TIDMHWG
RNS Number : 9079P
Harworth Group PLC
06 September 2017
HARWORTH GROUP PLC
UNAUDITED INTERIM RESULTS FOR THE HALF YEARED 30 JUNE 2017
Harworth Group plc ("Harworth" or the "Group"), the brownfield
land and property developer & investor, announces its interim
results for the half year ended 30 June 2017.
Six months Twelve months Six months
to 30 June to 31 December to 30 June
2017 2016 2016
------------------------------------ ------------ ---------------- ------------
Net Asset Value ("NAV") per share
(p) (1) 117.4 114.6 103.7
EPRA NNNAV per share (p) (1) 118.0 114.6 103.7
EPRA NAV per share (p) (1) 120.1 119.8 108.3
Profit from operations (GBP'm) (2) 1.0 2.2 0.9
Value gains (GBP'm) (3) 7.8 43.7 7.4
Value gains (including development
properties) (GBP'm) (4) 10.1 43.7 7.4
Earnings per share (p) 5.4 3.5 0.3
------------------------------------ ------------ ---------------- ------------
Notes: (1) Following the March 2017 equity capital raise to
accelerate the acquisition of strategic land for development and
the further evolution of our strategy, GBP77.7m of property was
re-categorised from investment to development. Balance sheet
measures will now include NAV, EPRA NNNAV which includes the market
value of development properties (GBP2.3m), less deferred tax
(GBP0.4m), and EPRA NAV which is EPRA NNNAV excluding deferred tax
(GBP6.5m) and the mark to market movement on financial instruments
(GBP0.2m)
(2) Profit from operations comprises operating profit before
exceptionals (GBP8.8m) less value gains (GBP7.8m) and pension costs
(GBPnil)
(3) Value gains comprise profits on sale of investment
properties (GBP0.2m), assets held for sale (loss GBP0.4m) and
development properties (GBP0.3m) plus increase in fair value of
investment properties (GBP7.7m)
(4) Value gains (including development properties) comprises
value gains (GBP7.8m) plus the increase in the fair market value of
development properties (GBP2.3m)
Financial Highlights
* Full year financial forecasts are in line with the
Board's expectations but, as usual, weighted towards
the second half
Ø Continued double-digit growth in NAV (13.2%, 13.8% and 10.9%
increases in NAV, EPRA NNNAV and EPRA NAV respectively from H1 2016),
supported by NAV uplift in the first half. As at 31 June 2016, NAV,
EPRA NNNAV and EPRA NAV respectively were GBP377.0m, GBP379.0m and GBP385.7m
Ø Profit from operations(2) increased to GBP1.0m (H1 2016: GBP0.9m)
and value gains (including development properties)(4) increased to GBP10.1m
(H1 2016: GBP7.4m) reflecting positive management actions
Ø Increases in earnings per share to 5.37p (H1 2016: 0.30p) and
underlying earnings per share 5.17p (H1 2016: 2.04p) reflect positive
improvements in the deferred tax position. Dividend per share of 0.253p
(H1 2016: 0.23p)
Ø Strong financial footing following GBP27.1m capital raise in
March 2017 and increase in bonding line to GBP15.0m. Policy of prudent
gearing maintained with net loan to value 2.5% (FY 2016: 9.9%)
Strategic and Operating Highlights
* Focus remains on Northern and Midlands regeneration
markets with current emphasis on "beds and sheds"
sectors which: provide flexibility; have consistent
demand; and remain attractive for the long-term
Ø Continuing benefits from management action led model with over
80% of first half value gains as a result of milestone delivery as opposed
to reliance on market movements
Ø Outline planning agreed at Kellingley (1.45m sq. ft commercial
space) and Swadlincote (42k sq. ft commercial space). Further planning
success targeted in the second half of the year with more decisions due
which will underpin the expected full year value gains
* Significant advances made in successfully deploying
GBP27.1m equity capital raised in March 2017. On
track to have committed entire proceeds by year-end
Ø Three acquisitions made in August 2017 across the Midlands and
North West - all above expected target rate of return. Total consideration
of GBP16.3m (plus costs) with further infrastructure investment planned
to bring the sites forward
Ø Options signed on two sites in the North West and preferred bidder
positions secured on a further four sites in the North West, Yorkshire
and the Midlands. It is expected that all the GBP27.1m capital raised
in March will be committed by the year end towards strategic land
* Excellent progress with sales and deals
Ø On track with disposals with almost 50 per cent of targeted full
year sales completed in the first half. These first half sales comprised
358 residential plots and up to 564k sq. ft of commercial space, achieving
an overall profit on sale. The majority of the remaining targeted full
year sales have been agreed and good progress has already been made with
2018 sales
Ø Innovative deals undertaken during the period to drive value whilst
demonstrating the benefit of refocusing the portfolio, including:
o A joint venture with Lancashire County Pension Fund to deliver a new
commercial scheme at Logistics North in Bolton;
o A joint venture with Dransfield Properties to deliver a new 193,722
sq. ft local centre at Waverley in Rotherham; and,
o Long-term letting of a 225,000 sq. ft unit to Whistl on behalf of M&G
Real Estate at Logistics North, following the unit's forward funding
Harworth's Chief Executive, Owen Michaelson, said:
"We have had another strong first half, with good progress being
made in all of our key business areas. We have executed a number of
market leading deals at our flagship Advanced Manufacturing Park
and Logistics North developments that further grow our commercial
development capabilities, both directly and in partnership. We have
also continued to make progress in securing planning consents to
grow the value of the portfolio, most notably at Kellingley.
"We are well advanced with deploying the new capital raised in
March and expect to have committed all the proceeds by the year end
on strategic land sites. Our future acquisitions pipeline remains
strong and we continue to rationalise our portfolio, with the
intention of reducing our sites under management to less than 100
within two years.
"The economic potential of the regions in which we operate
remains good and the long-term market fundamentals are solid. Based
on current market conditions, we expect our full-year performance
to be in line with our expectations."
-S-
Enquiries:
Harworth Group plc Tel: +44 (0) 114 349 3131
Owen Michaelson, Chief Executive
Andrew Kirkman, Finance Director
Cardew Group Tel: +44 (0)20 7930 0777
Shan Shan Willenbrock
ABOUT HARWORTH GROUP PLC
Listed on the main market, Harworth Group plc (LSE: HWG) is a
leading brownfield land and property developer & investor which
owns and manages a portfolio of approximately 21,000 acres of land
on just under 140 sites located throughout the Midlands and North
of England. The Group specialises in the regeneration of former
coalfield sites and other brownfield land into new residential
developments, employment areas and low carbon energy projects.
(http://www.harworthgroup.com)
Chairman's Statement
Overview
I am pleased to present our report for the half year ended 30
June 2017. We have had a strong start to the year, with a pipeline
of sales already agreed, planning permissions secured and positive
development progress across our sites. As usual, we expect NAV
growth to be weighted to the second-half and our full year results
to reflect the momentum created in the first half, as agreed sales
complete and planning and site development feed through to value
gains. The Group's full year forecast remains in line with the
Board's expectations.
Strategy, business model and markets
Strong fundamentals persist in our residential and commercial
property markets in the North and Midlands. The Group's strategy,
business model and markets continue to evolve to provide
flexibility and resilience notwithstanding a backdrop of
macro-economic and political uncertainty.
Our performance in the first half of the year continues to
demonstrate the validity of our business model which places
emphasis on management action, including sales, planning and/or
development milestones. We have also continued to make progress in
strengthening the Group's recurring income base.
Maintaining long-term growth
Our consistent progress in developing and realising value from
the existing portfolio highlights the importance of acquiring new
sites to maintain long-term NAV growth. In March 2017, we raised
approximately GBP27m of additional equity, by way of a share
placing, to accelerate previously identified acquisitions. Since
the placing, we have completed acquisitions of sites at Coalville
in Leicestershire, Chatterley Valley in Staffordshire and Wingates
in Bolton committing GBP16.3m in consideration. Negotiations and
due diligence on our other acquisition target sites are progressing
well and we therefore expect to commit the balance of the placing
proceeds before the end of the year.
Performance and results
Following the March 2017 equity capital raise to accelerate the
acquisition of strategic land for development and in recognition of
our evolving plans for certain sites, we have updated the
categorisation of some of our sites from investment to development.
This is reflected in our half-year results.
NAV per share grew in the first half from 114.6p to 117.4p per
share, which takes into account the capital raised and shares
issued in our equity raise in March 2017. Over the twelve months
from 1 July 2016 to 30 June 2017, NAV increased by 13.2% continuing
to meet our targeted double digit NAV growth. Operating profit
before exceptionals in the first half was GBP8.8m (H1 2016:
GBP8.3m), including profit from operations of GBP1.0m (H1 2016:
GBP0.9m), aggregate profit derived from sales of GBP0.1m (H1 2016:
loss of GBP0.5m) and revaluation gains of GBP7.7m (H1 2016:
GBP7.9m).
We have seen good performance in the first half from sales,
lettings and planning across both our Capital Growth and Income
Generation segments. This has included some notable successes: the
announcement of joint ventures with Lancashire Country Pension Fund
at Logistics North and Dransfield Properties at Waverley; and
planning permission being secured at Kellingley in North Yorkshire,
the country's last deep mine to close. This momentum has been
carried into the second half of the year with McLaren Automotive
taking a 20-year lease on a new facility that we will build on
their behalf at the Advanced Manufacturing Park.
Dividend
In line with our dividend policy the Group will pay an interim
dividend of 0.253p per share (H1 2016: 0.230p) equivalent to
GBP813k (H1 2016: GBP672k). This dividend will be paid on 13
October 2017 to shareholders on the register at the close of
business on 15 September 2017. The ex-dividend date will be 14
September 2017.
Succession
I said at the Annual General Meeting (AGM) in May that, having
led the former UK Coal plc through its 2012 restructuring and then
the Group in its re-acquisition of Harworth Estates in 2015, I feel
that this is the right time to plan my succession to a new Chair. I
announced my intention to step down from the Board no later than
the 2018 AGM. The process is well underway to identify my
successor, led by Lisa Clement, our Senior Independent Director,
alongside our other independent Non-Executive Directors. We will
make a further announcement in due course.
