REG - Helical PLC - Annual Results for the Year to 31 March 2024
23/05/2024 07:15
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240523:nRSW5559Pa&default-theme=true
RNS Number : 5559P Helical PLC 23 May 2024
HELICAL PLC
("Helical" or the "Group" or the "Company")
Annual Results for the Year to 31 March 2024
HELICAL ANNOUNCES THE RESULTS OF A BUSINESS REVIEW AND A CHANGE IN LEADERSHIP
Richard Cotton, Chairman, commented:
"These results reflect a period of economic volatility, with the higher
interest rate backdrop negatively impacting on investment yields and
structural challenges in the occupational market.
"Looking forward, with inflation returning to normal levels at 2.3% and
interest rates forecast to decline, the investment market is expected to
strengthen with rental growth continuing for "best-in-class" office space.
"We have today announced that Gerald Kaye has informed the Board that will be
handing over his executive duties and stepping down from the Board at the AGM
in July, with Matthew Bonning-Snook succeeding him. I am pleased that Gerald
will continue in a consultancy role to deliver our next two projects, at 100
New Bridge Street, EC4 and Brettenham House, WC2.
"Matthew has an extensive track record of delivering highly profitable schemes
over nearly three decades at Helical and he is the right choice to maximise
the opportunities at the Company. During the year he secured the joint venture
with Transport for London ("TfL")'s property company, Places for London, and
the three new schemes added to our pipeline, with the potential for additional
opportunities, will form the cornerstone of our exciting development pipeline
for the rest of this decade.
"In recent months I have been leading a comprehensive business review, the
details of which can be found in my Chairman's Statement below. In summary, we
have an exciting pipeline of committed developments, which due to the quality
of the schemes and anticipated supply shortages, are well placed to attract
premium rents and achieve strong returns. At the same time, in order to
optimise the value of our investment properties, we need to complete our asset
management plans, principally through leasing up vacancy, and be ready to
realise value as and when liquidity returns to the investment market.
"We are confident that we have a coherent strategy in place to deliver
Shareholder value. In the meantime, there are very clear priorities for our
experienced team of investment and development professionals, centred on
reducing the portfolio vacancy in our completed buildings and maximising the
potential in our development pipeline, all at a lower operational cost.
"The Board is therefore unanimous in its view that, given current market
conditions and outlook, the potential returns on a three year view far exceed
the likely returns from alternative strategies to return capital to
Shareholders. To this end, it has signed off on a detailed three year plan,
also encompassing business cost reduction and management incentives, which
provides a clear blueprint for future growth."
Operational Highlights
Good letting momentum with progress at our "best-in-class" assets
· During the year we completed 13 new lettings, comprising 136,660 sq ft
(our share: 86,237 sq ft), delivering contracted rent of £11.7m per annum
(our share: £7.1m), 1.1% above 31 March 2023 ERVs.
- At The JJ Mack Building, EC1, we let 100,847 sq ft at a 1.8% premium
to 31 March 2023 ERVs. Post year end, we let the ground floor office space to
J Sainsbury and have placed the fourth floor, 10(th) floor and remaining
ground floor retail unit under offer. On completion of these lettings 90% of
the building will be let at an average office rent of £95, with just one
floor remaining.
- At The Bower, EC1, we forfeited the leases for six floors let to
WeWork at The Tower, taking back control of the space. Since then we have
re-let one floor back to them until June 2024 and have entered into a
management agreement for infinitSpace to provide serviced offices on two
floors. The remaining vacant fourth, fifth and sixth floors are being
refurbished to be let on a Cat A+ basis.
Sales
· Shortly before the year end, we exchanged on the £43.5m sale of 25
Charterhouse Square, EC1, with completion of the sale in April 2024.
· As announced a few days ago, we entered into a joint venture
arrangement for the redevelopment of 100 New Bridge Street, EC4, selling a 50%
interest in the site for £55m structured on a preferred equity basis to a
vehicle led by Orion Capital Managers. Simultaneous to the joint venture being
signed, the parties entered into a development financing arrangement with
NatWest and an institutional lender, and a building contract with Mace to
deliver the scheme.
Portfolio Valuation
· Primarily driven by the impact of the higher interest rate environment
on market sentiment, there was an outward yield adjustment of 95bps in the
year to 31 March 2024, increasing the true equivalent yield for the portfolio
to 6.34% (31 March 2023: 5.39%) and reducing the investment portfolio
valuation to £660.6m (31 March 2023: £839.5m).
Development Pipeline
· With a joint venture partner secured, development finance in place and
a construction contract signed, the 194,000 sq ft redevelopment of 100 New
Bridge Street, EC4, our latest "best-in-class" scheme, has commenced and is
expected to be completed by March 2026.
· Contracts were signed in July 2023, confirming Helical as Places for
London's commercial office joint venture partner. The long-term partnership
will see the delivery of new high quality and sustainable space predominantly
above or adjacent to key transport hubs.
- 10 King William Street, EC4 (formerly Bank OSD) - An eight-storey
office development on an island site, located above the recently opened Bank
station entrance on Cannon Street, delivering 140,000 sq ft of office and
retail space. This development is due to commence in Q4 2024 with completion
due by December 2026.
- Southwark Over Station Development, SE1 - Located over Southwark tube
station, the site benefits from planning for a 222,000 sq ft NIA office
scheme. We are now having detailed pre-application discussions with Southwark
Borough Council regarding an alternative purpose-built student accommodation
scheme. We aim to submit a planning application during Summer 2024, commence
on site in July 2025 and complete in Summer 2027.
- Paddington Over Station Development, W2 - Situated close to the
Elizabeth Line station at Paddington, this 19-storey building will provide
235,000 sq ft of office space. The site will be acquired by the joint venture
in January 2026 and the intention is to deliver the scheme in 2029.
· Terms have been agreed, and contracts will shortly be signed, with the
long leasehold owner of the existing building at Brettenham House, WC2 for the
wholesale refurbishment of the 120,000 sq ft office building with Helical
acting as development manager and contributing towards construction costs.
This transaction is an example of the "equity-light" model that we seek to
pursue in the future with ownership remaining with the long leaseholder and
our equity contribution limited. Work has already commenced and we expect to
deliver the completed scheme in Q1 2026.
Financial Highlights
Earnings and Dividends
· IFRS loss of £189.8m (2023: £64.5m).
· See-through Total Property Return(1) of -£162.7m (2023: -£51.4m):
- Group's share(1) of net rental income decreased 23.8% to £25.5m
(2023: £33.5m).
- Net loss on sale and revaluation of investment properties of -£188.6m
(2023: -£88.1m).
- Development profits of £0.4m (2023: £3.2m).
· Total Property Return, as measured by MSCI, of -20.3%, compared to the
MSCI Central London Offices Total Return Index of -5.7%.
· IFRS basic loss per share of 154.6p (2023: 52.6p).
· EPRA earnings per share(1) of 3.5p (2023: 9.4p).
· Final dividend proposed of 1.78p per share (2023: 8.70p).
· Total dividend for the year of 4.83p (2023: 11.75p).
Balance Sheet
· Net asset value down 34.1% to £401.1m (31 March 2023: £608.7m).
· Total Accounting Return(1) on IFRS net assets of -31.7% (2023: -9.4%).
· Total Accounting Return(1) on EPRA net tangible assets of -31.4%
(2023: -12.1%).
· EPRA net tangible asset value per share(1) down 32.9% to 331p (31
March 2023: 493p).
· EPRA net disposal value per share(1) down 33.3% to 327p (31 March
2023: 490p).
Financing
· See-through loan to value(1) increased to 39.5% (31 March 2023: 27.5%)
with a pro-forma LTV(2), post year-end sales, of 28.7%.
· See-through net borrowings(1) of £261.6m (31 March 2023: £231.4m),
pro-forma £163.8m.
· Average maturity of the Group's share(1) of secured debt of 2.1 years
(31 March 2023: 2.9 years).
· Change in fair value of derivative financial instruments charge of
£5.6m (2023: credit of £12.8m).
· See-through average cost of secured facilities(1) reduced to 2.9% (31
March 2023: 3.4%).
· Group's share(1) of cash and undrawn bank facilities of £115.5m (31
March 2023: £244.2m).
Portfolio Update
· IFRS investment property portfolio value of £472.5m (31 March 2023:
£681.7m).
· 22.4% valuation decrease, on a like-for-like basis(1) (22.6% including
sales and purchases), of our see-through investment portfolio, valued at
£660.6m (31 March 2023: £839.5m).
· Contracted rents of £33.0m (31 March 2023: £39.0m), compared to an
ERV(1) of £60.8m (31 March 2023: £60.4m). Following the sale of 25
Charterhouse Steet, EC1, and 50% of 100 New Bridge Street, EC4 post year end,
the ERV falls to £48.1m.
· See-through portfolio WAULT(1) of 6.6 years (31 March 2023: 5.0
years).
· Vacancy rate on completed assets decreased to 17.6% at 31 March 2024
(2023: 19.8%), primarily due to the lettings at The JJ Mack Building, EC1.
Sustainability Highlights
· The JJ Mack Building, EC1 received its final BREEAM certificate
achieving an Outstanding with a score of 96.4%, making it the highest rated
commercial building in the UK.
· Photovoltaic panels installed at The Bower, EC1 generating over 37,000
kWhs of energy once fully commissioned, for the exclusive use of our
building.
· Retention of EPRA Sustainability BPR Gold rating and CDP B rating with
a GRESB 4 Green Star status.
Dividend and Annual General Meeting Timetable
Announcement date 23 May 2024
Ex-dividend date 27 June 2024
Record date 28 June 2024
Last date for DRIP election 12 July 2024
Annual General Meeting 17 July 2024
Dividend payment date 2 August 2024
A Dividend Reinvestment Plan ("DRIP") is provided by Equiniti Financial
Services Limited. The DRIP enables the Company's Shareholders to elect to have
their cash dividend payments used to purchase the Company's shares. More
information can be found at www.shareview.co.uk/info/drip
(http://www.shareview.co.uk/info/drip) .
For further information, please contact:
Helical plc 020 7629 0113
Richard Cotton (Chairman)
Gerald Kaye (Chief Executive)
Tim Murphy (Chief Financial Officer)
Address: 5 Hanover Square, London W1S 1HQ
Website: www.helical.co.uk (http://www.helical.co.uk)
Twitter: @helicalplc
FTI Consulting 020 3727 1000
Dido Laurimore/Richard Gotla/Andrew Davis
schelical@fticonsulting.com (mailto:schelical@fticonsulting.com)
Results Presentation
Helical will be holding a presentation for analysts and investors starting at
10:30am on Thursday 23 May 2024 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 (mailto:schelical@fticonsulting.com)
The presentation will be on the Company's website www.helical.co.uk
(http://www.helical.co.uk) and a live webcast and Q&A will also be
available.
Webcast Link:
https://brrmedia.news/HLCL_FY_23/24 (https://brrmedia.news/HLCL_FY_23/24)
1. See Glossary for definition of terms. The "see-through" performance
measures are designed to give additional information about the Group's share
of assets and liabilities, income and expenses in subsidiaries and joint
ventures (see Note 25). The financial statements have been prepared in
accordance with International Accounting Standards ("IAS") in conformity with
the Companies Act 2006. In common with usual practice in our sector,
alternative performance measures have also been provided to supplement IFRS,
including measures which are based on the recommendations of the European
Public Real Estate Association ("EPRA").
2. See Note 30.
Chairman's Statement
The results announced today are reflective of the cyclical and structural
headwinds affecting the real estate sector and, more particularly, London
offices and which have adversely impacted our financial and share performance.
Our portfolio of investment properties and development sites has been
disproportionately impacted by the significant outward yield movement over the
past 12 months, with vacancy negatively impacting valuations.
On a more positive note, I am, however, pleased to report that our strategy of
focusing on "best-in-class" buildings is bearing fruit, as evidenced by the
encouraging letting progress and record rents achieved at our latest and most
sustainable property, The JJ Mack Building, EC1. This underpins our confidence
in the prospects for our significant development pipeline and our future
profitability.
Over recent months I have led a detailed and rigorous business review, where
we have examined all of the potential strategies to generate Shareholder
value. We have concluded that the nature of our business does not lend itself
to the strategy currently being adopted by some of our peers, namely the
return of capital to Shareholders funded through asset disposals. There are
some important factors underlying this conclusion, particularly the
complexities of our financing and capital commitments given the scale of our
central London pipeline assets, compounded by the current market illiquidity
for properties of over £100m, which is even more pronounced for London
offices.
We have reached several important conclusions:
· We have an exciting pipeline of committed developments, which due to
the quality and location of the schemes, are well placed to attract premium
rents and should achieve strong returns;
· Helical has a proven track record in delivering very high quality
schemes, across a variety of asset classes, often in partnership. Going
forwards, the intention is to increasingly adopt an "equity-light" model to
take advantage of market opportunities with a disciplined approach to capital
deployment;
· To optimise the value of our investment properties we need to complete
our asset management plans, principally through leasing up vacancy, and be
ready to realise value as and when liquidity returns to the investment market;
· We need to adjust our dividend payout given recurring earnings are
insufficient to cover the historic level of dividend and development profits
are inherently lumpy;
· We plan to make a significant reduction in our fixed overheads, and we
have started to implement changes to reduce our running overheads by 25% by
the end of March 2025;
· The Board has signed off on a detailed three year plan and is very
clear that, given current markets, the potential returns on a three year view
far exceed the potential returns from an alternative strategy to return
capital to Shareholders in the short term; and
· The Board recognises the talent and potential in the wider Helical team
and, to this end, we are consulting on the introduction of a new three year
management incentive plan that is designed to strengthen the alignment of the
executive and senior management team with Shareholder returns.
The trajectory of investment yields is outside our control, but absent
significant further outward movement, we are confident that through the
implementation of the above strategy we can demonstrate value accretion. In
due course, the investment market should return to more normal conditions. In
the meantime, we have lots to be getting on with; letting vacancy in our
existing portfolio and maximising the potential in our development pipeline,
whilst maintaining a robust financial position, all at a lower operational
cost, are the team's main priorities.
The Board is not complacent about the scale of the challenge facing us and
other small listed property businesses, but we are very clear about the
opportunity for Helical in a dislocated market. We are proud to work with a
number of high quality partners, which is a strong endorsement of the Helical
brand and we will continue to nurture these relationships.
Leadership
We have today announced that Gerald Kaye has informed the Board that he will
be handing over his executive duties and stepping down from the Board at the
AGM in July. We are delighted that he has agreed to stay on in a consultancy
role with specific responsibility for our joint ventures at 100 New Bridge
Street, EC4 and our new West End scheme at Brettenham House, WC2. I am very
pleased to announce that Gerald will be succeeded by Matthew Bonning-Snook as
Chief Executive.
On behalf of the Board I would like to pay tribute to Gerald's outstanding
contribution to Helical during his long tenure as, first, Development Director
and, most recently, as Chief Executive. Since he succeeded Mike Slade in 2016
he has re-focused the business as a "best-in-class" developer in central
London. Over this period he has had to contend with strong headwinds, from
Brexit, Covid and latterly the sharp upward adjustment in interest rates.
Throughout he has remained calm and focused, demonstrating a totally committed
work ethic.
I am delighted that he has agreed to continue in an external consultancy role,
maintaining the strong relationships with some of our key joint venture
partners.
With Matthew having secured the joint venture with TfL, the cornerstone of our
exciting development pipeline, and with an extensive track record of
delivering profitable schemes over nearly three decades at Helical, he is the
right choice to maximise the opportunities at Helical. We are clear about the
challenges in front of us and I look forward to working closely with Matthew
and the wider Helical team to implement our strategy.
Non-Executive Directors
On behalf of my fellow Helical Directors, I want to thank Joe Lister who,
after serving for almost six years on the Board, is stepping down at the 2024
Annual General Meeting ("AGM"), following his appointment as Chief Executive
at FTSE 100 company, The Unite Group plc. Joe has made a significant
contribution to our Board deliberations and we shall miss his wise counsel.
I would also like to welcome our two new Non-Executive Directors, Amanda
Aldridge and Robert Fowlds. Amanda has strong credentials in financial
reporting and will succeed Joe as Chair of the Audit and Risk Committee
following the 2024 AGM. Robert strengthens the overall expertise of the Board
with his extensive financial knowledge and background in real estate.
Richard Cotton
Chairman
22 May 2024
Chief Executive's Statement
Overview
During the year to 31 March 2024, we have seen a significant readjustment in
the investment market as valuation yields have increased to reflect movements
in 10 year gilts and five year swap rates, the pricing on which real estate
property yields are correlated.
At Helical, the portfolio has seen an outward yield adjustment of 95bps since
31 March 2023, offset by 1.1% ERV growth, with both valuations and earnings
impacted by increased vacancy in the portfolio, particularly as the result of
our forfeiture of the leases to WeWork at The Bower, EC1. This proactive step
allowed us to regain control of the space, shortly before the tenant went into
Chapter 11 in the US, and refurbishment work is well under way as we seek to
re-let this high quality space.
