Final Results

17th Jul 2008 10:30



Atlantic Coal plc / Index: AIM / Epic: ATC / Sector: Mining

17 July 2008

Atlantic Coal plc ('Atlantic Coal' or 'the Company')

Final Results

Atlantic Coal plc, the AIM listed open cast coal production and processing company, is pleased to announce its results for the year ended 31 December 2007.

Chairman's statement

This is my first full year report as Chairman since Atlantic Coal plc commenced trading on AIM, following the acquisition of the Stockton Coal Group ('SCG') in Pennsylvania, USA by way of a Reverse Takeover of Summit Resources plc. As shareholders will know, SCG is an open cast production and processing business focussing on incremental reserves of high grade coal for immediate and near term production. SCG's assets include the ownership and operation of the Stockton Colliery which is comprised of the producing Stockton Mine and an adjacent anthracite washing plant.

Operational Review

SCG operates the Stockton Colliery which comprises an open-cast anthracite mine and an adjacent anthracite washing plant. The mine is an established non-union surface mine encompassing circa 900 land acres in the Hazle Creek Valley, Pennsylvania and has an estimated probable reserve of over 2 million tonnes of recoverable clean (washed) coal product. Mining of raw coal is predominantly from the high quality Mammoth seam, while washing and sizing takes place in the 150 tonne per hour coal preparation plant. At re-admission to AIM, J T Boyd Company, the Company's Competent Person, estimated that there is over 10 years of mine life from existing reserves at an average production rate of 400,000 Run of Mine ('ROM') tonnes per annum. Based on historic production levels, the mine is capable of and is projected to produce approximately 450,000 ROM tonnes of coal per year. 

Mining operations are conducted by the use of hydraulic excavators. Uncovered raw coal is then loaded into 100 tonne trucks for delivery to the onsite preparation plant. As each section of the mine is developed, mining progresses from the northern and southern faces into the basin. This yields a constant flow of raw coal to the preparation plant.

Coal production is currently reduced as SCG's mining operations are being restricted by the Norfolk Southern railroad track which is located on the southern face of the mine. The railroad tracks' present location prevents extraction of coal reserves located near and under the track. Coal is currently mined from the northern face into the basin while coal located on the southern face remains in place. After relocation of the railroad track is completed, coal will be mined from both faces into the basin. Resulting production will provide full feed to the preparation plant which will raise production levels significantly. The Board expects track relocation to be completed in the second half of 2008 although the final timings will be dependent on the timely response from the railroad related to track design and acceptance of the designated relocation area. Clean coal processed from 1 September to 31 December 2007 was 33,427 tonnes. Clean coal processed from 1 January 2008 to 30 June 2008 was 10,833 tonnes.

Operating one eight hour shift, the on-site preparation plant has an estimated production capacity of up to 147,000 tonnes per annum of clean sized coal. However, post year end, full production has been constrained by lower yields from the mine. An additional crushing circuit has been installed at the preparation plant to provide sizing flexibility to meet increased small size coal demand.

SCG is one of five operating anthracite companies within the region capable of producing annually more than 100,000 tonnes of clean coal. Competition with other producers remains constrained due to the balance of supply and demand in the market. Barriers to entry are formidable preventing substantial increases in short term production. The capital-intensive nature of the industry along with environmental concerns and protracted permitting regulations enforced by federal and state agencies, precludes significant short-term increases in local production. Importantly, SCG has in place all necessary permits and bonding to operate the mine and preparation plant.

SCG practices concurrent mine reclamation at its Stockton mine. Overburden removed to expose the coal seam is trucked to a disposal area located in a previously mined section of the active mine. This practice insures all reclamation remains current and maintains the open pit area of the mine within allowed limits. Areas refilled are restored to approximate original contour and completed by seeding with grass and planting trees. A previous mine site must be reclaimed by SCG. Reclamation expenditures are estimated at $1.2M annually over a two year period beginning in 2009. 

Anthracite coal, washed and sized into eight products, is sold into the domestic heating and industrial markets. Domestic heating market demand remains robust and commands the highest prices. Coal is sold to dealers for final delivery to households utilizing coal as a primary or secondary heating fuel. The north eastern states of the US consume approximately 85% of total USA fuel oil used for heat. As the price of fuel oil has escalated unabated, demand for anthracite coal as a primary fuel for heating has surged. This demand is further bolstered by the substantial increase in shipments of hand fired coal stoves into the market. The weighted average selling price for this segment of the market was $130 per tonne. It remains an attractive and dynamic segment of the market. 

Industrial market consumption is concentrated on steel producers using anthracite as a carbon additive in their melting shop operations. Steel production continues at high levels with concomitant demand for coal. The high quality of Mammoth seam anthracite mined by SCG creates a superior high fixed carbon product for the steel market. These very characteristics also make our coal desirable for use in ore reduction processes with potential future demand by this segment. Industrial markets are price competitive with the weighted average selling price.

The weighted average selling price for all coal sold was $122 per tonne. As global oil prices continue to increase it is anticipated that future coal prices will follow. The price of coal sold for domestic heating will most likely increase to offset operating cost increase and will climb higher due to greater consumption brought on by stronger domestic heating market demand.

Financial Review

The loss for the period 1 September 2007 to 31 December 2007 was $3,615,463. This performance was impacted by lower raw coal production from the mine. Turnover was $2,523,054 with 21,303 tonnes sold. The Company has secured an interim funding facility from Stephen Best to complete relocation of the railroad track and fund ongoing operations pending the return to expected production levels and profitability. However the Board intends to replace this interim funding facility with additional debt or equity finance in the second half of the year.

