Final Results

Helical Bar PLC 02 June 2005 2 June 2005 HELICAL BAR PLC ('Helical'/'Company' / 'Group') PRELIMINARY RESULTS FOR THE YEAR TO 31 MARCH 2005 HELICAL GROWS BY 30% HIGHLIGHTS * Adjusted diluted net asset value plus trading stock surplus totalling 1148p per share (2004: 884p) - up 30 per cent * Record profit before tax Â£34.9m (2004: Â£13.7m) - up 155 per cent * Diluted earnings per share of 110.5p (2004: 39.6p) - up 179 per cent * Substantial increase in development profits and a strong performance in investment portfolio underpin results * Final dividend of 11.00p per share (2004: 10.00p) - up 10 per cent * The Company has returned Â£102m to shareholders since 1 April 2004 John Southwell, Chairman, commented; 'The sale of our industrial estates at Aycliffe & Peterlee generated an exceptional profit for the Company which together with the benefits from the new diversified programme, put together from 2002, produced an excellent result. This programme, with over 30 projects under way, should continue to produce good shareholder returns for the next couple of years.' Further information: Helical Bar plc Nigel McNair Scott (Finance Director) Michael Brown (Investment Director) Tel: 020 7629 0113 after 2.00 p.m. Issued by: Financial Dynamics Stephanie Highett/Dido Laurimore Tel: 020 7831 3113 FINANCIAL HIGHLIGHTS Year Ended Year Ended 31 March 31 March 2005 2004 Notes Â£m Â£m Net rental income 19.7 23.0 Development profits 12.7 0.0 Trading profits 5.8 1.0 Profits on sales of investment properties 16.0 2.0 Other gross profits 0.2 0.6 Profits before tax 34.9 13.7 Adjusted profits before tax 1 18.9 11.7 pence pence Diluted earnings per share 110.5 39.6 Total dividends per share 17.60 16.60 Adjusted diluted net assets per share 2 1078 884 Adjusted diluted 'triple net' assets per share 3 992 804 Diluted trading stock surplus per share 70 - Â£m Â£m Value of investment portfolio 271.1 334.9 Net borrowings 125.0 129.8 Shareholders' funds - equity 4 190.3 234.9 - non equity 2.4 - Net gearing 66% 55% Notes 1. Excludes profit on sale of investment properties and loss on sale of subsidiary. 2. After adding back additional deferred taxation arising from the clawback of capital allowances on sale of investment properties. 3. Adjusted for contingent liabilities of deferred taxation on chargeable gains on investment properties and the market value of financial instruments but after adding back the deferred taxation referred to in 2 above. 4. Comparative restated for the adoption of UITF 38 - Accounting for ESOP Trusts Chairman's Statement I am delighted that the year to 31 March 2005, my last one as Chairman of Helical Bar plc, has been such a good one for the Company and its shareholders. The Company made record profits in the year as the development pipeline returned to profitability. The continuation of the buoyant investment market enabled the Company to sell Â£140m of investment properties at prices 14% above March 2004 valuation and increase year end values on the remaining investment portfolio by 14.2%. In November 2004 the Company announced that it intended returning cash to shareholders and subsequently paid out Â£97.2m (including costs). This Return of Cash to shareholders has enhanced returns to shareholders with the adjusted net asset value per share at 31 March 2005 estimated to have been boosted by 3% or 28p per share, with further enhanced growth to come. Results Profits after tax this year rose to Â£26.8m from Â£11.5m, mainly due to an exceptional Â£16m profit on sale of investment properties and substantially increased development profits of Â£12.7m (2004: nil). Diluted earnings per share as a result rose by 179% to 110.5p (2004: 39.6p). The revaluation surplus on the investment portfolio was Â£30m (2004: Â£24m). The Group's adjusted net asset value per share rose by 22 per cent to 1078p (2004: 884p) and the adjusted triple net asset value (taking account of the contingent liabilities of deferred tax and the market value of financial instruments) rose by 23 per cent to 992p per share (2004: 804p). These figures take no account of any surplus on the Â£96m of trading and development stock which are held in our books, in accordance with normal practice, at the lower of cost and net realisable value. The directors' valuation of trading and development stock shows a surplus of Â£13m, the majority of which is attributable to the Unwins portfolio. For shareholders, the Company continued its share buy-back programme, purchasing 530,000 ordinary 5p shares for Â£4.5m at an average of 843p per share. These purchases took the total number of shares bought in since July 2003 to 3,435,951 ordinary shares, approximately 11.5% of the company's share capital, at a cost of Â£26.0m and an average cost of 756p per share. This average cost is a 30% discount to the adjusted net asset value per share at 31 March 2005. The encouraging prospects for 2005/2006 enable the Board to recommend to shareholders a final dividend of 11p per share (2004: 10.0p), an increase of 10 per cent. This proposed dividend, together with the interim dividend of 6.6p (2004: 6.6p) paid in December 2004 makes a total dividend of 17.6p per share (2004: 16.6p) in addition to the dividend paid as part of the Return of Cash. This is an increase of 6 per cent on last year. The total dividend is covered over seven times by profits after tax. Outlook The world appears to have an uncertain future with continuing concerns over crude oil prices, the global economy, the state of the High Street and the housing market. Inflationary pressures seem to be easing with the next move in interest rates currently expected to be downwards. Commercial property has delivered excellent returns over the last two years, principally due to yield compression which has lowered the return investors are likely to earn in future years. Competition for investment stock remains fierce. Investors need to price bids based on unleveraged target returns of 7-8% or less to stand any chance of acquiring property in the mainstream markets. Despite these challenging conditions, we believe it is still possible to continue to achieve satisfactory returns-but only through effecting change. This may be physical change via refurbishment or redevelopment or through obtaining more valuable planning consents or active tenant management. Our flexible acquisition strategy incorporates a willingness to tackle difficult or empty properties in all sectors together with a rapid response time (the 95 Unwins properties were acquired in 48 hours) and harnessing a myriad of local contacts and skills via strong joint venture relationships. This range of activities not only provides diversification of risk, but a much increased chance of sourcing deals at acceptable prices. Once yield shift has run its course and property returns decline from 2004's heady levels, we believe the potential for relative outperformance of this approach should increase. Board I am delighted to welcome the appointment of Wilf Weeks to the Board of Helical Bar plc as a non-executive director. Wilf specialises in Government Relations and is currently Chairman of European Public Affairs at Weber Shandwick. With Government policy increasingly impacting on the property market through planning intervention and tax rises an experienced approach to local and central government bodies will become increasingly important. I would like to take this opportunity to thank all of Helical's staff, our professional advisors and our joint venture partners, all of whom work very hard for the Company. This is my last Chairman's statement as I will be stepping down at the Annual General Meeting after 17 years in this position. I will continue as a non-executive director but would like to put on record my thanks to my fellow directors throughout this period for their support and advice. I would also like to wish Giles Weaver, my successor as Chairman, a