TIDMEBG
RNS Number : 2880N
Energybuild Group PLC
09 June 2010
Energybuild Group Plc / Index: AIM / Ticker: EBG / Sector: Mining
9 June 2010
Energybuild Group Plc ('Energybuild' or 'the Group')
Final Results for the 9 month period ended 31 March 2010
Energybuild Group Plc, the Welsh producer of deep mined premium anthracite coal
and surface mined coal, announces itsfinal results for the 9 month period ended
31 March 2010.
Overview:
· Profit before tax for the 9 months ended 31 March 2010 of GBP0.231
million
· Operating profit for the 9 months to 31 March 2010 was GBP0.42 million
(2009* - GBP1.865 million
· Coal sales of GBP6.8 million (2009* - GBP16.380 million)
· Successful private placement took place in December 2009* raising GBP14.5
million gross
· Produced 121,000 tonnes of run of mine coal or 51,000 tonnes of clean
coal from the 18ft seam in the nine month period to March 2010 (2009* - 190,000
tonnes of run of mine coal or 114,000 tonnes of clean coal)
· Continued with the development of the Aberpergwm drift mine with several
milestones achieved during the nine month period
* 2009 comparisons are for the 12 month period to 30 June 2009, following the
change of year end to 31 March
Chairman's statement
I am pleased to provide an update on Energybuild Group Plc's progress to date.
The Company and its subsidiaries are reporting on results for the 9 months ended
31 March 2010, with the comparative period being the 12 months to 30 June 2009.
The Company has shortened its current reporting period to bring it in line with
the reporting period of its 54.7% controlling shareholder Western Coal Corp.
The results for the period are disappointing in comparison to the period to 30
June 2009 but are understandable taking into account the extent of the
development of the mine and the economic environment in which we have operated.
The Group has recovered from a loss before tax of GBP0.99 million for the six
months ended 31 December 2009 to report a profit before tax for the nine months
ended 31 March 2010 of GBP0.231 million.
Financial highlights
Operating profit for the 9 months to 31 March 2010 was GBP0.42 million (2009 -
GBP1.865 million) on coal sales of GBP6.8 million (2009 - GBP16.380 million).
Profit after tax for the nine-month period was GBP0.140 million (2009 - GBP1.317
million).
There was a cash outflow from operations during the 9 months of GBP1.388 million
(2009 - inflow of GBP5.265 million); GBP7.954 million was spent on mine
development activity and plant and machinery (2009 - GBP8.275 million).
A successful private placement took place in December 2009 raising GBP14.5
million gross, GBP9.6 million net of the repayment of loans and expenses. Net
cash at 31 March 2010 was GBP5.0 million.
Operations
The Group continued with the development of the Aberpergwm drift mine with
several milestones achieved during the nine-month period.
One of the most important milestones reached was the successful completion of
the roof bolting trials, despite these taking longer than expected. Following
their completion two "bypass bolters" were introduced underground, with two quad
bolters ordered for delivery in October and December 2010. Successful roof
bolting is expected to support increased production in the second half of the
current financial period.
A cutting machine was introduced into the first production panel in the 18ft
seam with panzer chains and pans as a temporary conveying measure until the two
shuttle cars and breaker are delivered and installed underground.
The team has commenced two drifts from the 18ft seam to the 9ft seam with the
intention of creating an air circuit in the 9ft seam. This is considered to be
the strike seam and it is anticipated that production will commence from this
seam during the current financial year.
The development of the new surface drift, however, has fallen behind target in
the period due to falls of ground caused by fractured geology and coal seams
thrusting up to the surface. These conditions have slowly been overcome and
progress is now being made as the cover above the new drift increases and the
geology stabilises.
As reported in the interim accounts to 31 December 2009, there was a major delay
in obtaining planning consent for opencast developments which affected the
Group's earnings and cash flow in the first six months. The position was
remedied when we received the appropriate planning consent in September 2009.
These operations have been working successfully since coal extraction began in
December 2009.
The coal tip recovery joint venture continues to operate successfully and we are
examining options to expand the operation by acquiring new sites.
The market for the Group's coal remains positive and world coal prices are
hardening after a long recession.
People
Energybuild continued the development of its human resource base with ongoing
apprenticeship and training schemes, while new experienced personnel have also
joined the team with skill sets complementary to the progression of mining
activities and techniques at the Aberpergwm drift mine. We look forward to the
ongoing contribution from our operational employees and thank them for their
commitment during another intensive period.
Outlook
The key asset of the company is the Aberpergwm drift mine which remains in a
development phase. Management are introducing new mining techniques and
equipment while driving a new surface drift and accessing a second seam. These
activities will benefit the operation in the future with increased production.
Operational problems and difficult geology and equipment delays have meant
production levels were lower in the period than expected and these issues will
also affect the first half of the financial year to 31 March 2011. However, we
believe we have overcome most of these issues and can increase production in the
second half and remain confident in the future of your company.
C Cooke
Company Chairman
Date: 8 June 2010
For further information please visit www.energybuild.co.uk or contact:
+-------------+--------------------------+---------------------+
| Rhidian | Energybuild Group Plc | Tel: 01639 722 400 |
| Davies | | |
+-------------+--------------------------+---------------------+
| James Steel | Arbuthnot Securities | Tel: 020 7012 2000 |
+-------------+--------------------------+---------------------+
| Hugo de | St Brides Media & | Tel: 020 7236 1177 |
| Salis | Finance Ltd | |
+-------------+--------------------------+---------------------+
| Paul Youens | St Brides Media & | Tel: 020 7236 1177 |
| | Finance Ltd | |
+-------------+--------------------------+---------------------+
Review of Operations
This review of operations has been prepared to provide additional information to
shareholders to assess the Group's strategies and the potential for those
strategies to succeed. The review of operations contains certain forward
looking statements. These statements are made by the directors in good faith
based on the information available to them up to the time of their approval of
this report and such statements should be treated with caution due to the
inherent uncertainties, including both economic and business risk factors,
underlying any such forward-looking information.
Operations
Energybuild Group Plc is principally a coal miner operating the Aberpergwm mine
and owning the Treforgan coal reserve located in the Neath and Dulais valleys of
South Wales. These have between them 6.8 million tonnes of measured and
indicated coal resources, with a further inferred coal resource of 36.2 million
tonnes and an in situ coal seam resource in excess of 110 million tonnes. The
coal is high quality anthracite.
The Group also operates the Nant y Mynydd and Forest Quarry opencast coal sites
situated on the Aberpergwm Estate for which the Group has a 25-year lease over
2,428 hectares.
The Group has existing sales contracts into the nearby Aberthaw Power Station
and Corus Port Talbot steelworks while it also supplies sized coal into the
local and national domestic markets through its own sales outlet and through a
contract with Coal 4 Energy Limited.
Competitive environment
The number of deep and drift coal mining operations that exist locally has
reduced significantly over recent years to the extent that the last remaining
deep mine in Wales, Tower Colliery, ceased production in January 2008. The
principal competition therefore comes from coal produced abroad and from local
opencast operations.