At the same time, we continue to let space at our most recently completed new
development, The JJ Mack Building, EC1. Despite an increase in the time taken
to negotiate commercial terms and complete the legal processes, we have made
good progress in the year in letting the space and at record rents for the
Farringdon area, significantly in excess of the initial appraisal rental
levels and above March 2023 ERVs. Today this "best-in-class" building is 71%
let, increasing to 90% on completing the letting of the space currently under
offer.
Tenant demand for the best newly developed or refurbished buildings, at the
forefront of sustainability and with top quality amenities, continues to be
strong, with rising rental values evidenced by our own experience and that of
our peer group.
Against this backdrop, and since the year end, Helical has recycled capital
from its portfolio, reduced year end leverage and cut its ongoing core
administrative costs, targeting a 25% reduction by the end of this financial
year. As a result, it is well placed to capitalise on any ongoing market
dislocation and the structural trends impacting the office sector.
Our Pipeline
The Group seeks to grow the business by realising surpluses from its recently
developed investment assets, and reinvesting that recycled equity into new
opportunities.
In the year to 31 March 2024, no new development schemes were started with the
last completed scheme being The JJ Mack Building, EC1, which achieved
practical completion in September 2022. Instead, Helical's focus has been on
increasing its development pipeline of future schemes.
Being selected by TfL as their joint venture partner for the Platinum
Portfolio was a significant milestone, providing three schemes to our pipeline
with the potential for additional opportunities to be added to the joint
venture in the future. This collaboration with TfL, rebranded as Places for
London, is an endorsement of the Helical brand and recognises our track record
of producing "best-in-class" developments across central London over many
years. Since contracts were signed with Places for London, in July 2023, we
have been working to maximise the opportunities at each of the three initial
sites at 10 King William Street, EC4, previously referred to as the Bank Over
Station Development ("OSD"), Southwark OSD, SE1 and Paddington OSD, W2. We are
excited at the prospect of starting the first of these developments at 10 King
William Street, EC4 later this year, with the subsequent schemes due to start
in 2025 and 2026, with delivery in 2026, 2027 and 2029 respectively.
In addition, with a joint venture partner secured, development bank finance
arranged and a main contractor signed, we are also excited to progress the
redevelopment of 100 New Bridge Street, EC4, our 194,000 sq ft office and
retail scheme.
Finally, as referred to in November, when we reported on our Half Year
results, we have also secured a new "equity-light" scheme at Brettenham House,
WC2. This scheme, a comprehensive refurbishment of a 120,000 sq ft office
building adjacent to Waterloo Bridge, is an example of Helical providing its
development expertise to a property owner looking to retain its investment but
create, in joint venture where we contribute towards construction costs, a
"best-in-class" investment asset. In return for our participation, Helical
will receive development management fees plus a "waterfall" promote based on
the outcome once let. Our business model envisages additional "equity-light"
schemes being added to the development pipeline in the future.
Results for the Year
The loss for the year to 31 March 2024 was £189.8m (2023: £64.5m) with a
see-through Total Property Return of -£162.7m (2023: -£51.4m). See-through
net rental income reduced by 23.8% to £25.5m (2023: £33.5m) while
developments generated see-through profits of £0.4m (2023: £3.2m). The
see-through net loss on sale and revaluation of the investment portfolio was
£188.6m (2023: £88.1m).
Total see-through net finance costs reduced to £11.1m (2023: £12.0m),
reflecting a lower level of debt offset by a full year of expensed interest on
the debt in our joint ventures since practical completion of The JJ Mack
Building, EC1 in September 2022. A fall in expected future interest rates led
to a £5.6m charge (2023: credit of £12.8m) from the valuation of the Group's
derivative financial instruments. Recurring see-through administrative costs
were 8.7% lower at £9.4m (2023: £10.3m) before an accelerated depreciation
charge of £0.7m (2023: £nil), with performance related awards, reflecting a
purely notional charge for share awards, reduced to £1.2m (2023: £2.7m).
National Insurance on these awards was £0.1m (2023: £0.3m).
Since 1 April 2022, Helical has been a REIT and the receipt of income which
fell outside this regime in the prior year has resulted in a small tax charge
of £0.2m (2023: £nil) for the year.
The IFRS basic loss per share was 154.6p (2023: 52.6p) and EPRA earnings per
share were 3.5p (2023: 9.4p).
On a like-for-like basis, the investment portfolio fell in value by 22.4%
(22.6% including purchases and gains on sales). The see-through total
investment portfolio value reduced to £660.6m (31 March 2023: £839.5m),
reflecting the revaluation loss for the year.
The total return of our property portfolio, as measured by MSCI, was -20.3%
(2023: -5.6%), which underperformed the Central London Offices Total Return
Index of -5.7%.
The completed investment portfolio was 82.4% let at 31 March 2024 and
generated contracted rents of £33.0m, equating to an average of £65.70 psf.
This increases to an ERV of £42.9m on the letting of the currently vacant
space and capturing the reversion of the portfolio. The Group's contracted
rent has a Weighted Average Unexpired Lease Term ("WAULT") of 6.6 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 -31.7% (2023: -9.4%).
Based on EPRA net tangible assets, the TAR was
-31.4% (2023: -12.1%). EPRA net tangible assets per share fell by 32.9% to
331p (31 March 2023: 493p), with EPRA net disposal value per share falling by
33.3% to 327p (31 March 2023: 490p).
Balance Sheet Strength and Liquidity
The Group has a significant level of liquidity with see-through cash and
unutilised bank facilities of £115.5m (31 March 2023: £244.2m) to fund
capital works on its portfolio and future acquisitions.
At 31 March 2024, the Group had £12.0m of cash deposits available to deploy
without restrictions and a further £11.9m of rent in bank accounts available
to service payments under loan agreements, cash held at managing agents and
cash held in joint ventures. In addition, the Group held rental deposits from
tenants of £7.8m. Furthermore, the Group had £83.8m of loan facilities
available to draw on.
These year end balances have been supplemented by cash receipts of £97.8m,
from the sale of 25 Charterhouse Square, EC1 and the sale of 50% of the site
at 100 New Bridge Street, EC4, both completed since the year end.
The see-through loan to value ratio ("LTV") increased to 39.5% at the Balance
Sheet date (31 March 2023: 27.5%) and our see-through net gearing, the ratio
of net borrowings to the net asset value of the Group, increased to 65.2% (31
March 2023: 38.0%) over the same period. However, post year end sales have
reduced the pro-forma see-through LTV to 28.7% and the pro-forma see-through
net gearing to 40.3%.
At the year end, the average debt maturity on secured loans, on a see-through
basis, was 2.1 years (31 March 2023: 2.9 years). The average cost of debt, on
a see-through basis, was 2.9% (31 March 2023: 3.4%).
Dividends
Helical is a capital growth stock, seeking to maximise value by successfully
letting comprehensively 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 have been considered when determining the payment of dividends.
In the year to 31 March 2024, EPRA earnings per share fell by 63% from 9.4p
last year to 3.5p this year. As there were no sales of assets during the year,
no capital profits were realised.
Moving forward, and in line with our new strategy, we are adjusting our
dividend policy to suit our expected trajectory. We will align our dividends
to our EPRA earnings per share, rebasing to a lower level while we wait for
our development pipeline to produce profits.
In light of the results for the year and the fall in EPRA earnings, the Board
will be recommending to Shareholders a commensurate reduction in the final
dividend to 1.78p (2023: 8.70p) per share, representing the minimum PID
payment required under the REIT regime. This represents, if approved by
Shareholders at the 2024 AGM, a total dividend for the year of 4.83p, down 59%
on 2023.
This final dividend, if approved, will be paid out of distributable reserves
generated from the Group's activities. Following its conversion to a UK REIT,
dividends payable by Helical will comprise a Property Income Distribution
("PID") from the operations that fall under the REIT regime, and a dividend
from those operations that fall outside the REIT regime. The PID, for the year
to 31 March 2024, including the amount paid at the half year of 0.50p, will be
2.28p, with the balance of the total dividend, amounting to 2.55p,
representing an ordinary dividend paid at the half year.
Sustainability
Sustainability remains at the heart of our business, both at a corporate and
asset level.
We have made good progress in the year and continue to perform strongly
against the targets we have set. In our managed portfolio, energy intensity
across our like-for-like assets fell by 8% during the year to an average of
119 kWh/m(2) (2023: 129 kWh/m(2)), keeping us on track for our 2030 net zero
carbon target of 90kWh/m(2).
For our development pipeline, we will be targeting an upfront embodied carbon
of less than 600kgCO(2)e/m(2) focussing on efficient design, low carbon and
recycled materials to meet this target.
We continue to perform well across the industry benchmarks in which we
participate. For our sustainability reporting, we again received a Gold Award,
for our reporting in accordance with EPRA's European Sustainability Best
Practice Recommendations (sBPR). We were also pleased to maintain our CDP
score of B, further demonstrating our commitment to best practice disclosure
and enhanced climate change risk assessment. While we retained our Green Star
status under the GRESB rating, the tougher criteria saw the overall rating
fall from 5* to 4* despite our receiving the highest rating of our peer group
for our standing investments of 87% (2023: 88%), with our developments
delivering 92% (2023: 94%).
Looking forward, we have a substantial development pipeline, with our Places
for London joint venture due to deliver three "best-in-class" schemes and our
redevelopment of 100 New Bridge Street, EC4 delivering a further 191,000 sq ft
of high quality, redeveloped office space and 3,500 sq ft of retail space. All
these buildings will be targeting a minimum of BREEAM Outstanding, NABERS 5*
and WELL Enabled Platinum, the recognisable hallmarks of "best-in-class"
office buildings.
The Opportunity
During the year, we have experienced the loss of rental income through tenant
failure and further significant outward yield movement reducing the value of
our investment portfolio by 22.4%. Market commentary suggests that this
outward yield movement may be coming to an end with growing expectations of
the first cut in the Bank of England's base rate coming this summer and five
year swaps and 10 year gilts rates, both currently c.4%, forecast to decline.
If this proves to be correct, and having taken the pain of reductions in
value, Helical is well positioned to drive growth through the letting of the
vacant space in its investment portfolio and the generation of substantial
profits from its development pipeline. However, such optimism can be derailed
by future geopolitical and domestic events outside of our control and Helical
will seek to manage its Balance Sheet to ensure it has protection against the
impact of these potential events.
Occupational demands continue to evolve in the office sector, with tenants
using their premises to optimise the work experience for their employees.
Amenity, connectivity, service and sustainability are encouraging businesses
towards new buildings. At the same time, buildings that provide a poorer
working environment are driving occupiers away. This bifurcation of the market
is accelerating with rental growth continuing for the "best-in-class" and
values falling for the rest. This will provide opportunities to acquire
potential developments and major refurbishments at levels that allow for
strong capital returns.
Our development pipeline is expected to provide surpluses for the foreseeable
future. Scheduled to start in 2024 and be delivered from early 2026 onwards,
this pipeline will be supplemented with additional "equity-light"
opportunities as building owners seek specialists in development and
refurbishment to partner with them to maximise the value of their assets. In
addition, banks and other financial institutions with non-performing assets
should provide additional opportunities for Helical to create value.
Our Balance Sheet is in good shape and maintaining financial discipline
remains at the forefront of Helical's approach. Recycling equity and seeking
third party financing to fund the pipeline of opportunities, as recently seen
with 100 New Bridge Street, EC4, will allow the Company to grow the business
while containing gearing to appropriate levels.
There remains a shortage of "best-in-class" newly refurbished or redeveloped
office space in central London. With an experienced management team, a
substantial development pipeline with optionality over timing and funding, and
no legacy assets requiring investment to meet minimum sustainability
standards, Helical is well positioned to capitalise on current cyclical
opportunities.
Finally
I have been the Chief Executive of Helical since 2016 and a main Board
Director since 1994, the year I joined the Company, delivering over 30 years
of service to Helical, its employees and its Shareholders. It is time to "draw
stumps" on my executive role having delivered over 60 projects of mainly
offices but also retail, residential, logistics and student accommodation in
that time. This includes over five million sq ft of offices, the vast majority
of which are in London. I remain proud of each asset as I regularly pass them
on my journeys through this great city of ours and for that reason I am
pleased to be able to continue to work on landmark buildings in my new role on
100 New Bridge Street, EC4 and Brettenham House, WC2.
I have worked alongside Matthew for almost 30 years and believe he is the
right person to succeed me as Chief Executive of Helical. I know that he is
fully focused on realising profits from the Company's exceptional development
pipeline and I look forward to continuing to make my contribution to the
ongoing success of Helical.
Gerald Kaye
Chief Executive
22 May 2024
Our Market
The year has been defined by a dislocation between the occupational and
investment markets, with the letting market for the new, best quality space
proving resilient as we continue to see high levels of active requirements,
leasing momentum and strong rental growth in the core sub-markets. In
contrast, the investment market remains muted, with activity far below the
long-term average.
Over the last year, there has been a material reduction in the annual rate of
CPI inflation which fell to 2.3% yesterday, compared to 10.1% in March 2023.
This offers some relief and a sense of optimism that interest rates have
peaked and will begin to fall in the coming year. The Bank of England policy
rate has been flat at 5.25% since August 2023, however the effects of a higher
interest rate environment, combined with the residual effects of elevated
inflation levels, are still present and continue to weigh on sentiment in the
investment market.
Investment Market
Investment volumes remain subdued in the central London office market due to
the challenging macroeconomic environment, geopolitical tensions and high
borrowing costs, which remain elevated due to persistent core inflation. With
a lack of quality assets being marketed, many investors are adopting a "wait
and see" approach with regard to any near-term changes to the Bank's base
rate.
Transaction activity reached just £7.1bn in 2023, down 57% on the long-term
10-year average, with sub £50m lot sizes accounting for 77% of this figure
and just 17 transactions occurring in excess of £100m, compared to the
five-year average of 35. This subdued activity continues to cause increased
uncertainty over appropriate asset valuations as comparable evidence remains
scarce. Whilst the smaller lot size purchases have been dominated by high net
worth family offices, there are an increasing number of private equity and
Asia-Pacific buyers returning to the market, focusing on core assets where
pricing is now felt to be attractive.
London still remains the preferred destination for overseas capital and we do
expect to see a pickup in investment activity towards the second half of 2024,
particularly if we continue to see higher office occupancy and businesses
placing increasing importance on their office as a tool to attract talent.
However, the key trigger and largest shift in sentiment will most likely occur
when there is clearer guidance regarding the direction of interest rates.
Occupational Market
There is both strong demand and activity in the occupational market and JLL
reported take-up for central London at 9.7m sq ft in 2023, with Q4 figures
representing the highest levels since 2010. The City submarket demonstrated
the greatest level of resilience, achieving volumes 7% higher than the 10-year
average. Whilst Q1 2024 take-up volumes were subdued, we continue to see
strength of demand in the market as under offer numbers have continued to
rise, to 18% above the long-term average. There is also significant breadth of
occupier demand as business services continue to transact, while creative
industries have come back to the market, accounting for 20% of Q1 take-up
numbers.
Looking forward, Knight Frank reports active requirements at the end of Q1
2024 at 12.6m sq ft, up 50% compared to March 2023. These requirements are
primarily focused on scarce, new space where vacancy rates remain
significantly below the overall vacancy figure, at 2% compared to 9.9%
overall. For refurbishments, the vacancy rate sits around 4%; this comes as
two thirds of leasing transactions are for new and refurbished space.
The high level of active requirements, combined with low vacancy rates for new
space, continues to generate competition which is driving rents upwards.
Knight Frank has reset its approach to prime rents to reflect this trend, with
City Core, Midtown and Farringdon prime rents all increasing by £10 psf,
taking them to £87.50, £80.00 and £90.00 psf respectively. This revision to
prime rents represents a fundamental reset, offering a new "best-in-class"
subset of prime, as a result of an improved outlook for occupier demand and a
development pipeline that remains below average levels for new and refurbished
buildings.
At our joint venture development, The JJ Mack Building, EC1, located in
Farringdon, we have secured rents significantly above £100 psf, highlighting
the strength of demand and a willingness to pay higher rents to secure the
best space as employers are increasingly looking to incentivise their
employees to adopt more office based approaches to working.
Development Pipeline
Sustained construction cost inflation driven by supply chain disruption, tight
labour markets and volatile energy costs has moderated recently and Arcadis
published its "London Building Construction TPI" forecast, with the central
case showing low inflation ranging from 1% to 2% over the course of 2024.
In 2023, development completions across central London reached 5m sq ft; up 5%
on the long-term average. Completions were still below Savills' initial
forecast of 7.5m sq ft at the beginning of the year, evidencing that delays
have caused schemes to be pushed back. Looking ahead, the levels of planned
supply are unlikely to be sufficient to meet the high levels of demand, with
Knight Frank reporting 28m sq ft of lease expiries occurring before the end of
2026.
