Helical Bar Regulatory News (HLCL)

HELICAL SEES LETTING SUCCESS AND INCREASED FOCUS ON CORE SECTORS

Gerald Kaye, Chief Executive, commented:

"The financial year to date has seen Helical make encouraging progress in executing its strategy and meeting targets. Following the sale announced yesterday of our retirement village portfolio for £102m, a 13% discount to book value, we have now sold the majority of our non-core holdings, with those remaining accounting for just 4% of the total portfolio. One Creechurch Place, London EC3 is 48% let with a further 22% under offer and good interest in the remaining space. In addition, we have achieved record rents at a number of our London investment assets. With the second phase of The Bower, London EC1 and One Bartholomew Close, London EC1 due for completion in Q3 2018, we are confident of their letting prospects. Looking forward, we will continue to seek new refurbishment and development opportunities in undersupplied markets.

"We have sold over £315m of investment assets since 1 April 2016, including the sale this week of our London office investment at C-Space, London EC1, at prices in aggregate of 2.5% above book value. Net proceeds have funded our capital expenditure programme and, importantly, have reduced net borrowings by £236m substantially reducing our loan to value from 55%, at 31 March 2016, to today's pro-forma ratio of 43%.

"With our portfolio of high quality London and Manchester offices and higher yielding logistics properties, we now look forward to increasing our income stream from the current contracted rents of £45m towards the portfolio's ERV of £65m as completed office space is made available to potential tenants in the next 12 months."

Financial Highlights - strong base from which to deliver future returns

Results

· EPRA net asset value per share down 1.7% to 465p (31 March 2017: 473p), reflecting the impact on NAV from the sale of the retirement village portfolio.

· EPRA loss per share of 5.9p (2016: earnings 4.4p).

· IFRS basic earnings per share of 0.3p (2016: 27.8p)

· IFRS Profit before tax of £1.2m (2016: £31.1m).

· Total Property Return of £15.4m (2016: £47.8m).

- Group's share of net rental income of £17.9m reflecting the sale of non-core properties (2016: £24.6m).

- Development losses of £8.2m (2016: £2.6m), after provisions of £11.5m (2016: £6.6m).

- Net gain on sale and revaluation of investment properties of £5.7m (2016: £25.8m).

· Interim dividend declared of 2.50p per share (2016: 2.40p) - up 4.2%.

Property Valuations

· Group's share of property portfolio £1,211m (31 March 2017: £1,205m).

· Investment property valuations, on a like-for-like basis, up 0.8% (0.7% including sales and purchases).

Financing

· See-through loan to value of 51% (31 March 2017: 51%). Post 30 September 2017 sales reduce pro-forma loan to value to 43%.

· 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 30 September 2017 of £266m (31 March 2017: £267m).

Operational Highlights - portfolio positioned to capture ERV  

London Portfolio

· 1.5% valuation increase of London investment portfolio valued at £712m (71% of investment portfolio) at 30 September 2017 - 31 March 2017: £666m (65%).

· C-Space EC1, a 61,973 sq ft office building on City Road, was sold post half-year end for £74.0m, a small premium to its 30 September 2017 and 31 March 2017 book values.

· Contracted rents on our London portfolio, following the C-Space sale and including pre-lets at The Bower, of £25.3m compare to an ERV of £43.3m (like-for-like increase of 4.6%) - 31 March 2017: £27.9m contracted rents with ERV of £44.9m.

· At One Creechurch Place EC3, we have signed leases with two tenants for space totalling 131,879 sq ft, representing 48% of the building and have agreed terms with another two tenants for 60,017 sq ft which, if concluded, will result in the building being 70% let.

· At 25 Charterhouse Square EC1, 70% of the building now let at average rents of £75.50 psf on the offices and £59.35 psf on the ground floor retail.

· At The Loom EC1, we have let an additional 12,850 sq ft of newly refurbished space at between £52.50 psf and a record £55.00 psf.

· At The Bower EC1, we are on target to complete the refurbishment of The Tower by July 2018. Marketing of the remaining space, with 34% already pre-let to WeWork, has commenced and initial interest is encouraging.

· At Barts Square EC1, 128 of the 144 residential units (89%) in Phase One have exchanged (31 March 2017: 116 units) with a further three units reserved.

· 13 sales at Barts Square have completed by 14 November 2017 with the remaining 115 sales due to complete by March 2018 and expected to deliver net proceeds of £56m.

Manchester Portfolio

· Comprises four office buildings generating £5.4m of contracted rents against an ERV of £7.2m and valued at £87.6m.

