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Helical PLC (HLCL)

  Print      Mail a friend       Annual reports

Wednesday 15 November, 2017

Helical PLC

Half-year Report

RNS Number : 5155W
Helical PLC
15 November 2017
 

HELICAL PLC

("Helical" or the "Group" or the "Company")

Half Year Results for the Six Months to 30 September 2017

 

HELICAL SEES LETTING SUCCESS AND INCREASED FOCUS ON CORE SECTORS

 

Gerald Kaye, Chief Executive, commented:

 

"The financial year to date has seen Helical make encouraging progress in executing its strategy and meeting targets. Following the sale announced yesterday of our retirement village portfolio for £102m, a 13% discount to book value, we have now sold the majority of our non-core holdings, with those remaining accounting for just 4% of the total portfolio. One Creechurch Place, London EC3 is 48% let with a further 22% under offer and good interest in the remaining space. In addition, we have achieved record rents at a number of our London investment assets. With the second phase of The Bower, London EC1 and One Bartholomew Close, London EC1 due for completion in Q3 2018, we are confident of their letting prospects. Looking forward, we will continue to seek new refurbishment and development opportunities in undersupplied markets.

 

"We have sold over £315m of investment assets since 1 April 2016, including the sale this week of our London office investment at C-Space, London EC1, at prices in aggregate of 2.5% above book value. Net proceeds have funded our capital expenditure programme and, importantly, have reduced net borrowings by £236m substantially reducing our loan to value from 55%, at 31 March 2016, to today's pro-forma ratio of 43%.

 

"With our portfolio of high quality London and Manchester offices and higher yielding logistics properties, we now look forward to increasing our income stream from the current contracted rents of £45m towards the portfolio's ERV of £65m as completed office space is made available to potential tenants in the next 12 months."

 

Financial Highlights - strong base from which to deliver future returns

 

Results

 

·   EPRA net asset value per share down 1.7% to 465p (31 March 2017: 473p), reflecting the impact on NAV from the sale of the retirement village portfolio.

·   EPRA loss per share of 5.9p (2016: earnings 4.4p).

·   IFRS basic earnings per share of 0.3p (2016: 27.8p)

·   IFRS Profit before tax of £1.2m (2016: £31.1m).

·   Total Property Return of £15.4m (2016: £47.8m).

-       Group's share of net rental income of £17.9m reflecting the sale of non-core properties (2016: £24.6m).

-       Development losses of £8.2m (2016: £2.6m), after provisions of £11.5m (2016: £6.6m).

-       Net gain on sale and revaluation of investment properties of £5.7m (2016: £25.8m).

·   Interim dividend declared of 2.50p per share (2016: 2.40p) - up 4.2%.

 

 

Property Valuations

 

·   Group's share of property portfolio £1,211m (31 March 2017: £1,205m).

·   Investment property valuations, on a like-for-like basis, up 0.8% (0.7% including sales and purchases).

 

Financing

 

·   See-through loan to value of 51% (31 March 2017: 51%). Post 30 September 2017 sales reduce pro-forma loan to value to 43%.

·   Average maturity of the Group's share of debt of 3.0 years (31 March 2017: 3.6 years) at an average cost of 4.3% (31 March 2017: 4.3%).

·   Group's share of cash and undrawn bank facilities at 30 September 2017 of £266m (31 March 2017: £267m).

 

Operational Highlights - portfolio positioned to capture ERV  

 

London Portfolio

 

·   1.5% valuation increase of London investment portfolio valued at £712m (71% of investment portfolio) at 30 September 2017 - 31 March 2017: £666m (65%).

·   C-Space EC1, a 61,973 sq ft office building on City Road, was sold post half-year end for £74.0m, a small premium to its 30 September 2017 and 31 March 2017 book values.

·   Contracted rents on our London portfolio, following the C-Space sale and including pre-lets at The Bower, of £25.3m compare to an ERV of £43.3m (like-for-like increase of 4.6%) - 31 March 2017: £27.9m contracted rents with ERV of £44.9m.

·   At One Creechurch Place EC3, we have signed leases with two tenants for space totalling 131,879 sq ft, representing 48% of the building and have agreed terms with another two tenants for 60,017 sq ft which, if concluded, will result in the building being 70% let.

·   At 25 Charterhouse Square EC1, 70% of the building now let at average rents of £75.50 psf on the offices and £59.35 psf on the ground floor retail.

·   At The Loom EC1, we have let an additional 12,850 sq ft of newly refurbished space at between £52.50 psf and a record £55.00 psf.

·   At The Bower EC1, we are on target to complete the refurbishment of The Tower by July 2018. Marketing of the remaining space, with 34% already pre-let to WeWork, has commenced and initial interest is encouraging.

·   At Barts Square EC1, 128 of the 144 residential units (89%) in Phase One have exchanged (31 March 2017: 116 units) with a further three units reserved.

·   13 sales at Barts Square have completed by 14 November 2017 with the remaining 115 sales due to complete by March 2018 and expected to deliver net proceeds of £56m.

 

Manchester Portfolio

 

·   Comprises four office buildings generating £5.4m of contracted rents against an ERV of £7.2m and valued at £87.6m.

·   Trinity Court, a 47,443 sq ft office building, acquired in May 2017 for £12.9m. An extensive refurbishment of the building is proposed.

 

Logistics Portfolio

 

·   Comprises 23 predominantly single let assets located around the main UK transport networks generating £11.3m of contracted rents against an ERV of £11.9m and valued at £150.8m.

·   One asset sold in the period to an owner-occupier at its book value of £9.3m.

·   A new ten year lease completed to the existing tenant at our 65,000 sq ft unit at Telford at passing rent, with good interest in our only remaining vacant property in Doncaster.

 

Non-Core

 

·   The strategic sale of the retirement village portfolio for £102m, post the half year, reflects a 13% discount to book value with this sales value reflected in the carrying values at 30 September 2017.

·   The sale reduces Group borrowings by £46m and boosts cash reserves by £51m of which the payment of £26m is deferred for 12 months.

·   During the half year to 30 September 2017, we sold three retail assets for £73.3m at a profit of £1.5m.

·   Since 1 April 2016, we have sold £132m of non-core investment assets at 1.3% premium to book value.

·   Following the post period end sales, the non-core portfolio includes three regional offices and one retail asset, valued in total at £34.7m, and land valued at £5.9m. Non-core assets now comprise just 4.0% of the total current portfolio (31 March 2017: 17.6%).

 

 

For further information, please contact:

 

Helical plc

020 7629 0113

Gerald Kaye (Chief Executive)

 

Tim Murphy (Finance Director)

 

 

 

Address:

5 Hanover Square, London W1S 1HQ

Website:

www.helical.co.uk

Twitter:

@helicalplc

 

 

FTI Consulting

020 3727 1000

Dido Laurimore/Tom Gough/Richard Gotla

[email protected]

 

Half Year Results Presentation

 

Helical will be holding a presentation for analysts and investors at 11am, Wednesday 15 November 2017 at FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD. If you would like to attend, please contact Jenni Nkomo on 020 3727 1000, or [email protected]

 

The presentation will be on the Company's website www.helical.co.uk and a conference call facility will be available. The dial-in details are as follows:

 

Participants, Local - London, United Kingdom:

+44 (0)330 336 9411

Confirmation Code:

8623415

 

Webcast Link:

http://webcasting.brrmedia.co.uk/broadcast/59d4e041d349960788385c49

 

The presentation will also be on the Company's website www.helical.co.uk

 

 

Financial Highlights

 

 

See-through Income Statement

Notes

1

Half Year to

30 September

 2017

£m

Half Year to

30 September 2016

£m

Year to

31 March

2017

£m

Net rental income

 

17.9

24.6

47.0

Development property losses

 

(8.2)

(2.6)

(5.7)

Gain on revaluation of investment properties

 

4.5

28.6

37.3

Gain/(loss) on sale of investment properties

 

1.2

(2.8)

1.3

Total property return

 

15.4

47.8

79.9

 

 

 

 

 

IFRS Profit before tax

 

1.2

31.1

41.6

EPRA (loss)/earnings

 

(6.9)

5.0

0.5

           

 

 

Earnings Per Share and Dividends

 

 

Pence

 

Pence

 

Pence

Basic earnings per share

2

0.3

27.8

34.0

Diluted earnings per share

2

0.3

26.6

33.2

EPRA (loss)/earnings per share

2

(5.9)

4.4

0.5

Dividends per share paid in period

 

6.20

0.72

3.12

Dividends per share declared for period

 

2.50

2.40

8.60

 

 

See-through Balance Sheet

 

3

Proforma At4

30 September

2017

£m

At

30 September

 2017

£m

At

30 September 2016

£m

At

31 March

2017

£m

See-through property portfolio

 

1,036.8

1,210.8

1,249.5

1,205.2

See-through net borrowings

 

445.4

619.4

664.3

620.0

Net assets

 

510.2

510.2

508.9

516.9

 

 

 

 

 

 

Net assets per share and borrowings

 

 

 

 

 

EPRA Net Asset Value per share

 

465p

465p

471p

473p

See-through loan to value

5

43%

51%

53%

51%

See-through net gearing

6

87%

121%

131%

120%

Weighted average cost of debt

 

4.3%

4.3%

4.3%

4.3%

Weighted average debt maturity

 

3.0 years

3.0 years

4.0 years

3.6 years

 

Notes

1.     Includes Group's share of income and gains of its subsidiaries and joint ventures. See Note 25.

2.     Calculated in accordance with IAS 33 and guidance issued by the European Public Real Estate Association ("EPRA"). EPRA earnings per share exclude the net gain on sale and revaluation of the investment portfolio of £5.7m (2016: £25.8m) but include development losses of £8.2m (2016: £2.6m).

3.     Includes the Group's share of assets and liabilities of its subsidiaries and joint ventures. See Note 25.

4.     Reflects the Group's share of assets and liabilities at 30 September 2017, adjusted for £176m of sales since the half year end. 

5.     See-through loan to value is the ratio of see-through net borrowings to see-through property portfolio. See Note 26.

6.     See-through net gearing is the ratio of see-through net borrowings to net assets. See Note 26.

 

 

 

Chief Executive's Statement

 

Overview

 

The financial year to date has seen Helical make encouraging progress in executing its strategy and meeting targets. Following the sale announced yesterday of our retirement village portfolio for £102m, a 13% discount to book value, we have now sold the majority of our non-core holdings, with those remaining accounting for just 4% of the total portfolio. One Creechurch Place, London EC3 is 48% let with a further 22% under offer and good interest in the remaining space. In addition, we have achieved record rents at a number of our London investment assets. With the second phase of The Bower, London EC1 and One Bartholomew Close, London EC1 due for completion in Q3 2018, we are confident of their letting prospects. Looking forward, we will continue to seek new refurbishment and development opportunities in undersupplied markets.

 

Results for the Half Year

 

The profit before tax for the half year to 30 September 2017 was £1.2m (2016: £31.1m) with a Total Property Return of £15.4m (2016: £47.8m). The reduction in net rents to £17.9m (2016: £24.6m) reflects the sale of £186m of investment assets over the preceding 12 months. Developments contributed profits of £3.3m (2016: £4.0m) before provisions of £11.5m (2016: £6.6m). The gain on sale and revaluation of the investment portfolio contributed £5.7m (2016: £25.8m).

 

Total finance costs were £14.1m (2016: £14.1m), offset by interest receivable of £1.2m (2016: £2.3m) to give net finance costs of £12.9m (2016: £11.7m). An increase in expected future interest rates led to a credit from the valuation of the Group's derivative financial instruments of £2.9m (2016: charge of £5.9m). The valuation of the Group's Convertible Bond gave rise to a charge to the Income Statement of £0.1m (2016: credit of £7.7m). Recurring administration costs were £5.6m (2016: £5.8m) and the provision for performance related remuneration, including associated NIC, was £0.5m (2016: £0.1m).

