Preliminary Results - Replace

RNS Number : 4864D

Hargreaves Services PLC

15 September 2008

 



For immediate release

15 September 2008

The issuer has made the following amendment to the 'Preliminary Results' announcement released on 15 September 2008 at 7.00 am under RNS number 3930D.

'The final dividend is proposed to be paid on 12 November 2008 to all shareholders on the register at the close of business on 26 September 2008.'

A full corrected version of the announcement is set out below:

HARGREAVES SERVICES PLC 

(the 'Company' or the 'Group')

Preliminary results 

for the year ended 31 May 2008

Hargreaves Services plc (AIM: HSP), a leading supplier of products and services to the energy, mineral and waste sectors announces its preliminary results for the year ended 31 May 2008. 

HIGHLIGHTS

	Year ended 31 May 2008	Year ended 31 May 2007	Change %
Revenue	£404.9m	£240.1m	+69%
Operating Profit	£22.1m	£9.9m	+123%
Underlying Operating Profit (1)	£23.6m	£10.8m	+118%
Profit Before Tax	£17.9m	£9.6m	+86%
Underlying Profit Before Tax (2)	£19.0m	£10.2m	+86%
Diluted EPS	46.7p	26.3p	+78%
Underlying Diluted EPS (2)	51.1p	28.8p	+77%
Proposed Full Year Dividend	10.3p	9.0p	+14%

• Record results ahead of expectations

• Strong organic growth and operating margin progression across all divisions

• Positive cash generation in second half reduced net debt by £10.7m to £46.2m

• Recoverable coal reserves substantially increased, extending the potential life of Maltby Colliery from 2017 by up to 8 years

• Well-positioned to progressively benefit from increases in world coal and coke prices over the next three years

• Strong order book and forward revenue visibility. Good prospects for further organic growth in all divisions

• Three acquisitions were completed in the year to complement and broaden the Group's product and service offering 

• All acquisitions have now been integrated into the Group and are performing well

(1) Underlying Operating profit is stated excluding the amortisation of acquired intangibles and release of negative goodwill and including share of profit in joint ventures and associates as shown in the table below

(2) Underlying Profit before tax and EPS are stated excluding the amortisation of acquired intangibles and release of negative goodwill

Commenting on the preliminary results, Chairman Tim Ross said: 'Hargreaves is well positioned in the resilient energy, waste and mineral sectors, dealing primarily with large blue chip customers. The Group continues to have a strong forward order book providing future earnings visibility and expects, over the next three years, to benefit significantly from the substantial increases in coal and coke prices experienced over the last twelve months.'

  For further details:

Hargreaves Services Gordon Banham, CEO Iain Cockburn, Finance Director	0191 373 4485
Buchanan Communications Tin Anderson, Catherine Breen	0207 466 5000
Brewin Dolphin Investment Banking Andrew Kitchingman	0113 241 0130

  CHAIRMAN'S STATEMENT

Results

I am pleased to report that the Group has completed a very successful year and delivered another set of record results with revenue, profit and margins improving in all divisions. Revenue for the year was £404.9m, an increase of 69% on the prior year. Underlying profit before tax for the year increased 86% from £10.2m to £19.0m. Profit before tax for the year increased by 86% from £9.6m to £17.9m.

In addition to exceeding a challenging set of operational and financial targets the Group has also completed three acquisitions in the period - Imperial Tankers in September 2007, AJS Contracts in March 2008 and Maxibrite (through Coal4Energy) in April 2008.

We are reporting our full year audited results for the first time under International Financial Reporting Standards as adopted by the EU ('Adopted IFRS').

Potential Mine Life Extension

The Group purchased Maltby Colliery, the last coking coal mine in the UK, in February 2007 with a view to securing supply of coking coal for its Monckton coke works. When the colliery was purchased from UK Coal plc the estimated mine life extended to 2015. 

In light of the current coal prices, the Board commissioned a technical and feasibility study to identify opportunities to extend the life of the mine. This has confirmed that changes to the current mining plans could provide access to additional reserves that would allow the mine life to be extended as far as 2025. These changes would involve a further acceleration of face development and preparation ('drivage') rates to maximise the coal reserves accessible in the current Parkgate seam, combined with a plan to access specific areas of the Thorncliffe seam which is 25 metres below the Parkgate seam. On the basis of being able to achieve a satisfactory price level, these changes could allow the Group to maintain current production levels until 2025. A detailed business plan is now being developed to support the investment in headcount and equipment.

Dividend

The Board is recommending a final dividend of 7.0 pence per share bringing the dividend for the year to 10.3 pence per share. The final dividend is proposed to be paid on 12 November 2008 to all shareholders on the register at the close of business on 26 September 2008. 

Staff

The Group now employs over 2,200 people and is proud of its committed and hard working staff. We have launched our third Save as You Earn Scheme and now have 571 staff members engaged with at least one scheme. The Group remains committed to Health and Safety and significant effort has been devoted to developing safety systems across the Group.

Board Changes

As previously reported, Peter Dillon retired as Finance Director on 31 December 2007 and was replaced by Iain Cockburn. The Board would again like to thank Peter for his loyal service and acknowledge the significant contribution that Peter has made to the development of the Group and its flotation on the London Stock Exchange.

Outlook

Hargreaves is well positioned in the relatively resilient energy, waste and mineral sectors, dealing primarily with large blue chip customers. The Group continues to benefit from a strong forward order book providing future earnings visibility and expects, over the next three years, to benefit significantly from the substantial increases in coal and coke prices experienced over the last twelve months. The Board views the current year with confidence and expects to build on the track record of strong growth that has been established since flotation.

GROUP BUSINESS REVIEW

Overview

This has been a pivotal and high growth year for Hargreaves. This growth reflects solid organic progress in all divisions as well as the recent acquisitions of Maltby Colliery and Imperial Tankers. We have been particularly pleased with the success achieved by our German team.

Segmentation

The Group has reviewed its operations and will be making a change to the way the business will be reported and segmented to follow the way in which the business is being organised and managed. 

We have settled on a structure of four divisions: 

• Production Division - comprises Maltby Colliery and the Monckton Coke and Tyre Shredding operations that were previously reported separately under the Maltby and Monckton segments.

• Industrial Services Division - no change and will continue to comprise of our material handling and site service operations, the bulk material warehousing operation and the newly acquired AJS Contracts.

• Energy and Commodities Division - previously the Minerals Division.

• Transport Division - no change and will continue to comprise the bulk material, bulk liquid and waste transport operations.

