TIDMHSP
RNS Number : 6976I
Hargreaves Services PLC
09 August 2023
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 GBP27.2m and GBP28.9m.
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 GBP6.6m. 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 GBP211.5m GBP177.9m
Underlying Profit Before Tax ("UPBT")** GBP27.3m GBP30.4m*
Profit from joint ventures (net of tax) GBP16.3m GBP25.9m*
Share of Profit Before Tax from continuing GBP27.2m GBP32.2m*
operations
EBITDA** GBP21.8m GBP13.6m
Basic underlying EPS from continuing operations** 86.3p 96.1p*
Proposed Final Dividend 6.0p +7.1% 5.6p
Proposed Additional Dividend from HRMS 12.0p 12.0p
Cash and cash equivalents GBP21.9m GBP13.8m
Net Assets GBP201.0m +11.8% GBP179.8m*
Net Assets per Share** 618p 553p*
HIGHLIGHTS
-- Revenue increased 18.9% to GBP211.5m (2022: GBP177.9m) due to organic growth in Services
-- UPBT above expectations at GBP27.3m (2022: GBP30.4m),
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 GBP12.3m (2022: GBP7.6m)
-- Hargreaves Land UPBT increased 85.7% to GBP3.9m (2022: GBP2.1m)
-- 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 GBP966,000 and a decrease in the share of profit in
joint ventures (net of tax) of GBP2,321,000 which has subsequently
decreased the closing investment in joint ventures by GBP3,287,000.
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.
*** M arket 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 Services www.hsgplc.co.uk
Gordon Banham, Chief Executive Tel: 0191 373 4485
Stephen Craigen, 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 Applegarth 07747 515 393
/
Louis Ashe-Jepson
Singer Capital Markets (Nomad and Corporate Tel: 020 7496 3000
Broker)
Sandy Fraser / Justin McKeegan
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.
Chair's Statement
Nigel Halkes, Acting Group Chair
Strategic Focus
The Group has remained focused on its strategy to create,
deliver and realise value for shareholders. Over recent years
progress has been made on the creation of value opportunities,
notably the winning of new Services contracts and by identifying
opportunities for renewable energy assets on some of our land which
has limited alternative development potential. Additionally, the
Group has delivered high quality trading results highlighted by
solid organic growth within Services. On 25 July 2023, I announced
that the Board has identified opportunities for value realisation,
as set out below:
Renewable Energy Land Asset Valuation and Realisation Plan
A key focus over the last few years has been the identification
of several thousand acres of the Group's land which is now under
lease to third parties for the construction of wind farms as well
as other renewable energy assets and the granting of access to
third party wind farm projects. Collectively, these have the
potential to generate over 700MW of clean electricity. The Group
has rights to receive index linked ground rents from these assets,
most of which are linked to the underlying price of the electricity
they generate.
The first wind farm on our land became operational earlier this
year at Dalquhandy. Similar land assets within the renewable land
portfolio have increasing index linked rental income coming on
stream over the next few years resulting in a growing and
meaningful annual return to the Group. Most of these renewable
energy land assets have planning permission and approved dates for
grid connections, significantly de-risking the projected income
profile.
We have recently commissioned the first independent valuation of
these renewable energy land assets by Jones Lang LaSalle Limited
("JLL"). This review has placed a Market Value Today*** in the
range of between GBP21.6m and GBP23.1m on these assets as at 30
June 2023 with a Market Value at Commissioning of Development
("COD")*** expectation in the range of GBP27.2m to GBP28.9m for
when the assets commence generation, which is at various points
over the period to January 2027. The board intends to commission
this valuation on an annual basis. These investment property assets
are held on the Balance Sheet at an historic cost of GBP6.6m,
resulting in a substantial gain to be realised. These assets
exclude the Westfield site where an Energy from Waste ("EfW") plant
is being constructed by a third party.
It is the intention of the Board to realise the value of these
renewable energy land assets over the next five years in an orderly
manner and to repatriate proceeds to shareholders. This is a clear
demonstration of the Group's strategy to create, deliver and then
realise value for shareholders and I am pleased that this
particular initiative is now moving into the realisation phase.
Pension Schemes
The Group currently pays GBP1.9m per annum in deficit reduction
contributions relating to two legacy defined benefit pension
schemes. Recent movements in gilt yields and the underlying
performance of scheme assets have substantially narrowed the gap
between scheme assets and liabilities. The Board estimates that a
figure in the region of GBP15m would be sufficient to buy out these
schemes and transfer the liabilities to an appropriate insurer. I
can confirm that the Group has now instructed the Trustees of the
schemes to progress towards a full buy out of the liability,
subject to obtaining satisfactory terms from the insurance market.
This may take up to 18 months to complete. The Board expects this
will be funded from existing cash resources.
Financial Results
I am pleased to report another strong set of results for the
Group. Underlying Profit before Tax ("UPBT")** was GBP27.3m (2022:
GBP30.4m*), GBP3.1m lower than the prior year due to the expected
and previously announced reduction in profitability from the
Group's investment in the German joint venture, Hargreaves Raw
Material Services GmbH ("HRMS") due to the anticipated reduction in
commodity prices from elevated levels recorded in the previous
year.
Whilst the contribution from HRMS has fallen from GBP25.0m to
GBP15.5m*, a reduction of GBP9.5m, both the Services business and
Hargreaves Land have seen substantial growth in profits to mitigate
the softening commodity markets which have impacted the German
business.
Group EBITDA** grew by 60.3% to GBP21.8m (2022: GBP13.6m),
driven by improved performance within Services. Profit before Tax
from Continuing Operations was GBP27.2m (2022: GBP32.2m*). Basic
underlying earnings per share from continuing operations** was
86.3p (2022: 96.1p*). Basic earnings per share was 85.9p (2022:
106.6p*).
Cash and leasing debt
On 31 May 2023 the Group held cash in the bank of GBP21.9m
(2022: GBP13.8m). The increase in cash compared with the prior year
is predominantly due to the repayment of a GBP15m loan from HRMS,
which was advanced in the prior year to allow the Joint Venture to
maximise profits from the temporary boom in commodity prices.
The Group's debt relates solely to leasing arrangements for the
acquisition of fixed assets. At the year end the balance of the
debt was GBP36.4m (2022: GBP18.4m). The increase relates to the
investment in plant and machinery required to undertake the
earthmoving works on the HS2 contract.
Dividend
In April 2023, the Group paid an interim dividend of 3.0p, which
was an increase of 7.1% on the prior year. The Group has continued
to trade well throughout the second half of the year and the Board
is proposing a final dividend of 6.0p (2022: 5.6p) taking the full
year underlying dividend to 9.0p (2022: 8.4p) which represents an
increase of 7.1%.