 

These results allow the Board to declare an Interim Dividend of 2.50p (2016: 2.40p), an increase of 4.2%.

 

Finance

 

The Company uses gearing on a tactical basis throughout the property cycle, being raised to accentuate property performance when property returns are judged to materially outperform the cost of debt and lowered when seeking to reduce exposure to the property cycle.

 

We have sold over £315m of investment assets since 1 April 2016, including the sale this week of our London office investment at C-Space, London EC1, at prices in aggregate of 2.5% above book value. Net proceeds have funded our capital expenditure programme and, importantly, have reduced net borrowings by £236m substantially reducing our loan to value from 55% at 31 March 2016 to today's pro-forma ratio of 43%.

 

Outlook

 

With our portfolio of high quality London and Manchester offices and higher yielding logistics properties, we now look forward to increasing our income stream from the current contracted rents of £45m to the portfolio's ERV of £65m as completed office space is made available to potential tenants in the next 12 months.

 

Gerald Kaye

Chief Executive

15 November 2017

 

 

 

Our Market

 

Overview

 

Helical's core business is the development of, and investment in, dynamic, well located office space in London and Manchester accompanied by a portfolio of logistics units along the motorway network of England and Wales. With intelligent stock selection, we aim to maximise returns by development and refurbishment as well as through significant asset management initiatives.

 

London

 

In London, Helical is building up a portfolio of multi-tenanted offices in the Tech Belt locations of Farringdon, the Old Street roundabout and Whitechapel areas, as well as in West London from Chiswick to Shepherds Bush. By owning these "clusters" or "villages" of office buildings we have a portfolio of assets with multiple lease events leading to ongoing asset management opportunities.

 

The Company also seeks to grow by taking on additional schemes in Central London often in joint venture or by forward selling/funding them, to allow for the generation of significant profit shares, reducing balance sheet exposure where appropriate.

 

Manchester

 

In Manchester we have four assets with a potential capital value, after all refurbishment works and lettings are concluded, approaching £100m. In this city, the occupational and investment market continues to strengthen. It has high quality office stock and a diverse occupier base which has seen much international and institutional investment in recent years. Companies have access to a deep and highly skilled talent pool in a cost effective location both for the employer and employee. It is regarded as the leading UK creative location outside London and our buildings are designed to attract creative occupiers. Annual office take-up is consistently in excess of one million sq ft with high profile new occupiers coming to the city on a regular basis.

 

Logistics

 

We have a portfolio of logistics units comprising 15% of our investment portfolio, but which contribute 23% of our current contracted rents. This sector is characterised by strong occupational demand and limited available supply. These properties tend to have little obsolescence and good prospects for rental growth.

 

Looking Forward

Our key focus remains on London, Manchester offices and logistics. We have made significant progress in reducing non-core holdings which, post the retirement village sales, constitute just 4% of the total portfolio. We will continue to sell the remaining assets as the opportunities to do so arise.

 

Our ambition is to have a balanced portfolio which generates sufficient net rental income to exceed all of our recurring costs and provide a surplus significantly greater than our annual dividend to Shareholders. We have an ERV on the portfolio, post recent sales, of £65m and expect to generate this surplus once all of our current asset management initiatives are completed. We also seek a pipeline of opportunities to grow the balance sheet of Helical through the creation of development profits and capital surpluses.

 

 

Financial Review

 

 

IFRS Performance

 

 

EPRA Performance

Profit Before Tax
£1.2m (2016: £31.1m)

 

EPRA EPS
Loss of 5.9p (2016: earnings of 4.4p)

 

IFRS EPS
0.3p (2016: 27.8p)

 

EPRA NAV
465p (31 March 2017: 473p)

 

IFRS Diluted NAV
426p (31 March 2017: 431p)

 

EPRA Triple NAV436p (31 March 2017: 442p)

 

 

Total Accounting Return

 

The total accounting return is the growth in the net asset value of the company plus dividends paid in the period, expressed as a percentage of the net asset value at the beginning of the period. The metric measures the growth in shareholders' funds each period and is expressed as an absolute measure.

 

 

1H

2018

%

2017
%

2016
%

2015

%

2014

%

2013

%

Total Accounting Return

0.1

8.3

22.5

21.1

36.8

2.4

 

Total Property Return

 

We calculate our Total Property Return to enable us to assess the aggregate of income and capital profits made each period from our property activities. Our business is primarily aimed at producing surpluses in the value of our assets through asset management and development, with the income side of the business seeking to cover our annual administration and finance costs.

 

 

1H

2018

£m

2017
£m

2016
£m

2015

£m

2014

£m

2013

£m

Total Property Return

15.4

79.9

164.6

155.3

140.1

35.9

 

Earnings per Share

 

The IFRS earnings per share is based on the after tax earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. For the six months to 30 September 2017 IFRS earnings per share was 0.3p (2016: 27.8p). On the EPRA basis, which excludes gains on the sale and revaluation of properties, the loss per share was 5.9p (2016: earnings 4.4p).

 

 

Net Asset Value Per Share

 

IFRS diluted net asset value per share is a measure of shareholders' funds divided by the number of shares in issue at the period end, excluding those held by the Company's Employee Share Ownership Plan Trust, adjusted to allow for the effect of all dilutive share awards. At 30 September 2017 it was 426p (31 March 2017: 431p). On an EPRA basis, which adds back the fair value of financial instruments and the Convertible Bond, the property related deferred tax creditor and reflects the fair value of trading and development properties, the net asset value per share was 465p (31 March 2017: 473p).

 

Income Statement

 

Rental Income and Property Overheads

 

Gross rental income receivable by the Group reduced by 23% to £20.2m (2016: £26.3m) reflecting the sale of £186m of investment assets with contracted rents of £11.8m since 30 September 2016, offset by the partial capture of the portfolio's reversionary potential. Property overheads increased from £1.7m to £2.3m leaving the see-through net rents reduced by 27% to £17.9m (2016: £24.6m).

 

Development Profits/Losses

 

Development profits in the half year include a £0.7m development management fee at Barts Square and a contribution of £1.9m from our retail development programme offset by a £1.2m loss on the sale of land at Cawston. The retirement village provision of £10.2m plus a loss on sales at the retirement villages of £0.8m contributed to a net development loss of £8.2m (2016: £2.6m).

 

Share of Results of Joint Ventures

 

In our joint ventures we recognised an investment valuation uplift of £2.3m. Our retail development scheme at Shirley contributed to a development profit of £1.4m with the joint ventures contributing a total profit of £3.4m (2016: loss of £1.0m).

 

Gain on Sale and Revaluation of Investment Properties

 

During the six months we sold three non-core retail assets for a combined £73.3m and an industrial unit to an owner-occupier for £9.3m. Net of costs these sales contributed a profit of £1.2m (2016: loss of £2.8m). Subsequent to the half year end we have sold our investment asset at C-Space, London EC1, for £74.0m, marginally above its 30 September 2017 book value.

 

Administration Costs

 

Administration costs, before performance-related awards, reduced from £5.8m to £5.6m. Including share awards and associated NIC of £0.5m (2016: £0.1m), total administration costs increased to £6.1m (2016: £5.9m).

 

Finance Costs, Finance Income and Derivative Financial Instruments

 

Interest payable on secured bank loans, including our share of loans on assets held in joint ventures but before capitalised interest, was £13.1m (2016: £13.1m). Interest payable in respect of the unsecured Retail and Convertible Bonds was £4.4m (2016: £4.4m). Capitalised interest marginally reduced to £3.4m (2016: £3.5m). Total finance costs, including in joint ventures, were £14.1m (2016: £14.1m). Finance income earned was £1.2m (2016: £2.3m). The movement in medium and long-term interest rate projections during the period, offset by the shortening maturity period of the Group's derivative financial instruments, contributed to a credit of £2.9m (2016: charge of £5.9m) on their mark-to-market valuation.

 

 

Taxation

 

Helical pays corporation tax on its net rental income, trading and development profits and realised chargeable gains, after offset of administration and finance costs and any available losses.

 

The deferred tax charge for the half year is principally derived from the revaluation surpluses recognised in the period offset by the recognition of the tax losses which the Group believes will be utilised against profits in the foreseeable future.

 

Dividends

 

The Board has approved the payment of an interim dividend of 2.50p per share (2016: 2.40p), an increase of 4.2%. This interim dividend will be paid on 22 December 2017 to Shareholders on the share register on 24 November 2017.

 

Balance Sheet

 

Shareholders' Funds

 

Shareholders' funds at 1 April 2017 were £516.9m. The Group's results for the six months added £0.4m, net of tax, representing the total comprehensive income for the period. Movements in reserves arising from the Group's share schemes increased funds by £0.2m. The Company paid dividends to Shareholders amounting to £7.3m leaving a net decrease in Shareholders' Funds from the Group's activities during the half year of £6.7m to £510.2m.

 

Investment Portfolio

 

 

Wholly

owned
£000

In joint
venture

£000

See-through

£000

Lease Incentives

£000

Book

Value

£000

Valuation at 31 March 2017

1,003,000

13,907

1,016,907

(15,440)

1,001,467

Acquisitions

13,785

-

13,785

-

13,785

Capital Expenditure

36,774

3,757

40,531

-

40,531

Disposals

(79,353)

-

(79,353)

150

(79,203)

Revaluation Surplus

- Helical

2,920

2,331

5,251

(775)

4,476

 

- Profit Share Partners

2,420

-

2,420

-

2,420

Valuation at 30 September 2017

979,546

19,995

999,541

(16,065)

983,476

 

Disclosed as:

 

 

 

 

 

Investment properties

963,481

19,995

983,476

-

983,476

In Trade and other receivables

-

-

-

16,065

16,065

 

963,481

19,995

983,476

16,065

999,541

 

Debt and Financial Risk

 

Helical's outstanding debt at 30 September 2017 of £738m (31 March 2017: £737m) had a weighted average maturity of 3.0 years (31 March 2017: 3.6 years) and a weighted average interest cost of 4.3% (31 March 2017: 4.3%).

 

 

Debt Profile at 30 September 2017 - Excluding the Effect of Arrangement Fees

 

 

Total

Facility

£000's

Total

Utilised

£000's

Available Facility

£000's

Net LTV

%

Weighted Average Interest Rate

%

Weighted Average Interest Rate

Fully Utilised

%

Average Maturity

Years

Investment facilities

569,344

439,543

129,801

-

4.3

3.5

3.5

Development facilities

60,000

47,910

12,090

-

3.5

3.1

2.9

Total wholly owned

629,344

487,453

141,891

-

4.2

3.5

3.5

In joint ventures

72,270

70,795

1,475

-

3.4

3.4

2.2

Total secured debt

701,614

558,248

143,366

36

4.1

3.5

3.3

Retail bond

80,000

80,000

-

-

6.0

6.0

2.7

Convertible bond

100,000

100,000

-

-

4.0

4.0

1.7

Working capital

10,000

-

10,000

-

-

-

-

Fair value of convertible bond

-

(99)

-

-

-

-

-

Total unsecured debt

190,000

179,901

10,000

-

4.9

4.9

2.2

Total debt

891,614

738,149

153,366

51

4.3

3.8

3.0

 

Secured Debt

 

The Group arranges its secured investment and development facilities to suit its business needs as follows:

 

-      Investment Facilities

We have £190m of revolving credit facilities which enable the group to acquire, refurbish, reposition and hold significant parts of our investment portfolio. We have used these facilities mainly to finance our regional portfolio. Our London investment assets are primarily held in £379m of secured loan facilities which, where appropriate, allow us to finance projects, including the redevelopment of The Tower at The Bower, London EC1. Of the total of £569m of investment facilities we have £130m available to fund these works and finance any new acquisitions. The average maturity of the Group's investment facilities at 30 September 2017 was 3.5 years with a weighted average interest rate of 4.3%.

