CEO Statement
24 May 2018

Gerald Kaye Chief Executive

I am pleased to present the Company’s 2018 Annual Results.

The results for the year to 31 March 2018 reflect the completion of the transformation of the Helical Group over the last two years from a multi-sector, geographically spread UK property company, into an office-led investment and development company focused purely on London and Manchester. During this two-year period, Helical has sold £484m of investment property (2018: £328m) for gross proceeds of £507m (2018: £349m) at a net profit of £15.0m (2018: £13.6m). We have exited the logistics, retail and retirement village sectors whilst investing £144m (2018: £84m) in our London portfolio and £24m (2018: £19m) in Manchester whilst reducing see-through loan to value from 55.0% to 39.9% (2017: 51.4%). As at 31 March 2018, the Group owned eight London and four Manchester assets with three remaining non-core properties either subsequently sold or being marketed for sale. This compares to 75 separate assets two years ago.

The majority of the Group’s performance in the year has again come from our schemes in London, where we have now increased our weighting to 86%, with 11% in Manchester and the remaining non-core assets, representing just 3% of the portfolio.

Results for the Year

Profit before tax for the year to 31 March 2018 was £30.8m (2017: £41.6m). Total Property Return reduced to £68.8m (2017: £79.9m) and included net rents of £36.1m (2017: £47.0m). Lettings at One Creechurch Place, London EC3, enabled the Group to recognise development profits of £10.2m in the year. However, a loss of £13.0m on the sale of the Retirement Villages portfolio plus provisions of £4.1m (2017: £12.8m) turned this profit into a net development loss of £8.0m (2017: £5.7m). The gain on sale and revaluation of the investment portfolio contributed £40.7m (2017: £38.6m).

Net finance costs of £35.2m were substantially higher than in 2017 (£21.2m) and included an £8.7m premium payable on the repayment of the Group’s £80m Retail Bond. This redemption, made 27 months before the Bond was due for repayment, will save annual interest costs of £4.8m. The Income Statement benefited from the shortening of the maturity period for the Group’s remaining interest rate swaps and an increase in medium and long-term interest rates which led to a £4.0m credit (2017: £0.8m) arising from the valuation of the Company’s derivative financial instruments. The revaluation of the Company’s Convertible Bond provided a charge of £1.6m (2017: credit of £3.0m). Recurring administration costs were marginally higher at £11.0m (2017: £10.8m). Performance related awards were substantially lower at £1.7m (2017: £6.9m) with National Insurance on these awards of £0.1m (2017: £0.7m).

The reduction in annual finance costs from the repayment of debt during the year coupled with recent action taken to reduce performance related administration costs both contribute to lower central costs going forward. With net rental income increasing towards an ERV for the portfolio of £60m over the next few years, the Board is confident that the Group’s earnings will increase significantly in the near future. This expectation has led the Board to recommend to Shareholders an increase in the final dividend of 12.9% to 7.00p (2017: 6.20p) which, together with the interim dividend of 2.50p paid in December 2017, takes the total dividend for the year to 9.50p (2017: 8.60p), an overall increase of 10.5%.


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

IFRS basic earnings per share reduced to 22.3p (2017: 34.0p) with EPRA loss per share of 7.0p (2017: earnings of 0.5p), reflecting a fall in net rental income and increased development losses in the year following the sale of a third of the investment portfolio and the retirement village portfolio. On a like-for-like basis, the investment portfolio increased by 4.5% (5.0% including sales and purchases). Sales during the year offset this growth in values contributing to an overall reduction in the portfolio value to £910m (31 March 2017: £1,205m). The unleveraged return of our property portfolio, as measured by IPD, was 11.1% (2017: 9.4%), compared to 9.3% (2017: 4.4%) for the benchmark index. Total Accounting Return, being the increase in Shareholders’ Funds before dividends, was 5.3% (2017: 8.3%). EPRA net asset value per share was down 1.1% to 468p (31 March 2017: 473p), with EPRA triple net asset value per share up 1.4% to 448p (31 March 2017: 442p).


The Company uses gearing on a tactical basis throughout the property cycle, being raised 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 year to 31 March 2018, the Group sold £328m of investment properties and £156m of development stock whilst exiting the industrial, retail and retirement village sectors. These sales, net of investment in the portfolio of £172m, were used to reduce net borrowings by £262m, significantly reducing future finance costs.

