REG - Helical PLC - Half-year Report
26/11/2024 07:00
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RNS Number : 6018N Helical PLC 26 November 2024
HELICAL PLC
("Helical" or the "Group" or the "Company")
Results for the Half Year to 30 September 2024 (the "Period"/"Half Year")
FUNDING IN PLACE TO DELIVER ON CENTRAL LONDON DEVELOPMENT PIPELINE - NOW IS
THE TIME TO BUILD
Matthew Bonning-Snook, Chief Executive, commented:
"In my first six months as Chief Executive of Helical we have been
implementing the strategy agreed following the business review undertaken
earlier this year and have focused on shaping the Company to best capture the
cyclical growth opportunity. Our substantial development pipeline is set to
deliver "best-in-class" office developments into a supply-constrained 2026 and
beyond. Recycling equity through £245m of sales at a surplus to book value
has underpinned a return to profitability, alongside an increase in Net Asset
Value and a positive Total Accounting Return. These sales have also reduced
our post balance sheet pro-forma LTV to 15.9%, its lowest ever level.
Importantly, this provides the Group with all the anticipated equity it needs
to complete its current development pipeline, including those schemes not yet
started, providing the means to our future growth.
"While retaining a focus on offices, we are widening our offering to
incorporate alternative uses, such as the student accommodation being planned
above Southwark tube station, and we will continue to seek the best value use
for sites in central London. Our exciting development pipeline, delivering in
joint venture with equity partners, will provide valuation surpluses as well
as new revenue streams of significant development management fees and
promotes. This pipeline will be supplemented with additional "equity-light"
opportunities as building owners seek specialists in development and
refurbishment to partner with them to maximise the value of their assets.
"With an experienced management team and funds in place to deliver a
substantial development pipeline, Helical is financially and operationally
well placed to deliver a strong performance over the coming cycle."
Financial Highlights
EPRA Measures(1) 30 September 2024 30 IFRS Measures 30 September 2024 30
September September 2023
2023
EPRA earnings £2.8m £1.4m Profit/(loss) after tax £4.7m £(93.1)m
EPRA earning per share 2.25p 1.15p Basic earning/(loss) per share 3.8p (75.8)p
EPRA Total Accounting Return 0.8% (16.6)% Interim dividend per share 1.50p 3.05p
30 September 2024 31 30 September 2024 31
March March
2024 2024
EPRA NTA per share(1) 331p 331p Net assets per share(1) 329p 327p
See-through LTV(1) - at Period end 31.5% 39.5% See-through net debt(1) - at Period end £188.1m £261.6m
- pro-forma 15.9% 28.7% - £77.0m £163.8m
pro-forma
Operational Activity During the Period
Good letting progress
· During the half year we completed 12 new lettings, comprising 62,015 sq
ft with a contracted rent of £5.0m per annum (our share: £2.8m), 1.3% (our
share 0.9%) above March 2024 ERVs. Following the Period end, we have signed
one additional lease for 9,499 sq ft at a contracted rent of £0.7m, 3.6%
above March 2024 ERVs. In addition, we have completed five lease renewals of
14,260 sq ft during the Period and one following the Period end of 10,046 sq
ft, totalling 24,306 sq ft.
- At The JJ Mack Building, EC1, we let 45,624 sq ft (our share 22,812 sq
ft) at a 1.8% premium to 31 March 2024 ERVs. On the sale of Helical's 50%
share in the asset, 90% of the building was let at an average office rent of
£95 psf, with just one floor remaining.
- At The Tower at The Bower, EC1, following the Period end, we have
let the refurbished, ex WeWork, fourth floor at a 3.6% premium to 31 March
2024 ERVs, and have agreed terms for a five year renewal of the lease on the
13(th) floor to the existing tenant at its 31 March 2024 ERV. Refurbishment
works on the fifth and sixth floors have just completed and these are now
available to let. The third floor is undergoing refurbishment.
- At The Loom, E1, we let 16,391 sq ft, for a contracted rent of
£0.7m, 1.8% below 31 March 2024 ERVs.
Sales
· In April 2024, we completed on the £43.5m sale of 25 Charterhouse
Square, EC1.
· In May 2024, we entered into a joint venture arrangement for the
redevelopment of 100 New Bridge Street, EC4, selling a 50% interest in the
site for £55m structured on a preferred equity basis to a vehicle led by
Orion Capital Managers. At the same time, the parties entered into a £155m
development financing arrangement with NatWest and an institutional lender, as
well as a building contract to deliver the scheme.
· In August 2024, we exchanged contracts to sell The Power House, W4 for
£7.0m, with completion due at the end of November.
· In October 2024, we completed on the sale of our 50% interest in
Charterhouse Place Limited, the owner of The JJ Mack Building, EC1 to our
joint venture partner, AshbyCapital, for £71.4m. The transaction reflected a
value of £139.2m for Helical's 50% share of the property. As this was a
corporate sale, the £71.4m reflected the consolidated net asset value of
Charterhouse Place Limited at the date of sale, which included bank finance
and other working capital items.
Development Pipeline
On Site
· 100 New Bridge Street, EC4 - This 194,500 sq ft "carbon friendly"
redevelopment of the existing building is progressing with a planned
completion date for April 2026.
· Brettenham House, WC2 - The repositioning of this 128,000 sq ft building
(including 6,000 sq ft of retail) is well underway with the building
scaffolded to facilitate the cleaning and repair of the external stonework and
new window installation. Completion of the works is due April 2026.
· 10 King William Street, EC4 - The first of three initial sites to be
developed in joint venture with Transport for London's ("TfL") property
company, Places for London, this eight-storey office development will deliver
139,000 sq ft of "best-in-class" new office space with 2,000 sq ft of ground
floor retail. Practical completion is programmed for December 2026.
Pipeline
· Southwark Over Station Development, SE1 - We have submitted a planning
application for a purpose-built student accommodation scheme of 429 studio
units together with a separate building providing 44 affordable housing units.
This will be the second development with Places for London and is expected to
be delivered in Q2 2028.
· Paddington Over Station Development, W2 - Situated close to the
Elizabeth Line station at Paddington, this 19-storey building will provide
235,000 sq ft of office space. The site will be acquired in January 2026 with
the intention to deliver the scheme in Q1 2029.
Financial and Portfolio Performance
Earnings and Dividends
· IFRS profit of £4.7m (2023: loss £93.1m).
· IFRS basic earnings per share of 3.79p (2023: loss of 75.85p).
· EPRA earnings per share(1) of 2.25p (2023: 1.15p).
· Interim dividend of 1.50p per share (2023: 3.05p).
Balance Sheet
· Net asset value up 0.8% to £404.2m (31 March 2024: £401.1m).
· Total Accounting Return(1) on IFRS net assets of 1.3% (2023: -15.9%).
· Total Accounting Return(1) on EPRA net tangible assets of 0.8% (2023:
-16.6%).
· EPRA net tangible asset value per share(1) unchanged at 331p (31 March
2024: 331p).
· EPRA net disposal value per share(1) up to 328p (31 March 2024: 327p).
Financing
· IFRS net borrowings of £120.5m (31 March 2024: £199.0m).
· See-through loan to value(1) of 31.5% (31 March 2024: 39.5%).
· Pro-forma see-through loan to value(1) of 15.9%.
· See-through net borrowings(1) of £188.1m (31 March 2024: £261.6m).
· Pro-forma see-through net borrowings(1) of £77.0m.
· Average maturity of the Group's share(1) of secured investment debt of
3.0 years (31 March 2024: 2.1 years).
· 100% of drawn debt protected by interest rate hedging to expiry of
facilities.
· Average cost of the Group's share of secured investment facilities(1)
of 3.0% (31 March 2024: 2.9%).
· Group's share(1) of cash and undrawn bank facilities of £176.1m (31
March 2024: £115.5m).
Portfolio Update
· Investment property valuations showed an improvement, on a like-for-like
basis of 0.4% while the development portfolio value increased by 9.0% to
provide a net 1.3% improvement overall. The true equivalent yield of the
investment portfolio increased from 6.45% to 6.56% during the Period.
· IFRS investment property portfolio value of £371.9m (31 March 2024:
£472.5m) reflecting disposals during the Period.
· See-through investment portfolio(1), valued at £591.5m (31 March
2024: £660.6m).
· Contracted rents of £30.5m (31 March 2024: £33.0m), compared to an ERV
of £39.7m (31 March 2024: £60.8m). Following the sales of The JJ Mack
Building, EC1 and The Power House, W4, the ERV falls to £29.4m.
· See-through portfolio WAULT(1) of 6.8 years (31 March 2024: 6.6
years).
· Vacancy rate on completed assets decreased to 16.1% at 30 September
2024 (31 March 2024: 17.6%).
Sustainability Highlights
· Received a 5 star GRESB rating across both our development portfolio
and standing investments with a score of 96/100 and 88/100 respectively.
· Design stage BREEAM certificate received for 100 New Bridge Street, EC4
with an Outstanding rating and a score of 95%.
· Sustainability Linked Revolving Credit Facility signed incorporating
three ESG targets.
Interim Dividend Timetable
Announcement date 26 November 2024
Ex-dividend date 20 December 2024
Record date 6 December 2024
Dividend payment date 15 January 2025
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
Matthew Bonning-Snook (Chief Executive)
Tim Murphy (Chief Financial Officer)
Address: 5 Hanover Square, London W1S 1HQ
Website: www.helical.co.uk (http://www.helical.co.uk)
X: @helicalplc
FTI Consulting 020 3727 1000
Dido Laurimore/Richard Gotla/Andrew Davis
schelical@fticonsulting.com (mailto:schelical@fticonsulting.com)
Results Presentation
Helical will be holding a presentation for analysts and investors starting at
10:30am on Tuesday 26 November 2024 at the offices of FTI Consulting, 200
Aldersgate, Aldersgate Street, London, EC1A 4HD. If you would like to attend,
please contact FTI Consulting on 020 3727 1000, or email
schelical@fticonsulting.com (mailto:schelical@fticonsulting.com)
The presentation will be on the Company's website www.helical.co.uk
(http://www.helical.co.uk) and a live webcast and Q&A will also be
available.
Webcast Link:
https://brrmedia.news/HLCL_HY_25 (https://brrmedia.news/HLCL_HY_25)
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
2024 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 2024 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
Since 31 March 2024, we have taken advantage of letting progress to recycle
capital from the portfolio. The Group has sold £190m of completed investment
properties (of which £139m was contracted since 30 September 2024) as well as
50% of the site at 100 New Bridge Street, EC4 for £55m. In aggregate, the
Group has realised £245m of value at a net profit of £10m over 31 March 2024
book values. These sales have underpinned a return to profit, alongside an
increase in Net Asset Value and a positive Total Accounting Return.
Importantly, they also provide the Group with all the anticipated equity it
requires to be able to complete its current development pipeline, including
those schemes not yet commenced, providing fuel for our future growth.
Our business model is now focused on delivering, in joint venture with equity
partners, "best-in-class" developments in highly desirable central London
locations. Primarily, these will be new office schemes or the comprehensive
refurbishment of existing buildings. In addition, we will look at alternative
uses within central London, such as the purpose built student accommodation
being planned above Southwark tube station. As we consider alternative
opportunities, we will always look to deliver the best value use.
We have a current pipeline of five development projects with our future equity
requirements fully funded, delivering into a window with strongly predicted
low levels of supply. We also have a strategic joint venture with TfL's
property company, Places for London, with an ambition to deliver more schemes
with them, having just started on site at the first office project at 10 King
William Street, EC4. Future potential schemes are already in discussion. This
exciting approach to development in central London brings the prospect of a
number of revenue streams to Helical. During the construction phase, the
development management fees payable by the joint ventures fund the Group's
costs of providing its expertise. In aggregate, with several schemes under
construction at the same time, the receipt of these fees significantly reduces
the net overheads of the business, in addition to the 25% cost reduction
referred to below. On completion and successful letting, particularly for
"equity-light" schemes, a development promote is payable to the Group, which
has the potential to provide returns significantly in excess of the level of
equity required. Our business model envisages additional "equity-light"
schemes being added to the current development pipeline. Finally, for those
schemes in joint venture, there will be a proportionate return for the equity
participation.
In the Period, the Group started three new schemes, at 100 New Bridge Street,
EC4, 10 King William Street, EC4 and Brettenham House, WC2. All three schemes,
totalling 460,000 sq ft, are scheduled to achieve practical completion in
2026, when supply of new schemes is expected to be severely constrained.
In May 2024, we committed to reduce our running overheads by 25% by the end of
March 2025 and I am pleased that we are on track to deliver on this promise. A
major part of this cost reduction is the imminent move of our head office
which will complete before Christmas.
