Preliminary Results Year ended 31 May 2019 1 Preliminary Results – Year ended 31 May 2015
Headlines Underlying Underlying Dividend Net Debt Operating Profit EPS Per Share £10.0m 15.3p 7.2p £17.9m (FY18: 14.9p) (FY18: £9.4m) (FY18: 7.2p) (FY18: £30.8m) Headlines Revenue increas eased ed by 1.9% % to £302.6m • Underlyi ying Operating ng Profit it* increas ased by 6% and margin in improv oved ed to 3.3% • Underlyi ying EPS increas ased by 2.7% • Exceptional ional provision isions s of £8m for r Wolf and £8m for British sh Steel insolven lvencie ies • Dispos osal of Brockwel ell l Energy successfu sfull lly closed ed with a £5m gain • Conditional ional sale e of first st two developme ment plots s at Blindwells ls exchanged, worth over £10m • *Underlying Operating Profit is a key indicator by which the Board monitors financial performance and is defined by the Board as Operating Profit from continuing operations prior to exceptional items, amortisation and impairment of intangible assets and includes the Group’s share of the operating profit of its German associate 2 Preliminary Results – Year ended 31 May 2019
Major Events Brockwell – The Group success ssfu full lly y sold Brockwel ell l Energy Limited, ed, resultin ing in a profit it on disposa sal l of £5m. The gross proceeds s of £21.7m m were applied to reduce short term debt. Potential ial £2m further er cash and profit it followin lowing finan ancial cial close at Westfi fiel eld by FY21. The Group expects to benefit in the future from m rental l income mes s from om the Westfie ield ld EfW plant and windfar arms ms to be developed by Brockwel ell l on land assets s owned by Hargreav eaves. es. Wolf Minerals – One of the Group’s customers ceased trading in October, resulting in £5m Debt and WIP write off f and a further er £3m of redundancy, demobili lisa sation ion and other plant relat ated costs. s. Hargreave aves s is well position ioned ed to secure any restor oration ion or other work which may arise se at the site in due course se. British Steel – Follow owin ing the decision ion to place British ish Steel into liquidat ation ion, the Group has made an £8m provision sion again inst st WIP , debtors, s, plant and employment liabil ilitie ities, s, £1m lower than initial ially ly estimat ated. The Group is continuin ing to work k for r the Offic icia ial l Receive ver r while the future of British ish Steel is determin ined. 3 Preliminary Results – Year ended 31 May 2019
Business overview Gordon Banham, Chief Executive Officer
Distribution and Services – P&D UK Production and Distribution business stable Represents coal production and distribution, including HRMS Estima mated d cash inflow ow from evolution on of • mining g strategy gy: (German associate). £20m FY19 Headlines Efficient mining operations throughout FY19; • Transport operations profitable due to focus on waste sector. • Outlook UK mining strategy continues to evolve; • This will generate substantial cash inflows in FY21 and FY22 resulting from the unwind of the coal • stock and the disposal of surplus assets. 5 Preliminary Results – Year ended 31 May 2019
Distribution and Services – P&D (HRMS) HRMS trading down due to lower industrial activity in Germany FY19 Headlines Group’s share of UOP from HRMS was £3.3m (2018: £6.5m), reflecting reduced levels of German • industrial activity. Outlook UK Balance Sheet Exposure to HRMS £m Carbon Pulverisation Plant – Build is nearing • 35.0 completion, trial production in autumn 2019, 30.0 expected to breakeven in first year of operations, 25.0 with sustainable growth expected in future years; 20.0 Plant production capacity of 400kt, orders in place 15.0 • for 70kt per annum, with trials with other 10.0 customers in the steel and cement industries; 5.0 - HRMS working to increase visibility of future FY17 FY18 FY19 FY20 FY21 FY22 • earnings without committing further substantial Actual Expected capital. 6 Preliminary Results – Year ended 31 May 2019
