11th Jan 2007 07:01
UK Coal PLC11 January 2007 11 January 2007 UK COAL PLC TRADING UPDATE UK COAL PLC ("UK COAL" or the "Group") today provides the following tradingupdate in advance of the publication of its preliminary results for the yearended 31 December 2006, which will be announced on 1 March 2007. Overall trading in the period since the update in October has been in line withexpectations and further significant progress has been made in developing theGroup's property portfolio, which at the year end is expected to be valued at£343 million (2005: £274 million). Overall reported profit before taxation is expected to be around £17 million,including additional gains on the revaluation of property of £50 million which,in accordance with new accounting policies, will be recorded in the consolidatedincome statement for 2006. Excluding additional property gains, as expected,losses in the period before taxation are estimated to be around £33 million,largely attributable to the difficulties encountered in Deep Mining in the thirdquarter. Net debt was £56 million at the end of December 2006 (2005: £43 million),including leasing and hire purchase agreements and cash balances of £42 millionheld in respect of insurance requirements and subsidence security funds (2005:£53 million). Deep Mines Deep Mines were marginally profitable in the three months to December. Unitcosts for the full year before exceptional items are expected to be £1.61 pergigajoule (2005: £1.49 per GJ). Output for the full year was 8.9 million tonnes,0.3 million below expectations in Q4 as a result of lower production at DawMill. Average sales proceeds during 2006 were £1.41 per GJ (2005: £1.35 per GJ). Within deep mines, exceptional costs in the year are anticipated to be around£20 million, including a credit for Coal Investment Aid of £7.8 million,principally comprising costs of mothballing Rossington and Harworth and costsincurred at Maltby colliery during Q3 when production was halted as a result ofa roof fall. At 1 January 2007, some 17.7 million tonnes of the Group's contractual supplyobligations remained outstanding at prices of up to £1.48 per GJ (plus retailprice indexation for later years) dependent partly on the outturn ofinternational coal prices. Surface Mines Surface mining profit is expected to be some £4.8 million in the year endedDecember 2006 (2005: £0.8 million) on output of 0.6 million tonnes (2005: 1.0million tonnes). This includes a £5.0 million profit on the disposal ofunutilised plant and the release of £4.5 million of provisions in respect ofrestoration liabilities which have been reassessed in the light of planningapplications granted in the North East to extract coal in adjacent reserves.This has reduced the cost of the existing restoration task. Unit costs per GJ before provision releases were £1.88 (2005: £1.31 per GJ) andreflect the low level of activity in 2006 with only one site coaling for themajority of the year. Remaining reserves with planning at the end of 2006 amounted to 4.1 milliontonnes (2005: 2.7 million tonnes) as a result of new planning approvals for twosites containing 2.0 million tonnes. Six sites are in the planning process and are expected to be granted in 2007,further increasing the permitted reserves base by 5.4 million tonnes. A further six sites are currently being prepared for planning submissions in2007, providing a further 4.6 million tonnes of potential reserves. Property The property division is expected to record an overall profit in 2006 of around£73 million (2005: £62 million). This contains additional gains of around £50million from property revaluations which are expected to be reported through theconsolidated income statement in accordance with new accounting standards (2005:£46 million). The formal RICS valuation of the Group's property interests stands at £343million at December 2006 (2005: £274 million) before allowance for any clawbackliabilities and reflects its current use and planning status. Net profit from rental operations was £3.2 million (2005: £2.2 million) onrental income of £6.0 million (2005: £4.8 million). Profits on disposals in the year were £8.7 million (2005: £9.6 million) comparedto historical book value. Disposals were made from a successful auction ofsurplus farmland which had limited development prospects and generated proceeds60% higher than the 2005 RICS Red Book valuation. Further disposals were madefrom sites where the Group believes maximum value has been added. The planning application for our major Prince of Wales development site has nowbeen submitted and a decision is expected in Q2 2007. Further good progress continues to be made on Orgreave / Waverley, anotherflagship development. Planning has been granted for the second phase comprising60 acres, which will provide in the order of 650,000 sq ft of mixed businesspark development opportunities. The first phase, Advance Manufacturing Park(AMP), continues to attract high tech metals and aviation industries to itscluster. Further planning applications will follow to develop out the full site. Power Generation Harworth Power, UK COAL's power generation subsidiary, is expected to deliverprofit before interest and taxation of some £3.2 million (2005: £3.4 million)including emissions trading credits of £1.8 million (2005: £2.4 million). Harworth Power has 32 MW of installed methane power generation capacity.Planning applications in respect of 40 wind turbines are in progress. Year onyear profit growth (excluding emissions credits) was 40%. Additional capacity of12 MW will be installed in early 2007. Outlook Overall the Group is well placed to deliver further value for shareholders inthe coming year and will continue to focus on realising the significantpotential within its property portfolio, reducing the risk profile of its deepmining operations and capitalising on opportunities in power generation. Enquiries: Media Citigate Dewe Rogerson Tel: 020 7638 9571Anthony Carlisle Mobile: 07973 611 888Brett Jacobs Tel: 020 7282 2971 Analysts and investors Chris Mawe Mobile: 07778 780 884Group Finance Director, UK COAL PLC Note Production Year to Year to 31 Dec 2006 31 Dec 2005 (mt) (mt)Ongoing Collieries Daw Mill 2.7 2.0Kellingley 2.1 2.0Maltby 0.7 1.1Thoresby 1.5 1.4Welbeck 1.2 1.0Sub Total - ongoing collieries 8.2 7.5 Other closed or closing mines 0.7 1.5Total Deep Mines 8.9 9.0 Surface Mines 0.6 1.0Total Production 9.5 10.0 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Harworth Gp