TIDMATH
RNS Number : 1939W
ATH Resources plc
26 January 2012
Press Release 26 January 2012
ATH Resources plc
("ATH" or the "Group")
Preliminary Results
ATH Resources plc (AIM:ATH), one of the UK's largest coal
producers, reports its Preliminary Results for the year ended 2
October 2011.
Financial Summary
-- Group sales for the period increased by 7% to GBP84.2
million (2010: GBP78.3 million)
-- Net borrowings reduced for the third consecutive year
by GBP3.0 million to GBP31.5 million
-- Despite difficult mining conditions and unexpected geological
challenges at a number of sites the Group reports an
operating profit before exceptional charges of GBP3.0
million (2010: GBP7.0 million)
-- Loss before tax from continuing operations of GBP5.8
million (2010: profit GBP4.0 million) due to a number
of largely non-cash exceptional charges which amounted
to GBP6.2 million
-- In light of the loss for the year it is the intention
of the Board to not recommend the payment of a dividend
in respect of the current year (2010: 2 pence per share)
Operational Summary
-- Successful opening of Netherton which is now in full
production as planned
-- Sales volumes of 1.67 million tonnes (2010: 1.79 million
tonnes) including 530,000 tonnes supplied to legacy
contracts
-- Average selling price increased by 15% to GBP50.43 per
tonne (2010: GBP43.70 per tonne)
-- Commenced initial site preparations to develop Duncanziemere,
which will progressively increase production throughout
2012
-- Achieved planning permission for extensions at Glenmuckloch
and Muir Dean for 505,000 tonnes and 350,000 tonnes
respectively
-- Successful renegotiation of one of the Group's remaining
legacy contracts, effective from January 2012
Alistair Black, Chief Executive of ATH, commented: "This has
been a challenging period for ATH, with the Group's legacy
contracts, difficult mining conditions and higher input costs
(particularly gas oil), continuing to impact performance. However,
the Group's renegotiation of one of its remaining legacy contracts
together with the development of the Group's project pipeline, will
provide a firmer platform for ATH's business going forward."
- Ends -
For further information:
ATH Resources plc
David Port, Executive Chairman Tel: +44 (0) 7836 693798
Alistair Black, Chief Executive Tel: +44 (0) 1302 760 462
www.ath.co.uk
Seymour Pierce Ltd
Sarah Jacobs (Nominated Adviser) Tel: +44 (0) 207 107 8000
Richard Redmayne / Katie Ratner
(Broker)
www.seymourpierce.com
Media enquiries:
Abchurch
Sarah Hollins / Quincy Allan / Oliver Tel: +44 (0) 207 398 7710
Baxendale
quincy.allan@abchurch-group.com www.abchurch-group.com
Chairman's statement
Introduction
The period under review has been a difficult one for ATH. The
continued impact of the below market price legacy contracts
combined with much higher input costs, principally gas oil, and
unexpected geological conditions at a number of the Group's sites,
have all created significant pressure on performance.
Despite these difficulties the Group is committed to satisfying
legacy contract volumes as quickly as possible and remains on track
to fulfil the first of these contracts by the end of March 2012 and
the second during 2013. The Group has also continued to reduce net
debt and has delivered a further reduction of GBP3.0 million to
GBP31.5 million in the year.
Results in brief
Sales volumes for the year at 1.67 million tonnes were slightly
lower than last year (1.79 million tonnes) but average selling
prices rose by 15% to GBP50.43 per tonne (2010: GBP43.70 per
tonne), increasing revenue to GBP84.2 million (2010: GBP78.3
million). The Group's legacy sales contracts continue to constrain
performance and during the year accounted for around 32% of total
sales volumes. Demand for the Group's products remains strong and
the Board is confident of being able to sell all of its annual
production. Pre-exceptional operating profits were GBP3.0 million
(2010: GBP7.0 million). However, as it is now apparent that the
higher input costs, particularly gas oil, will feature for some
time to come, it was necessary to increase the Group's restoration
provisions by GBP1.5 million. Additionally the difficult geological
conditions at Glenmuckloch and Muir Dean required a write down of
the Group's work in progress provisions of some GBP4.1 million.
This together with other small exceptional charges resulted in a
pre-tax loss of GBP5.8 million (2010: profit GBP4.0 million) and a
basic loss per share from continuing operations of 11.5 pence
(2010: earnings of 6.3 pence).
Dividend
Given the impact of the legacy contracts and the level of
exceptional charges this year, the Board will not be recommending
the payment of a final dividend. However, the Board will continue
to review the situation and remains committed to delivering a
progressive dividend to shareholders in the future.
