REG - Hargreaves Servs PLC - Interim results
29/01/2025 07:00
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RNS Number : 0327V Hargreaves Services PLC 29 January 2025
HARGREAVES SERVICES PLC
(the "Group", the "Company" or "Hargreaves")
Interim Results for the six months ended 30 November 2024
Hargreaves Services plc (AIM: HSP), a diversified group delivering services to
the environmental, infrastructure and property sectors, announces its interim
results for the six months ended 30 November 2024, a period which delivered
significant double-digit revenue and EBITDA growth, a return to profitability
for HRMS, and an increase in interim dividend to 18.5p.
With the Company securing high levels of visibility within Services, the Board
expects to exceed revenue expectations by 10% for Services for the year ended
31 May 2025 as well as future years, however technical planning delays at
Blindwells will offset this additional margin in the current year resulting in
the Board anticipating delivering full year results in line with market
expectations.
KEY FINANCIAL RESULTS Unaudited Unaudited
Six Months ended Six Months ended
30 Nov 2024 30 Nov 2023
Revenue £125.3m £110.2m +13.7%
EBITDA* £14.9m £12.3m +21.1%
Profit before tax ("PBT") £5.3m £2.7m +96.3%
EPS 12.2p 5.2p +134.6%
Interim Dividend 18.5p 18.0p +2.8%
Cash and cash equivalents £15.7m £18.7m -16.0%
Leasing debt £34.2m £28.8m +17.0%
Net Asset Value** £188.9m £185.1m +2.1%
Net Assets per Share** 580p 567p +2.3%
* EBITDA is calculated as Operating Profit after adding back depreciation and
amortisation, and excludes gains or losses on the sale of fixed assets and
investment property.
** Net Asset Value and Net Assets per Share for 30 November 2023 have been
adjusted for the pension adjustment of £12.4m for comparability.
HIGHLIGHTS
• Group revenue has increased by £15.1m, or 14% driven by revenue growth within
Services, especially in earthmoving activities.
• Net margin within Services maintained at over 7%, growing in line with
Revenue.
• Group EBITDA increased by £2.6m, or 21% driven by the strong performance
within Services.
• Sale of 11-acre site at Blindwells completed in January 2025 for cash
consideration of £9.3m.
• Positive turnaround within HRMS as the joint venture has returned to
delivering a profit in the period.
• Interim dividend increased by 3% to 18.5p reflecting the growth in profit and
strong forward visibility.
• Investment continued into the Group's land assets ahead of the realisation in
January 2025, resulting in cash in hand at period end of £15.7m (2023:
£18.7m).
• Net asset value impacted by accounting for the pension scheme Buy-In which
occurred in March 2024 resulting in a £12.4m adjustment.
OUTLOOK
• Services has 90% of revenue secured under contract for the year ending 31 May
2025. Combining this with the additional earthmoving volumes underpins
management's expectation for Services of outperforming market revenue
expectations for the current financial year by approximately 10%, leading to
an improvement in Services PBT and EBITDA.
• Improved performance in H1 within HRMS provides a solid base for H2 despite
the continued slowdown within the German economy.
• First tranche of renewable energy assets currently being marketed, with good
levels of interest received, hopeful of sale concluding in 2025.
• Despite the completion of a material sale at Blindwells, another planned sale
is likely to be delayed until early in the next financial year due to a delay
in securing technical approval for site access. This delay is expected to
offset the anticipated gains in Services. As a result, the Board anticipates
the Group will perform in line with market expectations for the full year.
Commenting on the interim results, Group Chair, Roger McDowell said: "I am
pleased to report another strong set of results for the Group. The 14% revenue
growth highlights the ability of Hargreaves to identify and capture
opportunity in our areas of strength. We remain committed to our strategy of
creating and realising value for our shareholders, as evidenced by the
progressive increase in the interim dividend.
"The improved performance from our Services business is expected to continue
into future years as a result of pipeline opportunities, that require a highly
skilled, experienced workforce and a proven track record of safe delivery.
With the first tranche of renewable energy land assets now marketed and cash
continuing to return from Germany, we are delivering on our commitments to
shareholders."
CEO video
Please find a link to a video overview relating to the Company's interim
results from the Group's Chief Executive Officer, Gordon Banham here
(https://www.brrmedia.co.uk/broadcasts-embed/6798abaeda34b6c1a6c5cfd2/hargreaves-services-trading-update/?popup=true)
.
