Hargreaves Services plc · LSE:HSP
Hargreaves Services — FY2023 Earnings Presentation
28 slides from Hargreaves Services's earnings presentation, Aug 9, 2023
Slide 1: Hargreaves Services plc – Year ended 31 May 2023
Hargreaves Services plc Year ended 31 May 2023 Wednesday 9 August 2023
Slide 2: Strategic Value Proposition
Strategic Value Proposition Gordon Banham Chief Executive 2 Installation of 5-leg conveyor on HS2
Slide 3: Hargreaves Services plc - Strategic Value Proposition
Hargreaves Services plc - Strategic Value Proposition Create Deliver Realise Secure opportunities in Execute on those opportunities Release locked up capital, established business areas where with an emphasis on low capital monetise and then return value to Hargreaves has expertise, requirement, con
Slide 4: Renewables Valuation and Realisation Plan
Renewables Valuation and Realisation Plan Valuation undertaken by Jones Land LaSalle Limited covering ground rents on: 3 Wind Farms (125 MW); 6 Access Agreements (506 MW); 2 Battery Storage schemes (550-1050MW); Low Case High Case …Future Renewables Market Value Today £21.6m £23.1m •9 schemes under
Slide 5: Hargreaves Services plc – FY23 Results Overview
Underlying Profit before Hargreaves Services plc – FY23 Results Overview Tax Services £27.3m (FY22: £30.4m) • 23% revenue growth driven by HS2 and M&E contracts; • 21% underlying growth in UPBT from £7.6m to £9.2m Dividend per share • £3.2m non-recurring profit recognised for asset realisations 21.0
Slide 6: Financial Review
Financial Review Stephen Craigen Group Finance Director 6 Lime dosing silos at HS2
Slide 7: Financial Review – Income Statement
Financial Review – Income Statement Year ended 31 May 2023 2022 Margin £m Margin £m Services – Revenue, PBT & margin Revenue – Services 200.9 162.8 +24.6 improved mainly due to HS2 & M&E % works - £3.2m asset realisations Revenue – Hargreaves Land 10.6 15.1 Group Revenue 211.5 177.9 Land – sale at B
Slide 8: Financial Review – Balance Sheet
Renewables £6.6m Financial Review – Balance Sheet Westfield EFW £5.2m Other £4.7m Including £35.2m for Blindwells Service 31 May 23 Land HRMS Unallocated May 23 May 22 s Tangible FA’s (incl ROU assets) 47.9 16.5 - 0.4 64.8 40.3 Goodwill 5.7 - - - 5.7 4.8 Investments in JCEs - 5.7 68.6 - 74.3 55.1 In
Slide 9: Finance Review – Cash flow
Finance Review – Cash flow Including £5.8m Including £5.4m net investment into the investment into land Westfield investment development property opportunities Preliminary Results – Year ended 31 May 2023 9
Slide 10: Finance Review – HRMS Summary consolidated financials
Finance Review – HRMS Summary consolidated financials Income statement £’m May 23 May 22 Revenue – HRMS trading 374.3 441.1 Revenue Reduction Revenue – HRMS CPP 4.0 4.1 Due to reduction in volume as markets have softened Revenue - DK 132.6 146.4 Group Loans Revenue 510.9 591.6 £15m advanced in FY22
Slide 11: Operating Review Services
Operating Review Services Gordon Banham Chief Executive 11 Rocky Lane cutting – HS2
Slide 12: Services – Resilience & quality
Services – Resilience & quality Major Customers Frameworks Industry Sectors & term contracts 60+ Energy 29% 30% Secured orders at start of year Environment al c70% UK Infrastructure Typical operating margins Industrial 5%+ 15% 26% Preliminary Results – Year ended 31 May 2023 12
Slide 13: Services – growth drivers
£38.1m growth comprising (£m) Services – growth drivers 0.9, 2% 7.5, 20% Revenue up 23.4% 250 200 150 REVENUE (£M) 100 12.6, 33% 17.1, 45% 50 0 FY22 FY23 HS2 Earthmoving M&E Projects Industrial Services Asia Other Preliminary Results – year ended 31 May 2023 13
Slide 14: Services – Growth opportunities
Services – Growth opportunities Major infrastructure projects Existing contractual positions Lower Thames Sizewell C – Tungsten West – Over 10 new frameworks/term contracts added in FY23 Crossing – contracts strong with new clients including: preferred already secured contractual Durham City Council
Slide 15: Operating Review Hargreaves Land
Operating Review Hargreaves Land David Anderson Group Property Director 15 Unity, Doncaster
