Helical Bar Regulatory News (HLCL)

HELICAL, DELIVERING A SUSTAINABLE FUTURE

Gerald Kaye, Chief Executive, commented:

"Today marks the opening to the public of the Elizabeth Line, one of the largest transport infrastructure projects in the UK, increasing Central London's rail capacity by 10% and bringing an additional 1.5 million people within 45 minutes of Central London. Our £1bn portfolio of sustainable, amenity rich London offices, of which 99% by value are situated within a 12 minute walk of a nearby Elizabeth Line station, will continue to benefit from their proximity to this new arterial route through Central London. It is this connection, together with the improving strength of the prime London office market, that has underpinned a strong set of results after emerging from the Covid-19 pandemic following two difficult years.

"Our Total Accounting Return ("TAR") for the year, a key performance indicator for Helical, was 15.0% on our net assets measured under IFRS and 10.2% based on our EPRA net tangible assets. Over the three years to 31 March 2022, the compound annual growth rate of our EPRA TAR was 7.8% pa, an indication of the strength and consistency of the financial performance of the Group, despite the challenges of the period. These results were driven by growing rental income and strong valuation surpluses from both our completed development schemes, now held for long term income growth and future asset management opportunities, and our schemes under development.

"This morning we published our Net Zero Carbon Pathway to becoming a net zero carbon business by 2030, as our contribution, as a responsible business, to the decarbonising of the UK economy by 2050. In continuing this journey, we have identified meaningful ways of reducing both our embodied and operational carbon emissions. As part of this process, we have signed up to the Better Buildings Partnership Climate Commitment, which provides an accountable and transparent framework for delivering net zero carbon for a property portfolio.

"We are a specialist developer and investor in prime Central London real estate, creating inspiring and sustainable, best-in-class office buildings. London is a leading world city, a safe haven, attracting a mix of established and growing businesses seeking a base for their operations and well capitalised investors looking to invest their funds.

"We will continue to see bifurcation between the best-in-class new sustainable buildings and the older less sustainable buildings. This will be reflected in strong rental growth for the former and rental decline for the latter. Helical is well positioned to capitalise upon a period of opportunity within the sector over the next 10-20 years, changing the older "brown" buildings into "green" sustainable buildings.

"In the last year, we have deployed capital to acquire 100 New Bridge Street, EC4, with this exciting redevelopment due to start by the end of 2023, following the expiry of the current tenancies. Along with 33 Charterhouse Street, EC1, due for completion in September 2022, and continuing asset management opportunities in the remaining, completed investment portfolio, we are optimistic that our successful track record of outperforming the market and delivering strong financial returns will continue."

Operational Highlights

· Major boost to the development pipeline with the acquisition of 100 New Bridge Street, EC4. Delivery of a c.185,000 sq ft office scheme planned for early 2025.

· Practical completion of 33 Charterhouse Street, EC1, a 205,369 sq ft BREEAM "Outstanding" office development, on track for September 2022.

· 14 residential units at Barts Square sold in this 236 unit residential scheme, leaving 14 apartments available at the year end of which one has since been sold and two are under offer.

· 12 new lettings completed across the portfolio, totalling 54,118 sq ft, delivering contracted rent of £3.3m (Helical's share £3.0m) at 1.8% above the 31 March 2021 ERV (excluding managed lettings).

· 95.8% of all rent contracted and payable for the financial year collected with 2.2% to be collected following the end of the Government's general moratorium and 2.0% having been written off or agreed concessions.

· Post year end disposals of:

- Trinity, our last remaining asset in Manchester, for £34.55m, at a net premium of c.£2.0m to our 31 March 2022 book value and representing a net initial yield of 5.0%.

- 55 Bartholomew, EC1, for £16.5m (our share £7.6m), at a 3% premium to 31 March 2022 book value, reflecting a net initial yield of 4.5%.

Financial Highlights

Earnings and Dividends

· IFRS profit after tax increased to £88.9m (2021: £17.9m).

· See-through Total Property Return1 of £89.5m (2021: £48.6m):

- Group's share1 of net rental income of £31.2m (2021: £25.0m) - up 24.8%.

- Net gain on sale and revaluation of investment properties of £51.7m (2021: £23.9m).

- Development profits of £6.6m (2021: losses of £0.3m).

· Total Property Return, as measured by MSCI, of 10.7%, compared to the MSCI Central London Offices Total Return Index of 7.9%.

· IFRS basic earnings per share of 72.8p (2021: 14.8p).

· EPRA earnings per share1 of 5.2p (2021: loss of 1.8p).

· Final dividend proposed of 8.25p per share (2021: 7.40p), an increase of 11.5%.

· Total dividend for the year of 11.15p (2021: 10.10p), an increase of 10.4%.

Balance Sheet

· Net asset value up 13.0% to £687.0m (31 March 2021: £608.2m).

· Total Accounting Return1 on IFRS net assets of 15.0% (2021: 3.3%).

· Total Accounting Return1 on EPRA net tangible assets of 10.2% (2021: 4.5%).

· EPRA Total Accounting Return CAGR1 for the three years to 31 March 2022 of 7.8% (2021: 7.2%).

· EPRA net tangible asset value per share1 up 7.3% to 572p (31 March 2021: 533p).

· EPRA net disposal value per share1 up 13.6% to 551p (31 March 2021: 485p).

Financing

· See-through loan to value1 increased to 36.4% (31 March 2021: 22.6%).

· See-through net borrowings1 of £402.9m (31 March 2021: £193.9m).

· Average maturity of the Group's share1 of secured debt of 3.0 years (31 March 2021: 3.2 years), increasing to 3.7 years on exercise of options to extend current facilities and on a fully utilised basis.

· Change in fair value of derivative financial instruments credit of £18.0m (2021: £2.9m).

· See-through average cost of secured facilities1 of 3.2% (31 March 2021: 3.5%).

· Group's share1 of cash and undrawn bank facilities of £132m (31 March 2021: £423m).

· Helical elected to become a REIT, effective 1 April 2022, and will be exempt from UK corporation tax on relevant future property activities.

Portfolio Update

· IFRS investment property portfolio value of £938.8m (31 March 2021: £740.2m).

· 7.0% valuation increase, on a like-for-like basis1 (5.6% including sales and purchases), of our see-through investment portfolio, valued at £1,097.3m, compared to £839.4m at 31 March 2021.

· Contracted rents of £46.4m (31 March 2021: £37.8m) compared to an ERV1 of £67.1m (31 March 2021: £52.1m).

· See-through portfolio WAULT1 of 5.6 years (31 March 2021: 6.9 years).

