Half Yearly Report
UK COAL PLC
('UK COAL' or the 'Group')
Financial Results for the six months ended 27 June 2009
Commenting, David Jones, Chairman, said:
'Our half year results are in line with the guidance we gave at our July 2009 pre-close statement. Despite the impact of the economic downturn, in mining, our average realised sales price at £1.80 per gigajoule was in line with our expectations and was very marginally above the level we achieved in the same period last year. While we also faced particular challenges in both deep and surface mining which have reduced our operating profit, we held our total production at the same level as in the first half of last year. We are also beginning to see the cash flow benefits of the new and amended contracts we negotiated at the start of this year with our blue chip electricity generator customers. In Harworth Estates, our property business, the strength of agricultural land prices and planning gains mitigated the impact of the lower market prices for commercial and residential property.
'During the second half of this year we expect to mine the majority of the coal in the last panels of the challenging seams at Kellingley and Thoresby mines as well as the final panel at Welbeck before its planned closure next year. While the difficult operating conditions in these seams are presenting, and will continue to present, production challenges through the second half, we expect to sell an increased tonnage at a somewhat higher average selling price. We are encouraged by the expected planning progress in the second half and the signs of greater stability in the property market.
'Looking ahead, our investment programmes, in particular in opening up the new seams, and substantially increased development work mean we are now well advanced in changing the profile of our deep mining operations from next year to three high performing mines able broadly to maintain our total deep mine production at current levels, but with the benefits of improved production economics and reliability. With our legacy contracts predominantly expired, we shall also progressively benefit from the terms of the new and amended contracts. In our property business, we believe that the planning permissions currently envisaged have the potential to more than double the worth of our estate to £886m, in today's money terms, by 2014.
'The Board is confident that the combination of the improving prospects for the mining operations and the significant property value upside provides UK Coal with the opportunity to deliver strong value growth to shareholders. As we move towards this improved profile for our business, we are also encouraged by the good progress we are making in establishing an appropriate financial structure to support the Group going forward.'
Enquiries:
Media:
Citigate Dewe Rogerson
Anthony Carlisle Tel: 020 7638 9571. Mobile: 07973 611 888
Analysts and investors:
Jon Lloyd, Chief Executive, UK COAL PLC Tel: 01302 755 002
David Brocksom, Group Finance Director, UK COAL PLC Tel: 01302 755 013
Citigate Dewe Rogerson
Nick Cox-Johnson Tel: 020 7638 9571. Mobile: 07957 596 729
Notes to Editors:
UK COAL is Britain's biggest producer of coal, supplying around 13% of all the
coal burned in the UK, which is equivalent to the energy needed to provide around 5% of the UK's electricity requirements. UK COAL is one of Britain's largest brownfield site property developers, owning some 43,500 acres of land across the UK, of which some 3,790 acres are currently targeted for development.
Financial highlights
|
Income Statement |
H1 2009 |
H1 2008 |
Full Year 2008 |
|
|
|
|
|
|
Total Group revenue (£m) |
159.8 |
172.9 |
392.5 |
|
Average sales price per Gigajoule (£/GJ) |
1.80 |
1.79 |
1.92 |
|
Operating (loss)/profit before non-trading exceptional items and property revaluation (£m) |
(38.1) |
(24.0) |
1.8 |
|
Property revaluation (loss)/gain (£m) |
(37.4) |
19.8 |
- |
|
Operating (loss)/profit before non-trading exceptional items (£m) |
(75.5) |
(4.2) |
1.8 |
|
Operating (loss) (£m) |
(71.8) |
(5.1) |
(2.2) |
|
(Loss) before tax (£m) |
(81.5) |
(9.9) |
(15.6) |
|
(Loss) per share (pence) |
(51.8) |
(6.5) |
(10.0) |
|
Divisional breakdown - (losses) / profits before non-trading exceptional items |
H1 2009 |
H1 2008 |
Full Year 2008 |
|
|
£m |
£m |
£m |
|
Deep mines |
(35.9) |
(24.2) |
(12.8) |
|
Surface mines |
(3.2) |
5.0 |
10.4 |
|
Surface mines - additional restoration provision |
- |
(5.6) |
- |
|
Others |
(0.2) |
0.1 |
(0.5) |
|
Property - Other income less expenses |
0.5 |
0.6 |
1.0 |
|
- Net (losses)/gains from investment properties |
(36.7) |
19.9 |
3.7 |
|
Group operating (loss)/profit before non-trading exceptional items |
(75.5) |
(4.2) |
1.8 |
|
Share of profit from joint ventures |
0.4 |
0.6 |
1.5 |
|
Group (loss)/profit before non-trading exceptional items |
(75.1) |
(3.6) |
3.3 |
|
Balance sheet |
June 2009 |
Dec 2008 |
|
|
|
|
|
Net bank debt less unrestricted cash (£m) |
143.5 |
137.1 |
|
Generator loans / prepayments (£m) |
47.3 |
- |
|
Net assets (£m) |
128.3 |
300.4 |
|
Net assets per share (pence) |
82 |
191 |
|
Period end bank gearing (%) |
112 |
46 |
|
Period end total gearing (%) |
149 |
46 |
|
|
|
|
Chairman's Statement
Results Overview
In April 2009, I reported on the scale of the challenges faced by UK COAL as a result of the dramatic impact of the global economic downturn. Although the UK energy market and the short term demand for coal, in particular for thermal coal, continues to be adversely affected, the underlying strengths of our business provide a platform for the long-term growth of shareholder value.
The Group continues to put primary emphasis on safety in all aspects of our operations. I regret, however, to report on the loss of the life of a colleague in July, which emphasises all the more the importance of, and strengthens our resolve to strive for, Zero Incidents. Our condolences go to relatives and friends of our long-serving colleague. Notwithstanding this tragedy, good progress continues to be made in reinforcing a safety first culture throughout the entire business. The Health and Safety Executive ('HSE') reportable injury rate was 23.9 per 100,000 manshifts (FY 2008: 24.0), and the number of dangerous occurrences was 17 in the first half of 2009 compared to 38 in the 2008 calendar year.
Group revenue in the first half fell 7.6% to £159.8m (H1 2008: £172.9m) largely due to lower sales volume at 3.6m tonnes (H1 2008: 3.7m tonnes). The overall realised sales price of our coal held firm and in line with expectations at £1.80 per gigajoule (GJ) (H1 2008: £1.79/GJ).
As we announced on 16 July 2009, first half production at 3.7m tonnes (H1 2008: 3.7m tonnes) was in line with our expectations buoyed by the strong production performance at Daw Mill which continues to operate reliably through its current panel. Daw Mill's production of 1.7m tonnes (H1 2008: 1.6m tonnes) offset production difficulties at Kellingley and Thoresby which, as previously reported, both continued to mine in difficult geological conditions. In addition to these difficulties in the deep mines, our surface mines production in the first half was affected by the higher than normal ratio of muckshift (the lift of non-coal material) to coal production, which resulted in a lower output at 0.7m tonnes (H1 2008: 0.9m tonnes). These factors, coupled with the planned increase in development work, are reflected in the operating outcome for our mining businesses in the first half.
Our strategy in the deep mining business remains to increase the productivity and predictability of output at our ongoing mines, and therefore reduce the extraction cost per gigajoule. The record breaking performance at Daw Mill this year reflects the expenditures we have made both in improving the reliability of the operations and reducing the non-productive hours in a largely fixed-cost business. Similarly the investments to move Kellingley and Thoresby into new seams, in order to deliver improved output levels, continue on track in both mines for production to commence in the first quarter of 2010. Over the longer-term, in each of these mines, our increased development work aims to improve the level and predictability of output by reducing the production delays and risks from future face gaps. Significantly, Daw Mill has driven 2,700 metres of development in the first half, more than the 2,000 metres it drove in the whole of 2008, and now has four development headings rather than the previous two, facilitating this improved performance.
In our property business, Harworth Estates, we believe that we are differentiated from others in the sector because of the diversity and nature of the estate, although we are not totally insulated from the current weak state of the commercial and residential property markets. Our property portfolio contains a significant agricultural element, whose valuation continues to demonstrate significant resilience, and a very significant amount of brownfield land at an early stage in the planning process, where the longer term values can be significantly increased through planning progress.
Despite planning progress and a strong performance from the agricultural element of our portfolio (which increased in value by approximately 5% on a like-for-like basis since December 2008), the aggregated RICS property valuation shows a fall since the end of 2008 of 9% on a like-for-like basis to £382.2m (December 2008: £422.3m), reflecting the generally weak state of the commercial and residential property market.
The Group made an operating loss before non-trading exceptional items and property valuations of £38.1m (H1 2008: £24.0m loss). After reflecting the non-cash movements on property values, the operating loss before non-trading exceptional items was £75.5m in the first half of the year (H1 2008: £4.2m loss). The Group loss before tax in the first half of the year was £81.5m (H1 2008: £9.9m loss) and the loss per share was 51.8 pence (H1 2008: 6.5 pence loss per share).
Net assets at 27 June 2009 were £128.3m compared to £300.4m at the end of 2008, primarily influenced by the £92.0m increase in the Group's retirement benefit obligations and the net loss for the period. The increase in the retirement benefit obligations mainly reflects a change in actuarial assumptions, particularly in relation to price inflation and discount rates.
Overall net bank debt (excluding restricted cash balances) at 27 June 2009 was in line with expectations at £143.5m (End December 2008: £137.1m). Including the cash prepayments / loans from our generator customers of £47.3m, total net debt (excluding restricted cash balances) at 27 June 2009 was £190.8m (End December 2008 £137.1m).
Going concern
As highlighted in the 2008 Annual Report and Accounts, the risk environment in which the Group operates has increased due to weaknesses in energy, banking and property markets.
The Group continues to review its financial and capital structure in this environment. The Board is engaged with its lending banks to secure longer term facilities and is, at the same time, reviewing its overall financing structure and considering funding options to provide short and longer term stability for the Group. I would again draw your attention to those matters which the Board has felt it appropriate to take into account in forming its conclusion on going concern set out in the notes to this Interim Report.
Outlook
Since 27 June 2009, two of our deep mines have experienced face changes: Kellingley and Thoresby are both in the last panels in their current seams before they start mining in the Beeston and Deep Soft seams respectively. Welbeck is just about to start ramping up its final panel prior to its planned closure in Q1 2010. Face changes represent significant dislocations to production and pose material risks, particularly in the period required for the new face to reach full production rates. This process has been slower than expected at Kellingley and Thoresby, resulting in deep mine production since June being some 0.2m tonnes behind our expectations.
In the second half, Daw Mill will continue to mine through its current panel, and the new panels are now approaching full production at Kellingley and Thoresby. The final panel at Welbeck will start in September. Whilst we have already implemented plans at Kellingley and Thoresby to recover the lost production, these plans are still in the early stages of implementation and therefore represent a degree more forecasting risk than normal. Consequently we now expect that deep mine production for the full year will be in a range between 6.4m tonnes and 6.6m tonnes, as compared with guidance published in the July 2009 pre-close statement of up to 6.75m tonnes.
In line with our July 2009 pre-close statement, taking the deferral of Park Wall North's opening and lower production in the first half into account, surface mine sales in the full year are expected to be around 1.5m tonnes, with production of 1.4m tonnes.
Although the longer term indications of coal pricing remain favourable, the forward prices in the market for the final quarter of 2009 are relatively low at approximately £1.75/GJ. With this market price, and given our sales contracts, we would expect an overall average realised sales price for the full year of between £1.85 and £1.90/GJ.
Looking further ahead, forward market prices for coal delivered to NW Europe (API#2) indicate market prices for 2010 of c.£2.05/GJ, for 2011 of c.£2.40/GJ and for 2012 of c.£2.55/GJ at current £/$ exchange rates. In 2010 we will deliver, for practical purposes, the last of the legacy contracts and, in 2011, we will start to deliver under the new customer contracts that we put in place earlier this year. Our unsold coal production should also then benefit from the improved pricing that is being indicated by the forward prices in the market.
