Harworth Group PLC Trading Update (3963L)

TIDMHWG

RNS Number : 3963L

Harworth Group PLC

30 April 2020

LEI 213800R8JSSGK2KPFG21

Harworth Group plc

TRADING UPDATE

Harworth Group plc ("Harworth" or the "Company"), a leading regenerator of land and property for development and investment, today provides a trading update covering the period since the Preliminary Results announcement on 17 March 2020, in light of the economic and social disruption caused by the COVID-19 pandemic.

Our priority remains the health, safety and well-being of our employees and wider stakeholders, whilst protecting long-term shareholder interests. The Company's strong balance sheet and fundamentals means that it is well positioned to mitigate any short-term market volatility and to take advantage of any land and property opportunities that arise as a result of present market conditions.

KEY OPERATIONAL & FINANCIAL HIGHLIGHTS

-- Completion of key commercial land sale at Skelton Grange on 16 April, for a total consideration of GBP13

million,   ahead of 31 December 2019 book value

-- Continuing infrastructure works on six major development sites, in order to support future agreed sales

programme

-- Income from the Company's diverse portfolio continuing to cover operating costs, with March quarter rent received broadly in line with previous quarters

   --     New lettings have further reduced its Business Space vacancy rate to 4.8% (FY 2019: 6%)

-- GBP30 million increase to the revolving credit facility agreed with lenders, to GBP130 million, providing increased operational flexibility and the ability to take advantage of future suitable land and property opportunities

-- A final dividend for FY 2019 will no longer be recommended but an additional 2020 interim dividend, in

lieu of     the FY 2019 final dividend, will be considered in due course

Balance Sheet and Liquidity

As reported in our Preliminary Results announcement on 17 March 2020, Harworth entered this unprecedented period in a strong financial position, with cash and undrawn debt facilities of GBP36 million (at 31 December 2019).

The Company has continued to exercise a prudent and disciplined approach to financing and as a result remains well capitalised, with a net loan-to-portfolio value today (based on 31 December 2019 valuations) of 12.4% (FY 2019: 12.1%).

In support of the Company's strategy, our lenders have agreed to increase our revolving credit facility limit by GBP30 million to GBP130 million, providing both operational flexibility and the ability to take advantage of future suitable land and property opportunities. The pricing on these facilities will increase marginally by 0.15%. This means that the Company will have substantial available liquidity of GBP64 million once documented, comprising GBP34 million of cash and GBP30 million of undrawn facilities, with no significant debt maturities until 2023.

Update on Trading

With a number of housebuilder customers announcing reduced activity on live construction sites and new purchases, the Company is prioritising its capital expenditure on those of its major development sites that have agreed sales in place for later in the year, in line with its strategy of effectively managing cash flows to fund sustainable growth. Infrastructure works are therefore continuing on six active development sites across the portfolio. The Company and our contractors are adhering strictly to all government guidelines on social distancing and safe working practices during this period.

The Company's financial position has been further strengthened by the completed disposal earlier this month of 19.5 acres of land at our Skelton Grange site in Leeds, to leading energy from waste ("EfW") operator and developer Wheelabrator Technologies, ("Wheelabrator") for a total consideration of GBP13 million. The site, adjacent to Junction 45 of the M1 to the east of Leeds, has planning consent for a 410,000 tonne per annum EfW facility. The project will be taken forward by Wheelabrator with the support of Multifuel Energy Limited, a 50:50 joint venture between Wheelabrator and Scottish and Southern Energy.

Harworth's income collection, derived from its Business Space and Natural Resources assets with its diversified tenant base, continues to be robust and covers all business overheads and interest on its loan facilities, with rental payments received for the March quarter broadly in line with previous quarters.

In March we completed a fourth new letting in 2020 at Multiply Logistics North, the joint venture between Harworth and the Lancashire County Pension Fund at our Logistics North development. The joint venture has completed a ten-year letting of Unit F2/B, comprising c.55,600 sq. ft, to PJH Group Limited, the UK's largest supplier of bathrooms, appliances, sinks and taps. As a result of the active asset management undertaken in 2020 to date, the Business Space portfolio vacancy has reduced to 4.8% (FY 2019: 6%), with a weighted average lease length to expiry remaining in excess of 13 years.

2019 Final Dividend and Annual General Meeting

Notwithstanding our current balance sheet strength and liquidity headroom, the macro economic environment is one of heightened uncertainty. After due consideration, the Board, therefore, believes that it is now prudent to not recommend to the forthcoming Annual General Meeting ("AGM") the previously announced final dividend of 0.7p per share for the financial year ended 31 December 2019. This will therefore not be paid on 29 May as previously announced on 17 March. However, the Board recognises the importance of dividends to shareholders and therefore intends to consider the appropriateness and timing of an additional interim dividend (equivalent to the previously announced 2019 final dividend) for the financial year ending 31 December 2020 when it has a clearer view of the ongoing effects on the Company of the COVID-19 pandemic.

The Company is now planning to hold its 2020 AGM on 29 June 2020. This is a month later than in previous years, in order to afford more time for the Board to monitor the COVID-19 backdrop and, in particular, the evolving position with regard to restrictions on movement and public gatherings. Further details regarding its format will be provided to shareholders in due course. The 2019 Annual Report and Accounts will be published and distributed to shareholders alongside the Notice of AGM not less than 20 working days in advance of the AGM.

Outlook

Whilst it is too early to say with any certainty, the Board expects that the disruption caused by the COVID-19 pandemic will likely have a material influence on the Company's results for the financial year to 31 December 2020. However, given the positive long-term fundamentals of the Company's strategy including its focus on those structurally supported sectors of residential, industrial and logistics within the North of England and the Midlands, the Board remains confident that the Company is strongly positioned for the future, continuing to transform land and property into sustainable places where people want to live and work, and directly supporting the UK's economic recovery.

-ENDS-

Enquiries:

 
 Harworth Group plc                        FTI Consulting 
 Owen Michaelson, Chief Executive          Dido Laurimore 
  Kitty Patmore, Chief Financial Officer    Richard Gotla 
 Iain Thomson, Head of Communications      Eve Kirmatzis 
  & IR                                      Tel: +44 (0)20 3727 1000 
  Tel: +44 (0)114 349 3131                  Harworth@fticonsulting.com 
  investors@harworthgroup.com

ABOUT HARWORTH GROUP PLC

Listed on the premium segment of the main market, Harworth Group plc (LSE: HWG) invests to transform land and property into sustainable places where people want to live and work. Harworth owns and manages a portfolio of approximately 18,000 acres of land on around 100 sites located throughout the North of England and Midlands (harworthgroup.com).

This announcement contains certain forward-looking statements which, by their nature, involve risk, uncertainties and assumptions because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward looking statements. Any forward-looking statements made by, or on behalf of, the Company are made in good faith based on current expectations and beliefs and on the information available at the time the statement is made. No representation or warranty is given in relation to these forward-looking statements, including as to their completeness or accuracy or the basis on which they were prepared, and undue reliance should not be placed on them. The Company does not undertake to revise or update any forward-looking statement contained in this announcement to reflect any changes in its expectations with regard thereto or any new information or changes in events, conditions or circumstances on which any such statement is based, save as required by law and regulations. Nothing in this announcement should be construed as a profit forecast.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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