Harworth Group plc Half Year Results for the six months ended 30 June 2022

Harworth Group plc

Half Year Results for the six months ended 30 June 2022

Delivery on strategy and robust demand drive significant first half valuation growth

Harworth Group plc (“Harworth” or the “Group”), a leading regenerator of land and property for sustainable development and investment, today announces its half year results for the six months ended 30 June 2022.

Lynda Shillaw, Chief Executive of Harworth, commented: “Harworth made significant operational and financial progress in the first half. We undertook a record level of direct development in our industrial & logistics portfolio, continued to accelerate our residential sales, and made several acquisitions to grow our development pipeline. It is our management actions that have materially contributed to the growth in EPRA NDV, supported by the strong market during the period for our residential and industrial & logistics products, demonstrating that we are continuing to deliver successfully against our growth strategy outlined a year ago.

“We are alive to the complex geopolitical and macroeconomic environment impacting economies across the world, and we remain closely attuned to the potential impact on our markets. We are confident that Harworth's strong financial position, and the scale and mix of our portfolio, positions us well to respond to these challenges and adapt to the changing risk environment. However, as previously stated, it is our expectation that as a result of this market backdrop, valuation gains during 2022 are likely to be first half-weighted.

“The supply and demand factors supporting our markets have been resilient to date, our pipeline remains robust, and our through-the-cycle investment and management actions continue to drive value across our portfolio. Our proven successful track record as a developer of large complex sites to create high-quality sustainable places provides a solid platform for growth as we continue to deliver on our strategic plan to reach £1bn of EPRA NDV.”

Strong returns, driven by management actions and structural growth in our markets

•    Total Return⁽¹⁾of 14.1% (H1 2021: 15.4%)
•    EPRA NDV⁽¹⁾⁽²⁾per share increased by 13.7% to 224.7p (31 Dec 2021: 197.6p), driven by valuation gains across both industrial & logistics and residential sites, largely resulting from progress at our development sites
• EPRA NDV increased by 13.7% to £724.8m (31 December 2021: £637.5m)
• An underlying increase of 10% in the interim dividend per share to 0.404p, in line with the Group's dividend policy

I ncreased direct development unlocking value from 32.2m sq. ft industrial & logistics pipeline 

•    Currently, 97% of budgeted industrial & logistics land sales for the year have completed, exchanged or in heads of terms, either in line with, or at a premium to, 31 December 2021 book value 
•  After period-end, reached practical completion on 432,000 sq. ft, including 332,000 sq. ft of Grade A space at Bardon Hill, Leicestershire, which is 92% let and has embedded Net Zero Carbon principles in its design
•    Development underway on a further 203,000 sq. ft at the Advanced Manufacturing Park (“AMP”), Waverley and Gateway 36, Barnsley
•    After period-end, completed the sale of Kellingley development site in North Yorkshire for £54.0m, in line with 30 June 2022 valuation and at a significant premium to pre-sale book value

Progressing 28,990 plot residential pipeline through sales of serviced plots, and launch of single-family Build to Rent (“BTR”) product

•    Currently over 100% of budgeted residential plot sales for the year have completed, exchanged or are in heads of terms, either in line with, or at a premium to, 31 December 2021 book value 
•    Completed the Group's largest serviced residential land sale to date: a £29m sale at Waverley to Barratt and David Wilson Homes, capable of delivering approximately 450 homes  
•    Diversification of residential product with launch of a portfolio of up to 1,200 single-family BTR homes to be built across 10 sites, and to be delivered through a forward funding agreement: significant interest received and exchange targeted for later in 2022

Targeting a 12-15 year land supply through acquisitions and progressing sites through planning  

•    1,143 plots and 3.9m sq. ft added to Harworth's total development pipeline in the first half, predominantly through land assembly acquisitions for future strategic sites
•  Targeting planning determinations in the next six months for 3.0m sq. ft of industrial & logistics space across: Gascoigne Wood, North Yorkshire; Skelton Grange, Leeds; and Houghton Main, Barnsley

Investment Portfolio showing strong operational metrics:  

• A vacancy rate⁽⁴⁾of 3.9% as at 30 June 2022 (31 December: 4.1%) with 99% of rent collected for the first half
•    Completed leasing deals added £0.1m of annualised rent; new lettings at an average 17% premium to estimated rental values (“ERVs”), and renewals on average 15% ahead of previous passing rent 

Maintaining a strong balance sheet and financial position, with low LTV and significant available liquidity  

•    As at 30 June 2022, net debt was £67.8m (31 December 2021: £25.7m) resulting in a net loan to portfolio value of 7.6% (31 December 2021: 3.4%) 
•    Available liquidity as at 30 June 2022 of £144.4m (31 December 2021: £128.0m), following the signing of a new £200m revolving credit facility (“RCF”) earlier in the period; no major refinancing requirements until 2027