Interim Results
RJB MINING PLC
8 September 1999
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 1999
RJB Mining PLC ('RJB'), the UK's leading coal mining company, today
announces its interim results for the six months ended 30 June 1999.
1999 1998
£'000 £'000
Turnover 345,221 445,315
Profit before tax and exceptionals 4,015 43,956
Earnings per share, after tax and
before exceptionals 4.5p 20.5p
Dividend 3.0p 3.0p
* Total coal sales 11.4 million tonnes (1998: 13.5 million tonnes) - of
which 10.0 million tonnes was sold for electricity generation
* Around 20 million tonnes contracted annually to ESI market up to end of
2000
* Total coal production was 11.8 million tonnes, with 9.2 million tonnes
from deep mine operations
* Overall production unit costs similar to last year despite geological
problems at Selby
* Reappraisal of valuation of colliery assets resulting in an exceptional
non cash item of £131.0m
* Offer for CIM Resources in Australia declared unconditional on 21 July
- RJB now controls 81% of the company
Commenting on the results, Richard Budge, Chief Executive of RJB Mining
said:
'We have now secured contracted sales volumes with all our major
generator customers for 1999 and 2000, provided that the Government
maintains its stricter gas consents policy.
'In the second half of this year additional sales will be difficult to
win, given the highly competitive prices available on the international
spot market.
'The situation at the Selby complex has improved. However we continue
to incur losses at our Stillingfleet colliery. The Company focus
remains on cost reduction and balancing sales and production.'
For further information, please contact:
RJB Mining PLC Today
Richard Budge, Chief Executive 0171 457 2345
Gordon McPhie, Finance Director Thereafter 01302 751751
Gavin Anderson & Company
Gerald Gradwell 0171 457 2345
Fiona Grant Duff
CHAIRMAN'S INTERIM STATEMENT
RESULTS
In the half year to 30 June 1999 the Company has reported profit before tax
and exceptional items of £4.0 million (1998: £44.0 million) on a turnover of
£345.2 million (1998: £445.3 million). Earnings per share after taxation
and before exceptional items were 4.5 pence (1998: 20.5 pence) based on a
weighted average of 145,847,273 shares in issue (1998:145,847,273).
DIVIDENDS
The Board has declared an interim dividend of 3.0 pence per share (1998: 3.0
pence per share). The level of interim dividend was set taking into account
the net cash inflow from operating activities of £62.1 million (1998: £86.6
million).
EXCEPTIONAL ITEMS
Following completion during the period of electricity generator contract
negotiations, the Board has reappraised the carrying value of colliery
assets. An impairment in value of £131.0 million has been recognised as an
exceptional item in the period to 30 June 1999, less the associated tax
credit. This includes £7.0 million in respect of the Calverton Colliery,
where mining has already ceased. A further exceptional net cost of
redundancy of £6.0 million has arisen in the period.
BUSINESS REVIEW
Coal sales of 11.4 million tonnes were made in the first half year (1998:
13.5 million tonnes), including 10.0 million tonnes to the electricity
supply industry (ESI). The effect of the reduction in sales volumes
compared to 1998, coupled with the lower levels of income per tonne
following the agreement of new contracts with the ESI, has reduced operating
profit by £40 million.
The recent round of sales negotiations with electricity generators will
provide for contracted coal sales to the ESI market of around 20 million
tonnes per annum for 1999 and 2000 at these lower levels of income per
tonne. Imported coal prices have been cyclical and through this summer have
been at a 15-year low. No spot sales have been made by the Company to the
ESI market.
Increased import penetration of the UK market has reduced sales to
industrial and domestic markets to 1.4 million tonnes, down 20% compared to
1998.
Overall production unit costs in the first half of 1999 were similar to
those of the corresponding prior period in spite of difficult geology
affecting some operations in the Selby deep mine complex.
Deep mine production in the period was 9.2 million tonnes (1998: 10.2
million tonnes), with production reduced by 0.5 million tonnes due to
geological problems at the Selby mines complex. Actions taken within the
Selby Group of collieries have reduced costs at Wistow and Riccall, however
Stillingfleet continues to be a major concern. The North Selby Mine site
will close with consequential savings. Driveage has commenced to access a
secure area of Stanley Main reserves in the Selby Riccall Mine. Coal stocks
have increased by 0.7 million tonnes in the year to date.
Mining ceased at the Calverton colliery during the period through
deteriorating geological conditions and limited remaining accessible
reserves. The operating lease and licence have been returned to the Coal
Authority.