Atlantic Coal remains well positioned as an anthracite producer in Pennsylvania. With the relocation of the railroad track production at the site will be able to increase, moving the Company towards positive cash flow generation. Market metrics remain strong for domestic heating use driven by the high cost of oil and uncertainty of supply. Industrial demand continues to impress given the current economic climate in the US and foreign demand for steel coupled with favourable exchange rates. Importantly, we are in talks with major industrial companies for off-take agreements, which could provide the Company with the opportunity to increase overall output. To this extent, the Board is examining a number of transactions that will expand its regional asset base and allow Atlantic Coal to significantly increase its critical mass. These are both in Pennsylvania in the US as well as in the UK. 

In the current markets with coal prices on the increase, Atlantic Coal is ideally placed to take advantage of this and I believe that the Company has a bright future to look forward to.

Christopher Lambert

Non-Executive Chairman

16 July 2008

 

BALANCE SHEETS

As at 31 December 2007

		Group			Company
	Note	As at 31 December 2007 $	As at 31 August 2007 (restated) $		As at 31 December 2007 $	As at 31 December 2006 $
Non-Current Assets
Property, plant and equipment	5	6,159,182	6,492,461		3,065	5,704
Land, coal rights and restoration	6	6,378,121	6,427,589		-	-
Intangible assets	7	-	-		-	-
Investment in subsidiaries	8	-	-		19,072,306	-
Trade and other receivables	9	-	-		8,217,677	-
		12,537,303	12,920,050		27,293,048	5,704
Current Assets
Inventories	10	751,589	966,776		-	-
Trade and other receivables	9	2,135,420	1,376,134		541,721	2,634,999
Other assets	11	653,216	640,285		-	-
Cash and cash equivalents	12	1,591,300	133,087		1,469,689	4,311,342
		5,131,525	3,116,282		2,011,410	6,946,341
Total Assets		17,668,828	16,036,332		29,304,458	6,952,045
Current Liabilities
Trade and other payables	14	3,525,155	3,536,937		428,786	24,763
Provisions	15	1,080,000	648,000
Borrowings	16	950,500	9,063,388		-	-
Accrued restoration costs	17	428,000	428,000		-	-
		5,983,655	13,676,325		428,786	24,763
Non-Current Liabilities
Borrowings	16	3,988,413	4,001,902		-	-
Accrued restoration costs	17	6,624,209	6,561,713		-	-
		10,612,622	10,563,615		-	-
Total Liabilities		16,596,277	24,239,940		428,786	24,763
Net Assets		1,072,551	(8,203,608)		28,875,672	6,927,282
Capital and Reserves Attributable to Equity Holders of the Company
Called up share capital	13	1,057,101	1		1,057,101	348,784
Share premium account		12,108,661	2,674,078		12,108,661	6,593,569
Merger reserve		17,112,462	-		17,112,462	-
Reverse acquisition reserve		(12,562,742)	-		-	-
Other reserves		78,381	-		78,381	13,030
Foreign currency translation reserve		(277,968)	-		(277,968)	345,920
Retained earnings / (losses)		(16,443,344)	(10,877,687)		(1,202,965)	(374,021)
Total Equity		1,072,551	(8,203,608)		28,875,672	6,927,282

 

The Financial Statements were approved and authorised for issue by the Board of Directors on 16 July 2008 and were signed on its behalf by:

Raymond Petrilla

Finance Director

GROUP INCOME STATEMENT

For the period 1 September 2007 to 31 December 2007

				Group
			Note	For the period from 1 September 2007 to 31 December 2007 $	For the year ended 31 August 2007 (restated) $
Revenue			3	2,523,054	4,450,695
Cost of sales				(3,252,089)	(7,587,274)
Gross loss				(729,035)	(3,136,579)
Administration expenses				(848,628)	(3,405,493)
Other (losses) / gains - net			18	268,143	(352,330)
Other income			19	1,602	50,729
Operating Loss				(1,307,918)	(6,843,673)
Impairment of goodwill			7	(1,785,612)	-
Finance income			22	21,834	49,183
Finance costs			22	(543,767)	(648,363)
Loss Before Taxation				(3,615,463)	(7,442,853)
Corporation tax expense			23	-	-
Loss for the Period				(3,615,463)	(7,442,853)
Attributable to Equity Holders				(3,615,463)	(7,442,853)
Loss per share attributable to the equity holders of the Company:
Basic and diluted			24	1.11 cents	2.28 cents

The Company has elected to take the exemption under Section 230 of the Companies Act 1985 from presenting the Parent Company Income Statement.

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the period 1 September

to 31 December 2007 and the

year ended 31 December 2007

Group ($)	Share capital	Share Premium	Merger reserve	Share option reserve	Reverse acquisition reserve	Translation reserve	Profit and loss account (restated)	Total equity
At 1 September 2006	1	2,674,078	-	-	-	-	(3,434,834)	(760,755)
Loss  for the year	-	-	-	-	-	-	(7,442,853)	(7,442,853)
At  31 August 2007	1	2,674,078	-	-	-	-	(10,877,687)	(8,203,608)
Partnership capital	-	1,950,194	-	-	-	-	(1,950,194)	-
Capital contribution	-	1,000,000	-	-	-	-	-	1,000,000
Loss  for the period	-	-	-	-	-	-	(3,615,463)	(3,615,463)
Reverse merger	1,057,100	6,484,389	17,112,462	78,381	(12,562,742)	(277,968)	-	11,891,622
At 31 December 2007	1,057,101	12,108,661	17,112,462	78,381	(12,562,742)	(277,968)	(16,443,344)	1,072,551

