Harworth Group H1 2026 Earnings Report

Harworth Group EPS Results

• Actual EPS: -GBX 7.80
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Harworth Group Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Harworth Group Announcement Details

• Quarter: H1 2026
• Date: 9/9/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, September 9, 2026
• Conference Call Time: 5:00AM ET

Harworth Group (LON:HWG) is a leading sustainable regenerator of land and property for development and investment which owns, develops and manages a portfolio of over 14,000 acres of land on around 100 sites located throughout the North of England and Midlands. The Group specialises in the regeneration of large, complex sites, in particular former industrial sites, into new residential and industrial & logistics developments. Visit www.harworthgroup.com for further information.

Harworth Group H1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Industrial, logistics, and powered-land momentum remained strong, with three pre-lets completed or in legal negotiations after period-end, generating expected annualized rent of £3.7 million at a 17% premium to estimated rental value. The substantially construction-ready land bank reached a record 3.8 million square feet, with estimated gross development value of £600 million over the next three to five years.
• Positive Sentiment: Harworth entered exclusivity with a leading data-center provider on a second hyperscale site, while its powered-land pipeline totals 0.8 gigawatts and could grow to 1.9 gigawatts. Management cited potential future profits of £292 million from the existing powered-land portfolio, although these estimates depend on securing planning, power, and full ownership assumptions.
• Negative Sentiment: First-half total accounting return was -3.7%, with EPRA NDV per share falling from 224.4p to 214.8p. Residential exposure was the main drag, contributing substantial valuation losses due to softer housebuilder demand and higher construction costs, while net debt rose to £190 million from £145.9 million.
• Positive Sentiment: The company plans to exit residential entirely and become a pure-play powered-land and industrial-logistics platform, reallocating capital toward segments that generated a reported 24% average annual return on capital employed over the past three years. Management is targeting low-double-digit long-term total accounting returns and expects the simplified structure to reduce costs.
• Positive Sentiment: The board approved a 10% increase in the interim dividend to 0.592p per share, while liquidity remained £99.5 million and loan-to-portfolio value was 20.3%, below the company’s 25% ceiling. Harworth also said it may return surplus capital to shareholders after assessing future investment opportunities.

Presentation

[Lynda Shillaw, CEO at Harworth Group]

A very good morning, everyone. Kitty and I are delighted to be speaking to you today from our offices here in the heart of our Waverley site, home to the world-class advanced manufacturing park. Thank you for joining us for Harworth's half-year results for the six months ended June 30th, 2026. Before we get into our results presentation, you will no doubt be aware that Harworth is currently in an offer period. Alongside today's results, we have published our response to the unrecommended offer for Harworth Group by Peel Pepper (U.K.) Limited, a company indirectly wholly owned by Peel Holdings Group Limited. Materials relating to our response can be found on the harworth.uk website, with the focus of today's presentation being on our performance during the first half. Here is our agenda for today.

[Lynda Shillaw, CEO at Harworth Group]

First, I will provide a brief overview of what we have achieved so far this year and the continued progress we have made in bringing our sites forward. Kitty will then take you through our financial and operational performance, and I will then provide a strategic update. This will include more details on our acceleration of key initiatives to create a simpler, lower cost, and higher returning platform, in turn delivering sustainable further growth for shareholders. I want to begin with some of our key highlights from the first half. It was another period of strong operational momentum and disciplined delivery against what has continued to be a challenging market backdrop. First, we continue to build momentum across our industrial and logistics and powered land pipeline. This culminated in us completing two pre-lets shortly after period end with a third in legals.

[Lynda Shillaw, CEO at Harworth Group]

We also entered into exclusivity with a leading data center provider on a second powered land sale. I will cover these both in more detail shortly. Secondly, as of today, we have our largest ever substantially construction-ready land bank. This provides a material pipeline for value realization through pre-lets, land sales, and selective development, with the potential for gross development value estimated at GBP 600 million over the next three to five years. Finally, we are continuing to build on the strong track record we have established over many years by today announcing an acceleration of key initiatives to create a simpler, lower cost, and higher returning platform, and I will touch on this in more detail later in the presentation.

