Helical Bar Regulatory News (HLCL)

Well positioned with high quality portfolio

and robust balance sheet

Gerald Kaye, Chief Executive, commented:

"Helical has had another successful year, delivering a Total Property Return of 9.6%, Total Accounting Return on EPRA net assets of 9.3% and an increase in EPRA Net Asset Value per share of 6.0%. This was reflected in a Total Shareholder Return of 8.7%.

"The year also saw the completion of a full development cycle which started in March 2011 when we acquired, in joint venture, 3.2 acres of land and buildings at Barts Square, London EC1. By March 2020, we had built or refurbished 2.3m sq ft of office space across 20 buildings in London and Manchester and delivered 236 residential apartments (0.2m sq ft). Today, the Group has a high-quality portfolio of new or recently refurbished Grade A offices in London and Manchester.

"However, these results are announced during a period of considerable uncertainty with the timing and strength of the recovery from the Covid-19 pandemic yet to be determined. For the office sector, questions are being asked about the desire to return to previous working practices. As we move through the various stages of the Covid-19 pandemic and arrive at the so-called "new normal", we shall learn how businesses and their staff view their experiences and the productivity of working from home. What we do know, however, is that people are sociable and prefer to congregate together, both at work and at play.

"It is our view that a large majority of businesses will continue to seek space for their employees to gather in a centralised working environment and that the draw of London, as a pre-eminent global city, will remain. It is our challenge to ensure that what we have to offer is attractive to these businesses. We believe they will continue to seek well located and accessible buildings near large and modern transport hubs, served with the latest technology but with an increased focus on health and well-being within sustainable buildings. Our properties, with spacious, light filled floors let on flexible leases and served by multiple transport options, amenity rich with sizeable bike storage and changing facilities, will continue to provide the features of office life that our tenants and their employees are seeking.

"We anticipate there will be a growing divergence in the office sector between Grade A buildings and the rest. The response from both occupiers and investors following Covid-19 is likely to accelerate this process and we are confident that the successful delivery of our strategy in recent years means we are positioned on the right side of this gap, with our Grade A buildings offering an appealing environment for businesses seeking high quality space.

"The Company has robust finances and will seek to protect Shareholder value and meet the challenges that the coming months will bring. Going forward, Helical has £279m of cash and undrawn bank facilities available to pursue its strategy of growing the business when the opportunities arise."

Operational Performance

· Practical completion achieved at Kaleidoscope, 55 Bartholomew and the last phase of residential at Barts Square, all in Farringdon, London EC1, marking the conclusion of a 2.5m sq ft development programme.

· Planning permission granted to enhance the ground floor configuration and add an additional floor of 13,175 sq ft within the envelope of the existing design at 33 Charterhouse Street, Farringdon, London EC1. The new c.200,000 sq ft office development, in JV with AshbyCapital, should complete during Summer 2022.

· 23 new office lettings completed in London, representing 203,857 sq ft, delivering contracted rent of £15.4m (Helical's share £3.6m) at 5.0% above 31 March 2019 ERV.

· Five additional new office lettings completed in London on a "Plug & Play" basis, representing 35,268 sq ft, generating £3.0m of contracted rent (Helical's share £2.7m).

· In Manchester, eight office lettings (including one on a "Plug & Play" basis) and a retail letting completed, comprising 50,324 sq ft in total, generating rental income of £1.2m at 2.9% above 31 March 2019 ERV.

· Successful equity recycling with the sale of Power Road Studios, a 57,164 sq ft multi-let office campus in Chiswick for £41.6m, reflecting a net initial yield of 4.8%.

· Subsequent to the year-end, and during the lockdown period, the Company has achieved a further disposal with the sale of 90 Bartholomew Close, London EC1, held in joint venture, to La Francaise Real Estate Partners International for £48.5m, reflecting a net initial yield of 3.92%.

Financial Highlights

Earnings and Dividends

· See-through Total Property Return1 of £83.9m (2019: £81.4m):

- Group's share1 of net rental income of £28.5m (2019: £25.2m).

- Development profits of £9.9m (2019: losses of £4.4m), after provisions of £0.3m (2019: £13.7m).

- Net gain on sale and revaluation of investment properties of £45.5m (2019: £60.6m).

· Total Property Return, as measured by MSCI, of 9.6% compared to the MSCI Central London Offices Total Return Index of 4.5%.

· IFRS Profit before tax of £43.0m (2019: £43.5m).

· IFRS basic earnings per share of 32.3p (2019: 35.8p).

· EPRA earnings per share1 of 7.6p (2019: loss of 8.4p).

· Final dividend proposed of 6.00p per share (2019: 7.50p), a decrease of 20% as part of action taken to reduce outgoings and preserve the Group's cash resources in the current uncertain environment.

· Total dividend for the year of 8.70p (2019: 10.10p), a decrease of 13.9%.

Balance Sheet

· Net asset value up 5.5% to £598.7m (31 March 2019: £567.4m).

· Total Accounting Return1 on EPRA net assets of 9.3% (2019: 8.0%).

· EPRA net asset value per share1 up 6.0% to 511p (31 March 2019: 482p).

· EPRA triple net asset value per share1 up 3.2% to 480p (31 March 2019: 465p).

Property Valuations

· IFRS property portfolio value of £819.6m (31 March 2019: £778.8m).

· See-through property portfolio1 of £949.3m (31 March 2019: £876.4m).

· See-through investment property valuation gain, on a like-for-like basis, of 5.9% (5.8% including purchases and gains on sales).

Financing

· See-through loan to value1 marginally increased to 31.4% (31 March 2019: 30.6%).

· See-through net borrowings1 of £298.5m (31 March 2019: £268.6m).

· Average maturity of the Group's share1 of secured debt of 4.1 years (31 March 2019: 3.4 years), increasing to 5.5 years on exercise of options to extend current facilities.

· See-through average cost of secured facilities1 of 3.5% (31 March 2019: 4.1%).

· Group's share1 of cash and undrawn bank facilities of £279m (31 March 2019: £382m).

Portfolio Update

London Portfolio

· 6.4% valuation increase, on a like-for-like basis, of our see-through London investment portfolio, valued at £776.9m at 31 March 2020 (85% of investment portfolio) compared to £693.8m at 31 March 2019 (85% of investment portfolio).

· Contracted rents of £31.1m (31 March 2019: £27.5m) compared to an ERV of £50.6m (31 March 2019: £42.4m).

· WAULT of 7.8 years (31 March 2019: 8.0 years).

Manchester Portfolio

· 2.9% valuation increase, on a like-for-like basis, to £136.7m at 31 March 2020 (15% of investment portfolio) compared to £122.7m at 31 March 2019 (15% of investment portfolio).

· Contracted rents increased to £6.5m (31 March 2019: £5.7m) compared to an ERV of £9.3m (31 March 2019: £9.0m).

· WAULT of 3.9 years (31 March 2019: 3.9 years).

