TIDMHLCL
RNS Number : 1763G
Helical PLC
25 May 2017
HELICAL PLC
("Helical" or the "Group" or the "Company")
Annual Results for the Year to 31 March 2017
HELICAL'S LONDON PORTFOLIO CONTINUES TO DELIVER
Gerald Kaye, Chief Executive, commented:
"Helical has a dynamic portfolio with good upside potential
through a combination of development, refurbishment and significant
asset management opportunities. We believe our concentration on
offices and mixed use assets in London, offices in Manchester and
well located logistics units will provide capital growth from
development gains and rising income streams.
"We have ambition to continue to grow the Company and have
actively sought to add to our development pipeline with exciting
new schemes, particularly in London. Rebalancing the portfolio
through the sale of non-core assets enables us to recycle some of
the value we have created in recent years and fully pursue those
opportunities that we have identified."
Financial Highlights
Results
-- EPRA net asset value per share up 3.7% to 473p (31 March 2016: 456p).
-- EPRA earnings per share of 0.5p (2016: 17.1p).
-- IFRS basic earnings per share of 34.0p (2016: 91.3p).
-- IFRS Profit before tax of GBP41.6m (2016: GBP114.0m).
-- Total Accounting Return of 8.3% (2016: 22.5%).
-- See-through Total Property Return of GBP79.9m (2016: GBP164.6m).
- Group's share of net rental income of GBP47.0m (2016: GBP43.4m) - up 8.3%.
- Development losses of GBP5.7m (2016: profits of GBP27.5m),
after provisions of GBP12.8m (2016: GBP6.4m).
- Net gain on sale and revaluation of investment properties of GBP38.6m
(2016: GBP93.7m).
-- Final dividend proposed of 6.20p per share (2016: 2(nd) interim plus final 5.87p) - up 5.6%.
Property Valuations
-- Group's share of property portfolio GBP1,205m (31 March 2016: GBP1,240m).
-- Unleveraged return of property portfolio as measured by IPD
of 9.4% (2016: 21.7%) compared to 4.4% (2016: 11.4%) for the
benchmark index.
-- Investment property valuations, on a like-for-like basis, up
5.2% (4.5% including sales and purchases).
Financing
-- See-through loan to value reduced to 51% (31 March 2016: 55%).
-- Average maturity of the Group's share of debt of 3.6 years
(31 March 2016: 4.5 years) at an average cost of 4.3% (31 March
2016: 4.2%).
-- Group's share of cash and undrawn bank facilities at 31 March 2017 of GBP267m
(31 March 2016: GBP193m).
Operational Highlights
London Portfolio - strong valuation performance supported by
ongoing lettings progress and the completion of refurbishments
-- 9.8% valuation increase, on a like-for-like basis, of
see-through London investment portfolio, valued at GBP666m at 31
March 2017 (65.5% of investment portfolio) compared with GBP593m at
31 March 2016 (56.4%).
-- Contracted rents on our see-through London portfolio at 31
March 2017, including pre-lets at The Bower, increased to GBP27.9m
(2016: GBP23.6m) compared to an ERV of GBP45.0m (2016:
GBP45.4m).
-- At 25 Charterhouse Square EC1, refurbishment works on this
43,600 sq ft building were completed in March 2017 with 50% of the
office space (18,725 sq ft) let at GBP75 psf.
-- At The Loom E1, a major repositioning of the building was
completed in September 2016 and 19,275 sq ft is currently available
with 2,750 sq ft under offer. Average contracted rents of GBP37.50
psf compare to lettings during the year of up to GBP54 psf.
-- Planning permission granted at Power Road Studios, Chiswick
W4 for 42,500 sq ft of new office space.
-- At The Bower EC1, 58,907 sq ft of Phase 2, The Tower, was pre-let to WeWork in November 2016.
-- At Barts Square EC1, 118 (82%) of the 144 residential units
in Phase One had exchanged by 24 May 2017 (31 March 2016: 102
units) at an average of GBP1,570 psf, with a further three
reserved.
Regional Portfolio - asset recycling providing stronger focus on
Manchester offices and logistics units
-- 2.1% valuation decrease, on a like-for-like basis, in the
see-through Regional investment portfolio, valued at GBP351m at 31
March 2017 (34.5% of investment portfolio) compared with GBP460m at
31 March 2016 (43.6%).
-- Contracted gross rents on see-through Regional investment
portfolio at 31 March 2017 of GBP24.3m (2016: GBP32.4m) compared to
an ERV of GBP26.6m (2016: GBP35.6m).
-- Regional investment portfolio comprised 9.3% offices, 5.0% in
town retail, 2.8% retail parks, 15.4% logistics and 2.0% other
(percentages of whole investment portfolio at year end).
-- Sales of 22 regional assets during the period comprising 13
logistics units, three offices and six retail assets for GBP117m at
a 1.5% premium to March 2016 values.
-- The Morgan Quarter, Cardiff and a retail park at Great
Yarmouth sold post year end for a total of GBP59m.
-- Trinity Court, a 47,500 sq ft office building in Manchester,
acquired for GBP12.9m post year end.
-- 39,047 sq ft let at Churchgate House, Manchester at average
rents of GBP17.27 psf, 12.7% above March 2016 ERV.
-- 92,672 sq ft logistics unit let in Burton-on-Trent at GBP5.50 psf, 5% above March 2016 ERV.
-- Since 31 March 2016, 96 retirement village units sold for
GBP39.3m with 53 reserved or exchanged for GBP27.4m.
-- Land at Liphook sold for GBP3.7m at a profit of GBP3.1m.
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
Results Presentation
Helical will be holding a presentation for analysts and
investors at 9am, Thursday 25 May 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
her at jenni.nkomo@fticonsulting.com.
Helical plc will host a live conference call and webcast. The
details are as follows:
Conference Call Details:
Participants, Local - London, United
Kingdom: +44 (0)330 336 9411
Confirmation Code: 5857195
Webcast Link:
http://webcasting.brrmedia.co.uk/broadcast/591f0b181ef2297b08216e7c
The presentation will also be on the Company's website
www.helical.co.uk
Financial Highlights
Year to
Year to 31 March 2016
Notes 31 March 2017 Restated
See-through Income Statement 1, 8 GBPm GBPm
--------------------------------------------- ------ -------------- --------------
Net rental income 47.0 43.4
Development property (losses)/profits (5.7) 27.5
Gain on revaluation of investment properties 37.3 49.8
Gain on sale of investment properties 1.3 43.9
----------------------------------------------------- -------------- --------------
Total property return 79.9 164.6
----------------------------------------------------- -------------- --------------
IFRS Profit before tax 41.6 114.0
EPRA earnings 0.5 19.6
Earnings Per Share and Dividends Pence Pence
-------------------------------------- ------- -------
Basic earnings per share 2 34.0 91.3
Diluted earnings per share 2 33.2 88.0
EPRA earnings per share 2 0.5 17.1
Dividends per share paid in year 3.12 12.60
Dividends per share declared for year 8.60 8.17
-------------------------------------- ------- -------
At
At 31 March 2016
31 March 2017 Restated
See-through Balance Sheet 3 GBPm GBPm
------------------------------------------------ --- -------------- --------------
See-through property portfolio 1,205.2 1,240.0
See-through net borrowings 620.0 681.8
Net assets 516.9 480.7
------------------------------------------------ --- -------------- --------------
Net assets per share, gearing and loan to value
------------------------------------------------ --- -------------- --------------
EPRA Net Asset Value per share 4 473p 456p
See-through loan to value 5 51% 55%
Pro-forma see-through loan to value 6 49% n/a
See-through net gearing 7 120% 142%
------------------------------------------------ --- -------------- --------------
Notes
1. Includes Group's share of income and gains of its
subsidiaries and joint ventures. See Appendix 1.
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 GBP38.6m (2016: GBP93.7m) but include
development losses of GBP5.7m (2016: profits of GBP27.5m).
3. Includes the Group's share of assets and liabilities of its
subsidiaries and joint ventures. See Appendix 1.
4. The EPRA Net Asset Value per share at 31 March 2016 has been
restated from 461p for the matters referred to in note 25.
5. See-through loan to value is the ratio of see-through net
borrowings to see-through property portfolio. See Appendix 2.
6. See-through loan to value at 31 March 2017, adjusted for
GBP65m of sales proceeds and GBP13m of purchases since the year
end.
7. See-through net gearing is the ratio of see-through net
borrowings to net assets. See Appendix 2.
8. See the Glossary in Appendix 6 for definition of key terms.
Chief Executive's Statement
Overview
I am pleased to present the Company's 2017 Annual Results, the
first since my appointment as Chief Executive of Helical plc at the
2016 AGM.
The year to 31 March 2017 has been eventful with the real estate
sector proving resilient against a background of both UK and
international political change. Looking back 12 months it was clear
that the exceptional growth in property values that we experienced
over the period from 2012 to 2016, as the market recovered from the
2008 Global Financial Crisis, was coming to an end with yields
approaching historic lows, but with some prospect for growth in
rental values.
At Helical, we took advantage of the strong recovery in property
values during this period by expanding the Company's business
activities, investing in development opportunities in London and
higher yielding regional assets to provide a stable flow of rental
income. Using the proceeds of our 2013 Retail Bond and our 2014
Convertible Bond, together with additional borrowings, we increased
our property portfolio from GBP626m at 31 March 2013 to over
GBP1.2bn, generating significant surpluses which have more than
doubled shareholders' funds from GBP254m to GBP517m at 31 March
2017.
During the year we have sought to recycle some of the capital
created in this period into the schemes which we believe will
continue to support the future growth of the Company. We have
narrowed the focus of the Company to London, offices in Manchester
and a portfolio of logistics units. We expect to complete this
process during the current year with the sale of the remaining
non-core assets, being the retail properties and regional offices
outside of Manchester, whilst continuing to work through the
retirement village programme.
In the year under review, the majority of our performance has
come from the assets we own in London, where we have increased our
weighting to 63% of the total portfolio. Sales of regional assets
since the year end have increased this London weighting further to
66%. In the investment portfolio we have created buildings which
reflect the needs of our tenants, acknowledging that modern
lifestyles increasingly merge work and leisure needs. We now have a
portfolio of multi-let, flexible and desirable properties which
also provide ongoing asset management opportunities to add value.
Our London portfolio remains reversionary with further value to be
created through the completion of our redevelopment and
refurbishment programme, letting vacant space and upcoming rent
reviews.
We believe that London will continue to outperform the rest of
the UK over the medium and long term and our strategy is to
continue to increase our London holdings.
Results for the Year
The profit before tax for the year to 31 March 2017 was GBP41.6m
(2016: GBP114.0m). Total Property Return reduced to GBP79.9m (2016:
GBP164.6m) and included growing net rents of GBP47.0m, an increase
of 8.3% on 2016 (GBP43.4m), and development losses of GBP5.7m
(2016: GBP27.5m) after deducting provisions of GBP12.8m (2016:
GBP6.4m). The gain on sale and revaluation of the investment
portfolio contributed GBP38.6m (2016: GBP93.7m).
Net finance costs of GBP21.2m were lower than in 2016 (GBP22.6m)
and the Income Statement benefited from the shortening of the
maturity period for the Group's remaining interest rate swaps which
led to a GBP0.8m credit (2016: charge of GBP6.9m) arising from the
valuation of the Company's derivative financial instruments. The
revaluation of the Company's Convertible Bond provided a credit of
GBP3.0m (2016: GBP0.5m). Recurring administration costs were
marginally higher at GBP10.8m (2016: GBP10.7m). Performance related
awards were substantially lower at GBP6.9m (2016: GBP13.3m) with
National Insurance on these awards of GBP0.7m (2016: GBP2.1m).
These results allow the Board to continue its progressive
dividend policy and to recommend to shareholders a final dividend
of 6.20p which, together with the interim dividend of 2.40p paid in
December 2016, takes the total dividend for the year to 8.60p
(2016: 8.17p), an overall increase of 5.3%.
Performance
We measure our performance at both portfolio and Company level,
seeking to outperform the relevant sector indices and our peer
group in the medium and long term.
EPRA earnings per share fell from 17.1p to 0.5p, reflecting
growing net rental income offset by reduced development profits. On
a like-for-like basis, the investment portfolio increased by 5.2%
(4.5% including sales and purchases). Sales during the year offset
this growth in values contributing to an overall reduction in the
portfolio value to GBP1,205m (2016: GBP1,240m). The unleveraged
return of our property portfolio, as measured by IPD, was 9.4%
(2016: 21.7%), compared to 4.4% (2016: 11.4%) for the benchmark
index. These investment gains contributed to an increase in EPRA
net asset value per share, up 3.7% to 473p (2016: 456p).
Finance
The Company has expanded its activities significantly in recent
years, seeking to increase shareholder funds through the generation
and retention of increased net rental streams, development profits
and valuation surpluses. This growth has been financed through an
increase in secured debt borrowed primarily from UK high street
banks and, since 2013, through the use of unsecured debt in the
form of a Retail Bond and a Convertible Bond. In assessing the
needs of the business the Company is conscious that it needs to
manage any risks inherent in this leveraged approach to growing the
business. It seeks to do this through the use of unsecured debt
(24% of total debt), by maintaining an appropriate debt maturity
profile and by hedging its interest rate exposure.
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.
At 31 March 2017, the Company's see-through loan to value
("LTV"), being the ratio of see-through net borrowings to the value
of the see-through property portfolio, was 51%. This metric has
varied between 45% and 55% in the last five years and, subsequent
to the year end, has fallen below 50% following the recent sales of
properties in Cardiff and Great Yarmouth.
Looking forward, the Company will seek to operate within an LTV
range of 40%-50% for the foreseeable future, subject to being able
to maximise opportunities in the market whilst remaining aware of
the risks of higher levels of gearing.
During the year, the average debt maturity reduced to 3.6 years
(2016: 4.5 years), with no secured loan repayable before November
2019, whilst marginally increasing the average cost of debt at 4.3%
(2016: 4.2%). The Company has a significant level of liquidity with
cash and unutilised bank facilities of GBP267m (2016: GBP193m) to
fund capital works on its portfolio.
Board Matters
In July 2016, I became CEO of Helical succeeding Michael Slade
who became the Company's Non-Executive Chairman. The Board also
consists of three Executive Directors and five Independent
Non-Executive Directors. Our Executive team has an average of over
19 years' experience at Helical and are supported by a strong team
of property and finance professionals and administrative staff.
The Future
Helical has a dynamic portfolio with good upside potential
through a combination of development, refurbishment and significant
asset management opportunities. We believe our concentration on
offices and mixed use assets in London, offices in Manchester and
well located logistics units will provide capital growth from
development gains and rising income streams.
We have ambition to continue to grow the Company and have
actively sought to add to our development pipeline with exciting
new schemes, particularly in London. Rebalancing the portfolio
through the sale of non-core assets enables us to recycle some of
the capital we have created in recent years and fully pursue those
opportunities that we have identified.
Gerald Kaye
Chief Executive
25 May 2017
Our Market
Overview
Helical's core business is developing and owning dynamic, well
located office space in London and Manchester and also includes 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 our judgement, the London commercial property market
currently provides the best source of potential capital profits and
we expect this to remain the case for the foreseeable future,
notwithstanding the risks associated with our exit from the
European Union and other potential headwinds.
In order for Helical to generate capital profits the Company
needs to identify those areas where it believes tenant demand is,
or will become, strong and to source opportunities in those areas
at an appropriate entry price. Using the skills, knowledge and
expertise gained over many years, the Helical team aims to deliver
attractive and exciting office space, in locations with growing
tenant demand.
