18th Jul 2007 07:00
UK Coal PLC18 July 2007 UK COAL PLC Trading update for the six months ended 30 June 2007 Continued strong progress UK COAL PLC ('UK COAL' or the 'Group') today provides the following tradingupdate in advance of the publication of its interim results for the half yearended 30 June 2007, which will be announced on 5 September 2007. Overall trading in the period since the update in April has been in line withexpectations. Further significant progress has been made in developing theGroup's property portfolio which has increased in value to £398.0 million at thehalf year (2006 year end: £343.9 million). Good progress has also been made inimproving the operating performance of the mining business. Group reported profit before taxation is expected to be around £40.0 million(2006 restated: £19.8 million), including property revaluation gains of £51.0million (2006 restated: £21.6 million). The gross pension deficit is expected to reduce by £44.5 million in the periodto £50.0 million at 30 June 2007 due to improved bond yields, additionalcontributions, good investment performance and the sale of Maltby. £35.6 millionof this reduction in deficit will be reported through reserves. Key Performance indicators are summarised in Table 1. Property The property division managed by Harworth Estates is expected to record anoverall profit to 30 June 2007 of £53.5 million (2006 restated: £22.9 million). The RICS valuation increased by 16% in the half year. The Company's internalexercise estimating the portfolio land value in 2012 with the benefit ofanticipated planning consents, has grown to £900 million, a 12.5% increase sincethe year end. During this period, an additional 11 sites were added to theoriginally identified 60, giving a total pipeline of 71 projects covering a netdevelopable area of 3,326 acres providing land for an estimated 29m sq ft ofemployment space along with 20,000 housing plots. We continue to identifyfurther opportunities, however, the additional acreage identified in the firsthalf should not be taken as an indication of the level of further opportunitiesto be identified in the coming periods. The Company has recently received planning consent on three sites: a housingscheme of 80 units at Sharlston, West Yorkshire, an employment scheme of 500,000sq ft at Chatterley Valley in Staffordshire and, after appeal, a further smallbusiness park at Riccall, Selby, North Yorkshire. Consent for 900 houses and 250,000 sq ft of employment use within Phase 1 of thePrince of Wales scheme in Pontefract, along with schemes at five other locationsthroughout the UK, is expected in the next quarter. We have progressed twofurther significant planning applications at Lounge in the East Midlands(900,000 sq ft to be submitted end of July) and at Coalville, SouthLeicestershire (600,000 sq ft recently submitted) with our Joint Venturepartners Gazeley, Graftongate and Legal & General. Deep Mines Deep Mines returned to profit in the month of June. Excluding the issues at DawMill announced in January, which led to a £20.0m profit shortfall to plan, allmines have performed as expected. As a result, overall deep mining operatinglosses for the half year amounted to £15.0 million (2006: £0.9 million loss).Operating losses are calculated after exceptional gains of £12.0 million fromthe sale of Maltby Colliery and £2.6 million redundancy and closure costs (2006:£3.7 million). Negotiations to secure further future coal supply contracts are well advanced.We are confident any new supply agreements will reflect market prices adjustedupwards for transport and other benefits of sourcing indigenously produced coal.Coal prices at 30 June 2007 have increased by more than 15% compared to 31December 2006. Surface Mines Surface Mines have performed well in the half year despite adverse weatherconditions, and the business continues to grow strongly. Output has increased to700,000 tonnes (2006: 210,000 tonnes) and operating profit is expected to be£4.5 million (2006: £1.2 million). Planning consents have been received for a further three sites. The permittedreserves base now stands at 4.9 million tonnes (June 2006: 4.1 million tonnes). Power Generation Harworth Power, UK COAL's power generation subsidiary now has 29 MWe ofinstalled capacity. Engines at the former Stillingfleet Mine have been fullycommissioned since May 2007. Operating Profit is expected to be £2.0 million(2006: £1.6 million). Planning applications for 9 wind turbines have been submitted or are in theappeal process. Financial Finance costs were £5.0 million (2006: £5.0 million). Net debt was £61.0 million at the end of June 2007 (December 2006: £51.8million). This benefited from proceeds from the sale of Maltby Colliery of £21.5million and temporarily low working capital levels at the period end. Outlook Overall the Group is well placed to continue the delivery of further value forshareholders in the coming half year and beyond and will maintain its focus onrealising the significant potential within its property portfolio, improving theoperating performance of the mining business, and capitalising on opportunitiesin power generation. Table 1 - Key Performance Indicators (KPIs) H1 H1 Year 2007 2006 2006Financial Expected Restated ActualNet Assets per Share (£/share) 2.06 1.28 1.56Profit Before Taxation (£ millions) 40.0 19.8 17.6Net Debt (£ millions) 61.0 59.9 51.8Net Assets (£ millions) 323.0 191.4 244.1 PropertyRICS Valuation (£ millions) 398 293 344Estimate of land value in 2012 (£ millions) (1) 900 800 800 MiningCoal Sales Price (£/GJ) 1.52 1.39 1.41Contractual supply commitments (million tonnes) 15.2 24.1 17.9Price of contractual supply commitments (£/GJ) (2) 1.53 1.51 1.51Period end comparative spot prices (£/GJ) (3) 1.84 1.58 1.62 Deep MinesOutput (million tonnes) 3.3 5.3 8.9Full Cost of Production Deep Mines (£/GJ) 1.87 1.41 1.56Cash Cost of Production Deep Mines (£/GJ) 1.62 1.24 1.32 Surface MinesOutput (million tonnes) 0.7 0.2 0.6Full Cost of Production (£/GJ) 1.29 1.55 1.93Reserves with Planning (million tonnes) 4.9 4.1 4.1Reserves in Planning (million tonnes) 3.3 4.4 5.3To be submitted for planning in 2007 (million 4.9 5.9 4.6tonnes) Power GenerationMW Hours Generated (thousand MWh) 75 65 120Wind turbines in Planning process 9 9 9 (1) Value in 2012 in money of the reporting period(2) Subject to the outturn of international coal prices(3) Including delivery premium. Source: Argus McCloskey coal price index report Enquiries: Media: Citigate Dewe Rogerson Tel: 020 7638 9571Anthony Carlisle Mobile: 07973 611 888Laure Lagrange Mobile: 07768 698 731 Analysts and investors: Chris Mawe Mobile: 07778 780 884Group Finance Director, UK COAL PLC This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Harworth Gp