Slide 16: What we do
Master Developer Large scale multi phase projects delivering serviced plots for residential and commercial development. • Blindwells, Edinburgh – 1,600 plots • Unity, Doncaster – 3,100 plots, 2.4m sq ft of commercial • Westfield, Fife – 1m sq ft commercial What we • Lincolnshire Lakes, Scunthorpe –
Slide 17: FY23 Key Events
Q4: Market conditions F Y23 Key E vents beginning to stabilise Q2/3: Deteriorating conditions Q1: Strong market conditions Blindwells • 77 plot sale completed. • A further 342 plots unconditionally exchanged • A further 140 plots now subject to agreed sales terms. Sunderland • Planning consent for 2
Slide 18: Development Pipeline
Development Pipeline Residential Commercial • 5,730 Residential • 5.7m sq ft of plots (800 acres) allocated/consented now commercial space allocated/consented across 6 sites (356 across 6 sites with a acres) with a GDV of £200m. combined GDV (constructed end • A further 2,862 value) of £620m. reside
Slide 19: Outlook
Outlook Residential Markets Renewables Projects The range of Demand for quality ✓ 750 residential plots now subject to renewables projects residential sites has exchanged contracts or agreed sales continues to expand terms with 70% set to complete in FY24. begun to stabilised, with battery storage,
Slide 20: Operating Review HRMS
Operating Review HRMS Gordon Banham Chief Executive 20
Slide 21: Hargreaves Raw Materials GmbH – Joint Venture
Hargreaves Raw Materials GmbH – Joint Venture HRMS is a Joint Venture HRMS - Trading Hargreaves owns 49.9% of voting Market leading trader in industrial shares, however is entitled to 86% of economic benefit through non-voting raw materials in Germany and shares. Northern Europe. Supplying solid The
Slide 22: Hargreaves Raw Materials GmbH - Trading
Hargreaves Raw Materials GmbH - Trading Historic performance of the Trading business 30.0 Profits from Trading in HRMS have been HARGREAVES SHARE OF PROFIT variable over the period of ownership, with profits depending on commodity cycles and 25.0 market pricing. The business has never made a loss. A
Slide 23: Hargreaves Raw Materials GmbH - CPP
Hargreaves Raw Materials GmbH - CPP Total production capacity of 400,000t per annum Product will displace the highly polluting brown lignite coal dust which is expected to be phased out by the German government; Accessible market is 2million tonnes Currently producing 100kt, delivering a break even
Slide 24: DK Recycling und Roheisen GmbH – Material outputs
DK Recycling und Roheisen GmbH – Material outputs Pig Iron and Coke Zinc Zinc sales are 50% hedged. Zinc prices have fluctuated over the last 2 years from $2,000 to peaks of over $4,500 and have Pig Iron v Coke now fallen back to $2,400. There is no cost to DK in producing 900 zinc as it is a byprod
Slide 25: Hargreaves Services plc – ESG
Hargreaves Services plc – ESG Social Governance Environmental Controls and monitors how Employee Examines how the Wellbeing Monitors and reports how the Company deals with its Company manages its the Company controls its leadership, internal controls relationship with employees, Waste impact on the
Slide 26: Hargreaves Services plc – Outlook
Hargreaves Services plc – Outlook Services Land HRMS Group Outlook • Over 60 framework • Avant sale for £18.5m • Trading business • Trading outlook for agreements in exchanged record FY24 is strong led by place, many with unconditionally for demonstrates profits Service and cost plus completion in J
Slide 27: Hargreaves Services plc – Investment Proposition
Hargreaves Services plc – Investment Proposition Experienced Board with Proven Track Record Excellent & Strong Balance Sustainable Sheet with No Dividend Bank Debt Return Good Visibility Three Pillars of of Forward Business Value – Work Pipeline Services, Land, HRMS 27 Preliminary Results – Year end
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 “Company”) or any of its directors or any other person as to the accuracy, completeness or fairness of the information contained in this presen