Valuation and Realisation Plan for Renewables

Hargreaves Services PLC

25 July 2023

 

Hargreaves Services plc

("Hargreaves", the "Company", or the "Group")

Valuation and Realisation Plan for Renewable Energy Land Assets

Hargreaves Services plc (AIM: HSP), a diversified group delivering services to the industrial and property sectors, announces significant progress regarding its renewable energy land assets.

Strategic Focus

The Group has remained focused on its strategy to create, deliver and realise value for shareholders. Over recent years progress has been made on the creation of value opportunities including identifying opportunities for renewable energy assets to be constructed on or accessed from some of the Group's land which has limited alternative development potential. The Board can now announce that it has identified clear opportunities for value realisation, as set out below:

Renewable Asset Valuation and Realisation Plan

A key focus over the last few years has been the identification of several thousand acres of the Group's land which is now under lease to third parties for the construction of wind farm as well as other renewable energy assets and the granting of access to third party wind farm projects. Collectively, these have the potential to generate over 700MW of clean electricity.  The Group has rights to receive index linked ground rents from these assets, most of which are linked to the underlying price of the electricity they generate.

The first wind farm on our land became operational earlier this year at Dalquhandy. Similar land assets within the renewable land portfolio have increasing index linked rental income coming on stream over the next few years resulting in a growing and meaningful annual return to the Group. Most of these renewable energy land assets have planning permission and approved dates for grid connections, significantly de-risking the projected income profile.

We have recently commissioned the first independent valuation of these renewable energy assets by Jones Lang LaSalle Limited. This review has placed a Market Value Today* in the range of between £21.6m and £23.1m on these assets as at 30 June 2023 with a Market Value at Commissioning of Development ("COD")* expectation in the range of £27.2m to £28.9m for when the assets commence generation which is at various points over the period to January 2027. The Board intends to commission this valuation on an annual basis going forward, but does not intend to revalue its investment property in its annual statements.

These investment property assets are held on the Balance Sheet at an historic cost of £6.6m, resulting in a substantial gain to be realised. These assets exclude the Westfield site where an Energy from Waste ("EfW") plant is being constructed by a third party.

It is the intention of the Board to realise the value of these renewable energy land assets, as well as the Westfield EfW, over the next five years in an orderly manner and to repatriate proceeds to shareholders. This is a clear demonstration of the Group's strategy to create, deliver and then realise value for shareholders.

Commenting on the Valuation and Realisation Plan, Acting Group Chair Nigel Halkes said: "While originally unsuitable land for commercial or residential projects, Hargreaves has identified exciting opportunities for renewable energy projects generating a long-term index linked rental income stream for the Group. With a roadmap to delivery of these projects now in sight, our Valuation and Realisation Plan is a clear demonstration of the Group's efficient strategic planning and commitment to creating, delivering and realising value for our shareholders."

* Valuation definitions

Market Value Today - Market Value Today takes the Market Value at COD and applies an appropriate reduction to reflect the inherent risk of delivery that would likely arise between a willing buyer and a willing seller based on the circumstances as they are at 30 June 2023.

Market Value at COD - represents the price at which the portfolio would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts.

For further details: 

Hargreaves Services Gordon Banham, Chief Executive John Samuel, Group Finance Director		www.hsgplc.co.uk Tel: [phone]
Walbrook PR (Financial PR & IR) Paul McManus / Lianne Applegarth / Louis Ashe-Jepson	Tel: [phone] or [e-mail] Mob: [phone] / 07747 515 393
Singer Capital Markets (Nomad and Corporate Broker) Sandy Fraser / Justin McKeegan		Tel: [phone]

About Hargreaves Services plc (www.hsgplc.co.uk)

Hargreaves Services plc is a diversified group delivering services to the industrial and property sectors, supporting key industries within the UK and South East Asia. The Company's three business segments are Services, Hargreaves Land and an investment in a German joint venture, Hargreaves Raw Materials Services GmbH (HRMS). Services provides critical support to many core industries including Energy, Environmental, UK Infrastructure and certain manufacturing industries through the provision of materials handling, mechanical and electrical contracting services, logistics and major earthworks. Hargreaves Land is focused on the sustainable development of brownfield sites for both residential and commercial purposes. HRMS trades in specialist commodity markets and owns DK Recycling, a specialist recycler of steel waste material. Hargreaves is headquartered in County Durham and has operational centres across the UK, as well as in Hong Kong and a joint venture in Duisburg, Germany.

 

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