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RNS Number : 1310U
Helical Bar PLC
28 November 2013
H E L I C A L B A R P L C
28 November 2013
Half Year Results
For the Six Months to 30 September 2013
HELICAL DELIVERS RECORD PROFITS
Excellent financial performance and strong shareholder returns
· Record profit before tax of £68.9m (2012: £5.2m).
- Total Property Return of £88.5m (2012: £17.4m).
- Group's share of net rental income up 16% to £14.1m (2012: £12.2m).
- Development profits of £63.5m (2012: £4.7m), including our share in
- Net gain on sale and revaluation of investment properties of £10.9m
(2012: £0.5m), including our share in joint ventures.
· Adjusted diluted EPRA earnings per share of 40.5p (2012: 5.2p).
· Diluted EPRA net asset value per share up 6.8% to 282p (31 March 2013:
· Total Shareholder Return of 27% in the six months to 30 September
· Interim dividend payable of 2.00p per share (2012: 1.85p), up 8%.
Improved capital returns
· Investment portfolio valuations on a like-for-like basis increased by
3.5% (2.3% including sales and purchases) during the period.
· Group's share of property portfolio £684m (31 March 2013: £626m),
growing to £770m including purchases contracted but not completed at 30
Strong financial position
· Ratio of net borrowings to value of property portfolio of 40% (31 March
2013: 46%), increasing to 47% on completion of purchases contracted at 30
· Average maturity of the Group's share of debt of 3.6 years (31 March
2013: 2.6 years) at an average cost of 4.5% (31 March: 3.9%).
· The Group's share of cash and undrawn bank facilities of over £196m, of
which £86m is committed to contracted purchases.
Development portfolio delivering super profits and well positioned for future
· Exceptional development profits totalling £62m received at 200
Aldersgate, London EC1 and Brickfields, White City, London W12.
· 113,000 sq ft foodstore led scheme at Leisure Plaza, Milton Keynes
pre-let to Morrisons and pre-sold to Aviva.
· Resolution to grant planning obtained at:
- 207-211 Old Street, London EC1, a 396,000 sq ft refurbishment.
- King Street, Hammersmith, London W6, a town centre regeneration scheme in
joint venture with Grainger.
- Cortonwood, South Yorkshire, for a 98,000 sq ft extension to an existing
· 1 Mitre Square, London EC3 acquired and demolition of existing
buildings completed, ready for development to start on securing a pre-letting
or obtaining a financial partner.
Growing investment portfolio
· £69m of new purchases (New Loom House, London E1; Maple House, London
EC1; Huddersfield Retail Park) with a further £86m completing post half year
(Quartz portfolio; Enterprise House, London W2; Artillery Lane, London E1).
· Contracts exchanged on the forward purchase of Clifton Street, London
EC2 post half year. Completion due in summer 2015 for £21m.
· Capital recycling through £13.1m of sales (Asda, Clydebank and Iceland,
Asset management enhancing returns
· Like-for-like rents up £494,000. Increase driven by new lettings of
£881,000 and rental increases of £60,000 offset by losses at lease end or
expiry of £447,000.
· 41 new leases signed in the period with 71.6% of tenants retained at
lease end or expiry (excluding Landlord breaks exercised for redevelopment).
· Including purchases post half year, Helical's share of gross rent from
the investment portfolio has increased to £39.8m (FY 2013: £28.7m).
Commenting on the results, Michael Slade, Chief Executive said:
"We have had an outstanding first half of the year and we look forward to
announcing further improvements in our full year results to 31 March 2014. We
are long both in central London offices and in high yielding secondary
regional assets, the former to provide capital growth and the other to
generate income and cash flow. This has been our aim and strategy for the last
three years and I firmly believe we are reaping the rewards as London
continues to grow and investors move up the risk curve and into the regions."
For further information, please contact:
Helical Bar plc 020 7629 0113
Michael Slade (Chief Executive)
Tim Murphy (Finance Director)
Address: 11-15 Farm Street, London W1J 5RS
Fax: 020 7408 1666
FTI Consulting 020 7831 3113
Stephanie Highett/Dido Laurimore/Nina Legge
Notes Half Year To 30 September 2013 Half Year To 30 September 2012 Year To31 March 2013
See-through Income Statement 1 £m £m £m
Net rental income 14.1 12.2 24.5
Development property profits 63.5 4.7 7.0
Gain on revaluation of investment properties 10.9 0.7 6.8
Loss on sale of investment properties - (0.2) (2.4)
Total property return 88.5 17.4 35.9
Profit before tax 68.9 5.2 5.0
EPRA earnings 40.9 5.2 2.8
Earnings Per Share and Dividends 2 pence pence pence
Basic earnings per share 47.4 3.5 5.0
Diluted earnings per share 46.4 3.5 5.0
Adjusted diluted EPRA earnings per share 3 40.5 5.2 8.2
EPRA earnings per share 34.2 4.4 2.4
Dividends per share paid in period 3.70 3.40 5.25
Pro-forma8At30 September 2013 At30 September2013 At30 September2012 At31 March2013
See-through Balance Sheet 4 £m £m £m £m
See-through property portfolio 770.1 684.1 581.6 626.4
See-through net borrowings 360.1 274.1 266.2 286.3
Net assets 305.5 305.5 254.1 253.8
Net assets per share, gearing and loan to value
Diluted EPRA net asset value per share 5 282p 282p 252p 264p
See-through loan to value 6 47% 40% 46% 46%
See-through net gearing 7 118% 90% 105% 113%
1. Includes Group's share of income and gains of its subsidiaries and joint
ventures. See note 24.