In Harworth Estates, although we, along with the property sector in general, suffered first half revaluation losses, we are expecting further planning progress and a more stable market in the second half. Our central estimate of the worth of our estate in 2014 with the benefit of the planning permissions we envisage also remains unchanged at £886m in today's money terms.
Overall, in the first half we have made good progress in de-risking the business to build a more solid and reliable platform from which to realise the substantial potential of the Group in both the mining and property businesses.
David Jones
Chairman
Operating review
SAFETY
Safety and health are the foremost considerations in all the Group's activities. All Group operations are undertaken in a way which protect as far as possible the safety and health of our employees and those that may be affected by our activities, and we aim to be seen as an international leader in coal mine safety. Nevertheless, mining is hazardous. The deeply sad loss of life of one of our long-serving colleagues in July underscores this and reinforces our commitment to our target Zero Incidents philosophy.
The Board ensures clear oversight of safety and health matters through its regular meetings and its Safety Committee. The Group has pledged support to the newly published Health and Safety Executive (HSE) strategy which we see as in line with our own aims, values and behaviour. HSE reportable injury rates in the first six months of 2009 were in line with 2008 with incident rates per 100,000 man shifts of 23.9 (2008 24.0). There was also a reduction in the rate of reported dangerous occurrences to 17 in the half year compared to 38 in the 2008 full year
Inquests have been conducted during 2009 into two fatalities in the deep mines that arose in earlier years and Health and Safety Executive investigations into the Group's regulatory compliance at the time of past incidents have continued. The Group is aware that these investigations may lead to prosecutions being brought in relation to potential breaches of the Group's statutory obligations.
MINING AND POWER
Coal market
Across the world, the coal market has continued to see great volatility in the first half of 2009 as business and consumers adapt to the changed economic environment. In Europe, falling market demand for electricity has left generators with fuel commitments in excess of current requirements. In the coal market in particular, with very low gas pricing encouraging gas burn, demand for thermal coal in the short term has been particularly affected. Prices, especially for near term deliveries, have therefore fallen, although the prices for deliveries in 2010 and beyond continue to remain relatively strong and reflect the positive long term demand and price for coal.
In the light of these current market conditions, we have decided to reduce the output from our surface mines business, where the more variable cost nature of the business means that cost savings can be generated in this way. In particular, we have decided to defer the start up of our Park Wall North surface mine into Q2 2010, and generally to reduce the amount of hired-in equipment used at our surface mines.
Demand for indigenous coal is also supported by the fact that the UK only produces some 31% of the coal that we burn as a country, with 13% being produced by UK Coal. Russia has continued to be the main source of coal imported into the UK market supplying approximately 40% of demand in the first half of 2009.
Coal sales
The new and amended customer contracts entered into in the first half of 2009 are in line with the Group's strategy of achieving a diverse mix of long-term contracts with customers, with shorter-term contracts or spot sales employed in order to achieve a better balance between the security of longer-term supply contracts, the ability to take advantage of coal prices where beneficial, and the need to manage variabilities in production. The contractual commitments at the end of June 2009 totalled 32.2m tonnes (H1 2008: 21m tonnes), as outlined in the table below.
In the first half, we tend to fulfil our lower priced longer-term contracts and the average realised sales price was, at £1.80/GJ, in line with our expectations and slightly above the £1.79/GJ achieved in the first half of last year. The majority of our market and floating rate priced sales for 2009 (either contracted or spot) will take place in the final quarter of this year as expected. With prices for coal for Q4 2009 in the Rotterdam market at around £1.75/GJ (API#2 of $73 per tonne converted at $1.65:£1), our expectations for the average realised sales price for the year as a whole will be around the £1.85-1.90/GJ level.
|
|
TOTAL Million tonnes |
2009 H2 Million tonnes |
2010 Million tonnes |
2011 Million tonnes |
2012 Million tonnes |
2013 Million tonnes |
2014 Million tonnes |
2015 Million tonnes |
|
Fully Floating§ |
4.6 |
0.6 |
1.3 |
1.3 |
1.3 |
0.1 |
- |
- |
|
Floating within caps and floors * |
8.9 |
0.8 |
1.2 |
2.5 |
3.1 |
0.4 |
0.6 |
0.3 |
|
Fixed, subject to indexation ** |
7.5 |
2.3 |
3.9 |
1.3 |
- |
- |
- |
- |
|
Fixed, not subject to indexation |
11.2 |
0.6 |
1.1 |
2.1 |
1.9 |
1.9 |
1.8 |
1.8 |
|
Total |
32.2 |
4.3 |
7.5 |
7.2 |
6.3 |
2.4 |
2.4 |
2.1 |
|
|
|
|
|
|
|
|
|
|
|
Options to purchase coal, granted at fully floating prices |
3.0 |
- |
- |
0.5 |
0.5 |
1.0 |
1.0 |
- |
* Caps and floor prices are subject to indexation
** Indexation will be RPI based
§ Fully floating tonnage is priced upon API#2, the industry benchmark price for NW Europe, plus a
delivery premium.
As a guide, we set out below the possible average revenue outturn in respect of contractual commitments alone. In all cases RPI changes have been applied in respect of indexation where applicable, and on API#2 prices, have been assumed on an annual basis to be in line with Bank of England inflation targets of 2%. The actual sales price outcome will be dependent on inflation, the actual outcome for API#2, the volume of coal delivered in any year which is not currently contracted and a number of other factors. The table excludes the effect of uncontracted coal or coal under option and is not intended to be a forecast of the expected overall realised sales price.
|
API#2 Assumptions £/GJ |
2009 H2 £/GJ |
2010 £/GJ |
2011 £/GJ |
2012 £/GJ |
2013 £/GJ |
2014 £/GJ |
2015 £/GJ |
|
|
|
|
|
|
|
|
|
|
£3.00 |
2.08 |
2.12 |
2.54 |
2.94 |
2.55 |
2.52 |
2.50 |
|
£2.75 |
2.04 |
2.08 |
2.48 |
2.84 |
2.54 |
2.52 |
2.50 |
|
£2.50 |
2.01 |
2.03 |
2.41 |
2.74 |
2.54 |
2.52 |
2.50 |
|
£2.25 |
1.97 |
1.97 |
2.30 |
2.57 |
2.49 |
2.47 |
2.46 |
|
£2.00 |
1.94 |
1.92 |
2.20 |
2.40 |
2.48 |
2.46 |
2.46 |
|
£1.75 |
1.88 |
1.88 |
2.14 |
2.32 |
2.47 |
2.46 |
2.46 |
|
£1.50 |
1.85 |
1.84 |
2.10 |
2.27 |
2.46 |
2.46 |
2.46 |
Deep Mines
|
Colliery performance summary |
Production (m tonnes) H1 2009 |
Production (m tonnes) H1 2008 |
Operating cost* (£m) H1 2009 |
Operating cost* (£m) H1 2008 |
|
Deep mines |
|
|
|
|
|
Daw Mill |
1.7 |
1.6 |
55.1 |
45.7 |
|
Kellingley |
0.4 |
0.5 |
38.1 |
35.7 |
|
Thoresby |
0.4 |
0.3 |
31.7 |
32.9 |
|
Welbeck |
0.5 |
0.4 |
28.9 |
26.8 |
|
Total deep mines production / costs before stock movements |
3.0 |
2.8 |
153.8 |
141.1 |
|
Stock movements |
- |
- |
(8.8) |
(4.4) |
|
Total production / costs for deep mines |
3.0 |
2.8 |
145.0 |
136.7 |
* Operating cost before non-trading exceptional items and depreciation costs, with central costs absorbed. Deep mine costs include the costs of the power operation, formerly reported separately. The H1 2008 costs here have been restated to incorporate these costs, which totalled £0.4m for that period.
Deep mine production in the first half at 3.0m tonnes, was in line with expectations and slightly above last year (H1 2008: 2.8m tonnes).
Daw Mill
Daw Mill had a very good first half with production of 1.7m tonnes (H1 2008: 1.6m tonnes), exceeding our production expectations by some 0.2m tonnes. In addition, Daw Mill has set a new record for the speed of mining 2.0m tonnes (which was achieved by 8 August 2009). In the last 20 weeks, Daw Mill has achieved an average output of 65k tonnes per week compared to an average in 2008 of 61.5k tonnes per week, reflecting the improved reliability of the mine operations, not least as a result of the belt replacement programme undertaken from the last quarter of 2008 into 2009. With this improved performance we are expecting to finish the current panel in November 2009 ahead of forecast, although the next panel will not, as expected, be available until after the turn of the year.
Development work at Daw Mill has also been successful, with 2,700m of development driven in the first half, more than in the whole of 2008 (FY 2008: 2,000m) and slightly ahead of challenging expectations. As a result of this improved performance, the next panel (32's) will be some 75 metres longer than originally expected, thereby increasing the amount of coal in the panel by 200k tonnes and resulting in over three weeks more production out of this panel in 2010 than previously anticipated. We are now operating four development headings simultaneously, compared to two last year, as we continue to invest for the future. This improved performance, both in production and development terms, has increased operating costs at Daw Mill compared to the same period last year, due to the associated materials used in increased development activities and increased incentive payments related to the improved performance.
Kellingley
Kellingley has continued to suffer from difficult geological conditions in the last of the panels in its current seam. Panel 409, which has been the main panel mined in the period, has had faulting running with the retreat for most of the period, with the resulting unstable geology necessitating almost continuous bolting and cementing of the loose roof. This slowed down production, with 0.4m tonnes mined in the period, some 0.2m tonnes below original expectations and 0.1m tonnes below the production for the first half of 2008 of 0.5m tonnes. It also significantly increased the cost of the retreat, impacting financial performance in the period.
Kellingley has now commenced production on the 412 panel, the last panel to be mined in the current Silkstone seam before it moves to the Beeston seam at the start of 2010. Whilst certainty in deep mining is never assured, we are not expecting quite the same difficulties in 412's as experienced on 409's. Given also that 412's is a wider panel, we are expecting Kellingley to deliver much higher tonnage in the second half in line with the performance it achieved in 2007 on 414's, a similar sized adjacent panel. To mitigate costs and improve reliability, we therefore moved production to start 412's early, prior to the conclusion of 409's.
Development work at Kellingley has not progressed as planned, with 3,600m achieved in the first half (H1 2008: 2,700m), some 1,000m short of target although significantly ahead of the performance in the first half of 2008. Whilst work on the first panel in the Beeston seam, 501's, is on target for commencement at the start of 2010 when 412's will be exhausted, we had intended to be further ahead on 501's than we are to prevent future face gaps. Progress was held back by areas of faulting encountered in the first half, which underpins the importance of the Group's strategy to build a strong development bank.
Thoresby
As we have already announced, Thoresby has contended with a number of difficulties as it mines the current Parkgate seam. The last panel, 56's, suffered from interference from earlier workings in the period, although, as a result of pre-emptive work carried out, the impact on production has not been as extensive as in autumn 2008. Despite these difficulties, production for the first half was broadly in line with expectations at 0.4m tonnes, and slightly ahead of the first half last year of 0.3m tonnes. The final panel in the Parkgate seam, 57's, commenced at the start of July. Given what we have learned in managing the impact of former workings on the previous panel, we have 'rehanded' the 57's panel, locating the conveyor and bulky face equipment in the gate likely to suffer far less from these issues. As a consequence, we are expecting an improved production performance in the second half.
Thoresby's development work has been close to expectations at 4,000m achieved, only around 200m short of expectations, and ahead of the 3,200m achieved in the first half of 2008. One of the two gates for the next panel, DS1's, the first of the Deep Soft seams, is currently three weeks behind programme, but this is expected to be made up in the second half.
Welbeck
Whilst higher than in the first half of last year, Welbeck's production was slightly below original expectations at 0.5m tonnes (H1 2008: 0.4 m tonnes) and production on its final panel will start in September, four weeks later than originally expected. The mine is now being operated on a four shift basis. Given this, and that all development activities have now ceased in the mine, we are expecting production levels to be at a higher rate in the second half. However, with slightly lower production expectations for the year than before, we are now expecting that Welbeck will finish mining this panel and close in Q1 2010. We are undergoing individual consultation with our colleagues at Welbeck to assess the redeployment of these experienced miners to other collieries within the Group.
