Harworth Group Plc · LSE:HWG

Harworth — FY2021 Earnings Presentation

46 slides from Harworth's earnings presentation, Mar 22, 2022

  1. Slide 1: Full Year Results 2021

    FULL YEAR RESULTS 2021 22 MARCH 2022

  2. Slide 2: Agenda

    AGENDA 1. OPENING REMARKS 2. FINANCIAL REVIEW 3. OPERATIONAL REVIEW 4. OUTLOOK 5. Q&A 2

  3. Slide 3: Stepping into our growth strategy

    STEPPING INTO OUR GROWTH STRATEGY Strong operational Significant market tailwinds, Record EPRA NDV growth of 23.5% performance particularly in industrial & logistics and Total Return of 24.6% Well-positioned with the expertise, landbank and financial firepower to pursue growth strategy to reach £1bn

  4. Slide 4: Highlights for 2021

    HIGHLIGHTS FOR 2021 INDUSTRIAL & LOGISTICS RESIDENTIAL PIPELINE GROWING OUR STRATEGIC INVESTMENT PORTFOLIO: PIPELINE (SQ. FT) (PLOTS) LANDBANK ROBUST OPERATIONAL METRICS 28.2m 30,804 Rent collection Vacancy 99% 2.7% 27.3m 30,668 29,596 24.4m 21.6m 21.3m Freehold acquisitions 20,490 17,836 added 1.5m

  5. Slide 5: Record take-up, constrained supply

    INDUSTRIAL & LOGISTICS RECORD TAKE-UP, CONSTRAINED SUPPLY TAKE-UP IN 2021 THE STRONGEST ON RECORD  Take-up reached record highs in 2021, surpassing records set in the previous year 60 50  Factors driving demand included growth of online retailing, onshoring of 40 supply chains, and response to sup

  6. Slide 6: Continued strong demand, supply below targets

    RESIDENTIAL CONTINUED STRONG DEMAND, SUPPLY BELOW TARGETS HOUSING SUPPLY REMAINS WELL BELOW UK GOVERNMENT TARGETS  Delivering 300,000 new homes per year a key Government target, but delivery remains well below this level 300,000 Long-standing Government target 250,000  Demand remains high across a

  7. Slide 7: Our strategy for growth

    OUR STRATEGY FOR GROWTH OUR PURPOSE: Harworth invests to transform land and property into sustainable places where people want to live and work ENABLERS THE HARWORTH WAY OUR KEY MARKETS FINANCING STRATEGY OUR PEOPLE Planet, People, Partnerships, Industrial & Logistics and Residential Prudently geare

  8. Slide 8: Progress against our growth strategy

    PROGRESS AGAINST OUR GROWTH STRATEGY 2015 - 2020 2021 AMBITION OVER 5-7 YEARS 1. Increasing direct 51k sq. ft completed 200k sq. ft developed 800k sq. ft developed development of industrial on average per annum on average per annum & logistics stock 432k sq. ft started on site 2. Accelerating sales

  9. Slide 9: Financial Review

    FINANCIAL REVIEW

  10. Slide 10: EPRA NDV growth to 197.6p per share

    EPRA NDV GROWTH TO 197.6p PER SHARE BALANCE SHEET (£m) 31 Dec 2021 31 Dec 2020 PROPERTY PORTFOLIO(1) 689.8 584.5 CASH 12.0 12.7 TRADE & RECEIVABLES, OTHER ASSETS 60.4 61.8 GROSS BORROWINGS (37.8) (83.9) DEFERRED TAX LIABILITIES(2) (42.6) (15.8) OTHER LIABILITIES(3) (103.8) (70.6) STATUTORY NET ASSET

  11. Slide 11: Higher serviced land and property sales drive revenues

    HIGHER SERVICED LAND AND PROPERTY SALES DRIVE REVENUES  Higher serviced land and property sales resulting from INCOME STATEMENT (£m) 2021 2020 accelerated sales in line with growth strategy as well as some rephasing of sales during Covid-19 pandemic REVENUE 109.9 70.0  At reporting date, 36% of 20

  12. Slide 12: Record valuation gains of £160.5m

    RECORD VALUATION GAINS OF £160.5m 2021 2020 31 Dec 2021 31 Dec 2020 £m REVALUATION TOTAL VALUE PORTFOLIO PORTFOLIO PROFIT ON SALE TOTAL VALUE GAINS GAINS VALUATION VALUATION GAINS/(LOSSES)(1) CAPITAL GROWTH MAJOR DEVELOPMENTS 6.6 79.4 86.0 (10.3) 308.2 248.1 STRATEGIC LAND 1.1 34.4 35.5 12.6 144.0 9

