Slide 1: 2017 Interim Results
2017 INTERIM RESULTS 6 SEPTEMBER 2017 Transforming - Regenerating - Revitalising
Slide 2: Business and Financial Overview
BUSINESS AND FINANCIAL OVERVIEW TRACK RECORD STRATEGY MARKETS Delivering market leading NAV Proven and robust strategy Market fundamentals in the growth Strong financial performance with confidence in the future regions remain strong Another period of double 83% of H1 2017 value gains Focus on “beds
Slide 3: Vision & Strategy Remains Clear and Robust
VISION & STRATEGY REMAINS CLEAR AND ROBUST To be the UK’s leading developer We will accomplish this by: of brownfield land and 1. Progressively expanding our geographical reach into all regions of the UK that regeneration partner of choice have clear value-add opportunities – with initial focus on c
Slide 4: Our Regional Markets Provide Clear Opportunities
OUR REGIONAL MARKETS PROVIDE CLEAR OPPORTUNITIES BEDS – RESIDENTIAL All dwellings annual house price rates of change: Year to May 2017 National housing under-supply is driving consistently strong demand for land Presumption remains in favour of residential development on brownfield land House price
Slide 5: Tried and Tested Business Model
TRIED AND TESTED BUSINESS MODEL Asset Management Plot Sale / Build Out £410.9m(1) Infrastructure Development Indicative Value Add Value Engineering & Land Remediation Planning Approval Competitive advantage comes from our ability to add value through Masterplanning management actions Acquisition & r
Slide 6: Key Achievements in the First Half
KEY ACHIEVEMENTS IN THE FIRST HALF Acquisition & Land Assembly Masterplanning Planning Approval • Successful £27.1m equity raise in • 9,171 consented residential plots • Outline planning agreed in H1 for March to fund new purchases and 10.941m sq. ft of commercial a total of 1.492m sq. ft of space u
Slide 7: Key Achievements in the First Half
KEY ACHIEVEMENTS IN THE FIRST HALF Value Engineering Infrastructure Plot Sale / Build Out & Land Asset Management Development Remediation • 13 sites classed as ‘Major Projects’; • 358 residential plots and up to • 16 new commercial lettings remediation and site infrastructure works 564,000 sq. ft of
Slide 8: Continued Double Digit Net Asset Value Growth
CONTINUED DOUBLE DIGIT NET ASSET VALUE GROWTH Year on year, NAV per share rose 13.2%, EPRA NNNAV 13.8% and EPRA NAV 10.9% Opening NAV/ Other (Pension, Def Tax/ Closing NAV/ Capital Raise Profit from Interest and Dividends EPRA NAV Value Gains EBT, Current Interest rate EPRA NNNAV/ Operations finance
Slide 9: Value Gains – Revaluation Gains and Profit on Disposal
VALUE GAINS – REVALUATION GAINS AND PROFIT ON DISPOSAL Six months to 30 June (£’m) 2017 2016 Profit on Revaluation gains1 Total Total disposal Management Market Major Developments Uplifts at Logistics North and Waverley as site value 0.0 1.4 0.9 2.3 1.9 increases due to maturity and buyer interest.
Slide 10: Income Statement
INCOME STATEMENT A Six months to 30 June 2016 H1 Capital Income Central 2017 H1 Revenue and (£’000) Total Growth Generation overheads Total cost of sales 2017 includes development Revenue (rent, royalty and operations) 17,405 14,235 8,685 - A 22,920 property sales. M&G related Cost of sales (11,864)
Slide 11: Financing Strategy Is to Match Cash Flows
FINANCING STRATEGY IS TO MATCH CASH FLOWS Infrastructure spend and investment in acquisitions are largely funded by disposals − Infrastructure spend is assessed against, and matched with, the quantum and timing of expected disposals − Spend and sales are forecast to be H2 weighted, as in previous ye
Slide 12: Financing
FINANCING Position as at 30 June 2017 £’000 Policy of prudent gearing Drawn bank borrowings – RBS RCF (9,164) − As at 30 June 2017, gross Loan To Value (LTV) was 5.7% and net LTV 2.5%. Debt has been Infrastructure loans (14,428) repaid in the short term following the £27.1m Gross interest bearing de
Slide 13: Logistics North: Value Delivery via Our Business Model
LOGISTICS NORTH: VALUE DELIVERY VIA OUR BUSINESS MODEL Acquisition & Land Assembly Masterplanning Planning Approval • Surface mining at one of the UK’s • Promotion of site for employment • Outline planning consent granted in largest mine sites ended in 2011 between 2011 - 2013 December 2013 for 4m s
Slide 14: Logistics North: NAV Movement 2010 – 2016
LOGISTICS NORTH: NAV MOVEMENT 2010 – 2016 • The book/market value of Logistics North increased from £12.2m at the end of 2010 to £22.4m at the end of 2016, after accounting for sales of £57.0m. In that time period, Harworth achieved value gains (revaluation gains and profit on disposal) of £34.4m •
Slide 15: Significant Latent Value: Land Pipeline
SIGNIFICANT LATENT VALUE: LAND PIPELINE • Momentum from previous periods maintained in the first half with 358 new housing plots sold and a new joint venture agreed to develop up to 564k sq. ft of new commercial space at Logistics North • Portfolio now comprises 9,171 consented housing plots and 10.
