Company Announcements

Half-year Report

Source: RNS
RNS Number : 3966G
Helical PLC
25 November 2020
 

HELICAL PLC

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

Half Year Results for the Six Months to 30 September 2020

 

HELICAL RECYCLES EQUITY TO REDEVELOP, REFURBISH AND REPOSITION

 

Gerald Kaye, Chief Executive, commented:

 

"We announce these half year results eight months into the Covid-19 pandemic and during a period of lockdown as we await greater clarity on the relaxation of current restrictions prior to Christmas. Whether the Government has struck the right balance between the urgent need for a re-opening of the economy, particularly in London, and the continued protection of the health of the nation is not yet clear. However, the renewed optimism that this crisis will eventually end on the rollout of a number of recently announced and anticipated vaccines and the return to some semblance of normality in 2021 is welcome.

 

"We believe that the enforced "working from home" experiment in 2020 will result in more flexibility being offered to some office workers going forward. However, we also believe that the disadvantages of working at home with its inadequate ergonomics, lack of divide between work and home life, potential mental health issues caused by isolation from colleagues and, for many, its ever decreasing productivity as collaboration and creativity diminish, will provide the impetus for a return to the office as the place of work.

 

"Our experience of the pandemic has reinforced our view that our investment in multi-let offices in well-located and accessible Grade A buildings, incorporating the latest in sustainable building design, offering state of the art technology with occupier health and well-being at their core, provides the most resilient defence against adversity and the best opportunity for continued growth. This has been borne out by our strong rent collection figures and robust portfolio valuation.

 

"We see a divergence between these Grade A buildings and the rest from both a capital value and rental growth perspective; this pattern will accelerate as tenants seek to leave buildings which are not fit for purpose in the search for working environments that match the expectations of their employees.

 

"Our near term focus remains on letting the available space across the portfolio. At the same time, having sold a portfolio of three properties in Manchester since the half year end and reduced the Group's gearing levels to an historic low, our efforts are also centred around using our considerable firepower to obtain new projects. These will be a combination of properties acquired for redevelopment and the refurbishment and repositioning of existing buildings, delivering the highest quality, fit for purpose office space, suitable for the post-Covid world."

 

Operational Performance

 

·    93.2% of all rent contracted and payable for the March and June quarters collected. Of the balance, rent holidays have been granted on 3.5%, mainly to F&B occupiers, leaving 3.3% subject to ongoing discussions with tenants.

·   86.8% of the September quarter rents due to date have been collected. Through further cash receipts from monthly payments, it is anticipated that between 91% and 94% will have been collected by the end of December.

·    Three new lettings completed in the period, representing 5,531 sq ft, delivering contracted rent of £0.3m (Helical's share £0.2m) at 12.4% above 31 March 2020 ERV.

·    At 33 Charterhouse Street, London EC1, a new 150 year lease was granted, with a £140m loan facility secured from Allianz to finance the development. Mace has been appointed as principal contractor.

·    On 28 April 2020, Helical completed the sale of 90 Bartholomew Close, Barts Square, EC1 to La Francaise Real Estate Partners International, a pan-European investment business acting on behalf of a French collective real estate investment vehicle. The disposal price of £48.5m reflected a net initial yield of 3.92% (£1,594 psf capital value).

·    Following the period end, contracts were exchanged for the sale of three Manchester properties, The Tootal Buildings, 35 Dale Street and Fourways, to Pictet Alternative Advisors, SA and XLB Property Limited for a net sale price of £114.8m, at a blended net initial yield of 5.2% and marginally above 30 September 2020 and 31 March 2020 book values.

 

Financial Highlights

 

Earnings

 

·    IFRS basic loss per share of 8.9p (2019: earnings of 11.7p).

·    IFRS loss before tax of £12.7m (2019: profit of £13.1m).

·    Total Accounting Return1 of -2.0% (2019: 2.7%).

·    See-through Total Property Return1 of £6.9m (2019: £28.6m):

-     Group's share1 of net rental income of £11.9m (2019: £13.0m).

-     Development losses of £0.5m (2019: profits of £5.7m), after provisions of £0.3m (2019: £1.2m).

-     Net loss on sale and revaluation of Investment properties of £4.5m (2019: gain of £9.9m).

·    EPRA loss per share1 of 1.0p (2019: earnings of 5.4p).

·    Interim dividend maintained at 2.70p per share (2019: 2.70p).

 

Balance Sheet

 

·    Net asset value down 3.2% to £579.2m (31 March 2020: £598.7m).

·    EPRA net tangible asset value per share1 down 3.6% to 505p (31 March 2020: 524p).

·    EPRA net asset value per share1 down 2.2% to 500p (31 March 2020: 511p).

 

Property Valuations

 

·    IFRS property portfolio value of £815.7m (31 March 2020: £819.6m).

·    See-through property portfolio1 of £918.2m (31 March 2020: £949.3m).

·    See-through Investment property valuation loss, on a like-for-like basis, of 0.5% (0.6% including purchases and gains/losses on sales).

 

Financing

 

·    See-through loan to value1 of 32.2% (31 March 2020: 31.4%).

·    See-through net borrowings1 of £295.3m (31 March 2020: £298.5m).

·    Average maturity of the Group's share1 of secured debt of 3.7 years (31 March 2020: 4.1 years), increasing to 5.1 years, fully utilised and upon exercise of options to extend current facilities.

·    See-through average cost of borrowings1 of 3.5% (31 March 2020: 3.5%).

·    Group's share1 of cash and undrawn bank facilities at 30 September 2020 of £323m (31 March 2020: £279m).

 

 

Pro forma2 Financing post Manchester Sales

 

·    See-through property portfolio1 of £804.8m.

·    See-through loan to value1 of 22.4%.

·    See-through net borrowings1 of £180.5m.

·   Group's share1 of cash and undrawn bank facilities of £438m.

 

 

Portfolio Update

 

London Portfolio

 

·    0.5% valuation decrease, on a like-for-like basis, with a portfolio valued at £760.3m (85% of Investment portfolio) at 30 September 2020 compared to £776.9m (85% of Investment portfolio) at 31 March 2020.

·    Contracted rents of £29.9m (31 March 2020: £31.1m) growing to an ERV of £49.9m (31 March 2020: £50.6m).

·    WAULT of 6.2 years (31 March 2020: 6.6 years).

 

Manchester Portfolio

 

·    0.4% valuation decrease on a like-for-like basis, with a portfolio valued at £138.0m (15% of Investment portfolio) at 30 September 2020 compared to £136.7m (15% of Investment portfolio) at 31 March 2020 after taking into account capital expenditure.

·    Contracted rents increased to £6.8m (31 March 2020: £6.5m) growing to an ERV of £9.3m (31 March 2020: £9.3m).

·    WAULT of 4.3 years (31 March 2020: 3.9 years).

 

Sustainability Highlights

 

·    New Sustainability Strategy announced, "Built for the Future", setting out the Company's long-term vision and objectives.

·    Achieved the UK's first BREEAM 2018 New Construction "Outstanding" rating for the design stage at 33 Charterhouse Street, London EC1 office development.

·    Received a Silver award (2019: Bronze) under the EPRA Sustainability Best Practice Recommendations and 3* Green ratings from GRESB (2019: 2*).

 

Interim Dividend

 

An Interim Dividend of 2.70 pence per share (2019: 2.70 pence per share) will be paid to Shareholders as follows:

 

Ex-dividend date

3 December 2020

Record date

4 December 2020

Payable date

31 December 2020

 

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/Richard Gotla

schelical@fticonsulting.com

Half Year Results Presentation

 

Helical will be holding an audio webcast with a live Q&A for analysts and investors starting at 9:00 am on Wednesday 25 November 2020.  

 

The presentation will be on the Company's website www.helical.co.uk and a conference call facility will be available.

 

The dial-in details are as follows:

 

Participants, Local - London, United Kingdom:

+44 (0)330 336 9411

Passcode:

1285777

 

Webcast Link:

https://webcasting.brrmedia.co.uk/broadcast/5f7ed93bc4d0076f2b93d5a2 

 

1.  See Glossary for definition of terms. The half year condensed unaudited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). In common with usual and best practice in our sector, alternative performance measures have also been provided to supplement IFRS, some of which are based on the recommendations of the European Public Real Estate Association ("EPRA"), with others designed to give more relevant information about the Group's share of assets and liabilities, income and expenses in subsidiaries and joint ventures.

 

2.  Pro forma measures adjusted to reflect the impact of the post period end sale of The Tootal Buildings, 35 Dale Street and Fourways for a net sale price of £114.8m.

 

 

Chief Executive's Statement

 

Overview

 

We announce these half year results eight months into the Covid-19 pandemic and during a period of lockdown as we await greater clarity on the relaxation of current restrictions prior to Christmas. Whether the Government has struck the right balance between the urgent need for a re-opening of the economy, particularly in London, and the continued protection of the health of the nation is not yet clear. However, the renewed optimism that this crisis will eventually end on the rollout of a number of recently announced and anticipated vaccines and the return to some semblance of normality in 2021 is welcome.

 

In the context of the challenges presented by the pandemic, the Company has performed well, collecting c.93% of rents from its tenants and reducing its finance and administration costs. Subsequent to the half year, it has strengthened its Balance Sheet by selling assets above book value and, in the process, reducing its gearing levels to the lowest for over 30 years.

 

We have also made good progress in meeting our sustainability targets during the period, issuing our new Sustainability Strategy and improving our performance against industry benchmarks.

 

Results for the Half Year

 

The loss before tax for the half year to 30 September 2020 was £12.7m (2019: profit of £13.1m) with a see-through Total Property Return of £6.9m (2019: £28.6m). Net rental income of £11.9m (2019: £13.0m) was earned over the period. Developments contributed a small loss of £0.2m (2019: profit of £6.9m) before provisions of £0.3m (2019: £1.2m). The loss on sale and revaluation of the investment portfolio was £4.5m (2019: gain of £9.9m).

 

Total see-through finance costs decreased to £7.9m (2019: £8.9m), offset by interest receivable of £nil (2019: £1.3m) to give net finance costs of £7.9m (2019: £7.6m). A reduction in expected future interest rates led to a charge from the valuation of the Group's derivative financial instruments of £5.3m (2019: £5.0m). Recurring administration costs were 10% lower at £4.8m (2019: £5.3m), with £0.3m (2019: £0.3m) in our joint ventures. The provision for performance related remuneration, including associated NIC, was £0.4m (2019: £1.7m).

 

A corporation tax charge of £nil (2019: £1.2m) has been recognised in the Half Year Results. With a reduction in the Group's deferred tax provision of £2.0m, a net tax credit of £2.0m (2019: £0.9m) has been recognised.

 

The loss for the period, after recognition of this tax credit, was £10.8m (2019: profit of £14.0m). There was an IFRS basic loss per share of 8.9p (2019: earnings of 11.7p) and an EPRA loss per share of 1.0p (2019: earnings of 5.4p).

 

On a like-for-like basis, the Investment portfolio decreased in value by 0.5% (0.6% including purchases and gains/losses on sales). The see-through total portfolio value reduced to £918.2m (31 March 2020: £949.3m).

 

The portfolio was 81% let at 30 September 2020, generating contracted rents of £36.7m (31 March 2020: £37.6m), at an average of £42.18 psf, growing to £47.4m on the letting of currently vacant space, towards an ERV of £59.3m (31 March 2020: £60.0m). The Group's contracted rent at 30 September 2020 had a Weighted Average Unexpired Lease Term ("WAULT") of 6.2 years in London and 4.3 years in Manchester.

 

The Total Accounting Return ("TAR"), being the growth in the net asset value of the Group plus dividends paid in the year, was -2.0% (2019: 2.7%). Based on EPRA net tangible assets the TAR was -2.5% (2019: 2.7%). EPRA net tangible asset value per share was reduced by 3.6% to 505p (31 March 2020: 524p), with EPRA net disposal value per share down 3.1% to 465p (31 March 2020: 480p).

 

EPRA Earnings and Dividends

 

Helical is a capital growth stock, seeking to maximise value by successfully letting redeveloped and refurbished property. Once stabilised, these assets are either retained for their long term income and reversionary potential or sold to recycle equity into new schemes.

 

This recycling leads to fluctuations in our EPRA earnings per share, as the calculation of these earnings excludes capital profits generated from the sale and revaluation of assets. As such, both rental income and realised capital profits are considered when determining the payment of dividends.

 

For this half year, we have declared an unchanged interim dividend of 2.70p (2019: 2.70p).