Company ($)	Share capital	Share Premium	Merger reserve	Share option reserve	Translation reserve	Profit and loss account	Total equity
As at 1 January 2006	-	-	-	-	-	-	-
Share capital issued	348,784	6,952,759	-	-	-	-	7,301,543
Cost of share issue	-	(359,190)	-	-	-	-	(359,190)
Foreign currency	-	-	-	-	345,920	-	345,920
Loss for the year	-	-	-	-	-	(374,021)	(374,021)
Share based payments				13,030			13,030
As at 31 December 2006	348,784	6,593,569	-	13,030	345,920	(374,021)	6,927,282
Share capital issued	708,317	5,532,086	17,112,462	-	-	-	23,352,865
Share based payments	-	(16,994)	-	65,351	-	-	48,357
Foreign currency	-	-	-	-	(623,888)	-	(623,888)
Loss for the year	-	-	-	-	-	(828,944)	(828,944)
As at 31 December 2007	1,057,101	12,108,661	17,112,462	78,381	(277,968)	(1,202,965)	28,875,672

GROUP CASH FLOW STATEMENT

For the period 1 September to 31 December 2007

			Group
		Note	For the period from 1 September 2007 to 31 December 2007 $	For the year ended 31 August 2007 (restated) $
Cash flows from operating activities
Operating loss			(1,307,918)	(6,843,673)
Adjustments for:
Depreciation			365,133	1,193,693
Amortisation			49,468	185,237
Gain on disposal of property, plant and equipment			-	5,853
Accretion, accrued restoration costs			62,496	484,336
Foreign exchange (gains) / losses			(268,143)	352,330
Decrease in trade and other receivables			(9,286)	(892,686)
Less: Trade & other receivables acquired on reverse acquisition			(541,721)	-
(Increase) / decrease in inventories			215,187	(792,968)
Increase / (decrease) in trade and other payables			(11,782)	570,046
Less: Trade and other payables acquired on reverse acquisition			(428,786)	-
Increase in provisions			432,000	648,000
Increase in accrued restoration costs			-	1,817,841
Net cash used in operations			(1,443,352)	(3,271,991)
Cash flows from investing activities
Purchase of property, plant and equipment			(28,404)	(1,766,564)
Payment for deposits			(12,930)	(42,917)
Additions of cash from reverse acquisition			3,157,195	-
Interest paid			(301,938)	(242,707)
Interest received			21,834	49,183
Net cash from (used in) investing activities			2,835,757	(2,003,005)
Cash flows from financing activities
Proceeds from equity contribution			250,000	-
Proceeds from borrowings			-	6,280,074
Repayments of borrowings			(207,959)	(978,026)
Net cash from Financing Activities			42,041	5,302,048
Net increase in cash and cash equivalents			1,434,446	27,052
Effect of foreign exchange rate changes			23,767	-
Cash and cash equivalents at beginning of period			133,087	106,035
Cash and cash equivalents at end of period		12	1,591,300	133,087

NOTES TO THE FINANCIAL STATEMENTS

For the period ended 31 December 2007

1. Financial Risk Management

Financial Risk Factors

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.

Market Risk

The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollar. Foreign exchange risk arises from future commercial transactions denominated in a foreign currency. The Group maintains bank accounts in these currencies to reduce its exposure to this risk. The volume of transactions is not deemed sufficient to enter into forward contracts.

The Group is exposed to commodity price risk as a result of its operations. However, given the size of the Group's operations, the costs of managing exposure to commodity price risk exceed any potential benefits. Changes in individual commodity prices that were reasonably possible at the Balance Sheet date would have no significant effect upon profit or loss or equity.

The Group has no exposure to equity securities price risk, as it has no listed equity investments.

The Group has both interest-bearing assets and liabilities. Interest-bearing assets include only cash balances, all of which earn interest at a fixed rate. The Group has a policy of maintaining debt at a fixed rate to ensure certainty of future interest cash flows. Thus the Group is only exposed to fair value interest rate risk, which is not expected to have a significant impact on profit or loss or equity.

Credit Risk

Credit risk arises from cash and cash equivalents as well as exposure to customers including outstanding receivables.

The Group has implemented policies that require appropriate credit checks on potential customers before sales are made. Where debt finance is utilised, this is subject to pre-approval by the Board of Directors. The amount of exposure to any individual counterparty is subject to a limit, which is reassessed annually by the Board.

The Company considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.

Liquidity Risk

The Group actively maintains a mixture of long-term and short-term debt finance that is designed to ensure that the Group has sufficient available funds for operations and planned expansions. 

The following table analyses the Group's financial liabilities, which will be settled on a net basis, into relevant maturity groupings, based on the remaining period to maturity at the Balance Sheet date. The amounts disclosed are the contractual undiscounted cash flows:

At 31 December 2007	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years	Over 5 years
Borrowings	950,500	3,116,148	872,265	-
Trade and other payables	3,525,155	-	-	-

At 31 August 2007	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years	Over 5 years
Borrowings	9,063,388	605,914	3,395,988	-
Trade and other payables	3,536,937	-	-	-

  ATLANTIC COAL PLC

NOTES TO THE FINANCIAL STATEMENTS

For the period ended 31 December 2007

1. Financial Risk Management (continued)

Capital Risk Management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Group monitors capital using a gearing ratio which is Net Debt divided by EBITDA. Net debt is calculated as securitisation, finance lease liabilities and group loans less cash and cash equivalents.

Fair Value Estimation

The carrying value less impairment provision of trade receivables and payables is assumed to approximate to their fair values, due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

2. Critical Accounting Estimates and Judgements

The preparation of the combined financial statements in conformity with IFRSs requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Significant items subject to such estimates and assumptions include, but are not limited to, the allowance for doubtful accounts; inventories, coal lands, asset retirement obligations; employee benefit liabilities; future cash flows associated with assets; useful lives for depreciation, depletion and amortisation; workers' compensation claims; income taxes; and fair value of financial instruments. Due to the subjective nature of these estimates, actual results could differ from those estimates.

