Helical : 2024 Annual Report and Accounts

HELICAL PLC

Annual Report and Accounts 2024

CGI

Strategic Report	122	Directors' Remuneration Report
2	Highlights			142	Report of the Directors
4	Chairman's statement		144	Directors' responsibilities statement
6	Chief Executive's statement		Financial Statements
10	Our market	145	Independent Auditor's Report
14	Our investment case				to the Members of Helical plc
16	Strategy		149	Consolidated Income Statement
20	Working in partnership		150	Consolidated Balance Sheet
22	Business model		151	Company Balance Sheet
24	Key performance indicators		152	Consolidated and Company Cash Flow Statement
28	Our portfolio	153	Consolidated and Company Statements
39	The property portfolio in numbers				of Changes in Equity
			154	Notes to the Financial Statements
42	Financial review
48	Risk management	Additional information
60	Sustainability at Helical	184	Appendix 1 - See-through analysis
88	Our stakeholders - Section 172(1) Statement		187	Appendix 2 - Total Accounting Return
Governance				and Total Property Return
188	Appendix 3 - Five year review
100	Chairman's governance review
189	Appendix 4 - Property portfolio
102	Board of Directors
190	Appendix 5 - EPRA performance measures
106	Corporate Governance Report
192	Glossary
112	Nominations Committee Report
194	Shareholder information
118	Audit and Risk Committee Report
195	Financial calendar and advisors	helical.co.uk

We create sustainable and inspiring workplaces which are technologically smart, rich in amenities and promote employee wellbeing.

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

Highlights

Highlights 2024

Financial highlights

Strategic Report

Operational highlights

3.5p	£189.8m	IFRS loss of £189.8m
(2023: £64.5m).
EPRA earnings per share¹	331p	EPRA net tangible asset value
2023: 9.4p
		per share1 down 32.9% to
		331p (31 March 2023: 493p).
39.5%	4.83p	Total dividend for the year
(2023: 11.75p).
See-through loan to value1 increased	2.9%	See-through average cost of
to 39.5% (31 March 2023: 27.5%) with
a pro-forma LTV2, post year-end sales,	secured facilities1 reduced to
of 28.7%.			2.9% (31 March 2023: 3.4%).

Good letting momentum with progress at our "best-in-class" assets

• During the year we completed 13 new lettings, comprising 136,660 sq ft (our share: 86,237 sq ft), delivering contracted rent of £11.7m per annum (our share: £7.1m), 1.1% above 31 March 2023 ERVs.
• • At The JJ Mack Building, EC1, we let 100,847 sq ft at a 1.8% premium to 31 March 2023 ERVs. Post year end, we let the ground floor office space to J Sainsbury and have placed the fourth floor, 10th floor and remaining ground floor retail unit under offer. On completion of these lettings 90% of the building will be let at an average office rent of £95, with just one floor remaining.
  • At The Bower, EC1, we forfeited the leases for six floors let to WeWork at The Tower, taking back control of the space. Since then we have re-let one floor back to them until June 2024 and have entered into a management agreement for infinitSpace to provide serviced offices on two floors. The remaining vacant fourth, fifth and sixth floors are being refurbished to be let on a Cat A+ basis.

Sales

• Shortly before the year end, we exchanged on the £43.5m sale of
  25 Charterhouse Square, EC1, with completion of the sale in April 2024.
• As announced a few days ago, we entered into a joint venture arrangement for the redevelopment of 100 New Bridge Street, EC4, selling a 50% interest in the site for £55m structured on a preferred equity basis to a vehicle led by Orion Capital Managers. Simultaneous to the joint venture being signed, the parties entered into a development financing arrangement with NatWest and an institutional lender, and a building contract with Mace to deliver the scheme.

Portfolio valuation

Development pipeline

• With a joint venture partner secured, development finance in place

and a construction contract signed, the 194,000 sq ft redevelopment

of 100 New Bridge Street, EC4, our latest "best-in-class" scheme,

has commenced and is expected to be completed by March 2026.

• Contracts were signed in July 2023, confirming Helical as Places

for London's commercial office joint venture partner. The long-term

partnership will see the delivery of new high quality and sustainable

space predominantly above or adjacent to key transport hubs.

-10 King William Street, EC4 (formerly Bank OSD) - An eight-

storey office development on an island site, located above the

recently opened Bank station entrance on Cannon Street, delivering

140,000 sq ft of office and retail space. This development is due to

commence in Q4 2024 with completion due by December 2026.

-Southwark Over Station Development, SE1 - Located over

Southwark tube station, the site benefits from planning for a

222,000 sq ft NIA office scheme. We are now having detailed pre-

application discussions with Southwark Borough Council regarding

an alternative purpose-built student accommodation scheme.

We aim to submit a planning application during summer 2024,

commence on site in July 2025 and complete in summer 2027.

-Paddington Over Station Development, W2 - Situated close to

the Elizabeth Line station at Paddington, this 19-storey building will

provide 235,000 sq ft of office space. The site will be acquired by

the joint venture in January 2026 and the intention is to deliver the

scheme in 2029.