Regulatory environment
The key legislative requirements which affect the Group are the Mines and
Quarries Act, the Health and Safety at Work Act and the Environmental Act 1990.
These are enforced primarily by the Health and Safety executive and the
Environment Agency Wales.
Macro-economic environment
The economic environment has seen coal prices recovering in the last six months
of the period.
Strategy and objectives
Our objective continues to be creating real shareholder value.
There are three key elements to our strategy for achieving our objective:
· achieve a position in markets capable of long-term growth;
· target investment in developing mining assets under the Group's control,
thus supporting strong organic growth and profitability; and
· focus on acquiring interests in additional coal reserves and move inferred
resources to proven and probable reserves.
We continue to make progress on the three elements of our strategy. We continue
to supply markets capable of long-term growth through our contract into the
Aberthaw Power Station, and have increased sales into the local and domestic
markets for sized coal and commenced deliveries into the Pulverised Coal
Injection (PCI) market in September 2009 after the conclusion of successful
trials of our coal into Corus Port Talbot. We have continued to invest capital
in the development of the Aberpergwm mine in order to access large resources of
coal and increase our production capabilities. This process will, over time,
enable the Group to reclassify inferred resources as measured and indicated coal
resources.
In addition to the above, we have continued operations from both our joint
ventures in coal tip washing and aggregates while our opencast activities
recommenced in December 2009 after receiving planning consent in September 2009.
We continue to purchase coal from third party operators when available at a
competitive margin.
Key performance indicators
The directors monitor performance with reference to clear targets set for key
performance indicators (KPIs).
The financial targets used are:
Sales revenue per tonne of coal sold
Operating cost per tonne of coal sold
These financial targets are supported by non-financial targets which are:
Number of reportable accidents per one hundred thousand man shifts
Environmental incidents
Development metres achieved
+---------------------+---------+---------+-------+
| | 2010 | 2009 | |
| | (9 | (12 | |
| | month | month | |
| | Period) | Period) | |
+---------------------+---------+---------+-------+
| | | | |
+---------------------+---------+---------+-------+
| Sales revenue per | GBP70 | GBP68 | |
| tonne | | | |
+---------------------+---------+---------+-------+
| Operating cost per | GBP63 | GBP57 | |
| tonne | | | |
+---------------------+---------+---------+-------+
| Number of | 11.1 | 7.5 | |
| reportable | | | |
| accidents | | | |
+---------------------+---------+---------+-------+
| Environmental | Nil | Nil | |
| incidents | | | |
+---------------------+---------+---------+-------+
| Development metres | 2,635 | 4,168 | |
+---------------------+---------+---------+-------+
The results in the table show that the sales revenue per tonne increased in the
period due in large part to the increase in sales of metallurgical coal in the
period and the world price of coal increasing in the second half of the year.
Operating costs were predominantly in line with that expected. Unfortunately the
number of reportable incidents increased during the period and management are
focused on significantly reducing the incident level. The number of development
metres achieved was significantly less in the prior period as a result of the
shorter reporting period, the roof bolting trials which delayed advances and
geological disturbances.
Results for the 2010 (9 months) and 2009 (12 months) financial periods
A summary of the key financial results is set out in the table below and
discussed in this section.
+--------------------------+-------+---------+---------+---------+--------------+
| | Revenue | Operating |
| | | profit |
+----------------------------------+-------------------+------------------------+
| | | 2010 | 2009 | 2010 | 2009 |
+--------------------------+-------+---------+---------+---------+--------------+
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------+-------+---------+---------+---------+--------------+
| | | | | | |
+--------------------------+-------+---------+---------+---------+--------------+
| Drift mine | | 4,729 | 9,060 | 98 | 1,340 |
+--------------------------+-------+---------+---------+---------+--------------+
| Opencast | | 1,266 | 4,214 | 54 | 304 |
+--------------------------+-------+---------+---------+---------+--------------+
| Coal blending, sandstone | | | | | |
| & coal tip recovery | | 794 | 3,106 | 273 | 221 |
+--------------------------+-------+---------+---------+---------+--------------+
| | | | | | |
+--------------------------+-------+---------+---------+---------+--------------+
| | | 6,789 | 16,380 | 425 | 1,865 |
+--------------------------+-------+---------+---------+---------+--------------+
| | | | | | |
+--------------------------+-------+---------+---------+---------+--------------+
Review by operation
The directors have organised the business around three major operations being
drift mine, opencast and other (comprising sandstone, coal purchases and coal
tip recovery). Each operation has its own manager who is responsible for
meeting key targets.
The performance for each operation is analysed below:
Drift mine
In the period under consideration the Group successfully implemented its plan to
block out areas of the 18ft seam coal in preparation for production.
The Group produced 121,000 tonnes of run of mine coal, yielding 51,000 tonnes of
clean coal from the 18ft seam in the nine-month period to March 2010 compared to
190,000 tonnes of run of mine coal, yielding 114,000 tonnes of clean coal in the
12 months to June 2009.
The coal yield has dropped due to geological difficulties in the 18ft seam and
also that the coal has been washed to a higher specification in order to deliver
to the PCI market.
Of the tonnage produced, 51,000 tonnes was sold, generating revenues of GBP4.729
million for the period to 31 March 2010.
Work has continued on the mine surface infrastructure in order to cater for the
increased manpower and forecast increases in production.
The Group continues to drive the new drift and has overcome weak ground
conditions in the initial phase to make progress in recent months.
Opencast
The Forest Quarry Opencast site was granted planning consent in September 2009
and began producing coal in late December 2009, after planning pre-conditions
were met including the funding of a restoration bond in the sum of GBP571,000.
Approximately 25,000 tonnes were produced by 31 March 2010, generating revenue
of GBP1.2 million. Operating costs were in line with expectations. The company
has identified a further tonnage of coal for which it will apply for planning
consent and is examining a number of other potential sites on the Aberpergwm
Estate.
During the period a significant level of restoration and aftercare was carried
out on sites mined by the company, together with historical legacy
rehabilitation for planning gain purposes.
Other operations
Other operations comprise coal blending and the Group's two joint ventures being
Sandstone and coal tip recovery which are discussed below. Other operations have
generated an operating profit of GBP273,000 on revenue of GBP794,000 which is
primarily attributable to the profit of GBP398,000 from the coal tip recovery
joint venture and GBP138,000 from coal blending, offset by the allocation of
corporate overheads.
Sandstone
The Group has planning consent to extract 800,000 tonnes of saleable high
quality sandstone on its Nant y Mynydd opencast site, lying above one of its
targeted coal seams. In order to exploit this reserve it has entered into a
joint venture with a local crushing plant operator to quarry, crush and process
the stone. The joint venture partner is using some of the stone in its own
asphalt operations whilst the remainder will be marketed to other aggregate
consumers.
This operation will generate small margins but will allow the Group to lift the
remaining overburden above the coal seam at marginal cost. Overall, 15,000
tonnes of aggregate were sold by the joint venture company in the nine-month
period to 31 March 2010.
