Slide 1: Preliminary Results 2018
PRELIMINARY RESULTS 2018 5 March 2019 www.harworthgroup.com
Slide 2: Agenda
AGENDA 1. RECAP OF 2018 ACTIVITIES AND OUR STRATEGY, MARKETS AND BUSINESS MODEL 3-7 OWEN MICHAELSON, CHIEF EXECUTIVE 2. 2018 FINANCIAL PERFORMANCE 8-13 ANDREW KIRKMAN, FINANCE DIRECTOR 3. WELL POSITIONED FOR THE FUTURE 14-21 OWEN MICHAELSON, CHIEF EXECUTIVE 4. APPENDICES 22-32 2
Slide 3: Another strong year of delivery and progress
ANOTHER STRONG YEAR OF DELIVERY AND PROGRESS STRONG PERFORMANCE SOUND MARKETS CLEAR STRATEGY 13.3% TOTAL RETURN ACHIEVED - ONCE FOCUS REMAINS ON ‘BEDS AND SHEDS’ STRATEGY AND BUSINESS MODEL ARE AGAIN ABOVE TARGET LONG-RUN TOTAL SECTORS IN THE NORTH OF ENGLAND CENTRED ON LARGE, COMPLEX SITE RETURN OF
Slide 4: Vision and strategy remain clear and robust
VISION AND STRATEGY REMAIN CLEAR AND ROBUST Perth VISION - TO BE THE LEADING LAND AND PROPERTY REGENERATION SPECIALIST IN THE NORTH OF ENGLAND AND MIDLANDS M8 Edinburgh Glasgow M74 DEVELOPMENT REGIONS NORTH EAST 16 sites Dumfries A74(M) Driving the capital growth of Leveraging our strong Carlisle Ne
Slide 5: Clear market focus supported by government policy
CLEAR MARKET FOCUS SUPPORTED BY GOVERNMENT POLICY RESIDENTIAL INDUSTRIAL & LOGISTICS GOOD DEMAND STEADY DEMAND ousing under-supply is driving consistently good demand H Steady demand for well-located industrial space continues, for land from housebuilders of all types in our regions with supply cont
Slide 6: Driving sector-leading total returns
DRIVING SECTOR-LEADING TOTAL RETURNS Recurring Income Capital CAPITAL REALISATION Receipt Asset Management Plot Sale / Build Out Reinvestment of Capital Infrastructure Development Indicative Value Add Land Preparation Planning Approval Masterplanning Competitive advantage comes from our ability to a
Slide 7: Significant progress throughout 2018
SIGNIFICANT PROGRESS THROUGHOUT 2018 ACQUISITION LAND PREP & & LAND MASTER- PLANNING INFRASTRUCTURE PLOT SALE/ ASSET ASSEMBLY PLANNING APPROVAL DEVELOPMENT BUILD OUT MANAGEMENT Eleven sites Applications Outline planning 15 major projects 1,049 residential Over 300,000 sq. ft purchased for submitted
Slide 8: Continued strong net asset value growth
CONTINUED STRONG NET ASSET VALUE GROWTH In 2018, EPRA NNNAV per share rose by 12.6% to 145.2p, (NAV by 7.9% to 137.5p and EPRA NAV by 13.2% to 148.3p) 150.0p 3.1p 145.0p 7.7p 140.0p 7.4p 0.4p 0.2p 1.2p 1.0p 0.3p 3.1p 0.9p 1.2p 135.0p EPRA NAV per share EPRA NNNAV per share 8.6p NAV per share 137.5p
Slide 9: Value gains driven by active management
VALUE GAINS DRIVEN BY ACTIVE MANAGEMENT OVER 80% OF OUR REVALUATION GAINS CONTINUE TO COME DIRECTLY FROM ACTIVE MANAGEMENT • Earlier recognition of revaluation gains on upcoming profitable sales led to lower profit on disposal compared to last year 2018 2017 TWELVE MONTHS TO 31 DECEMBER (£’m) Revalu
Slide 10: Sales of mature income sites to enhance returns
SALES OF MATURE INCOME SITES TO ENHANCE RETURNS We are continuing to deliver our policy of actively asset managing our income generating sites. With some of our mature income generating sites having limited potential for further value uplift, we now intend to sell c.£20m of these sites each year to
Slide 11: Growing income to cover all business overheads
GROWING INCOME TO COVER ALL BUSINESS OVERHEADS Profit Excluding Value Gains TWELVE MONTHS TO 31 DECEMBER Capital Growth Income Central 2018 2017 2018 reflects increase from income (£’000) Development Other Generation Overheads Total Total generation acquisitions and M&G Profit excluding value gains
Slide 12: Significant debt and equity advances
