Michael Slade Chairman

I am extremely proud to announce today’s record results which show rental levels, investment gains, pre-tax profits, shareholders’ funds and EPRA net asset value per share all at the highest level in Helical’s 32 year history as a real estate company. These results clearly demonstrate that our strategy of targeting London for capital growth and development profits and the regions for higher yielding investment assets provides the most appropriate allocation of resources to enable us to meet our long term objectives.

The greatest proportion of our performance this year has come from London where we have increased our portfolio weighting, primarily with the purchase of The Bower EC1. We also increased our weighting in industrial assets whilst reducing our exposure to retail. We sold our Polish assets and continue to deliver on our retirement village programme.

Within the investment portfolio we have a strong and diverse tenant profile. We have increased contracted rents by £12.7m (29% increase) from new lettings and by capturing some of the reversionary potential of the portfolio and expect this growth to continue. Our London investment portfolio remains highly reversionary and its inherent value will be unlocked through the completion of our redevelopment and refurbishment programme and the letting of the vacant and remaining reversionary space. London continues to outperform the rest of the UK and our strategy is to increase our London holdings.

We now have an investment portfolio poised for future earnings growth which, if supported by a benign economic background, should lead to substantial capital appreciation.


We measure our performance at both portfolio and Company level, seeking to outperform in the medium and long term relevant sector indices and our peer group.

EPRA earnings per share increased from 2.4p to 17.1p, reflecting growing net rental income and increased development profits. On a like-for-like basis, the investment portfolio increased by 14.9 (11.1% including sales and purchases) contributing to an overall growth in the portfolio to £1,240m (2015: £1,021m). The unleveraged return of our property portfolio, as measured by IPD, was 21.7% (2015: 20.4%), compared to 11.4% (2015: 17.5%) for the benchmark index. These investment gains contributed to an increase in EPRA net asset value per share, up 19.7% to 461p (2015: 385p). Since the start of 2016, the listed real estate sector has been affected by concerns over global economic issues and the forthcoming referendum on our membership of the European Union. Despite this, we achieved a positive Total Shareholder Return for the year to 31 March 2016 of 1.0% (2015: 7.6%), compared to the sector index which fell by 6.4% (2015: increase of 22.8%).

Results for the Year

The profit before tax for the year to 31 March 2016 was £120.1m (2015: £87.4m), the highest in the Group’s history. Total Property Return increased by 10% to £170.6m (2015: £155.3m) and included growing net rents of £43.4m, an increase of 12% on 2015 (£38.6m), and development profits of £27.5m (2015: £17.6m). The gain on sale and revaluation of the investment portfolio contributed £99.7m (2015: £96.6m) and there were no trading profits (2015: £2.5m).

Net finance costs of £22.6m were lower than in 2015 (£24.8m), however the income statement was adversely affected by falls in expected future interest rates which led to a £6.9m (2015: £8.4m) charge arising from the valuation of the Group’s derivative financial instruments. The valuation of the Group’s Convertible Bond provided a credit of £0.5m (2015: charge of £3.3m). Recurring administration costs were marginally higher at £10.7m (2015: £10.2m). Performance related awards, reflecting the success of the Group’s activities in the year were £13.3m (2015: £13.4m). National Insurance costs on remuneration, including performance related awards, were £2.1m (2015: £3.0m).

These results allow the Board to continue its progressive dividend policy and to recommend to shareholders a final dividend of 0.72p which, together with the two interim dividends paid to date of 7.45p takes the total dividend for the year to 8.17p (2015: 7.25p), an overall increase of 12.7%.

The London Portfolio

The London investment and development portfolio continues to contribute the greater proportion of capital growth and development profits. In the year to 31 March 2016, London provided c. 80% of the total property return of £170.6m (2015: £155.3m).

Since 2010 we have steadily acquired property in two “clusters”; the Tech Belt districts of Farringdon, Shoreditch, Aldgate and through to Whitechapel and the West London districts of Hammersmith, Shepherds Bush and Chiswick.