We have changed the name of the former Minerals segment to reflect an increasing focus on a broader offering of mineral commodities and on the energy sector. This reflects a growing demand for renewable fuels and energy sources and the anticipation of a greater role to be played by our RocFuel and RocPower operations.

Although we are reporting a combined Production Division, for transition purposes, we have reported both the Monckton and Maltby unit numbers in addition to those of the overall Production division.

Macro-Economic Environment

Our exposure to the mineral, waste and energy sectors provides the Group with a degree of resilience to economic and other cyclical factors.

Coal prices have increased during the year. The benchmark API2 coal price increased from $72 per tonne at the start of the year to close the year at $158 per tonne. At the date of this report the index stood at approximately $180 per tonne. Importantly for the Group, international coke prices have increased even more significantly than coal prices. This has been driven by a combination of increased raw material (coal) cost, increased Chinese export taxes and limited availability of supply driven by the surging domestic demand for coke in China, India and other developing nations. 

Whilst commodity price rises bode well for the longer term performance of the Production Division, the majority of coal and coke produced by the Group is sold under long term contract. The Group is however very well positioned to benefit from increases in the world coke prices as its coke contracts are renewed over the next two years.

Hargreaves' bulk material transport operations have limited exposure to the aggregates and construction sector. The Group's scale and diversified customer base combined with a backbone of group controlled transport flows is a resilient transport formula. The strategy of combining sub-contract vehicles with own fleet increases its flexibility. 

The exposure of Hargreaves' transport and mineral handling operations to fuel price increases is mitigated through the use, wherever possible, of index linked contracts. The Group aims to have monthly indexation provisions within these contracts to cater for volatility in fuel prices. The Imperial Tankers operation, acquired during the year, had traditionally operated on quarterly indexing. The majority of their contracts have now been converted to monthly indexation to minimise exposure to fuel price movements.

FINANCIAL RESULTS

Hargreaves has continued to show strong trading performance and strong growth. Revenues for the full year increased by 69% from £240.1m to £404.9m. Underlying operating profit increased by 118% from £10.8m to £23.6m. Operating profit increased from £9.9m to £22.1m. Group operating margin increased from 4.3% to 5.5%.

The principal drivers of the organic growth were the impact of increased commodity prices on the minerals trading operations and strong volume growth in the German minerals operation. Due to the long term contracts covering the bulk of the outputs, revenues from Maltby did not benefit significantly from the increased commodity prices in the year to 31 May 2008. Although Monckton revenues benefited from increased prices, the hedges that were in place to protect the margin on specific contracts mitigated much of the margin benefit. As discussed below, we would expect Monckton to start to benefit from the increased prices during the second half of the current financial year.

Reconciliation of operating profit to underlying operating profit, by segment is as follows:

		Energy & Commodities	Industrial	Transport	Production	Total
		2008	2008	2008	2008	2008
		£000	£000	£000	£000	£000
Segment operating profit		7,599	1,644	3,219	9,665	22,127
Intangible amortisation and release of negative goodwill		(17)	972	209	-	1,164
Share of profit in    - joint ventures		213	-	-	-	213
- associates		49	-	-	-	49
Underlying operating profit		7,844	2,616	3,428	9,665	23,553

		Energy & Commodities	Industrial	Transport	Production	Total
		2007	2007	2007	2007	2007
		£000	£000	£000	£000	£000
Segment operating profit		3,402	395	2,100	3,994	9,891
Intangible amortisation and release of negative goodwill		(84)	685	-	-	601
Share of profit in    - joint ventures		215	-	55	-	270
- associates		56	-	-	-	56
Underlying operating profit		3,589	1,080	2,155	3,994	10,818

  REVIEW OF OPERATING PERFORMANCE 

References in this section are total revenue before deduction of inter segment revenue. Further revenue analysis is included in note 2.

Production Division

Production division gross revenues increased from £39.6m to £84.3m due mainly to the acquisition of Maltby Colliery in February 2007. Operating profit for the division increased by £5.7m to £9.7m, again this reflects a first full year of contribution from Maltby Colliery.

Production Division - Maltby 

Over the year the mine performed largely in line with financial expectations. Production at just over 1 million tonnes was lower than projected, although the combination of a tight control on costs and a greater proportion of higher value coking coal in the product mix helped to maintain the forecast profitability. The revenue for the mine was £47.8m compared to £12.1m in the three months ended 31 May 2007. Operating profit for the mine in the last year was £6.3m compared to £1.2m in the three months to 31 May 2007.

As reported in the Interim Statement, Maltby had a challenging first half due to reliability issues with the face equipment acquired with the mine as it worked the T9's long wall to completion. The face change from T9 to T22 in January 2008 took place without incident reflecting the expertise and commitment of the team. In the second half the mine performed strongly and recovered some of the production shortfall from the first half.

All Power Station Fuel ('PSF') produced at Maltby continues to be supplied to Drax under the supply agreement signed when the mine was acquired. Drax have exercised their option to extend the contract by a further year. The Group is continuing discussions with Drax to agree the phasing of this tonnage. Monckton continues to purchase the coking coal that is produced at Maltby. The mined coal fines which cannot be used as coking coal or PSF and the fines which are recovered from the surface ponds at Maltby continue to be sold to a variety of customers. A number of new contracts for coal fines have been signed in the year. The Group estimates that 1.5m tonnes of surface coal fines can be recovered from the site and efforts will continue to maximise recovery and sale effort.

In line with the plans set out at the acquisition of the mine, a new set of face equipment has been ordered and delivered and is being installed on the new T11 face which is due to commence production at the end of this calendar year. Given the experience on the recent T9 production face and the intention to extend the length of faces to maximise accessible reserves, the Group has significantly upgraded the specification of this equipment. Although this will raise the forecast capital cost for the new face equipment from around £7m to £10m, the Group is confident that the increased costs will be justified by greater future production reliability and longer mine life.

The mine has continued to yield significant quantities of methane gas which is recovered and combusted on site to produce electricity. The mine has ordered a sixth gas engine which should produce an additional 1.4 MW with a current import value of approximately £0.7m annually. This should be running by March 2009.

When the mine was purchased, the expected mine life was 8 years through to 2015. In the Interim Statement we announced that we had accelerated development drivage and were confident that mine life would be extended to 2017. We also stated that we would undertake feasibility studies on further extension.

These feasibility studies have now been completed and reviewed by the Board and external consultants. The Board has concluded that it is technically feasible to access additional reserves of coking coal both on the current Parkgate seam and the Thorncliffe seam which runs 25 metres below the Parkgate.