Methane Generation
We generated 76,000 MWh (H1 2008: 84,000 MWh) of electricity from methane pumped from both operational and closed deep mines. This is equivalent to about 55% of the deep mines' electricity requirements in the period.
Surface Mines
|
|
|
H1 2009 |
H1 2008 |
|
Production (m tonnes) |
|
0.7 |
0.9 |
|
Operating costs * (£m) |
|
33.3 |
31.6 |
|
Operating costs per gigajoule * (£/GJ) |
|
1.92 |
1.52 |
|
Additional provision re fuel increases** (£m) |
|
- |
5.6 |
|
Total costs before depreciation (£m) |
|
33.3 |
37.2 |
* Operating cost before non-trading exceptional items and depreciation costs, with central costs absorbed.
**A charge of £5.6m was made for the impact of fuel prices on the restoration provisions. This was reversed in the second half of 2008 as fuel prices returned to more normal levels.
Our surface mine operations produced 0.7m tonnes, some 0.2m tonnes less than in the first half last year (H1 2008: 0.9m tonnes). We had expected that there would be a relatively greater amount of work involved in exposing coal for extraction ('muckshift') in the first half for both operational and geological reasons, and consequently that costs per gigajoule of extracted coal would be higher. We were, however, surprised by unrecorded former underground workings in part of the Cutacre site. Whilst extensive drilling is always carried out, this process can never be guaranteed to reveal the proper extent of former workings which are often present in surface mine sites in the UK.
As a consequence of these factors, the ratio of muckshift relative to coal production increased significantly, and resulted in operating costs per gigajoule (before depreciation) increasing sharply to £1.92/GJ in the first half compared to £1.52/GJ in the same period for the prior year.
In the second half, we are expecting a much improved operational performance with a significantly improved extraction cost per gigajoule, resulting from the thicker, higher quality seam sizes now being extracted at Steadsburn, and with the Cutacre operations mining areas not previously worked.
HARWORTH ESTATES
The RICS valuation of our property portfolio decreased from £422.3m at the end of 2008 to £382.2m at 27 June 2009 with the detail set out in the table below.
After allowing for sales, purchases, depreciation and development spend, the net valuation reduction in the first half of the year on a like-for-like basis was 9%. The value of our agricultural element increased by 5% on a like for like basis from December 2008 demonstrating the benefits of owning a diverse land holding. Our undeveloped land fell by 15% in value on a like for like basis, mainly reflecting weaker residential land values, and commercial land with rental income fell in value by 11% on a like for like basis as yields moved out, although recent indications suggest yields are stabilising with some signs they may be starting to move back in. While commercial capital values have fallen we have not experienced material reductions in rental or occupancy levels at our business parks.
For the second half, the planning progress we expect at a number of sites should reinforce momentum. Longer term, we remain confident of the central estimate of worth of our portfolio in 2014 of £886m in today's money terms.
Portfolio RICS Valuation as at 27 June 2009
|
|
|
|
Jun-09 |
|
Dec-08 |
|
Dec-08 |
|
Jun-08 |
|
|
|
|
|
|
|
like for like |
|
|
|
|
|
|
|
|
|
£'000 |
|
£'000 |
% |
|
£'000 |
|
£'000 |
|
Agricultural |
|
|
|
|
|
|
|
|
|
|
|
|
Mixed |
|
109,926 |
|
105,129 |
5% |
|
114,185 |
|
106,521 |
|
|
Low grade |
|
5,691 |
|
5,055 |
13% |
|
5,045 |
|
5,185 |
|
|
|
|
115,617 |
|
110,184 |
5% |
|
119,230 |
|
111,706 |
|
Undeveloped land |
|
|
|
|
|
|
|
|
|
|
|
|
With planning |
55,645 |
|
66,500 |
(16%) |
|
64,070 |
|
71,645 |
|
|
|
Application submitted |
52,625 |
|
70,877 |
(26%) |
|
65,310 |
|
73,500 |
|
|
|
Without planning |
94,268 |
|
102,118 |
(8%) |
|
101,723 |
|
107,836 |
|
|
|
|
|
202,538 |
|
239,495 |
(15%) |
|
231,103 |
|
252,981 |
|
Commercial land with rental income |
|
|
|
|
|
|
|
|
||
|
|
Part or fully developed |
28,000 |
|
32,669 |
(14%) |
|
32,600 |
|
35,050 |
|
|
|
In development |
20,750 |
|
21,944 |
(5%) |
|
21,725 |
|
17,725 |
|
|
|
|
|
48,750 |
|
54,613 |
(11%) |
|
54,325 |
|
52,775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Properties at valuation |
|
366,905 |
|
404,292 |
(9%) |
|
404,658 |
|
417,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational |
|
|
|
|
|
|
|
|
|
|
|
|
Potential development |
7,222 |
|
8,932 |
(19%) |
|
8,792 |
|
9,734 |
|
|
|
Agricultural |
1,457 |
|
1,218 |
20% |
|
1,218 |
|
2,553 |
|
|
|
Other |
|
6,650 |
|
7,519 |
(12%) |
|
7,600 |
|
8,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational Properties at valuation |
15,329 |
|
17,669 |
(13%) |
|
17,610 |
|
20,987 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Properties at valuation |
|
382,234 |
|
421,961 |
(9%) |
|
422,268 |
|
438,449 |
|
* The like for like percentage change and December 2008 comparatives are after property reclassifications and take into account adjustments for asset sales of £4.8m and purchases, development expenditures and depreciation of £4.5m.
During the period, planning consent was formally documented for our scheme at Prince of Wales Colliery, Pontefract, to provide initially 917 houses and approximately 260,000 sq ft (c. 24,200 sq m) of employment space and ancillary retail/leisure. This new urban extension community will be known in the future as Baileycross. Representations have been submitted for a further net 24 acres (c. 9.7 hectares) of residential development on our adjoining land and confirmation of this allocation in the local planning policy is expected later this year.
At Waverley, Rotherham, South Yorkshire, an area designated by Government as a Housing Growth Point, two planning applications are expected to go to committee at the end of 2009. The first is for a new community of 3,890 homes plus approximately 165,000 sq ft (c. 15,000 sq m) for commercial and leisure use and the second is for a change of use to a Government office campus of approximately 646,000 sq ft (c. 60,000 sq m) of office space plus a hotel and ancillary retail space.
In March, the Court of Appeal upheld the Secretary of State's decision to grant planning consent for the major rail connected facility at Gascoigne Wood in North Yorkshire, which had been challenged by a local landowner. Gascoigne Wood will deliver major regeneration and job creation opportunities for the Selby area.
Whilst in July we received confirmation that our development site at Rossington had not been selected in the Government's first wave of four eco-town projects, it is however one of two sites up for selection as possible second wave projects. The eco-town programme has successfully established that the former colliery site is suitable for residential development which is supported by both Doncaster Council and the majority of local residents. Plans for the redevelopment of the site will now focus on a more traditional residential led scheme which will maximise the land value.
We have completed the build out of Evolution Park at the AMP, South Yorkshire of approximately (94,000 sq ft (c. 8,700 sq m) with our joint venture partner Strategic Sites Ltd. Currently, approximately 25,000 sq ft (c. 2,300 sq m) is let and 3,000 sq ft (c. 275 sq m) is under offer, with interest being shown in a significant element of the remaining units.
At Cutacre, Bolton, our major premium business park proposal on part of the current surface mining project, evidence has now been presented to Bolton Council to support this site as a preferred choice for a key employment site within their proposed Core Strategy which is expected to be submitted to the Secretary of State in early 2010.
In the first half of the year, we received planning committee approvals for 169 homes and submitted applications for around a further 585 homes and 370,000 sq ft (c. 34,000 sq m) of business space. We continue to make strong representations to local planning authorities for increased housing numbers on our various mixed-use schemes in the North East, West and South Yorkshire and the East Midlands and several of our residential schemes sit in areas confirmed as Housing Growth Points under Government plans for meeting demand for additional new homes over the next decade.
Since January 2009, we have made detailed representations for around 5,250 homes and 1.2 million sq ft (c. 111,000 sq m) of commercial space to local planning authorities as a precursor to subsequent planning applications. At Rufford, Nottinghamshire, we are preparing a planning application for a 66 acre (c. 26.7 hectare) business park of over 1 million sq ft (c. 92,000 sq m) and a 56 acre (c. 22.7 hectare) off-road motorsports facility. At North Selby, North Yorkshire, we have signed a memorandum of understanding with Science City York (a Joint Venture between City of York Council and the University of York) to promote and submit a planning application to create a Centre of Excellence for renewable energy technology of approximately 70,000 sq ft (c. 6,500 sq m).
FINANCIAL REVIEW
Financial performance
A review of the financial position and performance of the Group and the individual businesses has been given in the Operating Review and further detailed disclosures are contained in the financial statements accompanying this report.
Financing expenses and funding
Net finance costs in the first half of 2009 were £10.1m (H1 2008: £5.4m) including the non-cash cost for the unwinding of discounts on provisions of £2.2m (H1 2008: £2.0m). There was no overall movement in the income statement in respect of the mark-to-market on our interest rate hedges in the first half of 2009 (H1 2008: credit of £2.0m), which has also contributed to the relative increase in net finance costs. The balance of the relative increase in the first half of 2009 compared to the same period in 2008 relates to imputed interest on the generator loans/prepayments of £0.7m (H1 2008: £nil) and an increase in amortisation of costs of bank loans which were £1.6m for the period (H1 2008: £0.7m).
As reported in the 2008 Annual Report and Accounts, a number of the Group's interest rate swap hedges became ineffective for hedge accounting purposes towards the end of 2008 and in 2009 as a result of the changes in the banking market. Despite this, there was a credit to reserves in respect of movements in the market value of hedges effective for hedge accounting purposes of £0.7m (H1 2008: £0.5m).
We reported in the 2008 Annual Report and Accounts that the Group entered into new and amended contractual arrangements in the first half of 2009 with its customers and would benefit from increased cashflows as a result. During the first half of 2009, the Group received £47.3m from these arrangements, and expects to have received a benefit of up to around £85m including interest and working capital changes by the end of the year. This is in addition to the Group's existing bank borrowing facilities of £173m and approximately £16m of finance leases, including new leases taken out in the first half of £13m which are repayable over the next three to five years.
Coal4Energy Limited
The Group disposed of its 50% holding in Coal4Energy Limited, the joint venture with Hargreaves Services PLC, at the end of January 2009. Before the disposal, the joint venture earned profits of £0.4m (H1 2008: £0.6m). The disposal resulted in net proceeds after the costs of sale of £8.7m and realised a profit on sale of £6.5m.
Taxation
There has been no corporation tax charge in the period (H1 2008: £0.3m).
The Group continues to review its deferred tax asset given the nature of its business and its historic performance. There have been no movements in respect of deferred tax in the period (H1 2008: £nil), and the Group continues to recognise a deferred tax asset of £36.1m, being the amount expected to be recovered based on forecasts of future taxable profits. Further deferred tax assets have not been recognised owing to the uncertainty as to their recoverability.
Retirement benefit obligations
The Group's defined benefit obligations comprise two funded Industry Wide Schemes and an unfunded concessionary fuel scheme.
The Industry Wide Schemes, which are closed to new entrants but are required to be open for future service, had a combined deficit of £162.5m at June 2009 (End December 2008: £74.8m). The deficit has increased over the first half by £87.7m. The main factors causing this increase were an increase in the liabilities of £74.5m, calculated by the actuary and resulting from an increase in the assumed rate of price inflation from 2.6% to 3.3%, a reduction in the discount rate from 6.5% to 6.2%, and investment returns of some £13.6 million lower than the actuary's expected returns.
