REG - Helical PLC - Half-year Report
22/11/2023 07:15
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RNS Number : 2082U Helical PLC 22 November 2023
HELICAL PLC
("Helical" or the "Group" or the "Company")
Results for the Half Year to 30 September 2023 (the "Period"/"Half Year")
Helical's letting potential and development pipeline to drive future growth
Gerald Kaye, Chief Executive, commented:
"Occupational demands are evolving 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 between
the "best-in-class" and the rest is accelerating with rental growth continuing
for the "best" 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.
"We have experienced a further significant outward yield movement in the
Period, and while interest from potential occupiers has been encouraging,
lease negotiations are taking longer to conclude. However, having taken the
pain of reductions in value, Helical is now well positioned to drive growth
through the letting of the vacant space in its investment portfolio.
"At The JJ Mack Building, EC1, a prime example of a "best-in-class" building,
recent letting progress has been encouraging and we will be c.60% let once the
current space under offer completes in December. Each letting to date has
exceeded the applicable ERV and the recent letting of the 9(th) floor sets a
record rent for the sub-market. By concluding these lettings, the existing
25bps yield differential between vacant and let space will unwind providing a
significant positive impact on valuations. Similarly, upon re-letting the
WeWork space at The Bower, EC1, the capital value will be enhanced as the
yield differential is removed and contracted rent increases towards its ERV of
c.£24m, which is significantly in excess of our total annualised recurring
administration and finance costs.
"Our development pipeline is expected to provide surpluses for the foreseeable
future. Scheduled to start in 2024 and be delivered from late 2025 onwards,
this pipeline will be supplemented with additional "equity-light"
opportunities as building owners seek specialists in office 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.
"The 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 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."
Operational Activity During the Period
Steady progress with lettings, despite challenging backdrop
· During the Period we completed five new lettings, comprising 10,381 sq
ft, delivering contracted rent of £576,803 in line with 31 March 2023 ERVs.
· Despite this activity, vacancy increased across the portfolio to
18.5% (31 March 2023: 16.1%) at 30 September 2023.
· Since the Period end, we have let the 9(th) floor (13,408 sq ft) at The
JJ Mack Building, EC1 for 10 years to Corio Generation, a subsidiary of
Macquarie Group, at a 2.3% premium to 31 March 2023 ERVs, and have a further
three floors (68,002 sq ft) under offer to one tenant. On completion, the
building will be c.60% let.
· At The Bower, EC1 we have extended the lease to existing tenant
Verkada by 10 years and have facilitated their expansion into an additional,
adjacent floor. The vacant 14(th) floor is now under offer at a rent above 31
March 2023 ERV.
· In October 2023, we exercised our right to forfeit the individual
leases for the six floors let to WeWork at The Tower, EC1 following
non-payment of rent for the September 2023 quarter. Subsequently, we have
entered into a short-term licence arrangement with them and received a fee
equivalent to the whole of the September quarter's rent and service charge due
under the terms of the previous lease arrangements.
· On the expiry of the WeWork licence arrangement, and following the
departure of Baker McKenzie from 100 New Bridge Street, EC4 in anticipation of
its redevelopment, the vacancy rate across the investment portfolio will rise
to c.25%.
Sales
· Subsequent to the Period end, we have sold the long leasehold
interest in the retail units at Barts Square for £7.0m (our share £3.5m),
bringing an end to the joint venture with Baupost, which built 235 apartments,
three office buildings totalling 249,000 sq ft and 21,000 sq ft of retail
across 10 units.
Portfolio Valuation
· There was an average outward yield adjustment of 46bps at 30
September 2023 across the portfolio. This compares to the 75bps outward
movement of City office prime yields, as reported by Savills for the Period.
100 New Bridge Street, EC4
· At 100 New Bridge Street, EC4, we received planning approval from The
City of London for our 194,000 sq ft scheme. The main construction contract
and development financing facility are being finalised so that we can be ready
to start construction in early 2024.
The Platinum Portfolio - TfL
· On 11 July 2023, contracts were signed confirming Helical as Transport
for London's ("TfL") commercial office joint venture partner. This long term
partnership will see the delivery of new, high-quality and sustainable office
space predominantly above or adjacent to key transport hubs. The first three
development opportunities are:
- Bank OSD, EC4 - Located above the recently opened Bank Station entrance
on Cannon Street. This eight storey office development will deliver 142,000 sq
ft NIA over seven office floors, with typical floorplates of 22,500 sq ft, and
7,653 sq ft of terracing over three floors. A start on site is envisaged in
October 2024.
- Southwark OSD, SE1 - Located above Southwark Station. The scheme has
consent for a 222,000 sq ft NIA office building over 17 storeys. Feasibility
studies are underway, looking at alternative approaches for the site.
- Paddington OSD, W2 - The 235,000 sq ft NIA scheme is to be built
over the canal level eastern entrance to Paddington Station, opposite the
Brunel Building. We intend to make minor changes to ensure we deliver a
"best-in-class" scheme with enhanced amenities.
Financial Highlights
Earnings and Dividends
· IFRS loss of £93.1m (2022: profit of £17.2m), primarily driven by
revaluation losses.
· IFRS basic loss per share of 75.8p (2022: earnings of 14.1p).
· EPRA earnings per share(1) of 1.1p (2022: 4.8p).
· Interim dividend maintained at 3.05p per share (2022: 3.05p).
Balance Sheet
· Net asset value down 17.5% to £502.3m (31 March 2023: £608.7m).
· Total Accounting Return(1) on IFRS net assets of -15.9% (2022: 2.3%).
· Total Accounting Return(1) on EPRA net tangible assets of -16.6%
(2022: -2.5%).
· EPRA net tangible asset value per share(1) down 17.0% to 409p (31
March 2023: 493p).
· EPRA net disposal value per share(1) down 16.5% to 409p (31 March
2023: 490p).
Financing
· See-through loan to value(1) of 33.5% (31 March 2023: 27.5%).
· See-through net borrowings(1) of £249.6m (31 March 2023: £231.4m).
· Average maturity of the Group's share(1) of secured debt of 2.4 years
(31 March 2023: 2.9 years).
· 100% of drawn debt protected by interest rate hedging to expiry of
facilities.
· Gain in valuation of derivative financial instruments of £2.1m
(2022: £26.6m).
· See-through average cost of secured facilities(1) of 3.3% (31 March
2023: 3.4%).
· Group's share(1) of cash and undrawn bank facilities of £226.7m (31
March 2023: £244.2m).
Portfolio Update
· IFRS investment property portfolio value of £595.1m (31 March 2023:
£681.7m).
· Our see-through investment portfolio(1), valued at £745.6m (31 March
2023: £839.5m), declined 11.8% with yield expansion of 46bps offset by 1.8%
ERV(1) growth.
· See-through portfolio WAULT(1) of 4.6 years (31 March 2023: 5.0
years).
Sustainability Highlights
· Good progress against targets set out in sustainability strategy "Built
for the Future" and our aim to be a net zero carbon business by 2030.
· Ranked 1(st) against our peers in the UK Office Listed sector for
standing investments, as measured by GRESB, scoring 87% and receiving a 4 Star
rating. Our developments received a score of 92% and also received a 4 Star
rating.
· Retention of EPRA Sustainability BPR Gold rating.
Interim Dividend Timetable
Announcement date 22 November 2023
Ex-dividend date 30 November 2023
Record date 1 December 2023
Dividend payment date 12 January 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
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
10:00am on Wednesday 22 November 2023 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://stream.brrmedia.co.uk/broadcast/64e620a4d584ef1a8fc186ab
(https://stream.brrmedia.co.uk/broadcast/64e620a4d584ef1a8fc186ab)
Half Year Results Statement
At Helical, sustainability is at the heart of everything we do and forms one
of the key pillars of our strategy. With this in mind, we have taken the
decision to cease mailing hard copies of our half year results reports to our
Shareholders and other stakeholders unless specifically requested. Should you
wish to receive a hard copy of our Results for the Half Year to 30 September
2023 by post, please email your request to companysecretary@helical.co.uk
(mailto:companysecretary@helical.co.uk) . An electronic version of our Results
for the Half Year to 30 September 2023 is available on our website
(https://www.helical.co.uk/investors/results-and-presentations/
(https://www.helical.co.uk/investors/results-and-presentations/) ).
1. See Glossary for definition of terms. These interim condensed
consolidated financial statements have been prepared in accordance with IAS 34
Interim Financial Reporting as adopted by the UK and the Disclosure Guidance
and Transparency Rules sourcebook of the UK's Financial Conduct Authority. In
common with usual and best practice in our sector, alternative performance
measures have also been provided to supplement IFRS, some of which are based
on the recommendations of the European Public Real Estate Association
("EPRA"), with others designed to give additional information about the
Group's share of assets and liabilities, income and expenses in subsidiaries
and joint ventures.
Chief Executive's Statement
Overview
During the six months to 30 September 2023, there has been a painful
readjustment in the investment market as valuation yields have increased to
reflect movements in ten year gilts and five year swap rates, the pricing of
which is correlated to real estate property yields.
There are signs, however, with inflation falling and predictions that CPI will
be in low single figures by the end of 2024, that base rates have peaked and
may start to fall sooner than the "higher for longer" commentators suggest,
allowing yields to stabilise.
At Helical, the portfolio has seen an outward yield adjustment of 46bps since
31 March 2023, offset by 1.8% 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
has allowed us to regain control of the space, shortly before the tenant went
into Chapter 11 in the US, and it enables us to determine the best future
leasing strategy for 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 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.
The Half Year at Helical has also seen significant progress made across the
development pipeline, including signing the joint venture with TfL's property
company, "Places for London", and reviewing and refining plans for each of our
projects. The selection of Helical as the joint venture partner for Places for
London was a significant milestone, boosting our development pipeline by
almost 600,000 sq ft, with the potential for additional schemes to be added to
the joint venture in the future. This collaboration with TfL, one of London's
largest landowners, is an endorsement of the Helical brand and recognises our
track record of producing "best-in-class" successful developments across
central London over many years.
Results for the Half Year
The loss after tax for the half year to 30 September 2023 was £93.1m (2022:
profit £17.2m).
The see-through Total Property Return of -£84.8m (2022: +£4.0m),
incorporating the Group's share of results of its joint ventures, includes
see-through net rental income of £12.4m (2022: £18.2m), while developments
generated see-through losses of £0.5m (2022: profit of £0.9m). The
see-through net loss on sale and revaluation of the investment portfolio was
£96.7m (2022: £15.1m).
See-through recurring administration costs, excluding performance related
awards and NIC, were down 16.1% to £4.8m (2022: £5.8m). Including the charge
for share based payments and NIC, total see-through administration costs were
down 4.6%, to £5.8m (2022: £6.0m). Total see-through net finance costs
reduced by 22% to £5.6m (2022: £7.2m) while an increase in expected future
interest rates, as assessed at 30 September 2023, led to a £2.1m gain (2022:
£26.6m) in the valuation of the Group's derivative financial instruments.
There was an IFRS basic loss per share of 75.8p (2022: earnings of 14.1p) and
an EPRA earnings per share of 1.1p (2022: 4.8p).
On a like-for-like basis, the see-through investment portfolio fell in value
by 11.8%, reflecting yield expansion of 46bps offset by 1.8% ERV growth.
EPRA net tangible assets ("NTA") per share were down 17.0% to 409p (31 March
2023: 493p), with EPRA net disposal value ("NDV") per share down 16.5% to 409p
(31 March 2023: 490p). The Total Accounting Return ("TAR") for the Period,
being the growth in the IFRS net asset value of the Group, plus dividends paid
in the Period, was -15.9% (2022: 2.3%). Based on EPRA NTA per share, the TAR
was
-16.6% (2022: -2.5%).
Balance Sheet Strength and Liquidity
At 30 September 2023, the Group had £226.7m (31 March 2023: £244.2m) of cash
and agreed, undrawn, committed bank facilities, including its share in joint
ventures, available to fund capital works on its portfolio and future
acquisitions.
The see-through loan to value ratio ("LTV") increased to 33.5% 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 49.7% (31
March 2023: 38.0%) over the same period.