Capital expenditure in the period was £10.6 million. £9.8 million of the
expenditure has been on replacement equipment within the deep mines and the
continuing development and equipping of the Daw Mill colliery for access to
a 33 million tonnes block of reserves.
Surface mining operations produced 2.6 million tonnes of coal (1998: 3.0
million tonnes), from 15 sites. Coaling operations were complete on two
sites. As part of the company's policy of progressive restoration, 104,000
trees and 13,000 metres of hedgerows were planted during the period, and 120
hectares of land was restored to agricultural use. Land restored to
woodlands was 50 hectares and land restored to amenity 30 hectares.
CIM RESOURCES
The offer to shareholders in CIM Resources (CIM) was declared unconditional
on 21 July and as at 3 September 1999 the Group had purchased or received
written acceptances from shareholders totalling 81% of the ordinary share
capital. The offer will remain open to 30 September 1999.
CIM is an opencast coal producer, listed on the Australian Stock Exchange,
with a market capitalisation of A$15.7 million. It currently produces
around 1.5 million tonnes of coal per annum from its Stratford site in the
Gloucester Basin coal field of New South Wales.
CIM has a 90% interest in Stratford, and sells its production of mainly
coking coal to overseas markets, principally Japan.
A second site, Duralie has the necessary planning approvals and will be
considered for development when the economic conditions for the coal
industry improve.
BOARD
I would like to welcome Brian Staples to the Board and to thank Sir Ross
Buckland who is leaving, for his contribution and support during his years
on the Board. I would also like to thank George Jarrett for his
contribution over many years dedicated to the Group and wish him a long and
happy retirement.
OUTLOOK
The Company now has secure contracted sales volumes with all its major
generator customers for 1999 and 2000, provided that the Government
maintains its stricter gas consents policy.
In the second half of this year additional sales will be difficult to win,
given the highly competitive prices available on the international spot
market.
The situation at the Selby complex has improved. However we continue to
incur losses at our Stillingfleet colliery. The Company focus remains on
cost reduction and balancing sales and production.
John Robinson
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 30 June 1999
Before Exceptio Total 6 6 months Year to 31
Exception nal months to December
al items to 30 June 1998
Items 30 June 1998
1999 As
Notes restated
(Note 1)
£'000 £'000 £'000 £'000 £'000
Turnover -
Continuing 2 345,221 - 345,221 445,315 822,543
operations
Cost of Sales (323,574) - (323,574) (387,249) (744,134)
Exceptional
items:
Redundancy 3 - (6,000) (6,000) - -
costs
Impairment
in
value of
colliery
assets 3 - (131,000) (131,000) - -
----- ---- ---- ----- -----
Total
exceptional
costs of
sales - (137,000) (137,000) - -
---- ---- ---- ---- ----
Total cost of sales (323,574) (137,000) (460,574) (387,249) (744,134)
---- ---- ---- ---- ----
Gross profit/
(loss) 21,647 (137,000 (115,353) 58,066 78,409
Other operating
income and (11,019) - (11,019) (10,412) (19,714)
expenses ---- ---- ---- ---- ----
Operating profit/
(loss)
- Continuing
operations 10,628 (137,000)(126,372) 47,654 58,695
Associate
undertaking 4 (21) - (21) (644) (4,163)
---- ---- ---- ---- ----
10,607 (137,000)(126,393) 47,010 54,532
Net interest
payable and
similar charges 5 (6,592) - (6,592) (3,054) (14,473)
---- ---- ---- ---- ----
Profit/(loss)
on ordinary
activities before
taxation 4,015 (137,000)(132,985) 43,956 40,059
Tax on profit
on ordinary
activities 6 2,576 31,411 33,987 (14,049) 17,733
--- --- --- --- ----
Profit/(loss)
on ordinary
activities
after taxation 6,591 (105,589) (98,998) 29,907 57,792
Dividend 7 (4,375) - (4,375) (4,375) (10,209)
--- ---- ---- ---- ----
Retained profit/
(loss) for the
period 8 2,216 (105,589)(103,373) 25,532 47,583
==== ==== ==== ===== ====
Earnings/(loss)
per ordinary 4.5p (72.4p) (67.9p) 20.5p 39.6p
share ==== ==== ==== ==== ====
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the six months ended 30 June 1999
6 months to 6 months to Year to
30 June 1999 30 June 1998 31 December
As restated 1998
(Note 1)
£'000 £'000 £'000
(Loss)/profit for
the period after taxation (98,998) 29,907 57,792
Exchange differences 198 (266) 253
---- ---- ----
