Harworth Group PLC Full Year Results for 12 months ended 31 Dec 2023

RNS Number : 3413H

Harworth Group PLC

19 March 2024

Harworth Group plc

Full Year Results for the 12 months ended 31 December 2023

Harworth outperforms and remains confident in reaching its £1bn target in 2027

Harworth Group plc ("Harworth" or the "Group"), a leading regenerator of land and property for sustainable development and investment, today announces its results for the 12 months ended 31 December 2023.

Key Non-Statutory Measures⁽¹⁾	2023	2022	Key Statutory Measures	2023	2022
Total Return (%)	5.1	0.1	Operating profit (£m)	54.2	44.5
EPRA NDV per share (p)⁽²⁾	205.1	196.5	Net asset value (£m)	637.7	602.7
Value gains (£m)	58.1	(2.0)	Total dividend per share (p)⁽³⁾	1.466	1.333
Net loan to portfolio value (%)	4.7	6.6	Net debt (£m)	36.4	48.4

Lynda Shillaw, Chief Executive of Harworth, commented: "Harworth once again delivered another strong performance in 2023, ahead of the MSCI All Property Index and resulting in one of the sector's leading total returns, while maintaining a low loan-to-value of just 4.7% and significant financial liquidity. We continue to benefit from the unique combination of our extensive landbank and the application of our specialist skillset to develop new market opportunities and realise the highest value from each of our sites. This saw us complete serviced land and property sales at prices broadly in line with book values before transaction costs, achieve lettings ahead of estimated rental values, and progress some exciting acquisitions as we build our future pipeline and continue to move sites through the planning system.

"Since 2015, Harworth has undergone a transformation as a business whilst doubling its EPRA NDV. The progress made across our portfolio in 2023 underpinned a 4.4% increase in our EPRA NDV, to £663m, and we remain confident of achieving our strategic ambition of becoming a £1bn business by the end of 2027. I am delighted with the performance of the business over the year, which was a tough one against a continued challenging macroeconomic backdrop, ongoing structural changes in parts of the market and domestic political uncertainty.

"So far in 2024, macroeconomic conditions remain challenging but there are signs of optimism. Our key markets remain characterised by structural undersupply and we are seeing good demand for our serviced residential land as well as high levels of occupier interest in our employment sites. We have a self-propelled growth strategy driven by our landbank and the skills of our people, and our long-term through-the-cycle approach means that, as well as securing and progressing opportunities to deliver long-term value to investors, we are well positioned to take the management actions that will generate further value gains from our portfolio in the year ahead."

Management actions drive strong EPRA NDV performance and Total Return

· Total Return⁽¹⁾ of 5.1% (2022: 0.1%), driven by an increase in EPRA NDV per share

· EPRA NDV⁽¹⁾⁽²⁾ per share increased 4.4% to 205.1p (31 December 2022: 196.5p), driven by management actions to unlock high value uses from sites and progress planning applications

· EPRA NDV increased £29.1 million to £662.9m (31 December 2022: £633.8m)

· An increase of 10% in the final dividend to 1.022p per share, in line with the Group's dividend policy, bringing the total dividend for the year to 1.466p per share

Strong balance sheet and financial position, with low gearing and significant available liquidity

· Year-end net debt of £36.4m (31 December 2022: £48.4m), representing a net loan to portfolio value ("LTV") of 4.7% (31 December 2022: 6.6%)

· Available liquidity of £192.2m at year-end (31 December 2022: £175.6m) which, coupled with our ability to generate cash through land sales, allows us to self-fund our extensive development pipeline

· No major refinancing requirement until 2027

193,000 sq. ft of industrial & logistics space developed, with a remaining pipeline of 37.7m sq. ft

· Completed development of 110,000 sq. ft of Grade A space at Gateway 36 in Barnsley and 83,000 sq. ft at the Advanced Manufacturing Park ("AMP") in Rotherham, with 55% currently let, exchanged or in heads of terms

· Work underway on a further 187,000 sq. ft at the AMP, comprising two pre-let units and one occupier-owned build-to-suit unit, underscoring the location's popularity and Harworth's flexible approach to development. In addition to this, 21,000 sq. ft has commenced at Olive Lane, a new mixed-use heart of the community at our Waverley site with a medical centre, pharmacy, convenience retail and leisure.

· Enabling works underway for 1.5m sq. ft, including our first unit at Chatterley Valley in Staffordshire, and a unit at our Droitwich site in Worcestershire

· These developments plus recently completed vacant space are expected to add £5.1m annualised rent, of which £1.9m is already let, exchanged or in heads of terms.

1,170 residential plots sold, with an extensive remaining pipeline of 27,190 plots

· Nine transactions completed with six different housebuilders, comprising national and regional operators, demonstrating sustained demand for the Group's de-risked residential serviced land

· Headline residential sales of £52.1m, with all transactions at prices broadly in line with book values before transaction costs

· After year-end, completed a further plot sale, at book value, to Sky-House to construct 50 new homes at Waverley in Rotherham, with a robust pipeline for further residential plot sales in the months ahead

Progress in securing planning approvals and forward-funding agreements for mixed tenure products

· First forward-funding agreement signed as part of our portfolio of sites for affordable housing, with a further one signed after year-end, both with Great Places, for the delivery of 155 homes in total

· Planning approvals now received for 45% of our portfolio of sites for build-to-rent ("BtR") properties; progressing towards exchange of contracts with selected partners

· Planning approval received for the first pilot site for the Group's net zero carbon homes product, at the Prince of Wales development in Pontefract

Further strengthening our pipeline through acquisitions and planning progress to unlock high value uses

· Acquisitions added 1.8m sq. ft of industrial & logistics space and 809 residential plots to the pipeline with several other significant transactions in legals

· Secured outline planning consent for 397 residential units, with a further 500 units approved after the year-end, and 1.1m sq. ft of industrial & logistics space, including a 0.8m sq. ft approval at Skelton Grange, Leeds

· Applications for 10.1m sq. ft of industrial & logistics space and 1,774 residential plots progressing through the planning system at year-end

Investment Portfolio⁽⁴⁾ 37% Grade A at year-end (31 December 2022: 18%)

· £70.0m of Investment Portfolio sales completed broadly in line with book values before transaction costs, all of which are assets where value had been maximised prior to sale through asset management initiatives

· After year-end, completed the sale of a site in Flaxby Moor Industrial Estate, Knaresborough, previously occupied by Ilke Homes, for £13.3m, in line with book value

· Leasing activity added £2.1m (17%) to annualised rent; new lettings achieved an average 10% premium to ERVs, and renewals and rent reviews achieved on average a 27% uplift to previous passing rent

· Year-end vacancy rate of 9.9% (31 December 2022: 8.3%); reduced to 1.2% when excluding space completed in the preceding 12 months (31 December 2022: 2.7%); 98% of rent due in 2023 collected to date

Delivering a positive lasting impact for our planet, people and communities

· Opened 71 acres of green space and nature recovery across Cadley Park, Derbyshire and South East Coalville, Leicestershire, alongside a new learn-to-ride cycle track at Waverley

· Began construction of a new forest school at South East Coalville and a new mixed-use heart of the community at Waverley, Olive Lane, providing retail and leisure space

· Publication of Net Zero Carbon ('NZC') Pathway, outlining the steps that the Group is taking to achieve its ambition of being operationally NZC by 2030 and NZC for all emissions by 2040

· Our Communities Framework will be released alongside the Annual Report, detailing Harworth's approach to delivering social value through regeneration: our portfolio has the potential to deliver £4.8bn of GVA

Notes:

(1) Harworth discloses both statutory and alternative performance measures ('APMs'). A full description of these is set out in Note 2 to the financial statements with a reconciliation between statutory measures and APMs set out in the appendix to the financial statements

(2) European Public Real Estate Association Net Disposal Value

(3) The Ex-dividend date, Record date and Payment date for the 2023 dividend can be found in the Shareholder Information section of this announcement

(4) The Investment Portfolio excludes a site at Flaxby Moor Industrial Estate, Knaresborough that was previously occupied by Ilke Homes, as this was sold shortly after year-end

For further information

Harworth Group plc
Lynda Shillaw (Chief Executive) Kitty Patmore (Chief Financial Officer)	T: +44 (0)114 349 3131 E: investors@harworthgroup.com

FTI Consulting
Dido Laurimore Richard Gotla Eve Kirmatzis	T: +44 (0)20 3727 1000 E: Harworth@fticonsulting.com

Results presentation

Harworth will host a presentation for analysts and investors at 9.30am today. A live webcast and playback of this can be accessed at the following link: https://brrmedia.news/HWG_FY23

Investor Meet Company presentation

A presentation relating to these results will also be hosted via the Investor Meet Company platform on 26 March 2024 at 3.00pm. The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9am the day before the meeting, or at any time during the live presentation.

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

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

About Harworth

Listed on the Premium Segment of the Main Market, Harworth Group plc (LSE: 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 the 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. LEI: 213800R8JSSGK2KPFG21

Chair's statement

When I wrote my statement a year ago I said that, "alongside the rest of the market, planning what the business will achieve in 2023 has been as much an art as a science given the prevailing uncertainty". I went on to say that "whilst we cannot control markets we can position ourselves to make the most of what positive momentum may develop during the year, progressing those sites that will be most in demand by housebuilders as oven ready products in strong locations, and working with potential occupiers of commercial space to tailor what we bring forward to meet their requirements through build-to-suit and pre-let development. We will also seek to advance sites through the planning process so that when market conditions are right to invest further in particular sites, we have the consents we need to progress." And that is exactly what Lynda Shillaw and her management team have delivered over the past 12 months, resulting in a creditably strong performance of a Total Return* for the year of 5.1% against an uncertain market backdrop.

I also said that over the long term all the value created in the business will be due to management actions and that has been fully supported by how 2023 has turned out. Underlying markets are little changed over the year - industrial & logistics yields have continued to increase but at a slower rate following the material increase in the fourth quarter of last year as interest rates increased and this yield shift has been largely offset by growth in market rent. Current transactional evidence has underpinned the value of our residential sites in which we have continued to see strong interest from housebuilders. The £29m increase in EPRA NDV* during the year was, therefore, primarily the result of the development milestones our management have achieved: obtaining planning consents; installing site infrastructure; securing sales on residential sites; evidencing site specific use value; delivering practical completions; and gaining letting commitments for commercial development.

There are of course elements outside of our control, planning being a case in point. It is widely reported that the planning process itself is lengthening as local authority resource constraints bite, whilst the backdrop of policy and political uncertainty increasingly influences site specific planning decisions. Value gains projected to be delivered during the course of a particular year may, therefore, end up being realised in a subsequent period despite the best endeavours of management. While our team is highly adept at navigating these challenges, the long-term nature of the business makes relative progress against our plans over the medium term a better measure of the successful execution of strategy than solely focussing on the achievement of specific targets for a discrete year. Having said this, we do continue to outperform industry benchmarks, with our Total Return* of 5.1% comparing favourably to the MSCI All Property Return of -1.0% in the year, as it did in the prior year when our Total Return* was 0.1% but the MSCI All Property Return was -8.5%.

Lynda's Chief Executive's Report sets out what has been achieved during the year against each element of the strategy agreed by the Board in 2021 following her appointment. As will be seen material progress has been made in every area.

· With practical completion of 193,000 sq. ft of directly developed Grade A commercial space, and £70.0m sales of mature properties, 37% of our investment portfolio is now Grade A, up from 18% last year.

· Against the objective to broaden our range of residential products we are working towards exchange with partners interested in our BtR land portfolio and have signed our first deals for our affordable homes developments. We have also launched our pilot NZC homes development, Coze Homes.

· Our development strategy aims to maintain a 12 to 15-year forward pipeline of sites at varying stages of planning and development. Control of sizeable land holdings was secured during the year, the nature of the tenure across freehold, option, and planning promotion agreement being determined by the degree of planning confidence, development timescales, and what is commercially optimal. In all we added the potential for 1.8m sq. ft of industrial & logistics space and 809 housing plots.

Within our ESG strategy we are this year setting out in detail the framework of our social strategy under our Communities pillar, supplementing our Net Zero Carbon Pathway that was published last year under the Planet pillar. For every potential development we assess its environmental and social implications, very conscious of the material impact of developments of the scale we bring forward on both the natural world and the wider communities of which they will form a part. Our Communities Framework sets out our approach to regeneration and aligns as far as possible with both industry and national guidance. We are also gaining an increasingly detailed insight into our carbon footprint having made strong progress analysing our Scope 3 emissions, both those of our contractors and suppliers that are upstream of our developments and those downstream businesses that are tenants within our Investment Portfolio. We are working with both upstream and downstream stakeholders to reduce emissions along our path to deliver our commitment to be NZC for all emissions by 2040.

With falling inflation and the next move in interest rates expected to be downwards, it is good to see market interest increasing in our sector and the Harworth share price outperforming sector benchmarks having gained 41% since its low point in October 2023. That said, we remain acutely conscious that we still stand at a 34% discount to NDV which is deeply frustrating for all shareholders, the Board, management, and employees alike. We believe that, as the sector rerates, the discount will continue to narrow: equally, we recognise that the structure of our shareholding and the resulting lack of liquidity in our stock can be a barrier to entry for investors wishing to deploy significant capital. It is, therefore, the task of the Board and management to make the investment proposition as compelling as possible by the quality of our delivery against our strategic objectives and the effectiveness with which we communicate what we do and the successes we achieve. We maintain a strong balance sheet with relatively low gearing, significant available liquidity to take advantage of opportunities developed by our team, and no refinancing requirements under our core facilities.

The multiple discrete stages at which we realise value on our developments make it inevitable that Harworth is managed as a through-the-cycle business. Success at each of these stages depends primarily on one thing - people. Since becoming Chair at Harworth I have consistently held that Harworth is all about its people, their skills, experience, and position in our sector. It is they who see the strategic potential of undeveloped land and create substance from their vision through their master plan, assessing the potential of the site given its particular characteristics. It is they who turn that master plan into an outline capable of securing planning consent and negotiate with planners and local communities how best to meet their, and our, objectives. It is they who have the relationships with landowners, their agents, site finders and housebuilders and negotiate the terms of both site acquisitions and sales. It is they who, as seasoned professionals, have the connectivity developed across their careers to ensure those entities with a possible interest and their agents are fully aware of a site's potential, and who frequently work over a long period to develop that interest to the point of being willing to agree a transaction that fully reflects the extent of value that our work on bringing the site forward has created.

We recognise fully that our people are at the heart of our success, a primary focus of Lynda and her team being the recruitment and retention of the people we need, designing policies and practices that engage, motivate, and incentivise. In turn, the Board recognises that effective leadership of the development and implementation of our strategy is key to our success and we regard ourselves fortunate to have a highly capable and committed senior leadership team, the retention of which we aim to ensure through appropriate motivation and incentivisation.

Whilst there were no departures or new faces within either our executive or non-executive directors last year we shall be saying goodbye at the end of this year to Steven Underwood, our longest serving non-executive director. Steven first joined the board in August 2010 as the representative director of Peel Group, one of our largest shareholders, where he is currently Chief Executive. Following the reduction of Peel Group's shareholding to below 25% in 2019, we asked Steven to remain for a period on the Board in a personal, rather than representative, capacity given his depth of understanding of real estate development and the market in the north of England. At December he will have served almost 14 and a half years on our Board, hence, whilst offering himself for reappointment at the forthcoming AGM, he will be doing so on the basis that he will step down on 31 December 2024. He has been a great colleague who has added considerable value to our deliberations over a long period, and his wise counsel will be missed.

Let me finish by conveying my grateful thanks, and those of our Board, to everyone, both inside and outside of Harworth, who is part of, and has supported, our team in achieving another strong year delivering the operational milestones of our strategy. Our success is totally dependent on, and derives from, what you contribute - thank you.

Alastair Lyons

Chair

18 March 2024

^*Harworth discloses both statutory and alternative performance measures ("APMs"). A full description of these is set out in Note 2 to the financial statements with a reconciliation between statutory measures and APMs set out in the appendix to the financial statements

Chief Executive's review

Harworth delivered another strong performance in 2023 achieving sector-leading results ahead of the MSCI All Property Index, while maintaining a low loan-to-value* of just 4.7% and significant financial liquidity. We continue to benefit from the unique combination of our extensive landbank and the application of our specialist skillset to develop new market opportunities and realise the highest value from each of our sites. This saw us complete serviced land and property sales at prices broadly in line with book values before transaction costs, achieve lettings ahead of estimated rental values, and progress some exciting acquisitions as we build our future pipeline and continue to move sites through the planning system.

Our markets

Harworth's focus markets of residential and industrial & logistics are characterised by structural undersupply and are fundamental to delivering growth in the UK economy.

Industrial & logistics

In the industrial & logistics sector, demand continues to be driven by structural factors, including the growth of online retail, the need for nearshoring and reshoring to ensure supply chain stability and a demand for more energy efficient and sustainable space. However, softer macroeconomic conditions naturally resulted in occupiers becoming more cautious, and so negotiations in the occupational market became more protracted and deals took longer to complete. This translated into more normalised levels of take-up across the market in 2023, following three record years, albeit Savills estimates that take-up remains 12% above the pre-Covid average.

The lower levels of take-up seen in 2023 have resulted in an increase in supply and higher vacancy rates across the market. While no region has been completely immune from rising supply, the three regions of the UK that continue to have the tightest supply are the East Midlands, West Midlands and Yorkshire. These are the only regions where there remains less than one year's worth of supply and are also where the majority of our industrial & logistics sites are located.