In addition to the final dividend of 6.0p, the Board is also
proposing an additional dividend of 12.0p per share (2022: 12.0p)
relating to cash to be repatriated from HRMS. This, combined with
the full year underlying dividend of 9.0p, takes the total dividend
to 21.0p (2022: 20.4p), an overall increase of 2.9%.
If approved at the Annual General Meeting, the final dividend of
6.0p and the additional dividend of 12.0p will be paid on 30
October 2023 to all shareholders on the register at the close of
business on 22 September 2023. The shares will become ex-dividend
on 21 September 2023.
Board changes
As previously announced, Roger McDowell has taken a temporary
sabbatical for personal reasons from the beginning of June 2023 and
I have assumed his responsibility as Chair until his return, which
is anticipated to be in September 2023. Also as reported
previously, John Samuel has informed the Board of his intention to
step down as Group Finance Director to pursue other opportunities.
He will be succeeded as Group Finance Director by Stephen Craigen
(39), Group Financial Controller, with effect from 9 August 2023,
the date on which John will leave the Board. Stephen joined the
Board on 1 August 2023. David Hankin, a qualified solicitor and in
house Legal Counsel, will be appointed Company Secretary on 9
August 2023.
Outlook
The Group has maintained the momentum it has built over the last
few years and has demonstrated its resilience, particularly within
the Services operations, in the face of a challenging economic
environment. The Balance Sheet remains free from bank debt and
third party security and continues to provide a strong and stable
platform for growth.
The outlook for the Group's trading activities for the coming
year and beyond is strong with 70% of expected revenue for the year
in the Services business already secured and with Hargreaves Land
having exchanged unconditional contracts for a large plot at
Blindwells which is scheduled to complete in January 2024.
Furthermore, the realisation plans for certain renewable energy
land assets has the potential to deliver substantial incremental
value for shareholders over the next few years.
Nigel Halkes
Acting Chair
8 August 2023
* 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 GBP966,000 and a decrease in the share of profit in
joint ventures (net of tax) of GBP2,321,000 which has subsequently
decreased the closing investment in joint ventures by GBP3,287,000.
Please refer to Note 7.
** The basis of Underlying profit before tax, EBITDA and basic
underlying EPS is set out in Note 8.
*** Valuation definitions
Market Value Today - Market Value Today takes the Market Value
at COD and applies an appropriate reduction to reflect the inherent
risk of delivery that would likely arise between a willing buyer
and a willing seller based on the circumstances as they were at 30
June 2023.
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.
Group Business Review
Gordon Banham, Group Chief Executive
CHIEF EXECUTIVE'S REVIEW
GBP'm Services Hargreaves HRMS Unallocated Total
Land
Revenue (2023) 200.9 10.6 - - 211.5
--------- ----------- ----- ------------ ------
Revenue (2022) 162.8 15.1 - - 177.9
--------- ----------- ----- ------------ ------
Underlying Profit/(Loss)
before Tax** (2023) 12.3 3.9 15.5 (4.4) 27.3
--------- ----------- ----- ------------ ------
Underlying Profit/(loss)
before Tax* (2022) 7.6 2.1 25.0 (4.3) 30.4
--------- ----------- ----- ------------ ------
Profit/(loss) before
tax from continuing operations
(2023) 12.2 3.9 15.5 (4.4) 27.2
--------- ----------- ----- ------------ ------
Profit before tax from
continuing operations
*(2022) 9.4 2.1 25.0 (4.3) 32.2
--------- ----------- ----- ------------ ------
* 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 GBP966,000 and a decrease in the share of profit in
joint ventures (net of tax) of GBP2,321,000 which has subsequently
decreased the closing investment in joint ventures by GBP3,287,000.
Please refer to Note 7
** The basis of Underlying profit before tax and basic
underlying EPS is set out in Note 8 .
Services
The Services business delivered a 23.4% increase in revenue to
GBP200.9m (2022: GBP162.8m), due in the most part to the increase
in activity on the HS2 contract which accounted for GBP20.5m of the
increase. The remaining increase has come from mechanical and
electrical engineering project works, which is an area of the
business which has performed particularly well in the year, and
from growth in industrial services in Hong Kong.
The business unit recorded an underlying profit before tax of
GBP12.3m (2022: GBP7.6m), an increase of over 60% on the prior
year. This included a non-recurring profit of GBP3.2m from the
disposal of certain plant and equipment. The remaining growth of
GBP1.5m represents an underlying improvement of 19.7% year on
year.
HS2
The year ended 31 May 2023 represented the first full year of
operations on HS2, which commenced in the second half of the
previous financial year. Revenue from activities on HS2 was
GBP54.1m in the year (2022: GBP33.6m), which represents 26.9%
(2022: 20.6%) of the total Services revenue.
The Group is contracted to the EKFB Joint Venture to carry out
the major earthworks on the C2/3 sections of HS2, predominantly in
Buckinghamshire. I am pleased to report that the contract has
performed very well in the year, with all required plant and
machinery now acquired and on site and at peak operations over 400
workers were at the location. In addition to earthmoving, the Group
has supplied EKFB with a 650m, five section conveyor to facilitate
the removal of surplus material in a highly efficient way and
contributing to a substantial reduction in carbon emissions.
Continued contract success
A key aspect of the Services business unit is its resilience and
stability, which is derived from its strong contract base with high
quality customers. During the last financial year we have seen more
success in this area as the Services business has signed more than
ten term and framework contracts. These contract wins have taken
the total number of term and framework contracts within the
Services business to over 60, which provides an excellent underpin
for the Group. These contracts secure approximately 70% of expected
revenue for the year ending 31 May 2024. Additionally, t he
Services business has excellent growth opportunities in a number of
major infrastructure projects, including Lower Thames Crossing and
Sizewell C, alongside further mechanical engineering works for
industrial clients.
Additionally, the Services business has good resilience to the
current inflationary pressures. Most term contracts include a form
of price escalation, particularly in relation to fuel increases for
our logistics operations. The main HS2 contract is a target cost
reimbursable fee arrangement so that increases in defined costs are
recovered. With inflation in the UK rising rapidly and persisting
over the past 12 months, the business has seen the benefit of these
clauses in mitigating the impact of such risks.
The Group continues to monitor the situation at Tungsten West
plc ("TW") regarding the tungsten mine in Devon. As previously
reported, Hargreaves has a strong contractual position with TW
which would provide the potential for substantial growth should TW
be successful in raising sufficient funds to commence mining
activities. The recent announcement by TW regarding their raising
of funds ensured the receipt of the annual GBP1m fee, which was
paid as due in June 2023. The future of the project remains
dependent on TW raising substantial additional monies. The Group
remains in close contact with TW.