The Company has recognised three continuing major developments
in the London office market. First, the growth of the London
population, which exceeded its previous peak during 2015. Second,
the continuing and rapid expansion of the creative industries,
predominantly in technology and media. Third, the migration of
occupiers from the West End to the City and East London.
London's population reached 8.7 million in 2015, exceeding its
previous peak in 1939, and is forecast to continue growing towards
10 million by 2030. Whilst this growth will present challenges to
London, particularly in terms of its infrastructure, the opening of
the Elizabeth Line (Crossrail) at the end of 2018 will assist in
alleviating these problems. Our properties in the City and Tech
Belt are all in locations that will benefit from this rail
link.
Recently published research by CBRE noted that the UK is a
global leader in the creative industries and we have targeted these
industries with our portfolio. In London, companies involved in
media, advertising and marketing, technology and other creative
industries comprised 54% of our new lettings in the year to 31
March 2017.
The third factor influencing our choice of location for our
portfolio is the migration of occupiers across central London to
the City and East London. The desire to be part of creative hubs,
surrounded by like-minded individuals, located a short travelling
distance from home is a common theme in discussing requirements
with tenants. Most obviously, those hubs are in the Tech Belt from
Kings Cross to Whitechapel.
In London, Helical is building up a portfolio of multi-tenanted
office buildings in the Tech Belt locations of Farringdon, the Old
Street roundabout and Whitechapel and also in West London from
Chiswick to Shepherd's Bush. By owning these "clusters" or
"villages" of office buildings it has a portfolio of assets with
multiple lease events leading to ongoing asset management
opportunities.
The Company also seeks to expand its profitability by taking on
additional schemes in Central London either by co-investment or by
forward selling/funding them, to allow for the generation of profit
shares and development management fees but with reduced balance
sheet exposure.
The Regions
Outside London, the Company has identified two key areas that
contribute the potential for capital growth and are a source of
recurring net rental income at good yields.
In Manchester we now have four assets (one acquired post
year-end) with a potential capital value, after all refurbishment
works and lettings are concluded, approaching GBP100m. Here, the
occupational and investment market continues to strengthen. The
city has high quality office stock and a diverse occupier base
which has seen much international and institutional investment over
the past few years. Companies have access to a deep and highly
skilled talent pool in a cost effective location both for the
employer and the employee. Recent research by CBRE identified
Manchester as the "leading UK creative location outside London by
some margin" and our buildings are designed to attract creative
occupiers. Annual office take up is consistently in excess of 1m sq
ft with high profile new occupiers coming to the City on a frequent
basis.
In addition, we have a portfolio of logistics units comprising
15% of our investment portfolio but which contribute 25% of our
current contracted rents. This sector is characterised by strong
occupational demand and limited available supply. These properties
have little obsolescence and good prospects of rental growth.
Looking Forward
The key areas of focus going forward for Helical are London,
Manchester offices and logistics units. All other assets currently
held are regarded as non-core and we will seek to continue to exit
those 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 GBP69m 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.
Performance
We measure our performance using a number of financial and
non-financial key performance indicators ("KPIs").
We incentivise management to outperform the Group's competitors
by setting appropriate levels for performance indicators against
which rewards are measured. We also design our remuneration
packages to align management's interests with shareholders'
aspirations. Key to this is the monitoring and reporting against
identifiable performance targets and benchmarks.
Investment Property Databank
The Investment Property Databank ("IPD") produces a number of
independent benchmarks of property returns which are regarded as
the main industry indices.
IPD has compared the ungeared performance of Helical's total
property portfolio against that of portfolios within IPD for the
last 20 years. The Group's annual performance target is to exceed
the top quartile of the IPD database, which it has consistently
achieved. Helical's ungeared performance for the year to 31 March
2017 was 9.4% (2016: 21.7%) compared to the IPD benchmark of 4.4%
(2016: 11.4%) and upper quartile benchmark of 6.9% (2016:
13.0%).
Helical's unleveraged portfolio returns to 31 March 2017 were as
follows:
1 yr 3 yrs 5 yrs 10 yrs 20 yrs
% pa % pa % pa % pa % pa
-------------------------- ----- ----- ----- ------ ------
Helical 9.4 17.0 16.6 8.4 14.5
IPD Benchmark 4.4 11.0 10.0 4.3 8.8
Helical's Percentile Rank 8 3 3 3 2
-------------------------- ----- ----- ----- ------ ------
Source: Investment Property Databank
Helical's trading and development portfolio (15.5% of gross
assets) is shown in IPD at the lower of book cost or fair value and
uplifts are only included on the sale of an asset.
EPRA Net Asset Value Per Share
Our Group's main objective is to maximise growth in net asset
value which we seek to achieve through increases in investment
portfolio values and from retained earnings from other property
related activity. EPRA net asset value per share is the property
industry's preferred measure of the share of net assets
attributable to each share as it includes the fair value of net
assets on an ongoing long term basis. The adjustments to net asset
value to arrive at this figure are shown in note 22 to the
financial statements.
The diluted net asset value per share, excluding trading stock
surplus, at 31 March 2017 increased by 6.4% to 431p (2016: 405p).
Including the surplus on valuation of trading and development stock
and adjusting for the fair value of derivatives and deferred
taxation, the EPRA net asset value per share at 31 March 2017
increased by 3.7% to 473p (2016: 456p).
Total Shareholder Return
Total Shareholder Return is a measure of the return on
investment for shareholders. It combines share price appreciation
and dividends paid to show the total return to the shareholder
expressed as an annualised percentage.
The Total Shareholder Return in the year to 31 March 2017 was
-18.0% (2016: 1.0%). Over five, ten, fifteen, twenty and twenty
five years Helical's Total Shareholder Return exceeded that of the
Listed Real Estate Sector Index.
Performance Measured Over
1 year 3 years 5 years 10 years 15 years 20 years 25 years
Total return Total return Total return Total return Total return Total return Total return
pa % pa % pa % pa % pa % pa % pa %
------------- ------------ ------------ ------------ ------------- ------------- ------------- -------------
Helical plc 1 -18.0 -3.8 13.0 -1.3 6.4 10.6 16.2
UK Equity
Market 2 22.0 7.7 9.7 5.7 6.6 6.7 8.7
Listed Real
Estate
Sector Index 3 -0.3 4.7 12.2 -2.1 5.6 5.8 8.2
Direct
Property -
monthly data 4 3.8 11.2 10.0 3.9 7.8 8.8 8.9
------------- ------------ ------------ ------------ ------------- ------------- ------------- -------------
1. Growth over all periods to 31/03/17.
2. Growth in FTSE All-Share Return Index over all periods to
31/03/17.
3. Growth in FTSE 350 Real Estate Super Sector Return Index over
all periods 31/03/17. For data prior to 30
September 1999 FTSE All Share Real Estate Sector Index has been
used.
4. Growth in Total Return of IPD UK Monthly Index (All Property)
over all periods to 31/03/17.
Average Length of Employee Service and Average Staff
Turnover
High levels of staff retention remain a key feature of Helical's
business. The Group retains a highly skilled and experienced team.
We assess our success based on two key metrics, the average length
of service of the Group's head office employees and average staff
turnover.
The average length of service of the Group's head office
employees at 31 March 2017 was eight years and the average staff
turnover during the year to 31 March 2017 was 5.7%.
2017 2016 2015 2014 2013
----------------------------------------------- ---- ---- ---- ---- ----
Average length of service at 31 March - Years 8.0 7.6 7.6 8.7 10.2
Staff Turnover during the year to 31 March - % 5.7 14.3 12.5 5.9 10.3
----------------------------------------------- ---- ---- ---- ---- ----
Financial Review
IFRS Performance EPRA Performance
Profit Before Tax EPRA EPS
GBP41.6m (2016: GBP114.0m) 0.5p (2016: 17.1p)
IFRS Diluted EPS EPRA NAV
33.2p (2016: 88.0p) 473p (2016: 456p)
IFRS Diluted NAV EPRA Triple NAV442p (2016:
431p (2016: 405p) 424p)
---------------------------- ---------------------------
Results for the Year
The year to 31 March 2017 saw the Group deliver continued growth
in net rental income and a valuation surplus on the investment
portfolio leading to pre-tax profit of GBP41.6m and an increase in
EPRA net asset value per share of 3.7%.
The proposed final dividend of 6.20p takes the total dividend
for the year to 8.60p, a 5.3% increase on the previous year. With
growing rents from our core London portfolio, supported by strong
income streams from the regional portfolio, the Company aims to
continue to grow this dividend.
The Group's real estate portfolio, including its share of assets
held in joint ventures, reduced to GBP1,205m (2016: GBP1,240m) as
gains from its annual revaluation and capital expenditure on the
investment portfolio and development programme were offset by the
sale of GBP199m of assets. There were no purchases of new
investment, trading or development assets during the year.
The sale of investment assets during the year has resulted in a
reduction in the Group's loan to value to 51% (2016: 55%) which has
been reduced further since the year end to 49% on a pro-forma basis
following the sale of GBP65m of assets and the purchase of one
asset for GBP13m. The Group's debt maturity profile shortened to
3.6 years (2016: 4.5 years) and its weighted average cost of debt
increased to 4.3% (2016: 4.2%).
At 31 March 2017, the Group had unutilised bank facilities of
GBP158m and GBP109m of cash. The bank facilities are primarily
available to fund Phase Two of the Group's redevelopment of The
Bower, London EC1, the construction works at Barts Square, London
EC1, including the last phase of residential, its retirement
village development programme and future potential investment
purchases.
Total Accounting Return
The total accounting return is the growth in the net asset value
of the company plus dividends paid in the year, expressed as a
percentage of the net asset value at the beginning of the period.
The metric measures the growth in shareholders' funds each year and
is expressed as an absolute measure.
2017 2016 2015 2014 2013
% % % % %
------------------------ ----- ------ ------ ------ -----
Total Accounting Return 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 year 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.
2017 2016 2015 2014 2013
GBPm GBPm GBPm GBPm GBPm
---------------------- ------ ------ ------- ------- ------
Total Property Return 79.9 164.6 155.3 140.1 35.9
---------------------- ------ ------ ------- ------- ------
Earnings Per Share
The IFRS earnings per share decreased from 91.3p to 34.0p and is
based on the after tax earnings attributable to ordinary
shareholders divided by the weighted average number of shares in
issue during the year.
On an EPRA basis, earnings per share were 0.5p (2016: 17.1p),
reflecting the Group's share of net rental income of GBP47.0m
(2016: GBP43.4m) and development losses of GBP5.7m (2016: profits
of GBP27.5m) but excluding gains on sale and revaluation of
investment properties of GBP38.6m (2016: GBP93.7m).
Net Asset Value
IFRS diluted net asset value per share increased from 405p to
431p and 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.
EPRA net asset value per share increased by 3.7% to 473p per
share (2016: 456p). This increase arose principally from a total
comprehensive income (retained profits) of GBP39.2m (2016:
GBP104.9m) less dividends paid of GBP3.6m (2016: GBP14.4m) and
reflecting a reduction in the surplus on valuation of the trading
and development stock to GBP12.5m (2016: GBP19.4m).
Income Statement
Rental Income and Property Overheads
Gross rental income receivable by the Group in respect of wholly
owned properties increased by 7.3% to GBP48.8m (2016: GBP45.5m)
reflecting the partial capture of the investment portfolio's
reversionary potential offset by sales of assets during the year.
In the joint ventures, gross rents fell from GBP1.8m to GBP0.9m.
Property overheads in respect of wholly owned assets and in respect
of those assets in joint ventures fell from GBP3.4m to GBP2.5m.
After taking account of net rents payable to our profit share
partners of GBP0.3m (2016: GBP0.5m), see-through net rents
increased by 8.3% to GBP47.0m (2016: GBP43.4m).
Development Profits
The majority of the Group's development activities are carried
out on assets held as investment properties such as The Bower,
London EC1 and 25 Charterhouse Square, London EC1, schemes funded
with third parties, or in joint ventures as referred to below.
In the year under review the Company made progress at its
retirement village portfolio, increasing sales to GBP40.0m,
including the sale of land, (2016: GBP29.9m) with profits of
GBP1.8m (2016: GBP0.6m). In its development management role at
Barts Square, London EC1 and One Creechurch Place, London EC3 and
in respect of the development of the Scottish Power headquarters in
Glasgow, it earned fees of GBP2.8m. Our retail development
programme generated net profits of GBP2.3m (2016: loss of GBP1.8m)
as the pre-let scheme at Cortonwood was forward funded during the
year. In total, the Group generated development profits of GBP7.1m
(2016: GBP30.7m).
At the year end we reviewed the book value of our land holdings
and made provisions of GBP6.3m (2016: GBP6.4m), primarily in
respect of the retirement village at Great Alne, where forecast
costs have increased during the year. Net of these provisions, a
development property profit of GBP0.8m (2016: GBP24.3m) was
recognised.
In the previous year to 31 March 2016, profits included a
development management fee of GBP23.2m in respect of The Bower,
London EC1 and GBP3.7m in respect of One Creechurch Place and the
Scottish Power headquarters.
Share of Results of Joint Ventures
The sale of our retail development at Shirley and the
termination of the lease to the NHS at Barts Square to allow the
final phase of development to commence reduced net rents in our
joint ventures from GBP1.3m to GBP0.8m. No further rents are
expected in respect of assets currently held in joint ventures in
the short term. At the year end we reviewed the book value of our
land holdings in the joint ventures and made provisions of GBP6.5m
against the carrying value of our schemes at Hammersmith Town Hall
and Barts Square. Finance, administration and taxation costs and
sundry provisions against the carrying value of assets added a
further GBP0.8m of losses leaving a net loss from our joint venture
of GBP6.5m.
In the previous year to 31 March 2016, gains on the sale or
revaluation of the investment assets of GBP43.9m, mainly in respect
of The Bower, London EC1 and Barts Square, London EC1, contributed
to a total net profit from joint ventures for that year of
GBP50.5m.
Gain on Sale and Revaluation of Investment Properties
During the year, we sold 24 investment assets for a total of
GBP159m generating a net overall profit of GBP1.4m. In London we
sold two office buildings at One King Street, Hammersmith, W6 and
Chart House, EC1 for GBP42.0m at a small net loss of GBP0.3m. In
the regions we sold three office buildings at Castle Donnington,
Cheadle and Cobham for GBP14.2m at a profit of GBP0.7m after costs.
We sold six retail assets during the period, being a shop in
Leicester and five retail parks in Ellesmere Port, Harrogate,
Huddersfield, Scarborough and Stockport for a combined GBP44.1m at
a net loss of GBP2.9m. From our logistics portfolio, we sold 13
assets for GBP58.5m at a net profit of GBP3.8m.
The valuation of our investment portfolio continued to reflect
the benefit of our refurbishment activities in London where we
generated an increase of 9.1% overall and 9.8% on a like-for-like
basis. The regions contributed a loss of 1.3% overall and 2.1 % on
a like-for-like basis. In total, the investment portfolio showed a
valuation increase of 4.5%, or 5.2% on a like-for-like basis.
The total impact on our results of the gain on sale and
revaluation of our investment portfolio, including in joint
ventures, was a net gain of GBP38.6m (2016: GBP93.7m).
Administration Costs
Administration costs, before performance related awards,
increased marginally from GBP10.7m to GBP10.8m.
Performance related share awards and bonus payments, before
National Insurance costs, were GBP6.9m (2016: GBP13.3m). Of this
amount, the GBP1.7m (2016: GBP6.7m) charge for share awards under
the Performance Share Plans is expensed through the Income
Statement but added back to Shareholders' Funds through the
Statement of Changes in Equity. In addition, National Insurance of
GBP0.7m (2016: GBP2.1m) has been charged in the year.