3. Segmental Information

At 31 December 2007, the Group operates in one business segment, the extraction and processing of anthracite coal. The Group has interests in two geographical segments, the United Kingdom and the United States of America. The Group revenues and assets are substantially attributable to the coal activities in the US. The parent company operates a head office based in the United Kingdom which incurred certain administration and corporate costs.

Geographical Segments

The Group's business segments operate in two main geographical areas. The Group's revenues are wholly within the US.

	Group
Revenue	For the period from 1 September 2007 to 31 December 2007 $	For the year ended 31 August 2007 $
USA	2,523,054	4,450,695

Revenue is allocated based customer location.

	Group
Total Assets	As at 31 December 2007 $	As at 31 August 2007 $
USA	15,654,354	17,036,332
UK	2,014,474	-
Total	17,668,828	17,036,332

Total assets are allocated based on asset location.

	Group
Capital Expenditure	For the period from 1 September 2007 to 31 December 2007 $	For the year ended 31 August 2007 $
USA	28,403	1,767,063

Capital expenditure is allocated based on asset location.

4. Operating Loss

The operating loss is stated after charging:	Group
	For the period from 1 September 2007 to 31 December 2007 $	For the year ended 31 August 2007 $
Fees payable to the Company's auditors for the audit of the Parent Company and consolidated accounts	40,036	-
Fees payable to the Company's auditors for other services provided to the Company and its subsidiaries:	34,030	-
Fees payable to the Company's auditors for the audit of the Company's subsidiaries	75,000	37,000
Fees payable to the Company's auditors for tax services	2,000	-
Depreciation	365,133	1,193,693
Amortisation	49,468	185,237

5. Property, Plant and Equipment

	Group
	Land and buildings $	Plant and machinery $	Motor vehicles $	Furniture and equipment $	Total $
Cost
Balance as at 1 September 2006	332,957	13,281,286	393,394	62,220	14,069,857
Additions	-	1,765,885	-	1,178	1,767,063
Disposals	-	-	(27,848)	-	(27,848)
As at 31 August 2007	332,957	15,047,171	365,546	63,398	15,809,072
Additions	-	24,000	-	4,403	28,403
Additions on reverse acquisition	-	-	-	6,831	6,831
Exchange differences	-	-	-	-	-
As at 31 December 2007	332,957	15,071,171	365,546	74,632	15,844,306
Depreciation
Balance as at 1 September 2006	206,139	7,545,122	334,768	58,385	8,144,414
Charge for the year	13,487	1,158,834	20,655	2,314	1,195,290
Disposals	-	-	(23,093)	-	(23,093)
As at 31 August 2007	219,626	8,703,956	332,330	60,699	9,316,611
Charge for the period	5,110	353,004	5,583	1,436	365,133
On reverse acquisition	-	-	-	3,475	3,475
Exchange differences	-	-	-	(95)	(95)
Disposals	-	-	-	-	-
As at 31 December 2007	224,736	9,056,960	337,913	65,515	9,685,124
Net book value as at 31 August 2007	113,331	6,343,215	33,216	2,699	6,492,461
Net book value as at 31 December 2007	108,221	6,014,211	27,633	9,117	6,159,182

The net book value of assets under finance lease is $140,800 (31 August 2007: $157,867).

				Company
				Furniture and equipment $
Cost
Balance as at 1 January 2006				-
Additions				6,831
As at 31 December 2006				6,831
Exchange differences				89
As at 31 December 2007				6,920
Depreciation
Balance as at 1 January 2006				-
Charge for the year				1,128
As at 31 December 2006				1,128
Charge for the year				2,736
Exchange differences				(9)
As at 31 December 2007				3,855
Net book value as at 31 December 2006				5,703
Net book value as at 31 December 2007				3,065

6. Land, coal rights and restoration costs

	Group
	As at 31 December 2007 $	As at 31 August 2007 $
Stockton mine costs
Land costs	3,000,000	3,000,000
Development costs	2,437,098	2,437,098
Retirement obligation cost
Brought forward	914,472	2,290,617
Decrease in retirement obligation estimate	-	(1,376,145)
Carried forward	914,472	914,472
Total Stockton mine costs	6,351,570	6,351,570
Stockton mine costs depreciation
Brought forward	2,222,419	2,091,551
Charge for the year	27,404	130,868
Stockton accumulated depreciation	2,249,823	2,222,419
Stockton mine costs net book value	4,101,747	4,129,151
Land costs
Land - 154.2 Acres surface and mineral	3,400,000	3,400,000
Land - 181 Acres mineral only	150,000	150,000
	3,550,000	3,550,000
Mineral depreciation
Brought forward	1,251,562	1,197,193
Charge for the year	22,064	54,369
Land accumulated depreciation	1,273,626	1,251,562
Land net book value	2,276,374	2,298,438
Total	6,378,121	6,427,589

The asset retirement provision for the Stockton mine property is calculated using current cost estimates provided by an independent third party consultant. The current cost estimates are applied to the required reclamation activities for closure of the mine. The cost estimates are escalated at 4.4% annually to the anticipated future mine closure date. The escalation factor was derived from the prior 15 year average increase in the US Producer Price Index for Anthracite producers. The future reclamation cost value is discounted at 8% (incremental cost of borrowing) to arrive at the recorded reclamation liability.

7. Intangible Fixed Assets

					Group
					Goodwill $
Cost
Balance as at 31 August 2007					-
Arising on reverse acquisition					1,785,612
Impairment losses					(1,785,612)
As at 31 December 2007					-

The goodwill arising on the reverse acquisition has been impaired in full as the Directors' do not consider this reflects any increase in the value of the group's assets. 