At the Period end, the average debt maturity on secured loans, on a
see-through basis, was 2.4 years (31 March 2023: 2.9 years). The average cost
of debt, on a see-through basis, at 30 September 2023 was 3.3% (31 March 2023:
3.4%).
Dividends
Helical seeks to maximise value by successfully letting redeveloped or
comprehensively refurbished 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 or losses generated
from the sale and revaluation of assets. As such both EPRA earnings and
accumulated realised capital profits are considered when determining the
payment of any dividend in excess of the Property Income Distribution
requirement.
In the Period to 30 September 2023, EPRA earnings per share fell to 1.1p
(2022: 4.8p), mainly reflecting the impact of the forfeiture of the leases to
WeWork at The Bower, EC1 and the sale of Kaleidoscope, EC1 in September 2022.
No investment assets were sold during the Period.
In the light of the reduced earnings, the Board has approved an Interim
Dividend of 3.05p per share, the same level as in 2022. This dividend is to be
paid out of EPRA earnings and accumulated realised capital profits. The
Property Income Distribution ("PID") for the six months to 30 September 2023
will be 0.50p, with the balance of the Interim Dividend of 2.55p representing
an additional ordinary dividend.
The Opportunity
Occupational demands are evolving 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 between
the "best-in-class" and the rest is accelerating with rental growth continuing
for the "best" 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.
We have experienced a further significant outward yield movement in the
Period, and while interest from potential occupiers has been encouraging,
lease negotiations are taking longer to conclude. However, having taken the
pain of reductions in value, Helical is now well positioned to drive growth
through the letting of the vacant space in its investment portfolio.
At The JJ Mack Building, EC1, a prime example of a "best-in-class" building,
recent letting progress has been encouraging and we will be c.60% let once the
current space under offer completes in December. Each letting to date has
exceeded the applicable ERV and the recent letting of the 9(th) floor sets a
record rent for the sub-market. By concluding these lettings, the existing
25bps yield differential between vacant and let space will unwind providing a
significant positive impact on valuations. Similarly, upon re-letting the
WeWork space at The Bower, EC1, the capital value will be enhanced as the
yield differential is removed and contracted rent increases towards its ERV of
c.£24m, which is significantly in excess of our total annualised recurring
administration and finance costs.
Our development pipeline is expected to provide surpluses for the foreseeable
future. Scheduled to start in 2024 and be delivered from late 2025 onwards,
this pipeline will be supplemented with additional "equity-light"
opportunities as building owners seek specialists in office 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.
The 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 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.
Gerald Kaye
Chief Executive
22 November 2023
Our Market
General overview
During the Period, the central London office market experienced significant
headwinds as geopolitical and economic events continued to weigh on sentiment
towards the sector.
While the economic environment for real estate remains challenging, the
fundamentals of the central London office occupier market remain robust with
Q3 2023 experiencing the highest levels of take-up so far this year and active
requirements surpassing 10 million sq ft as occupiers continue to seek
"best-in-class" space for their employees.
Investment Market
The investment market continues to be impacted by higher interest rates and
general economic uncertainty. Investment volumes in the three quarters to 30
September 2023 have been subdued, totalling £3.8bn in central London. This is
74% below the 10 year average as reported by CBRE. This lack of activity has
led to further uncertainty over appropriate asset valuations as comparable
evidence remains scarce.
Savills prime equivalent yields show that, over the last six months, the City
office yield has moved out 75bps to 5.25%. The MSCI London City Equivalent
Yield, which includes both prime and non-prime office buildings, has moved out
90bps over the last six months, while our portfolio yield expanded by 46bps,
highlighting that "best-in-class" yields have been less impacted.
The consensus opinion that interest rates will remain at higher levels for an
extended period has added significant costs to project appraisals, suppressing
investor appetite for new acquisitions and undertaking capital expenditure
projects of scale. However, debt markets remain open, with an increasingly
diverse lender pool seeking the opportunity to deploy capital, albeit lenders
are being increasingly discerning about their choice of counterparty.
Occupational Market
Despite a challenging economic backdrop, the occupational market has remained
relatively robust and the latest figures show, as at 30 September 2023, there
is 10.6 million sq ft of active requirements for space across central London,
up 42% compared to a year earlier. The trend towards "best-in-class" office
space continues and is evidenced by CBRE's Q3 2023 figures, showing a decline
in availability of newly completed space to 4.0 million sq ft, while
second-hand space availability stood much higher, at 17.3 million sq ft, well
above the long-term average of 11.1 million sq ft.
Banking, finance and professional services remain the most active sectors,
making up 73% of active requirements in the market as at the end of Q3 2023.
Businesses continue to encourage workers to return to the office, with an
increasing number of firms revising their working from home policies.
Occupiers remain focused upon providing their employees with the optimal
workplace environment and continue to seek buildings with the highest levels
of amenity, connectivity, service and sustainability, which align to the
characteristics of our existing portfolio and is a trend we can continue to
capitalise on through our development pipeline.
New build vacancy rates continue to remain at low levels at 1.6%, comparing
favourably to an overall vacancy rate of 9.6% (4.0% above the 10 year
average). This shortage is translating into tenants' willingness to pay
increasing rents for "best-in-class" accommodation. JLL has seen 49% of all H1
2023 letting deals completed at or above the prime rent, against a long term
average of 30% and CBRE forecast annualised rental growth of 4-5% for central
London over the next five years.
Development Pipeline
CBRE reports 3.9 million sq ft of developments and major refurbishments
completed in the first nine months of the year, marginally higher than the
comparable periods over the last two years. In addition, there is around 13.7m
sq ft of space under construction across central London, with 39% of this
space already let or under offer, further illustrating the strength of demand
for new space.
Recent sustained construction cost inflation, driven by strong demand, supply
chain disruption, tight labour markets and volatile energy costs seem to be
moderating, but when coupled with interest rate rises, the viability of
development remains challenging.
We continue to expect a clear medium term demand/supply imbalance for
"best-in-class" space of which we will look to take advantage. For many,
however, the market conditions mean new starts will be paused until it is
evident there is sufficient rental growth to support viable returns.
The challenging planning environment also continues to elongate development
timelines and limit the future pipeline of new development stock. Occupiers
continue to require newly developed or refurbished offices that are well
located and have good amenities; this will exacerbate the scarcity. The
opportunity to work with TfL to develop a portfolio of new consented schemes
adjacent to key transport infrastructure provides the opportunity to seize
upon these trends by delivering new "best-in-class" space into supply
constrained sub-markets.
Sustainability requirements will also continue to drive redevelopment with
around 75% of central London space currently below an EPC B rating, meaning
there will be significant works required to upgrade the existing unsustainable
buildings. Many assets with upcoming lease events face obsolescence and owners
will be required to invest considerable capital to bring these assets back to
the market to the appropriate standard.
Conclusion
Our portfolio focuses on "best-in-class", sustainable buildings and our
extensive development pipeline ensures that we are well placed to outperform
the market in the current environment. Furthermore, Helical has the necessary
expertise and established track record to take advantage of the opportunities
that we expect to emerge in the future, partnering with land owners to
minimise equity and maximise returns.
Sustainability and Net Zero Carbon
We continue to make good progress against the targets we set out in our
sustainability strategy "Built for the Future" and our aim to become a net
zero carbon business by 2030. With a pipeline of new developments and major
refurbishments, we are continuing to challenge carbon emissions across these
projects with the aspiration of meeting our embodied carbon target of
600kgco(2)e/m(2) and energy intensity target of 90kWh/m(2).
For GRESB, we have again been ranked the number one company in the UK Office
Listed sector, scoring 87% and receiving a 4 Star rating in the annual
sustainability performance index for our standing investment properties.
Alongside this, we received a score of 92% for our development activities
resulting in a 4 Star rating. This downgrade from the prior year reflects the
application of more onerous criteria and we have identified where improvements
can be made for the future.
For our sustainability reporting, we received a Gold Award for the third
consecutive year from EPRA's Sustainability Best Practice Recommendations
(sBPR). The EPRA sBPR is intended to raise the standards and consistency of
sustainability reporting for listed real estate companies across Europe.
Our portfolio is well placed in terms of energy efficiency, with 99% of our
assets (by value) already compliant with the proposed legislative requirement
that all rented commercial buildings achieve a minimum EPC rating of B by
2030. Research has highlighted that c.75% of current office stock in London
has an EPC C or below, with significant capital outlay likely to be required
to take non-compliant buildings up to the minimum standard. In addition to
strong EPC ratings, 99% of our assets (by value) hold a BREEAM certification,
with 88% being "Outstanding" or "Excellent" (excluding 100 New Bridge Street,
EC4, which is to be refurbished).
Furthermore, in partnership with Places for London, TfL's commercial property
company, we will deliver market leading buildings with exemplary ESG
credentials, including BREEAM, NABERS and WELL certifications. It is intended
that all sites will be developed on a net zero carbon basis and promote
circular economy principles, operating to the highest efficiency with the aid
of all-electric solutions and on-site renewables, as well as promoting health
and wellbeing.
Helical's Property Portfolio - 30 September 2023
Property Overview
Helical's "best-in-class" portfolio comprises income-producing multi-let
offices, refurbishments and developments across central London. We have a
development pipeline of 790,000 sq ft of consented schemes following the
establishment of our strategic joint venture with TfL's commercial property
company, Places for London. Our portfolio is focused on areas of central
London where we see strong tenant demand and growth potential for our amenity
rich, technologically advanced and highly sustainable office schemes.
The Platinum Portfolio
On 11 July 2023, contracts were signed confirming Helical as Places for
London's commercial office joint venture partner. This long term partnership
will see the delivery of new high-quality and sustainable office space above
key transport hubs. At inception, the joint venture consists of three new
commercial office development opportunities, namely:
Bank OSD, EC4
Located above the recently opened Bank Station entrance on Cannon Street, this
eight storey office development will deliver 142,000 sq ft NIA over seven
office floors, with typical floorplates of 22,500 sq ft and 7,653 sq ft of
terracing over three floors. We are looking to make minor changes to the
existing permission to enhance the arrival facilities and amenity and
incorporate a shared space on Abchurch Lane. A start on site is envisaged in
October 2024.
Southwark OSD, SE1
Located above Southwark Station, the scheme has consent for a 222,000 sq ft
NIA office building over 17 storeys. Feasibility studies are underway, looking
at alternative approaches for the site's development. It is to be drawn down
in July 2025 and it is expected that any revision to the planning permission
will be obtained by then.
Paddington OSD, W2
The 235,000 sq ft NIA scheme is to be built over the canal level eastern
entrance to Paddington Station, opposite the Brunel Building. Planning
permission was granted in 2015 for the 19 storey building with 15 floors of
office accommodation and we are looking at making minor changes to this
consent in order to provide a visually striking, "best-in-class" scheme with
enhanced amenities and terracing. The site drawdown is scheduled for January
2026.
The JJ Mack Building, EC1
Our most recently completed office development, The JJ Mack Building, is one
of London's smartest and most sustainable new office buildings. The 206,050 sq
ft office building was developed in a joint venture with AshbyCapital.
The sixth and seventh floors, comprising 37,880 sq ft, are let to Partners
Group, a leading global private markets firm, for their new London office and
they are progressing their fit-out works with the aim of taking occupation in
Q1 2024.
Subsequent to the Period end, we completed a letting of the ninth floor,
comprising 13,408 sq ft, to Corio Generation, a subsidiary of Macquarie Group.
In addition, the first, second and third floors are under offer and due to
formally sign in early December.
The building is situated just 150m from Farringdon Station and the Elizabeth
Line, providing occupiers with unparalleled connectivity. Its construction has
utilised design, technology and operational practices that have created a
market leading sustainable property. This commitment to sustainability has
been recognised by a BREEAM 2018 New Construction "Outstanding" rating at
design stage which is currently being certified, an EPC A rating and an
anticipated NABERS 5 Star rating. It also provides a technologically
pioneering environment for occupiers with smart building systems and a fully
integrated building management app for tenants.
100 New Bridge Street, EC4
We received planning approval from The City of London in June 2023 for our
next "best-in-class" office development, located adjacent to City Thameslink
and a short walk from Farringdon and Blackfriars stations. Two new floors will
be added to the building, increasing the net internal area from 167,026 sq ft
to 194,000 sq ft. The main construction contract and development financing
facility are being finalised so that we can be ready to start construction in
early 2024.