People
I would like to thank all our colleagues in the business for
their hard work in delivering another strong start to the year. As
ever, it is our people who maximise the value from our portfolio
and I look forward to them carrying that momentum into the second
half of the year.
Jonson Cox
Chairman
6 September 2017
Chief Executive's Statement
Overview
I am pleased to report another robust set of interim results to
shareholders, reflecting a strong start to the year by both of our
Capital Growth and Income Generation business segments. These
results demonstrate the underlying strength of our business, with
over 80% of first half value gains achieved as a result of
management
actions rather than market movements. NAV as at 30 June 2017 was GBP377.0m (H1 2016: GBP303.0m).
As in previous years, we anticipate performance to be second
half weighted, as agreed sales formally complete and both
infrastructure and development works are accelerated over the
summer months, driving value gains prior to the year-end.
Reflecting the strategic evolution of the business and expected
activities going forward, we have changed the categorisation of
some parts of our sites to development rather than investment.
Capital Growth
We continue to make good progress in extracting optimal value
from our portfolio in the North of England and the Midlands through
our masterplanning, placemaking and technical expertise. This
includes a strong emphasis on residential and logistics development
("beds and sheds" sectors) which continue to benefit from
consistent demand in the regions in which we operate and remain
attractive to the Group in the long-term. Our strategy of
refocussing our portfolio in these areas, particularly through the
reduction of our historic agricultural land holdings, continues and
we intend to reduce our sites under management to less than 100
within two years.
During the six-month period, outline planning consents were
granted for 1,492,000 sq. ft. of commercial space, the main element
of which was 1,450,000 sq. ft at Kellingley - the last of the UK's
deep mines, which is located in North Yorkshire. Live planning
applications for a further 910 freehold plots, 855 partnership
plots and 1,815,000 sq. ft of commercial space are also in place,
with determination on all expected by the end of 2017. If
successful, these applications are likely to make a significant
contribution to expected full year value gains and will strengthen
the position of the business going forward.
A bedrock of our strategy continues to be the careful planning
of the disposal of properties to extract the maximum value from our
land portfolio, with the aim of achieving gains against book value
to invest in accelerating the redevelopment of our sites. In the
first half of the year we sold 358 residential plots across three
development parcels to regional housebuilders. Further additional
sales to housebuilders and commercial occupiers have also been
agreed for completion during the second half of the year, meaning
that by 30 June 2017 we had completed, exchanged or agreed 95% of
budgeted sales for 2017. Good progress has also been made in
preparing land and agreeing terms for eventual 2018 sales.
As at 30 June 2017, the total number of consented residential
plots in the portfolio was 9,171 alongside 10.9m sq. ft of
consented employment space. Furthermore, should all of our
identified future residential and commercial planning applications
come to fruition, this would deliver a total of 19,705 residential
plots alongside 18.5m sq. ft of new commercial space for the
regions.
Income Generation
We have made further selected moves to capture development
profits to generate increased value for our shareholders, in
particular increasing the number of direct build, commercial
developments that we are undertaking in some of our strongest
locations. This has been in response to a continued undersupply of
smaller commercial units in the North of England and supports our
efforts to build income and drive net asset value growth from our
income-producing portfolio.
At Logistics North, a joint venture known as 'Multiply Logistics
North' between Harworth and the Lancashire County Council Pension
Fund was agreed in May 2017. This partnership has now begun
constructing the first three of ten planned industrial units
totalling approximately 564k sq. ft across 31.2 acres over the next
two years. This follows our direct development of two industrial
units from internal funds, totalling 52,250 sq. ft, elsewhere
on-site.
The occupational market for these units remains robust,
evidenced by our experience elsewhere at Logistics North. Following
the completion of 400,000 sq. ft of Grade 'A' commercial space on
behalf of M&G Real Estate in December 2016, we secured a
ten-year lease for the 225,000 sq. ft unit in January 2017 with
Whistl to act as its new North West distribution facility.
In April, we also reached practical completion on six new units
totalling 51,750 sq. ft at the Advanced Manufacturing Park (AMP) in
Rotherham, with a leading advanced manufacturer becoming our first
new tenant for a 12,100 sq. ft unit. As announced in July,
immediately post the period end, this was followed by a pre-let to
McLaren Automotive, which is taking a 20-year lease on a new 75,000
sq. ft unit at the AMP that we will be building on their behalf.
Both deals reflect the strength of the manufacturing sector in the
North of England and the attractiveness of the AMP to meet this
need.
In the Spring, we also announced a new Joint Venture with
Dransfield Properties Limited, to deliver a new retail, office and
leisure scheme at Waverley. A planning application for a total of
193,722 sq. ft was submitted to Rotherham Metropolitan Borough
Council in July and we hope to secure a full planning consent
during H2.
Progress has also been made in generating income from our
existing Business Parks. We signed 16 new commercial lettings or
renewals in the six months to 30 June 2017, with an annualised rent
roll of GBP367,700 per annum.
Our revenues for the period were also supplemented by the
installation of another 5MW of additional capacity from low carbon
energy schemes, bringing total capacity in our portfolio to
148.5MW. Finally, the sale of coal fines from former colliery sites
to energy companies to supplement our income has continued, with
more tonnes being sold in the first half of this year compared with
last year. As previously reported however, we do not see the sale
of coal fines underpinning our revenues in the medium to long-term
as demand falls in line with the closure of the remaining coal
fired power plants by 2025.
Acquisitions
The successful completion of the GBP27.1m equity raise in March
to accelerate the continued expansion of our strategic landbank was
a key milestone in funding our future growth prospects and
significant advances have since been made in deploying the
proceeds.
We made three acquisitions in August 2017 for a total
consideration of GBP16.3m plus costs on sites identified as part of
the equity placing, with a projected rate of return in each case
above our target rate. The first, Coalville in Leicestershire, is a
145-acre site purchased for GBP11.8m plus costs. It neighbours our
existing Coalville development and already benefits from an
existing planning permission for 914 new homes. This creates a
combined site with planning permission for over 2,000 new
residential plots and provides a 15-year development pipeline.
The second, Chatterley Valley in Staffordshire, is an 88-acre
site purchased for GBP2.6m plus costs that borders our existing
24-acre freehold site. The entire site benefits from Government
Enterprise Zone status and an extant planning permission to deliver
up to 1.2m sq. ft of new commercial development.
The final acquisition, Wingates in Bolton, involved the freehold
purchase or option to purchase three land parcels totalling 73
acres. The land is adjacent to Junction 6 of the M61, close to our
existing Logistics North development, and borders 221 acres of land
that we already own. When all of this land is combined, it could
deliver a further 2.4m sq. ft of commercial employment space.
Good progress has also been made on our other identified
acquisition targets, with: options signed at two sites in the North
West; a purchase price being agreed for a large site in Yorkshire;
and preferred bidder status being secured on a further four sites
totalling over 400 acres in the North West, Yorkshire and the
Midlands. We therefore expect that all of the GBP27.1m capital
raised in March will be committed by the year end.
Market Outlook
The outlook in our target markets remains healthy. The stability
of the regional markets we operate in is driven by comparatively
low prices, a continuing lack of housing land supply and the need
for high quality new commercial space in regions where good quality
stock is scarce. Sentiment is further strengthened by national
Government policy, which continues to support the redevelopment of
brownfield sites through the Housing White Paper, published in
February 2017, and the developing Industrial Strategy.
Overall, trading remains in line with our expectations, with
strong momentum continuing into the second half of 2017.
Owen Michaelson
Chief Executive Officer
6 September 2017
Financial Review
Business model and Property categorisation
Harworth has become more firmly established in recent years,
particularly as a result of the effective re-listing in March 2015
and the development of a successful track record. At the same time,
our business model has matured and evolved, notably with moves into
adjacent activities such as direct development and forward funding
deals. As a consequence, following the capital raise in March 2017
which was to accelerate the acquisition of strategic land for
development, we reviewed our most advanced and active sites and
re-categorised certain properties to reflect the intentions for the
sites. The majority of Waverley, Logistics North and Prince of
Wales have been re-categorised as development sites and as such are
now disclosed within inventory. Development sites are held on the
balance sheet at cost rather than fair/market value, albeit at the
point of re-categorisation the property is transferred at market
value.
The balance sheet value of these three development sites at the
point of re-categorisation was GBP77.7m. The balance sheet value of
these three development sites as at 30 June 2017 was GBP73.2m
(reflecting sales in the period) and the market value was GBP75.5m.
In order to highlight the market value of development sites and be
consistent with our investment properties, we are now also
reporting EPRA NNNAV which includes the market value of development
properties, less deferred tax. We will continue to report EPRA NAV
which is EPRA NNNAV excluding deferred tax and the mark to market
movement on financial instruments.
Overview
The first half of 2017 saw further progress across both segments
of our business, Capital Growth and Income Generation, demonstrated
by our very good financial results. NAV per share increased to
117.4p (GBP377.0m) as at 30 June 2017, which is a 13.2% increase on
the NAV per share as at 30 June 2016 of 103.7p (GBP303.0m) and a
2.4% increase on the NAV per share as at 31 December 2016 of 114.6p
(GBP334.9m). EPRA NNNAV rose by 13.8% to 118.0p per share
(GBP379.0m) compared to 103.7p per share as at 30 June 2016
(GBP303.0m) and rose by 3.0% compared to 114.6p per share as at 31
December 2016 (GBP334.9m). EPRA NAV rose by 10.9% to 120.1p per
share (GBP385.7m) compared to 108.3p per share as at 30 June 2016
(GBP316.5m) and rose by 0.3% compared to 119.8p per share as at 31
December 2016 (GBP350.1m).
Operating profit before exceptional items in the first half
increased to GBP8.8m (H1 2016: GBP8.3m) as a result of the delivery
of milestones by management. If revaluation gains on those
properties now categorised as development were included, then value
gains and operating profit would have been GBP2.3m higher in 2017
(H1 2016: GBPnil). Earnings per share were 5.37p (H1 2016: 0.30p)
reflecting positive advances allowing the recognition of further
deferred tax assets and the interim dividend increased by 10.0% to
0.253p per share (H1 2016: 0.23p). Finally, the balance sheet
remains healthy following the GBP27.1m capital raise in March 2017,
which is expected to be committed to acquisitions by the year end,
but also reflects excellent progress with sales such that gearing
on a net loan to value basis has reduced to 2.5% (H1 2016: 13.4%).
