Preliminary Results

Year ended 31 May 2014

Leaders in Solid Fuel Supply & Bulk Material Logistics
 Results Highlights
Gordon Banham, Chief Executive Officer

Preliminary Results – Year ended 31 May 2014 Liverpool Docks, Merseyside

 Group Results Highlights
Leaders in Solid Fuel Supply & Bulk Material Logistics

Continuing Underlying Continuing Underlying Dividend Per Share

Operating Profit Diluted EPS (proposed)

£59.5m 124.8p 25.5p

+6.8% -7.3% +24.4%

Strong UK trading volumes and expansion of production activities

Continuation of progressive increase in dividend payout
Reduced debt levels and positive cash generation
Announcement of Group review and simplification strategy
Disposal of Imperial Tankers is the first outcome of the review

Preliminary Results – Year ended 31 May 2014 3

 Overview by Business
Leaders in Solid Fuel Supply & Bulk Material Logistics

Production Energy & Commodities Industrial Services Transport

Operating Profit Operating Profit Operating Profit Operating Profit

£16.7m £32.5m £5.7m £4.5m

(FY13: £16.7m) (FY13: £31.9m) (FY13: £3.0m) (FY13: £4.0m)

Core activities delivered a strong performance

• Strong Energy & Commodities volumes in the UK
• Five year contract secured with China Light and Power in Hong Kong

First contributions from Scottish surface mines

• Start up delayed and exceptional weather impact in H2
• Strong end to the year – management pleased with current production run rates

Subdued coke markets

• Monckton saw significant pricing pressure in H2 as contracts completed
• Monckton and European coke trading operations under review

Preliminary Results – Year ended 31 May 2014 4

 Strategy Update
Gordon Banham, Chief Executive Officer

Preliminary Results – Year ended 31 May 2014 Muir Dean Surface Mine, Fife
 Strategy Update - Market Challenges
Leaders in Solid Fuel Supply & Bulk Material Logistics

The Board’s strategic focus has been prompted by recent, emerging and potential changes
in the markets in which the Group operates

Future Dynamics of UK International Coal

Coal Markets Price

• Reduction in UK coal burn driven by • Price has fallen c.£10/tonne since the Scottish
environmental standards and carbon taxes assets were acquired

• Our opinion is that coal will play an important • FY15 protected by £9m of hedge and contract
part in the energy mix for many years to come value compared to FY16

• Data indicates size of UK coal market will
continue to support the Group’s activities
• Market uncertainty leads to shorter term
contracts and reduced revenue visibility
• Near term challenges to investment decisions in
surface mining operations
• Opportunity to mitigate price impact by
redesigning mining plans
• Scottish assets represent good long term value
and Group remains committed to development

Preliminary Results – Year ended 31 May 2014 6

 Review of Strategy
Leaders in Solid Fuel Supply & Bulk Material Logistics

Ensure the Group is optimally placed to maximise shareholder value

Focus on core
Investment strengths Simplification
Opportunities to of Group Operations
Underpin Core UK Simplify operations
Exit non core business
Business Respond to market conditions activities and profit streams
deemed to represent the
Opportunities to contract or Improve quality of earnings lowest risk-weighted returns
otherwise acquire more direct and weakest prospects for
control over significant outlets Maximise cash sustainable growth
for its coal generation

Carefully Grow International

Services Business
Build on recent contract wins and
increased credentials and experience in
steel sector

Preliminary Results – Year ended 31 May 2014 7

 Strategic Reinvestment
Leaders in Solid Fuel Supply & Bulk Material Logistics

Control of a significant
coal flow will underpin
and de-risk the core Reinvestment
business Scenario
Acquire control over
4mt of coal flows
Introduce Clean Dark
Trading Spread exposure Services
Opportunity to
Secure 2mt tonnes of
diversify service
import visibility
offering and expertise
Maintain access to Production UK reference site for
sized coal for speciality
international
market Secure 2mt of expansion
controllable off take
Clean Dark Spread vs Coal
Price Hedge
De-risk investment
decisions