The transformation of the Group has allowed us to significantly reduce our gearing levels with our see-through loan to value ratio (“LTV”), down from 55.0% two years ago to 39.9% at the year-end (31 March 2017: 51.4%) and 37.1% on a pro-forma basis, taking into account the deferred consideration from the sale of the retirement village portfolio due in November 2018. Our see-though net gearing, the ratio of net borrowings to the net asset value of the Group, has fallen from 142% to 68% (31 March 2017: 120%) over the same period.

During the year, the average debt maturity reduced to 3.0 years (31 March 2017: 3.6 years), with no secured loan repayable before November 2019, whilst maintaining the average cost of debt at 4.3% (31 March 2017: 4.3%). The Company has a significant level of liquidity with cash and unutilised bank facilities of £277m (31 March 2017: £267m) to fund capital works on its portfolio and future acquisitions.

Board matters

In February 2018, the Group announced that Michael Slade will step down from his role as Chairman of Helical at the 2019 AGM and Richard Grant, current Chairman of the Audit Committee, was appointed his successor and Deputy Chairman until he assumes the role of Chairman next year. In addition, Richard Cotton succeeded Richard Gillingwater as Senior Independent Director. Richard Gillingwater has indicated that he will not seek re-election as a Non-Executive Director at the 2018 AGM. On behalf of the whole Board, I would like to thank Richard for his commitment, support and guidance during his six years on the Board of Helical.

The Future

We believe that London will remain the best source of potential capital gains and development profits for the foreseeable future with Manchester being the most dynamic regional city in the UK. Our ongoing focus is on maximising the potential of our current portfolio, both in terms of generating development and valuation surpluses but also on capturing the ERV of the assets we own to ensure a sustainable surplus of rental income over all costs. We also continue to seek exciting opportunities to add to our portfolio of assets, a recent example being the over-ground development of the Farringdon East Elizabeth Line Station. Our much-reduced gearing levels have increased the Group’s firepower and balance sheet capacity significantly and will enable us to add to our pipeline of opportunities in the future.

Our newly refocused and reprioritised portfolio is a select showcase for London and Manchester. We create buildings for today’s occupiers who demand more inspiring space with distinctive architectural detail, carefully curated public realm, market leading amenities, high quality management and our flexible approach to leasing. Applying this philosophy, we seek to maximise Shareholder returns through delivering income growth from creative asset management and capital gains from our development activity as we continue to drive the future vision of Helical.

2018 Performance Highlights


The Group’s main objective is to maximise growth in net asset value per share which we seek to achieve through increases in investment portfolio values and from retained earnings from other property related activity. EPRA net asset value per share is the property industry’s preferred measure of the share of net assets attributable to each share as it includes the fair value of net assets on an ongoing long term basis. The adjustments to net asset value to arrive at this figure are shown in note 22 to the financial statements.

The diluted net asset value per share, excluding trading stock surplus, at 31 March 2018 increased by 3.2% to 445p (31 March 2017: 431p). Including the surplus on valuation of trading and development stock and adjusting for the fair value of derivatives and deferred taxation, the EPRA net asset value per share at 31 March 2018 reduced by 1.1% to 468p (31 March 2017: 473p). EPRA triple net asset value per share at 31 March 2018 increased by 1.4% to 448p (31 March 2017: 442p).

EPRA NET ASSET VALUE compound annual growth rate (3 years)


The Investment Property Databank (“IPD”) produces a number of independent benchmarks of property returns that 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 2018 was 11.1% (2017: 9.4%) compared to the IPD benchmark of 9.3% (2017: 4.4%) and upper quartile benchmark of 12.0% (2017: 6.9%).

Helical’s unleveraged portfolio returns to 31 March 2018 were as follows:


Source: Investment Property Databank

Helical’s trading and development portfolio (9.3% of gross assets) is shown in IPD at the lower of book cost or fair value and uplifts are only included on the sale of an asset.


Total Shareholder Return is a measure of the return on investment for shareholders. It combines share price appreciation and dividends paid to show the total return to the shareholder expressed as an annualised percentage.

The Total Shareholder Return in the year to 31 March 2018 was 6.1% (2017: (18.0%)).

Helical Bar Plc
UK Equity Market
Listed real estate sector index
Direct property - monthly data

1. Growth over all periods to 31/03/18.
2. Growth in FTSE All-Share Return Index over all periods to 31/03/18.
3. Growth in FTSE 350 Real Estate Super Sector Return Index over all periods to 31/03/18. For data prior to 30 September 1999 FTSE All Share Real Estate Sector Index has been used.
4. Growth in Total Return of IPD UK Monthly Index (All Property) over all periods to 31/03/18


High levels of staff retention remain a key feature of Helical’s business. The Group retains a highly skilled and experienced team. We assess our success based on two key metrics, the average length of service of the Group’s head office employees and average staff turnover.