The development pipeline continues to be impacted by delivery barriers
including elevated associated costs of development and planning timelines,
causing investors to recalibrate appraisals. As a result, investors are
increasingly considering alternative land uses to maximise site value, which
is further suppressing the near-term supply of office schemes. A current
example of this is our Southwark OSD, SE1 scheme where we are in the process
of seeking planning consent to develop student accommodation, rather than the
previously consented office scheme, as we believe this will generate the best
value for our site. A demand-supply imbalance is likely to occur over the
medium to longer term, with 2027 to 2030 likely to see the most dramatic
levels of undersupply as planned completions remain low.
Constrained market supply and a high level of occupier demand will lead to
increased competition, presenting an opportunity for developers and investors
who are willing and able to deliver new, "best-in-class" schemes. However, to
deliver sustainable returns, they will require higher economic rents to offset
the increased associated costs of development and as a result, pre-letting
activity might slow as investors hold out for rental growth tomorrow rather
than security at day one. This is evidenced by Savills reporting a recent
reduction in the overall quantity of the pipeline that is let prior to
completion.
Conclusion
Our existing portfolio continues to attract new occupiers due to its
"best-in-class" credentials, excellent tenant amenities and active asset
management. Helical's proven track record, expertise and our recently signed
joint venture with Places for London and "best-in-class" scheme at 100 New
Bridge Street, EC4 will ensure we are well positioned to meet occupier demands
through our extensive development pipeline across five schemes. Our planned
schemes are located in exciting and vibrant sub-markets that look set to
experience both a shortfall in supply and elevated tenant demand, resulting in
strong rental growth prospects that look set to deliver us an attractive
return profile.
Sustainability and Net Zero Carbon
Our commitment to delivering and operating "best-in-class", smart, sustainable
offices aligns with occupiers' continued demand for high quality buildings
across London. This has been seen at The JJ Mack Building, EC1, our flagship
sustainable asset, where sustainability has been a key driver in tenants
taking space in the building. We were particularly pleased to see The JJ Mack
Building, EC1 receive its final BREEAM Outstanding certificate and a score of
96.4%, making it the UK's highest rated BREEAM office development.
Our long-term partnership with Places for London will be responsible for
delivering three "best-in-class" over station developments at 10 King William
Street, EC4, Southwark OSD, SE1 and Paddington OSD, W2. Sustainability is a
fundamental objective for these projects with the schemes providing the
opportunity to deliver market leading buildings with exemplary ESG
credentials, adopting BREEAM, NABERS and WELL benchmarking. All three sites
will be developed on a net zero carbon basis and champion circular economy
principles, operating to the highest efficiency with the aid of all electric
solutions and on-site renewables and promote health and wellbeing. At 10 King
William Street, EC4, we have already defined a clear pathway to drive down
embodied carbon in line with our stretching target of 600 kgCO(2)e/m(2).
Our major refurbishment at 100 New Bridge Street, EC4, will achieve the
highest standards of sustainability through the retention of the existing
structure and the reuse of materials. This retrofit approach will result in a
low carbon, highly efficient building while also meeting the demands of future
tenants. We are currently targeting BREEAM Outstanding, NABERS 5* and WELL
enabled Platinum, having already received precertification and will be
delivering the building on a net zero carbon basis.
Within our managed portfolio, we were pleased to see that during the year our
total energy usage (including tenant and landlord areas) reduced by 23%. This
was in part due to the vacant possession of 100 New Bridge Street, EC4,
however on a like-for-like basis there was a decrease in consumption of 8%. As
a result of our continued effort to engage occupiers and drive down
consumption, our energy intensity across our like-for-like assets fell to an
average of 119 kWh/m(2) keeping us on track for our 2030 net zero carbon
target of 90kWh/m(2). At The Bower, EC1, our most energy intensive building,
we saw the installation of 80 photovoltaics panels which, once fully
operational, will generate c.37,000kWhs of electricity.
While we are progressing well against the target we set to be net zero carbon
by 2030, we are mindful that due to the continual evolvement of the definition
"net zero carbon", we may need to rebase our ambitions in the coming years.
With the highly anticipated UK Net Zero Carbon Building Standard due for
release later this summer, we look forward to delivering all our future
developments to this industry recognised standard.
For our sustainability reporting, we received a Gold Award for the fourth
consecutive year from EPRA's Sustainability Best Practice Recommendations
(sBPR) and also maintained our CDP rating of B. While we retained our Green
Star status under the GRESB rating, the tougher criteria saw the overall
rating fall from 5* to 4* despite our receiving the highest rating of our peer
group for our standing investments of 87%, with our developments delivering
92%.
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.
As discussed in the Chief Executive's statement, the financial measures for
the year reflect a period of economic volatility with higher interest rates
negatively impacting on investment yields.
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 2024
was -31.7% (2023: -9.4%).
Year to Year to Year to Year to Year to
2024 2023 2022 2021 2020
% % % % %
Total Accounting Return on IFRS net assets -31.7 -9.4 15.0 3.3 7.7
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 2024
was -31.4% (2023: -12.1%).
Year to Year to Year to Year to Year to
2024 2023 2022 2021 2020
% % % % %
Total Accounting Return on EPRA net tangible assets -31.4 -12.1 10.2 4.5 9.3
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 23 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 2024 decreased by
32.9% to 331p (31 March 2023: 493p).
2024 2023 2022 2021 2020
p p p p p
EPRA net tangible asset value per share 331 493 572 533 524
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 Shareholders 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 2024 was -27.3% (2023:
-24.8%).
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) (27.3) (17.8) (6.0) (3.1) 0.3 3.1
UK Equity Market(2) 8.4 8.1 5.4 5.8 9.2 7.2
Listed Real Estate Sector Index(3) 9.3 (2.3) (1.1) 1.5 7.8 3.2
1. Growth over all years to 31/03/24.
2. Growth in FTSE All-Share Return Index over all years to 31/03/24.
3. Growth in FTSE 350 Real Estate Super Sector Return Index over all
years to 31/03/24.
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 2024 was -20.3% (2023: -5.6%).
This compares to the MSCI Central London Offices Total Return Index of
-5.7% (2023: -8.6%) and the upper quartile return of -3.1% (2023: -5.4%).
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.
Helical's unleveraged portfolio returns to 31 March 2024 were as follows:
1 year 3 years 5 years 10 years 20 years
% % % % %
Helical -20.3 -5.9 -0.5 6.7 8.9
MSCI Central London Offices Total Return Index -5.7 -2.3 -1.0 4.7 7.1
Source: MSCI
Helical's portfolio has been impacted by higher interest rates and
construction cost inflation, as well as vacancy within the portfolio and the
failure of WeWork in particular.
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 2024 was
12.4 years and the average staff turnover during the year to 31 March 2024 was
16.8%.
2024 2023 2022 2021 2020
Average length of service at 31 March - years 12.4 13.2 11.8 11.0 10.0
Staff turnover during the year to 31 March - % 16.8 7.7 3.7 3.6 10.3
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 2024, five of our seven (31 March 2023: five of our seven) office
buildings had achieved, or were targeting, a BREEAM certification of
"Excellent" or "Outstanding". These five buildings account for 89% of the
portfolio by value.
Building BREEAM rating EPC rating
Completed properties ( )
The JJ Mack Building, EC1 Outstanding (2018) A
The Warehouse and Studio, EC1 Excellent (2014) B
The Tower, EC1 Excellent (2014) B
25 Charterhouse Square, EC1 Excellent (2014) B
Under development
100 New Bridge Street, EC4 Outstanding (2018)(1) A(1)
1. Targeted.
At The Loom, E1, it was not possible to obtain a BREEAM certification at the
design or development stage, however, the building has achieved a BREEAM In
Use rating of "Very Good", a high accolade given the listed status of the
building.
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 2024
Property Overview
Helical has a portfolio of income producing, multi-let offices which are
extremely well located and offer sustainable and inspiring workplaces which
are technologically smart, rich in amenities and promote employee wellbeing.
We seek to maximise returns through delivering income growth from creative
asset management and capital gains from our development activity.
The JJ Mack Building, EC1
The JJ Mack Building comprises 206,085 sq ft and is held in a 50:50 joint
venture with AshbyCapital. The JJ Mack Building, named after the market trader
who occupied the site in the 1940s, is one of London's most sustainable new
office buildings and recently has been recognised as BREEAM's highest rated
new development under the 2018 guidance, with an Outstanding rating of 96.4%.
Prior to the start of the financial year, we let the sixth and seventh floors,
comprising 37,880 sq ft, to Partners Group, a global private markets firm, for
15 years and they took occupation of their space in April 2024.
In November 2023, we let the ninth floor, comprising 13,408 sq ft, to Corio
Generation, a subsidiary of Macquarie Group, for 10 years at a 2.3% premium to
31 March 2023 ERVs and they are now in occupation following completion of
their fit-out works.
In December 2023, we let the first, second and third floors comprising 68,002
sq ft to J Sainsbury for 15 years, at a 1.3% premium to 31 March ERVs. The
retailer will be relocating its existing London office to the new building
over the next two years. In addition, J Sainsbury has signed an agreement for
lease for two of the three ground floor retail units and additional office
space on the ground floor, comprising 7,128 sq ft.
In March 2024, we let the eighth floor, comprising 15,484 sq ft, to Three
Crowns LLP, a leading international arbitration law firm, for 15 years. The
agreed rent was 3.1% above 31 March 2023 ERVs.
We are under offer on both the fourth and 10(th) floor, comprising 23,566 sq
ft and 13,409 sq ft respectively, as well as the last remaining ground floor
retail unit of 1,526 sq ft.
As a result of our strong letting progress, the building was 67% let as at 31
March 2024 and following the year end, a further 7,128 sq ft has been let,
equating to the building being 71% let. Following completion of the units
under offer, the building will be 90% let with just the fifth floor available.
100 New Bridge Street, EC4
Our "best-in-class" office development at 100 New Bridge Street is adjacent to
City Thameslink and a short walk from Farringdon and Blackfriars stations. In
the year, we have obtained planning permission for minor amendments to the
scheme to enhance the ground floor amenity and improve the floorplate
efficiency.
This carbon friendly, fully refurbished building will provide 194,000 sq ft of
office and retail space across seven retained floors and three new floors once
completed in Q1 2026. In addition, we will make considerable public realm
improvements to provide extensive outdoor space that enhances the experience
for both tenants and the local community.
Post year end, we signed a joint venture agreement with Orion Capital
Managers, selling a 50% investment in the site for £55m. Simultaneously, a
£155m (our share: £77.5m) development finance facility was secured and Mace
was appointed as the main contractor. We continue to progress towards our
March 2026 targeted completion date.
The Platinum Portfolio, London
Contracts were signed in July 2023, confirming Helical as Places for London's
commercial office joint venture partner. The long-term partnership will see
the delivery of new high quality and sustainable space predominantly above or
adjacent to key transport hubs. The joint venture consists of three initial
development opportunities, each detailed below:
10 King William Street, EC4
An eight-storey office development on an island site, located above the
recently opened Bank station entrance on Cannon Street, delivering 140,000 sq
ft of prime space. Since the formation of the joint venture, we have been
progressing the enhancement of the scheme alongside Fletcher Priest Architects
and the wider professional team. We submitted a non-material planning
amendment application to introduce significant public realm improvements,
making Abchurch Lane a shared space, a much improved cycle arrival experience
and the inclusion of changing facilities and a wellness lounge at the
mezzanine level. Initial enabling works are due to take place over the coming
months in preparation for a formal start on site in October 2024. We aim to
achieve practical completion of the scheme by December 2026.
Southwark OSD, SE1
The site is located above Southwark tube station and prior to the formation of
the joint venture, planning was obtained for a 222,000 sq ft NIA office
scheme. We have been conducting feasibility studies to determine the most
appropriate and valuable use for the site and we are now having detailed
pre-application discussions with Southwark Borough Council regarding a
purpose-built student accommodation scheme. The proposed scheme comprises
c.430 studio units, with the delivery of a separate on-site affordable housing
component located in a new adjacent building. We aim to submit a planning
application during Summer 2024, with the ambition to commence on site upon
acquisition in July 2025 and complete in Summer 2027.
Paddington OSD, W2
Situated close to the Elizabeth Line station at Paddington, this 19-storey
building will provide 235,000 sq ft of office space. In the year, we submitted
a non-material planning amendment application to introduce terracing to each
individual office floor. We continue to develop the design to enhance the
scheme with a particular focus on the end of trip facilities and arrival
experience. The site will be acquired by the joint venture in January 2026 and
the intention is to deliver the scheme in 2029.
Brettenham House, WC2
We continue to provide development advice to the owner of Brettenham House, a
1930s heritage office building located on the Thames and adjacent to The Savoy
and Somerset House, with formal arrangements to be concluded imminently. We
have utilised our expertise in retrofit and refurbishments to assist with the
design of a comprehensive refurbishment of the building and obtaining planning
consent for extensive amenity which will significantly upgrade this asset.
Construction is due to commence in Summer 2024 upon finalising terms for our
"equity-light" participation.
The Bower, EC1
The Bower is a prominent 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 where significant
remodelling works have taken place, providing extensive additional public
realm to occupiers.
The Warehouse and The Studio
The Warehouse and The Studio comprise 141,141 sq ft of fully-let office space.
In addition, there is a further 10,298 sq ft of retail space across the
buildings with these units also being fully let following two lettings in the
year to a restaurant operator and a hair and beauty studio.
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 operators Serata Hall
and Wagamama.
In October, we took decisive action to forfeit the WeWork leases for six
floors in The Tower following non-payment of rent.
Subsequently, we entered into a short-term lease with WeWork who re-occupied
the building to 24 December 2023, with Helical having received a fee
equivalent to the whole of the unpaid September quarter's rent and service
charge due under the terms of the previous contractual arrangements. WeWork
continue to operate on the third floor to June 2024 when the incumbent tenant
vacates. In addition, we signed a management agreement with infinitSpace to
provide serviced office space on the first and second floors at The Tower.
This space has been well received by WeWork's historic subtenants and new
tenants alike and provides valuable flexible space for the campus. As part of
our active asset management approach, we are in the process of refurbishing
the fourth, fifth and sixth floors. Once completed, the floors will be let on
a CAT A+ basis.
We have let the 14(th) floor, comprising 9,568 sq ft, to existing tenant
Incubeta who have relocated from the 16(th) floor. We let the 11,306 sq ft
16(th) floor to Verkada as expansion space. The company now has contiguous
floors, having already occupied the 17(th) floor.
The Tower is 84% let, up from 62%, following the forfeiture of the original
WeWork leases, with good interest being shown in the remaining space from
existing and potential new tenants.
The Loom, E1
This former Victorian wool warehouse offers 108,540 sq ft of office space and
we continue with our active management approach to this asset and are seeking
to reduce the vacancy through flexible lease offerings. During the year the
vacancy rate increased from 28% to 35% although five new lettings, totalling
12,001 sq ft, were completed. Post year end, we have completed three lettings
and have eight units under offer to four tenants which would reduce the
vacancy rate to 26% once completed.
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 asset is being actively marketed for sale.
25 Charterhouse Square, EC1
25 Charterhouse Square comprises 42,921 sq ft of office space, overlooking the
historic Charterhouse Square and adjacent to the Farringdon East Elizabeth
Line station. During the year, we exchanged on the sale of the long leasehold
interest to a real estate fund managed by global alternative investment
manager, Ares Management, for £43.5m. We completed on the sale on 25 April
2024.
Barts Square, EC1
In the first half of the year, we completed the sale of the last residential
unit thereby ending our involvement in the residential elements of the scheme.
Subsequently, we completed the sale of the retail element of the scheme in Q4
2023, which was the final component of the development. Since 2014, the joint
venture has built 235 apartments, three office buildings totalling 249,000 sq
ft and 21,000 sq ft of retail across 10 units. Through outperformance, we
increased our share of profit from our 33% equity participation to 44% and
made a total profit of £41m with a 26% IRR.
Portfolio Analytics
See-through Total Portfolio by Fair Value
Investment % Development % Total
£m £m £m %
London Offices
- Completed properties 561.5 85.0 - - 561.5 84.8
- Development pipeline 99.0 15.0 1.4 82.4 100.3 15.1
Total London 660.5 100.0 1.4 82.4 661.8 99.9
Other 0.1 0.0 0.3 17.6 0.5 0.1
Total 660.6 100.0 1.7 100.0 662.3 100.0
See-through Land and Development Portfolio
Book value Fair value Surplus
£m £m £m
Land and Developments 1.4 1.7 0.3
Total 1.4 1.7 0.3
Capital Expenditure
We have a committed and planned development and refurbishment programme.
