TIDMHSP
RNS Number : 2698H
Hargreaves Services PLC
31 July 2019
For immediate release 31 July 2019
HARGREAVES SERVICES PLC
(the "Group" or "Hargreaves")
Preliminary Results for the year ended 31 May 2019
Hargreaves Services plc (AIM: HSP), a diversified group
delivering key services to the industrial and property sectors,
announces its preliminary results for the year ended 31 May
2019.
KEY FINANCIAL RESULTS
Year ended 31 May 2019 2018
Revenue GBP302.6m GBP297.1m
Operating Loss GBP(9.7)m GBP(1.4)m
Underlying Operating Profit* GBP10.0m GBP9.4m
(Loss)/profit Before Tax GBP(9.9)m GBP0.5m
Basic loss/earnings per share from
continuing operations (25.7p) 3.8p
Underlying basic EPS from continuing
operations 15.3p 14.9p
Final Dividend 4.5p 4.5p
Net Debt GBP17.9m GBP30.8m
Net Assets GBP127.5m GBP136.1m
Net Assets per Share 397p 424p
* Underlying Operating Profit is stated prior to exceptional
items, the amortisation and impairment of intangible assets and
including the Group's share of operating profit in associates and
joint ventures, see note 8.
HIGHLIGHTS
-- Underlying performance of the Group has been satisfactory
-- GBP16.1m of exceptional provisions made against the
insolvencies of British Steel & Wolf Minerals
-- Disposal of Brockwell Energy, treated as a Discontinued
Operation, realising GBP5.2m pre-tax profit
-- Distribution & Services revenue up by 4.7% to GBP293.8m (2018: GBP280.7m)
-- Construction of Carbon Pulverisation Plant by German associate nearing completion
-- Conditional sales of first plots achieved at Blindwells
-- GBP13m Legacy assets left to realise, down from GBP28m at 31
May 2018 (GBP60m three years ago)
-- Net Debt down to GBP17.9m (2018: GBP30.8m)
-- Net Asset Value per share as at 31 May 2019 GBP3.97 per share (2018: GBP4.24)
-- Roger McDowell appointed Chairman on 1 August 2018
-- David Anderson recruited as Group Property Director in November 2018
-- Final dividend maintained at 4.5p (2018: 4.5p); full year dividend of 7.2p (2018: 7.2p)
-- Additional annual dividend of 12p per share from repatriating
profits from German associate to commence in the year ending 31 May
2021
Commenting on the preliminary results, Chairman Roger McDowell
said: "In what has been a challenging year, the Group has made
progress towards its strategic objectives. The Group's property
business, Hargreaves Land, has gained further momentum and, by
extracting capital from our UK mining activities, its growth can be
accelerated. Value held in the balance sheet of our German
associate business is being unlocked and will be distributed to
shareholders in due course. The Board anticipates progress through
the next financial year."
Analyst meeting
A meeting for analysts will be held at 11.00am this morning, 31
July 2019, at the offices of Buchanan, 107 Cheapside, London EC2V
6DN. Please contact Buchanan on 020 7466 5000 or at
hargreaves@buchanan.uk.com for further information.
Enquiries:
Hargreaves Services plc
Gordon Banham, Chief Executive Officer
John Samuel, Group Finance Director 0191 373 4485
Buchanan (Financial PR)
Mark Court / Sophie Wills / Henry
Wilson 0207 466 5000
N+1 Singer (NOMAD and Joint Corporate
Broker)
Sandy Fraser / Rachel Hayes / Justin
McKeegan 020 7496 3000
Investec (Joint Corporate Broker)
Sara Hale / Richard Short 020 7597 5970
Chairman's Statement
Roger McDowell, Group Chairman
Introduction
In my first full year report as the Chairman of Hargreaves, it
is very disappointing to have to report a loss for the year. The
Group has been impacted by the insolvency of two notable customers,
Wolf Minerals Limited and British Steel Limited. These events
caused the Group to make substantial provisions totalling GBP16.1m
against unrecoverable debtor and work in progress balances and
equipment values and also against employment related liabilities
including redundancies.
Putting those setbacks to one side, the underlying performance
of the Group has been satisfactory and progress on non-core asset
realisation and cash generation has continued including the
successful disposal of Brockwell Energy Limited in October 2018 for
a profit after tax of GBP4.5m.
Results
Revenue from continuing operations was GBP302.6m (2018:
GBP297.1m), an increase of 1.9%, despite the loss of revenue
arising from the Wolf Minerals contract. The insolvency of British
Steel had no material impact on revenue in the financial year.
Underlying Operating Profit from continuing operations for the
year was GBP0.6m higher than the prior year at GBP10.0m (2018:
GBP9.4m). Underlying Operating Profit is defined by the Board as
Operating Profit prior to exceptional items, amortisation and
impairment of intangible assets and includes the Group's share of
the operating profit of its German associate. The Board uses this
measure as a Key Indicator in assessing the financial performance
of the Group throughout the year and believes that its disclosure
benefits readers of the financial statements. Further information
on the trading performance of the businesses is given in the Chief
Executive's Review.
Operating profit prior to exceptional items trebled to GBP6.4m
(2018: GBP2.1m). After accounting for the provisions in respect of
Wolf Minerals and British Steel of GBP16.1m (2018: GBP3.5m) as
exceptional items, the operating loss under IFRS was GBP9.7m (2018:
loss of GBP1.4m). After net financial expenses of GBP1.7m (2018:
GBP1.3m) and accounting for the Group's share of post-tax profits
of the German associate of GBP1.5m (2018: GBP3.2m), the
consolidated loss before tax was GBP9.9m (2018: profit of GBP0.5m).
After a tax credit of GBP1.7m (2018: GBP0.7m), the profit from
discontinued operations of GBP3.5m (2018: loss of GBP1.0m) reduced
the loss for the year to GBP4.7m (2018: profit of GBP0.2m). Basic
underlying earnings per share from continuing operations were 15.3p
(2018: 14.9p) and a loss per share of 25.7p (2018: earnings of
3.8p) on a reported basis.
Net Debt
As previously reported, net debt at the year end was GBP17.9m
(2018: GBP30.8m). The decrease of GBP12.9m largely relates to the
successful disposal of Brockwell Energy. Additionally, cash
generation from the continuing unwind of Legacy assets has been
offset by a planned increase in inventory. Although net debt is
likely to increase again in the first half of this financial year,
due to planned increases in working capital including at
Blindwells, net debt is expected to return to similar levels by 31
May 2020 as working capital unwinds. Further reductions in working
capital are expected to contribute to a material reduction in net
debt by the end of the year ending 31 May 2021.
Dividend
The Board is recommending an unchanged final dividend of 4.5p
(2018: 4.5p) per ordinary share thus maintaining the full year
dividend at 7.2p (2018: 7.2p). This will be paid on 1 November 2019
to all shareholders on the register at the close of business on 20
September 2019. The shares will become ex-dividend on 19 September
2019.