The overall post service obligations also include an unfunded liability in respect of the concessionary fuel scheme of £33.5m (December 2008: £29.2m). This has increased in the period as a result of the same changes in discount rate and inflation assumptions which has affected the Industry Wide Schemes.
Overall the Group's post retirement net liabilities have therefore increased by £92.0m over the period.
|
|
Pension £m |
Concessionary fuel £m |
Total £m |
|
At January 2009 |
(74.8) |
(29.2) |
(104.0) |
|
Interest cost less expected return on assets |
(2.5) |
(1.0) |
(3.5) |
|
Difference between actual return and expected return on assets |
(13.6) |
- |
(13.6) |
|
Actuarial loss in respect of liabilities |
(74.5) |
(3.5) |
(78.0) |
|
Contributions paid less current service cost |
2.9 |
0.2 |
3.1 |
|
|
|
|
|
|
At June 2009 |
(162.5) |
(33.5) |
(196.0) |
Balance sheet
The Group's net assets have fallen sharply in the first half of the year by £172.1m from £300.4m at the start of the year to £128.3m at the half year. This decrease is as a result of impact of the total increase in the retirement benefit obligations of £92.0m as outlined above, together with the Group's net loss for the period of £81.5m.
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KEY RISKS AND UNCERTAINTIES |
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UK COAL PLC operates in an industry which carries inherent risk, and is subject to market and other external risks which cannot be fully controlled, mitigated or insured against. The Key Risks and Uncertainties identified by the Directors which exist within the Group remain those disclosed on pages 45 to 47 in the Annual Report and Accounts for the Group for the year ended 27 December 2008. |
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The key risks fall into the following categories: |
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Mining risks: |
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- Health, safety and environment |
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- Financing |
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- Fluctuations in coal prices |
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- Major unforeseeable production shortfalls or geological constraints |
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Pension risk |
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Property risks: |
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- Property market downturn or volatility |
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- Planning approvals |
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The Outlook section of the Chairman's Statement provides commentary concerning the remainder of the financial year. |
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Forward-looking statements |
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Certain statements in this interim report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. |
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The Group undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. |
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RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE INTERIM FINANCIAL REPORT |
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The Directors confirm that this condensed consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely: |
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- an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the key risks and uncertainties for the remaining six months of the financial year; and |
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- material related parties transactions in the first six months and any material changes in the related party transactions described in the last annual report. |
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The Directors of UK COAL PLC are listed in the UK COAL PLC Annual Report for 27 December 2008. A list of current Directors is maintained on the UK COAL PLC website: www.ukcoal.com |
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By order of the Board |
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Jon Lloyd |
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David Brocksom |
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Chief Executive |
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Finance Director |
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27 August 2009 |
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27 August 2009 |
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INDEPENDENT REVIEW REPORT TO UK COAL PLC
Introduction
We have been engaged by UK COAL PLC (the 'Company') to review the condensed consolidated interim financial information in the interim report for the six months ended 27 June 2009, which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in shareholders' equity, the consolidated balance sheet, the consolidated statement of cash flows and related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial information.
Directors' responsibilities
The interim report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed consolidated interim financial information included in this interim report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed consolidated interim financial information in the interim report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial information in the interim report for the six months ended 27 June 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
Emphasis of matter - going concern
In arriving at our review conclusion, which is not qualified, we have considered the adequacy of the disclosures made in the basis of preparation note within the condensed consolidated interim financial information concerning the Company's ability to continue as a going concern. This ability is dependent on a number of factors, in particular the outcome of discussions regarding the extension or renewal of its banking facilities, and the availability of alternative sources of finance. These matters, together with the other matters explained in the basis of preparation note indicate the existence of material uncertainties which may cast doubt about the Company's ability to continue as a going concern. The interim financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern.
PricewaterhouseCoopers LLP
Chartered Accountants
27 August 2009
Leeds
Notes:
a) The maintenance and integrity of the UK COAL PLC website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the website.
b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.
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CONSOLIDATED INCOME STATEMENT |
|||||
|
|
FOR THE SIX MONTHS ENDED 27 JUNE 2009 |
|||||
|
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|
|
Unaudited 6 months ended 27 June 2009 |
Unaudited 6 months ended 28 June 2008 |
Audited year ended 27 December 2008 |
|
|
Continuing operations |
|
Notes |
£000 |
£000 |
£000 |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
2 |
159,781 |
172,854 |
392,541 |
|
|
Cost of sales |
|
|
(195,812) |
(193,814) |
(389,699) |
|
|
Gross (loss)/profit |
|
|
(36,031) |
(20,960) |
2,842 |
|
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in fair value of investment properties |
|
(37,385) |
19,828 |
23 |
|
|
|
Profit on disposal of investment properties |
|
|
666 |
62 |
3,661 |
|
|
(Loss)/ gains on investment properties |
|
|
(36,719) |
19,890 |
3,684 |
|
|
Profit on sale of joint venture |
|
|
6,534 |
- |
- |
|
|
Other operating expenses |
|
|
(5,557) |
(4,052) |
(8,774) |
|
|
Operating loss |
|
2 |
(71,773) |
(5,122) |
(2,248) |
|
|
Finance costs |
|
3 |
(10,526) |
(6,749) |
(17,817) |
|
|
Finance income |
|
3 |
368 |
1,349 |
2,919 |
|
|
Net finance costs |
|
3 |
(10,158) |
(5,400) |
(14,898) |
|
|
Share of post-tax profit from joint ventures |
|
|
407 |
623 |
1,503 |
|
|
Loss before tax |
|
|
(81,524) |
(9,899) |
(15,643) |
|
|
Tax |
|
4 |
- |
(309) |
(100) |
|
|
Loss for the period |
|
|
(81,524) |
(10,208) |
(15,743) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
Equity holders of the Company |
|
|
(81,524) |
(10,208) |
(15,743) |
|
|
|
|
|
|
|
|
|
|
Loss per share |
|
|
pence |
pence |
pence |
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
6 |
(51.8) |
(6.5) |
(10.0) |
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
|
|
|||
|
|
FOR THE SIX MONTHS ENDED 27 JUNE 2009 |
|
|
|||
|
|
|
|
|
Unaudited 6 months ended 27 June 2009 |
Unaudited 6 months ended 28 June 2008 |
Audited year ended 27 December 2008 |
|
|
|
|
|
£000 |
£000 |
£000 |
|
|
Loss for the period |
|
|
(81,524) |
(10,208) |
(15,743) |
|
|
Other comprehensive income |
|
|
|
|
|
|
|
Actuarial loss on industry wide schemes |
|
|
(87,948) |
(30,971) |
(33,900) |
|
|
Actuarial (loss)/gain on Blenkinsopp pension scheme |
|
|
(247) |
58 |
262 |
|
|
Actuarial (loss)/gain on concessionary fuel reserve |
|
|
(3,474) |
174 |
(4,911) |
|
|
Movement on deferred tax asset relating to retirement benefit liabilities |
- |
- |
(2,257) |
||
|
|
Cash flow hedges |
|
|
734 |
492 |
(7,354) |
|
|
Movement on deferred tax asset relating to cash flow hedges |
|
- |
- |
2,378 |
|
|
|
Revaluation of property transferred from operating to investment properties |
- |
1,747 |
3,170 |
||
|
|
Total comprehensive income for the period |
|
|
(172,459) |
(38,708) |
(58,355) |
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
Equity holders of the Company |
|
|
(172,459) |
(38,708) |
(58,355) |
|
|
|
|
|
|
|
|
|
|
The notes which follow the consolidated statement of cash flows are an integral part of the condensed consolidated interim financial statements. |
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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares |
Share premium account |
Other reserves |
Retained earnings |
Total equity |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Balance at January 2008 |
1,571 |
30,756 |
321,122 |
4,797 |
358,246 |
|
|
Loss for the six months to June 2008 |
- |
- |
- |
(10,208) |
(10,208) |
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
Actuarial losses on post retirement benefits |
- |
- |
- |
(30,739) |
(30,739) |
|
|
Fair value gain on revaluation of investment properties |
- |
- |
19,828 |
(19,828) |
- |
|
|
Property revaluation on transfer to investment properties |
- |
- |
1,747 |
- |
1,747 |
|
|
Transfer of realised gain on disposed properties |
- |
- |
(801) |
801 |
- |
|
|
Hedging reserve created - fair value gains in period |
- |
- |
492 |
- |
492 |
|
|
Total comprehensive income for the period ended June 2008 |
- |
- |
21,266 |
(59,974) |
(38,708) |
|
|
Transactions with owners: |
|
|
|
|
|
|
|
Accrual for long-term incentive plan liabilities |
- |
- |
- |
237 |
237 |
|
|
|
- |
- |
- |
237 |
237 |
|
|
Balance at June 2008 |
1,571 |
30,756 |
342,388 |
(54,940) |
319,775 |
|
|
Loss for the six months to December 2008 |
- |
- |
- |
(5,535) |
(5,535) |
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
Actuarial losses on post retirement benefits |
- |
- |
- |
(7,810) |
(7,810) |
|
|
Movement on deferred tax asset in relation to retirement benefit liabilities |
- |
- |
- |
(2,257) |
(2,257) |
|
|
Fair value loss on revaluation of investment properties |
- |
- |
(19,805) |
19,805 |
- |
|
|
Property revaluation on transfer to investment properties |
- |
- |
1,423 |
- |
1,423 |
|
|
Transfer of realised gain on disposed properties |
- |
- |
(17,014) |
17,014 |
- |
|
|
Hedging reserve created - fair value losses in period |
- |
- |
(7,846) |
- |
(7,846) |
|
|
Movement on deferred tax asset in relation to cash flow hedges |
- |
- |
2,378 |
- |
2,378 |
|
|
Total comprehensive income for the period ended December 2008 |
- |
- |
(40,864) |
21,217 |
(19,647) |
|
|
Transactions with owners: |
|
|
|
|
|
|
|
New shares issued |
1 |
- |
- |
- |
1 |
|
|
Accrual for long-term incentive plan liabilities |
- |
- |
- |
303 |
303 |
|
|
|
1 |
- |
- |
303 |
304 |
|
|
Balance at December 2008 |
1,572 |
30,756 |
301,524 |
(33,420) |
300,432 |
|
|
Loss for the six months to June 2009 |
- |
- |
- |
(81,524) |
(81,524) |
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
Actuarial losses on post retirement benefits |
- |
- |
- |
(91,669) |
(91,669) |