Hargreaves Land
Hargreaves Land recorded revenue of GBP10.6m (2022: GBP15.1m)
and a Profit before Tax of GBP3.9m (2022: GBP2.1m) for the year.
This represents an increase of 86% over the prior year, which is
reflective of the business converting several development
opportunities in the year. Despite this increase in profitability,
the result is somewhat lower than the Board was anticipating
earlier in the year as uncertainty over the housing market resulted
in certain sales being delayed into the new financial year.
Our flagship project at Blindwells has been the most impacted by
these delays, however, I am pleased to announce that we have
exchanged unconditional contracts for the sale of a 20 acre plot to
Avant Homes (Scotland) Limited for consideration of GBP18.5m. The
sale is scheduled to complete in January 2024 with payments
structured into four equal instalments over a three year period,
with the first payable on completion.
The Board considers the delays experienced in the year to be
reflective of the wider slowdown in the housebuilding market and
therefore will only represent a timing delay on the project. The
Board remains confident that the overall profitability of the
scheme is not materially affected. The site remains a long term,
regular profit stream for Hargreaves Land, with Phase 1 which is
expected to be completed by 2032. Once Phase 1 is completed, there
is a second Phase for which outline planning for a further 1,400
homes on land owned by the Group is currently being progressed.
Progress has continued at Unity in Yorkshire, with construction
on one of the major logistics units, which was announced last year,
progressing well. The Unity Joint Venture remains independently
funded without recourse to Hargreaves.
Pipeline
A key strength of the Hargreaves Land business is the size and
quality of its pipeline of development opportunities with
significant progress having been made during the last twelve
months. In the year ended 31 May 2023 Hargreaves Land exchanged
contracts on schemes with a combined Gross Development Value
("GDV") of over GBP190m, which is anticipated to deliver returns in
excess of 15%.
These opportunities are spread across the residential,
commercial and logistics sectors, which ensures that the business
does not become over reliant on any particular industry segment.
Additionally, these arrangements form part of the capital light
model that the business is adopting for future schemes, removing
the need for material investment into assets to be held for long
periods.
Pipeline Summary Number of Residential Square Footage Estimated
sites plots (Commercial) GDV
Residential (planning
allocated) 6 5,700 n/a GBP200m
---------- ------------ --------------- ----------
Residential (planning
promotion) 7 2,850 n/a GBP120m
---------- ------------ --------------- ----------
Commercial (planning allocated) 6 n/a 5,700,000 GBP620m
---------- ------------ --------------- ----------
Renewables Energy Land Assets
The Group continues to act as a landlord for several wind farm
and other renewable energy assets, which could generate over 700MW
of clean electricity. The first wind farm on our land became
operational earlier this year at Dalquhandy. The remaining similar
land assets have increasing rental income streams which are due to
come on board over the next few years. These renewable energy land
assets have planning permission and approved dates for grid
connections, significantly de-risking the projected income
profile.
The renewable energy land portfolio continues to be an area of
great focus for the Board. We have seen the first independent
valuation of the portfolio undertaken in the year by JLL, which has
provided a Market Value at COD of over GBP27m for all existing
renewable energy schemes, excluding the Westfield site, where a
third party is constructing an EfW plant. The Board is committed to
ensuring that the value created within the Group is optimised,
realised and then repatriated to shareholders over the coming
years.
In addition to the renewable energy land assets which are well
progressed, the Group continues to look at longer term
opportunities for renewable energy projects on its land. There are
a further nine schemes under discussion which could generate over
800MW of energy. These schemes are medium term growth
opportunities.
HRMS
The Group's share of post-tax profits from HRMS was GBP15.5m
(2022: GBP25.0m*) which is a reduction of 38%. The corresponding
contribution for the year ended 31 May 2021 was GBP13.6m, which
demonstrates that the Joint Venture has made the most of the high
commodity prices observed throughout late 2021 and 2022 and that
the market has returned to more normal levels. Despite this
reduction, the comparison with two years ago is more relevant as
market conditions then were more comparable to today.
The trading business has seen a 38% reduction in total traded
volume from 1,637kt to 1,020kt in the current year coupled with a
reduction in commodity prices. This softening of commodity prices
and reduction in volumes has meant a reduction in the level of
working capital that HRMS requires. As such HRMS has been able to
repay the GBP15m short term working capital loan that the Group
provided in the previous financial year. At present there is no
further requirement for funding to be provided by the Group to
HRMS. The Board expects further cash repatriation from HRMS as
inventory levels reduce in the trading business.
The Carbon Pulverisation Plant ("CPP") continues to breakeven as
it has done since it was completed. It remains fully operational
but is not expected to move into profitability until year ending 31
May 2025 at the earliest as it is impacted by the economic
uncertainties within the German economy which have delayed the
expected transition away from brown lignite coal.
In DK Recycling und Roheisen GmbH ("DK"), zinc, which is an
important output, has fallen from peaks of over $4,500 per tonne in
April 2022 to around $2,400 today, reducing profitability.
Summary
Hargreaves has continued to trade well despite challenging
economic conditions both in the UK and Europe. The business has a
strong balance sheet, from which we remain focused on unlocking and
realising value for shareholders and I look to the future with
optimism.