Preliminary Results – Year ended 31 May 2014 8

 Strategy Implementation – Disposal of Imperial Tankers
Leaders in Solid Fuel Supply & Bulk Material Logistics

We recently announced the disposal of Imperial Tankers to Suttons Transport Group,

which represents a significant first step in the Group’s simplification plan

Rationale For Sale Key Transaction Remaining UK Bulk

Metrics Transport Business

• Non core business
• Limited synergies with other
Group operations
• Consolidating sector
• Attractive price represents
excellent return for the Group
and shareholders
• Imperial FY14 revenue: £30m
• Imperial FY14 EBITDA: £4.0m
• Imperial FY14 PBT: £1.8m
• Enterprise Value: £28.1m
• Group net debt reduced by
£28.1m
• Book value of Imperial assets in
Group accounts c.£9.5m
• FY14 revenue: £59m
• FY14 EBITDA: £3.7m
• FY14 PBT: £1.8m
• Net assets: £9.9m
• Fleet of >170 vehicles
• Dedicated subcontract fleet of
>120 vehicles

Preliminary Results – Year ended 31 May 2014 9

 Further Simplification Opportunities
Leaders in Solid Fuel Supply & Bulk Material Logistics

A number of initiatives are being considered to liberate cash for reinvestment in

core activities, complementary opportunities or capital distribution

Monckton Coke Focus On Core Other Non Core

Works Trading Streams Activities

• Coke markets and pricing remain very
volatile
• Financial and commercial position of
customers and producers is adding to
challenging trading conditions
• Need for contractual certainty to justify
significant working capital investment
• Group will also look at opportunity to
reduce trading levels in Germany
• Focus activities on core trading streams
where Group is best placed to add
value
• Maximise trading synergies and profits
from thermal coal and speciality coal
markets
• Reduce bulk trading volumes by circa
1.5mt per annum and reduce working
capital
• Protect market share and margins of
UK speciality markets
• The disposal of Imperial Tankers was
the first step in this strategy
• Other non core activities are also
under review
• Includes our tyre crumbing operation
and the Rocpower operation
• Notice already given to start wind
down of the activities of MIR Trade JV
• Will contribute to the simplification of
the Group and refocus on core
activities

Preliminary Results – Year ended 31 May 2014 10

 Financial & Segmental Performance
Iain Cockburn, Finance Director

Preliminary Results – Year ended 31 May 2014 Glenmuckloch Restoration Project, Dumfriesshire and Ayrshire
 FY 2014 Financial Review
Leaders in Solid Fuel Supply & Bulk Material Logistics

Continuing Underlying Continuing Underlying Net Cash From Continuing Net Debt
Profit Before Tax Diluted EPS Operating Activities

£55.1m 124.8p £42.2m £68.8m

+5.6% -7.3% +99.0% Reduction of £9.1m

Full year 2014 profits – robust performance across all divisions

• Underlying PBT from continuing operations increased by 5.6%
• Focus on core activities following Scottish acquisitions and exits from Maltby and Belgium in previous year

Reduction in Net Debt

• Net Debt 1.0x EBITDA – comfortably below covenant levels
• 46% debt/equity gearing ratio compared to 66% at May 2013
• Strong operating cash flows across all divisions

Reorganisation of German business

• Now an Associate with Group retaining same economic interest as before

Preliminary Results – Year ended 31 May 2014 12

 Income Statement Highlights
Leaders in Solid Fuel Supply & Bulk Material Logistics
2014 2013 Movement
£m £m %
Continuing Revenue 869.2 843.3 +3.1%
Continuing Underlying Operating Profit 59.5 55.7 +6.8%
Continuing Net Interest Expense (4.4) (3.5) +25.7%
Continuing Underlying Profit Before Tax 55.1 52.2 +5.6%
Loss for the period from Discontinued Operations (3.7) (81.8) n/a