|
|
Fair value loss on revaluation of investment properties |
- |
- |
(37,385) |
37,385 |
- |
|
|
Transfer of realised gain on disposed properties |
- |
- |
(3,769) |
3,769 |
- |
|
|
Hedging reserve created - fair value gains in period |
- |
- |
734 |
- |
734 |
|
|
Total comprehensive income for the period ended June 2009 |
- |
- |
(40,420) |
(132,039) |
(172,459) |
|
|
Transactions with owners: |
|
|
|
|
|
|
|
Accrual for long-term incentive plan liabilities |
- |
- |
- |
312 |
312 |
|
|
|
- |
- |
- |
312 |
312 |
|
|
Balance at June 2009 |
1,572 |
30,756 |
261,104 |
(165,147) |
128,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEET |
|
|
|||
|
|
AT 27 JUNE 2009 |
|
|
|
|
|
|
|
|
|
|
Unaudited 27 June 2009 |
Unaudited 28 June 2008 |
Audited 27 December 2008 |
|
|
|
|
Notes |
£000 |
£000 |
£000 |
|
|
ASSETS |
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
Operating property, plant and equipment |
7 |
194,393 |
190,963 |
181,801 |
|
|
|
Surface mine development and restoration assets |
7 |
24,667 |
31,065 |
28,479 |
|
|
|
|
|
|
219,060 |
222,028 |
210,280 |
|
|
Investment properties |
8 |
366,905 |
413,877 |
404,658 |
|
|
|
Investment in joint ventures |
13 |
893 |
1,869 |
2,778 |
|
|
|
Deferred tax asset |
|
36,121 |
36,000 |
36,121 |
|
|
|
Trade and other receivables |
|
1,282 |
1,615 |
1,527 |
|
|
|
|
|
|
624,261 |
675,389 |
655,364 |
|
|
Current assets |
|
|
|
|
|
|
|
Inventories |
|
58,488 |
46,150 |
46,752 |
|
|
|
Trade and other receivables |
|
25,393 |
41,453 |
39,991 |
|
|
|
Derivative financial instruments |
|
- |
928 |
- |
|
|
|
Cash and cash equivalents |
9 |
36,912 |
40,300 |
71,102 |
|
|
|
|
|
120,793 |
128,831 |
157,845 |
|
|
|
Total Assets |
|
745,054 |
804,220 |
813,209 |
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Borrowings - bank loans, overdrafts and finance leases |
10 |
(51,190) |
(7,066) |
(7,306) |
|
|
|
Derivative financial instruments |
|
(1,831) |
- |
- |
|
|
|
Trade and other payables |
|
(106,407) |
(103,190) |
(104,052) |
|
|
|
Provisions |
11 |
(28,106) |
(31,221) |
(35,206) |
|
|
|
|
|
|
(187,534) |
(141,477) |
(146,564) |
|
|
Net current (liabilities)/assets |
(66,741) |
(12,646) |
11,281 |
||
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
||
|
|
Borrowings - bank loans, overdrafts and finance leases |
10 |
(101,729) |
(141,148) |
(172,057) |
|
|
|
- generator loans and prepayments |
10 |
(47,284) |
- |
- |
|
|
|
Derivative financial instruments |
|
(5,993) |
(55) |
(8,493) |
|
|
|
Trade and other payables |
(81) |
(98) |
(139) |
||
|
|
Deferred tax liabilities |
(815) |
(815) |
(815) |
||
|
|
Provisions |
11 |
(77,346) |
(99,174) |
(80,693) |
|
|
|
Retirement benefit obligations |
12 |
(195,987) |
(101,678) |
(104,016) |
|
|
|
|
|
|
(429,235) |
(342,968) |
(366,213) |
|
|
Total liabilities |
|
(616,769) |
(484,445) |
(512,777) |
|
|
|
Net assets |
|
128,285 |
319,775 |
300,432 |
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
|
|
Called up share capital |
|
1,572 |
1,571 |
1,572 |
|
|
|
Share premium |
|
30,756 |
30,756 |
30,756 |
|
|
|
Revaluation reserve |
|
128,646 |
143,893 |
130,339 |
|
|
|
Capital redemption reserve |
|
257 |
257 |
257 |
|
|
|
Fair value reserve |
|
136,443 |
197,746 |
175,904 |
|
|
|
Hedging reserve |
(4,242) |
492 |
(4,976) |
||
|
|
Retained loss |
(165,147) |
(54,940) |
(33,420) |
||
|
|
Total shareholders' equity |
128,285 |
319,775 |
300,432 |
||
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF CASH FLOWS |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited 6 months ended 27 June 2009 |
Unaudited 6 months ended 28 June 2008 |
Audited year ended 27 December 2008 |
|
|
|
|
Notes |
£000 |
£000 |
£000 |
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
Loss for the period |
2 |
(81,524) |
(10,208) |
(15,743) |
|
|
|
Depreciation of property, plant and equipment |
7 |
17,876 |
20,268 |
37,913 |
|
|
|
Amortisation of surface mine development and restoration assets |
7 |
6,832 |
5,726 |
12,583 |
|
|
|
Net fair value decrease/(increase) in investment properties |
8 |
37,385 |
(19,828) |
(23) |
|
|
|
Net interest payable and unwinding of discount on provisions |
3 |
10,158 |
5,400 |
14,898 |
|
|
|
Net charge for share-based remuneration |
|
312 |
237 |
540 |
|
|
|
Share of post-tax profit from joint ventures |
|
(407) |
(623) |
(1,503) |
|
|
|
Profit on disposal of investment properties |
|
(666) |
(62) |
(3,661) |
|
|
|
Profit on disposal of operating property, plant and equipment |
|
(12) |
(15) |
(82) |
|
|
|
Profit on sale of joint venture |
|
(6,534) |
- |
- |
|
|
|
Capitalised surface mine restoration costs |
|
- |
(11,269) |
(11,077) |
|
|
|
(Decrease)/increase in provisions |
|
(12,333) |
3,983 |
(18,265) |
|
|
|
Tax charge |
|
- |
309 |
100 |
|
|
|
Operating cash flows before movements in working capital |
|
(28,913) |
(6,082) |
15,680 |
|
|
|
Increase in stocks |
|
(11,736) |
(6,394) |
(6,996) |
|
|
|
Decrease/(increase) in receivables |
|
14,844 |
(11,502) |
(9,952) |
|
|
|
Increase in payables |
|
2,297 |
2,693 |
3,805 |
|
|
|
Cash (used in)/generated from operations |
|
(23,508) |
(21,285) |
2,537 |
|
|
|
Loan arrangement fees paid |
|
(2,034) |
- |
(1,231) |
|
|
|
Interest paid |
|
(5,966) |
(6,140) |
(12,518) |
|
|
|
Cash used in operating activities |
|
(31,508) |
(27,425) |
(11,212) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
Interest received |
|
368 |
1,349 |
2,919 |
|
|
|
Net receipt from insurance and subsidence security funds |
|
1,204 |
11,711 |
20,329 |
|
|
|
Net proceeds from sale of joint venture |
|
8,726 |
- |
- |
|
|
|
Proceeds on disposal of investment properties |
|
5,435 |
863 |
6,032 |
|
|
|
Proceeds on disposal of operating property, plant and equipment |
|
58 |
46 |
217 |
|
|
|
Net receipts from/(investment in) joint ventures |
|
100 |
(904) |
(933) |
|
|
|
Development costs of investment properties |
|
(4,402) |
(6,167) |
(14,090) |
|
|
|
Pre-coaling expenditure for surface mines and deferred stripping costs |
|
(3,020) |
(5,411) |
(9,874) |
|
|
|
Purchase of operating property, plant and equipment |
|
(17,443) |
(14,356) |
(25,753) |
|
|
|
Cash used in investing activities |
|
(8,974) |
(12,869) |
(21,153) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
Proceeds from issue of ordinary shares |
|
- |
- |
1 |
|
|
|
Net (repayment)/proceeds of bank loans |
|
(33,751) |
27,152 |
59,494 |
|
|
|
Net proceeds from generator loans and prepayments |
|
46,555 |
- |
- |
|
|
|
Repayments of obligations under hire purchase and finance leases |
|
(5,308) |
(4,915) |
(5,767) |
|
|
|
Cash generated from financing activities |
|
7,496 |
22,237 |
53,728 |
|
|
|
|
|
|
|
|
|
|
|
(Decrease)/increase in cash |
(32,986) |
(18,057) |
21,363 |
||
|
|
|
|
|
|
|
|
|
|
At commencement of period |
|
|
|
||
|
|
Cash |
42,336 |
20,973 |
20,973 |
||
|
|
Cash equivalents |
28,766 |
49,095 |
49,095 |
||
|
|
|
|
|
71,102 |
70,068 |
70,068 |
|
|
Decrease in cash equivalents (net receipt from insurance and subsidence security funds) |
(1,204) |
(11,711) |
(20,329) |
||
|
|
(Decrease)/increase in cash |
(32,986) |
(18,057) |
21,363 |
||
|
|
|
36,912 |
40,300 |
71,102 |
||
|
|
At end of period |
|
|
|
||
|
|
Cash |
9,350 |
2,916 |
42,336 |
||
|
|
Cash equivalents |
27,562 |
37,384 |
28,766 |
||
|
|
Cash and cash equivalents |
9 |
36,912 |
40,300 |
71,102 |
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS |
|||||
|
|
FOR THE SIX MONTHS ENDED 27 JUNE 2009 |
|||||
|
|
|
|
|
|
|
|
|
1 |
Basis of preparation of the condensed consolidated interim financial statements |
|||||
|
|
General information |
|
|
|
|
|
|
|
UK COAL PLC (the 'Company') is a limited liability company incorporated and domiciled in the UK. The address of its registered office is Harworth Park, Blyth Road, Harworth, Doncaster, DN11 8DB. |
|||||
|
|
|
|
|
|
|
|
|
|
The Company is listed on the London Stock Exchange. |
|
|
|||
|
|
|
|
|
|
|
|
|
|
The condensed consolidated interim financial statements as at and for the six months ended 27 June 2009 comprise the Company and its subsidiaries (together referred to as the 'Group'). |
|||||
|
|
|
|
|
|
|
|
|
|
The condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The Group financial statements for the year ended 27 December 2008 were approved by the Board of Directors on 27 April 2009 and delivered to the Registrar of Companies. The report of the auditors on those accounts did not contain any statement under section 237 of the Companies Act 1985 and was unqualified but contained an emphasis of matter paragraph in relation to going concern. |
|||||
|
|
|
|
|
|
|
|
|
|
These condensed consolidated interim financial statements for the period ended 27 June 2009 have been reviewed, not audited and were approved for issue by the Board on 27 August 2009. |
|||||
|
|
|
|
|
|
|
|
|
|
Basis of preparation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The condensed consolidated interim financial statements for the six months ended 27 June 2009 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS34 'Interim Financial Reporting' as adopted by the European Union ('EU'). The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 27 December 2008 which have been prepared in accordance with IFRSs as adopted by the EU. |
|||||
|
|
|
|
|
|
|
|
|
|
Accounting policies |
|
|
|
|
|
|
|
Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 27 December 2008, as described in those annual financial statements. |
|||||
|
|
|
|
|
|
|
|
|
|
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected annual earnings. |
|||||
|
|
|
|
|
|
|
|
|
|
The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2009: |
|||||
|
|
- IAS 1 (revised), 'Presentation of Financial Statements'. The most significant change within IAS 1 (revised) is the requirement to produce a statement of comprehensive income setting out all items of income and expense relating to non-owner changes in equity. There is choice between presenting comprehensive income in one statement or in two statements comprising an income statement and a separate statement of comprehensive income. The Group has elected to present comprehensive income in two statements. In addition, IAS 1 (revised) requires the statement of changes in shareholders' equity to be presented as a primary statement. The other revisions to IAS 1 have not had a significant impact on the presentation of the Group's financial information. The interim financial statements have been prepared under the revised disclosure requirements. |
|||||
|
|
- IFRS 8, 'Operating Segments'. IFRS 8 replaces IAS 14, 'Segment Reporting', and requires the disclosure of segment information on the same basis as the management information provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Executive Management Committee. The adoption of this standard has not resulted in a change in the Group's reportable segments. |
|||||
|
|
- IAS 23 (revised), 'Borrowing Costs'. IAS 23 (revised) requires the capitalisation of borrowing costs which are directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use). The adoption of this standard has resulted in a change in accounting policy as the Group previously elected to expense borrowing costs as incurred. The impact of IAS 23 (revised) on the Group's results is not significant at 27 June 2009. |
|||||
|
|
|
|
|
|
|
|
|
|
The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2009, but are not currently relevant to the Group: |
|||||
|
|
- IFRIC 13, 'Customer Loyalty Programmes'; |
|
|
|
||
|
|
- IFRIC 15, 'Agreements for the Construction of Real Estate'; and |
|
|
|||
|
|
- IFRIC 16, 'Hedges of a Net Investment in a Foreign Operation'. |
|
|
|||
|
|
|
|
|
|
|
|
|
|
The following new standards, amendments to standards and interpretations have been issued but are not effective for the financial year beginning 1 January 2009 and have not been adopted early: |
|||||
|
|
- IFRS 3 (revised), 'Business Combinations' and consequential amendments to IAS 27, 'Consolidated and Separate Financial Statements', IAS 28, 'Investments in Associates' and IAS 31, 'Interests in Joint Ventures', effective prospectively to business combinations for which the acquisition date is on or after the first annual reporting period beginning on or after 1 July 2009. The Group will apply IFRS 3 (revised) to all business combinations from 1 January 2010, subject to endorsement by the EU; |
