical Bar 1999 Share Option Scheme Subscription 299,310 (299,310) – – – – – – Helical Bar Approved 1999 Share Option Scheme Subscription 21,200 (21,200) – – – – – – 320,510 (320,510) – |
Type | At start of year |
Options exercised in year |
At end of year |
Exercise price |
Date | Date from which granted exercisable |
Expiry date |
exercised at 31 March 2010 |
|---|---|---|---|---|---|---|---|---|---|
Expected values if options
Nigel McNair Scott and Michael Brown (who resigned from the Board 4 June 2009) held no share options during the year to 31 March 2010.
In the period under review options over 320,510 new subscription shares and 1,057,095 shares held by the Group's ESOP were exercised. In order that the number of shares required by the ESOP to satisfy share awards be reduced, the Group agreed with employees that the number of shares acquired on the exercise of those options be reduced. To ensure that employees were not disadvantaged by the reduction, the exercise prices applied on the exercise of the options were correspondingly reduced.
The options exercised during the year by the directors, in accordance with this agreement and on the original basis, were as follows:
| Director | Date of exercise |
Type of option |
Original number of shares |
Reduced number of shares |
Original exercise price |
Reduced exercise price |
Market value |
Gain £000's |
|---|---|---|---|---|---|---|---|---|
| Michael Slade | 09.06.09 | Purchase | 500,000 | 269,000 | 150.0p | 1p | 325.0p | 973 |
| 500,000 | 973 | |||||||
| Gerald Kaye | 09.06.09 | Purchase | 347,095 | 183,000 | 153.3p | 1p | 325.0p | 663 |
| 347,095 | 663 | |||||||
| Matthew Bonning-Snook | 09.06.09 | Purchase | 210,000 | 113,000 | 150.0p | 1p | 325.0p | 407 |
| 210,000 | 407 | |||||||
| Jack Pitman | 30.03.10 Subscription 299,310 | n/a | 141.5p | n/a | 336.1p | 582 | ||
| 30.03.10 Subscription | 21,200 | n/a | 141.5p | n/a | 336.1p | 41 | ||
| 320,510 | 623 |
The market price of the ordinary shares at 31 March 2010 was 337.9p (2009: 287.5p). This market price varied between 293.5p and 404.1p during the year.
The gains on exercise of share options by Michael Slade, Gerald Kaye and Matthew Bonning-Snook include a cash bonus of 20p per 1p share in accordance with the matter referred to under special dividend below.
47
In order to compensate option holders for the payment of a special dividend or a distribution of capital, the Board has, under the terms of the Helical Bar 1999 Share Option Scheme ("the Scheme"), the authority to adjust the number of shares subject to option or the exercise price of those options.
The Group is unable to increase the number of shares under option in sufficient quantity to satisfy the requirement to compensate option holders for the special dividend of 100p paid in April 2002. An adjustment to the exercise price of the existing options would result in an increased national insurance cost to the Group. Accordingly, the Board has considered alternative ways of compensating option holders and, as a result, the Group compensates holders of options at the time the special dividend was declared, on the dates they exercise their options by 20p per 1p share (previously 100p per 5p share), equivalent to the special dividend.
In the year under review compensation of £211,000 was paid following the exercise of options over 1,057,095 1p shares.
At the 2004 Annual General Meeting the Group received approval for the adoption of a Performance Share Plan ("PSP").
The operation of the PSP is supervised by the Committee.
The PSP is capable of delivering shares to an executive after a period of not less than three years, other than in exceptional circumstances and with the approval of the Committee, subject to meeting pre-specified performance targets.
All employees of the Group and its subsidiaries (including directors who are required to devote substantially the whole of their working time to the business of the Group) who are not under notice nor within six months of any contractual retirement ages will be eligible to receive invitations to participate in the PSP at the discretion of the Remuneration Committee.
Awards may be made within the six weeks following approval at a general meeting, the announcement by the Group of its results for any period, or the removal of any statutory or regulatory restriction which had previously prevented an award being granted or any other times considered by the Remuneration Committee to be exceptional.
No awards may be made more than ten years after the adoption of the PSP by the Group. The Committee, advised by Hewitt New Bridge Street, reviewed the operation of the PSP during the year and it was agreed that no changes should be made.
An award consists of the right to acquire shares in the Group for either no payment or payment of a nominal sum. Awards are neither transferable nor pensionable.
No awards may be granted over shares in any financial year whose value is greater than three times an employee's annual rate of salary.
Other than in exceptional circumstances, an award will vest no earlier than the third anniversary of its grant to the extent that the applicable performance conditions (see below) have been satisfied and the participant is still employed by the Group. Once exercisable, awards will then remain capable of exercise for a period of normally no more than six months.
The Remuneration Committee has set demanding performance conditions for the vesting of shares. There are two performance conditions, one based on absolute growth in the Group's net asset value per share and the other based on the gross (ungeared) total property return per share relative to other property funds as determined by IPD but excluding those funds worth less than £50m at the start of the three year period. Performance will be measured over the three years following grant.
Participants will not normally be permitted to sell shares received through the PSP, other than to meet taxation (and national insurance contributions) liabilities, until they own shares to the value of 2 x salary for directors and 1 x salary for other executives.
For the growth in net asset value, the "fully diluted triple net" net asset value as at the start of the financial year in which a grant takes place will be compared to the value three years later (having added back dividends).
(a) Absolute net asset value per share (having added back dividends) condition
| Annual compound increase after three years | % of award vesting |
|---|---|
| 15% p.a. or more | 66.7 |
| Between 7.5% p.a. and 15% p.a. | Pro rata between 6.7 and 66.7 |
| 7.5% p.a. | 6.7 |
| Below 7.5% p.a. | Zero |
If UK inflation (RPI) is higher than 3% per annum over the three year period then the required compound increases will be raised by the excess over the 3% per annum average.
| Ranking after three years | % of award vesting |
|---|---|
| Upper quartile or above | 33.3 |
| Between median and upper quartile | Pro rata between 3.3 and 33.3 |
| Median | 3.3 |
| Less than median | Zero |
Provided the net asset value per share (having added back dividends) increases over the three year period.
Share awards will lapse where the gross return falls below the IPD median and where the growth in triple net asset value is below 7.5% per annum over the three year period. No share awards vest if the triple asset value falls over the three year period.
The Remuneration Committee has analysed the potential gains that may be made by executives (directors and those below Board level) through the PSP and other incentive arrangements currently in place. It has concluded that the share of the increase in the value of the Group (measured as the increase in the net asset value plus cash returned as dividends to shareholders) that could accrue to all executives through the Group's long and short-term incentive and bonus plans (excluding gains on share options granted before December 2002) at the point at which the maximum awards vest might be of the order of 20%. At this point, in absolute terms, the Group will have increased its triple net asset value by at least 15% per annum with the Group's relative performance placing it in the top quartile of IPD, over the three year period.
During the year the performance conditions relating to the third award, granted on 4 July 2006, were considered. The three year performance period to 31 March 2009 showed that the net asset value per share, calculated in accordance with the terms of the PSP, had increased by 2.9% p.a. During this three year period the total return of Helical's property portfolio, as determined by IPD, had increased by 5.5% p.a. compared to the upper quartile of the IPD Benchmark which had reduced by 5.9% p.a. Therefore, although the net asset value performance criteria was not met, the IPD comparison performance criteria was met. Accordingly, one third of the third award of shares vested and 482,061 shares, after deduction of shares sold to pay income tax, were transferred to award holders on 9 July 2009. The value of the shares on that date which were attributable to the directors is included in the table of the Remuneration of Directors on page 50.
| Director | Shares awarded 06.07.07 at 481.00p |
Shares awarded 14.07.08 at 276.25p |
Shares awarded 09.07.09 at 300.25p |
Total shares awarded |
Total award value £ |
|---|---|---|---|---|---|
| Michael Slade | 187,110 | 325,792 | 499,584 | 1,012,486 | 3,300,000 |
| Nigel McNair Scott | 124,740 | 217,195 | 334,721 | 676,656 | 2,205,000 |
| Gerald Kaye | 171,518 | 298,643 | 324,729 | 794,890 | 2,625,000 |
| Matthew Bonning-Snook | 146,570 | 255,204 | 274,771 | 676,545 | 2,235,000 |
| Jack Pitman | 146,570 | 255,204 | 274,771 | 676,545 | 2,235,000 |
It is currently expected that no shares will vest in respect of the share awards made on 6 July 2007 and 14 July 2008 and that 50% of the shares awarded on 9 July 2009 will vest.
PSP awards granted in 2007 and 2008 to Michael Brown, who resigned from the Board on 4 June 2009, were cancelled on his resignation.
On 24 July 2002 the shareholders approved the Helical Bar 2002 Approved Share Incentive Plan (the "Plan"). Under the terms of this Plan employees of the Group are given up to £3,000 of free shares in any tax year. Participants in the Plan may purchase additional shares up to a value of £1,500 which is matched in a ratio of 2:1 by the Group. Provided participants remain employed by the Group for a minimum of three years they will retain the free and matching shares.
Shares allocated to, or purchased on behalf of, the directors under the rules of the Plan were as follows:
| 5 June 2009 at 335.0p |
10 August 2009 at 374.0p |
23 December 2009 at 329.9p |
8 June 2010 at 284.0p |
|
|---|---|---|---|---|
| Michael Slade | 895 | 839 | 675 | 1,919 |
| Nigel McNair Scott | 895 | 839 | 675 | 1,919 |
| Gerald Kaye | 895 | 840 | 675 | 1,919 |
| Matthew Bonning-Snook | 895 | 837 | 673 | 1,915 |
| Jack Pitman | 895 | 839 | 675 | 1,919 |
Shares held by the Trustees of the Plan at 31 March 2010 were 223,624 (2009: 250,000).
Remuneration in respect of the directors was as follows:
| Salaries and bonuses | fees £000 |
Salary/ Benefits- £000 |
Cash in-kind bonuses £000 |
Executive bonus plan £000 |
2010 Total £000 |
fees £000 |
Salary/ Benefits- £000 |
Cash in-kind bonuses £000 |
Executive bonus plan £000 |
2009 Total £000 |
2010 Pensions Pensions £000 |
2009 £000 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Chairman | ||||||||||||
| Giles Weaver | 75 | – | – | – | 75 | 75 | – | – | – | 75 | – | – |
| Non-executive directors | ||||||||||||
| Antony Beevor | 42 | – | – | – | 42 | 42 | – | – | – | 42 | – | – |
| Wilf Weeks | 35 | – | – | – | 35 | 35 | – | – | – | 35 | – | – |
| Andrew Gulliford | 36 | – | – | – | 36 | 35 | – | – | – | 35 | – | – |
| Executive directors | ||||||||||||
| Michael Slade | 488 | 39 | – | – | 527 | 450 | 40 | – | – | 490 | – | – |
| Nigel McNair Scott | 326 | 34 | – | – | 360 | 300 | 30 | 300 | – | 630 | – | – |
| Gerald Kaye | 312 | 34 | – | – | 346 | 275 | 34 | – | – | 309 | – | – |
| Matthew Bonning-Snook |
265 | 20 | 880 | – | 1,165 | 235 | 19 | 735 | – | 989 | – | – |
| Jack Pitman | 265 | 20 | – | – | 285 | 235 | 20 | – | – | 255 | – | – |
| Former Director | ||||||||||||
| Michael Brown | 74 | 5 | – | – | 79 | 325 | 31 | – | – | 356 | – | – |
| 1,918 | 152 | 880 | – | 2,950 | 2,007 | 174 | 1,035 | – | 3,216 | – | – |
Michael Brown resigned from the Board on 4 June 2009. No payments were made to him other than in respect of his contractual entitlement to salary to the date of his departure from the Company.
Michael Slade was the highest paid director during the year with a total remuneration of £1,890,000 (including gains on share awards) (2009: £4,962,000).
50
| Share awards | Vesting of PSP awards £000 |
Gain on exercise of share options £000 |
2010 Total gains £000 |
Vesting of PSP awards £000 |
Gain on exercise of share options £000 |
2009 Total gains £000 |
|---|---|---|---|---|---|---|
| Chairman | ||||||
| Giles Weaver | – | – | – | – | – | – |
| Non-executive directors | ||||||
| Antony Beevor | – | – | – | – | – | – |
| Wilf Weeks | – | – | – | – | – | – |
| Andrew Gulliford | – | – | – | – | – | – |
| Executive directors | ||||||
| Michael Slade | 390 | 973 | 1,363 | 1,576 | 2,896 | 4,472 |
| Nigel McNair Scott | 244 | – | 244 | 985 | 1,675 | 2,660 |
| Gerald Kaye | 210 | 663 | 873 | 847 | 706 | 1,553 |
| Matthew Bonning-Snook | 105 | 407 | 512 | 410 | – | 410 |
| Jack Pitman | 101 | 623 | 724 | 394 | 656 | 1,050 |
| Former Director | ||||||
| Michael Brown | 210 | – | 210 | 847 | 1,124 | 1,971 |
| 1,260 | 2,666 | 3,926 | 5,059 | 7,057 | 12,116 |
In order to compensate option holders for the payment of the special dividend in April 2002, the Group pays a cash bonus of 20p per share on the date option holders exercise their options, as noted on page 47. The gain on exercise of share options of the directors includes cash bonuses of £211,000 arising out of the exercise of options during the year. The cost of these cash bonuses is included in administrative expenses.
Service contracts The service contracts of Michael Slade and Nigel McNair Scott operate from 1 April 2007, and of Gerald Kaye, Matthew Bonning-Snook and Jack Pitman from 1 March 2010. No service contract provides for more than a one year notice period. On termination of employment each director is entitled to a payment in lieu of notice of basic salary and other contractual entitlements i.e. provision of car and health insurance.
Non-Executive Directors Non-Executive Directors are appointed by a Letter of Appointment and are subject to re-appointment by shareholders at the Group's AGM at least every three years. The remuneration of the Non-Executive Directors is determined by the Board and was last increased in April 2007. The appointment of Non-Executive Directors is terminable on three months notice. Non-Executive Directors do not participate in any of the Group's bonus or share award schemes.
