Slide 1: Full Year Results
FINAL DRAFT Full Year Results 14 March 2023 Image: Bardon Hill and South East Coalville, Leicestershire
Slide 2: Agenda
Agenda 1. Introduction 2. Financial review 3. Operational review 4. Outlook & conclusion 5. Q&A 2
Slide 3: A long-term, through-the-cycle business
A long-term, through-the-cycle business A year of strong operational Management actions largely Focus markets remain strong, and strategic progress offset market-driven H2 and we have significant valuation movements flexibility and firepower Record plot sales, direct development and acquisitions, as
Slide 4: A year of operational and strategic progress
A year of operational and strategic progress Growth in industrial & Residential pipeline Single-family BTR Investment Portfolio logistics pipeline (sq. ft) remained stable (plots) portfolio launched transition underway 35.0m 29,596 30,668 30,804 29,311 Portfolio now 18% Grade A 28.2m 24.4m 27.3m Sel
Slide 5: Market fundamentals remain strong, despite challenging H2
Market fundamentals remain strong, despite challenging H2 2022 the third-strongest year on record for industrial & logistics take-up Mortgage affordability improving following H2 challenges 60 7 ‘Mini- budget’ 50 6.5 Mortgage rate (%) 6 Sq. ft. (m) 40 5.5 30 5 20 4.5 10 2023 4 0 2012 2013 2014 2015
Slide 6: Progressing our growth strategy
Progressing our growth strategy Growth drivers 2015 - 2020 2021 2022 Ambition by 2027 1. Increasing direct 1.3m sq. ft 432,000 sq. ft completed during year 800,000 sq. ft development of industrial 51,000 sq. ft developed over developed on average & logistics space developed five years 203,000 sq. ft
Slide 7: Financial Review
Financial Review Kitty Patmore Chief Financial Officer
Slide 8: EPRA NDV stable at 196.5p per share
EPRA NDV stable at 196.5p per share Broadly flat valuation and EPRA Balance sheet (£m) 31 Dec 2022 31 Dec 2021 NDV performance over the year as a result of: Property portfolio(1) 695.4 689.8 an increase in the valuation of Trade receivables & other assets 72.5 60.4 Investment properties (within
Slide 9: Land sales and direct development drive higher revenues
Land sales and direct development drive higher revenues Revenue increased largely due to: Income statement (£m) 2022 2021 higher serviced land and property sales Revenue 166.7 109.9 growth in rental income due to completed Gross profit(1) 83.4 48.7 direct development sale of Kellingley site
Slide 10: Robust valuation performance despite market headwinds
Robust valuation performance despite market headwinds 2022 2021 31 Dec 31 Dec Industrial & Logistics: market Total 2022 2021 yields increased but value losses £m Profit/(loss) Revaluation Total value value Portfolio Portfolio largely offset by rising rental values on sale(1) gains/(losses)(2) gain
Slide 11: Significant latent value in portfolio
Significant latent value in portfolio Natural Resources Industrial & logistics Agriculture & other Strategic land: residential Residential £51m | 23,200 plots Industrial Investment Portfolio Residential £281m | 4.0m sq. ft & logistics (£/plot) (£/sq. ft) Investment Income Portfolio £70 generation 42
Slide 12: £275m of cumulative value gains over the past five years
£275m of cumulative value gains over the past five years Cumulative value gains (£m) 110.3 (113.2) 53 107.5 Closing valuation: £736.8m 45.5 32.9 (23.2) Starting valuation: 11.1 £462.9m 40.8 10.5 H1 18 H2 18 H1 19 H2 19 H1 20 H2 20 H1 21 H2 21 H1 22 H2 22 Average annual Total Return of 9.8% over five
Slide 13: Net debt of £48.4m with £175.6m cash & debt headroom
Net debt of £48.4m with £175.6m cash & debt headroom Net debt movement (£m) 27.5 (131.2) 4.0 17.7 6.0 RCF 13.4 (4.4) 1.2 Headroom 88.5 £164.0m RCF Headroom £116.0m Cash: 11.6m Cash: 12.0m 48.4 25.7 31 Dec 21 Development Acquisitions Profit excluding Investment in JVs Interest and Tax Dividends Cash