Investor presentation
Gordon Banham, Group Chief Executive, Stephen Craigen, Chief Financial Officer
and David Anderson, Group Property Director, will provide a live presentation
on the Company's interim results via the Investor Meet Company platform today
at 4:30pm GMT.
Investors can sign up to Investor Meet Company for free and add to meet
Hargreaves here
(https://www.investormeetcompany.com/hargreaves-services-plc/register-investor)
.
For further details:
Hargreaves Services www.hsgplc.co.uk (http://www.hsgplc.co.uk/)
Gordon Banham, Chief Executive Officer Tel: 0191 373 4485
Stephen Craigen, Chief Financial Officer
Walbrook PR (Financial PR & IR) Tel: 020 7933 8780 or hargreavesservices@walbrookpr.com
(mailto:hargreavesservices@walbrookpr.com)
Paul McManus, Lianne Applegarth,
Mob: 07980 541 893 / 07584 391 303
Louis Ashe-Jepson
07747 515 393
Singer Capital Markets (Nomad and Joint Corporate Broker)
Sandy Fraser, Phil Davies, Sam Butcher Tel: 020 7496 3000
Cavendish Capital Markets Ltd (Joint Corporate Broker) Tel: 020 7220 0500
Katy Birkin / Hamish Waller - Corporate Finance
Jasper Berry / Tim Redfern - Sales / ECM
About Hargreaves Services plc (www.hsgplc.co.uk (http://www.hsgplc.co.uk/) )
Hargreaves Services plc is a diversified group delivering services to the
environmental, infrastructure 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 und Roheisen
GmbH ("DK"), 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
Introduction
I am pleased to report a strong set of results for the Group, with significant
growth in both revenue and profits. The momentum that has been building within
Services is really coming to the fore with an 11% increase in revenue in the
period. Whilst the results in Hargreaves Land are lower than in November 2023,
this is reflective of timing, and I'm pleased to report a substantial
transaction has completed at our flagship Blindwells project in January 2025.
Perhaps most pleasing is the return to profitability for HRMS, which has seen
a significant positive turnaround in the first six months whilst maintaining
cash returns to the Group.
The focus of the Group is unchanged regarding the realisation and delivery of
value to our shareholders. Each section of the business will continue to play
a key role in this strategy as follows:
• Services - Focused on delivering value through sustainable growth in
high-quality, robust contracts in areas of core competence within the
environmental and infrastructure market.
• Hargreaves Land - Medium-term plan to deliver value through the realisation of
capital employed within Blindwells, alongside the sale of the renewable energy
asset portfolio as the business transitions to a capital light model.
• HRMS - Focus on cash realisation through an annual return of cash to the
Group, whilst we explore longer term realisation potential.
Results and Progress update
Revenue for the Group increased by 13.7% to £125.3m (2023: £110.2m) due to
an increase in earthmoving activities on several large infrastructure
projects. Consequently, the Group's PBT also increased from £2.7m to £5.3m.
Whilst much of this profit increase can be attributed to the strong growth
within Services, we have also seen a significant improvement in the
performance of HRMS despite the ongoing economic challenges in Germany.
Strong Services Outlook
The first six months has seen the Services business capitalise on the momentum
we have built over the last few years. We have seen numerous new contract wins
and renewals, as well as growth in activity on existing works. Most notably we
have seen an increase in activity at large scale infrastructure projects,
including HS2 and Sizewell C, where our competence and safety culture are
highly valued.
The Board are confident that the pipeline of opportunities, combined with the
works already secured under contract, are sufficient to result in an
outperformance of expectations for the current financial year. Moreover, the
high levels of visibility, especially within earthmoving opportunities, lead
us to expect that future years will also exceed current expectations.
Land realisations
A key strategic target of the Group remains the realisation of value from the
Hargreaves Land assets, in particular Blindwells and I'm pleased to see
progress has been made with the recent completions at that site. However, due
to delays experienced with local planning approvals we now expect one material
land sale at Blindwells to complete in the early part of next financial year.
Progress has also been made on the sale of the first tranche of renewable
energy land assets. They have been marketed, and we have received promising
initial levels of interest. We remain hopeful of concluding a transaction in
2025. The completion of a sale would represent a significant landmark in the
strategic progress of the Group.
HRMS recovery
The performance of HRMS has been much improved as the initiatives around solid
fuel pricing and renegotiated gate fees on recycled materials have started to
take effect. The Group has already received the first instalment of the cash
return from HRMS for the current year, with £6m received in July 2024,
demonstrating the commitment to value realisation from this investment.
