Wednesday, February 24, 2016

News: Profits up at Harworth Group

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Rotherham-based developer Harworth Group plc has delivered a good performance in the first nine months of trading as a standalone business, with increases in the value of its portfolio and in profits.

The group was created in the complex restructure of UK Coal and is listed on the London Stock Exchange. It wholly owns Harworth Estates – one of the UK's largest regeneration companies. Harworth Estates owns and manages 27,000 acres across 200 sites in the North of England and the Midlands. It specialises in transforming brownfield land into residential and commercial developments and low carbon energy projects, in addition to managing a substantial agricultural portfolio.

Coalfield Resources was until December 2012 the parent company of the UK's largest coal miner, UK Coal. In one of the most complex restructurings in UK corporate history, Coalfield Resources, which was previously known as UK Coal plc, split its operating businesses into two separate units - property and mining. A £150m deal took place in 2015 that saw Harworth Estates become completely owned by Coalfield Resources plc, which was subsequently renamed Harworth Group plc.

With a focus on property, the deal and listing on the LSE enabled debt to be refinanced and a new £65m, five year bank facility was secured. Since then, momentum gathered in 2015 and is expected to be maintained through 2016.

Over £20m of acquisitions were made in 2015, which have already increased in value. The focus is on a select number of brownfield sites with higher value enhancement potential and the group expects an acceleration of sales and investment in the portfolio, with further acquisitions expected from 2016 onwards.

For the year to the end of December, Harworth Group posted pre-tax profits of £77.6m - up from £3.5m in the previous year. The figure includes the £44.2m gain arising from the successful acquisition of the remaining 75.1% of Harworth Estates Property Group Limited.

On an underlying basis, operating profit increased to £2.1m from £0.8m in 2014. The group said that the gains in value from disposals and revaluation significantly exceeded expectations with total value gains from disposals of £40.4m, nearly double the £23.6m of the previous year. This resulted in an operating profit, before exceptional items, of £42.6m (2014: £24.4m).

The net assets at the year-end were valued at £297.7m, an increase of £47.4m on a like for like basis from the previous year.

Owen Michaelson, chief executive at Harworth, said: "Building on the success of the first half of the year, I am pleased to report that the first nine months of trading as a standalone business have delivered a good performance, resulting in strong growth in net asset value. Both the Capital Growth and Income Generation segments continued to build on the inherent value in the property portfolio reflecting the strength and experience of the in-house teams.

"The Group is positioned for further growth in net asset value, through the exploitation of portfolio opportunities by optimising land use and securing planning consents on key sites, and with a renewed focus on a smaller number of brownfield sites with greater enhancement potential. With the growth momentum already established in the business, we anticipate a larger number of sales, increased development spend and further acquisitions in 2016. We have entered the new year with confidence, which is demonstrated by the proposed initiation of our dividend policy."

The company, which is based on its flagship Waverley development (pictured) and has 50 staff, added that: "In response to improving sales prospects, capital investment at Logistics North and at the Advanced Manufacturing Park in Rotherham has been brought forward, ensuring that there is land available for immediate occupation on the next phases of these developments."

At Waverley, plans are being developed for a local centre and potential offices, a hotel, conference centre, gym, retail units and community facilities to compliment the growing AMP and housing developments. Plans for an additional 3.6 hectares (8.9 acres) of land for employment on the AMP have recently been approved and detailed plans have been submitted for the next 73,000 sq ft of space at the R-evolution development.

Harworth Estates website

Images: Harworth Estates

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