Plans to access the additional reserves will rely on investment in additional development drivage equipment, high specification coal face equipment and additional resources. We are currently developing the detailed business plans to facilitate the extension.

Production Division - Monckton

Gross revenues for Monckton increased from £27.4m to £36.5m, an increase of £9.1m. A significant proportion of the revenue improvement related to contracts for which hedges were in place to protect the margin and as a result the revenue improvement was offset by and equally and opposite increase on cost. Operating profit increased from £2.8m to £3.3m, an increase of £0.5m or 17%.

The Monckton coke operation performed well this year, particularly in the latter half of the year as higher prices have started to filter through on sales of electricity, by-products and a small amount of un-contracted coke tonnage. World coke prices continue to rise and indeed over the last 12 months have risen considerably more than coal prices. Just over half of the output from Monckton is sold on annual fixed price contracts. The balance is sold on a five year contract, expiring June 2010, where the price has been fixed through the use of hedging instruments (a provision for the fair value of which is included on the balance sheet under Adopted IFRS). When these contracts are renewed the Group should be able to access world coke prices which are up to £100 per tonne above the current prices.

Monckton has also benefited from improved electricity and by-product pricing which should benefit performance significantly in the coming year.

The Group continues to progress the project to re-commission 9 ovens which have not been operated for some 20 years. This project will increase the capacity of Monckton by approximately 20% and will allow Monckton to fulfil a greater portion of its customer requirements directly. The project is estimated to cost around £10m and will be subject to environmental and planning consents. This is anticipated to take upwards of one year.

Monckton's tyre shredding operation has had a challenging first full year. As reported in the Interim Statement, good progress has been made with the sourcing of tyres and the efficiency of the plant's operations. A new contract was agreed with Goodyear that will give the plant access to truck tyres from September 2008. The losses at Monckton Rubber Technologies ('MRT') of £0.95m have offset the benefit from the increased and un-hedged coke prices and has resulted in the overall operating margin dropping from 10.3% to 9.1%. The management team at MRT are testing new equipment to clean rubber contamination from the waste wire to access significantly higher scrap metal prices for this waste product. The Group believes that, together with the improvements that have taken place to date, this would bring the plant into profitability.

Energy and Commodities Division

The Energy & Commodities Division had a very strong year. Gross revenues increased by 66% from £140.5m to £233.3m, driven largely by increases in commodity prices and a strong growth in volume through the German minerals business. 

Underlying operating profit for the division increased by 119% from £3.6m to £7.8m. Operating profit for the division increased from £3.4m to £7.6m. Underlying operating margin improved from 2.6% to 3.4%. This improvement primarily reflects success in finding additional sales opportunities for the coal fines recovered at Maltby together with strong margin performance from the German business.

In its first full year of business the German minerals business has generated revenues of £111.7m. The team is based in Duisburg and has grown to 12 staff.

The UK minerals business continues to trade strongly. Following the year end the division entered into a joint venture at Immingham docks to consolidate its port storage and handling operations with those of Oxbow Coal Limited ('Oxbow'), a subsidiary of Oxbow Inc, the leading US minerals trading group. This joint venture should allow both Hargreaves and Oxbow to extract synergies from the combination of resources and skills and from the resulting cost synergies and efficiencies offered by the increased scale of operation. Although revenues from the UK operations increased, the volume of coal sold through the UK minerals operation in the year was 350,000 tonnes less than the prior year due to strategic stocking of coal by a customer in the prior year.  

The Hargreaves Building Products group that comprises the ash disposal businesses (Hargreaves Building Products Limited and Hargreaves Coal Combustion Products Limited) and Lytag distribution business (Lytag Limited) performed satisfactorily over the year, although profits were lower than the prior year due to expenses incurred in evaluating the potential to build Lytag production facilities. 

We have decided against making the substantial investments necessary in Lytag production facilities at this time. The Group will instead focus on ash disposal. As a result of this decision, following the year end, the Board concluded a reorganisation of its interests in its building products group. We have effectively disposed of our 50% interest in the Lytag business in return for the purchase of an additional 25% of the ash business operation of Hargreaves Building Products Limited and the cancellation of outstanding deferred consideration from the acquisition of the additional 25% shareholdings in Hargreaves Building Products Limited and Lytag Limited that took place in October 2007. The reorganisation had no material cash effect for the Group.

Coal4Energy has traded very strongly throughout the year and on 2 May 2008, acquired Maxibrite Limited with a view to adding Maxibrite's products to the Coal4Energy portfolio and driving synergy gains from the customer base and sales teams.

Our RocFuel joint venture signed its first material supply contracts. In addition to creating the first revenue and margin opportunities for the business, this activity has also generated business for the Transport Division.

Industrial Services Division

The Industrial Services business had a solid year. Gross revenues increased from £26.8m to £47.1m reflecting the first full year of Norec results. Underlying operating profit for the Division increased from £1.1m to £2.6m, an increase of 142% while underlying operating margin improved from 4.0% to 5.6%. Operating profit increased from £0.4m to £1.6m

The business made steady progress and has won a number of new contracts with new and existing customers during the year. New contracts include both the renewal of existing activities and extension to include other site services for British Energy at Eggborough. Success at Eggborough has also led to an extension of the contact to cover other site services. Contracts to support the FGD plants at Ferrybridge and Rugeley have been won, together with a contract to operate a coal cleaning plant for UK Coal at Thoresby Colliery.

The bulk warehousing operation at Killingholme (acquired from Simons Distribution in April 2007) has continued to perform strongly, exceeding expectations, and has been fully integrated into the Industrial Services Division.

The acquisition of AJS Contracts Limited on 3 April 2008 expands the Division's service offerings and customer base. The integration of AJS is progressing well and a new general manager has recently been engaged to oversee the development of the business. In addition to tendering for work at Monckton and Maltby, AJS is already working on a number of new tenders in respect of both new and existing customers.

Transport Division

Transport Division gross revenues have increased by £19.2m from £56.4m in the prior year to £75.6m. Underlying operating profit increased by 59% from £2.2m to £3.4m. Operating profit increased from £2.1m to £3.2m. Underlying operating margin improved from 3.8% to 4.5%.

The main driver for the increases in revenue and profitability was the acquisition of Imperial Tankers on 28 September 2007. The increase in specialist bulk tanker revenues in the mix of the Division's revenues was the key driver of the improvement in operating margin. The tanker operations continue to trade well. The integration of Imperial with the Hargreaves Bulk Liquid Transport business is now well advanced and the Group should benefit from the resulting cost savings and synergies in the upcoming year. The combined tanker operation will be operating under the Imperial Tankers banner. 

