capital growth · 2019. 12. 19. · answer session and any other related verbal or written...

Transforming Regenerating Revitalising

CAPITAL GROWTH

CAPITAL MARKETS MORNING – 25 JANUARY 2017


OVERVIEW

CAPITAL GROWTH focuses on maximising value by

developing the land and property portfolio to its optimum

extent, thereby growing the company’s Net Asset Value (NAV).

Our core skill is to transform underutilised and

undervalued land into valuable residential or commercial

development sites. The strategic imperative for the business

is therefore to continue the pipeline of value growth and to

replenish the portfolio with further land to sustain the business.

TODAY

BEFORE

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HOW WE CREATE AND ADD VALUE

Competitive advantage comes from our ability to add value through management actions rather than reliance on market movements

Acquisition &

Land Assembly

Masterplanning

Planning Approval

Value Engineering &

Land Remediation

Infrastructure Development

Plot Sale / Build Out

Ind

ica

tive

Va

lue

Ad

d

Asset Management

Acquisitions Strategic Land Major Projects Income

Time

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SUMMARY OF OUR PORTFOLIO

TOP 10 SITES

Site Location AcresHouse plots Employment space

Consented Sold/Built Consented Built

CA

PIT

AL

GR

OW

TH

Waverley &

AMPYorkshire 587 3,890 740/550 2.1m sq. ft 1.2m sq. ft

Logistics North North West 763 -- -- 4.0m sq. ft 1.5m sq. ft

Rossington Yorkshire 344 1,200 74/15 0.1m sq. ft 0 sq. ft

Lounge Midlands 103 -- -- 0.8m sq. ft 0 sq. ft

Prince of Wales Yorkshire 303 917 226/110 0.3m sq. ft 0 sq. ft

Harworth Midlands 173 996 118/74 0.8m sq. ft 0 sq. ft

Coalville Midlands 200 1,100 0 - -

TOTAL 2,473 8,103 1,158/749 8.1m sq. ft 2.8m sq. ft

INC

OM

E Asfordby Midlands 133 -- -- 0.3m sq. ft 0.3m sq. ft

Gascoigne Yorkshire 279 -- -- 0.3m sq. ft 0.3m sq. ft

Rockingham Yorkshire 430 -- -- 0.2m sq. ft 0.2m sq. ft

TOTAL 3,315 8,103 1,158/749 8.9m sq. ft 3.5m sq. ft

60% of our portfolio value sits within ‘Capital

Growth’ (over £210m)

• Our focus is on brownfield sites with greater value

enhancement potential

Top 10 sites represent c.60% of portfolio value

Top 20 sites represent c.80% of portfolio value

• Number of sites and acres being reduced to improve

portfolio focus

Waverley

Logistics NorthRossington

Lounge

Prince of Wales

Melton Commercial Park

Gascoigne

Gateway36

Harworth

Coalville

Next 10 Remaining properties

£363.9M

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WE CONTINUE TO GROW OUR PORTFOLIO

Major Developments

£146.0m

Agricultural Land£21.6m

Natural Resources

£18.8m

Strategic Land

£45.9m

Business Parks

£75.6m

Major Developments

£157.6m


Natural Resources£20.8m

Strategic Land

£52.4m

Business Parks

£90.9m

Major Developments

£163.4m


Natural Resources£23.5m

Strategic Land

£56.2m

Business Parks

£100.9m

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SALES PROCEEDS H2 2015

MDS £20.83m

STL £5.29m

TOTAL £26.12m

SALES PROCEEDS H1 2016

MDS £7.58m

STL £0.91m

TOTAL £8.67m

£307.8m

£15.9m

£22.8m(£13.7m) £11.8m

£344.5m

£10.1m

£12.8m (£11.3m) £7.9m

£363.9m

£280m

£290m

£300m

£310m

£320m

£330m

£340m

£350m

£360m

£370m

£280m

£290m

£300m

£310m

£320m

£330m

£340m

£350m

£360m

£370m

InvestmentProperty @

30/06/15

Site Expenditure Acquisitions Disposals Fair ValueAppreciation


31/12/15

Site Expenditure Acquisitions Disposals Fair ValueAppreciation


30/06/16

Movements in Investment Property


HOW CAPITAL GROWTH IS REALISED

COMMERCIAL &

MASTERPLANNING

STRATEGY

LAND ENABLEMENTDEVELOPMENT &

INFRASTRUCTURE

SECURING AN END USE

FOR INDIVIDUAL PLOTS

VISION

MARKET ASSESSMENT

PLANNING

REMEDIATION

RESTORATION

ENGINEERING LANDFORM

ROADS AND SEWERS

SERVICES

OFF-SITE ENABLEMENT

WARRANTIES

OCCUPIERS

DEVELOPERS/HOUSEBUILDERS

INVESTMENT

BUSINESS DEVELOPMENT

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COMMERCIAL & MASTERPLANNING STRATEGY

• We establish a vision and confirm market assessment for

each of our sites

• Our sites are then masterplanned for appropriate uses

• We work effectively with local stakeholders to understand

the nature of our landholdings and the context of the local

area they sit within

• Planning consents secured for over 11,000 plots and 10m

sq. ft of commercial space since 2008 (see right)

• Target set of securing 1,000 residential plots per annum

on average in order to deliver further value.