Coal blending
The Group purchases coal where available at a price that enables it to make a
margin. 14,000 tonnes were purchased in the nine-month period to 31 March 2010
of which 11,600 tonnes were bought from the joint venture coal tip recovery
scheme.
Coal tip recovery
The joint venture coal tip recovery scheme has had a very good period of
trading, generating a profit before tax of GBP796,000 for the nine-month period
ended 31 March 2010 (2009 - GBP594,000 for the 12 months ended 30 June 2009),
the company's share being GBP398,000.
Resources available to the group
The Group has the following key resources which assist it in the pursuit of its
objectives:
· leases and licences with the Aberpergwm Estate and Coal Authority of over
6.8 million tonnes of measured and indicated coal resources, with a further
inferred coal resource of 36.2 million tonnes and an in situ coal seam resource
in excess of 110 million tonnes for the Aberpergwm/Treforgan mine, together with
planning consent for 15 years;
· 25-year lease over 2,428 acres of the Aberpergwm Estate encompassing all
the mineral rights;
· management team with over 30 years of mining experience in Wales;
· local manpower resources with significant mining experience gained in the
South Wales coalfield; and
· the support of its ultimate holding company, Western Coal Corp., which now
holds an effective interest of 54.7%.
Corporate responsibility
The Group takes its corporate responsibility seriously and is committed to
implementing appropriate policies and systems, including concern for employees
and their health and safety, the environment and the community.
Health and safety
The Group regards health and safety as a very important aspect of its operations
and ensures that it complies with all its obligations and regulations.
It employs a health and safety officer who is supported by other senior
management with the appropriate training.
Training for all staff is continually updated in line with industry requirements
and resources committed towards ensuring that each employee is aware of the
dangers involved in the environment in which they work. Safety inductions take
place for all new employees and weekly safety meetings are held.
The sites operated by the Group are regularly visited by officers from the
appropriate regulatory authorities.
There were five major accidents reported to the Health and Safety Executive in
the period from July 2009 to March 2010, equivalent to an average of 11.1 per
100,000 man shifts worked. A major accident for these purposes is defined as an
accident that results in more than three days work missed.
All sites have emergency procedures in place and the drift mine is covered by
membership of the Approved National Mine Rescue Scheme.
We screen our employees on a regular basis to ensure that any risk to their
health from the work environment is kept to a minimum.
The directors are aware of their own and the Group's responsibility towards
health and safety and the resources that need to be committed.
Environment
The environmental policy of the Group is to mitigate pollution, comply with
environmental legislation and to maintain management systems to a high standard
in order to ensure that environmental incidents are kept to a minimum.
Social and community issues
We support community projects and maintain a Community Fund for that purpose,
and intend to contribute towards this fund annually. The fund will be spent on
projects authorised by the Energybuild Site Liaison Committee; this committee
includes members of the local Community Council on its board.
Outlook
The price of coal has fluctuated in the period under consideration, increasing
in the last six months of the period, and the company expects prices,
particularly of thermal and PCI coal, will continue to increase as the worldwide
recession recedes.
Energybuild believes it has under its control one of the largest high quality
anthracite coal reserves, not only in the UK but in Europe, and the Group is
ideally placed to take advantage of the high demand for this commodity. The
Group is confident that it will be able to sell all of its coal in a rising
market as it seeks to ramp up production to its target of 750,000 tonnes of
clean coal by 2013.
The key underground infrastructure developments are the new surface drift and
accessing the 9ft seam which began in December 2009, and it is management's
intention to allocate more resources to these activities in the current year.
Roof bolting techniques have been successfully introduced in the period as a
means of primary and secondary support in development headings. Although this
has taken longer than expected, the technique should assist in increasing
advance rates and drive down material costs of production. Furthermore, proving
the technique is an important pre requisite to introducing continuous mining
methods in the 18ft and the 9ft seams.
Opencast activities will continue from the Forest Quarry extension in the
current year, with planning consent approved on 22 September 2009, and from the
Nant y Mynydd site as the coal is released from stone activities.
It is anticipated that the coal tip recovery scheme will continue to generate
profits while other sites are being actively examined.
CONSOLIDATED INCOME STATEMENT
9 Month Period Ended 31 March 2010
+----------------------------------+---+--------+-------+---------+----------+
| | | | 9 | 12 |
| | | | months | months |
| | | | ended | ended |
| | | | 31 | 30 |
| | | | March | June |
| | | | 2010 | 2009 |
+----------------------------------+---+----------------+---------+----------+
| | | Note | | GBP'000 | GBP'000 |
+----------------------------------+---+--------+-------+---------+----------+
| | | | | | |
+----------------------------------+---+--------+-------+---------+----------+
| Continuing operations | | | | | |
+----------------------------------+---+--------+-------+---------+----------+
| Revenue | | 5 | | 6,789 | 16,380 |
+----------------------------------+---+--------+-------+---------+----------+
| Cost of sales | | | | (6,020) | (13,736) |
+----------------------------------+---+--------+-------+---------+----------+
| | | | | | |
+----------------------------------+---+--------+-------+---------+----------+
| GROSS PROFIT | | | | 769 | 2,644 |
+----------------------------------+---+--------+-------+---------+----------+
| | | | | | |
+----------------------------------+---+--------+-------+---------+----------+
| Share of profits of joint | | | | 400 | 297 |
| ventures | | | | | |
+----------------------------------+---+--------+-------+---------+----------+
| Profit on disposal of fixed | | | | 20 | 9 |
| assets | | | | | |
+----------------------------------+---+--------+-------+---------+----------+
| Other administration expenses | | | | (764) | (1,085) |
+----------------------------------+---+--------+-------+---------+----------+
| | | | | | |
+----------------------------------+---+--------+-------+---------+----------+
| OPERATING PROFIT | | 6 | | 425 | 1,865 |
+----------------------------------+---+--------+-------+---------+----------+
| | | | | | |
+----------------------------------+---+--------+-------+---------+----------+
| Other income | | | | 15 | - |
+----------------------------------+---+--------+-------+---------+----------+
| Investment income | | 8 | | 40 | 103 |
+----------------------------------+---+--------+-------+---------+----------+
| Finance costs | | 9 | | (249) | (81) |
+----------------------------------+---+--------+-------+---------+----------+
| | | | | | |
+----------------------------------+---+--------+-------+---------+----------+
| PROFIT ON ORDINARY ACTIVITIES | | | | | |
| BEFORE TAXATION | | | | 231 | 1,887 |
+----------------------------------+---+--------+-------+---------+----------+
| | | | | | |
+----------------------------------+---+--------+-------+---------+----------+
| Tax on profit on ordinary | | 10 | | (91) | (570) |
| activities | | | | | |
+----------------------------------+---+--------+-------+---------+----------+
| | | | | | |
+----------------------------------+---+--------+-------+---------+----------+
| PROFIT FOR THE FINANCIAL PERIOD | | | | 140 | |
| ATTRIBUTABLE TO EQUITY HOLDERS | | | | | |
| OF THE PARENT | | | | | 1,317 |
+----------------------------------+---+--------+-------+---------+----------+
| | | | | | |
+----------------------------------+---+--------+-------+---------+----------+