 

-      Development Facilities

These facilities finance the construction of the retirement villages at Durrants Village Horsham; Maudslay Park, Great Alne; Phase IV at Bramshott Place, Liphook and Millbrook Village, Exeter. The average maturity of the Group's development facilities at 30 September 2017 was 2.9 years with a weighted average interest rate of 3.5%. These facilities were transferred to the purchaser of the retirement village portfolio in November 2017.

 

-      Joint Venture Facilities

We hold a number of investment and development properties in joint venture with third parties and include in our reported figures our share, in proportion to our economic interest, of the debt associated with each asset. The average maturity of the Group's share of bank facilities in joint ventures at 30 September 2017 was 2.2 years with a weighted average interest rate of 3.4%.

 

 

Unsecured Debt

 

The Group's unsecured debt, including the Convertible Bond at its mark-to-market valuation, is £180m as follows:

 

-      Retail Bond

In June 2013, the Group raised £80m from the issue of an unsecured Retail Bond with a 6.00% coupon. This bond is repayable in June 2020.

 

-      Convertible Bond

In June 2014, the Group raised £100m from the issue of a listed unsecured Convertible Bond with a 4.0% coupon, repayable in June 2019, or, subject to certain conditions, convertible at the option of the bond holders into ordinary shares, unless a cash settlement option is exercised by the Company. The initial conversion price has been set at £4.9694 per share, representing a 35% premium above the price on the day of the issue and a premium of 59% above the Company's EPRA net asset value per share at 31 March 2014. The value of the Bond at 30 September 2017, as determined by the listed market price, was £99.9m.

 

-      Short term working capital facilities

These facilities provide access to additional working capital for the Group.

 

Cash and Cash Flow

 

At 30 September 2017, the Group had £266m (31 March 2017: £267m) of cash and agreed, undrawn, committed bank facilities including its share in joint ventures, as well as £22m (31 March 2017: £17m) of uncharged property on which it could borrow funds.

 

Net Borrowings and Gearing

 

Total gross borrowings of the Group, including in joint ventures, have increased marginally from £736.6m to £738.1m during the six months to 30 September 2017. After deducting cash balances of £112.4m and unamortised refinancing costs of £6.3m, net borrowings were £619.4m (31 March 2017: £620.0m). The gearing of the Group, including in joint ventures, was 121% (31 March 2017: 120%).

 

 

30 September

2017

31 March

2017

See-through gross borrowings

£738.1m

£736.6m

See-through cash balances

£112.4m

£109.0m

Unamortised refinancing costs

£6.3m

£7.6m

See-through net borrowings

£619.4m

£620.0m

Shareholders' funds

£510.2m

£516.9m

See-through net gearing

121%

120%

 

 

Hedging

 

At 30 September 2017, the Group had £621.3m (31 March 2017: £651.4m) of fixed rate debt with an average effective rate of 4.2% (31 March 2017: 4.2%) and £46.0m (31 March 2017: £29.3m) of floating rate debt with an average effective rate, excluding commitment fees, of 3.0% (31 March 2017: 3.0%). In addition, the Group had £3.3m of interest rate caps at 0.75% (31 March 2017: £3.3m at 0.75%). In our joint ventures, the Group's share of fixed rate debt was £nil (31 March 2017: £nil) and £70.8m (31 March 2017: £55.9m) of floating rate debt with an effective rate of 3.4% (31 March 2017: 3.4%) with interest rate caps set at 1.5% plus margin on £158.9m and 0.5% plus margin on £164.7m.

 

 

30 September

2017

£m

30 September

2017

%

31 March

2017

£m

31 March

2017

%

Fixed rate debt

 

 

 

 

- Secured borrowings

441.4

4.0

471.6

4.0

- Retail Bond

80.0

6.0

80.0

6.0

- Convertible Bond

100.0

4.0

100.0

4.0

- Fair value of Convertible Bond

(0.1)

-

(0.2)

-

Total fixed rate debt

621.3

4.2

651.4

4.2

Floating rate debt

 

 

 

 

- Secured

46.0

6.81

29.3

8.91

Total wholly owned

667.3

4.4

680.7

4.4

In joint ventures

 

 

 

 

- Floating rate

70.8

3.4

55.9

3.4

Total borrowings

738.1

4.3

736.6

4.3

 

Note 1: This includes commitment fees on undrawn facilities. Excluding these would reduce the effective rate to 3.0% (31 March 2017: 3.0%).

 

Interest Cover

 

In assessing the results of the Group for each financial period, Helical considers its interest cover as a measure of its performance and ability to finance its annual interest payments from its net operating income, before revaluation gain or losses on the investment portfolio and net realisable provisions on the trading and development stock. In the half year to 30 September 2017 the interest cover was 1.7 times (2016: 2.2 times).

 

 

30 September

2017

30 September 

2016

31 March

2017

See-through net operating income

£22.4m

£25.8m

£55.4m

See-through net financing costs

£12.9m

£11.7m

£21.2m

Interest Cover

1.7x

2.2x

2.6x

 

 

 

 

 

 

 

Tim Murphy
Finance Director

15 November 2017

 

 

Helical's Property Portfolio - 30 September 2017

 

Property Overview

 

Helical divides its property activities into three core markets: London, Manchester offices and logistics. Following the sale of C-Space and the Retirement Village portfolio in November 2017, the London Portfolio represents 73.1% of the total property portfolio and drives capital growth, development profits and, increasingly, income. Manchester offices accounts for 8.4%, and logistics account for 14.5%.

 

In addition, we have a small portfolio of non-core assets comprising three regional offices and one regional retail property which together represent just 4.0% of the total property portfolio.

 

The London Portfolio

 

Our strategy is to continue to increase our London holdings, focusing on areas where we see strong tenant demand and growth potential, such as the "Tech Belt" that runs from King's Cross through Old Street and Shoreditch to Whitechapel and in West London, in particular Shepherds Bush, Chiswick and Hammersmith. Our London portfolio comprises income producing multi-let offices, office refurbishments and developments and residential development schemes.

 

·       City and Tech Belt

 

One Creechurch Place, City of London EC3

One Creechurch Place is a landmark City office scheme in the heart of the insurance sector in London. In May 2014, Helical signed a joint venture agreement with HOOPP (Healthcare of Ontario Pension Plan) to redevelop the site. Under the terms of the joint venture, HOOPP and Helical jointly funded the project on a 90:10 split, with Helical acting as development manager for which it will receive a promote payment depending on the successful outcome of the scheme. The new building, comprising 272,505 sq ft NIA of offices and 786 sq ft of retail, achieved practical completion on 7 November 2016 and is currently being marketed for occupation. Since 30 September 2017, we have signed leases with Hyperion for 115,910 sq ft and Travelers for 15,969 sq ft, representing 48% of the building and are under offer with another two tenants for 60,017 sq ft, which, if concluded, will result in the building being 70% let.

 

25 Charterhouse Square, Smithfield EC1

In January 2016, Helical was granted a new 155 year leasehold interest in 25 Charterhouse Square, from the Governors of Sutton's Hospital in Charterhouse for £16m. Helical has carried out a major refurbishment of the existing building, which increased the previous 34,000 sq ft to 38,355 sq ft of offices with the addition of a new sixth floor, and added 5,138 sq ft of retail/restaurant space. The building achieved practical completion on 28 March 2017. The 5th and 6th floors have been let at £75 psf and in the period the 4th floor was let to Peakon, also at £75 psf on a 10 year lease with a five year break. Since the end of the period the ground and first floors have been let on five year leases at £77 psf for the first floor and an average £59 psf for the "shell" ground floor units. The second floor is also under offer and due to exchange shortly.

 

C-Space, 37-45 City Road EC1

Helical acquired C-Space in June 2013. Planning consent was obtained for a complete refurbishment of the building which increased the previous 50,000 sq ft office building to 61,973 sq ft. The works, which were completed in October 2015, involved an additional floor and extensions to the third floor, a landscaped courtyard and entrance pavilion to the rear and full height glazing to the raised ground floor. 75% of the space was pre-let to the creative agency MullenLowe in June 2015, with the remaining space let to NeuLion in November 2016.

 

Contracts were exchanged on 10 November 2017 for the sale of the building at £74m, marginally above its 31 March 2017 value book, with completion in December 2017.

The Loom, Whitechapel E1

This 110,069 sq ft listed former wool warehouse was acquired in 2013. A major repositioning was completed in September 2016 to include a new entrance and reception onto Gowers Walk, café, showers and a bike store. Since 1 April 2017, we have completed five new lettings on 12,850 sq ft with newly refurbished space being let at between £52.50 psf and a record £55.00 psf. Two further units totalling 2,431 sq ft are under offer.

 

The Bower EC1

 

211 Old Street EC1

The development of Phase One, comprising The Warehouse, 128,262 sq ft, and The Studio, 23,177 sq ft, completed in November 2015.

 

Phase One is fully let to CBS, Farfetch, Pivotal, Allegis and Stripe (The Warehouse) and John Brown Media (The Studio), and all tenants are in occupation. The retail operators are Bone Daddies, Draft House, Enoteca da Luca, Honest Burger, Maki and Franze & Evans.

 

207 Old Street EC1

At The Tower, comprising 178,571 sq ft of offices with ground floor retail, the refurbishment and construction works are well underway with practical completion scheduled for July 2018. We have pre-let six floors, comprising 58,904 sq ft (34%), to WeWork, the leading global provider of flexible collaborative co-working space, and recently launched the marketing of the remaining 119,667 sq ft of this building. A number of parties have inspected the building and we are encouraged by the interest being shown.

 

Barts Square EC1

In a joint venture with The Baupost Group LLC, Helical owns the freehold interest of Barts Square, a 3.2 acre site between St Pauls and Smithfield Market, situated a short walk from Farringdon East station on the Elizabeth Line (Crossrail) which is due to be operational at the end of 2018.

 

Barts Square will ultimately provide an entirely new quarter in the City consisting of 236 residential apartments, three office buildings of 213,125 sq ft, 24,031 sq ft and 10,200 sq ft and 21,839 sq ft of retail/A3 at ground floor as well as major public realm improvements.

 

Phase One - Residential

Phase 1 of Barts Square comprises 144 residential units, 3,193 sq ft of retail and extensive public realm improvements. The residential units are being handed over to purchasers as buildings are completed with the Underwood Building (13 sales) completed by October 2017 and six further buildings (115 sales) to be completed and handed over in the period to March 2018. In total, contracts have been exchanged for the sale of 128 residential units (12 in the period) for a total value of £162.1m at an average of £1,565 psf, with a further three units reserved, leaving just 13 apartments to sell.

 

90 Bartholomew Close - Offices

Construction of the 24,013 sq ft office building with 6,449 sq ft of restaurant use on the ground floor is expected to be completed in December 2017. Marketing of the offices will commence after practical completion of the building. The ground floor restaurant is under offer to a leading UK restauranteur who operates a small collection of restaurants, delis and bars.

 

Phase Two - One Bartholomew Close - Offices

One Bartholomew Close was sold to clients of Ashby Capital LLP ("Ashby") for £102.4m in August 2015. The demolition of the existing building and the construction of a new 12 storey office block of 213,125 sq ft commenced in January 2016 and is due to be completed in Q3 2018. Ashby's clients finance the development costs and, when the building is completed and successfully let, the joint venture will be entitled to receive a profit share payment. Helical is the development manager for delivery of the project.

 

Phase Three - Residential/retail/offices

Demolition work on Phase 3 of Barts Square is completed with pre-construction works now underway. This phase will comprise 92 apartments and 12,197 sq ft of retail space. Completion is due in Q3 2019 and marketing of the units is expected to commence in Q2 2018. The refurbishment of 54/58 Bartholomew Close to provide 10,200 sq ft of offices is expected to start in 2018 for completion in 2019.

 

Farringdon East, Smithfield EC1

We have an exclusivity agreement with Farringdon East Ltd whereby we will acquire the company with the intention of constructing a new consented 89,000 sq ft office building over the Farringdon East Crossrail Station with the benefit of a new 150 year lease from TFL. It is anticipated that the construction works will commence in Spring 2018 for completion by Q4 2019.