Savills estimates that logistics investment volumes totalled £3.1bn in 2023, which again, despite being below the levels seen in the previous three record years, were above pre-pandemic levels. These transactions were weighted towards the second half of the year, when the macroeconomic backdrop improved. Data from MSCI shows that the industrial sector saw only slight growth in capital values of 0.1% during the year, a significantly better performance than the prior year (which saw a -18.0% decline), as rental growth of 7.6% was offset by 32 bps of average yield shift. Industrials remained the only major real estate sector to see capital value growth in 2023, with capital values for the MSCI All Property Index falling -5.6% over the year (an improvement from a -14.2% decline in the prior year).

Residential

For much of the year, homebuyer demand remained subdued, as a result of high mortgage rates, challenging affordability and low consumer confidence. However, sentiment improved in the final quarter of the year, as the prospect of interest rate cuts occurring earlier in 2024 than previously expected began to impact mortgage rates and buyers adjusted to the prospect of higher rates for longer.

This bolstering of demand in the later months meant that UK house prices declined by only -1.8% in 2023 according to Nationwide, a less significant fall than many had expected. Within this was a notable regional disparity, with northern England seeing a 1.8% reduction in house prices, while southern England saw a 2.4% decline. Yorkshire & the Humber, where many of Harworth's mature residential major development sites are located and which continues to benefit from good homebuyer affordability ratios, was the best performing region in England, with an annual reduction of just -0.5%.

Reporting from housebuilders suggested a focus on reduced construction volumes and a more selective approach to land acquisitions. Despite this, we saw good levels of demand throughout the year from a wide range of housebuilders, both national and regional, with many of whom we have long-term relationships. This underscores the differentiated nature of our serviced and, therefore, de-risked land product.

The institutional BtR market continued to grow in 2023 despite the wider market uncertainty, demonstrating the defensive nature of the product and the acute shortage of rental homes in the UK. Savills reports that investment volumes in the sector totalled £4.5bn in 2023, the second highest level on record after 2022, when levels were only marginally higher. A recent Cushman & Wakefield report predicted the figure could rise to as much as £8bn in 2024.

The UK's BtR stock now stands at over 92,000, representing growth of 11% in the last 12 months, with regional markets growing faster than London. Despite this, only 11% of the built stock is single-family and transactions remain focused on multi-family, which accounted for around 60% of investment over the last 12 months. Rents in the sector continue to grow, but challenges facing consumers highlight the importance of providing affordable products. Our single-family BtR and affordable housing portfolios of sites are particularly well-positioned to address this acute supply imbalance.

In the investment markets, Savills data shows that UK greenfield residential land values declined -6.5% over the course of 2023, albeit a number of indices point to declines levelling off in the final quarter. Greenfield residential land values remain more resilient than those for urban land (which have declined -8.4%) and again there are significant regional variations, with land values in the North of England and the East Midlands remaining more robust due to a resilient housing market, shortage of sites and stronger competition.

Operational performance

Our strategy sets out a clear road map for our ambition to grow EPRA NDV* to £1bn by the end of 2027 and we remain confident in achieving this goal. It aims to accelerate the delivery of our sites and achieve our NZC ambitions, drawing on our highly specialist expertise and extensive land bank. The table below shows our progress to date against the four key growth drivers of this strategy.

Growth driver	2021	2022	Progress in 2023	Ambition by the end of 2027
Increasing direct development of industrial & logistics stock	51,000 sq. ft developed	432,000 sq. ft developed	193,000 sq. ft developed during the year and 208,000 sq. ft started or ready to start in 2024. Enabling works underway for 1.5m sq. ft of further development.	800,000 sq. ft completed on average per annum
Accelerating sales and broadening the range of our residential products	1,411 plots sold	2,236 plots sold	1,170 plots sold	2,000 plots sold on average per annum
Scaling up through land acquisitions and promotion activities	Land supply of 12 to 15 years		Maintained 12 to 15-year land supply through acquisitions representing 1.8m sq. ft and 809 plots	Maintain a land supply of 12 to 15 years
Repositioning our Investment Portfolio to modern Grade A	11% Grade A at year-end	18% Grade A at year-end	37% Grade A at year-end	100% of the Investment Portfolio to be Grade A

We developed 193,000 sq. ft of speculative space during the year, across our Gateway 36 site in Barnsley and the AMP in Rotherham. These are our two most mature industrial & logistics sites and are highly sought-after locations, having also benefitted from becoming part of the UK's first government-designated Investment Zone this year, and we are pleased with their letting progress to date. As previously indicated, our focus for 2023 has been on securing pre-let and build-to-suit direct development opportunities, and we are now progressing three of these at the AMP across a total of 187,000 sq. ft, including the development of a new UK head office for Danieli, one of the world's largest suppliers to the steel industry. In addition to this, 21,000 sq. ft has commenced at Olive Lane a new mixed-use heart of the community at our Waverley development with a medical centre, pharmacy, convenience retail and leisure.

As we enter 2024, our focus will be on completing construction currently underway and starting new developments. At year-end, enabling works were underway for 1.5m sq. ft of development, at Chatterley Valley in Staffordshire, our Droitwich site in Worcestershire, and the next phase of Gateway 36 with works to commence shortly at our Wingates site in Bolton. Vertical developments that we expect to be on site with this year plus recently completed vacant space are expected to add £5.1m annualised rent, of which £1.9m is already let, exchanged or in heads of terms.

Against a challenging backdrop for housebuilders, we completed 1,170 residential plot sales during the year, transacting at prices that were broadly in line with book values before transaction costs. While the number of plots sold was lower than the extraordinarily high level seen in 2022, when we brought forward transactions to take advantage of buoyant market conditions, the average number of plots sold across 2023 and 2022 was still 21% higher than the level seen in 2021. We saw a wide range of housebuilders active in the market during the year and completed our first transactions with Homes by Honey and Forge New Homes, bringing our total housebuilders transacted with to date to 23 This figure demonstrates the depth of demand for our de-risked serviced land product, and the strong relationships with housebuilders that our teams cultivate.

It has been a very busy year for our mixed tenure team as we broadened the range of residential products on offer across our sites. We signed our first forward-funding agreement with a registered provider, Great Places, as part of our affordable housing portfolio of sites, and signed a further agreement with them after year end, for the delivery of 155 homes in total, with several other transactions in the pipeline. For our single-family BtR product, timelines have become protracted, owing mainly to delays in receiving planning approvals. Having said this, approvals are now in place for 45% of sites and we are progressing towards exchange with selected partners. Also of note was the launch of our NZC homes product, Coze Homes, which we will be directly developing in small-scale trials across two of our sites. This product has significant potential not only to improve the vibrancy of our communities and unlock challenging development parcels, but to develop our understanding of the technical requirements of this relatively immature market.

Looking at land acquisitions and promotion, we further strengthened our pipeline with the addition of 1.8m sq. ft of industrial & logistics space and 809 residential plots during the year through a combination of freehold acquisitions, option agreements and Planning Promotion Agreements ("PPAs"). We also received planning approvals for 397 residential units and 1.1m sq. ft of industrial & logistics space, most notably at our 0.8m sq. ft Skelton Grange site in Leeds. Securing this approval on a former power station site we acquired back in 2014 demonstrates Harworth's unique skillset in identifying and acquiring complex brownfield sites, devising a masterplan that realises their potential, and then progressing this through the planning system to unlock value. This development will meet the growing demand for high-specification and well-connected Grade A industrial space across West Yorkshire, in turn supporting jobs and investment for the region.

Our ambition to transition the Investment Portfolio to fully Grade A also took a major step forward during the year, and now stands at 37% Grade A, compared to 18% just a year ago. This was driven by a significant sales programme of assets where we had maximised value through asset management or development initiatives, as well as through our development and letting of new space. Sales totalled £70.0m in the year, and all were broadly in line with book values before transaction costs - an excellent result given the wider challenges in the investment market during the first half of the year in particular. Leasing activity added £2.1m of annualised rent to the Investment Portfolio during the year and was achieved at significant premiums to estimated rental values and previous passing rents.

Financial performance

Our management actions undertaken on development sites to unlock high value uses, alongside positive progress on planning applications, were the key driver of a 4.4% increase in EPRA NDV* during the year to 205.1p per share (2022: 196.5p). This resulted in a Total Return* for the year of 5.1% (2022: 0.1%), which we consider to be a strong performance given conditions in our markets for much of the year. Statutory net asset value* was £637.7m (2022: £602.7m).

The Board is proposing a final dividend of 1.022p per share, bringing the total dividend per share for 2023 to 1.466p, representing 10% underlying growth from 2022, in line with our dividend policy.

We continue to maintain a strong balance sheet and financial position, with significant available liquidity of £192.2m as at 31 December 2023 (31 December 2022: £175.6m) and no refinancing requirement under our core facilities until 2027. Our LTV* at year-end was 4.7% (31 December 2022: 6.6%), affording us a high degree of flexibility and resilience as we pursue our strategy.

The Harworth Way

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

During the year we published our NZC pathway, outlining in detail for the first time the steps that we will take to address the challenges and opportunities that decarbonisation brings for Harworth. It provides clear and practical guidance for the business, and a framework through which progress can be measured as we move towards our target to be operationally NZC by 2030 and NZC for all emissions by 2040. We have made great early progress, having reduced our operational emissions by 24% this year through the use of alternative fuels in our site preparation works, procuring green electricity and the increased use of electric vehicles. We also began a woodland planting scheme in Chevington in Northumberland, which will significantly boost our sequestration capabilities.

It has been a very active year in delivering for our communities, and I was delighted that we have been able to progress several initiatives to deliver schools, green space and other amenities across our developments. We opened 71 acres of managed green space, including a new 50-acre country park at our Cadley Park development in Derbyshire, which benefits from new purpose-built footpaths and cycleways, a picnic area and community orchard, as well as new habitats to protect and promote local wildlife. We also commenced construction of a new forest school at South East Coalville as well as Olive Lane, a mixed-use development comprising convenience retail, restaurants and new community spaces in the heart of Waverley.

Alongside this year's Annual Report we will be releasing our Communities Framework, which explains our approach to delivering social value through our regeneration approach, both in the communities we serve and in wider society. This approach ranges from creating sustainable communities, preserving heritage and promoting healthier lifestyles through to growing regional economies and supporting jobs. This year we once again commissioned Ekosgen, an independent economic research consultancy, to appraise the social and economic benefits of the regeneration and development Harworth has delivered and plans to deliver, and it found that our portfolio has the potential to deliver £4.8bn of GVA, support up to 76,500 jobs and generate up to £82m in business rates, underscoring the huge potential of our activities to benefit society.

Our people

Harworth's ambition is to be an employer of choice, providing an inspiring place to work and attracting and retaining the best talent. Critical to our success is our culture and the engagement, wellbeing and diversity of our people. During the year, we progressed a wide-ranging transformation programme that is designed to make sure that our processes, systems and people skills keep pace with the rapid growth of our business as we work towards our £1bn ambition.

Our culture is formed by everyone at Harworth. We know through employee feedback that Harworth has a positive culture. As we grow, we want to be proactive in defining how it needs to evolve whilst preserving all that is great about Harworth. For this reason, during 2023 we reviewed and started to refresh our vision, values, and behavioural competency framework, which will be embedded during 2024.

Another area of focus has been on individual and professional development, which has led to the creation of the 'Harworth Academy'. Under this banner, we have developed the formal training and development options we want to make available to our employees, in alignment with their career experience and history and role level and requirements. In time, there may be minimum levels of "hard and soft skills" training and development which colleagues at varying stages of their careers will need to pass through before being considered ready for progression and promotion.

Outlook

Macroeconomic conditions look set to improve modestly in the year ahead, with inflationary pressures easing and the prospect of interest rate cuts from the middle of the year. However, uncertainty still remains for businesses and consumers, and this is likely to weigh on sentiment for some time to come. For the industrial & logistics market, the structural drivers of demand remain largely intact and supply in our regions is relatively constrained: in the year ahead we will continue to derisk our development by focusing on pre-let and build-to-suit opportunities and land parcel sales. For residential, while affordability challenges will weigh on house buyer demand for some time yet, the supply of development-ready land will remain constrained, and we are confident that our consented, de-risked serviced land will appeal to a wide range of housebuilders. At the same time, our increasingly diversified range of residential products will provide us with exposure to markets that continue to grow regardless of where the cycle is.

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

As we move into year three of delivering our strategy, we have pump primed the consented capacity of our industrial & logistics portfolio and have a consented pipeline of 6.1m sq. ft that will deliver c.£0.8bn of GDV by 2028, while also creating the financial headroom to crystallise this. We are also exploring other use classes, including the development of data centres and energy assets on our industrial & logistics sites and senior living opportunities on our residential sites. Together these factors will ensure we realise the full potential of our 37.7m sq. ft industrial & logistics portfolio, which has an estimated gross development value of c.£5bn, and our 27,190 plot residential pipeline, while delivering for our people, our planet and our communities.

Despite the unpredictability of the last couple of years, which has delivered more than a few curve balls for the real estate sector, I am as excited about what Harworth can do as a business, and what we can become, as the day that I joined the company. In concluding, I would like to say a huge thank you to my colleagues across the business, who have embraced the ambition of our strategy and have worked extremely hard to deliver another strong year of progress, and to our investors who have continued to support what we do. Our robust financial performance and operational progress against a challenging market backdrop are testament to the support, dedication, determination, skills, and teamwork that make us proudly Harworth.

Lynda Shillaw

Chief Executive

18 March 2024

Operational review

Industrial & logistics land portfolio

At 31 December 2023, the industrial & logistics pipeline totalled 37.7m sq. ft (31 December 2022: 35.0m sq. ft), of which 6.1m sq. ft was consented (31 December 2022: 5.4m sq. ft), and 10.1m sq. ft was in the planning system awaiting determination (31 December 2022: 5.6m sq. ft). The pipeline was 57% owned freehold, with the remaining 43% controlled via options or PPAs.

Acquisitions and land assembly

During the year, freehold acquisitions added 1.8m sq. ft to the pipeline. These comprised:

· Parkside East, St Helens, Merseyside: a 50-acre site with direct access to Junction 22 of the M6, close to the M62 interchange. The site was allocated in the recently adopted local plan and forms part of a wider regeneration area, supported by the council. Harworth is developing a masterplan for up to 0.8m sq. ft of employment space.

· Markham Moor, Nottinghamshire: a 29-acre site next to the A1, capable of delivering 0.4m sq. ft of industrial & logistics space.

· Additional land parcel acquisitions as part of land assembly works at the Group's existing sites in Rothwell, Northamptonshire and Skelton Grange, Leeds.

Planning

During the year, planning approval was secured for 1.1m sq. ft of industrial & logistics space. This comprised:

· Skelton Grange, Leeds: an outline planning consent to develop 0.8m sq. ft of industrial & logistics space on a 50-acre site adjacent to Junction 44 of the M1. It was formerly the location of the Skelton Grange Power Station and was acquired by Harworth in 2014.

· Former Houghton Main Colliery site, South Yorkshire: outline planning consent for 0.2m sq. ft

· Bardon West, Leicestershire: outline planning consent for 0.1m sq. ft of space, adjacent to the Group's existing Bardon Hill site in Leicestershire.

We also have a significant number of sites progressing through the planning process to secure an allocation in a local plan. The "allocation" of a site within a Local Plan is an important step towards securing a planning approval, as it signifies that a development is acceptable in principle to a local planning authority, and is therefore also a significant valuation driver of sites in the portfolio. During the period, a draft allocation was secured for 0.5m sq. ft of industrial & logistics space at our Bennerley site in Nottinghamshire. Post year end, draft allocations have also been secured for 1.6m sq. ft of space at a site close to Junction 15 of the M1 in Northampton (under option), and for 0.7m sq. ft at our mixed-use site at Diseworth in the East Midlands (freehold and part PPA).

Planning applications for 10.1m sq. ft of industrial & logistics space are currently progressing through the planning system. The largest developments within this comprise:

· Cinderhill, Derbyshire: Proposals for a mixed-use development comprising 1.8m sq. ft of high specification employment space alongside 150 houses and a new junction on the A38 trunk road.

· Gascoigne Wood, North Yorkshire: this 185-acre former colliery site benefits from an existing rail connection and close proximity to the A1(M) and M62. Plans have been submitted for 1.5m sq. ft of rail-linked industrial & logistics space at the site.

Direct development and placemaking

During the year, practical completion was reached on two direct developments, which were both delivered to Harworth's sustainable commercial building specification, targeting EPC A and BREEAM Excellent, with whole life carbon assessments and renewable energy provisions incorporated into the design:

· Gateway 36, Barnsley: 110,000 sq. ft of speculative industrial & logistics space completed, representing the start of the development's second phase. One unit was let to lifestyle brand Lucy & Yak following completion. A further unit was let to Dunelm after year-end, with a lease commencement date of 31 December 2023.

· AMP, Rotherham: 83,000 sq. ft of speculative industrial & logistics space was developed, marketed as "R-Evolution 4". The development will build on the success of previous similar R-Evolution phases at the AMP, with an updated and enhanced design which provides additional flexibility for occupiers wishing to adapt the space for manufacturing or warehousing. This flexibility will ensure the scheme appeals to a broad range of potential occupiers, and we have already seen significant interest in the space.

At year-end, a total of 187,000 sq. ft was on site at the AMP, comprising two pre-let units and one build-to-suit unit that will be owned by its occupier. This underscores the location's popularity and the Group's flexible approach to development. In addition to this, 21,000 sq. ft has commenced at Olive Lane, a new mixed-use heart of the community at our Waverley development with a medical centre, pharmacy, convenience retail and leisure.

During the year, the Group received development management revenue totalling £1.0m (2022: £4.2m) from build-to-suit opportunities.

