Harworth Group (HWG) released a confident set of results in its first full year as a pure-play land developer. Net assets at the year-end were £298m, up from £59m a year before, reflecting a large contribution from recently reacquired Harworth Estates. But even stripping out this effect, the like-for-like increase in net assets would have been £47.4m as the company continued to build value by securing more than 2,000 residential planning permission consents over the period. Both of these boosted the income statement, with a £24m increase in the value of the company's investment companies, and a £44.2m gain on purchase for Harworth Estates.
The company operates in the coalfields of northern England, a reflection of its heritage (the group's complicated back-story has its origins in UK Coal) and it reports strong demand for houses in the area. During the period it managed to achieve land sale prices above book value at all sites. The group’s focus has shifted to targeting a smaller number of brownfield sites with bigger development potential.
Alongside land redevelopment, Harworth generates rental returns from its business parks and agricultural portfolio, as well as royalties for energy projects on its sites. Rental income in 2015 exceeded £3.2m (up from £2.8m in 2014) and this is expected to increase further next year.
Broker Investec Securities expects adjusted net asset value (NAV) of 11.7p per share at 31 December 2016, up from 10.6p a year earlier.
| HARWORTH (HWG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 12p | MARKET VALUE: | £351m | |
| TOUCH: | 11.8p-12.3p | 12-MONTH HIGH: | 14p | 7p |
| DIVIDEND YIELD: | 0.4% | TRADING PROP: | £9m | |
| PREMIUM TO NAV: | 18% | NET DEBT: | 12% | |
| INVESTMENT PROP: | £334m | |||
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 9.7 | 3.5 | 0.6 | nil |
| 2015* | 10.2 | 77.6 | 3.1 | 0.05 |
| % change | +5 | +2117 | +417 | - |
Ex-div: na Payment: na *Dividend subject to shareholder approval at the April AGM | ||||
