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

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