• Terms have been agreed, and contracts will shortly be signed, with the

Earnings and dividends

• IFRS loss of £189.8m (2023:

£64.5m).

• See-through Total Property

Return1 of -£162.7m (2023:

-£51.4m):

• Total Property Return, as

measured by MSCI, of -20.3%,

compared to the MSCI Central

London Offices Total Return

Index of -5.7%.

• IFRS basic loss per share

Balance Sheet

• Net asset value down 34.1%

to £401.1m (31 March 2023:

£608.7m).

• Total Accounting Return1 on

IFRS net assets of -31.7%

(2023: -9.4%).

• EPRA net tangible asset value

per share1 down 32.9% to 331p

(31 March 2023: 493p).

• EPRA net disposal value per

share1 down 33.3% to 327p

(31 March 2023: 490p).

• Primarily driven by the impact of the higher interest rate environment on market sentiment, there was an outward yield adjustment of 95bps in the year to 31 March 2024, increasing the true equivalent yield for the portfolio to 6.34% (31 March 2023: 5.39%) and reducing the investment portfolio valuation to £660.6m (31 March 2023: £839.5m).

long leasehold owner of the existing building at Brettenham House, WC2

for the wholesale refurbishment of the 120,000 sq ft office building with

Helical acting as development manager and contributing towards

construction costs. This transaction is an example of the "equity-light"

model that we seek to pursue in the future, with ownership remaining with

the long leaseholder and our equity contribution limited. Work has already

commenced and we expect to deliver the completed scheme in Q1 2026.

-Group's share1 of net rental

income decreased 23.8%

to £25.5m (2023: £33.5m).

-Net loss on sale and

of 154.6p (2023: 52.6p).

• EPRA earnings per share1

of 3.5p (2023: 9.4p).

• Total Accounting Return1 on

EPRA net tangible assets of

-31.4% (2023: -12.1%).

Portfolio update

Sustainability highlights

revaluation of investment

• Final dividend proposed of

• IFRS investment property

• Contracted rents of £33.0m

• The JJ Mack Building, EC1

• Photovoltaic panels installed at

properties of -£188.6m (2023:

-£88.1m).

-Development profits of £0.4m

(2023: £3.2m).

1.78p per share (2023: 8.70p).

• Total dividend for the year

of 4.83p (2023: 11.75p).

Financing

• See-through loan to value1

increased to 39.5% (31 March

2023: 27.5%) with a pro-forma

LTV2, post year-end sales,

of 28.7%.

• Change in fair value of

derivative financial instruments

charge of £5.6m (2023: credit

of £12.8m).

portfolio value of £472.5m

(31 March 2023: £681.7m).

• 22.4% valuation decrease,

on a like-for-like basis1 (22.6%

including sales and purchases),

of our see-through investment

(31 March 2023: £39.0m),

compared to an ERV1 of

£60.8m (31 March 2023:

£60.4m). Following the sale of

25 Charterhouse Street, EC1,

and 50% of 100 New Bridge

received its final BREEAM

certificate, achieving an

Outstanding with a score of

96.4%, making it the highest

rated commercial building in

the UK.

The Bower, EC1 generating over

37,000 kWhs of energy once

fully commissioned, for the

exclusive use of our building.

• Retention of EPRA

Sustainability BPR Gold rating

1. See Glossary for definition of terms. The "see-through" performance measures are designed to give additional information about the Group's share of assets and liabilities, income and expenses in subsidiaries and joint ventures. The financial statements have been prepared in accordance with International Accounting Standards ("IAS") in conformity with the Companies Act 2006. In common with usual practice in our sector, alternative performance measures have also been provided to supplement IFRS, including measures which are based on the recommendations of the European Public Real Estate Association ("EPRA").
2. See Note 34.

• See-through net borrowings1

of £261.6m (31 March 2023:

£231.4m), pro-forma £163.8m.

• Average maturity of the Group's

share1 of secured debt of 2.1 years

(31 March 2023: 2.9 years).

• See-through average cost of

secured facilities1 reduced to

2.9% (31 March 2023: 3.4%).

• Group's share1 of cash and

undrawn bank facilities of

£115.5m (31 March 2023:

£244.2m).

portfolio, valued at £660.6m

(31 March 2023: £839.5m).

• See-through portfolio WAULT1

of 6.6 years (31 March 2023:

5.0 years).

Street, EC4 post year end, the

ERV falls to £48.1m.

• Vacancy rate on completed

assets decreased to 17.6% at

31 March 2024 (2023: 19.8%),

primarily due to the lettings at

The JJ Mack Building, EC1.

and CDP B rating with a

GRESB 4 Green Star status.

2	Helical plc - Annual Report and Accounts 2024

Helical plc - Annual Report and Accounts 2024

3

Chairman's statement

Richard Cotton

Chairman

A clear pathway to future growth

CGI

We have reached several important conclusions:

• We have an exciting pipeline of committed developments, which,

due to the quality and location of the schemes, are well placed to

attract premium rents and should achieve strong returns;

• Helical has a proven track record in delivering very high quality

schemes, across a variety of asset classes, often in partnership.