We have also increased our bonding line from GBP10m to GBP15m to
support increased activity.
A certain degree of complexity remains in our results due to the
1 for 10 share consolidation which occurred in the first half of
2016 and the GBP27.1m capital raise in March 2017. Consequently,
earning per share are set out below on both a statutory and
underlying basis.
Operating profit
Revenues in the first half were GBP22.9m (H1 2016: GBP17.4m)
split between revenue from operations GBP14.4m (H1 2016: GBP17.4m)
and revenue from the sale of development properties GBP8.5m (H1
2016: GBPnil). Revenue from operations is split between: Income
Generation GBP8.7m (H1 2016: GBP7.8m), where revenue mainly
comprises rental and royalty income together with some sales of
coal fines and salvage; and Capital Growth GBP5.7m (H1 2016:
GBP9.6m). The increase in revenue from Income Generation reflected
improved lettings and business space acquisitions made in 2016. The
reduction in revenue from Capital Growth reflected the completion
in December 2016 of the two units at Logistics North which were
forward funded by M&G Real Estate. The revenue in 2017
reflected amounts received on completion of the work including a
promote fee on the letting of the larger 225,000 sq. ft unit to
Whistl in January 2017. The smaller 175,000 sq. ft unit continues
to be actively marketed.
Cost of sales now comprises three elements being: sales of
development properties; operating costs for business space, natural
resources and coal fines activities; and costs in relation to the
M&G contract for construction and letting units. Cost of sales
increased to GBP15.3m (H1 2016: GBP11.9m) including some large
movements being the first-time recognition of sales of development
property of GBP8.2m (H1 2016: GBPnil) and a reduction of costs
associated with the M&G contract to GBP4.8m (H1 2016:
GBP9.5m).
Total overheads, which include the overhead costs of the Capital
Growth and Income Generation segments and central costs, amounted
to GBP6.6m (H1 2016: GBP4.7m). The increase in costs reflected an
increased accrual for the Executive Long Term Incentive Plan
reflecting continued and expected NAV outperformance as well as
increased staffing and business costs reflecting greater and more
productive operational activity. The table below shows the results
of the business split between Capital Growth, Income Generation and
Central Overheads:
Capital H1 2017 H1 2016
Growth Income Generation Central Overheads Total Total
GBPm GBPm GBPm GBPm GBPm
-------------------------------------- ------- ----------------- ----------------- ------- -------
Revenue 14.2 8.7 - 22.9 17.4
Cost of sales (12.7) (2.6) - (15.3) (11.9)
Overheads (1.0) (0.9) (4.6) (6.6) (4.7)
Profit from operations (1) 0.5 5.1 (4.6) 1.0 0.9
Revaluation gains 3.5 4.2 - 7.7 7.9
Profit/(loss) on disposals (1) - 0.1 - 0.1 (0.5)
Pension credit - - - - 0.1
Operating profit, before exceptionals 4.0 9.4 (4.6) 8.8 8.3
-------------------------------------- ------- ----------------- ----------------- ------- -------
Revaluation gains on development
properties (2) 2.3 - - 2.3 0.0
-------------------------------------- ------- ----------------- ----------------- ------- -------
Notes:
(1) Profit from operations comprises operating profit before
exceptionals (GBP8.8m) less pension costs (GBPnil) and value gains
(GBP7.8m). Value gains comprise profit/(loss) on disposals (being
profits on sale of investment properties (GBP0.2m), assets held for
sale (loss of GBP0.4m) and development properties (GBP0.3m)) plus
increase in fair value of investment properties (GBP7.7m)
(2) This is the unrecognised mark to market gain since the
properties were re-categorised into development properties
Set out below are value gains for 2016 and 2017, which comprise
profit on disposals, revaluation gains on investment properties and
revaluation gains on development properties:
H1 2017 H1 2016
-------------------
Profit on disposal Revaluation gains Total Total
GBPm Management Market
------------------- ------------------ ----------- ------ ----- -------
Major Developments - 1.4 0.9 2.3 1.9
Strategic Land - 3.3 - 3.3 1.5
Business Space - 2.0 - 2.0 1.0
Natural Resources 0.3 1.0 - 1.3 3.4
Agricultural Land (0.2) 0.7 0.7 1.2 (0.4)
Total 0.1 8.4 1.6 10.1 7.4
------------------- ------------------ ----------- ------ ----- -------
The Group made sales and conditional sales of GBP24.9m in H1
2017 (H1 2016: GBP13.3m), of which GBP15.2m of the consideration is
deferred, with profit on disposal of GBP0.1m (H1 2016: loss of
GBP0.5m). The proceeds were split between residential serviced
plots (GBP11.7m), commercial development (GBP10.8m) and other,
essentially agricultural land (GBP2.4m).
The Group achieved revaluation gains, including revaluation
gains on development properties, of GBP10.0m (H1 2016: GBP7.9m).
Revaluation gains for major developments were all for development
sites totalling GBP2.3m (H1 2016: GBPnil). We have split
revaluation gains to reflect the contribution from management
actions, GBP8.4m, and market movements, GBP1.6m. Whilst there is a
degree of subjectivity in this split, it highlights that the
majority of the value gains come from management actions. The
principal H1 2017 revaluation gains across the divisions were as
follows:
-- Major Developments - Uplifts at Logistics North and Waverley
as site values increase with maturity and buyer interest. Updated
market values at Prince of Wales;
-- Strategic Land - Outline planning consent granted at
Kellingley and planning application submitted for Thoresby
redevelopment;
-- Business Space - Completion of direct development at AMP and new lettings secured;
-- Natural Resources - Uplifts at Bilsthorpe and Kellingley due to expected future sales; and
-- Agricultural Land - Reduction in restoration liability of former surface mine sites.
The resulting operating profit for the Group, before exceptional
items, was GBP8.8m (H1 2016: GBP8.3m).
Exceptional items
Exceptional items in the first half were composed of three
separate items which, as before, relate to the Group's legacy
activities. The total amounts in H1 2017 were GBP0.1m (H1 2016:
GBPnil).
In the first half of 2017, GBP0.2m was recognised as anticipated
settlement from the administrator of Ocanti No.1 Limited which
related to the reimbursement of management expenses incurred by
Harworth (then known as Coalfield Resources plc) and a small
positive amount was recognised for the recovery of VAT on deal fees
relating to the March 2015 re-listing. Offsetting this was the
write-off of GBP0.2m related to a debtor for the settlement of a
claim against Coalfield Resources plc regarding certain road
repairs.
The amounts which were recognised in the first half of 2016 when
aggregated netted to nil. With regard to Harworth Insurance Company
Limited, Harworth received GBP0.5m from the administrator, which
essentially represented final settlement. In addition, GBP0.2m was
received from the administrator of Ocanti Opco Limited which
related to the reimbursement of management expenses incurred by
Harworth (then known as Coalfield Resources plc). In respect of
coal fines activities, an exceptional charge of GBP0.7m was taken
to reflect the under recovery of amounts relating to the cessation
of activities at Rugeley and a provision taken against the value of
coal fines stocks to reflect reduced demand.
Taxation
The credit for taxation in the period was GBP8.9m (H1 2016:
GBP1.4m charge) which comprises a deferred tax credit of GBP8.8m
(H1 2016: GBP1.4m charge) and current year tax credit of GBP0.1m
(H1 2016: GBPnil). The breakdown was as follows:
-- further recognition of deferred tax assets of GBP7.5m (H1
2016: GBPnil) as a result of executing a contract which resulted in
increased certainty that the losses would not be lost;
-- the deferred tax credit on forecast future capital gains
arising on the investment property portfolio of GBP1.3m (H1 2016:
GBP1.4m charge);
-- land remediation relief tax credit of GBP0.2m (H1 2016: GBPnil); and
-- a current year tax charge of GBP0.1m (H1 2016: GBPnil)
resulting from profits on sales of development properties.
The Group is still utilising brought forward tax losses but as a
result of categorising some sites from investment to development is
likely to pay tax on future profitable sales. In the current
period, Harworth received cash in respect of the land remediation
relief claim and recovery of VAT on deal fees of GBP0.3m (H1 2016:
GBPnil).
At 30 June 2017, the Group had deferred tax liabilities of
GBP21.8m (FY 2016: GBP23.3m), related to unrealised gains on
investment properties and had recognised deferred tax assets of
GBP15.7m (FY 2016: GBP8.4m). The net deferred tax liability was
GBP6.1m (FY 2016: GBP14.9m).
Earnings per share and Dividends
Earnings per share increased to 5.37p (H1 2016: 0.30p) and
underlying earnings per share, using the closing number of shares,
increased to 5.17p (H1 2016: 2.04p). These increases reflect the
positive progress made in the period with respect to profits and
tax.
In line with our dividend policy the Group will pay an interim
dividend of 0.253p per share (H1 2016: 0.230p) equivalent to
GBP813k (H1 2016: GBP672k). This dividend will be paid on 13
October 2017 to shareholders on the register at the close of
business on 15 September 2017. The ex-dividend date will be 14
September 2017.
Net assets
As set out below, NAV increased to GBP377.0m as at 30 June 2017
from GBP334.9m as at 31 December 2016 (GBP303.0m as at 30 June
2016). This increase was as a result of movements in the period,
being operating profit before exceptionals of GBP8.8m, the March
2017 equity capital raise of GBP27.1m, a tax credit of GBP8.9m,
less interest costs of GBP1.2m, dividends of GBP1.7m and other
movements of GBP0.2m.
