HdWE Annual Report 2024

2024

Annual Report Howard de Walden Estates Holdings Limited

Introduction

Strategic report

Governance

Financial statements

Howard de Walden Estates Holdings Limited The Howard de Walden Estate 23 Queen Anne Street London W1G 9DL Contact us: +44 (0)20 7580 3163 enquiries@hdwe.co.uk hdwe.co.uk Company registered number 06439246

For more information please visit our website

Introduction

Strategic report

Governance

Financial statements

Clockwise left to right: 28 Weymouth Street/Healthcare See pages 14 to 15 Ossington Buildings/Residential See pages 16 to 17 WatchHouse/Retail See pages 20 to 21 20 Thayer Street/Office See pages 18 to 19

The Group oversees a diverse community of residents, businesses and amenities, including Marylebone Village’s retail and leisure offering and the world-class healthcare providers of Harley Street Medical Area.

1-39

51-84

Introduction Chairman’s statement Operational and performance highlights

2 4

Strategic report Our business Chief Executive’s statement Property portfolio overview – Healthcare – Residential – Office – Retail Financial performance Principal risks and uncertainties Sustainability Our people Our community

6 8 12 14 16 18 20 22 24 28 32 34

Financial statements Group Statement of Comprehensive Income Group Statement of Financial Position Group Statement of Changes in Equity Group Statement of Cash Flows Company Statement of Financial Position Company Statement of Changes in Equity Notes to the Accounts

52 53 54 55 56 57 58

Additional information Five year summary Definitions

83 84

40-50

Governance Officers and professional advisers Governance framework Governance Section 172 statement Directors’ report Independent auditor’s report

40 41 42 44 46 48

Front cover: WatchHouse, Marylebone.

Opposite: Marylebone Christmas Lights 2023.

1

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Chairman’s statement

Governance

Financial statements

“We are well positioned for growth over the next five years as we refresh and reinforce our position as a global centre for world-class healthcare.”

Sir William Proby Bt CBE DL Chairman

level since records began. The UK is the only country in the G7 that has not returned to pre-pandemic employment levels. It is difficult to see how the new government can deliver its programme of growth without solving this huge structural and social problem. Tax rises are likely and historically the property sector has been an easy target.

Although the global and economic situation remains unsettled, governments and businesses are gradually adapting to the changed global environment post COVID and coming to terms with higher interest rates and inflation.

In the UK the Labour Party’s massive majority in the 2024 election means there is likely to be a period of political stability, in contrast to the chaotic last years of the Conservative Party. The incoming government faces some significant challenges, not least in the labour market where there are 9.4m economically inactive adults of working age, on top of the 2.3m people drawing pensions – the highest The Howard de Walden Estate Annual Report 2024

The last 12 months were a period of consolidation for Howard de Walden, but there have also been some exciting new developments. We are increasing investment to reposition our buildings towards uses with the highest potential for growth in income and capital. This led to an increase in costs and is why growth in our key financial metric, revenue profit before taxation, was largely flat. Higher interest rates, which appear to have peaked, continued to adversely impact asset values in healthcare and offices and to a lesser extent residential. Despite the rise in the cost of living we experienced robust demand for retail and leisure space, resulting in valuation increases in this sector.

The senior management team is increasingly focused on operational performance and strategy in response to the changes in occupier demand that impact the workplace and are affecting the delivery of healthcare.

We have also strengthened our commitment to net zero through the 2

International Women’s Day. See pages 34 to 35

Marylebone Summer Festival.

See pages 34 to 35

launch of deCarbon. This programme aims to reduce carbon in the operation of our buildings, in development and in our supply chain and commits us to educate and train colleagues to deliver on our sustainability objectives.

More information on deCarbon and progress towards net zero features on pages 28 to 30 of the Strategic report.

During the year we provided £0.9 million of financial support to charitable and local community causes. In addition, we continued to provide properties at a subsided rent to key workers on our estate and encouraged staff to volunteer at our charitable events and in support of community matters. We are proud

Introduction

Strategic report

Governance

Financial statements

13-14 Welbeck Street, Office.

See pages 18 to 19

deCarbon Sustainability Strategy 2040

Park Crescent Mews West, Residential.

See pages 16 to 17

to support local community groups and always look to add to financial contributions through partnering and volunteering at events held throughout the year, such as the Marylebone Summer Festival and the Christmas Lights.

In July 2024, we were deeply saddened by the death of The Lady Howard de Walden. A Board member for over 30 years, The Lady Howard de Walden participated in many of the key decisions which transformed the estate and will be dearly missed.

The only other Board change was the resignation in June 2023 of Mark Musgrave, whose appointment as Alternate Director was a temporary

one during COVID. I am very grateful to our experienced Non-Executive Directors for their contribution, not just at Board meetings but on our various sub-committees which are a key part of the governance of the Company.

The Board and everyone at Howard de Walden were thrilled and delighted at the recent appointment of the Rt Hon Lord Kakkar KG KBE as a Knight Companion of the Most Noble Order of the Garter. Lord Kakkar has played a vital role in the development of our strategy for the healthcare sector.

We have come through an extremely testing time with COVID, high inflation, increased interest rates and a fundamental change in the pattern of 3

office working. There has also been a workforce crisis with job vacancies at an all-time high. However, as the headline rate of inflation has fallen and interest rates have stabilised, there are signs that we may have reached or are very close to the bottom of the current property cycle and because of our strong financial position we expect there will be good opportunities for our estate to prosper.

There are challenges, particularly as healthcare facilities and offices adapt to new business models and altered patterns of working, but there are also opportunities as we refresh and reinforce our position as a global centre for world-class healthcare. We are also investing at higher levels in retail, living, work and leisure spaces across the Marylebone community to build resilience and drive returns for our shareholders. Looking forward I am confident that we are well positioned for growth over the next five years.

On behalf of the Board and the shareholders, I would like to thank the Executive Directors, the Executive Committee and all our colleagues for their contribution and achievements in the last year.

Sir William Proby Bt CBE DL Chairman The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Operational and performance highlights

Governance

Financial statements

“We successfully launched our flexible office brand, Elmtree, proving occupier demand is strong for the right space and product.”

Mark Kildea Chief Executive See pages 8 to 9

Operational highlights Our year in review A good start was made against the strategic objectives. Occupier demand remained strong for the right space. The year has largely consolidated the work which began last year, with a positive volume of new lettings and good progress made on major refurbishment projects.

We have grown income whilst also investing for the future. However, the macroeconomic environment remained challenging, impacting property yields and the cost of investment.

New lettings

Number of new leases

Weighted average unexpired lease term (WAULT)

Energy intensity (tCO2e/m2)

£35.4m 2023: £29.9m

746 2023: 716

16.9 years 2023: 17.2 years

The Pulman, 20 Thayer Street.

The Howard de Walden Estate Annual Report 2024

4

0.035 2023: 0.033

Introduction

Strategic report

Governance

Financial statements

“Whilst the valuation of our portfolio has decreased, income has grown and the Group has a strong balance sheet, meaning it is well-placed for when the economic environment improves.”

Andrew Griffith Chief Financial Officer See pages 22 to 23

Performance highlights Rental income

Investment property value

Shareholders’ funds

3.0% (2023: 9.2%)

6.3% (2023: 4.0%)

8.6% (2023: 3.8%)

£152.2m 2023: £147.8m

£4,168.4m 2023: £4,449.1m

£2,806.9m 2023: £3,071.1m

2024

152.2

2024

4,168.4

2024

2,806.9

2023

147.8

2023

4,449.1

2023

3,071.1

2022

135.4

2022

4,635.8

2022

3,191.2

2021

131.8

2021

4,546.2

2021

3,276.9

2020

144.4

2020

4,678.5

2020

3,382.5

Revenue profit before tax*

Gearing**

0.4% (2023: 16.7%)

19.4% (2023: 0.6%)

* Revenue profit before tax is the Group’s preferred measure of profitability.

** Gearing is the proportion of the Group’s net assets funded by net debt.

£74.6m 2023: £74.9m

21.5% 2023: 18.0%

Calculation on page 23 2024

74.6

2024

21.5

2023

74.9

2023

18.0

2022

64.2

2022

17.9

2021

63.6

2021

19.2

2020

77.6

2020

18.3

5

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Our business

Governance

Financial statements

Howard de Walden Estates Holdings Limited (‘the Company’) and its wholly owned entities (‘Howard de Walden’, ‘the Group’) manage a portfolio of over 800 property interests, the majority of which are freehold-owned, in a 95 acre area of Marylebone, central London.

The Group is beneficially owned by members of the Howard de Walden family (‘the Family’) and the estate has been under the Family’s control since 1879. Howard de Walden aligns shareholder prosperity with the wellbeing of the community, the environment and its other key stakeholders.

Our purpose To create the setting for Marylebone to flourish.

Our mission To enhance the community through our stewardship, service and unique offering.

When you are here, we want you to feel part of something exceptional.

Our values Collaboration Cultivating great relationships with customers, colleagues, community and other stakeholders.

Responsiveness Approachable and partnering with our stakeholders. Listening and reacting to other parties, who are also invested in the prosperity of the area.

Innovation We offer buildings and spaces that provide modern-day amenities, designed and suited to our customers’ lives and livelihoods.

Excellence We want Marylebone to continue to be known as a fantastic place to live, visit and do business.

Inclusiveness We recognise that diverse and inclusive businesses grow prosperity.

Our strategic aim To be the preferred property partner in central London.

Our strategic objectives G row rental income and efficiently manage expenditure.

Our culture and behaviours We take a long-term approach in everything we do.

Provide property and services that customers demand.

We are respectful to each other, the community and our valued stakeholders.

Avoid property obsolescence and plan for net zero carbon emissions by 2040.

We support and empower each other and continue to learn while connecting people and places.

Diversify our property income, where possible.

Make organisational and operational improvements for higher performance.

The Howard de Walden Estate Annual Report 2024

6

We take pride in everything we do.

Introduction

Strategic report

Governance

Financial statements

REGENT’S PARK

MAR

ONE

ROA D

ROA D

M

Y LEB

ONE

A RY L E

MAR

Y LEB

BON E

E Y ST

P L AC

HARL

T

L AND

TREE

PORT

E H IG HS REE T

M AR YL EB ON

PADDINGTON STREET GARDENS

PORT

E HI GH ST RE

L AND E

E Y ST

P L AC

HARL

ET

REE T

MARYLEBONE LANE

W IG M

O W IG M

RE ST

ORE S

TREE

T

CAVENDISH SQUARE GARDENS

REE T

T he Howard de Walden Estate 2024 OX F O R D

7

STREE T

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Chief Executive’s statement

Governance

Financial statements

“We continue to invest in our portfolio to provide best in class space in the amenity-rich location of Marylebone.”

Mark Kildea Chief Executive

on short-term flexible leases. During the year, we successfully launched our flexible office brand, Elmtree, at one building with others to be added to the portfolio in due course. In addition, we have delivered more office buildings to a higher fitout specification to capture the demand for shorter leases. Our long-term workplace strategy is to provide best in class space in the amenity-rich location of Marylebone.

Introduction This time last year, I remarked that many of the headwinds had proved to be stubborn and this has been repeated over the last 12 months.

Despite the Bank of England raising interest rates to their highest level since 2008, inflation remained high for much of the year, which had an impact on expenditure. Whilst we were able to grow turnover by 3.3%, revenue profit before tax, our key financial performance metric, was largely flat due to the increase in operating costs.

The steady increase in interest rates from 2022 onwards have impacted the investment yields applied to value our portfolio, which have decreased by 6.3% overall and 8.2% on a like-for-like basis. These declines happen as UK property values move in cycles. The Group has long-dated borrowings at low fixed rates to withstand the downturns and be positioned for the opportunities in the early stage of recovery.

income and recorded rental growth in the year of between 2.0% and 8.7%.

Operational and financial performance We expected our operating costs to increase this year as we continued to invest to meet occupier demand, which was healthy across three of our four principal sectors. Occupancy levels in Retail, Residential and Healthcare were high with demand occasionally outstripping supply. These three sectors, represent 77.2% of our total

The Office portfolio experienced a rental decline of 3.6%, largely driven by the increase in the number of properties that moved into our development pipeline. Triggered by the pandemic and changing occupier requirements, we have adapted our portfolio to provide a wider range of choice. We continued to capitalise on the demand for flexible space by repositioning more office buildings away from the traditional lease structure that prevailed prior to 2020. In time, despite the investment required, we see significant opportunities to grow net rental income due to higher prices paid

The Howard de Walden Estate Annual Report 2024

8

With the continued investment in the portfolio, we have successfully delivered several high-quality developments during the year. These include 27-29 Harley Street (Healthcare), 74 Wigmore Street (Office) and 20-27 Thayer Street and 47-57 Marylebone Lane (Retail and Office). Post year end, 65 Harley Street (nine Residential apartments) was completed. Our development pipeline also includes flagship schemes at 55-57 Marylebone High Street (Retail) and 1 Harley Street (Healthcare) due to complete later this calendar year and in 2025 respectively. Continual upgrading of our portfolio is critical to maintain income growth by attracting new and retaining existing customers.

We are excitedly moving forward with our initiative to attract health technology innovators with three buildings under refurbishment at 19, 42 and 76-78 Portland Place.

These buildings will be a catalyst for innovation, research and support for healthcare occupiers in Harley Street

Introduction

Strategic report

Governance

Financial statements

Marylebone Lane, The Elm Leaf.

20 Thayer Street, Office and Retail.

See pages 18 to 21

27-29 Harley Street, Healthcare.

See pages 14 to 15

and beyond and will help to further diversify our income over the long term.

that the Group achieves its net zero objective by 2040.

Organisational improvements were made in the year, creating four teams based on locations in which all buildings are managed by a property team, with a centralised strategy for enabling functions. The aim is to provide an improved and more consistent service to customers, streamlining decision making by buildings and not by sector. Our most recent customer survey resulted in an 86% customer satisfaction rate, with a net promoter score of 48. Whilst this is a positive result, we are targeting to improve this further.

Our strategy Our five strategic objectives are set out on page 6 and underpin the successful management of the Group by providing guidance for both near and longer-term priorities and objectives. This year we were successful in growing income, and whilst operating costs increased too, this reflected the need to invest in opportunities that we expect will increase returns over the longer term.

We have been successful in launching both our flexible workplace product and brand, Elmtree, alongside our sustainability strategy, deCarbon.

Our property team restructure has started to deliver more efficient decision making with a more customer centric approach.

the widespread shortage of clinical staff, regulation and pressure on public health finances. We envisage that the adoption of technology in healthcare will support both clinicians and patients.

We were pleased to be able to deliver two of the largest events that regularly take place in central London, the Marylebone Summer Festival and Christmas Lights, alongside holding a successful one-off retail event in Marylebone Lane last autumn. All proved very successful, with the Summer Festival and Christmas Lights raising significant sums for our charity partners.

In October 2023 we published our sustainability strategy, deCarbon.

The strategy is supported by a detailed implementation plan to deliver against our four sustainability commitments. The plan sets out short-, medium- and long-term priorities, all designed to ensure

The emergence of our health technology workplaces in early 2025 will diversify, but also complement our Healthcare sector making it a more attractive location, for existing and new clinics. Underpinning the success of this initiative will be our long-term strategy to pivot towards a whole-health district. This means that we will explore opportunities to provide space for complex surgery, rehabilitation, outpatient, wellbeing and preventative healthcare. Demand requirements for our medical buildings will evolve, impacted by social trends, 9

Outlook Whilst macro-economic uncertainty and higher interest rates negatively impacted valuation and performance, property markets appear to be stabilising with values looking like they are at or near the bottom of the current cycle. With capacity to invest, alongside robust demand and occupancy, Howard de Walden is positioned to take advantage as market conditions become more favourable. Our ability to take a long-term view is a strength that comes to the fore in challenging periods; it builds resilience and, with a reinvigorated plan to make our estate a leading location for lifestyle and healthcare, we see considerable potential for significant growth in income and value over the long term.

Approval The Strategic report, covering pages 6 to 39, was approved by the Board of Directors on 14 August 2024 and signed on its behalf by:

Mark Kildea Chief Executive The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Marylebone Food Festival.

The Howard de Walden Estate Annual Report 2024

10

Introduction

Strategic report

Governance

Financial statements

Marylebone Summer Festival, Film Night.

11

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Property portfolio overview

Governance

Financial statements

“Higher yields saw the valuation of our investment properties decrease, reflecting the changes in market conditions.”

Julian Best Executive Property Director

Market overview The market’s slowdown was well publicised with cumulative investment volumes marginally ahead of the five-year average. Notably the mean transaction value remained below the long-term average but the low levels of activity were consistent with the high cost of finance. Supply remained constrained across the West End in the absence of any distressed sellers, with lenders and owners alike continuing to adopt a ‘wait and see’ approach.

management opportunities, whilst maintaining sector diversity and employing our specialist knowledge of the Marylebone market. During the year, we acquired two assets consistent with our acquisition strategy: the long leasehold interest in 76-78 Portland Place and 55-57 Marylebone High Street. These acquisitions represented excellent value during a dearth of investment activity, demonstrating our ability to act when the wider market was largely static.

The leasing market was subdued in early 2024 compared to the previous year’s activity but the ‘flight to quality’ trend remained a prominent feature, with strong demand for the best-in-class office space with excellent amenities. The largest transactions in the West End were new Grade A developments or comprehensively refurbished buildings, either under construction or completed within the last two quarters.

76-78 Portland Place was an office building occupied by RIBA and will kickstart our venture into creating bespoke innovation space for research and health technology occupiers.

The acquisition of 55-57 Marylebone High Street underscores our commitment to retail and leisure with an opportunity to reposition and relet the former Conran store.

Portfolio performance Occupancy levels remained encouragingly high across the Healthcare, Residential and Retail sectors throughout the year with occupancy exceeding 97% by year end allied with solid rental growth. However, Office remained a challenging sector with a fall in rental income, and occupancy lower, compared to historical levels, at 81% at the year end. This was in The Howard de Walden Estate Annual Report 2024

part intentional with our strategy to transition heritage office buildings into our newly launched, high-quality serviced product called Elmtree where initial take-up has been encouraging.

Valuation At 31 March 2024, the Group’s investment properties were valued at £4,168.4 million, a decrease of 6.3% and 8.2% on a like-for-like basis.

The two most valuable sectors are Healthcare at £1,528.0 million and Residential at £1,179.6 million.

Acquisitions and disposals The Group acquires property to unlock long-term value through development, rationalising adjacencies or asset 12

We realised £7.4 million from disposals, predominantly leasehold reform enfranchisement claims.

Post year end we sold 9 Mansfield Street for £12.5 million, a heritage office property with the potential for residential conversion but without consent. In line with our strategic objectives, these proceeds will be reinvested back into the portfolio.