Going forwards, the intention is to increasingly adopt an "equity-

light" model to take advantage of market opportunities with a

disciplined approach to capital deployment;

• To optimise the value of our investment properties we need to

complete our asset management plans, principally through leasing

up vacancy, and be ready to realise value as and when liquidity

returns to the investment market;

• We need to adjust our dividend payout given recurring earnings are

insufficient to cover the historic level of dividend and development

profits are inherently lumpy;

• We plan to make a significant reduction in our fixed overheads,

and we have started to implement changes to reduce our running

overheads by 25% by the end of March 2025;

• The Board has signed off on a detailed three-year plan and is very

clear that, given current markets, the potential returns on a three-

year view far exceed the potential returns from an alternative

strategy to return capital to Shareholders in the short term; and

• The Board recognises the talent and potential in the wider Helical

team and, to this end, we are consulting on the introduction of a

new three-year management incentive plan that is designed to

strengthen the alignment of the executive and senior management

Leadership

Gerald Kaye has informed the Board that he will be handing over his executive duties and stepping down from the Board at the AGM in July. We are delighted that he has agreed to stay on in a consultancy role with specific responsibility for our joint ventures at 100 New Bridge Street, EC4 and our new West End scheme at Brettenham House, WC2. I am very pleased to announce that Gerald will be succeeded by Matthew Bonning-Snook as Chief Executive.

On behalf of the Board I would like to pay tribute to Gerald's outstanding contribution to Helical during his long tenure as, first, Development Director and, most recently, as Chief Executive. Since he succeeded Mike Slade in 2016 he has re-focused the business as a "best-in-class" developer in central London. Over this period he has had to contend with strong headwinds, from Brexit, Covid and latterly the sharp upward adjustment in interest rates. Throughout he has remained calm and focused, demonstrating

a totally committed work ethic.

I am delighted that he has agreed to continue in an external consultancy role, maintaining the strong relationships with some of our key joint venture partners.

With Matthew having secured the joint venture with TfL, the cornerstone of our exciting development pipeline, and with an extensive track record of delivering profitable schemes over nearly three decades at Helical, he is the right choice to maximise the opportunities at Helical. We are clear about the challenges in front of us and I look forward to working closely with Matthew and the wider Helical team to implement our strategy.

On behalf of the Board I would like to pay tribute to Gerald's outstanding contribution to Helical during his long tenure."

Non-Executive Directors

On behalf of my fellow Helical Directors, I want to thank Joe Lister who, after serving for almost six years on the Board, is stepping down at the 2024 Annual General Meeting ("AGM"), following his appointment as Chief Executive at FTSE 100 company, The Unite Group plc. Joe has made a significant contribution to our Board

Strategic Report

The results are reflective of the cyclical and structural headwinds affecting the real estate sector and, more particularly, London offices and which have adversely impacted our financial and share performance. Our portfolio of investment properties and development sites has been disproportionately impacted by the significant outward yield movement over the past 12 months, with vacancy negatively impacting valuations.

On a more positive note, I am, however, pleased to report that our strategy of focusing on "best-in-class" buildings is bearing fruit, as evidenced by the encouraging letting progress and record rents achieved at our latest and most sustainable property, The JJ Mack Building, EC1. This underpins our confidence in the prospects for our significant development pipeline and our future profitability.

Over recent months I have led a detailed and rigorous business review, where we have examined all of the potential strategies to generate Shareholder value. We have concluded that the nature of our business does not lend itself to the strategy currently being adopted by some of our peers, namely the return of capital to Shareholders funded through asset disposals. There are some important factors underlying this conclusion, particularly the complexities of our financing and capital commitments given the scale of our central London pipeline assets, compounded by the current market illiquidity for properties of over £100m, which is even more pronounced for London offices.

team with Shareholder returns.

The trajectory of investment yields is outside our control, but absent significant further outward movement, we are confident that through the implementation of the above strategy we can demonstrate value accretion. In due course, the investment market should return to more normal conditions. In the meantime, we have lots to be getting on with; letting vacancy in our existing portfolio and maximising the potential in our development pipeline, whilst maintaining a robust financial position, all at a lower operational cost, are the team's main priorities.

The Board is not complacent about the scale of the challenge facing us and other small listed property businesses, but we are very clear about the opportunity for Helical in a dislocated market. We are proud to work with a number of high quality partners, which is a strong endorsement of the Helical brand,and we will continue to nurture these relationships.

deliberations and we shall miss his wise counsel.

I would also like to welcome our two new Non-Executive Directors, Amanda Aldridge and Robert Fowlds. Amanda has strong credentials in financial reporting and will succeed Joe as Chair

of the Audit and Risk Committee following the 2024 AGM. Robert strengthens the overall expertise of the Board with his extensive financial knowledge and background in real estate.

Richard Cotton

Chairman

22 May 2024

4

Helical plc - Annual Report and Accounts 2024

Helical plc - Annual Report and Accounts 2024

5

Chief Executive's statement

Gerald Kaye

Chief Executive

Creating "best-in-class" buildings at the forefront of sustainability

Overview

During the year to 31 March 2024, we have seen a significant readjustment in the investment market as valuation yields have increased to reflect movements in 10-year gilts and five-year swap rates, the pricing on which real estate property yields are correlated.