Cash and debt
As at 30 November 2024 the Group held cash of £15.7m compared with £22.7m on
31 May 2024 (November 2023: £18.7m). The majority of this decrease is due to
the continued investment in Land assets ahead of contracted sales, one of
which has completed in January 2025.
The only debt held by the Group is leasing debt for specific plant items which
was £34.2m at 30 November 2024 (November 2023: £28.8m). The increase
reflects investment in plant and equipment to support the growth in activities
which has in turn driven the revenue and profit improvements within Services.
The reduction in the Group's net assets compared to twelve months ago is due
to the accounting treatment of the pension scheme Buy-In, which we completed
in March 2024, which resulted in a substantial reserve movement. I'm pleased
to confirm that the £4m loan lent by the Group to the pension scheme to
facilitate the Buy-In has been repaid in full in January 2025. The Group
awaits the completion of the Buy-Out, which is expected to occur in calendar
year 2026.
Board Changes
As previously announced, David Anderson will retire from his role as Group
Property Director on 31 May 2025. David joined the Group in November 2018 and
has been central to the growth and development of Hargreaves Land. David will
continue to assist the business as a specialist consultant on certain projects
to enable a smooth transition. The Board wishes to thank David for all of his
efforts throughout his time with the business and wishes him a long and happy
retirement.
I am pleased to announce the appointment of Simon Hicks as Chief Operating
Officer and Executive Director starting on 1 June 2025. Simon brings with him
a wealth of experience across the infrastructure and energy markets having
held senior positions within Cape plc, Altrad Services, Bilfinger and most
recently as CEO of Evero Energy Limited, a privately-owned waste-to-energy
producer with several operational plants across the UK.
Simon's initial focus will be on the creation and delivery of value within the
Group's Services business unit. I, along with the rest of the Board, am
looking forward to working with Simon to unlock the further potential of the
Services business.
Dividend
It remains the intention of the Board to have a progressive dividend policy
following the substantial increase made in the previous year. Based on the
growth observed to date and the strong levels of revenue visibility, the Board
is sufficiently confident to raise the level of the interim dividend to 18.5p
(2023: 18.0p) reflecting a 2.8% increase. The interim dividend represents 50%
of the Board's expected increased full year dividend of 37.0p (2024: 36p).
The interim dividend will be paid on 8 April 2025 to shareholders on the
register on 21 March 2025.
Outlook
The strong performance within Services is expected to continue through to the
end of the year, with good visibility on project work and the continued
confidence provided by the strong contract portfolio. Whilst Hargreaves Land
has made good progress on the marketing of the renewable energy land assets,
delays with local planning conditions are likely to impact on profits in the
current year offsetting the gains seen within Services. We expect HRMS to
remain on a steady footing despite the slowdown in economic activity in
Germany. The Board anticipates the Group will perform in line with market
expectations for the full year.
The Group remains in a strong position, with excellent visibility within
Services and Land, which is testament to the hard work and dedication of our
teams. I would like to extend my gratitude to all my colleagues at Hargreaves
as we look to the future with continued confidence.
Roger McDowell
Chair
29 January 2025
CHIEF EXECUTIVE'S REVIEW
£'m Services Land HRMS Central Costs Total
Revenue (Nov 2024) 121.2 4.1 - - 125.3
Revenue (Nov 2023) 109.5 0.7 - - 110.2
Profit/(loss) before tax (Nov 2024) 8.8 (1.4) 0.1 (2.2) 5.3
Profit/(loss) before tax (Nov 2023) 7.8 (1.0) (1.9) (2.2) 2.7
Services
Services delivered first half revenues of £121.2m (2023: £109.5m) and a PBT
of £8.8m (2023: £7.8m). This represents growth of 10.7% in revenue and 12.8%
in PBT. The growth in revenue and profit has been driven by additional
opportunities within the earthmoving operations, where we have seen
substantial enabling works coming forward on major infrastructure projects.
The net margin within Services of 7.3% is in line with the 7.1% achieved in
the comparative period. These margins reflect the high quality of work
undertaken and robust contract positions held by the Group.
As has been the case in previous years, the full year result for Services is
likely to be weighted towards the first six months of the financial year. This
is due to the earthmoving season predominantly taking place during the first
half, as well as the fourth instalment of the annual £1m receipt from
Tungsten West plc being received in July 2024.