Our bulk tanker operations specialised in the transportation of hazardous chemicals, pressurised gases, petroleum products and controlled liquid waste. These sectors continue to generate strong volumes and a significant portion of this work is undertaken under long term contracts. Many of the contracts that were acquired with the Imperial business had been operated under quarterly fuel indexing. Whilst quarterly indexing protected longer term margins, there has been a consistent lag effect over the period which resulted in approximately £0.3m of additional fuel expense. All major contracts have now been renegotiated onto a monthly indexing basis.

The Waste transport operation had a challenging first half due to changes in the patterns of waste flows on both the Barnsley and Cheshire contracts. Both these contracts have now concluded. A compensation claim for Barnsley in the region of £0.25m has been awarded. Compensation discussions for the Cheshire contract are ongoing. No provision has been made for any recoveries at this stage. On the positive side, the waste transport business has won a 5 year contract in Lincoln and continues to operate its other contracts. The Group appointed a new general manager for the Waste transport business in May 2008 and will be looking for additional opportunities to expand the business.

The bulk materials operation performed well during the year, particularly given the challenging trading conditions and the margin pressure at the aggregate operations at Tarmac and Darrington Quarries. Activity levels in the coal and biomass markets remain buoyant. The bulk materials fleet continues to benefit from the strong pull through in the Group's material movements. The existence of a large sub-contract element has allowed the Group a greater degree of operational flexibility than many of the Group's smaller competitors. Whist the current environment does not present much opportunity for organic growth in the coming year, we are confident that the business unit is well placed to weather the challenges in the sector.

  FINANCIAL REVIEW

Revenue

Group revenue for the year was £404.9m compared to £240.1m for the previous year, an increase of 69%. The key drivers of organic growth came from the Energy and Commodities Division both in the UK and Germany. 

Operating Profit and Margins

Operating profits increased in each of the divisions of the Group with the most significant organic increase coming in Energy and Commodities from the rapid growth of the German operation. The addition of a full year of activity from Maltby Colliery contributed an additional £5.1m of operating profit compared to the prior year. The increase of Maltby profits in the revenue mix and the improved margins from the UK mineral operations were the major drivers of improvement in overall Group underlying operating margin from 4.3% to 5.5%.

Interest

The net interest charge for the Group was £4.5m compared to £0.6m for the previous year. The increase in interest reflects the higher average debt levels following recent acquisitions and the higher Group working capital requirements. The prior year charge is stated after offsetting credits amounting to £1.1m relating to fair value gains on interest and foreign exchange swaps.

Profit Before Tax

Underlying profit before tax increased from £10.2m to £19.0m. Reported Profit before tax increased from £9.6m to £17.9m.

Taxation

The tax charge in the year was £5.2m compared to £3.1m in the previous year. The effective tax rate fell slightly from 32.6% in the prior year to 29.0% due to reductions in the UK and German corporate tax rates.

Earnings Per Share

Basic earnings per share for the year were 46.7 pence (2007 26.3 pence) and diluted earnings per share were 45.7 pence (2007 26.2 pence) Underlying diluted earnings per share, after adding back amortisation of acquired intangibles, increased by 77% from to 51.1 pence. Earnings per share arose entirely from continuing operations.

Dividend

The Board has recommended a final dividend of 7.0 pence (2007 6.0 pence) bringing the proposed dividend for the full year to 10.3 pence, an increase of 14.4% in the total dividend for the year . The proposed dividend is covered 4.5 times by underlying earnings (2007 2.9 times).

BALANCE SHEET REVIEW

Net Assets

Net assets increased from £41.0m at 31 May 2007 to £48.1m at 31 May 2008. Stripping out the provision for the fair value of financial instruments that we use to hedge coal and coke contracts, the underlying net assets increased by £17.2m in the year from £41.1m to £58.3m.

Net tangible fixed assets increased by £3.1m from £63.2m to £66.3m. Working capital increased £16.2m over the year as a result of the investment in coal face drivage and preparation at Maltby, increased trading activity in Germany, the addition of the Imperial Tankers business and the general impact of increased commodity prices. 

Net stocks increased by £8.5m from £35.0m to £43.5m, of which £28.2m related to highly liquid coal and mineral stocks. Work in progress at the Maltby mine amounted to £8.2m. Over the next two years this is expected to increase by approximately £6m as drivage rates are pushed to 100 metres per week to support the mine life extension. 

Trade debtors increased by £9.1m from £31.1m to £40.2m. Trade debtor days continued to improve and were 36.7 days at the end of the year, down from 39.7 days at the end of the prior year. Trade creditors increased by only £2.0m from £22.5m to £24.5m reflecting the tighter trade terms on the increasing mix of imports from China. During the year we also switched some extended trade credit to more cost effective import facilities offered by banks. Working capital is core to our business and we remain focussed on managing it effectively and efficiently. 

Net Debt

Group net debt, comprising cash and cash equivalents, bank overdraft, other interest bearing loans and borrowings. was £46.2m, an increase of £7.8m from the £38.4m reported at 31 May 2007 and a reduction of £10.7m from the £56.9m reported at the half year. The gearing ratio of the Group at 31 May 2008 (expressed as net debt divided by net equity) was 96% compared to 133% at the half year and 94% at 31 May 2007. The acquisitions of Imperial Tankers and AJS in the year added £13.0m of net debt to the Group balance sheet.

Cash Flow

Cash flow generated from operating activities (before interest and income tax paid) was £23.6m in the year compared to £8.4m in the previous year. The strong second half cash flow also benefited from assets sales of £0.6m and the slippage of approximately £1.5m of capital expenditure into the first quarter of the following year.

Cash flow generated from operations included an £11.3m outflow relating to an increase in working capital reflecting increased trading levels compared to the prior year, both as a result of the volume of trade and the impact of increased prices of coal, coke and other mineral prices on all elements of working capital. 

There will continue to be an element of seasonality in our working capital levels with a tendency to build coal stocks over the first half and reducing stocks over the second half. This has been particularly prevalent since we commenced buying coal from Norway (Spitsbergen) which is shipped in large 70,000 tonne consignments and needs to be purchased before the ports become iced for the winter. We are planning to purchase an additional two shipments this season compared to the prior year. In the six months to 30 November 2008 we will build a stock of product for Monckton to fulfil an exceptionally large export order in December. In keeping with prior practice, the Group will also be building an extra safety stock of coking coal in the last calendar quarter to protect Monckton from any supply disruption during the planned face change at the mine at the end of the year. Although these factors will combine to increase working capital and net debt in the first half, these positions will have unwound by the end of the next financial year. The Board is comfortable that we have the facilities in place to fund these requirements.

