Hargreaves Services plc · LSE:HSP
Hargreaves Services — FY2024 Earnings Presentation
28 slides from Hargreaves Services's earnings presentation, Aug 6, 2024
Slide 1: Hargreaves Services plc – Year ended 31 May 2024
Hargreaves Services plc Year ended 31 May 2024 Tuesday 6th August 2024
Slide 2: Strategic Value Proposition
Strategic Value Proposition Gordon Banham Chief Executive 2
Slide 3: Strategic Overview
Strategic Overview • Organic growth to support long term sustainable dividend Services • Focus on contract wins in areas of core competence • Realisation of renewable assets Land • Reduce capital employed from c£80m to c£20m • Maximise cash repatriation HRMS • DK operational turn around Preliminary
Slide 4: FY24 Results Overview
FY24 Results Overview Services • Significant wins grow term and framework contracts to 65+, including: Underlying Profit • Five-year framework for materials handling services for Yorkshire Water. before tax • Preparatory works on Sizewell C Nuclear Power Station. • Three-year framework for transport
Slide 5: Financial Review
Financial Review Stephen Craigen Chief Financial Officer
Slide 6: Financial Review – Income Statement
Financial Review – Income Statement Year ended 31 May 2024 2023 Margin £m Margin £m Services – Substantial margin Revenue – Services 204.1 200.9 +1.6% improvement due to improved plant utilisation rates in earthmoving Revenue – Hargreaves Land 7.0 10.6 -34.0% activities Group Revenue 211.1 211.5 -0.
Slide 7: Financial Review – Balance Sheet
Financial Review – Balance Sheet Including £44.6m for Renewables: £7.4m Blindwells Other: £8.5m 31 May 24 (£’m) Services Land HRMS Unallocated May 24 May 23 Tangible FA’s (incl. ROU assets) 48.6 15.9 - 0.4 64.9 64.8 Goodwill 6.0 - - - 6.0 5.7 Investments in JCEs - 6.0 56.0 - 62.0 74.3 Inventory 1.2
Slide 8: Valuation Considerations
Valuation Considerations Services* Land HRMS (Joint Venture) REVENUE £208m BOOK VALUE (Cost) c£80m BOOK VALUE (Cost) £70m EBIT £12.3m RENEWABLE UPLIFT >£20m ANNUAL CASH RECEIPT £7m EBITDA £26.1m Timescale 5-7 years Timescale 5-7 years Equity Employed £8m-£15m Moving to a lower capital model, utilisi
Slide 9: Finance Review – Cash flow
Finance Review – Cash flow Receipt from HRMS £m Including £3.7m Buy-In T s l s n i n e en ia i n ei e ai ia ca a ec s a ae ec e a gc ib n e se in n en s i i e ea i nc i i e ns e Preliminary Results – Year ended 31 May 2024 9
Slide 10: Finance Review – HRMS Summary
Finance Review – HRMS Summary Consolidated financials Income statement £’m c May 24 May 23 Revenue decline Revenue – HRMS 222.8 378.3 Due to volume reduction (746kt vs 1,020kt) impacted by German recession as well as a reduction in margin per tonne due to commodity price Revenue - DK 115.9 132.6 red
Slide 11: Operating Review – Services
Operating Review - Services Gordon Banham Chief Executive
Slide 12: Services – Resilience and quality
Services – Resilience and quality Major Customers Frameworks Services – PBT Growth and term contracts profile (CAGR c30%) £’m 65+ 11.4 12 9.1 10 Secured orders as 31 May 24 7.6 8 c.70% PBT 5.1 6 Typical operating margins 4 5%+ 2 0 FY21 FY22 FY23 FY24 Revenue Credit Inflation resilience exposure resi
Slide 13: Services – Market focus
Services – Market focus Core services Industry Sector Specialist Bulk Materials Engineering and Handling Maintenance 23% Land 28% Bulk Logistics Remediation Energy Environmental UK Infrastructure Industrial Waste 12% Major Management Earthmoving 37% Solutions Quarrying and Aggregate Services Prelimi
Slide 14: Services – Growth opportunities
Services – Growth opportunities Major infrastructure projects HS2 – A further two years work at Sizewell C – enabling projects Lower Thames Crossing – preferred Tungsten West – strong contractual least remaining underway partner to position with TW Balfour Beaty awaiting funding Contract successes S
Slide 15: Operating Review – Hargreaves Land
Operating Review – Hargreaves Land David Anderson Group Property Director 15
Slide 16: Land – Key Events FY24