At Helical, the portfolio has seen an outward yield adjustment of 95bps since 31 March 2023, offset by 1.1% ERV growth, with both valuations and earnings impacted by increased vacancy in the portfolio, particularly as the result of our forfeiture of the leases to WeWork at The Bower, EC1. This proactive step allowed us to regain control of the space, shortly before the tenant went into Chapter 11 in the US, and refurbishment work is well under way as we seek to re-let this high quality space.

At the same time, we continue to let space at our most recently completed new development, The JJ Mack Building, EC1. Despite an increase in the time taken to negotiate commercial terms and complete the legal processes, we have made good progress in the year in letting the space and at record rents for the Farringdon area, significantly in excess of the initial appraisal rental levels and above March 2023 ERVs. Today this "best-in-class" building is 71% let, increasing to 90% on completing the letting of the space currently under offer.

Tenant demand for the best newly developed or refurbished buildings, at the forefront of sustainability and with top quality amenities, continues to be strong, with rising rental values evidenced by our own experience and that of our peer group.

CGI

Being selected by TfL as their joint venture partner for the Platinum Portfolio was a significant milestone, providing three schemes to our pipeline..."

Against this backdrop, and since the year end, Helical has recycled capital from its portfolio, reduced year end leverage and cut its ongoing core administrative costs, targeting a 25% reduction by the end of this financial year. As a result, it is well placed to capitalise on any ongoing market dislocation and the structural trends impacting the office sector.

Our pipeline

The Group seeks to grow the business by realising surpluses from its recently developed investment assets, and reinvesting that recycled equity into new opportunities.

In the year to 31 March 2024, no new development schemes were started with the last completed scheme being The JJ Mack Building, EC1, which achieved practical completion in September 2022. Instead, Helical's focus has been on increasing its development pipeline of future schemes.

Being selected by TfL as their joint venture partner for the Platinum Portfolio was a significant milestone, providing three schemes to our pipeline with the potential for additional opportunities to be added to the joint venture in the future. This collaboration with TfL, rebranded as Places for London, is an endorsement of the Helical brand and recognises our track record of producing "best-in-class" developments across central London over many years. Since contracts were signed with Places for London, in July 2023, we have been working to maximise the opportunities at each of the three initial sites at 10 King William Street, EC4, previously referred to as the Bank Over Station Development ("OSD"), Southwark OSD, SE1 and Paddington OSD, W2. We are excited at the prospect of starting the first of these developments at 10 King William Street, EC4 later this year, with the subsequent schemes due to start in 2025 and 2026, with delivery in 2026, 2027 and 2029 respectively.

In addition, with a joint venture partner secured, development bank finance arranged and a main contractor signed, we are also excited to progress the redevelopment of 100 New Bridge Street, EC4, our 194,000 sq ft office and retail scheme.

Finally, as referred to in November, when we reported on our Half Year results, we have also secured a new "equity-light" scheme at Brettenham House, WC2. This scheme, a comprehensive refurbishment of a 120,000 sq ft office building adjacent to Waterloo Bridge, is an example of Helical providing its development expertise to a property owner looking to retain its investment but create, in joint venture where we contribute towards construction costs, a "best-in-class" investment asset. In return for our participation, Helical will receive development management fees plus a "waterfall" promote based on the outcome once let. Our business model envisages additional "equity-light" schemes being added to the development pipeline in the future.

Results for the year

The loss for the year to 31 March 2024 was £189.8m (2023: £64.5m) with a see-through Total Property Return of -£162.7m (2023: -£51.4m).See-through net rental income reduced by 23.8% to £25.5m (2023: £33.5m) while developments generated see-through profits of £0.4m (2023: £3.2m). The see-through net loss on sale and revaluation of the investment portfolio was £188.6m (2023: £88.1m).

Total see-through net finance costs reduced to £11.1m (2023: £12.0m), reflecting a lower level of debt offset by a full year of expensed interest on the debt in our joint ventures since practical completion of The JJ Mack Building, EC1 in September 2022. A fall in expected future interest rates led to a £5.6m charge (2023: credit of £12.8m) from the valuation of the Group's derivative financial instruments. Recurring see-through administrative costs were 8.7% lower at £9.4m (2023: £10.3m) before an accelerated depreciation charge

of £0.7m (2023: £nil), with performance related awards, reflecting

1. purely notional charge for share awards, reduced to £1.2m (2023: £2.7m). National Insurance on these awards was £0.1m (2023: £0.3m).

Strategic Report

6

Helical plc - Annual Report and Accounts 2024

Helical plc - Annual Report and Accounts 2024

7

Chief Executive's statement

continued

Since 1 April 2022, Helical has been a REIT and the receipt of income which fell outside this regime in the prior year has resulted in a small tax charge of £0.2m (2023: £nil) for the year.

The IFRS basic loss per share was 154.6p (2023: 52.6p) and EPRA

earnings per share were 3.5p (2023: 9.4p).

On a like-for-like basis, the investment portfolio fell in value by 22.4% (22.6% including purchases and gains on sales). The see-through total investment portfolio value reduced to £660.6m (31 March 2023: £839.5m), reflecting the revaluation loss for the year.