· Trinity Court, a 47,443 sq ft office building, acquired in May 2017 for £12.9m. An extensive refurbishment of the building is proposed.

Logistics Portfolio

· Comprises 23 predominantly single let assets located around the main UK transport networks generating £11.3m of contracted rents against an ERV of £11.9m and valued at £150.8m.

· One asset sold in the period to an owner-occupier at its book value of £9.3m.

· A new ten year lease completed to the existing tenant at our 65,000 sq ft unit at Telford at passing rent, with good interest in our only remaining vacant property in Doncaster.

Non-Core

· The strategic sale of the retirement village portfolio for £102m, post the half year, reflects a 13% discount to book value with this sales value reflected in the carrying values at 30 September 2017.

· The sale reduces Group borrowings by £46m and boosts cash reserves by £51m of which the payment of £26m is deferred for 12 months.

· During the half year to 30 September 2017, we sold three retail assets for £73.3m at a profit of £1.5m.

· Since 1 April 2016, we have sold £132m of non-core investment assets at 1.3% premium to book value.

· Following the post period end sales, the non-core portfolio includes three regional offices and one retail asset, valued in total at £34.7m, and land valued at £5.9m. Non-core assets now comprise just 4.0% of the total current portfolio (31 March 2017: 17.6%).

For further information, please contact:

Half Year Results Presentation

Helical will be holding a presentation for analysts and investors at 11am, Wednesday 15 November 2017 at FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD. If you would like to attend, please contact Jenni Nkomo on 020 3727 1000, or jenni.nkomo@fticonsulting.com.

The presentation will be on the Company's website www.helical.co.uk and a conference call facility will be available. The dial-in details are as follows:

Webcast Link:

http://webcasting.brrmedia.co.uk/broadcast/59d4e041d349960788385c49

The presentation will also be on the Company's website www.helical.co.uk

Financial Highlights

Notes

1. Includes Group's share of income and gains of its subsidiaries and joint ventures. See Note 25.

2. Calculated in accordance with IAS 33 and guidance issued by the European Public Real Estate Association ("EPRA"). EPRA earnings per share exclude the net gain on sale and revaluation of the investment portfolio of £5.7m (2016: £25.8m) but include development losses of £8.2m (2016: £2.6m).

3. Includes the Group's share of assets and liabilities of its subsidiaries and joint ventures. See Note 25.

4. Reflects the Group's share of assets and liabilities at 30 September 2017, adjusted for £176m of sales since the half year end.

5. See-through loan to value is the ratio of see-through net borrowings to see-through property portfolio. See Note 26.

6. See-through net gearing is the ratio of see-through net borrowings to net assets. See Note 26.

Chief Executive's Statement

Overview

The financial year to date has seen Helical make encouraging progress in executing its strategy and meeting targets. Following the sale announced yesterday of our retirement village portfolio for £102m, a 13% discount to book value, we have now sold the majority of our non-core holdings, with those remaining accounting for just 4% of the total portfolio. One Creechurch Place, London EC3 is 48% let with a further 22% under offer and good interest in the remaining space. In addition, we have achieved record rents at a number of our London investment assets. With the second phase of The Bower, London EC1 and One Bartholomew Close, London EC1 due for completion in Q3 2018, we are confident of their letting prospects. Looking forward, we will continue to seek new refurbishment and development opportunities in undersupplied markets.

Results for the Half Year

The profit before tax for the half year to 30 September 2017 was £1.2m (2016: £31.1m) with a Total Property Return of £15.4m (2016: £47.8m). The reduction in net rents to £17.9m (2016: £24.6m) reflects the sale of £186m of investment assets over the preceding 12 months. Developments contributed profits of £3.3m (2016: £4.0m) before provisions of £11.5m (2016: £6.6m). The gain on sale and revaluation of the investment portfolio contributed £5.7m (2016: £25.8m).

Total finance costs were £14.1m (2016: £14.1m), offset by interest receivable of £1.2m (2016: £2.3m) to give net finance costs of £12.9m (2016: £11.7m). An increase in expected future interest rates led to a credit from the valuation of the Group's derivative financial instruments of £2.9m (2016: charge of £5.9m). The valuation of the Group's Convertible Bond gave rise to a charge to the Income Statement of £0.1m (2016: credit of £7.7m). Recurring administration costs were £5.6m (2016: £5.8m) and the provision for performance related remuneration, including associated NIC, was £0.5m (2016: £0.1m).

These results allow the Board to declare an Interim Dividend of 2.50p (2016: 2.40p), an increase of 4.2%.

