HARGREAVES Services has said its Scottish mining sites have done well during the firm's first full year of ownership, though the volatile price of coal has dragged on its overall results.

The Durham-based company said underlying pre-tax profits rose by more than 20 per cent to £52.1m in the year to May 31, boosted by its mines in Scotland.

The firm sold 845,000 tonnes of coal from its sites north of the Border during the year, generating £50.5m of revenues and an operating profit of £5.8m.

Hargreaves said it was pleased with the performance despite a slow start to the year, when heavy rain in the west of Scotland delayed operations.

The Durham-based company joined the Scottish mining industry by taking over several open-cast mines from the Scottish Coal Company and a subsidiary of ATH Resources when both firms fell into administration last year.

"We remain very much committed to maintaining and operation them in a sustainable fashion," said finance director Iain Cockburn yesterday.

At sites where Hargreaves is restoring the land after mining, the firm estimates that it has more than £100m still to spend. Glenmuckloch in Dumfries and Galloway and Muir Dean in Fife are among the sites being repaired.

"In all cases where residual mining is taking place, the mining is contributing to an improved restoration outcome," the firm said.

The company's total revenues from continuing operations rose 3.1 per cent to £869.2 million in the year. These figures exclude a £3.7m loss booked on the Maltby colliery near Rotherham, which Hargreaves closed this year.

Hargreaves is also considering whether to shut the Monckton coke production site in South Yorkshire as it struggles to cope with volatile commodity prices, made worse by an influx of cheap coke from China. A decision on the 130-year-old site is due "within weeks".

"The coke markets are in turmoil across Europe at the moment. It's a very difficult market to trade in. We've got some key contracts coming up in the fourth quarter and these will be pivotal. We will be looking at the market prices between now and then, and we'll do our best to keep it open," said Mr Cockburn on Monckton's prospects.

London-listed shares in the company fell 7.9 per cent to 645p yesterday. The shares have lost almost a fifth of their value since the start of September, when the firm announced its review of the Monckton facility.

The company intends to cut its overall volumes by 1.5m tonnes a year in order to lower spending. Last week it announced the sale of Imperial Tankers for £26.9m as part of its efforts to streamline the business. Chairman Tim Ross said yesterday that the disposal was "is an encouraging first step".

Despite the tough trading, Hargreaves yesterday raised its final dividend 23 per cent to 16.7p, which will be paid out to investors on November 21.

"Whilst there remain challenges ahead, particularly due to the uncertain economic climate and its knock-on effects on the major coal users in the power generation and steel sectors, we believe that the group's resilience leaves it better positioned than any other coal operator to work through the current market volatility and support the sector in the longer term," the firm said in its results statement.

Its sites in Scotland include Broken Cross in South Lanarkshire, Damside in North Lanarkshire, St Ninian's in Fife, and House of Water and Chalmerston in East Ayrshire.

The company has 27.8 million tonnes of coal in reserve at its UK sites, of which about 21.9 million tonnes is in Scotland.