Hargreaves Services Share Discussion Threads

[bamboo2] 19/4/2013 20:15

Will this affect HSP?
Obviously not at Maltby.

Firms 'own unburnable fossil fuels'
By Roger Harrabin



Some 60% to 80% of fossil fuel reserves owned by listed firms could be classed as unburnable if politicians stick to CO2 emission limits, a report warns.

The research by the London School of Economics and NGO Carbon Tracker says firms spend billions of pounds of shareholders' money on exploration.

It says 200 listed firms spent £440bn in 2012 chasing more coal, oil and gas.

It says if this continues for a decade - and if CO2 limits are achieved - they would waste over £4tn.

The research says the listed companies analysed own 762 billion tonnes of CO2 in the form of coal, oil and gas.

Many of the firms are listed in the City of London - the world's fossil fuel investment capital.

To stick to the current agreed global limit on emissions - which is sure to be breached - the firms would probably be able to emit no more than about 125-275 billion tonnes of CO2 - about a quarter of their assets.

The authors say that, even if the rules are relaxed to allow emissions to a level associated with a 3C temperature rise, there will still have to be limits on fossil fuel burning.

The carbon capture and storage technology can strip carbon from fossil fuel exhaust gases and store it in rocks, but it is unproven at scale, trials are years behind schedule and it may not work in some areas of the world.

The authors say the current fossil fuel business model assumes that there are no emissions limits.

This attitude is perhaps hardly surprising, given the mismatch between politicians' rhetoric on the need to cut emissions and the continued rise in atmospheric CO2.

Carbon Tracker has been campaigning for regulators to force firms to disclose the potential CO2 emissions embedded in their fossil fuel reserves, in order to inform potential investors.

It says there is a danger of a carbon "bubble."

[castleford tiger] 19/4/2013 18:30

There you go...........under 800p again

tiger

[dellwood86] 18/4/2013 22:47

significant assets......scottish coal ?

[gargoyle2] 18/4/2013 06:41

From today's FT:

A plan to mine Britain's untapped coal resources will be financed by a £42m share issue from Hargreaves Services, which aims to acquire more UK surface mining assets.

The Aim-traded coal mining and bulk materials logistics company said it believed that expanding its UK surface mining assets and development pipeline would have significant benefits for its wider operation.

Gordon Banham, chief executive, estimated there was about 300m-400m tonnes of accessible coal in the UK that could be mined.

"There's still a lot close to the surface," he said. But, he added, he did not believe any closed deep coal mines in the UK would reopen because of the huge cost of sinking new shafts. "Once they close, then they are gone for ever."

Hargreaves has endured a difficult few months after geological problems at its now-closed Maltby Colliery in Yorkshire. It also announced that it had uncovered alleged fraud at its Belgian business.

The company produces about 1m tonnes of coal from UK surface mining. But it expects the proceeds of the share issue to help it triple this through the acquisition of assets from companies that have been struggling with pension liabilities and the cost of restoring sites after mining. "We are starting with a fresh, clean piece of paper," said Mr Banham.

The proposed placing of 5.46m new shares at 775p each with new and existing institutional investors is being conducted through an accelerated bookbuilding process by N+1 Singer and Jefferies, joint brokers.

It is split into two equal tranches, with the first issued using an early authority granted by shareholders and the second conditional on shareholder approval at a general meeting on May 7. The issue of new shares is expected to dilute existing shareholders by 20 per cent.

The proceeds will also provide working capital and cover the cost of future land restoration. Assuming the money is fully invested by June 1, Hargreaves expects the capital investment to be earnings enhancing in the 2014 financial year.

The company's activities include producing, processing, handling and transporting coal and other bulk materials in the UK and continental Europe. Hargreaves said that "a strong underlying performance" in the six months to November 30 underpinned its expectation for trading volumes to produce a strong second half.

N+1 Singer is forecasting pre-tax profit of £52.9m on turnover of £667m in the year to May 31, but that excludes the £65m costs of closing Maltby Colliery and accounting for the Belgian fraud.

Last year's pre-tax profit was £47.5m, excluding exceptional costs of £400,000, on turnover of £688.3m. The shares fell 7p to 803p on Wednesday.

[castleford tiger] 17/4/2013 17:57

They have been touting it about for a week or so and word slipped out.
the trades today are weird.

Look at them. Buys of 1 and 33 numerous times.

strange but too cheap.
EPS 2017 I see at 200p so a price of 20.00 by them implies a huge upside.

ATH are no 1 open cast producers and they will complete this now.

[gargoyle2] 17/4/2013 14:10

Agreed. Dave, thanks for that. Very interesting. It sounds as if negotiations are well under way, so I assume the sellers have said that -- because of the uncertain markets -- they won't do a deal that is conditional on a successful placing -- so HSP have got it out of the way first. I would expect a deal to be announced pretty quickly now. It sounds like they've reached agreement on price, at least.

[simon gordon] 17/4/2013 12:21

Dave,

Thanks for the note.