Acquisitions resulted in net cash outflows of £8.9m reflecting the cash acquisition cost of Imperial Tankers and AJS.

Capital expenditure

Net capital expenditure for the year was £4.4m compared to £7.9m in the prior year. The depreciation charge for the year was £11.0m (2007 £5.0m). The decrease over the prior year reflects capital expenditure immediately following the Maltby acquisition in February 2007 and lower than expected capital expenditure in the second half of the year. A number of scheduled fleet replacements were delayed to June and July of this year which resulted in capital expenditure being approximately £1.5m less than expected. 

Following the year end the Group has completed the scheduled acquisition of a new set of face equipment for the Maltby Colliery. Although this was anticipated at the time of the acquisition, the specification of the equipment has been significantly increased to provide greater operational reliability and to deal with the much longer face runs that are planned to support the mine life extension. There will also be a consequent increase in the total capital cost from around £7.0m to £10.0m.

FUTURE STRATEGY AND OUTLOOK

Production

At Maltby we will continue to work towards securing the extension of the mine life. The key short term challenge will be to look at investments that will take the development drivage rates up to 100m per week. Over the coming 12 months, we will also be looking at investments to increase the amount of methane that can be recovered from the mine with a view to adding further methane gas engines. The objective will be to increase generation to a level where the mine is self sufficient in electricity.

We will continue to recover the coal fines for supply to the Energy and Commodities Division and are actively looking at plans that will allow us to increase annual production.

In light of the current coke prices, including contracts already signed that came into effect on 1 January 2008, the outlook for the coke operations over the next three years is very positive. At Monckton the key strategic opportunity will be the re-commissioning of the extra ovens, a project that will be progressed as quickly as possible.

We will continue to review and push progress at Monckton Rubber Technologies. The outlook for the plant will be greatly improved if the current initiatives to add value to the waste wire are successful. We would not envisage investing in any further capacity.

Energy & Commodities Division

In the coming months we will seek to build on the resources, relationships and product flows that have been laid down in Europe by our German team. This will include reviewing the opportunities for acquiring transport or port assets in the medium term to start to build an integrated model similar to the model we operate in the UK. In the shorter term we are looking to add power generation coal to the minerals that we source and import into continental Europe to accelerate organic growth.

In the UK, we will look to the new Immingham joint venture to provide cost and efficiency benefits to our UK minerals business. The new joint venture will also provide additional capacity, increase product volumes and drive organic growth.

Having disposed of our shareholding in Lytag we will be focussing our efforts on developing our ash business by acquiring strategic assets or looking at opportunities to develop new relationships.

With our partner, UK Coal plc, we will also look at further opportunities to develop the Coal4Energy business.

Industrial Services Division

The outlook for the Industrial Services Division remains robust. The focus in the short term will be on driving additional organic growth, leveraging existing relationships and the products and services of AJS. We will continue to look at small bolt on acquisitions that, like AJS, offer the possibility of expanding or improving the range of services provided to customers.

Having completed the integration of the bulk warehousing operation at Killingholme, we will be looking at organic opportunities in the coming year to add scale to the operation and to create additional value from the property and land that came with the acquisition.

Transport Division

In the first half of the current year we hope to have completed our search for a new Managing Director to drive and manage the strategy and operations for all the Group's transport assets. 

The outlook for the Transport Division remains solid. We believe that we are well placed to deal effectively with any further increases in fuel costs. The strategy for the next 12 months will be to work hard in all three transport businesses to drive further contract wins based on the assets, resources and reputation that we currently have at our disposal. 

We will continue to review opportunities for bolt-on acquisitions to add scale to all three transport businesses. We will also look for opportunities for partnerships or joint ventures that will leverage greater value from the significant mineral flows that we currently move by rail.

Outlook Summary 

Whilst no business is immune to cyclical factors, our core markets remain robust and relatively resilient to short term economic factors. The prospect of further extending the mine life is exciting and we will continue to evaluate this opportunity over the coming months. Provided prices remain at the current levels there will be significant opportunity to access higher coke prices as contracts unwind over the next three years. As a result we are entering the current year in a strong position and remain focused on pursuing further organic and acquisitive growth.

Gordon Banham

Chief Executive Officer                                                                                                                                                15 September 2008

Iain Cockburn

Group Finance Director

  Consolidated Income Statement

for year ended 31 May 2008

	Note	2008	2007
		£000	£000
Revenue	2	404,901	240,105
Cost of sales		(355,721)	(213,164)
Gross profit		49,180	26,941
Other operating (expense)/income		(77)	25
Administrative expenses		(26,976)	(17,075)
Operating profit	2	22,127	9,891
Financial income		1,151	1,640
Financial expenses		(5,680)	(2,236)
Share of profit of jointly controlled entities (net of tax)		213	270
Share of profit of associates (net of tax)		49	56
Profit before tax	2	17,860	9,621
Income tax expense		(5,181)	(3,134)
Profit for the year		12,679	6,487
Attributable to:
Equity holders of the company		12,257	6,414
Minority interest		422	73
Profit for the year		12,679	6,487
Basic earnings per share (pence)	5	46.66	26.32
Diluted earnings per share (pence)	5	45.74	26.16

  Consolidated Statement of Recognised Income and Expense

for year ended 31 May 2008

			2008	2007
			£000	£000
Foreign exchange translation differences			190	(4)
Effective portion of changes in fair value of cash flow hedges			(9,811)	(769)
Actuarial gains and losses on defined benefit pension plans			4,625	108
Tax recognised on income and expenses recognised directly in equity			1,238	199
Net expense recognised directly in equity			(3,758)	(466)
Profit for the year			12,679	6,487
Total recognised income and expense for the year			8,921	6,021
Total recognised income and expense for the year is attributable to:
Equity holders of the parent			8,499	5,948
Minority interest			422	73
			8,921	6,021

