Harworth Group Plc · LSE:HWG
Harworth — H1 2016 Earnings Presentation
28 slides from Harworth's earnings presentation, Sep 6, 2016
Slide 1: 2016 Interim Results
2016 INTERIM RESULTS 6 SEPTEMBER 2016 Transforming - Regenerating - Revitalising
Slide 2: Harworth performance remains on-track
HARWORTH PERFORMANCE REMAINS ON-TRACK • Positioned for continued NAV growth Further progress in the valuation of our property portfolio Ongoing improvements in optimising land use, securing planning permissions and deriving other revenue streams • Additional income generation secured New and i
Slide 3: Financial highlights
FINANCIAL HIGHLIGHTS1 • 2016 H1 EBIT of £8.3m (H1 2015: £320m £14.8m) . Value gains include a 315.8 £2.9m reduction for 2016 stamp +11.6% duty changes, 2015 value gains 309.1 £310m includes £3.2m for option sale +9.2% 303.0 Financial performance in line £300m 297.7 +10.4% with expectations but, as
Slide 4: Market backdrop
MARKET BACKDROP The markets in our regions remain robust: RESIDENTIAL Demand for land remains steady, with house builders reporting consistent plot sales post Brexit vote; we also have several deals in the pipeline COMMERCIAL Demand for well-connected industrial and logistics space remains good with
Slide 5: Business model
BUSINESS MODEL • Harworth is one of the leading brownfield regeneration companies in the North of England and the Midlands, delivering superior returns to shareholders by providing innovative solutions Acquisitions Diverse and Capital Growth Income Generation extensive landbank Hold - recurring inco
Slide 6: Thoresby: masterplanning & remediation
THORESBY: MASTERPLANNING & REMEDIATION 150 development acres 700 new homes and 250,000 350 acre Country Park now Nottinghamshire (500 acres total) sq. ft employment space underway Planning BEFORE Development to date Thoresby Colliery (2007) • Draft allocation secured in Newark • Public consultation
Slide 7: Replenishing the portfolio: H1 acquisition summary
REPLENISHING THE PORTFOLIO: H1 ACQUISITION SUMMARY • Harworth made four acquisitions in the first half of 2016 for £12.8m, including costs. The two key acquisitions were: Temple Green (£9.0m) Sanderson (Advantage) House (£2.3m) • In March, we purchased 50% of Aire Valley • In February 2016, we purch
Slide 8: Segmental reporting
SEGMENTAL REPORTING Six months to 30 June H1 2015 Capital Income Central H1 2016 Total Growth Generation overheads Total £000 £000 £000 £000 £000 Revenue (rent, royalty and operations) 7,737 9,580 7,825 - 17,405 Cost of sales (3,393) (9,438) (2,384) (42) (11,864) Overheads (3,333) (832) (678) (3,155
Slide 9: NAV movements
NAV MOVEMENTS £315m 7.4 £305m 26.7 303.0 297.7 0.9 (3.0) £295m (4.5) £285m 15.1 274.5 1.1 £275m (5.6) 13.7 £265m £255m 250.3 1.1 £245m £235m £225m NAV at Profit from Value Gains Cash raised Interest NAV at Profit from Value Gains Interest NAV at Profit from Value Gains Interest NAV at 31/12/2014 ope
Slide 10: Our balance sheet remains prudent
OUR BALANCE SHEET REMAINS PRUDENT £000 • Investment properties valued by management at half year (BNP Paribas and Savills at year end). Value Investment Properties 363,925 was £344.5m at 31 December 2015 (including assets held for sale and JVs) • Planned RBS financing extension concluded in August D
Slide 11: Recycling cash into future developments
RECYCLING CASH INTO FUTURE DEVELOPMENTS £45m 10,894 £40m £35m £30m 2,214 27,564 (12,027) £25m 7,803 23,692 £20m £15m (12,756) £10m £5m £0m Opening Cash Cash and Disposal Development Acquisitions Increase in debt Closing Cash 31/12/15 working capital proceeds spend 30/06/16 used in operations • Dispo
Slide 12: Strategy and outlook
STRATEGY AND OUTLOOK • Strategic focus remains unchanged Promoting, developing and utilising our existing portfolio to its full potential whilst replenishing our asset base Delivering a sustainable, recurring portfolio of income projects • Market in our regions remains robust The AMRC at Advance
Slide 13: Appendices
APPENDICES 6 SEPTEMBER 2016 Summary of investment properties – Concentration 13 Income generation: Summary, strategy and trends 21 Summary of investment properties – Movement 14 Income generation: Progress in H1 2016 22 Residential: Progress with sales & planning 15 Reconciliation of H1 2015 Income
Slide 14: Summary of investment properties - concentration
SUMMARY OF INVESTMENT PROPERTIES - CONCENTRATION Remaining Waverley • Focus is on brownfield sites with greater properties enhancement potential Top 10 sites represent c.60% of Logistics North portfolio value Top 20 sites represent c.80% of £363.9M portfolio value Next 10 Rossington • Number of
Slide 15: Summary of investment properties – movement
