Full Year Results for year ended 31 Dec 2024

HARWORTH GROUP PLC

('Harworth' or the 'Group' or the 'Company')

Full Year Results for the year ended 31 December 2024

Operational outperformance, strong returns and continued EPRA NDV growth

Harworth Group plc, a leading land and property regenerator of sustainable developments, today announces its results for the year ended 31 December 2024.

Lynda Shillaw, Chief Executive of Harworth, commented: "Harworth delivered record revenue and land sales in 2024, generating significant value gains, with EPRA NDV up 8.5% year on year. Our strong total accounting return of 9.1% is yet again among the best in the sector and the result of management actions, consistent with our focus on driving value as we continue to progress our sites through development. This included two landmark land sales, to Microsoft for a hyperscale data centre and Frasers Group for their global headquarters, alongside record residential plot sales. Our performance continues to demonstrate the resilience of our through-the-cycle business model and highlights our ability to capitalise on emerging sectors, such as data centres, to accelerate our sites. The last four years of investment in strengthening our business to enable growth is bearing fruit and the business is performing across the board.

"While we remain cautious in light of the current macro-economic backdrop, our financial flexibility and careful capital allocation, and alignment to structurally undersupplied sectors fundamental to the UK's growth, mean we are well placed to navigate uncertainty.

"Our consented pipeline and land bank and our ability to deliver at scale are significant strengths against a backdrop of site scarcity in our regions, and a planning system that remains sluggish as the reforms introduced by the government bed in. With a significant number of our sites coming on line for development, we are well positioned to continue to deliver strong returns, creating long-term value for our investors as we recycle capital to unlock the material underlying value of our land bank and increase the development of modern Grade A Industrial & Logistics assets. All of these actions provide the foundations for achieving our targets of £1bn of EPRA NDV by the end of 2027 and growing our core Investment Portfolio to £0.9bn by the end of 2029."

Management actions drive strong performance

Total property sales of £215.8m across 2,385 Residential plots and 4.4m sq. ft of Industrial & Logistics land

Planning approvals underpin extensive and growing pipeline

Selective strategic acquisitions

Core Investment Portfolio space now 45% Grade A (2023: 37%)

Significant firepower to fund development pipeline

Delivering Harworth's commitment to planet, people and communities

Notes:

(1) Represent our Alternative Performance Measures (APMs). A full description of these is set out in Note 2 to the financial statements with a reconciliation between statutory measures and APMs set out in the appendix to the financial statements.

(2) European Public Real Estate Association Net Disposal Value

(3) Total sales include £101.0m of Industrial & Logistics land sales, £97.2m of Residential plot sales and £17.6m of investment property sales and other

(4) The core Investment Portfolio represents our primary income generating Industrial & Logistics portfolio. It excludes Strategic Land, Major Developments, Natural Resources, and Agricultural land

(5) Measured by area (6) The financial highlights represent our statutory measures

(7) The Ex-dividend date, Record date and Payment date for the 2024 dividend can be found in the Shareholder Information section of this announcement

(8) Properties include investment properties, development properties, AHFS, occupied properties and investment in joint ventures, refer to Note 2 to the financial statements

(9) European Public Real Estate Association Vacancy Rate

*percentage point change

For further information

Results presentation

Harworth will host a presentation for analysts and investors at 9.30am today. A live webcast and playback of this can be accessed at the following link: https://brrmedia.news/HWG_FY24

Investor Meet Company presentation

A presentation relating to these results will also be hosted via the Investor Meet Company platform on 25 March 2025 at 1.00pm. The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9am the day before the meeting, or at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and follow Harworth via: https://www.investormeetcompany.com/harworth-group-plc/register-investor

Investors who already follow Harworth on the Investor Meet Company platform will automatically be invited.

About Harworth

Harworth Group plc (LSE: HWG), is a leading land and property regenerator of sustainable developments. We own, develop, and manage a portfolio of over 15,000 acres of Strategic Land over 100 sites located throughout the North of England and Midlands. We specialise in delivering long-term value for all stakeholders by regenerating large, complex sites, particularly former industrial sites, into new Industrial & Logistics developments and serviced Residential land to create sustainable places, support new homes, jobs and communities where people want to live and work. Visit www.harworthgroup.com for further information. LEI: 213800R8JSSGK2KPFG21

Chair's statement

2024 has been a landmark year for Harworth:-

· We achieved our largest ever sale of regenerated brownfield land, concluding a £106.6m agreement with Microsoft for the development of a hyperscale data centre in Leeds, a deal that had been more than 18 months in the making. Taking all stages of that transaction together, this should realise a profit of some £78.2m.

· Over the year we sold a record 2,385 plots for Residential development, materially ahead of the 1,170 sold in 2023 and ahead of our strategic target of 2,000 per year on average, as we accelerate through sites by broadening the range of our Residential products.

· Four years after Lynda Shillaw joined us as Chief Executive, we announced the next stage in the evolution of the four growth drivers of the strategy she first outlined in 2021, increasing our focus on Industrial & Logistics development and retaining more prime Grade A properties in our Investment Portfolio. This is now targeted to grow to £0.9bn by the end of 2029, at which point we expect our balance sheet to be weighted over 85% towards Industrial & Logistics assets compared to its current 63%. In turn, we expect the increase in recurring earnings from the significantly larger Investment Portfolio to allow increased dividends to be declared in future years.

· Positive market sentiment towards the consistency of our operational performance and the evolution of our strategy drove our share price to 179p on 13 September after the interim results, 46% ahead of the start of the year. We entered the FTSE 250 for the first time, a significant milestone for the business and a testament to our people and ability to deliver against our strategic objectives. The institutional buying associated with entering the index drove us to a high of 194.5p. Whilst, as would be expected, the share price has settled back somewhat, we have maintained a narrower discount to NDV.

We are pleased to see that the strategic pivot of our business towards the development, and retention, of Grade A Industrial & Logistics has resonated with investors. Residential land sales and our mixed tenure products remain an important source of funding for the business, in particular for the growth in direct development of our Industrial & Logistics portfolio, and we shall continue to seek out opportunities to acquire sites that have the potential to be developed into serviced parcels of Residential land - indeed, we acquired the potential for 4,404 such plots during the year. It is also likely that some of the sites we acquire, given their typical scale, will offer the potential for both commercial and Residential development. Our recent development of other tenures, alongside private sales to housebuilders, increases our ability to accelerate through such Residential developments, thereby achieving an accelerated capital turn.

As Lynda's Chief Executive report details, alongside our success in accelerating Residential sales we also made strong progress against each of the other elements of our strategy:

· With the practical completion of 107,000 sq. ft of directly developed Grade A commercial space and acquisition of the 285,000 sq. ft Grade A Catalyst urban logistics estate in Rotherham, 45% of our core Investment Portfolio is now Grade A. Enabling works for direct development are underway on several of our Major Development sites and all of the Grade A space in progress over the next 12 months is expected to be retained in our Investment Portfolio.

· We have maintained our objective of holding a 12 to 15-year forward pipeline of sites at varying stages of planning and development having secured control of further sizeable land holdings during the year, with these adding the potential for 1.0m sq. ft of Industrial & Logistics space and 4,404 Residential plots.

The speed at which we can realise the overall potential in our pipeline of 33.6m sq. ft of Industrial & Logistics space and 31,264 Residential plots is substantially dependent upon developments in the macro-economy and what results from planning reforms. The course of the global economy, and in particular of interest rates, is very uncertain with a new administration taking power in the US, political and economic instability in the EU, and areas of major active conflict. At home, businesses and consumers are still digesting the implications of the new government's first budget, and the Bank of England is trying to chart a course for UK interest rates having regard to global interest rates, movements in sterling, and how UK inflation develops.

