Interim Results
Hargreaves Services PLC
14 February 2008
For immediate release 14 February 2008
HARGREAVES SERVICES PLC (the 'Group')
Interim Results for the Six Month Period Ended 30 November 2007
Hargreaves Services PLC, a leading supplier of support services to the energy,
mineral and waste sectors today announces its interim results for the period
ended 30 November 2007.
Business Highlights
• Group continues to deliver ahead of expectations
• Particularly strong performance from Minerals Division
• Imperial Tankers acquired in September
• Expected production life of Maltby extended two years to 2017
Financial Highlights
• Revenue up 70% to £174.3m
• Underlying operating profit up 114% from £4.3m to £9.2m
• Underlying profit before tax up 61% from £4.4m to £7.1m
• Underlying EPS up 33% to 17.64p
• Interim dividend increased 10% to 3.3p
• Return on Average Capital Employed 18.0%
Chairman, Tim Ross commented
'These are another impressive set of results and the Board is delighted with the
performance of the business. We are pleased to have good visibility of short and
medium term forward revenues. The acquisition of Imperial Tankers, which was
completed during the period, is integrating well into the Group. The outlook and
prospects for all divisions is very positive and we are pleased to be proposing
an increase of 10% in the interim dividend to 3.3p per share'
Enquiries
Hargreaves Services PLC 0191 373 4485
Gordon Banham
Iain Cockburn
Buchanan Communications 020 7466 5000
Diane Stewart
Tim Anderson
Brewin Dolphin Investment Banking 07785 708 167
Andrew Kitchingman
INTERIM STATEMENT
Hargreaves Services plc (the 'Group' or 'Hargreaves') announces interim results
for the six months ended 30 November 2007. The unaudited interim financial
information represents the first published financial information prepared on the
basis of the recognition and measurement requirements of International Financial
Reporting Standards ('IFRS') adopted by the EU ('Adopted IFRS').
RESULTS
We are pleased to report that Hargreaves has had a successful first half and is
reporting a strong set of results, reflecting a combination of robust organic
growth and the benefits and synergies from its recent acquisitions. Revenue has
increased 70% from £102.7m to £174.3m. Including our share of revenue from joint
ventures, revenue increased by 68% from £114.8m to £192.9m. The Group operating
margin has also increased from 3.8% to 4.9% due in a large part to the effect of
prior-period acquisitions. Operating profit before amortisation of acquired
intangibles, including our share of profit from joint ventures, increased from
£4.3m to £9.2m. Despite the full period acquisition of land and assets
associated with the Maltby Colliery our return on average capital employed for
the first six months of the year remained a respectable 18.0% (2006: 21.5%).
TRADING AND BUSINESS REVIEW
The markets in which we operate have seen some significant changes. The
benchmark price of coal has risen strongly during the period and finished
November at $128 per tonne, 72% higher than the beginning of the period.
Although these price increases offer Hargreaves the potential of increasing
future profits, the Group continues to adhere to its strategy of reducing risk
wherever practicable by seeking long term contracts with hedged and determinable
margins. Although this limits the opportunity to exploit higher prices in the
short term, it is more than offset by the benefit of increased predictability of
profits.
Minerals
The minerals business has had a strong first half of the year with revenue
including share of joint ventures increasing 69% from £67.0m to £113.0m.
Underlying operating profit increased from £2.1m to £3.0m. The German business
has grown rapidly in the period and has established itself as a leading importer
of coke and refractory minerals into Europe.
In the UK coal volumes and order books for power stations remain strong and our
stocks and supply position are geared up for what we anticipate will be a busy
second half.
Our Coal4Energy joint venture has rapidly established itself as the leading
supplier of coal to the UK domestic market and is well placed to deliver a
strong result for the full year.
Our ash handling joint venture, comprising Hargreaves Building Products ('HBP')
and Hargreaves Coal Combustion Products ('HCCP') continues to perform well and
is a leading service provider to the UK power station market. In September we
combined this joint venture with our lightweight aggregates associate, Lytag.
