Interim Results - 6 Months to 30 September 1999
Helical Bar PLC
25 November 1999
H E L I C A L B A R P L C
I n t e r i m R e s u l t s
For the half year to 30 September 1999
HELICAL HAMMERS ON
Interim profits before tax 11 per cent higher at £9.1 million
(1998: £8.2 million)
Diluted earnings per share increased by 26 per cent to 24.7p
(1998: 19.6p)
Interim dividend 4.4p - up 10 per cent
Net rental income up 27 per cent
New developments totalling over 1 million sq. ft.
John Southwell, Chairman states: 'Having paid a Special Dividend of £29
million, in April and October, there is a continuing flow of cash from the
surplus of rent over interest and from completed profitable developments.
This will enable the company to respond quickly to opportunities to expand the
group's investment and development activities.'
Further information, please contact:
Helical Bar plc
Michael Slade (Managing Director) 0171 629 0113
Nigel McNair Scott (Finance Director)
Financial Dynamics
Emma Denne 0171 831 3113
C h a i r m a n ' s S t a t e m e n t
Results
Helical's turnover for the period was £68.3m (1998: £60.2m). Developments
contributed £53.5m (1998: £46.9m). Trading and other income was £1.9m (1998:
£3.0m) and rental income was £12.9m (1998: £10.3m).
Development profits were £8.7m (1998: £8.5m) and net rental income was 27 per
cent higher at £11.4m (1998: £9.0m). Profits on sales of investment property
were £1.2m (1998: nil). After accounting for interest and administration
costs, profits before taxation rose by 11 per cent to £9.1m (1998: £8.2m).
Minority interests were £0.3m (1998: £0.6m). Fully diluted earnings per share
rose to 24.7p (1998: 19.6p). Net assets per share increased by 19p to 492p.
This figure is based on investment property values at 31 March 1999. It
excludes valuation surpluses on trading and development stock and potential
profits on pre-sold developments.
The directors are pleased to announce an increase in the interim dividend of
10 per cent to 4.4p (1998: 4.0p).
Development Programme
During the period, we achieved major lettings at a number of our office
schemes. Our two buildings at Windsor, forward funded with clients of Argyll
Asset Management, are now completed. These were let at record rent levels;
44,000 sq. ft. to FM Insurance Co. Ltd. at £30 p.s.f. and 24,000 sq. ft. to
the Galileo Company at £29 p.s.f. Our 35,000 sq. ft. scheme adjacent to
Guildford railway station forward funded with the British Gas Staff Pension
Fund has been completed and let to MWB Business Exchange at £27 p.s.f.
Of the properties held on our own book, the completed 45,000 sq. ft. scheme at
6 St Andrews Street, London EC4, 35,000 sq. ft. pre-let to solicitors Speechly
Bircham has been handed over to the purchaser Shell Pension Fund this month
and our site at Welsh Back, Bristol has been sold to Fuller Smith Turner plc
for bar/restaurant and hotel use. We have also sold our recently completed
35,200 sq. ft. development at 10 Mansion House Place, London EC4 to British
Arab Commercial Bank.
Building work continues on our sites in the City, the 260,000 sq. ft.
development at 25-32 Chiswell Street, pre-let to Slaughter and May, due for
completion in Autumn 2000 and the 152,000 sq. ft. development at 100 Wood
Street which will be ready for letting in Spring 2000. Both these schemes
have been forward funded and pre-sold to Despa.
Since the end of September we have forward funded our 60,000 sq. ft.
development at One Plough Place, London EC4 with Henderson Investors on behalf
of NPI. We let the last 5,000 sq. ft. of our 30,000 sq. ft. development
Blenheim House, 1 West Street, Leeds and have sold the building at slightly
over book value. We have also profitably disposed of our interest in a
retirement homes project at Berkhamsted to Ward Holdings plc.
