Harworth Group Plc · LSE:HWG
Harworth — FY2020 Earnings Presentation
38 slides from Harworth's earnings presentation, Mar 16, 2021
Slide 1: Preliminary Results 2020
PRELIMINARY RESULTS 2020 16 MARCH 2021 www.harworthgroup.com
Slide 2: Harworth invests to transform land and property into sustainable places
Harworth invests to transform land and property into sustainable places where people want to live and work
Slide 3: Preliminary Results 2020 agenda
PRELIMINARY RESULTS 2020 1. OPENING REMARKS 4-6 LYNDA SHILLAW, CHIEF EXECUTIVE 2. 2020: A STRONG OPERATIONAL PERFORMANCE 7-22 KITTY PATMORE, CHIEF FINANCIAL OFFICER 3. MARKETS AND OUTLOOK 23-27 LYNDA SHILLAW, CHIEF EXECUTIVE APPENDIX 28-36 DISCLAIMER 37 3
Slide 4: A Leading Strategic Land Business
OPENING REMARKS A LEADING STRATEGIC LAND BUSINESS As Master Developer we are skilled at assembling land, undertaking remediation and taking it through planning to deliver regionally significant schemes PIPELINE OF INCOME OPPORTUNITIES Regional expertise: our local teams live and work in their areas
Slide 5: Our Purpose: The Way We Do Business
OPENING REMARKS OUR PURPOSE: THE WAY WE DO BUSINESS ESG has always been at the heart of everything we do and fully embedded into our investment process We care passionately about the ongoing curation of the spaces we create for the communities who live and work there Assets reconditioned and reused
Slide 6: 2020 Key Highlights
OPENING REMARKS 2020 KEY HIGHLIGHTS 2020 KEY HIGHLIGHTS EPRA NDV PER SHARE 2016-2020 RENT COLLECTION - 2020 100% 98% 180.0p 97% 96% 94% 95% 160.0p All major sales completed under post 160.0p 145.2p 155.6p 80% COVID-19 budget 140.0p 129.9p 120.0p 114.6p 60% Good progress on development sites despite
Slide 7: 2020: A Strong Operational Performance
2020: A Strong Operational Performance
Slide 8: 2020 Financial Highlights
2020: A STRONG OPERATIONAL PERFORMANCE 2020 FINANCIAL HIGHLIGHTS EPRA NDV per share growth of 2.8% to 160p per CAPITAL 2020 2019 share (2019: 7.2%) EPRA NDV PER SHARE 160.0p 155.6p Operating profit increased by 14.4% to £27.8m TOTAL RETURN 3.0% 7.8% (2019: £24.3m) VALUE GAINS £22.3m £44.0m 2020 sale
Slide 9: Value Gains Across the Portfolio
2020: A STRONG OPERATIONAL PERFORMANCE VALUE GAINS ACROSS THE PORTFOLIO ROBUST PERFORMANCE FROM DIVERSIFIED PORTFOLIO DESPITE PANDEMIC UNCERTAINTY 2020 2019 2020 2019 Profit Revaluation Total Total Portfolio Total £m on Sale Gains/ (losses) Value Gains Value Gains Valuation Valuation CAPITAL GROWTH
Slide 10: Growth in Net Rental Income Increases Cover of Central Overheads
2020: A STRONG OPERATIONAL PERFORMANCE GROWTH IN NET RENTAL INCOME INCREASES COVER OF CENTRAL OVERHEADS Rental income growth through acquisitions and asset management £m 2020 2019 PROFIT FROM CAPITAL GROWTH SALES* 6.2 5.1 Fee and promote income at Logistics North contributing to PEVG PROFIT FROM INC
Slide 11: Diversified Portfolio: Portfolio Overview