Julian Best Executive Property Director

Introduction

Strategic report

Governance

Financial statements

Year ended 31 March 2024 £m

Year ended 31 March 2023 £m

Increase/ (decrease) £m

Change %

1,528.0 1,179.6 773.2 553.2 115.4 19.0

1,692.7 1,225.5 864.8 489.7 159.6 16.8

(164.7) (45.9) (91.6) 63.5 (44.2) 2.2

9.7% 3.7% 10.6% 13.0% 27.7% 13.1%

4,168.4

4,449.1

(280.7)

6.3%

Rental income

2024 £m

2023 £m

Increase/ (decrease) £m

Change %

Healthcare Residential Office Retail Educational Other

60.9 35.1 27.0 21.5 7.2 0.5

59.7 32.3 28.0 20.1 7.0 0.7

1.2 2.8 (1.0) 1.4 0.2 (0.2)

2.0% 8.7% 3.6% 7.0% 2.9% 28.6%

152.2

147.8

4.4

3.0%

Valuation Healthcare Residential Office Retail Educational Other

A more detailed overview of our four biggest sectors can be found on pages 14 to 21.

Percentage of valuation by sector (%)

Percentage of rental income by sector (%)

13.3% (11.0%)

14.1% (13.6%) 4.7% 0.4% (4.7%) (0.5%)

2.8% 0.4% (3.6%) (0.5%)

36.7% (38.0%)

40.0% (40.4%)

18.5% (19.4%)

17.7% (18.9%)

28.3% (27.5%)

23.1% (21.9%)

Healthcare Residential Office Retail Educational Other 13

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Healthcare

27-29 Harley Street.

Percentage of rental income (%)

28 Weymouth Street.

40.0% (40.4%)

£60.9m Rental income 2023: £59.7m

2.0%

Change in rental income 2023: 9.7%

£1,528.0m Valuation 2023: £1,692.7m

11.2%

Change in like-for-like valuation 2023: 8.4%

Healthcare income totalled £60.9 million, an increase of £1.2 million or 2.0% against the previous year. Values decreased by 9.7% (like-for-like decrease of 11.2%) from the prior year to £1,528.0 million.

Of the total portfolio, Healthcare represents 40.0% of income and 36.7% of total property values.

Healthcare remains our largest sector in both income and value terms.

Income has continued to grow, with demand outstripping availability.

This was reflected in occupancy levels remaining high throughout the year (excluding buildings under refurbishment), with available space largely under offer or pre-let.

We continued to refurbish and redevelop our Healthcare portfolio to the highest standards, with a focus on designing buildings from the inside out, using our detailed knowledge of occupiers’ operational requirements to dovetail their fit outs. We constantly research advancements in the sector to ensure we are providing space that meets the evolving requirements of current and future Healthcare providers. 6.3% (based on ERV) of the total Healthcare portfolio sat in our development pipeline at year end.

The Howard de Walden Estate Annual Report 2024

14

Key lettings during the year included: — 27-29 Harley Street, a flagship Grade-A healthcare redevelopment, let to HCA International Limited for their enlarged and amalgamated women’s clinic — 62-64 New Cavendish Street let to Re:Cognition Health, enabling their groundbreaking research and treatment for Alzheimer’s, dementia and cognitive impairment.

Other lettings included 28 Weymouth Street and 71 Wimpole Street to a range of healthcare providers including ear, nose and throat and hearing specialists. We also continued to forge transactions with several NHS Private Patient Units that utilise fees from their independent services to reinvest into the NHS Trusts.

As mentioned above, the development of 27-29 Harley Street released nearly 13,000 sq ft of modern consulting and diagnostic space, attracting significant interest and now let to HCA. The significant facade retention development of 1 Harley Street commenced during the year and is on programme to be completed in 2025.

This iconic address is receiving strong enquiries from healthcare operators to acquire a single consulting and diagnostic facility comprising 26,000 sq ft.

Introduction

Strategic report

Governance

Financial statements

PHOTOS: NYLA SAMMONS/PHARMACIERGE

Pharmacierge Pharmacierge, a private e-prescription app and delivery service, expanded its facilities, with the transformation of two 18th-century Georgian properties into one clinical space. This is an example of how our traditional settings can be used by innovative health technology business operations. Pharmacierge’s new space makes use of a 9-metre multi-arm dispensing robot.

15

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Residential

101 Marylebone High Street.

Percentage of rental income (%)

23.1% (21.9%)

£35.1m Rental income 2023: £32.3m

8.7%

Change in rental income 2023: 10.2%

£1,179.6m Valuation 2023: £1,225.5m

4.6%

Change in like-for-like valuation 2023:  0.3%

Residential income totalled £35.1 million, an increase of £2.8 million or 8.7% against the previous year. The Residential portfolio value was £1,179.6 million, a decrease of £45.9 million or 3.7% (like-for-like decrease of 4.6%) from the prior year.

Of the total portfolio, Residential represented 23.1% of income and 28.3% of total property value.

The main driver for the valuation decrease was the impact of the Leasehold and Freehold Reform Bill, with the stated aim of streamlining and making acquisitions affordable for leaseholders to extend leases or purchase their freehold. The two main changes are the abolition of marriage value and the capping of ground rents. The Bill was passed and achieved Royal Assent, but the change in government leaves the timing of enactment unclear.

Continuing from the prior year, demand for our residential properties remained high, leading to occupancy levels close to 100% throughout the year. Occupancy at year end was 98%, with the remaining stock under offer or in refurbishment.

Our focus is to provide high-quality residential homes, in a variety of configurations and price points, ensuring we attract a diverse resident population to Marylebone Village that contribute to the community’s vitality.

The Howard de Walden Estate Annual Report 2024

16

103 Marylebone High Street.

Alongside refreshing and refurbishing our portfolio, we restructured our property management teams to foster a more personal approach and build on our customer service. The latest residential customer satisfaction score was 86%, demonstrating the success of our in-house management approach. This made a positive contribution to income growth, increasing our retention rates whilst on average achieving lettings within nine days of launch.

Significant refurbishment projects finished during the year, included those at 26, 29 & 30 Park Crescent Mews West, which involved substantial reconfiguration of three dated mews

Introduction

Strategic report

30 Park Crescent Mews West.

Governance

Financial statements

26 Park Crescent Mews West.

29 Park Crescent Mews West.

126 Harley Street.

houses into modern homes, and four apartments at 101, 103 & 105 Marylebone High Street. Upgrading the residential stock is key to the long-term success of Marylebone Village making it a desirable place to live, work and relax and, help to maintain the balance of uses in a highly desirable destination.

Our development pipeline comprised 7.5% (based on ERV) of the total residential income at year end. Our largest development at 65 Harley Street, comprising nine bespoke apartments, has been pre-let to Living Rooms, a niche operator of serviced apartments. Other schemes included the refurbishment of 13 Wigmore Place, a single mews house, and eight apartments developed at 56/60 Wigmore Street, emphasising the wide range of accommodation we offer across the portfolio. These projects completed in Q2 2024.

Ossington Buildings.

Enfranchisement receipts during the year totalled £6.8 million.

17

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Office

Governance

Financial statements

The Pulman, 20 Thayer Street.

Percentage of rental income (%)

17.7% (18.9%)

£27.0m Rental income 2023: £28.0m

3.6%

Change in rental income 2023: 10.7%

£773.2m Valuation 2023: £864.8m

15.3%

Change in like-for-like valuation 2023: 6.2%

Office income totalled £27.0 million, a decrease of £1.0 million or 3.6% against the previous year. Values decreased by 10.6% (like-for-like decrease of 15.3%) from the prior year to £773.2 million. Of the total portfolio, Office represents 17.7% of income and 18.5% of total property values.

Our strategic focus remains to ensure that we have a diversified, fit for purpose portfolio for the long term, meeting the requirements of our current and future occupiers, as well as achieving our sustainability goals.

We launched our first flexible office building under the Elmtree brand at 34-36 Queen Anne Street, shortly to be followed by 32 Welbeck Street and The Howard de Walden Estate Annual Report 2024

18

another Queen Anne Street property.

This programme of delivering high-quality, contemporary co-working and private offices will fulfil known demand for flexible office space in Marylebone Village. Working with our operator Spacemade, we aim to capitalise on the demand from small and large occupiers to let space quickly, in a versatile fashion.

We also continue to invest in our traditional portfolio where demand for high-quality offices on longer leases remains, with occupiers increasingly demanding an enhanced fitout including furniture. We are taking the opportunity to upgrade our buildings when tenants vacate, not only to

Introduction

Strategic report

Governance

Financial statements

1 Portland Place.

13-14 Welbeck Street.

51 Welbeck Street.

meet customer expectations but also sustainability requirements. Whilst this approach has seen more properties enter our development pipeline, which has suppressed rental growth, it is essential if we are to remain relevant, avoid obsolescence and maximise value over the longer term.

The recently completed 20 Thayer Street development named The Pulman delivered over 18,000 sq ft of Grade A office space in Marylebone.

The development generated strong interest with the second floor under offer at the year end and offers issued for the remaining three floors, all above £105 sq ft. Our enhanced fitouts at 1 Portland Place, 51 Welbeck Street

and 7-10 Chandos Street all saw strong letting activity, exceeding the traditional lease option, by accelerating companies’ speed to occupation.

7-10 Chandos Street.

Office occupation is a key requirement of our diversified portfolio, which contributes to a vibrant community and is an integral part of Marylebone Village.

19

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Retail

Governance

Financial statements

Frame, 94 Marylebone High Street.

Percentage of rental income (%)

14.1% (13.6%)

£21.5m Rental income 2023: £20.1m

7.0%

Change in rental income 2023: 7.5%

£553.2m Valuation 2023: £489.7m

8.4%

Change in like-for-like valuation 2023:  3.5%

The Retail sector incorporates our retail, hospitality and leisure units.

Income totalled £21.5 million, an increase of £1.4 million or 7.0% against the previous year. Values increased by 13.0% (like-for-like increase of 8.4%) from the prior year to £553.2 million. Of the total portfolio, Retail represents 14.1% of income and 13.3% of total property values.

The income and capital growth has been driven from new lettings, underpinned by strong occupier demand. The Retail portfolio is an integral part of Marylebone Village, and often features in residents’ and businesses’ reasons for locating to the area.

The Howard de Walden Estate Annual Report 2024

20

The occupancy level at year end was 97% (with 1% under offer), a consistent level achieved throughout the year. High demand for space allowed the asset management team to carefully curate diverse occupiers throughout Marylebone Village.

Some of the key lettings during the year included: — 1 St Vincent Street – let to Rebase, a wellness gym which opened in May 2024, adding to the wellness offering in Marylebone Village.

— 94 Marylebone High Street – let to Frame, an American fashion lifestyle brand inspired by French style icons of the 1970s.

Introduction

Strategic report

Governance

Financial statements

Rebase, 1 St. Vincent Street.

— 28-29 Marylebone High Street – let to Sézane, a French lifestyle brand, as their largest UK and flagship store.

— 3 9 Marylebone High Street – let to Derek Rose, a UK lifestyle brand that is still family owned and run.

— 17 New Cavendish Street – let to Naroon, delivering authentic Persian cuisine.

— 24 New Cavendish Street – let to Oh My Cream!, a beauty concept store that combines different clean and effective brands with expert and friendly advice.

Naroon, 17 Cavendish Street.

As demand for space accelerated post pandemic, we are constantly rebalancing and maximising units within our influence. Recent surrenders of the units occupied by Barclays, NatWest and Lloyds banks provided exciting opportunities for new and existing occupiers to upsize into more prominent locations, such as ME+EM who will open at 4-5 Marylebone High Street in late 2024. In addition, our redevelopment of 20 Thayer Street/Marylebone Lane created two retail units, one let to Platform and one currently under offer.

The restaurant unit on Thayer Street is expected to go under offer to open before the end of 2024.

Sézane, 28-29 Marylebone High Street.

particularly those that cannot be found elsewhere or easily emulated.

Continuing to create a village feel is a priority and we see our diverse range of occupiers across retail, hospitality and leisure as being vital to delivering on this objective.

A core focus is to ensure the right balance of fashion, experiential, services and entertainment, 21

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Financial performance

Governance

Financial statements

“Revenue profit before tax remained relatively flat with growth in income offset by inflationary cost increases and continued investment in our buildings.”

Andrew Griffith Chief Financial Officer

Overview Turnover for the year increased £4.8 million from £149.0 million to £153.8 million. This was driven by strong underlying growth in rents from our Residential and Retail portfolios, with lettings activity and renewals buoyant. Retail income benefited from RPI-indexed increases agreed on new leases during the COVID-19 pandemic, alongside renewals and new lettings achieved above estimated rental value (ERV) due to high demand. Similarly, Residential lettings continued to benefit from strong demand resulting in many deals going to best and final bids. Healthcare properties were largely fully occupied with growth coming through renewals and rent reviews. The Office portfolio saw a decline in rent as we reposition certain buildings into our flexible working portfolio. The ERV of our development pipeline at year end was over £12.0 million per annum, with a combination of assets across all sectors, and will be a key element of income growth in the future.

revaluation losses. The reconciliation from headline loss to revenue profit before tax is set out on page 23.

Overall rent collection was 94% for amounts billed during the year.

This is expected to rise as several of the outstanding amounts from commercial occupiers are subject to payment plans. Whilst the overall collection rate remained lower than pre-pandemic levels, a recovery is evident, albeit some larger individual tenants have experienced trading

difficulties that we continue to manage case by case. The accounts include a provision against outstanding debts where there is a risk of non-recovery.

Our key financial metric is revenue profit before tax, as it excludes the variable impact of gains and losses on disposals and the annual revaluation of assets and liabilities.

This year’s revenue profit before tax remained relatively flat at £74.6 million, a decrease of 0.4% on the level achieved last year (2023: £74.9 million).

The headline loss before tax of £254.2 million factors in revaluation losses of £331.8 million for the year.

In 2023 a headline loss before tax of £102.3 million was recorded incorporating £199.5 million of

The Howard de Walden Estate Annual Report 2024

22

The way we grow revenue profit before tax is through increasing rental income and reducing or managing operating and borrowing costs. This year we were able to grow income, but this has been offset by cost increases. Property cost increases of £4.1 million have come from several factors, but mainly increased expenditure in refurbishing and developing our properties to a high standard, as the repair element is expensed through the profit and loss account. In addition, we increased our bad debt provision and one-offs that occurred in prior years, such as rates rebates, did not occur in the current year. General day to day property costs were largely maintained at the prior year levels. Administrative costs have increased by £1.2 million for the year from £23.9 million to £25.1 million, largely due to having a fully resourced team for the first time since the pandemic, coupled with inflationary pressures.

Net finance costs decreased from £24.5 million to £24.4 million.

The average amount borrowed was £661.3 million, a decrease of £2.5 million from the previous year (2023: £663.8 million). The average rate paid on borrowing increased to 4.0% (2023: 3.8%).

Introduction

Strategic report

Governance

Financial statements

Financial performance Loss before tax Adjustments: Loss on revaluation of investment properties Profit on sale of investment properties Fair value loss/(gain) on derivative financial instruments (Gain)/loss on foreign currency exchange* Revenue profit before tax

Year ended 31 March 2024 £m

Year ended 31 March 2023 £m

(254.2)

(102.3)

331.8 (2.6) 14.5 (14.9)

199.5 (20.2) (10.9) 8.8

74.6

74.9

*2024 includes rounding of £0.1m where reporting converts £000 to £m.

39 Marylebone High Street.

Year-end borrowings dropped from £663.0 million to £658.3 million (at forward contracted rates – see pages 74 to 75). One tranche of the 2011 private placement matured and was replaced in part by the deferred funding arranged in 2020.

Cash and cash equivalents at 31 March 2024 were £54.3 million (2023: £110.7 million) with the majority invested in a high interest-bearing bank account. The level of cash held at the bank, alongside a revolving credit facility of £150.0 million provides the Group with significant financial headroom to take advantage of any opportunities or withstand any further downturns in the market. During the

Distributions Distributions of £77.4 million (2023: £50.0 million) were paid during the year to shareholders. Comprised of dividends totalling £44.1 million (2023: £50.0 million), which included dividends of £nil on ‘A’ shares (2023: £8.0 million) and a bonus share issue and redemption of £33.3 million (2023: £nil).

year, the Group took up the option to extend the facility to December 2026 on existing terms. This extension was subject to credit approval from the bank lenders and the payment of a fee. At the year end, for both the current and previous year, the facility was undrawn.

At 31 March 2024, the Group’s average debt maturity was 13.0 years (2023: 12.9 years). The level of net borrowing to net assets (the gearing ratio) increased from 18.0% to 21.5%, driven by the 6.3% drop in investment property values. The Group’s low level of borrowing is comfortably supported by interest cover of 4.1 times (2023: 4.1 times).

23

Five-year financial performance The comparative figures below relate to the year ending 31 March 2020 where results were largely unaffected by the impacts of the COVID-19 pandemic and changes to the corporation tax rate. The Group’s rental income has increased by 5.4% from £144.4 million to £152.2 million.

In the same period, revenue profit before tax has decreased by 3.9% from £77.6 million to £74.6 million. The value of the Group’s investment properties has reduced by 10.9%, from £4,678.5 million to £4,168.4 million, a decrease of £510.1 million. In the same period, shareholders’ funds decreased by 17.0% from £3,382.5 million to £2,806.9 million.

Andrew Griffith Chief Financial Officer

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Principal risks and uncertainties

Governance

Financial statements

“The Group is a long-term investor and seeks to enhance its reputation whilst growing rental income and profitability.”

Andrew Griffith Chief Financial Officer

Overview The Group is a long-term investor focused on high-quality real estate assets in Marylebone and seeks to enhance its reputation and grow rental income and profitability. The geographic concentration, exposure to property market cyclicality and operation of heritage buildings are accepted risks which are offset by maintaining a diverse portfolio and carrying low financial risk. Delivery of strategic objectives in the context of the business, as described in this overview, is enhanced by a values-driven culture which prioritises excellence, responsiveness, innovation, collaboration and inclusiveness.

Risk management framework and process The diagrams below provide an overview of our governance and process structures for risk management. The Group continues to evolve its risk management framework to ensure comprehensive identification of opportunities and risks, and to support visibility and responsibility for risk management in alignment with its values-driven culture.

Risk assessment and reporting are managed in a three lines of defence aligned-model and designed to provide the Board with a Group-wide consistent perspective of the key risks.

Risk management structure

Risks identified by the Executive Committee are assessed and appropriate responses agreed. These risks are consolidated up to the Group risk register and reviewed by the Risk Committee twice per year, with insights from the Assurance, Risk and Compliance team. Key risks, controls and improvements are subject to monitoring and assurance where considered appropriate. The Risk Committee also meets separately to discuss future uncertainties.

