REG - Harworth Group PLC - Year-end Trading Update

HarworthAnnouncement

30/01/2024 07:00

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RNS Number : 2861B  Harworth Group PLC  30 January 2024

Harworth Group plc

("Harworth" or "the Company")

Year-end Trading Update

Management actions drive robust performance in 2023 and strong momentum into
2024

 

Harworth Group plc, a leading regenerator of land and property for sustainable
development and investment, is today providing a trading update in respect of
its financial year ended 31 December 2023, ahead of the announcement of its
Full Year Results on 19 March 2024.

 

The Group anticipates that EPRA NDV((1)) as at 31 December 2023 will be
slightly ahead of current market consensus((2)). This is the result of
management actions undertaken on development sites to unlock high value uses,
and positive progress with planning applications, which have underpinned
valuation gains.

 

Lynda Shillaw, Chief Executive of Harworth, commented: "Harworth had a strong
2023 and delivered another robust performance. The unique combination of our
extensive landbank and applying our specialist skillset to identify and
realise the highest value from each of our sites saw us complete serviced land
and property sales at prices in line with, or ahead of, book values, achieve
lettings ahead of estimated rental values, and progress sites through the
planning system, all against an uncertain market backdrop.

 

"Since re-listing in 2015, Harworth has doubled its EPRA NDV. The progress
made across our portfolio in 2023 has meant that our year-end valuation is
slightly ahead of expectations, moving us closer to our strategic ambition of
becoming a £1bn business by 2027.

 

"As we enter 2024, there are some signs of optimism in the macro environment
whilst our key markets remain characterised by structural undersupply. We are
encouraged that we are seeing continued good demand into the new year for our
serviced residential land as well as occupier interest in our employment
sites. This, combined with our long-term through-the-cycle approach, our low
loan-to-value and significant financial liquidity means that as well as
securing and progressing opportunities to deliver long-term value to
investors, we are well positioned to take the management actions that will
generate further value gains from our portfolio in the year ahead."

 

193,000 sq. ft of industrial & logistics space developed during the year,
with a remaining pipeline of 37.7m sq. ft

·      Completed development of 110,000 sq. ft of Grade A space at
Gateway 36 in Barnsley and 83,000 sq. ft at the Advanced Manufacturing Park
("AMP") in Rotherham, which is 39% is let, exchanged or in heads of terms

·      Work underway on a further 187,000 sq. ft of space at the AMP,
comprising two pre-let units and one build-to-suit unit that will be owned by
its occupier, underscoring the location's popularity and Harworth's flexible
approach to development

·      Infrastructure works continuing at Chatterley Valley in
Staffordshire, and to commence shortly at Wingates in Bolton, with combined
planning permissions to develop 2.2m sq. ft

 

1,170 residential plots sold during the period, with an extensive remaining
pipeline of 27,190 plots

·      Nine transactions completed with six different housebuilders,
comprising national and regional operators, demonstrating sustained demand for
the Group's de-risked residential serviced land

·      Headline sales proceeds of £52.1m, with all transactions at
prices in line with, or ahead of, book values

·      After year-end, completed a further plot sale, at book value, to
Sky-House to construct 50 new homes at Waverley in Rotherham, with a robust
pipeline for further residential plot sales in the months ahead

 

Progress in securing planning approvals and forward-funding agreements for
mixed tenure products

·      First forward-funding agreement signed as part of our portfolio
of sites for affordable housing, with Great Places, for the development of 50
affordable homes

·      Planning approvals now received for 31% of our portfolio of sites
for build-to-rent properties; progressing towards exchange of contracts with
selected partners

·      Planning approval received for the first pilot site for net zero
carbon homes product, at the Prince of Wales development in Pontefract

 

Further strengthening our pipeline through acquisitions and planning progress
to unlock high value uses

·      Acquisitions added 1.8m sq. ft of industrial & logistics
space and 809 residential plots to the pipeline

·      Secured planning for 397 residential units, with a further 500
units approved post year-end, and 1.1m sq. ft of industrial & logistics
space, including a 0.8m sq. ft approval at Skelton Grange, Leeds

·      Applications for 10.1m sq. ft of industrial & logistics space
and 1,774 residential plots progressing through the planning system at the
year-end

 

Investment Portfolio now 37%((3)) Grade A (31 December 2022: 18%)

·      £70.0m of Investment Portfolio sales completed during the year
in line with book values, all of which are assets where value had been
maximised prior to sale through asset management initiatives

·      After year-end, completed the sale of a site in Flaxby, North
Yorkshire, previously occupied by Ilke Homes, for a headline sales price of
£13.3m, ahead of book value

·      Leasing activity added £1.9m (16%) to annualised rent; new
lettings achieved an average 7% premium to ERVs, and renewals and rent reviews
achieved on average a 27% uplift to previous passing rent

·      Vacancy rate of 11.2%((3)) (31 December 2022: 8.3%); reduced to
1.2% by excluding space completed in the preceding 12 months (31 December
2022: 2.7%); 97% of rent due in 2023 collected

 

Providing sustainable new community infrastructure across the regions

·      Opened 71 acres of green space across Cadley Park, Derbyshire and
South East Coalville, Leicestershire, alongside a new learn-to-ride cycle
track at Waverley

·      Began construction of a new forest school at South East Coalville
and a new mixed-use centre at the heart of the community at Waverley, Olive
Lane, providing retail and leisure space

 

Strong balance sheet and financial position, with low gearing and significant
available liquidity

·      Year-end net debt of £36.4m (31 December 2022: £48.4m),
representing a pro-forma LTV based on 30 June 2023 valuations of 5.3% (30 June
2023: 8.6%)

·      Available liquidity of £192.2m at year-end (31 December 2022:
£175.6m): no major refinancing requirement until 2027

 

Notes:

(1)    European Real Estate Association ('EPRA') Net Disposal Value
('NDV'), an adjusted Net Asset Value metric which is one of Harworth's key
Alternative Performance Measures

(2)    Current consensus for 31 December 2023 EPRA NDV per share is 194.0p,
comprising four analyst forecasts ranging from 189.5p to 195.6p

(3)    Excludes a site in Flaxby, North Yorkshire, which was previously
occupied by Ilke Homes, as this was sold shortly after year-end

 

For further information

 

 Harworth Group plc
 Lynda Shillaw (Chief Executive)                               T: +44 (0114) 349 3131

 Kitty Patmore (Chief Financial Officer)                       E: investors@harworthgroup.com

 Tom Loughran (Head of Investor & Stakeholder Relations)

 FTI Consulting
 Dido Laurimore                                                T: +44 (0)20 3727 1000

 Richard Gotla                                                 E: Harworth@fticonsulting.com

 Eve Kirmatzis

 

The information contained within this announcement is deemed by the Company to contain inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"). The person responsible for making this announcement on behalf of Harworth is Chris Birch, Company Secretary.

 

About Harworth

 

Listed on the Premium Segment of the Main Market, Harworth Group plc (LSE:
HWG) is a leading sustainable regenerator of land and property for development
and investment which owns, develops and manages a portfolio of over 13,000
acres of land on around 100 sites located throughout the North of England and
Midlands. The Group specialises in the regeneration of large, complex sites,
in particular former industrial sites, into new residential and industrial
& logistics developments. Visit www.harworthgroup.com for further
information. LEI: 213800R8JSSGK2KPFG21

 

 

 

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