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Investor Info > Latest Results

Latest Results

Interim Results

ATH Resources plc, one of the UK’s largest coal producers, reports its Interim Results for the six months ended 29 March 2009.

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Highlights

  • Turnover increased by over 27% to £35.7 million (2008: £28.1 million) on sales of 845,000 tonnes of coal (2008: 787,000 tonnes)
  • Average selling price increased by 19% to £42 per tonne
  • Strong improvement from the Surface Mining business with operating profit more than doubling to £3.5 million (2008: £1.2 million)
  • Profit before tax of £0.1 million (2008 : £0.4 million)
  • Earnings per share of 0.15 pence (2008 : 0.8 pence)
  • Proposed interim dividend deferred until payment of final dividend (2008: 3.36 pence per share) following recent inflow of water at the Muir Dean mine
  • Water management plan on track at Muir Dean to restore the mine to full production later in the summer
  • Proven Reserves increased by 9% to 4.9 million tonnes

Commenting on the Interim Results, Tom Allchurch, Chief Executive of ATH, said: "I am pleased to announce a strong improvement in the results of our Surface Mining business with proven coal reserves also moving ahead. The profitability of the Group was held back by the lack of production from the ATH Regeneration business. However, with the start of deliveries this April by Surface Mining under a new, long term coal contract I am confident that trading for the full year should be in line with market expectations."

 

Chairman's Statement

Trading results

Revenue in the six months to 29 March 2009 was £35.7 million (2008: £28.1 million) on sales of 845,000 tonnes of coal (2008: 787,000 tonnes). Profit before tax was £0.1 million (2008: £0.4 million) and net cash generated from operations was £6.5 million (2008: £6.4 million). Earnings per share were 0.15 pence per share (2008: 0.8 pence per share).

Average selling prices increased by 19% reflecting the continuing strength of the coal market and the Group’s marketing and contracting strategy. The Group entered into a long-term sales contract in January with a new customer, ScottishPower, to supply its power station at Longannet. Deliveries under this new contract commenced, as planned, in April 2009.

Production costs increased reflecting the mix and configuration of mines and higher levels of depreciation following the Group’s major investment programme over the last two years together with the loss of lower cost ATH Regeneration production and higher fuel prices. The price of gas oil represents a key production cost which is closely monitored and the Group hedges against price fluctuations, with half of the forecast remaining usage for the year fixed at around current market prices.

The results reflect a strong improvement in the performance of the Surface Mining business, with operating profit more than doubling to £3.5 million (2008: £1.2 million) and sales volumes increasing by 25% during the period.  Compared to the prior period, production benefitted from a full period of operations at the Grievehill mine in Ayrshire and the Muir Dean mine in Fife.  Operations continued successfully at the Group’s three other mines in Ayrshire and Dumfries and Galloway.  Production will come to an end, as planned, at the Laigh Glenmuir and Grievehill mines before the year end with production being replaced by extensions at Skares Road and Glenmuckloch.

As previously announced, production at the Muir Dean mine in Fife is currently being temporarily reduced by an unexpected increase in water levels at part of the mine. Following the implementation of a comprehensive water reduction plan, water levels in the mine are currently returning to previous expectations which will allow full scale production to recommence later in the summer.

Plans are in place to maximise production from other sites and, at this stage, the Directors do not expect that the temporary reduction in output should have a significant impact on the Group's ability to achieve its market expectations for the full year or have any adverse impact on banking facilities or associated covenants.

ATH Regeneration was affected by the closure of the Grimethorpe site last year and, with no operational sites, the business generated no income during the period. This resulted in an operating loss of £1.5 million (2008: operating profit £0.9 million) reflecting the overhead of the business and restructuring and other costs related to the ending of production at Grimethorpe. The future, ongoing cost base, has been reduced significantly consistent with the expectation that no income will be generated by the business until 2010.

Reserves

Proven Reserves in the Group increased by 9% to 4.9 million tonnes with additional planning consents received in the Surface Mining business of 1.8 million tonnes.

Proven and Probable Reserves at the period end were 7.1 million tonnes.

