Hargreaves Services PLC Trading Update (9525V)
April 20 2021 - 1:00AM
UK Regulatory
TIDMHSP
RNS Number : 9525V
Hargreaves Services PLC
20 April 2021
Hargreaves Services plc
("Hargreaves" or the "Group")
Trading Update
Improved trading from German JV and material improvement in year
end cash position
Hargreaves Services plc (AIM: HSP), a diversified group
delivering services to the industrial and property sectors,
announces improved trading results from its German joint venture
and material improvement in cash levels to result in a year end net
cash position.
As noted in the interim results announcement on 27 January 2021,
the Board considers that the investment in the Group's German joint
venture, Hargreaves Raw Material Services GmbH ("HRMS"), is an
increasingly important aspect of the creation and delivery of
shareholder value. The Board is pleased to note that trading in
both HRMS' traditional materials trading business and in its
subsidiary, DK Recycling und Roheisen GmbH ("DK"), is exceeding
expectations. Whilst favourable market conditions have benefitted
the business, the Board is confident that the overall trend is
sustainable following extensive work to reduce costs and improve
operational efficiency at DK. These developments are such that the
Board now expects the contribution from its joint venture to Group
profits to be materially greater than current market
expectations.
The Group's Distribution & Services business continues to
trade in line with expectations. Whilst delays to the mobilisation
of HS2 are adversely impacting Specialist Earthworks, that has been
offset by improved performance in both Production &
Distribution and Industrial Services. The Board intends to report
this business unit as "Services" in the future.
Hargreaves Land, the Group's property development business, also
continues to trade in line with expectations.
The Board can also report that it has now concluded final
account agreements in respect of all C A Blackwell Legacy Civils
contracts. Other than retentions for defects periods, all cash has
now been received. These settlements have resulted in a GBP2.2m
exceptional charge, consistent with the previous accounting for
these contracts.
In recent weeks, the Group has experienced material cash inflows
due to working capital reductions. As a result, the Board now
expects that year end cash balances will be substantially higher
than market expectations. The only debt the Group will carry at the
year end will be leasing debt, which will be lower than expected
due to the deferral of capital expenditure within Specialist
Earthworks into the following financial year as a knock-on effect
of the delayed mobilisation of HS2. An overall consolidated net
cash position is now expected as at 31 May 2021. This improvement
in the Group's year end financial position will not benefit from
any funds flow from HRMS other than the payment related to the sale
of speciality coal announced in December 2020.
The Board expects to provide a further update in early June
following the end of the financial year on 31 May.
Chairman Roger McDowell commented: "I am pleased that our German
joint venture has made such good progress in turning around the
performance of DK in addition to delivering strong trading results.
Whilst the delay in mobilisation at HS2 is both out of our control
and frustrating, the value in that contract is only deferred and
not lost to the Group. The Group's cash generation is particularly
satisfying and I look forward to reporting further progress at the
time of our preliminary results announcement in late July."
For further details:
Hargreaves Services www.hsgplc.co.uk
Gordon Banham, Chief Executive Tel: 0191 373 4485
Officer
John Samuel, Group Finance Director
Walbrook PR (Financial PR & Tel: 020 7933 8780 or hargreavesservices@walbrookpr.com
IR) Mob: 07980 541 893 / 07584 391 303
Paul McManus / Lianne Cawthorne
N+1 Singer (Nomad and Joint Corporate Tel: 020 7496 3000
Broker)
Sandy Fraser/Justin McKeegan/Rachel
Hayes
Investec (Joint Corporate Broker) Tel: 020 7597 5970
Sara Hale/David Anderson/Shalin
Bhamra
About Hargreaves Services plc ( www.hsgplc.co.uk )
Hargreaves Services plc is a diversified group delivering
services to the industrial and property sectors, supporting key
industries within the UK and South East Asia. The Company's
business segments are Distribution and Services (now to be known
simply as Services), Hargreaves Land and Hargreaves Services Europe
Limited, which owns the Group's investment in a German joint
venture, HRMS. The largest segment is Services, which provides
materials handling, mechanical and electrical contracting services
and logistics to a range of different industry sectors together
with specialist earthworks for major infrastructure projects.
Hargreaves Land is focused on the development of brownfield sites
for both residential and commercial purposes. Hargreaves was
formerly a coal mining company but ceased all mining activities in
July 2020.
Offering a unique range of skills and services, Hargreaves
provides unrivalled performance across their business in the
Services and Property Development sectors. Hargreaves is
headquartered in County Durham and has operational centres across
the UK, as well as in Hong Kong and a joint venture in Germany.
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END
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