The major refurbishment will achieve the highest standards of sustainability
through the retention of the existing structure and the reuse of materials
where possible. Three facades will be reclad to significantly increase the
thermal performance of the building and the building systems will be replaced
with the latest technology to provide the best operational energy efficiency.
The new building will provide high-quality tenant amenities, including
extensive cycle parking, changing facilities and extensive outside space to
create a new "best-in-class" office building.
The Bower, EC1
The Bower comprises 312,573 sq ft of innovative, high quality office space
along with 21,059 sq ft of restaurant and retail space. The estate is located
adjacent to the Old Street roundabout which has been undergoing significant
works that are due to complete in early 2024, 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 10,298 sq ft of retail space across the buildings with
these units also being fully let following two lettings in the Period 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 the Period, we have extended the lease on the 17(th) floor with Verkada by
10 years and facilitated their expansion into the 16(th) floor. The 14(th)
floor is now under offer to Incubeta who are relocating from the 16(th) floor.
These asset management initiatives extend the WAULT across 32,201 sq ft and
achieve rents at a premium to the March 2023 ERVs.
On 27 October 2023, following non-payment of rent for the September quarter,
we exercised our right to forfeit the individual leases for six floors let to
WeWork. Subsequently, we entered into a short-term licence arrangement with
them, to re-occupy the space, following Helical's receipt of a fee equivalent
to the whole of the September quarter's rent and service charge due under the
terms of the previous contractual arrangements.
Barts Square, EC1
In the Period, we completed the sale of the last residential unit thereby
ending our involvement in the residential elements of the scheme.
The retail component has nine units, with a variety of occupiers including
Michelin-Starred Restaurant St Barts, Lap Bikes, MyLuthier and Athletic
Fitness. One unit has become available in the Period, with an additional unit
under offer to Italian Taste as at 30 September 2023. Since the Period end, we
have sold the long leasehold interest in the retail units for their book value
of £7m. This was our last remaining interest in Barts Square.
This enables us to conclude our joint venture with Baupost which started in
2011. This joint venture 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.
The Loom, E1
This former Victorian wool warehouse offers 108,555 sq ft of office space and
we continue with our active management approach to this asset, with vacancy
currently at 37%. Whilst 16,009 sq ft became vacant during the Period, we have
completed three new lettings, totalling 7,443 sq ft, in line with March 2023
ERVs.
25 Charterhouse Square, EC1
25 Charterhouse Square comprises 42,921 sq ft of offices adjacent to the newly
operational Farringdon East Elizabeth Line station, overlooking the historic
Charterhouse Square. The building is 85% let with the fourth floor available
following a comprehensive refurbishment.
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.
Portfolio Analytics
See-through Total Portfolio by Fair Value
Investment % Development % Total
£m £m £m %
London Offices
- Completed properties 626.4 84.0 - 0.0 626.4 84.0
- Development pipeline 119.0 16.0 - 0.0 119.0 16.0
Total London Core 745.4 100.0 - 0.0 745.4 100.0
Other 0.2 0.0 0.3 100.0 0.5 0.0
Total Non-Core Portfolio 0.2 0.0 0.3 100.0 0.5 0.0
Total 745.6 100.0 0.3 100.0 745.9 100.0
See-through Land and Development Portfolio
Book value Fair value Surplus Fair value
£m £m £m %
Land and developments 0.0 0.3 0.3 100.0
Total 0.0 0.3 0.3 100.0
Capital Expenditure
We have a committed and planned development and refurbishment programme.
Property Capex Remaining Pre-redeveloped space New Total Commencement
date
budget spend sq ft space completed
space
(Helical share) (Helical share) sq ft
sq ft
£m £m
Investment - committed site acquisitions
- Bank OSD, EC4 32.9 32.9 - 142,000 142,000 Q4 2024
- Southwark OSD, SE1 11.0 11.0 - 222,000 222,000 Q4 2025
- Paddington OSD, W2 30.2 30.2 - 235,000 235,000 Q2 2026
Investment - planned capital expenditure
- 100 New Bridge Street, EC4 134.9 120.6 167,026 26,974 194,000 Q1 2024
- Bank OSD, EC4 59.3 59.3 - 142,000 142,000 Q4 2024
- Southwark OSD, SE1 123.9 123.9 - 222,000 222,000 Q4 2025
- Paddington OSD, W2 123.2 123.2 - 235,000 235,000 Q2 2026
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 84.0 26.6 78.8 30.9(1) 81.2 43.6 71.0 0.3
- Development pipeline 16.0 7.1 21.1 7.1(2) 18.7 17.8 28.9 5.6
Total London 100.0 33.7 99.9 38.0 99.9 61.4 99.9 1.8
Other 0.0 0.0 0.1 0.0 0.1 0.1 0.1 0.0
Total 100.0 33.7 100.0 38.0 100.0 61.5 100.0 1.8
(1 ) Following the forfeiture of the leases to WeWork at The Bower,
EC1 post Period end, the contracted rent reduced to £26.9m.
(2) In accordance with the business plan to redevelop 100 New Bridge
Street, EC4 the Baker McKenzie lease will terminate on 31 December 2023,
reducing the contracted rent by £7.1m.
See-through
total portfolio contracted rent
£m
Rent lost at break/expiry (1.7)
Rent reviews and uplifts on lease renewals 0.1
New lettings 0.6
Net decrease in the period (1.0)(1)
(1 ) Following the forfeiture of the leases to WeWork at The Bower,
EC1 post Period end, the contracted rent reduced by a further £4.0m.
Investment Portfolio
Valuation Movements
Valuation Investment portfolio Investment portfolio
change weighting weighting
% 30 September 2023 31 March 2023
% %
London Offices
- Completed properties (10.6) 84.0 83.4
- Development pipeline (17.7) 16.0 16.6
Total (11.8) 100.0 100.0
Portfolio Yields
EPRA topped EPRA topped Reversionary Reversionary True equivalent yield True equivalent yield
up NIY up NIY yield yield 30 September 31 March
30 September 31 March 30 September 31 March 2023 2023
2023 2023 2023 2023 % %
% % % %
London Offices
- Completed properties 4.0 4.1 6.3 5.7 6.0 5.6
- Development pipeline 1.4 3.6 5.7 5.1 5.4 4.9
Total 3.5 4.0 6.1 5.5 5.9 5.4
See-through Capital Values, Vacancy Rates and Unexpired Lease Terms
Capital value Capital value Vacancy rate Vacancy rate WAULT WAULT
30 September 31 March 30 September 31 March 30 September 31 March
2023 2023 2023 2023 2023 2023
£ psf £ psf % % Years Years
London Offices
- Completed properties 1,058 1,166 22.8 19.8 5.6 5.8
- Development pipeline 712 835 2.6 2.6 0.2 0.7
Total 994 1,104 18.5(1) 16.1 4.6(2) 5.0
(1) Vacancy rate increases to 26.0% following the forfeiture of the WeWork
leases.
(2 ) Total WAULT falls to 3.2 years following the forfeiture of the
WeWork leases.
See-through Lease Expiries or Tenant Break Options
Half year to Year to Year to Year to Year to 2028
2024 2025 2026 2027 2028 onward
% of rent roll 25.7 13.1 3.3 13.5 32.8 11.7
Number of leases 18 15 8 10 14 16
Average rent per lease (£) 439,953 268,980 126,469 414,517 722,555 224,462
Includes impact of the forfeiture of the WeWork leases and the expiry of the
lease to Baker McKenzie on 31 December 2023.
Top 15 Tenants
At 30 September 2023, the top 15 tenants account for 81.6% of the total rent
roll.
Tenant Tenant industry Contracted rent Rent roll
Rank £m %
1 Baker McKenzie* Legal services 7.0 18.4
2 Farfetch Online retail 4.3 11.4
3 WeWork* Flexible offices 4.0 10.5
4 Brilliant Basics Technology 2.4 6.2
5 VMware Technology 2.2 5.7
6 Partner Group Financial Services 1.9 5.0
7 Anomaly Marketing 1.5 3.9
8 Viacom Technology 1.2 3.1
9 Allegis Media 1.1 2.8
10 Denstu Marketing 1.1 2.8
11 Stripe Financial services 1.0 2.6
12 Verkada Technology 1.0 2.5
13 Incubeta Marketing 0.9 2.4
14 Openpayd Financial services 0.9 2.3
15 Stenn Technology 0.8 2.0
Total 31.3 81.6
* Leases expire on or before 31 December 2023.
Letting Activity - New Leases Completed During the Period
Area Contracted rent Rent Change to Average
sq ft (Helical's share) £ psf 31 March 2023 ERV lease term to expiry
£ (exc Plug and Play and managed lettings) Years
%
Investment Properties
London Offices
- The Loom, E1 7,443 446,803 60.03 0.1 4.0
London Offices Total 7,443 446,803 60.03 0.1 4.0
London Retail
- The Warehouse, The Bower, EC1 2,938 130,000 44.25 (3.7) 5.0
London Retail Total 2,938 130,000 44.25 (3.7) 5.0
Total 10,381 576,803 55.56 (2.1) 4.2
Financial Review
IFRS Performance EPRA Performance
Loss after tax EPRA profit
£93.1m (2022: profit of £17.2m)
£1.4m (2022: £5.8m)
Loss per share (EPS) EPRA EPS
75.8p (2022: earnings of 14.1p)
1.1p (2022: 4.8p)
Diluted NAV per share EPRA NTA per share
409p (31 March 2023: 489p)
409p (31 March 2023: 493p)
Total Accounting Return Total Accounting Return on EPRA NTA
-15.9% (2022: 2.3%) -16.6% (2022: -2.5%)
Overview
Against a challenging backdrop, the results for the half year reflect the
outward yield shift experienced across the office sector through investment
property valuation losses, coupled with the effect on net rental income of the
forfeiture of the WeWork leases. This impact was partially offset by
reductions in administrative costs (excluding performance related awards) and
finance costs. The rise in interest rates during the Period has resulted in a
small gain on the fair value of derivatives, which continue to protect the
Company against the current high level of interest rates.
Results for the Period
The IFRS loss for the Period of £93.1m (2022: profit of £17.2m) includes
revenue from rental income, service charges and development management fees of
£19.2m, offset by direct costs of £7.8m to give a net property income of
£11.4m (2022: £18.8m). Other income of £0.9m (2022: £nil), from the
sub-letting of part of the Company's head office, was recognised in the
Period. There was a net loss on sale and revaluation of investment properties
of £93.4m (2022: £30.4m) and the loss from joint venture activities was
£4.5m (2022: gain of £15.1m). Administration expenses of £5.6m (2022:
£5.6m) and net finance costs of £4.0m (2022: £7.3m), were offset by a gain
in the fair value of derivatives of £2.1m (2022: £26.6m).
The Group holds a significant proportion of its property assets in joint
ventures. As the risk and rewards of ownership of these underlying properties
are the same as those it wholly owns, Helical supplements its IFRS disclosure
with a "see-through" analysis of alternative performance measures, which looks
through the structure to show the Group's share of the underlying business.
The see-through results for the Period to 30 September 2023 include net rental
income of £12.4m, a net loss on sale and revaluation of the investment
portfolio of £96.7m and development losses of £0.5m, leading to a Total
Property Return of -£84.8m (2022: £4.0m). Other income of £0.9m less total
see-through administration costs of £5.8m (2022: £6.0m) and see-through net
finance costs of £5.6m (2022: £7.2m) plus see-through gains from the
mark-to-market valuation of derivative financial instruments of £2.1m (2022:
£26.6m) contributed to an IFRS loss of £93.1m (2022: profit of £17.2m).
The interim dividend, payable on 12 January 2024, will be 3.05p per share
(2022: 3.05p), unchanged from last year.
The EPRA net tangible asset value per share decreased by 17% to 409p (31 March
2023: 493p).
The Group's investment portfolio, including its share of assets held in joint
ventures, decreased to £745.6m (31 March 2023: £839.5m) primarily due to the
net loss on revaluation of the investment portfolio of £96.7m after lease
incentives of £3.5m, offset by capital expenditure on the investment
portfolio of £6.3m.