Slide 14: Net loan to portfolio value remains low at 6.6%
Net loan to portfolio value remains low at 6.6% Net debt of £48.4m with a net LTV of 6.6% Gearing overview 31 Dec 2022 31 Dec 2021 Target year-end net loan to portfolio value of Net debt (£m) 48.4 25.7 <20% with a maximum of 25% in year In March 2022, agreed a new senior debt Net loan to portf
Slide 15: Operational Review
Operational Review Lynda Shillaw Chief Executive
Slide 16: Industrial & logistics land portfolio
Industrial & logistics land portfolio Potential to deliver 35.0m sq. ft of space 2022 Highlights Main industrial & logistics sites (31 December 2022) Acquisitions added 8.5m sq. ft to pipeline, including options on a site in Sold or developed / Estimated GDV Completion Name North Yorkshire (3.0m s
Slide 17: Residential land portfolio
Residential land portfolio Potential to deliver 29,311 homes 2022 Highlights Main residential sites (31 December 2022) Name Plots sold / consented or planned Completion date Completed the sale of 2,236 plots (2021: 1,411 plots): pricing in-line with or ahead of Dec 2021 book values 1 Waverley 2,44
Slide 18: Diversifying through mixed tenure
Residential land portfolio Diversifying through mixed tenure Benefits for Harworth of mixed tenure delivery: Single-family BTR portfolio Launched in May 2022: up to 1,200 Accelerates site development as can be delivered alongside homes to be delivered across traditional housebuilder products Har
Slide 19: Investment Portfolio: Strong occupational market drives robust metrics
Investment Portfolio Strong occupational market drives robust metrics Portfolio breakdown (31 Dec 2022) Key stats 31 Dec 2022 31 Dec 2021 Number of sites 19 18 Online retail Other Total area 4.0m sq. ft 3.7m sq. ft 1% 13% Automotive Annualised rent roll £19.7m £18.0m 6% Manufacturing 40% Gross yield
Slide 20: The Harworth Way: Selected operational targets
The Harworth Way Net Zero Carbon pathway 2022 2030 2040 Group targets Net Zero Carbon Net Zero Carbon for Net Zero Carbon pathway devised Scope 1, Scope 2 and for all emissions Scope 3 business travel emissions Selected operational targets 2022 2023 by 2025 by 2030 by 2040 All new commercial No new
Slide 21: Energy & natural capital
The Harworth Way Energy & natural capital Natural Resources portfolio already includes sites used for a wide Energy/sustainability products currently being explored: range of energy production and extraction purposes During the year, we devised an energy & natural capital strategy focusing on ho
Slide 22: Outlook & conclusion
Outlook & conclusion Market Early signs of stability, but macroeconomic conditions remain uncertain: likely to remain so until interest rates reach their peak, and inflation falls back to manageable levels Our focus market fundamentals remain intact: strong and diverse demand for products and co
Slide 23: Appendices
Appendices
Slide 24: Appendices index
Appendices index Title Page Background Our investment case 25 Valuation methodology 26 Financial track record 27 Operational track record 28 Our business model 29 Financial data Property valuation movement bridge 30 Portfolio breakdown 31 EPRA NDV bridge 32 Debt facilities 33 Operational data Indust
Slide 25: Our investment case
Our investment case We invest to transform land and property into places where people want to live and work 1 2 3 4 5 6 Unique Extensive, Focused on Regional Robust Responsible skillset high-quality growing exposure financial business pipeline sectors position A specialist regenerator We own around
Slide 26: Valuation methodology
Valuation methodology Our portfolio is valued twice a year. Independent valuers, BNPP and Savills, Valuation techniques across the portfolio: undertook a valuation as at 31 December 2022 to support the production of our full year results. Strategic land & Valuation is carried out property-by-propert