2. Calculated in accordance with IAS 33 and guidance issued by the European
Public Real Estate Association ("EPRA").
3. Diluted EPRA earnings per share adjusted for performance related awards.
4. Includes Group's share of assets and liabilities of its subsidiaries and
joint ventures. See note 24.
5. Calculated in accordance with guidance issued by EPRA.
6. See-through loan to value is the ratio of see-through net borrowings to
see-through property portfolio. See note 25.
7. See-through net gearing is the ratio of see-through net borrowings to net
assets. See note 25.
8. Includes £86m of purchases since 30 September 2013.
CHIEF EXECUTIVE'S STATEMENT
The first half of the financial year has been dominated by the culmination and
outstanding success of the projects at White City, London W12 and 200
Aldersgate, London EC1, both of which exemplify the 'Helical model' of
applying limited equity to create substantial performance. These projects have
resulted in a net cash receipt by the Group of £65m, an extraordinary return
on a £1.5m total investment.
In our joint venture with Aviva, who acquired the 10 acres south of the A40 at
White City, we worked with the Local Authority and other landowners, creating
a vision for the Mayor's Opportunity Area initiative which ultimately resulted
in a resolution to grant planning permission for a 1.5m sq ft mixed use
development on the site. This site was sold to Imperial College in September
2013, crystallising a substantial profit payment. It was a complicated and
long term project which required skill and perseverance to deliver the vision
and thereby generate a good return for shareholders.
The second significant transaction involved Helical working with Deutsche
Pfandbriefbank to lead the refurbishment and letting of 200 Aldersgate,
comprising 365,000 sq ft of offices and retail. In the summer we completed the
final letting which enabled the building to be sold which then triggered a
substantial profit share payment for the Group as a result of the successful
execution of the business plan.
The investment team has invested the proceeds of our recent £80m retail bond
in income producing London offices at Paddington and Whitechapel but also in
regional offices and secondary retail; £69m in the first half and £86m post
the half year end. The aim is to pursue more investments in London and
additional high yielding investments outside London. These should produce
growth and further improve cash flow to support the Group in its strategy of
carrying out office and mixed use developments in central London.
Helical now turns its attention to the current development portfolio. In joint
venture with Grainger, Helical recently received a resolution to grant
planning consent for a mixed use development scheme adjoining Hammersmith Town
Hall, comprising replacement offices for the council, 196 apartments, a
cinema, retail, restaurant and café space. Furthermore, work has now started
on site for the 220,000 sq ft development of the new Scottish Power
headquarters building in Glasgow, pre-sold to M&G Real Estate.
Helical will also remain focused on opportunities within the City of London
and the 'Tech Belt'. This portfolio comprises a 450,000 sq ft mixed use
development at Barts Square London EC1 in partnership with Baupost; a 396,000
sq ft office refurbishment at 207-211 Old Street, London EC1, in partnership
with Crosstree Real Estate Partners; the new development of 273,000 sq ft at
Mitre Square, London EC3 and the refurbishment and extension at Maple House,
City Road, London EC1 (61,000 sq ft). In addition, we have agreed to forward
purchase a 43,000 sq ft office development in Clifton Street, London EC2, when
it is completed in 2015.
Our retirement village portfolio is also proceeding apace, assisted by the
recent growth in house prices, and I am pleased with the progress made by
Helical Retail in planning negotiations for a number of foodstores around the
Midlands and Southern England during the period.
We have had an outstanding first half of the year and we look forward to
announcing further improvements in our full year results to 31 March 2014. We
are long both in central London offices and in high yielding secondary
regional assets, the former to provide capital growth and the other to
generate income and cash flow. This has been our aim and strategy for the last
three years and I firmly believe we are reaping the rewards as London
continues to grow and investors move up the risk curve and into the regions.
It remains for me to thank all the members of the team for their outstanding
efforts and also to express my thanks to the members of our Board, our
bankers, the many professionals who have advised us so well and to you our
28th November 2013
Review of the Half Year
The half year to 30 September 2013 produced record pre-tax profits for Helical
of £68.9m (2012: £5.2m).
See-through net rents from the Group's share of the property portfolio
increased by 16% from £12.2m to £14.1m, comprising £11.1m (2012: £9.8m) from
wholly owned assets and £3.0m (2012: £2.4m) from assets held in joint
The sales of 200 Aldersgate Street, London EC1 and Brickfields, White City,
London W12, generated net cash receipts for the Group of £64.8m. Of the £62.0m
net profit arising from these two transactions, £1.0m had been recognised in
the year to 31 March 2013 with the balance of £61.0m reflected in the Income
Statement for the half year. Our retail scheme at Leisure Plaza, Milton Keynes
contributed a further £2.5m and, with continued development profits from the
retirement village scheme at Bramshott Place, Liphook offset by the running
costs of our Polish development operations, the Group's share of net
development profits increased from £4.7m to £63.5m.
