REG - Harworth Group PLC - Full Year Results for year ended 31 Dec 2024
18/03/2025 07:15
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RNS Number : 0433B Harworth Group PLC 18 March 2025
HARWORTH GROUP PLC
('Harworth' or the 'Group' or the 'Company')
Full Year Results for the year ended 31 December 2024
Operational outperformance, strong returns and continued EPRA NDV growth
Harworth Group plc, a leading land and property regenerator of sustainable
developments, today announces its results for the year ended 31 December 2024.
Summary highlights((1)) 2024 2023 % change 2024 2023 % change
Total accounting return (%) 9.1 5.1 +4.0* Value gains (£m) 97.2 58.1 +67.3
EPRA NDV per share (p)((2)) 222.3 205.1 +8.4 Total Property sales (£m)((3)) 215.8 125.9 +71.4
EPRA NDV (£m) ((2)) 719.5 662.9 +8.5 Residential plots sales 2,385 1,170 +103.9
Net loan to portfolio value (%) 5.4 4.7 +0.7* Inv. Portfolio value (£m)((4)) 297.2 221.4 +34.2
Liquidity (£m) 192.4 192.2 +0.2 Inv. Portfolio Grade A((5)) (%) 45 37 +8.0*
Financial highlights((6)) 2024 2023 % change 2024 2023 % change
Total dividend per share (p)((7)) 1.614 1.466 +10 Operating profit (£m) 74.6 54.2 +37.6
Net debt (£m) 46.7 36.4 +28.3 Portfolio value (£m)((8)) 821.6 734.7 +11.8
Net assets per share (p) 213.7 197.3 +8.3 Net asset value (£m) 691.7 637.7 +8.5
Lynda Shillaw, Chief Executive of Harworth, commented: "Harworth delivered
record revenue and land sales in 2024, generating significant value gains,
with EPRA NDV up 8.5% year on year. Our strong total accounting return of 9.1%
is yet again among the best in the sector and the result of management
actions, consistent with our focus on driving value as we continue to progress
our sites through development. This included two landmark land sales, to
Microsoft for a hyperscale data centre and Frasers Group for their global
headquarters, alongside record residential plot sales. Our performance
continues to demonstrate the resilience of our through-the-cycle business
model and highlights our ability to capitalise on emerging sectors, such as
data centres, to accelerate our sites. The last four years of investment in
strengthening our business to enable growth is bearing fruit and the business
is performing across the board.
"While we remain cautious in light of the current macro-economic backdrop, our
financial flexibility and careful capital allocation, and alignment to
structurally undersupplied sectors fundamental to the UK's growth, mean we are
well placed to navigate uncertainty.
"Our consented pipeline and land bank and our ability to deliver at scale are
significant strengths against a backdrop of site scarcity in our regions, and
a planning system that remains sluggish as the reforms introduced by the
government bed in. With a significant number of our sites coming on line for
development, we are well positioned to continue to deliver strong returns,
creating long-term value for our investors as we recycle capital to unlock the
material underlying value of our land bank and increase the development of
modern Grade A Industrial & Logistics assets. All of these actions provide
the foundations for achieving our targets of £1bn of EPRA NDV by the end of
2027 and growing our core Investment Portfolio to £0.9bn by the end of 2029."
Management actions drive strong performance
· Total accounting return((1)) ('TAR') of 9.1% (2023: 5.1%), driven by growth in
EPRA NDV per share and marking another year of consecutive sector-leading
returns with an average of 8.4% over the last five years against the MSCI All
Property Index of 5.1%
· EPRA NDV increased by 8.5% or £56.6m to £719.5m (2023: £662.9m), driven by
management actions, principally moving sites through planning, and progressing
infrastructure and direct development, which are reflected in revaluation
gains and gains on sales, including landmark sales at Skelton Grange, Leeds
and Ansty, Rugby
· EPRA NDV((1)(2)) per share increased by 8.4% or 17.2p to 222.3p (2023: 205.1p)
· In line with our progressive dividend policy, total dividend per share of
1.614p was up 10%, (2023: 1.466p) after a final dividend of 1.125p
Total property sales of £215.8m across 2,385 Residential plots and 4.4m sq.
ft of Industrial & Logistics land
· Agreed £106.6m land sale to Microsoft, of which £47.9m was recognised during
2024
· Completed sale of Strategic Land site at Ansty (Rugby) for £53.5m to Frasers
Group
· Record Residential plot sales of 2,385 at headline sales value of £104.1m
(broadly in line with or ahead of HY24 book values before transaction costs)
· Deep and diversified customer base with sales to national and regional
housebuilders and registered social affordable housing providers, including
our third forward funded development agreement with Great Places, validating
the robust demand for our de-risked Residential service land across different
tenures
Planning approvals underpin extensive and growing pipeline
· Planning approvals secured for 6.8m sq. ft of Industrial & Logistics space
(2023: 1.1m sq. ft), including 1.5m sq. ft at Gascoigne Wood (Selby),
increasing total consented space to 8.4m sq. ft (2023: 6.1m sq. ft)
· Planning approvals secured for 818 Residential plots, growing total consented
plots to 4,568 plots (2023: 5,296 plots).
· Harworth's extensive land bank now has capacity to deliver up to 33.6m sq. ft
of Industrial & Logistics space and 31,264 Residential plots across the
Midlands and the North of England
Selective strategic acquisitions
· £43.7m acquisition of Catalyst (Rotherham), a 285,000 sq. ft, Grade A, urban
logistics estate, with headline rental income of £2.2m, located adjacent to
our flagship Advanced Manufacturing Park ('AMP')
· £30.6m acquisition of former brickworks site at Stewartby (Bedfordshire),
payable over two years, which has outline planning consent for 1,000 homes
· Further acquisitions of £11.5m including at Wingates (Bolton), enhancing our
land assembly for Phase 2 of that development, and at Grimsby West (Grimsby)
· Acquired 25 acres of Residential land at Cinderhill (Derbyshire), increasing
the freehold ownership to 51%, and enabling the delivery of an enhanced scheme
Core Investment Portfolio space now 45% Grade A (2023: 37%)
· Core Investment Portfolio valued at £297.2m (2023: £221.4m), with a reduced
EPRA vacancy rate((9)) of 5.6% (2023: 9.9%)
· 107,000 sq. ft. of Grade A Industrial & Logistics space completed in 2024,
73,000 sq. ft of which was retained within the core Investment Portfolio,
adding £0.6m of headline rental income
· Currently on site with 270,000 sq. ft of Industrial & Logistics
development, with one-third of this space already pre-let.
· Leasing activity added £0.7m of headline rental income on a like for like
basis, 4.3% ahead of December 2023 estimated rental value ('ERV'), with
renewals and rent reviews achieving, on average, a 22% uplift to previous
passing rents
· The core Investment Portfolio has a headline rental income 19.3% below
year-end ERVs, alongside a net initial yield of 4.8% (2023: 5.0%), and a
reversionary yield of 6.5% (2023: 6.3%), demonstrating near-term reversionary
potential
Investment in enabling works builds momentum in pipeline
· Completed enabling works during the year to deliver up to 1.3m sq. ft of
Industrial and Logistics space at Chatterley Valley (Stoke) and Droitwich
(Worcester). Construction already well progressed at Droitwich and ready to
start at Chatterley Valley later this year.
· The next tranche of enabling works was underway at year-end, to open up a
further 1.8m sq. ft of space at both Skelton Grange (Leeds), where we are
delivering serviced land for Microsoft, and Wingates (Bolton), where we are
undertaking major highway works
Significant firepower to fund development pipeline
· Available liquidity of £192.4m at year-end (2023: £192.2m), alongside our
consistent track record of generating cash through land sales, gives us the
firepower needed to fund our attractive development pipeline
· Year-end net debt was £46.7m (2023: £36.4m), representing a net loan to
portfolio value ('LTV') of 5.4% (2023: 4.7%)
Delivering Harworth's commitment to planet, people and communities
· The Group published its first Net Zero Carbon ('NZC') Progress Report,
providing an update on progress in meeting its NZC pathway. A further update
will be provided in our 2024 NZC Progress Report, which will be released
alongside the Annual Report & Accounts in April 2025
· Harworth published its Communities Framework, outlining its approach to
delivering social value. The Framework has been incorporated into the Group's
Gascoigne Wood development (Selby) and will continue to be rolled out across
the business in 2025
Notes:
(1) Represent our Alternative Performance Measures (APMs). A full description
of these is set out in Note 2 to the financial statements with a
reconciliation between statutory measures and APMs set out in the appendix to
the financial statements.
(2) European Public Real Estate Association Net Disposal Value
(3) Total sales include £101.0m of Industrial & Logistics land sales,
£97.2m of Residential plot sales and £17.6m of investment property sales and
other
(4) The core Investment Portfolio represents our primary income generating
Industrial & Logistics portfolio. It excludes Strategic Land, Major
Developments, Natural Resources, and Agricultural land
(5) Measured by area
(6) The financial highlights represent our statutory measures
(7) The Ex-dividend date, Record date and Payment date for the 2024 dividend
can be found in the Shareholder Information section of this announcement
(8) Properties include investment properties, development properties, AHFS,
occupied properties and investment in joint ventures, refer to Note 2 to the
financial statements
(9) European Public Real Estate Association Vacancy Rate
*percentage point change
For further information
Harworth Group plc
Lynda Shillaw (Chief Executive) T: +44 (0)114 349 3131
Kitty Patmore (Chief Financial Officer) E: investors@harworthgroup.com (mailto:investors@harworthgroup.com)
Dougie Maudsley (Interim Chief Financial Officer)
FTI Consulting
Dido Laurimore T: +44 (0)20 3727 1000
Richard Gotla E: Harworth@fticonsulting.com (mailto:Harworth@fticonsulting.com)
Eve Kirmatzis
Results presentation
Harworth will host a presentation for analysts and investors at 9.30am today.
A live webcast and playback of this can be accessed at the following link:
https://brrmedia.news/HWG_FY24
(https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fbrrmedia.news%2FHWG_FY24&data=05%7C02%7Cjweissdalton%40harworthgroup.com%7C71d71524a8104d7d524608dd615abce7%7C5fc64be3a587436480ed549be821ab19%7C0%7C0%7C638773764561874620%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=XOMh0rjQ3y8lwxYoyjNzuwfaccJgWxOWJ1iPIApyqNs%3D&reserved=0)
Investor Meet Company presentation
A presentation relating to these results will also be hosted via the Investor
Meet Company platform on 25 March 2025 at 1.00pm. The presentation is open to
all existing and potential shareholders. Questions can be submitted pre-event
via your Investor Meet Company dashboard up until 9am the day before the
meeting, or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and follow Harworth
via: https://www.investormeetcompany.com/harworth-group-plc/register-investor
(https://www.investormeetcompany.com/harworth-group-plc/register-investor)
Investors who already follow Harworth on the Investor Meet Company platform
will automatically be invited.
About Harworth
Harworth Group plc (LSE: HWG), is a leading land and property regenerator of
sustainable developments. We own, develop, and manage a portfolio of over
15,000 acres of Strategic Land over 100 sites located throughout the North of
England and Midlands. We specialise in delivering long-term value for all
stakeholders by regenerating large, complex sites, particularly former
industrial sites, into new Industrial & Logistics developments and
serviced Residential land to create sustainable places, support new homes,
jobs and communities where people want to live and work. Visit
www.harworthgroup.com for further information. LEI: 213800R8JSSGK2KPFG21
Chair's statement
2024 has been a landmark year for Harworth:-
· We achieved our largest ever sale of regenerated brownfield land,
concluding a £106.6m agreement with Microsoft for the development of a
hyperscale data centre in Leeds, a deal that had been more than 18 months in
the making. Taking all stages of that transaction together, this should
realise a profit of some £78.2m.
· Over the year we sold a record 2,385 plots for Residential
development, materially ahead of the 1,170 sold in 2023 and ahead of our
strategic target of 2,000 per year on average, as we accelerate through sites
by broadening the range of our Residential products.
· Four years after Lynda Shillaw joined us as Chief Executive, we
announced the next stage in the evolution of the four growth drivers of the
strategy she first outlined in 2021, increasing our focus on Industrial &
Logistics development and retaining more prime Grade A properties in our
Investment Portfolio. This is now targeted to grow to £0.9bn by the end of
2029, at which point we expect our balance sheet to be weighted over 85%
towards Industrial & Logistics assets compared to its current 63%. In
turn, we expect the increase in recurring earnings from the significantly
larger Investment Portfolio to allow increased dividends to be declared in
future years.
· Positive market sentiment towards the consistency of our operational
performance and the evolution of our strategy drove our share price to 179p on
13 September after the interim results, 46% ahead of the start of the year. We
entered the FTSE 250 for the first time, a significant milestone for the
business and a testament to our people and ability to deliver against our
strategic objectives. The institutional buying associated with entering the
index drove us to a high of 194.5p. Whilst, as would be expected, the share
price has settled back somewhat, we have maintained a narrower discount to
NDV.
We are pleased to see that the strategic pivot of our business towards the
development, and retention, of Grade A Industrial & Logistics has
resonated with investors. Residential land sales and our mixed tenure products
remain an important source of funding for the business, in particular for the
growth in direct development of our Industrial & Logistics portfolio, and
we shall continue to seek out opportunities to acquire sites that have the
potential to be developed into serviced parcels of Residential land - indeed,
we acquired the potential for 4,404 such plots during the year. It is also
likely that some of the sites we acquire, given their typical scale, will
offer the potential for both commercial and Residential development. Our
recent development of other tenures, alongside private sales to housebuilders,
increases our ability to accelerate through such Residential developments,
thereby achieving an accelerated capital turn.
As Lynda's Chief Executive report details, alongside our success in
accelerating Residential sales we also made strong progress against each of
the other elements of our strategy:
· With the practical completion of 107,000 sq. ft of directly developed
Grade A commercial space and acquisition of the 285,000 sq. ft Grade A
Catalyst urban logistics estate in Rotherham, 45% of our core Investment
Portfolio is now Grade A. Enabling works for direct development are underway
on several of our Major Development sites and all of the Grade A space in
progress over the next 12 months is expected to be retained in our Investment
Portfolio.
· We have maintained our objective of holding a 12 to 15-year forward
pipeline of sites at varying stages of planning and development having secured
control of further sizeable land holdings during the year, with these adding
the potential for 1.0m sq. ft of Industrial & Logistics space and 4,404
Residential plots.
The speed at which we can realise the overall potential in our pipeline of
33.6m sq. ft of Industrial & Logistics space and 31,264 Residential plots
is substantially dependent upon developments in the macro-economy and what
results from planning reforms. The course of the global economy, and in
particular of interest rates, is very uncertain with a new administration
taking power in the US, political and economic instability in the EU, and
areas of major active conflict. At home, businesses and consumers are still
digesting the implications of the new government's first budget, and the Bank
of England is trying to chart a course for UK interest rates having regard to
global interest rates, movements in sterling, and how UK inflation develops.
Uncertainty depresses and delays business demand for new development and
society's demand for new homes, whilst interest rates staying higher for
longer compounds consumers' wariness and suppresses both returns and the
potential for yield compression. These in turn are compounded by planning
delays, reflecting both the lack of clear direction that followed the previous
government's December 2023 planning reforms and local authority resource
constraints. Overall, the new government's commitments to a planning system
that supports economic growth in key sectors and significantly increases
housing supply should be strongly supportive of our own potential for new
development. However, the reforms that marked the first stages of the
extensive planning legislation agenda will take time to become embedded in
practical decision-making. Whilst, therefore, we continue to make steady
progress towards the achievement of £1bn EPRA NDV by the end of 2027, and the
outlook for 2025 is more challenging than when we reported at our 2024 interim
results in September 2024.
The other prime determinant of the speed at which we can progress is the
availability of the necessary skills, experience, and relationships within the
people who make up Harworth. In my past reports I have focused consistently on
the criticality of having the right team of the necessary size to the
achievement of our objectives - to see the potential of undeveloped land; to
create masterplans that maximise that potential; to negotiate with planners
and communities to turn those masterplans into detailed planning consents; to
manage the detailed implementation of the resulting developments; to identify
how best to market those developments; and to nurture the relationships that
in turn lead to successful transactions. As Harworth grows, both in the number
of developments it has ongoing at any time, and in the size of its Investment
Portfolio, so too must its available resource grow. As we are a long-term
through the cycle business, what we plan to be achieving as outcomes in two to
three years' time, and even longer-term, will depend on what we are creating
as inputs today. It is, therefore, inevitable that we have to grow our
resource ahead of the planned future growth of the business. It is also
critical that we attract and retain the leadership talent we need to achieve
our strategic ambitions. The changes that, following considerable thought and
extensive engagement with our shareholders, we are proposing to the
Remuneration Policy that will apply for the next three years are designed with
this in mind.
As last year, alongside our Annual Report, we are publishing our latest report
of the progress we made over the last 12 months along our NZC Pathway.
Considerable further progress has been made in understanding our carbon
footprint, in particular the Scope 3 emissions of the contractors and
suppliers who are upstream of our developments, and of the downstream tenants
in our Investment Portfolio. This allows us to work with both to reduce those
emissions with changes to structural design and construction methods and
materials, alongside helping our tenants to reduce their own emissions through
measures such as the installation of solar panelling and sourcing renewable
energy. We have also seen carbon pricing becoming an integral part of planning
policy, with net zero targets embedded into the Greater Manchester Combined
Authority planning policy, Places for Everyone, and whole life carbon
assessments and detailed energy assessments, becoming a required part of
planning applications within the areas covered by nine of the Greater
Manchester local authorities. The focus we have placed on understanding our
own NZC Pathway, and developing the supporting detailed assessment
methodology, stands us in good stead to present for approval ourselves
developments that are strongly aligned with planning objectives.
ESG is firmly embedded in all aspects of our business: every decision we make
has regard to its ESG implications and its support of our NZC commitment. In
an area of complex, and sometimes conflicting, reporting requirements we now
understand what we are going to report, and how to deliver the related
reporting obligations. Our NZC Pathway is well-defined, and its components
measured and independently verified. ESG is, therefore, mainstream for our
business and as such we have decided that its oversight and related decisions
should move to being considerations of the main Board in which all Directors
participate, rather than scrutinised by a separate committee. The oversight of
ESG reporting, itself now being embedded into international accounting
standards, will become the responsibility of our Audit Committee.
I have two particular thank yous - to Steven Underwood who retired at the end
of last year as our longest serving non-executive director, having first
joined the board in August 2010. With his in-depth insight into real estate
development in the North of England, as Chief Executive of the Peel Group, he
has made a great contribution to Board decision-making and will be much
missed. We shall, however, not lose touch given Peel's position as our second
largest shareholder. We are actively seeking to appoint a new Non-Executive
Director with similar experience and capability within the real estate sector.
I would also express our appreciation of the contribution Ruth Cooke has made
since she joined as a Non-Executive Director in March 2019. As we have
developed our mixed tenure Residential proposition her experience and insight
as Chief Executive of one of the largest housing associations has been of
great value. She will be retiring from the Board at this year's Annual General
Meeting.
More generally, my grateful thanks go to all those within Harworth, and to our
partners, advisers, suppliers and contractors, who have contributed to our
continuing successful growth and increase in value. A business is like a
jigsaw - it cannot achieve its objective unless every element is in place and
achieving its purpose: every individual is critical to us and is valued by us.
Alastair Lyons
Chair
17 March 2025
Chief Executive's review
Our 2024 results translate into an impressive total account return of 9.1%,
demonstrating our ability to deliver in challenging markets and showcasing the
agility and resilience of our through-the-cycle business model. I could not
have asked more of our teams in achieving sector-leading results ahead of the
MSCI All Property Index, whilst maintaining significant financial liquidity
and a low year end LTV of just 5.4%. 2024 saw us deliver a record level of
land sales, undertake selective strategic acquisitions, and progress our
lettings ahead of estimated rental values. This translated to significant
growth in value through both valuation gains and profits on sales. We offer a
unique combination: an extensive land bank that is proving strategically
significant to the UK's infrastructure needs for both Residential and
Industrial & Logistics, coupled with our specialist skillset to uncover
new market opportunities, invest in our developments, and unlock material
underlying value as we continue to move our sites through the planning system,
positioning us well as we move into 2025.