2020: A STRONG OPERATIONAL PERFORMANCE DIVERSIFIED PORTFOLIO PORTFOLIO OVERVIEW MAJOR DEVELOPMENTS Strategic Land COMMERCIAL £69.4m (Further details on pages 12 - 13) MAJOR DEVELOPMENTS RESIDENTIAL £178.7m Major Developments (Further details on pages 14 - 19) STRATEGIC LAND RESIDENTIAL £43.6m Busine
Slide 12: Long-Term Land Pipeline
2020: A STRONG OPERATIONAL PERFORMANCE LONG-TERM LAND PIPELINE OUR LAND PIPELINE UNDERPINS HARWORTH’S FUTURE SALES AND RESIDENTIAL PIPELINE: COMMERCIAL PIPELINE: DEVELOPMENT PROGRAMME PLOT NUMBERS SQ. FT Our pipeline is the largest in Harworth’s history as a listed company 35,000 30m We continue to
Slide 13: Acquisitions Are Key to Harworth's Growth Strategy
2020: A STRONG OPERATIONAL PERFORMANCE ACQUISITIONS ARE KEY TO HARWORTH’S GROWTH STRATEGY ACQUISITIONS TOTALLING £50.5M INHERITED Vs ACQUIRED MADE DURING 2020 LAND AND PROPERTY cquisition of strategic land lies at the heart of our A strategy to grow our development pipeline and extend our income por
Slide 14: Meeting the Demand for Good Quality Industrial & Logistics Space
2020: A STRONG OPERATIONAL PERFORMANCE MEETING THE DEMAND FOR GOOD QUALITY INDUSTRIAL & LOGISTICS SPACE KEY COMMERCIAL SALES DURING THE YEAR: Sale of land at Skelton to Wheelabrator 2.2 acres at Logistics North Kellingley sale to Coalfield Regeneration Trust Riverdale Park commercial plot sold to Bu
Slide 15: Industrial & Logistics Case Studies: Logistics North
INDUSTRIAL & LOGISTICS CASE STUDIES: 2020: A STRONG OPERATIONAL PERFORMANCE LOGISTICS NORTH, NORTH WEST LOGISTICS NORTH, BOLTON SALE OF PLOT C1 AND START ON SITE TO DEVELOP PLOT H INTO A 50,800 SQ. FT NEW LOGISTICS UNIT Leading hub for manufacturing and logistics operations Will deliver over 4m sq.
Slide 16: Industrial & Logistics Case Studies: Kellingley Konect
INDUSTRIAL & LOGISTICS CASE STUDIES: 2020: A STRONG OPERATIONAL PERFORMANCE KELLINGLEY KONECT, YORKSHIRE & CENTRAL KELLINGLEY KONECT LAUNCH OF KONECT, THE ONLY UK DISTRIBUTION PARK OFFERING TRIMODAL CONNECTIVITY The former Kellingley Colliery site, which closed in 2016, is being transformed into Kon
Slide 17: Meeting the Demand for Family Housing
2020: A STRONG OPERATIONAL PERFORMANCE MEETING THE DEMAND FOR FAMILY HOUSING KEY RESIDENTIAL SALES: outh East Coalville: sale in June to Redrow and S Bellway sale in December Micklefields: Final plot sold to Avant Homes Thoresby Vale: 2nd housebuilder David Wilson Homes on site, first homes built th
Slide 18: Residential Case Studies: Thoresby Vale
RESIDENTIAL CASE STUDIES: 2020: A STRONG OPERATIONAL PERFORMANCE THORESBY VALE, YORKSHIRE & CENTRAL THORESBY VALE DAVID WILSON HOMES MADE ITS FIRST PURCHASE TO BUILD 219 NEW HOMES ON PHASE 2 OF THE SITE Thoresby Vale is the redevelopment of the 450-acre former Thoresby Colliery, next to Sherwood For
Slide 19: Residential Case Studies: Micklefields
RESIDENTIAL CASE STUDIES: 2020: A STRONG OPERATIONAL PERFORMANCE MICKLEFIELDS, YORSHIRE & CENTRAL MICKLEFIELDS, CASTLEFORD THE FINAL PHASE OF HOUSING LAND HAS BEEN SOLD TO AVANT HOMES WHO WILL BUILD 140 NEW HOMES Planning secured in November 2015 Infrastructure and enabling works completed Harworth
Slide 20: Our Diversified Income Portfolio