The total return of our property portfolio, as measured by MSCI, was -20.3% (2023: -5.6%), which underperformed the Central London Offices Total Return Index of -5.7%.

The completed investment portfolio was 82.4% let at 31 March 2024 and generated contracted rents of £33.0m, equating to an average of £65.70 psf. This increases to an ERV of £42.9m on the letting of the currently vacant space and capturing the reversion of the portfolio. The Group's contracted rent has a Weighted Average Unexpired Lease Term ("WAULT") of 6.6 years.

The Total Accounting Return ("TAR"), being the growth in the IFRS net asset value of the Group, plus dividends paid in the year, was -31.7% (2023: -9.4%). Based on EPRA net tangible assets, the TAR was -31.4% (2023: -12.1%). EPRA net tangible assets per share fell by 32.9% to 331p (31 March 2023: 493p), with EPRA net disposal value per share falling by 33.3% to 327p (31 March 2023: 490p).

Balance Sheet strength and liquidity

The Group has a significant level of liquidity with see-through cash and unutilised bank facilities of £115.5m (31 March 2023: £244.2m) to fund capital works on its portfolio and future acquisitions.

At 31 March 2024, the Group had £12.0m of cash deposits available

Pipeline projects

2024

2025

2026

2027

2028

2029

The JJ Mack

Let remaining

Building

space

21,734 sq ft

Remaining*

100 New Bridge

Complete

Street

March 2026

191,000 sq ft

offices

10 King William

Site Drawdown

Complete

Street

October 2024

Dec 2026

140,000 sq ft

offices

Southwark

Site Drawdown

Complete

430 studio units -

July 2025

August 2027

PBSA

Paddington

Site Drawdown

Complete

235,000 sq ft

January 2026

May 2029

offices

Brettenham

Main works

Complete

House

commence

Q1 2026

120,000 sq ft

Summer 2024

offices

Portfolio

Lettings, rental growth and

capital recycling ongoing

* Excluding under offers

If this proves to be correct, and having taken the pain of reductions in value, Helical is well positioned to drive growth through the letting of the vacant space in its investment portfolio and the generation of substantial profits from its development pipeline. However, such optimism can be derailed by future geopolitical and domestic events outside of our control and Helical will seek to manage its Balance Sheet to ensure it has protection against the impact of these potential events.

Occupational demands continue to evolve in the office sector, with tenants using their premises to optimise the work experience for their employees. Amenity, connectivity, service and sustainability are encouraging businesses towards new buildings. At the same time, buildings that provide a poorer working environment are driving occupiers away. This bifurcation of the market is accelerating with rental growth continuing for the "best-in-class" and values falling for the rest. This will provide opportunities to acquire potential developments and major refurbishments at levels that allow for strong capital returns.

Our development pipeline is expected to provide surpluses for the foreseeable future. Scheduled to start in 2024 and be delivered from early 2026 onwards, this pipeline will be supplemented with additional "equity-light" opportunities as building owners seek specialists in development and refurbishment to partner with them to maximise the value of their assets. In addition, banks and other financial institutions with non-performing assets should provide additional opportunities for Helical to create value.

Our Balance Sheet is in good shape and maintaining financial discipline remains at the forefront of Helical's approach. Recycling equity and seeking third party financing to fund the pipeline of opportunities, as recently seen with 100 New Bridge Street, EC4, will allow the Company to grow the business while containing gearing to appropriate levels.

Strategic Report

to deploy without restrictions and a further £11.9m of rent in bank accounts available to service payments under loan agreements, cash held at managing agents and cash held in joint ventures. In addition, the Group held rental deposits from tenants of £7.8m. Furthermore, the Group had £83.8m of loan facilities available to draw on.

These year end balances have been supplemented by cash receipts of £97.8m, from the sale of 25 Charterhouse Square, EC1 and the sale of 50% of the site at 100 New Bridge Street, EC4, both completed since the year end.

The see-through loan to value ratio ("LTV") increased to 39.5% at the Balance Sheet date (31 March 2023: 27.5%) and our see-through net gearing, the ratio of net borrowings to the net asset value of the Group, increased to 65.2% (31 March 2023: 38.0%) over the same period. However, post year end sales have reduced the pro-formasee-through LTV to 28.7% and the pro-formasee-through net gearing to 40.3%.

At the year end, the average debt maturity on secured loans, on a see-through basis, was 2.1 years (31 March 2023: 2.9 years). The average cost of debt, on a see-through basis, was 2.9% (31 March 2023: 3.4%).

Dividends

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

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

In the year to 31 March 2024, EPRA earnings per share fell by 63% from 9.4p last year to 3.5p this year. As there were no sales of assets during the year, no capital profits were realised.

Moving forward, and in line with our new strategy, we are adjusting our dividend policy to suit our expected trajectory. We will align our dividends to our EPRA earnings per share, rebasing to a lower level while we wait for our development pipeline to produce profits.

In light of the results for the year and the fall in EPRA earnings,

the Board will be recommending to Shareholders a commensurate reduction in the final dividend to 1.78p (2023: 8.70p) per share, representing the minimum PID payment required under the REIT regime. This represents, if approved by Shareholders at the 2024 AGM, a total dividend for the year of 4.83p, down 59% on 2023.