Operational performance
Our ambitions to grow EPRA NDV to £1bn by the end of 2027 and our core
Investment Portfolio to £0.9bn by the end of 2029 are underpinned by a clear
road map and the significant progress we have made since launching our
strategy in 2021. We remain confident in achieving our goals by accelerating
the delivery of our sites whilst achieving our NZC ambitions, drawing on our
highly specialist expertise to work through our extensive strategic land bank.
The table below shows our progress to date against our four key growth
drivers.
Growth drivers 2020((1)) 2023 Progress in 2024 Ambition by the end of 2027
Repositioning our core Investment Portfolio to modern Grade A <10% Grade A at year-end 37% Grade A at year-end 45% Grade A at year-end 100% of core Investment Portfolio to be Grade A
Increasing direct development of Industrial & Logistics stock 200,000 sq. ft completed((2)) 193,000 sq. ft completed 107,000 sq. ft completed 800,000 sq. ft run-rate of completed space (average per annum)
0.4m sq. ft of enabling works 208,000 sq. ft started 270,000 sq. ft started
1.5m sq. ft of enabling works 1.3m sq. ft of enabling works completed
1.8m sq. ft of enabling works underway at year-end
Accelerating sales and broadening the range of our Residential products 862 plots sold((2)) 1,170 plots sold 2,385 plots sold 2,000 plots sold on average per annum
Scaling up through land acquisitions and promotion activities Land supply of 12 to 15 years Maintained 12 to 15-year land supply through acquisitions representing 1.0m Maintain a land supply of 12 to 15 years
sq. ft
and 4,404 plots
Targets
Grow EPRA NDV £515.9m((3)) £662.9m £719.5m £1bn
Grow core Investment Portfolio £221.4m((4)) £297.2m £0.9bn by end of 2029
(1) Targets announced 2021. FY20 used as baseline.
(2) Annual average 2015 to 2020.
(3) EPRA NDV at 31 December 2020.
(4) Target announced H2 2024. FY23 used as baseline.
We are making significant progress repositioning our core Investment Portfolio
to modern Grade A specification. It now stands at 45% Grade A, compared to 11%
in 2021, when we announced our ambition. This was driven by significant sales,
where we had already maximised value through asset management or
re-development initiatives, as well as through our development and letting of
new space, and the selective acquisition of the Catalyst urban logistics
estate in Rotherham. We are confident in our ability to reach our 100% Grade A
target, underpinned by the combination of our direct developments, and further
selective acquisitions alongside our sales programme.
We completed a record 2,385 Residential plot sales during the year, across 13
transactions, demonstrating the depth of demand for our de-risked serviced
land product, and the strong relationships cultivated by our teams with
housebuilders, Build-to-Rent developers and housing associations. Residential
sales were completed at a headline sales value of £104.1m, at prices that
were broadly in line with or ahead of HY24 book values before transaction
costs. The average plot sales since setting our 2021 target sit at 1,800,
positioning us well to hit our 2,000 average plot sales by 2027.
Our Industrial & Logistics Major Developments portfolio consists of 12
sites at various stages of development, from early enabling works to
near-complete Grade A units. We developed 107,000 sq. ft of modern Grade A
Industrial & Logistics space in 2024, of which 73,000 sq. ft went into our
core Investment Portfolio and the remainder was built for an owner occupier.
We started on a further 270,000 sq. ft in the period, with one-third of this
space already pre-let. In order to achieve our aim of an 800,000 sq. ft
run-rate of completions by 2027, we need to scale up our enabling works to at
least three times this level on an annual basis. Our programme to 2027 is
back-end weighted and at year-end enabling works were underway for 1.0m sq. ft
of development at Wingates (Bolton).
Our strategic land bank is fundamental to our business model and scaling up
our land bank through acquisitions and promotions is one of our key skillsets
to maintain a land supply of 12 to 15 years. During the year, we made land
acquisitions representing 1.0m sq. ft of potential Industrial & Logistics
space and a further 4,404 Residential plots.
Our markets
We focus on Industrial & Logistics and Residential, two structurally
undersupplied sectors fundamental to delivering growth to the UK economy and
requiring key infrastructure delivery to ensure their success. Both are a
priority for this government and set to benefit from recent government policy
objectives. In December 2024, the UK government announced its planning
overhaul via the National Planning Policy Framework to accelerate
housebuilding and deliver 1.5m new homes before the next General Election.
More recently, the Prime Minister announced his blueprint to turbocharge
Artificial Intelligence ('AI'), in which data centres and the delivery of key
infrastructure will play a critical part. Our Industrial & Logistics
portfolio is well placed to contribute to this rollout.
Industrial & Logistics
Demand continues to be driven by structural factors, including growth of
online retail, cloud computing, the dramatic proliferation of AI, and the
increased infrastructure requirements that come with all three. Take-up for
Grade A industrial and logistics space of 100,000 sq. ft units and larger was
up 6% in 2024, to 22.6m sq. ft, outperforming the pre-pandemic average of
21.2m sq. ft, according to Jones Lang LaSalle (JLL). Three-quarters of this
total take-up was of new, rather than second-hand, space, indicating
significant business focus on new facilities. A fall in the level of
build-to-suit space was more than offset by an increased level of speculative
take-up of 7.4m sq. ft, which compares to average pre-pandemic speculative
take-up levels of 4.5m sq. ft.
Despite occupiers remaining active, the market is not seeing a corresponding
impact on net absorption and overall vacancy as occupier demand is being
driven by more strategic reasons than business growth alone, which is
resulting in deals taking longer to complete and older space coming back into
the market. Notwithstanding, H1 2025 requirements are forecast to be up
year-on-year with a focus nationwide on units of 100,000-200,000 sq. ft.
According to JLL, 74% of 2024 take-up was within our regions and the Midlands
made up the lion's share at 58%.
Prime yields were broadly stable across 2024, but the volatility in bond
markets is expected to impact Q1 2025 transaction appetite, as investors and
vendors wait to see how the market settles down. Investors and developers are
increasingly focused on strategic acquisitions and developments that meet
occupier needs and sustainability requirements and are best placed to benefit
from rental growth. UK prime headline rents enjoyed 6% growth over 2024 and,
while this is down year-on-year and materially below the pandemic peak of
almost 18% in 2021, it is still above average pre-pandemic levels of 4.1%,
based on JLL research.
Data centres
The UK data centre market is in a material growth phase, with more recent
interest outside of London and the South East. While different commentators
have varying projections of the state of the UK market and potential growth,
consensus is clear that the market is set to experience a double-digit CAGR
out to 2030, driven by growing adoption of multi-cloud computing and network
upgrades required to support the roll out of 5G alongside the need for more
data storage and transmission from ecommerce, digital content, social media
and the Internet of Things.
Currently, London is the largest data centre market in the EMEA and the second
largest globally, with 1.14GW in operation, a 15% increase year-on-year,
according to Cushman & Wakefield. Data from JLL shows that capacity in the
London market is set to double, including 504MW in development and 677MW in
planning, driven by growth in multi-tenant data centres, hyperscale data
centres and edge computing, coupled with a focus on energy efficiency and
eco-friendly solutions. Emerging regional markets and remote campuses sitting
outside the established metro areas are also beginning to reshape the data
centre landscape as the emergence of AI and cloud computing facilities are
becoming increasingly location agnostic, driven by power availability and site
deliverability. This is evidenced by our own land sale for data centre use in
Leeds and other market transactions across the North West and North East.
Limited availability of land and power, together with sustainability
regulations, and their impact on cost and time to deliver, are the pressing
issues for both operators and investors in the UK and globally. Since the
start of 2024, Savills has tracked over 415 acres of UK land deals to data
centre operators that were, in the main, previously promoted for industrial
and logistics use. This has had the effect of removing, on average, close to
one year's worth of potential industrial and logistics supply from the
market.
Support for the sector has been underpinned both by the UK government and
significant private investment. Government initiatives to ensure the viability
of the sector include investment to boost the grid capacity through new
measures in the Planning and Infrastructure Bill, classifying data centres as
critical national infrastructure, strengthening resilience and regulatory
support. These were followed up by the launch of the AI Action Plan and
associated planning reforms, to boost sectors that are critical to powering
the economy and the long-term growth of the UK. Government actions have been
significantly bolstered by private sector investments, including Microsoft's
announcement that, in addition to its contracting to acquire 48 acres at our
Skelton Grange (Leeds) site for a hyperscale data centre, it had acquired the
former Eggborough power station in North Yorkshire to create a data centre
campus; DC01UK's £3.75bn investment in Europe's largest data centre in
Hertfordshire; Amazon Web Services' plans to invest £8bn building, operating
and maintaining data centres in the UK; and Latos DC's plans to open 40
purpose-built data centres across the UK by 2030.
Residential
Residential volumes remained subdued in 2024, with the market in the early
stages of recovery. Front and centre of government policy are bold ambitions
to increase housing activity, delivering 1.5m new homes by the next General
Election, with planning reform at the heart of supporting this and wider
economic growth. It's fair to say that delivery against this target will be
back-end loaded, with housebuilder volumes in 2024 still not recovering to
2022 levels and new government initiatives to drive up volumes being
mobilised.
Local housing targets have been reintroduced and the presumption in favour of
development strengthened with government task forces formed to unlock the
'grey' belt. While planning reform is still expected to be a relatively
protracted process, the shift to drive growth and develop new homes is a
positive signal to the sector and, from a supply side perspective, positive
also for strategic land. However, the returns for landowners need to remain
attractive for land to come forward to meet the scale of what is proposed.
The ambition to build more affordable homes is no silver bullet, and while
demand exists, the financial capacity of Housing Associations remains weak and
viability remains an issue for developers where the mix is skewed to
affordable tenures. Where investor markets are concerned, the stamp duty
surcharge announced in the October Budget is likely to suppress the appetite
of buy-to-let landlords and tip towards larger, wealthier and institutional
landlords.
With interest rates easing and, subject to global dynamics, showing signs of a
further downward trajectory in 2025 this is positive for homebuyers, however
rental reform through the Renters Rights Bill and residual building safety
issues and regulation are weighing on parts of the sector. Savills forecasts
house price growth of 20% to 25% over the next five years with 4% growth
predicted for 2025. Rental values are forecast to increase by over 17% in the
same period with 4% growth predicted for 2025.
The Harworth Way
As a specialist regenerator and placemaker, a commitment to our communities,
our people and our planet is at the heart of everything we do. Critical to
this is having a lasting positive impact on the communities we serve,
supporting new homes, jobs and infrastructure. The Harworth Way is our
framework for ensuring this happens.
During the year we published our first NZC Progress Report, providing an
update on progress, challenges, and opportunities in meeting our NZC Pathway.
Against our 2030 Commitment to be NZC for our business operations, operational
emissions reduced by 17% in the year and by 33% since 2022, through the
continued use of alternative fuels in our site preparation works, the
increased use of electric vehicles, and the transition of our core Investment
Portfolio to Grade A. In collaboration with the Forestry Commission, we
completed a woodland planting scheme of 108,000 trees at Chevington North
(Northumberland), whilst also commencing further planting of more than 150,000
trees at Highthorn (Northumberland).
In April 2024 we published our Communities Framework, which explains our
approach to delivering social value throughout the regeneration process and
the developments we create. During 2024 we developed our processes to allow
the Framework to be incorporated into our Gascoigne Wood (Selby) scheme, which
received resolution to grant planning permission for 1.5m sq. ft of Industrial
& Logistics space, and we will continue to roll out the Framework
throughout the business in 2025.
It has been another very active year in delivering for our communities with a
wide range of community events and local club sponsorship, from fun runs to
food festivals and community planting. We completed the construction of the
new forest school at Coalville (Leicester), providing 420 new primary school
places in an energy efficient, modular building, integrated into the new
community. At Thoresby Vale a wonderful opening event marked the completion of
the country park providing more than 100 acres of restored heathland, home to
unique wildlife, alongside 4.2km of active travel infrastructure all set
within the growing residential community.
Over 2024, we once again commissioned Ekosgen, an independent economic
research consultancy, to appraise the social and economic benefits of the
regeneration and developments we have delivered and plan to deliver, and it
found that our portfolio has the potential to deliver £4.3bn of GVA, support
up to 66,800 jobs and generate up to £72.5m in business rates, underscoring
the huge potential of our activities to benefit society.
Our people
The long-term sustained growth and prosperity of Harworth can only be
delivered by providing an environment which cultivates a high-performance
culture. Our high talent retention, engagement, and happiness rates reflect
the growing effectiveness of our people strategies, which are consciously
designed to enable people to do their best work for the benefit of all our
stakeholders, including investors.
We continuously review and enhance our Total Reward package to ensure it meets
the evolving needs of a diverse workforce and remains attractive in a
continuously challenging skills and talent market. Our diversity picture is
one of steady progress and in the context of our sector a very encouraging one
and an important indicator within our recently developed Culture Dashboard. In
2024 our Culture programme delivered several important milestones, such as our
new corporate values and behaviours framework and the inclusion of cultural
indicators within our recently launched Enabling Excellence Framework.
Looking ahead, we are excited about the prospect of securing an Investors In
People accreditation this year and delivering further important milestones
such as the next generation of our Learning & Development Programme and
further enhancing the productivity of our people and efficiency in process
through our Digital Transformation agenda.
Outlook
Harworth is a long-term through-the-cycle business. Regeneration of large,
complex sites that may take a decade or more to move from inception to
completion, underpinned by our significant land bank and proven skillset in
being able to unlock value through our management actions, is what sets
Harworth apart. Since 2021, when we stepped into our strategy, we have not
only been focused on growing our business and accelerating delivery across our
sites, but have invested in our planning teams to progress more applications
through the system, our development teams to ramp up delivery, and our
acquisitions teams to build our land bank.
For the Industrial & Logistics market, the structural drivers of demand
remain particularly strong, with increased infrastructure needs from online
retail, cloud computing and AI, and a relatively constrained supply of
suitable sites and power capacity in our regions. Our portfolio can contribute
solutions to these infrastructure gaps. That said, given short-term economic
uncertainties in the year ahead, we will continue to de-risk our development
by focusing on pre-let and build-to-suit opportunities and land parcel sales.
For Residential, while affordability challenges remain for house buyers, our
increasingly diversified range of Residential products alongside constrained
supply of development-ready land, improves our confidence that our consented,
de-risked serviced land will continue to appeal strongly to a wide range of
housebuilders, developers and social housing participants, providing us with
exposure to markets that continue to grow regardless of the cycle.
As we move into the second half of our delivery strategy, we have an 8.4m sq.
ft consented Industrial & Logistics pipeline that is capable of delivering
c.£0.6bn of Gross Development Value ('GDV') by the end of 2027. We continue
to explore other use classes, including the development of data centres and
energy assets on our Industrial & Logistics sites and senior living
opportunities on our Residential sites. Together these factors will ensure we
realise the full potential of our 33.6m sq. ft Industrial & Logistics
portfolio, which has an estimated GDV of c.£5bn, and our 31,264 plot
Residential pipeline, while delivering for our people, our planet and our
communities.
Whilst we remain cautious about the near-term macro-economic outlook, I
continue to be excited about our prospects as a business and the significant
growth and embedded value across our portfolio, including our ability to reach
£1bn of EPRA NDV by the end of 2027 and grow our core Investment Portfolio to
£0.9bn by the end of 2029.
I would like to say a huge thank you to my colleagues across the business, who
work tirelessly to deliver on the ambition of our strategy and have achieved a
strong year of progress, and to our investors who have continued to support
what we do. Our significant financial performance and operational progress
illustrate the dedication, determination, skills, and teamwork that make us
proudly Harworth.
Lynda Shillaw
Chief Executive
17 March 2025
Operational review
Portfolio key
Our portfolio sits across three regions: Yorkshire & Central ('YAC'),
Midlands ('MID') and the North West ('NOW') with a focus on two sectors:
Industrial & Logistics ('I&L') and Residential ('R'). Within I&L,
we have three portfolios, Investment Portfolio ('IP'), Strategic Land ('SL')
and Major Developments ('MD') and within R, the focus is SL and MD.
Industrial & Logistics land portfolio
At year end, the I&L pipeline totalled 33.6 m sq. ft (2023: 37.7m sq. ft)
comprising a consented pipeline of 8.4m sq. ft (2023: 6.1m sq. ft) and a
further 4.8m sq. ft in the planning system awaiting determination (2023: 10.1m
sq. ft). The pipeline was 50% owned freehold by the Group, with the remainder
controlled through joint venture arrangements, options or Planning Promotion
Agreements ('PPAs') (2023: 57% / 43%).
Land assembly
· Wingates (Bolton) NOW | I&L | MD / SL: freehold acquisition
adding 392,000 sq. ft to our existing development site, of which 1.0m sq. ft
is consented for logistics and manufacturing space and 1.9m sq. ft has an
allocation for commercial use under Greater Manchester's Places for Everyone.
This increases the area under our control to 2.9m sq. ft, of which 86% is
under freehold ownership and 14% held via options agreements. We are also
creating more green space for residents and a new landscaped buffer to screen
the road and move traffic away from nearby homes by working to realign a short
section of the A6 Chorley Road and provide improved and dedicated access to
the site.
· Gateway 36 (Barnsley) YAC | I&L | IP / SL: Strategic Land capable
of delivering 546,000 sq. ft was acquired under an option agreement, which
brings the development land under our control for future development to 1.1m
sq. ft. With 110,000 sq. ft already built, and in the IP, this option extends
our pipeline and adds to our potential GDV on delivery.
Planning
· Planning approvals were secured for 6.8m sq. ft of I&L space
across four sites, bringing total consents to 8.4m sq. ft. Allocations were
received for 3.5m sq. ft (total allocated now 4.9m sq. ft) and draft
allocations for 0.7m sq. ft (total benefiting from draft allocation now 2.9m
sq. ft) as sites continue to move through the planning system.
· Applications totalling 4.8m sq. ft are in the planning system awaiting
determination, including two significant planning applications across MID for
1.8m sq. ft and YAC for 2.9m sq. ft.
Direct development
· During the year, we completed 107,000 sq. ft at the AMP (Rotherham)
YAC | I&L | IP, of which 73,000 sq. ft was let to Insight, the solutions
and systems integrator, and retained as part of our core IP and the remaining
34,000 sq. ft was built on behalf of an owner-occupier.
· At 31 December 2024, we were on site with 270,000 sq. ft. of direct
development, 34% of which is pre-let. A further 386,000 sq. ft of I&L
space is expected to commence during the next 12 months, all of which is
expected to be retained within the core IP. The units will all be delivered to
Harworth's sustainable commercial building specification, targeting EPC A and
BREEAM Excellent, with whole life carbon assessments and renewable energy
provisions incorporated into the design.
· Enabling works are a critical component of our pipeline to reach our
direct development targets. During the year, we completed a significant level
of works, enabling future delivery of up to 1.3m sq. ft of I&L space. A
further 1.8m sq. ft of enabling works were underway at the year-end.
Land sales
Sales completed in 2024 included:
· Skelton Grange (Leeds) YAC | I&L | MD, where we completed the sale
of 27 acres of unserviced land to Microsoft, alongside a development
agreement, and conditionally exchanged on a further 21 acres, for a total
consideration of £106.6m, of which £53m is set to be received in H1 2026
upon completion. The transaction is expected to generate an IRR above 40%,
with further potential from the delivery of the 16 acres of 'Retained Land'.
· Ansty (Rugby) MID | I&L | SL, where we sold 278 acres for
£53.5m, reflecting a premium to June 2024 book value.