Carbon Reduction Commitment
The Board maintains its view that the Group does not qualify for
inclusion in the Government's new Carbon Reduction Commitment
Scheme ("CRCS") and decided not to register for the Scheme.
However, as announced on 14 June 2011, the Department of Energy and
Climate Change ("DECC") has subsequently issued ATH with an
enforcement notice, asserting a failure to register as a
participant in the first phase of the CRCS, which the Group is
appealing. Central to the issue is whether or not the electricity
consumed by ATH's conveyor, which transports coal from its
Glenmuckloch site to its railhead at New Cumnock some twelve
kilometres away, is exempt from CRCS. The appeal was heard on 7 and
8 November 2011 and a decision is expected in early 2012. The cost
to the Group should its appeal fail will be in the order of GBP1.4
million for each of the three years from April 2011. The Group will
update the market as appropriate.
Takeover talks
During the year the Group was approached by a third party with a
view to possibly acquiring ATH. The Board fully co-operated with
the third party over several months in order to achieve the best
possible outcome for its shareholders but ultimately could not
agree a basis on which the transaction could proceed. Offer talks
were terminated on 13 September 2011.
Banking and restoration bond facilities
During the year the Group was able to successfully renegotiate
its banking facilities, increasing the facility available and
extending the duration to 31 May 2013.
As the Group opens a new site it has to provide the local
authority with an insurance bond to cover the liability of
restoring the site in the event that the Group fails to do so.
Recently this market has tightened considerably with one of the
Group's main providers withdrawing from the market and a second
provider reducing its participation. Maintaining an appropriate
level of bonding will be one of the main challenges facing the
Group in the coming year. However, the Board has recently
negotiated additional facilities with its existing providers and is
confident that the necessary bonding facilities will be available
as and when required for both existing and new sites.
The Board
In July 2010 the Board decided that my position as Non-Executive
Chairman should become Executive in order to oversee the transition
to a new management team following the departure of the former
Chief Executive, Tom Allchurch, and Finance Director, Steven
Beaumont. Their replacements, Alistair Black and Andrew
Weatherstone, have now been in their posts for over twelve months
and together have conducted a thorough review of the business and
renegotiated the Group's banking facilities. The Board is satisfied
that the transition to the new management team is complete and that
I can resume my previous role as Non-executive Chairman. This
change will take effect from the date of the Annual General Meeting
on the 29(th) February 2012.
The Group's Senior Non-executive Director, Vaughan Williams, has
decided to retire from the Board and will step down at the Annual
General Meeting. The Board would like to join me in thanking
Vaughan for his valuable contribution over the last seven years and
in wishing him well for the future.
Tim Stokeld will become the Senior Independent Director and will
chair the Audit and Remuneration Committees.
Outlook
Production is planned to continue at around current levels with
the Group's strategy focused on delivering as much of the legacy
contracts as possible whilst continuing to comply with its
commitments to its banks and shareholders and further reductions in
debt.
Following the successful renegotiation of one of the Group's
remaining legacy contracts, the Board expects a continued rise in
average selling prices and turnover. However, it recognises that
the Group is exposed to movements in commodity prices and should
the recent disconnect between rising gas oil prices and falling
coal prices continue margins will be impacted. The new mine at
Netherton is now in full production as planned and Duncanziemere,
which has recently commenced coaling, is performing satisfactorily
and will progressively increase production throughout the coming
year.
Looking to the longer term, the Group continues to develop and
invest in new sites in order to increase its reserve base and to
strengthen the business going forward.
David Port
Executive Chairman
Chief Executive's statement
Review of the Period
Following my appointment as Chief Executive in July 2010,
greater emphasis has been placed on fulfilling the supply of
tonnage due under legacy contracts and the reduction of debt, both
of which will improve future shareholder value in the longer term.
Given the increased costs of production, a review of both current
and identified potential future sites has been undertaken with
increased focus on mining lower ratio, higher quality coal
reserves. Whilst several cost-saving initiatives targeted at
reducing the Group's operating cost structure are beginning to take
effect, the major challenge for the Group remains the continued
escalation in the price of gas oil at a time when income is
constrained by the impact of fixed price sales contracts and a
reduction in international coal prices.
Operational review
Revenue for the period was GBP84.2 million (2010: GBP78.3
million) from 1.67 million tonnes (2010: 1.79 million tonnes).
Average selling prices increased by 15% to GBP50.43 per tonne
(2010: GBP43.70 per tonne), benefiting not only from increases in
the international market price of coal but also from an improved
mix. This policy has helped mitigate the impact of rising input
costs and the unexpected geological conditions at Glenmuckloch and
increased old workings at Muir Dean.