Property Capex Proposed equity (Helical share) Proposed debt* (Helical share) Pre-redeveloped space New Total Commencement
date
budget £m £m sq ft space completed
space
(Helical share) sq ft
sq ft
£m
Investment - committed
- 100 New Bridge Street, EC4 59.4 3.0 56.4 167,026 27,629 194,655 Q2 2024
- 10 King William Street, EC4 32.9 32.9 0.0 - 140,000 140,000 Q4 2024
- Southwark OSD, SE1 11.0 11.0 0.0 - TBD TBD Q3 2025
- Paddington OSD, W2 30.2 30.2 0.0 - 235,000 235,000 Q1 2026
Investment - planned
- 10 King William Street, EC4 62.0 9.8 52.2 - 140,000 140,000 Q4 2024
- Southwark OSD, SE1 61.8 21.8 40.0 - TBD TBD Q3 2025
- Paddington OSD, W2 122.9 38.7 84.2 - 235,000 235,000 Q1 2026
* Assumes 55% LTC debt facility arranged for future schemes.
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 Passing % Contracted rent % ERV % ERV change
Investment portfolio value rent £m £m like-for-like
weighting £m %
%
London Offices
- Completed properties 85.0 23.6 100.0 33.0 100.00 42.9* 70.5 -0.7
- Development pipeline 15.0 - 0.0 - - 17.8 29.3 5.6
Total London 100.0 23.6 100.0 33.0 100.0 60.7 99.8 1.1
Other 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.0
Total 100.0 23.6 100.0 33.0 100.0 60.8 100.0 1.1
* Includes 25 Charterhouse Square, EC1, which has been sold post year end.
See-through
total portfolio contracted rent
£m
Rent lost at break/expiry (5.7)
Lease expiry to allow redevelopment (7.1)
New lettings 7.1
Net decrease in the year from asset management activities (5.7)
Contracted rent reduced through disposals (0.3)
Total contracted rental change from sales (0.3)
Net decrease in contracted rents in the year (6.0)
Investment Portfolio
Valuation Movements
Valuation change Valuation change Investment portfolio Investment portfolio
incl sales and purchases excl sales and purchases weighting weighting
% % 31 March 2024 31 March 2023
% %
London Offices
- Completed properties (19.8) (19.6) 85.0 83.4
- Development pipeline (35.3) (35.3) 15.0 16.6
Total (22.6) (22.4) 100.0 100.0
Portfolio Yields
EPRA topped EPRA topped Reversionary Reversionary True equivalent yield True equivalent yield
up NIY up NIY yield yield 31 March 31 March
31 March 31 March 31 March 31 March 2024 2023
2024 2023 2024 2023 % %
% % % %
London Offices
- Completed properties 5.1 4.1 6.9 5.7 6.5 5.6
- Development pipeline n/a 3.6 6.1 5.1 5.7 4.9
Total 5.1 4.0 6.6 5.5 6.3 5.4
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
2024 2023 2024 2023 2024 2023
£ psf £ psf % % Years Years
London Offices
- Completed properties 982 1,166 17.6 19.8 6.6 5.8
- Development pipeline 508 835 100.0 2.6 0.0 0.7
Total 880 1,104 37.6 16.1 6.6 5.0
See-through Lease Expiries or Tenant Break Options
Year to Year to Year to Year to Year to 2029
2025 2026 2027 2028 2029 onward
% of rent roll 15.8 3.7 12.8 30.5 7.1 30.1
Number of leases 20 9 11 13 5 19
Average rent per lease (£) 260,030 134,922 384,495 772,366 466,332 521,731
Contracted rent (£) 5,200,606 1,214,299 4,229,447 10,040,764 2,331,658 9,912,882
Top 15 Tenants
We have a strong rental income stream and a diverse tenant base. The top 15
tenants account for 75.2% of the total rent roll.
Tenant Tenant industry Contracted rent Rent roll
Rank £m %
1 Farfetch Online retail 4.3 13.1
2 J Sainsbury Retail 3.0 9.1
3 Brilliant Basics Technology 2.4 7.2
4 VMware Technology 2.2 6.6
5 Verkada Technology 1.9 5.9
6 Partners Group Financial services 1.9 5.7
7 Anomaly Marketing 1.5 4.5
8 Viacom Technology 1.2 3.5
9 Allegis Media 1.1 3.3
10 Dentsu Marketing 1.1 3.2
11 Stripe Financial services 1.0 2.9
12 Openpayd Financial services 0.9 2.7
13 WeWork Flexible offices 0.9 2.6
14 Three Crowns Legal services 0.8 2.5
15 Incubeta Marketing 0.8 2.4
Total 25.0 75.2
Letting Activity - New Leases
Area Contracted rent Rent Increase to Average
sq ft (Helical's share) (excl Plug and Play and managed lettings) 31 March 2023 ERV lease term to expiry
£ £ psf (excl Plug and Play and managed lettings) Years
%
Investment Properties
Completed - offices
- The Tower, EC1 20,874 1,760,000 85.00 0.1 10.0
- The Loom, E1 12,001 657,000 48.56 -11.7 3.2
- The JJ Mack Building, EC1 96,894 4,495,000 92.79 1.8 13.3
Offices Total 129,769 6,912,000 89.59 1.2 11.5
Completed - retail
- The Warehouse, EC1 2,938 130,000 44.25 -4.4 5.0
- The JJ Mack Building, EC1 3,953 100,000 50.59 2.1 15.0
Retail Total 6,891 230,000 47.89 -0.6 9.3
Total 136,660 7,142,000 87.23 1.1 11.5
Financial Review
IFRS Performance EPRA Performance
Loss after tax EPRA profit
£189.8m (2023: £64.5m)
£4.3m (2023: £11.5m)
Loss per share (EPS) EPRA EPS
154.6p (2023: 52.6p)
3.5p (2023: 9.4p)
Diluted NAV per share EPRA NTA per share
326p (31 March 2023: 489p)
331p (31 March 2023: 493p)
Total Accounting Return Total Accounting Return on EPRA NTA
-31.7% (2023: -9.4%) -31.4% (2023: -12.1%)
Overview
The financial results for the year are dominated by the outward yield movement
experienced across the office sector reflected in investment property
valuation losses. With yields on our completed investment portfolio having
moved out by an average of 95bps in the year, the financial results show a net
valuation loss of £187.1m compared to a loss of £92.8m the previous year.
Results for the Year
The IFRS loss for the year of £189.8m (2023: £64.5m) includes revenue from
rental income, service charges and development management fees of £39.9m,
offset by direct costs of £14.5m to give a net property income of £25.4m
(2023: £36.3m). Other income of £0.9m (2023: £nil), from the sub-letting of
part of the Company's head office, was recognised in the year. There was a net
loss on sale and revaluation of investment properties of £181.2m (2023:
£93.3m) and the loss from joint venture activities was £9.3m (2023: gain of
£3.5m). Administrative expenses of £11.0m (2023: £12.8m) and net finance
costs of £7.9m (2023: £10.9m), were further increased by a loss in the fair
value of derivatives of £5.6m (2023: gain of £12.8m).
The Group holds a significant proportion of its property assets in joint
ventures. As the risks 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 2024 include net rental
income of £25.5m, a net loss on sale and revaluation of the investment
portfolio of £188.6m and development profits of £0.4m, leading to a Total
Property Return of -£162.7m (2023: -£51.4m). Other income of £0.9m less
total see-through administrative costs of £11.3m (2023: £13.3m) and
see-through net finance costs of £11.1m (2023: £12.0m) plus see-through
losses from the mark-to-market valuation of derivative financial instruments
of £5.6m (2023: gains of £12.8m) contributed to an IFRS loss of £189.8m
(2023: £64.5m).
The Company has proposed a final dividend of 1.78p per share (2023: 8.70p)
which, if approved by Shareholders at the 2024 AGM, will be payable on 2
August 2024. The total dividend paid or payable in respect of the year to 31
March 2024 will be 4.83p (2023: 11.75p), a decrease of 59%.
The EPRA net tangible asset value per share decreased by 32.9% to 331p (31
March 2023: 493p).
The Group's investment portfolio, including its share of assets held in joint
ventures, decreased to £660.6m (31 March 2023: £839.5m) primarily due to the
net loss on revaluation of the investment portfolio of £187.1m after lease
incentives of £4.1m, offset by capital expenditure on the investment
portfolio of £17.3m.
The Group's see-through loan to value at 31 March 2024 was 39.5% (31 March
2023: 27.5%). The Group's weighted average cost of debt at 31 March 2024 was
2.9% (31 March 2023: 3.4%) and the weighted average debt maturity was 2.1
years (31 March 2023: 2.9 years).
At 31 March 2024, the Group had unutilised bank facilities of £83.8m and cash
of £31.7m on a see-through basis. These are primarily available to fund
future property acquisitions and capital expenditure.
The completion of the sale of 25 Charterhouse Square, EC1 plus the sale of 50%
of our development scheme at 100 New Bridge Street, EC4, following the year
end, have reduced our net borrowings resulting in a pro-forma LTV of 28.7%.
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 administrative and finance costs.
Year to Year to Year to Year to Year to
2024 2023 2022 2021 2020
£m £m £m £m £m
Total Property Return -162.7 -51.4 89.5 48.6 83.9
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
2024 2023 2022 2021 2020
% % % % %
Helical's unleveraged portfolio -20.3 -5.6 10.7 7.0 9.6
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
2024 2023 2022 2021 2020
% % % % %
Total Accounting Return on IFRS net assets -31.7 -9.4 15.0 3.3 7.7
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
2024 2023 2022 2021 2020
% % % % %
Total Accounting Return on EPRA net tangible assets -31.4 -12.1 10.2 4.5 9.3
Earnings/(Loss) Per Share
The IFRS loss per share increased from a loss of 52.6p to a loss of 154.6p and
is based on the after tax loss 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 was 3.5p compared to an earnings per
share of 9.4p in 2023, reflecting the Group's share of net rental income of
£25.5m (2023: £33.5m) and development profits of £0.4m (2023: £3.2m), but
excluding losses on sale and revaluation of investment properties of £188.6m
(2023: £88.1m).
Net Asset Value
IFRS diluted net asset value per share decreased by 33.3% to 326p per share
(31 March 2023: 489p) 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 decreased by 32.9% to 331p per share
(31 March 2023: 493p). This movement arose principally from a total
comprehensive expense (retained losses) of £189.8m (2023: £64.5m), less
£14.4m of dividends (2023: £13.8m).
EPRA net disposal value per share decreased by 33.3% to 327p per share (31
March 2023: 490p).
Income Statement
Rental Income and Property Overheads
Gross rental income, before adjusting for lease incentives, for the Group in
respect of wholly owned properties decreased to £33.3m (2023: £34.9m).
Offset against gross rental income are lease incentives of £5.8m reflecting
the net reversal of previously recognised rental income accrued in advance of
receipt (2023: £1.6m). In this year, £2.9m of this adjustment related to the
unexpired lease incentives provided to WeWork which have been reversed on the
termination of their leases during the year. Overall this resulted in a gross
rental income of wholly owned properties of £27.5m (2023: £33.3m).
2024 2023
£000
£000
Gross rental income (excluding lease incentives) 33,344 34,947
Lease incentives (5,830) (1,632)
Total gross rental income 27,514 33,315
Gross rental income in joint ventures increased to £2.0m (2023: £0.3m).
Property overheads in respect of wholly owned assets and in respect of those
assets in joint ventures increased to £4.0m (2023: £3.4m) reflecting
increased vacancy in the portfolio.
Overall, see-through net rents decreased by 23.8% to £25.5m (2023: £33.5m).
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 2027 on a see-through basis, based on the tenant leases
as at 31 March 2024. 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
£000 £000
Year to 31 March 2024 8,816 (4,105)
Year to 31 March 2025 14,293 5,477
Year to 31 March 2026 16,895 2,602
Year to 31 March 2027 15,169 (1,726)
Rent Collection
Year to
31 March 2024
%
Rent collected to date 99.5
Rent concessions 0.5
At 22 May 2024, the Group had collected 99.5% of all rent contracted and
payable for the financial year to 31 March 2024.
Development Profits
During the year, there was a profit of £0.9m on legacy retail schemes at East
Ham and Kingswinford plus development management fees of a further £0.1m were
recognised. These were offset by a write back of the expected development
management promote fee at The JJ Mack Building, EC1 and other development
costs of £1.2m, which led to a net development loss of £0.2m (2023: profit
of £2.0m).
Share of Results of Joint Ventures
Net rental income recognised in the year was £0.8m (2023: loss of £0.8m) as
a result of the letting progress at The JJ Mack Building, EC1.
The revaluation of our investment assets held in joint ventures generated a
loss of £5.9m (2023: surplus of £5.1m). A loss of £1.5m was recognised in
respect of the sale of our retail units at Barts Square, EC1, offset by a
profit on sale of our last remaining residential unit of £0.6m.
Finance, administrative and other sundry costs totalling £3.5m (2023: £1.5m)
were incurred. An adjustment to reflect our economic interest in the Barts
Square, EC1 development to its recoverable amount generated a profit of £0.2m
(2023: loss of £0.6m), and after a tax charge of £nil (2023: £nil), there
was a net loss from our joint ventures of £9.3m (2023: profit of £3.5m).
Loss on Sale and Revaluation of Investment Properties
The deficit on valuation and loss on sales of our investment portfolio on a
see-through basis resulted in an overall loss on sale and revaluation,
including in joint ventures, of £188.6m (2023: £88.1m).
Administrative Expenses
Recurring administrative costs in the Group, before performance related
awards, decreased 8% from £9.9m to £9.1m with an additional £0.7m of costs
reflecting an accelerated depreciation of leasehold improvements at our
current head office, in anticipation of our move to new offices later in the
year.
The Group has reviewed all categories of expenditure, seeking efficiencies and
cost reductions where available with the aim to reduce our overheads by 25% by
the end of March 2025.
Performance related share awards and bonus payments, before National Insurance
costs, decreased to £1.2m (2023: £2.7m). Of this amount, £1.0m (2023:
£1.1m), 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 £0.1m (2023: £0.3m).
In joint ventures, administrative expenses decreased from £0.5m to £0.3m.
2024 2023
£000
£000
Recurring administrative expenses (excluding performance related awards) (9,051) (9,845)
Accelerated depreciation of leasehold improvements (680) -
Performance related awards (1,155) (2,702)
NIC (125) (288)
Group (11,011) (12,835)
In joint ventures (338) (459)
Total (11,349) (13,294)
Finance Costs, Finance Income and Change in Fair Value of Derivative Financial
Instruments
Net finance costs excluding change in fair value of derivative financial
instruments, including joint ventures, reduced to £11.1m (2023: £12.0m).
Group 2024 2023
£000
£000
Interest payable on secured bank loans (5,493) (8,284)
Other interest payable and similar charges (3,115) (2,780)
Total interest payable before cancellation of loans (8,608) (11,064)
Cancellation of loans - (128)
Total finance costs (8,608) (11,192)
Finance income 661 274
Net finance costs (7,947) (10,918)
Change in fair value of derivative financial instruments (5,609) 12,757
Finance costs, finance income and change in fair value of derivative financial (13,556) 1,839
instruments
Joint ventures
Interest payable on secured bank loans (3,012) (2,703)
Other interest payable and similar charges (211) (203)
Interest capitalised - 1,815
Total finance costs (3,223) (1,091)
Finance income 43 23
Net finance costs (3,180) (1,068)
Total finance costs, finance income and change in fair value of derivative (16,736) 771
financial instruments
Net finance costs excluding change in fair value of derivative financial (11,127) (11,986)
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. There is no deferred tax charge
in the current year.
The current tax charge for the year was £nil (2023: £nil), with an under
provision of £0.2m being recognised in relation to a prior year, the total
tax charge for the year was £0.2m (2023: £nil).
Dividends
In light of the results for the year and the fall in EPRA earnings, the Board
will be recommending to Shareholders a reduction in the final dividend to
1.78p (2023: 8.70p) per share, representing the minimum PID payment required
under the REIT regime. This represents an 80% fall on last year. If approved
by Shareholders at the 2024 AGM, the total dividend for the year will be
4.83p, down 59% on 2023.
Balance Sheet
Shareholders' Funds
Shareholders' Funds at 1 April 2023 were £608.7m. The Group had a loss of
£189.8m (2023: £64.5m), representing the total comprehensive expense for the
year. Movements in reserves arising from the Group's share schemes resulted in
a net deduction of £3.4m. The Company paid dividends to Shareholders during
the year of £14.4m. The net decrease in Shareholders' Funds from Group
activities during the year was £207.6m to £401.1m.
Investment Portfolio
Wholly In joint venture See-through Head leases capitalised Lease incentives Book
owned £000 £000 £000 £000 value
£000
£000
Valuation at 31 March 2023 693,550 145,975 839,525 6,481 (14,172) 831,834
Capital expenditure - wholly owned 16,052 - 16,052 (14) - 16,038
- joint ventures - 1,211 1,211 (31) - 1,180
Letting costs amortised - wholly owned (168) - (168) - - (168)
- joint ventures - (70) (70) - - (70)
Transfer to assets held for sale - wholly owned (42,845) - (42,845) (2,105) 1,133 (43,817)
Disposals - joint ventures - (4,676) (4,676) - 158 (4,518)
Revaluation (deficit)/surplus - wholly owned (186,989) - (186,989) - 5,776 (181,213)
- joint ventures - (4,190) (4,190) - (1,743) (5,933)
Valuation at 31 March 2024 479,600 138,250 617,850 4,331 (8,848) 613,333
The Group expended £17.3m on capital works across the investment portfolio,
at The JJ Mack Building, EC1 (£1.2m), 100 New Bridge Street, EC4 (£13.6m),
The Bower, EC1 (£0.8m), The Loom, E1 (£0.7m) and The Power House, W4
(£1.0m).