The Group's see-through loan to value at 30 September 2023 was 33.5% (31 March
2023: 27.5%). The Group's weighted average cost of debt at 30 September 2023
was 3.3% (31 March 2023: 3.4%) and the weighted average debt maturity was 2.4
years (31 March 2023: 2.9 years).
At 30 September 2023, the Group had unutilised bank facilities of £187.5m and
cash of £39.2m on a see-through basis. These are primarily available to fund
future property acquisitions and capital expenditure.
Total Property Return
We calculate our Total Property Return to enable us to assess the aggregate of
income and capital profits made each period from our property activities. Our
business is primarily aimed at producing surpluses in the value of our assets
through asset management and development, with the income side of the business
seeking to cover our annual administration and finance costs.
Half year to Half year to
2023 2022
£m £m
Total Property Return (84.8) 4.0
Total Accounting Return
Total Accounting Return is the growth in the net asset value of the Group plus
dividends paid in the Period, expressed as a percentage of the net asset value
at the beginning of the Period. The metric measures the growth in
Shareholders' Funds in each period and is expressed as an absolute percentage.
Half year to Half year to
2023 2022
% %
Total Accounting Return on IFRS net assets (15.9) 2.3
Total Accounting Return on EPRA net tangible assets is the growth in the EPRA
net tangible asset value of the Group plus dividends paid in the period,
expressed as a percentage of the EPRA net tangible asset value at the
beginning of the period.
Half year to Half year to
2023 2022
% %
Total Accounting Return on EPRA net tangible assets (16.6) (2.5)
Earnings/(Loss) Per Share
The IFRS earnings/(loss) per share decreased from earnings of 14.1p to a loss
of 75.8p and is based on the after tax (loss)/earnings attributable to
ordinary Shareholders divided by the weighted average number of shares in
issue during the Period.
On an EPRA basis, the earnings per share is 1.1p compared to 4.8p in 2022,
reflecting a decrease in the Group's share of net rental income to £12.4m
(2022: £18.2m) plus development losses of £0.5m (2022: profit of £0.9m),
but excluding losses on sale and revaluation of Investment properties of
£96.7m (2022: £15.1m).
Net Asset Value
IFRS diluted net asset value per share decreased to 409p per share (31 March
2023: 489p) and is a measure of Shareholders' Funds divided by the number of
shares in issue at the Period end, adjusted to allow for the effect of all
dilutive share awards.
EPRA net tangible asset value per share decreased to 409p per share (31 March
2023: 493p). This
movement arose principally from a total comprehensive expense (retained
losses) of £93.1m (2023:
£64.5m), less £9.5m of dividends (2023: £13.8m).
EPRA net disposal value per share decreased by 16.5% to 409p per share (31
March 2023: 490p).
Income Statement
Rental Income and Property Overheads
Gross rental income for the Group in respect of wholly owned properties
decreased to £12.8m (2022: £19.2m), with gross rents in joint ventures
increasing to £0.9m (2022: £0.3m). Property overheads in respect of wholly
owned assets and in respect of those assets in joint ventures remained at
£1.3m (2022: £1.3m). Overall, see-through net rents decreased to £12.4m
(2022: £18.2m).
Included within gross rental income is a reduction of £4.3m (30 September
2022: addition of £2.5m, 31 March 2023: addition of £1.7m) of accrued income
for rent free periods including an adjustment of £2.9m relating to the
forfeited leases to WeWork.
The table below demonstrates the movement of the see-through accrued income
balance for rent free periods granted and the respective rental income
adjustment over the period to 31 March 2027, based on the tenant leases as at
30 September 2023. The actual adjustment will vary depending on lease events
such as new lettings and early terminations and future acquisitions or
disposals.
Accrued Adjustment to rental income
income £000
£000
6 months to 31 March 2024 10,678 (68)
Year to 31 March 2025 10,610 (328)
Year to 31 March 2026 10,282 (2,188)
Year to 31 March 2027 8,094 (2,125)
Rent Collection
March 2023 - September 2023
quarters
%
Rent collected to date 98.8
Rent under payment plan 0.8
Rent under discussion 0.4
At 22 November 2023, the Group had collected 98.8% of all rent contracted and
payable for the March, June and September 2023 quarters.
Development Profits
During the Period, a profit of £0.6m on a legacy retail scheme at East Ham
and a close out payment for the site at Kingswinford of £0.1m were
recognised. These were offset by a write back of the expected development
management fee at The JJ Mack Building, EC1 of £1.2m, recognised in previous
periods, which led to a net development loss of £0.5m (2022: profit of
£0.9m).
Share of Results of Joint Ventures
The revaluation of our Investment properties held in joint ventures generated
a deficit of £3.3m (2022: surplus of £15.3m). A profit of £0.1m (2022:
profit of £0.2m) was recognised in respect of the final apartment sale at our
Barts Square, EC1 residential development. Net rental income of £0.5m (2022:
£0.1m) was recognised.
Finance, administration and other sundry costs totalling £1.8m (2022: £0.3m)
were incurred and after a tax charge of £nil (2022: £0.1m), there was a net
loss from our joint ventures of £4.5m (2022: profit of £15.1m).
Loss on Sale and Revaluation of Investment Properties
The loss on valuation of our investment portfolio on a see-through basis
resulted in an overall loss on sale and revaluation, including in joint
ventures, of £96.7m (2022: £15.1m).
Administrative Expenses
Administration costs in the Group, before performance related awards,
decreased by 12.5% from £5.3m to £4.7m.
Performance related share awards and bonus payments, before National Insurance
costs, increased to £0.8m (2022: £0.2m). Of this amount, £0.7m (2022:
£0.1m), being the charge for share awards under the Performance Share Plan,
which, currently are not expected to vest, is expensed through the Income
Statement but added back to Shareholders' Funds through the Statement of
Changes in Equity.
2023 2022
£000 £000
Administrative expenses (excluding performance related awards) 4,655 5,323
Performance related awards 793 220
NIC 122 41
Group 5,570 5,584
In joint ventures 188 452
Total 5,758 6,036
Finance Costs, Finance Income and Change in Fair Value of Derivative Financial
Instruments
Net finance costs excluding changes in the fair value of derivative financial
instruments, including in joint ventures, reduced to £5.6m (2022: £7.2m).
Group 2023 2022
£000
£000
Interest payable on secured bank loans (2,878) (5,214)
Other interest payable and similar charges (1,487) (2,056)
Total interest payable before cancellation of loans (4,365) (7,270)
Cancellation of loans - (132)
Total finance costs (4,365) (7,402)
Finance income 328 96
Net finance costs (4,037) (7,306)
Change in fair value of derivative financial instruments 2,098 26,564
Finance costs, net of finance income and change in fair value of derivative (1,939) 19,258
financial instruments
Joint Venture
Interest payable on secured bank loans (1,502) (1,619)
Other interest payable and similar charges (104) (101)
Interest capitalised - 1,815
Total finance costs (1,606) 95
Finance income 18 6
Finance costs, finance income and change in fair value of derivative financial (1,588) 101
instruments
Total finance costs, net of finance income (5,625) (7,205)
Total finance costs, net of finance income and change in fair value of (3,527) 19,359
derivative financial instruments
The movement upwards in medium and long-term interest rate projections during
the Period contributed to a gain of £2.1m (2022: £26.6m) on the
mark-to-market valuation of the derivative financial instruments.
Taxation
The Group elected to become a REIT, effective from 1 April 2022, and is now
exempt from UK corporation tax on the profits/(losses) of its property
activities that fall within the REIT regime. Helical will continue to pay
corporation tax on its profits/(losses) that are not within this regime.
As a consequence, the tax charge for the Period was £nil (2022: £nil).
Dividends
The Board has declared an interim dividend for the Period of 3.05p per share,
the same level as in 2022. This dividend is to be paid out of EPRA earnings
and accumulated realised capital profits. The Property Income Distribution
("PID") for the Period will be 0.5p, with the balance of 2.55p representing an
additional ordinary dividend.
Balance Sheet
Shareholders' Funds
Shareholders' Funds at 31 March 2023 were £608.7m. The Group's loss for the
Period, representing the total comprehensive expense for the Period, reduced
funds by £93.1m (2022: increased by profit of £17.2m). Movements in reserves
arising from the Group's share schemes decreased funds by £3.8m. The Company
paid dividends to Shareholders during the Period of £9.5m. The net decrease
in Shareholders' Funds from Group activities during the Period was £106.4m to
£502.3m.
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 6,822 - 6,822 (8) - 6,814
- joint ventures - (558) (558) (15) - (573)
Letting costs amortised - wholly owned (56) - (56) - - (56)
- joint ventures - (12) (12) - - (12)
Revaluation (deficit)/surplus - wholly owned (97,666) - (97,666) - 4,299 (93,367)
- joint ventures - (2,505) (2,505) - (804) (3,309)
Valuation at 30 September 2023 602,650 142,900 745,550 6,458 (10,677) 741,331
The Group expended £6.8m on capital works across the investment portfolio, at
100 New Bridge Street, EC4 (£5.1m), The Bower, EC1 (£0.6m), The Loom, E1
(£0.6m), and The Power House, W4 (£0.5m). These costs were partially offset
by a reversal of costs at The JJ Mack Building, EC1 of £0.5m.
Revaluation losses resulted in a £100.2m decrease in the see-through fair
value of the portfolio, before lease incentives, to £745.6m (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 £741.3m (31 March 2023:
£831.8m).
Debt and Financial Risk
In total, the see-through outstanding debt at 30 September 2023 of £292.4m
(31 March 2023: £290.4m) had a weighted average interest cost of 3.3% (31
March 2023: 3.4%) and a weighted average debt maturity of 2.4 years (31 March
2023: 2.9 years).
Debt Profile at 30 September 2023 - Including Commitment Fees but Excluding
the Amortisation of Arrangement Fees
Total Total Available Weighted average interest rate Average maturity of borrowings
facility utilised facility % Years
£000s £000s £000s
£400m Revolving Credit Facility 400,000 230,000 170,000 3.0 2.8
Total wholly owned 400,000 230,000 170,000 3.0 2.8
In joint ventures 69,900 62,366 7,534 4.2 0.8
Total secured debt 469,900 292,366 177,534 3.3 2.4
Working capital 10,000 - 10,000 - -
Total unsecured debt 10,000 - 10,000 - -
Total debt 479,900 292,366 187,534 3.3 2.4
Secured Debt
The Group arranges its secured investment and development facilities to suit
its business needs as follows:
- £400m Revolving Credit Facility
The Group has a £400m Revolving Credit Facility in which all of its wholly
owned investment assets are secured. The value of the Group's properties
secured in this facility at 30 September 2023 was £603m (31 March 2023:
£693m) with a corresponding loan to value of 38.2% (31 March 2023: 33.2%).
The average maturity of the facility at 30 September 2023 was 2.8 years (31
March 2023: 3.3 years) with a weighted average interest rate of 3.0% (31 March
2023: 3.1%).
- Joint Venture Facilities
Where the Group holds investment and development properties in joint venture
with third parties it includes its share, in proportion to its economic
interest, of the debt associated with each asset. The average maturity of the
Group's share of bank facilities in joint ventures at 30 September 2023 was
0.8 years (31 March 2023: 1.3 years) with a weighted average interest rate of
4.2% (31 March 2023: 4.2%). The average interest rate will fall as The JJ
Mack Building, EC1 development facility is drawn down and would be 4.00% on a
fully utilised basis, reducing to 2.25% once the building is let. There is a
one-year extension option in this facility.
Unsecured Debt
The Group's unsecured debt is £nil (31 March 2023: £nil).
Cash and Cash Flow
At 30 September 2023, the Group had £17.5m (31 March 2023: £28.2m) of cash
deposits available to deploy without restrictions, £7.7m (31 March 2023:
£9.1m) of rent deposits from tenants and a further £14.0m (31 March 2023:
£17.4m) of rent in bank accounts available to service payments under loan
agreements, cash held at managing agents and cash held in joint ventures.
Furthermore, the Group had £187.5m (31 March 2023: £189.5m) of loan
facilities available to fund future acquisitions.