In spite of little growth in tenant demand and rising building costs, there
has been increasing demand for speculative sites in the City and the South
East, making it difficult to find value. Nevertheless, looking forward, we
still have a portfolio of interesting schemes over the next two years
including the 76,000 sq. ft. office development at 200 Hammersmith Road,
London W6, the 180,000 sq. ft. office scheme at the Meadows, Camberley forward
funded with Scottish Widows, the 100,000 sq. ft. development in Bunhill Row
adjoining the Chiswell Street development and the 70,000 sq. ft. office
refurbishment scheme at Rex House, 4-12 Regent Street, London SW1.
Helical Retail, our 75% retail development subsidiary, completed the fully let
80,000 sq. ft. development at the George Hotel, Glasgow for Hermes, the 44,000
sq. ft. development for Merseyside Pension Fund at Ilford and the 250,000 sq.
ft. town centre development at Captain Cook Square, Middlesbrough for Norwich
Union where they also plan a further extension. In Bolton they are finishing
a new unit as an extension to the existing retail park and have exchanged a
conditional agreement for lease with B&Q for a 121,000 sq. ft. retail
warehouse on an adjoining site. During the last nine months Jim Kelly and his
team have concentrated on new schemes in and around town centres and are
putting together projects on over a million sq. ft. of new space in Ipswich,
Newcastle, Cheltenham, Dorchester, Truro, Wigan, Chichester, Canterbury and
Solihull.
This programme and the office development schemes under way should enable
Helical to reinforce its position as a specialist developer, offering
institutional investors attractive investments providing high quality space
for office and retail occupiers.
Investment Portfolio
In Spring of this year we decided to step up our purchasing activity and
bought £80m of property including a flagship office and retail investment at
60 Sloane Avenue, Brompton Cross, London, media style offices let to World
Television News at the Interchange, Camden, London and the Scottish Enterprise
industrial portfolio. Since then investment sentiment has rebounded making it
harder to source reasonably priced stock, but this offered us the chance to
continue repositioning our portfolio with sales of over-rented offices at
Wellington House, Strand, London and of Cannon Park, Coventry, this the last
of our shopping centres purchased in the early 1990s. We also sold, at a
profit, The Pavilion, Thames Ditton, which was acquired last year.
On asset management, voids continued to fall with the last office space at
Cheapside House being let. Significant rent increases were obtained in many
of the buildings acquired over the last two years in and around central
London, particularly in Southwark and at Capital House, London, NW1.
Since the half year end we have exchanged contracts to buy a £25.0m mixed
portfolio of office, retail and industrial units with a number of further
purchases and sales in solicitors' hands.
Prospects
We continue to benefit from last year's reductions in interest rates and the
continuing cash flow from the development programme, including since the half
year, receipts in respect of Middlesbrough and Windsor and from the sales of
Blenheim House, Leeds and Welshback, Bristol. Further inflows of profits from
6 St Andrews Street, London EC4, Guildford, Mansion House Place and Chiswell
Street are expected over the next 15 months.
Continuing our policy of being comparatively highly geared, we are increasing
our major loan facility to £175m and extending it until the end of 2009. The
majority of our borrowings are capped at rates between 5.22 per cent and 7.50
per cent. The fair values of financial assets and liabilities under Financial
Reporting Standard No. 13 compared to their book values show a net asset
position of approximately £3.5m (31 March 1999 liability of £4.8m).
Our aim is to use this strong base over the next three years to widen the gap
between rents and interest payable while taking advantage of new
opportunities.
Year 2000 Compliance
Helical, as previously reported in the Company's Annual Report and Accounts,
has conducted a review of its computer systems and implemented an action plan
to ensure that its exposure to risks of disruption to its business from Year
2000 issues is minimised. That action plan has now been completed although
the monitoring of compliance of our systems will continue. While no
organisation can guarantee that no Year 2000 problems will arise, the Board
believes it has reached an appropriate state of readiness and has allocated
resources to deal promptly with any issues that may arise.
Summary
Having paid a Special Dividend of £29 million, in April and October, there is
a continuing flow of cash from the surplus of rent over interest and from
completed profitable developments. This will enable the company to respond
quickly to opportunities to expand the group's investment and development
activities.
