Companies: ATH   

Coal producer ATH Resources is upbeat after increasing first-half profits 39 per cent to £2.5 million pre-tax.

AIM-quoted ATH lifted earnings a more modest 9.4 per cent to 3.7p a share and upped its turnover 35 per cent to £23.1 million in the six months to 2 April on a 23.5 per cent increase in coal production, chiefly in Scotland, to 790,000 tonnes. Deliveries were partially impeded by the temporary closure of the Settle-to-Carlisle railway, which increased stocks but will not, argues the company, have an impact on results for the full year.

Reserves fell by 1.3 million tonnes to 5.3 million tonnes over the half year. But Doncaster-based ATH has applied for planning permission to add a further 3.2 million tonnes, for a total of 8.5 million tonnes.

Chief executive Tom Allchurch says high gas prices have drawn attention to the merits of coal for power generators. He draws attention to two contracts signed in April to supply 5.5 million tonnes between now and 2010, with annual price escalation clauses written in.

In May, ATH bought coal recovery, land remediation and regeneration concern A.Ogden for £9.5 million. Allchurch says it is fitting in well and points out that ATH is keeping its eyes open for more acquisitions.

For the full year to October, analysts are predicting a near-30 per cent increase to £7.4 million in pre-tax profits. At 198p, down 6p this morning, the shares have long term merits.

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