Trading Update and Notification of Interim Results

RNS Number : 9845H

Hargreaves Services PLC

09 December 2020

 

9 December 2020 

Hargreaves Services plc

("Hargreaves" or the "Group")

Trading Update and Notification of Interim Results

Hargreaves Services plc (AIM: HSP), a diversified group delivering services to the industrial and property sectors, provides the following update on trading ahead of reporting its interim results for the six months ended 30 November 2020.

The Board anticipates reporting interim results in line with its expectations.

As expected, Revenue and Underlying Profit before Tax* will be lower than that reported for the six months ended 30 November 2019, primarily due to the phasing of works on the HS2 project within the Specialist Earthworks business. This timing gives greater emphasis to the weighting of profitability to the second half but 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 30 November 2019, as working capital has reduced following the cessation of mining in July 2020. Net bank debt has reduced to £8.0m compared with £25.4m twelve months ago and £13.5m at 31 May 2020.

Following the acquisition of British Steel Limited 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 Group employees transferring their employment to British Steel in January 2021 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 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.

The Board is pleased to announce that it has been appointed by Drax Power Limited to undertake a substantial five-year materials handling, plant operation and maintenance contract at Drax Power Station in Selby, commencing in April 2021. The contract has up to two years of extension options. This award enhances Hargreaves' position as a key strategic supplier of these services in the UK.

In the Hargreaves Land business, the development of land at Hilderthorpe Road, Bridlington, which will deliver 44,000 sq ft of pre-let retail floor space, has commenced. 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. This development, which is on land owned by a third party, is indicative of Hargreaves Land's ambitions to create and realise value without committing substantial capital to development projects.

Notification of Interim Results

The Group expects to report its interim results for the six months ended 30 November 2020 on Wednesday 27 January 2021. Details of the analyst meeting to accompany the results will be provided in due course.

*Underlying Profit before Tax is stated prior to exceptional items and amortisation and impairment of intangible assets  and includes the Group's share of the post-tax profits of its German joint venture.

For further details:  

Hargreaves Services plc Gordon Banham, Chief Executive Officer John Samuel, Group Finance Director	0191 373 4485
Buchanan (Financial PR) Mark Court/Sophie Wills/Henry Wilson [e-mail]	0207 466 5000
N+1 Singer (Nomad and Joint Corporate Broker) Sandy Fraser/Rachel Hayes/Justin McKeegan	0207 496 3000
Investec (Joint Corporate Broker)   0207 597 5970 Sara Hale/David Anderson/Shalin Bhamra

 

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