In my interim report, I stated that the Board intended to return
with immediate effect to a more conventional dividend payment
policy, distributing approximately one third of the anticipated
full year dividend at the interim stage and more generally that it
would seek to increase dividends progressively, balancing this
objective with continuing to reduce net debt. Despite the losses
incurred this year, the Board believes it is appropriate to
maintain the dividend, reflecting the Board's confidence in both
the strength of the balance sheet and the trading prospects of the
underlying business, and will look to increase it appropriately in
due course.
People
Over 2,000 people are employed by the Group across its
operations and their efforts and commitment are vital in delivering
value to our shareholders. The Board would like to take this
opportunity to thank them all publicly and to encourage them to
carry on their good work as the Group continues the process of
repositioning itself for new opportunities.
Board Changes
I am delighted that we were able to secure the services of David
Anderson who joined the Board on 14 November 2018 as Group Property
Director. David is driving forward with the growth of Hargreaves
Land, the Group's property development business, as demonstrated by
the announcements of the conditional disposal of plots at
Blindwells.
Following both David Morgan and Peter Jones leaving the Board
during the year, the Board is undertaking a process to appoint a
further Non-Executive Director.
Brexit
The uncertainty of the final outcome to the Brexit discussions
continues. Hargreaves has very little trading activity with any
country within the EU. Consequently, the Board expects no material
direct impact on the Group's trading activities whatever the final
Brexit outcome may be. The Group's German specialist raw material
trading associate business, Hargreaves Raw Materials Services GmbH
("HRMS"), trades almost exclusively within the EU but imports much
of its trading stock from outside the EU. The Board cannot
meaningfully assess any wider macro-economic impact of Brexit which
may affect business sentiment in trading and financial markets
leading to a material change in the economic or financial
environment within the UK and Europe for the Group or its
customers.
Strategy
I reported at the interim stage that following my appointment as
Chairman, the Board had conducted an initial review of strategy.
Three key areas of focus were identified. First, the realisation of
cash from the disposal of surplus assets and non-core activities
including the Legacy assets. Secondly, a focus to increase returns
from the Distribution & Services business. Thirdly, the
development of the Group's Property business, Hargreaves Land,
which the Board regards as an important area to generate greater
medium and longer-term value. The Board considers that progress is
being made in all three areas.
Asset realisation
Legacy assets have reduced from over GBP60m in 2016 to GBP12.8m
as at 31 May 2019, including a realisation of GBP15.7m during the
year. A further reduction is expected during the new financial year
as a result of the disposal of surplus plant and equipment in the
Tower joint venture.
UK Distribution & Services
Following the failure of both British Steel and Wolf Minerals,
the prospects for growth in the Distribution & Services
business have been impacted. Both the Industrial Services and
Specialist Earthworks business units have been adversely affected
by these events although the UK Production & Distribution
business remains stable. The emphasis across all revenue streams is
on improving profits and generating cash, mainly from reductions in
working capital.
HRMS
The investment by HRMS in a Carbon Pulverisation Plant ("CPP")
to provide both improved resilience for the existing European
specialty minerals trading business and additional growth
opportunities is almost completed. The CPP is expected to begin
trial production in the autumn with initial shipments of material
expected in the second half of the financial year to a contracted
customer.
Hargreaves Land
The Board regards the property development business, Hargreaves
Land, as an important area for future growth. Cash generated from
the evolution of our UK mining operations is expected to be
invested into property development opportunities. This investment
is expected to gain further momentum in the financial year ending
31 May 2021. Typically, the return on investment in property
developments can take approximately three years.
Overhead costs
The programme of reducing operational and overhead costs is
ongoing at both Group level and within the business units and
remains a key area of focus for the Board. During the last
financial year, over 70 employees left the Group providing almost
GBP4m of annualised overhead salary savings. Corporate overhead
reduced by over 21% to GBP4.4m (2018: GBP5.6m). Over the last four
years, some 300 people have left the business with annualised
salary costs totalling GBP14m. Further cost reductions will take
place through the new financial year.
Shareholder Value
As part of the Board's plans to create shareholder value, it is
working with its German associate business, HRMS, to enhance the
value of its investment whilst releasing capital where possible.
HRMS is now an integrated business, including both the speciality
trading activity, which has inherent market driven volatility and
the CPP, which as a production asset should provide more
predictable earnings. HRMS is working to increase further the
overall visibility of future earnings without committing further
substantial capital.
Over the last three financial years and continuing until the
financial year ending 31 May 2021, HRMS is not permitted to pay
dividends as a condition of its borrowing arrangements in
connection with funding the construction of the CPP. Dividends,
including the payment of previously undistributed reserves, should
recommence in the financial year ending 31 May 2021, with cash
being repatriated to the UK in the following financial year.
The Board has decided that the dividends from HRMS will be
passed through to shareholders in the form of an extra dividend in
addition to any normal final dividend which would be declared in
accordance with the dividend policy outlined above. The Board
anticipates that this extra dividend would be in the region of 12p
per share and would be maintained at that level for the foreseeable
future. The first such extra dividend would be declared along with
the final dividend for the year ending 31 May 2021 and paid in the
following financial year.
Outlook
2019 has been a challenging financial year for the Group and
although progress has been made in several areas, following the
setbacks that have arisen, much remains to be achieved. The Board
is focused on delivering reliable and growing profits in, and
unlocking capital from, its Distribution & Services businesses
enabling strong cash returns to shareholders alongside investment
in the growth of Hargreaves Land.
Roger McDowell
Chairman
30 July 2019
Group Business Review
Gordon Banham, Group Chief Executive Officer
Chief Executive's Review
Distribution & Services
The Distribution & Services business recorded revenue up
4.7% at GBP293.8m (2018: GBP280.7m). The increase in revenue was
due to growth in Industrial Services and in Specialist Earthworks,
partially offset by lower revenue in Production & Distribution.
GBP2.8m (2018: GBP5.5m) of Specialist Earthworks revenue was
attributable to legacy contracts which are recorded as
exceptional.
Underlying Operating Profit was GBP12.1m (2018: GBP12.9m). The
slight fall in Underlying Operating Profit was primarily due to a
GBP3.2m reduction in the contribution from HRMS, as a result of
weaker German economic activity, partially offset by improved
results from Industrial Services and Specialist Earthworks. On an
IFRS basis, this business segment recorded an Operating Loss of
GBP8.1m (2018: profit of GBP2.0m), with the loss being due to the
charge for exceptional items which are set out below.
