Hargreaves Services ends year above market expectations
9th Jun 2022 15:45
(Sharecast News) - Industrial and property-focussed Hargreaves Services updated the market on the financial year just ended on Thursday, saying it expected to report results ahead of market expectations.
The AIM-traded firm said the outperformance was the result of "continued strong performance" of its joint venture in Germany, HRMS.
As it noted on 3 May, commodity prices - including zinc and pig iron - had maintained their high levels, which led to an expectation that HRMS' contribution to the Hargreaves results for the year ended 31 May would now be £3.5m after tax greater than prior consensus estimates.
"The board anticipates reporting strong results in each of its business segments," the directors said in their statement.
"Revenue will be lower than the prior year due to the cessation of its coal activities, profit before tax is expected to be higher.
"This improvement on the prior year profit before tax is anticipated due to increased contributions from the services and HRMS businesses."
At the end of the financial year, the group had no bank debt and held cash of £14.0m, down from £28.3m year-on-year.
The reduction in cash was due to the provision of an additional short term loan of £15m to HRMS to assist with its trading capacity.
Hargreaves' board said it had decided to continue to provide additional funding to HRMS while current favourable market conditions prevailed.
"The only non-bank debt held by the group, excluding its joint ventures, relates to leasing debt related to specific fixed assets.
"The total leasing debt at the year-end was approximately £18.1m," Hargreaves confirmed, up from £11.8m a year earlier.
"The increase is a result of the investment in the plant required for the HS2 contract within services."
Hargreaves said it would report its preliminary results for the year ended 31 May on 27 July.
At 1512 BST, shares in Hargreaves Services were up 4.61% at 590p.
Reporting by Josh White at Sharecast.com.