‘Challenging’ period for mining group as underlying profits fall

MINING group Hargreaves Services has reported underlying profits were down 90% but is upbeat about its prospects after two “challenging” years.

It said it has reduced coal production and trading  and is now focusing on speciality markets.

Its underlying operating profit fell to £4.6m for the year to May, however exceptional costs of £12.4m from restructuring dragged its overall position into the red.

Hargreaves said that the acquisition of CA Blackwell in January 2016 broadens its Services operations and delivers “significant heavy plant synergies.”

It also said the establishment of Property & Energy Division would drive £35-50m of value creation in next five to seven years, and that aggressive targets were set for new business for Industrial Services operations in face of accelerated UK coal fired station closures.

Hargreaves said its balance sheet remains strong and well financed to allow orderly run-out of £60m of coal stocks and other legacy assets which include land, property, equipment, stocks and loans, into cash.

Chairman David Morgan said: “After two challenging years, we have a clear opportunity in front of us to develop and deliver significant shareholder value. The group’s core business operations have been enhanced following the acquisition of CA Blackwell. Our portfolio of property and energy projects offer an exciting platform for significant value creation that is incremental to that created from our Distribution & Services operations. We have targeted £35-50m of incremental value creation from development and energy projects related to these property assets.

“The £60m of legacy assets that we aim to convert to cash will strengthen a balance sheet that is already strong and allow consideration of a wide range of options to return value or capital to shareholders.”