19th Jul 2006 07:01
UK Coal PLC19 July 2006 UK Coal PLC 19 July 2006 Trading Update In line with best practice, UK COAL PLC is issuing the following update whichcovers the half year to 30th June 2006. It is anticipated that the interimresults for the six months ended 30th June 2006 will be announced on Wednesday6th September 2006. Trading Update The Group currently anticipates reporting a first half year profit beforetaxation of £7m (H1 2005: £31m loss), including a revaluation gain on investmentproperties of £5m (H1 2005: £5m). Sales for the six-month period were £193m (H12005: £164m). Deep Mines operating loss before exceptional items was £2m (H1 2005: £30m). Thesecond quarter was affected by difficult ground conditions at Maltby and costsincurred of approximately £4m in accessing new reserves at Welbeck andKellingley. Total Deep Mine unit costs were £1.37 per gigajoule (H1 2005: £1.50per gigajoule). Surface Mining achieved a profit of £1m (H1 2005: £1m), whichincludes a release of £3m of restoration provisions as a result of gainingplanning permission for a surface mine site at Stobswood North, Northumberland. The Property and Power businesses performed in line with expectations,generating a trading profit of £1m for Property (H1 2005: £1m) and £2m for Power(H1 2005: £4m). Property disposal profits were £4m (H1 2005: £4m), and £5m (H12005: £5m) was realised from increases in the value of the Group's investmentproperties as a result of increased occupancy rates. Financing costs were £5m (H1 2005: £4m) including a charge of £2m for unwindingof discounts (2005 £2m). Exceptional gains were £1m (H1 2005: £12m expense). Coal Investment Aid incomewas £5m (H1 2005: £8m). Rossington closure costs were £2m, and Harworthdevelopment costs of £2m invested in the first half year to support futuremining were written off. As previously reported, UK COAL has retained £12m of assets relating to Harworthcolliery. UK COAL is currently trying to secure a market for the coal at priceswhich will allow the mine to continue in production. In the event that this isnot successful, a full review of the asset values will be conducted and mayresult in an additional non-cash charge. Total borrowings at 30th June 2006 were £104m (December 2005: £96m), includingleasing and hire purchase agreements but excluding cash balances held in respectof insurance requirements and subsidence security funds. Payments have been madein the half year in respect of surface mine restoration and land rehabilitationof £7m, additional contributions to the companies defined benefit pensionschemes of £5m, and payments in respect of redundancy provided in 2005 of £4m. The deficit on the Group's defined benefit pension schemes reduced to £92m(December 2005: £117m). The reduction is a result of net actuarial gains, mainlyarising from higher bond yields. Sales and Contracts Sales volumes for the first six months of 2006 were 5.7 million tonnes (H1 2005:4.8 million tonnes) against production of 5.5m tonnes (H1 2005: 4.6m tonnes).Unit income rose to £1.39 per gigajoule (H1 2005: £1.32 per gigajoule). Coal under contract at the end of June, including an estimate of sales tonon-Electricity Supply Industry markets, was 27.4m tonnes. Average proceedsacross all years (in 2006 prices) are projected at between £1.39 and £1.51 pergigajoule. These prices are subject to full RPI and are partly dependent on theoutturn of international coal prices. The Joint venture company formed in the second quarter for marketing domesticand industrial coal is performing in line with expectations. Energy Review UK COAL welcomes the DTI's Energy Review report, which underscores the importantlong-term contribution of coal-fired generation and aims to optimise the use ofeconomical domestic coal reserves. In particular, we are pleased with theGovernment's decision to convene a Coal Forum, which will bring togetherelectricity generators and coal producers to help find solutions to secure thelong-term future of domestic coal production. UK COAL is now going to work hard to secure contract terms which will allow thecompany to invest in new mining operations, and help deliver the Government'senergy policy goals Outlook Deep Mines continue to develop as expected. Output for the second half of theyear is expected to be 5.0 million tonnes, resulting in overall profitabilityfor Deep Mines. Surface Mining output is expected to increase in the second half of the year asnew mines come into production and output for the full year is expected to bearound 0.8 million tonnes. Surface Mining progress in planning is very encouraging and three newapplications covering 1.9 million tonnes were granted in 2006. Production atthese sites is expected to commence in the fourth quarter of 2006. The current status of surface mine permits are summarised in the table below. Site Tonnes Remaining TonnesMaidens Hall 1,700,000 678,000Cutacre 1,500,000 1,500,000Stony Heap 257,000 257,000Stobswood North 920,000 920,000Long Moor 725,000 725,000Sites with Planning 5,102,000 4,080,000 Potland Burn 2,000,000 2,000,000Sharlston 360,000 360,000Lodge House (Public Inquiry) 1,000,000 1,000,000Steadsburn 1,000,000 1,000,000Oxcroft 15,000 15,000Site in Planning / Public Inquiry 4,375,000 4,375,000 The Property business progressed further with the arrival of Jon Lloyd, PropertyDirector on the 3rd July 2006. This appointment to the Board will increase thefocus on the strategic development of the Group's property assets. Good progress is being made on a number of fronts and the group is well placedto benefit from a better environment for indigenous coal in the future. Production-6mths to June (m t) H1 2006 H1 2005--------------------------------------------------------------------Daw Mill 1.6 0.7Kellingley 1.2 1.0Thoresby 0.9 0.8Welbeck 0.6 0.5Maltby 0.4 0.4Harworth 0.4 0.3Rossington 0.2 0.2Other Closed mines 0.0 0.1--------------------------------------------------------------------Total Deep Mines 5.3 4.0--------------------------------------------------------------------Surface Mines 0.2 0.6--------------------------------------------------------------------Total Production 5.5 4.6==================================================================== Note 1: Mining Production Output for the Half Year to June 2006 (2005) Enquiries: Financial, Gavin Anderson & Company 020 7554 1400Ken CroninMichael Turner OperationalStuart Oliver 07774 231 178 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Harworth Gp