Latest Results

ATH Resources plc, one of the UK's largest coal producers, reports its Interim Results for the six months ended 30 March 2008.

Presentation

The slides of the Interims Results Presentation are available to view and download in PDF format.

Highlights

• Turnover of £28.1 million (2007: £31.2 million) on sales of 787,000 tonnes of coal (2007: 973,000 tonnes)
• Average selling price increased by more than 10% to £35 per tonne
• Profit before tax of £0.4 million (2007 restated: £2.7 million)
• Earnings per share of 0.8 pence (2007 restated: 4.6 pence)
• Proposed interim dividend maintained at 3.36p per share
• ATH Regeneration preferred bidder on 12 million tonnes tailings washing project in Queensland, Australia
• Planning consents at Muir Dean and Grievehill mines deliver a 70% increase in Proven  Reserves to 6 million tonnes*
• Grievehill and Muir Dean mines now operational
• Strong coal market results in significant increase in value of coal reserves

Commenting on the Interim Results, Tom Allchurch, Chief Executive of ATH, said:

”The results for the period, as expected, reflect lower production from our Grievehill mine whilst we were waiting for the final planning consent for an extension to the site.  It is pleasing to report that both Grievehill and the new Muir Dean site are now open, which will drive a significant increase in volumes for the second half.  With favourable pricing set to continue, I am confident that results for the full year will be in line with market expectations.

The last six months have seen a number of developments for ATH which will be important to the future prospects of the Group.  Successful planning applications increased our Proven Reserves from 3.5 million tonnes to 6 million tonnes and the confirmation of ATH Regeneration as preferred bidder on a 12 million tonne tailings washing project in Queensland is a major breakthrough in opening up the Australian market to our unique coal tip washing process.”

Chairman's Statement

Trading results

Turnover in the six months to 30 March 2008 was £28.1 million (2007: £31.2 million) on sales of 787,000 tonnes (2007: 973,000) tonnes.  Profit before tax was £0.4 million (2007 restated: £2.7 million) with a net cash inflow from operations of £6.4 million (2007 restated: £10.1 million).  Earnings per share were 0.8 pence (2007 restated: 4.6 pence).

The results reflect a reduction in coal sales compared with the previous period, due primarily to lower coal production from the Grievehill surface mine in East Ayrshire. The site, as previously notified, was out of production for a number of months pending final planning approval of the latest 1 million tonne extension.  The site is now once again fully operational.

The surface mining business is currently expanding production capacity at Grievehill and Muir Dean, as planned, with the delivery of new mining equipment.  This will contribute to the recovery of sales volumes for the full year to over 2 million tonnes, around the level for 2007.

Average selling prices increased by over 10%, reflecting a strong international market for coal.  This market will drive higher average selling prices for ATH in the second half as mining production increases. Operating costs continue to be carefully monitored and successfully controlled.  Oil price rises resulted in an increase in the cost of gas oil, a significant component of the cost base, however the Directors are confident this cost increase can be absorbed given the strength of the coal market and the current hedging strategy.

ATH Regeneration, the land regeneration and coal recovery business, continues to operate the Grimethorpe site until the summer when, as planned, the Group will commence final restoration of the site.

Development - UK

Following a successful appeal to the Scottish Executive, final planning approval was obtained for the commencement of mining at Muir Dean in Fife, adding 2.3 million tonnes of coal to Proven Reserves. Grievehill received planning consent for an additional 1.0 million tonnes following the design of an innovative soil strip and restoration programme to maintain the local habitat.  A further 0.6 million tonnes was also added to Probable Reserves from an additional extension identified at the Skares Road site, with a planning decision expected later in 2008.

The development of a 0.5 million tonne coal washing site at Langton by ATH Regeneration progressed well during the period and consent to operate the site is expected within the next three months, with plant build and operations commencing later in the year. ATH Regeneration is pursuing a number of other opportunities in the UK, either to acquire the rights to the coal for recovery or provide tip washing to third parties. In addition to the Langton site, the Directors anticipate the construction of two further plants in the UK during 2009.

Proven Reserves increased by 70% to 6.0 million tonnes at the period end, with a further 2.4 million tonnes of Probable Reserves.

Development - Australia

The Group continues to advance opportunities for ATH Regeneration to utilise its coal recovery expertise in Australia. Several projects are being actively pursued and the Directors are confident that the technology will be successfully introduced into this large coal producing market to provide significant growth for the business in the medium term.

The Group is pleased to announce that ATH has been confirmed as preferred bidder for a project in Queensland to wash 12 million tonnes of coal tailings, anticipated to commence in 2009. The project, which is subject to final approval by the client, is for an initial three years and would be carried out under contract to one of the major global mining organisations.  The proposal provides for ATH Regeneration to build and operate a wash plant under an index linked contract, with the client responsible for the marketing and transport of the coal. 

ATH Regeneration is also commencing the exploration and analysis of a separate coal tailings tip on a mine owned by another major mining organisation in Australia, with a view to negotiating a contract to recover the coal from the tip.  The Directors believe that these two projects will pave the way for a growing number of coal tip washing projects in Australia.

Financing

The Group refinanced its borrowing facilities during the period to reflect the long term planning and operational profile of its UK business.  Existing loan facilities were replaced by £15 million of senior debt and a further £8 million facility to finance the opening of the Muir Dean site.

On the basis of the strength of the existing business and the anticipated returns from the projects, the Directors intend to maintain the Group's dividend policy for the full year.   

Dividends

The Directors are proposing an interim dividend of 3.36p per share, unchanged from 2007. The dividend will be paid on 17 July 2008 to registered holders on 27 June 2008.

Outlook

Demand for coal remains strong, with international prices continuing to increase from already record levels, more than doubling over the last year. The forward price index indicates average prices over the next three years exceeding US$120 per tonne.

Much of the current coal output, in total 4 million tonnes, supplies long term contracts with UK power generators. These contracts benefit from price certainty but are, on average, £25 to £30 per tonne below prices the business might expect to obtain on new long term contracts in the current market.  In addition to this contracted tonnage, the Group has further non-contracted coal reserves of around 4 million tonnes, including 2.3 million tonnes from the Muir Dean site, and the Directors expect the Group to benefit significantly over time from higher coal prices for this and future new coal reserves.

The strength of the coal market is also expected to support the growth of ATH Regeneration, as it becomes increasingly economic to wash coal tip sites and provide land owners with sustainable environmental improvements to their sites.

Coal is set to remain a significant source of energy production within the world and UK economies and ATH is well placed with its existing coal assets, expertise and projects under development to deliver additional value to shareholders.

David Port
Non-executive Chairman
10 June 2008

* 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 30 March 2008

The profit on ordinary activities before taxation arises from the Group's continuing activities.

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

Condensed consolidated balance sheet
as at 30 March 2008

Condensed consolidated statement of changes in equity
for the six months ended 30 March 2008

Condensed consolidated cash flow statement
for the six months ended 30 March 2008

Notes

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

Page last up-dated: 20 June 2008