Helical Bar PLC (HLCL) - Half Yearly Report RNS Number : 7484R Helical Bar PLC 22 November 2012 22 November 2012 H E L I C A L B A R P L C ("Helical"/"Company"/"Group") H a l f Y e a r R e s u l t s For the Six Months to 30 September 2012 Financial Highlights: § Profit before tax of £5.2m (2011: £4.1m) - up 27% § Group's share of net rental income of £12.2m (2011: £11.0m) - up 11% § Development profits of £4.7m (2011: £1.8m) - up 161% § Diluted EPRA earnings per share of 4.4p (2011: 4.1p) - up 7% § Diluted EPRA net assets per share at 252p (31 March 2012: 250p) § Group's share of property portfolio £582m (31 March 2012: £573m) § Ratio of net borrowings to property portfolio of 46% (31 March 2012: 49%) § Cash and unused bank facilities of over £85m § Reduction in effective rate of interest to 3.8% (31 March 2012: 4.2%) § Interim dividend increased to 1.85p per share (2011: 1.75p) - up 6% Operational Highlights: Development Programme · Conditional planning consent granted post the period end at Barts Square, London EC1, for a 425,000 sq ft mixed use scheme · Planning application submitted at Brickfields, White City, London W12 for a c. 1.5m sq ft mixed use scheme · Fulham Wharf, London SW6 sold during the period crystallising our additional development management fee · 74,000 sq ft under offer at 200 Aldersgate, London EC1 · Helical appointed as development partners to build a new 220,000 sq ft headquarters for Scottish Power in Glasgow · Sales of £24m of non-income producing development sites, including Milton retirement village site (£6.9m) and part of the Exeter retirement village site (£7.6m) Investment Portfolio · Investment portfolio valuationsup 0.1% including capex, sales and purchases (0.2% on a like-for-like basis) during the six months, comparing favourably to the IPD monthly index which fell 2.35% over the same period · Like for like rents up 0.9% (£249,000). Increase driven by new lettings (£885,000) and rental increases (£409,000), more than compensating for losses from administrations and breaks / expiries · 32 new leases signed in the period, with 68.3% of rent retained at lease expiries and 78.4% retained at breaks · Vacancy by ERV fell to 10.4% from 11.5% in March 2012 Commenting on the results, Michael Slade, Chief Executive said: "Returns are hard to find in a market where only a few asset classes in very specific locations show any rental or capital growth. We see three ways to make profits for our business: by buying well, proactively managing surplus cash flow and creating value through repositioning and development. Our focus remains very much on those three areas. "Overseas equity continues to drive the prime end of the investment market which may, in time, become over-bought. We anticipate a move to more investment in good quality secondary property. Development will remain the realm of the experienced and well-funded and we, with our partners, feel particularly well placed to capitalise on these opportunities." For further information, please contact: Helical Bar plc 020 7629 0113 Michael Slade (Chief Executive) Tim Murphy (Finance Director) Address: 11-15 Farm Street, London W1J 5RS Fax: 020 7408 1666 Website: www.helical.co.uk FTI Consulting 020 7831 3113 Stephanie Highett/Dido Laurimore/Daniel O'Donnell FINANCIAL HIGHLIGHTS Half Year To Half Year To Year To 30 September 30 September 31 March 2012 2011 Adjusted Income Statement 2012 £m £m Notes £m Group's share of net rental income 1 12.2 11.0 22.9 Development property profits 4.7 1.8 0.7 Group's share of gain on sale and 2 0.5 1.2 3.9 revaluation Total property return 17.4 14.0 27.5 Profit before tax 5.2 4.1 7.4 EPRA earnings 5.2 4.7 4.0 Earnings Per Share and Dividends pence pence pence Basic earnings per share 3 3.5 3.4 6.5 Diluted earnings per share 3 3.5 3.4 6.5 EPRA earnings per share 3 4.4 4.1 3.4 Dividends per share paid in period 3.40 3.15 4.90 At At 30 September 31 March 2012 2012 £m Adjusted Balance Sheet £m 326.6 Value of investment portfolio in 326.9 subsidiaries 122.2 4 132.8 Trading and development stock at 132.8 directors' valuation in subsidiaries 4 112.9 581.6 Group's share of property portfolio 572.6 in joint ventures and held for sale investments 216.8 231.3 49.4 Net debt in subsidiaries 6 51.1 266.2 Group's share of net debt of joint 282.4 ventures Group's share of total net borrowings 254.1 253.7 Net assets 252p 250p 5 Diluted EPRA Net Asset Value per 46% share 49% 105% 111% Ratio of net borrowings to fair value 6 of property portfolio Net gearing Notes 1. Includes Group's share of net rental income of joint ventures of £2.4m (2011: £2.6m). 2. The Group's share of the results of entities controlled equally by the Group and its joint venture partner. 3. Calculated in accordance with IAS 33 and the best practice recommendations of the European Public Real Estate Association ("EPRA"). See note 9 of Half Year Statement. 4. Includes the trading and development stock surplus of £36.4m (31 March 2012: £34.5m). See notes 11 and 12 of Half Year Statement. 5. Calculated in accordance with the best practice recommendations of EPRA. See note 21 of Half Year Statement. 6. Net gearing is the ratio of net borrowings, including the Group's share of net borrowings of joint ventures and held for sale investments, to net assets. CHAIRMAN'S STATEMENT Review of the Half Year The results for the six months to 30 September 2012 showed a continued improvement in profits as net rental income from the investment portfolio and increased development profits contributed to a pre-tax profit of £5.2m (2011: £4.1m) and EPRA earnings per share of 4.4p (2011: 4.1p). Asset management initiatives helped to maintain investment values, while progress on the development programme allowed the Group to add to its surplus on the valuation of trading and development stock. These results increase the Group's EPRA net asset value per share to 252p (31 March 2012: 250p) and have enabled the Board to approve an increased interim dividend of 1.85p per share (2011: 1.75p), the first increase at the half year since 2007, reinforcing the Board's commitment to a progressive dividend policy. Outlook I am pleased that Helical has had a good start to the current financial year and it is gratifying to see profits beginning to flow from our development pipeline after several years spent