Share Name Share Symbol Market Type Share ISIN Share Description
Hargreaves Services Plc LSE:HSP London Ordinary Share GB00B0MTC970 ORD 10P
  Price Change % Change Share Price Shares Traded Last Trade
  -7.00 -1.45% 475.00 35,620 15:33:41
Bid Price Offer Price High Price Low Price Open Price
472.00 479.00 475.00 470.00 471.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Support Services 222.24 2.15 13.40 35.4 153
Last Trade Time Trade Type Trade Size Trade Price Currency
16:05:44 O 2,000 478.00 GBX

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23/7/202112:47Hargreaves Services plc2,344

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Hargreaves Services Daily Update: Hargreaves Services Plc is listed in the Support Services sector of the London Stock Exchange with ticker HSP. The last closing price for Hargreaves Services was 482p.
Hargreaves Services Plc has a 4 week average price of 406p and a 12 week average price of 346.50p.
The 1 year high share price is 495p while the 1 year low share price is currently 199p.
There are currently 32,311,606 shares in issue and the average daily traded volume is 97,459 shares. The market capitalisation of Hargreaves Services Plc is £153,480,128.50.
btgman: The £6 share price target looks to have become very realistic given current trading update AIMHO GLA BTG
btgman: Looking forward to the results end of the month if Hsp deliver 50p eps and a 22p dividend and a decent outlook for 2021/2 I don't think a p/e of 12 would be unreasonable pointing towards a £6 share price AIMHO GLA BTG
sphere25: Talking of catalysts, last month SCSW did a brief write up on HSP and finished with "More next month...". Could that suggest this will be a main tip in tomorrow's edition? And if so... Will it be an interesting write up? And if so... Could that cause buying volumes to spike to a level (HSP is clearly highly illiquid so it doesn't take much) that results in HSP breaking out? All to be revealed soon. All imo DYOR
muckshifter: Afternoon CT, I believe that the figure in 2282 above for HRMS retained earnings, including HSP’s 86%, as of May 20, at £9.35m is reasonably correct, although I’d welcome any accountancy trained posters assessment for comparison. HSP / HRMS clearly have a plan, which I suspect involves HRMS taking on a big asset based loan from German banks, on the coal stocks, to fund: the coal purchase, the promised “pass through” dividend, and perhaps the additional working capital requirement that use of the pulveriser will incur. So, imo, HSP are simply passing debt from one pocket to the other, at an unknown but probably significant cost, for an unrevealed purpose. My best guess is that this action has been effectively driven by the UK banking relationship. Over the last few years there seem to me, from memory, to be quite a few references to renegotiation of bank facilities in RNSs and reports, some of which look to put HSP in a slightly uncomfortable position. Why this is the case, if I’m right, is anybody’s guess. It could be that the banks have become increasingly troubled by the never ending succession of expensive write offs of failed businesses, bad debt provisions, etc, over the last ten years, or it might just be that the banks are becoming nervous about lendings to “dirty” industries because of growing environmental related pressure. Another possibility is that HSP don’t really believe the hype about the German business, hope to sell it soon, are getting whatever cash they can out of it in the meantime, and feel more comfortable with the “non recourse debt” if HRMS did get into trouble (so far, I believe HSP have guaranteed just £5m of HRMS debt), but without access to any detailed accounts for HRMS, who knows?
smithie6: interesting & well done for reading accounts & trying to sort out the numbers your point that 86% of HMRS is HSP, good/fair point 'retained profit', not sure that I see that as a key value, since it can be held in 'intangibles' which, well, its not tangible ! Debt HSP was paying a high price for its bank debt, 2 million/year. a very -ve impact on the annual profit number. HMRS is in German so one assumes they can obtain loans at very cheap rates in Euros (with the ECB providing billions to industry at close to 0% to prop it up) & such a loan can be backed up by the assets of HMRS (incl. its new coal stocks & its pulverising facilities) & phps its EBITDA. removing the debt cost from the HSP accounts increases its annual profit. The lower interest cost will appear in the HMRS accounts but I'm sure that asset equity accounting is used in the HSP accounts for the treatment of the investment in HMRS (because !!, HSP owns less than 50.0% of the votes; interesting ) so the interest cost inside HMRS is effectively/almost not seen in the HSP accounts. Instead the HMRS accounts will state the shareholder nett assets (which is after the interest cost of course) & the HSP accounts will state 86% of that for the value of that asset. With various items of debt I'm not sure how HMRS manages to pay a divi. If I remember correctly a divi can only be paid if the shareholder assets are greater than the amount raised by issuing shares. Maybe only a tiny amount was raised by issuing shares & hence removing that problem/risk, recalling that the cash to fund HMRS was provided as a loan (also providing HSP with the advantage of owning the HMRS assets, while owning <50% of the votes, if there were problems).