The restructuring brought together our expertise in ash sourcing and disposal
with our expertise in the use of ash to make lightweight aggregates. Discussions
with a number of power stations, aimed at establishing a Lytag plant in the UK,
are ongoing.
Following the re-structuring, Hargreaves lifted its stake in the overall
combined joint venture to 50%. The cost to the Group will depend on the level of
profits made by the joint venture in the 18 months proceeding the transaction
but is expected to be £1.2m. The consideration will be settled in shares in
Hargreaves Services PLC at the conclusion of the earn-out period.
Industrial
Following the acquisition of Norec Limited in September 2006, the Norec business
has delivered a strong revenue and margin performance. The Industrial Division
reported revenues of £20.4m, up from £8.6m in the first half of 2006. Under the
management of Norec the Industrial Division margins have improved from 3.6% to
5.0% generating an operating profit before amortisation of acquired intangibles
of £1.0m in the period.
Transport and Waste
The Transport and Waste division has had a satisfactory first half. The Division
achieved revenue growth of £4.3m from £26.2m to £30.5m. Adjusting for the impact
of the Imperial acquisition this reflected an organic increase of 5.6%.
Operating profits increased from £1.6m to £1.7m. The decrease in the margins
from 6.0% to 5.5% was principally due to the performance of the Crewe and
Barnsley waste transport contracts, both of which have now expired.
On 28 September 2007, the Group completed the acquisition of the entire share
capital of Imperial Tankers Ltd ('Imperial'). The purchase price paid was £5.4m
with a further deferred consideration of up to £2.0m, subject to the achievement
of targets based on the profitability of the combined Imperial and Hargreaves
Bulk Liquid Transport Ltd ('HBLT') businesses in the 12 months following the
acquisition.
It is expected that the earn-out targets will both help to ensure that the
maximum available synergies are achieved and allow the Group to benefit from the
management strength and expertise of the Imperial team.
Monckton
Monckton generated revenues of £15.8m, an increase of £2.7m or 20.6% on the
comparative period. The majority of the increase in revenues can be attributed
to revenues from the new tyre shredding operation. Operating profit improved
from £0.5m in the period to 30 November 2006 to £1.4m in the current period,
mainly reflecting the impact of a one off charge in the comparative period.
The Coke works has performed well during the first half of the year and should
benefit from increased prices for the available output that has not been sold
under long term fixed or hedged contracts. With the increases that have occurred
in international coke prices we are looking at the feasibility of
re-commissioning old ovens in order to increase production capacity.
We have made good progress in achieving sources of supply for the tyre feedstock
and the sale of the resulting tyre crumb. A strengthened management team have
been tasked with achieving further improvements in production efficiency and
equipment utilisation.
Maltby
Maltby Colliery generated revenues of £13.3m and an operating profit of £2.4m in
the first six months. This was slightly below internal expectations, with the
face equipment acquired with the mine becoming increasingly unreliable as the
long T10 face was worked to completion. The change from T10 to the next face
(T22) took place in January 2008 without any major issues and we are now
producing on the T22 face with new equipment. The professionalism with which
the face change was executed is a reflection of the expertise and commitment of
our team at the colliery.
We will continue to invest significant amounts in plant, equipment and drivage
development to extend as far as possible, the life of the area of reserves
currently being worked. When the colliery was acquired the expected life was
stated as being 2015. With the investment we have made and continue to make,
coupled with the expertise of our mining team, we now believe that the current
reserves area will be generating coal until 2017.
We are also currently undertaking a review of the technical and financial
feasibility of reaching new areas of reserves, outside the current area of
working, with a view to potentially extending the mine beyond the current
forecast expected closure date of 2017.
FINANCIAL REVIEW
IFRS
The Alternative Investment Market (AIM) rules require that the next annual
consolidated financial statements of the Group, for the year ending 31 May 2008,
be prepared in accordance with Adopted IFRS.
