The developer posted a pre-tax loss of £3.6m for the six months ended 30 June, compared to a £18.5m profit in the year-earlier period due to valuation adjustments amid cautious market sentiment, it said.
Harworth Group, which is developing the Logistics North industrial park in Bolton and has other interests in the region, saw its half-year revenues fall almost 60% year-on-year to £23.7m, from £58.6m, based on lower levels of serviced land and income from rent, royalties and fees, according to a stock exchange filing.
“While this is lower than in 2019, this is reflective of scheduled activity on sites and a higher than normal level of development property disposal activity in the prior period,” the company said. “With the onset of the pandemic, capital spend was prioritised on sites with agreed sales in place, while no sales fell away as a result of Covid-19.”
The Rotherham-headquartered firm said that profitable sales, strong rent collection and active management helped to mitigate the downward property valuation movement as of 30 June. In particular, its portfolio was bolstered by 2019 acquisitions and a promote fee at Logistics North, which offset the impact of ongoing winding down of income from coal fines, Harworth explained.
Still, valuation adjustments including the impairment of development properties led to an overall loss for the period.
“This has been a six months like no other for global industry, but I am pleased with how resilient the business and our staff have been in minimising Covid-19’s potential effects and continuing to deliver key milestones across our sites in the North of England and the Midlands,” said Harworth’s chief executive Owen Michaelson.
“Although our results for the half year reflect within valuations the disruption of Covid-19 and market sentiment, our hard work progressing sites, working with tenants and asset managing our land and property portfolio has minimised the impact. This places us in a strong position moving forwards.”
The first-half performance was broadly in line with the group’s projections at the start of 2020, before the pandemic hit, he added.
For the rest of the year, Harworth’s strategic focus remains on the ‘beds and sheds’ sectors in the North and Midlands, Michaelson said. The group is well capitalised, with net debt of £69.2m and “substantial” liquidity of £67.5m as of 30 June.
The group intends to reinstate its dividend to shareholders after withdrawing it in April, and the agreed interim payment of 0.334p represents a 10% increase on the 2019 payout.
Michaelson, who is being succeeded as chief executive by Lynda Shillaw on 1 November, said: “The business is weathering the pandemic well. The Government’s priority to ‘build build build’ and to level up the national economy in support of the regions, backed by sensible proposed planning reforms and significant regional infrastructure investment, remains an important underpin.
“This, together with the strength of our balance sheet and diverse portfolio, provides a solid platform for future growth while affording flexibility to take advantage of strategic land or income-generating opportunities in the regions.”