REG - Hargreaves Servs PLC - Preliminary results
09/08/2023 07:00
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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 £27.2m
and £28.9m. 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 £6.6m. 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 £211.5m £177.9m
Underlying Profit Before Tax ("UPBT")** £27.3m £30.4m*
Profit from joint ventures (net of tax) £16.3m £25.9m*
Share of Profit Before Tax from continuing operations £27.2m £32.2m*
EBITDA** £21.8m £13.6m
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 £21.9m £13.8m
Net Assets £201.0m +11.8% £179.8m*
Net Assets per Share** 618p 553p*
HIGHLIGHTS
· Revenue increased 18.9% to £211.5m (2022: £177.9m) due to organic
growth in Services
· UPBT above expectations at £27.3m (2022: £30.4m), 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 £12.3m (2022: £7.6m)
· Hargreaves Land UPBT increased 85.7% to £3.9m (2022: £2.1m)
· 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 £966,000 and a decrease in the share of profit in joint
ventures (net of tax) of £2,321,000 which has subsequently decreased the
closing investment in joint ventures by £3,287,000. 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.
*** 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.
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 (mailto: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
(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 Tel: 0191 373 4485
Stephen Craigen, 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.
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 £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. 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 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 £1.9m 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 £15m 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 £27.3m (2022: £30.4m*), £3.1m 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 £25.0m to £15.5m*, a
reduction of £9.5m, 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 £21.8m (2022: £13.6m), driven by improved
performance within Services. Profit before Tax from Continuing Operations was
£27.2m (2022: £32.2m*). 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 £21.9m (2022: £13.8m). The
increase in cash compared with the prior year is predominantly due to the
repayment of a £15m 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 £36.4m (2022:
£18.4m). 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 £966,000 and a decrease in the share of profit in joint
ventures (net of tax) of £2,321,000 which has subsequently decreased the
closing investment in joint ventures by £3,287,000. 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
£'m Services Hargreaves Land HRMS Unallocated Total
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 £966,000 and a decrease in the share of profit in joint
ventures (net of tax) of £2,321,000 which has subsequently decreased the
closing investment in joint ventures by £3,287,000. 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 £200.9m (2022:
£162.8m), due in the most part to the increase in activity on the HS2
contract which accounted for £20.5m 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 £12.3m (2022:
£7.6m), an increase of over 60% on the prior year. This included a
non-recurring profit of £3.2m from the disposal of certain plant and
equipment. The remaining growth of £1.5m 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 £54.1m in the year (2022: £33.6m), 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, the 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 £1m 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 £10.6m (2022: £15.1m) and a Profit
before Tax of £3.9m (2022: £2.1m) 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 £18.5m. 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 £190m, 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 sites Residential plots Square Footage Estimated GDV
(Commercial)
Residential (planning allocated) 6 5,700 n/a £200m
Residential (planning promotion) 7 2,850 n/a £120m
Commercial (planning allocated) 6 n/a 5,700,000 £620m
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 £27m 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 £15.5m (2022: £25.0m*)
which is a reduction of 38%. The corresponding contribution for the year ended
31 May 2021 was £13.6m, 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 £15m 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
Continuing operations Note 2023 Restated *
£000 2022
£000
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 - (8)
or loss
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 £966,000 and a decrease in the share of profit in joint
ventures (net of tax) of £2,321,000 which has subsequently decreased the
closing investment in joint ventures by £3,287,000. 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
2023
£000 Restated*
2022
£000
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 £966,000 and a decrease in the share of profit in joint
ventures (net of tax) of £2,321,000 which has subsequently decreased the
closing investment in joint ventures by £3,287,000. Please refer to Note 7.
:
Group Statement of Changes in Equity
for year ended 31 May 2023
Group Share capital £000 Share premium £000 Translation reserve Hedging reserve £000 Other reserves £000 Capital redemption reserve Merger reserve £000 Share- based payment reserve £000 Restated* Retained earnings £000 Restated* Non-controlling interest Restated* Total equity £000
£000 £000 Total Parent equity £000
£000
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 £966,000 and a decrease in the share of profit in joint
ventures (net of tax) of £2,321,000 which has subsequently decreased the
closing investment in joint ventures by £3,287,000. Please refer to Note 7.