This interim financial information has been prepared on the basis of the
recognition and measurement requirements of Adopted IFRS as at 30 November 2007
that are anticipated to be effective (or available for early adoption) at 31 May
2008, the Group's first annual reporting date at which it is required to use
Adopted IFRS. Based on these Adopted IFRS, the directors have applied the
accounting policies, as set out in the restatement document referred to in note
1 of this interim financial information, which they expect to apply when the
first annual IFRS financial statements are prepared for the year ending 31 May
2008.
However, the Adopted IFRS that will be effective (or available for early
adoption) in the financial statements for the year ending 31 May 2008 are still
subject to change and to additional interpretations and therefore cannot be
determined with certainty. Accordingly, the accounting policies for that annual
period will only be determined finally when the annual financial statements are
prepared for the year ending 31 May 2008.
Interest
The net finance charge for the period was £2.1m (2006: £0.0m). The increased
interest was attributable to the cost of acquisitions, predominantly the Maltby
Colliery and associated working capital investment. The interest expense in the
comparative period was £0.6m but was mitigated by £0.6m of income recorded in
respect of the fair value movement on interest rate swaps and foreign exchange
contracts. With the increase in debt levels, interest cover has decreased, but
remains at a comfortable 6.8x (2006: 11.2x).
Taxation
The taxation charge was £2.1m compared to £1.3m in the same period of 2006. The
effective tax rate for the period increased from 30% to 32% due to an increase
in the proportion of Group profits subject to the higher German tax rates.
Profit Attributable to Equity Shareholders
The profit attributable to equity shareholders increased from £2.9m to £4.1m.
The minority interest, which now stands at 27.5%, relates to management share
interests in Hargreaves Raw Material Services Gmbh.
Earnings per Share
Reported basic earnings per share increased by 28% from 12.25p to 15.70p. Basic
earnings per share excluding amortisation of acquired intangibles increased 33%
from 13.22p to 17.64p.
Dividend
The Board has recommended an increase in the interim dividend from 3.0p last
year to 3.3p. Dividend cover remains robust at just over 4.7 times earnings.
This dividend will be paid on 20 March 2008 to all shareholders on the register
at the close of business on 22 February 2008.
CAPITAL STRUCTURE
Cash Flow and Working Capital
Cash flow from operating activities was £3.1m (2006: £6.0m). Cash generation
from operating activities was strong but was offset by an increase in working
capital of £10.7m in the period.
The key driver of the investment in working capital was an increase of £6.9m in
stocks. This reflected higher trading levels, the increase in the coal and coke
prices and the build up of coal stocks and work in process at Maltby following
the acquisition. Coal and coke stock levels continue to be carefully monitored
and controlled. These stocks are readily convertible into cash and the coal and
coke stock at the end of the half year amounted to £33.8m and represented less
than 2 months supply based on recent shipping levels.
Trade debtors also increased during the period by £13.9m to £45.0m due to higher
trading levels. Although trade debtors increased in absolute terms, debtor days,
expressed in terms of days sales outstanding, have fallen from 47 at the end of
November 2006 to 39 at the end of this period. The impact of the increased
trade debtors was only partially mitigated by a corresponding increase of £7.5m
in trade and other creditors due to tighter payment terms in respect for mineral
exports from China to the European market, through our German operation.
Capital expenditure
Capital expenditure during the period was £4.4m compared to £2.8m in the prior
period principally reflecting the higher investment levels attributable to the
Maltby Colliery.
Net Debt
Net Debt levels at the end of the period were £56.9m, an increase of £18.5m from
the start of the period. This increase was attributable to the acquisition of
Imperial Tankers and the increased investment in working capital discussed
above.
Term loans and hire purchase debt increased by £6.5m in the period from £25.2m
to £31.7m reflecting the £5.0m of term loan debt added for the acquisition of
Imperial together with an additional £4.4m of hire purchase and term loan debt
acquired with the company. Net debt available to finance working capital
increased by £12m, from £13.2m to £25.2m, reflecting the higher working capital
levels discussed above.