30 June 2017 31 December 30 June
GBPm 2016 2016
GBPm GBPm
--------------------------------------------- ------------ ------------ -----------
Investment and development properties
(including investments in joint ventures,
assets held for sale, overages and occupied
properties) 408.6 400.3 363.9
Cash 13.5 13.0 23.7
Other assets 18.9 25.2 21.8
--------------------------------------------- ------------ ------------ -----------
Total assets 441.0 438.5 409.4
Gross borrowings 23.6 52.5 72.6
Deferred tax liability 6.1 14.9 12.8
Derivative financial instruments 0.2 0.4 0.7
Other liabilities 34.1 35.8 20.3
--------------------------------------------- ------------ ------------ -----------
Net assets 377.0 334.9 303.0
--------------------------------------------- ------------ ------------ -----------
Number of shares in issue 321,250,750 292,269,786 292,269,786
--------------------------------------------- ------------ ------------ -----------
NAV per share 117.4p 114.6p 103.7p
--------------------------------------------- ------------ ------------ -----------
EPRA NNNAV per share (1) 118.0p 114.6p 103.7p
--------------------------------------------- ------------ ------------ -----------
EPRA NAV per share (2) 120.1p 119.8p 108.3p
--------------------------------------------- ------------ ------------ -----------
Notes (1) NAV (GBP377.0m) plus market value of development properties
(GBP2.3m) less deferred tax (GBP0.4m) divided by number of shares
in issue
(2) EPRA NNNAV (GBP379.0m) excluding deferred tax liability (GBP6.5m)
and mark to market movement on financial instruments (GBP0.2m) divided
by number
of shares in issue
Financing and funding strategy
The Group has a GBP75m non-amortising Revolving Credit Facility
(RCF) with RBS which expires in February 2021, of which effectively
GBP30m is fixed at an all-in rate of 2.955% (including fees) until
June 2020 and the remainder is charged at LIBOR plus 2%. The
interest rate swap is hedge accounted with any unrealised movements
going through reserves. The Group's hedging strategy is to have
roughly half of its debt at a fixed rate and half of its debt
exposed to floating rates.
The Group also uses infrastructure funding, provided by public
bodies to promote the development of major sites for employment and
housing needs, in our funding strategy. At 30 June 2017 the Group
had six infrastructure facilities with all-in funding rates of
between 2.5% and 4.0%. After the half year, to assist with funding
requirements associated with greater activities and continued
growth, we secured an increase in our bonding line from GBP10.0m to
GBP15.0m.
The Group's cash and cash equivalents at 30 June 2017 were
GBP13.5m (FY 2016: GBP13.0m). The Group had borrowings and loans of
GBP23.6m at 30 June 2017 (FY 2016: GBP52.5m), being the RBS RCF of
GBP9.2m (FY 2016: GBP37.1m) and infrastructure loans of GBP14.4m
(FY 2016: GBP15.3m). The resulting net debt was GBP10.1m (FY 2016:
GBP39.5m). The weighted average cost of debt, using 30 June 2017
balances and rates, was 3.5% with a 0.8% non-utilisation fee on
undrawn RCF amounts (FY 2016: 2.9% with a 0.8% non-utilisation fee
on undrawn RCF amounts).
The Group continues with its aim of balancing its cash flows by
using disposal proceeds to fund infrastructure spend and investment
in acquisitions to replenish the portfolio, as well as improving
its focus on brownfield sites with greater value enhancement
potential. The Group is also maintaining its policy of prudent
gearing with gross Loan To Value (LTV) of 5.7% (FY 2016: 13.1%) and
net LTV of 2.5% (FY 2016: 9.9%). However, Capital Growth sites are
deliberately not geared, so if gearing is just assessed against the
value of Business Space and Natural Resources properties this
equates to gross LTV of 17.3% (FY 2016: 41.6%) and net LTV of 7.4%
(FY 2016: 31.3%).
Harworth's policy of prudent gearing gives the Group the ability
to complete acquisitions quickly, which is often a source of
competitive advantage. In addition, this policy of prudent gearing
allows working capital swings to be appropriately managed given
that infrastructure spend is usually in advance of sales and thus
net debt can increase by over GBP20m during the year.
Andrew Kirkman
Finance Director
6 September 2017
Principal risks and uncertainties
A detailed explanation of the principal risks and uncertainties
affecting the Group, and how it seeks to mitigate these risks, can
be found on pages 40 to 44 of the Annual Report and Financial
Statements for the year ended 31 December 2016, which is available
at www.harworthgroup.com/investors. These risks and uncertainties
are expected to remain relevant for the second half of the
financial year. In some cases, there have been external
developments or internal actions which could affect the likelihood
and/or impact of certain risks. These are listed below.
Whilst the Group is not immune to political and economic
uncertainty particularly as negotiations continue in respect of the
UK's departure from the EU and following the results of the General
Election, the Directors do not consider that the prevailing
situation materially increases the Group's exposure to market
fluctuations. This is further mitigated given the diversity of our
portfolio and as our regional residential and commercial markets
remain strong.
In July, the Government announced the next round of consultation
on phase 2b of the HS2 route from Birmingham through to Leeds. This
includes a proposed rolling stock depot located in the vicinity of
our Skelton Grange site and the adjoining Gateway 45 site, which is
owned by The Aire Valley Land LLP, our joint venture with Evans
Property Group. As a consequence, both sites have been safeguarded
until a final decision has been made after consultation. This
consultation with key local authorities and landowners will run
through to 12 October 2017 with a final decision anticipated in
either late 2017 or in early 2018. This announcement will have a
short-term, and potentially long-term, impact on our development
plans across the two sites and we are working closely with HS2 to
deliver its objectives whilst also ensuring that our current
development plans can be brought forward unimpeded.
Certain of the value gains projected for the second half of the
year are reliant on planning successes. Whilst we are confident of
achieving those successes, we have an increased risk associated
with planning applications during this period compared with other
periods.
Given the increased activities of the Group, both across our
existing portfolio and in connection with acquisition targets,
there continues to be capacity pressures across the business. We
are addressing this with recruitment into a number of new roles,
much of which has been completed and/or is underway. The additional
staff costs resulting from this recruitment will be addressed by
corresponding increases and improvements in our recurring income
base, which are ongoing.
Chris Birch
Group General Counsel and Company Secretary
6 September 2017
Consolidated income statement
Unaudited Unaudited
6 months 6 months Audited
ended ended 30 year ended
30 June June 31 December
2017 2016 2016
Note GBP000 GBP000 GBP000
------------------------------------------------ ---- --------- --------- ------------
Revenue 22,920 17,405 33,693
Cost of sales (15,014) (11,864) (20,905)
------------------------------------------------ ---- --------- --------- ------------
Gross profit 7,906 5,541 12,788
Administrative expenses (6,570) (4,802) (10,455)
Increase in fair value of investment properties 7,689 7,900 33,713
Decrease in fair value of assets classified
as held for sale - - (224)
Profit/(loss) on sale of investment properties 217 (307) 9,166
Loss on sale of assets classified as held
for sale (399) (192) (375)
Other gains 17 56 747
Other operating (expense)/income (24) 137 (204)
Depreciation of property, plant and equipment (4) - (2)
------------------------------------------------ ---- --------- --------- ------------
Operating profit before exceptional items 8,832 8,333 45,154
Exceptional income 2 230 689 689
Exceptional expense 2 (168) (682) (682)
------------------------------------------------ ---- --------- --------- ------------
Operating profit 8,894 8,340 45,161
Finance income 4 15 242 247
Finance costs 4 (1,184) (1,196) (2,588)
Share of profit of joint ventures - - 647
------------
Profit before tax 7,725 7,386 43,467
Tax 5 8,873 (1,422) (3,566)
------------------------------------------------ ---- --------- --------- ------------
Profit for the period/year 16,598 5,964 39,901
------------------------------------------------ ---- --------- --------- ------------
Earnings per share from operations pence pence pence
------------------------------------------------ ---- --------- --------- ------------
Basic and diluted 7 5.4 0.3 3.5
------------------------------------------------ ---- --------- --------- ------------
The notes on pages 19 to 32 are an integral part of these
condensed consolidated interim financial statements.
All activities in the current period/year are derived from
continuing operations.