Effective Underlying Tax Rate 23.5% 27.3% -3.8%

Continuing Underlying Diluted EPS 124.8 134.6 -7.3%
Dividend (including proposed final dividend) 25.5p 20.5p +24.4%

Preliminary Results – Year ended 31 May 2014 13

 Continuing Segmental Performance - Production
Leaders in Solid Fuel Supply & Bulk Material Logistics

Production
2014 2013 Movement
£m £m £m

Surface Mining – Tower 5.8 8.1 -2.3

Surface Mining – Scotland 5.8 1.1 +4.7
Surface Mining – England 0.9 - +0.9
Surface Mining – Total 12.5 9.2 +3.3
Monckton 2.9 6.6 -3.7
Other Production 1.3 0.9 +0.4
16.7 16.7 -

Tonnes (kte)
Surface Mining - Tower 474 574 -100
Surface Mining – Scotland 845 46 +799
Surface Mining – England 45 - +45
Monckton 192 236 -44

Preliminary Results – Year ended 31 May 2014 14

 Continuing Segmental Performance - Energy & Commodities
Leaders in Solid Fuel Supply & Bulk Material Logistics

Energy and Commodities

2014 2013 Movement
UK Bulk
Volume – Thermal 3,939 kte 3,783 kte +156 kte
Volume – Metallurgical 1,472 kte 896 kte +576 kte
Volume – Total 5,411 kte 4,679 kte +732 kte
Operating profit £13.6m £11.0m +£2.6m
Operating profit per tonne £2.52 per tonne £2.35 per tonne +£0.17 per tonne
UK Speciality
Volume 680 kte 618 kte +62 kte
Operating profit £12.8m £13.4m -£0.6m
Operating profit per tonne £18.78 per tonne £21.68 per tonne -£2.90 per tonne
Europe Speciality
Volume 491 kte 645 kte -154 kte
Operating profit £4.6m £6.3m -£1.7m
Operating profit per tonne £9.29 per tonne £9.77 per tonne -£0.48 per tonne

Preliminary Results – Year ended 31 May 2014 15

 Continuing Segmental Performance – Industrial and Transport
Leaders in Solid Fuel Supply & Bulk Material Logistics

Industrial Services
Revenue Operating Profit
 Revenue -17.9%
 Operating Profit +90.0%
149.3 5.7  Operating Margin 4.6% (+2.6%)
122.6
• Core material handling operations consistent with FY13.
3.0 • FY13 segmental result suppressed by downsizing of
engineering services and losses on biomass projects.
2013 2014 2013 2014
• Final commercial discussions underway on second
biomass conversion project.
Transport
Revenue Operating Profit  Revenue +7.6%
 Operating Profit +12.5%

82.7 89.0 4.5  Operating Margin 5.1% (+0.3%)

4.0
• Strong volumes from Dry Bulk business.
2.4
29.3 29.7
2.0
Imperial • Weighting to H1 reflected higher Bulk volumes.
Imperial
Imperial Imperial • Imperial Tankers sold on 29 August 2014.
2013 2014 2013 2014

Preliminary Results – Year ended 31 May 2014 16

 Cash Flow Highlights
Leaders in Solid Fuel Supply & Bulk Material Logistics
2014 2013
£m £m
EBITDA 67.2 60.3
Working capital (20.3) (26.5)
46.9 33.8
Interest (3.9) (2.7)
Taxation (0.8) (9.9)
Capital expenditure – underlying (22.2) (8.0)
Capital expenditure – IFRIC 20 stripping asset (12.3) -
Dividends paid (7.4) (5.4)
Dividends received 4.3 -
Germany reorganisation 10.2 -
Equity raise - 41.7
Other 0.5 (3.5)
Movement in Net Debt – Continuing 15.3 46.0
Movement in Net Debt – Discontinued (6.2) (46.2)
Movement in Net Debt – Total 9.1 (0.2)