Results for the Half Year
The profit after tax for the half year to 30 September 2024 was £4.7m (2023:
loss of £93.1m). See-through net rental income reduced by 11.4% to £11.0m
(2023: £12.4m) while developments generated a see-through profit of £0.3m
(2023: loss of £0.5m). The see-through net gain on sale and revaluation of
the investment portfolio was £9.2m (2023: loss of £96.7m).
Total see-through net finance costs reduced to £5.1m (2023: £5.6m),
reflecting a lower level of debt. Included in net finance costs is a charge of
£2.0m relating to the amortisation of arrangement costs relating to the
revolving credit facility repaid at the end of the Period. A fall in expected
future interest rates led to a £4.7m charge (2023: credit of £2.1m) from the
valuation of the Group's see-through derivative financial instruments.
Recurring see-through administrative costs were 5.5% lower at £4.6m (2023:
£4.8m) before an accelerated depreciation charge of £0.4m (2023: £nil) and
non-recurring restructuring costs of £0.2m (2023: £nil). Performance related
awards, including National Insurance, reduced to £0.8m (2023: £0.9m).
Since 1 April 2022, Helical has been a REIT and there was a £nil tax charge
(2023: £nil) for the half year.
The IFRS basic earnings per share was 3.79p (2023: loss of 75.85p) and EPRA
earnings per share were 2.25p (2023: 1.15p).
On a like-for-like basis, the investment portfolio increased in value by 0.4%
(0.4% including purchases and gains on sales). The see-through total
investment portfolio value reduced to £591.5m (31 March 2024: £660.6m),
mainly reflecting the sales of 25 Charterhouse Square, EC1 and 50% of 100 New
Bridge Street, EC4. Subsequent to 30 September 2024, the pro-forma investment
portfolio decreased in value to £481.9m, reflecting the sale of the Group's
50% share of The JJ Mack Building, EC1, the expected sale of The Power House,
W4 and the purchase of the site at 10 King William Street, EC4 in joint
venture with Places for London.
The completed investment portfolio was 83.9% let at 30 September 2024 (31
March 2024: 82.4%) and generated contracted rents of £30.5m (31 March 2024:
£33.0m), equating to an average of £68.86 psf (31 March 2024: £69.02 psf).
The post half year end sales reduce contracted rent to £21.3m. This increases
to an ERV of £29.4m on the letting of the currently vacant space and
capturing the reversion of the portfolio. The Group's contracted rent has a
Weighted Average Unexpired Lease Term ("WAULT") at 30 September 2024 of 6.8
years (31 March 2024: 6.6 years).
The Total Accounting Return ("TAR"), being the growth in the IFRS net asset
value of the Group, plus dividends paid in the half year, was 1.3% (2023:
-15.9%). Based on EPRA net tangible assets, the TAR was 0.8% (2023: -16.6%).
EPRA net tangible assets per share remained unchanged at 331p (31 March 2024:
331p), with EPRA net disposal value per share increasing to 328p (31 March
2024: 327p).
Asset Management
We have an investment portfolio which is significantly reduced in the number
of assets held, as we recycle equity once the asset management is largely
completed and as we pivot the business further towards development. The
investment portfolio now consists of The Bower, EC1 and The Loom, E1.
At The Bower, EC1, we have made progress following the departure of WeWork,
who occupied the first six floors of The Tower comprising c.59,000 sq ft. We
have refurbished three of the six floors, with one let and two recently
released to the market. Of the other three floors, two are occupied by a
provider of flexible space and the final floor is undergoing a light refit. At
The Warehouse, we have carried out works on the recently vacated 7(th) floor
to re-present the space as an attractive fitted option.
At The Loom, E1 we have made progress during the Period, reducing vacancy from
35% to 27% today.
We continue to actively manage the multi-let campus at The Bower, EC1 which
has a broad mix of office and F&B occupiers, ensuring that it presents as
new. Offering a mix of occupier spaces including fitted solutions, Cat A
finish and our serviced operation Beyond The Bower, we aim to retain occupiers
as they reach lease ends and attract new occupiers when vacancy occurs,
maximizing occupancy throughout the estate. The new public realm works carried
out by TfL, immediately outside The Tower after several years of construction,
have certainly increased the estate's appeal.
Balance Sheet Strength and Liquidity
The Group has a significant level of liquidity following the post balance
sheet sales with see-through cash and unutilised bank facilities of £217.6m
(31 March 2024: £115.5m), and a development pipeline whose equity is fully
funded.
At 30 September 2024, the Group had £14.2m of cash deposits available to
deploy without restrictions and a further £12.7m of rent in bank accounts
available to service payments under loan agreements, cash held at managing
agents and cash held in joint ventures. In addition, the Group held rental
deposits from tenants of £10.5m and had £32.2m deposited with solicitors to
fund the acquisition of the site at 10 King William Street, EC4. Furthermore,
the Group had £106.5m of loan facilities available to draw on.
These Period end balances are supplemented by cash receipts of £71.4m from
the sale of the Group's 50% share in The JJ Mack Building, EC1 at the end of
October 2024 and the sale of The Power House, W4 for £7.0m, due for
completion at the end of November 2024.
The see-through loan to value ratio ("LTV") reduced to 31.5% at the Balance
Sheet date (31 March 2024: 39.5%) and our see-through net gearing, the ratio
of net borrowings to the net asset value of the Group, decreased to 46.5% (31
March 2024: 65.2%) over the same period. However, post Period-end sales have
reduced the pro-forma see-through LTV to 15.9% and the pro-forma see-through
net gearing to 19.1%, the lowest gearing ratios in the Group's history.
At the Period end, the average debt maturity of the Group's secured investment
loans was 3.0 years (31 March 2024: 2.3 years), with two one-year extensions
of the Group's revolving credit facility extending this maturity to 5.0 years.
The average cost of debt, on a see-through basis, was 3.0% (31 March 2024:
2.9%).
Dividends
Helical is a capital growth stock, seeking to maximise value by successfully
letting comprehensively refurbished and redeveloped property. Once stabilised,
these assets are either retained for their long-term income and reversionary
potential or sold to recycle equity into new schemes.
This recycling leads to fluctuations in our EPRA earnings per share, as the
calculation of these earnings excludes capital profits generated from the sale
and revaluation of assets. As such, both EPRA earnings and realised capital
profits have previously been considered when determining the payment of
dividends.
Moving forward, and in line with our new strategy, we have adjusted our
dividend policy to suit our expected trajectory. We will align our dividends
to our EPRA earnings per share, rebasing to a lower level while we wait for
our development pipeline to produce profits.
In the Period to 30 September 2024, EPRA earnings per share increased from
1.15p to 2.25p. However, due to the sales of investment assets during the
financial year to date, we do not currently expect this earnings trajectory to
continue in the second half of the year. We are, therefore, restricting the
Interim Dividend to the minimum Property Income Distribution ("PID") required
under the REIT regime and an Interim Dividend of 1.50p per share will be paid
in January 2025.
The Opportunity
Our development pipeline is expected to provide development management fees,
promotes and surpluses for the next three years. With three recently started
new schemes delivering c.460,000 sq ft from early 2026 onwards, this pipeline
will be supplemented with additional "equity-light" opportunities as building
owners seek specialists in development and refurbishment to partner with them
to maximise the value of their assets. In addition, banks and other financial
institutions with non-performing assets should provide additional
opportunities for Helical.
Our Balance Sheet is in very good shape with gearing at its lowest level in
the Group's history. Maintaining financial discipline remains at the forefront
of Helical's approach. Recycling equity and seeking third party funding for
future opportunities will allow the Company to grow the business while keeping
gearing within our guidance levels of 15% to 35%.
We have a current pipeline of five development projects, which will be
delivered into a window where demand for the best quality space is expected to
significantly outstrip supply. With an experienced management team, funds in
place to deliver a substantial development pipeline and no legacy assets
requiring investment to meet minimum sustainability standards, Helical is
financially and operationally well placed to deliver a strong performance over
the coming cycle.
Matthew Bonning-Snook
Chief Executive
25 November 2024
Our Market
Overview
As we approach 2025, the central London office market is showing encouraging
signs of life, despite the ongoing economic and geopolitical challenges. The
broader economy is also beginning to stabilise, with falling interest rates
creating a more favourable environment for the investment market.
Leasing activity has continued to strengthen quarter-on-quarter, outpacing the
five year average. Demand is heavily concentrated at the top end of the
market, driven by a "flight to quality" as occupiers seek premium office
spaces that align with evolving workplace strategies and stringent ESG
criteria. This trend is bolstering demand and rental growth for
"best-in-class" assets, while posing challenges for older, less well-specified
buildings. Among the larger occupier requirements, a first-mover advantage
will likely emerge as the pipeline of new office deliveries slows from 2026.
Over the last year, the Bank of England has cut policy rates twice to 4.75%
and further reductions are expected, albeit more slowly than previously
anticipated. The combination of economic uncertainty, geopolitical events, and
changes in global governance means investors have continued to adopt a
"wait-and-see approach".
Encouragingly, we have seen the arrival of several large lot size sales onto
the commercial property market which are expected to serve as key indicators
as we enter the new year, guiding the ongoing phase of price discovery and
bringing confidence back into the market.
Investment Market
The investment market is showing signs of recovery despite overall volumes
remaining below historical averages. Q3 2024 saw central London investment
volumes reach £1.2 billion. According to CBRE data, investment volumes to the
end of Q3 reached £3.1 billion, marking a 17% decline compared to the same
period in 2023 and remaining 59% below the ten year quarterly average.
A total of 35 deals were transacted in Q3, slightly up from 34 in the previous
quarter with the purchase of Atlantic House, EC1 for c.£180m, representing
the City's largest transaction since Q1 2024. The activity has tended to focus
on the smaller lot sizes with the West End accounting for 61% of all deals so
far in 2024. In the City, the interest has been focused on core-plus and
value-add transactions although the recent emergence of larger lot sizes onto
the market is receiving increasing attention from investors. The appetite and
pricing for core City assets has yet to be tested in a significant openly
marketed transaction.
A key emerging trend for London capital markets is the widening of the demand
pool with evidence of some UK and European institutional investors returning
to the market alongside private family offices and private equity capital.
According to CBRE, during the last 12 months, overseas investors represented
approximately half of the market and domestic investors the other half.
The widening yield spread between prime and secondary assets highlights the
strong preference for quality, sustainable buildings. This, coupled with
improving market sentiment, strong rental growth for the best quality space
and economic recovery, is attracting investors who sense that market yields
have peaked and the trajectory is positive.
Occupational Market
The central London occupational market demonstrated continued growth in 2024,
with leasing activity gaining significant momentum. Take-up reached 2.8m sq ft
in Q3 2024, marking the highest quarterly volume of the year and bringing
year-to-date volumes to 6.6m sq ft. This represents a 5% increase compared to
the same period in 2023, surpassing the Q1-Q3 five year average by 8%, as
reported by JLL.
Demand for high-quality space continues, with large pre-let deals driving the
market. According to industry data, banking and finance sector take-up was
22%, closely followed by the professional sector at 19%. Significant pre-let
transactions included Citadel, BDO, Evercore and Legal & General and it is
reported that 40.9% of the total volume under construction is already
pre-leased.
Overall availability in central London stands at 24.2m sq ft (8.5%) at the end
of Q3, however the new build vacancy rate stands at 1.5% in total and 1.1% in
the City. The market continues to favour "best-in-class" spaces, reinforcing a
"flight to quality". Real estate sector insights support a positive outlook
with elevated levels of space under offer, 3.5m sq ft, compared to a 10 year
average of 2.8m sq ft and active demand at 12.7m sq ft, compared to a 9.4m sq
ft 10 year average.
Prime rental levels are forecast to rise strongly as demand for the
"best-in-class" space outpaces supply. JLL predict prime rents rising from
2025-2029 by 3.8% per annum and even higher growth levels for the
"super-prime" buildings. Occupiers are increasingly mindful of factors such as
fit-out costs and landlord counterparty risk when making pre-leasing decisions
but the drive to improve productivity, encourage collaboration, promote
employee wellbeing, attract and retain the best talent outweighs this,
enhancing the appeal of being in the best quality office accommodation.
Development Pipeline
As stated above, the market is poised for a demand-supply imbalance. Of the
space currently under construction JLL report that 44% is pre-let or under
offer. With regard to the completions planned post 2026 there is considerable
uncertainty on delivery with over 54% having "multiple barriers to starting on
site" (JLL Central London Market Overview).