 

·       West London

 

The Shepherds Building, Shepherds Bush W14

This 151,000 sq ft multi-let office building close to the Westfield London shopping centre maintains an occupancy approaching 100%, as it has for the past ten consecutive years. The average contracted rent for the building is £45 psf with a total contracted rent of £6.64m. During the period we have completed new lettings totalling 8,987 sq ft and 1,573 sq ft since the period end.

 

Power Road Studios, Chiswick W4

The site comprises 58,404 sq ft of offices across five buildings and is multi-let to a wide range of predominantly media tenants. In October we completed the refurbishment of Studio 1, a project comprising 16,000 sq ft of air conditioned Grade A space, refurbished common parts and two new lift shafts to accommodate a consented future roof extension of 13,000 sq ft. Of the newly refurbished space, we pre-let 2,425 sq ft at £43 psf and have recently completed the letting of a further 5,916 sq ft at £43 psf. Preliminary works have been completed on a consented new 30,000 sq ft office building.

 

The Powerhouse, Chiswick W4

Helical acquired this 24,288 sq ft office and recording studios by way of sale and leaseback in 2013. The Powerhouse is a listed building on Chiswick High Road and is fully let on a long lease to Metropolis Music Group.

 

King Street, Hammersmith W6

Hammersmith & Fulham Borough Council, who have been opposed to this regeneration project since the Council became Labour controlled, have exercised their option to terminate the development agreement. With our partners Grainger plc we will now seek to maximise the value of the land held by the joint venture company and are in discussions with the Council with the aim of reaching agreement on this sale.

Manchester Offices

 

Manchester is a city with a diverse, thriving and growing economy which is widely regarded as England's second city and the centre of the "Northern Powerhouse". The assets we hold there are:

 

Churchgate and Lee House, Manchester

This asset, comprising 249,233 sq ft of multi let offices, was purchased in March 2014. Since purchase we have refurbished the reception and 75,254 sq ft of office space and the building is fully let. During the period we agreed a new ten year lease with Capita on 33,000 sq ft at £15.50 psf, an uplift of 7% on the previous rent. Looking forward we will continue with asset management initiatives to drive further rental and capital growth.

 

31 Booth Street, Manchester

This 25,441 sq ft office located in the prime city core was acquired in January 2016 for £4.7m. The building has been fully refurbished and was launched to the market in March 2017. The ground floor and basement has been let on an agreement to lease to Elevatione, a luxury boutique cosmetic retailer, and good interest is being shown in the remaining office space.

 

35 Dale Street, Manchester

35 Dale Street is a 51,634 sq ft office building situated in the Northern Quarter of Manchester. We have completed the refurbishment of the 3rd and 4th floor offices and agreed terms at £19 psf on that space. The refurbishment of the 1st and 2nd floors will commence in December 2017 with delivery expected in March 2018. All the available space on the 1st floor is under offer. The ground and lower ground floor space has been pre-let to Vibe Gym and Idle Hands (coffee shop).

Trinity Court, Manchester

Trinity Court, purchased in May 2017 for £12.9m, is a 47,443 sq ft office building situated in the central business district of Manchester. The building is currently 100% let with secured income until January 2018 at a passing rent of £26.94 psf. The building will be vacated in 2018 and a full refurbishment and extension will be implemented delivering 55,672 sq ft of new and refurbished office space to the market in early 2019.

 

Logistics

 

Helical owns 23 distribution and logistics units located around major UK transport networks. These units generally have few bespoke features making them straightforward to re-let if vacancies occur with low capital expenditure required. During the period, we sold our 189,349 sq ft warehouse at Hinckley, Leicestershire to an owner-occupier for its book value of £9.3m. We have completed a new ten year lease at the existing passing rent at Telford and have good interest from potential tenants in our remaining vacant asset in Doncaster.

 

Non-Core

 

Offices

 

Our regional offices, outside Manchester, comprise three fully let buildings located in Crawley, Reading and Glasgow which generate contracted rental income of £2.3m and have a combined value of £24.6m.

 

Retail Investments

 

During the period we sold our retail assets at Morgan Quarter, Cardiff, Great Yarmouth and Southend for a combined £73.3m, a premium to book value of 4.7%. At 30 September 2017, our single remaining retail investment is a 42,490 sq ft retail warehouse in Sevenoaks.

 

Retail Developments

 

During the period we completed our 79,750 sq ft retail park at Cortonwood Retail Park which was 100% pre-let and forward funded with clients of Aberdeen Asset Management. We also progressed our retail schemes at Truro, Evesham, Kingswinford and East Ham.

 

Retirement Villages

 

Our retirement village portfolio at 30 September 2017 consisted of four villages at Bramshott Place Liphook, Durrants Village Faygate, Millbrook Village Exeter and Maudslay Park Great Alne.

 

In November 2017, we sold our entire retirement village portfolio to L&G Capital for gross proceeds of £102m with £26m deferred for 12 months.

 

 

Total Portfolio by Fair Value

 

  

Investment

£m

Development

£m

Total

£m

 

%

Proforma1 

£m

Proforma1

%

London Offices

 

 

 

 

 

 

 

 

 - Completed, let and available to let

510.9

42.2

23.8

2.0

534.7

44.2

461.5

44.5

 - Being redeveloped

200.7

16.6

-

-

200.7

16.6

200.7

19.4

London Land and Options

-

-

8.0

0.6

8.0

0.6

8.0

0.8

London Residential

-

-

87.1

7.2

87.1

7.2

87.1

8.4

Total London

711.6

58.8

118.9

9.8

830.5

68.6

757.3

73.1

Manchester Offices

87.6

7.2

-

-

87.6

7.2

87.6

8.4

Logistics

150.8

12.5

-

-

150.8

12.5

150.8

14.5

Total Core Portfolio

950.0

78.5

118.9

9.8

1,068.9

88.3

995.7

96.0

 

 

 

 

 

 

 

 

 

Regional Offices

24.6

2.1

0.5

-

25.1

2.1

25.2

2.4

Retail

10.0

0.8

-

-

10.0

0.8

10.0

1.0

Retirement Villages

14.8

1.2

86.1

7.1

100.9

8.3

-

-

Land

0.1

-

5.8

0.5

5.9

0.5

5.9

0.6

Total Non-Core Portfolio

49.5

4.1

92.4

7.6

141.9

11.7

41.1

4.0

 

 

 

 

 

 

 

 

 

Total

999.5

82.6

211.3

17.4

1,210.8

100.0

1,036.8

100.0

                   

 

1 Proforma figures reflect the position at 30 September 2017, adjusted for the sales of C-Space, EC1 and the Retirement Village portfolio in November 2017.

 

Trading and Development Portfolio

 

 

Book Value

£m

Fair Value

£m

Surplus

£m

Fair Value

%

Proforma1 

Fair Value

£m

Proforma1

Fair Value

%

London Offices

15.8

23.8

8.0

11.3

23.8

19.0

London Residential

84.1

87.1

3.0

41.2

87.1

69.6

London Land and Options

8.0

8.0

-

3.8

8.0

6.4

Total London

107.9

118.9

11.0

56.3

118.9

95

Manchester Offices

-

-

-

-

-

-

Logistics

-

-

-

-

-

-

Total core portfolio

107.9

118.9

11.0

56.3

118.9

95

 

 

 

 

 

 

 

Regional Offices

0.2

0.5

0.3

0.3

0.5

0.5

Retail

-

-

-

-

-

-

Retirement Villages

86.1

86.1

-

40.7

-

-

Land

5.2

5.8

0.6

2.7

5.8

4.5

Total Non-Core Portfolio

91.5

92.4

0.9

43.7

6.3

5.0

 

 

 

 

 

 

 

Total

199.4

211.3

11.9

100.0

125.2

 100.0

 

1 Proforma figures reflect the position at 30 September 2017, adjusted for the sales of C-Space, EC1 and the Retirement Village portfolio in November 2017.

 

 

Capital Expenditure

 

We have a planned development and refurbishment programme.

 

Property

Capex Budget

(Helical Share)

£m

Remaining Spend

(Helical share)

£m

Pre-refurbished

Space

Sq ft

New Space

Sq ft

Total Completed
Space

Sq ft

Completion
Date

Investment - committed

 

 

 

 

 

 

207 Old Street, London EC1

97.2

49.2

114,000

65,000

179,000

July 2018

35 Dale Street, Manchester

4.7

1.1

56,000

-

56,000

May 2018

Trinity Court, Manchester

5.8

5.8

47,000

8,000

55,000

March 2019

Investment - planned

 

 

 

 

 

 

Barts Square, London EC1

10.8

1.5

27,000

-

27,000

December 2017

Power Road Studios, London W4

20.1

20.1

59,000

43,000

102,000

September 2019

Development - committed

 

 

 

 

 

 

Barts Square, London EC1 - Phase 1

81.1

15.4

-

129,000

129,000

March 2018

Barts Square, London EC1 - Phase 3

44.2

38.4

-

92,000

92,000

September 2019

 

Asset Management

 

Asset management is a critical component in driving Helical's performance. Through having well considered business plans and by maximising the combined skills of our management team, we are able to create value in our assets without relying on market movements.

 

 

Investment portfolio

Fair

Value

Weighting

%

Passing

Rent

£m

 %

Contracted1 Rent

£m

 %

ERV

£m

ERV Change Since March 2017

£m

ERV Change Since

March 2017

%

ERV Change Like

for

Like

%

London Offices

 

 

 

 

 

 

 

 

 

 

- Completed, let and available to let

51.1

20.6

50.4

23.6

48.5

29.4

42.5

0.4

1.3

1.3

- Being redeveloped

20.1

1.3

3.2

5.3

10.9

17.5

25.4

1.7

10.8

10.8

Total London

71.2

21.9

53.6

28.9

59.4

46.9

67.9

2.1

4.6

4.6

Manchester Offices

8.8

5.0

12.2

5.4

11.1

7.2

10.4

1.6

28.7

(0.1)

Logistics

15.0

10.9

26.8

11.3

23.2

11.9

17.1

(0.7)

(5.5)

0.9

Total Core Portfolio

95.0

37.8

92.6

45.6

93.7

66.1

95.4

3.0

4.8

3.4

 

 

 

 

 

 

 

 

 

 

 

Regional Offices

2.5

2.3

5.5

2.3

4.7

2.4

3.4

-

-

-

Retail

1.0

0.8

1.9

0.8

1.6

0.8

1.2

(5.4)

(87.0)

-

Retirement Villages

1.5

-

-

-

-

-

-

-

-

-

Total Non-Core Portfolio

5.0

3.1

7.4

3.1

6.3

3.2

4.6

(5.4)

(62.9)

-

 

 

 

 

 

 

 

 

 

 

 

Total

100.0

40.9

100.0

48.7

100.0

69.2

100.0

(2.4)

(3.4)

3.3

                           

 

1 Contracted rent includes £3.8m pre-let to WeWork at The Bower.

 

During the period, total contracted income reduced by £3.5m as the result of the sale of £82.6m of investment properties and losses from breaks and lease expiries, offset by the purchase of one investment property and rent from new lettings and rent reviews.

