UK Coal shrugged off losses at the half year stage today with a positive view of future trading which it said would place it on track to meet full-year expectations.
Announcing its interim results for the six months ended June 30, UK Coal said increased coal prices had created a strong economic environment for the business going forward.
The company's Harworth Estates property arm has also prospered from plann
ing progress - plans for a major development at the former Prince of Wales Colliery site at Pontefract were approved this month, and rises in agricultural land values.
Over the interim period revenue climbed 18 per cent to £172.9m (2007: £146.2m) as average sales price per gigajoule (GJ) rose 18 per cent to £1.79 (2007: £1.52). The company said it expected average sales price for the second half of 2008 of £1.95 to £2.00/GJ.
Total sales in the first half were 3.7m tonnes (2007: 3.8m tonnes, excluding the company's Maltby mine) and expected output for the second half is likely to be in the region of 5m tonnes (2007: 4.1m tonnes).
The latest like-for-like valuation of the company's land and property portfolio showed a rise of five per cent to £438.4m (December 2007: £410.7m) and the company said further modest increase were expected for the second half of 2008.
Group operating loss before non-trading exceptional items was £4.2m against an operating profit of £35.5m at the same stage last year, which the firm said reflected lower property valuation gains in the current year.
Loss before tax was £9.9m against a profit before tax of £40.6m last year.
Chairman, David Jones, said: "These results show the robustness of UK Coal's growth platform and place us on track to meet full year expectations.
"They also demonstrate the changing financial profile of our business as higher coal prices now start to deliver increased cash flows and we progressively reduce the proportion of our production needed to fulfil low-priced, legacy contracts.
"While overall the reported result for the first half is lower than for the same period last year, this is not unexpected bearing in mind the scheduled timing of our mining production over this year and the unsurprisingly reduced level of non-cash property valuation gains achieved for the first half of 2008 given the current property environment.
"In mining, our first half output was proportionately more committed to satisfying older contracts, muting the positive impact of the increased market price for coal.
"In addition, first half production was constrained and was marginally lower than original expectations, principally reflecting the timing of face changes at Kellingley and Welbeck. For the second half, while there may always be unpredictabilities, we expect significantly higher production at a significantly higher sales price.
"The sharp increase in the market price of coal, up around 45 per cent from the start of the year to the end of July, and its strong forward curve, transforms the outlook for our mining operations."
He added: "In our property business, longer term, we believe that the UK's structural shortage of land for development benefits our estate and that the locations of our brownfield sites fit well with both local and national government's vision of sustainable communities.
"We were pleased to receive planning approval from the Local Authority Planning Committee for the first phase of the Prince of Wales project in August.
"Overall, we have made further good progress in realising the substantial potential of the group. We continue to be confident of meeting expectations for the full year and view the future with optimism."
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