2017 2016
GBP000 GBP000
----------------------------------------- -------- -------
Administration Costs 10,800 10,717
Share awards 1,672 6,666
Directors and senior executives' bonuses 5,182 6,633
NIC on share awards and bonuses 718 2,087
----------------------------------------- -------- -------
Total 18,372 26,103
----------------------------------------- -------- -------
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, increased to GBP24.7m (2016: GBP23.9m). Interest payable
in respect of the unsecured Retail and Convertible Bonds was
GBP8.8m (2016: GBP8.8m). The movement in medium and long term
interest rate projections during the year, offset by the shortening
maturity period of the Group's financial instruments, contributed
to a credit of GBP0.8m (2016: charge of GBP6.9m) on their
mark-to-market valuation. Capitalised interest increased from
GBP4.9m to GBP7.9m as development schemes progressed. Total finance
costs, including joint ventures, reduced from GBP27.8m to GBP25.6m.
Finance income earned was GBP4.4m (2016: GBP5.1m).
Taxation
Helical pays corporation tax on its UK sourced net rental
income, trading and development profits and realised chargeable
gains, after offset of administration and finance costs.
The deferred tax charge for the year is principally derived from
the revaluation surpluses recognised in the year offset by the
recognition of tax losses which the Group believes will be utilised
against profits in the foreseeable future.
Dividends
Helical follows a progressive dividend policy increasing its
dividends in line with its results, whilst retaining the majority
of funds generated for investment in growing the business. The
interim dividend paid on 30 December 2016 of 2.40p was an increase
of 4.3% on the previous interim dividend of 2.30p. The Company has
proposed a final dividend of 6.20p, an increase of 5.6% on the
previous year (2016: 5.87p). In total, the dividend paid or payable
in respect of the results for the year to 31 March 2017 is 8.60p
(2016: 8.17p), an increase of 5.3%. Since 2014 the compound annual
growth rate of the Company's dividends has been 8.4%.
Balance Sheet
Shareholders' Funds
Shareholders' funds at 1 April 2016 were GBP480.7m. The Group's
results for the year added GBP39.2m, net of tax, representing the
total comprehensive income for the year. Movements in reserves
arising from the Group's share schemes increased funds by GBP0.6m.
The Company paid dividends to shareholders amounting to GBP3.6m
leaving a net increase in Shareholders' Funds from the Group
activities during the year of GBP36.2m to GBP516.9m.
Investment Portfolio
Wholly In joint venture Lease incentives Book
owned GBP000 See-through GBP000 Value
GBP000 GBP000 GBP000
----------------------------------------------- --------- ---------------- ----------- ---------------- ---------
Valuation at 31 March 2016 1,041,100 11,552 1,052,652 (6,067) 1,046,585
Acquisitions - - - - -
Capital Expenditure 63,712 4,230 67,942 - 67,942
Disposals (155,548) - (155,548) 685 (154,863)
Transfer from Stock 5,066 - 5,066 - 5,066
Revaluation Surplus - Helical 49,210 (1,875) 47,335 (10,058) 37,277
- Profit Share
Partners (540) - (540) - (540)
----------------------------------------------- --------- ---------------- ----------- ---------------- ---------
Valuation at 31 March 2017 1,003,000 13,907 1,016,907 (15,440) 1,001,467
----------------------------------------------- --------- ---------------- ----------- ---------------- ---------
Debt and Financial Risk
In seeking to finance Helical's expansion in recent years, the
Group has used a combination of new secured facilities, whose
purpose and terms reflect the nature of the assets charged to the
lenders, and unsecured bonds which have provided the firepower to
acquire many of the assets which have contributed to the recent
growth in Shareholders' Funds. The composition of the Group's debt
structure has significantly changed since 31 March 2013 with
unsecured debt now representing 24% of debt drawn at 31 March
2017.
In total, Helical's outstanding debt at 31 March 2017 of GBP737m
(2016: GBP778m) had an average maturity of 3.6 years (2016: 4.5
years) and a weighted interest cost of 4.3% (2016: 4.2%).
Debt Profile at 31 March 2017 - Excluding the Effect of
Arrangement Fees
Total Total Weighted average Average
facility utilised Available facility Net LTV interest rate maturity
GBP000's GBP000's GBP000's % % Years
------------------------------- --------- --------- ------------------ ------- ---------------- ---------
Investment facilities 572,859 457,992 114,867 - 4.3 4.1
Development facilities 60,000 42,949 17,051 - 3.7 3.4
------------------------------- --------- --------- ------------------ ------- ---------------- ---------
Total wholly owned 632,859 500,941 131,918 - 4.3 3.6
In joint ventures 72,270 55,886 16,384 - 3.4 2.7
------------------------------- --------- --------- ------------------ ------- ---------------- ---------
Total secured debt 705,129 556,827 148,302 37 4.2 3.9
Retail Bond 80,000 80,000 - - 6.0 3.2
Convertible Bond 100,000 100,000 - - 4.0 2.2
Working capital 10,000 - 10,000 - - -
Fair Value of Convertible Bond (226) (226) - - - -
------------------------------- --------- --------- ------------------ ------- ---------------- ---------
Total unsecured debt 189,774 179,774 10,000 - 4.9 2.7
------------------------------- --------- --------- ------------------ ------- ---------------- ---------
Total debt 894,903 736,601 158,302 51 4.3 3.6
------------------------------- --------- --------- ------------------ ------- ---------------- ---------
Secured Debt
The Group arranges its secured investment and development
facilities to suit its business needs as follows:
-- Investment facilities
We have GBP190m 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 to
finance our regional portfolio. Our London investment assets are
primarily held in GBP383m of term loan secured facilities which,
where appropriate, allow us to finance refurbishment projects
including the redevelopment of The Tower at The Bower, Old Street,
London EC1. The value of the Group's properties secured in these
facilities at 31 March 2017 was GBP983m (31 March 2016: GBP945m)
with a corresponding loan to value of 47% (2016: 54%). The average
maturity of the Group's investment facilities at 31 March 2017 was
4.1 years (2016: 5.0 years) with a weighted average interest rate
of 4.3% (2016: 3.8%).
-- Development facilities
These facilities finance the construction of the retirement
villages at Durrants Village, Horsham; Maudslay Park, Great Alne;
Milbrook Village, Exeter and the fourth phase of Bramshott Place,
Liphook. The average maturity of the Group's development facilities
at 31 March 2017 was 3.4 years (2016: 4.4 years) with a weighted
average interest rate of 3.7% (2016: 3.8%).
-- 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 31 March 2017
was 2.7 years (2016: 3.7 years) with a weighted average interest
rate of 3.4% (2016: 3.4%).
Unsecured Debt
The Group's unsecured debt, including the Convertible Bond at
its mark-to-market valuation, is GBP179.8m (2016: GBP182.7m) as
follows:
-- Retail Bond
In June 2013, the Group raised GBP80m 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 GBP100m 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 GBP4.9694 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 31 March 2017, as determined
by the listed market price, was GBP99.8m (2016: GBP102.7m).
-- Short term working capital facilities
These facilities provide access to additional working capital
for the Group.
Cash and Cash Flow
At 31 March 2017, the Group had GBP267m (2016: GBP193m) of cash
and agreed, undrawn, committed bank facilities including its share
in joint ventures as well as GBP17m (2016: GBP153m) of uncharged
property on which it could borrow funds.
Net Borrowings and Gearing
Total gross borrowings of the Group, including in joint
ventures, have reduced from GBP777.9m to GBP736.6m during the year
to 31 March 2017. After deducting cash balances of GBP109.0m (2016:
GBP86.8m) and unamortised refinancing costs of GBP7.6m (2016:
GBP9.3m), net borrowings reduced from GBP681.8m to GBP620.0m. The
gearing of the Group, including in joint ventures, reduced from
142% to 120%.
2017 2016
------------------------------ ---------- ----------
See-through gross borrowings GBP736.6m GBP777.9m
See-through cash balances GBP109.0m GBP86.8m
Unamortised refinancing costs GBP7.6m GBP9.3m
See-through net borrowings GBP620.0m GBP681.8m
Shareholders' funds GBP516.9m GBP480.7m
See-through gearing - IFRS 120% 142%
Hedging
At 31 March 2017, the Group had GBP651.4m (2016: GBP635.5m) of
fixed rate debt with an average effective interest rate of 4.2%
(2016: 4.2%) and GBP29.3m (2016: GBP107.1m) of floating rate debt
with an average effective interest rate, excluding commitment fees,
of 3.0% (2016: 3.9%). In addition, the Group has GBP3.3m of
interest rate caps at an average of 0.75% (2016: GBP157m at 4.0%).
In our joint ventures, the Group's share of fixed rate debt was
GBPnil (2016: GBPnil) and GBP55.9m (2016: GBP35.3m) of floating
rate debt with an effective rate of 3.4% (2016: 3.4%) with interest
rate caps set at 1.5% plus margin on GBP61.8m and 0.5% plus margin
on GBP56.9m (2016: GBPnil).
2017 Effective interest rate 2016 Effective interest rate
GBPm % GBPm %
---------------------------------- ------ ------------------------ ------ ------------------------
Fixed rate debt
- Secured borrowings 471.6 4.0 452.8 3.9
- 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 (0.2) - 2.7 -
---------------------------------- ------ ------------------------ ------ ------------------------
Total 651.4 4.2 635.5 4.2
Floating rate debt
- Secured 29.3 8.9(1) 107.1 3.9
---------------------------------- ------ ------------------------ ------ ------------------------
Total 680.7 4.4 742.6 4.2
In joint ventures
- Fixed rate - - - -
- Floating rate 55.9 3.4 35.3 3.4
---------------------------------- ------ ------------------------ ------ ------------------------
Total borrowings 736.6 4.3 777.9 4.2
---------------------------------- ------ ------------------------ ------ ------------------------
(1)This includes commitment fees on undrawn facilities.
Excluding these would reduce the effective rate to 3.0%.
Interest Cover
In assessing the results of the Group for each financial year,
Helical considers its interest cover as a measure of its
performance and its ability to finance its annual interest payments
from its net operating income, before revaluation gains or losses
on the investment portfolio and net realisable provisions on the
trading and development stock. In the year to 31 March 2017, this
interest cover was 2.6 times (2016: 5.4 times).
2017 2016
---------------------------------- --------- ----------
See-through net operating income GBP55.4m GBP121.3m
See-through net finance costs GBP21.2m GBP22.6m
Interest cover 2.6x 5.4x
---------------------------------- --------- ----------
Investment Property Accounting Treatment
International Accounting Standard 40 - Investment Property
requires that accrued operating lease income assets should be shown
separately and deducted from the fair value of the investment
properties in the Statement of Financial Position. This accounting
treatment had not been applied at 31 March 2016 but has been
adopted for the period ended 31 March 2017. A prior year adjustment
has been made to ensure consistency of comparative information,
clarity and transparency.
The effect of the adjustment on the relevant financial statement
line items for the year ended 31 March 2016 is detailed in note
25.
Tim Murphy
Finance Director
25 May 2017
Helical's Property Portfolio - 31 March 2017
Property Overview
Helical divides its property activities into three core markets:
London, Manchester offices and logistics. The London Portfolio
represents 63% of the total property portfolio and drives capital
growth, development profits and, increasingly, income. Manchester
offices accounts for 6%, and logistics account for 13%.
In addition, we have a portfolio of four retirement villages
which are being completed and sold over the next three years, a
small portfolio of regional offices and four regional retail assets
(two of which were sold post year end).
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
The Bower, Old Street EC1
This asset was acquired in November 2012 for GBP60.8m in a joint
venture with Crosstree Real Estate Partners LLP. The site is in the
heart of an area which has become a "creative halo", a district of
London which is a hub for technology, media and telecommunications
companies and which is benefiting from substantial investment in
infrastructure. A planning consent has been implemented to increase
the floor space on the site by 116,000 sq ft, to refurbish existing
areas and significantly upgrade the public realm with the creation
of a new pedestrian street.
On 20 January 2016, Helical acquired The Warehouse and The
Studio (211 Old Street) and The Tower (207 Old Street) from the
joint venture.
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, 178,724 sq ft, the refurbishment and construction
works are well underway with practical completion scheduled for Q2
2018. Whilst the formal letting campaign for the building is
expected to commence closer to completion, we have already pre-let
six floors, comprising 58,907 sq ft, to WeWork, the leading global
provider of flexible collaborative co-working space.
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 of
the City consisting of 236 residential apartments, three office
buildings of 213,000 sq ft, 23,485 sq ft and 10,200 sq ft and
20,400 sq ft of retail/A3 at ground floor as well as major public
realm improvements.
Phase One - Residential/offices/retail
Phase 1 of Barts Square comprises 144 residential units, 8,900
sq ft of retail space, 23,485 sq ft of new office space and
extensive public realm improvements. Construction work is
progressing well with the first apartments being handed over to
purchasers in Summer 2017. Contracts have been exchanged for the
sale of 118 residential units for a total value of GBP151.3m at an
average of GBP1,570 psf, with a further three units under
offer.
Phase Two - One Bartholomew Close - Offices
One Bartholomew Close was sold to clients of Ashby Capital LLP
("Ashby") for GBP102.4m in August 2015. The demolition of the
existing building and the construction of a new 12 storey office
block of 213,000 sq ft commenced in January 2016. The building is
due to be completed in August 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
Demolition work on Phase 3 of Barts Square is well underway.
This phase will comprise 92 apartments and 11,500 sq ft of retail
space. Completion is due in Summer 2019.
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. There
are a number of potential tenants interested in the building.
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.
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 GBP16m. 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.
The building achieved practical completion on 28 March 2017. The
top two floors, totalling 12,200 sq ft, have been let to Anomaly at
GBP75.00 psf for a ten year lease term.
The Loom, Whitechapel E1
This 110,000 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. During the year we completed 11 new
lettings and five renewals securing GBP1.8m of contracted rent. We
also completed two rent reviews with an uplift to contracted rent
of GBP300,000. The largest, most prominent, unit in the building of
9,000 sq ft was let in July for GBP54 psf. The average contracted
rent for the building is GBP37.50 psf. 19,275 sq ft is currently
available in five units with an ERV of circa GBP950k, of which
2,750 sq ft is under offer.
-- The West
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 nine consecutive years. The average contracted
rent for the building is GBP44 psf with a total contracted rent of
GBP6.57m and a passing net rent of GBP3.6m. During the year 13 new
lettings, all in excess of GBP47.50 psf, were completed securing a
contracted rent of GBP500,000. Two rent reviews were settled with
an uplift to contracted rent of GBP225,000. 2,550 sq ft is
currently available in four studio units.
Power Road Studios, Chiswick W4
The site comprises 62,000 sq ft of offices across five buildings
and is multi-let to a wide range of predominantly media tenants.
Recent lettings have been concluded at a rent of GBP38 psf with
GBP40 psf having been achieved in Studio 1, compared to an average
rental of GBP24 psf at acquisition. Cineworld, which occupied
16,000 sq ft, has surrendered its lease and vacated which permits
the comprehensive refurbishment of the unit and creation of a new
entrance at the front of the building. These works started in
November 2016 and are expected to last nine months, increasing the
rental value for this space from GBP22.00 psf to GBP42.50 psf.
Planning permission to add a further 42,500 sq ft of office space
has been granted.
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.
In addition to our holdings in the City and Tech Belt and West
London we have one scheme in Covent Garden WC2.