Covid-19 Update

· 92% of March quarter rents collected, with a further 3% being paid in instalments, however, letting progress on Kaleidoscope, London EC1 and Trinity, Manchester has slowed.

· All the Group's buildings have remained open, whilst complying with Government guidelines on providing safe office space.

· Helical became one of the first Founding Partners to donate to the LandAid Emergency Fund. Our donation of £20,000 is enabling frontline charities across the country to provide vital support to young homeless people during the Covid-19 pandemic.

For further information, please contact:

Results Presentation

Helical will be holding an audio webcast with a live Q&A for analysts and investors starting at 9am on Thursday 4 June 2020.

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

Webcast Link:

https://webcasting.brrmedia.co.uk/broadcast/5e665db99672d83b98777cbb

1 See Glossary for definition of terms. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). 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

Introduction

Having started the financial year with the political uncertainty over Brexit followed by the December General Election, 2020 commenced with an encouraging level of business confidence. This confidence dissipated rapidly as the Covid-19 pandemic spread and we are now encountering a recession, caused not by financial stress but by the cessation of a considerable level of economic activity. The pace of economic recovery is uncertain, and it is against this backdrop that we announce the Company's 2020 Annual results.

Helical has had another successful year, delivering a Total Property Return of 9.6%, Total Accounting Return on EPRA net assets of 9.3% and an increase in EPRA Net Asset Value per share of 6.0%. This was reflected in a Total Shareholder Return of 8.7%.

The Completion of Our Development Pipeline

In the last year we have completed a full development cycle which started in March 2011 when we acquired, in joint venture, 3.2 acres of land and buildings at Barts Square, London EC1. By March 2020, we had built or refurbished 2.3m sq ft of office space in 20 buildings in London and Manchester and delivered 236 residential apartments (0.2m sq ft).

Whilst 1.3m sq ft of offices has been developed in partnership with their ultimate owners or subsequently sold, we have retained a high quality portfolio comprising 1.0m sq ft of new or recently refurbished Grade A offices in London and Manchester.

Results for the Year

Profit before tax for the year to 31 March 2020 remained steady at £43.0m (2019: £43.5m). Total Property Return increased to £83.9m (2019: £81.4m) and included net rents of £28.5m (2019: £25.2m), bolstered by development profits of £9.9m (2019: losses of £4.4m). The net gain on sale and revaluation of the investment portfolio contributed £45.5m (2019: £60.6m).

Net finance costs of £15.6m were substantially lower than in 2019 (£18.4m) as a result of the reduction in borrowings achieved in the last two years and lower interest rates. However, the Income Statement was adversely affected by the reduction in medium and long-term interest rates over the year which led to a £7.7m charge (2019: £3.3m) arising from the valuation of the Company's derivative financial instruments. The repayment of the Company's Convertible Bond provided a credit of £0.5m (2019: £0.9m).

Recurring administration costs were marginally lower at £11.1m (2019: £11.3m), whilst performance related awards increased marginally to £5.3m (2019: £5.2m) with National Insurance on these awards of £0.9m (2019: £0.7m).

IFRS basic earnings per share decreased to 32.3p (2019: 35.8p). However, EPRA earnings per share improved to 7.6p (2019: loss of 8.4p), reflecting the contribution to earnings from the development profits.

The Total Accounting Return on EPRA net assets, being the growth in the net asset value of the Group, as calculated in accordance with EPRA guidelines, plus dividends paid in the year, was 9.3% (2019: 8.0%). EPRA net asset value per share was up 6.0% to 511p (31 March 2019: 482p), with EPRA triple net asset value per share up 3.2% to 480p (31 March 2019: 465p).

On a like-for-like basis, the investment portfolio increased in value by 5.9% (5.8% including purchases and gains on sales). The see-through total portfolio value increased to £949.3m (31 March 2019: £876.4m).

The unleveraged return of our property portfolio, as measured by MSCI, was 9.6% (2019: 10.1%). We compare our portfolio performance to two MSCI benchmarks. The MSCI UK March-Valued Annual Property Index produced a return of -1.1% (2019: 3.6%) with an upper quartile return of 2.9% (2019: 7.0%). The MSCI Central London Offices Total Return Index produced a return of 4.5% (2019: 4.8%) with an upper quartile return of 6.2% (2019: 6.2%).

Finance

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

During the year to 31 March 2020, the Group invested £86.8m in its investment portfolio and incurred development expenditure of £15.5m in its residential scheme at Barts Square, London EC1. Offsetting this expenditure, the Group generated £41.6m of investment sales and £24.7m from the sale of development stock and funded the balance of expenditure through borrowings, which increased to £298.5m (2019: £268.6m).

The see-through loan to value ratio ("LTV") marginally increased to 31.4% at the year-end (31 March 2019: 30.6%) and our see-through net gearing, the ratio of net borrowings to the net asset value of the Group, increased to 49.9% (31 March 2019: 47.3%) over the same period.

At the year end, the average debt maturity on secured loans, on a see-through basis, was 4.1 years (31 March 2019: 3.4 years), increasing to 5.5 years on exercise of options to extend the Group's £400m RCF and on a fully utilised basis. No secured loan is repayable before December 2021. The average cost of debt at 31 March 2020 was 3.5% (31 March 2019: 4.0%). The Group has a significant level of liquidity with see-through cash and unutilised bank facilities of £279m (31 March 2019: £382m) to fund capital works on its portfolio and future acquisitions.

Earnings and Dividends

As I stated in last year's Annual Report, Helical is primarily a capital growth stock, albeit one with an increasingly important income stream as our redeveloped and refurbished investment assets become let.

The portfolio was 82% let at 31 March 2020, generating contracted rents of £37.6m (2019: £33.2m), at an average of £42.60 psf, growing to £47.8m on the letting of currently vacant space, towards an ERV of £60.0m (2019: £51.5m). The Group's contracted rent has a Weighted Average Unexpired Lease Term ("WAULT") of 7.8 years in London and 3.9 years in Manchester.

The most immediate impact on our business from Covid-19 has been the delay in letting our most recently completed office schemes at Kaleidoscope, London EC1 and Trinity, Manchester. The ERV of these two buildings is £8.9m, or 15% of the portfolio's total ERV, and we had anticipated lettings being achieved by now. Whilst we have good interest in the buildings, they remain available and this will have an impact on earnings in the coming year.

Commensurate with action taken elsewhere to reduce outgoings and preserve the Group's cash resources in the current uncertain environment, the Board is recommending to Shareholders a final dividend of 6.00p, a reduction of 20.0% on last year (7.50p). If approved by Shareholders at the 2020 AGM, the total dividend for the year will be 8.70p, down 13.9% on 2019 (10.10p). This reduction of the dividend recognises the near term uncertainty in our earnings and provides us with the opportunity, over the medium term, to grow dividends in line with sustainable earnings.

