There were plenty of pleasant surprises from Hargreaves, which supplies coal to UK power stations. These included decent organic growth, a pleasing dividend increase and news of a refinancing. That latter development should mean ample headroom for future investment, including acquisitions and capital investment - such as upgrades to the Maltby colliery, which should extend its life from 2017 to 2025.
Despite tough economic conditions, commodity price fluctuations and depressed European coke demand - which has been hit by cut-backs in steel production on the continent - three of the group's four divisions reported solid growth. Indeed, only the transport side was flat, largely due to the impact of the slowdown in construction on demand for aggregates. However, Hargreaves has taken the opportunity to upgrade its fleet, which should prove to be a good move for when demand recovers. Prospects look encouraging, too. Certainly, risks remain, but it looks as though industrial activity is picking up - which is benefiting coal and coke prices - and there's evidence of signs of recovery in European coke markets. Moreover, there should be decent growth prospects from the group's newer ventures - such as the RocFuel and RocPower projects.
Brewin Dolphin expects adjusted pre-tax profit for 2010 to rise from £28.6m last year to £34m, with EPS rising from 76.3p to 89.6p.
More analysis of company results
HARGREAVES SERVICES (HSP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 641p | MARKET VALUE: | £169m | |
| TOUCH: | 636-645p | 12-MONTH HIGH: | 640p | LOW: 399p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 263p* | NET DEBT: | 97% | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 88.0 | 2.40 | 9.40 | nil |
| 2006 | 155 | 5.50 | 20.3 | 5.00 |
| 2007 | 240 | 9.60 | 26.3 | 9.00 |
| 2008 | 405 | 17.9 | 46.7 | 10.3 |
| 2009 | 503 | 26.2 | 68.5 | 11.8 |
| % change | +24 | +47 | +47 | +15 |
Ex-div: 14 Oct Payment: 18 Nov *Includes intangible assets of £36.7m, or 139p a share | ||||