Assurance is provided to the Board by the Audit Committee.

Process

Board

Audit committee

Identification

Risk committee Assurance

Assessment Business context and culture

Assurance

Business function leaders Response

Monitoring

Reporting

The Howard de Walden Estate Annual Report 2024

24

Introduction

Strategic report

Principal risks The risk landscape is constantly changing, and the financial performance, operations and sustainability of the Group can be impacted by various factors. In monitoring and assessing risk in the context of the strategic objectives and operating environment, the most significant risks to our strategy, financial position and future performance are summarised in the following commentary.

Governance

Financial statements

Risk movement: Increased Decreased No change New

1. Climate change and decarbonisation

6. Business interruption

2. Macro environment

7. O ptimisation of customer experience

3. Strategic execution and resilience

8. O ptimisation of people resources

4. Change management

9. Regulations and compliance

5. Technology and cyber security

1. C limate change and decarbonisation Description The failure to meet decarbonisation targets, and regulatory and customer requirements in a cost effective manner due to increasing extreme weather events or regulatory requirements, availability of products and materials, failure to engage with stakeholders, embrace technology and data or plan for skills requirements.

Outlook and impact The transition to a low carbon and climate resilient business requires significant investment and is subject to regulations, technologies, and skills requirements.

Failure to respond could impact compliance, insurance availability or cost, funding availability or cost, valuations, operational costs, and our ability to let assets. It could result in reputational damage, litigation, fines, loss of customers and/or costs associated with occupying our buildings, significant carbon cost, and potential damage from extreme weather.

Key controls — Science-based targets commitment monitored by the Sustainability Committee and Taskforce — Compliance projects incorporated to asset plans, EPC target B+ by 2030 — Climate and transition risk assessments undertaken — Policies implemented e.g. sustainable development framework, gas decommissioning, a supplier charter aligned to sustainability goals — Bonus scheme aligned to targets

Outlook and impact There continues to be elevated economic and political uncertainty which is amplified by conflicts and political tensions affecting supply chains. Impacts include financial sanctions, higher inflation and interest rates, and reduced consumer spending. These factors can impact the attractiveness of London, valuations and covenant requirements, costs of financing for both the Group and its customers which can lead to customer default or failure, increased covenant risk, reduced demand for properties, and impact to current and planned developments.

Key controls — Maintaining a diversified portfolio — Interest rate protection and sufficient financial headroom — L imited external borrowing and interest and currency rates fixed — Monitoring and maintaining close engagement with customers and suppliers — Monitoring of external environment for emerging risks — Monitoring economic and policy updates for response requirements and opportunities

Outlook and impact Shifts in the retail and office sectors have impacted demand for traditional space, and technology and demographics are influencing the healthcare sector. Environmental, social and governance (ESG) matters and technology advances could be sources of further disruption to all sectors. Political and economic uncertainties remain with inflation and interest rates potentially impacting the acquisitions and disposals strategy and financial strength of key customers or suppliers resulting in default or failure. Identifying trends and responding with timely delivery of sufficient and appropriate product to the market is key to preserving financial strength, income and growth and avoiding property obsolescence.

Key controls — Regular review of strategic objectives and initiatives — Regular review of financial forecasts — Monitor portfolio balance and key customers — Investment committee approval for acquisition and disposal decisions — Board oversight and challenge — Sufficient financial headroom maintained

2. M acro environment Description Tensions and conflicts, civil unrest, terrorism, health crises, political uncertainty and other macro events could lead to high inflation and interest rates, health and safety concerns, unfavourable policy and legislation, and adverse impact to market cycles.

3. Strategic execution and resilience Description Execution of strategic objectives, development programme, and satisfaction of stakeholder requirements could be impacted by structural market shifts, property cycles, the economic and political landscape, over-exposure to sectors or key customers, evolving customer requirements, ineffective capital allocation, changing demographics affecting target sectors, increased competition, technological advancements, increasing legal and regulatory requirements, or the competency and efficiency of internal resources and structures.

25

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

4. Change management Description Failure to deliver the benefits of business projects and change programmes could occur due to a failure to govern, identify objectives, skills and funding requirements, resource projects, and monitor delivery.

Outlook and impact There are significant changes and internal strategic initiatives in response to the current landscape (e.g. data analytics and reporting requirements, regulatory requirements, structural market movements, political and economic factors). Failure to manage programmes could result in increased costs, loss of income, reduced productivity, loss of project stakeholder engagement, and failure to meet growth and efficiency objectives.

Key controls — Business projects and change programmes overseen by Executive Committee — Strategic planning days for senior management and leadership — Business cases signed off by Executive Committee

Outlook and impact There continues to be rapid advancement and increased use and dependence on technology (including artificial intelligence), which has been fuelled by factors such as a drive for efficiencies, data, cost reductions, decarbonisation, and ESG considerations.

The risk is exacerbated by geopolitical tensions which increase the risk of direct or indirect disruption, data breaches, fines, reputational damage, increased costs and resource requirements, and impact the Group’s ability to attract and retain customers and market share.

Key controls — C yber security accreditation and measures to prevent and detect issues and incidents, including MFA and training, Cyber Essentials Plus, regular testing, detection software and regular patching — Incident response plans including DR plan, full replicated backups — IT supplier due diligence — Cyber insurance — Cloud hosting — Regular review of policies — D igital strategy and taskforce

Description The ability to carry on business as usual and remain a resilient organisation could be disrupted by major external or internal events such as sudden market shifts, natural disasters, extreme weather, health crises, major cyber events, utility failures, major supply chain disruption, civil unrest, crime or terrorist activity in central London.

Outlook and impact Such events are beyond our control but could cause severe and complex impacts. Instances of extreme weather are increasing including heat, storms, and flooding, and there is continued political and economic uncertainty.

Events can cause disruption to our operations, customers, suppliers and can affect the condition of our portfolio, our ability to let properties or retain customers, and ultimately our financial performance.

Key controls — Full insurance cover — Review and testing of Crisis Management Plan and business impact analysis — Climate impact analysis — Market analysis — D isaster Recovery Plan, Cyber Essentials Plus accreditation, active network monitoring and testing, staff awareness and training programme — Regular strategy and forecasting reviews — D iversified and monitored key supply chain

The Howard de Walden Estate Annual Report 2024

26

5. Technology and cyber security Description Infrastructure failure and/or the unavailability of systems, services or data could be caused by incidents such as fire or flooding, or events such as cyber-attacks or misuse.

There may also be shortfalls in product or service delivery caused by a failure to adopt and benefit from the advancement of technology in line with competition and advancements, and additional data protection and ethical impacts from choosing to adopt new technologies.

6. Business interruption

Introduction

Strategic report

Governance

Financial statements

Risk movement: Increased Decreased No change New

1. Climate change and decarbonisation

6. Business interruption

2. Macro environment

7. O ptimisation of customer experience

3. Strategic execution and resilience

8. O ptimisation of people resources

4. Change management

9. Regulations and compliance

5. Technology and cyber security

7. Optimisation of customer experience Description Structural shifts in markets in which the Group operates, changes to regulations and technology, and increasing competition could affect our ability to deliver products and services required to attract and retain customers. Such changes could also impact the skills and behaviours required by employees.

Outlook and impact Shifts in the retail, office and healthcare sectors are changing the space and amenity requirements of target customers. The growth of sustainability and technology requirements can also affect customer needs. Failure to respond could lead to difficulties letting assets, loss of customers to competitors and assets could become stranded reducing valuations and income.

Key controls — Monitoring market trends and updating sector and development strategies — D iversification across and within sectors — D igital strategy development and implementation — Regular engagement including customer surveys and forums — Complaint handling procedure — Periodic review of people strategy to ensure appropriate mix of structure, resources, skills and behaviours

Outlook and impact Staff turnover levels have reduced. However role profiles, skills requirements, employee expectations and workloads continue to evolve due to the changing operating environment which can result in recruitment challenges, deterioration in wellbeing, reduced productivity, or increased absence.

Key controls — Active Diversity, Equity, Inclusion and Belonging Committee — Succession planning, training needs and development plans linked to objectives — Benchmarked remuneration packages and policy benefits — Clear articulation of values and behaviours with recognition scheme — Employee engagement surveys — Regular and periodic wellbeing activities and initiatives

Outlook and impact There have been significant recent updates to the legal and regulatory environment and further key reforms are anticipated in key areas. In addition, there is a new government in the UK and general elections are scheduled in many nations this year, meaning increased potential for change exists in the near term.

Breaches of regulations can result in incidents or accidents, fines, prosecution, reputational damage and impact our ability to operate in certain sectors.

Key controls — Regular training for staff on key regulatory areas — E xternal advisors provide updates and briefings — G overnance delivered through Executive Committee oversight of regulatory environment, processes and training updates and compliance projects — E xternal financial audit — Engagement with relevant associations and bodies — Assurance activities for key areas

8. Optimisation of people resources Description The achievement of strategic objectives could be impacted by unacceptable staff turnover levels, ineffective employee engagement, lack of relevant skills or structure, loss of key staff or leadership, prolonged recruitment period.

9. Regulations and compliance Description Breaches of regulations, laws or other liabilities could occur due to failed or missing controls, inadequate monitoring or understanding of changes to the legal and regulatory environment, or if there is an inappropriate level of resource and/or skill and/or culture required to implement the required changes.

27

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

“Our sustainability strategy demonstrates an unwavering vision for responsible property ownership.”

Sustainability

Simon Tranter Head of Sustainability

Our commitments

Managing our buildings efficiently

Delivering low carbon refurbishments and redevelopments

Training and educating our colleagues

Working with our customers and suppliers

Significant developments: — First net zero carbon building assessment completed — Removal plan for phasing out gas boilers in progress — All properties MEES compliant — EPC improvement plan in place — Renewed licence for building optimisation software at 23 Queen Anne Street — Continued our LED lighting upgrade programme — Developed a SMART-meter upgrade programme for remaining non-SMART landlord meters — Secured 100% REGO and RGGO backed electricity and gas supply for next year

Significant developments: — Acquired technology to support data collection for embodied carbon analysis — Completed our first net zero carbon assessment to support design-stage decision making — 100% of applicable projects adopting our Sustainable Development Framework — A ll commercial development projects targeting at least an EPC B rating — 100% of all whole-building projects targeting gas boiler removal — Incorporated sustainability requirements in our Framework for Planned Repairs and Maintenance — Commenced our first Nabers 4.5 star rated project — Achieved BREEAM Excellent at our Thayer Street redevelopment

Significant developments: — Introduced seven internal key performance indicators to measure progress — Restructured our Sustainability Taskforce to improve senior-level engagement — Became a member of Better Building Partnership (BBP) — Received a Planet Mark award for data quality — Net Zero Carbon presentations given to colleagues to improve knowledge and understanding — Glossary of Terms developed to help communicate key terminology and definitions — Guidance issued on our seven strategic key performance indicators to support compliance — Enhanced the new-joiner induction to include our webinar on The Business Case for Net Zero

Significant developments: — New service providers awarded contracts to support the management of utilities — Drafted comprehensive sustainable procurement requirements for our suppliers — Improved our data collection methods for tracking the number of leases with green clauses — Commercial leases updated to include green clauses and data sharing agreements — Continually updated customers on our adoption of the City of Westminster’s Sustainable City Charter — Included sustainability-related questions in our customer satisfaction questionnaire — Reviewed and updated our Sustainable Events guidance for marketing and events — Held meetings with key customers to discuss and understand their sustainability drivers

deCarbon Sustainability Strategy 2040

The Howard de Walden Estate Annual Report 2024

28

Overall, our total carbon emissions increased compared to last year. The rise is attributed to higher carbon emissions from electricity production (Scope 2) within the UK national grid.

We also observed an increase in spend on refurbishment work, which had a direct impact on our Scope 3 emissions. These emissions will correlate with our spending patterns until we have fully transitioned to methods such as embodied carbon analysis. Finally, we encountered a refrigerant leak in one of our properties, which increased our Scope 1 emissions.

Emissions from our occupied properties and the carbon associated with our development work (embodied carbon) continue to represent the biggest sources of emissions. They also represent the biggest opportunity for making meaningful progress against our net zero carbon strategic objective (page 6).

We published our sustainability strategy, deCarbon, in October 2023.

Our strategy is now supported by a detailed implementation plan, which outlines the short, medium and long-term priorities under our four sustainability commitments.

Our strategy prioritises the improvements that we know are needed to make the biggest impact – this includes but is not limited to: developing net zero carbon-aligned

Financial statements

2023-24 Carbon footprint by Scope High

Our strategy We have seen a positive reduction in carbon across a range of emissions sources, which includes our head office, travel activities and landlord areas within our managed properties.

This has been helped by continued improvements in the energy efficiency and optimisation of buildings across our portfolio, and maintaining our commitment to procuring electricity from renewable sources. Our full results and methodology are detailed on page 31. Following a comprehensive analysis of our carbon data, we are now reporting full coverage across our Scope 1, 2 and 3 emissions categories for the first time.

Governance

Scope 1 Scope 2 Scope 3

23.39% Downstream leased assets

71.64% Purchased goods & services

Risk

Strategic report

1.74% Gas consumption

.80% 1 Electricity consumption 0.89% Fuel and energy related activities Low

Introduction

0.17% Employee commuting Low

0.25% Refrigerants 0.01% Operational waste Operational control

improvement plans for our managed estate and development projects, removing gas boilers, maintaining full Energy Performance Certificate (EPC) compliance, engaging our customers, and aligning supplier performance with our ambitions. We also remain committed to improving the breadth and quality of our data, developing our approach to climate resilience, and training and educating our colleagues.

Managing our buildings efficiently Driving down emissions across our estate is an imperative – this requires us to understand how we decarbonise our managed buildings and the properties occupied by our customers. Detailed studies, such as the net zero carbon assessments, are improving our understanding of the type and scale of improvements needed. We commissioned our first assessment for our own head office building at 23 Queen Anne Street, and we plan to deliver a further 13 building assessments next year. This aligns with our commitment to delivering the aims of the City of Westminster’s Sustainable City Charter, which we signed last year.

Phasing out gas boilers across the estate will support reductions in our Scope 1 and 3 emissions and we have made this a strategic focus of deCarbon. Buildings and units with upcoming lease events, and house boilers, are of particular interest. We have also developed a comprehensive 29

0.10% Business travel

<0.01% Fuel for transport High

understanding of all the properties not under our direct management where we believe gas boilers exist and we are now developing a removal plan.

Our properties continue to meet the statutory requirements under the Minimum Energy Efficiency Standard (MEES). Despite the previous government’s decision to reverse its position on the standards required for residential dwellings, we remain committed to targeting an EPC of C, or B for commercial developments. We have developed an EPC improvement plan to address the anticipated interim targets in 2025, 2027 and 2030. We recognise the importance of improving beyond minimum compliance wherever possible.

Delivering low carbon refurbishments and redevelopments We are currently prioritising the assessment of embodied carbon across our projects. In March 2024, we signed an agreement with a company called Qualisflow. Their technology platform, QFlow, will help us collect accurate data on material deliveries and waste generated during construction.

The accuracy of the data is helping to improve the measurement of embodied carbon. We have aligned our approach to the RICS methodology for Whole Life Carbon Assessment (WLCA). We have developed a Scope of Service to accompany our contracts, The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

which provides guidance to our design teams on how to comply with our proposed measurement approach.

Compliance with the Scope of Service will support the identification of carbon reduction opportunities during the design and construction stages. We are using the outputs from the WLCA process to develop embodied carbon targets, specific for our heritage assets.

The measurement and reduction of embodied carbon is a strategic priority under deCarbon. It accounts for 60% of our total carbon footprint.

Our focus on net zero carbon design continues to gain momentum.

We completed our first net zero carbon assessment for the design at 76-78 Portland Place. The proposed project boasts impressive energy-saving opportunities of 67% when compared to the existing base-build. The project has adopted the requirements in our Sustainable Development Framework for Refurbishments and Redevelopments, which we launched last year. It is targeting BREEAM Excellent and a Nabers rating of 4.5 stars.

Training and educating our people To accelerate our progress on sustainability matters, we have introduced seven KPIs to measure the quantitative and qualitative progress we make. To incentivise colleagues, satisfactory progress against these KPIs has a direct impact on the discretionary annual employee bonus pool available, which can increase the pool by up to 10%.

Our internal KPIs 1 Buildings with fossil fuel free systems – i.e. without gas 2 Units compliant with future EPC regulations 3 Buildings with NZC audits / Decarbonisation plans 4a Projects with embodied carbon assessments (Design) 4b Projects with embodied carbon assessments (Completion) 5 Appraisals setting sustainability budgets 6 Commercial leases with green clauses 7 New suppliers with NZC commitments

The Howard de Walden Estate Annual Report 2024

Governance

Financial statements

All head office based employees are required to set a sustainability objective as part of their performance plan for the year. Next year we will complete a training needs analysis so that we can set priorities and create a fit-for-purpose learning and development strategy.

Our Sustainability Taskforce was restructured in the year. Meetings are now held quarterly with senior members of the business attending.

Steering and Working Groups were established to work through the priorities in our implementation plan.

The revamped approach increases engagement across the relevant functions of the business and will help to accelerate progress. Roles and responsibilities are also more clearly defined across teams.

Our Head of Sustainability delivered a webinar to all head office based employees outlining the business case for net zero carbon. The webinar addressed relevant policy and legislation, the emerging UK Net Zero Standard for Buildings, through to an examination of our carbon footprint and our 2040 reduction target.

This year we became a member of Better Buildings Partnership (BBP).

The BBP represents the sustainability interests of the real estate sector, with a focus that aligns to the objectives and priorities outlined in deCarbon.

Our other memberships include the UK Green Building Council, Planet Mark, and the Science-based Target Initiative. Planet Mark delivered a sustainability workshop for our newly formed Sustainable Office Action Group. We were proud recipients of a Planet Mark award for Data Quality and Collection. The award recognised our commitment to transparency, accuracy, and consistency in reporting our emissions.

Working with our customers and suppliers We successfully onboarded two providers of utility management services. Together they oversee our landlord energy, water and gas accounts for both our permanent and

30

temporary supplies and facilitate the change of tenancy process.

In February 2024 we signed a contract that guarantees 100% renewable energy for both gas (i.e. RGGOs) and electricity (i.e. REGOS) for the first time. Our commitment to clean energy will support further reductions in carbon when we report next year.

We are currently reviewing and updating the Environmental Policy for suppliers. The refreshed policy, due in 2024, will outline our mandatory and preferred requirements. Encouraging our suppliers to measure their carbon footprint or recommending products with lower environmental impacts, for example, will all feature in the policy.

The policy will align with our intention to encourage suppliers to measure their own carbon footprint or by further committing to achieving net zero carbon in operation.