long and successful period in office. John Southwell Chairman 2 June 2005 Development programme Helical's development objective is clear. The Group seeks to recreate the profit streams achieved from office and retail development over the last ten years by focusing on large Central London office schemes, major mixed-use developments and retail schemes. As in the last cycle it is anticipated that the retail schemes will contribute to development profits before the larger office and mixed-use schemes come on stream. Development schemes Completed developments available to let Funding Space Completion Size Institution Tenants Let Offices Sq ft Sq ft West End 40 Berkeley Square, London March 2004 75,000 Morley The 32,000 W1 Blackstone Group, Caxton Europe 11,900 Asset Management, Multiplex 21,310 Constructions (UK) Limited Thames Valley The Heights, Weybridge April 2003 337,000 Prudential Kia Motors, 16,000 Portfolio Managers Alliance Unichem 23,600 Development schemes Current and future programme Approximate Size Start Date Offices Sq ft City Mitre Square, London EC3 2006 350,000 Ropemaker Place, London EC2 2006 500,000 Central London - Mixed-use Clareville House, London SW1 2006 60,000 Wood Lane, White City 2006+ 43 acres Thames Valley Amen Corner, Bracknell 2007 500,000 Retail/Mixed-use Trinity Square, Nottingham 2005 235,000 Commercial Road, Bournemouth 2005 47,000 Bluebrick, Wolverhampton 2005 170,000 Hatters Retail Park, Luton 2005 105,000 Town Centre Shirley, Solihull 2006 155,000 Shrub Hill, Worcester 2005 35,000 Completed office developments 40 Berkeley Square, London W1 40 Berkeley Square has been a tremendous success. Developed in a joint venture with existing owners, Morley Fund Management, the scheme was completed in March 2004 with 20,000 sq ft pre-let to The Blackstone Group. Since completion, Blackstone have leased a further 12,000 sq ft and we have let 11,900 sq ft to Caxton Europe Asset Management and 21,310 sq ft to Multiplex Constructions (UK) Ltd. Only the ground floor remains available to let. The Heights, Brooklands, Weybridge A high quality business park development of 337,000 sq ft in 5 separate buildings. Building 2 has been let to Kia Motors, 16,000 sq ft, and Alliance Unichem, 23,600 sq ft. Marketing efforts continue on the remaining space and the number of viewings has increased recently. The project was forward funded with Prudential Assurance Company, the terms of which limit our financial exposure. Future office development programme Mitre Square, London EC3 A planning application for an office scheme of 350,000 sq ft is due to be determined by the City Planning Committee shortly. The proposed development is a joint venture with Ansbacher Property Development Ltd. Once planning has been granted, the outstanding land acquisitions can be progressed and a pre-let campaign commenced. Ropemaker Place, London EC2 We are acting as Development Manager for DB Real Estate, Helical has received approval for a new building of approximately 500,000 sq ft. Demolition of the existing building will be completed in August 2005. Clareville House We are acting as Development Manager for Lattice Group Pension Fund who own this mixed use building comprising offices of 35,000 sq ft, nightclub of 17,000 sq ft, restaurant of 4,000 sq ft and retail of 2,000 sq ft. We will be carrying out an extensive refurbishment. We are currently negotiating a pre let on the nightclub and seeking to obtain planning consent. Wood Lane, White City On behalf of a number of landowners, of which Helical is one, we are promoting the regeneration of 43 acres of land at White City for a major mixed-use development. The Office of Metropolitan Architecture run by the world renowned architect, Rem Koolhaas, has been appointed to carry out a masterplan for the site. We expect this masterplanning process to be completed by October 2005 at which point a planning application can follow. The scheme is likely to involve a high density mix of offices, residential, leisure and other ancillary uses. Amen Corner, Bracknell Having acquired a number of properties and options over land at Amen Corner, Bracknell, Helical is promoting a gateway office development fronting the A329 (M) through the Local Development Framework planning process. A small scale infill residential scheme is also being pursued. Retail developments Helical's retail development programme has expanded significantly in the last year. The joint ventures with Overton Developments and Oswin Developments have made good progress in respect of a number of promising opportunities. Friary Retail Park, Stafford Friary Retail Park, Stafford was completed in December 2004. This is a 38,500 sq ft retail scheme which was pre-let to TK Maxx (20,000 sq ft), PC World (15,000 sq ft) and Choices Video (3,500 sq ft) and funded with Arlington Fund Managers representing Tyne and Wear Metropolitan Borough Council. A second phase involving a unit of 4,000 sq ft, pre-let to Laura Ashley, has obtained planning consent and is due to start on site in August 2005. The unit is pre-sold to Arlington as an extension to the main funding deal. Trinity Square, Nottingham Helical completed the site acquisition late last year and has since received detailed planning consent for this major Â£100m city centre project. The completed buildings which will adjoin the Victoria Centre (Nottingham's prime shopping pitch) will contain 190,000 sq ft of retail space, 700 student apartments and a multi-storey car park with 470 spaces. Demolition of the redundant buildings is well advanced, and it is anticipated the construction work will commence this summer. The development is expected to be completed in summer 2007. Major pre-lets have been signed up with Borders (26,000 sq ft), TK Maxx (58,000 sq ft) and Dixons (25,000 sq ft) providing a committed rent roll of Â£2.1m. Negotiations with a major UK fund to forward sell the completed investment are well advanced and are expected to be finalised early this summer. Commercial Road, Bournemouth Eight of the eleven shops purchased in late 2003 were demolished over Christmas 2004 with construction commencing on site in February 2005. The new 51,000 sq ft scheme has been substantially pre-let to Hennes, Zara and Republic with one unit remaining to let (6,000 sq ft). The new development plus the retained investment block let to Dixons, Wallis and Carphone Warehouse have both been forward sold to a private Irish investor for just over Â£40m. Future Retail Development Programme Bluebrick, Wolverhampton The former low level station comprising a total of eleven acres was purchased in November 2003. The main nine acre site has been marketed as a major regeneration mixed use scheme and a planning application has now been submitted for a 20,000 sq ft car showroom, 81 bed hotel, 7,500 sq ft public house, 5 restaurants (23,000 sq ft) in the listed station buildings and 208 apartments. Consent is anticipated this summer with a view to starting on site to demolish the surplus buildings and put in a spine road to provide serviced sites to the occupiers in the autumn. Reg Vardy have signed up to purchase the car showroom site which will trade as a Land Rover Dealership and discussions are in hand with operators for the Hotel and Public House. The apartments site will be sold following planning consent to a major house builder and the listed building conversion will be developed directly once occupiers have been secured. Hatters Retail Park, Luton The 8 acre site had been secured by way of conditional contracts and following receipt of planning consent for 80,000 sq ft of bulky goods retail warehousing and 25,000 sq ft of industrial units the contracts have now been triggered so the site will be bought in two tranches in summer 2005. Marketing of the units is underway and active discussions are in hand with a number of mainstream retailers. It is envisaged that construction work will