Increasingly, existing redundant office buildings that cannot profitably be
repositioned to be "best-in-class" buildings are being re-purposed for
alternative uses such as hotels or student accommodation. In certain
sub-markets the alternative uses generate higher values. An example of this is
our office project with Places for London at Southwark where we are now
submitting a planning application for a 429-unit purpose built student
accommodation scheme, aiming to target the robust demand in the student
housing sector in this location. We will continue to look at other central
London opportunities where we can reposition assets to their best value use.
A planning system focused on retrofit-first, rightly trying to reduce embodied
carbon emission, will inevitably lead to a slowdown in planning approvals as
developers seek to justify levels of demolition and new build replacement.
Rising construction costs have tempered but whilst this slowdown offers some
relief to developers, challenges persist. Supply chain disruptions, labour
shortages and material availability remain issues affecting project schedules.
The industry's volatility, evidenced by contractor insolvencies, poses
additional risks. As developers we are very careful in our contractor
selection and implement risk management strategies to manage these risks.
The combination of these factors is likely to lead to the reassessment of
schemes and delays in delivery, potentially exacerbating undersupply and
driving increased competition for those schemes that are deliverable.
This environment presents an excellent opportunity for developers and
investors able to deliver new, "best-in-class" schemes who can navigate the
complex planning requirements and increased regulatory scrutiny.
Conclusion
Helical is strategically positioned to capitalise on the evolving and
recovering central London market. Our portfolio, focused on the best quality
space and amenities, aligns with current occupier requirements, attracting
tenants through our excellent credentials and proactive asset management
strategy. This year, we have achieved significant success through the sale of
our 50% interest in The JJ Mack Building, EC1, and have also renewed our
revolving credit facility, securing it for the next three years. Furthermore,
we have commenced construction on our "best-in-class" schemes at 100 New
Bridge Street, EC4, Brettenham House, WC2 and 10 King William Street, EC4,
delivering 460,000 sq ft of space into a market which is predicted to be
undersupplied.
While maintaining a focus on offices, we retain a flexible approach,
considering diversification into alternative property sectors to maximise
available market opportunities. We have an extensive development pipeline in
vibrant submarkets experiencing strong tenant demand and high rental growth
potential. With our strategic joint venture with Places for London, combined
with our proven track record and expertise, we are well placed to benefit from
what we see as a significant market opportunity to create value.
Sustainability
We continue to make good progress against the targets we set out in our
sustainability strategy "Built for the Future" and our ambitions to become a
net zero carbon business. With the recent release of the first UK Net Zero
Carbon Building Standard, we are in the process of reviewing how our pipeline
of developments aligns with the targets and limits set within, with a view of
providing a full assessment of the impact in our Annual Report and Accounts in
May 2025. In the intervening period, we have submitted 100 New Bridge Street,
EC4 to participate in the pilot testing scheme for the Standard.
For GRESB, we have again performed well with a score of 88% and receiving a 5
star rating in the annual sustainability performance index for our standing
investment properties. Alongside this, we received a score of 96% for our
development activities, also resulting in a 5 star rating. This uplift from
our previous 4 star rating demonstrates the continued improvements we are
making in how we develop and manage our assets.
For our sustainability reporting, we received a Gold Award for the fourth
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.
During the Period we were pleased to receive the interim design stage BREEAM
certificate for 100 New Bridge Street, EC4, achieving a score of 95% and an
Outstanding rating. Alongside this, the development was also awarded a NABERS
Design for Performance Reviewed Target Rating of 5 stars. This is the first
building within Helical's development portfolio to achieve this milestone and
sets a new standard for energy efficiency and sustainability. We have a
commitment to achieve a minimum NABERS rating of 5 stars across all our
development schemes.
In September, the new £210m Group Revolving Credit Facility was signed with
the inclusion of three Sustainability KPIs. The targets were selected to
reflect our development activities over the next three years and include an
embodied carbon target, BREEAM certification target and, to reflect our
commitments to growing social value, a volunteering hours target. We will
report on the performance against these targets in May 2025 as part of our
annual reporting.
Helical's Property Portfolio - 30 September 2024
Property Overview
We seek to maximise returns through delivering income growth from creative
asset management and capital gains from our development activity. Focused on
central London, the Helical portfolio comprises investment assets we have
created and an exciting pipeline of development schemes, each designed to the
very highest standards to enable their occupiers to thrive and benefitting the
communities in which they are located. This pipeline includes three schemes
that have started on site and will deliver 460,000 sq ft of "best-in-class"
offices in 2026 into a supply constrained market. We are actively looking to
add to our pipeline with further joint ventures and "equity-light"
opportunities.
Investment Portfolio
The Bower, EC1
The Bower is a prominent estate comprising 312,573 sq ft of innovative, high
quality office space along with 21,059 sq ft of restaurant and retail space.
The estate is located adjacent to the former Old Street roundabout which has
been peninsularised, creating further high-quality public realm to the benefit
of The Bower and its occupiers.
The Warehouse and The Studio
The Warehouse and The Studio comprise 141,141 sq ft of office space. In
addition, there is 10,298 sq ft of fully-let retail space across the
buildings.
The buildings are 91.8% let, with fitout works on the vacant seventh floor
expected to complete at the beginning of December.
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.
Following the departure of WeWork, who occupied the first six floors, Beyond
The Bower (run by third party operator infinitSpace), our serviced office
offering, is fully operational on floors one and two. Occupancy across these
two floors, by number of desks, is now 62%.
The fourth floor has been refurbished and let on a five year lease with a
three year break. The refurbishment of the fifth and sixth floors on a fully
fitted basis has completed and these floors are now available to let.
The third floor, previously occupied by Stripe, under license through WeWork
until June 2024, is being refurbished.
Farfetch, who occupied six floors across the wider Bower estate, consolidated
into their three floors in The Warehouse and assigned floors seven, eight and
nine of The Tower to Fresha, a multi-national software booking platform.
We have also completed the renewal of 13(th) floor with OpenPayd, which was
due to expire in February 2025 but has been extended for a further five years
to 17 February 2030, with a break option in year three, at its ERV of £80
psf.
As a result, the building is now 83.7% occupied.
The Loom, E1
This former Victorian wool warehouse offers 108,540 sq ft of space and we have
made good progress with our flexible lease offerings, resulting in the letting
of previously vacant space and the retention of current tenants. Vacancy
stands at 27%, down from 35% at the last year end, following the completion of
eight new lettings and five lease renewals, including relocating existing
tenants within the building.
Sales
The JJ Mack Building, EC1
A 206,085 sq ft office building, including 5,474 sq ft of retail, which was
developed with AshbyCapital via a 50:50 joint venture. The JJ Mack Building,
named after the market trader who occupied the site in the 1940s, is one of
London's most sustainable new office buildings, having recently been
recognised as BREEAM's highest rated new office development under the 2018
guidance, with an Outstanding score of 96.42%. In addition, the building won
the 2021 SECBE Digital Construction Award and has been awarded EPC A and
NABERS 5 star.
During the Period, we leased a further 45,624 sq ft of space at 1.8% above 31
March 2024 ERVs, taking the building to 90% let.
After the Period end, we completed the sale of our 50% share in the building
to our joint venture partner, AshbyCapital on 31 October 2024 with £139.2m
representing our share of the property value. After accounting for debt, this
released £71.4m of equity to fund our current development pipeline.
25 Charterhouse Square, EC1
25 Charterhouse Square is a 42,921 sq ft office building, including 4,566 sq
ft of retail space, overlooking the historic Charterhouse Square and adjacent
to the Farringdon East Elizabeth Line station. On 25 April 2024, we completed
the sale of the long leasehold to Ares Management, a real estate fund manager,
for £43.5m.
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. The building is fully let on a
long leasehold to Metropolis Music Group.
We have exchanged contracts to sell the building for £7.0m with completion
expected at the end of November 2024.
Development Pipeline
On Site
100 New Bridge Street, EC4
Our "best-in-class" office development at 100 New Bridge Street is adjacent to
City Thameslink and a short walk from Farringdon and Blackfriars stations.
This "carbon friendly new build" will provide 191,000 sq ft of office space
across seven retained floors and three new floors, as well as 3,500 sq ft of
retail space once completed in April 2026. In addition, we will make
considerable public realm improvements to improve the street level experience
for tenants and the local community.
During the Period, we signed a joint venture agreement with Orion Capital
Managers, a £155m (our share £77.5m) development facility agreement with
NatWest and an institutional lender, as well as the main building contract
with Mace. Works are progressing well, with internal strip-out works now
complete along with the removal of the façade on all elevations and hard
demolition has commenced on the upper floors.
Brettenham House, WC2
We have signed a development management agreement with the owner of Brettenham
House, a 1930s heritage office building located on the Thames between The
Savoy and Somerset House at Waterloo Bridge. We have utilised our expertise in
retrofit and refurbishments to assist with the design of a comprehensive
refurbishment of the building and obtained planning consent for extensive
amenity which will significantly upgrade this asset. Work has commenced and is
due to complete by April 2026. Helical have committed to contributing £12.5m
during the construction phase and will receive a development management fee of
£2.5m and profit share based upon rental performance once the building is
successfully let.
Places for London Joint Venture
Contracts were signed in July 2023, confirming Helical as the commercial
office joint venture partner of Transport for London's property company,
Places for London. This long-term partnership will see the delivery of new
high-quality and sustainable space, predominantly above or adjacent to key
transport hubs. The joint venture consists of three initial development
opportunities with construction underway at the first of these sites, 10 King
William Street, EC4.
10 King William Street, EC4
An eight-storey office development on an island site, located above the
recently opened Bank station entrance on Cannon Street, offering 139,000 sq ft
of prime office space with attractive sized floor plates and 2,000 sq ft
ground floor retail space. Since formation of the joint venture, we have
enhanced the scheme alongside Fletcher Priest Architects and the wider
professional team.
During the summer we secured consent for public realm enhancements making
Abchurch Lane a shared space, a much improved cycle arrival experience and the
inclusion of changing facilities and a wellness lounge at mezzanine level, via
three separate s96a planning applications. We acquired the site on 1 October
2024 and the basement construction works are now well underway. Terms have
been agreed for a four year, £125m development facility to fund the
construction works and we aim to achieve practical completion of the scheme by
December 2026.
Future Opportunities
Southwark OSD, SE1
The second site in our joint venture with Places for London is located above
Southwark tube station. Prior to the formation of the joint venture, planning
was obtained for a 222,000 sq ft NIA office scheme. After conducting
feasibility studies (to determine the most appropriate and valuable use for
the site) and having detailed pre-application discussions with Southwark
Borough Council, we submitted a planning application on 20 September 2024
proposing a purpose-built student accommodation scheme of 429 studio units,
together with a separate building providing 44 affordable housing units.
The new scheme sees a reduction in height and massing compared to the
previously consented office scheme, as well as retaining and enhancing Joan
Street as part of the significant improvements to local biodiversity and urban
greening.
We aim to commence on site in July 2025 with completion in Q2 2028. As part of
our focus on "equity light" opportunities, we intend to forward fund the
scheme.
Paddington OSD, W2
Situated close to the Elizabeth Line station at Paddington, the third
development in our joint venture with Places for London is a 19-storey
building that will provide 235,000 sq ft of office space. In the Period, we
received consent to introduce terracing on each office floor and have
submitted a further application to significantly improve the end of trip
facilities and arrival experience. The site will be acquired by the joint
venture in January 2026 and the intention is to deliver the scheme in January
2029.
Portfolio Analytics
See-through Total Portfolio by Fair Value
Investment % Development % Total
£m £m £m %
London Offices
- Completed properties 525.1 88.8 - - 525.1 87.9
- Development pipeline 66.3 11.2 5.7 94.5 72.0 12.0
Total London Core 591.4 100.0 5.7 94.5 597.1 99.9
Other 0.1 0.0 0.3 5.5 0.4 0.1
Total Non-Core Portfolio 0.1 0.0 0.3 100.0 0.4 0.1
Total 591.5 100.0 6.0 100.0 597.5 100.0
Capital Expenditure
We have a committed and planned development and refurbishment programme.
Property Capex Proposed equity (Helical share) Proposed debt (Helical share) Commencement Completion
date
budget £m £m date
(Helical share)
£m
Investment - committed
- 100 New Bridge Street, EC4 53.9 - 53.9 On-site Q2 2026
- Brettenham House, WC2 12.5 12.5 - On-site Q2 2026
- 10 King William Street, EC4 95.4 42.1 53.3* On-site Q4 2026
- Southwark OSD, SE1 11.0 11.0 - Q3 2025 Q2 2028
- Paddington OSD, W2 30.2 30.2 - Q1 2026 Q1 2029
Investment - planned
- Paddington OSD, W2 127.2 41.1 86.1* Q1 2026 Q1 2029
* Assumes 55% LTC debt facility arranged for future schemes.