identifying sites and working up schemes. With the sound financial base of a growing surplus of rents over finance and administration costs, these development profits, in many cases generated with negligible capital employed by Helical, will enable the Company to expand its investment portfolio and increase returns to shareholders. The focus on developments in Central and West London in schemes where equity requirements are kept to a minimum enable a company of Helical's size to increase its exposure to a wider range of opportunities, in joint venture with larger financial institutions, than would otherwise be the case. With a backdrop of continued economic uncertainty and political turmoil in Europe and the Middle East, it is understandable that London continues to be seen as a 'safe haven' for investors' money. Helical's development programme is primarily targeted at office and residential schemes in the capital and these schemes, together with the food store and retirement village programmes, hold much promise for a profitable future for Helical. Board Changes During the half year there have been several changes to the Board of Helical Bar plc. As noted in the 2012 Report and Accounts, Giles Weaver, Antony Beevor and Wilf Weeks stepped down from the Board at the 2012 Annual General Meeting. On behalf of the remaining Board members, I would like to thank all three for their contribution to the success of the Company. In particular, as Chairman, Giles has been a firm hand on the tiller for many years providing sound guidance and assistance to the Executive Board and I look forward to making a similar contribution in my time as Chairman. I welcome to the Board, as non-executive directors, Richard Gillingwater, who has taken on the role of Senior Independent Director, and Richard Grant, who is the new Chairman of the Audit Committee. I am confident the Company, and its shareholders, will benefit from the considerable experience and fresh perspective the renewed non-executive team will bring to Helical. Finally, I welcome the appointment of Tim Murphy as my successor as Finance Director of the Company. Nigel McNair Scott Chairman 22 November 2012 CHIEF EXECUTIVE'S STATEMENT Helical's Strategy Helical Bar plc is a property investment and development company whose objective is to maximise returns to shareholders through income returns, development and trading profits and capital growth. The Group's strategy to achieve these returns is: § To maintain and expand our investment portfolio, providing a blend of high yielding retail and office property which offers considerable opportunity to increase income and enhance capital values through proactive asset management and skilful stock selection; § To have the majority of our gross assets in the investment portfolio creating positive net cash flow for the business; § To carry out developments (mainly London based), whether new build or refurbishment, creating value through land assembly, planning and implementation in the office, residential, mixed use and retail sectors to maximise returns by minimising the use of equity in development situations; § To carry out food store led / pre-let regional retail developments; and § To divest itself of non-core assets i.e. overseas properties. Our Market Returns are hard to find in a market where only a few asset classes in very specific locations show any rental or capital growth. We see three ways to make profits for our business: by buying well, proactively managing surplus cash flow and creating value through repositioning and development. Our focus remains very much on those three areas. Overseas equity continues to drive the prime end of the investment market which may, in time, become over-bought. We anticipate a move to more investment in good quality secondary property. Development will remain the realm of the experienced and well-funded and we, with our partners, feel particularly well placed to capitalise on these opportunities. Helical's Progress Helical has historically been renowned for maximising performance, "punching above its weight" by working off a very small equity base and carrying out its development work either on a forward funded basis with UK and overseas funds or in partnership with financial institutions. Having had a flat five years working through our portfolio during the most challenging market conditions, we now look forward to our development portfolio coming to fruition and enhancing shareholder returns. We are happily concentrating our development efforts in those areas and sectors where we see both capital growth and a continuing demand from both occupiers and co-investors. Mindful of the slowdown within the banking industry which has impacted their take-up of space within the City we are pleased to control a site in Mitre Square, in the heart of the insurance market. We are delighted that the City resolved this week to grant planning consent for our Barts Square scheme, which has an office and residential provision of c. 450,000 sq ft. This will allow us to take forward the scheme at the end of 2014, once vacant possession of the first few buildings is achieved. Helical Retail, after five years of relative inactivity due to a dead marketplace, is now engaged in some seven projects in the Midlands, East Midlands and the South East, acquiring sites by way of option or exclusivity arrangements, pre-letting to food-stores and pre-funding with major UK institutions. Having successfully finished our development management role on behalf of Sainsbury's at Fulham Wharf, we continue in our joint venture with Grainger plc to redevelop around Hammersmith Town Hall where we anticipate gaining approval for a modified scheme in mid 2013. At Brickfields, White City, in joint venture with Aviva, we anticipate receipt of planning consent for our 1.5m sq ft scheme prior to our year end. Each of the above projects should, on completion, have a significant effect on our balance sheet and lead to a pipeline of future schemes. Summary All of the above are made possible by our excellent relationships with our bankers and the sizeable cash flow we enjoy from our acquisition of carefully chosen investment stock. Continuing to find a suitable safe haven in multi-let assets yielding a substantial margin over fixed borrowing costs remains challenging