Alongside these operational challenges, the Group was faced with
a rise of 28% in the price of gas oil, its single largest input
cost. Prices have risen by a further 5% since the year end, in part
driven by adverse movements in the value of the US Dollar.
Furthermore, following an increase in international rubber prices,
the cost of replacement tyres has increased by 15% in the second
half of the year with further rises anticipated during 2012.
During the year the Group invested some GBP8.0 million in
successfully opening its new operation at Netherton. Although
quantities of heat affected coal in the initial areas impacted on
both volume and quality, this site contributed nearly 30% of the
Group's total production in the past financial year. With the site
now in full production and operations having advanced away from the
heat affected areas, Netherton is expected to account for over 37%
of the current year's production.
In spite of these challenging conditions the Group was still
able to report an operating profit before exceptional charges of
GBP3.0 million (2010: GBP7.0 million).
After making capital investments of GBP10.6 million, the Group
has continued to reduce debt to GBP31.5 million, a reduction of
GBP3.0 million in the year. This is the third consecutive year debt
levels have reduced.
Legacy contracts
One of the features of the Group's business is the supply of
coal contracted to the Electricity Supply Industry ("ESI") at fixed
prices which are below current market prices. Since the year end
the Group has been able to successfully renegotiate improved terms
for one of these contracts which will increase average selling
prices.
This year over 32% of sales volumes were supplied to satisfy
these contracts. It remains a key priority for ATH to meet these
commitments as quickly as possible. Consequently the Group remains
on track to complete the first of these contracts in March 2012
with a second due to be completed the following year. Legacy
volumes will then fall to around 15 percent of annual sales
volumes.
Coal reserves and mine development
Following the successful opening of Netherton, the Group
commenced its initial site preparations to develop Duncanziemere,
which is expected to become fully operational this year. In
addition, the Group was successful in achieving planning permission
for extensions at Glenmuckloch and Muir Dean for 505,000 tonnes and
350,000 tonnes respectively, both of which form part of current
production plans.
Coal reserves at the end of the 2011 financial year:
SITE PROVED PROBABLE TOTAL
Tonnes '000' Tonnes '000' Tonnes '000'
--------------- -------------- -------------- --------------
Netherton 1,550 650 2,200
--------------- -------------- -------------- --------------
Duncanziemere 750 - 750
--------------- -------------- -------------- --------------
Glenmuckloch 650 - 650
--------------- -------------- -------------- --------------
Muir Dean 950 850 1,800
--------------- -------------- -------------- --------------
Rigg 1,100 900 2,000
--------------- -------------- -------------- --------------
Other - 500 500
--------------- -------------- -------------- --------------
5,000 2,900 7,900
--------------- -------------- -------------- --------------
As at 2 October 2011 the Group had 5.0 million tonnes proved
reserves (2010: 6.1 million tonnes) and probable reserves of 2.9
million tonnes (2010: 2.5 million tonnes).
The table above, relating to exploration results, mineral
resources or mineral reserves is based upon information compiled by
Peter Morgan, a full time employee of the Group who is a Fellow of
the Institute of Materials, Minerals and Mining. Mr Morgan has
sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration. He has
reviewed and consents to the inclusion in this report of the
matters based on his information in the form and context in which
they appear. A glossary of terms is available on the Group's
website www.ath.co.uk.
In addition to the table above, estimated resources in excess of
11 million tonnes have been secured through various licence
agreements for sites where additional geological and planning work
is required to confirm with a reasonable level of certainty the
tonnages available to mine.
The Group is anticipating bringing forward over 2 million tonnes
into the planning process during the next twelve months.
Coal prices
International coal prices rose sharply in the first half of last
year to a peak of $130 per tonne but have since fallen back by
around 20%. The evident disconnect between coal and oil prices over
the past few months will, if it persists, put further pressure on
margins for the Group; however, the recent renegotiation of one of
the Group's remaining legacy contracts will help alleviate the
potential impact.
Health and safety
The Board understands the potential hazardous nature of the work
undertaken in surface mining. The Group takes its responsibilities
for health and safety very seriously and strives to continually
improve the safety levels in all of its operations.
ATH has been successful in maintaining its RoSPA Gold award and
OHSAS accreditation from BSI for health and safety standards in
2011, recognising the Group's continued commitment to creating the
safest possible working environment.
Each Mine Manager has the necessary qualifications and
competence to manage operations safely and has assistance from a
dedicated Health and Safety Manager.
