Hargreaves Services plc
("Hargreaves" or the "Group")
Retirement Benefit Obligation
Buy In update
Hargreaves Services plc (AIM:
HSP), a diversified group delivering services to the industrial and
property sectors, announces that is has completed the buy in (the
"Buy In") of the Group's two defined benefit pensions schemes (the
"Schemes").
The Board is pleased to announce
that the Schemes completed the Buy In transaction with Just Group
plc ("Just") on 29 February 2024. The shortfall in the Schemes
assets which required funding was £3.7m. After taking into account
fees, the impact of GMP equalisation legislation and other
potential data cleansing adjustments this could rise to a maximum
of £6.6m. This is lower than the previously estimated maximum cost
of £9m.
This process means that the member
benefits to be paid out upon their retirement are now covered by an
insurance policy provided by Just. The Group has made an initial
cash payment of £7.7m out of existing cash reserves in order to
secure this position. This initial cash payment reflects the
shortfall on the Schemes assets of £3.7m, noted above, plus an
additional £4.0m in the form of a loan, as some of the property
assets held in the Schemes are illiquid. This loan allows the
Schemes to purchase the requisite insurance policy. The loan, which
will bear interest at a commercial rate, will be repaid to the
Group upon the subsequent sale of the underlying assets by the
trustees.
The Group has been paying £1.8m in
annual deficit reduction contribution payments to the Schemes. The
Board announced in the Annual Report and Accounts for the year
ended 31 May 2023 the intention to ultimately buy out the Schemes'
obligation. The Buy In has removed the need for any further deficit
reduction contributions from the Group. However, the obligation
(albeit now fully insured) remains with the Group until the buy-out
is completed. The buy-out will likely take between 12 to 24 months
to complete during which time Just will be undertaking routine data
validation checks on the Schemes.
Change of dividend payment date
The interim dividend of 18p which
was announced as being payable on the 11 April 2024 in the Interim
Statement, will now be paid on the 4 April 2024 to shareholders on
the register on 22 March 2024.
Roger McDowell, Non-Executive Chair of Hargreaves,
said: "The Buy In represents a significant step forward in the
Group's stated strategy of realising value for shareholders. Not
only does it further simplify the Group's Balance Sheet, but it
also releases annual free cash flow, which will support the
sustainability of the recently announced 36p annual
dividend."
For
further details:
For
further details:
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Hargreaves
Services plc
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www.hsgplc.co.uk
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Gordon Banham, Chief Executive
Officer
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Tel: 0191 373
4485
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Stephen Craigen, Group Financial
Officer
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Walbrook PR
(Financial PR & IR)
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Tel: 020 7933 8780
or hargreavesservices@walbrookpr.com
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Paul McManus/Louis Ashe-Jepson/
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Mob: 07980 541
893/07747 515 393
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Charlotte Edgar
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07884 664
686
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Singer Capital
Markets (Nomad and
Corporate
Broker)
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Tel: 020 7496
3000
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Sandy Fraser/Phil Davies/Sam Butcher
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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 three business segments are Services,
Hargreaves Land and an investment in a German joint venture,
Hargreaves Raw Materials Services GmbH (HRMS). Services provides
critical support to many core industries including Energy,
Environmental, UK Infrastructure and certain manufacturing
industries through the provision of materials handling, mechanical
and electrical contracting services, logistics and major
earthworks. Hargreaves Land is focused on the sustainable
development of brownfield sites for both residential and commercial
purposes. HRMS trades in specialist commodity markets and owns DK
Recycling, a specialist recycler of steel waste material.
Hargreaves is headquartered in County Durham and has operational
centres across the UK, as well as in Hong Kong and a joint venture
in Duisburg, Germany.