Our Balance Sheet Strength and Liquidity

At 31 March 2020, we had £64m of cash deposits available to deploy without restrictions and a further £19m of rent and sales receipts collected in bank accounts available to service payments under loan agreements, cash held at managing agents and cash held in joint venture. In addition, the sale of 90 Bartholomew Close, London EC1 in April, realised a further £8m for Helical. The net cash available to the Group is sufficient to cover over two years of operating costs. Furthermore, the Group has £196m of loan facilities available to draw on plus £70m of currently uncharged investment assets.

With no secured borrowings repayable before December 2021, the weighted average maturity of its secured borrowings is 4.1 years, increasing to 5.5 years on exercise of options to extend the £400m RCF and on a fully utilised basis. The Group's weighted average cost of debt is 3.5%. The marginal cost of fully utilising the undrawn RCF is 2.2%.

Board Matters

At the 2019 AGM we said goodbye to Mike Slade, the founder and former Chief Executive of Helical, who retired from the Board after 35 years to be succeeded as Chairman by Richard Grant. At the same time, Michael O'Donnell stepped down from the Board after eight years as a Non-Executive Director and we thank both of them for their contributions to the success of the Company.

In June 2019, Sue Farr was appointed as an independent Non-Executive Director and a member of each of the Company's Audit & Risk, Nominations and Remuneration Committees. Sue is an experienced Non-Executive Director and, subject to her re-election at the 2020 AGM, will assume the role of Chair of the Remuneration Committee.

Sustainability

Sustainability underpins all activities at Helical and we have long recognised that our activities have an impact on the environment and communities in which we operate. During the year we formalised our approach to sustainability and notably established a Sustainability Committee, chaired by Property Director Matthew Bonning-Snook, along with other representatives from across the business. We are also pleased to announce our new sustainability strategy, "Built for the Future", which will be made available alongside our Annual Report and Accounts. This strategy sets out our long-term vision and associated targets for our key areas: Our Environment, Our People and Our Communities.

Eight of our buildings have either achieved or are targeting a BREEAM rating of "Excellent" and 75% of our portfolio holds an EPC rating of C and above. As part of our ongoing commitment to sustainability reporting, we measure our performance under MSCI, GRESB and CDP, along with aligning our disclosures with EPRA. In addition to this, we have also had our greenhouse gas (GHG) emissions externally verified giving additional confidence to our stakeholders.

Our Response to Covid-19

Our People

We have 29 full and part-time employees in the Company who have been working from home since mid-March. Despite the challenges they have faced, their commitment and contribution has been unwavering, and the Board is proud of the way they have continued undeterred by current events.

Our Community

Helical's relationship with LandAid began over 30 years ago and since then the Group has raised or donated a significant amount to provide temporary accommodation for vulnerable young people, enabling them to make a new start in life.

Helical has participated in LandAid events throughout its life as a charity and when the call came in March for further assistance, Helical became one of the first Founding Partners to donate to the LandAid Emergency Fund. Our donation of £20,000 is enabling frontline charities across the country to provide vital support to young homeless people during the Covid-19 pandemic.

Our Tenants

We are a provider of Grade A office space to multiple businesses in London and Manchester, all of which are having to navigate their own journey through this difficult time. Since the Covid-19 lockdown, we have continued to keep all our buildings open, ensuring that they comply with Government guidelines on providing safe office space.

During this period, we have engaged positively with all our tenants seeking solutions to any short-term cash flow concerns. For those in financial difficulty, we have agreed to rent concessions with the March quarter rent being paid monthly rather than quarterly. This approach has enabled us to collect 92% of the March quarter rents, with a further 3% being paid in instalments and 2% deferred. In addition, we have collected 97% of the quarterly service charge due from our tenants.

In anticipation of possible cash flow difficulties for some occupiers, we have taken early steps to engage with all our tenants in advance of the June quarter. Whilst the Government has launched a range of business support measures, including protection against forfeiture and legal action to recover rents, it has reiterated that commercial tenants remain liable for their obligations under leases. We will continue to work collaboratively with our tenants to help them through this crisis.

Our Development Programme

At the outbreak of Covid-19, work at our only major scheme, at 33 Charterhouse Street, London EC1, halted temporarily whilst appropriate assessment of the Government's guidance on safe working on construction sites was considered. Demolition of the structures on site has now resumed in full compliance with the latest guidance.

Actions taken to reduce Overheads and Other Outgoings

Notwithstanding the strong financial position of the Group at 31 March 2020, we are in a period of uncertainty, with clarity unlikely until businesses return to their usual places of work and become able to operate normally.

With this as the background, we have taken prudent steps to reduce the costs of the business and the call on our cash resources. We have reviewed our overheads and cancelled the previously anticipated annual salary increases for the Board and staff, other than in exceptional circumstances. The Executive Directors have agreed to a reduction of 10% in their annual bonus entitlement, an amount equivalent to a reduction in base salary of 25% for six months, with the reduced bonus level awarded wholly in shares with no cash element. In addition, capital expenditure programmes have been reviewed to ensure that any commitments are accretive to value.

Outlook

These results are announced during a period of considerable uncertainty with the timing and strength of the recovery from the Covid-19 pandemic yet to be determined. For the office sector, questions are being asked about the desire to return to previous working practices. As we move through the various stages of the Covid-19 pandemic and arrive at the so-called "new normal", we shall learn how businesses and their staff view their experiences and the productivity of working from home. What we do know, however, is that people are sociable and prefer to congregate together, both at work and at play.

It is our view that a large majority of businesses will continue to seek space for their employees to gather in a centralised working environment and that the draw of London, as a pre-eminent global city, will remain. It is our challenge to ensure that what we have to offer is attractive to these businesses. We believe they will continue to seek well located and accessible buildings near large and modern transport hubs, served with the latest technology but with an increased focus on health and well-being within sustainable buildings. Our properties, with spacious, light filled floors let on flexible leases and served by multiple transport options, amenity rich with sizeable bike storage and changing facilities, will continue to provide the features of office life that our tenants and their employees are seeking.

We anticipate there will be a growing divergence in the office sector between Grade A buildings and the rest. The response from both occupiers and investors following Covid-19 is likely to accelerate this process and we are confident that the successful delivery of our strategy in recent years means we are positioned on the right side of this gap, with our Grade A buildings offering an appealing environment for businesses seeking high quality space.

The Company has robust finances and will seek to protect Shareholder value and meet the challenges that the coming months will bring. Going forward, Helical has £279m of cash and undrawn bank facilities available to pursue its strategy of growing the business when the opportunities arise.

Gerald KayeChief Executive

4 June 2020

Investing with Helical

We create buildings for today's occupiers who demand more inspiring space with distinctive architectural detail, carefully curated public realm, market leading amenities, high quality management and our flexible approach to leasing.

Applying this philosophy, we seek to maximise Shareholder returns through delivering income growth from creative asset management and capital gains from our development activity.

Performance

We measure our performance using several financial and non-financial key performance indicators ("KPIs").

We incentivise management to outperform the Group's peers by setting challenging targets and using these performance indicators to measure success. We design our remuneration packages to align management's interests with Shareholders' aspirations.

MSCI

MSCI produces several independent benchmarks of property returns that are regarded as the main industry indices.