Regular training is provided to employees in respect of the
Group's procedures with 85% of the Group's workforce attaining
grade NVQ level 2, delivered by our own accredited training
centre.
Staff
The Board would like to join me in thanking all of our
management and employees for their unstinting efforts and support
throughout this challenging period.
Summary
The Group is expecting an improved performance in the current
year, together with further reductions in bank debt. However, the
trading environment remains a challenging one, with the high cost
of gas oil expected to continue and, in the short term, coal prices
easing from their earlier peak.
Alistair Black
Chief Executive
Financial review
The consolidated financial statements for the Group, which are
prepared in accordance with EU adopted International Financial
Reporting Standards ("IFRS"), are presented for the 52-week period
ended 2 October 2011.
Performance
Group sales for the period were GBP84.2 million (2010: GBP78.3
million), an increase of 8%. Sales volumes were 1.67 million tonnes
(2010: 1.79 million tonnes) including 530,000 tonnes supplied to
legacy contracts.
Notwithstanding the impact of these below market price legacy
contracts, the average sales price per tonne rose by 15% to
GBP50.43 per tonne (2010: GBP43.70 per tonne), assisted by an
improved sales mix and a buoyant international coal price, which
rose by over 40% compared to the previous year's average price.
Input cost increases significantly impacted the Group's
operating margins, with increases in the cost of gas oil (of
approximately 28% year on year) being the main driver. The Group's
hedging strategy did, however, help to reduce fuel costs by GBP0.5
million. In addition the average mining ratio at which the Group
operates increased during the year leading to a rise in the unit
cost of production to GBP43 per tonne (2010: GBP35 per tonne).
During the year the Group exercised its option to take GBP2.0
million of royalties under its agreement with RecyCoal Limited.
This necessitated an associated goodwill write off of GBP1.65
million.
Overall pre-exceptional operating profits fell by GBP4.0 million
to GBP3.0 million (2010: GBP7.0 million).
There have been a number of largely non-cash exceptional charges
during the year, which in total amounted to GBP6.2 million:
-- adjustments to work in progress balances of GBP4.1 million at
Muir Dean and Netherton to reflect the increase in mining ratios
after encountering unexpected geological conditions and increased
old workings;
-- increases to restoration provisions of GBP1.5 million
reflecting the rise in operational costs; and
-- provision for additional PAYE of GBP0.6 million arising from
an under deduction in respect of allowances paid to a small number
of employees over a number of years.
Consequently the overall loss before tax from continuing
operations was GBP5.8 million (2010: profit of GBP4.0 million).
Financing costs
Interest costs on borrowing fell by GBP0.1 million to GBP2.0
million, reflecting the fall in level of net debt, representing an
effective interest rate of 5.5%. The non-cash element of financing
charges of final void discount and unrealised differences on
interest rate hedges fell by GBP0.2 million to GBP0.7 million,
making a total reduction in financing costs of GBP0.3 million.
Taxation
The Group paid GBP0.4 million in tax during the year in respect
of prior years. There was a tax credit for the year of GBP1.2
million giving an effective rate of 20.8%, compared to the standard
rate of 27%. The level of tax credit was lower than expected due to
the goodwill write off of GBP1.65 million in respect of RecyCoal
Limited not being deductible for tax purposes.
At 2 October 2011 the Group had unused trading losses in excess
of approximately GBP3.5 million to offset against future
profits.
Earnings and dividends per share
Earnings per share in respect of continuing operations before
exceptional items were Nil pence (2010: earnings of 6.3 pence).
After taking into account exceptional items the Group recorded a
loss per share of 11.5 pence (2010: earnings of 6.3 pence). A final
dividend of 2 pence per share was paid in January 2011 in respect
of the prior financial year. In light of the loss for the year it
is the intention of the Board not to recommend the payment of a
dividend in respect of the current year.
IFRIC 20 'Stripping Costs in the Production Phase of a Mine'
This guidance was published in final form in October 2011 and
will be applicable for accounting periods commencing after January
2013. Following the revision to the Group's accounting policy in
respect of work in progress (deferred stripping costs) in the
previous year, the Board does not believe that the adoption of
IFRIC 20 will have a material impact on the Group's performance.
However, IFRIC 20 requires the deferred stripping costs to be
classified as a non-current asset. This will necessitate a
reclassification of the Group's work in progress balance, which is
at present included in current assets, when the Group implements
IFRIC 20 once it is formally adopted by the EU.
Cash flow and borrowings
Overall total net borrowings including hire purchase obligations
reduced by GBP3.0 million to GBP31.5 million, which compares to a
peak of over GBP45.0 million three years ago.Net bank borrowings
amounted to GBP18.6 million (2010: GBP17.6 million).