Development - Surface Mining

The business has been successful in developing Surface Mining coal reserves. Final planning consent at a new site at Rigg in Dumfries and Galloway added 1.1 million tonnes with extensions to the existing Glenmuckloch mine adding a further 0.7 million tonnes to Proven Reserves.

Approval for a 0.6 million tonne extension to the Group’s existing site at Skares Road was received after the period end.

In addition, an extension of 0.3 million tonnes has been identified at the Muir Dean mine adding to Probable Reserves and plans are in place for the submission for a planning consent later in the year for a new 2 to 3 million tonne site in Ayrshire.

Development - ATH Regeneration

As previously notified, the Directors were disappointed that planning for the proposed ATH Regeneration plant at Langton in Derbyshire was refused by Derbyshire County Council when approval had already been received from Nottinghamshire County Council.  The Group has submitted an appeal against the decision with the result expected before the end of 2009 which, if successful, will allow production to commence in 2010.
The Group continues to pursue other opportunities in the UK with several potential developments identified for commencement in 2011 and beyond, and will update the market accordingly.

Progress continues on the acquisition of the first contract in Queensland, Australia with commercial negotiations to build, own and operate a plant nearing completion prior to final approval by the potential client.  Discussions continue with other mining companies in Australia for the implementation of the unique coal washing technology at other sites.

Funding

During the six month period to March 2009, bank loans and hire purchase liabilities reduced by £7.3 million to £39.2 million (September 2008: £46.5 million). In November 2008, a new working capital facility was put in place with amounts drawn during the six month period of £5.6 million resulting in total debt at the period end of £44.8 million (September 2008: £46.5 million). Cash balances were £0.2 million (September 2008: £1.2 million). A major investment programme in plant and equipment and mine development has recently been completed and, with the rate of investment set to fall significantly in the UK, the Group is targeting to accelerate debt reduction over the next two to three years.

Dividends

The unexpected inflow of water encountered recently at Muir Dean is currently temporarily reducing production from part of the site and consequently, as a precautionary and prudent measure, the Directors propose that the interim dividend is deferred and incorporated into the final dividend expected to be paid in January 2010.

Directors

During the period, Mrs Ivana Ridler resigned as a Non-executive Director of the Group and the Board would like to thank Ivana for her contribution to the business over the last eight years, five of them as a Non-executive Director. Following the period end, Mr Tim Stokeld was appointed to the Board as a Non-executive Director.

Outlook

Prices for coal remain strong, despite the recent economic downturn, with future market indices indicating that market prices will increase well ahead of inflation over the next two to three years. Focussing on the strategic development of reserves will allow the Group to take advantage of the continuing demand for coal, which will in turn be supported by recent announcements on clean coal projects and policy.

 

David Port
Non-executive Chairman
9 June 2009

* The information in this report relating to exploration results, mineral resources or mineral reserves is based on information compiled by Mr Peter Morgan, a full-time employee of the company, 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 the report of the matters based on his information in the form and context in which it appears. A glossary of terms is available on our website - www.ath.co.uk.

 

Condensed consolidated income statement
for the six months ended 29 March 2009

  Unaudited Unaudited Audited
  six months six months year
  ended ended ended
  29 March 30 March 28 September
  2009 2008 2008
  £000 £000 £000
Revenue 35,672 28,062 76,851
Cost of sales (28,810) (21,886) (55,429)
Gross profit 6,862 6,176 21,422
Other operating income 97 125 353
Administrative expenses (5,320) (4,658) (9,872)
Operating profit 1,639 1,643 11,903
Finance costs (1,549) (1,199) (2,895)
Profit before taxation 90 444 9,008
Taxation (28) (122) (2,878)
Profit for the period 62 322 6,130
Basic earnings per share 0.15p 0.80p 15.30p
Diluted earnings per share  0.15p 0.78p 14.90p

There are no recognised gains and losses other than as stated in the income statement.

