Hargreaves wins maintenance contract with Drax

Hargreaves said the award enhances its position as a key strategic supplier of these services in the UK. The contract has up to two years of extension options.

The group also said that its Hargreaves Land business has commenced the development of land at Hilderthorpe Road, Bridlington, which will deliver 44,000 sq ft of pre-let retail floor space. The project is funded independently of the group.

The scheme is due for completion in summer 2021 and has a gross development value of £9.5m. Hargreaves Land said this development, which is on land owned by a third party, is indicative of its ambitions to create and realise value without committing substantial capital to development projects.

In a trading update the group, which delivers services to the industrial and property sectors, said it anticipates reporting interim results in line with its expectations.

It said revenue and underlying pre-tax profits will be lower than that reported for the six months to November 30 2019, primarily due to the phasing of works on the HS2 project within its specialist earthworks business. However, the board’s expectation of results for the financial year remains unchanged.

Net debt, including debt associated with leased assets, at the half year end was approximately £20.5m, compared with £40.3m at the end of November 2019, as working capital has reduced following the cessation of mining in July. Net bank debt has reduced to £8m compared with £25.4m 12 months ago and £13.5m in May.

Following the acquisition of British Steel by Jingye Group, the Chinese steel business, earlier this year, Hargreaves has been engaged in commercial discussions with Jingye whilst continuing to provide services under short term contract extensions.

Those discussions have now concluded with an agreement that Jingye will bring certain activities in house leading to approximately 160 employees transferring their employment to British Steel in January under the Transfer of Undertakings regulations at no cost to Hargreaves.

All debts due to Hargreaves and all unbilled work in progress will be recovered in full. Although this will lead to a reduction in revenue of around £9m a year, Hargeaves said this outcome has been anticipated for some time and this revenue has not formed part of the group’s forecasts beyond March 2021.

It added that this decision has no impact on the board’s view that the group will deliver results in line with expectations for the year ending May 31 2021.

Hargreaves expects to report its interim results for the six months on Wednesday January 27.