Hargreaves Services flags 'strong' interim results after coal trading disposal

Industrial and property service provider Hargreaves Services said on Wednesday that it was expecting “strong” interim results, as all of its business segments traded in line with expectations.

The AIM-traded firm said that while revenue for the first half would be lower than last year, as expected due to the disposal of coal trading activities last December, profit before tax would be higher.

It said that improvement in profit before tax year-on-year was reflected across each of its three business units.

“In particular, as previously indicated, the group's German joint venture Hargreaves Raw Materials Services (HRMS), has benefited from forward trading positions in the first half of the financial year,” the board explained in its statement.

“Those positions mean that the results of HRMS for the first half of this financial year are expected to be broadly similar to those reported for the second half of last financial year.

“The board has also previously noted that the favourable market conditions, characterised by strong commodity prices which have prevailed throughout most of this calendar year, might not endure.”

Looking forward, Hargreaves said those market conditions were uncertain, and as a result HRMS’ management was currently adopting a cautious approach to trading following the expiry of its forward positions.

The impact on the likely trading results of HRMS for the year as a whole would become clearer by the end of January, although the company’s board said it expected they would be “substantially weighted” to the first half.

Net debt, including debt associated with leased assets, at the end of the first half on 30 November totalled £3m, compared to £20.8m a year earlier.

“Much of this reduction is due to the strategic decision to dispose of all material coal stock in December 2020,” the board said.

Excluding the impact of leasing debt, as at 30 November the group held cash balances of £8.5m, compared with a net bank debt of £8m 12 months ago.

Cash balances had reduced from £28.3m on 31 May, however, due to an additional short-term loan of £15m that the group provided to HRMS to assist that business to take advantage of the current strong market conditions.

Hargreaves said that the loan would be repaid in the second half of the financial year.

“The board remains confident of delivering full year results in line with market expectations,” Hargreaves Services said.

The company said it would report its interim results for the six months ended 30 November on 26 January.

At 1024 GMT, shares in Hargreaves Services were down 2.81% at 418.9p.