Michael Slade, Chief Executive, commented:
“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 have sold our Polish assets and continue to deliver on our retirement village programme.
“Since 2012, we have targeted an income producing investment portfolio representing at least 75% of our total property assets with our development programme making up 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 Charterhouse Square;
- Complete the residential scheme at Barts Square and sell the remaining units;
- Capture the reversion in our investment portfolio;
- Maintain and grow a sustainable investment income surplus; and
- 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.
“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.
“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 c. £800,000 and with Helical Bar plc a steel company making reinforcement bars for the construction industry. I joined the Company to change things. With 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.”
- EPRA net asset value per share up 19.7% to 461p (2015: 385p).
- CAGR of EPRA net asset value per share over three years of 20.4% pa (2015: 15.5% pa).
- EPRA earnings per share of 17.1p (2015: 2.4p) – up 613%.
- IFRS Profit before tax of £120.1m (2015: £87.4m) – up 37%.
- Total Property Return of £170.6m (2015: £155.3m) – up 10%.
- Group’s share of net rental income of £43.4m (2015: £38.6m) – up 12%.
- Development profits of £27.5m (2015: £17.6m) – up 56%.
- Net gain on sale and revaluation of investment properties of £99.7m (2015: £96.6m).
- Final dividend proposed of 0.72p per share, increasing total dividend per share to 8.17p (2015: 7.25p) – up 12.7%.
Strong capital returns
- Group’s share of property portfolio £1,240m (2015: £1,021m) – up 21%.
- Unleveraged return of property portfolio as measured by IPD of 21.7% (2015: 20.4%) compared to 11.4% (2015: 17.5%) for the benchmark index.
- Investment property valuations, on a like-for-like basis, up 14.9% (11.1% including sales and purchases) with London office valuations up 30.8% (18.8% including sales and purchases).
Secure financial position
- See-through loan to value of 40% on a secured basis (2015: 34%) 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 at 31 March 2016 of £193m (2015: £229m).
London portfolio well positioned to provide future development surpluses whilst being highly reversionary – delivering c. 80% of property returns
- 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).
- Offices at The Bower EC1 acquired for £248m (with Helical reinvesting its existing 1/3rd 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 constructio
- 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.
- 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.
- 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 62 apartments.
- Power Road Studios W4, a 62,000 sq ft office complex of five buildings acquired for £34m.
- Contracted gross rents on regional investment portfolio (44% of total 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 dominated by performance of Churchgate and Lee House in Manchester.
- 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.
Succession strategy delivered
- Michael Slade to step down as Chief Executive at 2016 AGM and remain on the Board as Non-Executive Chairman.
- Gerald Kaye to be appointed Chief Executive at 2016 AGM.
- Nigel McNair Scott, Chairman, and Andrew Gulliford, Non-Executive Director, to retire at the 2016 AGM.
- Susan Clayton and Richard Cotton appointed Non-Executive Directors to provide further independence and balance to the Board.