Exceptional Items
Wolf Minerals Limited
As previously announced, in October 2018, one of the Group's
customers, Wolf Minerals Limited, announced that it had ceased
trading and subsequently it went into liquidation. As a result, the
Group incurred an exceptional charge of GBP8.1m. The Group
continues to have a small presence at the Hemerdon mine site where
it is carrying out minor maintenance and asset safeguarding
activities. The future of the site remains unclear, but Hargreaves
is well positioned to secure any restoration or other work which
may arise in due course. Hargreaves is not considering operating
the mine.
British Steel Limited
In late May 2019, British Steel Limited announced that it was
being placed into liquidation. Currently the business is being
operated under the aegis of the Official Receiver and the Group is
continuing to provide services under similar commercial terms as
prior to the insolvency. Until the future of British Steel is
clarified, the final financial impact on the Group cannot be fully
determined, however, the Board has made a provision of GBP4.5m
against trade debt and work-in-progress balances which are unlikely
to be recovered. Additionally, a further expense of GBP3.5m has
been recognised in respect of redundancy and other associated
employment costs and equipment write downs, resulting in a total
exceptional charge of GBP8.0m.
Further information on the performance of each business within
Distribution & Services is given below.
Production and Distribution
UK
Revenue was GBP119.4m (2018: GBP137.4m), primarily due to
reduced volumes of low margin thermal coal being traded and so
Underlying Operating Profit fell slightly to GBP3.2m (2018:
GBP3.5m) although margins improved to 2.7% (2018: 2.5%). Mining
operations have been conducted very efficiently through the
financial year and as a result the business is carrying higher
levels of inventory than is usual. It is more cost effective to
mine out coal whilst favourable conditions exist than to suffer the
costs of poor output during spells of bad weather.
Our mining operational strategy continues to evolve to meet the
future demand for coal through focus on the speciality markets.
This will lead to a release of cash from working capital and the
sale of surplus assets of approximately GBP20m. This cash should be
released through financial years ending 31 May 2021 and 2022. The
Transport business has delivered a much improved result in the
period, returning profit to acceptable levels as we continue to
focus on core markets and margin improvement.
HRMS
HRMS contributed GBP3.3m (2018: GBP6.5m) to Underlying Operating
Profit as economic activity in Germany weakened. As a speciality
commodity trading business, the results of HRMS are subject to
fluctuations depending upon market conditions. As previously
reported, HRMS is constructing a Carbon Pulverisation Plant in
Duisburg, Germany, to add resilience and greater predictability to
future trading prospects. Construction work is almost completed.
Initial trial product is expected to be supplied during the autumn
with the first sales to a contracted customer by the start of
calendar year 2020. The Board of HRMS is focused on securing
further contracts for the CPP so that meaningful contribution to
profit is expected in the financial year ending 31 May 2021.
Industrial Services
Revenue increased by 25% to GBP87.4m (2018: GBP70.0m) with
Underlying Operating Profit up by 58% to GBP3.8m (2018: GBP2.4m), a
margin of 4.3% (2018: 3.4%).
UK
In the UK, revenue grew by 22% to GBP57.9m (2018: GBP47.5m) with
Underlying Operating Profit improving to GBP2.7m (2018: GBP1.7m),
increasing margins to 4.7% from 3.6%.
The UK business is focused on margin improvement as it
transitions gradually from mainly supporting coal fired power
stations and broadens its customer base. The main area of activity
is in materials handling but increasingly the business is
developing its skills in mechanical and electrical engineering
within industrial complexes and is positioned to secure further
work of that type. The forward order book and term contract
positions held by the Industrial Services business mean that its
budget revenue for the next financial year is almost fully
secured.
The insolvency of British Steel has caused a setback to this
business' growth plans and as a result both revenue and Underlying
Operating Profit are likely to be materially lower in the financial
year ending 31 May 2020. British Steel contributed approximately
GBP1m of revenue each month. The exceptional charge of GBP8m, which
is GBP1m lower than announced on 22 May 2019, assumes that British
Steel operations cease as at 31 July 2019 as, at the date of
signing these accounts, the Board has no better information upon
which to base its judgement.
International
In the international business, which is primarily based in Hong
Kong, revenue grew by 31% to GBP29.5m (2018: GBP22.5m) with an
Underlying Operating Profit of GBP1.1m (2018: GBP0.7m), a margin of
4.1% (2018: 3.1%).
The Hong Kong business continues to broaden both the range of
services it provides to its clients and its customer base. The
South African business broke even as it did in 2018.
The Hong Kong business has been appointed to a new five year
NEC4 Term Service Contract by its principal customer, CLP Power
Hong Kong Ltd ("CLP"). This contract has a wider scope than its
predecessor, which Hargreaves has delivered over the past five
years, and extends to CLP's operations at both Castle Peak and
Black Point power stations. Hargreaves will be providing a range of
mechanical and electrical engineering services in annual planned
and reactive maintenance operations. The successful award of this
contract is seen as critical to the ongoing development within Hong
Kong and the wider Asia region. It both secures Hargreaves'
position as a leading vendor to CLP and continues to develop this
key and valued relationship whilst providing an enhanced platform
for further diversified growth in the region.
Specialist Earthworks
The Specialist Earthworks business recorded revenue of GBP87.0m
(2018: GBP78.8m) and an Underlying Operating Profit of GBP1.8m
(2018: GBP0.5m). Most of the growth in revenue is as a result of
increased sales of plant and equipment.
The business has continued to manage to completion three legacy
civils contracts inherited from the acquisition of C. A. Blackwell.
These contracts reported GBP2.8m (2018: GBP5.5m) of revenue and
incurred operating losses of GBP0.7m in the year (2018: GBP3.4m),
which are recorded as exceptional and which have been offset by the
recovery of GBP0.6m after legal costs from a claim against the
vendors of C. A. Blackwell for breach of warranty. These contracts
are now completed on site with only small demobilisation or defects
corrections activities remaining. Final accounts remain to be
agreed with a total of GBP9.2m contract assets outstanding in
respect of these legacy contracts.
Following the insolvency of Wolf Minerals, the business has only
a small level of activity currently at the Hemerdon tungsten mine
site. Over the last several months, Hargreaves has sought to
position itself to take advantage of whatever the future holds for
the site. This would include carrying out the site restoration, the
costs of which will be met by a fund which has already been set
aside for that purpose during Wolf's tenure as mine operators.
The Specialist Earthworks business is focused on major
earthworks projects. The principal current contract is the A14 bulk
earthworks project which is expected to be completed in the new
financial year. Future business opportunities with similar
operational and contractual characteristics are being pursued and,
as previously reported, C. A. Blackwell has been selected as a
strategic partner to one of the major contractor consortia for two
sections of earthworks on the HS2 rail project. Currently the
business is engaged in early stage enabling works on the site.
The business is also providing early contractor involvement
consultancy advice on other major planned infrastructure projects
in the south of England. The timing of many of these projects is
uncertain and some are subject to political influence, but the
business is well placed to provide what is a specialist capability
in a market with a small number of potential suppliers.