Finance

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

We have sold over £315m of investment assets since 1 April 2016, including the sale this week of our London office investment at C-Space, London EC1, at prices in aggregate of 2.5% above book value. Net proceeds have funded our capital expenditure programme and, importantly, have reduced net borrowings by £236m substantially reducing our loan to value from 55% at 31 March 2016 to today's pro-forma ratio of 43%.

Outlook

With our portfolio of high quality London and Manchester offices and higher yielding logistics properties, we now look forward to increasing our income stream from the current contracted rents of £45m to the portfolio's ERV of £65m as completed office space is made available to potential tenants in the next 12 months.

Gerald Kaye

Chief Executive

15 November 2017

Our Market

Overview

Helical's core business is the development of, and investment in, dynamic, well located office space in London and Manchester accompanied by a portfolio of logistics units along the motorway network of England and Wales. With intelligent stock selection, we aim to maximise returns by development and refurbishment as well as through significant asset management initiatives.

London

In London, Helical is building up a portfolio of multi-tenanted offices in the Tech Belt locations of Farringdon, the Old Street roundabout and Whitechapel areas, as well as in West London from Chiswick to Shepherds Bush. By owning these "clusters" or "villages" of office buildings we have a portfolio of assets with multiple lease events leading to ongoing asset management opportunities.

The Company also seeks to grow by taking on additional schemes in Central London often in joint venture or by forward selling/funding them, to allow for the generation of significant profit shares, reducing balance sheet exposure where appropriate.

Manchester

In Manchester we have four assets with a potential capital value, after all refurbishment works and lettings are concluded, approaching £100m. In this city, the occupational and investment market continues to strengthen. It has high quality office stock and a diverse occupier base which has seen much international and institutional investment in recent years. Companies have access to a deep and highly skilled talent pool in a cost effective location both for the employer and employee. It is regarded as the leading UK creative location outside London and our buildings are designed to attract creative occupiers. Annual office take-up is consistently in excess of one million sq ft with high profile new occupiers coming to the city on a regular basis.

Logistics

We have a portfolio of logistics units comprising 15% of our investment portfolio, but which contribute 23% of our current contracted rents. This sector is characterised by strong occupational demand and limited available supply. These properties tend to have little obsolescence and good prospects for rental growth.

Looking Forward

Our key focus remains on London, Manchester offices and logistics. We have made significant progress in reducing non-core holdings which, post the retirement village sales, constitute just 4% of the total portfolio. We will continue to sell the remaining assets as the opportunities to do so arise.

Our ambition is to have a balanced portfolio which generates sufficient net rental income to exceed all of our recurring costs and provide a surplus significantly greater than our annual dividend to Shareholders. We have an ERV on the portfolio, post recent sales, of £65m and expect to generate this surplus once all of our current asset management initiatives are completed. We also seek a pipeline of opportunities to grow the balance sheet of Helical through the creation of development profits and capital surpluses.

Financial Review

Total Accounting Return

The total accounting return is the growth in the net asset value of the company plus dividends paid in the period, expressed as a percentage of the net asset value at the beginning of the period. The metric measures the growth in shareholders' funds each period and is expressed as an absolute measure.

Total Property Return

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

Earnings per Share

The IFRS earnings per share is based on the after tax earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. For the six months to 30 September 2017 IFRS earnings per share was 0.3p (2016: 27.8p). On the EPRA basis, which excludes gains on the sale and revaluation of properties, the loss per share was 5.9p (2016: earnings 4.4p).

Net Asset Value Per Share

IFRS diluted net asset value per share is a measure of shareholders' funds divided by the number of shares in issue at the period end, excluding those held by the Company's Employee Share Ownership Plan Trust, adjusted to allow for the effect of all dilutive share awards. At 30 September 2017 it was 426p (31 March 2017: 431p). On an EPRA basis, which adds back the fair value of financial instruments and the Convertible Bond, the property related deferred tax creditor and reflects the fair value of trading and development properties, the net asset value per share was 465p (31 March 2017: 473p).

Income Statement

Rental Income and Property Overheads

Gross rental income receivable by the Group reduced by 23% to £20.2m (2016: £26.3m) reflecting the sale of £186m of investment assets with contracted rents of £11.8m since 30 September 2016, offset by the partial capture of the portfolio's reversionary potential. Property overheads increased from £1.7m to £2.3m leaving the see-through net rents reduced by 27% to £17.9m (2016: £24.6m).