Preliminary Results – Year ended 31 May 2014 17

 Movement in Net Debt
Leaders in Solid Fuel Supply & Bulk Material Logistics
-
77.9 68.8
10.0
67.2 20.3
20.0 Net Cash
Generated in H2:
30.0 £26.4m
3.9
40.0 0.8 12.3
£m

50.0 H1
Working Cap: 22.2
60.0 -£45.6m 4.3 7.4
H2 10.2
70.0 6.2
Working Cap: 0.5
80.0 +£25.3m

90.0
Opening Net EBITDA Working Net Interest Taxation Net Capex - Net Capex - Germany Dividends Dividends Discont'd Other Closing Net
Debt Capital IFRIC 20 Underlying Reorg Recd Paid Debt

Working Capital Capex – IFRIC 20 Capex - Underlying Germany Reorg Discontinued

• £8.4m SRG property
portfolio acquisition
• £11.8m WIP build on Lot 4
biomass project
• Underlying core working
capital increase £0.1m
• See Appendix 2
• £12.3m stripping asset
additions and site set-up
costs on new Scottish sites
• EBITDA benefit will be felt
over next 12 months as this
expenditure starts to unwind
through P&L
• £12.3m invested in yellow
plant in Scotland
• £5m invested in core
Transport business
• £4.9m invested in other
parts of the Group
• £13m of capex financed
through finance leases
• Deconsolidation of net debt
in German business
following reorganisation
• German debt was £10.2m at
the point of divestment
• Disposal included the final
£24.8m of German inventory
• Maltby outflows of c.£9m as
mining shafts were filled and
capped
• Offset by proceeds from sale
of mining equipment

Preliminary Results – Year ended 31 May 2014 18

 Working Capital
Leaders in Solid Fuel Supply & Bulk Material Logistics

May 2014 May 2013

£m £m
Readily Marketable Inventory (RMI) 71.5 84.9
Net Debt 68.8 77.9
RMI / Net Debt 104% 109%

Stock Days 87 days 77 days

Average Capital Employed (Continuing) 251.1 220.0

Return On Capital Employed (Continuing) – ROCE 24% 25%

Average Trading Working Capital (Continuing) 125.5 105.8

Return On Average Trading Working Capital – ROTWC 47% 53%

Preliminary Results – Year ended 31 May 2014 19

 Balance Sheet Highlights
Leaders in Solid Fuel Supply & Bulk Material Logistics
May 2014 May 2013
£m £m
Goodwill and Intangibles 17.8 19.1
Investments in JVs 6.8 2.7
Tangible Fixed Assets 80.3 60.1
Assets held for resale (Discontinued) 8.2 15.0
Working Capital 132.9 124.3
Derivative Financial Instruments 3.2 (7.6)
Retirement Benefit Obligations (5.6) (3.6)
Provisions (9.2) (9.9)
Deferred Tax (2.7) 4.1
Other Net Liabilities (12.8) (7.9)
Net Assets Before Borrowings 218.9 196.2

Net Debt (68.8) (77.9)

Net Assets 150.1 118.3

Gearing (Debt/Equity) 46% 66%

Continuing Interest Cover (times) 15.1 17.4
Debt/EBITDA (times) 1.0 1.3

Preliminary Results – Year ended 31 May 2014 20

 Financial Summary
Leaders in Solid Fuel Supply & Bulk Material Logistics

Robust Focus on core activities

underlying 2014 following Scottish
results across all acquisitions and exits from
divisions Maltby and Belgium in
previous year

Strong H2 cash Dividend payout

generation has reduced increased as we move
net debt and to reduce cover
strengthened the Group
balance sheet

Preliminary Results – Year ended 31 May 2014 21

 Summary & Outlook
Gordon Banham, Chief Executive Officer

Preliminary Results – Year ended 31 May 2014 Broken Cross Surface Mine, South Lanarkshire
 Summary & Outlook
Leaders in Solid Fuel Supply & Bulk Material Logistics

