Post-Close Trading Update and Results Notification
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For immediate release |
22 December 2016 |
Hargreaves Services plc
("Hargreaves", "the Group" or "the Company")
Post-Close Trading Update and Notification of Interim Results
Hargreaves Services plc (AIM: HSP), a diversified group delivering key projects and services to the infrastructure, energy and property sectors, today provides the following update on trading ahead of its interim results for the six months ended 30 November 2016.
The Group has experienced more stable trading conditions during the period with underlying Group profits for the six months expected to be in line with management expectations. Hargreaves anticipates a strong second half with expected outperformance in Coal Distribution and Property & Energy that will more than offset the impact of the expected contract delays in Industrial Services.
Results for the Coal Distribution Division include the Group's share of profit from our associate operation in Germany which is trading very strongly as its markets recover. The recent increase in coal price during the first half, together with more robust coal demand, is expected to also result in the UK operation exceeding forecasts. Profits for the Division are currently expected to exceed management expectations by £3m for the full year.
The Industrial Services Division set aggressive targets for new business gains over the year as a whole. Whilst good progress continues to be made, it now seems unlikely that these will be fully achieved due to a delay in the commencement of a major project in Hong Kong. The Division's UK business has traded strongly and is expected to continue to do so through the second half.
Good progress continues to be made in the evaluation and development of the Group's Property and Energy project portfolio. Profits realised from the Property Division are expected to slightly exceed management targets over the year as a whole, although the timing of property sales remains difficult to predict.
The integration of the Blackwell acquisition is progressing well and underlying trading performance has been strong and in line with expectations. The Group has re-appraised the costs to complete and remediate two legacy contracts that were identified at the time of acquisition and as a consequence goodwill will be increased by £2.6m to £3.4m to reflect these additional costs, a level that management consider sustainable given the underlying profitability and cash generation of the operation. The escrow account established at the time of acquisition continues to provide protection in relation to legacy contracts and no further provisions or adjustments in respect of pre-acquisition contracts are expected. Good progress continues to be made in the realisation of cash from sales of former Blackwell properties.
Management remain pleased with the rate of conversion of legacy assets into cash. As reported in October the Group's existing coal stocks have been sold and we continue to expect the full recovery of loans to the Tower joint venture. Working capital performance across the Group also remains in line with expectations. The Group is currently targeting to close the financial year with less than £5m of net debt.
The Group expects to report its interim results for the six months ended 30 November on 15 February 2017. A briefing for analysts will be held at 10.00am on the morning of the results at the offices of Buchanan, 107 Cheapside, London EC2V 6DN. For more information on the briefing, please contact Buchanan on 020 7466 5000.
For further details:
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Hargreaves Services Gordon Banham, Chief Executive Officer Iain Cockburn, Finance Director
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0191 373 4485 |
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Buchanan Mark Court / Anna Michniewicz / Sophie Cowles
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020 7466 5000 |
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N+1 Singer (Nomad and Joint Broker) Sandy Fraser / Nick Owen
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020 7496 3000 |
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Investec (Joint Broker) Sara Hale / Robert Baker |
020 7597 4000 |
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This information is provided by RNS
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