Uncertainty depresses and delays business demand for new development and society's demand for new homes, whilst interest rates staying higher for longer compounds consumers' wariness and suppresses both returns and the potential for yield compression. These in turn are compounded by planning delays, reflecting both the lack of clear direction that followed the previous government's December 2023 planning reforms and local authority resource constraints. Overall, the new government's commitments to a planning system that supports economic growth in key sectors and significantly increases housing supply should be strongly supportive of our own potential for new development. However, the reforms that marked the first stages of the extensive planning legislation agenda will take time to become embedded in practical decision-making. Whilst, therefore, we continue to make steady progress towards the achievement of £1bn EPRA NDV by the end of 2027, and the outlook for 2025 is more challenging than when we reported at our 2024 interim results in September 2024.

The other prime determinant of the speed at which we can progress is the availability of the necessary skills, experience, and relationships within the people who make up Harworth. In my past reports I have focused consistently on the criticality of having the right team of the necessary size to the achievement of our objectives - to see the potential of undeveloped land; to create masterplans that maximise that potential; to negotiate with planners and communities to turn those masterplans into detailed planning consents; to manage the detailed implementation of the resulting developments; to identify how best to market those developments; and to nurture the relationships that in turn lead to successful transactions. As Harworth grows, both in the number of developments it has ongoing at any time, and in the size of its Investment Portfolio, so too must its available resource grow. As we are a long-term through the cycle business, what we plan to be achieving as outcomes in two to three years' time, and even longer-term, will depend on what we are creating as inputs today. It is, therefore, inevitable that we have to grow our resource ahead of the planned future growth of the business. It is also critical that we attract and retain the leadership talent we need to achieve our strategic ambitions. The changes that, following considerable thought and extensive engagement with our shareholders, we are proposing to the Remuneration Policy that will apply for the next three years are designed with this in mind.

As last year, alongside our Annual Report, we are publishing our latest report of the progress we made over the last 12 months along our NZC Pathway. Considerable further progress has been made in understanding our carbon footprint, in particular the Scope 3 emissions of the contractors and suppliers who are upstream of our developments, and of the downstream tenants in our Investment Portfolio. This allows us to work with both to reduce those emissions with changes to structural design and construction methods and materials, alongside helping our tenants to reduce their own emissions through measures such as the installation of solar panelling and sourcing renewable energy. We have also seen carbon pricing becoming an integral part of planning policy, with net zero targets embedded into the Greater Manchester Combined Authority planning policy, Places for Everyone, and whole life carbon assessments and detailed energy assessments, becoming a required part of planning applications within the areas covered by nine of the Greater Manchester local authorities. The focus we have placed on understanding our own NZC Pathway, and developing the supporting detailed assessment methodology, stands us in good stead to present for approval ourselves developments that are strongly aligned with planning objectives.

ESG is firmly embedded in all aspects of our business: every decision we make has regard to its ESG implications and its support of our NZC commitment. In an area of complex, and sometimes conflicting, reporting requirements we now understand what we are going to report, and how to deliver the related reporting obligations. Our NZC Pathway is well-defined, and its components measured and independently verified. ESG is, therefore, mainstream for our business and as such we have decided that its oversight and related decisions should move to being considerations of the main Board in which all Directors participate, rather than scrutinised by a separate committee. The oversight of ESG reporting, itself now being embedded into international accounting standards, will become the responsibility of our Audit Committee.

I have two particular thank yous - to Steven Underwood who retired at the end of last year as our longest serving non-executive director, having first joined the board in August 2010. With his in-depth insight into real estate development in the North of England, as Chief Executive of the Peel Group, he has made a great contribution to Board decision-making and will be much missed. We shall, however, not lose touch given Peel's position as our second largest shareholder. We are actively seeking to appoint a new Non-Executive Director with similar experience and capability within the real estate sector. I would also express our appreciation of the contribution Ruth Cooke has made since she joined as a Non-Executive Director in March 2019. As we have developed our mixed tenure Residential proposition her experience and insight as Chief Executive of one of the largest housing associations has been of great value. She will be retiring from the Board at this year's Annual General Meeting.

More generally, my grateful thanks go to all those within Harworth, and to our partners, advisers, suppliers and contractors, who have contributed to our continuing successful growth and increase in value. A business is like a jigsaw - it cannot achieve its objective unless every element is in place and achieving its purpose: every individual is critical to us and is valued by us.

Alastair Lyons

Chair

17 March 2025

Chief Executive's review

Our 2024 results translate into an impressive total account return of 9.1%, demonstrating our ability to deliver in challenging markets and showcasing the agility and resilience of our through-the-cycle business model. I could not have asked more of our teams in achieving sector-leading results ahead of the MSCI All Property Index, whilst maintaining significant financial liquidity and a low year end LTV of just 5.4%. 2024 saw us deliver a record level of land sales, undertake selective strategic acquisitions, and progress our lettings ahead of estimated rental values. This translated to significant growth in value through both valuation gains and profits on sales. We offer a unique combination: an extensive land bank that is proving strategically significant to the UK's infrastructure needs for both Residential and Industrial & Logistics, coupled with our specialist skillset to uncover new market opportunities, invest in our developments, and unlock material underlying value as we continue to move our sites through the planning system, positioning us well as we move into 2025.

Operational performance

Our ambitions to grow EPRA NDV to £1bn by the end of 2027 and our core Investment Portfolio to £0.9bn by the end of 2029 are underpinned by a clear road map and the significant progress we have made since launching our strategy in 2021. We remain confident in achieving our goals by accelerating the delivery of our sites whilst achieving our NZC ambitions, drawing on our highly specialist expertise to work through our extensive strategic land bank. The table below shows our progress to date against our four key growth drivers.

(1) Targets announced 2021. FY20 used as baseline.

(2) Annual average 2015 to 2020.

(3) EPRA NDV at 31 December 2020.

(4) Target announced H2 2024. FY23 used as baseline.

We are making significant progress repositioning our core Investment Portfolio to modern Grade A specification. It now stands at 45% Grade A, compared to 11% in 2021, when we announced our ambition. This was driven by significant sales, where we had already maximised value through asset management or re-development initiatives, as well as through our development and letting of new space, and the selective acquisition of the Catalyst urban logistics estate in Rotherham. We are confident in our ability to reach our 100% Grade A target, underpinned by the combination of our direct developments, and further selective acquisitions alongside our sales programme.

We completed a record 2,385 Residential plot sales during the year, across 13 transactions, demonstrating the depth of demand for our de-risked serviced land product, and the strong relationships cultivated by our teams with housebuilders, Build-to-Rent developers and housing associations. Residential sales were completed at a headline sales value of £104.1m, at prices that were broadly in line with or ahead of HY24 book values before transaction costs. The average plot sales since setting our 2021 target sit at 1,800, positioning us well to hit our 2,000 average plot sales by 2027.

Our Industrial & Logistics Major Developments portfolio consists of 12 sites at various stages of development, from early enabling works to near-complete Grade A units. We developed 107,000 sq. ft of modern Grade A Industrial & Logistics space in 2024, of which 73,000 sq. ft went into our core Investment Portfolio and the remainder was built for an owner occupier. We started on a further 270,000 sq. ft in the period, with one-third of this space already pre-let. In order to achieve our aim of an 800,000 sq. ft run-rate of completions by 2027, we need to scale up our enabling works to at least three times this level on an annual basis. Our programme to 2027 is back-end weighted and at year-end enabling works were underway for 1.0m sq. ft of development at Wingates (Bolton).

