Full Year Trading Update

RNS Number : 8819J

Hargreaves Services PLC

23 July 2013

 



For immediate release

23 July 2013

HARGREAVES SERVICES PLC 

("Hargreaves" or the "Group")

Pre-Close Period Trading Update for the year ended 31 May 2013

Hargreaves Services plc (AIM: HSP), the UK's leading supplier of solid fuels and bulk material logistics, today issues the following trading update prior to the Group entering its close period. The Group expects to announce its Preliminary Results on Tuesday 24 September 2013.

The Group is pleased to announce that results for the year ended 31 May 2013 are expected to be in line with management's expectations. 

Production

As expected, production at Tower was strong in the second half and this is continuing.

Coal production activities at the new Scottish sites, acquired following the acquisition of assets from ATH/Aardvark, commenced before the end of the financial year and these operations are performing in line with expectations. Steps are currently underway to re-commence production at a number of former Scottish Coal sites.

At Maltby, the closure plan continued in line with expectations during the second half. The sale of the methane assets to Alkane Energy allowed the Group to achieve its target asset realisation for the year ended 31 May 2013. The process to sell the remainder of the plant and equipment is on-going.

Sales and production at Monckton were also in line with expectations.

Energy & Commodities

Coal trading performance in the second half was slightly ahead of management expectations. Strong demand from UK power stations contributed to record volumes in the second half and this high level of demand has continued. Sales demand remained high across our speciality sectors.

It is disappointing to note that UK Coal continued to fall short of meeting its obligations under its supply contract with the Group during the second half. UK Coal ceased to make any supplies in May and defaulted on its contract prior to entering administration.  The Group is continuing commercial discussions with UK Coal over future coal supply whilst in addition making arrangements to source alternative supplies from its new surface mining assets.

Trading volumes of coke in Germany have been strong despite very challenging markets. The outlook for coke and coke prices remains uncertain.  Contract positions continued to be unwound in Belgium during the second half. We expect to complete this exercise in the second half of year ending 31 May 2014.

Industrial Services

Performance in the core material handling business was strong in the second half and in line with management expectations. Offsetting this strong trading in the core business are the two underperforming contracts to deliver biomass conversion projects which are now nearing completion. We have already completed steps to henceforth focus on our core business of material handling.  Aside from these issues the Industrial Services Division has made strong progress, expanding its contract base in the steel and power sectors.  The outlook for this business remains very positive.

Transport

We are again pleased to report that the Transport Division has had a solid year and has performed in line with management's expectations. The dry bulk fleet has enjoyed a very good year whilst the tanker fleet has also traded well.

Net Debt

Net debt at 31 May 2013 was £77.8m, slightly higher than management expectations due to significant purchases of approximately £30m of coke at the end of the financial year for sale in the first half of the current financial year.

Outlook

Having repositioned its production assets, the Group has had a very busy year and   starts the new financial year in a strong position.  Whilst risks and pressures remain in the coal and coke markets, the Group is confident that it is well placed to overcome these.  The core UK coal trading and distribution business continues to perform strongly and the newly acquired surface mining assets provide further opportunity. Hargreaves will focus its efforts in the next few months on ensuring that these new Scottish mining assets are successfully integrated into the Group.

For further details:

Hargreaves Services	0191 373 4485
Gordon Banham, Group Chief Executive
Iain Cockburn, Group Finance Director
Buchanan	020 7466 5000
Mark Court / Fiona Henson / Sophie Cowles
PPS Group	0131 226 1951
Donald Anderson/Jeremy Hamilton
N+1 Singer (Nomad & Joint Broker)	020 7496 3000
Sandy Fraser / Nick Owen
Jefferies International Limited (Joint Broker)	020 7029 8000
Sara Hale / Harry Nicholas

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