Net Borrowings and Gearing
Total gross borrowings of the Group, including in joint ventures, have
slightly increased from £290.4m to £292.4m during the Period to 30 September
2023. After deducting cash balances of £39.2m (31 March 2023: £54.7m) and
unamortised refinancing costs of £3.6m (31 March 2023: £4.3m), net
borrowings increased from £231.4m to £249.6m. The see-through net gearing of
the Group, including in joint ventures, increased from 38.0% to 49.7%.
30 September 31 March
2023 2023
See-through gross borrowings £292.4m £290.4m
See-through cash balances £39.2m £54.7m
Unamortised refinancing costs £3.6m £4.3m
See-through net borrowings £249.6m £231.4m
Shareholders' funds £502.3m £608.7m
See-through gearing - IFRS net asset value 49.7% 38.0%
Hedging
At 30 September 2023, the Group had £230.0m (31 March 2023: £230.0m) of
borrowings protected by interest rate swaps, with an average effective
interest rate of 2.5% (31 March 2023: 2.6%) and average maturity of 2.8 years.
The Group had no floating rate debt (31 March 2023: £nil). In our joint
ventures, the Group's share of fixed rate debt was £62.4m (31 March 2023:
£60.4m) at 0.5% plus margin with an effective rate at 31 March 2023 of 4.2%
and no floating rate debt (31 March 2023: none).
30 September Effective interest rate 31 March Effective interest rate
2023 % 2023 %
£m £m
Fixed rate debt
- Secured borrowings 230.0 2.5 230.0 2.6
Total 230.0 3.0(1) 230.0 3.1(1)
In joint ventures
- Fixed rate 62.4 4.2(2) 60.4 4.2(2)
Total borrowings 292.4 3.3 290.4 3.4
(1) This includes commitment fees on undrawn facilities.
(2) This includes commitment fees on undrawn facilities. Excluding these
would reduce the effective rate to 4.00% (31 March 2023: 4.00%).
Tim Murphy
Chief Financial Officer
22 November 2023
Statement of Directors' Responsibilities
We confirm that to the best of our knowledge:
a) The condensed unaudited consolidated financial statements have been
prepared in accordance with IAS 34 Interim Financial Reporting;
b) The interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events and their
impact during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
c) The interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
On behalf of the Board
Tim Murphy
Chief Financial Officer
22 November 2023
Independent Review Report to Helical Plc
Conclusion
We have been engaged by Helical plc ('the Company') to review the condensed
set of financial statements of the Company and its subsidiaries (the 'Group')
in the half year financial report for the six months ended 30 September 2023
which comprises the unaudited consolidated income statement, unaudited
consolidated balance sheet, unaudited consolidated cash flow statement,
unaudited consolidated statement of changes in equity and notes to the half
year results. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent material
misstatements of fact or material inconsistencies with the information in the
condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2023 is not prepared,
in all material respects, in accordance with International Accounting Standard
34, "Interim Financial Reporting" as contained in UK-adopted International
Accounting Standards, and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ('ISRE (UK) 2410') issued for use in
the United Kingdom. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in Note 1, the annual financial statements of the Group are
prepared in accordance with UK-adopted International Accounting Standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting" as contained in UK-adopted International
Accounting Standards.
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the Group and
the Company to cease to continue as a going concern.
Responsibilities of Directors
The half-yearly financial report, is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with International Accounting
Standard 34, "Interim Financial Reporting" as contained in UK-adopted
International Accounting Standards and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the Group's and the Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the Group or the Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's Responsibilities for the Review of the Financial Information
In reviewing the half-yearly financial report, we are responsible for
expressing to the Company a conclusion on the condensed set of financial
statements in the half-yearly financial report. Our conclusion, including our
Conclusions Relating to Going Concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our Report
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim Financial
Information performed by the Independent Auditor of the Entity". Our review
work has been undertaken so that we might state to the Company those matters
we are required to state to them in an independent review report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company, for our review work,
for this report, or for the conclusions we have formed.
RSM UK Audit LLP
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
22 November 2023
Unaudited Consolidated Income Statement
For the Half Year to 30 September 2023
Notes Half Year to Half Year to Year to
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Revenue 3 19,224 23,461 49,848
Cost of sales 3 (7,857) (4,623) (13,567)
Net property income 4 11,367 18,838 36,281
Share of results of joint ventures 12 (4,499) 15,101 3,494
Other income 3 905 - -
7,773 33,939 39,775
Gain on sale of Investment properties 5 - 4,606 4,564
Revaluation loss on Investment properties 11 (93,367) (34,994) (97,854)
(85,594) 3,551 (53,515)
Administrative expenses 6 (5,570) (5,584) (12,835)
Operating loss (91,164) (2,033) (66,350)
Net finance costs and change in fair value of derivative financial instruments 7 (1,939) 19,258 1,839
(Loss)/profit before tax (93,103) 17,225 (64,511)
Tax on (loss)/profit on ordinary activities 8 - - -
(Loss)/profit for the period (93,103) 17,225 (64,511)
(Loss)/earnings per share 10
Basic (75.8)p 14.1p (52.6)p
Diluted (75.8)p 14.0p (52.6)p
There were no items of comprehensive income in the current or prior periods
other than the (loss)/profit for the Period and, accordingly, no Statement of
Comprehensive Income is presented.
Unaudited Consolidated Balance Sheet
At 30 September 2023
Notes At At At
30 September 2023 30 September 2022 31 March
£000 Restated(1) 2023
£000 £000
Non-current assets
Investment properties 11 595,073 738,518 681,682
Owner occupied property, plant and equipment 3,631 4,358 4,351
Investment in joint ventures 12 82,141 105,895 87,330
Other investments 13 434 306 353
Derivative financial instruments 20 25,343 36,758 23,245
Trade and other receivables 15 1,449 - -
708,071 885,835 796,961
Current assets
Land and developments 14 28 2,089 28
Corporation tax receivable 7 - 7
Trade and other receivables 15 16,697 27,581 24,935
Cash and cash equivalents 16 37,040 63,348 50,925
53,772 93,018 75,895
Total assets 761,843 978,853 872,856
Current liabilities
Trade and other payables 17 (26,406) (33,225) (31,232)
Lease liability 18 (695) (670) (683)
Corporation tax payable - (230) -
(27,101) (34,125) (31,915)
Non-current liabilities
Borrowings 19 (227,176) (246,100) (226,677)
Lease liability 18 (5,238) (5,933) (5,589)
(232,414) (252,033) (232,266)
Total liabilities (259,515) (286,158) (264,181)
Net assets 502,328 692,695 608,675
Equity
Called-up share capital 21 1,233 1,233 1,233
Share premium account 116,619 116,619 116,619
Revaluation reserve (46,951) 109,276 46,416
Capital redemption reserve 7,743 7,743 7,743
Own shares held (1,675) (1,535) (848)
Other reserves 291 291 291
Retained earnings 425,068 459,068 437,221
Total equity 502,328 692,695 608,675
(1 ) Trade and other receivables and cash and cash equivalents have
been restated as at 30 September 2022 following the IFRIC agenda decision in
respect of demand deposits with restrictions on use arising from a contract
with a third party (see Note 29).
Unaudited Consolidated Cash Flow Statement
For the Half Year to 30 September 2023
Half Year to Half Year to Year to
30 September 2023 30 September 2022 31 March
£000 Restated(1) 2023
£000 £000
Cash flows from operating activities
(Loss)/profit before tax (93,103) 17,225 (64,511)
Adjustment for:
Depreciation 420 382 798
Revaluation deficit on Investment properties 93,367 34,994 97,854
Letting cost amortisation 56 135 200
Gain on sale of Investment properties - (4,606) (4,564)
Profit on sale of plant and equipment - - (18)
Net financing costs 4,037 7,306 10,918
Change in value of derivative financial instruments (2,098) (26,564) (12,757)
Share based payment charge 698 54 1,073
Share of results of joint ventures 4,499 (15,101) (3,494)
Gain on sublet of the Group's head office (902) - -
Cash inflows from operations before changes in working capital 6,974 13,825 25,499
Change in trade and other receivables 8,483 (6,211) (3,560)
Change in land, developments and trading properties - - 2,061
Change in trade and other payables (4,997) (11,385) (11,477)
Cash inflows/(outflows) generated from operations 10,460 (3,771) 12,523
Finance costs (3,698) (6,952) (12,361)
Finance income 328 96 274
Tax received - 568 331
(3,370) (6,288) (11,756)
Net cash generated from/(used by) operating activities 7,090 (10,059) 767
Cash flows from investing activities
Additions to Investment property (6,814) (4,420) (10,509)
Purchase of other investments (81) - (47)
Net proceeds from sale of Investment property - 186,583 186,541
(Investments)/return from investments in joint ventures and subsidiaries (1,375) 3,323 3,323
Dividends from joint ventures 2,066 6,488 13,446
Sale of plant and equipment - - 48
Purchase of leasehold improvements, plant and equipment (491) (108) (548)
Net cash (used by)/generated from investing activities (6,695) 191,866 192,254
Cash flows from financing activities
Borrowings repaid - (150,000) (170,000)
Finance lease repayments (338) (326) (659)
Shares issued - 10 10
Purchase of own shares (4,402) (1,535) (1,089)
Equity dividends paid (9,540) (10,092) (13,842)
Net cash used by financing activities (14,280) (161,943) (185,580)
Net (decrease)/increase in cash and cash equivalents (13,885) 19,864 7,441
Cash and cash equivalents at start of period 50,925 43,484 43,484
Cash and cash equivalents at end of period 37,040 63,348 50,925
(1) Trade and other receivables and cash and cash equivalents have been
restated as at 30 September 2022 following the IFRIC agenda decision in
respect of demand deposits with restrictions on use arising from a contract
with a third party (see Note 29).
Unaudited Consolidated Statement of Changes in Equity
At 30 September 2023
Share Share Revaluation Capital Own shares held Other Retained earnings Total
capital premium reserve redemption £000 reserves £000 £000
£000 £000 £000 reserve £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 3,965 - - (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 - - - - - - (93,103) (93,103)
Revaluation deficit - - (93,367) - - - 93,367 -
Transactions with owners
Performance Share Plan - - - - - - 698 698
Purchase of own shares - - - - (4,402) - - (4,402)
Share settled Performance Share Plan - - - - 2,352 - (2,352) -
Share settled bonus - - - - 1,223 - (1,223) -
Dividends paid - - - - - - (9,540) (9,540)
Total transactions with owners - - - - (827) - (12,417) (13,244)
At 30 September 2023 1,233 116,619 (46,951) 7,743 (1,675) 291 425,068 502,328
Share Share Revaluation Capital Own shares held Other Retained earnings Total
capital premium reserve redemption £000 reserves £000 £000
£000 £000 £000 reserve £000
£000
At 31 March 2022 1,223 112,654 197,627 7,743 - 291 367,505 687,043
Total comprehensive income - - - - - - 17,225 17,225
Revaluation deficit - - (34,994) - - - 34,994 -
Realised on disposals - - (53,357) - - - 53,357 -
Transactions with owners
Issued share capital 10 3,965 - - - - - 3,975
Performance Share Plan - - - - - - 54 54
Purchase of own shares - - - - (1,535) - - (1,535)
Share settled Performance Share Plan - - - - - - (3,536) (3,536)
Share settled bonus - - - - - - (439) (439)
Dividends paid - - - - - - (10,092) (10,092)
Total transactions with owners 10 3,965 - - (1,535) - (14,013) (11,573)
At 30 September 2022 1,233 116,619 109,276 7,743 (1,535) 291 459,068 692,695
Unaudited Notes to the Half Year Results
1. Financial Information and Basis of Preparation
The Company is a public limited company incorporated and domiciled in England
and Wales and listed on the Main Market of the London Stock Exchange. The
registered office address is 5 Hanover Square London W1S 1HQ.
These condensed interim financial statements were approved for issue on 22
November 2023.
The financial information contained in this statement does not constitute
statutory accounts within the meaning of section 434 of the Companies Act
2006. The full accounts for the year ended 31 March 2023, approved by the
Board of Directors on 23 May 2023, which were prepared under International
Financial Reporting Standards as adopted by the United Kingdom and which
received an unqualified report from the Auditors, and did not contain a
statement under Section 498(2) or Section 498(3) of the Companies Act 2006,
have been filed with the Registrar of Companies.