We updated our commercial leases for office and healthcare spaces to include green clauses, implementing the recommendations from the BBP’s Green Lease Toolkit.

We previously commissioned an environmental risk assessment to understand the estate’s vulnerability to future climate change impacts.

The report, by Marsh, identified flooding, extreme heat and high winds as primary concerns. Within our industry, there is ongoing debate on how buildings should be adapted to withstand these threats. Many real estate firms are now disclosing their strategies to address these risks, often in the form of a transition plan or climate resilience strategy.

We are not required to disclose climate-related risks, but we recognise their importance. Our commitment is documented in our deCarbon strategy.

As a result, we are currently reviewing the recommendations outlined by the Taskforce for Climate Related Financial Disclosure and Transition Plan Taskforce and are considering how we respond to the need to address short and long-term physical, transitional and financial risks.

Introduction

Strategic report

Governance

Financial statements

Streamlined Energy and Carbon Reporting (SECR) disclosure 2024

2023*

Net Zero Base Line 2017/18

Total Scope 1 emissions (tCO 2e)

515

447

574

Total Scope 2 emissions (tCO 2e) Location-based Market-based

466 133

481 150

1,472 –

Total Scope 3 emissions (tCO 2e) Cat 1 – Purchased goods and services Cat 3 – Fuel and energy related activity Cat 5 – Waste generated in operations Cat 6 – Business travel Cat 7 – Employee commuting Cat 13 – Downstream leased assets

24,865 18,517 231 3 25 43 6,046

21,568 15,470 303 13 40 62 5,680

33,756 22,463 484 15 1 74 10,719

Carbon intensity ratio (tCO 2e/m2) Location-based

0.035

0.033

0.13

Total energy use (MWh of electricity & gas)

4,703

4,875

4,871

Our reporting period covers 1 April 2023 to 31 March 2024. Scope 1 is defined as direct emissions that include any gas data for landlord-controlled parts (including company vehicles) and fugitive emissions from air conditioning are included where it is our responsibility within the managed portfolio. Scope 2 is defined as indirect energy emissions which include purchased electricity within landlord-controlled areas such as lobbies, staircases or vacant units. The boundary of reporting excludes tenant consumption in our properties, as the leasing arrangements put responsibility for energy payment on the tenants. Therefore, these emissions fall within Scope 3 (leased assets). Electricity used in refurbishment projects has been included where available or material. We quantify the carbon intensity of the portfolio based on its size (m2) rather than rental income which has little bearing on the efficiency of our buildings. Our emissions intensity for 2024 was 0.035 tCO 2e/m2 (Scope 1 & 2 location based). We have expanded our Scope 3 reporting and data quality. Scope 3 categories 3,5,6 and 7 are based on consumption information with the remaining Categories 1 & 13 based on estimated consumption through financial spend and EPC data respectively. * T he above 2023 Scope 3 emissions have been restated for the period as we have expanded our data coverage and reporting in line with our deCarbon Strategy.

We now report against all relevant Scope 3 categories for our business.

Streamlined Energy and Carbon Reporting (SECR) Our SECR disclosure presents our carbon footprint across Scopes 1, 2 and 3, together with an appropriate intensity metric and our total energy use. During the year, our measured Scope 1 and 2 emissions (marketbased) totalled 648 tonnes of CO 2 equivalent (‘tCO 2e’) This is an increase on last year primarily due to a refrigerant top up as a result of air-conditioner unit leakages across several properties during the year resulting in 65 tCO 2e. This, in combination with higher greenhouse gas (GHG) conversion factors compared with previous years, has resulted in higher emissions. The higher UK government conversion factors for UK electricity in 2023 are principally due to an increase in natural gas usage and decrease in renewables usage compared to last year.

renewable sources. We are also taking the opportunity to review current options for green gas.

Our energy consumption reduced throughout the year as shown in the table above. This is largely due to a decrease in electricity consumption reported at several of our properties.

Energy efficiency improvements — Increased the number of properties with EPC A, B and C ratings — Improved lighting efficiency in common parts by upgrading to high-efficiency LEDs — Focused on building optimisation and generating low-cost energy savings — Prioritised gas removal and improved thermal value performance — C ontinued to enhance sub-metering capabilities and remote monitoring

With the exception of void units, all of the electricity powering common parts in buildings we manage and in our staff offices now comes from certified 31

Methodology The GHG emissions data is prepared by following the Greenhouse Gas (GHG) Protocol: A Corporate Accounting and Reporting Standard published by the World Resources Institute (WRI).

We use the GHG Protocol operational control approach as this reflects where the Group has the ability to influence GHG emissions. The energy and carbon statements disclosed in this report have been calculated in accordance with the following standards: — WRI/WBCSD (2004). Greenhouse Gas Protocol: Corporate Accounting and Reporting Standard – Revised Edition — WRI/WBCSD (2015). Greenhouse Gas Protocol: Scope 2 Guidance for market-based reporting — D epartment for Environment, Food & Rural Affairs and Department for Business, Energy & Industrial Strategy (2019): Environmental reporting guidelines: Including Streamlined Energy and Carbon Reporting requirements.

We have applied the appropriate greenhouse gas conversion factors from UK Department for Business, Energy Security & Net Zero (DESNZ) 2023 in addition to UK Standard Industrial Classifications (SIC) GHG intensities for 2021 (most recent published data) for our purchased goods & services.

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Our people

Governance

Financial statements

“At Howard de Walden, we aim for people to have opportunities for fulfilling careers.”

Suzanne Tomlinson Chief People Officer

Our people are essential to the success of our business and we aim to attract, engage, grow and retain a high-performing and diverse workforce who are committed to being custodians of the estate. At Howard de Walden, we aim for people to have opportunities for fulfilling careers whilst delivering an excellent service to our customers.

This year, the Group’s voluntary employee turnover rate decreased significantly to 5.6% (2023: 15.5%) which we attribute to a less buoyant labour market but also the improvement in our employee value proposition. 37% of our workforce have more than 10 years’ service and 35% joined us over the past three years which provides a balance of continuity, experience and estate-wide knowledge alongside fresh ideas.

Values We focused our attention on values in the year, particularly how to embed them. For the second year running, the demonstration of our values forms 50% of the performance review process and is a key element when determining employee bonus awards. In addition, we launched Howie Heroes, a 360 degree quarterly employee recognition scheme rewarding our people for the exceptional demonstration of our values which has initiated camaraderie across the business.

The Howard de Walden Estate Annual Report 2024

Employee satisfaction Employee feedback is invaluable and during 2024 we commenced our biannual employee satisfaction survey to gain a collective view of our strengths and possible ways to improve. Having run the survey twice, the response has been consistently positive in terms of our people being welcoming, supportive and engaging with a strong company and team ethos. Our benefits and working conditions feature equally highly. We operate a culture for employees to provide feedback throughout the year and this is further supported by informal monthly update lunches held by the Executive Directors and Chief People Officer.

Developing our talent The employee satisfaction survey helped demonstrate that our people are eager for more progression and development opportunities. We were pleased to financially support a number of employees to embark on professional qualifications or other relevant courses. There were eight internal promotions and a reorganisation of our commercial and residential property teams has led to increased cross-functional working.

Wellbeing Health and wellbeing continues to be high on the agenda with a range of initiatives during the year. These included mental health and financial wellbeing workshops and seminars, 32

Employees were trained to become Mental Health First Aiders.

mini health ‘MOTs’, and a nutrition seminar. To strengthen our mental health support offering for employees, 11 employees were trained to become Mental Health First Aiders.

Diversity, equity, inclusion & belonging (DEI&B) The Diversity, Equity Inclusion & Belonging (DEI&B) Committee made excellent progress with the five-year road map achieving all of the aims set out in Year one. Our 2024 DEI&B and Wellbeing Calendar consisting of events and informative intranet posts relating to a selection of national and global awareness and religious dates has facilitated raising awareness and had high levels of engagement.

Events often involve us working and engaging with individuals who have businesses on the estate.

A number of employees have now benefitted from our enhanced maternity, paternity and shared parental leave policies implemented

Introduction

Strategic report

Governance

Financial statements

Our gender pay gap Headline figures comparing the basic hourly pay of all employees inclusive of cash payments and allowances Mean

Median

Our gender pay gap 2024 Change 2023 gap

46.5% -0.8% 47.3%

36.3% -4.6% 40.9%

National average gap 2024 Change 2023 gap*

13.2% -0.7% 13.9%

14.3% -0.1% 14.4%

Our gender bonus pay gap 2024 Change 2023 gap

75.8% -2.2% 78.0%

54.1% -8.4% 62.5%

A minus indicates the gap is in favour of females. *Source ONS.gov.uk (Released 1 November 2023).

Pay quartiles The proportion of male and female employees by quartile pay bands Quartile trends year on year Male Female Upper quartile Upper middle Lower middle Lower quartile

2024 2023 2024 2023 2024 2023 2024 2023

71% 72% 43% 44% 24% 31% 26% 18%

29% 28% 57% 56% 76% 69% 74% 82%

Chief Executive pay ratio

2024

2023

75th percentile Median 25th percentile

11:1 17:1 25:1

11:1 19:1 27:1

in 2023 and a meeting room was converted into a privacy/quiet room available for all staff to use.

Gender pay gap For the fifth year we have voluntarily commissioned an external consultant to calculate our gender pay gap. In common with our real estate peers, we report a significant gender pay gap and are focused on steps to reduce this.

The Group continues to employ more women than men however applying the pay gap calculations, men were paid more on average than women. It remains the case that men represent the largest proportion of the upper quartiles and women the lower

quartiles. The percentage of women in the upper and upper middle quartiles for office-based staff has increased by 3% and 10% respectively. However, the representation of women also increased in the lower quartile (6%) and decreased by 14% in the lower middle quartile.

of service charged buildings. For office-based staff only, the gender pay gap marginally increased to 29.4% (2023: 29.3%) on a median basis and to 42% (2023: 41%) on a mean basis.

Whilst the bonus gender pay gap is affected by part-time employees, as the calculation does not allow for prorating, the bonus gender pay gap has decreased for the first year since we started reporting.

Whilst there are some positive changes in our gender pay gap, we remain committed to making further improvements. Increasing the representation of women in the upper quartile is crucial for narrowing the gender pay gap but a critical aspect not to be overlooked is shifting the balance in the lower quartile where increasing male representation can provide a faster impact to bridge the gender pay gap.

Six of the eight internal promotions in the year were women, but none were into upper quartile positions. We have facilitated more internal mobility and secondment opportunities in the past year to support career development vertically and horizontally. We continue to work with schools and universities within the local community, educating a diverse pool about the property industry and encouraging more women to embark on a career within it. For the second consecutive year, a woman has been selected for our successful annual internship programme with the University of Westminster.

Priorities for the coming year include developing career paths to facilitate more progression as well as succession planning. Despite progress, being able to make a significant impact on the gender pay gap will take considerable time with a Group of our size.

The Group gender pay gap for hourly pay reduced again. As with previous years, the three highest paid individuals are the Executive Directors, all of whom are men, which has a noticeable impact on the result. Additionally, the gender pay gap is distorted by the inclusion of all estate-based staff whose salaries are reimbursed by occupants 33

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Community

Governance

Financial statements

“As responsible stewards, we are deeply embedded within the local community.”

Andrea Merrington Director of Planning & Engagement

Customers We recognise the importance of our customers as the source of our income, and the role they play in creating our vibrant Marylebone community. We work hard to attract, retain and support customers and consider them a key part of our stakeholder network.

We continue to support and invest in our customers and the area through engagement, marketing and communications. Building strong relationships with both our residential and commercial occupiers and understanding the needs and challenges they face is key to shaping our marketing and communication strategy. We work hard to nurture these relationships through regular face to face meetings, networking forums and community events.

Marylebone Journal 100th Issue launch.

Meet me in Marylebone.

Connecting each of our customer sectors is hugely important, ensuring customers that live and work in Marylebone are aware of and benefiting from the area’s diverse mix of retail, restaurants and wellness facilities. Local initiatives include our two periodicals, the Marylebone Journal, promoting retail, restaurants and lifestyle, and Prognosis, which promotes healthcare, along with our Marylebone Village Privilege Card, which now offers over 4,000 local residents and businesses discounts and promotions across the village, all play a part in achieving this goal.

The Howard de Walden Estate Annual Report 2024

We continue to improve our digital strategy and increase the area’s profile and footfall through an active calendar of events, promotions, press opportunities and campaigns.

This year there has been a greater emphasis on attracting national and international visitors through our lifestyle brand, Marylebone Village.

Events Events have long been a major pillar of our community and this year saw the return of our full annual line up plus some new additions. This included the Marylebone Food Festival, run in collaboration with The Portman Estate, which highlighted the diverse food and beverage offering across Marylebone whilst raising money for our charity partner, The Food Chain. The largest of our events is the Marylebone Summer Festival, a two-day community event raising money for local charity Greenhouse Sports. In addition, to mark the coronation of King Charles III, we installed bunting and flags along Marylebone High Street, Moxon Street

Marylebone Summer Festival.

34

Introduction

Strategic report

Governance

Financial statements

and Marylebone Lane throughout the summer months. We also ran a digital campaign to celebrate the various activities put on by our local retailers and restaurants. New this year; we hosted a ‘Meet me in Marylebone’ shopping and dining day on Marylebone Lane, fully pedestrianising the lane for a full day of activities, al fresco dining and music. Our annual Merry Marylebone Christmas Lights street event took place in support of our local charity partner Mind in Brent, Wandsworth & Westminster. For International Women’s Day we hosted a panel event focusing on the women behind the Marylebone Village brands which was chaired by local resident and BBC radio broadcaster Jo Good.

This year also saw the return of the international healthcare event, Arab Health, at which we hosted 13 of our healthcare operators as part of the Harley Street Medical Area collective at the World Trade Centre in Dubai.

Safety statistics The below data is a representation for the year to 31 March 2024.

Health and safety Ensuring the health and safety of our employees, customers and buildings is essential to our business. We aim to maintain a safe working environment through effective risk management, led by a team of qualified professionals who specialise in compliance within the built environment.

Suppliers and contractors We have continued to build on the progress made last year. Regular cyclical reviews of our supply chain now take place, with enhancements to categorisation resulting in a more balanced supply chain overall.

Providing great value for money to our varied customers and stakeholders has remained a critical driver and we have successfully negotiated key contracts to deliver improved quality. Contracts put in place in the last year have covered areas such as sustainability, health and safety compliance, facilities management, building management and utilities.

Internal policies remain under regular review, and we will be launching our new supplier code of conduct in the Summer of 2024, to build upon the standard terms and conditions and other contract documentation in place for supplier engagements.

Our strategic health and safety plan prioritises building compliance, fire safety, the Building Safety Act, contractor management, procurement, risk management, and internal competency development. Regular audits and inspections of our buildings, including construction projects, are conducted with our contractors. We analyse the results thoroughly and implement recommendations promptly to minimise risks.

Our health and safety team collaborates with property managers, department heads, and contractors to prioritise control measures in daily operations.

The Health and Safety Committee, comprising senior representatives and overseen by the CFO, regularly reviews this collaboration. This structure drives continuous improvement and supports unbiased decision-making.

Employees

Contractors

Managed portfolio

Accident

2

1

2

Incident

1

–

5

Near miss

–

1

2

RIDDORs

–

–

–

Fatalities

–

–

–

Dangerous occurrences

–

–

–

Prohibition notices

–

–

–

Improvement notices

–

–

–

Our straightforward health and safety approach focuses on planning, controlling, and monitoring activities to prevent harm or disruption to anyone associated with us.

construction projects across three categories: community, environment and workforce. Due to the heritage constraints of the buildings in our portfolio and the estate’s location in a conservation area in the heart of London, it is very difficult to obtain the highest scores for many of our projects.

This year, the Group scored an average of 39 (out of 45) across all our projects, which CCS consider as an excellent result. This includes a maximum score for our development at Thayer Street.

We remain committed to ensuring that our refurbishment and redevelopment programme creates minimal disruption and we look to appoint contractors who share this aspiration. The Considerate Constructors Scheme (CCS) is used to assess the impact of large-scale projects. A CCS assessor scores

Modern Slavery Act The Modern Slavery Act 2015 (‘the Act’) seeks to encourage a robust and diligent approach by commercial organisations in tackling modern slavery, which includes slavery, servitude, forced or compulsory labour, and human trafficking. The Group does not tolerate any form of modern slavery, within its own business or within its supply chain. We comply with all mandatory requirements of employment legislation and best practice. All workers engaged have chosen their employment freely and are treated with dignity and respect.

In accordance with section 54 of the Act, the Group publishes an annual statement detailing the steps taken to prevent slavery and human trafficking from taking place in any part of its business or supply chain. The statement is available to be viewed on the Howard de Walden Estate website (www.hdwe.co.uk).

35

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Staff volunteering at ZSL London Zoo and the Marylebone Project.

Community investment The Group’s community investment is guided by the principle that our income is generated in Marylebone, and therefore support should be focused predominantly in the local area. Recognising that there are areas in need just outside the 95 acres of our estate, we broaden our reach to support neighbouring communities in the City of Westminster.

Our community investment encompasses our charitable giving and support of local institutions and initiatives and, is aligned with our diversity and inclusion aims. It is also recognised as a contributing factor to enhancing employee engagement. Our Community Investment Committee oversaw contributions of £877,000 (2023: £1,002,000) to many deserving local charities and community institutions.

Over the past year, we continued to support and work with our charitable partners that are tackling the issues impacting some of the most vulnerable people in our community.

Some of our key partnerships this year focused on tackling food insecurity with The Felix Project and the Mayor’s Fund, homelessness with St Mungo’s and The Marylebone Project, and isolated older people with Age UK Westminster and the West End Community Trust.

The Howard de Walden Estate Annual Report 2024

Helping young people reach their full potential and supporting educational programmes is another area of our focus. Through our partnership with the Young Westminster Foundation, we not only donated to their grant giving programme, but also helped fund their peer-led needs analysis research to really understand the key issues facing young people in Westminster, to ensure support was going where it is needed most.

We know creating opportunities is important, so our colleagues took part in various employability programmes with our local secondary schools and the University of Westminster. We also fund scholarships and run an internship programme which offers students on property-related degree courses the experience, support and connections needed to help with their careers.

Beyond our financial support, we encourage our colleagues to volunteer locally and we support them with their own fundraising activities. This year, 457 hours were spent volunteering directly with or at fundraisers for our charitable partners and at local schools.

Key worker housing Our support also extends to offering discounted housing to key medical workers at local hospitals. Central London residential properties are expensive, and we are conscious that some key healthcare staff who work 36

in the area are unable to afford to live here. To achieve this, we have been running our own defined housing programme since late 2019 to enable key workers from local hospitals to make Marylebone their home as well as their place of work. The scheme provides a mix of flats rented out at subsidised rates to successful applicants. At the end of the year, we had 10 flats (2023: 16) let to key medical workers. Units let during the year were at an average discount to market rent of 54% (2023: 53%) which equates to £191,000 (2023: £215,000) of rent foregone in the financial year.