muckshifter: OK Smithie6, I’ll attempt to explain my jaundiced view of the HRMS purchase transaction to you, but bear in mind that I’m not an accountant, just someone who reads annual reports carefully and does his best to understand them – so I may make mistakes. At the time that the coal pulveriser construction was contracted by HRMS, it was budgeted to cost 27.5 million Euros – we have no access to any HRMS accounts to see the final outcome but aiui the contract completion was a few months behind schedule, which as a lifetime contractor makes me expect that the budget may well have been busted, but I’ll ignore that in the absence of figures. This was financed by a 3m Euro loan from HSP, a German bank loan taken by HRMS of 15m Euros (86% HSP) and 9.5 m Euros from retained profits of HRMS (86% HSP). I had a look at that time to see if I could work out the retained profits HRMS held, to see if they would be comfortable after the 9.5m Euros, and I’ve updated the retained profit figure from then using AR numbers to May 20. My updated figure came to approx 20.25m Euros, without any additional funds from depreciation because I don’t think HRMS had almost any depreciable assets before the Coal pulveriser. Deducting the 9.5m Euro funding for the crusher contract leaves 10.75m Euros (86% HSP), say £9.35m in HRMS retained profit. Note that the £24m coal purchase by HRMS was announced in December but payment had not occurred by the interims late in January - the reason, imo, is that HRMS haven’t enough cash. So, what comes next? Perhaps more borrowing by HRMS in Germany to raise the funds, but that would be borrowing by HSP for 86%. That seems to me to mean that HSP are transferring ownership of £24m worth of coal 86% to themselves, paying themselves from funds which are 86% theirs, and taking ownership of 86% of additional German bank loans to the tune of at least 16.7M Euros – very “smoke and mirrors” imo. The alternative is that HSP “declare”; the sale but get paid over a prolongued period during which HRMS sell the coal. That would be more like my understanding of the relationship between the two parties to date, when, as I understand it, HSP declare their portion of HRMS net profit in the Annual Report in the profit and loss statement and then deduct it in the cashflow statement, ie. the cash stays in HRMS. Confusing this, isn’t it? And I wonder how the £3.86m needed for the 12p/share extra dividend passed through from HRMS to HSP shareholders will be financed.
muckshifter: Afternoon Smithie6. The only shares I ever owned in HSP were the approx £1k worth that I bought for the short term early last November, for one of my kids, and they were sold last week. After many years of watching HSP make what I felt were a never ending series of blunders, I’d begun to think that they might just be pulling themselves together, and felt that the short term news flow should be reasonably good. But, after the last few RNSs I wanted out as soon as my target was reached. For long enough I’ve been posting that I didn’t think Blindwells would be the bonanza many expected, but a steady reasonably profitable long term project, and the last few RNSs have vindicated that view, imo. HSP spending to November 20 on Blindwells preparatory work amounts to approximately £22m, with no yardstick to measure that against – ie. have they completed all the most expensive preparatory work within the intended budget, or not, and so far they have received just £4.2m in January from the Bellway completion – no wonder HSP seem to have slowed down work at Blindwells, with the next £2.1m due January 22. The RNS about the coal sale to HRMS was an incredible RNS in my opinion, and if there was such a thing, I’m sure it would win the London Stock Exchange “smoke and mirrors” Oscar of the year, so I was pleased to exit when I did. However, differing opinions are what makes the market, so I wish all posters here the best of luck and a continuation of the rising share price.