Development Profits/Losses

Development profits in the half year include a £0.7m development management fee at Barts Square and a contribution of £1.9m from our retail development programme offset by a £1.2m loss on the sale of land at Cawston. The retirement village provision of £10.2m plus a loss on sales at the retirement villages of £0.8m contributed to a net development loss of £8.2m (2016: £2.6m).

Share of Results of Joint Ventures

In our joint ventures we recognised an investment valuation uplift of £2.3m. Our retail development scheme at Shirley contributed to a development profit of £1.4m with the joint ventures contributing a total profit of £3.4m (2016: loss of £1.0m).

Gain on Sale and Revaluation of Investment Properties

During the six months we sold three non-core retail assets for a combined £73.3m and an industrial unit to an owner-occupier for £9.3m. Net of costs these sales contributed a profit of £1.2m (2016: loss of £2.8m). Subsequent to the half year end we have sold our investment asset at C-Space, London EC1, for £74.0m, marginally above its 30 September 2017 book value.

Administration Costs

Administration costs, before performance-related awards, reduced from £5.8m to £5.6m. Including share awards and associated NIC of £0.5m (2016: £0.1m), total administration costs increased to £6.1m (2016: £5.9m).

Finance Costs, Finance Income and Derivative Financial Instruments

Interest payable on secured bank loans, including our share of loans on assets held in joint ventures but before capitalised interest, was £13.1m (2016: £13.1m). Interest payable in respect of the unsecured Retail and Convertible Bonds was £4.4m (2016: £4.4m). Capitalised interest marginally reduced to £3.4m (2016: £3.5m). Total finance costs, including in joint ventures, were £14.1m (2016: £14.1m). Finance income earned was £1.2m (2016: £2.3m). The movement in medium and long-term interest rate projections during the period, offset by the shortening maturity period of the Group's derivative financial instruments, contributed to a credit of £2.9m (2016: charge of £5.9m) on their mark-to-market valuation.

Taxation

Helical pays corporation tax on its net rental income, trading and development profits and realised chargeable gains, after offset of administration and finance costs and any available losses.

The deferred tax charge for the half year is principally derived from the revaluation surpluses recognised in the period offset by the recognition of the tax losses which the Group believes will be utilised against profits in the foreseeable future.

Dividends

The Board has approved the payment of an interim dividend of 2.50p per share (2016: 2.40p), an increase of 4.2%. This interim dividend will be paid on 22 December 2017 to Shareholders on the share register on 24 November 2017.

Balance Sheet

Shareholders' Funds

Shareholders' funds at 1 April 2017 were £516.9m. The Group's results for the six months added £0.4m, net of tax, representing the total comprehensive income for the period. Movements in reserves arising from the Group's share schemes increased funds by £0.2m. The Company paid dividends to Shareholders amounting to £7.3m leaving a net decrease in Shareholders' Funds from the Group's activities during the half year of £6.7m to £510.2m.

Investment Portfolio

Debt and Financial Risk

Helical's outstanding debt at 30 September 2017 of £738m (31 March 2017: £737m) had a weighted average maturity of 3.0 years (31 March 2017: 3.6 years) and a weighted average interest cost of 4.3% (31 March 2017: 4.3%).

Debt Profile at 30 September 2017 - Excluding the Effect of Arrangement Fees

Secured Debt

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

- Investment Facilities

We have £190m of revolving credit facilities which enable the group to acquire, refurbish, reposition and hold significant parts of our investment portfolio. We have used these facilities mainly to finance our regional portfolio. Our London investment assets are primarily held in £379m of secured loan facilities which, where appropriate, allow us to finance projects, including the redevelopment of The Tower at The Bower, London EC1. Of the total of £569m of investment facilities we have £130m available to fund these works and finance any new acquisitions. The average maturity of the Group's investment facilities at 30 September 2017 was 3.5 years with a weighted average interest rate of 4.3%.

- Development Facilities

These facilities finance the construction of the retirement villages at Durrants Village Horsham; Maudslay Park, Great Alne; Phase IV at Bramshott Place, Liphook and Millbrook Village, Exeter. The average maturity of the Group's development facilities at 30 September 2017 was 2.9 years with a weighted average interest rate of 3.5%. These facilities were transferred to the purchaser of the retirement village portfolio in November 2017.

- Joint Venture Facilities

We hold a number of investment and development properties in joint venture with third parties and include in our reported figures our share, in proportion to our economic interest, of the debt associated with each asset. The average maturity of the Group's share of bank facilities in joint ventures at 30 September 2017 was 2.2 years with a weighted average interest rate of 3.4%.