· Vacancy rate reduced from 10.5% to 6.7%.

Sustainability Highlights

· Helical's "Net Zero Carbon Pathway" published today setting out our commitment to becoming a net zero carbon business by 2030.

· Better Building Partnership's Climate Commitment adopted, providing an accountable and transparent framework for delivering net zero carbon for a property portfolio.

· Improvements across sustainability measures and ratings with a 4* Green GRESB rating (85/100), MSCI ESG of AAA and an EPRA Sustainability BPR rating of Gold.

· 96% of the space in our buildings has been recently developed or refurbished (excluding 100 New Bridge Street, EC4) with 99% of our investment portfolio, by value, having an A or B EPC rating.

For further information, please contact:

Results Presentation

Helical will be holding a presentation for analysts and investors starting at 08:30am on Tuesday 24 May 2022 at the offices of FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD. If you would like to attend, please contact FTI Consulting on 020 3727 1000, or email schelical@fticonsulting.com 

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

Webcast Link:

https://webcasting.brrmedia.co.uk/broadcast/624c2069e1d0d456b32a283b

1. See Glossary for definition of terms. The financial statements have been prepared in accordance with International Accounting Standards ("IAS") in conformity with the Companies Act 2006. In common with usual and best practice in our sector, alternative performance measures have also been provided to supplement IFRS, some of which are based on the recommendations of the European Public Real Estate Association ("EPRA"), with others designed to give additional information about the Group's share of assets and liabilities, income and expenses in subsidiaries and joint ventures. 

Chief Executive's Statement

Overview

Today marks the opening to the public of the Elizabeth Line, one of the largest transport infrastructure projects in the UK, increasing Central London's rail capacity by 10% and bringing an additional 1.5 million people within 45 minutes of Central London. Our £1bn portfolio of sustainable, amenity rich London offices, of which 99% by value are situated within a 12 minute walk of a nearby Elizabeth Line station, will continue to benefit from their proximity to this new arterial route through Central London. It is this connection, together with the improving strength of the prime London office market, that has underpinned a strong set of results after emerging from the Covid-19 pandemic following two difficult years.

Our Total Accounting Return ("TAR") for the year, a key performance indicator for Helical, was 15.0% on our net assets measured under IFRS and 10.2% based on our EPRA net tangible assets. Over the three years to 31 March 2022, the compound annual growth rate of our EPRA TAR was 7.8% pa, an indication of the strength and consistency of the financial performance of the Group, despite the challenges of the period. These results were driven by growing rental income and strong valuation surpluses from both our completed development schemes, now held for long term income growth and future asset management opportunities, and our schemes under development.

Sustainability

This morning we published our Net Zero Carbon Pathway to becoming a net zero carbon business by 2030, as our contribution, as a responsible business, to the decarbonising of the UK economy by 2050. In continuing this journey, we have identified meaningful ways of reducing both our embodied and operational carbon emissions. As part of this process, we have signed up to the Better Buildings Partnership Climate Commitment, which provides an accountable and transparent framework for delivering net zero carbon for a property portfolio.

With our commitment to sustainability reporting, we measure our performance against industry-wide benchmarks, and I am pleased again to be able to report significant progress against these measures during the year.

We have improved our GRESB score from a 3* to a 4* Green rating, increasing our score from 76 to 85, and have maintained our MSCI ESG rating at AAA, the top rating. Further, we have been awarded a Gold rating under the EPRA Sustainability BPR, up from Silver.

At a portfolio level, 99% by value of our completed portfolio has an EPC rating of A or B (the remaining 1% has a C rating) and each of our refurbished or redeveloped office buildings has a BREEAM rating of "Excellent", with BREEAM "Outstanding" targeted for 33 Charterhouse Street, EC1 and 100 New Bridge Street, EC4.

Overall, the Group has continued to respond decisively to the climate change challenge, achieving its sustainability targets and, importantly, has a clear path to continue this journey.

Results for the Year

The profit after tax for the year to 31 March 2022 was £88.9m (2021: £17.9m) with a see-through Total Property Return of £89.5m (2021: £48.6m). Following the letting of Kaleidoscope, EC1 in March 2021 and the recent purchase of 100 New Bridge Street, EC4, see-through net rental income increased by 24.8% to £31.2m (2021: £25.0m) while developments generated see-through profits of £6.6m (2021: loss of £0.3m). The see-through net gain on sale and revaluation of the investment portfolio was £51.7m (2021: £23.9m).

Total see-through net finance costs increased to £19.7m (2021: £14.8m), including £5.9m loan cancellation costs. An increase in expected future interest rates led to an £18.0m credit (2021: £2.9m) from the valuation of the Group's derivative financial instruments. Recurring see-through administration costs were 2% higher at £9.9m (2021: £9.7m), with performance related awards increasing to £6.0m (2021: £4.3m) and National Insurance on these awards of £1.2m (2021: £0.8m).

A corporation tax credit of £1.1m has been recognised in the annual results and following the election to become a REIT, with effect from 1 April 2022, a deferred tax credit of £14.9m has also been recognised.

There was an IFRS basic earnings per share of 72.8p (2021: 14.8p) and an EPRA earnings per share of 5.2p (2021: loss of 1.8p).

On a like-for-like basis, the investment portfolio increased in value by 7.0% (5.6% including purchases and gains on sales). The see-through total portfolio value increased to £1,097.3m (31 March 2021: £839.4m), following the acquisition of 100 New Bridge Street, EC4 during the year.

The unleveraged return of our property portfolio, as measured by MSCI, was 10.7% (2021: 7.0%), showing strong outperformance of its benchmark. We compare our portfolio performance to the MSCI UK Central London Offices Total Return Index which produced a return of 7.9% (2021: -1.7%) with an upper quartile return of 9.9% (2021: 1.6%).

The portfolio was 93.3% let at 31 March 2022, generating contracted rents of £46.4m (2021: £37.8m), at an average of £60 psf, growing to £49.3m on the letting of currently vacant space and moving towards capturing its ERV of £67.1m (2021: £52.1m). The Group's contracted rent has a Weighted Average Unexpired Lease Term ("WAULT") of 5.6 years.

The Total Accounting Return ("TAR"), being the growth in the IFRS net asset value of the Group, plus dividends paid in the year, was 15.0% (2021: 3.3%). Based on EPRA net tangible assets, the TAR was 10.2% (2021: 4.5%). EPRA net tangible assets per share were up 7.3% to 572p (31 March 2021: 533p), with EPRA net disposal value per share up 13.6% to 551p (31 March 2021: 485p).

