Corporate governance report

Compliance

Application of the principles

Chairman and Chief Executive

Board balance and independence

Recognising that the independence of non-executive directors is an issue for some shareholders, Giles Weaver offers himself for re-election at each Annual General Meeting. He has received an overwhelming majority in favour of re-election at all Annual General Meetings since his appointment as Chairman of Helical.

The senior independent director is Antony Beevor. The remaining non-executive directors are Wilf Weeks and Andrew Gulliford.

The breadth of experience provided by the non-executive directors allied to the management information provided by the Group enable the non-executive Board members to assess and advise the full Board on the major risks faced by the Group. In view of this we continue to believe that all the non-executive directors are independent and for the purposes of this report are referred to below as independent directors.

The Board of Directors

The members of the Board, and the roles of each director are given in the biographical details of the directors here.

All directors take decisions objectively in the interests of the Group.

As part of their role as members of the Board, non-executive directors constructively challenge and help develop proposals on strategy. 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 ad hoc meetings arranged to discuss particular transactions and events and the 2008 AGM, the full Board met on eight occasions during the year under review. The attendance record of the directors is shown in the table below.

Michael Brown resigned from the Board on 4 June 2009. Wilf Weeks was absent from a number of meetings due to ill health.

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:

Schedule of matters reserved for the Board:

• Strategy and management – responsibility for the overall management of the Group; approval of the Group’s long-term 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.


• Structure and capital – changes to the Group’s capital structure; major changes to the Group’s corporate structure; changes to the Group’s management and control structure; changes to the Group’s listing or plc status.


• Financial reporting and controls – approval of interim and preliminary announcements; approval of annual report and accounts, including the corporate governance statement and the directors’ remuneration report; approval of dividend policy; approval of significant changes in accounting policies or practices; approval of treasury policies.


• Internal controls – ensuring maintenance of a sound system of internal control and risk management.


• Communication – approval of resolutions and documentation to be put to shareholders in general meeting; approval of press releases concerning matters decided by the Board.


• Board membership and other appointments to senior management.


• Both the appointment and removal of the Company Secretary.


• Corporate governance matters including directors’ performance evaluations.


• Approval of policies including code of conduct; share dealing code; health and safety policy; environmental and corporate social responsibility policy and equal opportunity policy.

Nominations and Appointments Committee

The membership of the Committee is as follows:

Giles Weaver (Chairman)
Antony Beevor
Wilf Weeks
Andrew Gulliford

Directors – appointments to the Board

The Nominations and Appointments Committee controls the process for Board appointments and makes recommendations to the Board. All the members of the Committee are independent non-executive Directors.

The work of the Nominations and Appointments Committee in the year

Directors – information and professional development

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.

Directors – performance evaluation

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 performance evaluation of the Chairman, taking into account views of executive directors. Each director completed an evaluation of the Chairman’s performance and provided this evaluation to the senior independent non-executive director.

The evaluation process identified a concern 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 to ensure that an appropriate amount of time is devoted to each area. Otherwise, there were no significant matters arising out of the annual evaluation process which required action by the Board.

Directors re–election

– Giles Weaver has served more than nine years on the Board and in accordance with the Code offers himself for re-election;
– Antony Beevor is due to retire by rotation and offers himself for re-election;
– Andrew Gulliford is due to retire by rotation and offers himself for re-election;
– Michael Slade is due to retire by rotation and offers himself for re-election; and,
– Nigel McNair Scott is due to retire by rotation and offers himself for re-election.

Biographical details of the directors are given here.

Relations with shareholders

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 this website. The Group receives regular reports from sector analysts and its investor relations advisors on how it is viewed by its shareholders.

Accountability and audit

Financial reporting

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.

Going concern

The key areas of sensitivity are:

• timing and value of property sales
• availability of loan finance and related cash flows
• future property valuation and its impact on covenants and potential loan repayments
• committed future expenditure
• future rental income and potential bad debts
• repayment timing and value of trade receivables

Audit Committee and auditors

The membership of the Committee is as follows:

Antony Beevor (Chairman)
Wilf Weeks
Andrew Gulliford

The Committee endorses the principles set out in the Smith Guidance for Audit Committees.

The Board has formal and transparent arrangements for considering how it applies the financial reporting and internal control principles and for maintaining an appropriate relationship with the Group’s 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 work of the Audit Committee in the year

In addition to matters discussed in relation to the annual and interim audits, the Committee met with the auditors once to discuss the Group’s system of internal control following receipt of the auditors’ review of the design effectiveness of internal controls in February 2009. The key findings and recommendations of this report, which cover governance, operational controls and financial reporting were considered and are being implemented.

Internal control

The Board is responsible for maintaining a sound system of internal control to safeguard shareholders’ investment and the Group’s assets. Such a system is designed to manage, but cannot eliminate, the risk of failure to achieve business objectives. There are inherent limitations in any control system and, accordingly, even the most effective system can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The key features of the Group’s system of internal control are as follows:

• clearly defined organisational responsibilities and limits of authority. The day-to-day involvement of the executive directors in the running of the business ensures that these responsibilities and limits are adhered to;
• financial controls and review procedures;
• financial information systems including cash flow, profit and capital expenditure forecasts. The Board receives regular and comprehensive reports on the day-to-day running of the business;
• an Audit Committee which meets with the auditors and deals with any significant internal control matter. In the year under review the Committee met with the Auditors on four occasions.

Internal audit

The Board reviewed its position during the year to 31 March 2009 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.

Audit independence

A policy of reviewing audit independence has been adopted whereby non-audit services undertaken by the auditors are approved prior to work being carried out. During the year under review non-audit services comprised a review of the financial accounts and a review of internal controls. 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.