Land sales

Industrial & logistics land sales totalling £11.5m (2022: £57.0m) were completed during the year, at prices above or in line with book values before transaction costs, with the reduction from the prior year being due to the £54.0m sale of the Group's Kellingley site completing in 2022. These comprised: the sale of a land parcel at South East Coalville for the development of a supermarket; the sale of three land parcels at Riverdale Park, Doncaster; and the sale of land at the AMP to an occupier, on which Harworth will be developing the above-mentioned build-to-suit unit.

Residential land portfolio

At year-end, the residential pipeline had the potential to deliver 27,190 housing plots (31 December 2022: 29,311), of which 5,296 were consented (31 December 2022: 6,111), and 1,774 were in the planning system awaiting determination (31 December 2022: 1,890). The pipeline was 49% owned freehold, with the remaining 51% subject to PPAs, options or overages.

Acquisitions and land assembly

During the year, a combination of freehold acquisitions, options and PPAs added 809 residential plots to the pipeline. The majority of this related to the signing of a PPA on a parcel of land at Aughton, Rotherham, capable of delivering up to 700 homes. Harworth will work with local stakeholders to bring forward a masterplan in advance of submitting a planning application.

Planning

During the year, planning was approved for 397 homes at Killamarsh in Derbyshire comprising 297 freehold plots and 100 plots promoted via PPA. Post period end, planning was approved for 500 homes at Hale Gate Road in Liverpool, under a PPA agreement, and a draft allocation was secured for our mixed-use site Diseworth in the East Midlands for 2,275 homes (freehold and part PPA).

Plot sales

Completed residential land sales totalled 1,170 plots (2022: 2,236 plots), a decrease from the exceptionally high level of sales seen in the prior year, as the 2022 figure was driven by expediting sales to take advantage of robust housebuilder demand at the time. The average number of plots sold across 2023 and 2022 was still higher than the level seen in 2021. Headline sales totalled £52.1m and were completed at prices broadly in line with book values before transaction costs. The headline sale prices ranged from £30k to £77k per serviced plot (2022: £28k to £105k).

Sales were completed with six different housebuilders, comprising national and regional operators, and including two housebuilders that the Group was transacting with for the first time: Homes by Honey and Forge New Homes. The largest of the disposals was the whole of a site in Killamarsh, Derbyshire, which was sold jointly to both Harron Homes and Homes by Honey. In the first half of 2023, an outline planning consent was secured to develop up to 397 family homes at the site.

The year also saw sales of land subject to PPAs - arrangements whereby Harworth receives a fee from a landowner for securing a planning approval and plot sale on their behalf - generating £0.8m in fees (2022: £5.8m)

Residential products

One of the Group's key strategic objectives is broadening the range of its residential products, and to date it has launched three portfolios of sites to deliver on this:

· Single-family BtR portfolio: approximately 1,000 single-family homes across seven sites. The Group has secured planning consents for 45% of the plots to date and is now progressing towards exchange with selected investment and delivery partners.

· Affordable housing portfolio: approximately 550 homes across six sites, that meet the National Planning Policy Framework criteria for affordable housing (social rents, affordable rents, as well as a range of intermediate rent and for-sale products, such as the shared ownership scheme), to be delivered via a forward-funding agreement. Harworth signed its first forward-funding agreement on part of this portfolio in December, with Great Places, for the development of 50 homes at its Riverdale Park site in Doncaster, and after year-end signed a further agreement with Great Places for the development of 105 homes at Simpson Park in Nottinghamshire.

· NZC homes (Coze Homes): a portfolio of approximately 100 homes, which will be directly developed by Harworth as a small-scale pilot at its Prince of Wales site in Pontefract and at Waverley. The pilot is designed to deepen the Group's understanding of the technical requirements of the still relatively immature NZC homes market, which will help to develop improved masterplans for future developments that further embed climate resilience and respond to emerging regulatory and societal needs. The Prince of Wales site has received reserved matters planning consent and construction is expected to begin shortly, with Waverley following later in the year.

Placemaking

As a master developer, Harworth prides itself on investing in its residential sites to provide enhanced infrastructure, amenities and green spaces. This investment creates a sense of community that improves the wellbeing of residents and enhances the attractiveness of these developments to housebuilders and other partners. During the year, several placemaking initiatives were undertaken across the portfolio:

· South East Coalville, Leicestershire: construction works began on a new forest school. Designed by award-winning Lungfish Architects, the two-form entry school is scheduled to open in 2024, providing 420 places. The year also saw a land sale to Aldi for the construction of a new supermarket at the site, and the opening of a 21-acre park, comprising a riverside corridor with amenity space and several biodiversity enhancement features.

· Waverley, South Yorkshire: a new learn-to-ride cycle track was opened, funded jointly by Harworth and a £45,000 grant from British Cycling's "Places to Ride" programme. The track sits at the heart of Waverley, providing a safe, fun and traffic-free environment for children to learn to ride a bike and progress skills before venturing onto the site's connecting cycle paths and roads. Planning was also approved, and construction started on site, for Olive Lane, a new mixed-use heart of the community with a medical centre, pharmacy and convenience retail and leisure.

· Cadley Park, Derbyshire: a new 50-acre country park was opened, having been developed by Harworth working in close partnership with South Derbyshire District Council as well as the National Forest, RSPB, Derbyshire Wildlife Trust and the local community. The park benefits from new purpose-built footpaths and cycleways, a picnic area and community orchard, as well as new habitats to protect and promote local wildlife. The site also features a memorial pit wheel, commemorating the site's rich mining history.

Investment portfolio

This portfolio comprises both industrial & logistics assets that have been acquired by Harworth and, increasingly, those that have been directly developed and retained. It provides recurring rental income in addition to asset management opportunities and the potential for capital value growth.

As at 31 December 2023, the Investment Portfolio comprised 11 sites covering 2.5m sq. ft (31 December 2022: 19 sites covering 4.0m sq. ft). It delivered £14.1m of annualised rent (31 December 2022: £19.7m), equating to a gross yield of 6.3% (31 December 2022: 7.0%) and a net initial yield of 5.7% (31 December 2022: 6.2%). Annualised rent for the portfolio decreased during the year by 28.4%, driven by property sales which more than offset the addition of new Grade A space to the portfolio and a 13.2% like-for-like increase in rents. Grade A space represented 37% of the portfolio (31 December 2022: 18%).

During the year, 462,000 sq. ft of leasing deals were completed, adding £2.1m (17%) to annualised rent (2022: 722,000 sq. ft, adding £2.1m). Lease renewals and regears were completed on terms that on average represented a 27% uplift to previous passing rents, while new lettings were completed on average at an 10% premium to ERVs.

Across the Investment Portfolio, operational metrics remained robust. The portfolio had a weighted average rent of £5.75 per sq. ft (31 December 2022: £4.69), rent collection currently stands at 98% for the year (2022: 99%). Vacancy was 9.9% at year-end (31 December 2022: 8.3%), reduced to 1.2% when excluding space completed in the preceding 12 months (31 December 2022: 2.7%).

Disposals

A key element of Harworth's growth strategy is to transition its Investment Portfolio to modern Grade A. This is being achieved by retaining more direct development but also by disposing of assets where value has been maximised through asset management and development initiatives.

The sales of six Investment Portfolio sites were completed during the year, for total consideration of £70.0m. After year-end, the Group completed the sale of a site in Flaxby Moor Industrial Estate, Knaresborough, previously occupied by Ilke Homes, for a headline sales price of £13.3m. These sales were all at prices broadly in line with book values before transaction costs.

Natural Resources portfolio

Harworth's Natural Resources portfolio comprises sites used by occupiers for a wide range of energy production and extraction purposes, including wind and solar energy schemes and battery storage. As at 31 December 2023, the portfolio generated £1.8m of annualised gross rent (31 December 2022: £2.1m), reduced following sales in 2022.

We continue to progress our energy & natural capital strategy, with the aim of developing, alongside strategic partners where appropriate, renewable energy generation solutions and other sustainability initiatives such as battery storage, solar, EV charging, multi-fuel hubs and nature recovery on Natural Resources sites. The strategy will have a wider focus on embedding these energy concepts and future-proofing principles across all of Harworth's sites to maximise energy availability and resilience, create economic value and help fulfil the Group's NZC ambitions.

The Harworth Way

In 2022, the Group committed to becoming NZC for Scope 1, Scope 2 and Scope 3 business travel emissions by 2030 and to being NZC for all emissions by 2040. To meet these objectives, the Group has developed a NZC pathway and embedded NZC commitments into a range of workstreams and targets to guide the Group's growth strategy in the development of industrial & logistics and residential sites.

Further information on The Harworth Way and the Group's NZC pathway can be found within the 2023 Annual Report and standalone NZC Pathway Progress Report 2023, which will both be published in April 2024.

The Group will also be publishing its Communities Framework in April 2024, which outlines the steps it takes to embed social value into its developments.

Financial review

Overview

Our primary metric, Total Return* (the movement in EPRA NDV* plus dividends per share paid in the year expressed as a percentage of opening EPRA NDV per share*), for 2023 was 5.1% (2022: 0.1%). The Total Return* reflected a strong performance, driven primarily by management actions focused on leveraging the unique attributes of each of our development sites to create the opportunities to unlock the use with the greatest value. These focused actions, alongside completing direct development, and securing sales and asset management initiatives across our Investment Portfolio resulted in EPRA NDV* increasing by 4.4% during the year to 205.1p per share (2022: 196.5p). Our 2023 performance reflected continued progress against our strategic objectives, coupled with a strong operational delivery. Alongside this, the structural undersupply within our chosen markets remains, and provides a good foundation for the Group's future growth.

Sales of serviced land and property, in addition to income from rent, royalties and fees, resulted in Group revenue of £72.4m (2022: £166.7m). The reduction in the year reflected reduced rental income following the successful sale of properties from the Investment Portfolio for £70m during the year, accounted for in Other Gains, and lower Development Property sales resulting from the acceleration of residential land sales into 2022, capitalising on the then prevailing favourable residential market conditions, as well as the 2022 sale of the Kellingley development site for £54.0m. Total property sales*, which include proceeds from the sales of investment properties, assets held for sale and overages, totalled £125.9m (2022: £138.5m). Rental income collection has been consistently strong and like for like income increased through management actions, including lettings of completed direct developments at Bardon Hill and Gateway 36, and rent reviews. The £72.4m of revenue also included PPA and development management fees totalling £1.7m (2022: £10m), the reduction year on year was driven by project timelines and a lower volume of managed developments on site. Looking forward, the sales profile is robust with 72.1% of 2024 budgeted sales by value already completed, exchanged or in heads of terms (budgeted sales completed, exchanged or in heads of terms at the same point in 2023: 71.9%).

The Investment Portfolio (£221.4m 2023 (£280.9m 2022)) will vary in size over time as, in line with our strategy, we sell those assets where we have completed our asset management activity and where there is no long-term opportunity in our portfolio, and replace them through the new stock that we build alongside our investment to upgrade existing assets to Grade A. This will mean that, at times, our overhead costs will not be fully covered by income from this portfolio as we reposition the portfolio and build up new sources of income from, for example, development management fees. This is a dynamic that we are now seeing this year; we anticipated this when we set out our ambition to transition the portfolio to Grade A, and our business model and banking facilities provide the flexibility required to execute this strategy effectively.

BNP Paribas and Savills, our independent valuers, completed a full valuation of our portfolio as at 31 December 2023, resulting in full-year revaluation gains* of £64.9m (2022: losses of £15.0m), including the movement in the market value of development properties. These external independent valuations have regard to conditions in the residential and industrial & logistics markets as well as the positive factors resulting from management actions on our sites. Outside the valuation movements, losses on sales were £6.8m (2022: profits of £13.0m). Although sales prices were in line with book values before transaction costs overall, the loss was driven by the impact of selling costs, the recognition of deferred consideration at present value as a result of higher interest rates, and increased levels of estimated future site-wide infrastructure costs allocated to prior period sales, in particular at our Waverley site where increased costs were driven by a change in the site masterplan. Overall, this led to total value gains of £58.1m (2022: £2.0m losses).

The fair value of investment properties increased by £71.4m (2022: £19.7m decrease), which fed through to an underlying operating profit of £54.2m (2022: £44.5m) and profit after tax of £38.0m (2022: £27.8m).

Over the year, the net asset value* of the Group grew to £637.7m (31 December 2022: £602.7m). With EPRA adjustments for development property valuations included, EPRA NDV* at 31 December 2023 increased to £662.9m (31 December 2022: £633.8m) representing a per share increase of 4.4% to 205.1p (31 December 2022: 196.5p).  

The Group has declared a final dividend of 1.022p per share, bringing the total dividend per share for 2023 to 1.466p, representing 10% underlying growth from 2022, in line with our dividend policy.

The Group remains well capitalised and, at 31 December 2023, had available liquidity of £192.2m (31 December 2022: £175.6m). Net debt* was £36.4m (31 December 2022: £48.4m) resulting in an LTV* at 31 December 2023 of 4.7% (31 December 2022: 6.6%). At the same date, 35% of the Group's drawn debt was subject to fixed rates (31 December 2022: 34%). We currently do not have interest rate hedging in place against drawings under our Revolving Credit Facility (RCF), although this remains under review.

Presentation of financial information

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

Our key APMs* are: 

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

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

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

· Net loan to portfolio value ("LTV"): Group debt net of cash held expressed as a percentage of portfolio value.

A full description of all non-statutory measures is set out in Note 2 and reconciliations between all statutory and non-statutory measures are provided in the appendix to the consolidated financial statements. Our financial reporting is aligned to our business units of Capital Growth and Income Generation, with any items that are not directly allocated to specific business activities held centrally and presented separately.  

Income Statement

	2023				2022
	Capital Growth £m	Income Generation £m	Central Overheads £m	Total £m	Capital Growth £m	Income Generation £m	Central Overheads £m	Total £m
Revenue	49.0	23.4	-	72.4	135.4	31.3	-	166.7
Cost of sales	(54.0)	(6.0)	-	(60.1)	(74.4)	(8.9)	-	(83.3)
Gross profit	(5.0)	17.4	-	12.4	61.0	22.4	-	83.4
Administrative expenses	(5.1)	(3.1)	(19.2)	(27.4)	(4.1)	(1.9)	(16.1)	(22.1)
Other gains/(losses)	65.2	4.3	-	69.4	17.8	(34.5)	-	(16.8)
Other operating expense	-	-	(0.1)	(0.1)	-	-	(0.1)	(0.1)
Operating profit/(loss)	55.1	18.5	(19.3)	54.2	74.7	(14.0)	(16.2)	44.5
Share of profit / (loss) of JVs	0.9	0.7	-	1.6	(4.3)	(3.2)	-	(7.5)
Net interest credit / (expense)	0.5	-	(6.5)	(6.0)	0.1	-	(6.2)	(6.1)
Profit/(loss) before tax	56.4	19.2	(25.8)	49.8	70.4	(17.2)	(22.4)	30.9
Tax charge	-	-	(11.9)	(11.9)	-	-	(3.0)	(3.0)
Profit/(loss) after tax	56.4	19.2	(37.7)	38.0	70.4	(17.2)	(25.4)	27.8

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

Revenue in the year was £72.4m (2022: £166.7m), of which Capital Growth contributed £49.0m (2022: £135.4m) and Income Generation contributed £23.4m (2022: £31.3m). 

Capital Growth revenue, which primarily relates to the sale of development properties, decreased as a result of accelerating sales to take advantage of the positive residential market conditions during the first three quarters of 2022, coupled with the 2022 sale of the Kellingley development site for £54.0m. Capital Growth revenue also includes fees from PPAs and build-to-suit development management, together totalling £1.7m (2022: £10.0m).

Revenue from Income Generation (the Investment Portfolio, Natural Resources and Agricultural Land) mainly comprises property rental and royalty income. Revenue of £23.4m (2022: £31.3m) was lower than last year reflecting the successful sale of certain investment properties during the period for £70.0m. Like-for-like rental income from the Investment Portfolio increased by 13.2% during 2023 following new lettings, lease re-gears and rent reviews on our existing assets; when including the letting of assets that practically completed during the year, the increase achieved was 17.2%. This resulted in annualised rent for the Investment Portfolio of £14.1m at the year-end (2022: £19.7m), as lettings at the next phase of our Gateway 36 development, combined with lettings, re-gears and rent reviews on existing assets, were offset by income lost through investment property sales during the year.

Cost of sales comprises the inventory cost of development property sales, costs incurred in undertaking build-to-suit development and both the direct and recoverable service charge costs of the Income Generation business. Cost of sales decreased to £60.1m (2022: £83.3m), of which £47.3m related to the inventory cost of development property sales (2022: £67.7m). In the year, we saw an increase in the net realisable value provision on development properties of £4.3m (2022: £2.4m decrease) following the valuation process as at 31 December 2023.

Administrative expenses increased in the year by £5.3m (2022: £2.9m increase). This was due to higher salary expenses, resulting from the full year impact of increased employee numbers recruited during 2022 as we stepped into our strategy and set up key teams to deliver future value creation, inflationary cost pressures and costs incurred as part of progressing strategic objectives. Headcount was increased at a slower rate during 2023. The nature of long-term sites can mean that transactions, while progressing, span an accounting year end, resulting in the associated revenue not always fitting neatly into a financial year. The strong EPRA NDV growth shows the actions of the teams creating value as they work on sites and progress transactions to a conclusion. Administrative expenses expressed as a percentage of operating profit excluding administrative expenses was broadly in line with the previous year at 34% (2022: 33%).