Following the acquisition of Imperial, the Group has reviewed it banking
covenants and facilities with its bankers. The Group continues to be able to
borrow at competitive rates and is satisfied with its current facilities. The
gearing at the end of the period was 136% (2006: 73%). Given the ease with
which the Group could convert stocks into cash, the Group is comfortable with
this level of gearing and believes that the current facilities are adequate and
appropriate for the Group's current needs.
BOARD CHANGES
On 31st December 2007, as planned, Peter Dillon retired as Finance Director and
was replaced by Iain Cockburn. The Group recognises the considerable
contribution made by Peter to the development of the business and thanks him for
his substantial commitment and achievement. The Group wishes him well for the
future and welcomes Iain to the Board.
CURRENT TRADING AND OUTLOOK
The Group has grown very quickly in the last two years. We are very pleased with
the way that the acquisitions are fitting into the Group and with the success
that we are having in generating incremental synergies from these investments.
We will continue to review further investment opportunities, both organic and
acquisition, and remain firmly focussed on the day-to-day operational
performance. Following the recent period of growth, we continue to devote
considerable energy to strengthening and refining our management structure and
resources.
We remain very optimistic about the prospects for all divisions. A strong
forward order book provides us with good revenue and profit visibility, in both
the short and medium term.
Gordon Banham
Chief Executive
14 February 2008
Iain Cockburn
Finance Director
14 February 2008
Consolidated Income Statement
for the six months ended 30 November 2007
6 months ended 6 months ended Year ended
30 November 30 November 31 May
2007 2006 2007
Unaudited Unaudited Unaudited
£000 £000 £000
Revenue 174,293 102,684 240,105
Cost of sales (152,695) (92,936) (213,164)
Gross profit 21,598 9,748 26,941
Other income/(expense) 80 (16) 25
Administrative expenses (13,215) (5,834) (17,075)
Operating profit 8,463 3,898 9,891
Finance income 114 618 324
Finance expenses (2,206) (574) (920)
Share of profit of joint ventures 222 205 270
Share of profit of associates - - 56
Profit before income tax 6,593 4,147 9,621
Income tax (2,126) (1,253) (3,134)
Profit for the period 4,467 2,894 6,487
Attributable to:
Equity holders of the company 4,124 2,901 6,414
Minority interest 343 (7) 73
Profit for the period 4,467 2,894 6,487
Basic earnings per share 15.70p 12.25p 26.32p
Diluted earning per share 15.48p 12.21p 26.16p
Consolidated Statement of Recognised Income and Expense
for the six month period ended 30 November 2007
Unaudited Unaudited Unaudited
30 November 30 November 31 May
2007 2006 2007
£000 £000 £000
Foreign currency translation differences for foreign operations 98 - (4)
Effective portion of changes in fair value of cash flow hedges (3,307) - (769)
Defined benefit plan actuarial gains - - 108
Income tax on income and expense recognised directly in equity 910 - 199
Income and expense recognised directly in equity (2,299) - (466)
Profit for the period 4,467 2,894 6,487
Total recognised income and expense for the period 2,168 2,894 6,021
Attributable to:
Equity holders of the company 1,825 2,901 5,948
Minority interest 343 (7) 73
Total recognised income and expense for the period 2,168 2,894 6,021
Consolidated Balance Sheet
at 30 November 2007
30 November 30 November 2006 31 May
2007 2007
Unaudited Unaudited Unaudited
£000 £000 £000
ASSETS
Non-current assets
Property, plant and equipment 71,162 24,209 63,178
Intangible assets 17,445 11,531 12,630
Investments in joint ventures 1,360 1,110 881
Investments in associates - - 58
Other investments, including derivates 7 159 220
Other receivables - 500 500
Deferred tax assets 1,060 - 502
Total non-current assets 91,034 37,509 77,969