as a higher yield attracts higher risks. As we reap the cash rewards of the development projects, we will continue our current trend of investing in Central London, in particular in multi-let offices in the villages around the centre which demonstrate the potential for both income and capital growth. Michael Slade Chief Executive 22 November 2012 Financial Review Review of the Half Year Net rents from the Company's property portfolio increased by 11% from £11.0m to £12.2m, comprising £9.8m (2011: £8.4m) from wholly owned assets and £2.4m (2011: £2.6m) from assets held in joint venture. The sale of the site at Fulham Wharf enabled the Company to recognise further profits arising out of its development management agreement with Sainsbury's. Together with continued development profits from the retirement village scheme at Bramshott Place, Liphook, this increased the Company's net development profits in the half year from £1.8m to £4.7m. Administration costs, before performance related awards, increased to £4.2m (2011: £3.6m). Net finance costs rose from £3.3m to £4.8m reflecting an increase in borrowings from a larger investment portfolio, increased refinancing costs and a lower level of capitalised interest compared to the corresponding period last year. The decline in medium and long term rates since the year end contributed a £0.7m (2011: £1.4m) loss when comparing the fair value of the Company's derivative financial investments to their book value. Exchange rate movements on the Company's share of the assets and liabilities relating to its Polish developments generated a loss of £0.7m (2011: gain of £0.3m). The investment portfolio rose 0.1% including capex, sales and purchases (31 March 2012: 0.7%), reflected as a gain on revaluation of £0.7m (31 March 2012: £3.7m) and 0.2% on a like-for-like basis. A loss on sale of investment properties of £0.2m (31 March 2012: £0.4m) primarily reflects the transaction costs of the sales. The net result for the half year was a pre-tax profit of £5.2m compared to a profit of £4.1m in the corresponding period last year. This profit resulted in a diluted EPRA earnings per share of 4.4p (2011: 4.1p). The Directors have declared an interim dividend of 1.85p (2011: 1.75p) an increase of 5.7%. This dividend will be paid on 28 December 2012 to shareholders on the register on 30 November 2012. EPRA earnings of £5.2m added 4.4p to the EPRA net assets per share which, when added to the gain on sale and revaluation of the investment portfolio and the increase in the surplus on the directors' valuation of trading and development stock, increased EPRA net assets per share to 255p. However, the dividend paid in the half year of 3.40p reduced this to 252p. Debt and Bank Facilities Since 31 March 2012, Helical has continued to release cash and repay bank debt from non-income producing assets, receiving £24m from sales, with a further £7m of sales either agreed or in solicitors' hands. In total £16m of debt has been repaid with new loans of £6m drawn down during the period. At 30 September 2012 the Group had net borrowings of £266.2m (31 March 2012: £282.4m) and gross property values of £581.6m (31 March 2012: £572.6m). These net borrowings and property values include the Group's share of the properties and borrowings held in joint ventures. The ratio of net borrowings to the value of the property portfolio (including the surplus on directors' valuation of stock) was 46% (31 March 2012: 49%). Net debt to equity gearing at 30 September 2012 was 105% (31 March 2012: 111%). Included within borrowings at 30 September 2012, Helical had £81m of debt due for repayment within one year. Of this, terms have been agreed to extend £70m for an average of four years, with the remainder to be repaid upon sale of properties. At 30 September 2012, the Group's share of fixed rate borrowings was £139.1m (31 March 2012: £138.3m) with an effective rate of 4.4% (31 March 2012: 4.9%) and an average maturity of 2.6 years (31 March 2012: 2.4 years). The Group's share of floating rate borrowings was £181.8m (31 March 2012: £183.9m) with an effective interest rate of 3.3% (31 March 2012: 3.6%). The Group's share of interest rate caps at 30 September 2012 was £102.9m at an average rate of 4.1% (31 March 2012 £144.2m at 4.6%). Overall, the Group's share of borrowings of £320.9m at 30 September 2012 had an effective rate of interest of 3.8% (31 March 2012: 4.2% on £322.2m) and an average maturity of 2.5 years (31 March 2012: 2.8 years). Since the year end the Group has taken advantage of the low interest rate environment to acquire a £75m interest rate swap at 2%, effective from January 2015 to January 2020. The acquisition of this swap will allow the Group to continue to protect itself from rises in interest rates during that period. Tim Murphy Finance Director 22 November 2012 PROPERTY PORTFOLIO A complete list of the Group's ongoing projects is set out in the tables at the end of this Half Year Statement but a summary of the more significant matters that have progressed since 31 March 2012 follows. The table below shows how we invest our capital. London South In Out of Change Mixed Retirement March Offices East Town Town Poland Industrial of Use Use Villages TOTAL 2012 Offices Retail Retail Investment 22.0% 1.5% 41.0% 3.0% - 3.0% - - 1.0% 71.5% 73.0% Trading and 0.5% 2.0% 2.5% 0.5% 10.5% 0.5% 1.0% 1.0% 10.0% 28.5% 27.0% Development TOTAL 22.5% 3.5% 43.5% 3.5% 10.5% 3.5% 1.0% 1.0% 11.0% 100.0% 100.0% Further portfolio statistics are included in the appendices to this statement. Development Programme Central London Barts Square, London EC1 (www.bartssquare.com) - a 452,000 sq ft new mixed use development In joint venture with The Baupost Group LLC we own the freehold interest in land and buildings at this location adjacent to the new Barts Hospital and close to a major intersection of Crossrail. The buildings are currently let to the NHS for c. £3.5m per annum on leases expiring in 2014 and 2016. In February 2012, we submitted a planning application for a new urban mixed use quarter integrating this historic location into a high quality scheme comprising c. 226,000 sq ft of offices, 206,000 sq ft of residential and 24,000 sq ft of retail/restaurant use. In November 2012, the City resolved to grant planning permission for the scheme. Work will commence on the first phase when vacant possession is achieved at the end of 2014. 