As a result of the above events, both revenue and Underlying
Operating Profit in this business are likely to be materially lower
in the financial year ending 31 May 2020.
Hargreaves Land
Hargreaves Land, the Group's Property business, contributed
GBP2.8m (2018: GBP11.7m) of revenue and an Operating Profit of
GBP2.2m (2018: GBP2.1m). Property revenue was principally derived
from the sale of non-strategic land. Additionally, Hargreaves Land
sold GBP6.8m of land at the old Maltby colliery and Monckton coke
works. This land was previously classified within fixed assets and
so is excluded from the measurement of revenue. There remains
approximately GBP5m of non-strategic land to be sold.
In last year's annual report, an independent valuation was
carried out which supported the values given by a similar
independent exercise in 2017. As the land portfolio develops, it
becomes increasingly difficult to make a meaningful comparison with
historic valuations and so the Board has decided not to carry out a
similar exercise this year. The Board continues to hold the view
that the market value of its property portfolio is materially
greater than its book value. Where appropriate levels of return can
be generated, Hargreaves Land will seek to deliver greater
development value if that can be extracted through additional
investment or by enhancing planning conditions.
At the major Blindwells site near Edinburgh, conditional sales
of fully serviced plots to both Cruden Homes and Bellway have
already been announced. These sales are expected to complete in the
next financial year with a value in excess of GBP10m. GBP7.0m
(2018: GBP1.6m) of infrastructure cost has been invested in the
site during the year, which is included in Inventory in the Group
balance sheet. Further investment of over GBP9m is planned in the
next financial year with a further fifteen acres being brought to
market in the autumn of this year. It is unlikely that sales of
those plots will complete until the year ending 31 May 2021.
The site development plan for phase one will take approximately
ten years and provides an ongoing stream of revenue and profit
which will underpin the Property business, including the sale of
land for around 1,600 homes. The second phase, known as Greater
Blindwells, now has approval in principle to be allocated through
the local development plan. This phase would result in an
additional 900 homes to be built on land owned by the Group.
During the year, the business identified several other
development opportunities in Scotland and the North of England
which it plans to exploit either through joint venture arrangements
or in other partnerships. One such opportunity is at Hatfield in
Yorkshire. After the year end, Hargreaves Land entered into a joint
venture there to develop a six hundred acre site with planning
permission for 3,100 residential properties and 1.5 million square
feet for a mixture of industrial, commercial and logistics use.
Lead times on such developments can be unpredictable and as a
result initial profits are not expected to arise on this scheme
until 2021.
Hargreaves Land's strategic goal is that of a property developer
rather than a long term owner of investment properties and it will
seek to exploit appropriate opportunities whilst restricting the
amount of capital to be invested as much as possible.
Brockwell Energy Limited
The Board was pleased to complete the sale of the entire share
capital of Brockwell Energy Limited ("Brockwell") in October 2018.
The initial gross proceeds of the disposal, including the
reimbursement of certain costs, were GBP21.7m. An after-tax profit
on the disposal of Brockwell of GBP4.5m, excluding the contingent
consideration, has been recorded within Discontinued
Operations.
Brockwell's new owners are specialist renewable energy investors
and they have plans to develop a number of such assets, some of
which will be on land which is owned by Hargreaves. As these assets
are developed, they will provide the Group with long term high
quality rental income streams. Currently, Brockwell is pursuing
financial close to construct an Energy from Waste plant at the
Hargreaves site at Westfield in Scotland and a further GBP2m in
cash is receivable by Hargreaves should that financing be
successful. At that point, Brockwell will also enter into a long
term lease at commercial rates. The availability of low cost energy
at the site should provide a strong incentive to enable Hargreaves
Land to attract other potential industrial and warehouse operators
to this 100 acre site.
Legacy Assets
During the period, sales of Legacy Assets amounted to GBP6.1m
(2018: GBP4.7m) with no Operating Profit being recorded (2018:
GBPnil). GBP12.8m of Legacy Assets remain in the form of loans due
from the Tower Joint Venture which are supported by underlying land
and equipment. Further sales of joint venture equipment are
expected to take place in the new financial year.
Summary
The insolvencies of both Wolf Minerals and British Steel have
cast a shadow over the Distribution & Services business which
has otherwise traded well. The Board is resolved to derive value
and cash from the component businesses as the Group transitions to
a model which requires less capital to be employed.
HRMS, the German associate, is also transitioning to a more
consistent business model as the CPP comes into production. This
will add value to Hargreaves' investment in that business.
The Board has identified Hargreaves Land as a key area for
growth given suitable investment into both existing assets and new
opportunities, primarily utilising cash to be derived from the
cessation of mining activities.
Gordon Banham
Group Chief Executive
30 July 2019
Consolidated Statement of Profit and Loss
and Other Comprehensive Income
For the year ended 31 May 2019
2019 2018
Continuing operations Note GBP000 GBP000
-------------------------------------------------------- ---- --------- ---------
Revenue 2 302,613 297,119
Cost of sales (285,902) (266,746)
-------------------------------------------------------- ---- --------- ---------
Gross profit 16,711 30,373
Other operating income/(expense) 4,291 (185)
Administrative expenses (30,690) (31,564)
-------------------------------------------------------- ---- --------- ---------
Operating loss (9,688) (1,376)
Analysed as:
Operating profit (before exceptional items) 6,448 2,108
Exceptional items - Cost of sales (12,645) (3,025)
Exceptional items - Administrative expenses (3,491) (459)
-------------------------------------------------------- ---- --------- ---------
Exceptional items 3 (16,136) (3,484)
Operating loss (after exceptional items) (9,688) (1,376)
-------------------------------------------------------- ---- --------- ---------
Finance income 450 626
Finance expenses (2,154) (1,937)
Share of profit in associates and joint ventures
(net of tax) 1,534 3,175
-------------------------------------------------------- ---- --------- ---------
(Loss)/profit before tax (9,858) 488
Taxation 4 1,665 693
-------------------------------------------------------- ---- --------- ---------
(Loss)/profit for the year from continuing operations (8,193) 1,181
Discontinued operations
Profit/(loss) for the year from discontinued
operations 5 3,526 (1,000)
-------------------------------------------------------- ---- --------- ---------
(Loss)/profit for the year (4,667) 181
-------------------------------------------------------- ---- --------- ---------
Other comprehensive income
Items that will not be reclassified to profit
or loss