Consolidated statement of comprehensive income
Unaudited
Unaudited 6 months Audited
6 months ended ended year ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
---------------------------------------------- --------------- --------- ------------
Profit for the period/year 16,598 5,964 39,901
Other comprehensive income - items that will
not be reclassified to profit or loss:
Net actuarial loss in Blenkinsopp Pension
scheme (31) (25) (269)
Fair value of financial instruments 142 (658) (366)
Revaluation of Group occupied property - - (17)
Deferred tax on actuarial loss - - 94
---------------------------------------------- --------------- --------- ------------
Total other comprehensive income/(expense) 111 (683) (558)
---------------------------------------------- --------------- --------- ------------
Total other comprehensive income for the
period/year 16,709 5,281 39,343
---------------------------------------------- --------------- --------- ------------
Consolidated balance sheet
Unaudited
Unaudited 6 months Audited
6 months ended ended year ended
30 June 30 June 31 December
2017 2016 2016
ASSETS Note GBP000 GBP000 GBP000
--------------------------------------------- ---- --------------- --------- ------------
Non-current assets
Property, plant and equipment 785 - 789
Other receivables 1,406 650 1,397
Investment properties 8 310,527 346,521 379,190
Investments in joint ventures and associates 9 11,768 9,798 10,549
--------------------------------------------- ---- --------------- --------- ------------
324,486 356,969 391,925
--------------------------------------------- ---- --------------- --------- ------------
Current assets
Inventories 10 74,010 565 733
Trade and other receivables 18,214 20,554 24,444
Cash and cash equivalents 11 13,484 23,692 13,007
Assets classified as held for sale 12 10,829 7,606 8,350
--------------------------------------------- ---- --------------- --------- ------------
116,537 52,417 46,534
--------------------------------------------- ---- --------------- --------- ------------
Total assets 441,023 409,386 438,459
--------------------------------------------- ---- --------------- --------- ------------
LIABILITIES
Current liabilities
Borrowings 13 (2,319) (1,938) (1,819)
Trade and other payables (31,984) (17,612) (33,719)
--------------------------------------------- ---- --------------- --------- ------------
(34,303) (19,550) (35,538)
--------------------------------------------- ---- --------------- --------- ------------
Net current assets 82,234 32,867 10,996
--------------------------------------------- ---- --------------- --------- ------------
Non-current liabilities
Borrowings 13 (21,273) (70,669) (50,659)
Trade and other payables (1,520) (2,280) (1,520)
Derivative financial instruments (223) (658) (366)
Deferred income tax liabilities (6,093) (12,801) (14,851)
Retirement benefit obligations 14 (562) (404) (602)
--------------------------------------------- ---- --------------- --------- ------------
(29,671) (86,812) (67,998)
--------------------------------------------- ---- --------------- --------- ------------
Total liabilities (63,974) (106,362) (103,536)
--------------------------------------------- ---- --------------- --------- ------------
Net assets 377,049 303,024 334,923
--------------------------------------------- ---- --------------- --------- ------------
SHAREHOLDERS' EQUITY
Called up share capital 15 32,150 29,227 29,227
Share premium account 16 24,351 - -
Fair value reserve 65,968 31,960 58,279
Capital redemption reserve 257 257 257
Merger reserve 45,667 45,667 45,667
Investment in own shares 15 (263) - -
Retained earnings 192,321 60,828 161,592
Other reserves - 129,121 -
Current year profit 16,598 5,964 39,901
--------------------------------------------- ---- --------------- --------- ------------
Total shareholders' equity 377,049 303,024 334,923
--------------------------------------------- ---- --------------- --------- ------------
Consolidated statement of cash flows
Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
--------------------------------------------------- --------- --------- ------------
Cash flows from operating activities
Profit for the period/year 7,725 5,964 43,467
Net interest payable 1,169 954 2,341
Fair value increase in investment properties (7,689) (7,900) (33,713)
Fair value decrease in assets classified as
held for sale - - 224
(Profit)/loss on disposal of investment properties (217) 307 (9,166)
Loss on sale of assets classified as held for
sale 399 192 375
Other gains - - (747)
Share of profit of joint ventures - - (647)
Depreciation of property, plant and equipment 4 - 2
Pension contributions in excess of charge and
other gains (71) (63) (102)
Operating cash inflows/(outflow) before movements
in working capital 1,320 (546) 2,034
Decrease in inventories 4,457 30 359
Decrease/(increase) in receivables 9,332 (151) (634)
(Decrease)/increase in payables (1,821) 3,428 3,715
--------------------------------------------------- --------- --------- ------------
Cash generated from operations 13,288 2,761 5,474
Loan arrangement fees paid (97) (47) (150)
Interest paid (707) (742) (1,861)
Cash generated from operating activities 12,484 1,972 3,463
--------------------------------------------------- --------- --------- ------------
Cash flows from investing activities
Interest received 15 242 247
Investment in joint ventures (1,219) (9,030) (9,134)
Proceeds from disposal of investment properties
and assets classified as held for sale 4,028 10,894 53,201
Expenditure on investment properties and assets
classified as held for sale (11,156) (15,753) (47,528)
Tax received 174 - -
Expenditure on property, plant and equipment - - (25)
--------------------------------------------------- --------- --------- ------------
Cash used in investing activities (8,158) (13,647) (3,239)
--------------------------------------------------- --------- --------- ------------
Cash flows from financing activities
Net proceeds from issue of ordinary shares 27,065 - -
Proceeds from other loans 2,327 2,905 5,187
Repayment of other loans (3,593) (4,102) (5,805)
Proceeds from bank loan 10,000 9,000 -
Repayment of bank loan (38,000) - (12,000)
Investment in own shares (177) - -
Other transaction costs 209 - -
Dividends paid (1,680) - (2,163)
Cash (used in)/generated from financing activities (3,849) 7,803 (14,781)
--------------------------------------------------- --------- --------- ------------
Increase/(decrease) in cash 477 (3,872) (14,557)
--------------------------------------------------- --------- --------- ------------
At 1 January
Cash 13,007 27,564 27,564
--------- --------- ------------
13,007 27,564 27,564
Increase/(decrease) in cash 477 (3,872) (14,557)
13,484 23,692 13,007
--------------------------------------------------- --------- --------- ------------
At period/year end
Cash 13,484 23,692 13,007
--------------------------------------------------- --------- --------- ------------
Cash and cash equivalents 13,484 23,692 13,007
--------------------------------------------------- --------- --------- ------------
Consolidated statement of changes in shareholders' equity
Called Share Fair Capital
up share premium value redemption Merger Own Retained Total
capital account reserve reserve reserve shares earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- ---------- --------- -------- ----------- --------- ------- --------- -------
Balance at 1 January 2016
(audited) 29,227 129,121 24,060 257 45,667 - 69,411 297,743
Transactions with owners:
Profit for the six months to
30 June 2016 - - - - - - 5,964 5,964
Transfer of fair value gain
on revaluation of investment
properties - - 7,900 - - - (7,900) -
Transfer of share premium to
other distributable reserves - (129,121) - - - - 129,121 -
Other comprehensive expense:
Actuarial loss in Blenkinsopp
pension scheme - - - - - - (25) (25)
Fair value of financial
instruments - - - - - - (658) (658)
-------------------------------- ---------- --------- -------- ----------- --------- ------- --------- -------
Balance at 30 June 2016
(unaudited) 29,227 - 31,960 257 45,667 - 195,913 303,024
Transactions with owners:
Dividends paid - - - - - - (2,163) (2,163)
Profit for the six months to
31 December 2016 - - - - - - 33,937 33,937
Transfer of fair value gain
on revaluation of investment
properties - - 25,813 - - - (25,813) -
Transfer of fair value decrease
on assets classified as held
for sale - - (224) - - - 224 -
Transfer of other gains - - 747 - - - (747) -
Other comprehensive
(expense)/income:
Actuarial loss in Blenkinsopp
pension scheme - - - - - - (244) (244)
Revaluation of group occupied
property - - (17) - - - - (17)
Fair value of financial
instruments - - - - - - 292 292
Deferred tax on actuarial loss
on pension scheme - - - - - - 94 94
-------------------------------- ---------- --------- -------- ----------- --------- ------- --------- -------
Balance at 31 December 2016
(audited) 29,227 - 58,279 257 45,667 - 201,493 334,923
Transactions with owners:
Profit for the six months to
30 June 2017 - - - - - - 16,598 16,598
Transfer of fair value gain
on revaluation of investment
properties - - 7,689 - - - (7,689) -
Purchase of own shares - - - - - (263) 86 (177)
Dividend paid - - - - - - (1,680) (1,680)
Share issue 2,923 24,142 - - - - - 27,065
Other transaction costs - 209 - - - - - 209
Other comprehensive
(expense)/income:
Actuarial loss in Blenkinsopp
pension scheme - - - - - - (31) (31)
Fair value of financial
instruments - - - - - - 142 142
-------------------------------- ---------- --------- -------- ----------- --------- ------- --------- -------
Balance at 30 June 2017
(unaudited) 32,150 24,351 65,968 257 45,667 (263) 208,919 377,049
-------------------------------- ---------- --------- -------- ----------- --------- ------- --------- -------
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2017
1. Basis of preparation of the condensed consolidated interim
financial statements
General information
Harworth Group plc (the 'Company') is a public limited company
incorporated and domiciled in the UK. The address of its registered
office is Advantage House, Poplar Way, Catcliffe, Rotherham, South
Yorkshire, S60 5TR.
The Company is listed on the London Stock Exchange.
The condensed consolidated interim financial statements for the
six months ended 30 June 2017 comprise the Company and its
subsidiaries (together referred to as the 'Group').
These condensed consolidated interim financial statements do not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006. The Group financial statements for the year
ended 31 December 2016 were approved by the Board of Directors on
19 April 2017 and delivered to the Registrar of Companies. The
report of the auditor on those accounts was unqualified, did not
contain an emphasis of matter paragraph and did not contain any
statement under section 498 of the Companies Act 2006.
These condensed consolidated interim financial statements have
been reviewed not audited.
The condensed consolidated interim financial statements for the
period ended 30 June 2017 were approved by the Board on 5 September
2017.
Basis of preparation
These condensed consolidated interim financial statements for
the six months ended 30 June 2017 have been prepared in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
Authority (previously the Financial Services Authority) and with
IAS 34 'Interim Financial Reporting' as adopted by the European
Union ('EU'). The condensed consolidated interim financial
statements should be read in conjunction with the Group financial
statements for the year ended 31 December 2016 which have been
prepared in accordance with IFRSs as adopted by the EU.
Going-concern basis
These condensed consolidated interim financial statements are
prepared on the basis that the Group is a going concern. In forming
its opinion as to going concern, the Board prepares cash flow
forecasts based upon its assumptions with particular consideration
to the key risks and uncertainties as summarised in the 'How we
manage our risks' section of the 2016 annual report, as well as
taking into account the funding strategy and available borrowing
facilities disclosed on page 30.
The key factor that has been considered in this regard is:
The Group has a GBP75m revolving credit facility with The Royal
Bank of Scotland, expiring February 2021, on a non-amortising
basis. The facility is in the form of a debenture security whereby
there is no charge on the individual assets of the Group. The
facility is subject to financial and other covenants.
The covenants are based upon gearing, tangible net worth, loan
to property values and interest cover. Property valuations affect
the loan to value covenants. Breach of covenants could result in
the need to pay down in part some of these loans, additional costs,
or a renegotiation of terms or, in extremis, a reduction or
withdrawal of facilities by the bank concerned.
The Directors confirm their belief that it is appropriate to use
the going concern basis of preparation for these condensed
consolidated interim financial statements.
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2017
1. Basis of preparation of the condensed consolidated interim
financial statements (continued)
Accounting policies
The same accounting policies are followed in these condensed
consolidated interim financial statements as were applied in the
Group's latest audited financial statements with the exception
of;
Development properties
Development properties are inventory and are included in the
consolidated balance sheet at the lower of cost and net realisable
value. Net realisable value is the expected net sales proceeds of
the developed property in the ordinary course of business less
estimated costs to complete and anticipated selling costs.
Properties re-categorised to development properties from investment
properties are transferred at deemed cost, being the fair value at
the date of re-categorisation.
Since the 2016 annual accounts were published, the IASB have not
issued any amendments or interpretations that are expected to have
a material impact on the Group's reporting.
Estimates and judgements
The preparation of the condensed consolidated interim financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended 31 December
2016, with the exception of changes in estimates that are required
in determining the provision for income taxes.