 

 

Total Portfolio Contracted Rent

£m

Contracted rent reduced through sales of investment properties

(5.8)

Contracted rent increased from purchases of investment properties

1.3

Total contracted rental change from sales and purchases

(4.5)

Rent lost at break/expiry

(0.7)

Rent reviews and uplifts on lease renewals

0.1

New lettings

1.6

Total increase in the period from asset management activities

1.0

Net decrease in contracted rents in the period

(3.5)

 

 

Investment Portfolio - as at 30 September 2017

 

Portfolio Yields

 

 

EPRA Topped Up NIY

%

Reversionary

%

London Offices

 

 

- Completed, let and available to let

4.3

5.3

- Being redeveloped

-

5.8

Manchester Offices

5.8

6.9

Logistics

7.0

7.1

Total Core Portfolio

5.0

5.9

 

 

 

Regional Offices

8.7

8.7

Retail

7.4

7.6

Total Non-Core Portfolio

8.3

8.3

 

 

 

Total

5.2

6.0

 

Capital Values, Vacancy Rates and Unexpired Lease Terms

 

 

Capital value psf

£

Vacancy rate*

%

WAULT

Years

London Offices

 

 

 

- Completed, let and available to let

943

9.5

6.4

- Being redeveloped

653

-

-

Total London

838

9.5

6.4

Manchester Offices

226

18.6

2.9

Logistics

56

5.6

4.8

Total Core Portfolio

242

7.4

6.1

 

 

 

 

Regional Offices

174

-

6.6

Retail

235

-

6.9

Total Non-Core Portfolio

188

-

6.6

 

 

 

 

Total

239

7.1

6.1

*The vacancy rates exclude assets in the course of redevelopment.

 

Valuation Movements

 

 

Val Change

inc Capex,

Sales &

Purchases

%

Val Change

inc Capex,

excl Sales & Purchases

%

Investment Portfolio Weighting

September 2017

%

Investment Portfolio Weighting

March 2017

%

London Offices

 

 

 

 

- Completed, let and available to let

1.6

1.6

51.1

49.3

- Being redeveloped

1.0

1.0

20.1

12.4

- Held for future development

n/a

n/a

-

3.8

Total London

1.5

1.5

71.2

65.5

Manchester Offices

(0.1)

0.2

8.8

7.0

Logistics

2.2

2.3

15.0

15.4

Total Core Portfolio

1.4

1.5

95.0

87.9

 

 

 

 

 

Regional Offices

(0.9)

(0.9)

2.5

2.3

Retail

-

-

1.0

7.8

Retirement Villages

(25.6)

(25.6)

1.5

2.0

Total Non-Core Portfolio

(4.3)

(9.9)

5.0

12.1

 

 

 

 

 

Total

0.7

0.8

100.0

100.0

 

 

Lease Expiries or Tenant Break Options

 

 

Year to

2018

Year to

2019

Year to

2020

Year to

2021

Year to

2022

% of rent roll

11

11

7

7

18

Number of leases

86

52

38

11

32

Average rent per lease (£)

59,072

97,340

84,900

270,787

248,644

 

We have a strong rental income stream and a diverse tenant base, with the largest tenant in the portfolio accounting for only 8.7% of the rent roll. The top 10 tenants account for 36.7% of the total rent roll and the tenants come from a variety of industries.

 

 

Rank

Tenant

Tenant Industry

Rent

£m

Rent Roll

%

1

Endemol UK Limited

Media

3.9

8.7

2

MullenLowe Limited

Marketing Communications

2.6

5.8

3

Gopivotal (UK) Limited

Technology

2.0

4.5

4

Farfetch UK Limited

Online Retail

1.9

4.2

5

Sainsbury's Supermarkets Limited

Food Retail

1.3

2.8

6

Neulion Limited

Technology

1.0

2.3

7

CBS Interactive Limited

Media

1.0

2.3

8

Allegis Group Limited

Recruitment

1.0

2.2

9

Anomaly UK Limited

Marketing

0.9

2.0

10

Stripe Payments UK Limited

Technology

0.8

1.9

Total

 

16.4

36.7

 

Independent review report to the members of Helical plc

 

Introduction

 

We have reviewed the condensed set of financial statements in the half-yearly financial report of Helical Plc for the six months ended 30 September 2017 which comprises the Unaudited Consolidated Income Statement, the Unaudited Consolidated Balance Sheet, the Unaudited Consolidated Cash Flow Statement, the Unaudited Consolidated Statement of Changes in Equity and the related unaudited notes. We have read the other information contained in the half yearly financial report: Financial Highlights, Chief Executive's Statement, Financial Review and Helical's Property Portfolio and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the company, as a body, in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company as a body, for our review work, for this report, or for the conclusion we have formed.

 

Directors' responsibilities

 

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

 

Our responsibility

 

Our responsibility is to express a conclusion to the company on the condensed set of financial statements in the half-yearly financial report based on our review.

 

Scope of review

 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

 

 

 

Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants

London                 
15 November 2017

 

 

 

 

Unaudited Consolidated Income Statement

 

For the Half Year to 30 September 2017

  

Notes

Half Year to

30 September 2017

£000

Half Year to

30 September 2016

£000

Year to

31 March

2017

£000

Revenue

3

33,207

52,367

99,934

Net rental income

4

18,037

23,911

46,162

Development property (loss)/profit

5

(9,520)

(83)

843

Share of results of joint ventures

13

3,382

(1,044)

(6,528)

Other operating income/(expense)

 

41

(1)

982

Gross profit before net gain on sale and revaluation of investment properties

 

11,940

22,783

41,459

Net gain on sale and revaluation of investment properties

6

3,370

26,353

40,543

Change in fair value of available-for-sale investments

15

1,423

(1,179)

(3,352)

Gross profit

 

16,733

47,957

78,650

Administrative expenses

7

(6,081)

(5,871)

(18,372)

Operating profit

 

10,652

42,086

60,278

Finance costs

8

(13,376)

(13,949)

(25,598)

Finance income

 

1,154

1,199

3,156

Change in fair value of derivative financial instruments

 

2,884

(5,949)

789

Change in fair value of Convertible Bond

 

(127)

7,663

2,973

Foreign exchange gain

 

22

2

(3)

Profit before tax

 

1,209

31,052

41,595

Tax on profit on ordinary activities

9

(809)

672

(2,471)

Profit for the period

 

400

31,724

39,124

 

 

 

 

 

Earnings per share

11

 

 

 

Basic

 

0.3p

27.8p

34.0p

Diluted

 

0.3p

26.6p

33.2p

 

Unaudited Consolidated Statement of Comprehensive Income

 

For the Half Year to 30 September 2017

 

Half Year to

30 September 2017

£000

Half Year to

30 September 2016

£000

Year to

31 March

2017

£000

Profit for the period

400

31,724

39,124

Exchange difference on retranslation of net investments in foreign operations

(18)

21

48

Total comprehensive income for the period

382

31,745

39,172

 

The exchange differences on retranslation of net investments in foreign operations will be reclassified to the Income Statement on disposal.

 

 

Unaudited Consolidated Balance Sheet

 

At 30 September 2017

 

Notes

At

30 September 2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

Non-current assets

 

 

 

 

Investment properties

12

963,481

1,034,687

987,560

Owner occupied property, plant and equipment

 

2,013

2,147

2,124

Investment in joint ventures

13

23,264

26,259

19,882

 

 

988,758

1,063,093

1,009,566

Current assets

 

 

 

 

Land, developments and trading properties

14

95,476

88,294

86,680

Available-for-sale investments

15

-

1,991

-

Corporate tax receivable

 

3,358

1,335

3,320

Trade and other receivables

16

60,322

77,485

73,925

Cash and cash equivalents

17

104,341

52,945

99,262

 

 

263,497

222,050

263,187

Total assets

 

1,252,255

1,285,143

1,272,753

Current liabilities

 

 

 

 

Trade and other payables

18

(57,650)

(62,408)

(56,349)

Borrowings

19

(4,133)

(901)

(2,517)

 

 

(61,783)

(63,309)

(58,866)

Non-current liabilities

 

 

 

 

Borrowings

19

(657,410)

(685,404)

(671,184)

Derivative financial instruments

20

(10,095)

(20,721)

(13,981)

Deferred tax liability

9

(12,734)

(6,800)

(11,825)

 

 

(680,239)

(712,925)

(696,990)

Total liabilities

 

(742,022)

(776,234)

(755,856)

 

 

 

 

 

Net assets

 

510,233

508,909

516,897

 

 

 

 

 

Equity

 

 

 

 

Called-up share capital

21

1,450

1,447

1,447

Share premium account

 

98,798

98,798

98,798

Revaluation reserve

 

182,183

171,600

164,190

Capital redemption reserve

 

7,478

7,478

7,478

Other reserves

 

291

291

291

Retained earnings

 

220,033

229,295

244,693

Equity attributable to equity holders of the parent

 

510,233

508,909

516,897

Non-controlling interests

 

-

-

-

Total equity

 

510,233

508,909

516,897

 

Unaudited Consolidated Cash Flow Statement

    

For the Half Year to 30 September 2017

 

Half Year to

30 September 2017

£000

Half Year to

30 September 2016

£000

Year to

31 March

2017

£000

Cash flows from operating activities

 

 

 

Profit before tax

1,209

31,052

41,595

Depreciation

151

204

391

Net revaluation gain on investment properties

(2,145)

(29,141)

(39,152)

(Gain)/loss on sale of investment properties

(1,225)

2,788

(1,391)

Profit on sale of plant and equipment

-

(13)

(56)

Net financing costs

12,222

12,750

22,442

Change in value of derivative financial instruments

(2,884)

5,949

(789)

Change in fair value of Convertible Bond

127

(7,663)

(2,973)

Share based payment charge

321

283

1,672

Share of results of joint ventures

(3,382)

1,044

6,528

Change in fair value of available-for-sale investment

(1,423)

1,179

3,352

Foreign exchange movement

(22)

32

6

Cash inflows from operations before changes in working capital

2,949

18,464

31,625

Change in trade and other receivables

14,339

(4,319)

876

Change in land, developments and trading properties

(6,734)

5,451

3,789

Change in trade and other payables

(841)

(7,625)

(9,338)

Cash inflows generated from operations

9,713

11,971

26,952

Finance costs

(16,407)

(17,028)

(33,041)

Finance income

56

627

1,413

Tax received/(paid)

5

(2,928)

(3,392)

 

(16,346)

(19,329)

(35,020)

Cash flows from operating activities

(6,633)

(7,358)

(8,068)

Cash flows from investing activities

 

 

 

Additions to investment property

(49,175)

(26,022)

(59,310)

Sale of investment property

80,578

54,919

156,254

Dividends from joint ventures

-

687

1,580

Receipts from/(purchases of) available for sale asset

1,423

(56)

(238)

Sale of plant and equipment

-

49

178

Purchase of leasehold improvements, plant and equipment

(40)

(193)

(442)

Net cash generated from investing activities

32,786

29,384

98,022

Cash flows from financing activities

 

 

 

Borrowings drawn down

11,704

15,725

41,986

Borrowings repaid

(25,526)

(57,709)

(102,887)

Shares issued

3

-

-

Purchase of own shares

-

(944)

(944)

Equity dividends paid

(7,261)

(823)

(3,566)

Net cash used by financing activities

(21,080)

(43,751)

(65,411)

Net increase/(decrease) in cash and cash equivalents

5,073

(21,725)

24,543

Exchange gains on cash and cash equivalents

6

-

49

Cash and cash equivalents at start of period

99,262

74,670

74,670

Cash and cash equivalents at end of period

104,341

52,945

99,262

 

 

Unaudited Consolidated Statement of Changes in Equity

 

At 30 September 2017

 

Share

capital

£000

Share

premium

£000

Revaluation

reserve

£000

Capital

redemption

reserve

£000

Other

reserves

£000

Retained earnings

£000

Own shares

held

£000

Total

£000

At 31 March 2016

1,447

98,798

143,699

7,478

291

229,008

-

480,721

Total comprehensive income

-

-

-

-

-

39,172

-

39,172

Revaluation surplus

-

-

39,152

-

-

(39,152)

-

-

Realised on disposals

-

-

(18,661)

-

-

18,661

-

-

Performance share plan

-

-

-

-

-

1,672

-

1,672

Performance share plan - deferred tax

-

-

-

-

-

(2,062)

-

(2,062)

Share settled bonus

-

-

-

-

-

1,904

-

1,904

Dividends paid

-

-

-

-

-

(3,566)

-

(3,566)

Purchase of own shares

-

-

-

-

-

-

(944)

(944)

Own shares held reserve transfer

-

-

-

-

-

(944)

944

-

At 31 March 2017

1,447

98,798

164,190

7,478

291

244,693

-

516,897

Total comprehensive income

-

-

-

-

-

382

-

382

Revaluation surplus

-

-

2,145

-

-

(2,145)

-

-

Realised on disposals

-

-

15,848

-

-

(15,848)

-

-

Issued share capital

3

-

-

-

-

-

-

3

Performance share plan

-

-

-

-

-

321

-

321

Dividends paid

-

-

-

-

-

(7,261)

-

(7,261)

At 30 September 2017

1,450

98,798

182,183

7,478

291

220,033

-

510,233

                   

 

For a breakdown of total comprehensive income see the Unaudited Consolidated Statement of Comprehensive Income.