Remeasurements of defined benefit pension schemes (1,197) (857)
Tax recognised on items that will not be reclassified
to profit or loss 203 120
Items that are or may be reclassified subsequently
to profit or loss
Foreign exchange translation differences 318 (22)
Effective portion of changes in fair value of
cash flow hedges (1,269) 1,123
Tax recognised on items that are or may be reclassified
subsequently to profit or loss 216 (192)
-------------------------------------------------------- ---- --------- ---------
Other comprehensive (expense)/income for the
year, net of tax (1,729) 172
-------------------------------------------------------- ---- --------- ---------
Total comprehensive (expense)/income for the
year (6,396) 353
-------------------------------------------------------- ---- --------- ---------
2019 2018
GBP000 GBP000
------------------------------------------------------ ------- -------
Profit attributable to:
Equity holders of the Company (4,741) 229
Non-controlling interest 74 (48)
------------------------------------------------------ ------- -------
(Loss)/profit for the year (4,667) 181
------------------------------------------------------ ------- -------
Total comprehensive (expense)/income attributable
to:
Equity holders of the Company (6,470) 401
Non-controlling interest 74 (48)
------------------------------------------------------ ------- -------
Total comprehensive (expense)/income for the
year (6,396) 353
------------------------------------------------------ ------- -------
Basic (loss)/earnings per share (pence) 6(14.75) 0.72
Diluted (loss)/earnings per share (pence) 6(14.75) 0.71
Basic (loss)/earnings per share from continuing
operations (pence) 6(25.71) 3.84
Diluted (loss)/earnings per share from continuing
operations (pence) 6(25.71) 3.82
------------------------------------------------------ ------- -------
Non-GAAP Measures
Basic underlying earnings per share from continuing
operations (pence) 6 15.30 14.90
Diluted underlying earnings per share from continuing
operations (pence) 6 15.30 14.79
------------------------------------------------------ ------- -------
Consolidated Balance Sheet
at 31 May 2019
Group
----------------------
Represented
(see note
1)
2019 2018
GBP000 GBP000
------------------------------------------------ -------- --------- -----------
Non-current assets
Property, plant and equipment 45,528 53,777
Investment property 10,067 11,909
Intangible assets including goodwill 10,983 11,121
Investments in associates and joint ventures 11,744 10,116
Other financial assets - -
Deferred tax assets 6,229 3,814
------------------------------------------------ -------- --------- -----------
84,551 90,737
------------------------------------------------ -------- --------- -----------
Current assets
Assets held for sale - 16,660
Inventories 48,040 34,652
Other financial assets 25 1,044
Trade and other receivables 75,562 103,245
Contract assets 17,596 18,970
Cash and cash equivalents 21,583 16,110
------------------------------------------------ -------- --------- -----------
162,806 190,681
------------------------------------------------ -------- --------- -----------
Total assets 247,357 281,418
------------------------------------------------ -------- --------- -----------
Non-current liabilities
Other interest-bearing loans and borrowings (35,222) (4,434)
Retirement benefit obligations (4,184) (4,395)
Provisions (3,718) (2,947)
Other financial liabilities (137) (30)
------------------------------------------------ -------- --------- -----------
(43,261) (11,806)
------------------------------------------------ -------- --------- -----------
Current liabilities
Other interest-bearing loans and borrowings (4,289) (42,460)
Trade and other payables (69,259) (88,425)
Provisions (2,327) (2,633)
Income tax liability (594) -
Other financial liabilities (150) (7)
------------------------------------------------ -------- --------- -----------
(76,619) (133,525)
------------------------------------------------ -------- --------- -----------
Total liabilities (119,880) (145,331)
------------------------------------------------ -------- --------- -----------
Net assets 127,477 136,087
------------------------------------------------ -------- --------- -----------
Group
----------------------
2019 2018
GBP000 GBP000
-------------------------------- ------------------------ --------- -----------
Equity attributable to equity
holders of the parent
Share capital 3,314 3,314
Share premium 73,955 73,955
Other reserves 211 211
Translation reserve (692) (1,010)
Merger reserve 1,022 1,022
Hedging reserve 102 1,155
Capital redemption reserve 1,530 1,530
Share based payment reserve 1,139 1,043
Retained earnings 46,841 54,886
---------------------------------------------------------- --------- -----------
127,422 136,106
Non-controlling interest 55 (19)
---------------------------------------------------------- --------- -----------
Total equity 127,477 136,087
---------------------------------------------------------- --------- -----------
Consolidated Statement of Changes in Equity
for year ended 31 May 2019
Share-
Capital based Total
Share Share Translation Hedging Other redemption Merger payment Retained Parent Non-controlling Total
capital premium reserve reserve reserves reserve reserve reserve earnings equity interest equity
Group GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------- ------- ------- ----------- ------- -------- ---------- ------- ------- -------- ------- --------------- -------
At 1 June 2017 3,314 73,955 (988) 224 211 1,530 1,022 936 57,694 137,898 29 137,927
Total
comprehensive
income for the
year
Profit/(loss) for
the year - - - - - - - - 229 229 (48) 181
Other
comprehensive
income/(expense)
Foreign exchange
translation
differences - - (22) - - - - - - (22) - (22)
Effective portion
of changes in
fair
value of cash
flow
hedges - - - 1,123 - - - - - 1,123 - 1,123
Remeasurements
of defined
benefit
pension schemes - - - - - - - - (857) (857) - (857)
Tax recognised
on other
comprehensive
income - - - (192) - - - - 120 (72) - (72)
----------------- ------- ------- ----------- ------- -------- ---------- ------- ------- -------- ------- --------------- -------
Total other
comprehensive
income/(expense) - - (22) 931 - - - - (737) 172 - 172
----------------- ------- ------- ----------- ------- -------- ---------- ------- ------- -------- ------- --------------- -------
Total
comprehensive
income/(expense)
for the year - - (22) 931 - - - - (508) 401 (48) 353
----------------- ------- ------- ----------- ------- -------- ---------- ------- ------- -------- ------- --------------- -------
Transactions with
owners recorded
directly in
equity
Equity-settled
share-based
payment
transactions - - - - - - - 107 - 107 - 107
Dividends paid - - - - - - - - (2,300) (2,300) - (2,300)
----------------- ------- ------- ----------- ------- -------- ---------- ------- ------- -------- ------- --------------- -------
Total
contributions
by and
distributions
to owners - - - - - - - 107 (2,300) (2,193) - (2,193)
----------------- ------- ------- ----------- ------- -------- ---------- ------- ------- -------- ------- --------------- -------
At 31 May 2018 3,314 73,955 (1,010) 1,155 211 1,530 1,022 1,043 54,886 136,106 (19) 136,087
----------------- ------- ------- ----------- ------- -------- ---------- ------- ------- -------- ------- --------------- -------
Share-
Capital based Total
Share Share Translation Hedging Other redemption Merger payment Retained Parent Non-controlling Total