Asset Management
Asset management is a critical component in driving Helical's performance.
Through having well considered business plans and maximising the combined
skills of our management team, we are able to create value in our assets.
Passing % Contracted rent % ERV % ERV change
Investment portfolio rent £m £m like-for-like
£m %
London Offices 20.1 100.0 30.4 99.7 39.6 99.7 0.9
Total London 20.1 100.0 30.4 99.7 39.6 99.7 0.9
Other 0.0 0.0 0.1 0.3 0.1 0.3 0.0
Total 20.1 100.0 30.5 100.0 39.7 100.0 0.9
See-through
total portfolio contracted rent
£m
Rent lost at break/expiry (2.4)
Contracted rent reduced through sales (2.9)
New lettings 2.8
Net decrease in the Period (2.5)
* Following the sale of The JJ Mack Building, EC1 and The Power House, W4
post Period end, the contracted rent reduced by a further £9.2m.
Investment Portfolio
Valuation Movements
Valuation Valuation Investment portfolio Investment portfolio
change change weighting weighting
inc sales exc sales 30 September 2024 31 March 2024
% % % %
London Offices
- Completed properties 0.4 0.4 88.8 85.0
- Development pipeline 9.0 9.0 11.2 15.0
Total 1.2 1.3 100.0 100.0
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 2024 2024
2024 2024 2024 2024 % %
% % % %
London Offices
- Completed properties 5.37 5.14 6.67 6.86 6.56 6.45
- Development pipeline n/a n/a 5.98 6.05 5.57 5.68
Total 5.37 5.14 6.46 6.60 6.26 6.34
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
2024 2024 2024 2024 2024 2024
£ psf £ psf % % Years Years
London Offices 992 982 16.1 17.6 6.8 6.6
See-through Lease Expiries or Tenant Break Options
Half Year to Year to Year to Year to Year to 2029
2025 2026 2027 2028 2029 onward
% of rent roll 7.8 4.6 6.6 32.8 7.7 40.5
Number of leases 15 13 8 17 5 28
Average rent per lease (£) 158,617 107,603 251,882 588,186 466,332 440,327
Letting Activity - New Leases
Area Area Contracted rent Rent Increase to Average
sq ft (Helical share) (Helical's share) £ psf 31 March 2024 ERV lease term to expiry
sq ft £ % Years
Investment Properties
Offices
- The Loom, E1 16,391 16,391 709,293 43.27 (1.8) 4.93
- The JJ Mack Building, EC1 44,103 22,052 2,084,236 94.51 1.2 12.33
Total 60,494 38,443 2,793,529 72.67 0.4 11.26
Retail
- The JJ Mack Building, EC1 1,521 760 50,000 65.79 31.6 5.00
Total 1,521 760 50,000 65.79 31.6 5.00
Total 62,015 39,203 2,843,529 72.53 0.9 11.13
Financial Review
IFRS Performance EPRA Performance
Profit after tax EPRA earnings
£4.7m (2023: loss of £93.1m)
£2.8m (2023: £1.4m)
Earnings per share (EPS) EPRA EPS
3.8p (2023: loss of 75.8p)
2.25p (2023: 1.15p)
Diluted NAV per share EPRA NTA per share
328p (31 March 2024: 326p)
331p (31 March 2024: 331p)
Total Accounting Return Total Accounting Return on EPRA NTA
1.3% (2023: -15.9%) 0.8% (2023: -16.6%)
Overview
In the Period since 31 March 2024, the Group has made significant progress in
funding its development pipeline by selling investment assets and 50% of its
office development scheme at 100 New Bridge Street, EC4, generating c.£245m
of gross proceeds (£146m post half year). These transactions have funded the
Group's contribution to acquiring the site at 10 King William Street, EC4,
reduced gearing, post the half year end, to a pro-forma LTV of 15.9%, the
lowest level in the Group's history, and provided all the equity expected to
be required to complete the Group's current development programme.
Results for the Period
The IFRS profit for the Period of £4.7m (2023: loss of £93.1m) includes
revenue from rental income, service charges and development management fees of
£16.9m, offset by direct costs of £8.3m to give a net property income of
£8.6m (2023: £12.3m). Other income was £nil (2023: £0.9m from the
sub-letting of part of the Company's head office). There was a net gain on
sale and revaluation of investment properties of £11.8m (2023: loss of
£93.4m) and the loss from joint venture activities was £1.1m (2023: £4.5m).
Administration expenses of £5.9m (2023: £5.6m) and net finance costs of
£3.8m (2023: £4.0m), were further increased by a loss in the fair value of
derivatives of £4.9m (2023: gain of £2.1m).
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 structures to show the Group's share of the underlying business.
The see-through results for the Period to 30 September 2024 include net rental
income of £11.0m (2023: £12.4m), a net gain on sale and revaluation of the
investment portfolio of £9.2m (2023: loss of £96.7m) and development profits
of £0.3m (2023: loss of £0.5m), leading to a Total Property Return of
£20.4m (2023: -£84.8m). Administration costs of £6.0m (2023: £5.8m) and
see-through net finance costs of £5.1m (2023: £5.6m) plus see-through losses
from the mark-to-market valuation of derivative financial instruments of
£4.7m (2023: gains of £2.1m) contributed to an IFRS profit of £4.7m (2023:
loss of £93.1m).
While sales of investment assets reduced the Group's net rental income in the
half year, repayment of borrowings and the receipt of development management
fees contributed to an increase in earnings with an EPRA EPS for the Period of
2.25p (2023: 1.15p).
The interim dividend, payable on 15 January 2025, will be 1.50p per share
(2023: 3.05p).
The EPRA net tangible asset value per share remained the same at 331p (31
March 2024: 331p).
The Group's investment portfolio, including its share of assets held in joint
ventures, decreased to £591.5m (31 March 2024: £660.6m), primarily due to
the sale of 25 Charterhouse Square, EC1 and the sale of 50% of our interest in
100 New Bridge Street, EC4, offset by capital expenditure on the investment
portfolio of £15.9m and on the development portfolio of £4.3m.
The Group's see-through loan to value at 30 September 2024 was 31.5% (31 March
2024: 39.5%). The Group's weighted average cost of debt at 30 September 2024
was 3.0% (31 March 2024: 2.9%) and the weighted average debt maturity was 2.7
years (31 March 2024: 2.1 years).
At 30 September 2024, the Group had unutilised bank facilities of £106.5m and
cash of £69.6m on a see-through basis. These are primarily available to fund
future property acquisitions and capital expenditure.
The sale of The JJ Mack Building, EC1 plus our share of the purchase of the
site at 10 King William Street, EC4, both completed since 30 September 2024.
In addition, we anticipate the completion of the sale of The Power House, W4
at the end of November 2024 and together these transactions will reduce our
net borrowings, resulting in a proforma see-through LTV of 15.9%.
Total Property Return
We calculate our Total Property Return to enable us to assess the aggregate of
income and capital profits made each year from our property activities. Our
business is primarily aimed at producing surpluses in the value of our assets
through asset management and development, with the income side of the business
seeking to cover our annual administration and finance costs.
Half Year to Half Year to Half Year to
2024 2023 2022
£m £m £m
Total Property Return 20.4 (84.8) 4.0
See-through 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 each Period and is expressed as an absolute measure.
Half Year to Half Year to Half Year to
2024 2023 2022
% % %
Total Accounting Return on IFRS net assets 1.3 (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 Half Year to
2024 2023 2022
% % %
Total Accounting Return on EPRA net tangible assets 0.8 (16.6) (2.5)
Earnings/Loss Per Share (EPS)
The IFRS loss per share of 75.8p in the first half of the last financial year
improved to IFRS earnings of 3.8p this financial year and is based on the
after tax earnings (2023: loss) attributable to ordinary Shareholders divided
by the weighted average number of shares in issue during the year.
On an EPRA basis, the earnings per share were 2.25p compared to an earnings
per share of 1.15p in 2023, reflecting a decrease in the Group's share of net
finance costs to £5.1m (2023: £5.6m) and an increase in development profits
to £0.3m (2023: loss of £0.5m) offset by a reduction in net rental income to
£11.0m (2023: £12.4m). EPRA EPS excludes gains on sale and revaluation of
investment properties of £9.2m (2023: loss of £96.7m).
Net Asset Value
IFRS diluted net asset value per share increased to 328p per share (31 March
2024: 326p) 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 remained at 331p (31 March 2024:
331p).
EPRA net disposal value per share increased to 328p (31 March 2024: 327p).
Income Statement
Rental Income and Property Overheads
Gross rental income for the Group in respect of wholly owned properties
decreased to £10.3m (2023: £17.1m) before adjusting for lease incentives.
In order to spread the impact of rent free periods over the term of the
associated leases, additional rental income of £0.1m has been added to gross
rental income reflecting accrued income from lease incentives (2023: £4.3m
was offset against gross rental income reflecting the net reversal of
previously recognised rental income accrued in advance of receipt). In 2023,
£2.9m of this adjustment related to the unexpired lease incentives provided
to WeWork which were reversed on the termination of their leases during the
half year. Overall, this resulted in gross rental income of wholly owned
properties of £10.4m (2023: £12.8m).
2024 2023
£000
£000
Gross rental income (excluding lease incentives) - subsidiaries 10,351 17,111
Lease incentives - subsidiaries 52 (4,307)
Total gross rental income 10,403 12,804
Gross rental income in joint ventures increased to £3.1m (2023: £0.9m) as a
result of lettings at The JJ Mack Building, EC1.
Property overheads in respect of wholly owned assets and in respect of those
assets in joint ventures increased to £2.5m (2023: £1.3m) reflecting
increased vacancy in the investment portfolio.
Overall, see-through net rents decreased by 11.4% to £11.0m (2023:
£12.4m).
The table below demonstrates the movement of the accrued income balance for
rent free periods granted and the respective rental income adjustment over the
period to 31 March 2028, based on the tenant leases as at 30 September 2024.
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 2025 6,847 (266)
Year to 31 March 2026 5,338 (1,509)
Year to 31 March 2027 3,838 (1,500)
Year to 31 March 2028 2,588 (1,250)
Rent Collection
We have collected 100% of all rent contracted and payable for the half year to
30 September 2024 and so far have collected 98.5% of the September 2024
quarter rents demanded (98.8% at the corresponding date last year). At 30
September 2024 there was a bad debt provision of £26,000 against the total
rent debtor, all in respect of tenants at The Loom, E1.
Development Profits
In the Group, development management fees of £0.4m plus a £0.1m net
contribution from the retail scheme at East Ham, offset by professional
indemnity insurance and consultancy fees on our development schemes of £0.1m,
resulted in a net development profit of £0.3m (2023: loss of £0.5m).
Share of Results of Joint Ventures
Net rental income recognised in the Period was £2.7m (2023: £0.5m) as a
result of significant lettings at The JJ Mack Building, EC1 over the past
year.
The revaluation of our investment properties held in joint ventures generated
a deficit of £2.7m (2023: £3.3m).
Finance, administration and other sundry costs totalling £1.1m (2023: £1.7m)
were incurred and after a tax charge of £nil (2023: £nil), there was a net
loss from our joint ventures of £1.1m (2023: £4.5m).
Gain on Sale and Revaluation of Investment Properties
There was a gain on revaluation in the Group of £1.8m which together with the
loss on valuation in joint ventures of £2.7m resulted in an overall
see-through loss on valuation of £0.9m. This was offset by the gain on sales
of our investment portfolio on a see-through basis of £10.1m and resulted in
an overall gain on sale and revaluation, including in joint ventures, of
£9.2m (2023: loss of £96.7m).
Administrative Expenses
Administration costs in the Group, before performance related awards,
increased by 9.6% from £4.7m to £5.1m.
Performance related share awards and bonus payments decreased to £0.8m (2023:
£0.9m). Of this amount, £0.4m (2023: £0.7m), being the charge for share
awards under the Performance Share Plan, is expensed through the Income
Statement but added back to Shareholders' Funds through the Statement of
Changes in Equity.
2024 2023
£000 £000
Administrative expenses (excluding performance related awards) 4,493 4,655
Accelerated depreciation change and restructuring costs 607 -
Performance related awards and related NIC 795 915
Group 5,895 5,570
In joint ventures 82 188
Total 5,977 5,758
Administrative expenditure of £5.1m for the half year to 30 September 2024
includes £0.6m of non-recurring expenditure, including costs reflecting an
accelerated depreciation of leasehold improvements at our current head office
in anticipation of our move to new offices in December 2024. The Group remains
on track to reduce fixed overheads by 25% by the end of March 2025.
Finance Costs, Finance Income and Change in Fair Value of Derivative Financial
Instruments
Net finance costs excluding changes in fair value of derivative financial
instruments, but including joint ventures, reduced to £5.1m (2023: £5.6m).