Unsecured Debt

The Group's unsecured debt, including the Convertible Bond at its mark-to-market valuation, is £180m as follows:

- Retail Bond

In June 2013, the Group raised £80m from the issue of an unsecured Retail Bond with a 6.00% coupon. This bond is repayable in June 2020.

- Convertible Bond

In June 2014, the Group raised £100m from the issue of a listed unsecured Convertible Bond with a 4.0% coupon, repayable in June 2019, or, subject to certain conditions, convertible at the option of the bond holders into ordinary shares, unless a cash settlement option is exercised by the Company. The initial conversion price has been set at £4.9694 per share, representing a 35% premium above the price on the day of the issue and a premium of 59% above the Company's EPRA net asset value per share at 31 March 2014. The value of the Bond at 30 September 2017, as determined by the listed market price, was £99.9m.

- Short term working capital facilities

These facilities provide access to additional working capital for the Group.

Cash and Cash Flow

At 30 September 2017, the Group had £266m (31 March 2017: £267m) of cash and agreed, undrawn, committed bank facilities including its share in joint ventures, as well as £22m (31 March 2017: £17m) of uncharged property on which it could borrow funds.

Net Borrowings and Gearing

Total gross borrowings of the Group, including in joint ventures, have increased marginally from £736.6m to £738.1m during the six months to 30 September 2017. After deducting cash balances of £112.4m and unamortised refinancing costs of £6.3m, net borrowings were £619.4m (31 March 2017: £620.0m). The gearing of the Group, including in joint ventures, was 121% (31 March 2017: 120%).

Hedging

At 30 September 2017, the Group had £621.3m (31 March 2017: £651.4m) of fixed rate debt with an average effective rate of 4.2% (31 March 2017: 4.2%) and £46.0m (31 March 2017: £29.3m) of floating rate debt with an average effective rate, excluding commitment fees, of 3.0% (31 March 2017: 3.0%). In addition, the Group had £3.3m of interest rate caps at 0.75% (31 March 2017: £3.3m at 0.75%). In our joint ventures, the Group's share of fixed rate debt was £nil (31 March 2017: £nil) and £70.8m (31 March 2017: £55.9m) of floating rate debt with an effective rate of 3.4% (31 March 2017: 3.4%) with interest rate caps set at 1.5% plus margin on £158.9m and 0.5% plus margin on £164.7m.

Note 1: This includes commitment fees on undrawn facilities. Excluding these would reduce the effective rate to 3.0% (31 March 2017: 3.0%).

Interest Cover

In assessing the results of the Group for each financial period, Helical considers its interest cover as a measure of its performance and ability to finance its annual interest payments from its net operating income, before revaluation gain or losses on the investment portfolio and net realisable provisions on the trading and development stock. In the half year to 30 September 2017 the interest cover was 1.7 times (2016: 2.2 times).

Tim MurphyFinance Director

15 November 2017

Helical's Property Portfolio - 30 September 2017

Property Overview

Helical divides its property activities into three core markets: London, Manchester offices and logistics. Following the sale of C-Space and the Retirement Village portfolio in November 2017, the London Portfolio represents 73.1% of the total property portfolio and drives capital growth, development profits and, increasingly, income. Manchester offices accounts for 8.4%, and logistics account for 14.5%.

In addition, we have a small portfolio of non-core assets comprising three regional offices and one regional retail property which together represent just 4.0% of the total property portfolio.

The London Portfolio

Our strategy is to continue to increase our London holdings, focusing on areas where we see strong tenant demand and growth potential, such as the "Tech Belt" that runs from King's Cross through Old Street and Shoreditch to Whitechapel and in West London, in particular Shepherds Bush, Chiswick and Hammersmith. Our London portfolio comprises income producing multi-let offices, office refurbishments and developments and residential development schemes.

· City and Tech Belt

One Creechurch Place, City of London EC3

One Creechurch Place is a landmark City office scheme in the heart of the insurance sector in London. In May 2014, Helical signed a joint venture agreement with HOOPP (Healthcare of Ontario Pension Plan) to redevelop the site. Under the terms of the joint venture, HOOPP and Helical jointly funded the project on a 90:10 split, with Helical acting as development manager for which it will receive a promote payment depending on the successful outcome of the scheme. The new building, comprising 272,505 sq ft NIA of offices and 786 sq ft of retail, achieved practical completion on 7 November 2016 and is currently being marketed for occupation. Since 30 September 2017, we have signed leases with Hyperion for 115,910 sq ft and Travelers for 15,969 sq ft, representing 48% of the building and are under offer with another two tenants for 60,017 sq ft, which, if concluded, will result in the building being 70% let.