Hargreaves Land – Key Events FY24 Sale of Westfield EFW Ground Sale of Residential site Maltby, Continued Development of Lease Investment Rotherham Renewables Asset Portfolio • 50-year ground lease investment • Planning permission secured for • Renewables rental income rose to • Net consideration £7
Slide 17: Land – Multi Phase Development Projects
Hargreaves Land – Multi Phase Development Projects • Unity, Doncaster – 3,100 residential plots/ 2.4m sq ft commercial space • 79 acres sold to TJ Morris for regional logistics hub • 191,000 sq ft logistics unit forward sold and delivered • £1.2m of restaurant plot sales contracted with planning app
Slide 18: Land – Renewables portfolio
Hargreaves Land – Renewables portfolio Independent Status Book Value Valuation 2 Windfarms OPERATIONAL 216 MW 2 Access Agreements UNDER 1 Windfarm 230 MW CONSTRUCTION 2 Access Agreements £7.4m £27m-£29m 1 Windfarm PRE- 2 Access Agreements 952MW CONSTRUCTION 1 Battery Storage 11 Schemes 1,398MW 1 Acc
Slide 19: Land – Development pipeline & outlook
Hargreaves Land – Development pipeline & outlook Residential Markets Renewables Projects House builder confidence Continued growth in the remains fragile with below pipeline of potential average sales rates and renewables assets over the weak consumer demand. medium term together with a Land Develop
Slide 20: Operating Review – HRMS
Operating Review – HRMS Gordon Banham Chief Executive
Slide 21: Raw Materials GmbH – JV
Hargreaves Raw Materials GmbH – JV HRMS - Trading HRMS is a Joint Venture Market leading trader in Hargreaves owns 49.9% of industrial raw materials in voting shares, however, is Germany and Northern entitled to 86% of economic benefit through non-voting Europe. Supplying solid shares. fuels, refrac
Slide 22: Hargreaves Share of Profit
Hargreaves Raw Materials GmbH - Trading Historic performance of the Trading business Profits from trading in HRMS have been 30.0 variable over the period of ownership, HARGREAVES SHARE OF PROFIT given dependency on commodity cycles and market pricing. 25.0 AFTER TAX £M 20.0 DK acquisition in Decembe
Slide 23: DK Recycling und Roheisen GmbH – Operating model
DK Recycling und Roheisen GmbH – Operating model Blast Suppliers Inputs Output Customers furnace Coke c130kt Pig iron 250kt Coal c40kt Zinc 6kt Iron ore c30kt Energy Steel waste c500kt DK is a net energy generator with surplus output being sold back to the German grid. Preliminary Results – Year end
Slide 24: DK Recycling – Material outputs
DK Recycling und Roheisen GmbH – Material outputs Variables in FY24 Efficiency improvements • Lower cost coke sourcing in place for the Pig Iron sales price – 28% reduction coming year • EU phased embargo expected to have Coke purchase price – 25% reduction positive impact on pig iron 3% squeeze on
Slide 25: Hargreaves Services plc – ESG
Hargreaves Services plc – ESG Social Governance Environmental Controls and monitors how Examines how the Monitors and reports how the Company deals with its Company manages its the Company controls its leadership, internal controls relationship with employees, impact on the environment and sharehold
Slide 26: Hargreaves Services plc – Outlook
Hargreaves Services plc – Outlook Services • Over 70% of revenues secured under contract for new financial year providing confidence in the continued delivery of sustainable and reliable profits into the future Group Outlook • Trading outlook for FY25 Land is strong led by Services and Hargreaves La
Slide 27: Hargreaves Services plc – Investment Proposition
Hargreaves Services plc – Investment Proposition Experienced Board with Proven Track Record Strong Balance Excellent and Sheet with No Sustainable Bank Debt Dividend High quality asset Return backed income Strong Visibility Three Pillars of of Forward Business Value – Work Pipeline Services, Land, H
Slide 28: Hargreaves Services plc - Disclaimer
Hargreaves Services plc - Disclaimer • No representation or warranty, expressed or implied, is made or given by or on behalf of Hargreaves Services plc (the “C mp y”) y f i di y h p h u y, mp f i f h i f m i contained in this presentation and no responsibility or liability is accepted for any such i