The investment portfolio, including assets held in joint venture, rose 3.5% on
a like-for-like basis (2012: 0.2%) and 2.3% after sales and purchases (2012:
0.1%), reflected as a gain on revaluation of £10.9m (2012: £0.7m).
Administration costs, before performance related awards, remained at £4.1m
(2012: £4.1m). The results of the Group for the half year have increased
expectations that awards issued by the long term performance share plan will
vest in the next few years and that cash and deferred shares payable in
accordance with the Group's bonus schemes will vest. Accordingly, based on
these results, a total charge of £6.6m plus national insurance has been made
in these accounts to provide for the future vesting of these awards.
See-through net finance costs, excluding the interest payable on the retail
bond, reduced from £5.7m to £5.4m reflecting a reduction in bank borrowings as
the net proceeds from the bond were initially deployed to repay bank debt.
With interest accrued on the retail bond payable half yearly in December and
June, the see-through net finance costs increased to £6.7m (2012: £5.7m).
The increase in medium and long term interest rates since the year end
contributed to a £4.9m gain (2012: loss of £0.7m) on the fair value of the
Group's derivative financial investments. Exchange rate movements on the
Group's share of the assets and liabilities relating to its Polish
developments generated a loss of £0.2m (2012: £0.7m). The held for sale
investment of £4.8m accounted for in the Group's investment in joint ventures
has been written down to nil to reflect current market conditions.
The net result for the half year was a pre-tax profit of £68.9m compared to a
profit of £5.2m
in the corresponding period last year. This profit resulted in
an adjusted diluted EPRA earnings per share of 40.5p (2012: 5.2p). The
Directors have declared an interim dividend of 2.00p (2012: 1.85p) an increase
of 8.1%. This dividend will be paid on 27 December 2013 to shareholders on the
register on 6 December 2013.
EPRA earnings of £40.9m added 34.2p to the EPRA net assets per share which,
when added to the gain on sale and revaluation of the investment portfolio and
the fair value movement on derivative financial instruments, less the
reduction in the surplus on the Directors' valuation of trading and
development stock, increased diluted EPRA net assets per share to 286p.
However, the dividend paid in the half year of 3.70p reduced this to 282p, a
6.8% increase on 31 March 2013 (264p) and an 11.9% increase on 30 September
Debt and Bank Facilities
Since 31 March 2013, Helical has raised £80m through the issue of a retail
bond with a 6.0% coupon repayable in 2020, consolidated three existing loan
facilities totalling £49m into a new £75m revolving credit facility providing
£26.0m of additional borrowing capacity and arranged a £25.0m facility to
build out our retirement village at Great Alne, Warwickshire.
The Group has used the net proceeds of the retail bond plus the net
development receipts from 200 Aldersgate and Brickfields to repay c. £40m of
bank debt in revolving credit facilities, which may be re-drawn in the future,
and to fund the purchases of Huddersfield Retail Park and new London
investment assets at New Loom House, E1 and Maple House, EC1 and, subsequent
to the half year, Enterprise House, Paddington, W2, Artillery Lane, E1 and the
Quartz portfolio, ten properties located throughout the country.
At 30 September 2013, the Group had £229m of investment facilities of which
£164m was drawn down, leaving £65m available to fund future acquisitions. The
Group's development facilities, principally for its retirement village
programme, totalled £85m of which £56m was drawn down. In addition, the Group
had unutilised short term facilities of £10m. The retail bond was fully drawn
down at £80.0m. In the Group's joint ventures, Helical's share of investment
and development facilities of £72m were fully drawn down.
Cash balances within the Helical Group at 31 March 2013 were £63m with its
share of cash in its joint ventures of £30m.
At 30 September 2013 the Group had see-through net borrowings of £274.1m (31
March 2013: £286.3m) and gross property values of £684.1m (31 March 2013:
£626.4m). These net borrowings and property values include the Group's share
of the properties and borrowings held in joint ventures. The ratio of net
borrowings to the value of the property portfolio (including the surplus on
Directors' valuation of stock) i.e. loan to value ratio, was 40% (31 March
2013: 46%). Net debt to equity gearing at 30 September 2013 was 90% (31 March
2013: 113%). Since 30 September 2013, the Group has exchanged or completed
contracts to purchase a further £86m of investment properties. If these
acquisitions had completed before 30 September 2013, the loan to value ratio
at that date would have been 47% with gearing of 118%.
At 30 September 2013, the average maturity of the Group's investment
facilities was 3.1 years (31 March 2013: 3.6 years) on which an average rate
of interest of 3.9% was payable. The Group's development facilities had an
average maturity of 2.5 years (31 March 2013: 1.9 years) on which an average
rate of interest of 3.9% was payable. The Group's debt facilities, including
the retail bond but excluding its share of debt in joint ventures, had an
average maturity of 4.0 years on which an average rate of interest of 4.6% was
payable. In the Group's joint ventures, the investment and development
facilities had an average maturity of 1.8 years (31 March 2013: 2.4 years) on
which an average rate of interest of 4.3% was payable (31 March 2013: 4.2%).