Drury Lane & Dryden Street, Covent Garden WC2
The existing buildings, which are in office and retail use, sit
on an island site of approximately 0.5 acres. Approximately half of
the site, adjacent to Dryden Street, sits within the Covent Garden
Conservation Area. In July 2015, contracts were exchanged with
Diageo Pension Fund (a fund managed by Savills Investment
Management) for the conditional acquisition of the Drury Lane site.
The contract is conditional on the viability of the scheme and
Helical securing planning consent. A planning application for the
residential led scheme of 68 apartments was submitted in August
2015 and resolution to grant consent was issued at a planning
committee in April 2016. A further planning consent for an
alternative office led scheme was submitted in December 2016 and is
currently being considered by Westminster City Council.
The Regional Portfolio
Our approach to regional investment is to acquire assets where
occupational demand is robust throughout the property cycle and the
barriers to new supply are high. Successfully picking the sectors
and assets with these attributes will ensure strong cash flows and
rental growth. In general, yields for regional assets are higher
than those in London and these assets are acquired to provide
significant cash flow for the Group. We anticipate that income will
become an increasingly important part of total returns as yield
compression slows and, as such, we focus our attention on areas
where we believe the occupational market remains robust.
Our regional portfolio contributed 60% of our net rental income
from tenants in diverse sectors and geographical locations. The
GBP351m regional portfolio comprises GBP156m of logistics (44% of
the regional investment portfolio), GBP95m of offices (27%), GBP80m
retail warehousing and in-town retail (23%), mainly the Morgan
Quarter, Cardiff, which has been sold for GBP55m since year end,
and GBP20m of value from ground rents and assignment fees from our
retirement village development programme (6%).
Logistics
Helical had 25 distribution and logistics units located around
major UK transport networks at 31 March 2017. These units generally
have few bespoke features making them straightforward to re-let if
vacancies occur with minimal capital expenditure required. The
majority of the assets are single let. Significant assets within
the portfolio include a 256,000 sq ft distribution warehouse let to
Sainsbury's in Yate, Bristol, a 203,000 sq ft facility in Leighton
Buzzard, Bedfordshire and a 183,000 sq ft distribution warehouse
let to the Royal Mail in Chester.
Manchester and other Regional Offices
Our regional office investment portfolio comprises seven assets
including four in Manchester and others in Crawley, Glasgow and
Reading. During the year we sold three assets in Cobham, Castle
Donnington and Cheadle for GBP14.15m, a 6.8% premium to book
value.
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 249,000 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. With the successful
letting of the 1(st) floor of Lee House and the Sunshine Suite
(15,536 sqft), Churchgate and Lee House is now 100% occupied.
Looking forward asset management initiatives still exist to drive
further rental growth. We will continue to refurbish the asset as
space becomes available through lease events.
Dale House, Manchester
Dale House is a 54,000 sq ft office building situated in the
Northern Quarter of Manchester. Following purchase we have pursued
surrenders across the building. We successfully achieved surrenders
of the top three floors, lower ground and basement spaces which
amounts to circa 33,000 sq ft. Refurbishment of these areas has
commenced with delivery in Q4 2017. We have secured a pre-let of
the 5(th) floor (7,100 sq ft) and have significant interest in the
remaining space that is being delivered.
31 Booth Street, Manchester
This 25,441 sq ft office located in the prime city core was
acquired in January 2016 for GBP4.7m. The building has been fully
refurbished and was launched to the market in March 2017. We have
received significant occupational interest to date and hope to
secure our first letting soon.
Trinity Court, Manchester
Trinity Court, purchased in May 2017 for GBP12.9m, is a 47,500
sqft office building situated in the central business district of
Manchester. The building is currently 100% let with secured income
until the end of 2017 at a passing rent of GBP26.94 psf. The
building will be vacated in 2018 and a full refurbishment and
extension will be implemented delivering new office space to the
market in early 2019.
Retail
Our retail assets total GBP80m, 7% of our portfolio (31 March
2016: GBP143m). This part of the portfolio includes a prime retail
asset in Cardiff, three retail parks and a number of pre let and/or
prefunded retail developments.
During the year, six retail properties were sold for a total of
GBP44.1m, at c. 6% below book value. At the year end the portfolio
consisted of four assets of which Cardiff and Great Yarmouth have
since been sold reducing the total value of the portfolio to
GBP24.2m.
The Morgan Quarter, Cardiff
During the year we continued to reposition the asset and
strengthen the tenant mix. We concluded 12 retail leases
representing over GBP400,000 per annum in rental income which
included two tenants upsizing within the estate. Negotiations with
Jack Wills, first started in 2015, for them to extend their store
finally came to fruition in December.
Along with this expansion, we also completed all of the planned
lease renewals and regears with the Hayes retailers, Molton Brown,
White Stuff and Joules. In addition we completed the lease renewal
with Route One in the Morgan Arcade.
Within the Creative Quarter we completed six office leases and
work on Phase Three of the refurbishment completed in May 2017
providing 5,700 sq ft of new space. Since the year end this asset
has been sold for GBP55m, a net initial yield of 5.9% in line with
its March 2016 book value.
Retail Developments
Parkgate, Shirley, West Midlands
The shopping centre at Parkgate, Shirley, where Helical had a
50% interest, was completed in 2014 and the 80,000 sq ft Asda,
which had been pre-sold to the food-store, together with a number
of other retailers including Poundland, Peacocks and Store
Twenty-one have all opened successfully for trade. In November 2016
the scheme was sold to a private purchaser.
A second phase of high density residential is being progressed
on a 10 acre site opposite the Parkgate scheme. Completions of the
first phase of the site sales has occurred to Extracare Charitable
Trust and Lioncourt Homes and demolition and infrastructure works
have completed. A site for a petrol filling station has been sold
to Asda.
Cortonwood Retail Park
This 79,750 sq ft retail park has been 100% pre-let to tenants
including Outfit, H&M, New Look, River Island and Marks and
Spencer. The scheme has been forward funded with clients of
Aberdeen Asset Management and construction is continuing with
completion due in July 2017.
Truro
Helical has entered into a Conditional Purchase Agreement on the
six acre Truro City Football Club site which has planning consent,
subject to a s.106 Agreement, for a 78,000 sq ft non-food retail
park. The scheme proposals provide for the relocation of the
football club and we anticipate starting on site in 2018.
Retirement Villages
Our retirement village portfolio consists of four villages. We
design each of the villages with an active, independent retirement
in mind and the communities that we create are the ideal place to
live a social and varied lifestyle. Each private, age-exclusive
retirement community is centred around a residents' clubhouse, and
features many amenities including an indoor pool and gym,
landscaped gardens, bar, restaurant and library. With an increasing
proportion of the UK population over 65 years old, and a severe
under supply in retirement housing, this sector creates significant
opportunities for investors and developers.
Bramshott Place, Liphook, Hampshire
This village is situated amongst natural parkland near the
village of Liphook on the border of Hampshire, West Sussex and
Surrey. The village features a selection of two and three bedroom
cottages and one, two and three bedroom apartments arranged around
a residents' clubhouse. All construction works to Phases One to
Three are completed where 151 units in total have been built and
sold. Phase 4 commenced in August 2016 with the construction of 40
additional cottages, due for completion in January 2018. Sales on
the site will be formally launched in July 2017, with six of the 40
new cottages already having been reserved and a further two of the
40 being exchanged. The residents' clubhouse is now fully
refurbished.
Durrants Village, Faygate, West Sussex
Durrants Village is set within 30 acres of private parkland in
the hamlet of Faygate, near Horsham in West Sussex. The village
features a selection of cottages and apartments. The first two
phases of construction completed in January 2016 with 105 units
located around the residents' clubhouse. Phase 3A has commenced and
consists of an additional 20 units and is due to complete in
September 2017. Sales have progressed well with 99 units sold, 1
exchanged and an additional 10 units reserved. Good interest is
being shown in Phase 3A and more reservations are expected to be
secured leading up to the delivery of this section in September
2017.
Millbrook Village, Exeter, Devon
Millbrook Village is nestled close to the River Exe in the heart
of the historic cathedral city of Exeter. The village features a
selection of two and three bedroom cottages and one, two and three
bedroom apartments. The site will comprise 164 units once
completed. The clubhouse was completed in March and includes a
restaurant and bar, games room, gym, cinema and a swimming pool.
The build programme is well advanced with 114 units currently
completed with more stock now coming online at regular three month
intervals. We anticipate that the village will be fully constructed
by November 2017. 59 units have been sold, two exchanged with an
additional 22 reserved.
Maudslay Park, Great Alne, Warwickshire
Maudslay Park is set in 90-acres of parkland in the Warwickshire
village of Great Alne, near Stratford-upon-Avon. The village will
comprise 166 units with a mixture of cottages and apartments built
around the central clubhouse facility. Similar to our other
villages the clubhouse will include a restaurant and bar, games
room, gym, cinema and a swimming pool. Phase 1 of the development
is currently under construction which consists of 14 cottages, 35
apartments and the central clubhouse facility. The first cottages
were completed in April 2017 with the central clubhouse facility
being completed in January 2018. Currently we have sold one unit
and have a further ten reservations.
Total Portfolio by Fair Value
Investment Development Total
GBPm % GBPm % GBPm %
---------------------- ---------- ----- ----------- ----- ------- -----
London Offices
- Completed, let and
available to let 501.5 49.3 19.8 10.5 521.3 43.3
- Being redeveloped 125.7 12.4 - - 125.7 10.4
- Held for future
development 38.4 3.8 - - 38.4 3.2
London Residential - - 78.8 41.9 78.8 6.5
---------------------- ---------- ----- ----------- ----- ------- -----
Total London 665.6 65.5 98.6 52.4 764.2 63.4
Regional Offices 95.3 9.3 0.5 0.3 95.8 7.9
Regional logistics 156.5 15.4 - - 156.5 13.0
Regional Retail 79.5 7.8 - - 79.5 6.6
Retirement Villages 19.9 2.0 82.9 44.0 102.8 8.6
Land 0.1 - 6.3 3.3 6.4 0.5
---------------------- ---------- ----- ----------- ----- ------- -----
Total Regional 351.3 34.5 89.7 47.6 441.0 36.6
Total 1,016.9 100.0 188.3 100.0 1,205.2 100.0
---------------------- ---------- ----- ----------- ----- ------- -----
Trading and Development Portfolio
Book Value Fair Value Surplus Fair Value
GBPm GBPm GBPm %
-------------------- ---------- ---------- ------- ----------
London Offices 15.8 19.8 4.0 10.5
London Residential 75.8 78.8 3.0 41.9
-------------------- ---------- ---------- ------- ----------
Total London 91.6 98.6 7.0 52.4
Regional Offices 0.2 0.5 0.3 0.3
Retirement Villages 79.0 82.9 3.9 44.0
Land 5.0 6.3 1.3 3.3
-------------------- ---------- ---------- ------- ----------
Total Regional 84.2 89.7 5.5 47.6
Total 175.8 188.3 12.5 100.0
-------------------- ---------- ---------- ------- ----------
Capital Expenditure
We have a planned development and refurbishment programme.
Current
Capex Budget Remaining spend Total Refurbished
(Helical Share) (Helical share) Space Space New Space Completion
Property GBPm GBPm Sq ft Sq ft Sq ft date
--------------------------- ---------------- ---------------- ------- ----------- --------- ----------
London Offices
207 Old Street, London EC1 94.5 62.9 114,000 179,000 65,000 Jun 2018
Power Road Studios, W4 4.5 3.4 60,000 20,000 - Sep 2017
The Loom, London E1 7.9 1.8 112,000 80,500 - Mar 2018
London Residential
Barts Square, London EC1 87.4 55.7 n/a n/a n/a Sep 2019
--------------------------- ---------------- ------- ----------- --------- ----------
Regional Offices
Dale House, Manchester 4.3 3.5 54,000 30,000 - Dec 2017
--------------------------- ---------------- ---------------- ------- ----------- --------- ----------
Retirement Villages
Remaining spend
Capex Budget GBPm Total number of Units under Completion
Property GBPm units Completed units construction date
------------------- ------------ --------------- ------------------ --------------- ----------------- ----------
Millbrook Village,
Exeter 43.5 7.1 164 114 50 Nov 2017
Durrants Village,
Faygate 49.3 17.9 173 105 20 Sep 2019
Maudslay Park,
Great Alne 60.9 53.1 166 5 45 May 2019
Bramshott Place,
Liphook 17.8 9.5 40 - 40 Jan 2018
------------------- ------------ --------------- ------------------ --------------- ----------------- ----------
171.5 87.6 543 224 155
------------------- ------------ --------------- ------------------ --------------- ----------------- ----------
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.
Fair ERV Change Like
Value Passing ERV Change Since for
Weighting Rent Contracted Rent ERV March 2016 Like
Investment portfolio % GBPm % GBPm % GBPm % % %
---------------------- ---------- ------- ----- --------------- ----- ----- ----- ---------------- ---------------
London Offices
- Completed, let and
available to let 49.3 11.3 32.8 22.8 47.1 29.1 40.6 2.6 5.1
- Being redeveloped 12.4 - - - - 13.4 18.7 2.6 2.6
- Held for future
development 3.8 1.2 3.5 1.3 2.7 2.5 3.4 (3.3) 17.3
Total London 65.5 12.5 36.3 24.1 49.8 45.0 62.7 (1.1) 4.9
Regional Offices 9.3 5.5 15.9 6.3 13.0 7.9 11.0 (9.9) 3.9
Regional Logistics 15.4 10.9 31.6 12.2 25.2 12.5 17.6 (25.1) (1.4)
Regional Retail 7.8 5.6 16.2 5.8 12.0 6.2 8.7 (38.6) (0.9)
Retirement Villages 2.0 - - - - - - - -
Total Regional 34.5 22.0 63.7 24.3 50.2 26.6 37.3 (25.1) 0.3
Total 100.0 34.5 100.0 48.4 100.0 71.6 100.0 (11.7) 3.1
---------------------- ---------- ------- ----- --------------- ----- ----- ----- ---------------- ---------------
During the year contracted income increased by GBP3.5m as a
result of new lettings and rent reviews, net of any losses from
breaks and lease expiries (2016: GBP12.7m). The significant
contributors to the new lettings were: The Loom, London E1
(GBP1.6m), C-Space, London EC1 (GBP1.0m), and 25 Charterhouse
Square, London EC1 (GBP0.9m).
There was significant activity within the investment portfolio
with 165 lease events.
Contracted Rent
GBPm
--------------------------- ---------------
Rent lost at break/expiry (2.3)
Rent reviews 0.5
Uplift at lease renewals 0.2
New lettings 5.1
--------------------------- ---------------
Total increase in the year 3.5
--------------------------- ---------------
Portfolio Yields
EPRA Topped Up NIY Reversionary
% %
-------------------------------------- ------------------ ------------
London Offices
- Completed, let and available to let 4.3 5.4
- Being redeveloped - 5.8
- Held for future development 3.1 5.6
-------------------------------------- ------------------ ------------
Total London 4.2 5.5
Regional Offices 6.2 7.4
Regional Logistics 7.3 7.3
Regional Retail 6.9 7.2
-------------------------------------- ------------------ ------------
Total Regional 6.9 7.3
Total 5.2 6.1
-------------------------------------- ------------------ ------------
Capital Values, Vacancy Rates and Unexpired Lease Terms
Capital value psf Vacancy rate* WAULT
GBP % Years
-------------------------------------- ----------------- ------------- ------
London Offices
- Completed, let and available to let 926 10.0 6.8
- Being redeveloped 619 n/a -
- Held for future development 645 43.2 0.1
Total London 828 33.2 6.9
Regional Offices 201 12.9 5.1
Regional Logistics 54 4.3 4.8
Regional Retail 217 2.8 4.9
Total Regional 94 5.2 5.0
Total 220 10.0 5.9
-------------------------------------- ----------------- ------------- ------
*The vacancy rates exclude assets in the course of
redevelopment.
