Harworth Group Plc · LSE:HWG
Harworth — FY2023 Earnings Presentation
43 slides from Harworth's earnings presentation, Mar 19, 2024
Slide 1: Full Year Results
Full Year Results 19 March 2024 www.harworthgroup.com Harworth Group plc | Full Year Results 2023 Image: Learn-to-ride cycle track at Waverley, Rotherham
Slide 2: Agenda
Agenda 1. Introduction 2. Financial review 3. Operational review 4. Outlook & conclusion 5. Q&A Harworth Group plc | Full Year Results 2023 2
Slide 3: Highlights of 2023
Highlights of 2023 EPRA NDV per share Total Return LTV 205.1p (+4.4%) 5.1% 4.7% (Dec 2022: 196.5p) (2022: 0.1%) (Dec 2022: 6.6%) Industrial & logistics Residential pipeline Reduction in Harworth’s operational carbon emissions (plots) -24% pipeline (sq. ft) 37.7m 35.0m 29,596 30,668 30,804 29,311 27,
Slide 4: Consistently outperforming the sector
Consistently outperforming the sector Cumulative performance (%) 45 Growth strategy launched during 40.6% 40 the year 35 30 2023 Total Return 25 Harworth: +5.1% 20 MSCI All Property Index: -1.0% 15 10 5 4.9% 0 -5 2019 2020 2021 2022 2023 Harworth Total Return MSCI All Property Index Total Return Sou
Slide 5: Progressing our growth strategy
Progressing our growth strategy Growth drivers 2023 How we will reach our ambition Ambition by the end of 2027 Progressing sites through the planning system ready 1. Increasing direct 193,000 sq. ft developed for development 800,000 sq. ft development of industrial Enabling and developing our co
Slide 6: Financial review
Financial review Kitty Patmore Chief Financial Officer Harworth Group plc | Full Year Results 2023
Slide 7: Growth supported by consistent property sales
Growth supported by consistent property sales Total Property Sales of £125.9m ahead of 5-year average (£105.7m) Income statement (£m) 2023 2022 Income Generation revenue lower due to sales from Increased due to higher Revenue 72.4 166.7 the Investment Portfolio; this will rise again as salary ex
Slide 8: EPRA NDV increased 4% to 205.1p per share
EPRA NDV increased 4% to 205.1p per share Increase in EPRA NDV to £662.9m continuing on track to reach the Balance sheet (£m) 31 Dec 2023 31 Dec 2022 £1bn target by the end of 2027 Property portfolio(1) 734.8 695.4 Increase due to uptick in Increase in valuations following valuation of investmen
Slide 9: Valuation gains driven by management actions
Industrial & logistics land portfolio Valuation gains driven by management actions The Industrial & logistics land portfolio delivered revaluation gains in 2023 Industrial & logistics strategic land valuation (£m) of £60.6m representing like for like growth of 29.3% 18.4 105.9 9.9 (0.9) (11.6) A
Slide 10: Rent growth and asset management add value
Investment Portfolio Rent growth and asset management add value Investment Portfolio valuation (£m) 280.9 0.7 2.9 (69.3) 6.2 221.4 Disposal of assets in New leases, renewals line with book value and rent reviews added (before costs) with EPC £2.1m to annualised ratings between B and rent and resulte
Slide 11: Valuations underpinned by residential land sales
Residential land portfolio Valuations underpinned by residential land sales The Residential land portfolio delivered revaluation losses in 2023 of £2.9m Residential strategic land valuation (£m) representing like for like reduction in the portfolio of 1.3%. 0.9 (7.4) 1.1 0.2 51.4 6.1 51.6 Reside
Slide 12: Significant latent value in portfolio
Significant latent value in portfolio Natural Industrial & logistics Resources Strategic land: Agricultural Land & other Residential Industrial Residential Residential £52m | 21,031 plots & logistics (per plot) (per sq. ft) Investment Portfolio £221m | 2.5m sq. ft Resi Sales price / Grade A in £53k
Slide 13: Low net debt and significant available facilities
Low net debt and significant available facilities Net debt movement (£m) 3.1 (131.5) 4.4 10.2 4.5 RCF 10.1 Headroom RCF Headroom 19.0 165.0 164.0 68.2 Cash: 11.6 Cash: 27.2 48.4 36.4 31 Dec 22 Development spend Acquisitions Loss excluding value Interest and finance Tax Dividends Cash and working Sal
Slide 14: Net loan to portfolio value remains low at 4.7%
Net loan to portfolio value remains low at 4.7% Debt facility metrics 31 Dec 2023 31 Dec 2022 Net debt (£m) 36.4 48.4 Weighted average cost of debt 6.9% 5.5% Well within target of having a year-end net loan to portfolio value of <20%, with a Net loan to portfolio value 4.7% 6.6% maximum of 25% in-ye
Slide 15: Operational review