Overall, the Group's debt facilities, including the retail bond and in joint
ventures, had an average maturity of 3.6 years (31 March 2013: 2.6 years) on
which interest was payable at an average rate of 4.5% (31 March 2013: 3.9%).
The Group is protected from future interest rate rises through a combination
of interest rate swaps and caps, as well as the £80m fixed rate 6% retail
bond. At 30 September, the Group had £174m of interest rate swaps (including
in joint ventures) at an average of 4.44% (31 March 2013: £163m at 4.47%) and
£152m of interest rate caps at an average of 4.13% (31 March 2013: £102m at
28th November 2013
HELICAL AT A GLANCE
Pro-forma figures include those acquisitions completing after 30 September
where the contracts are unconditional including Enterprise House, Paddington,
Artillery Lane, E1 and the Quartz Portfolio.
Total Portfolio(Helical share of book value) March2012 March2013 September2013 Pro-forma
Investment £374m £407m £484m £576m
Trading and Development £144m £169m £174m £174m
Total Portfolio £518m £576m £658m £750m
Investment Portfolio(Helical share) March 2012 March2013 September 2013 Pro-forma
London Office £113m £146m £210m £253m
30.2% 35.9% 43.4% 43.9%
Retail £228m £228m £240m £258m
61.1% 56.0% 49.6% 44.9%
Industrial £20m £12m £13m £21m
5.3% 2.9% 2.7% 3.6%
Provincial Office £8m £15m £15m £38m
2.1% 3.7% 3.1% 6.6%
Other £5m £6m £6m £6m
1.3% 1.5% 1.2% 1.0%
Total £374m £407m £484m £576m
100.0% 100.0% 100.0% 100.0%
The investment portfolio currently comprises 77% of Helical's portfolio by
book value (74% at 30 September 2013).
Development and Trading Portfolio(Helical share of book value) March2012 March2013 September 2013 Pro-forma
Office £13m £16m £22m £22m
9.0% 9.5% 12.6% 12.6%
Retail £14m £22m £23m £23m
9.7% 13.0% 13.2% 13.2%
Industrial £6m £1m £1m £1m
4.2% 0.6% 0.6% 0.6%
Mixed Use £5m £5m £3m £3m
3.5% 3.0% 1.7% 1.7%
Change of Use £4m £5m £5m £5m
2.8% 3.0% 2.9% 2.9%
Retirement Villages £60m £55m £60m £60m
41.6% 32.5% 34.5% 34.5%
Poland £42m £65m £60m £60m
29.2% 38.4% 34.5% 34.5%
Total £144m £169m £174m £174m
100% 100% 100% 100%
The development portfolio comprises 23% of Helical's portfolio by book value
(26% at 30 September 2013).
Development and Trading Portfolio(Helical share) Book value Fair valuation Surplus % of development portfolio (fair value)
Office £21.9m £26.4m £4.5m 13.2%
Retail £23.5m £25.4m £1.9m 12.7%
Industrial £1.4m £1.4m - 0.7%
Mixed Use £2.8m £2.8m - 1.4%
Change of Use £4.7m £6.8m £2.1m 3.4%
Retirement Villages £59.6m £76.3m £16.7m 38.3%
Poland £60.5m £60.5m - 30.3%
Total £174.4m £199.6m £25.2m 100.0%
There is a £25.2m Director's surplus over book value in the development
portfolio. This has significantly reduced from March 2013 (£49.9m) since the
sales of Brickfields and 200 Aldersgate.
DEVELOPMENT PORTFOLIO OVERVIEW
200 Aldersgate, London EC1 Sale Lettings completed and building sold
Brickfields, White City W12 Sale Sold
Mitre Square, London EC3 Demolition Demolition completed
Mitre Square, London EC3
Key Changes to Development Properties
200 Aldersgate Street, London EC1
Helical was appointed asset and development manager by Deutsche Pfandbriefbank
in May 2010. Our brief was to refurbish and let this office building which had
been vacant since 2005 when the previous tenant, Clifford Chance, relocated to
Canary Wharf. We re-clad part of the building and carried out major
refurbishment works to the extensive common parts creating a "vertical
village" comprising a variety of floor-plates to suit a range of different
occupiers, as well as exceptional tenant facilities, including a concierge
cycle store service, an on-site gym and a café and business lounge.
Refurbishment works were completed and the building re-launched in January
2011.The building now comprises 348,000 sq ft of offices, 16,673 sq ft of
retail and 39,601 sq ft of basement space. The refurbishment works were
completed within budget in December 2010. Having let 96% of the space in the
building, the asset was marketed in the late summer and has now been sold to
Ashby Capital LLP.
Brickfields, White City, London W12
Following receipt of a resolution to grant planning consent for a 1.5m sq ft
residential led mixed use scheme, the site was sold to neighbouring landowner
Imperial College. Completion occurred on 2 September 2013 and we have received
the profit payment due under our joint venture agreement with Aviva
Mitre Square, London EC3
Mitre Square is a landmark City office scheme in the heart of the insurance
sector in London. We have completed the purchase of 1 Mitre Square and we have
extended our conditional purchase agreement with the City for the adjoining
site. Demolition has now been completed to facilitate the construction of a
new building comprising 273,000 sq ft NIA. It is anticipated that construction
will commence once a financial partner has been signed up. The finished
development will have a capital value of circa £250m.