|||||
|
|
- IFRIC 17, 'Distributions of Non-Cash Assets to Owners', effective for annual periods beginning on or after 1 July 2009. This is not currently applicable to the Group, as it has not made any non-cash distributions; and |
|||||
|
|
- IFRIC 18, 'Transfers of Assets From Customers', effective for transfers of assets received on or after 1 July 2009. This is not relevant to the Group as it has not received any assets from customers. |
|||||
|
|
|
|||||
|
|
Trading and non-trading exceptional items |
|||||
|
|
Items that are both material and non-recurring and whose significance is sufficient to warrant separate disclosure and identification within the condensed consolidated interim financial statements are referred to as exceptional items and disclosed within their relevant income statement category. Items that may give rise to classification as exceptional items include, but are not limited to, significant and material restructuring closures and reorganisation programmes, asset impairments, and profits or losses on the disposal of businesses. |
|||||
|
|
|
|||||
|
|
Exceptional items are divided into non-trading and trading exceptional items, depending upon the impact of the event giving rise to the cost or income on the ongoing trading operations and the nature of the costs or income involved. Non-trading exceptional items include costs and income arising from closure, rationalisation and business disposals. |
|||||
|
|
|
|||||
|
|
Property related transactions, including changes in the fair value of investment properties, and profits and losses arising on the disposal of property assets are not included in the definition of exceptional items as they are expected to recur, but are separately disclosed on the face of the consolidated income statement, where material. |
|||||
|
|
|
|
|
|
|
|
|
|
Going concern This interim report is prepared on the basis that the Group is a going concern. In forming its opinion as to going concern, the Board prepares a cash flow forecast based upon its assumptions as to trading as well as taking into account the available borrowing facilities in line with the Treasury Policy disclosed in the Directors' Report in the Group's Annual Report and Accounts for the year ended 27 December 2008. The Board also prepares a number of alternative scenarios modelling the business variables and key risks and uncertainties as summarised on pages 45 to 47 in the Annual Report and Accounts for 2008. The key factors that have been considered in this regard are:
The Board notes that the matters set out above indicate the existence of material uncertainties which may cast significant doubt over the Group's ability to continue as a going concern. Nevertheless the Board confirms its belief that it is appropriate to use the going concern basis of preparation for this interim report. This interim report does not include the adjustments that would result if the Group or the parent company were unable to continue as a going concern. |
|||||
|
|
Seasonality |
|
|
|
|
|
|
|
Significant seasonal or cyclical variations in the Group's total revenues are not experienced during the financial year. |
|||||
|
|
|
|
|
|
|
|
|
|
Estimates and judgements |
|
|
|
|
|
|
|
The preparation of the condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. |
|||||
|
|
|
|
|
|
|
|
|
|
In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 27 December 2008. |
|||||
|
2 |
SEGMENTAL REPORTING |
|
|
|
|
|
|
|
|||
|
|
The chief operating decision-maker has been identified as the Executive Management Committee, as detailed below. The Committee manages and co-ordinates all strategic and key operational issues. The Committee considers that the operating segments comprise: - Mining split between deep mining including the contract services operations and the methane extraction / electricity generating operations, and surface mining including the plant and equipment fleet operation; - Harworth Estates our property division including the wind farm portfolio; and - Other consists of operations not controlled by the mining or property businesses and unallocated central activities which do not represent a separate reportable segment in accordance with IFRS 8. The performance of the operating segments is assessed on a measure of operating profit / loss. This measurement basis excludes the effect of non-trading exceptional items and finance costs and income which are not included in the results of the operating businesses. Total assets for the segments exclude deferred tax and cash and cash equivalents (unrestricted) as these are managed centrally. Cash and cash equivalents that are subject to restriction have been included within the appropriate segment, along with the related provisions. |
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|
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The Executive Management Committee are, as at 27 June 2009:- |
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||||||||
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||||
|
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Chief Executive |
|
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Jon Lloyd |
|
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||||
|
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Finance Director |
|
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David Brocksom |
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|||||
|
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Production Director |
|
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William Tinsley |
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|||||
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Human Resources and Communications Director |
|
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Norman Haslam |
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|||||
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Commercial Contracts Director |
|
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Philip Garner |
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Company Secretary |
|
|
Richard Cole |
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Revenue |
6 months ended June 2009 |
6 months ended June 2008 |
Year ended December |
|||||||
|
|
Revenue from operations arises from: |
£000 |
£000 |
£000 |
|||||||
|
|
Sale of goods |
156,346 |
164,914 |
374,798 |
|||||||
|
|
Rendering of services |
612 |
5,354 |
12,624 |
|||||||
|
|
Rental income |
2,823 |
2,586 |
5,119 |
|||||||
|
|
|
|
|
|
|
159,781 |
172,854 |
392,541 |
|||
|
|
Six months ended June 2009 |
|
|
|
|
|
||
|
|
|
Ongoing deep mines |
Closed/sold deep mines* |
Deep mining |
Surface mining |
Property |
Other** |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Continuing operations |
|
|
|
|
|
|
|
|
|
Revenue - gross |
125,553 |
- |
125,553 |
35,377 |
3,261 |
76 |
164,267 |
|
|
Revenue - intra Group |
- |
- |
- |
(4,052) |
(434) |
- |
(4,486) |
|
|
Revenue - external |
125,553 |
- |
125,553 |
31,325 |
2,827 |
76 |
159,781 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss before non-trading exceptional items |
(35,888) |
- |
(35,888) |
(3,222) |
(36,177) |
(170) |
(75,457) |
|
|
|
|
|
|
|
|
|
|
|
|
Non-trading exceptional items |
|
|
|
|
|
|
|
|
|
- Profit on sale of joint venture |
- |
- |
- |
- |
- |
6,534 |
6,534 |
|
|
- Rationalisation, closure and other costs |
(643) |
(2,150) |
(2,793) |
(18) |
- |
(39) |
(2,850) |
|
|
Operating (loss)/profit after non-trading exceptional items |
(36,531) |
(2,150) |
(38,681) |
(3,240) |
(36,177) |
6,325 |
(71,773) |
|
|
Finance costs |
|
|
|
|
|
|
(10,526) |
|
|
Finance income |
|
|
|
|
|
|
368 |
|
|
Net finance costs |
|
|
|
|
|
|
(10,158) |
|
|
Share of post-tax profit from joint ventures |
|
|
|
|
|
|
407 |
|
|
Loss before tax |
|
|
|
|
|
|
(81,524) |
|
|
Tax |
|
|
|
|
|
|
- |
|
|
Loss for the period |
|
|
|
|
|
|
(81,524) |
|
|
|
|
|
|
|
|
|
|
|
|
Other segmental items |
|
|
|
|
|
|
|
|
|
Capital expenditure |
30,306 |
- |
30,306 |
67 |
4,542 |
- |
34,915 |
|
|
Depreciation |
16,549 |
- |
16,549 |
1,215 |
81 |
32 |
17,877 |
|
|
Surface mines development costs and restoration assets capitalised |
- |
- |
- |
3,020 |
- |
- |
3,020 |
|
|
Amortisation of surface mining development and restoration assets |
- |
- |
- |
6,832 |
- |
- |
6,832 |
|
|
Provisions - non-cash charge |
2,430 |
- |
2,430 |
- |
- |
2 |
2,432 |
|
|
* Closed/sold deep mines includes income and expenditure arising at the Harworth colliery.
|
|||||||
|
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|
|
|
|
|
|
|
|
|
|
** Other consists of operations not controlled by the mining or property businesses and unallocated central activities which do not represent a separate reportable segment in accordance with IFRS 8.
|
|||||||
|
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|
|
|
|
|
|
|
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|
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Property operating loss includes the net decrease in fair value of investment properties of £37,385,000 offset by profit on disposal of investment properties of £666,000.
|
|||||||
|
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|
|
|
|
|
|
|
|
|
|
Non-trading exceptional items
|
|
|
|||||
|
|
Rationalisation, closure and other costs are predominantly associated with the deep mines operations and consists of costs for Harworth colliery of £2,150,000 and redundancy costs of £700,000.
|
|||||||
|
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|
|
|
|
|
|
|
|
|
All non-trading exceptional items are included in cost of sales.
|
|||||||
|
|
Six months ended June 2008 |
|
|
|
|
|||
|
|
|
Ongoing deep mines |
Closed/sold deep mines* |
Deep mining |
Surface mining |
Property |
Other** |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Continuing operations |
|
|
|
|
|
|
|
|
|
Revenue - gross |
132,608 |
- |
132,608 |
41,541 |
2,592 |
1,149 |
177,890 |
|
|
Revenue - intra Group |
(1,156) |
- |
(1,156) |
(3,625) |
- |
(255) |
(5,036) |
|
|
Revenue - external |
131,452 |
- |
131,452 |
37,916 |
2,592 |
894 |
172,854 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)/profit before non-trading exceptional items |
(24,206) |
- |
(24,206) |
(603) |
20,452 |
195 |
(4,162) |
|
|
Non-trading exceptional items |
|
|
|
|
|
|
|
|
|
- Rationalisation, closure and other costs |
(347) |
(541) |
(888) |
(72) |
- |
- |
(960) |
|
|
Operating (loss)/profit after non-trading exceptional items |
(24,553) |
(541) |
(25,094) |
(675) |
20,452 |
195 |
(5,122) |
|
|
Finance costs |
|
|
|
|
|
|
(6,749) |
|
|
Finance income |
|
|
|
|
|
|
1,349 |
|
|
Net finance costs |
|
|
|
|
|
|
(5,400) |
|
|
Share of post-tax profit from joint ventures |
|
|
|
|
|
|
623 |
|
|
Loss before tax |
|
|
|
|
|
|
(9,899) |
|
|
Tax |
|
|
|
|
|
|
(309) |
|
|
Loss for the period |
|
|
|
|
|
|
(10,208) |
|
|
|
|
|
|
|
|
|
|
|
|
Other segmental items |
|
|
|
|
|
|
|
|
|
Capital expenditure |
12,269 |
- |
12,269 |
1,199 |
7,055 |
- |
20,523 |
|
|
Depreciation |
18,838 |
- |
18,838 |
1,338 |
81 |
11 |
20,268 |
|
|
Surface mines development costs and restoration assets capitalised |
- |
- |
- |
16,680 |
- |
- |
16,680 |
|
|
Amortisation of surface mining development and restoration assets |
- |
- |
- |
5,726 |
- |
- |
5,726 |
|
|
Provisions - non-cash charge |
3,673 |
- |
3,673 |
16,915 |
- |
23 |
20,611 |
|
|
* Closed/sold deep mines includes income and expenditure arising at the Harworth colliery.
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
** Other consists of operations not controlled by the mining or property businesses and unallocated central activities which do not represent a separate reportable segment in accordance with IFRS 8.
|
|
||||||
|
|
|
|
||||||
|
|
Property operating profit includes the net increase in fair value of investment properties of £19,828,000 and profit on disposal of investment properties of £62,000.
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
Non-trading exceptional items
|
|
|
|
||||
|
|
Rationalisation, closure and other costs are predominantly associated with the deep mines operations and consists of costs for Harworth colliery of £541,000 and redundancy costs of £419,000.