muckshifter: A few more points, Smithie6, As previously posted, I'm not at all sure that the HSP JV have a road to build as part of the "completion" conditions, but I don't trust HSP RNSs. The bit of the RNS you quote in 2216 talks of a new road which provides direct access to Jn 5 of the M18, which sounds like the road Balfours have just opened - ie. an access road directly to the future warehouse would not connect to a motorway junction, it would connect to the road which Balfours have recently opened. So it is far from clear, reading that RNS that the HSP JV has to build the connection, but far from clear and perhaps "economical with the truth" seems common in HSP RNSs, imo. If you want the real picture in terms of Blindwells, I suggest you go to East Lothian Council site where there are literally hundreds of Blindwells related planning documents which tell the story. For example, iirc, planning permission for the roads and drainage needed as a precursor, I believe, to the two completions was granted subject to just a few preconditions 19th May 2020, which didn't leave much time to fulfil the preconditions and then do the work before the predicted end of May "completion" did it. Some of the documents appear contradictory, such as the need to prove that the site is environmentally clean which occurs in the Hargreaves application and the two joint applications between HSP & Crudens or Bellway - joint applications being indicative that HSP still have responsibility for some aspects of the housing site application. The HSP one for the roads and drainage etc, appears to have got over that hurdle but the others don't, because, imho, the criteria for acceptable levels of contamination are more rigorous for housing areas than under roads. Try this and then poke about if you have hours and hours to spare:
muckshifter: In terms of your latest series of posts Smithie6, here, fwiw, is my understanding of the origin, situation, etc of the German associate company HRMS GmbH, taken from an incomprehensible (imo) set of Annual Reports that I’ve just re-skimmed through. To be fair, the “dog’s breakfast” of enterprises which HSP owns, would take some explaining, so the lack of clarity that I’m complaining about, is understandable. Firstly voting rights, ie. control of the actions of the company lie with the German management who have a 51% stake, but financial “ownershipR21;, which I believe HSP explain as “profits and assets” without mentioning liabilities – which I would assume follow the same principle, is 86% HSP. This, I would think, stems from the origins of HRMS. HSP originally, I believe, had set up a team in Germany trading coal and the like into German industry, especially coke produced by HSP’s cokeworks in Yorkshire. Presumably, that team did well, and presented HSP with a proposal to create partly management owned HRMS, with perhaps an unacceptable alternative. HSP then set up HRMS with an initial loan of £10m, iirc, and a bank guarantee for a £5m facility. HRMS was a nice successful business for some time, I believe, but the closure, or impending closure, of the UK cokeworks caused them to decide on building the Carbon Crushing Plant, on the basis that it would give them more leverage with their customers. There was a hint that something new was being considered in the 2017 report, then in the 2018 report it was reported as being built at Duisberg, where HRMS have their HQ, at a cost of 27.5m Euro funded by 15m borrowed from a German bank by HRMS, a loan of 3m Euro from HSP, and the remainder from profits retained in HMRS. It was to be completed by end of March 2019, but was in fact six months late (no mention of cost overruns). Within that 2018 report, one of the “key risks” identified by the auditor was that failure of HRMS would create a material risk to the Group. Elsewhere in that AR total financial liability of the group related to HRMS is stated to be £29 million and outstanding receivables from HRMS is given as £11.8m, so the success of the German enterprise is clearly critical for HSP. In terms of what the CCP does, it must serve the high quality coal and coke users, such as steel smelters, cement works, etc, with German “coal” fired power stations using the much lower calorific value ( but cheap and local) lignite. Presumably, the high quality carbon product users have had some sort of system for pulverising the coal / coke themselves for years, but HRMS believe, and have convinced HSP, that they have a viable business which can replace the existing system profitably. That would not surprise me, as businesses generally seem to be whittling down peripheral operations and outsourcing them as they approach obsolescence these days. Finally, the purchase for 1 Euro of an adjacent business DK Recycling in December 2019, was reported in AR 2020. This is a business that reclaims iron from furnace slag, and is currently (at the date of the 2020 AR - 28/7/20) the first customer of the CCP. Both businesses are said to be suffering covid related slowdowns. Again, this is said to be a unique and efficient reclamation process, which presumably is intended to replace provisions at smelters. Many years ago blast furnace slag was used as sub-base on a motorway building contract I worked on, but it was not good, because it was full of lumps of slag mixed with metal, which is what I assume this recycling company is dealing with, separating the metal out and selling it back to the smelter with sub base or cement additive as a bonus by product perhaps. It will be very interesting to see how successful these two ventures are, as they seem to me to be critical to the future of HSP and must be reliant on replacing existing suppliers, but I doubt if we will have a clear indication this year. Hope that helps your understanding of the situation!
cc2014: Hmm. If HSP share price is going up on a day when FTSE is down 170pts I'm minded to believe someone has a good idea what's in the results.
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