 

Condensed consolidated balance sheet
as at 29 March 2009

  Unaudited Audited Unaudited
  29 March 28 September 30 March
  2009 2008 2008
  £000 £000 £000
ASSETS      
Non current assets      
Goodwill 7,657 7,657 7,169
Property, plant and equipment 79,820 83,458 68,689
  87,477 91,115 75,858
Current assets      
Inventories 20,088 14,967 11,346
Trade and other receivables 8,877 11,133 6,995
Cash and cash equivalents 162 1,207 -
  29,127 27,307 18,341
Total assets 116,604 118,422 94,199
LIABILITIES      
Current liabilities      
Trade and other payables (16,006) (14,899) (8,470)
Tax liabilities (1,470) (1,443) (193)
Financial liabilities - borrowings  (19,111) (14,649) (13,519)
Final void provision (2,224) (1,811) -
  (38,811) (32,802) (22,182)
Non-current liabilities      
Trade and other payables - - (50)
Financial liabilities - borrowings (25,657) (31,810) (25,707)
Final void provision (14,413) (15,018) (13,046)
Deferred tax liabilities (4,208) (4,208) (3,603)
Other provisions (338) (338) -
  (44,616) (51,374) (42,406)
Total liabilities (83,427) (84,176) (64,588)
Net assets 33,177 34,246 29,611
EQUITY      
Share capital 200 200 200
Share premium 27,855 27,855 27,855
Share-based payment reserve 1,609 1,682 1,508
Retained earnings 3,513 4,509 48
Total equity  33,177 34,246 29,611

 

Condensed consolidated statement of changes in equity
for the six months ended 29 March 2009

  Called up share capital
£000
Share premium account
£000
Share-based payment  reserve
£000
Retained earnings
£000
Total equity shareholders’ funds
£000
           
At 30 September 2007 199 27,563 1,313 3,028 32,103
Issue of ordinary shares 1 292 - - 293
Profit for the year - - - 6,130 6,130
Dividends paid - - - (4,649) (4,649)
Addition to share-based payment reserve - - 369 - 369
At 28 September 2008 200 27,855 1,682 4,509 34,246
           
At 30 September 2007 199 27,563 1,313 3,028 32,103
Issue of ordinary shares 1 292 - - 293
Profit for the period - - - 322 322
Dividends paid - - - (3,302) (3,302)
Addition to share-based payment reserve
-

-

195

-

195
At 30 March 2008 200 27,855 1,508 48 29,611
           
At 28 September 2008 200 27,855 1,682 4,509 34,246
Profit for the period - - - 62 62
Dividends paid - - - (1,058) (1,058)
Reduction in share-based payment reserve - - (73) - (73)
At 29 March 2009 200 27,855 1,609 3,513 33,177

 

Condensed consolidated cash flow statement
for the six months ended 29 March 2009

    Unaudited Unaudited Audited
    six months six months year
    ended ended ended
    29 March 30 March 28 September
    2009 2008 2008
  Notes £000 £000 £000
Cash flows from operating activities        
Cash generated from operations 6 6,540 6,436 22,588
Interest paid   (1,234) (1,414) (2,558)
Tax paid   - (642) (1,542)
Net cash from operating activities   5,306 4,380 18,488
Cash flows from investing activities        
Proceeds from sale of property, plant and equipment   30 3 197
Interest received   3 55 64
Government grant received   - - 204
Purchases of property, plant and equipment   (3,407) (5,415) (13,624)
Acquisition of subsidiary   - - (150)
Net cash used in investing activities   (3,374) (5,357) (13,309)
Cash flow from financing activities        
Dividends paid   (1,058) (3,302) (4,649)
Repayment of borrowings   (2,669) (3,664) (6,323)
Payment of hire purchase liabilities   (5,436) (4,048) (7,899)
Proceeds from the issue of share capital   - 293 293
New bank loans raised   596 18,282 22,700
Net cash (used in)/from financing activities   (8,567) 7,561 4,122
Net (decrease)/increase in cash and cash equivalents   (6,635) 6,584 9,301
Cash and cash equivalents at beginning of period   1,207 (8,094) (8,094)
Cash and cash equivalents at end of period   (5,428) (1,510) 1,207

 

Notes

Notes to the Financial Statements are available in the printable PDF version
 
 

Page last up-dated: 9 June 2009