[Lynda Shillaw, CEO at Harworth Group]

The group's industrial logistics and powered land platform totals 34.8 million square feet, with accepted power offers of 0.8 GW, and 73% of the pipeline is either consented or in the planning system. This portfolio would be extremely difficult to replicate today given its scale, together with the advanced planning and power supply status and the strategic locations of many of our sites. Sustained investment in infrastructure and enabling works during the period and last year has created our largest ever substantially construction-ready land bank of 3.8 million square feet, which as mentioned, has the potential to deliver GBP 600 million of GDV over three to five years. We are already underway with monetizing this pipeline. So far this year, we have completed or entered into legals on three pre-lets totaling over 300,000 sq ft.

[Lynda Shillaw, CEO at Harworth Group]

These are on long-term leases ranging from 15-20 years and are expected to generate GBP 3.7 million of annualized rent at an average of 17% premium compared to ERV. We are also in negotiations across a further 1.5 million square feet, demonstrating strong occupier demand across our product range. Powered land and data centers are a significant component of the opportunity ahead. Here, the market dynamics are very favorable, with the U.K.'s demand for cloud services, AI computing, and data storage continuing to accelerate. While London continues to dominate market share, attention to campuses and regional locations is rising amid power constraints in the southeast and also supportive government policy for development in the regions. The timeline on this chart illustrates our track record and the opportunity ahead of us. Our first hyperscale powered land sale to Microsoft at Skelton Grange is now progressing towards completion.

[Lynda Shillaw, CEO at Harworth Group]

We also announced last month that we have entered exclusivity with a leading data center provider on a powered land scale at a second site to deliver hyperscale data center. The site already has an accepted power connection offer and has strong planning prospects. Beyond these transactions, we have identified a further four potential hyperscale data center opportunities. All are owned freehold or controlled through options or joint ventures, and all but one are already progressing through the planning system, with stakeholder engagement underway on the remaining site. Our advantage is not power alone. These opportunities combine control of strategic sites, planning expertise, infrastructure capability, and access to power. Those characteristics are scarce and increasingly valuable as hyperscales seek regional locations that offer speed to market, suitable infrastructure, and transport connectivity.

[Lynda Shillaw, CEO at Harworth Group]

Our model remains focused on unlocking and monetizing the land value in a capital-limited way and at an early stage, which is well before power on dates. An exercise undertaken by JLL has identified that the potential future profits from our existing powered land portfolio, so beyond Skelton Grange, as service powered land for data centers are estimated to be GBP 292 million. This assumes full ownership, planning achieved, and power secured, but represents significant embedded value that we are working hard to realize. I will now hand you over to Kitty, who will take you through our financial performance in the first half of the year.

[Kitty Patmore, CFO at Harworth Group]

Thank you, Lynda. Harworth's financial performance in the first half reflected continued operational progress across the powered land and industrial logistics portfolio, but also macro-driven valuation pressure, particularly in residential markets. Operational momentum was resilient during the first half, underpinned by progress across our powered land and industrial logistics pipeline. Across our industrial logistics pipeline, we continued site-enabling works to produce our largest ever substantially construction-ready land bank, providing flexibility to capture demand through pre-lets, land sales, and selected speculative development. Occupier demand remained robust, with three pre-lets completed or in legals post period end, and negotiations are ongoing across a further 1.5 million square feet of space.

[Kitty Patmore, CFO at Harworth Group]

Meanwhile, in our powered land pipeline, we progressed the final Microsoft land sale at Skelton Grange towards completion and identified five further potential data center sites in our land bank capable of being delivered in the short to medium term. Post period end, we entered exclusivity on the second of these for a hyperscale data center site, and we also accepted a new 200 MW power offer. Finally, against a challenging backdrop, we progressed full year sales with 58% of budgeted full-year sales either completed, exchanged, or in legals. This includes 952 service plots in our residential portfolio, where during the half we sold land for over 150 plots to a national house builder at Benthall Grange in Ironbridge. Moving on to our financial performance.