Cash generated from operations improved to GBP16.2 million from
GBP12.7 million last year which helped fund the increase in capital
expenditure which amounted to GBP10.6 million (2010: GBP7.3
million); this was slightly lower than planned following a delay to
the start of the Duncanziemere site.
The Group successfully renegotiated its revolving credit
facility with its existing lenders extending it to 31 May 2013. In
addition the facility was increased to provide GBP23.5 million
until May 2012 from which time it reduces in stages to GBP19.0
million by the end of September 2012. Further reductions are then
phased to reduce the facility to GBP16.0 million by the end of
April 2013.
Going concern basis
These financial statements are prepared on the basis that the
Group is a going concern. In forming its opinion as to going
concern, the Board prepares forecasts and projections based upon
detailed assumptions in particular with regard to levels of coal
production and the key risks and uncertainties, together with the
level of borrowings and other facilities made available to the
Group. The Board also takes account of reasonable possible changes
in trading performance to determine whether the Group should be
able to operate within its current level of facilities. Key factors
that have been considered are:
-- recent performance has demonstrated the impact of
unpredictable geological conditions on production volumes. Further
shortfalls of production could lead to a potential material adverse
impact on cash and profitability;
-- the Group requires adequate restoration bond facilities to
continue to operate both existing and new sites. Recently the
number of bond providers providing surety in this market has
reduced with one withdrawing from the market completely and another
significantly curtailing its participation. Shortage of bond
facilities could lead to the Group not being able to operate at
planned levels of production and failure to renew a bond could
result in a claim on the Group under the terms of its counter
indemnities given to the bond providers. However, the Group has
recently negotiated additional facilities with its existing
providers and is confident that the necessary bonding facilities
will be available as and when required;
-- bank facilities have recently been renegotiated, providing a
facility through to 31 May 2013. The facility is at a level of
GBP23.5 million, with scheduled reductions commencing May 2012
onwards reducing the facility to GBP19.0 million by September 2012
and then to GBP16.0 million in April 2013. These facilities contain
performance covenants including interest cover, debt to borrowing
ratio and debt service ratio, which if breached could lead to a
need to renegotiate terms or in the extreme case, a reduction or
withdrawal of the facilities concerned; and
-- sales price in respect of a number of contracts are floating
and based upon the international price of coal, creating a risk of
unpredictability in revenues and cash.
The Board recognises the material uncertainties noted above but,
based upon information available to it at the date of approval of
these financial statements, confirms its belief that it is
appropriate to use the going concern basis of preparation for these
financial statements.
A P Weatherstone
Group Finance Director
Consolidated income statement
for the year ended 2 October 2011
2011 2010
________________________
-------------------------------------- --------------------------------------
Before Exceptional Before Exceptional
exceptional operating exceptional operating
items items Total items items Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------- ----- ------------- ------------ --------- ------------- ------------ ---------
Continuing operations
Revenue 84,166 - 84,166 78,307 - 78,307
Cost of sales (71,434) (6,230) (77,664) (62,520) - (62,520)
------------------------------- ----- ------------- ------------ --------- ------------- ------------ ---------
Gross profit 12,732 (6,230) 6,502 15,787 - 15,787
Other operating income 2,082 - 2,082 73 - 73
Administrative expenses (10,139) - (10,139) (8,906) - (8,906)
Impairment of goodwill (1,650) - (1,650) - - -
------------------------------- ----- ------------- ------------ --------- ------------- ------------ ---------
Operating profit/(loss) 3,025 (6,230) (3,205) 6,954 - 6,954
Finance costs (2,641) - (2,641) (2,966) - (2,966)
------------------------------- ----- ------------- ------------ --------- ------------- ------------ ---------
Profit/(loss before taxation 384 (6,230) (5,846) 3,988 - 3,988
Tax credit/(expense) (410) 1,628 1,218 (1,461) - (1,461)
------------------------------- ----- ------------- ------------ --------- ------------- ------------ ---------
Profit/(loss) for the year
from continuing operations (26) (4,602) (4,628) 2,527 - 2,527
------------------------------- ----- ------------- ------------ --------- ------------- ------------ ---------
Discontinued operations
Loss for the year from
discontinued operations 4 - - - (4,294) - (4,294)
---------
Loss for the year attributable
to ordinary shareholders (26) (4,602) (4,628) (1,767) - (1,767)
------------------------------- ----- ------------- ------------ --------- ------------- ------------ ---------
(Loss)/earnings per share
From continuing and
discontinued
operations
Basic 5 (11.5)p (4.4)p
Diluted 5 (11.5)p (4.4)p
---------
From continuing operations
Basic 5 (11.5)p 6.3p
Diluted 5 (11.5)p 6.2p
------------------------------- ----- ------------- ------------ --------- ------------- ------------ ---------
There is no income or expense other than as stated in the
consolidated income statement.