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FORMER THORESBY COLLIERY, NOTTINGHAMSHIRE

800 plots

25 acres of employment

Planning submitted 23/12/2016

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RESIDENTIAL LAND: OUR PLANNING PIPELINE

SITE PLOTSPREDICTED DETERMINATION

DATE

Market Warsop (PPA) 400 Q1 2017

Thoresby 800 Q1/2 2017

Partnership sites (overages) 526 Range of dates in 2017

TOTAL 1,716

2,417 2,312

0

500

1,000

1,500

2,000

2,500

3,000

2017-2020 Beyond 2020

• Planning preparation and promotion was focused on in 2016, with a range of applications submitted in H2. Future pipeline identified

with representations made to secure planning

Plots with

outline consentPlots with Resolution

to Grant consent

65

31/12/2015 Consent and RtGin H1 2016

Purchased Sold 30/06/2016

10,299

(335)

10,029

CONSENTED RESIDENTIAL PLOTS IN PORTFOLIO POTENTIAL APPLICATIONS

APPLICATIONS MADE IN 2016

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COMMERCIAL LAND: PLANNING PIPELINE

7.8m 0.1m

2.6m 0m 10.5m*

31/12/2015 Consent and RtGin H1 2016

Purchased Sold 30/06/2016

3.6.m

2.5.m

0.0m0.5m1.0m1.5m2.0m2.5m3.0m3.5m4.0m

2017-2020 Beyond 2020

• Purchase of Temple Green, Leeds has pushed consented space within our portfolio to over 10m sq. ft for the first time. Pipeline of

applications provide opportunities for both Capital Growth and future Income Generation

* 10.5m includes 2.6m sq. ft of consented space at Temple Green that is owned by Aire Valley Land

LLP - our 50% JV with Evans Property Group

SITE SPACEPREDICTED DETERMINATION

DATE

Daw Mill 265,000 sq. ft Q1 2017

Kellingley 1,400,00 sq. ft Q2 2017

Thoresby 250,000 sq. ft Q2 2017

TOTAL 1,915,000 sq. ft

Sq. ft of space with

outline consentSq. ft of space with Resolution

to Grant consent

CONSENTED COMMERCIAL LAND IN PORTFOLIO POTENTIAL APPLICATIONS

APPLICATIONS MADE IN H2

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LAND ENABLEMENT

• Tackling former industrial sites that have operated in their

previous guises for up to a Century often brings a number

of technical challenges to bear when considering their use

• The team is expert in delivering cost-effective solutions by

using their expertise and experience to turn brownfield

land into development platforms that match the use we

have proposed

• This work often includes the demolition and recovery of

former industrial structures as part of delivering the

identified vision for the development.

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WAVERLEY, ROTHERHAM

WAVERLEY BEFORE

WAVERLEY NOW

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DEVELOPMENT & INFRASTRUCTURE

• We invest in and develop infrastructure on our major

developments in order to facilitate serviced development plots,

paid for using money recycled from previous land sales.

• Spend is only incurred however if it is value enhancing by de-

risking the site (in providing warranties as an example) and/or

brings it forward for plot sales or further development.

• Work is brought forward in phases as our track record shows that

higher values are unlocked through phased sales as our sites

mature into established locations.

• As the portfolio develops, we anticipate bringing forward more

points of sale to increase portfolio momentum, unlock further

value and diversify risk. This could include new sectors,

including PRS, retail centres and retirement homes.