“From our earliest days, Howard de Walden have supported our work and have made a conscious decision to be actively involved in changing the lives of young people in Westminster.”

Helen Mann CEO Young Westminster Foundation

Introduction

Strategic report

Governance

Financial statements

Dan Beard (Projects Surveyor) presenting to University of Westminster students.

“The University of Westminster is deeply grateful for its longstanding partnership with The Howard de Walden Estate. Their support through scholarships has been transformative for students from underrepresented communities, allowing them to reduce part-time work and fully commit to their studies. This vital support helps these students reach their full potential.”

Jordan Scammell Head of Development and Fundraising at the University of Westminster

37

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Marylebone Summer Festival.

The Howard de Walden Estate Annual Report 2024

38

Introduction

Strategic report

Governance

Financial statements

Marylebone Christmas Lights.

39

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Officers and professional advisers

Secretary Karen Inman Registered office 23 Queen Anne Street London W1G 9DL Company registered number 06439246 Bankers Lloyds Banking Group plc 25 Gresham Street London EC2V 7HN

Auditor CLA Evelyn Partners Limited 45 Gresham Street London EC2V 7BG Solicitors Charles Russell Speechlys 5 Fleet Place London EC4M 7RD

Lloyds Bank plc 10 Gresham Street London EC2V 7AE National Westminster Bank plc 250 Bishopsgate London EC2M 4AA Royal Bank of Scotland plc 36 St Andrew Square Edinburgh EH2 2YB

The Howard de Walden Estate Annual Report 2024

40

Non-Executive Directors Sir William Proby Bt CBE DL The Hon Mrs Buchan The Hon Mrs White The Hon Mrs Acloque Marc Gilbard Rt Hon Professor Lord Kakkar KG KBE Liz Peace CBE Toby Shannon Karl Sternberg Executive Directors Mark Kildea Julian Best Andrew Griffith

Introduction

Strategic report

Governance

Financial statements

Governance framework

The Board The Board delegates certain matters to its five principal committees.

Audit Committee

Investment Committee

The Audit Committee, chaired by Toby Shannon, reports to the Board and oversees financial reporting and the statutory audit as well as monitoring internal controls including risk management.

The Investment Committee, chaired

by Marc Gilbard, reviews large and complex investment proposals, and approves any investment that exceeds the authority level delegated by the Board to the Executive Directors.

Members: Toby Shannon Marc Gilbard Karl Sternberg

Members: Marc Gilbard Sir William Proby Toby Shannon Karl Sternberg and the Executive Directors

Remuneration and Nominations Committee The Remuneration and Nominations Committee, chaired

by Sir William Proby, makes recommendations to the Board on the Executive Directors’ remuneration, based upon independent external professional advice.

Sustainability Committee

Risk Committee

The Sustainability Committee, chaired by Liz Peace, implements actions to improve our sustainability credentials and has oversight of projects against our strategic objectives.

The Risk Committee, chaired by Andrew Griffith, complements our existing risk management framework and considers any changes to the risk environment and any priority or escalated matters.

Members: Sir William Proby Rt Hon Professor Lord Kakkar Liz Peace

Members: Liz Peace Sir William Proby Rt Hon Professor Lord Kakkar Mark Kildea Simon Tranter (Head of Sustainability)

Members: Andrew Griffith Mark Kildea Julian Best Nick Darling (Director of Assurance, Risk and Compliance) Vikki Soh (Risk & Assurance Manager)

Executive Committee The Executive Committee (‘ExCo’) exists to streamline communication between the senior management team and the Board with a focus on the key property, financial, project and community matters affecting the business.

Members: Mark Kildea (Executive Director) Julian Best (Executive Director) Andrew Griffith (Executive Director) Paul Bakker Fiona Barnes

Craig Clements James Fisher David McArthur Andrea Merrington Suzanne Tomlinson

Supporting Committees A number of supporting committees provide oversight on key business activities and risks such as health and safety, community investment and diversity, equity, inclusion & belonging.

41

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Governance

Howard de Walden Estates Holdings Limited is privately owned, with the majority shareholder being the Lord Howard de Walden and Seaford’s Marriage Settlement Children’s Trust, which holds the shares for the benefit of current and future members of the Howard de Walden family. There are other family trusts and individual family shareholdings which hold the remaining shares.

Howard de Walden Estates Holdings Limited is the holding company of Howard de Walden Estates Limited which, together with its wholly owned entities, form ‘the Group’, which owns all the property assets. Howard de Walden Estates Holdings Limited has no equity or debt securities listed on the London Stock Exchange and although it is exempt from compliance with the UK Corporate Governance Code, the Group’s approach is to apply best corporate governance practice appropriate to a large private company. This creates a high level of accountability, probity and clarity on decision making.

The Howard de Walden Estate Annual Report 2024

The composition of the Group Board of Directors (‘the Board’) is designed to ensure the effective management of the Group and to provide leadership, strategy and control. Including the Chairman there are six Non-Executive Directors with CEO or equivalent experience on the Board and three family shareholders, plus the three Executive Directors.

The roles of the Chairman and the Chief Executive are clearly defined.

The Chairman is primarily responsible for overseeing the workings of the Board and its committees. The Board has ultimate responsibility for the Group’s strategy and policies, which are developed by the Chief Executive.

The Chief Executive is responsible for the implementation of the policies and strategies set by the Board and management of the business.

There were two changes to the Board; Mark Musgrave resigned as Alternate Director in June 2023 and post year end, The Lady Howard de Walden resigned in July 2024 upon her passing.

The Audit Committee reports to the Board and oversees financial reporting and the statutory audit as well as monitoring internal controls, including risk management. The members of the Audit Committee are Toby Shannon, Marc Gilbard and Karl Sternberg with the attendance of the Chairman, Executive Directors and Director of Finance when required.

42

It is the nature of the property business that some investments are large and complex, therefore the Group operates an Investment Committee, which reports to the Board. The Investment Committee meetings allow members adequate time and preparation to explore, understand, challenge and approve any investment that exceeds the authority level delegated by the Board to the Executive Directors.

This committee, chaired by Marc Gilbard, also comprises Sir William Proby, Toby Shannon, Karl Sternberg and the Executive Directors. Non-Executive Directors are also invited to informal update meetings and site visits, which provide an opportunity to meet senior management.

The Remuneration and Nominations Committee makes recommendations to the Board on the Executive Directors’ remuneration, based upon independent external professional advice. The members of the Remuneration and Nominations Committee are Sir William Proby, Liz Peace and Rt Hon Professor Lord Kakkar.

Introduction

Strategic report

The Executive Committee From left to right: David McArthur, Fiona Barnes, Julian Best, Mark Kildea, Andrew Griffith, Andrea Merrington, Craig Clements, Suzanne Tomlinson, James Fisher, Paul Bakker.

Governance

Financial statements

The need to achieve environmental compliance across many heritage buildings is a strategic objective.

The Sustainability Committee leads on the oversight and implementation of actions alongside the investment required to achieve compliance.

The Sustainability Committee is chaired by Liz Peace, with Sir William Proby, Rt Hon Professor Lord Kakkar, Mark Kildea and Simon Tranter (Head of Sustainability) as fellow members.

The Risk Committee complements our Audit Committee, bringing the Group into line with governance standards in place for listed entities by assisting the Board with its responsibilities for the oversight of risk. The Risk Committee is chaired by the Chief Financial Officer, with the Chief Executive, Executive Property Director and assurance, risk and compliance team as fellow members. The committee operates as a third line of defence in our risk management framework and meets at least three times per year to consider any changes to the risk environment and any priority or escalated matters.

43

Our experienced management team is integral to the continued success of the Group as it brings specialist skills to manage our diversified portfolio on an asset-by-asset basis. Senior management are typically department heads and interact daily with and report to the Executive Directors. The Executive Committee (‘ExCo’) exists to streamline communication between the senior management team and the Board with a focus on the key property, financial, project and community matters affecting the business. The ExCo, comprising the Executive Directors, Paul Bakker, Fiona Barnes, Craig Clements, James Fisher, David McArthur, Andrea Merrington and Suzanne Tomlinson, met frequently to discuss ongoing business matters and met formally five times in the year for wider strategic discussions.

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Section 172 statement

This is the section 172 statement for the Group, covering the Howard de Walden Estates Holdings Limited and its wholly owned entities, for the year ended 31 March 2024, which should be read in conjunction with the Strategic report as a whole.

The requirement Section 172 of the Companies Act 2006 (‘section 172’) requires a Director of a company to act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard, amongst other matters, to: — the likely consequences of any decision in the long-term; — the interests of the company’s employees; — the need to foster the company’s business relationships with suppliers, customers and others; — the impact of the company’s operations on the community and the environment; — the desirability of the company maintaining a reputation for high standards of business conduct; and — the need to act fairly with members of the company.

The Directors give careful consideration to the factors set out above in discharging their duties under section 172 for the Group.

The Board The Board, comprised of the three Executive Directors, six Non-Executive Directors and four family shareholders, convened for five meetings in the year. While the primary activity of the Board is to oversee the operations of a property investment and management business capable of

The Howard de Walden Estate Annual Report 2024

44

distributing a proportion of its profit to shareholders, the Board recognises that long-term success is dependent on maintaining relationships with all its key stakeholders and considering the external impact of the Group’s activities. The Group engages with a wide range of stakeholders to inform its decision making, including customers, suppliers, neighbouring communities, employees and shareholders, as well as considering its impact on the environment. As long-term stewards of buildings in Marylebone, the Board actively considers the views of all stakeholders and strives to find a balance between them, as it looks to continue to deliver outstanding places to visit, live and work.

The Board met throughout the year to discuss matters of strategic importance and to obtain an understanding of the performance and position of the Group. Decisions made by the Board consider the Group’s performance and the impact on stakeholders, with the Group’s reputation of paramount importance.

The three Executive Directors are part of the Executive Committee (comprising the most senior non-Board employees in the Group) and attend management meetings throughout the year to obtain a full understanding of issues affecting the Group and to improve decisions made at Board level.

Introduction

Strategic report

Governance

Financial statements

Key decisions taken during the year Board decision Oversaw the publication of deCarbon, the Group’s Sustainability Strategy 2040.

Considerations

Outcome

— Formal publication of the Group’s sustainability strategy provides a clear message to all stakeholders about what we are trying to achieve and how.

— T his facilitates discussions with stakeholders from discussing matters with the local authority to working with our suppliers and customers to achieve common goals.

— Publication of deCarbon in October 2023.

— O bjectives set in the strategy provide the Group with metrics to report against annually.

— Incentivises employees and aligns Approved the amendment of the existing employee bonus scheme personal growth targets with those to an enhanced model aligned of the Group’s strategy. to Group financial targets with — Encourages employees to additional performance measures maximise their potential, on aligned linked to strategic objectives objectives, which should lead to relating to sustainability and increased profitability and returns customer satisfaction. for shareholders.

— Encourages employees to provide the best level of service to our customers with a percentage of the bonus now dependent on their feedback.

— Element linked to achieving sustainability targets ensures we have a collective approach to achieving our goals. Employees are all pulling in the same direction to achieve a key strategic objective.

— T he approval of the enhanced model for bonuses was well received by all employees.

— T he Executive Directors will continue to monitor the operation of the scheme to ensure it remains fit for purpose.

Stakeholders The following are considered the key stakeholders of the Group: — Customers Our occupiers are the centre of the community.

Through careful selection, they bring vibrancy to the area and help to make Marylebone a desirable location to visit, live and work.

— Employees The Group cannot satisfy its other key stakeholders without our employees. They are key to the long-term success of the Group.

— S hareholders As a family-owned group, our family members’ interests are always considered when making key strategic decisions. A Shareholder

Committee provides a platform for the shareholders to provide input on long-term strategic decisions.

— Communities The Group is embedded within the local community. As responsible stewards, we need to play our part in supporting the community through events, direct charitable giving and our schemes which impact upon the local environment.

— Suppliers We seek to work with suppliers and contractors who share our standards. When working on the estate, suppliers are an extension of Howard de Walden, so it is essential they maintain the Group’s reputation as considerate stewards.

— D ebt providers We maintain a close working relationship with our debt providers who play an important role in the long-term financing of the Group.

— Local authorities We work closely with the City of Westminster to ensure we maintain and enhance our buildings and spaces.

45

The Howard de Walden Estate Annual Report 2024

Pages 28 to 37 provide details of the key activities and initiatives we have carried out in the year, including engagement with our key stakeholders. The table above contains an overview of the key decisions taken by the Board during the year.

Introduction

Strategic report

Governance

Financial statements

Directors’ report

The Directors present their report and the financial statements for the year ended 31 March 2024.

Directors’ responsibilities statement The Directors are responsible for preparing the Strategic report, the Directors’ report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare accounts for each financial year. Under that law, the Directors have elected to prepare the accounts in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’. Under company law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the Group and of the profit or loss of the Group for the financial year.

In preparing these accounts, the Directors are required to: — select suitable accounting policies and then apply them consistently; — make judgments and accounting estimates that are reasonable and prudent; — state whether applicable UK The Howard de Walden Estate Annual Report 2024

Accounting Standards have been followed, subject to any material departures disclosed and explained in the accounts; and — prepare the accounts on the going concern basis unless it is inappropriate to presume that the Company and Group will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the accounts comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.

Legislation in the United Kingdom governing the preparation and dissemination of accounts may differ from legislation in other jurisdictions.

46

Disclosure of information to the auditor In the case of each person who was a Director at the time this report was approved: — so far as that Director was aware there was no relevant audit information of which the Company and Group’s auditor was unaware; and — that Director had taken all steps that the Director ought to have taken as a Director to make himself or herself aware of any relevant audit information and to establish that the Company and Group’s auditor was aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

Auditor A resolution to reappoint the auditor, CLA Evelyn Partners Limited, will be proposed at the next AGM. Company’s registered number The Company’s registered number is 06439246.

Dividends During the year, the Group paid dividends of £44,130,000 (2023: £42,029,000) to ordinary shareholders and £nil (2023: £8,000,000) to ‘A’ shareholders.

Introduction

Strategic report

Governance

Financial statements

The Board members who served during the year and up to the date of this report are listed below: Sir William Proby Bt CBE DL Toby Shannon Mark Kildea Julian Best Andrew Griffith The Lady Howard de Walden (resigned 13 July 2024) The Hon Mrs Buchan The Hon Mrs White The Hon Mrs Acloque Marc Gilbard Rt Hon Professor Lord Kakkar KG KBE Mark Musgrave (resigned 2 June 2023) Liz Peace CBE Karl Sternberg

Chairman Deputy Chairman Chief Executive Executive Property Director Chief Financial Officer Family Shareholder Family Shareholder Family Shareholder Family Shareholder Alternate Director*

Non-Executive Non-Executive Executive Executive Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive

* M ark Musgrave was an Alternate Director to the Chairman and would only have acted as a Director if the Chairman had been incapacitated.

Mark Musgrave attends Board meetings in his role as a Director of the Trustees of Lord Howard de Walden and Seaford’s Marriage Settlement Children’s Trust.

Risk management A summary of the principal risks and uncertainties is included in the Strategic report on pages 24 to 27.

Going concern The Directors have considered the appropriateness of applying the going concern basis for preparing the financial statements. More detail can be found in note 2.2 to the accounts.

Section 172 In compliance with section 172 requirements, a statement can be found on pages 44 and 45 of the Strategic report which includes details of the Directors’ regard for employee engagement and business relationships.

Streamlined energy and carbon reporting In compliance with streamlined energy and carbon reporting, the Directors present the Group’s emissions and energy usage on page 31 of the Strategic report, as the matter is of strategic importance. Our annual emissions equate to 0.04 tCO 2e/m2 (Scope 1 & 2 location based).

The Group quantifies and reports its organisational greenhouse gas (GHG) emissions in alignment with the World Resources Institute’s Greenhouse Gas Protocol Corporate Accounting and Reporting Standard and the corresponding guidance. We currently include six of the 13 Scope 3 categories. We consolidate our organisational boundary according to the operational control approach.

The GHG sources that constituted our operational boundary for the year are: — Scope 1: Natural gas, transportation fuels — Scope 2: Electricity — Scope 3: Business travel mileage, water, purchased electricity and gas sub-metered to occupiers, and fuel and energy related activities We have used accurate consumption data to calculate emissions for most utility supplies. In some cases, where there is limited information, values have been estimated using either extrapolation of available data or data from the previous year as a proxy, to ensure complete coverage for the reporting year. We aim to continually improve the coverage, quality and scope of our data.

47

The reporting guidelines require that we quantify and report Scope 2 emissions according to two different methodologies: (i) the location-based method, using average grid emissions factors for the country in which the reported operations take place; and (ii) the market-based method, which uses the actual emissions factors of the energy procured and therefore, takes renewable energy sources into account. During the year over 99% of the energy we procured was from certified renewables.

This report was approved by the Board of Directors on 14 August 2024 and signed on its behalf by:

Mark Kildea Chief Executive Director

Sir William Proby Bt CBE DL Chairman Director

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Independent auditor’s report to the Members of Howard de Walden Estates Holdings Limited

Opinion We have audited the financial statements of Howard de Walden Estates Holdings (‘the Company’) and its subsidiaries (‘the Group’) for the year ended 31 March 2024 which comprise the Group Statement of Comprehensive Income, the Group and the Company Statements of Financial Position, the Group and the Company Statements of Changes in Equity, the Group Statement of Cash Flows and the notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements: — give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 March 2024 and of the Group’s loss for the year then ended; — have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and — have been prepared in accordance with the requirements of the Companies Act 2006.

The Howard de Walden Estate Annual Report 2024

Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.

Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group and the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Company’s ability to continue as a going concern for a period of at least 48

twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

Other information The other information comprises the information included in the Annual Report, other than the financial statements and our auditor’s report thereon. The Directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

Introduction

Strategic report

Governance

Financial statements

We have nothing to report in this regard.

are free from material misstatement, whether due to fraud or error.

Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: — the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and — the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Matters on which we are required to report by exception In the light of the knowledge and understanding of the Group and the Company and their environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: — adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or — the Company financial statements are not in agreement with the accounting records and returns; or — c ertain disclosures of directors’ remuneration specified by law are not made; or — we have not received all the information and explanations we require for our audit.

Responsibilities of Directors As explained more fully in the Directors’ responsibilities statement set out on page 46, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that

Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below: We obtained a general understand of the Group and the Company’s legal and regulatory framework through enquiry of management concerning their understanding of relevant laws and regulations, the entity’s policies and procedures regarding compliance, and how they identify, evaluate and account for 49

litigation claims. We also drew on our existing understanding of the Group and the Company’s industry and regulations.

