Harworth Group plc
Full Year Results for the 12 months ended 31 December 2023
Harworth outperforms and remains confident in reaching its £1bn target in 2027
Harworth Group plc (“Harworth” or the “Group”), a leading regenerator of land and property for sustainable development and investment, today announces its results for the 12 months ended 31 December 2023.
| Key Non-Statutory Measures(1) | 2023 | 2022 | Key Statutory Measures | 2023 | 2022 |
| Total Return (%) | 5.1 | 0.1 | Operating profit (£m) | 54.2 | 44.5 |
| EPRA NDV per share (p)(2) | 205.1 | 196.5 | Net asset value (£m) | 637.7 | 602.7 |
| Value gains (£m) | 58.1 | (2.0) | Total dividend per share (p)(3) | 1.466 | 1.333 |
| Net loan to portfolio value (%) | 4.7 | 6.6 | Net debt (£m) | 36.4 | 48.4 |
Lynda Shillaw, Chief Executive of Harworth, commented: “Harworth once again delivered another strong performance in 2023, ahead of the MSCI All Property Index and resulting in one of the sector’s leading total returns, while maintaining a low loan-to-value of just 4.7% and significant financial liquidity. We continue to benefit from the unique combination of our extensive landbank and the application of our specialist skillset to develop new market opportunities and realise the highest value from each of our sites. This saw us complete serviced land and property sales at prices broadly in line with book values before transaction costs, achieve lettings ahead of estimated rental values, and progress some exciting acquisitions as we build our future pipeline and continue to move sites through the planning system.
“Since 2015, Harworth has undergone a transformation as a business whilst doubling its EPRA NDV. The progress made across our portfolio in 2023 underpinned a 4.4% increase in our EPRA NDV, to £663m, and we remain confident of achieving our strategic ambition of becoming a £1bn business by the end of 2027. I am delighted with the performance of the business over the year, which was a tough one against a continued challenging macroeconomic backdrop, ongoing structural changes in parts of the market and domestic political uncertainty.
“So far in 2024, macroeconomic conditions remain challenging but there are signs of optimism. Our key markets remain characterised by structural undersupply and we are seeing good demand for our serviced residential land as well as high levels of occupier interest in our employment sites. We have a self-propelled growth strategy driven by our landbank and the skills of our people, and our long-term through-the-cycle approach means that, as well as securing and progressing opportunities to deliver long-term value to investors, we are well positioned to take the management actions that will generate further value gains from our portfolio in the year ahead.”
Management actions drive strong EPRA NDV performance and Total Return
· Total Return(1) of 5.1% (2022: 0.1%), driven by an increase in EPRA NDV per share
· EPRA NDV(1)(2) per share increased 4.4% to 205.1p (31 December 2022: 196.5p), driven by management actions to unlock high value uses from sites and progress planning applications
· EPRA NDV increased £29.1 million to £662.9m (31 December 2022: £633.8m)
· An increase of 10% in the final dividend to 1.022p per share, in line with the Group’s dividend policy, bringing the total dividend for the year to 1.466p per share
Strong balance sheet and financial position, with low gearing and significant available liquidity
· Year-end net debt of £36.4m (31 December 2022: £48.4m), representing a net loan to portfolio value (“LTV”) of 4.7% (31 December 2022: 6.6%)
· Available liquidity of £192.2m at year-end (31 December 2022: £175.6m) which, coupled with our ability to generate cash through land sales, allows us to self-fund our extensive development pipeline
· No major refinancing requirement until 2027
193,000 sq. ft of industrial & logistics space developed, with a remaining pipeline of 37.7m sq. ft
· Completed development of 110,000 sq. ft of Grade A space at Gateway 36 in Barnsley and 83,000 sq. ft at the Advanced Manufacturing Park (“AMP”) in Rotherham, with 55% currently let, exchanged or in heads of terms
· Work underway on a further 187,000 sq. ft at the AMP, comprising two pre-let units and one occupier-owned build-to-suit unit, underscoring the location’s popularity and Harworth’s flexible approach to development. In addition to this, 21,000 sq. ft has commenced at Olive Lane, a new mixed-use heart of the community at our Waverley site with a medical centre, pharmacy, convenience retail and leisure.
· Enabling works underway for 1.5m sq. ft, including our first unit at Chatterley Valley in Staffordshire, and a unit at our Droitwich site in Worcestershire
· These developments plus recently completed vacant space are expected to add £5.1m annualised rent, of which £1.9m is already let, exchanged or in heads of terms.
1,170 residential plots sold, with an extensive remaining pipeline of 27,190 plots
· Nine transactions completed with six different housebuilders, comprising national and regional operators, demonstrating sustained demand for the Group’s de-risked residential serviced land
· Headline residential sales of £52.1m, with all transactions at prices broadly in line with book values before transaction costs
· After year-end, completed a further plot sale, at book value, to Sky-House to construct 50 new homes at Waverley in Rotherham, with a robust pipeline for further residential plot sales in the months ahead
Progress in securing planning approvals and forward-funding agreements for mixed tenure products
· First forward-funding agreement signed as part of our portfolio of sites for affordable housing, with a further one signed after year-end, both with Great Places, for the delivery of 155 homes in total
· Planning approvals now received for 45% of our portfolio of sites for build-to-rent (“BtR”) properties; progressing towards exchange of contracts with selected partners
· Planning approval received for the first pilot site for the Group’s net zero carbon homes product, at the Prince of Wales development in Pontefract
Further strengthening our pipeline through acquisitions and planning progress to unlock high value uses
· Acquisitions added 1.8m sq. ft of industrial & logistics space and 809 residential plots to the pipeline with several other significant transactions in legals
· Secured outline planning consent for 397 residential units, with a further 500 units approved after the year-end, and 1.1m sq. ft of industrial & logistics space, including a 0.8m sq. ft approval at Skelton Grange, Leeds
· Applications for 10.1m sq. ft of industrial & logistics space and 1,774 residential plots progressing through the planning system at year-end
Investment Portfolio(4) 37% Grade A at year-end (31 December 2022: 18%)
· £70.0m of Investment Portfolio sales completed broadly in line with book values before transaction costs, all of which are assets where value had been maximised prior to sale through asset management initiatives
· After year-end, completed the sale of a site in Flaxby Moor Industrial Estate, Knaresborough, previously occupied by Ilke Homes, for £13.3m, in line with book value
· Leasing activity added £2.1m (17%) to annualised rent; new lettings achieved an average 10% premium to ERVs, and renewals and rent reviews achieved on average a 27% uplift to previous passing rent
· Year-end vacancy rate of 9.9% (31 December 2022: 8.3%); reduced to 1.2% when excluding space completed in the preceding 12 months (31 December 2022: 2.7%); 98% of rent due in 2023 collected to date
Delivering a positive lasting impact for our planet, people and communities
· Opened 71 acres of green space and nature recovery across Cadley Park, Derbyshire and South East Coalville, Leicestershire, alongside a new learn-to-ride cycle track at Waverley
· Began construction of a new forest school at South East Coalville and a new mixed-use heart of the community at Waverley, Olive Lane, providing retail and leisure space
· Publication of Net Zero Carbon (‘NZC’) Pathway, outlining the steps that the Group is taking to achieve its ambition of being operationally NZC by 2030 and NZC for all emissions by 2040
· Our Communities Framework will be released alongside the Annual Report, detailing Harworth’s approach to delivering social value through regeneration: our portfolio has the potential to deliver £4.8bn of GVA