The East

At The Bower EC1, we have acquired the outstanding 2/3rd interest from our joint venture partner Crosstree Real Estate Partners LLP (“Crosstree”), of the buildings known as The Warehouse (122,858 sq ft of offices, 5,404 sq ft of restaurant use) and The Studio (18,283 sq ft of offices, 4,894 sq ft of restaurant use). Construction work on these two buildings was completed in November 2015 and both are fully let at average office rents of £55.00 psf and £43.85 psf respectively. In addition, we have acquired The Tower at 207 Old Street, a 179,000 sq ft refurbishment and extension of the existing building on which work has commenced and is due for completion Q1 2018. At £248m, this purchase is our largest ever acquisition and strongly reaffirms our belief in the London office market. The remaining buildings at The Bower, being Empire House and the retail parade, were sold by the joint venture to Standard Life and Crosstree respectively.

At Barts Square EC1, our scheme in joint venture with The Baupost Group LLC, we have now exchanged contracts for sale at an average of £1,580 psf on 102 of the 144 residential units with a further two units reserved in phase 1 of the development which is due for completion in summer 2017. The office development of 212,858 sq ft at One Bartholomew Close EC1 has been forward funded with clients of Ashby Capital, is currently under construction and is due for completion in July 2018.

Our 272,426 sq ft office development at One Creechurch Place EC3, equity funded with our joint venture partner HOOPP (Healthcare of Ontario Pension Plan) is expected to complete in September 2016. C-Space EC1 completed its refurbishment in October 2015 and is 75% let at an average rent of £56 psf. At 23-28 Charterhouse Square EC1 we have commenced construction works, due to complete in Q1 2017 on a refurbishment which will comprise 38,500 sq ft of offices and 5,100 sq ft of retail/restaurant use. Our 112,000 sq ft listed building at The Loom, Whitechapel E1 is now undergoing a comprehensive refurbishment and is due for completion in September 2016.

The West

There has been substantial growth in rents at our West London properties. At Shepherd’s Building W14 we have completed the lease renewal and increased the space let to our largest tenant Endemol, increasing the rent by £1.25m pa, with average rents for the building now £45.75 psf. At One King Street W6 following the completion of the refurbishment works, we have achieved a benchmark rent for the area of £55.00 psf. We have added to our portfolio with the acquisition of Power Road Studios W4, 62,000 sq ft of offices over five buildings acquired for £34m.

The Regional Portfolio

The regional investment and development portfolio provides a growing stream of net rents from a high yielding investment portfolio while contributing development profits from our retirement village and retail development programmes.

The regional investment portfolio increased to £460m at 31 March 2016 (2015: £420m) with the addition of 13 distribution warehouses and a regional office for an aggregate £94m, offset by the sale of eight distribution warehouses, five retail assets and three regional offices for £67m. Regional assets contributed £31.0m of net rental income during the year (2015: £30.7m) which is expected to continue to grow with contracted rents on the portfolio of £32m and an ERV of £36m. Net gains on the sale and revaluation of the regional portfolio contributed £6.7m (2015: £18.8m).

Our regional development exposure is limited to our retirement village and out-of-town retail development programmes and our Scottish Power project in Glasgow, where balance sheet risk is limited. At our retirement village development programme we continued the construction of units at Durrants Village Horsham, Millbrook Village Exeter and Maudslay Park Great Alne, near Stratford-upon-Avon. During the year we completed the clubhouse at Durrants Village and sold 33 residential units at the three schemes (2015: 25 units). In our retail development programme, we have completed our scheme at Shirley, West Midlands and continue to make progress on our scheme at Truro. Subsequent to the year end we forward funded a 79,750 sq ft out-of-town retail development at Cortonwood with a client of Aberdeen Asset Management. The Scottish Power project is pre-let and pre-sold and due for completion in September 2016. As part of the overall deal Helical takes on three existing Scottish Power sites which are surplus to requirements. One has been sold and good progress is being made on the business plans for the other two.


The Group has expanded its activities significantly in the last three years, seeking to increase shareholder funds through the generation and retention of increased net rental streams, development profits and valuation surpluses. This growth has been financed through an increase in secured debt borrowed primarily from UK high street banks and, since 2013, through the use of unsecured debt in the form of a retail bond and a convertible bond. In assessing the needs of the business the Company is conscious that it needs to manage any risks inherent in this leveraged approach to growing the business. It seeks to do this through the use of unsecured debt (23% of total debt), by increasing the maturity of its debt profile and by hedging its interest rate exposure. In addition, the Group’s debt profile includes borrowings in respect of residential and retirement village developments which are expected to be repaid as sales complete.