Scottish Power Headquarters
Helical and local development partner, Dawn Developments Limited, were
appointed as development managers by Scottish Power for the construction of
their new headquarters at St Vincent Street, Glasgow, pre-sold by Scottish
Power to M&G Real Estate. The completed building will comprise 220,000 sq ft
of prime office space in the heart of the city's commercial district. Planning
permission has been granted and a formal start on site was made in October
2013. As part of the deal Helical is purchasing, for c. £5.8m, three existing
Scottish Power sites in Glasgow which are surplus to their requirements.
Park Handlowy Mlyn, Wroclaw
Wroclaw is a large city in West Poland, some 100km from the German border and
470km south of Warsaw. This 9,600 sq m (103,000 sq ft) out of town retail
development was completed in December 2008 and is fully let to a number of
domestic and international retailers. During the period, leases to Komfort,
Kakadu, Deichmann and Media Expert were extended for a further five years and
Sports Direct agreed a 10 year lease.
We have made good progress at Parkgate, Shirley, where the 80,000 sq ft
foodstore was pre-sold to Asda, and 78,000 sq ft of retail and leisure units
will be completed and open for trading in April 2014. We have exchanged
contracts on 40% of the retail space with tenants including Pizza Express,
Prezzo, 99p Store and others. There is an additional 20% in solicitors' hands
and active discussions on a further 30%.
Cortonwood Shopping Park
Planning consent was granted recently, after an appeal, for a 98,000 sq ft
open A1 retail extension to the existing Cortonwood Retail Park. Construction
is expected to commence in early 2015, and the park is expected to be open in
time for Christmas 2015.
We have now started construction of our three retirement villages in Faygate
near Horsham, Exeter and Great Alne, near Stratford upon Avon. Sales are
progressing well, at prices higher than those used in our appraisals prior to
commencing on site.
Bramshott Place, Liphook, Hampshire
Construction of this 151 unit village completed in December 2012. We have
completed or exchanged on the sale of 130 units (compared to 115 at the year
end) and have a further eight under offer.
Durrants Village, Faygate, Horsham, West Sussex
We started the first phase (43 units) of this 171 unit village in May 2012. We
have exchanged the sale of two units with a further 16 reserved plus 19
'up-field' reservations in future phases. The first completions are expected
in January 2014.
Millbrook Village, Exeter
We have started on site at this 164 unit village since the half year end and
have also launched the marketing, with 15 units reserved in the first phase.
Maudslay Park, Great Alne, Warwickshire
We have recently started the construction of the show homes and marketing
suite and marketing, and the full construction programme will start in the New
Year for this 132 unit scheme.
Barts Square, London EC1 Pre-development Pre-development issues being cleared prior to start on site in January 2015
Europa Centralna, Gliwice Lettings Now 85% let
Hammersmith Town Hall, W6 Planning consent Planning consent granted November 2013
Now 85% let
Hammersmith Town Hall, W6
Planning consent granted November 2013
Barts Square, London EC1
In joint venture with The Baupost Group LLC (Baupost 66.7%, Helical 33.3%) we
own the freehold interest in land and buildings at Bartholomew Close, Little
Britain and Montague Street, a 3.2 acre site adjacent to the new Barts
Hospital and just south of Smithfield Market. The current buildings comprise
420,000 sq ft let to the NHS at circa £3.5m per annum on a number of short
term leases that expire between 2014 and 2016. In November 2012, a resolution
to grant planning permission was obtained and planning consent has now been
issued following signature of the S106 Agreement. The scheme will bring much
needed regeneration to this area of the City and will retain some of the
existing buildings and complement them with a sympathetic redevelopment of the
site. It will comprise circa 225,000 sq ft NIA of office space in two
buildings and 215 high quality residential apartments in 17 buildings with
retail and restaurant space at ground floor level. Significant public realm
improvements are planned, which will be incorporated into the wider Smithfield
Area Strategy being worked up by the City. We estimate a total development
value of circa £470m. Detailed design of phase one (97 residential
underway to enable a start on site as soon as vacant possession is granted in
207-211 Old Street, London EC1
This 3.12 acre asset was acquired in November 2012 for £60.8m in joint venture
with Crosstree Real Estate Partners LLP (Helical interest 33.3%). The site is
in the heart of "Tech City", an area of London which is a hub for technology,
media and telecommunications companies and is benefitting from substantial
investment in infrastructure.
Since acquisition, plans have been developed to substantially increase the
amount of space, refurbish existing areas and significantly upgrade the public
realm. A resolution to grant planning consent was made by the Planning
Committee of London Borough of Islington on 5 September 2013. The planning
consent will be issued when the Section 106 Agreement is signed.
Construction work on the first phase, comprising 127,000 sq ft of refurbished
office space at 211 Old Street and a new office building of 21,208 sq ft, as
well as substantial onsite public realm improvements with ground floor
restaurant and retails uses, is due to commence in January 2014. The
construction will be financed with bank debt and terms have been agreed with a
We continue to manage our ongoing tenant relationships in the remaining
buildings to ensure a rental income surplus.