MSCI has compared the ungeared performance of Helical's total property portfolio against that of portfolios within MSCI for over 20 years. The Group's annual performance target is to exceed the top quartile of the MSCI UK March-Valued Annual Property Index, which it has consistently achieved. Helical's ungeared performance for the year to 31 March 2020 was 9.6% (2019: 10.1%). This compares to the MSCI UK March-Valued Annual Property Index of -1.1% (2019: 3.6%) with an upper quartile return of 2.9% (2019: 7.0%).

The MSCI Central London Offices Total Return Index showed a return of 4.5% (2019: 4.8%) with an upper quartile return of 6.2% (2019: 6.2%).

Helical's unleveraged portfolio returns to 31 March 2020 were as follows:

Source: MSCI

Helical's share of the development portfolio (4% of gross property assets) is included in its performance, as measured by MSCI, at the lower of book cost or fair value and uplifts are only included on the sale of an asset.

Total Accounting Return

Total Accounting Return is the growth in the net asset value of the Group plus dividends paid in the reporting year, expressed as a percentage of the net asset value at the beginning of the period. The metric measures the growth in Shareholders' Funds each year and is expressed as an absolute measure.

The Total Accounting Return on IFRS net assets in the year to 31 March 2020 was 7.7% (2019: 8.4%).

EPRA Net Asset Value Per Share

The Group's main objective is to maximise growth in net asset value per share, which we seek to achieve through increases in investment portfolio values and from retained earnings from other property related activity. EPRA net asset value per share is the property industry's preferred measure of the proportion of net assets attributable to each share as it includes the fair value of net assets on an ongoing long-term basis. The adjustments to net asset value to arrive at this figure are shown in Note 23 to the financial statements.

The EPRA net asset value per share at 31 March 2020 increased by 6.0% to 511p (31 March 2019: 482p). EPRA triple net asset value per share at 31 March 2020 increased by 3.2% to 480p (31 March 2019: 465p).

Total Shareholder Return

Total Shareholder Return is a measure of the return on investment for Shareholders. It combines share price appreciation and dividends paid to show the total return to the Shareholder expressed as an annualised percentage.

The Total Shareholder Return in the year to 31 March 2020 was 8.7% (2019: 5.2%).

1. Growth over all years to 31/03/20.

2. Growth in FTSE All-Share Return Index over all years to 31/03/20.

3. Growth in FTSE 350 Real Estate Super Sector Return Index over all years to 31/03/20. For data prior to 30 September 1999, the FTSE All Share Real Estate Sector Index has been used.

4. Growth in Total Return of MSCI UK Monthly Index (All Property) over all years to 31/03/20.

Average Length of Employee Service and Average Staff Turnover

A high level of staff retention remains a key feature of Helical's business. The Group retains a highly skilled and experienced team. We assess our success based on two key metrics: the average length of service of the Group's head office employees and average staff turnover.

The average length of service of the Group's head office employees at 31 March 2020 was 10.0 years and the average staff turnover during the year to 31 March 2020 was 10.3%.

BREEAM Ratings

BREEAM is an environmental impact assessment methodology for commercial buildings. It sets out best practice standards for the environmental performance of buildings through their design, specification, construction and operational phases. Performance is measured across a series of ratings; "Pass", "Good", "Very Good", "Excellent" and "Outstanding". We target a BREEAM rating of "Very Good" to "Excellent" on any major refurbishment or new development.

During the year to 31 March 2020, eight of our 14 (31 March 2019: eight out of 15) office buildings held or are targeting a BREEAM certification of "Excellent".

1 Final certification

2 Certified at design stage

3 Targeting

We are currently exploring BREEAM In Use certification for those assets where it was not possible to obtain a BREEAM certification at the design and development stages.

Financial Review

Overview

The year has seen significant progress in the Group's development programme, with practical completion successfully achieved at Kaleidoscope, London EC1, 55 Bartholomew, London EC1 and at the second and final phase of residential apartments at Barts Square, London EC1, while the acquisition of 33 Charterhouse Street, London EC1, in joint venture, has added to the Group's development pipeline.

This success has been further reflected in Helical's letting activities. The final vacant floors at The Tower, London EC1 and One Bartholomew, London EC1 were let during the year. 90 Bartholomew Close, London EC1 was also fully let during the year, enabling its sale after the year end at significantly above its 31 March 2019 book value.

The completion of its development management roles at One Creechurch Place, London EC3 and One Bartholomew, London EC1 has allowed the Group to recognise its final profit shares, with receipt of these boosting its cash resources.

With the repayment of the £100m Convertible Bond in June 2019, the repayment of the development loan on The Bower, London EC1 and the completion of the expanded £400m Revolving Credit Facility, the Group has reduced its average cost of debt whilst extending the maturity of its borrowings.

Results for the Year

The see-through results for the year to 31 March 2020 include net rental income of £28.5m, a net gain on sale and revaluation of the investment portfolio of £45.5m and development profits of £9.9m, leading to a Total Property Return of £83.9m (2019: £81.4m). Total administration costs of £17.3m (2019: £17.2m) and net finance costs of £15.6m (2019: £18.4m) contributed to a pre-tax profit of £43.0m (2019: £43.5m). EPRA net asset value per share increased by 6.0% to 511p (31 March 2019: 482p).

The final dividend, payable on 27 July 2020, will be 6.00p per share (2019: 7.50p).

The Group's real estate portfolio, including its share of assets held in joint ventures, increased to £949.3m (31 March 2019: £876.4m) as a result of the acquisition, in joint venture, of 33 Charterhouse Street, London EC1, capital expenditure and net revaluation gains on the investment portfolio, offset by the sale of Power Road Studios, London W4.

The expenditure on the investment portfolio during the year marginally increased the Group's see-through loan to value to 31.4% (31 March 2019: 30.6%). Repayment of the Convertible Bond and refinancing The Bower into an expanded £400m Revolving Credit Facility reduced the Group's weighted average cost of debt to 3.5% (31 March 2019: 4.0%) and increased the weighted average debt maturity to 4.0 years (31 March 2019: 2.7 years). The average maturity of the facilities would increase to 5.4 years on exercise of the two one-year extension options on the Revolving Credit Facility, on a fully utilised basis.

At 31 March 2020, the Group had unutilised bank facilities of £196m and £83m of cash on a see-through basis. These are primarily available to fund the development of 33 Charterhouse Street, London EC1, remaining capital commitments at Kaleidoscope, London EC1 and future property acquisitions.

Total Property Return

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

The net rental income, development profits and net gains on sale and revaluation of our investment portfolio, which contribute to the Total Property Return, provide the inputs for our performance as measured by MSCI.

Total Accounting Return

Total Accounting Return is the growth in the net asset value of the Group plus dividends paid in the reporting year, expressed as a percentage of the net asset value at the beginning of the period. The metric measures the growth in Shareholders' Funds each year and is expressed as an absolute measure.