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2017
2. Exceptional items
Unaudited Audited
Unaudited 6 months ended year ended
6 months ended 30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
----------------------------------------------------------- ----------------------- --------------- ------------
Settlement relating to Harworth Insurance Company Limited - 500 500
Settlement relating to Ocanti Opco Limited - 189 189
Settlement relating to Ocanti No.1 Limited 202 - -
Recovery of VAT on bargain purchase previously written off 28 - -
Settlement in relation to Juniper No.3 Limited (168) - -
Under recovery relating to the cessation of coal fines
activity at Rugeley and coal fines
stock provision - (682) (682)
Total exceptional items 62 7 7
------------------------------------------------------------ ----------------------- --------------- ------------
Exceptional items in the six months ended 30 June 2017 were
composed of three separate items which relate to the Group's legacy
activities and totalled GBP0.1m (H1 2016; GBPnil, FY 2016;
GBPnil).
In the six months ended 30 June 2017, GBP0.2m was recognised as
anticipated settlement from the administrator of Ocanti No.1
Limited which related to the reimbursement of management expenses
incurred by Harworth (then known as Coalfield Resources plc) and a
small positive amount was recognised for the recovery of deal fees
relating to the 2015 re-listing. Offsetting this was the write-off
of a GBP0.2m debtor related to the settlement of a claim against
Coalfield Resources plc regarding certain road repairs.
The amounts which were recognised in the six months ended 30
June 2016 when summed together netted to nil. With regard to
Harworth Insurance Company Limited, Harworth received GBP0.5m from
the administrator, which essentially represented final settlement.
In addition, GBP0.2m was received from the administrator of Ocanti
Opco Limited which related to the reimbursement of management
expenses incurred by Coalfield Resources plc. In respect of coal
fines activity, an exceptional charge of GBP0.7m was taken to
reflect the under recovery of amounts relating to the cessation of
activities at Rugeley and a provision taken against the value of
coal fines stocks to reflect reduced demand.
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2017
3. Segment information
Capital Income Unallocated
Growth Generation costs Total
30 June 2017 GBP000 GBP000 GBP000 GBP000
---------------------------------------------- ------- ----------- ----------- --------
Revenue from operations 5,712 8,685 - 14,397
Revenue from sale of development properties 8,523 - - 8,523
---------------------------------------------- ------- ----------- ----------- --------
Revenue 14,235 8,685 - 22,920
---------------------------------------------- ------- ----------- ----------- --------
Gross profit/(loss) less administrative
expenses 550 5,108 (4,631) 1,027
Gross profit from sale of development
properties 309 - - 309
---------------------------------------------- ------- ----------- ----------- --------
Total gross profit/(loss) less administrative
expenses 859 5,108 (4,631) 1,336
Increase in fair value of investment
properties 3,443 4,246 - 7,689
(Loss)/profit on sale of investment
properties (59) 276 - 217
Loss on sale of assets classified as
held for sale (233) (166) - (399)
Other operating expenses - - (7) (7)
Depreciation - - (4) (4)
Exceptional items - - 62 62
---------------------------------------------- ------- ----------- ----------- --------
Operating profit/(loss) 4,010 9,464 (4,580) 8,894
---------------------------------------------- ------- ----------- ----------- --------
Finance income 15
Finance costs (1,184)
Profit before tax 7,725
---------------------------------------------- ------- ----------- ----------- --------
Other information
Investment property additions:
- Direct acquisitions - - - -
- Subsequent expenditure 9,980 2,471 -12,451
------------------------------- ----- ----- ------
Capital Income
Growth Generation Unallocated Total
Segmental Assets GBP000 GBP000 GBP000 GBP000
------- ----------- ----------- --------
Investment properties 159,553 150,974 - 310,527
Property, plant and equipment - - 785 785
Assets classified as held for sale 9,100 1,729 - 10,829
Inventories 74,010 - - 74,010
Other receivables 1,406 - - 1,406
Investments in joint ventures 891 10,877 - 11,768
----------------------------------- ------- ----------- ----------- --------
244,960 163,580 785 409,325
----------------------------------- -----------
Trade and other receivables 18,214 18,214
Cash and cash equivalents 13,484 13,484
------- ----------- -----------
Total assets 244,960 163,580 32,483 441,023
----------------------------------- ------- ----------- ----------- --------
Capital Income Unallocated
Growth Generation costs Total
30 June 2016 GBP000 GBP000 GBP000 GBP000
---------------------------------------- ------- ----------- ----------- --------
Revenue 9,580 7,825 - 17,405
---------------------------------------- ------- ----------- ----------- --------
Gross (loss)/profit less administrative
expenses (690) 4,626 (3,197) 739
Increase in fair value of investment
properties 3,500 4,400 - 7,900
Loss on sale of investment properties
and assets classified as held for sale (137) (362) - (499)
Other gains and operating income - 137 56 193
Exceptional items - (682) 689 7
---------------------------------------- ------- ----------- ----------- --------
Operating profit/(loss) 2,673 8,119 (2,452) 8,340
---------------------------------------- ------- ----------- ----------- --------
Finance income 242
Finance costs (1,196)
Profit before tax 7,386
---------------------------------------- ------- ----------- ----------- --------
Financial liabilities are not allocated to the reporting
segments as they are managed and measured on a group basis.
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2017
3. Segment information (continued)
Other information
Investment property additions:
- Direct acquisitions 903 2,822 - 3,725
- Subsequent expenditure 5,002 5,059 - 10,061
----------------------------------- ------- ----------- ----------- --------
Capital Income
Growth Generation Unallocated Total
Segmental Assets GBP000 GBP000 GBP000 GBP000
------- ----------- ----------- --------
Investment properties 211,546 134,975 - 346,521
Assets classified as held for sale 258 7,348 - 7,606
Inventories - 565 - 565
Other receivables 650 - - 650
Investments in joint ventures 768 9,030 - 9,798
------------------------------------ ------- ----------- ----------- --------
213,222 151,918 - 365,140
------------------------------------ -----------
Trade and other receivables 20,554 20,554
Cash and cash equivalents 23,692 23,692
------- ----------- -----------
Total assets 213,222 151,918 44,246 409,386
------------------------------------ ------- ----------- ----------- --------
Financial liabilities are not allocated to the reporting
segments as they are managed and measured on a group basis.
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2017
3. Segment information (continued)
Capital Income Unallocated
Growth Generation costs Total
31 December 2016 GBP000 GBP000 GBP000 GBP000
-------------------------------------------- ------- ----------- ----------- -------
Revenue 16,307 17,386 - 33,693
-------------------------------------------- ------- ----------- ----------- -------
Gross (loss)/profit less administrative
expenses (1,425) 11,032 (7,274) 2,333
Increase in fair value of investment
properties 23,433 10,280 - 33,713
Decrease in fair value of assets classified
as held for sale - (224) - (224)
Profit on sale of investment properties 7,473 1,693 - 9,166
Loss on sale of assets classified as
held for sale - (375) - (375)
Other gains 747 - - 747
Other operating expenses - (117) (87) (204)
Depreciation - - (2) (2)
Exceptional items - (682) 689 7
-------------------------------------------- ------- ----------- ----------- -------
Operating profit/(loss) 30,228 21,607 (6,674) 45,161
-------------------------------------------- ------- ----------- ----------- -------
Finance income 247
Finance costs (2,588)
Share of profit of joint venture 647
-------------------------------------------- ------- ----------- ----------- -------
Profit before tax 43,467
-------------------------------------------- ------- ----------- ----------- -------
Other information
Investment property additions:
Direct acquisitions - 22,524 -22,524
Subsequent expenditure 14,707 7,947 -22,654
-------------------------------- ------ ------ ------
Capital Income
Growth Generation Unallocated Total
Segmental assets GBP000 GBP000 GBP000 GBP000
----------------------------------- ------- ----------- ----------- -------
Investment properties 232,886 146,304 - 379,190
Property, plant and equipment - - 789 789
Assets classified as held for sale 6,152 2,198 - 8,350
Inventories 454 279 - 733
Other receivables 1,397 - - 1,397
Investments in joint ventures 868 9,681 - 10,549
----------------------------------- ------- ----------- ----------- -------
241,757 158,462 789 401,008
----------------------------------- ------- ----------- ----------- -------
Trade and other receivables 24,444 24,444
Cash and cash equivalents 13,007 13,007
----------------------------------- ------- ----------- ----------- -------
Total assets 241,757 158,462 38,240 438,459
----------------------------------- ------- ----------- ----------- -------
Financial liabilities are not allocated to the reporting
segments as they are managed and measured on a group basis.
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2017
4. Finance (cost)/income
Unaudited Unaudited
6 months 6 months Audited
ended 30 ended 30 year ended
June June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
------------------------------------------ --------- --------- ------------
Interest expense
- Bank interest (559) (742) (1,559)
- Amortisation of Facility and other fees (370) (249) (545)
- Other interest (255) (205) (484)
------------------------------------------ --------- --------- ------------
(1,184) (1,196) (2,588)
------------------------------------------ --------- --------- ------------
Interest received 15 242 247
------------------------------------------ --------- --------- ------------
Net finance costs (1,169) (954) (2,341)
------------------------------------------ --------- --------- ------------
5. Tax
The tax credit in the period is GBP8.9m (H1 2016: GBP1.4m
charge; FY 2016: GBP3.6m charge), which comprises a current year
tax credit of GBP0.1m (H1 2016: GBPnil; FY 2016: GBPnil) and a
deferred tax credit of GBP8.8m using a tax rate of 17% (H1 2016:
GBP1.4m charge at 18% tax rate and FY 2016: GBP3.6m charge at 17%
tax rate) as the Group now has greater certainty of recoverability
of previously unrecognised tax losses. Deferred tax assets of
GBP9.2m as at 30 June 2017 have not been recognised (FY 2016:
GBP19.7m).
The Group has a net deferred tax liability of GBP6.1m (H1 2016:
GBP12.8m and FY 2016: GBP14.9m) primarily in respect of property
revaluation gains where tax is expected to arise when the property
is sold.