Balance Sheet Strength and Liquidity

The Group has a significant level of liquidity with see-through cash and unutilised bank facilities of £132m (31 March 2021: £423m) to fund capital works on its portfolio and future acquisitions.

At 31 March 2022, the Group had £14.2m of cash deposits available to deploy without restrictions and a further £19.1m of rent in bank accounts available to service payments under loan agreements, cash held at managing agents and cash held in joint ventures. Furthermore, the Group had £99.0m of loan facilities available to draw on plus £31.0m of uncharged property.

The see-through loan to value ratio ("LTV") increased to 36.4% at the balance sheet date (31 March 2021: 22.6%) and our see-through net gearing, the ratio of net borrowings to the net asset value of the Group, increased to 58.6% (31 March 2021: 31.9%) over the same period.

At the year end, the average debt maturity on secured loans, on a see-through basis, was 3.0 years (31 March 2021: 3.2 years), increasing to 3.7 years on exercise of options to extend the Group's facilities and on a fully utilised basis. The average cost of debt at 31 March 2022 was 3.2% (31 March 2021: 3.5%).

Helical as a Real Estate Investment Trust ("REIT")

Helical's business has evolved in recent years, from a developer/trader model, selling its development schemes to third party investors, to become a developer of, and investor in, new or refurbished Grade A buildings that are retained for their capital growth and long-term income potential.

Today, Helical has a portfolio with a superior sustainability rating. Together, this portfolio and the Company's long-term investment model has facilitated the conversion of the Company's operations to a REIT, with the notice to become a REIT submitted in March 2022 and effective from 1 April 2022.

It is the intention of the Board that there will be no material changes to the Group's investment policy or strategy on becoming a REIT.

Helical intends to employ the same dividend policy as followed prior to its conversion to a REIT. Within the REIT regime, distributions from the Company may comprise Property Income Distributions (PIDs), ordinary dividends or a combination of the two. The Company will be required to distribute at least 90% of the tax exempt income profits of its property rental business and will be able to distribute additional amounts over and above the minimum PID requirement, to enable it to continue its current dividend policy.

Dividends

Helical is a capital growth stock, seeking to maximise value by successfully letting repositioned, refurbished and redeveloped property. Once stabilised, these assets are either retained for their long-term income and reversionary potential or sold to recycle equity into new schemes.

This recycling leads to fluctuations in our EPRA earnings per share, as the calculation of these earnings excludes capital profits generated from the sale and revaluation of assets. As such, both EPRA earnings and realised capital profits are considered when determining the payment of dividends.

In the year to 31 March 2022, prior to Helical becoming a REIT, the Company retained all its investment assets, investing its available cash resources to grow the development pipeline with the acquisition of 100 New Bridge Street, EC4. The additional income from this purchase and the growing net rental income from the completed investment assets increased net rental income by 24.8% and EPRA earnings per share from a loss of 1.8p in 2021 to earnings of 5.2p in 2022.

In the light of the increased earnings and the strong results for the year, the Board will be recommending to Shareholders a final dividend of 8.25p per share, an increase of 11.5% on last year (7.40p). If approved by Shareholders at the 2022 AGM, the total dividend for the year will be 11.15p, up 10.4% on 2021.

This final dividend, if approved, will be paid out of distributable reserves generated from the Group's activities prior to its conversion into a REIT.

Board Matters

At this year's Annual General Meeting ("AGM") our Chairman, Richard Grant, will step down from the Board after ten years' service. On behalf of the rest of the Board, I thank him for his contribution to the success of Helical over that period and wish him well.

Richard will be replaced as Chairman by Richard Cotton, our current Senior Independent Director ("SID") with Sue Clayton, who has been on the Board for six years, replacing Richard Cotton as SID.

Outlook

The geopolitical and economic backdrop has deteriorated since we reported on our half year results in November 2021. The human tragedy of what is unfolding in Ukraine is heart rending and shocking to Western democracies and it is difficult to comprehend the motivation and methods of the aggressors. With these events in Eastern Europe ongoing and growing inflationary pressures accompanying a slowing economy leading to fears of "stagflation", it is right to be concerned for the performance of UK businesses over the next year. Despite these concerns, the fundamentals of our business remain strong, and we believe our experience and reputation will enable us to secure new opportunities as they arise.

We are a specialist developer and investor in prime Central London real estate, creating inspiring and sustainable, best-in-class office buildings. London is a leading world city, a safe haven, attracting a mix of established and growing businesses seeking a base for their operations and well capitalised investors looking to invest their funds.

We will continue to see bifurcation between the best-in-class new sustainable buildings and the older less sustainable buildings. This will be reflected in strong rental growth for the former and rental decline for the latter. Helical is well positioned to capitalise upon a period of opportunity within the sector over the next 10-20 years, changing the older "brown" buildings into "green" sustainable buildings.

In the last year, we have deployed capital to acquire 100 New Bridge Street, EC4, with this exciting redevelopment due to start by the end of 2023, following the expiry of the current tenancies. Along with 33 Charterhouse Street, EC1, due for completion in September 2022, and continuing asset management opportunities in the remaining, completed investment portfolio, we are optimistic that our successful track record of outperforming the market and delivering strong financial returns will continue.

Gerald KayeChief Executive

24 May 2022

Our Market

The past two years have seen the Central London commercial property market face unprecedented challenges. Throughout this period, Helical has retained a strong conviction that our portfolio of high quality, sustainable and technologically advanced buildings would be resilient in the face of the significant challenges facing the sector and well positioned to take advantage of the quickly evolving demands of the marketplace. While headwinds remain, this conviction has been borne out, and it is encouraging to see increasing evidence that employees, occupiers and investors alike continue to place significant importance on the value of the office and that our portfolio of design led, amenity rich and well located properties continue to outperform in a highly competitive market.

London

The Central London commercial property market continues to demonstrate its inherent resilience. The end of the UK Government's Covid-19 restrictions has enabled employees to return to the office and confidence to grow throughout the sector. Data collected by The Freespace Index, which provides office use statistics, shows that daily London office occupancy has steadily increased, demonstrating the importance of the office in effective working practices, albeit employees are adopting a range of working practices depending on the nature of their industry. Any uncertainty over the future of the office has much reduced as the value of the office to workplace culture, efficiency and knowledge sharing is rediscovered and reinforced.

These trends are evidenced in the letting market where velocity has continued to increase in Central London as greater stability has enabled occupiers to develop longer-term plans. According to CBRE, since July 2021 the amount of space under offer has exceeded the 10 year average of 3.3m sq ft. While availability remains high at 26.0m sq ft, 18.1m sq ft of this relates to second hand stock, further demonstrating that best-in-class space is desired as the flight to quality intensifies. A combination of these factors, coupled with limited newly built office space, has led to increases in headline rents across most Central London sub-markets in 2021 for these best-in-class buildings.