Revaluation losses resulted in a £191.2m decrease in the see-through fair
value of the portfolio, before lease incentives, to £617.9m (31 March 2023:
£839.5m). The accounting for head leases and lease incentives resulted in a
book value of the see-through investment portfolio of £613.3m (31 March 2023:
£831.8m).
Debt and Financial Risk
In total, the see-through outstanding debt at 31 March 2024 of £296.1m (31
March 2023: £290.4m) had a weighted average interest cost of 2.9% (31 March
2023: 3.4%) and a weighted average debt maturity of 2.1 years (31 March 2023:
2.9 years).
Debt Profile at 31 March 2024*
Total Total Available Weighted average Average maturity of facilities
facility utilised facility interest rate Years
£000s £000s £000s %
£300m Revolving Credit Facility 300,000 230,000 70,000 2.9 2.3
Total wholly owned 300,000 230,000 70,000 2.9 2.3
In joint ventures 69,900 66,141 3,759 2.8 1.3
Total secured debt 369,900 296,141 73,759 2.9 2.1
Working capital 10,000 - 10,000 - -
Total unsecured debt 10,000 - 10,000 - -
Total debt 379,900 296,141 83,759 2.9 2.1
*Including Commitment Fees but Excluding the Amortisation of Arrangement Fees.
Secured Debt
The Group arranges its secured investment and development facilities to suit
its business needs as follows:
- £300m Revolving Credit Facility
The Group cancelled a surplus £100m of its £400m Revolving Credit Facility
in the year. The value of the Group's properties secured in this facility at
31 March 2024 was £522m (31 March 2023: £693m) with a corresponding loan to
value of 44.0% (31 March 2023: 33.2%). The average maturity of the facility at
31 March 2024 was 2.3 years (31 March 2023: 3.3 years).
- Joint Venture Facilities
The Group has a number of investment and development properties in joint
ventures with third parties and includes our share, in proportion to our
economic interest, of the debt associated with each asset. In the year, the
one year extension on The JJ Mack Building, EC1 facility was exercised,
resulting in an average maturity of the Group's share of bank facilities in
joint ventures at 31 March 2024 of 1.3 years (31 March 2023: 1.3 years) with
a weighted average interest rate of 2.8% (31 March 2023: 4.2%). The average
interest rate has fallen to 2.75% in the year as a result of letting progress
and will reduce to 2.25% once the building is over 90% let.
Unsecured Debt
The Group's unsecured debt is £nil (31 March 2023: £nil).
Cash and Cash Flow
At 31 March 2024, the Group had £115.5m (31 March 2023: £244.2m) of cash and
agreed, undrawn, committed bank facilities including its share in joint
ventures.
Net Borrowings and Gearing
Total gross borrowings of the Group, including in joint ventures, have
increased from £290.4m to £296.1m during the year to 31 March 2024. After
deducting cash balances of £31.7m (31 March 2023: £54.7m) and unamortised
refinancing costs of £2.8m (31 March 2023: £4.3m), net borrowings increased
from £231.4m to £261.6m. The see-through gearing of the Group, including in
joint ventures, increased from 38.0% to 65.2%.
31 March 31 March
2024 2023
See-through gross borrowings £296.1m £290.4m
See-through cash balances £31.7m £54.7m
Unamortised refinancing costs £2.8m £4.3m
See-through net borrowings £261.6m £231.4m
Shareholders' funds £401.1m £608.7m
See-through loan to value 39.5% 27.5%
Pro-forma see-through LTV 28.7% -
See-through gearing - IFRS net asset value 65.2% 38.0%
Pro-forma see-through gearing - IFRS net asset value 40.3% -
Following the sale of 25 Charterhouse Square, EC1 and the sale of a 50% stake
in our 100 New Bridge Street, EC4 development, both completed since 31 March
2024, our pro-forma see-through development LTV has fallen to 28.7% and our
see-through gearing on our IFRS net asset value to 40.3%.
Hedging
At 31 March 2024, the Group had £230.0m (31 March 2023: £230.0m) of
borrowings protected by interest rate swaps, with an average effective
interest rate of 2.6% (31 March 2023: 2.6%) and average maturity of 2.3 years.
In our joint ventures, the Group's share of fixed rate debt was £66.1m (31
March 2023: £60.4m) at 0.5% plus margin, which has reduced as a result of
letting progress at The JJ Mack Building, EC1, resulting in an effective rate
at 31 March 2024 of 2.8%.
31 March Effective interest rate 31 March Effective interest rate
2024 % 2023 %
£m £m
Fixed rate debt
- Secured borrowings 230.0 2.6 230.0 2.6
Total 230.0 2.6 230.0 2.6
Floating rate debt
- Secured - - - -
Total - 2.9(1) - 3.1(1)
In joint ventures
- Fixed rate 66.1 2.8(2) 60.4 4.2(2)
Total borrowings 296.1 2.9 290.4 3.4
1. This includes commitment fees on undrawn facilities. Excluding
these would reduce the effective rate to 2.6%.
2. This includes commitment fees on undrawn facilities. Excluding
these would not impact the effective rate (31 March 2023: reduce to 4.00%).
Tim Murphy
Chief Financial Officer
22 May 2024
Consolidated Income Statement
For the year to 31 March 2024
Notes Year to Year to
31 March 31 March
2024 2023
£000 £000
Revenue 3 39,905 49,848
Cost of sales 3 (14,450) (13,567)
Net property income 4 25,455 36,281
Share of results of joint ventures 12 (9,310) 3,494
16,145 39,775
Gain on sale of investment properties 5 - 4,564
Revaluation of investment properties 11 (181,213) (97,854)
(165,068) (53,515)
Administrative expenses 6 (11,011) (12,835)
Operating loss (176,079) (66,350)
Net finance costs and change in fair value of derivative financial instruments 7 (13,556) 1,839
Loss before tax (189,635) (64,511)
Tax on loss on ordinary activities 8 (179) -
Loss for the year (189,814) (64,511)
Loss per share 10
Basic (154.6)p (52.6)p
Diluted (154.6)p (52.6)p
There were no items of comprehensive income in the current or prior year other
than the loss for the year and, accordingly, no Statement of Comprehensive
Income is presented.
Consolidated Balance Sheet
At 31 March 2024
Notes At At
31 March 31 March
2024 2023
£000 £000
Non-current assets
Investment properties 11 472,522 681,682
Owner occupied property, plant and equipment 3,569 4,351
Investment in joint ventures 12 73,923 87,330
Other investments 13 565 353
Derivative financial instruments 21 17,635 23,245
Trade and other receivables 16 1,252 -
569,466 796,961
Current assets
Land and developments 14 28 28
Assets held for sale 15 42,761 -
Corporation tax receivable - 7
Trade and other receivables 16 16,981 24,935
Cash and cash equivalents 17 28,633 50,925
88,403 75,895
Total assets 657,869 872,856
Current liabilities
Trade and other payables 18 (24,886) (31,232)
Lease liability 19 (829) (683)
(25,715) (31,915)
Non-current liabilities
Borrowings 20 (227,634) (226,677)
Lease liability 19 (3,445) (5,589)
(231,079) (232,266)
Total liabilities (256,794) (264,181)
Net assets 401,075 608,675
Equity
Called-up share capital 22 1,233 1,233
Share premium account 116,619 116,619
Revaluation reserve (134,797) 46,416
Capital redemption reserve 7,743 7,743
Own shares held (1,274) (848)
Other reserves 291 291
Retained earnings 411,260 437,221
Total equity 401,075 608,675
Consolidated Cash Flow Statement
For the year to 31 March 2024
Year to Year to
31 March 31 March
2024 2023
£000 £000
Cash flows from operating activities
Loss before tax (189,635) (64,511)
Adjustment for:
Depreciation 1,506 798
Revaluation deficit on investment properties 181,213 97,854
Letting cost amortisation 168 200
Gain on sale of investment properties - (4,564)
Profit on sale of plant and equipment (29) (18)
Net financing costs 7,947 10,918
Change in value of derivative financial instruments 5,609 (12,757)
Share based payments charge 1,039 1,073
Share of results of joint ventures 9,310 (3,494)
Gain on sub-let of 5 Hanover Square (902) -
Cash inflows from operations before changes in working capital 16,226 25,499
Change in trade and other receivables 9,555 (3,560)
Change in land, developments and trading properties - 2,061
Change in trade and other payables (6,581) (11,477)
Cash inflows generated from operations 19,200 12,523
Finance costs (7,587) (12,361)
Finance income 661 274
Tax received - 331
(6,926) (11,756)
Net cash generated from operating activities 12,274 767
Cash flows from investing activities
Additions to investment property (16,038) (10,509)
Net purchase of other investments (212) (47)
Net proceeds from sale of investment property - 186,541
(Investments in)/returns from joint ventures and subsidiaries (3,861) 3,323
Dividends from joint ventures 5,666 13,446
Sale of plant and equipment 30 48
Purchase of leasehold improvements, plant and equipment (618) (548)
Net cash (used by)/generated from investing activities (15,033) 192,254
Cash flows from financing activities
Borrowings repaid - (170,000)
Finance lease repayments (708) (659)
Shares issued - 10
Purchase of own shares (4,402) (1,089)
Equity dividends paid (14,423) (13,842)
Net cash used by financing activities (19,533) (185,580)
Net (decrease)/increase in cash and cash equivalents (22,292) 7,441
Cash and cash equivalents at start of year 50,925 43,484
Cash and cash equivalents at end of year 28,633 50,925
Consolidated Statement of Changes in Equity
At 31 March 2024
Share Share Revaluation Capital Own shares Other Retained earnings Total
capital premium reserve redemption held reserves £000 £000
£000 £000 £000 reserve £000 £000
£000
At 31 March 2022 1,223 112,654 197,627 7,743 - 291 367,505 687,043
Total comprehensive expense - - - - - - (64,511) (64,511)
Revaluation deficit - - (97,854) - - - 97,854 -
Realised on disposals - - (53,357) - - - 53,357 -
Transactions with owners
- Issued share capital 10 3,965 - - - - - 3,975
- Performance Share Plan - - - - - - 1,073 1,073
- Purchase of own shares - - - - (848) - - (848)
- Share settled Performance Share Plan - - - - - - (3,536) (3,536)
- Share settled bonus - - - - - - (439) (439)
- Revaluation deficit on valuation of shares - - - - - - (240) (240)
- Dividends paid - - - - - - (13,842) (13,842)
Total transactions with owners 10 3,985 - - (848) - (16,984) (13,857)
At 31 March 2023 1,233 116,619 46,416 7,743 (848) 291 437,221 608,675
Total comprehensive expense - - - - - - (189,814) (189,814)
Revaluation deficit - - (181,213) - - - 181,213 -
Transactions with owners
- Performance Share Plan - - - - - - 1,039 1,039
- Purchase of own shares - - - - (4,402) - - (4,402)
- Share settled Performance Share Plan - - - - - - - -
- PSP vesting - - - - 2,352 - (2,352) -
- Share settled bonus - - - - 1,223 - (1,223) -
- Revaluation deficit on valuation of shares - - - - - - - -
- Dividends paid - - - - - - (14,423) (14,423)
Total transactions with owners - - - - (827) - (16,959) (17,786)
At 31 March 2024 1,233 116,619 (134,797) 7,743 (1,675) 291 411,661 401,075
Notes to the Full Year Results
1. Basis of Preparation
These financial statements have been prepared using the recognition and
measurement principles of UK adopted 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 certain 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 2024. These accounts will be delivered to the
Registrar of Companies following the Annual General Meeting. The auditor's
opinion on the 2024 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 2023. The Group Annual Report and Financial
Statements for 2023 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 2024 are detailed below, however none of these have had a
material impact on the financial statements:
· Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of
Accounting Policies (effective for periods beginning on or after 1 January
2023);
· Amendments to IAS 8 Definition of Accounting Estimates (effective for
periods beginning on or after 1 January 2023); and
· Amendments to IFRS 17 Insurance Contracts (effective for periods
beginning on or after 1 January 2023).
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 IFRS 16 Lease liability in a sale and leaseback
(effective for periods beginning on or after 1 January 2024);
· Amendments to IAS 1 Classification of Liabilities as Current or
Non-current (effective for periods beginning on or after 1 January 2024); and
· Amendments to IFRS 10 and IAS 28 Sale or contribution of assets
between an investor and its associate or joint venture (effective for periods
beginning on or after 31 December 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 to September 2025, 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
£300m 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 2024 compliance position for these covenants is summarised below:
Covenant Requirement Actual
LTV <65% 44%
LRV <12.0x/15.0x* 10.17x
ICR >150% 726%
*15 times applies up to but not including the January 2025 interest payment
date.
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 16% fall in
contracted rental income;
• Property values could fall by 14% before loan to value covenants come
under pressure; 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 2024.
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 areas are 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).
· Classification of 25 Charterhouse Square, EC1 as an asset held for
sale as its sale was considered "highly probable" at 31 March 2024 (see Note
15).
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.
Consideration has been given to climate risk but it has been concluded that it
does not give rise to material new sources of estimation uncertainty.
2. Revenue from Contracts with Customers
Year to Year to
31 March 31 March
2024 2023
£000 £000
Development property income 711 4,921
Service charge income 10,689 8,372
Other revenue 991 -
Total revenue from contracts with customers 12,391 13,293
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 £23,000 was recognised in the year to 31
March 2024 (2023: £5,000).
3. Segmental Information
IFRS 8 Operating Segments requires the identification of the Group's operating
segments, which are defined as being discrete components of the Group's
operations whose results are regularly reviewed by the Chief Operating
Decision Maker (being the Chief Executive) to allocate resources to those
segments and to assess their performance.
The Group divides its business into the following segments:
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.
Revenue Investments Developments Total Investments Year to Developments Total
Year to Year to Year to 31.03.23 Year to Year to
31.03.24 31.03.24 31.03.24 £000 31.03.23 31.03.23
£000 £000 £000 £000 £000
Gross rental income 27,514 - 27,514 36,555 - 36,555
Development property income - 711 711 - 4,921 4,921
Service charge income 10,689 - 10,689 8,372 - 8,372
Other revenue 991 - 991 - - -
Revenue 39,194 711 39,905 44,927 4,921 49,848
Cost of sales Investments Developments Total Investments Year to Developments Total
Year to Year to Year to 31.03.23 Year to Year to
31.03.24 31.03.24 31.03.24 £000 31.03.23 31.03.23
£000 £000 £000 £000 £000
Head rents payable (224) - (224) (157) - (157)
Property overheads (2,580) - (2,580) (2,092) - (2,092)
Service charge expense (10,689) - (10,689) (8,372) - (8,372)
Development cost of sales - (922) (922) - (2,915) (2,915)
Development sales expenses - (35) (35) - (1) (1)
Provision - - - - (30) (30)
Cost of sales (13,493) (957) (14,450) (10,621) (2,946) (13,567)
Loss before tax Investments Developments Total Investments Developments Total
Year to Year to Year to Year to Year to Year to
31.03.24 31.03.24 31.03.24 31.03.23 31.03.23 31.03.23
£000 £000 £000 £000 £000 £000
Net property income 25,701 (246) 25,455 34,306 1,975 36,281
Share of results of joint ventures (9,969) 659 (9,310) 4,867 (1,373) 3,494
Loss on sale and revaluation of investment properties (181,213) - (181,213) (93,290) - (93,290)
Segmental (loss)/profit (165,481) 413 (165,068) (54,117) 602 (53,515)
Administrative expenses (11,011) (12,835)
Net finance costs (7,947) (10,918)
Change in fair value of derivative financial instruments (5,609) 12,757
Loss before tax (189,635) (64,511)
Net assets Investments Developments Total Investments Developments Total
at 31.03.24 at 31.03.24 at 31.03.24 at 31.03.23 at 31.03.23 at 31.03.23
£000 £000 £000 £000 £000 £000
Investment properties 472,522 - 472,522 681,682 - 681,682
Land and developments - 28 28 - 28 28
Assets held for sale 42,761 - 42,761 - - -
Investment in joint ventures 71,528 2,395 73,923 84,255 3,075 87,330
586,811 2,423 589,234 765,937 3,103 769,040
Other assets 68,635 103,816
Total assets 657,869 872,856
Liabilities (256,794) (264,181)
Net assets 401,075 608,675
4. Net Property Income
Year to Year to
31 March 31 March
2024 2023
£000 £000
Gross rental income 27,514 36,555
Head rents payable (224) (157)
Property overheads (2,580) (2,092)
Net rental income 24,710 34,306
Development property income 711 4,921
Development cost of sales (922) (2,915)
Sales expenses (35) (1)
Provision - (30)
Development property (loss)/profit (246) 1,975
Other revenue 991 -
Net property income 25,455 36,281
Included within Gross rental income above is an adjustment of £5,830,000
being a net release of previously accrued income (2023: recognition of accrued
income of £1,609,000). Included within gross rental income are dilapidation
receipts of £1,490,000 (2023: £45,000).