[Kitty Patmore, CFO at Harworth Group]

Total accounting return was -3.7%, driven primarily by a reduction in EPRA NDV per share from GBP 2.244 at December 31st, 2025 to GBP 2.148.

[Kitty Patmore, CFO at Harworth Group]

This was driven primarily by residential market headwinds, namely softer demand in house builder end markets and market construction cost inflation. Industrial and logistics valuations remained broadly stable as management actions to drive value across industrial and logistics and data center sites largely offset macroeconomic-driven cost increases in labor and materials. Total property sales in half one were GBP 13.2 million, compared to GBP 18.9 million in the prior year period. Post period, we completed a further GBP 8.1 million disposal. Headline sales pricing across these transactions was marginally ahead of book value before transaction costs and the discounting of any deferred consideration to present value. Consistent with previous years, the net loan-to-portfolio value increased in the first half to 20.3%. This reflects the normal phasing of our cash flow, with investment in sites occurring ahead of sales receipts, which are generally weighted towards the second half.

[Kitty Patmore, CFO at Harworth Group]

At all times, we remained well within our self-imposed maximum level of 25%. Reflecting its confidence in the business, the board has approved to pay an interim dividend of GBP 0.00592 per share, an increase of 10% in line with the group's policy, underpinning their confidence in the company's ability to grow recurring income. This slide shows a breakdown of our GBP 14.9 million portfolio value loss during the half. Our industrial and logistics major developments remain a source of strong value creation, generating a GBP 12.7 million valuation gain as we advanced key sites, including Skelton Grange and our broader data center, powered land, and industrial and logistics pipeline. This gain was offset by GBP 14.7 million loss in industrial and logistics strategic land, where macro-driven development cost inflation, particularly on those sites nearing planning permission and delivery, outpaced near-term value recognition.

[Kitty Patmore, CFO at Harworth Group]

The industrial and logistics investment portfolio recorded a GBP 4.3 million loss driven by a planned repositioning at one asset which increased vacancy. Excluding that asset, the portfolio increased in value by GBP 0.8 million, demonstrating its underlying strong fundamentals supported by ERV growth and lettings progress. As I've already touched on, our residential exposure was a material headwind. Both major developments and strategic land recorded losses, GBP 15.8 million and GBP 1.2 million respectively, reflecting softer demand and increased market-driven costs. Our portfolio of natural resources, agricultural land, and other assets generated GBP 8.4 million of valuation gains, boosted by new biodiversity net gain schemes and an improved outlook for income on some energy sites. Combined, these movements resulted in a net portfolio value loss of GBP 14.9 million in the first half.

[Kitty Patmore, CFO at Harworth Group]

Our balance sheet remains solid, and we continue to deploy leverage strategically to support investment in our largest ever construction-ready land bank whilst maintaining flexibility. Net debt increased to GBP 190 million at June 30th from GBP 145.9 million at December 31st, reflecting our continued investment in high-returning industrial logistics sites and the normal phasing of half one expenditure ahead of half two sales receipts. The net loan to portfolio value stands at 20.3%, comfortably within our 25% self-imposed maximum and with available liquidity of GBP 99.5 million, comprising GBP 90 million of undrawn revolving credit facility capacity, plus GBP 9.5 million of cash. This provides substantial firepower to progress our development pipeline while maintaining flexibility. Our GBP 275 million revolving credit facility includes a GBP 50 million uncommitted accordion option with no refinancing requirements until November 2029, and an option to extend by a further year.

