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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Helical Plc | LSE:HLCL | London | Ordinary Share | GB00B0FYMT95 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 2.50 | 1.25% | 202.50 | 201.00 | 202.50 | 201.50 | 196.00 | 196.00 | 24,045 | 16:35:25 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Lessors Of Real Property,nec | 49.85M | -64.51M | -0.5230 | -3.82 | 246.71M |
From Apr 2022 to Apr 2024
TIDMHLCL
RNS Number : 5225M
Helical PLC
24 May 2022
HELICAL PLC
("Helical" or the "Group" or the "Company")
Annual Results for the Year to 31 March 2022
HELICAL, DELIVERING A SUSTAINABLE FUTURE
Gerald Kaye, Chief Executive, commented:
"Today marks the opening to the public of the Elizabeth Line, one of the largest transport infrastructure projects in the UK, increasing Central London's rail capacity by 10% and bringing an additional 1.5 million people within 45 minutes of Central London. Our GBP1bn portfolio of sustainable, amenity rich London offices, of which 99% by value are situated within a 12 minute walk of a nearby Elizabeth Line station, will continue to benefit from their proximity to this new arterial route through Central London. It is this connection, together with the improving strength of the prime London office market, that has underpinned a strong set of results after emerging from the Covid-19 pandemic following two difficult years.
"Our Total Accounting Return ("TAR") for the year, a key performance indicator for Helical, was 15.0% on our net assets measured under IFRS and 10.2% based on our EPRA net tangible assets. Over the three years to 31 March 2022, the compound annual growth rate of our EPRA TAR was 7.8% pa, an indication of the strength and consistency of the financial performance of the Group, despite the challenges of the period. These results were driven by growing rental income and strong valuation surpluses from both our completed development schemes, now held for long term income growth and future asset management opportunities, and our schemes under development.
"This morning we published our Net Zero Carbon Pathway to becoming a net zero carbon business by 2030, as our contribution, as a responsible business, to the decarbonising of the UK economy by 2050. In continuing this journey, we have identified meaningful ways of reducing both our embodied and operational carbon emissions. As part of this process, we have signed up to the Better Buildings Partnership Climate Commitment, which provides an accountable and transparent framework for delivering net zero carbon for a property portfolio.
"We are a specialist developer and investor in prime Central London real estate, creating inspiring and sustainable, best-in-class office buildings. London is a leading world city, a safe haven, attracting a mix of established and growing businesses seeking a base for their operations and well capitalised investors looking to invest their funds.
"We will continue to see bifurcation between the best-in-class new sustainable buildings and the older less sustainable buildings. This will be reflected in strong rental growth for the former and rental decline for the latter. Helical is well positioned to capitalise upon a period of opportunity within the sector over the next 10-20 years, changing the older "brown" buildings into "green" sustainable buildings.
"In the last year, we have deployed capital to acquire 100 New Bridge Street, EC4, with this exciting redevelopment due to start by the end of 2023, following the expiry of the current tenancies. Along with 33 Charterhouse Street, EC1, due for completion in September 2022, and continuing asset management opportunities in the remaining, completed investment portfolio, we are optimistic that our successful track record of outperforming the market and delivering strong financial returns will continue."
Operational Highlights
-- Major boost to the development pipeline with the acquisition of 100 New Bridge Street, EC4. Delivery of a c.185,000 sq ft office scheme planned for early 2025.
-- Practical completion of 33 Charterhouse Street, EC1, a 205,369 sq ft BREEAM "Outstanding" office development, on track for September 2022.
-- 14 residential units at Barts Square sold in this 236 unit residential scheme, leaving 14 apartments available at the year end of which one has since been sold and two are under offer.
-- 12 new lettings completed across the portfolio, totalling 54,118 sq ft, delivering contracted rent of GBP3.3m (Helical's share GBP3.0m) at 1.8% above the 31 March 2021 ERV (excluding managed lettings).
-- 95.8% of all rent contracted and payable for the financial year collected with 2.2% to be collected following the end of the Government's general moratorium and 2.0% having been written off or agreed concessions.
-- Post year end disposals of:
- Trinity, our last remaining asset in Manchester, for GBP34.55m, at a net premium of c.GBP2.0m to our 31 March 2022 book value and representing a net initial yield of 5.0%.
- 55 Bartholomew, EC1, for GBP16.5m (our share GBP7.6m), at a 3% premium to 31 March 2022 book value, reflecting a net initial yield of 4.5%.
Financial Highlights
Earnings and Dividends
-- IFRS profit after tax increased to GBP88.9m (2021: GBP17.9m). -- See-through Total Property Return(1) of GBP89.5m (2021: GBP48.6m): - Group's share(1) of net rental income of GBP31.2m (2021: GBP25.0m) - up 24.8%. - Net gain on sale and revaluation of investment properties of GBP51.7m (2021: GBP23.9m). - Development profits of GBP6.6m (2021: losses of GBP0.3m).
-- Total Property Return, as measured by MSCI, of 10.7%, compared to the MSCI Central London Offices Total Return Index of 7.9%.
-- IFRS basic earnings per share of 72.8p (2021: 14.8p). -- EPRA earnings per share(1) of 5.2p (2021: loss of 1.8p). -- Final dividend proposed of 8.25p per share (2021: 7.40p), an increase of 11.5%. -- Total dividend for the year of 11.15p (2021: 10.10p), an increase of 10.4%.
Balance Sheet
-- Net asset value up 13.0% to GBP687.0m (31 March 2021: GBP608.2m). -- Total Accounting Return(1) on IFRS net assets of 15.0% (2021: 3.3%). -- Total Accounting Return(1) on EPRA net tangible assets of 10.2% (2021: 4.5%).
-- EPRA Total Accounting Return CAGR(1) for the three years to 31 March 2022 of 7.8% (2021: 7.2%).
-- EPRA net tangible asset value per share(1) up 7.3% to 572p (31 March 2021: 533p). -- EPRA net disposal value per share(1) up 13.6% to 551p (31 March 2021: 485p).
Financing
-- See-through loan to value(1) increased to 36.4% (31 March 2021: 22.6%). -- See-through net borrowings(1) of GBP402.9m (31 March 2021: GBP193.9m).
-- Average maturity of the Group's share(1) of secured debt of 3.0 years (31 March 2021: 3.2 years), increasing to 3.7 years on exercise of options to extend current facilities and on a fully utilised basis.
-- Change in fair value of derivative financial instruments credit of GBP18.0m (2021: GBP2.9m). -- See-through average cost of secured facilities(1) of 3.2% (31 March 2021: 3.5%). -- Group's share(1) of cash and undrawn bank facilities of GBP132m (31 March 2021: GBP423m).
-- Helical elected to become a REIT, effective 1 April 2022, and will be exempt from UK corporation tax on relevant future property activities.
Portfolio Update
-- IFRS investment property portfolio value of GBP938.8m (31 March 2021: GBP740.2m).
-- 7.0% valuation increase, on a like-for-like basis(1) (5.6% including sales and purchases), of our see-through investment portfolio, valued at GBP1,097.3m, compared to GBP839.4m at 31 March 2021.
-- Contracted rents of GBP46.4m (31 March 2021: GBP37.8m) compared to an ERV(1) of GBP67.1m (31 March 2021: GBP52.1m).
-- See-through portfolio WAULT(1) of 5.6 years (31 March 2021: 6.9 years). -- Vacancy rate reduced from 10.5% to 6.7%.
Sustainability Highlights
-- Helical's "Net Zero Carbon Pathway" published today setting out our commitment to becoming a net zero carbon business by 2030.
-- Better Building Partnership's Climate Commitment adopted, providing an accountable and transparent framework for delivering net zero carbon for a property portfolio.
-- Improvements across sustainability measures and ratings with a 4* Green GRESB rating (85/100), MSCI ESG of AAA and an EPRA Sustainability BPR rating of Gold.
-- 96% of the space in our buildings has been recently developed or refurbished (excluding 100 New Bridge Street, EC4) with 99% of our investment portfolio, by value, having an A or B EPC rating.
For further information, please contact:
Hot Features
Premium
Helical plc 020 7629 0113
Gerald Kaye (Chief Executive)
Tim Murphy (Chief Financial Officer)
Address: 5 Hanover Square, London W1S
1HQ
Website: www.helical.co.uk
Twitter: @helicalplc
FTI Consulting 020 3727 1000
Dido Laurimore/Richard Gotla/Andrew Davis
schelical@fticonsulting.com
Results Presentation
Helical will be holding a presentation for analysts and investors starting at 08:30am on Tuesday 24 May 2022 at the offices of FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD. If you would like to attend, please contact FTI Consulting on 020 3727 1000, or email schelical@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:
Participants, Local - London, United Kingdom: 0330 165 4012 Participation Code: 5156706
Webcast Link:
https://webcasting.brrmedia.co.uk/broadcast/624c2069e1d0d456b32a283b
1. See Glossary for definition of terms. The financial statements have been prepared in accordance with International Accounting Standards ("IAS") in conformity with the Companies Act 2006. In common with usual and best practice in our sector, alternative performance measures have also been provided to supplement IFRS, some of which are based on the recommendations of the European Public Real Estate Association ("EPRA"), with others designed to give additional information about the Group's share of assets and liabilities, income and expenses in subsidiaries and joint ventures.
Chief Executive's Statement
Overview
Today marks the opening to the public of the Elizabeth Line, one of the largest transport infrastructure projects in the UK, increasing Central London's rail capacity by 10% and bringing an additional 1.5 million people within 45 minutes of Central London. Our GBP1bn portfolio of sustainable, amenity rich London offices, of which 99% by value are situated within a 12 minute walk of a nearby Elizabeth Line station, will continue to benefit from their proximity to this new arterial route through Central London. It is this connection, together with the improving strength of the prime London office market, that has underpinned a strong set of results after emerging from the Covid-19 pandemic following two difficult years.
Our Total Accounting Return ("TAR") for the year, a key performance indicator for Helical, was 15.0% on our net assets measured under IFRS and 10.2% based on our EPRA net tangible assets. Over the three years to 31 March 2022, the compound annual growth rate of our EPRA TAR was 7.8% pa, an indication of the strength and consistency of the financial performance of the Group, despite the challenges of the period. These results were driven by growing rental income and strong valuation surpluses from both our completed development schemes, now held for long term income growth and future asset management opportunities, and our schemes under development.
Sustainability
This morning we published our Net Zero Carbon Pathway to becoming a net zero carbon business by 2030, as our contribution, as a responsible business, to the decarbonising of the UK economy by 2050. In continuing this journey, we have identified meaningful ways of reducing both our embodied and operational carbon emissions. As part of this process, we have signed up to the Better Buildings Partnership Climate Commitment, which provides an accountable and transparent framework for delivering net zero carbon for a property portfolio.
With our commitment to sustainability reporting, we measure our performance against industry-wide benchmarks, and I am pleased again to be able to report significant progress against these measures during the year.
We have improved our GRESB score from a 3* to a 4* Green rating, increasing our score from 76 to 85, and have maintained our MSCI ESG rating at AAA, the top rating. Further, we have been awarded a Gold rating under the EPRA Sustainability BPR, up from Silver.
At a portfolio level, 99% by value of our completed portfolio has an EPC rating of A or B (the remaining 1% has a C rating) and each of our refurbished or redeveloped office buildings has a BREEAM rating of "Excellent", with BREEAM "Outstanding" targeted for 33 Charterhouse Street, EC1 and 100 New Bridge Street, EC4.
Overall, the Group has continued to respond decisively to the climate change challenge, achieving its sustainability targets and, importantly, has a clear path to continue this journey.
Results for the Year
The profit after tax for the year to 31 March 2022 was GBP88.9m (2021: GBP17.9m) with a see-through Total Property Return of GBP89.5m (2021: GBP48.6m). Following the letting of Kaleidoscope, EC1 in March 2021 and the recent purchase of 100 New Bridge Street, EC4, see-through net rental income increased by 24.8% to GBP31.2m (2021: GBP25.0m) while developments generated see-through profits of GBP6.6m (2021: loss of GBP0.3m). The see-through net gain on sale and revaluation of the investment portfolio was GBP51.7m (2021: GBP23.9m).
Total see-through net finance costs increased to GBP19.7m (2021: GBP14.8m), including GBP5.9m loan cancellation costs. An increase in expected future interest rates led to an GBP18.0m credit (2021: GBP2.9m) from the valuation of the Group's derivative financial instruments. Recurring see-through administration costs were 2% higher at GBP9.9m (2021: GBP9.7m), with performance related awards increasing to GBP6.0m (2021: GBP4.3m) and National Insurance on these awards of GBP1.2m (2021: GBP0.8m).
A corporation tax credit of GBP1.1m has been recognised in the annual results and following the election to become a REIT, with effect from 1 April 2022, a deferred tax credit of GBP14.9m has also been recognised.
There was an IFRS basic earnings per share of 72.8p (2021: 14.8p) and an EPRA earnings per share of 5.2p (2021: loss of 1.8p).
On a like-for-like basis, the investment portfolio increased in value by 7.0% (5.6% including purchases and gains on sales). The see-through total portfolio value increased to GBP1,097.3m (31 March 2021: GBP839.4m), following the acquisition of 100 New Bridge Street, EC4 during the year.
The unleveraged return of our property portfolio, as measured by MSCI, was 10.7% (2021: 7.0%), showing strong outperformance of its benchmark. We compare our portfolio performance to the MSCI UK Central London Offices Total Return Index which produced a return of 7.9% (2021: -1.7%) with an upper quartile return of 9.9% (2021: 1.6%).
The portfolio was 93.3% let at 31 March 2022, generating contracted rents of GBP46.4m (2021: GBP37.8m), at an average of GBP60 psf, growing to GBP49.3m on the letting of currently vacant space and moving towards capturing its ERV of GBP67.1m (2021: GBP52.1m). The Group's contracted rent has a Weighted Average Unexpired Lease Term ("WAULT") of 5.6 years.
The Total Accounting Return ("TAR"), being the growth in the IFRS net asset value of the Group, plus dividends paid in the year, was 15.0% (2021: 3.3%). Based on EPRA net tangible assets, the TAR was 10.2% (2021: 4.5%). EPRA net tangible assets per share were up 7.3% to 572p (31 March 2021: 533p), with EPRA net disposal value per share up 13.6% to 551p (31 March 2021: 485p).
Balance Sheet Strength and Liquidity
The Group has a significant level of liquidity with see-through cash and unutilised bank facilities of GBP132m (31 March 2021: GBP423m) to fund capital works on its portfolio and future acquisitions.
At 31 March 2022, the Group had GBP14.2m of cash deposits available to deploy without restrictions and a further GBP19.1m of rent in bank accounts available to service payments under loan agreements, cash held at managing agents and cash held in joint ventures. Furthermore, the Group had GBP99.0m of loan facilities available to draw on plus GBP31.0m of uncharged property.
The see-through loan to value ratio ("LTV") increased to 36.4% at the balance sheet date (31 March 2021: 22.6%) and our see-through net gearing, the ratio of net borrowings to the net asset value of the Group, increased to 58.6% (31 March 2021: 31.9%) over the same period.
At the year end, the average debt maturity on secured loans, on a see-through basis, was 3.0 years (31 March 2021: 3.2 years), increasing to 3.7 years on exercise of options to extend the Group's facilities and on a fully utilised basis. The average cost of debt at 31 March 2022 was 3.2% (31 March 2021: 3.5%).
Helical as a Real Estate Investment Trust ("REIT")
Helical's business has evolved in recent years, from a developer/trader model, selling its development schemes to third party investors, to become a developer of, and investor in, new or refurbished Grade A buildings that are retained for their capital growth and long-term income potential.
Today, Helical has a portfolio with a superior sustainability rating. Together, this portfolio and the Company's long-term investment model has facilitated the conversion of the Company's operations to a REIT, with the notice to become a REIT submitted in March 2022 and effective from 1 April 2022.
It is the intention of the Board that there will be no material changes to the Group's investment policy or strategy on becoming a REIT.
Helical intends to employ the same dividend policy as followed prior to its conversion to a REIT. Within the REIT regime, distributions from the Company may comprise Property Income Distributions (PIDs), ordinary dividends or a combination of the two. The Company will be required to distribute at least 90% of the tax exempt income profits of its property rental business and will be able to distribute additional amounts over and above the minimum PID requirement, to enable it to continue its current dividend policy.
Dividends
Helical is a capital growth stock, seeking to maximise value by successfully letting repositioned, refurbished and redeveloped property. Once stabilised, these assets are either retained for their long-term income and reversionary potential or sold to recycle equity into new schemes.
This recycling leads to fluctuations in our EPRA earnings per share, as the calculation of these earnings excludes capital profits generated from the sale and revaluation of assets. As such, both EPRA earnings and realised capital profits are considered when determining the payment of dividends.
In the year to 31 March 2022, prior to Helical becoming a REIT, the Company retained all its investment assets, investing its available cash resources to grow the development pipeline with the acquisition of 100 New Bridge Street, EC4. The additional income from this purchase and the growing net rental income from the completed investment assets increased net rental income by 24.8% and EPRA earnings per share from a loss of 1.8p in 2021 to earnings of 5.2p in 2022.