Key Industrial & Logistics development sites
Site Site type / Sold or developed Consented or planned Estimated GDV remaining to develop (£) Stage Forecast completion date
Ownership(1)
(sq. ft) (sq. ft)
Advanced Manufacturing Park (AMP) (Rotherham) MD / FH 1.7m 0.3m / 0.0m £45m - £55m Direct development or plot sale 2026
Gateway 36 MD / FH 0.4m 0.6m / 0.5m £130m - £150m Direct development or plot sale 2033
(Barnsley)
Chatterley Valley MD / FH 0.0m 1.2m / 0.0m £160m - £170m Land remediation and infrastructure development 2026
(Stoke)
Wingates MD & SL / FH & O 0.0m 1.0m / 1.9m £500m - £540m Land remediation and infrastructure development 2029
(Bolton)
Skelton Grange SL / FH 0.6m 0.8m Confidential Direct development or plot sale 2025
(Leeds)
Cinderhill SL / FH & 0.0m 1.5m / 0.0m £180m - £190m Planning approval 2030
(Derby)
PPA
Gascoigne Wood SL / FH 0.0m 1.5m / 0.5m £270m - £290m Planning approval 2028
(Selby)
Northern Gateway(2) SL / JV & O 0.0m 0.0m / 2.0m Confidential Masterplanning 2026 - 2035
(Greater Manchester)
N. Yorkshire site SL / O 0.0m 0.0m / 3.3m Confidential Masterplanning 2040
Rothwell SL / FH 0.0m 0.0m / 1.8m £300m - £320m Masterplanning 2028
(Coventry)
Junction 15 SL / O 0.0m 0.0m / 1.5m £260m - £290m Masterplanning 2030
(Northampton)
(1) Ownership includes FH: Freehold, PPA: Planning Promotion Agreement, JV:
Joint venture and O: Option Site type includes Strategic Land, SL and Major
Developments, MD.
(2) Harworth's share of a Joint Venture, adjacent to the M62 and close to the
M66, Northern Gateway is the core site of the Atom Valley Mayoral Development
Zone, comprising a mix of freehold and optioned land.
Investment Portfolio
The I&L IP comprises assets we have acquired and, increasingly, directly
developed and retained. It generates recurring rental income, with the
potential for capital value growth via active asset management.
Acquisition
· Catalyst (Rotherham) YAC | I&L | IP: newly developed Grade A urban
logistics estate acquired for £43.7m in October 2024, reflecting a net
initial yield of 5.4%. This prime 285,000 sq. ft scheme was completed in 2023
and is located adjacent to the AMP, where we expect to benefit from strong
occupier demand to fill up the existing 28,000 sq. ft vacancy. Once fully let,
the scheme will generate £2.5m of headline rental income.
Lettings
· During the year, 146,000 sq. ft of leasing deals were completed, with
total leasing activity adding a net £1.3m of headline rental income (2023:
462,000 sq. ft, adding £2.1m). New lettings, renewals and reviews were
completed at an average 4.3% premium to ERVs.
At year end, the IP was valued at £297.2m, up 34% on the prior year, and with
a target to grow to £0.9bn by year-end 2029, a required CAGR of 25% over the
next five years. The portfolio comprised 12 sites covering 2.8m sq. ft. It
generated £17.5m of headline rental income and had a passing rental income of
£15.8m. This equates to a net initial yield of 4.8%. The portfolio comprised
of 45% Grade A space. Our target is to transform it to 100% Grade A by
year-end 2027.
Industrial & Logistics Investment Portfolio
2024 2023 % change
Portfolio value (£m) 297.2 221.4 34
Number of sites 12 11 9
Area (m sq. ft) 2.8 2.5 14
Grade A space - by area (%) 45 37 8pp(1)
Passing rental income (£m) 15.8 11.4 39
Weighted average passing rent(2) (£ psf) 5.90 4.60 28
Grade A ERV(3) (£ psf) 9.10 8.80 3
WAULT(4) to first break (years) 10.1 11.9 -15
WAULT(4) to expiry (years) 11.4 12.9 -12
EPRA vacancy(5) (%) 5.6 9.9 -4.3pp
Net initial yield (%) 4.8 5.0 -0.2pp
Reversionary yield (%) 6.5 6.3 0.2pp
(1) Percentage points
(2) Calculated on occupied space
(3) Estimated rental values
(4) Weighted average unexpired lease term
(5) European Public Real Estate Association vacancy
Investment Portfolio sites
Location Region Ownership Area
(sq. ft)
Site
Advanced Manufacturing Park (AMP) Rotherham YAC FH 363,000
Bardon Hill Leicester MID FH 332,000
Catalyst Rotherham YAC FH 285,000
Wyke Lane Bradford YAC FH 252,000
Saturn Business Park Liverpool NOW FH 422,000
Logistics North Bolton NOW FH 104,000
Multiply Logistics North Bolton NOW 20% JV 87,000
Brierley Hill Birmingham MID FH 373,000
Gateway 36 Barnsley YAC FH 110,000
Moor Lane Leeds YAC FH 253,000
Etherow Industrial Estate Manchester NOW FH 190,000
A19 Business Park Selby YAC FH 61,000
Residential portfolio
The Residential pipeline totalled 31,264 plots at year end (2023: 27,190
plots) comprising a consented pipeline of 4,568 plots (2023: 5,296 plots) and
a further 2,136 plots in the planning system awaiting determination (2023:
1,774 plots). Development continues to progress on the first mixed tenure
sites sold by way of forward funding agreements. The pipeline was 41% owned
freehold by Group, with the remainder controlled through joint venture
arrangements, options or PPAs (2023: 49% / 51%).
Acquisition & land assembly
· Stewartby (Bedford) MID | R | MD: we acquired this iconic former
brickworks site in Bedfordshire for total consideration of £30.6m payable
over 2 years. This is a near-term opportunity which has outline planning
permission for the delivery of 1,000 plots, offering the ability to create
value and generate cash to fund the broader direct development programme.
· Grimsby West (Grimsby) YAC | R | SL: we entered into a uniquely
structured joint venture for Harworth where, once planning permission is
secured, we will hold a c.75% profit share in the scheme which has the
capacity to deliver 3,979 Residential plots. The site is allocated and
planning progress continues, we expect the first parcels will be available for
sale in 2027 with development continuing through to 2046.
· Staveley (Chesterfield) YAC | R | SL: we acquired an additional
freehold parcel at our existing site, which is expected to deliver up to 360
plots, taking the total plots in our control to 950.
Planning
· Hale Gate Road (Widnes) NOW | R | PPA: planning approval was
secured for 500 Residential plots under a PPA and separately, an allocation
was received for 1,200 homes on another site in the North West.
· Diseworth West (East Midlands Airport) MID | R | SL / PPA: a draft
allocation was secured for a mixed use development comprising 2,275
Residential plots and 0.7m sq. ft of I&L space.
At year-end, 2,136 plots across five sites continue to progress through the
planning system awaiting determination. Planning consent was received at
Cadley Park YAC | R | PPA for 150 plots post year-end.
Key Residential development sites
Site Site type / Consented or planned Stage Forecast
Ownership(1)
completion date
Sold (plots)
(plots)
Waverley MD / FH 2,578 393 / 0 Mixed tenure delivery or plot sale 2025
(Rotherham)
Thoresby Vale MD / FH 650 150 / 286 Mixed tenure delivery or plot sale 2027
(Nottingham)
Staveley SL / FH 0 0 / 950 Masterplanning 2030
(Chesterfield)
Rossington MD / FH 927 273 / 206 Mixed tenure delivery or plot sale 2028
(Doncaster)
Stewartby MD / FH 0 1,000 / 0 Planning approval 2029
(Bedford)
Ironbridge MD / FH 312 688 / 0 Mixed tenure delivery or plot sale 2030
(Telford)
Coalville MD / FH 1,334 682 / 270 Mixed tenure delivery or plot sale 2031
(Leicester)
Diseworth SL / FH & PPA 0 0 / 842 Masterplanning 2035
(East Midlands)
Cinderhill SL / FH & PPA 0 150 / 1,200 Planning approval 2039
(Derby)
Grimsby West SL / JV 0 0 / 3,044 Acquisitions and land assembly 2044
(Grimsby)
(1) Ownership includes FH: Freehold, PPA: Planning Promotion Agreement, JV:
Joint venture and O: Option. Site type includes Strategic Land, SL and Major
Developments, MD.
Land sales
Record sales of 2,385 Residential plots were completed at a headline sales
value of £104.1m (broadly in line with or ahead of HY24 book values before
transaction costs). Sales were made to national and regional housebuilders and
registered social affordable housing providers, including our third forward
funded development agreement with Great Places, validating the robust demand
for our de-risked Residential service land across different tenures.
Natural Resources portfolio
The Natural Resources portfolio is comprised of sites used for a wide range of
energy production, including wind and solar energy production, battery
storage, and reforestation schemes, delivered as part of our Energy &
Natural Capital strategy. The aim is to grow this portfolio, alongside
strategic partners where appropriate, through developing renewable energy
generation solutions and other sustainability initiatives such as battery
storage, solar, EV charging, multi-fuel hubs and reforestation/rewilding. The
strategy has a wider focus on embedding these energy concepts and
future-proofing principles across all of Harworth's sites to maximise energy
availability and resilience, create economic value, and help fulfil the
Group's NZC ambitions.
At the year-end, the Natural Resources portfolio had a value of £21.5m (2023:
£21.6m) and headline rental income of £2.1m (2023: £1.8m).
Financial review
Overview
Our primary metric, Total Accounting Return, for 2024 was 9.1%, representing
an increase from 5.1% in 2023. This Total Accounting Return reflected positive
contributions from all areas of the Group, with management actions delivering
value through planning success, and progressing infrastructure and direct
development, along with completing the landmark sales at Skelton Grange and
Ansty. These actions, alongside completions of direct development, securing
sales, and asset management initiatives across our Investment Portfolio,
resulted in EPRA NDV per share increasing by 8.4% to 222.3p (2023: 205.1p).
Our 2024 performance reflected strong operational delivery while continuing to
progress against our strategic objectives. Looking forward, the structural
undersupply within our chosen markets continues to provide a strong foundation
for the Group's future growth.
Sales of serviced land and property, in addition to income from rent,
royalties and fees, resulted in Group revenue of £181.6m (2023: £72.4m). The
increase in the year reflected £47.9m of revenues recognised from the
successful phase 1 sale at Skelton Grange to Microsoft. Revenue from the sale
of Residential serviced land also increased during the year to £92.2m (2023:
£38.0m), reflecting strong demand for the Group's de-risked land products.
Lower rental income during the year reflected the timing of Investment
Portfolio asset sales during 2023 and the early part of 2024 offset by rental
revenue from letting completed directly developed assets, and the acquisition
of Catalyst during October 2024. Total property sales, which included proceeds
from the sales of investment properties, assets held for sale ('AHFS') and
overages, amounted to £215.8m (2023: £125.9m), reflecting both the increased
development property sales and the sale of the Ansty Strategic Land site for
£53.5m. Rental income collection has been consistently strong and
like-for-like income increased through management actions, including lettings
of completed direct developments at the Advanced Manufacturing Park
(Rotherham) and rent reviews. The £181.6m of revenue also included PPA and
development revenue totalling £19.3m (2023: £1.7m), with the increase
year-on-year being driven by completion of a UK head office for a customer at
the Advanced Manufacturing Park, Rotherham, as well as development for
Microsoft at Skelton Grange. In 2025, we have already completed headline sales
of £10.4m and remain confident in our ability to achieve the 2025 budgeted
sales targets.
The Investment Portfolio increased to £297.2m at the end of 2024 (2023:
£221.4m) reflecting the impact of increased valuations driven by management
actions, market rental growth, and the £43.7m acquisition of Catalyst, a
285,000 sq. ft, Grade A, urban logistics estate in Rotherham, South Yorkshire
adjacent to the Group's established Advanced Manufacturing Park. The Group
is targeting a core Investment Portfolio of approximately £0.9bn by the end
of 2029, through a combination of retained developments and selective
acquisitions with the target of this becoming 100% Grade A by the end of 2027.
BNP Paribas, Jones Lang LaSalle and Savills, our independent valuers,
completed a full valuation of our portfolio as at 31 December 2024, resulting
in full-year revaluation gains of £86.0m (2023: gains of £64.9m), including
the movement in the market value of development properties. These external
independent valuations have regard to conditions in the residential and
industrial and logistics markets as well as the positive factors resulting
from management actions at our sites. Outside the valuation movements, profits
on sales were £11.2m (2023: losses of £6.8m). Overall, this led to total
value gains of £97.2m (2023: £58.1m gains).
The fair value of investment properties increased by £60.8m (2023: £71.4m
increase), which fed through to an underlying operating profit of £74.6m
(2023: £54.2m) and profit after tax of £57.2m (2023: £38.0m).
Over the year, the net asset value of the Group grew by 8.5% to £691.7m (31
December 2023: £637.7m). With EPRA adjustments for development property
valuations included, EPRA NDV at 31 December 2024 increased by 8.5% to
£719.5m (31 December 2023: £662.9m) representing a per share increase of
8.4% to 222.3p (31 December 2023: 205.1p).
The Group remains well capitalised and, at 31 December 2024, had available
liquidity of £192.4m (31 December 2023: £192.2m). Net debt was £46.7m (31
December 2023: £36.4m) resulting in an LTV at 31 December 2024 of 5.4% (31
December 2023: 4.7%). Following the repayment of development loans, none of
the Group's drawn debt was subject to fixed rates (31 December 2023: 35%).
Presentation of financial information
As our property portfolio includes development properties and joint venture
arrangements, Alternative Performance Measures ('APMs') can provide valuable
insight into our business alongside statutory measures. In particular,
revaluation gains on development properties are not recognised in the
Consolidated Income Statement and the Balance Sheet. The APMs outlined below
measure movements in development property revaluations, overages and joint
ventures. We believe that these APMs assist in providing stakeholders with
additional useful disclosure on the underlying trends, performance and
position of the Group.
Our key APMs are:
· Total Accounting Return: the movement in EPRA NDV plus dividends per
share paid in the year expressed as a percentage of opening EPRA NDV per
share.
· EPRA NDV per share: EPRA NDV aims to represent shareholder value
under an orderly sale of the business, where deferred tax, financial
instruments and certain other adjustments are calculated to the full extent of
their liability net of any resulting tax. EPRA NDV per share is EPRA NDV
divided by the number of shares in issue at the end of the period (less shares
held by the Employee Benefit Trust or Equiniti Share Plan Trustees Limited to
satisfy Restricted Share Plan, Share Incentive Plan and Deferred Share Bonus
awards).
· Value gains: the realised profits from the sale of properties and
unrealised profits from property valuation movements including joint ventures,
and the mark-to-market movement on development properties and overages.
· Net LTV: Group debt net of cash held expressed as a percentage of
portfolio value.
A full description of all non-statutory measures is set out in the appendix to
the financial statements and reconciliations between all statutory and
non-statutory measures are provided in the appendix to the consolidated
financial statements. From 2025 the Group plans to report on an additional
APM, Total Property Return, calculated in line with the MSCI Property Index
Methodology. This will provide increased information to shareholders on the
Group's relative performance and support the implementation of relative
operational performance measures for the short-term and long-term incentive
schemes under the revised Remuneration Policy.
Our financial reporting is aligned to our business units of Capital Growth and
Income Generation, with any items that are not directly allocated to specific
business activities held centrally and presented separately.
Income Statement
2024 2023
Capital Income Generation Central Overheads Total Capital Income Generation Central Overheads Total
Growth
£m
Growth
£m
£m £m £m
£m £m £m
Revenue 160.1 21.5 - 181.6 49.0 23.4 - 72.4
Cost of sales (145.8) (4.7) - (150.5) (54.0) (6.0) - (60.1)
Gross profit 14.2 16.8 - 31.1 (5.0) 17.4 - 12.4
Administrative expenses (6.4) (1.1) (25.7) (33.2) (5.1) (3.1) (19.2) (27.4)
Other gains/(losses) 59.7 18.4 - 78.1 65.2 4.3 - 69.4
Other operating expense - - (1.4) (1.4) - - (0.1) (0.1)
Operating profit/(loss) 67.5 34.1 (27.1) 74.6 55.1 18.5 (19.3) 54.2
Share of profit / (loss) of JVs (0.7) 2.2 - 1.5 0.9 0.7 - 1.6
Net interest credit / (expense) 2.9 0.1 (9.7) (6.7) 0.5 - (6.5) (6.0)
Profit/(loss) before tax 69.7 36.5 (36.8) 69.4 56.4 19.2 (25.8) 49.8
Tax charge - - (12.1) (12.1) - - (11.9) (11.9)
Profit/(loss) after tax 69.7 36.5 (48.9) 57.2 56.4 19.2 (37.7) 38.0
Note: There are minor differences on some totals due to roundings.
Revenue in the year was £181.6m (2023: £72.4m), of which Capital Growth
contributed £160.1m (2023: £49.0m) and Income Generation contributed £21.5m
(2023: £23.4m).
Capital Growth revenue, which primarily relates to the sale of development
properties, increased by £111.1m as a result of higher sales of Residential
serviced land, as well as the completion of the phase 1 sale at Skelton Grange
to Microsoft for which revenue of £47.9m was recognised during the year.
Capital Growth revenue also includes fees from PPAs and development management
revenue.
Revenue from Income Generation mainly comprised property rental and royalty
income from the Investment Portfolio, Natural Resources and Agricultural Land.
Revenue of £21.5m (2023: £23.4m) was lower than last year reflecting the
2023 sale of investment properties and the successful sale of a site at Flaxby
in early 2024, offset by income from our Catalyst Grade A urban logistics
site, acquired in October 2024. Like-for-like headline rent from the
Investment Portfolio increased by 4.9% during 2024 following new lettings,
lease re-gears and rent reviews on our existing assets. Taking into account
the acquisition of the Catalyst Grade A urban logistics site and the letting
of assets that practically completed during the year, the total headline
rental income for the Investment Portfolio increased by 24% to £17.5m at the
year-end, (2023: £14.1m). Cost of sales comprises the inventory cost of
development property sales, costs incurred in undertaking build-to-suit
development and both the direct and recoverable service charge costs of the
Income Generation business. Cost of sales increased to £150.5m (2023:
£60.1m), of which £132.0m related to the inventory cost of development
property sales (2023: £47.3m). In the year, we saw a decrease in the net
realisable value provision on development properties of £5.7m (2023: £4.4m
increase) following the valuation process as at 31 December 2024.
Administrative expenses increased in the year by £5.8m (2023: £5.3m
increase). This was due to higher salary expenses, resulting from increased
employee numbers recruited to deliver future value creation as we step into
the next phase of the strategy, higher bonus costs incurred reflecting the
strong performance, coupled with inflationary cost pressures, IT spend
increasing automation, and costs incurred as part of progressing strategic
objectives.
The strong EPRA NDV growth shows the actions of the teams creating value as
they work on sites and progress transactions to a conclusion. Administrative
expenses expressed as a percentage of operating profit excluding
administrative expenses was lower than the previous year at 31% (2023: 34%).
Other gains comprised a £60.4m net increase (2023: £71.1m net increase) in
the fair value of investment properties and assets held for sale ('AHFS')
combined with the profit on sale of investment properties, AHFS and overages
of £17.7m (2023: £1.7m loss), driven primarily by the sale of the Ansty
Strategic Land site following receipt of planning permission during the year.
Other operating expense includes a settlement loss incurred following the
Group entering a trustee agreed Buy-In Agreement with respect to the
Blenkinsopp Pension scheme during the year. The agreement secures all
remaining liabilities in the scheme by way of an insurance contract. The costs
of £1.4m represent a settlement loss preceding buyout arrangement and as such
are expensed through the Income Statement.
Joint venture profits of £1.5m (2023: £1.6m profits) were the result of net
rental income and valuation gains at Multiply Logistics North, offset by a
small reduction in value of the Aire Valley Land joint venture increasing
costs of development. Value gains/(losses) on a non-statutory basis are
outlined below.
Non-statutory value gains/(losses)
Value gains/(losses) are made up of profit on sale, revaluation gains/(losses)
on investment properties (including joint ventures), and revaluation
gains/(losses) on development properties, AHFS and overages. A full
description and reconciliation between statutory and non-statutory value gains
can be found in Note 2 and the appendix to the consolidated financial
statements.
