Hargreaves performs well in a difficult market

First published in Features by

Hargreaves Services (AIM: HSP 702.75p)

This week I am taking the opportunity to look back at a company that we featured last November. The AIM listed Hargreaves Services has performed well in a difficult market and has seen its share price rise from 483.5p (September 2008) to over 700p.

Hargreaves Services was established in 1994 as a bulk haulier and it has now grown through acquisition into the supply, movement and management of mineral resources, as well as providing support to the energy and waste services. Hargreaves’ resource and client base is mainly located within the UK and Europe. It has a fleet of over 400 vehicles and moves more than 10 million tonnes of materials throughout the UK each year.

The group is split into four main divisions: Production Division which provides fuel products for customers throughout the UK and Europe. This includes Maltby Colliery.

Energy & Commodities Division provides coal, coke, minerals and biomass products to a range of consumers.

Transport Division is one of the largest in the country and comprises 400 vehicles used for specialist bulk haulage throughout a number of depots across the country.

Industrial Services Division provides contract management services to the power generation, utilities, chemicals and minerals industries.

Preliminary results for the year ended May 31, 2009 were impressive. Group revenue increased by 24.3per cent to £503.1m (2008: £404.9m) and underlying operating profit increased to £29.8m (2008: £22.1m). Diluted Earnings per share increased by 47.1per cent to 67.3p and the company proposed a full year dividend of 11.8p (2008: 10.3p) The company is multi-disciplined and a well integrated business that has delivered sustainable growth.

They have a proven management team with a track record of executing and implementing acquisitions as well as moving forward organically. The company has a blue-chip customer base and recently renegotiated a number of contracts which shows their good working relationships as well as winning new ones. The share price has moved up over the last year in a time when many AIM companies have struggled. However, the shares could still be worth buying on weakness.

WARNING: Opinions expressed are the writers’ judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek professional advice as to the suitability of the investments.

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