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PRINCE OF WALES, PONTEFRACT

SUMMER 2015

AUTUMN 2016

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SECURING END USES FOR OUR SITES

• Once we have secured an end use for a site and have prepared land

accordingly, we either sell engineered land for residential or commercial

purposes or retain land in order to increase our income portfolio

• We plan the disposals of properties carefully to extract maximum value from

our land portfolio, with gains achieved over book value on all major sites –

with cash then reinvested in the development cycle

• Housebuilders that have purchased some of our plots include Barratt

Developments, Taylor Wimpey, Harron Homes and Keepmoat. We have

also sold land for commercial uses to local, national and international firms,

including Rolls-Royce, Aldi, Lidl and a range of manufacturers and retailers

• We retain our landholdings should a detailed assessment show that market

conditions support its use for future income generation. Land that has been

retained for us to develop our own commercial income portfolio include key

sites at Bolton (Logistics North), Rotherham (the AMP) and Barnsley

(Gateway 36). This approach would also apply on current and future Joint

Ventures, including our JV with Evans Property Group at Gateway 45 Leeds.

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The markets in our home regions remain robust.

RESIDENTIAL

Demand for land remains steady, with housebuilders reporting

consistent plot sales in the North and the Midlands. This is

underpinned by housing starts in the UK continuing to be well below

acknowledged Government targets (140,000 house starts in 2015 vs. a

national housing target of 250,000 starts), whilst Government

incentives such as Help to Buy remain in place.

COMMERCIAL

Demand for well-connected industrial and logistics space remains good

with an under-supply of new units reported in all of our regions, both

under and above 100,000 sq. ft, allied to consistent occupier demand.

The industrial and logistics sector appears to be the most attractive of

the commercial real estate sectors and with a number of our sites close

to key motorway and principal road junctions, we are well-placed to

take advantage of this trend.

OUR MARKETS ARE ROBUST

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FUTURE STRATEGY & OUTLOOK

We have a clear strategy to increase the value of our landholdings

sustainably over time, supported by the solid interest in the property

sector in our core regions and the experience and expertise of the team.

• We will continue with our stated strategy of exploiting portfolio opportunities by

optimising land use and securing planning consents for both residential and commercial

uses.

• We will also continue to invest in the sites in our portfolio with the highest value

enhancement potential, whilst increasing our points of sale to increase value creation

and to diversify risk.

• Investing in the sites with the highest value-add potential will also provide further outlets

for us to build new commercial units that can be retained as income-producing assets.

• Lower value sites with little development potential will continue to be sold to free-up

management time further.

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DISCLAIMER

• For the purpose of the following disclaimer, reference to this ‘presentation’ shall be deemed to

include reference to the presentation slides, the presenters’ speeches, the question and

answer session and any other related verbal or written communication.

• References in these slides to financial information for the full financial year ending 31

December 2016 are to an average of forecasts from Canaccord Genuity Limited (11/01/2017)

and Investec Bank plc (11/01/2017), following the Company’s trading update on 10/01/2017.

• This presentation, which has been issued by Harworth Group plc (‘Harworth’), comprises

slides for a presentation for a Capital Markets Morning hosted on 25 January 2017 and is

solely for use at such presentation. This presentation is confidential and may not be

reproduced, redistributed or passed directly or indirectly to any person or published in whole

or in part for any purpose.

• This presentation includes forward-looking statements with respect to the business,

performance and financial condition of Harworth. By their nature, these statements may

involve uncertainty given future events and circumstances can cause results and

developments to differ materially from those anticipated. Any forward-looking statements

reflect knowledge and information available at the date of preparation of these slides. Nothing

in this presentation should be construed as a profit forecast. Harworth gives no undertaking

to update these forward-looking statements.

• Actual results may differ materially from those expressed in forward-looking statements. As

such, you are cautioned not to put undue reliance on any forward-looking statements. No

investment advice is being given in this presentation. No representation, warranty or

undertaking is given by, or on behalf of, Harworth or any of its directors, officers, employees

and advisers that Harworth will achieve any results set out in such statement or as to the

accuracy, completeness or reasonableness of any projections, targets, estimates, forecast

statements, beliefs, opinions or information contained in or given during this presentation and

no liability is accepted or incurred by any of them for or in respect of the same, provided that

nothing in this paragraph shall exclude liability for any representations or warranty made

fraudulently.

• In making this presentation available, Harworth makes no recommendation to buy, sell or

otherwise deal in shares in Harworth or in any other securities or investments whatsoever,

and you should neither rely nor act upon, directly or indirectly, any of the information

contained in this presentation in respect of any such investment activity. Past performance is

no guide to future performance. If you are considering engaging in investment activity, you

should seek appropriate independent financial advice and make your own assessment.

• By accepting these presentation slides, you agree to be bound by the above conditions and

limitations.

• This presentation does not constitute or form part of any offer or invitation to sell, or any

solicitation of any offer to purchase, any shares in Harworth or any other securities, nor shall it

or any part of it, nor the fact of its distribution form the basis of, or be relied upon in connection

with, any contract or investment decision related thereof.

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capital growth · 2019. 12. 19. · answer session and any other related verbal or written...

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