  13. Slide 13: Portfolio overview

    PORTFOLIO OVERVIEW NATURAL AGRICULTURE & OTHER STRATEGIC LAND: RESOURCES INDUSTRIAL & LOGISTICS RESIDENTIAL £53m | 22,129 plots £492 million | 28.2m sq. ft(1) RESIDENTIAL £237 million | 30,804 plots INCOME GENERATION INVESTMENT PORTFOLIO 41% £277m | 3.8m sq. ft £766m MAJOR DEVELOPMENTS: RESIDENTIAL

  14. Slide 14: Net debt of £25.7m with £128.0m cash & debt headroom

    NET DEBT OF £25.7m WITH £128.0m CASH & DEBT HEADROOM NET DEBT MOVEMENT (£m) 27.8 (80.9) 47.6 RCF Headroom 34.0 RCF Headroom 116.0 Cash 12.7 (33.6) 71.2 (13.1) Cash 1.6 1.2 12.0 3.9 25.7 31 Dec 2020 Development Spend Acquisitions Spend Sales Proceeds Payment of Deferred Profit excluding value Interes

  15. Slide 15: Low net loan to portfolio value of 3.4%

    LOW NET LOAN TO PORTFOLIO VALUE OF 3.4%  Target year-end net loan to portfolio value of GEARING OVERVIEW 31 Dec 2021 31 Dec 2020 <20% with a maximum of 25% NET DEBT (£m) 25.7 71.2  The weighted average cost of debt, using an end of month average 2021 balance and 31 December 2021 rates, was 2.90% w

  16. Slide 16: New debt facility: increased liquidity and flexibility

    NEW DEBT FACILITY: INCREASED LIQUIDITY AND FLEXIBLITY  Post year-end, Harworth agreed new senior debt HARWORTH’S AVAILABLE DEBT PROFILE AND RCF MATURITY package comprising a five-year £200m RCF, together with a £40m uncommitted accordion 5 years  Facility replaces Harworth’s previous RCF with Natw

  17. Slide 17: Operational Review

    OPERATIONAL REVIEW

  18. Slide 18: Potential to deliver 8.2m sq. ft of space

    INDUSTRIAL & LOGISTICS LAND PORTFOLIO POTENTIAL TO DELIVER 28.2M SQ. FT OF SPACE 2021 HIGHLIGHTS MAIN INDUSTRIAL & LOGISTICS SITES SOLD OR DEVELOPED / ESTIMATED GDV  Freehold acquisition of 107-acre site in Rothwell, Northamptonshire: potential NAME CONSENTED OR PLANNED (SQ. REMAINING TO DELIVERY t

  19. Slide 19: Exchanged on sales of Kellingley and Ansty sites

    INDUSTRIAL & LOGISTICS LAND PORTFOLIO EXCHANGED ON SALES OF KELLINGLEY AND ANSTY SITES KELLINGLEY, NORTH YORKSHIRE  In November 2021, exchanged on the sale of the Kellingley development site for £54.0m. Site had a valuation of £31.1m as at 30 June 2021  Took control of 149-acre former colliery sit

  20. Slide 20: Potential to deliver 30,804 new homes

    RESIDENTIAL LAND PORTFOLIO POTENTIAL TO DELIVER 30,804 NEW HOMES 2021 HIGHLIGHTS MAIN RESIDENTIAL SITES NAME PLOTS SOLD / CONSENTED OR PLANNED DELIVERY TIME  Freehold acquisition of 133-acre brownfield site in Staveley, Derbyshire: plans to deliver 600 homes, green spaces and other amenities 1 WAVE

  21. Slide 21: Delivering robust operational metrics

    INVESTMENT PORTFOLIO DELIVERING ROBUST OPERATIONAL METRICS KEY STATS DIVERSIFIED OCCUPIER PROFILE 31 Dec 2021 31 Dec 2020 BREAKDOWN BY SECTOR TOP 5 OCCUPIERS BY RENT ROLL NUMBER OF SITES 18 19 Transport/Logistics OCCUPIER % RENT ROLL 19% 17% Chemicals TOTAL AREA 3.7m sq. ft 3.4m sq. ft Manufacturing