| Earnings per share - from | | | | | |
| continuing operations | | | | | |
+----------------------------------+---+--------+-------+---------+----------+
| Basic | | 11 | | 0.08p | 1.0131p |
+----------------------------------+---+--------+-------+---------+----------+
| Diluted | | 11 | | 0.08p | 1.0131p |
+----------------------------------+---+--------+-------+---------+----------+
| | | | | | |
+----------------------------------+---+--------+-------+---------+----------+
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
9 Month Period Ended 31 March 2010
+-------------------+---------+---------+---------+---------+----------+---------+
| | | Share | Share- | | | Total |
| | Share | premium | based | Merger | Retained | GBP'000 |
| | capital | account | payment | | earnings | |
| | | | reserve | reserve | | |
| | GBP'000 | GBP'000 | GBP'000 | | GBP'000 | |
| | | | | GBP'000 | | |
+-------------------+---------+---------+---------+---------+----------+---------+
| | | | | | | |
+-------------------+---------+---------+---------+---------+----------+---------+
| At 1 July 2008 | 13,000 | 7,325 | - | (2,574) | 313 | 18,064 |
+-------------------+---------+---------+---------+---------+----------+---------+
| Profit for the | - | - | - | - | 1,317 | 1,317 |
| financial year | | | | | | |
+-------------------+---------+---------+---------+---------+----------+---------+
| Credit to equity | | - | | | | 312 |
| for | - | | 312 | - | - | |
| equity-settled | | | | | | |
| share-based | | | | | | |
| payments | | | | | | |
+-------------------+---------+---------+---------+---------+----------+---------+
| Deferred tax on | | - | | | | (88) |
| equity-settled | - | | (88) | - | - | |
| share-based | | | | | | |
| payments | | | | | | |
+-------------------+---------+---------+---------+---------+----------+---------+
| | | | | | | |
+-------------------+---------+---------+---------+---------+----------+---------+
| At 1 July 2009 | 13,000 | 7,325 | 224 | (2,574) | 1,630 | 19,605 |
+-------------------+---------+---------+---------+---------+----------+---------+
| Profit for the | - | - | - | - | 140 | 140 |
| financial period | | | | | | |
+-------------------+---------+---------+---------+---------+----------+---------+
| New shares issued | 9,667 | 4,833 | - | - | - | 14,500 |
+-------------------+---------+---------+---------+---------+----------+---------+
| Share issue | - | (423) | - | - | - | (423) |
| expenses | | | | | | |
+-------------------+---------+---------+---------+---------+----------+---------+
| | | | | | | |
+-------------------+---------+---------+---------+---------+----------+---------+
| At 31 March 2010 | 22,667 | 11,735 | 224 | (2,574) | 1,770 | 33,822 |
+-------------------+---------+---------+---------+---------+----------+---------+
| | | | | | | |
+-------------------+---------+---------+---------+---------+----------+---------+
CONSOLIDATED BALANCE SHEET
As at 31 March 2010
+---------------------------------------+--+--------+----+---------+---------+
| | | | | 31 | 30 |
| | | | | March | June |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | 2010 | 2009 |
+---------------------------------------+--+--------+----+---------+---------+
| | | Note | | GBP'000 | GBP'000 |
+---------------------------------------+--+--------+----+---------+---------+
| NON-CURRENT ASSETS | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| Other intangible assets | | 12 | | 2,133 | 2,133 |
+---------------------------------------+--+--------+----+---------+---------+
| Property, plant and equipment | | 13 | | 31,721 | 24,448 |
+---------------------------------------+--+--------+----+---------+---------+
| Investments | | 14 | | 1,456 | 600 |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | 35,310 | 27,181 |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| CURRENT ASSETS | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| Inventories | | 15 | | 625 | 1,345 |
+---------------------------------------+--+--------+----+---------+---------+
| Trade and other receivables | | 16 | | 2,859 | 1,930 |
+---------------------------------------+--+--------+----+---------+---------+
| Cash and cash equivalents | | | | 4,981 | 528 |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | 8,465 | 3,803 |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| TOTAL ASSETS | | | | 43,775 | 30,984 |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| CURRENT LIABILITIES | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| Trade and other payables | | 18 | | 4,579 | 6,532 |
+---------------------------------------+--+--------+----+---------+---------+
| Obligations under hire purchase | | 17 | | 370 | 146 |
| agreements | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| Deferred income | | 20 | | 167 | 167 |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | 5,116 | 6,845 |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| NON-CURRENT LIABILITIES | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| Long-term provisions | | 22 | | 358 | 213 |
+---------------------------------------+--+--------+----+---------+---------+
| Contingent consideration | | 19 | | 353 | 319 |
+---------------------------------------+--+--------+----+---------+---------+
| Deferred tax | | 21 | | 874 | 783 |
+---------------------------------------+--+--------+----+---------+---------+
| Deferred income | | 20 | | 2,969 | 3,095 |
+---------------------------------------+--+--------+----+---------+---------+
| Obligations under hire purchase | | 17 | | 283 | 124 |
| agreements | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | 4,837 | 4,534 |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| TOTAL LIABILITIES | | | | 9,953 | 11,379 |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| NET ASSETS | | | | 33,822 | 19,605 |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| EQUITY | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| Share capital | | 23 | | 22,667 | 13,000 |
+---------------------------------------+--+--------+----+---------+---------+
| Share premium account | | | | 11,735 | 7,325 |
+---------------------------------------+--+--------+----+---------+---------+
| Share-based payment reserve | | | | 224 | 224 |
+---------------------------------------+--+--------+----+---------+---------+
| Merger reserve | | | | (2,574) | (2,574) |
+---------------------------------------+--+--------+----+---------+---------+
| Retained earnings | | | | 1,770 | 1,630 |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| Equity attributable to equity holders | | | | 33,822 | 19,605 |
| of the parent | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
| | | | | | |
+---------------------------------------+--+--------+----+---------+---------+
CONSOLIDATED CASH FLOW STATEMENT
9 Month Period Ended 31 March 2010
+-------------------------------------------+----------+------+----+---------+---------+
| | | Note | | 9 | 12 |
| | | | | months | months |
| | | | | ended | ended |
| | | | | 31 | 30 |
| | | | | March | June |
| | | | | 2010 | 2009 |
| | | | | GBP'000 | GBP'000 |
+-------------------------------------------+----------+------+----+---------+---------+
| | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| NET CASH (OUTFLOW)/ INFLOW FROM OPERATING | | | | | |
| ACTIVITIES | | 27 | | (1,388) | 5,265 |
+-------------------------------------------+----------+------+----+---------+---------+
| | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| INVESTING ACTIVITIES | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| Interest received | | | | 1 | 103 |
+-------------------------------------------+----------+------+----+---------+---------+
| Purchase of property, plant, equipment | | | | (7,954) | (8,275) |
| and mine development | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| Grant received | | | | - | 11 |
+-------------------------------------------+----------+------+----+---------+---------+
| Proceeds on disposal of property, plant | | | | - | 40 |
| and equipment | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| Repayment/(issue) of loan from/(to) joint | | | | 170 | (350) |
| venture company | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| (Increase)/decrease in mine restoration | | | | (456) | 205 |
| bonds | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| NET CASH USED IN INVESTING ACTIVITIES | | | | (8,239) | (8,266) |
+-------------------------------------------+----------+------+----+---------+---------+
| | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| FINANCING ACTIVITIES | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| Repayment of obligations under hire | | | | (396) | (128) |
| purchase agreements | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| New hire purchase agreements | | | | 568 | 244 |
+-------------------------------------------+----------+------+----+---------+---------+
| Receipt of loan from parent undertaking | | | | 4,300 | - |
+-------------------------------------------+----------+------+----+---------+---------+
| Proceeds on issue of share capital | | | | 10,031 | - |
+-------------------------------------------+----------+------+----+---------+---------+
| Expenses of shares issued | | | | (423) | - |
+-------------------------------------------+----------+------+----+---------+---------+
| | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| NET CASH FROM FINANCING ACTIVITIES | | | | 14,080 | 116 |
+-------------------------------------------+----------+------+----+---------+---------+
| | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| NET INCREASE/(DECREASE) IN CASH AND CASH | | | | | |
| EQUIVALENTS | | | | 4,453 | (2,885) |
+-------------------------------------------+----------+------+----+---------+---------+
| | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| CASH AND CASH EQUIVALENTS AT BEGINNING OF | | | | | |
| PERIOD | | | | 528 | 3,413 |
+-------------------------------------------+----------+------+----+---------+---------+
| | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| CASH AND CASH EQUIVALENTS AT END OF | | | | 4,981 | 528 |
| PERIOD | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
| | | | | | |
+-------------------------------------------+----------+------+----+---------+---------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9 Month Period Ended 31 March 2010
1. GENERAL INFORMATION
Energybuild Group Plc is a company incorporated in the United Kingdom. The
address of the registered office is given on page 1. The nature of the UK
group's operations and its principal activities are set out in the business
review and principal activities section in the directors' report.
These financial activities are presented in pounds sterling because that is the
currency of the primary economic environment in which the Group operates. All
values are rounded to the nearest thousand (GBP'000) unless otherwise indicated.
2. ADOPTION OF NEW AND REVISED STANDARDS
In the current year the group has adopted IFRS 8, operating segments and IAS 1
(revised), Presentation of Financial Statements, IFRS 8 sets out the
requirements for the disclosure of information about an entity's operating
segments on the basis of internal reports about components of the group that are
regularly reviewed by the chief operating decision maker (superseding 1AS 14,
Segment Reporting). The adoption of IFRS 8 has not impacted the group's
reportable operating segments and has had no impact on the group's previously
reported net cash flows, financial position or total comprehensive income,
accordingly no comparative consolidated statement of financial position at 1
July 2008 has been presented. The revised IAS 1 renames the primary financial
statements and requires the inclusion of a statement of changes in equity as a
primary statement. Amendments to IFRS 7, Financial Instruments: Disclosures
became effective during the year, resulting in additional disclosure of fair
value measurements, classified using a fair value hierarchy to reflect the
significance of the measurement inputs. In addition, IAS 23 (revised), Borrowing
Costs, IAS 27 (revised), Consolidated and Separate Financial Statements, IFRS 3
(revised), Business Combinations, IFRIC Interpretation 13, Customer Loyalty
Programmes, IFRIC Interpretation 15, Agreements for the Construction of Real
Estate, IFRIC Interpretation 16, Hedges of a Net Investigation in a Foreign
Operation and IFRIC Interpretation 18, Transfers of Assets from Customers became
effective during the year. The group has no transactions within the scope of
these standards and interpretations, and there is no impact on the group's
results.
The group has not adopted early Related Party Disclosures (effective 1 January
2011). IAS 24 (revised) amends the definition of a related party. This standard
is not expected to significantly impact the group. In addition, IFRS 1
(revised), First-time Adoption of International Financial Reporting Standards
has been issued but is not effective for 2009 year ends and is not applicable to
the group.
Amendments to existing standards (amendments to IFRS 5, IAS 32, IAS 39) have
been issued but are not effective for 2009 year ends and have not been adopted
early by the group. In addition, an amendment to IFRIC Interpretation 16,Hedges
or a Net Investment in a Foreign Operation, IFRIC Interpretation17,
Distributions of Non-cash assets to Owners and IFRIC Interpretation 19,
Extinguishing Financial Liabilities with Equity Instruments have been issued but
are not effective for 2009 year ends. These amendments and interpretations are
not expected to impact the group's results.
The Directors do not anticipate that the adoption of these standards and
interpretations will have a material impact on the Group's financial statements,
other than increasing disclosures, in the period of initial adoption.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union as they
apply to financial statements of the Group for the 9 month period ended 31 March
2010 and applied in accordance with the Companies Act 2006.
The financial statements have been prepared on the historical cost basis. The
principal accounting policies adopted are outlined below.
Basis of consolidation
The consolidated financial information consolidates the financial information of
Energybuild Group Plc and its subsidiary undertakings drawn up to the nine
months ended 31 March 2010.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Jointly controlled entities
A joint venture is an entity over which the Group has joint control, through the
ability to govern financial and operating policy decisions of the economic
activity so as to obtain benefits from it.
The Group accounts for its jointly controlled entities on an equity method of
accounting.
Revenue and revenue recognition
Revenue comprises sales of coal and other external sales. Revenue is generally
recognised when delivery of the product or service has been made and when the
customer has a legally binding obligation to settle under the terms of the
contract and has assumed all the risks and rewards of ownership. In most
instances this is when the product is delivered to the location specified by the
customer, which is typically when despatched, where the customer pays the
transportation costs.
Segmental analysis is presented in note 5 below.
Coal Investment Aid
Coal Investment Aid is received as a contribution towards qualifying
expenditure, as defined by the Department for Business, Innovation and Skills
("BIS"), incurred by the Group. If the expenditure has been charged in the
consolidated income statement, the related Investment Aid is credited to the
consolidated income statement in the same period. When the Investment Aid
relates to mine development or the purchase of plant and equipment, then the
Investment Aid is held on the consolidated balance sheet as deferred income and
is credited to the consolidated income statement over the life of the asset to
which it relates.
Grants
Grants in respect of capital expenditure are credited to a deferred income
account and are released to the income statement over the expected useful lives
of the relevant assets. Grants of a revenue nature are credited to income in
the year to which they relate.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other
leases are classified as operating leases.
Assets held under finance leases are recognised as assets in the balance sheet
at their fair value or, if lower, at the present value of the minimum lease
payments, each determined at the inception of the lease. The corresponding
liability to the lessor is included in the balance sheet as a financial lease
obligation. Lease payments are apportioned between finance charges and
reduction of the lease obligation so as to achieve a constant rate of interest
on the remaining balance of the liability. Finance charges are charged directly
against income.