SIGNIFICANT DEBT AND EQUITY ADVANCES RCF EXTENSION PREMIUM LISTING & INDICES INCLUSION On 30 April, Harworth extended its Revolving Credit Facility (RCF) On 29 May, Harworth announced the formal start of a process to from £75m to £100m by bringing Santander in alongside RBS transfer its shares from
Slide 13: Managing annual cash flows to fund growth
MANAGING ANNUAL CASH FLOWS TO FUND GROWTH DISCIPLINED APPROACH WITH INVESTMENT IN INFRASTRUCTURE AND ACQUISITIONS FUNDED THROUGH DISPOSALS • Year end net LTV of 12.3% within target 10%-15% range; net debt increased in-year to fund business growth • Prudent gearing provides headroom and flexibility w
Slide 14: Portfolio is managed to diversify risk
PORTFOLIO IS MANAGED TO DIVERSIFY RISK PORTFOLIO CONCENTRATION PORTFOLIO SECTOR SPLIT NUFARM WAVERLEY AMP THORESBY MELTON COMMERCIAL PARK COALVILLE ROSSINGTON 3 4 5 GATEWAY 45 MAJOR DEVELOPMENTS £190.6m MAJOR DEVELOPMENTS £52.7m 6 Residential Commercial 2 7 FOUR OAKS BUSINESS PARK 47% 8 56% WAVERLEY
Slide 15: Land pipeline provides significant future value
LAND PIPELINE PROVIDES SIGNIFICANT FUTURE VALUE RESIDENTIAL PIPELINE: Significant future planning pipeline in COMMERCIAL PIPELINE: place to augment existing consented PLOT NUMBERS landbank, providing much of the land SQUARE FEET supply to underpin future sales and our 25,000 direct development progr
Slide 16: Growing value from new sites across our core regions | Summary
Dumfries A74(M) Carlisle Newcastle GROWING VALUE FROM NEW SITES ACROSS OUR CORE REGIONS | SUMMARY Upon Tyne Whitehaven Middlesbrough M6 E leven acquisitions made at nine sites Flaxby Scarborough for £57.9m including fees. Further consideration of up to £3.25m will be York paid depending on planning
Slide 17: Growing value from new sites | Midlands
GROWING VALUE FROM NEW SITES ACROSS OUR CORE REGIONS | MIDLANDS IRONBRIDGE, SHROPSHIRE COALVILLE & BARDON HILL, LEICESTERSHIRE PURCHASE FROM UNIPER (UK) OF THE 350 ACRE FORMER IRONBRIDGE TWO STRATEGIC LAND PURCHASES MADE IN LEICESTERSHIRE TO COAL-FIRED POWER STATION IN SHROPSHIRE SUPPLEMENT STRATEGI
Slide 18: Growing value from new sites | North West
GROWING VALUE FROM NEW SITES ACROSS OUR CORE REGIONS | NORTH WEST MOSS NOOK, ST HELENS WINGATES, BOLTON WE PURCHASED 56 ACRES OF LAND AT MOSS NOOK IN ST HELENS, FURTHER LAND WAS PURCHASED OFF JUNCTION 6 OF THE M61 MERSEYSIDE IN OCTOBER - HARWORTH’S FIRST RESIDENTIAL LAND IN BOLTON AS PART OF ASSEMBL
Slide 19: Growing value from new sites | Yorkshire & Central
GROWING VALUE FROM NEW SITES ACROSS OUR CORE REGIONS | YORKSHIRE & CENTRAL NUFARM, BRADFORD FLAXBY, HARROGATE 112 ACRE SITE PURCHASED FOR £32.45M PLUS ACQUISITION COSTS, 22-ACRE SITE IN NORTH YORKSHIRE SECURED FOR £8.75M PLUS LESS THAN A MILE FROM J26 OF THE M62 ACQUISITION COSTS, LESS THAN HALF A M
Slide 20: 2019 strategy delivery targets & current progress
2019 STRATEGY DELIVERY TARGETS & CURRENT PROGRESS ACQUISITIONS SALES PLANNING LETTINGS Further acquisition Well advanced with 2019 Outline planning Tenants sought for 5 of 13 acres made at sales, with over 50% applications to be made co-interest and 2 wholly our Moss Nook site of budgeted sales eith
Slide 21: Another strong year of delivery and progress
ANOTHER STRONG YEAR OF DELIVERY AND PROGRESS STRONG PERFORMANCE SOUND MARKETS CLEAR STRATEGY 13.3% TOTAL RETURN ACHIEVED - ONCE FOCUS REMAINS ON ‘BEDS AND SHEDS’ STRATEGY AND BUSINESS MODEL ARE AGAIN ABOVE TARGET LONG-RUN TOTAL SECTORS IN THE NORTH OF ENGLAND CENTRED ON LARGE, COMPLEX SITE RETURN OF
Slide 22: Appendices
APPENDICES WHY INVEST IN HARWORTH? 23 A BRIEF HISTORY 24 INCOME: STRATEGY, PROGRESS AND TRENDS 25 PROPERTY PORTFOLIO - 2018 MOVEMENT AND SALES ANALYSIS 26 PROPERTY PORTFOLIO - FURTHER DETAIL 28 SUMMARY OF DRAWN FINANCING FACILITIES AS AT 31 DECEMBER 2018 30 VALUATION METHODOLOGY 31 DISCLAIMER 32 22
Slide 23: Why invest in Harworth?