 

The adjustment against retained earnings of £321,000 (31 March 2017: £1,672,000) adds back the share based payments charge in accordance with IFRS 2 Share Based Payments.

 

There were net transactions with owners of £7,046,000 (31 March 2017: £2,996,000) made up of the Performance Share Plan credit of £321,000 (31 March 2017: £1,672,000) and related deferred tax debit of £109,000 (31 March 2017: £2,062,000), dividends paid of £7,261,000 (31 March 2017: £3,566,000), the issue of share capital of £3,000 (31 March 2017: £nil), the purchase of own shares of £nil (31 March 2017: £944,000) and the share settled bonus of £nil (31 March 2017: £1,904,000).

 

 

 

Share

capital

£000

Share

premium

£000

Revaluation

reserve

£000

Capital

redemption

reserve

£000

Other

reserves

£000

Retained earnings

£000

Own shares

held

£000

Total

£000

At 31 March 2016

1,447

98,798

143,699

7,478

291

229,008

-

480,721

Total comprehensive income

-

-

-

-

-

31,745

-

31,745

Revaluation surplus

-

-

29,141

-

-

(29,141)

-

-

Realised on disposals

-

-

(1,240)

-

-

1,240

-

-

Performance share plan

-

-

-

-

-

283

-

283

Share settled bonus

-

-

-

-

-

(325)

-

(325)

Dividends paid

-

-

-

-

-

(823)

-

(823)

Purchase of own shares

-

-

-

-

-

-

(944)

(944)

Own shares held reserve transfer

-

-

-

-

-

(944)

944

-

At 30 September 2016

1,447

98,798

171,600

7,478

291

229,295

-

508,909

                   

 

The adjustment against retained earnings of £283,000 adds back the share based payments charge in accordance with IFRS 2 Share Based Payments.

 

There were net transactions with owners of £3,557,000 made up of the performance share plan credit of £283,000 and related deferred tax debit of £1,748,000, dividends paid of £823,000, the purchase of own shares of £944,000 and the share settled bonus of £325,000.

 

 

Unaudited Notes to the Half Year Results

 

1. Financial Information

 

The financial information contained in this statement does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The full accounts for the year ended 31 March 2017, which were prepared under International Financial Reporting Standards as adopted by the European Union and which received an unqualified report from the Auditors, and did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006, have been filed with the Registrar of Companies.

 

These interim condensed unaudited consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The principal accounting policies have remained unchanged from the prior financial period to 31 March 2017.

 

These interim condensed unaudited consolidated financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 March 2017.

 

The Directors have a reasonable expectation that the Group will continue in operational existence for the foreseeable future and have, therefore, used the going concern basis in preparing the financial statements.

 

Principal Risks and Uncertainties       

The responsibility for the governance of the Group's risk profile lies with the Board of Directors of Helical. The Board is responsible for setting the Group's risk strategy by assessing risks, determining its willingness to accept those risks and ensuring that the risks are monitored and that the Group is aware of and, if appropriate, reacts to changes in those risks. The Board is also responsible for allocating responsibility for risk within the Group's management structure.

 

The Group considers its principal risks to be:

•    strategic risk;

•    financial risk;

•    operational risk; and

•    reputational risk.

 

There have been no significant changes to these risk areas in the period nor are there expected to be for the half year to 31 March 2018. A further analysis of these risks is included within the consolidated financial statements of the Group for the year ended 31 March 2017.

 

Use of Estimates and Judgements

The estimates and judgements have remained unchanged from the prior financial year to 31 March 2017.

 

2.  Statement of Directors' Responsibilities

 

Each of the Directors confirms that, to the best of his knowledge, the condensed set of unaudited consolidated financial statements, which has been prepared in accordance with IAS 34 as adopted by the European Union, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer, or the undertakings included in the consolidation as a whole and that the interim management report herein includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.

 

Balances with related parties at 30 September 2017, 30 September 2016 and 31 March 2017 are disclosed in note 24.

 

A list of current Directors is maintained at 5 Hanover Square, London W1S 1HQ and at www.helical.co.uk.

 

The half year statement was approved by the Board on 15 November 2017 and is available from the Company's registered office at 5 Hanover Square, London W1S 1HQ and on the Company's website at www.helical.co.uk.

 

 

 

 

 

On behalf of the Board

Tim Murphy
Finance Director

15 November 2017

 

 

3.  Segmental Information

 

The Group identifies two discrete operating segments whose results are regularly reviewed by the Chief Operating Decision Maker (the Chief Executive) to allocate resources to these segments and to assess their performance. The segments are:

 

•    investment properties, which are owned or leased by the Group for long-term income and for capital appreciation, and trading properties, which are owned or leased with the intention to sell; and,

 

•    development properties, which include sites, developments in the course of construction, completed developments available for sale, and pre-sold developments.

 

Revenue

Investment

and Trading

Half Year to 30.09.17

£000

Developments

Half Year to

30.09.17

£000

Total

Half Year to

30.09.17

£000

Investment

and Trading

Half Year to 30.09.16

£000

Developments

Half Year to

30.09.16

£000

Total

Half Year to

30.09.16

£000

Rental income

20,178

-

20,178

25,531

-

25,531

Development property income

-

12,962

12,962

-

26,836

26,836

Other revenue

67

-

67

-

-

-

Revenue

20,245

12,962

33,207

25,531

26,836

52,367

 

Revenue

 

Investment

and Trading

Year to

31.03.17

£000

Developments

Year to

31.03.17

£000

Total

Year to

31.03.17

£000

Rental income

48,835

-

48,835

Development property income

-

49,994

49,994

Other revenue

1,105

-

1,105

Revenue

49,940

49,994

99,934

 

Profit before tax

Investment

and Trading

Half Year to 30.09.17

£000

Developments

Half Year to

30.09.17

£000

Total

Half Year to

30.09.17

£000

 

Investment and Trading

Half Year to 30.09.16

£000

Developments

Half Year to

30.09.16

£000

Total

Half Year to

30.09.16

£000

Net rental income

18,034

3

18,037

23,935

(24)

23,911

Development property loss

-

(9,520)

(9,520)

-

(83)

(83)

Share of results of joint ventures

2,419

963

3,382

(704)

(340)

(1,044)

Gain on sale and revaluation of investment properties

3,370

-

3,370

26,353

-

26,353

 

23,823

(8,554)

15,269

49,584

(447)

49,137

Fair value movement of available for sale assets

 

 

1,423

 

 

(1,179)

Other operating income/(expense)

 

 

41

 

 

(1)

Gross profit

 

 

16,733

 

 

47,957

Administrative expenses

 

 

(6,081)

 

 

(5,871)

Net finance costs

 

 

(9,465)

 

 

(11,036)

Foreign exchange gain

 

 

22

 

 

2

Profit before tax

 

 

1,209

 

 

31,052

               

 

 

 

Profit before tax

Investment

and Trading

Year to

31.03.17

£000

 

Developments

Year to

31.03.17

£000

 

Total

Year to

31.03.17

£000

Net rental income

46,213

(51)

46,162

Development property profit

-

843

843

Share of results of joint ventures

(2,049)

(4,479)

(6,528)

Gain on sale and revaluation of investment properties

40,543

-

40,543

 

84,707

(3,687)

81,020

Fair value movement of available for sale assets

 

 

(3,352)

Other operating income

 

 

982

Gross profit

 

 

78,650

Administrative expenses

 

 

(18,372)

Net finance costs

 

 

(18,680)

Foreign exchange loss

 

 

(3)

Profit before tax

 

 

41,595

 

Balance sheet

Investment and Trading

At 30.09.17

£000

 

Developments

At 30.09.17

£000

 

Total

At 30.09.17

£000

Investment

and Trading

At 30.09.16

£000

 

Developments

At 30.09.16

£000

 

Total

At 30.09.16

£000

Investment properties

963,481

-

963,481

1,034,687

-

1,034,687

Land, development and trading properties

28

95,448

95,476

28

88,266

88,294

Investment in joint ventures

4,233

19,031

23,264

3,192

23,067

26,259

 

967,742

114,479

1,082,221

1,037,907

111,333

1,149,240

Other assets

 

 

170,034

 

 

135,903

Total assets

 

 

1,252,255

 

 

1,285,143

Liabilities

 

 

(742,022)

 

 

(776,234)

Net assets

 

 

510,233

 

 

508,909

 

Balance sheet

 

Investment

and Trading

At 31.03.17

£000

Developments

At 31.03.17

£000

Total

At 31.03.17

£000

Investment properties

987,560

-

987,560

Land, development and trading properties

28

86,652

86,680

Investment in joint ventures

1,814

18,068

19,882

 

989,402

104,720

1,094,122

Other assets

 

 

178,631

Total assets

 

 

1,272,753

Liabilities

 

 

(755,856)

Net assets

 

 

516,897

 

4.  Net Rental Income

 

 

Half Year to

30 September 2017

£000

Half Year to

30 September 2016

£000

Year to

31 March

2017

£000

Gross rental income

20,178

25,531

48,835

Rents payable

(83)

(17)

(68)

Property overheads

(1,991)

(1,378)

(2,283)

Net rental income

18,104

24,136

46,484

Net rental income attributable to profit share partner

(67)

(225)

(322)

Group share of net rental income

18,037

23,911

46,162

 

 

5.  Development Property (Loss)/Profit

 

 

Half Year to

30 September 2017

£000

Half Year to

30 September 2016

£000

Year to

31 March

2017

£000

Development property income

12,962

26,836

49,994

Cost of sales

(10,974)

(18,938)

(37,576)

Sales expenses

(53)

(4,012)

(5,275)

Provision against book values

(11,455)

(3,969)

(6,300)

Development property (loss)/profit

(9,520)

(83)

843

 

6.  Net Gain on Sale and Revaluation of Investment Properties

 

 

Half Year to

30 September 2017

£000

Half Year to

30 September 2016

£000

Year to

31 March

 2017

£000

Net proceeds from the sale of investment properties

81,489

54,919

156,939

Book value (note 12)

(79,203)

(57,243)

(154,863)

Tenants incentives on sold investment properties

(1,061)

(464)

(685)

Gain/(loss) on sale of investment properties

1,225

(2,788)

1,391

Revaluation surplus on investment properties

2,145

29,141

39,152

Net gain on sale and revaluation of investment properties

3,370

26,353

40,543

 

7.  Administrative Expenses

 

 

Half Year to

30 September 2017

£000

Half Year to

30 September 2016

£000

Year to

31 March

2017

£000

Administration costs

(5,606)

(5,801)

(10,799)

Performance related awards

(340)

(285)

(6,854)

National Insurance on performance related awards

(135)

215

(719)

Administrative expenses

(6,081)

(5,871)

(18,372)

 

8.         Finance Costs

 

 

Half Year to

30 September 2017

£000

Half Year to

30 September 2016

£000

Year to

31 March

2017

£000

Interest payable on bank loans, bonds and overdrafts

(14,471)

(14,923)

(28,586)

Other interest payable and similar charges

(2,353)

(2,520)

(4,913)

Interest capitalised

3,448

3,494

7,901

Finance costs

(13,376)

(13,949)

(25,598)

 

 

9.  Tax on Profit on Ordinary Activities

 

 

Half Year to

30 September 2017

£000

Half Year to

30 September 2016

£000

Year to

31 March

2017

£000

The tax (charge)/credit is based on the profit for the period and represents:

 

United Kingdom corporation tax at 19%

 

 

 

- Group corporation tax

-

-

-

- Adjustment in respect of prior periods

(10)

-

1,521

- Overseas tax

-

2

2

Current tax (charge)/credit

(10)

2

1,523

 

 

 

 

Deferred tax

 

 

 

- Capital allowances

403

(847)

(1,023)

- Tax losses

1,158

674

(4,347)

- Unrealised chargeable gains

(1,562)

(164)

1,803

- Other temporary differences

(798)

1,007

(427)

Deferred tax (charge)/credit

(799)

670

(3,994)

Total tax (charge)/credit for period

(809)

672

(2,471)

 

Deferred tax

 

At

30 September 2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

Capital allowances

(2,566)

(2,793)

(2,969)

Tax losses

9,332

13,195

8,174

Unrealised chargeable gains

(23,893)

(24,298)

(22,331)

Other temporary differences

4,393

7,096

5,301

Deferred tax liability

(12,734)

(6,800)

(11,825)

 

Under IAS 12, deferred tax provisions are made for the tax that would potentially be payable on the realisation of investment properties and other assets at book value.