Total shareholder return The performance criteria of the Group's 1999 share option schemes, referred to on pages 45 to 47 above, require the Group to exceed certain targets of total shareholder return. The total shareholder return for a holding in the Group's shares in the five years to 31 March 2010 is shown in the graph below.
Source: Thomson Reuters
This graph looks at the value, by 31 March 2010, of £100 invested in Helical on 31 March 2005 compared with the value of £100 invested in the FTSE 350 Super-sector Real Estate Index. The other points plotted are the values at intervening financial year-ends. Dividends received are re-invested in shares.
Fees receivable by Nigel McNair Scott in his capacity as Chairman of Avocet Mining Plc are shown in the financial statements of that Company.
Chairman of the Remuneration Committee
16 June 2010
We have audited the financial statements of Helical Bar plc for the year ended 31 March 2010 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the group and company balance sheets, the group and company cash flow statements, the group and company statements of changes in equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
As explained more fully in the Statement of Directors' Responsibilities on page 37, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb/scope/UKP.
In our opinion:
As explained in Note 1 to the group financial statements, the group in addition to complying with its legal obligation to comply with IFRSs as adopted by the European Union, has also complied with IFRSs as issued by the International Accounting Standards Board (IASB).
In our opinion the group financial statements comply with IFRSs as issued by the IASB.
In our opinion:
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
Under the Listing Rules, we are required to review:
Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants London
16 June 2010
| Note | Year ended 31.3.10 £000 |
Year ended 31.3.09 £000 |
|
|---|---|---|---|
| Revenue | 3 | 67,354 | 81,770 |
| Net rental income | 4 | 14,151 | 17,682 |
| Development property loss | 5 | (1,293) | (7,704) |
| Trading property loss | 6 | (10) | (514) |
| Share of results of joint ventures | 20 | 3,745 | 1,846 |
| Other operating income | 5 | 26 | 6,752 |
| Gross profit before net gain/(loss) on sale and revaluation of investment properties | 16,619 | 18,062 | |
| Net gain/(loss) on sale and revaluation of investment properties | 7 | 8,195 | (66,670) |
| Gain on sale of investments | 18 | – | 1,892 |
| Gross profit/(loss) | 24,814 | (46,716) | |
| Administrative expenses | 8 | (8,680) | (8,090) |
| Operating profit/(loss) | 16,134 | (54,806) | |
| Finance costs | 9 | (9,328) | (9,718) |
| Finance income | 9 | 1,039 | 2,082 |
| Change in fair value of derivative financial instruments | 23 | 1,157 | (13,412) |
| Foreign exchange (losses)/gains | (1,127) | 3,999 | |
| Profit/(loss) before tax | 7,875 | (71,855) | |
| Taxation on profit/(loss) on ordinary activities | 10 | 1,711 | 18,359 |
| Profit/(loss) after tax | 9,586 | (53,496) | |
| – attributable to minority interests | (33) | 143 | |
| – attributable to equity shareholders | 9,619 | (53,639) | |
| Profit/(loss) for the year | 9,586 | (53,496) | |
| Basic earnings/(loss) per share | 14 | 9.1p | (56.6p) |
| Diluted earnings/(loss) per share | 14 | 9.1p | (56.6p) |
55
| For the year ended 31 March 2010 | Group Year ended 31.3.10 £000 |
Group Year ended 31.3.09 £000 |
|---|---|---|
| Profit/(loss) for the year | 9,586 | (53,496) |
| Other comprehensive income Reclassification of prior year fair value adjustment realised in the year on disposal of available-for-sale investments |
– | (1,028) |
| Fair value movements on available-for-sale investments | 2,962 | 5,170 |
| Associated deferred tax on fair value movements | (829) | (1,159) |
| Exchange difference on retranslation of net investments in foreign operations | (131) | (309) |
| Total comprehensive income/(expense) for the year | 11,588 | (50,822) |
| – attributable to equity shareholders | 11,621 | (50,965) |
| – attributable to minority interest | (33) | 143 |
| 11,588 | (50,822) |
| Note | Group 31.3.10 £000 |
Group 31.3.09 £000 |
Company 31.3.10 £000 |
Company 31.3.09 £000 |
|
|---|---|---|---|---|---|
| Non-current assets | |||||
| Investment properties | 15 | 219,901 | 241,287 | – | – |
| Owner occupied property, plant and equipment | 17 | 1,638 | 1,745 | 1,476 | 1,721 |
| Available-for-sale investments | 18 | 13,325 | 13,310 | 13,325 | 13,310 |
| Investment in subsidiaries | 19 | – | – | 31,822 | 32,896 |
| Investment in joint ventures | 20 | 26,384 | 7,924 | 5,383 | 9,308 |
| Derivative financial instruments | 23 | 1,944 | – | 1,944 | – |
| Goodwill | 21 | 16 | 30 | – | – |
| Deferred tax asset | 11 | 3,169 | 3,440 | – | – |
| 266,377 | 267,736 | 53,950 | 57,235 | ||
| Current assets | |||||
| Land, developments and trading properties | 22 | 182,576 | 210,415 | 968 | 853 |
| Available-for-sale investments | 18 | 10,959 | 7,684 | – | – |
| Trade receivables and other receivables | 24 | 38,691 | 40,591 | 376,609 | 348,948 |
| Corporation tax receivable | 1,098 | 868 | 1,170 | 862 | |
| Cash and cash equivalents | 25 | 39,800 | 72,776 | 25,258 | 55,793 |
| 273,124 | 332,334 | 404,005 | 406,456 | ||
| Total assets | 539,501 | 600,070 | 457,955 | 463,691 | |
| Current liabilities | |||||
| Trade payables and other payables | 26 | (43,651) | (51,215) | (189,394) | (193,015) |
| Borrowings | 27 | (72,459) | (48,155) | (20,163) | – |
| (116,110) | (99,370) | (209,557) | (193,015) | ||
| Non-current liabilities | |||||
| Borrowings | 27 | (170,299) | (249,297) | (7,354) | (27,007) |
| Derivative financial instruments | 23 | (10,485) | (14,337) | (3,299) | (2,776) |
| Deferred tax provision | 11 | – | – | (3,282) | (3,218) |
| (180,784) | (263,634) | (13,935) | (33,001) | ||
| Total liabilities | (296,894) | (363,004) | (223,492) | (226,016) | |
| Net assets | 242,607 | 237,066 | 234,463 | 237,675 |
57
| Group 31.3.10 |
Group 31.3.09 |
Company 31.3.10 |
Company 31.3.09 |
|
|---|---|---|---|---|
| £000 | £000 | £000 | £000 | |
| Equity | ||||
| Called-up share capital | 1,339 | 1,336 | 1,339 | 1,336 |
| Share premium account | 70,828 | 70,378 | 70,828 | 70,378 |
| Revaluation reserve | – | 529 | – | – |
| Capital redemption reserve | 7,478 | 7,478 | 7,478 | 7,478 |
| Other reserves | 291 | 291 | 1,987 | 1,987 |
| Retained earnings | 162,547 | 158,494 | 152,831 | 158,093 |
| Own shares held | – | (1,597) | – | (1,597) |
| Equity attributable to equity holders of the parent | 242,483 | 236,909 | 234,463 | 237,675 |
| Minority interests | 124 | 157 | – | – |
| Total equity | 242,607 | 237,066 | 234,463 | 237,675 |
The financial statements were approved by the Board of Directors on 16 June 2010.
Director Director
Michael Slade Nigel McNair Scott
For the year to 31 March 2010
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
Company 31.3.10 £000 |
Company 31.3.09 £000 |
|
|---|---|---|---|---|
| Cash flows from operating activities | ||||
| Profit/(loss) before tax | 7,875 | (71,855) | 3,736 | 5,916 |
| Depreciation | 334 | 321 | 296 | 321 |
| Revaluation (gain)/loss on investment properties | (13,104) | 68,005 | – | – |
| Net interest payable | 8,289 | 6,999 | (1,846) | (5,665) |
| Gain on sale of investments | – | (1,892) | – | (1,892) |
| Loss/(gain) on sales of investment properties | 4,909 | (1,335) | – | – |
| (Gain)/loss on valuation of derivative financial instruments | (1,157) | 13,412 | 16 | 2,776 |
| Share based payment charge/(credit) | 1,151 | (1,363) | – | – |
| Share of results of joint ventures | (3,745) | (1,846) | – | (2,243) |
| Investment written off in the year | – | – | 1,100 | 5,675 |
| Foreign exchange reserves | (1,153) | 4,703 | – | – |
| Other non-cash items | 2 | (448) | (12) | (796) |
| Cash flows from operations before changes in working capital | 3,401 | 14,701 | 3,290 | 4,092 |
| Change in trade and other receivables | 358 | 3,503 | (27,661) | 3,404 |
| Change in land, developments and trading properties | 30,707 | (23,632) | (115) | (307) |
| Change in trade and other payables | (11,555) | (8,688) | (7,436) | (4,851) |
| Cash inflow/(outflow) generated from operations | 22,911 | (14,116) | (31,922) | 2,338 |
| Finance costs | (12,345) | (16,992) | (1,936) | (1,597) |
| Finance income | 1,231 | 2,497 | 4,189 | 6,396 |
| Tax received | 834 | 1,439 | 808 | 1,439 |
| Tax paid | (77) | (331) | (77) | (89) |
| (10,357) | (13,387) | (2,984) | 6,149 | |
| Cash flows from operating activities | 12,554 | (27,503) | (28,938) | 8,487 |
| Cash flows from investing activities | ||||
| Purchase of investment property | (4,192) | (15,024) | – | – |
| Sale of investment property | 36,704 | 10,340 | – | – |
| Purchase of investments | – | (5,048) | – | – |
| Sale of investments | – | 2,100 | – | 2,100 |
| Investment in joint venture | (18,641) | – | – | – |
| Dividends from joint ventures | 3,926 | – | 3,926 | – |
| Cost of acquiring derivative financial instruments | (1,437) | – | (1,437) | – |
| Cost of cancelling interest rate swap | (3,202) | – | – | – |
| Purchase of shares by ESOP | – | (3,107) | – | (3,107) |
| Sale of plant and equipment | 28 | 14 | 28 | 14 |
| Purchase of leasehold improvements, plant and equipment | (237) | (77) | (62) | (53) |
| 12,949 | (10,802) | 2,455 | (1,046) | |
| Cash flows from financing activities | ||||
| Issue of shares | 453 | 27,972 | 453 | 27,972 |
| Borrowings drawn down | 13,739 | 93,250 | 10,000 | 32,608 |
| Borrowings repaid | (67,923) | (23,101) | (9,757) | (8,109) |
| Equity dividends paid | (4,748) | (4,130) | (4,748) | (4,130) |
| (58,479) | 93,991 | (4,052) | 48,341 | |
| Net increase in cash and cash equivalents | (32,976) | 55,686 | (30,535) | 55,782 |
| Cash and cash equivalents at 1 April | 72,776 | 17,090 | 55,793 | 11 |
| Cash and cash equivalents at 31 March | 39,800 | 72,776 | 25,258 | 55,793 |
59
| Group | Share capital £000 |
premium £000 |
Share Revaluation reserve £000 |
Capital redemption reserve £000 |
Other reserves £000 |
Retained earnings £000 |
Own shares held £000 |
Minority interests £000 |
Total £000 |
|---|---|---|---|---|---|---|---|---|---|
| At 31 March 2008 | 1,222 | 42,520 | 57,072 | 7,478 | 291 | 163,911 | (3,992) | 157 268,659 | |
| Revaluation deficit | – | – | (56,360) | – | – | 56,360 | – | – | – |
| Realised on disposals | – | – | (183) | – | – | 183 | – | – | – |
| Total comprehensive expense | – | – | – | – | – | (50,822) | – | – | (50,822) |
| Dividends | – | – | – | – | – | (4,130) | – | – | (4,130) |
| Minority interest | – | – | – | – | – | (143) | – | – | (143) |
| Purchase of shares | – | – | – | – | – | – | (3,107) | – | (3,107) |
| Performance share plan | – | – | – | – | – | (1,363) | – | – | (1,363) |
| Own shares held | – | – | – | – | – | (5,502) | 5,502 | – | – |
| Issue of shares | 114 | 27,858 | – | – | – | – | – | – | 27,972 |
| At 31 March 2009 | 1,336 | 70,378 | 529 | 7,478 | 291 | 158,494 | (1,597) | 157 | 237,066 |
| Revaluation surplus | – | – | 13,104 | – | – | (13,104) | – | – | – |
| Realised on disposals | – | – | (13,633) | – | – | 13,633 | – | – | – |
| Total comprehensive income | – | – | – | – | – | 11,588 | – | – | 11,588 |
| Dividends | – | – | – | – | – | (7,657) | – | – | (7,657) |
| Minority interests | – | – | – | – | – | 33 | – | (33) | – |
| Purchase of shares | – | – | – | – | – | – | 6 | – | 6 |
| Performance share plan | – | – | – | – | – | 1,151 | – | – | 1,151 |
| Own shares held | – | – | – | – | – | (1,591) | 1,591 | – | – |
| Issue of shares | 3 | 450 | – | – | – | – | – | – | 453 |
| At 31 March 2010 | 1,339 | 70,828 | – | 7,478 | 291 | 162,547 | – | 124 | 242,607 |
The adjustment to retained earnings of £1,151,000 (2009: £1,363,000) adds back the share-based payments charge/(credit), in accordance with IFRS 2 Share-Based Payments.
| Company | Share capital £000 |
premium £000 |
Share Revaluation redemption reserve £000 |
Capital reserve £000 |
Other reserves £000 |
Retained earnings £000 |
Own shares held £000 |
Total £000 |
|---|---|---|---|---|---|---|---|---|
| At 31 March 2008 | 1,222 | 42,520 | – | 7,478 | 1,987 | 159,475 | (3,992) 208,690 | |
| Total comprehensive income | – | – | – | – | – | 8,250 | – | 8,250 |
| Dividends | – | – | – | – | – | (4,130) | – | (4,130) |
| Purchase of shares | – | – | – | – | – | – | (3,107) | (3,107) |
| Own shares held | – | – | – | – | – | (5,502) | 5,502 | – |
| Issue of shares | 114 | 27,858 | – | – | – | – | – | 27,972 |
| At 31 March 2009 | 1,336 | 70,378 | – | 7,478 | 1,987 | 158,093 | (1,597) 237,675 | |
| Total comprehensive income | – | – | – | – | – | 3,986 | – | 3,986 |
| Dividends | – | – | – | – | – | (7,657) | – | (7,657) |
| Purchase of shares | – | – | – | – | – | – | 6 | 6 |
| Own shares held | – | – | – | – | – | (1,591) | 1,591 | – |
| Issue of shares | 3 | 450 | – | – | – | – | – | 453 |
| At 31 March 2010 | 1,339 | 70,828 | – | 7,478 | 1,987 | 152,831 | – 234,463 |
Notes:
Share capital – represents the nominal value of issued share capital.
