Hargreaves Services on track despite tough first half

Industrial and property service provider Hargreaves Services said on Wednesday that as expected, revenue and underlying profit before tax in its first half were both lower year-on-year, primarily due to the phasing of works on the HS2 project within its specialist earthworks business.

The AIM-traded firm said revenue for the six months ended 30 November was £92m, down from £124.7m year-on-year, as its underlying profit before tax was £1.1m, falling from £2.4m a year earlier.

Underlying earnings per share fell to 3.4p from 6.4p, while earnings per share were also 3.4p, down from 13.6p.

Its board did reinstate the interim dividend at 2.7p, compared to a nil payment a year earlier, while its net bank debt was reduced by 69% to £8m.

The company’s German joint venture was a particular bright spot, with its profit after tax growing 37% to £0.9m.

Hargreaves noted the disposal of its speciality coal business for £24m since the period ended, eliminating bank borrowing, as well as the completion of the first sale of land at Blindwells since the end of the first half.

“The group has traded resiliently through the period and continues to do so although the delays to HS2 have been frustrating and have impacted the headline results adversely,” said chairman Roger McDowell.

“The German joint venture continues to deliver profits in a challenging economic environment.”

McDowell said the company had made “significant progress” in reshaping its future beyond coal.

“The reduction in net bank debt in the period was substantial and it has been eliminated totally after the period ended as a result of the sale of speciality coal.

“The board expects to report results for the full financial year in line with expectations.”

At 1107 GMT, shares in Hargreaves Services were down 4.25% at 256.6p.