[davebowler] 17/4/2013 12:06

I heard it via a stockbroker contact.

[spooky] 17/4/2013 11:59

I don't think i could ever be happy with a company issuing new equity at 6.5 times earnings.

[simon gordon] 17/4/2013 11:55

From the Interim presentation of Coalfield Resources plc (UK Coal):

Surface mining

• Operating profit £8.4m (H1 2011: £11.4m)

• Good production from four producing sites compared to six in same period last year.

• H1 production was 0.9m tonnes (H1 2011: 1.0m tonnes)

• Two new sites (Butterwell and Lodge House Extension) began production with Minorca starting H2 2012

--

HSP this morning:

"...could lead to the acquisition of surface mining assets with current annual production of between one and two million tonnes and the Board's view is that further attractive acquisition opportunities are likely to emerge in the near term."

--

Is there a bigger surface miner than UK coal?

[jamielein] 17/4/2013 11:50

Dave, where did you hear it's oversubscribed?

IMO the placing is a positive thing. Would've been better if it were at a higher price but it's being done for the right reasons and should promote earnings growth.

Also shows strong institutional support at 775p if it's fully subscribed.

[davebowler] 17/4/2013 11:33

Apparently the placing was heavily oversubscribed.

[gargoyle2] 17/4/2013 07:41

Yes, that must be it. Looks like they have good reasons to raise the extra funds though -- that's positive. Earnings enhancing in 2014 if they get the deals that they're looking at. I suspect the jittery markets were the reason for the placing price being at such a discount. Annoying, but no reason to sell for longer-term investors, at least -- imo.

[cisk] 17/4/2013 07:11

now we know the reason for the share price decline. Placing announced this morning (for institutional investors only) at 775p.

[gargoyle2] 17/4/2013 03:27

Even if it was GBP 385 million, just because that's a lot of money doesn't mean it's not a cheap company. Especially if it makes GBP 52 million pretax profit! On Singer's numbers this is on a forward PE of 6 now.

[simon gordon] 16/4/2013 20:15

Actual market cap is £222.7m.

[dellwood86] 16/4/2013 20:00

not sure they are very cheap market cap 385 million, good company though

[castleford tiger] 16/4/2013 18:52

And south today.

very cheap now

[gargoyle2] 10/4/2013 12:50

Good to see this attracting a few buyers and heading north again today.

[gargoyle2] 08/4/2013 09:21

Good to see SCSW reiterating its buy recommendation here today. It cites broker N+1 Singer as forecasting £52.9m pretax and eps of 131p, for a forward PE of around 6.4.

[gargoyle2] 05/4/2013 02:24

Thanks, Simon. I've been watching the decline, which was starting to concern me, so good to see that report. My own target is 1000p here, right in the middle of Jefferies and Westhouse.

[simon gordon] 04/4/2013 18:24

Bloomberg - 4/4/13:

Hargreaves Services Confounds Buy Calls With Drop: London Mover

By Peter Woodifield

Hargreaves Services Plc (HSP) fell for an eighth day, the longest streak in three years, even as analysts say the U.K. supplier of materials and transport for energy companies is poised to gain as it settles difficulties at a coal mine and fraud in its Belgian unit.

Hargreaves Services, based in Durham, England, is mothballing its Maltby colliery because of geological risks to health and safety, and in February said the loss from Belgian malfeasance may be 17.7 million pounds ($26.7 million).

"As the issues at Maltby and in Belgium are worked through, that should be a positive catalyst," Justin Jordan, an analyst at Jefferies LLC with a buy rating on the stock, said in an interview today. Some investors are banking gains, Jordan said, after the stock rose more than 40 percent in the three months before the current decline.

The shares fell as much as 0.8 percent to 823 pence and were down 0.2 percent at 12:49 p.m., heading for the lowest close in more than five weeks. That extended the eight-day decline to almost 7 percent.

Hargreaves said Feb. 28 that it expected a "strong" second half and predicted it would meet its full-year forecasts excluding Maltby and Belgium. Those difficulties should be "put to bed" by the time the company announces results for the year ending in May, Jordan said.

Hargreaves is benefiting from increasing use of coal in U.K. power stations as a result of an expanding price differential with gas, the London-based analyst said. It's also expanding rapidly in Europe.

25% Upside

Jordan predicts the shares will rise to 1,030 pence, implying an upside of about 25 percent. He is one of four analysts with a buy recommendation among those who share their research with Bloomberg. Two analysts advise holding the shares, while none say sell.

"Outperformance in the shares since December does not yet, in our view, reflect the potential of the 'new' Hargreaves," Michael Donnelly, an analyst at Westhouse Securities, wrote on March 5 after the interim results. Earnings before interest and taxes gained 6 percent in the first half on an underlying basis, he noted.

Donnelly predicts the shares will rise to 984 pence.

[eeyrcr] 10/3/2013 20:21

Thanks Simon. I'm long here but I think I should probably widen my stop a little based on the spread here!!