John Southwell
CHAIRMAN
Independent Review Report to Helical Bar plc
Introduction
We have been instructed by the company to review the financial information set
out on pages 5 to 8 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing
Rules of the London Stock Exchange require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes,
and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4 'Review of Interim Financial Information' issued by the Auditing
Practices Board. A review consists principally of making enquiries of
management and applying analytical procedures to the financial information and
underlying financial data and, based thereon, assessing whether the accounting
policies and presentation have been consistently applied unless otherwise
disclosed. A review excludes audit procedures such as tests of controls and
verification of assets, liabilities and transactions. It is substantially
less in scope than an audit performed in accordance with Auditing Standards
and therefore provides a lower level of assurance than an audit. Accordingly,
we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 1999.
Grant Thornton
Chartered Accountants
25 November 1999
Group Profit and Loss Account
For the half year to 30 September 1999
Unaudited Unaudited Audited
Half Year To Half Year To Year To
30 September 30 September 31 March
1999 1998 1999
Notes £000 £000 £000
Turnover 1 68,291 60,173 121,244
Cost of sales (48,907) (43,152) (82,240)
Gross profit 1 19,384 17,021 39,004
Administrative expenses (3,295) (2,633) (6,860)
Operating profit 16,089 14,388 32,144
Profit/(loss) on sale
of investment
properties 1,166 (2) 415
Profit on ordinary
activities before
interest 17,255 14,386 32,559
Interest receivable 569 692 1,510
Interest payable and
similar charges (8,707) (6,836) (14,025)
Profit on ordinary
activities before
taxation 9,117 8,242 20,044
Taxation (1,520) (1,915) (3,899)
Profit on ordinary
activities after
taxation 7,597 6,327 16,145
Minority interest (306) (609) (1,175)
Profit for the period 7,291 5,718 14,970
Ordinary dividends -
4.40p (4.00p) (1,272) (694) (2,434)
Special dividend - - (28,904)
Preference dividends
- paid - (1,153) (2,293)
- accrued 3 - (216) -
Retained profit/(loss)
for the period 6,019 3,655 (18,661)
Earnings per 5p share 2
- basic 25.2p 25.2p 66.7p
- fully diluted 24.7p 19.6p 50.7p
Summary Group Balance Sheet
At 30 September 1999
Unaudited Audited
At At
30 September 31 March
1999 1999
£000 £000
Fixed assets 402,407 338,307
Fixed assets for resale 525 525
Stock 34,037 35,054
Investments 885 -
Debtors 40,232 40,148
Cash 31,569 44,310
Creditors falling due within one
year (125,996) (128,662)
Creditors falling due after one
year (235,248) (187,576)
Net Assets 148,411 142,106
Capital & Reserves
Called up share capital 1,481 1,495
Share premium account 34,502 34,508
Revaluation reserve 81,714 78,948
Capital redemption and other
reserves 7,392 7,372
Profit and loss account 22,433 19,201
Shareholders' funds 147,522 141,524
Minority interests 889 582
148,411 142,106
Shareholders' Funds
Attributable to equity interests 147,522 141,510
Attributable to non-equity
interests - 14
147,522 141,524
Net assets per share
basic 498p 478p
fully diluted 492p 473p
Summary Cash Flow Statement
For the half year to 30 September 1999
Unaudited Unaudited Audited
Half Year To Half Year To Year to
30 September 30 September 31 March
1999 1998 1999
Notes £000 £000 £000
Net cash inflow/(outflow)
from operating
activities 4 22,597 (1,843) 27,969
Returns on investment and
servicing of finance (8,763) (8,712) (18,161)
Taxation (429) (743) (3,650)
Capital expenditure and
financial investment (11,984) (14,713) (60,398)
Acquisitions (12,390) - -
Equity dividends paid (16,186) (953) (1,648)
Management of liquid
resources 17,654 - 10,110
Financing
- (redemption)/issue of
shares (20) 1,460 1,352
- increase/(decrease) in
debt 14,503 (21,027) 33,324
Increase/(decrease) in
cash 4,982 (46,531) (11,102)
Reconciliation of net cash
flow to movement in net
debt
Increase/(decrease) in