200 Aldersgate Street, London EC1 (www.200aldersgate.com) - a 370,000 sq ft office refurbishment Appointed under an asset and development management agreement by Deutsche Pfandbriefbank, we have refreshed and re-clad parts of the building, creating a 'vertical village' for office users. We have let 112,000 sq ft of office space and currently have 73,000 sq ft under offer. In addition, 35,000 sq ft has been let to Virgin Active. Upon completion of a successful letting programme and a subsequent sale of the building, we will receive a development management profit share to supplement the annual fee we currently receive. Mitre Square, London EC3 (www.mitresquareec3.com) - a 276,000 sq ft new office development Helical has contracted to purchase two adjoining sites from the City of London and SFL2 Limited (previously Ansbacher) on which it intends to construct a 276,000 sq ft office development scheme. Construction is ready to commence when a forward funding or substantial pre-let is agreed. West London Brickfields, White City, London W12 (www.brickfieldsw12.com) - a c. 1,550,000 sq ft new mixed use development In joint venture with Aviva we own a c. 10 acre site adjacent to White City underground station and just north of the Westfield London Shopping Centre, Shepherds Bush. An outline planning application was submitted for this scheme in July 2012 and we anticipate a Planning Committee hearing at the end of 2012 or early 2013. The scheme comprises 1,250,000 sq ft of residential (c. 1,150 units), 210,000 sq ft of offices and c. 60,000 sq ft of retail, leisure and community uses. Assuming planning consent is granted, we hope to be in a position to make a start on site at the end of 2013. Fulham Wharf, London SW6 At Sands End, Fulham Wharf, on behalf of landowner Sainsbury's, we secured planning permission for a new 100,000 sq ft food store, together with 463 residential units (590,000 sq ft) and 11,000 sq ft of restaurant/retail/community use. In June 2012 the site was sold to housebuilder Barratts, in a joint venture with housing association London & Quadrant, and construction of the first phase, consisting of the food store and 267 residential units has commenced. Helical received a fee of £1.5m in 2011 for obtaining planning permission for the scheme and has recognised a profit share from the sale of the site and will receive the cash as phased payments are made to Sainsbury's. In accordance with the Group's income recognition policies and IFRS, the Group has recognised this additional income in these accounts. King Street, Hammersmith, London W6 At King Street, Hammersmith we have a development agreement with the London Borough of Hammersmith & Fulham, in partnership with residential specialist Grainger plc, for the regeneration of King Street, Hammersmith. A resolution to grant planning consent was obtained in November 2011 for new council offices, a food store, restaurants and 300 homes around a new public square. This scheme was not supported by the Mayor and hence we are working with the Borough on a new brief. Public consultations on the new design ideas are to commence shortly with an application being submitted during 2013. Scotland Scottish Power Headquarters, Glasgow Helical has been appointed, alongside its joint venture partners Dawn Group, by Scottish Power to work as development partners on Scottish Power's new 220,000 sq ft headquarters on St Vincent Street in central Glasgow. It is anticipated that a planning application will be submitted in December 2012 with construction expected to commence in 2013. Retail Good progress is being made in securing a number of potential food store and non-food retail sites by way of options or conditional contracts, with a view to satisfying specific retailers' store requirements. New opportunities have been secured in Evesham, Truro, Birmingham and Nottingham to supplement the existing schemes which are progressing at:- Parkgate, Shirley, West Midlands The mixed use regeneration project is now in the construction phase and completion is on track for April 2014. Anchored by an 85,000 sq ft Asda, discussions are now actively underway with a number of non-food retailers and a mainstream housebuilder as a partner for the residential element of the scheme. Tyseley, Birmingham An outline planning consent was secured in the summer and the scheme is now being amended to reflect the requirements of the 68,000 sq ft anchor Asda store and the 70,000 sq ft of open A1 non-food space. A detailed planning application will be submitted in spring 2013. Cortonwood An outline planning application has recently been submitted for a 96,000 sq ft open A1 retail park, which will serve as an extension to the very successful Cortonwood Retail Park.A planning decision is anticipated in spring 2013. The conditional purchase of the site is then subject to pre-lettings of a percentage of the retail space. Poland Europa Centralna, Gliwice - A 720,000 sq ft new retail development In joint venture with a client of Standard Life, we will complete this retail park and shopping centre comprising 720,000 sq ft of retail space by the end of 2012. The scheme is over 70% pre-let to Tesco, Castorama and others and will open in early spring 2013. We continue to work with our joint venture partners to let the remaining space and will sell our remaining interest in the scheme to Standard Life's client two years after its completion. Park Handlowy Myln, Wroclaw - A 103,000 sq ft new retail development This out of town retail development was completed in 2008 and is fully let to a number of domestic and international retailers. The scheme has been marketed for sale and discussions are at an advanced stage with a purchaser and we hope to complete a sale by the end of 2012. Retirement Villages A retirement village is a private residential community in which active over-55's are able to live independently in retirement. Residents have typically down-sized from a larger family home into a cottage or apartment with no maintenance or security issues. With access to a central clubhouse containing a bar and restaurant facilities and health and fitness rooms and surrounded by maintained grounds, this retirement option is proving increasingly popular. Bramshott