LONDON (ShareCast) - (ShareCast News) - Full-year profits at Hargreaves Services sank as the company continued to restructure its operations in the face of low coal prices and UK coal generation-based power plant closures.
Continuing revenues for the twelve months ending on 31 May shrank 48.6% to £340.7m, contributing to a 89.3% drop in continuing underlying profits on an operating basis to £4.6m.

On that same basis, earnings per share fell 94.0% to 5.6p.

During the reporting period, the coal mining and transport company incurred in £12.4m of exceptional costs resulting from its restructuring, with net debt rising from £1.0m to £32.3m.

In a strategy update provided on 27 April, the company said that: "Over the last year, the challenges facing the coal sector in the UK have increased due to continuing coal price weakness and low levels of coal demand arising from weak gas prices and an accelerated programme of UK coal generation plant closures."

Nonetheless, on this occassion management expressed confidence, highlighting the acquistion of CA Blackwell to broaden its Services operations.

David Morgan, the group´s chairman, added that Hargreaves was targetting £35-50m of incremental value creation, over the next five to seven years, from the development and energy projects related to its portfolio of property and energy projects.

Hargreaves was also looking to convert to cash £60m of legacy assets which would "allow consideration of a wide range of options to return value or capital to shareholders."

Trading since the company´s interim results had been in line with management's expectations, the company said in a statement.

A final dividend of 2.3p per share was declared, in line with the firm´s stated policy of paying-out 40.0% of profits.

"It is still early days, but with net assets of more than 400p per share, management believes that significant value can be created," analysts at N+1 Singer said in a research report sent to clients.

Shares in Hargreaves Services finished the session lower by 2.20% ar 189.0p.

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