£m Category 2024 2023 31 Dec 24 31 Dec 23
Profit /(loss) Reval. gains/ Total Profit /(loss) Reval. gains/ Total Total valuation Total valuation
on sale (losses) on sale (losses)
Capital Growth
Residential Development (2.9) 20.3 17.4 (5.4) (9.0) (14.4) 223.8 210.5
Major Developments
Industrial & Logistics Major Developments Mixed 0.7 5.8 6.5 0.1 43.1 43.2 138.1 136.0
Residential Investment - 8.6 8.6 (0.1) 6.1 6.0 61.0 51.6
Strategic Land
Industrial & Logistics Investment 12.6 31.4 44.0 (0.1) 18.4 18.3 109.7 105.9
Strategic Land
Income Generation
Investment Portfolio Investment 0.8 19.6 20.4 (1.4) 6.2 4.8 297.2 221.4
Natural Resources Investment - 0.5 0.5 0.1 - 0.1 21.5 21.6
Agricultural Land & other Investment (0.1) (0.3) (0.4) - 0.1 0.1 7.5 21.1
Total 11.2 86.0 97.2 (6.8) 64.9 58.1 858.8 768.1
Notes: There are some minor differences on some totals due to
roundings. Profit/(loss) on sale is stated net of the impact of transaction
fees incurred.
Profit on sale of £11.2m (2023: £6.8m loss) reflected the impact of the sale
of the Ansty Industrial & Logistics Strategic Land site alongside wider
sales reflecting pricing broadly in line with book value before transaction
costs, the impact of discounting deferred consideration at present value, and
retentions not recognised on completion. Revaluation gains were £86.0m (2023:
£64.9m gains) and are outlined in the table below.
2024 2023
£m £m
Increase in fair value of investment properties 60.8 71.4
Decrease in value of assets held for sale (0.4) (0.3)
Movement in net realisable value provision on development properties 1.3 (6.2)
Contribution to statutory operating profit 61.7 64.9
Share of profit of joint ventures 1.5 1.6
Unrealised (losses)/gains on development properties and overages 22.7 (1.6)
Total non-statutory revaluation gains 86.0 64.9
Note: There are minor differences on some totals due to roundings
The principal revaluation gains and losses across the divisions reflected the
following:
· Industrial & Logistics:
· Across Major Developments and Strategic Land, there were value gains
relating to planning progress, including at Gascoigne Wood and Ansty, as well
as progressing the sale of land for data centre use at Skelton Grange through
the agreement with Microsoft.
· The industrial and logistics market continued to benefit from rental
growth supporting our Industrial & Logistics Major Development sites,
Strategic Land sites and the Investment Portfolio alongside the impact of
management actions.
· Regional investment yields remained stable between December 2023 and
December 2024, according to JLL. Value gains were primarily driven by
management actions, particularly from renewals and rent reviews, securing new
leases, and providing renewable energy to tenants, combined with incentive
period completions.
· Residential:
· Masterplan optimisation at our Residential Major Development sites
drove value gains, through our responding flexibly to increasing local housing
needs and reducing future costs by working with stakeholders and
re-engineering development solutions.
· Strategic Land gains included the impact of sites progressing through
the planning system as well as re-allocating land to Residential where changes
in local markets could drive greater value through acceleration.
· Residential land sales on our Major Development sites at good pricing
levels demonstrated the demand for our serviced land product underpinning
valuations.
· The residential market saw house prices increase by 4.7% over the year;
however, new house completions remained low and significantly below the UK
government target of 300,000 a year. Despite this the demand for short term
and serviced land continued to be strong across Harworth sites supporting both
sales and underpinning valuations.
· Natural Resources: valuations remained broadly stable with valuation
increases resulting principally from higher royalties from wind assets.
· Agricultural Land and Other experienced a small valuation decrease
during the year.
The net realisable value provision on development properties as at 31 December
2024 was £8.5m (31 December 2023: £14.1m). This provision is held to reduce
the value of seven (31 December 2023: nine) development properties from their
deemed cost (the fair value at which they were transferred from an investment
to a development categorisation) to their net realisable value at 31 December
2024. The transfer from investment to development property takes place once
planning is secured and development with a view to sale has commenced.
Cash and sales
Group revenue from property sales in the year of £215.8m (2023: £125.9m),
resulted in an overall profit on sale of £11.2m (2023: loss £6.8m). Revenue
from sales comprised Residential plot sales of £97.2m (2023: £44.1m),
Industrial & Logistics land sales of £101.0m (2023: £11.5m), sales of
Investment Portfolio properties of £13.3m (2023: £70.0m) and receipt of
overages of £4.3m (2023: £0.3m).
Cash proceeds from sales in the year were £172.3m (2023: £132.0m) as shown
in the table below:
2024 2023
£m £m
Total property sales 215.8 125.9
Less deferred consideration on sales in the year (57.8) (21.9)
Add receipt of deferred consideration from sales in prior years 14.3 28.0
Total cash proceeds 172.3 132.0
The increase in Residential headline sales to £104.1m (2023: £52.1m)
resulted in higher levels of deferred consideration. Where deferred payment
terms are agreed to, security is maintained to mitigate credit risk.
Tax
The income statement charge for taxation for the year was £12.2m (2023:
£11.9m), which comprised a current year tax charge of £6.0m (2023: £5.8m)
and a deferred tax charge of £6.1m (2023: £6.0m).
The current tax charge resulted primarily from profits from the sale of
development properties, investment property, AHFS, profit on the rental of
investment property, royalties and other fees after taking into account
overheads and interest costs. The increase in deferred tax largely relates to
unrealised gains on investment properties. The deferred tax balance has been
calculated based on the rate expected to apply on the date the liability is
crystallised.
At 31 December 2024, the Group had deferred tax liabilities of £37.4m (31
December 2023: £30.6m) and deferred tax assets of £1.5m (31 December 2023:
£0.5m). The net deferred tax liability was £35.9m (31 December 2023:
£30.1m).
Basic earnings per share and dividends
Basic earnings per share for the year increased to 17.7p (2023: 11.8p)
reflecting the increase in the valuation of investment properties in 2024,
increased profits from sales during the year, coupled with reduced rental
income following the successful sale of investment property during 2023 and
early 2024.
In addition to the interim dividend of 0.489p, the Board has declared a final
dividend of 1.125p (2023: 1.022p) per share, bringing the total dividend for
the year to 1.614p (2023: 1.466p) per share. The recommended 2024 final
dividend and 2024 total dividend represent a 10% increase in line with our
dividend policy.
Property categorisation
Until sites receive planning permission and their future use has been
determined, our view is that the land is held for a currently undetermined
future use and should, therefore, be held as investment property. We
categorise properties and land that have received planning permission, and
where development with a view to sale has commenced, as development
properties.
The table below sets out our top 10 sites by value, which represent 54% of our
total portfolio, split according to their categorisation, including currently
consented Residential plots and commercial space:
Top 10 sites by value
Site Region Use Site BS Progress to date
type
category
Ironbridge (Telford) MID R MD Dev. prop 1,000 Residential units consented, land sold representing 312 units, further
enabling works underway
Continue to progress master planning for the scheme in collaboration with the
SL Inv. prop Local Authority
R
Advanced Manufacturing Park (AMP) (Rotherham) YAC I&L MD Inv. prop 2.1m sq. ft of Industrial & Logistics space consented, 1.7m sq. ft built
or sold, with 0.1m sq. ft nearing completion
0.4m sq. ft of Grade A held in Investment Portfolio
I&L IP Inv. prop
Bardon Hill (Leicester) MID I&L IP Inv. prop 0.3m sq. ft of fully-let Grade A held in Investment Portfolio
Coalville (Leicester) MID R MD Dev. prop 2,016 Residential units consented, land sold representing 977 units
Catalyst (Rotherham) YAC I&L IP Inv. prop Acquisition of 0.3m sq. ft Grade A urban logistics estate
Wyke Lane (Bradford) YAC I&L IP Inv. prop 0.3m sq. ft fully-let
Logistics North (Bolton) NOW I&L IP Inv. prop 104k sq. ft owned freehold retained in Investment Portfolio.
I&L IP JV 87k sq. ft controlled through joint venture retained in Investment Portfolio
Stewartby (Bedford) MID R MD Inv. prop Outline consent for 1,000 Residential units
Wingates (Bolton) NOW I&L MD Inv. prop Up to 1m sq. ft of I&L space consented on Phase 1 and enabling works
started
I&L SL
The wider scheme allocation under Greater Manchester's Places for Everyone
will see a further planning application for 1.9m sq. ft. submitted later this
year.
Waverley (Rotherham) YAC R MD Dev. prop Consent for up to 3,000 Residential units, land sold representing 2,578 units
I&L MD Inv. prop Olive Lane, a new mixed-use development reached practical completion in March
2025 and will be retained in Investment Portfolio (20k sq. ft)
As at 31 December 2024, the balance sheet value of our development properties
was £190.9m (2023: £250.0m) and their independent valuation by BNP Paribas
was £221.9m, reflecting a £31.0m cumulative uplift in value since they were
classified as development properties. In order to highlight the market value
of development properties, and overages, and to be consistent with how we
state our investment properties, we use EPRA NDV, which includes the market
value of development properties and overages less notional deferred tax, as
our primary net assets metric.
Net asset value
31 Dec 2024 31 Dec 2023
£m £m
Properties((1)) 821.6 734.7
Cash 117.4 27.2
Trade and other receivables 98.2 48.6
Other assets 15.3 13.8
Total assets 1,052.5 824.4
Gross borrowings (164.1) (63.6)
Deferred tax liability (35.9) (30.1)
Other liabilities (160.9) (93.0)
Statutory net assets 691.7 637.7
Mark to market value adjustment on development properties and overages less 27.8
notional deferred tax
25.2
EPRA NDV 719.5 662.9
Number of shares in issue less Employee Benefit Trust & Equiniti Share 323,640,852
Plan Trustees Limited-held shares
323,154,373
EPRA NDV per share 222.3p 205.1p
(1) Properties include investment properties, development properties, AHFS,
occupied properties and investment in joint ventures.
EPRA NDV at 31 December 2024 was £719.5m (31 December 2023: £662.9m), which
includes the mark to market adjustment on the value of the development
properties and overages. The total Portfolio Value at 31 December 2024 was
£858.8m, an increase of £90.6m from 31 December 2023 (£768.2m). The Group's
share of gains from joint ventures of £1.5m (2023: £1.6m), alongside net
investment, resulted in investments in joint ventures increasing to £33.6m
(31 December 2023: £30.7m). Trade and other receivables include deferred
consideration on sales as set out previously. At 31 December 2024, deferred
consideration of £72.9m (31 December 2023: £28.1m) was outstanding, of which
61.0% is due within one year, with the increase driven by the higher level of
Residential land sales completed during 2024; where deferred payment terms are
agreed, the Group maintains security in order to mitigate credit risk.
Financing strategy
Harworth's financing strategy remains to be prudently geared. The Income
Generation portfolio provides a recurring income source to service debt
facilities and this is supplemented by proceeds from sales. The Group has an
established sales track record that has been built up since re-listing in
2015, with 2024 reflecting a substantial increase in total property sales
compared with 2023.
To deliver its strategic plan, the Group has adopted a target LTV at year-end
of below 20%, with a maximum of 25% in-year. As a principle, the Group seeks
to maintain its cash flows in balance by funding the majority of
infrastructure expenditure through disposal proceeds, while allowing for
growth in the portfolio.
Debt facilities
The accordion option within the RCF was exercised during 2024, increasing the
total RCF to £240m. The RCF is provided by NatWest, Santander and HSBC and is
aligned to the Group's strategy, providing significant liquidity and
flexibility to enable us to pursue our strategic objectives. The interest rate
on the RCF is based on an LTV ratchet mechanism with a margin payable above
SONIA in the range of 2.25% to 2.50%. The Group has no refinancing
requirements until 2027.
As part of its funding structure, the Group also uses infrastructure financing
provided by public bodies and site-specific direct development loans to
promote the development of major sites and bring forward the development of
Industrial & Logistics units.
The Group had borrowings and loans of £164.1m at 31 December 2024 (2023:
£63.6m), being the RCF drawn balance (net of capitalised loan fees) of
£164.1m (2023: £33.8m) and infrastructure or direct development loans (net
of capitalised loan fees) of £nil (2023: £29.7m). The Group's cash balances
at 31 December 2024 were £117.4m (2023: £27.2m) reflecting sales proceeds
received in late December 2024. The resulting net debt was £46.7m (2023:
£36.4m).
Net debt increased with property expenditure and acquisitions mainly offset by
the completion of serviced land and property sales. The movements in net debt
over the year are shown below:
2024 2023
£m £m
Opening net debt as at 1 January (36.4) (48.4)
Cash inflow from operations 42.6 17.4
Property expenditure and acquisitions (116.5) (54.9)
Disposal of investment property, AHFS and overages 80.0 69.6
Net investments in joint ventures (1.3) 0.7
Interest and loan arrangement fees (7.7) (4.5)
Dividends paid (4.9) (4.4)
Tax paid (0.5) (10.2)
Other cash and non-cash movements (2.0) (1.7)
Closing net debt as at 31 December (46.7) (36.4)
The Group's hedging strategy to manage its exposure to interest rate risk is
to hedge the lower of around half its average debt during the year or its net
debt balance at year-end. Following the repayment of the infrastructure
financing outside the RCF during the year, at 31 December 2024, none of the
Group's drawn debt was subject to fixed rate interest rates (31 December 2023:
35%), with no hedging instruments in place on the floating rate debt.
Projected drawn debt and hedging requirements remain under active review with
any new hedging to be aligned to future net debt requirements.
Due to the timing of sales towards the end of December 2024, the Group held a
higher year end cash balance of £117.4m (31 December 2023: £27.2m) of which
£90.0m was used to repay RCF debt in the first week of January 2025. This
higher cash and gross debt balance impacted the gross debt ratios at 31
December 2024. As at 31 December 2024, the Group's gross LTV was 19.1% (31
December 2023: 8.3%) and its net LTV was 5.4% (31 December 2023: 4.7%). If
gearing is assessed against the value of the core income generation portfolio
(the Investment Portfolio and Natural Resources portfolio) only, this equates
to a net loan to core income generation portfolio value of 15.7% (31 December
2023: 15.9%). Under the RCF, the Group could withstand a material fall in
portfolio value, property sales or rental income before reaching covenant
levels.
At 31 December 2024, Group liquidity of £192.4m (31 December 2023: £192.2m)
included undrawn capacity under the RCF of £75.0m (31 December 2023:
£165.0m) in addition to the year-end cash balance of £117.4m (31 December
2023: £27.2m). Going forwards the RCF, alongside selected use of development
and infrastructure loans where appropriate, will continue to provide the Group
with sufficient liquidity to execute our growth strategy.
Dougie Maudsley
Interim Chief Financial Officer
17 March 2025
( )
Key performance indicators
2.1 Financial track record
KPI 2024 result 2023 result 2024 performance commentary
Total Accounting Return (%) 9.1% 5.1% Our total accounting return of 9.1% was the result of a 8.5% increase in EPRA
NDV during the year, as well as the payment of 1.511p in dividends.
Growth in EPRA NDV during the year in addition to dividends paid, as a
proportion of EPRA NDV at the beginning of the year.
EPRA Net Disposal Value ('NDV') per share 222.3p 205.1p The increase in EPRA NDV was driven by profit on sales during the year as well
as increased valuations reflecting management actions, including progressing
A European Public Real Estate Association ('EPRA') metric that represents a sites through the planning process.
net asset valuation where development property is included at fair value
rather than cost and deferred tax, financial instruments and other adjustments
as set out in Note 2 and the appendix to the financial statements, are
calculated to the full extent of their liability.
Net asset value £691.7m £637.7m Net asset value included the impact of crystalising valuation gains through
development property sales during the year in addition to increases in the
The value of our assets less the value of our liabilities, based on IFRS value of investment properties, driven by management actions.
measures, which excludes the mark-to-market value of development properties.
Net LTV 5.4% 4.7% Our LTV increased during the year but remained well within our target of less
than 20% at year-end as we continued to manage carefully our levels of net
Net debt as a proportion of the aggregate value of properties and investments. debt.
2.2 Strategic track record
KPI 2024 result 2023 result 2024 performance commentary
Industrial & Logistics space direct development 107,000 sq. ft 193,000 sq. ft Our level of completed direct development reduced due to a focus on pre-let
and build to suit schemes in 2024, but we made significant progress with
The amount of Industrial & Logistics space developed by Harworth, either enabling works (1.3m sq. ft enabled during the year and another 1.8m sq. ft of
speculatively or on a build-to-suit basis for an end occupier or investor, works underway at year-end) and were on site at the year end with 270,000 sq.
achieving practical completion during the year. ft. all due to complete in 2025.
Total Industrial & Logistics pipeline 33.6m 37.7m Our Industrial & Logistics pipeline decreased primarily due to the
landmark sales of the Ansty Strategic Land site and phase 1 of the sale to
The total amount of Industrial & Logistics space that could be delivered sq. ft sq. ft Microsoft at Skelton Grange (Leeds).
from our land bank, including freehold land, options and PPAs.
Proportion of Investment Portfolio that is 45% 37% The proportion of our Investment Portfolio that is Grade A space significantly
increased due to the completion of pre-let development at the AMP, Rotherham
Grade A and the acquisition of Catalyst, a 285,000 sq. ft. Grade A urban logistics
estate adjacent to the AMP.
The proportion of our Investment Portfolio by area that could be classified as
modern Grade A Industrial & Logistics space. Grade A is a widely-used
industry term that is understood to mean 'best in class' space which is new or
relatively new, high-specification and in a desirable location, allowing the
unit to attract a rent that is above the market average.
Number of plots sold 2,385 1,170 The number of plots sold increased significantly compared to 2023 reflecting
the acceleration of our Residential sites, the strong demand for our serviced
The number of plots equivalent to land parcel sales to housebuilders or land product and the broadening of Residential product through mixed tenure
registered providers during the year. sales.
Total Residential pipeline 31,264 plots 27,190 plots Our Residential pipeline increased with the acquisition of a Residential
development at Stewartby and Harworth's share of an allocated site near
The total number of Residential plots that could be delivered from our Grimsby in Strategic Partnership with a local landowner, as well as reflecting
pipeline including freehold land, options and PPAs. realignment of sites from Industrial & Logistics where local planning
considerations provide opportunity to drive greater value through
acceleration.
2.3 Environmental, economic and social track record
KPI 2024 result 2023 result 2024 performance commentary
Potential GVA that could be delivered from our portfolio £4.3bn £4.8bn The potential GVA that could be delivered from our portfolio decreased during
the year due to landmark sales at Ansty (Rugby) and Skelton Grange (Leeds)
Calculated by Ekosgen, an economic impact consultancy, on our behalf. This from the I&L pipeline, together with a record number of Residential plot
estimates sales, only partially offset by acquisitions.
the total contribution that our portfolio could make to the economy once fully
built out.
Location based Scope 1, Scope 2 and Scope 3 business travel emissions 694 834((1)) Our emissions decreased during the year, driven by the use of alternative
fuels for direct plant operations, and increased use of electric vehicles by
Emissions that are captured by our target to be operationally NZC by 2030. tCO(2)e tCO(2)e staff.
During the year, the scope and availability of our emissions data increased,
and therefore figures for 2022 have been restated to allow for a like-for-like
comparison with 2023.
Employee pride 98% 100% Levels of staff satisfaction remained very high, as we continued our work to
ensure Harworth is an employer of choice, with initiatives aimed at promoting
The proportion of employees who said they were "proud to tell people that I employee engagement, wellbeing and equity, diversity & inclusion.
work for Harworth" in our annual employee survey.
(1) Prior year figure has been restated
Principal risks & uncertainties
The Board is responsible for identifying and evaluating the Group's principal
and emerging risks that could potentially impact the execution of our
strategy, business model, future performance, solvency, liquidity, or
reputation. The Board receives a report on these principal and emerging risks
at each meeting. During 2024, the Board continued to assess principal risks
closely, particularly in light of the strategic 'pivot' towards Industrial
& Logistics development and investment announced during the year, and
external factors such as the election of, and rollout of policies by, the new
UK government, and persistent geopolitical instability and macroeconomic
headwinds throughout the year.