Group Cash Flow Statement
for year ended 31 May 2023
Group
2023
£000 Restated*
2022
£000
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 14,570 8,666
assets
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 (4,718) (1,298)
right-of-use assets
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 £966,000 and a decrease in the share of profit in joint
ventures (net of tax) of £2,321,000 which has subsequently decreased the
closing investment in joint ventures by £3,287,000. 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 £966,000 and a decrease in the share of profit in joint
ventures (net of tax) of £2,321,000 which has subsequently decreased the
closing investment in joint ventures by £3,287,000. Please refer to Note 7.
Going Concern
The Group's financing is not dependent on bank borrowings, however the group
has access to a £12m 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:
Services Hargreaves Unallocated Total
2023 Land 2023 HRMS 2023
£000 2023 £000 2023 £000
£000 £000
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 £50.3m include cash and cash equivalents of
£21.9m, net deferred tax asset of £11.3m, amounts due from joint ventures of
£11.2m, amounts due to joint ventures of £4.1m, a net pension asset of
£5.6m and other corporate items (£4.4m asset).
Services Hargreaves Unallocated Restated* Restated*
2022 Land 2022 HRMS Total
£000 2022 £000 2022 2022
£000 £000 £000
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 £60.6m include cash and cash equivalents of
£13.8m, deferred tax asset of £11.1m, amounts due from Jointly Controlled
Entities of £29.3m, a net pension asset of £7.7m, deferred tax liability of
£1.9m and other corporate items (£0.6m 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 £966,000 and a decrease in the share of profit in joint
ventures (net of tax) of £2,321,000 which has subsequently decreased the
closing investment in joint ventures by £3,287,000. 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
£000 £000
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 £1,754,000 was released as the potential for payment had
lapsed due to time.
4 Taxation
Recognised in the Income Statement
2023 2022
£000 £000
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 (771) (347)
investees)
The deferred tax adjustment in respect of prior years of £3,364,000 (2022:
£2,097,000) relates to losses assumed to be utilised in the previous year,
which were ultimately retained.
Recognised in Other Comprehensive Income
2023 2022
£000 £000
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
2023 Restated*
£000 2022
£000
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 £966,000 and a decrease in the share of profit in joint
ventures (net of tax) of £2,321,000 which has subsequently decreased the
closing investment in joint ventures by £3,287,000. 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
£2,000,000 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 £2m which
was received in the year ended 31 May 2022. There are no remaining balances
relating to this matter.
2023 2022
£000 £000
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.
2023 Restated*
2022
Earnings EPS DEPS Earnings EPS DEPS
£000 Pence Pence £000 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 (140) (0.43) (0.42) 1,421 4.39 4.26
tax)
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 £966,000 and a decrease in the share of profit in joint
ventures (net of tax) of £2,321,000 which has subsequently decreased the
closing investment in joint ventures by £3,287,000. 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 £966,000 and a decrease in the share of profit in joint
ventures (net of tax) of £2,321,000 which has subsequently decreased the
closing investment in joint ventures by £3,287,000.
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 1 June 2021 Opening Balance Decrease 1 June 2021 (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 31 May 2022 Opening Balance Decrease Decrease in the Period 31 May 2022 (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 31 May 2022 Decrease in the Period 31 May 2022 (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)
Retained Earnings Total Parent Equity Non-Controlling 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 tax ("UPBT") Represents the profit before tax prior to exceptional 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
£000 £000
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 per share Profit attributable to the equity holders of the 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
£'000 £'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 share Represents the Net Asset value of the Group divided by the number of shares in
issue less those shares held in treasury. Calculated as follows:
2022
2023
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* £200,991,000 £179,849,000
Net Asset Value per share* £6.18 £5.53
Net Asset Value per share
Represents the Net Asset value of the Group divided 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*
£200,991,000
£179,849,000
Net Asset Value per share*
£6.18
£5.53
* 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 £966,000 and a decrease in the share of profit in joint
ventures (net of tax) of £2,321,000 which has subsequently decreased the
closing investment in joint ventures by £3,287,000. 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
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