Hargreaves Services is keeping a watching brief after client British Steel went into liquidation.
In a statement issued ahead of official confirmation that the business had entered the insolvency process, the group confirmed it had worked with British Steel for the past eight years supplying materials handling and other services to it.
These include materials handling at Immingham port (unloading raw materials – iron ore, coal and coke) and transferring them to the Scunthorpe site as required; receiving raw materials at Scunthorpe and loading them into the furnace for steel production; and transferring the finished steel from the furnace and delivering it for storage.
Approximately 170 Hargreaves Services employees are involved in the provision of these services.
“Until the future of British Steel is clarified, the potential impact on Hargreaves cannot be fully determined.
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“However, the Board estimates that the Group has a current net exposure of approximately £4.5m 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.
"Redundancy and other associated employment costs may result in a further non-recurring charge of up to £3m against group profits. Potential asset write downs and leasing obligations amount to an additional £1.5m, resulting in a possible total exceptional charge of £9m,” Hargreaves Services said in a statement.
It added that if British Steel ceases to trade, group revenue in the next financial year could be reduced by approximately £11m and its pre-tax profit by about £1.3m.
British Steel was placed into compulsory liquidation today (22 May).
In a statement the official receiver, acting for the Insolvency Service, said: “The immediate priority following my appointment as liquidator of British Steel is to continue safe operation of the site. I appreciate that this a difficult time for the company’s employees and I want to thank them for their ongoing cooperation.
“The company in liquidation is continuing to trade and supply its customers while I consider options for the business. Staff have been paid and will continue to be employed.
“The court also appointed special managers [from Ernst & Young} to assist me with my work and they are engaging with staff and their representatives to keep them informed, as well as contacting British Steel’s customers.”
Photo: PA Images