Consolidated balance sheet
as at 2 October 2011
Company number 4928463
Note 2011 2010
GBP000 GBP000
------------------------------- ----- --------- ---------
ASSETS
Non-current assets
Intangible assets 3,763 5,413
---------
Property, plant and equipment 67,214 67,097
------------------------------- ----- --------- ---------
70,977 72,510
------------------------------- ----- --------- ---------
Current assets
Inventories 11,463 11,925
---------
Trade and other receivables 14,988 11,257
---------
Cash and cash equivalents 498 2,353
------------------------------- ----- --------- ---------
26,949 25,535
------------------------------- ----- --------- ---------
Total assets 97,926 98,045
------------------------------- ----- --------- ---------
LIABILITIES
Current liabilities
Trade and other payables (15,155) (11,227)
---------
Tax liabilities - (407)
---------
Financial liabilities 7 (5,617) (6,335)
---------
Final void provision (3,048) (2,315)
------------------------------- ----- --------- ---------
(23,820) (20,284)
------------------------------- ----- --------- ---------
Non-current liabilities
Financial liabilities 7 (26,175) (30,309)
---------
Final void provision (23,706) (16,498)
---------
Deferred tax liabilities (2,008) (3,254)
------------------------------- ----- --------- ---------
(51,889) (50,061)
------------------------------- ----- --------- ---------
Total liabilities (75,709) (70,345)
------------------------------- ----- --------- ---------
Net assets 22,217 27,700
------------------------------- ----- --------- ---------
EQUITY
Share capital 200 200
---------
Share premium 27,855 27,855
---------
Retained losses (5,838) (355)
------------------------------- ----- --------- ---------
Total equity 22,217 27,700
------------------------------- ----- --------- ---------
The preliminary results announcement was approved by the Board
of Directors and authorised for issue on 25 January 2012
Consolidated cash flow statement
for the year ended 2 October 2011
Note 2011 2010
GBP000 GBP000
------------------------------------------------------- ----- --------- ---------
Cash flows from operating activities 6
Cash generated from operations 16,172 12,736
---------
Interest paid (1,957) (2,058)
---------
Tax paid (435) (1,806)
------------------------------------------------------- ----- --------- ---------
Net cash from operating activities 13,780 8,872
------------------------------------------------------- ----- --------- ---------
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 561 438
---------
Net proceeds from the sale of ATH Regeneration assets - 6,258
---------
Purchases of property, plant and equipment (10,585) (7,288)
------------------------------------------------------- ----- --------- ---------
Net cash used in investing activities (10,024) (592)
------------------------------------------------------- ----- --------- ---------
Cash flows from financing activities
Dividends paid (801) (2,865)
---------
Repayment of borrowings (1,000) (14,335)
---------
Payment of finance lease liabilities (8,076) (11,247)
---------
New asset--backed finance raised 4,266 8,501
---------
Drawings from new revolving credit facility - 19,238
------------------------------------------------------- ----- --------- ---------
Net cash used in financing activities (5,611) (708)
------------------------------------------------------- ----- --------- ---------
Net (decrease)/increase in cash and cash equivalents (1,855) 7,572
---------
Cash and cash equivalents at beginning of year 2,353 (5,219)
------------------------------------------------------- ----- --------- ---------
Cash and cash equivalents at end of year 6 498 2,353
------------------------------------------------------- ----- --------- ---------
1. Basis of accounting
The financial information included in this preliminary results
announcement does not constitute statutory accounts of the group
for the 52 weeks ended 2 October 2011 and 3 October 2010 but is
derived from those accounts. Statutory accounts for 2010 have been
delivered to the Registrar of Companies and those for 2011 will be
delivered in due course. The auditor has reported on the 2011
accounts; their report was unqualified, did not include a reference
to any matters to which the auditor drew attention by way of
emphasis without qualifying their report and did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
The preliminary results announcement has been prepared in
accordance with the accounting policies adopted in the financial
statements which were approved by the Board of Directors on 25
January 2012 and which were prepared on the historical cost basis,
except for the revaluation of certain financial instruments, which
are carried at fair value.