[Kitty Patmore, CFO at Harworth Group]

This all gives us confidence to continue investing in our sites, as well as optionality to capitalize on selective opportunities. In short, our robust balance sheet position, combined with disciplined capital allocation and asset management and sales, provides us with sufficient liquidity to progress the highest returning sites whilst keeping gearing within our internal targets. The quality of our investment portfolio and its income generation characteristics continue to improve as we unlock the substantial unrealized value within our portfolio. At June 30th, the investment portfolio was valued at GBP 301.4 million and was 77% Grade A by value. The portfolio is benefiting from strong leasing momentum. The three pre-lets, now completed or in legals, will add GBP 3.7 million of annualized rental income at a 17% premium to combined estimated rental value when they transfer into the investment portfolio.

[Kitty Patmore, CFO at Harworth Group]

Following the period end, we sold Etherow Industrial Estate for GBP 8.1 million at a 3% premium to book value, further supporting the current portfolio valuation. This sale is consistent with our approach of selling assets and the secondary assets in particular once the business plan has been completed, whilst recycling capital into higher quality Grade A stock and creating a portfolio increasingly focused on modern, sustainable assets with longer term income and reversionary potential. This disciplined approach moves us decisively towards our 100% Grade A target. That concludes the financial and operational review for the first half. Now I will hand you back to Lynda to provide a strategic update.

[Lynda Shillaw, CEO at Harworth Group]

Thank you, Kitty. I now want to turn attention to our strategy. Since the launch of our current strategic plan in 2021, we have delivered a strong track record of growth and returns. This includes securing planning on over 9 million square feet of industrial and logistics space, with a GDV of around GBP 1.3 billion, and with a consistently high success rate on planning applications. Concluding headline sales totaling GBP 700 million across both our industrial and logistics and residential portfolios at an average 24% profit on historic cost, and acquiring a total of 15.4 million square feet of industrial and logistics land, with an estimated GDV of over GBP 2.3 billion. Over the five years to December 31, 2025, delivering an average total accounting return of 8.1%, representing upper quartile performance amongst our peers in the listed sector.

[Lynda Shillaw, CEO at Harworth Group]

Having executed our current strategic plan consistently since 2021 and successfully positioning the business to drive future medium to long-term returns from our industrial and logistics land bank, we are today announcing an acceleration of key initiatives to align capital allocation and organization design to the structural shifts in our primary markets. This slide shows the four key elements of this acceleration. We believe these reflect the changed external environment and provide a path to long-term value creation, allowing future investment requirements to be substantially funded through the internally generated capital. Having been agreed in principle by the Harworth Board earlier this year, the implementation of this platform is already underway, and once completed, we believe it can deliver higher and more sustainable returns for Harworth shareholders, targeting low double digit total accounting returns in the long term.

[Lynda Shillaw, CEO at Harworth Group]

Now I'd like to talk you through each of these elements in turn. Starting with becoming a pure play powered land and industrial and logistics specialist. This slide shows the return on capital employed across different segments of our business over the past three years, and you can see that industrial and logistics land and developments, including data centers, have delivered an average annual return on capital employed of 24%. In 2024, we announced our intention to position our portfolio to 85% industrial and logistics and thereby reduce residential exposure to below 15% by 2029. Due to the scale and strength of opportunities across our industrial and logistics and powered land pipeline, we're confirming today our intention to exit the residential sector entirely and accelerate the reallocation of capital to higher returning opportunities aligned to industrial and logistics and powered land.

[Lynda Shillaw, CEO at Harworth Group]

Our data center strategy is focused on identifying, advancing, and then selling sites capable of supporting hyperscale data centers, as well as smaller scale digital infrastructure projects across our portfolio. Our 0.8 GW U.K. powered land pipeline is one of the largest secured powered land pipelines held by a U.K. listed real estate platform, and we have identified opportunities to increase the total powered land pipeline to 1.9 GW. As this chart shows, by disposing of sites at the powered land stage, we believe that we can monetize a substantial proportion of the value uplift associated with data center developments. Crucially, we could do this earlier than would be the case under a conventional build and retain delivery model, significantly reducing the capital requirements, execution risk, and development timelines relative to the build and retain model. Moving on to refocusing on strategic land, enabling works and selected developments.