6. Dividends
Unaudited Unaudited
6 months 6 months Audited
ended 30 ended 30 year ended
June June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
---------------------------------------------- --------- --------- ------------
Final dividend of 0.523p per share proposed
and paid May 2017 (1,680) - -
Interim dividend of 0.230p per share proposed
and paid December 2016 - - (672)
Final dividend of 0.510p per share proposed
and paid September 2016 - - (1,491)
---------------------------------------------- --------- ------------
(1,680) - (2,163)
---------------------------------------------- --------- --------- ------------
An interim dividend of 0.253p per share was approved by the
Board on 5 September 2017 and is payable on 13 October 2017 to
shareholders on the register on 15 September 2017. The interim
dividend is not recognised as a liability in the interim
information.
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2017
7. Earnings per share
Earnings per share has been calculated by dividing the profit
attributable to ordinary shareholders by the weighted average
number of shares in issue and ranking for dividend during the
period/year.
Unaudited
6 months Unaudited Audited
ended 30 6 months ended year ended
June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
------------------------------------------------- ------------------ ----------------------- ---------------
Profit for the period/year 16,598 5,964 39,901
------------------------------------------------- ------------------ ----------------------- ---------------
Weighted average number of shares
In issue at start of period/year 292,269,786 2,922,697,857 2,922,697,857
Effect of share issues 17,115,939 1 2
Effect of share consolidation - (939,438,598) (1,789,553,526)
Effect of own shares purchased (143,196) - -
------------------------------------------------- ------------------ ----------------------- ---------------
Weighted average number of shares in period/year 309,242,529 1,983,259,260 1,133,144,333
------------------------------------------------- ------------------ ----------------------- ---------------
Closing number of shares in underlying earnings
calculations 321,250,750 292,269,786 292,269,786
------------------------------------------------- ------------------ ----------------------- ---------------
Basic and diluted earnings per share (pence) 5.4 0.3 3.5
-------------------------------------------------
Underlying earnings per share (pence) 5.2 2.0 13.7
------------------------------------------------- ------------------ ----------------------- ---------------
Underlying earnings per share have been calculated using profit
for the period/year of GBP16.6m (H1 2016: GBP6.0m, FY 2016
GBP39.9m) and shares in issue at the end of the period/year.
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2017
8. Investment properties
The Group holds five categories of investment property being
agricultural land, natural resources, business space, major
developments and strategic land in the UK, which sit within the
operating segments of Income Generation and Capital Growth.
Income Generation Capital Growth
----------------------------------- ------------------------
Agricultural Natural Business Major Strategic
Land Resources Space Developments Land Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------ ------------ ----------- -------- ------------- --------- --------
At 1 January 2016 (audited) 16,763 16,954 90,896 157,589 52,415 334,617
Direct acquisitions 493 - 2,329 - 903 3,725
Subsequent expenditure 141 389 4,529 3,649 1,353 10,061
Increase in fair value - 3,400 1,000 2,000 1,500 7,900
Transfer to assets classified
as held for sale (1,531) - - - - (1,531)
Disposals (388) - - (7,500) (363) (8,251)
------------------------------ ------------ -------- ------------- --------- --------
At 30 June 2016 (unaudited) 15,478 20,743 98,754 155,738 55,808 346,521
------------------------------ ------------ ----------- -------- ------------- --------- --------
Transfers 4,617 5,682 (25,424) 64,763 (49,638) -
Direct acquisitions 897 - 18,805 - (903) 18,799
Subsequent expenditure 145 1,274 1,469 7,574 2,131 12,593
(Decrease)/increase
in fair value (894) 1,803 4,971 10,103 9,830 25,813
Transfer to assets classified
as held for sale (149) - (477) (6,153) - (6,779)
Transfer to property,
plant and equipment - - (783) - - (783)
Disposals 12 (13) (606) (16,375) 8 (16,974)
------------------------------ ------------ ----------- -------- ------------- --------- --------
At 31 December 2016
(audited) 20,106 29,489 96,709 215,650 17,236 379,190
------------------------------ ------------ ----------- -------- ------------- --------- --------
Subsequent expenditure 1,508 582 381 7,725 2,255 12,451
Increase in fair value 1,592 654 2,000 - 3,443 7,689
Transfer to development
properties - - - (77,734) - (77,734)
Transfer to assets classified
as held for sale (1,160) - - (8,492) (350) (10,002)
Disposals (887) - - - (180) (1,067)
------------------------------ --------
At 30 June 2017 (unaudited) 21,159 30,725 99,090 137,149 22,404 310,527
------------------------------ ------------ ----------- -------- ------------- --------- --------
Valuation process
The properties have been valued by management who have exercised
their experience and judgement in arriving at the increase in fair
value at 30 June 2017 and 30 June 2016. The properties were valued
by BNP Paribas Real Estate and Savills at 31 December 2016. Both
are independent firms acting in the capacity of external valuers
with relevant experience of valuations of this nature.
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2017
9. Investments
Investments in joint ventures
GBP000
----------------------------------------------- ------
At 1 January 2016 (audited) 768
Acquisition 9,030
At 30 June 2016 (unaudited) 9,798
----------------------------------------------- ------
Acquisition 104
Share in profit of joint venture 647
----------------------------------------------- ------
At 31 December 2016 (audited) 10,549
Acquisitions and investments in joint ventures 1,219
----------------------------------------------- ------
At 30 June 2017 (unaudited) 11,768
----------------------------------------------- ------
The Group holds 50% of the issued ordinary shares of Bates
Regeneration Limited, a joint venture with Banks Property Limited
for the development of an investment property at Blyth,
Northumberland. In addition, the Group purchased a 50% share of The
Aire Valley Land LLP from Keyland Developments Limited for a
consideration of GBP8.5m plus costs on 14 March 2016. The Aire
Valley Land LLP is a joint venture company. It controls 165 acres
of land in Leeds that abuts existing landholding of the Group on
the former Skelton Grange power station site. On 16 December 2016,
the Group entered into a joint venture agreement with Dransfield
Properties Limited to acquire a 50% share of Waverley Square
Limited. On 26 April 2017, the Group entered into a joint venture
agreement with Lancashire County Council to establish Multiply
Logistics North Holdings Limited and Multiply Logistics North LP,
to develop part of the site at Logistics North near Bolton.
The Group's share of the assets and liabilities are:
Interest
Assets Liabilities held
30 June 2017 (unaudited) Country of incorporation GBP000 GBP000 %
---------------------------------- ------------------------- ------- ----------- --------
England and
Bates Regeneration Limited Wales 1,213 (445) 50
---------------------------------- ------------------------- ------- ----------- --------
England and
The Aire Valley Land LLP Wales 12,001 (2,320) 50
---------------------------------- ------------------------- ------- ----------- --------
England and
Waverley Square Limited Wales 123 - 50
---------------------------------- ------------------------- ------- ----------- --------
Multiply Logistics North Holdings England and
Limited Wales - - 20
---------------------------------- ------------------------- ------- ----------- --------
England and
Multiply Logistics North LP Wales 1,196 - 20
---------------------------------- ------------------------- ------- ----------- --------
Interest
Assets Liabilities held
31 December 2016 (audited) Country of incorporation GBP000 GBP000 %
---------------------------------- ------------------------- ------- ----------- --------
England and
Bates Regeneration Limited Wales 1,213 (445) 50
---------------------------------- ------------------------- ------- ----------- --------
England and
The Aire Valley Land LLP Wales 12,001 (2,320) 50
---------------------------------- ------------------------- ------- ----------- --------
England and
Waverley Square Limited Wales 100 - 50
---------------------------------- ------------------------- ------- ----------- --------
Interest
Assets Liabilities held
30 June 2016 (unaudited) Country of incorporation GBP000 GBP000 %
---------------------------------- ------------------------- ------- ----------- --------
England and
Bates Regeneration Limited Wales 1,213 (445) 50
---------------------------------- ------------------------- ------- ----------- --------
England and
The Aire Valley Land LLP Wales 7,798 (3,900) 50
---------------------------------- ------------------------- ------- ----------- --------
The risks associated with these investments are as follows:
-- Decline in the availability and or an increase in the cost of
credit for residential and commercial buyers
-- Decline in market conditions and values
The Group also owns a number of other joint ventures whose value
is minimal. A full list of joint ventures can be obtained from the
Group's registered office.
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2017
10. Inventories
Unaudited
6 months Unaudited Audited
ended 30 6 months ended year ended
June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
------------------------------ --------- --------------- ------------
Development properties 73,247 - -
Planning promotion agreements 622 - 454
Options 141 - -
Finished goods - 565 279
------------------------------ --------- --------------- ------------
74,010 565 733
------------------------------ --------- --------------- ------------
The movement in development properties is as follows:
GBP000
------------------------------------ -------
At 1 January 2017 (audited) -
Transfer from investment properties 77,734
Subsequent expenditure 1,116
Disposals (5,603)
At 30 June 2017 (unaudited) 73,247
------------------------------------ -------
The market value of these properties is GBP2.3m higher than
their carrying value at 30 June 2017.
11. Cash and cash equivalents
Unaudited
6 months Unaudited Audited
ended 30 6 months ended year ended
June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
---------------------------------- --------- --------------- ------------
Cash held and other cash balances 13,484 23,692 13,007
---------------------------------- --------- --------------- ------------
12. Assets classified as held for sale
Assets classified as held for sale relate to investment
properties expected to be sold within twelve months.
GBP000
--------------------------------------- -------
At 1 January 2016 (audited) 9,128
Transferred from investment properties 1,531
Disposals (3,053)
----------------------------------------- -------
At 30 June 2016 (unaudited) 7,606
Subsequent expenditure 1,588
Decrease in fair value (224)
Transferred from investment properties 6,779
Disposals (7,399)
----------------------------------------- -------
At 31 December 2016 (audited) 8,350
Subsequent expenditure 188
Transferred from investment properties 10,002
Disposals (7,711)
----------------------------------------- -------
At 30 June 2017 10,829
----------------------------------------- -------
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2017
13. Borrowings and loans
Unaudited
6 months Unaudited Audited
ended 30 6 months ended year ended
June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
---------------------- --------- --------------- ------------
Current:
Secured - other loans (2,319) (1,938) (1,819)
---------------------- --------- --------------- ------------
(2,319) (1,938) (1,819)
---------------------- --------- --------------- ------------
Non-current:
Secured - bank loans (9,164) (58,100) (37,142)
Secured - other loans (12,109) (12,569) (13,517)
---------------------- --------- --------------- ------------
(21,273) (70,669) (50,659)
---------------------- --------- --------------- ------------
At 30 June 2017, the Group had bank borrowings of GBP9.2m net of
borrowing costs (H1 2016: GBP58.1m, FY 2016: GBP37.0m) and a
further GBP14.4m (H1 2016: GBP14.4m, FY 2016: GBP15.5m) of
infrastructure loans, which resulted in total borrowings of
GBP23.6m (H1 2016: GBP72.6m, FY 2016: GBP52.5m). The bank
borrowings are part of a GBP75.0m revolving credit facility from
The Royal Bank of Scotland. The facility is repayable on 13
February 2021 (five-year term) on a non-amortising basis and is
subject to financial and other covenants.