commence early in 2006. Town Centre Scheme, Shirley, Solihull The scheme which comprises 160,000 sq ft of retail, anchored by a 75,000 sq ft foodstore, and some 250 apartments is being progressed through a 50:50 joint venture with Coltham Developments. A development agreement has been exchanged with Solihull Metropolitan Borough Council, who own the majority of the site, to promote the 'Heart of Shirley' town centre scheme. Site assembly is underway and it is envisaged that a planning application will be submitted this summer with a view to start on site early in 2006. Shrub Hill, Worcester A purchase contract has been entered into with First Bus subject to their relocation to a new site and once this has been achieved the site, which has planning consent for 35,000 sq ft of retail warehousing, can be progressed. In addition there is also a one acre site with planning consent for 45 canalside apartments. Residential Developments The Group has from time to time acquired sites and created value through obtaining planning consents for retirement villages. Lime Tree Village, Dunchurch, Rugby This development involves the refurbishment of a Victorian country house and the construction of 153 bungalows, cottages and apartments for retirement. The first phase of 50 homes and the refurbishment of the house have been completed. Phase two of a further 50 homes is under construction. 57 of the units have been sold or reserved. Bramshott Place, Liphook Planning negotiations continue for a retirement village development comprising 144 apartments, cottages and bungalows. Subject to planning, work is due to start in 2006. Gerald Kaye Development Director INVESTMENT The investment and trading portfolio had a good year with a valuation uplift of 14.2%, sales of investment properties at 13.6% over March 2004 valuation and trading profits of Â£8.4 million (including Helical's share of joint venture profits). In all, this produced an unleveraged total return of 27.6% outperforming all 156 quarterly and monthly valued funds as measured by IPD for the year to 31 March 2005. These figures and those noted below exclude the surplus arising from the valuation of trading and development stock referred to in the Chairman's statement. Investment portfolio Valuation movement ERV movement Average unexpired term years Offices 16.3% 10.8% 8.8 Industrial 9.3% 1.2% 8.6 Out of town retail 10.1% 5.9% 14.1 In-town retail 13.2% 6.8% 8.9 -------- ------- ------ Total 14.2% 7.2% 9.6 Valuation yields Initial Reversionary Equivalent True equivalent Offices 7.6% 7.9% 7.8% 8.2% Industrial 7.5% 8.4% 8.2% 8.6% Out of town retail 5.6% 6.3% 6.2% 6.5% In-town retail 4.1% 7.6% 7.0% 7.3% ------- ------- ------- ------- Total 6.3% 7.6% 7.3% 7.7% Retail In March 2005 we completed the Â£29 million purchase of the 225,000 sq ft Morgan Department Store and Royal and Morgan Arcades in Cardiff. Planning consent has been obtained to convert the department store into three large retail units, the biggest of which has been prelet to Sportsworld. Residential development is proposed for the upper floors. This holding is 'unworked' having been in family ownership for 124 years and is in an improving pitch directly opposite Land Securities' and Liberty's proposed St David's 2 Shopping Centre, to be anchored by John Lewis. Progress continues at our shopping centre in Letchworth where we have created two larger units let to Bon Marche and Millets at Â£55 and Â£58 psf Zone A, 60% above rental values at the time of our 2003 purchase. A residential planning consent to convert an office building above the centre has been obtained and further applications made for a mall cafe and small retail extension. Turning to retail warehouses, we have acquired an infill site at our Weston-Super-Mare Park and obtained planning consent for a 27,000 sq ft unit prelet to Wickes at Â£14.25 psf, a 19% uplift over previous rental values. We also took a surrender of a 19,000 sq ft unit let to Magnet which was subsequently relet to Next. Retail warehouses of 32,000 sq ft in Ashford near Heathrow and 27,000 sq ft in Crowborough, East Sussex were acquired during the year. Both are highly reversionary. Many of our more active retail assets are trading properties, held within our accounts at the lower of cost or value and where performance will only be crystallised on sale. These are listed in the Trading Properties table below. In joint venture with local developers Abbeygate, we have a number of ongoing projects in Milton Keynes. â€¢ Construction is due to complete in June of an 80,000 sq ft retail warehouse at Winterhill prelet to Homebase at Â£17.75 psf and funded with Arlington Investors for Â£24.5 million. â€¢ Our joint venture vehicle, Abbeygate Helical, has been selected by English Partnerships as the developer for the Â£100 million C4.1 project in central Milton Keynes. A 110,000 sq ft Sainsbury supermarket and 400 residential units are planned with construction due to start later this year. â€¢ Discussions with English Partnerships have also commenced to investigate the regeneration of the Leisure Plaza (acquired in 2003) to create a mixed use development encompassing retail, leisure and residential uses of a similar scale to C4.1. Two further acquisitions have been made with Abbeygate. A 28,000 sq ft industrial property adjoining a retail park in Winterhill was acquired in November for medium term retail redevelopment. A 10,000 sq ft retail warehouse was acquired in January in central Sheffield where we are promoting a ten storey residential development. In January we acquired a site in Epsom with residential consent which we are now promoting with adjoining council land as an 80,000 sq ft supermarket development. A planning application has been submitted. Just before the financial year end we acquired for Â£25.5 million a portfolio of 95 off licences all in the South East of England and leased back to Unwins. With an average lot size of under Â£500,000 these properties are likely to prove attractive to private investors and will be traded on during the year at auction. The first auction sale in May 2005 of 26 of the larger units produced gross sales of over Â£16m. Offices During the first half of the financial year, offices were sold at 5-10 Paris Gardens, London SE1 for Â£18.25 million, a half share of 66 Prescot Street, London E1 for Â£14.35 million, Westfields in High Wycombe for Â£5.5 million and Southfields Road, Dunstable for Â£3.3 million. We also contracted early in the year to sell the Interchange in Camden for Â£21.5 million with completion deferred to March 2005. The total of Â£62.9 million of office sales was marginally above March 2004 valuation and 37% over historic cost, all having been acquired over the previous five years. Our 150,000 sq ft office refurbishment at Shepherds Bush is now 97% let to over 40 tenants, principally from the media sector, including Fox TV, National Geographic TV, Endemol and Mulberry. The leasing of the building generated a 22% valuation increase this year but much potential for further growth remains with the average rent passing at under Â£20 psf. At 61 Southwark Street, half the building by floor area has been subject to rent review during the year with an average rental increase of 66% driving a 21% valuation increase. Rex House in Regent Street, which was refurbished and let in 2001, is being held for cashflow, rental recovery and marriage value potential. The property is leasehold with an unexpired term of just over 30 years. In February we acquired for refurbishment 60,000 sq ft of vacant TV studios and offices in Battersea in a 50/50 joint venture. The project will follow the concept developed at Shepherds Bush with multiple suites created around central social facilities including a cafe/bar. Industrial After 17 years of ownership we sold in November our largest asset, our industrial holdings at Aycliffe and Peterlee, for Â£67.6 