[Lynda Shillaw, CEO at Harworth Group]

Our distinctive capabilities lie in assembling and master planning complex strategic sites, securing planning and power, and carrying out remediation and infrastructure works, and creating construction ready development opportunities. These are the activities where we create the most value and where, through the scale of our land bank, we have a clear competitive advantage. As you can see from this slide, we have a strong track record of delivery in this area over the past five years, with over 9 million square feet of planning permission secured, 7.5 million square feet of developments and land sales, and 6 million square feet of land serviced or with enabling works underway. Our industrial and logistics pipeline is extensive, with 3.8 million square feet substantially construction-ready and a further 9.6 million square feet in the medium-term pipeline.

[Lynda Shillaw, CEO at Harworth Group]

As we bring our pipeline forward, we will retain the flexibility to sell serviced land to occupiers and investors, build out on balance sheet or in partnership, and sell or retain built assets. Harworth has an established track record in all of these areas, and this flexible approach helps us to actively manage the risk profile of the business and recycle capital more efficiently. JLL have assessed the potential future development profits for 75% of the serviced land, substantially construction-ready, and medium-term pipeline set out in the table above. JLL's opinion of the additional potential net realizable value of this pipeline, including future development profits, is GBP 174 million. Crucially, this net realizable value is not included in the group's formal valuations as per Red Book guidance, and it is therefore not reflected in our EPRA NDV.

[Lynda Shillaw, CEO at Harworth Group]

When combined with Harworth's ability to sell or selectively develop and hold its industrial and logistics sites, subject to market demand and potential returns, our development pipeline provides a significant growth opportunity, the value of which is not reflected in our EPRA NDV. Now, onto sizing the investment portfolio to support funding while recycling to optimize returns. Our investment portfolio was valued at GBP 301 million as at the 30th of June 2026 and is 77% Grade A by value. Transferring developments into our investment portfolio serves three main purposes. Firstly, providing a recurring source of income supporting cash generation. Secondly, facilitating debt financing on the land and development pipeline. And thirdly, value creation through asset management and selected disposals. Over the last five financial years, it has delivered an average unlevered return on capital employed of 8.2% per annum in excess of the cost of debt.

[Lynda Shillaw, CEO at Harworth Group]

Going forward, the investment portfolio will be more actively managed to crystallize asset management and valuation gains on an ongoing basis, with the principal aim of supporting the group's debt funding while also optimizing returns. As a result, the portfolio will no longer be managed to a target size, but is expected to reach a medium-term stabilized value in the order of GBP 500 million-GBP 600 million. This approach will also release capital for higher returning strategic land and development opportunities. Finally, transitioning to a pure-play powered land and industrial logistics platform will create a simpler business model. Alongside our digital and wider operational transformation, which we've been implementing over the last two years, this will bring significant operational efficiencies. Combined, these two factors will support material reductions in our cost base.

[Lynda Shillaw, CEO at Harworth Group]

We intend to quantify these cost savings in a quantified financial benefits statement, which requires reports from Harworth's reporting accountants and financial advisors. The preparation of these reports is underway so that we can publish details of our targeted cost savings as soon as possible. So to the outlook. We're firmly focused on pursuing the optimal way to preserve and deliver the full embedded value of Harworth to our shareholders. We believe that the acceleration of key initiatives to alter the capital allocation and organization design of Harworth reflects the changed external environment and provides a path to long-term value creation.

[Lynda Shillaw, CEO at Harworth Group]

If we identify that we hold surplus capital, including following sales of material assets and having assessed future accretive capital deployment opportunities, the board will consider returning some or all of this surplus capital to shareholders, enabling them to benefit directly from the value creation initiatives as they are executed. Having been agreed in principle by our board earlier this year, the implementation of this platform is already underway. Once completed, we believe that it can deliver higher and more sustainable returns for Harworth shareholders, and we're targeting low double-digit total accounting returns in the longer term. This concludes our presentation. Thank you.

Participants

Executives

• Lynda Shillaw, CEO
• Kitty Patmore, CFO