Valuation Movements
Val Change Val Change
inc Capex, inc Capex, Investment Portfolio Weighting Investment Portfolio Weighting
Sales & Purchases excl Sales & Purchases March 2017 March 2016
% % % %
------------ ------------------ ----------------------- ------------------------------ ------------------------------
London
Offices
- Completed,
let and
available
to let 11.1 12.3 49.3 45.0
- Being
redeveloped 0.3 0.3 12.4 8.6
- Held for
future
development 3.9 3.9 3.8 2.8
------------ ------------------ ----------------------- ------------------------------ ------------------------------
Total London 9.1 9.8 65.5 56.4
Regional
Offices 1.7 1.4 9.3 9.7
Regional
Logistics 1.6 0.2 15.4 20.0
Regional
Retail (9.6) (11.4) 7.8 12.8
Retirement
Villages 14.3 10.6 2.0 1.1
Total
Regional (1.3) (2.1) 34.5 43.6
Total 4.5 5.2 100.0 100.0
------------ ------------------ ----------------------- ------------------------------ ------------------------------
Lease Expiries or Tenant Break Options
Year to Year to Year to Year to Year to
2018 2019 2020 2021 2022
----------------------------- ------- ------- ------- ------- -------
% of rent roll 9.8 10.6 11.2 5.1 14.7
Number of leases 91 90 68 22 35
Average rent per lease (GBP) 51,742 56,770 79,331 111,898 202,620
----------------------------- ------- ------- ------- ------- -------
We have a strong rental income stream and a diverse tenant base,
with the largest tenant in the portfolio accounting for only 8.1%
of the rent roll. The top 10 tenants account for 34.8% of the total
rent roll and the tenants come from a variety of industries.
Rent Rent Roll
Rank Tenant Tenant Industry GBPm %
------ -------------------------------- ------------------------------ --------------- ---------
1 Endemol UK Limited Media 3.9 8.1
2 MullenLowe Limited Marketing Communications 2.6 5.4
3 Gopivotal (UK) Limited Technology 2.0 4.1
4 Farfetch UK Limited Online Retail 1.9 3.9
5 Sainsbury's Supermarkets Limited Food Retail 1.2 2.6
6 Economic Solutions Limited Employment and Skills Training 1.1 2.3
7 Neulion Limited Technology 1.0 2.2
8 CBS Interactive Limited Media 1.0 2.2
9 Allegis Group Limited Recruitment 1.0 2.1
10 Anomaly UK Limited Marketing 0.9 1.9
Total 16.6 34.8
---------------------------------------- ------------------------------ --------------- ---------
Consolidated income statement
For the year ended 31 March 2017
Year ended
Year ended 31.3.16
31.3.17 Restated
Notes GBP000 GBP000
------------------------------------------------------------------------------ ----- ---------- ----------
Revenue 2 99,934 116,500
------------------------------------------------------------------------------ ----- ---------- ----------
Net rental income 3 46,162 42,164
Development property profit 4 843 24,252
Share of results of joint ventures 12 (6,528) 50,469
Other operating income 982 20
------------------------------------------------------------------------------ ----- ---------- ----------
Gross profit before net gain on sale and revaluation of investment properties 41,459 116,905
Net gain on sale and revaluation of investment properties 5 40,543 49,826
Impairment of available-for-sale investments 14 (3,352) (1,370)
------------------------------------------------------------------------------ ----- ---------- ----------
Gross profit 78,650 165,361
Administrative expenses 6 (18,372) (26,103)
------------------------------------------------------------------------------ ----- ---------- ----------
Operating profit 60,278 139,258
Finance costs 7 (25,598) (24,113)
Finance income 3,156 5,128
Change in fair value of derivative financial instruments 789 (6,860)
Change in fair value of Convertible Bond 2,973 516
Foreign exchange (loss)/gain (3) 100
------------------------------------------------------------------------------ ----- ---------- ----------
Profit before tax 41,595 114,029
Tax on profit on ordinary activities 8 (2,471) (9,146)
------------------------------------------------------------------------------ ----- ---------- ----------
Profit after tax 39,124 104,883
------------------------------------------------------------------------------ ----- ---------- ----------
- attributable to equity shareholders 39,124 104,943
- attributable to non-controlling interests - (60)
------------------------------------------------------------------------------ ----- ---------- ----------
Profit for the year 39,124 104,883
------------------------------------------------------------------------------ ----- ---------- ----------
Earnings per share 10
Basic 34.0p 91.3p
Diluted 33.2p 88.0p
------------------------------------------------------------------------------ ----- ---------- ----------
Consolidated statement of comprehensive income
For the year ended 31 March 2017
Year ended
Year ended 31.3.16
31.3.17 Restated
GBP000 GBP000
------------------------------------------------------------------------------ ---------- ----------
Profit for the year 39,124 104,883
Exchange difference on retranslation of net investments in foreign operations 48 (16)
------------------------------------------------------------------------------ ---------- ----------
Total comprehensive income for the year 39,172 104,867
------------------------------------------------------------------------------ ---------- ----------
- attributable to equity shareholders 39,172 104,927
- attributable to non-controlling interests - (60)
------------------------------------------------------------------------------ ---------- ----------
Total comprehensive income for the year 39,172 104,867
------------------------------------------------------------------------------ ---------- ----------
The exchange differences on retranslation of net investments in
foreign operations will be reclassified to the Income Statement on
disposal.
Consolidated balance sheet
At 31 March 2017
31.3.16
31.3.17 Restated
Notes GBP000 GBP000
---------------------------------------------------- ----- --------- ----------
Non-current assets
Investment properties 11 987,560 1,035,033
Owner occupied property, plant and equipment 2,124 2,200
Investment in joint ventures 12 19,882 27,990
---------------------------------------------------- ----- --------- ----------
1,009,566 1,065,223
---------------------------------------------------- ----- --------- ----------
Current assets
Land, developments and trading properties 13 86,680 92,035
Available-for-sale investments 14 - 3,114
Corporate tax receivable 3,320 -
Trade and other receivables 15 73,925 73,057
Cash and cash equivalents 16 99,262 74,670
---------------------------------------------------- ----- --------- ----------
263,187 242,876
---------------------------------------------------- ----- --------- ----------
Total assets 1,272,753 1,308,099
---------------------------------------------------- ----- --------- ----------
Current liabilities
Trade and other payables 17 (56,349) (71,000)
Corporation tax payable - (1,592)
Borrowings 18 (2,517) (885)
---------------------------------------------------- ----- --------- ----------
(58,866) (73,477)
---------------------------------------------------- ----- --------- ----------
Non-current liabilities
Borrowings 18 (671,184) (733,178)
Derivative financial instruments 19 (13,981) (14,955)
Deferred tax liability 8 (11,825) (5,768)
---------------------------------------------------- ----- --------- ----------
(696,990) (753,901)
---------------------------------------------------- ----- --------- ----------
Total liabilities (755,856) (827,378)
---------------------------------------------------- ----- --------- ----------
Net assets 516,897 480,721
---------------------------------------------------- ----- --------- ----------
Equity
Called-up share capital 20 1,447 1,447
Share premium account 98,798 98,798
Revaluation reserve 164,190 143,699
Capital redemption reserve 7,478 7,478
Other reserves 291 291
Retained earnings 244,693 229,008
---------------------------------------------------- ----- --------- ----------
Equity attributable to equity holders of the parent 516,897 480,721
Non-controlling interests - -
---------------------------------------------------- ----- --------- ----------
Total equity 516,897 480,721
---------------------------------------------------- ----- --------- ----------
Consolidated cash flow statement
For the year to 31 March 2017
Year ended
Year ended 31.3.16
31.3.17 Restated
GBP000 GBP000
--------------------------------------------------------------- ---------- ----------
Cash flows from operating activities
Profit before tax 41,595 114,029
Depreciation 391 338
Net revaluation gain on investment properties (39,152) (47,441)
Gain on sales of investment properties (1,391) (2,385)
Profit on sale of plant and equipment (56) -
Net financing costs 22,442 18,985
Change in value of derivative financial instruments (789) 6,860
Change in fair value of Convertible Bond (2,973) (516)
Share based payment charge 1,672 6,666
Share of results of joint ventures 6,528 (50,469)
Impairment of available-for-sale investment 3,352 1,370
Foreign exchange movement 6 250
--------------------------------------------------------------- ---------- ----------
Cash inflows from operations before changes in working capital 31,625 47,687
--------------------------------------------------------------- ---------- ----------
Change in trade and other receivables 876 (5,074)
Movement in property derivative financial asset - 16,388
Change in land, developments and trading properties 3,789 306
Change in trade and other payables (9,338) 5,314
--------------------------------------------------------------- ---------- ----------
Cash inflows generated from operations 26,952 64,621
--------------------------------------------------------------- ---------- ----------
Finance costs (33,041) (25,312)
Finance income 1,413 3,915
Tax paid (3,392) (4,712)
--------------------------------------------------------------- ---------- ----------
(35,020) (26,109)
--------------------------------------------------------------- ---------- ----------
Cash flows from operating activities (8,068) 38,512
--------------------------------------------------------------- ---------- ----------
Cash flows from investing activities
Additions to investment property (59,310) (405,133)
Sale of investment property 156,254 121,770
Return of investment in joint ventures - 11,495
Dividends from joint ventures 1,580 82,569
Available for sale asset additions (238) (142)
Sale of plant and equipment 178 70
Purchase of owner occupied property, plant and equipment (442) (263)
--------------------------------------------------------------- ---------- ----------
Net cash generated from/(used by) investing activities 98,022 (189,634)
--------------------------------------------------------------- ---------- ----------
Cash flows from financing activities
Borrowings drawn down 41,986 299,754
Borrowings repaid (102,887) (161,648)
Purchase of own shares (944) (18,857)
Equity dividends paid (3,566) (14,437)
--------------------------------------------------------------- ---------- ----------
Net cash (used by)/generated from financing activities (65,411) 104,812
--------------------------------------------------------------- ---------- ----------
Net increase/(decrease) in cash and cash equivalents 24,543 (46,310)
Exchange gains/(losses) on cash and cash equivalents 49 (13)
Cash and cash equivalents at start of year 74,670 120,993
--------------------------------------------------------------- ---------- ----------
Cash and cash equivalents at end of year 99,262 74,670
--------------------------------------------------------------- ---------- ----------
Consolidated statement of changes in equity
At 31 March 2017
Capital Own Non-
Share Share Re-valuation redemption Other Retained shares controlling
capital premium reserve reserve reserves earnings held interests Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- -------- -------- ------------ ---------- --------- -------- -------- ----------- --------
At 31 March
2015 1,447 98,798 108,060 7,478 291 188,229 - 60 404,363
Total
comprehensive
income - - - - - 104,927 - (60) 104,867
Revaluation
surplus - - 47,441 - - (47,441) - - -
Realised on
disposals - - (11,802) - - 11,802 - - -
Performance
share plan - - - - - 6,666 - - 6,666
Performance
share plan -
deferred tax - - - - - (3,002) - - (3,002)
Share settled
bonus - - - - - 1,121 - - 1,121
Dividends paid - - - - - (14,437) - - (14,437)
Purchase of
own shares - - - - - - (18,857) - (18,857)
Own shares
held reserve
transfer - - - - - (18,857) 18,857 - -
-------------- -------- -------- ------------ ---------- --------- -------- -------- ----------- --------
At 31 March
2016 restated 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
-------------- -------- -------- ------------ ---------- --------- -------- -------- ----------- --------
For a breakdown of total comprehensive income see the
Consolidated Statement of Comprehensive Income.
The adjustment against retained earnings of GBP1,672,000 (31
March 2016: GBP6,666,000) adds back the share based payments charge
in accordance with IFRS 2 Share Based Payments.
There were net transactions with owners of GBP2,996,000 (31
March 2016: GBP28,509,000) made up of the performance share plan
charge of GBP1,672,000 (31 March 2016: GBP6,666,000) and related
deferred tax debit of GBP2,062,000 (31 March 2016: GBP3,002,000),
dividends paid of GBP3,566,000 (31 March 2016: GBP14,437,000), the
purchase of own shares debit of GBP944,000 (31 March 2016:
GBP18,857,000) and the share settled bonus credit of GBP1,904,000
(31 March 2016: GBP1,121,000).
Notes to the full year results
1. Basis of Preparation
These financial statements have been prepared using the
recognition and measurement principles of International Financial
Reporting Standards ("IFRS"), including International Financial
Reporting Interpretations Committee ("IFRIC") interpretations as
adopted by the European Union.
The financial statements have been prepared in Sterling (rounded
to the nearest thousand) under the historical cost convention as
modified by the revaluation of investment properties,
available-for-sale investments, convertible bonds and derivative
financial instruments.
The principal accounting policies of the Group are set out in
the Group's 2016 annual report and financial statements, there has
been no significant change to these policies.
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined in
section 434 of the Companies Act 2006 but has been derived from the
Company's audited statutory accounts for the year ended 31 March
2017. These accounts will be delivered to the Registrar of
Companies following the Annual General Meeting. The Group Annual
Report and Financial Statements for 2016 are available at Companies
House. The auditor's opinion on the 2016 accounts was unqualified
and did not contain a statement under section 498(2) or (3) of the
Companies Act 2006.
2. 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.