2. Accounting period
The Company has drawn up its accounts for the 52 week period to
2 October 2011 (2010: 52 week period to 3 October 2010).
3. Exceptional items-continuing operations
Items that are non-recurring and whose significance is
sufficient to warrant separate disclosure and identification within
the financial statements are disclosed as exceptional items within
their relevant income statement category. During the year the Group
has incurred the following exceptional operating items:
2011 2010
GBP000 GBP000
-------------------------------------------------- -------- --------
Write off of work in progress in respect of the 4,067 -
Glenmuckloch and Muir Dean sites
Increase in provision for future restoration 1,563 -
work
Provision for additional payroll taxes in respect 600 -
of prior years
-------------------------------------------------- -------- --------
6,230 -
-------------------------------------------------- -------- --------
Unexpected geological conditions were encountered at both the
Glenmuckloch and Muir Dean sites during the year. As a result
remaining coal reserves were much lower than previously expected,
which increased the ratio of overburden to coal for each site. Work
in progress balances have been adjusted accordingly.
Following a significant increase in certain operating costs,
particularly gas oil, the Group has examined its unit cost rates
applied to the estimated volume of overburden to be restored at the
end of the productive life of each mine. As a result future cost
rates have been amended, resulting in a requirement to increase in
the Group's restoration provisions. This review was undertaken in
conjunction with an independent evaluation of the Group's
restoration liabilities.
A review of the Group's payroll procedures and systems showed
that there had been an under deduction of PAYE on some allowances
paid to a small number of individuals over a number of years. The
Group has made provision to cover the expected liability.
4. Discontinued operations
On 29 July 2010, the Group disposed of the business assets of
ATH Regeneration Limited, which specialised in the recovery of coal
through the washing of redundant coal tips and its subsequent sale
to UK electricity generators.
The disposal was to a newly formed company, RecyCoal Limited,
which is funded by a European based private equity fund. Among the
shareholders of RecyCoal Limited are Mr Tom Allchurch, the Group's
Chief Executive prior to the disposal and a Non- executive Director
until 18 January 2011, and Mr Steven Beaumont, the Group's Finance
Director, until 30 September 2010.
The consideration received for the assets was GBP6,500,000,
resulting in a loss on disposal of GBP1,136,000 together with an
associated write off of goodwill of GBP2,244,000.
The Group entered into a licence agreement with RecyCoal Limited
to exclusively license the intellectual property of the unique coal
processing technology, ownership of which is retained within the
Group.
Analysis of the loss for the year from discontinued
operations
2011 2010
GBP000 GBP000
------------------------------------------ --------- --------
Cash flows from discontinued operations
Net cash flows from operating activities - (5,455)
Net cash flows from investing activities - 3,015
Net cash flows from financing activities - (426)
------------------------------------------ --------- --------
Net cash flows - (2,866)
------------------------------------------ --------- --------
2011 2010
GBP000 GBP000
------------------------------------------------ --------- --------
Revenue - -
------------------------------------------------ --------- --------
Other operating income - 11
Expenses - (1,573)
Loss on sale of business assets - (1,136)
Goodwill amortisation associated with disposal - (2,244)
------------------------------------------------ --------- --------
Loss before tax - (4,942)
Attributable tax expense - 648
------------------------------------------------ --------- --------
Loss for the year attributable to discontinued
operations - (4,294)
------------------------------------------------ --------- --------
5. Earnings per share
Basic and diluted earnings per share
Basic (loss)/earnings per share is calculated by dividing the
loss attributable to shareholders by the weighted average number of
ordinary shares is issue during the period.
For diluted (loss)/earnings per share, the weighted average
number of ordinary shares in issue is adjusted to assume conversion
of all potential dilutive ordinary shares. The potential dilutive
ordinary shares relate to those options granted to employees where
the exercise price is less than the average market price of the
Company's ordinary shares at the balance sheet date.
The earnings and weighted average number of ordinary shares used
in the calculation of basic and diluted earnings per share are as
follows:
2011 2010
GBP000 GBP000
-------------------------------------------------------- -------- --------
Loss for the year used in the calculation of basic
and diluted earnings per share (4,628) (1,767)
Loss for the year from exceptional items 4,602 -
Loss for the year from discontinued operations - 4,294
-------------------------------------------------------- -------- --------
(Loss)/earnings used in the calculation of basic and
diluted earnings per share from continuing operations (26) 2,527
-------------------------------------------------------- -------- --------
The weighted number of ordinary shares used in the calculation
of basic and diluted earnings per share on continuing operations
only are as follows:
2011 2010
Number Number
000 000
--------
Weighted number of ordinary shares for the purpose
of basic earnings per share 40,075 40,075
Effect of dilutive potential ordinary shares from
share options - 875
---------------------------------------------------- -------- --------
Weighted number of ordinary shares for the purpose
of diluted earnings per share 40,075 40,950
---------------------------------------------------- -------- --------
There are 2,297,000 (2010: Nil) potential dilutive ordinary
shares on continuing and discontinued operations, which have been
disregarded in the above as they are anti-dilutive.