5. Profit on Sale of Investment Properties
Year to Year to
31 March 31 March
2024 2023
£000 £000
Net proceeds from the sale of investment properties - 186,541
Book value (Note 11) - (169,570)
Tenants' incentives on sold investment properties - (12,407)
Profit on sale of investment properties - 4,564
6. Administrative Expenses
Year to Year to
31 March 31 March
2024 2023
£000 £000
Administrative costs (9,731) (9,845)
Performance related awards, including annual bonuses (1,155) (2,702)
National Insurance on performance related awards (125) (288)
Administrative expenses (11,011) (12,835)
7. Net Finance Costs and Change in Fair Value of Derivative Financial
Instruments
Year to Year to
31 March 31 March
2024 2023
£000 £000
Interest payable on bank loans and overdrafts (5,493) (8,284)
Other interest payable and similar charges (3,115) (2,780)
Total before cancellation of loans (8,608) (11,064)
Cancellation of loans - (128)
Finance costs (8,608) (11,192)
Finance income 661 274
Net finance costs (7,947) (10,918)
Change in fair value of derivative financial instruments (5,609) 12,757
Net finance costs and change in fair value of derivative financial instruments (13,556) 1,839
8. Tax on Profit on Ordinary Activities
Year to Year to
31 March 31 March
2024 2023
£000 £000
The tax charge is based on the profit for the year and represents:
United Kingdom corporation tax at 25% (2023: 19%)
- Adjustment in respect of prior years (179) -
- Use of tax losses - -
Current tax charge (179) -
Deferred tax - -
Total tax charge for year (179) -
The Group became a UK REIT on 1 April 2022. As a REIT, the Group is not
subject to corporation tax on the profits of its property rental business and
chargeable gains arising on the disposal of investment assets used in the
property rental business, but remains subject to tax on profits and chargeable
gains arising from non-REIT business activities.
Since entering the REIT regime, no deferred tax assets and liabilities have
been recognised on the basis that they are either associated with the
tax-exempt property business or are deferred tax assets of the non-property
business that are no longer recognised 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 assets could be offset.
On the basis that the Group continues to meet the REIT regime conditions,
there has been no change to the position regarding recognition of deferred tax
assets and liabilities in the year ended 31 March 2024. At 31 March 2024, no
deferred tax was recognised (31 March 2023: £nil).
9. Dividends
Year to Year to
31 March 31 March
2024 2023
£000 £000
Attributable to equity share capital
Ordinary
- Interim paid 3.05p per share (2023: 3.05p) 3,744 3,750
- Prior year final paid 8.70p per share (2022: 8.25p) 10,679 10,092
14,423 13,842
A final dividend of 1.78p, if approved at the AGM on 17 July 2024, will be
paid on 2 August 2024 to the Shareholders on the register on 28 June 2024.
This final dividend, amounting to £2.2m, has not been included as a liability
as at 31 March 2024, 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
2024 2023
000 000
Ordinary shares in issue 123,355 123,355
Weighting adjustment (602) (613)
Weighted average ordinary shares in issue for calculation of basic and EPRA 122,753 122,742
earnings per share
Weighted average ordinary shares issued on share settled bonuses 154 561
Weighted average ordinary shares to be issued under Performance Share Plan - 846
Adjustment for anti-dilutive shares (154) (1,407)
Weighted average ordinary shares in issue for calculation of diluted loss per 122,753 122,742
share
£000
£000
Loss used for calculation of basic and diluted earnings per share (189,814) (64,511)
Basic loss per share (154.6)p (52.6)p
Diluted loss per share (154.6)p (52.6)p
£000 £000
Loss used for calculation of basic and diluted earnings per share (189,814) (64,511)
Net loss/(gain) on sale and revaluation of investment properties
- subsidiaries 181,213 93,290
- joint ventures 7,401 (5,161)
Tax on profit on disposal of investment properties - 463
(Gain)/loss on movement in share of joint ventures (155) 564
Fair value movement on derivative financial instruments 5,609 (12,757)
Expense on cancellation of loans - 128
Deferred tax on adjusting items - (503)
Earnings used for calculations of EPRA earnings per share 4,254 11,513
EPRA earnings per share 3.5p 9.4p
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
2024 2023
£000 £000
Book value at 1 April 681,682 938,797
Additions at cost 16,038 10,509
Disposals - (169,570)
Transfer to assets held for sale (43,817) -
Letting cost amortisation (168) (200)
Revaluation deficit (181,213) (97,854)
As at year end 472,522 681,682
The fair value of the investment properties is as follows:
At At
31 March 31 March
2024 2023
£000 £000
Book value 472,522 681,682
Lease incentives and costs included in trade and other receivables 7,078 13,987
Head leases capitalised - (2,119)
Fair value 479,600 693,550
Interest capitalised in respect of the refurbishment of investment properties
at 31 March 2024 amounted to £8,271,000 (31 March 2023: £9,620,000).
Interest capitalised during the year in respect of the refurbishment of
investment properties amounted to £nil (31 March 2023: £nil). An amount of
£nil (31 March 2023: £3,482,000) was released on the sale of the properties
in the year and an amount of £1,349,000 (31 March 2023: £nil) was released
as a result of an asset being transferred to assets held for sale.
The historical cost of investment property is £608,010,000 (31 March 2023:
£633,237,000). The anticipated capital expenditure included in valuations
reflects our commitment to achieving the highest standards of sustainability.
Any capex contractually committed is included in Note 29.
The fair value of the Group's investment property as at 31 March 2024 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.
At At
31 March 31 March
2024 2023
£000 £000
Cushman & Wakefield LLP 479,450 693,400
Director's valuation 150 150
479,600 693,550
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 value
31 March
2024 % £000
True equivalent yield 7.05%
+ 50 bps (10.4) (54,300)
+ 25 bps (5.4) (28,200)
- 25 bps 5.9 30,800
- 50 bps 12.3 64,400
ERV £72.71 psf
+ 5.00% 5.6 29,500
+ 2.50% 2.8 14,700
- 2.50% (2.7) (14,300)
- 5.00% (5.4) (28,300)
12. Joint Ventures
Share of results of joint ventures Year to Year to
31 March 31 March
2024 2023
£000 £000
Revenue 2,559 10,141
Gross rental income 2,004 287
Property overheads (1,209) (1,103)
Net rental expense 795 (816)
Revaluation of investment properties (5,933) 5,095
(Loss)/gain on sale of investment properties (1,468) 66
Development property profit 659 1,262
(5,947) 5,607
Administrative expenses (338) (459)
Operating (loss)/profit (6,285) 5,148
Interest payable on bank loans and overdrafts (3,012) (2,703)
Other interest payable and similar charges (211) (203)
Interest capitalised - 1,815
Finance income 43 23
(Loss)/profit before tax (9,465) 4,080
Tax 1 (22)
(Loss)/profit after tax (9,464) 4,058
Adjustment for Barts Square economic interest¹ 154 (564)
Share of results of joint ventures (9,310) 3,494
1. This adjustment reflects the impact of the consolidation of a joint
venture at its economic interest of 50% (31 March 2023: 50%) rather than its
actual ownership interest of 33%.
Investment in joint ventures At At
31 March 31 March
2024 2023
£000 £000
Summarised balance sheets
Non-current assets
Investment properties 140,811 150,151
Owner occupied property, plant and equipment 63 109
140,874 150,260
Current assets
Land and developments 1,321 539
Trade and other receivables 3,034 727
Cash and cash equivalents 3,064 3,749
7,419 5,015
Current liabilities
Trade and other payables (4,254) (3,332)
(4,254) (3,332)
Non-current liabilities
Trade and other payables (1,155) (406)
Borrowings (65,644) (59,416)
Leasehold interest (5,020) (4,927)
(71,819) (64,749)
Net assets pre-adjustment 72,220 87,194
Acquisition costs 1,703 136
Investment in joint ventures 73,923 87,330
The fair value of investment properties in joint ventures at 31 March 2024 is
as follows:
At At
31 March 31 March
2024 2023
£000 £000
Book value 140,811 150,151
Lease incentives and costs included in trade and other receivables 1,770 185
Head leases capitalised (4,331) (4,361)
Fair value 138,250 145,975
13. Other Investments
At At
31 March 31 March
2024 2023
£000 £000
Book value at 1 April 353 306
Acquisitions 212 47
As at 31 March 565 353
On 6 August 2021, the Group entered into a commitment of £1,000,000 to invest
in the Pi Labs European PropTech venture capital fund ("Fund") of which
£212,000 (31 March 2023: £47,000) 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 3 fair value measurement as defined in IFRS 13
Fair Value Measurement.
14. Land and Developments
At At
31 March 31 March
2024 2023
£000 £000
At 1 April 28 2,089
Disposals - (2,031)
Provision - (30)
At 31 March 28 28
The Directors' valuation of development stock shows a surplus of £302,000 (31
March 2023: £302,000) above book value. This surplus has been included in the
EPRA net tangible asset value (Note 23).
No interest has been capitalised or included in land and developments.
15. Assets Held for Sale
At At
31 March 31 March
2024 2023
£000 £000
Book value on transfer to asset held for sale 43,817 -
Lease incentives 1,133 -
Long leasehold liability (2,189) -
At 31 March 42,761 -
16. Trade and Other Receivables
At At
31 March 31 March
2024 2023
£000 £000
Trade receivables 2,111 2,517
Other receivables 3,601 752
Prepayments 4,103 1,990
Accrued income 7,166 19,676
Current trade and other receivables 16,981 24,935
Other receivables 1,252 -
Non-current trade and other receivable 1,252 -
Total trade and other receivables 18,233 24,935
Included in accrued income are lease incentives of £7,078,000 (31 March 2023:
£13,987,000).
17. Cash and Cash Equivalents
At At
31 March 31 March
2024 2023
£000 £000
Cash held at managing agents 4,914 4,156
Rental deposits 7,828 9,069
Restricted cash 3,880 9,495
Cash deposits 12,011 28,205
Total cash and cash equivalents 28,633 50,925
Restricted cash is made up of cash held by solicitors and cash in restricted
accounts.
18. Trade and Other Payables
At At
31 March 31 March
2024 2023
£000 £000
Trade payables 13,497 15,212
Other payables 1,252 2,136
Accruals 5,101 5,404
Deferred income 5,036 8,480
Total trade and other payables 24,886 31,232
19. Lease Liability
At At
31 March 31 March
2024 2023
£000 £000
Current lease liability 829 683
Non-current lease liability 3,445 5,589
Included within the lease liability are £829,000 (31 March 2023: £683,000)
of current and £3,445,000
(31 March 2023: £3,399,000) of non-current lease liabilities which relate to
the long leasehold of the Group's head office.
20. Borrowings
At At
31 March 31 March
2024 2023
£000 £000
Current borrowings - -
Borrowings repayable within:
- two to three years 227,634 -
- three to four years - 226,677
Non-current borrowings 227,634 226,677
Total borrowings 227,634 226,677
At At
31 March 31 March
2024 2023
£000 £000
Total borrowings 227,634 226,677
Cash (28,633) (50,925)
Net borrowings 199,001 175,752
Net borrowings exclude the Group's share of borrowings in joint ventures of
£65,644,000 (31 March 2023: £59,416,000) and cash in joint ventures of
£3,064,000 (31 March 2023: £3,749,000). All borrowings in joint ventures are
secured.
At At
31 March 31 March
2024 2023
£000 £000
Net assets 401,075 608,675
Gearing 49.6% 28.9%
21. Derivative Financial Instruments
At At
31 March 31 March
2024 2023
£000 £000
Derivative financial instruments asset 17,635 23,245
A loss on the change in fair value of £5,609,000 has been recognised in the
Consolidated Income Statement (31 March 2023: gain of £12,757,000).
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.
22. Share Capital
At At
31 March 31 March
2024 2023
£000 £000
Authorised 39,577 39,577
The authorised share capital of the Company is £39,577,000 divided into
ordinary shares of 1p each.
At At
31 March 31 March
2024 2023
£000 £000
Allotted, called up and fully paid:
- 123,355,197 (31 March 2023: 123,355,197) ordinary shares of 1p each 1,233 1,233
1,233 1,233
23. Net Assets Per Share
At Number of shares At Number of shares p
31 March 000 31 March 000
2024 2023
£000 £000
p
IFRS net assets 401,075 123,355 608,675 123,355
Adjustments:
- own shares held (602) (283)
Basic net asset value 401,075 122,753 327 608,675 123,072 495
- share settled bonus 154 561
- dilutive effect of Performance Share Plan - 751
Diluted net asset value 401,075 122,907 326 608,675 124,384 489
Adjustments:
- fair value of financial instruments (17,635) (23,245)
- fair value of land and developments 302 302
- real estate transfer tax 44,605 56,591
EPRA net reinstatement value 428,347 122,907 349 642,323 124,384 516
- real estate transfer tax (21,879) (28,868)
EPRA net tangible asset value 406,468 122,907 331 613,455 124,384 493
At Number of shares At Number of shares p
31 March 000 31 March 000
2024 2023
£000 p £000
Diluted net assets 401,075 122,907 326 608,675 124,384 489
Adjustments:
- surplus on fair value of stock 302 302
EPRA net disposal value 401,377 122,907 327 608,977 124,384 490
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 own the buildings, rather than direct asset sales.
The calculation of EPRA net disposal value per share reflects the fair value
of all the assets and liabilities of the Group at 31 March 2024.
24. Related Party Transactions
The following amounts were due from the Group's joint ventures:
At At
31 March 31 March
2024 2023
£000 £000
Charterhouse Place Limited group 1,340 577
TfL companies 1,530 -
Barts Square companies 71 79
Shirley Advance LLP - 8
An accounting and corporate services fee of £50,000 (March 2023: £50,000)
was charged by the Group to the Barts Square companies. A development
management, accounting and corporate services fee of £1,089,181 due from the
Charterhouse Place Limited group was reversed (31 March 2023: £150,000
receivable).
25. 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
2024 2023
£000 £000
Gross rental income - subsidiaries 27,514 36,555
- joint ventures 2,004 287
Total gross rental income 29,518 36,842
Rents payable - subsidiaries (224) (157)
Property overheads - subsidiaries (2,580) (2,092)
- joint ventures (1,209) (1,103)
See-through net rental income 25,505 33,490
See-through Net Development Profits
Helical's share of development profits from property assets held in
subsidiaries and in joint ventures is shown in the table below.
Year to Year to
31 March 31 March
2024 2023
£000 £000
In parent and subsidiaries (246) 2,005
In joint ventures 659 1,262
Total gross development profit 413 3,267
Provision - subsidiaries - (30)
See-through net development profits 413 3,237
See-through Net Loss 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
2024 2023
£000 £000
Revaluation (deficit)/surplus on investment properties - subsidiaries (181,213) (97,854)
- joint ventures (5,933) 5,095
Total revaluation deficit (187,146) (92,759)
Net (loss)/gain on sale of investment properties - subsidiaries - 4,564
- joint ventures (1,468) 66
Total net (loss)/gain on sale of investment properties (1,468) 4,630
See-through net loss on sale and revaluation of investment properties (188,614) (88,129)
See-through Administrative Expenses
Helical's share of the administrative expenses incurred in subsidiaries and
joint ventures is shown in the table below.