Total recognised gains
and losses for the period (98,800) 29,641 58,045
Prior period adjustment - (44,831) (44,831)
---- ---- ----
(98,800) (15,190) (13,214)
=== === ===
CONSOLIDATED BALANCE SHEET
for the six months ended 30 June 1999
At At At
30 June 30 June 31 December
1999 1998 1998
As restated
(Note 1)
Notes £'000 £'000 £'000
Fixed assets
Tangible assets 489,469 669,811 647,663
Investments 1,166 4,876 1,041
---- ---- ----
490,635 674,687 648,704
Current assets
Stocks 157,076 132,979 142,388
Debtors: amounts falling
due after one year 50,814 71,308 61,465
Debtors: amounts falling
due within one year 126,595 131,817 170,157
Cash at bank and in hand 37,953 56,846 51,197
---- ---- ----
372,438 392,950 425,207
---- ---- -----
Total assets 863,073 1,067,637 1,073,911
==== ==== ====
Equity shareholders'
funds 8 337,032 436,556 440,207
Provisions for
liabilities and charges 9 308,494 314,207 345,544
Creditors: amounts
falling due after
more than one year 10 33,605 58,668 45,191
Creditors: amounts
falling due within
one year 10 183,942 258,206 242,969
---- ---- ----
526,041 631,081 633,704
Total funds employed
863,073 1,067,637 1,073,911
==== ==== ====
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 1999
6 months to 6 months to Year to
30 June 30 June 31 December
1999 1998 1998
Note £'000 £'000 £'000
Operating activities
Net cash inflow from
operating activities 11 62,050 86,630 96,087
Returns from investments
and servicing of finance
Interest paid (1,096) - (691)
Interest paid on
hire purchase and
finance leases (2,406) (3,669) (6,516)
Interest paid on
discounted receivables (1,282) - -
Interest received 2,314 2,062 5,821
---- ---- ----
Net cash outflow from
returns on investments and
servicing of finance (2,470) (1,607) (1,386)
---- ---- ----
Taxation (11,094) (3,670) (17,549)
Capital expenditure and
financial investment
Development expenditure capitalised (3,631) (3,330) (6,638)
Purchase of fixed assets (14,841) (17,549) (33,249)
Receipts from sales of assets 340 1,056 1,802
----- ---- ----
(18,132) (19,823) (38,085)
Acquisitions and disposals
Purchase of shares in associate - (360) (368)
Overdraft disposed with - 183 183
sale of Blenkinsopp Collieries
Sale of Blenkinsopp Collieries - (925) (925)
---- ---- ----
- (1,102) (1,110)
Equity dividends paid
Dividends paid (5,805) (14,557) (18,932)
Cash inflow before use 24,549 45,871 19,025
of liquid resources and financing ---- ---- ----
Financing
(Repayment)/receipt of
revolving credit facility (25,000) - 35,000
Hire purchase and finance
lease capital repaid (12,793) (11,870) (26,517)
---- ---- ----
Net cash (outflow)/inflow
from financing (37,793) (11,870) 8,483
---- ---- ----
(Decrease)/increase in cash (13,244) 34,001 27,508
==== ==== ====
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 1999
1 Preparation of interim statements
The interim financial statements have been prepared on the basis of the
accounting policies set out in the Group's 1998 statutory accounts. The
interim financial statements are not statutory accounts for the purposes of
S240 of the Companies Act 1985. The figures for the full year to 31
December 1998 do not constitute the statutory accounts for the year. They
have been abridged from the statutory accounts which have been filed with
the Registrar of Companies and contain the auditors' report, which was
unqualified and did not contain a statement under either S237(2) or S237(3)
of the Companies Act 1985. The half year figures have not been audited, but
have been reviewed by the auditors. The auditors' review report is included
with the interim statements. The interim financial statements were approved
by the Board on 8 September 1999.
As a result of implementing FRS 12 'Provisions, Contingent Liabilities and
Contingent Assets' in preparing the Group's statutory accounts for the year
ended 31 December 1998, comparative figures for the six month period ended
30 June 1998 have been adjusted to reflect revised accounting policies for
provisions. These new policies are outlined in the Group's 1998 statutory
accounts. The profit before tax on ordinary activities for the six month
period ended 30 June 1998 has been decreased by £0.8 million. The effect of
the revision in policies on the net interest payable and similar charges for
this period is set out in note 5. The total provisions and net assets at 30
June 1998 have been increased by £78.8 million and decreased by £45.4
million respectively.