In pursuing this strategy, the Group has increased the average debt maturity to 4.5 years (2015: 4.3 years), with no secured loan repayable before November 2019, whilst marginally increasing the average cost of debt at 4.2% (2015: 4.1%). The Group continues to retain a significant level of liquidity with cash and unutilised bank facilities of £193m (2015: £229m) to fund capital works on its portfolio.

Board changes

As previously announced with our half year results, I will be handing over the reins of the Company to Gerald Kaye, our senior development director for the last 22 years, and I will stand to be elected as Non-Executive Chairman, at the 2016 Annual General Meeting. At that AGM, Nigel McNair Scott, our current Chairman, former Finance Director and my close friend and confidant, will retire after 30 years on the Board. Nigel has proved to be a constant source of advice, support and wisdom during his time at Helical and I wish him a long and happy retirement.

The AGM will also see the retirement of Andrew Gulliford, a Non-Executive director for the last ten years. Andrew has also proved to be a tremendous support to the Board and his contribution is greatly appreciated. With these two planned departures we have sought to strengthen the Board with the addition of two new independent Non-Executive Directors and were delighted to be able to announce the appointments of Susan Clayton and Richard Cotton earlier this year.


Since 2012, we have targeted an income producing investment portfolio representing at least 75% of our total property assets and a development programme of the remaining 25% which is capable of producing exceptional profits. We have now exceeded our original targets and, as we complete the current development programme over the next three years, our objectives are clear. We seek to:

• Complete and let our London office schemes at The Bower, One Creechurch Place, One Bartholomew Close and 23-28 Charterhouse Square;

• Complete the residential scheme at Barts Square and sell the remaining units;

• Take forward our London schemes in Hammersmith and Drury Lane and at the appropriate time restock the London development pipeline to enable us to continue to create capital growth and development profits;

• Capture the reversion in our investment portfolio; and,

• Maintain and grow a sustainable investment income surplus.

We aim to do this against a background of increasing uncertainty, exacerbated by the imminent possibility of the UK voting to leave the European Union. However, with substantially increased contracted rents on our portfolio and having de-risked our two largest London office developments at One Creechurch Place EC3 and One Bartholomew Close EC1, Helical is well placed to deal with any headwinds that may come its way.

Finally, this will be my last Chief Executive’s Statement after nearly 32 years with the Company. I joined the Board on the 21 August 1984 when the equivalent share price was around one pence per share giving a market capitalisation of circa £800,000 and with Helical Bar plc a steel company making reinforcement bars for the construction industry. I joined the Company to change things. A quick sale of the steel business followed by over 30 years as an entrepreneurial property company, Helical has grown to have a current market capitalisation of over £460m having distributed £276m to shareholders during that period. I now look forward to becoming Chairman and leave the Company in the excellent hands of my successor, Gerald Kaye, and the wider executive team who have an average tenure with the Company of a mere 19 years! I look forward to continuing both on the Board and as the Company’s largest shareholder and am confident that Helical’s outperformance will continue.

2016 Performance Highlights


A property company’s share price should reflect growth in net assets per share. Our Group’s main objective is to maximise growth in assets from increases in investment portfolio values and from retained earnings from other property related activities. Net asset value per share represents the share of net assets attributable to each ordinary share. Whilst the basic and diluted net asset per share calculations provide a guide to performance, the property industry prefers to use an EPRA adjusted net asset per share to represent the fair value of net assets on an ongoing long term basis. The adjustments necessary to arrive at this figure are shown in note 34 of the financial statements.

Management is incentivised to exceed 15% pa growth in net asset value per share.


The Investment Property Databank (“IPD”) produces a number of independent benchmarks of property returns which are regarded as the main industry indices.