Contract Focus
The Services business remains focused on growing the contract order book, with
over 65 term and framework contracts in place and 90% of the current financial
year revenue already secured. The first six months of the year has seen
further growth in the contract book with several notable successes including:
• The renewal of a five-year contract with FCC for transportation services.
• New two-year position with Yorwaste to provide recycling transfer services.
• New contract with Enfinium providing management services into waste-to energy
plants.
These contract successes represent the continued development of the Services
business into supporting the environmental infrastructure of the UK in
particular.
The earthmoving contract with EKFB for HS2 remains the largest single contract
within the Group. This has been operational for three years and it is
anticipated that there will be at least another two earthmoving seasons of
full-scale activity from now.
Activity at Sizewell C has seen a substantial uptick in volumes during the
first six months of the year. The Group has been undertaking a number of
pre-construction enabling earthworks and has been successful in securing
several task orders providing further visibility into the next financial year.
This progress gives comfort that the Group remains in a good position to
secure the primary earthmoving contract when it is tendered.
Longer term the business remains in close contact with Lower Thames Crossing,
awaiting the decision of the Government which was delayed from October 2024.
Furthermore, the Group has noted the recent announcements made by Tungsten
West plc regarding the tungsten mine in Devon. We await the outcome of their
fund raising and remain well placed to undertake the mining services should
the project proceed.
Whilst inflation has returned to more normal levels in recent months, the
Government budget announced on 30 October 2024 brought an increase in National
Insurance costs for all businesses. As has been demonstrated previously within
the Group, our strong contractual position has meant that increases in
employment taxes and wage inflation have been largely mitigated through
contractual escalation factors. We anticipate limited impact on margin from
the tax increases.
The Services business continues to deliver high-quality, growing and resilient
profits within our areas of core competence.
Hargreaves Land
Land
Hargreaves Land recorded revenue of £4.1m (2023: £0.7m) and a loss before
tax of £1.4m (2023: £1.0m). The variation in both revenue and loss before
tax is due to the timing of sales at Blindwells.
In the first half of the year Hargreaves Land completed the sale of 7 acres at
Blindwells to Places for People for a initial consideration of £3.1m.
Furthermore, the sale of 11 acres to Avant Homes for consideration of £9.3m,
which was originally scheduled to complete in early 2024, completed in January
2025. This represents the sixth sale of land at Blindwells, which, with over
250 families now living on site, is maturing into a vibrant and desirable
place to live.
A key uncertainty within land sales remains the planning process, over which
the Group has minimal influence. A third sale at Blindwells had been planned
to complete within the current financial year, however, due to a delay on
transport planning this is now expected to complete early in the next
financial year. Notwithstanding this temporary delay, the site remains a
long-term profit generator for the Group with approximately 80 acres remaining
in phase 1. After the completion of phase 1, which will take a further three
to four years, there is a second phase, for which a further planning
allocation for up to 1,250 additional homes is being progressed on 90 acres
owned by the Group.
We have also seen good progress at the Group's other multi-phase development
sites, with contracts exchanged at the Unity site in Doncaster for the sale of
two roadside development plots to McDonalds and Starbucks for consideration of
£1.2m.
Investment into Blindwells has reached its peak and, following the completion
of the sale in January 2025, is expected to continue to unwind over the coming
years reflective of the Group's strategic plan to release value from the site.
Pipeline
The long-term pipeline of opportunities within Hargreaves Land represents a
key indicator of future value creation potential within a low capital business
model, which the business is transitioning to. The first six months of the
year has seen growth in the aggregate Gross Development Pipeline ("GDV")
across residential and commercial opportunities to £1.2bn (31 May 2024:
£1.1bn). The schemes represent long term opportunities and are expected to
deliver a minimum of 15% margin on GDV.
Renewables
The initial tranche of seven renewable energy land assets have been taken to
market. They represent two operational wind farms and five access agreements
in total generating 466MW of green energy. The independent valuation attached
to these assets at 31 May 2024 was £12.6m to £13.5m out of the £27m to
£29m total valuation of the portfolio. Interest received to date has been
positive and we are hopeful of completing a transaction within 2025.
One notable development within the portfolio is that the third party
developing a 500MW Battery Energy Storage Scheme at Broken Cross has achieved
financial close. This is a critical step in bringing the scheme forward to
construction as well as a key step in the future realisation of the asset for
Hargreaves.