Investment Investment
and Trading Developments Total and Trading Developments Total
Year ended Year ended Year ended Year ended Year ended Year ended
31.03.17 31.03.17 31.03.17 31.03.16 31.03.16 31.03.16
Revenue GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- ------------ ------------ ----------- ------------ ------------ -----------
Rental income 48,835 - 48,835 45,158 347 45,505
Development property income - 49,994 49,994 - 70,876 70,876
Other revenue 1,105 - 1,105 119 - 119
---------------------------- ------------ ------------ ----------- ------------ ------------ -----------
Revenue 49,940 49,994 99,934 45,277 71,223 116,500
---------------------------- ------------ ------------ ----------- ------------ ------------ -----------
Investment and Investment
Trading Developments Total and Trading Developments Total
Year ended Year ended Year ended Year ended Year ended Year ended
31.03.17 31.03.17 31.03.17 31.03.16 31.03.16 31.03.16
Profit before tax GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- ---------------------- ------------ ----------- ------------ -------------- ------------
Net rental income 46,213 (51) 46,162 42,010 154 42,164
Development property
profit - 843 843 - 24,252 24,252
Share of results of
joint ventures (2,049) (4,479) (6,528) 47,592 2,877 50,469
Gain on sale and
revaluation of
investment properties 40,543 - 40,543 49,826 - 49,826
----------------------- ---------------------- ------------ ----------- ------------ -------------- ------------
84,707 (3,687) 81,020 139,428 27,283 166,711
Impairment of available
for sale assets (3,352) (1,370)
Other operating income 982 20
----------------------- ---------------------- ------------ ----------- ------------ -------------- ------------
Gross profit 78,650 165,361
Administrative expenses (18,372) (26,103)
Net finance costs (18,680) (25,329)
Foreign exchange
(loss)/gain (3) 100
----------------------- ---------------------- ------------ ----------- ------------ -------------- ------------
Profit before tax 41,595 114,029
----------------------- ---------------------- ------------ ----------- ------------ -------------- ------------
Investment
Investment and Trading Developments Total and Trading Developments Total
31.03.17 31.03.17 31.03.17 31.03.16 31.03.16 31.03.16
Balance sheet GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ---------------------- -------------- ---------- ------------ -------------- ----------
Investment properties 987,560 - 987,560 1,035,033 - 1,035,033
Land, development and
trading properties 28 86,652 86,680 28 92,007 92,035
Investment in joint
ventures 1,814 18,068 19,882 14,162 13,828 27,990
------------------------ ---------------------- -------------- ---------- ------------ -------------- ----------
989,402 104,720 1,094,122 1,049,223 105,835 1,155,058
Other assets 178,631 153,041
------------------------ ---------------------- -------------- ---------- ------------ -------------- ----------
Total assets 1,272,753 1,308,099
Liabilities (755,856) (827,378)
------------------------ ---------------------- -------------- ---------- ------------ -------------- ----------
Net assets 516,897 480,721
------------------------ ---------------------- -------------- ---------- ------------ -------------- ----------
3. Net Rental Income
Year ended Year ended
31.3.17 31.3.16
GBP000 GBP000
------------------------------------------------------- ---------- ----------
Gross rental income 48,835 45,505
Rents payable (68) (80)
Property overheads (2,283) (2,728)
------------------------------------------------------- ---------- ----------
Net rental income 46,484 42,697
Net rental income attributable to profit share partner (322) (533)
------------------------------------------------------- ---------- ----------
Group share of net rental income 46,162 42,164
------------------------------------------------------- ---------- ----------
4. Development Property Profit
Year ended Year ended
31.3.17 31.3.16
GBP000 GBP000
------------------------------------ ---------- ----------
Development property income 49,994 70,876
Profit on forward property contract - 14
Cost of sales (37,576) (29,519)
Sales expenses (5,275) (10,671)
Provision against book values (6,300) (6,448)
------------------------------------ ---------- ----------
Development property profit 843 24,252
------------------------------------ ---------- ----------
5. Net Gain on Sale and Revaluation of Investment Properties
Year ended Year ended
31.3.17 31.3.16
GBP000 GBP000
---------------------------------------------------------- ---------- ----------
Net proceeds from the sale of investment properties 156,939 122,201
Book value (note 11) (154,863) (119,385)
Tenants incentives on sold investment properties (685) (431)
---------------------------------------------------------- ---------- ----------
Gain on sale of investment properties 1,391 2,385
Revaluation surplus on investment properties 39,152 47,441
---------------------------------------------------------- ---------- ----------
Net gain on sale and revaluation of investment properties 40,543 49,826
---------------------------------------------------------- ---------- ----------
6. Administrative Expenses
Year ended Year ended
31.3.17 31.3.16
GBP000 GBP000
------------------------------------------------- ---------- ----------
Administration costs (10,800) (10,717)
Performance related awards (6,854) (13,299)
National Insurance on performance related awards (718) (2,087)
------------------------------------------------- ---------- ----------
Administrative expenses (18,372) (26,103)
------------------------------------------------- ---------- ----------
7. Finance Costs
Year ended Year ended
31.3.17 31.3.16
GBP000 GBP000
----------------------------------------------------- ---------- ----------
Interest payable on bank loans, bonds and overdrafts (28,586) (25,353)
Other interest payable and similar charges (4,913) (3,700)
Interest capitalised 7,901 4,940
----------------------------------------------------- ---------- ----------
Finance costs (25,598) (24,113)
----------------------------------------------------- ---------- ----------
8. Tax on Profit on Ordinary Activities
Year ended Year ended
31.3.17 31.3.16
GBP000 GBP000
------------------------------------------------------------- --------------- ----------
The tax credit/(charge) is based on the profit for the year and represents:
United Kingdom corporation tax at 20%
- Group corporation tax - (7,010)
- Adjustment in respect of prior periods 1,521 (115)
- Overseas tax 2 (712)
------------------------------------------------------------- --------------- ----------
Current tax credit/(charge) 1,523 (7,837)
Deferred tax
- Capital allowances (1,023) (385)
- Tax losses (4,347) 500
- Unrealised chargeable gains 1,803 (7,447)
- Other timing differences (427) 6,023
------------------------------------------------------------- --------------- ----------
Deferred tax charge (3,994) (1,309)
------------------------------------------------------------- --------------- ----------
Total tax charge for the year (2,471) (9,146)
------------------------------------------------------------- --------------- ----------
31.3.17 31.3.16
Deferred tax GBP000 GBP000
---------------------------- --------- ---------
Capital allowances (2,969) (1,946)
Tax losses 8,174 12,521
Unrealised chargeable gains (22,331) (24,134)
Other timing differences 5,301 7,791
---------------------------- --------- ---------
Deferred tax liability (11,825) (5,768)
---------------------------- --------- ---------
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 GBP2,969,000 would be released and further
capital allowances of GBP31,390,000 would be available to reduce
future tax liabilities.
The net deferred tax asset in respect of other timing
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.
9. Dividends
Year ended Year ended
31.3.17 31.3.16
GBP000 GBP000
------------------------------------------------------ ---------- ----------
Attributable to equity share capital
Ordinary
- Interim paid 2.40p per share (2016: 2.30p) 2,743 2,652
- Second interim paid of 5.15p per share - 5,886
- Prior year final paid 0.72p per share (2015: 5.15p) 823 5,899
------------------------------------------------------ ---------- ----------
3,566 14,437
------------------------------------------------------ ---------- ----------
A final dividend of 6.20p, if approved at the AGM on 13 July
2017, will be paid on 21 July 2017 to shareholders on the register
on 23 June 2017. This final dividend, amounting to GBP7,249,950,
has not been included as a liability as at 31 March 2017, in
accordance with IFRS.
10. 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 year. 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 EPRA 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:
Year ended Year ended
31.3.17 31.3.16
000's 000's
------------------------------------------------------------------------------------------ ---------- ----------
Ordinary shares in issue 118,196 118,184
Weighting adjustment (3,110) (3,296)
------------------------------------------------------------------------------------------ ---------- ----------
Weighted average ordinary shares in issue for calculation of basic and EPRA earnings per
share 115,086 114,888
Weighted average ordinary shares issued on share settled bonuses 1,402 1,197
Weighted average ordinary shares to be issued under performance share plan 1,403 3,212
Weighted average ordinary shares in issue for calculation of diluted earnings per share 117,891 119,297
------------------------------------------------------------------------------------------ ---------- ----------
GBP000 GBP000
---------------------------------------------------------------------- ------- -------
Earnings used for calculation of basic and diluted earnings per share 39,124 104,943
---------------------------------------------------------------------- ------- -------
Basic earnings per share 34.0p 91.3p
Diluted earnings per share 33.2p 88.0p
---------------------------------------------------------------------- ------- -------
GBP000 GBP000
-------------------------------------------------------------------------------- -------- --------
Earnings used for calculation of basic and diluted earnings per share 39,124 104,943
Net (gain)/loss on sale and revaluation of investment properties - subsidiaries (40,543) (49,826)
- joint ventures 1,929 (50,210)
Tax on profit on disposal of investment properties 420 998
Fair value movement on derivative financial instruments - subsidiaries (789) 6,860
- joint ventures 42 (211)
Fair value movement on Convertible Bond (2,973) (516)
Impairment of available-for-sale investment 3,352 1,370
Deferred tax on adjusting items (37) 6,212
-------------------------------------------------------------------------------- -------- --------
Earnings used for calculations of EPRA earnings per share 525 19,620
-------------------------------------------------------------------------------- -------- --------
EPRA earnings per share 0.5p 17.1p
-------------------------------------------------------------------------------- -------- --------
The earnings used for the calculation of EPRA earnings per share
includes net rental income and development property profits but
excludes trading property gains.
11. Investment Properties
31.3.17 31.3.16
GBP000 GBP000
---------------------------------------------------------- --------- ---------
Book value at 1 April 1,035,033 701,521
Additions and transfers at cost 68,778 405,133
Disposals (154,863) (119,385)
Revaluation surplus 39,152 47,441
Revaluation surplus attributable to profit share partners (540) 323
---------------------------------------------------------- --------- ---------
Book value at 31 March 987,560 1,035,033
---------------------------------------------------------- --------- ---------
All properties are stated at market value as at 31 March 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 31 March 2017 is as follows:
31.3.17 31.3.16
GBP000 GBP000
------------------------------------------------------------------- --------- ---------
Book value 987,560 1,035,033
Lease incentives and costs included in trade and other receivables 15,440 6,067
------------------------------------------------------------------- --------- ---------
Fair value 1,003,000 1,041,100
------------------------------------------------------------------- --------- ---------
Interest capitalised in respect of the refurbishment of
investment properties at 31 March 2017 amounted to GBP10,973,000
(31 March 2016: GBP6,571,000).
The historical cost of investment property is GBP822,161,000 (31
March 2016: GBP889,493,000).
12. Joint Ventures
Year ended Year ended
31.3.17 31.3.16
Share of results of joint ventures GBP000 GBP000
--------------------------------------------------------- ---------- ----------
Gross rental income 931 1,828
Property overheads (100) (558)
--------------------------------------------------------- ---------- ----------
Net rental income 831 1,270
Net (loss)/gain on revaluation of investment properties (1,875) 2,316
(Loss)/profit on sale of investment properties (54) 41,553
Development (loss)/profit (35) 3,223
Provision against book values (6,524) -
Other operating (expenses)/income (1,118) 218
Administrative expenses (338) (1,140)
Finance costs (2) (3,673)
Finance income 1,233 21
Change in fair value of derivative financial instruments (42) 211
--------------------------------------------------------- ---------- ----------
(Loss)/profit before tax (7,924) 43,999
Tax 1,396 129
--------------------------------------------------------- ---------- ----------
(Loss)/profit after tax (6,528) 44,128
Economic interest adjustment* - 6,341
--------------------------------------------------------- ---------- ----------
Share of results of joint ventures (6,528) 50,469
--------------------------------------------------------- ---------- ----------
*Under the Barts Square joint venture agreement the Group is
entitled to varying returns dependent upon the performance of the
development. Whilst the Group holds a 33.35% equity share in the
Barts Square group, it has accounted for its share at 43.8% at the
current and prior year end to reflect its expected economic
interest in the joint venture. The assessment of the Group's
economic interest has not changed since 31 March 2016.
31.3.17 31.3.16
Investment in joint ventures GBP000 GBP000
--------------------------------------------- --------- ---------
Summarised balance sheets
Non-current assets
Investment properties 13,907 11,552
Owner occupied property, plant and equipment 30 96
Derivative financial instruments 52 -
Deferred Tax 1,811 412
--------------------------------------------- --------- ---------
15,800 12,060
--------------------------------------------- --------- ---------
Current assets
Land, development and trading properties 89,115 75,904
Trade and other receivables 1,327 3,497
Cash and cash equivalents 9,745 12,177
--------------------------------------------- --------- ---------
100,187 91,578
--------------------------------------------- --------- ---------
Current liabilities
Trade and other payables (17,699) (14,436)
--------------------------------------------- --------- ---------
(17,699) (14,436)
--------------------------------------------- --------- ---------
Non-current liabilities
Trade and other payables (23,124) (26,586)
Borrowings (55,282) (34,626)
(78,406) (61,212)
--------------------------------------------- --------- ---------
Net assets 19,882 27,990
--------------------------------------------- --------- ---------
The Directors' valuation of trading and development stock shows
a surplus of GBP7,500,000 (2016: GBP7,000,000) above book
value.
13. Land, Developments and Trading Properties
31.3.17 31.3.16
GBP000 GBP000
--------------------------------- --------- ---------
Development properties 86,652 92,007
Properties held as trading stock 28 28
--------------------------------- --------- ---------
86,680 92,035
--------------------------------- --------- ---------
The Directors' valuation of trading and development stock shows
a surplus of GBP5,014,000 (2016: GBP12,412,000) above book
value.
Total interest to date in respect of the development of sites is
included in stock to the extent of GBP11,178,000 (2016:
GBP11,626,000). Interest capitalised during the period in respect
of development sites amounted to GBP3,500,000.
14. Available-For-Sale Investments
31.3.17 31.3.16
GBP000 GBP000
---------------------- --------- ---------
Fair value at 1 April 3,114 4,342
Fair value additions 248 142
Fair value disposals (10) -
Fair value impairment (3,352) (1,370)
---------------------- --------- ---------
Fair value 31 March - 3,114
---------------------- --------- ---------
The fair value of the Group's Level 3 available-for-sale
investment has been determined by assessing the expected future
consideration receivable from this investment, as the value cannot
be derived from observable market data. The fair value of the asset
is sensitive only to potential sales proceeds.
15. Trade and Other Receivables
31.3.17 31.3.16
GBP000 GBP000
------------------------------- --------- ---------
Trade receivables 12,836 20,869
Other receivables 27,462 32,382
Prepayments and accrued income 33,627 19,806
------------------------------- --------- ---------
73,925 73,057
------------------------------- --------- ---------
16. Cash and Cash Equivalents
31.3.17 31.3.16
GBP000 GBP000
----------------------------------------------- --------- ---------
Rent deposits and cash held at managing agents 4,046 4,906
Restricted cash 12,111 17,063
Cash deposits 83,105 52,701
----------------------------------------------- --------- ---------
99,262 74,670
----------------------------------------------- --------- ---------
Restricted cash is made up of cash held by solicitors and cash
in blocked/restricted accounts.
17. Trade and Other Payables
31.3.17 31.3.16
GBP000 GBP000
----------------------------- --------- ---------
Trade payables 12,197 14,463
Other payables 3,022 8,218
Accruals and deferred income 41,130 48,319
----------------------------- --------- ---------
56,349 71,000
----------------------------- --------- ---------
18. Borrowings
31.3.17 31.3.16
GBP000 GBP000
----------------------------- --------- ---------
Current borrowings 2,517 885
----------------------------- --------- ---------
Borrowings repayable within:
- one to two years 4,150 3,617
- two to three years 304,641 3,650
- three to four years 215,667 337,098
- four to five years 1,053 219,523
- five to six years 73,353 95,981
- six to ten years 72,320 73,309
----------------------------- --------- ---------
Non-current borrowings 671,184 733,178
----------------------------- --------- ---------
Total borrowings 673,701 734,063
----------------------------- --------- ---------
Included within borrowings repayable within two to three years
is the convertible bond at its fair value of GBP99,774,000. It is a
financial instrument classified as Level 1 under the IFRS 13 fair
value hierarchy.
31.3.17 31.3.16
Net Gearing GBP000 GBP000
----------------- --------- ---------
Total borrowings 673,701 734,063
Cash (99,262) (74,670)
----------------- --------- ---------
Net borrowings 574,439 659,393
----------------- --------- ---------
Net borrowings excludes the Group's share of borrowings in joint
ventures of GBP55,282,000 (2016: GBP34,626,000) and cash of
GBP9,745,000 (2016: GBP12,177,000). All borrowings in joint
ventures are secured.
31.3.17 31.3.16
GBP000 GBP000
----------- --------- ---------
Net assets 516,897 480,721
----------- --------- ---------
Gearing 111% 137%
----------- --------- ---------
19. Derivative Financial Instruments
31.3.17 31.3.16
GBP000 GBP000
------------------------------------------- --------- ---------
Derivative financial instruments asset - -
------------------------------------------- --------- ---------
Derivative financial instruments liability (13,981) (14,955)
------------------------------------------- --------- ---------
The fair values of the Group's outstanding interest rate swaps
and caps 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.
20. Share Capital
31.3.17 31.3.16
GBP000 GBP000
----------- --------- ---------
Authorised 39,577 39,577
----------- --------- ---------
The authorised share capital of the Company is GBP39,576,626.60
divided into ordinary shares of 1p each and deferred shares of 1/8p
each.
