May 22, 2019 / 6:46 AM / a month ago

Hargreaves Services warns of profit hit from possible British Steel collapse

A British Steel works sign is seen in Scunthorpe, northern England, Britain, May 21, 2019. REUTERS/Scott Heppell

(Reuters) - Hargreaves Services Plc said a possible collapse of British Steel, the country’s second largest steel producer, would hit the industrial and property services provider’s revenue and pretax profit in the next financial year.

Hargreaves has supplied materials handling and other services to British Steel’s operations for almost eight years, employing about 170 people in those operations, it said.

British Steel is on the brink of collapse unless the government agrees to provide an emergency 30 million pound loan, two sources close to the situation told Reuters on Tuesday.

If British Steel ceases to trade, this could reduce Hargreaves Services’ revenue in the next financial year by about 11 million pounds and its pretax profit by about 1.3 million pounds, it said.

The company said it estimates a current net exposure of about 4.5 million pounds to British Steel comprising trade debt and work-in-progress balances, some or all of which may prove to be irrecoverable were British Steel to be unable to continue trading.

Hargreaves also warned of redundancy costs, potential asset write downs and leasing obligations.

Reporting by Noor Zainab Hussain in Bengaluru; Editing by Alexandra Hudson

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