Share premium – represents the excess of value of shares issued over their nominal value.
Revaluation reserve – represents the surplus of fair value of investment properties over their historic cost.
Capital redemption reserve – represents amounts paid to purchase issued shares for cancellation at their nominal value.
Retained earnings – represents the accumulated retained earnings of the Group.
Own shares held – relates to the shares purchased by the Helical Bar Employees' Share Ownership Plan Trust.
Report & accounts 2010
These financial statements have been prepared in accordance with applicable International Financial Reporting Standards ("IFRS"), including International Financial Reporting Interpretations Committee ("IFRIC") interpretations as adopted by the European Union and as issued by the International Accounting Standards Board ("IASB").
The directors have taken advantage of the exemption offered by Section 408 of the Companies Act 2006 not to present a separate income statement for the parent company.
The financial statements have been prepared in Sterling (rounded to the nearest thousand) under the historical cost convention as modified by the revaluation of investment properties, available-for-sale investments and derivative financial instruments. The measurement bases and principal accounting policies of the Group are set out below. These accounting policies are consistent with those applied in the year to 31 March 2009, as amended to reflect any new Standards, Amendments to Standards and interpretations which are mandatory for the year ended 31 March 2010.
IAS 1 Presentation of Financial Statements (revised 2007) requires presentation of a comparative balance sheet as at the beginning of the first comparative period in some circumstances. Management considers that this is not necessary this year because the March 2008 balance sheet is the same as that previously published.
The Group adopted the following new and amended IFRS and IFRIC interpretations in the year.
IAS 1 Presentation of Financial Statements (revised 2007);
IAS 23 Borrowing Costs (revised 2007) (effective 1 January 2009);
IAS 27 Consolidated and Separate Financial Statements (Revised 2008) (effective 1 January 2009);
Amendment to IFRS 2 Share-based Payments - Vesting Conditions and Cancellations (effective 1 January 2009);
Amendment to IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items (effective 1 July 2009); Amendment to IAS 40 Investment Properties - Property that is being constructed or developed for future use as investment property (effective 1 January 2009);
Amendment to IFRS 7 Financial Instruments: Disclosures - Improving Disclosures About Financial Instruments (effective 1 January 2009);
Embedded Derivatives - Amendments to IAS 39 and IFRIC 9 (effective for annual periods ending on or after 30 June 2009); IFRS 3 Business Combinations (revised 2008) (effective 1 July 2009);
IFRS 8 Operating Segments (effective 1 January 2009);
IFRIC 15 Agreements for the Construction of Real Estate (effective 1 January 2009); and,
IFRIC 16 Hedges of a Net Investment in a Foreign Operation (effective 1 October 2008).
There has been no material impact as a result of adopting the above other than in the presentation of accounts under the revised requirements of IAS 1 and IFRS 8.
The following standards, interpretations and amendments have been issued but are not yet effective. They will be adopted at the point they are effective:
IAS 27 (amended) Consolidated and Separate Financial Statements - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate;
IAS 28 (revised 2008) Investments in Associates;
IAS 32 (amended) Financial Instruments - Presentation - Classification of Rights Issues;
IFRIC 17 Distributions of Non-cash Assets to Owners;
IFRIC 18 Transfer of Assets from Customers; and,
Improvements to IFRSs (April 2009).
The Directors do not expect that the adoption of these Standards and Interpretations in future periods will have a material impact on the financial statements of the Group.
The Group financial statements consolidate those of Helical Bar plc (the "Company") and all of its subsidiary undertakings (together the "Group") drawn up to 31 March 2010. Subsidiary undertakings are those entities over which the Group has the ability to govern the financial and operating policies through the exercise of voting rights. Subsidiaries are accounted for under the purchase method and are held in the Company balance sheet at cost and reviewed annually for impairment.
Joint Ventures are entities whose economic activities are controlled jointly by the Group and by other ventures independent of the Group and are accounted for using the equity method of accounting. Under IFRS the Group's share of the results and of the net assets of the joint ventures are shown in the Income Statement and Consolidated Balance Sheet ("Balance Sheet") respectively. Under IFRS the Company's cost of investment in joint ventures is shown in the Company Balance Sheet.
Associates are those entities over which the Group has significant influence but which are neither subsidiaries nor joint ventures.
Intra-group balances and any unrealised gains on transactions between the Company and its subsidiaries and between subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Report & accounts 2010
The accounts have been prepared on a going concern basis as explained in the Financial Review on pages 31 to 33.
Rental income - rental income receivable is recognised in the Income Statement on a straight line basis over the lease term. Any incentive for lessees to enter into a lease agreement and any costs associated with entering into the lease are spread over the same period.
Sale of goods - assets, such as trading properties, development sites and completed developments, are regarded as sold upon the transfer of the significant risks and rewards of ownership to the purchaser, in accordance with IAS 18 Revenue. This occurs on exchange of unconditional contracts for the sale of the site, on satisfaction of any and all conditions on a conditional contract for the sale of the site or on completion of the contract on a conditional sale where those conditions are satisfied at completion. Measurements of revenue arising from the sale of such assets is derived from the fair value of the consideration received in accordance with IAS 18 Revenue.
Construction contracts - where an asset is constructed under a specific contract with a purchaser (a "pre-sold development") the initial sale of the site to that purchaser is recognised as a sale of goods in accordance with IAS 18 Revenue. The construction element of the contract is treated, for the purposes of revenue recognition, as a construction contract in accordance with IAS 11 Construction Contracts. Revenue is recognised by reference to the stage of completion which is typically determined by reference to project appraisals, normally supported by independent valuation certificates provided by quantity surveyors. The Company's principal other responsibility on pre-sold developments is the identification of and agreement of terms with potential tenants of the completed building(s). The revenue recognition of this additional component of the funding agreements is considered separately to reflect the substance of the transaction as the rendering of services, in accordance with IAS 18 Revenue. The amount of revenue recognised is determined by reference to the percentage of the building(s) that are let.
Investment income - revenue in respect of investment and other income represents investment income, fees and commissions earned on an accruals basis and the fair value of the consideration received/receivable on investments held for the short-term. Dividends are recognised when the shareholders' right to receive payment has been established. Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate.
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 43 to 50. The fair value of share-based payments related to employees' service are determined indirectly by reference to the fair value of the related instrument at the grant date. All share-based payment arrangements granted after 7 November 2002 that had not vested prior to 1 January 2005 are recognised in the financial statements. The Group uses the stochastic valuation model and the resulting value is amortised through the Consolidated Income Statement ("Income Statement") over the vesting period of the share-based payments.
For the performance share plan and share incentive plan awards, where non-market conditions apply, the expense is allocated, over the vesting period, to the Income Statement based on the best available estimate of the number of awards that are expected to vest. Estimates are subsequently revised if there is any indication that the number of awards expected to vest differs from previous estimates.
In accordance with IAS 40 Investment Property, depreciation is not provided for on freehold investment properties or on leasehold investment properties. The Group does not own the freehold land and buildings which it occupies. Costs incurred in respect of leasehold improvements to the Group's head office at 11-15 Farm Street, London W1J 5RS are capitalised and held as short-term leasehold improvements. Leasehold improvements, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Residual values are reassessed annually.
Depreciation is charged so as to write off the cost of assets less residual value, over their estimated useful lives, using the straight line method, on the following basis:
| Short leasehold improvements | – 10% or length of lease, if shorter |
|---|---|
| Plant and equipment | – 25% |
The taxation charge represents the sum of tax currently payable and deferred tax. The charge for current taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using rates that have been enacted or substantively enacted by the balance sheet date. Tax payable upon realisation of revaluation gains recognised in prior periods is recorded as a current tax charge with a release of the associated deferred taxation.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. The measurement of deferred tax assets and liabilities reflects the tax consequences of the manner in which Helical expects, at the balance sheet date, to recover or settle the carrying amount of those assets and liabilities. Such assets and liabilities are not recognised if the temporary differences arise from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered.
The deferred tax asset relating to share based payment awards reflects the estimated value of tax relief available on the vesting of the awards at the balance sheet date.
Deferred tax is determined using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. It is recognised in the Income Statement except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
The Group recognises a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except to the extent that both of the following conditions are satisfied:
a) the Group is able to control the timing of the reversal of the temporary difference; and, b) it is probable that the temporary difference will not reverse in the foreseeable future.
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 are properties owned or leased by the Group which are held for long-term rental income and for capital appreciation. Investment properties are initially recognised at cost, including associated transaction costs, and revalued at the balance sheet date to fair value. These fair values are based on market values as determined by professionally qualified external valuers or are determined by the directors of the Group based on their knowledge of the property. In accordance with IAS 40, investment properties held under leases are stated gross of the recognised finance lease liability.
Gains or losses arising from changes in the fair value of investment properties are included as gains or losses on revaluation in the Income Statement of the period in which they arise.
In accordance with IAS 40, as the Group uses the fair value model, no depreciation is provided in respect of investment properties including integral plant.
Property that is being constructed or developed for future use as an investment property is treated as investment property in accordance with IAS 40.
When the Group redevelops an existing investment property for continued future use as investment property, the property remains an investment property measured at fair value and is not reclassified. Interest is capitalised before tax relief until the date of practical completion.
Gross borrowing costs associated with expenditure on properties under development or undergoing major refurbishment are capitalised. The interest capitalised is calculated using the Group's weighted average cost of borrowings. Interest is capitalised from the date of commencement of the development work until date of practical completion.
Details of the valuation of investment properties can be found in note 15.
Goodwill, representing the excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired, is capitalised and reviewed annually for impairment. Goodwill is carried at cost less accumulated impairment losses. Negative goodwill is recognised immediately after acquisition in the Income Statement.
Land, developments and trading properties held for sale are inventory and are included in the Balance Sheet at the lower of cost and net realisable value.
Available-for-sale investments are revalued to fair value at the balance sheet date. Gains or losses arising from changes in fair value are recognised in the Statement of Comprehensive Income except to the extent that losses are attributable to impairment, in which case they are recognised in the Income Statement. Upon disposal, accumulated fair value adjustments are included in the Income Statement.
Trade receivables do not carry any interest and are stated initially at fair value and subsequently at amortised cost as reduced by appropriate allowances for estimated irrecoverable amounts.
Cash and cash equivalents are carried in the Balance Sheet at amortised cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand, deposits with banks, and other short-term, highly liquid investments with original maturities of three months or less.
63
Trade and other payables are not interest bearing and are initially recognised at fair value and subsequently at amortised cost.
Interest bearing bank loans and overdrafts are initially recorded at fair value, net of finance and other costs yet to be amortised.
Borrowing costs directly attributable to the acquisition and construction of new developments and investment properties are added to the costs of such properties until the date of completion of the development or investment. After initial recognition borrowings are carried at amortised cost.
Derivative financial assets and financial liabilities are recognised on the Balance Sheet when the Group becomes a party to the contractual provisions of the instrument.
The Group enters into derivative transactions such as interest rate caps and floors, and forward foreign currency contracts in order to manage the risks arising from its activities. Derivatives are initially recorded at fair value and are subsequently remeasured to fair value based on market prices, estimated future cash flows and forward rates as appropriate. Any change in the fair value of such derivatives is recognised immediately in the Income Statement.
Further information on the categorisation of financial instruments can be found in note 23.
Leases are classified according to the substance of the transaction. A lease that transfers substantially all the risks and rewards of ownership to the lessee is classified as a finance lease. All other leases are classified as operating leases.
In accordance with IAS 40, finance leases of investment property are accounted for as finance leases and recognised as an asset and an obligation to pay future minimum lease payments. The investment property asset is included in the balance sheet at fair value, gross of the recognised finance lease liability. Lease payments are allocated between the liability and finance charges so as to achieve a constant financing rate.
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Non-monetary items that are measured at historical cost in a foreign currency are translated at the exchange rate at the date of the transaction.
Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognised in the Income Statement in the period in which they arise. Exchange differences on non-monetary items are recognised in the Statement of Comprehensive Income to the extent that they relate to a gain or loss on that non-monetary item which is included in the Statement of Comprehensive Income, otherwise such gains and losses are recognised in the Income Statement.
The assets and liabilities in the financial statements of foreign subsidiaries are translated at the rate of exchange ruling at the balance sheet date. Income and expenses are translated at the average rate. The exchange differences arising from the retranslation of the opening net investment in subsidiaries are taken directly to retained earnings in equity. On disposal of a foreign operation the cumulative translation differences (including, if applicable, gains and losses on related hedges) are transferred to the Income Statement as part of the gain or loss on disposal.
Net asset values per share have been calculated in accordance with the best practice recommendations of the European Public Real Estate Association ("EPRA").
Earnings /(loss) per share have been calculated in accordance with IAS 33 and the best practice recommendations of EPRA.
Shares held in the Helical Bar Employee Share Ownership Plan Trust ("ESOP") are shown as a deduction in arriving at equity funds. Assets, liabilities and reserves of the ESOP are included in the statutory headings to which they relate. Purchases and sales of own shares increase or decrease the book value of "Own shares held" in the Balance Sheet. At each period end the Group assesses and recognises the fair value of "Own shares held" and accounts for movement between book value and fair value as a reserves transfer.
To be able to prepare accounts according to generally accepted accounting principles, management must make estimates and assumptions that affect the asset and liability items and revenue and expense amounts recorded in the financial accounts. These estimates are based on historical experience and various other assumptions that management and the Board of Directors believe are reasonable under the circumstances. The results of these considerations form the basis for making judgements about the carrying value of assets and liabilities that are not readily available from other sources.