 

Our Balance Sheet Strength and Liquidity

 

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

 

During the half year to 30 September 2020, on a see-through basis, the Group invested £8.4m in its Investment portfolio and incurred development expenditure of £4.6m in its residential scheme at Barts Square, London EC1. Offsetting this expenditure, the Group generated £19.7m of investment sales and £22.8m from the sale of development stock, reducing net borrowings to £295.3m (31 March 2020: £298.5m). 

 

At 30 September 2020, we had £43.8m of cash deposits available to deploy without restrictions and a further £27.6m of rent and sales receipts collected in bank accounts available to service payments under loan agreements, cash held at managing agents and cash held in joint venture. Furthermore, the Group has £251.4m of loan facilities available to draw on plus £25.3m of currently uncharged investment assets.

 

With no secured borrowings repayable before December 2021, the weighted average maturity of its secured borrowings is 3.7 years, increasing to 5.1 years on exercise of options to extend the current facilities and on a fully utilised basis. The Group's weighted average cost of debt is 3.5%. The marginal cost of fully utilising the undrawn RCF is 1.6%.

 

The see-through loan to value ratio ("LTV") increased marginally to 32.2% at the half year end (31 March 2020: 31.4%). Our see-through net gearing, the ratio of net borrowings to the net asset value of the Group, increased from 49.9% as at 31 March 2020 to 51.0%. Following the sale of three assets in Manchester, after the half year end, our pro forma LTV and gearing fell to 22.4% and 31.2%, respectively.

 

Sustainability

 

During the period we announced our new Sustainability Strategy, "Built for the Future", which sets out our long-term vision, together with the governance structure to help us achieve our objectives and targets. As part of our commitment to sustainability reporting we measure our performance against industry-wide benchmarks, and I am pleased to be able to report positive progress against these measures during the period.

 

In July, we achieved the UK's first BREEAM 2018 New Construction "Outstanding" rating for the design stage of 33 Charterhouse Street, London EC1, a significant milestone for the Company. We are also pleased to have achieved the EPRA Sustainability Best Practice Recommendation "Silver" award, an improvement on the "Bronze" award of previous years. Finally, we have improved our GRESB score from a 2* to a 3* Green rating, increasing our score from 63 to 76.

Outlook

 

We believe that the enforced "working from home" experiment in 2020 will result in more flexibility being offered to some office workers going forward. However, we also believe that the disadvantages of working at home with its inadequate ergonomics, lack of divide between work and home life, potential mental health issues caused by isolation from colleagues and, for many, its ever decreasing productivity as collaboration and creativity diminish, will provide the impetus for a return to the office as the place of work.

 

Our experience of the pandemic has reinforced our view that our investment in multi-let offices in well-located and accessible Grade A buildings, incorporating the latest in sustainable building design, offering state of the art technology with occupier health and well-being at their core, provides the most resilient defence against adversity and the best opportunity for continued growth. This has been borne out by our strong rent collection figures and robust portfolio valuation.

 

We see a divergence between these Grade A buildings and the rest from both a capital value and rental growth perspective; this pattern will accelerate as tenants seek to leave buildings which are not fit for purpose in the search for working environments that match the expectations of their employees.

 

Our near term focus remains on letting the available space across the portfolio. At the same time, having sold a portfolio of three properties in Manchester since the half year end and reduced the Group's gearing levels to an historic low, our efforts are also centred around using our considerable firepower to obtain new projects. These will be a combination of properties acquired for redevelopment and the refurbishment and repositioning of existing buildings, delivering the highest quality, fit for purpose office space, suitable for the post-Covid world.

 

 

 

Gerald Kaye

Chief Executive

25 November 2020

 

 

Helical's Property Portfolio - 30 September 2020

 

Property Overview

 

For Helical to generate capital profits, the Group 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. Equally important, we need to provide inspiring working environments suited to the needs of our customers. Using the skills, knowledge and expertise gained over many years, the Helical team aims to deliver attractive and exciting office space in our identified locations.

 

Helical divides its property activities into two markets: London and Manchester offices. At 30 September 2020, London represented 84.6% and Manchester 15.4% of the Investment property portfolio. Whilst there are structural differences in these markets, Helical has found that its business model can be applied successfully to each, driving capital growth, development profits and rental income.

 

London

 

Market Context

 

In our judgement, the London commercial property market continues to provide the best source of capital profits. Whilst Covid-19 has created significant headwinds, we consider that the London market is robust and will deliver strong long term growth. By applying the three "Rs" - redeveloping, refurbishing and repositioning, combined with our ability to effectively engage with occupiers and evolve our offering, we believe we are well positioned to take advantage of opportunities that are presented by the challenging economic backdrop.

 

From an occupational perspective, we expect strong medium to long term demand. Whilst take up of office space has been suppressed across all markets in 2020, we anticipate a return in demand for high quality commercial office space. The supply of new prime office space is constrained and this shortage has been further exacerbated by Covid-19, with the delayed commencement and completion of development projects. CBRE has reported that, of the 14m sq ft of development identified as under construction in London at the end of Q3 2020, 44% was already let or under offer.

 

Whilst Covid-19 has necessitated increased remote working, the office remains central to the successful operation of a business, providing a vital location for collaboration, learning and the development and maintenance of corporate culture. The increasing emphasis occupiers are placing on employee wellbeing and sustainability will drive them towards best in class flexible space. Providing amenity rich buildings is at the heart of Helical's approach, with all our buildings already including generous cycle provision and changing facilities.

 

The rapid integration of technology into the workplace continues, expedited by the increase in remote working and contactless technologies, with the best buildings providing innovative solutions to enhance occupier efficiency. We have responded to these trends and our London portfolio places an emphasis on quality, modernity and wellbeing, helping to differentiate it from the increasing amount of vacant, second hand "grey" space available.

 

As occupiers review the usage of their space, it is increasingly important to engage with our customers and maintain strong relationships. By offering flexible leases on our multi-let assets and allowing them to occupy space commensurate with their changing requirements, we target their long-term retention. We have also continued to evolve our fitted "Plug & Play" flexible solution which we offer at appropriate buildings, typically on smaller floorplates.
 

The volume of investment transactions has been subdued due to concerns over Covid-19 but there remains significant capital available for deployment into the office market, particularly in developed markets such as London, and as restrictions have been lifted we have seen an increase in office transactions.

 

Knight Frank has highlighted an increased focus from investors on cities which embrace growth in new sectors, including technology and life sciences. In its analysis, London is seen as the leading global city for innovation. As with occupational demand, sustainability criteria feature highly and London is also considered to be leading the way in promoting green initiatives.

 

When compared against similar global cities, London remains liquid and competitively priced, with prime yields in Central London remaining above previous cyclical lows, helped by the prime yield to gilt spread remaining at a 10 year high.

 

We remain confident that London will continue to provide the best source of capital profits for the foreseeable future and that our flexible, best in class portfolio is well positioned to take advantage of the demands of an evolving market.

 

London Rent Collection

 

Despite the impact of Covid-19, rent collection for the March, June and September quarters has remained high across the London portfolio.

 

 

March

quarter

%

June

quarter

%

September

quarter

%

Rent collected to date

95.0

91.8

85.8

Rent to be collected by way of payment plan

-

-

7.4

Rent under discussion

3.3

4.2

3.4

Rent concessions

1.7

4.0

3.4

 

In London, we completed two lettings in the period, representing 2,841 sq ft. These lettings generated contracted rent of £0.2m (Helical's share £0.1m) at a 13.0% premium to 31 March 2020 ERV.

 

Four units, representing 9,390 sq ft and contracted rent of £0.4m, became vacant in the period as a result of a lease expiry or breaks.

 

London Portfolio

 

Our London portfolio comprises income-producing multi-let offices, office refurbishments and developments and a mixed use commercial/residential scheme. Our strategy is to continue to increase the size of our London portfolio, focusing on areas where we see strong tenant demand and growth potential, such as the "Tech Belt" that runs from King's Cross through Farringdon, Old Street and Shoreditch to Whitechapel.

 

33 Charterhouse Street, EC1

In May 2019 we acquired 33 Charterhouse Street, a major development site located in Farringdon, in a 50:50 joint venture with AshbyCapital.  The site is situated on the corner of Charterhouse Street and Farringdon Road, just 100m from Farringdon Station and immediately opposite Smithfield General Market where work is now underway to transform the site into the future Museum of London.

 

In July, we exercised the option under the Development Agreement with the City of London to secure a new 150 year lease and, following this, appointed Mace as principal contractor. Work is progressing on site, with the basement raft and core substantially completed. The 205,369 sq ft office development remains on track for completion in September 2022.

 

As part of Helical's new sustainability strategy "Built for the Future", 33 Charterhouse Street has been awarded the UK's first BREEAM 2018 New Construction "Outstanding" rating for the design stage.

 

The Bower, EC1

The Bower is a landmark estate immediately adjacent to the Old Street roundabout and featuring 312,575 sq ft of innovative, high quality office space, along with 21,059 sq ft of restaurant and retail space.

 

The Warehouse and The Studio

 

The Warehouse comprises 122,858 sq ft of offices and The Studio 18,283 sq ft of offices, with 10,298 sq ft of restaurant space across the two buildings. The offices are fully let and the rent reviews for the office tenants have commenced, enabling Helical to capture their reversionary potential.

 

The Tower

 

The Tower, completed in August 2018, offers 171,434 sq ft of office space with a contemporary façade and innovatively designed interconnecting floors, along with 10,761 sq ft of restaurant space, across two units.

 

Barts Square, EC1

In a joint venture with The Baupost Group LLC, Helical acquired the freehold interest of Barts Square, a 3.2 acre site between St Paul's and Smithfield Market, in 2011. A redevelopment comprising 236 residential apartments, three office buildings of 214,434 sq ft, 24,013 sq ft and 10,976 sq ft together with 21,185 sq ft of retail/restaurant space at ground floor as well as major public realm improvements has now been completed.

 

Residential/Retail

 

In Phase One of our residential scheme at Barts Square, we completed the sale of four apartments and have exchanged contracts on one further apartment, which has subsequently completed. In total, 143 apartments have been sold in the first phase, leaving just one apartment available for sale.

 

In Phase Two, we completed the sale of 26 apartments during the period, six of which exchanged since 1 April, and the freehold sale of the former marketing suite at 56 West Smithfield. In total, 58 apartments have been sold in the second phase, leaving 33 apartments remaining to sell, of which three have been put under offer since the end of the period.

 

The retail space in Phase One is fully let and one of the Phase Two units has been let since the end of the period. The remaining five retail units are being marketed with two of these units under offer. The landscaping of the new square has been completed offering extensive public amenity.

 

90 Bartholomew Close - Office/Restaurant

 

In April 2020, we completed the sale of 90 Bartholomew Close, Barts Square, EC1, to La Francaise Real Estate Partners International, a pan-European investment business acting on behalf of a French collective real estate investment vehicle. The disposal price of £48.5m reflected a net initial yield of 3.92% (£1,594 psf capital value).

 

55 Bartholomew

 

At 55 Bartholomew, EC1, the fifth floor is let to Shadowfall and, during the period, Clevertouch agreed a five year lease for the 2,564 sq ft ground floor at a headline rent of £75.00 psf, a 15% premium to 31 March 2020 ERV.

 

Four floors, including the fitted second floor, remain available in this recently refurbished 10,976 sq ft office.

 

Kaleidoscope, EC1

Practical completion of this new office development above the Farringdon East Elizabeth Line station was achieved in December 2019. The 88,581 sq ft development, spread over five office floors, alongside two ground floor units, is currently under offer from a letting perspective.

 

The Loom, E1

At this 108,635 sq ft former Victorian wool warehouse, we have undertaken further asset management opportunities to reconfigure units to offer larger floorplates to complement the existing mix. 15,268 sq ft is currently available across six units, of which one unit, representing 1,358 sq ft, is currently under offer.

 

25 Charterhouse Square, EC1

25 Charterhouse Square comprises 43,343 sq ft of offices adjacent to the new Farringdon East Elizabeth Line station and overlooks the historic Charterhouse Square. The building was extensively refurbished upon acquisition.

 

Following the exercise of a break option, the 11,570 sq ft ground floor and first floor, which are currently used as showroom space, will be available to let as office accommodation from January 2021.

 

The Powerhouse, 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.

 

Manchester

 

Our Manchester portfolio comprises four offices where we offer vibrant, modern space to a diverse group of tenants.