  Consolidated Balance Sheet

at 31 May 2008

			2008	2007
			£000	£000
Non-current assets
Property, plant and equipment			66,277	63,178
Intangible assets			25,666	16,745
Investments in jointly controlled entities			592	881
Investments in associates			-	58
Other investments			-	20
Derivative financial instruments			35	200
Other financial assets			-	500
			92,570	81,582
Current assets
Inventories			43,453	35,027
Derivative financial instruments			754	-
Trade and other receivables			52,022	38,406
Cash and cash equivalents			10,015	11,779
			106,244	85,212
Total assets			198,814	166,794
Non-current liabilities
Other interest-bearing loans and borrowings			(30,001)	(34,165)
Retirement benefit obligations			(5,431)	(9,411)
Provisions			(10,327)	(10,327)
Derivative financial instruments			(7,895)	(631)
Deferred tax liabilities			(3,410)	(3,613)
Other non-current liabilities			(1,026)	-
			(58,090)	(58,147)
Current liabilities
Bank overdraft			(11,040)	(9,824)
Other interest-bearing loans and borrowings			(15,187)	(6,228)
Trade and other payables			(58,230)	(49,505)
Income tax liabilities			(5,092)	(1,851)
Derivative financial instruments			(3,114)	(205)
			(92,663)	(67,613)
Total liabilities			(150,753)	(125,760)
Net assets			48,061	41,034

Consolidated Balance Sheet (continued)

at 31 May 2008

			2008	2007
			£000	£000
Equity attributable to equity holders of the parent
Share capital			2,627	2,627
Share premium			29,177	29,177
Other reserves			29	29
Translation reserve			186	(4)
Merger reserve			1,022	1,022
Hedging reserve			(7,618)	(538)
Capital redemption reserve			1,530	1,530
Retained earnings			20,427	7,041
			47,380	40,884
Minority interest			681	150
Total equity			48,061	41,034

  Consolidated Cash Flow Statement

for year ended 31 May 2008

			2008	2007
			£000	£000
Cash flows from operating activities
Profit for the year			12,679	6,487
Adjustments for:
Depreciation			11,042	5,030
Amortisation of intangible assets			1,164	601
Dividend income			-	-
Net finance expense			4,528	596
Share of profit of joint ventures			(213)	(270)
Share of profit of associates			(49)	(56)
Loss/(gain) on sale of property, plant and equipment			105	(25)
Equity settled share-based payment expenses			440	268
Income tax expense			5,181	3,134
Translation of minority interest			71	-
			34,948	15,765
Change in trade and other receivables			(8,820)	(4,914)
Change in inventories			(6,391)	(13,254)
Change in trade and other payables			3,542	10,691
Change in provisions and employee benefits			333	117
			23,612	8,405
Interest paid			(4,216)	(1,971)
Income tax paid			(4,013)	(2,245)
Net cash generated from operating activities			15,383	4,189
Cash flows from investing activities
Proceeds from sale of property, plant and equipment			1,016	794
Proceeds from sales of investments			51	-
Interest received			-	324
Dividends received			750	-
Acquisition of subsidiaries, net of cash acquired			(8,878)	(33,693)
Acquisition of property, plant and equipment			(5,369)	(8,661)
Acquisition of other investments			(31)	75
Net cash outflow from investing activities			(12,461)	(41,161)
Cash flows from financing activities
Proceeds from the issue of share capital			-	10,332
Proceeds from new loan			5,000	15,000
Repayment of borrowings			(5,779)	(1,164)
Payment of finance lease liabilities			(3,034)	(1,947)
(Repayment of)/Proceeds from invoice discounting facility			(4,977)	3,656
Dividends paid			(2,453)	(1,972)
Proceeds from issue of promissory notes			6,759	-
Net cash (outflow)/inflow from financing activities			(4,484)	23,905
Net decrease in cash and cash equivalents			(1,562)	(13,067)
Cash and cash equivalents at 1 June			1,955	15,022
Effect of exchange rate fluctuations on cash held			(1,418)	-
Cash and cash equivalents at 31 May			(1,025)	1,955

  1.    Basis of preparation and status of financial information

The financial information set out above has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards as adopted by the EU (Adopted IFRSs).

This is the first time the Group has reported its results under Adopted IFRSs and full details of the impact of the Group's transition from UK GAAP to Adopted IFRSs (including the accounting policies adopted) were set out in the Group's RNS announcement entitled 'IFRS Restatement' issued on 14 February 2008 - a copy of which is available on the Investor Relations section of the Group's website at www.hargreavesservices.co.uk

The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 May 2008 or 2007 (but is derived from the 2007 accounts). Statutory accounts for 2007, which were prepared under UK GAAP, have been delivered to the Registrar of Companies, and those for 2008, prepared under Adopted IFRSs, will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985.

These results were approved by the Board of Directors on 15 September 2008.  

2.    Segmental information

The table below sets out information for each of the Group's industry segments.  

		Energy & Commodities	Industrial	Transport	Production	Total
		2008	2008	2008	2008	2008
		£000	£000	£000	£000	£000
Revenue
Total revenue		233,263	47,126	75,594	84,288	440,271
Inter-segment revenue		(4,012)	(4,589)	(10,995)	(15,774)	(35,370)
Revenue to third parties		229,251	42,537	64,599	68,514	404,901
Segment operating profit		7,599	1,644	3,219	9,665	22,127
Share of profit in  - joint ventures		213	-	-	-	213
- associates		49	-	-	-	49
Net financing costs		(1,571)	(301)	(956)	(1,701)	(4,529)
Profit before taxation		6,290	1,343	2,263	7,964	17,860

Production division comprises:

				Monckton	Maltby	Production
				2008	2008	2008
				£000	£000	£000
Revenue
Total revenue				36,529	47,759	84,288
Inter-segment revenue				(7)	(15,767)	(15,774)
Revenue to third parties				36,522	31,992	68,514
Segment operating profit				3,317	6,348	9,665
Share of profit in  - joint ventures				-	-	-
- associates				-	-	-
Net financing costs				(454)	(1,247)	(1,701)
Profit before taxation				2,863	5,101	7,964

		Energy & Commodities	Industrial	Transport	Production	Total
		2007	2007	2007	2007	2007
		£000	£000	£000	£000	£000
Revenue
Total revenue		140,454	26,807	56,388	39,563	263,212
Inter-segment revenue		(6,133)	(1,768)	(12,283)	(2,923)	(23,107)
Revenue to third parties		134,321	25,039	44,105	36,640	240,105
Segment operating profit		3,402	395	2,100	3,994	9,891
Share of profit in  - joint ventures		215	-	55	-	270
- associates		56	-	-	-	56
Net financing costs		810	(136)	(221)	(1,049)	(596)
Profit before taxation		4,483	259	1,934	2,945	9,621

Production division comprises:

				Monckton	Maltby	Production
				2007	2007	2007
				£000	£000	£000
Revenue
Total revenue				27,415	12,148	39,563
Inter-segment revenue				(4)	(2,919)	(2,923)
Revenue to third parties				27,411	9,229	36,640
Segment operating profit				2,835	1,159	3,994
Share of profit in  - joint ventures				-	-	-
- associates				-	-	-
Net financing costs				(637)	(412)	(1,049)
Profit before taxation				2,198	747	2,945

Included within revenue is £111.7m (2007:£29.9m) of revenue which originates in Europe. All other revenue originates in the United Kingdom.