capital premium reserve reserve reserves reserve reserve reserve earnings equity interest equity
Group GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------- ------- ------- ----------- ------- -------- ---------- ------- ------- -------- ------- --------------- -------
At 1 June 2018 3,314 73,955 (1,010) 1,155 211 1,530 1,022 1,043 54,886 136,106 (19) 136,087
Total
comprehensive
income for the
year
(Loss)/profit for
the year - - - - - - - - (4,741) (4,741) 74 (4,667)
Other
comprehensive
income/(expense)
Foreign exchange
translation
differences - - 318 - - - - - - 318 - 318
Effective portion
of changes in
fair
value of cash
flow
hedges - - - (1,269) - - - - - (1,269) - (1,269)
Remeasurements
of defined
benefit
pension schemes - - - - - - - - (1,197) (1,197) - (1,197)
Tax recognised
on other
comprehensive
income - - - 216 - - - - 203 419 - 419
----------------- ------- ------- ----------- ------- -------- ---------- ------- ------- -------- ------- --------------- -------
Total other
comprehensive
income/(expense) - - 318 (1,053) - - - - (994) (1,729) - (1,729)
----------------- ------- ------- ----------- ------- -------- ---------- ------- ------- -------- ------- --------------- -------
Total
comprehensive
income/(expense)
for the year - - 318 (1,053) - - - - (5,735) (6,470) 74 (6,396)
----------------- ------- ------- ----------- ------- -------- ---------- ------- ------- -------- ------- --------------- -------
Transactions with
owners recorded
directly in
equity
Equity-settled
share-based
payment
transactions - - - - - - - 96 - 96 - 96
Dividends paid - - - - - - - - (2,310) (2,310) - (2,310)
----------------- ------- ------- ----------- ------- -------- ---------- ------- ------- -------- ------- --------------- -------
Total
contributions
by and
distributions
to owners - - - - - - - 96 (2,310) (2,214) - (2,214)
----------------- ------- ------- ----------- ------- -------- ---------- ------- ------- -------- ------- --------------- -------
At 31 May 2019 3,314 73,955 (692) 102 211 1,530 1,022 1,139 46,841 127,422 55 127,477
----------------- ------- ------- ----------- ------- -------- ---------- ------- ------- -------- ------- --------------- -------
Consolidated Cash Flow Statements
for year ended 31 May 2019
Group
------------------
2019 2018
GBP000 GBP000
------------------------------------------------------------ -------- --------
Cash flows from operating activities
(Loss)/profit for the year from continuing operations (8,193) 1,181
Adjustments for:
Depreciation and impairment of property, plant and
equipment 16,136 12,936
Impairment of investment properties - 621
Amortisation and impairment of goodwill and intangible
assets 142 880
Net finance expense 1,704 1,311
Share of profit in associates and joint ventures (net
of tax) (1,534) (3,175)
(Profit)/loss on sale of property, plant and equipment (4,291) 185
Equity settled share-based payment expenses 96 107
Income tax credit (1,665) (693)
Contributions to defined benefit pension schemes (1,746) (1,829)
Translation of non-controlling interest and investments (100) (24)
------------------------------------------------------------- -------- --------
549 11,500
Change in assets held for sale 8,961 -
Change in inventories (11,262) 10,976
Change in trade and other receivables 26,172 (2,984)
Change in trade and other payables (17,454) (387)
Change in provisions and employee benefits 1,817 (1,475)
------------------------------------------------------------- -------- --------
8,783 17,630
Net interest paid (1,635) (905)
Income tax received 307 1,127
------------------------------------------------------------- -------- --------
Net cash inflow from continuing operating activities 7,455 17,852
Net cash inflow/(outflow) from operating activities
in discontinued operations 15,593 (1,017)
------------------------------------------------------------- -------- --------
Net cash inflow from operating activities 23,048 16,835
------------------------------------------------------------- -------- --------
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 12,231 1,001
Acquisition of property, plant and equipment and investment
property (8,433) (21,227)
------------------------------------------------------------- -------- --------
Net cash inflow/(outflow) from investing activities
in continuing operations 3,798 (20,226)
Net cash outflow from investing activities in discontinued
operations - (4,309)
------------------------------------------------------------- -------- --------
Net cash inflow/(outflow) from investing activities 3,798 (24,535)
------------------------------------------------------------- -------- --------
Cash flows from financing activities
Payment of finance lease liabilities (6,780) (5,461)
Dividends paid (2,310) (2,300)
(Repayment of)/proceeds from Group banking facilities (12,300) 3,800
------------------------------------------------------------- -------- --------
Net cash outflow from financing activities (21,390) (3,961)
------------------------------------------------------------- -------- --------
Net increase/(decrease) in cash and cash equivalents 5,456 (11,661)
Cash and cash equivalents at 1 June 16,110 27,817
Effect of exchange rate fluctuations on cash held 17 (46)
------------------------------------------------------------- -------- --------
Cash and cash equivalents at 31 May 21,583 16,110
------------------------------------------------------------- -------- --------
1 Basis of preparation and status of financial information
The financial information set out above has been prepared in
accordance with the recognition and measurement criteria of
International Financial Reporting Standards as adopted by the EU
(Adopted IFRSs).
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 31 May 2019 or 31
May 2018. Statutory accounts for 2018 have been delivered to the
Registrar of Companies, and those for 2019 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 adoption of IFRS 15 has
resulted in a representation of contract assets and contract
provisions in the 2018 balance sheet, this representation has not
resulted in a change to the previously reported net assets of the
Group.
These results were approved by the Board of Directors on 30 July
2019.
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 Distribution
& Services, Hargreaves Land, Legacy and Unallocated.
-- Distribution & Services: Provides coal distribution,
including mining operations, materials handling and contracting
services and logistics to a range of industrial, wholesale and
public sector customers. The business unit also provides earth
moving and infrastructure services across the UK and trades in
plant and machinery.
-- Hargreaves Land: The development and realisation of value
from the land portfolio including rental income from investment
properties.
-- Legacy: The realisation of surplus assets which are not
associated with the continuing operations into cash in a timely
manner, whilst obtaining full value.
-- Unallocated: The overhead costs related to the central
functions that are not devolved to the individual business
units.
These segments are combinations of subsidiaries, jointly
controlled entities and associates. They have separate management
teams and provide different products and services. The four
operating segments are also reportable segments.
Underlying Operating Profit is defined by the Board as Operating
Profit prior to exceptional items, amortisation and impairment of
intangible assets and includes the Group's share of the operating
profit of its German associate.
