LONDON (ShareCast) - Hargreaves Services, the AIM-listed supplier of fuel and bulk material logistics, swung into the red in the year ended May 31st despite impressive top-line growth as the company felt the impact of a closure in Belgium and the mothballing of its Maltby colliery.

Revenues from continuing operations jumped by 36.5% from £617.9m to £843.3m, helped by strong performances from its coal distribution business in the UK and core material handling services unit.

Underlying profit before tax from continuing operations increased by 5.9% from £49.3m to £52.2m.

However, discontinued operations - relating to Belgium and Maltby - made a total loss of £81.8m for the year, meaning that the group recorded a net loss of £49.6m, compared with a profit of £30.8m previously.

Hargreaves discovered discrepancies in December relating to its Belgium business with the value of stock and other balance-sheet values being "fraudulently reported". Following the subsidiary's closure, the company took an exception charge of £17.3m as well as recognising operating losses of £4.7m.

Meanwhile, the closure of underground operations at Maltby - on the back of health & safety, geological and financial grounds - led to a post-tax loss of £59.8m, which including operating losses, redundancy costs, closure costs and write-offs.

Nevertheless, the company declared a final dividend of 13.6p a share, taking the full-year payout to 20.5p, up 15.2% on the 17.8p paid to shareholders the year before.

"It has been both a challenging and rewarding year," said Chairman Tim Ross.

"Whilst the group suffered setbacks at both Maltby and in Belgium, we have made significant strategic progress. Following a successful equity raise in April, the group has accelerated the development of its surface mining business to become the key coal producer and distributor in the UK market."

The company raised £42m earlier in the year to fund its acquisition of surface mining assets of ATH Resources and Scottish Resources.

The stock gained 0.65% in early trading on Tuesday to 814.28p.

Analysts at Jefferies said that continuing profits came in 4% ahead of consensus expectations as it maintained its 'buy' recommendation and 1,030p target price. It said that Hargreaves should be "positive re-rated" by the market.

The broker said: "We view these reassuring FY13 results following two recent surface mine acquisitions as further progress in evolving the Hargreaves group to a lower risk business with: 1) more consistent operational performance; 2) improved quality of earnings; and 3) increased dividend payout to shareholders."

BC

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