8. Investments in Subsidiary Undertakings

	Company
Shares in Group Undertakings	As at 31 December 2007 $	As at 31 December 2006 $
At 1 January	-	-
Additions	19,072,306	-
At 31 December	19,072,306	-

Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid.

Details of Subsidiary Undertakings

Name of subsidiary	Place of establishment	Registered capital	Share capital held	Principal activities
Coal Contractors (1991) Inc	USA	Ordinary shares $100	100%	Anthracite mining
Stockton Anthracite LP	USA	-	100%	Operation of anthracite washing plant
Stockton Anthracite LLC	USA	-	100%	Dormant

9. Trade and Other Receivables

	Group			Company
	As at 31 December 2007 $	As at 31 August 2007 $		As at 31 December 2007 $	As at 31 December 2006 $
Trade receivables	631,593	1,236,079		130,276	-
Other receivables	239,361	-		-	-
Prepayments	213,790	140,055		110,769	217,491
Deposits	99,091	-		99,091	97,834
Equity contributions receivable	750,000	-		-	-
VAT receivable	201,585	-		201,585	66,709
Loans	-	-		-	2,252,965
Loans to related parties (note 27)	-	-		8,217,677	-
	2,135,420	1,376,134		8,759,398	2,634,999
Less non-current portion: loans to related entities	-	-		8,217,677	-
Current portion	2,135,420	1,376,134		541,721	2,634,999

Equity contributions receivable relate to an agreement by former individual shareholders of the Coal Contractors (1991), Inc. to make total cash payments of $1,000,000 in respect of four quarterly payments of $250,000 due to General Electric Capital Corporation.

All non-current receivables are due within five years of the Balance Sheet date.

Group

At 31 December 2007, trade receivables of $501,317 (31 August 2007: $996,717) were overdue but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing of these receivables is:

	As at 31 December 2007 $	As at 31 August 2007 $
Up to 3 months	320,746	745,238
3 to 6 months	135,123	206,031
6 to 12 months	45,448	45,448
Total	501,317	996,717

10. Inventories

	Group			Company
	As at 31 December 2007 $	As at 31 August 2007 $		As at 31 December 2007 $	As at 31 December 2006 $
Coal	601,348	796,682		-	-
Supplies	150,241	170,094		-	-
	751,589	966,776		-	-

The cost of inventories recognised as an expense and included in cost of sales was $186,815 (31 August 2007: ($792,968)).

11. Other assets

	Group
	As at 31 December 2007 $	As at 31 August 2007 $
Certificate of deposit	230,649	221,976
Escrow account	422,567	418,309
	653,216	640,285

The Group, as part of a purchase agreement on a portion of the site currently being mined, has provided a supply agreement to the seller. The Group is required to provide, at the option of the purchaser, up to 100,000 tons of coal annually, with minimum quality specifications, until the date of exhaustion of the coal reserves on the site (refer Note 15). As part of the agreement, the Group is required to deposit into an escrow  account $1.00 for every ton of prepared coal produced from the site until the escrow account accumulates to $2,500,000. Should the Group default on the terms of the agreement, the escrow account could be forfeited as liquidating damages.

The Group has provided certificates of deposit as collateral to secure mine reclamation obligations as required by the Department of Environmental Protection. The certificates are not released until the underlying reclamation obligations have been completed by the Group and released by the Department of Environmental Protection.

12. Cash and Cash Equivalents

	Group			Company
	As at 31 December 2007 $	As at 31 August 2007 $		As at 31 December 2007 $	As at 31 December 2006 $
Cash at bank and on hand	1,591,300	133,087		1,469,689	4,311,342

13. Called-Up Share Capital

	Number	£
Authorised
Ordinary shares of 0.07 p each	20,000,000,000	14,000,000

There has been no movement in the authorised share capital during the year

Issued	Number of shares	Ordinary shares $		Share premium $	Total $
At 31 December 2006	267,868,264	348,784		6,593,569	6,942,353
Acquisition of subsidiaries	494,131,736	708,317		5,515,093	6,223,410
At 31 December 2007	762,000,000	1,057,101		12,108,662	13,165,763

Share Options

Share options outstanding at the end of the year have the following expiry date and exercise prices:

				Shares
Expiry date		Exercise price in £ per share		2007	2006
7 June 2011		0.02		24,348,142	24,348,142
18 November 2012		0.025		15,240,000	-
18 November 2012		0.035		6,000,000	-
18 November 2012		0.055		6,000,000	-
18 November 2012		0.075		5,000,000	-
				56,588,142	23,348,142

The options are exercisable starting immediately from the date of grant and lapse on the fifth anniversary of the date of grant. The Company or Group has no legal or constructive obligation to settle or repurchase the options in cash.

The fair value of the share options was determined using the Black Scholes valuation model. The parameters used are detailed below:

	2007 Options	2006 Options
Option granted on:	19 November 2007	6 June 2006
Option life (years)	5 years	5 years
Risk free rate	5%	4.6%
Expected volatility	15%	15%
Expected dividend yield	-	-
Marketability discount	20%	80%
Total fair value of options granted ($000)	65	13

The expected volatility is based on historical volatility since listing on AIM on 8 June 2006.

The total fair value has resulted in a charge to the Income Statement for the year ended 31 December 2007 of $30,832 (2006: $13,030).