Our strategic land bank is fundamental to our business model and scaling up our land bank through acquisitions and promotions is one of our key skillsets to maintain a land supply of 12 to 15 years. During the year, we made land acquisitions representing 1.0m sq. ft of potential Industrial & Logistics space and a further 4,404 Residential plots.

Our markets

We focus on Industrial & Logistics and Residential, two structurally undersupplied sectors fundamental to delivering growth to the UK economy and requiring key infrastructure delivery to ensure their success. Both are a priority for this government and set to benefit from recent government policy objectives. In December 2024, the UK government announced its planning overhaul via the National Planning Policy Framework to accelerate housebuilding and deliver 1.5m new homes before the next General Election. More recently, the Prime Minister announced his blueprint to turbocharge Artificial Intelligence ('AI'), in which data centres and the delivery of key infrastructure will play a critical part. Our Industrial & Logistics portfolio is well placed to contribute to this rollout.

Industrial & Logistics

Demand continues to be driven by structural factors, including growth of online retail, cloud computing, the dramatic proliferation of AI, and the increased infrastructure requirements that come with all three. Take-up for Grade A industrial and logistics space of 100,000 sq. ft units and larger was up 6% in 2024, to 22.6m sq. ft, outperforming the pre-pandemic average of 21.2m sq. ft, according to Jones Lang LaSalle (JLL). Three-quarters of this total take-up was of new, rather than second-hand, space, indicating significant business focus on new facilities. A fall in the level of build-to-suit space was more than offset by an increased level of speculative take-up of 7.4m sq. ft, which compares to average pre-pandemic speculative take-up levels of 4.5m sq. ft.

Despite occupiers remaining active, the market is not seeing a corresponding impact on net absorption and overall vacancy as occupier demand is being driven by more strategic reasons than business growth alone, which is resulting in deals taking longer to complete and older space coming back into the market. Notwithstanding, H1 2025 requirements are forecast to be up year-on-year with a focus nationwide on units of 100,000-200,000 sq. ft. According to JLL, 74% of 2024 take-up was within our regions and the Midlands made up the lion's share at 58%.

Prime yields were broadly stable across 2024, but the volatility in bond markets is expected to impact Q1 2025 transaction appetite, as investors and vendors wait to see how the market settles down. Investors and developers are increasingly focused on strategic acquisitions and developments that meet occupier needs and sustainability requirements and are best placed to benefit from rental growth. UK prime headline rents enjoyed 6% growth over 2024 and, while this is down year-on-year and materially below the pandemic peak of almost 18% in 2021, it is still above average pre-pandemic levels of 4.1%, based on JLL research.

Data centres

The UK data centre market is in a material growth phase, with more recent interest outside of London and the South East. While different commentators have varying projections of the state of the UK market and potential growth, consensus is clear that the market is set to experience a double-digit CAGR out to 2030, driven by growing adoption of multi-cloud computing and network upgrades required to support the roll out of 5G alongside the need for more data storage and transmission from ecommerce, digital content, social media and the Internet of Things. 

Currently, London is the largest data centre market in the EMEA and the second largest globally, with 1.14GW in operation, a 15% increase year-on-year, according to Cushman & Wakefield. Data from JLL shows that capacity in the London market is set to double, including 504MW in development and 677MW in planning, driven by growth in multi-tenant data centres, hyperscale data centres and edge computing, coupled with a focus on energy efficiency and eco-friendly solutions. Emerging regional markets and remote campuses sitting outside the established metro areas are also beginning to reshape the data centre landscape as the emergence of AI and cloud computing facilities are becoming increasingly location agnostic, driven by power availability and site deliverability. This is evidenced by our own land sale for data centre use in Leeds and other market transactions across the North West and North East. 

Limited availability of land and power, together with sustainability regulations, and their impact on cost and time to deliver, are the pressing issues for both operators and investors in the UK and globally. Since the start of 2024, Savills has tracked over 415 acres of UK land deals to data centre operators that were, in the main, previously promoted for industrial and logistics use. This has had the effect of removing, on average, close to one year's worth of potential industrial and logistics supply from the market. 

Support for the sector has been underpinned both by the UK government and significant private investment. Government initiatives to ensure the viability of the sector include investment to boost the grid capacity through new measures in the Planning and Infrastructure Bill, classifying data centres as critical national infrastructure, strengthening resilience and regulatory support. These were followed up by the launch of the AI Action Plan and associated planning reforms, to boost sectors that are critical to powering the economy and the long-term growth of the UK. Government actions have been significantly bolstered by private sector investments, including Microsoft's announcement that, in addition to its contracting to acquire 48 acres at our Skelton Grange (Leeds) site for a hyperscale data centre, it had acquired the former Eggborough power station in North Yorkshire to create a data centre campus; DC01UK's £3.75bn investment in Europe's largest data centre in Hertfordshire; Amazon Web Services' plans to invest £8bn building, operating and maintaining data centres in the UK; and Latos DC's plans to open 40 purpose-built data centres across the UK by 2030.

Residential

Residential volumes remained subdued in 2024, with the market in the early stages of recovery. Front and centre of government policy are bold ambitions to increase housing activity, delivering 1.5m new homes by the next General Election, with planning reform at the heart of supporting this and wider economic growth. It's fair to say that delivery against this target will be back-end loaded, with housebuilder volumes in 2024 still not recovering to 2022 levels and new government initiatives to drive up volumes being mobilised. 

Local housing targets have been reintroduced and the presumption in favour of development strengthened with government task forces formed to unlock the 'grey' belt. While planning reform is still expected to be a relatively protracted process, the shift to drive growth and develop new homes is a positive signal to the sector and, from a supply side perspective, positive also for strategic land. However, the returns for landowners need to remain attractive for land to come forward to meet the scale of what is proposed.

The ambition to build more affordable homes is no silver bullet, and while demand exists, the financial capacity of Housing Associations remains weak and viability remains an issue for developers where the mix is skewed to affordable tenures. Where investor markets are concerned, the stamp duty surcharge announced in the October Budget is likely to suppress the appetite of buy-to-let landlords and tip towards larger, wealthier and institutional landlords. 

With interest rates easing and, subject to global dynamics, showing signs of a further downward trajectory in 2025 this is positive for homebuyers, however rental reform through the Renters Rights Bill and residual building safety issues and regulation are weighing on parts of the sector. Savills forecasts house price growth of 20% to 25% over the next five years with 4% growth predicted for 2025. Rental values are forecast to increase by over 17% in the same period with 4% growth predicted for 2025. 

The Harworth Way

As a specialist regenerator and placemaker, a commitment to our communities, our people and our planet is at the heart of everything we do. Critical to this is having a lasting positive impact on the communities we serve, supporting new homes, jobs and infrastructure. The Harworth Way is our framework for ensuring this happens.

During the year we published our first NZC Progress Report, providing an update on progress, challenges, and opportunities in meeting our NZC Pathway. Against our 2030 Commitment to be NZC for our business operations, operational emissions reduced by 17% in the year and by 33% since 2022, through the continued use of alternative fuels in our site preparation works, the increased use of electric vehicles, and the transition of our core Investment Portfolio to Grade A. In collaboration with the Forestry Commission, we completed a woodland planting scheme of 108,000 trees at Chevington North (Northumberland), whilst also commencing further planting of more than 150,000 trees at Highthorn (Northumberland).