Operational review Lynda Shillaw Chief Executive Harworth Group plc | Full Year Results 2023
Slide 16: Potential to deliver 37.7m sq. ft of space
Industrial & logistics land portfolio Potential to deliver 37.7m sq. ft of space Main industrial & logistics sites (31 Dec 2023) Forecast Sold or developed / Estimated GDV Name consented or planned (sq. ft) remaining to develop completion date Planning approved 1 AMP 1.7m / 2.1m £50m - £60m 2027 for
Slide 17: Strong occupational market drives robust metrics
Investment Portfolio Strong occupational market drives robust metrics Sector breakdown (31 December 2023) Key stats 31 Dec 2023(1) 31 Dec 2022 Number of sites 11 19 Total area 2.5m sq. ft 4.0m sq. ft Other Reduction driven by Retail 14% Annualised rent roll £14.1m £19.7m property sales 5% Gross yiel
Slide 18: Potential to deliver 27,190 new homes
Residential land portfolio Potential to deliver 27,190 new homes Main residential sites (31 Dec 2023) Forecast Name Plots sold / consented or planned completion date 1 Waverley 2,528 / 3,038 2025 Land parcel sold to 2 South East Coalville 977 / 2,016 2031 Harron Homes for 141 houses at Prince of 3 S
Slide 19: Progressing mixed tenure portfolios to accelerate delivery
Residential land portfolio Progressing mixed tenure portfolios to accelerate delivery Affordable Single-family Coze Homes Senior Living Housing Built-to-Rent (small-scale pilot of c.100 net (exploring opportunities to (land for c.550 homes) (land for c.1,000 homes) zero carbon homes) bring providers
Slide 20: Delivering a lasting positive impact
The Harworth Way Delivering a lasting positive impact Planet Launch of Net Zero Carbon Pathway, with target to be operationally NZC by 2030 and fully NZC by 2040 Operational carbon emissions reduced by 24% during the year, driven mainly by switching to HVO fuels and increased EV usage Communitie
Slide 21: Outlook: on track to reach £1bn target by the end of 2027
Outlook: on track to reach £1bn target by the end of 2027 Self-propelled growth strategy underpinned by our strategic landbank and the skills or our people Proven track record on site and in delivering above market returns through the cycle Low leverage and a strong balance sheet and are well positi
Slide 22: Appendices
Appendices Harworth Group plc | Full Year Results 2023
Slide 23: Appendices index
Appendices index Slide title Page Background Introducing Harworth 24 A long-term, through-the-cycle business 25 Our portfolio 26 Our business model 27 The planning cycle 28 Financial track record 29 Operational track record 30 Valuation methodology 31 Financial data Property valuation movement bridg
Slide 24: Introducing Harworth
Introducing Harworth Who we are Our purpose What we create Our values Harworth is one of the UK’s Our purpose is to invest to As a master developer, we Our sustainability framework, leading land and property transform land and property create long-term value by The Harworth Way, guides our regenerat
Slide 25: A long-term, through-the-cycle business
A long-term, through-the-cycle business Transforming land and property into sustainable places where people want to live and work Structurally Strong Unique Extensive Responsible undersupplied financial skillset landbank business markets position Consistently delivering market leading returns throug
Slide 26: Our portfolio (selected sites)
Our portfolio (selected sites) Site name Location Industrial & logistics 1 AMP Rotherham, South Yorkshire 2 Gateway 36 Barnsley, South Yorkshire 3 Chatterley Valley Stoke-on-Trent, Staffordshire 4 Wingates Bolton, Greater Manchester 5 Skelton Grange Leeds, West Yorkshire 6 6 Gascoigne Wood Sherbur
Slide 27: Our business model
Our business model Strategic Land Major Developments Investment Portfolio Asset management Placemaking Plot sale or direct development Value creation Infrastructure development Steps repeated as sites mature Land preparation Planning approval Masterplanning Acquisitions & land assembly Time Targetin
Slide 28: The planning cycle
The planning cycle Unallocated Draft Harworth is promoting a significant number Allocation of sites through the planning process to Allocation secure an allocation in a local plan. This is a 12.3m sq ft key part of the process to create and unlock 13,363 plots 6.2m sq ft high value uses on our sites
Slide 29: Financial track record