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 operating profit/(loss), which is
reconciled to profit/(loss) before tax in the tables below:
Distribution Hargreaves
& Services Land Legacy Unallocated Total
2019 2019 2019 2019 2019
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------- ------------ ---------- ------- ----------- ---------
Revenue
Total revenue 293,787 3,634 6,054 - 303,475
Intra-segment revenue - (862) - - (862)
------------------------------------------- ------------ ---------- ------- ----------- ---------
Revenue from external customers 293,787 2,772 6,054 - 302,613
------------------------------------------- ------------ ---------- ------- ----------- ---------
Underlying operating profit/(loss) 12,110 2,232 - (4,376) 9,966
Amortisation and impairment of intangibles (142) - - - (142)
Taxation on associates and joint ventures (875) - - - (875)
Exceptional items (16,770) - - 634 (16,136)
------------------------------------------- ------------ ---------- ------- ----------- ---------
Operating (loss)/profit including share
of associate (5,677) 2,232 - (3,742) (7,187)
------------------------------------------- ------------ ---------- ------- ----------- ---------
Interest on associates and joint ventures (967) - - - (967)
Net financing costs (1,646) (144) - 86 (1,704)
------------------------------------------- ------------ ---------- ------- ----------- ---------
(Loss)/profit before taxation (8,290) 2,088 - (3,656) (9,858)
------------------------------------------- ------------ ---------- ------- ----------- ---------
Depreciation charge (15,416) (192) - (528) (16,136)
------------------------------------------- ------------ ---------- ------- ----------- ---------
Capital expenditure (15,535) (15) - (365) (15,915)
------------------------------------------- ------------ ---------- ------- ----------- ---------
Net assets/(liabilities)
Segment assets 188,199 27,288 12,824 7,302 235,613
Segment liabilities (83,675) (2,970) - (33,235) (119,880)
------------------------------------------- ------------ ---------- ------- ----------- ---------
Segment net assets/(liabilities) 104,524 24,318 12,824 (25,933) 115,733
Associates and joint ventures 11,744 - - - 11,744
------------------------------------------- ------------ ---------- ------- ----------- ---------
Total net assets 116,268 24,318 12,824 (25,933) 127,477
------------------------------------------- ------------ ---------- ------- ----------- ---------
Unallocated net liabilities of GBP25.9m include the Group
banking facilities liability (GBP26.9m), cash and cash equivalents
(GBP0.9m liability), derivative financial instruments (GBP0.3m
liability), corporation tax liability (GBP0.6m) and deferred tax
asset (GBP6.2m), retirement benefit obligations (GBP4.2m) and other
corporate items (GBP0.8m asset).
Distribution
& Services Property Legacy Corporate Total
2018 2018 2018 2018 2018
Continuing operations GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------- ------------ -------- ------- --------- ---------
Revenue
Total revenue 286,188 11,730 4,706 - 302,624
Intra-segment revenue (5,505) - - - (5,505)
------------------------------------------- ------------ -------- ------- --------- ---------
Revenue from external customers 280,683 11,730 4,706 - 297,119
------------------------------------------- ------------ -------- ------- --------- ---------
Underlying operating profit/(loss) 12,872 2,085 46 (5,554) 9,449
Amortisation and impairment of intangibles (880) - - - (880)
Taxation on associates and joint ventures (1,632) - - - (1,632)
Exceptional items (3,484) - - - (3,484)
------------------------------------------- ------------ -------- ------- --------- ---------
Operating profit/(loss) including share
of associate 6,876 2,085 46 (5,554) 3,453
------------------------------------------- ------------ -------- ------- --------- ---------
Interest on associates and joint ventures (1,654) - - - (1,654)
Net financing costs (1,968) (491) - 1,148 (1,311)
------------------------------------------- ------------ -------- ------- --------- ---------
Profit/(loss) before taxation 3,254 1,594 46 (4,406) 488
------------------------------------------- ------------ -------- ------- --------- ---------
Depreciation charge (12,019) (467) - (450) (12,936)
------------------------------------------- ------------ -------- ------- --------- ---------
Capital expenditure (23,421) (5,545) - (295) (29,261)
------------------------------------------- ------------ -------- ------- --------- ---------
Net assets/(liabilities)
Segment assets 203,256 34,115 28,547 5,384 271,302
Segment liabilities (93,634) (6,492) - (45,205) (145,331)
------------------------------------------- ------------ -------- ------- --------- ---------
Segment net assets/(liabilities) 109,622 27,623 28,547 (39,821) 125,971
Associates and joint ventures 10,116 - - - 10,116
------------------------------------------- ------------ -------- ------- --------- ---------
Total net assets 119,738 27,623 28,547 (39,821) 136,087
------------------------------------------- ------------ -------- ------- --------- ---------
Unallocated net liabilities of GBP39.8m include the Group
banking facilities liability (GBP39.3m), cash and cash equivalents
(GBP0.6m liability), derivative financial instruments (GBP1.0m
asset), corporation and deferred tax assets (GBP3.9m), retirement
benefit obligations (GBP4.4m) and other corporate items (GBP0.4m
liability).
3 Exceptional Items
The Group incurred a number of exceptional items in the year
primarily related to the losses sustained due to the insolvency of
Wolf Minerals (UK) Limited and British Steel Limited. Additionally,
there were two other items relating to the C. A. Blackwell
subsidiary.
2019 2018
GBP000 GBP000
------------------------------------------------------------------ -------- -------
Losses due to the insolvency of Wolf Minerals (UK) Limited (8,130) -
Losses due to the insolvency of British Steel Limited (7,964) -
Losses on legacy contracts in C. A. Blackwell (676) (3,435)
Net amounts recovered from C.A Blackwell breach of warranty
claim 634 -
Other restructuring costs relating to C. A. Blackwell - (459)
Credit associated with early closure of certain mining operations - 410
Total (16,136) (3,484)
------------------------------------------------------------------ -------- -------
4 Taxation
Recognised in the Income Statement
2019 2018
GBP000 GBP000
---------------------------------------------------------- ------- -------
Current tax
Current year 87 469
Adjustments for prior years 344 (173)
---------------------------------------------------------- ------- -------
Current tax expense 431 296
---------------------------------------------------------- ------- -------
Deferred tax
---------------------------------------------------------- ------- -------
Origination and reversal of temporary timing differences (1,178) (712)
Adjustments for prior years (918) (277)
Deferred tax credit (2,096) (989)
---------------------------------------------------------- ------- -------
Tax credit in Income Statement (excluding share of tax of
equity accounted investees) (1,665) (693)
Share of tax of equity accounted investees 875 1,632
---------------------------------------------------------- ------- -------
Total tax (credit)/expense from continuing operations (790) 939
---------------------------------------------------------- ------- -------
The deferred tax adjustment in respect of prior years of
GBP918,000 relates to capital allowances, which were disclaimed
within the Group provision previously.