Clyde Shopping Centre, Clydebank
This asset, which comprises 627,000 sq ft of town centre shopping centre and a
foodstore, was acquired in 2010 in joint venture with a private investor. The
Group has a 60% interest in the centre and undertakes all of the asset
management activities. Construction works have started on site to create a new
unit for Pure Gym. Occupation is expected in March 2014 further enhancing the
leisure offering in this centre. We have completed the refurbishment of the
southern end of the scheme (Sylvania Way South) and the toilets and baby
Europa Centralna, Poland
This retail park and shopping centre was built in a 50:50 joint venture with
clients of Standard Life. The scheme is now over 85% let to Tesco, Castorama,
H & M, Media Saturn, Sports Direct, Jula and others. Construction was
completed in February 2013 and the scheme opened on 1 March 2013. The sale of
50% of the scheme in 2011 includes a provision that we will sell the remaining
ownership stake two years after the date of completion of the development to
our existing joint venture partners.
King Street, Hammersmith, London W6
Following the renegotiation of our development agreement with the London
Borough of Hammersmith and Fulham, we have continued to work with our partners
Grainger plc on the proposed regeneration of the west end of King Street,
Hammersmith. A resolution to grant planning consent was obtained on 12
November 2013 for 196 new homes, 40,000 sq ft of new council offices, together
with a three screen boutique cinema and restaurant/retail space. Discussions
are underway on the S106 Agreement with a view to securing planning permission
Leisure Plaza, Milton Keynes
Leisure Plaza is a 50:50 joint venture with Abbeygate Developments. The site
has consent for an 80,000 sq ft supermarket, 33,000 sq ft of Open A1 retail
and the refurbishment of the existing ice rink. The supermarket has been
pre-let to Morrisons on a long lease and pre-sold to Aviva Investors' Lime
Property Fund for circa £40m, a headline yield of 4.25%. The joint venture has
realised a profit of circa £1.6m on the sale of the land to the fund, and
should make a further profit of circa £7m over the course of the development
(the store is due to be completed in August 2014). We have recognised £2.5m of
our share of this profit during the half year.
INVESTMENT PORTFOLIO OVERVIEW
Our £484m (£576m post half year) portfolio provides income to cover all
operational and finance costs and dividends.
Within the portfolio there are properties which we intend to keep for the
longer term, typically the larger properties which demonstrate continued
rental growth and asset management potential. These include Shepherds
Building, London, the Morgans Quarter in Cardiff and New Loom House, London,
together with properties which have a specific medium term asset management
plan and will be sold when we judge the time to be right.
We acquire a broad spread of properties which provide access to a variety of
asset classes and tenants. We look to have a combination of higher yielding
assets, for example our shopping centres, providing core income and assets
which have significant repositioning opportunity, for example New Loom House.
The investment portfolio now comprises 74% of our assets (77% post half year)
and has grown steadily since 2010. We intend to continue growing this
portfolio whilst selectively selling some assets over time.
We concluded £68.8m of acquisitions in the reporting period and have exchanged
or completed on a further £86.2m of acquisitions since the period end. We have
also exchanged contracts on the forward purchase of Clifton Street in
Shoreditch, for £21m, for which payment is due on practical completion
scheduled for summer 2015. These acquisitions provide a good blend of income,
potential capital growth and an exposure to multiple markets.
The acquisitions inside London have been concluded at an average yield of 4.1%
(5.1% excluding Maple House which is empty) and at a capital value psf of
£386. Outside London, the yield is 7.9%, demonstrating our strategy of
acquiring yield outside London and the potential for capital growth inside
New Loom House, London E1
We completed the acquisition of this multi-let office building in Whitechapel,
on the eastern edge of the City, for £34.2m in July, an initial yield of 4.8%.
The building is a multi-let, listed Victorian 'warehouse' style office
providing 112,000 sq ft of office and storage space over five floors. There
are 67 lettable units of 1,000- 5,500 sq ft each, which currently generate
£1.785m of rent pa. Ten units (14,217 sq ft) are currently vacant although two
of these are under offer (3,208 sq ft) and we have agreed terms to let a
further 3,549 sq ft which is being vacated in January. We have let 6,869 sq ft
since acquisition, all at rents in the low £20's psf in what is currently an
The average rent passing on the office space is circa £18.50 psf and we would
expect this to increase close to £30 psf once we have carried out a
refurbishment of the entrance and common parts and of individual units as and
when they become vacant. This refurbishment will re-position the building so
that it appeals to occupiers from the creative industries prevalent in the
increasingly popular 'Tech Belt' that runs from Old Street through Shoreditch
and down to Whitechapel, and will include a bar/café on the ground floor,
potentially restaurants and other leisure uses such as a gym as well as
showers and bike storage areas. We are working up the plans and costings for
this with a view to carrying out the works in late 2014/early 2015.