In April 2024 we published our Communities Framework, which explains our approach to delivering social value throughout the regeneration process and the developments we create. During 2024 we developed our processes to allow the Framework to be incorporated into our Gascoigne Wood (Selby) scheme, which received resolution to grant planning permission for 1.5m sq. ft of Industrial & Logistics space, and we will continue to roll out the Framework throughout the business in 2025.

It has been another very active year in delivering for our communities with a wide range of community events and local club sponsorship, from fun runs to food festivals and community planting. We completed the construction of the new forest school at Coalville (Leicester), providing 420 new primary school places in an energy efficient, modular building, integrated into the new community. At Thoresby Vale a wonderful opening event marked the completion of the country park providing more than 100 acres of restored heathland, home to unique wildlife, alongside 4.2km of active travel infrastructure all set within the growing residential community.

Over 2024, we once again commissioned Ekosgen, an independent economic research consultancy, to appraise the social and economic benefits of the regeneration and developments we have delivered and plan to deliver, and it found that our portfolio has the potential to deliver £4.3bn of GVA, support up to 66,800 jobs and generate up to £72.5m in business rates, underscoring the huge potential of our activities to benefit society.

Our people 

The long-term sustained growth and prosperity of Harworth can only be delivered by providing an environment which cultivates a high-performance culture. Our high talent retention, engagement, and happiness rates reflect the growing effectiveness of our people strategies, which are consciously designed to enable people to do their best work for the benefit of all our stakeholders, including investors.

We continuously review and enhance our Total Reward package to ensure it meets the evolving needs of a diverse workforce and remains attractive in a continuously challenging skills and talent market. Our diversity picture is one of steady progress and in the context of our sector a very encouraging one and an important indicator within our recently developed Culture Dashboard. In 2024 our Culture programme delivered several important milestones, such as our new corporate values and behaviours framework and the inclusion of cultural indicators within our recently launched Enabling Excellence Framework.

Looking ahead, we are excited about the prospect of securing an Investors In People accreditation this year and delivering further important milestones such as the next generation of our Learning & Development Programme and further enhancing the productivity of our people and efficiency in process through our Digital Transformation agenda.

Outlook

Harworth is a long-term through-the-cycle business. Regeneration of large, complex sites that may take a decade or more to move from inception to completion, underpinned by our significant land bank and proven skillset in being able to unlock value through our management actions, is what sets Harworth apart. Since 2021, when we stepped into our strategy, we have not only been focused on growing our business and accelerating delivery across our sites, but have invested in our planning teams to progress more applications through the system, our development teams to ramp up delivery, and our acquisitions teams to build our land bank.

For the Industrial & Logistics market, the structural drivers of demand remain particularly strong, with increased infrastructure needs from online retail, cloud computing and AI, and a relatively constrained supply of suitable sites and power capacity in our regions. Our portfolio can contribute solutions to these infrastructure gaps. That said, given short-term economic uncertainties in the year ahead, we will continue to de-risk our development by focusing on pre-let and build-to-suit opportunities and land parcel sales. For Residential, while affordability challenges remain for house buyers, our increasingly diversified range of Residential products alongside constrained supply of development-ready land, improves our confidence that our consented, de-risked serviced land will continue to appeal strongly to a wide range of housebuilders, developers and social housing participants, providing us with exposure to markets that continue to grow regardless of the cycle. 

As we move into the second half of our delivery strategy, we have an 8.4m sq. ft consented Industrial & Logistics pipeline that is capable of delivering c.£0.6bn of Gross Development Value ('GDV') by the end of 2027. We continue to explore other use classes, including the development of data centres and energy assets on our Industrial & Logistics sites and senior living opportunities on our Residential sites. Together these factors will ensure we realise the full potential of our 33.6m sq. ft Industrial & Logistics portfolio, which has an estimated GDV of c.£5bn, and our 31,264 plot Residential pipeline, while delivering for our people, our planet and our communities. 

Whilst we remain cautious about the near-term macro-economic outlook, I continue to be excited about our prospects as a business and the significant growth and embedded value across our portfolio, including our ability to reach £1bn of EPRA NDV by the end of 2027 and grow our core Investment Portfolio to £0.9bn by the end of 2029.

I would like to say a huge thank you to my colleagues across the business, who work tirelessly to deliver on the ambition of our strategy and have achieved a strong year of progress, and to our investors who have continued to support what we do. Our significant financial performance and operational progress illustrate the dedication, determination, skills, and teamwork that make us proudly Harworth.

Lynda Shillaw

Chief Executive

17 March 2025

Operational review

Portfolio key

Our portfolio sits across three regions: Yorkshire & Central ('YAC'), Midlands ('MID') and the North West ('NOW') with a focus on two sectors: Industrial & Logistics ('I&L') and Residential ('R'). Within I&L, we have three portfolios, Investment Portfolio ('IP'), Strategic Land ('SL') and Major Developments ('MD') and within R, the focus is SL and MD.

Industrial & Logistics land portfolio 

At year end, the I&L pipeline totalled 33.6 m sq. ft (2023: 37.7m sq. ft) comprising a consented pipeline of 8.4m sq. ft (2023: 6.1m sq. ft) and a further 4.8m sq. ft in the planning system awaiting determination (2023: 10.1m sq. ft). The pipeline was 50% owned freehold by the Group, with the remainder controlled through joint venture arrangements, options or Planning Promotion Agreements ('PPAs') (2023: 57% / 43%).

Land assembly

· Wingates (Bolton) NOW | I&L | MD / SL: freehold acquisition adding 392,000 sq. ft to our existing development site, of which 1.0m sq. ft is consented for logistics and manufacturing space and 1.9m sq. ft has an allocation for commercial use under Greater Manchester's Places for Everyone. This increases the area under our control to 2.9m sq. ft, of which 86% is under freehold ownership and 14% held via options agreements. We are also creating more green space for residents and a new landscaped buffer to screen the road and move traffic away from nearby homes by working to realign a short section of the A6 Chorley Road and provide improved and dedicated access to the site.

· Gateway 36 (Barnsley) YAC | I&L | IP / SL: Strategic Land capable of delivering 546,000 sq. ft was acquired under an option agreement, which brings the development land under our control for future development to 1.1m sq. ft. With 110,000 sq. ft already built, and in the IP, this option extends our pipeline and adds to our potential GDV on delivery.

Planning

· Planning approvals were secured for 6.8m sq. ft of I&L space across four sites, bringing total consents to 8.4m sq. ft. Allocations were received for 3.5m sq. ft (total allocated now 4.9m sq. ft) and draft allocations for 0.7m sq. ft (total benefiting from draft allocation now 2.9m sq. ft) as sites continue to move through the planning system.

· Applications totalling 4.8m sq. ft are in the planning system awaiting determination, including two significant planning applications across MID for 1.8m sq. ft and YAC for 2.9m sq. ft.

Direct development

· During the year, we completed 107,000 sq. ft at the AMP (Rotherham) YAC | I&L | IP, of which 73,000 sq. ft was let to Insight, the solutions and systems integrator, and retained as part of our core IP and the remaining 34,000 sq. ft was built on behalf of an owner-occupier.

· At 31 December 2024, we were on site with 270,000 sq. ft. of direct development, 34% of which is pre-let. A further 386,000 sq. ft of I&L space is expected to commence during the next 12 months, all of which is expected to be retained within the core IP. The units will all be delivered to Harworth's sustainable commercial building specification, targeting EPC A and BREEAM Excellent, with whole life carbon assessments and renewable energy provisions incorporated into the design. 