From an investment perspective, a significant amount of capital continues to be allocated to the Central London office market with CBRE identifying more than £40bn of capital targeting the sector at the end of 2021. While London saw consecutive years of declining investment volumes in 2019 and 2020 due to the destabilising impacts of Brexit and Covid-19, this trend reversed in 2021, with investment into London offices of £12.3bn, an increase of £3bn on 2020. 2022 has continued this trend with CBRE reporting a record first quarter of £5.5bn of inbound investment, with a further £5bn under offer.

London continues to be a highly desirable market and the renewed sense of confidence is manifesting in growing development activity, with the amount of new development starting on site at 1.0m sq ft above the long-term average. While this is positive, significant headwinds remain, with the impact of increasing cost price inflation, rising interest rates and disrupted global supply chains adversely impacting development activity. As general inflation hits its highest levels in 40 years, Arcadis notes that manufacturing inflation is outpacing all other sectors, with raw material prices increasing by 13.6% during the year. These disruptive trends will need to be monitored over the coming year and are likely to partially moderate some of the renewed sectoral confidence.

Sustainability

Sustainability is now at the forefront of business decision making, with an increasing number of companies committing to net zero targets. Landlords and tenants are increasingly aware of the need to both minimise embodied carbon in the development of assets and reduce operational carbon through the building's day to day use. Furthermore, legislative changes are mandating the efficient operational performance of buildings to ensure wider environmental targets are achieved. The quick response by landlords and tenants, and the Government's regulatory changes, have combined to make London the highest ranked green city globally out of 286 cities studied by Knight Frank.

The nature of sustainable development is evolving rapidly with an increased focus on the development and integration of new technologies. Whilst these technologies increase the initial cost, we believe that this is justified, with increasing evidence of occupiers paying a premium for best-in-class "green" buildings. In contrast, "brown" assets are increasingly hard to let. Knight Frank has identified 24.5m sq ft of pending lease expiries between now and the end of 2025, and this will undoubtably require landlords to undertake substantial refurbishment work to meet the required energy performance standards and enable these spaces to be relet.

The trend to ensure sustainability is at the heart of development is also manifesting itself in a fundamental change in approach, as developers seek to reduce embodied carbon by reusing, where possible, elements of an existing building. Deloitte's Crane Survey has noted an emerging trend towards substantial refurbishment rather than new ground up development, with 64% of space under construction relating to refurbishment. This trend is further evidenced by our most recent acquisition of 100 New Bridge Street, London EC4, where we will work with the existing building structure, delivering a best-in-class carbon friendly new build. Equally, Local Authorities are seeking increasing justification for demolition, on sustainability grounds.

Amenity Rich and Flexible Space

As businesses seek to encourage employees to return to the office and to provide them with an environment that is conducive to collaborative and effective working, there is a requirement for amenity rich and flexible space. Knight Frank found 46% of occupiers surveyed for their 2022 London Report expect to have a greater amenity offering in their workplace in the next three years.

Businesses are wishing to occupy buildings which provide flexible, varied space to facilitate agile working practices and stimulate creativity. Furthermore, they are looking for attractive spaces that help create a sense of community for employees, which is more highly valued following the enforced periods of isolated remote working. Across the Helical portfolio our carefully designed buildings provide exceptional work environments with our occupiers also able to benefit from spa-quality changing facilities, generous cycle storage and thoughtfully designed outdoor spaces.

Alongside the amenity delivered within the building the external environment is also of significant importance. Our portfolio of assets is located in some of London's most vibrant communities enabling occupiers to benefit from local food and beverage offerings, arts and cultural institutions and green spaces which supplement their daily office experience.

Technology and Smart Buildings

As hybrid working models proliferate across most sectors, digital connectivity is vitally important to ensure that office based and remote employees maintain collaborative and connected working practices. All our buildings benefit from excellent connectivity, enabling occupiers to have confidence in the digital backbone of their operations.

The technology integrated within our increasingly smart buildings can be utilised to generate extensive data. This data has significant value when collated and analysed to provide insights into the operation of the building. Both landlord and tenant have the ability, through the integration of technologies, to access data and tailor environments for peak performance and to drive operational efficiencies.

During the year, the Group invested in a proptech venture capital fund managed by Pi Labs. The investment reflects the importance Helical places on supporting businesses and technologies that aim to drive the evolution of the workplace, and it is hoped that their products can be successfully deployed into the portfolio.

The delivery of buildings has been enhanced with the introduction of pioneering construction methodologies. 33 Charterhouse Street, EC1 saw the offsite pre-fabrication of all service risers throughout the building, reducing the construction programme considerably and enabling service commissioning to be undertaken in a controlled factory environment rather than on a live construction site, thereby increasing reliability. The new building will also benefit from the incorporation of an intelligent and dynamic water management and recycling system linked to real time weather data.

This trend will likely accelerate as developers continue to challenge industry practices to build in a more efficient and sustainable manner and create more advanced and technologically enabled buildings.

Health and Wellness

The Covid-19 pandemic has highlighted the importance of physical and mental health for employers and employees. An increased focus has been placed upon enhancing ventilation, lighting and acoustics within buildings to maximise employee wellbeing and to provide an environment where they can work efficiently. Similarly, technology has been rapidly adopted to minimise touch points and to enable individuals to have a high degree of control over their micro working environment. Furthermore, opportunities for well curated outdoor spaces, with external greening, are now increasingly desired.

Buildings which deliver a healthy working environment supporting employee wellbeing are increasingly in demand from occupiers and investors alike. All of Helical's buildings benefit from extensive amenity and, as we continue to grow our portfolio, the ability to deliver this for occupiers will remain a key criterion in asset selection.

Sustainability and Net Zero Carbon

We have made good progress against the targets we set out in our sustainability strategy "Built for the Future" and continue to drive forward our ESG ambitions. In support of this, Helical has released its "Net Zero Carbon Pathway".

In the UK, the built environment is responsible for 40% of the country's total greenhouse gas emissions. If the UK is going to achieve its commitment of becoming net zero by 2050, there needs to be rapid transformational change within the sector. As a contributor to these emissions, we recognise the need to be a part of this transformational change while still delivering long-term sustainable growth to our Shareholders. In consideration of this, we are committing to becoming a net zero carbon business by 2030.