Slide 27: Financial track record
Financial track record Income 2022 2021 2020 2019 2018 Revenue (£m) 166.7 109.9 70.0 85.5 78.1 Gross profit (£m) 83.3 48.7 10.6 27.9 24.5 Operating profit (£m) 44.5 121.9 27.8 24.3 33.0 Dividend per share (p) 1.3 1.1 1.8(1) 0.3 0.9 Total Return (%) 0.1 24.6 3.0 7.8 13.3 Total property sales (£m) 138
Slide 28: Operational track record
Operational track record Capital growth 2022 2021 2020 2019 2018 Residential plots sold 2,236 1,411 873 1,379 1,049 Direct development completed (m sq. ft) 0.4 0.1 - - 0.4 31 Dec 2022 31 Dec 2021 31 Dec 2020 31 Dec 2019 31 Dec 2018 Industrial & logistics pipeline (m sq. ft) 35.0 28.2 27.3 24.4 21.3
Slide 29: Our business model
Our business model Strategic Land Major Developments Investment Portfolio Asset management Placemaking Plot sale / Direct development Value creation Infrastructure development Steps repeated as sites mature Land preparation Planning approval Masterplanning Acquisitions & land assembly Time 29
Slide 30: Property valuation movement (£m)
Property valuation movement (£m) 96.1 11.9 (115.4) 765.7 (6.4) (15.1) 736.8 Properties at Development Acquisitions Disposals Investment in JVs Revaluations Properties at 31 Dec 2021 Spend 31 Dec 2022 30
Slide 31: Portfolio breakdown (31 December 2022)
Portfolio breakdown (31 December 2022) South East Coalville Strategic land Remaining Ironbridge Major developments Sites (32%) Investment Portfolio Bardon Hill Natural Resources Top 10 sites: 47% £737m Agriculture & other Nufarm Ansty AMP Four Oaks Business Park Next 10 sites (21%) Pheasant Hill Par
Slide 32: EPRA NDV per share bridge (p)
EPRA NDV per share bridge (p) 197.6p 196.5p (10.7)p 1.4p (2.0)p 2.0p 9.6p 18.3p 10.1p (1.0)p (1.2)p 0.3p 186.9p 179.3p 31 Dec 2021 Value Gains/(losses) Profit Excluding Interest & Finance Tax Dividend Other (pension, swap, 31 Dec 2022 Value Gains Costs dilution etc) NAV per share EPRA NDV per share
Slide 33: Debt facilities: increased liquidity and flexibility
Debt facilities: increased liquidity and flexibility In March 2022, Harworth agreed a Harworth’s available debt profile and RCF maturity new senior debt package comprising a five-year £200m RCF, together with a £40m uncommitted 3.2 years 3.2 years accordion The facility replaces Harworth’s 300 p
Slide 34: Industrial & logistics land portfolio: Main sites
Industrial & logistics land portfolio Main sites sq. ft sold or Name Description developed / Completion date Progress in 2022 Next steps consented Adjacent to J33 of the M1, home to a Completed a new 100,000 sq. ft build-to-suit Direct development works underway for next Advanced number of global ma
Slide 35: Residential land portfolio: Main sites
Residential land portfolio Main sites Plots sold / Completion Name Description Progress in 2022 Next steps consented date Yorkshire’s largest ever mixed-use brownfield Residential land sales totalling 556 plots completed Further residential plot sales, development of BTR Waverley development, with c
Slide 36: Stages of site development
Stages of site development 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032+ AMP Gateway 36 Selected units transferred to Chatterley Valley Investment Portfolio Wingates Waverley South East Coalville Simpson Park Phesant Hill Park Benthall Grange (Ironbridge) Infrastructure, placemaking & resi
Slide 37: Top 10 sites by valuation and EPC ratings data
Investment portfolio Top 10 sites by valuation and EPC ratings data Top 10 sites by valuation Investment Portfolio breakdown by EPC rating(2) Site Location Area (sq. ft) Bardon Hill Coalville 0.3m 32% Nufarm Bradford 0.3m 28% 26% Advanced Manufacturing Park(1) Rotherham 0.2m Walton Summit Preston 0.
Slide 38: Harworth
Harworth
Slide 39: 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