Gordon Banham
Group Chief Executive
8 August 2023
Consolidated Statement of Profit and Loss
and Other Comprehensive Income
for the year ended 31 May 2023
Restated
*
2023 2022
Continuing operations Note GBP000 GBP000
-------------------------------------------------------- ---- --------- ---------
Revenue 2 211,459 177,908
Cost of sales (172,402) (148,458)
-------------------------------------------------------- ---- --------- ---------
Gross profit 39,057 29,450
Other operating income 4,918 1,298
Administrative expenses (32,178) (24,520)
-------------------------------------------------------- ---- --------- ---------
Operating profit 11,797 6,228
Analysed as:
Operating profit (before exceptional items and
amortisation charges) 11,972 4,474
Exceptional items 3 - 1,754
Amortisation of intangible assets (175) -
-------------------------------------------------------- ---- --------- ---------
Operating profit 11,797 6,228
-------------------------------------------------------- ---- --------- ---------
Finance income 1,612 823
Finance expense (2,565) (770)
Share of profit in joint ventures (net of tax)* 16,311 25,879
-------------------------------------------------------- ---- --------- ---------
Profit before tax* 27,155 32,160
Taxation 4 771 347
-------------------------------------------------------- ---- --------- ---------
Profit for the year from continuing operations* 27,926 32,507
Profit for the year from discontinued operations 5 - 2,000
-------------------------------------------------------- ---- --------- ---------
Profit for the year* 27,926 34,507
-------------------------------------------------------- ---- --------- ---------
Other comprehensive income/(expense)
Items that will not be reclassified to profit
or loss
(Loss)/gain in defined benefit pension schemes (4,645) 5,955
Tax recognised on items that will not be reclassified
to profit or loss 1,161 (1,488)
Items that are or may be reclassified subsequently
to profit or loss
Foreign exchange translation differences 1,130 313
Effective portion of changes in fair value of
cash flow hedges - 41
Tax recognised on items that are or may be reclassified
subsequently to profit or loss - (8)
Share of other comprehensive income of joint
ventures, (net of tax) 1,912 3,070
-------------------------------------------------------- ---- --------- ---------
Other comprehensive (expense)/income for the
year, net of tax (442) 7,883
-------------------------------------------------------- ---- --------- ---------
Total comprehensive income for the year* 27,484 42,390
-------------------------------------------------------- ---- --------- ---------
Profit/(loss) attributable to:
Equity holders of the Company* 27,915 34,719
Non-controlling interest 11 (212)
------------------------------------------------------ ------ ------
Profit for the year* 27,926 34,507
------------------------------------------------------ ------ ------
Total comprehensive income/(expense) attributable
to:
Equity holders of the Company* 27,473 42,602
Non-controlling interest 11 (212)
------------------------------------------------------ ------ ------
Total comprehensive income for the year* 27,484 42,390
------------------------------------------------------ ------ ------
Basic earnings per share (pence)* 6 85.85 106.63
Diluted earnings per share (pence)* 6 84.13 103.48
Continuing basic earnings per share (pence)* 6 85.85 100.45
Diluted continuing basic earnings per share (pence)* 6 84.13 97.48
Non-GAAP Measures
------------------------------------------------------ ------ ------
Basic underlying earnings per share from continuing
operations (pence)* 6 86.28 96.06
Diluted underlying earnings per share from continuing
operations (pence)* 6 84.55 93.22
------------------------------------------------------ ------ ------
* 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 GBP966,000 and a decrease in the share of profit in
joint ventures (net of tax) of GBP2,321,000 which has subsequently
decreased the closing investment in joint ventures by GBP3,287,000.
Please refer to Note 7. Earnings per share for the prior year have
also been restated. Please refer to Note 6.
Group Balance Sheet
at 31 May 2023
Group
------------------------------------- ----------------------
Restated*
2023 2022
GBP000 GBP000
------------------------------------- --------- -----------
Non-current assets
Property, plant and equipment 10,861 9,938
Right-of-use assets 39,815 22,062
Investment property 14,074 8,298
Intangible assets including goodwill 5,685 4,824
Investments in joint ventures* 74,282 55,096
Deferred tax assets 14,753 11,063
Trade receivables - 4,224
Retirement benefit surplus 8,474 10,382
-------------------------------------- --------- -----------
167,944 125,887
------------------------------------- --------- -----------
Current assets
Inventories 39,302 30,476
Trade and other receivables 71,609 88,574
Contract assets 5,114 6,752
Cash and cash equivalents 21,859 13,773
-------------------------------------- --------- -----------
137,884 139,575
------------------------------------- --------- -----------
Total assets* 305,828 265,462
-------------------------------------- --------- -----------
Non-current liabilities
Other interest-bearing loans and
borrowings (20,839) (11,045)
Retirement benefit obligations (2,902) (2,703)
Provisions (4,120) (2,344)
Deferred tax liabilities (3,417) (1,920)
(31,278) (18,012)
------------------------------------- --------- -----------
Current liabilities
Other interest-bearing loans and
borrowings (15,511) (7,326)
Trade and other payables (47,427) (50,727)
Provisions (10,467) (9,440)
Income tax liability (154) (108)
(73,559) (67,601)
------------------------------------- --------- -----------
Total liabilities (104,837) (85,613)
-------------------------------------- --------- -----------
Net assets* 200,991 179,849
-------------------------------------- --------- -----------
Equity attributable to equity
holders of the Parent
Share capital 3,314 3,314
Share premium 73,972 73,972
Other reserves 211 211
Translation reserve (689) (1,819)
Merger reserve 1,022 1,022
Hedging reserve 318 318
Capital redemption reserve 1,530 1,530
Share-based payment reserve 2,388 2,029
Retained earnings* 119,136 99,494
------------------------------- ------- -------
201,202 180,071
Non-controlling interest (211) (222)
------------------------------- ------- -------
Total equity* 200,991 179,849
------------------------------- ------- -------
* 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 GBP966,000 and a decrease in the share of profit in
joint ventures (net of tax) of GBP2,321,000 which has subsequently
decreased the closing investment in joint ventures by GBP3,287,000.
Please refer to Note 7 .
:
Group Statement of Changes in Equity
for year ended 31 May 2023
Share- Restated*
Capital based Restated* Total Restated*
Share Share Translation Hedging Other redemption Merger payment Retained Parent Non-controlling Total
capital premium reserve reserve reserves reserve reserve reserve earnings equity interest equity
Group GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------- ------- ------- ----------- ---------- -------- ---------- ------- ------- --------- --------- --------------- ---------
At 1 June 2021 3,314 73,955 (2,132) 285 211 1,530 1,022 1,680 63,475 143,340 (10) 143,330
Total
comprehensive
income/(expense)
for
the year
Profit/(loss) for
the year* - - - - - - - - 34,719 34,719 (212) 34,507
Other
comprehensive
income - - 313 33 - - - - 7,537 7,883 - 7,883
----------------- ------- ------- ----------- ---------- -------- ---------- ------- ------- --------- --------- --------------- ---------
Total
comprehensive
income/(expense)
for
the year* - - 313 33 - - - - 42,256 42,602 (212) 42,390
----------------- ------- ------- ----------- ---------- -------- ---------- ------- ------- --------- --------- --------------- ---------
Transactions with
owners recorded
directly
in equity
Issue of shares - 17 - - - - - - - 17 - 17
Equity-settled
share-based
payment
transactions - - - - - - - 349 - 349 - 349
Dividends paid - - - - - - - - (6,237) (6,237) - (6,237)
----------------- ------- ------- ----------- ---------- -------- ---------- ------- ------- --------- --------- --------------- ---------
Total
contributions
by and
distributions
to owners - 17 - - - - - 349 (6,237) (5,871) - (5,871)
----------------- ------- ------- ----------- ---------- -------- ---------- ------- ------- --------- --------- --------------- ---------
At 31 May 2022* 3,314 73,972 (1,819) 318 211 1,530 1,022 2,029 99,494 180,071 (222) 179,849
----------------- ------- ------- ----------- ---------- -------- ---------- ------- ------- --------- --------- --------------- ---------
At 1 June 2022* 3,314 73,972 (1,819) 318 211 1,530 1,022 2,029 99,494 180,071 (222) 179,849
Total comprehensive
income/(expense) for
the year
Profit for the year - - - - - - - - 27,915 27,915 11 27,926
Other comprehensive
income/(expense) - - 1,130 - - - - - (1,572) (442) - (442)
--------------------------- ----- ------ ------- --- --- ----- ----- ----- ------- ------- ----- -------
Total comprehensive
income for the year - - 1,130 - - - - - 26,343 27,473 11 27,484
--------------------------- ----- ------ ------- --- --- ----- ----- ----- ------- ------- ----- -------
Transactions with
owners recorded directly
in equity
Equity-settled share-based
payment transactions - - - - - - - 359 - 359 - 359
Dividends paid - - - - - - - - (6,701) (6,701) - (6,701)
--------------------------- ----- ------ ------- --- --- ----- ----- ----- ------- ------- ----- -------
Total contributions
by and distributions
to owners - - - - - - - 359 (6,701) (6,342) - (6,342)
--------------------------- ----- ------ ------- --- --- ----- ----- ----- ------- ------- ----- -------
At 31 May 2023 3,314 73,972 (689) 318 211 1,530 1,022 2,388 119,136 201,202 (211) 200,991
--------------------------- ----- ------ ------- --- --- ----- ----- ----- ------- ------- ----- -------
* 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 GBP966,000 and a decrease in the share of profit in
joint ventures (net of tax) of GBP2,321,000 which has subsequently
decreased the closing investment in joint ventures by GBP3,287,000.