Financial track record Income 2023 2022 2021 2020 2019 2018 Revenue (£m) 72.4 166.7 109.9 70.0 85.5 78.1 Gross profit (£m) 12.4 83.4 48.7 10.6 27.9 24.5 Operating profit (£m) 54.2 44.5 121.9 27.8 24.3 33.0 Dividend per share (p) 1.5 1.3 1.1 1.8(1) 0.3 0.9 Total Return (%) 5.1 0.1 24.6 3.0 7.8 13.3 T
Slide 30: Operational track record
Operational track record Capital growth 2023 2022 2021 2020 2019 2018 Residential plots sold 1,170 2,236 1,411 873 1,379 1,049 Direct development completed (m sq. ft) 0.2 0.4 0.1 - - 0.4 31 Dec 2023 31 Dec 2022 31 Dec 2021 31 Dec 2020 31 Dec 2019 31 Dec 2018 Industrial & logistics pipeline (m sq. ft
Slide 31: Valuation methodology
Valuation methodology Our portfolio is valued twice a year. Independent valuers, BNPP and Savills, undertook a valuation as at 31 December 2023 to support the production of our year end results. Valuation is carried out property-by-property on the basis of market value (RICS Red Book definition)
Slide 32: Property valuation movement (£m)
Property valuation movement (£m) 16.5 (117.5) 68.2 63.2 768.1 736.8 0.9 Properties at Development Acquisitions Disposals Investment in JVs Revaluations (1) Properties at 31 Dec 2022 Spend 31 Dec 2023 (1) Revaluations excludes Joint Venture revaluation gains of £1.5m, and Land and Buildings revaluati
Slide 33: EPRA NDV per share bridge (p)
EPRA NDV per share bridge (p) 17.5p (1.8)p (3.1)p (1.4)p 0.5p 205.1p 196.5p (3.1)p 31 Dec 2022 Loss Excluding Value Value Gains/(losses) Interest & Finance Costs Tax Dividend Other 31 Dec 2023 Gains Harworth Group plc | Full Year Results 2023 33
Slide 34: Cumulative total valuation gains (£m)
Cumulative total valuation gains (£m) Total £333.2m valuation gains Over 5 years Average annual Total Accounting Return of c.8% per annum over five years Harworth Group plc | Full Year Results 2023 34
Slide 35: Portfolio breakdown (31 December 2023)
Portfolio breakdown (31 December 2023) Ironbridge Strategic land Skelton Grange Remaining Major developments Sites (27%) Investment Portfolio South East Coalville Natural Resources Top 10 sites: 51% £768m Agricultural Land & other Bardon Hill Nufarm AMP Next 10 sites Ansty (22%) Knowsley Wingates Si
Slide 36: Debt facilities: high available liquidity and flexibility
Debt facilities: high available liquidity and flexibility In March 2022, Harworth agreed a new senior debt package comprising a Harworth’s available debt profile and RCF maturity five-year £200m RCF, together with a £40m 3.2 years 3.2 years uncommitted accordion 2.9 years The facility replaced H
Slide 37: Valuation movements table
Valuation movements table Residential: stable market, as 2023 2022 31 Dec 31 Dec supply remained constrained and Total 2023 2022 house prices were maintained. For £m Profit/(loss) Revaluation Total value Value Portfolio Portfolio Gains/ major developments, progress on sale(1) gains/(losses)(2) gai
Slide 38: Main sites: Industrial & logistics land portfolio
Industrial & logistics land portfolio Main sites sq. ft sold or Forecast developed / Name Description consented or completion Progress in 2023 Next steps planned date Complete construction of 187,000 sq. ft at the Adjacent to J33 of the M1, home to a number of global Completion of 83,000 sq. ft of d
Slide 39: Main sites: Residential land portfolio
Residential land portfolio Main sites Plots sold / Forecast Name Description consented or completion Progress in 2023 Next steps planned date Yorkshire’s largest ever mixed-use brownfield Commenced development of Olive Lane and completed a Build completion and first occupation of Olive Lane 21,000 s
Slide 40: 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 (31 December 2023) Investment Portfolio breakdown by EPC rating (31 December 2023)(1) Site Location Area (sq. ft) 75% EPC A-C Bardon Hill Coalville 0.3m 32% Nufarm Bradford 0.3m Advanced Manufacturing Park
Slide 41: Exploring energy and natural capital opportunities
Natural Resources Exploring energy and natural capital opportunities Natural Resources portfolio already includes sites used for a wide range of energy production and extraction purposes Energy / sustainability products currently being explored: Our energy & natural capital strategy focuses on h
Slide 42: 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 43: Harworth Group plc
Harworth Group plc Head Office Birmingham Manchester Leeds Advantage House Waterloo House 6th Floor, Trinity 3rd Floor Poplar Way 20 Waterloo Street 16 John Dalton Street Nine Bond Court Rotherham Birmingham Manchester Leeds S60 5TR B2 5TB M2 6HY LS1 2JZ www.harworthgroup.com Harworth Group plc | Fu