WHY INVEST IN HARWORTH? HARWORTH GROUP PLC IS ONE OF THE UK’S LEADING REGENERATORS OF LAND AND PROPERTY FOR DEVELOPMENT AND INVESTMENT - TARGETING A TOTAL RETURN OF OVER 10% PER ANNUM ON AVERAGE STRONG PERFORMANCE SOUND MARKETS CLEAR STRATEGY WELL POSITIONED BUILDING TRACK RECORD WITH FOCUS ON “BEDS
Slide 24: A brief history
A BRIEF HISTORY 2004 - 2012 2012 - 2014 2015 ONWARDS PROPERTY DIVISION WITHIN HARWORTH ESTATES WAS 24.9% RE-LAUNCHED AS UK COAL PLC OWNED BY CFR PLC HARWORTH GROUP PLC In 1994, RJB Mining (founded In December 2012, after a In February 2015, Harworth in 1974) bought British Coal’s complex restructuri
Slide 25: Income: strategy, progress and trends
INCOME: STRATEGY, PROGRESS AND TRENDS THE STRATEGY REMAINS TO GROW, AND IMPROVE THE QUALITY OF, OUR RECURRING REVENUE BREAKDOWN INCOME TO COVER OVERHEADS (INCLUDING STRATEGIC LAND PROMOTION) AND INTEREST, AND ULTIMATELY COVER TAX AND DIVIDENDS £80.0m MAJOR BUSINESS NATURAL £70.0m DEVELOPMENT SPACE R
Slide 26: Property portfolio | 2018 movement and sales analysis | Movement
PROPERTY PORTFOLIO | 2018 MOVEMENT AND SALES ANALYSIS | MOVEMENT £570.0m £550.0m £530.0m £57.9m £79.3m £510.0m £48.0m £490.0m £525.7m £33.0m £3.2m £470.0m £462.9m £450.0m Properties at Development spend Acquisitions Disposals Investment in JVs Revaluation gains Properties at 31/12/17 31/12/18 Notes:
Slide 27: Property portfolio | 2018 movement and sales analysis | Sales
PROPERTY PORTFOLIO | 2018 MOVEMENT AND SALES ANALYSIS | SALES £48.3m £2.5m £44.8m £45m £0.7m £1.6m £1.0m £40m £40m £8.0m £35m £35m £33.6m £0.9m £30.9m £2.8m £30m £1.0m £0.2m £30m £28.7m £2.4m £5.3m £25m £1.5m £25m £20m £20m £15m £15m £35.1m £44.2m £24.4m £30.0m £24.8m £10m £10m £5m £5m £0m £0.2m £0m
Slide 28: Property portfolio | Further details: top ten sites
PROPERTY PORTFOLIO | FURTHER DETAILS TOP TEN SITES HOUSE PLOTS COMMERCIAL SPACE SITE TYPE REGION ACRES CONSENTED SOLD/BUILT CONSENTED BUILT WAVERLEY (NEW COMMUNITY) Development Yorkshire 454 3,890 1,218/850 - - COALVILLE Development Midlands 346 2,016 - - - NUFARM Investment Yorkshire 112 - - 0.30m
Slide 29: Property portfolio | Further details: ownership breakdown
PROPERTY PORTFOLIO | FURTHER DETAILS OWNERSHIP BREAKDOWN ACRES SITES 31-DEC-17 30-JUN-18 31-DEC-18 31-DEC-17 30-JUN-18 31-DEC-18 FREEHOLD LAND 16,478 17,110 16,718 95 98 80 LEASEHOLD LAND 176 176 318 3 3 3 COMMERCIAL CLAWBACKS 3,975 3,961 3,961 33 32 32 JV SITES 376 376 635 5 5 6 SUB-TOTAL 21,005 21
Slide 30: Summary of drawn financing facilities as at 31 December 2018
SUMMARY OF DRAWN FINANCING FACILITIES AS AT 31 DECEMBER 2018 WEIGHTED AVERAGE COST OF DEBT OF 3.3% (USING 31 DECEMBER 18 BALANCES AND RATES) WITH A 0.84% NON-UTILISATION FEE ON UNDRAWN RCF AMOUNTS £45m fixed at 1.235% plus 210 basis point margin until July 2022 LENDER SITE AMOUNT DRAWN (£’K) INTERES
Slide 31: Valuation methodology
VALUATION METHODOLOGY PORTFOLIO IS VALUED TWICE VALUATION TECHNIQUES FOR THE BROAD CATEGORIES OF THE PORTFOLIO ARE: YEARLY. FORMAL YEAR-END VALUATION BY BNP PARIBAS BUSINESS SPACE STRATEGIC LAND DEVELOPMENT SITES AND SAVILLS, AND HALF YEAR VALUATION BY MANAGEMENT Market comparison with direct Discou
Slide 32: Disclaimer
DISCLAIMER FOR THE PURPOSE OF THE FOLLOWING December 2018. By their nature, these statements beliefs, opinions or information contained in or given DISCLAIMER, REFERENCE TO THIS may involve risks, uncertainties or assumptions during this presentation and no liability is accepted given future events