Harworth Group Plc - Trading Statement
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Harworth Group plc
Year-end Trading Update
COMPLETION OF PLANNED TRANSACTIONS AND A FOCUS ON BEDS AND SHEDS UNDERPINS STRONG 2020 FINANCIAL PERFORMANCE
Harworth Group plc ("Harworth" or "the Group"), a leading regenerator of land and property for development and investment, today provides a trading update for the year ended 31 December 2020 ahead of its preliminary results which will be announced on 16 March 2021.
The Group has delivered a strong operational performance in the second half of the year despite Covid-19 restrictions. This, coupled with the indicative outcome of the independent valuation of the land and property portfolio, means that we anticipate that the financial performance resulting in Group EPRA NDV at 31 December 2020 will be ahead of our expectations.
Highlights for the period from 1 October to 31 December 2020 include:
DELIVERING A ROBUST PIPELINE OF SERVICED PLOTS FOR NEW HOMES AND COMMERCIAL SPACES
The Covid-19 pandemic has highlighted the need for the well-planned, high-quality residential and industrial developments that Harworth brings forward as master-developer. Harworth has seen resilient demand from its customers for its serviced land continue throughout 2020. In the final quarter, over 55 acres of serviced land comprising 669 residential plots and 41,800 sq. ft of commercial space were sold for a combined consideration of £33.6m, ahead of or in line with their 31 December 2019 book value. These sites are fundamental to supporting the ongoing regeneration of our regions through the delivery of new homes and jobs.
ADDING TO THE LAND AND PROPERTY PORTFOLIO FOR FUTURE GROWTH
Harworth completed land purchases totalling over 117 acres for a combined consideration of £7.0m and entered into two Planning Promotion Agreements. These transactions grew the substantial long-term land pipeline which as at 31 December 2020 stood at 30,668 residential plots and 27.3m sq. ft of employment space (30 June 2020: 30,132 plots and 25.4m sq. ft).
In November, the Group acquired an income-producing property at Knowsley for a total consideration of £26.0m, reflecting a net initial yield of 7.8%.
PREPARING LAND TO CREATE NEW COMMUNITIES AS MASTER-DEVELOPER
The Group made continued progress on planning applications meaning that as at 31 December 2020, sites with over 1.2m sq. ft of employment space and over 2,500 residential plots were in the planning system awaiting determination.
Our ongoing programme of commercial development added a further 26,117 sq. ft of pre-let income-producing commercial space to the Business Space portfolio and we commenced a new development at Logistics North.
ACTIVELY MANAGING THE GROUP'S INCOME PORTFOLIO
We have collected 92% of rent for the December quarter to date, including from the small number of tenants on payment plans. The pattern is in line with previous quarters and shows the resilience of the portfolio and tenant base.
Rental income continues to cover all Group overheads with rental growth (excluding new acquisitions) of 6.8%. Vacancy on the Business Space portfolio stood at 4.5% (30 June 2020: 3.7%) and we continue to see strong tenant interest. The portfolio has a WAULT of 12.5 years (30 June 2020: 13.2 years).
ROBUST BALANCE SHEET POSITIONS THE COMPANY FAVOURABLY FOR LONG-TERM GROWTH
Harworth remains well capitalised, with net debt of £71.2m (30 June 2020: £69.2m) which reflects an LTV of 11.5% and substantial available liquidity of £62.7m as at 31 December 2020.
Lynda Shillaw, Chief Executive, commented:
"We anticipate the 2020 closing Group EPRA NDV to be ahead of our expectations, reflecting the quality of our serviced land, the strength of our underlying markets, diversity of our portfolio and the performance of our teams. Our regional markets in the North of England and the Midlands remain strong and I am confident that Harworth can play a key role in helping local and central government to deliver on their core agendas.
"I am delighted to have been offered the opportunity to become Chief Executive of Harworth, given its strong purpose and highly skilled team who have shown real resilience and achievement throughout 2020. My first impressions are overwhelmingly positive: the strength of Harworth's culture shines through as does the significant potential of both its operating platform and its unique land and property portfolio. I have taken the opportunity, when possible, to visit our sites and the sheer scale, complexity and potential of the projects that we bring forward through the cycle, such as Waverley, Ironbridge and Coalville, cannot fail to impress.
"There is still some way to go to get back to a normal business environment in 2021. Through what we have achieved in 2020, Harworth has already shown its resilience and we continue to progress schemes across our portfolio, remaining well-positioned to deploy our skills and scale to deliver growth and sustainable long-term shareholder returns. We are currently undertaking a comprehensive review of the business to ensure that we optimise the returns from our portfolio (including our pipeline) and deploy appropriately our expertise to capitalise on opportunities in the residential and industrial markets. This will build on our existing strengths and the key attributes that have positioned us to succeed. I look forward to leading Harworth through its next phase of growth. We have a strong track record of acquiring, assembling and developing our strategic landbank and an unrivalled focus on creating places where people want to live and work."
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as amended by The Market Abuse (Amendment) (EU Exit) Regulations 2019. The person responsible for making this announcement on behalf of Harworth is Chris Birch, Company Secretary.