Group 2024 2023
£000
£000
Interest payable on secured bank loans (1,511) (2,878)
Other interest payable and similar charges (1,276) (1,487)
Total interest payable before cancellation of loans (2,787) (4,365)
Cancellation of loans (1,960) -
Total finance costs (4,747) (4,365)
Finance income 923 328
Finance costs net of finance income (3,824) (4,037)
Joint Ventures
Interest payable on secured bank loans (1,209) (1,502)
Other interest payable and similar charges (108) (104)
Total finance costs (1,317) (1,606)
Finance income 27 18
Finance costs net of finance income (1,290) (1,588)
Total finance costs net of finance income (5,114) (5,625)
The movement downwards in medium and long-term interest rate projections
during the Period, together with a restructuring of the interest rate swaps
contributed to a loss of £4.9m (2023: gain £2.1m) on the mark-to-market
valuation of the derivative financial instruments in the Group. In the joint
ventures, a new swap was taken out, resulting in a gain of £0.2m in the
Period.
IFRS Disclosure 2024 2023
£000 £000
Finance costs net of finance income - Group (3,824) (4,037)
Change in fair value of derivative financial instruments (4,893) 2,098
Net finance costs and change in fair value of financial instruments (8,717) (1,939)
Taxation
The Group has been a REIT since 1 April 2022, and is exempt from UK
corporation tax on the profits of its property activities that fall within the
REIT regime. Helical will continue to pay corporation tax on its profits that
are not within this regime.
As a consequence, the tax charge for the Period was £nil (2023: £nil).
Dividends
The Board has declared an interim dividend for the Period of 1.50p (2023:
3.05p) per share, representing the minimum PID payment required under the REIT
regime.
Balance Sheet
Shareholders' Funds
Shareholders' Funds at 1 April 2024 were £401.1m. The Group generated total
comprehensive income for the Period of £4.7m (2023: loss of £93.1m).
Movements in reserves arising from the Group's share schemes increased funds
by £0.4m as a result of the charge for the Performance Share Scheme being
added back. The Company paid dividends to Shareholders during the Period of
£1.9m. As a result of these movements, Shareholders' Funds increased by
£3.2m to £404.2m.
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 2024 479,600 138,250 617,850 4,331 (8,848) 613,333
Capital expenditure - wholly owned 3,782 - 3,782 - - 3,782
- joint ventures - 12,135 12,135 (15) - 12,120
Site acquisition - joint ventures - 55,000 55,000 - - 55,000
Letting costs amortised - wholly owned (70) - (70) - - (70)
- joint ventures - (50) (50) - - (50)
Transfer to assets held for sale - wholly owned (6,880) - (6,880) - - (6,880)
Disposals - wholly owned (99,178) - (99,178) - - (99,178)
Revaluation (deficit)/surplus - wholly owned 1,896 - 1,896 - (139) 1,757
- joint ventures - 161 161 - (2,855) (2,694)
Valuation at 30 September 2024 379,150 205,496 584,646 4,316 (11,842) 577,120
The Group expended £15.9m on capital works across the investment portfolio on
a see-through basis; at 100 New Bridge Street, EC4 (£11.4m), The Bower, EC1
(£3.3m), The JJ Mack Building, EC1 (£0.9m), and The Loom, E1 (£0.3m).
Revaluation gains resulted in a £2.1m increase in the see-through fair value
of the portfolio, before lease incentives, to £584.6m (31 March 2024:
£617.9m). The accounting for head leases and lease incentives resulted in a
book value of the see-through investment portfolio of £577.1m (31 March 2024:
£613.3m).
Debt and Financial Risk
In total, the see-through outstanding debt at 30 September 2024 of £260.9m
(31 March 2024: £296.1m) had a weighted average interest cost of 3.0% (31
March 2024: 2.9%) and a weighted average debt maturity of 2.7 years (31 March
2024: 2.1 years).
Debt Profile at 30 September 2024 - Excluding the Amortisation of Arrangement
Fees
Total Total Available Weighted average interest rate Average maturity of borrowings
facility utilised facility % Years
£000s £000s £000s
£210m Revolving Credit Facility 210,000 188,000 22,000 3.1 3.0
Total wholly owned 210,000 188,000 22,000 3.1 3.0
In joint ventures
- The JJ Mack Building, EC1 69,900 67,151 2,749 2.3 0.8
- 100 New Bridge Street, EC4 77,500 5,785 71,715 8.5* 3.6
Total secured debt 357,400 260,936 96,464 3.0 2.7
Working capital 10,000 - 10,000 - 1.0
Total unsecured debt 10,000 - 10,000 - 1.0
Total debt 367,400 260,936 106,464 3.0 2.7
* Excludes commitment fees.
The debt secured on the investment portfolio at 30 September 2024 had a
weighted average interest rate of 3.1% with an average maturity of three
years, extendable at the Group's option to five years. The debt in joint
ventures, secured on The JJ Mack Building, EC1 and 100 New Bridge Street, EC4
had a weighted average interest rate of 2.8% and an average maturity of 2.3
years.
At 30 September 2024, the Group's borrowings under the £210m RCF (reduced
from £300m in September 2024) of £188m were fully covered by £200m of
interest rate swaps.
Subsequent to the half year, drawings under the RCF were reduced to £138m
following the completion of the sale of The JJ Mack Building, EC1. Further
restructuring of the interest rate swaps down to £175m meant that current
drawings are overhedged by £37m. As we expect to draw down further amounts
under the RCF, we plan to keep the hedging level at £175m. As a consequence
of these changes, the schedule of borrowings post half year end is as follows:
Total Total Available Weighted average interest rate Average maturity of borrowings
facility utilised facility % Years
£000s £000s £000s
£210m Revolving Credit Facility 210,000 138,000 72,000 3.0 3.0
Total wholly owned 210,000 138,000 72,000 3.0 3.0
In joint ventures
- 100 New Bridge Street, EC4 77,500 5,785 71,715 8.5* 3.6
Total secured debt 287,500 143,785 143,715 3.2 3.2
Working capital 10,000 - 10,000 - 1.0
Total unsecured debt 10,000 - 10,000 - 1.0
Total debt 297,500 143,785 153,715 3.2 3.1
* Excludes commitment fees.
Secured Debt
The Group arranges its secured investment and development facilities to suit
its business needs as follows:
- £210m Revolving Credit Facility
During the Period, the Group reduced its Revolving Credit Facility from £300m
to £210m. All of the Group's wholly owned investment assets are secured in
this facility. The value of the Group's properties secured in this facility at
30 September 2024 was £386m (31 March 2024: £522m) with a corresponding loan
to value of 48.7% (31 March 2024: 44.0%). The average maturity of the facility
at 30 September 2024 was 3.0 years (31 March 2024: 2.3 years), with two
one-year extension options which, if exercised, would extend the facility's
repayment date to September 2029.
- Joint Venture Facilities
The Group has a number of investment and development properties in joint
ventures with third parties and includes our share, in proportion to our
economic interest, of the debt associated with each asset.
During the Period, a new £155m facility was arranged with an institutional
lender and NatWest to finance 100 New Bridge Street, EC4 at a fixed rate of
3.8% plus margin. This margin starts at 4.65% during the development phase,
reducing to 2.25% on letting post completion.
The Group's share of bank facilities in joint ventures at 30 September 2024
was comprised of debt of £67.2m against The JJ Mack Building, EC1 and £5.8m
against 100 New Bridge Street, EC4. The debt against The JJ Mack Building, EC1
had a weighted average interest rate of 2.3% and an average maturity of 0.8
years. This debt was subsequently transferred to the purchaser on sale of the
building in October 2024. The debt against 100 New Bridge Street, EC4 had a
weighted average interest rate (excluding commitment fees) of 8.5% and an
average maturity of 3.6 years at 30 September 2024.
Unsecured Debt
The Group's utilised unsecured debt is £nil (31 March 2024: £nil).
Cash and Cash Flow
At 30 September 2024, the Group had £176.1m (31 March 2024: £115.5m) of cash
and agreed, undrawn, committed bank facilities including its share in joint
ventures.
Net Borrowings and Gearing
Total gross borrowings of the Group, including in joint ventures, have
decreased from £296.1m to £260.9m during the Period to 30 September 2024 as
a result of the sale of 25 Charterhouse Square, EC1, offset by funds drawn
down against 100 New Bridge Street, EC4. After deducting cash balances of
£69.6m (31 March 2024: £31.7m) and unamortised refinancing costs of £3.2m
(31 March 2024: £2.8m), see-through net borrowings decreased from £261.6m to
£188.1m. The see-through gearing of the Group, including in joint ventures,
decreased from 65.2% to 46.5%.
Following the sale of The JJ Mack Building, EC1, and the purchase of the site
at 10 King William Street, EC4 (our share 51%), both completed in October
2024, and the anticipated completion of the sale of The Power House, W4 at the
end of November 2024, our pro-forma see-through loan to value falls to 15.9%
and our pro-forma see-through gearing falls to 19.1%.
Pro-forma 30 September 31 March
30 September 2024 2024
2024
See-through gross borrowings £143.8m £260.9m £296.1m
See-through cash balances £63.9m £69.6m £31.7m
Unamortised refinancing costs £2.9m £3.2m £2.8m
See-through net borrowings £77.0m £188.1m £261.6m
Shareholders' funds £404.2m £404.2m £401.1m
See-through loan to value - 31.5% 39.5%
Pro-forma see-through loan to value 15.9% - -
See-through gearing - IFRS net asset value - 46.5% 65.2%
Pro-forma see-through gearing - IFRS net asset value 19.1% - -
Tim Murphy
Chief Financial Officer
25 November 2024
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
25 November 2024
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 2024
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 2024 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
25 November 2024
Unaudited Consolidated Income Statement
For the Half Year to 30 September 2024
Notes Half Year to Half Year to Year to
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Revenue 3 16,920 20,129 39,905
Cost of sales 3 (8,361) (7,857) (14,450)
Net property income 4 8,559 12,272 25,455
Share of results of joint ventures 12 (1,143) (4,499) (9,310)
7,416 7,773 16,145
Gain on sale of Investment properties 5 10,090 - -
Revaluation gain/(loss) on Investment properties 11 1,757 (93,367) (181,213)
19,263 (85,594) (165,068)
Administrative expenses 6 (5,895) (5,570) (11,011)
Operating profit/(loss) 13,368 (91,164) (176,079)
Net finance costs and change in fair value of derivative financial instruments 7 (8,717) (1,939) (13,556)
Profit/(loss) before tax 4,651 (93,103) (189,635)
Tax on profit/(loss) on ordinary activities 8 - - (179)
Profit/(loss) for the period 4,651 (93,103) (189,814)
Earnings/(loss) per share 10
Basic 3.8p (75.8)p (154.6)p
Diluted 3.8p (75.8)p (154.6)p
There were no items of comprehensive income in the current or prior periods
other than the profit/(loss) for the Period and, accordingly, no Statement of
Comprehensive Income is presented.
