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County Durham firm Hargreaves Services is hoping to reap a growing benefit from work on the HS2 project as it moves away from its former coal operations.

The Esh Winning firm has released a trading update in which interim results for the six months to the end of November show that revenues fell to £76.1m, having been at £92m for the same period a year earlier.

But the company’s profit before tax for the same period increased from £1.1m to £10.4m and net debt fell from £20.8m to £3m. The company has proposed an interim dividend of 2.8p a share, a slight increase on the amount paid out last year.

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Almost all of the profit (£9m) came from the company’s German joint venture but Hargreaves said that profits had increased in all three of its business segments. Having indicated a year ago that it was considering selling the joint venture, it has now put those plans on hold and a dividend from the German operation will also be paid to Hargreaves’ shareholders at year end.

Hargreaves said it was seeing revenues of more than £2m a month from its work on the HS2 project, which it expected to increase in the second half of the year as the project accelerates. The company has signed a £120m, three-year contract with the HS2 project and is also bidding for work on the Thames crossing and forthcoming nuclear plants, while it has also seen its first £1m annual receipt from the Tungsten West mining project in Devon.

Hargreaves chairman Roger McDowell said: “The group has delivered a strong set of results and carries real momentum into the second half of the financial year in all segments of the business.

“The German joint venture continues to deliver substantial profits and our balance sheet is strong with no bank debt. The board has increased its expectations for financial performance in the current and future years materially and I look forward to reporting further progress in due course.”