· Enabling works are a critical component of our pipeline to reach our direct development targets. During the year, we completed a significant level of works, enabling future delivery of up to 1.3m sq. ft of I&L space. A further 1.8m sq. ft of enabling works were underway at the year-end.

Land sales

Sales completed in 2024 included:

· Skelton Grange (Leeds) YAC | I&L | MD, where we completed the sale of 27 acres of unserviced land to Microsoft, alongside a development agreement, and conditionally exchanged on a further 21 acres, for a total consideration of £106.6m, of which £53m is set to be received in H1 2026 upon completion. The transaction is expected to generate an IRR above 40%, with further potential from the delivery of the 16 acres of 'Retained Land'.

· Ansty (Rugby) MID | I&L | SL, where we sold 278 acres for £53.5m, reflecting a premium to June 2024 book value.

Key Industrial & Logistics development sites

(1) Ownership includes FH: Freehold, PPA: Planning Promotion Agreement, JV: Joint venture and O: Option Site type includes Strategic Land, SL and Major Developments, MD.

(2) Harworth's share of a Joint Venture, adjacent to the M62 and close to the M66, Northern Gateway is the core site of the Atom Valley Mayoral Development Zone, comprising a mix of freehold and optioned land.

Investment Portfolio 

The I&L IP comprises assets we have acquired and, increasingly, directly developed and retained. It generates recurring rental income, with the potential for capital value growth via active asset management.

Acquisition

· Catalyst (Rotherham) YAC | I&L | IP: newly developed Grade A urban logistics estate acquired for £43.7m in October 2024, reflecting a net initial yield of 5.4%. This prime 285,000 sq. ft scheme was completed in 2023 and is located adjacent to the AMP, where we expect to benefit from strong occupier demand to fill up the existing 28,000 sq. ft vacancy. Once fully let, the scheme will generate £2.5m of headline rental income. 

Lettings

· During the year, 146,000 sq. ft of leasing deals were completed, with total leasing activity adding a net £1.3m of headline rental income (2023: 462,000 sq. ft, adding £2.1m). New lettings, renewals and reviews were completed at an average 4.3% premium to ERVs.

At year end, the IP was valued at £297.2m, up 34% on the prior year, and with a target to grow to £0.9bn by year-end 2029, a required CAGR of 25% over the next five years. The portfolio comprised 12 sites covering 2.8m sq. ft. It generated £17.5m of headline rental income and had a passing rental income of £15.8m. This equates to a net initial yield of 4.8%. The portfolio comprised of 45% Grade A space. Our target is to transform it to 100% Grade A by year-end 2027.

Industrial & Logistics Investment Portfolio

(1) Percentage points

(2) Calculated on occupied space

(3) Estimated rental values

(4) Weighted average unexpired lease term

(5) European Public Real Estate Association vacancy

Investment Portfolio sites

Residential portfolio 

The Residential pipeline totalled 31,264 plots at year end (2023: 27,190 plots) comprising a consented pipeline of 4,568 plots (2023: 5,296 plots) and a further 2,136 plots in the planning system awaiting determination (2023: 1,774 plots). Development continues to progress on the first mixed tenure sites sold by way of forward funding agreements. The pipeline was 41% owned freehold by Group, with the remainder controlled through joint venture arrangements, options or PPAs (2023: 49% / 51%).

Acquisition & land assembly

· Stewartby (Bedford) MID | R | MD: we acquired this iconic former brickworks site in Bedfordshire for total consideration of £30.6m payable over 2 years. This is a near-term opportunity which has outline planning permission for the delivery of 1,000 plots, offering the ability to create value and generate cash to fund the broader direct development programme.   

· Grimsby West (Grimsby) YAC | R | SL: we entered into a uniquely structured joint venture for Harworth where, once planning permission is secured, we will hold a c.75% profit share in the scheme which has the capacity to deliver 3,979 Residential plots. The site is allocated and planning progress continues, we expect the first parcels will be available for sale in 2027 with development continuing through to 2046.

· Staveley (Chesterfield) YAC | R | SL: we acquired an additional freehold parcel at our existing site, which is expected to deliver up to 360 plots, taking the total plots in our control to 950.

Planning

· Hale Gate Road (Widnes) NOW | R | PPA: planning approval was secured for 500 Residential plots under a PPA and separately, an allocation was received for 1,200 homes on another site in the North West.

· Diseworth West (East Midlands Airport) MID | R | SL / PPA: a draft allocation was secured for a mixed use development comprising 2,275 Residential plots and 0.7m sq. ft of I&L space.

At year-end, 2,136 plots across five sites continue to progress through the planning system awaiting determination. Planning consent was received at Cadley Park YAC | R | PPA for 150 plots post year-end.

Key Residential development sites

(1) Ownership includes FH: Freehold, PPA: Planning Promotion Agreement, JV: Joint venture and O: Option. Site type includes Strategic Land, SL and Major Developments, MD.

Land sales

Record sales of 2,385 Residential plots were completed at a headline sales value of £104.1m (broadly in line with or ahead of HY24 book values before transaction costs). Sales were made to national and regional housebuilders and registered social affordable housing providers, including our third forward funded development agreement with Great Places, validating the robust demand for our de-risked Residential service land across different tenures.

Natural Resources portfolio 

The Natural Resources portfolio is comprised of sites used for a wide range of energy production, including wind and solar energy production, battery storage, and reforestation schemes, delivered as part of our Energy & Natural Capital strategy. The aim is to grow this portfolio, alongside strategic partners where appropriate, through developing renewable energy generation solutions and other sustainability initiatives such as battery storage, solar, EV charging, multi-fuel hubs and reforestation/rewilding. The strategy has a wider focus on embedding these energy concepts and future-proofing principles across all of Harworth's sites to maximise energy availability and resilience, create economic value, and help fulfil the Group's NZC ambitions.

At the year-end, the Natural Resources portfolio had a value of £21.5m (2023: £21.6m) and headline rental income of £2.1m (2023: £1.8m).

Financial review

Overview 

Our primary metric, Total Accounting Return, for 2024 was 9.1%, representing an increase from 5.1% in 2023. This Total Accounting Return reflected positive contributions from all areas of the Group, with management actions delivering value through planning success, and progressing infrastructure and direct development, along with completing the landmark sales at Skelton Grange and Ansty. These actions, alongside completions of direct development, securing sales, and asset management initiatives across our Investment Portfolio, resulted in EPRA NDV per share increasing by 8.4% to 222.3p (2023: 205.1p). Our 2024 performance reflected strong operational delivery while continuing to progress against our strategic objectives. Looking forward, the structural undersupply within our chosen markets continues to provide a strong foundation for the Group's future growth.

Sales of serviced land and property, in addition to income from rent, royalties and fees, resulted in Group revenue of £181.6m (2023: £72.4m). The increase in the year reflected £47.9m of revenues recognised from the successful phase 1 sale at Skelton Grange to Microsoft. Revenue from the sale of Residential serviced land also increased during the year to £92.2m (2023: £38.0m), reflecting strong demand for the Group's de-risked land products. Lower rental income during the year reflected the timing of Investment Portfolio asset sales during 2023 and the early part of 2024 offset by rental revenue from letting completed directly developed assets, and the acquisition of Catalyst during October 2024. Total property sales, which included proceeds from the sales of investment properties, assets held for sale ('AHFS') and overages, amounted to £215.8m (2023: £125.9m), reflecting both the increased development property sales and the sale of the Ansty Strategic Land site for £53.5m. Rental income collection has been consistently strong and like-for-like income increased through management actions, including lettings of completed direct developments at the Advanced Manufacturing Park (Rotherham) and rent reviews. The £181.6m of revenue also included PPA and development revenue totalling £19.3m (2023: £1.7m), with the increase year-on-year being driven by completion of a UK head office for a customer at the Advanced Manufacturing Park, Rotherham, as well as development for Microsoft at Skelton Grange. In 2025, we have already completed headline sales of £10.4m and remain confident in our ability to achieve the 2025 budgeted sales targets.