In addition, during H2 2024, in-depth principal risk workshops were conducted
by the Enterprise Risk Management function with business risk champions,
further strengthening the 'top-down/bottom-up' review process. During 2025,
the Board will undertake a comprehensive review of principal risks, informed
by the strategic pivot, the resultant scaling up of development activity and
of the Investment Portfolio, and the early outputs from the enhancement and
standardisation of our 'bottom-up' operational risk management framework.
Below are the changes made to our principal risks since the 2023 Annual
Report.
Risk What has changed during the year
Planning Although the risk profile outlined in this report remains unchanged, we
recognise that the planning reforms proposed by the new government should have
a positive overall impact on Harworth's planning promotion activities.
However, implementation of these reforms, and realisation of their full
effects, will take time. Consequently, we anticipate that the residual risk
profile will trend downwards in the short-to-medium term.
Residential and commercial markets The analysis of this principal risk has been undertaken against a backdrop of
challenging and uncertain market conditions. At the time of writing, there are
some early signs which suggest that the external economic landscape may
improve over the course of the balance of the year, notably if there are
further cuts in interest rates. That said, there also remains downside risk in
the economic and political environment.
Digital resilience This risk has been renamed from 'cyber security' to 'digital resilience' with
changes to the risk description, broadening the risk scope beyond
cyber-attack. It now includes the mismanagement of information by employees or
suppliers, recognising and articulating that internal actions and third-party
relationships also pose a risk alongside malicious threats.
The revised statement also recognises a more comprehensive articulation of the
potential impact of this risk, including intellectual property theft or loss,
financial loss, reputational damage and/or business interruption.
The residual risk rating has moved from 'low' to 'medium'. These changes
result from the growing threat, both with increased malicious activity by
third parties, and with Harworth, now a FTSE 250 company, being more likely to
be targeted. The digital resilience controls in place and being bolstered will
improve Harworth's overall security posture, keep pace with and support the
rollout of our digital transformation project.
A detailed analysis of each principal risk is set out below, and in the
'Effectively managing our risk' section of the 2024 Annual Report.
Risk 1: Availability of and competition for strategic sites
Failure to acquire strategic land at appropriate prices due to constrained
supply or competition.
Inherent risk Residual risk Change in residual risk in the year
(before mitigating actions) (after mitigating actions)
High Medium No change
Commentary
The availability of and competition for financially viable strategic sites are
influenced by several factors, including land scarcity, which, combined with
the impact of other principal risks to the viability of prospective new
schemes, create challenges to securing schemes which meet our financial return
aspirations. These factors are partially offset by Harworth's significant
embedded value to be unlocked from our high-quality extensive land bank,
capable of delivering c. 33.6m sq. ft. of Industrial & Logistics space and
over 30,000 Residential plots. We continue to leverage our relationships with
key stakeholders in the market, enhancing strategic partnerships, market
intelligence, and financial analysis to secure prime locations, optimise
developments, and ensure long-term environmental and regulatory compliance.
Mitigation Additional measures planned for 2025
· Developing and maintaining our relationships with land agents and land · Brand awareness: Optimising Harworth's brand value as a master
owners. developer and existing reputation for tackling complex projects.
· Developing strategic partnerships to secure first access to prime · Deploying alternative structures to support land assembly, including via
locations whenever possible. strategic partnerships.
· Gathering market intelligence. · Re-evaluate the long-term Strategic Land and development pipeline in
light of the strategic pivot to the Industrial & Logistics sector and
· Engaging with valuers before major acquisitions and conducting extensive undertake a gap analysis of the existing pipeline to inform an updated
financial analysis to ensure acquisition prices yield appropriate returns. acquisitions strategy.
· Optimising master plans and enhancing organic scheme value growth,
focusing on locations with existing infrastructure and strong market
potential.
· Conducting comprehensive evaluations of prospective new sites, which
are informed by price- and non-price-based risks and opportunities throughout
the development cycle.
Risk 2: Planning
Planning promotion risk including uncertainty around local and national
changes to planning regime with adverse effects on promotion activity and/or
financial returns.
Inherent risk Residual risk Change in residual risk in the year
(before mitigating actions) (after mitigating actions)
Very high High No change
Commentary
The UK planning challenges include delays from an inefficient system, resource
constraints within local authority planning departments, and frequent changes
to government policy. Proposed reforms are, on the whole, but not exclusively,
positive for Harworth: they aim to streamline processes, bolster local
authority resources, restore housing targets, and boost sustainable
development, with goals including the delivery of 1.5 m new homes over the
next five years and critical infrastructure projects. However, significant
impacts are unlikely until later in the parliamentary term. Industry
engagement and stability are essential for progress, while private sector
projects remain constrained by economic uncertainty and the cost of debt.
Added complexities come in the form of land value capture, Greater
Manchester's carbon tax, greenbelt and Biodiversity Net Gain ('BNG') policies,
with uncertainties around how these will be implemented in practice (these
also inform the profile of Risk 6: statutory costs of development).
Harworth employs a comprehensive approach to project underwriting,
incorporating detailed planning permission strategies, stakeholder mapping,
and market analysis to guide investment decisions and optimise outcomes. This
includes monitoring greenbelt exposure, local planning applications, and
market trends, engaging with political advisers and industry peers, and
actively participating in consultations to influence planning policies.
Mitigation Additional measures planned for 2025
· Project underwriting proposals include detailed planning permission · Developing strategic plans to foster relationships with senior political
strategies (including competing sites analysis and BNG considerations), stakeholders, positioning Harworth as a trusted partner with planning
informed by project stakeholder mapping, which continue to be monitored via authorities.
site project plans.
· At every Investment Committee and Board meeting, we review greenbelt
exposure at a portfolio level.
· Awareness and monitoring of local authority planning resources and
outcomes guide our long-term decisions on where Harworth should invest.
· We have developed regional political engagement strategies with
support from local political advisers.
· The Investment Committee's decision-making process is informed by
representation at key planning forums, engagement with industry peers, and an
in-house and selected panel of external planning promotion experts.
· We undertake horizon scanning for planning policy changes and
respond to consultations on emerging planning policy in our own capacity and
via representative groups, such as the British Property Federation.
Risk 3: Development supply chain
Exposure to development supply chain leading to greater exposure to pricing
pressures and labour constraints, and risk of disputes with and/or default by
and/or insolvency of supply chain partners.
Inherent risk Residual risk Change in residual risk since
(before mitigating actions) (after mitigating actions) reformulation at the half-year
High Medium No change
Commentary
Following a sustained period of materials cost inflation and constrained
capacity across the construction sector, the cost of materials has stabilised,
and pricing is further benefiting from increased competition between
contractors. That said, labour costs remain high and set against a subdued and
unstable macroeconomic backdrop; the UK construction industry is experiencing
a significant increase in insolvencies. In the year to June 2024, 4,303
construction firms became insolvent, accounting for 17% of all insolvencies in
England and Wales. (source: DLA Piper). This rise in insolvencies heightens
the risk of disputes, defaults, and project delays. Harworth continues to
focus on robust and efficient procurement, rigorous due diligence and
management of contractors, and fostering resilient supplier relationships.
Mitigation Additional measures planned for 2025
· Rigorous tender processes (extensive financial checks and interviews · We are looking to enhance our control of geotechnical validation data in
with contractors' Financial Directors where necessary). real-time should the unforeseen occur with a contractor.
· Due diligence on contractors - screening contractors before the · We are exploring the prospect of procuring our own performance bond
appointment and ongoing Group-wide review of contractor 'concentration risk' insurance, further mitigating the risk of delay in gaining access to
and financial health. To this end, we utilise market intelligence regarding performance bonds in the event of contractor insolvency.
contractors' commitments and workload.
· We are also exploring step-in rights on sub-contracting packages should
· We have established a suite of legal precedents to promote a principal contractor become insolvent.
consistency in land remediation and direct development procurement and have
improved the protections in those precedents to increase our speed of
intervention in the event of insolvency.
· Performance bonds sought to support all major contracts.
· External review of contractor insurance packages for every direct
development project.
Risk 4: Counterparties: investment partners and service providers
Increase in exposure to investment partners and critical dependencies on
certain service providers, leading to increased risk from disputes with and/or
default by and/or insolvency of these counterparties.
Inherent risk Residual risk Change in residual risk since
(before mitigating actions) (after mitigating actions) formulation at the half-year
High Medium No change
Commentary
We face increased exposure to investment partners (JVs, forward funders,
strategic investors) as we continue to grow and develop our sites, seeking
opportunities with partners in connection with land assembly, direct
development and delivery of alternative Residential products. Our governance
and ways of working continue to mature to counter this increased exposure. As
our activity levels increase, we are also carefully monitoring critical
dependencies amongst our service providers (beyond those in our project
delivery supply chain), which could increase our vulnerability to disputes
with and/or defaults by and/or insolvencies of those providers. To mitigate
these risks, Harworth conducts thorough due diligence and diversifies its
partnerships. As we grow and work with investment partners, our governance and
management system evolve to address increased exposure. Continuous
improvements in our supply chain management system also mitigate our
dependency on strategic service providers.
Mitigation Additional measures planned for 2025
· A consistent process is followed for selecting and 'onboarding' · Transition to a new supply chain management and procurement target
counterparties. operating model.
· Project underwriting proposals include detailed consideration of · Implementation of an enhanced relationship management regime for existing
counterparty risk, where appropriate. JV partners.
· Due diligence to support the appraisal of credit counterparty risk and
counterparties' ability to meet their financial commitments is particularly
rigorous for new investment partners.
· Development of relationships with counterparties and ongoing assessment
of their delivery of obligations.
Risk 5: Power infrastructure capacity
Challenges in securing power for our sites resulting in potential for adverse
impact and uncertainty as to cost and
programme for development.
Inherent risk Residual risk Change in residual risk since
(before mitigating actions) (after mitigating actions) formulation at the half-year
High Medium No change
Commentary
Securing power for development sites in the UK has become increasingly
challenging, leading to uncertainties, potential cost increases, and project
delays. The rising demand for renewable energy has strained grid
infrastructure, resulting in longer connection timelines. In response,
National Energy System Operator (NESO) is undertaking the Great Grid Upgrade
comprising 17 major infrastructure projects to upgrade existing networks.
In December 2023, the National Grid Electricity System Operator (NGESO), now
NESO, published final recommendations to reform the grid connection
application process. These changes aim to streamline connections but also
introduce new challenges.
The 'first ready, first connected' approach with regard to transmission and
generation applications is now in place. The next phase of the connection
reform is a pause in connection applications, which began in January 2025 to
allow NESO to implement the new application process. Harworth is actively
monitoring the situation as it progresses. We are in regular communications
with the relevant Distribution Network Operators (DNOs) whose feedback has
been that demand projects will continue to be processed as normal to support
economic growth and development. We are hopeful the NESO reforms will help
mitigate risks associated with connection delays, ultimately lowering this
risk.
Mitigation Additional measures planned for 2025
· We are actively engaging with NESO with regard to the progress of the · Continuing to monitor the proposed changes to, and implementation of,
Great Grid Upgrade to monitor the effect on our development sites with a view the reformed connections system and future application requirements.
to seizing opportunities that may arise from these upgrades.
· Analysis of power capacity and upgrade potential and timing as part
of acquisition analysis.
· Early engagement with DNOs and NESO to identify the availability of
power capacity, formulate procurement strategy, and seek earlier connection
offers and 'reservation of capacity' for long-term projects.
· Alignment with broader energy system plans via monitoring publicly
available information on DNO Geographic Information Systems.
· Entry into reservation commitments to secure Harworth's position, where
appropriate.
Risk 6: Statutory costs of development
Legislative reforms which do, or may, impose a tax or levy on development, or
have the effect of levying an additional cost on development.
Inherent risk Residual risk Change in residual risk in the year
(before mitigating actions) (after mitigating actions)
High Medium No change
Commentary
There persists an upward trend in statutory costs of development in the UK,
including the cumulative impact of land value capture via Section 106
obligations and the Community Infrastructure Levy (CIL), with the prospect of
greater capture via the government's planning reforms, the Residential
Property Development Tax, the Building Safety Levy, the costs of meeting
increasing sustainability requirements including BNG obligations and emerging
carbon tax regimes within local planning policy.
Despite these challenges, the government's commitment to reform the planning
system and improve infrastructure delivery offers a potential counterbalance.
Proposed adjustments to housing targets and enhanced collaboration between
developers and local authorities could also help manage statutory obligations
more effectively.
In response, we undertake horizon scanning, model statutory cost sensitivities
during acquisitions, and engage proactively on emerging policies both directly
and through strategic collaboration with stakeholders. This approach positions
us to navigate these complexities while maintaining a focus on sustainable and
profitable development.
Mitigation Additional measures planned for 2025
· Enhanced horizon scanning regime. · None planned.
· Sensitivity to additional statutory costs modelled when assessing
acquisitions.
· Responding to emerging policy both on a solus basis and through key
stakeholder groups.
Risk 7: Residential and commercial markets
Downturn in Industrial & Logistics and/or Residential market conditions
leading to falls in property values.
Inherent risk Residual risk Change in residual risk in the year
(before mitigating actions) (after mitigating actions)
Very high Medium No change
Commentary
The UK residential and commercial property markets are still expected to (at
least begin to) recover in 2025, but the pace of that recovery is likely to be
materially slower than previously anticipated as a result of stagnating
economic growth and 'higher for longer' gilt and interest rates. A recovery,
even if delayed and/or slower, should still present opportunities for Harworth
across both of our core sectors, supporting increases in residential property
values and a rebound in commercial investment activity.
In 2024, we made notable progress in progressing our short- medium- and
long-term Industrial & Logistics pipeline, advancing our strategy to grow
our Investment Portfolio to £0.9 bn by 2029. Key achievements included
securing planning permission for 6.8m sq. ft. and allocations or draft
allocations for an additional 4.2m sq. ft. With these milestones, Harworth is
well-positioned to move into the development phase, supported by stabilising
market conditions and a near-term pipeline capable of delivering c.£0.6bn of
GDV by the end of 2027.
Our strategy has evolved to prioritise growth in income-generating Industrial
& Logistics assets, ensuring long-term resilience and value creation for
our stakeholders. We remain confident of achieving our strategic objectives.
Mitigation Additional measures planned for 2025
· Advisers regularly supplement generic market commentary by providing · We will continue to implement our strategy, informed by evolving market
feedback on the status of Residential and Industrial & Logistics markets conditions.
in our core regions.
· Expand our network of external advisers who proactively gather and
· Our delivery teams and the Investment Committee regularly review site provide market insights and data on emerging opportunities and risks. This
project plans, informed by prevailing market conditions. will strengthen our strategic market perspective and further enhance
decision-making.
· Collaborating with a firm of architects to evolve our building
specifications, which are updated every six months in line with current/future
market movements and occupier demand.
· Management actions to drive value and adapt to prevailing market
conditions, including periodic reviews of business strategy, including funding
models.
· Introduction of mixed tenure products to support accelerated realisation
on Residential development sites.
· Available market data on tenants and proactive engagement with
key/high-risk tenants, which may impact cash flow.
Risk 8: Organisational development and design
Misalignment of workplace culture, capability, systems and/or controls with
what the business requires to deliver the strategy.
Inherent risk Residual risk Change in residual risk in the year
(before mitigating actions) (after mitigating actions)
High Medium No change
Commentary
As the workforce continues to grow to support strategy execution and resultant
scaling up of activity volumes and pace, the Board recognises the importance
of, and continues to monitor closely, a structured change management approach.
This approach encompasses organisational development-focusing on culture and
values-and organisational design, addressing operations and governance to
ensure scalable and sustainable evolution.
In 2024, we made considerable progress on our culture and values initiative,
gaining valuable insights as we continue to shape our desired organisational
culture. Parallel advancements were achieved in operations and governance,
with key mitigation activities outlined below.
While these achievements mark important milestones, we recognise that
organisational development and design require persistent focus. Addressing
key risks, such as recruiting and retaining critical skills, remain central
to navigating the changes necessary to align with our strategic ambitions and
the increasing scale and pace of our activities.
Mitigation Additional measures planned for 2025
· Through annual and pulse surveys focusing on engagement, well-being, and · We will review our Target Operating Model to align with our evolving
happiness, we continue to gain valuable insights into our organisational strategic objectives and ensure it supports growth and operational efficiency.
culture and progress toward our desired state.
· We will continue advancing key aspects of our Culture Project,
· Behavioural Competency Framework: a newly introduced framework integrated focusing on enhancing recruitment practices, refining reward strategies, and
into roles, supporting excellence, learning and development, and a refined improving the workplace environment.
reward strategy.
· Further development of the Harworth Academy will prioritise critical
· Reward and Recognition: ongoing reward benchmarking, a comprehensive skills analysis, identification of skills gaps, and the delivery of targeted
reward evaluation project covering pay and benefits, and the execution of learning and development programmes to build a future-ready workforce.
transparent Pay, Bonus, and Retention Policies.
· Our Talent Management Project will progress by implementing tailored
· Diversity, Equity, and Inclusion (DE&I): regular measurement, development plans, clearly defined career pathways, and robust succession
reporting, and publication of DE&I metrics to ensure accountability. planning for critical roles.
· Recruitment and Leadership: transparent recruitment practices and · We will implement the first phase of initiatives within our digital
enhanced leadership development programmes to attract and retain top talent. transformation project, leveraging technology to optimise processes and drive
innovation across the business.
· Organisational Improvements: streamlined communication channels, updated
performance management systems, and improved cross-functional collaboration
processes to enhance operational efficiency and cohesion.
· Digital transformation project: we have completed the 'review' phase,
which identified the improvements we need to make to our technology systems to
ensure that they are 'future-proofed' to support the operational growth of the
business.
Risk 9: Availability of appropriate capital
Inability to access appropriate equity and/or debt funding to support the
strategy.
Inherent risk Residual risk Change in residual risk in the year
(before mitigating actions) (after mitigating actions)
High Medium No change
Commentary
The increase in pace and scale of activity under our strategy, in turn, has
the potential to require additional capital. The £200m RCF, signed in early
2022 and increased to £240m through exercising the accordion option in late
2024, supplemented by project-specific funding where appropriate, currently
supports the funding needs of the business. Headroom is projected to remain
compliant with all covenants, and the business could withstand a material fall
in valuations without breaching covenants. Interest rates appear to have
peaked but may reduce more slowly than previously expected. To leverage our
growing development pipeline, we are likely to need to supplement the RCF with
additional capital in future years. Any opportunity to raise additional equity
to fund accelerated development, which we keep under review, would be informed
by a multitude of factors, including our share price, appetite amongst
existing and prospective shareholders and wider market impact on capital
deployment opportunities.
Mitigation Additional measures planned for 2025
· Regular review of financing strategy to complement our business · Continue to identify scheme-specific and grant funding.
strategy, supported by external consultants where required.
· Progress the review of funding options.
· Forecasting process: covenant forecasting, short-term and medium-term
cashflow forecasting accompanying longer-term Strategic Plan forecasting.
· In 2022, we signed a new RCF comprising a five-year £200m
revolving credit facility together with a £40m accordion facility, which was
exercised during 2024, providing a £240m facility. This is supplemented by
accessing project-specific funding where relevant.
· Strong relationships with lenders.
· We continue to pursue and unlock grant funding and review
additional funding options.
Risk 10: Health and safety
A health and safety incident causing injury and/ or death resulting in
liability, penalties, and/or reputational damage.
Inherent risk Residual risk Change in residual risk in the year
(before mitigating actions) (after mitigating actions)
High Low No change
Commentary
We prioritise the health, safety, and well-being of everyone involved in or
impacted by our activities, including site visitors and workers. Above all
else, we want everyone undertaking activity on our sites to be safe. This
commitment extends across all our sites and operations, from horizontal and
vertical development projects to our Investment Portfolio and our office
environments. The risks which we proactively manage can be organised into
three 'baskets': those which arise by virtue of our land and property
ownership, those which arise as a result of our development activity, albeit
typically via third-party contractors and consultants, and those which arise
in Harworth's capacity as an employer.