Other gains comprised a £71.1m combined net increase (2022: £19.9m net decrease) in the fair value of investment properties and assets held for sale ('AHFS') less the loss on sale of investment properties, AHFS and overages of £1.7m driven primarily by transaction costs (2022: profit £3.2m).

Joint venture profits of £1.6m (2022: £7.5m losses) were the result of an increase in the property valuations at Gateway 45 and net rental income at Multiply Logistics North. Value gains/(losses) on a non-statutory basis are outlined below.

Non-statutory value gains/(losses)^*

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

£m	Category	2023			2022			31 Dec 23	31 Dec 22
£m	Category	Profit /(loss) on sale	Reval. gains/ (losses)	Total	Profit /(loss) on sale	Reval. gains/ (losses)	Total	Total valuation	Total valuation
Capital Growth
Residential Major Developments	Development	(5.4)	(9.0)	(14.4)	11.6	2.2	13.8	210.5	228.1
Industrial & Logistics Major Developments	Mixed	0.1	43.1	43.2	(2.0)	(3.4)	(5.4)	136.0	68.2
Residential Strategic Land	Investment	(0.1)	6.1	6.0	0.4	39.8	40.2	51.6	51.4
Industrial & logistics Strategic Land	Investment	(0.1)	18.4	18.3	(0.2)	(12.7)	(12.9)	105.9	82.2
Income Generation
Investment Portfolio	Investment	(1.4)	6.2	4.8	-	(41.0)	(41.0)	221.4	280.9
Natural Resources	Investment	0.1	-	0.1	3.2	(0.2)	3.0	21.6	20.3
Agricultural Land & other	Investment	-	0.1	0.1	-	0.3	0.3	21.1	5.7
Total		(6.8)	64.9	58.1	13.0	(15.0)	(2.0)	768.1	736.8

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

Loss on sale of £6.8m (2022: £13.0m profit) reflected sales broadly in line with book value before transaction costs, the impact of discounting deferred consideration at present value as a result of higher interest rates, and retentions not recognised on completion, coupled with higher levels of estimated future site-wide infrastructure costs allocated to prior period sales, in particular at our Waverley site where increased costs were driven by a change in the site masterplan. Revaluation gains* were £64.9m (2022: 15.0m losses) and are outlined in the table below.

	2023 £m	2022 £m
Increase/(decrease) in fair value of investment properties	71.4	(19.7)
Decrease in value of assets held for sale	(0.3)	(0.2)
Movement in net realisable value provision on development properties	(6.2)	(2.0)
Contribution to statutory operating profit	64.9	(22.0)
Share of profit/(loss) of joint ventures	1.6	(7.5)
Unrealised (losses)/gains on development properties and overages^*	(1.6)	14.5
Total non-statutory revaluation gains/(losses)*	64.9	(15.0)

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

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

· Industrial & logistics:

· Across Major Developments and Strategic Land, there were value gains relating to planning progress and unlocking high value uses at Skelton Grange, Ansty, Bennerley and Wingates.

· The industrials & logistics market saw transaction volumes fall back in line with the pre-Covid average. MSCI reported 0.1% capital value growth which was driven by rental growth of 7.6% offset by 32bps average outward yield shift.

· These market dynamics affected our industrial & logistics Major Development sites, Strategic Land sites and the Investment Portfolio. For development sites, costs of construction also increased over the year.

· Investment Portfolio property yields moved in line with the market but our management actions securing new leases, renewals and rent reviews resulted in the net initial yield moving only 50 bps to 5.7% from 6.2% as at 31 December 2022.

· Residential:

· The residential market saw house prices decline 1.8% over the year. Housebuilders reported that they were scaling back land acquisitions although, with a planning system which continues to be slow, short term and serviced land remained in demand.

· Residential land sales on our Major Development sites continued to demonstrate demand for our serviced land product and underpin valuations.

· Costs increased during the year and this was reflected in forward cost plans on Major Development sites.

· Natural Resources: valuations remained broadly stable with minor valuation declines in the waste and recycling portfolio.

· Agricultural Land: we experienced a small valuation increase as a result of improving agricultural land prices.

The net realisable value provision on development properties as at 31 December 2023 was £14.1m (31 December 2022: £9.8m). This provision is held to reduce the value of nine (31 December 2022: six) development properties from their deemed cost (the fair value at which they were transferred from an investment to a development categorisation) to their net realisable value at 31 December 2023. The transfer from investment to development property takes place once planning is secured and development with a view to sale has commenced.  

Cash and sales

The Group made revenue from property sales^* in the year of £125.9m (2022: £138.5m), achieving a total overall loss on sale of £6.8m (2022: profit £13.0m). Revenue from sales comprised residential plot sales of £44.1m (2022: £69.5m), industrial & logistics land sales of £11.5m (2022: £57.0m), sales of investment portfolio properties of £70.0m (2022: £12.0m) and receipt of overages of £0.3m (2022: £nil).

Cash proceeds from sales in the year were £132.0m (2022: £131.2m) as shown in the table below:

	2023 £m	2022 £m
Total property sales*	125.9	138.5
Less deferred consideration on sales in the year	(21.9)	(28.5)
Add receipt of deferred consideration from sales in prior years	28.0	21.2
Total cash proceeds	132.0	131.2

Tax

The income statement charge for taxation for the year was £11.8m (2022: £3.0m), which comprised a current year tax charge of £5.8m (2022: £21.8m charge) and a deferred tax charge of £6.0m (2022: £18.7m credit).  

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

At 31 December 2023, the Group had deferred tax liabilities of £30.6m (31 December 2022: £25.9m) and deferred tax assets of £0.5m (31 December 2022: £1.8m). The net deferred tax liability was £30.1m (31 December 2022: £24.1m). 

Basic earnings per share and dividends

Basic earnings per share for the year increased to 11.8p (2022: 8.6p) reflecting the increase in the valuation of investment properties in 2023, compared to a reduction in 2022, offset by lower development property sales having taken advantage of market conditions in the first three quarters of 2022, coupled with reduced rental income following the successful sale of investment property during 2023.

In addition to the interim dividend of 0.444p, the Board has declared a final dividend of 1.022p (2022: 0.929p) per share to be paid, bringing the total dividend for the year to 1.466p (2022: 1.333p) per share. The recommended 2023 final dividend and 2023 total dividend represent a 10% increase in line with our dividend policy.

Property categorisation

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

As at 31 December 2023, the balance sheet value of all our development properties was £250.0m (2022: £205.0m) and their independent valuation by BNP Paribas was £274.0m, reflecting a £24.0m cumulative uplift in value since they were classified as development properties. In order to highlight the market value of development properties, and overages, and to be consistent with how we state our investment properties, we use EPRA NDV^*, which includes the market value of development properties and overages less notional deferred tax, as our primary net assets metric.

Net asset value*

	31 Dec 2023  £m	31 Dec 2022  £m
Properties⁽¹⁾	734.8	695.4
Cash	27.2	11.6
Trade and other receivables	48.6	60.7
Other assets	13.8	11.8
Total assets	824.4	779.5
Gross borrowings	(63.6)	(60.0)
Deferred tax liability	(30.1)	(24.1)
Derivative financial instruments	-	-
Other liabilities	(93.0)	(92.7)
Statutory net assets	637.7	602.7
Mark to market value adjustment on development properties and overages less notional deferred tax^*	25.2	31.2
EPRA NDV^*	662.9	633.8
Number of shares in issue less Employee Benefit Trust & Equiniti Share Plan Trustees Limited-held shares	323,154,373	322,612,685
EPRA NDV per share^*	205.1p	196.5p

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

EPRA NDV* at 31 December 2023 was £662.9m (31 December 2022: £633.8m), which includes the mark to market adjustment on the value of the development properties and overages. The total Portfolio Value* at 31 December 2023 was £768.2m, an increase of £31.4m from 31 December 2022 (£736.8m). The Group's share of gains from joint ventures of £1.6m (2022: £7.5m losses) resulted in investments in joint ventures increasing to £30.7m (31 December 2022: £29.8m). Trade and other receivables include deferred consideration on sales as set out previously. At 31 December 2023, deferred consideration of £28.1m (31 December 2022: £34.6m) was outstanding, of which 56.1% is due within one year.

The table below sets out our top 10 sites by value, which represent 51% of our total portfolio, split according to their categorisation, including currently consented residential plots and commercial space:

Site	Site type	Categorisation in Balance Sheet	Region	Progress to date
Benthall Grange, Ironbridge	Major Development	Investment	Midlands	1,000 residential units consented, land sold representing 110 units
Skelton Grange	Major Development	Development	Yorkshire & Central	0.8m sq ft of industrial & logistics space consented, 0.3m sq ft awaiting determination
South East Coalville	Major Development	Development	Midlands	2,016 residential units consented, land sold representing 977 units
Bardon Hill	Investment Portfolio	Investment	Midlands	Fully let
Nufarm	Investment Portfolio	Investment	Yorkshire & Central	-
Waverley AMP	Investment Portfolio	Investment	Yorkshire & Central	2.1m sq. ft of industrial & logistics space consented, 1.7m built or sold
Ansty⁽¹⁾	Strategic Land	Investment	Midlands	Proposed industrial & logistics site, planning now submitted
Knowsley	Investment Portfolio	Investment	North West	-
Wingates	Major Development	Development	North West	Up to 1.0m sq. ft of industrial & logistics space consented and a further 1.5m sq. ft planned. Enabling works to commence shortly.
Simpson Park	Major Development	Development	Yorkshire & Central	1,615 residential units consented, land sold representing 629 units

(1) Contracts have been conditionally exchanged for the sale of the site

Financing strategy

Harworth's financing strategy remains to be prudently geared. The Income Generation portfolio provides a recurring income source to service debt facilities and this is supplemented by proceeds from sales. The Group has an established sales track record that has been built up since re-listing in 2015, with 2023 providing total property sales broadly in line with 2022.

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

The Group enters into development and infrastructure loans alongside its RCF to support its growth strategy.

Debt facilities

The Group has a £200m RCF, together with a £40m uncommitted accordion option, which was entered into in 2022. The RCF is provided by NatWest, Santander and HSBC and is aligned to the Group's strategy, providing significant liquidity

and flexibility to enable us to pursue our strategic objectives. The interest rate on the RCF is based on a loan-to-value ratchet mechanism with a margin payable above SONIA in the range of 2.25% to 2.50%. The Group has no

refinancing requirements under its core facilities until 2027.

As part of its funding structure, the Group also uses infrastructure financing provided by public bodies and site-specific

direct development loans to promote the development of major sites and bring forward the development of industrial & logistics units.  

The Group had borrowings and loans of £63.6m at 31 December 2023 (2022: £60.0m), being the RCF drawn balance (net of capitalised loan fees) of £33.8m (2022: £34.6m) and infrastructure or direct development loans (net of capitalised loan fees) of £29.7m (2022: £25.4m).  The Group's cash balances at 31 December 2023 were £27.2m (2022: £11.6m) reflecting sales activity during December 2023. The resulting net debt was £36.4m (2022: £48.4m).   

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

	2023  £m	2022  £m
Opening net debt* as at 1 January	(48.4)	(25.7)
Cash inflow from operations	17.4	58.9
Property expenditure and acquisitions	(54.9)	(66.6)
Disposal of investment property, AHFS and overages	69.6	14.2
Investments in joint ventures	0.7	(1.2)
Interest and loan arrangement fees	(4.5)	(6.0)
Dividends paid	(4.4)	(4.0)
Tax paid	(10.2)	(17.7)
Other cash and non-cash movements	(1.7)	(0.3)
Closing net debt* as at 31 December	(36.4)	(48.4)

The weighted average cost of debt, using an end of month average 2023 balance and 31 December 2023 rates, was 6.88% with a 0.9% non-utilisation fee on undrawn RCF amounts (2022: 5.52% with a 0.9% non-utilisation fee). The weighted average term of drawn debt is now 2.2 years (31 December 2022: 3.2 years).

The Group's hedging strategy to manage its exposure to interest rate risk is to hedge the lower of around half its average debt during the year or its net debt* balance at year-end. At 31 December 2023, 35% (31 December 2022: 34%) of the Group's drawn debt, reflecting 62% (31 December 2022: 44%) of net debt*, was subject to fixed rate interest rates with no hedging instruments in place on the remaining floating rate debt. Projected drawn debt and hedging requirements remain under active review with any new hedging to be aligned to future net debt requirements.

As at 31 December 2023, the Group's gross LTV* was 8.3% (31 December 2022: 8.1%) and its net LTV* was 4.7% (31 December 2022: 6.6%). If gearing is assessed against the value of the core income generation portfolio (the Investment Portfolio and Natural Resources portfolio) only, this equates to a gross loan to core income generation portfolio value* of 27.9% (31 December 2022: 26.1%) and a net loan to core income generation portfolio value* of 15.9% (31 December 2022: 21.0%). Under the RCF, the Group could withstand a material fall in portfolio value, property sales or rental income before reaching covenant levels.

At 31 December 2023, undrawn capacity under the RCF was £165m (31 December 2022: £164.0m). Going forwards the RCF, alongside selected use of development and infrastructure loans where appropriate, will continue to provide the Group with sufficient liquidity to execute our growth strategy.

Kitty Patmore

Chief Financial Officer

18 March 2024

* Harworth discloses both statutory and alternative performance measures ('APMs'). A full description of these is set out in Note 2 to the financial statements with a reconciliation between statutory measures and APMs set out in the appendix to the financial statements

Appendix 1: Supplementary operational information

1.1 Main industrial & logistics sites (as at 31 December 2023)

Name	Location	Sold or developed (sq. ft)	Consented or planned (sq. ft)
Advanced Manufacturing Park	Rotherham, South Yorkshire	1.7m	2.1m consented
Gateway 36	Barnsley, South Yorkshire	0.6m	1.3m consented
Chatterley Valley	Stoke-on-Trent, Staffordshire	-	1.2m consented
Wingates	Bolton, Greater Manchester	-	1.0m consented, a further 1.5m planned
Skelton Grange	Leeds, West Yorkshire	-	0.8m consented, a further 0.3m planned
North Yorkshire site	North Yorkshire	-	3.0m planned
Northern Gateway*	Greater Manchester	-	2.5m planned
Cinderhill	Cinderhill, Derbyshire	-	1.8m planned
Rothwell	Rothwell, Northamptonshire	-	1.8m planned
Junction 15, M1	Northampton, Northamptonshire	-	1.6m planned
Gascoigne Wood	Sherburn-in-Elmet, North Yorkshire	-	1.5m planned

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

1.2 Main residential sites (as at 31 December 2023)

Name	Location	Sold (plots)	Consented or planned (plots)
Waverley	Rotherham, South Yorkshire	2,528	3,038 consented
South East Coalville	Coalville, Leicestershire	977	2,016 consented
Simpson Park	Harworth, Nottinghamshire	629	1,615 consented
Pheasant Hill Park	Doncaster, South Yorkshire	645	1,200 consented
Prince of Wales	Pontefract, West Yorkshire	589	622 consented, a further 441 planned
Benthall Grange	Ironbridge, Shropshire	110	1,000 consented
Moss Nook	St Helens, Merseyside	256	900 consented
Thoresby	Edwinstowe, Nottinghamshire	650	800 consented
Huyton	Knowsley, Merseyside	-	1,500 planned
Staveley	Staveley, Derbyshire	-	590 planned

Appendix 2: Key performance indicators

2.1 Financial track record

KPI	2023 result	2022 result	2023 performance commentary
Total Return (%)* Growth in EPRA NDV* during the year in addition to dividends paid, as a proportion of EPRA NDV* at the beginning of the year.	5.1%	0.1%	Our total return* of 5.1% was the result of a 4.4% increase in EPRA NDV* during the year, as well as the payment of a 1.466p dividend.
EPRA Net Disposal Value ('NDV') per share* A European Public Real Estate Association ("EPRA") metric that represents a net asset valuation where development property is included at fair value rather than cost and deferred tax, financial instruments and other adjustments as set out in Note 2 and the appendix to the financial statements, are calculated to the full extent of their liability.	205.1p	196.5p	The increase in valuations was driven by management actions to unlock high value uses from sites and progress planning applications, against a challenging macroeconomic backdrop.
Net asset value* The value of our assets less the value of our liabilities, based on IFRS measures, which excludes the mark-to-market value of development properties.	£637.7m	£602.7m	Net asset value* increased as a result of crystalising valuation gains through development property sales during the year.
Net loan to portfolio value ('LTV')* Net debt* as a proportion of the aggregate value of properties and investments.	4.7%	6.6%	Our LTV* decreased during the year and remained well within our target of less than 20% at year-end as we continued to manage carefully our levels of net debt.

2.2 Strategic track record

KPI	2023 result	2022 result	2023 performance commentary
Number of plots sold The number of plots equivalent to land parcel sales to housebuilders or registered providers during the year.	1,170	2,236	While the number of plots sold was a reduction from 2022, when we brought forward transactions to take advantage of buoyant market conditions, the average number of plots sold across 2023 and 2022 was still 21% higher than the level seen in 2021.
Total residential pipeline The total number of residential plots that could be delivered from our pipeline including freehold land, options and PPAs.	27,190 plots	29,311 plots	Our residential pipeline declined slightly, but remains well within our ambition to maintain a 12 to 15-year land supply. The reduction was due to a successful year of plot sales, which more than offset new plots added to the pipeline.
Industrials & logistics space direct developed The amount of industrial & logistics space developed by Harworth, either speculatively or on a build-to-suit basis for an end occupier or investor, achieving practical completion during the year.	193,000 sq. ft	432,000 sq. ft	Our level of completed direct development reduced from the record amount seen in 2022 due to a focus on pre-let schemes in 2023, but we made significant progress with construction starts and enabling works
Total industrial & logistics pipeline The total amount of industrial & logistics space that could be delivered from our landbank, including freehold land, options and PPAs.	37.7m sq. ft	35.0m sq. ft	Our industrial & logistics pipeline increased due to a number of freehold acquisitions during the year
Proportion of Investment Portfolio that is Grade A The proportion of our Investment Portfolio by area that could be classified as modern Grade A industrial & logistics space. Grade A is a widely-used industry term that is understood to mean 'best in class' space which is new or relatively new, high-specification and in a desirable location, allowing the unit to attract a rent that is above the market average.	37%	18%	The proportion of our Investment Portfolio that is Grade A space significantly increased due to a successful disposal programme of mature assets and the direct development of new space which reached practical completion during the year.

