Helical Bar plc Report & Accounts 2013 helical bar plc 2013 contents directors’ report - annual review financial statements 01 what we do 66 financial statements 02 helical at a glance 67 report of independent auditor 05 chairman’s statement 68 consolidated income statement 06 chief executive’s statement 68 consolidated statement of comprehensive income 08 strategy and performance 69 consolidated and company balance sheets 12 events of the year 70 consolidated and company cash flow statements 14 investment portfolio overview 71 consolidated and company statements of changes in equity 16 investment portfolio statistics 72 notes to the financial statements 18 principal investment properties 99 ten year review 24 development programme 35 financial review investor information 42 corporate responsibility 101 investor information appendix I - property portfolio 104 investor information appendix II - risk register directors’ report - governance 106 shareholder information 45 governance 107 glossary of terms 46 corporate governance review 108 financial calendar 49 letter from the chairman of the nominations committee 108 advisors 50 report of the nominations committee 51 the board of directors and senior management 53 letter from the chairman of the remuneration committee 54 directors’ remuneration report 63 report of the audit committee 64 report of the directors financial highlights Diluted EPRA earnings per share1 Final proposed dividend per share 2.4p 3.70p 2012: 3.4p 2012: 3.40p Diluted EPRA net asset value per share1 IFRS net assets 264p £253.8m 2012: 250p 2012: £253.7m Portfolio valuation2 Portfolio return3 £626.4m 8.6% 2012: £572.7m 2012: 5.6% 1 Calculated in accordance with the best practice recommendations of EPRA. 2 Includes the Group’s share of properties held in joint ventures and the surplus on directors’ valuation of trading and development stock. 3 Unleveraged return of property portfolio according to IPD. Front cover: CGI of refurbished 207 Old Street, London EC1. helical bar plc 2013 what we do directors’ report - annual review Helical Bar: a property investment and development company Helical aims to deliver market leading returns by acquiring high yielding investment properties, applying a rigorous approach to asset management and deploying limited equity through a variety of different structures into development situations which have the potential to be highly profitable. Our spread of activities gives us flexibility to deploy capital rapidly across our business and focus on whatever opportunities offer the best returns at different points of the property cycle. We aim to make excellent returns for our shareholders (which include the management team who own 15% of the company) through a wide variety of high margin activities. Our core areas include central London offices and high yielding retail investments, central London developments and refurbishment projects pre-let regional foodstore developments and retirement villages. Barts Square, London EC1 Brickfields, White City, London W12 Clyde Shopping Centre, Clydebank 01 helical bar plc 2013 helical at a glance Overall Investment portfolio split portfolio London offices 36% Out of town retail 3% Investment 71% In town retail 53% Industrial 3% Trading and development 29% South East Offices 4% Other 1% London Retail Central London investment investment development Key projects Key projects Key projects Battersea, London SW8 The Morgan Quarter, Cardiff 200 Aldersgate St, London EC1 Broadway House, London W6 Clyde Shopping Centre, Clydebank Mitre Square, London EC3 Shepherds Building, London W14 Corby Town Centre, Corby Old St, London, EC1 Idlewells Shopping Centre, Sutton-in-Ashfield Barts Square, London EC1 The Guineas, Newmarket 3.12 acre 2.0m sq ft 273,000 sq ft Freehold interest at Old St Of retail investment space Office consent at Mitre Square 02 helical bar plc 2013 helical at a glance directors’ report - annual review Trading and development portfolio (Helical’s share) Book value Fair value Surplus % of development Project type £m £m £m portfolio (fair value) Office 15.6 27.3 11.7 12.44 Retail 22.3 23.6 1.3 10.75 Industrial 1.4 1.4 – 0.64 Mixed use 5.0 22.4 17.4 10.19 Change of use 4.6 6.8 2.2 3.11 Retirement villages 55.3 72.6 17.3 33.07 Poland 65.4 65.4 – 29.80 Total 169.6 219.5 49.9 100.00 Note: the table above includes the Group’s share of development properties held in joint ventures. West London Retail Retirement development development villages Key projects Key projects Key projects Brickfields, London W12 Parkgate, Shirley, West Midlands Bramshott Place, Liphook King St, Hammersmith, London W6 Leisure Plaza, Milton Keynes Durrants Village, Faygate Europa Centralna, Poland Maudslay Park, Great Alne Millbrook Village, Exeter c1.5m sq ft March 2013 618 units Size of mixed use scheme at White City Europa Centralna open for trade In our retirement village programme 03 helical bar plc 2013 200 Aldersgate Street, London, EC1 04 helical bar