 

Market Context

 

Manchester, the centre of the "Northern Powerhouse", is a city with a diverse and growing economy and a commercial office market that has expanded significantly in recent years. As with the London market, supply remains constrained with Grade A office supply currently only sufficient to cover two years of demand based on average take-up rate. The number of Tech, Media and Telecoms occupiers has increased significantly in recent years as they have sought to grow the tech cluster, and these businesses are anticipated to underpin demand in the commercial market in the future.

 

Whilst the volume of investment transactions has declined due to the impact of Covid-19, it is anticipated that volumes will increase once the current turbulence passes, with an increasing pool of investors seeking to deploy capital into the market.

 

Manchester Rent Collection

 

As with London, the rent collection for the March, June and September quarters has remained high.

 

 

March quarter

%

June quarter

%

September quarter

%

Rent collected to date

94.0

91.3

91.5

Rent to be collected by way of payment plan

-

-

4.8

Rent under discussion

0.7

1.7

2.1

Rent concessions

5.3

7.0

1.6

 

In Manchester, we have completed one letting in the period, representing 2,690 sq ft. This letting generated contracted rent of £0.1m (Helical's share £0.1m) at a 10.9% premium to 31 March 2020 ERV.

 

One unit was vacated in the period which resulted in a reduction in contracted rent of less than £0.1m.

 

Manchester Portfolio

 

The Tootal Buildings, Manchester

This 245,907 sq ft multi-let office remains fully let. We have continued our asset management programme which included refurbishment of the Broadhurst and Lee reception areas and a rebranding of the two properties as The Tootal Buildings, reflecting its heritage. Contracts were exchanged for the sale of this property after the period end.

 

Trinity, Manchester

Following completion of the full redevelopment in January 2019, the building comprises 54,651 sq ft of office space and 4,300 sq ft of retail/restaurant space. During the period, we have let 2,690 sq ft at a 10.9% premium to ERV. Of the remaining space, three office units (20,002 sq ft) and two retail units (4,300 sq ft) are under offer.

 

Fourways, Manchester

We applied our asset management skills to this 60,009 sq ft Grade II listed former packing warehouse, reconfiguring the existing space to create a greater range of unit sizes. We also completed the full refurbishment of the atrium and common parts. Contracts were exchanged for the sale of this property after the period end.

 

35 Dale Street, Manchester

35 Dale Street is a 56,209 sq ft office building situated in the Northern Quarter of Manchester which underwent a comprehensive refurbishment that was completed in June 2018. Contracts were exchanged for the sale of this property after the period end.

 

 

Portfolio Analytics

 

See-through Total Portfolio by Fair Value

 

  

Investment

£m

Development

£m

Total

£m

 

%

London Offices

 

 

 

 

 

 

 - Completed, let and available to let

707.3

78.7

-  

-

707.3

77.0

 - Being redeveloped

53.0

5.9

-  

-

53.0

5.8

London Residential

-  

-

19.2

96.8

19.2

2.1

Total London

             760.3

84.6

                19.2

96.8

779.5

84.9

Manchester Offices

 

 

 

 

 

 

 - Completed, let and available to let

138.0

15.4

-  

-

138.0

15.0

Total Manchester

          138.0

15.4

-  

-

138.0

15.0

Other

0.1

-

0.6

3.2

0.7

0.1

Total

898.4

100.0

19.8

100.0

918.2

100.0

 

See-through Land and Development Portfolio

 

 

Book value

£m

Fair value

£m

Surplus

£m

Fair value

%

London Residential

19.2

19.2

0.0

96.8

Land

0.0

0.6

0.6

3.2

Total

19.2

19.8

0.6

100.0

 

Capital Expenditure

 

We have a committed and planned development and refurbishment programme.

 

Property

Capex

budget

(Helical share)

£m

Remaining spend

(Helical share)

£m

Pre-redeveloped

space

sq ft

New space

sq ft

Total completed
space

sq ft

Completion
date

Investment - committed

 

 

 

 

 

 

- The Tower, London EC1

110.0

4.0

114,000

68,195

182,195

Completed

- Kaleidoscope, London EC1

62.2

4.2

-

88,581

88,581

Completed

- 33 Charterhouse Street, London EC1

65.8

55.6

-

205,369

205,369

September 2022

- 55 Bartholomew, London EC1

2.7

0.1

9,000

1,976

10,976

Completed

Development - committed

 

 

 

 

 

 

- Barts Square, London EC1 - Phase One

65.4

0.2

-

127,364

127,364

Completed

- Barts Square, London EC1 - Phase Three

41.3

1.0

-

89,353

89,353

Completed

                     
 

 

Asset Management

 

Asset management is a critical component in driving Helical's performance. Through having well considered business plans and maximising the combined skills of our management team, we are able to create value in our assets.

 

 

See-through Investment portfolio

Fair

value

weighting

%

Passing

rent

£m

 %

Contracted rent

£m

 %

ERV

£m

ERV change

like-for-like

%

London Offices

 

 

 

 

 

 

 

 

- Completed, let and available to let

78.7

25.0

80.9

29.9

81.5

41.3

69.6

0.2

- Being redeveloped

5.9

-  

-

-  

-

8.6

14.6

1.2

Total London

84.6

25.0

80.9

29.9

81.5

49.9

84.2

0.3

Manchester Offices

 

 

 

 

 

 

 

 

- Completed, let and available to let

15.4

5.9

19.1

6.8

18.5

9.3

15.7

0.0

Total Manchester

15.4

5.9

19.1

6.8

18.5

9.3

15.7

0.0

Other

-

-  

-

-  

-

0.1

0.1

0.0

Total

100.0

30.9

100.0

36.7

100.0

59.3

100.0

0.3

 

During the period, total contracted income decreased by £0.9m as a result of the disposal of 90 Bartholomew Close, London EC1.

 

 

See-through

total portfolio contracted rent

£m

Rent lost at break/expiry

(0.4)

Rent reviews and uplifts on lease renewals

0.2

New lettings

 

- London

0.1

- Manchester

0.1

Total movement in the period from asset management activities

0.0

Contracted rent reduced through disposals of London Offices

(0.9)

Net decrease in contracted rents in the period

(0.9)

 

 

 

Investment Portfolio

 

See-through Valuation Movements

 

 

Val change

inc purchases & gains/losses on sales

%

Val change

excl purchases & gains/losses on sales

%

Investment

portfolio

weighting

30 September 2020

%

Investment portfolio

weighting

31 March 2020

%

London Offices

 

 

 

 

- Completed, let and available to let

(0.9)

(0.8)

78.7

80.1

- Being redeveloped

3.4

3.4

5.9

4.9

Total London

(0.6)

(0.5)

84.6

85.0

Manchester Offices

 

 

 

 

- Completed, let and available to let

(0.4)

(0.4)

15.4

15.0

Total Manchester

(0.4)

(0.4)

15.4

15.0

Total

(0.6)

(0.5)

100.0

100.0

 

Portfolio Yields

 

 

EPRA topped

up NIY

30 September

2020

%

EPRA topped

up NIY

31 March

2020

%

Reversionary

yield

30 September

2020

%

Reversionary

yield

31 March

2020

%

True equivalent yield

30 September

2020

%

True equivalent yield

31 March

2020

%

London Offices

 

 

 

 

 

 

- Completed, let and available to let

3.8

3.9

5.3

5.2

5.1

5.0

- Being redeveloped

n/a

n/a

5.7

5.5

4.9

4.9

Total London

3.8

3.9

5.4

5.3

5.0

5.0

Manchester Offices

 

 

 

 

 

 

- Completed, let and available to let

4.6

4.4

6.3

6.2

6.0

6.0

Total Manchester

4.6

4.4

6.3

6.2

6.0

6.0

 

 

 

 

 

 

 

Total

4.0

4.0

5.5

5.4

5.1

5.1

               

 

See-through Capital Values, Vacancy Rates and Unexpired Lease Terms

 

 

30 September 2020

Capital value psf

£

30 September 2020

Vacancy rate

%

30 September 2020

WAULT

Years

31 March 2020

WAULT

Years

London Offices

 

 

 

 

- Completed, let and available to let

1,157

19.7

6.2

6.6

- Being redeveloped

516

n/a

n/a

n/a

Total London

998

19.7

6.2

6.6

Manchester Offices

 

 

 

 

- Completed, let and available to let

328

17.7

4.3

3.9

Total Manchester

328

17.7

4.3

3.9

 

 

 

 

 

Total

753

18.9

5.8

6.1

 

See-through Lease Expiries or Tenant Break Options

 

 

Half Year to

2021

Year to

2022

Year to

2023

Year to

2024

Year to

2025

2025 Onward

% of rent roll

4.6

16.2

14.0

11.5

7.3

46.4

Number of leases

14

33

22

22

13

44

Average rent per lease (£)

120,246

180,835

233,431

191,791

206,359

383,915

 

 

 

Top 10 Tenants

 

We have a strong rental income stream and a diverse tenant base. The top 10 tenants account for 54.3% of the total rent roll and the tenants come from a variety of industries.

 

 

Rank

Tenant

Tenant Industry

Contracted rent

£m

Rent roll

%

1

Farfetch

Online retail

3.9

10.7

2

WeWork

Flexible offices

3.8

10.4

3

Brilliant Basics

Technology

3.2

8.6

4

Pivotal

Technology

2.0

5.5

5

Capita

Business services

1.8

4.9

6

Anomaly

Marketing

1.4

3.8

7

CBS

Media

1.0

2.8

8

Allegis

Recruitment

1.0

2.7

9

Incubeta

Marketing

0.9

2.5

10

OpenPayd

Financial Services

0.9

2.4

Total

 

19.9

54.3

 

Letting Activity

 

 

Area

sq ft

Contracted rent

(Helical's Share)

£

Rent

£ psf

% Above

 31 March 2020 ERV

%

Investment Properties

 

 

 

 

London Offices

 

 

 

 

- 55 Bartholomew, EC1

2,564

90,000

75.00

15.4

London Retail

 

 

 

 

- The Warehouse, EC1

277

18,000

64.98

(7.2)

Total London

2,841

108,000

74.02

13.0

 

 

 

 

 

Manchester Offices

 

 

 

 

- Trinity

2,690

89,000

33.00

10.9

Total Manchester

2,690

89,000

33.00

10.9

 

 

 

 

 

Total

5,531

              197,000

54.07

12.4

 

 

 

Financial Review

 

 

IFRS Performance

 

 

EPRA Performance

Loss Before Tax
£12.7m (2019: profit of £13.1m)

 

EPRA Earnings
Loss of £1.2m (2019: earnings of £6.5m)

 

EPS
Loss of 8.9p (2019: earnings of 11.7p)

 

EPRA EPS
Loss of 1.0p (2019: earnings of 5.4p)

 

Diluted NAV Per Share
474p (31 March 2020: 489p)

 

EPRA NTA Per Share
505p (31 March 2020: 524p)

 

Total Accounting Return

-2.0% (2019: 2.7%)

 

Total Accounting Return on EPRA NTA

-2.5% (2019: 2.7%)

 

Overview

 

The quality of the Group's portfolio and tenant mix has underpinned strong rent collection figures during the period. However, it has not been immune to the challenges presented by Covid-19. Rent holidays were offered to those tenants who were hardest hit, primarily food and beverage operators, and we experienced some tenant failures, leading to a fall in net rental income.

 

This reduction in rent was reflected in the valuation of the Group's investment properties, where increased vacancy and void costs resulted in a small net revaluation deficit. Against this, good progress in the development of 33 Charterhouse Street, London EC1, including securing the long lease of the site, resulted in a net gain on revaluation from our joint ventures.

 

The Group continues to maintain its robust financial position with £323m of cash and undrawn facilities and a see-through LTV of 32%.

 

Results for the Half Year

 

The see-through results for the half year to 30 September 2020 include net rental income of £11.9m, a net loss on sale and revaluation of the investment portfolio of £4.5m and development losses of £0.5m, leading to a Total Property Return of £6.9m (2019: £28.6m). Total administration costs of £5.5m (2019: £7.4m), net finance costs of £7.9m (2019: £8.9m) and the mark-to-market valuation of derivative financial instruments of £5.3m (2019: £5.0m) contributed to a pre-tax loss of £12.7m (2019: profit of £13.1m). EPRA net tangible assets per share decreased by 3.6% to 505p (31 March 2020: 524p).

 

The interim dividend, payable on 31 December 2020, will be 2.70p per share (2019: 2.70p).

 

The Group's real estate portfolio, including its share of assets held in joint ventures, decreased to £918.2m (31 March 2020: £949.3m) primarily as a result of the sale of 90 Bartholomew Close and the residential apartments at Barts Square, London EC1, but offset by capital expenditure at 33 Charterhouse Street, London EC1.