Our dedicated Environment, Health & Safety (EHS) function, which operates
as a 'second line of defence' as well as undertaking an advisory and support
role, oversees a robust risk and compliance management framework encompassing
defined roles and responsibilities, policies, systems and processes, and
reporting.
During 2024, to ensure our health and safety risk management across the
business is resilient to the forecast growth in volume and acceleration in the
pace of our activities, we undertook a comprehensive, strategic review of our
EHS function and framework, covering roles and responsibilities of both 'first
line' and 'second line of defence' resourcing; policies; systems, processes
and controls; governance and reporting. Reflecting our commitment to
continuous improvement, we have identified some gaps in future resource needs,
which we have started to fill, changes we should make, and new initiatives we
plan to introduce to 'future-proof' our health and safety risk management
capabilities.
Mitigation Additional measures planned for 2025
· Policies include a Safety, Health and Environmental Management System · An updated EHS strategy was approved by the Board in December 2024,
('SHEMS') Policy and Employee Health and Safety Policy. which will ensure future resilience in our EHS risk management capabilities.
Examples of the initiatives it identified included the following:
· Our portfolio is subject to a site inspection programme. This is
currently undertaken by both operational and EHS functions. o We will be recruiting additional resource into both the EHS function and
our operational teams, to ensure scalable capacity to discharge 'first line'
· Our construction projects are subject to desktop and physical health and 'second line' EHS responsibilities.
and safety inspections, supported by an EHS 'second line' audit programme,
ensuring that we conscientiously discharge our responsibilities as Client o Updates to our EHS roles and responsibilities matrix to align with changes
under Construction Design and Management (CDM) regulations. to our operating model.
· Risk registers document the risk profile of each site, reflecting o Our site inspection programme will be updated to (A) implement a more
hazards, operational activity and incidents. traditional 'first line' and 'second line' assurance regime and (B) reflect
better the risk profile of sites, supported by improvements to the formulation
· We use a cloud-based SHEMS platform, which supports the site inspection of our site Risk Registers.
programme and incident tracking. Proactive and reactive remedial actions are
managed via this platform, which also supports reporting. o Technical enhancements to, and a comprehensive awareness programme for, our
SHEMS cloud-based platform.
· We have a panel of external EHS advisers who support our Project
Delivery teams to monitor proactively the management of health and safety o Improvements to our reporting of both 'leading' and 'lagging' EHS risk
across all our development activities, typically in our capacity as client indicators, with greater emphasis on the former.
under CDM.
o Improvements to our contractor applications and selection process.
· EHS Legal Register: The EHS Team keeps a log of existing,
changing and upcoming legislation and organises training sessions.
· EHS Committee meetings are held quarterly and attended by the Executive
and senior management from all delivery functions. These are supplemented by a
programme of attendance by EHS team members at delivery team operational
meetings.
· We host compulsory health and safety training for all employees every
two years, supplemented by an annual schedule of mandatory online learning.
· We have a programme of health and wellbeing initiatives for employees,
including access to internal physical and mental health first aiders and an
external Employee Assistance Programme.
· EHS reports are made to the Executive, Board and members of the EHS
Committee monthly, and the Head of EHS provides a detailed strategic and
operational update to the Board annually, including proposed changes to the
SHEMS Policy.
Risk 11: Net Zero Carbon (NZC) pathway
Failure to develop, manage and meet our NZC commitments and/or NZC
regulations, resulting in financial loss,
reduced availability of funding and/or reputational damage.
Inherent risk Residual risk Change in residual risk in the year
(before mitigating actions) (after mitigating actions)
High Medium No change
Commentary
The NZC agenda means transformational change for all businesses. It has a
wide-ranging impact on the Group, from our investment case to shareholders
through to operational activity, including the need to embed NZC principles
into all projects whilst remaining profitable. It also embraces external
factors such as industry and stakeholder metrics and the approach taken by
Local and Combined Authorities on, e.g., carbon tax, BNG and social value
measures. In April 2023, we published our first NZC Pathway report and,
subsequently, our first NZC Pathway Progress Report for 2023 alongside the
2023 Annual Report, as well as our Communities Framework. We consider it
crucial that our approach is understandable and deliverable. A NZC Pathway
Progress Report will be published alongside this Annual Report for 2024.
Mitigation Additional measures planned for 2025
· Development of The Harworth Way and NZC Pathway with targets · Continue to improve the capture and analysis of environmental data.
identified and progress report published annually.
· Continued development of a carbon accounting system, including
· Continued transition of our Investment Portfolio to 100% modern Grade A. appropriate accreditation.
· Improvements to the capture and analysis of environmental data (including · Continued development of an Energy and Natural Capital strategy.
from our supply chain and tenants) with measures in place for verification of
the same.
· New leases are offered to existing and new tenants on 'green' lease
terms.
· Switched energy procurement for our Investment Portfolio to a new
renewable energy tariff.
· Work closely with prospective occupiers of our new developments to offer
tailored renewable energy provision.
· Project appraisals include detailed sustainability analysis.
· Development of Harworth's commercial and Residential building
specifications.
· We are a member of the UK Green Building Council, which facilitates
the sharing of knowledge and best practices.
Risk 12: Digital resilience
A successful cyber-attack and/or the mismanagement of information by an
employee or supplier threatens business continuity and/or results in
intellectual property loss or theft and/or gives rise to financial loss.
Inherent risk Residual risk Change in residual risk in the year
(before mitigating actions) (after mitigating actions)
High Medium Increased
Commentary
Cyber threats pose an ever-evolving risk to all businesses. Those operating in
the real estate sector, which are often engaged in high-value transactions and
project-based activities and rely on valuable information relating to land,
property and projects, are particularly vulnerable to ransomware attacks,
intellectual property theft, business email compromise and invoice fraud. The
materialisation of any one of these threats, or self-harm via careless
handling of commercially sensitive information, could prejudice business
continuity and/or give rise to significant financial losses and/or serious
reputational harm. As Harworth's portfolio, activities, and profile grow, so
will its vulnerability to cyber threats. It is also important that digital
resilience security keeps pace with the changes we are implementing as part of
our digital transformation project, referred to in the context of Risk 8
above. Against that backdrop, we consider that the residual risk profile of
this Risk 12 has increased from 'Low' to 'Medium'. Towards the end of 2024, we
instructed an external digital resilience audit and will implement its
recommendations alongside and in support of the rollout of the digital
transformation project. As these improvements are made, we will reassess the
risk profile to ensure that it is aligned with our risk appetite.
Mitigation Additional measures planned for 2025
· Identity and data access management: ensuring secure and controlled · During Q4 2024, we instructed a comprehensive external audit of
access to sensitive data and systems. digital resilience security. That audit covered all aspects of information
security, comprising the framework for protecting all information at Harworth,
· Data backup strategy: implementing a backup plan to safeguard critical including cyber security as a crucial subset of that framework. The audit
business data. identified opportunities to improve Harworth's overall security 'posture',
which will be implemented to support the rollout of our digital transformation
· Network monitoring and defence: utilising network monitoring and defence project.
systems to detect and prevent security threats.
· Malware defence systems: deploying malware defence mechanisms to protect
against malicious software.
· External IT support and cybersecurity expertise: We work with an
external IT support provider that stays vigilant in the evolving cyber
security landscape, complemented by a retained cybersecurity specialist.
· Cyber risk insurance: we maintain cyber risk insurance to mitigate the
financial impact of potential security breaches.
· Penetration testing and security simulations: we conduct biennial
penetration tests, regular phishing simulations, and continuous IT system
vulnerability scanning to identify and address weaknesses proactively.
· Business Continuity and Disaster Recovery Plan: Our Business
Continuity Plan includes a robust Disaster Recovery Plan to ensure operational
resilience during a cyber-attack or system failure.
· Audit Committee oversight: as part of our assurance process, the Audit
Committee receives biannual updates on digital resilience risks and mitigation
strategies.
Directors' Responsibilities Statement
The Directors' Responsibilities Statement below has been prepared in
connection with the full Annual Report and Financial Statements for the year
ended 31 December 2024.
The directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with applicable United Kingdom law and
regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the Group
and Company Financial Statements in accordance with UK-adopted international
accounting standards (IFRSs). Under company law the Directors must not approve
the Financial Statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and the Company and of the
profit or loss of the Group and the Company for that period.
In preparing these Financial Statements the Directors are required to:
· select suitable accounting policies in accordance with IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors and then apply
them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
· provide additional disclosures when compliance with the specific
requirements in IFRSs is insufficient to enable users to understand the impact
of particular transactions, other events and conditions on the Group and
Company financial position and financial performance;
· in respect of the Group Financial Statements, state whether
UK-adopted international accounting standards have been followed, subject to
any material departures disclosed and explained in the financial statements;
· in respect of the Company Financial Statements, state whether UK-adopted
international accounting standards have been followed, subject to any material
departures disclosed and explained in the Financial Statements; and
· prepare the Financial Statements on the going concern basis unless it
is inappropriate to presume that the Company and/or the Group will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's and Group's transactions and
disclose with reasonable accuracy at any time the financial position of the
Company and the Group and enable them to ensure that the Company and the Group
Financial Statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group and Company and hence for
taking reasonable steps for the prevention and detection of fraud and other
irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a strategic report, directors' report, directors' remuneration
report and corporate governance statement that comply with that law and those
regulations. The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Company's website.
Responsibility statements
The Directors (see the list of names and roles in the Annual Report) confirm,
to the best of their knowledge:
· that the consolidated Financial Statements, prepared in accordance with
UK-adopted international accounting standards give a true and fair view of the
assets, liabilities, financial position and profit of the Company and
undertakings included in the consolidation taken as a whole;
· that the Annual Report, including the strategic report, includes a fair
review of the development and performance of the business and the position of
the Company and undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they
face; and
· that they consider the Annual Report, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the Company's position, performance, business model and
strategy.
Disclosure of information to the auditor
Each of the Directors who were in office at the date of approval of this
Report also confirms that:
· so far as they are aware, there is no relevant audit information of
which the auditor is unaware; and
· each Director has taken all the steps that they ought to have taken
as a Director to make themselves aware of any relevant information and to
establish that the Group's and Company's auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the
provisions of section 418 Companies Act.
This Statement of Directors' Responsibilities was approved by the Board and
signed by order of the Board:
Chris Birch
General Counsel and Company Secretary
17 March 2025
Cautionary statement and Directors' liability
This announcement and the 2024 Annual Report and Financial Statements contain
certain forward-looking statements which, by their nature, involve risk,
uncertainties and assumptions because they relate to future events and
circumstances. Actual outcomes and results may differ materially from any
outcomes or results expressed or implied by such forward looking statements.
Any forward-looking statements made by or on behalf of the Group are made in
good faith based on current expectations and beliefs and on the information
available at the time the statement is made. No representation or warranty is
given in relation to these forward-looking statements, including as to their
completeness or accuracy or the basis on which they were prepared, and undue
reliance should not be placed on them. The Group does not undertake to revise
or update any forward-looking statement contained in this announcement or the
2024 Annual Report and Financial Statements to reflect any changes in its
expectations with regard thereto or any new information or changes in events,
conditions or circumstances on which any such statement is based, save as
required by law and regulations. Nothing in this announcement or the 2024
Annual Report and Financial Statements should be construed as a profit
forecast.
This announcement and the 2024 Annual Report and Financial Statements have
been prepared for, and only for, the shareholders of the Company, as a body,
and no other persons. Neither the Company nor the Directors accept or assume
any liability to any person to whom this announcement or the 2024 Annual
Report and Financial Statements is shown or into whose hands they may come
except to the extent that such liability arises and may not be excluded under
English law.
Financial Calendar
Annual Report and Financial Statements for the year ended 31 December 2024 Published 15 April 2025
2025 Annual General Meeting Scheduled 19 May 2025
Final dividend for the year ended 31 December 2024 Ex-dividend date 24 April 2025
Record date 25 April 2025
Payable 23 May 2025
Half-year results for the six months ending 30 June 2025 Announced September 2025
Registrars
All administrative enquiries relating to shareholdings should, in the first
instance, be directed to Equiniti. Help can be found at www.shareview.co.uk.
Alternatively you can contact Equiniti at Aspect House, Spencer Road, Lancing,
West Sussex, BN99 6DA (telephone: +44 (0)371 384 2301). You should state
clearly the registered shareholder's name and address.
Dividend Mandate
Any shareholder wishing dividends to be paid directly into a bank or building
society should contact the Registrars for a dividend mandate form. Dividends
paid in this way will be paid through the Bankers' Automated Clearing System
('BACS').
Shareview service
The Shareview service from Equiniti allows shareholders to manage their
shareholding online. It gives shareholders direct access to their data held on
the share register, including recent share movements and dividend details and
the ability to change their address or dividend payment instructions online.
To visit the Shareview website, go to www.shareview.co.uk. There is no charge
to register but the 'shareholder reference number' printed on proxy forms or
dividend stationery will be required.
Website
The Group's website (harworthgroup.com (http://harworthgroup.com/) ) gives
further information on the Group. Detailed information for shareholders can
be found at harworthgroup.com/investors.
Consolidated income statement
Year ended Year ended
31 December
31 December
Note
2024
2023
£'000
£'000
Revenue 3 181,585 72,427
Cost of sales 3 (150,508) (60,077)
Gross profit 3 31,077 12,350
Administrative expenses 3 (33,185) (27,435)
Other gains 3 78,113 69,426
Other operating expenses 3 (1,371) (112)
Operating profit 3 74,634 54,229
Finance costs 4 (9,900) (6,421)
Finance income 4 3,166 445
Share of profit of joint ventures (including impairment) 9 1,487 1,554
Profit before tax 69,387 49,807
Tax charge 5 (12,150) (11,851)
Profit for the year 57,237 37,956
Earnings per share from operations pence pence
Basic 7 17.7 11.8
Diluted 7 17.3 11.5
The notes 1 to 16 are an integral part of these condensed consolidated
financial statements.
All activities are derived from continuing operations.
Consolidated statement of comprehensive income
Year ended Year ended
31 December
31 December
2024
2023
£'000
£'000
Profit for the year 57,237 37,956
Other comprehensive (expense)/income - items that will not be reclassified to
profit or loss:
Net actuarial loss in Blenkinsopp Pension scheme (239) (10)
Revaluation of Group occupied property (515) (167)
Deferred tax on other comprehensive income items - 3
Total other comprehensive expense (754) (174)
Total comprehensive income for the year 56,483 37,782
Consolidated balance sheet
ASSETS As at As at
31 December
31 December
Note
2024 2023
£'000
£'000
Non-current assets
Property, plant and equipment 1,529 1,670
Right of use assets 1,443 512
Trade and other receivables 25,638 11,296
Investment properties 8 585,489 433,942
Investments in joint ventures 9 33,553 30,722
647,652 478,142
Current assets
Inventories 10 205,985 263,073
Trade and other receivables 72,580 37,289
Assets held for sale 11 8,910 18,752
Cash 12 117,382 27,182
404,857 346,296
Total assets 1,052,509 824,438
LIABILITIES
Current liabilities
Borrowings 13 - (29,744)
Trade and other payables (135,998) (88,087)
Lease liabilities (271) (158)
Current tax liabilities (8,130) (2,643)
(144,399) (120,632)
Net current assets 260,458 225,664
Non-current liabilities
Borrowings 13 (164,125) (33,830)
Trade and other payables (15,226) (1,757)
Lease liabilities (1,196) (397)
Net deferred tax liabilities (35,853) (30,089)
Retirement benefit obligations (45) (11)
(216,445) (66,084)
Total liabilities (360,844) (186,716)
Net assets 691,665 637,722
SHAREHOLDERS' EQUITY
Called up share capital 14 32,495 32,408
Share premium account 25,157 25,034
Fair value reserve 216,704 225,177
Capital redemption reserve 257 257
Merger reserve 45,667 45,667
Investment in own shares (138) (99)
Retained earnings 314,286 271,322
Current year profit 57,237 37,956
Total shareholders' equity 691,665 637,722
Condensed consolidated statement of changes in shareholders' equity
Called up share capital £'000 Share Fair Capital redemption reserve Investment in own
premium account Merger reserve value £'000 shares Retained earnings Total
£'000 £'000 reserve £'000 £'000 equity
£'000 £'000
Balance at 1 January 2023 32,305 24,688 45,667 174,520 257 (50) 325,277 602,664
Profit for the financial year - - - - - - 37,956 37,956
Fair value gains - - - 76,744 - - (76,744) -
Transfer of unrealised gains on disposal of investment property - - - (25,920) - - 25,920 -
Other comprehensive (expense)/income:
Actuarial loss in Blenkinsopp pension scheme - - - - - - (10) (10)
Revaluation of group occupied property - - - (167) - - - (167)
Deferred tax on other comprehensive (expense)/income items - - - - - - 3 3
- - - 50,657 - - (12,875) 37,782
Transactions with owners:
Purchase of own shares - - - - - (49) - (49)
Share-based payments - - - - - - 1,314 1,314
Dividends paid - - - - - - (4,438) (4,438)
Share issue 103 346 - - - - - 449
Balance at 31 December 2023 32,408 25,034 45,667 225,177 257 (99) 309,278 637,722
Profit for the year to 31 December 2024 - - - - - - 57,237 57,237
Fair value gains - - - 63,334 - - (63,334) -
Transfer of unrealised gains on disposal of investment property - - - (71,292) - - 71,292 -
Other comprehensive (expense)/income:
Actuarial loss in Blenkinsopp pension scheme - - - - - - (239) (239)
Revaluation of group occupied property - - - (515) - - - (515)
- - - (8,473) - - 64,956 56,483
Transactions with owners:
Purchase of own shares - - - - - (39) - (39)
Share-based payments - - - - - - 2,188 2,188
Dividends paid - - - - - - (4,899) (4,899)
Share issue 87 123 - - - - - 210
Balance at 31 December 2024 32,495 25,157 45,667 216,704 257 (138) 371,523 691,665
Consolidated statement of cash flows
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Cash flows from operating activities
Profit before tax for the year 69,387 49,807
Net finance costs 6,734 5,976
Other gains (78,113) (69,426)
Share of profit of joint ventures (including impairment) (1,487) (1,554)
Share-based transactions((1)) 2,287 1,404
Depreciation of property, plant and equipment and right of use assets 406 282
Pension contributions in excess of charge (205) (113)
Operating cash inflow before movements in working capital (991) (13,624)
Decrease in inventories 57,088 5,186
(Increase)/decrease in receivables (52,774) 18,868
Increase in payables 39,297 6,937
Cash generated from operations 42,620 17,367
Interest paid (7,568) (4,302)
Corporation tax paid (516) (10,212)
Cash generated from operating activities 34,536 2,853
Cash flows from investing activities
Interest received 810 445
Investment in joint ventures (3,048) (250)
Distribution from joint ventures 1,704 911
Net proceeds from disposal of investment properties, AHFS and overages 80,028 69,568
Property acquisitions (69,478) (19,046)
Expenditure on investment properties and AHFS (47,009) (35,808)
Expenditure on property, plant and equipment (600) (396)
Cash generated from/(used in) investing activities (37,593) 15,424
Cash flows from financing activities
Net proceeds from issue of ordinary shares 137 400
Proceeds from other loans 5,510 5,939
Repayment of other loans (37,134) (3,299)
Proceeds from bank loans 205,000 45,000
Repayment of bank loans (75,000) (46,000)
Loan arrangement fees (151) (162)
Payment in respect of leases (206) (118)
Dividends paid (4,899) (4,438)
Cash generated from/(used in) financing activities 93,257 (2,678)
Increase in cash 90,200 15,599
Cash as at beginning of year 27,182 11,583
Increase in cash 90,200 15,599
Cash as at end of year 117,382 27,182
( )
((1)) Share-based transactions reflect the non-cash expenses relating to
share-based payments included within the income statement
Notes to the financial information
for the year ended 31 December 2024
1. Accounting policies
The principal accounting policies adopted in the preparation of this audited
consolidated financial information are set out below. These policies have been
consistently applied to all of the periods presented, unless otherwise stated.