Unaudited Consolidated Balance Sheet
At 30 September 2024
Notes At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Non-current assets
Investment properties 11 371,933 595,073 472,522
Owner occupied property, plant and equipment 2,826 3,631 3,569
Investment in joint ventures 12 142,042 82,141 73,923
Other investments 13 586 434 565
Derivative financial instruments 21 12,742 25,343 17,635
Trade and other receivables 16 1,056 1,449 1,252
531,185 708,071 569,466
Current assets
Land and developments 14 28 28 28
Asset held for sale 15 6,880 - 42,761
Corporation tax receivable - 7 -
Trade and other receivables 16 15,472 16,697 16,981
Cash and cash equivalents 17 66,130 37,040 28,633
88,510 53,772 88,403
Total assets 619,695 761,843 657,869
Current liabilities
Trade and other payables 18 (25,023) (26,406) (24,886)
Lease liability 19 (861) (695) (829)
(25,884) (27,101) (25,715)
Non-current liabilities
Borrowings 20 (186,594) (227,176) (227,634)
Lease liability 19 (3,008) (5,238) (3,445)
(189,602) (232,414) (231,079)
Total liabilities (215,486) (259,515) (256,794)
Net assets 404,209 502,328 401,075
Equity
Called-up share capital 22 1,233 1,233 1,233
Share premium account 116,619 116,619 116,619
Revaluation reserve (48,502) (46,951) (134,797)
Capital redemption reserve 7,743 7,743 7,743
Own shares held (1,675) (1,675) (1,675)
Other reserves 291 291 291
Retained earnings 328,500 425,068 411,661
Total equity 404,209 502,328 401,075
Unaudited Consolidated Cash Flow Statement
For the Half Year to 30 September 2024
Half Year to Half Year to Year to
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Cash flows from operating activities
Profit/(loss) before tax 4,651 (93,103) (189,635)
Adjustment for:
Depreciation 844 420 1,506
Revaluation (gain)/loss on Investment properties (1,757) 93,367 181,213
Letting cost amortisation 70 56 168
Gain on sale of Investment properties (10,090) - -
Profit on sale of plant and equipment (36) - (29)
Net financing costs 3,824 4,037 7,947
Change in value of derivative financial instruments 4,893 (2,098) 5,609
Share based payment charge 396 698 1,039
Share of results of joint ventures 1,143 4,499 9,310
Gain on sublet of the Group's head office - (902) (902)
Cash inflows from operations before changes in working capital 3,938 6,974 16,226
Change in trade and other receivables 1,709 8,483 9,555
Change in trade and other payables 495 (4,997) (6,581)
Cash inflows generated from operations 6,142 10,460 19,200
Finance costs (4,148) (3,698) (7,587)
Finance income 923 328 661
(3,225) (3,370) (6,926)
Net cash generated from operating activities 2,917 7,090 12,274
Cash flows from investing activities
Additions to Investment property (3,782) (6,814) (16,038)
Purchase of other investments (21) (81) (212)
Net proceeds from sale of Investment property 152,029 - -
Investments in joint ventures (69,742) (1,375) (3,861)
Returns from joint ventures 481 2,066 5,666
Sale of plant and equipment 52 - 30
Purchase of leasehold improvements, plant and equipment (118) (491) (618)
Net cash generated from/(used by) investing activities 78,899 (6,695) (15,033)
Cash flows from financing activities
Borrowings repaid (42,000) - -
Lease liability payments (406) (338) (708)
Purchase of own shares - (4,402) (4,402)
Equity dividends paid (1,913) (9,540) (14,423)
Net cash used by financing activities (44,319) (14,280) (19,533)
Net increase/(decrease) in cash and cash equivalents 37,497 (13,885) (22,292)
Cash and cash equivalents at start of period 28,633 50,925 50,925
Cash and cash equivalents at end of period 66,130 37,040 28,633
Unaudited Consolidated Statement of Changes in Equity
At 30 September 2024
Share Share Revaluation Capital Own shares Other Retained earnings Total
capital premium reserve redemption held reserves £000 £000
£000 £000 £000 reserve £000 £000
£000
At 31 March 2023 1,233 116,619 46,416 7,743 (848) 291 437,221 608,675
Total comprehensive expense - - - - - - (189,814) (189,814)
Revaluation deficit - - (181,213) - - - 181,213 -
Transactions with owners
Performance Share Plan - - - - - - 1,039 1,039
Purchase of own shares - - - - (4,402) - - (4,402)
Share settled Performance Share Plan - - - - 2,352 - (2,352) -
Share settled bonus - - - - 1,223 - (1,223) -
Dividends paid - - - - - - (14,423) (14,423)
Total transactions with owners - - - - (827) - (16,959) (17,786)
At 31 March 2024 1,233 116,619 (134,797) 7,743 (1,675) 291 411,661 401,075
Total comprehensive income - - - - - - 4,651 4,651
Revaluation surplus - - 1,757 - - - (1,757) -
Realised on disposals - - 84,538 - - - (84,538) -
Transactions with owners
Performance Share Plan - - - - - - 396 396
Dividends paid - - - - - - (1,913) (1,913)
Total transactions with owners - - - - - - (1,517) (1,517)
At 30 September 2024 1,233 116,619 (48,502) 7,743 (1,675) 291 328,500 404,209
Share Share Revaluation Capital Own Other Retained earnings Total
capital premium reserve redemption shares reserves £000 £000
£000 £000 £000 reserve held £000
£000 £000
At 31 March 2023 1,233 116,619 46,416 7,743 (848) 291 437,221 608,675
Total comprehensive income - - - - - - (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
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 25 November
2024.
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 2024, approved by the
Board of Directors on 23 May 2024, 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 2024.
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 2024 interim condensed unaudited consolidated financial statements
as in the most recent annual financial statements.
Change in Accounting Policies
In the current year, the following amendments have been adopted which were
effective for the periods commencing on or after 1 January 2024:
· Amendments to IAS 1: Non-current liabilities with covenants, and
classification of liabilities as current or non-current;
· Amendments to IFRS 16: Lease liability in a sale and leaseback; and
· Amendments to IAS 7 and IFRS 7: Supplier Finance Arrangements.
As a result of the adoption of the amendments to IAS 1, the Group changes its
accounting policy for the classification of borrowings:
· "Borrowings are classified as current liabilities unless at the end of
the reporting period the Group has a right to defer settlement of the
liability for at least 12 months after the reporting period."
This new policy did not result in a change in the classification of the
Group's borrowings. The Group did not make any retrospective adjustments as a
result of adopting the amendments to IAS 1.
Standards and Interpretations in issue but not yet effective
At the date of authorisation of these financial statements there were
standards and amendments which were in issue but not yet effective and which
have not been applied.
The principal ones were:
· Amendments to IAS 21: Accounting where there is a lack of
exchangeability (effective 1 January 2025); and
· IFRS 18: Presentation and Disclosure in Financial Statements
(effective 1 January 2027 - subject to endorsement by the UKEB).
The Directors do not expect the adoption of these standards and amendments to
have a material impact on the financial statements.
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
£210m 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 2024 compliance position for these covenants is summarised below:
Covenant Requirement Actual
LTV 65% 48%
LRV 15* 10.9
ICR 185% 256%
* Covenant relaxation from 12 times to 15 times agreed with lenders from
December 2023 up to but not including the January 2025 IPD.
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 32% fall in
contracted rental income;
· Property values could fall by 32% before loan to value covenants come
under pressure;
· Whilst the Group has a WAULT of 6.8 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 ability to identify, assess, monitor and manage risks is fundamental to
the financial stability, continuing performance and reputation of our
business. The responsibility for the Group's risk-centric governance
arrangements lies with the Board of Directors of Helical (the "Board") and it
is through application of the Group's established risk management framework
that the Board determines the nature and extent of the principal risks the
Group is willing to take to achieve its long-term strategic objectives.
The Board assesses and monitors the principal risks of the business and
considers how these risks can be managed or mitigated, where possible, through
a combination of risk management procedures and internal controls. Whilst the
Board is ultimately responsible for the management of risk, the Group is
structured so that risk identification, assessment, management and monitoring
occur at all levels of the Helical team and risk management is a standing
agenda item at the Group's management meetings.
For the Period to 30 September 2024, the Group considered the appropriateness
of its principal risks, taking into account the Group's performance, the
macro-political and economic environment and current business projects. The
Group's increased levels of development activity, the escalation of the
Israel-Hamas war, the deepening of the Russo-Ukrainian war and the impacts of
political elections on the global economy were of significant note when
reviewing the principal risks.
The improved market sentiment towards "best-in-class" offices over the Period
was also considered, specifically the forecast demand for "best-in-class"
office space outstripping supply and property yield stabilisation.
Following its review of the Period to 30 September 2024, the Group concluded
that, despite there being revisions to the impacts of each of the principal
risks given the wider macro-economic environment and Helical's current
operations, overall Helical's principal risks remain materially unchanged from
those reported in the Group's 2024 Annual Report and Accounts. The Board is
also satisfied that we continue to operate within our risk appetite.
At 30 September 2024, Group considers its principal risks to be:
Risk Principal Risk Description
Category
Strategic 1 The Group's strategy is inconsistent with the market
2 Risks arising from the Group's significant development projects
3 Property values decline/reduced tenant demand for space
4 Geopolitical and economic
5 Climate change
Financial 6 Availability and cost of bank borrowing, cash resources and potential breach
of loan covenants
Operational 7 Our people and relationships with business partners and reliance on external
partners
8 Health and safety risk
9 Significant business disruption/external catastrophic event/cyber-attacks to
our business and our buildings
Reputational 10 Poor management of stakeholder relations and non-compliance with prevailing
legislation, regulation and best practice
2. Revenue from Contracts with Customers
Half Year to Half Year to Year to
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Development property income 865 462 711
Service charge income 5,652 5,958 10,689
Other - - 991
Total revenue from contracts with customers 6,517 6,420 12,391
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
2024 (Half Year to 30 September 2023: £nil, Year to 31 March 2024: £23,000).
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 30.09.23 Half Year to Half Year to
30.09.24 30.09.24 30.09.24 £000 30.09.23 30.09.23
£000 £000 £000 £000 £000
Gross rental income 10,403 - 10,403 12,804 - 12,804
Development property income - 865 865 - 462 462
Service charge income 5,652 - 5,652 5,958 - 5,958
Other revenue - - - 905 - 905
Revenue 16,055 865 16,920 19,667 462 20,129
Revenue Investments Developments Total
Year to Year to Year to
31.03.24 31.03.24 31.03.24
£000 £000 £000
Gross rental income 27,514 - 27,514
Development property income - 711 711
Service charge income 10,689 - 10,689
Other revenue 991 - 991
Revenue 39,194 711 39,905
Cost of sales Investments Developments Total Investments Developments Total
Half Year to Half Year to Half Year to Half Year to 30.09.23 Half Year to Half Year to
30.09.24 30.09.24 30.09.24 £000 30.09.23 30.09.23
£000 £000 £000 £000 £000
Rents payable - - - (95) - (95)
Property overheads (2,151) - (2,151) (846) - (846)
Service charge expense (5,652) - (5,652) (5,958) - (5,958)
Development cost of sales - (536) (536) - (922) (922)
Development sales expenses - (22) (22) - (36) (36)
Cost of sales (7,803) (558) (8,361) (6,899) (958) (7,857)
Cost of sales Investments Developments Total
Year to Year to Year to
31.03.24 31.03.24 31.03.24
£000 £000 £000
Rents payable (224) - (224)
Property overheads (2,580) - (2,580)
Service charge expense (10,689) - (10,689)
Development cost of sales - (922) (922)
Development sales expenses - (35) (35)
Cost of sales (13,493) (957) (14,450)
Profit/(loss) before tax Investments Developments Total Investments Developments Total
Half Year to Half Year to Half Year to Half Year to 30.09.23 Half Year to Half Year to
30.09.24 30.09.24 30.09.24 £000 30.09.23 30.09.23
£000 £000 £000 £000 £000
Net property income 8,252 307 8,559 12,768 (496) 12,272
Share of results of joint ventures (1,371) 228 (1,143) (4,439) (60) (4,499)
Gain/(loss) on sale and revaluation of Investment properties 11,847 - 11,847 (93,367) - (93,367)
Segmental profit/(loss) 18,728 535 19,263 (85,038) (556) (85,594)
Administrative expenses (5,895) (5,570)
Finance costs (4,747) (4,365)
Finance income 923 328
Change in fair value of derivative financial instruments (4,893) 2,098
Profit/(loss) before tax 4,651 (93,103)
Loss before tax Investments Developments Total
Year to Year to Year to
31.03.24 31.03.24 31.03.24
£000 £000 £000
Net property income 25,701 (246) 25,455
Share of results of joint ventures (9,969) 659 (9,310)
Loss on sale and revaluation of Investment properties (181,213) - (181,213)
Segmental (loss)/profit (165,481) 413 (165,068)
Administrative expenses (11,011)
Finance costs (8,608)
Finance income 661
Change in fair value of derivative financial instruments (5,609)
Loss before tax (189,635)
Net assets Investments Developments Total Investments Developments at 30.09.23 Total
at 30.09.24 at 30.09.24 at 30.09.24 at 30.09.23 £000 at 30.09.23
£000 £000 £000 £000 £000
Investment properties 371,933 - 371,933 595,073 - 595,073
Land and developments - 28 28 - 28 28
Asset held for sale 6,880 - 6,880 - - -
Investment in joint ventures 134,356 7,686 142,042 81,126 1,015 82,141
513,169 7,714 520,883 676,199 1,043 677,242
Other assets 98,812 84,601
Total assets 619,695 761,843
Liabilities (215,486) (259,515)
Net assets 404,209 502,328
Net assets Investments Developments Total
at 31.03.24 at 31.03.24 at 31.03.24
£000 £000 £000
Investment properties 472,522 - 472,522
Land and developments - 28 28
Asset held for sale 42,761 - 42,761
Investment in joint ventures 71,528 2,395 73,923
586,811 2,423 589,234
Other assets 68,635
Total assets 657,869
Liabilities (256,794)
Net assets 401,075
4. Net Property Income
Half Year to Half Year to Year to
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Gross rental income 10,403 12,804 27,514
Head rents payable - (95) (224)
Property overheads (2,151) (846) (2,580)
Net rental income 8,252 11,863 24,710
Development property income 865 462 711
Development cost of sales (536) (922) (922)
Sales expenses (22) (36) (35)
Development property profit/(loss) 307 (496) (246)
Other revenue - 905 991
Net property income 8,559 12,272 25,455
Included within gross rental income above is a net addition of £52,000
(September 2023: net deduction of £4,307,000, March 2024: net deduction of
£5,830,000) of accrued income for rent free periods. Also included within
gross rental income are dilapidation receipts of £146,000 (September 2023:
£215,000, March 2024: £1,490,000).