 

If upon sale of the investment properties the group retained all the capital allowances, the deferred tax provision in respect of capital allowances of £2,566,000 would be released and further capital allowances of £26,254,000 would be available to reduce future tax liabilities.

 

The net deferred tax asset in respect of other temporary differences arises from tax relief available to the Group on the mark to market valuation of financial instruments, the future vesting of share awards and other timing differences.

 

10. Dividends

 

 

Half Year to

30 September 2017

£000

Half Year to

30 September 2016

£000

Year to

31 March

2017

£000

Attributable to equity share capital

 

 

 

Ordinary

 

 

 

- Interim paid 2.40p per share

-

-

2,743

- Prior period final paid 6.20p per share (2016: 0.72p)

7,261

823

823

 

7,261

823

3,566


The interim dividend of 2.50p (30 September 2016: 2.40p per share) was approved by the Board on 14 November 2017 and will be paid on 22 December 2017 to Shareholders on the register on 24 November 2017. This interim dividend, amounting to £2,934,000 has not been included as a liability as at 30 September 2017.

 

 

11. Earnings Per 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 period. This is a different basis to the net asset per share calculations which are based on the number of shares at the year end. Shares held by the Helical Employees' Share Ownership Plan Trust (the "ESOP"), which has waived its entitlement to receive dividends, are treated as cancelled for the purpose 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 and the post tax effect of dividends on the assumed exercise of all dilutive options.

 

The earnings per share is calculated in accordance with IAS 33 and the best practice recommendations of the European Public Real Estate Association ("EPRA").

 

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below:

 

 

Half Year to
30 September 2017

000's

Half Year to
30 September 2016

000's

Year to

31 March

2017

000's

Ordinary shares in issue

118,534

118,184

118,196

Weighting adjustment

(1,426)

(3,901)

(3,110)

Weighted average ordinary shares in issue for calculation of basic and EPRA earnings per share

117,108

114,283

115,086

Weighted average ordinary shares issued on share settled bonuses

840

1,197

1,402

Weighted average ordinary shares to be issued under performance share plan

1,600

3,700

1,403

Weighted average ordinary shares in issue for calculation of diluted earnings per share

119,548

119,180

117,891

 

 

£000

£000

£000

Earnings used for calculation of basic and diluted earnings per share

400

31,724

39,124

Basic earnings per share

0.3p

27.8p

34.0p

Diluted earnings per share

0.3p

26.6p

33.2p

         

 

 

 

£000

£000

£000

Earnings used for calculation of basic and diluted earnings per share

400

31,724

39,124

Net gain on sale and revaluation of investment properties      - subsidiaries

(3,370)

(26,353)

(40,543)

                                                                                                - joint ventures

(2,331)

518

1,929

Tax on profit/(loss) on disposal of investment properties

659

(308)

420

Fair value movement on derivative financial instruments        - subsidiaries

(2,884)

5,949

(789)

                                                                                                - joint ventures

6

-

42

Fair value movement on Convertible Bond

127

(7,663)

(2,973)

Fair value movement of available-for-sale investment

(1,423)

1,179

3,352

Deferred tax on adjusting items

1,876

(66)

(37)

(Loss)/earnings used for calculations of EPRA earnings per share

(6,940)

4,980

525

 

 

 

 

EPRA (loss)/earnings per share

(5.9p)

4.4p

0.5p


The earnings used for the calculation of EPRA earnings per share includes net rental income and development property profits but excludes trading property gains.

 

 

12. Investment Properties

 

 

Half Year to

30 September 2017

£000

Half Year to

30 September 2016

£000

Year to

31 March

2017

£000

Book value at 1 April

987,560

1,035,033

1,035,033

Additions at cost

50,559

27,806

68,778

Disposals

(79,203)

(57,243)

(154,863)

Revaluation surplus

2,145

29,141

39,152

Revaluation surplus attributable to profit share partners

2,420

(50)

(540)

As at period end

963,481

1,034,687

987,560

 

All properties are stated at market value as at 30 September 2017, and are valued by professionally qualified external valuers (Cushman & Wakefield LLP) in accordance with the Valuation-Professional Standards published by the Royal Institution of Chartered Surveyors. The fair value of the investment properties at 30 September 2017 is as follows:

 

 

Half Year to

30 September

2017

£000

Half Year to

30 September 2016

£000

Year to

31 March

2017

£000

Book value

963,481

1,034,687

987,560

Lease incentives and costs included in trade and other receivables

16,065

11,323

15,440

Fair value

979,546

1,046,010

1,003,000

 

Interest capitalised in respect of the refurbishment of investment properties at 30 September 2017 amounted to £7,174,000 (30 September 2016: £8,355,000; 31 March 2017: £10,972,000). Interest capitalised during the period in respect of the refurbishment of investment properties amounted to £408,000.

 

The historical cost of investment property is £791,823,000 (30 September 2016: £861,338,000; 31 March 2017: £822,161,000).

 

13. Joint Ventures

 

Share of results of joint ventures

Half Year to

30 September 2017

£000

Half Year to

30 September 2016

£000

Year to

31 March

2017

£000

Gross rental income

5

794

931

Property overheads

(164)

(90)

(100)

Net rental (expense)/income

(159)

704

831

Net gain/(loss) on revaluation of investment properties

2,331

(510)

(1,875)

Loss on sale of investment properties

-

(8)

(54)

Development profit/(loss)

1,367

116

(35)

Provision against book values

-

(2,668)

(6,524)

Other operating expense

(63)

-

(1,118)

Administrative expenses

(127)

(175)

(338)

Finance costs

(709)

(105)

(2)

Finance income

5

1,141

1,233

Change in fair value of derivative financial instruments

(6)

-

(42)

Profit/(loss) before tax

2,639

(1,505)

(7,924)

Tax

(89)

461

1,396

Profit/(loss) after tax

2,550

(1,044)

(6,528)

Accounting adjustment*

832

-

-

Share of results of joint ventures

3,382

(1,044)

(6,528)

 

 

Investment in joint ventures

At

30 September 2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

Summarised balance sheets

 

 

 

Non-current assets

 

 

 

Investment properties

19,995

12,833

13,907

Owner occupied property, plant and equipment

22

88

30

Deferred Tax

1,761

907

1,811

Derivative financial instruments

51

-

52

 

21,829

13,828

15,800

Current assets

 

 

 

Land, development and trading properties

103,888

88,831

89,115

Trade and other receivables

6,522

2,918

1,327

Cash and cash equivalents

8,056

11,690

9,745

 

118,466

103,439

100,187

Current liabilities

 

 

 

Trade and other payables

(21,901)

(17,184)

(17,699)

 

(21,901)

(17,184)

(17,699)

Non-current liabilities

 

 

 

Trade and other payables

(25,680)

(31,211)

(23,124)

Borrowings

(70,282)

(42,613)

(55,282)

 

(95,962)

(73,824)

(78,406)

Net assets pre adjustment

22,432

26,259

19,882

Accounting adjustment*

832

-

-

Net assets

23,264

26,259

19,882


*The adjustment in economic interest has been made for the Group's share of the loss incurred on one of its joint ventures in the period to ensure the Group's interest is shown at its recoverable amount.

 

The Directors' valuation of trading and development stock shows a surplus of £11,000,000 (30 September 2016: £7,000,000; 31 March 2017: £7,500,000) above book value.

 

14. Land, Developments and Trading Properties

 

 

At

30 September 2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

Development properties

95,448

88,266

86,652

Properties held as trading stock

28

 

95,476

88,294

86,680


The Directors' valuation of trading and development stock shows a surplus of £943,000 (30 September 2016: £6,573,000; 31 March 2017: £5,014,000) above book value.

 

Total interest to date in respect of the development of sites is included in stock to the extent of £11,660,000 (30 September 2016: £11,441,000; 31 March 2017: £11,178,000). Interest capitalised during the period in respect of development sites amounted to £481,000.

 

 

15.       Available-For-Sale Investments

 

 

Half Year to

30 September 2017

£000

Half Year to

30 September 2016

£000

Year to

31 March

2017

£000

Fair value at 1 April

-

3,114

3,114

Additions

-

56

248

Fair value movement

1,423

(1,179)

(3,352)

Disposals

(1,423)

-

(10)

Fair value at period end

-

1,991

-


The fair values of the Group's available-for-sale investments have been determined by assessing the expected future consideration receivable from these investments, representing Level 3 fair value measurements as defined by IFRS 13 Fair Value Measurement as the value cannot be derived from observable market data. The fair value of the asset is sensitive only to potential sales proceeds. The gain of £1,423,000 recognised in the period is the result of cash received in relation to a previously fully impaired asset.

 

16. Trade and Other Receivables

 

 

 

At

30 September 2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

Trade receivables

8,644

13,974

12,836

Other receivables

28,733

36,022

27,462

Prepayments and accrued income

22,945

27,489

33,627

 

60,322

77,485

73,925

 

17.       Cash and Cash Equivalents

 

 

At

30 September 2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

Rent deposits and cash held at managing agents

4,896

7,513

4,046

Restricted cash

71,167

9,176

12,111

Cash deposits

28,278

36,256

83,105

 

104,341

52,945

99,262


Restricted cash is made up of cash held by solicitors and cash in blocked accounts. Of the blocked amount, £54,408,000 relates to the sale of a property in the period and is expected to be released in the near future upon the successful refinancing of an existing facility.

 

18.       Trade and Other Payables

 

 

 

At

30 September 2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

Trade payables

14,704

17,256

12,197

Other payables

2,255

3,494

3,022

Accruals and deferred income

40,691

41,658

41,130

 

57,650

62,408

56,349

 

 

 

19. Borrowings

 

 

At

30 September 2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

Current borrowings

4,133

901

2,517

Borrowings repayable within:

 

 

 

- one to two years

104,067

4,133

4,150

- two to three years

421,886

99,250

304,641

- three to four years

1,036

424,077

215,667

- four to five years

57,500

84,053

1,053

- five to six years

1,110

1,072

73,353

- six to ten years

71,811

72,819

72,320

Non-current borrowings

657,410

685,404

671,184

Total borrowings

661,543

686,305

673,701

 

Included within borrowings repayable within one to two years is the Convertible Bond at its fair value of £99,901,000. It is a financial instrument classified as Level 1 under the IFRS 13 fair value hierarchy.

 

 

At

30 September 2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

Total borrowings

661,543

686,305

673,701

Cash

(104,341)

(52,945)

(99,262)

Net borrowings

557,202

633,360

574,439

 

Net borrowings excludes the Group's share of borrowings in joint ventures of £70,282,000 (30 September 2016: £42,613,000; 31 March 2017: £55,282,000) and cash of £8,056,000 (30 September 2016: £11,690,000; 31 March 2017: £9,745,000). All borrowings in joint ventures are secured.