Current assets
Inventories 42,617 15,208 35,027
Other investments, including derivates 129 - -
Trade and other receivables 55,815 32,291 38,406
Cash and cash equivalents 7,850 3,788 11,779
Total current assets 106,411 51,287 85,212
Total assets 197,445 88,796 163,181
LIABILITIES
Non-current liabilities
Loans and borrowings (22,014) (18,582) (38,477)
Other non-current liabilities (1,243) - -
Derivative financial instruments (4,122) - (631)
Deferred tax liabilities - (1,618) -
Retirement benefit obligations (9,411) (469) (9,411)
Provisions (9,827) (2,671) (10,327)
Total non-current liabilities (46,617) (23,340) (58,846)
Current liabilities
Trade and other payables (62,513) (30,822) (49,505)
Current income tax liabilities (3,689) (2,099) (1,851)
Borrowings (42,725) (4,956) (11,740)
Derivative financial instruments (37) (523) (205)
Total current liabilities (108,964) (38,400) (63,301)
Total liabilities (155,581) (61,740) (122,147)
Net assets 41,864 27,056 41,034
EQUITY
Capital and reserves attributable to equity holders
Issued capital 2,627 2,368 2,627
Share premium 29,177 19,082 29,177
Other reserves 29 29 29
Translation reserve 94 - (4)
Merger reserve 1,022 - 1,022
Hedging reserve (2,934) - (538)
Capital redemption reserve 1,530 1,530 1,530
Retained earnings 9,826 4,054 7,041
41,371 27,063 40,884
Minority interest in equity 493 (7) 150
41,864 27,056 41,034
Consolidated Cash Flow Statement
for the six month period ended 30 November 2007
Unaudited Unaudited Unaudited
6 months ended 6 months ended Year ended
30 November 30 November 31 May
2007 2006 2007
£000 £000 £000
Cash flows from operating activities
Profit for the period 4,467 2,894 6,487
Adjustments for:
Depreciation 4,714 1,758 5,030
Amortisation of intangible assets 512 228 685
Negative goodwill on acquisition - - (84)
Share of profit of joint ventures (222) (205) (270)
Share of profit of associates - - (56)
Gain on sale of property, plant and equipment (80) 16 (25)
Equity-settled share-based payment transactions 237 90 268
Net finance expense/(income) 2,092 (44) 596
Income tax expense 2,126 1,253 3,134
13,846 5,990 15,765
Change in inventories (6,857) (153) (13,254)
Change in trade and other receivables (14,180) (3,553) (4,914)
Change in trade and other payables 10,288 3,713 10,691
Change in provisions and employee benefits - - 117
Cash from operating activities 3,097 5,997 8,405
Interest paid (2,089) (571) (1,971)
Income tax paid (1,504) (982) (2,245)
Net cash (outflow)/inflow from operating activities (496) 4,444 4,189
Cash flows from investing activities
Interest received 114 50 324
Proceeds from sale of property, plant and equipment 493 241 794
Acquisition of property, plant and equipment (4,862) (3,014) (8,661)
Acquisition of subsidiary, net of cash acquired (6,640) (7,710) (33,693)
Acquisition of other investments (8) - 75
Net cash outflow from investing activities (10,904) (10,433) (41,161)
Cash flows from financing activities
Proceeds from issue of shares - - 10,332
Proceeds of borrowings 5,040 - 15,000
Repayments of borrowings (2,454) (3,006) (1,164)
Repayment of finance lease liabilities (1,294) (848) (1,947)
Proceeds from invoice discounting facility 4,787 (207) 3,656
Dividends paid (1,536) (1,184) (1,972)
Net cash (outflow)/inflow from financing activities 4,543 (5,245) 23,905
Net decrease in cash and cash equivalents (6,857) (11,234) (13,067)
Cash and cash equivalents at the start of the period/year 1,955 15,022 15,022
Effect of exchange rate fluctuations on cash held (591) - -
Cash and cash equivalents at the end of the period/year (5,493) 3,788 1,955
Notes
(forming part of the financial statements)
1. Basis of preparation
The AIM rules require that the next annual consolidated financial statements of
the Group, for the year ending 31 May 2008, be prepared in accordance with
International Financial Reporting Standards ('IFRS') adopted for use in the EU
('Adopted IFRS').