plc 2013 chairman’s statement directors’ report - annual review Your Company has had a very good year against a backdrop of challenging, albeit improving, economic conditions. The total unleveraged return of its property portfolio, as measured by IPD, was 8.6%, the Company’s best return since 31 March 2007, compared to the IPD Universe of March valued funds of 3.9%. Total property return increased by 31% to £35.9m (2012: During the year we consulted with shareholders on £27.5m) and included growing net rents of £24.5m (up 7.0% a proposed new annual bonus scheme, designed to codify from £22.9m in 2012) and development profits of £7.0m the existing discretionary scheme, rewarding participants (2012: £0.7m). Diluted EPRA net asset value per share based on the results of the business and seeking greater increased 5.6% to 264p (2012: 250p). Total Shareholder alignment of executive remuneration with shareholders’ Return for the year to 31 March 2013 was 28.4%, compared interests. The resulting bonus scheme, incorporating the to returns for the Listed Real Estate Sector of 21.8% and for feedback received from shareholders holding more than 50% the UK Equity Market as a whole of 16.8%. These results of our share register, was approved by over 95% of allow the Board to continue its progressive dividend policy shareholders who voted at the 2012 AGM. I am delighted and to recommend to shareholders a final dividend of 3.70p, this year’s results have allowed participants in the scheme taking the total for the year to 5.55p, an increase of 7.8%. to receive bonuses in the form of cash payments and deferred shares. The year has seen many successes in the Company’s investment portfolio and development programme. Asset Consultation with shareholders was also undertaken with management initiatives have driven the net income of the regard to changes to the Board during the year. Richard Group forward and, at 31 March 2013, passing net rents were Gillingwater, Senior Independent Director, and Richard £28.7m (2012: £25.9m). Our share of the surplus on revaluation Grant, Audit Committee Chairman, joined as independent of investment properties, including those held in joint ventures, non-executive directors and I welcome both of them to the was £6.8m (2012: £4.2m) and the investment portfolio is now Board. I congratulate my former deputy, Tim Murphy, who valued at £407.0m (2012: £394.1m). On the development replaced me as Finance Director when I became Chairman, side we have delivered against many of the milestones set having served as Finance Director for the last 25 years. Our at the beginning of the financial year, most notably at 200 former Chairman, Giles Weaver, served with distinction Aldersgate Street, London EC1, where we have as of today during his time on the Board and I would like to thank him let 90% of the 348,000 sq ft refurbished office building (with as well as Antony Beevor and Wilf Weeks, who have also a further 6% under offer), at our 1.5m sq ft development at retired, for their invaluable contributions to the Board and Brickfields, White City where we have received planning its Committees. consent and contracts have been exchanged for a sale of the After a challenging five years, I believe we are on the cusp site, and at our 450,000 sq ft redevelopment of Barts Square, of returning to delivering outperformance. Looking forward, London EC1, where we have received a resolution to grant we will benefit from a rebalanced portfolio with a strong and planning consent. growing income stream which we intend to increase Despite frequent commentary that banks are not lending significantly in the next year. In addition, our development enough to the private sector, there is clearly an appetite portfolio is expected to deliver substantial profits and cash amongst banks to lend to well managed, profitable and returns over the same period and in the following years. stable public companies in the real estate sector. We continue We look forward to these two elements of our business to enjoy excellent relationships with our banking partners combining to generate strong returns and value on behalf with c. £290m of new or renewed facilities agreed since the of all our shareholders. beginning of 2012, extending our debt maturity to 3.3 years. With interest rates continuing at historic lows, we have been able to ensure that we are adequately protected against future interest rate rises, thereby securing growing income Nigel McNair Scott, surpluses, strong cash flows and good interest cover. Chairman 23 May 2013 05 helical bar plc 2013 chief executive’s statement It is worth restating the Company’s strategy to re-emphasise our focus and differentiate ourselves from our peer group. We are a property investment and development company whose objective is to maximise shareholder returns by driving income, repositioning assets to deliver capital growth and generating substantial development gains employing limited amounts of our own equity.