Please refer to Note 7 .
Group Cash Flow Statement
for year ended 31 May 2023
Group
----------------------------------------- ---------------------
Restated*
2023 2022
GBP000 GBP000
----------------------------------------- -------- -----------
Cash flows from operating activities
Profit for the year from continuing
operations* 27,926 32,507
Adjustments for:
Depreciation and impairment of
property, plant and equipment
and right-of-use assets 14,570 8,666
Amortisation of goodwill and intangible
assets 175 -
Net finance expense/(income) 953 (53)
Share of profit in joint ventures
(net of tax)* (16,311) (25,879)
Profit on sale of property, plant
and equipment, investment property
and right-of-use assets (4,718) (1,298)
Equity-settled share-based payment
expenses 359 349
Income tax credit (771) (347)
Contributions to defined benefit
pension schemes (2,426) (2,002)
Translation of non-controlling
interest and investments 482 202
20,239 12,145
Change in inventories (8,827) (3,308)
Change in trade and other receivables 23,290 (19,256)
Change in trade and other payables (4,563) 903
Change in provisions and employee
benefits 2,713 1,000
------------------------------------------ -------- -----------
32,852 (8,516)
Interest received 1,127 34
Interest paid (2,192) -
Income tax paid (281) (44)
------------------------------------------ -------- -----------
Net cash inflow/(outflow) from
operating activities 31,506 (8,526)
------------------------------------------ -------- -----------
Cash flows from investing activities
Proceeds from sale of property,
plant and equipment 6,565 801
Proceeds from sale of investment
property 266 1,407
Proceeds from sale of right of
use assets 81 78
Acquisition of property, plant
and equipment (3,442) (1,479)
Acquisition of investment property (5,783) (1,070)
Acquisition of right of use assets (85) (163)
Payment for acquisition of subsidiaries,
net of cash acquired (1,447) -
Dividends received from joint
ventures - 3,917
Net cash (outflow)/inflow from
investing activities in continuing
operations (3,845) 3,491
------------------------------------------ -------- -----------
Net cash inflow from investing
activities in discontinued operations - 2,000
------------------------------------------ -------- -----------
Net cash (outflow)/inflow from
investing activities (3,845) 5,491
------------------------------------------ -------- -----------
Cash flows from financing activities
Principal elements of lease payments (12,721) (5,531)
Dividends paid (6,701) (6,237)
Net cash outflow from financing
activities (19,422) (11,768)
------------------------------------------ -------- -----------
Net increase/(decrease) in cash
and cash equivalents 8,239 (14,803)
Cash and cash equivalents at 1
June 13,773 28,303
Effect of exchange rate fluctuations
on cash held (153) 273
------------------------------------------ -------- -----------
Cash and cash equivalents at
31 May 21,859 13,773
------------------------------------------ -------- -----------
* 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 GBP966,000 and a decrease in the share of profit in
joint ventures (net of tax) of GBP2,321,000 which has subsequently
decreased the closing investment in joint ventures by GBP3,287,000.
Please refer to Note 7.
Notes
1 Basis of preparation and status of financial information
The financial information set out above has been prepared and
approved by the Directors in accordance with the recognition and
measurement criteria of international accounting standards in
conformity with the requirements of the Companies Act 2006.
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 31 May 2023 or 31
May 2022. Statutory accounts for 2022 have been delivered to the
Registrar of Companies, and those for 2023 will be delivered in due
course. The auditor has reported on those accounts; their reports
were (i) unqualified, (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in these
consolidated financial statements.
The Group has restated the 31 May 2022 Consolidated Statement of
Profit and Loss and Other Comprehensive Income, Group Balance
Sheet, Group Statement of Changes in Equity, and Group Cash Flow
Statement 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 GBP966,000 and a decrease in the
share of profit in joint ventures (net of tax) of GBP2,321,000
which has subsequently decreased the closing investment in joint
ventures by GBP3,287,000. Please refer to Note 7.
Going Concern
The Group's financing is not dependent on bank borrowings,
however the group has access to a GBP12m invoice discounting
facility, which is currently undrawn and will remain in place until
31 October 2024. Notwithstanding that, a rigorous review of cash
flow forecasts including testing for a range of challenging
downside sensitivities has been undertaken. Mitigating strategies
to these sensitivities considered by the Board exclude any remedies
which are not entirely within the Group's control. As a result, and
after making appropriate enquiries including reviewing budgets and
strategic plans, the Directors have a reasonable expectation that
both the Company and the Group have adequate resources to continue
in operational existence for the foreseeable future. Accordingly,
the Board continues to adopt the going concern basis in preparing
the Annual Report and Accounts.
These results were approved by the Board of Directors on 8
August 2023.
2 Segmental Information
The following analysis by industry segment is presented in
accordance with IFRS 8 on the basis of those segments whose
operating results are regularly reviewed by the Board of Directors
(the Chief Operating Decision Maker as defined by IFRS 8) to assess
performance and make strategic decisions about allocation of
resources.
The sectors distinguished as operating segments are Services,
Hargreaves Land, Unallocated and HRMS.
-- Services: Provides materials handling, mechanical and
electrical engineering, land restoration, logistics and bulk
earthmoving into the energy, environmental, infrastructure and
industrial sectors.
-- Hargreaves Land: The development and realisation of value
from the land portfolio including rental income from investment
properties and the share of profit of the Unity joint venture.
-- Unallocated: The corporate overhead contains the central
functions that are not devolved to the individual business
units.
