Companies: ATH   

ATH Resources, one of the UK’s largest coal producers backed by Alchemy, Artemis and Axa Framlington, continues to quarry impressive profits growth for shareholders. Figures for the six months ended 1 April revealed revenues up more than a third at £31.2m on 973,000 tonnes of coal sold, up from 790,000 tonnes a year earlier.

Cash generated grew by an impressive 89% to £10.1m and pre-tax profits clipped higher to £2.3m (£1.9m) for growth of 19%. The dividend was held at 3.36p, covered marginally more than once by an earnings increase to 3.9p (3.3p), reflecting the group’s positioning as a dedicated income stock.

Chief executive Tom Allchurch said the strong financials reflected the ‘continued high level of activity and development seen’ during a half in which new mines were opened and a new conveyor, ‘the longest of its kind in Europe’, was commissioned. Earnings visibility was enhanced with an extra 1.6m tonnes added to the group’s coal reserves, taking current reserves (after allowing for production) to 8.5m tonnes.

Allchurch was also keen to push the merits of the group’s first major AIM acquisition ATH Ogden, a land regeneration and coal tip washing business bought in May 2006 and successfully re-branded to ATH Regeneration, which continues to perform ahead of expectations, and adds a ‘green’ angle to the ATH investment case.

ATH, market leader in the washing and regeneration of coal sites as well as the second biggest surface mining business in the UK, operates in a coal market that remains strong and further acquisitions to supplement organic growth are expected. Growing fast with bumper yield appeal, we consider the shares a strong buy.