In publishing our Net Zero Carbon Pathway, Helical has also become a signatory to the Building Better Partnership's ("BBP") Climate Commitment, which provides a clear, accountable and transparent mechanism for real estate companies in the UK to drive towards net zero carbon. As we build on our ambitions, we continue to recognise the importance of transparency and independently assured reporting. Going forward we will be reporting on our progress against our net zero carbon targets to make certain we are on track for 2030.

Our portfolio is well placed in terms of energy efficiency, with 99% of our assets (by value) already compliant with the proposed legislative requirement that all rented commercial buildings achieve a minimum EPC of a B rating by 2030. Market research suggests only 23% of commercial assets are currently compliant, with significant capital outlay likely to be required to take non-compliant buildings up to the minimum standard.

For our development assets, we have undertaken significant initiatives to minimise embodied carbon and maximise operational efficiency. At 33 Charterhouse Street, EC1, through the careful design and selection of materials, we have reduced the embodied carbon to 40% below the RIBA benchmark. Going forward we are focusing on delivering "carbon friendly new build" schemes, such as 100 New Bridge Street, EC4, where we will re-use or recycle large portions of the existing building and look to incorporate the existing structural frame to minimise the carbon impact.

During the year, we have also further developed our reporting against the recommendations of the Task Force on Climate-related Financial Disclosures. We have performed an in-depth review of the risks and opportunities that could arise from certain climate-related scenarios and evaluated the potential impact to our business.

Performance Measurements

We measure our performance against our strategic objectives, using several financial and non-financial Key Performance Indicators ("KPIs").

The KPIs have been selected as the most appropriate measures to assess our progress in achieving our strategy, successfully applying our business model and generating value for our Shareholders.

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

Total Accounting Return

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

The Group targets a Total Accounting Return of 5-10%.

The Total Accounting Return on IFRS net assets in the year to 31 March 2022 was 15.0% (2021: 3.3%).

EPRA Total Accounting Return

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

The Group targets an EPRA Total Accounting Return of 5-10%.

The Total Accounting Return on EPRA net assets in the year to 31 March 2022 was 10.2% (2021: 4.5%).

* Calculated using EPRA net assets.

EPRA Net Tangible Asset Value Per Share

The Group's main objective is to maximise growth in net asset value per share, which we seek to achieve through increases in investment portfolio values and from retained earnings from other property related activity. EPRA net tangible asset value per share is the property industry's preferred measure of the proportion of net assets attributable to each share as it includes the fair value of net assets on an ongoing long-term basis. The adjustments to net asset value to arrive at this figure are shown in Note 22 to the financial statements.

The Group targets increasing its net assets, of which EPRA net tangible asset growth is a key component.

The EPRA net tangible asset value per share at 31 March 2022 increased by 7.3% to 572p (31 March 2021: 533p).

* Calculated using EPRA net assets.

Total Shareholder Return

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

The Group targets being in the upper quartile when compared to its peers.

The Total Shareholder Return in the year to 31 March 2022 was 1.7% (2021: 21.2%).

1. Growth over all years to 31/03/22.

2. Growth in FTSE All-Share Return Index over all years to 31/03/22.

3. Growth in FTSE 350 Real Estate Super Sector Return Index over all years to 31/03/22.

 MSCI Property Index

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

MSCI has compared the ungeared performance of Helical's total property portfolio against that of portfolios within MSCI for over 20 years. Helical's ungeared performance for the year to 31 March 2022 was 10.7% (2021: 7.0%). This compares to the MSCI Central London Offices Total Return Index of 7.9% (2021: -1.7%) and the upper quartile return of 9.9% (2021: 1.6%).

Helical's share of the development portfolio (1% of gross property assets) is included in its performance, as measured by MSCI, at the lower of book cost or fair value and uplifts are only included on the sale of an asset.

Helical's unleveraged portfolio returns to 31 March 2022 were as follows:

Source: MSCI

Average Length of Employee Service and Average Staff Turnover

A high level of staff retention remains a key feature of Helical's business. The Group retains a highly skilled and experienced team with an increasing length of service.

The Group targets staff turnover to be less than 10% per annum.

The average length of service of the Group's employees at 31 March 2022 was 11.8 years and the average staff turnover during the year to 31 March 2022 was 3.7%.

BREEAM and EPC Ratings

BREEAM is an environmental impact assessment methodology for commercial buildings. It sets out best practice standards for the environmental performance of buildings through their design, specification, construction and operational phases. Performance is measured across a series of ratings, "Pass", "Good", "Very Good", "Excellent" and "Outstanding".

The Group targets a BREEAM rating of "Excellent" or "Outstanding" on all major refurbishments or new developments.

At 31 March 2022, seven of our ten (31 March 2021: six of our nine) office buildings had achieved, or were targeting, a BREEAM certification of "Excellent" or "Outstanding". These seven buildings account for c.88% of the portfolio by value.

1. Certified at design stage.

2. Targeted.

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

Energy Performance Certificates ("EPC") provide ratings on a scale of A-G on a building's energy efficiency and are required when a building is constructed, sold or let. All but one of our completed buildings (99% by portfolio value) have an EPC rating of A or B.

Helical's Property Portfolio - 31 March 2022

Property Overview

Helical's portfolio comprises income producing multi-let offices, office refurbishments and developments and a mixed use commercial/residential scheme. As at 31 March 2022, London represented 97% and Manchester 3% of the investment property portfolio, by value. As evidenced by the recent acquisition of 100 New Bridge Street, EC4, our strategy is to continue to increase our Central London holdings, focusing on areas where we see strong occupier demand and growth potential.

33 Charterhouse Street, EC1

The development of our 205,369 sq ft office building, in a 50:50 joint venture with AshbyCapital, is due to reach practical completion in September 2022. The building's external envelope is complete and work is now focused on the delivery of the services and completing the internal finishes.

The building is situated just 100m from Farringdon Station and will provide excellent connectivity via the Elizabeth Line, which is due to open today, ahead of the building's practical completion. Once completed it will provide a best-in-class "Net Zero" office development, meeting the highest ESG credentials, as evidenced by its BREEAM 2018 New Construction "Outstanding" design rating and anticipated NABERS 5* rating. It will also provide a technologically pioneering environment with smart building systems and a fully integrated building management app for occupiers.

100 New Bridge Street, EC4

On 1 March, Helical completed the acquisition of 100 New Bridge Street, EC4 for £160m.

The 167,026 sq ft office building is currently let to international law firm Baker McKenzie, whose lease expires in December 2023. Helical proposes to carry out a major, sustainability led refurbishment to create a carbon friendly new build office that puts occupier amenity and wellbeing at its centre. We also envisage undertaking significant public realm improvements around the site to greatly improve the environment for both tenants and the general public.

