Trading Update

UK Coal PLC
11 January 2007

11 January 2007



                                  UK COAL PLC



                                 TRADING UPDATE



UK COAL PLC ('UK COAL' or the 'Group') today provides the following trading
update in advance of the publication of its preliminary results for the year
ended 31 December 2006, which will be announced on 1 March 2007.



Overall trading in the period since the update in October has been in line with
expectations and further significant progress has been made in developing the
Group's property portfolio, which at the year end is expected to be valued at
£343 million (2005: £274 million).



Overall reported profit before taxation is expected to be around £17 million,
including additional gains on the revaluation of property of £50 million which,
in accordance with new accounting policies, will be recorded in the consolidated
income statement for 2006. Excluding additional property gains, as expected,
losses in the period before taxation are estimated to be around £33 million,
largely attributable to the difficulties encountered in Deep Mining in the third
quarter.



Net debt was £56 million at the end of December 2006 (2005: £43 million),
including leasing and hire purchase agreements and cash balances of £42 million
held in respect of insurance requirements and subsidence security funds (2005:
£53 million).



Deep Mines



Deep Mines were marginally profitable in the three months to December. Unit
costs for the full year before exceptional items are expected to be £1.61 per
gigajoule (2005: £1.49 per GJ). Output for the full year was 8.9 million tonnes,
0.3 million below expectations in Q4 as a result of lower production at Daw
Mill. Average sales proceeds during 2006 were £1.41 per GJ (2005: £1.35 per GJ).



Within deep mines, exceptional costs in the year are anticipated to be around
£20 million, including a credit for Coal Investment Aid of £7.8 million,
principally comprising costs of mothballing Rossington and Harworth and costs
incurred at Maltby colliery during Q3 when production was halted as a result of
a roof fall.



At 1 January 2007, some 17.7 million tonnes of the Group's contractual supply
obligations remained outstanding at prices of up to £1.48 per GJ (plus retail
price indexation for later years) dependent partly on the outturn of
international coal prices.


Surface Mines



Surface mining profit is expected to be some £4.8 million in the year ended
December 2006 (2005: £0.8 million) on output of 0.6 million tonnes (2005: 1.0
million tonnes). This includes a £5.0 million profit on the disposal of
unutilised plant and the release of £4.5 million of provisions in respect of
restoration liabilities which have been reassessed in the light of planning
applications granted in the North East to extract coal in adjacent reserves.
This has reduced the cost of the existing restoration task.



Unit costs per GJ before provision releases were £1.88 (2005: £1.31 per GJ) and
reflect the low level of activity in 2006 with only one site coaling for the
majority of the year.



Remaining reserves with planning at the end of 2006 amounted to 4.1 million
tonnes (2005: 2.7 million tonnes) as a result of new planning approvals for two
sites containing 2.0 million tonnes.



Six sites are in the planning process and are expected to be granted in 2007,
further increasing the permitted reserves base by 5.4 million tonnes.



A further six sites are currently being prepared for planning submissions in
2007, providing a further 4.6 million tonnes of potential reserves.



Property



The property division is expected to record an overall profit in 2006 of around
£73 million (2005: £62 million). This contains additional gains of around £50
million from property revaluations which are expected to be reported through the
consolidated income statement in accordance with new accounting standards (2005:
£46 million).



The formal RICS valuation of the Group's property interests stands at £343
million at December 2006 (2005: £274 million) before allowance for any clawback
liabilities and reflects its current use and planning status.



Net profit from rental operations was £3.2 million (2005: £2.2 million) on
rental income of £6.0 million (2005: £4.8 million).



Profits on disposals in the year were £8.7 million (2005: £9.6 million) compared
to historical book value. Disposals were made from a successful auction of
surplus farmland which had limited development prospects and generated proceeds
60% higher than the 2005 RICS Red Book valuation. Further disposals were made
from sites where the Group believes maximum value has been added.



The planning application for our major Prince of Wales development site has now
been submitted and a decision is expected in Q2 2007.



Further good progress continues to be made on Orgreave / Waverley, another
flagship development. Planning has been granted for the second phase comprising
60 acres, which will provide in the order of 650,000 sq ft of mixed business
park development opportunities. The first phase, Advance Manufacturing Park
(AMP), continues to attract high tech metals and aviation industries to its
cluster. Further planning applications will follow to develop out the full site.



Power Generation



Harworth Power, UK COAL's power generation subsidiary, is expected to deliver
profit before interest and taxation of some £3.2 million (2005: £3.4 million)
including emissions trading credits of £1.8 million (2005: £2.4 million).



Harworth Power has 32 MW of installed methane power generation capacity.
Planning applications in respect of 40 wind turbines are in progress. Year on
year profit growth (excluding emissions credits) was 40%. Additional capacity of
12 MW will be installed in early 2007.



Outlook



Overall the Group is well placed to deliver further value for shareholders in
the coming year and will continue to focus on realising the significant
potential within its property portfolio, reducing the risk profile of its deep
mining operations and capitalising on opportunities in power generation.





Enquiries:


Media

Citigate Dewe Rogerson                                   Tel: [phone]
Anthony Carlisle                                         Mobile: [phone]
Brett Jacobs                                             Tel: [phone]

Analysts and investors

Chris Mawe                                               Mobile: [phone]
Group Finance Director, UK COAL PLC





Note


Production                                        Year to                Year to
                                              31 Dec 2006            31 Dec 2005
                                                     (mt)                   (mt)
Ongoing Collieries

Daw Mill                                              2.7                    2.0
Kellingley                                            2.1                    2.0
Maltby                                                0.7                    1.1
Thoresby                                              1.5                    1.4
Welbeck                                               1.2                    1.0
Sub Total - ongoing collieries                        8.2                    7.5


Other closed or closing mines                         0.7                    1.5
Total Deep Mines                                      8.9                    9.0

Surface Mines                                         0.6                    1.0
Total Production                                      9.5                   10.0




                      This information is provided by RNS
            The company news service from the London Stock Exchange