Thursday, February 19, 2015

News: Harworth Estates performs well in second year

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Rotherham-based Harworth Estates, one of the largest property and regeneration companies across the North of England and the Midlands, continued to trade well in its second year of trading as an independent property development company.

Reporting its financial results for the year ended December 31, the company, which is based on its own flagship Waverley development, enjoyed a profit before tax of £20.9m, mainly due to asset sales. By regenerating former coalfields and brownfield land, net assets increased to £249m from £235m in 2013, on a property portfolio value of £290m, up from £277m in 2013.

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Recovery plans for Doncaster-based UK Coal were put in place in May 2011 when the group reported a £124.6m loss and had a £450m pension deficit. The subsequent restructure in 2012 saw the new company, Coalfield Resources, focus on targeting the realisation of its property assets through the Harworth Estates Property Group Limited.

The restructure saw Coalfield Resources own 24.9% of Harworth Estates, with 75.1% having passed to the Pension Funds in return for a £30m cash injection and their support to the mining division. A year later, administrators were called in for its struggling mining division.

Now heads of terms have been agreed for Coalfield Resources to acquire the remaining 75.1% shareholding in Harworth Estates from the Pension Protection Fund (PPF). The deal, worth around £150m, was announced in November.

The report said that Harworth Estates has benefited from improved confidence in the housing market across the North and the Midlands. Highlights include the deals at Waverley for further housing and commercial development, commercial sales at its Logistics North development near Bolton, and residential sales at its Prince of Wales and Rossington sites. Preparations are also being made to realise the assets at the Harworth Colliery site and a recently purchased site at Skelton Grange power station site in Leeds.

The board of Coalfield Resources believes that Harworth Estates has significant opportunities to create further value from its land portfolio of approximately 27,000 acres and specialist brownfield remediation and development skills. Its strength in the regions of in Yorkshire, the North East and the East Midlands also provides scope for further growth as these regional economies strengthen.

Jonson Cox, chairman of Coalfield Resources, said: "We have made good progress in growing the asset value of Harworth Estates, which continued to perform well in its second year of trading as a specialist brownfield investment property development company.

"We have also announced the proposed acquisition for a total consideration of approximately £150m. This acquisition would give a strong platform for growing Harworth. We will continue to work with the PPF to deliver the transaction which is proceeding to plan.

"We continue to see good interest in the property sector. Harworth Estates is a beneficiary of this through the increased demand and improved prices for commercial and residential land. This can be seen in both the valuation gains achieved and also the disposals made.

"The board is confident of the ability of our underlying asset, Harworth Estates, to deliver and grow shareholder value from the redevelopment of the former coalfields and other former industrial sites."

Since the year end, Harworth's debt has been refinanced, on substantially improved terms. A new £65m, five year bank facility (£60m revolving credit facility and £5m bond facility) was secured with Royal Bank of Scotland last week which paid off existing bank facilities and should allow more financing flexibility to Harworth Estates.

A number of board changes are also set to be made. On completion of the proposed acquisition, Owen Michaelson, the chief executive and Michael Richardson, the finance director of Harworth Estates are set to join the board of Coalfield Resources.

Harworth Estates website

Images: Harworth Estates

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