Hargreaves Services (HSP) H2 2024 earnings summary

Executive summary

• Business operates across three pillars: Services, Land (including renewables), and a German joint venture (HRMS), each contributing to diversified income streams and strategic transformation.

• Achieved significant contract wins in Services, expanding to over 65 term and framework contracts, including major deals with Yorkshire Water and Sizewell C Nuclear Power Station.

• Land business delivered a record year for profit before tax, driven by major asset disposals such as the Westfield EfW asset and residential site at Maltby.

• HRMS performance was impacted by the German economic downturn and commodity price reductions, but showed improvement in the second half and continues to provide a sustainable dividend stream.

• Full year dividend doubled to 36.0p per share, supported by strong cash flow and a completed pension scheme buyout.

Financial highlights

• Group profit before tax (PBT) was £16.9m, down from the previous year due to challenges in Germany.

• Services revenue grew 1.6% year-over-year to £204.1m, with underlying PBT rising from £9.1m to £11.4m and margin improvement above 5%.

• Land delivered a record £8.2m PBT, mainly from major asset disposals.

• EBITDA increased 19.7% to £26.1m, reflecting strong cash generation.

• Net cash at year-end was £22.7m, with no bank debt.

Outlook and guidance

• Trading outlook for FY25 is strong, led by Services and Land, with over 70% of Services revenue secured under contract.

• Land business to realize at least £60m from asset sales, with further upside from renewables and the first tranche of renewable energy land assets to be marketed in FY25.

• Renewables portfolio anticipated to attract strong market interest, with potential early sale.

• HRMS expected to deliver improved performance, with focus on cash returns and stabilization through hedging and cost controls.

• Dividend of £0.36 per share is sustainable, with potential for special dividends or buybacks as cash is realized.