 

The Group's see-through loan to value increased marginally to 32.2% (31 March 2020: 31.4%). The weighted average cost of debt is 3.5% (31 March 2020: 3.5%) with a weighted average debt maturity of 3.7 years (31 March 2020: 4.0 years). The average maturity of the facilities would increase to 5.1 years on exercise of the two one-year extension options on the Revolving Credit Facility and the one-year extension on the 33 Charterhouse Square, London EC1 facility, on a fully utilised basis.

 

At 30 September 2020, the Group had unutilised bank facilities of £251.4m and £71.4m of cash on a see-through basis. These are primarily available to fund the development of 33 Charterhouse Street, London EC1 and future property acquisitions.

 

Total Property Return

 

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

 

 

Half Year to

2020

£m

Half Year to

2019

£m

Total Property Return

6.9

28.6

 

Total Accounting Return

 

Total Accounting Return is the growth in the net asset value of the Group plus dividends paid in the reporting period, expressed as a percentage of the net asset value at the beginning of the period. The metric measures the growth in Shareholders' Funds each period and is expressed as an absolute measure.

 

 

Half Year to 2020

Half Year to

2019

Total Accounting Return on IFRS net assets

(2.0)

2.7

 

Total Accounting Return on EPRA net assets is the growth in the EPRA net tangible asset value of the Group plus dividends paid in the period, expressed as a percentage of EPRA net tangible asset value at the beginning of the period.

 

 

Half Year to

2020

%

Half Year to

2019

%

Total Accounting Return on EPRA net tangible assets

(2.5)

2.7

 

Earnings Per Share

 

The IFRS earnings per share decreased from 11.7p to a loss of 8.9p and are based on the after tax earnings attributable to ordinary Shareholders, divided by the weighted average number of shares in issue during the period. 

 

On an EPRA basis, the earnings per share of 5.4p in 2019 decreased to a loss per share of 1.0p, reflecting the Group's share of net rental income of £11.9m (2019: £13.0m) and development losses of £0.5m (2019: profits of £5.7m), but excluding losses on the sale and revaluation of Investment properties of £4.5m (2019: profits of £9.9m).

 

Net Asset Value

 

IFRS diluted net asset value per share decreased from 489p to 474p and is a measure of Shareholders' Funds divided by the number of shares in issue at the period end, adjusted to allow for the effect of all dilutive share awards. 

 

EPRA has introduced three new asset value measures which are applicable to Helical's Half Year Results to 30 September 2020. The new measures replace the existing EPRA net asset value and triple net asset value metrics. Helical considers the EPRA net tangible asset measure to be the most relevant for its business. EPRA net tangible asset per share decreased by 3.6% from 524p to 505p per share (EPRA net asset value fell from 511p to 500p). This movement arose principally from a total comprehensive loss of £10.8m (2019: profit of £14.1m) and £7.3m of dividends (2019: £9.0m).

 

Income Statement

 

Rental Income and Property Overheads

 

Gross rental income for the Group in respect of wholly owned properties decreased to £13.4m (2019: £14.5m) as a result of concessions offered to food and beverage operators and some tenant failures. In the joint ventures, gross rents fell to £0.1m (2019: £0.4m). Property overheads in respect of wholly owned assets and in respect of those assets in joint ventures decreased in line with gross rental income to £1.6m (2019: £1.9m). Overall, see-through net rents decreased by 8.7% to £11.9m (2019: £13.0m).

 

Development Profits

 

Through our role as development manager at 33 Charterhouse Street, London EC3, we recognised £0.4m of fees in the period. Ongoing costs of closing out our legacy retail development programme of £0.3m offset these to give a net development profit in the main Group of £0.1m (2019: £1.4m).

 

Share of Results of Joint Ventures

 

The revaluation of our investment assets held in joint ventures generated a surplus of £2.0m (2019: £0.5m). A loss of £0.5m was recognised in respect of our Barts Square, London EC1 residential development as a result of marketing and void costs. Transaction costs on the sale of 90 Bartholomew Close, London EC1 resulted in a net loss of £0.6m (year to 31 March 2020: £4.7m valuation surplus).

 

Finance, administration, taxation and other sundry items added a further £1.1m of costs. An adjustment to reflect our economic interest in the Barts Square, London EC1 development to its recoverable amount generated a loss of £0.8m, leaving a net loss from our joint ventures of £1.0m (2019: profit of £8.0m).

 

Loss/gain on Sale and Revaluation of Investment Properties

 

The valuation of our London Investment portfolio, on a see-through basis, generated a valuation deficit of 0.6% (including purchases and gains/losses on sales) and 0.5% on a like-for-like basis. Manchester generated a valuation deficit of 0.4% (including purchases and gains/losses on sales) and 0.4% on a like-for-like basis. In total, the see-through investment portfolio showed a valuation deficit of 0.6% (including purchases and gains/losses on sales), or 0.5% on a like-for-like basis.

 

The total impact on our results of the loss on sale and revaluation of our investment portfolio, including in joint ventures, was £4.5m (2019: gain of £9.9m). 

 

 

 

Administrative Expenses

 

Administration costs in the Group, before performance related awards, reduced by 9.8% from £5.3m to £4.8m as a result of the Group's cost saving measures taken in response to Covid-19.

 

Performance related share awards and bonus payments, including National Insurance costs, were £0.4m (2019: £1.7m). Of this amount, £0.3m (2019: £0.9m), being the charge for share awards under the Performance Share Plan, is expensed through the Income Statement but added back to Shareholders' Funds through the Statement of Changes in Equity.

 

 

2020

£000

2019
£000

Administrative expenses (excluding performance related rewards)

4,803

5,324

Performance related awards, including NIC

412

1,730

Group

5,215

7,054

In joint ventures

292

335

Total

5,507

7,389

 

Finance Costs, Finance Income and Derivative Financial Instruments

 

Total finance costs, including in joint ventures, fell during the period to £7.9m (2019: £8.9m), reflecting a fall in interest rates and the lower level of borrowings following the repayment of the Convertible Bond in June 2019, offset by a reduction in capitalised interest.

 

 

2020

£000

2019
£000

Interest payable on bank loans and overdrafts                   - subsidiaries

5,489

5,900

                                                                                            - joint ventures

547

267

Interest payable on unsecured bonds

-

855

Amortisation of refinancing costs

555

1,623

Sundry interest and bank charges                                       - subsidiaries

1,192

1,064

                                                                                            - joint ventures

94

328

Interest capitalised

-

(1,127)

Total

7,877

8,910

 

Finance income earned, including in joint ventures, was £nil (2019: £1.4m). The movement downwards in medium and long-term interest rate projections during the period contributed to a charge of £5.3m (2019: £5.0m) on the mark-to-market valuation of the derivative financial instruments.

 

Taxation

 

Helical pays corporation tax on its UK sourced net rental income, trading and development profits and realised chargeable gains, after offsetting administration and finance costs.

 

The current tax charge for the period decreased from £1.2m to £nil.

 

Dividends

 

The Board has declared an interim dividend for the period of 2.70p, unchanged from the prior period.

 

 

Balance Sheet

 

Shareholders' Funds

 

Shareholders' Funds at 1 April 2020 were £598.7m. The total comprehensive expense for the period was £10.8m (2019: income of £14.1m). Movements in reserves arising from the Group's share schemes decreased funds by £1.4m. The Company paid dividends to Shareholders amounting to £7.3m leaving a net decrease in Shareholders' Funds from Group activities during the period of £19.5m to £579.2m.

 

Investment Portfolio

 

 

 

Wholly

owned
£000

In joint venture

£000

See-through

£000

Head leases capitalised

£000

Lease incentives

£000

Book

value

£000

Valuation at 31 March 2020

836,875

76,809

913,684

2,161

(20,131)

895,714

Acquisitions

- wholly owned

-

-

-

-

-

-

 

- joint ventures

-  

-  

-  

4,308

-

4,308

Capital expenditure        

- wholly owned

2,137

-  

2,137

 (7)

-  

2,130

                                         

- joint ventures

-  

6,278

6,278

-  

-  

6,278

Letting costs amortised

- wholly owned

 (4)

-  

 (4)

-  

-  

 (4)

Disposals

- joint ventures

-  

 (20,210)

 (20,210)

-  

606

 (19,604)

Economic interest adjustment

- joint ventures

-

1,080

1,080

-

 (6)

1,074

Revaluation (deficit)/surplus

- wholly owned

 (6,608)

-  

 (6,608)

-

589

 (6,019)

                                

- joint ventures

-  

2,051

2,051

-

 (19)

2,032

Valuation at 30 September 2020

832,400

66,008

898,408

6,462

 (18,961)

885,909

 

The Group spent £8.4m on capital works across the Investment portfolio, mainly at 33 Charterhouse Street, London EC1 (£6.2m), Fourways, Manchester (£1.1m), The Tootal Buildings, Manchester (£0.5m) and Trinity, Manchester (£0.5m). 90 Bartholomew Close, London EC1 was sold in the period with a book value of £20.2m.

 

The net deficit on revaluation of £4.6m reduced the see-through value of the portfolio, before lease incentives, to £898.4m (31 March 2020: £913.7m). The accounting for head leases and lease incentives resulted in a book value of the see-through investment portfolio of £885.9m (31 March 2020: £895.7m).

 

Debt and Financial Risk

 

Helical's outstanding debt at 30 September 2020 of £373.3m (31 March 2020: £386.9m) had a weighted interest cost of 3.5% (31 March 2020: 3.5%) and a weighted average debt maturity of 3.7 years (31 March 2020: 4.0 years). The average maturity of the facilities would increase to 5.1 years following exercise of the two one-year extensions of the Group's £400m Revolving Credit Facility and the one-year extension of the 33 Charterhouse Street, London EC1 development facility, on a fully utilised basis.

 

 

Debt Profile at 30 September 2020 - Including Commitment Fees but Excluding the Amortisation of Arrangement Fees

 

 

Total

facility

£000

Total

utilised

£000

Available facility

£000

Weighted average

interest rate

%

Average
maturity

Years

Extended* average maturity Years

Investment facilities

480,750

310,750

170,000

3.4

3.9

5.5

Development facilities

50,400

48,876

1,524

2.9

2.9

2.9

Total wholly owned

531,150

359,626

171,524

3.4

3.8

5.2

In joint ventures

83,606

13,706

69,900

7.7

1.3

4.2

Total secured debt

614,756

373,332

241,424

3.5

3.7

5.1

Working capital

10,000

-

10,000

-

-

1.0

Total unsecured debt

10,000

-

10,000

-

-

1.0

Total debt

624,756

373,332

251,424

3.5

3.7

5.1

 

* Calculated on a fully utilised basis with the two one-year extensions of the Revolving Credit Facility and the one-year extension of the 33 Charterhouse Street, London EC1 facility included.

 

Secured Debt

 

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

 

-       Investment Facilities

We have a £400m Revolving Credit Facility that enables the Group to acquire, refurbish, reposition and hold significant parts of our investment portfolio with the remaining investment assets held in an £81m term loan secured facility. The value of the Group's properties secured in these facilities at 30 September 2020 was £703m (31 March 2020: £709m) with a corresponding loan to value of 44.2% (31 March 2020: 43.8%). The average maturity of the Group's investment facilities at 30 September 2020 was 3.9 years (31 March 2020: 4.4 years), increasing to 5.5 years on a fully utilised basis and following the two one-year extensions of the Revolving Credit Facility. The weighted average interest rate was 3.4% (31 March 2020: 3.3%). The marginal cost of fully utilising the undrawn Revolving Credit Facility was 1.6% (31 March 2020: 2.2%).

 

-       Development Facilities

This facility finances the over-station development at Kaleidoscope, London EC1. The maturity of this facility at 30 September 2020 was 2.9 years (31 March 2020: 3.4 years) with a weighted average interest rate of 2.9% (31 March 2020: 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 drawn bank facilities in joint ventures at 30 September 2020 was 1.3 years (31 March 2020: 1.8 years) with a weighted average interest rate of 7.7% (31 March 2020: 4.2%). The average interest rate will fall as the 33 Charterhouse Street, London EC1 development facility is drawn down and would be 4.2% on a fully utilised basis.

 

Unsecured Debt

 

The Group's unsecured debt, following the repayment of the £5m working capital facility in July 2020, is £nil (31 March 2020: £5m).