million. This represented a 25% premium over our March 2004 valuation and nearly three times historic cost. Industrial units were also sold at Avonmouth for Â£8 million (26% above valuation) and Sawston for Â£1.5 million (39% above the 2003 purchase price). As with the retail portfolio, many of our more active industrial properties are held as trading stock. These typically are refurbishments or redevelopments designed for owner-occupier sales at premium prices. Schemes in progress or completed during the year in joint venture with Dencora are 127,000 sq ft in Harlow (100% sold), 46,000 sq ft Sawston, Cambridge (44% sold, 22% under offer) and 36,000 sq ft in Edenbridge (25% sold, 36% under offer) with a new project acquired in Newmarket (90,000 sq ft). We also completed 135,000 sq ft in Slough (52% sold or let) in joint venture with Chancerygate with whom we also acquired a new project in Oxford (56,000 sq ft). At Dunstable we obtained a planning consent for 148 flats on a five acre industrial site which has been sold to Kingsoak for Â£8.2 million (at more than double the 2002 purchase price). We also own industrial assets in Fleet (five acres) and Great Alne, Warwickshire (20 acres) where we have made planning applications and are hopeful of obtaining residential or retirement homes consents. Michael Brown Investment Director Investment Properties LONDON OFFICES Size Average Vacancy Year Comments (sq ft) passing rate acquired rent (psf) Rex House, SW1 80,000 Â£56 0% 2000 Leasehold expires 2035 Shepherds Building, W14 151,000 Â£19 3% 2000 90% interest 61 Southwark Street, SE1 66,000 Â£20 10% 1998 Rent reviews 2004 on 32,000 sq ft Battersea Studios, SW8 58,000 Â£16 94% 2005 50% interest ------------ ------------ ----------- 355,000 Â£27 18% OUT OF TOWN RETAIL Weston Retail Park, 140,000 Â£12 0% 1999 75% interest Weston-Super-Mare Otford Road Retail Park, 43,000 Â£14 0% 2003 75% interest Sevenoaks Homebase, St Austell 36,000 Â£8 0% 2002 75% interest Focus, Ashford 32,000 Â£15 0% 2004 75% interest Focus, Crowborough 27,000 Â£9 0% 2005 75% interest Wickes, Worthing 26,000 Â£11 0% 2003 75% interest ------------ ----------- ------- 304,000 Â£11.75 0% TOWN CENTRE RETAIL Morgans Department Store, Cardiff 160,000 Â£17 60% 2005 Morgan & Royal Arcades, Cardiff 65,000 Â£40 ZA 3% 2005 Garden Square, Letchworth 165,000 Â£40 ZA 10% 2003 New lettings @ Â£55 psf ZA WH Smiths, Chiswick 5,000 Â£85 ZA 0% 2000 Residential site at rear ------------ ------------ -------- 395,000 Â£50ZA 29% INDUSTRIAL Size Average Vacancy Year Comments (sq ft) passing rent rate acquired (psf) Hawtin Park, Blackwood 251,000 Â£2.85 7% 2003 Sawston, Cambridge 218,000 Â£4.30 0% 2003 67% interest Walton Summit, Preston 143,000 Â£4.10 0% 1990 Standard Estate, N Woolwich 105,000 Â£9.00 29% 2002 60% interest Golden Cross, Hailsham 102,000 Â£5.00 0% 2001 Waterside, Fleet 54,000 Â£7.00 9% 1999 -------------- --------- ------ 873,000 Â£4.66 6% OTHER Cardiff Royal Infirmary - vacant hospital on a peppercorn lease with redevelopment potential TRADING PROPERTIES Address Description Year % interest acquired Unwins Portfolio 95 off licences in South East England 2005 100% Upper High Street, Epsom Residential site with supermarket potential 2005 100% Bus Depot, Milton Keynes Ongoing development pre-let to Homebase (80,000 sq 2001 50% ft) funded with Arlington Leisure Plaza, Milton Keynes 119,000 sq ft leisure scheme with potential for 2003 50% mixed- use development Mailcom, Milton Keynes 28,000 sq ft industrial unit with retail warehouse 2004 50% potential Globus Office World, Sheffield 10,000 sq ft retail warehouse with residential 2005 50% potential Great Alne, Maudslay Park 314,000 sq ft industrial estate on a 20 acre site 2004 100% with potential for a retirement home use Mill Street, Slough 135,000 sq ft industrial in 14 units 2002 90% Fircroft Way, Edenbridge 36,000 sq ft industrial estate refurbished for owner 2004 50% occupier sales Watlington Road, Oxford 56,000 sq ft offices/industrial to be refurbished/ 2005 80% redeveloped for owner occupier sales Willie Snaith Road, Newmarket Site for 80,000 sq ft trade counter/industrial/office 2005 50% development 2/6 Curtain Road, 7,000 sq ft office forming part of a 700,000 sq ft 2001 50% London EC2 development site ENTIRE PORTFOLIO CASHFLOW YIELDS (YIELDS EARNED BY HELICAL - EXCLUDE NOTIONAL PURCHASER'S COSTS) Initial Reversionary Equivalent Investment 6.7% 8.0% 7.7% Trading 5.0% 8.1% 7.8% Development 0.2% 7.9% 7.5% ------- ------- ------- Total 5.7% 8.0% 7.7% PORTFOLIO BALANCE London Retail Retail Industrial Other Total offices In town Out of town Investment 28.3% 17.5% 14.5% 12.4% 0.1% 72.8% Trading 0.6% 8.3% 1.2% 5.5% 0.9% 16.5% Development 2.3% 5.3% 1.5% 0.0% 1.6% 10.7% -------- -------- -------- -------- -------- --------- Total 31.2% 31.1% 17.2% 17.9% 2.6% 100.0% Financial Review Profits Adjusted profits before tax, excluding exceptional items and loss on sale of subsidiary increased to Â£18.9m (2004: Â£11.7m). Profits after tax and minority interest increased to Â£26.8m (2004: Â£11.2m). Rental income Net rental income for the year fell to Â£19.7m (2004: Â£23.0m) as the Group sold further investment and trading properties. During the year Â£124.2m of investment properties, yielding Â£10.4m of rental income were sold. Â£22.3m was used to add to the investment portfolio and Â£41.4m was used to purchase income producing properties to be re-developed or traded. Together these produce a passing rent of Â£3.2m. Rent reviews and new lettings, net of lease expiries and rent free periods, added rental income of Â£1.7m on the remaining portfolio. Rental costs increased from Â£2.3m to Â£2.8m, mainly from letting fees on previously vacant space. Trading and other profits Trading profits of Â£5.8m were up on last year (2004: Â£1.0m) and arose from the sale of a number of small industrial units in Aycliffe & Peterlee, Harlow, Slough, Sawston and Edenbridge and a site in Dunstable. Development profits The development programme started to generate significant profits again with the office development at 40 Berkeley Square and the retail schemes at Stafford and Bournemouth being the main contributors. 2005 2004 2003 2002 2001 Developments Â£ 000 Â£ 000 Â£ 000 Â£ 000 Â£ 000 Profits 12,664 38 4,630 17,072 29,507 Administrative expenses Administrative expenses increased from Â£8.0m to Â£15.8m due to an increased level of performance related bonuses. Administrative expenses, before goodwill and executive bonuses, fell to Â£5.6m (2004: Â£6.0m). Profit on sale of investment properties - exceptional items During the year to 31 March 2005 the Group sold Â£124.2m (2004: Â£82.2m) of investment property on which it made Â£16.0m (2004: Â£2.0m) of profit over 31 March 2004 book value and sale costs. The properties sold included the industrial estates at Aycliffe & Peterlee and Avonbridge, offices in Southwark, Camden and High Wycombe and a Sainsbury's store in Wednesfield. Net interest payable Despite higher interest rates and a higher level of gearing in the second half of the year the cash surpluses arising from the sale of investment properties kept net interest payable to Â£6.8m (2004: Â£6.6m). Interest received increased from Â£1.1m to Â£1.9m as surplus cash from investment sales was placed on deposit prior to the Return of Cash. Interest of Â£2.3m (2004: Â£1.8m) was capitalised reflecting the much increased holding of non-income producing development sites. 