-- Hargreaves Raw Materials Services ("HRMS"): The Group's share
of its German joint venture, which includes Hargreaves Services
Europe Limited, which is the parent company of HRMS and DK.
These segments are combinations of subsidiaries and joint
ventures. They have separate management teams and provide different
products and services. The four operating segments are also
reportable segments.
The segment results, as reported to the Board of Directors, are
calculated under the principles of IFRS. Performance is measured on
the basis of underlying profit/(loss) before tax, which is
reconciled to profit/(loss) before tax in the tables below:
Hargreaves
Services Land Unallocated HRMS Total
2023 2023 2023 2023 2023
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------- -------- ---------- ----------- -------- ---------
Revenue
Total revenue 202,958 10,608 - - 213,566
Intra-segment revenue (2,107) - - - (2,107)
------------------------------------- -------- ---------- ----------- -------- ---------
Revenue from external customers 200,851 10,608 - - 211,459
------------------------------------- -------- ---------- ----------- -------- ---------
Operating profit/(loss) (before
exceptional items and amortisation) 14,326 3,011 (5,365) - 11,972
Share of profit in joint ventures
(net of tax) - 841 - 15,470 16,311
Net finance (expense)/income (1,956) 44 959 - (953)
Amortisation charge (175) - - - (175)
---------- ----------- --------
Profit/(loss) before taxation
from continuing operations 12,195 3,896 (4,406) 15,470 27,155
Taxation (231) 629 373 - 771
------------------------------------- -------- ---------- ----------- -------- ---------
Profit/(loss) after taxation 11,964 4,525 (4,033) 15,470 27,926
------------------------------------- -------- ---------- ----------- -------- ---------
Depreciation charge 14,295 110 165 - 14,570
------------------------------------- -------- ---------- ----------- -------- ---------
Capital expenditure 33,690 6,083 235 - 40,008
------------------------------------- -------- ---------- ----------- ---------
Net assets/(liabilities)
Segment assets 94,111 73,920 63,515 - 231,546
Segment liabilities (85,028) (6,623) (13,186) - (104,837)
------------------------------------- -------- ---------- ----------- -------- ---------
Segment net assets 9,083 67,297 50,329 - 126,709
Joint ventures - 5,675 - 68,607 74,282
------------------------------------- -------- ---------- ----------- -------- ---------
Total net assets 9,083 72,972 50,329 68,607 200,991
------------------------------------- -------- ---------- ----------- -------- ---------
Unallocated net assets of GBP50.3m include cash and cash
equivalents of GBP21.9m, net deferred tax asset of GBP11.3m,
amounts due from joint ventures of GBP11.2m, amounts due to joint
ventures of GBP4.1m, a net pension asset of GBP5.6m and other
corporate items (GBP4.4m asset).
Hargreaves Restated* Restated*
Services Land Unallocated HRMS Total
2022 2022 2022 2022 2022
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- -------- ---------- ----------- --------- ---------
Revenue
Total revenue 163,800 15,100 - - 178,900
Intra-segment revenue (992) - - - (992)
----------------------------------- -------- ---------- ----------- --------- ---------
Revenue from external customers 162,808 15,100 - - 177,908
----------------------------------- -------- ---------- ----------- --------- ---------
Operating profit/(loss) (before
exceptional items) 8,011 1,211 (4,748) - 4,474
Share of profit in joint ventures
(net of tax)* - 858 - 25,021 25,879
Net finance (expense)/income (468) 58 463 - 53
Exceptional items 1,754 - - - 1,754
----------------------------------- -------- ---------- ----------- --------- ---------
Profit/(loss) before taxation
from continuing operations* 9,297 2,127 (4,285) 25,021 32,160
Taxation 3,343 (3,546) 550 - 347
----------------------------------- -------- ---------- ----------- --------- ---------
Profit/(loss) after taxation* 12,640 (1,419) (3,735) 25,021 32,507
----------------------------------- -------- ---------- ----------- --------- ---------
Depreciation and impairment charge (8,344) (100) (222) - (8,666)
----------------------------------- -------- ---------- ----------- --------- ---------
Capital expenditure (13,507) (1,165) (154) - (14,826)
----------------------------------- -------- ---------- ----------- --------- ---------
Net assets/(liabilities)
Segment assets 79,155 62,505 68,706 - 210,366
Segment liabilities (70,104) (7,391) (8,118) - (85,613)
----------------------------------- -------- ---------- ----------- --------- ---------
Segment net assets 9,051 55,114 60,588 - 124,753
Joint ventures* - 4,836 - 50,260 55,096
----------------------------------- -------- ---------- ----------- --------- ---------
Total net assets* 9,051 59,950 60,588 50,260 179,849
----------------------------------- -------- ---------- ----------- --------- ---------
Unallocated net assets of GBP60.6m include cash and cash
equivalents of GBP13.8m, deferred tax asset of GBP11.1m, amounts
due from Jointly Controlled Entities of GBP29.3m, a net pension
asset of GBP7.7m, deferred tax liability of GBP1.9m and other
corporate items (GBP0.6m asset).
* 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 GBP966,000 and a decrease in the share of profit in
joint ventures (net of tax) of GBP2,321,000 which has subsequently
decreased the closing investment in joint ventures by GBP3,287,000.
Please refer to Note 7.
3 Exceptional Items
The Group incurred one exceptional item in the year ended 31 May
2022 as follows:
2023 2022
GBP000 GBP000
----------------------------------------------------- ------- -------
Exceptional item in Administrative expenses
Release of accrual relating to a liability from the
year ended 31 May 2015 - 1,754
----------------------------------------------------- ------- -------
Total exceptional item in Administrative expenses - 1,754
----------------------------------------------------- ------- -------
Total - 1,754
----------------------------------------------------- ------- -------
In the year ended 31 May 2022, an aged accrual dating from the
year ended 31 May 2015 totalling GBP1,754,000 was released as the
potential for payment had lapsed due to time.
4 Taxation
Recognised in the Income Statement
2023 2022
GBP000 GBP000
--------------------------------------------------------- ------- -------
Current tax
Current year 187 212
Adjustments for prior years 24 (4)
--------------------------------------------------------- ------- -------
Current tax expense 211 208
--------------------------------------------------------- ------- -------
Deferred tax
Origination and reversal of temporary timing differences 2,382 1,542
Adjustments for prior years (3,364) (2,097)
--------------------------------------------------------- ------- -------
Deferred tax credit (982) (555)
--------------------------------------------------------- ------- -------
Tax credit in Income Statement (excluding share of tax
of equity accounted investees) (771) (347)
--------------------------------------------------------- ------- -------
The deferred tax adjustment in respect of prior years of
GBP3,364,000 (2022: GBP2,097,000) relates to losses assumed to be
utilised in the previous year, which were ultimately retained.