25 Charterhouse Square, Smithfield EC1

In January 2016, Helical was granted a new 155 year leasehold interest in 25 Charterhouse Square, from the Governors of Sutton's Hospital in Charterhouse for £16m. Helical has carried out a major refurbishment of the existing building, which increased the previous 34,000 sq ft to 38,355 sq ft of offices with the addition of a new sixth floor, and added 5,138 sq ft of retail/restaurant space. The building achieved practical completion on 28 March 2017. The 5th and 6th floors have been let at £75 psf and in the period the 4th floor was let to Peakon, also at £75 psf on a 10 year lease with a five year break. Since the end of the period the ground and first floors have been let on five year leases at £77 psf for the first floor and an average £59 psf for the "shell" ground floor units. The second floor is also under offer and due to exchange shortly.

C-Space, 37-45 City Road EC1

Helical acquired C-Space in June 2013. Planning consent was obtained for a complete refurbishment of the building which increased the previous 50,000 sq ft office building to 61,973 sq ft. The works, which were completed in October 2015, involved an additional floor and extensions to the third floor, a landscaped courtyard and entrance pavilion to the rear and full height glazing to the raised ground floor. 75% of the space was pre-let to the creative agency MullenLowe in June 2015, with the remaining space let to NeuLion in November 2016.

Contracts were exchanged on 10 November 2017 for the sale of the building at £74m, marginally above its 31 March 2017 value book, with completion in December 2017.

The Loom, Whitechapel E1

This 110,069 sq ft listed former wool warehouse was acquired in 2013. A major repositioning was completed in September 2016 to include a new entrance and reception onto Gowers Walk, café, showers and a bike store. Since 1 April 2017, we have completed five new lettings on 12,850 sq ft with newly refurbished space being let at between £52.50 psf and a record £55.00 psf. Two further units totalling 2,431 sq ft are under offer.

The Bower EC1

211 Old Street EC1

The development of Phase One, comprising The Warehouse, 128,262 sq ft, and The Studio, 23,177 sq ft, completed in November 2015.

Phase One is fully let to CBS, Farfetch, Pivotal, Allegis and Stripe (The Warehouse) and John Brown Media (The Studio), and all tenants are in occupation. The retail operators are Bone Daddies, Draft House, Enoteca da Luca, Honest Burger, Maki and Franze & Evans.

207 Old Street EC1

At The Tower, comprising 178,571 sq ft of offices with ground floor retail, the refurbishment and construction works are well underway with practical completion scheduled for July 2018. We have pre-let six floors, comprising 58,904 sq ft (34%), to WeWork, the leading global provider of flexible collaborative co-working space, and recently launched the marketing of the remaining 119,667 sq ft of this building. A number of parties have inspected the building and we are encouraged by the interest being shown.

Barts Square EC1

In a joint venture with The Baupost Group LLC, Helical owns the freehold interest of Barts Square, a 3.2 acre site between St Pauls and Smithfield Market, situated a short walk from Farringdon East station on the Elizabeth Line (Crossrail) which is due to be operational at the end of 2018.

Barts Square will ultimately provide an entirely new quarter in the City consisting of 236 residential apartments, three office buildings of 213,125 sq ft, 24,031 sq ft and 10,200 sq ft and 21,839 sq ft of retail/A3 at ground floor as well as major public realm improvements.

Phase One - Residential

Phase 1 of Barts Square comprises 144 residential units, 3,193 sq ft of retail and extensive public realm improvements. The residential units are being handed over to purchasers as buildings are completed with the Underwood Building (13 sales) completed by October 2017 and six further buildings (115 sales) to be completed and handed over in the period to March 2018. In total, contracts have been exchanged for the sale of 128 residential units (12 in the period) for a total value of £162.1m at an average of £1,565 psf, with a further three units reserved, leaving just 13 apartments to sell.

90 Bartholomew Close - Offices

Construction of the 24,013 sq ft office building with 6,449 sq ft of restaurant use on the ground floor is expected to be completed in December 2017. Marketing of the offices will commence after practical completion of the building. The ground floor restaurant is under offer to a leading UK restauranteur who operates a small collection of restaurants, delis and bars.

Phase Two - One Bartholomew Close - Offices

One Bartholomew Close was sold to clients of Ashby Capital LLP ("Ashby") for £102.4m in August 2015. The demolition of the existing building and the construction of a new 12 storey office block of 213,125 sq ft commenced in January 2016 and is due to be completed in Q3 2018. Ashby's clients finance the development costs and, when the building is completed and successfully let, the joint venture will be entitled to receive a profit share payment. Helical is the development manager for delivery of the project.