Year to Year to
31 March 31 March
2024 2023
£000 £000
Administrative expenses - subsidiaries 9,731 9,845
- joint ventures 338 459
Total administrative expenses 10,069 10,304
Performance related awards, including NIC - subsidiaries 1,280 2,990
Total performance related awards, including NIC 1,280 2,990
See-through administrative expenses 11,349 13,294
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
2024 2023
£000 £000
Interest payable on bank loans and overdrafts - subsidiaries 5,493 8,284
- joint ventures 3,012 2,703
Total interest payable on bank loans and overdrafts 8,505 10,987
Other interest payable and similar charges - subsidiaries 3,115 2,908
- joint ventures 211 203
Interest capitalised - joint ventures - (1,815)
Total finance costs 11,831 12,283
Interest receivable and similar income - subsidiaries (661) (274)
- joint ventures (43) (23)
See-through net finance costs 11,127 11,986
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
2024 2023
£000 £000
Investment property fair value - subsidiaries 479,600 693,550
- joint ventures 138,250 145,975
Assets held for sale - subsidiaries 42,761 -
Total investment property fair value 660,611 839,525
Land and development stock - subsidiaries 28 28
- joint ventures 1,321 539
Total land and development stock 1,349 567
Total land and development stock surplus - subsidiaries 302 302
Total land and development stock at fair value 1,651 869
See-through property portfolio 662,262 840,394
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
2024 2023
£000 £000
Gross borrowings more than one year - subsidiaries 227,634 226,677
Total 227,634 226,677
Gross borrowings more than one year - joint ventures 65,644 59,416
Total 65,644 59,416
Cash and cash equivalents - subsidiaries (28,633) (50,925)
- joint ventures (3,064) (3,749)
Total (31,697) (54,674)
See-through net borrowings 261,581 231,419
26. See-through Net Gearing and Loan to Value
At At
31 March 31 March
2024 2023
£000 £000
See-through property portfolio 662,262 840,394
See-through net borrowings 261,581 231,419
Net assets 401,075 608,675
See-through net gearing 65.2% 38.0%
See-through loan to value 39.5% 27.5%
Pro-forma see-through loan to value (Note 30) 28.7% -
27. Total Accounting Return
At At
31 March 31 March
2024 2023
£000 £000
Brought forward IFRS net assets 608,675 687,043
Carried forward IFRS net assets 401,075 608,675
Decrease in IFRS net assets (207,600) (78,368)
Dividends paid 14,423 13,842
Total accounting return (193,177) (64,526)
Total accounting return percentage (31.7)% (9.4)%
At
At 31 March
31 March 2023
2024 £000
£000
Brought forward EPRA net tangible assets 613,455 713,279
Carried forward EPRA net tangible assets 406,468 613,455
Decrease in EPRA net tangible assets (206,987) (99,824)
Dividends paid 14,423 13,842
Total EPRA accounting return (192,564) (85,982)
Total EPRA accounting return percentage (31.4)% (12.1)%
28. Total Property Return
At At
31 March 31 March
2024 2023
£000 £000
See-through net rental income 25,505 33,490
See-through development profits 413 3,237
See-through revaluation deficit (187,146) (92,759)
See-through net (loss)/gain on sale of investment properties (1,468) 4,630
Total property return (162,696) (51,402)
29. Capital Commitments
The Group has a commitment of £133,500,000 (31 March 2023: £1,700,000), of
which £59,400,000 relates to the development of 100 New Bridge Street, EC4
and the remaining £73,800,000 relates to the purchases of the TfL sites at 10
King William Street, EC2, Southwark, SE1 and Paddington, W2.
30. Post Balance Sheet Events
Following the year end, the sale of 25 Charterhouse Square, EC1 for £43.5m
was completed (see Note 15) with the £42m proceeds used to part pay down the
Group's RCF.
On 17 May 2024, a joint venture agreement was signed with Orion Capital
Managers who acquired a 50% investment in the 100 New Bridge Street, EC4 site
for £55m, with a £155m development facility agreement signed at the same
time to fund the development and finance costs.
The impact of the two transactions above are reflected in the pro-forma tables
below:
At Impact of transactions Pro-forma
31 March £000 £000
2024
£000
Investment property fair value - subsidiaries 479,600 (99,000) 380,600
- joint ventures 138,250 49,500 187,750
Investment property held for sale - subsidiaries 42,761 (42,761) -
Development portfolio 1,651 - 1,651
Total see-through property portfolio 662,262 (92,261) 570,001
See-through net borrowings 261,581 (97,761) 163,820
See-through loan to value 39.5% (10.8)% 28.7%
Net assets 401,075 5,500 406,575
See through gearing 65.2% (24.9)% 40.3%
Appendix 1 - Five Year Review
Income Statements
Year ended Year ended Year ended Year ended Year ended
31.3.24 31.3.23 31.3.22 31.3.21 31.3.20
£000 £000 £000 £000 £000
Revenue 39,905 49,848 51,146 38,596 44,361
Net rental income 24,710 34,306 31,086 24,965 27,838
Development property (loss)/profit (246) 2,005 3,519 678 2,076
(Provisions)/reversal of provisions - (30) 2,285 (82) 1,198
Share of results of joint ventures (9,310) 3,494 20,708 2,352 13,396
Other income 991 - 28 48 88
16,145 39,775 57,626 27,961 44,596
Gain/(loss) on sale of investment properties - 4,564 (45) (1,341) (1,272)
Revaluation (deficit)/surplus on investment properties (181,213) (97,854) 33,311 19,387 38,351
Administrative expenses excluding performance related awards (9,731) (9,845) (9,598) (9,276) (10,524)
Performance related awards (including NIC) (1,280) (2,990) (7,170) (5,140) (6,191)
Finance costs (8,608) (11,192) (19,234) (14,079) (16,100)
Finance income 661 274 6 58 1,345
Change in fair value of derivative financial instruments (5,609) 12,757 17,996 2,938 (7,651)
Change in fair value of Convertible Bond - - - - 468
Foreign exchange gains - - - - 8
(Loss)/profit before tax (189,635) (64,511) 72,892 20,508 43,030
Tax on (loss)/profit on ordinary activities (179) - 16,002 (2,631) (4,313)
(Loss)/profit after tax (189,814) (64,511) 88,894 17,877 38,717
Balance Sheets
At At At At At
31.3.24 31.3.23 31.3.22 31.3.21 31.3.20
£000 £000 £000 £000 £000
Investment portfolio at fair value 479,600 693,550 961,500 756,875 836,875
Land, trading properties and developments 28 28 2,089 448 852
Assets held for sale 42,761 - - - -
Group's share of investment properties held by joint ventures 138,250 145,975 135,820 82,516 76,809
Group's share of land, trading and development properties held by joint 1,321 539 8,349 16,545 34,164
ventures
Group's share of land and development property surpluses 302 302 302 578 578
Group's share of total properties at fair value 662,262 840,394 1,108,060 856,962 949,278
Net debt 199,001 175,752 353,149 169,476 273,598
Group's share of net debt of joint ventures 62,580 55,667 35,111 11,688 24,933
Group's share of net debt 261,581 231,419 388,260 181,164 298,531
Net assets 401,075 608,675 687,043 608,161 598,689
EPRA net tangible assets value 406,468 613,455 713,279 658,663 640,424
Dividend per ordinary share paid 11.55p 11.30p 10.30p 8.70p 10.20p
Dividend per ordinary share declared 4.83p 11.75p 11.15p 10.10p 8.70p
EPRA earnings/(loss) per ordinary share 3.5p 9.4p 5.2p (1.8)p 7.6p
EPRA net tangible assets per share 331p 493p 572p 533p 524p
Appendix 2 - Property Portfolio
London Portfolio - Investment Properties
Property Description Area sq ft Vacancy rate Vacancy rate at 31 March 2023
(NIA) at 31 March %
2024
%
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 16.0 0.0
The Loom, E1 Multi-let office building 108,540 34.9 28.4
The JJ Mack Building, EC1 Multi-let office building 206,085 32.7 81.6
25 Charterhouse Square, EC1 Multi-let office building 42,921 15.2 15.2
The Power House, W4 Single-let recording studios/office building 21,268 0.0 0.0
712,446 17.6 19.8
Development pipeline
100 New Bridge Street, EC4 Vacant office to be redeveloped 167,026 100.0 2.6
879,472 37.6 16.1
Appendix 3 - EPRA Performance Measures
At At
31 March 31 March
2024 2023
EPRA net tangible assets £406.5m £613.5m
EPRA net reinstatement value per share 349p 516p
EPRA net tangible assets per share 331p 493p
EPRA net disposal value per share 327p 490p
EPRA net initial yield 3.5% 3.9%
EPRA "topped up" net initial yield 5.1% 4.0%
EPRA vacancy rate 10.5% 16.3%
EPRA cost ratio (including direct vacancy costs) 50.6% 39.5%
EPRA cost ratio (excluding direct vacancy costs) 44.0% 35.7%
EPRA earnings £4.3m £11.5m
EPRA earnings per share 3.5p 9.4p
Appendix 4 - Risk Register
Risk Description Mitigating actions Probable impact (post mitigation)
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 strategy is inconsistent with the market Changing market conditions leading to a reduction in demand or deferral of Management constantly monitors the market and makes changes to the Group's The market continues to favour the "best-in-class" space with strong
decisions by occupiers, impacting property values, could hinder the Group's strategy in light of market conditions. The Group conducts an annual strategic sustainability credentials and such assets continue to command premium rents.
ability to buy, develop, let and sell assets as envisioned in its strategy. review and maintains rolling forecasts, with inbuilt sensitivity analysis to Helical's portfolio is well positioned to respond to this trend. The office is
The location, size and mix of properties in Helical's portfolio determine the model anticipated economic conditions. no longer seen as a fixed asset, but as an overall workplace experience that
impact of the risk. If the Group's chosen markets underperform, the impact on
is not tied to a physical location and desirability is influenced by increased
the Group's liquidity, investment property revaluations and rental income will The Group's management team is highly experienced and has a strong track investment in onsite amenities, better workplace technology, flexible space
be greater. record of interpreting the property market. layout, work models and increased sustainability credentials. Helical
continues to place great emphasis on innovation and design in the areas of
Inconsistency between the market and the Group's strategy has the potential to The small size of the Group's management team enables quick implementation of sustainability, technology, service provision and health/wellbeing.
negatively impact our share price and result in reduced market strategic change when required.
sentiment/shareholder satisfaction.
Demand for the best quality buildings in the best locations is expected to
We have robust and established governance and approval processes. remain robust in 2024. This will lead to rental growth in most UK office
There continues to be uncertainty regarding the future of the office given the
markets at the prime end of the spectrum.
continuation of hybrid working practices across the UK. The risk of future We engage closely with our occupiers to ensure we are offering space that
pandemic outbreaks also poses a threat to the future of the office. meets their business needs. Sentiment towards the future of the office continues to improve, but hybrid
working practices are still in existence across the majority of UK businesses.
We are active members of industry bodies and professional organisations and
participate in local business and community groups. This ensures we are Further, there remains a risk of future pandemics which could affect our
actively engaged in decisions affecting our business, customers, partners and strategy.
communities.
Through ongoing engagement with our stakeholders, the impact of a divergence
The Board directly and indirectly engage with the Helical Shareholders on the between the market and our strategy is mitigated, but only to an extent.
Group's strategy and the Directors' decision making and execution of strategy
is heavily influenced by the feedback received from our Shareholders.
The Board continually assesses the viability of the Group strategy with
respect to the demand for office space in Central London.
Risks arising from the Group's significant development projects The Group conducts significant development projects over a number of years and Management carefully reviews the prospective performance and risk profiles of The Group has started the enabling works at 100 New Bridge Street, EC4 ("100
is therefore exposed to fluctuations in the market and tenant demand levels individual developments and, in some cases, builds properties in several NBS"), and we are progressing the three sites to be developed in joint venture
over time. phases to minimise the Group's exposure to reduced demand for particular asset with TfL.
classes or geographical locations over time. The Group conducts developments
Development projects often require substantial capital expenditure for land in partnership with other organisations and pre-lets space to reduce There continues to be the risk of insolvencies in the construction industry
procurement and construction, and they usually take a considerable amount of development risk, where considered appropriate. given the uncertainties around the future macroeconomic environment and
time to complete and generate rental income.
geopolitical market influences. Material costs remains a near term challenge
The management team is highly experienced and has a track record of developing for the real estate industry, despite some signs that the price trend of key
The risk of delays or failure to get planning approval is an inherent risk of best-in-class office spaces in highly desirable, well-connected locations. commodities is easing.
property development.
Management places significant focus on timely project delivery and strong Despite technological advancements, supply chain bottlenecks, recent
The construction industry is faced with both labour and materials supply relationships with construction partners with appropriate risk sharing. We geopolitical escalations and economic uncertainty were, and still are,
shortages which could lead to cost escalation and project delay. choose to work with highly regarded suppliers and contractors to minimise cost challenges for the sector and a risk for the global economy.
uncertainty.
Exposure to developments increases the potential monetary impact of cost
Labour related issues also remain very much to the fore, with skill shortages
inflation, adverse valuation or other market factors which could affect the We typically enter into contracts with our contractors on a fixed price basis being problematic across the industry.
Group's financial capabilities and targeted financial returns. and incorporate appropriate contingencies.
In addition, financial constraints due to economic uncertainty are viewed as
Sustainability is becoming ever more important in the planning process, with We continually collaborate with our suppliers and contractors to mitigate an increasingly significant obstacle to development activities.
local authorities and the Government placing considerable emphasis on climate risks arising from our developments.
change e.g., requiring justification for demolition over refurbishment.
The risk has increased in severity given the commencement of the 100 NBS
Development plans and exposure to risk are considered in the annual business enabling works in late 2023. As the pipeline progresses with the TfL joint
plan. venture, this risk's severity will not decrease.
Detailed planning pre-applications and due diligence are conducted in advance
of any site acquisition.
Board approval is required for commitments above a certain threshold.
Management continuously monitors the cost of materials and pressures on supply
chain and distribution networks. Ongoing consideration is given to investing
in the most energy efficient machinery and building materials and using
renewable sources of energy where possible.
Management considers acceleration of digitalisation of logistics and supply
chain management, such as real-time warning systems that forecast shortages at
an early stage as crucial to responding agilely and avoiding delays in real
estate developments.
The Group is striving to reduce the carbon footprint of its development
activities and is continuously looking to evolve its strategy in this regard.
Property values decline/reduced tenant demand for space The property portfolio is at risk of valuation falls through changes in market The Group's property portfolio has tenants from diverse industries, reducing Despite the strong market sentiment towards new, best-in-class office space,
conditions, including underperforming sectors or locations, lack of tenant the risk of over-exposure to one sector. We conduct regular occupier financial the impact of interest rate rises will halt the expansion in the office jobs
demand, deferral of occupiers' decisions, or general economic uncertainty. covenant checks ahead of approving leases in order to limit our exposure to market during 2024. Following healthy increases in the last two years.
tenant failure. Management accounts which include the Group's performance Research suggests that office-based employment is to remain largely unchanged
The potential adverse impact of the political and economic environments on against the financial covenants are reviewed by the Board on a quarterly in 2024.
property yields has heightened the risk of a fall in property values. Falling basis. Management regularly reviews external data, seeks the advice of
valuations could lead to uncertainty regarding development scheme returns and industry experts and monitors the performance of individual assets and sectors Although there has been a notable increase in the return of employees to their
the viability of future office development schemes. The Group's net asset in order to dispose of non-performing assets and rebalance the portfolio to offices, a number of corporates are continuing to offer hybrid working
value and gearing levels will also be impacted by a fall in property values. suit the changing market. Management regularly models different property opportunities. Despite slowing jobs growth, UK office take-up in 2024 is
revaluation scenarios through its forecasting process in order to prepare a expected to increase relative to the levels seen in 2023.
Property valuations are dependent on the level of rental income receivable and considered approach to mitigating the potential impact. We continue to design
expected to be receivable on that property in the future. Therefore, declines and innovate in the areas of sustainability, technology, wellbeing and service The cost of debt and lack of liquidity issues impacted yields in 2023, with
in rental income could have an adverse impact on revenue and the value of the provision and, working closely with our management agents, Ashdown Phillips, further property valuation falls predicted for Q1 2024. However, yields are
Group's properties. we engage with our occupiers to understand their evolving needs and respond expected to remain stable and may start to tighten over the next 12-24 months.
quickly and collaboratively to any changing requirements.
There remains a risk of continued economic downturn given the broader
geopolitical climate, inflation and current interest rate levels. This could The Board and management team continually monitor the property market. The
result in further pressure on rent collection figures with a prolonged period bi-weekly management meeting considers factors such as new leases, lease
of corporate failures, leading to a decline in occupancy and increase in events and tenant issues with respect to each property in the portfolio.
office vacancies. This risk is further heightened by bank failures and impact
on liquidity.
Geopolitical and economic Significant events or changes in the global/UK political or economic landscape Management monitors macroeconomic research and economic outlook considerations Geo-political uncertainty from conflicts continues to affect global and local
may have a significant impact on the Group's ability to plan and deliver its are incorporated into the Group's annual business plan. economies e.g., inflationary pressures arising from supply chain shortages,
strategic priorities in accordance with its business model. Such events or
high interest rates and energy costs. These conflicts could escalate or spread
changes may result in decreased investor activity and reluctance of occupiers Management conducts ongoing assessments of the impacts of current to include other countries.
to make decisions with respect to office space uptake. Furthermore, the macro-economic and geopolitical concerns.
impacts on London's desirability arising from political uncertainty,
However, whilst the duration of inflation will significantly impact the
government policies and the potential disruption of energy supplies are of We will continue to monitor the economic and political situations in the UK sector, commercial offices remain an attractive asset class.
concern to the business. and globally, and adapt any business decisions accordingly.
With respect to the UK's near-term macroeconomic outlook, the inflation rate
Macro-economic drivers, such as interest rates, can significantly impact Management seeks advice from experts to ensure it understands the political significantly fell towards the end of 2023 and is expected to continue its
pricing in the real estate market. For example, in order to curb inflation, environment and the impact of emerging regulatory and tax changes on the downward trajectory. Although it is anticipated that base rates will stay high
the Bank of England has been raising interest rates, thus increasing the cost Group. It maintains good relationships with planning consultants and local for an extended period, there is the real prospect of rate reductions in the
of borrowing, which in turn provides challenge for investors. authorities. Where appropriate, management joins with industry representatives latter half of 2024, which would be advantageous for both occupiers and
to contribute to policy and regulatory debate relevant to the industry. investors, and should stimulate increased activity.