2 Segmental and geographical analysis
6 months to 6 months to Yearto
30 June 30 June 31
December
1999 1998 1998
£'000 £'000 £'000
a) Turnover
Coal sales - deep mines 275,229 347,839 650,297
Coal sales - surface mines 56,908 83,910 145,310
Opencast contract
mining and associated
activities 4,006 4,974 9,234
Manufactured fuel and
combined heat and power 9,078 8,592 17,702
---- ---- ----
345,221 445,315 822,543
==== ==== ====
Geographical Analysis
United Kingdom 343,133 441,447 814,712
European Union Countries 692 1,288 841
Rest of Europe 1,396 2,580 6,990
---- ---- ----
345,221 445,315 822,543
==== ==== ====
6 months to 6 months to Year to
30 June 30 June 31 December
1999 1998 1998
As restated
(note 1)
£'000 £'000 £'000
b) Profit before taxation
Coal sales - deep mines 5,640 31,295 25,690
Coal sales - surface mines 3,636 15,364 30,210
Opencast contract
mining and associated
activities 1,299 882 2,129
Manufactured fuel
and combined heat
and power 53 113 666
---- ---- ----
Operating profit 10,628 47,654 58,695
Loss on dilution of
interest on deemed
disposal of investment - (644) (644)
Share of loss of associates (21) - (115)
Impairment in value
of investment - - (3,404)
Redundancy and closure costs (6,000) - -
Impairment in value
of colliery assets (131,000) - -
Net Interest payable (6,592) (3,054) (14,473)
---- ---- ----
Profit (loss) before taxation (132,985) 43,956 40,059
==== ==== ====
Due to the nature of the Group's business, distribution expenses are treated
as a part of cost of sales.
3 Exceptional items
Redundancy costs 6,000 - -
Impairment in value
of colliery assets 124,000 - -
Calverton asset impairments 7,000 - -
Interest payable to
Inland Revenue - - *3,282
Interest provision for
potential additional - - *6,690
consideration ---- ---- ----
137,000 - 9,972
==== ==== ====
* Included in net interest payable.
Following completion during the period of electricity generator contract
negotiations, the Board have reappraised the carrying value of colliery
assets. An impairment in value of £124 million has been recognised as an
exceptional item in the period to 30 June 1999, together with an asset
impairment in respect of Calverton colliery amounting to £7 million. A
further exceptional net cost of redundancy of £6 million has arisen in the
period.
By virtue of reducing the carrying value of colliery assets of £131.0
million, recognised as an exceptional item, the Company is technically in
default of its existing bank facility agreement. Agreement in principle has
been reached on the terms of a replacement facility, which is expected to be
entered into shortly.
4 CIM Resources
Fixed asset investments comprise an investment in an associate undertaking,
CIM Resources Ltd ('CIM'), a coal mining company listed on the Australian
Stock Exchange. The Group's ownership of CIM at 30 June 1999 was 17.8% of
the ordinary share capital. This interim statement includes the Group's
share of CIM's results up to 31 December 1998, being the date of the latest
publicly available information. The Group's share of loss for the six month
period ended 31 December 1999 was £21,000 (Year ended 30th June 1998:
£115,000). A loss on dilution of interest on a deemed part disposal of this
investment of £644,000 and an impairment in value of this investment of
£3,404,000 were recognised in the year to 31 December 1998.
On 9th April 1999, the Group made an offer to acquire the remaining ordinary
share capital of CIM at Aus$0.07 per share which valued the Company at £6.1
million. This offer became unconditional on 21 July 1999. As of 3rd
September 1999, the Group had purchased, or received written acceptances
from shareholders, totalling 80.74% of the ordinary share capital. A fair
value balance sheet at the date of acquisition is currently being prepared
and will be reported in the Group's Annual Report for the year ending 31
December 1999.
5 Net interest payable 6 months to 6 months to Year to
and similar charges 30 June 30 June 31 December
1999 1998 1998
£'000 £'000 £'000
On bank loans, overdrafts
and other loans repayable
within 5 years 946 5 689
Amortisation of loan
issue costs (FRS4) 117 18 88
Interest paid on hire
purchase and finance leases 2,400 3,515 6,323
Discounting of receivables 646 - -
Unwinding of discount
on provisions 4,199 1,586 3,173
Interest payable to
Inland Revenue 532 - 3,282
Interest payable for
potential additional - - 6,690
consideration
Interest receivable from short (2,248) (2,070) (5,772)
term deposits ---- ---- ----
6,592 3,054 14,473
==== ==== ====
Following adoption of FRS 12 'Provisions, Contingent Liabilities and
Contingent Assets', by the group at 31 December 1998 in the figures for the
full year to 31 December 1998, interim figures for the six months to 30 June
1998 have been restated to include unwinding of discount.