Included in other revenue of £nil (30 September 2023: £905,000, 31 March
2024: £991,000) is the gain on the sublet of the Group's head office of £nil
(30 September 2023: £902,000, 31 March 2024: £902,000).
5. Gain on Sale of Investment Properties and Assets held for sale
Half Year to Half Year to Year to
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Net proceeds from the sale of Investment properties and assets held for sale 152,029 - -
Book value of Investment properties (Note 11) (99,178) - -
Asset held for sale (42,761) - -
Gain on sale of Investment properties and assets held for sale 10,090 - -
6. Administrative Expenses
Half Year to Half Year to Year to
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Administration costs (5,100) (4,655) (9,731)
Performance related awards, including annual bonuses and NIC (795) (915) (1,280)
Administrative expenses (5,895) (5,570) (11,011)
7. Net Finance Costs and Change in Fair Value of Derivative Financial
Instruments
Half Year to Half Year to Year to
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Interest payable on bank loans and overdrafts (1,511) (2,878) (5,493)
Other interest payable and similar charges (1,276) (1,487) (3,115)
Total before cancellation of loans (2,787) (4,365) (8,608)
Cancellation of loans (1,960) - -
Finance costs (4,747) (4,365) (8,608)
Finance income 923 328 661
Net finance costs (3,824) (4,037) (7,947)
Change in fair value of derivative financial instruments (4,893) 2,098 (5,609)
Net finance costs and change in fair value of derivative financial instruments (8,717) (1,939) (13,556)
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 half year to 30 September 2024 (Half Year to 30 September 2023: £nil,
Year to 31 March 2024: £179,000) in respect of non-REIT activities.
At 30 September 2024, no deferred tax was recognised (30 September 2023:
£nil, 31 March 2024: £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 2024 30 September 2023 31 March
£000 £000 2024
£000
Attributable to equity share capital
Ordinary
- Interim paid 3.05p per share (2023: 3.05p) - - 3,744
- Prior period final paid 1.78p per share (2023: 8.70p) 1,913 9,540 10,679
1,913 9,540 14,423
The interim dividend of 1.50p per share (30 September 2023: 3.05p per share)
was approved by the Board on 25 November 2024 and will be paid on 15 January
2025 to Shareholders on the register on 6 December 2024. This interim
dividend, amounting to £1,841,000 has not been included as a liability as at
30 September 2024.
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 2024 30 September 2023 31 March
000 000 2024
000
Ordinary shares in issue 123,355 123,355 123,355
Own shares held (602) (602) (602)
Weighted average ordinary shares in issue for calculation of basic and EPRA 122,753 122,753 122,753
earnings per share
Weighted average ordinary shares issued on share settled bonuses 154 154 154
Weighted average ordinary shares to be issued under Performance Share Plan 304 - -
Adjustment for anti-dilutive shares - (154) (154)
Weighted average ordinary shares in issue for calculation of diluted earnings 123,211 122,753 122,753
per share
£000 £000
£000
Earnings/(loss) used for calculation of basic and diluted earnings per share 4,651 (93,103) (189,814)
Basic earnings/(loss) per share 3.8p (75.8)p (154.6)p
Diluted earnings/(loss) per share 3.8p (75.8)p (154.6)p
£000 £000 £000
Earnings/(loss) used for calculation of basic and diluted earnings per share 4,651 (93,103) (189,814)
Net gain/(loss) on sale and revaluation of Investment properties
(11,847) 93,367 181,213
- subsidiaries
2,694 3,309 7,401
- joint ventures
Gain on movement in share of joint ventures (30) (66) (155)
Fair value movement on derivative financial instruments
4,893 (2,098) 5,609
- subsidiaries
(170) - -
- joint ventures
Expense on cancellation of loans 1,960 - -
Non-operating items 607 - -
Earnings used for calculations of EPRA earnings per share 2,758 1,409 4,254
EPRA earnings per share 2.25p 1.15p 3.47p
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 2024 30 September 2023 31 March
£000 £000 2024
£000
Book value at 1 April 472,522 681,682 681,682
Additions at cost 3,782 6,814 16,038
Disposals (99,178) - -
Transfer to Asset held for sale (6,880) - (43,817)
Letting cost amortisation (70) (56) (168)
Revaluation gain/(loss) 1,757 (93,367) (181,213)
As at period end 371,933 595,073 472,522
There are two small sites held at Directors' valuation totalling £150,000.
All remaining 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 2024 30 September 2023 31 March
£000 £000 2024
£000
Book value 371,933 595,073 472,522
Lease incentives and costs included in trade and other receivables 7,217 9,689 7,078
Head leases capitalised - (2,112) -
Fair value 379,150 602,650 479,600
Cumulative interest capitalised in respect of the refurbishment of Investment
properties at 30 September 2024 amounted to £8,271,000 (30 September 2023:
£9,620,000, 31 March 2024: £8,271,000). Interest capitalised during the
Period in respect of the refurbishment of Investment properties amounted to
£nil (30 September 2023: £nil, 31 March 2024: £nil) and an amount of £nil
(30 September 2023: £nil, 31 March 2024: £1,349,000) was released as a
result of an asset being transferred to assets held for sale.
The historical cost of Investment property is £420,737,000 (30 September
2023: £640,052,000, 31 March 2024: £608,010,000).
The fair value of the Group's Investment property as at 30 September 2024 was
determined by independent external valuers at that date, except for Investment
properties valued by the Directors. The valuations are in accordance with the
RICS Valuation
- Professional Standards ("The Red Book") and the International Valuation
Standards and were arrived at by reference to market transactions for similar
properties.
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.
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 5.0% shift in ERVs
for the wholly owned investment portfolio:
At Change in portfolio value
30 September
2024 % £m
True equivalent yield 6.79%
+ 50bps (7.2) (27.9)
+ 25bps (3.7) (14.4)
- 25bps 4.0 15.6
- 50bps 8.4 32.5
ERV £78.38 psf
+ 5.00% 4.2 16.3
+ 2.50% 2.1 8.1
- 2.50% (2.0) (7.9)
- 5.00% (4.1) 15.8
12. Joint Ventures
Share of results of joint ventures Half Year to Half Year to Year to
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Revenue 3,080 1,442 2,559
Gross rental income 3,080 887 2,004
Property overheads (348) (349) (1,209)
Net rental income 2,732 538 795
Loss on revaluation of Investment properties (2,694) (3,309) (5,933)
Loss on sale of Investment properties - - (1,468)
Development property (loss)/profit (9) (18) 659
29 (2,789) (5,947)
Administrative expenses (82) (188) (338)
Operating loss (53) (2,977) (6,285)
Interest payable on bank loans and overdrafts (1,209) (1,502) (3,012)
Other interest payable and similar charges (108) (104) (211)
Finance income 27 18 43
Fair value movement on derivative financial instruments 170 - -
Loss before tax (1,173) (4,565) (9,465)
Tax - - 1
Loss after tax (1,173) (4,565) (9,464)
Adjustment for Barts Square economic interest¹ 30 66 154
Share of results of joint ventures (1,143) (4,499) (9,310)
1.This adjustment reflects the impact of the consolidation of a joint venture
at its economic interest of 50% (31 March 2024: 50%) rather than its actual
ownership interest of 33%.
The net rental income has increased in the Period due to lettings at The JJ
Mack Building, EC1.
Investment in joint ventures At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Summarised balance sheets
Non-current assets
Investment properties 205,187 146,257 140,811
Owner occupied property, plant and equipment 63 63 63
Derivative financial instruments 170 - -
205,420 146,320 140,874
Current assets
Land and developments 5,627 - 1,321
Trade and other receivables 6,906 1,894 3,034
Cash and cash equivalents 3,516 2,207 3,064
16,049 4,101 7,419
Current liabilities
Trade and other payables (7,310) (2,728) (4,254)
Borrowings (66,746) (61,634) -
(74,056) (64,362) (4,254)
Non-current liabilities
Trade and other payables (1,314) (407) (1,155)
Borrowings (4,359) - (65,644)
Leasehold interest (5,166) (5,020) (5,020)
(10,839) (5,427) (71,819)
Net assets pre-adjustment 136,574 80,632 72,220
Acquisition costs 5,468 1,509 1,703
Investment in joint ventures 142,042 82,141 73,923
During the Period, our share of the net assets of our joint ventures has
increased by £68,119,000. The majority of this increase is the acquisition of
50% of 100 New Bridge Street, EC4, for £55,000,000.
The fair value of Investment properties held by joint ventures at 30 September
2024 is as follows:
At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Book value 205,187 146,257 140,811
Lease incentives and costs included in trade and other receivables 4,626 989 1,770
Head leases capitalised (4,317) (4,346) (4,331)
Fair value 205,496 142,900 138,250
13. Other Investments
At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Book value at 1 April 565 353 353
Acquisitions 21 81 212
As at period end 586 434 565
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
£21,000 (31 March 2024: £212,000, 30 September 2023: £81,000) 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 2024 30 September 2023 31 March
£000 £000 2024
£000
At 1 April and period end 28 28 28
The Directors' valuation of development stock shows a surplus of £302,000 (30
September 2023: £302,000, 31 March 2024: £302,000) above book value. This
surplus has been included in the EPRA net tangible asset value (Note 23). No
interest has been capitalised or included in land and developments.
15. Assets Held for Sale
At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Transfer to assets held for sale 6,880 - 43,817
Lease incentives - - 1,133
Long leasehold liability - - (2,189)
As at period end 6,880 - 42,761
16. Trade and Other Receivables
Due within 1 year At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Trade receivables 2,134 3,027 2,111
Other receivables 3,846 1,296 3,601
Prepayments 2,279 2,099 4,103
Accrued income 7,213 10,275 7,166
Total trade and other receivables 15,472 16,697 16,981
Included in Accrued income is accrued income from rent free periods granted to
tenants of £7,113,000 (30 September 2023: £9,689,000, 31 March 2024:
£7,046,000). Prepayments include capital contributions to tenants of
£104,000 (30 September 2023: £nil, 31 March 2024: £32,000). Taken together,
these form the lease incentives adjustment in Note 11.
Due after 1 year At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Other receivables 1,056 1,449 1,252
Total trade and other receivables 1,056 1,449 1,252
17. Cash and Cash Equivalents
At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Cash held at managing agents 4,113 7,513 4,914
Rental deposits 10,498 7,714 7,828
Restricted cash 5,095 4,350 3,880
Cash deposits 46,424 17,463 12,011
Total cash and cash equivalents 66,130 37,040 28,633
Restricted cash is made up of rental deposits and cash in restricted accounts.
18. Trade and Other Payables
At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Trade payables 15,762 14,465 13,497
Other payables 923 1,591 1,252
Accruals 3,399 3,030 5,101
Deferred income 4,939 7,320 5,036
Total trade and other payables 25,023 26,406 24,886
19. Lease Liability
At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Current lease liability 861 695 829
Non-current lease liability 3,008 5,238 3,445
Included within the lease liability are £861,000 (30 September 2023:
£695,000, 31 March 2024: £829,000) of current and £3,008,000 (30 September
2023: £3,049,000, 31 March 2024: £3,445,000) of non-current lease
liabilities which relate to the long leasehold of the Group's head office.
20. Borrowings
At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Current borrowings - - -
Borrowings repayable within:
- two to three years 186,594 227,176 227,634
Non-current borrowings 186,594 227,176 227,634
Total borrowings 186,594 227,176 227,634
At At
30 September 2024 At 31 March
£000 30 September 2023 2024
£000 £000
Total borrowings 186,594 227,176 227,634
Cash (66,130) (37,040) (28,633)
Net borrowings 120,464 190,136 199,001
Net borrowings exclude the Group's share of borrowings in joint ventures of
£71,105,000 (30 September 2023: £61,634,000, 31 March 2024: £65,644,000)
and cash of £3,516,000 (30 September 2023: £2,207,000, 31 March 2024:
£3,064,000). All borrowings in joint ventures are secured.