Phase Three - Residential/retail/offices

Demolition work on Phase 3 of Barts Square is completed with pre-construction works now underway. This phase will comprise 92 apartments and 12,197 sq ft of retail space. Completion is due in Q3 2019 and marketing of the units is expected to commence in Q2 2018. The refurbishment of 54/58 Bartholomew Close to provide 10,200 sq ft of offices is expected to start in 2018 for completion in 2019.

Farringdon East, Smithfield EC1

We have an exclusivity agreement with Farringdon East Ltd whereby we will acquire the company with the intention of constructing a new consented 89,000 sq ft office building over the Farringdon East Crossrail Station with the benefit of a new 150 year lease from TFL. It is anticipated that the construction works will commence in Spring 2018 for completion by Q4 2019.

· West London

The Shepherds Building, Shepherds Bush W14

This 151,000 sq ft multi-let office building close to the Westfield London shopping centre maintains an occupancy approaching 100%, as it has for the past ten consecutive years. The average contracted rent for the building is £45 psf with a total contracted rent of £6.64m. During the period we have completed new lettings totalling 8,987 sq ft and 1,573 sq ft since the period end.

Power Road Studios, Chiswick W4

The site comprises 58,404 sq ft of offices across five buildings and is multi-let to a wide range of predominantly media tenants. In October we completed the refurbishment of Studio 1, a project comprising 16,000 sq ft of air conditioned Grade A space, refurbished common parts and two new lift shafts to accommodate a consented future roof extension of 13,000 sq ft. Of the newly refurbished space, we pre-let 2,425 sq ft at £43 psf and have recently completed the letting of a further 5,916 sq ft at £43 psf. Preliminary works have been completed on a consented new 30,000 sq ft office building.

The Powerhouse, Chiswick W4

Helical acquired this 24,288 sq ft office and recording studios by way of sale and leaseback in 2013. The Powerhouse is a listed building on Chiswick High Road and is fully let on a long lease to Metropolis Music Group.

King Street, Hammersmith W6

Hammersmith & Fulham Borough Council, who have been opposed to this regeneration project since the Council became Labour controlled, have exercised their option to terminate the development agreement. With our partners Grainger plc we will now seek to maximise the value of the land held by the joint venture company and are in discussions with the Council with the aim of reaching agreement on this sale.

Manchester Offices

Manchester is a city with a diverse, thriving and growing economy which is widely regarded as England's second city and the centre of the "Northern Powerhouse". The assets we hold there are:

Churchgate and Lee House, Manchester

This asset, comprising 249,233 sq ft of multi let offices, was purchased in March 2014. Since purchase we have refurbished the reception and 75,254 sq ft of office space and the building is fully let. During the period we agreed a new ten year lease with Capita on 33,000 sq ft at £15.50 psf, an uplift of 7% on the previous rent. Looking forward we will continue with asset management initiatives to drive further rental and capital growth.

31 Booth Street, Manchester

This 25,441 sq ft office located in the prime city core was acquired in January 2016 for £4.7m. The building has been fully refurbished and was launched to the market in March 2017. The ground floor and basement has been let on an agreement to lease to Elevatione, a luxury boutique cosmetic retailer, and good interest is being shown in the remaining office space.

35 Dale Street, Manchester

35 Dale Street is a 51,634 sq ft office building situated in the Northern Quarter of Manchester. We have completed the refurbishment of the 3rd and 4th floor offices and agreed terms at £19 psf on that space. The refurbishment of the 1st and 2nd floors will commence in December 2017 with delivery expected in March 2018. All the available space on the 1st floor is under offer. The ground and lower ground floor space has been pre-let to Vibe Gym and Idle Hands (coffee shop).

Trinity Court, Manchester

Trinity Court, purchased in May 2017 for £12.9m, is a 47,443 sq ft office building situated in the central business district of Manchester. The building is currently 100% let with secured income until January 2018 at a passing rent of £26.94 psf. The building will be vacated in 2018 and a full refurbishment and extension will be implemented delivering 55,672 sq ft of new and refurbished office space to the market in early 2019.

Logistics

Helical owns 23 distribution and logistics units located around major UK transport networks. These units generally have few bespoke features making them straightforward to re-let if vacancies occur with low capital expenditure required. During the period, we sold our 189,349 sq ft warehouse at Hinckley, Leicestershire to an owner-occupier for its book value of £9.3m. We have completed a new ten year lease at the existing passing rent at Telford and have good interest from potential tenants in our remaining vacant asset in Doncaster.

