Harworth Group Plc · LSE:HWG
Harworth — H1 2022 Earnings Presentation
37 slides from Harworth's earnings presentation, Sep 13, 2022
Slide 1: Half Year Results
HALF YEAR RESULTS 13 September 2022 Image: Gateway 36, Barnsley
Slide 2: Agenda
Agenda 1. Introduction 2. Financial review 3. Operational review 4. Outlook & conclusion 5. Q&A 2
Slide 3: Strong H1 performance
Strong H1 performance A strong operational and financial performance in the first half, with valuation uplifts driven by management actions, and supported by structural growth in our markets A more challenging economic backdrop expected in the second half Confident in the resilience of our mar
Slide 4: H1 2022 highlights
H1 2022 highlights INDUSTRIAL & LOGISTICS RESIDENTIAL PIPELINE GROWING OUR STRATEGIC INVESTMENT PORTFOLIO: PIPELINE (SQ. FT) (PLOTS) LANDBANK ROBUST OPERATIONAL METRICS Rent collection Vacancy 32.2m 28,990 99% 3.9% 29,596 30,668 30,804 27.3m 28.2m 24.4m Acquisitions added 3.9m sq. ft 20,490 21.3m of
Slide 5: Focus markets remained strong in H1
Focus markets remained strong in H1 H1 2022 set a new record for industrial & logistics take-up House price growth continued to outpace inflation H1 60 16% 14% 50 12% 40 10% Sq. ft. (m) 30 8% 6% 20 4% 10 2% 0 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013 2014 2015 2016 2017 2018 201
Slide 6: Continued progress against our growth strategy
Continued progress against our growth strategy GROWTH DRIVERS 2021 H1 2022 AMBITION BY 2027 1. Increasing direct 432,000 sq. ft completed shortly after period- development of industrial 51,000 sq. ft of direct end 800,000 sq. ft developed development completed on average per annum & logistics stock
Slide 7: Outlook
Outlook Consistently strong performance in recent years, despite an unprecedented macroeconomic backdrop Our resilience is not by accident: the result of deliberate management actions to focus on right markets and products, build expertise and maintain strong relationships Over past six months
Slide 8: Financial Review
FINANCIAL REVIEW KITTY PATMORE Chief Financial Officer
Slide 9: EPRA NDV growth to 224.7p per share
EPRA NDV growth to 224.7p per share BALANCE SHEET (£m) 30 June 2022 30 June 2021 31 Dec 2021 PROPERTY PORTFOLIO(1) 800.0 684.6 689.8 TRADE RECEIVABLES & OTHER ASSETS 77.3 62.4 60.4 NET DEBT (67.8) (100.2) (25.7) DEFERRED TAX LIABILITIES(2) (58.6) (37.7) (42.6) OTHER LIABILITIES(3) (95.8) (68.0) (103
Slide 10: Higher serviced land and property sales drive revenues
Higher serviced land and property sales drive revenues Increased revenue with higher serviced land and property INCOME STATEMENT (£m) H1 2022 H1 2021 FY 2021 sales resulting from accelerated sales in line with growth strategy, planning promotion fees and fees from build-to- REVENUE 62.6 18.9 109.9
Slide 11: Total valuation gains of £110.3m
Total valuation gains of £110.3m H1 2022 30 June 2022 31 Dec 2021 H1 2021 TOTAL £m REVALUATION PORTFOLIO PORTFOLIO PROFIT ON SALE TOTAL VALUE GAINS VALUE GAINS GAINS/(LOSSES)(1) VALUATION VALUATION CAPITAL GROWTH MAJOR DEVELOPMENTS 4.7 49.3 53.9 52.5 366.5 308.2 STRATEGIC LAND 0.2 42.1 42.3 28.7 192
Slide 12: Portfolio overview £889m