14. Trade and Other Payables

	Group			Company
	As at 31 December 2007 $	As at 31 August 2007 $		As at 31 December 2007 $	As at 31 December 2006 $
Trade payables	2,661,675	1,717,685		326,016	9,090
Social security and other taxes	75,772	26,310		-	-
Accrued expenses	787,708	1,792,942		102,770	15,673
	3,525,155	3,536,937		428,786	24,763

15. Provisions

	Group
	As at 31 December 2007 $	As at 31 August 2007 (restated) $
Provision for supply of coal	1,080,000	648,000

In connection with the acquisition of the Stockton Mine real estate in November, 2000, the Stockton Coal Group entered into a ROM Coal Sale and Purchase Agreement to supply coal to Jeddo, an affiliate of the vendor of the property, Pagnotti Enterprises, Inc.. It grants Jeddo the option to purchase up to 100,000 standard long tons of coal annually, divided into an "annual" amount of at least 50,000 tons, provided that Jeddo gives notice of its election to exercise by 31 December of the previous year, and a quarterly optional amount where Jeddo can buy up to 50,000 tons more per year by exercising quarterly increase rights of up to 5,000 tons per month. The term of the Group's obligation under this agreement lasts until all the coal reserves at the Stockton mine are depleted.

As a result, a provision has been recognised for the Group's obligations under this agreement.

A charge of $432,000 has been recognised in the current period. A charge of $648,000 has been reflected in the results for the year ended 31 August 2007.

16. Borrowings

	Group
	As at 31 December 2007 $	As at 31 August 2007 $
Non-Current
Debenture and other loans	3,860,161	3,858,935
Finance lease liabilities	128,252	142,967
	3,988,413	4,001,902
Current
Convertible bond	-	1,664,153
Debentures and other loans	908,328	7,358,848
Finance lease liabilities	42,172	40,387
	950,500	9,063,388

Total borrowings include secured liabilities of $2,707,857 (31 August 2007: $3,917,393). Borrowings are secured as follows:

American Investments Ltd loan note in the amount of $55,000 is secured by a lien on a 1998 Volvo Model L220D Rubber Tired Loader S/N L220DV1117 located at the Stockton mine site.

Cleveland Brothers Equipment Co, Inc loan note in the amount of $257,410 is secured by liens on two Caterpillar Model D9N dozers, S/N 14Y75640 and S/N 14Y75637.

Cleveland Brothers Equipment Co, Inc loan note in the amount of $86,906 is secured by liens on two Caterpillar Model 777B trucks, S/N04YC00229 and S/N 04YC01410.

General Electric Capital Corporation loan note in the amount of $2,308,541 is secured by all anthracite coal to be extracted from the property and all anthracite coal inventory through the grant of a mortgage on all the real property of the Stockton Coal Group.

The carrying amounts and fair value of the non-current borrowings are:

	Carrying amount			Fair value
	As at 31 December 2007 $	As at 31 August 2007 $		As at 31 December 2007 $	As at 31 August 2006 $
Debenture and other loans	3,860,161	3,858,935		3,860,161	3,858,935
Finance lease liabilities	128,252	142,967		128,252	142,967
	3,988,413	4,001,902		3,988,413	4,001,902

The fair value of current borrowings equals their carrying amount, as the impact of discounting is not significant. The fair values are based on the face values of the loans.

The carrying amounts of short-term borrowings are approximately their fair value.

Lease Liabilities

Lease liabilities are effectively secured, as the rights to the leased asset revert to the lessor in the event of default.

	As at 31 December 2007 $	As at 31 August 2007 $
Finance lease liabilities - minimum lease payments
due within one year	60,210	60,210
due within two to five years	146,532	166,602
due thereafter	-	-
	206,742	226,812
Finance charges allocated to future periods	36,318	43,458
Present value of finance lease liabilities	170,424	183,354

17. Accrued Restoration Costs

	Group
	As at 31 December 2007 $	As at 31 August 2007 $
Gowen	4,206,625	4,206,625
Stockton	2,417,584	2,355,088
	6,624,209	6,561,713
Gowen total costs
Brought forward	4,634,625	2,667,979
Increase in estimated reclamation liability	-	1,966,646
Carried forward	4,634,625	4,634,625
Gowen costs split:
Current	428,000	428,000
Non-current	4,206,625	4,206,625
Stockton total costs
Brought forward	2,355,088	3,454,845
Accretion	62,496	276,388
Decrease in estimated Stockton mine reclamation liability	-	(1,376,145)
Carried forward	2,417,584	2,355,088

18. Other (Losses) / Gains - Net

	Group
	For the period from 1 September 2007 to 31 December 2007 $	For the year ended 31 August 2007 $
Net foreign exchange gains / (losses)	268,143	(352,330)

19. Other Income

	Group
	For the period from 1 September 2007 to 31 December 2007 $	For the year ended 31 August 2007 $
Sale of scrap metal	1,572	50,729
Other	30	-
	1,602	50,729

20. Employees

	Group			Company
Staff Costs(including Executive Directors)	For the period from 1 September 2007 to 31 December 2007 $	For the year ended 31 August 2007 $		For the year ended 31 December 2007 $	For the year ended 31 December 2006 $
Wages and salaries	718,277	1,268,949		120,109	34,095
Social security costs	51,976	144,908		7,152	-
Share options granted to Directors	-	-		-	4,904
Pension contributions - defined contribution plans	-	-		-	-
	770,253	1,413,857		127,261	38,999

	Group
Average Number of Employees (including Executive Directors)	For the period from 1 September 2007 to 31 December 2007 $	For the year ended 31 August 2007 $
Admin	9	8
Coal miners	29	26
Total average headcount	38	34

21. Directors' Remuneration

	Directors' Fees			Options Issued
	For the year ended 31 December 2007 $	For the year ended 31 December 2006 $		For the year ended  31 December 2007 $	For the year ended 31 December 2006 $
Non-executive Directors
Christopher Lambert	37,033	18,706		-	2,451
Malcolm James (1)	31,929	18,706		-	2,451
Jade Styants (1)	31,929	18,706		-	2,451
Toby Howell	110,100	34,095		-	4,904
Gregory Kuenzel	2,803	-		-	-
Executive Directors
Stephen Best (2)	10,009	-		1, 695	-
Raymond Petrilla (2)	43,939	-		337	-
	267,742	90,212		2,032	12,257

(1) Resigned 19 November 2007

(2) Appointed 19 November 2007

No pension benefits are provided for any Director.