  22. Slide 22: Our eight focus impact areas

    THE HARWORTH WAY OUR EIGHT FOCUS IMPACT AREAS COMMUNITIES PLANET PEOPLE 1. Delivering homes, supporting 3. Reducing CO2 emissions 7. Engaging our people, ensuring jobs, creating communities Harworth is a great place to work Operationally Net Zero Carbon by 2030 Fully Net Zero Carbon by 2040 2. Promo

  23. Slide 23: Outlook

    OUTLOOK  Strong performance in 2021 highlights the continuing demand for our sectors and the resilience of our business model  Growth strategy builds on existing strengths and capabilities and unlocks potential within our strategic landbank  Focus now fully on execution, and ensuring team has ski

  24. Slide 24: Appendices

    APPENDICES

  25. Slide 25: Appendices index

    APPENDICES INDEX TITLE PAGE TITLE PAGE BACKGROUND OPERATIONAL DATA & CASE STUDIES OUR INVESTMENT CASE 26 INDUSTRIAL & LOGISTICS: MAIN SITES 34 VALUATION METHODOLOGY 27 INDUSTRIAL & LOGISTICS CASE STUDY: ROTHWELL, NORTHAMPTONSHIRE 35 FINANCIAL TRACK RECORD 28 INDUSTRIAL & LOGISTICS CASE STUDY: GATEWA

  26. Slide 26: 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

  27. Slide 27: Valuation methodology

    VALUATION METHODOLOGY Our portfolio is valued twice a year. Formal year-end valuations are undertaken by BNPP VALUATION TECHNIQUES ACROSS THE PORTFOLIO: and Savills. The former also undertook a desktop valuation as at 30 June 2021 to support the production of our interim results. STRATEGIC LAND & Va

  28. Slide 28: Financial track record

    FINANCIAL TRACK RECORD INCOME 2021 2020 2019 2018 2017 REVENUE (£m) 109.9 70.0 85.5 78.1 53.7 GROSS PROFIT (£m) 48.7 10.6 27.9 24.5 16.0 OPERATING PROFIT (£m) 121.9 27.8 24.3 33.0 40.1 DIVIDEND PER SHARE (p) 1.1 1.8(1) 0.3 0.9 0.8 TOTAL RETURN (%) 24.6 3.0 7.8 13.3 13.2 TOTAL PROPERTY SALES (£m) 108

  29. Slide 29: Operational track record

    OPERATIONAL TRACK RECORD CAPITAL GROWTH PORTFOLIO 2021 2020 2019 2018 2017 RESIDENTIAL PLOTS SOLD 1,411 873 1,379 1,049 622 DIRECT DEVELOPMENT COMPLETED (m SQ. FT) 0.1 - - 0.4 0.3 31 Dec 2021 31 Dec 2020 31 Dec 2019 31 Dec 2018 31 Dec 2017 INDUSTRIAL & LOGISTICS PIPELINE (m SQ. FT) 28.2 27.3 24.4 21

  30. Slide 30: 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 30

  31. Slide 31: Property valuation movement (£m)

    PROPERTY VALUATION MOVEMENT (£m) 148.0 765.7 27.8 (76.6) 47.0 618.2 1.6 31

  32. Slide 32: Portfolio breakdown

    PORTFOLIO BREAKDOWN REMAINING SOUTH EAST COALVILLE STRATEGIC LAND SITES (34%) NUFARM MAJOR DEVELOPMENTS KELLINGLEY INVESTMENT PORTFOLIO NATURAL RESOURCES TOP 10 SITES: WAVERLEY (RESIDENTIAL) 44% £766m AGRICULTURE & OTHER AMP KNOWSLEY ANSTY IRONBRIDGE FOUR OAKS BUSINESS PARK PHEASANT HILL PARK NEXT 1

  33. Slide 33: EPRA NDV bridge

    EPRA NDV BRIDGE 4.1p (1.3)p (3.2)p (10.3)p 13.1p (1.8)p 0.4p 197.6p 36.6p 18.3p 179.3p 160.0p 8.4p 151.6p 31 Dec 2020 Value Gains/(losses) Profit Excluding Value Interest & Finance Tax Dividend Other (pension, swap, 31 Dec 2021 Gains Costs dilution etc) NAV per share EPRA NDV per share 33

  34. Slide 34: Main sites: industrial & logistics

    INDUSTRIAL & LOGISTICS LAND PORTFOLIO MAIN SITES SQ. FT SOLD OR NAME DESCRIPTION DEVELOPED / DELIVERY TIME PROGRESS IN 2021 NEXT STEPS CONSENTED ADVANCED Located adjacent to J33 of the M1, the AMP Started on-site with the construction of a new Further direct development as part of the next is home t