In the light of the increased earnings and the strong results for the year, the Board will be recommending to Shareholders a final dividend of 8.25p per share, an increase of 11.5% on last year (7.40p). If approved by Shareholders at the 2022 AGM, the total dividend for the year will be 11.15p, up 10.4% on 2021.
This final dividend, if approved, will be paid out of distributable reserves generated from the Group's activities prior to its conversion into a REIT.
Board Matters
At this year's Annual General Meeting ("AGM") our Chairman, Richard Grant, will step down from the Board after ten years' service. On behalf of the rest of the Board, I thank him for his contribution to the success of Helical over that period and wish him well.
Richard will be replaced as Chairman by Richard Cotton, our current Senior Independent Director ("SID") with Sue Clayton, who has been on the Board for six years, replacing Richard Cotton as SID.
Outlook
The geopolitical and economic backdrop has deteriorated since we reported on our half year results in November 2021. The human tragedy of what is unfolding in Ukraine is heart rending and shocking to Western democracies and it is difficult to comprehend the motivation and methods of the aggressors. With these events in Eastern Europe ongoing and growing inflationary pressures accompanying a slowing economy leading to fears of "stagflation", it is right to be concerned for the performance of UK businesses over the next year. Despite these concerns, the fundamentals of our business remain strong, and we believe our experience and reputation will enable us to secure new opportunities as they arise.
We are a specialist developer and investor in prime Central London real estate, creating inspiring and sustainable, best-in-class office buildings. London is a leading world city, a safe haven, attracting a mix of established and growing businesses seeking a base for their operations and well capitalised investors looking to invest their funds.
We will continue to see bifurcation between the best-in-class new sustainable buildings and the older less sustainable buildings. This will be reflected in strong rental growth for the former and rental decline for the latter. Helical is well positioned to capitalise upon a period of opportunity within the sector over the next 10-20 years, changing the older "brown" buildings into "green" sustainable buildings.
In the last year, we have deployed capital to acquire 100 New Bridge Street, EC4, with this exciting redevelopment due to start by the end of 2023, following the expiry of the current tenancies. Along with 33 Charterhouse Street, EC1, due for completion in September 2022, and continuing asset management opportunities in the remaining, completed investment portfolio, we are optimistic that our successful track record of outperforming the market and delivering strong financial returns will continue.
Gerald Kaye
Chief Executive
24 May 2022
Our Market
The past two years have seen the Central London commercial property market face unprecedented challenges. Throughout this period, Helical has retained a strong conviction that our portfolio of high quality, sustainable and technologically advanced buildings would be resilient in the face of the significant challenges facing the sector and well positioned to take advantage of the quickly evolving demands of the marketplace. While headwinds remain, this conviction has been borne out, and it is encouraging to see increasing evidence that employees, occupiers and investors alike continue to place significant importance on the value of the office and that our portfolio of design led, amenity rich and well located properties continue to outperform in a highly competitive market.
London
The Central London commercial property market continues to demonstrate its inherent resilience. The end of the UK Government's Covid-19 restrictions has enabled employees to return to the office and confidence to grow throughout the sector. Data collected by The Freespace Index, which provides office use statistics, shows that daily London office occupancy has steadily increased, demonstrating the importance of the office in effective working practices, albeit employees are adopting a range of working practices depending on the nature of their industry. Any uncertainty over the future of the office has much reduced as the value of the office to workplace culture, efficiency and knowledge sharing is rediscovered and reinforced.
These trends are evidenced in the letting market where velocity has continued to increase in Central London as greater stability has enabled occupiers to develop longer-term plans. According to CBRE, since July 2021 the amount of space under offer has exceeded the 10 year average of 3.3m sq ft. While availability remains high at 26.0m sq ft, 18.1m sq ft of this relates to second hand stock, further demonstrating that best-in-class space is desired as the flight to quality intensifies. A combination of these factors, coupled with limited newly built office space, has led to increases in headline rents across most Central London sub-markets in 2021 for these best-in-class buildings.
From an investment perspective, a significant amount of capital continues to be allocated to the Central London office market with CBRE identifying more than GBP40bn of capital targeting the sector at the end of 2021. While London saw consecutive years of declining investment volumes in 2019 and 2020 due to the destabilising impacts of Brexit and Covid-19, this trend reversed in 2021, with investment into London offices of GBP12.3bn, an increase of GBP3bn on 2020. 2022 has continued this trend with CBRE reporting a record first quarter of GBP5.5bn of inbound investment, with a further GBP5bn under offer.
London continues to be a highly desirable market and the renewed sense of confidence is manifesting in growing development activity, with the amount of new development starting on site at 1.0m sq ft above the long-term average. While this is positive, significant headwinds remain, with the impact of increasing cost price inflation, rising interest rates and disrupted global supply chains adversely impacting development activity. As general inflation hits its highest levels in 40 years, Arcadis notes that manufacturing inflation is outpacing all other sectors, with raw material prices increasing by 13.6% during the year. These disruptive trends will need to be monitored over the coming year and are likely to partially moderate some of the renewed sectoral confidence.
Sustainability
Sustainability is now at the forefront of business decision making, with an increasing number of companies committing to net zero targets. Landlords and tenants are increasingly aware of the need to both minimise embodied carbon in the development of assets and reduce operational carbon through the building's day to day use. Furthermore, legislative changes are mandating the efficient operational performance of buildings to ensure wider environmental targets are achieved. The quick response by landlords and tenants, and the Government's regulatory changes, have combined to make London the highest ranked green city globally out of 286 cities studied by Knight Frank.
The nature of sustainable development is evolving rapidly with an increased focus on the development and integration of new technologies. Whilst these technologies increase the initial cost, we believe that this is justified, with increasing evidence of occupiers paying a premium for best-in-class "green" buildings. In contrast, "brown" assets are increasingly hard to let. Knight Frank has identified 24.5m sq ft of pending lease expiries between now and the end of 2025, and this will undoubtably require landlords to undertake substantial refurbishment work to meet the required energy performance standards and enable these spaces to be relet.
The trend to ensure sustainability is at the heart of development is also manifesting itself in a fundamental change in approach, as developers seek to reduce embodied carbon by reusing, where possible, elements of an existing building. Deloitte's Crane Survey has noted an emerging trend towards substantial refurbishment rather than new ground up development, with 64% of space under construction relating to refurbishment. This trend is further evidenced by our most recent acquisition of 100 New Bridge Street, London EC4, where we will work with the existing building structure, delivering a best-in-class carbon friendly new build. Equally, Local Authorities are seeking increasing justification for demolition, on sustainability grounds.
Amenity Rich and Flexible Space
As businesses seek to encourage employees to return to the office and to provide them with an environment that is conducive to collaborative and effective working, there is a requirement for amenity rich and flexible space. Knight Frank found 46% of occupiers surveyed for their 2022 London Report expect to have a greater amenity offering in their workplace in the next three years.
Businesses are wishing to occupy buildings which provide flexible, varied space to facilitate agile working practices and stimulate creativity. Furthermore, they are looking for attractive spaces that help create a sense of community for employees, which is more highly valued following the enforced periods of isolated remote working. Across the Helical portfolio our carefully designed buildings provide exceptional work environments with our occupiers also able to benefit from spa-quality changing facilities, generous cycle storage and thoughtfully designed outdoor spaces.
Alongside the amenity delivered within the building the external environment is also of significant importance. Our portfolio of assets is located in some of London's most vibrant communities enabling occupiers to benefit from local food and beverage offerings, arts and cultural institutions and green spaces which supplement their daily office experience.
Technology and Smart Buildings
As hybrid working models proliferate across most sectors, digital connectivity is vitally important to ensure that office based and remote employees maintain collaborative and connected working practices. All our buildings benefit from excellent connectivity, enabling occupiers to have confidence in the digital backbone of their operations.
The technology integrated within our increasingly smart buildings can be utilised to generate extensive data. This data has significant value when collated and analysed to provide insights into the operation of the building. Both landlord and tenant have the ability, through the integration of technologies, to access data and tailor environments for peak performance and to drive operational efficiencies.
During the year, the Group invested in a proptech venture capital fund managed by Pi Labs. The investment reflects the importance Helical places on supporting businesses and technologies that aim to drive the evolution of the workplace, and it is hoped that their products can be successfully deployed into the portfolio.
The delivery of buildings has been enhanced with the introduction of pioneering construction methodologies. 33 Charterhouse Street, EC1 saw the offsite pre-fabrication of all service risers throughout the building, reducing the construction programme considerably and enabling service commissioning to be undertaken in a controlled factory environment rather than on a live construction site, thereby increasing reliability. The new building will also benefit from the incorporation of an intelligent and dynamic water management and recycling system linked to real time weather data.
This trend will likely accelerate as developers continue to challenge industry practices to build in a more efficient and sustainable manner and create more advanced and technologically enabled buildings.
Health and Wellness
The Covid-19 pandemic has highlighted the importance of physical and mental health for employers and employees. An increased focus has been placed upon enhancing ventilation, lighting and acoustics within buildings to maximise employee wellbeing and to provide an environment where they can work efficiently. Similarly, technology has been rapidly adopted to minimise touch points and to enable individuals to have a high degree of control over their micro working environment. Furthermore, opportunities for well curated outdoor spaces, with external greening, are now increasingly desired.
Buildings which deliver a healthy working environment supporting employee wellbeing are increasingly in demand from occupiers and investors alike. All of Helical's buildings benefit from extensive amenity and, as we continue to grow our portfolio, the ability to deliver this for occupiers will remain a key criterion in asset selection.
Sustainability and Net Zero Carbon
We have made good progress against the targets we set out in our sustainability strategy "Built for the Future" and continue to drive forward our ESG ambitions. In support of this, Helical has released its "Net Zero Carbon Pathway".
In the UK, the built environment is responsible for 40% of the country's total greenhouse gas emissions. If the UK is going to achieve its commitment of becoming net zero by 2050, there needs to be rapid transformational change within the sector. As a contributor to these emissions, we recognise the need to be a part of this transformational change while still delivering long-term sustainable growth to our Shareholders. In consideration of this, we are committing to becoming a net zero carbon business by 2030.
In publishing our Net Zero Carbon Pathway, Helical has also become a signatory to the Building Better Partnership's ("BBP") Climate Commitment, which provides a clear, accountable and transparent mechanism for real estate companies in the UK to drive towards net zero carbon. As we build on our ambitions, we continue to recognise the importance of transparency and independently assured reporting. Going forward we will be reporting on our progress against our net zero carbon targets to make certain we are on track for 2030.
Our portfolio is well placed in terms of energy efficiency, with 99% of our assets (by value) already compliant with the proposed legislative requirement that all rented commercial buildings achieve a minimum EPC of a B rating by 2030. Market research suggests only 23% of commercial assets are currently compliant, with significant capital outlay likely to be required to take non-compliant buildings up to the minimum standard.
For our development assets, we have undertaken significant initiatives to minimise embodied carbon and maximise operational efficiency. At 33 Charterhouse Street, EC1, through the careful design and selection of materials, we have reduced the embodied carbon to 40% below the RIBA benchmark. Going forward we are focusing on delivering "carbon friendly new build" schemes, such as 100 New Bridge Street, EC4, where we will re-use or recycle large portions of the existing building and look to incorporate the existing structural frame to minimise the carbon impact.
During the year, we have also further developed our reporting against the recommendations of the Task Force on Climate-related Financial Disclosures. We have performed an in-depth review of the risks and opportunities that could arise from certain climate-related scenarios and evaluated the potential impact to our business.
Performance Measurements
We measure our performance against our strategic objectives, using several financial and non-financial Key Performance Indicators ("KPIs").
The KPIs have been selected as the most appropriate measures to assess our progress in achieving our strategy, successfully applying our business model and generating value for our Shareholders.
We incentivise management to outperform the Group's peers by setting challenging targets and using these performance indicators to measure success. We design our remuneration packages to align management's interests with Shareholders' aspirations.
Total Accounting Return
Total Accounting Return is the growth in the net asset value of the Group plus dividends paid in the reporting 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.
The Group targets a Total Accounting Return of 5-10%.
The Total Accounting Return on IFRS net assets in the year to 31 March 2022 was 15.0% (2021: 3.3%).
2022 2021 2020 2019 2018
% % % % %
Total Accounting Return on IFRS net assets 15.0 3.3 7.7 8.4 5.3
EPRA Total Accounting Return
Total Accounting Return on EPRA net tangible assets is the growth in the EPRA net tangible asset value of the Group plus dividends paid in the period, expressed as a percentage of the EPRA net tangible asset value at the beginning of the period.
The Group targets an EPRA Total Accounting Return of 5-10%.
The Total Accounting Return on EPRA net assets in the year to 31 March 2022 was 10.2% (2021: 4.5%).
Year to Year to Year to Year to Year to
2022 2021 2020 2019 2018
% % % % %
Total Accounting Return on EPRA net tangible assets 10.2 4.5 9.3 8.0* 1.0*
* Calculated using EPRA net assets.
EPRA Net Tangible Asset Value Per Share
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 tangible asset value per share is the property industry's preferred measure of the proportion 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 Group targets increasing its net assets, of which EPRA net tangible asset growth is a key component.
The EPRA net tangible asset value per share at 31 March 2022 increased by 7.3% to 572p (31 March 2021: 533p).
2022 2021 2020 2019 2018
p p p p p
EPRA net tangible asset value per share 572 533 524 494 468*
* Calculated using EPRA net assets.
Total Shareholder Return
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 Group targets being in the upper quartile when compared to its peers.
The Total Shareholder Return in the year to 31 March 2022 was 1.7% (2021: 21.2%).
Performance Measured Over
1 year 3 years 5 years 10 years 15 years 20 years
Total return Total return Total return Total return Total return Total return
pa % pa % pa % pa % pa % pa %
Helical plc(1) 1.7 10.2 8.4 10.7 1.9 6.9
UK Equity Market(2) 13.0 5.3 4.7 7.2 5.3 6.2
Listed Real Estate Sector
Index(3) 20.8 6.9 5.6 8.9 0.4 5.6
1. Growth over all years to 31/03/22.
2. Growth in FTSE All-Share Return Index over all years to 31/03/22.
3. Growth in FTSE 350 Real Estate Super Sector Return Index over all years to 31/03/22.
MSCI Property Index
MSCI produces several independent benchmarks of property returns that are regarded as the main industry indices.
MSCI has compared the ungeared performance of Helical's total property portfolio against that of portfolios within MSCI for over 20 years. Helical's ungeared performance for the year to 31 March 2022 was 10.7% (2021: 7.0%). This compares to the MSCI Central London Offices Total Return Index of 7.9% (2021: -1.7%) and the upper quartile return of 9.9% (2021: 1.6%).
Helical's share of the development portfolio (1% of gross property assets) is included in its performance, as measured by MSCI, at the lower of book cost or fair value and uplifts are only included on the sale of an asset.
Helical's unleveraged portfolio returns to 31 March 2022 were as follows:
1 year 3 years 5 years 10 years 20 years
% % % % %
Helical 10.7 9.1 9.6 13.1 11.6
MSCI Central London Offices Total Return Index 7.9 3.3 4.4 9.1 8.1
Source: MSCI
Average Length of Employee Service and Average Staff Turnover
A high level of staff retention remains a key feature of Helical's business. The Group retains a highly skilled and experienced team with an increasing length of service.
The Group targets staff turnover to be less than 10% per annum.
The average length of service of the Group's employees at 31 March 2022 was 11.8 years and the average staff turnover during the year to 31 March 2022 was 3.7%.
2022 2021 2020 2019 2018
Average length of service at 31 March - years 11.8 11.0 10.0 8.7 7.9
Staff turnover during the year to 31 March - % 3.7 3.6 10.3 6.9 15.2
BREEAM and EPC Ratings
BREEAM is an environmental impact assessment methodology for commercial buildings. It sets out best practice standards for the environmental performance of buildings through their design, specification, construction and operational phases. Performance is measured across a series of ratings, "Pass", "Good", "Very Good", "Excellent" and "Outstanding".
The Group targets a BREEAM rating of "Excellent" or "Outstanding" on all major refurbishments or new developments.
At 31 March 2022, seven of our ten (31 March 2021: six of our nine) office buildings had achieved, or were targeting, a BREEAM certification of "Excellent" or "Outstanding". These seven buildings account for c.88% of the portfolio by value.
Building BREEAM Rating EPC Rating Completed, let, and available to let The Warehouse and Studio, EC1 Excellent (2014) B The Tower, EC1 Excellent (2014) B 25 Charterhouse Square, EC1 Excellent (2014) B Kaleidoscope, EC1 Excellent (2014) B 55 Bartholomew, EC1 Excellent (2014) B Under development or to be redeveloped 33 Charterhouse Street , EC1 Outstanding (2018)(1) A(2) 100 New Bridge Street, EC4 Outstanding (2018)(2) A(2) 1. Certified at design stage. 2. Targeted.
We are currently exploring BREEAM In Use certification for The Loom where it was not possible to obtain a BREEAM certification at the design and development stages.
Energy Performance Certificates ("EPC") provide ratings on a scale of A-G on a building's energy efficiency and are required when a building is constructed, sold or let. All but one of our completed buildings (99% by portfolio value) have an EPC rating of A or B.