SUMMARY OF INVESTMENT PROPERTIES – MOVEMENT (INCLUDES AVAILABLE FOR SALE AND JOINT VENTURES) 14 Transforming - Regenerating - Revitalising
Slide 16: Residential: progress with sales & planning
RESIDENTIAL: PROGRESS WITH SALES & PLANNING • Average target of 1,000 units p.a. for planning and sales. Planning preparation and promotion in H1 with a range of applications to be submitted in H2. Future pipeline beyond 2017 remains solid CONSENTED RESIDENTIAL PLOTS IN PORTFOLIO 10,299 65 10,029 (3
Slide 17: Commercial: progress with sales & planning
COMMERCIAL: PROGRESS WITH SALES & PLANNING • Purchase of Temple Green, Leeds has pushed consented space within our portfolio to over 10m sq. ft for the first time. Strong pipeline of applications in H2 and into the future CONSENTED COMMERCIAL LAND IN PORTFOLIO 2.6m 0m 10.5m* 7.8m 0.1m Sq. ft of spac
Slide 18: Infrastructure spend: progress in H1 2016
INFRASTRUCTURE SPEND: PROGRESS IN H1 2016 H1 2015 H1 2016 Sites Status (£’m) (£’m) Build of Helix industrial unit and fast-food units for KFC and Rockingham 1.6 3.9 Taco Bell Logistics North 5.7 1.4 Completion of infrastructure works & build of Country Park Infrastructure and remediation of both hou
Slide 19: Recycling capital: H1 disposal summary
RECYCLING CAPITAL: H1 DISPOSAL SUMMARY • Total disposal proceeds of £13.3m (2015: Split of disposal proceeds (£13.3m) £21.0m), of which £2.4m is deferred, generating a loss on disposal of £0.5m (£5.5m profit). 2015 included a £3.2m profit on the sale of the Other 32% Chevington option • Residential
Slide 20: Valuation methodology
VALUATION METHODOLOGY • Portfolio is valued twice yearly. Formal year end valuation by BNP Paribas and Savills, and half year valuation by management with review by BNP Paribas and Savills • Valuation is property by property on the basis of Market Value (RICS Red Book definition) given the highest a
Slide 21: Revaluation gains
REVALUATION GAINS Six months to 30 June (£’m) 2015 2016 Major Developments Progress made in the regeneration of Chatterley Valley, strong 2.3 2.0 occupier interest at Logistics North, Savings on cost plan at Harworth Business Parks 1.9 1.0 Direct development advancing at Gateway 36 (Rockingham) Stra
Slide 22: Income generation: summary, strategy and trends
INCOME GENERATION: SUMMARY, STRATEGY AND TRENDS • The strategy is to grow and improve the quality of recurring income to cover overheads (including strategic land promotion), interest and ultimately cover the dividend Revenue from Income streams £20.0m £20.0m Business area description Revenue trend
Slide 23: Income generation: progress in H1 2016
INCOME GENERATION: PROGRESS IN H1 2016 BUSINESS SPACE NATURAL RESOURCES • Portfolio WAULT of 8.8 years (December 2015: 8.3 years) • Chevington wind farm commissioned (18MW) and Lounge • Good progress with new lettings (Barnsley Council, now operational (0.5MW), solar developments completed Environme
Slide 24: Reconciliation of H1 2015 income statement
RECONCILIATION OF H1 2015 INCOME STATEMENT Six months to 30 June 2015 Harworth Group plc Harworth Group plc Fair Value Harworth Group plc Underlying Underlying - Pre Acquisition Adjustments £000 £000 £000 £000 Profit from operations 1,068 (305) (297) 466 Valuation gain 8,186 (4,830)(1) - 3,356 Profi
Slide 25: Cash flow for the half year to 30 June 2016
CASH FLOW FOR THE HALF YEAR TO 30 JUNE 2016 £’000 Profit after tax 5,964 Loss on disposals (499) Revaluation gains (7,900) Movements in working capital and other 5,196 Cash used in operations 2,761 Temple Green acquisition and associated funding Investment in joint venture (9,030) Proceeds from disp
Slide 26: Gateway 36 (Rockingham): capital uplift
GATEWAY 36 (ROCKINGHAM): CAPITAL UPLIFT Phases 2&3: 100 acres+ First three units, 75,000 sq. ft direct Phase 1: 198,000 sq. ft totalling 65,000 sq. ft, Barnsley, Yorkshire planned for commercial development unit also over 11 acres leased to Barnsley MBC uses under construction Planning BEFORE: Devel
Slide 27: Temple Green: replenishing the portfolio
TEMPLE GREEN: REPLENISHING THE PORTFOLIO 2,600,000 sq. ft Leeds City Council Park Phase 1 Infrastructure Leeds 166 development acres Commercial Space & Ride as first occupier completed Planning BEFORE Development to date Waterloo Main Colliery (1968) • Formerly Waterloo Main Colliery, one • Sale of
Slide 28: Disclaimer
DISCLAIMER • For the purpose of the following disclaimer, reference to this • In making this presentation available, Harworth makes no ‘presentation’ shall be deemed to include reference to the presentation recommendation to buy, sell or otherwise deal in shares in Harworth or in slides, the present