Areas requiring the use of estimates and critical judgement that may significantly impact on the Group's earnings and financial position are:
The Group has adopted IFRS 8 Operating Segments with effect from 1 April 2009. IFRS 8 requires the identification of the Group's operating segments which are defined as being discrete components of the Group's operations whose results are regularly reviewed by the Chief Executive to allocate resources to those segments and to assess their performance. This has not led to a change in the division of operating segments to those disclosed in prior years and the Group continues to divide its business into the following segments:
| Revenue | Investment Year ended 31.3.10 £000 |
and trading Developments Year ended 31.3.10 £000 |
Total Year ended 31.3.10 £000 |
Investment and trading Year ended 31.3.09 £000 |
Developments Year ended 31.3.09 £000 |
Total Year ended 31.3.09 £000 |
|---|---|---|---|---|---|---|
| Rental income | 16,689 | 2,192 | 18,881 | 19,989 | 792 | 20,781 |
| Development income | – | 47,822 | 47,822 | – | 54,097 | 54,097 |
| Trading property sales | 525 | – | 525 | – | – | – |
| 17,214 | 50,014 | 67,228 | 19,989 | 54,889 | 74,878 | |
| Other revenue | 126 | 6,892 | ||||
| Total revenue | 67,354 | 81,770 |
All revenue is from external sales and is attributable to continuing operations. There were no inter-segmental sales.
Revenue for the year comprises revenue from construction contracts of £7,670,000 (2009: £16,251,000), revenue from the sale of goods of £37,926,000 (2009: £15,993,000), revenue from services of £2,877,000 (2009: £28,745,000), and rental income of £18,881,000 (2009: £20,781,000).
All revenues are within the UK other than £19,482,000 of development income derived from the Group's operations in Poland.
64
| Profit before tax | Investment Year ended 31.3.10 £000 |
and trading Developments Year ended 31.3.10 £000 |
Total Year ended 31.3.10 £000 |
Investment and trading Year ended 31.3.09 £000 |
Developments Year ended 31.3.09 £000 |
Total Year ended 31.3.09 £000 |
|---|---|---|---|---|---|---|
| Net rental income | 12,904 | 1,247 | 14,151 | 17,008 | 674 | 17,682 |
| Development property loss | – | (1,293) | (1,293) | – | (7,704) | (7,704) |
| Trading property loss | (10) | – | (10) | (514) | – | (514) |
| Share of results of joint ventures | 3,158 | 587 | 3,745 | (332) | 2,178 | 1,846 |
| Gain/(loss) on sale and revaluation of investment properties |
8,195 | – | 8,195 | (66,670) | – | (66,670) |
| 24,247 | 541 | 24,788 | (50,508) | (4,852) | (55,360) | |
| Gain on sale of investments | – | 1,892 | ||||
| Other operating income | 26 | 6,752 | ||||
| Gross profit/(loss) | 24,814 | (46,716) | ||||
| Administrative expenses | (8,680) | (8,090) | ||||
| Finance income | 1,039 | 2,082 | ||||
| Finance costs | (8,171) | (23,130) | ||||
| Foreign exchange (loss)/gain | (1,127) | 3,999 | ||||
| Profit/(loss) before tax | 7,875 | (71,855) | ||||
| Balance sheet | 31.3.10 £000 |
31.3.10 £000 |
31.3.10 £000 |
31.3.09 £000 |
31.3.09 £000 |
31.3.09 £000 |
| Investment properties | 219,901 | – | 219,901 | 241,287 | – | 241,287 |
| Land, development and trading properties |
273 | 182,303 | 182,576 | 878 | 209,537 | 210,415 |
| 220,174 | 182,303 | 402,477 | 242,165 | 209,537 | 451,702 | |
| Other assets | 137,024 | 148,368 | ||||
| Total assets | 539,501 | 600,070 | ||||
| Liabilities | (296,894) | (363,004) | ||||
| Net assets | 242,607 | 237,066 |
All non-current assets are derived from the Group's UK operations.
| Year ended 31.3.10 £000 |
Year ended 31.3.09 £000 |
|
|---|---|---|
| Gross rental income | 18,881 | 20,781 |
| Rents payable | (12) | (12) |
| Property overheads | (3,732) | (2,394) |
| Net rental income | 15,137 | 18,375 |
| Third party share of net rental income | (986) | (693) |
| Group share of net rental income | 14,151 | 17,682 |
Property overheads include lettings costs, vacancy costs and bad debt provisions.
| Year ended 31.3.10 £000 |
Year ended 31.3.09 £000 |
|
|---|---|---|
| Development property income | 47,822 | 54,097 |
| Cost of sales | (38,638) | (26,274) |
| Sales expenses | (436) | (6,141) |
| Provision against book values | (10,041) | (29,386) |
| Development property loss | (1,293) | (7,704) |
Within other operating income for the year ended 31 March 2009 of £6,752,000 was £6,642,000 relating to contributions from joint venture partners and tenants against the write-down of development stock. No such contributions were received in the year ended 31 March 2010.
| Year ended 31.3.10 £000 |
Year ended 31.3.09 £000 |
|
|---|---|---|
| Trading property sales | 525 | – |
| Cost of sales | (525) | – |
| Sales expenses | (10) | – |
| Provision against book values | – | (514) |
| Trading property loss | (10) | (514) |
| Year ended 31.3.10 £000 |
Year ended 31.3.09 £000 |
|
|---|---|---|
| Net proceeds from the sale of investment properties | 36,704 | 10,340 |
| Book value (note 15) | (40,438) | (9,005) |
| Tenants incentives on sold investment properties | (1,175) | – |
| (Loss)/gain on sale of investment properties | (4,909) | 1,335 |
| Revaluation surplus/(deficit) on investment properties | 13,104 | (68,005) |
| Gain/(loss) on sale and revaluation of investment properties | 8,195 | (66,670) |
| Year ended 31.3.10 £000 |
Year ended 31.3.09 £000 |
|
|---|---|---|
| Administrative expenses | (8,680) | (8,090) |
| Operating profit/(loss) is stated after the following items that are contained within administrative expenses: |
||
| Staff costs during the year: | ||
| – salaries and other remuneration | 4,012 | 4,368 |
| – social security costs | 470 | 506 |
| – other pension costs | 115 | 77 |
| 4,597 | 4,951 | |
| Depreciation | ||
| – owner occupied property, plant and equipment | 334 | 321 |
| Share-based payments charge/(credit) | 1,151 | (425) |
| Auditors' remuneration: | ||
| Audit fees | ||
| – audit of parent company and consolidated financial statements | 143 | 163 |
| – audit of company's subsidiaries | 71 | 79 |
| – interim audit of consolidated financial statements | 39 | 30 |
| – internal controls review | – | 15 |
| – financial accounts review | 3 | 18 |
| Non-audit fees | ||
| – PSP review | 3 | 3 |
Details of the remuneration of Directors amounting to £6,876,000 (2009: £15,332,000) are included in the Directors' Remuneration Report on pages 43 to 50. The amount of the share-based payments charge relating to share awards made to Directors is £921,000 (2009: credit of £348,000).
Other pension costs relate to payments to individual pension plans.
The average number of employees (management and administration) of the Group during the year was 25 (2009: 24).
| Year ended 31.3.10 £000 |
Year ended 31.3.09 £000 |
|
|---|---|---|
| Interest payable on bank loans and overdrafts | (10,956) | (15,890) |
| Other interest payable and similar charges | (696) | (362) |
| Finance arrangement costs | (872) | (321) |
| Interest capitalised | 3,196 | 6,855 |
| Finance costs | (9,328) | (9,718) |
| Interest receivable and similar income | 1,039 | 2,082 |
| Finance income | 1,039 | 2,082 |
All interest payable relates to interest on borrowings and all interest receivable relates to interest on cash and cash equivalents.
On projects where specific third party loans have been arranged, interest has been capitalised at the rate for the individual loan. The weighted average capitalised interest rate of such loans was 2.81% (2009: 6.04%). 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 3.61% (2009: 6.15%).
| Year ended 31.3.10 |
Year ended 31.3.09 |
|
|---|---|---|
| The tax credit is based on the profit/(loss) for the year and represents: | £000 | £000 |
| United Kingdom corporation tax at 28% | ||
| – Group corporation tax | – | – |
| – adjustment in respect of prior periods | 1,152 | 1,915 |
| Current tax credit | 1,152 | 1,915 |
| Deferred tax at 28% – capital allowances |
(52) | (480) |
| – revaluation surplus/(deficits) | – | 12,566 |
| – tax losses | 2,121 | 5,285 |
| – other temporary differences | (1,510) | (927) |
| Deferred tax credit | 559 | 16,444 |
| Tax credit on profit/(loss) on ordinary activities | 1,711 | 18,359 |
Factors affecting the tax credit for the period:
The tax assessed for the period is lower than the standard rate of corporation tax in the UK (28%). The differences are explained below:
| Year ended 31.3.10 £000 |
Year ended 31.3.09 £000 |
|
|---|---|---|
| Profit/(loss) on ordinary activities before tax | 7,875 | (71,855) |
| Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in the UK of 28% | (2,205) | 20,119 |
| Effect of: | ||
| – expenses not deductible for tax purposes | (532) | (390) |
| – income not subject to UK corporation tax | 910 | 2,288 |
| – capital allowances not reflected through deferred tax | 672 | – |
| – tax relief on share awards | 483 | (1,351) |
| – tax losses utilised | (146) | 2,257 |
| – operating profit of joint ventures | 1,082 | – |
| – prior year adjustment | 1,152 | 1,915 |
| – revaluation surplus/(deficit) not recognised through deferred tax | 3,669 | (6,475) |
| – chargeable gain in excess of loss on investment property | (3,308) | – |
| – other temporary differences | (66) | (4) |
| Total tax credit for the period | 1,711 | 18,359 |
The tax charge is expected to be less than the full rate in future years, primarily due to the Group continuing to claim allowances in respect of eligible expenditure on investment properties and unrealised capital losses at 31 March 2010 of £14.5m.
Deferred tax provided for in the financial statements is set out below:
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
Company 31.3.10 £000 |
Company 31.3.09 £000 |
|
|---|---|---|---|---|
| Capital gains | – | – | – | – |
| Capital allowances | (3,257) | (3,205) | (228) | (179) |
| Available-for-sale assets | (4,782) | (3,218) | (3,222) | (3,218) |
| Tax losses | 7,704 | 5,579 | 168 | 179 |
| Other temporary differences | 3,504 | 4,284 | – | – |
| Deferred tax asset/(liability) | 3,169 | 3,440 | (3,282) | (3,218) |
Other temporary differences represent deferred tax assets arising from the recognition of the fair value of derivative financial instruments and future tax relief available to the Group from capital allowances and when share awards vest.
If upon sale of the investment properties the Group retained all the capital allowances, the deferred tax provision in respect of capital allowances of £3.3m (2009: £3.2m) would be released and further capital allowances of £12.2m (2009: £11.8m) would be available to reduce future tax liabilities.
| Year ended 31.3.10 £000 |
Year ended 31.3.09 £000 |
||
|---|---|---|---|
| Attributable to equity share capital | |||
| Ordinary | |||
| – first interim paid of 1.75p (2009: 1.75p) per share | 1,851 | 1,640 | |
| – second interim payable on 1 April 2010 of 2.75p (2009: nil) per share | 2,909 | – | |
| – prior period final paid of 2.75p (2009: 2.75p) per share | 2,897 | 2,490 | |
| Total dividends paid and payable in year – 7.25p (2009: 4.50p) per share | 7,657 | 4,130 |
An interim dividend of 1.75p was paid on 23 December 2009 to shareholders on the register on 4 December 2009. A second interim dividend of 2.75p was declared on 3 March 2010 and paid on 1 April 2010 to shareholders on the register on 12 March 2010. At 31 March 2010 this dividend was included within Other Payables. The final dividend, if approved at the AGM on 21 July 2010, will be paid on 23 July 2010 to shareholders on the register on 25 June 2010. This final dividend, amounting to £265,000, has not been included as a liability as at 31 March 2010, in accordance with IFRS.
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 year of the Company was £3,975,000 (2009: £7,157,000).
The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. This is a different basis to the net asset per share calculations which are based on the number of shares at the year end. Shares held by the ESOP, which has waived its entitlement to receive dividends, are treated as cancelled for the purposes of this calculation.
The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares on the assumed exercise of all dilutive options.
The earnings/(loss) per share are calculated in accordance with IAS 33, Earnings per Share and the best practice recommendations of the European Public Real Estate Association ("EPRA").
Reconciliations of the earnings/(loss) and weighted average number of shares used in the calculations are set out below.
| Year ended 31.3.10 000s |
Year ended 31.3.09 000s |
|
|---|---|---|
| Ordinary shares in issue | 107,408 | 107,087 |
| Weighting adjustment | (1,852) | (12,242) |
| Weighted average ordinary shares in issue for calculation of basic and diluted earnings per share | 105,556 | 94,845 |
| Weighted average ordinary shares issued on exercise of share options | 294 | 804 |
| Weighted average ordinary shares to be issued on exercise of share options | – | 703 |
| Weighted average ordinary shares to be issued under performance share plan | 406 | 918 |
| Weighted average ordinary shares in issue for calculation of diluted EPRA earnings per share | 106,256 | 97,270 |
| Earnings/(loss) used for calculation of basic and diluted earnings per share | 9,619 | (53,639) |
| Basic earnings/(loss) per share | 9.1p | (56.6p) |
| Diluted earnings/(loss) per share | 9.1p | (56.6p) |
| Earnings/(loss) used for calculation of basic and diluted earnings per share | 9,619 | (53,639) |
| Net (gain)/loss on sale and revaluation of investment properties | (8,195) | 66,670 |
| Fair value movement on derivative financial instruments | (1,157) | 13,412 |
| Gain on disposal of investment | – | (1,892) |
| Deferred tax | 2,853 | (15,843) |
| Earnings used for calculation of diluted EPRA earnings per share | 3,120 | 8,708 |
| Diluted EPRA earnings per share | 2.9p | 9.0p |
In accordance with IAS 33 no weighting adjustments have been made for share awards in existence during the year to 31 March 2009 as a loss was made during that year making the adjustments anti-dilutive. Accordingly, the basic and diluted losses per share for that year are the same.