2005 2004 2003 2002 2001 Net interest payable Â£ 000 Â£ 000 Â£ 000 Â£ 000 Â£ 000 Interest payable on bank 8,330 7,548 9,543 14,804 19,514 loans Other interest payable 2,243 1,741 2,351 3,215 1,343 Finance arrangement costs 457 170 783 408 572 Interest capitalised (2,296) (1,817) (795) (1,006) (1,597) Interest receivable (1,948) (1,070) (2,244) (2,642) (591) ----------- ----------- ----------- ----------- ----------- 6,786 6,572 9,638 14,779 19,241 ----------- ----------- ----------- ----------- ----------- Taxation The corporation tax charge for the year is less than the standard rate of 30% due to the use of capital allowances and tax losses. The deferred tax credit for the year reflects a full provision for capital allowances claimed in previous years which is more than offset by a reduction in previous years' provisions where investment properties have been sold and there is no longer a potential for the clawback of the allowances claimed to date. Dividends The Board is recommending to shareholders at the Annual General Meeting on 20 July 2005 a final dividend of 11p per share (2004: 10.00p) to be paid on 22 July 2005 to shareholders on the register on 10 June 2005. This, with the interim dividend of 6.60p, makes a total of 17.60p. This is an increase of 6 per cent on the previous year's dividend of 16.60p. This is covered over seven times by profits after tax. 2005 2004 2003 2002 2001 Dividends pence pence pence pence pence Interim 6.60 6.60 6.00 5.50 5.00 Final 11.00 10.00 9.00 8.25 7.50 ----------- ----------- ----------- ----------- ----------- 17.60 16.60 15.00 13.75 12.50 Special - - - 100.00 - ----------- ----------- ----------- ----------- ----------- 17.60 16.60 15.00 113.75 12.50 ----------- ----------- ----------- ----------- ----------- In the year to 31 March 2005 a 400p per share dividend was paid to shareholders holding 14,143,020 A shares as part of the Return of Cash on 23 December 2004. Earnings per share Earnings per share in the year to 31 March 2005 were 115.2p (2004: 40.9p) per share and on a diluted basis were 110.5p (2004: 39.6p) per share. 2005 2004 2003 2002 2001 Earnings per share pence pence pence pence pence Earnings per share 115.2 40.9 61.2 60.0 70.0 Diluted earnings per share 110.5 39.6 59.2 57.8 67.7 Investment portfolio During the year investment properties with a book value of Â£124.2m were sold and partly replaced by Â£22.3m of new properties. In addition around Â£5.6m of capital expenditure was spent on refurbishing various office, industrial and retail buildings. At 31 March 2005 there was a revaluation surplus of Â£30.1m (2004: Â£24.2m) on the investment portfolio. 2005 2004 2003 2002 2001 Investment portfolio Â£ 000 Â£ 000 Â£ 000 Â£ 000 Â£ 000 Cost or valuation at 1 April 334,932 342,484 439,911 453,607 419,570 Additions at cost 30,314 50,464 47,175 32,838 24,341 Disposals (124,210) (82,178) (131,168) (65,062) (29,624) Revaluation 30,097 24,162 (13,434) 18,528 39,320 ----------- ----------- ----------- ----------- ----------- Cost or valuation at 31 March 271,133 334,932 342,484 439,911 453,607 ----------- ----------- ----------- ----------- ----------- Net asset values The net asset values of Helical Bar plc have been affected by three main areas - the performance of the Company, the payment of Â£97.2m in the Return of Cash and the adoption of UITF 38 - Accounting for ESOP Trusts. In the year to 31 March 2005 the Company generated a retained profit, before payment of the A share dividend under the Return of Cash reorganisation, of Â£23.3m (2004: Â£7.0m). A revaluation surplus of Â£30.1m (2004: Â£24.2m) was recognised. Payments under the Return of Cash proposals totalled Â£97.2m with a further Â£2.45m to be paid in June 2005. In addition the Company purchased 530,000 ordinary 5p shares for Â£4.5m. The adoption of UITF 38 - Accounting for ESOP Trusts has resulted in a reduction in shareholders funds at 31 March 2005 of Â£6.9m (2004 restated: Â£10.1m). In calculating the net assets per share a provision has been made for the deferred tax which would become payable should all the capital allowances claimed to date be clawed back as a taxable adjustment in the Group's tax computations. The Group believes this clawback is unlikely and accordingly, has calculated the diluted net asset value assuming this not to be the case in line with current industry practice. Adjusted diluted net assets per share of 1078p compare to 884p in 2004. After allowing for the unprovided deferred tax on revaluation surpluses and the value ascribed to financial instruments, the adjusted diluted triple net asset value of the Group has increased from 804p to 992p at 31 March 2005. 2005 2004 2003 2002 2001 Net asset values per ordinary pence pence pence pence pence share Diluted net asset value - 1 1078 884 775 775 754 Diluted net asset value - 2 992 804 704 664 651 1 - net asset value diluted for share options but adding back the provision of deferred tax on clawback of capital allowances. 2 - net asset value diluted for share options and adjusted for unprovided deferred tax, FRS 13 value of financial instruments but adding back the provision of deferred tax on clawback of capital allowances. Net asset values for the year to 31 March 2001 and subsequently have been restated to reflect the impact of the adoption of UITF 38 - Accounting for ESOP Trusts, regarding the disclosure of the investment in the Company's shares held by its Employee Share Ownership Plan Trust. Borrowings and financial risk The Group's ongoing reduction in its exposure to the Central London office market has continued the reduction in debt and, at 31 March 2005, net debt had fallen to Â£125.0m from Â£129.8m. The Group's net gearing increased to 66% from 55% at 31 March 2004. 2005 2004 2003 2002 2001 Net debt and gearing Net debt Â£125.0m Â£129.8m Â£140.9m Â£152.4m Â£232.8m Gearing 66% 55% 62% 67% 104% 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 Â£51m of undrawn bank facilities and cash of Â£28.2m (2004: Â£18.3m). In addition it had Â£130m of uncharged property on which the Group could borrow funds. As at 2 June 2005 Helical's average interest rate was 6.01%. FRS13 requires disclosure of financial instruments on a fair value basis and at 31 March 2005 an adjustment to reflect this basis would reduce net assets, after tax relief, by Â£1.2m (2004: Â£2.0m) which, if provided for, would reduce diluted net assets by 6p per share (2004: 7p). Shares purchased for cancellation Using the authority granted at the 2003 AGM, the Company continued its share purchase programme and, in May and June 2004, purchased 530,000 ordinary 5p shares for cancellation at an average price of 843p per share and a total cost of Â£4.5m. The total number of shares purchased since July 2003 is 3,435,951, approximately 11.5% of the share capital in issue prior to the start of the purchases, at a total cost of Â£26.0m and an average cost of 756p per share. This average cost is at a 30% discount to adjusted net asset value of 1078p per share and a 24% discount to 'triple net' asset value of 992p per share. Return of Cash On 18 November 2004 the Company announced that it intended returning Â£4.00 per existing ordinary share to shareholders in conjunction with a reorganisation of the Company's share capital. This Return of Cash was structured to give shareholders a choice between receiving it in the form of capital or income or, alternatively, to receive new ordinary shares in lieu of the entitlement to a cash payment. The Return of Cash was approved by shareholders at an Extraordinary General Meeting held on 20 December 2004. Shareholders holding 14,143,020 ordinary shares elected, or were deemed to have elected, for A shares which entitled the holders of these shares to a Â£4.00 dividend per share and, accordingly, on 23 December 2004 a total dividend of Â£56,572,080 was paid. Shareholders holding 10,586,829 ordinary shares elected to receive B shares. B shareholders were entitled to have those shares repurchased for Â£4.00 each, or to retain the B shares pending receipt of an offer to purchase the shares for Â£4.00 after 5 April 2005. The Company received notification that shareholders representing 9,974,125 B shares had accepted the repurchase offer. Accordingly, on 23 December 2004 and 5 January 2005 payments totalling Â£39,896,500 were made. It is anticipated that the remaining 612,704 B shares will be repurchased