For immediate release 27 October 2014
HARGREAVES SERVICES PLC
("Hargreaves" or "the Group")
CONSULTATION PROCESS AT MONCKTON
Hargreaves Services plc (AIM:HSP), the UK's leading supplier of solid fuels and bulk material logistics, announces that it will today begin a consultation process in which the employees at Monckton Coke and Chemical Company Limited will be issued with notification of potential redundancies. This consultation process will last for a minimum of 45 days.
In the Group's preliminary results statement, issued on 9 September 2014, the Board confirmed its intention to review the future of Monckton, which continues to suffer from a period of unprecedented turmoil in European coke markets. Although discussions continue with key export customers, a significant change in both market conditions and customer demand would be required to secure the plant's future.
Although Monckton continues to benefit in this financial year from a number of higher priced legacy contracts and was budgeted to make a profit of £2.0m, the outlook beyond this year is very poor given current market prices. If the decision is taken to proceed with closure, whilst the current year profit would be reduced to nil reflecting the cancellation and rescheduling of a number of customer contracts, the closure would result in the unwinding of significant working capital tied up in the business. The combined impact on FY15 and FY16 of this working capital unwind would be in excess of £22m. The cash flows over this period would be partly offset by cash closure costs of approximately £3m and remediation costs of £1.8m.
Commenting on the announcement, Gordon Banham, CEO of Hargreaves, said: "Hargreaves acquired Monckton in 2005. Whilst great progress has been made by the team in improving efficiency and environmental performance over the past ten years, the coke markets have become increasingly challenging for the business. I have worked closely with the management team and it is with great personal sadness that we find ourselves having to start this consultation process."
For further details:
Hargreaves Services |
Tel: 0191 373 4485 |
Gordon Banham, CEO |
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Iain Cockburn, Finance Director |
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Buchanan |
Tel: 020 7466 5000 |
Mark Court / Fiona Henson / Sophie Cowles |
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N+1 Singer (Nomad & Joint Broker) |
Tel: 0207 496 3000 |
Sandy Fraser / Nick Owen |
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Jefferies Hoare Govett (Joint Broker) |
Tel: 020 7029 8000 |
Sara Hale / Harry Nicholas |
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