We understand that the Group and the Company comply with the framework through: — O perating an experienced in-house legal team who update internal procedures, manuals and controls as legal and regulatory requirements change; — Close oversight by the Directors and key management, meaning that any litigation or claims would come to their attention directly; and — O utsourcing tax compliance to external experts.

In the context of the audit, we considered those laws and regulations which determine the form and content of the financial statements, which are central to the Group and the Company’s ability to conduct its business and/or where there is a risk that failure to comply could result in material penalties.

We identified the following laws and regulations as being of significance in the context of the Group and the Company: — the financial reporting framework United Kingdom Accounting Standards including FRS102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”; — the Companies Act 2006; and — U K taxation law.

We performed the following specific procedures to gain evidence about compliance with the significant laws and regulations identified above: — D iscussion with management as well as those charged with governance, over their consideration of known or suspected instances of non-compliance with laws and regulation and fraud; — Reviewed legal expenses to identify any known or suspected instances of non-compliance; — Reviewed Board meeting minutes to identify any known or suspected instances of non-compliance; and

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

— We obtained written management representations that they have disclosed to us all known or suspected instances of non-compliance with laws and regulations and accounted for and disclosed all known actual or possible litigation and claims in the financial statements.

The Senior Statutory Auditor led a discussion with senior members of the engagement team regarding the susceptibility of the Group and the Company’s financial statements to material misstatement, including how fraud might occur. The areas identified in this discussion were: — M anipulation of the financial statements via the posting of fraudulent journal entries; — Incorrect recognition of revenue notably around the year end; — M anagement bias in areas of estimation uncertainty for the valuation of the investment properties; and — M anagement bias in areas of estimation uncertainty for the valuation of the derivative financial instruments.

The procedures we carried out to gain evidence in the above areas included: — Testing of a sample of manual journal entries, selected through applying specific risk assessments based on the The Howard de Walden Estate Annual Report 2024

Governance

Financial statements

Company’s processes and controls surrounding manual journal entries; — Testing a sample of revenue transactions to underlying documentation; — Testing the validity of the data used in the investment property valuations, due to the risk of manipulation of inputs in valuation calculations and bias towards the refurbishment capital/revenue estimate. To address this, we obtained and documented an understanding of relevant controls relating to investment property valuations and major refurbishments. We tested the existence and valuation of a sample of investment properties by agreeing to underlying lease agreements, as well as recalculating and comparing to the yield inputs as confirmed by the Company’s third-party valuer and investigating any departures. We reviewed a sample of refurbishment projects undertaken in the period to understand the nature of the works and tested the capital/revenue specifications to ensure they were reasonable; and — Testing the valuation of the derivative financial instruments to third party valuation reports and comparison to the bank valuation reports received.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/ auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Nicholas Jacques Senior Statutory Auditor, for and on behalf of CLA Evelyn Partners Limited Statutory Auditor Chartered Accountants 45 Gresham Street London EC2V 7BG 14 August 2024

50

Introduction

Strategic report

Governance

Financial statements

Financial statements

13-14 Welbeck Street.

51

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Group Statement of Comprehensive Income for the year ended 31 March 2024

Note

2024 £000

2023 £000

4

153,817

148,951

Property outgoings and cost of sales

(29,935)

(25,809)

Gross profit

123,882

123,142

Administrative expenses

(25,127)

(23,862)

98,755 (331,780) 2,604

99,280 (199,516) 20,236

(230,421)

(80,000)

2,225 (26,338) (14,529) 14,838

531 (24,905) 10,932 (8,833)

(254,225)

(102,275)

67,835

32,707

(186,390)

(69,568)

(541) 136

(630) 157

Other comprehensive loss for the year

(405)

(473)

Total comprehensive loss for the year

(186,795)

(70,041)

Turnover

Operating profit before capital items Loss on revaluation of investment properties Profit on sale of investment properties

12

Operating loss Interest receivable and similar income Interest payable and similar charges Fair value (loss)/gain on derivative financial instruments Gain/(loss) on foreign currency exchange

5 6

Loss before tax Tax on loss

9

Loss for the year after tax Other comprehensive income Actuarial loss Deferred tax arising on actuarial loss

The Howard de Walden Estate Annual Report 2024

22 10

52

Introduction

Strategic report

Governance

Financial statements

Group Statement of Financial Position as at 31 March 2024

Fixed assets Investment properties Tangible fixed assets

Current assets Debtors: amounts falling due in more than one year Debtors: amounts falling due within one year Cash and cash equivalents

Note

2024 £000

2023 £000

12 13

4,168,418 14,868

4,449,061 14,766

4,183,286

4,463,827

20,927 42,315 54,255

25,216 57,612 110,730

117,497

193,558

(84,035)

(105,550)

33,462

88,008

4,216,748

4,551,835

(663,492)

(652,312)

3,553,256

3,899,523

– (746,393)

– (828,410)

2,806,863

3,071,113

2,667 2,917 2,210,750 244,763 345,766

2,667 2,917 2,464,786 238,119 362,624

2,806,863

3,071,113

15 15

Creditors: amounts falling due within one year

16

Net current assets Total assets less current liabilities Creditors: amounts falling due after more than one year

17

Net assets excluding provisions Provisions Defined benefit pension liability Deferred tax liability

22 10

Net assets Capital and reserves Called up share capital Merger reserve Revaluation reserve Other reserves Profit and loss account

19 20 20 20 20

Shareholders’ funds

The accounts were approved and authorised for issue by the Board of Directors on 14 August 2024 and were signed on its behalf by: Mark Kildea Director

Andrew Griffith Director

The notes on pages 58 to 82 form part of these financial statements.

53

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Group Statement of Changes in Equity for the year ended 31 March 2024

Called up share capital £000

Merger reserve £000

Revaluation reserve £000

Other reserves £000

Profit & loss account £000

Shareholders’ funds £000

2,667

2,917

2,623,846

212,869

348,884

3,191,183

Loss for the year

–

–

–

–

(69,568)

(69,568)

Other comprehensive income

–

–

–

–

(473)

(473)

Total comprehensive loss for the year

–

–

–

–

(70,041)

(70,041)

Transfer of: — investment property revaluation losses

–

–

(199,516)

–

199,516

–

— deferred tax arising on investment properties

–

–

49,201

–

(49,201)

–

— realised profits

–

–

(8,745)

25,250

(16,505)

–

Equity dividends paid

–

–

–

–

(50,029)

–

At 31 March 2023

2,667

2,917

2,464,786

238,119

362,624

3,071,113

At 1 April 2023

2,667

2,917

2,464,786

238,119

362,624

3,071,113

Loss for the year

–

–

–

–

(186,390)

(186,390)

Other comprehensive loss

–

–

–

–

(405)

(405)

Total comprehensive loss for the year

–

–

–

–

(186,795)

(186,795)

Transfer of: — investment property revaluation losses

–

–

(331,780)

–

331,780

–

— deferred tax arising on investment properties

–

–

82,208

–

(82,208)

–

— realised profits

–

–

(4,464)

6,644

(2,180)

–

Bonus issue of share capital – B shares

–

–

–

(33,325)

–

(33,325)

Redemption of share capital – B shares

–

–

–

33,325

(33,325)

–

Equity dividends paid

–

–

–

–

(44,130)

(44,130)

2,667

2,917

2,210,750

244,763

345,766

2,806,863

At 1 April 2022

At 31 March 2024

The Howard de Walden Estate Annual Report 2024

54

Introduction

Strategic report

Governance

Financial statements

Group Statement of Cash Flows for the year ended 31 March 2024

2024 £000

Note

Cash flows from operating activities Corporation tax paid

21

Net cash generated from operating activities Cash flows from investing activities Interest received and other fees Additions to investment properties Additions to tangible fixed assets Proceeds from sales of investment properties Proceeds from sales of tangible fixed assets

2024 £000

102,635 (16,222)

88,082

86,413 364 (26,948) (480) 35,265 32

(36,209)

Cash flows from financing activities Interest paid New long-term borrowings Long-term borrowings repaid Capital distribution – B shares repaid Equity dividends paid

2023 £000

104,912 (16,830)

1,658 (44,074) (1,183) 7,367 23

Net cash (used in)/generated from investing activities

2023 £000

(26,240) 35,000 (39,653) (33,325) (44,130)

8,233 (24,547) 15,000 (16,892) – (50,029)

Net cash used in financing activities

(108,348)

(76,468)

Net (decrease)/increase in cash and cash equivalents

(56,475)

18,178

Cash and cash equivalents at 1 April

21

110,730

92,552

Cash and cash equivalents at 31 March

21

54,255

110,730

55

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Company Statement of Financial Position as at 31 March 2024

Fixed assets Investments

Note

2024 £000

2023 £000

14

140,137

209,926

4

36

(51)

(63)

(47)

(27)

140,090

209,899

2,667 40,926 96,497

2,667 40,926 166,306

140,090

209,899

Current assets Cash and cash equivalents Creditors: amounts falling due within one year

16

Net current liabilities Net assets Capital and reserves Called up share capital Other reserves Profit and loss account

19 20 20

Shareholders’ funds

No profit and loss account is presented for Howard de Walden Estates Holdings Limited as permitted by section 408 of the Companies Act 2006.

The profit after tax for the financial year of the Company amounted to £7,646,000 (2023: £6,523,000).

The accounts were approved and authorised for issue by the Board of Directors on 14 August 2024 and were signed on its behalf by:

Mark Kildea Director

Andrew Griffith Director

The notes on pages 58 to 82 form part of these financial statements.

The Howard de Walden Estate Annual Report 2024

56

Introduction

Strategic report

Governance

Financial statements

Company Statement of Changes in Equity for the year ended 31 March 2024

Called up share capital £000

Other reserves £000

Profit & loss account £000

Shareholders’ funds £000

2,667

48,926

201,812

253,405

Profit for the year

–

–

6,523

6,523

Total comprehensive income for the year

–

–

6,523

6,523

Transfer of realised profits

–

(8,000)

8,000

–

Equity dividends paid

–

–

(50,029)

(50,029)

At 31 March 2023

2,667

40,926

166,306

209,899

At 1 April 2023

2,667

40,926

166,306

209,899

Profit for the year

–

–

7,646

7,646

Total comprehensive income for the year

–

–

7,646

7,646

Bonus issue of share capital – B shares

–

(33,325)

–

(33,325)

Redemption of share capital – B shares

–

33,325

(33,325)

–

Equity dividends paid

–

–

(44,130)

(44,130)

2,667

40,926

96,497

140,090

At 1 April 2022

At 31 March 2024

57

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts

for the year ended 31 March 2024

1. General information

2. Accounting policies

Howard de Walden Estates Holdings Limited (‘the Company’) is a private limited company, limited by shares, incorporated in England and Wales. The registered office is 23 Queen Anne Street, London, W1G 9DL. Its registered number is 06439246.

2.1 Basis of preparation of financial statements These financial statements have been prepared in accordance with applicable United Kingdom (‘UK’) Accounting Standards, including Financial Reporting Standard 102 – ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (‘FRS 102’) and with the Companies Act 2006.

The principal activity of the Group is long-term property investment.

The financial statements have been prepared under the historical cost convention as modified by the revaluation of investment properties and the modification to a fair value basis for certain financial instruments as specified in the relevant accounting policies. The financial statements are prepared in sterling which is the functional currency of the Group and rounded to the nearest £000.

Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Group. Control is achieved where the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

The Group financial statements consolidate the financial statements of Howard de Walden Estates Holdings Limited and all its subsidiary undertakings drawn up to 31 March each year.

Exemptions under the reduced disclosure framework The Company meets the definition of a qualifying entity under FRS 102 and has therefore taken advantage of the reduced disclosure exemptions available to it in respect of these financial statements. Exemptions have been taken in relation to financial instruments and the presentation of a Statement of Cash Flows, as equivalent disclosures have been shown in the consolidated financial statements.

The Howard de Walden Estate Annual Report 2024

58

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

2. Accounting policies (continued)

2.4 Investment properties Investment properties are initially measured at cost, including any transaction costs. Investment properties are subsequently measured and included in the financial statements at fair value at each year end. For the purposes of these financial statements, in order to avoid double counting, the fair value reported is reduced by the carrying amount of any debtor balances resulting from the spreading of lease incentives.

Any surplus or deficit on revaluation is recognised initially in the Statement of Comprehensive Income. All revaluation movements are transferred to a non-distributable reserve called the Revaluation reserve unless a deficit below original cost, or its reversal, on an individual property is expected to be permanent in which case it remains in the Profit and loss account reserve as an impairment. Deferred tax is provided on these gains or losses at the substantively enacted rate of UK corporation tax.

The following principal accounting policies have been applied: 2.2 Going concern Given the ongoing economic uncertainty, the Group’s financial forecasts were subject to some sensitivity analysis.

All scenarios considered provided no concerns with regards to the Group’s ability to continue as a going concern. The Group’s 12-month financial forecasts continue to factor in the adverse economic conditions and rising costs.

The forecasts demonstrate that the Group will have sufficient liquidity to fund its operations as well as appropriate headroom to comply with debt covenants.

Based on these considerations, the Directors are satisfied that the Group remains a going concern and therefore, the Group continues to adopt the going concern basis in preparing its financial statements.

2.5 Profit on sale of investment properties Profits or losses on the sale of investment properties are calculated by reference to the fair value at the end of the previous year, adjusted for any subsequent capital expenditure. Current year profits or losses are presented in the Statement of Comprehensive Income and realised profits or losses are subsequently transferred into the Other reserves.

2.3 Turnover and income recognition Turnover represents the amounts receivable for rental income, goods and services, net of VAT. Rental income is recognised on the basis of the amount receivable for the year. Where there is a rent free period and the amount is considered to be recoverable, the income is recognised evenly over the period of the lease term, which represents the non-cancellable period of the lease. Where the customer has the option to exercise a break during the lease term, the income is recognised evenly to the first break clause. Amounts received from customers to terminate leases or to compensate for dilapidations are recognised in the Statement of Comprehensive Income when the right to receive them arises. Rents charged in advance are shown as deferred income in the Statement of Financial Position.

2.6 Tangible fixed assets Land and buildings held and used in the Group’s own activities for administrative purposes are stated in the Statement of Financial Position at cost.

Depreciation is provided on tangible fixed assets to write off the cost less estimated residual value of each asset over its expected useful economic life.

Freehold land and buildings are not depreciated, as the Group is satisfied that the residual value of these assets exceeds their carrying value.

Depreciation is provided on assets at the following rates: Plant and machinery

— 10% of cost

Fixtures and fittings

— 15% of cost

Motor vehicles

— 25% of written down value

Office equipment

— 25% of cost

2.7 Investment in subsidiaries Investments in subsidiaries are accounted for at cost less provision for impairment in the individual financial statements.

Amounts included as loans are recorded at transaction price and are receivable in more than one year.

59

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

2. Accounting policies (continued)

there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

2.8 Debtors Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment.

Discounting is omitted where the effect of discounting is immaterial.

2.9 Creditors Short-term creditors are measured at transaction price.

Other financial liabilities, including loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. Discounting is omitted where the effect of discounting is immaterial.

2.10 Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand, net of bank overdrafts.

Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.

Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. The Group uses financial derivatives, principally interest rate swaps and cross currency interest rate swaps, to manage its exposure to interest rate and foreign exchange risk and does not use them for trading. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value at each year end.

2.11 Deposits received from customers Where deposits have been received from customers and placed in designated bank accounts, such amounts are not included in the Statement of Financial Position as assets of the Group nor as liabilities to customers. Amounts held at 31 March 2024 were £24,045,000 (2023: £18,405,000).

2.12 Operating leases: the Group as lessor Income in respect of operating leases is recognised within turnover in the Statement of Comprehensive Income on a straight-line basis over the lease term, in accordance with the policy for income recognition.

Amounts paid under interest rate swaps, both on obligations as they fall due and on early settlement, are recognised in the Statement of Comprehensive Income as interest payable and similar charges. Fair value movements on revaluation of derivative financial instruments are shown in the Statement of Comprehensive Income. The Group does not apply hedge accounting to its interest rate and cross currency interest rate swaps. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

2.13 Operating leases: the Group as lessee Operating lease costs are recognised as an operating expense in the Statement of Comprehensive Income on a straight-line basis over the lease term.

2.14 Loan notes Interest bearing bank loans and loan notes are initially recorded at transaction price representing amounts drawn, net of any issue costs or arrangement fees. All borrowings are subsequently measured at amortised cost using the effective interest rate method.

Modifications to financial instruments which meet both of the following conditions are not considered a normal modification, rather the effective interest rate is amended with no gain or loss on modification: — T he change is necessary as a direct consequence of interest rate benchmark reform; and — T he new basis for determining the contractual cashflows is economically equivalent to the previous basis.

2.15 Arrangement fees Costs incurred in the raising of loan finance are recorded as a deduction from the loan and subsequently amortised over the term of the loan using the effective interest rate method.

2.16 Financial instruments Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is an enforceable right to set off the recognised amounts and The Howard de Walden Estate Annual Report 2024

The Group and the Company have applied the practical expedient in accordance with paragraph 11.20c of FRS 102.

60

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

Current and deferred tax for the year are recognised in the Statement of Comprehensive Income, except when they relate to items which are recognised in Other comprehensive income or directly in equity, in which case the current and deferred tax is also recognised in Other comprehensive income or directly in equity, respectively.

2. Accounting policies (continued) 2.17 Foreign currencies Transactions in currencies other than the functional currency of the Group are initially translated at the spot rate of exchange on the date of the transaction and recorded in the Group’s functional currency.

2.19 Pensions The Group runs a defined benefit scheme and a defined contribution scheme (‘Group Personal Pension Plan’) for its employees. Contributions payable to the Group Personal Pension Plan are charged to the Statement of comprehensive income as incurred. Pension costs relating to the defined benefit scheme are accounted for in accordance with FRS 102 section 28.

Monetary items denominated in foreign currencies at the reporting date are retranslated at the rate prevailing at the end of the reporting period. Non-monetary items that are measured at historic cost in a foreign currency are not retranslated.

All exchange differences are recognised within the Statement of Comprehensive Income.

The defined benefit scheme’s assets are measured at fair value, its obligations are calculated at discounted present value, and subject to meeting the conditions of FRS 102 section 28, any net surplus or deficit is recognised in the Statement of Financial Position. Operating and financing costs are charged to the Statement of Comprehensive Income, with service costs spread systematically over employees’ working lives, and financing costs expensed in the period in which they arise.

2.18 Current and deferred taxation Tax on loss represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from the result as reported in the Statement of Comprehensive Income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible.

The Group’s liability for tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Re-measurements, comprising actuarial gains and losses and the return on the defined benefit scheme assets (excluding amounts included in net interest), are recognised in Other comprehensive income in the period in which they occur.