in June 2005. Shareholders holding 2,426,676 ordinary shares elected to receive C shares which entitled the holders of these shares to convert them into new ordinary shares at a conversion rate of 1 new share for every 3.2 C shares held. Accordingly, 758,336 new ordinary shares were issued at an effective 20% premium to the prevailing share price at the date the Return of Cash was announced. International Financial Reporting Standards International Financial Reporting Standards (IFRS) will first apply to the financial statements of Helical Bar plc for the year to 31 March 2006 and will be adopted when we report our interim results for the period to 30 September 2005. Our preparations for this are well advanced. The main effects of IFRS for Helical Bar will be: â€¢ Recognition of investment property revaluation surpluses and deficits in the income statement and the associated deferred tax liability in the tax charge and balance sheet; â€¢ Mark to market valuation of financial instruments. â€¢ Dividends will be recognised effectively when paid, rather than when proposed. Accounting Standards - Adoption of UITF 38 The adoption of UITF38 - Accounting for ESOP Trusts in these financial statements has resulted in the value of the shares in the Company held by the ESOP Trust being treated as a deduction from Shareholders' Funds and not as a fixed asset investment. A corresponding adjustment has been made to the balance sheet at 31 March 2004 and a number of comparative figures at that date and for previous years have been restated. Performance measures In order to evaluate its overall performance against other small to mid-size capital companies, both here and abroad, Helical looks at equity value added and total shareholder return ('TSR'). The performance of the property portfolio as measured by the Investment Property Databank ('IPD') is also noted below. Equity value added Year ended 31 March 2005 2004 2003 2002 2001 Capital employed Â£m 347 348 377 390 466 Return on capital % 22 11.5 3.9 10.5 18.2 Weighted average cost of capital % 6.7 7.0 6.1 6.3 5.9 Spread % 15.4 4.5 (2.2) 4.2 12.3 Equity value added/(lost) Â£m 53.4 15.6 (8.5) 19.6 52.9 Total shareholder return Total shareholder return measures the return to shareholders from share price movements and dividend income. The returns were as follows: 1 year 3 years 5 years 10 years 15 years 19 years from from from from from from 31 March 2004 2002 2000 1995 1990 1986 % pa % pa % pa % pa % pa % pa Helical Bar plc 35.6 14.8 20.0 20.7 17.7 27.4 UK equity market 15.6 2.0 (1.7) 8.1 9.3 10.1 Listed real estate sector 25.4 16.4 15.8 12.2 8.3 9.5 index Direct property 18.0 13.7 11.5 11.4 9.1 -* Source: New Bridge Street Consultants/Datastream *1 Information not available Investment Property Databank ('IPD') Helical has compared its ungeared property performance against that of portfolios within the Investment Property Databank for the last 15 years. Helical has been in the top percentile or above over 1, 5, 10 and 15 years. The returns on shareholder capital earned by Helical are generally higher than those measured by IPD due to the use of gearing. IPD (all monthly and quarterly valued funds) ungeared returns Total Returns % Annualised over 1 yr 5 yrs 10 yrs 15 yrs Helical 28.5 17.3 19.1 17.7 IPD benchmark 17.2 11.3 11.4 8.5 Percentile rank 0 1 0 0 '0' means the top ranked fund The returns noted above take no account of the Â£13m surplus of trading and development stock above book value arising from the directors' valuation. HELICAL BAR PLC GROUP PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2005 UNAUDITED Notes Year Ended Year Ended 31 March 2005 31 March Â£000 2004 Â£000 Turnover (including share of joint ventures' turnover) 105,808 55,984 Less: share of joint ventures' turnover (4,647) (1,418) ----------- ----------- Turnover 1 101,161 54,566 Cost of sales (62,807) (29,916) ----------- ----------- Gross profit 1 38,354 24,650 Administrative expenses 2 (15,768) (8,037) ----------- ----------- Operating profit 22,586 16,613 Share of operating profit in joint ventures 3,078 1,636 Profit on sale of investment properties 3 15,973 2,035 Loss on sale of subsidiary - (59) Net interest payable 4 (6,786) (6,572) ----------- ----------- Profit before tax 34,851 13,653 Taxation 5 (8,037) (2,199) Minority interest (17) (232) ----------- ----------- Profit for the year 26,797 11,222 Dividends - interim paid 6 (1,702) (1,739) - final proposed 6 (1,831) (2,524) - A share paid (56,572) - ----------- ----------- Transfer (from)/to reserves (33,308) 6,959 ----------- ----------- Earnings per share - Basic 7 115.2p 40.9p - Diluted 7 110.5p 39.6p Ordinary dividends per share Interim - paid 17 December 2004 6.60p 6.60p ----------- ----------- Final - payable 22 July 2005 11.00p 10.00p ----------- ----------- Total 17.60p 16.60p ----------- ----------- Net assets per share - Basic 16 1,122p 916p - Diluted 16 1,068p 876p - Adjusted diluted, adding back FRS19 provision 16 1,078p 884p - Triple net diluted for FRS 13 adjustment and unprovided deferred tax, adding back 16 992p 804p FRS19 provision Reconciliation of movements in shareholders' funds Restated Year Ended Year Ended 31 March 2005 31 March Â£000 2004 Â£000 Profit for the year 26,797 11,222 Dividends paid and proposed (3,533) (4,263) Return of Cash - A share dividend (56,572) - ----------- ----------- Retained profits (33,308) 6,959 Revaluation of investment property - subsidiaries 30,097 23,912 - joint ventures 192 - Minority interest in revaluation surplus (960) (849) Issue of shares 3,965 635 Purchase of own shares (4,467) (21,515) Employee Share Ownership Plan Trust 3,213 (1,095) Return of Cash - B share repurchase (39,896) - Expenses of Return of Cash (709) - ----------- ----------- Net change in shareholders' funds (41,873) 8,047 Opening shareholders' funds (as restated) 234,917 226,870 ----------- ----------- Closing shareholders' funds 193,044 234,917 ----------- ----------- Statement of Total Recognised Gains and Losses Restated Year Ended Year Ended 31 March 2005 31 March Â£000 2004 Â£000 Profit for the year after taxation 26,814 11,454 Minority interest (17) (232) Revaluation of investment property - subsidiaries 30,097 23,912 - joint ventures 192 - Minority interest in revaluation surplus (960) (849) ----------- ----------- Total recognised gains and losses in the year 56,126 34,285 Prior year adjustment - ESOP Trust shares - (10,106) ----------- ----------- Total recognised gains and losses since last financial statements 56,126 24,179 ----------- ----------- HELICAL BAR PLC BALANCE SHEETS UNAUDITED Notes 31 March Restated 2005 31 March Â£000 Â£000 Â£000 2004 Â£000 Shareholders' funds 193,044 234,917 ======= ======= Represented by: Fixed assets Intangible assets - goodwill 8 673 873 Tangible assets 9 540 503 Investment property 9 271,133 334,932 Investment in joint ventures Share of gross assets 6,469 17,684 Share of gross liabilities (4,274) (16,965) ----------- ----------- 2,195 719 ----------- ----------- 274,541 337,027 Current assets Stock 10 95,568 70,254 Debtors 36,560 25,573 Investments 123 263 Cash 11 28,203 18,284 Creditors: amounts falling due within one year (104,441) (78,662) ----------- ----------- Total assets less current liabilities 330,554 372,739 Creditors: amounts falling due after more than one year 12 (132,043) (131,779) Provision for liabilities and charges - deferred tax 13 (1,799) (2,345) ----------- ----------- Net assets 196,712 238,615 Equity minority interests (3,668) (3,698) ----------- ----------- Shareholders' funds 193,044 234,917 ======= ======= HELICAL BAR PLC CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2005 UNAUDITED Notes Year Ended Year Ended 31 March 2005 31 March Â£000 2004 Â£000 Net cash inflow/(outflow) from operating activities 17 36,007 (11,082) Dividends from joint ventures 846 1,415 Returns on investment and servicing of finance (9,715) (6,828) Taxation (3,431) (6,469) Capital expenditure and financial investment 83,602 19,002 Disposals (124) 40,415 Dividends paid (60,798) (4,309) ----------- ----------- Cash flow before management of liquid resources and financing 46,387 32,144 Management of liquid resources 9,347 132 Financing - issue of shares 3,965 635 - purchase of shares (4,467) (21,515) - increase/(decrease) in debt 4,859 (9,060) - refinancing costs (220) (57) - return of cash - B shares (39,896) - - share issue expenses (709) - ----------- ----------- Increase in cash in the year 19,266 2,279 ----------- ----------- Reconciliation of net cash flow to movement in net debt Increase in cash in the year 19,266 2,279 Cash inflow from management of liquid resources (9,347) (132) Cash (outflow)/inflow from change in debt (4,639) 9,117 Debt arrangement expenses (457) (170) ----------- ----------- Movement in net debt in the year 4,823 11,094 Net debt at beginning of the year (129,799) (140,893) ----------- ----------- Net debt at end of the year (124,976) (129,799) ----------- ----------- Notes to the Preliminary Announcement 1. Turnover and gross profit on ordinary activities before taxation The analysis of turnover and gross profit by function is as follows: Turnover Year Ended Year Ended 31 March 2005 31 March Â£000 2004 Â£000 Trading property sales 25,432 5,264 Rental income 22,437 25,283 Developments 52,917 23,418 Other income 375 601 ----------- ----------- 101,161 54,566 ----------- ----------- Gross profit and adjusted profit Year Ended Year Ended 31 March 2005 31 March Â£000 2004 Â£000 Trading property sales 5,771 1,031 Rental income 19,684 22,980 Developments 12,664 38 Other income and provisions 235 601 ----------- ----------- Gross profit 38,354 24,650 Central overheads (15,768) (8,037) Interest payable less receivable (6,786) (6,572) Share of joint venture company profits 3,078 1,636 ----------- ----------- Adjusted Profit 18,878 11,677 ----------- ----------- Adjusted profit is profit before taxation, profit on sale of investment properties and loss on sale of subsidiary 2. Administrative expenses Year Ended Year Ended 31 March 2005 31 March Â£000 2004 Â£000 Total administrative expenses 15,768 8,037 ----------- ----------- Operating profit on ordinary activities is stated after: Staff costs 11,471 5,757 Depreciation 190 213 Auditors remuneration 110 110 Amortisation 81 65 Administrative expenses includes remuneration in respect of the directors of Â£7,426,000 (2004: Â£3,275,000) plus cash bonuses payable to directors arising out of their exercise of share options of Â£854,000 (2004: Â£140,000). 3. Profit on sale of investment properties Year Ended Year Ended 31 March 2005 31 March Â£000 2004 Â£000 Net proceeds from sale of investment properties 140,183 84,213 Book value (124,210) (82,178) ----------- ----------- Profit on sale of investment properties 15,973 2,035 ----------- ----------- In calculating the profit on sale of investment properties in the year the uplift in value arising from the revaluation of the investment portfolio at 30 September 2004, for the purposes of the Interim Statement, has not been taken into account. 4. Net interest payable Year Ended Year Ended 31 March 2005 31 March Â£000 2004 Â£000 Interest payable on bank loans and overdrafts 8,330 7,548 Finance arrangement costs 457 170 Other interest and similar charges 2,243 1,741 Interest capitalised (2,296) (1,817) Interest receivable and similar income (1,948) (1,070) ----------- ----------- 6,786 6,572 ----------- ----------- Interest payable on bank loans and overdrafts includes the Group's share of interest payable by joint ventures of Â£258,000 (2004: Â£746,000). 5. Taxation on profit on ordinary activities Year Ended Year Ended 31 March 2005 31 March Â£000 2004 Â£000 The tax charge is based on the profit for the year and represents: - United Kingdom corporation tax at 30% (2004: 30%) 6,670 2,456 - Adjustments in respect of prior periods 1,913 (67) ----------- ----------- Current tax charge 8,583 2,389 Deferred tax - reversal of timing differences (546) (190) ----------- ----------- Tax on profit on ordinary activities 8,037 2,199 ----------- ----------- The corporation tax charge includes the Group's share of the corporation tax provision of joint ventures of Â£570,000 (2004: Â£ 372,000). The deferred tax charge includes the Group's share of the deferred tax provision of joint ventures of Â£nil (2004 : Â£171,000). 6. Dividends Year Ended Year Ended 31 March 2004 31 March Â£000 2004 Â£000 Attributable to equity share capital Ordinary - interim paid 6.60p (2004: 6.60p) per share 1,702 1,739 - final proposed 11.00p (2004: 10.00p) per share 1,831 2,524 ----------- ----------- Total 17.60p (2004: 16.60p) per share 3,533 4,263 ----------- ----------- The interim dividend of 6.60p was paid on 17 December 2004 to shareholders on the register on 24 November 2004. The final dividend, if approved at the AGM on 20 July 2005, will be paid on 22 July 2005 to shareholders on the register on 10 June 2005. In the year to 31 March 2005 a 400p per share dividend was paid to Shareholders holding 14,143,020 A shares as part of the Return of Cash on 23 December 2004. 7. Earnings per ordinary share The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. 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. Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below. Year ended 31 March 2005 Earnings Weighted average no. of shares Per share amount pence Â£ Basic earnings per ordinary share 26,797,325 23,261,966 115.2 Dilutive effect of share options 994,805 ----------- ----------- ----------- Diluted earnings per ordinary share 26,797,325 24,256,771 110.5 ----------- ----------- ----------- Year ended 31 March 2004 Earnings Weighted average Per share amount Â£ no. of shares pence Basic earnings per ordinary share 11,222,716 27,413,946 40.9 Dilutive effect of share options 897,915 ----------- ----------- ----------- Diluted earnings per share 11,222,716 28,311,861 39.6 ----------- ----------- ----------- 8. Intangible fixed assets Goodwill Â£000 Cost at 1 April 2004 1,634 Additions 124 Disposals (243) ----------- Cost at 31 March 2005 1,515 ----------- Amortisation at 1 April 2004 761 Provision for the year 81 Amortisation at 31 March 2005 842 ----------- Net book amount at 31 March 2005 673 ----------- Net book amount at 31 March 2004 873 ----------- 9. Tangible fixed assets Investment Investment Properties Properties Short leasehold Vehicles & property & office Freehold Leasehold improvements equipment Total Â£000 Â£000 Â£000 Â£000 Â£000 Cost or valuation at 270,182 64,750 646 820 336,398 1 April 2004 Additions at cost 29,324 990 - 232 30,546 Disposals (117,853) (6,357) - (199) (124,409) Revaluation 22,030 8,067 - - 30,097 ----------- ----------- ----------- ----------- ----------- Cost or valuation at 31 March 2005 203,683 67,450 646 853 272,632 ----------- ----------- ----------- ----------- ----------- Depreciation at1 April 2004 - - 412 551 963 Provision for the year - - 46 144 190 Eliminated on disposals - - - (194) (194) ----------- ----------- ----------- ----------- ----------- Depreciation at 31 March 2005 - - 458 501 959 ----------- ----------- ----------- ----------- ----------- Net book amount at 31 March 2005 203,683 67,450 188 352 271,673 ----------- ----------- ----------- ----------- ----------- Net book amount at 31 March 2004 270,182 64,750 234 269 335,435 ----------- ----------- ----------- ----------- ----------- Interest capitalised in respect of the development of investment properties is included in tangible fixed assets to the extent of Â£1,013,000 (2004: Â£1,013,000). 10. Stock 31 March 31 March 2005 2004 Â£000 Â£000 Development sites 34,711 46,236 Properties held as trading stock 60,857 24,018 ----------- ----------- 95,568 70,254 ----------- ----------- Interest capitalised in respect of the development of sites is included in stock to the extent of Â£2,185,000 (2004: Â£1,666,000). Interest capitalised during the year in respect of development sites amounted to Â£2,296,000 (2004: Â£1,817,000). 