These interim condensed unaudited consolidated financial statements do not
include all of the information required for full annual financial statements
and should be read in conjunction with the consolidated financial statements
of the Group for the year ended 31 March 2023.
These interim condensed unaudited consolidated financial statements have been
prepared in accordance with IAS 34 Interim Financial Reporting as adopted by
the United Kingdom and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority. The same
accounting policies and methods of computation are followed in the 30
September 2023 interim condensed unaudited consolidated financial statements
as in the most recent annual financial statements.
Change in Accounting Policies
The Group adopted the following new and amended standards in the Period ended
30 September 2023. There was no material impact arising from their adoption.
· Disclosure of accounting policies - Amendments to IAS 1 and IFRS
Practice Statement 2
· Definition of accounting policies - Amendments to IAS 8
· Deferred tax related to assets and liabilities arising from a single
transaction - Amendments to IAS 12
Going Concern
The Directors have considered the appropriateness of adopting a going concern
basis in preparing the financial statements. Their assessment is based on
forecasts for the next 12 month period, with sensitivity testing undertaken to
replicate severe but plausible downside scenarios related to the principal
risks and uncertainties associated with the business.
The key assumptions used in the review are summarised below:
· The Group's rental income receipts were modelled for each tenant on
an individual basis;
· Existing loan facilities remain available;
· Certain property additions/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
£400m Revolving Credit Facility, was one of the Directors' key areas 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 October 2023 compliance position for these covenants is summarised below:
Covenant Requirement Actual
LTV <65% 31%
LRV <12.0x 10.8x
ICR >150% 360%
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 13% fall in
contracted rental income;
· Property values could fall by 30% before loan to value covenants come
under pressure;
· Whilst the Group has a WAULT of 4.6 years, in a downside scenario
whereby all tenants with lease expiries or break options in the going concern
period exercise their breaks or do not renew at the end of their lease, and
with no vacant space let or re-let, the rental income covenants would be met
throughout the review period; and
· Additional asset sales could be utilised to generate cash to repay
debt, materially increasing covenant headroom.
Based on this analysis, the Directors have adopted a going concern basis in
preparing the accounts for the Period.
Principal Risks and Uncertainties
The responsibility for the governance of the Group's risk profile lies with
the Board of Directors of Helical. The Board is responsible for setting the
Group's risk strategy by assessing risks, determining its willingness to
accept those risks and ensuring that the risks are monitored and that the
Group is aware of and, if appropriate, reacts to changes in those risks. The
Board is also responsible for allocating responsibility for risk within the
Group's management structure.
The Group considers its principal risks to be:
Principal Risk
Strategic · The Group's strategy is inconsistent with the market
· Risks arising from the Group's significant development projects
· Property values decline/reduced tenant demand for space
· Geopolitical and economic
· Climate change
Financial · Availability and cost of bank borrowing, cash resources and potential
breach of loan covenants
Operational · Our people and relationships with business partners and reliance on
external partners
· Health and safety
· Significant business disruption/external catastrophic
event/cyber-attacks to our business and our buildings
Reputational · Poor management of stakeholder relations and non-compliance with
prevailing legislation, regulation and best practice
There have been no significant changes to these risks in the Period and
further analysis is included within the Group's Annual Report and Accounts
2023.
2. Revenue from Contracts with Customers
Half Year to Half Year to Year to
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Development property income 462 934 4,921
Service charge income 5,958 3,282 8,372
Total revenue from contracts with customers 6,420 4,216 13,293
The total revenue from contracts with customers is the revenue recognised in
accordance with IFRS 15 Revenue from Contracts with Customers.
No impairment of contract assets was recognised in the Period to 30 September
2023 (Half Year to 30 September 2022: £nil, Year to 31 March 2023: £5,000).
3. Segmental Information
The Group identifies two discrete operating segments whose results are
regularly reviewed by the Chief Operating Decision Maker (the Chief Executive)
to allocate resources to these segments and to assess their performance. The
segments are:
· Investment properties, which are owned or leased by the Group
for long-term income and for capital appreciation; and
· Development properties, which include sites, developments in the
course of construction, completed developments available for sale, and
pre-sold developments.
Revenue Investments Developments Total Investments Developments Total
Half Year to Half Year to Half Year to Half Year to 30.09.22 Half Year to Half Year to
30.09.23 30.09.23 30.09.23 £000 30.09.22 30.09.22
£000 £000 £000 £000 £000
Gross rental income 12,804 - 12,804 19,245 - 19,245
Development property income - 462 462 - 934 934
Service charge income 5,958 - 5,958 3,282 - 3,282
Revenue 18,762 462 19,224 22,527 934 23,461
Revenue Investments Developments Total
Year to Year to Year to
31.03.23 31.03.23 31.03.23
£000 £000 £000
Gross rental income 36,555 - 36,555
Development property income - 4,921 4,921
Service charge income 8,372 - 8,372
Revenue 44,927 4,921 49,848
Cost of sales Investments Developments Total Investments Developments Total
Half Year to Half Year to Half Year to Half Year to 30.09.22 Half Year to Half Year to
30.09.23 30.09.23 30.09.23 £000 30.09.22 30.09.22
£000 £000 £000 £000 £000
Rents payable (95) - (95) (69) - (69)
Property overheads (846) - (846) (1,121) - (1,121)
Service charge expense (5,958) - (5,958) (3,282) - (3,282)
Development cost of sales - (922) (922) - (150) (150)
Development sales expenses - (36) (36) - (1) (1)
Cost of sales (6,899) (958) (7,857) (4,472) (151) (4,623)
Cost of sales Investments Developments Total
Year to Year to Year to
31.03.23 31.03.23 31.03.23
£000 £000 £000
Rents payable (157) - (157)
Property overheads (2,092) - (2,092)
Service charge expense (8,372) - (8,372)
Development cost of sales - (2,915) (2,915)
Development sales expenses - (1) (1)
Reversal of provision - (30) (30)
Cost of sales (10,621) (2,946) (13,567)
(Loss)/profit before tax Investments Developments Total Investments Developments Total
Half Year to Half Year to Half Year to Half Year to 30.09.22 Half Year to Half Year to
30.09.23 30.09.23 30.09.23 £000 30.09.22 30.09.22
£000 £000 £000 £000 £000
Net property income 11,863 (496) 11,367 18,055 783 18,838
Share of results of joint ventures (4,439) (60) (4,499) 14,750 351 15,101
Other income 905 - 905 - - -
Loss on sale and revaluation of Investment properties (93,367) - (93,367) (30,388) - (30,388)
Segmental (loss)/profit (85,038) (556) (85,594) 2,417 1,134 3,551
Administrative expenses (5,570) (5,584)
Finance costs (4,365) (7,402)
Finance income 328 96
Change in fair value of derivative financial instruments 2,098 26,564
(Loss)/profit before tax (93,103) 17,225
Included in other income of £905,000 (30 September 2022: £nil, 31 March
2023: £nil) is the gain on the sublet of the Group's head office of £902,000
(30 September 2022: £nil, 31 March 2023: £nil).
Loss before tax Investments Developments Total
Year to Year to Year to
31.03.23 31.03.23 31.03.23
£000 £000 £000
Net property income 34,306 1,975 36,281
Share of results of joint ventures 4,867 (1,373) 3,494
Loss on sale and revaluation of Investment properties (93,290) - (93,290)
Segmental (loss)/profit (54,117) 602 (53,515)
Administrative expenses (12,835)
Finance costs (11,192)
Finance income 274
Change in fair value of derivative financial instruments 12,757
Loss before tax (64,511)
Net assets Investments Developments Total Investments Developments at 30.09.22 Total
at 30.09.23 at 30.09.23 at 30.09.23 at 30.09.22 £000 at 30.09.22
£000 £000 £000 £000 £000
Investment properties 595,073 - 595,073 738,518 - 738,518
Land and developments - 28 28 - 2,089 2,089
Investment in joint ventures 81,126 1,015 82,141 101,097 4,798 105,895
676,199 1,043 677,242 839,615 6,887 846,502
Other assets 84,601 132,351
Total assets 761,843 978,853
Liabilities (259,515) (286,158)
Net assets 502,328 692,695
Net assets Investments Developments Total
at 31.03.23 at 31.03.23 at 31.03.23
£000 £000 £000
Investment properties 681,682 - 681,682
Land and developments - 28 28
Investment in joint ventures 84,255 3,075 87,330
765,937 3,103 769,040
Other assets 103,816
Total assets 872,856
Liabilities (264,181)
Net assets 608,675
4. Net Property Income
Half Year to Half Year to Year to
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Gross rental income 12,804 19,245 36,555
Head rents payable (95) (69) (157)
Property overheads (846) (1,121) (2,092)
Net rental income 11,863 18,055 34,306
Development property income 462 934 4,921
Development cost of sales (922) (150) (2,915)
Sales expenses (36) (1) (1)
Provision - - (30)
Development property (loss)/profit (496) 783 1,975
Net property income 11,367 18,838 36,281
Included within gross rental income above is a net deduction of £4,307,000
(September 2022: net addition of £2,464,000, March 2023: net addition of
£1,609,000) of accrued income for rent free periods.
5. Gain on Sale of Investment Properties
Half Year to Half Year to Year to
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Net proceeds from the sale of Investment properties - 186,583 186,541
Book value (Note 11) - (169,570) (169,570)
Tenants' incentives on sold Investment properties - (12,407) (12,407)
Gain on sale of Investment properties - 4,606 4,564
6. Administrative Expenses
Half Year to Half Year to Year to
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Administration costs (4,655) (5,323) (9,845)
Performance related awards, including annual bonuses (793) (220) (2,702)
National Insurance on performance related awards (122) (41) (288)
Administrative expenses (5,570) (5,584) (12,835)
7. Net Finance Costs and Change in Fair Value of Derivative Financial
Instruments
Half Year to Half Year to Year to
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Interest payable on bank loans and overdrafts (2,878) (5,214) (8,284)
Other interest payable and similar charges (1,487) (2,056) (2,780)
Total before cancellation of loans (4,365) (7,270) (11,064)
Cancellation of loans - (132) (128)
Finance costs (4,365) (7,402) (11,192)
Finance income 328 96 274
Net finance costs (4,037) (7,306) (10,918)
Change in fair value of derivative financial instruments 2,098 26,564 12,757
Net finance costs and change in fair value of derivative financial instruments (1,939) 19,258 1,839
8. Tax on Profit on Ordinary Activities
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. No current tax charge arises
in the Period to 30 September 2023 (Half Year to 30 September 2022: £nil,
Year to 31 March 2023: £nil) in respect of non-REIT activities.
At 30 September 2023, no deferred tax was recognised (30 September 2022:
£nil, 31 March 2023: £nil). This is on the basis that deferred tax assets
and liabilities either relate to the Group's exempt property rental business,
or are deferred tax assets where it is unlikely that there will be taxable
profit in the future against which they could be used.