The Investment Portfolio increased to £297.2m at the end of 2024 (2023: £221.4m) reflecting the impact of increased valuations driven by management actions, market rental growth, and the £43.7m acquisition of Catalyst, a 285,000 sq. ft, Grade A, urban logistics estate in Rotherham, South Yorkshire adjacent to the Group's established Advanced Manufacturing Park. The Group is targeting a core Investment Portfolio of approximately £0.9bn by the end of 2029, through a combination of retained developments and selective acquisitions with the target of this becoming 100% Grade A by the end of 2027.

BNP Paribas, Jones Lang LaSalle and Savills, our independent valuers, completed a full valuation of our portfolio as at 31 December 2024, resulting in full-year revaluation gains of £86.0m (2023: gains of £64.9m), including the movement in the market value of development properties. These external independent valuations have regard to conditions in the residential and industrial and logistics markets as well as the positive factors resulting from management actions at our sites. Outside the valuation movements, profits on sales were £11.2m (2023: losses of £6.8m). Overall, this led to total value gains of £97.2m (2023: £58.1m gains).

The fair value of investment properties increased by £60.8m (2023: £71.4m increase), which fed through to an underlying operating profit of £74.6m (2023: £54.2m) and profit after tax of £57.2m (2023: £38.0m).

Over the year, the net asset value of the Group grew by 8.5% to £691.7m (31 December 2023: £637.7m). With EPRA adjustments for development property valuations included, EPRA NDV at 31 December 2024 increased by 8.5% to £719.5m (31 December 2023: £662.9m) representing a per share increase of 8.4% to 222.3p (31 December 2023: 205.1p).

The Group remains well capitalised and, at 31 December 2024, had available liquidity of £192.4m (31 December 2023: £192.2m). Net debt was £46.7m (31 December 2023: £36.4m) resulting in an LTV at 31 December 2024 of 5.4% (31 December 2023: 4.7%). Following the repayment of development loans, none of the Group's drawn debt was subject to fixed rates (31 December 2023: 35%).

Presentation of financial information  

As our property portfolio includes development properties and joint venture arrangements, Alternative Performance Measures ('APMs') can provide valuable insight into our business alongside statutory measures. In particular, revaluation gains on development properties are not recognised in the Consolidated Income Statement and the Balance Sheet. The APMs outlined below measure movements in development property revaluations, overages and joint ventures. We believe that these APMs assist in providing stakeholders with additional useful disclosure on the underlying trends, performance and position of the Group.

Our key APMs are:

· Total Accounting Return: the movement in EPRA NDV plus dividends per share paid in the year expressed as a percentage of opening EPRA NDV per share.

· EPRA NDV per share: EPRA NDV aims to represent shareholder value under an orderly sale of the business, where deferred tax, financial instruments and certain other adjustments are calculated to the full extent of their liability net of any resulting tax. EPRA NDV per share is EPRA NDV divided by the number of shares in issue at the end of the period (less shares held by the Employee Benefit Trust or Equiniti Share Plan Trustees Limited to satisfy Restricted Share Plan, Share Incentive Plan and Deferred Share Bonus awards).

· Value gains: the realised profits from the sale of properties and unrealised profits from property valuation movements including joint ventures, and the mark-to-market movement on development properties and overages.

· Net LTV: Group debt net of cash held expressed as a percentage of portfolio value.

A full description of all non-statutory measures is set out in the appendix to the financial statements and reconciliations between all statutory and non-statutory measures are provided in the appendix to the consolidated financial statements. From 2025 the Group plans to report on an additional APM, Total Property Return, calculated in line with the MSCI Property Index Methodology. This will provide increased information to shareholders on the Group's relative performance and support the implementation of relative operational performance measures for the short-term and long-term incentive schemes under the revised Remuneration Policy.

Our financial reporting is aligned to our business units of Capital Growth and Income Generation, with any items that are not directly allocated to specific business activities held centrally and presented separately.

Income Statement 

 Note: There are minor differences on some totals due to roundings.

Revenue in the year was £181.6m (2023: £72.4m), of which Capital Growth contributed £160.1m (2023: £49.0m) and Income Generation contributed £21.5m (2023: £23.4m).

Capital Growth revenue, which primarily relates to the sale of development properties, increased by £111.1m as a result of higher sales of Residential serviced land, as well as the completion of the phase 1 sale at Skelton Grange to Microsoft for which revenue of £47.9m was recognised during the year. Capital Growth revenue also includes fees from PPAs and development management revenue.

Revenue from Income Generation mainly comprised property rental and royalty income from the Investment Portfolio, Natural Resources and Agricultural Land. Revenue of £21.5m (2023: £23.4m) was lower than last year reflecting the 2023 sale of investment properties and the successful sale of a site at Flaxby in early 2024, offset by income from our Catalyst Grade A urban logistics site, acquired in October 2024. Like-for-like headline rent from the Investment Portfolio increased by 4.9% during 2024 following new lettings, lease re-gears and rent reviews on our existing assets. Taking into account the acquisition of the Catalyst Grade A urban logistics site and the letting of assets that practically completed during the year, the total headline rental income for the Investment Portfolio increased by 24% to £17.5m at the year-end, (2023: £14.1m). Cost of sales comprises the inventory cost of development property sales, costs incurred in undertaking build-to-suit development and both the direct and recoverable service charge costs of the Income Generation business. Cost of sales increased to £150.5m (2023: £60.1m), of which £132.0m related to the inventory cost of development property sales (2023: £47.3m). In the year, we saw a decrease in the net realisable value provision on development properties of £5.7m (2023: £4.4m increase) following the valuation process as at 31 December 2024.

Administrative expenses increased in the year by £5.8m (2023: £5.3m increase). This was due to higher salary expenses, resulting from increased employee numbers recruited to deliver future value creation as we step into the next phase of the strategy, higher bonus costs incurred reflecting the strong performance, coupled with inflationary cost pressures, IT spend increasing automation, and costs incurred as part of progressing strategic objectives.

The strong EPRA NDV growth shows the actions of the teams creating value as they work on sites and progress transactions to a conclusion. Administrative expenses expressed as a percentage of operating profit excluding administrative expenses was lower than the previous year at 31% (2023: 34%).

Other gains comprised a £60.4m net increase (2023: £71.1m net increase) in the fair value of investment properties and assets held for sale ('AHFS') combined with the profit on sale of investment properties, AHFS and overages of £17.7m (2023: £1.7m loss), driven primarily by the sale of the Ansty Strategic Land site following receipt of planning permission during the year.

Other operating expense includes a settlement loss incurred following the Group entering a trustee agreed Buy-In Agreement with respect to the Blenkinsopp Pension scheme during the year. The agreement secures all remaining liabilities in the scheme by way of an insurance contract. The costs of £1.4m represent a settlement loss preceding buyout arrangement and as such are expensed through the Income Statement.