Good performance last year in difficult conditions

Disposal of Imperial provides great start to streamlining initiative

Continue to carefully monitor market conditions

Review of strategy well underway – focussed on maximising and protecting

shareholder value

Steady international services growth will continue – any major reinvestment of

cash will be focussed on strengthening core UK coal business

Scottish acquisitions provide solid surface mining platform and exciting store of
value

Preliminary Results – Year ended 31 May 2014 23

 Hargreaves Services plc Preliminary Results
Year ended 31 May 2014

Appendices

Preliminary Results – Year ended 31 May 2014 St Ninian’s Restoration Project, Fife
 Appendix 1 – Coal Price
Leaders in Solid Fuel Supply & Bulk Material Logistics

Source: IHS McCloskey

Please note: Prices shown in US Dollars

Preliminary Results – Year ended 31 May 2014 25

 Appendix 2 – Working Capital Movements
Leaders in Solid Fuel Supply & Bulk Material Logistics
180.0
170.0
7.8 9.0
160.0 4.6
150.0 14.0 1.0
13.4 6.5
140.0 8.4
11.9
130.0
£m

11.8
120.0
110.0
100.0
90.0
124.3 132.9
80.0
Opening WIP - Biomass Stock - SRG Stock - UK Bulk Stock - Scotland Stock - Germany Stock - Other Receivables Payables Other Mvments Germany Reorg Closing Working
Working Cap Properties Mining H1 Cap

Biomass WIP Scotland Movements H1 Germany Stock Receivables/Payables Germany Reorg

• WIP build on the Lot 4
biomass conversion project
• Heavily weighted to H1
• Final commercial discussions
now underway on project
• £8.4m property portfolio • £9m of coke stock at the end
acquired from SRG of FY13 unwound during H1
of FY14
• Stock build reflects
commencement of • The remaining £24.8m was
operations deconsolidated when the
German business became an
Associate and forms part of
the £10.2m net debt impact
• UK Thermal sales volumes
reduced in May 2014 year-
on-year, leading to lower
receivables and greater
amount carried in stock
• Reduction in payables
following less coal
purchased in May due to
above dynamic
• +£10.2m Net Debt impact on
reorganisation (see page 16)
• -£0.2m relating to Fixed
Assets on deconsolidation
• +£1.9m relating to Minority
Interest on deconsolidation
• Sum of above = £11.9m
working capital movement

Preliminary Results – Year ended 31 May 2014 26

 Appendix 3 – UK Power Market – Coal-Fired Power Stations
Leaders in Solid Fuel Supply & Bulk Material Logistics
2012Coal 2016 Coal 2024 Coal
Station Operator Capacity MW Burn (mt)* Burn (mt)* Burn (mt)*
Cottam EDF 2,008 4.4 3.5 3.1
Drax Drax 3,870 9.0 4.7 4.7
Ferrybridge (2 of 4 units) SSE 980 2.1 1.3 1.1
Fiddlers Ferry SSE 1,980 4.2 3.2 2.8
Longannet Scottish Power 2,304 4.8 3.2 2.7
Ratcliffe on Soar E.ON 2,000 4.4 3.1 2.8
Rugely GDF Suez 1,006 2.2 1.5 1.2
West Burton EDF 2,012 4.4 2.3 1.9
Aberthaw RWE 1,586 3.2 3.5 -
Eggborough Eggborough 1,960 4.4 1.7 -
Lynemouth RWE 420 1.2 - -
Operating Stations 20,126 44.2 28.0 20.3
Cockenzie Scottish Power 1,200 2.4 - -
Didcot A RWE 2,060 4.2 - -
Ferrybridge (2 of 4 units) SSE 980 2.1 - -
Ironbridge E.ON 900 2.0 - -
Kingsnorth E.ON 1,974 1.5 - -
Tilbury RWE 1,074 0.3 - -
Teesside SembCorp 280 0.3 - -
Uskmouth SSE 363 0.6 - -
LCPD Opted Out & Closed Stations 8,831 13.3 - -
28,957 57.5 28.0 20.3
* Hargreaves estimates

Preliminary Results – Year ended 31 May 2014 27