Allotted, called up and fully paid:
- 118,196,215 (2016: 118,183,806) ordinary shares of 1p each 1,182 1,182
- 212,145,300 deferred shares of 1/8p each 265 265
------------------------------------------------------------- ----- -----
1,447 1,447
------------------------------------------------------------- ----- -----
21. 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. For this purpose, 254,000 shares (2016: 4,488,000) in
the Company were purchased during the year at a cost of
GBP944,000 (2016: GBP18,857,000).
At 31 March 2017 the ESOP held 1,262,000 ordinary shares in
Helical plc (2016: 3,901,000).
At 31 March 2017 options over nil (2016: nil) ordinary shares in
Helical plc had been granted through the ESOP. At 31 March 2017
awards over 4,744,000 (2016: 6,558,000) ordinary shares in Helical
plc, made under the terms of the Performance Share Plan, were
outstanding.
22. Net Assets per Share
Number
of
31.3.17 Shares 31.3.17
GBP000 000's 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 adjustment for the fair value of trading and development
properties represents the surplus as at 31 March 2017.
Number
of
31.3.16 Shares 31.3.16
GBP000 000's Pence Per Share
------------------------------------------------------------------ --------- ------- -----------------
Net asset value 480,721 118,184
Less: - own shares held by ESOP (3,901)
- deferred shares (265)
------------------------------------------------------------------ --------- ------- -----------------
Basic net asset value 480,456 114,283 420
Add: share settled bonus 1,197
Add: dilutive effect of the Performance Share Plan 3,177
------------------------------------------------------------------ --------- ------- -----------------
Diluted net asset value 480,456 118,657 405
Adjustment for:
- fair value of financial instruments 14,955
- fair value movement on Convertible Bond 2,747
- deferred tax 23,161
------------------------------------------------------------------ --------- ------- -----------------
Adjusted diluted net asset value 521,319 118,657 439
Adjustment for:
- fair value of trading and development properties 19,412
------------------------------------------------------------------ --------- ------- -----------------
EPRA net asset value 540,731 118,657 456
Adjustment for:
- fair value of financial instruments (14,955)
- deferred tax (23,161)
------------------------------------------------------------------ --------- ------- -----------------
EPRA triple net asset value 502,615 118,657 424
------------------------------------------------------------------ --------- ------- -----------------
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.
23. Related Party Transactions
At 31 March 2017 and 31 March 2016 the following amounts were
due from/(to) the Group's joint ventures.
31.3.17 31.3.16
GBP000 GBP000
----------------------------------------------- ------- -------
King Street Developments (Hammersmith) Limited 8,162 6,231
Shirley Advance LLP 503 11,347
Barts Square companies (13) 77
Helical Sosnica Sp. Zoo 1,126 1,099
Old Street Holdings LP 3 -
Creechurch Place Limited 15,883 13,345
----------------------------------------------- ------- -------
24. Capital Commitments
The Group has a commitment of GBP69,830,000 (2016:
GBP17,209,000) in relation to construction contracts, which are due
to be completed in the period to June 2018.
25. Investment Property Accounting Restatement
International Accounting Standard 40 - Investment Property
requires that accrued operating lease income assets should be shown
separately and deducted from the fair value of the investment
properties in the Consolidated Balance Sheet. This accounting
treatment had not been applied at 31 March 2016 but has been
adopted for the year ended 31 March 2017. A prior year adjustment
has been made to ensure consistency of comparative information,
clarity and transparency.
The effect of the adjustment on the relevant financial statement
line items for the year ended 31 March 2016 is as follows:
Original Adjustment Restated
31.3.16 31.3.16 31.3.16
Impact on equity - increase/(decrease) in equity GBP000 GBP000 GBP000
------------------------------------------------- --------- ---------- ---------
Investment properties 1,041,100 (6,067) 1,035,033
Deferred tax liability (6,367) 599 (5,768)
------------------------------------------------- --------- ---------- ---------
Equity 486,189 (5,468) 480,721
------------------------------------------------- --------- ---------- ---------
Original Adjustment Restated
Impact on the consolidated income statement - Year ended 31.3.16 Year ended 31.3.16 Year ended 31.3.16
increase/(decrease) in profit for the year GBP000 GBP000 GBP000
------------------------------------------------------- ------------------- ------------------- -------------------
Net gain on sale and revaluation of investment
properties 55,893 (6,067) 49,826
------------------------------------------------------- ------------------- ------------------- -------------------
Profit before tax 120,096 (6,067) 114,029
------------------------------------------------------- ------------------- ------------------- -------------------
Tax on profit on ordinary activities (9,745) 599 (9,146)
------------------------------------------------------- ------------------- ------------------- -------------------
Profit for the year 110,351 (5,468) 104,883
------------------------------------------------------- ------------------- ------------------- -------------------
Impact on basic and diluted earnings per share and EPRA Original Adjustment Restated
Net Asset Value - increase/(decrease) Year ended 31.3.16 Year ended 31.3.16 Year ended 31.3.16
pence pence pence
------------------------------------------------------- ------------------- ------------------- -------------------
Basic earnings per share 96.1 (4.8) 91.3
Diluted earnings per share 92.6 (4.6) 88.0
------------------------------------------------------- ------------------- ------------------- -------------------
EPRA net asset value per share 461 (5) 456
------------------------------------------------------- ------------------- ------------------- -------------------
The adjustment did not have an impact on the Group's EPRA
earnings per share.
No adjustment was made at 31 March 2015 on the grounds of
materiality.
26. Post Balance Sheet Events
In May 2017, the Group sold The Morgan Quarter, Cardiff for
GBP55m and a retail asset in Great Yarmouth for GBP4.2m, and
purchased an office building, Trinity Court, Manchester for
GBP12.9m.
Appendix 1 - 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.
Year ended Year ended
31.3.17 31.3.16
GBP000 GBP000
------------------------------------------------------- ------------------ ---------- ----------
Gross rental income - subsidiaries 48,835 45,505
- joint ventures 931 1,828
------------------ ---------- ----------
Total gross rental income 49,766 47,333
Rents payable - subsidiaries (68) (80)
Property overheads - subsidiaries (2,283) (2,728)
- joint ventures (100) (558)
Net rental income attributable to profit share partner (322) (533)
-------------------------------------------------------- ----------------- ---------- ----------
See-through net rental income 46,993 43,434
--------------------------------------------------------------------------- ---------- ----------
See-through net development profits
Helical's share of development profits from property assets held
in subsidiaries and in joint ventures are shown in the table
below.
Year ended Year ended
31.3.17 31.3.16
GBP000 GBP000
----------------------------------------- ------------------ ---------- ----------
In parent and subsidiaries 7,143 30,700
In joint ventures (35) 3,223
------------------------------------------------------------- ---------- ----------
Total gross development profit 7,108 33,923
Provision against stock - subsidiaries (6,300) (6,448)
- joint ventures (6,524) -
------------------ ---------- ----------
See-through development (losses)/profits (5,716) 27,475
------------------------------------------ ----------------- ---------- ----------
See-through net gain on sale and revaluation of investment
properties
Helical's share of the net gain on sale and revaluation of
investment properties held in subsidiaries and in joint ventures
are shown in the table below.
Year ended Year ended
31.3.17 31.3.16
GBP000 GBP000
------------------------------------------------------- ----------------- ---------- ----------
Revaluation surplus/(deficit) on investment properties - subsidiaries 39,152 47,441
- joint ventures (1,875) 2,316
------------------------------------------------------------------------- ---------- ----------
Total revaluation surplus 37,277 49,757
Net gain/(loss) on sale of investment properties - subsidiaries 1,391 2,385
- joint ventures (54) 41,553
------------------------------------------------------------------------- ---------- ----------
Total net gain on sale of investment properties 1,337 43,938
-------------------------------------------------------------------------- ---------- ----------
See-through net gain on sale and revaluation of investment properties 38,614 93,695
-------------------------------------------------------------------------- ---------- ----------
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.
Year ended Year ended
31.3.17 31.3.16
GBP000 GBP000
---------------------------------------------- ----------------- ---------- ----------
Interest payable on bank loans and overdrafts - subsidiaries 28,586 25,353
- joint ventures 2 3,673
---------------------------------------------------------------- ---------- ----------
Total interest payable on bank loans and overdrafts 28,588 29,026
Other interest payable and similar charges - subsidiaries 4,913 3,700
Interest capitalised - subsidiaries (7,901) (4,940)
---------------------------------------------- ----------------- ---------- ----------
Total finance costs 25,600 27,786
Interest receivable and similar income - subsidiaries (3,156) (5,128)
- joint ventures (1,233) (21)
---------------------------------------------------------------- ---------- ----------
See-through net finance costs 21,211 22,637
----------------------------------------------------------------- ---------- ----------
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.
31.3.17 31.3.16
GBP000 GBP000
-------------------------------------------------- ----------------- --------- ---------
Investment property fair value - subsidiaries 1,003,000 1,041,100
- joint ventures 13,907 11,552
------------------ ------------------------------------------------- --------- ---------
Total investment property fair value 1,016,907 1,052,652
Trading and development stock - subsidiaries 86,680 92,035
- joint ventures 89,115 75,904
------------------ ------------------------------------------------- --------- ---------
Total trading and development stock 175,795 167,939
Trading and development stock surplus - subsidiaries 5,014 12,412
- joint ventures 7,500 7,000
------------------ ------------------------------------------------- --------- ---------
Total trading and development stock surpluses 12,514 19,412
---------------------------------------------------------------------- --------- ---------
Total trading and development stock at fair value 188,309 187,351
---------------------------------------------------------------------- --------- ---------
See-through property portfolio 1,205,216 1,240,003
---------------------------------------------------------------------- --------- ---------
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.
31.3.17 31.3.16
GBP000 GBP000
------------------------------------------------------------------- --------- ---------
In parent and subsidiaries - gross borrowings less than one year 2,517 885
- gross borrowings more than one year 671,184 733,178
------------------------------------------------------------------ --------- ---------
Total 673,701 734,063
In joint ventures - gross borrowings less than one year - -
- gross borrowings more than one year 55,282 34,626
------------------------------------------------------------------ --------- ---------
Total 55,282 34,626
In parent and subsidiaries Cash and cash equivalents (99,262) (74,670)
In joint ventures Cash and cash equivalents (9,745) (12,177)
--------------------------- -------------------------------------- --------- ---------
See-through net borrowings 619,976 681,842
------------------------------------------------------------------- --------- ---------
Appendix 2 - See-through Analysis Ratios
31.03.17 31.03.16 31.03.15 31.03.14 31.03.13
Interest cover GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------------------- ---------- ---------- ---------- --------- --------
Net rental income 46,993 43,434 38,645 29,839 24,459
Trading profits/(losses) - - 2,503 252 (1)
Development profits (before provisions) 7,108 33,923 18,028 64,472 7,616
Gain/(loss) on sale of investment properties 1,337 43,938 3,571 8,580 (2,388)
--------------------------------------------- ---------- ---------- ---------- --------- --------
Net operating income 55,438 121,295 62,747 103,143 29,686
--------------------------------------------- ---------- ---------- ---------- --------- --------
Finance costs 21,211 22,637 24,799 12,360 10,893
--------------------------------------------- ---------- ---------- ---------- --------- --------
Interest cover 2.6x 5.4x 2.5x 8.3x 2.7x
Balance sheet
Property portfolio 1,205,216 1,240,003 1,021,362 801,712 626,425
Net borrowings 619,976 681,842 531,897 365,059 283,350
Shareholders' funds 516,897 480,721 404,363 340,527 253,768
Loan to value 51% 55% 52% 46% 45%
Gearing 120% 142% 132% 107% 112%
--------------------------------------------- ---------- ---------- ---------- --------- --------
Appendix 3 - Five Year Review
Income Statements
31.3.17 31.3.16 31.3.15 31.3.14 31.3.13
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------- --------- --------- --------- --------- -------
Revenue 99,934 116,500 106,341 123,637 65,439
------------------------------------- --------- --------- --------- --------- -------
Net rental income 46,162 42,164 34,233 24,402 19,578
Development profit 7,143 30,700 16,126 62,273 7,616
Provisions against stock (6,300) (6,448) (452) 552 (660)
Trading profit/(loss) - - 2,503 252 (1)
Share of results of joint ventures (6,528) 50,469 27,497 16,448 3,854
Other income/(expense) 982 20 368 230 (547)
------------------------------------- --------- --------- --------- --------- -------
Gross profit before gain/(loss)
on investment properties 41,459 116,905 80,275 104,157 29,840
Gain/(loss) on sale of investment
properties 1,391 2,385 2,480 8,611 (2,388)
Revaluation surplus on investment
properties 39,152 47,441 66,904 20,714 3,723
Impairment of available-for-sale
investments (3,352) (1,370) (773) (88) -
Administrative expenses excluding
performance related awards (10,800) (10,716) (10,156) (8,816) (8,092)
Performance related awards (7,572) (15,387) (16,374) (17,860) (6,828)
Finance costs (25,598) (24,113) (23,678) (13,983) (9,577)
Finance income 3,156 5,128 2,480 4,135 887
Movement in fair value of derivative
financial instruments 789 (6,860) (8,389) 5,312 (2,573)
Convertible Bond adjustment 2,973 516 (3,263) - -
Foreign exchange (losses)/gains (3) 100 (2,061) (501) 17
------------------------------------- --------- --------- --------- --------- -------
Profit before tax 41,595 114,029 87,445 101,681 5,009
Tax (2,471) (9,146) (12,669) (14,126) 815
------------------------------------- --------- --------- --------- --------- -------
Profit after tax 39,124 104,883 74,776 87,555 5,824
------------------------------------- --------- --------- --------- --------- -------
Balance Sheets
31.3.17 31.3.16 31.3.15 31.3.14 31.3.13
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
Investment portfolio at fair value 1,003,000 1,041,100 701,521 493,201 312,026
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
Land, developments and trading properties 86,680 92,035 92,578 98,160 92,874
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
Group's share of investment properties held by joint ventures 13,907 11,552 88,305 107,504 94,962
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
Group's share of land, trading and development properties held
by joint ventures 89,115 75,904 102,715 75,368 76,698
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
Group's share of land, trading and development stock surpluses 12,514 19,412 36,243 27,479 49,685
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
Group's share of total properties at fair value 1,205,216 1,240,003 1,021,362 801,712 626,425
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
Net debt 574,439 659,393 477,248 312,849 222,878
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
Group's share of net debt of joint ventures 45,537 22,449 54,649 52,210 60,472
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
Group's share of net debt 619,976 681,842 531,897 365,059 283,350
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
Shareholders' funds 516,897 480,721 404,363 340,527 253,768
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
EPRA shareholders' funds 565,973 540,731 469,128 370,062 313,733
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
Dividend per ordinary share paid/payable 3.12p 12.60p 6.85p 5.70p 5.25p
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
Dividend per ordinary share declared 8.60p 8.17p 7.25p 6.75p 5.55p
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
EPRA earnings per ordinary share 0.5p 17.1p 2.4p 33.3p 2.4p
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
EPRA net assets per share 473p 456p 385p 313p 264p
--------------------------------------------------------------- ---------- ---------- ---------- -------- -------
Appendix 4 - Property Portfolio
London Portfolio
Area
Address Held As Description sq ft (NIA) Vacancy rate
--------------------------- ------------- ---------------------------------------------- ------------ ------------
The Shepherds Building W14 Investment Multi let office building 150,470 2%
The Bower (Ph 1) EC1 Investment Office and retail buildings 151,439 -
The Bower (Ph 2) EC1 Investment Office and retail buildings undergoing 178,724 n/a
refurbishment and extension
The Loom E1 Investment Multi let office building 110,143 18%
C-Space EC1 Investment Multi let office building 61,973 -
The Powerhouse W4 Investment Single let recording studios/office building 24,288 -
Multi let office building with redevelopment
Power Road Studios W4 Investment potential 58,404 43%
Office refurbishment scheme completed in March
25 Charterhouse Square EC1 Investment 2017 43,493 72%
Barts Square EC1 Investment/ 213,000 sq ft offices, 236 residential 471,228 n/a
Development apartments and 20,400 sq ft retail/leisure
development
under construction
One Creechurch Place EC3 Development 277,513 n/a
Drury Lane WC1 Development Planning consent for an alternative office led n/a
scheme has been submitted
King Street W6 Development Development site n/a