The Total Accounting Return on IFRS net assets in the year to 31 March 2020 was 7.7% (2019: 8.4%).

Total Accounting Return on EPRA net assets is the growth in the EPRA net asset value of the Group plus dividends paid in the year, expressed as a percentage of EPRA net asset value at the beginning of the year.

Earnings Per Share

The IFRS earnings per share decreased from 35.8p to 32.3p and are based on the after tax earnings attributable to ordinary Shareholders divided by the weighted average number of shares in issue during the year. 

On an EPRA basis, the loss per share of 8.4p in 2019 improved to a positive earnings per share of 7.6p, reflecting the Group's share of net rental income of £28.5m (2019: £25.2m) and development profits of £9.9m (2019: losses of £4.4m), but excluding gains on sale and revaluation of Investment properties of £45.5m (2019: £60.6m)

Net Asset Value

IFRS diluted net asset value per share increased from 469p to 489p and is a measure of Shareholders' Funds divided by the number of shares in issue at the year end, adjusted to allow for the effect of all dilutive share awards. 

EPRA net asset value per share increased by 6.0% to 511p per share (31 March 2019: 482p). This movement arose principally from a total comprehensive income (retained profits) of £38.8m (2019: £42.6m), less £12.2m of dividends (2019: £11.4m).

EPRA triple net asset value per share increased to 480p (31 March 2019: 465p).

EPRA has introduced three new asset value measures which will be applicable to Helical's Annual Results to 31 March 2021. The new measures will replace the existing EPRA net asset value and triple net asset value metrics. Helical considers the EPRA net tangible asset measure to be the most relevant for its business and its net asset value per share under this measure is 524p (31 March 2019: 494p).

Income Statement

Rental Income and Property Overheads

Gross rental income for the Group in respect of wholly owned properties increased to £31.6m (2019: £28.2m), reflecting letting success and partial capture of the investment portfolio's reversionary potential. In the joint ventures, gross rents decreased marginally to £0.9m (2019: £1.0m). Property overheads in respect of wholly owned assets and in respect of those assets in joint ventures remained steady at £4.1m (2019: £4.1m). After taking account of net rents receivable from our profit share partners of £nil (2019: £0.1m), see-through net rents increased by 13.0% to £28.5m (2019: £25.2m).

Development Profits

In the year, from our role as development manager at One Creechurch Place, London EC3, we recognised £0.8m of fees. Further fees of £1.3m were recognised for carrying out similar roles at Barts Square, London EC1 and 33 Charterhouse Street, London EC1.

A net write back of a provision for cost indemnities given on the sale of the Retirement Village schemes in 2017 contributed £1.1m and the sale of the Drury Lane scheme for a higher than anticipated value resulted in a further write back of £0.5m. The provisions of £0.4m against our legacy retail development programme, taking the carrying value of these assets to £nil, offset these to give a net development profit in the main group of £3.3m (2019: losses of £1.8m).

Share of Results of Joint Ventures

The revaluation of our investment assets held in joint ventures generated a surplus of £8.5m (2019: £1.3m). Under our development management agreement for One Bartholomew, London EC1, we recognised a net development fee of £8.1m as a result of completing the development and letting this asset. However, a reassessment of the expected sales proceeds and costs on the remaining apartments in the first phase of residential at Barts Square resulted in a provision of £1.5m and net developmental profits in joint ventures of £6.6m. The sale of the Group's interest in One Creechurch Place, London EC3 resulted in a profit of £1.3m.

Finance, administration, taxation and other sundry items added a further £3.5m of costs. An adjustment to reflect our economic interest in the Barts Square, London EC1 development and to ensure our (now disposed of) investment in One Creechurch Place, London EC3 is shown at its recoverable amount, generated net surpluses of £0.5m, leaving a net profit from our joint ventures of £13.4m (2019: loss of £3.2m).

Gain on Sale and Revaluation of Investment Properties

The valuation of our London investment portfolio, on a see-through basis, continued to reflect the benefit of our letting and development activities where we generated a valuation surplus of 6.3% (including purchases and gains on sales) and 6.4% on a like-for-like basis. In Manchester, a valuation surplus of 2.9% (including purchases and gains on sales) and 2.9% on a like-for-like basis was achieved. In total, the see-through investment portfolio showed a valuation surplus of 5.8% (including purchases and gains on sales), or 5.9% on a like-for-like basis.

The total impact on our results of the gain on sale and revaluation of our investment portfolio, including in joint ventures, was a net gain of £45.5m (2019: £60.6m). 

Administrative Expenses

Administration costs in the Group, before performance-related awards, reduced from £10.9m to £10.5m.

Performance related share awards and bonus payments, including National Insurance costs, were £6.2m (2019: £5.9m). Of this amount, £2.8m (2019: £2.3m), 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.

Finance Costs, Finance Income and Derivative Financial Instruments

Total finance costs, including joint ventures, fell significantly during the year to £17.0m (2019: £19.5m), primarily as a result of the repayment of the Convertible Bond in June 2019.

Finance income earned, including in joint ventures, was £1.4m (2019: £1.1m). The movement downwards in medium and long-term interest rate projections during the year contributed to a charge of £7.7m (2019: £3.3m) on the mark-to-market valuation of the derivative financial instruments. The repayment of the £100m Convertible Bond resulted in a credit of £0.5m (2019: £0.9m) on the reversal of the 31 March 2019 mark-to-market valuation.

Taxation

Helical pays corporation tax on its UK sourced net rental income, trading and development profits and realised chargeable gains, after offsetting administration and finance costs.

The current tax charge for the year decreased to £0.5m from £9.0m (which reflected the tax charge on the capital gain on the sale of The Shepherds Building, London W14 in September 2018).

Dividends

The interim dividend paid on 31 December 2019 of 2.70p was an increase of 3.8% on the previous interim dividend of 2.60p. The Company has proposed a final dividend of 6.00p, a decrease of 20% on the previous year (2019: 7.50p), for approval by Shareholders at the 2020 AGM. In total, the dividend paid or payable in respect of the results for the year to 31 March 2020 will be 8.70p (2019: 10.10p), a decrease of 13.9%.

Balance Sheet

Shareholders' Funds

Shareholders' Funds at 1 April 2019 were £567.4m. The Group's results for the year added £38.8m (2019: £42.6m), net of tax, representing the total comprehensive income for the year. Movements in reserves arising from the Group's bonus and share schemes and the impact of adopting IFRS 16 Leases increased funds by £4.7m. The Company paid dividends to Shareholders amounting to £12.2m leaving a net increase in Shareholders' Funds from Group activities during the year of £31.3m to £598.7m.