The infrastructure loans of GBP14.4m (net of borrowing costs)
(H1 2016: GBP14.4m, FY 2016: GBP15.5m) are provided by public
bodies in order to promote the development of major sites. They
comprise a GBP0.6m loan from Leeds LEP (H1 2016: GBP1.0m, FY 2016:
GBP0.8m) in respect of the Prince of Wales site; GBP8.5m from the
Homes and Community Agency in respect of Waverley (H1 2016:
GBP11.4m, FY 2016: GBP11.6m) and GBP0.1m for Village Farm (H1 2016:
GBPnil, FY 2016: GBP0.1m); GBP2.3m from Sheffield City Region
JESSICA Fund for Gateway 36 (H1 2016: GBP0.6m, FY 2016: GBP2.3m)
and GBP2.5m for the Advanced Manufacturing Park at Waverley (H1
2016: GBPnil, FY 2016: GBP0.7m); and GBP0.4m (H1 2016: GBPnil, FY
2016: GBPnil) from the North West Evergreen Limited Partnership for
Units 4 and 5 at Logistics North. At 30 June 2016, the Group had
loans of GBP1.5m from Greater Manchester Investment Fund in respect
of Logistics North. The loans are drawn as work on the respective
sites is progressed and they are repaid on agreed dates or when
disposals are made from the sites.
Current loans are stated after deduction of unamortised
borrowing costs of GBPnil (H1 2016: GBPnil, FY 2016: GBPnil).
Non-current bank and other loans are stated after deduction of
unamortised borrowing costs of GBP1.0m (H1 2016: GBP1.1m, FY 2016:
GBP1.1m).
14. Retirement benefit obligations
The Group has defined benefit obligations in respect of the
Blenkinsopp Section of the Industry-Wide Mineworkers' Pension
Scheme (the Blenkinsopp scheme). This scheme is closed to new
members. The balance sheet amounts in respect of retirement benefit
obligations are:
Unaudited Unaudited Audited
as at as at as at
30 June 30 June 31 December
2017 2016 2016
---------------------------------------------- --------- --------- ------------
Fair value of plan assets 2,159 2,023 2,117
Present value of funding obligations (2,721) (2,427) (2,719)
---------------------------------------------- --------- --------- ------------
Net liability recognised in the balance sheet (562) (404) (602)
---------------------------------------------- --------- --------- ------------
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2017
14. Retirement benefit obligations (continued)
The pension scheme has been valued by a qualified independent
actuary for the purposes of IAS19 (revised) and the preparation of
these condensed consolidated interim financial statements. The
assumptions used are consistent with those derived at 31 December
2016, but updated for current market conditions. Contributions of
GBP94,650 (H1 2016: GBP94,650, FY 2016: GBP189,300) have been made
in the six months ended 30 June 2017. The main assumptions
underlying the valuation of the Blenkinsopp scheme are:
Unaudited Unaudited Audited
as at as at as at
30 June 30 June 31 December
2017 2016 2016
------------------------------ --------- --------- ------------
Discount rate 2.50% 3.00% 2.55%
Rate of pension increases 2.25% 2.00% 2.30%
Rate of price inflation (RPI) 3.20% 2.95% 3.25%
Rate of cost inflation (CPI) 2.20% 1.95% 2.25%
Rate of cash commutation 20.00% 20.00% 20.00%
------------------------------ --------- --------- ------------
The amounts recognised in the consolidated income statement
are:
Unaudited
6 months Unaudited Audited
ended 6 months ended year ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
--------------- --------- --------------- ------------
Expenses (15) (33) (74)
Interest costs (9) (6) (13)
--------------- --------- --------------- ------------
(24) (39) (87)
--------------- --------- --------------- ------------
The net effect of re-measurements on the Blenkinsopp scheme
charged to the consolidated statement of comprehensive income is a
loss of GBP31,000 (H1 2016: loss of GBP25,000, FY 2016: loss of
GBP269,000).
Notes to the condensed consolidated interim financial
statements
for the six months ended 30 June 2017
15. Called up share capital
Unaudited
6 months Unaudited Audited
ended 6 months ended year ended
30 June 30 June 31 December
2017 2016 2016
Issued and fully paid - GBP000 GBP000 GBP000 GBP000
------------------------------- --------- --------------- ------------
At start of period/year 29,227 29,227 29,227
Shares issued 2,923 - -
------------------------------- --------- --------------- ------------
At end of period/year 32,150 29,227 29,227
Own shares held (263) - -
------------------------------- --------- --------------- ------------
At end of period/year 31,887 29,227 29,227
------------------------------- --------- --------------- ------------
Unaudited
6 months Unaudited Audited
ended 6 months ended year ended
30 June 30 June 31 December
Issued and fully paid - Number of shares 2017 2016 2016
----------------------------------------- ----------- --------------- ---------------
At start of period/year 292,269,786 2,922,697,857 2,922,697,857
Shares issued 29,226,974 3 3
Share consolidation (10 for 1) - (2,630,428,074) (2,630,428,074)
----------------------------------------- ----------- --------------- ---------------
At end of period/year 321,496,760 292,269,786 292,269,786
Own shares held (246,010) - -
----------------------------------------- ----------- --------------- ---------------
At end of period/year 321,250,750 292,269,786 292,269,786
----------------------------------------- ----------- --------------- ---------------
On 17 March 2017, the Group issued 29,226,974 new ordinary
shares at 95 pence each.
On 26 April 2016, 3 ordinary shares were issued at 1 pence each
and all shares in issue were consolidated from 1 pence shares into
10 pence shares.
16. Share premium account
Unaudited
6 months Unaudited Audited
ended 6 months ended year ended
30 June 30 June 31 December
2017 2016 2016
Issued and fully paid GBP000 GBP000 GBP000
---------------------------------------- --------- --------------- ------------
At start of period/year - 129,121 129,121
Shares issued 24,842 - -
Costs relating to share issue (700) - -
Other transaction costs 209 - -
Transfer to other distributable reserve - (129,121) (129,121)
---------------------------------------- --------- --------------- ------------
At end of period/year 24,351 - -
---------------------------------------- --------- --------------- ------------
17. Related party transactions
There have been no material changes in the related party
transactions described in the 2016 Annual report and accounts. The
amendments to an existing joint venture with the Peel Group, which
were approved at the Annual General Meeting on 24 May 2017 and the
details of which were set out in the Notice of Annual General
Meeting, have now been implemented.
Responsibility Statement
The Directors who held office at the date of approval of these
Financial Statements confirm that to the best of their
knowledge:
1. the Condensed Consolidated Interim Financial Statements have
been prepared in accordance with IAS 34 "Interim Financial
Reporting" as adopted by the European Union; and
2. the Interim Management Report includes a fair review of the information required by:
(a) Rule 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
half-year ended 30 June 2017 and their impact on the Condensed
Consolidated Interim Financial Statements, and a description of the
principal risks and uncertainties for the remaining second half of
the year; and
(b) Rule 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the half-year
ended 30 June 2017 and that have materially affected the financial
position or performance of the Group during that period, and any
changes in the related party transactions described in the last
Annual Report and Financial Statements that could do so.
The Board
The Directors serving during the half-year ended 30 June 2017
were as follows:
Jonson Cox Chairman
Owen Michaelson Chief Executive
-----------------------------------
Andrew Kirkman Finance Director
-----------------------------------
Lisa Clement Senior Independent Director
-----------------------------------
Anthony Donnelly Independent Non-Executive Director
-----------------------------------
Andrew Cunningham Independent Non-Executive Director
-----------------------------------
Steven Underwood Non-Executive Director
-----------------------------------
Martyn Bowes Non-Executive Director
-----------------------------------
The responsibilities of the Directors during their period of
service were as set out on pages 54 and 55 of the Annual Report and
Financial Statements for the financial year ended 31 December
2016.
By order of the Board
Chris Birch
Group General Counsel and Company Secretary
6 September 2017
Cautionary statement
This Interim Report contains certain forward-looking statements
with respect to the financial condition, results, operations and
business of Harworth Group plc. These statements and forecasts
involve risk and uncertainty because they relate to events and
depend upon circumstances that will occur in the future. There are
a number of factors that could cause actual results or developments
to differ materially from those expressed or implied by these
forward-looking statements and forecasts. Nothing in this Interim
Report should be construed as a profit forecast.
Directors' liability
Neither the Company nor the Directors accept any liability to
any person in relation to this Interim Report except to the extent
that such liability could arise under English law. Accordingly, any
liability to a person who has demonstrated reliance on any untrue
or misleading statement or omission shall be determined in
accordance with section 90A of the Financial Services and Markets
Act 2000.
Shareholder information
Financial calendar
Half-yearly results for the period Announced 6 September 2017
ended 30 June 2017
Interim dividend for the financial Ex-dividend 14 September 2017
year ended 31 December 2017 date 15 September 2017
Record date 13 October 2017
Payable
------------- -------------------
Preliminary results for the year Announced March 2018
ended 31 December 2017
------------- -------------------
Annual report and financial statements Published April 2018
for the year ended 31 December
2017
------------- -------------------
2018 Annual General Meeting May 2018
------------- -------------------
Final dividend for the year ended Payable June 2018
31 December 2017
------------- -------------------
Registrars
All administrative enquiries relating to shareholdings should,
in the first instance, be directed to Equiniti, Aspect House,
Spencer Road, Lancing, West Sussex BN99 6DA (telephone: 0371 384
2301) and should clearly state 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).
Website
The Group has a website (www.harworthgroup.com) that gives
further information on the Group.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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