25 September 2012 – final results
Although the group has reported record results for the year to 31 May, with revenues up almost 25% at £688m and underlying pre-tax profits up by over 17% at £47.5m, continued and unexpected problems at the Maltby coal mine have caused the share price to fall sharply. Underlying earnings per share for the year were 121.9p, an increase of over 17% and the dividend was also increased by nearly 15% to 17.8p. Net debt also increased to £77.7m (2011: £66.0m). The group is now actively reviewing its options for Maltby as the geological problems encountered are causing severe issues. However, the group has now developed to such a degree that even if the mine was closed or mothballed it would not hinder the overall growth prospects at the group. Clearly, until some resolution at Maltby is reached there will continue to be some uncertainty regarding the shares, but even if the mine is closed the remaining operations of the group would be much lower risk and the shares would therefore benefit from being given a higher rating. After today’s fall we rate the stock aSPECULATIVE BUY.