Place, Liphook, Hampshire - 151 cottages and apartments Bramshott Place is a retirement village located adjacent to the A3 and Liphook in Hampshire. The development was started in 2007 and, built in phases, has now been completed. To date we have sold 104 units with reservations on a further 15 units. Durrants Village, Faygate, Horsham - 171 cottages and apartments Durrants Village is a retirement village located near Horsham in West Sussex. Construction of the first phase of 36 units has started and we have reservations on eight of these units with a further 14 'up-field' reservations on future phases. Maudslay Park, Great Alne, Warwickshire Maudslay Park, Great Alne is a retirement village located c. 11 miles north-west of Stratford-upon-Avon in Warwickshire. Outline planning permission was granted in 2011 for a retirement village of 132 units. Demolition of the existing buildings on site is starting in December 2012 with construction due to commence in summer 2013. St Loye's College, Exeter St Loye's College is a retirement village site located on the outskirts of Exeter. A resolution to grant planning permission for a retirement village was granted in 2009 and in 2011 we received planning consent for 63 open market housing units on part of the site. This part was sold in August 2012 to Linden Homes and a retirement village of c. 164 units is planned for the remaining site, with construction due to start in early 2013. Ely Road, Milton, Cambridge We acquired this site in 2006 and obtained an amended planning consent for 89 open market housing units in 2011. The site was sold in September 2012 to Bellway Homes for its book value of £6.9m. Investment Portfolio There was a valuation increase of 0.1% in the six months to September including capex, sales and purchases (0.2% on a like-for-like basis) which compares favourably to the IPD monthly index which fell 2.35% over the same period. The yields on the investment portfolio as at 30 September 2012 were as follows: Portfolio Initial Reversionary Yield on letting Equivalent Weighting Yield Yield voids Yield (AiA) % % % % % Industrial 4.1 8.4 10.3 10.0 9.5 London Offices 30.9 5.5 8.3 7.3 7.7 South East Offices 2.0 8.3 8.5 8.3 8.6 Retail - in town 57.5 7.3 8.2 7.8 7.8 Retail - out of town 3.8 5.9 6.6 6.0 6.6 Other 1.7 n/a n/a n/a n/a Total 100.0 6.9 8.3 7.7 7.8 Note: Includes our share of Clyde Shopping Centre. Yield calculations exclude Barts (Barts initial yield is 5.3%).Valuation movements include Barts. Sales We have continued to make good progress selling non-income producing properties. Sales totalled £28.7m of which £24.8m was non-income producing. The sales included the retirement village site at Milton (£6.9m) and part of the retirement village site at Exeter (£7.6m), as well as £5.6m of sales of completed units at Bramshott Place, Liphook. Merlin Park, Manchester, a 62,000 sq ft fully let industrial unit, was sold for £3.6m. Acquisitions There have been no new acquisitions in the period. Asset Management We completed 32 new lettings, increasing our contracted income by £885,000, and have completed 27 lease renewals, securing a further £778,000 of annual rent (an increase of £75,000 pa). We also secured £334,000 of rental uplifts through rent reviews and final uplifts. This was offset by the loss of 51 tenants during the six months due to lease expiries, breaks or tenants falling into administration, resulting in a reduction of £1,045,000 to our annualised income. The loss solely attributable to administrations totalled £468,000. Overall our portfolio's annual income increased by £249,000. Principal investment properties: During the period from December 2009 to October 2011 we acquired interests in four retail investment assets, to add to our existing core holding at the Morgan Quarter, Cardiff. These assets were bought as they provided a good yield whilst offering a number of opportunities to use our asset management skills to deliver income growth in the near term and capital appreciation in the longer term. Retail Clyde Shopping Centre, Clydebank, Scotland The Clyde Shopping Centre is the dominant retail location in Clydebank and the north west quarter of Glasgow. The centre comprises over 625,000 sq ft of net retail space with six anchor stores, including Asda, Primark, BHS, Dunnes, Boots and Argos, over 120 shops, cafes and parking for c. 2,000 cars. The centre was originally opened in 1978 and subsequent phases were built in 1980, 1987 and 2003. Acquired in December 2009 for £69m, reflecting an initial yield of 8.3%, this long leasehold interest was acquired in joint venture with Prime Commercial Properties with Helical owning a 60% economic interest. Since acquisition, new leases have been signed with Poundworld, JD Sports, Costa, Bank, Claire's Accessories, Watt Brothers, Trespass, The Post Office, Greggs and Argos as well as many other smaller retailers. Net of head rents, rental income has moved from £5.8m at acquisition to £6.4m once rent free periods expire. The Morgan Quarter, Cardiff The Morgan Quarter is a prime retail freehold investment asset comprising 220,000 sq ft. The asset was acquired as the former David Morgan Department Store in 2005, refurbished in 2006/7 and subsequently let to TK Maxx, Urban Outfitters, Jack Wills, White Stuff, Joules, Fred Perry and Dr Martens amongst other retailers. Alongside the main retail units are two arcades; the Royal and Morgan Arcades which are multi-tenanted and provide a number of asset management opportunities. With current contracted rent of £3.6m and an ERV of £4.3m, there is a good opportunity for rental growth in the medium term. Corby Town Centre, Corby Corby Town Centre is a freehold investment asset comprising over 700,000 sq ft of primarily retail space including the Oasis Retail Park, Willow Place and Corporation Street. We acquired this asset in October 2011 for c. £70m, reflecting an initial yield of 8.0%. In the 12 months since acquisition we have concluded 10 new lettings including Greenwoods, Grace & Co, Coral, Henderson Connellan & Clearkut and completed 22 lease renewals. We have removed canopies and installed new street lighting to Corporation Street, opened up Market Walk by removing concrete bridge links and removing the redundant bus station roof, with new lighting to be installed shortly. We