11. Cash 31 March 31 March 2005 2004 Â£000 Â£000 Rent deposits and cash held at managing agents 2,612 2,575 Cash secured against debt and cash held at 2,368 1,121 solicitors Cash held to fund future development costs 364 1,517 Free cash 22,859 13,071 ----------- ----------- 28,203 18,284 ----------- ----------- 12. Financing and financial instruments 31 March 31 March 2005 2004 Â£000 Â£000 Bank overdraft and loans - maturity Due after more than one year 132,043 131,779 Due within one year 21,136 16,304 ----------- ----------- 153,179 148,083 ----------- ----------- The Group has various undrawn committed borrowing facilities. The facilities available at 31 March 2005 in respect of which all conditions precedent had been met were as follows: 12. Financing and financial instruments (continued) 31 March 31 March 2005 2004 Â£000 Â£000 Expiring in one year or less 30,578 30,000 Expiring in more than one year but not more than two years - - Expiring in more than two years 20,625 6,661 ----------- ----------- 51,203 36,661 ----------- ----------- Interest Rates 31 March % Expiry 2005 Â£000 Fixed rate borrowings - fixed 9.050 Feb 2009 7,913 - swap rate plus bank margin 5.901 Dec 2007 26,750 - swap rate plus bank margin 5.939 Sep 2009 17,500 - swap rate plus bank margin 6.329 Feb 2008 5,800 - swap rate plus bank margin 4.965 Mar 2007 5,925 - swap rate plus bank margin 5.846 Jun 2006 3,500 - swap rate plus bank margin 5.819 Sep 2007 3,460 - swap rate plus bank margin 6.004 Oct 2008 3,100 ----------- ----------- ----------- Weighted average 6.311 May 2008 73,948 Floating rate borrowings 79,639 ----------- Total borrowings 153,587 Deferred arrangement costs (408) ----------- 153,179 ----------- Floating rate borrowings bear interest at rates based on LIBOR. Hedging In addition to the fixed rates, borrowings are also hedged by the following financial instruments. Instrument Value Rate Start Expiry Â£000 % Current - cap 80,000 7.500 Jan 2006 - collar 31,000 4.730-6.500 Jan 2006 - floor 49,000 4.730 Jan 2006 Future - cap 80,000 7.000 Jan 2006 Sept 2009 - floor 40,000 4.800 Jan 2006 Sept 2009 Gearing 31 March 31 March 2005 2004 Â£000 Â£000 Total borrowings 153,179 148,083 Cash (28,203) (18,284) ----------- ----------- Net borrowings 124,976 129,799 ----------- ----------- Net assets attributable to equity shareholders 190,327 234,918 Gearing 66% 55% Net borrowings exclude the Group's share of borrowings in joint ventures of Â£2,483,000 (2004: Â£8,984,000). Fair value of financial assets and financial liabilities 31 March 31 March 31 March 31 March 2005 2005 2004 2004 Book Fair Book Fair value value value value Â£000 Â£000 Â£000 Â£000 Borrowings 153,587 154,283 148,728 149,639 Interest rate swaps - 192 - 123 Other financial instruments - 768 - 1,848 ----------- ----------- ----------- ----------- 153,587 155,243 148,728 151,610 ----------- ----------- ----------- ----------- The fair value of financial assets and liabilities represents the mark to market valuations at 31 March 2005 and 31 March 2004. The adjustment to net assets from a recognition of these values would be to reduce diluted net asset value per share by 6p (2004: 7p). 13. Provision for liabilities and charges - deferred taxation Deferred taxation provided for in the financial statements is set out below: 31 March 31 March 2005 2004 Â£000 Â£000 Accelerated capital allowances 2,105 2,744 Other timing differences - - ----------- ----------- 2,105 2,744 Less: - discount (306) (399) ----------- ----------- Discounted provision for deferred tax 1,799 2,345 ----------- ----------- The Group has applied the provisions of FRS19 Deferred Tax, which requires that deferred tax be recognised as a liability or asset if the transactions or events that give the Group an obligation to pay more or less tax in the future have occurred by the balance sheet date. In accordance with FRS19, the Group makes full provision for timing differences which are primarily in respect of capital allowances on plant and machinery, industrial buildings allowances and tax losses. Amounts unprovided are: Unrealised capital gains 14,684 20,509 ----------- ----------- No provision has been made for taxation which would accrue if the investment properties were sold at their revalued amounts. The adjustment to net assets resulting from a recognition of these amounts would be to reduce diluted net asset value per share by 75p (2004: 70p). 14. Share capital 31 March 31 March 2005 2004 Â£000 Â£000 Allotted, called up and fully paid Attributable to equity interests - 18,101,164 (2004: 27,147,903) ordinary shares of 5 p 905 1,357 each Attributable to non-equity interests - 617,704 non-cumulative preference shares of 1 7/8 pence each ('B' shares) 2,451 - - 212,145,300 deferred shares of 1/8p each 265 - ----------- ----------- 3,621 1,357 ----------- ----------- Share options At 31 March 2005 options over 1,504,323 (2004: 2,412,945) new ordinary shares in the Company and 1,296,939 (2004: 1,361,939) purchased shares held by the ESOP had been granted to directors and employees under the Company's share option schemes. During the year no new options were granted and options over 908,622 new shares and 65,000 purchased shares were exercised. 15. Investment in own shares 31 March 31 March 2005 2004 Â£000 Â£000 Employees' Share Ownership Plan Trust ('ESOP') 6,893 10,106 ----------- ----------- At 31 March 2005 the ESOP held 1,139,116 (2004: 1,361,939) ordinary shares in Helical Bar plc. On 1 April 2005 the Trust purchased a further 40,500 ordinary shares in the Company and at 2 June 2005 held 1,179,616 ordinary shares in Helical Bar plc. 16. Net assets per share Number of Shares p.p.s. Change since 31.03.2004 000's % Â£000 Net asset value ('NAV') 190,327 16,962 1,122 22.5 Add: potential exercise of options 6,925 1,504 ----------- ----------- ----------- ----------- Diluted NAV 197,252 18,466 1,068 22.0 Adjustment for: - capital allowances provided for but unlikely to be clawed back 1,799 ----------- ----------- ----------- ----------- Adjusted diluted NAV 199,051 18,466 1,078 21.9 Adjustment for: - potential capital gains unprovided for (14,684) - mark to market value of interest rate hedging agreements (1,160) ----------- ----------- ----------- ----------- Adjusted diluted triple NAV 183,208 18,466 992 23.4 ----------- ----------- ----------- ----------- If account is taken of the unrealised surplus on the development and trading stock of Â£13.0m an increase in the adjusted diluted net asset value of 70p to 1,148p, and an increase in the adjusted diluted triple net asset value of 49p (after tax) to 1,041p, would arise. 17. Reconciliation of operating profit to net cash flow from operating activities Year Ended Year Ended 31 March 2005 31 March 2004 Â£000 Â£000 Operating profit 22,586 16,613 Depreciation of fixed assets 190 213 Provision against investments - (133) Profit on sale of fixed assets (42) (9) Amortisation of goodwill 81 65 Increase in debtors (10,987) (580) Increase in creditors 45,545 74 Increase in stock (21,366) (27,325) ----------- ----------- Net cash flow from operating activities 36,007 (11,082) ----------- ----------- 18. Basis of preparation of the preliminary announcement The preliminary announcement includes extracts from the draft statutory accounts for the year to 31 March 2005. The figures relating to the year to 31 March 2005 are unaudited. The comparative figures relating to the year to 31 March 2004 are taken from the audited statutory accounts for that year. The preliminary announcement has been prepared in accordance with accounting policies applied in respect of the year ended 31 March 2005. This information is provided by RNS The company news service from the London Stock Exchange

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