Harworth Group Plc · LSE:HWG
Harworth — H1 2021 Earnings Presentation
47 slides from Harworth's earnings presentation, Sep 14, 2021
Slide 1: Half Year Results 2021
HALF YEAR RESULTS 2021 14 SEPTEMBER 2021
Slide 2: Overview
OVERVIEW 1. OPENING REMARKS 2. FINANCIAL REVIEW 3. OPERATIONAL REVIEW 4. STRATEGIC UPDATE 5. OUTLOOK 2
Slide 3: Our Investment Case
OUR INVESTMENT CASE OUR PURPOSE: Harworth invests to transform land and property into sustainable places where people want to live and work Uniquely positioned Focused on the high growth Regional focus as a specialist regenerator of large Industrial & Logistics and provides exposure to markets exper
Slide 4: H1 2021 Key Highlights
H1 2021 KEY HIGHLIGHTS ▪ Strong first half operational performance, advancing planning, INDUSTRIAL & LOGISTICS PIPELINE RESIDENTIAL PIPELINE development activity, sales and lettings across our portfolio (SQ FT) (PLOTS) 27.3m ▪ EPRA NDV per share increased by 14.5% to 183.2p (FY 2020: 160.0p), 24.4m
Slide 5: Market Backdrop
MARKET BACKDROP INDUSTRIAL & LOGISTICS RESIDENTIAL ▪ Strong take-up of industrial & logistics space in H1 2021 has resulted in a ▪ Delivering 300,000 new homes per year is a key Government objective sharp decline in supply and the lowest level of vacancies on record ▪ Lockdowns and the need to work
Slide 6: Strategy to Double EPRA NDV in the Next 5-7 Years
STRATEGY TO DOUBLE EPRA NDV IN THE NEXT 5 – 7 YEARS ▪ Detailed review of the business undertaken during the first half ▪ Review explored how to deploy our existing strengths and scale, and considers our changing markets ▪ Strategic plan is exciting and ambitious, and aims to double our EPRA NDV from
Slide 7: Financial Review
FINANCIAL REVIEW
Slide 8: Income Statement
INCOME STATEMENT ▪ Revenue of £18.9m in H1 2021; lower property sales INCOME (£m) H1 2021 H1 2020 FY 2020 than H1 2020 as a result of rephasing during COVID-19 giving a sales profile concentrated in H2 2021 REVENUE 18.9 23.7 70.0 ▪ 98% of budgeted sales completed or agreed for 2021 GROSS PROFIT(1) 1
Slide 9: Balance Sheet
BALANCE SHEET ▪ EPRA NDV growth of 14.5% to 183.2p, driven by an NET ASSETS (£m) H1 2021 H1 2020 FY 2020 increase in the value of the property portfolio, including development properties, AHFS and PROPERTY PORTFOLIO(1) 684.6 534.9 584.5 overages CASH 3.9 7.5 12.7 ▪ Combined with dividend growth of 1
Slide 10: Valuation Gains
VALUATION GAINS H1 2021 H1 2020 TOTAL H1 2021 PORTFOLIO FY 2020 PORTFOLIO £m REVALUATION PROFIT ON SALE TOTAL VALUE GAINS VALUE GAINS VALUATION VALUATION GAINS/(LOSSES)(1) CAPITAL GROWTH MAJOR DEVELOPMENTS 1.3 51.2 52.5 (30.3) 303.5 248.1 STRATEGIC LAND 0.1 28.6 28.7 0.4 129.5 96.2 INCOME GENERATION
Slide 11: Portfolio Overview
PORTFOLIO OVERVIEW NATURAL AGRICULTURE & OTHER RESOURCES STRATEGIC LAND: INDUSTRIAL & LOGISTICS RESIDENTIAL £454 million | 26.2m sq ft(1) £52m | 21,307 plots RESIDENTIAL £250 million | 30,655 plots INVESTMENT PORTFOLIO £271m | 3.8m sq ft INCOME GENERATION 42% MAJOR DEVELOPMENTS: RESIDENTIAL £198m |
Slide 12: Net Debt Movement
NET DEBT MOVEMENT (£) RCF Headroom RCF 32.3m Headroom 16.7m 50.0m Cash 3.9m 17.5m (11.5m) 10.3m (8.9m) Cash 12.7m 6.7m (3.9m) 1.6m 0.5m 100.2m 71.2m Opening Net Debt Development Sales proceeds Receipt of Profit excluding Interest, finance Investment in VAT timing Cash and working Acquisitions Closin
Slide 13: Financing Strategy
FINANCING STRATEGY ▪ Revised financing strategy remains to be GEARING H1 2021 H1 2020 FY 2020 prudently geared – target year-end net loan to portfolio value of <20% with a maximum NET DEBT (£M) 100.2 69.2 71.2 of 25% ▪ Weighted average cost of debt is 2.63% with NET LOAN TO PORTFOLIO VALUE 13.4% 12.