Joint venture profits of £1.5m (2023: £1.6m profits) were the result of net rental income and valuation gains at Multiply Logistics North, offset by a small reduction in value of the Aire Valley Land joint venture increasing costs of development. Value gains/(losses) on a non-statutory basis are outlined below.

Non-statutory value gains/(losses) 

Value gains/(losses) are made up of profit on sale, revaluation gains/(losses) on investment properties (including joint ventures), and revaluation gains/(losses) on development properties, AHFS and overages. A full description and reconciliation between statutory and non-statutory value gains can be found in Note 2 and the appendix to the consolidated financial statements.

Notes: There are some minor differences on some totals due to roundings. Profit/(loss) on sale is stated net of the impact of transaction fees incurred.

Profit on sale of £11.2m (2023: £6.8m loss) reflected the impact of the sale of the Ansty Industrial & Logistics Strategic Land site alongside wider sales reflecting pricing broadly in line with book value before transaction costs, the impact of discounting deferred consideration at present value, and retentions not recognised on completion. Revaluation gains were £86.0m (2023: £64.9m gains) and are outlined in the table below.

 Note: There are minor differences on some totals due to roundings

The principal revaluation gains and losses across the divisions reflected the following:

· Industrial & Logistics:

· Across Major Developments and Strategic Land, there were value gains relating to planning progress, including at Gascoigne Wood and Ansty, as well as progressing the sale of land for data centre use at Skelton Grange through the agreement with Microsoft.

· The industrial and logistics market continued to benefit from rental growth supporting our Industrial & Logistics Major Development sites, Strategic Land sites and the Investment Portfolio alongside the impact of management actions.

· Regional investment yields remained stable between December 2023 and December 2024, according to JLL. Value gains were primarily driven by management actions, particularly from renewals and rent reviews, securing new leases, and providing renewable energy to tenants, combined with incentive period completions.

· Residential:

· Masterplan optimisation at our Residential Major Development sites drove value gains, through our responding flexibly to increasing local housing needs and reducing future costs by working with stakeholders and re-engineering development solutions.

· Strategic Land gains included the impact of sites progressing through the planning system as well as re-allocating land to Residential where changes in local markets could drive greater value through acceleration.

· Residential land sales on our Major Development sites at good pricing levels demonstrated the demand for our serviced land product underpinning valuations.

· The residential market saw house prices increase by 4.7% over the year; however, new house completions remained low and significantly below the UK government target of 300,000 a year. Despite this the demand for short term and serviced land continued to be strong across Harworth sites supporting both sales and underpinning valuations.

· Natural Resources: valuations remained broadly stable with valuation increases resulting principally from higher royalties from wind assets.

· Agricultural Land and Other experienced a small valuation decrease during the year.

The net realisable value provision on development properties as at 31 December 2024 was £8.5m (31 December 2023: £14.1m). This provision is held to reduce the value of seven (31 December 2023: nine) development properties from their deemed cost (the fair value at which they were transferred from an investment to a development categorisation) to their net realisable value at 31 December 2024. The transfer from investment to development property takes place once planning is secured and development with a view to sale has commenced.

Cash and sales 

Group revenue from property sales in the year of £215.8m (2023: £125.9m), resulted in an overall profit on sale of £11.2m (2023: loss £6.8m). Revenue from sales comprised Residential plot sales of £97.2m (2023: £44.1m), Industrial & Logistics land sales of £101.0m (2023: £11.5m), sales of Investment Portfolio properties of £13.3m (2023: £70.0m) and receipt of overages of £4.3m (2023: £0.3m).

Cash proceeds from sales in the year were £172.3m (2023: £132.0m) as shown in the table below:

The increase in Residential headline sales to £104.1m (2023: £52.1m) resulted in higher levels of deferred consideration. Where deferred payment terms are agreed to, security is maintained to mitigate credit risk.

Tax 

The income statement charge for taxation for the year was £12.2m (2023: £11.9m), which comprised a current year tax charge of £6.0m (2023: £5.8m) and a deferred tax charge of £6.1m (2023: £6.0m).

The current tax charge resulted primarily from profits from the sale of development properties, investment property, AHFS, profit on the rental of investment property, royalties and other fees after taking into account overheads and interest costs. The increase in deferred tax largely relates to unrealised gains on investment properties. The deferred tax balance has been calculated based on the rate expected to apply on the date the liability is crystallised.

At 31 December 2024, the Group had deferred tax liabilities of £37.4m (31 December 2023: £30.6m) and deferred tax assets of £1.5m (31 December 2023: £0.5m). The net deferred tax liability was £35.9m (31 December 2023: £30.1m).

Basic earnings per share and dividends 

Basic earnings per share for the year increased to 17.7p (2023: 11.8p) reflecting the increase in the valuation of investment properties in 2024, increased profits from sales during the year, coupled with reduced rental income following the successful sale of investment property during 2023 and early 2024.

In addition to the interim dividend of 0.489p, the Board has declared a final dividend of 1.125p (2023: 1.022p) per share, bringing the total dividend for the year to 1.614p (2023: 1.466p) per share. The recommended 2024 final dividend and 2024 total dividend represent a 10% increase in line with our dividend policy.

Property categorisation 

Until sites receive planning permission and their future use has been determined, our view is that the land is held for a currently undetermined future use and should, therefore, be held as investment property. We categorise properties and land that have received planning permission, and where development with a view to sale has commenced, as development properties.

The table below sets out our top 10 sites by value, which represent 54% of our total portfolio, split according to their categorisation, including currently consented Residential plots and commercial space:

Top 10 sites by value

As at 31 December 2024, the balance sheet value of our development properties was £190.9m (2023: £250.0m) and their independent valuation by BNP Paribas was £221.9m, reflecting a £31.0m cumulative uplift in value since they were classified as development properties. In order to highlight the market value of development properties, and overages, and to be consistent with how we state our investment properties, we use EPRA NDV, which includes the market value of development properties and overages less notional deferred tax, as our primary net assets metric.

Net asset value 

(1) Properties include investment properties, development properties, AHFS, occupied properties and investment in joint ventures.  

EPRA NDV at 31 December 2024 was £719.5m (31 December 2023: £662.9m), which includes the mark to market adjustment on the value of the development properties and overages. The total Portfolio Value at 31 December 2024 was £858.8m, an increase of £90.6m from 31 December 2023 (£768.2m). The Group's share of gains from joint ventures of £1.5m (2023: £1.6m), alongside net investment, resulted in investments in joint ventures increasing to £33.6m (31 December 2023: £30.7m). Trade and other receivables include deferred consideration on sales as set out previously. At 31 December 2024, deferred consideration of £72.9m (31 December 2023: £28.1m) was outstanding, of which 61.0% is due within one year, with the increase driven by the higher level of Residential land sales completed during 2024; where deferred payment terms are agreed, the Group maintains security in order to mitigate credit risk.

Financing strategy 

Harworth's financing strategy remains to be prudently geared. The Income Generation portfolio provides a recurring income source to service debt facilities and this is supplemented by proceeds from sales. The Group has an established sales track record that has been built up since re-listing in 2015, with 2024 reflecting a substantial increase in total property sales compared with 2023.

To deliver its strategic plan, the Group has adopted a target LTV at year-end of below 20%, with a maximum of 25% in-year. As a principle, the Group seeks to maintain its cash flows in balance by funding the majority of infrastructure expenditure through disposal proceeds, while allowing for growth in the portfolio.

Debt facilities 

The accordion option within the RCF was exercised during 2024, increasing the total RCF to £240m. The RCF is provided by NatWest, Santander and HSBC and is aligned to the Group's strategy, providing significant liquidity and flexibility to enable us to pursue our strategic objectives. The interest rate on the RCF is based on an LTV ratchet mechanism with a margin payable above SONIA in the range of 2.25% to 2.50%. The Group has no refinancing requirements until 2027.