9. Dividends
Half Year to Half Year to Year to
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Attributable to equity share capital
Ordinary
- Interim paid 3.05p per share - - 3,750
- Prior period final paid 8.70p per share (2022: 8.25p) 9,540 10,092 10,092
9,540 10,092 13,842
The interim dividend of 3.05p per share (30 September 2022: 3.05p per share)
was approved by the Board on 22 November 2023 and will be paid on 12 January
2024 to Shareholders on the register on 1 December 2023. This interim
dividend, amounting to £3,744,000 has not been included as a liability as at
30 September 2023.
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 Period. This is a different basis to the net
asset per share calculations which are based on the number of shares at the
Period 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:
Half Year to Half Year to Year to
30 September 2023 30 September 2022 31 March
000 000 2023
000
Ordinary shares in issue 123,355 123,355 123,355
Own shares held (602) (398) -
Weighting adjustment - (658) (613)
Weighted average ordinary shares in issue for calculation of basic and EPRA 122,753 122,299 122,742
earnings per share
Weighted average ordinary shares issued on share settled bonuses 154 561 561
Weighted average ordinary shares to be issued under Performance Share Plan - 575 846
Adjustment for anti-dilutive shares (154) - (1,407)
Weighted average ordinary shares in issue for calculation of diluted earnings 122,753 123,435 122,742
per share
£000 £000
£000
(Loss)/earnings used for calculation of basic and diluted earnings per share (93,103) 17,225 (64,511)
Basic (loss)/earnings per share (75.8)p 14.1p (52.6)p
Diluted (loss)/earnings per share (75.8)p 14.0p (52.6)p
£000 £000 £000
(Loss)/earnings used for calculation of basic and diluted earnings per share (93,103) 17,225 (64,511)
Net loss/(gain) on sale and revaluation of Investment properties
93,367 30,388 93,290
- subsidiaries
3,309 (15,268) (5,161)
- joint ventures
Tax on profit on disposal of Investment properties - 228 463
(Gain)/loss on movement in share of joint ventures (66) 66 564
Fair value movement on derivative financial instruments (2,098) (26,564) (12,757)
Expense on cancellation of loans - 132 128
Deferred tax on adjusting items - (377) (503)
Earnings used for calculations of EPRA earnings per share 1,409 5,830 11,513
EPRA earnings per share 1.1p 4.8p 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 At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Book value at 1 April 681,682 938,797 938,797
Additions at cost 6,814 4,420 10,509
Disposals - (169,570) (169,570)
Letting cost amortisation (56) (135) (200)
Revaluation deficit (93,367) (34,994) (97,854)
As at period end 595,073 738,518 681,682
All properties are stated at market value and are valued by professionally
qualified external valuers (Cushman & Wakefield LLP) in accordance with
the Valuation - Professional Standards, published by the Royal Institution of
Chartered Surveyors. The fair value of the Investment properties are as
follows:
At At At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Book value 595,073 738,518 681,682
Lease incentives and costs included in trade and other receivables 9,689 14,858 13,987
Head leases capitalised (2,112) (2,126) (2,119)
Fair value 602,650 751,250 693,550
Cumulative interest capitalised in respect of the refurbishment of Investment
properties at 30 September 2023 amounted to £9,620,000 (30 September 2022:
£9,620,000, 31 March 2023: £9,620,000). Interest capitalised during the
Period in respect of the refurbishment of Investment properties amounted to
£nil (30 September 2022: £nil, 31 March 2023: £nil) and an amount of £nil
(30 September 2022: £nil, 31 March 2023: £3,482,000) was released on the
sale of the properties in the Period.
The historical cost of Investment property is £640,052,000 (30 September
2022: £627,437,000, 31 March 2023: £633,237,000).
The fair value of the Group's Investment property as at 30 September 2023 was
determined by independent external valuers at that date, except for Investment
properties valued by the Directors. The valuations are in accordance with the
RICS Valuation - Professional Standards ("The Red Book") and the International
Valuation Standards and were arrived at by reference to market transactions
for similar properties.
Fair values for Investment property 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. The
key unobservable inputs used to determine the fair values range from an ERV of
£24.45 psf to £106.38 psf and a true equivalent yield range from 5.4% to
7.2%.
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
30 September
2023 % £m
True equivalent yield 5.85%
+ 50bps (10.8) (80.3)
+ 25bps (5.8) (42.0)
- 25bps 6.2 45.8
- 50bps 12.9 96.1
ERV £79.68 psf
+ 5.00% 5.5 40.9
+ 2.50% 2.7 20.3
- 2.50% (2.7) (20.3)
- 5.00% (5.4) (40.2)
12. Joint Ventures
Share of results of joint ventures Half Year to Half Year to Year to
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Revenue 1,442 4,873 10,141
Gross rental income 887 269 287
Property overheads (349) (142) (1,103)
Net rental income 538 127 (816)
(Loss)/gain on revaluation of Investment properties (3,309) 15,339 5,095
(Loss)/gain on sale of Investment properties - (71) 66
Development property (loss)/profit (18) 186 1,262
(2,789) 15,581 5,607
Administrative expenses (188) (452) (459)
Operating (loss)/profit (2,977) 15,129 5,148
Interest payable on bank loans and overdrafts (1,502) (1,619) (2,703)
Other interest payable and similar charges (104) (101) (203)
Interest capitalised - 1,815 1,815
Finance income 18 6 23
(Loss)/profit before tax (4,565) 15,230 4,080
Tax - (63) (22)
(Loss)/profit after tax (4,565) 15,167 4,058
Adjustment for Barts Square economic interest¹ 66 (66) (564)
Share of results of joint ventures (4,499) 15,101 3,494
(1 ) This adjustment reflects the impact of the consolidation of a
joint venture at its economic interest of 50.0% (30 September 2022: 50.0%, 31
March 2023: 50.0%) rather than its actual ownership interest of 33.3%.
Investment in joint ventures At At At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Summarised balance sheets
Non-current assets
Investment properties 146,257 160,700 150,151
Owner occupied property, plant and equipment 63 154 109
146,320 160,854 150,260
Current assets
Land and developments - 4,663 539
Trade and other receivables 1,894 1,240 727
Cash and cash equivalents 2,207 4,516 3,749
4,101 10,419 5,015
Current liabilities
Trade and other payables (2,728) (5,573) (3,332)
Borrowings (61,634) - -
(64,362) (5,573) (3,332)
Non-current liabilities
Trade and other payables (407) (406) (406)
Borrowings - (54,603) (59,416)
Leasehold interest (5,020) (4,834) (4,927)
Deferred tax - (55) -
(5,427) (59,898) (64,749)
Net assets pre-adjustment 80,632 105,802 87,194
Acquisition costs 1,509 93 136
Investment in joint ventures 82,141 105,895 87,330
The fair value of Investment properties at 30 September 2023 is as follows:
At At At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Book value 146,257 160,700 150,151
Lease incentives and costs included in trade and other receivables 989 161 185
Head leases capitalised (4,346) (4,376) (4,361)
Fair value 142,900 156,485 145,975
13. Other Investments
At At At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Book value at 1 April 353 306 306
Acquisitions 81 - 47
As at period end 434 306 353
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
£81,000 (31 March 2023: £47,000) was invested during the Period. The Fund is
focused on investing in the next generation of proptech businesses.
The fair value of the Group's investment is based on the net asset value of
the Fund, representing Level 2 fair value measurement as defined in IFRS 13
Fair Value Measurement.
14. Land and Developments
At At At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
At 1 April 28 2,089 2,089
Disposals - - (2,031)
Provision - - (30)
As at period end 28 2,089 28
The Directors' valuation of development stock shows a surplus of £302,000 (30
September 2022: £302,000, 31 March 2023: £302,000) above book value. This
surplus has been included in the EPRA net tangible asset value (Note 22).
No interest has been capitalised or included in land and developments.
15. Trade and Other Receivables
Due within 1 year At At At
30 September 2023 30 September 2022 31 March
£000 Restated(1) 2023
£000 £000
Trade receivables 3,027 7,198 2,517
Other receivables 1,296 804 752
Prepayments 2,099 2,503 1,990
Accrued income 10,275 17,076 19,676
Total trade and other receivables 16,697 27,581 24,935
(1) Trade and other receivables and cash and cash equivalents have been
restated as at 30 September 2022 following the IFRIC agenda decision in
respect of demand deposits with restrictions on use arising from a contract
with a third party (see Note 29).
Included in accrued income are lease incentives of £9,689,000 (30 September
2022: £14,858,000, 31 March 2023: £13,987,000).
Due after 1 year At At At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Other receivables 1,449 - -
Total trade and other receivables 1,449 - -
16. Cash and Cash Equivalents
At At At
30 September 2023 30 September 2022 31 March
£000 Restated(1) 2023
£000 £000
Cash held at managing agents 7,513 4,366 4,156
Rental deposits 7,714 8,970 9,069
Restricted cash 4,350 3,905 9,495
Cash deposits 17,463 46,107 28,205
Total cash and cash equivalents 37,040 63,348 50,925
(1) Trade and other receivables and cash and cash equivalents have been
restated as at 30 September 2022 following the IFRIC agenda decision in
respect of demand deposits with restrictions on use arising from a contract
with a third party (see Note 29).
Restricted cash is made up of cash held by solicitors, rental deposits and
cash in restricted accounts.
17. Trade and Other Payables
At At At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Trade payables 14,465 15,551 15,212
Other payables 1,591 1,607 2,136
Accruals 3,030 6,266 5,404
Deferred income 7,320 9,801 8,480
Total trade and other payables 26,406 33,225 31,232
18. Lease Liability
At At At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Current lease liability 695 670 683
Non-current lease liability 5,238 5,933 5,589
Included within the lease liability are £695,000 (30 September 2022:
£670,000, 31 March 2023: £683,000) of current and £3,049,000 (30 September
2022: £3,745,000, 31 March 2023: £3,399,000) of non-current lease
liabilities which relate to the long leasehold of the Group's head office.
19. Borrowings
At At At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Current borrowings - - -
Borrowings repayable within:
- two to three years 227,176 - -
- three to four years - 246,100 226,677
Non-current borrowings 227,176 246,100 226,677
Total borrowings 227,176 246,100 226,677
At At
30 September 2023 At 31 March
£000 30 September 2022 2023
Restated(1) £000
£000
Total borrowings 227,176 246,100 226,677
Cash (37,040) (63,348) (50,925)
Net borrowings 190,136 182,752 175,752
(1) Trade and other receivables and cash and cash equivalents have been
restated as at 30 September 2022 following the IFRIC agenda decision in
respect of demand deposits with restrictions on use arising from a contract
with a third party (see Note 29).
Net borrowings exclude the Group's share of borrowings in joint ventures of
£61,634,000 (30 September 2022: £54,603,000, 31 March 2023: £59,416,000)
and cash of £2,207,000 (30 September 2022: £4,516,000, 31 March 2023:
£3,749,000). All borrowings in joint ventures are secured.
At At
At 30 September 2022 31 March
30 September 2023 Restated(1) 2023
£000 £000 £000
Net assets 502,328 692,695 608,675
Net gearing 38% 26% 29%
1 Trade and other receivables and cash and cash equivalents
have been restated as at 30 September 2022 following the IFRIC agenda decision
in respect of demand deposits with restrictions on use arising from a contract
with a third party (see Note 29).
20. Derivative Financial Instruments
At At At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Derivative financial instruments asset 25,343 36,758 23,245
A gain on the change in fair value of £2,098,000 has been recognised in the
Unaudited Consolidated Income Statement (30 September 2022: £26,564,000, 31
March 2023: £12,757,000) as a result of the continued movements upwards in
the medium and long term interest rate projections.
The fair values of the Group's outstanding interest rate swaps and caps have
been estimated by calculating the present values of future cash flows, using
appropriate market discount rates, representing Level 2 fair value
measurements as defined in IFRS 13 Fair Value Measurement.
21. Share Capital
At At At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Authorised 39,577 39,577 39,577
The authorised share capital of the Company is £39,577,000 divided into
ordinary shares of 1p each.
Allotted, called up and fully paid:
- 123,355,197 (30 September 2022: 123,355,197, 31 March 2023: 123,355,197) 1,233 1,233 1,233
ordinary shares of 1p each
1,233 1,233 1,233
22. Net Assets Per Share
At Number of shares At Number of shares p
30 September 2023 000 31 March 000
£000 p 2023
£000
IFRS net assets 502,328 123,355 608,675 123,355
Adjustments:
- own shares held (602) (283)
Basic net asset value 502,328 122,753 409 608,675 123,072 495
- share settled bonus 154 561
- dilutive effect of Performance Share Plan - 751
Diluted net asset value 502,328 122,907 409 608,675 124,384 489
Adjustments:
- fair value of financial instruments (25,343) (23,245)
- fair value of land and developments 302 302
- real estate transfer tax 50,348 56,591
EPRA net reinstatement value 527,635 122,907 429 642,323 124,384 516
- real estate transfer tax (25,301) (28,868)
EPRA net tangible asset value 502,334 122,907 409 613,455 124,384 493
At Number of shares p At Number of shares p
30 September 2023 000 31 March 000
£000 2023
£000
Diluted net asset value 502,328 122,907 409 608,675 124,384 489
Adjustments:
- surplus on fair value of stock 302 302
EPRA net disposal value 502,630 122,907 409 608,977 124,384 490
At Number of shares p
30 September 000
2022
£000
IFRS net assets 692,695 123,355
Adjustments:
- own shares held (398)
Basic net asset value 692,695 122,957 563
- share settled bonus 561
- dilutive effect of Performance Share Plan 543
Diluted net asset value 692,695 124,061 558
Adjustments:
- fair value of financial instruments (36,758)
- deferred tax 126
- fair value of land and developments 302
- real estate transfer tax 61,043
EPRA net reinstatement value 717,408 124,061 578
- real estate transfer tax (31,674)
- deferred tax (126)
EPRA net tangible asset value 685,608 124,061 553
At Number of shares p
30 September 000
2022
£000
Diluted net assets 692,695 124,061 558
Adjustments:
- surplus on fair value of stock 302
EPRA net disposal value 692,997 124,061 559
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 30 September 2023.