Helical's Property Portfolio - 31 March 2022
Property Overview
Helical's portfolio comprises income producing multi-let offices, office refurbishments and developments and a mixed use commercial/residential scheme. As at 31 March 2022, London represented 97% and Manchester 3% of the investment property portfolio, by value. As evidenced by the recent acquisition of 100 New Bridge Street, EC4, our strategy is to continue to increase our Central London holdings, focusing on areas where we see strong occupier demand and growth potential.
33 Charterhouse Street, EC1
The development of our 205,369 sq ft office building, in a 50:50 joint venture with AshbyCapital, is due to reach practical completion in September 2022. The building's external envelope is complete and work is now focused on the delivery of the services and completing the internal finishes.
The building is situated just 100m from Farringdon Station and will provide excellent connectivity via the Elizabeth Line, which is due to open today, ahead of the building's practical completion. Once completed it will provide a best-in-class "Net Zero" office development, meeting the highest ESG credentials, as evidenced by its BREEAM 2018 New Construction "Outstanding" design rating and anticipated NABERS 5* rating. It will also provide a technologically pioneering environment with smart building systems and a fully integrated building management app for occupiers.
100 New Bridge Street, EC4
On 1 March, Helical completed the acquisition of 100 New Bridge Street, EC4 for GBP160m.
The 167,026 sq ft office building is currently let to international law firm Baker McKenzie, whose lease expires in December 2023. Helical proposes to carry out a major, sustainability led refurbishment to create a carbon friendly new build office that puts occupier amenity and wellbeing at its centre. We also envisage undertaking significant public realm improvements around the site to greatly improve the environment for both tenants and the general public.
Kaleidoscope, EC1
Our 88,581 sq ft office building located directly above the Farringdon East Elizabeth Line station is let to TikTok Information Technologies UK Limited on a 15 year lease term at an annual rent of GBP7.6m. TikTok has recently completed their fit out works and are beginning occupation of the building.
The Bower, EC1
The Bower is a landmark estate comprising 312,573 sq ft of innovative, high quality office space along with 21,059 sq ft of restaurant and retail space. The estate is located adjacent to the Old Street roundabout, which is currently undergoing significant remodelling and will provide extensive additional public realm when completed in Autumn 2022 .
The Warehouse and The Studio
The Warehouse comprises 122,858 sq ft of offices and The Studio 18,283 sq ft of offices, both fully let, with 10,298 sq ft of retail space across the two buildings.
In June 2021 we completed a lease renewal with Stripe at the Warehouse, extending the lease by three years. We have also completed all the rent reviews for office tenants in the Warehouse which has added GBP782,000 to its contracted rent, a 13.2% increase.
The retail unit in The Studio has been let to 28 Well Hung, a steak restaurant, which will open this summer.
The Tower
The Tower offers 171,432 sq ft of office space with a contemporary façade and innovatively designed interconnecting floors, along with 10,761 sq ft of retail space, across two units, let to food and beverage occupiers Serata Hall and Wagamama.
We have let the 17(th) floor, previously let to Finablr, to Verkada on a five year lease for a rent which is in line with the 31 March 2021 ERV. The 12(th) floor which, following the culmination of a specific project, was returned in October 2021 by Brilliant Basics, is now under offer. They continue to occupy three floors at The Tower.
Barts Square, EC1
Residential/Retail
At Barts Square, EC1, we have completed the sale of the last remaining apartment in Phase One. In Phase Two, we completed the sale of 13 apartments during the year and one further apartment sale had exchanged which has now completed. Of the remaining 14 units available at the year end, one has since been sold and two are under offer, leaving 11 available in this 236 unit residential scheme.
The Barts Square residential development has been recognised for its outstanding design and sympathetic approach to its surroundings by winning a Housing Design Award, the only awards promoted by all five major professional institutions, and a RIBA London Award.
The retail space in Phase One is fully let to Stem + Glory and Halfcup. One of the Phase Two retail units is let to BEERS London and since the year end a further unit has been let to Nest, a modern British restaurant. The remaining four retail units are currently being marketed. The landscaping of the new public square is complete, offering extensive public amenity.
55 Bartholomew
At 55 Bartholomew, EC1 w e have completed three lettings to Push Gaming, William Fry and Zero Gravity. Following the completion of these lettings, which totalled 4,835 sq ft, the building is now 77% let with just the third floor still available.
On 20 May 2022 we exchanged contracts to dispose of the property to a private European investor for a consideration of GBP16.5m (our share GBP7.6m), reflecting a net initial yield of 4.5% and a 3% premium to 31 March 2022 book value.
The Loom, E1
At this 108,600 sq ft former Victorian wool warehouse, we have completed three leases , totalling 8,623 sq ft, at an average rent of GBP53 psf. Following these lettings, The Loom is 80% let with 21,803 sq ft across nine units available to let. We anticipate further units to be returned in the coming year as lease events take place, including original unrefurbished units, giving us the opportunity to undertake asset management activities to capture reversionary potential.
25 Charterhouse Square, EC1
25 Charterhouse Square comprises 42,921 sq ft of offices adjacent to the new Farringdon East Elizabeth Line station, overlooking the historic Charterhouse Square.
The newly refurbished first floor and one of the two ground floor units have been let to Entain, the FTSE listed betting and gaming company, to establish a global innovation hub. Following this letting the building is 96% let, with the final unit now under offer.
The Power House, W4
The Power House is a listed building, providing 21,268 sq ft of office and recording studio space, on Chiswick High Road and is fully let on a long lease to Metropolis Music Group. The RPI linked rent review was concluded in November, increasing contracted rent by 16.4%. The capital works to improve the roof, undertaken on behalf of the tenants, are due to complete shortly.
Trinity, Manchester
We have completed three office lettings in the year with the first floor let to British Engineering, the remaining part of the sixth floor let to Waterman Group and the seventh floor let to AEW Architects. These lettings total 17,541 sq ft and achieved a combined premium of 4.6% to the 31 March 2021 ERV. Following the completion of these lettings the 58,533 sq ft historic building, which was comprehensively remodelled in 2019, is 76% let.
Following the year end we completed the sale of the property to clients of Mayfair Capital, for a headline purchase price of GBP34.55m, which reflects a net gain of c.GBP2.0m against the 31 March 2022 book value.
Portfolio Analytics
See-through Total Portfolio by Fair Value
Investment Development Total
GBPm % GBPm % GBPm %
London Offices
- Completed properties 783.9 71.5 - 0.0 783.9 70.8
- Development pipeline 282.3 25.7 - 0.0 282.3 25.5
London Residential - 0.0 8.3 77.7 8.3 0.7
Total London 1,066.2 97.2 8.3 77.7 1,074.5 97.0
Manchester Offices
- Completed properties 31.0 2.8 - 0.0 31.0 2.8
Total Manchester 31.0 2.8 - 0.0 31.0 2.8
Total Core 1,097.2 100.0 8.3 77.7 1,105.5 99.8
Other 0.1 0.0 2.4 22.3 2.5 0.2
Total Non-Core Portfolio 0.1 0.0 2.4 22.3 2.5 0.2
Total 1,097.3 100.0 10.7 100.0 1,108.0 100.0
See-through Land and Development Portfolio
Book value Fair value Surplus Fair value
GBPm GBPm GBPm %
London Residential 8.3 8.3 0.0 77.7
Land/retail 2.1 2.4 0.3 22.3
Total 10.4 10.7 0.3 100.0
Capital Expenditure
We have a committed and planned development and refurbishment programme.
Capex Remaining Total
budget spend Pre-redeveloped completed
(Helical share) (Helical share) space New space space Completion
Property GBPm GBPm sq ft sq ft sq ft date
Investment -
committed
- 33 Charterhouse
Street, EC1 66.0 13.1 n/a 205,369 205,369 September 2022
Investment -
anticipated
- 100 New Bridge
Street, EC4 101.2 101.2 167,026 c.18,000 c.185,000 Early 2025
Asset Management
Asset management is a critical component in driving Helical's performance. Through having well considered business plans and maximising the combined skills of our management team, we are able to create value in our assets.
Fair
value Passing ERV change
weighting rent Contracted rent ERV like-for-like
Investment portfolio % GBPm % GBPm % GBPm % %
London Offices
- Completed properties 71.5 28.5 78.3 37.6 81.1 41.6 62.0 0.1
- Development pipeline 25.7 7.2 19.8 7.3 15.7 23.6 35.2 0.0
Total London 97.2 35.7 98.1 44.9 96.8 65.2 97.2 0.1
Manchester Offices
- Completed properties 2.8 0.7 1.9 1.4 3.0 1.8 2.7 -0.4
Total Manchester 2.8 0.7 1.9 1.4 3.0 1.8 2.7 -0.4
Other 0.0 0.0 0.0 0.1 0.2 0.1 0.1 0.0
Total 100.0 36.4 100.0 46.4 100.0 67.1 100.0 0.1
See-through
total portfolio contracted rent
GBPm
Rent lost at break/expiry (2.6)
Rent reviews and uplifts on lease renewals 1.0
New lettings - London 2.4
New lettings - Manchester 0.6
Total increase in the year from asset management activities 1.4
Contracted rent increase from purchases of London Offices 7.2
Net increase in contracted rents in the year 8.6
Investment Portfolio
Valuation Movements
Valuation change Investment portfolio Investment portfolio
Valuation change excl sales and weighting weighting
inc sales and purchases purchases 31 March 2022 31 March 2021
% % % %
London Offices
- Completed properties 5.4 5.4 71.5 88.5
- Development pipeline 5.3 17.2 25.7 8.2
Total London 5.4 6.8 97.2 96.7
Manchester Offices
- Completed properties 12.5 12.5 2.8 3.3
Total Manchester 12.5 12.5 2.8 3.3
Total 5.6 7.0 100.0 100.0
Portfolio Yields
EPRA topped EPRA topped Reversionary Reversionary
up NIY up NIY yield yield True equivalent yield True equivalent yield
31 March 31 March 31 March 31 March 31 March 31 March
2022 2021 2022 2021 2022 2021
% % % % % %
London
Offices
- Completed
properties 4.2 4.5 4.8 5.1 4.9 5.0
-
Development
pipeline 4.2 n/a 4.5 5.6 4.2 4.9
Total London 4.2 4.5 4.7 5.3 4.6 4.9
Manchester
Offices
- Completed
properties 4.1 2.4 5.4 5.9 5.3 5.7
Total
Manchester 4.1 2.4 5.4 5.9 5.3 5.7
Total 4.2 4.5 4.7 5.3 4.6 5.0
See-through Capital Values, Vacancy Rates and Unexpired Lease Terms
Capital value Capital value Vacancy rate Vacancy rate WAULT WAULT
31 March 31 March 31 March 31 March 31 March 31 March
2022 2021 2022 2021 2022 2021
GBP psf GBP psf % % Years Years
London Offices
- Completed properties 1,289 1,215 6.9 5.8 6.3 6.9
- Development pipeline 1,086 674 0.0 n/a 1.7 n/a
Total London 1,213 1,081 5.4 5.8 5.6 6.9
Manchester Offices
- Completed properties 530 465 23.9 54.1 6.1 8.4
Total Manchester 530 465 23.9 54.1 6.1 8.4
Total 1,175 1,040 6.7 10.5 5.6 6.9
See-through Lease Expiries or Tenant Break Options
Year to Year to Year to Year to Year to 2027
2023 2024 2025 2026 2027 onward
% of rent roll 9.5 25.8 4.0 0.8 10.0 49.9
Number of leases 17 28 10 4 18 31
Average rent per lease (GBP) 258,280 427,422 186,003 96,997 256,179 741,267
Top 15 Tenants
We have a strong rental income stream and a diverse tenant base. The top 15 tenants account for 79.3% of the total rent roll.
Contracted rent Rent roll
Rank Tenant Tenant industry GBPm %
1 TikTok Technology 7.6 16.5
2 Baker McKenzie Legal services 7.0 15.2
3 Farfetch Online retail 4.3 9.3
4 WeWork Flexible offices 4.0 8.6
5 Brilliant Basics Technology 2.4 5.1
6 VMware Technology 2.2 4.7
7 Anomaly Marketing 1.4 3.0
8 Viacom Media 1.2 2.5
9 Allegis Media 1.1 2.3
10 Dentsu Marketing 1.1 2.3
11 Stripe Financial services 1.0 2.1
12 Verkada Technology 1.0 2.1
13 Incubeta Marketing 0.9 2.0
14 Openpayd Financial services 0.9 1.9
15 Snowflake Technology 0.8 1.7
Total 36.9 79.3
Letting Activity - New Leases
Change to
31 March 2021 ERV
Contracted rent (exc Plug and Play and Average
Area (Helical's share) Rent managed lettings) lease term to expiry
sq ft GBP GBP psf % Years
Investment Properties
London
- The Tower, EC1 11,327 963,000 85.02 -0.2 5.00
- The Warehouse, EC1 2,524 115,000 45.56 13.9 15.00
- The Loom, E1 8,623 455,000 52.82 2.1 4.33
- 25 Charterhouse Square,
EC1 9,268 715,000 77.13 0.5 10.00
- 55 Bartholomew, EC1 4,835 239,000 76.00 1.3 3.67
Total London 36,577 2,487,000 71.10 1.1 6.00
Total Manchester 17,541 557,000 31.77 4.6 10.00
Total 54,118 3,044,000 57.57 1.8 7.00
Financial Review
IFRS Performance EPRA Performance
Profit after tax EPRA profit
GBP88.9m (2021: GBP17.9m) GBP6.4m (2021: loss of GBP2.2m)
Earnings per share (EPS) EPRA EPS
72.8p (2021: 14.8p) 5.2p (2021: loss of 1.8p)
Diluted NAV per share EPRA NTA per share
551p (31 March 2021: 492p) 572p (31 March 2021: 533p)
Total Accounting Return Total Accounting Return on
15.0% (2021: 3.3%) EPRA NTA
10.2% (2021: 4.5%)
Overview
The strong performance for the year was the result of significant valuation gains from our sustainable, best-in-class investment portfolio and the Group's ongoing development activities.
The results were further improved by gains in the fair value of the Group's derivatives and the reversal of previously recognised deferred tax on the Group's election to become a REIT.
The acquisition of 100 New Bridge Street, EC4 added to the development pipeline and resulted in an increased LTV of 36.4%.
Results for the Year
The profit before tax for the year of GBP72.9m (2021: GBP20.5m) includes revenue from rental income and development management of GBP51.1m, offset by direct costs of GBP14.2m. The net gain on sale and revaluation of investment properties added GBP33.3m and its joint venture activities a further GBP20.7m. Administration expenses of GBP16.8m and finance costs of GBP19.2m were offset by a gain in fair value of derivatives of GBP18.0m.
The Group holds a significant proportion of its property assets in joint ventures. As the risk and rewards of ownership of these underlying properties are the same as those it wholly owns, Helical supplements its IFRS disclosure with a "see-through" analysis of alternative performance measures, which looks through the structure to show the Group's share of the underlying business.
The see-through results for the year to 31 March 2022 include net rental income of GBP31.2m, a net gain on sale and revaluation of the investment portfolio of GBP51.7m and development profits of GBP6.6m, leading to a Total Property Return of GBP89.5m (2021: GBP48.6m). Total see-through administration costs of GBP17.1m (2021: GBP14.8m), see-through net finance costs of GBP19.7m (2021: GBP14.8m) and see-through derivative financial instrument gains of GBP18.0m (2021: GBP2.9m) contributed to an IFRS pre-tax profit of GBP72.9m (2021: GBP20.5m).
The election to become a REIT from 1 April 2022 allowed the release of the previously recognised deferred tax provision which contributed to a tax credit for the year of GBP16.0m (2021: charge of GBP2.6m).
The post tax profit for the year was GBP88.9m (2021: GBP17.9m) and the EPRA net tangible asset value per share increased by 7.3% to 572p (31 March 2021: 533p).
The Company has proposed a final dividend of 8.25p per share (2021: 7.40p) which, if approved by Shareholders at the 2022 AGM, will be payable on 29 July 2022. The total dividend paid or payable in respect of the year to 31 March 2022 will be 11.15p (2021: 10.10p), an increase of 10.4%.
The Group's real estate portfolio, including its share of assets held in joint ventures, increased to GBP1,108.1m (31 March 2021: GBP857.0m) primarily because of the acquisition of 100 New Bridge Street, EC4, net revaluation gains on the investment portfolio and capital expenditure at 33 Charterhouse Street, EC1.
The acquisition of 100 New Bridge Street, EC4 and capital expenditure on the development of 33 Charterhouse Street, EC1 resulted in an increase in the Group's see-through loan to value to 36.4% (31 March 2021: 22.6%). The Group's weighted average cost of debt was 3.2% (31 March 2021: 3.5%) and the weighted average debt maturity was 3.0 years (31 March 2021: 3.2 years). The average maturity of the facilities would increase to 3.7 years on exercise of the available extension options, on a fully utilised basis.
At 31 March 2022, the Group had unutilised bank facilities of GBP99.0m and cash of GBP33.3m on a see-through basis. These are primarily available to fund the development of 33 Charterhouse Street, EC1 and future property acquisitions.