Political instability and unrest can have a significant knock-on effect on
global economies and trade (as evidenced by the Russo-Ukrainian and the The interest rate environment has dominated the office investment landscape
Israel-Hamas wars which have led to volatility in energy prices). Geopolitical since they started rising in the second half of 2022, severely constraining
risks lead to changed market dynamics and influence, such as the increasing volumes. It is expected that this will ease in the second half of 2024, but
role of governments in economies and the shifts in geopolitical powers. investment volumes in the first half will remain low.
Many of the significant geopolitical risks that the world faces in 2024 come
from existing conflicts and tensions. Experts have identified the elections in
the United States (amid increasing polarisation and declining trust in the
country's political system); a possible escalation of the Israel-Hamas war
into wider conflict in the Middle East; and a further deepening of the Russo-
Ukrainian war as most significant.
In addition, the following geopolitical risks have the potential to affect the
global economy:
· Increased cooperation between China, Iran, North Korea and Russia;
· The reported setbacks to the Chinese growth model; and
· The possibility of conflict arising from authoritarian regimes.
Over half of the world's population will vote in general or local elections
worldwide this year. Therefore, elections will be a key political theme in
2024 and could have a significant impact on the direction of the global
economy. This effect will be seen not only through potential changes in trade
and investment policies but also by increased uncertainty and political
polarisation.
The upcoming UK General Election (currently anticipated to be 4 July 2024)
will add further uncertainty and may delay business decision making. The Group
needs to be alert to the risks of changes to political stability, government
structure, and economic policies that may come with a change in Government.
Investor and tenant decision making and timing could be impacted, and the
Election may cause volatility in the stock market.
Climate change The Group is alive to the risks posed by climate change. Failing to respond to The Group has a Sustainability Committee, which reviews the Group's approach Climate change risk continues to increase in prominence and importance. In the
these risks appropriately (in line with societal attitudes or legislation) or and strategy to climate related risks and presents regularly to the Board and UK, the Government continues to introduce more legislation linked to climate
failing to identify potential opportunities could lead to reputational damage, Executive Committee on emerging issues and mitigation plans. The Board has a risk e.g., TCFD and legislation requiring higher standards for energy
loss of income or decline in property values. Having strong sustainability designated Non-Executive Director responsible for sustainability. The efficiency in commercial and residential properties (EPCs).
credentials is a market differentiator and provides a competitive advantage. Committee sets appropriate targets and KPIs to effectively monitor the Group's
performance. The risks associated with the impact of climate change continue to increase
There is also the risk that the costs to operate our business (energy or
and businesses are being encouraged by their stakeholders to proactively
water) or undertake development activities (construction materials) will rise During the year, a detailed scenario analysis was performed to ascertain the respond. Pressure for greater disclosure by real estate owners and investors
as a consequence of climate change and the actions taken to safeguard against potential risks and opportunities that arise due to specific climate related continues to intensify.
it. scenarios. The outcome of this analysis has been incorporated into our wider
TCFD statement. The Group will conduct detailed scenario analysis of the risks Building and operating buildings which are resilient to climate change
The Group is also alert to the physical risks of climate change e.g. the and opportunities on an annual basis to ensure the appropriate protects shareholder value. Identifying the risks and opportunities that are
increasing severity and frequency of extreme weather events which pose threats actions/responses are taken. material to us as a business under a number of different climate scenarios
to real estate assets.
allows us to appropriately align our mitigation plan and long-term strategy.
Annually, the Group produces a Sustainability Performance Report with key data
and performance points which are externally assured.
In May 2022, the Group 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 and cost of bank borrowing, cash resources and potential breach The inability to roll over existing facilities or take out new borrowing could The Group maintains good relationships with many established lending Increased stability in the forward interest rate market has led to more
of loan covenants impact the Group's ability to maintain its current portfolio and purchase new institutions and borrowings are spread across a number of such lenders. confidence in capital and debt maturity.
properties. The Group may forego opportunities if it does not maintain
sufficient cash to take advantage of them as they arise and requires new Funding requirements are reviewed monthly by the management team, which seeks Whilst the turmoil seen in the banking sector, with the collapse of the
sources of debt to finance its development programme. to ensure that the maturity dates of borrowings are spread over several years. Silicon Valley Bank and the acquisition of Credit Suisse by UBS, has not
worsened, their remains instability in the global markets and concern for the
The Group is at risk of increased interest rates on unhedged borrowings. Management monitors the cash levels of the Group on a weekly basis and rest of the financial sector.
maintains sufficient levels of cash resources and undrawn committed bank
If the Group breaches debt covenants, lending institutions may require the facilities to fund opportunities as they arise. The Group has exercised its option to extend its development financing of The
early repayment of borrowings.
JJ Mack Building, EC1 by a year and is in discussions to extend its £300m
The Group hedges the interest rates on the majority of its borrowings, RCF. The Group has cash and undrawn bank facilities available to it and an
The lack of global liquidity has the potential to create significant obstacles effectively fixing or capping the rates over several years. appropriate level of borrowings.
for the Group.
Covenants are closely monitored throughout the year. Management conducts
Liquidity risk could lead to missed opportunities or financial losses. sensitivity analyses to assess the likelihood of future breaches based on
significant changes in property values or rental income.
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 and relationships with business partners and reliance on external The Group's continued success is reliant on its management and staff and Our people Although there is strong competition for talent in the employment market at
partners maintaining its successful relationships with its joint venture partners.
present, this risk has remained broadly similar due to our high staff
The senior management team is very experienced with a high average length of retention levels.
Ineffective succession planning, or failure to attract, develop and retain the service. The Nominations Committee and Board continuously review succession
right people with requisite skills, as well as failing to maintain a positive plans, and the Remuneration Committee oversees the Directors' Remuneration Succession plans are in place for key roles within Helical, and this supports
working environment for employees, could inhibit the execution of our strategy Policy and its application to senior employees, and reviews and approves the long-term success of the business.
and diminish our long-term sustainability. incentive arrangements to ensure they are commensurate with market practice.
Remuneration is set to attract and retain high calibre staff. External factors such as geopolitical tensions and high levels of demand for
As several of the Group's properties are held in conjunction with third
certain raw materials and components continue to place increased pressure on
parties, the Group's control over these properties is more limited and these Our annual appraisal process focuses on future career development and staff supply chains and distribution networks. Labour shortages continue to pose a
structures may also reduce the Group's liquidity. are encouraged to undertake personal development and training courses, challenge to the industry.
supported by Helical.
Operational effectiveness and financing strategies may also be adversely
Given our reliance on external third parties to ensure the successful delivery
impacted if partners are not strategically aligned. The Board and senior management engage directly with employees through a of our development programmes and asset management, these external factors
variety of engagement initiatives which enable the Board to ascertain staff could have a significant impact on our business.
The Group is dependent on a number of external third parties to ensure the satisfaction levels and implement changes to working practices and the working
successful delivery of its development programme and asset management of environment as necessary.
existing assets. These include:
We also arrange all-staff training activities and events throughout the year.
· Contractors and suppliers;
Business partners
· Consultants;
The Group nurtures well established relationships with joint venture partners,
· Managing agents; and seeking future projects where it has had previous successful collaborations.
· Legal and professional teams. Management has a strong track record of working effectively with a diverse
range of partners.
The Group would be adversely impacted by increases in the cost of services
provided by third parties. Our joint venture business plans are prepared to ensure operational and
strategic alignment with our partners.
External partners
The Group actively monitors its development projects and uses external project
managers to provide support. Potential contractors are vetted for their
quality, health and safety record and financial viability prior to engagement.
The Group has a highly experienced team managing its properties, which
regularly conduct on-site reviews and monitors cash flows against budget.
The Group seeks to actively monitor and maintain excellent relationships with
its specialist professional advisors, often engaging parties with whom it has
successfully worked previously.
Health and safety The nature of the Group's operations and markets exposes it to potential The Group reviews and updates its Health & Safety Policy regularly and it As we have begun the on-site development activities at 100 NBS, this risk is
health and safety risks both internally and externally within the supply is approved by the Board annually. therefore a key area of focus for the business and has increased.
chain.
Contractors are required to comply with the terms of our Health & Safety
The Board conducts continuous assessment and is responsible for the management Policy. The Group engages an external health and safety consultant to review
of the potential impacts of new building and fire safety regulations, contractor agreements prior to appointment and ensures they have appropriate
including under the Building Safety Act 2022. policies and procedures in place, then monitors the adherence to such policies
and procedures throughout the project's lifetime.
As a real estate developer, we are exposed to public liability risks and there
is always the potential for accidents to occur on our sites involving The Group has an H&S Committee to oversee, and drive improved performance
occupiers or employees. in, the strategies, policies, working practices of the Group in relation to
health and safety. The Committee also monitors relevant legal and regulatory
developments.
Ongoing training in H&S is conducted by our employees as appropriate.
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 conduct regular site visits.
To address public liability risks, through our robust H&S risk management
strategies, we ensure our properties are properly maintained, safety protocols
are in place and we conduct regular risk assessments to identify and mitigate
potential hazards.
We have invested in comprehensive public liability insurance to provide
financial protection in the event of legal claims arising from injuries or
property damage.
Significant business disruption/external catastrophic event/cyber-attacks to The Group's operations, reputation or financial performance could be adversely In the event of a significant event: Future pandemics could reduce people's appetite to work in and visit London
our business and our buildings affected and disrupted by major external events such as pandemic disease,
for leisure and therefore impact the demand for, and value of, our buildings.
civil unrest, war and geopolitical instability, terrorist attacks, extreme • The Executive Committee will be tasked with the daily The risk of pandemic is therefore relevant to our business. The
weather, environmental incidents and power supply shortages. All of these monitoring and managing of the risk, and will focus on the impact on property Russo-Ukrainian war and associated sanctions, and the Israel- Hamas war are
potential events could have a considerable impact on the global economy, as locations, the business and supply chain. continuing to put pressure on global supply chains and economies.
well as that of our business and our stakeholders.
• Regular Board discussions will be held during any Furthermore, the UK's terrorism national threat level continues to be rated as
The increasing reliance on and use of digital technology heighten the risks pandemic to review the Group's response and mitigating actions. "substantial".
associated with IT and cyber security.
• Enhanced engagement with our stakeholders will be Cyber risks persist as cyber criminals continue to devise new ways to exploit
• The Group relies on information technology ("IT") to conducted (particularly with occupiers, contractors, Shareholders and and harm businesses around the globe. Consequently, the Group's cyber security
perform effectively as a cyber-attack could result in IT systems being employees). controls continue to be of invaluable importance.
unavailable, adversely affecting the Group's operations and reputation.
• There will be continuous review of Government guidelines Misinformation and disinformation and cyber insecurity are ranked first and
• Commercially sensitive and personal information is and emerging practice, with risk assessments undertaken as control measures fourth respectively by the World Economic Forum as being the most severe
electronically stored by the Group. Theft of this information could adversely change. economic risks over the next two years.
impact the Group's commercial advantage and result in penalties where the
information is governed by law (GDPR and Data Protection Act 2018). • Guidance will be issued to our staff, occupiers and
contractors on how to protect themselves and others.
• The Group is at risk of being a victim of social
engineering fraud. Risks are continually evolving, and we must design, implement and monitor
effective controls to protect the Group from cyber-attack or major IT failure.
• The Group increasingly employs IT solutions across its
property portfolio to ensure its buildings are "smart". However, proptech The Group ensures that it has adequate Business Continuity Plans and IT
solutions, such as sensors and automation, may risk physical damage to Business Continuity Plans in place to enable remote working for all staff.
property if they fail, for example if new systems are retrofitted to old
wiring. Testing of business resilience and risk planning is conducted throughout the
year.
Misinformation and disinformation may radically disrupt electoral processes in
several economies over the next two years. The Group engages and actively manages external IT experts to ensure its IT
systems operate effectively and that we respond to the evolving IT security
The metaverse and artificial intelligence (AI), are two forms of disruptive environment. This includes regular off- site backups and a comprehensive
technology which have been identified as having the potential to reduce the disaster recovery process. The external provider also ensures the system is
demand for physical office space, and thus impact our strategy. secure and this is subject to routine testing including bi-annual disaster
recovery tests and annual Cyber Essential Plus Certification.
There is a robust control environment in place for invoice approval and
payment authorisations including authorisation limits and a dual sign off
requirement for large invoices and bank payments.
The Group provides training and performs penetration testing and disaster
recovery network vulnerability testing to identify emails of a suspicious
nature, ensuring these are flagged to the IT providers, and ensures employees
are aware they should not open attachments or follow instructions within the
email. On an annual basis, our external IT providers provide IT security
training to ensure all staff are adopting best practice IT security measures
to help protect the business against cyber-attack.
The Group periodically instructs external reviews of its anti-financial crime
and cyber security frameworks and delivers training to all staff.
The Group has a disaster recovery plan, on-site security at its properties and
insurance policies in place to deal with any external events and mitigate
their impact.
The Group has cyber insurance cover (broad enough to encompass the cyber risks
faced today/the future) to help mitigate financial losses and liabilities
associated with the compromise of sensitive data.
The Group has business interruption insurance in place to help cover financial
losses if a temporary operational shutdown occurs.
Helical, through its suppliers, conducts proactive risk management including
routine maintenance, regular system updates, and thorough testing to minimise
these risks. Our insurance policies have been extended to cover any damages
resulting from technological failures.
Reputational Risks
Reputational risks are those that could affect the Group in all aspects of its
strategy.
Poor management of stakeholder relations and non-compliance with prevailing Reputational damage resulting in a loss of credibility with key stakeholders The Group believes that successfully delivering its strategy and mitigating This risk is consistent for the business due to the ever changing legal and
legislation, regulation and best practice including Shareholders, analysts, banking institutions, contractors, managing its principal risks should protect its reputation. regulatory landscape in which the business operates. Impact of regulatory
agents, tenants, property purchasers/sellers and employees is a continuous
change and scrutiny on operational resilience and management practices
risk for the Group. The Group regularly reviews its strategy and risks to ensure it is acting in continues to be a risk for our business.
the interests of its stakeholders.
The nature of the Group's operations and markets exposes it to financial
crimes risks (including bribery and corruption risks, money laundering and tax The Group maintains a strong relationship with investors and analysts through
evasion) both internally and externally within the supply chain. regular meetings.
The Group is exposed to the potential risk of acquiring or disposing of a We ensure strong community involvement in the design process for our
property where the owner/purchaser has been involved in criminal conduct or developments and create employment and education opportunities through our
illicit activities. construction and operations activities.
The Group would attract criticism and negative publicity if any instances of, A Group Disclosure Policy and Share Dealing Code, Policy & Procedures have
for example: been circulated to all staff in accordance with UK legislation and regulation
on market abuse.
• modern slavery and human trafficking were identified
within its supply chain. The Group's anti-bribery and corruption and whistleblowing policies and
procedures are reviewed and updated annually and emailed to staff and
• non-compliance with GDPR and the Data Protection Act displayed on our website. Projects with greater exposure to bribery and
2018 were identified. Non-compliance may also result in financial penalties. corruption are monitored closely.
The Group avoids doing business in high-risk territories. The Group has
related policies and procedures designed to mitigate bribery and corruption
As a REIT, the Group is required to adhere to the relevant legislation. risks including:
Failure to comply could result in adverse tax consequences.
· Know Your Client checks.
· Due diligence processes.
· Capital expenditure controls.
· Contracts risk assessment procedures.
· Competition and anti-trust guidance.
The Group engages legal professionals to support these policies where
appropriate.
All employees are required to complete anti-bribery and corruption training
and to submit details of corporate hospitality and gifts received.
Periodically, staff receive anti-financial crime training to enhance their
awareness.
All property transactions are reviewed and authorised by the Executive
Committee.
Our Modern Slavery Act statement, which is prominently displayed on our
website, gives details of our policy and our approach to combating slavery in
our supply chain.
The Group monitors its GDPR and Data Protection Act 2018 compliance to ensure
appropriate safeguards, policies, procedures, contractual terms and records
are implemented and maintained in accordance with the regulations.
The Group regularly monitors its current and projected REIT compliance.
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 23).
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 23).
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 23).
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 23).
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 23).
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
25).
See-through net gearing
The see-through net borrowings expressed as a percentage of net assets (see
Note 26).
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 27).
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 28).
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 (mailto:reception@helical.co.uk)
www.helical.co.uk (http://www.helical.co.uk)
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FLLLLZELEBBZRecent news on Helical
See all newsREG - Helical PLC - Director/PDMR Shareholding
AnnouncementREG - Helical PLC - Director/PDMR Shareholding
AnnouncementREG - Helical PLC - £333 MILLION FORWARD SALE OF 100 NEW BRIDGE STREET
AnnouncementREG - Helical PLC - TRADING UPDATE
AnnouncementREG - Helical PLC - Director/PDMR Shareholding
Announcement