REG - Hargreaves Servs PLC - Valuation and Realisation Plan for Renewables

Hargreaves ServicesAnnouncement

25/07/2023 07:00

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RNS Number : 0173H  Hargreaves Services PLC  25 July 2023

Hargreaves Services plc

("Hargreaves", the "Company", or the "Group")

 

Valuation and Realisation Plan for Renewable Energy Land Assets

 

Hargreaves Services plc (AIM: HSP), a diversified group delivering services to
the industrial and property sectors, announces significant progress regarding
its renewable energy land assets.

 

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 including identifying opportunities for
renewable energy assets to be constructed on or accessed from some of the
Group's land which has limited alternative development potential. The Board
can now announce that it has identified clear opportunities for value
realisation, as set out below:

 

Renewable 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 farm 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 assets by Jones Lang LaSalle Limited. This review has placed
a Market Value Today* in the range of between £21.6m and £23.1m on these
assets as at 30 June 2023 with a Market Value at Commissioning of Development
("COD")* expectation in the range of £27.2m to £28.9m 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 going
forward, but does not intend to revalue its investment property in its annual
statements.

 

These investment property assets are held on the Balance Sheet at an historic
cost of £6.6m, 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, as well as the Westfield EfW, 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.

 

Commenting on the Valuation and Realisation Plan, Acting Group Chair Nigel
Halkes said: "While originally unsuitable land for commercial or residential
projects, Hargreaves has identified exciting opportunities for renewable
energy projects generating a long-term index linked rental income stream for
the Group. With a roadmap to delivery of these projects now in sight, our
Valuation and Realisation Plan is a clear demonstration of the Group's
efficient strategic planning and commitment to creating, delivering and
realising value for our shareholders."

 

* 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 are 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.

 

For further details:

 

 Hargreaves Services                                                www.hsgplc.co.uk (http://www.hsgplc.co.uk)

 Gordon Banham, Chief Executive                                     Tel: 0191 373 4485

 John Samuel, Group Finance Director

 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 Corporate Broker)                Tel: 020 7496 3000

 Sandy Fraser / Justin McKeegan

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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