Total Property Return
We calculate our Total Property Return to enable us to assess the aggregate of income and capital profits made each year 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.
Year
to Year to Year to Year to Year to
2022 2021 2020 2019 2018
GBPm GBPm GBPm GBPm GBPm
Total Property Return 89.5 48.6 83.9 81.4 68.8
The net rental income, development profits and net gains on sale and revaluation of our investment portfolio, which contribute to the Total Property Return, provide the inputs for our performance as measured by MSCI.
Year
to Year to Year to Year to Year to
2022 2021 2020 2019 2018
% % % % %
Helical's unleveraged portfolio 10.7 7.0 9.6 10.1 10.8
See-through Total Accounting Return
Total Accounting Return is the growth in the net asset value of the Group plus dividends paid in the reporting 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 year and is expressed as an absolute measure.
Year to Year to Year to Year to Year to
2022 2021 2020 2019 2018
% % % % %
Total Accounting Return on IFRS net assets 15.0 3.3 7.7 8.4 5.3
Total Accounting Return on EPRA net tangible assets is the growth in the EPRA net tangible asset value of the Group plus dividends paid in the period, expressed as a percentage of the EPRA net tangible asset value at the beginning of the period.
Year to Year to Year to Year to Year to
2022 2021 2020 2019 2018
% % % % %
Total Accounting Return on EPRA net tangible assets 10.2 4.5 9.3 8.0* 1.0*
* Calculated using EPRA net assets.
Earnings Per Share
The IFRS earnings per share increased from 14.8p to 72.8p and are based on the after tax earnings attributable to ordinary Shareholders divided by the weighted average number of shares in issue during the year.
On an EPRA basis, the earnings per share were 5.2p compared to a loss per share of 1.8p in 2021, reflecting the Group's share of net rental income of GBP31.2m (2021: GBP25.0m) and development profits of GBP6.6m (2021: losses of GBP0.3m), but excluding gains on sale and revaluation of investment properties of GBP51.7m (2021: GBP23.9m).
Net Asset Value
IFRS diluted net asset value per share increased by 12.0% to 551p per share (31 March 2021: 492p) and is a measure of Shareholders' Funds divided by the number of shares in issue at the year end, adjusted to allow for the effect of all dilutive share awards.
EPRA net tangible asset value per share increased by 7.3% to 572p per share (31 March 2021: 533p). This movement arose principally from a total comprehensive income (retained profits) of GBP88.9m (2021: GBP17.9m), less GBP12.6m of dividends (2021: GBP10.5m).
EPRA net disposal value per share increased by 13.6% to 551p per share (31 March 2021: 485p).
Income Statement
Rental Income and Property Overheads
Gross rental income for the Group in respect of wholly owned properties increased to GBP35.3m (2021: GBP28.0m), mainly reflecting the letting of Kaleidoscope, EC1 in March 2021, with gross rents in joint ventures also increasing to GBP0.3m (2021: GBP0.2m). Property overheads in respect of wholly owned assets and in respect of those assets in joint ventures increased to GBP4.4m (2021: GBP3.2m). Overall, see-through net rents increased by 25.0% to GBP31.2m (2021: GBP25.0m).
Included within gross rental income is GBP5.8m (31 March 2021: reduction of GBP0.4m) of accrued income for rent free periods.
The table below demonstrates the movement of the accrued income balance for rent free periods granted and the respective rental income adjustment over the four years to 31 March 2025, based on the tenant leases as at 31 March 2022. The actual adjustment will vary depending on lease events such as new lettings and early terminations and future acquisitions or disposals.
Accrued income Adjustment to rental income
GBP000 GBP000
Year to 31 March 2022 23,114 5,818
Year to 31 March 2023 27,557 4,443
Year to 31 March 2024 23,757 (3,800)
Year to 31 March 2025 20,495 (3,262)
Rent Collection
March 2021 -
December 2021
quarters
%
Rent collected to date 95.8
Rent under discussion 2.2
Rent concessions 2.0
At 23 May 2022, the Group had collected 95.8% of all rent contracted and payable for the March, June, September and December 2021 quarters.
Development Profits
In the year, from our role as development manager at 33 Charterhouse Street, EC1, we recognised GBP1.3m of fees. Additional fees of GBP0.1m were recognised for carrying out accounting and corporate services at Barts Square, EC1 and 33 Charterhouse Street, EC1.
Profits on the sales of a retail site at Kingswinford and land at Aycliffe of GBP1.5m were recognised, as well as the write back of provisions made in previous periods on two retail projects, at East Ham and Cortonwood, totalling GBP2.3m. A further GBP0.8m of development income on closing out legacy projects, offset by other costs of GBP0.2m, contributed to a net development profit in the Group of GBP5.8m (2021: GBP0.6m).
Share of Results of Joint Ventures
The revaluation of our investment assets held in joint ventures generated a surplus of GBP18.5m (2021: GBP6.4m). A profit of GBP0.7m (2021: loss of GBP0.9m) was recognised in respect of sales at our Barts Square, EC1 residential development.
Finance, administration and other sundry costs totalling GBP0.5m (2021: GBP1.1m) were incurred. An adjustment to reflect our economic interest in the Barts Square, EC1 development to its recoverable amount generated a gain of GBP0.8m, and after a tax credit of GBP1.2m (2021: charge of GBP0.6m), there was a net profit from our joint ventures of GBP20.7m (2021: GBP2.4m).
Gain on Sale and Revaluation of Investment Properties
The valuation of our investment portfolio, on a see-through basis, continued to reflect the benefit of our letting and development activities where we generated a see-through gain on sale and revaluation, including in joint ventures, of GBP51.7m (2021: GBP23.9m).
Administrative Expenses
Administration costs in the Group, before performance related awards, increased marginally from GBP9.3m to GBP9.6m.
Performance related share awards and bonus payments, before National Insurance costs, increased to GBP6.0m (2021: GBP4.3m), reflecting the strong performance of the business. Of this amount, GBP3.2m (2021: GBP2.0m), being the charge for share awards under the Performance Share Plan, is expensed through the Income Statement but added back to Shareholders' Funds through the Statement of Changes in Equity. NIC incurred in the year on performance related awards was GBP1.2m (2021: GBP0.8m).
2022 2021
GBP000 GBP000
Administrative expenses (excluding performance related awards) 9,598 9,276
Performance related awards 6,019 4,341
NIC 1,151 799
Group 16,768 14,416
In joint ventures 295 432
Total 17,063 14,848
Finance Costs and Derivative Financial Instruments
Total finance costs before cancellation of loans, including in joint ventures, reduced to GBP13.8m (2021: GBP14.9m). The cost of early redemption of the development facility for Kaleidoscope, EC1 and the term loan with Aviva, totalling GBP5.8m (2021: GBPnil), allowed the Group to take advantage of the lower cost of debt provided by the GBP400m Revolving Credit Facility, which will be reflected in lower finance costs in future years.
2022 2021
GBP000 GBP000
Interest payable on secured bank loans - subsidiaries 10,169 10,567
- joint ventures 2,407 1,319
Amortisation of refinancing costs - subsidiaries 1,010 1,111
Sundry interest and bank charges - subsidiaries 2,169 2,401
- joint ventures 181 -
Interest capitalised - joint ventures (2,142) (514)
Total before cancellation of loans 13,794 14,884
Cancellation of loans - subsidiaries 5,886 -
Total 19,680 14,884
The significant movement upwards in medium and long-term interest rate projections during the year contributed to a credit of GBP18.0m (2021: GBP2.9m) on the mark-to-market valuation of the derivative financial instruments.
Taxation
The Group elected to become a REIT, effective from 1 April 2022, and will be exempt from UK corporation tax on the profit of its property activities that fall within the REIT regime. Helical will continue to pay corporation tax on its profits that are not within this regime. As a result, the previously recognised deferred tax liability of GBP13.5m in the Group (GBP1.7m in joint ventures) has been released, with a credit of GBP14.9m in the Income Statement and a charge of GBP1.4m recognised directly in the Statement of Changes in Equity.
The current tax credit for the year was GBP1.1m (2021: charge of GBP0.9m), resulting in a tax credit on profit on ordinary activities of GBP16.0m (2021: charge of GBP2.6m).
Dividends
The interim dividend paid on 31 December 2021 of 2.90p was an increase of 7.4% on the previous interim dividend of 2.70p. The Company has proposed a final dividend of 8.25p, an increase of 11.5% on the previous year (2021: 7.40p), for approval by Shareholders at the 2022 AGM. If approved, the total dividend paid or payable in respect of the results for the year to 31 March 2022 will be 11.15p (2021: 10.10p), an increase of 10.4%.
The final dividend, if approved by Shareholders, will be paid out of distributable reserves generated from the Group's activities prior to its conversion into a REIT.
Balance Sheet
Shareholders' Funds
Shareholders' Funds at 1 April 2021 were GBP608.2m. The Group's results for the year added GBP88.9m (2021: GBP17.9m), net of tax, representing the total comprehensive income for the year. Movements in reserves arising from the Group's share schemes increased funds by GBP2.5m. The Company paid dividends to Shareholders during the year of GBP12.6m. The net increase in Shareholders' Funds from Group activities during the year was GBP78.8m to GBP687.0m.
Investment Portfolio
Head
Wholly In joint leases Lease Book
owned venture See-through capitalised incentives value
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Valuation at 31 March 2021 756,875 82,516 839,391 6,568 (18,934) 827,025
- wholly
Acquisitions owned 160,000 - 160,000 - - 160,000
- wholly
Capital expenditure owned 5,520 - 5,520 (14) - 5,506
- joint ventures - 35,074 35,074 (30) - 35,044
- wholly
Letting costs amortised owned (226) - (226) - - (226)
- joint ventures - (9) (9) - - (9)
- wholly
Revaluation surplus owned 39,331 - 39,331 - (6,020) 33,311
- joint ventures - 18,521 18,521 - (50) 18,471
Economic interest
adjustment - joint ventures - (282) (282) - 2 (280)
Valuation at 31 March 2022 961,500 135,820 1,097,320 6,524 (25,002) 1,078,842
The Group acquired 100 New Bridge Street, EC4 for GBP160m and spent GBP40.6m on capital works across the investment portfolio, mainly at 33 Charterhouse Street, EC1 (GBP35.0m), 100 New Bridge Street, EC4 (GBP3.7m), Kaleidoscope, EC1 (GBP0.6m), The Loom, EC1 (GBP0.5m) and 25 Charterhouse Square, EC1 (GBP0.4m).
Revaluation gains added GBP57.9m to increase the see-through fair value of the portfolio, before lease incentives, to GBP1,097.3m (31 March 2021: GBP839.4m). The accounting for head leases and lease incentives resulted in a book value of the see-through investment portfolio of GBP1,078.8m (31 March 2021: GBP827.0m).
Debt and Financial Risk
In total, the see-through outstanding debt at 31 March 2022 of GBP440.9m (31 March 2021: GBP362.2m) had a weighted average interest cost of 3.2% (31 March 2021: 3.5%) and a weighted average debt maturity of 3.0 years (31 March 2021: 3.2 years). The average maturity of the facilities would increase to 3.7 years following exercise of the one-year extension of the Group's GBP400m Revolving Credit Facility, and the one-year extension of the joint venture development loan, on a fully utilised basis.
Debt Profile at 31 March 2022 - Including Commitment Fees but Excluding the Amortisation of Arrangement Fees
Weighted average Average maturity
Total Total interest Average maturity including
facility utilised Available facility rate of facilities extensions*
GBP000s GBP000s GBP000s % Years Years
GBP400m Revolving
Credit Facility 400,000 400,000 - 2.9 3.1 4.3
GBP60m Revolving
Credit Facility 60,000 - 60,000 - - 0.7
Total wholly owned 460,000 400,000 - 3.0 3.1 3.8
In joint ventures 69,900 40,889 29,011 5.6 2.3 3.3
Total secured debt 529,900 440,889 89,011 3.2 3.0 3.8
Working capital 10,000 - 10,000 - - 1.0
Total unsecured
debt 10,000 - 10,000 - - 1.0
Total debt 539,900 440,889 99,011 3.2 3.0 3.7
* Calculated on a fully utilised basis and assuming the exercise of the one-year extension of the Revolving Credit Facility and the one-year extension option of the joint venture development loan.
Secured Debt
The Group arranges its secured investment and development facilities to suit its business needs as follows:
- GBP400m Revolving Credit Facility
The Group has a GBP400m Revolving Credit Facility in which all of its investment assets, other than Trinity, Manchester, are secured. The value of the Group's properties secured in this facility at 31 March 2022 was GBP870m (31 March 2021: GBP729m) with a corresponding loan to value of 46.0% (31 March 2021: 46.8%). The average maturity of the facility at 31 March 2022 was 3.1 years (31 March 2021: 3.3 years), increasing to 4.3 years on a fully utilised basis and following the one-year extension of the Revolving Credit Facility. The weighted average interest rate was 2.9% (31 March 2021: 3.7%).
- GBP60m Revolving Credit Facility
The Group has a GBP60m Revolving Credit Facility to provide short-term liquidity to acquire new property opportunities. The maturity of this undrawn facility was 0.7 years and the weighted average interest rate was 3.2%, on a fully utilised basis.
- Joint Venture Facilities
The Group has a number of investment and development properties in joint venture with third parties and includes 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 31 March 2022 was 2.3 years (31 March 2021: 1.9 years) with a weighted average interest rate of 5.6% (31 March 2021: 6.5%). The average interest rate will fall as the 33 Charterhouse Street, EC1 development facility is drawn down and would be 4.95% on a fully utilised basis, reducing to 2.25% once the building is complete and let.
Unsecured Debt
The Group's unsecured debt is GBPnil (31 March 2021: GBPnil).
Cash and Cash Flow
At 31 March 2022, the Group had GBP132m (31 March 2021: GBP423m) of cash and agreed, undrawn, committed bank facilities including its share in joint ventures, as well as GBP31.0m (31 March 2021: GBP28.1m) 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 from GBP362.2m to GBP440.9m during the year to 31 March 2022. After deducting cash balances of GBP33.3m (31 March 2021: GBP162.2m) and unamortised refinancing costs of GBP4.7m (31 March 2021: GBP6.1m), net borrowings increased from GBP193.9m to GBP402.9m. The see-through gearing of the Group, including in joint ventures, increased from 31.9% to 58.6%.
31 March 31 March
2022 2021
See-through gross borrowings GBP440.9m GBP362.2m
See-through cash balances GBP33.3m GBP162.2m
Unamortised refinancing costs GBP4.7m GBP6.1m
See-through net borrowings GBP402.9m GBP193.9m
Shareholders' funds GBP687.0m GBP608.2m
See-through gearing - IFRS net asset value 58.6% 31.9%
Hedging
At 31 March 2022, the Group had GBP300.0m (31 March 2021: GBP280.8m) of borrowings protected by interest rate swaps, with an average effective interest rate of 2.8% (31 March 2021: 3.1%) and average maturity of 3.3 years. The Group had a further GBP100.0m of floating rate debt (31 March 2021: GBP60.4m) with an effective rate of 3.5% (31 March 2021: 4.2%). In addition, the Group had GBP145m of interest rate caps at an average rate of 1.75% (31 March 2021: GBP240m at 1.75%) and with an average maturity of 1.3 years. In our joint ventures, the Group's share of fixed rate debt was GBP40.9m (31 March 2021: GBP9.4m) with an effective rate of 5.6% and no floating rate debt (31 March 2021: GBP11.6m with an effective rate of 3.1%), with no interest rate swaps or caps as at 31 March 2022 (31 March 2021: interest rate caps of GBP35.3m at 1.5%).
31 March 31 March
2022 Effective interest rate 2021 Effective interest rate
GBPm % GBPm %
Fixed rate debt
- Secured borrowings 300.0 2.8 280.8 3.1
Total 300.0 2.8 280.8 3.1
Floating rate debt
- Secured 100.0 3.5(1) 60.4 4.2(1)
Total 400.0 3.0 341.2 3.3
In joint ventures
- Fixed rate 40.9 5.6(2) 9.4 10.7(2)
- Floating rate - - 11.6 3.1
Total borrowings 440.9 3.2 362.2 3.5
1. This includes commitment fees on undrawn facilities. Excluding these would reduce the effective rate to 2.7%.
2. This includes commitment fees on undrawn facilities. Excluding these would reduce the effective rate to 4.95% (31 March 2021: 4.95%).