Deferred tax is recognised on timing differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable timing differences.

Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible timing differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Professional actuaries are used in relation to the defined benefit scheme and the assumptions made are outlined in note 22.

2.20 Dividends Final equity dividends are recognised when they are approved. Interim equity dividends are recognised when they are approved and paid.

2.21 Related party transactions For the Company, advantage has been taken of the exemption provided by paragraph 33.1A of FRS 102 of not disclosing transactions with entities that are wholly owned members of the Group.

Deferred tax assets and liabilities are measured on an undiscounted basis at tax rates which are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

61

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

3. Significant accounting judgements and estimates

Defined benefit pension scheme The present value of scheme liabilities, fair value of scheme assets and the expected annual charge in respect of the defined benefit pension scheme are determined according to estimates carried out by actuaries on the basis of assumptions agreed by the Directors. The key assumptions underlying these calculations are set out in note 22.

In applying the Group’s accounting policies, the Directors are required to make judgements, estimates and assumptions concerning the future. Judgements, estimates and underlying assumptions are based on historical experience and other factors available when the financial statements are prepared. They are reviewed on an ongoing basis and revised when necessary. Revisions to accounting estimates are recognised in the period in which they occur, as well as future periods if the revision affects both current and future periods.

In accordance with paragraph 28.22 of FRS 102, the Group has not recognised a defined benefit pension asset as the Group is not able to recover the surplus through reduced contributions in the future or through refunds from the plan.

As such, the actuarial gain and associated deferred tax has been reduced to bring the deferred benefit pension liability to £nil.

In preparing the Group and Company financial statements, the judgements that may have a significant effect are those involving estimations which are explained below.

Taxation The Group applies judgement in the application of taxation regulations and makes estimates in calculating current corporation tax and deferred tax assets and liabilities, including when gains/losses are likely to be realised and the likely availability of future taxable profits against which deferred tax assets can be utilised. Current corporation tax and deferred tax assets and liabilities recognised are shown in notes 9 and 10.

The estimates and assumptions that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities include: Investment property valuations Valuation of investment property is a central component of the business. The Group carries its investment properties at fair value. In estimating the fair value, valuations are jointly overseen by the Group Executive Property Director and the Group Head of Investment, on the basis of market value in accordance with the Appraisal and Valuation Manual of the Royal Institution of Chartered Surveyors.

The underlying rent, yield and capital value assumptions used in the valuation are independently reviewed by a third party, CBRE Limited. Estimated future refurbishment and void costs are also factored into the valuations. More information regarding the valuation techniques and inputs used in determining the fair value of the property portfolio is disclosed in note 12.

Financial instruments and fair value measurements In estimating the fair value of an asset or liability, the Group uses market-observable data to the extent that it is available.

Information about the valuation techniques and inputs used in determining the fair value of derivative financial instruments is disclosed in note 24.

The Howard de Walden Estate Annual Report 2024

62

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

4. Turnover

All of the Group’s turnover arises in the United Kingdom

2024 £000

2023 £000

153,817

148,951

2024 £000

2023 £000

152,244 688 885

147,777 191 983

153,817

148,951

2024 £000

2023 £000

1,544 263 61 357

254 92 – 185

2,225

531

Analysis by class of business: Turnover: Rental income Lease premiums Other income

5. Interest receivable and similar income

Bank interest receivable Net finance income relating to pensions Interest on corporation tax Other interest receivable

63

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

6. Interest payable and similar charges 2024 £000

2023 £000

467 25,535 313 22 1

2,290 22,378 237 – –

26,338

24,905

2024 £000

2023 £000

Auditor’s remuneration: Fees payable to the Group’s auditor for the audit of the Company’s accounts

39

28

Fees payable to the Group’s auditor and its associates for other services: — Audit of the accounts of subsidiaries — Taxation compliance services — Taxation advisory services — Other non-assurance services — Audit of the Howard de Walden Estates Limited Retirement Benefits Scheme

154 147 40 186 19

146 159 28 229 18

1,062 90 354

921 87 373

Bank loans and overdrafts Unsecured loan notes Amortisation of loan issue costs Interest on corporation tax Other interest payable

7. Loss before tax The loss before tax is stated after charging:

Depreciation (note 13) Operating leases (investment properties) Operating leases (other)

The Howard de Walden Estate Annual Report 2024

64

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

8. Directors and employees Staff costs, including Directors’ remuneration, were as follows: Salaries Social security Pension costs

2024 £000

2023 £000

14,258 1,810 1,464

12,492 1,621 1,653

17,532

15,766

The average monthly number of persons employed by the Group, including Directors, during the year was 171 (2023: 167).

All were employed within the property investment business, with 138 (2023: 132) operating from head office and 33 (2023: 35) located in buildings across the estate. Where applicable, costs for those working in buildings across the estate are recharged to tenants either directly or via service charges.

The Group operates a defined contribution scheme (‘Group Personal Pension Plan’) for the benefit of the employees and Directors. The assets of the scheme are administered by an adviser.

Directors’ remuneration Remuneration in respect of Directors was as follows: Aggregate emoluments Pension contributions

2024 £000

2023 £000

3,378 210

2,663 199

3,588

2,862

The Directors are considered to be key management personnel. The above aggregate emoluments represent employee benefits payable to key management personnel. Included within aggregate emoluments is £395,000 (2023: £207,000) in respect of long-term incentive schemes. The above aggregate emoluments also include those in respect of the highest paid Director for the year ended 31 March 2024 of £1,102,000 (2023: £1,066,000) and a pension allowance of £88,000 (2023: £85,000).

At 31 March 2024 there were three (2023: two) Directors accruing benefits under the Group Personal Pension Plan.

The Company, Howard de Walden Estates Holdings Limited, did not employ any members of staff during the year (2023: nil).

All Directors are remunerated through a subsidiary company, Howard de Walden Estates Limited.

65

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

9. Tax 2024 £000

2024 £000

2023 £000

2023 £000

Current tax: — UK Corporation tax — Adjustments in respect of previous years

14,821 (775)

16,478 (322)

Total current tax charge for the year

14,046

16,156

Deferred tax: — Origination and reversal of timing differences — O n transition adjustments on financial instruments — O n investment properties

215 112 (82,208)

253 85 (49,201)

Total deferred tax credit for the year

(81,881)

(48,863)

Tax credit on loss

(67,835)

(32,707)

Factors affecting tax for the year The tax for the year is lower (2023: lower) than the standard rate of corporation tax in the UK of 25% (2023: 19%).

The differences are explained below: 2024 £000

2023 £000

Loss before tax

(254,225)

(102,275)

Loss multiplied by the standard rate of corporation tax in the UK of 25% (2023: 19%)

(63,556)

(19,432)

Effects of: Change in tax rates Indexation deductible for tax purposes Capital allowances in excess of depreciation Expenses not deductible for tax purposes Adjustments to tax charge in respect of previous years Other permanent differences

– 220 (3,843) 62 (775) 57

(11,759) 9 (1,144) 74 (322) (133)

Total tax credit for the year

(67,835)

(32,707)

The Howard de Walden Estate Annual Report 2024

66

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

10. Deferred taxation 2024 £000

2024 £000

2023 £000

(828,410)

At 1 April 81,881 136

Profit and loss Other comprehensive income At 31 March

2023 £000

(877,430) 48,863 157

82,017

49,020

(746,393)

(828,410)

2024 £000

2023 £000

Included in provision for liabilities and charges

(746,393)

(828,410)

The liability for deferred tax comprises the following: — Accelerated capital allowances — Investment properties — Transition adjustments on financial instruments

(218) (746,286) 111

(139) (828,494) 223

(746,393)

(828,410)

Factors that may affect future tax charges The UK corporation tax rate was 25% for the year ended 31 March 2024 and 19% for the prior year. There are no known factors which may affect future tax charges.

67

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

11. Dividends

Ordinary shares £8.29 per share paid on 6 April 2023 (2023: £7.90 per share paid on 4 April 2022) £4.14 per share paid on 22 September 2023 (2023: £3.95 per share paid on 22 September 2022) £4.14 per share paid on 8 December 2023 (2023: £3.95 per share paid on 9 December 2022)

‘A’ shares £nil paid in the year (2023: £1,502.75 per share paid on 22 September 2022)

2024 £000

2023 £000

22,066

21,015

11,032

10,507

11,032

10,507

44,130

42,029

–

8,000

44,130

50,029

After the year end, dividends of £23,168,000 on ordinary shares (2023: £22,066,000) were approved and paid on 8 April 2024. Those dividends are not included in these accounts.

The Howard de Walden Estate Annual Report 2024

68

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

12. Investment properties (Group) Freehold £000

Leasehold £000

Total £000

Valuation At 1 April 2023 Additions Disposals Reclassification Revaluation

4,423,477 55,869 (4,498) 305 (332,144)

25,584 31 (265) (305) 364

4,449,061 55,900 (4,763) – (331,780)

At 31 March 2024

4,143,009

25,409

4,168,418

At 31 March 2023

4,423,477

25,584

4,449,061

The historical cost of investment properties for the Group at 31 March 2024 was £1,211,330,000 (2023: £1,155,729,000).

The valuation of investment properties at 31 March 2024 and 31 March 2023 was jointly overseen by the Group’s Executive Property Director and the Group’s Head of Investment. The valuations have been prepared on the basis of market value in accordance with the RICS Valuation – Global Standards (‘Red Book Global Standards’). The underlying rent, yield and capital value assumptions used in the valuation were independently reviewed by CBRE Limited and were considered to be appropriate. The key assumptions used to determine the fair value of investment property at 31 March 2024 are shown in the table below.

Property type

Key inputs

Healthcare

ERV psf, Floor area, Capitalisation yields

(1)

Net effective ERV range/Capital value range £psf

Yield range %

£60.00-£95.00+

4.00-5.25%

£630.00-£1,800.00

–

Residential(2)*

Capital values psf, Floor area, Annual rental income

Office(1)

ERV psf, Floor area, Capitalisation yields

£45.00-£90.00+

4.25-6.00%

Retail(1)

ERV Zone A psf, Floor area, Capitalisation yields

£75.00-£360.00

4.25-4.50%

Restaurant(1)

ERV psf, Floor area, Capitalisation yields

£75.00-£125.00

4.25%

Educational(1)

ERV psf, Floor area, Capitalisation yields

£45.00-£65.00

5.25%-5.50%

Other(1)

ERV psf, Floor area, Capitalisation yields

£nil-£50.00

3.00-8.00%

General deferment yields

–

–

4.25-5.00%

Valuation method: income and capitalisation.

Investment value.

Short-term Residential valued by discounting net annual rental income at a rate of 7%.

(1)

(2) *

Investment property rental income earned during the year was £152,244,000 (2023: £147,777,000) (note 4).

The Group had contracted future minimum lease receivables as set out in note 25.

69

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

13. Tangible fixed assets (Group) Land and buildings £000

Other assets £000

Total £000

Cost At 1 April 2023 Additions Disposals

8,583 15 –

8,644 1,168 (115)

17,227 1,183 (115)

At 31 March 2024

8,598

9,697

18,295

Depreciation At 1 April 2023 Charge for the year Eliminated on disposal

– – –

2,461 1,062 (96)

2,461 1,062 (96)

At 31 March 2024

–

3,427

3,427

At 31 March 2024

8,598

6,270

14,868

At 31 March 2023

8,583

6,183

14,766

Net book value

The Group’s office building included within land and buildings is held at cost as detailed above. Depreciation is not charged as detailed in note 2.6. The Directors consider the fair value of our office building to be £27,164,000 (2023: £32,597,000) as determined using the same assumptions and basis as detailed in note 12. No provision has been made for the tax which would arise should the Group dispose of its office building at the fair value listed above. Tax would be payable on disposal to the extent that rollover relief would not be available. The potential tax liability which would arise on the sale of the Group’s office building, at the latest substantively enacted rate of corporation tax, is approximately £4,469,000 (2023: £5,831,000).

The Howard de Walden Estate Annual Report 2024

70

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

14. Investments (Company) Shares in subsidiary undertakings £000

Loans to subsidiary undertakings £000

Total £000

Cost At 1 April 2023 Net repayments

1,331 –

208,595 (69,789)

209,926 (69,789)

At 31 March 2024

1,331

138,806

140,137

Interests in subsidiaries The Company holds 100% of the shares and voting rights of Howard de Walden Estates Limited, which directly and indirectly holds all of the other interests in the subsidiary companies. At the year end, the Company had interests in the following subsidiaries which are all registered in England and Wales:

Company

Type of business

Howard de Walden Estates Limited Portland Industrial Dwelling Company Limited*1 18 Marylebone Mews Limited Howard de Walden Telecommunications Limited*1 Marylebone Village Limited*1 Howard de Walden Estates (TLC) Limited*1 Howard de Walden Estates (TLC LP2) Limited*1 The London Clinic Limited Partnership Howard de Walden Estates (TLC GP) Limited*1 60 Portland Place Tenants Management Limited*2 Howard de Walden Management Limited*2

Property investment Property investment Property investment Property investment Property investment Property investment Property investment Property investment Property management Dormant Dormant

Proportion of voting rights & shares held

100% 100% 100% 100% 100% 100% 100% 100%*3 100% 100% 100%

Company is exempt from the requirements of the Companies Act 2006 relating to the audit of the individual accounts by virtue of section 479A. Company is exempt from the requirements of the Companies Act 2006 relating to the audit of the individual accounts by virtue of section 480. *3 Proportion of voting rights held only. *1

*2

The registered office for each subsidiary is 23 Queen Anne Street, London, W1G 9DL. During the year two subsidiary companies, Howard House Limited and Stone House Management Limited, were dissolved on 16 May 2023.

Loans to subsidiary undertakings Loans to subsidiary undertakings bear interest quarterly at SONIA plus a margin of 1.6193%. The loan is unsecured and repayable 1 year and 1 day following notice from the Company that repayment is required.

71

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

15. Debtors (Group)

Due after more than one year: Other debtors Derivative financial assets (note 24)

Due within one year: Trade debtors Other debtors Prepayments and accrued income Capitalised arrangement fees Derivative financial assets (note 24)

2024 £000

2023 £000

564 20,363

805 24,411

20,927

25,216

15,874 4,762 21,301 378 –

18,677 1,346 25,570 262 11,757

42,315

57,612

16. Creditors: amounts falling due within one year

Trade creditors Other creditors Other taxation and social security Accruals and deferred income Derivative financial liabilities (note 24) Bank loans and other borrowings (note 18)

Group 2024 £000

Group 2023 £000

Company 2024 £000

Company 2023 £000

4,574 752 1,724 56,986 – 19,999

5,256 172 2,027 46,334 3 51,758

– – – 51 – –

– – – 63 – –

84,035

105,550

51

63

2024 £000

2023 £000

659,636 477 3,379

647,329 331 4,652

663,492

652,312

17. Creditors: amounts falling due after more than one year (Group)

Bank loans and other borrowings (note 18) Accruals and deferred income Derivative financial liabilities (note 24)

The Howard de Walden Estate Annual Report 2024

72

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

18. Analysis of borrowings (Group) Unsecured loan notes (A): 2024 £000

Amounts falling due within one year Issued 9 October 2014 £20m loan notes expiring 16 October 2024 – 3.43% Issued 16 September 2011 $64m loan notes expiring 18 September 2023 – 4.46% Total unsecured borrowings due within one year

2024 £000

2023 £000

2023 £000

19,999

–

–

51,758

19,999

51,758

Amounts falling due in more than one year Issued 25 August 2010 $86m loan notes expiring 16 July 2025 – 5.23% £25m loan notes expiring 16 July 2030 – 5.61%

68,061 24,960

Issued 16 September 2011 $73m loan notes expiring 16 September 2026 – 4.66% Issued 9 October 2014 £20m loan notes expiring 16 October 2024 – 3.43% £40m loan notes expiring 16 October 2029 – 3.58% £40m loan notes expiring 16 October 2034 – 3.79%

69,522 24,954 93,021

94,476

57,760

59,001

– 39,969 39,940

19,996 39,963 39,934 79,909

Issued 14 September 2016 £40m loan notes expiring 14 September 2031 – 2.54% £60m loan notes expiring 14 September 2036 – 2.74%

39,945 59,861

99,893 39,937 59,851

99,806

Issued 9 January 2019 £40m loan notes expiring 9 January 2034 – 3.01% £30m loan notes expiring 9 January 2039 – 3.11% £45m loan notes expiring 9 January 2044 – 3.20% £45m loan notes expiring 9 January 2049 – 3.29% £35m loan notes expiring 14 November 2034 – 3.11% £10m loan notes expiring 14 November 2039 – 3.21% £15m loan notes expiring 14 November 2044 – 3.30% £30m loan notes expiring 9 September 2042 – 3.61% £30m loan notes expiring 9 September 2048 – 3.57%

39,946 29,938 44,876 44,845 34,939 9,975 14,950 29,911 29,882

99,788 39,940 29,934 44,870 44,839 34,934 9,973 14,947 29,906 29,878

279,262

Issued 15 October 2020 £15m loan notes expiring 9 July 2055 – 2.51% £35m loan notes expiring 9 July 2055 – 2.56%1

14,952 34,926

Total unsecured borrowings due more than one year

279,221 14,950 –

49,878

14,950

659,636

647,329

Drawn 11 September 2023.

1

73

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

18. Analysis of borrowings (Group) (continued) Borrowings are repayable as follows: Instalments due: Within one year Two to five years Greater than five years

2024 £000

2023 £000

19,999 125,821 533,815

51,758 148,519 498,810

679,635

699,087

(A) Unsecured loan notes On 25 August 2010, the Group issued unsecured loan notes in a private placement. The Group has entered into derivative contracts in respect of the fixed rate US dollar loan notes totalling $111 million (£75 million equivalent), swapping the payments on the loan notes into sterling floating rates at a blended margin of 1.28% over LIBOR (1.56% over SONIA following the Interest Rate Benchmark Reform). Derivative contracts are in place to fix the amount of borrowings in US dollars at £58.1 million. The total amount of borrowings repayable is fixed at £83.1 million.

On 16 September 2011, the Group issued unsecured loan notes in a private placement. The Group has entered into derivative contracts in respect of the fixed rate loan notes swapping the payments on the loan notes into sterling floating rates at a blended margin of 1.15% over LIBOR (1.41% over SONIA following the Interest Rate Benchmark Reform).

During the year, one tranche of the unsecured loan notes matured and was repaid. Derivative contracts entered into in relation to this tranche also matured. At the year end, the derivative contracts in place fix the amount of borrowings repayable at £45.2 million.

On 9 October 2014, the Group issued a total of £100 million fixed rate unsecured loan notes in a private placement with an average rate payable of 3.63%.