2.3 Environmental, economic and social track record

KPI	2023 result	2022 result	2023 performance commentary
Potential GVA that could be delivered from our portfolio Calculated by Ekosgen, an economic impact consultancy, on our behalf. This estimates the total contribution that our portfolio could make to the economy once fully built out.	£4.8bn	£4.6bn	The potential GVA that could be delivered from our portfolio increased due to the additional employment potential created by our industrial & logistics acquisitions during the year.
Location based Scope 1, Scope 2 and Scope 3 business travel emissions Emissions that are captured by our target to be operationally NZC by 2030. During the year, the scope and availability of our emissions data increased, and therefore figures for 2022 have been restated to allow for a like-for-like comparison with 2023.	802 tCO₂e	1,054⁽¹⁾ tCO₂e	Our emissions decreased during the year, driven by the use of alternative fuels at our Ironbridge site, and increased use of electric vehicles by staff.
Employee pride The proportion of employees who said they were "proud to tell people that I work for Harworth" in our annual employee survey.	100%	100%	Levels of staff satisfaction remained very high, as we continued our work to ensure Harworth is an employer of choice, with initiatives aimed at promoting employee engagement, wellbeing and equity, diversity & inclusion.

(1) Prior year figure has been restated

Principal risks & uncertainties

The Board is responsible for identifying, setting the risk appetite for, and evaluating the Group's principal and emerging risks, being those risks that could threaten the delivery of our strategy, our business model, future performance, solvency or liquidity and/or reputation. Our principal and emerging risks are reported to the Board at each meeting, and the Board

undertakes a detailed assessment every six months, the most recent being in November 2023.

In 2021, the Board identified through a series of workshops a refreshed set of principal risks, informed by the Company's strategy developed that year. During 2023, the Board continued to review principal risks, especially in the context of the challenging and uncertain macroeconomic and geopolitical environment which persisted throughout the year. At the time of writing, and looking ahead, the Board anticipates national and global economic and political uncertainty to remain elevated requiring it to continue to manage the Group's principal risks against an uncertain backdrop.

Outlined below are the changes that have been made since reporting on our principal risks in the 2022 Annual Report:

Risk	What has changed during the period
Availability of and competition for strategic sites	The Board determined the status of this risk to have reduced from "high" to "medium" as uncertain market conditions have constrained the appetite of capital for long-term strategic sites, moderating the level of competition for land. At the same time, our strong balance sheet and existing pipeline of opportunities enable us to continue to grow our strategic land portfolio in a selective manner.
Power infrastructure capacity	The Board identified a new principal risk reflecting the challenges in securing adequate power capacity for development sites creating uncertainty in the cost and programme for development. This new risk has a "medium" residual risk status.
Development supply chain	The previous "Supply chain cost inflation and constraints" risk has been expanded to incorporate all risks associated with management of the development supply chain combining supply chain counterparty risk, including the risk of insolvencies, as well as inflation risk. Whilst inflation risk has reduced, the Board considers that the overall development supply chain risk is trending higher due to the increasing risk of contractor insolvency in challenging market conditions.
Counterparties: investment partners and service providers	The previous "Supply chain and delivery partner management (counter-party risk)" has been reframed to focus on the risk of increased exposure to investment partners as well as counterparty risks amongst our critical service providers (beyond those in our development supply chain). This risk, as amended, has a "medium" residual risk status.
Planning	Whilst the planning risk profiles of individual projects differ, the Board continues to consider that, overall, the residual risk status of our planning risk remains "high" reflecting both current planning policy and local authority resourcing headwinds. However, the Board considers that this risk is no longer trending higher. There are signs of positive changes in planning policy over the medium term, regardless of the outcome of the next General Election. In the meantime, Harworth continues to make progress through management actions.
Residential and commercial markets	Given prevailing economic headwinds at the half-year, the Board highlighted in the Company's interim results announcement that this risk could trend higher during the second half of the year. Conditions have since stabilised in Harworth's core markets with an improving outlook. Inflationary pressures are easing such that there is an expectation of interest rate cuts from the middle of the year, which should lead to a softening of gilt yields and reduction in mortgage rates. In the industrial & logistics sector, robust rental growth has mitigated the impact of softening yields which are expected to stabilise with clarity on interest rates. In the residential sector, house prices have risen moderately in recent months and improving sales rates have led housebuilders to express optimism about the outlook for the sector. Given this improved outlook, the Board determined that the "residential and commercial markets" risk has reduced to "medium". However, as uncertainty remains for businesses and consumers, not least from a volatile geo-political backdrop, the Board will continue to monitor the status of this risk very closely.

A detailed analysis of each principal risk is set out below, and in the "Effectively Managing our Risk" section of the 2023 Annual Report.

Risk: Availability of and competition for strategic sites Failure to acquire strategic land at appropriate prices due to constrained supply or competition.
Inherent risk (before mitigating actions)	Residual risk (after mitigating actions)		Change in residual risk in the year
High	Medium		Decrease
Commentary Competition for acquisitions remains a key risk as acquiring (or otherwise securing an interest in) new sites underpins the third pillar of our strategy: "Growing our strategic land portfolio and land promotion activities". During the year the Board determined the status of this risk to have reduced to "medium" as uncertain market conditions have constrained the appetite of capital for long-term strategic sites, moderating the level of competition for land. At the same time, the Group has a robust pipeline of industrial & logistics and residential land (37.7m sq. ft of industrial & logistics space and 27,190 housing plots at 31 December 2023), as well as a strong balance sheet, enabling us to continue to grow our strategic land portfolio in a selective manner.
Mitigation		Additional measures planned for 2024
· Extensive external stakeholder engagement to identify opportunities, supported by internal co-ordination via regular internal acquisitions meetings and a Group-wide acquisitions tracker. · We seek input from our valuers prior to making major acquisitions to ensure we understand the latest market pricing. · Via our portfolio strategy, we manage the timing of acquisitions. · The review of project plans for each site helps highlight further land assembly opportunities.		· Leveraging better our relationships with local authorities and agents. · Deploying alternative structures to support land assembly, including via strategic partnerships.

Risk: Planning Planning promotion risk including uncertainty around local and national changes to planning regime with adverse effects on promotion activity and/or financial returns.
Inherent risk (before mitigating actions)	Residual risk (after mitigating actions)		Change in residual risk in the year
Very high	High		No change
Commentary Planning remains challenging due to a combination of factors including: Central Government policy (the updated National Planning Policy Framework (NPPF)); inertia pending a General Election; and Local Planning Authority under-resourcing. The determination of planning applications on certain sites has been slower, and we have also seen local plan processes paused or suspended and local planning committees refuse to adopt plans. At the same time, the short-term horizon looks unfavourable with mandatory Biodiversity Net Gain (BNG) requirements needing to be implemented from January 2024, the updated NPPF (which poses potential long-term headwinds for planning promotion), and introduction of the infrastructure levy (the practical application of which remains unclear). That said, there are signs of positive changes in planning policy over the medium term, regardless of the outcome of the next General Election. In the meantime, and longer-term, Harworth remains well positioned with our large strategic landbank.
Mitigation		Additional measures planned for 2024
· We review greenbelt exposure at a portfolio level at every Investment Committee and Board meeting. · Project underwriting proposals include detailed planning strategies (including competing sites analysis and BNG considerations), informed by project stakeholder mapping, which continue to be monitored via site project plans. · Local political advisers are appointed on individual sites, where appropriate. · Group strategic stakeholder mapping. · We respond to consultations on emerging planning policy, both in a solus capacity and via representative groups, such as the British Property Federation.		· Strategic planning for development of relationships with senior political stakeholders.

Risk: Development supply chain Exposure to development supply chain leading to greater exposure to pricing pressures and labour constraints, and risk of disputes with and/or default by and/or insolvency of supply chain partners.
Inherent risk (before mitigating actions)	Residual risk (after mitigating actions)		Change in residual risk since reformulation at the half-year
High	Medium		No change
Commentary The previous "Supply chain cost inflation and constraints" risk has been expanded to incorporate all risks associated with management of the development supply chain - combining supply chain counterparty risk, including the risk of insolvencies, as well as inflation risk. Cost inflation in the supply chain had been identified as a distinct principal risk reflecting a persistently high inflationary environment following the Covid pandemic, but this risk is subsiding, and the cancellation of the HS2 Northern Leg has the potential for more capacity to become available in the contracting market helping further to regularise costs. However, macroeconomic conditions have led to a materially increased prevalence of construction sector insolvencies. The Board considers that this expanded risk is trending higher due to the increased potential for insolvencies in our supply chain, and it, therefore, continues to be the subject of intensive scrutiny and management.
Mitigation		Additional measures planned for 2024
· Our procurement approach is considered early in project planning. · We undertake rigorous tender processes. · Cost plans are monitored closely, updated in valuations and adjustments made regularly to reflect pricing movements. · Due diligence on contractors - screening of contractors ahead of appointment together with ongoing Group-wide review of contractor "concentration risk" and financial health. To this end, we utilise market intelligence regarding contractors' commitments and workload. · Performance bonds sought to support all major contracts. · External review of contractor insurance packages for every direct development project. · We have established a suite of legal precedents to promote consistency in land remediation and direct development procurement.		· We have undertaken a comprehensive review of procurement and continue to transition to a new operating model, which will include tiering of the supply chain and more intensive relationship management of, and due diligence on, strategic suppliers.

Risk: Counterparties: investment partners and service providers Increase in exposure to investment partners and critical dependencies on certain service providers, leading to increased risk from disputes with and/or default by and/or insolvency of these counterparties.
Inherent risk (before mitigating actions)	Residual risk (after mitigating actions)		Change in residual risk since formulation at the half-year
High	Medium		No change
Commentary We face increased exposure to investment partners (JVs, forward funders, strategic investors) as we continue to grow and develop our sites, seeking opportunities with partners in connection with land assembly, direct development and delivery of alternative residential products. Our governance and ways of working continue to mature to counter this increased exposure. In the near term, a difficult economic climate also increases the risk of insolvencies amongst these counterparties, which continues to be monitored closely. Separately, supply chain tiering, which forms part of our transition to a new procurement operating model, will help to identify the critical dependencies amongst our service providers (beyond those in our project delivery supply chain) which could increase our vulnerability to disputes with and/or defaults by and/or insolvencies of those providers.
Mitigation		Additional measures planned for 2024
· A consistent process is followed for selecting and "onboarding" counterparties. · Project underwriting proposals include detailed consideration of counterparty risk, where appropriate. Due diligence to support the appraisal of credit counterparty risk, and counterparties' ability to meet their financial commitments, is particularly rigorous for new investment partners. · Development of relationships with counterparties and ongoing assessment of their delivery of obligations.		· The comprehensive review of procurement and transition to a new operating model will make more effective the way we engage with service providers. · Implementation of an enhanced relationship management regime for existing JV partners.

Risk: Power infrastructure capacity Challenges in securing power for our sites resulting in potential for adverse impact and uncertainty as to cost and programme for development.
Inherent risk (before mitigating actions)	Residual risk (after mitigating actions)		Change in residual risk since formulation at the half-year
High	Medium		No change
Commentary There are increasing challenges in securing power for our development sites bringing uncertainty and the risk of increasing costs and delay. The current system for securing power capacity, in which applications are made to Distribution Network Operators (DNOs), results in the formation of queues for available power capacity, meaning there can be a long wait for infrastructure upgrades and/or for third parties to relinquish capacity they have secured but no longer need. In addition, it is not uncommon for the National Grid ESO (NGESO) to amend or withdraw offers. In some cases, NGESO is altogether unable to provide a cost or programme for upgrades. Following NGESO's consultation on the connections' application process and final recommendations report published in December 2023, we will continue to monitor and plan for implementation of the reformed process which will represent a welcome transition to a "first ready, first connected" approach. Should the application regime successfully change in this way, currently expected to be implemented in January 2025, we expect the status of this risk to reduce.
Mitigation		Additional measures planned for 2024
· Analysis of power capacity and upgrade potential and timing as part of acquisition underwrite. · Early engagement with DNOs and NGESO to identify availability of power capacity, formulate procurement strategy, and seek earlier connection offers. · Entry into reservation commitments to secure Harworth's position, where appropriate.		· Continuing to monitor the proposed changes to and implementation of the reformed connections system, and future application requirements.

Risk: Statutory costs of development Legislative reforms which do, or may, impose a tax or levy on development, or have the effect of levying an additional cost on development.
Inherent risk (before mitigating actions)	Residual risk (after mitigating actions)		Change in residual risk in the year
High	Medium		No change
Commentary It is the current government's settled policy to increase public financial gain by taking a larger proportion of land value uplift derived from planning consents. Legislative measures to achieve this aim include: the residential property developer tax, albeit this has already been implemented with no tangible effect noticed on pricing of land sold to housebuilders; the Building Safety Levy, which is not yet implemented but does not seem to be high on the agenda when we engage with housebuilders; and the Infrastructure Levy, to be implemented via the Levelling Up and Regeneration Act, but the practical implementation of which remains unclear. The Labour Party has indicated that it would abandon some of these measures if it were to win the next General Election.
Mitigation		Additional measures planned for 2024
· Enhanced horizon scanning regime. · Sensitivity to additional statutory costs modelled when assessing acquisitions. · Responding to emerging policy both on a solus basis and through key stakeholder groups.		· None planned.

Risk: Residential and commercial markets Downturn in industrial & logistics and/or residential market conditions leading to falls in property values.
Inherent risk (before mitigating actions)	Residual risk (after mitigating actions)		Change in residual risk in the year
Very high	Medium		Decrease
Commentary As conditions have stabilised in Harworth's core markets with an improving outlook, the Board have assessed this risk to have reduced to a "medium" residual risk status. However, as uncertainty remains for businesses and consumers, which is likely to weigh on sentiment for some time to come, the Board will continue to monitor the status of this risk very closely. Notwithstanding market headwinds, Harworth's core markets of industrial & logistics and residential have continued to be resilient as they remain key drivers of economic growth. This, coupled with the scale and mix of our portfolio and our ability to create value through management actions, means that the Group is well positioned to mitigate and adapt to changes in the external environment. For the industrial & logistics market, the structural drivers of demand remain largely intact and supply in our regions is relatively constrained. For residential, we expect that, even as interest rates ease, affordability challenges will still impact house buyer demand in some parts of the country. However, the supply of development-ready land will remain constrained, and we are confident that our consented, de-risked serviced land will appeal to a wide range of buyers. At the same time, our increasingly diversified range of residential products will provide us with exposure to markets that continue to grow regardless of where the cycle is.
Mitigation		Additional measures planned for 2024
· Regular feedback is received from advisers on the status of residential and industrial & logistics markets in our core regions to supplement generic market commentary. · Regular review of site project plans by our delivery teams and the Investment Committee, informed by prevailing market conditions. · Management actions to drive value and adapt to prevailing market conditions - for example, during 2023 we continued to pursue mixed tenure strategies, and did not start any new speculative direct development projects		· Continue to implement the strategy taking account of existing market conditions. For example, we will continue to accelerate serviced land sales where we see regional market opportunities, press ahead with our mixed tenure products, and mitigate our exposure to market risk by focusing on build-to-suit vertical development opportunities and land parcel sales.

Risk: Organisational development and design Misalignment of culture, capability, systems and/or controls with what the business requires to deliver the strategy.
Inherent risk (before mitigating actions)	Residual risk (after mitigating actions)		Change in residual risk in the year
High	Medium		No change
Commentary Following a period of rapid growth in employee numbers, the Board recognised that a structured change management approach to both organisational development (the "informal" elements of behaviour, values and culture) and organisational design (the "formal" elements of operation and governance) was critical as the Group continued to evolve and grow. During the year, we made good progress in establishing that structured approach, examples of which are identified in the mitigation activities below. Our organisational design and development will be subject to continuous evolution. It will likely remain a principal risk in the medium-term, during which time that evolution will be more intensive, to support the marked changes in pace and scale of our activities required by our strategy.
Mitigation		Additional measures planned for 2024
· Implementation of people strategy to complement our business strategy, focusing on the number and nature of resources required to fill skills gaps as well as numbers gaps. · During the year, progress has been made in the focus areas below: o Review of Harworth's culture o Reward project (pay & benefits) o Development of a new Talent and Learning & Development strategy: the "Harworth Academy"		· Continue to implement the "People and Enabling Excellence Strategy", focusing on culture, workplace and the next phase of the reward project.