Diluted EPRA earnings per share excludes from earnings the IFRS effects of including the gain on sale and revaluation of investment properties (net of tax) and fair value movement on derivative financial instruments (net of tax).
| Group | Freehold 31.3.10 £000 |
Leasehold 31.3.10 £000 |
Total 31.3.10 £000 |
Freehold 31.3.09 £000 |
Leasehold 31.3.09 £000 |
Total 31.3.09 £000 |
|---|---|---|---|---|---|---|
| Fair value at 1 April | 182,812 | 58,475 | 241,287 | 230,853 | 75,925 | 306,778 |
| Property acquisitions | 3,853 | 339 | 4,192 | 14,159 | 1,852 | 16,011 |
| Properties transferred from land, trading and development properties |
– | – | – | 1,514 | – | 1,514 |
| Disposals | (3,263) | (37,175) | (40,438) | (9,005) | – | (9,005) |
| Revaluation surplus/(deficit) | 13,756 | (652) | 13,104 | (49,273) | (18,732) | (68,005) |
| Joint venture share of revaluation | 1,643 | 113 | 1,756 | (5,436) | (570) | (6,006) |
| Fair value at 31 March | 198,801 | 21,100 | 219,901 | 182,812 | 58,475 | 241,287 |
A disposal of the investment property portfolio at its stated fair value would crystallise a net payment of £1,748,000 due to the Group's joint venture partners in respect of their share of the revaluation surplus (2009: £nil).
Interest capitalised during the year in respect of the refurbishment of investment properties amounted to £nil (2009: £1,065,000).
Interest capitalised in respect of the refurbishment of investment properties is included in investment properties to the extent of £5,767,000 (2009: £6,205,000).
Investment properties with fair value of £216,000,000 were held as security against borrowings.
Properties are stated at market value as at 31 March 2010, valued by professionally qualified external valuers except for investment properties valued by the Directors. The valuations have been prepared in accordance with the Valuation Standards (6th edition) published by the Royal Institution of Chartered Surveyors ("the Standards"). In their valuation reports, the valuers have noted, in accordance with Guidance Note 5 of the Standards, that the primary source of evidence for valuations is recent, comparable market transactions on arms length terms. The Directors have valued £3,751,000 (2%) of the investment portfolio on a discounted cashflow basis representing the present value of future income receivable upon the disposal by residents of units in the Group's retirement village portfolio.
The investment properties have been valued at 31 March 2010 as follows:
| £000 | |
|---|---|
| Cushman & Wakefield LLP | 211,050 |
| Drivers Jonas Deloitte | 5,100 |
| Directors' valuation | 3,751 |
| 219,901 |
The historical cost of investment property is £218,893,000 (2009: £240,583,000).
The Group earns rental income by leasing its investment properties to tenants under non-cancellable operating leases. At the balance sheet date the Group had contracted with tenants to receive the following future minimum lease payments:
| Group 31.03.10 £000 |
Group 31.03.09 £000 |
|
|---|---|---|
| Not later than one year | 14,908 | 17,715 |
| Later than one year but not more than five years | 38,063 | 49,037 |
| More than five years | 38,983 | 50,367 |
| 91,954 | 117,119 |
The Company has no operating lease arrangements.
| Short leasehold improvement 31.3.10 £000 |
Plant and equipment 31.3.10 £000 |
Total 31.3.10 £000 |
Short leasehold improvement 31.3.09 £000 |
Plant and equipment 31.3.09 £000 |
Total 31.3.09 £000 |
|
|---|---|---|---|---|---|---|
| Cost at 1 April | 2,071 | 554 | 2,625 | 2,033 | 587 | 2,620 |
| Additions at cost | – | 237 | 237 | 38 | 39 | 77 |
| Disposals | – | (121) | (121) | – | (72) | (72) |
| Cost at 31 March | 2,071 | 670 | 2,741 | 2,071 | 554 | 2,625 |
| Depreciation at 1 April | 518 | 362 | 880 | 328 | 285 | 613 |
| Provision for the year | 190 | 144 | 334 | 190 | 131 | 321 |
| Eliminated on disposals | – | (111) | (111) | – | (54) | (54) |
| Depreciation at 31 March | 708 | 395 | 1,103 | 518 | 362 | 880 |
| Net book amount at 31 March | 1,363 | 275 | 1,638 | 1,553 | 192 | 1,745 |
Plant and equipment include vehicles, fixtures and fittings and other office equipment.
All short leasehold improvement, plant and equipment relates to the Company except for plant and equipment with a net book value of £162,000 as at 31 March 2010 (2009: £24,000).
71
| At 31 March 2010 | 13,325 | 13,325 | 10,959 | – |
|---|---|---|---|---|
| Fair value adjustments | 15 | 15 | 2,947 | – |
| Disposals | – | – | (10) | – |
| Additions | – | – | 338 | – |
| At 1 April 2009 | 13,310 | 13,310 | 7,684 | – |
| Non-Current Group £000 |
Non-Current Company £000 |
Current Group £000 |
Current Company £000 |
Included in non-current available-for-sale investments is an effective investment of 18% in Quotient Biosciences Group Limited ("Quotient"), a private bioscience company.
The valuation of the investment in Quotient is determined using a valuation technique as there is no active market for the shares. The valuation for one part of the business is based on the sales price of a similar business. Due to the difference in the technology involved the sales price is discounted by 60%.
The value of another part of the business is derived from the forecast revenue for the year to 31 March 2011 and a revenue multiple for the business based on the market capitalisation of similar businesses within the biosciences sector.
For the remainder of the business the valuation is derived from the forecast earnings for the year to 31 March 2011 and an earnings multiple for the business based on the market capitalisation of similar businesses within the biosciences sector.
The increase in the valuation of the investment in Quotient is recognised in the Statement of Comprehensive Income as is the associated movement in deferred tax.
It is believed that the correct discount factor of one of the parts of the business should be within the range of 50% to 60% based on the differing levels of progress of the technologies. The discount factor of 60% is deemed to be the most appropriate based on the known technological progress. However, were the discount factor 50% the value of the investment would be £1,272,000 greater and the shareholder funds would be increased by £916,000.
The revenue multiple is calculated from the sales values of other similar businesses. The multiple chosen is the average of the range of multiples identified. Were the earnings multiple at the bottom of the range the value of the investment would be £1,644,000 lower and the shareholder funds would be reduced by £1,184,000. Were the earnings multiple at the top of the range the value of the investment would be £3,645,000 greater and the shareholder funds would be increased by £2,624,000.
The earnings multiple is calculated from the sales values of other similar businesses. The multiple chosen is in the average of the range of multiples identified. Were the earnings multiple at the bottom of the range the value of the investment would be £312,000 lower and the shareholder funds would be reduced by £225,000. Were the earnings multiple at the top of the range the value of the investment would be £321,000 greater and the shareholder funds would be increased by £231,000.
The gain on sale of investments in 2009 of £1,892,000 was due to the Group selling a tenth of its holding in Quotient.
Included within current available-for-sale investments is an amount lent to a company promoting a mainly residential mixed-use development and an investment of 20% of the equity of this company. At the beginning of the year the Group had an entitlement to 10% of the equity of the company and the option to buy additional shares. During the year this entitlement and option were renegotiated to 20% of the equity without an option to buy additional shares. The loan was also renegotiated.
The loan and the equity are classed as available-for-sale investments and are held at fair value. The Group has determined its fair value by considering both the loan and the equity element separately. The loan element is valued at the fair value of the consideration receivable. The equity element is given a nil value with the Group valuing the underlying company on a break up basis at nil as they believe this is the most probable outcome. This nil valuation is derived because the Group believe that the value of the property and any other of the company's assets, after the repayment of the loan payable to the Group, would be required to repay the outstanding creditors leaving negligible value to the shareholders.
The movement in the fair value of the available-for-sale investments and the associated deferred tax movement are recognised in the Statement of Comprehensive Income.
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
Company 31.3.10 £000 |
Company 31.3.09 £000 |
|
|---|---|---|---|---|
| At 1 April | – | – | 32,896 | 37,771 |
| Acquired during year | – | – | 26 | 800 |
| Impairment in the carrying value of investments | – | – | (1,100) | (5,675) |
| At 31 March | – | – | 31,822 | 32,896 |
The Company's principal subsidiary undertakings, all of which have been consolidated, are:
| Name of undertaking | Nature of business | Percentage of ordinary share capital held |
|---|---|---|
| Albion Land (Bushey Mill) Ltd | Development | 100% |
| Baylight Developments Ltd* | Investment | 100% |
| Cranmer Investments (Whitstable) Ltd | Development | 100% |
| Dencora (Docklands) Ltd | Investment | 100% |
| Dencora (Fordham) Ltd | Investment | 100% |
| Downtown Space Properties LLP | Development | 70% |
| Harbour Developments (Bracknell) Ltd | Development | 100% |
| HB Sawston No. 3 Ltd | Investment | 100% |
| Helical (Aldridge) Ltd | Investment | 100% |
| Helical (Ashford) Ltd | Investment | 100% |
| Helical Bar Developments (South East) Ltd | Development | 100% |
| Helical Bar (East Grinstead) Ltd | Investment | 100% |
| Helical Bar (Great Dover Street) Ltd | Investment | 100% |
| Helical Bar (Hawtin Park No. 3) Ltd | Investment | 100% |
| Helical Bar Services Ltd | Management Services | 100% |
| Helical Bar (Wales) Ltd* | Investment | 100% |
| Helical Bar (White City) Ltd | Development | 100% |
| Helical (Battersea) Ltd | Investment | 100% |
| Helical (Bramshott Place) Ltd | Development | 100% |
| Helical (Cardiff) Ltd | Investment | 100% |
| Helical (Cowley) Ltd | Development | 100% |
| Helical (Crawley) Ltd | Investment | 100% |
| Helical (Exeter) Ltd | Development | 100% |
| Helical (Faygate) Ltd | Development | 100% |
| Helical (Fleet) No. 2 Ltd* | Investment | 100% |
| Helical (Glasgow) Ltd | Investment/Trading | 100% |
| Helical (Hailsham) Ltd | Development | 100% |
| Helical (Kidlington) Ltd | Development | 100% |
| Helical (Liphook) Ltd | Development (Jersey) | 100% |
| Helical (Milton) Ltd | Development | 100% |
| Helical (Paignton) Ltd | Investment | 100% |
| Helical Retail Ltd | Development | 100% |
| Helical Retail (RBS) Ltd* | Development | 100% |
| Helical (Sevenoaks) Ltd | Investment | 100% |
| Helical Sosnica Sp. z.o.o.* | Development (Poland) | 100% |
| Helical (Southall) Ltd | Development | 100% |
| Helical (Southampton) Ltd | Development | 100% |
| Helical (Stockport) Ltd | Development | 100% |
| Helical (Telford) Ltd | Development | 100% |
| Helical (Winterhill) Ltd | Investment | 100% |
| Helical Wroclaw Sp. z.o.o.* | Development (Poland) | 100% |
| Prescot Street Investments Ltd | Investment | 100% |
| 14 Fieldgate Street Ltd | Development | 100% |
| 61 Southwark Street Ltd* | Investment | 100% |
All principal subsidiary undertakings operate in the United Kingdom other than Helical Sosnica Sp. z.o.o. and Helical Wroclaw Sp. z.o.o. and, unless otherwise indicated, are incorporated and registered in England and Wales. A full list of all subsidiaries is lodged with the Annual Return at Companies House.
*Ordinary capital is held by a subsidiary undertaking.
Investments in subsidiaries have been impaired based on a review of their fair value at the balance sheet date. A review of the fair value of the investments is undertaken periodically. The fair value of the investment in subsidiaries is based on the value of the subsidiaries underlying assets.
| Group 31.3.10 |
Group 31.3.09 |
|
|---|---|---|
| Summarised statements of consolidated income | £000 | £000 |
| Revenue | 1,835 | 2,595 |
| Operating profit | 3,207 | 1,862 |
| Sale of investment | 1,147 | – |
| Net finance costs | (490) | (16) |
| Profit before tax | 3,864 | 1,846 |
| Tax | (119) | – |
| Profit after tax | 3,745 | 1,846 |
| Summarised balance sheets | ||
| Non-current assets | 45,305 | 31 |
| Current assets | 27,507 | 22,677 |
| Current liabilities | (18,528) | (14,784) |
| Non-current liabilities | (27,900) | – |
| Net assets | 26,384 | 7,924 |
The cost of the Company's investment in joint ventures was £150,000 (2009: £150,000).
The Group did not have any contingent liabilities relating to its joint ventures (2009: £nil) and the joint venture companies did not have any contingent liabilities (2009: £nil) at the balance sheet date.
At 31 March 2010 the Group and the Company had interests in the following joint venture companies:
| incorporation | Country of Class of share capital held |
Proportion held Group |
Proportion held Company |
Nature of business |
|
|---|---|---|---|---|---|
| Abbeygate Helical (Leisure Plaza) Ltd | United Kingdom | Ordinary | 50% | – Development | |
| Abbeygate Helical (Winterhill) Ltd | United Kingdom | Ordinary | 50% | – Development | |
| Abbeygate Helical (C4.1) LLP | United Kingdom | n/a | 50% | – Development | |
| The Asset Factor Ltd | United Kingdom | Ordinary | 50% | 50% | Outsourcing |
| Shirley Advance LLP | United Kingdom | n/a | 50% | – Development | |
| King Street Developments (Hammersmith) Ltd | United Kingdom | Ordinary | 50% | – Development | |
| PH Properties Limited (BVI) | British Virgin Islands | Ordinary | 60% | – | Investment |
During the year the Group acquired a 60% economic interest in PH Properties Limited (BVI), a jointly controlled entity which owns a shopping centre in the UK. The results and financial position of PH Properties Limited (BVI) at the balance sheet date have been accounted for as a joint venture as Helical does not control PH Properties Limited (BVI).