have secured planning permission for the relocation of the market back to Corporation Street with new stalls under construction. We have also sold Deene House for £1.5m (representing a 4.9% yield). The Guineas, Newmarket In December 2010 we purchased The Guineas, Newmarket, a regional shopping centre, at an initial yield of c. 8%. Acquired from administrators, this 142,000 sq ft shopping centre is let to Marks & Spencer, Argos, Poundland, Superdrug and others. A minor refurbishment has recently been completed. Upon conclusion of deals in solicitors' hands we will have only two vacant retail units. Idlewells Shopping Centre, Sutton-in-Ashfield In January 2011 we purchased the Idlewells Shopping Centre, Sutton-in-Ashfield for c. £16m, at an initial yield of c. 8.5%. This 143,000 sq ft shopping centre is let to New Look, Argos, B+M Bargains and others. The centre is fully let and four lease renewals have been concluded in the last six months. Offices Shepherds Building, Shepherds Bush, London W14 Shepherds Building is a 151,000 sq ft refurbished office block let to 63 tenants with less than 500 sq ft vacant. The occupiers are mainly media related businesses including Endemol, Crow TV, Fox and others and the average rent is £23.50 psf. Contracted rents are c. £3.6m and the freehold interest is valued at an initial yield of 7%. Silverthorne Road, Battersea, London SW8 Acquired with vacant possession in 2005, we refurbished the existing building, Battersea 1, to create a multi-let TV production and office hub of c. 56,000 sq ft. In 2007-2009 we obtained planning consent and built Battersea 2, a 51,000 sq ft new office building. This building is now c. 62% let with interest in the remaining space. Contracted rents for the two buildings are c. £1.5m and, once fully let, should yield in excess of 8%. Broadway House, Hammersmith, London W6 Broadway House, Hammersmith was bought for c. £14m from receivers in January 2012, reflecting a net initial yield of 5.7% and a targeted reversionary yield of c. 8.7%. This 35,000 sq ft multi-let investment has retail on the ground floor with four floors of offices above. The retail is let to Dollond & Aitchison, Lloyds TSB, Café Nero, Ryman and Ladbrokes with two floors above let to Pakistan International Airlines and Kaplan Financial. The two remaining office floors have been refurbished and are being actively marketed, with interest being shown by a number of potential tenants. Current contracted rents are c. £0.9m and the freehold interest is valued at an initial yield of 5.4%. Independent review report to the members of Helical Bar plc Introduction We have reviewed the condensed set of financial statements in the half-yearly financial report of Helical Bar plc for the six months ended 30 September 2012 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated cash flow statement, the consolidated statement of changes in equity, and the related notes. We have read the other information contained in the half yearly financial report: Chairman's Statement, Chief Executive's Statement, Financial Highlights, Financial Review and Property Portfolio and have considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the company's members, as a body, in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company's members those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our review work, for this report, or for the conclusion we have formed. 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 and Transparency Rules of the United Kingdom's Financial Services Authority. As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard34, 'Interim Financial Reporting', as adopted by the European Union. Our responsibility Our responsibility is to express 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'. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. 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 is not prepared, in all material respects, in accordance with International Accounting Standard34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. Grant Thornton UK LLP Auditor London 22 November 2012 Consolidated Income Statement For the Half Year to 30 September 2012 Half Year To 30 Half Year To Year To September 30 September 31 March 2012 2011 2012 £000 Notes £000 £000 Revenue 3 44,225 31,333 52,968 Net rental income 4 9,794 8,354 17,876 Development property profit 4,739 1,845 655 Trading property loss (6) - - Share of results of joint 11 1,219 1,028 2,472 ventures Other operating income 2 111 113 Gross profit before gain on sale 15,748 11,338 21,116 and revaluation ofinvestment properties Net gain on sale and revaluation 5 557 486 3,288 of investment properties Gross profit 16,305 11,824 24,404 Administrative expenses (4,957) (3,264) (7,800) Operating profit 11,348 8,560 16,604 Finance costs 6 (5,042) (3,499) (8,409) Finance income 258 227 583 Change in fair value of (659) (1,434) (306) derivative financial instruments Foreign exchange (loss)/gain (662) 255 (1,064) Profit before tax 5,243 4,109 7,408 Tax on profit on ordinary 7 (1,169) (126) 158 activities Profit after tax 4,074 3,983 7,566 - attributable to (7) - (9) non-controlling interests - attributable to equity 4,081 3,983 7,575 shareholders Profit for the period 4,074 3,983 7,566 Earnings per 1p share 9 Basic 3.5p 3.4p 6.5p Diluted 3.5p 3.4p 6.5p Consolidated Statement of Comprehensive Income For the Half Year to 30 September 2012 Half Year To Half Year To Year To 30 September 30 September 31 March 2012 2011 2012 £000 £000 £000 Profit for the period 4,074 3,983 7,566 Impairment of available-for-sale (432) - (3,521) investments Exchange difference on retranslation of net (34) (23) (39) investments in foreign operations Total comprehensive income for the period 3,608 3,960 4,006 - attributable to equity shareholders 3,615 3,960 4,015 - attributable to non-controlling (7) - (9) interests 3,608 3,960 4,006 Consolidated Balance Sheet At 30 September 2012 At At At 30 September 30 September 31 March 2012 2011 2012 Notes £000 £000 £000 Non-current assets Investment properties 10 326,601 236,244 326,876 Owner occupied property, plant and 1,138 1,353 1,251 equipment Investment in joint ventures 11 41,344 36,409 40,592 Derivative financial instruments 18 260 184 629 Trade and other receivables 14 6,141 - - Deferred tax asset 7 8,010 8,904 9,050 