Investment Portfolio

In the year to 31 March 2020, the Group acquired 33 Charterhouse Street, London EC1 in joint venture for £37.1m (our share). The Group spent £49.7m on capital works on the investment portfolio, mainly at Kaleidoscope, London EC1 (£24.9m), The Tower, London EC1 (£7.8m), and 33 Charterhouse Street, London EC1 (£3.9m), The Tootal Buildings (formerly called Churchgate and Lee), Manchester (£6.2m) and Fourways, Manchester (£3.2m). Power Road Studios, London W4 was sold in the year with a book value of £41.5m. A downward economic adjustment of £0.5m was made to reflect our share of Barts Square, London EC1, at 43.0% compared to 43.8% in the prior year. Revaluation gains added £52.2m to increase the see-through value of the portfolio, before lease incentives, to £913.7m (31 March 2019: £816.6m). The accounting for head leases and lease incentives resulted in a book value of the see-through investment portfolio of £895.7m (31 March 2019: £804.0m).

Debt and Financial Risk

In total, Helical's outstanding debt at 31 March 2020 of £386.9m (31 March 2019: £479.2m) had a weighted interest cost of 3.5% (31 March 2019: 4.0%) and a weighted average debt maturity of 4.0 years (31 March 2019: 2.7 years). The average maturity of the facilities would increase to 5.4 years following exercise of the two one-year extensions of the Group's £400m Revolving Credit Facility, on a fully utilised basis.

Debt Profile at 31 March 2020 - Including Commitment Fees but Excluding the Amortisation of Arrangement Fees

* Calculated on a fully utilised basis with the two one-year extensions of the Revolving Credit Facility included.

Secured Debt

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

- Investment Facilities

We have a £400m Revolving Credit Facility that enables the Group to acquire, refurbish, reposition and hold significant parts of our investment portfolio with the remaining investment assets held in an £81m term loan secured facility. The value of the Group's properties secured in these facilities at 31 March 2020 was £709m (31 March 2019: £698m) with a corresponding loan to value of 43.8% (31 March 2019: 44.4%). The average maturity of the Group's investment facilities at 31 March 2020 was 4.4 years (31 March 2019: 3.5 years), increasing to 6.0 years on a fully utilised basis and following the two one-year extensions of the Revolving Credit Facility. The weighted average interest rate was 3.3% (31 March 2019: 3.9%). The marginal cost of fully utilising the undrawn Revolving Credit Facility was 2.2% (31 March 2019: 2.1%).

- Development Facilities

This facility finances the over-station development at Kaleidoscope, London EC1. The maturity of the Group's development facility at 31 March 2020 was 3.4 years (31 March 2019: 4.4 years) with a weighted average interest rate of 3.8% (31 March 2019: 6.3%).

- Joint Venture Facilities

We hold a number of investment and development properties in joint venture with third parties and include in our reported figures our share, in proportion to our economic interest, of the debt associated with each asset. The average maturity of the Group's share of bank facilities in joint ventures at 31 March 2020 was 1.8 years (31 March 2019: 2.8 years) with a weighted average interest rate of 4.2% (31 March 2019: 4.0%).

Unsecured Debt

The Group's unsecured debt, following the repayment of the £100m Convertible Bond in June 2019, is £5.0m (31 March 2019: £100.5m), as follows:

- Short-term Working Capital Facilities

Drawn £5m (31 March 2019: £nil) of these facilities as additional working capital for the Group.

Cash and Cash Flow

At 31 March 2020, the Group had £279m (31 March 2019: £382m) of cash and agreed, undrawn, committed bank facilities including its share in joint ventures, as well as £70m (31 March 2019: £25m) of uncharged property on which it could borrow funds.

Net Borrowings and Gearing

Total gross borrowings of the Group, including in joint ventures, have decreased from £479.2m to £386.9m during the year to 31 March 2020. After deducting cash balances of £83.0m (31 March 2019: £205.2m) and unamortised refinancing costs of £6.0m (31 March 2019: £5.4m), net borrowings increased from £268.6m to £298.5m. The see-through gearing of the Group, including in joint ventures, increased from 47.3% to 49.9%.

Hedging

At 31 March 2020, the Group had £285.8m (31 March 2019: £363.0m) of fixed rate debt with an average effective interest rate of 3.0% (31 March 2019: 3.7%) and £68.0m (31 March 2019: £67.2m) of floating rate debt with an average effective interest rate of 4.9% (31 March 2019: 5.7%). In addition, the Group had £240m of interest rate caps at an average of 1.75% (31 March 2019: £240m at 1.69%). In our joint ventures, the Group's share of fixed rate debt was £nil (31 March 2019: £nil) and £33.1m (31 March 2019: £49.0m) of floating rate debt with an effective rate of 4.2% (31 March 2019: 4.0%), with interest rate caps set at 1.5% plus margin on £32.3m (31 March 2019: £11.0m at 0.5%).

* This includes commitment fees on undrawn facilities. Excluding these would reduce the effective rate to 3.0% (31 March 2019: 3.7%).

Going Concern and Covenant Compliance

Helical's Going Concern analysis is discussed in Note 1 of the Notes to the Full Year Results. To the extent that this analysis considers the collection of rent and the impact of this collection on loan covenants, the position is outlined below.

Despite the impact of Covid-19, the rent collection for the 25 March 2020 quarter remained high and further progress has been made since the quarter date, resulting in 92% of the rents collected to date.

Of the remaining 8% uncollected, 5% is subject to an agreed payment plan or deferral.

In addition, we have collected 97% of the service charge for the 25 March 2020 quarter.

The Group has income cover covenants on its Revolving Credit Facility (RCF) and Aviva term loan and as a result of the strong rent collection the March 2020 covenants were comfortably met.

For the RCF, £5.5m of rent will be charged for the June 2020 rent quarter and we have rent deposits and bank guarantees of £9.7m from tenants in buildings secured in this facility. For the Aviva term loan, £2.0m of rent will be charged for the June 2020 rent quarter and we have rent deposits and bank guarantees of £1.8m from tenants in buildings secured to this loan.

The Group has adopted a going concern basis in preparing the accounts for the year ended 31 March 2020.

Tim Murphy

Finance Director

4 June 2020

Helical's Property Portfolio - 31 March 2020

Property Overview

For Helical to generate capital profits and growing income streams, the Group needs to identify those areas where it believes tenant demand is, or will become, strong and to source opportunities in those areas at an appropriate entry price. Equally important, we need to provide inspiring working environments suited to the needs of our customers, the tenants. Using the skills, knowledge and expertise gained over many years, the Helical team aims to deliver attractive and exciting office space in our identified locations.

Helical divides its property activities into two core markets: London and Manchester offices. At 31 March 2020, London represented 85% and Manchester 15% of the investment property portfolio. Whilst there are structural differences in these markets, Helical has found that its business model can be applied successfully to each, driving capital growth, development profits and rental income.

The London Portfolio

Our London portfolio comprises income-producing multi-let offices, office refurbishments and developments and a mixed use commercial/residential scheme. Our strategy is to continue to increase our London holdings, focusing on areas where we see strong tenant demand and growth potential, such as the "Tech Belt" that runs from King's Cross through Farringdon, Old Street and Shoreditch to Whitechapel.