Distribution and Services – Industrial Services Industrial Services - UK HIS trading is focused on materials handling in industrial complexes; • HIS to focus on expanding range of mechanical and electrical engineering services. • Outlook UK growth impacted by the British Steel insolvency, reducing revenue by £1m per month; • UK outlook, excluding British Steel, remains stable with continued focus on contract selectivity. • Industrial Services – Hong Kong 34% growth in revenue in FY19 with broader range of engineering services; • Successful award of 5 year China Light and Power contract, securing our position in the Hong Kong • market. Outlook Hong Kong business focused on organic growth and customer diversification. • 7 Preliminary Results – Year ended 31 May 2019
Distribution and Services – Specialist Earthworks Focus on Major Infrastructure projects FY19 Headlines Legacy contracts now completed on site, final account discussions ongoing, £9.2m to recover. • Outlook Business is now focused only on Major Earthmoving projects, such as the recent works on the A14; • A leading ECI consultancy adviser on major earthworks schemes; • Secured supply position to major consortium on HS2; • HS2 enabling works commenced on site in early June; • Leading innovative solutions including the first driverless ADT. • 8 Preliminary Results – Year ended 31 May 2019
Legacy Legacy asset profile £m 70.0 60.1 60.0 50.0 40.0 34.5 28.6 30.0 20.0 12.8 10.0 - May 16 May 17 May 18 May 19 Remaining assets relate solely to the operations at T ower Colliery; • Further realisations expected in FY20. • 9 Preliminary Results – Year ended 31 May 2019
Hargreaves Land David Anderson, Group Property Director
Hargreaves Land Property identified as area for investment to deliver future growth; • Goal is to be a property developer not a long term owner of investment properties; • Focus on projects where limited speculative investment required and exits secured in advance; • Current target areas continue to be the North of England and Scotland where Hargreaves Land is • already established; Aim to maintain broad multi-sector exposure across residential, industrial/logistics and specialist • retail, reflecting current market demand, through joint ventures and partnerships as appropriate; Further sales of non-strategic land, with £5m targeted for FY20; • Typically, returns from investment in property development can take three years. • Commercial and indu dustri rial space with Reside dential plots s with planning conse sent: Value of non-st stra rategi gic property disp spos osals s planning g conse sent: in year: 4,700 £11.8m 3.5 million sq ft 11 Preliminary Results – Year ended 31 May 2019
Hargreaves Land - Blindwells Blindwells Conditional sale contracts valued • at over £10m exchanged with Bellway and Cruden; Both sales forecast to complete in • Cruden en Homes FY20; Second phase of residential plot • sales, totalling 13 acres, to be marketed in Q4 2019 with sales expected to complete in FY21; Blindwells forecast to continue to • be a significant revenue generator over the next 10 years. Bellway lway Target Sept 19 Reside denti tial plots ts with th planning conse sent: t: Release lease 1,600 12 Preliminary Results – Year ended 31 May 2019
Hargreaves Land - Hatfield Hatfield Post year end, Hargreaves entered into a 50:50 • JV with regional developer Waystone on a 600 acre mixed use development in Doncaster; Planning permission granted for 3,100 homes, • 1.5m sq ft of industrial, logistics and commercial development; Direct access to the national motorway network • via M18/M180 and adjacent established passenger rail station; Development of SCR funded £12m access road • commenced and due to complete in Q4 2020; Initial sales of residential plot sales targeted for • completion in 2021. 13 Preliminary Results – Year ended 31 May 2019
Hargreaves Land - Westfield Westfield Unrestored former open cast mine with planning • permission for 1 million sq ft of industrial and warehousing space on 100 acres; Brockwell Energy working to the financial close of • the EfW plant at Westfield targeted for FY21; Successful financial close will trigger: • £2m of contingent consideration receivable • from Brockwell sale; Signing of a long term lease at a • commercial rate with annual RPI linked Brockwel well l EfW rental uplifts; EfW to provide low cost heat and power to rest • of site, encouraging other occupiers. 14 Preliminary Results – Year ended 31 May 2019
• Financial Results John Samuel, Group Finance Director
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