cash in the period 4,982 (46,531) (11,102)
Cash inflow from
management of liquid
resources (17,654) - (10,110)
Cash flow from decrease in
net debt (14,503) 21,027 (33,324)
Liability acquired with
subsidiary (40,382) - -
Debt arrangement expenses (194) (149) (256)
Movement in net debt in
the period (67,751) (25,653) (54,792)
Net debt at beginning of
the period (174,489) (119,697) (119,697)
Net debt at end of the
period (242,240) (145,350) (174,489)
Gearing 163% 99% 122%
Statement of Total Recognised Gains and Losses
For the half year to 30 September 1999
Unaudited Unaudited Audited
Half Year To Half Year To Year To
30 September 30 September 31 March
1999 1998 1999
£000 £000 £000
Profit for the period
after taxation 7,597 6,327 16,145
Minority interest (306) (609) (1,175)
Surplus on revaluation of
investment properties - - 19,850
Total recognised gains and
losses relating to the
period 7,291 5,718 34,820
Notes to the Interim Statement
1. Turnover and gross profit on ordinary activities before taxation
Unaudited Unaudited Audited
Half Year To Half Year To Year To
30 September 30 September 31 March
1999 1998 1999
Turnover £000 £000 £000
Trading property sales 1,805 95 95
Rental income 12,917 10,336 21,482
Developments 53,541 46,873 96,622
Other income 28 2,869 3,045
68,291 60,173 121,244
Gross Profit
Trading property sales (92) 57 72
Net rental income 11,421 9,006 18,475
Developments 8,698 8,533 21,601
Other net income (643) (575) (1,144)
Gross profit 19,384 17,021 39,004
Central overheads (3,295) (2,633) (6,860)
Interest payable less
receivable (8,138) (6,144) (12,515)
Profit before taxation and
profit on sale of
investment properties 7,951 8,244 19,629
2. Earnings per share
Basic earnings per share have been calculated on the basis of profits after
tax on 28,903,697 (1998 17,311,369) ordinary shares. Fully diluted earnings
per share have been restated to comply with Financial Reporting Standard No.
14 and are calculated on 29,490,150 (1998 29,183,756) ordinary shares which
include the conversion of preference shares and the exercise of share options.
3. Preference dividends
The preference dividend accrued in accordance with Financial Reporting
Standard No. 4 on Capital Instruments in the half year to 30 September 1998 is
not payable because of the conversion of preference shares into ordinary
shares on 16 February 1999.
4. Reconciliation of operating profit to net cash flow from operating
activities
Unaudited Unaudited Audited
Half Year To Half Year To Year To
30 September 30 September 31 March
1999 1998 1999
£000 £000 £000
Operating profit 16,089 14,388 32,144
Depreciation of fixed assets 112 53 221
Write down of fixed assets
held for resale - 250 500
Profit on sale of fixed
assets (4) - 10
Amortisation of goodwill 35 - 41
Decrease in debtors 1,165 7,991 599
Increase/(decrease) in
creditors 3,691 (24,806) 2,708
Decrease/(increase) in stocks 1,509 281 (8,254)
Net cash inflow/(outflow)
from operating activities 22,597 (1,843) 27,969
5. Notes to the Profit and Loss Account
The interim statement was approved by the Board of Directors on 24 November
1999. The foregoing financial information does not represent full accounts
within the meaning of S.240 of the Companies Act 1985, and has been reviewed
but not audited by the auditors, nor filed with the Registrar of Companies.
The results for the 12 months to 31 March 1999 are an abridged version of the
full accounts which received an unqualified auditor's report and have been
filed with the Registrar of Companies.
The interim dividend is payable on 6 January 2000 to shareholders on the
register on 10 December 1999.
This statement is being sent to shareholders and will be available from the
Company's Registered Office at 11-15 Farm Street, London W1X 8NP.
6. Notes to the Balance Sheet
Realisations of £2.8m of property revaluation losses of prior periods have
been transferred from the profit and loss reserve.
Investment properties within fixed assets are carried at cost or valuation at
31 March 1999.
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