"Unprecedented" energy market causes £110m fall in revenues

MINING group Hargreaves Services has blamed “unprecedented” market conditions as revenues and profits tumbled.

Its half-year figures show revenues dropped by nearly one-quarter, to £351.2m, with continuing pre-tax profits down by nearly half, to £15.2m.

Despite that, the AIM-listed group has increased its interim dividend by 14%, to 10p.

Its share price remains low, closing last night at 567p, having dropped from 800p in late August to 522p six weeks later. A year ago its shares were worth around 900p.

In December it ceased production at its site in Monckton, near Barnsley, which employed 120 people. The group said the closure will result in a £16.6m charge to the income statement, but it would “liberate the significant working capital that was tied up” and expects to generate net cash inflows of £17m.

Hargreaves Services chairman Tim Ross said: “The market conditions we are currently experiencing are unprecedented and very challenging. The group simplification programme and focus on reducing debt ensures that the group is well placed to weather the current difficult trading conditions for such time as they persist.

“Although we are unable to control factors such as coal price and coal demand, the management team is proactively taking all the sensible steps and measures to manage current market conditions whilst leaving the group well placed to benefit when the market improves.”

Almost all of the drop in revenue for the group came from its energy and commodities division, resulting from “ongoing uncertainty and volatility within coal markets” which has reduced bulk volumes and seen margins come under pressure because of weak domestic demand.

However the company was able to reduce its net debt by £28.4m, to £40.4m, and continues to generate cash.

Mr Ross added: “Although there are challenging times to face in the coming financial year the group is expected to continue to be profitable and to generate meaningful surplus cash.

“Reflecting the group’s inherent strength and solid financial position, the board has the confidence to increase the interim dividend in line with prior guidance.”