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Hargreaves Services - Capital reallocation exercise

October 2014

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • HSP
  • Price:
  • 547p
Hargreaves’ full year results were in-line  - pretax profit was £55.1m, eps was 124.8p and net debt was down to £68.8m - but what has spooked the market has been the company highlighting that gas prices have collapsed, which has seen coal and also coke prices spiral downwards. Coal burn in June was a record low. This price volatility means that power station customers have been reluctant to sign up to 2/3 year contracts as they did previously. Finance director Ian Cockburn says it is now lucky if gets six month contracts, which creates short term issues and Hargreaves is therefore no longer looking at absolute returns but returns on a risk adjusted basis.The year saw it buy some surface mining assets includin ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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