Rentals under operating leases are charged to the income statement on a
straight-line basis over the lease term.
Operating profit
Operating profit is stated after crediting/ (charging) the share of results of
joint ventures and charging provisions for impairments in investment in
associates, but before investment income and finance costs.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from the initial recognition of goodwill or from the
initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the tax profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current tax assets and liabilities on a net
basis.
Business combinations
The acquisition of subsidiaries is accounted for using the purchase method
except where the acquisition is a common control transaction. The cost of the
acquisition is measured at the aggregate of the fair values, at the date of
exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree, plus
any costs directly attributable to the business combination. The acquiree's
identifiable assets, liabilities and contingent liabilities that meet the
conditions for recognition under IFRS3 are recognised at their fair value at the
acquisition date, except for non-current assets (or disposal groups) that are
classified as held for sale in accordance with IFRS5 Non-current Assets Held for
Sale and Discontinued Operations, which are recognised and measured at fair
value less costs to sell.
The excess of the cost of the business combination over the Group's interest in
the net fair value of the identifiable assets, liabilities and contingent
liabilities recognised is assigned to mineral reserves if the acquiree has
mineral rights which exceed this value, otherwise the balance would be
classified as goodwill. If, after reassessment, the Group's interest in the net
fair value of the acquiree's identifiable assets, liabilities and contingent
liabilities exceeds the cost of the business combination, the excess is
recognised immediately in the income statement.
Contingent consideration
The cost of business combinations is adjusted for the net present value of
contingent consideration at the acquisition date if the adjustment is probable
and can be measured reliably. No adjustment is included in the cost of the
combination at the time of initial accounting for the combination if it is
either not probable or cannot be measured reliably. However, if that adjustment
subsequently becomes probable and can be measured reliably, the additional
consideration is treated as an adjustment to the cost of combination. Once
recorded, the discount in respect of the liability is unwound in the finance
costs to the income statement.
Mineral reserve
The mineral reserves were recognised on the acquisition of Mineral Extraction
and Handling Limited, representing the excess of the fair value of consideration
paid and payable over the fair value of the identifiable assets and liabilities
acquired. Mineral reserves are stated at cost less accumulated amortisation.
Amortisation will be charged on a tonnage extracted basis over the estimated
life of the recoverable reserves.
Property, plant and equipment
Property, plant and equipment are held at cost less accumulated depreciation and
any recognised impairment loss. They are depreciated to their residual value
using the straight-line method over their expected useful lives as follows:
+----------------------+--+-------------------------------------+
| Leasehold buildings | -| Over the period of the lease |
+----------------------+--+-------------------------------------+
| Heavy mining | -| 8 to 20 years |
| equipment | | |
+----------------------+--+-------------------------------------+
| Other plant and | -| 3 to 15 years |
| equipment | | |
+----------------------+--+-------------------------------------+
Assets held under finance leases are depreciated over their useful lives as set
out above.
The gain or loss arising on the disposal or retirement of an asset is determined
as the difference between the sale proceeds and the carrying amount of the
asset, and is recognised in the income statement as part of operating profit.
Mine development costs
The purpose of mine development is to establish secure working conditions and
infrastructure to allow the safe and efficient extraction of recoverable
reserves. The cost of mine development includes all costs, including labour and
materials directly attributable to development of the mine infrastructure and
surface. Depreciation on mine development is not charged until full production
commences or the assets are put to use. On commencement of full production,
depreciation is charged on a tonnage extracted basis over the estimated life of
the recoverable reserves. Prior to coal production, costs incurred are allocated
between mine development costs and operating costs on an appropriate basis
taking into account expected long run operating costs per tonne of the mine.
Restoration and closure costs
The total costs of reinstatement of soil excavation, surface restoration and
mine closure are recognised as a provision on site commissioning when the
obligation arises. The amount provided represents the fair value of expected
costs. Costs are charged to the provision as incurred. A tangible asset is
created for an amount equivalent to the initial provision. This is charged to
the income statement on a unit of production basis over the life of the site,
together with other mine development costs.
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indications exist,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). Where the asset does not generate cash
flows that are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs. An
intangible asset with an indefinite useful life is tested for impairment
annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately, unless the relevant asset is carried at
a revalued amount in which case the impairment loss is treated as a revaluation
decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of an
impairment loss is recognised as income immediately, unless the relevant asset
is carried at a revalued amount in which case the reversal of the impairment
loss is treated as a revaluation increase.
Inventories
Inventories are stated at the lower of cost and net realisable value (cost
comprises direct material costs). Net realisable value represents the estimated
selling price less all estimated costs of completion.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance
sheet when the Group becomes party to the contractual provision of the
instrument.
Trade receivables
Trade receivables are measured at initial recognition at fair value, and are
subsequently measured at amortised cost using the effective interest rate
method. Appropriate allowances for estimated irrecoverable amounts are
recognised in the income statement when there is objective evidence that the
asset is impaired. The allowance recognised is measured as the difference
between the asset's carrying amount and the present value of estimated future
cash flows discounted at the effective interest rate computed at initial
recognition.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits held at call
with banks.
Trade payables
Trade payables are initially measured at fair value, and are subsequently
measured at amortised cost using the effective interest rate method.
Equity instruments
Equity instruments issued by the Group are recorded as proceeds received, net of
direct issue costs.
Provisions
Provisions are recognised when the Group has a present obligation as a result of
a past event and it is probable that the Group will be required to settle that
obligation. Provisions are measured at the directors' best estimate of the
expenditure required to settle the obligation at the balance sheet date and are
discounted to present value where the effect is material.
Share-based payments
The Group has applied the requirements of IFRS2 share-based payments.
The Group issues equity-settled, share-based payments to certain employees.
Equity-settled, share-based payments are measured at fair value at the date of
grant. The fair value determined at the grant date of the equity-settled,
share-based payments is expensed on a straight-line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest.
Fair value is measured by use of a Black-Scholes model. The expected life used
in the model has been adjusted, based on management's best estimate, for the
effects of non-transferability, exercise restrictions and behavioural
considerations.
Going concern
In preparing the financial statements, the directors have considered the current
financial position of the Group and its likely future cash flows. At the date of
signing the financial statements, after making appropriate enquiries and
examining those areas which could give rise to financial exposure, the directors
are satisfied that no material or significant exposures exist and that the Group
will have adequate resources to continue its operations for the foreseeable
future.
In forming this conclusion the directors have reviewed the detailed forecasts
prepared to determine the appropriateness of the going concern presumption. The
forecasts indicate that the Group will be cash generative from its production
activities and the Group will continue its capital investment programme in the
mine project over the next twelve months. The Group recognises that this capital
investment will require a cash outlay in the near term which in turn will enable
the extraction of increased coal tonnage enabling cash generation from its
operations in the future. The Group's forecasts demonstrate that this capital
investment will be financed by capital already raised in the market, the Group's
own internally generated cash flows, and additional income through lease
financing.