At At
At 30 September 2023 31 March
30 September 2024 £000 2024
£000 £000
Net assets 404,209 502,328 401,075
Net gearing 29.8% 37.9% 49.6%
21. Derivative Financial Instruments
At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Derivative financial instruments asset 12,742 25,343 17,635
A loss on the change in fair value of £4,893,000 has been recognised in the
Unaudited Consolidated Income Statement (30 September 2023: gain of
£2,098,000, 31 March 2024: loss of £5,609,000) as a result of the unwinding
of the derivative asset and the reduction 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.
22. Share Capital
At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£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 2023: 123,355,197, 31 March 2024: 123,355,197) 1,233 1,233 1,233
ordinary shares of 1p each
1,233 1,233 1,233
23. Net Assets Per Share
At Number of shares At Number of shares p
30 September 2024 000 31 March 000
£000 p 2024
£000
IFRS net assets 404,209 123,355 401,075 123,355
Adjustments:
- own shares held (602) (602)
Basic net asset value 404,209 122,753 329 401,075 122,753 327
- share settled bonus 154 154
- dilutive effect of Performance Share Plan 308 -
Diluted net asset value 404,209 123,215 328 401,075 122,907 326
Adjustments:
- fair value of financial instruments (12,911) (17,635)
- fair value of land and developments 302 302
- real estate transfer tax 39,049 44,605
EPRA net reinstatement value 430,649 123,215 350 428,347 122,907 349
- real estate transfer tax (22,932) (21,879)
EPRA net tangible asset value 407,717 123,215 331 406,468 122,907 331
At Number of shares p At Number of shares p
30 September 2024 000 31 March 000
£000 2024
£000
Diluted net asset value 404,209 123,215 328 401,075 122,907 326
Adjustments:
- surplus on fair value of stock 302 302
EPRA net disposal value 404,511 123,215 328 401,377 122,907 327
At Number of shares p
30 September 000
2023
£000
IFRS net assets 502,328 123,355
Adjustments:
- own shares held (602)
Basic net asset value 502,328 122,753 409
- share settled bonus 154
- dilutive effect of Performance Share Plan -
Diluted net asset value 502,328 122,907 409
Adjustments:
- fair value of financial instruments (25,343)
- deferred tax -
- fair value of land and developments 302
- real estate transfer tax 50,348
EPRA net reinstatement value 527,635 122,907 429
- real estate transfer tax (25,301)
- deferred tax -
EPRA net tangible asset value 502,334 122,907 409
At Number of shares p
30 September 000
2023
£000
Diluted net assets 502,328 122,907 409
Adjustments:
- surplus on fair value of stock 302
EPRA net disposal value 502,630 122,907 409
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 2024.
24. Related Party Transactions
The following amounts were due from/(to) the Group's joint ventures:
At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Charterhouse Place Limited group 1,306 578 1,340
Barts Square companies 51 71 71
100 New Bridge Street group 1,997 - -
Platinum companies 4 - 1,530
Shirley Advance LLP (43) 8 (43)
A development management, accounting and corporate services fee of £25,000
(30 September 2023: £25,000, 31 March 2024: £50,000) was charged by the
Group to the Barts Square companies. In addition, a net development
management, accounting and corporate services fee of £55,000 was charged
during the Period (30 September 2023: reversal of charge of £1,229,000, 31
March 2024: reversal of charge of £1,084,000) by the Group to the
Charterhouse Place Limited group. A development management fee of £317,000
(30 September 2023: £nil) was charged by the Group to the 100 New Bridge
Street group. During the Period, the Group advanced a short term working
capital loan to the 100 New Bridge Street group. The balance at 30 September
2024 was £1,997,000 (31 March 2024: £nil).
25. See-through Analysis
Helical holds a significant proportion of its property assets in joint
ventures with partners that provide a significant equity contribution, whilst
relying on the Group to provide asset management or development expertise.
Accounting convention requires Helical to account under IFRS for its share of
the net results and net assets of joint ventures on an equity basis in the
Income Statement and Balance Sheet. Helical considers 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 2024 30 September 2023 31 March
£000 £000 2024
£000
Gross rental income - subsidiaries 10,403 12,804 27,514
- joint ventures 3,080 887 2,004
Total gross rental income 13,483 13,691 29,518
Rents payable - subsidiaries - (95) (224)
Property overheads - subsidiaries (2,151) (846) (2,580)
- joint ventures (348) (349) (1,209)
See-through net rental income 10,984 12,401 25,505
See-through Net Development Profits/(Losses)
Helical's share of development profits/(losses) from property assets held in
subsidiaries and in joint ventures is shown in the table below.
Half Year to Half Year to Year to
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
In parent and subsidiaries 307 (496) (246)
In joint ventures (9) (18) 659
See-through development profits/(losses) 298 (514) 413
See-through Net Gain/(loss) on Sale and Revaluation of Investment Properties
Helical's share of the net gain/(loss) 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 2024 30 September 2023 31 March
£000 £000 2024
£000
Revaluation gain/(loss) on Investment properties - subsidiaries 1,757 (93,367) (181,213)
- joint ventures (2,694) (3,309) (5,933)
Total revaluation loss (937) (96,676) (187,146)
Net gain/(loss) on sale of Investment properties - subsidiaries 10,090 - -
- joint ventures - - (1,468)
Total net gain/(loss) on sale of Investment properties 10,090 - (1,468)
See-through net gain/(loss) on sale and revaluation of Investment properties 9,153 (96,676) (188,614)
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 2024 30 September 2023 31 March
£000 £000 2024
£000
Administration expenses - subsidiaries 5,100 4,655 9,731
- joint ventures 82 188 338
Total administration expenses 5,182 4,843 10,069
Performance related awards, including NIC - subsidiaries 795 915 1,280
Total performance related awards, including NIC 795 915 1,280
See-through administration expenses 5,977 5,758 11,349
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 2024 30 September 2023 31 March
£000 £000 2024
£000
Interest payable on bank loans and overdrafts - subsidiaries 1,511 2,878 5,493
- joint ventures 1,209 1,502 3,012
Total interest payable on bank loans and overdrafts 2,720 4,380 8,505
Other interest payable and similar charges - subsidiaries 3,236 1,487 3,115
- joint ventures 108 104 211
Total finance costs 6,064 5,971 11,831
Interest receivable and similar income - subsidiaries (923) (328) (661)
- joint ventures (27) (18) (43)
See-through net finance costs 5,114 5,625 11,127
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 2024 30 September 2023 31 March
£000 £000 2024
£000
Investment property fair value - subsidiaries 379,150 602,650 479,600
- joint ventures 205,496 142,900 138,250
Asset held for sale - subsidiaries 6,880 - 42,761
Total Investment property fair value 591,526 745,550 660,611
Land and development stock - subsidiaries 28 28 28
- joint ventures 5,627 - 1,321
Total land and development stock 5,655 28 1,349
Total land and development stock surplus 302 302 302
Total land and development stock at fair value 5,957 330 1,651
See-through property portfolio 597,483 745,880 662,262
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 2023 31 March
30 September 2024 £000 2024
£000 £000
Gross borrowings more than one year - subsidiaries 186,594 227,176 227,634
- joint ventures 4,359 - -
Total 190,953 227,176 227,634
Gross borrowings less than one year - joint ventures 66,746 61,634 65,644
Total 66,746 61,634 65,644
Cash and cash equivalents - subsidiaries (66,130) (37,040) (28,633)
- joint ventures (3,516) (2,207) (3,064)
Total (69,646) (39,247) (31,697)
See-through net borrowings 188,053 249,563 261,581
26. See-through Net Gearing and Loan to Value
At At
At 30 September 2023 31 March
30 September 2024 £000 2024
£000 £000
Property portfolio 597,483 745,880 662,262
Net borrowings 188,053 249,563 261,581
Net assets 404,209 502,328 401,075
See-through net gearing 46.5% 49.7% 65.2%
See-through loan to value 31.5% 33.5% 39.5%
Pro-forma see-through loan to value (Note 30) 15.9% N/A 28.7%
27. Total Accounting Return
At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Brought forward IFRS net assets 401,075 608,675 608,675
Carried forward IFRS net assets 404,209 502,328 401,075
Increase/(decrease) in IFRS net assets 3,134 (106,347) (207,600)
Dividends paid 1,913 9,540 14,423
Total accounting return 5,047 (96,807) (193,177)
Total accounting return percentage 1.3% (15.9%) (31.7%)
At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
Brought forward EPRA net tangible assets 406,468 613,455 613,455
Carried forward EPRA net tangible assets 407,717 502,334 406,468
Increase/(decrease) in EPRA net tangible assets 1,249 (111,121) (206,987)
Dividends paid 1,913 9,540 14,423
Total EPRA accounting return 3,162 (101,581) (192,564)
Total EPRA accounting return percentage 0.8% (16.6%) (31.4%)
28. Total Property Return
At At At
30 September 2024 30 September 2023 31 March
£000 £000 2024
£000
See-through net rental income 10,984 12,401 25,505
See-through development profits/(losses) 298 (514) 413
See-through revaluation loss (937) (96,676) (187,146)
See-through net gain/(loss) on sale of Investment properties 10,090 - (1,468)
Total property return 20,435 (84,789) (162,696)
29. Capital Commitments
In July 2023, Helical and Places for London entered into a Joint Venture
Agreement with a commitment to purchase a portfolio of three over-station
development sites. 10 King William Street, EC4 site was acquired on 1 October
2024 for £32.6m (our share), the Southwark OSD, SE1 site will be acquired in
July 2025 for £11.0m (our share) and the Paddington OSD, W2 site in January
2026 for £30.2m (our share).
30. Post Balance Sheet Events
Following the Period end, the sale of The JJ Mack Building, EC1, for £278.4m
(Helical share: £139.2m), which is included within Joint Ventures on the
Balance Sheet, completed. In addition, on 1 October 2024, the Group purchased
the site at 10 King William Street, EC4 for £32.6m. The impact of these
transactions and the completion of the sale of The Power House, W4, whose sale
had exchanged before the Period end and was classified as "Asset Held for
Sale", is included in the pro-forma table below:
30 September Pro-forma
2024 Impact of transactions £000
£000 £000
Investment property fair value - subsidiaries 379,150 - 379,150
- joint ventures 205,496 (102,786) 102,710
Asset held for sale - subsidiaries 6,880 (6,880) -
Land and developments 5,957 (3,804) 2,153
Total see-through property portfolio 597,483 (113,470) 484,013
See-through net borrowings 188,053 (111,030) 77,023
See-through loan to value 31.5% - 15.9%
Net assets 404,209 - 404,209
See through gearing 46.5% - 19.1%
At 31 March 2024, the see-through pro-forma loan to value was 28.7%, which
took into account the sale of 25 Charterhouse Square, EC1, in April 2024.
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 23).
EPRA net reinstatement value per share
Net asset value adjusted to reflect the value required to rebuild the entity
and assuming that entities never sell assets. Assets and liabilities, such as
fair value movements on financial derivatives, that are not expected to
crystallise in normal circumstances and deferred taxes on property valuation
surpluses are excluded (see Note 23).
EPRA net tangible assets per share
Assumes that entities buy and sell assets, thereby crystallising certain
levels of unavoidable deferred tax, but excludes assets and liabilities, such
as fair value movements on financial derivatives, that are not expected to
crystallise in normal circumstances and deferred taxes on property valuation
surpluses are excluded (see Note 23).
EPRA topped-up NIY
The current annualised rent, net of costs, topped-up for contracted uplifts,
expressed as a percentage of the fair value of the relevant property.
Estimated rental value (ERV)
The market rental value of lettable space as estimated by the Group's valuers
at each Balance Sheet date.
Initial yield
Annualised net passing rents on Investment properties as a percentage of their
open market value.
Like-for-like valuation change
The valuation gain/loss, net of capital expenditure, on those properties held
at both the previous and current reporting period end, as a proportion of the
fair value of those properties at the beginning of the reporting period plus
net capital expenditure.
MSCI INC. (MSCI IPD)
MSCI INC. is a company that produces independent benchmarks of property
returns using its Investment Property Databank (IPD).
Net asset value per share (NAV)
Net assets divided by the number of ordinary shares at the Balance Sheet date
(see Note 23).
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
25).
See-through net gearing
The see-through net borrowings expressed as a percentage of net assets (see
Note 26).
Total Accounting Return
The growth in the net asset value of the Company plus dividends paid in the
Period, expressed as a percentage of net asset value at the start of the
Period (see Note 27).
Total Property Return
The total of net rental income, trading and development profits and net gain
on sale and revaluation of Investment properties on a see-through basis (see
Note 28).
Total Shareholder Return (TSR)
The growth in the ordinary share price as quoted on the London Stock Exchange
plus dividends per share received for the 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)
www.helical.co.uk (http://www.helical.co.uk)
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