3.    Acquisitions of subsidiaries

On 28 September 2007, the Group acquired all of the ordinary shares in Imperial Tankers Limited for £6,415,000, satisfied by £5,415,000 cash, with £1,000,000 being deferred and contingent on the future performance of the business. The company operates a fleet of bulk liquid tankers. In accordance with IFRS 3 Business Combinations, a review of the acquisition was performed to identify specific intangible assets. This resulted in the creation of an intangible asset of £2,032,000 for customer contracts, based on discounted future cash flows of the key long term sales contracts in place at the date of acquisition. 

In the 8 months to 31 May 2008 the subsidiary contributed profit after tax of £889,000 to the consolidated profit after tax for the year. If the acquisition had occurred on 1 June 2007, Group revenue would have been an estimated £410.3m and profit after tax would have been an estimated £12.7m. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition occurred on 1 June 2007.

		Pre-acquisition carrying amounts	Fair value adjustments	Recognised values on acquisition
		£000	£000	£000
ASSETS
Non-current assets
Property, plant and equipment		7,287	-	7,287
Intangible assets		-	2,032	2,032
Current assets
Inventories		126	-	126
Trade and other receivables		2,782	-	2,782
Cash and cash equivalents		1,306	-	1,306
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings		(2,993)	-	(2,993)
Deferred tax liabilities		(1,068)	(569)	(1,637)
Current liabilities
Trade and other payables		(2,212)	(250)	(2,462)
Current income tax liabilities		(390)	-	(390)
Interest-bearing loans and borrowings		(1,609)	-	(1,609)
Net identifiable assets and liabilities		3,229	1,213	4,442
Goodwill on acquisition				1,973
Net purchase consideration and costs of acquisition				6,415
Satisfied by:
Consideration paid				5,415
Contingent consideration				1,000
				6,415

The intangible assets are being amortised over the weighted average expected life of these contracts, which is 62 months. The goodwill is not being amortised, but will be reviewed for impairment annually.

  3.    Acquisitions of subsidiaries (continued)

On 1 April 2008, the Group acquired all of the ordinary shares in AJS Contracts Limited for £4,436,000 cash, of which £2,120,000 is deferred. The company carries out specialist engineering services relating to major outages at power stations. In accordance with IFRS 3 Business Combinations, a review of the acquisition was performed to identify specific intangible assets. This resulted in the creation of an intangible asset of £2,596,000 for customer contracts, based on discounted future cash flows of the key long term sales contracts in place at the date of acquisition. 

In the 2 months to 31 May 2008 the subsidiary contributed profit after tax of £296,000 to the consolidated profit after tax for the year. If the acquisition had occurred on 1 June 2007, Group revenue would have been an estimated £408.3m and profit after tax would have been an estimated £13.8m. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition occurred on 1 June 2007. 

				Pre-acquisition carrying amounts		Fair value adjustments	Recognised values on acquisition
				£000		£000	£000
ASSETS
Non-current assets
Property, plant and equipment				217		(39)	178
Intangible assets					-	2,596	2,596
Current assets
Inventories				163		-	163
Trade and other receivables				649		-	649
LIABILITIES
Non-current liabilities
Deferred tax liabilities					(29)	(727)	(756)
Current liabilities
Trade and other payables					(544)	(21)	(565)
Current income tax liabilities					(299)	-	(299)
Interest-bearing loans and borrowings					(32)	-	(32)
Net identifiable assets and liabilities					125	1,809	1,934
Goodwill on acquisition							2,502
Net purchase consideration and costs of acquisition							4,436
Satisfied by:
Consideration paid							2,316
Deferred consideration							2,120
							4,436

The intangible asset is being amortised over the weighted average expected life of these contracts, which is 71 months. The goodwill is not being amortised, but will be reviewed for impairment annually.

  3.    Acquisitions of subsidiaries (continued)

On 5 October 2007, the Group increased its stake in Hargreaves Building Products Ltd and Lytag Ltd by way of a share exchange between Hargreaves Building Products Ltd and Hargreaves Coal Combustion Products Ltd, and exchanging shares in Hargreaves Services plc with the other shareholders of HCCP Ltd, HBP Ltd, and Lytag Ltd. Hargreaves increased its share of the new combined group from 25% to 50%, resulting in an increase in investments of £107,054. The consideration was valued at £1,120,097 based on expected future profits of the combined HBP/HCCP group. This resulted in goodwill of £1,013,043. The goodwill will not be amortised over a specific period of time, however it will be reviewed annually for impairment at each reporting date, in line with Group policy.

The Group acquired the entire issued share capital of Norec Limited on 1 September 2006. The resulting goodwill of £1,252,000 was capitalised and will be reviewed annually for impairment. 

In accordance with IFRS 3 Business Combinations, a review of the acquisition was performed to identify specific intangible assets. This resulted in the creation of an intangible asset of £7,061,000 for customer contracts, based on discounted future cash flows of the key long term sales contracts in place at the date of acquisition. The intangible asset is being amortised over the weighted average expected life of these contracts, which is 75 months.

			Pre-acquisition carrying amounts	Fair value adjustments	Recognised values on acquisition
			£000	£000	£000
ASSSETS
Non-current assets
Property, plant and equipment			764	-	764
Intangible assets			-	7,061	7,061
Current assets
Trade and other receivables			4,271	-	4,271
Cash and cash equivalents			1,371	-	1,371
LIABILITIES
	Non-current liabilities
	Deferred tax liabilities		-	(1,977)	(1,977)
Current liabilities
Trade and other payables			(2,172)	-	(2,172)
Provisions			(3,173)	-	(3,173)
			-		-
Net identifiable assets and liabilities			1,061	5,084	6,145
Goodwill on acquisition					1,252
Net purchase consideration and costs of acquisition					7,397
Satisfied by:
Cash consideration paid					5,897
Deferred consideration paid by 31 May 2007					1,500
					7,397

  3.    Acquisitions of subsidiaries (continued)

The Group also acquired the trade and assets of Maltby Colliery, on 26 February 2007 resulting in goodwill of £2,139,000. This goodwill will be reviewed annually for impairment.