These forecasts also reflect a number of factors that depend on the outcome of
future events, the most significant of which are production volumes, operating
costs and the selling price of coal. The directors are satisfied that these
assumptions are reasonable and that they have sufficient headroom and
contingencies built into the forecasts.
Furthermore, the Group has no external bank debt and the directors are of the
opinion that should additional or alternative sources of investment be required,
the Group has sufficient assets, evidence of significant coal reserves and a
developed business plan which would enable it to obtain finance from external
providers.
The directors are therefore satisfied that the Group will have adequate
resources to continue its operations for the foreseeable future and for this
reason the directors continue to adopt the going concern basis in preparing the
financial statements.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of financial statements requires management to make estimates
and assumptions that affect the amounts reported for assets and liabilities at
the balance sheet date and the amounts reported for revenue and expenses during
the year. The nature of estimation means the actual outcomes could differ from
those estimates. The key sources of estimation uncertainty that have
significant risk of causing material adjustment to the carrying amounts of
assets and liabilities for the next financial year are discussed below.
Fair values recognised in business combinations
The estimation of fair value of intangible mineral rights and mineral assets and
associated property, plant and equipment acquired in business combinations
involves estimates over the quantities of minerals that may be recovered and the
technical and commercial feasibility of extraction, which may be highly
uncertain. Generally, fair values assigned to exploration and evaluation assets
are limited so as not to generate negative goodwill where there is significant
uncertainty over the estimates of fair value.
Restoration provision
The estimation of the amount of the restoration provision involves estimates
over expected future cash flows associated with rehabilitation and restoration
activities, which may be highly uncertain. Management has estimated the
provision based on an assessment of the expected future cash flows relating to
certain "clean-up" activities.
Impairment
Determining whether intangible and tangible assets are impaired requires an
estimation of the value in use of the cash generating units to which the asset
has been allocated. The value in use calculation requires the entity to
estimate future cash flows expected to arise from the cash generating unit and a
suitable discount rate in order to calculate present value.
Capitalisation of development costs
Mine development costs are capitalised to the point where production commences
from an economically viable block of coal and these costs are then amortised
over the tonnage of coal expected to be extracted in the future from that block.
Assumptions are made in establishing the viability of the area of coal to be
mined such as expected geology, coal prices, vend, product yield and cost of
development in order to estimate the long run operating costs per tonne of the
mine, which are reviewed and updated. Whilst coal production and development
activity are ongoing simultaneously, costs incurred are allocated between mine
development costs and operating costs on an appropriate basis taking into
account expected long run operating costs per tonne of the mine.
Depreciation of development costs
Capitalised mine development costs are amortised over the tonnage of coal
expected to be extracted in the future. If the estimated amount of coal varies,
this will impact on the amount of the asset which should be carried forward in
the consolidated balance sheet.
Inventory valuation and cost of sales
Coal inventory for the mine is being valued on the basis of estimated normal
costs of production. If these normal costs of production vary from that
estimated, the actual cost of inventory may differ from that recorded in the
balance sheet.
Coal is being extracted and sold during the latter stages of drift mine
development. The cost of such extraction is allocated between mine development
costs in the balance sheet and cost of sales in the income statement in line
with estimated normal operating cost levels for the mine.
Contingent consideration
Contingent consideration is calculated based on future revenues and costs. These
may differ in the future from those expected and may result in variations to the
carrying value of the liability.
5. BUSINESS AND GEOGRAPHICAL SEGMENTS
The Group has adopted IFRS 8 Operating Segments with effect from 1 July 2009.
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the Chief
Executive to allocate resources to the segments and to assess their performance.
In contrast, the predecessor Standard (IAS 14 Segment Reporting) required the
Group to identify two sets of segments (business and geographical) using a risks
and returns approach, with the Group's system of financial reporting to key
management serving only as the starting point for the identification of such
segments.
In considering IFRS 8, however, the Group is satisfied that the business
continues to have only three operating segments - drift mining, opencast mining
and other operations - which is consistent with that reported under IAS 14.
Other operations include coal blending, sandstone and coal tip recovery.
+-------------------------------+---------+----------+------------+---------+
| | | | Other | Total |
| | Drift | Opencast | operations | Period |
| | mine | Period | Period | ended |
| | Period | ended | ended | 31 |
| | ended | 31 March | 31 March | March |
| | 31 | 2010 | 2010 | 2010 |
| | March | GBP'000 | GBP'000 | GBP'000 |
| | 2010 | | | |
| | GBP'000 | | | |
+-------------------------------+---------+----------+------------+---------+
| Revenue | | | | |
+-------------------------------+---------+----------+------------+---------+
| External sales | 4,729 | 1,266 | 794 | 6,789 |
+-------------------------------+---------+----------+------------+---------+
+--------------------------------+----------+--------+----------+--------+----------+---------+----------+--------+----------+
| Result | | | | |
+-------------------------------------------+-------------------+-------------------+--------------------+-------------------+
| Segment result | 98 | 54 | 273 | 425 |
+-------------------------------------------+-------------------+-------------------+--------------------+-------------------+
| | | | | |
+-------------------------------------------+-------------------+-------------------+--------------------+-------------------+
| Operating profit | | | | 425 |
+-------------------------------------------+-------------------+-------------------+--------------------+-------------------+
| Other income | | | | 15 |
+-------------------------------------------+-------------------+-------------------+--------------------+-------------------+
| Investment income | | | | 40 |
+-------------------------------------------+-------------------+-------------------+--------------------+-------------------+
| Finance costs | | | | (249) |
+-------------------------------------------+-------------------+-------------------+--------------------+-------------------+
| | | | | |
+-------------------------------------------+-------------------+-------------------+--------------------+-------------------+
| Profit before tax | | | | 231 |
+-------------------------------------------+-------------------+-------------------+--------------------+-------------------+
| Tax | | | | (91) |
+-------------------------------------------+-------------------+-------------------+--------------------+-------------------+
| | | | | |
+-------------------------------------------+-------------------+-------------------+--------------------+-------------------+
| Profit after tax | | | | 140 |
+-------------------------------------------+-------------------+-------------------+--------------------+-------------------+
| | | | | |
+-------------------------------------------+-------------------+-------------------+--------------------+-------------------+
| Other information | | | Other operations | | |
| | Drift mine | Opencast | Period ended | Total | |
| | Period ended | Period ended | 31 March | Period ended | |
| | 31 March | 31 March | 2010 | 31 March | |
| | 2010 | 2010 | GBP'000 | 2010 | |
| | GBP'000 | GBP'000 | | GBP'000 | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| | | | | | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| Capital additions | 7,185 | 768 | - | 7,953 | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| Depreciation | 470 | 210 | - | 680 | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| | | | | | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| Balance sheet | | | | | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| Assets | | | | | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| Segment assets | 38,357 | 4,262 | 1,156 | 43,775 | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| | | | | | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| Consolidated total assets | | | | 43,775 | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| | | | | | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| Liabilities | | | | | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| Segment liabilities | 8,489 | 1,018 | 446 | 9,953 | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| | | | | | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| Consolidated total liabilities | | | | 9,953 | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| | | | | | |
+--------------------------------+-------------------+-------------------+--------------------+-------------------+----------+
| | | | | | | | | | |
+--------------------------------+----------+--------+----------+--------+----------+---------+----------+--------+----------+
+-------------------------------+---------+----------+------------+---------+
| | | | Other | |
| | Drift | Opencast | operations | Total |
| | mine | Year | Year ended | Year |
| | Year | ended | 30 June | ended |
| | ended | 30 June | 2009 | 30 |
| | 30 | 2009 | GBP'000 | June |
| | June | GBP'000 | | 2009 |
| | 2009 | | | GBP'000 |
| | GBP'000 | | | |
+-------------------------------+---------+----------+------------+---------+
| Revenue | | | | |
+-------------------------------+---------+----------+------------+---------+
| External sales | 9,060 | 4,214 | 3,106 | 16,380 |
+-------------------------------+---------+----------+------------+---------+
Inter-segment sales are charged at prevailing market prices.