 

Cash and Cash Flow

 

At 30 September 2020, the Group had £323m (31 March 2020: £279m) of cash and agreed, undrawn, committed bank facilities including its share in joint ventures, as well as £25m (31 March 2020: £70m) of uncharged property upon which it could borrow funds.

 

Net Borrowings and Gearing

 

Total gross borrowings of the Group, including in joint ventures, have decreased from £386.9m to £373.3m during the period to 30 September 2020. After deducting cash balances of £71.4m (31 March 2020: £83.0m) and unamortised refinancing costs of £6.6m (31 March 2020: £6.0m), net borrowings decreased from £298.5m to £295.3m. The see-through gearing of the Group, including in joint ventures, increased from 49.9% to 51.0%.

 

 

30 September

2020

31 March

2020

See-through gross borrowings

£373.3m

£386.9m

See-through cash balances

£71.4m

£83.0m

Unamortised refinancing costs

£6.6m

£6.0m

See-through net borrowings

£295.3m

£298.5m

Shareholders' Funds

£579.2m

£598.7m

See-through gearing - IFRS net asset value

51.0%

49.9%

 

Hedging

 

At 30 September 2020, the Group had £280.8m (31 March 2020: £285.8m) of fixed rate debt with an average effective interest rate of 3.1% (31 March 2020: 3.0%) and £78.8m (31 March 2020: £68.0m) of floating rate debt with an average effective interest rate of 4.1% (31 March 2020: 4.9%). In addition, the Group had £240m of interest rate caps at an average of 1.75% (31 March 2020: £240m at 1.75%). In our joint ventures, the Group's share of fixed rate debt was £nil (31 March 2020: £nil) and £13.7m (31 March 2020: £33.1m) of floating rate debt with an effective rate of 7.7% (31 March 2020: 4.2%), with interest rate caps set at 1.5% plus margin on £35.3m (31 March 2020: £32.3m at 1.5%).

 

 

30 September

2020

£m

Effective interest rate

%

31 March

2020

£m

Effective interest rate

%

Fixed rate debt

 

 

 

 

- Secured borrowings

280.8

3.1

280.8

3.0

- Unsecured borrowings

-

-

5.0

3.3

Total

280.8

3.1

285.8

3.0

Floating rate debt

 

 

 

 

- Secured

78.8

4.11

68.0

4.91

Total

359.6

3.4

353.8

3.4

In joint ventures

 

 

 

 

- Floating rate

13.7

7.72

33.1

4.22

Total borrowings

373.3

3.5

386.9

3.5

 

1 This includes commitment fees on undrawn facilities. Excluding these would reduce the effective rate to 2.5% (31 March 2020: 3.0%).

2 This includes commitment fees on undrawn facilities. Excluding these would reduce the effective rate to 3.2% (31 March 2020: 3.8%).

 

The fair value of the interest rate caps and swaps resulted in a net derivative financial instrument liability of £15.7m (31 March 2020: £10.4m). The £81m term loan secured facility has a fixed interest rate and is not shown at its fair value, adjusting to its fair value would increase the loan liability by £12.2m (31 March 2020: £12.5m).

 

 

 

Tim Murphy

Finance Director

25 November 2020
 

Statement of Directors' Responsibilities

 

We confirm that to the best of our knowledge:

 

a)    The condensed unaudited consolidated financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting';

 

b)    The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events and their impact during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

 

c)    The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

 

Balances with related parties at 30 September 2020, 30 September 2019 and 31 March 2020 are disclosed in Note 23.

 

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

 

The half year statement was approved by the Board on 25 November 2020 and is available from the Company's registered office at 5 Hanover Square, London, W1S 1HQ and on the Company's website at www.helical.co.uk.

 

 

 

On behalf of the Board

Tim Murphy
Finance Director

25 November 2020

 

 

Independent Review Report to the Members of Helical plc

 

Introduction

 

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2020 which comprises the Unaudited Consolidated Income Statement, Unaudited Consolidated Statement of Comprehensive Income, Unaudited Consolidated Balance Sheet, Unaudited Consolidated Cash Flow Statement and Unaudited Consolidated Statement of Changes in Equity, and related Notes 1 to 29. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

Directors' Responsibilities

 

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

 

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

 

Our Responsibility

 

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

 

Scope of Review

 

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

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2020 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. 

 

 

 

Use of Our Report

 

This report is made solely to the Company 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 issued by the Financial Reporting Council. Our work has been undertaken so that we might state to the Company those matters we are required to state to it 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, for our review work, for this report, or for the conclusions we have formed.

 

 

 

 

Deloitte LLP

Statutory Auditor

London, United Kingdom

25 November 2020

 

 

Unaudited Consolidated Income Statement

 

For the Half Year to 30 September 2020

 

  

Notes

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

Revenue

3

19,320

22,055

44,361

Net rental income

4

11,950

12,811

27,838

Development property profit

5

52

1,441

3,274

Share of results of joint ventures

13

(959)

7,982

13,396

Other operating income

 

-

44

88

Gross profit before net (loss)/gain on sale and revaluation of Investment properties

 

11,043

22,278

44,596

Loss on sale of Investment properties

6

(4)

(28)

(1,272)

Revaluation of Investment properties

12

(6,019)

9,442

38,351

Gross profit

 

5,020

31,692

81,675

Administrative expenses

7

(5,215)

(7,054)

(16,715)

Operating (loss)/profit

 

(195)

24,638

64,960

Finance costs

8

(7,236)

(8,315)

(16,100)

Finance income

 

20

1,311

1,345

Change in fair value of derivative financial instruments

20

(5,333)

(4,980)

(7,651)

Change in fair value of Convertible Bond

 

-

468

468

Foreign exchange gain

 

-

9

8

(Loss)/profit before tax

 

(12,744)

13,131

43,030

Tax on (loss)/profit on ordinary activities

9

1,983

898

(4,313)

(Loss)/profit for the period

 

(10,761)

14,029

38,717

 

 

 

 

 

(Loss)/earnings per share

11

 

 

 

Basic

 

(8.9)p

11.7p

32.3p

Diluted

 

(8.9)p

11.6p

31.7p

 

Unaudited Consolidated Statement of Comprehensive Income

 

For the Half Year to 30 September 2020

 

 

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

(Loss)/profit for the period

(10,761)

14,029

38,717

Exchange difference on retranslation of net investments in foreign operations

-

55

68

Total comprehensive (expense)/income for the period

(10,761)

14,084

38,785

 

 

 

Unaudited Consolidated Balance Sheet

 

At 30 September 2020

 

 

Notes

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Non-current assets

 

 

 

 

Investment properties

12

815,680

820,138

819,573

Owner occupied property, plant and equipment

 

5,724

6,394

6,007

Investment in joint ventures

13

69,607

78,073

80,818

Derivative financial instruments

20

58

319

86

 

 

891,069

904,924

906,484

Current assets

 

 

 

 

Land and developments

14

52

1,035

852

Corporation tax receivable

 

1,452

-

1,417

Trade and other receivables

15

45,447

36,539

40,382

Cash and cash equivalents

16

62,284

47,726

74,586

 

 

109,235

85,300

117,237

Total assets

 

1,000,304

990,224

1,023,721

Current liabilities

 

 

 

 

Trade and other payables

17

(32,808)

(52,539)

(45,771)

Lease liability

18

(622)

(599)

(611)

Corporation tax payable

 

-

(280)

-

Borrowings

19

-

-

(5,000)

 

 

(33,430)

(53,418)

(51,382)

Non-current liabilities

 

 

 

 

Borrowings

19

(354,545)

(340,603)

(343,184)

Derivative financial instruments

20

(15,760)

(8,017)

(10,455)

Lease liability

18

(7,250)

(7,872)

(7,563)

Trade and other payables

17

-

(590)

(590)

Deferred tax liability

9

(10,087)

(6,066)

(11,858)

 

 

(387,642)

(363,148)

(373,650)

Total liabilities

 

(421,072)

(416,566)

(425,032)

 

 

 

 

 

Net assets

 

579,232

573,658

598,689

 

 

 

 

 

Equity

 

 

 

 

Called-up share capital

21

1,478

1,465

1,465

Share premium account

 

107,990

103,462

103,522

Revaluation reserve

 

165,445

140,492

171,464

Capital redemption reserve

 

7,478

7,478

7,478

Own shares held

 

(1,542)

-

-

Other reserves

 

291

291

291

Retained earnings

 

298,092

320,470

314,469

Total equity

 

579,232

573,658

598,689

 

 

Unaudited Consolidated Cash Flow Statement

 

For the Half Year to 30 September 2020

 

 

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

Cash flows from operating activities

 

 

 

(Loss)/profit before tax

(12,744)

13,131

43,030

Adjustment for:

 

 

 

Depreciation

400

409

807

Revaluation deficit/(surplus) on Investment properties

6,019

(9,442)

(38,351)

Letting cost amortisation

4

-

-

Loss on sale of Investment properties

4

28

1,272

Profit on sale of plant and equipment

(14)

(11)

(11)

Net financing costs

7,216

7,004

14,755

Change in value of derivative financial instruments

5,333

4,980

7,651

Change in fair value of Convertible Bond

-

(468)

(468)

Share based payment charge

314

920

2,814

Share settled bonus

-

-

1,485

Share of results of joint ventures

959

(7,982)

(13,396)

Foreign exchange movement

-

55

67

Cash inflows from operations before changes in working capital

7,491

8,624

19,655

Change in trade and other receivables

1,935

16,394

12,499

Change in land, developments and trading properties

800

1,276

1,459

Change in trade and other payables

(2,837)

3,231

(3,890)

Cash inflows generated from operations

7,389

29,525

29,723

Finance costs

(6,609)

(12,525)

(19,630)

Finance income

20

6,680

6,717

Tax paid

(35)

(3,482)

(4,467)

 

(6,624)

(9,327)

(17,380)

Net cash generated from operating activities

765

20,198

12,343

Cash flows from investing activities

 

 

 

Additions to Investment property

(12,945)

(32,423)

(44,159)

Net (costs)/proceeds from sale of Investment property

(4)

(28)

40,260

Investments in joint ventures and subsidiaries

(7,014)

(46,748)

(50,749)

Proceeds from disposal of joint ventures

-

1,334

1,334

Dividends from joint ventures

10,267

-

6,670

Sale of plant and equipment

23

26

27

Purchase of leasehold improvements, plant and equipment

(125)

(7)

(18)

Net cash used by investing activities

(9,798)

(77,846)

(46,635)

Cash flows from financing activities

 

 

 

Borrowings drawn down

10,815

213,747

254,038

Borrowings repaid

(5,000)

(296,679)

(329,929)

Finance lease repayments

(301)

(290)

(588)

Shares issued

13

6

6

Purchase of own shares

(1,542)

-

-

Equity dividends paid

(7,254)

(8,980)

(12,219)

Net cash used by financing activities

(3,269)

(92,196)

(88,692)

Net decrease in cash and cash equivalents

(12,302)

(149,844)

(122,984)

Cash and cash equivalents at start of period

74,586

197,570

197,570

Cash and cash equivalents at end of period

62,284

47,726

74,586

 

 

 

Unaudited Consolidated Statement of Changes in Equity

 

At 30 September 2020

 

 

Share

capital

£000

Share

premium

£000

Revaluation

reserve

£000

Capital

redemption

reserve

£000

Own shares held £000

Other

reserves

£000

Retained earnings

£000

Total

£000

At 31 March 2019

1,459

101,304

131,050

7,478

-

291

325,843

567,425

Balances at 1 April 2019, as previously reported

1,459

101,304

131,050

7,478

-

291

325,843

567,425

Impact of transition to IFRS 16

-

-

-

-

-

-

(548)

(548)

Adjusted balances at 1 April 2019

1,459

101,304

131,050

7,478

-

291

325,295

566,877

Total comprehensive income

-

-

-

-

-

-

38,785

38,785

Revaluation surplus

-

-

38,351

-

-

-

(38,351)

-

Realised on disposals

-

-

2,063

-

-

-

(2,063)

-

Issued share capital

6

2,218

-

-

-

-

-

2,224

Performance Share Plan

-

-

-

-

-

-

2,814

2,814

Performance Share Plan - deferred tax

-

-

-

-

-

-

483

483

Share settled Performance Share Plan

-

-

-

-

-

-

(1,349)

(1,349)

Share settled bonus

-

-

-

-

-

-

1,074

1,074

Dividends paid

-

-

-

-

-

-

(12,219)

(12,219)

At 31 March 2020

1,465

103,522

171,464

7,478

-

291

314,469

598,689

Total comprehensive expense

-

-

-

-

-

-

(10,761)

(10,761)

Revaluation deficit

-

-

(6,019)

-

-

-

6,019

-

Issued share capital

13

4,468

-

-

-

-

-

4,481

Performance Share Plan

-

-

-

-

-

-

314

314

Performance Share Plan - deferred tax

-

-

-

-

-

-

(214)

(214)

Purchase of own shares

-

-

-

-

(1,542)

-

-

(1,542)

Share settled Performance Share Plan

-

-

-

-

-

-

(3,335)

(3,335)

Share settled bonus

-

-

-

-

-

-

(1,146)

(1,146)

Dividends paid

-

-

-

-

-

-

(7,254)

(7,254)

At 30 September 2020

1,478

107,990

165,445

7,478

(1,542)

291

298,092

579,232

                   

 

For a breakdown of Total comprehensive (expense)/income see the Unaudited Consolidated Statement of Comprehensive Income.

