Acquisition - Maltby Colliery
Hargreaves Services PLC
27 February 2007
For immediate release 27 February 2007
Analyst Briefing
An analyst briefing will be held today at the offices of Buchanan
Communications, 45 Moorfields, London, EC2Y 9AE at 11.15 am.
Please contact Diane Stewart or Catherine Breen on 0207 466 5000 to confirm
attendance.
HARGREAVES SERVICES PLC
('Hargreaves')
£21.5m Acquisition of Maltby Colliery from UK Coal
Hargreaves Services plc (AIM:HSP), a leading provider of transport and support
services to the energy and waste sectors, is pleased to announce the acquisition
of Maltby Colliery ('Maltby') from UK Coal PLC for a cash consideration of
£21.5m (plus the assumption of a pension deficit of £8.6m) (the 'Acquisition').
Hargreaves also announces today in a separate release its Interim Results for
the six months ended 30 November 2006.
The consideration for the Acquisition will be funded equally between bank debt
and by the placing of 2,370,000 new ordinary shares at a placing price of £4.69
per share to raise £11.1 million from new and existing investors. Additionally,
£5.6 million of existing ordinary shares has been placed on behalf of certain
members of the Hargreaves management team. Application has been made for the
shares to be admitted to AIM and Dealings in the new ordinary shares are
expected to commence on 1 March 2007.
Based in South Yorkshire, Maltby Colliery has been a working mine since 1908 and
is one of the few remaining deep coal mines in the UK. In 2006, it produced
approximately 800,000 tonnes of coking coal. Maltby currently employs
approximately 500 staff.
Hargreaves owns The Monckton Coke & Chemical Company Limited ('Monckton') which
is the only independent producer of metallurgical coke in the UK, and currently
consumes approximately 25 per cent. of Maltby production of coking coal.
Hargreaves is the largest independent importer of coal in the United Kingdom.
The Acquisition is being undertaken as a fixed project to 2015, when the mine is
scheduled for closure, and the site will be redeveloped subject to planning
permission.
Hargreaves has recruited Alan Houghton as a full time executive with direct
responsibility for Maltby's operations. Alan is highly regarded in the mining
industry, having worked for British Coal for a number of years, managing 16
collieries employing 14,000 people. He has also acted as a consultant and
trouble shooter at mining operations around the world.
To coincide with the Acquisition, Hargreaves has today signed a new three year
contract with Drax Power Limited, a customer of Maltby, at market rates . This
contract is estimated to account for approximately 60 per cent. of Maltby's 2007
production, alongside Monckton's estimated requirement of approximately 25 per
cent., underpinning the majority of Maltby's 2007 revenues.
In addition to the positive impact from the new ESI contract, the directors
believe that there will be significant benefits to be gained from leveraging the
skills across the Hargreaves group. Consequently, Norec Industrial Services will
be involved with Maltby's above ground operations. The Minerals Division will
operate its coal marketing. The Transport Division will operate its bulk haulage
services and Monckton will closely partner with Maltby in order to optimise its
stock holding and handling. Additionally, Monckton's coking coal supply will be
secured for the foreseeable future.
In the year ended 31 December 2006 Maltby reported a turnover of £32.1m and an
operating loss of £18.2m in a year when there were one off production issues
which reduced output by 36 per cent. Gross assets as at 27 February 2007 were £
40.0m.
The directors expect the Acquisition to be significantly earnings enhancing in
the year ended 31 May 2008.
Gordon Banham, Chief Executive Officer of Hargreaves said ' This is a unique
opportunity for Hargreaves to acquire a coking coal mine which is an ideal
strategic fit within the Hargreaves range of services. This Acquisition is a
significant value add to our business, not only supplying Monckton but also
enabling us to leverage off our other operations to financially benefit the
group as a whole.
The Acquisition will also safeguard the future of Maltby and the jobs of almost
500 employees who work there and I am delighted to take Maltby forward into this
next exciting phase'.
ENDS
Enquiries:
Hargreaves
Gordon Banham, Chief Executive Officer 0191 373 4485
Peter Dillon, Financial Director 0191 373 4485
Buchanan Communications
Diane Stewart 0207 466 5000
Tim Anderson 0207 466 5000
Brewin Dolphin Securities
Andrew Kitchingman 0113 245 9341
Notes to Editors
Founded in 1994 as a coal haulage business with approximately 20 vehicles,
Hargreaves activities have now been transformed to cover mineral trading, coke
production, waste handling and transportation, handling and processing of
minerals through its two port facilities as well as specialist bulk road
haulage. The group employs approximately 1400 staff.
Since formation, the group has expanded both organically through winning new
contracts, diversifying into other business areas and by acquisition. It uses
its critical mass to create economies of scale and efficiency improvements. It
enjoys strong visibility of earnings through long term contracts.
Hargreaves operates through four divisions;
•Minerals Division, imports and retails carbon based materials to end
users. The Group operates at two port facilities, Immingham on the East
Coast and Newport in South Wales. The majority of imported material is for
the power generation industry;
•Industrial Division, provides quality assured contract management
services to the power generation, utilities and minerals industries,
including the handling and storage of bulk materials;
•Transport and Waste Division, one of the UK's largest specialist bulk
hauliers, with a total vehicle fleet of approximately 400 vehicles;
•Monckton Coke & Chemical Company Limited, which was acquired by
Hargreaves in June 2005, is the only independent producer of metallurgical
coke in the UK. It produces 200,000 tonnes of coke per annum for use in the
production of soda ash, specialist ferro-alloys and for domestic heating.
In the year to 31 May 2006, Hargreaves reported turnover of £155m and PBT of
£5.5m.
This information is provided by RNS
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