Kaleidoscope, EC1

Our 88,581 sq ft office building located directly above the Farringdon East Elizabeth Line station is let to TikTok Information Technologies UK Limited on a 15 year lease term at an annual rent of £7.6m. TikTok has recently completed their fit out works and are beginning occupation of the building.

The Bower, EC1

The Bower is a landmark estate comprising 312,573 sq ft of innovative, high quality office space along with 21,059 sq ft of restaurant and retail space. The estate is located adjacent to the Old Street roundabout, which is currently undergoing significant remodelling and will provide extensive additional public realm when completed in Autumn 2022.

The Warehouse and The Studio

The Warehouse comprises 122,858 sq ft of offices and The Studio 18,283 sq ft of offices, both fully let, with 10,298 sq ft of retail space across the two buildings.

In June 2021 we completed a lease renewal with Stripe at the Warehouse, extending the lease by three years. We have also completed all the rent reviews for office tenants in the Warehouse which has added £782,000 to its contracted rent, a 13.2% increase.

The retail unit in The Studio has been let to 28 Well Hung, a steak restaurant, which will open this summer.

The Tower

The Tower offers 171,432 sq ft of office space with a contemporary façade and innovatively designed interconnecting floors, along with 10,761 sq ft of retail space, across two units, let to food and beverage occupiers Serata Hall and Wagamama.

We have let the 17th floor, previously let to Finablr, to Verkada on a five year lease for a rent which is in line with the 31 March 2021 ERV. The 12th floor which, following the culmination of a specific project, was returned in October 2021 by Brilliant Basics, is now under offer. They continue to occupy three floors at The Tower.

Barts Square, EC1

Residential/Retail

At Barts Square, EC1, we have completed the sale of the last remaining apartment in Phase One. In Phase Two, we completed the sale of 13 apartments during the year and one further apartment sale had exchanged which has now completed. Of the remaining 14 units available at the year end, one has since been sold and two are under offer, leaving 11 available in this 236 unit residential scheme.

The Barts Square residential development has been recognised for its outstanding design and sympathetic approach to its surroundings by winning a Housing Design Award, the only awards promoted by all five major professional institutions, and a RIBA London Award.

The retail space in Phase One is fully let to Stem + Glory and Halfcup. One of the Phase Two retail units is let to BEERS London and since the year end a further unit has been let to Nest, a modern British restaurant. The remaining four retail units are currently being marketed. The landscaping of the new public square is complete, offering extensive public amenity.

55 Bartholomew

At 55 Bartholomew, EC1 we have completed three lettings to Push Gaming, William Fry and Zero Gravity. Following the completion of these lettings, which totalled 4,835 sq ft, the building is now 77% let with just the third floor still available.

On 20 May 2022 we exchanged contracts to dispose of the property to a private European investor for a consideration of £16.5m (our share £7.6m), reflecting a net initial yield of 4.5% and a 3% premium to 31 March 2022 book value.

The Loom, E1

At this 108,600 sq ft former Victorian wool warehouse, we have completed three leases, totalling 8,623 sq ft, at an average rent of £53 psf. Following these lettings, The Loom is 80% let with 21,803 sq ft across nine units available to let. We anticipate further units to be returned in the coming year as lease events take place, including original unrefurbished units, giving us the opportunity to undertake asset management activities to capture reversionary potential.

25 Charterhouse Square, EC1

25 Charterhouse Square comprises 42,921 sq ft of offices adjacent to the new Farringdon East Elizabeth Line station, overlooking the historic Charterhouse Square.

The newly refurbished first floor and one of the two ground floor units have been let to Entain, the FTSE listed betting and gaming company, to establish a global innovation hub. Following this letting the building is 96% let, with the final unit now under offer.

The Power House, W4

The Power House is a listed building, providing 21,268 sq ft of office and recording studio space, on Chiswick High Road and is fully let on a long lease to Metropolis Music Group. The RPI linked rent review was concluded in November, increasing contracted rent by 16.4%. The capital works to improve the roof, undertaken on behalf of the tenants, are due to complete shortly.

Trinity, Manchester

We have completed three office lettings in the year with the first floor let to British Engineering, the remaining part of the sixth floor let to Waterman Group and the seventh floor let to AEW Architects. These lettings total 17,541 sq ft and achieved a combined premium of 4.6% to the 31 March 2021 ERV. Following the completion of these lettings the 58,533 sq ft historic building, which was comprehensively remodelled in 2019, is 76% let.

Following the year end we completed the sale of the property to clients of Mayfair Capital, for a headline purchase price of £34.55m, which reflects a net gain of c.£2.0m against the 31 March 2022 book value.

Portfolio Analytics

See-through Total Portfolio by Fair Value

See-through Land and Development Portfolio

Capital Expenditure

We have a committed and planned development and refurbishment programme.

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.

Investment Portfolio

Valuation Movements

Portfolio Yields

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

See-through Lease Expiries or Tenant Break Options

Top 15 Tenants

We have a strong rental income stream and a diverse tenant base. The top 15 tenants account for 79.3% of the total rent roll.

Letting Activity - New Leases

Financial Review

Overview

The strong performance for the year was the result of significant valuation gains from our sustainable, best-in-class investment portfolio and the Group's ongoing development activities.

The results were further improved by gains in the fair value of the Group's derivatives and the reversal of previously recognised deferred tax on the Group's election to become a REIT.

The acquisition of 100 New Bridge Street, EC4 added to the development pipeline and resulted in an increased LTV of 36.4%.

Results for the Year

The profit before tax for the year of £72.9m (2021: £20.5m) includes revenue from rental income and development management of £51.1m, offset by direct costs of £14.2m. The net gain on sale and revaluation of investment properties added £33.3m and its joint venture activities a further £20.7m. Administration expenses of £16.8m and finance costs of £19.2m were offset by a gain in fair value of derivatives of £18.0m.

The Group holds a significant proportion of its property assets in joint ventures. As the risk and rewards of ownership of these underlying properties are the same as those it wholly owns, Helical supplements its IFRS disclosure with a "see-through" analysis of alternative performance measures, which looks through the structure to show the Group's share of the underlying business.

The see-through results for the year to 31 March 2022 include net rental income of £31.2m, a net gain on sale and revaluation of the investment portfolio of £51.7m and development profits of £6.6m, leading to a Total Property Return of £89.5m (2021: £48.6m). Total see-through administration costs of £17.1m (2021: £14.8m), see-through net finance costs of £19.7m (2021: £14.8m) and see-through derivative financial instrument gains of £18.0m (2021: £2.9m) contributed to an IFRS pre-tax profit of £72.9m (2021: £20.5m).