Risk: Availability of appropriate capital Inability to access appropriate equity and/or debt funding to support the strategy.
Inherent risk (before mitigating actions)	Residual risk (after mitigating actions)		Change in residual risk in the year
High	Medium		No change
Commentary The increase in pace and scale of activity under our strategy in turn has the potential to require additional capital. The £200m RCF signed in early 2022, supplemented by project specific funding where appropriate, currently supports the funding needs of the business. Headroom is projected to remain on all LTV covenants and could withstand a material fall in valuations. The interest rate risk is plateauing as interest rates are expected to have peaked. However, to leverage our growing development pipeline we are likely to need to supplement the RCF with additional capital in future years. The Board recognises it could be challenging, given current market uncertainty, to raise additional equity to fund accelerated development, and therefore management is actively reviewing other potential sources of funding.
Mitigation		Additional measures planned for 2024
· Regular review of financing strategy to complement our business strategy, supported by external consultants where required. · Improvements to longer-term financial forecasting. · In early 2022, we signed a new RCF comprising a five-year £200m revolving credit facility together with a £40m accordion facility. This is supplemented by accessing project specific funding where relevant. · We continue to pursue and unlock grant funding and review additional funding options.		· Continue to identify scheme specific and grant funding. · Progress the review of capital structure funding options.

Risk: Health and safety Incident causing injury and/ or death resulting in liability, penalties and/or reputational damage.
Inherent risk (before mitigating actions)	Residual risk (after mitigating actions)		Change in residual risk in the year
High	Low		No change
Commentary The health, safety and welfare of people involved in or affected by Harworth's activities are of prime importance to us. This risk ranges from the health and safety of visitors and workers on our sites, and trespassers (given the nature of our sites), through to the management of health and safety on our horizontal and vertical development projects, and the health and safety of employees and visitors in an office environment. Full compliance with all relevant legislation is the minimum acceptable standard but we and our partners aim to achieve the highest possible standards of good practice. We have a long-established Environment, Health & Safety (EHS) function with a focused remit on health and safety and environmental policy, advice and assurance.
Mitigation		Additional measures planned for 2024
· Appropriate policies are in place, including a Safety, Health and Environmental Management System (SHEMS) Policy and an Employee Health and Safety Policy. · During the year we transitioned the SHEMS to a new cloud-based platform which facilitates reporting of site incidents and risk assessments including real-time reporting via a mobile application. · The EHS team undertakes a rigorous site inspection assurance regime. · We have a panel of EHS consultants who support our project delivery, and have undertaken a project to improve engagement with and management of these consultants. · EHS Committee meetings are held quarterly and attended by the Executive and senior management from all delivery functions. These are supplemented by a programme of attendance by EHS team members at delivery team operational meetings. · We host compulsory health and safety training for all employees every two years, supplemented by an annual schedule of mandatory online learning. · We have a programme of health and wellbeing initiatives for employees, including access to internal physical and mental health first aiders and an external Employee Assistance Programme. · EHS reports are made to the Executive and Board monthly. The Head of EHS provides a detailed update to the Board annually.		· Continuous review of improvements to EHS reporting supported by the cloud-based platform. · Improvements to the management of first line and second line assurance site inspections.

Risk: Net Zero Carbon (NZC) pathway Failure to develop, manage and meet our NZC commitments and/or NZC regulations, resulting in financial loss, reduced availability of funding and/or reputational damage.
Inherent risk (before mitigating actions)	Residual risk (after mitigating actions)		Change in residual risk in the year
High	Medium		No change
Commentary The NZC agenda means transformational change for all businesses. It has a wide-ranging impact on the Group, from our investment case to shareholders, through to operational activity, including the need to embed NZC principles into all projects, whilst remaining profitable. It also embraces external factors such as industry and stakeholder metrics and the approach taken by Local and Combined Authorities on e.g. carbon tax, BNG and social value measures. In April 2023, we published our first NZC Pathway report and will publish a NZC Pathway Progress Report for 2023 alongside this Annual Report, as well as our Communities Framework. We consider it crucial that, in delivering on NZC, our approach is authentic, understandable and deliverable.
Mitigation		Additional measures planned for 2024
· Development of The Harworth Way and NZC Pathway with targets identified. · Continued transition of our Investment Portfolio to 100% modern Grade A. · Improvements to the capture and analysis of environmental data (including from our supply chain and tenants) with measures in place for verification of the same. · Initiation of a pilot for the construction of our NZC homes product, Coze Homes . · New leases offered to existing and new tenants are on "green" lease terms. · We switched energy procurement for our Investment Portfolio to a new renewable energy tariff. · We work with prospective occupiers of our new developments to offer tailored renewable energy provision. · Project appraisals include better sustainability analysis. · Development of Harworth's commercial and residential building specifications. · We are a member of the UK Green Building Council, which facilitates sharing of knowledge and best practice.		· Continue to improve the capture and analysis of environmental data. · Continued development of a carbon accounting system, including appropriate accreditation. · Continued development of an Energy and Natural Capital strategy.

Risk: Cyber security Successful cyber-attack jeopardising business continuity.
Inherent risk (before mitigating actions)	Residual risk (after mitigating actions)		Change in residual risk in the year
High	Low		No change
Commentary Cyber-attacks pose a continually evolving threat to all businesses and Harworth, like all others, is at risk. We have robust strategic and technical measures in place to monitor and mitigate this risk. Our last biennial penetration test (H2 2022) found Harworth to be in a strong position, and we undertake rolling vulnerability scanning which provides real-time assurance. Updates on cyber security risk and mitigations are provided to the Audit Committee biannually.
Mitigation		Additional measures planned for 2024
· The Business Continuity Plan. · We have an external provider for IT support, which remains vigilant to the evolving cyber security backdrop, and is supported by a retained cyber security specialist. · We take out cyber risk insurance. · We undertake biennial penetration testing, supported by regular phishing simulations and continuous IT system vulnerability scanning. · We have a rolling cyber and information security awareness programme for all employees.		· Desktop test of Business Continuity Plan.

Chris Birch

General Counsel and Company Secretary

18 March 2024

Directors' Responsibilities Statement

The Directors' Responsibilities Statement below has been prepared in connection with the full Annual Report and Financial Statements for the year ended 31 December 2023.

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

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

In preparing these Financial Statements the Directors are required to:

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

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

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

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

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

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

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

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

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

Responsibility statements

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

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

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

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

Disclosure of information to the auditor

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

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

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

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

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

Chris Birch

General Counsel and Company Secretary

18 March 2024

Cautionary statement and Directors' liability

This announcement and the 2023 Annual Report and Financial Statements contain certain forward-looking statements which, by their nature, involve risk, uncertainties and assumptions because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward looking statements. Any forward-looking statements made by or on behalf of the Group are made in good faith based on current expectations and beliefs and on the information available at the time the statement is made. No representation or warranty is given in relation to these forward-looking statements, including as to their completeness or accuracy or the basis on which they were prepared, and undue reliance should not be placed on them. The Group does not undertake to revise or update any forward-looking statement contained in this announcement or the 2023 Annual Report and Financial Statements to reflect any changes in its expectations with regard thereto or any new information or changes in events, conditions or circumstances on which any such statement is based, save as required by law and regulations. Nothing in this announcement or the 2023 Annual Report and Financial Statements should be construed as a profit forecast.

This announcement and the 2023 Annual Report and Financial Statements have been prepared for, and only for, the shareholders of the Company, as a body, and no other persons. Neither the Company nor the Directors accept or assume any liability to any person to whom this announcement or the 2023 Annual Report and Financial Statements is shown or into whose hands they may come except to the extent that such liability arises and may not be excluded under English law.

Financial Calendar

Annual Report and Financial Statements for the year ended 31 December 2023	Published	10 April 2024
2024 Annual General Meeting	Scheduled	20 May 2024
Final dividend for the year ended 31 December 2023	Ex-dividend date Record date Payable	25 April 2024 26 April 2024 24 May 2024
Half-year results for the six months ending 30 June 2024	Announced	September 2024

Registrars

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

Dividend Mandate

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

Shareview service

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

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

Website

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

Consolidated income statement

Year ended 31 December 2023 £'000

Year ended 31 December 2022 £'000

Revenue

72,427

166,685

Cost of sales

(60,077)

(83,292)

Gross profit

12,350

83,393

Administrative expenses

(27,435)

(22,090)

Other gains/(losses)

69,426

(16,761)

Other operating expense

(112)

(56)

Operating profit

54,229

44,486

Finance costs

(6,421)

(6,367)

Finance income

445

227

Share of profit/(loss) of joint ventures

1,554

(7,487)

Profit before tax

49,807

30,859

Tax charge

(11,851)

(3,021)

Profit for the year

37,956

27,838

Earnings per share from operations

pence

Basic

11.8

8.6

Diluted

11.5

8.5

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

All activities are derived from continuing operations.

Consolidated statement of comprehensive income

	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Profit for the year	37,956	27,838
Other comprehensive (expense) / income - items that will not be reclassified to profit or loss:
Net actuarial (loss)/gain in Blenkinsopp Pension scheme	(10)	295
Revaluation of Group occupied property	(167)	(133)
Deferred tax on other comprehensive income/(expense) items	3	(101)
Other comprehensive income - items that may be reclassified subsequently to profit or loss:
Fair value of financial instruments	-	156
Total other comprehensive (expense)/income	(174)	217
Total comprehensive income for the year	37,782	28,055

Consolidated balance sheet

ASSETS

As at 31 December 2023 £'000

As at 31 December 2022 £'000

Non-current assets

Property, plant and equipment

1,670

600

Right of use assets

512

254

Trade and other receivables

11,296

4,013

Investment properties

433,942

400,363

Investments in joint ventures

30,722

29,828

478,142

435,058

Current assets

Inventories

263,073

216,393

Trade and other receivables

37,289

56,658

Assets held for sale

18,752

59,790

Cash

27,182

11,583

346,296

344,424

Total assets

824,438

779,482

LIABILITIES

Current liabilities

Borrowings

(29,744)

(3,067)

Trade and other payables

(88,087)

(82,499)

Lease liabilities

(158)

(82)

Current tax liabilities

(2,643)

(7,013)

(120,632)

(92,661)

Net current assets

225,664

251,763

Non-current liabilities

Borrowings

(33,830)

(56,911)

Trade and other payables

(1,757)

(2,819)

Lease liabilities

(397)

(172)

Net deferred income tax liabilities

(30,089)

(24,141)

Retirement benefit obligations

(11)

(114)

(66,084)

(84,157)

Total liabilities

(186,716)

(176,818)

Net assets

637,722

602,664

SHAREHOLDERS' EQUITY

Called up share capital

32,408

32,305

Share premium account

25,034

24,688

Fair value reserve

225,177

174,520

Capital redemption reserve

257

Merger reserve

45,667

Investment in own shares

(99)

(50)

Retained earnings

271,322

297,439

Current year profit

37,956

27,838

Total shareholders' equity

637,722

602,664

Condensed consolidated statement of changes in shareholders' equity

	Called up share capital £'000	Share premium account £'000	Merger reserve £'000	Fair value reserve £'000	Capital redemption reserve £'000	Investment in own shares £'000	Retained earnings £'000	Total equity £'000
Balance at 1 January 2022	32,272	24,627	45,667	199,629	257	(24)	275,556	577,984
Profit for the financial year	-	-	-	-	-	-	27,838	27,838
Fair value losses on investment property	-	-	-	(10,019)	-	-	10,019	-
Transfer of unrealised gains on disposal of investment property	-	-	-	(14,957)	-	-	14,957	-
Other comprehensive (expense)/income:								-
Actuarial gain in Blenkinsopp pension scheme	-	-	-	-	-	-	295	295
Revaluation of Group occupied property	-	-	-	(133)	-	-	-	(133)
Fair value of financial instruments	-	-	-	-	-	-	156	156
Deferred tax on other comprehensive expense items	-	-	-	-	-	-	(101)	(101)
	-	-	-	(25,109)	-	-	53,164	28,055
Transactions with owners:
Purchase of own shares	-	-	-	-	-	(26)	-	(26)
Share-based payments	-	-	-	-	-	-	589	589
Dividends paid	-	-	-	-	-	-	(4,032)	(4,032)
Share issue	33	61	-	-	-	-	-	94
Balance at 31 December 2022	32,305	24,688	45,667	174,520	257	(50)	325,277	602,664
Profit for the financial year	-	-	-	-	-	-	37,956	37,956
Fair value gains on investment property	-	-	-	76,744	-	-	(76,744)	-
Transfer of unrealised gains on disposal of investment property	-	-	-	(25,920)	-	-	25,920	-
Other comprehensive (expense)/income:
Actuarial gain in Blenkinsopp pension scheme	-	-	-	-	-	-	(10)	(10)
Revaluation of group occupied property	-	-	-	(167)	-	-	-	(167)
Deferred tax on other comprehensive expense items	-	-	-	-	-	-	3	3
	-	-	-	50,657	-	-	(12,875)	37,782
Transactions with owners:
Purchase of own shares	-	-	-	-	-	(49)	-	(49)
Share-based payments	-	-	-	-	-	-	1,314	1,314
Dividends paid	-	-	-	-	-	-	(4,438)	(4,438)
Share issue	103	346	-	-	-	-	-	449
Balance at 31 December 2023	32,408	25,034	45,667	225,177	257	(99)	309,278	637,722

Consolidated statement of cash flows

	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Cash flows from operating activities
Profit before tax for the year	49,807	30,859
Net finance costs	5,976	6,140
Other (gains)/losses	(69,426)	16,761
Share of (profit)/loss of joint ventures (including impairment)	(1,554)	7,487
Share-based transactions⁽¹⁾	1,404	728
Depreciation of property, plant and equipment and right of use assets	282	152
Pension contributions in excess of charge	(113)	(149)
Operating cash inflow before movements in working capital	(13,624)	61,978
Decrease in inventories	5,186	16,502
Decrease/(increase) in receivables	18,868	(6,482)
Increase/(decrease) in payables	6,937	(13,137)
Cash generated from operations	17,367	58,861
Interest paid	(4,302)	(3,998)
Corporation tax paid	(10,212)	(17,702)
Cash generated from operating activities	2,853	37,161
Cash flows from investing activities
Interest received	445	227
Investment in joint ventures	(250)	(1,849)
Distribution from joint ventures	911	665
Net proceeds from disposal of investment properties, AHFS and overages	69,568	14,232
Property acquisitions	(19,046)	(13,445)
Expenditure on investment properties and AHFS	(35,808)	(53,107)
Expenditure on property, plant and equipment	(396)	(110)
Cash generated from/(used in) investing activities	15,424	(53,387)
Cash flows from financing activities
Net proceeds from issue of ordinary shares	400	67
Proceeds from other loans	5,939	19,850
Repayment of other loans	(3,299)	-
Proceeds from bank loans	45,000	154,000
Repayment of bank loans	(46,000)	(152,000)
Loan arrangement fees	(162)	(2,022)
Payment in respect of leases	(118)	(91)
Dividends paid	(4,438)	(4,032)
Cash (used in)/generated from financing activities	(2,678)	15,772
Increase/(decrease) in cash	15,599	(454)

Cash as at beginning of year	11,583	12,037
Increase/(decrease) in cash	15,599	(454)
Cash as at end of year	27,182	11,583

⁽¹⁾ Share-based transactions reflect the non-cash expenses relating to share-based payments included within the income statement

Notes to the financial information for the year ended 31 December 2023

1. Accounting policies

The principal accounting policies adopted in the preparation of this audited consolidated financial information are set out below. These policies have been consistently applied to all of the periods presented, unless otherwise stated.

General information

Harworth Group plc (the "Company") is a company limited by shares, incorporated and domiciled in the UK (England). The address of its registered office is Advantage House, Poplar Way, Catcliffe, Rotherham, South Yorkshire, S60 5TR.

The Company is a public company listed on the London Stock Exchange.

The consolidated financial statements for the year ended 31 December 2023 comprise the accounts of the Company and its subsidiaries (together referred to as the "Group").

Basis of preparation

These financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and UK adopted International Accounting Standards ("IFRS").

The financial information set out herein does not constitute the Company's statutory accounts for the years ended 31 December 2023 or 2022 but is derived from those accounts. The financial information has been prepared using accounting policies consistent with those set out in the annual report and accounts for the year ended 31 December 2022. Statutory accounts for 2022 have been delivered to the Registrar of Companies, and those for 2023 will be delivered in due course. The auditors have reported on those accounts; their report was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain any statements under Section 498(2) or (3) of the Companies Act 2006.

Going-concern basis

These financial statements are prepared on the basis that the Group is a going concern. In forming its opinion as to going concern, the Company prepares cash flow and banking covenant forecasts based upon its assumptions with particular consideration to the key risks and uncertainties and the current macro-economic environment as well as taking into account available borrowing facilities. The going concern period assessed is until June 2025 which has been selected as it can be projected with a good degree of expected accuracy.

A key focus of the assessment of going concern is the management of liquidity and compliance with borrowing facilities for the period to June 2025. In 2022, a five year £200m RCF was agreed with HSBC joining as a new lender in addition to lenders NatWest and Santander. The RCF is aligned to the Group's strategy and provides significant liquidity and flexibility to enable it to pursue its strategic objectives. The facility is subject to financial covenants, including minimum interest cover, maximum infrastructure debt as a percentage of property value and gearing, all of which are tested through the going concern assessment undertaken. Available liquidity, including cash and cash equivalents and bank facility headroom, was £192.2m as at 31 December 2023.

The Group benefits from diversification across its Capital Growth and Income Generation businesses including its industrial and renewable energy property portfolio. Taking into account the independent valuation by BNP Paribas and Savills, the Group LTV remains low at 4.7%, within the Board's target range and with headroom to allow for falls in property values. Rent collection remained strong, with 98% collected to date for 2023.

In addition to a base cashflow forecast, a sensitised forecast was produced that reflected a number of severe but plausible downsides. This downside included: 1) a severe reduction in sales to the housebuilding sector as well as lower investment property sales; 2) notwithstanding strong rent collection in 2023 a prudent material increase in bad debts across the portfolio over the majority of the going concern assessment period; 3) a material decline in the value of land and investment property values and 4) increases in interest rates, impacting the cost of the Group's borrowings.