This final dividend, if approved, will be paid out of distributable reserves generated from the Group's activities. Following its conversion to a UK REIT, dividends payable by Helical will comprise

1. Property Income Distribution ("PID") from the operations that fall under the REIT regime, and a dividend from those operations that fall outside the REIT regime. The PID, for the year to 31 March 2024, including the amount paid at the half year of 0.50p, will be 2.28p, with the balance of the total dividend, amounting to 2.55p, representing an ordinary dividend paid at the half year.

Sustainability

Sustainability remains at the heart of our business, both at a corporate and asset level.

We have made good progress in the year and continue to perform strongly against the targets we have set. In our managed portfolio, energy intensity across our like-for-like assets fell by 8% during the year to an average of 119 kWh/m2 (2023: 129 kWh/m2), keeping us on track for our 2030 net zero carbon target of 90 kWh/m2.

For our development pipeline, we will be targeting an upfront embodied carbon of less than 600 kgCO2e/m2, focusing on efficient design, low carbon and recycled materials to meet this target.

We continue to perform well across the industry benchmarks in which we participate. For our sustainability reporting, we again received a Gold Award, for our reporting in accordance with EPRA's European Sustainability Best Practice Recommendations (sBPR). We were also pleased to maintain our CDP score of B, further demonstrating our commitment to best practice disclosure and enhanced climate change risk assessment. While we retained our Green Star status under the GRESB rating, the tougher criteria saw the overall rating fall from 5* to 4* despite our receiving the highest rating of our peer group for our standing investments of 87% (2023: 88%), with our developments delivering 92% (2023: 94%).

Looking forward, we have a substantial development pipeline, with our Places for London joint venture due to deliver three "best-in-class" schemes and our redevelopment of 100 New Bridge Street, EC4 delivering a further 191,000 sq ft of high quality, redeveloped office space and 3,500 sq ft of retail space. All these buildings will be targeting a minimum of BREEAM Outstanding, NABERS 5* and WELL Enabled Platinum, the recognisable hallmarks of "best-in-class" office buildings.

The opportunity

During the year, we have experienced the loss of rental income through tenant failure and further significant outward yield movement reducing the value of our investment portfolio by 22.4%. Market commentary suggests that this outward yield movement may be coming to an end with growing expectations of the first cut in the Bank of England's base rate coming this summer and five-year swaps and 10-year gilts rates, both currently c.4%, forecast to decline.

There remains a shortage of "best-in-class" newly refurbished or redeveloped office space in central London. With an experienced management team, a substantial development pipeline with optionality over timing and funding, and no legacy assets requiring investment to meet minimum sustainability standards, Helical is well positioned to capitalise on current cyclical opportunities.

Finally

I have been the Chief Executive of Helical since 2016 and a main Board Director since 1994, the year I joined the Company, delivering over 30 years of service to Helical, its employees and its Shareholders. It is time to "draw stumps" on my executive role having delivered over 60 projects of mainly offices but also retail, residential, logistics and student accommodation in that time. This includes over five million sq ft of offices, the vast majority of which are in London.

1. remain proud of each asset as I regularly pass them on my journeys through this great city of ours and for that reason I am pleased to be able to continue to work on landmark buildings in my new role on 100 New Bridge Street, EC4 and Brettenham House, WC2.

I have worked alongside Matthew for almost 30 years and believe he is the right person to succeed me as Chief Executive of Helical.

1. know that he is fully focused on realising profits from the Company's exceptional development pipeline and I look forward to continuing to make my contribution to the ongoing success of Helical.

Gerald Kaye

Chief Executive

22 May 2024

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Helical plc - Annual Report and Accounts 2024

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Our market

Matthew Bonning-Snook

Chief Executive Officer

Designate

Rental growth for "best-in-class"

Our market

The year has been defined by a dislocation between the occupational and investment markets, with the letting market for the new, best quality space proving resilient as we continue to see high levels of active requirements, leasing momentum and strong rental growth in the core sub-markets. In contrast, the investment market remains muted, with activity far below the long-term average.

Over the last year, there has been a material reduction in the annual rate of CPI inflation which fell to 2.3% in the later half of May 2024, compared to 10.1% in March 2023. This offers some relief and a sense of optimism that interest rates have peaked and will begin to fall in the coming year. The Bank of England policy rate has been flat at 5.25% since August 2023, however the effects of a higher interest rate environment, combined with the residual effects of elevated inflation levels, are still present and continue to weigh on sentiment in the investment market.

London still remains the			Strategic
preferred destination for			Report
overseas capital and we do
expect to see a pickup in
investment activity towards
the second half of 2024."

Investment market

Investment volumes remain subdued in the central London office market due to the challenging macroeconomic environment, geopolitical tensions and high borrowing costs, which remain elevated due to persistent core inflation. With a lack of quality assets being marketed, many investors are adopting a "wait and see" approach with regard to any near-term changes to the Bank's base rate.

