Hargreaves Services – 360p

14 February 2018 – interim results

The company has released a solid set of figures for the six months ended 30 November 2017 and has also stated that it expects full year results to be in line with expectations.  Revenue for the period was £150.3m (2016: £170.9m). The fall can mainly be explained by the inclusion of £10.2m of Legacy asset sales in 2016 versus £0.4m of such sales in the latest period and a reduction of £6.3m in revenue on three legacy contracts in Specialist Earthworks.  Underlying operating profit was £2.3m (2016: £2.1m).  After accounting for an exceptional item of £2.8m, amortisation of intangible assets of £0.2m (2016: £0.1m) and adjusting for tax on the profits of the German associate of £0.7m (2016: £0.6m), the loss before tax was £1.9m versus a profit of £0.2m in the same period a year earlier.  Underlying basic earnings per share were 2.7p (2016: 0.3p).  Net debt was reduced to £20.6m (2016: £36.9m) and is not expected to be materially different by the end of the financial year.  The interim dividend will be held at 2.7p (2016: 2.7p). Payment will be made on 6 April 2018 with the ex-dividend date being 22 February.  Net assets have risen to 423p per share and this is likely to prove conservative so for now we keep our BUY rating.

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