The election to become a REIT from 1 April 2022 allowed the release of the previously recognised deferred tax provision which contributed to a tax credit for the year of £16.0m (2021: charge of £2.6m).

The post tax profit for the year was £88.9m (2021: £17.9m) and the EPRA net tangible asset value per share increased by 7.3% to 572p (31 March 2021: 533p).

The Company has proposed a final dividend of 8.25p per share (2021: 7.40p) which, if approved by Shareholders at the 2022 AGM, will be payable on 29 July 2022. The total dividend paid or payable in respect of the year to 31 March 2022 will be 11.15p (2021: 10.10p), an increase of 10.4%.

The Group's real estate portfolio, including its share of assets held in joint ventures, increased to £1,108.1m (31 March 2021: £857.0m) primarily because of the acquisition of 100 New Bridge Street, EC4, net revaluation gains on the investment portfolio and capital expenditure at 33 Charterhouse Street, EC1.

The acquisition of 100 New Bridge Street, EC4 and capital expenditure on the development of 33 Charterhouse Street, EC1 resulted in an increase in the Group's see-through loan to value to 36.4% (31 March 2021: 22.6%). The Group's weighted average cost of debt was 3.2% (31 March 2021: 3.5%) and the weighted average debt maturity was 3.0 years (31 March 2021: 3.2 years). The average maturity of the facilities would increase to 3.7 years on exercise of the available extension options, on a fully utilised basis.

At 31 March 2022, the Group had unutilised bank facilities of £99.0m and cash of £33.3m on a see-through basis. These are primarily available to fund the development of 33 Charterhouse Street, EC1 and future property acquisitions.

Total Property Return

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

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.

See-through Total Accounting Return

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

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.

* Calculated using EPRA net assets.

Earnings Per Share

The IFRS earnings per share increased from 14.8p to 72.8p and are based on the after tax earnings attributable to ordinary Shareholders divided by the weighted average number of shares in issue during the year. 

On an EPRA basis, the earnings per share were 5.2p compared to a loss per share of 1.8p in 2021, reflecting the Group's share of net rental income of £31.2m (2021: £25.0m) and development profits of £6.6m (2021: losses of £0.3m), but excluding gains on sale and revaluation of investment properties of £51.7m (2021: £23.9m).

Net Asset Value

IFRS diluted net asset value per share increased by 12.0% to 551p per share (31 March 2021: 492p) and is a measure of Shareholders' Funds divided by the number of shares in issue at the year end, adjusted to allow for the effect of all dilutive share awards. 

EPRA net tangible asset value per share increased by 7.3% to 572p per share (31 March 2021: 533p). This movement arose principally from a total comprehensive income (retained profits) of £88.9m (2021: £17.9m), less £12.6m of dividends (2021: £10.5m).

EPRA net disposal value per share increased by 13.6% to 551p per share (31 March 2021: 485p).

Income Statement

Rental Income and Property Overheads

Gross rental income for the Group in respect of wholly owned properties increased to £35.3m (2021: £28.0m), mainly reflecting the letting of Kaleidoscope, EC1 in March 2021, with gross rents in joint ventures also increasing to £0.3m (2021: £0.2m). Property overheads in respect of wholly owned assets and in respect of those assets in joint ventures increased to £4.4m (2021: £3.2m). Overall, see-through net rents increased by 25.0% to £31.2m (2021: £25.0m).

Included within gross rental income is £5.8m (31 March 2021: reduction of £0.4m) of accrued income for rent free periods.

The table below demonstrates the movement of the accrued income balance for rent free periods granted and the respective rental income adjustment over the four years to 31 March 2025, based on the tenant leases as at 31 March 2022. The actual adjustment will vary depending on lease events such as new lettings and early terminations and future acquisitions or disposals.

Rent Collection

At 23 May 2022, the Group had collected 95.8% of all rent contracted and payable for the March, June, September and December 2021 quarters.

Development Profits

In the year, from our role as development manager at 33 Charterhouse Street, EC1, we recognised £1.3m of fees. Additional fees of £0.1m were recognised for carrying out accounting and corporate services at Barts Square, EC1 and 33 Charterhouse Street, EC1.

Profits on the sales of a retail site at Kingswinford and land at Aycliffe of £1.5m were recognised, as well as the write back of provisions made in previous periods on two retail projects, at East Ham and Cortonwood, totalling £2.3m. A further £0.8m of development income on closing out legacy projects, offset by other costs of £0.2m, contributed to a net development profit in the Group of £5.8m (2021: £0.6m).

Share of Results of Joint Ventures

The revaluation of our investment assets held in joint ventures generated a surplus of £18.5m (2021: £6.4m). A profit of £0.7m (2021: loss of £0.9m) was recognised in respect of sales at our Barts Square, EC1 residential development.

Finance, administration and other sundry costs totalling £0.5m (2021: £1.1m) were incurred. An adjustment to reflect our economic interest in the Barts Square, EC1 development to its recoverable amount generated a gain of £0.8m, and after a tax credit of £1.2m (2021: charge of £0.6m), there was a net profit from our joint ventures of £20.7m (2021: £2.4m).

Gain on Sale and Revaluation of Investment Properties

The valuation of our investment portfolio, on a see-through basis, continued to reflect the benefit of our letting and development activities where we generated a see-through gain on sale and revaluation, including in joint ventures, of £51.7m (2021: £23.9m).

Administrative Expenses

Administration costs in the Group, before performance related awards, increased marginally from £9.3m to £9.6m.

Performance related share awards and bonus payments, before National Insurance costs, increased to £6.0m (2021: £4.3m), reflecting the strong performance of the business. Of this amount, £3.2m (2021: £2.0m), being the charge for share awards under the Performance Share Plan, is expensed through the Income Statement but added back to Shareholders' Funds through the Statement of Changes in Equity. NIC incurred in the year on performance related awards was £1.2m (2021: £0.8m).

Finance Costs and Derivative Financial Instruments

Total finance costs before cancellation of loans, including in joint ventures, reduced to £13.8m (2021: £14.9m). The cost of early redemption of the development facility for Kaleidoscope, EC1 and the term loan with Aviva, totalling £5.8m (2021: £nil), allowed the Group to take advantage of the lower cost of debt provided by the £400m Revolving Credit Facility, which will be reflected in lower finance costs in future years.

The significant movement upwards in medium and long-term interest rate projections during the year contributed to a credit of £18.0m (2021: £2.9m) on the mark-to-market valuation of the derivative financial instruments.