In our judgement, the London commercial property market continues to provide the best source of capital profits. From an occupational perspective the market fundamentals remain robust with strong global demand for commercial office space from occupiers and a constrained supply of high quality, new space. 2019 saw annual leasing activity reaching 11.5m sq ft which was c.9% above the 10 year average. By the end of 2019 the overall London office vacancy rate had fallen to 4.1%, which is significantly below the 10 year average of 5.5%. These factors contributed to the significant increases in prime rents across the London market, with a 7% rise seen in the City office market. In particular, we have seen substantial premiums being paid for best in class space within sub-markets, as occupiers increasingly search for quality environments from which to conduct business.

Whilst occupational demand remains strong, within the London office sector there remains a looming supply shortage, particularly in new prime space. Recent research from CBRE shows that of the c.12.6m sq ft of office space under construction, 60% is already let or under offer. Whilst Tech, Media and Telecoms (TMT) occupiers make up the largest group taking pre-let space, the market is diverse with significant requirements from Financial and Professional Services businesses.

Prior to the impact of Covid-19, the investment market had begun to benefit from renewed confidence at the beginning of 2020, which aligned with stability in the political environment. Whilst investment volumes may be expected to remain subdued this year due to concerns regarding Covid-19, significant capital is still available to be allocated to the London office market which we believe will provide an opportunity to deliver strong capital returns. Furthermore, when compared against similar global cities, London remains competitively priced, with prime yields in Central London having not compressed to previous cyclical lows, primarily due to Brexit concerns since 2016.

In recent years, the office market has seen significant evolution with occupiers increasingly focusing their property decisions on maximising employee wellbeing and ensuring the sustainability of the space they occupy. It is anticipated that this trend will continue, with the impacts of Covid-19 likely to further expedite change in the office environment. Furthermore, the rapid evolution of the integration of technology into the workplace continues, with best in class buildings providing innovative technological solutions to enhance occupier efficiency. We believe these trends align with our London properties which place an emphasis on quality, modernity and well-being and help to differentiate the portfolio.

The trend towards flexibility in occupiers' leasing arrangements continues to evolve across the commercial office market in London. At Helical, we continue to engage with our customers and look to develop long-standing relationships with them. By offering flexible leases on our multi-let assets, which allows them to occupy space commensurate with their requirements, we target the long-term retention of our customers. We continue to evolve our offering to reflect trends in demand, specifically the recent introduction of fitted "Plug & Play" solutions across the portfolio.

We consider that the London office market provides solid fundamentals which align with our strengths in the three "Rs" - repositioning, refurbishing and redeveloping property. Our ability to effectively engage with occupiers and evolve our offering enables us to remain well positioned to take advantage of market trends and continue to deliver best in class space.

33 Charterhouse Street, EC1

In May 2019, we acquired the long leasehold interest in 33 Charterhouse Street, a major development site located in Farringdon, in a 50:50 joint venture with AshbyCapital. The site is situated on the corner of Charterhouse Street and Farringdon Road, just 100m from Farringdon Station and immediately opposite the future Museum of London site at Smithfield General Market.

Since acquisition, planning consent has been obtained to enhance the ground floor configuration and to add an additional floor of 13,175 sq ft within the envelope of the existing design, such that the property will now provide c.200,000 sq ft of office accommodation over ground plus ten floors.

Work started on site in February 2020 and following a two week suspension in activity on site due to Covid-19, work is back underway and the building is due to complete in Summer 2022.

The Bower, EC1

The Bower is a landmark estate immediately adjacent to the Old Street roundabout featuring 312,575 sq ft of innovative, high quality office space along with 21,059 sq ft of restaurant and retail space.

The Warehouse and The Studio

The Warehouse comprises 122,858 sq ft of offices and The Studio 18,283 sq ft of offices, with 10,298 sq ft of retail space across the two buildings. The offices are fully let to CBS, Farfetch, Pivotal, Allegis and Stripe (The Warehouse) and John Brown Media (The Studio), with the first rent reviews for the office tenants taking place in the coming year. The retail operators are Bone Daddies, Brewdog AF, Enoteca da Luca, Honest Burger, Mokka Brothers and Good To Go.

The Tower

The Tower, completed in August 2018, offers 171,434 sq ft of office space with a contemporary façade and innovatively designed interconnecting floors, along with 10,761 sq ft of retail space, across two units, let to food and beverage occupiers, Serata Hall and Wagamama.

In the year we let the 12th and 15th floors to Brilliant Basics, an Infosys Company, an existing tenant. We also let the 13th floor to OpenPayd, a financial services business, the 14th floor to Snowflake Computing and the 16th floor to Incubeta, a multi-national marketing group. The lettings on the 12th, 13th and 14th floors were on a "Plug & Play" basis. Following these lettings, The Tower is now fully let.

Barts Square, EC1

In a joint venture with The Baupost Group LLC, Helical acquired the freehold interest of Barts Square, a 3.2 acre site between St Paul's and Smithfield Market, in 2011. A redevelopment comprising 236 residential apartments, three office buildings of 214,434 sq ft, 24,013 sq ft and 10,976 sq ft together with 21,144 sq ft of retail/A3 at ground floor as well as major public realm improvements has now been completed.

Phase One

Residential/Retail

During the year we completed on the sales of four residential apartments in Phase One and exchanged contracts for the sale of a further two residential apartments, one of which has completed since the end of the year. This leaves just four apartments to sell, of which one has been reserved since the end of the year. In total, the sales of the 140 apartments have achieved a total value of £180.3m, at an average price of £1,536 psf. The retail space is fully let to Stem + Glory and Halfcup. The landscaping of the new public square has been completed offering a further public amenity.

90 Bartholomew Close - Office/Restaurant

At 90 Bartholomew Close, a redevelopment comprising 24,013 sq ft of offices and 6,414 sq ft of restaurant, we let five floors during the year and the building is now fully let. The second floor was let to Peakon, an existing tenant within the Helical portfolio, on a "Plug & Play" basis. The remaining floors were let to Sia Partners, Constantine Cannon LLP and Eric Salmon.

Subsequent to the year end, we completed the sale of 90 Bartholomew Close to La Francaise Real Estate Partners International, a pan-European investment business acting on behalf of a French collective real estate investment vehicle. The disposal price of £48.5m reflected a net initial yield of 3.92% (£1,594 per sq ft capital value).

Phase Two

One Bartholomew - Offices

One Bartholomew was sold to clients of AshbyCapital for £102.4m in August 2015. The construction of a new 12 storey Grade A office block of 214,434 sq ft completed in December 2018. AshbyCapital's clients financed the development costs and Helical acted as the development manager for delivery of the project.

During the year we let all the remaining space within the building, comprising 140,224 sq ft over eight floors. The ground, first and second floor were let to The University of Chicago Booth School of Business, the third and fourth floors have been let to BDB Pitmans, the fifth floor to finnCap Group, the sixth floor to Sopra Steria and the seventh floor to InfraRed Capital Partners. As a result of the building having been completed and successfully let, the Barts Square joint venture has received its profit share payment.

