Industrial group Hargreaves Services has posted underlying pre-tax profits of £32.7m despite a dip in revenue.
Announcing full year results to the end of May 2022, the business said it had seen particularly strong growth in its services arm and with its investment in German pig iron and zinc production joint venture HRMS. Investors were told how a significant earth moving contract for HS2 had boosted profitability as had two electrical engineering contracts worth £18m.
Hargreaves said the HRMS business had benefited from rising commodities prices and that its steel recycling business, DK Recycling und Roheisen GmbH, had undergone improvements to operating processes and administrative functions which would deliver around €10m savings per year. HRMS was also said to be taking steps to plan for potential threats to German energy supplies.
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Revenue dropped from £204.8m to £177.9m partly due to a reduction in revenue across the services business caused by the decision to stop coal activities in 2021. On a like-for-like bases the services revenue grew from £137.2m to £162.8m.
Meanwhile performance Hargreaves' land division delivered increased revenue of £15.1m, up from £11.8m and pre-tax profits of £2.1m, down from £6.8m - it said due to the timing of sales at its Unity Joint Venture, near Doncaster.
Further sales were completed and exchanged at the group's major Blindwells site including a 12.9 acre site to housebuilder Persimmon for £9.6m and an agreement with Ogilvie Homes for a 4.6 acre plot, which is expected to close later this year. The group also pointed to Brockwell Energy having achieved financial close on its energy from waste plant under construction on Hargreaves' Westfield site. The first windfarm is now under construction by BayWa AG on the group's Dalquhandy site.
Gordon Banham, CEO of Hargreaves, said: "The business is one a solid foundation, we've got money in the bank and we can weather any storms that are potentially coming. The Services business is fairly inflation resistant because we have these inflation-linked contracts."
He added: "I think Hargreaves is in a good, solid place now and we've transitioned from a coal business. It's quite interesting to see the green bits of our business emerging from what was an old coal company that has become something very much different."
Chairman Roger McDowell said: "The board has a clear, strategic investment proposition from which to create, deliver and realise shareholder value. These results, which include the highest level of profit recorded in seven years, illustrate the group's agility in taking advantage of market conditions whilst also delivering strong, underlying and sustainable profits. The board is alive to current economic issues and our balance sheet strength will serve the Group well in a period of challenging global economic outlook."
Hargreaves announced a 25% increase to the final dividend which is expected to be 5.6p, up from 4.5p in 2021. An additional dividend of 12.0p per share is also proposed in relation to dividends to be received from previously undistributed profits at HRMS. Combined this brings the total dividend for the year to 20.4p, up from 19.2p in 2021.
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