In addition to the 11 schemes totalling 1,398MW independently valued at
between £27m and £29m, the pipeline has a further seven schemes generating
1,066MW of energy. These opportunities are either in pre-planning phase or not
yet under contract and as such have not received an independent valuation.
HRMS
HRMS recorded a post-tax profit of £0.1m (2023: loss of £1.9m) for the six
months ended 30 November 2024. This represents a significant turnaround
compared to the equivalent period in 2023.
The trading side of HRMS has continued to weather the German economic
recession and maintained good margin despite a reduction in revenue. This is
driven by a reduction in the commodity pricing of solid fuels and other
minerals as volumes have remained consistent with the comparative period.
The turnaround in performance within the joint venture is driven by DK, which
has seen a number of factors assist in its improvement. The most meaningful
improvement has been the pricing of solid fuels, including coke, which was
held at high levels during 2023/24. The fuel required for the current
financial year has been secured at a substantial cost reduction. At present
all of the fuel required for the year ending 31 May 2025 has been contracted.
Additionally, EU sanctions on Russian pig iron have started to have an impact
with an improvement in sales pricing for pig iron. This has been tempered by
the global scrap metal market which has seen scrap prices at low levels in the
first half of the year.
Furthermore, the contracts for gate fees on incoming recycling materials were
renegotiated and this improvement is also represented within the performance.
Counter to the improvements, zinc pricing has been lower than observed in the
prior year which has slightly dampened what has been a very good turnaround in
result.
The Group's overall exposure to the HRMS joint venture continues to reduce and
on 30 November 2024 stood at £62.7m (31 May 2024: £70.2m, 30 November 2023:
£75.3m). This is reflective of the increased cash receipts the Group is now
getting from the joint venture in the form of regular cash dividends.
Summary
The Services business' low capital model continues to deliver high-quality,
recurring revenue with net margin in the first half maintained at over 7%.
With 90% of revenue for the year already under contract and excellent
visibility on future schemes, the Services business can expect to deliver
improved profits over the coming years, underpinned by our highly experienced
and skilled workforce and track record of safe delivery.
The pipeline of both low capital land projects and renewable energy land
assets continues to grow within Hargreaves Land. Progress made on sales at
Blindwells demonstrates the plan to realise value from that asset over the
coming years. With the first tranche of renewable assets in the market for
sale, I am confident that we can realise meaningful value for shareholders in
the medium-term.
The improved result within HRMS is in line with our expectations at the start
of the year. This has been achieved against a backdrop of economic malaise
within Germany, and yet the joint venture has managed to return to
profitability and delivered material cash to the UK. I look forward to
continued improvement in the profitability of the investment in 2025.
I continue to be confident and optimistic about the value creation potential
within the Group and I firmly believe there are substantial opportunities to
optimise and realise further value for shareholders in the coming years.
Gordon Banham
Group Chief Executive
29 January 2025
Condensed Consolidated Statement of Profit and Loss and Other Comprehensive
Income
for the six months ended 30 November 2024
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 November 30 November 31 May
2024 2023 2024
Note £000 £000 £000
Revenue 125,343 110,171 211,146
Cost of sales (100,868) (88,943) (167,763)
Gross profit 24,475 21,228 43,383
Other operating income 311 - 6,404
Administrative expenses (18,714) (16,127) (33,920)
Operating profit 6,072 5,101 15,867
Finance income 775 818 2,078
Finance expense (1,519) (1,473) (2,802)
Share of (loss)/profit in joint ventures (net of tax) (31) (1,714) 1,533
Profit before tax 5,297 2,732 16,676
Taxation 5 (1,316) (1,035) (4,458)
Profit for the period 3,981 1,697 12,218
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension plans - - (12,377)
Tax recognised on items that will not be reclassified to profit or loss - - 3,094
Items that are or may be reclassified subsequently to profit or loss
Foreign exchange translation differences (1,285) 528 (569)
Share of other comprehensive income of joint ventures (net of tax) - - 167