As part of its funding structure, the Group also uses infrastructure financing provided by public bodies and site-specific direct development loans to promote the development of major sites and bring forward the development of Industrial & Logistics units.

The Group had borrowings and loans of £164.1m at 31 December 2024 (2023: £63.6m), being the RCF drawn balance (net of capitalised loan fees) of £164.1m (2023: £33.8m) and infrastructure or direct development loans (net of capitalised loan fees) of £nil (2023: £29.7m). The Group's cash balances at 31 December 2024 were £117.4m (2023: £27.2m) reflecting sales proceeds received in late December 2024. The resulting net debt was £46.7m (2023: £36.4m).

Net debt increased with property expenditure and acquisitions mainly offset by the completion of serviced land and property sales. The movements in net debt over the year are shown below:

The Group's hedging strategy to manage its exposure to interest rate risk is to hedge the lower of around half its average debt during the year or its net debt balance at year-end. Following the repayment of the infrastructure financing outside the RCF during the year, at 31 December 2024, none of the Group's drawn debt was subject to fixed rate interest rates (31 December 2023: 35%), with no hedging instruments in place on the floating rate debt. Projected drawn debt and hedging requirements remain under active review with any new hedging to be aligned to future net debt requirements.

Due to the timing of sales towards the end of December 2024, the Group held a higher year end cash balance of £117.4m (31 December 2023: £27.2m) of which £90.0m was used to repay RCF debt in the first week of January 2025. This higher cash and gross debt balance impacted the gross debt ratios at 31 December 2024. As at 31 December 2024, the Group's gross LTV was 19.1% (31 December 2023: 8.3%) and its net LTV was 5.4% (31 December 2023: 4.7%). If gearing is assessed against the value of the core income generation portfolio (the Investment Portfolio and Natural Resources portfolio) only, this equates to a net loan to core income generation portfolio value of 15.7% (31 December 2023: 15.9%). Under the RCF, the Group could withstand a material fall in portfolio value, property sales or rental income before reaching covenant levels.

At 31 December 2024, Group liquidity of £192.4m (31 December 2023: £192.2m) included undrawn capacity under the RCF of £75.0m (31 December 2023: £165.0m) in addition to the year-end cash balance of £117.4m (31 December 2023: £27.2m). Going forwards the RCF, alongside selected use of development and infrastructure loans where appropriate, will continue to provide the Group with sufficient liquidity to execute our growth strategy.

Dougie Maudsley

Interim Chief Financial Officer 

17 March 2025 

Key performance indicators

2.1 Financial track record

2.2 Strategic track record

2.3 Environmental, economic and social track record

(1) Prior year figure has been restated

Principal risks & uncertainties

The Board is responsible for identifying and evaluating the Group's principal and emerging risks that could potentially impact the execution of our strategy, business model, future performance, solvency, liquidity, or reputation. The Board receives a report on these principal and emerging risks at each meeting. During 2024, the Board continued to assess principal risks closely, particularly in light of the strategic 'pivot' towards Industrial & Logistics development and investment announced during the year, and external factors such as the election of, and rollout of policies by, the new UK government, and persistent geopolitical instability and macroeconomic headwinds throughout the year.

In addition, during H2 2024, in-depth principal risk workshops were conducted by the Enterprise Risk Management function with business risk champions, further strengthening the 'top-down/bottom-up' review process. During 2025, the Board will undertake a comprehensive review of principal risks, informed by the strategic pivot, the resultant scaling up of development activity and of the Investment Portfolio, and the early outputs from the enhancement and standardisation of our 'bottom-up' operational risk management framework.

Below are the changes made to our principal risks since the 2023 Annual Report.

A detailed analysis of each principal risk is set out below, and in the 'Effectively managing our risk' section of the 2024 Annual Report.

Directors' Responsibilities Statement

The Directors' Responsibilities Statement below has been prepared in connection with the full Annual Report and Financial Statements for the year ended 31 December 2024.

The directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable United Kingdom law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Company Financial Statements in accordance with UK-adopted international accounting standards (IFRSs). Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group and the Company for that period.

In preparing these Financial Statements the Directors are required to:

· select suitable accounting policies in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

· make judgements and accounting estimates that are reasonable and prudent;

· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

· provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group and Company financial position and financial performance;

· in respect of the Group Financial Statements, state whether UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

· in respect of the Company Financial Statements, state whether UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the Financial Statements; and

· prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company and/or the Group will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's and Group's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the Company and the Group Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a strategic report, directors' report, directors' remuneration report and corporate governance statement that comply with that law and those regulations. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.

Responsibility statements

The Directors (see the list of names and roles in the Annual Report) confirm, to the best of their knowledge:

· that the consolidated Financial Statements, prepared in accordance with UK-adopted international accounting standards give a true and fair view of the assets, liabilities, financial position and profit of the Company and undertakings included in the consolidation taken as a whole;

· that the Annual Report, including the strategic report, includes a fair review of the development and performance of the business and the position of the Company and undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

· that they consider the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position, performance, business model and strategy.

Disclosure of information to the auditor

Each of the Directors who were in office at the date of approval of this Report also confirms that:

· so far as they are aware, there is no relevant audit information of which the auditor is unaware; and

· each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant information and to establish that the Group's and Company's auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418 Companies Act.

This Statement of Directors' Responsibilities was approved by the Board and signed by order of the Board:

Chris Birch

General Counsel and Company Secretary

17 March 2025

Cautionary statement and Directors' liability

This announcement and the 2024 Annual Report and Financial Statements contain 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 Group 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 Group does not undertake to revise or update any forward-looking statement contained in this announcement or the 2024 Annual Report and Financial Statements 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 or the 2024 Annual Report and Financial Statements should be construed as a profit forecast.

This announcement and the 2024 Annual Report and Financial Statements have been prepared for, and only for, the shareholders of the Company, as a body, and no other persons. Neither the Company nor the Directors accept or assume any liability to any person to whom this announcement or the 2024 Annual Report and Financial Statements is shown or into whose hands they may come except to the extent that such liability arises and may not be excluded under English law.

Financial Calendar

Registrars

All administrative enquiries relating to shareholdings should, in the first instance, be directed to Equiniti. Help can be found at www.shareview.co.uk. Alternatively you can contact Equiniti at Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA (telephone: +44 (0)371 384 2301). You should state clearly the registered shareholder's name and address. 

Dividend Mandate

Any shareholder wishing dividends to be paid directly into a bank or building society should contact the Registrars for a dividend mandate form. Dividends paid in this way will be paid through the Bankers' Automated Clearing System ('BACS').

Shareview service

The Shareview service from Equiniti allows shareholders to manage their shareholding online. It gives shareholders direct access to their data held on the share register, including recent share movements and dividend details and the ability to change their address or dividend payment instructions online.

To visit the Shareview website, go to www.shareview.co.uk. There is no charge to register but the 'shareholder reference number' printed on proxy forms or dividend stationery will be required. 

Website

The Group's website (harworthgroup.com) gives further information on the Group. Detailed information for shareholders can be found at harworthgroup.com/investors.

Consolidated income statement

The notes 1 to 16 are an integral part of these condensed consolidated financial statements.

All activities are derived from continuing operations.

Consolidated statement of comprehensive income

Consolidated balance sheet

Condensed consolidated statement of changes in shareholders' equity