REG - Hargreaves Servs PLC - Retirement Benefit Obligation Buy In update

Hargreaves ServicesAnnouncement

04/03/2024 07:00

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RNS Number : 3365F  Hargreaves Services PLC  04 March 2024

Hargreaves Services plc

("Hargreaves" or the "Group")

 

Retirement Benefit Obligation Buy In update

 

Hargreaves Services plc (AIM: HSP), a diversified group delivering services to
the industrial and property sectors, announces that is has completed the buy
in (the "Buy In") of the Group's two defined benefit pensions schemes (the
"Schemes").

 

The Board is pleased to announce that the Schemes completed the Buy In
transaction with Just Group plc ("Just") on 29 February 2024. The shortfall in
the Schemes assets which required funding was £3.7m. After taking into
account fees, the impact of GMP equalisation legislation and other potential
data cleansing adjustments this could rise to a maximum of £6.6m. This is
lower than the previously estimated maximum cost of £9m.

 

This process means that the member benefits to be paid out upon their
retirement are now covered by an insurance policy provided by Just. The Group
has made an initial cash payment of £7.7m out of existing cash reserves in
order to secure this position. This initial cash payment reflects the
shortfall on the Schemes assets of £3.7m, noted above, plus an additional
£4.0m in the form of a loan, as some of the property assets held in the
Schemes are illiquid. This loan allows the Schemes to purchase the requisite
insurance policy. The loan, which will bear interest at a commercial rate,
will be repaid to the Group upon the subsequent sale of the underlying assets
by the trustees.

 

The Group has been paying £1.8m in annual deficit reduction contribution
payments to the Schemes. The Board announced in the Annual Report and Accounts
for the year ended 31 May 2023 the intention to ultimately buy out the
Schemes' obligation. The Buy In has removed the need for any further deficit
reduction contributions from the Group. However, the obligation (albeit now
fully insured) remains with the Group until the buy-out is completed. The
buy-out will likely take between 12 to 24 months to complete during which time
Just will be undertaking routine data validation checks on the Schemes.

 

Change of dividend payment date

The interim dividend of 18p which was announced as being payable on the 11
April 2024 in the Interim Statement, will now be paid on the 4 April 2024 to
shareholders on the register on 22 March 2024.

 

Roger McDowell, Non-Executive Chair of Hargreaves, said: "The Buy In
represents a significant step forward in the Group's stated strategy of
realising value for shareholders. Not only does it further simplify the
Group's Balance Sheet, but it also releases annual free cash flow, which will
support the sustainability of the recently announced 36p annual dividend."

 

 

For further details:

 

 For further details:
 Hargreaves Services plc                                               www.hsgplc.co.uk (http://www.hsgplc.co.uk)
 Gordon Banham, Chief Executive Officer                                Tel: 0191 373 4485
 Stephen Craigen, Group Financial Officer

 Walbrook PR (Financial PR & IR)         Tel: 020 7933 8780 or hargreavesservices@walbrookpr.com
                                         (mailto:hargreavesservices@walbrookpr.com)
 Paul McManus/Louis Ashe-Jepson/         Mob: 07980 541 893/07747 515 393
 Charlotte Edgar     07884 664 686

 Singer Capital Markets (Nomad and                                     Tel: 020 7496 3000

 Corporate Broker)
 Sandy Fraser/Phil Davies/Sam Butcher

 

 

About Hargreaves Services plc (www.hsgplc.co.uk (http://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.

 

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