These works, together with the changes to the surrounding area driven by
significant local residential development (notably the Goodmans Fields
development which is next door) and the delivery of Crossrail, give us
confidence that there should be considerable rental growth in the building
Huddersfield Retail Park
We completed the purchase in August of this multi-let, open A1 retail park for
£17 million, a net initial yield of 7.2%. There are two terraces (96,977 sq ft
in total) of three units each, fully let to retailers including Matalan,
Dunelm, Aldi and B&M on long leases (the weighted average unexpired lease term
is 12 years without breaks, 10 years including breaks). Five of the six units
were let between 2009 and 2012 and so the rents are low (an average of circa
£13 psf), offering opportunities for future rental growth (there are fixed
increases in some leases) and the yield is high by historic standards. The 13%
cash on cash return provides some balance to the lower yielding central London
Maple House, London EC1
Maple House is an existing office building fronting City Road, Epworth Street
and Tabernacle Street with close proximity to Old Street roundabout. Helical
acquired the building in June 2013 and is proposing an extensive refurbishment
to reposition the building to provide modern, appealing space for the 'Tech
Belt' occupier market. Approximately 10,000 sq ft of additional floor space is
being added together with a new reception area within a landscape courtyard to
the rear of the building. Completion is expected in Spring 2015.
Acquisitions since the period end include:-
Enterprise House, Paddington, London W2
We acquired this 45,000 sq ft office building with a 20 year sale and
leaseback to Network Rail for £30.75m, representing a net initial yield of
5.65%. The property has since been valued at £35.75m and will show a 9.5% cash
on cash return once we put debt in place. There is a minimum fixed uplift in
2018 to £45.00 psf (current £40.70 psf). We hope that at the next rent review,
which will coincide with Crossrail opening, rents will be in excess of this
This mixed sector portfolio is to be acquired for £48.6m, a net initial yield
of 8.2%. The portfolio has an average weighted unexpired lease term of 12
years to the earlier of break or expiry. Once funded, the portfolio will
provide a cash on cash return in excess of 15%.
Properties within the portfolio include a Homebase in Cardiff let for 15
years, an office in Reading let to Thames Water for a further nine years, an
office in Crawley let for a further nine years and an industrial unit in
Cannock let to a food packaging company for a further 15 years as well as a
number of smaller assets.
Completion is due in December 2013 and some assets may be sold prior to
Artillery Lane, London E1
The purchase of this property, located very close to Liverpool Street, is due
to complete in December 2013 off market for £6.8m. Average passing rents are
£20.00 psf. We plan to comprehensively refurbish the property including the
provision of new M&E and a new reception. We may look to create an additional
floor on the top of the building and convert the ground floor and basement to
We have concluded the sale of an Asda supermarket in Clydebank for 5.15% NIY
(£12.1m) (Helical share 60%) and an Iceland supermarket in Corby for £1.0m.
During the half year, contracted income increased by £0.49m. There were 88
tenancies which underwent a lease event within the portfolio in the period.
We had limited exposure to administrations during the period with two
Internacionale units being the only ones affected. Both continue to trade and
pay full rent although we have now concluded a new letting on the
Internacionale in Corby to Heron Frozen Foods at a rent of £60,000
(Internacionale £47,500) as a result of which we will be terminating their
Rent lost at break/expiry -£0.45m
Net rent lost through administrations £0.00m
Rent review £0.06m
Lease renewals and new lettings £0.88m
Total change £0.49m
Leases which have been terminated by Helical for redevelopment and
refurbishment purposes (Old Street) have been excluded.
The rental gains were equally split between the retail portfolio and London
office portfolio, both contributing in excess of £0.2m of rental gains.
Investment Portfolio Statistics
The following refers to Helical's share of the investment portfolio prior to
acquisitions after the half year.
% of investment portfolio Valuation increase/decrease (like-for-like) Valuation increase/decrease (inc. sales and purchases Initial yield Reversionary yield Average unexpired lease term Vacancy rate (floor area) ERV change since March 2013 Capital value psf
London office 43.4% 7.4% 4.3% 5.0% 7.4% 3.0 7.8% 1.4% £260
Retail 49.6% 1.2% 0.8% 7.3% 7.9% 6.9 4.9% (0.8%) £132
Industrial 2.7% 3.0% 3.0% 9.2% 9.8% 2.6 13.2% (0.8%) £65
Provincial offices 3.1% 0.0% 0.0% 8.3% 8.5% 16.1 0.0% 0.0% £209
Other 1.2% 0.0% 0.0% - - - 0.0% 0.0% -
Total 100.0% 3.5% 2.3% 6.6% 7.8% 5.7 6.1% (0.1%) £174
Note: Vacancy has increased from 5.7% in March 2013 to 6.0% in September 2013,
largely due to the acquisition of properties with vacancy in London, notably
New Loom House with 14.1% vacancy.
Asset Management Overview: Cash on Cash Returns
Our high yielding assets continue to deliver strong cash on cash returns:
Centre Free Cash Post Interest Cash on Cash
Basildon £0.6m 19.1%
Clydebank £3.3m 13.0%
Corby £3.4m 15.8%
Newmarket £0.83m 14.1%
Sutton in Ashfield £0.92m 23.9%
Across the portfolio, rent collection was 99% within two weeks of the quarter
We have a strong rental income stream and a diverse tenant base. Prior to our
post period acquisitions, our top 10 tenants accounted for 21.1% of our rent
The rent roll from the investment portfolio has increased from £28.7 in March
2013 to £33.4m in September 2013 (Helical's share). This will increase by a
further £6.4m once the post period acquisitions are complete.