Slide 14: Operational Review
OPERATIONAL REVIEW
Slide 15: Portfolio Overview: Industrial & Logistics
PORTFOLIO OVERVIEW INDUSTRIAL & LOGISTICS PLANNING STATUS OWNERSHIP INDUSTRIAL & LOGISTICS MAJOR DEVELOPMENT SITES CONSENTED PPAs / SOLD OR DEVELOPED / OPTIONS NAME GDV to develop DELIVERY TIME 24% CONSENTED (SQ FT) 9.0 AMP 1.5m / 2.1m £60m - £70m to 2027 26.2m 1 2022+ 14.1 26.2m sq ft sq ft 2 GATEW
Slide 16: Portfolio Overview: Residential
PORTFOLIO OVERVIEW RESIDENTIAL PLANNING STATUS OWNERSHIP RESIDENTIAL MAJOR DEVELOPMENT SITES CONSENTED PPAs / NAME PLOTS SOLD / CONSENTED DELIVERY TIME OPTIONS 1 WAVERLEY 1,714 / 3,890 to 2027 9,855 SOUTH EAST COALVILLE 370 / 2,016 to 2031 30,655 30,655 2 2022+ 46% 54% 3 PHEASANT HILL PARK 522 / 1,2
Slide 17: Portfolio Overview: Investment Portfolio
PORTFOLIO OVERVIEW INVESTMENT PORTFOLIO PORTFOLIO OVERVIEW DIVERSIFIED OCCUPIER PROFILE 30 JUN 2021 31 DEC 2020 Transport/Logistics 16% NUMBER OF SITES 18 19 20% Chemicals Manufacturing TOTAL AREA 3.8m sq ft 3.4m sq ft Housebuilding ANNUALISED RENT ROLL £17.7m £15.7m 3% Wholesale 14% GROSS YIELD 6.4
Slide 18: Logistics North
CASE STUDY LOGISTICS NORTH BUILD-OUT OF LOGISTICS NORTH COMPLETE, WITH THE CONCLUSION OF MULTIPLY JV AND COMPLETION OF A 50,800 SQ FT DIRECTLY DEVELOPED UNIT ▪ Harworth received outline planning consent for 4.0m sq ft at Logistics North in 2013, and in 2017 established the Multiply joint venture (‘J
Slide 19: The Harworth Way
THE HARWORTH WAY THE FIVE PILLARS OF THE HARWORTH WAY H1 2021 HIGHLIGHTS ▪ Established an ESG Committee of the Board to provide oversight and guidance of the Group’s ESG strategy, reporting, and activities People Communities Planet ▪ Joined UK Green Building Council and built unit LN50 at Logistics
Slide 20: Strategic Update
STRATEGIC UPDATE
Slide 21: A Strategy for Growth
A STRATEGY FOR GROWTH OUR PURPOSE: Harworth invests to transform land and property into sustainable places where people want to live and work ENABLERS THE HARWORTH WAY OUR KEY MARKETS FINANCING STRATEGY OUR PEOPLE Planet, People, Partnerships, Industrial & Logistics and Residential Prudently geared,
Slide 22: Key Drivers of Growth and Return
KEY DRIVERS OF GROWTH AND RETURN ▪ Long track record of development: 1.3m sq ft of INDUSTRIAL & LOGISTICS DIRECT DEVELOPMENT FROM CONSENTED PIPELINE space built since 2015 2015- 2021 Plan for 2022-2026 Region ▪ Current 9.0m sq ft consented industrial & logistics Area (sq ft) Area (sq ft) GDV (£m) 1.