A scenario was also run which demonstrated that very severe loss of revenue, valuation reductions and interest cost increases would be required to breach cashflow and banking covenants. The Directors consider this very severe scenario to be remote. A scenario with consideration of potential climate change and related transition impacts was also examined as part of the Group's focus on climate-related risks and opportunities.

Under each downside scenario, for the going concern period to June 2025, the Group expects to continue to have sufficient cash reserves to continue to operate with headroom on lending facilities and associated covenants and has additional mitigation measures within management's control, for example reducing development and acquisition expenditure and reducing operating costs, that could be deployed to create further cash and covenant headroom.

Based on these considerations, together with available market information and the Directors' knowledge and experience of the Group's property portfolio and markets, the Directors considered it appropriate to adopt a going concern basis of accounting in the preparation of the Group's and Company's financial statements.

Accounting policies

Changes in accounting policy and disclosures

(a) New standards, amendments and interpretations

A number of new standards and amendments to standards and interpretations were effective for annual periods beginning on or after 1 January 2023. None of these have had a significant effect on the financial statements of the Group.

(b) New standards, amendments and interpretations not yet adopted

A number of new standards and amendments to standards and interpretations were effective for annual periods beginning on or after 1 January 2024 and have not been applied in preparing these financial statements. None of these are expected to have had a significant effect on the financial statements of the Group.

Estimates and judgements

The preparation of the consolidated 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 consolidated 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 in the consolidated financial statements for the year ended 31 December 2022.

2. Alternative Performance Measures ("APMs")

Introduction

The Group has applied the December 2019 European Securities and Markets Authority ("ESMA") guidance on APMs and the November 2017 Financial Reporting Council ("FRC") corporate thematic review of APMs in these results. An APM is a financial measure of historical or future financial performance, position or cash flows of the Group which is not a measure defined or specified under IFRS.

Overview of use of APMs

The Directors believe that APMs assist in providing additional useful information on the underlying trends, performance and position of the Group. APMs assist stakeholder users of the accounts, particularly equity and debt investors, through the comparability of information. APMs are used by the Directors and management, both internally and externally, for performance analysis, strategic planning, reporting and incentive-setting purposes.

APMs are not defined by IFRS and therefore may not be directly comparable with other companies' APMs, including peers in the real estate industry. APMs should be considered in addition to, and are not intended to be a substitute for, or superior to, IFRS measurements.

The derivations of our APMs and their purpose

The primary differences between IFRS statutory amounts and the APMs that are used by Harworth are as follows:

1. Capturing all sources of value creation - Under IFRS, the revaluation movement in development properties which are held in inventory is not included in the balance sheet. Also, overages are not recognised in the balance sheet until they are highly probable. These movements, which are verified by our independent valuers BNP Paribas and Savills, are included within our APMs;

2. Re-categorising income statement amounts - Under IFRS, the grouping of amounts, particularly within gross profit and other gains, does not clearly allow Harworth to demonstrate the value creation through its business model. In particular, the statutory grouping does not distinguish value gains (being realised profits from the sales of properties and unrealised profits from property value movements) from the ongoing profitability of the business which is less susceptible to movements in the property cycle. Finally, the Group includes profits from joint ventures within its APMs as its joint ventures conduct similar operations to Harworth, albeit in different ownership structures; and

3. Comparability with industry peers - Harworth discloses some APMs which are EPRA measures as these are a set of standard disclosures for the property industry and thus aid comparability for our stakeholder users.

Our key APMs

The key APMs that the Group focuses on are as follows:

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

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

· Value gains - These are the realised profits from the sales of properties and unrealised profits from property value movements including joint ventures and the mark to market movement on development properties, AHFS and overages

· Net loan to portfolio value ("LTV") - Group debt net of cash and cash equivalents held expressed as a percentage of portfolio value

3. Segment information

Segmental Income Statement Year ended 31 December 2023

	Capital Growth
	Sale of development properties	Other property activities	Income Generation	Central	Total
	£'000	£'000	£'000	£'000	£'000
Revenue ⁽¹⁾	46,731	2,286	23,410	-	72,427
Cost of sales	(51,709)	(2,340)	(6,028)	-	(60,077)
Gross (loss)/profit ⁽²⁾	(4,978)	(54)	17,382	-	12,350
Administrative expenses	-	(5,062)	(3,147)	(19,226)	(27,435)
Other gains ⁽³⁾	-	65,066	4,360	-	69,426
Other operating expense	-	-	-	(112)	(112)
Operating (loss)/profit	(4,978)	59,950	18,595	(19,338)	54,229
Finance costs	-	-	-	(6,421)	(6,421)
Finance income	-	438	7	-	445
Share of profit of joint ventures	-	892	662	-	1,554
(Loss)/profit before tax	(4,978)	61,280	19,264	(25,759)	49,807

⁽¹⁾ Revenue
Revenue is analysed as follows:
Sale of development properties	46,731	- -	-	-	46,731
Revenue from PPAs	- -	776	-	-	776
Build-to-suit development revenue	- -	956	-	-	956
Rent, service charge and royalties revenue	- -	340	22,657	-	22,997
Other revenue	- -	214	753	-	967
	46,731	2,286	23,410	-	72,427

⁽²⁾ Gross (loss)/profit
Gross (loss)/profit is analysed as follows:
Gross (loss)/profit excluding sales of development properties	-	(54)	17,382	-	17,328
Gross loss on sale of development properties*	(618)	-	-	-	(618)
Net realisable value provision on development properties	(7,442)	-	-	-	(7,442)
Reversal of previous net realisable value provision on development properties	1,213	-	-	-	1,213
Release of net realisable value provision on disposal of development properties	1,869	-	-	-	1,869
	(4,978)	(54)	17,382	-	12,350

*Gross loss on sale of development properties includes a reduction of £2.0m (2022: £0.4m) relating to the discounting of deferred consideration receivable.

⁽³⁾ Other gains/(losses)
Other gains/(losses) are analysed as follows:
Increase in fair value of investment properties	-	65,584	5,788	-	71,372
Decrease in the fair value of AHFS	-	(114)	(158)	-	(272)
Loss on sale of investment properties	-	(588)	(365)	-	(953)
Loss on sale of AHFS	-	(134)	(1,006)	-	(1,140)
Profit on sale of overages	-	318	101	-	419
	-	65,066	4,360	-	69,426

Segmental Balance Sheet As at 31 December 2023

	Capital Growth £'000	Income Generation £'000	Central £'000	Total £'000
Non-current assets
Property, plant and equipment	-	-	1,670	1,670
Right of use assets	-	-	512	512
Trade and other receivables	11,296	-	-	11,296
Investment properties	199,216	234,726	-	433,942
Investments in joint ventures	17,604	13,118	-	30,722
	228,116	247,844	2,182	478,142
Current assets
Inventories	263,073	-	-	263,073
Trade and other receivables	23,967	11,300	2,022	37,289
AHFS	3,764	14,988	-	18,752
Cash and cash equivalents	-	-	27,182	27,182
	290,804	26,288	29,204	346,296
Total assets	518,920	274,132	31,386	824,438

Financial liabilities and derivative financial instruments are not allocated to the reporting segments as they are managed and measured at a Group level.

Segmental Income Statement Year ended 31 December 2022

	Capital Growth
	Sale of development properties	Other property activities	Income Generation	Central	Total
	£'000	£'000	£'000	£'000	£'000
Revenue ⁽¹⁾	124,956	10,478	31,251	-	166,685
Cost of sales	(68,099)	(6,305)	(8,888)	-	(83,292)
Gross profit ⁽²⁾	56,857	4,173	22,363	-	83,393
Administrative expenses	-	(4,123)	(1,877)	(16,090)	(22,090)
Other gains/(losses) ⁽³⁾	-	17,788	(34,549)	-	(16,761)
Other operating expense	-	-	-	(56)	(56)
Operating profit/(loss)	56,857	17,838	(14,063)	(16,146)	44,486
Finance costs	-	(168)	-	(6,199)	(6,367)
Finance income	-	227	-	-	227
Share of loss of joint ventures	-	(4,317)	(3,170)	-	(7,487)
Profit/(loss) before tax	56,857	13,580	(17,233)	(22,345)	30,859

⁽¹⁾ Revenue
Revenue is analysed as follows:
Sale of development properties	124,956	- -	-	-	124,956
Revenue from PPAs	- -	5,810	-	-	5,810
Build-to-suit development revenue	-	4,215	-	-	4,215
Rent, service charge and royalties revenue	-	426	28,151	-	28,577
Revenue from coal fines	-	-	2,113	-	2,113
Other revenue	- -	27	987	-	1,014
	124,956	10,478	31,251	-	166,685

⁽²⁾ Gross profit
Gross profit is analysed as follows:
Gross profit excluding sales of development properties	-	4,173	22,363	-	26,536
Gross profit on sale of development properties	57,252	-	-	-	57,252
Net realisable value provision on development properties	(7,074)	-	-	-	(7,074)
Reversal of previous net realisable value provision on development properties	5,030	-	-	-	5,030
Release of net realisable value provision on disposal of development properties	1,649	-	-	-	1,649
	56,857	4,173	22,363	-	83,393

⁽³⁾ Other gains/(losses)
Other gains/(losses) are analysed as follows:
Increase/(decrease) in fair value of investment properties	-	17,958	(37,683)	-	(19,725)
Decrease in the fair value of AHFS	-	(199)	-	-	(199)
Profit on sale of investment properties	-	76	847	-	923
(Loss)/profit on sale of AHFS	-	(216)	2,287	-	2,071
Profit on sale of overages	-	169	-	-	169
	-	17,788	(34,549)	-	(16,761)

Segmental Balance Sheet As at 31 December 2022

	Capital Growth £'000	Income Generation £'000	Central £'000	Total £'000
Non-current assets
Property, plant and equipment	-	-	600	600
Right of use assets	-	-	254	254
Trade and other receivables	4,013	-	-	4,013
Investment properties	164,533	235,830	-	400,363
Investments in joint ventures	16,462	13,366	-	29,828
	185,008	249,196	854	435,058
Current assets
Inventories	216,393	-	-	216,393
Trade and other receivables	41,287	14,913	458	56,658
AHFS	2,627	57,163	-	59,790
Cash and cash equivalents	-	-	11,583	11,583
	260,307	72,076	12,041	344,424
Total assets	445,315	321,272	12,895	779,482

Financial liabilities and derivative financial instruments are not allocated to the reporting segments as they are managed and measured at a Group level.

4. Finance costs and finance income

	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Finance costs
- Bank interest	(2,778)	(2,206)
- Facility fees	(1,524)	(1,791)
- Amortisation of up-front fees	(671)	(685)
- Acceleration of amortisation of up-front fees following extinguishment of previous RCF	-	(599)
- Other interest	(1,448)	(1,086)
Total finance costs	(6,421)	(6,367)
Finance income	445	227
Net finance costs	(5,976)	(6,140)

5. Tax

Analysis of tax (charge)/credit in the year	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Current tax
Current year	(6,749)	(21,650)
Adjustment in respect of prior periods	907	(118)
Total current tax charge	(5,842)	(21,768)
Deferred tax
Current year	(4,779)	13,504
Adjustment in respect of prior periods	(987)	409
Difference between current tax rate and rate of deferred tax	(243)	4,834
Total deferred tax (charge)/credit	(6,009)	18,747
Tax charge	(11,851)	(3,021)


Other comprehensive income items
Deferred tax - current year	3	(101)
Total	3	(101)

The tax charge for the year is higher (2022: lower) than the standard rate of corporation tax in the UK of 23.5% (2022: 19%). The differences are explained below:

	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Profit before tax	49,807	30,859

Profit before tax multiplied by rate of corporation tax in the UK of 23.5% (2022: 19%)	(11,705)	(5,863)

Effects of:
Adjustments in respect of prior periods- deferred taxation	(987)	409
Adjustments in respect of prior periods- current taxation	907	(118)
Expenses not deducted for tax purposes	(542)	(127)
Revaluation gains/(losses)	252	(755)
Share of profit/(loss) of joint ventures	365	(1,423)
Difference between current tax rate and rate of deferred tax	(243)	4,834
Share options	102	22
Total tax charge	(11,851)	(3,021)

The difference between current tax rate and rate of deferred tax of £0.2m (2022: £4.8m) relates to the unwinding of balances previously recognised at 25% and the reduction of the deferred tax liabilities recognised at 25% as a result of in year movements.

At 31 December 2023, the Group had a current tax liability of £2.6m (2022: £7.0m).

The Company has recognised a current tax liability in 2023 of £0.8m (2022: asset £0.5m).

Deferred tax

The following is the analysis of deferred tax liabilities presented in the consolidated balance sheet:

	As at 31 December 2023 £'000	As at 31 December 2022 £'000
Deferred tax assets	503	1,839
Deferred tax liabilities	(30,592)	(25,980)
	(30,089)	(24,141)

The movements on the deferred income tax account were as follows:

	Investment Properties £'000	Tax Losses £'000	Other Temporary Differences £'000	Total £'000
At 1 January 2022	(46,988)	2,558	1,783	(42,647)
Recognised in the consolidated income statement	21,008	(2,558)	297	18,747
Recognised in the consolidated statement of comprehensive income	-	-	(101)	(101)
Recognised in the consolidated statement of equity	-	-	(140)	(140)
At 31 December 2022 and 1 January 2023	(25,980)	-	1,839	(24,141)
Recognised in the consolidated income statement	(4,612)	-	(1,397)	(6,009)
Recognised in the consolidated statement of comprehensive income	-	-	3	3
Recognised in the consolidated statement of equity	-	-	58	58
At 31 December 2023	(30,592)	-	503	(30,089)

In the Spring Budget 2021, the Government announced an increase in the corporation tax rate from 19% to 25% from 1 April 2023. The rate was substantively enacted on 24 May 2021 and as such the deferred tax balances have been calculated in full on temporary differences under the liability method using the rate expected to apply at the time of the reversal of the balance. As such, the deferred tax assets and liabilities have been calculated using a 25% rate (2022: mixture of 25% and a blended rate) as appropriate.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority.

Deferred tax assets of £7.7m at 31 December 2023 (2022: £8.1m) have not been recognised owing to the uncertainty as to their recoverability.

The Company has recognised a deferred tax asset in 2023 of £0.1m (2022: £0.1m).

6. Dividends

	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Interim dividend of 0.444p per share for the six months ended 30 June 2023	1,437	-
Full year dividend of 0.929p per share for the year ended 31 December 2022	3,001	-
Interim dividend of 0.404p per share for the six months ended 30 June 2022	-	1,305
Full year dividend of 0.845p per share for the year ended 31 December 2021		2,727
	4,438	4,032

The Board has declared a final dividend to be paid of 1.022p (2022: 0.929p) per share, bringing the total dividend for the year to 1.466p (2022: 1.333p). The recommended 2023 final dividend and 2023 total dividend represent a 10% increase in line with the Group's policy.

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 year.

	Year ended 31 December 2023	Year ended 31 December 2022
Profit from continuing operations attributable to owners of parent (£'000)	37,956	27,838
Weighted average number of shares used for basic earnings per share calculation	322,767,356	322,571,783
Basic earnings per share (pence)	11.8	8.6
Weighted average number of shares used for diluted earnings per share calculation	328,653,655	326,317,353
Diluted earnings per share (pence)	11.5	8.5

The difference between the weighted average number of shares used for the basic and diluted earnings per share calculation is due to the effect of share awards and options that are dilutive.

8. Investment properties

Investment properties at 31 December 2023 and 31 December 2022 have been measured at fair value. The Group holds five categories of investment property being Agricultural Land, Natural Resources, the Investment Portfolio, 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 Land £'000	Natural Resources £'000	Investment Portfolio £'000	Major Developments £'000	Strategic Land £'000	Total £'000
At 1 January 2022	5,412	30,551	259,726	45,483	137,183	478,355
Direct acquisitions	-	-	-	-	11,863	11,863
Subsequent expenditure	-	12	2,822	40,928	9,344	53,106
Disposals	-	(860)	-	-	-	(860)
Increase/(decrease) in fair value	282	(163)	(37,802)	(5,357)	23,315	(19,725)
Transfers between divisions			42,250	(42,250)	-	-
Transfers from/(to) development properties	-	-	-	5,440	(60,513)	(55,073)
Transfer to AHFS	-	(9,814)	(56,589)	-	(900)	(67,303)
At 31 December 2022	5,694	19,726	210,407	44,244	120,292	400,363
Direct acquisitions	655	-	-	-	15,829	16,484
Subsequent expenditure	45	1,350	677	22,104	11,558	35,734
Disposals	-	-	(11,136)	(788)	(7,041)	(18,965)
Increase in fair value	116	89	5,583	3,196	62,388	71,372
Transfers between divisions	-	-	18,551	(10,416)	(8,135)	-
Transfers to development properties	-	-	-	-	(51,865)	(51,865)
Transfers to property, plant and equipment	-	-	(967)	-	-	(967)
Transfer to AHFS	-	(1,264)	(14,800)	-	(2,150)	(18,214)
At 31 December 2023	6,510	19,901	208,315	58,340	140,876	433,942

Subsequent expenditure is recorded net of government grant receipts of £1.6m (2022: £0.9m).

During the year £nil (2022: £5.4m) of development property was re-categorised as investment property to reflect a change in use. During the year £51.9m (2022: £60.5m) of investment property was re-categorised to development properties. During the year £1.0m of investment property was re-categorised as land and buildings (2022: £nil).

Investment property is transferred between divisions to reflect a change in the activity arising from the asset.

