Hargreaves Services has warned that it expects its half-year profits to fall after much of its work on HS2 was pushed back.
The Durham group, which provides services to the industrial and property sector, has told investors that its revenue and pre-tax profit figures for the six months ending November 30 2020 will come in lower than the same period in 2019.
Hargreaves said the dip in its financials had been caused by the “phasing of works on the HS2 project within the specialist earthworks business, but added that its profitability would increase in the second half of the year.
As a result, the company has said its expectation of results for the full year remain unchanged.
The company also explained how the acquisition of British Steel by Jingye Group would impact its business.
Hargreaves had previous worked for British Steel before its takeover and has now been providing services to Jingye under short term contract extensions.
Jingye now plans to bring some of its work in-house, leading to the Hargreaves losing around £9m of work a year.
Explaining how the change would impact its business in a trading update Hargreaves said: “All debts due to Hargreaves and all unbilled work in progress will be recovered in full.
Most Read
“Although this will lead to a reduction in revenue of around £9m per annum, this outcome has been anticipated for some time by Hargreaves and this revenue has not formed part of the Group’s forecasts beyond March 2021.
“This decision has no impact on the board’s view that the group will deliver results in line with expectations for the year ending 31 May 2021.”
Meanwhile, Hargreaves has won a significant contract that will see it carry out materials handling, plant operation work and maintenance at Drax Power Station in Selby. The five-year contract starts in April 2021 and can be extended for two years.
Work has also started on a major development being built by Hargreaves Land at Hilderthorpe Road, Bridlington. The development has 44,000sq ft of pre-let retail floor space and has been fully funded by Hargreaves.
The scheme is set to complete next summer and has a gross development value of £9.5m.