Transaction activity reached just £7.1bn in 2023, down 57% on the long-term10-year average, with sub £50m lot sizes accounting for 77% of this figure and just 17 transactions occurring in excess of £100m, compared to the five-year average of 35. This subdued activity continues to cause increased uncertainty over appropriate asset valuations as comparable evidence remains scarce. Whilst the smaller lot size purchases have been dominated by high net worth family offices, there are an increasing number of private equity and Asia-Pacific buyers returning to the market, focusing on core assets where pricing is now felt to be attractive.

London still remains the preferred destination for overseas capital and we do expect to see a pickup in investment activity towards the second half of 2024, particularly if we continue to see higher office occupancy and businesses placing increasing importance on their office as a tool to attract talent. However, the key trigger and largest shift in sentiment will most likely occur when there is clearer guidance regarding the direction of interest rates.

2.3% £7.1bn

Material reduction in annual	Transaction activity
CPI inflation	in 2023

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Helical plc - Annual Report and Accounts 2024

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Our market

continued

Occupational market

There is both strong demand and activity in the occupational market and JLL reported take-up for central London at 9.7m sq ft in 2023, with Q4 figures representing the highest levels since 2010. The City sub-market demonstrated the greatest level of resilience, achieving volumes 7% higher than the 10-year average. Whilst Q1 2024 take-up volumes were subdued, we continue to see strength of demand in the market as under offer numbers have continued to rise, to 18% above the long-term average. There is also significant breadth of occupier demand as business services continue to transact, while creative industries have come back to the market, accounting for 20% of Q1 take-up numbers.

Looking forward, Knight Frank reports active requirements at the end of Q1 2024 at 12.6m sq ft, up 50% compared to March 2023. These requirements are primarily focused on scarce new space where vacancy rates remain significantly below the overall vacancy figure, at 2% compared to 9.9% overall. For refurbishments, the vacancy rate sits around 4%; this comes as two thirds of leasing transactions are for new and refurbished space.

The high level of active requirements, combined with low vacancy rates for new space, continues to generate competition which is driving rents upwards. Knight Frank has reset its approach to prime rents to reflect this trend, with City Core, Midtown and Farringdon prime rents all increasing by £10 psf, taking them to £87.50, £80.00 and £90.00 psf respectively. This revision to prime rents represents

1. fundamental reset, offering a new "best-in-class" subset of prime, as a result of an improved outlook for occupier demand and a development pipeline that remains below average levels for new and refurbished buildings.

At our joint venture development, The JJ Mack Building, EC1, located in Farringdon, we have secured rents significantly above £100 psf, highlighting the strength of demand and a willingness to pay higher rents to secure the best space as employers are increasingly looking to incentivise their employees to adopt more office-based approaches to working.

Our tenant make-up

Software and Computer Services	17%
Financial Products	16%
Online retailing - Fashion	15%
Consumer goods	10%
Advertising/Marketing	9%
IT Consultancy	9%
Media	9%
Flexible offices	3%
Food & Beverage	3%
Human Resources	3%
Law	3%
Business Consultancy	1%
Consumer services	1%
Other	1%

Strategic Report

CGI

12.6m

sq ft

Active requirements at end of Q1 2024, up 50%

28m

sq ft

Lease expiries before end of 2026

Development pipeline

Sustained construction cost inflation driven by supply chain disruption, tight labour markets and volatile energy costs has moderated recently and Arcadis published its "London Building Construction TPI" forecast, with the central case showing low inflation ranging from 1% to 2% over the course of 2024.

In 2023, development completions across central London reached 5m sq ft; up 5% on the long-term average. Completions were still below Savills' initial forecast of 7.5m sq ft at the beginning of the year, evidencing that delays have caused schemes to be pushed back. Looking ahead, the levels of planned supply are unlikely to be sufficient to meet the high levels of demand, with Knight Frank reporting 28m sq ft of lease expiries occurring before the end of 2026.

The development pipeline continues to be impacted by delivery barriers including elevated associated costs of development and planning timelines, causing investors to recalibrate appraisals. As a result, investors are increasingly considering alternative land uses to maximise site value, which is further suppressing the near-term supply of office schemes. A current example of this is our Southwark OSD, SE1 scheme where we are in the process of seeking planning consent to develop student accommodation, rather than the previously consented office scheme, as we believe this will generate the best value for our site. A demand-supply imbalance is likely to occur over the medium to longer term, with 2027 to 2030 likely to see the most dramatic levels of undersupply as planned completions remain low.

Constrained market supply and a high level of occupier demand will lead to increased competition, presenting an opportunity for developers and investors who are willing and able to deliver new, "best-in-class" schemes. However, to deliver sustainable returns, they will require higher economic rents to offset the increased associated costs of development and as a result, pre-letting activity might slow as investors hold out for rental growth tomorrow rather than security at day one. This is evidenced by Savills reporting a recent reduction in the overall quantity of the pipeline that is let prior to completion.

Conclusion

Our existing portfolio continues to attract new occupiers due to its "best-in-class" credentials, excellent tenant amenities and active asset management. Helical's proven track record, expertise and our recently signed joint venture with Places for London and "best-in-class" scheme at 100 New Bridge Street, EC4 will ensure we are well positioned to meet occupier demands through our extensive development pipeline across five schemes. Our planned schemes are located in exciting and vibrant sub-markets that look set to experience both a shortfall in supply and elevated tenant demand, resulting in strong rental growth prospects that look set to deliver us an attractive return profile.