The average length of service of the Group’s head office employees at 31 March 2018 was 7.9 years and the average staff turnover during the year to 31 March 2018 was 15.2%.

Staff turnover during the year

2018 Operational Highlights

Operational Performance

  • Investment property sale proceeds on disposals of £349m in the year at 6.2% above book value following the Group’s exit from the logistics and retail sectors.
  • 41 new office lettings in London of 268,336 sq ft during the year, generating £16.6m (our share £5.7m) of rental income at 8.1% above 31 March 2017 ERVs.
  • Since the year end, we have let three additional floors at The Tower, London EC1 to an existing tenant of Phase One in line with market rents. This takes the office space let at The Tower, prior to completion of the building works, to 52%.
  • A further 10 office lettings in Manchester of 79,657 sq ft occurred in the year generating rental income of £1.3m at 10.8% above 31 March 2017 ERVs.
  • Sale of the retirement village portfolio for £102m, a discount of 13.5% to book value.
  • Capital expenditure of £104m incurred on our office development programme, with £76m remaining to be expended in 2018-2020.
  • 294,000 sq ft of office developments under construction for delivery in 2018-19.
  • New 89,000 sq ft office development started at Farringdon East Elizabeth Line Station for delivery in Q4 2019.

Financial Highlights

Property Valuation

  • Group’s share of property portfolio £910m (31 March 2017: £1,205m) following £484m of disposals.
  • Unleveraged return of property portfolio as measured by IPD delivered strong outperformance of 11.1% (2017: 9.4%) compared to 9.3% (2017: 4.4%) for the benchmark index.
  • Investment property valuations, on a like-for-like basis, up 4.5% (5.0% including sales and purchases).


  • IFRS basic earnings per share of 22.3p (2017: 34.0p).
  • IFRS profit before tax of £30.8m (2017: £41.6m).
  • Total Accounting Return of 5.3% (2017: 8.3%).
  • See-through Total Property Return of £68.8m (2017: £79.9m).
    • Group’s share of net rental income of £36.1m (2017: £47.0m).
    • Development losses of £8.0m (2017: £5.7m), after provisions of £4.1m (2017: £12.8m).
    • Net gain on sale and revaluation of investment properties of £40.7m (2017: £38.6m).
  • EPRA loss per share of 7.0p (2017: earnings of 0.5p).
  • Final dividend proposed of 7.00p per share (2017: 6.20p) – up 12.9%.

Balance Sheet

  • Net asset value of £533.9m (31 March 2017: £516.9m) – up 3.3%.
  • EPRA net asset value per share down 1.1% to 468p (31 March 2017: 473p).
  • EPRA triple NAV per share up 1.4% to 448p (31 March 2017: 442p).


  • See-through loan to value reduced to 39.9% (31 March 2017: 51.4%).
  • Average maturity of the Group’s share of debt of 3.0 years (31 March 2017: 3.6 years) at an average cost of 4.3% (31 March 2017: 4.3%).
  • Group’s share of cash and undrawn bank facilities at 31 March 2018 of £277m (31 March

Portfolio Update

London Portfolio

  • 4.2% valuation increase, on a like-for-like basis, of our see-through London investment portfolio, valued at £700m at 31 March 2018 (84.8% of investment portfolio) compared with £666m at 31 March 2017 (65.5% of investment portfolio).
  • Contracted rents on our see-through London portfolio at 31 March 2018, including pre-lets at The Bower, increased to £28.4m (2017: £27.9m) compared to an ERV of £49.6m (2017: £45.0m).

Manchester Portfolio

  • 10.8% valuation increase, on a like-for-like basis, of our Manchester investment portfolio, valued at £98m at 31 March 2018 (11.9% of investment portfolio) compared to £71.5m at 31 March 2017 (7.0%).
  • Contracted rents on the Manchester portfolio at 31 March 2018 increased to £4.7m (2017: £4.1m) compared to an ERV of £8.1m (2017: £5.6m).

Half Year to 30 September 2018 Highlights

Profit before tax
EPRA Net asset value
Total property return
Half year review

2018 annual report & Accounts

View our current and historic reports and presentations.