Tim Murphy
Chief Financial Officer
24 May 2022
Consolidated Income Statement
For the year to 31 March 2022
Year to Year to
31 March 31 March
2022 2021
Notes GBP000 GBP000
Revenue 3 51,146 38,596
Cost of sales 3 (14,228) (12,987)
Net property income 4 36,918 25,609
Share of results of joint ventures 12 20,708 2,352
Gross profit before net gain on sale and revaluation of investment properties 57,626 27,961
Loss on sale of investment properties 5 (45) (1,341)
Revaluation of investment properties 11 33,311 19,387
Gross profit 90,892 46,007
Administrative expenses 6 (16,768) (14,416)
Operating profit 74,124 31,591
Finance costs 7 (19,234) (14,079)
Finance income 6 58
Change in fair value of derivative financial instruments 20 17,996 2,938
Profit before tax 72,892 20,508
Tax on profit on ordinary activities 8 16,002 (2,631)
Profit for the year 88,894 17,877
Earnings per share 10
Basic 72.8p 14.8p
Diluted 71.4p 14.5p
Consolidated Statement of Comprehensive Income
For the year to 31 March 2022
Year to Year to
31 March 31 March
2022 2021
GBP000 GBP000
Profit for the year 88,894 17,877
Total comprehensive income for the year 88,894 17,877
Consolidated Balance Sheet
At 31 March 2022
At At
31 March 31 March
2022 2021
Notes GBP000 GBP000
Non-current assets
Investment properties 11 938,797 740,207
Owner occupied property, plant and equipment 4,631 5,362
Investment in joint ventures 12 100,604 79,953
Other investments 13 306 -
D erivative financial instruments 20 11,104 171
1,055,442 825,693
Current assets
Land and developments 14 2,089 448
Corporation tax receivable 338 -
Trade and other receivables 15 48,453 40,427
Cash and cash equivalents 16 28,807 154,448
79,687 195,323
Total assets 1,135,129 1,021,016
Current liabilities
Trade and other payables 17 (43,986) (46,764)
Lease liability 18 (658) (634)
Corporation tax payable - (655)
(44,644) (48,053)
Non-current liabilities
Borrowings 19 (396,633) (336,703)
Derivative financial instruments 20 (538) (7,601)
Lease liability 18 (6,271) (6,929)
Deferred tax liability 8 - (13,569)
(403,442) (364,802)
Total liabilities (448,086) (412,855)
Net assets 687,043 608,161
Equity
Called-up share capital 21 1,223 1,478
Share premium account 112,654 107,990
Revaluation reserve 197,627 164,316
Capital redemption reserve 7,743 7,478
Other reserves 291 291
Retained earnings 367,505 326,608
Total equity 687,043 608,161
Consolidated Cash Flow Statement
For the year to 31 March 2022
Year to Year to
31 March 31 March
2022 2021
GBP000 GBP000
Cash flows from operating activities
Profit before tax 72,892 20,508
Adjustment for:
Depreciation 766 791
Revaluation surplus on investment properties (33,311) (19,387)
Letting cost amortisation 226 19
Loss on sale of investment properties 45 1,341
Profit on sale of plant and equipment (11) (14)
Net financing costs 19,228 14,021
Change in value of derivative financial instruments (17,996) (2,938)
Share based payment charge 3,843 2,031
Share of results of joint ventures (20,708) (2,352)
Cash inflows from operations before changes in working capital 24,974 14,020
Change in trade and other receivables (7,926) (2,554)
Change in land, developments and trading properties (1,641) 404
Change in trade and other payables 5,941 3,758
Cash inflows generated from operations 21,348 15,628
Finance costs (18,335) (12,902)
Finance income 6 58
Tax received 13 1,219
(18,316) (11,625)
N et cash generated from operating activities 3,032 4,003
Cash flows from investing activities
Additions to investment property (174,057) (16,306)
Net purchase of other investments (306) -
Net (costs)/proceeds from sale of investment property (45) 113,207
Investments in joint ventures and subsidiaries (3,323) (7,414)
Dividends from joint ventures 3,381 10,266
Sale of plant and equipment 44 23
Purchase of leasehold improvements, plant and equipment (68) (156)
Net cash (used by)/generated from investing activities (174,374) 99,620
Cash flows from financing activities
Borrowings drawn down 190,000 12,339
Borrowings repaid (131,150) (25,000)
Finance lease repayments (631) (610)
Shares issued 10 13
Sale of own shares 54 25
Equity dividends paid (12,582) (10,528)
Net cash generated from/(used by) financing activities 45,701 (23,761)
Net (decrease)/increase in cash and cash equivalents (125,641) 79,862
Cash and cash equivalents at start of year 154,448 74,586
Cash and cash equivalents at end of year 28,807 154,448
Consolidated Statement of Changes in Equity
At 31 March 2022
Capital
Share Share Revaluation redemption Other
capital premium reserve reserve reserves Retained earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 31 March 2020 1,465 103,522 171,464 7,478 291 314,469 598,689
Total comprehensive income - - - - - 17,877 17,877
Revaluation surplus - - 19,387 - - (19,387) -
Realised on disposals - - (26,535) - - 26,535 -
Issued share capital 13 4,468 - - - - 4,481
Performance Share Plan - - - - - 2,031 2,031
Performance Share Plan -
deferred tax - - - - - 66 66
Share settled Performance Share
Plan - - - - - (3,335) (3,335)
Share settled bonus - - - - - (1,145) (1,145)
Profit on sales of shares - - - - - 25 25
Dividends paid - - - - - (10,528) (10,528)
At 31 March 2021 1,478 107,990 164,316 7,478 291 326,608 608,161
Total comprehensive income - - - - - 88,894 88,894
Revaluation surplus - - 33,311 - - (33,311) -
Issued share capital 10 4,610 - - - - 4,620
Performance Share Plan - - - - - 3,223 3,223
Performance Share Plan -
deferred tax - - - - - (1,325) (1,325)
Share settled Performance Share
Plan - - - - - (3,591) (3,591)
Deferred bonus shares - - - - - 620 620
Share settled bonus - - - - - (1,031) (1,031)
Profit on sales of shares - 54 - - - - 54
Cancelled deferred shares (265) - - 265 - - -
Dividends paid - - - - - (12,582) (12,582)
At 31 March 2022 1,223 112,654 197,627 7,743 291 367,505 687,043
For a breakdown of Total Comprehensive Income see the Consolidated Statement of Comprehensive Income.
The adjustment to retained earnings of GBP3,223,000 (31 March 2021: GBP2,031,000) adds back the share based payments charge recognised in the Consolidated Income Statement, in accordance with IFRS 2 Share Based Payments.
There were net transactions with owners of GBP10,012,000 (31 March 2021: GBP8,405,000) made up of the Performance Share Plan credit of GBP3,223,000 (31 March 2021: GBP2,031,000) and related deferred tax charge of GBP1,325,000 (31 March 2021: credit of GBP66,000), dividends paid of GBP12,582,000 (31 March 2021: GBP10,528,000), the issued share capital of GBP10,000 (31 March 2021: GBP13,000) and corresponding share premium of GBP4,610,000 (31 March 2021: GBP4,468,000), share settled Performance Share Plan awards charge of GBP3,591,000 (31 March 2021: GBP3,335,000), the share settled bonus awards charge of GBP1,031,000 (31 March 2021: GBP1,145,000), deferred bonus shares of GBP620,000 (31 March 2021: GBPnil) and the profit on the sale of shares of GBP54,000 (31 March 2021: GBP25,000).
Notes to the Full Year Results
1. Basis of Preparation
These financial statements have been prepared using the recognition and measurement principles of International Accounting Standards in conforming with the Companies Act 2006.
The financial statements have been prepared in Sterling (rounded to the nearest thousand) under the historical cost convention as modified by the revaluation of investment properties and derivative financial instruments.
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 434 of the Companies Act 2006 but has been derived from the Company's audited statutory accounts for the year ended 31 March 2022. These accounts will be delivered to the Registrar of Companies following the Annual General Meeting. The auditor's opinion on the 2022 accounts was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
The principal accounting policies of the Group are consistent with those applied in the year to 31 March 2021. The Group Annual Report and Financial Statements for 2021 are available at Companies House or on the Group's website.
Amendments to standards and interpretations which are mandatory for the year ended 31 March 2022 are detailed below, however none of these have had a material impact on the financial statements:
-- Amendments to IFRS 16 Covid 19-Related Rent Concessions beyond 30 June 2021 (effective for periods beginning on or after 1 April 2021); and
-- Amendments to IFRS 9 and IFRS 7 Interest Rate Benchmark Reform (effective for periods beginning on or after 1 January 2020).
The following standards, interpretations and amendments have been issued but are not yet effective and will be adopted at the point they are effective:
-- Amendments to IAS 16 Property, Plant and Equipment - Proceeds before Intended Use (effective for periods beginning on or after 1 January 2022);
-- Annual Improvements to IFRS Standards 2018-2020 (effective for periods beginning on or after 1 January 2022);
-- Amendments to IFRS 3 Reference to the Conceptual Framework (effective for periods beginning on or after 1 January 2022);
-- Amendments to IAS 37 Onerous Contracts - Cost of Fulfilling a Contract (effective for periods beginning on or after 1 January 2022);
-- IFRS 17 Insurance Contracts (effective for periods beginning on or after 1 January 2023);
-- Amendments to IFRS 17 Insurance Contracts (effective for periods beginning on or after 1 January 2023);
-- Amendments to IAS 1 Classification of Liabilities as Current or Non-current (effective for periods beginning on or after 1 January 2023);
-- Amendments to IAS 1 Classification of Liabilities as Current or Non-current - Deferral of Effective Date (effective for periods beginning on or after 1 January 2023);
-- Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies (effective for periods beginning on or after 1 January 2023); and
-- Amendments to IAS 8 Definition of Accounting Estimates (effective for periods beginning on or after 1 January 2023).
Going Concern
The Directors have considered the appropriateness of adopting a going concern basis in preparing the financial statements. Their assessment is based on forecasts for the next 12 month period, with sensitivity testing undertaken to replicate severe but plausible downside scenarios related to the principal risks and uncertainties associated with the business.
The key assumptions used in the review are summarised below:
-- The Group's rental income receipts were modelled for each tenant on an individual basis; -- Existing loan facilities remain available; -- Certain property disposals are assumed in line with the individual asset business plans; and -- Free cash is utilised where necessary to repay debt/cure bank facility covenants.
Compliance with the financial covenants of the Group's main debt facility, its GBP400m Revolving Credit Facility, was the Directors' key area of review, with particular focus on the following three covenants:
-- Loan to Value ("LTV") - the ratio of the drawn loan amount to the value of the secured property as a percentage;
-- Loan to Rent Value ("LRV") - the ratio of the loan to the projected contractual net rental income for the next 12 months; and
-- Projected Net Rental Interest Cover Ratio ("ICR") - the ratio of projected net rental income to projected finance costs.
The April 2022 compliance position for these covenants is summarised below:
Covenant Requirement Actual LTV <65% 46% LRV <12.0x 10.0x ICR >150% 313%
The results of this review demonstrated the following:
-- The forecasts show that all bank facility financial covenants will be met throughout the review period, with headroom to withstand a 61% fall in contracted rental income;
-- The Group could withstand receiving no rental income during the going concern period (excluding the impact on income covenants);
-- Property values could fall by 47% before loan to value covenants come under pressure;
-- Whilst the Group has a WAULT of 5.6 years, in a downside scenario whereby all tenants with lease expiries or break options in the going concern period exercise their breaks or do not renew at the end of their lease, and with no vacant space let or re-let, the rental income covenants would be met throughout the review period; and
-- Additional asset sales could be utilised to generate cash to repay debt, materially increasing covenant headroom.
Based on this analysis, the Directors have adopted a going concern basis in preparing the accounts for the year ended 31 March 2022.
Use of Judgements and Estimates
To be able to prepare accounts according to accounting principles, management must make estimates and assumptions that affect the assets and liabilities and revenue and expense amounts recorded in the financial statements. These estimates are based on historical experience and other assumptions that management and the Board of Directors believe are reasonable under the particular circumstances. The results of these considerations form the basis for making judgements about the carrying value of assets and liabilities that are not readily available from other sources.
Areas requiring the use of critical judgements and estimates that may significantly impact the Group's earnings and financial position are:
Significant Judgements
The key area is discussed below:
-- Consideration of the nature of joint arrangements. In the context of IFRS 10 Consolidated Financial Statements, this involves determination of where the control lies and whether either party has the power to vary its returns from the arrangements. In particular, significant judgement is exercised where the shareholding of the Group is not 50% (Note 12).
Key sources of estimation uncertainty
The key area is discussed below:
-- Valuation of investment properties. Discussion of the sensitivity of these valuations to changes in the equivalent yields and rental values is included in Note 11.
2. Revenue from Contracts with Customers
Year to Year to
31 March 31 March
2022 2021
GBP000 GBP000
Development property income 7,490 1,700
Service charge income 8,304 8,841
Other revenue 28 48
Total revenue from contracts with customers 15,822 10,589
The total revenue from contracts with customers is the revenue recognised in accordance with IFRS 15 Revenue from Contracts with Customers.
Impairment of contract assets of GBP5,000 was recognised in the year to 31 March 2022 (2021: GBP140,000).
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
-- Development properties, which include sites, developments in the course of construction, completed developments available for sale, and pre-sold developments.
Investments Developments Total Developments Total
Year to Year to Year to Investments Year to Year to Year to
31.03.22 31.03.22 31.03.22 31.03. 21 31.03.21 31.03.21
Revenue GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Gross rental income 35,324 - 35,324 28,007 - 28,007
Development property income - 7,490 7,490 - 1,700 1,700
Service charge income 8,304 - 8,304 8,841 - 8,841
Other revenue 28 - 28 48 - 48
Revenue 43,656 7,490 51,146 36,896 1,700 38,596
Investments Developments Total Developments Total
Year to Year to Year to Investments Year to Year to Year to
31.03. 22 31.03.22 31.03.22 31.03. 21 31.03.21 31.03.21
Cost of sales GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Rents payable (169) - (169) (232) - (232)
Property overheads (4,069) - (4,069) (2,810) - (2,810)
Service charge expense (8,304) - (8,304) (8,841) - (8,841)
Development cost of sales - (3,864) (3,864) - (1,018) (1,018)
Development sales expenses - (107) (107) - (4) (4)
Reversal of provision/(provision) - 2,285 2,285 - (82) (82)
Cost of sales (12,542) (1,686) (14,228) (11,883) (1,104) (12,987)
Investments Developments Total Investments Developments Total
Year to Year to Year to Year to Year to Year to
31.03.22 31.03.22 31.03.22 31.03.21 31.03.21 31.03.21
Profit before tax GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Net property income 31,114 5,804 36,918 25,013 596 25,609
Share of results of joint ventures 20,603 105 20,708 4,389 (2,037) 2,352
Gain on sale and revaluation of Investment
properties 33,266 - 33,266 18,046 - 18,046
Segmental profit/(loss) 84,983 5,909 90,892 47,448 (1,441) 46,007
Administrative expenses (16,768) (14,416)
Net finance costs (19,228) (14,021)
Change in fair value of derivative
financial instruments 17,996 2,938
Profit before tax 72,892 20,508
Investments Developments Total Investments Developments Total
at 31.03.22 at 31.03.22 at 31.03.22 at 31.03.21 at 31.03.21 at 31.03.21
Net assets GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Investment properties 938,797 - 938,797 740,207 - 740,207
Land and developments - 2,089 2,089 - 448 448
Investment in joint ventures 96,157 4,447 100,604 74,165 5,788 79,953
1,034,954 6,536 1,041,490 814,372 6,236 820,608
Other assets 93,639 200,408
Total assets 1,135,129 1,021,016
Liabilities (448,086) (412,855)
Net assets 687,043 608,161
4. Net Property Income
Year to Year to
31 March 31 March
2022 2021
GBP000 GBP000
Gross rental income 35,324 28,007
Head rents payable (169) (232)
Property overheads (4,069) (2,810)
Net rental income 31,086 24,965
Development property income 7,490 1,700
Development cost of sales (3,864) (1,018)
Sales expenses (107) (4)
Reversal of provision /(provision) 2,285 (82)
Development property profit 5,804 596
Other revenue 28 48
Net property income 36,918 25,609
Included within Gross rental income above is GBP5,638,000 (2021: reduction of GBP389,000) of accrued income for rent free periods.
5. Loss on Sale of Investment Properties
Year to Year to
31 March 31 March
2022 2021
GBP000 GBP000
Net (costs)/proceeds from the sale of investment properties (45) 113,207
Book value (Note 11) - (111,883)
Tenants' incentives on sold investment properties - (2,665)
Loss on sale of investment properties (45) (1,341)
6. Administrative Expenses
Year to Year to
31 March 31 March
2022 2021
GBP000 GBP000
Administration costs (9,598) (9,276)
Performance related awards, including annual bonuses (6,019) (4,341)
National Insurance on performance related awards (1,151) (799)
Administrative expenses (16,768) (14,416)
7. Finance Costs
Year to Year to
31 March 31 March
2022 2021
GBP000 GBP000
Interest payable on bank loans and overdrafts (10,169) (10,697)
Other interest payable and similar charges (3,179) (3,382)
Total before cancellation of loans (13,348) (14,079)
Cancellation of loans (5,886) -
Finance costs (19,234) (14,079)
8. Tax on Profit on Ordinary Activities
Year to Year to
31 March 31 March
2022 2021
GBP000 GBP000
The tax credit/(charge) is based on the profit for the year and represents:
United Kingdom corporation tax at 19%
- Group corporation tax - (1,218)
- Adjustment in respect of prior years 1,146 365
- Use of tax losses (38) -
Current tax credit/(charge) 1,108 (853)
Deferred tax
- Capital allowances 4,540 (398)
- Tax losses (1,024) (794)
- Unrealised chargeable gains 13,512 338
- Other temporary differences (2,134) (924)
Deferred tax credit/(charge) 14,894 (1,778)
Total tax credit/(charge) for year 16,002 (2,631)
At At
31 March 31 March
2022 2021
Deferred tax GBP000 GBP000
Capital allowances - (4,540)
Tax losses - 1,024
Unrealised chargeable gains - (13,512)
Other temporary differences - 3,459
Deferred tax liability - (13,569)
The Group became a UK REIT on 1 April 2022. As a result, the deferred tax assets and liabilities associated with the Group's property business were released. The majority of the liability released related to unrealised revaluation gains on the Group's investment properties. In addition, deferred tax assets totalling GBP4,402,000 recognised at 31 March 2021 were released on the basis that it is no longer probable that sufficient taxable profits will be generated in the non-property business in the future against which these losses could be offset.