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Helical plc - Annual Report and Accounts 2024

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Our investment case

We create sustainable and inspiring workplaces which are technologically smart, rich in amenities and promote employee wellbeing.

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

The Helical difference

Strategic Report

01 02

03

04 05

06

Sustainable business model Sustainability is at the core of all activities at Helical. We recognise the impact the buildings we develop have on the environment and are focused on reducing our carbon footprint throughout a property's lifecycle, achieving Net Zero by 2030.

• See page 60

Best-in-class portfolio Helical holds a portfolio of newly developed or recently refurbished high quality office assets with attractive amenities and excellent sustainability credentials. They are located in culturally rich sub-marketswhich benefit from excellent transport links, attracting a diverse range of clients.

• See page 28

A customer focused approach Helical creates buildings which appeal to occupiers looking for design led, sustainable and amenity rich workplaces, and that support talent attraction and retention. Whether the properties are built from the ground up, or are re-imaginedexisting assets, they aim to be best-in-class,respecting the history and culture

of the area. Once complete and let, Helical applies the same philosophy of excellence to its ongoing asset management, ensuring the occupiers receive the very best service.

• See page 16

Market knowledge and relationships

With over 35 years' experience as a property company, through multiple property cycles, Helical has developed a comprehensive knowledge of the market and built an extensive network from which it can source new development opportunities and access capital.

• See page 10

Robust financial position

The Group uses gearing on a tactical basis, increasing it to accentuate returns in a rising market, or reducing debt to prepare for more challenging times whilst retaining firepower to take advantage of opportunities that arise.

• See page 42

Strong track record

Each of the Executive Directors has over 29 years of experience at Helical. Acting with integrity and supported by a dynamic and collaborative team, they have developed award-winning buildings that appeal to the most demanding of occupiers.

• See page 102

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Helical plc - Annual Report and Accounts 2024

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Strategy

We have five pillars which support our strategy:

Our strategy

To create value for Shareholders and society in a sustainable way, delivering market leading returns by developing customer focused and design led properties, letting them to a diverse tenant base, and applying a proactive approach to asset management.

Why Helical?

We are a property development and investment business with

a sustainability-led and stakeholder- focused value proposition.

Our Vision

To develop the most sustainable, technologically advanced, wellness promoting and amenity rich buildings.

Our Purpose

"We create sustainable and inspiring workplaces which are technologically smart, rich in amenities and promote employee wellbeing.

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

Our Purpose forms the foundation of our strategy.

01

Growth

Maximise Shareholder returns

by increasing the net asset value of the Group through capital gains and growing our rental income stream to cover dividends.

Strategic priorities

Deliver long-term sustainable growth.

Clear focus on Total Shareholder Return, delivering capital growth and income in a manner consistent with our Vision.

Purpose and Values embedded effectively in the operational policies and practices and culture of the Group.

Incentivise management to outperform the Group's competitors by setting challenging performance targets, against which rewards are measured.

2023/24 Achievements/value creation

RETURN (3 YEAR)	-17.8%
TOTAL SHAREHOLDER
EPRA NTA	331p
PER SHARE	3.5p
EPRA EARNINGS
Associated information
Key performance indicators
• Total Shareholder Return	• EPRA Total Accounting Return
• Total Accounting Return	• EPRA Net Tangible Assets

Principal associated risks

• Poor management of stakeholder relations and non-compliance with prevailing legislation, regulation and best practice
• Geopolitical and economic
• The Group's strategy is inconsistent with the market
• Significant business disruption/external catastrophic event cyber-attacks to our business and our buildings
• Our people and relationships with business partners and reliance on external partners.

Relevant stakeholders

• Shareholders
• Employees
• Partners

02

Property

Manage a "best-in-class", balanced portfolio with a clear market focus, combining assets with significant development and asset management potential with a strong rental income stream.

Strategic priorities

A focus on London, delivering capital gains from development activity and income growth from asset management.

Locate sites where complexity presents opportunity to add significant value through innovative development and asset management.

Maximise value and income through attracting a diverse and financially robust portfolio of tenants.

Continue a culture that is committed to the highest standards in health and safety.

Improve the communities in which we are active and ensure sustainability underpins our approach.

2023/24 Achievements/value creation

RETURN (1 YEAR)	-20.3%
TOTAL PROPERTY
RETURN (3 YEAR)	-5.9%
TOTAL PROPERTY

Associated information

Key performance indicators

• MSCI Property Index (1 Year)
• MSCI Property Index (3 Year)

Principal associated risks

• Property values decline/reduced tenant demand for space
• Risks arising from the Group's significant development projects
• Health and safety
• Significant business disruption/external catastrophic event/ cyber-attacks to our business and buildings

Relevant stakeholders

• Occupiers (tenants/customers)
• Suppliers and contractors
• Local communities

Strategic Report

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Helical plc - Annual Report and Accounts 2024

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