The interim financial information has been prepared on the basis of the
recognition and measurement requirements of Adopted IFRS that are effective (or
available for early adoption) at 31 May 2008, the Group's first annual reporting
date at which it is required to use Adopted IFRS. Based on these Adopted IFRS,
the directors have applied the accounting policies, as set out in the IFRS
restatement document referred to below, which they expect to apply when the
first annual IFRS financial statements are prepared for the year ending 31 May
2008.
However, the Adopted IFRS that will be effective (or available for early
adoption) in the financial statements for the year ending 31 May 2008 are still
subject to change and to additional interpretations and therefore cannot be
determined with certainty. Accordingly, the accounting policies for that annual
period will be determined finally only when the financial statement are prepared
for the year ending 31 May 2008.
The preparation of this financial information resulted in changes to the
accounting policies as compared with the most recent annual financial statements
prepared under previous Generally Accepted Accounting Practice ('GAAP'). The
revised accounting policies have, except where otherwise stated, been applied to
all periods presented in this financial information.
IFRS 1 - 'First Time Adoption of International Financial Reporting Standards'
mandates that most IFRS are applied fully retrospectively, meaning that the
opening balance sheet at 1 June 2006 is restated as if those accounting policies
had always been applied. IFRS 1 permits companies to apply certain exemptions
from the full requirements of IFRS during the transition. Details of the
exemptions applied by the Group are outlined in the restatement document
referred to below.
A detailed review of the changes in our accounting policies and reconciliations
of our financial statements from UK GAAP to IFRS at key dates were published to
the London Stock Exchange on 14 February 2008 and are also available on the
Group's website at www.hargreavesservices.co.uk
2. Accounting policies
The accounting policies that the Group intend to apply to the year ending 31 May
2008 are set out in the IFRS restatement document referred to in note 1.
3. Status of financial information
The comparative figures for the year ended 31 May 2007 are not the Group's
statutory financial statements for that year. Those financial statements, which
were prepared under UK GAAP, have been reported on by the Group's auditors and
delivered to the Registrar of Companies. The report of the auditors was
unqualified and did not contain statements under section 237(2) or (3) of the
Companies Act 1985.
The interim information for the half years ended 30 November 2007 and 30
November 2006 is unaudited. This information does not constitute statutory
accounts within the meaning of the Companies Act 1985. In relation to the
financial statements for the year ended 31 May 2007, this has been extracted
from an unaudited restatement of the financial information taken from the
audited Group's statutory financial statements for that year details of which
are given in the IFRS restatement document referred to in note 1.
4. Taxation
Taxation is based on the estimated effective rate for each year as a whole,
including deferred tax.
5. Dividends
The dividend of 6 pence per ordinary share, proposed in the 2007 Annual
Accounts, agreed by the shareholders at the Annual General Meeting on 3 October
2007 and paid on 11 October 2007, has been charged to reserves in these interim
financial statements.
The directors have recommended an interim dividend of 3.3 pence per share, which
will be paid on 20 March 2008.
6. Earnings per share
The calculation of earnings per share is based on the profit for the period/year
and on the weighted average number of ordinary shares in issue and ranking for
dividend in the period.
Unaudited Unaudited Unaudited
6 months 6 months ended Year
ended 30 November ended
30 November 2006 31 May 2007
2007
Profit for the period/year (£000) 4,124 2,901 6,414
Weighted average number of ordinary shares ('000) 26,271 23,675 24,372
Earnings per share (pence) 15.70 12.25 26.32
The calculation of diluted earnings per share is based on the profit for the
period/year and on the weighted average number of ordinary shares in issue in
the period/year adjusted for the dilutive effect of the share options
outstanding.
Unaudited Unaudited Unaudited
6 months 6 months ended Year
ended 30 November ended
30 November 2006 31 May 2007
2007
Profit for the period/year (£000) 4,124 2,901 6,414
Weighted average number of ordinary shares ('000) 26,642 23,751 24,516
Earnings per share (pence) 15.48 12.21 26.16
7. Divisional performance
The Divisions enjoy a considerable amount of inter-divisional trade as part of
the integrated solutions provided to clients. This level of inter-divisional
activities, cross-utilisation of the overhead base and other facilities limit
the usefulness of analysis beyond direct costs. Below are the stated divisional
results.