Other comprehensive (expense)/income for the period, net of tax (1,285) 528 (9,685)
Total comprehensive income for the period 2,696 2,225 2,533
Profit/(loss) attributable to:
Equity holders of the company 3,985 1,706 12,278
Non-controlling interest (4) (9) (60)
Profit for the period 3,981 1,697 12,218
Total comprehensive income/(expense) for the period attributable to:
Equity holders of the company 2,700 2,234 2,593
Non-controlling interest (4) (9) (60)
Total comprehensive income for the period 2,696 2,225 2,533
GAAP measures
Basic earnings per share (pence) 7 12.23 5.20 37.78
Diluted earnings per share (pence) 7 12.04 5.11 37.00
Condensed Consolidated Balance Sheet
as at 30 November 2024
Unaudited Unaudited Audited
30 November 30 November 31 May
2024 2023 2024
Note £000 £000 £000
Non-current assets
Property, plant and equipment 9,566 10,822 9,415
Investment property 15,145 15,267 14,829
Right of use assets 42,392 34,157 40,675
Intangible assets including goodwill 5,952 5,589 6,048
Investments in joint ventures 9 54,283 73,226 61,988
Deferred tax assets 9,806 14,214 11,323
Trade receivables - - 4,000
Retirement benefit surplus 1,259 9,111 1,259
138,403 162,386 149,537
Current assets
Inventories 54,051 44,192 49,325
Trade and other receivables 91,882 82,474 70,905
Contract assets 8,603 5,058 6,425
Cash and cash equivalents 15,744 18,718 22,700
170,280 150,442 149,355
Total assets 308,683 312,828 298,892
Non-current liabilities
Other Interest-bearing loans and borrowings (11,585) (13,874) (15,884)
Retirement benefit obligations (2,921) (2,839) (2,979)
Provisions (16,796) (3,829) (15,290)
Deferred tax liabilities - (3,853) -
(31,302) (24,395) (34,153)
Current liabilities
Other Interest-bearing loans and borrowings (22,624) (14,913) (18,270)
Trade and other payables (60,860) (64,545) (48,383)
Provisions (4,788) (11,268) (4,524)
Income tax liability (170) (212) (1,466)
(88,442) (90,938) (72,643)
Total liabilities (119,744) (115,333) (106,796)
Net assets 188,939 197,495 192,096
Unaudited Unaudited Audited
30 November 30 November 31 May
2024 2023 2024
Note £000 £000 £000
Equity attributable to equity holders of the parent
Share capital 3,314 3,314 3,314
Share premium 74,004 73,982 73,990
Other reserves 211 211 211
Translation reserve (2,543) (161) (1,258)
Merger reserve 1,022 1,022 1,022
Hedging reserve 318 318 318
Capital redemption reserve 1,530 1,530 1,530
Share-based payment reserve 2,789 2,540 2,730
Retained earnings 108,569 114,959 110,510
189,214 197,715 192,367
Non-controlling interest (275) (220) (271)
Total equity 188,939 197,495 192,096
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 November 2023
Share capital Share premium Translation reserve Hedging reserve Other reserves Capital redemption reserve Merger reserve Share-based payment reserve Retained earnings Total parent equity Non-controlling interest Total Equity
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Balance at 1 June 2023 3,314 73,972 (689) 318 211 1,530 1,022 2,388 119,136 (211)
201,202 200,991
Total comprehensive income for the period
Profit for the period - - - - - - - - 1,706 1,706 (9) 1,697
Other comprehensive income
Foreign exchange translation differences - - 528 - - - - - - 528 - 528
Total other comprehensive income - - 528 - - - - - - 528 - 528
Total comprehensive income for the period - - 528 - - - - - 1,706 2,234 (9) 2,225
Transactions with owners recorded directly in equity
Issue of shares - 10 10 - 10
Equity settled share-based payment transactions - - - - - - - 152 - 152 - 152
Dividends paid - - - - - - - - (5,883) (5,883) - (5,883)
Total contributions by and distributions to owners - 10 - - - - - 152 (5,883) (5,721) - (5,721)
Balance at 30 November 2023 3,314 73,982 (161) 318 211 1,530 1,022 2,540 114,959 (220)
197,715 197,495
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 November 2024
Share capital Share premium Translation reserve Hedging reserve Other reserves Capital redemption reserve Merger reserve Share-based payment reserve Retained earnings Total parent equity Non-controlling interest Total Equity
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Balance at 1 June 2024 3,314 73,990 (1,258) 318 211 1,530 1,022 2,730 110,510 (271)
192,367 192,096
Total comprehensive income for the period
Profit for the period - - - - - - - - 3,985 3,985 (4) 3,981
Other comprehensive income/(expense)
Foreign exchange translation differences - - (1,285) - - - - - - (1,285) - (1,285)
Total other comprehensive income - - (1,285) - - - - - - (1,285) - (1,285)
Total comprehensive income for the period - - (1,285) - - - - - 3,985 2,700 (4) 2,696