--------------------------- ------------- ---------------------------------------------- ------------ ------------
1,527,675
---------------------------------------------------------------------------------------- ------------ ------------
Regional Portfolio
Area Vacancy rate
Address Held As Description sq ft (NIA)
---------------------------- ----------- ----------------------------------------- ------------ ------------
In Town Retail
Prime retail parade and listed retail
The Morgan Quarter, Cardiff Investment arcades 289,537 6.6%
289,537
---------------------------------------------------------------------------------- ------------ ------------
Out-of-town Retail
Great Yarmouth Investment Single let retail park 38,771 -
Sevenoaks, Kent Investment Retail park 42,490 -
Southend on Sea Investment Retail park 74,954 -
156,215
---------------------------------------------------------------------------------- ------------ ------------
Industrial/Logistics
Bolton Investment Single let cash and carry 73,433 -
Bristol, Portbury Investment Single let industrial centre 64,003 -
Brownhills, Birmingham Investment Single let distribution centre 52,538 -
Cannock Investment Single let distribution centre 153,665 -
Cannock Investment Single let distribution centre 103,050 -
Cardiff, Heol Billingsley Investment Single let distribution centre 50,684 -
Chester Investment Single let distribution centre 182,824 -
Doncaster, Aspect Way Investment Single let distribution centre 122,591 100%
Doncaster, Kirk Sandalls Investment Single let distribution centre 153,547 -
Gloucester Quedgley Investment Multi let industrial estate 43,723 -
Halesowen Investment Single let industrial centre 72,120 -
Hinckley Investment Single let distribution centre 189,349 -
Jarrow Investment Single let industrial centre 101,476
Leighton Buzzard Investment Multi let industrial estate 202,674 -
Newton Aycliffe Investment Multi let industrial estate 20,657 7%
Northampton, Crow Lane Investment Multi let distribution centre 146,716 -
Peterborough Investment Single let industrial centre 160,791 -
Stone, Bibby Investment Single let industrial centre 122,301 -
Stone, Opal Way Investment Single let industrial centre 130,537 -
Sunderland, Doxford Investment Single let industrial centre 139,130 -
Telford Investment Single let distribution centre 65,225 -
Thetford Investment Single let distribution centre 127,574 -
Warrington, Raglan Court Investment Single let distribution centre 81,342 -
Wellingborough Investment Single let industrial centre 67,570 -
Yate Investment Single let distribution centre 255,714 -
---------------------------- ----------- ----------------------------------------- ------------ ------------
2,883,234
---------------------------------------- --------------------------------------- --------------------------
Area
Address Held As Description sq ft (NIA) Vacancy rate
----------------------------------- ------------ --------------------------------------- ------------ ------------
Regional Offices
Crawley Investment Single let office building 48,131 -
The Hub, Glasgow Investment Multi let office building 57,388 2%
Manchester, 31 Booth St Investment Multi let office building 25,441 n/a
Manchester, Churchgate & Lee House Investment Multi let city centre office 249,233 2%
Multi let city centre office building
with refurbishment and asset
Manchester, Dale House Investment management potential 53,635 53%
Reading Investment Office building 35,847 -
469,675
---------------------------------------------------------------------------------------- ------------ ------------
Land
Telford, Dawley Road Development Residential land n/a n/a
Crawley, Tilgate Development Commercial development site n/a n/a
Retail Development
----------------------------------- ------------ --------------------------------------- ------------ ------------
Cortonwood Retail Park Development Pre-let retail park 79,750 -
Four Pools, Evesham Development Retail park 41,000 15%
Ibstock site, Kingswinford Development Retail park 80,000 n/a
Barking Road, East Ham Development Retail/leisure 43,000 -
Treyew Road, Truro Development Retail park 78,000 n/a
321,750
---------------------------------------------------------------------------------------- ------------ ------------
Address Held As Description Units Vacancy rate
---------------------------- ------------- -------------------------------- ------------ -------------------
Retirement Villages
Millbrook, Exeter Development Retirement village development 164 n/a
Durrants Village, Faygate Development Retirement village development 173 n/a
Maudslay Park, Great Alne Development Retirement village development 166 n/a
Bramshott Place, Liphook Development Retirement village development 191 n/a
Bramshott Place Clubhouse Investment Clubhouse at retirement village n/a n/a
Durrants Village Clubhouse Investment Clubhouse at retirement village n/a n/a
Millbrook Village Clubhouse Investment Clubhouse at retirement village n/a n/a
---------------------------- ------------- -------------------------------- ------------ -------------------
694
------------- ------------------------------------------------------------- ------------ -------------------
Appendix 5 - Risk Register
STRATEGIC RISKS
Strategic risks are external risks that could prevent the Group delivering its strategy. These
risks principally impact our decision to purchase or exit from a property asset.
----------------------------------------------------------------------------------------------------------------------
Risk Risk description Mitigation/action
-------------------------------------- ------------------------------------ ----------------------------------------
The Group's strategy is inconsistent Changing market conditions could Management constantly monitors the
with the market. hinder the Group's ability to buy market and makes changes to the Group's
and sell properties envisioned strategy in light
in its strategy. The location, size of market shifts.
and mix of properties in the Helical
portfolio determine The Group's management is highly
the impact of the risk. experienced and has a strong track
record of calling the
If the Group's chosen markets property market.
underperform, the impact on the
Group's liquidity, investment Due to the Group's small management
property revaluations and rental team, changes in strategy can be
income is greater. implemented quickly.
The Group carries out significant Management carefully reviews the risk
development projects over several profile of individual developments and
years and is therefore in some cases
exposed to fluctuations in the builds properties in several phases to
market over time. minimise the exposure to reduced demand
for particular
asset classes or geographical locations
over time. The Group limits the number
of speculative
developments it does on its own balance
sheet.
-------------------------------------- ------------------------------------ ----------------------------------------
Property values decline/reduced tenant The property portfolio is at risk of The Group's property portfolio is
demand for space. revaluation falls through changes in diverse in asset type, location and
market conditions, tenant industries, reducing
including under-performing sectors over-exposure to one sector.
or locations, lack of tenant demand Management reviews external data,
or general economic seeks the advice of industry
uncertainty. experts and monitors the performance
of individual assets and sectors in
order to dispose
of non-performing assets and rebalance
the portfolio for the changing market.
-------------------------------------- ------------------------------------ --------------------------------------
Political risk There is a risk that regulatory and Management seeks advice from experts
tax changes could adversely affect to ensure continued monitoring of
the market in which upcoming regulatory
the Group operates and changes in and tax changes and to understand the
legislation could lead to delays in potential impact on the Group. It
receiving planning permission. maintains good relationships
with planning consultants and local
The risk has increased significantly authorities.
following the United Kingdom's
decision to leave the
European Union in June 2016.
-------------------------------------- ------------------------------------ --------------------------------------
FINANCIAL RISKS
Financial risks are those that could prevent the Group from funding its chosen strategy, both
in the long and short term.
Availability of bank borrowing and The inability to roll over existing The Group maintains a good
cash resources facilities or take out new borrowing relationship with many established
would impact on the lending institutions and borrowings
Group's ability to maintain its current are spread across a number of these.
portfolio and purchase new properties.
The Group may Funding requirements are reviewed
forego opportunities if it does not weekly by management, who ensure that
maintain sufficient cash to take the maturity dates
advantage of them as of borrowings are spread over several
they arise. years.
Management monitors the cash levels of
the Group on a daily basis and
maintains sufficient
levels of cash resources and undrawn
committed bank facilities to fund
opportunities as they
arise.
Breach of loan and bond covenants If the Group breaches debt covenants, Covenants are closely monitored
lending institutions may require the throughout the year. Management
early repayment carries out sensitivity analysis
of borrowings. to assess the likelihood of future
breaches based on significant changes
in property values
or rental income.
Increase in cost of borrowing The Group is at risk of increased The Group hedges the interest rates on
interest rates on unhedged borrowings. the majority of its borrowings,
effectively fixing
the rates over several years.
OPERATIONAL RISK
Operational risks are internal risks that could prevent the Group from delivery its strategy.
----------------------------------------------------------------------------------------------------------------------
Risk Risk description Mitigation/action
Employment and retention of key The Group's continued success is The senior management team is very
personnel reliant on its management and staff experienced and the average length of
and successful relationships service is high.
with its joint venture partners. The Nominations Committee and Board
regularly review succession planning
issues and remuneration
is set to attract and retain high
calibre staff.
The Group has well established
relationships with joint venture
partners.
Inability to asset manage, develop and The Group relies on external parties The Group has a highly experienced
let property assets to support it in asset managing, team managing its properties. It seeks
developing and letting to maintain excellent
its properties, including planning relationships with its specialist
consultants, contractors, architects, professional advisors. Management
project managers, actively monitors these
marketing agencies, lawyers and parties to ensure they are delivering
managing agents. the required quality on time.
Health and Safety/Bribery and The nature of the Group's operations The Group reviews and updates its
corruption risk and markets expose it to potential Health and Safety policy regularly and
health and safety it is approved by
and bribery and corruption risks. the Board annually. The Group engages
an external health and safety
consultant to review contractor
contracts prior to appointment to
ensure they have appropriate policies
and procedures in
place, then monitors the adherence to
policies throughout the project.
The Executive Committee reviews the
report by the external consultant
every month and the
Board reviews them at every scheduled
meeting. The internal asset managers
carry out regular
site visits.
The Group's anti-bribery and
whistleblowing policies are reviewed
and updated annually and
projects with greater exposure to
bribery and corruption are monitored
closely. The Group
avoids doing business in high risk
territories.
All employees are required to complete
an online anti-bribery and corruption
course and to
submit details of corporate
hospitality and gifts received.
Disruption to the business from The Group relies on Information The Group engages and actively manages
failure of Information Technology Technology to perform effectively. external Information Technology
systems Failure would adversely experts to ensure the
affect the Group's operations. systems operate effectively and that
Commercially sensitive information is we respond to the evolving I.T.
electronically stored by the Group. security environment.
Theft of this information This includes regular off- site
could adversely impact the Group's backups and a comprehensive disaster
commercial advantage and result in recovery process.
penalties where the
information is protected by law. The external provider also ensures the
system is secure and this is subject
to routine testing.
REPUTATIONAL RISKS
Reputational risks are those that could affect the Group in all aspects of its strategy.
----------------------------------------------------------------------------------------------------------------------
Risk Risk description Mitigation/action
Poor management of stakeholder The Group risks suffering from The Group believes that by
relations reputational damage resulting in a successfully delivering its strategy
loss of credibility with and mitigating its strategic,
key stakeholders including financial and operational risks its
shareholders, analysts, banking strong reputation will be protected.
institutions, contractors, managing
agents, tenants, property The Group regularly reviews its
purchasers/sellers and employees. strategy and risks to ensure it is
acting in the interests
of its stakeholders.
The Group maintains a strong
relationship with investors and
analysts through regular meetings.
The Group has a formal approval
procedure for all press releases and
public announcements.
A Group Disclosure Policy and Share
Dealing Code, Policy & Procedures have
been circulated
to all staff in accordance with the EU
Market Abuse Regulation (MAR)
Modern Slavery and Human Trafficking The Group risk would attract criticism Our Modern Slavery Act statement,
and negative publicity were any which is prominently displayed on our
instances of "modern website, gives details
slavery" identified within our supply of our policy and our approach.
chain.
Appendix 5 - Glossary of Terms
Average unexpired lease term The average unexpired lease term expressed in years.
Capital value (psf) The open market value of the property divided by the area of the property in
square feet.
Company or Helical or Group Helical plc and its subsidiary undertakings.
EPRA earnings per share Earnings per share adjusted to exclude losses/gains on sale and revaluation of
investment
properties and their deferred tax adjustments, the tax on loss/profit on
disposal of investment
properties, trading property losses/profits, impairment of available-for-sale
investments
and fair value movements on derivative financial instruments, on an undiluted
basis. Details
of the method of the calculation of the EPRA earnings per share are available
from EPRA.
EPRA net assets per share Diluted net asset value per share adjusted to exclude fair value of financial
instruments
and the convertible bond and deferred tax on capital allowances and on
investment properties
revaluation, but including the fair value of trading and development properties
in accordance
with the best practice recommendations of EPRA.
EPRA Topped-up NIY The current annualised rent, net of costs, topped-up for contracted uplifts,
expressed as
a percentage of the fair value of the relevant property.
EPRA triple net asset value per share EPRA net asset value per share adjusted to include fair value of financial
instruments and
deferred tax on capital allowances and on investment properties revaluation.
Diluted figures Reported amounts adjusted to include the effects of potential shares issuable
under the Director
and employee remuneration schemes.
Earnings per share (EPS) Profit after tax divided by the weighted average number of ordinary shares in
issue.
EPRA European Public Real Estate Association.
Equivalent yield The constant capitalisation rate which, if applied to all cash flows from an
investment property,
including current rent, reversions to current market rent and such items as
voids and expenditures,
equates to the market value. Assumes rent is received in arrears.
Estimated rental value (ERV) The market rental value of lettable space as estimated by the Group's valuers
at each balance
sheet date.
Gearing The normal value of Group borrowings expressed as a percentage of net assets
Initial yield Annualised net rents on investment properties as a percentage of the investment
property valuation.
IPD The Investment Property Databank Limited (IPD) is a company that produces a
number of independent
benchmarks of unleveraged commercial property returns.
Net assets value per share (NAV) Equity shareholders' funds divided by the number of ordinary shares at the
balance sheet date.
Net gearing Total borrowings less short-term deposits and cash as a percentage of equity
shareholders'
funds.
Passing rent The annual gross rental income being paid by the tenant.
Reversionary yield The income/yield from the full estimated rental value of the property on the
market value
of the property grossed up to include purchaser's costs, capital expenditure
and capitalised
revenue expenditure.
See-through The consolidated Group and the Group's share in its Joint Ventures.
See-through gearing The see-through net borrowings as expressed as a percentage of equity
shareholders' funds.
Total Accounting Return The growth in the net asset value of the Company plus dividends paid in the
year, expressed
as a percentage of net asset value.
Total property return The total of net rental income, trading and development profits and net gain on
sale and revaluation
of investment properties on a See-through basis.
Total shareholder return (TSR) The growth in the ordinary share price as quoted on the London Stock Exchange
plus dividends
per share received for the period expressed as a percentage of the share price
at the beginning
of the period.
True equivalent yield The constant capitalisation rate which, if applied to all cash flows from an
investment property,
including current rent, reversions to current market rent and such items as
voids and expenditures,
equates to the market value. Assumes rent is received quarterly in advance.
Unleveraged returns Total property gains and losses (both realised and unrealised) plus net rental
income expressed
as a percentage of the total value of the properties.
WAULT The total contracted rent up to the lease expiry date dividend by the
contracted annual rent.
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: reception@helical.co.uk
www.helical.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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