Slide 23: Key Drivers of Growth and Return
KEY DRIVERS OF GROWTH AND RETURN ▪ Long-term view of replenishing our stock, focusing on securing a significant future pipeline 3. Scaling up land ▪ Targeting maintaining a 12-15 year land supply acquisition and throughout plan period promotion activities ▪ Leveraging regional teams to deliver organ
Slide 24: Ambition to Double EPRA NDV from FY20 Level
AMBITION TO DOUBLE EPRA NDV FROM FY20 LEVEL DRIVERS OF GROWTH >£1bn 4. Repositioning our Investment 3. Scaling up land Portfolio to acquisition & modern Grade A 2. Accelerating promotion sales & broadening activities the range of our residential products 1. Increasing direct development of £515.9m i
Slide 25: Outlook
OUTLOOK ▪ Demand for industrial & logistics space and serviced residential plots remains very strong, reflecting unique positioning and structural tailwinds ▪ Trends in our markets expected to continue for the foreseeable future due to favourable supply and demand dynamics ▪ Focus for the remainder
Slide 26: Appendices
APPENDICES
Slide 27: Appendices Index
APPENDICES INDEX TITLE PAGE TITLE PAGE BACKGROUND OPERATIONAL DATA & CASE STUDIES VALUATION METHODOLOGY 28 SELECTED INDUSTRIAL & LOGISTICS SITES 36 COMPARATIVE DATA FOR H1 2019 29 INDUSTRIAL & LOGISTICS CASE STUDY: WINGATES, BOLTON 37 MARKET BACKDROP: INDUSTRIAL & LOGISTICS 30 INDUSTRIAL & LOGISTICS
Slide 28: Valuation Methodology
VALUATION METHODOLOGY Our portfolio is valued twice a year. Formal year-end valuations are undertaken by BNP and VALUATION TECHNIQUES ACROSS THE PORTFOLIO: Savills. The former also undertook a desktop valuation as at 30 June 2021 to support the production of our interim results. STRATEGIC LAND & Val
Slide 29: Comparative Data for H1 2019
COMPARATIVE DATA FOR H1 2019 H1 2019 comparatives have been provided here for reference due to the NET ASSETS (£m) H1 2021 H1 2020 H1 2019 impact of Covid-19 on our H1 2020 results. PROPERTY PORTFOLIO(1) 684.6 534.9 501.8 INCOME (£m) H1 2021 H1 2020 H1 2019 CASH 3.9 7.5 11.4 REVENUE 18.9 23.7 58.6 T
Slide 30: Market Backdrop: Industrial & Logistics
MARKET BACKDROP INDUSTRIAL & LOGISTICS TAKE-UP OF INDUSTRIAL & LOGISTICS SPACE IN H1 2021 STRONGEST ON RECORD ▪ Strong take-up of industrial & logistics space in H1 2021 has resulted in a sharp decline in supply and the lowest level of 60 vacancies on record 50 Sq. ft. (Millions) ▪ Covid-19 has acce
Slide 31: Market Backdrop: Residential
MARKET BACKDROP RESIDENTIAL HOMES GRANTED PLANNING CONSENT IN ENGLAND (20+ UNIT DEVELOPMENTS) ▪ Delivering 300,000 new homes per year is a key Government objective 90,000 80,000 ▪ Lockdowns and the need to work from home have 70,000 increased the importance of space and a sense of place for 60,000 b
Slide 32: Our Business Model
OUR BUSINESS MODEL Strategic Land Major Developments Investment Portfolio Asset management Placemaking Plot sale / Direct development Value creation Infrastructure development Land preparation Planning approval Masterplanning Acquisitions & land assembly Time 32
Slide 33: Property Valuation Movement (£m)
PROPERTY VALUATION MOVEMENT (£m) (9.4) 33
Slide 34: Portfolio Breakdown
PORTFOLIO BREAKDOWN SOUTH EAST COALVILLE REMAINING STRATEGIC LAND SITES WAVERLEY (36%) (RESIDENTIAL) MAJOR DEVELOPMENTS INVESTMENT PORTFOLIO NUFARM NATURAL RESOURCES 43% KELLINGLEY AGRICULTURE & OTHER £748m SATURN BUSINESS PARK, KNOWSLEY AMP, WAVERLEY ANSTY IRONBRIDGE FOUR OAKS BUSINESS PARK, PRESTO
Slide 35: EPRA NDV Bridge
EPRA NDV BRIDGE 1.2p (0.5)p (2.2)p 9.2p (7.4)p 0.3p 183.2p 24.1p (1.5)p 15.4p 167.8p 160.0p 8.4p 151.6p 31 Dec 2020 Value Gains/(losses) Profit Excluding Value Interest & Finance Costs Tax Dividend Other (pension, swap, 30 Jun 2021 Gains dilution etc) NAV per share EPRA NDV per share 35