9. Dividends
Year to Year to
31 March 31 March
2022 2021
GBP000 GBP000
Attributable to equity share capital
Ordinary
- Interim paid 2.90p per share (2021: 2.70p) 3,547 3,274
- Prior year final paid 7.40p per share (2020: 6.00p) 9,035 7,254
12,582 10,528
A final dividend of 8.25p, if approved at the AGM on 14 July 2022, will be paid on 29 July 2022 to the Shareholders on the register on 24 June 2022. This final dividend, amounting to GBP10,092,000 has not been included as a liability as at 31 March 2022, in accordance with IFRS.
10. Earnings Per Share
The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. This is a different basis to the net asset per share calculations which are based on the number of shares at the year end.
The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends on the assumed exercise of all dilutive share awards.
The earnings per share is calculated in accordance with IAS 33 Earnings per Share and the best practice recommendations of the European Public Real Estate Association ("EPRA").
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below:
Year to Year to
31 March 31 March
2022 2021
000 000
Ordinary shares in issue 122,325 121,266
Weighting adjustment (241) (282)
Weighted average ordinary shares in issue for calculation of basic and EPRA earnings per share 122,084 120,984
Weighted average ordinary shares issued on share settled bonuses 662 719
Weighted average ordinary shares to be issued under Performance Share Plan 1,700 1,434
Weighted average ordinary shares in issue for calculation of diluted earnings per share 124,446 123,137
GBP000 GBP000
Earnings used for calculation of basic and diluted earnings per share 88,894 17,877
Basic earnings per share 72.8p 14.8p
Diluted earnings per share 71.4p 14.5p
GBP000 GBP000
Earnings used for calculation of basic and diluted earnings per share 88,894 17,877
Net gain on sale and revaluation of investment properties
- subsidiaries (33,266) (18,046)
- joint ventures (18,473) (5,870)
Tax on profit on disposal of investment properties - 4,936
Gain on movement in share of joint ventures (820) 767
Fair value movement on derivative financial instruments (17,996) (2,938)
Expense on cancellation of loans 5,886 -
Deferred tax on adjusting items (17,844) 1,075
Earnings/(loss) used for calculations of EPRA earnings per share 6,381 (2,199)
EPRA earnings/(loss) per share 5.2p (1.8)p
The earnings used for the calculation of EPRA earnings per share include net rental income and development property profits but exclude investment and trading property gains.
11. Investment Properties
At At
31 March 31 March
2022 2021
GBP000 GBP000
Book value at 1 April 740,207 819,573
Additions at cost 165,505 13,149
Disposals - (111,883)
Letting cost amortisation (226) (19)
Revaluation surplus 33,311 19,387
As at year end 938,797 740,207
All properties are stated at market value and are valued by professionally qualified external valuers (Cushman & Wakefield LLP) in accordance with the Valuation - Professional Standards, published by the Royal Institution of Chartered Surveyors. The fair value of the investment properties are as follows:
At At
31 March 31 March
2022 2021
GBP000 GBP000
Book value 938,797 740,207
Lease incentives and costs included in trade and other receivables 24,836 18,815
Head leases capitalised (2,133) (2,147)
Fair value 961,500 756,875
Interest capitalised in respect of the refurbishment of investment properties at 31 March 2022 amounted to GBP13,102,000 (31 March 2021: GBP13,102,000). Interest capitalised during the year in respect of the refurbishment of investment properties amounted to GBPnil (31 March 2021: GBPnil).
The historical cost of investment property is GBP739,231,000 (31 March 2021: GBP573,709,000).
The fair value of the Group's investment property as at 31 March 2022 was determined by independent external valuers at that date, except for investment properties valued by the Directors. The valuations are in accordance with the RICS Valuation - Professional Standards ("The Red Book") and the International Valuation Standards and were arrived at by reference to market transactions for similar properties.
Fair values for investment properties are calculated using the present value income approach. The main assumptions underlying the valuations are in relation to rent profile and yields as discussed below. A key driver of the property valuations is the terms of the leases in place at the valuation date. These determine the cash flow profile of the property for a number of years. The valuation assumes adjustments from these rental values to current market rent at the time of the next rent review (where a typical lease allows only for upward adjustment) and as leases expire and are replaced by new leases. The current market level of rent is assessed based on evidence provided by the most recent relevant leasing transactions and negotiations. The equivalent yield is applied as a discount rate to the rental cash flows which, after taking into account other input assumptions such as vacancies and costs, generates the market value of the property.
The equivalent yield applied is assessed by reference to market transactions for similar properties and takes into account, amongst other things, any risks associated with the rent uplift assumptions.
The net initial yield is calculated as the current net income over the gross market value of the asset and is used as a sense check and to compare against market transactions for similar properties. The valuation outputs, along with inputs and assumptions, are reviewed to ensure these are in line with what a market participant would use when pricing each asset.
The reversionary yield is the return received from an asset once the estimated rental value has been captured on today's assessment of market value.
There are interrelationships between all the inputs as they are determined by market conditions. The existence of an increase in more than one input would be to magnify the input on the valuation. The impact on the valuation will be mitigated by the interrelationship of two inputs in opposite directions.
A sensitivity analysis was performed to ascertain the impact of a 25 and 50 basis point shift in the equivalent yield and a 2.5% and 5% shift in ERVs for the wholly owned investment portfolio:
At Change in portfolio
31 March value
2022 % GBP000
True equivalent yield 4.63%
+ 50 bps (13.0) (124,684)
+ 25 bps (6.8) (65,598)
- 25 bps 7.6 73,419
- 50 bps 16.2 155,947
ERV GBP70.02 psf
+ 5.00% 5.6 53,550
+ 2.50% 2.8 26,703
- 2.50% (2.8) (26,705)
- 5.00% (5.5) (53,249)
12. Joint Ventures
Year to Year to
31 March 31 March
2022 2021
Share of results of joint ventures GBP000 GBP000
Revenue 9,495 26,024
Gross rental income 317 156
Property overheads (175) (131)
Net rental income 142 25
Gain on revaluation of investment properties 18,473 6,423
Loss on sale of investment properties - (553)
Development property gain/(loss) 764 (948)
Gross profit 19,379 4,947
Administrative expenses (295) (432)
Operating profit 19,084 4,515
Interest payable on bank loans and overdrafts (2,407) (1,163)
Other interest payable and similar charges (181) (156)
Interest capitalised 2,142 514
Finance income - 5
Profit before tax 18,638 3,715
Tax 1,249 (596)
Profit after tax 19,887 3,119
Adjustment for Barts Square economic interest(1) 821 (767)
Share of results of joint ventures 20,708 2,352
1. This adjustment reflects the impact of the consolidation of a joint venture at its economic
interest of 46.0% (March 2021: 47.0%) rather than its actual ownership interest of 33.3%.
At At
31 March 31 March
2022 2021
Investment in joint ventures GBP000 GBP000
Summarised balance sheets
Non-current assets
Investment properties 140,045 86,817
Owner occupied property, plant and equipment 40 41
140,085 86,858
Current assets
Land and developments 8,349 16,545
Trade and other receivables 2,527 1,661
Cash and cash equivalents 4,474 7,781
15,350 25,987
Current liabilities
Trade and other payables (10,062) (7,098)
Borrowings - (11,455)
(10,062) (18,553)
Non-current liabilities
Trade and other payables (408) (408)
Borrowings (39,585) (8,014)
Leasehold interest (4,744) (4,584)
Deferred tax (125) (1,422)
(44,862) (14,428)
Net assets pre-adjustment 100,511 79,864
Acquisition costs 93 89
Investment in joint ventures 100,604 79,953
The fair value of investment properties at 31 March 2022 is as follows:
At At
31 March 31 March
2022 2021
GBP000 GBP000
Book value 140,045 86,817
Lease incentives and costs included in trade and other receivables 166 119
Head leases capitalised (4,391) (4,420)
Fair value 135,820 82,516
13. Other Investments
At At
31 March 31 March
2022 2021
GBP000 GBP000
Book value at 1 April - -
Acquisitions 306 -
As at year end 306 -
On 6 August 2021, the Group entered into a commitment of GBP1,000,000 to invest in the Pi Labs European PropTech venture capital fund ("Fund") of which GBP306,000 was invested during the year. The Fund is focused on investing in the next generation of proptech businesses.
The fair value of the Group's investment is based on the net asset value of the Fund, representing Level 2 fair value measurement as defined in IFRS 13 Fair Value Measurement.
14. Land and Developments
At At
31 March 31 March
2022 2021
GBP000 GBP000
At 1 April 448 852
Acquisitions and construction costs 2,913 220
Disposals (3,557) (804)
Reversal of provision 2,285 180
At 31 March 2,089 448
The Directors' valuation of development stock shows a surplus of GBP302,000 (31 March 2021: GBP578,000) above book value. This surplus has been included in the EPRA net tangible asset value (Note 22).
No interest has been capitalised or included in land and developments.
15. Trade and Other Receivables
At At
31 March 31 March
2022 2021
GBP000 GBP000
Trade receivables 18,807 17,426
Other receivables 762 544
Prepayments 4,310 4,597
Accrued income 24,574 17,860
Total trade and other receivables 48,453 40,427
Included in accrued income are lease incentives of GBP22,965,000 (31 March 2021: GBP17,179,000).
16. Cash and Cash Equivalents
At At
31 March 31 March
2022 2021
GBP000 GBP000
Cash held at managing agents 10,589 3,289
Restricted cash 3,978 72,878
Cash deposits 14,240 78,281
Total cash and cash equivalents 28,807 154,448
Restricted cash is made up of cash held by solicitors and cash in restricted accounts.
17. Trade and Other Payables
At At
31 March 31 March
2022 2021
GBP000 GBP000
Trade payables 23,122 24,194
Other payables 3,957 1,879
Accruals 7,418 14,023
Deferred income 9,489 6,668
Total trade and other payables 43,986 46,764
18. Lease Liability
At At
31 March 31 March
2022 2021
GBP000 GBP000
Current lease liability 658 634
Non-current lease liability 6,271 6,929
Included within the lease liability are GBP658,000 (31 March 2021: GBP634,000) of current and GBP4,082,000 (31 March 2021: GBP4,740,000) of non-current lease liabilities which relate to the long leasehold of the Group's head office.
19. Borrowings
At At
31 March 31 March
2022 2021
GBP000 GBP000
Current borrowings - -
Borrowings repayable within:
- two to three years 100,000 49,705
- three to four years 296,633 286,998
Non-current borrowings 396,633 336,703
Total borrowings 396,633 336,703
At At
31 March 31 March
2022 2021
GBP000 GBP000
Total borrowings 396,633 336,703
Cash (28,807) (154,448)
Net borrowings 367,826 182,255
Net borrowings exclude the Group's share of borrowings in joint ventures of GBP39,585,000 (31 March 2021: GBP19,469,000) and cash of GBP4,474,000 (31 March 2021: GBP7,781,000). All borrowings in joint ventures are secured.
At At
31 March 31 March
2022 2021
GBP000 GBP000
Net assets 687,043 608,161
Gearing 54% 30%
20. Derivative Financial Instruments
At At
31 March 31 March
2022 2021
GBP000 GBP000
Derivative financial instruments asset 11,104 171
Derivative financial instruments liability (538) (7,601)
A gain on the change in fair value of GBP17,996,000 has been recognised in the Consolidated Income Statement (31 March 2021: GBP2,938,000).
The fair values of the Group's outstanding interest rate swaps and caps have been estimated by calculating the present values of future cash flows, using appropriate market discount rates, representing Level 2 fair value measurements as defined in IFRS 13 Fair Value Measurement.
21. Share Capital
At At
31 March 31 March
2022 2021
GBP000 GBP000
Authorised 39,577 39,577
The authorised share capital of the Company is GBP39,577,000 ordinary shares of 1p each.
At At
31 March 31 March
2022 2021
GBP000 GBP000
Allotted, called up and fully paid:
- 122,325,413 (31 March 2021: 121,265,710) ordinary shares of 1p each 1,223 1,213
- 212,145,300 deferred shares of 1/8p each - 265
1,223 1,478
The deferred shares of 1/8p each were cancelled during the year.
22. Net Assets Per Share
At At
31 March 31 March
2022 Number of shares 2021 Number of shares
GBP000 000 p GBP000 000 p
IFRS net assets 687,043 122,325 608,161 121,266
Adjustments:
- deferred shares - (265)
Basic net asset value 687,043 122,325 562 607,896 121,266 501
- share settled bonus 662 718
- dilutive effect of Performance Share Plan 1,657 1,519
Diluted net asset value 687,043 124,644 551 607, 896 123,503 492
Adjustments:
- fair value of financial instruments (10,565) 7,431
- deferred tax 503 18,348
- fair value of land and developments 302 578
- real estate transfer tax 73,155 56,877
EPRA net reinstatement value 750,438 124,644 602 691,130 123,503 560
- real estate transfer tax (36,656) (24,862)
- deferred tax (503) (7,605)
EPRA net tangible asset value 713,279 124,644 572 658,663 123,503 533
At At
31 March 31 March
2022 Number of shares 2021 Number of shares
GBP000 000 p GBP000 000 p
Diluted net assets 687,043 124,644 551 607,896 123,503 492
Adjustments:
- surplus on fair value of stock 302 578
- fair value of fixed rate loan - (9,622)
EPRA net disposal value 687,345 124,644 551 598,852 123,503 485
The net asset values per share have been calculated in accordance with guidance issued by the European Public Real Estate Association ("EPRA").
The adjustments to the net asset value comprise the amounts relating to the Group and its share of joint ventures.
The calculation of EPRA net tangible asset value includes a real estate transfer tax adjustment which adds back the benefit of the saving of the purchaser's costs that Helical expects to receive on the sales of the corporate vehicles that owns the buildings, rather than direct asset sales.
The calculation of EPRA net disposal value and triple net asset value per share reflects the fair value of all the assets and liabilities of the Group at 31 March 2022. One of the loans held by the Group in the prior year was at a fixed rate and therefore not at fair value. The adjustment of GBPnil (31 March 2021: GBP9,622,000) is the increase from book to fair value.
23. Related Party Transactions
The following amounts were due from the Group's joint ventures:
At At
31 March 31 March
2022 2021
GBP000 GBP000
Charterhouse Street Limited 405 400
Barts Square companies 79 16
Shirley Advance LLP 8 8
Old Street Holdings LP 3 3
An accounting and corporate services fee of GBP50,000 (March 2021: GBP50,000) was charged by the Group to the Barts Square companies. In addition, a development management, accounting and corporate services fee of GBP1,380,000 (31 March 2021: GBP850,000) was charged by the Group to the Charterhouse Place Limited group.
24. See-through Analysis
Helical holds a significant proportion of its property assets in joint ventures with partners that provide a significant equity contribution, whilst relying on the Group to provide asset management or development expertise. Accounting convention requires Helical to account under IFRS for its share of the net results and net assets of joint ventures in limited detail in the Income Statement and Balance Sheet. Net asset value per share, a key performance measure used in the real estate industry, as reported in the financial statements under IFRS, does not provide Shareholders with the most relevant information on the fair value of assets and liabilities within an ongoing real estate company with a long-term investment strategy.
This analysis incorporates the separate components of the results of the consolidated subsidiaries and Helical's share of its joint ventures' results into a "see-through" analysis of its property portfolio, debt profile and the associated income streams and financing costs, to assist in providing a comprehensive overview of the Group's activities.
See-through Net Rental Income
Helical's share of the gross rental income, head rents payable and property overheads from property assets held in subsidiaries and in joint ventures is shown in the table below.
Year to Year to
31 March 31 March
2022 2021
GBP000 GBP000
Gross rental income - subsidiaries 35,324 28,007
- joint ventures 317 156
Total gross rental income 35,641 28,163
Rents payable - subsidiaries (169) (232)
Property overheads - subsidiaries (4,069) (2,810)
- joint ventures (175) (131)
See-through net rental income 31,228 24,990
See-through Net Development Profits/(Losses)
Helical's share of development profits/(losses) from property assets held in subsidiaries and in joint ventures is shown in the table below.
Year to Year to
31 March 31 March
2022 2021
GBP000 GBP000
In parent and subsidiaries 3,519 678
In joint ventures 764 (948)
Total gross development profit/(loss) 4,283 (270)
Reversal of provision/(provision) - subsidiaries 2,285 (82)
See-through development profits/(losses) 6,568 (352)
See-through Net Gain on Sale and Revaluation of Investment Properties
Helical's share of the net gain on the sale and revaluation of investment properties held in subsidiaries and joint ventures is shown in the table below.
