27th Feb 2007 07:05
Hargreaves Services PLC27 February 2007 For immediate release 27 February 2007 Analyst Briefing An analyst briefing will be held today at the offices of BuchananCommunications, 45 Moorfields, London, EC2Y 9AE at 11.15 am. Please contact Diane Stewart or Catherine Breen on 0207 466 5000 to confirmattendance. HARGREAVES SERVICES PLC ("Hargreaves") £21.5m Acquisition of Maltby Colliery from UK Coal Hargreaves Services plc (AIM:HSP), a leading provider of transport and supportservices to the energy and waste sectors, is pleased to announce the acquisitionof Maltby Colliery ("Maltby") from UK Coal PLC for a cash consideration of£21.5m (plus the assumption of a pension deficit of £8.6m) (the "Acquisition").Hargreaves also announces today in a separate release its Interim Results forthe six months ended 30 November 2006. The consideration for the Acquisition will be funded equally between bank debtand by the placing of 2,370,000 new ordinary shares at a placing price of £4.69per share to raise £11.1 million from new and existing investors. Additionally,£5.6 million of existing ordinary shares has been placed on behalf of certainmembers of the Hargreaves management team. Application has been made for theshares to be admitted to AIM and Dealings in the new ordinary shares areexpected to commence on 1 March 2007. Based in South Yorkshire, Maltby Colliery has been a working mine since 1908 andis one of the few remaining deep coal mines in the UK. In 2006, it producedapproximately 800,000 tonnes of coking coal. Maltby currently employsapproximately 500 staff. Hargreaves owns The Monckton Coke & Chemical Company Limited ("Monckton") whichis the only independent producer of metallurgical coke in the UK, and currentlyconsumes approximately 25 per cent. of Maltby production of coking coal.Hargreaves is the largest independent importer of coal in the United Kingdom. The Acquisition is being undertaken as a fixed project to 2015, when the mine isscheduled for closure, and the site will be redeveloped subject to planningpermission. Hargreaves has recruited Alan Houghton as a full time executive with directresponsibility for Maltby's operations. Alan is highly regarded in the miningindustry, having worked for British Coal for a number of years, managing 16collieries employing 14,000 people. He has also acted as a consultant andtrouble shooter at mining operations around the world. To coincide with the Acquisition, Hargreaves has today signed a new three yearcontract with Drax Power Limited, a customer of Maltby, at market rates . Thiscontract is estimated to account for approximately 60 per cent. of Maltby's 2007production, alongside Monckton's estimated requirement of approximately 25 percent., underpinning the majority of Maltby's 2007 revenues. In addition to the positive impact from the new ESI contract, the directorsbelieve that there will be significant benefits to be gained from leveraging theskills across the Hargreaves group. Consequently, Norec Industrial Services willbe involved with Maltby's above ground operations. The Minerals Division willoperate its coal marketing. The Transport Division will operate its bulk haulageservices and Monckton will closely partner with Maltby in order to optimise itsstock holding and handling. Additionally, Monckton's coking coal supply will besecured for the foreseeable future. In the year ended 31 December 2006 Maltby reported a turnover of £32.1m and anoperating loss of £18.2m in a year when there were one off production issueswhich reduced output by 36 per cent. Gross assets as at 27 February 2007 were £40.0m. The directors expect the Acquisition to be significantly earnings enhancing inthe year ended 31 May 2008. Gordon Banham, Chief Executive Officer of Hargreaves said " This is a uniqueopportunity for Hargreaves to acquire a coking coal mine which is an idealstrategic fit within the Hargreaves range of services. This Acquisition is asignificant value add to our business, not only supplying Monckton but alsoenabling us to leverage off our other operations to financially benefit thegroup as a whole. The Acquisition will also safeguard the future of Maltby and the jobs of almost500 employees who work there and I am delighted to take Maltby forward into thisnext exciting phase". ENDS Enquiries: HargreavesGordon Banham, Chief Executive Officer 0191 373 4485Peter Dillon, Financial Director 0191 373 4485 Buchanan CommunicationsDiane Stewart 0207 466 5000Tim Anderson 0207 466 5000 Brewin Dolphin SecuritiesAndrew Kitchingman 0113 245 9341 Notes to Editors Founded in 1994 as a coal haulage business with approximately 20 vehicles,Hargreaves activities have now been transformed to cover mineral trading, cokeproduction, waste handling and transportation, handling and processing ofminerals through its two port facilities as well as specialist bulk roadhaulage. The group employs approximately 1400 staff. Since formation, the group has expanded both organically through winning newcontracts, diversifying into other business areas and by acquisition. It usesits critical mass to create economies of scale and efficiency improvements. Itenjoys strong visibility of earnings through long term contracts. Hargreaves operates through four divisions; •Minerals Division, imports and retails carbon based materials to end users. The Group operates at two port facilities, Immingham on the East Coast and Newport in South Wales. The majority of imported material is for the power generation industry; •Industrial Division, provides quality assured contract management services to the power generation, utilities and minerals industries, including the handling and storage of bulk materials; •Transport and Waste Division, one of the UK's largest specialist bulk hauliers, with a total vehicle fleet of approximately 400 vehicles; •Monckton Coke & Chemical Company Limited, which was acquired by Hargreaves in June 2005, is the only independent producer of metallurgical coke in the UK. It produces 200,000 tonnes of coke per annum for use in the production of soda ash, specialist ferro-alloys and for domestic heating. In the year to 31 May 2006, Hargreaves reported turnover of £155m and PBT of£5.5m. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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