County Durham property and regeneration firm Hargreaves is poised to report full-year results in line with market expectations, after getting a lift from two areas of the business.
The AIM-listed group published a pre-close trading update, noting how its expectations have been “materially upgraded” in light of a very strong performance from its German joint venture and the accelerated completion of its Unity joint venture in Hargreaves Land.
The company announced last month how trading in the group’s German joint venture, HRMS, was benefitting from favourable market conditions.
It said that certain raw material commodity prices were continuing to be very strong, fuelled in part by demand from global steelmakers.
HRMS said it was unclear how long the strong market conditions will continue - but by continuing to take advantage of the conditions the board said it expected the contribution from the joint venture to exceed current market expectations “by a material amount”, which will be revealed when the results are published.
Meanwhile, April saw the early completion of the sale of a 79-acre plot to an undisclosed national retailer by its Unity joint venture, for £25m.
The revenue from the sale is being retained by the joint venture while the Unity board reviews future funding requirements.
The sale marked the first significant transaction on the Unity mixed use development scheme, which is held in a 50:50 joint venture with regional developer Waystone Developments.
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At its year end on May 31 2021 the group said it had no bank debt and held cash reserves of £28.3m, compared with a net bank debt of £13.5m a year earlier.
Unity is one of the biggest regeneration schemes in Yorkshire, with planning permission for two million square feet of commercial space and 3,100 homes across 650 acres.
It said the only debt held by the group is in respect of leasing debt related to specific assets which was around £12m at May 31 2021 compared with £14.6m last year, resulting in an overall net cash position of £16.3m compared with £28.1m of net debt at 31 May 2020.
Recent years have seen Hargreaves Services diversify away from its traditional coal mining roots into the regeneration and development sectors, driven by reduced global demand for coal and the closure of mines around the region.
The firm’s final shipment of coal to be shipped from Newcastle left the region in February, signifying the “end of coal” in the North East.
The group expects to report its preliminary results for the year on July 28.