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
||
|---|---|---|---|
| Cost at 1 April | 1,515 | 1,515 | |
| Additions | – | – | |
| Cost at 31 March | 1,515 | 1,515 | |
| Impairment at 1 April | 1,485 | 1,485 | |
| Impairment for the year | 14 | – | |
| Impairment at 31 March | 1,499 | 1,485 | |
| Fair value at 31 March | 16 | 30 | |
The carrying values of the Group's goodwill are reassessed at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If analysis indicates that the carrying value is too high, then this is reduced to its recoverable amount which is the higher of fair value and its value in use.
| Group | Development properties 31.3.10 £000 |
Trading stock 31.3.10 £000 |
Total 31.3.10 £000 |
Development properties 31.3.09 £000 |
Trading stock 31.3.09 £000 |
Total 31.3.09 £000 |
|---|---|---|---|---|---|---|
| At 1 April | 209,537 | 878 | 210,415 | 181,118 | 1,390 | 182,508 |
| Construction costs | 14,958 | – | 14,958 | 68,321 | 2 | 68,323 |
| Interest capitalised | 3,196 | – | 3,196 | 5,790 | – | 5,790 |
| Properties transferred to investment properties |
– | – | – | (1,514) | – | (1,514) |
| Disposals | (32,983) | (525) | (33,508) | (14,792) | – | (14,792) |
| Foreign exchange movements | (2,444) | – | (2,444) | – | – | – |
| Provision | (9,961) | (80) | (10,041) | (29,386) | (514) | (29,900) |
| At 31 March | 182,303 | 273 | 182,576 | 209,537 | 878 | 210,415 |
The directors' valuation of trading and development stock shows a surplus of £33m above book value (2009: £45m).
Interest capitalised in respect of the development of sites is included in stock to the extent of £8,482,000 (2009: £8,749,000).
Land, developments and trading properties with carrying value of £154,917,000 (2009: £159,602,000) were held as security against borrowings.
Financial assets in the Group include derivative financial assets which are designated as 'Fair value through the Income Statement'. Financial assets also include finance lease receivables, other receivables and cash and cash equivalents all of which are included within loans and receivables as well as available-for-sale investments.
Financial liabilities in the Group comprise derivative financial liabilities which are categorised as fair value through the Income Statement (non hedge). Financial liabilities also include secured bank loans, unsecured bond issues, unsecured loan notes, and bank loans and overdrafts, all of which are categorised as debt at amortised cost, and trade and other payables, provisions and current tax liabilities, which are classified as other financial liabilities.
The financial instruments of the Group as classified in the financial statements can be analysed under the following IAS 39 Financial Instruments: Recognition and Measurement, categories:
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
Company 31.3.10 £000 |
Company 31.3.09 £000 |
|
|---|---|---|---|---|
| Loans and receivables | 79,440 | 113,392 | 402,788 | 403,507 |
| Fair value through income statement | 1,944 | – | 1,944 | – |
| Available-for-sale financial assets | 24,284 | 20,994 | 13,325 | 13,310 |
| Total financial assets | 105,668 | 134,386 | 418,057 | 416,817 |
These financial assets are included in the balance sheet within the following headings:
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
Company 31.3.10 £000 |
Company 31.3.09 £000 |
|
|---|---|---|---|---|
| Available-for-sale investments | 24,284 | 20,994 | 13,325 | 13,310 |
| Derivative financial instruments | 1,944 | – | 1,944 | – |
| Trade receivables and other receivables | 38,542 | 39,748 | 376,360 | 346,852 |
| Corporation tax receivable | 1,098 | 868 | 1,170 | 862 |
| Cash and cash equivalents | 39,800 | 72,776 | 25,258 | 55,793 |
| Total financial assets | 105,668 | 134,386 | 418,057 | 416,817 |
Financial assets are stated in accordance with IAS 32 Financial Instruments: Presentation.
For fair value of available-for-sale investments see note 18. The carrying value of the trade receivables and other receivables and cash and cash equivalents is deemed not to be materially different from the fair value.
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
Company 31.3.10 £000 |
Company 31.3.09 £000 |
|
|---|---|---|---|---|
| Fair value through income statement | (10,485) | (14,337) | (3,299) | (2,776) |
| Other financial liabilities | (280,748) | (337,263) | (216,911) | (220,022) |
| Total financial liabilities | (291,233) | (351,600) | (220,210) | (222,798) |
These financial liabilities are included in the balance sheet within the following headings:
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
Company 31.3.10 £000 |
Company 31.3.09 £000 |
|
|---|---|---|---|---|
| Trade payables and other payables | (37,990) | (39,811) | (189,394) | (193,015) |
| Borrowings - current | (72,459) | (48,155) | (20,163) | – |
| Borrowings - non current | (170,299) | (249,297) | (7,354) | (27,007) |
| Derivative financial instruments | (10,485) | (14,337) | (3,299) | (2,776) |
| Total financial liabilities | (291,233) | (351,600) | (220,210) | (222,798) |
The carrying value of trade payables and other payables and borrowings is not deemed to be materially different from the fair value. Financial liabilities are stated in accordance with IAS 32.
The Group and Company financial instruments that are measured subsequent to initial recognition at fair value are available-forsale assets, forward exchange contracts and interest rate swaps, caps and floors.
Forward foreign exchange contracts are externally measured using quoted forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contracts. Interest rate swaps, caps and floors are measured at the present value of future cash flows estimated and discounted based on the applicable yield curves derived from quoted interest rates. Both would be classified as Level 2 fair value measurements, as defined by IFRS 7, Financial Instruments: Disclosure, being those derived from inputs other than quoted prices (included within Level 1) that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Available-for-sale assets, which are described in note 18 are classified as Level 3 fair value measurements, being those not based on observable market data. There were no transfers between categories in the current or prior year.
| Derivative financial assets | Group Year ended 31.3.10 £000 |
Group Year ended 31.3.09 £000 |
Company Year ended 31.3.10 £000 |
Company Year ended 31.3.09 £000 |
|---|---|---|---|---|
| Interest rate caps | 94 | – | 94 | – |
| Foreign exchange contracts | 1,850 | – | 1,850 | – |
| 1,944 | – | 1,944 | – | |
| Derivative financial liabilities | ||||
| Interest rate caps | – | 153 | – | 153 |
| Interest rate swaps | (7,186) | (11,561) | – | – |
| Interest rate floors | (3,299) | (2,929) | (3,299) | (2,929) |
| (10,485) | (14,337) | (3,299) | (2,776) |
The group's movement in the fair value of the derivative financial instruments in the year was a gain of £1,157,000 (2009: loss of £13,412,000); Company: loss of £16,000 (2009: £2,776,000).
Credit risks arise from the possibility that customers may not be able to settle their obligations as agreed. To manage this risk the Group periodically assesses the financial reliability of customers, taking into account the financial position, past experience and other factors.
As at 31 March 2010 Helical has total credit risk excluding cash of £63.9m of which £24.3m is available-for-sale assets and £39.6m is loans and receivables. Available-for-sale assets are analysed in note 18.
Of the trade receivables held at 31 March 2010, two amounts of £2.4m and £4.5m were due from the sale of investment properties and were received on 19 April 2010 and 4 May 2010 respectively and a further £2.7m related to rent due from tenants which was received post year-end.
All other debtors are deemed to be recoverable.
The Group is not reliant on any major customer for its ability to continue as a going concern.
For further information on trade and other receivables, see note 24.
Liquidity risk is defined as the risk that the Group would not be able to settle or meet its obligations on time or at a reasonable price.
Liquidity and funding risks, related processes and policies are overseen by management.
Helical manages its liquidity risk on a consolidated basis based on business needs, tax, capital or regulatory considerations, if applicable, and through numerous sources of finance in order to maintain flexibility. Management monitors the Group's net liquidity position through rolling forecasts on the basis of expected cash flows. The Group's cash and cash equivalents are held with major regulated financial institutions and the directors regularly monitor the financial institutions that the group uses to ensure its exposure to liquidity risk is minimised.
For further information on borrowing facilities, see notes 27 and 28.
The maturity profile of the Group's contracted financial liabilities is as follows:
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
Company 31.3.10 £000 |
Company 31.3.09 £000 |
|
|---|---|---|---|---|
| Payable within 3 months | 59,464 | 42,400 | 192,428 | 193,300 |
| Payable between 3 months and 1 year | 79,548 | 53,100 | 19,880 | 800 |
| Payable between 1 and 3 years | 121,256 | 147,800 | 11,438 | 28,300 |
| Payable after 3 years | 69,651 | 145,900 | 400 | – |
| Total contracted liabilities | 329,919 | 389,200 | 224,146 | 222,400 |
At 31 March 2010 Helical had £8.2m of undrawn borrowing facilities, £31.6m of uncharged property assets and cash balances of £39.8m. The above contracted liabilities assume that no loans are extended beyond their current facility expiry date. The management believe that these facilities, together with anticipated sales and the renewal of some of these loan facilities, mean that Helical can meet its contracted liabilities as they fall due.
Helical is exposed to market risk, primarily related to interest rates, foreign currency exchange movements, the market value of the investments and accrued development profits. The Group actively monitors these exposures.
76
Report & accounts 2010
It is the Group's policy and practice to minimise interest rate cash flow exposures on long-term financing. Helical does this by using a number of derivative financial instruments including interest rate swaps and interest rate caps. The purpose of these derivatives is to manage the interest rate risks arising from the Group's sources of finance. The Group does not use financial instruments for speculative purposes.
Details of financing and financial instruments can be found in note 28.
In the year to 31 March 2010, if interest rates had moved by 1%, this would have resulted in the following movement to pre-tax losses and equity due to movements in interest charges and mark-to-market valuations of derivatives.
| 31 March 2010 | |||
|---|---|---|---|
| Impact on results £000 |
Equity impact £000 |
||
| 1% increase – increase in net results and equity | 2,917 | 2,917 | |
| 1% decrease – decrease in net results and equity | (2,155) | (2,155) |
There would have been no significant impact on the results or on the equity of the Company if interest rates had increased or decreased.
Due to its operations in Poland and its investment in a non-UK based property developer, Helical has exposure to exchange movements on foreign currencies. Helical's management monitors its exposure to risks associated with foreign currency exchange risk and reviews any requirements to act to minimise these risks. During the year Helical has entered into currency option contracts in order to reduce its exposure to these risks.
In the year to 31 March 2010 the Group made foreign exchange losses of £1,127,000 resulting from foreign exchange movements related to its Polish operations.
The Group's balance sheet translation exposure is summarised as follows:
| 31 March 2010 | 31 March 2009 | |||||
|---|---|---|---|---|---|---|
| Euro (£000) |
Zloty (£000) |
US dollars (£000) |
Euro (£000) |
Zloty (£000) |
US dollars (£000) |
|
| Gross currency assets | 48,387 | 11,508 | 10,946 | 54,090 | 8,409 | 7,672 |
| Gross currency liabilities | (25,399) | (3,826) | – | (29,941) | (6,562) | – |
| Net exposure | 22,988 | 7,682 | 10,946 | 24,149 | 1,847 | 7,672 |
The group has entered into a fair-value hedge to reduce the effects of foreign exchange translation losses on stock. Any movement in the fair value of this instrument is shown in the Income Statement as part of the change in fair value of derivative financial instruments.
The Company's balance sheet translation exposure is almost exclusively due to intra-group loans and is summarised as follows:
| 31 March 2010 | 31 March 2009 | |||
|---|---|---|---|---|
| Euro (£000) |
Zloty (£000) |
Euro (£000) |
Zloty (£000) |
|
| Gross currency assets | 4,025 | 14,955 | 2,596 | 11,388 |
| Gross currency liabilities | – | – | – | – |
| Net exposure | 4,025 | 14,955 | 2,596 | 11,388 |
The Group's main currency exposure is to the euro. The sensitivity of the net assets and profit of the Group to a 10% change in the value of the foreign currencies against sterling is Euro: £2,299,000 (March 2009: £2,415,000), Zloty: £768,000 (March 2009: £185,000), US dollar: net assets: £788,000 (March 2009: £552,000), profit: £nil (March 2009: £nil).
The sensitivity of the net assets and profit of the Company to a 10% change in the value of the foreign currencies against sterling is Euro: £402,000 (March 2009: £260,000), Zloty: £1,496,000 (March 2009: £1,139,000).
In addition to the above the Group has entered in to a number of currency option contracts to act as cashflow hedges against development contracts in Poland and future expected profits on the development schemes. Whilst these contracts are designed to minimise foreign exchange risk on these transactions hedge accounting has not been applied and any movement to the fair value of the options is shown in the Income Statement as part of the change in fair value of derivative financial instruments. The details of these options is summarised below:
| Reason for hedging |
Contract value |
Contract rate |
Fair value at 31/03/2010 |
||
|---|---|---|---|---|---|
| Put euro – call zloty | Hedge against development contract | PLN 110m | 4.1 | £1,481,000 | |
| Put euro – call sterling | Hedge against anticipated development profit | EUR 10m | 1.14 | £369,000 |
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
Company 31.3.10 £000 |
Company 31.3.09 £000 |
|
|---|---|---|---|---|
| Trade receivables | 12,316 | 19,001 | – | 116 |
| Amounts owed by joint venture undertakings | 8,208 | 11,978 | 3,907 | 7,017 |
| Amounts owed by subsidiary undertakings | – | – | 365,955 | 333,367 |
| Other receivables | 3,520 | 4,071 | 1,816 | 4,237 |
| Prepayments and accrued income | 14,647 | 5,541 | 4,931 | 4,211 |
| 38,691 | 40,591 | 376,609 | 348,948 | |
| Receivables | Group 31.3.10 £000 |
Group 31.3.09 £000 |
Company 31.3.10 £000 |
Company 31.3.09 £000 |
|---|---|---|---|---|
| Fully performing | 36,911 | 38,658 | 376,360 | 346,852 |
| Past due < 3 months | 1,375 | 1,061 | – | – |
| Past due > 3 months | 256 | 29 | – | – |
| Total receivables being financial assets | 38,542 | 39,748 | 376,360 | 346,852 |
| Total receivables being non-financial assets | 149 | 843 | 249 | 2,096 |
| Total receivables | 38,691 | 40,591 | 376,609 | 348,948 |
Past due receivables relate to a number of independent customers for whom there is no recent history of default. Against trade receivables, Helical held £0.7m of rental deposits at 31 March 2010 (2009: £0.7m).