Recognised in Other Comprehensive Income
2023 2022
GBP000 GBP000
-------------------------------------------------------- ------- -------
Deferred tax expense
Effective portion of changes in fair value of cash flow
hedges - (8)
Remeasurements of defined benefit pension schemes (1,161) (1,488)
-------------------------------------------------------- ------- -------
(1,161) (1,496)
-------------------------------------------------------- ------- -------
Reconciliation of Effective Tax Rate
Restated*
2023 2022
GBP000 GBP000
------------------------------------------------------- ------- ---------
Profit for the year from continuing operations* 27,926 32,507
Total tax credit (771) (347)
------------------------------------------------------- ------- ---------
Profit before taxation from continuing operations* 27,155 32,160
------------------------------------------------------- ------- ---------
Tax using the UK corporation tax rate of 20.00% (2022:
19.00%)* 5,431 6,110
Effect of tax rates in foreign jurisdictions (159) 37
Tax effect of joint ventures* (3,100) (4,753)
Changes in unrecognised tax losses (616) 136
Non-deductible expenses 776 407
Other temporary trading differences 237 (183)
Adjustment in respect of previous periods (3,340) (2,101)
------------------------------------------------------- ------- ---------
Effective total tax credit (771) (347)
------------------------------------------------------- ------- ---------
* 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 GBP966,000 and a decrease in the share of profit in
joint ventures (net of tax) of GBP2,321,000 which has subsequently
decreased the closing investment in joint ventures by GBP3,287,000.
Please refer to Note 7.
Adjustment in respect of previous periods includes the impact of
the "super deduction" of 130% on qualifying fixed asset additions,
which resulted in losses that were expected to be utilised in the
May 2022 computations being retained.
The UK corporation tax rate increased from 19.00% on 1 April
2023, therefore a blended rate of 20.00% has been used (2022:
19.00%).
Factors That May Affect Future Current and Total Tax Charges
Following the March 2022 budget, the corporate tax rate
increased from 19% to 25% on 1 April 2023. The deferred tax
balances at 31 May 2023 and 31 May 2022 have been calculated based
on the rate substantively enacted at the balance sheet date of
25%.
5 Discontinued Operations
All discontinued operations results are attributable to equity
holders. For the year ended 31 May 2023, there were no discontinued
operations. For the year ended 31 May 2022, the Group's
discontinued operations made a profit of GBP2,000,000 after tax
during the year.
The profit from discontinued operations in the prior year
represents the contingent consideration received following the
disposal of Brockwell Energy Limited ("Brockwell"). The Company
disposed of the whole of its shareholding in Brockwell on 19
October 2018 with contingent consideration of GBP2m which was
received in the year ended 31 May 2022. There are no remaining
balances relating to this matter.
2023 2022
GBP000 GBP000
------------------------------------------------- ------- -------
Proceeds from disposal of subsidiary - 2,000
Profit before tax of discontinued operations - 2,000
Current tax charge - -
Profit for the year from discontinued operations - 2,000
------------------------------------------------- ------- -------
6 Earnings per Share
The calculation of earnings per share ("EPS") is based on the
profit for the year attributable to equity holders and on the
weighted average number of shares in issue and ranking for dividend
in the year.
Restated*
2023 2022
--------------------------------- ------------------------ ------------------------
Earnings EPS DEPS Earnings EPS DEPS
GBP000 Pence Pence GBP000 Pence Pence
--------------------------------- -------- ------ ------ -------- ------ ------
Underlying earnings per
share from continuing
operations* 28,066 86.28 84.55 31,086 96.06 93.22
Exceptional items, fair
value adjustments, amortisation
and impairment (net of
tax) (140) (0.43) (0.42) 1,421 4.39 4.26
--------------------------------- -------- ------ ------ -------- ------ ------
Continuing basic earnings
per share* 27,926 85.85 84.13 32,507 100.45 97.48
Discontinued operations - - - 2,000 6.18 6.00
--------------------------------- -------- ------ ------ -------- ------ ------
Basic earnings per share* 27,926 85.85 84.13 34,507 106.63 103.48
--------------------------------- -------- ------ ------ -------- ------ ------
Weighted average number
of shares 32,528 33,193 32,362 33,347
--------------------------------- -------- ------ ------ -------- ------ ------
The calculation of weighted average number of shares includes
the effect of own shares held of 611,118 (2022: 611,118).
The calculation of diluted earnings per share ("DEPS") is based
on the profit for the year and the weighted average number of
ordinary shares in issue in the year. The potentially dilutive
effect of the share options outstanding (effect on weighted average
number of shares) is 665,549 (2022: 985,056); effect of basic
earnings per ordinary share in the current year is 1.72p (2022:
3.15p). Effect on underlying earnings per ordinary share is 1.73p
(2022: 2.84p). Effect on discontinued operations per ordinary share
for 2023 is nil (2022: 0.18p).
* 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 GBP966,000 and a decrease in the share of profit in
joint ventures (net of tax) of GBP2,321,000 which has subsequently
decreased the closing investment in joint ventures by GBP3,287,000.
Please refer to Note 7.
Basic, continuing basic, underlying and diluted earnings per
share for the prior year have also been restated. The amount of the
correction for basic and diluted earnings per share was a decrease
of 7.2p and 7.0p per share respectively. The amount of the
correction for continuing basic and diluted earnings per share was
a decrease of 7.2p and 7.0p per share respectively. The amount of
the correction for underlying and diluted earnings per share was a
decrease of 7.2p and 7.0p per share respectively.
7 Restatement relating to the year ended 31 May 2022
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 GBP966,000 and a decrease in the share of profit in joint
ventures (net of tax) of GBP2,321,000 which has subsequently
decreased the closing investment in joint ventures by
GBP3,287,000.
Basic and diluted earnings per share for the prior year have
also been restated. The amount of the correction for basic and
diluted earnings per share was a decrease of 7.2p and 7.0p per
share respectively.