Recognised in Other Comprehensive Income
2019 2018
GBP000 GBP000
-------------------------------------------------------- ------- -------
Deferred tax income/(expense)
Effective portion of changes in fair value of cash flow
hedges 216 (192)
Remeasurements of defined benefit pension schemes 203 120
-------------------------------------------------------- ------- -------
419 (72)
-------------------------------------------------------- ------- -------
Reconciliation of Effective Tax Rate
2019 2018
GBP000 GBP000
--------------------------------------------------------------- ------- -------
(Loss)/profit for the year from continuing operations (8,193) 1,181
Total tax (credit)/expense (including share of tax of equity
accounted investees) (790) 939
--------------------------------------------------------------- ------- -------
(Loss)/profit excluding taxation from continuing operations (8,983) 2,120
--------------------------------------------------------------- ------- -------
Tax using the UK corporation tax rate of 19.00% (2018: 19.00%) (1,707) 403
Effect of tax rates in foreign jurisdictions 378 741
Previously unrecognised/(unrecognised) tax losses 576 (508)
Non-deductible expenses 537 753
Adjustment in respect of previous periods (574) (450)
--------------------------------------------------------------- ------- -------
Effective total tax (credit)/expense (790) 939
--------------------------------------------------------------- ------- -------
The UK corporation tax rate has been 19.00% for the duration of
the financial year (2018: 19.00%).
Factors That May Affect Future Current and Total Tax Charges
The UK corporation tax rate reduced from 20% to 19% (effective
from 1 April 2017) and remained at 19% for the tax year beginning 6
April 2019. On 16 March 2016 it was announced that the main rate of
UK Corporation Tax would reduce further to 17% on 6 April 2020.
This change was substantively enacted on 6 September 2016. This
will reduce the Group's current tax charge accordingly. The
deferred tax balances at 31 May 2019 and 2018 have been calculated
based on the rate of 17%, the rate substantively enacted at the
Balance Sheet date.
5 Discontinued Operations
All discontinued operation results are attributable to equity
holders. The Group's discontinued operations made a profit of
GBP3,526,000 (2018: loss of GBP1,000,000) after tax during the
year.
The discontinued operations represent the activities and
disposal of Brockwell Energy Limited ("Brockwell"). The Company
disposed of the whole of its shareholding in Brockwell on 19
October 2018 generating a profit after tax of GBP4,534,000.
Proceeds includes the reimbursement of certain costs and expenses
incurred by or in respect of Brockwell. Possible contingent
consideration of GBP2m has not been recognised on grounds that any
fair value attributable under IFRS 9 would be immaterial. In
addition to this, discontinued operations include a loss after tax
of GBP1,008,000 relating to a write off of a receivable in relation
to the Belgian fraud uncovered in 2012. There are no remaining
balances relating to this matter.
2019 2018
GBP000 GBP000
-------------------------------------------------------- -------- -------
Proceeds from disposal of subsidiary 21,733 -
Assets disposed (10,034) -
-------------------------------------------------------- -------- -------
11,699 -
Administrative expenses (7,760) (1,144)
-------------------------------------------------------- -------- -------
Profit/(loss) before tax of discontinued operations 3,939 (1,144)
Current tax (charge)/credit (312) 91
Deferred tax (charge)/credit (101) 53
-------------------------------------------------------- -------- -------
(413) 144
-------------------------------------------------------- -------- -------
Profit/(loss) for the year from discontinued operations 3,526 (1,000)
-------------------------------------------------------- -------- -------
6 Assets Held for Sale
In the prior year the assets and liabilities of Brockwell were
classified as held for sale. In addition to the assets associated
with the disposal group, there was property, plant and equipment
relating to the closure of Maltby Colliery which was also
classified as held for sale in the previous year. Additionally,
certain items of Freehold Land and Buildings were transferred into
Assets Held for Sale as discussions regarding their sale were
ongoing at the prior year end, these assets were disposed of during
the year for proceeds of GBP8.4m.
2019 2018
Assets Held for Sale GBP000 GBP000
--------------------------------------------------- ------- -------
Property, plant and equipment - Land and Buildings - 8,433
Property, plant and equipment - Other - 9,016
Goodwill - 383
Other current assets - 138
Other current liabilities - (1,310)
--------------------------------------------------- ------- -------
Total assets held for sale - 16,660
--------------------------------------------------- ------- -------
7 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.
2019 2018
-------------------------- --------------------------
Earnings EPS DEPS Earnings EPS DEPS
GBP000 Pence Pence GBP000 Pence Pence
------------------------------------- -------- ------- ------- -------- ------- -------
Underlying earnings per share from
continuing operations 4,918 15.30 15.30 4,764 14.90 14.79
Exceptional items and amortisation
(net of tax) (13,185) (41.01) (41.01) (3,535) (11.06) (10.97)
------------------------------------- -------- ------- ------- -------- ------- -------
Continuing basic (loss)/earnings per
share (8,267) (25.71) (25.71) 1,229 3.84 3.82
Discontinued operations 3,526 10.96 10.96 (1,000) (3.12) (3.11)
------------------------------------- -------- ------- ------- -------- ------- -------
Basic (loss)/earnings per share (4,741) (14.75) (14.75) 229 0.72 0.71
Weighted average number of shares 32,150 32,150 31,981 32,214
------------------------------------- -------- ------- ------- -------- ------- -------
The calculation of weighted average number of shares includes
the effect of own shares held of 1,013,502 (2018: 1,069,904).
The calculation of diluted (loss)/earnings per share is based on
the (loss)/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 425,491 (2018: 232,834); however the effect of
these on basic (loss)/earnings per ordinary share in the current
year is 0.00p as these instruments would have had an anti-dilutive
impact (2018: 0.01p). Effect on continuing basic (loss)/earnings
per ordinary share is 0.00p (2018: 0.02p).
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 Operating Represents the operating profit from continuing
Profit operations of the Group before net exceptional
items, the amortisation and impairment of intangible
assets and includes the Group's share of the operating
profit of its German associate. See Note 2 for
reconciliation to statutory profit before tax.
This measure is consistent with how the business
measures performance and is reported to the Board.
------------------------- ----------------------------------------------------------------
Basic underlying earnings Profit attributable to the equity holders of the
per share Parent before net exceptional items and the amortisation
and impairment of intangible assets 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 7.
------------------------- ----------------------------------------------------------------
Net Debt Represents the net position of the Group's cash
and loan balances including leases and hire purchase.
Calculated as follows:
2019 2018
GBP'000 GBP'000
Cash and cash equivalents 21,583 16,110
Non-current interest bearing
loans and borrowings (35,220) (4,434)
Current interest bearings
loans and borrowings (4,289) (42,460)
--------- ---------
Net Debt (17,926) (30,784)
------------------------- ----------------------------------------------------------------
Net Asset Value per Represents the Net Asset value of the group divided
Share by the number of shares in issue less those shares
held in treasury. Calculated as follows:
2019 2018
Total Shares in issue 33,138,756 33,138,756
Less shares in treasury (1,013,502) (1,069,904)
Shares for calculation 32,125,254 32,068,852
--------------- ---------------
Net Asset Value per Balance GBP127,477,000 GBP136,087,000
Sheet
--------------- ---------------
Net Asset Value per share GBP3.97 GBP4.24
------------------------- ----------------------------------------------------------------
9 Posting of Report & Accounts
The Group confirms that the annual report and accounts for the
year ended 31 May 2019 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
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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