The (loss)/earnings per share on continuing operations only are
as follows:
2011 2010
pence pence
------------------------------------------------ -------- -------
From continuing operations (11.5)p 6.3p
From continuing operations before exceptionals (0.0)p 6.3p
------------------------------------------------ -------- -------
6. Cash generated from operations
2011 2010
GBP000 GBP000
--------
(Loss)/profit before tax on continuing operations (5,846) 3,988
Loss before tax on discontinued operations - (4,942)
Adjustments for:
Finance costs 2,641 2,966
Depreciation of property, plant and equipment 13,977 13,758
Loss on disposal of fixed assets 52 3,380
Impairment of goodwill 1,650 -
Share--based payment (credit)/expense (54) 72
--------
Operating cash flows before movements in working
capital 12,420 19,222
Decrease in inventories 462 203
Increase in receivables (3,731) (1,636)
Increase/(decrease) in payables and provisions 7,021 (5,053)
--------
Cash generated from operations 16,172 12,736
--------
For the purpose of the cash flow statement, cash and cash
equivalents comprise the following:
2011 2010
GBP000 GBP000
--------------------------- -------- --------
Cash and cash equivalents 498 2,353
--------------------------- -------- --------
Analysis of net debt
3 October Net cash 2 October
2010 flow 2011
GBP000 GBP000 GBP000
-------------------------- ---------- --------- ----------
Cash at bank and in hand 2,353 (1,855) 498
-------------------------- ---------- --------- ----------
Debt due after one year (30,676) 3,966 (26,710)
----------
Debt due within one year (6,175) 844 (5,331)
-------------------------- ---------- --------- ----------
Total debt (36,851) 4,810 (32,041)
-------------------------- ---------- --------- ----------
Net debt (34,498) 2,955 (31,543)
-------------------------- ---------- --------- ----------
7. Financial liabilities
2011 2010
Current GBP000 GBP000
--------
Obligations under finance leases and hire purchase
contracts 5,331 6,175
--------
Derivative financial instruments 286 160
--------
5,617 6,335
--------
Non--current 2011 2010
GBP000 GBP000
--------
Drawings under revolving credit facility 19,000 20,000
Obligations under finance leases and hire purchase
contracts 7,710 10,676
Derivative financial instruments - 197
--------
26,710 30,873
Unamortised cost of borrowings (535) (564)
--------
26,175 30,309
--------
8. Consolidated statement of changes in equity for the year ended 2 October 2011
Called Total
up Share equity
share premium Retained shareholders'
capital account earnings funds
GBP000 GBP000 GBP000 GBP000
--------------------------------------- --------- --------- ---------- ---------------
At 4 October 2009 200 27,855 4,205 32,260
--------------------------------------- --------- --------- ---------- ---------------
Loss for the year - - (1,767) (1,767)
---------------
Other comprehensive income for - - - -
the year
--------------------------------------- --------- --------- ---------- ---------------
Total comprehensive income for
the year - - (1,767) (1,767)
--------------------------------------- --------- --------- ---------- ---------------
Transactions with equity shareholders
Adjustment in respect of share-based
payments - - 72 72
---------------
Dividends paid - - (2,865) (2,865)
--------------------------------------- --------- --------- ---------- ---------------
Total transactions with equity
shareholders - - (2,793) (2,793)
--------------------------------------- --------- --------- ---------- ---------------
At 3 October 2010 200 27,855 (355) 27,700
--------------------------------------- --------- --------- ---------- ---------------
Loss for the year - - (4,628) (4,628)
---------------
Other comprehensive income for - - - -
the year
--------------------------------------- --------- --------- ---------- ---------------
Total comprehensive income for
the year - - (4,628) (4,628)
--------------------------------------- --------- --------- ---------- ---------------
Transactions with equity shareholders
Adjustment in respect of share-based
payments - - (54) (54)
---------------
Dividends paid - - (801) (801)
--------------------------------------- --------- --------- ---------- ---------------
Total transactions with equity
shareholders - - (855) (855)
--------------------------------------- --------- --------- ---------- ---------------
At 2 October 2011 200 27,855 (5,838) 22,217
--------------------------------------- --------- --------- ---------- ---------------
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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