The financial statement line items have been restated as
follows:
Group Balance Sheet (Extract)
As previously
Reported at Opening Balance 1 June 2021
1 June 2021 Decrease (Restated)
Investments in jointly
controlled entities 31,187 (966) 30,221
Net Assets 144,296 (966) 143,330
----------------------- ---------------------- ---------------------- -------------------------
Retained earnings 64,441 (966) 63,475
Total Equity 144,296 (966) 143,330
----------------------- ---------------------- ---------------------- -------------------------
As previously
Reported at Opening Balance Decrease in the 31 May 2022
31 May 2022 Decrease Period (Restated)
Investments in jointly
controlled entities 58,383 (966) (2,321) 55,096
Net Assets 183,136 (966) (2,321) 179,849
----------------------- ---------------------- ---------------------- ------------------------- ------------------
Retained earnings 102,781 (966) (2,321) 99,494
Total Equity 183,136 (966) (2,321) 179,849
----------------------- ---------------------- ---------------------- ------------------------- ------------------
Consolidated Statement of Profit and Loss and Other
Comprehensive Income (Extract)
As previously
Reported at Decrease in the 31 May 2022
31 May 2022 Period (Restated)
Share of profit in joint ventures
(net of tax) 28,200 (2,321) 25,879
Profit before Tax 34,481 (2,321) 32,160
---------------------------------------- -------------------- ---------------------- ------------------
Taxation 347 - 347
---------------------------------------- -------------------- ---------------------- ------------------
Profit from Continuing Operations 34,828 (2,321) 32,507
---------------------------------------- -------------------- ---------------------- ------------------
Profit for the year from discontinuing
operations 2,000 - 2,000
---------------------------------------- -------------------- ---------------------- ------------------
Profit for the year 36,828 (2,321) 34,507
---------------------------------------- -------------------- ---------------------- ------------------
Other comprehensive income:
Total Comprehensive income for the
year 44,711 (2,321) 42,390
---------------------------------------- -------------------- ---------------------- ------------------
Profit attributable to:
Equity holders of the company 37,040 (2,321) 34,719
Non-controlling interest (212) - (212)
Profit for the year 36,828 (2,321) 34,507
---------------------------------------- -------------------- ---------------------- ------------------
Total comprehensive income attributable
to:
Equity holders of the company 44,923 (2,321) 42,602
Non-controlling interest (212) - (212)
Profit for the year 44,711 (2,321) 42,390
---------------------------------------- -------------------- ---------------------- ------------------
Group Statement of Changes in Equity (Extract)
Total Parent Non-Controlling
Retained Earnings Equity Interest Total Equity
As Previously Reported
At 1 June 2021 64,441 144,306 (10) 144,296
Opening Balance
Adjustment (966) (966) - (966)
-------------------------- ------------------------ ------------------- ---------------------- -------------------
Adjusted Balance at
1 June 2021 63,475 143,340 (10) 143,330
-------------------------- ------------------------ ------------------- ---------------------- -------------------
Profit/(loss) for the
year
As Previously Reported
At 31 May 2022 37,040 37,040 (212) 36,828
Decrease in the current
period (2,321) (2,321) - (2,321)
-------------------------- ------------------------ ------------------- ---------------------- -------------------
Adjusted Balance at
31 May 2022 34,719 34,719 (212) 34,507
-------------------------- ------------------------ ------------------- ---------------------- -------------------
Total comprehensive income/(expense)
for the year
As Previously Reported
At 31 May 2022 44,577 44,923 (212) 44,711
Decrease in the current
period (2,321) (2,321) - (2,321)
-------------------------- ------------------------ ------------------- ---------------------- -------------------
Adjusted Balance at
31 May 2022 42,256 42,602 (212) 42,390
-------------------------- ------------------------ ------------------- ---------------------- -------------------
Closing Balance at 31
May 2022
As Previously Reported
At 31 May 2022 102,781 183,358 (222) 183,136
Opening Balance
Adjustment (966) (966) - (966)
Decrease in the current
period (2,321) (2,321) - (2,321)
-------------------------- ------------------------ ------------------- ---------------------- -------------------
Adjusted Balance at
31 May 2022 99,494 180,071 (222) 179,849
-------------------------- ------------------------ ------------------- ---------------------- -------------------
8 Alternative Performance Measures Glossary
This report provides alternative performance measures ("APMs"),
which are not defined or specified under the requirements of
International Financial Reporting Standards. The Board believes
that these APMs provide readers with important additional
information on the business.
Alternative Performance
Measure Definition and Purpose
-------------------------- ---------------------------------- -------------------- ---------------
Underlying profit before Represents the profit before tax prior to exceptional
tax ("UPBT") items, fair value adjustments, impairment and amortisation
of intangible assets, and, in accordance with International
Accounting Standards, includes the Group's share
of the post-tax profit of its German joint venture.
This measure is consistent with how the business
measures performance and is reported to the Board.
2023 2022
GBP000 GBP000
---------------------------------- -------------------- ---------------
Profit before tax from continuing
operations* 27,155 32,160
Exceptional items (see Note 3) - (1,754)
Amortisation of intangible assets 175 -
Underlying Profit before Tax* 27,330 30,406
----------------------------------- -------------------- ---------------
Basic underlying earnings Profit attributable to the equity holders of the
per share Company prior to exceptional items, impairment
and amortisation of intangible assets and fair
value gains on acquisition after tax divided by
the weighted average number of ordinary shares
during the financial year adjusted for the effects
of any potentially dilutive options. See Note 6.
-------------------------- --------------------------------------------------------------------------
EBITDA EBITDA is defined as profit before tax from continuing
operations prior to charges for depreciation, amortisation
and impairment and interest and excludes the share
of profit from joint ventures and gains and losses
on the sale of fixed assets.
2023 2022
GBP'000 GBP'000
----------------------------------- --------- ---------
Profit before tax from continuing
operations* 27,155 32,160
Depreciation and impairment 14,570 8,666
Amortisation of intangible assets 175 -
Net finance expense / (income) 953 (53)
Share of profit in joint ventures
(net of tax)* (16,311) (25,879)
Profit on sale of fixed assets (4,718) (1,298)
----------------------------------- --------- ---------
EBITDA 21,824 13,596
----------------------------------- --------- ---------
-------------------------- --------------------------------------------------------------------------
Net Asset Value per Represents the Net Asset value of the Group divided
share by the number of shares in issue less those shares
held in treasury. Calculated as follows:
-------------------------- --------------------------------------------------------------------------
2023 2022
---------------------------------- -------------------- ---------------
Total shares in issue 33,138,756 33,138,756
Less shares in treasury (611,118) (611,118)
----------------------------------- ------------------------- -------------------- ---------------
Shares for calculation 32,527,638 32,527,638
----------------------------------- ------------------------- -------------------- ---------------
Net Asset Value per
Balance Sheet* GBP200,991,000 GBP179,849,000
----------------------------------- ------------------------- -------------------- ---------------
Net Asset Value per
share* GBP6.18 GBP5.53
----------------------------------- ------------------------- -------------------- ---------------
* 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 GBP966,000 and a decrease in the share of profit in
joint ventures (net of tax) of GBP2,321,000 which has subsequently
decreased the closing investment in joint ventures by GBP3,287,000.
Please refer to Note 7.
9 Posting of Report & Accounts
The Group confirms that the annual report and accounts for the
year ended 31 May 2023 will be posted to shareholders as soon as
practicable and a copy will be made available on the Group's
website:
www.hsgplc.co.uk
This information is provided by RNS, the news service of the
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END
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