Movements in the provision for impairment of trade receivables are as follows:
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
Company 31.3.10 £000 |
Company 31.3.09 £000 |
|
|---|---|---|---|---|
| Gross receivables being financial assets | 39,192 | 39,873 | 376,360 | 346,852 |
| Provisions for receivables impairment | (650) | (125) | – | – |
| Net receivables being financial assets | 38,542 | 39,748 | 376,360 | 346,852 |
| Receivables written off during the year as uncollectable | 637 | 329 | – | – |
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
Company 31.3.10 £000 |
Company 31.3.09 £000 |
|
|---|---|---|---|---|
| Rent deposits and cash held at managing agents | 1,274 | 1,215 | – | – |
| Cash secured against debt and cash held at solicitors | 1,295 | 15 | – | – |
| Cash allocated to pay dividend | 2,909 | – | 2,909 | – |
| Cash deposits | 34,322 | 71,546 | 22,349 | 55,793 |
| 39,800 | 72,776 | 25,258 | 55,793 |
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
Company 31.3.10 £000 |
Company 31.3.09 £000 |
||
|---|---|---|---|---|---|
| Trade payables | 4,635 | 3,611 | 108 | 68 | |
| Social security costs and other taxation | 638 | 332 | – | – | |
| Amounts owed to joint venture undertakings | – | 5,603 | 1,147 | 835 | |
| Amounts owed to subsidiary undertakings | – | – | 175,469 | 183,194 | |
| Other payables | 9,219 | 9,767 | 3,046 | 122 | |
| Accruals and deferred income | 29,159 | 31,902 | 9,624 | 8,796 | |
| 43,651 | 51,215 | 189,394 | 193,015 |
79
| 27. Borrowings | ||||
|---|---|---|---|---|
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
Company 31.3.10 £000 |
Company 31.3.09 £000 |
|
| Current borrowings | 72,459 | 48,155 | 20,163 | – |
| Bank loans repayable within: | ||||
| – one to two years | 29,644 | 69,642 | – | 27,570 |
| – two to three years | 72,725 | 54,150 | 7,650 | – |
| – three to four years | 68,878 | 65,075 | – | – |
| – four to five years | – | 61,890 | – | – |
| 171,247 | 250,757 | 7,650 | 27,570 | |
| Deferred arrangement costs | (948) | (1,460) | (296) | (563) |
| Non-current borrowings | 170,299 | 249,297 | 7,354 | 27,007 |
Bank overdrafts and term loans in creditors falling due within one year and after one year are secured against properties held in the normal course of business by subsidiary undertakings to the value of £370,917,000 (2009: £393,400,000). 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 £29,752,000 (2009: £5,644,000).
The policies for dealing with liquidity and interest rate risk are noted in the Financial Review on pages 31 to 33.
| Bank overdraft and loans – maturity | Group 31.3.10 £000 |
Group 31.3.09 £000 |
|---|---|---|
| Due after more than one year | 171,247 | 250,757 |
| Due within one year | 72,459 | 48,155 |
| 243,706 | 298,912 |
The Group has various undrawn committed borrowing facilities. The facilities available at 31 March 2010 in respect of which all conditions precedent had been met were as follows:
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
|
|---|---|---|
| Expiring in one year or less | 8,186 | 35,646 |
| Expiring in more than one year but not more than two years | – | 3,000 |
| 8,186 | 38,646 |
| Interest rates - Group | % | Expiry | 31.3.10 £000 |
% | Expiry | 31.3.09 £000 |
|---|---|---|---|---|---|---|
| Fixed rate borrowings: | ||||||
| – swap rate plus bank margin | – | – | – | 5.939 | Sep 2009 | 14,324 |
| – swap rate plus bank margin | 5.330 | Jun 2011 | 4,316 | 5.330 | Jun 2011 | 4,536 |
| – swap rate plus bank margin | 5.650 | Nov 2010 | 5,200 | 5.650 | Nov 2010 | 5,200 |
| – swap rate plus bank margin | – | – | – | 7.273 | Nov 2009 | 8,000 |
| – swap rate plus bank margin | 7.150 | Oct 2012 | 28,500 | 7.150 | Oct 2012 | 28,500 |
| – swap rate plus bank margin | 8.295 | Oct 2014 | 6,690 | 7.150 | Oct 2012 | 6,690 |
| – swap rate plus bank margin | 6.240 | Dec 2013 | 10,120 | 6.240 | Dec 2013 | 10,120 |
| – swap rate plus bank margin | 6.040 | Jan 2011 | 4,200 | 6.040 | Jan 2011 | 4,200 |
| – swap rate plus bank margin | 5.290 | Mar 2012 | 3,570 | 5.290 | Mar 2012 | 3,570 |
| – swap rate plus bank margin | 6.555 | Aug 2013 | 9,912 | 6.555 | Aug 2013 | 9,912 |
| – swap rate plus bank margin | 6.270 | Oct 2010 | 14,652 | 6.270 | Oct 2010 | 15,347 |
| – swap rate plus bank margin | – | – | – | 6.465 | Aug 2013 | 37,500 |
| – swap rate plus bank margin | 3.555 | Jun 2011 | 5,400 | – | – | – |
| Weighted average | 6.429 | Jun 2012 | 92,560 | 6.313 | May 2012 | 147,899 |
| Floating rate borrowings | 2.321 | Jun 2012 | 151,146 | 2.251 | Aug 2011 | 151,013 |
| Total borrowings | 243,706 | 298,912 | ||||
| Deferred arrangement costs | (948) | (1,460) | ||||
| 242,758 | 297,452 |
Floating rate borrowings bear interest at rates based on LIBOR. The Company's borrowings consist of fixed rate borrowings of £6,690,000 at 8.295% expiring in October 2014 and remainder are floating rate borrowings (2009: all floating rate borrowings).
In addition to the fixed rates, borrowings are also hedged by the following financial instruments:
| Instrument Current: |
Value £000 |
Rate % |
Start | Expiry |
|---|---|---|---|---|
| – cap | 30,000 – 40,950 | 6.000 | May 2008 | May 2013 |
| – floor | 30,000 – 40,950 | 4.500 | May 2008 | May 2013 |
| Group | Group | |
|---|---|---|
| 31.3.10 | 31.3.09 | |
| £000 | £000 | |
| Total borrowings | 242,758 | 297,452 |
| Cash | (39,800) | (72,776) |
| Net borrowings | 202,958 | 224,676 |
Net borrowings exclude the Group's share of borrowings in joint ventures of £29,752,000 (2009: £5,644,000).
| Group 31.3.10 £000 |
Group 31.3.09 £000 |
|
|---|---|---|
| Net assets | 242,607 | 237,066 |
| Gearing | 84% | 95% |
| 31.3.10 £000 |
31.3.09 £000 |
|
|---|---|---|
| Authorised | 39,577 | 39,577 |
| 39,577 | 39,577 | |
| The authorised share capital of the Company is £39,576,626.60 divided into ordinary shares of 1p each and deferred shares |
of 1⁄8p each. 31.3.10 31.3.09 £000 £000 Allotted, called up and fully paid – 107,407,522 ordinary shares of 1p each (2009: 107,087,012) 1,074 1,071 – 212,145,300 deferred shares of 1⁄8p each 265 265 1,339 1,336
As at 1 April 2009 the Company had 107,087,012 ordinary 1p shares in issue. In the year to 31 March 2010 320,510 new ordinary 1p shares were issued as the result of share options being exercised. The dates and number of shares issued are detailed in note 30. At 31 March 2010 there were 107,407,522 ordinary 1p shares in issue.
| Ordinary shares | Shares in issue 31.3.10 Number |
Share capital 31.3.10 £000 |
Shares in issue 31.3.09 Number |
Share capital 31.3.09 £000 |
|---|---|---|---|---|
| At 1 April | 107,087,012 | 1,071 | 95,732,457 | 957 |
| New shares issued | 320,510 | 3 | 11,354,555 | 114 |
| At 31 March | 107,407,522 | 1,074 | 107,087,012 | 1,071 |
| Deferred shares | ||||
| At 1 April | 212,145,300 | 265 | 212,145,300 | 265 |
| At 31 March | 212,145,300 | 265 | 212,145,300 | 265 |
The Group's capital management objectives are:
– to ensure the Group's ability to continue as a going concern; and,
– to provide an adequate return to shareholders.
The Group sets the amount of capital in proportion to its overall financing structure. It manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt. Capital is defined as being issued share capital, retained earnings and other reserves. (2010: £235,005,000, 2009: £230,499,000).
The deferred shares were issued on 23 December 2004 to those shareholders electing to receive a dividend, rather than a capital repayment or further shares in the Company, as part of the Return of Cash approved by shareholders on 20 December 2004. The deferred shares carry no voting rights and have no right to a dividend or capital payment in the event of a winding up of the Company.
The Company's Articles of Association give the Company irrevocable authority to purchase all or any of the deferred shares for a maximum aggregate total of 1 penny for all deferred shares in issue on the date of such purchase.
At 31 March 2010 there were no unexercised options (2009: 320,510) over new ordinary 1p shares in the Company and no unexercised options (2009: 1,057,095) over purchased ordinary 1p shares held by the ESOP, under the Group's share option schemes.
During the period no new options were granted. Options over 320,510 new ordinary 1p shares and 1,057,095 purchased ordinary 1p shares were exercised. In order to reduce the number of shares required by the ESOP to satisfy share awards, the Company agreed with employees that the number of shares required on the exercise of purchase options be reduced. To ensure that employees were not disadvantaged by this reduction, the exercise prices applied on the exercise of the options were correspondingly reduced.
The effect of the reductions to the exercise prices was to reduce the weighted average exercise price on all options exercised from 149p to 34p. These reductions in exercise prices were not applied to options exercised over subscription shares.
| Original subscription options |
Original purchase options |
Original total options |
Subscription options exercised |
Reduced purchase options exercised |
Total options exercised |
||
|---|---|---|---|---|---|---|---|
| 8 June 2009 | – | 1,057,095 | 1,057,095 | – | 565,000 | 565,000 | |
| 30 March 2010 | 320,510 | – | 320,510 | 320,510 | – | 320,510 | |
| 320,510 | 1,057,095 | 1,377,605 | 320,510 | 565,000 | 885,510 |
| Number | Weighted average exercise Price |
Number | Weighted average exercise price |
|
|---|---|---|---|---|
| Summary of share options | 31.3.10 | 31.3.10 | 31.3.09 | 31.3.09 |
| At 1 April | 1,377,605 | 149p | 4,569,660 | 131p |
| Options granted | – | – | – | – |
| Options exercised | (1,377,605) | 34p | (3,192,055) | 48p |
| Option expired/lapsed | – | – | – | – |
| At 31 March | – | – | 1,377,605 | 149p |
The Group provides share-based payments to employees in the form of performance share plan awards and a share incentive plan. All share-based payment arrangements granted after 7 November 2002 that had not vested prior to 1 January 2005 are recognised in the financial statements. The Company uses a stochastic valuation model and the resulting value is amortised through the Income Statement over the vesting period of the share-based payments.
| Options | 2010 Weighted average exercise price |
Options | 2009 Weighted average exercise price |
|
|---|---|---|---|---|
| Outstanding at beginning and end of period | nil | n/a | 320,510 | 141.50 |
| The inputs into the stochastic model of valuation of the options were as follows: | ||||
| 2010 | 2009 | |||
| Weighted average share price | n/a | 146.72 | ||
| Weighted average exercise price | n/a | 141.50 | ||
| Expected volatility | n/a | 16% | ||
| Expected life | n/a | 6 years | ||
| Risk free rate | n/a | 4.48% | ||
| Expected dividends | n/a | 1.99% |
Expected volatility was determined by calculating the historical volatility of the Company's shares over the last six years. The expected life used in the model has been adjusted, based on the Company's best estimate, for the effects of employee changes (subject to good leaver provisions), exercise restrictions and behavourial considerations.
| Performance share plan awards | Awards | 2010 Weighted average award value |
Awards | 2009 Weighted average award value |
|---|---|---|---|---|
| Outstanding at beginning of period | 4,738,900 | 364p | 4,536,065 | 366p |
| Awards vested during the period | (482,065) | 377p | (1,964,620) | 280p |
| Awards lapsed during the period | (964,130) | 377p | – | – |
| Awards cancelled during the period | (555,644) | 359p | – | – |
| Awards made during the period | 2,133,222 | 300p | 2,167,455 | 276p |
| Outstanding at end of period | 4,870,283 | 332p | 4,738,900 | 364p |
The performance share plan awards outstanding at 31 March 2010 had a weighted average remaining contractual life of one year nine months.
The inputs into the stochastic model of valuation of the PSP awards made in the year to 31 March 2010 were as follows:
| 2010 | 2009 | 2008 | |
|---|---|---|---|
| Weighted average share price | 297.5p | 276p | 502p |
| Weighted average exercise price | – | – | – |
| Expected volatility | n/a | n/a | n/a |
| Expected life | 3 years | 3 years | 3 years |
| Risk free rate | n/a | n/a | n/a |
| Expected dividends | 1.51% | 1.63% | 0.87% |
The Group recognised a charge of £1,151,000 (2009: credit of £425,000) in relation to Share-based payments.
At the balance sheet date there were no exercisable awards.
Following approval at the 1997 Annual General Meeting the Company established the Helical Bar Employees' Share Ownership Plan Trust (the "Trust") to be used as part of the remuneration arrangements for employees. The purpose of the Trust is to facilitate and encourage the ownership of shares by or for the benefit of employees by the acquisition and distribution of shares in the Company.
The Trust purchases shares in the Company to satisfy the Company's obligations under its Share Option Schemes and Performance Share Plan.
At 31 March 2010 the Trust held 1,291,844 (2009: 2,338,904) ordinary 1p shares in Helical Bar plc.
At 31 March 2010 unexercised options over nil (2009: 1,057,095) ordinary 1p shares in Helical Bar plc had been granted over shares held by the Trust.
At 31 March 2010 outstanding awards over 4,870,283 (2009: 4,738,900) ordinary 1p shares in Helical Bar plc had been made under the terms of the Performance Share Plan over shares held by the Trust.
The Group has no contingent liabilities.
The Company has entered into cross guarantees in respect of the banking facilities of its subsidiaries.
The Company has undertaken to provide support for some of its subsidiaries undertakings. However it does not believe that this support will be required in the foreseeable future.