23. Related Party Transactions
The following amounts were due from the Group's joint ventures:
At At At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Charterhouse Street Limited group 578 565 577
Barts Square companies 71 76 79
Old Street Holdings LP - - 8
Shirley Advance LLP 8 8 -
A development management, accounting and corporate services fee of £25,000
(30 September 2022: £25,000, 31 March 2023: £50,000) was charged by the
Group to the Barts Square companies. In addition, a net development
management, accounting and corporate services fee of £1.2m was reversed
during the Period (30 September 2022: charge of £699,000, 31 March 2023:
charge of £779,000) by the Group to the Charterhouse Place Limited group.
24. See-through Analysis
Helical holds a significant proportion of its property assets in joint
ventures with partners that provide a significant equity contribution, whilst
relying on the Group to provide asset management or development expertise.
Accounting convention requires Helical to account under IFRS for its share of
the net results and net assets of joint ventures on an equity basis in the
Income Statement and Balance Sheet. Helical consider that 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.
Half Year to Half Year to Year to
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Gross rental income - subsidiaries 12,804 19,245 36,555
- joint ventures 887 269 287
Total gross rental income 13,691 19,514 36,842
Rents payable - subsidiaries (95) (69) (157)
Property overheads - subsidiaries (846) (1,121) (2,092)
- joint ventures (349) (142) (1,103)
See-through net rental income 12,401 18,182 33,490
See-through Net Development (Losses)/Profits
Helical's share of development (losses)/profits from property assets held in
subsidiaries and in joint ventures is shown in the table below.
Half Year to Half Year to Year to
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
In parent and subsidiaries (496) 783 2,005
In joint ventures (18) 186 1,262
Total gross development (loss)/profit (514) 969 3,267
Provision against stock - subsidiaries - - (30)
See-through development (losses)/profits (514) 969 3,237
See-through Net (Loss)/Gain on Sale and Revaluation of Investment Properties
Helical's share of the net (loss)/gain on the sale and revaluation of
Investment properties held in subsidiaries and joint ventures is shown in the
table below.
Half Year to Half Year to Year to
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Revaluation loss on Investment properties - subsidiaries (93,367) (34,994) (97,854)
- joint ventures (3,309) 15,339 5,095
Total revaluation loss (96,676) (19,655) (92,759)
Net gain/(loss) on sale of Investment properties - subsidiaries - 4,606 4,564
- joint ventures - (71) 66
Total net gain on sale of Investment properties - 4,535 4,630
See-through net loss on sale and revaluation of Investment properties (96,676) (15,120) (88,129)
See-through Administration Expenses
Helical's share of the administration expenses incurred in subsidiaries and
joint ventures is shown in the table below.
Half Year to Half Year to Year to
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Administration expenses - subsidiaries 4,655 5,323 9,845
- joint ventures 188 452 459
Total administration expenses 4,843 5,775 10,304
Performance related awards, including NIC - subsidiaries 915 261 2,990
Total performance related awards, including NIC 915 261 2,990
See-through administration expenses 5,758 6,036 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.
Half Year to Half Year to Year to
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Interest payable on bank loans and overdrafts - subsidiaries 2,878 5,214 8,284
- joint ventures 1,502 1,619 2,703
Total interest payable on bank loans and overdrafts 4,380 6,833 10,987
Other interest payable and similar charges - subsidiaries 1,487 2,188 2,908
- joint ventures 104 101 203
Interest capitalised - joint ventures - (1,815) (1,815)
Total finance costs 5,971 7,307 12,283
Interest receivable and similar income - subsidiaries (328) (96) (274)
- joint ventures (18) (6) (23)
See-through net finance costs 5,625 7,205 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 At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Investment property fair value - subsidiaries 602,650 751,250 693,550
- joint ventures 142,900 156,485 145,975
Total Investment property fair value 745,550 907,735 839,525
Land and development stock - subsidiaries 28 2,089 28
- joint ventures - 4,663 539
Total land and development stock 28 6,752 567
Total land and development stock surplus 302 302 302
Total land and development stock at fair value 330 7,054 869
See-through property portfolio 745,880 914,789 840,394
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
At 30 September 2022 31 March
30 September 2023 Restated(1) 2023
£000 £000 £000
Gross borrowings more than one year - subsidiaries 227,176 246,100 226,677
Total 227,176 246,100 226,677
Gross borrowings less than one year - joint ventures 61,634 54,603 59,416
Total 61,634 54,603 59,416
Cash and cash equivalents - subsidiaries (37,040) (63,348) (50,925)
- joint ventures (2,207) (4,516) (3,749)
Total (39,247) (67,864) (54,674)
See-through net borrowings 249,563 232,839 231,419
(1) Trade and other receivables and cash and cash equivalents have been
restated as at 30 September 2022 following the IFRIC agenda decision in
respect of demand deposits with restrictions on use arising from a contract
with a third party (see Note 29).
25. See-through Net Gearing and Loan to Value
At At
At 30 September 2022 31 March
30 September 2023 Restated(1) 2023
£000 £000 £000
Property portfolio 745,880 914,789 840,394
Net borrowings 249,563 232,839 231,419
Net assets 502,328 692,695 608,675
See-through net gearing 49.7% 33.6% 38.0%
See-through loan to value 33.5% 25.4% 27.5%
(1) Trade and other receivables and cash and cash equivalents have been
restated as at 30 September 2022 following the IFRIC agenda decision in
respect of demand deposits with restrictions on use arising from a contract
with a third party (see Note 29).
26. Total Accounting Return
At At At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Brought forward IFRS net assets 608,675 687,043 687,043
Carried forward IFRS net assets 502,328 692,695 608,675
(Decrease)/increase in IFRS net assets (106,347) 5,652 (78,368)
Dividends paid 9,540 10,092 13,842
Total accounting return (96,807) 15,744 (64,526)
Total accounting return percentage (15.9)% 2.3% (9.4)%
At At At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
Brought forward EPRA net tangible assets 613,455 713,279 713,279
Carried forward EPRA net tangible assets 502,334 685,608 613,455
Decrease in EPRA net tangible assets (111,121) (27,671) (99,824)
Dividends paid 9,540 10,092 13,842
Total EPRA accounting return (101,581) (17,579) (85,982)
Total EPRA accounting return percentage (16.6)% (2.5)% (12.1)%
27. Total Property Return
At At At
30 September 2023 30 September 2022 31 March
£000 £000 2023
£000
See-through net rental income 12,401 18,182 33,490
See-through development (losses)/profits (514) 969 3,237
See-through revaluation loss (96,676) (19,655) (92,759)
See-through net gain on sale of Investment properties - 4,535 4,630
Total property return (84,789) 4,031 (51,402)
28. Capital Commitments
The Group has a commitment of £835,000 (31 March 2023: £835,000) relating to
the finalisation works at The JJ Mack Building, EC1.
In July 2023, Helical and Transport for London entered into a Joint Venture
Agreement with a commitment to purchase a portfolio of three over-station
development sites. The Bank OSD, EC4 site will be acquired in October 2024 for
£32.9m (our share), the Southwark OSD, SE1 site in July 2025 for £11.0m (our
share) and the Paddington OSD, W2 site in January 2026 for £30.2m (our
share).
29. Prior year adjustment
The Group has assessed the impact of the IFRS Interpretation Committee's
(IFRIC) recent Agenda Decision in respect of Demand Deposits with Restrictions
on Use arising from a Contract with a Third Party accounted for under IAS 7.
The Group holds tenant deposits in separate bank accounts, the use of which is
restricted under the terms of the lease agreements. Following the
clarification by IFRIC, these tenant deposits are judged to meet the
definition of restricted cash under IAS 7. The Group's accounting policy has
been updated to align with this clarification.
The Group comparative balances have been restated to reflect this change in
accounting policy, which resulted in the below reclassification of tenant
deposits from trade and other receivables to cash and cash equivalents. There
was no impact upon the Income Statement or the Statement of Changes in Equity
for the period ended 30 September 2022.
Balance Sheet 30 September 30 September 2022
2022 Restatement Restated
£000 £000 £000
Cash and cash equivalents 54,378 8,970 63,348
Trade and other receivables 36,551 (8,970) 27,581
LTV 26.4% -1.0% 25.4%
Cash Flow Statement 30 September 30 September 2022
2022 Restatement Restated
£000 £000 £000
Change in trade and other receivables (504) (5,707) (6,211)
Appendix 1 - 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 Group or Helical
Helical plc and its subsidiary undertakings.
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 disposal value per share
Represents the Shareholders' value under a disposal scenario, where deferred
tax, financial instruments and certain other adjustments are calculated to the
full extent of their liability, net of any resulting tax (see Note 22).
EPRA net reinstatement value per share
Net asset value adjusted to reflect the value required to rebuild the entity
and assuming that entities never sell assets. Assets and liabilities, such as
fair value movements on financial derivatives, that are not expected to
crystallise in normal circumstances and deferred taxes on property valuation
surpluses are excluded (see Note 22).
EPRA net tangible assets per share
Assumes that entities buy and sell assets, thereby crystallising certain
levels of unavoidable deferred tax, but excludes assets and liabilities, such
as fair value movements on financial derivatives, that are not expected to
crystallise in normal circumstances and deferred taxes on property valuation
surpluses are excluded (see Note 22).
EPRA topped-up NIY
The current annualised rent, net of costs, topped-up for contracted uplifts,
expressed as a percentage of the fair value of the relevant property.
Estimated rental value (ERV)
The market rental value of lettable space as estimated by the Group's valuers
at each Balance Sheet date.
Initial yield
Annualised net passing rents on Investment properties as a percentage of their
open market value.
Like-for-like valuation change
The valuation gain/loss, net of capital expenditure, on those properties held
at both the previous and current reporting period end, as a proportion of the
fair value of those properties at the beginning of the reporting period plus
net capital expenditure.
MSCI INC. (MSCI IPD)
MSCI INC. is a company that produces independent benchmarks of property
returns using its Investment Property Databank (IPD).
Net asset value per share (NAV)
Net assets divided by the number of ordinary shares at the Balance Sheet date
(see Note 22).
Net gearing
Total borrowings less short-term deposits and cash as a percentage of net
assets.
Net internal area (NIA)
The usable area within a building measured to the internal face of the
perimeter walls at each floor level.
Passing rent
The annual gross rental income being paid by the tenant.
Reversionary yield
The income/yield from the full estimated rental value of the property on the
market value of the property grossed up to include purchaser's costs, capital
expenditure and capitalised revenue expenditure.
See-through/Group share
The consolidated Group and the Group's share in its joint ventures (see Note
24).
See-through net gearing
The see-through net borrowings expressed as a percentage of net assets (see
Note 25).
Total Accounting Return
The growth in the net asset value of the Company plus dividends paid in the
Period, expressed as a percentage of net asset value at the start of the
Period (see Note 26).
Total Property Return
The total of net rental income, trading and development profits and net gain
on sale and revaluation of Investment properties on a see-through basis (see
Note 27).
Total Shareholder Return (TSR)
The growth in the ordinary share price as quoted on the London Stock Exchange
plus dividends per share received for the Period expressed as a percentage of
the share price at the beginning of the Period.
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)
W: www.helical.co.uk (http://www.helical.co.uk)
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