 

The adjustment to retained earnings of £314,000 (31 March 2020: £2,814,000) adds back the share based payments charge recognised in the Unaudited Consolidated Income Statement, in accordance with IFRS 2 Share Based Payments.

 

There were net transactions with owners of £8,696,000 (31 March 2020: £6,973,000) made up of the Performance Share Plan credit of £314,000 (31 March 2020: £2,814,000) and related deferred tax charge of £214,000 (31 March 2020: credit of £483,000), dividends paid of £7,254,000 (31 March 2020: £12,219,000), the issued share capital of £13,000 (31 March 2020: £6,000) and corresponding share premium of £4,468,000 (31 March 2020: £2,218,000), purchase of own shares of £1,542,000 (31 March 2020: £nil), share settled Performance Share Plan awards charge of £3,335,000 (31 March 2020: £1,349,000) and the share settled bonus awards charge of £1,146,000 (31 March 2020: credit of £1,074,000).

 

 

 

Share

capital

£000

Share

premium

£000

Revaluation

reserve

£000

Capital

redemption

reserve

£000

Other

reserves

£000

Retained earnings

£000

Total

£000

At 31 March 2019

1,459

101,304

131,050

7,478

291

325,843

567,425

Balances at 1 April 2019, as previously reported

1,459

101,304

131,050

7,478

291

325,843

567,425

Impact of transition to IFRS 16

-

-

-

-

-

(548)

(548)

Adjusted balances at 1 April 2019

1,459

101,304

131,050

7,478

291

325,295

566,877

Total comprehensive income

-

-

-

-

-

14,084

14,084

Revaluation surplus

-

-

9,442

-

-

(9,442)

-

Issued share capital

6

2,158

-

-

-

-

2,164

Performance Share Plan

-

-

-

-

-

920

920

Performance Share Plan - deferred tax

-

-

-

-

-

355

355

Share settled Performance Share Plan

-

-

-

-

-

(1,349)

(1,349)

Share settled bonus

-

-

-

-

-

(413)

(413)

Dividends paid

-

-

-

-

-

(8,980)

(8,980)

At 30 September 2019

1,465

103,462

140,492

7,478

291

320,470

573,658

 

The credit adjustment to retained earnings of £920,000 adds back the share based payments charge recognised in the Unaudited Consolidated Income Statement, in accordance with IFRS 2 Share Based Payments.

 

There were net transactions with owners of £7,303,000 made up of the Performance Share Plan credit of £920,000 and related deferred tax credit of £355,000, share settled Performance Share Plan charge of £1,349,000, share settled bonus awards charge of £413,000, dividends paid of £8,980,000, the issued share capital of £6,000 and corresponding share premium of £2,158,000.

 

 

Unaudited Notes to the Half Year Results

 

1. Financial Information

 

The financial information contained in this statement does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The full accounts for the year ended 31 March 2020, which were prepared under International Financial Reporting Standards as adopted by the European Union and which received an unqualified report from the Auditors, and did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006, have been filed with the Registrar of Companies.

 

These interim condensed unaudited consolidated financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 March 2020.

 

These interim condensed unaudited consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The same accounting policies and methods of computation are followed in the 30 September 2020 interim condensed unaudited consolidated financial statements as in the most recent annual financial statements.

 

Going Concern

 

The Directors have considered the appropriateness of adopting a going concern basis in preparing the condensed unaudited financial statements. Their assessment is based on forecasts for the next 12-month period, with the potential impact of Covid-19 being an area of focus and including severe but plausible downside scenarios on the principal risks and uncertainties.

The key assumptions used in the review are summarised below:

•    The Group's rental income receipts were modelled for each tenant on an individual basis;

•    Existing loan facilities remain available, but no new financing is arranged; and

•    Free cash is utilised to repay debt/cure bank facility covenants.

The results of this review demonstrated the following:

•    The Group has £323m of cash and undrawn bank facilities, including in joint ventures, at 30 September 2020 and there is no debt repayable within the forecast period;

•    The Group could withstand receiving no rental income during the going concern period (excluding the impact on income covenants);

•    The forecasts show that all bank facility financial covenants will be met throughout the review period, with headroom to withstand a 31% fall in rental income;

•    Whilst the Group has a WAULT of 5.8 years, in a downside scenario whereby all tenants with lease expiries or break options in the going concern period exercise their breaks or do not renew at the end of their lease, and with no vacant space let or re-let, the rental income covenants would be met throughout the review period;

•    Property values could fall by 44% before loan to value covenants come under pressure; and

•    Asset sales could be utilised to generate additional cash to repay debt, materially increasing covenant headroom.

 

Based on this analysis, the Directors have adopted a going concern basis in preparing the condensed unaudited financial statements for the period ended 30 September 2020.

 

 

Principal Risks and Uncertainties        

 

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

 

The Group considers its principal risks to be:

 

Strategic Risks - external risks that could prevent the Group delivering its strategy. These risks principally impact our decision to purchase or exit from a property asset.

 

Financial Risks - risks that could prevent the Group from funding its chosen strategy, both in the long and short term.

 

Operational Risks - internal risks that could prevent the Group from delivering its strategy.

 

Reputational Risks - risks that could affect the Group in all aspects of its strategy.

 

There have been no significant changes to these risks and further analysis is included within the Group's Annual Report and Accounts 2020. The risks associated with Covid-19 and disclosed in this Annual Report have been collated into a new Strategic Risk, "Risk of pandemic outbreak".

 

2. Revenue from Contracts with Customers

 

 

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

Development property income

1,251

3,080

3,849

Service charge income

4,649

4,422

8,790

Other revenue

-

 47

91

Total revenue from contracts with customers

5,900

7,549

12,730

 

The total revenue from contracts with customers is the revenue recognised in accordance with IFRS 15 Revenue from Contracts with Customers.

 

No impairment of contract assets was recognised in the half year to 30 September 2020 (half year to 30 September 2019: £nil, year to 31 March 2020: £nil).

 

 

3. Segmental Information

 

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

 

•    Investment properties, which are owned or leased by the Group for long-term income and for capital appreciation; and

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

 

Revenue

Investments

Half Year to 30.09.20

£000

Developments

Half Year to

30.09.20

£000

Total

Half Year to

30.09.20

£000

Investments

Half Year to 30.09.19

£000

Developments

Half Year to

30.09.19

£000

Total

Half Year to

30.09.19

£000

Rental income

13,420

-

13,420

14,506

-

14,506

Service charge income

4,649

-

4,649

4,422

-

4,422

Development property income

-

1,251

1,251

-

3,080

3,080

Other revenue

-

-

-

47

-

47

Revenue

18,069

1,251

19,320

18,975

3,080

22,055

 

Revenue

Investments Year to

31.03.20

£000

Developments

Year to

31.03.20

£000

Total

Year to

31.03.20

£000

Rental income

31,631

-

31,631

Service charge income

8,790

-

8,790

Development property income

-

3,849

3,849

Other revenue

91

-

91

Revenue

40,512

3,849

44,361

 

 

(Loss)/profit before tax

Developments

Half Year to

30.09.20

£000

Total

Half Year to

30.09.20

£000

Investments

Half Year to 30.09.19

£000

Developments

Half Year to

30.09.19

£000

Total

Half Year to

30.09.19

£000

Net rental income

11,950

-

11,950

12,811

-

12,811

Development property profit

-

52

52

-

1,441

1,441

Share of results of joint ventures

615

(1,574)

(959)

6,514

1,468

7,982

(Loss)/gain on sale and revaluation of Investment properties

(6,023)

-

(6,023)

9,414

-

9,414

 

6,542

(1,522)

5,020

28,739

2,909

31,648

Other operating income

 

 

-

 

 

44

Gross profit

 

 

5,020

 

 

31,692

Administrative expenses

 

 

(5,215)

 

 

(7,054)

Net finance costs

 

 

(7,216)

 

 

(7,004)

Change in fair value of derivative financial instruments

 

 

(5,333)

 

 

(4,980)

Change in fair value of Convertible Bond

 

 

-

 

 

468

Foreign exchange gain

 

 

-

 

 

9

(Loss)/profit before tax

 

 

(12,744)

 

 

13,131

               
 

 

Profit before tax

Investments

Year to

31.03.20

£000

Developments

Year to

31.03.20

£000

Total

Year to

31.03.20

£000

Net rental income

27,838

-

27,838

Development property profit

-

3,274

3,274

Share of results of joint ventures

11,880

1,516

13,396

Gain on sale and revaluation of Investment properties

37,079

-

37,079

 

76,797

4,790

81,587

Other operating income

 

 

88

Gross profit

 

 

81,675

Administrative expenses

 

 

(16,715)

Net finance costs

 

 

(14,755)

Change in fair value of derivative financial instruments

 

 

(7,651)

Change in fair value of Convertible Bond

 

 

468

Foreign exchange gain

 

 

8

Profit before tax

 

 

43,030

 

 

Net assets

Investments

at 30.09.20

£000

Developments

at 30.09.20

£000

Total

at 30.09.20

£000

Investments

at 30.09.19

£000

Developments

at 30.09.19

£000

Total

at 30.09.19

£000

Investment properties

815,680

-

815,680

820,138

-

820,138

Land and developments

-

52

52

-

1,035

1,035

Investment in joint ventures

63,390

6,217

69,607

31,739

46,334

78,073

 

879,070

6,269

885,339

851,877

47,369

899,246

Other assets

 

 

114,965

 

 

90,978

Total assets

 

 

1,000,304

 

 

990,224

Liabilities

 

 

(421,072)

 

 

(416,566)

Net assets

 

 

579,232

 

 

573,658

               

 

Net assets

 

Investments

at 31.03.20

£000

Developments

at 31.03.20

£000

Total

at 31.03.20

£000

Investment properties

819,573

-

819,573

Land and developments

-

852

852

Investment in joint ventures

73,643

7,175

80,818

 

893,216

8,027

901,243

Other assets

 

 

122,478

Total assets

 

 

1,023,721

Liabilities

 

 

(425,032)

Net assets

 

 

598,689

 

4. Net Rental Income

 

 

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

Gross rental income

13,420

14,506

31,631

Rents payable

(122)

42

(178)

Property overheads

(1,348)

(1,737)

(3,615)

Net rental income

11,950

12,811

27,838

 

 

5. Development Property Profit

 

 

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

Development property income

1,251

3,080

2,754

Cost of sales

(917)

(1,493)

(649)

Sales expenses

(1)

(20)

(29)

(Provision)/reversal of provision

(281)

(126)

1,198

Development property profit

52

1,441

3,274

 

6. Loss on Sale of Investment Properties

 

 

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

 2020

£000

Net (costs)/proceeds from the sale of Investment properties

(4)

(28)

40,260

Book value (Note 12)

-

-

(41,481)

Tenants' incentives on sold Investment properties

-

-

(51)

Loss on sale of Investment properties

(4)

(28)

(1,272)

 

7. Administrative Expenses

 

 

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

Administration costs

(4,803)

(5,324)

(10,524)

Performance related awards

(314)

(1,366)

(5,279)

National Insurance on performance related awards

(98)

(364)

(912)

Administrative expenses

(5,215)

(7,054)

(16,715)

 

8. Finance Costs

 

 

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

Interest payable on bank loans, bonds and overdrafts

(5,489)

(6,756)

(12,147)

Other interest payable and similar charges

(1,747)

(2,686)

(5,698)

Interest capitalised

-

1,127

1,745

Finance costs

(7,236)

(8,315)

(16,100)

 

 

 

9. Tax on (Loss)/Profit on Ordinary Activities

 

 

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

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

 

United Kingdom corporation tax at 19%

 

 

 

- Group corporation tax

-

(1,201)

(470)

- Adjustment in respect of prior periods

(1)

-

(19)

Current tax charge

(1)

(1,201)

(489)

 

 

 

 

Deferred tax

 

 

 

- Capital allowances

(720)

(576)

(879)

- Tax losses

1,442

147

(201)

- Unrealised chargeable gains

1,132

2,029

(4,691)

- Other temporary differences

130

499

1,947

Deferred tax credit/(charge)

1,984

2,099

(3,824)

Total tax credit/(charge) for period

1,983

898

(4,313)

 

Deferred tax

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Capital allowances

(4,862)

(3,839)

(4,142)

Tax losses

3,260

2,167

1,818

Unrealised chargeable gains

(12,718)

(7,131)

(13,850)

Other temporary differences

4,233

2,737

4,316

Deferred tax liability

(10,087)

(6,066)

(11,858)

 

Under IAS 12 Income Taxes, 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 £4,862,000 (net) would be released and further capital allowances of £83,483,000 (gross) would be available to reduce future tax liabilities.