Portfolio overview NATURAL AGRICULTURE & OTHER STRATEGIC LAND: RESOURCES INDUSTRIAL & LOGISTICS RESIDENTIAL £92m | 22,483 plots £584 million | 32.2m sq. ft(1) RESIDENTIAL £268 million | 28,990 plots INCOME GENERATION INVESTMENT PORTFOLIO £889m 37% £294m | 3.7m sq. ft MAJOR DEVELOPMENTS: RESIDENTIAL
Slide 13: Net debt of £67.8m with £144.4m cash & debt headroom
Net debt of £67.8m with £144.4m cash & debt headroom Net debt movement (£m) RCF Headroom 106.0 RCF Headroom 116.0 Cash 38.4 43.6 (33.7) 4.5 17.7 2.7 6.9 (4.7) 4.0 1.1 Cash 12.0 67.8 45.7m 43.0m 25.7 30.9m 31 Dec 2021 Development Sales Proceeds Profit excluding Investment in Interest and Tax Dividend
Slide 14: Net loan to portfolio value of 7.6%
Net loan to portfolio value of 7.6% Net debt of £67.8m with a net LTV of 7.6% GEARING OVERVIEW 30 June 2022 30 June 2021 31 Dec 2021 Target year-end net loan to portfolio value of NET DEBT (£m) 67.8 100.2 25.7 <20% with a maximum of 25% in year The weighted average cost of debt was 2.89% with
Slide 15: Operational Review
OPERATIONAL REVIEW LYNDA SHILLAW Chief Executive
Slide 16: Potential to deliver 32.2m sq. ft of space
INDUSTRIAL & LOGISTICS LAND PORTFOLIO Potential to deliver 32.2m sq. ft of space H1 2022 HIGHLIGHTS MAIN INDUSTRIAL & LOGISTICS SITES (30 June 2022) SOLD OR DEVELOPED / ESTIMATED GDV After period-end, reached practical completion on 432,000 sq. ft of directly NAME CONSENTED OR PLANNED REMAINING TO
Slide 17: Potential to deliver 28,990 new homes
RESIDENTIAL LAND PORTFOLIO Potential to deliver 28,990 new homes H1 2022 HIGHLIGHTS MAIN RESIDENTIAL SITES (30 June 2022) Over 100% budgeted land sales for the year completed, exchanged or in heads NAME PLOTS SOLD / CONSENTED OR PLANNED DELIVERY TIME of terms 1 WAVERLEY 2,336 / 2,900(1) consented
Slide 18: Launch of Harworth's single-family BTR portfolio
RESIDENTIAL LAND PORTFOLIO Launch of Harworth’s single-family BTR portfolio Launched in May 2022, a portfolio of up to 1,200 homes across up to 10 sites in Yorkshire, the Midlands and the North West A unique forward funding and long-term investment opportunity for prospective investment partner
Slide 19: Delivering robust operational metrics
INVESTMENT PORTFOLIO Delivering robust operational metrics KEY STATS DIVERSIFIED OCCUPIER PROFILE 30 June 2022 31 Dec 2021 BREAKDOWN BY SECTOR TOP 5 OCCUPIERS BY RENT ROLL NUMBER OF SITES 18 18 Transport/Logistics OCCUPIER % RENT ROLL Chemicals TOTAL AREA 3.7m sq. ft 3.7m sq. ft 19% 16% Manufacturin
Slide 20: A resilient, through-the-cycle business
A resilient, through-the-cycle business Strong operational and financial progress in the first half Management actions, supported by a robust market for our residential and industrial & logistics products, has driven significant uplift in EPRA NDV We remain closely attuned to the potential imp
Slide 21: Appendices
APPENDICES
Slide 22: Appendices index
Appendices index Title Page Background Our investment case 23 Valuation methodology 24 Financial track record 25 Operational track record 26 Our business model 27 Financial data Property valuation movement bridge 28 Portfolio breakdown 29 EPRA NDV bridge 30 Net debt facility details 31 Operational d
Slide 23: 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 24: Valuation methodology