2007 2007 2007 2007 2007 2007
Minerals Industrial Transport Monckton Maltby Total
£000 £000 £000 £000 £000 £000
Revenue 94,363 20,377 30,480 15,803 13,269 174,293
Segment operating profit 2,784 570 1,583 1,395 2,363 8,695
Segment profit before tax 2,287 443 1,306 1,175 1,756 6,966
Common costs (373)
Group profit before taxation 6,593
2006 2006 2006 2006 2006 2006
Minerals Industrial Transport Monckton Maltby Total
£000 £000 £000 £000 £000 £000
Revenue 57,663 8,583 23,379 13,060 - 102,684
Segment operating profit 1,962 78 1,493 482 - 4,015
Segment profit before tax 1,967 11 1,363 483 - 3,821
Common costs 326
Group profit before taxation 4,147
8. Acquisition
On 28 September 2007 the Company acquired the entire issued share capital of
Imperial Tankers Limited. In accordance with IFRS 3 Business Combinations, a
review of the acquisition was performed to identify specific intangible assets.
This resulted in the creation of an intangible asset of £1,622,000 for customer
contracts, based on the discounted future cash flows of the key long term sales
contracts in place at the date of acquisition. The residual goodwill of
£2,596,000 was capitalised and will be reviewed annually for impairment.
Book and
fair value
£000
ASSETS
Non-current assets
Property, plant and equipment 7,287
Current assets
Inventories 126
Trade and other receivables 2,782
Cash and cash equivalents 1,306
Total assets 11,501
LIABILITIES
Non-current liabilities
Loans and borrowings (2,993)
Deferred income tax liabilities (1,068)
Current liabilities
Trade and other payables (2,213)
Current income tax liabilities (390)
Borrowings (1,609)
Total liabilities (8,273)
Net assets 3,229
Goodwill 2,596
Intangibles under IFRS 3 1,622
Net purchase consideration and costs of acquisition 7,447
Satisfied by :
Cash 5,447
Deferred consideration 2,000
The intangible asset is being amortised over the weighted average expected life
of these contracts, which is 62 months. The goodwill is not being amortised, but
will be reviewed for impairment annually.
On 30 September 2007, the Group increased its stake in Hargreaves Building
Products Ltd and Lytag Ltd by way of a share exchange between Hargreaves
Building Products Ltd and Hargreaves Coal Combustion Products Ltd, and
exchanging shares in Hargreaves Services plc with the other shareholders of HCCP
Ltd, HBP Ltd, and Lytag Ltd. Hargreaves increased its share of the new combined
group from 25% to 50%, resulting in an increase in investments of £130,476. The
consideration was valued at £1,243,375 based on expected future profits of the
combined HBP/HCCP group. This resulted in goodwill of £1,112,899. The goodwill
will not be amortised over a specific period of time, however it will be
reviewed annually for impairment at each reporting date, in line with Group
policy.
9. Hedging reserve
The hedging reserve relates to the fair value of three commodity swap contracts
taken out to protect Group margin on the sale of coke under a long-term supply
contract. This contract is subject to commodity price and foreign exchange
fluctuations, hence the commercial decision to minimise the effect of these
fluctuations.
10. Interim results
These results were approved by the Board of Directors on 14 February 2008.
Copies of this interim report will be sent to all shareholders and will be
available to the public from the group's registered office.
This information is provided by RNS
The company news service from the London Stock Exchange VXLFFVLBFBBL
Latest directors dealings
- 39 minutes ago Balfour Beatty
- 1 hour ago Smiths Group
- 3 hours ago Wildcat Petroleum
- 3 hours ago Animalcare Group
- 3 hours ago BBGI Global Infrastructure S.A. NPV (DI)