Today’s update reassures that H1 trading is in line and that Coal Distribution outperformance is expected to offset any risks over the timing of property transactions. Our forecasts are unchanged, but the tenor of the statement suggests that forecast risk in H2 is firmly on the upside. Management’s focus is on delivering profit from all of the operations, reducing overheads and reducing volatility, and progress is being made towards these goals. Coal and Logistics profits are improving, the Earthworks contract issues are largely resolved and central costs are reducing. In addition, value should be realised from the surplus heavy plant in H2, as conditions in the market improve. Progress is said to be good with regards to development of both the property portfolio and the Brockwell Energy spin-off. As we said in August, with the core operations being refocused, the legacy assets being successfully liquidated and Property and Energy offering upside, the long term outlook for the Group is bright. Our intrinsic value stands at 452p, with clear potential to outperform this as property/energy development progresses; in our opinion, the recent price weakness offers a highly attractive entry point.