  35. Slide 35: Acquisition at Rothwell, Northamptonshire

    INDUSTRIAL & LOGISTICS LAND PORTFOLIO: CASE STUDY ACQUISITION AT ROTHWELL, NORTHAMPTONSHIRE IN NOVEMBER, ACQUIRED THE FREEHOLD TO A 107-ACRE STRATEGIC LAND SITE WITH THE POTENTIAL TO DELIVER 1.5M SQ. FT OF INDUSTRIAL & LOGISTICS SPACE  Located at Junction 3 of the A14, connecting to the A6, within

  36. Slide 36: Gateway 36, Barnsley, South Yorkshire

    INDUSTRIAL & LOGISTICS LAND PORTFOLIO: CASE STUDY GATEWAY 36, BARNSLEY, SOUTH YORKSHIRE PLANNING SECURED FOR THE FIRST STAGE OF PHASE 2 OF GATEWAY 36, AND SALE COMPLETED FOR PHASE 3  Harworth has transformed the 127-acre site, formerly home to the Rockingham Colliery, into a major hub for logistics

  37. Slide 37: Main sites: residential

    RESIDENTIAL LAND PORTFOLIO MAIN SITES PLOTS SOLD / DELIVERY NAME DESCRIPTION PROGRESS IN 2021 NEXT STEPS CONSENTED TIME Planning submitted for Olive Lane, a new heart of the Yorkshire’s largest ever mixed-use community including a supermarket, restaurants, a medical brownfield development, with Furt

  38. Slide 38: Acquisition at Staveley, Derbyshire

    RESIDENTIAL LAND PORTFOLIO: CASE STUDY ACQUISITION AT STAVELEY, DERBYSHIRE IN DECEMBER, ACQUIRED THE FREEHOLD TO A 133-ACRE BROWNFIELD SITE CAPABLE OF DELIVERING 600 NEW HOMES  Located close to the A619, in the Staveley & Rother Valley Corridor  Wider area allocated by Chesterfield Borough Council

  39. Slide 39: Ironbridge, Shropshire

    RESIDENTIAL LAND PORTFOLIO: CASE STUDY IRONBRIDGE, SHROPSHIRE TRANSFORMING A FORMER POWER STATION INTO A SUSTAINABLE NEW COMMUNITY  In September 2021, Harworth received planning approval for the regeneration of the former Ironbridge Power Station in Shropshire  Harworth acquired the 350-acre site

  40. Slide 40: South East Coalville, Leicestershire

    RESIDENTIAL: CASE STUDY SOUTH EAST COALVILLE, LEICESTERSHIRE DEVELOPMENT ENTERS ITS SECOND PHASE WITH TWO PLOT SALES IN 2021 REPRESENTING OVER 300 NEW HOMES Swinfen Vale  Harworth’s largest residential development in its Midlands region  250-acre site less than two miles from Junction 22 of the M1

  41. Slide 41: Stages of site development

    STAGES OF SITE DEVELOPMENT 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032+ WAVERLEY SOUTH EAST COALVILLE PHEASANT HILL PARK IRONBRIDGE SIMPSON PARK WINGATES Planning & Site preparation Infrastructure & Land sales Planning & Site preparation / Infrastructure & land sales Infrastructure & Land

  42. Slide 42: Top 10 sites by valuation and EPC ratings

    INVESTMENT PORTFOLIO TOP 10 SITES BY VALUATION AND EPC RATINGS TOP 10 SITES BY VALUATION INVESTMENT PORTFOLIO BY EPC RATING1 32% 32% SITE LOCATION SQ. FT NUFARM BRADFORD 0.3m 18% ADVANCED MANUFACTURING PARK ROTHERHAM 0.2m 9% SATURN BUSINESS PARK KNOWSLEY 0.4m 5% 2% 2% WALTON SUMMIT PRESTON 0.4m MELT

  43. Slide 43: Acquisition of Towngate Business Park, Widnes

    INVESTMENT PORTFOLIO: CASE STUDY ACQUISITION OF TOWNGATE BUSINESS PARK, WIDNES  Acquired in March 2021 for £12.7m, representing a NIY of 7.1% and a reversionary yield of 9.4%  262,000 sq. ft of fully-let space across nine units, with a WAULT of 4.3 years, facilitating asset management initiatives

  44. Slide 44: 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. 31 DEC 2021 31 DEC 2020 NUMBER OF SITES 20 23 ANNUALISED RE

  45. Slide 45: 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

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Harworth Group — FY2021 Earnings Presentation on 6ix