Other than these contingent liabilities there were no contingent liabilities at 31 March 2010 (2009: £nil).
| 31.3.10 £000 |
Number of shares 000s |
31.3.10 pence per share |
31.3.09 £000 |
Number of shares 000s |
31.3.09 pence per share |
|
|---|---|---|---|---|---|---|
| Net asset value | 242,607 | 107,408 | 237,066 | 107,087 | ||
| Less: own shares held by ESOP | – | (1,292) | – | (2,339) | ||
| deferred shares | (265) | (265) | ||||
| Basic net asset value | 242,342 | 106,116 | 228 | 236,801 | 104,748 | 226 |
| Add: unexercised share options | – | – | 454 | 321 | ||
| Diluted net asset value | 242,342 | 106,116 | 228 | 237,255 | 105,069 | 226 |
| Adjustment for: | ||||||
| – fair value of financial instruments | 9,978 | 14,337 | ||||
| – deferred tax | 3,257 | 3,205 | ||||
| Adjusted diluted net asset value | 255,577 | 106,116 | 241 | 254,797 | 105,069 | 242 |
| Adjustment for: | ||||||
| – fair value of trading properties | 32,991 | 45,455 | ||||
| Diluted EPRA net asset value | 288,568 | 106,116 | 272 | 300,252 | 105,069 | 286 |
| Adjustment for: | ||||||
| – fair value of financial instruments | (9,978) | (14,337) | ||||
| – deferred tax | (3,257) | (3,205) | ||||
| Diluted EPRA triple net asset value | 275,333 | 106,116 | 259 | 282,710 | 105,069 | 269 |
The net asset values per share have been calculated in accordance with the best practice recommendations of the European Public Real Estate Association ("EPRA").
At 31 March 2010 and 31 March 2009 the following amounts were due from the Group's joint ventures.
| At 31.3.10 £000 |
At 31.3.09 £000 |
|
|---|---|---|
| Abbeygate Helical (Leisure Plaza) Ltd | 2,212 | 1,516 |
| Abbeygate Helical (Winterhill) Ltd | (12) | (162) |
| Abbeygate Helical (C4.1) LLP | (598) | (636) |
| King Street Developments (Hammersmith) Ltd | 1,634 | 1,109 |
| Shirley Advance LLP | 4,372 | 4,320 |
| The Asset Factor Ltd | 600 | 4,270 |
| PH Properties Limited (BVI) | – | – |
All movements in joint venture balances related to loan repaid and loans advanced except for interest receivable from the Asset Factor in the year of £29,000.
At 31 March 2010 and 31 March 2009 there were the following balances between the Company and its subsidiaries.
| At 31.3.10 £000 |
At 31.3.09 £000 |
|
|---|---|---|
| Amounts due from subsidiaries | 365,955 | 333,367 |
| Amounts due to subsidiaries | 175,469 | 183,194 |
During the years to 31 March 2010 and 31 March 2009 there were the following transactions between the Company and its subsidiaries:
| Year ended 31.3.10 £000 |
Year ended 31.3.09 £000 |
|
|---|---|---|
| Management charges receivable | 3,202 | 3,404 |
| Management charges payable | 271 | 530 |
| Interest receivable | 3,109 | 5,232 |
| Interest payable | – | – |
Management charges relate to the performance of management services for the Company or its subsidiaries. Interest receivable relates to interest on loans made by the Company to its subsidiaries. All of these transactions, and the year-end balance sheet amounts arising from these transactions were conducted on an arm's length basis and on normal commercial terms. Amounts owed by subsidiaries to the company are identified in note 24. Amounts owed to subsidiaries by the company are identified in note 26.
The Group consider that the key management personnel are the directors and the detail of their remuneration is disclosed in the directors' remuneration report on pages 43 to 50. Share based payments for directors are disclosed in note 8.
| 86 | ||
|---|---|---|
| IFRS 31.3.10 £000 |
IFRS 31.3.09 £000 |
IFRS 31.3.08 £000 |
IFRS 31.3.07 £000 |
IFRS 31.3.06 £000 |
IFRS 31.3.05 £000 |
UK GAAP 31.3.04 £000 |
UK GAAP 31.3.03 £000 |
UK GAAP 31.3.02 £000 |
UK GAAP 31.3.01 £000 |
|
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 67,354 | 81,770 | 65,623 | 123,176 | 119,274 | 101,469 | 54,566 | 135,192 | 136,632 | 165,259 |
| Net rental income | 14,151 | 17,682 | 16,400 | 14,771 | 16,524 | 20,440 | 22,980 | 25,619 | 27,827 | 25,532 |
| Development (loss)/profit |
(1,293) | (7,704) | 6,068 | 13,587 | 4,594 | 12,664 | 38 | 4,630 | 17,072 | 29,507 |
| Trading (loss)/profit | (10) | (514) | (29) | 2,094 | 13,441 | 5,771 | 1,031 | 349 | 154 | 920 |
| Share of results of joint ventures |
3,745 | 1,846 | (98) | 6,196 | 437 | 2,699 | 1,636 | 1,544 | 986 | 86 |
| Other income | 26 | 6,752 | (315) | 766 | 235 | 235 | 601 | 626 | (67) | 342 |
| Gross profit before gain/(loss) on investment properties |
16,619 | 18,062 | 22,026 | 37,414 | 35,231 | 41,809 | 26,286 | 32,768 | 45,972 | 56,387 |
| Gain/(loss) on sale and revaluation of investment properties |
8,195 | (66,670) | (32,790) | 40,637 | 43,551 | 44,204 | 2,035 | 2,126 | 2,463 | 709 |
| Gain on sale of investments |
– | 1,892 | – | – | – | – | – | – | – | – |
| Administrative expenses |
(8,680) | (8,090) | (13,659) | (17,544) | (16,582) | (15,757) | (8,037) | (6,391) | (10,888) | (12,031) |
| Loss on sale of subsidiary |
– | – | – | – | – | – | (59) | – | (195) | – |
| Negative goodwill | – | – | – | – | – | – | – | 6,362 | – | – |
| Net finance costs | (7,132) | (21,048) | (1,724) | (419) | (5,080) | (5,561) | (6,572) | (9,638) | (14,779) | (19,241) |
| Foreign exchange (losses)/gains |
(1,127) | 3,999 | 1,862 | – | – | – | – | – | – | – |
| Profit/(loss) before tax | 7,875 | (71,855) | (24,285) | 60,088 | 57,120 | 64,695 | 13,653 | 25,227 | 22,573 | 25,824 |
| Tax | 1,711 | 18,359 | 11,971 | (8,000) | (9,676) | 844 | (2,199) | (7,660) | (5,353) | (5,471) |
| Profit/(loss) after tax | 9,586 | (53,496) | (12,314) | 52,088 | 47,444 | 65,539 | 11,454 | 17,567 | 17,220 | 20,353 |
| Investment portfolio | 219,901 | 241,287 | 306,778 | 316,025 | 294,583 | 271,315 | 334,932 | 342,484 | 439,911 | 453,607 |
| Shareholders' funds | 242,607 | 237,066 | 268,659 | 282,186 | 230,097 | 186,165 | 234,917 | 226,870 | 227,653 | 223,606 |
| Dividend per ordinary share |
7.25p | 4.50p | 4.50p | 4.05p | 3.65p | 3.32p | 3.32p | 3.00p | 2.75p | 2.50p |
| Special dividend per ordinary share |
– | – | – | – | – | – | – | – | 20.0p | – |
| Diluted earnings/(loss) per ordinary share |
9.1p | (56.6p) | (13.5p) | 53.7p | 51.8p | 53.7p | 7.9p | 11.8p | 11.8p | 13.5p |
| Diluted EPRA net assets per share |
272p | 286p | 352p | 374p | 309p | 238p | 182p | 155p | 155p | 151p |
The financial statements for the year to 31 March 2005 have been restated to reflect the adoption of International Financial Reporting Standards.
The financial statements for the years 31 March 2001 to 31 March 2005 have been restated to reflect the impact of the 5 for 1 share issue on 1 September 2005
The report and financial statements, share price information, company presentations, the financial calendar, Corporate Governance, contact details and other investor information on the Group are available in the Investor Relations and Company Profile area of our website www.helical.co.uk.
All general enquiries concerning holdings of ordinary shares in Helical Bar plc should be addressed to:
Capita Registrars Northern House, Woodsome Park, Fenay Bridge, Huddersfield, HD8 0GA
Telephone: 0871 664 0300 Fax: 020 8639 2342 Website: www.capitaregistrars.com Email: [email protected]
UK shareholders may chose to be alerted about updates to the Financial Reports, Results, Press Releases and Events Calendar sections of the Group's website by subscribing to the Alerting Service at www.helical.co.uk. Shareholders may also submit their proxy votes electronically. To register for this service, shareholders should visit the Shareholders area of www.capitaregistrars.com.
Shareholders whose dividends are not currently paid to mandated accounts may wish to consider having their dividends paid directly into their bank or building society account. This has a number of advantages, including the crediting of cleared funds into the nominated account on the dividend payment date. If shareholders would like their future dividends to be paid in this way, they should complete a mandate instruction available from the Registrars. Under this arrangement tax vouchers are sent to the shareholder's registered address.
Instead of waiting for a sterling cheque to arrive by mail, you can ask us to send your dividends direct to your bank account. For information contact the Company's Registrar.
The Company offers shareholders the option to participate in a DRIP. This enables shareholders to reinvest their cash dividends in Helical Bar plc shares.
For further details, contact the Company's Registrar.
For participants in the plan, key dates can be found in the online financial calendar in the 'Investor relations' area at www.helical.co.uk.
Shareholders with a small number of shares, the value of which makes it uneconomic to sell them, may wish to consider donating them to a charity ShareGift, (registered charity 1052686) which specialises in using such holdings for charitable benefit.
Further information about ShareGift is available at www.sharegift.org or by writing to: ShareGift, 17 Carlton House Terrace, London, SW1Y 5AH
Telephone: 020 7930 3737
Dividend payment dates on the Company's Ordinary 1p shares in 2009 are as follows:
| Dividend | Record Date |
Payment Date |
Amount |
|---|---|---|---|
| 2008/09 | 3 July | 24 July | 2.75p |
| Final | 2009 | 2009 | |
| 2009/10 | 4 Dec | 23 Dec | 1.75p |
| 1st interim | 2009 | 2009 |
Dividend payment dates in 2010 will be as follows:
| Dividend | Record Date |
Payment Date |
Amount |
|---|---|---|---|
| 2009/10 | 12 March | 1 April | 2.75p |
| 2nd interim | 2010 | 2010 | |
| 2009/10 | 25 June | 23 July | 0.25p |
| Final | 2010 | 2010 | |
| 2010/11 | Dec | Dec | |
| Interim | 2010 | 2010 |
The latest information on the Helical Bar plc share price is available on our website www.helical.co.uk.
11–15 Farm Street, London, W1J 5RS
Registered in England and Wales No. 156663.
| Average unexpired lease term | The average unexpired lease term expressed in years. |
|---|---|
| Capital value (psf) | The open market value of the property divided by the area of the property in square feet. |
| Diluted EPRA earnings per share | Earnings per share adjusted to exclude losses/gains on sale and revaluation of investment properties and their deferred tax adjustments, the tax on loss/profit on disposal of investment properties and fair value movements on derivative financial instruments, on a diluted basis. Details of the method of the calculation of the diluted EPRA earnings per share is available from EPRA. |
| Diluted EPRA net assets per share | Diluted net asset value per share adjusted to exclude fair value of financial instruments and deferred tax on capital allowances and on investment properties revaluation, but including the fair value of trading properties in accordance with the best practice recommendations of EPRA. |
| Diluted EPRA triple net asset value per share | Diluted EPRA net asset value per share adjusted to include fair value of financial instruments and deferred tax on capital allowances and on investment properties revaluation. |
| Diluted figures | Reported amounts adjusted to include the effects of potential shares issuable under the employee share option schemes. |
| Earnings per share | Profit after tax divided by the weighted average number of ordinary shares in issue. |
| EPRA | European Public Real Estate Association. |
| 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 in arrears. |
| Estimated rental value (ERV) | The market rental value of lettable space as estimated by the Company's valuers at each balance sheet date. |
| Initial yield | Annualised net rents on investment properties as a percentage of the investment property valuation. |
| IPD | The Investment Property Databank Limited (IPD) is a company that produces a number of independent benchmarks of unleveraged commercial property returns. |
| Net assets per share or net asset value (NAV) | Equity shareholders' funds divided by the number of ordinary shares at the balance sheet date. |
| Net gearing | Total borrowings less short-term deposits and cash as a percentage of equity shareholders' funds. |
| Passing rent | The annual gross rental income excluding the net effects of straightlining lease incentives. |
| Rack rental value % | The anticipated yield, which the initial yield will rise to once the rent reaches the ERV. |
| Total shareholder return (TSR) | 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. |
| Year ended 31 March 2010 | Annual General Meeting to be held 21 July 2010 Final ordinary dividend payable 23 July 2010 |
|---|---|
| Half year ending 30 September 2010 | Results and interim ordinary dividend announced November 2010 Interim ordinary dividend payable December 2010 |
| Year ending 31 March 2011 | Results and final dividend announced June 2011 Final ordinary dividend payable July 2011 |
| Registrars | Capita Registrars Northern House Woodsome Park Fenay Bridge |
|---|---|
| Bankers | Huddersfield HD8 0GA Aareal Bank AG Allied Irish Bank Bank of Ireland Barclays Bank plc Eurohypo AG HSBC plc Nationwide The Royal Bank of Scotland Group plc |
| Stockbrokers | JP Morgan Cazenove Limited 20 Moorgate London EC2R 6DA |
| Auditors | Grant Thornton UK LLP Grant Thornton House Melton Street Euston Square London NW1 2EP |
| Merchant bankers | Lazard Ltd 50 Stratton Street London W1J 8LL |
| Solicitors | Ashurst Clifford Chance Dechert Lawrence Graham Linklaters Lovells Mishcon de Reya Nabarro Norton Rose Wragge & Co |
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Registered Office 11-15 Farm Street London, W1J 5RS
Tel: 020 7629 0113 Fax: 020 7408 1666
email: [email protected]
www.helical.co.uk
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