Hargreaves Services plc
(“Hargreaves”, the “Company”, or the “Group”)
Results for the year ended 31 May 2023
Hargreaves Services plc (AIM: HSP), a diversified group delivering services to the industrial and property sectors, announces its results for the year ended 31 May 2023.
Renewable energy land asset valuation and realisation plan
The Group has had its portfolio of renewable energy land assets, comprising three wind farm leases, six access agreements and two solar farm leases, valued by Jones Lang LaSalle Limited at 30 June 2023. This valuation placed an expected Market Value at Commissioning of Development*** of between £27.2m and £28.9m. These assets exclude the Westfield site where an Energy from Waste plant is being constructed by a third party. These renewable energy land assets are held at cost in the Balance Sheet at £6.6m. It is the Board’s intention to realise the value within these renewable energy land assets over the next five years and repatriate proceeds to shareholders.
Financial results
The Group has maintained its momentum, with the continued expansion of a robust recurring revenue base in Services delivering both revenues marginally ahead and underlying profit before tax above market expectations and providing a strong foundation for future growth.
KEY FINANCIAL RESULTS
| Year ended 31 May | 2023 | 2022 | |
| Revenue | £211.5m | £177.9m | |
| Underlying Profit Before Tax (“UPBT”)** | £27.3m | £30.4m* | |
| Profit from joint ventures (net of tax) | £16.3m | £25.9m* | |
| Share of Profit Before Tax from continuing operations | £27.2m | £32.2m* | |
| EBITDA** | £21.8m | £13.6m | |
| Basic underlying EPS from continuing operations** | 86.3p | 96.1p* | |
| Proposed Final Dividend | 6.0p | +7.1% | 5.6p |
| Proposed Additional Dividend from HRMSCash and cash equivalents | 12.0p£21.9m | 12.0p£13.8m | |
| Net Assets | £201.0m | +11.8% | £179.8m* |
| Net Assets per Share** | 618p | 553p* |
HIGHLIGHTS
· Revenue increased 18.9% to £211.5m (2022: £177.9m) due to organic growth in Services
· UPBT above expectations at £27.3m (2022: £30.4m), decrease due to expected reduction in profitability in German Joint Venture, HRMS, offset by growth in both Services and Hargreaves Land
· Services UPBT increased 61.8% to £12.3m (2022: £7.6m)
· Hargreaves Land UPBT increased 85.7% to £3.9m (2022: £2.1m)
· Services business has over ten new term and framework contracts, taking total to over 60 providing visibility of 70% of next year’s expected revenue
* The prior year numbers have been restated following a correction of the allowability of certain expenses for corporate tax in a joint venture for the year ended 31 May 2022 and prior years. The net effect of the changes for the year ended 31 May 2022 was a decrease in the opening balance of the investment in joint ventures of £966,000 and a decrease in the share of profit in joint ventures (net of tax) of £2,321,000 which has subsequently decreased the closing investment in joint ventures by £3,287,000. Please refer to Note 7.
** The basis of Underlying profit before tax, EBITDA, Net Assets per Share and basic underlying EPS is set out in Note 8. The calculation of Net Assets per Share includes the renewable energy land assets at cost.
*** Market Value at COD – represents the price at which the portfolio would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts.
Commenting on the preliminary results, Acting Group Chair Nigel Halkes said: “The Group has maintained its strong momentum built over the last few years and continues to demonstrate its resilience in the current challenging economic environment. The growth of a robust recurring revenue base in Services is particularly pleasing and has provided the bedrock of performance for the Group. The outlook for the Group’s operations for the coming year and beyond is strong with over 60 term and framework contracts and 70% of revenue for the year already secured. The Group remains focused on its strategy to create, deliver and realise value for shareholders, and I look forward to executing on our value realisation plans in our renewable energy land asset portfolio in the medium term.“
Analyst briefing
A briefing open to analysts will take place on Wednesday 9 August 2023 at 9.30 am. To register and for more details please contact Walbrook PR on hargreavesservices@walbrookpr.com.
Investor presentation
Gordon Banham, Group Chief Executive, David Anderson, Group Property Director and Stephen Craigen, Group Financial Controller and Group Finance Director, will provide a live presentation on the Company’s preliminary results via the Investor Meet Company platform on 9 August 2023 at 4.30 pm BST.
The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9 am the day before the meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free here.
For further details:
| Hargreaves ServicesGordon Banham, Chief ExecutiveStephen Craigen, Group Finance Director | www.hsgplc.co.ukTel: 0191 373 4485 | |
| Walbrook PR (Financial PR & IR)Paul McManus / Lianne Applegarth /Louis Ashe-Jepson | Tel: 020 7933 8780 or hargreavesservices@walbrookpr.comMob: 07980 541 893 / 07584 391 303 /07747 515 393 | |
| Singer Capital Markets (Nomad and Corporate Broker)Sandy Fraser / Justin McKeegan | Tel: 020 7496 3000 | |