Valuation methodology Our portfolio is valued twice a year. Independent valuers, BNPP and Savills, VALUATION TECHNIQUES ACROSS THE PORTFOLIO: undertook a desktop valuation as at 30 June 2022 to support the production of our interim results. STRATEGIC LAND & Valuation is carried out property-by-prope
Slide 25: Financial track record
Financial track record INCOME H1 2022 H1 2021 2021 2020 2019 2018 REVENUE (£m) 62.6 18.9 109.9 70.0 85.5 78.1 GROSS PROFIT (£m) 25.5 16.0 48.7 10.6 27.9 24.5 OPERATING PROFIT (£m) 99.9 76.5 121.9 27.8 24.3 33.0 DIVIDEND PER SHARE (p) 0.404 0.367 1.1 1.8(1) 0.3 0.9 TOTAL RETURN (%) 14.1 15.4 24.6 3.0
Slide 26: Operational track record
Operational track record CAPITAL GROWTH PORTFOLIO H1 2022 H1 2021 2021 2020 2019 2018 RESIDENTIAL PLOTS SOLD 1,652 728 1,411 873 1,379 1,049 DIRECT DEVELOPMENT COMPLETED (m SQ. FT) 0.0(1) 0.0 0.1 - - 0.4 H1 2022 30 June 2021 31 Dec 2021 31 Dec 2020 31 Dec 2019 31 Dec 2018 INDUSTRIAL & LOGISTICS PIPE
Slide 27: 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 27
Slide 28: Property valuation movement (£m)
Property valuation movement (£m) 28
Slide 29: Portfolio breakdown
Portfolio breakdown SOUTH EAST COALVILLE STRATEGIC LAND REMAINING IRONBRIDGE SITES MAJOR DEVELOPMENTS (32%) KELLINGLEY INVESTMENT PORTFOLIO NATURAL RESOURCES TOP 10 SITES: BARDON HILL 46% £889m AGRICULTURE & OTHER NUFARM AMP ANSTY KNOWSLEY GATEWAY 36 WAVERLEY NEXT 10 SITES (22%) 29
Slide 30: EPRA NDV bridge
EPRA NDV bridge 4.0p (0.8)p 224.7p 1.4p (1.1)p 197.6p 30.2p (6.1)p (0.8)p 0.3p 21.5p 18.3p 203.2p 179.3p 31 Dec 2021 Value Gains/(losses) Profit Excluding Value Interest & Finance Tax Dividend Other 30 June 2022 Gains Costs NAV per share EPRA NDV per share 30
Slide 31: New debt facility: increased liquidity and flexibility
New debt facility: increased liquidity and flexibility In March 2022, Harworth agreed a new senior Harworth’s available debt profile and RCF maturity 4.5 years debt package comprising a five-year £200m RCF, together with a £40m uncommitted accordion The Facility replaces Harworth’s previous RCF
Slide 32: Main sites
INDUSTRIAL & LOGISTICS LAND PORTFOLIO Main sites SQ. FT SOLD OR NAME DESCRIPTION DEVELOPED / DELIVERY DATE PROGRESS IN H1 2022 NEXT STEPS CONSENTED ADVANCED Adjacent to J33 of the M1, the AMP is home After period-end, completed a new 100,000 sq. ft Direct development works underway for next to a num
Slide 33: Main sites
RESIDENTIAL LAND PORTFOLIO Main sites PLOTS SOLD / DELIVERY NAME DESCRIPTION PROGRESS IN H1 2022 NEXT STEPS CONSENTED TIME Largest serviced land sale to date, to Barratt and David Yorkshire’s largest ever mixed-use Wilson Homes for the delivery of 450 new homes. Further residential plot sales, and a
Slide 34: Stages of site development
Stages of site development 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032+ AMP GATEWAY 36 Selected units CHATTERLEY VALLEY transferred to Investment Portfolio WINGATES GASCOIGNE WOOD WAVERLEY SOUTH EAST COALVILLE SIMPSON PARK PHEASANT HILL PARK IRONBRIDGE Infrastructure, placemaking & reside
Slide 35: 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 2022 31 DEC 2021 NUMBER OF SITES 20 20 ANNUALISED RE
Slide 36: 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
Slide 37: Harworth
Harworth