Pre-Close Period Trading Upda

RNS Number : 6029N

Hargreaves Services PLC

15 June 2010

 



For immediate release

15 June 2010

HARGREAVES SERVICES PLC 

(the "Group" or "Hargreaves")

Pre-Close Period Trading Update for the twelve months ended 31 May 2010

Hargreaves Services plc (AIM: HSP), the UK's leading energy support services provider, today issues the following trading update for the twelve months ended 31 May 2010 prior to the Group entering its close period ahead of the announcement of its Preliminary Results.

The Group expects that the Preliminary results will be announced on 14 September 2010.

The Group is pleased to announce that overall results are expected to be in line with management expectations. 

Energy & Commodities Division

Overall the performance of the Energy & Commodities Division will be ahead of management expectations.

The UK based coal operations have continued to perform very strongly.  Strong margins in sized and speciality coal markets have continued to more than offset the softening in UK power station volumes that we reported in our Interim statement.

Trading levels and profitability levels in Europe have continued to increase and perform ahead of management expectations during the second half.

Production Division

As expected, Monckton has continued to perform well through the second half. The international coke markets have recovered strongly and the Group is pleased to announce that a new 3 year contract has been secured with Xstrata in South Africa to take up to 100,000 tonnes per annum commencing 1 June 2010. All coke is sold for the current calendar year and discussions are already underway with customers concerning new contracts or contract extensions beyond 31 December 2010.

Despite an encouraging start, underground production at Maltby was disappointing in the second half due to further teething problems with the new T11 production equipment. Surface coal production and shipments of fines to Drax have progressed well but have only partially offset the lower underground production. Full year production was 1,056,000 tonnes, slightly below the 1,075,000 guidance provided in December 2009. The next face change is planned for July 2010 with development work and equipment installation proceeding on target.

Commissioning continues at the first Rocpower plant. We expect the plant to be fully operational in August 2010. Planning applications for the next two sites are in process and on course. The Group will await the outcome of both the planning decisions and the current Government review on the grandfathering of Renewable Obligation Credits before committing significant capital investment to the next two sites. The Group remains confident that payback for the first plant will be achieved within the current grandfathering period but will require confirmation of grandfathering beyond 2013 to secure payback on subsequent sites before proceeding with the development.

The Tower project is progressing well. Planning applications were submitted on schedule at the beginning of March. The Group expects a decision before the end of this calendar year.

Overall, mainly due to the lower underground production at Maltby, the performance of the Production Division in the second half will be slightly behind management expectations.

Industrial Services Division

Industrial Services has traded in line with management expectations and the Board continues to be pleased with the steady growth and development of the business. Contract work is due to commence on the new contract won by AJS which was announced with the Interim Results.

Transport Division

The Transport Division's overall performance has continued to be slightly ahead of management expectations. Performance in Tankers has been particularly strong with a quality service offering underpinning existing contracts and helping the Group win market share. We remain confident that all three units; Dry Bulk, Tankers and Waste are well positioned to benefit from any upturn in volumes when the opportunity arises.

Corporate Activity

As previously announced the merger discussions with UK Coal plc have now ceased and no merger is currently being considered. We continue to work closely with UK Coal and look forward to a continuing positive trading relationship.  A charge of £230,000 will be made to the Accounts for the year end May 2010 for aborted deal costs.

Net debt

Group net debt as at 31 May 2010 was in line with management expectations at approximately £88m.

Outlook

The Board remain confident about the prospects for the Group. The Board is particularly excited by the prospects of the Tower project and pleased with the progress that is being made in developing the European business and will continue to focus efforts and investment at developing this market presence.

For further details:

Hargreaves Services Gordon Banham, CEO Iain Cockburn, Finance Director	0191 373 4485
Buchanan Communications Tim Anderson Catherine Breen Stasa Filiplic	0207 466 5000
Brewin Dolphin Graeme Summers Matt Davis Andy Emmott	0845 213 1000
RBS Hoare Govett Limited Hugo Fisher Stephen Bowler	0207 678 8000

END 

 

END

 

 

TSTUSRRRRKANAUR