Hargreaves Services Plc has warned it is planning to axe more jobs across its business as the company plans to reduce in size over the next year.
The company has been making the transition from its historic roots in the 海角视频鈥檚 coal mining industry to the property sector, and said it plans to cut jobs as a means of reducing costs.
John Samuel, Hargreaves鈥 finance director, said: 鈥淲e have been taking costs out of the business for some time. The business is going to reduce in total size over the next 12 months and the consequence is we have to make our headcount as effective as possible. It is a reduction in headcount, that is what it means.鈥
Mr Samuel declined to say how many jobs will be affected by the firm鈥檚 cost cutting plans but the majority of the redundancies will be made across its operational divisions.
It is expected that the firm鈥檚 North East workers will be largely unaffected.
Over the last financial year, 70 members of staff left Hargreaves, allowing the company to save almost 拢4m in salary costs. During the last four years Hargreaves has reduced its headcount by 300, allowing it to save 拢14m.
The news of further cuts comes as the firm revealed its operating loss had widened to 拢9.7m for the year ending May 31. It had posted a loss of 拢1.4m during the previous year.
Hargreaves鈥 financial results took a hit after it was forced to write off 拢16.1m from its books due to the collapse of Wolf Minerals Limited and British Steel.
Wolf Minerals entered liquidation in October 2018 leading to Hargreaves posting an exceptional charge of 拢8.1m. The group continues to have a small presence at the Hemerdon mine, where Wolf operated, and said it is well positioned to secure any restoration work which may arise at the site.
British Steel collapsed in May 2019 meaning the business鈥 failure did not impact Hargreave鈥檚 turnover for the 2018/19 financial year. However, the company has made a provision of 拢4.5m to cover trade balances and work-in-progress that will not be recovered and a further 拢3.5m to cover redundancy costs and equipment write downs.
At the moment Hargreaves is continuing to carry out work under its contract with British Steel as the Official Receiver has taken over its operations. But Mr Samuel believes the work will eventually cease, impacting the group鈥檚 top line.
He said: 鈥淲e are still working there right now as the Official Receiver continues to run the plant as it was. That can鈥檛 continue for ever but we don鈥檛 know how long that will continue.
鈥淚f it ceases to operate we lose 拢1m a month in revenue.鈥
Despite the difficult year Hargreaves did manage to increase its turnover by 1.9%, from 拢297.1m to 拢302.6m. Taking out the losses related to British Steel and Wolf Minerals underlying operating profit increased from 拢9.4m in 2018 to 拢10m.
Hargreaves is continuing to transition its business away from the coal and mining sector into the property sector and CEO Gordon Banham said that more money is now being invested in the latter.
Mr Banham said: 鈥淐oal mining and the future of coal is limited in the 海角视频. We are the last of the coal dinosaurs.鈥
He added: 鈥淎s the coal mining business comes to an end that brings a lot of cash that was tied up there and we believe we can use that cash to develop sites in the North East.鈥
The firm鈥檚 property business is currently working on its Blindwells development in Scotland, where 1,600 houses are being built. Hargreaves plans to develop more sites in Scotland, Yorkshire and the North East over the next few years.
In Germany, Hargreaves is nearing the completion of a Carbon Pulverisation Plant in Duisberg, which has been under development for a number of years. As investment in building the site has now completed, Hargreaves has rewarded shareholders with an additional dividend of 12p per share, which will commence in the year ending May 31 2021. The full year dividend for 2019 has been set at 7.2p.
News of the dividend payment has been welcomed by shareholders and caused Hargreaves share price to increase from 225p per share at close of play on Tuesday to 269p at the time of writing.
