TIDMHWG
RNS Number : 3282H
Harworth Group PLC
27 July 2023
Harworth Group plc
("Harworth" or "the Group")
Half Year Trading Update
Valuations broadly stable as management actions offset market
movements
Strong balance sheet, with low gearing and significant available
liquidity
Harworth Group plc, a leading regenerator of land and property
for sustainable development and investment, is today providing a
trading update in respect of the six months to 30 June 2023, ahead
of the announcement of its Half Year Results on 12 September
2023.
The Group anticipates that EPRA NDV(1) as at 30 June 2023 will
be broadly in line with its EPRA NDV as at 31 December 2022. This
is the result of positive valuation movements driven by management
actions across the portfolio, supported by continued demand from
occupiers for industrial & logistics assets and from
housebuilders for serviced residential land. These uplifts have
broadly offset market-driven outward yield movements in the
industrial & logistics sector which, while not as significant
as in the second half of 2022, have continued over the first half,
reflecting a softer macro-economic backdrop.
As of today, the Group has completed, exchanged, or is at heads
of terms on 81% of budgeted sales for the year across its
industrial & logistics and residential land portfolios, at
prices in-line with, or at a premium to, book value.
Lynda Shillaw, Chief Executive of Harworth, commented: "Harworth
has delivered a strong strategic and operational performance in the
first half highlighting the resilience of our through-the-cycle
model, and sustained demand for our serviced residential land and
industrial & logistics assets. In particular, the combination
of this year's sales of more mature industrial & logistics
sites and our development of new high-specification space has
accelerated the transition of our Investment Portfolio towards our
goal of 100% Grade A. In residential, we continue to transact with
a range of housebuilders, both national and regional, who are drawn
to our de-risked serviced land, and continue to progress our
portfolios of alternative residential products, including
Build-to-Rent and affordable homes.
"Despite resilient demand for our products, and our management
actions to drive value across the portfolio, macroeconomic
challenges are still weighing on investor sentiment. This has
resulted in our valuations remaining broadly stable over the first
six months of the year. Continued economic headwinds mean that the
landscape for the second half of the year remains challenging,
although there are early signs of some of the inflationary
pressures easing. Against this backdrop, our focus markets of
industrial & logistics and residential remain key drivers of
economic growth and have favourable supply and demand dynamics.
"Harworth is a long-term through-the-cycle business, and we
remain confident that our strategy will deliver long-term value.
What is more, our strong financial position, differentiated
products, and the scale and mix of our portfolio, position us well
to maximise the significant value embedded in our sites."
Direct development of industrial & logistics stock across
37.3m sq. ft pipeline:
-- Completed 110,000 sq. ft of Grade A space at Gateway 36 in
Barnsley: 39,000 sq. ft already let, with good interest for
remaining units
-- On-site with 166,000 sq. ft at the Advanced Manufacturing
Park ('AMP') in Rotherham, including a 73,000 sq. ft built-to-suit
unit
-- Site preparation works continue at Chatterley Valley in
Staffordshire: early discussions underway on pre-let and
build-to-suit opportunities at the site, which will deliver 1.2m
sq. ft
Progressing sales and broadening the range of residential
products across 28,359-plot pipeline:
-- After H1 period-end, completed the sale of serviced land at
Thoresby Vale, Nottinghamshire to Barratt and David Wilson Homes
for GBP9.9m, in line with 31 December 2022 valuations
-- Working towards exchange of contracts with selected
investment and construction partners for development of a
single-family Build-to-Rent ('BTR') portfolio
-- Good levels of interest received so far for Affordable
Housing portfolio, launched in April 2023
Scaling up land acquisitions and land promotion activities:
-- H1 acquisitions added 1.1m sq. ft of industrial &
logistics space and 700 housing plots to the pipeline
-- Secured planning for 397 residential units and 0.3m sq. ft of industrial & logistics space
-- Applications for 7.4m sq. ft of industrial & logistics
space and 1,641 plots progressing through the planning system
Investment Portfolio now 29% Grade A (31 December 2022: 18%)
-- Significant progress in transitioning portfolio by largely
retaining directly developed assets and disposing of those where
value has been maximised through asset management initiatives
-- Investment Portfolio sales completed in H1 total GBP52.1m,
with a further GBP16.3m disposal completed after period end, all at
prices broadly in line with December 2022 valuations
-- Vacancy rate(2) of 11.6% at 30 June 2023 (31 December 2022:
8.3%); reduced to 1.1% by excluding space completed in the
preceding 12 months (31 December 2022: 2.7%); 97% of rent collected
for H1 2023 to date
-- Leasing activity added GBP0.9m (6%) to annualised rent; new
lettings at an average 1% premium to estimated rental values
('ERVs'), and renewals and rent reviews on average 27% ahead of
previous passing rent
Continued focus on making a lasting positive impact on the
planet and communities
-- Publication of Net Zero Carbon ('NZC') Pathway in April 2023,
outlining the steps that the Group will take to achieve its
ambition of being operationally NZC by 2030 and NZC for all
emissions by 2040
-- Opening of new 50-acre country park at Cadley Park in
Derbyshire, providing new recreational space and wildlife habitats
at the 600-home development
Strong balance sheet and financial position, with low gearing
and significant available liquidity
-- As at 30 June 2023 net debt was GBP63.7m (31 December 2022:
GBP48.4m), representing a pro-forma LTV based on 31 December 2022
valuations of 9.2% (31 December 2022 6.6%)
-- Available liquidity of GBP163.5m at 30 June 2023 (31 December
2022: GBP175.6m); no major refinancing requirements until 2027
Notes:
(1) European Real Estate Association Net Disposal Value, an
adjusted Net Asset Value metric which is one of Harworth's key
Alternative Performance Measures.
(2) Calculated using the EPRA Best Practices Recommendations
Guidelines. Occupier Ilke Homes, which represents 7% of headline
rent roll, entered administration during the period, but has
remained in occupation to date. The related space is therefore
classified as occupied for the purposes of this calculation.
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
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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