Transactions with owners recorded directly in equity
Issue of shares - 14 14 - 14
Equity settled share-based payment transactions - - - - - - - 59 - 59 - 59
Dividends paid - - - - - - - - (5,926) (5,926) - (5,926)
Total contributions by and distributions to owners - 14 - - - - - 59 (5,926) (5,853) - (5,853)
Balance at 30 November 2024 3,314 74,004 (2,543) 318 211 1,530 1,022 2,789 108,569 189,214 (275) 188,939
Condensed Consolidated Cash Flow Statement
for the six months ended 30 November 2024
Unaudited Unaudited
six months six months Audited
ended ended year ended
30 November 30 November 31 May
2024 2023 2024
£000 £000 £000
Cash flows from operating activities
Profit for the period 3,981 1,697 12,218
Adjustments for:
Depreciation and impairment of property, plant and equipment and right-of-use 9,051 7,128 16,212
assets
Net finance expense 744 655 724
Amortisation/impairment of goodwill 96 96 191
Share of loss/(profit) in joint ventures (net of tax) 31 1,714 (1,533)
Profit on sale of property, plant and equipment, investment property and (311) - (6,204)
right-of-use assets
Equity settled share-based payment expense 59 152 342
Income tax expense 1,316 1,035 4,458
Contributions to defined benefit pension schemes (31) (589) (5,427)
Retranslation of foreign denominated assets and liabilities (89) (122) (217)
14,847 11,766 20,764
Change in inventories (4,726) (4,890) (10,024)
Change in trade and other receivables (19,001) (10,889) 1,777
Change in trade and other payables 13,157 17,156 5,358
Change in provisions and employee benefits 1,770 509 5,226
6,047 13,652 23,101
Interest received 775 818 2,078
Interest paid (1,546) (1,585) (2,548)
Income tax paid (1,876) 2 (37)
Net cash inflow from operating activities 3,400 12,887 22,594
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 451 110 219
Proceeds from sale of investment property - - 7,879
Proceeds from sale of ROU assets 17 12 115
Acquisition of property, plant and equipment (1,087) (1,466) (2,254)
Acquisition of investment property (317) (770) (1,040)
Acquisition of right of use assets (17) - -
Acquisition of subsidiaries - - (500)
Dividends received from joint ventures 6,267 - 7,800
Drawdown of loans due from joint ventures - - (683)
Loan to pension scheme in relation to buy in - - (4,000)
Net cash inflow/(outflow) from investing activities 5,314 (2,114) 7,536
Cash flows from financing activities
Principal elements of lease payments (9,841) (8,027) (17,425)
Dividends paid (5,926) (5,883) (11,788)
Net cash outflow from financing activities (15,767) (13,910) (29,213)
Net (decrease)/increase in cash and cash equivalents (7,053) (3,137) 917
Cash and cash equivalents at the start of the period 22,700 21,859 21,859
Effect of exchange rate fluctuations on cash held 97 (4) (76)
Cash and cash equivalents at the end of the period 15,744 18,718 22,700
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
1. Basis of preparation
The condensed consolidated interim financial information set out in this
statement for the six months ended 30 November 2024 and the comparative
figures for the six months ended 30 November 2023 is unaudited. This financial
information does not constitute statutory accounts as defined in Section 435
of the Companies Act 2006. It does not comply with IAS 34 'Interim Financial
Reporting', as is permissible under the rules of the AIM Market of the London
Stock Exchange.
The condensed consolidated interim financial information, which is neither
audited nor reviewed, has been prepared in accordance with the measurement and
recognition criteria of UK-adopted international accounting standards. This
statement does not include all the information required for the annual
financial statements and should be read in conjunction with the financial
statements of the Group as at and for the year ended 31 May 2024.
There are no new IFRS which apply to the condensed consolidated interim
financial information.
2. Accounting policies
The accounting policies applied in preparing the condensed consolidated
interim financial information are the same as those applied in the preparation
of the annual financial statements for the year ended 31 May 2024, as
described in those financial statements.
3. Status of financial information
The comparative figures for the financial year ended 31 May 2024 are not the
Group's statutory consolidated financial statements for that financial year.
The statutory financial accounts for the financial year ended 31 May 2024 have
been reported on by the company's auditor and delivered to the Registrar of
Companies. The report of the auditor was (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.