General information
Harworth Group plc (the "Company") is a company limited by shares,
incorporated and domiciled in the UK (England). The address of its registered
office is Advantage House, Poplar Way, Catcliffe, Rotherham, South Yorkshire,
S60 5TR.
The Company is a public company listed on the London Stock Exchange.
The consolidated financial statements for the year ended 31 December 2024
comprise the accounts of the Company and its subsidiaries (together referred
to as the "Group").
Basis of preparation
These financial statements have been prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006 and UK adopted International Accounting Standards ("IFRS").
The financial information set out herein does not constitute the Company's
statutory accounts for the years ended 31 December 2024 or 2023 but is derived
from those accounts. The financial information has been prepared using
accounting policies consistent with those set out in the annual report and
accounts for the year ended 31 December 2023. Statutory accounts for 2023 have
been delivered to the Registrar of Companies, and those for 2024 will be
delivered in due course. The auditors have reported on those accounts; their
report was unqualified, did not include a reference to any matters to which
the auditors drew attention by way of emphasis without qualifying their
report, and did not contain any statements under Section 498(2) or (3) of the
Companies Act 2006.
Going-concern basis
These financial statements are prepared on the basis that the Group is a going
concern. In forming its opinion as to going concern, the Company prepares cash
flow forecasts based upon assumptions, with particular consideration to key
risks and uncertainties and the macro-economic environment as well as taking
into account available borrowing facilities, including compliance with
financial covenants therein. The going concern period assessed is until June
2026 which is selected as it can be projected with a reasonable degree of
accuracy and covers a complete period of reporting under the Group's RCF.
A key focus of the assessment of going concern is the management of liquidity
and compliance with borrowing facilities for the period to June 2026. A £240m
RCF facility is available to the group and is aligned to the Group's strategy
and provides significant liquidity and flexibility to enable it to pursue its
strategic objectives. The facility is subject to financial covenants,
including minimum interest cover, maximum infrastructure debt as a percentage
of property value and gearing, all of which are tested through the going
concern assessment undertaken. Available liquidity, including cash and cash
equivalents and bank facility headroom, was £192.4m as at 31 December 2024.
The Group benefits from diversification across its Capital Growth and Income
Generation businesses including its industrial and renewable energy property
portfolios. Taking into account the independent valuation carried out by BNP
Paribas, JLL and Savills as at 31 December 2024, the Group LTV remains low at
5.4%, within the Board's target range and with sufficient headroom to allow
for any falls in property values. Rent collection remained strong, with 98%
collected to date for 2024.
In addition to the Company's base cashflow forecast, sensitised forecasts were
produced that included severe but plausible downside scenarios. This downside
included: 1) a severe reduction in sales to the housebuilding sector as well
as lower investment property sales; 2) notwithstanding strong rent collection,
a prudent material increase in bad debts across the portfolio over the
majority of the going concern assessment period; 3) a material decline in the
value of land and investment property values and 4) increases in interest
rates, impacting the cost of the Group's borrowings.
A scenario was also run which demonstrated that very severe loss of revenue,
valuation reductions and interest cost increases would be required to breach
cashflow and banking covenants. The Directors consider this very severe
scenario to be remote. A scenario with consideration of potential climate
change and related transition impacts was also examined as part of the Group's
focus on climate-related risks and opportunities.
Under each of the plausible downside scenario, for the going concern period to
June 2026, the Group expects to continue to have sufficient cash reserves to
continue to operate with headroom on lending facilities and associated
covenants and has additional mitigation measures within management's control,
for example reducing development and acquisition expenditure and reducing
operating costs, that could be deployed to create further cash and covenant
headroom.
Based on these considerations, together with available market information and
the Directors' knowledge and experience of the Group's property portfolio and
markets, the Directors considered it appropriate to adopt a going concern
basis of accounting in the preparation of the Group's and Company's financial
statements.
Accounting policies
Changes in accounting policy and disclosures
(a) New standards, amendments and interpretations
A number of new standards and amendments to standards and interpretations were
effective for annual periods beginning on or after 1 January 2024. None of
these have had a significant effect on the financial statements of the Group.
(b) New standards, amendments and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations were
effective for annual periods beginning on or after 1 January 2025 and have not
been applied in preparing these financial statements. None of these are
expected to have had a significant effect on the financial statements of the
Group.
Estimates and judgements
The preparation of the consolidated financial statements requires management
to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
In preparing these consolidated financial statements, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those that applied
in the consolidated financial statements for the year ended 31 December 2023.
2. Alternative Performance Measures ("APMs")
Introduction
The Group has applied the December 2019 European Securities and Markets
Authority ("ESMA") guidance on APMs and the November 2017 Financial Reporting
Council ("FRC") corporate thematic review of APMs in these results. An APM
is a financial measure of historical or future financial performance, position
or cash flows of the Group which is not a measure defined or specified under
IFRS.
Overview of use of APMs
The Directors believe that APMs assist in providing additional useful
information on the underlying trends, performance and position of the Group.
APMs assist stakeholder users of the accounts, particularly equity and debt
investors, through the comparability of information. APMs are used by the
Directors and management, both internally and externally, for performance
analysis, strategic planning, reporting and incentive-setting purposes.
APMs are not defined by IFRS and therefore may not be directly comparable with
other companies' APMs, including peers in the real estate industry. APMs
should be considered in addition to, and are not intended to be a substitute
for, or superior to, IFRS measurements.
The derivations of our APMs and their purpose
The primary differences between IFRS statutory amounts and the APMs that are
used by Harworth are as follows:
1. Capturing all sources of value creation - Under IFRS, the revaluation
movement in development properties which are held in inventory is not included
in the balance sheet. Also, overages are not recognised in the balance sheet
until they are highly probable. These movements, which are verified by our
independent valuers BNP Paribas and Savills, are included within our APMs;
2. Re-categorising income statement amounts - Under IFRS, the grouping
of amounts, particularly within gross profit and other gains, does not clearly
allow Harworth to demonstrate the value creation through its business model.
In particular, the statutory grouping does not distinguish value gains (being
realised profits from the sales of properties and unrealised profits from
property value movements) from the ongoing profitability of the business which
is less susceptible to movements in the property cycle. Finally, the Group
includes profits from joint ventures within its APMs as its joint ventures
conduct similar operations to Harworth, albeit in different ownership
structures; and
3. Comparability with industry peers - Harworth discloses some APMs
which are EPRA measures as these are a set of standard disclosures for the
property industry and thus aid comparability for our stakeholder users.
Our key APMs
The key APMs that the Group focuses on are as follows:
· Total Accounting Return - The movement in EPRA NDV plus dividends per
share paid in the year expressed as a percentage of opening EPRA NDV per share
· EPRA NDV per share - EPRA NDV aims to represent shareholder value
under an orderly sale of the business, where deferred tax, financial
instruments and certain other adjustments are calculated to the full extent of
their liability net of any resulting tax. EPRA NDV per share is EPRA NDV
divided by the number of shares in issue at the end of the period, less shares
held by the Employee Benefit Trust or Equiniti Share Plan Trustees Limited to
satisfy Long Term Incentive Plan and Share Incentive Plan awards
· Value gains - These are the realised profits from the sales of
properties and unrealised profits from property value movements including
joint ventures and the mark to market movement on development properties, AHFS
and overages
· Net LTV - Group debt net of cash and cash equivalents held
expressed as a percentage of portfolio value
3. Segment information
Segmental Income
Statement
Year
ended 31 December 2024
Capital Growth
Sale of development properties Other property activities Income Central Total
Generation
£'000 £'000 £'000 £'000 £'000
Revenue ((1)) 140,253 19,841 21,491 - 181,585
Cost of sales (126,320) (19,534) (4,654) - (150,508)
Gross profit ((2)) 13,933 307 16,837 - 31,077
Administrative expenses ((4)) - (6,367) (1,107) (25,711) (33,185)
Other gains ((3)) - 59,722 18,391 - 78,113
Other operating expense - - - (1,371) (1,371)
Operating profit/(loss) 13,933 53,662 34,121 (27,082) 74,634
Finance costs - (119) - (9,781) (9,900)
Finance income - 2,974 125 67 3,166
Share of (loss)/profit of joint ventures - (717) 2,204 - 1,487
Profit/(loss) before tax 13,933 55,800 36,450 (36,796) 69,387
((1)) Revenue
Revenue is analysed as follows:
Sale of development properties 140,253 - - - 140,253
Revenue from PPAs - 593 - - 593
Build-to-suit development revenue - 18,690 - - 18,690
Rent, service charge and royalties revenue - 412 21,358 - 21,770
Other revenue - 146 133 - 279
140,253 19,841 21,491 - 181,585
((2)) Gross profit
Gross profit is analysed as follows:
Gross profit excluding sales of development properties - 307 16,837 - 17,144
Gross profit on sale of development properties* 8,248 - - - 8,248
Net realisable value provision on development properties (5,664) - - - (5,664)
Reversal of previous net realisable value provision on development properties 6,950 - - - 6,950
Release of previous net realisable value provision on disposal of development 4,399 - - - 4,399
properties
13,933 307 16,837 - 31,077
*Gross profit on sale of development properties includes a reduction of £4.3m
(2023: £2.0m) relating to the discounting of deferred consideration
receivable.
((3)) Other gains/(losses)
Other gains/(losses) are analysed as follows:
Increase in fair value of investment - 43,004 17,813 - 60,817
Properties
Decrease in the fair value of AHFS - (201) (165) - (366)
Profit on sale of investment properties - 12,476 826 - 13,302
Profit/(loss) on sale of AHFS - 97 (83) - 14
Profit on sale of overages - 4,346 - - 4,346
- 59,722 18,391 - 78,113
((4)) Administrative expenses
Administrative expenses are analysed as follows:
Wages and salaries - (5,255) (902) (16,398) (22,555)
Legal and professional - (531) (408) (3,683) (4,622)
Other administrative expenses - (581) 203 (5,630) (6,008)
- (6,367) (1,107) (25,711) (33,185)
Segmental Balance
Sheet
As at 31
December 2024
Capital Income Central Total
£'000
Growth Generation £'000
£'000 £'000
Non-current assets
Property, plant and equipment - - 1,529 1,529
Right of use assets - - 1,443 1,443
Trade and other receivables 25,638 - - 25,638
Investment properties 281,635 303,854 - 585,489
Investments in joint ventures 18,935 14,618 - 33,553
326,208 318,472 2,972 647,652
Current assets
Inventories 205,985 - - 205,985
Trade and other receivables 61,404 10,948 228 72,580
AHFS 2,450 6,460 - 8,910
Cash and cash equivalents - - 117,382 117,382
269,839 17,408 117,610 404,857
Total assets 596,047 335,880 120,582 1,052,509
Financial liabilities and derivative financial instruments are not allocated
to the reporting segments as they are managed and measured at a Group level.
Segmental Income
Statement
Year
ended 31 December 2023
Capital Growth
Sale of development properties Other property activities Income Central Total
Generation
£'000 £'000 £'000 £'000 £'000
Revenue ((1)) 46,731 2,286 23,410 - 72,427
Cost of sales (51,709) (2,340) (6,028) - (60,077)
Gross (loss)/profit ((2)) (4,978) (54) 17,382 - 12,350
Administrative expenses ((4)) - (5,062) (3,147) (19,226) (27,435)
Other gains ((3)) - 65,066 4,360 - 69,426
Other operating expenses - - - (112) (112)
Operating (loss)/profit (4,978) 59,950 18,595 (19,338) 54,229
Finance costs - - - (6,421) (6,421)
Finance income - 438 7 - 445
Share of profit of joint ventures - 892 662 - 1,554
(Loss)/profit before tax (4,978) 61,280 19,264 (25,759) 49,807
((1)) Revenue
Revenue is analysed as follows:
Sale of development properties 46,731 - - - 46,731
Revenue from PPAs - 776 - - 776
Build-to-suit development revenue - 956 - - 956
Rent, service charge and royalties revenue - 340 22,657 - 22,997
Other revenue - 214 753 - 967
46,731 2,286 23,410 - 72,427
((2)) Gross profit
Gross profit is analysed as follows:
Gross (loss)/profit excluding sales of development properties - (54) 17,382 - 17,328
Gross loss on sale of development properties (618) - - - (618)
Net realisable value provision on development properties (7,442) - - - (7,442)
Reversal of previous net realisable value provision on development properties 1,213 - - - 1,213
Release of net realisable value provision on disposal of development 1,869 - - - 1,869
properties
(4,978) (54) 17,382 - 12,350
( )
((3)) Other gains/(losses)
Other gains/(losses) are analysed as follows:
Increase in fair value of investment - 65,584 5,788 - 71,372
properties
Decrease in the fair value of AHFS - (114) (158) - (272)
Loss on sale of investment properties - (588) (365) - (953)
Loss on sale of AHFS - (134) (1,006) - (1,140)
Profit on sale of overages - 318 101 - 419
- 65,066 4,360 - 69,426
((4)) Administrative expenses
Administrative expenses are analysed as follows:
Wages and salaries - (4,174) (1,083) (12,413) (17,670)
Legal and professional - (310) (840) (2,062) (3,212)
Other administrative expenses - (578) (1,224) (4,751) (6,553)
- (5,062) (3,147) (19,226) (27,435)
Segmental Balance
Sheet
As at 31
December 2023
Capital Income Central Total
£'000
Growth Generation £'000
£'000 £'000
Non-current assets
Property, plant and equipment - - 1,670 1,670
Right of use assets - - 512 512
Other receivables 11,296 - - 11,296
Investment properties 199,216 234,726 - 433,942
Investments in joint ventures 17,604 13,118 - 30,722
228,116 247,844 2,182 478,142
Current assets
Inventories 263,073 - - 263,073
Trade and other receivables 23,967 11,300 2,022 37,289
AHFS 3,764 14,988 - 18,752
Cash and cash equivalents - - 27,182 27,182
290,804 26,288 29,204 346,296
Total assets 518,920 274,132 31,386 824,438
Financial liabilities and derivative financial instruments are not allocated
to the reporting segments as they are managed and measured at a Group level.
4. Finance costs and finance income
Year ended Year ended
31 December
31 December
2024
2023
£'000
£'000
Finance costs
- Bank interest (6,201) (2,778)
- Facility fees (1,235) (1,524)
- Amortisation of up-front fees (727) (671)
- Other interest (1,737) (1,448)
(9,900) (6,421)
- Bank interest 810 42
- Unwind of discounting on deferred consideration 2,356 403
Finance income 3,166 445
Net finance costs (6,734) (5,976)
5. Tax
Year ended Year ended
31 December
31 December
2024
2023
£'000
£'000
Analysis of tax charge in the year
Current tax
Current year (7,931) (6,749)
Adjustment in respect of prior periods 1,925 907
Total current tax charge (6,006) (5,842)
Deferred tax
Current year (5,807) (4,779)
Adjustment in respect of prior periods (337) (987)
Difference between current tax rate and rate of deferred tax - (243)
Total deferred tax charge (6,144) (6,009)
Tax charge (12,150) (11,851)
Other comprehensive income items
Deferred tax - current year - 3
Total - 3
The tax charge for the year is lower (2023: higher) than the standard rate of
corporation tax in the UK of 25% (2023: 23.5%). The differences are explained
below:
Year ended Year ended
31 December
31 December
2024
2023
£'000
£'000
Profit before tax 69,387 30,859
Profit before tax multiplied by rate of corporation tax in the UK of 25% (17,347) (11,705)
(2023: 23.5%)
Effects of:
Adjustments in respect of prior periods - deferred taxation 337 (987)
Adjustments in respect of prior periods - current taxation 1,925 907
Defined benefits pension scheme (342) -
Non-taxable income 107 -
Expenses not deducted for tax purposes (327) (542)
Revaluation gains 2,734 252
Share of profit of joint ventures 372 365
Difference between current tax rate and rate of deferred tax - (243)
Share options 94 102
Utilisation of unrecognised deferred tax assets 176 -
Other adjustments 121 -
Total tax charge (12,150) (11,851)
The difference between current tax rate and rate of deferred tax of £nil
(2023: £0.2m) relates to the unwinding of balances previously recognised at
25% and the reduction of the deferred tax liabilities recognised at 25% as a
result of in year movements.
At 31 December 2024, the Group had a current tax liability of £8.1m (2023:
£2.6m).
The Company has recognised a current tax asset in 2024 of £0.4m (2023:
liability £0.8m).
Deferred tax
The following is the analysis of deferred tax liabilities presented in the
consolidated balance sheet:
As at As at
31 December
31 December
2024
2023
£'000
£'000
Deferred tax assets 1,520 503
Deferred tax liabilities (37,373) (30,592)
(35,853) (30,089)
The movements on the deferred income tax account were as follows:
Investment Tax Other Total
Properties
Losses
Temporary
£'000
£'000
£'000
Differences
£'000
At 1 January 2023 (25,980) - 1,839 (24,141)
Recognised in the consolidated income statement (4,612) - (1,397) (6,009)
Recognised in the consolidated statement of comprehensive income - - 3 3
Recognised in the consolidated statement of equity - - 58 58
At 31 December 2023 and 1 January 2024 (30,592) - 503 (30,089)
Recognised in the consolidated income statement (6,781) - 637 (6,144)
Recognised in the consolidated statement of equity - - 380 380
At 31 December 2024 (37,373) - 1,520 (35,853)
In the Spring Budget 2021, the Government announced an increase in the
corporation tax rate from 19% to 25% from 1 April 2023. The rate was enacted
at the balance sheet date and as such the deferred tax balances have been
calculated in full on temporary differences under the liability method using
the rate expected to apply at the time of the reversal of the balance. As
such, the deferred tax assets and liabilities as at 31 December 2024 have been
reflected at 25%.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred taxes relate to the same fiscal authority.
Deferred tax assets of £5.4m at 31 December 2024 (2023: £7.7m) have not been
recognised owing to the uncertainty as to their recoverability.
The Company has recognised a deferred tax asset in 2024 of £0.6m (2023:
£0.1m).
6. Dividends
Year ended Year ended
31 December 31 December
2024 2023
£'000
£'000
Interim dividend of 0.489p per share for the year ended 31 December 2024 1,589
Full year dividend of 1.022p per share for the year ended 31 December 2023 3,310 -
Interim dividend of 0.444p per share for the year ended 31 December 2023 - 1,437
Full year dividend of 0.929p per share for the year ended 31 December 2022 - 3,001
4,899 4,438
The Board has declared a final dividend to be paid of 1.125p (2023: 1.022p)
per share to be paid in May 2025, bringing the total dividend for the year to
1.614p (2023: 1.466p). The recommended 2024 final dividend and 2024 total
dividend represent a 10% increase.
There is no change to the current dividend policy to continue to grow the
dividends by 10% each year.
7. Earnings per share
Earnings per share has been calculated by dividing the profit attributable to
ordinary shareholders by the weighted average number of shares in issue and
ranking for dividend during the year.
Year ended Year ended
31 December 31 December
2024 2023
Profit from continuing operations attributable to ordinary shareholders 57,237 37,956
(£'000)
Weighted average number of shares used for basic earnings per share 323,497,275 322,767,356
calculation
Basic earnings per share (pence) 17.7 11.8
Weighted average number of shares used for diluted earnings per share 331,274,223 328,653,655
calculation
Diluted earnings per share (pence) 17.3 11.5
The difference between the weighted average number of shares used for the
basic and diluted earnings per share calculation is due to the effect of
employee share schemes that are dilutive.
8. Investment properties
The Group holds five categories of investment property being Agricultural
Land, Natural Resources, the Investment Portfolio, Major Developments and
Strategic Land in the UK, which sit within the operating segments of Income
Generation and Capital Growth.