Slide 16: Successful Deployment of Equity Placing Proceeds
SUCCESSFUL DEPLOYMENT OF EQUITY PLACING PROCEEDS • Following the equity placing that raised £27.1m (net of expenses) in March 2017, we have purchased three new sites to increase the size of our strategic landbank for residential and commercial uses. All have rate of return projections in excess of o
Slide 17: Acquisition: Coalville, Leicestershire
ACQUISITION: COALVILLE, LEICESTERSHIRE • Purchase of 145 acres of greenfield land for £11.8 million plus acquisition costs in Coalville, Leicestershire • Land already has outline planning permission for housing, which could deliver 914 new homes across 76 net developable acres • Located adjacent to
Slide 18: Acquisition: Chatterley Valley, Stoke-on-Trent
ACQUISITION: CHATTERLEY VALLEY, STOKE-ON-TRENT • Option exercised at Chatterley Valley, Staffordshire to purchase 88 acres of land for £2.6 million plus acquisition costs • Site is adjacent to our existing 24-acre freehold site which could not have been developed in isolation from the option land. T
Slide 19: Business and Financial Overview
BUSINESS AND FINANCIAL OVERVIEW TRACK RECORD STRATEGY MARKETS Delivering market leading NAV Proven and robust strategy Market fundamentals in the growth Strong financial performance with confidence in the future regions remain strong Another period of double 83% of H1 2017 value gains Focus on “beds
Slide 20: Appendices
APPENDICES 6 SEPTEMBER 2017 A brief history 21 Valuation Methodology 25 Net Asset Value growth – H1 2017 22 Summary of financing facilities 26 Properties – Movement in H1 23 Income: Strategy, Progress and Trends 27 Investment Properties: Portfolio Detail 24 Case Study: Kellingley, North Yorkshire 28
Slide 21: A Brief History
A BRIEF HISTORY 2004-2012 2012-2014 2015 onwards Property division within Harworth Estates was Re-launched as Harworth UK Coal plc 24.9% owned by CfR plc Group plc • In 1994, RJB Mining (founded in • In December 2012, after a complex • In February 2015, Harworth Estates 1974) bought British Coal’s c
Slide 22: Net Asset Value Growth – H1 2017
NET ASSET VALUE GROWTH – H1 2017 Opening NAV/ Other (Pension, Def Tax/ Closing NAV/ Capital Raise Profit from Interest and Dividends EPRA NAV Value Gains EBT, Current Interest rate EPRA NNNAV/ Operations finance costs Tax) Swap EPRA NAV Transforming - Regenerating - Revitalising - 22 -
Slide 23: Properties – Movement in H1
PROPERTIES(1) – MOVEMENT IN H1 Total H1 2017 sales - £24.9m Approaching 20% of the property portfolio value comes from sites bought since March 2015, which are outperforming our hurdle rate of return Notes: (1) Total value of all property – Investment (£310.5m), Development (£73.2m), Joint ventures
Slide 24: Investment Properties: Portfolio Detail
INVESTMENT PROPERTIES: PORTFOLIO DETAIL TOP 10 SITES House plots Employment space Site Location Acres Consented Sold/Built Consented Built Waverley & AMP Yorkshire 581 3,890 931/675 2.1m sq. ft 1.25m sq. ft Rossington Yorkshire 344 1,200 170/55 0.1m sq. ft 0 sq. ft Logistics North North West 736 4.0
Slide 25: 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 26: Summary of Financing Facilities
SUMMARY OF FINANCING FACILITIES • The table below summarises Harworth’s drawn facilities as at 30 June 2017 Lender Associated site Amount drawn (£’k) Interest rate End date 2.2% plus EU HCA Waverley 8,479 February 2022 Reference Rate 2.2% plus EU April 2018 but with an ability to extend if JESSICA G
Slide 27: Income: Strategy, Progress and Trends
INCOME: STRATEGY, PROGRESS AND TRENDS • The strategy remains to grow and improve the quality of recurring income to cover overheads (including strategic land promotion) and interest, and ultimately cover tax and dividends Revenue breakdown Progress in H1 2017 Trend Major Developments - Promote fee r
Slide 28: Case Study: Kellingley, North Yorkshire
CASE STUDY: KELLINGLEY, NORTH YORKSHIRE Masterplanning / planning approval PRESENT SITE PROPOSED DEVELOPMENT 197 acres in Selby in North Yorkshire: Now classified as a ‘Major Development’: • Former Colliery closed in December 2015 – the UK’s last • Demolition works to be completed in Q4 2017 deep mi
Slide 29: Disclaimer
DISCLAIMER For the purpose of the following disclaimer, reference to this undertaking is given by, or on behalf of, Harworth or any of its directors, ‘presentation’ shall be deemed to include reference to the presentation officers, employees and advisers that Harworth will achieve any results slides