2020: A STRONG OPERATIONAL PERFORMANCE OUR DIVERSIFIED INCOME PORTFOLIO INCOME STRATEGY PREDOMINANTLY INDUSTRIAL TENANTS Investment properties are actively managed by our in-house Income Generation team to drive recurring income and value gains BUSINESS SPACE SECTOR ANALYSIS Our strategy is to conti
Slide 21: Income Case Study: Knowsley
INCOME CASE STUDY: 2020: A STRONG OPERATIONAL PERFORMANCE KNOWSLEY, NORTH WEST SATURN PARK, KNOWSLEY IN NOVEMBER 2020 HARWORTH PURCHASED SATURN PARK IN KNOWSLEY, MERSEYSIDE FOR £26.0M (PLUS ACQUISITION COSTS) A 35.2 acre site adjacent to Junction 4 of the M57: well-positioned for access to The Port
Slide 22: Funding Investment Through Disposals
2020: A STRONG OPERATIONAL PERFORMANCE FUNDING INVESTMENT THROUGH DISPOSALS DISCIPLINED APPROACH WITH INVESTMENT IN INFRASTRUCTURE AND ACQUISITIONS LARGELY FUNDED THROUGH DISPOSALS • Net LTV of 11.5% at lower end of target range as at 31 December 2020 • Prudent gearing provides headroom and flexibil
Slide 23: Our Markets & Outlook
Our Markets & Outlook Harworth
Slide 24: Industrial & Logistics: Growth in E-Tailing Driving Strong Demand
MARKETS AND OUTLOOK INDUSTRIAL & LOGISTICS: GROWTH IN E-TAILING DRIVING STRONG DEMAND T he pandemic has accelerated the decline of the 2020 UK LOGISTICS MARKET; SUPPLY: LESS THAN 10 MONTHS WORTH OF SUPPLY REQUIREMENTS RISE TO HIGHEST LEVEL IN Q4 BASED ON ROLLING 3 YEAR AVERAGE TAKE UP High Street an
Slide 25: Residential: Resilient Demand Underpinned by Sound Fundamentals
MARKETS AND OUTLOOK RESIDENTIAL: RESILIENT DEMAND UNDERPINNED BY SOUND FUNDAMENTALS TOTAL 2020 TRANSACTIONS WERE AT 88% 5-YEAR HOUSE PRICE FORECASTS 2020-2025 elivering 300,000 new homes per year is D OF THE THREE YEAR AVERAGE BY REGION a key Government objective 150,000 30% Regions UK Average 2020
Slide 26: Changing Government Agenda and the Green Economy
MARKETS AND OUTLOOK CHANGING GOVERNMENT AGENDA AND THE GREEN ECONOMY s a master developer in some of the regions targeted by the Government with a A big strategic portfolio, we plan to play a fundamental part in the agenda to deliver houses and jobs in those areas overnment’s agenda is to ‘level up’
Slide 27: Harworth: Uniquely Well-Positioned
MARKETS AND OUTLOOK HARWORTH: UNIQUELY WELL-POSITIONED UK rail network Motorway network C ore residential and industrial markets in structural under-supply Key A roads with strong short-to-medium term fundamentals North West Yorkshire and Central T hrough-the-cycle business model with pipeline of sh
Slide 28: Appendix
APPENDIX: VALUATION METHODOLOGY 29 PROPERTY VALUATION MOVEMENT 30 PORTFOLIO REMAINS DIVERSIFIED 31 STRONG NET ASSET VALUE GROWTH 32 LATENT VALUE IN UNDERLYING PORTFOLIO FOR SALES & INCOME 33 KEY PROJECTS 34 STAGES OF SITE DEVELOPMENT 35 CURRENT FINANCING FACILITIES 36
Slide 29: Valuation Methodology
APPENDIX VALUATION METHODOLOGY THE PORTFOLIO IS VALUED TWICE VALUATION TECHNIQUES FOR THE BROAD CATEGORIES OF THE PORTFOLIO ARE: YEARLY. FORMAL YEAR-END VALUATIONS ARE UNDERTAKEN BY BNP AND SAVILLS, WHILST THEY ALSO BUSINESS SPACE STRATEGIC LAND & UNDERTOOK A DESKTOP VALUATION Market comparison with