Valuation process

The properties were valued in accordance with the Royal Institution of Chartered Surveyors (RICS) Valuation - Professional Standards (the 'Red Book') by BNP Paribas Real Estate and Savills at 31 December 2023 and 31 December 2022. Both are independent firms acting in the capacity of external valuers with relevant experience of valuations of this nature.

The valuations are on the basis of Market Value as defined by the Red Book, which RICS considers meets the criteria for assessing Fair Value under IFRS. The valuations are based on what is determined to be the highest and best use. When considering the highest and best use a valuer will consider, on a property by property basis, its actual and potential uses which are physically, legally and financially viable. Where the highest and best use differs from the existing use, the valuer will consider the cost and the likelihood of achieving and implementing this change in arriving at its valuation.

At each financial year end, management:

· verifies all major inputs to the independent valuation report;

· assesses property valuation movements when compared to the prior year valuation report; and

· holds discussions with the independent valuer.

The Directors determine the applicable hierarchy that each investment property falls into by assessing the level of unobservable inputs used in the valuation technique. As a result of the specific nature of each investment property, valuation inputs are not based on directly observable market data and therefore all investment properties were determined to fall into Level 3.

The Group's policy is to recognise transfers into and out of fair value hierarchy levels as at the date of the event or change in circumstance that caused the transfer. There were no transfers between hierarchy levels in the year ended 31 December 2023 (2022: none).

Valuation techniques underlying management's estimation of fair value are as follows:

Agricultural land

Most of the agricultural land is valued using the market comparison basis, with an adjustment made for the length of the remaining term on any tenancy and the estimated cost to bring the land to its highest and best use. Where the asset is subject to a secure letting, it is valued on a yield basis, based upon sales of similar types of investment.

Natural resources

Natural resource sites in the portfolio are valued based on discounted cash flow for the operating life of the asset with regard to the residual land value.

Investment Portfolio

The industrial & logistics investment properties are valued on the basis of market comparison with direct reference to observable market evidence including current rent and estimated rental value (ERV), yields and capital values and adjusted where required for the estimated cost to bring the property to its highest and best use. The evidence is adjusted to reflect the quality of the property assets, the quality of the covenant profile of the tenants and the reliability/volatility of cash flows. The Group's portfolio has a spread of yields. In the past, income acquisitions have been made at high yields where value can be added. As assets are enhanced and improved, these would also be expected to be valued at lower yields. Subject to market backdrop, properties that are built by Harworth will be modern Grade A with typically lower yields.

Major developments

Major development sites are generally valued using residual development appraisals, a form of discounted cash flow which estimates the current site value from future cash flows measured by current land and/or completed built development values, observable or estimated development costs, and observable or estimated development returns. Where possible development sites are valued by direct comparison to observable market evidence with appropriate adjustment for the quality and location of the property asset, although this is generally only a reliable method of measurement for smaller development sites.

Strategic land

Strategic land is valued on the basis of discounted cash flow, with future cash flows measured by current land values adjusted to reflect the quality of the development opportunity, the potential development costs estimated by reference to observable development costs on comparable sites, and the likelihood of securing planning consent. The valuations are then benchmarked against observable land values reflecting the current existing use of the land, which is generally agricultural and, where available, observable strategic land values. The discounted cash flows across the different property categories utilise value per acre, which takes account of the future expectations of sales over time discounted back to a current value, and cost report totals, which take account of the cost, as at today's value, to complete remediation and provide the necessary site infrastructure to bring the site forward.

9. Investment in joint ventures

	As at 31 December 2023 £'000	As at 31 December 2022 £'000
At 1 January	29,828	36,131
Investment in joint ventures	250	1,849
Distributions from joint ventures	(910)	(665)
Share of profits of joint ventures	1,554	(7,487)
At end of year	30,722	29,828

10. Inventories

	As at 31 December 2023 £'000	As at 31 December 2022 £'000
Development properties	250,024	204,952
Planning promotion agreements	3,805	2,994
Option agreements	9,244	8,447
Total inventories	263,073	216,393

The movement in development properties is as follows:

	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
At start of year	204,952	172,701
Subsequent expenditure	32,417	35,430
Disposals	(34,850)	(57,857)
Net realisable value provision charge	(4,360)	(395)
Net transfer from investment properties	51,865	55,073
At end of year	250,024	204,952

The movement in net realisable value provision was as follows:

	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
At start of year	9,776	12,154
Charge for the year	7,442	7,074
Released on disposals	(1,213)	(5,030)
Reversal of previous net realisable value provision	(1,869)	(1,649)
Released on transfer to investment property	-	(2,773)
At end of year	14,136	9,776

11. Assets held for sale

AHFS relate to investment properties identified as being for sale within 12 months, where a sale is considered highly probable and the property is immediately available for sale.

	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
At start of year	59,790	1,925
Net transfer from investment properties	18,214	67,303
Subsequent expenditure	74	1
Decrease in fair value	(272)	(199)
Disposals	(59,054)	(9,240)
At end of year	18,752	59,790

12. Cash

As at

31 December

2023

£'000

As at

31 December

2022 £'000

Cash

27,182

11,583

13. Borrowings

	As at 31 December 2023 £'000	As at 31 December 2022 £'000
Current:
Secured - infrastructure and direct development loans	(29,744)	(3,067)
	(29,744)	(3,067)

Non-current:
Secured - bank loan	(33,830)	(34,558)
Secured - infrastructure and direct development loans	-	(22,353)
Total non-current borrowings	(33,830)	(56,911)
Total borrowings	(63,574)	(59,978)

Loans are stated after deduction of unamortised fees of £1.5m (2022: £2.0m).

		As at 31 December 2023 £'000	As at 31 December 2022 £'000
Infrastructure and direct development loans
South Yorkshire Pension Fund/ Scrudf Limited Partnership	Rotherham AMP	(584)	-
Scrudf Limited Partnership	Gateway 36	(6,850)	(1,413)
Merseyside Pension Fund	Bardon Hill	(22,310)	(20,940)
North West Evergreen Limited Partnership	Logistics North	-	(3,067)
Total infrastructure and direct development loans		(29,744)	(25,420)
Bank loan		(33,830)	(34,558)
Total borrowings		(63,574)	(59,978)

The bank borrowings are part of a £200m (2022: £200m) revolving credit facility ("RCF") with a £40m uncommitted accordion option, provided by NatWest, Santander and HSBC. The RCF is repayable on 4 March 2027 at the end of the five-year term.

The RCF is subject to financial and other covenants. The bank borrowings are secured by way of a floating debenture over assets not otherwise used as security under specific infrastructure or direct development loans. Proceeds from and repayments of bank loans are reflected gross in the Consolidated Statement of Cash Flows and reflect timing of utilisation of the RCF.

The infrastructure and direct development loans are provided by public and private bodies in order to promote the development of major sites or assist with vertical direct development. 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.

14. Share capital

Issued, authorised and fully paid	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
At start of year	32,305	32,272
Shares issued	103	33
At end of year	32,408	32,305

Issued, authorised and fully paid - number of shares	Year ended 31 December 2023	Year ended 31 December 2022
At start of year	323,051,124	322,724,566
Shares issued	1,032,948	326,558
At end of year	324,084,072	323,051,124
Own shares held	(929,699)	(438,439)
At end of year	323,154,373	322,612,685

15. Related party transactions

The Group carried out the following transactions with related parties. The following entities are related parties as a consequence of shareholdings, joint venture arrangements and partners of such and/or common Directorships. All related party transactions are clearly justified and beneficial to the Group, are undertaken on an arm's-length basis on fully commercial terms and in the normal course of business.

	Year ended/ as at 31 December 2023 £000	Year ended/ as at 31 December 2022 £000
MULTIPLY LOGISTICS NORTH HOLDINGS LIMITED & MULTIPLY LOGISTICS NORTH LP
Sales
Recharges of costs	281	-
Asset management fee	100	145
Water charges	146	113

Purchases
Recharge of costs
	1	-
Receivables
Other receivables	5	-
Trade receivables	281	-
GENUIT GROUP (FORMERLY POLYPIPE)
Sales
Rent	10	20
Development property disposal	1,680	-

Receivables
Trade receivables	-	6
THE AIRE VALLEY LAND LLP

Receivable	26	26
CRIMEA LAND MANSFIELD LLP

Receivable	9	9
NORTHERN GATEWAY DEVELOPMENT VEHICLE LLP

Partner loan made during the year	-	1,849
Investment made during the year	250	-
INVESTMENT PROPERTY FORUM

Purchases	5	1

16. Post balance sheet events

In January 2024 the Group disposed of the investment portfolio asset Flaxby Moor Industrial Estate, Knaresborough for proceeds of £13.3m. This asset was included within assets held for sale at the year end.

Appendix

EPRA Net Asset Measures

EPRA introduced a new set of Net Asset Value metrics in 2020: EPRA Net Reinstatement Value ("NRV"), EPRA Net Tangible Assets ("NTA") and EPRA NDV. While the Group uses only EPRA NDV as a key APM, the EPRA Best Practices Recommendations guidelines require companies to report all three EPRA NAV metrics and reconcile them to IFRS. These disclosures are provided below.

	31 December 2023
	EPRA NDV £'000	EPRA NTA £'000	EPRA NRV £'000
Net assets	637,722	637,722	637,722
Cumulative unrealised gains on development properties	24,083	24,083	24,083
Cumulative unrealised gains on overages	9,400	9,400	9,400
Deferred tax liabilities (IFRS)	-	30,089	30,089
Notional deferred tax on unrealised gains	(8,342)	-	-
Deferred tax liabilities @ 50%	-	(19,216)	-
Purchaser costs	-	-	52,528
	662,863	682,078	753,822
Number of shares used for per share calculations	323,154,373	323,154,373	323,154,373
Per share (pence)	205.1	211.1	233.3

	31 December 2022
	EPRA NDV £'000	EPRA NTA £'000	EPRA NRV £'000
	EPRA NDV £'000	EPRA NTA £'000	EPRA NRV £'000
Net assets	602,664	602,664	602,664
Cumulative unrealised gains on development properties	33,852	33,852	33,852
Cumulative unrealised gains on overages	7,500	7,500	7,500
Deferred tax liabilities (IFRS)	-	24,141	24,141
Notional deferred tax on unrealised gains	(10,171)	-	-
Deferred tax liabilities @ 50%	-	(17,156)	-
Purchaser costs	-	-	46,307
	633,845	651,001	714,464
Number of shares used for per share calculations	322,612,685	322,612,685	322,612,685
Per share (pence)	196.5	201.8	221.5

1) Reconciliation to statutory measures

a. Revaluation gains/(losses)	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Increase/(decrease) in fair value of investment properties	71,372	(19,725)
Decrease in fair value of AHFS	(272)	(199)
Share of profit/(loss) of joint ventures	1,554	(7,487)
Net realisable value provision on development properties	(7,442)	(7,074)
Reversal of previous net realisable value provision on development properties	1,213	5,030
Amounts derived from statutory reporting	66,425	(29,455)
Unrealised (losses) / gains on development properties	(3,708)	10,493
Unrealised gains on overages	2,209	4,003
Revaluation gains/(losses)	64,926	(14,959)


b. (Loss)/profit on sale	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
(Loss)/profit on sale of investment properties	(953)	923
(Loss)/profit on sale of AHFS	(1,140)	2,071
(Loss)/profit on sale of development properties	(618)	57,252
Release of net realisable value provision on disposal of development properties	1,869	1,649
Profit on sale of overages	419	169
Amounts derived from statutory reporting	(423)	62,064
Less previously unrealised gains on development properties released on sale	(6,061)	(49,093)
Less previously unrealised gains on overages released on sale	(309)	-
(Loss)/profit on sale	(6,793)	12,971

c. Value gains/(losses)	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Revaluation gains/ (losses)	64,926	(14,959)
(Loss)/profit on sale	(6,793)	12,971
Value gains/(losses)	58,133	(1,988)

d. Total property sales	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Revenue	72,427	166,685
Less revenue from other property activities	(2,286)	(10,478)
Less revenue from income generation activities	(23,410)	(31,251)
Add proceeds from sales of investment properties, AHFS and overages	79,166	13,550
Total property sales	125,897	138,506

e. Operating profit contributing to growth in EPRA NDV	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Operating profit	54,229	44,486
Share of profit/(loss) on joint ventures	1,554	(7,487)
Unrealised (losses)/gains on development properties	(3,708)	10,493
Unrealised gains on overages	2,209	4,003
Less previously unrealised gains on development properties released on sale	(6,061)	(49,093)
Less previously unrealised gains on overages released on sale	(309)	-
Operating profit contributing to growth in EPRA NDV	47,914	2,402

f. Portfolio value	As at 31 December 2023 £'000	As at 31 December 2022 £'000
Land and buildings (included within Property, plant and equipment)	1,300	500
Investment properties	433,942	400,363
Investments in joint ventures	30,722	29,828
AHFS	18,752	59,790
Development properties (included within inventories)	250,024	204,952
Amounts derived from statutory reporting	734,740	695,433
Cumulative unrealised gains on development properties as at year end	24,083	33,852
Cumulative unrealised gains on overages as at year end	9,400	7,500
Portfolio value	768,223	736,785

g. Net debt	As at 31 December 2023 £'000	As at 31 December 2022 £'000
Gross borrowings	(63,574)	(59,978)
Cash and cash equivalents	27,182	11,583
Net debt	(36,392)	(48,395)

h. Net loan to portfolio value (%)	As at 31 December 2023 £'000	As at 31 December 2022 £'000
Net debt	(36,392)	(48,395)
Portfolio value	768,223	736,785
Net loan to portfolio value (%)	4.7%	6.6%

i. Net loan to core income generation portfolio value (%)	As at 31 December 2023 £'000	As at 31 December 2022 £'000
Net debt	(36,392)	(48,395)
Core income generation portfolio value (investment portfolio and natural resources)	228,216	230,133
Net loan to core income generation portfolio value (%)	15.9%	21.0%


j. Gross loan to portfolio value (%)	As at 31 December 2023 £'000	As at 31 December 2022 £'000
Gross borrowings	(63,574)	(59,978)
Portfolio value	768,223	736,785
Gross loan to portfolio value (%)	8.3%	8.1%


k. Gross loan to core income generation portfolio value (%)	As at 31 December 2023 £'000	As at 31 December 2022 £'000
Gross borrowings	(63,574)	(59,978)
Core income generation portfolio value (investment portfolio and natural resources)	228,216	230,133
Gross loan to core income generation portfolio value (%)	27.9%	26.1%


l. Number of shares used for per share calculations (number)	As at 31 December 2023	As at 31 December 2022
Number of shares in issue at end of year	324,084,072	323,051,124
Less Employee Benefit Trust and Equiniti Share Plan Trustees Limited held shares (own shares) at end of year	(929,699)	(438,439)
Number of shares used for per share calculations	323,154,373	322,612,685


m. Net Asset Value (NAV) per share	As at 31 December 2023	As at 31 December 2022
NAV (£'000)	637,722	602,664
Number of shares used for per share calculations	323,154,373	322,612,685
NAV per share (p)	197.3	186.8

2) Reconciliation to EPRA measures

a) EPRA NDV	As at 31 December 2023 £'000	As at 31 December 2022 £'000
Net assets	637,722	602,664
Cumulative unrealised gains on development properties	24,083	33,852
Cumulative unrealised gains on overages	9,400	7,500
Notional deferred tax on unrealised gains	(8,342)	(10,171)
EPRA NDV	662,863	633,845

b) EPRA NDV per share (p)	As at 31 December 2023	As at 31 December 2022
EPRA NDV (£'000)	662,863	633,845
Number of shares used for per share calculations	323,154,373	322,612,685
EPRA NDV per share (p)	205.1	196.5
EPRA NDV growth and total return
Opening EPRA NDV/share (p)	196.5	197.6
Closing EPRA NDV/share (p)	205.1	196.5
Movement in the year (p)	8.6	(1.1)
EPRA NDV growth	4.4%	(0.6%)
Dividends paid per share (p)	1.4	1.2
Total return per share (p)	10.0	0.1
Total return as a percentage of opening EPRA NDV	5.1%	0.1%

To help retain and incentivise a management team with the requisite skills, knowledge and experience to deliver strong, long-term, sustainable growth for shareholders Harworth runs a number of share schemes for employees. The dilutive impact of these on the number of shares at 31 December is set out below:

	As at 31 December 2023	As at 31 December 2022
Number of shares used for per share calculations	323,154,373	322,612,685
Outstanding share options and shares held in trust under employee share schemes	5,223,777	3,193,351
Number of diluted shares used for per share calculations	328,378,150	325,806,036

Diluted EPRA NDV per share, Diluted NDV Growth and Total Return as a percentage of opening diluted EPRA NDV per share are set out below:

c. Diluted EPRA NDV per share (p)	As at 31 December 2023	As at 31 December 2022
EPRA NDV (£'000)	662,863	633,845
Number of diluted shares used for per share calculations	328,378,150	325,806,036
Diluted EPRA NDV per share (p)	201.9	194.5



Diluted EPRA NDV growth and total return
Opening diluted EPRA NDV/share (p)	194.5	196.2
Closing diluted EPRA NDV/share (p)	201.9	194.5
Movement in the year (p)	7.4	(1.7)
Diluted EPRA NDV growth	3.8%	(0.9%)
Dividends paid per share (p)	1.4	1.2
Total diluted return per share (p)	8.8	(0.5)
Total return as a percentage of opening diluted EPRA NDV per share	4.5%	(0.2%)

d) Net loan to EPRA NDV	As at 31 December 2023 £'000	As at 31 December 2022 £'000
Net debt	(36,392)	(48,395)
EPRA NDV	662,863	633,845
Net loan to EPRA NDV	5.5%	7.6%

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