Year to Year to
31 March 31 March
2022 2021
GBP000 GBP000
Revaluation surplus on investment properties - subsidiaries 33,311 19,387
- joint ventures 18,473 6,423
Total revaluation surplus 51,784 25,810
Net loss on sale of investment properties - subsidiaries (45) (1,341)
- joint ventures - (553)
Total net loss on sale of investment properties (45) (1,894)
See-through net gain on sale and revaluation of investment properties 51,739 23,916
See-through Administration Expenses
Helical's share of the administration expenses incurred in subsidiaries and joint ventures is shown in the table below.
Year to Year to
31 March 31 March
2022 2021
GBP000 GBP000
Administration expenses - subsidiaries 9,598 9,276
- joint ventures 295 432
Total administration expenses 9,893 9,708
Performance related awards, including NIC - subsidiaries 7,170 5,140
Total performance related awards, including NIC 7,170 5,140
See-through administration expenses 17,063 14,848
See-through Net Finance Costs
Helical's share of the interest payable, finance charges, capitalised interest and interest receivable on bank borrowings and cash deposits in subsidiaries and joint ventures is shown in the table below.
Year to Year to
31 March 31 March
2022 2021
GBP000 GBP000
Interest payable on bank loans and overdrafts - subsidiaries 10,169 10,697
- joint ventures 2,407 1,163
Total interest payable on bank loans and overdrafts 12,576 11.860
Other interest payable and similar charges - subsidiaries 9,065 3,382
- joint ventures 181 156
Interest capitalised - joint ventures (2,142) (514)
Total finance costs 19,680 14,884
Interest receivable and similar income - subsidiaries (6) (58)
- joint ventures - (5)
See-through net finance costs 19,674 14,821
See-through Property Portfolio
Helical's share of the investment, land and development property portfolio in subsidiaries and joint ventures is shown in the table below.
At At
31 March 31 March
2022 2021
GBP000 GBP000
Investment property fair value - subsidiaries 961,500 756,875
- joint ventures 135,820 82,516
Total investment property fair value 1,097,320 839,391
Land and development stock - subsidiaries 2,089 448
- joint ventures 8,349 16,545
Total land and development stock 10,438 16,993
Total land and development stock surplus - subsidiaries 302 578
Total land and development stock at fair value 10,740 17,571
See-through property portfolio 1,108,060 856,962
See-through Net Borrowings
Helical's share of borrowings and cash deposits in subsidiaries and joint ventures is shown in the table below.
At At
31 March 31 March
2022 2021
GBP000 GBP000
Gross borrowings more than one year - subsidiaries 396,633 336,703
Total 396,633 336,703
Gross borrowings less than one year - joint ventures - 11,455
Gross borrowings more than one year - joint ventures 39,585 8,014
Total 39,585 19,469
Cash and cash equivalents - subsidiaries (28,807) (154,448)
- joint ventures (4,474) (7,781)
Total (33,281) (162,229)
See-through net borrowings 402,937 193,943
25. See-through Net Gearing and Loan to Value
At At
31 March 31 March
2022 2021
GBP000 GBP000
Property portfolio 1,108,060 856,962
Net borrowings 402,937 193,943
Net assets 687,043 608,161
See-through net gearing 58.6% 31.9%
See-through loan to value 36.4% 22.6%
26. Total Accounting Return
At At
31 March 31 March
2022 2021
GBP000 GBP000
Brought forward IFRS net assets 608,161 598,689
Carried forward IFRS net assets 687,043 608,161
Increase in IFRS net assets 78,882 9,472
Dividends paid 12,582 10,528
Total accounting return 91,464 20,000
Total accounting return percentage 15.0% 3.3%
At At
31 March 31 March
2022 2021
GBP000 GBP000
Brought forward EPRA net tangible assets 658,663 640,424
Carried forward EPRA net tangible assets 713,279 658,663
Increase in EPRA net tangible assets 54,616 18,239
Dividends paid 12,582 10,528
Total EPRA accounting return 67,198 28,767
Total EPRA accounting return percentage 10.2% 4.5%
27. Total Property Return
At At
31 March 31 March
2022 2021
GBP000 GBP000
See-through net rental income 31,228 24,990
See-through development profits/(losses) 6,568 (352)
See-through revaluation surplus 51,784 25,810
See-through net loss on sale of investment properties (45) (1,894)
Total property return 89,535 48,554
28. Capital Commitments
The Group has a commitment of GBPnil (31 March 2021: GBP4,400,000) in relation to development contracts which are due to be completed in the year to March 2023. A further GBP13,100,000 (31 March 2021: GBP45,600,000) relates to the Group's share of commitments in joint venture.
29. Post Balance Sheet Events
In May 2022, the Group exchanged contracts for the sale of Trinity, Manchester for GBP34.55m.
Appendix 1 - Five Year Review
Income Statements
Year Year Year Year Year
ended ended ended ended ended
31.3.22 31.3.21 31.3.20 31.3.19 31.3.18
GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 51,146 38,596 44,361 44,175 175,596
Net rental income 31,086 24,965 27,838 24,599 36,329
Development property profit/(loss) 3,519 678 2,076 2,564 (1,961)
Reversal of provisions/(provisions) 2,885 (82) 1,198 (4,345) (2,213)
Share of results of joint ventures 20,708 2,352 13,396 (3,217) 3,196
Other operating income 28 48 88 - 111
Gross profit before gain on
investment properties 57,626 27,961 44,596 19,601 35,462
(Loss)/gain on sale of investment
properties (45) (1,341) (1,272) 15,008 13,567
Revaluation surplus on investment
properties 33,311 19,387 38,351 44,284 23,848
Fair value movement of available-for-sale
assets - - - 144 1,385
Administrative expenses excluding
performance related awards (9,598) (9,276) (10,524) (10,858) (11,023)
Performance related awards (including
NIC) (7,170) (5,140) (6,191) (5,895) (1,742)
Finance costs (19,234) (14,079) (16,100) (17,407) (37,438)
Finance income 6 58 1,345 983 4,303
Change in fair value of derivative
financial instruments 17,996 2,938 (7,651) (3,322) 4,029
Change in fair value of Convertible
Bond - - 468 865 (1,559)
Foreign exchange gains/(losses) - - 8 53 (10)
Profit before tax 72,892 20,508 43,030 43,456 30,822
Tax on profit on ordinary activities 16,002 (2,631) (4,313) (836) (4,537)
Profit after tax 88,894 17,877 38,717 42,620 26,285
Balance Sheets
At At At At At
31.3.22 31.3.21 31.3.20 31.3.19 31.3.18
GBP000 GBP000 GBP000 GBP000 GBP000
Investment portfolio at fair value 961,500 756,875 836,875 791,250 802,134
Land, trading properties and developments 2,089 448 852 2,311 6,042
Group's share of investment properties held by joint ventures 135,820 82,516 76,809 25,382 22,623
Group's share of land, trading and development properties held by
joint ventures 8,349 16,545 34,164 56,935 76,474
Group's share of land and development property surpluses 302 578 578 578 2,328
Group's share of total properties at fair value 1,108,060 856,962 949,278 876,456 909,601
Net debt 367,826 182,255 273,598 227,712 325,121
Group's share of net debt of joint ventures 35,111 11,688 24,933 40,861 37,733
Group's share of net debt 402,937 193,943 298,531 268,573 362,854
Net assets 687,043 608,161 598,689 567,425 533,894
EPRA net tangible assets value 713,279 658,663 640,424 597,321 561,644*
Dividend per ordinary share paid 10.30p 8.70p 10.20p 9.60p 8.70p
Dividend per ordinary share declared 11.15p 10.10p 8.70p 10.10p 9.50p
EPRA earnings/(loss) per ordinary share 5.2p (1.8)p 7.6p (8.4)p (7.0)p
EPRA net tangible assets per share 572p 533p 524p 494p 468p*
*EPRA net asset value.
Appendix 2 - Property Portfolio
London Portfolio - Investment Properties
Vacancy rate at
31 March
Area sq ft 2022 Vacancy rate at 31 March 2021
Property Description (NIA) % %
Completed properties
The Warehouse and Studio,
The Bower, EC1 Multi-let office building 151,439 0.0 0.0
The Tower, The Bower, EC1 Multi-let office building 182,193 5.3 0.0
The Loom, E1 Multi-let office building 108,600 20.1 14.8
Single-let office
Kaleidoscope, EC1 building 88,581 0.0 0.0
25 Charterhouse Square,
EC1 Multi-let office building 42,921 4.4 26.0
55 Bartholomew, EC1 Multi-let office building 10,976 23.1 67.2
Single-let recording
The Power House, W4 studios/office building 21,268 0.0 0.0
605,978 6.9 5.8
Development pipeline
33 Charterhouse Street, Office development 205,369 n/a n/a
EC1
Single-let office
100 New Bridge Street, EC4 building 167,026 0.0 n/a
978,373 0.0 n/a
London Portfolio - Development Properties
Unsold
apartments Unsold apartments
at 31 March at 31 March
Property Description Total apartments 2022 2021
Barts Square, EC1 Residential apartments and 8 retail units 236 14 28
Manchester Offices
Vacancy rate
at 31 March
Area sq ft 2022 Vacancy rate at 31 March 2021
Property Description (NIA) % %
Trinity Multi-let office building 58,533 23.9 54.1
Appendix 3 - EPRA Performance Measures
At At
31 March 31 March
2022 2021
EPRA net tangible assets GBP713.3m GBP658.7
EPRA net reinstatement value per share 602p 560p
EPRA net tangible assets per share 572p 533p
EPRA net disposal value per share 551p 485p
EPRA net initial yield 3.5% 3.2%
EPRA "topped up" net initial yield 4.5% 4.6%
EPRA vacancy rate 4.8% 7.9%
EPRA cost ratio (including direct vacancy costs) 52.8% 59.0%
EPRA cost ratio (excluding direct vacancy costs) 48.8% 56.3%
EPRA earnings/(loss) GBP6.4m (GBP2.2m)
EPRA earnings/(loss) per share 5.2p (1.8p)
Appendix 4 - Risk Register
Risk Description Mitigating actions Changes in risk
severity
Strategic Risks
Strategic risks are external risks that could prevent the Group
delivering its strategy. It is these risks which principally
impact decision-making with respect to the purchasing or selling
of property assets.
The Group's Changing market Management constantly The pandemic had
strategy is conditions monitors the market and various strategic
inconsistent leading to makes changes to the impacts on property
with the market a reduction Group's strategy in light companies and uncertainty
in demand or of market conditions. regarding the full
deferral of The Group conducts an economic and social
decisions by annual strategic review impacts of the
occupiers, and maintains rolling Covid-19 pandemic
impacting property forecasts, with inbuilt continues. Over
values, could sensitivity analysis the course of the
hinder the to model anticipated year, we have seen
Group's ability economic conditions. an improved sentiment
to buy, develop, The Group's management towards the future
manage and team is highly experienced of the office,
sell assets and has a strong track but the agile working
as envisioned record of understanding movement continues,
in its strategy. the property market. with many businesses
The location, The small size of the adopting hybrid
size and mix Group's management team working practices.
of properties enables quick implementation It has become evident
in Helical's of strategic change when that the market
portfolio determine required. favours the best-in-class
the impact We have robust and space with strong
of the risk. established sustainability
If the Group's governance and approval credentials and
chosen markets processes. Helical's portfolio
underperform, We are active members is well positioned
the impact of industry bodies and to respond to this
on the Group's professional organisations trend. The UK's
liquidity, and participate in local Covid-19 vaccination
investment business and community programme has also
property revaluations groups. This ensures had a positive
and rental we are actively engaged impact on this
income will in decisions affecting risk. Consequently,
be greater. our business, customers, the severity of
partners and communities. this risk has decreased.
Risks arising The Group carries Management carefully The Group currently
from the Group's out significant reviews the risk profile has one ongoing
significant development of individual developments development and
development projects over and in some cases builds the majority of
projects a number of properties in several these costs are
years and is phases to minimise the fixed. Management
therefore exposed Group's exposure to reduced will look to negotiate
to fluctuations demand for particular similar contract
in the market asset classes or geographical terms for its new
and tenant locations over time. development project:
demand levels The Group carries out 100 New Bridge
over time. developments in partnership Street, EC4.
Development with other organisations However, this risk
projects often and pre-lets space to is dependent on
require substantial reduce development risk, negotiations with
capital expenditure where considered appropriate. contractors and
for land procurement Management are highly may change as new
and construction experienced and have development projects
and they usually a track record of developing are acquired.
take a considerable best-in-class office There remains risk
amount of time spaces in highly desirable, of insolvencies
to complete well connected, locations. in the construction
and generate Management place significant industry given
rental income. focus on timely project the uncertainties
The risk of delivery and strong around the future
delays or failure relationships macroeconomic environment
to get planning with construction partners and geopolitical
approval is with appropriate risk market influences.
an inherent sharing. We opt to work
risk of property with highly regarded
development. suppliers and contractors
The construction to minimise cost uncertainty.
industry is We typically enter into
faced with contracts with our
both labour contractors
and materials on a fixed price basis
supply shortages and incorporate appropriate
which could contingencies.
lead to cost Development plans and
escalation exposure to risk are
and project considered in the annual
delay. business plan.
Exposure to Detailed planning
developments pre-applications
increases the and due diligence are
potential financial conducted in advance
impact of cost of any site acquisition.
inflation, Board approval required
adverse valuation for commitments above
or other market a certain threshold.
factors which Management continuously
could affect monitors the cost of
the Group's materials and pressures
financial capabilities on supply chain and
and targeted distribution
financial returns. networks.
Ongoing consideration
is given to investing
in the most energy efficient
machinery and building
materials and using renewable
sources of energy where
possible.
Property The property The Group's property Although there
values decline/reduced portfolio is portfolio has tenants has been a notable
tenant demand at risk of from diverse industries, increase in the
for space valuation falls reducing the risk of return of employees
through changes over-exposure to one to their offices,
in market conditions, sector. We carry out a number of corporates
including underperforming occupier financial covenant are continuing
sectors or checks ahead of approving to offer hybrid
locations, leases in order to limit working opportunities.
lack of tenant our exposure to tenant However, there
demand, deferral failure. Management reviews is a strong market
of occupiers' external data, seeks sentiment towards
decisions or the advice of industry new, best-in-class
general economic experts and monitors office space and
uncertainty. the performance of individual given Helical's
Property valuations assets and sectors in Grade A portfolio,
are dependent order to dispose of the severity of
on the level non-performing this risk has reduced
of rental income assets and rebalance with respect to
receivable the portfolio to suit our portfolio.
and expected the changing market.
to be receivable Management regularly
on that property models different property
in the future. revaluation scenarios
Therefore, through its forecasting
declines in process in order to prepare
rental income a considered approach
could have to mitigating the potential
an adverse impact.
impact on revenue We work closely with
and the value our management agents,
of the Group's Ashdown Phillips, to
properties. engage closely with our
occupiers to understand
their needs and respond
quickly and collaboratively
to any changing requirements.
The Board and Management
team conduct ongoing
monitoring of property
market, direction and
valuations. The bi-weekly
Management meeting considers
factors such as new leases,
lease events and tenant
issues with respect to
each property in the
portfolio.
We conduct ongoing monitoring
of build cost inflation
and factor this into
appraisals of all potential
development schemes.
Geopolitical Significant Management seeks advice Whilst reduced,
and economic events or changes from experts to ensure the Covid -19 pandemic
in the global/UK it understands the political continues to effect
political or environment and the impact global and local
economic landscape of emerging regulatory economies e.g.
may have a and tax changes on the inflationary pressures
significant Group. It maintains good arising from supply
impact on the relationships with planning chain shortages,
Group's ability consultants and local interest rate rises,
to plan and authorities. Where cost of energy.
deliver its appropriate, UK GDP growth estimates
strategic priorities management joins with for 2022 have fallen
in accordance industry representatives since the beginning
with its business to contribute to policy of the year.
model. Such and regulatory debate Furthermore, global
events or changes relevant to the industry. economic and political
may result Management monitor conditions e.g.
in decreased macroeconomic the Russo-Ukrainian
investor activity research and economic war and associated
and reluctance outlook considerations sanctions, are
of occupiers are incorporated into exerting pressure
to make decisions the Group's annual business on global supply
with respect plan. chains and economies.
to office space Management conduct ongoing The risk is therefore
uptake. assessments of post-Brexit considered to have
There is a impacts and the continuing increased since
risk that regulatory effects of the Covid-19 last year.
and tax changes pandemic.
could adversely We will continue to monitor
affect the the economic and political
market in which situations in the UK
the Group operates. and globally and adapt
The ongoing any business decisions
transition accordingly.
of the UK from
the EU remains
a risk and
has an impact
on global trade.
Political instability
and unrest
can have a
significant
knock-on effect
on global economies
and trade (as
evidenced by
the Russo-Ukrainian
war).