Slide 30: Property Valuation Movement
APPENDIX PROPERTY VALUATION MOVEMENT £700.0m £50.5m £54.6m £15.6m £600.0m £30.0m £8.6m £500.0m £400.0m £300.0m £585.3m £618.2m £200.0m £100.0m £0.0m Value of Properties Development Acquisitions Disposals Net Investment Revaluation Value of Properties at 31/12/2019 spend in JVs gains at 31/12/2020 30
Slide 31: Portfolio Remains Diversified
APPENDIX: DETAILED PORTFOLIO INFORMATION PORTFOLIO REMAINS DIVERSIFIED SPLIT OF PORTFOLIO BY ASSET 10 LARGEST SITES KNOWSLEY WAVERLEY AMP NUFARM PHEASANT HILL PARK Strategic Land FOUR OAKS BUSINESS PARK Major Developments MELTON COMMERCIAL PARK SOUTH EAST COALVILLE Business Space IRONBRIDGE Natural
Slide 32: Strong Net Asset Value Growth
APPENDIX STRONG NET ASSET VALUE GROWTH FOR THE YEAR TO 31ST DECEMBER 2020, EPRA NDV PER SHARE INCREASED BY 2.8% TO 160.0p 160.0p 160.0p 155.6p 1.1p 8.4p 0.4p 155.0p (1.0p) (0.2p) (2.4p) (0.3p) (0.1p) 150.0p 11.5p 10.3p 145.0p (3.4p) 151.6p 140.0p 144.1p 135.0p 130.0p As at: Value gains/(losses) Prof
Slide 33: Well Positioned for the Future: Our Business Model
APPENDIX: WELL POSITIONED FOR THE FUTURE OUR BUSINESS MODEL FOCUS REMAINS ON UNLOCKING LATENT PORTFOLIO VALUE AND SELECTIVE ACQUISITIONS Asset management Placemaking Tenants sought for Long-term non- Live applications for 2,536 final vacant direct consented pipeline of residential plots and over and
Slide 34: Key Projects
APPENDIX: DETAILED PORTFOLIO INFORMATION KEY PROJECTS PROJECT RESIDENTIAL COMMERCIAL DELIVERY TIME PROGRESS TO DATE NEXT MILESTONE Plans for a new mixed-use scheme Planning to be submitted for (Olive Lane) which will form the heart of the mixed-use Olive Lane Consent for 3,890 homes at Yorkshire’s W
Slide 35: Stages of Site Development
APPENDIX: DETAILED PORTFOLIO INFORMATION STAGES OF SITE DEVELOPMENT 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Onwards WAVERLEY NEW COMMUNITY SOUTH EAST COALVILLE PHEASANT HILL PARK IRONBRIDGE ANSTY SIMPSON PARK THORESBY VALE WINGATES Site assembly & Masterplanning Infrastructure &
Slide 36: Current Financing Facilities
APPENDIX: FINANCIAL INFORMATION CURRENT FINANCING FACILITIES WEIGHTED AVERAGE COST OF DEBT IS 2.94% (USING 31 DECEMBER 2020 BALANCES AND RATES) WITH A 0.9% NON-UTILISATION FEE ON UNDRAWN RCF AMOUNTS £45m fixed at 1.235% plus 225 basis point margin until July 2022 LENDER SITE AMOUNT DRAWN (£) INTERES
Slide 37: Disclaimer
DISCLAIMER For the purpose of the following disclaimer, reference to this ‘presentation’ shall be Actual results may differ materially from those expressed in forward-looking deemed to include reference to the presentation slides, the presenters’ speeches, statements. As such, you are cautioned not
Slide 38: Office contact details
SECTION HEAD OFFICE BIRMINGHAM MANCHESTER LEEDS Advantage House Waterloo House Phoenix House Pinnacle T: 0114 349 3131 Poplar Way 20 Waterloo Street Cross Street 67 Albion Street E: enquiries@harworthgroup.com Rotherham Birmingham Manchester Leeds www.harworthgroup.com S60 5TR B2 5TB M2 4JF LS1 5AA