Yorkshire operations give profits boost to Hargreaves

HARGREAVES Services, which bought the remaining 50% interest in Yorkshire-based Coal4Energy earlier this year, has seen annual pre-tax profits rise by almost half thanks to its strategy of organic growth and strategic acquisitions.

Hargreaves has also agreed a new syndicated £115m debt refinance facility with a banking syndicate co-ordinated by The Royal Bank of Scotland, which it believes provides “an excellent platform” to take the group forward.

Revenues at Hargreaves, a leading supplier of products and services to the energy, mineral and waste sectors, for the year ended May 31 were £503.1m, up 24.3% from £404.9m at the same time last year.

Pre-tax profits were up 46.5% to £26.2m while operating profits were up almost 35% at £29.8m.

Chairman Tim Ross said the group was confident about its future prospects and believed it could continue to grow profits. 

Hargreaves said Maltby Colliery, which it owns, had helped its production division increase operating profit by £800,000 to £10.5m.

Saleable production at Maltby increased from 1.043m tonnes to 1.089m tonnes, with all power station coal produced at Maltby continuing to be sold to Drax power station.

Mr Ross said: “All the divisions are well placed to continue to drive further profit growth both organically and by complementary acquisitions.

“The board continues to view the current year with significant confidence and expects the Group to build on its impressive track record.”

The facility will provide funds to support continued organic growth and also refinances Hargreaves’ existing debt facilities and provides the company with debt support for potential future acquisitions. 

UK Coal sold its remaining 50% interest in Coal4Energy to Hargreaves Services for £9m in January.

Coal4Energy, based at Kellingley Colliery in West Yorkshire, was formed in 2006 as a 50:50 joint venture between Hargreaves and UK Coal and has grown to become the largest supplier of coal to the UK domestic and industrial markets.

It markets and sells domestic and industrial coal produced by Doncaster-based UK Coal and coal supplied by Hargreaves, which owns Maltby Colliery.

County Durham-based Hargreaves said the acquisition had helped boost the group’s energy and commodities division.

It added that it was continuing to explore opportunities to generate electricity using renewable fuels – Hargreaves has run a pilot plant in Immingham for the last 12 months – and has the option to lease six sites across Yorkshire.

Established in 1994 as a specialist bulk haulier, Hargreaves has grown considerably both organically and via acquisition to become the largest independent importer and distributor of coal to the UK industrial and wholesale markets and a leading exporter of coke and refractory minerals to Europe. 

Boasting a fleet of more than 400 vehicles and dedicated sub-contracted vehicles based at depots across the UK, it has the largest bulk haulage fleet in the UK, employing more than 2,300 people..    

Commenting on the refinancing facility, Iain Cockburn, Hargreaves’ finance director, said: “We are pleased to have new finance arrangements in place. Given the current economic environment, we believe the securing of this facility is testament to the strength of the business and its prospects for further progress.”

Funding was provided through Adrian Rowles, Martin Beckett, Marc McDermott and Matt Lowe from the RBS Corporate banking team and Andy Pickford from the RBS Invoice Finance team. Rory O’Connor and Caroline Kennedy from RBS Loan Markets co-ordinated the banking syndicate.

Walker Morris acted for the company, with Eversheds advising the debt parties. Financial due diligence was undertaken by KPMG in Leeds.

“Despite the unprecedented economic conditions this deal is evidence that good quality businesses with strong management teams are still able to secure funding,” said Shawn Bone, partner at BTG McInnes Corporate Finance who advised Hargreaves on the deal.

“Hargreaves is a quality North East business and there was a great deal of interest from the banking sector to support its expansion, and it is now well positioned to continue its successful track record of growth.”

Hargreaves has proposed a full year dividend of 11.8p, up 14.6%.