22. Finance Income and Costs

	Group
	For the period from 1 September 2007 to 31 December 2007 $	For the year ended 31 August 2007 $
Interest Expense:
Convertible bond	63,733	287,260
Other loans	480,034	361,103
Finance Costs	543,767	648,363
Finance Income
Interest received from bank	21,834	49,183
Net Finance Costs	521,933	599,180

23. Taxation

	Group
	For the period from 1 September 2007 to 31 December 2007 $	For the year ended 31 August 2007 (restated) $
Loss before tax	(3,615,463)	(7,442,853)
Tax at the applicable rate of 39% (2007: 40%)	(1,410,030)	(2,977,141)
Net tax effect of losses carried forward	1,410,030	2,977,141
Tax charge	-	-

No tax charge or credit arises on the loss for the period.

The tax rate used is a combination of the 30% standard rate of corporation tax in the UK, 34% US federal tax rate and 6% Pennsylvania state tax rate for the Stockton Coal Group to give an applicable rate of 39% (2007: 40%). The results for the year ended 31 August 2007 consist of only the 34% federal tax rate and 6% state tax rate for the Stockton Coal Group.

The group has tax losses of approximately $3,500,000 (2007: $11,000,000) available to carry forward against future taxable profits. A deferred tax asset has not been recognised because of uncertainty over the timing of future taxable profits against which the losses may be offset.

24. Loss per Share

The calculation of the basic loss per share of 1.11 cents (31 August 2007 loss per share: 2.28 cents) is based on the loss attributable to ordinary shareholders of $3,615,463 (31 August 2007 loss: $7,442,853) and on the weighted average number of ordinary shares of 326,081,044 (31 August 2007: 326,081,044) in issue during the period.

In accordance with IAS 33, no diluted earnings per share is presented as the effect on the exercise of share options would be to decrease the loss per share.

Details of share options that could potentially dilute earnings per share in future periods are set out in Note 13.

25. Commitments

The Group as part of a purchase agreement on a portion of the site currently being mined, has provided a supply agreement to the seller. The Group is required to provide, at the option of the purchaser of the coal, up to 100,000 tons of coal annually, with minimum quality specifications, until the date of exhaustion of the coal reserves on the site. As part of the agreement, the Group is required to deposit into an escrow account $1.00 for every ton of prepared coal produced from the site until the escrow account accumulates to $2,500,000. Should the Group default on the terms of the agreement, the escrow account could be forfeited as liquidating damages. The balance as at 31 December 2007 is $422,567 (31 August 2007: $418,309).

The Group has provided certificates of deposit as collateral to secure mining bonds required to secure mine reclamation obligations. The certificates are not released until the underlying reclamation obligations have been completed by the Group and released by the Department of Environmental Protection. The balance of certificates of deposit at 31 December 2006 is $230,648 (31 August 2007: $221,976).

Mine production has been temporarily reduced from expected levels due to the location of railroad tracks that prevent mining raw coal situated in proximity to and under the tracks. The Group requested the seller for a suspension of its obligation to supply run of mine coal until the tracks are relocated and normal mine production resumes. The seller consented provided that make up tonnage be delivered in future years.

26. Business Combinations

On 19 November 2007, Atlantic Coal plc acquired 100% of Coal Contractors (1991) Inc, Stockton Anthracite LLC and Stockton Anthracite LP (the Stockton Coal Group). This was a reverse acquisition, as described in note 1 (d).

In the absence of a reliable valuation for the Stockton Coal Group (as its shares are not quoted), the cost of combination has been calculated using the fair value of all of the issued equity instruments of Atlantic Coal plc at the date of acquisition.

Included in the consolidated results is the loss for the period 19 November 2007 to 31 December 2007 relating to Atlantic Coal plc of $302,643.

27. Related Party Transactions

Shareholder Loans

Included within borrowings are the following amounts owed to shareholders:

	Group
	As at 31 December 2007 $	As at 31 August 2007 $
Willoughby (465) Limited	600,060	1,219,594
Hichens, Harrison & Co Plc	218,273	-
Mary Catherine Best (1)	1,242,300	-
American Investments Ltd (2)	55,000	55,000
	2,115,633	1,274,594

(1) Mary Catherine Best is the spouse of Stephen Best who is a Director and shareholder of the Company.

(2) American Investments Ltd is a company controlled by Stephen Best.

American Investments Limited

As at 31 December 2007 there are amounts receivable of $72,506 (31 August 2007: $72,506) due from American Investments Limited in respect of the shortfall in receipts from the 10 per cent. convertible debentures.

Partnorth Limited

As at 31 December 2007 there are amounts receivable of $166,855 (31 August 2007: $166,855) due from Partnorth Limited. Partnorth Limited is controlled by Stephen Best.

Credit Facility

On 17 October 2007 the Company entered into an agreement with Stephen Best ('Facility Letter'), whereby Stephen Best has agreed to make available a credit facility of up to $1,000,000, for a period of 18 months following Admission, solely for the purposes of working capital. Interest is payable at a rate of 10% per annum on monies drawn and an arrangement fee of $50,000 is payable on first draw down or maturity, whichever is the earlier. As at 31 December 2007 the Company had not drawn down on this facility. Refer to Note 29 for further information.

Loan from Atlantic Coal plc to Coal Contractors (1991) Inc

As at 31 December 2007 there are amounts receivable of $8,217,677 due from Coal Contractors (1991) Inc to the Company.