		Pre-acquisition carrying amounts	Fair value adjustments	Recognised values on acquisition
		£000	£000	£000
ASSETS
Non-current assets
Property, plant and equipment		12,694	17,839	30,533
Current assets
Inventories		5,171	(1,358)	3,813
LIABILITIES
Deferred tax liabilities		-	(2,139)	(2,139)
Provisions		(6,186)	(7,656)	(13,842)
Net identifiable assets and liabilities		11,679	6,686	18,365
Goodwill on acquisition				2,139
Net purchase consideration and costs of acquisition				20,504
Satisfied by:
Cash consideration paid				20,504

This subsidiary undertaking acquired during the year ending 31 May 2007 contributed £4,112,000 to the group's net operating cashflows, paid £nil in respect of net returns on investments and servicing of finance and utilised £4,150,000 for capital expenditure.

Prior to the acquisition, Maltby Colliery was part of a division of UK Coal plc.

  3.    Acquisitions of subsidiaries (continued)

The Group acquired an additional 50% of the issued share capital of Hargreaves (Bulk Liquid Transport) Limited in December 2006 taking its shareholding to 100%. The resulting goodwill of £1,529,000 was capitalised and will be reviewed annually for impairment.

				Book and fair value
				£000
ASSETS
Non-current assets
Intangible				14
Property, plant and equipment				856
Current assets
Inventories				17
Trade receivables				855
Cash and cash equivalents				5
LIABILITIES
Trade and other payables				(1,389)
Provisions				(78)
Net identifiable assets and liabilities				280
Goodwill on acquisition				1,529
Net purchase consideration and costs of acquisition				1,809
Satisfied by:
Cash consideration paid				764
Shares				1,045
				1,809

  3.    Acquisitions of subsidiaries (continued)

The Group acquired the entire issued share capital of Mineral Resources Europe GmbH in May 2007, through its 77.5% owned subsidiary, Hargreaves Raw Material Services GmbH (now 72.5%). The resulting negative goodwill of £84,000 was released immediately to the profit and loss account.

				Book and fair value
				£000
ASSETS
Non-current assets				15
Property, plant and equipment
Current assets
Inventories				2,870
Trade receivables				6,345
Cash and cash equivalents				1,083
LIABILITIES
Current liabilities
Trade and other payables				(9,566)
Net identifiable assets and liabilities				747
Goodwill on acquisition				(84)
Net purchase consideration and costs of acquisition				663
Satisfied by:
Cash consideration paid				663

The Group acquired the trade and certain assets of the Simon Bulk Warehousing and Distribution division from Humber Sea Terminal Limited on 30 March 2007 resulting in goodwill of £nil.

		Book value	Revaluations	Fair value
		£000	£000	£000
ASSETS
Non-current assets
Property, plant and equipment		3,000	1,215	4,215
Net identifiable assets and liabilities				4,215
Goodwill on acquisition				-
Net purchase consideration and costs of acquisition				4,215
Satisfied by:
Cash consideration paid				4,215

4.    Taxation

Recognised in the income statement

	2008	2007
	£000	£000
Current tax expense
Current year	5,633	2,405
Adjustments for prior years	172	(294)
Foreign tax - current year	728	243
Current tax expense	6,533	2,354
Deferred tax (credit)/expense
Origination and reversal of temporary differences	(672)	591
Reduction in tax rate	(44)	-
Adjustments for prior years	(636)	189
Deferred tax (credit)/expense	(1,352)	780
Tax expense in income statement (excluding share of tax of equity accounted investees)	5,181	3,134
Share of tax of equity accounted investees	122	128
Total tax expense	5,303	3,262

Reconciliation of effective tax rate

	2008	2007
	£000	£000
Profit for the year	12,679	6,487
Total tax expense (including tax on equity accounted investees)	5,303	3,262
Profit excluding taxation	17,982	9,749
Tax using the UK corporation tax rate of 30% (2007: 30%)	5,395	2,925
Effect of tax rates in foreign jurisdictions	49	73
Difference in effective tax rate	(69)	-
Impact of change in tax rate to 28% on deferred tax balances	(44)	-
Non-deductible expenses	440	368
Utilisation of previously unrecognised tax losses	-	33
Marginal relief	(4)	(32)
Over provided in prior years	(464)	(105)
Total tax expense (including tax on equity accounted investees)	5,303	3,262

Tax recognised directly in equity

	2008	2007
	£000	£000
Current tax recognised directly in equity	-	-
Deferred tax recognised directly in equity	1,238	199
Total tax recognised directly in equity	1,238	199

  5.    Earnings per share

All earnings per share disclosures relate to continuing operations as the group had no discontinued operations in either 2007 or 2008.

Earnings per share for the ordinary shares are as follows:

	2008	2007
Ordinary shares
Basic earnings per share	46.66p	26.32p
Diluted earnings per share	45.74p	26.16p

The calculation of earnings per share is based on the profit for the year attributable to equity holders and on the weighted average number of shares in issue and ranking for dividend in the year.

Ordinary shares

	2008	2007
	£000	£000
Profit for the year attributable to equity holders	12,257	6,414
Weighted average number of shares	26,270,532	24,372,457
Earnings per ordinary share (pence)	46.66p	26.32p

The calculation of diluted earnings per share is based on the profit for the year and on the weighted average number of ordinary shares in issue in the year adjusted for the dilutive effect of the share options outstanding.

	2008	2007
	£000	£000
Profit for the year attributable to equity holders	12,257	6,414
Weighted average number of shares	26,800,663	24,516,162
Diluted earnings per ordinary share (pence)	45.74p	26.16p

6.    Dividends

The aggregate amount of dividends comprises::

	2008	2007
	£000	£000
Final dividends paid in respect of prior year but not recognised as liabilities in that year	1,576	1,184
Interim dividends paid in respect of the current year	867	788
	2,443	1,972
Proposed dividend of 7p per share (2007: 6p)	1,839	1,576

7.    Annual Report

 The Annual Report will be posted to shareholders on or around 9 October 2008 and copies will be available from the Company Secretary, Hargreaves Services plc, West Terrace, Esh Winning, Durham, DH7 9PT, or from the Investor Relations section of the Group website at www.hargreavesservices.co.uk

 

END

 

 

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