383,494 283,094 378,398 Current assets Land, developments and trading 12 86,810 142,864 99,741 properties Available-for-sale investments 13 6,766 10,778 7,003 Trade and other receivables 14 24,256 26,762 23,076 Corporation tax receivable - 1,046 1,178 Cash and cash equivalents 15 38,893 46,726 35,411 156,725 228,176 166,409 Total assets 540,219 511,270 544,807 Current liabilities Trade and other payables 16 (29,477) (23,506) (24,807) Corporation tax payable (21) - - Borrowings 17 (81,088) (25,866) (59,203) (110,586) (49,372) (84,010) Non-current liabilities Borrowings 17 (172,137) (200,220) (203,992) Derivative financial instruments 18 (3,365) (6,313) (3,075) (175,502) (206,533) (207,067) Total liabilities (286,088) (255,905) (291,077) Net assets 254,131 255,365 253,730 Equity Called-up share capital 19 1,447 1,447 1,447 Share premium account 98,678 98,678 98,678 Revaluation reserve 2,608 171 2,612 Capital redemption reserve 7,478 7,478 7,478 Other reserves 291 291 291 Retained earnings 143,523 147,178 143,111 Equity attributable to equity holders of the parent 254,025 255,243 253,617 Non-controlling interests 106 122 113 Total equity 254,131 255,365 253,730 Consolidated Cash Flow Statement For the Half Year to 30 September 2012 Half Year To Half Year To Year To 30 September 30 September 31 March 2012 2012 2011 £000 £000 £000 Cash flows from operating activities Profit before tax 5,243 4,109 7,408 Depreciation 140 164 309 Revaluation gain on investment (739) (1,223) (3,664) properties Loss on sales of investment 182 737 376 properties Net financing costs 4,822 3,272 7,826 Change in value of derivative 659 1,434 306 financial instruments Share based payment 766 (329) 35 charge/(credit) Share of results of joint (1,219) (1,028) (2,472) ventures Fair value adjustment for - - (4,278) disposal of interest in subsidiary Foreign exchange movement 496 (239) 896 Other non-cash items - 14 7 Cash inflows from operations 10,350 6,911 6,749 before changes in working capital Change in trade and other (7,772) 11,570 12,503 receivables Change in land, developments and 13,700 6,312 19,691 trading properties Change in trade and other 5,374 (21,645) (19,617) payables Cash inflows generated from 21,652 3,148 19,326 operations Finance costs (7,133) (5,994) (13,119) Finance income 320 257 623 Tax received/(paid) 1,250 (128) - (5,563) (5,865) (12,496) Cash flows from operating 16,089 (2,717) 6,830 activities Cash flows from investing activities Purchase of investment property (2,775) (12,532) (102,750) Sale of investment property 3,572 46,152 50,434 Cost of acquiring derivative - (932) (1,276) financial instruments Cost of cancelling interest rate - (891) (3,102) swap Return of investment in joint 367 683 2,098 ventures Dividends from joint ventures - - 500 Sale of plant and equipment - - 7 Purchase of leasehold (33) (37) (63) improvements, plant and equipment Net cash generated from/(used 1,131 32,443 (54,152) in) investing activities Cash flows from financing activities Borrowings drawn down 5,971 31,430 206,637 Borrowings repaid (15,685) (42,073) (149,502) Equity dividends paid (3,973) (3,663) (5,707) Net cash (used in)/generated (13,687) (14,306) 51,428 from financing activities Net increase in cash and cash 3,533 15,420 4,106 equivalents Exchange losses on cash and cash (51) (21) (22) equivalents Cash and cash equivalents at 35,411 31,327 31,327 start of period Cash and cash equivalents at end 38,893 46,726 35,411 of period Consolidated statement of changes in equity At 30 September 2012 Capital Non-controlling interests Share Share Revaluation redemption Other Retained reserves £000 capital premium reserve reserve earnings Total £000 £000 £000 £000 £000 £000 £000 At 31 March 2011 1,447 98,678 3,495 7,478 291 143,886 122 255,397 Total comprehensive income - - - - - 4,015 (9) 4,006 Revaluation surplus - - 3,664 - - (3,664) - - Realised on disposals - - (4,547) - - 4,547 - - Performance share plan - - - - - 35 - 35 Dividends paid - - - - - (5,708) - (5,708) At 31 March 2012 1,447 98,678 2,612 7,478 291 143,111 113 253,730 Total comprehensive income - - - - - 3,615 (7) 3,608 Revaluation surplus - - 739 - - (739) - - Realised on disposals - - (743) - - 743 - - Performance share plan - - - - - 766 - 766 Dividends paid - - - - - (3,973) - (3,973) At 30 September 2012 1,447 98,678 2,608 7,478 291 143,523 106 254,131 The adjustment against retained earnings of £766,000 (31 March 2012: £35,000) adds back the share based payments charge in accordance with IFRS 2 Share Based Payments. There were net transactions with shareholders of £3,973,000 (31 March 2012: £5,708,000) made up of dividends paid. Capital Non-controlling interests Share Share Revaluation redemption Other Retained reserves £000 capital premium reserve reserve earnings Total £000 £000 £000 £000 £000 £000 £000 At 31 March 1,447 98,678 3,495 7,478 291 143,886 122 255,397 2011 Total - - - - - 3,960 - 3,960 comprehensive income Revaluation - - 1,223 - - (1,223) - - surplus Realised on - - (4,547) - - 4,547 - - disposals Performance - - - - - (329) - (329) share plan Dividends paid - - - - - (3,663) - (3,663) At 30 1,447 98,678 171 7,478 291 147,178 122 255,365 September 2011 There were net transactions with shareholders of £3,663,000 made up of dividends paid. Unaudited notes to the Half Year Statement 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 2012, which were prepared under International Financial Reporting Standards and which received an unqualified report from the Auditors, and did not contain a statement under Section 498 of the Companies Act 2006, have been filed with the Registrar of Companies. These interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The principal accounting policies have remained unchanged from the prior financial period to 31 March 2012. They 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 ending 31 March 2012. The directors have a reasonable expectation that the Company will continue in operational existence for the foreseeable future and have, therefore, used the going concern basis in preparing the financial statements. Principal risks and uncertainties The responsibility for the governance of the Group's risk profile lies with the Board of Directors of Helical. The Board is responsible for setting the Group's risk strategy by assessing risks, determining