All group transactions were eliminated on consolidation.

Other Transactions

Claridge House Services Limited (CHS) was a company set up for the purpose of administering the serviced office for a number of companies, including the Company. The directors of CHS include Toby Howell and Gregory Kuenzel, with Gregory Kuenzel being the beneficial owner. The Company has entered into an agreement with CHS for the provision of services and accommodation in relation to Suite 4, 32 Davies Street, London W1K 4ND. During the period ended 31 December 2007 CHS invoiced the Company $20,469 in respect of serviced office costs.

Freeside Limited a company of which Gregory Kuenzel is a Director and beneficial owner was paid a fee for company secretarial services and other corporate consulting services provided to the Company. The total fees paid during the period ended 31 December 2007 amounted to $24,380.

All transactions with related parties are made on an arm's length basis.

28. Ultimate Controlling Party

The Directors believe there to be no ultimate controlling party.

29. Events after the Balance Sheet Date

Credit Facility

On 17 October 2007 the Company entered into an agreement with Stephen Best ('Facility Letter'), whereby Stephen Best has agreed to make available a credit facility of up to $1,000,000, for a period of 18 months following Admission, solely for the purposes of working capital. Interest is payable at a rate of 10% per annum on monies drawn and an arrangement fee of $50,000 is payable on first draw down or maturity, whichever is the earlier. As at the date of signing these accounts $600,578 has been drawn down on this facility.

On 27 June 2008 this facility was extended by an additional $4,000,000 with a maturity date of 31 December 2010, interest accruing at 9% per annum of on monies drawn down, secured over the assets of the Coal Contractors Group.

30. Contingencies

There are no legal or arbitration proceedings which may have or have had a material effect on the financial position of the Stockton Coal Group other than:

South Tamaqua Coal Pockets, Inc., as agent for Brook Contracting Corporation vs. Coal Contractors (1991), Inc. Raymond J. Petrilla and John T. Munley, Jr. (Common Pleas, Luzerne County No. 801-2007)

Brook Contracting Corp. alleges that it made prepayments, at the request of the Stockton Coal Group's management, for coal to be supplied pursuant to a coal supply agreement. Brook Contracting made prepayments aggregating $202,270 by early 2006, for which the coal was not delivered as agreed because the Stockton Coal Group's mining operations were idled during that time. Suit was filed in February 2007. Brook Contracting has made a claim for return of $202,270 with interest and damages in an unspecified amount caused by its having to obtain replacement coal from other sources at higher prices.

Since the mine resumed operations in late 2006, deliveries of coal have been been made to Brook Contracting in amounts sufficient to satisfy the claims for return of the prepaid amounts, and the Group is seeking a written acknowledgment from Brook Contracting of the same, and a voluntary dismissal of other claims. The amount of coal which Coal Contractors allocated to Brook for this purpose was 558 tons of lump coal and 5,770.20 tons of run of mine coal.

Kemper Equipment, Inc. vs. Coal Contractors (1991), Inc. (No. 10065-2007) Court of Common Pleas of Luzerne County, Pennsylvania

Kemper is the vendor of conveyance equipment purchased as a part of the coal scrubbing facility in 2006. Kemper has approximately $170,654 of unpaid invoices relating to the equipment it supplied. However, the Stockton Coal Group alleges counterclaims of about $20,000 in costs incurred to adapt or replace certain equipment that did not conform to specifications. Kemper filed suit in March, 2007 seeking to enforce a mechanics' lien, and the Stockton Coal Group's counsel has filed objections asserting that the mechanics' lien claim is legally defective.

Lyndon vs Coal Contractors, et al (No. 08-CI-406) Franklin Circuit Court, Kentucky

Lyndon filed a claim for past due premiums for mining bonds. A settlement agreement was entered into providing for three monthly payments to satisfy all past due premiums as full settlement of the complaint. The first monthly payment of $25,000 was made on 27 June 2008.

31. Comparative Period

The corresponding accounts in the audited Financial Statements for the year ended 31 August 2007 have been adjusted for the effects of changes to accounting policies on transition to IFRSs as follows:

Exchange differences arising on the translation of foreign currency loans amounting to $352,330 have been taken to the Profit and Loss account (refer Note 18).

* * ENDS * *

For further information, visit www.atlanticcoal.com or contact:

Stephen Best / Toby Howell/ Greg Kuenzel	Atlantic Coal plc	Tel: 020 7182 1747
Rod Venables/Cecil Jordaan	HB Corporate	Tel: 020 7510 8600
Hugo de Salis	St Brides Media & Finance	Tel: 020 7236 1177

About the Company:

Atlantic Coal owns and operates the Stockton Colliery which comprises an opencast anthracite mine and an adjacent anthracite washing plant. The mine is an established non-union surface mine encompassing circa 900 land acres in the Hazle Creek Valley, Pennsylvania and has an estimated proven reserve of 4 million tonnes. Mining of raw coal is from the high quality mammoth seam, while washing and sizing takes place in the 150 tonne per hour coal preparation plant. J T Boyd Company, the Company's Competent Person, estimated that there is over 10 years of mine life from existing reserves at an average production rate of 400,000 Run of Mine ('ROM') tonnes per annum. Based on historic production levels, the mine is capable of and is projected to produce approximately 450,000 ROM tonnes of coal per year. Mining operations are conducted by the use of hydraulic excavators. Uncovered raw coal is then loaded into 100 tonne trucks for delivery to the onsite preparation plant. As each section of the mine is developed, mining progresses from the northern and southern faces into the basin. This yields a constant flow of raw coal to the preparation plant.

ENDFR RRMLTMMTBMTP

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Related Shares:

Atlantic Coal