IPD has compared the ungeared performance of Helical’s total property portfolio against that of portfolios within IPD for the last 20 years. The Group’s annual performance target is to exceed the top quartile of the IPD database, which it has consistently achieved. Helical’s ungeared performance for the year to 31 March 2016 was 21.7% (2015: 20.4%) compared to the IPD median benchmark of 11.4% (2015: 17.5%) and upper quartile benchmark of 13.0% (2015: 19.6%).

Helical’s portfolio unleveraged returns to 31 March 2016 as shown above:

Source: Investment Property Databank.


Total Shareholder Return is a measure of the return on investment for shareholders. The table demonstrates this return compared to various indices. Over one, three, ten, fifteen, twenty and twenty five years Helical’s Total Shareholder Return exceeded that of the Listed Retail Estate Sector Index.

Source: Thomson Reuters Datastream.

HELICAL BAR PLC Growth over all periods to 31/03/16

UK EQUITY MARKET Growth in FTSE All-Share Return Index over all periods to 31/03/16

LISTED REAL ESTATE SECTOR INDEX Growth in FTSE 350 Real Estate Super Sector Return Index over all periods to 31/03/16. For data prior to 30 September 1999 FTSE All
Share Real Estate Sector Index has been used

DIRECT PROPERTY – MONTHLY DATA Growth in Total Return of IPD UK Monthly Index (All Property) over all periods to 31/03/16


High levels of staff retention remain a key feature of Helical’s business. The Group retains a highly skilled and experienced team. Opposite is the average length of service of the Group’s head office employees.

The principal driver for the fall in average length of employee service is the increased employee numbers due to the growth of the business.

2016 Operational Highlights

London Portfolio

The London portfolio represents 54% of the total property portfolio and is well positioned to provide future valuation surpluses whilst being highly reversionary.

  • 18.8% valuation increase of London Investment Portfolio (2015: 9.2%), now valued at £593m (56% of total investment portfolio).
  • Lettings at the Bower EC1, Shepherds Building W14, C-Space EC1 and One King Street W6 increased contracted gross rents on London Portfolio to £23.6m (2015: £8.7m) compared to an ERV of £45.4m (2015: £28.1m).
  • At One Bartholomew Close EC1, the site was sold for £102.4m and the 213,000 sq ft office development forward funded, releasing £34m cash to Helical.
  • Offices at The Bower EC1 acquired for £248m (With Helical reinvesting its existing one third Ownership). Joint venture partner Crosstree acquired the retail parade for £23m and Empire House sold for £20.65m in November 2015, a 38% premium to 31 March 2015 book value.
    — first phase 100% let
    — second phase under construction
  • At Barts Square EC1, 102 residential units exchanged at 23 May 2016 (31 March 2015: 56 units) and two reserved on phase 1 of 144 units.
  • Power Road Studios W4, acquired for £34m.
  • Major refurbishment commenced at Charterhouse Square EC1 increasing the office space to 38,500 sq ft with 5,100 sq ft of retail, with delivery in early 2017.
  • At Drury Lane & Dryden Street WC2 a resolution to grant planning was issued for a residential led scheme of 68 apartments.

Regional Portfolio

The Regional portfolio represents 46% of the total property portfolio and provided 71% of the net rental income for the year.

  • Contracted gross rents on regional investment portfolio of £32.4m.
  • Regional investment portfolio increased with the purchase of £89m of high yielding industrial/logistics warehouses.
  • 3.0% valuation increase on regional offices. Regional investment portfolio now comprises 22% offices, 13% in town retail, 17% retail parks, 46 industrial/logistics and 2% other.
  • Sale of 16 regional assets comprising eight industrial units, three regional offices and five retail assets for £67m in total.


See-through loan to value of 40% (2015: 34%) on a secured basis and 55% overall (2015: 52%).

Average maturity of the group’s share of debt of 4.5 years (2015: 4.3 years) at an average cost of 4.2% (2015: 4.1%).

Group’s share of cash and undrawn bank facilities of £193m (2015: £229m).

Agreed a new £200m bank facility to fund the purchase and development of The Bower, London EC1.

2016 Half year Highlights

Profit before tax
EPRA Net asset value
Share of property portfolio

2016 annual report & Accounts

View our current and historic reports and presentations.