 

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

 

10. Dividends

 

 

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

Attributable to equity share capital

 

 

 

Ordinary

 

 

 

- Interim paid 2.70p per share

-

-

3,239

- Prior period final paid 6.00p per share (2019: 7.50p)

7,254

8,980

8,980

 

7,254

8,980

12,219


The interim dividend of 2.70p (30 September 2019: 2.70p per share) was approved by the Board on 25 November 2020 and will be paid on 31 December 2020 to Shareholders on the register on 4 December 2020. This interim dividend, amounting to £3,274,000, has not been included as a liability as at 30 September 2020.

 

 

 

11. Earnings Per Share

 

The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. This is a different basis to the net asset per share calculations which are based on the number of shares at the period end.

 

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 share awards.

 

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

 

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

 

 

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

Ordinary shares in issue

121,266

119,957

119,978

Own shares held

(259)

-

-

Weighting adjustment

(563)

(237)

(133)

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

120,444

119,720

119,845

Weighted average ordinary shares issued on share settled bonuses

-

636

973

Weighted average ordinary shares to be issued under Performance Share Plan

-

868

1,385

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

120,444

121,224

122,203

 

 

£000

£000

£000

(Loss)/earnings used for calculation of basic and diluted earnings per share

(10,761)

14,029

38,717

Basic (loss)/earnings per share

(8.9)p

11.7p

32.3p

Diluted (loss)/earnings per share

(8.9)p

11.6p

31.7p

           

 

 

 

£000

£000

£000

(Loss)/earnings used for calculation of basic and diluted earnings per share

(10,761)

14,029

38,717

Net loss/(gain) on sale and revaluation of Investment properties

 

 

 

                                                                                                - subsidiaries

6,023

(9,414)

(37,079)

                                                                                                - joint ventures

(1,480)

(472)

(8,451)

Tax on profit on disposal of Investment properties

-

-

599

Tax on gain on settlement of derivative component of Convertible Bond

-

1,556

1,555

Loss/(gain) on movement in share of joint ventures

768

(2,404)

(275)

Fair value movement on derivative financial instruments           - subsidiaries

5,333

4,980

7,651

                                                                                                - joint ventures

-

34

39

Fair value movement on Convertible Bond

-

(468)

(468)

Profit on cancellation of derivative financial instruments

-

(218)

(233)

Expense on cancellation of loans

-

1,131

2,939

Deferred tax on adjusting items

(1,071)

(2,270)

4,088

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

(1,188)

6,484

9,082

 

 

 

 

EPRA (loss)/earnings per share

(1.0)p

5.4p

7.6p

         


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

 

 

12. Investment Properties

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Book value at 1 April

819,573

778,752

778,752

Additions at cost

2,130

31,944

43,951

Disposals

-

-

(41,481)

Letting cost amortisation

(4)

-

-

Revaluation (deficit)/surplus

(6,019)

9,442

38,351

As at period end

815,680

820,138

819,573

 

All properties are stated at market value as at 30 September 2020 and are valued by professionally qualified external valuers (Cushman & Wakefield LLP) in accordance with the Valuation - Professional Standards, published by the Royal Institution of Chartered Surveyors. The fair value of the Investment properties at 30 September 2020 is as follows:

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Book value

815,680

820,138

819,573

Lease incentives and costs included in trade and other receivables

18,874

17,130

19,463

Head leases capitalised

(2,154)

(2,168)

(2,161)

Fair value

832,400

835,100

836,875

 

Interest capitalised in respect of the refurbishment of Investment properties at 30 September 2020 amounted to £13,102,000 (30 September 2019: £12,484,000, 31 March 2020: £13,102,000). Interest capitalised during the period in respect of the refurbishment of Investment properties amounted to £nil (30 September 2019: £1,127,000, 31 March 2020: £1,745,000).

 

The historical cost of Investment property is £648,053,000 (30 September 2019: £676,356,000, 31 March 2020: £645,927,000).

 

 

 

13. Joint Ventures

 

Share of results of joint ventures

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

Revenue

23,252

6,746

32,162

Gross rental income

87

392

898

Property overheads

(125)

(162)

(298)

Net rental (expense)/income

(38)

230

600

Gain on revaluation of Investment properties

2,032

472

8,451

Loss on sale of Investment properties

(552)

-

-

Development property (loss)/profit

(504)

5,355

8,124

Provision against stock

-

(1,083)

(1,481)

Other operating expense

-

-

(21)

Gross profit

938

4,974

15,673

Administrative expenses

(292)

(335)

(596)

Operating profit

646

4,639

15,077

Finance costs

(641)

(595)

(871)

Finance income

4

41

54

Change in fair value of derivative financial instruments

-

(34)

(39)

Profit before tax

9

4,051

14,221

Tax

(200)

(31)

(2,658)

(Loss)/profit after tax

(191)

4,020

11,563

Reversal of One Creechurch Place loss1

-

224

224

Profit on sale of interest in One Creechurch Place

-

1,334

1,334

Adjustment for Barts Square economic interest2

(768)

2,404

275

Share of results of joint ventures

(959)

7,982

13,396

Investment in joint ventures

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Summarised balance sheets

 

 

 

Non-current assets

 

 

 

Investment properties

70,228

65,572

76,141

Owner occupied property, plant and equipment

24

111

41

Deferred tax

-

1,687

-

Derivative financial instruments

-

6

-

 

70,252

67,376

76,182

Current assets

 

 

 

Land and developments

19,184

53,188

34,164

Trade and other receivables

1,805

14,605

3,780

Cash and cash equivalents

9,163

3,551

7,821

 

30,152

71,344

45,765

Current liabilities

 

 

 

Trade and other payables

(13,105)

(12,376)

(7,162)

 

(13,105)

(12,376)

(7,162)

Non-current liabilities

 

 

 

Trade and other payables

(4,414)

(323)

(316)

Borrowings

(12,241)

(48,026)

(32,754)

Deferred tax

(1,130)

-

(976)

 

(17,785)

(48,349)

(34,046)

Net assets pre-adjustment

69,514

77,995

80,739

Acquisition costs

93

78

79

Investment in joint ventures

69,607

78,073

80,818


1 This adjustment has been made to add back the Group's share of the loss incurred in one of its joint ventures arising from finance and other costs in the period to ensure that the Group's interest is shown at its recoverable amount.

 

2 This adjustment reflects the impact of the consolidation of a joint venture at its economic interest of 47.0% (30 September 2019: 43.8%, 31 March 2020: 43.0%) rather than its actual ownership interest of 33.3%, following a return of equity during the period.

 

14. Land and Developments

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Development properties

52

1,035

852


The Directors' valuation of development stock shows a surplus of £578,000 (30 September 2019: £578,000, 31 March 2020: £578,000) above book value. This surplus has been included in the EPRA net asset value (Note 22).

 

No interest has been capitalised or included in land and developments.

 

15. Trade and Other Receivables

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Trade receivables

14,437

10,588

11,698

Other receivables

7,382

1,656

3,265

Prepayments

4,071

4,210

3,986

Accrued income

19,557

20,085

21,433

 

45,447

36,539

40,382

 

Included in accrued income are lease incentives of £18,874,000 (30 September 2019: £17,130,000, 31 March 2020: 19,463,000).

 

16. Cash and Cash Equivalents

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Cash held at managing agents

5,545

4,900

3,563

Restricted cash

12,909

8,330

7,177

Cash deposits

43,830

34,496

63,846

 

62,284

47,726

74,586

 

Restricted cash is made up of cash held by solicitors and cash in restricted accounts.

 

17.       Trade and Other Payables

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Trade payables

13,477 

20,200

28,378

Other payables

3,539

1,559

2,060

Accruals

8,393

24,355

9,277

Deferred income

7,399

6,425

6,056

Current trade and other payables

32,808

52,539

45,771

Accruals

-

590

590

Non-current trade and other payables

-

590

590

Total trade and other payables

32,808

53,129

46,361

 

 

 

18. Lease Liability

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Current lease liability

622

599

611

Non-current lease liability

7,250

7,872

7,563

 

Included within the lease liability are £622,000 (30 September 2019: £599,000, 31 March 2020: £611,000) of current and £5,060,000 (30 September 2019: £5,683,000, 31 March 2020: £5,374,000) of non-current lease liabilities which relate to the long leasehold of the Group's head office.

 

19. Borrowings

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Current borrowings

-

-

5,000

Borrowings repayable within:

 

 

 

- one to two years

-

-

-

- two to three years

48,085

-

-

- three to four years

226,361

31,930

37,190

- four to five years

80,099

216,591

305,994

- five to six years

-

92,082

-

Non-current borrowings

354,545

340,603

343,184

Total borrowings

354,545

340,603

348,184

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Total borrowings

354,545

340,603

348,184

Cash

(62,284)

(47,726)

(74,586)

Net borrowings

292,261

292,877

273,598

 

Net borrowings excludes the Group's share of borrowings in joint ventures of £12,241,000 (30 September 2019: £48,026,000, 31 March 2020: £32,754,000) and cash of £9,163,000 (30 September 2019: £3,551,000, 31 March 2020: £7,821,000). All borrowings in joint ventures are secured.

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Net assets

579,232

573,658

598,689

Gearing

51%

51%

46%

 

20. Derivative Financial Instruments

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Derivative financial instruments asset

58

319

86

Derivative financial instruments liability

(15,760)

(8,017)

(10,455)

 

A loss on the change in fair value of £5,333,000 has been recognised in the Unaudited Consolidated Income Statement (30 September 2019: £4,980,000, 31 March 2020: £7,651,000).

 

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.

 

21. Share Capital

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Authorised

39,577

39,577

39,577

 

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

 

Allotted, called up and fully paid:             

 

 

 

- 121,265,710 (30 September 2019: 119,956,767, 31 March 2020: 119,977,581) ordinary shares of 1p each

1,213

1,200

1,200

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

265

265

265

 

1,478

1,465

1,465

 

22. Net Assets Per Share

 

 

At

30 September 2020

£000

Number of shares

000

 

 

 

 

p

At

31 March 2020

£000

Number of shares

000

p

IFRS net assets

579,232

121,266

 

598,689

119,978

 

Adjustments:

 

 

 

 

 

 

- deferred shares

(265)

 

 

(265)

 

 

- own shares held

 

(437)

 

 

-

 

Basic net asset value

578,967

120,829

479

598,424

119,978

499

- share settled bonus

 

719

 

 

973

 

- dilutive effect of Performance Share Plan

 

537

 

 

1,306

 

Diluted net asset value

578,967

122,085

474

598,424

122,257

489

               

 

Adjustments:

 

 

 

 

 

 

- fair value of financial instruments

15,702

 

 

10,368

 

 

- deferred tax

15,381

 

 

15,668

 

 

- fair value of land and developments

578

 

 

578

 

 

- real estate transfer tax

60,867

 

 

61,607

 

 

 EPRA net reinstatement value

671,495

122,085

550

686,645

122,257

562

-  real estate transfer tax

(48,011)

 

 

(46,221)

 

 

-  deferred tax

(6,475)

 

 

-

 

 

 EPRA net tangible asset value

617,009

122,085

505

640,424

122,257

524

-  real estate transfer tax

(12,856)

 

 

(15,386)

 

 

-  deferred tax

6,475

 

 

-

 

 

 EPRA net asset value

610,628

122,085

500

625,038

122,257

511

 

 

 

 

At

30 September 2020

£000

Number of shares

000

 

 

