Financial Highlights(1)
· Strong 2016 financial performance, with profits and net asset value (NAV) ahead of expectations
Ø NAV rose to £334.9m (115p per share), a 12.5% increase from 2015 NAV of £297.7m (102p per share)
Ø EPRA NAV, which excludes deferred tax and the mark to market movement on financial instruments, up to £350.1m (120p per share), a 13.3% increase from 2015 of £309.1m (106p per share)
Ø Operating profit of £45.8m(2) (2015: £37.9m), including value gains of £43.7m(3) (2015: £36.3m) and profit from operations of £2.2m (2015: £1.5m)
Ø Earnings per share of 3.5p (2015: 3.1p), underlying earnings per share 13.7p (2015: 12.2p)
Strategic and Operating Highlights
· Clear strategic focus on residential and commercial markets in our regions that continue to be supportive of growth. This reflects strong fundamentals, being the shortage of housing supply and available commercial space
Ø Six acquisitions (£31.6m) made including 50% purchase of the investment vehicle that owns Gateway 45, Leeds' largest live commercial development, and two North West business parks that are both fully-let; strengthening the income base and growing our geographic presence
Ø £58.9m of disposals made to capture value increases on mature residential and commercial sites and to increase our focus on sites with higher value add potential. Portfolio now comprises the ownership or management of 22,000 acres on over 140 sites
· Operational performance across all sectors was very good with continuing momentum into 2017
Ø Residential sales progress was consistent through the year with 619 plots sold across 6 sites. Planning consent was secured for 65 new plots and applications for a further 1,200 plots were submitted. Across the portfolio, consents stand at over 9,500 plots with a further c.8,000 plots in the planning pipeline
Ø Commercial sales were made at a number of sites, the highlight being the sale of 43.7 acres at Logistics North to Lidl UK for £22.5million, realising a healthy profit above book value. Across the portfolio, c.10.0m sq ft is consented on our land(4), with 1.9m sq ft of new applications submitted and a further 6.3m sq ft to be submitted
Ø The income portfolio made further progress with new and renewed business park lettings and further low carbon energy tenants, offsetting the previously flagged trend of declining coal fines sales. Practical completion of direct developments in Yorkshire and the M&G Real Estate forward-funded units at Logistics North also provide a pipeline of further income producing opportunities into 2017
Financing
• New debt financing secured to provide headroom and advance income generating acquisitions
Ø In August, existing RCF increased from £65m to £75m and extended by 1 year to 2021
Ø Portfolio gearing of 9.9% net loan to value (LTV) which equates to 31.3% set against the Business Space and Natural Resources properties
Harworth's Chief Executive, Owen Michaelson, said:
“These are a strong set of results, reflecting our continued focus on maximising the value of our strategic land bank whilst simultaneously growing our income base through new lettings and acquisitions. We are particularly pleased by the progress made and value uplift we have seen from our flagship North West site, Logistics North in Bolton, and are pleased to have improved the quality of our income base over the year. We have a proven strategy to create value and the market fundamentals in our regions remain strong, giving us confidence in the future.”