Income Generation Capital Growth
Agricultural Land Investment Major Strategic Land
£'000 Natural Portfolio Developments £'000 Total
£'000
Resources £'000 £'000
£'000
At 1 January 2023 5,694 19,726 210,407 44,244 120,292 400,363
Direct acquisitions 655 - - - 15,829 16,484
Subsequent expenditure 45 1,350 677 22,104 11,558 35,734
Disposals - - (11,136) (788) (7,041) (18,965)
Increase in fair value 116 89 5,583 3,196 62,388 71,372
Transfers between operating segments - - 18,551 (10,416) (8,135) -
Transfers to development properties - - - - (51,865) (51,865)
Transfers to property, plant and equipment - - (967) - - (967)
Transfer to AHFS - (1,264) (14,800) - (2,150) (18,214)
At 31 December 2023 6,510 19,901 208,315 58,340 140,876 433,942
Direct acquisitions - - 44,833 30,494 15,462 90,789
Subsequent expenditure 36 624 1,494 41,733 3,111 46,998
Disposals - - (648) - (40,022) (40,670)
(Decrease)/increase in fair value (278) 688 17,402 3,656 39,349 60,817
Transfers between divisions - (1,285) 11,149 (8,119) (1,745) -
Transfer to AHFS - (2,167) (2,720) - (1,500) (6,387)
At 31 December 2024 6,268 17,761 279,825 126,104 155,531 585,489
Subsequent expenditure is recorded net of government grants of £nil (2023:
£1.6m).
During the year no (2023: £nil) development property was re-categorised as
investment property to reflect a change in use. During the year none (2023:
£51.9m) of the investment property was re-categorised to development
properties. During the year no investment property was re-categorised as land
and buildings (2023: £1.0m).
Investment property is transferred between divisions to reflect a change in
the activity relating to the asset.
Valuation
process
The properties were valued in accordance with the Royal Institution of
Chartered Surveyors (RICS) Valuation - Professional Standards (the 'Red Book')
by BNP Paribas Real Estate, Jones Land Lasalle and Savills at 31 December 2024
and by BNP Paribas and Savills at 31 December 2023. All three are independent
firms acting in the capacity of external valuers with relevant experience of
valuations of this nature.
The valuations are on the basis of Market Value as defined by the Red Book,
which RICS considers meets the criteria for assessing Fair Value under IFRS.
The valuations are based on what is determined to be the highest and best use.
When considering the highest and best use a valuer will consider, on a
property by property basis, its actual and potential uses which are
physically, legally and financially viable. Where the highest and best use
differs from the existing use, the valuer will consider the cost and the
likelihood of achieving and implementing this change in arriving at its
valuation.
At each financial year end, management:
· verifies all major inputs to the independent valuation report;
· assesses property valuation movements when compared to the prior
year valuation report; and
· holds discussions with the independent valuers.
The Directors determine the applicable hierarchy that each investment property
falls into by assessing the level of unobservable inputs used in the valuation
technique. As a result of the specific nature of each investment property,
valuation inputs are not based on directly observable market data and
therefore all investment properties were determined to fall into Level 3.
The Group's policy is to recognise transfers into and out of fair value
hierarchy levels as at the date of the event or change in circumstance that
caused the transfer. There were no transfers between hierarchy levels in the
year ended 31 December 2024 (2023: none).
Valuation techniques underlying management's estimation of fair value are as
follows:
Agricultural land
Most of the agricultural land is valued using the market comparison basis,
with an adjustment made for the length of the remaining term on any tenancy
and the estimated cost to bring the land to its highest and best use. Where
the asset is subject to a secure letting, it is valued on a yield basis, based
upon sales of similar types of investment.
Natural resources
Natural resource sites in the portfolio are valued based on discounted cash
flow for the operating life of the asset with regard to the residual land
value.
Investment Portfolio
The Industrial & Logistics investment properties are valued on the basis
of market comparison with direct reference to observable market evidence
including current rent and estimated rental value (ERV), yields and capital
values and adjusted where required for the estimated cost to bring the
property to its highest and best use. The evidence is adjusted to reflect the
quality of the property assets, the quality of the covenant profile of the
tenants and the reliability/volatility of cash flows. The Group's portfolio
has a spread of yields. In the past, income acquisitions have been made at
high yields where value can be added. As assets are enhanced and improved,
these would also be expected to be valued at lower yields. Subject to market
backdrop, properties that are built by Harworth will be modern Grade A with
typically lower yields.
Major Developments
Major Development sites are generally valued using residual development
appraisals, a form of discounted cash flow which estimates the current site
value from future cash flows measured by current land and/or completed built
development values, observable or estimated development costs, and observable
or estimated development returns. Where possible development sites are valued
by direct comparison to observable market evidence with appropriate adjustment
for the quality and location of the property asset, although this is generally
only a reliable method of measurement for smaller development sites.
Strategic Land
Strategic Land is valued on the basis of discounted cash flow, with future
cash flows measured by current land values adjusted to reflect the quality of
the development opportunity, the potential development costs estimated by
reference to observable development costs on comparable sites, and the
likelihood of securing planning consent. The valuations are then benchmarked
against observable land values reflecting the current existing use of the
land, which is generally agricultural and, where available, observable
strategic land values. The discounted cash flows across the different property
categories utilise value per acre, which takes account of the future
expectations of sales over time discounted back to a current value, and cost
report totals, which take account of the cost, as at today's value, to
complete remediation and provide the necessary site infrastructure to bring
the site forward.
9. Investment in joint ventures
As at As at
31 December 31 December 2023
2024
At 1 January 30,722 29,828
Investment in joint ventures 3,048 250
Distributions from joint ventures (1,704) (910)
Share of profits of joint ventures 1,487 1,554
At end of year 33,553 30,722
10. Inventories
As at As at
31 December 31 December 2023
2024
Development properties 190,888 250,024
Planning promotion agreements 4,655 3,805
Option agreements 10,442 9,244
Total inventories 205,985 263,073
The movement in development properties is as follows:
Year ended Year ended
31 December 31 December 2023
£'000
2024
£'000
At start of year 250,024 204,952
Acquisitions 1,419 -
Subsequent expenditure 38,919 32,417
Disposals (105,159) (34,850)
Net realisable value provision release/(charge) 5,685 (4,360)
Net transfer from investment properties - 51,865
Total development properties 190,888 250,024
The movement in net realisable value provision was as follows:
Year ended Year ended
31 December 31 December
2024 2023
£'000
£'000
At start of period 14,136 9,776
Charge for the period 5,664 7,442
Reversal of previous net realisable value provision (6,950) (1,213)
Released on disposals (4,399) (1,869)
At end of year 8,451 14,136
11. Assets held for sale
AHFS relate to investment properties identified as being for sale within 12
months, where a sale is considered highly probable and the property is
immediately available for sale.
As at As at
31 December 31 December 2023
£'000
2024
£'000
At start of year 18,752 59,790
Net transfer from investment properties 6,387 18,214
Subsequent expenditure 163 74
Decrease in fair value (366) (272)
Disposals (16,026) (59,054)
At end of year 8,910 18,752
12. Cash
As at As at
31 December 31 December 2023
£'000
2024
£'000
Cash 117,382 27,182
13. Borrowings
As at As at
31 December 31 December
2024 2023
£'000
£'000
Current:
Secured - infrastructure and direct development loans - (29,744)
- (29,744)
Non-current:
Secured - bank loan (164,125) (33,830)
Total non-current borrowings (164,125) (33,830)
Total borrowings (164,125) (63,574)
Loans are stated after deduction of unamortised fees of £0.9 million (2023:
£1.5 million).
As at As at
31 December 31 December
2024 2023
£'000
£'000
Infrastructure and direct development loans
South Yorkshire Pension Fund/ Scrudf Limited Partnership AMP, Rotherham - (584)
Scrudf Limited Partnership Gateway 36 - (6,850)
Merseyside Pension Fund Bardon Hill - (22,310)
Total infrastructure and direct development loans - (29,744)
Bank loan (164,125) (33,830)
Total borrowings (164,125) (63,574)
The Group's Revolving Credit Facility (RCF) was increased to £240 million (31
December 2023: £200 million) in December through activation of an accordion
option. The facility is provided by Natwest, Santander and HSBC. The RCF is
repayable in February 2027 (five year term) on a non-amortising basis.
The RCF is subject to financial and other covenants. The bank borrowings are
secured by way of a floating debenture over assets not otherwise used as
security under specific infrastructure or direct development loans. Proceeds
from and repayments of bank loans are reflected gross in the Consolidated
Statement of Cash Flows and reflect timing of utilisation of the RCF.
The infrastructure and direct development loans are provided by public and
private bodies in order to promote the development of major sites or assist
with vertical direct development. The loans are drawn as work on the
respective sites is progressed and they are repaid on agreed dates or when
disposals are made from the sites.
14. Share capital
Year ended Year ended
31 December 31 December
Issued, authorised and fully paid 2024 2023
£'000
£'000
At start of year 32,408 32,305
Shares issued 87 103
At end of year 32,495 32,408
Year ended Year ended
31 December 31 December
Issued, authorised and fully paid - number of shares 2024 2023
At start of year 324,084,072 323,051,124
Shares issued 871,342 1,032,948
At end of year 324,955,414 324,084,072
Own shares held (1,314,562) (929,699)
At end of year 323,640,852 323,154,373
15. Related party transactions
The Group carried out the following transactions with related parties. The
following entities are related parties as a consequence of shareholdings,
joint venture arrangements and partners of such and/or common Directorships.
All related party transactions are clearly justified and beneficial to the
Group, are undertaken on an arm's-length basis on fully commercial terms and
in the normal course of business.
Year ended/ Year ended/
As at As at
31 December 31 December
2024 2023
£000 £000
MULTIPLY LOGISTICS NORTH HOLDINGS LIMITED &
MULTIPLY LOGISTICS NORTH LP
Sales
Recharges of costs 176 281
Asset management fee 107 100
Water charges 132 146
Purchases
Recharge of costs 3 1
Receivables
Other receivables - 5
Trade receivables 39 281
Payables
Other payables (66) -
GENUIT GROUP (FORMERLY POLYPIPE)
Sales
Rent - 10
Development property disposal - 1,680
Receivables
Trade receivables - -
THE AIRE VALLEY LAND LLP
Receivable - 26
CRIMEA LAND MANSFIELD LLP
Receivable - 9
Investment made during the year 25 -
NORTHERN GATEWAY DEVELOPMENT VEHICLE LLP
Purchases
Recharge of costs 5 -
Investment made during the year 3,023 250
INVESTMENT PROPERTY FORUM
Purchases 3 5
BRITISH PROPERTY FEDERATION
Purchases 20 -
16. Post balance sheet events
There are no post balance sheet events to disclose that have not been
disclosed publicly by a regulatory news announcement.
Appendix
EPRA Net Asset Measures
EPRA introduced a new set of Net Asset Value metrics in 2020: EPRA Net
Reinstatement Value ("NRV"), EPRA Net Tangible Assets ("NTA") and EPRA NDV.
While the Group uses only EPRA NDV as a key APM, the EPRA Best Practices
Recommendations guidelines require companies to report all three EPRA NAV
metrics and reconcile them to IFRS. These disclosures are provided below.
31 December 2024
EPRA NDV EPRA NTA EPRA NRV
£'000 £'000 £'000
Net assets 691,665 691,665 691,665
Cumulative unrealised gains on development properties 31,026 31,026 31,026
Cumulative unrealised gains on overages 6,100 6,100 6,100
Deferred tax liabilities (IFRS) - 30,089 30,089
Notional deferred tax on unrealised gains (9,253) - -
Deferred tax liabilities @ 50% - (19,671) -
Purchaser costs - - 58,718
719,538 739,209 817,598
Number of shares used for per share calculations 323,640,852 323,640,852 323,640,852
Per share (pence) 222.3 228.4 252.6
31 December 2023
EPRA NDV EPRA NTA EPRA NRV
£'000 £'000 £'000
Net assets 637,722 637,722 637,722
Cumulative unrealised gains on development properties 24,083 24,083 24,083
Cumulative unrealised gains on overages 9,400 9,400 9,400
Deferred tax liabilities (IFRS) - 30,089 30,089
Notional deferred tax on unrealised gains (8,342) - -
Deferred tax liabilities @ 50% - (19,216) -
Purchaser costs - - 52,528
662,863 682,078 753,822
Number of shares used for per share calculations 323,154,373 323,154,373 323,154,373
Per share (pence) 205.1 211.1 233.3
1) Reconciliation to statutory measures
a. Revaluation gains/(losses) Year ended Year ended
31 December 31 December
2024 2023
£'000
£'000
Increase in fair value of investment properties 60,817 71,372
Decrease in fair value of AHFS (366) (272)
Share of profit of joint ventures 1,487 1,554
Net realisable value provision on development properties (5,664) (7,442)
Reversal of previous net realisable value provision on development properties 6,950 1,213
Amounts derived from statutory reporting 63,224 66,425
Unrealised gains/(losses) on development properties 21,874 (3,708)
Unrealised gains on overages 854 2,209
Revaluation gains 85,952 64,926
b. Profit/(loss) on sale Year ended Year ended
31 December 31 December
2024 2023
£'000
£'000
Profit/(loss) on sale of investment properties 13,302 (953)
Profit/(loss) on sale of AHFS 14 (1,140)
Profit/(loss) on sale of development properties 8,249 (618)
Release of net realisable value provision on disposal of development 4,399 1,869
properties
Profit on sale of overages 4,346 419
Amounts derived from statutory reporting 30,310 (423)
Less previously unrealised gains on development properties released on sale (14,932) (6,061)
Less previously unrealised gains on overages (4,154) (309)
Profit/(loss) on sale contributing to growth in EPRA NDV 11,224 (6,793)
c. Value gains Year ended Year ended
31 December 31 December
2024 2023
£'000
£'000
Revaluation gains 85,952 64,926
Profit/(loss) on sale 11,224 (6,793)
Value gains 97,176 58,133
d. Total property sales Year ended Year ended
31 December 31 December
2024 2023
£'000
£'000
Revenue 181,585 72,427
Less revenue from other property activities (19,841) (2,286)
Less revenue from income generation activities (21,491) (23,410)
Add proceeds from sales of investment properties, AHFS and overages 75,541 79,166
Total property sales 215,794 125,897
e. Operating profit contributing to growth in EPRA NDV Year ended Year ended
31 December 31 December
2024 2023
£'000
£'000
Operating profit 74,634 54,229
Share of profit of joint ventures 1,487 1,554
Unrealised gains/(losses) on development properties 21,874 (3,708)
Unrealised gains on overages 854 2,209
Less previously unrealised gains on development properties released on sale (14,932) (6,061)
Less previously unrealised gains on overages released on sale (4,154) (309)
Operating profit contributing to growth in EPRA NDV 79,763 47,914
As at As at
f. Portfolio value 31 December 31 December
2024 2023
£'000
£'000
Land and buildings (included within Property, plant and equipment) 1,188 1,300
Investment properties 585,489 433,942
Investments in joint ventures 33,553 30,722
AHFS 8,910 18,752
Development properties (included within inventories) 190,888 250,024
Amounts recoverable on contracts (included within receivables) 1,604 -
Amounts derived from statutory reporting 821,632 734,740
Cumulative unrealised gains on development properties as at period/year end 31,026 24,083
Cumulative unrealised gains on overages as at period/year end 6,100 9,400
Portfolio value 858,758 768,223
As at As at
g. Net debt 31 December 31 December
2024 2023
£'000
£'000
Gross borrowings (164,125) (63,574)
Cash and cash equivalents 117,382 27,182
Net debt (46,743) (36,392)
As at As at
h. Net loan to portfolio value (%) 31 December 31 December
2024 2023
£'000
£'000
Net debt (46,743) (36,392)
Portfolio value 858,758 768,223
Net loan to portfolio value (%) 5.4% 4.7%
i. Net loan to core income generation portfolio value (%) As at As at
31 December 31 December
2024 2023
£'000
£'000
Net debt (46,743) (36,392)
Core income generation portfolio value (Investment Portfolio and Natural 297,587 228,216
Resources)
Net loan to core income generation portfolio value (%) 15.7% 15.9%
j. Gross loan to portfolio value (%)
As at As at
31 December 31 December
2024 2023
£'000
£'000
Gross borrowings (164,125) (63,574)
Portfolio value 858,758 768,223
Gross loan to portfolio value (%) 19.1% 8.3%
k. Gross loan to core income generation portfolio value (%)
As at As at
31 December 31 December
2024 2023
£'000
£'000
Gross borrowings (164,125) (63,574)
Core income generation portfolio value (Investment Portfolio and Natural 297,587 228,216
Resources)
Gross loan to core income generation portfolio value (%) 55.2% 27.9%
l. Number of shares used for per share calculations (number)
As at As at
31 December 31 December
2024 2023
Number of shares in issue at end of period/year 324,955,414 324,084,072
Less Employee Benefit Trust and Equiniti Share Plan Trustees Limited held (1,314,562) (929,699)
shares (own shares) at end of period/year
Number of shares used for per share calculations 323,640,852 323,154,373
m. Net Asset Value (NAV) per share
As at As at
31 December 31 December
2024 2023
£'000
£'000
NAV (£'000) 691,665 637,722
Number of shares used for per share calculations 323,640,852 323,154,373
NAV per share (p) 213.7 197.3
n. Total underlying revenue
Year ended Year ended
31 December 31 December
2024 2023
£'000
£'000
Total property sales 215,794 125,897
Income generation portfolio revenue (Investment Portfolio, Natural Resources 21,491 23,410
and Agriculture)
Development revenues 18,690 956
Other revenue 1,151 1,330
Total underlying revenue 257,126 151,593
Less proceeds from sale of investment properties, AHFS and overages (75,541) (79,166)
Statutory revenue 181,585 72,427
2) Reconciliation to EPRA measures
a) EPRA NDV As at
As at 31 December
31 December 2023
£'000
2024
£'000
Net assets 691,665 637,722
Cumulative unrealised gains on development properties 31,026 24,083
Cumulative unrealised gains on overages 6,100 9,400
Notional deferred tax on unrealised gains (9,253) (8,342)
EPRA NDV 719,538 662,863
b) EPRA NDV per share (p) As at As at
31 December 31 December
2024 2023
£'000
£'000
EPRA NDV £'000 719,538 662,863
Number of shares used for per share calculations 323,640,852 323,154,373
EPRA NDV per share (p) 222.3 205.1
EPRA NDV growth and total accounting return
Opening EPRA NDV/share (p) 205.1 196.5
Closing EPRA NDV/share (p) 222.3 205.1
Movement in the year (p) 17.2 8.6
EPRA NDV growth 8.4% 4.4%
Dividends paid per share (p) 1.5 1.4
Total accounting return per share (p) 18.7 10.0
Total accounting return as a percentage of opening EPRA NDV 9.1% 5.1%
To help retain and incentivise a management team with the requisite skills,
knowledge and experience to deliver strong, long-term, sustainable growth for
shareholders Harworth runs a number of share schemes for employees. The
dilutive impact of these on the number of shares at 31 December is set out
below:
As at As at
31 December
2024 31 December
2023
Number of shares used for per share calculations 323,640,852 323,154,373
Outstanding share options and shares held in trust under employee share 7,135,161 5,223,777
schemes
Number of diluted shares used for per share calculations 330,776,013 328,378,150
Diluted EPRA NDV per share, Diluted NDV Growth and Total Accounting Return as
a percentage of opening diluted EPRA NDV per share are set out below:
c. Diluted EPRA NDV per share (p) As at As at
31 December
2024 31 December
2023
EPRA NDV (£'000) 719,538 662,863
Number of diluted shares used for per share calculations 330,776,013 328,378,150
Diluted EPRA NDV per share (p) 217.5 201.9
Diluted EPRA NDV growth and total accounting return
Opening EPRA NDV/share (p) 201.9 194.5
Closing EPRA NDV/share (p) 217.5 201.9
Movement in the period/year (p) 15.6 7.4
Diluted EPRA NDV per share growth 7.7% 3.8%
Dividends paid per share (p) 1.5 1.4
Total return per share (p) 17.2 8.8
Total return as a percentage of opening diluted EPRA NDV 8.5% 4.5%
d) Net loan to EPRA NDV As at As at
31 December 2023 31 December 2022
£'000 £'000
Net debt (46,743) (36,392)
EPRA NDV 719,538 662,863
Net loan to EPRA NDV 6.5% 5.5%
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