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
All non-trading exceptional items are included in cost of sales.
|
|
||||||
|
|
Year ended December 2008 |
Ongoing deep mines |
Closed/sold deep mines* |
Deep mining |
Surface mining |
Property |
Other** |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Continuing operations |
|
|
|
|
|
|
|
|
|
Revenue - gross |
309,103 |
- |
309,103 |
83,575 |
5,181 |
2,195 |
400,054 |
|
|
Revenue - intra Group |
- |
- |
- |
(7,125) |
(20) |
(368) |
(7,513) |
|
|
Revenue - external |
309,103 |
- |
309,103 |
76,450 |
5,161 |
1,827 |
392,541 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit/(loss) before non-trading exceptional items |
(12,795) |
- |
(12,795) |
10,416 |
4,706 |
(489) |
1,838 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-trading exceptional items |
|
|
|
|
|
|
|
|
|
- Rationalisation, closure and other costs |
(468) |
(3,456) |
(3,924) |
(162) |
- |
- |
(4,086) |
|
|
Operating (loss)/profit after non-trading exceptional items |
(13,263) |
(3,456) |
(16,719) |
10,254 |
4,706 |
(489) |
(2,248) |
|
|
Finance costs |
|
|
|
|
|
|
(17,817) |
|
|
Finance income |
|
|
|
|
|
|
2,919 |
|
|
Net finance costs |
|
|
|
|
|
|
(14,898) |
|
|
Share of post-tax profit from joint ventures |
|
|
|
|
|
|
1,503 |
|
|
Loss before tax |
|
|
|
|
|
|
(15,643) |
|
|
Tax charge |
|
|
|
|
|
|
(100) |
|
|
Loss for the year |
|
|
|
|
|
|
(15,743) |
|
|
|
|
|
|
|
|
|
|
|
|
Other segmental items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure |
21,487 |
- |
21,487 |
3,137 |
15,219 |
- |
39,843 |
|
|
Depreciation |
34,772 |
- |
34,772 |
2,936 |
162 |
43 |
37,913 |
|
|
Surface mines development costs and restoration assets capitalised |
- |
- |
- |
20,951 |
- |
- |
20,951 |
|
|
Amortisation of surface mining development and restoration assets |
- |
- |
- |
12,583 |
- |
- |
12,583 |
|
|
Provisions - non-cash charge |
6,900 |
- |
6,900 |
14,370 |
- |
45 |
21,315 |
|
|
* Closed/sold deep mines includes income and expenditure arising at the Harworth colliery.
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
** Other consists of operations not controlled by the mining or property businesses and unallocated central activities which do not represent a separate reportable segment in accordance with IFRS 8.
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
Property operating profit includes the net increase in fair value of properties of £23,000 and profit on disposal of investment properties of £3,661,000.
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
Non-trading exceptional items
|
|
|
|||||
|
|
Rationalisation, closure and other costs are predominantly associated with the deep mines operations and consist of costs of £3,447,000 for Harworth colliery and redundancy costs of £1,072,000, offset by income of £433,000 from the release of provisions following the settlement of HMRC and redundancy disputes, since these were recorded as exceptional costs in prior years.
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
All non-trading exceptional items are included in cost of sales.
|
|||||||
|
|
Total assets |
|
|
|
|
|||
|
|
at June 2009 |
|
|
|
|
|||
|
|
|
Ongoing deep mines |
Closed/sold deep mines* |
Deep mining |
Surface mining |
Property |
Other** |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Segment assets |
272,720 |
41 |
272,761 |
44,761 |
379,968 |
1,200 |
698,690 |
|
|
Investment in joint ventures |
- |
- |
- |
- |
893 |
- |
893 |
|
|
Total segment assets |
272,720 |
41 |
272,761 |
44,761 |
380,861 |
1,200 |
699,583 |
|
|
Cash and cash equivalents (unrestricted) |
|
|
|
|
|
|
9,350 |
|
|
Deferred tax asset |
|
|
|
|
|
|
36,121 |
|
|
Total assets per balance sheet |
|
|
|
|
|
|
745,054 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|||
|
|
at June 2008 |
|
|
|
|
|||
|
|
|
Ongoing deep mines |
Closed/sold deep mines* |
Deep mining |
Surface mining |
Property |
Other** |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Segment assets |
278,029 |
43 |
278,072 |
53,332 |
429,749 |
2,282 |
763,435 |
|
|
Investment in joint ventures |
- |
- |
- |
- |
904 |
965 |
1,869 |
|
|
Total segment assets |
278,029 |
43 |
278,072 |
53,332 |
430,653 |
3,247 |
765,304 |
|
|
Cash and cash equivalents (unrestricted) |
|
|
|
|
|
|
2,916 |
|
|
Deferred tax asset |
|
|
|
|
|
|
36,000 |
|
|
Total assets per balance sheet |
|
|
|
|
|
|
804,220 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|||
|
|
at December 2008 |
|
|
|
|
|||
|
|
|
Ongoing deep mines |
Closed/sold deep mines* |
Deep mining |
Surface mining |
Property |
Other** |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Segment assets |
258,022 |
13 |
258,035 |
54,792 |
418,043 |
1,104 |
731,974 |
|
|
Investment in joint ventures |
- |
- |
- |
- |
874 |
1,904 |
2,778 |
|
|
Total segment assets |
258,022 |
13 |
258,035 |
54,792 |
418,917 |
3,008 |
734,752 |
|
|
Cash and cash equivalents (unrestricted) |
|
|
|
|
|
|
42,336 |
|
|
Deferred tax asset |
|
|
|
|
|
|
36,121 |
|
|
Total assets per balance sheet |
|
|
|
|
|
|
813,209 |
|
|
* Closed/sold deep mines includes the assets of Harworth and Rossington collieries and Maltby colliery which was sold in 2007.
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
** Other consists of operations not controlled by the mining or property businesses and unallocated central activities which do not represent a separate reportable segment in accordance with IFRS 8.
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents that are subject to restriction have been included within the appropriate segment, along with the related provisions.
|
|||||||
|
3
|
Finance costs and income
|
|
|
||||||
|
|
|
|
|
6 months ended June 2009
|
6 months ended June 2008
|
Year ended December 2008
|
|
|
|
|
|
|
|
|
£000
|
£000
|
£000
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
|||
|
|
- Bank borrowings
|
(5,659)
|
(5,581)
|
(11,816)
|
|
|
|||
|
|
- Hire purchase agreements and finance leases
|
(307)
|
(559)
|
(879)
|
|
|
|||
|
|
- Unwinding of discount on provisions
|
(2,188)
|
(1,977)
|
(4,257)
|
|
|
|||
|
|
- Amortisation of issue costs of bank loans
|
(1,579)
|
(736)
|
(1,626)
|
|
|
|||
|
|
- Generator loans and prepayments
|
(728)
|
-
|
-
|
|
|
|||
|
|
(Losses)/gains on interest rate swaps not eligible for hedge accounting
|
(65)
|
2,104
|
761
|
|
|
|||
|
|
Finance costs
|
(10,526)
|
(6,749)
|
(17,817)
|
|
|
|||
|
|
Finance income
|
368
|
1,349
|
2,919
|
|
|
|||
|
|
Net finance costs
|
(10,158)
|
(5,400)
|
(14,898)
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
4
|
Tax
|
|
|
|
|
|
|
|
|
|
|
The tax charge in the period is £nil (June 2008: £309,000; December 2008: £100,000). No tax payments have been made during the period.
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
5
|
Dividends
|
|
|
|
|
|
|
|
|
|
|
No dividends have been paid or proposed in relation to 2008. No interim dividend is proposed for the six months ended June 2009.
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
6
|
Loss per share
|
|
|
|
|
|
|
|
|
|
|
Loss per share has been calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of shares in issue and ranking for dividend during the year.
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
In calculating the diluted loss per share, the weighted average number of ordinary shares is adjusted for the diluting effect of share options potentially issuable under the Group’s employee share option plans.
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 months ended June 2009
|
6 months ended June 2008
|
Year ended December 2008
|
|
|
|
|
|
|
|
|
£000
|
£000
|
£000
|
|
|
|
|
|
Loss before tax
|
(81,524)
|
(9,899)
|
(15,643)
|
|
|
|||
|
|
Corporation tax
|
-
|
(309)
|
(100)
|
|
|
|||
|
|
Loss for the year
|
(81,524)
|
(10,208)
|
(15,743)
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used for basic and diluted loss per share calculations
|
157,252,747
|
157,128,220
|
157,154,163
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share (pence)
|
(51.8)
|
(6.5)
|
(10.0)
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
Operating property, plant and equipment
|
|
|
|
|
|
|||
|
|
Net book value
|
|
|
|
|
|
|||
|
|
|
|
|
Operating property, plant and equipment
|
Surface mine development and restoration assets
|
Total
|
|
|
|
|
|
|
|
|
£000
|
£000
|
£000
|
|
|
|
|
|
At January 2008
|
199,551
|
20,111
|
219,662
|
|
|
|||
|
|
Additions
|
14,356
|
16,680
|
31,036
|
|
|
|||
|
|
Disposals
|
(31)
|
-
|
(31)
|
|
|
|||
|
|
Net transfer to investment properties
|
(2,645)
|
-
|
(2,645)
|
|
|
|||
|
|
Depreciation charge
|
(20,268)
|
(5,726)
|
(25,994)
|
|
|
|||
|
|
At June 2008
|
190,963
|
31,065
|
222,028
|
|
|
|||
|
|
Additions
|
11,397
|
4,271
|
15,668
|
|
|
|||
|
|
Disposals
|
(104)
|
-
|
(104)
|
|
|
|||
|
|
Net transfer to investment properties
|
(2,810)
|
-
|
(2,810)
|
|
|
|||
|
|
Depreciation charge
|
(17,645)
|
(6,857)
|
(24,502)
|
|
|
|||
|
|
At December 2008
|
181,801
|
28,479
|
210,280
|
|
|
|||
|
|
Additions
|
30,513
|
3,020
|
33,533
|
|
|
|||
|
|
Disposals
|
(45)
|
-
|
(45)
|
|
|
|||
|
|
Depreciation charge
|
(17,876)
|
(6,832)
|
(24,708)
|
|
|
|||
|
|
At June 2009
|
194,393
|
24,667
|
219,060
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
In addition to the above, the Group is committed to a further £21,993,000 of expenditure for operating property, plant and equipment.
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
In accordance with IAS 36, tangible fixed assets are reviewed for impairment if there is any indication that their carrying amount may not be recoverable. An impairment review has been performed for the tangible fixed assets of the deep and surface mining business which recorded a significant loss in the period.
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
In the period ended 27 June 2009, no impairment charges were recognised. The estimates of recoverable amount were based on value-in-use calculations, using a pre-tax discount rate of 14% which reflects the specific risks of the business. These calculations use cash flow projections based on financial budgets approved by management covering a five year period. Cash flows beyond the five year period are extrapolated assuming a zero growth rate.
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
8
|
Investment properties
|
|
|
|
|
||||
|
|
|
|
|
6 months ended June 2009
|
6 months ended June 2008
|
Year ended December 2008
|
|
|
|
|
|
At valuation
|
£000
|
£000
|
£000
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
At start of period
|
404,658
|
384,291
|
384,291
|
|
|
|||
|
|
Additions
|
4,402
|
6,167
|
14,090
|
|
|
|||
|
|
Disposals
|
(4,770)
|
(801)
|
(2,371)
|
|
|
|||
|
|
Fair value adjustment
|
(37,385)
|
19,828
|
23
|
|
|
|||
|
|
Transfer from operating property, plant and equipment
|
-
|
2,645
|
5,455
|
|
|
|||
|
|
Revaluation gain on transfer from operating property, plant and equipment
|
-
|
1,747
|
3,170
|
|
|
|||
|
|
At end of period
|
366,905
|
413,877
|
404,658
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
In addition to the above, the Group is committed to a further £2,755,000 of expenditure for investment properties.
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
All investment properties were valued at June 2009, in accordance with the Appraisal and Valuation Standards of the Royal Institution of Chartered Surveyors, by three firms, BNP Paribas (formerly Atis Real), Smiths Gore and Bell Ingram, all independent firms with relevant experience of valuations of this nature. The valuation excludes any deduction of rehabilitation and restoration costs which are stated within provisions in the balance sheet.