6 Tax on profit on ordinary activities
Before Exception Total 6 months to Year to
exception al items 6 months to 30 June 31 December
al items 30 June 1998 1998
1999 As restated
(note 1)
£'000 £'000 £'000 £'000 £'000
United Kingdom
corporation
tax at 30%
(1998: 31%)
Current 1,285 (1,785) (500) 14,049 9,882
Deferred - (29,626) (29,626) - 4,861
Under/(over)
provision in
respect of
prior years
Current (3,861) - (3,861) - (35,948)
Deferred - - - - 3,472
---- ---- ---- ----
(2,576) (31,411) (33,987) 14,049 (17,733)
==== ==== ==== ==== ====
7 Dividends
The ordinary dividend will be paid on 25 October 1999 to shareholders on the
register on 24 September 1999. The interim report will be circulated to all
ordinary shareholders and will be available at the Company's registered
office at Harworth Park, Blyth Road, Harworth, Doncaster, South Yorkshire
DN11 8DB.
1999 1999 1998 1998
pence pence
per share £'000 per share £'000
Interim 3.0 4,375 3.0 4,375
Final 4.0 5,834
---- ----
7.0 10,209
==== ====
8 Movement in shareholders' funds 6 months to
30 June 1999
£'000
Shareholders' funds at 1 January 1999 440,207
Retained loss for the period (103,373)
Exchange adjustments 198
------
Shareholders' funds at 30 June 1999 337,032
The High Court granted approval on 9 June 1999 to effect a transfer from the
Company's Share Premium account to the Special Reserve. Accumulated
goodwill which was previously offset against the consolidated profit and
loss reserve, is now offset on consolidation against this special reserve.
9 Provisions for liabilities and charges
At 1 Jan Created Released Utilised Unwinding At 30
1999 in year in year in year of June 1999
£'000 £'000 £'000 £'000 discount £'000
£'000
Provisions 313,668 10,126 (5,118) (16,631) 4,199 306,244
Deferred
taxation 31,876 - - (29,626) - 2,250
---- ---- ---- ---- ---- ----
345,544 10,126 (5,118) (46,257) 4,199 308,494
===== ==== ==== ==== ==== ====
10 Creditors
The creditors figures shown in the balance sheet include the following
liabilities:
30 June 30 June 31 December
1999 1998 1998
£'000 £'000 £'000
Creditors - amounts falling due
after more than one year
Hire purchase and
finance lease liabilities 29,557 58,823 40,557
==== ==== ====
Creditors - amounts falling
due within one year
Revolving credit facility 9,941 - 34,824
Hire purchase and
finance lease liabilities 23,479 26,653 25,272
---- ---- ----
33,420 26,653 60,096
==== ==== ====
11 Reconciliation of operating profit to net cash inflow from operating
activities.
6 months to 6 months to Year to
30 June 1999 30 June 1998 31 December
1998
Continuing activities
Operating profit
(pre exceptional) 10,628 47,654 58,695
Depreciation on
tangible fixed assets 40,297 41,731 82,742
Sale of Blenkinsopp Collieries - 1,109 1,109
(Increase)/decrease in stocks (14,688) 207 (9,202)
Decrease/(increase) in debtors 54,899 32,206 (2,902)
(Decrease) in creditors (29,086) (36,277) (34,355)
------ ------ ------
62,050 86,630 96,087
==== ==== ====
REVIEW REPORT BY THE AUDITORS
TO THE BOARD OF DIRECTORS OF RJB MINING PLC
Respective responsibilities of directors and auditors
We have been instructed by the company to review the financial information
set out in this document and we have read the other information contained in
the interim report for any apparent misstatements or material
inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein,
is the responsibility of, and has been approved by the directors. The
Listing Rules of the London Stock Exchange require that the accounting
policies and presentation applied to the interim figures should be
consistent with those applied in preparing the preceding annual accounts
except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board. A review consists
principally of making enquires of group management and applying analytical
procedures to the financial information and underlying financial data, and
based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review
excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope
than an audit performed in accordance with Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications
that should be made to the financial information as presented for the six
months ended 30 June 1999.
PricewaterhouseCoopers
Chartered Accountants
Nottingham
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