its willingness to accept those risks and ensuring that the risks are monitored and that the Group is aware of and, if appropriate, reacts to, changes in those risks. The Board is also responsible for allocating responsibility for risk within the Group's management structure. The Group considers its principal risks to be: - strategic risk - financial risk - development risk - reputational risk, and - people risk. There have been no significant changes to these risk areas in the period. A further analysis of these risks is included within the consolidated financial statements of the Group for the year ended 31 March 2012. The half year statement was approved by the Board on 22 November 2012 and is being sent to shareholders and will be available from the Company's registered officeat11‑15Farm Street, London W1J 5RS and on the Company's website at www.helical.co.uk. 2. Statement of directors' responsibilities The directors confirm that, to the best of their knowledge, this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R. Balances with related parties at 30 September 2012 and 31 March 2012 are disclosed in note 22. A list of current directors is maintained at 11-15 Farm Street, London W1J 5RS and at www.helical.co.uk. On behalf of the Board Tim Murphy Finance Director 22 November 2012 3. Segmental information The Group identifies two discrete operating segments whose results are regularly reviewed by the Chief Operating Decision Maker (the Chief Executive) to allocate resources to these segments and to assess their performance. The segments are: · investment properties, which are owned or leased by the Group for long-term income and for capital appreciation, and trading properties, which are owned or leased with the intention to sell; and, · development properties, which include sites, developments in the course of construction, completed developments available for sale, and pre-sold developments. Investment Investment and trading Developments Total and trading Developments Total Half year to Half year to Half year to Half year to Half year to Half year to 30.9.12 30.9.12 30.9.12 30.9.11 30.9.11 30.9.11 Revenue £000 £000 £000 £000 £000 £000 Rental income 12,129 846 12,975 9,665 787 10,452 Development income - 31,140 31,140 - 10,507 10,507 Trading property sales 100 - 100 10,263 - 10,263 12,229 31,986 44,215 19,928 11,294 31,222 Other revenue 10 111 Revenue 44,225 31,333 Investment and trading Developments Total Year to Year to Year to 31.3.12 31.3.12 31.3.12 Revenue £000 £000 £000 Rental income 21,391 1,667 23,058 Development income - 19,666 19,666 Trading property sales 10,131 - 10,131 31,522 21,333 52,855 Other revenue 113 Revenue 52,968 Investment Investment and trading Developments Total and trading Developments Total Half year to Half year to Half year to Half year to Half year to Half year to 30.9.12 30.9.12 30.9.12 30.9.11 30.9.11 30.9.11 Profit before tax £000 £000 £000 £000 £000 £000 Net rental income 9,069 725 9,794 7,680 674 8,354 Development property profit - 4,739 4,739 - 1,845 1,845 - Trading property loss (6) - (6) - - - Share of results of joint ventures 1,124 95 1,219 1,003 25 1,028 Gain on sale and revaluation 557 - 557 486 - 486 of investment properties 10,744 5,559 16,303 9,169 2,544 11,713 Other operating income 2 111 Gross profit 16,305 11,824 Administrative expenses (4,957) (3,264) Net finance costs (5,443) (4,706) Foreign exchange (loss)/gain (662) 255 Profit before tax 5,243 4,109 Investment and trading Developments Total Year to Year to Year to 31.3.12 31.3.12 31.3.12 Profit before tax £000 £000 £000 Net rental income 16,740 1,136 17,876 Development property profit - 655 655 Share of results of joint ventures 2,616 (144) 2,472 Gain on sale and revaluation of investment properties 3,288 - 3,288 22,644 1,647 24,291 Other operating income 113 Gross profit 24,404 Administrative expenses (7,800) Net finance costs (8,132) Foreign exchange loss (1,064) Profit before tax 7,408 Investment Investment and trading Developments Total and trading Developments Total At At At At At At 30.9.12 30.9.12 30.9.12 31.3.12 31.3.12 31.3.12 Balance sheet £000 £000 £000 £000 £000 £000 Investment properties 326,601 - 326,601 326,876 - 326,876 Land, development and 2,510 84,300 86,810 2,638 97,103 99,741 trading properties Investment in joint ventures 32,576 8,768 41,344 31,919 8,673 40,592 361,687 93,068 454,755 361,433 105,776 467,209 Other assets 85,464 77,598 Total assets 540,219 544,807 Liabilities (286,088) (291,077) Net assets 254,131 253,730 4.Net rental income Half Year To Half year To Year To 30 September 30 September 2011 31 March 2012 £000 2012 £000 £000 Gross rental income 12,975 10,452 23,058 Rents payable (172) (210) (418) Property overheads (2,618) (1,490) (3,938) Net rental income 10,185 8,752 18,702 Net rental income attributable to (391) (398) (826) profit share partner Group share of net rental income 9,794 8,354 17,876 5. Net gain on sale and revaluation of investment properties Half Year To Half Year To Year To 30 September 30 September 2011 31 March 2012 £000 2012 £000 £000 Net proceeds from the sale of 3,936 49,166 50,427 investment properties Book value (note 10) (3,753) (49,469) (50,768) Other costs (365) (434) (35) Loss on sale of investment properties (182) (737) (376) Revaluation surplus on investment 739 1,223 3,664 properties Net gain on sale and revaluation of 557 486 3,288 investment properties 6. Finance costs Half Year To Half Year To Year To 30 September 30 September 2011 31 March 2012 £000 2012 £000 £000 Interest payable on bank loans and (5,597) (4,905) (10,808) overdrafts Other interest payable and similar (791) (462) (901) charges Interest capitalised 1,346 1,868 3,300 Finance costs (5,042) (3,499) (8,409) 7. Taxation on profit on ordinary activities Half Year To Half Year To Year To 30 September 30 September 31 March 2011 2012 2012 £000 £000 £000 The tax (charge)/credit is based on the profit for the period and represents: United Kingdom corporation tax at 24%. - Group corporation tax (88) (20) - - Adjustment in respect of prior periods - - 153 - Overseas tax (41) (131) (163) Current tax charge (129) (151) (10) Deferred tax - capital allowances - tax losses The story has been truncated, [TRUNCATED]
Helical Bar PLC HLCL Half Yearly Report
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