Top tenants in the portfolio are:
Rank Tenant Tenant industry Rent (Helical) % Rent Roll
1 Endemol UK Ltd Media £1,523,203 4.56%
2 Barts and the London NHS Trust Government £1,208,254 3.62%
3 TK Maxx Retail £1,160,000 3.47%
4 Quotient Bioscience Ltd Biotech £664,792 1.99%
5 Argos Retail £454,125 1.36%
6 Fox International Media £445,053 1.33%
7 Wickes Building Supplies Retail £430,139 1.29%
8 Metropolis London Music Media £400,000 1.20%
9 Urban UK Retail £400,000 1.20%
10 Dunelm Retail £364,281 1.09%
Total £7,049,847 21.11%
Lease expiries or tenant breaks
Year 2014 2015 2016 2017 2018
% of rent roll 10.9% 13.7% 11.6% 15.9% 7.1%
Average rent/lease £32,200 £34,800 £63,700 £63,700 £36,400
Key Changes to Investment Properties
Corby Town Centre
Lettings continue at the centre. We have recently submitted plans for an
extension to the scheme which will include a new eight screen cinema, four
restaurants, a gym, new car parking and extensive landscaping. Net income has
increased by £104,000 during the six months.
The Morgan Quarter, Cardiff
We are close to agreeing the outstanding rent reviews on The Hayes with Molton
Brown and White Stuff at figures consistent with the Jack Wills letting and
previous rent reviews. These will show an increase of circa £80,000pa in
aggregate and rental growth of 34% between 2008 and 2013. Two lettings on the
recently pedestrianised St Mary's Street have set encouraging new rental
levels, circa 33% above previous levels, and letting activity continues in the
two listed Arcades. We are also progressing the Creative Quarter, a projec
bring approximately 18,000 sq ft of redundant upper parts back into office
use. We have already agreed terms to let phase one of this at rents above
appraisal levels (circa £17.50 psf).
Broadway House, London W6
The office is now fully let having concluded a recent letting to Drugdev at
£33.50 psf. We have received planning permission to create an extra 3,500 sq
ft office floor on top of the building which we will implement in Q4 2014.
Shepherds Building, London W14
The circa £1.5m refurbishment of the reception, bar/café and common parts will
complete in January 2014, following which we hope to achieve rents in the
mid-£30's compared to the current average rent in the building of circa £24
psf. At present, there are only two small units vacant (1,067 sq ft) out of a
total of 151,000 sq ft.
Independent review report to the members of Helical Bar plc
We have reviewed the condensed set of unaudited financial statements in the
Half Year Statement of Helical Bar plc for the six months to 30 September 2013
which comprises the consolidated income statement, the consolidated statement
of comprehensive income, the consolidated balance sheet, the consolidated cash
flow statement, the consolidated statement of changes in equity, and the
related notes. We have read the other information contained in the Half Year
Statement: Financial Highlights, Chief Executive's Statement, Financial
Review, 'Helical at a Glance', Development Portfolio Overview and Investment
Portfolio Overview, and have considered whether it contains any apparent
misstatements or material inconsistencies with the information in the
condensed set of financial statements.
This report is made solely to the Company's members, as a body, in accordance
with International Standard on Review Engagements (UK and Ireland) 2410,
'Review of Interim Financial Information performed by the Independent Auditor
of the Entity'. Our review work has been undertaken so that we might state to
the Company's members those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company and the Company's members as a body, for our review work, for
this report, or for the conclusion we have formed.
The Half Year Statement is the responsibility of, and has been approved by,
the directors. The directors are responsible for preparing the Half Year
Statement in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with International Financial Reporting Standards as
adopted by the European Union. The condensed set of financial statements
included in this Half Year Statement has been prepared in accordance with
International Accounting Standard 34, 'Interim Financial Reporting', as
adopted by the European Union.
Our responsibility is to express a conclusion on the condensed set of
financial statements in the Half Year Statement based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity'. A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the Half Year
Statement for the six months to 30 September 2013 is not prepared, in all
material respects, in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial Services
Grant Thornton UK LLP
28th November 2013
Unaudited Consolidated Income Statement
For the Half Year to 30 September 2013
Notes Half Year To 30 September2013£000 Half Year To 30 September2012£000 Year To31 March2013 £000
Revenue 3 87,874 44,225 65,439
Net rental income 4 11,075 9,794 19,578
Development property profit 60,940 4,739 6,956
Trading property loss - (6) (1)
Share of results of joint ventures 12 6,063 1,219 3,854
Other operating income/(expense) 105 2 (547)
Gross profit before gain on sale and revaluation of investment properties 78,183 15,748 29,840
Net gain on sale and revaluation of investment properties 5 3,921 557 1,335
Impairment of available-for-sale investments (771) - -
Gross profit 81,333 16,305 31,175
Administrative expenses 6 (11,613) (4,957) (14,920)
Operating profit 69,720 11,348 16,255
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