Harworth Gp Regulatory News (HWG)

22 Jan 2009 07:00



Embargo : 07.00hrs, 22 January 2009

22 January 2009

UK COAL PLC ("UK COAL")

Trading Update for the year ended December 2008

UK COAL today provides the following trading update in advance of the publication of its preliminary results in April 2009 for the year ended December 2008.

Mining

As expected, output for the final quarter was the strongest of all the quarters in the year, with all four deep mines working without face changes and surface mines performing strongly. 

Full year production and sales are expected to be 7.9 million tonnes (2007: 7.9 million tonnes, excluding Maltby). This result is broadly in line with our full year expectations announced on 17 October, 2008 of around 8 million tonnes. Output in the final quarter was around 2.4 million tonnes (2007: 1.8 million tonnes). This reflects the fact that Thoresby overcame the particular difficulties it faced at the start of the final quarter, although both Thoresby and Kellingley continue in the difficult geological conditions that we have previously discussed. With production of 0.8 million tonnes in the final quarter, Daw Mill achieved a record breaking 3.2 million tonnes in the full year (2007: 2.2 million tonnes). 

Production figures for the individual operations for the full year are expected to be as follows:

The overall average realised sales price for the year is expected to be around £1.92/ gigajoule, an increase of 19% over the average realised sales price achieved in 2007 of £1.62/GJ, and within our previously announced expected range of £1.90 to £1.95/GJ.

Good production performance in our surface mining business was further underpinned by good progress in obtaining planning approvals with consent in 2008 for 2 million tonnes of coal and 500k tonnes of fire clay at Potland Burn, Northumberland, and 700k tonnes of coal at Blair House in Fife. In addition we are pleased to announce that yesterday, 21 January 2009, Durham County Council approved the extraction of approximately 1.25 million tonnes of coal and 500k tonnes of fire clay at our Park Wall North site near Tow Law. This brings a total of eight approvals from our last eight applications, a testament to the environmental and operational quality of our surface mine schemes.

Property

Overall, good planning progress during the year has helped offset the downward pressures on valuations in the market, as has a significant increase in the value of our large agricultural estate. During 2008 we gained planning consent on over 1,200 homes and approximately 1.5 million sq ft of business space. In addition, during the year, planning applications were made for approximately 4,500 homes and 840,000 sq ft of business space. We are expecting an RICS valuation of the Group's property portfolio as at December 2008 of around £422 million compared to £411 million at December 2007 and £438 million at June 2008. Taking expenditure on the estate and a small number of acquisitions and disposals into account, we expect that the income statement will reflect a property revaluation result for the year around breakeven.

Net Borrowings

Overall net debt (excluding restricted cash balances) at December 2008 was circa £140 million (December 2007: £104 million), better than expected following the release in December of £10 million of previously restricted cash balances.

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