Phase Three

Residential/Retail

Phase Three is comprised of 92 residential apartments and 11,538 sq ft of retail space. During the year, practical completion was achieved on three of the four residential blocks, with the final block having been completed shortly after the year end, representing in total 91 apartments and six retail units. 56 West Smithfield, the site of the existing marketing suite, is to be redeveloped into the final apartment and retail unit at a later date.

We completed the sales of 32 apartments, with a further 15 completions having taken place since the year end. Legal completions of a further five exchanged apartments are ongoing over the coming weeks. In total the sales of the 52 apartments will achieve a total value of £78.3m, at an average price of £1,769 psf. There are 39 apartments remaining to sell, along with one additional duplex located at 56 West Smithfield which will be released at a later date. Six retail units within Phase Three have also been completed and are being marketed at present.

55 Bartholomew

The substantial refurbishment of 55 Bartholomew has been completed providing 10,976 sq ft of office accommodation. We have let the 1,040 sq ft fifth floor to ShadowFall Capital & Research, a hedge fund, at a headline rent of £80 psf.

Kaleidoscope, EC1

Practical completion of this new office development above the Farringdon East Elizabeth Line station was achieved in December 2019. We are now actively marketing the 86,064 sq ft of office space, spread over five floors, alongside a ground floor restaurant/retail unit and a kiosk unit.

The Loom, E1

At this 108,594 sq ft former Victorian wool warehouse, we have let six office units in the year at a c.4.3% premium to 31 March 2019 ERVs, along with the café. The building is 96% let with four units currently vacant, of which one is under offer. Since acquisition in 2013 we have extensively refurbished 92% of all the units. We are currently assessing further asset management opportunities to reconfigure units to offer larger floorplates to complement the existing mix.

25 Charterhouse Square, EC1

25 Charterhouse Square comprises 38,355 sq ft of Grade A offices and 5,138 sq ft of retail space adjacent to the new Farringdon East Elizabeth Line station and overlooks the historic Charterhouse Square. The building was extensively refurbished upon acquisition in January 2016, achieving practical completion in March 2017, and is fully let to Anomaly, Peakon, Hudson Sandler and Senator International.

Power Road Studios, W4

The multi-let office campus, comprising 57,164 sq ft of offices across four studio buildings, was sold to a private UK Investment Manager for £41.6m in February 2020. The sale price marginally exceeded the 31 March 2019 valuation and reflected a net initial yield of 4.8%.

Prior to disposal we had completed six lettings representing 16,637 sq ft and had also let the café to a new operator.

The Powerhouse, W4

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

One Creechurch Place, EC3

The sale of our 10% shareholding in One Creechurch Place, to our joint venture partner HOOPP, took place in September 2019, completing our involvement in the development.

The Manchester Portfolio

Our Manchester portfolio comprises four offices where we offer vibrant, modern space to a diverse group of tenants. Our four offices are all clustered within a ten minute walk of one another, enabling us to offer tenants a choice in design, size and rental tone and aiding in the long term retention of our customers.

Manchester, the centre of the "Northern Powerhouse", is a city with a diverse and growing economy that continues to present attractive opportunities. The city continues to attract significant foreign investment, ranking second behind London, and is home to over 2,000 foreign-owned companies. The vibrant culture and high graduate retention rates provide a deep talent pool. This has contributed to the rise in the number of creative industry occupiers within the city in recent years, evidenced by a 50% increase in FinTech in the past decade. The city also continues to be a pioneer in relation to sustainability, with a goal to halve carbon emissions by 2025 and become "zero carbon" by 2038, 12 years ahead of the UK's broader target.

The commercial office market has expanded significantly in recent years and the trend has continued with take-up in 2019 for office space considerably in excess of the five year average. 55% of total take up comprises the serviced offices, TMT and Business & Consumer Services sectors. Whilst Serviced Offices alone contributed 20% of the total take-up in 2019, the sector represents just 3.8% of the Manchester city office market, which is significantly lower than the c.7% seen in London.

We continue to see a decline in the supply of prime stock in the market with less than one year of Grade A supply reported as being available at the end of 2019 (based on average Grade A take-up rates). The limited supply has contributed to a 7% increase in city centre prime rents to £36.50 per sq ft. With increased private and public investment into the city and significant infrastructure spending proposed in the coming years, rental growth is anticipated in the medium term.

Going forward, 2.1m sq ft of office space is under construction, double the average amount observed over the past 12 years. However, of the space under development, 40% of the Grade A space is pre-let, with 40% of that taken by the TMT sector and 19% by the serviced office sector. As such, supply is expected to be constrained for the foreseeable future, particularly if construction is delayed due to the impacts of Covid-19.

The Tootal Buildings, Manchester

This 245,822 sq ft multi-let office is now fully let following the completion of the lettings of the recently refurbished third floor in Broadhurst (formerly known as Churchgate) and the sixth and seventh floors in Lee to Capita Business Services, an existing tenant. We have continued our asset management programme which includes refurbishments of the Broadhurst and Lee reception areas and a rebranding of the two buildings as The Tootal Buildings to reflect the heritage of the property.

Trinity, Manchester

Following completion of the full redevelopment in January 2019, the repositioned building comprises 54,651 sq ft of office space and 4,300 sq ft of retail/restaurant space. During the year, three office floors and one retail unit have gone under offer.

Fourways, Manchester

We continue to apply our asset management skills to this 59,260 sq ft Grade II listed former packing warehouse to reconfigure the existing space to create a greater range of unit sizes, including a complete refurbishment and reconfiguration of the first floor. In the year, we have let a further six units representing 14,393 sq ft, taking the building to 75% let. The refurbishment of the atrium and common parts is due to be completed shortly.

35 Dale Street, Manchester

35 Dale Street is a 56,124 sq ft office building, situated in the Northern Quarter of Manchester, which underwent a comprehensive refurbishment that was completed in June 2018. The property is fully let apart from one unit which has been refurbished during the year and is currently under offer.

Portfolio Analytics

See-through Total Portfolio by Fair Value

See-through Development Portfolio

Capital Expenditure

We have a planned development and refurbishment programme.

* Includes deferred consideration of £10.8m payable in April 2020.

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 without relying on market movements.

During the year, total contracted income increased by £4.4m primarily as a result of rent from new lettings and rent reviews. This income more than offset the contracted income lost on the sale of Power Road Studios and losses from breaks and lease expiries.

Investment Portfolio

Portfolio Yields

See-through Capital Values, Vacancy Rates and Unexpired Lease Terms

See-through Valuation Movements

See-through Lease Expiries or Tenant Break Options

We have a strong rental income stream and a diverse tenant base. The top 10 tenants account for 50.9% of the total rent roll and the tenants come from a variety of industries.

Principal Lettings

Letting Activity

1 Excludes leases on a "Plug & Play" basis.

Consolidated Income Statement

For the year ended 31 March 2020

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2020

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

Consolidated Balance Sheet

At 31 March 2020

Consolidated Cash Flow Statement

For the year to 31 March 2020

Consolidated Statement of Changes in Equity

At 31 March 2020