Significant The Group's In the event of a pandemic: Global rollout
business disruption/external operations, -- The Executive Committee of Covid-19 vaccinations
catastrophic reputation will be tasked with the has reduced the
event or financial daily monitoring and probability of
performance managing of the risk, further significant
could be adversely and will focus on the and prolonged disruption
affected and impact on property locations, due to the disease.
disrupted by the business and supply However, the UK's
major external chain. terrorism national
events such -- Regular Board discussions threat level is
as pandemic will be held during any currently rated
disease, civil pandemic to review the as significant.
unrest, war Group's response and The current Russo-Ukrainian
and geopolitical mitigating actions. war and associated
instability, -- Enhanced engagement sanctions are putting
terrorist attacks, with our stakeholders pressure on global
extreme weather, will be conducted supply chains and
environmental (particularly economies.
incidents, with occupiers, contractors, Therefore, this
and power supply shareholders and employees). risk remains unchanged.
shortages. -- There will be continuous
review of Government
All of these guidelines and emerging
potential events practice, with risk
could have assessments
a considerable undertaken as control
impact on the measures change.
global economy, -- Guidance will be issued
as well as to our staff, occupiers
that of our and contractors on how
business and to protect themselves
our stakeholders. and others.
The Group ensures that
it has adequate Business
Continuity Plans and
IT Business Continuity
Plans in place to enable
remote working for all
staff.
Testing of business
resilience
and risk planning is
conducted throughout
the year.
Climate change The Group is The Group has a Climate change
alive to the Sustainability risk continues
risks posed Committee, which reviews to increase in
by climate the Group's approach prominence and
change. Failing and strategy to climate importance. In
to respond related risks and presents the UK, the Government
to these risks regularly to the Board continues to introduce
appropriately and Executive Committee more legislation
(in line with on emerging issues and linked to climate
societal attitudes mitigation plans. The risk e.g. TCFD
or legislation) Committee sets appropriate and legislation
or failing targets and KPIs to requiring higher
to identify effectively standards for energy
potential opportunities monitor the Group's efficiency in commercial
could lead performance. and residential
to reputational During the year, a detailed properties (EPCs).
damage, loss scenario analysis was The risks associated
of income or performed to ascertain with the impact
decline in the potential risks and of climate change
property values. opportunities that arise continue to increase
There is also due to specific climate and businesses
the additional related scenarios. The are being encouraged
risk that the outcome of this analysis to pro-actively
costs to operate has been incorporated respond by all
our business into our wider Task Force their stakeholders.
(energy or on Climate Related Financial
water) or undertake Disclosures (TCFD) statement.
development Annually, the Group produces
activities a Sustainability Performance
(construction Report with key data
materials) and performance points
will rise as which are externally
a consequence assured.
of climate In May 2022, the Group
change. released its Net Zero
Carbon Pathway, which
commits to becoming net
zero carbon by 2030 and
includes the actions
and steps required to
meet the associated targets.
Financial Risks
Financial risks are those that could prevent the Group from
funding its chosen strategy, both in the long and short-term.
Availability The inability The Group maintains a The Group has significant
and cost of to roll over good relationship with cash and undrawn
bank borrowing existing facilities many established lending bank facilities
and cash resources or take out institutions and borrowings and a conservative
new borrowing are spread across a number level of borrowings.
could impact of these.
on the Group's Funding requirements
ability to are reviewed monthly
maintain its by management, who seek
current portfolio to ensure that the maturity
and purchase dates of borrowings are
new properties. spread over several years.
The Group may Management monitors the
forego opportunities cash levels of the Group
if it does on a daily basis and
not maintain maintains sufficient
sufficient levels of cash resources
cash to take and undrawn committed
advantage of bank facilities to fund
them as they opportunities as they
arise. arise.
The Group is The Group hedges the
at risk of interest rates on the
increased interest majority of its borrowings,
rates on unhedged effectively fixing or
borrowings. capping the rates over
several years.
Breach of If the Group Covenants are closely The pandemic has
loan covenants breaches debt monitored throughout put some tenants
covenants, the year. Management under cash flow
lending institutions carries out sensitivity pressure. Although
may require analyses to assess the the Group's rental
the early repayment likelihood of future collection remains
of borrowings. breaches based on significant strong, this is
changes in property values still a key risk
or rental income. for the business.
The risk is further mitigated
through the obtaining
of tenant guarantors/bank
guarantees/deposits.
Operational Risks
Operational risks are internal risks that could prevent the
Group from delivering its strategy.
Our people The Group's The senior management Although there
continued team is very experienced is currently
success is with a high average strong competition
reliant on length of service. for talent in
its management The Nominations Committee the employment
and staff. and Board continuously market at present,
The failure review succession plans, this risk has
to attract, and the Remuneration remained broadly
develop and Committee oversees similar due
retain the the Directors' Remuneration to our high
right people Policy and its application staff retention
with requisite to senior employees, levels.
skills, as and reviews and approves The Board reaffirmed
well as failure incentive arrangements the succession
to maintain to ensure they are plans for key
a positive commensurate with market roles within
working environment practice. Remuneration the Company
for employees is set to attract and during the year
could inhibit retain high calibre which supports
the execution staff. the long-term
of our strategy Our annual appraisal success of the
and dimmish process focuses on business.
our long-term future career development
sustainability. and staff are encouraged
to undertake personal
development and training
courses, supported
by the Company.
The Board and senior
management engage directly
with employees through
a variety of engagement
initiatives which enable
the Board to ascertain
staff satisfaction
levels and implement
changes to working
practices and the working
environment as necessary.
We also arrange all
staff training activities
and events throughout
the year.
Relationships The Group's Business partners External factors
with business continued -- The Group nurtures such as the
partners and success is well established Covid-19 pandemic,
reliance on reliant on relationships geopolitical
external partners successful with joint venture tensions and
relationships partners, seeking future high levels
with its projects where it has of demand for
joint venture had previous successful certain raw
partners. collaborations. materials and
As several -- Management has a components place
of the Group's strong track record increased pressure
properties of working effectively on supply chains
are held with a diverse range and distribution
in conjunction of partners. networks.
with third -- Our joint venture Given our reliance
parties, business plans are on external
the Group's prepared to ensure third parties
control over operational and strategic to ensure the
these properties alignment with our successful delivery
is more limited partners. of our development
and these programmes and
structures External partners asset management,
also reduce -- The Group actively these external
the Group's monitors its development factors could
liquidity. projects and uses external have a significant
Operational project managers to impact on our
effectiveness provide support. Potential business and,
and financing contractors are vetted accordingly,
strategies for their quality, this risk has
may also health and safety record increased.
be adversely and financial viability
impacted prior to engagement.
if partners -- The Group has a
are not strategically highly experienced
aligned. team managing its properties,
The Group who regularly conduct
is dependent on-site reviews and
on a number monitor cash flows
of external against budget.
third parties -- The Group seeks
to ensure to maintain excellent
the successful relationships with
delivery its specialist professional
of its development advisors, often engaging
programme parties with whom it
and asset has successfully worked
management previously.
of existing -- Management actively
assets. These monitors these parties
include: to ensure they are
-- Contractors delivering the required
and suppliers; quality on time and
-- Consultants; strong working relationships
-- Managing are maintained.
agents; and
-- Legal
and professional
teams.
The Group
would be
adversely
impacted
by increases
in the cost
of services
provided
by third
parties.
Health and The nature The Group reviews and This remains
safety of the Group's updates its Health a key area of
operations & Safety Policy regularly focus for the
and markets and it is approved business and
expose it by the Board annually. the risk remains
to potential Contractors are required the same.
health and to comply with the
safety risks terms of our Health
both internally & Safety Policy. The
and externally Group engages an external
within the health and safety consultant
supply chain. to review contractor
agreements prior to
appointment and ensures
they have appropriate
policies and procedures
in place, then monitors
the adherence to such
policies and procedures
throughout the project's
lifetime.
The Executive Committee
reviews the report
by the external consultant
every month and the
Board reviews them
at every scheduled
meeting. The internal
asset managers carry
out regular site visits.
Cyber attacks The Group The Group engages and Cyber risks
to our business relies on actively manages external persist as cyber
and our buildings/cyber information IT experts to ensure criminals continue
security technology its IT systems operate to exploit changes
("IT") to effectively and that in working practices
perform effectively, we respond to the evolving post-pandemic.
and a cyber-attack IT security environment. The Group's
could result This includes regular cyber security
in IT systems off-site backups and controls have
being unavailable, a comprehensive disaster continued to
adversely recovery process. The be strengthened
affecting external provider also and no major
the Group's ensures the system breaches were
operations. is secure and this reported during
The increasing is subject to routine the year.
reliance testing including bi-annual However, as
on and use disaster recovery tests the number of
of digital and annual Cyber Essential UK businesses
technology Plus Certification. reporting security
heighten There is a robust control threats has
the risks environment in place not decreased
associated for invoice approval over the year,
with IT and and payment authorisations we have not
cyber security. including authorisation revised the
Commercially limits and a dual sign risk severity
sensitive off requirement for rating for the
and personal large invoices and forthcoming
information bank payments. year.
is electronically The Group provides
stored by training and performs
the Group. penetration testing
Theft of to identify emails
this information of a suspicious nature,
could adversely ensuring these are
impact the flagged to the IT providers
Group's commercial and ensure employees
advantage are aware they should
and result not open attachments
in penalties or follow instructions
where the within the email. On
information an annual basis, our
is governed external IT providers
by law (GDPR provide IT security
and Data training to ensure
Protection all staff are adopting
Act 2018). best practice IT security
Risks are measures to help protect
continually the business against
evolving, cyberattack.
and we must An external review
design, implement of Helical's anti-financial
and monitor crime and cyber security
effective frameworks was conducted
controls during the year and
to protect training delivered
the Group to staff.
from cyber-attack The Group has a disaster
or major recovery plan, on-site
IT failure. security at its properties
The Group and insurance policies
increasingly in place in order to
employs IT deal with any external
solutions events and mitigate
across its their impact.
property
portfolio
to ensure
its buildings
are "smart".
The Group
is at risk
of being
a victim
of social
engineering
fraud.
Reputational Risks
Reputational risks are those that could affect the Group in
all aspects of its strategy.
Poor management Reputational The Group believes This risk remains
of stakeholder damage resulting that successfully delivering and is expected
relations in a loss its strategy and mitigating to remain at
of credibility its principal risks the same level.
with key should protect its
stakeholders reputation.
including The Group regularly
Shareholders, reviews its strategy
analysts, and risks to ensure
banking institutions, it is acting in the
contractors, interests of its
managing stakeholders.
agents, tenants, The Group maintains
property a strong relationship
purchasers/sellers with investors and
and employees analysts through regular
is a continuous meetings.
risk for We ensure strong community
the Group. involvement in the
design process for
our developments and
create employment and
education opportunities
through our construction
and operations activities.
Management closely
monitors day-to-day
business operations,
and the Group has a
formal approval procedure
for all press releases
and public announcements.
A Group Disclosure
Policy and Share Dealing
Code, Policy & Procedures
have been circulated
to all staff in accordance
with the UK Market
Abuse Regulation (UK
MAR).
Non-compliance The nature The Group's anti-bribery This risk is
with prevailing of the Group's and corruption and consistent for
legislation, operations whistleblowing policies the business
regulation and markets and procedures are due to the ever
and best practice exposes it reviewed and updated changing legal
to financial annually and emailed and regulatory
crimes risks to staff and displayed landscape the
(including on our website. Projects business operates
bribery and with greater exposure in. Therefore,
corruption to bribery and corruption the risk remains
risks, money are monitored closely. at a similar
laundering The Group avoids doing level.
and tax evasion) business in high-risk
both internally territories. The Group
and externally has related policies
within the and procedures designed
supply chain. to mitigate bribery
The Group and corruption risks
is exposed including:
to the potential Know Your Client checks,
risk of acquiring due diligence processes,
or disposing capital expenditure
of a property controls, contracts
where the risk assessment procedures,
owner/ purchaser and competition and
has been anti-trust guidance.
involved The Group engages legal
in criminal professionals to support
conduct or these policies where
illicit activities. appropriate.
The Group All employees are required
would attract to complete anti-bribery
criticism and corruption training
and negative and to submit details
publicity of corporate hospitality
were any and gifts received.
instances This year, staff also
of modern received anti-financial
slavery and crime training to enhance
human trafficking their awareness.
identified All property transactions
within its are reviewed and authorised
supply chain. by the Executive Committee.
The Group Our Modern Slavery
would attract Act statement, which
criticism is prominently displayed
and negative on our website, gives
publicity details of our policy
if instances and our approach.
of non-compliance The Group monitors
with GDPR its GDPR and Data Protection
and the Data Act 2018 compliance
Protection to ensure appropriate
Act 2018 safeguards, policies,
were identified. procedures, contractual
Non-compliance terms and records are
may also implemented and maintained
result in in accordance with
financial the regulation.
penalties.
Appendix 5 - Glossary of Terms
Capital value (psf)
The open market value of the property divided by the area of the property in square feet.
Company or Helical or Group
Helical plc and its subsidiary undertakings.
Compound Annual Growth Rate (CAGR)
The annualised average growth rate.
Diluted figures
Reported amounts adjusted to include the effects of potential shares issuable under the Director and employee remuneration schemes.
Earnings per share (EPS)
Profit after tax divided by the weighted average number of ordinary shares in issue.
EPRA
European Public Real Estate Association.
EPRA earnings per share
Earnings per share adjusted to exclude gains/losses on sale and revaluation of investment properties and their deferred tax adjustments, the tax on profit/loss on disposal of investment properties, trading property profits/losses, movement in fair value of available-for-sale assets and fair value movements on derivative financial instruments, on an undiluted basis. Details of the method of calculation of the EPRA earnings per share are available from EPRA (see Note 10).
EPRA net assets per share
Diluted net asset value per share adjusted to exclude fair value surplus of financial instruments, and deferred tax on capital allowances and on investment properties revaluation but including the fair value of trading and development properties in accordance with the best practice recommendations of EPRA (see Note 22).
EPRA net disposal value per share
Represents the Shareholders' value under a disposal scenario, where deferred tax, financial instruments and certain other adjustments are calculated to the full extent of their liability, net of any resulting tax (see Note 22).
EPRA net reinstatement value per share
Net asset value adjusted to reflect the value required to rebuild the entity and assuming that entities never sell assets. Assets and liabilities, such as fair value movements on financial derivatives, that are not expected to crystallise in normal circumstances and deferred taxes on property valuation surpluses are excluded (see Note 22).
EPRA net tangible assets per share
Assumes that entities buy and sell assets, thereby crystallising certain levels of unavoidable deferred tax, but excludes assets and liabilities, such as fair value movements on financial derivatives, that are not expected to crystallise in normal circumstances and deferred taxes on property valuation surpluses are excluded (see Note 22).
EPRA topped-up NIY
The current annualised rent, net of costs, topped-up for contracted uplifts, expressed as a percentage of the fair value of the relevant property.
Estimated rental value (ERV)
The market rental value of lettable space as estimated by the Group's valuers at each Balance Sheet date.
Gearing
Total borrowings less short-term deposits and cash as a percentage of net assets.
Initial yield
Annualised net passing rents on investment properties as a percentage of their open market value.
Like-for-like valuation change
The valuation gain/loss, net of capital expenditure, on those properties held at both the previous and current reporting period end, as a proportion of the fair value of those properties at the beginning of the reporting period plus net capital expenditure.
MSCI INC. (MSCI IPD)
MSCI INC. is a company that produces independent benchmarks of property returns using its investment Property Databank (IPD).
Net asset value per share (NAV)
Net assets divided by the number of ordinary shares at the Balance Sheet date (see Note 22).
Net gearing
Total borrowings less short-term deposits and cash as a percentage of net assets.
Passing rent
The annual gross rental income being paid by the tenant.
Reversionary yield
The income/yield from the full estimated rental value of the property on the market value of the property grossed up to include purchaser's costs, capital expenditure and capitalised revenue expenditure.
See-through/Group share
The consolidated Group and the Group's share in its joint ventures (see Note 24).
See-through net gearing
The see-through net borrowings expressed as a percentage of net assets (see Note 25).
Total Accounting Return
The growth in the net asset value of the Company plus dividends paid in the year, expressed as a percentage of net asset value at the start of the year (see Note 26).
Total Property Return
The total of net rental income, trading and development profits and net gain on sale and revaluation of investment properties on a see-through basis (see Note 27).
Total Shareholder Return (TSR)
The growth in the ordinary share price as quoted on the London Stock Exchange plus dividends per share received for the year expressed as a percentage of the share price at the beginning of the year.
True equivalent yield
The constant capitalisation rate which, if applied to all cash flows from an investment property, including current rent, reversions to current market rent and such items as voids and expenditures, equates to the market value. Assumes rent is received quarterly in advance.
Unleveraged returns
Total property gains and losses (both realised and unrealised) plus net rental income expressed as a percentage of the total value of the properties.
WAULT
The total contracted rent up to the first break, or lease expiry date, divided by the contracted annual rent.
HELICAL PLC
Registered in England and Wales No.156663
Registered Office:
5 Hanover Square
London
W1S 1HQ
T: 020 7629 0113 F: 020 7408 1666 E: reception@helical.co.uk
www.helical.co.uk
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