 

p

At

31 March 2020

£000

Number of shares

000

p

Diluted net assets

578,967

122,085

474

598,424

122,257

489

 

Adjustments:

 

 

 

 

 

 

-  surplus on fair value of stock

578

 

 

578

 

 

-  fair value of fixed rate loan

(12,150)

 

 

(12,481)

 

 

 EPRA net disposal value/EPRA triple net asset value

567,395

122,085

465

586,521

122,257

480

 

 

 

 

 

At

30 September 2019

£000

 

Number of shares

000

p

IFRS net assets

 

 

 

573,658

119,957

 

Adjustments:

 

 

 

 

 

 

- deferred shares

 

 

 

(265)

 

 

Basic net asset value

 

 

 

573,393

119,957

478

- share settled bonus

 

 

 

 

636

 

- dilutive effect of Performance Share Plan

 

 

 

926

 

Diluted net asset value

 

 

 

573,393

121,519

472

 

Adjustments:

 

 

 

 

 

 

- fair value of financial instruments

 

 

 

7,689

 

 

- deferred tax

 

 

 

9,309

 

 

- fair value of land and developments

 

 

 

578

 

 

- real estate transfer tax

 

 

 

60,727

 

 

 EPRA net reinstatement value

 

 

 

651,696

121,519

536

-  real estate transfer tax

 

 

 

(47,153)

 

 

-  deferred tax

 

 

 

-

 

 

 EPRA net tangible asset value

 

 

 

604,543

121,519

497

-  real estate transfer tax

 

 

 

(13,574)

 

 

-  deferred tax

 

 

 

-

 

 

 EPRA net asset value

 

 

 

590,969

121,519

486

 

 

 

 

 

At

30 September 2019

£000

 

Number of shares

000

p

Diluted net assets

 

 

 

573,658

121,519

472

 

Adjustments:

 

 

 

 

 

 

-  deferred shares

 

 

 

(265)

 

 

-  surplus on fair value of stock

 

 

 

578

 

 

-  fair value of fixed rate loan

 

 

 

(7,282)

 

 

 EPRA net disposal value/EPRA triple net asset value

 

 

 

566,689

121,519

466

               

 

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.

 

The calculation of EPRA net disposal value and triple net asset value per share reflects the fair value of all the assets and liabilities of the Group at 30 September 2020. One of the loans held by the Group is at a fixed rate and therefore not at fair value. The adjustment of £12,150,000 (30 September 2019: £7,282,000, 31 March 2020: 12,481,000) is the increase from book to fair value.

 

23. Related Party Transactions

 

The following amounts were due from the Group's joint ventures:

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Charterhouse Place Ltd

7,000

9

-

Charterhouse Street Ltd (formerly ARE 1 Farringdon SARL)

-

370

200

Barts Square companies

86

31

61

King Street Developments (Hammersmith) Ltd

-

71

71

Old Street Holdings LP

3

3

3

Shirley Advance LLP

7

14

7

 

During the period, interest on bonds of £nil (30 September 2019: £745,000, 31 March 2020: £745,000) and a promote fee for development management services of £nil (30 September 2019: £305,000, 31 March 2020: £305,000) were charged by the Group to Creechurch Place Limited. A development management, accounting and corporate services fee of £25,000 (30 September 2019: £945,000, 31 March 2020: £1,119,000) was charged by the Group to the Barts Square companies. In addition, a development management, accounting and corporate services fee of £426,000 (30 September 2019: £19,000, 31 March 2020: £243,000) was charged by the Group to the Charterhouse Place Limited Group.

 

 

24. See-through Analysis

 

Helical holds a significant proportion of its property assets in joint ventures with partners that provide a significant equity contribution, whilst relying on the Group to provide asset management or development expertise. Accounting convention requires Helical to account under IFRS for its 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 its 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 is shown in the table below.

 

 

 

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

Gross rental income

- subsidiaries

13,420

14,506

31,631

 

- joint ventures

87

392

898

Total gross rental income

 

13,507

14,898

32,529

Rents payable

- subsidiaries

(122)

42

(178)

Property overheads

- subsidiaries

(1,348)

(1,737)

(3,615)

 

- joint ventures

(125)

(162)

(298)

See-through net rental income

 

11,912

13,041

28,438

           

 

See-through Net Development (Losses)/Profits

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

 

 

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

In parent and subsidiaries

333

1,567

2,076

In joint ventures

(504)

5,355

8,124

Total gross development (loss)/profit

(171)

6,922

10,200

(Provision)/reversal of provision against stock

- subsidiaries

(281)

(126)

1,198

 

- joint ventures

-

(1,083)

(1,481)

See-through development (losses)/profits

(452)

5,713

9,917

 

 

 

See-through Net (Loss)/Gain on Sale and Revaluation of Investment Properties

Helical's share of the net (loss)/gain on the sale and revaluation of Investment properties held in subsidiaries and joint ventures is shown in the table below.

 

 

 

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

Revaluation (deficit)/surplus on Investment properties

- subsidiaries

(6,019)

9,442

38,351

 

- joint ventures

2,032

472

8,451

Total revaluation (deficit)/surplus

 

(3,987)

9,914

46,802

Net loss on sale of Investment properties

- subsidiaries

(4)

(28)

(1,272)

 

- joint ventures

(552)

-

-

Total net loss on sale of Investment properties 

(556)

(28)

(1,272)

See-through net (loss)/gain on sale and revaluation of Investment properties

(4,543)

9,886

45,530

           

 

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 joint ventures is shown in the table below.

 

 

 

Half Year to

30 September 2020

£000

Half Year to

30 September 2019

£000

Year to

31 March

2020

£000

Interest payable on bank loans and overdrafts

- subsidiaries

5,489

6,756

12,147

 

- joint ventures

547

267

543

Total interest payable on bank loans and overdrafts

5,898

7,023

12,690

Other interest payable and similar charges

- subsidiaries

1,747

2,686

5,698

 

- joint ventures

94

328

328

Interest capitalised

- subsidiaries

-

(1,127)

(1,745)

Total finance costs

 

7,877

8,910

16,971

Interest receivable and similar income

- subsidiaries

(20)

(1,311)

(1,345)

 

- joint ventures

(4)

(41)

(54)

See-through net finance costs

 

7,853

7,558

15,572

 

See-through Property Portfolio

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

 

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Investment property fair value

- subsidiaries

832,400

835,100

836,875

 

- joint ventures

66,008

65,870

76,809

Total Investment property fair value

 

898,408

900,970

913,684

Land and development stock

- subsidiaries

52

1,035

852

 

- joint ventures

19,184

53,188

34,164

Total land and development stock

 

19,236

54,223

35,016

Land and development stock surplus

- subsidiaries

578

578

578

 

- joint ventures

-

-

-

Total land and development stock surpluses

 

578

578

578

Total land and development stock at fair value

 

19,814

54,801

35,594

See-through property portfolio

 

918,222

955,771

949,278

           

 

 

 

See-through Net Borrowings

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

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Gross borrowings less than one year

- subsidiaries

-

-

5,000

Gross borrowings more than one year

- subsidiaries

354,545

340,603

343,184

Total

 

354,545

340,603

348,184

Gross borrowings more than one year

- joint ventures

12,241

48,026

32,754

Total

 

12,241

48,026

32,754

Cash and cash equivalents

- subsidiaries

(62,284)

(47,726)

(74,586)

 

- joint ventures

(9,163)

(3,551)

(7,821)

See-through net borrowings

295,339

337,352

298,531

 

25. See-through Gearing and Loan to Value

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Property portfolio

918,222

955,771

949,278

Net borrowings

295,339

337,352

298,531

Net assets

579,232

573,658

598,689

See-through net gearing

51.0%

58.8%

49.9%

See-through loan to value

32.2%

35.3%

31.4%

 

26. Total Accounting Return

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Brought forward IFRS net assets

598,689

567,425

567,425

Carried forward IFRS net assets

579,232

573,658

598,689

(Decrease)/increase in IFRS net assets

(19,457)

6,233

31,264

Dividends paid

7,254

8,980

12,219

Total accounting return

(12,203)

15,213

43,483

Total accounting return percentage

(2.0)%

2.7%

7.7%

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

Brought forward EPRA net tangible assets

640,424

597,321

597,321

Carried forward EPRA net tangible assets

617,009

604,543

640,424

(Decrease)/increase in EPRA net tangible assets

(23,415)

7,222

43,103

Dividends paid

7,254

8,980

12,219

Total EPRA accounting return

(16,161)

16,202

55,322

Total EPRA accounting return percentage

(2.5)%

2.7%

9.3%

 

 

 

27. Total Property Return

 

 

At

30 September 2020

£000

At

30 September 2019

£000

At

31 March

2020

£000

See-through net rental income

11,912

13,041

28,438

See-through development (losses)/profits

(452)

5,731

9,917

See-through revaluation (deficit)/surplus

(3,987)

9,914

46,802

See-through net loss on sale of investment properties

(556)

(28)

(1,272)

Total property return

6,917

28,658

83,885

 

28. Capital Commitments

 

The Group has a commitment of £65,134,000 (30 September 2019: £27,188,000, 31 March 2020: £19,600,000) in relation to construction contracts which are due to be completed in the period to March 2023. Of the total, £8,242,000 relates to the Group's Investment property portfolio, £55,640,000 relates to developing 33 Charterhouse Street, London EC1 and £1,171,000 is in relation to the Group's residential scheme at Barts Square with a further £81,000 committed to the completion of 55 Bartholomew, London EC1.

 

29. Post Balance Sheet Events

 

On 19 November 2020 the Group exchanged contracts for the sale of three Manchester properties, The Tootal Buildings, 35 Dale Street and Fourways, for a net sale price of £114,800,000, marginally above 30 September 2020 and 31 March 2020 book values.

 

 

 

Appendix 1 - Glossary of Terms

 

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.

 

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.

 

EPRA earnings per share

Earnings per share adjusted to exclude gains/losses on sale and revaluation of Investment properties and their deferred tax adjustments, the tax on profit/loss on disposal of Investment properties, trading property profits/losses, movement in fair value of available-for-sale assets and fair value movements on derivative financial instruments, on an undiluted basis. Details of the method of calculation of the EPRA earnings per share are available from EPRA (see Note 11).

 

EPRA net assets per share

Diluted net asset value per share adjusted to exclude fair value surplus 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 (see Note 22).

 

EPRA net disposal value per share (effective from 1 January 2020)

Represent the Shareholders' value under a disposal scenario, where deferred tax, financial instruments and certain other adjustments are calculated to the full extent of their liability, net of any resulting tax (see Note 22).

 

EPRA net reinstatement value per share (effective from 1 January 2020)

Net asset value adjusted to reflect the value required to rebuild the entity and assuming that entities never sell assets. Assets and liabilities, such as fair value movements on financial derivatives, that are not expected to crystallise in normal circumstances and deferred taxes on property valuation surpluses are excluded (see Note 22).

 

EPRA net tangible assets per share (effective from 1 January 2020)

Assumes that entities buy and sell assets, thereby crystallising certain levels of unavoidable deferred tax, but excludes assets and liabilities, such as fair value movements on financial derivatives, that are not expected to crystallise in normal circumstances and deferred taxes on property valuation surpluses are excluded (see Note 22).

 

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 (see Note 22).

 

Estimated rental value (ERV)

The market rental value of lettable space as estimated by the Group's valuers at each Balance Sheet date.

 

Gearing

Group borrowings expressed as a percentage of net assets.

 

Initial yield

Annualised net passing rents on Investment properties as a percentage of their open market value.

 

Like-for-like valuation change

The valuation gain/loss, net of capital expenditure, on those properties held at both the previous and current reporting period end, as a proportion of the fair value of those properties at the beginning of the reporting period plus net capital expenditure.

 

MSCI IPD

MSCI produces independent benchmarks of property returns using its Investment Property Databank (IPD).

 

Net asset value per share (NAV)

Net assets divided by the number of ordinary shares at the Balance Sheet date (see Note 22).

 

Net gearing

Total borrowings less short-term deposits and cash as a percentage of net assets.

 

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/Group share

The consolidated Group and the Group's share in its joint ventures (see Note 24).

 

See-through net gearing

The see-through net borrowings expressed as a percentage of net assets (see Note 25).

 

Total Accounting Return

The growth in the net asset value of the Company plus dividends paid in the period, expressed as a percentage of net asset value at the start of the period (see Note 26).

 

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 (see Note 27).

 

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 first break, or lease expiry date, divided 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

 

 

 

 

 

 

 

 

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