 

 

At

30 September 2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

Net assets

510,233

508,909

516,897

Gearing

109%

124%

111%

 

20. Derivative Financial Instruments

 

 

At

30 September 2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

Derivative financial instruments asset

-

-

-

Derivative financial instruments liability

(10,095)

(20,721)

(13,981)

 

The fair values of the Group's outstanding interest rate swaps have been estimated by calculating the present values of future cash flows, using appropriate market discount rates, representing Level 2 fair value measurements as defined in IFRS 13 Fair Value Measurement.

 

21.       Share Capital

 

 

At

30 September 2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

Authorised

39,577

39,577

39,577

 

The authorised share capital of the Company is £39,576,626.60 divided into ordinary shares of 1p each and deferred shares of 1/8p each.

 

Allotted, called up and fully paid:          

 

 

 

- 118,534,278 (31 March 2017: 118,196,215) ordinary shares of 1p each

1,185

1,182

1,182

- 212,145,300 deferred shares of 1/8p each

265

265

265

 

1,450

1,447

1,447

 

22. Own Shares Held

 

Following approval at the 1997 Annual General Meeting the Company established the Helical Employees' Share Ownership Plan Trust (the "ESOP") to be used as part of the remuneration arrangements for employees. The purpose of the ESOP is to facilitate and encourage the ownership of shares by, or for the benefit of employees, by the acquisition and distribution of shares in the Company.

 

The ESOP purchases shares in the Company to satisfy the Company's obligations under its Share Option Scheme and Performance Share Plan.

 

At 30 September 2017 the ESOP held 1,262,000 ordinary shares in Helical plc (30 September 2016: 3,901,000; 31 March 2017: 1,262,000).

 

At 30 September 2017 options over nil (30 September 2016 and 31 March 2017: nil) ordinary shares in Helical plc had been granted through the ESOP. At 30 September 2017 awards over 3,735,000 (30 September 2016: £7,524,000 and 31 March 2017: £4,744,000) ordinary shares in Helical plc, made under the terms of the Performance Share Plan, were outstanding.

 

23. Net Assets Per Share

 

 

At

30 September 2017

£000

Number

of

Shares

000's

At

30 September 2017

Pence Per Share

Net asset value

510,233

118,534

 

Less:        - own shares held by ESOP

 

(1,262)

 

                - deferred shares

(265)

 

 

Basic net asset value

509,968

117,272

435

Add: share settled bonus

 

840

 

Add: dilutive effect of the Performance Share Plan

 

1,570

 

Diluted net asset value

509,968

119,682

426

Adjustment for:

 

 

 

                - fair value of financial instruments

10,043

 

 

                - fair value movement on Convertible Bond

(99)

 

 

                - deferred tax

24,999

 

 

Adjusted diluted net asset value

544,911

119,682

455

Adjustment for:

 

 

 

                - fair value of trading and development properties

11,943

 

 

EPRA net asset value

556,854

119,682

465

Adjustment for:

 

 

 

                - fair value of financial instruments

(10,043)

 

 

                - deferred tax

(24,999)

 

 

EPRA triple net asset value

521,812

119,682

436

 

The adjustment for the fair value of trading and development properties represents the surplus as at 30 September 2017.

 

 

At

31 March

2017

£000

Number

of

Shares

000's

At

31 March

2017

Pence Per Share

Net asset value

516,897

118,196

 

Less:        - own shares held by ESOP

 

(1,262)

 

                - deferred shares

(265)

 

 

Basic net asset value

516,632

116,934

442

Add: share settled bonus

 

1,402

 

Add: dilutive effect of the Performance Share Plan

 

1,410

 

Diluted net asset value

516,632

119,746

431

Adjustment for:

 

 

 

                - fair value of financial instruments

13,929

 

 

                - fair value movement on Convertible Bond

(226)

 

 

                - deferred tax

23,124

 

 

Adjusted diluted net asset value

553,459

119,746

462

Adjustment for:

 

 

 

                - fair value of trading and development properties

12,514

 

 

EPRA net asset value

565,973

119,746

473

Adjustment for:

 

 

 

                - fair value of financial instruments

(13,929)

 

 

                - deferred tax

(23,124)

 

 

EPRA triple net asset value

528,920

119,746

442

 

The net asset values per share have been calculated in accordance with guidance issued by the European Public Real Estate Association ("EPRA").

 

The adjustments to the net asset value comprise the amounts relating to the Group and its share of joint ventures.

 

24. Related Party Transactions

 

At 30 September 2017, 30 September 2016 and 31 March 2017 the following amounts were due from the Group's joint ventures.

 

 

At

30 September 2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

King Street Developments (Hammersmith) Ltd

9,923

6,818

8,162

Shirley Advance LLP

509

11,688

503

Barts Square companies

(13)

-

(13)

Helical Sosnica Sp. zoo

1,104

1,112

1,126

Old Street Holdings LP

3

169

3

Creechurch Place Ltd

16,797

14,267

15,883

 

 

25. See-Through Analysis

 

Helical holds a significant proportion of its property assets in joint ventures with partners that provide the majority of the equity required to purchase the assets, whilst relying on the Group to provide asset management or development expertise. Accounting convention requires Helical to account under IFRS for our share of the net results and net assets of joint ventures in limited detail in the income statement and balance sheet. Net asset value per share, a key performance measure used in the real estate industry, as reported in the financial statements under IFRS, does not provide shareholders with the most relevant information on the fair value of assets and liabilities within an ongoing real estate company with a long term investment strategy.

 

This analysis incorporates the separate components of the results of the consolidated subsidiaries and Helical's share of its joint ventures' results into a 'see-through' analysis of our property portfolio, debt profile and the associated income streams and financing costs, to assist in providing a comprehensive overview of the Group's activities.

 

See-Through Net Rental Income

Helical's share of the gross rental income, head rents payable and property overheads from property assets held in subsidiaries and in joint ventures are shown in the table below.

 

 

 

Half Year to

30 September

2017

£000

Half Year to
30 September

2016

£000

Year to

31 March

2017

£000

Gross rental income

- subsidiaries

20,178

25,531

48,835

 

- joint ventures

5

794

931

Total gross rental income

 

20,183

26,325

49,766

Rents payable

- subsidiaries

(83)

(17)

(68)

Property overheads

- subsidiaries

(1,991)

(1,378)

(2,283)

 

- joint ventures

(164)

(90)

(100)

Net rental income attributable to profit share partner

 

(67)

(225)

(322)

See-through net rental income

 

17,878

24,615

46,993

             

 

See-Through Net Development (Losses)/Profits

Helical's share of development (losses)/profits from property assets held in subsidiaries and in joint ventures are shown in the table below.

 

 

Half Year to

30 September

2017

£000

Half Year to

30 September

2016

£000

Year to

 31 March

2017

£000

In parent and subsidiaries

1,935

     3,886

7,143

In joint ventures

1,367

116

(35)

Total gross development profit

3,302

4,002

7,108

Provision against stock

- subsidiaries

(11,455)

(3,969)

(6,300)

 

- joint ventures

-

(2,668)

(6,524)

See-through development (losses)/profits

(8,153)

(2,635)

(5,716)

 

 

See-Through Net Gain on Sale and Revaluation of Investment Properties

Helical's share of the net gain on the sale and revaluation of investment properties held in subsidiaries and joint ventures are shown in the table below.

 

 

 

Half Year to

30 September

2017

£000

Half Year to

30 September

2016

£000

Year to

31 March

2017

£000

Revaluation surplus on investment properties

- subsidiaries

2,145

29,141

39,152

 

- joint ventures

2,331

(510)

(1,875)

Total revaluation surplus

 

4,476

28,631

37,277

Net gain/(loss) on sale of investment properties

- subsidiaries

1,225

(2,788)

1,391

 

- joint ventures

-

(8)

(54)

Total net gain/(loss) on sale of investment properties 

1,225

(2,796)

1,337

See-through net gain on sale and revaluation of investment properties

5,701

25,835

38,614

           

 

See-Through Net Finance Costs

Helical's share of the interest payable, finance charges, capitalised interest and interest receivable on bank borrowings and cash deposits in subsidiaries and in joint ventures are shown in the table below.

 

 

 

Half Year to

30 September

2017

£000

Half Year to

30 September

2016

£000

Year to

31 March

2017

£000

Interest payable on bank loans and overdrafts

- subsidiaries

14,471

14,923

28,586

 

- joint ventures

709

105

2

Total interest payable on bank loans and overdrafts

15,180

15,028

28,588

Other interest payable and similar charges

- subsidiaries

2,353

2,520

4,913

Interest capitalised

- subsidiaries

(3,448)

(3,494)

(7,901)

Total finance costs

 

14,085

14,054

25,600

Interest receivable and similar income

- subsidiaries

(1,154)

(1,199)

(3,156)

 

- joint ventures

(5)

(1,141)

(1,233)

See-through net finance costs

 

12,926

11,714

21,211

 

See-Through Property Portfolio

Helical's share of the investment, trading and development property portfolio in subsidiaries and joint ventures are shown in the table below.

 

 

 

At

30 September 2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

Investment property

- subsidiaries

979,546

1,046,010

1,003,000

 

- joint ventures

19,995

12,833

13,907

Total investment property

 

999,541

1,058,843

1,016,907

Trading and development stock

- subsidiaries

95,476

88,294

86,680

 

- joint ventures

103,888

88,831

89,115

Total trading and development stock

 

199,364

177,125

175,795

Trading and development stock surplus

- subsidiaries

943

6,573

5,014

 

- joint ventures

11,000

7,000

7,500

Total trading and development stock surpluses

 

11,943

13,573

12,514

Total trading and development stock at fair value

 

211,307

190,698

188,309

See-through property portfolio

 

1,210,848

1,249,541

1,205,216

           

 

 

See-Through Net Borrowings

Helical's share of borrowings and cash deposits in parent and subsidiaries and joint ventures are shown in the table below.

 

 

At

30 September

2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

Gross borrowings less than one year

- subsidiaries

4,133

901

2,517

Gross borrowings more than one year

- subsidiaries

657,410

685,404

671,184

 

Total

661,543

686,305

673,701

Gross borrowings less than one year

- joint ventures

-

-

-

Gross borrowings more than one year

- joint ventures

70,282

42,613

55,282

 

Total

70,282

42,613

55,282

Cash and cash equivalents

- subsidiaries

(104,341)

(52,945)

(99,262)

 

- joint ventures

(8,056)

(11,690)

(9,745)

See-through net borrowings

619,428

664,283

619,976

 

See-Through Net Operating Income

 

 

Half year to

30 September 2017

£000

Half year to

30 September 2016

£000

Year to

31 March

2017

£000

Net rental income

17,878

24,615

46,993

Development profits (before provisions)

3,302

4,002

7,108

Gain/(loss) on sale of investment properties

1,225

(2,796)

1,337

Net operating income

22,405

25,821

55,438

 

26. See-Through Interest Cover, Gearing and Loan to Value

 

 

At

30 September 2017

£000

At

30 September 2016

£000

At

31 March

2017

£000

Interest cover

1.7x

2.2x

2.6x

Gearing

121%

131%

120%

Loan to value

51%

53%

51%

 

27. Capital Commitments

 

The Group has a commitment of £51,868,000 (30 September 2016: £131,085,000, 31 March 2017: £69,830,000) in relation to construction contracts, which are due to be completed in the period to March 2020. Of the total, £4,015,000 relates to the Group's investment property portfolio and £10,614,000 are in relation to the Group's residential scheme at Barts Square.

 

28. Post Balance Sheet Events

 

Since the period end, the Group has sold, an investment property, C-Space EC1, for £74.0m and its Retirement Village portfolio for £101.5m.

 

 

 

HELICAL PLC

 

Registered in England and Wales No. 156663

 

Registered Office:
5 Hanover Square
London

W1S 1HQ

 

T: 020 7629 0113

F: 020 7408 1666

 

E: [email protected]


www.helical.co.uk

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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