Key assumptions within the basis of fair value are:
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
- The sites will be cleared of redundant buildings, levelled and prepared ready for development
|
||||||||
|
|
- The values are on a basis that no material environmental contamination exists on the subject or adjoining sites, or where this is present the sites will be remediated to a standard consistent with the intended use, the costs for such remediation being separately provisioned
|
||||||||
|
|
- No deduction or adjustment has been made in relation to clawback provisions, or other taxes which may be payable in certain events
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
9
|
Cash and cash equivalents
|
|
|
|
|
|
|||
|
|
|
|
|
As at June 2009
|
As at June 2008
|
As at December 2008
|
|
|
|
|
|
|
|
|
£000
|
£000
|
£000
|
|
|
|
|
|
Cash deposited to cover insurance requirements
|
19,094
|
19,696
|
20,425
|
|
|
|||
|
|
Subsidence security fund
|
8,468
|
17,688
|
8,341
|
|
|
|||
|
|
Total restricted cash balances
|
27,562
|
37,384
|
28,766
|
|
|
|||
|
|
Other cash balances
|
9,350
|
2,916
|
42,336
|
|
|
|||
|
|
Cash and cash equivalents
|
36,912
|
40,300
|
71,102
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
Borrowings
|
|
|
|
|
|
|||
|
|
|
|
|
As at June 2009
|
As at June 2008
|
As at December 2008
|
|
|
|
|
|
|
|
|
£000
|
£000
|
£000
|
|
|
|
|
|
Bank loans, overdrafts and finance leases:
|
|
|
|
|
|
|||
|
|
Current
|
51,190
|
7,066
|
7,306
|
|
|
|||
|
|
Non-current
|
101,729
|
141,148
|
172,057
|
|
|
|||
|
|
|
|
|
152,919
|
148,214
|
179,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Generator loans and prepayments:
|
|
|
|
|
|
|||
|
|
Non-current
|
47,284
|
-
|
-
|
|
|
|||
|
|
|
|
|
47,284
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|||
|
|
Current
|
51,190
|
7,066
|
7,306
|
|
|
|||
|
|
Non-current
|
149,013
|
141,148
|
172,057
|
|
|
|||
|
|
|
|
|
200,203
|
148,214
|
179,363
|
|
|
|
Borrowings at June 2009 are stated after deduction of unamortised borrowing costs of £3,316,000 (June 2008: £3,431,000; December 2008: £2,861,000).
During the period, the Group made repayments of £6,200,000 against borrowings. Additional finance lease facilities of £13,070,000 have been secured during the period. Some of the leases are due to be repaid in the period to 2012, while the balance is due to be settled by 2014. The balance of the movement in borrowings relates to the outstanding balance on a revolving credit facility which is due for repayment in September 2010 and is disclosed as non-current.
During the period, the Group has entered into certain contracts for coal supply which have resulted in increased cashflows to the business in 2009 and 2010. These benefits together with accrued implied interest are treated as generator loans and prepayments, and will be repaid either out of later revenue or as separate repayments in the period commencing in July 2010 and ending in 2015. Interest is charged on these outstanding amounts using actual or implied interest rates. At June 2009, these generator loans and prepayments were not fully drawn. When fully drawn, the average interest rate on these balances will be 11%.
|
11 |
Provisions |
|
|
|
|
|
||
|
|
|
At December 2008 |
Created in period |
Released in period |
Utilised in period |
Unwinding of discount |
At June 2009 |
|
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
Employer and public liabilities |
18,716 |
1,499 |
- |
(1,527) |
- |
18,688 |
|
|
|
Surface damage |
13,419 |
651 |
(419) |
(999) |
331 |
12,983 |
|
|
|
|
32,135 |
2,150 |
(419) |
(2,526) |
331 |
31,671 |
|
|
|
Claims |
62 |
2 |
- |
- |
- |
64 |
|
|
|
Redundancy |
1,196 |
699 |
- |
(1,137) |
- |
758 |
|
|
|
Restoration and closure costs of surface mines |
59,358 |
- |
- |
(11,404) |
1,336 |
49,290 |
|
|
|
Restoration and closure costs of deep mines: |
|
|
|
|
|
||
|
|
- shaft treatment and pit top |
9,748 |
- |
- |
- |
219 |
9,967 |
|
|
|
- spoil heaps |
2,841 |
- |
- |
- |
64 |
2,905 |
|
|
|
- pumping costs |
5,327 |
- |
- |
- |
120 |
5,447 |
|
|
|
Ground/groundwater contamination |
5,232 |
- |
- |
- |
118 |
5,350 |
|
|
|
|
115,899 |
2,851 |
(419) |
(15,067) |
2,188 |
105,452 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The nature of the Group's obligations is as disclosed in the Annual Report and Accounts for the year ended 27 December 2008. |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
Restricted funds of £27,562,000 have been set aside to meet the liabilities due on the employer and public liabilities and surface damage provisions above. |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
Provisions have been allocated between current and non-current as follows: |
|
|
|
||||
|
|
|
|
|
|
As at June 2009 |
As at June 2008 |
As at December 2008 |
|
|
|
|
|
|
|
£000 |
£000 |
£000 |
|
|
|
Provisions payable within one year |
28,106 |
31,221 |
35,206 |
||||
|
|
Provisions payable after more than one year |
77,346 |
99,174 |
80,693 |
||||
|
|
|
|
|
|
105,452 |
130,395 |
115,899 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions are expected to be settled within the timescales set out in the following table: |
|
|
|
||||
|
|
|
|
Within 1 year |
1-2 years |
2-5 years |
More than 5 years |
Total |
|
|
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
Employer and public liabilities |
7,054 |
4,524 |
6,503 |
607 |
18,688 |
||
|
|
Surface damage |
3,596 |
2,496 |
5,231 |
1,660 |
12,983 |
||
|
|
|
|
10,650 |
7,020 |
11,734 |
2,267 |
31,671 |
|
|
|
Claims |
64 |
- |
- |
- |
64 |
||
|
|
Redundancy |
758 |
- |
- |
- |
758 |
||
|
|
Restoration and closure costs of surface mines |
16,620 |
7,841 |
16,851 |
7,978 |
49,290 |
||
|
|
Restoration and closure costs of deep mines: |
|
|
|
|
|
||
|
|
- shaft treatment and pit top |
14 |
905 |
2,493 |
6,555 |
9,967 |
||
|
|
- spoil heaps |
- |
388 |
1,144 |
1,373 |
2,905 |
||
|
|
- pumping costs |
- |
- |
- |
5,447 |
5,447 |
||
|
|
Ground/groundwater contamination |
- |
- |
- |
5,350 |
5,350 |
||
|
|
|
|
28,106 |
16,154 |
32,222 |
28,970 |
105,452 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 |
Retirement benefit obligations
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
The balance sheet amounts in respect of retirement benefit obligations are: |
|
||||||
|
|
|
|
|
|
As at June 2009 |
As at June 2008 |
As at December 2008 |
|
|
|
|
|
|
|
£000 |
£000 |
£000 |
|
|
|
Industry wide schemes |
161,598 |
77,117 |
74,079 |
||||
|
|
Blenkinsopp |
903 |
820 |
660 |
||||
|
|
Concessionary fuel |
33,486 |
23,741 |
29,277 |
||||
|
|
|
|
|
|
195,987 |
101,678 |
104,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Industry wide schemes
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
The amounts recognised in the consolidated balance sheet are as follows: |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at June 2009 |
As at June 2008 |
As at December 2008 |
|
|
|
|
|
|
|
£000 |
£000 |
£000 |
|
|
|
Fair value of plan assets |
|
317,516 |
345,769 |
316,464 |
|
||
|
|
Present value of funding obligations |
|
(479,114) |
(422,886) |
(390,543) |
|
||
|
|
Net liability recognised in the balance sheet |
|
(161,598) |
(77,117) |
(74,079) |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
The amounts recognised in the consolidated income statement are: |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 months ended June 2009 |
6 months ended June 2008 |
Year ended December 2008 |
|
|
|
|
|
|
|
£000 |
£000 |
£000 |
|
|
|
Current service cost |
|
(5,805) |
(6,218) |
(12,341) |
|
||
|
|
Interest cost |
|
(12,717) |
(12,236) |
(24,534) |
|
||
|
|
Expected return on plan assets |
|
10,242 |
12,608 |
25,473 |
|
||
|
|
|
|
|
|
(8,280) |
(5,846) |
(11,402) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current service cost is charged to cost of sales, with interest cost less expected return on plan assets included as part of administration expenses within other operating expenses. |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
Blenkinsopp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blenkinsopp is a section of the IWMPS covering the pension arrangements of the various companies comprising parts of the former British Coal. Blenkinsopp Collieries Limited was sold by the Group in 1998. However, it has since gone into liquidation and the retirement liabilities have reverted to the Group. The liability as at June 2009 is £903,000 (June 2008: £820,000; December 2008: £660,000), and the amount recognised in the income statement is £43,000 (June 2008: £43,000; December 2008: £87,000). |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
Concessionary fuel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The amounts recognised in the balance sheet are as follows: |
|
|
|
|
|
||
|
|
|
As at June 2009 |
As at June 2008 |
As at December 2008 |
|
|||
|
|
|
|
|
|
£000 |
£000 |
£000 |
|
|
|
Net liability recognised in the balance sheet |
(33,486) |
(23,741) |
(29,277) |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The amounts recognised in the consolidated income statement are: |
||||||||
|
|
|
|
|
|
6 months ended June 2009 |
6 months ended June 2008 |
Year ended December 2008 |
|
|
|
|
|
|
|
£000 |
£000 |
£000 |
|
|
|
Current service cost |
(220) |
(155) |
(309) |
|
|||
|
|
Interest cost |
(948) |
(677) |
(1,347) |
|
|||
|
|
|
|
|
|
(1,168) |
(832) |
(1,656) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current service cost is charged to cost of sales and interest cost is included as part of administration expenses within other operating expenses. |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 |
Related party transactions
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
In January 2009 the Group sold the 50% shareholding in Coal4Energy Limited to the joint venture partner, Hargreaves Services PLC, for £9,000,000 realising a profit of £6,543,000. |
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Investments in joint ventures |
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As at June 2009 |
As at June 2008 |
As at December 2008 |
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|
£000 |
£000 |
£000 |
|
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|
UK Strategic Partnership Limited |
893 |
904 |
874 |
|
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Coal4Energy Limited |
- |
965 |
1,904 |
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|
893 |
1,869 |
2,778 |
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Transactions with joint ventures |
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The following transactions were carried out with joint ventures, in the case of Coal4Energy Limited for January 2009 only: |
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6 months ended June 2009 |
6 months ended June 2008 |
Year ended December 2008 |
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|
£000 |
£000 |
£000 |
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UK Strategic Partnership Limited |
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Sale of land to related party |
- |
1,292 |
1,292 |
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Purchases of goods and services from related party |
- |
- |
143 |
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Coal4Energy Limited |
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Sale of goods and services to related party: |
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- Coal |
5,600 |
12,041 |
24,436 |
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- Services |
84 |
338 |
580 |
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5,684 |
12,379 |
25,016 |
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Purchases of goods and services from related party: |
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- Coal |
- |
5 |
5 |
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- Finance costs |
- |
2 |
3 |
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- |
7 |
8 |
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Sales and purchases to and from the joint ventures were carried out on commercial terms and conditions and at market prices. A profit of £62,000 was recognised in 2008 on the sale of land to UK Strategic Partnership Limited. |
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Balances owing from/(to) joint ventures |
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UK Strategic Partnership Limited |
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The balances arising from sales of goods and services at June 2009 was £nil (June 2008: £nil; December 2008: £409,000) owing from the joint venture, and there are no balances arising from purchase of goods and services at the period ends. |
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Coal4Energy Limited |
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The balances arising from sales of goods and services at June 2009 was £nil (June 2008: £1,143,000; December 2008: £61,000) owing from the joint venture, and there are no balances arising from purchase of goods and services at the period ends. |
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14 |
Contingent liabilities |
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Guarantees have been given in the normal course of business for performance bonds at June 2009 of £4,343,000 (December 2008: £1,235,000) to cover the performance of work under a number of Group contracts. |
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The Group has provided a guarantee for an insurance bond for £10,000,000 which is used as security to cover surface damage liabilities. |
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There are no other material contingent liabilities at June 2009 for which provision has not been made in these financial statements. |
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This information is provided by RNS
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