Slide 36: Selected Industrial & Logistics Sites
SELECTED INDUSTRIAL & LOGISTICS SITES SQ FT SOLD OR NAME DESCRIPTION DEVELOPED / DELIVERY TIME PROGRESS IN H1 2021 NEXT MILESTONE CONSENTED ADVANCED Located off J33 of the M1, the AMP is Plot sale to sportswear manufacturer Build-out of SBD facility and further home to a number of global SBD Apparel
Slide 37: Wingates, Bolton
CASE STUDY – INDUSTRIAL & LOGISTICS WINGATES, BOLTON UP TO 1.1M SQ FT OF INDUSTRIAL & LOGISTICS SPACE ADJACENT TO JUNCTION 6 OF THE M61 IN BOLTON, CLOSE TO LOGISTICS NORTH DEVELOPMENT ▪ Outline planning permission received in June 2021 for up to 1.1m sq ft of logistics and manufacturing space ▪ Idea
Slide 38: Bardon Hill, Leicestershire
CASE STUDY – INDUSTRIAL & LOGISTICS BARDON HILL, LEICESTERSHIRE DELIVERING 332,000 SQ FT OF INDUSTRIAL & LOGISTICS SPACE LESS THAN TWO MILES FROM JUNCTION 22 OF THE M1 ▪ Acquired 54-acre site in Bardon, Leicestershire, in May 2018 ▪ Adjacent to our South East Coalville site and less than two miles f
Slide 39: Major Developments: Selected Residential Sites
MAJOR DEVELOPMENTS: SELECTED RESIDENTIAL SITES PLOTS SOLD DELIVERY NAME DESCRIPTION / PROGRESS SO FAR IN 2021 NEXT MILESTONE TIME CONSENTED Plans for up to 3,890 homes at Yorkshire’s Planning submitted for Olive Lane, a new heart Further residential plot sales and awaiting largest ever mixed-use bro
Slide 40: Moss Nook, Merseyside
CASE STUDY – RESIDENTIAL MOSS NOOK, MERSEYSIDE HARWORTH’S FIRST RESIDENTIAL DEVELOPMENT IN THE NORTH WEST, WITH UP TO 900 HOMES TO BE BUILT ONE MILE FROM ST HELENS TOWN CENTRE ▪ 95-acre brownfield site acquired by Harworth in 2018 after previous development plans had stalled ▪ Highly complex remedia
Slide 41: South East Coalville, Leicestershire
CASE STUDY – RESIDENTIAL SOUTH EAST COALVILLE, LEICESTERSHIRE FOLLOWING COMPLETION OF FIRST PHASE OF 370 PLOTS, ENABLING WORKS FOR SECOND PHASE NOW UNDERWAY ▪ Largest residential development in our Midlands region ▪ 250-acre site less than two miles from Junction 22 of the M1, with planning consent
Slide 42: Key Strategic Land Sites
KEY STRATEGIC LAND SITES NAME DESCRIPTION DELIVERY TIME PROGRESS SO FAR IN 2021 NEXT MILESTONE Plans to transform the former Ironbridge Power Our plans for this site were approved by Telford We remain positive on the prospects for this site, Station into a new community comprising 1,000 & Wrekin Cou
Slide 43: Stages of Site Development
STAGES OF SITE DEVELOPMENT 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032+ WAVERLEY SOUTH EAST COALVILLE PHEASANT HILL PARK IRONBRIDGE ANSTY SIMPSON PARK THORESBY VALE WINGATES Site assembly & Masterplanning Infrastructure & Land sales Planning & Site preparation Infrastructure & Land s
Slide 44: Towngate Business Park, Widnes
CASE STUDY – INVESTMENT PORTFOLIO TOWNGATE BUSINESS PARK, WIDNES ▪ Acquired in March 2021 for £12.7m, representing a Net Initial Yield of 7.1% and a reversionary yield of c.9.4% ▪ 262,000 sq ft of fully-let space across nine units, with a WAULT of 4.3 years, facilitating asset management initiatives
Slide 45: Natural Resources Portfolio
NATURAL RESOURCES PORTFOLIO PORTFOLIO OVERVIEW Our Natural Resources portfolio comprises sites used for a wide range of energy production and extraction purposes, including wind and solar energy schemes, battery storage and methane capture. 30 JUN 2021 31 DEC 2020 NUMBER OF SITES 21 23 ANNUALISED RE
Slide 46: Disclaimer
DISCLAIMER For the purpose of the following disclaimer, reference to this ‘presentation’ shall be deemed Actual results may differ materially from those expressed in forward-looking statements. As to include reference to the presentation slides, the presenters’ speeches, the question and such, you a
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