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(Alliance News) - Hargreaves Services PLC on Wednesday said it swung to a profit in the first half of its financial year despite a significant reduction in revenue.
Shares were up 1.6% at 311.00 pence each on Wednesday morning in London.
For the six months to the end of November, revenue was GBP124.7 million, reflecting a 26% decrease from GBP167.9 million recorded in the comparative period the year before.
Hargreaves said the revenue fall was caused primarily by reduced levels of activity in the specialist earthworks business. It added that it continued to seek account settlements on three completed legacy civil contracts which have GBP9.2 million of contract assets outstanding.
The company also added that revenue recorded in the comparative period included over GBP8 million from former customer Wolf Minerals Ltd. In October 2018, Wolf Minerals announced it had ceased trading and moved into an insolvency process.
Hargreaves posted a pretax profit of GBP5.2 million, swinging from a loss of GBP6.0 million the year prior, attributed to the sale of subsidiary Drakelands Restoration Ltd to Tungsten West Ltd and the company's trading with British Steel.
"Hargreaves has made good progress in the last six months following the challenges it faced in its financial year ended May 31. The board remains focused on delivering reliable and growing profits in, and unlocking capital from, its distribution & services businesses enabling strong cash returns to shareholders alongside investment in the growth of Hargreaves Land," said Chair Roger McDowell.
Hargreaves maintained its interim dividend at 2.7 pence per share.
Net debt was up 41% at GBP40.3 million from GBP28.6 million last year with the increase attributed to accounting changes in accordance with the new reporting standards, and higher levels of working capital in the distribution and services business.
The company also said it has hired Christopher Jones as a non-executive director effective from the start of April. He founded Christopher Dee LLP, a Manchester-based partnership specialising in the analysis, acquisition and disposal of commercial property investment and development opportunities across the UK, Hargreaves said.
Looking ahead, the firm said it expects to report higher than anticipated net debt in May due to increased inventory levels, however it anticipates its full year results to be slightly ahead of expectations due to the benefit of its trading with British Steel.
It added that it expects no direct impact to its trading activities due to the country's exit from the European Union scheduled for Friday because it has very little trading activity with any country within the EU.
"The future holds a number of further opportunities, particularly in specialist earthworks should HS2 go ahead, although that is not expected to benefit the reported results in the current financial year. I also expect Hargreaves Land to make further progress on a number of exciting projects," said Chief Executive Gordon Banham.
By Ife Taiwo; ifetaiwo@alliancenews.com
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