4. Principal risks and uncertainties
The principal risks and uncertainties affecting the Group are unchanged from
those set out in the Group's accounts for the year ended 31 May 2024. The
Directors have reviewed financial forecasts and are satisfied that the Group
has adequate resources to continue in operational existence for the
foreseeable future. Accordingly, the Group continues to adopt the going
concern basis in preparing the condensed consolidated interim financial
information.
5. Taxation
UK income tax for the period is charged at 25% (2023: 25%). The effective tax
rate, after removing the impact of joint ventures is 24.7% (2023: 23.3%),
representing an estimate of the annual effective rate for the full year to 31
May 2025. This rate is lower than the standard rate of UK income tax due to
the impact of overseas tax which applies a lower tax rate.
6. Dividends
The final dividend of 18.0p per ordinary share, proposed in the 2024 Annual
Report and Accounts and approved by the shareholders at the Annual General
Meeting on 30 October 2024, was paid on 4 November 2024.
The directors have proposed an interim dividend of 18.5p per share (2023:
18.0p) which will be paid on 8 April 2025 to shareholders on the register at
the close of business on 21 March 2025. This will be paid out of the Company's
available distributable reserves. In accordance with IAS 1, dividends are
recorded only when paid and are shown as a movement in equity rather than as a
charge in the income statement.
7. Earnings per share
Six months ended 30 November 2024 Six months ended 30 November 2023 Year ended 31 May 2024
Unaudited Unaudited Audited
Earnings EPS DEPS Earnings EPS DEPS Earnings EPS DEPS
£000 Pence Pence £000 Pence Pence £000 Pence Pence
Basic earnings per share 3,981 12.23 12.04 1,697 5.20 5.11 12,218 37.78 37.00
Weighted average number of shares (000's) 32,554 33,069 32,659 33,217 32,345 33,021
The calculation of diluted earnings per share is based on the profit for the
period attributable to equity holders of the Company and on the weighted
average number of ordinary shares in issue in the period adjusted for the
dilutive effect of the share options outstanding. The effect on the weighted
average number of shares is 515,000 (2023: 558,000), the effect on basic
earnings per ordinary share is 0.19p (2023: 0.0p).
8. Segmental information
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker has been identified as the Board of Directors since they are
responsible for strategic decisions. HRMS represents the Groups share of its
German joint venture, which includes Hargreaves Services Europe Limited which
is the parent company of HRMS and DK.
Services Hargreaves Land Unallocated HRMS Total
Unaudited Unaudited Unaudited Unaudited Unaudited
30 November 30 November 30 November 30 November 30 November
2024 2024 2024 2024 2024
£000 £000 £000 £000 £000
Revenue
Total revenue 122,578 4,179 - - 126,757
Intra-segment revenue (1,414) - - (1,414)
Revenue from external customers 121,164 4,179 - - 125,343
Operating profit/(loss) 10,104 (1,320) (2,712) - 6,072
Share of (loss)/profit in joint ventures (net of tax) - (145) - 114 (31)
Net finance income (1,315) 77 494 - (744)
Profit/(loss) before tax 8,789 (1,388) (2,218) 114 5,297
Services Hargreaves Land Unallocated HRMS Total
Unaudited Unaudited Unaudited Unaudited Unaudited
30 November 30 November 30 November 30 November 30 November
2023 2023 2023 2023 2023
£000 £000 £000 £000 £000
Revenue
Total revenue 110,327 673 - - 111,000
Intra-segment revenue (829) - - (829)
Revenue from external customers 109,498 673 - - 110,171
Operating profit/(loss) 8,913 (1,284) (2,528) - 5,101
Share of profit/(loss) in joint ventures (net of tax) - 173 - (1,887) (1,714)
Net finance expense (1,092) 108 329 - (655)
Profit/(loss) before tax 7,821 (1,003) (2,199) (1,887) 2,732
9. Investments in joint ventures
Tower Regeneration Limited Hargreaves Services Europe Limited Waystone Hargreaves LLP Interests in immaterial joint ventures Total
£000 £000 £000 £000 £000
At 1 June 2024 - 56,046 6,001 (59) 61,988
Group's share of profit/(loss) in joint ventures (net of tax) - 114 (145) - (31)
Dividend - (6,267) - - (6,267)
Exchange differences - (1,370) - (37) (1,407)
At 30 November 2024 - 48,523 5,856 (96) 54,283
10. Condensed consolidated interim financial
information
The condensed consolidated interim financial information was approved by the
Board of Directors on 29 January 2025. Copies of this interim statement will
be sent to all shareholders and will be available to the public from the
Group's registered office.
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