Taxation

The Group elected to become a REIT, effective from 1 April 2022, and will be exempt from UK corporation tax on the profit of its property activities that fall within the REIT regime. Helical will continue to pay corporation tax on its profits that are not within this regime. As a result, the previously recognised deferred tax liability of £13.5m in the Group (£1.7m in joint ventures) has been released, with a credit of £14.9m in the Income Statement and a charge of £1.4m recognised directly in the Statement of Changes in Equity.

The current tax credit for the year was £1.1m (2021: charge of £0.9m), resulting in a tax credit on profit on ordinary activities of £16.0m (2021: charge of £2.6m).

Dividends

The interim dividend paid on 31 December 2021 of 2.90p was an increase of 7.4% on the previous interim dividend of 2.70p. The Company has proposed a final dividend of 8.25p, an increase of 11.5% on the previous year (2021: 7.40p), for approval by Shareholders at the 2022 AGM. If approved, the total dividend paid or payable in respect of the results for the year to 31 March 2022 will be 11.15p (2021: 10.10p), an increase of 10.4%.

The final dividend, if approved by Shareholders, will be paid out of distributable reserves generated from the Group's activities prior to its conversion into a REIT.

Balance Sheet

Shareholders' Funds

Shareholders' Funds at 1 April 2021 were £608.2m. The Group's results for the year added £88.9m (2021: £17.9m), net of tax, representing the total comprehensive income for the year. Movements in reserves arising from the Group's share schemes increased funds by £2.5m. The Company paid dividends to Shareholders during the year of £12.6m. The net increase in Shareholders' Funds from Group activities during the year was £78.8m to £687.0m.

Investment Portfolio

The Group acquired 100 New Bridge Street, EC4 for £160m and spent £40.6m on capital works across the investment portfolio, mainly at 33 Charterhouse Street, EC1 (£35.0m), 100 New Bridge Street, EC4 (£3.7m), Kaleidoscope, EC1 (£0.6m), The Loom, EC1 (£0.5m) and 25 Charterhouse Square, EC1 (£0.4m).

Revaluation gains added £57.9m to increase the see-through fair value of the portfolio, before lease incentives, to £1,097.3m (31 March 2021: £839.4m). The accounting for head leases and lease incentives resulted in a book value of the see-through investment portfolio of £1,078.8m (31 March 2021: £827.0m).

Debt and Financial Risk

In total, the see-through outstanding debt at 31 March 2022 of £440.9m (31 March 2021: £362.2m) had a weighted average interest cost of 3.2% (31 March 2021: 3.5%) and a weighted average debt maturity of 3.0 years (31 March 2021: 3.2 years). The average maturity of the facilities would increase to 3.7 years following exercise of the one-year extension of the Group's £400m Revolving Credit Facility, and the one-year extension of the joint venture development loan, on a fully utilised basis.

Debt Profile at 31 March 2022 - Including Commitment Fees but Excluding the Amortisation of Arrangement Fees

* Calculated on a fully utilised basis and assuming the exercise of the one-year extension of the Revolving Credit Facility and the one-year extension option of the joint venture development loan.

Secured Debt

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

- £400m Revolving Credit Facility

The Group has a £400m Revolving Credit Facility in which all of its investment assets, other than Trinity, Manchester, are secured. The value of the Group's properties secured in this facility at 31 March 2022 was £870m (31 March 2021: £729m) with a corresponding loan to value of 46.0% (31 March 2021: 46.8%). The average maturity of the facility at 31 March 2022 was 3.1 years (31 March 2021: 3.3 years), increasing to 4.3 years on a fully utilised basis and following the one-year extension of the Revolving Credit Facility. The weighted average interest rate was 2.9% (31 March 2021: 3.7%).

- £60m Revolving Credit Facility

The Group has a £60m Revolving Credit Facility to provide short-term liquidity to acquire new property opportunities. The maturity of this undrawn facility was 0.7 years and the weighted average interest rate was 3.2%, on a fully utilised basis. 

- Joint Venture Facilities

The Group has a number of investment and development properties in joint venture with third parties and includes our share, in proportion to our economic interest, of the debt associated with each asset. The average maturity of the Group's share of bank facilities in joint ventures at 31 March 2022 was 2.3 years (31 March 2021: 1.9 years) with a weighted average interest rate of 5.6% (31 March 2021: 6.5%). The average interest rate will fall as the 33 Charterhouse Street, EC1 development facility is drawn down and would be 4.95% on a fully utilised basis, reducing to 2.25% once the building is complete and let.

Unsecured Debt

The Group's unsecured debt is £nil (31 March 2021: £nil).

 Cash and Cash Flow

At 31 March 2022, the Group had £132m (31 March 2021: £423m) of cash and agreed, undrawn, committed bank facilities including its share in joint ventures, as well as £31.0m (31 March 2021: £28.1m) of uncharged property on which it could borrow funds.

Net Borrowings and Gearing

Total gross borrowings of the Group, including in joint ventures, have increased from £362.2m to £440.9m during the year to 31 March 2022. After deducting cash balances of £33.3m (31 March 2021: £162.2m) and unamortised refinancing costs of £4.7m (31 March 2021: £6.1m), net borrowings increased from £193.9m to £402.9m. The see-through gearing of the Group, including in joint ventures, increased from 31.9% to 58.6%.

Hedging

At 31 March 2022, the Group had £300.0m (31 March 2021: £280.8m) of borrowings protected by interest rate swaps, with an average effective interest rate of 2.8% (31 March 2021: 3.1%) and average maturity of 3.3 years. The Group had a further £100.0m of floating rate debt (31 March 2021: £60.4m) with an effective rate of 3.5% (31 March 2021: 4.2%). In addition, the Group had £145m of interest rate caps at an average rate of 1.75% (31 March 2021: £240m at 1.75%) and with an average maturity of 1.3 years. In our joint ventures, the Group's share of fixed rate debt was £40.9m (31 March 2021: £9.4m) with an effective rate of 5.6% and no floating rate debt (31 March 2021: £11.6m with an effective rate of 3.1%), with no interest rate swaps or caps as at 31 March 2022 (31 March 2021: interest rate caps of £35.3m at 1.5%).

1. This includes commitment fees on undrawn facilities. Excluding these would reduce the effective rate to 2.7%.

2. This includes commitment fees on undrawn facilities. Excluding these would reduce the effective rate to 4.95% (31 March 2021: 4.95%).

Tim Murphy

Chief Financial Officer

24 May 2022

Consolidated Income Statement

For the year to 31 March 2022

Consolidated Statement of Comprehensive Income

For the year to 31 March 2022

Consolidated Balance Sheet

At 31 March 2022

Consolidated Cash Flow Statement

For the year to 31 March 2022