Non-Core

Offices

Our regional offices, outside Manchester, comprise three fully let buildings located in Crawley, Reading and Glasgow which generate contracted rental income of £2.3m and have a combined value of £24.6m.

Retail Investments

During the period we sold our retail assets at Morgan Quarter, Cardiff, Great Yarmouth and Southend for a combined £73.3m, a premium to book value of 4.7%. At 30 September 2017, our single remaining retail investment is a 42,490 sq ft retail warehouse in Sevenoaks.

Retail Developments

During the period we completed our 79,750 sq ft retail park at Cortonwood Retail Park which was 100% pre-let and forward funded with clients of Aberdeen Asset Management. We also progressed our retail schemes at Truro, Evesham, Kingswinford and East Ham.

Retirement Villages

Our retirement village portfolio at 30 September 2017 consisted of four villages at Bramshott Place Liphook, Durrants Village Faygate, Millbrook Village Exeter and Maudslay Park Great Alne.

In November 2017, we sold our entire retirement village portfolio to L&G Capital for gross proceeds of £102m with £26m deferred for 12 months.

Total Portfolio by Fair Value

1 Proforma figures reflect the position at 30 September 2017, adjusted for the sales of C-Space, EC1 and the Retirement Village portfolio in November 2017.

Trading and Development Portfolio

1 Proforma figures reflect the position at 30 September 2017, adjusted for the sales of C-Space, EC1 and the Retirement Village portfolio in November 2017.

Capital Expenditure

We have a planned development and refurbishment programme.

Asset Management

Asset management is a critical component in driving Helical's performance. Through having well considered business plans and by maximising the combined skills of our management team, we are able to create value in our assets without relying on market movements.

1 Contracted rent includes £3.8m pre-let to WeWork at The Bower.

During the period, total contracted income reduced by £3.5m as the result of the sale of £82.6m of investment properties and losses from breaks and lease expiries, offset by the purchase of one investment property and rent from new lettings and rent reviews.

Investment Portfolio - as at 30 September 2017

Portfolio Yields

Capital Values, Vacancy Rates and Unexpired Lease Terms

\* The vacancy rates exclude assets in the course of redevelopment.

Valuation Movements

Lease Expiries or Tenant Break Options

We have a strong rental income stream and a diverse tenant base, with the largest tenant in the portfolio accounting for only 8.7% of the rent roll. The top 10 tenants account for 36.7% of the total rent roll and the tenants come from a variety of industries.

Independent review report to the members of Helical plc

Introduction

We have reviewed the condensed set of financial statements in the half-yearly financial report of Helical Plc for the six months ended 30 September 2017 which comprises the Unaudited Consolidated Income Statement, the Unaudited Consolidated Balance Sheet, the Unaudited Consolidated Cash Flow Statement, the Unaudited Consolidated Statement of Changes in Equity and the related unaudited notes. We have read the other information contained in the half yearly financial report: Financial Highlights, Chief Executive's Statement, Financial Review and Helical's Property Portfolio and 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, 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 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 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 Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with 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 Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express a conclusion to the company 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 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 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Grant Thornton UK LLPStatutory Auditor, Chartered Accountants

London 15 November 2017

Unaudited Consolidated Income Statement

For the Half Year to 30 September 2017

Unaudited Consolidated Statement of Comprehensive Income

For the Half Year to 30 September 2017

The exchange differences on retranslation of net investments in foreign operations will be reclassified to the Income Statement on disposal.

Unaudited Consolidated Balance Sheet

At 30 September 2017

Unaudited Consolidated Cash Flow Statement

For the Half Year to 30 September 2017

Unaudited Consolidated Statement of Changes in Equity

At 30 September 2017

For a breakdown of total comprehensive income see the Unaudited Consolidated Statement of Comprehensive Income.

The adjustment against retained earnings of £321,000 (31 March 2017: £1,672,000) adds back the share based payments charge in accordance with IFRS 2 Share Based Payments.

There were net transactions with owners of £7,046,000 (31 March 2017: £2,996,000) made up of the Performance Share Plan credit of £321,000 (31 March 2017: £1,672,000) and related deferred tax debit of £109,000 (31 March 2017: £2,062,000), dividends paid of £7,261,000 (31 March 2017: £3,566,000), the issue of share capital of £3,000 (31 March 2017: £nil), the purchase of own shares of £nil (31 March 2017: £944,000) and the share settled bonus of £nil (31 March 2017: £1,904,000).