On 14 September 2016, the Group issued £100 million of unsecured loan notes in a private placement with £40 million at a fixed rate of 2.54% and £60 million at a fixed rate of 2.74%.

On 9 January 2019, the Group agreed a total of £280 million of unsecured loan notes at different fixed rates of interest in a private placement with two tranches of deferred funding. £160 million was drawn on 9 January 2019 with £40 million at 3.01%, £30 million at 3.11%, £45 million at 3.20% and £45 million at 3.29%. A further £60 million was drawn on 14 November 2019 with £35 million at 3.11%, £10 million at 3.21% and £15 million at 3.30%. The final £60 million was drawn on 9 September 2021 with £30 million at 3.61% and £30 million at 3.57%.

On 15 October 2020, the Group agreed £50 million of unsecured loan notes in a private placement comprised of two tranches of deferred funding. Both tranches attract fixed rates of interest, £15 million at 2.51% and £35 million at 2.56%. The £15 million tranche was drawn on 11 July 2022 and the £35 million tranche was drawn during the year on 11 September 2023.

Unsecured loan notes denominated in US Dollars are retranslated at the rate prevailing at the reporting date. Arrangement fees are capitalised and once the loan notes are drawn, amortised up to the expiration of the loan notes. Arrangement fees relating to undrawn loan notes are included in debtors due within one year at the year end.

The Howard de Walden Estate Annual Report 2024

74

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

18. Analysis of borrowings (Group) (continued) The Group’s borrowings are made up of: Drawn loan debt in a mixture of US dollars and pounds sterling at forward contracted rates Foreign currency exchange adjustments on the US dollar debt Capitalised arrangement fees

2024 £000

2023 £000

658,337 22,534 (1,236)

662,990 37,372 (1,275)

679,635

699,087

(B) Bank loans and overdrafts The Group aims to have a minimum of 75% of current net debt subject to fixed interest rate protection. The fixed rate protection is achieved via the use of interest rate swaps which attract varied levels of interest and fixed rate unsecured loan notes.

On 2 July 2021, the Group entered into an amendment and restatement agreement to vary the terms of the existing revolving credit facility. During the year, the Group took up the option to extend the facility to December 2026 on existing terms. The margin payable remains dependent on the level of utilisation with non-utilisation fees of 35% of the prevailing margin. The minimum margin payable on this facility is 1.20% and the highest margin payable is 1.55%. At the year end for both the current and previous year, the facility was undrawn.

75

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

19. Called up share capital (Group and Company)

Allotted, called up and fully paid 2,661,780 ordinary shares of £1 each 532,356 ‘A’ shares of 1p each

2024 £000

2023 £000

2,662 5

2,662 5

2,667

2,667

The holders of ‘A’ shares are entitled to receive dividends exclusively from enfranchisement profits up to £8,000,000 per 4 year profit period with a final 2 year profit period ending 31 March 2024 where the holders can receive up to £4,000,000.

Enfranchisement profits are profits realised on the disposal of property by the Group pursuant to the provisions for residential leasehold enfranchisement under the leasehold reform legislation. The ‘A’ shareholders have no right to receive notice of or to attend and vote at general meetings of the Company in their capacity as holders of ‘A’ shares.

During the year, on 22 August 2023 the Company created a bonus issue of 2,661,780 redeemable ‘B’ shares at par value of £12.52. The bonus issue was created by capitalising part of the Company’s Other reserves. On the same day, the Company redeemed 100% of the ‘B’ shares at par, totalling £33,325,000. On redemption, a share buyback reserve of £33,325,000 was created which is included within Other reserves.

20. Reserves (Group and Company) Merger reserve The consolidated financial statements are prepared under the principles of merger accounting. This reserve is used to record the difference between the costs of the investment in the subsidiary companies and the nominal value of the share capital acquired that arose upon the group reconstruction.

Revaluation reserve This non-distributable reserve is used to record: — Cumulative fair value gains and losses on investment properties.

— Cumulative deferred tax on fair value gains and losses on investment properties.

Other reserves This reserve is used to record cumulative realised profit and losses on property sales including enfranchisement property sales. It is also used to record both capital redemption reserve and share buyback reserve balances. At the year end, the value of the capital redemption reserve aggregated to £33,325,000 (2023: £Nil).

Profit and loss account The Profit and loss account is used to record the cumulative retained profit and losses recognised in the Statement of Comprehensive Income less dividends and items transferred to the above reserves.

The Howard de Walden Estate Annual Report 2024

76

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

21. Notes to the Statement of Cash Flows (Group) (A) Reconciliation of loss to net cash inflow generated from operating activities 2024 £000

2023 £000

(186,390)

(69,568)

Loss on revaluation of investment properties Depreciation of tangible fixed assets (Gain)/loss on disposal of tangible fixed assets Profit on sale of investment properties Difference between pension charge and cash contributions Interest receivable and similar income Interest payable and similar charges Fair value loss/(gain) on derivative financial instruments (Gain)/loss on foreign currency exchange Decrease/(increase) in debtors (Decrease)/increase in creditors Tax on loss

331,780 1,062 (4) (2,604) (278) (2,225) 26,338 14,529 (14,838) 6,963 (1,586) (67,835)

199,516 921 72 (20,236) (538) (531) 24,905 (10,932) 8,833 (1,173) 4,073 (32,707)

Cash generated from operations

104,912

102,635

54,255

110,730

At 31 March 2024 £000

Loss for the year after tax Adjustments to reconcile loss for the year after tax to cash generated from operations:

(B) Cash and cash equivalents Cash and cash equivalents comprise the following: Cash at bank and in hand (C) Analysis of change in net debt At 1 April 2023 £000

Cash flows £000

Other non-cash changes £000

Cash and cash equivalents Cash

110,730

(56,475)

–

54,255

Borrowings Debt due within one year Debt due after one year

(51,758) (647,329)

39,653 (34,985)

(7,894) 22,678

(19,999) (659,636)

(699,087)

4,668

14,784

(679,635)

(588,357)

(51,807)

14,784

(625,380)

Total

77

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

22. Pensions (Group) Defined benefit pension scheme The Group operates a defined benefit scheme in the UK. The major assumptions used by the actuary as at 31 March 2024 are shown on the following pages.

During the year, the Group paid contributions at the rate of 73.2% of pensionable earnings. Next year, the Group will continue to pay contributions at the rate of 73.2% of pensionable earnings with no annual deficit reduction contributions.

Amounts recognised in the Statement of Financial Position 2024 £000

2023 £000

26,802 (26,802)

27,018 (27,018)

–

–

2024 £000

2023 £000

Fair value of scheme assets at start of year Interest income Actuarial losses Contributions by the Group Benefits paid and expenses Adjustment to cumulative surplus not recognised

27,018 1,542 (2,317) 566 (1,016) 1,009

40,277 1,216 (12,437) 1,148 (856) (2,330)

Fair value of scheme assets at end of year

26,802

27,018

Fair value of plan assets Present value of scheme liabilities Defined benefit pension liability Reconciliation of opening and closing balances of the fair value of scheme assets

The actual return on the scheme assets over the year ending 31 March 2024 was £(775,000) (2023: £(11,221,000)).

Reconciliation of opening and closing balances of the present value of the scheme liabilities 2024 £000

2023 £000

Scheme liabilities at start of year Current service cost Interest expense Actuarial gains Benefits paid and expenses

27,018 288 1,279 (767) (1,016)

40,277 610 1,124 (14,137) (856)

Scheme liabilities at end of year

26,802

27,018

The Howard de Walden Estate Annual Report 2024

78

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

22. Pensions (Group) (continued) Total expense recognised in the Statement of Comprehensive Income 2024 £000

2023 £000

288 (263)

610 (92)

25

518

2024 £000

2023 £000

(2,317) (32)

(12,437) 90

799

14,047

(1,550) 1,009

1,700 (2,330)

(541)

(630)

2024 £000

2023 £000

Equity instruments Debt instruments Other Property Cash and cash equivalents

6,499 13,611 2,760 1,456 6,792

7,488 16,557 3,189 1,538 3,571

Total assets

31,118

32,343

Current service cost Net interest income

Total expense recognised in Other comprehensive income

Gains/(losses) arising on: Return on plan assets Effect of experience adjustments Effects of changes in the demographic and financial assumptions underlying the present value of the plan liabilities Adjustment to cumulative surplus not recognised

Assets

None of the fair values of the assets shown above include any of the Group’s own financial instruments or any property occupied by, or other assets used by, the Group.

79

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

22. Pensions (Group) (continued) Key assumptions

2024

2023

Discount rate RPI inflation

4.90% 3.15%

4.80% 3.25%

Salary escalation Deferred pension revaluation — RPI 5%

4.65%

4.75%

3.15%

3.25%

2.95% 5.00%

3.00% 5.00%

25.3 26.7 27.3 28.7 No allowance

25.5 26.9 27.4 28.8 No allowance

Pension increases — Post 1 April 2003 (RPI max 5%) — Pre 1 April 2003 (Fixed 5%) Mortality assumptions Implied life expectancy at age 62 — Male currently aged 62 — Male currently aged 42 — Female currently aged 62 — Female currently aged 42 Commutation

Group Personal Pension Plan The Group makes contributions to a Group Personal Pension Plan. Contributions for the financial year were £923,000 (2023: £775,000).

The Howard de Walden Estate Annual Report 2024

80

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

23. Financial instruments (Group) The carrying value of the Group’s financial assets and liabilities are summarised by category below: 2024 £000

2023 £000

Measured at fair value through profit or loss: — Derivative financial assets

20,363

36,168

Financial Liabilities Measured at fair value through profit or loss: — Derivative financial liabilities

3,379

4,655

(15,805) 1,276

1,792 9,140

(14,529)

10,932

2024 £000

2023 £000

Assets Interest rate swaps Cross currency interest rate swaps

– –

56 11,701

Assets due within one year (note 15)

–

11,757

Liabilities Interest rate swaps (note 16)

–

3

2024 £000

2023 £000

Assets Cross currency interest rate swaps (note 15)

20,363

24,411

Liabilities Interest rate swaps (note 17)

3,379

4,652

Financial Assets

The Group gains and losses in respect of financial instruments are summarised below: Fair value (losses)/gains On derivative financial assets measured at fair value through profit and loss On derivative financial liabilities measured at fair value through profit and loss

24. Derivative financial instruments (Group)

Due within one year:

Due after more than one year:

In assessing fair value, the Directors use their judgement to select suitable valuation techniques and make assumptions which are mainly based on market conditions existing at the year end date. The fair value of interest rate swaps and cross currency interest rate swaps is determined by using an independent pricing service which discounts estimated future cash flows based on the terms and maturity of each contract and uses market interest rates for similar instruments at the measurement date. These values are tested for reasonableness against counter party quotes.

81

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Notes to the Accounts for the year ended 31 March 2024

25. Lease commitments (Group) The Group had annual commitments due under non-cancellable operating leases in respect of investment properties for each of the following periods: Due:

2024 £000

2023 £000

Within one year Between one and five years More than five years

13 50 105

13 50 118

168

181

The Group had future minimum operating lease receivables due under non-cancellable operating leases in respect of investment properties for each of the following periods: Due: Within one year Between one and five years More than five years

2024 £000

2023 £000

126,420 313,072 1,509,885

120,468 291,979 1,442,572

1,949,377

1,855,019

The Group had annual commitments due under non-cancellable operating leases in respect of other assets for each of the following periods: Due:

2024 £000

2023 £000

Within one year Between one and five years

196 92

116 52

288

168

26. Control and related party transactions The principal family trust which controls the Group is the Lord Howard de Walden and Seaford’s Marriage Settlement Children’s Trust (‘the Trust’). The Trust received dividends on ordinary shares of £26,214,000 (2023: £24,965,000) and dividends on ‘A’ shares of £nil (2023: £4,737,000) during the year.

During the year, the Group paid £nil (2023: £165,000) to the Trustees of the Trust, one of whom was a Non-Executive Director, in respect of services. At the year end, £nil (2023: £24,000) was included within trade creditors.

During the year, the Group paid £nil (2023: £100,000) to Elton Estates Company Limited, a company in which the Chairman holds a controlling interest, in respect of services. At the year end, no balances were outstanding (2023: £nil).

During the year, £215,000 (2023: £221,000) was paid by the Group in respect of costs incurred by the Howard de Walden Estates Limited Retirement Benefit Scheme.

The Howard de Walden Estate Annual Report 2024

82

Introduction

Strategic report

Governance

Financial statements

Five year summary

Based on the financial statements for the years ended 31 March

2024 £m

2023 £m

2022 £m

2021 £m

2020 £m

Rental income

152.2

147.8

135.4

131.8

144.4

Revenue profit before tax*

74.6

74.9

64.2

63.6

77.6

Investment properties

4,168.4

4,449.1

4,635.8

4,546.2

4,678.5

Shareholders’ funds

2,806.9

3,071.1

3,191.2

3,276.9

3,382.5

Gearing

21.5%

18.0%

17.9%

19.2%

18.3%

Group Statement of Comprehensive Income

Group Statement of Financial Position

* E xcludes profits and losses from sale of investment properties, one off termination costs in respect of derivative financial instruments and gains or losses on investment properties, derivative financial instruments and foreign exchange.

83

The Howard de Walden Estate Annual Report 2024

Introduction

Strategic report

Governance

Financial statements

Definitions

Annual General Meeting (AGM) Gathering of the Directors and shareholders once a year to discuss the previous year’s activities and accounts.

Investment property A property that is held for the purposes of earning rental income or for capital appreciation or both.

Building Research Establishment Environmental Assessment Method (BREEAM) Science-based suite of validation and certification systems for the sustainable built environment.

Key performance indicators (KPIs) Measures used by the Group to ensure that our business model is effective and our strategic objectives are met.

Conservation area An area of special architectural interest.

Planning permission is required to carry out external alterations to buildings in a conservation area whether or not they are listed.

Considerate Constructors Scheme (CCS) A non-profit-making, independent organisation founded in 1997 by the construction industry to improve its image. Construction sites, companies and suppliers voluntarily register with the Scheme and agree to abide by the Code of Considerate Practice, designed to encourage best practice beyond statutory requirements.

Derivative financial instrument Includes currency and interest rate swaps, used to exchange US dollar debt to sterling.

Estimated rental value (ERV) The open market rent which, on the valuation date, could be expected to be obtained on a new letting or rent review of a property.

Gearing Net debt as a percentage of Shareholders’ funds.

Harley Street Medical Area (HSMA) A concentrated area of medical excellence in Marylebone. Home to hundreds of independent practitioners, small clinics and full scale hospitals, covering an unrivalled array of medical specialties and related professions.

Health and Safety Executive (HSE) The body responsible for the encouragement, regulation and enforcement of workplace health, safety and welfare, and for research into occupational risks in the UK. Institution of Occupational Safety and Health (IOSH) Chartered body for health and safety professionals.

Interest cover Operating profit before capital items divided by net finance costs.

Last year The financial year ended 31 March 2023.

Leasehold Reform Legislation Legislation derived from the Leasehold Reform Act, including subsequent amendments and additions, which allows for the lessee of a residential property to extend the lease or acquire the freehold under certain provisions.

National Australian Built Environment Rating System (NABERS) An assessment method which provides simple, reliable and comparable sustainability measurement across building sectors.

Net debt Total borrowings at forward contracted rates minus cash held.

Net finance costs Interest payable excluding the finance charge relating to pensions, less interest receivable excluding the finance income relating to pensions.

Passing rent The annual rental income receivable as at the year end date. Excludes rental income where a rent free period is in operation.

Private placement Borrowings sourced from financial institutions other than banks, where loan notes are issued to investors.

Redevelopment Substantial works undertaken which fundamentally alter the structure of properties, or parts thereof, to prevent them from becoming obsolete.

Refurbishment Works undertaken to repair and maintain properties, or parts thereof, without significant structural changes, to prevent them from becoming obsolete.

Rent roll The annual contracted rental income at a particular point in time.

Interest rate swap A financial instrument where two parties agree to exchange an interest rate obligation for a pre-determined period of time. These are used to convert floating rate debt to fixed rates.

The Howard de Walden Estate Annual Report 2024

Revenue profit before tax A measure of the recurring profit performance.

Excludes profits and losses from the sales of investment properties, one off termination costs in respect of derivative financial instruments, gains or losses on revaluation of investment properties, gains or losses on derivative financial instruments and gains or losses on foreign exchange.

Scope 1, 2 and 3 emissions Scope 1 refers to direct emissions from sources owned or controlled by the Group.

Scope 2 refers to indirect emissions from purchased electricity. Scope 3 refers to all other indirect, upstream and downstream value chain emission sources not owned or controlled by the Group.

Scope 1 & 2 (location-based) A location-based method reflects the average emissions intensity of grids on which energy consumption occurs, using mostly grid-average emission factor data.

Scope 1 & 2 (market-based) A market-based method reflects emissions from electricity that the Group have purposefully chosen.

Shareholders’ funds The value of shareholders’ investment in the Group.

Shareholder value A measure of the Group’s ability to generate net asset increases for shareholders. It is represented by the increase in shareholders’ funds, plus dividends paid during the year, expressed as a percentage of opening shareholders’ funds.

Sterling Overnight Index Average (SONIA) The average of the interest rates that banks pay to borrow sterling overnight from other financial institutions and other institutional lenders.

This year The financial year ended 31 March 2024.

UK Corporate Governance Code The UK Corporate Governance Code is sponsored by the Financial Reporting Council (FRC). The FRC monitors the implementation of standards and promotes best practice by companies, by issuing guidance, such as the Code. The Code covers such issues as Board composition and effectiveness, the role of Board committees, risk management, remuneration and relations with shareholders.

WELL Building Standard (WELL) A roadmap for creating and certifying spaces that advance human health and well-being.

Yield The anticipated income return from an investment property.

84

Introduction

Strategic report

Governance

Financial statements

This report is printed on Accent Recycled which is made from 100% FSC® certified Recycled fibre which is acid free and carbon balanced at source.

The FSC® label on this report ensures responsible use of the world’s forest resources. Printed sustainably in the UK by Pureprint, a CarbonNeutral® company with FSC® chain of custody who recycle 100% of all dry waste. Pureprint are ISO 14001 certified (environmental management system).

Accent Recycled is offset at source via Carbon Footprint Ltd. They offset through projects in Brazil and India by reducing deforestation and degradation, renewable energy moving energy production from illegal firewood agricultural and industrial residues and also wind and Hydroelectric schemes.

If you have finished with this document and no longer wish to retain it, please pass it on to other interested readers or dispose of it in your recycled waste.

Introduction

Strategic report

Governance

Howard de Walden Estates Holdings Limited The Howard de Walden Estate 23 Queen Anne Street London W1G 9DL Contact us: +44 (0)20 7580 3163 enquiries@hdwe.co.uk hdwe.co.uk Company registered number 06439246

Financial statements