+-------------------------------+--------+--------+--------+---------+
| Result | | | | |
+-------------------------------+--------+--------+--------+---------+
| Segment result | 1,340 | 304 | 221 | 1,865 |
+-------------------------------+--------+--------+--------+---------+
| Operating profit | | | | |
+-------------------------------+--------+--------+--------+---------+
| Investment revenue | | | | 1,865 |
+-------------------------------+--------+--------+--------+---------+
| Finance costs | | | | 103 |
+-------------------------------+--------+--------+--------+---------+
| | | | | (81) |
+-------------------------------+--------+--------+--------+---------+
| Profit before tax | | | | |
+-------------------------------+--------+--------+--------+---------+
| Tax | | | | 1,887 |
+-------------------------------+--------+--------+--------+---------+
| | | | | (570) |
+-------------------------------+--------+--------+--------+---------+
| Profit after tax | | | | |
+-------------------------------+--------+--------+--------+---------+
| | | | | 1,317 |
+-------------------------------+--------+--------+--------+---------+
| | | | | |
+-------------------------------+--------+--------+--------+---------+
+-------------------------------+---------+----------+------------+---------+
| Other information | | | Other | |
| | Drift | Opencast | operations | Total |
| | mine | Year | Year ended | Year |
| | Year | ended | 30 June | ended |
| | ended | 30 June | 2009 | 30 |
| | 30 | 2009 | GBP'000 | June |
| | June | GBP'000 | | 2009 |
| | 2009 | | | GBP'000 |
| | GBP'000 | | | |
+-------------------------------+---------+----------+------------+---------+
| | | | | |
+-------------------------------+---------+----------+------------+---------+
| Capital additions | 8,125 | 150 | - | 8,275 |
+-------------------------------+---------+----------+------------+---------+
| Depreciation | 409 | 632 | - | 1,041 |
+-------------------------------+---------+----------+------------+---------+
| | | | | |
+-------------------------------+---------+----------+------------+---------+
| Balance sheet | | | | |
+-------------------------------+---------+----------+------------+---------+
| Assets | | | | |
+-------------------------------+---------+----------+------------+---------+
| Segment assets | 26,602 | 2,387 | 1,108 | 30,097 |
+-------------------------------+---------+----------+------------+---------+
| Unallocated corporate assets | | | | 887 |
+-------------------------------+---------+----------+------------+---------+
| | | | | |
+-------------------------------+---------+----------+------------+---------+
| Consolidated total assets | | | | 30,984 |
+-------------------------------+---------+----------+------------+---------+
| | | | | |
+-------------------------------+---------+----------+------------+---------+
| Liabilities | | | | |
+-------------------------------+---------+----------+------------+---------+
| Segment liabilities | 8,421 | 1,658 | 1,121 | 11,200 |
+-------------------------------+---------+----------+------------+---------+
| Unallocated corporate | | | | 179 |
| liabilities | | | | |
+-------------------------------+---------+----------+------------+---------+
| | | | | |
+-------------------------------+---------+----------+------------+---------+
| Consolidated total | | | | 11,379 |
| liabilities | | | | |
+-------------------------------+---------+----------+------------+---------+
| | | | | |
+-------------------------------+---------+----------+------------+---------+
| | | | | |
+-------------------------------+---------+----------+------------+---------+
Major customers
All of the revenue from opencast operations was generated from one customer,
while GBP3.564 million of revenue from the drift mine was sold to three
customers.
6. OPERATING PROFIT
+-------------------------------------------------+--+---------+---------+
| | | 9 | 12 |
| | | months | months |
+-------------------------------------------------+--+---------+---------+
| | | ended | ended |
+-------------------------------------------------+--+---------+---------+
| | | 31 | 30 |
| | | March | June |
+-------------------------------------------------+--+---------+---------+
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
+-------------------------------------------------+--+---------+---------+
| This has been arrived at after | | | |
| charging/(crediting) | | | |
+-------------------------------------------------+--+---------+---------+
| Credit to income in respect of government | | (126) | (149) |
| grants (see note 20) | | | |
+-------------------------------------------------+--+---------+---------+
| Depreciation of property, plant and equipment | | | |
| (see note 13) | | | |
+-------------------------------------------------+--+---------+---------+
| - owned assets | | 293 | 603 |
+-------------------------------------------------+--+---------+---------+
| - leased assets | | 387 | 438 |
+-------------------------------------------------+--+---------+---------+
| Operating lease rentals | | 37 | 48 |
+-------------------------------------------------+--+---------+---------+
| Staff costs (see note 7) | | 4,765 | 6,771 |
+-------------------------------------------------+--+---------+---------+
| Auditors' remuneration - audit services | | 41 | 36 |
+-------------------------------------------------+--+---------+---------+
| Auditors' remuneration - non-audit services | | 16 | 12 |
+-------------------------------------------------+--+---------+---------+
The analysis of auditors' remuneration is as follows
+-----------------------------------+----------+----------------+---------+---------+
| | | | GBP'000 | GBP'000 |
+-----------------------------------+----------+----------------+---------+---------+
| | | | | |
+-----------------------------------+----------+----------------+---------+---------+
| Fees payable to the company's | | | | |
| auditors for the audit of the | | | 6 | 5 |
| company's financial statements | | | | |
+-----------------------------------+----------+----------------+---------+---------+
| Fees payable to the company's | | | | |
| auditors and their associates for | | | | |
| other services to the Group | | | | |
+-----------------------------------+----------+----------------+---------+---------+
| - The audit of the company's | | | | |
| subsidiaries pursuant to | | | 35 | 31 |
| legislation | | | | |
+-----------------------------------+----------+----------------+---------+---------+
| | | | | |
+-----------------------------------+----------+----------------+---------+---------+
| Total audit fees | | | 41 | 36 |
+-----------------------------------+----------+----------------+---------+---------+
| | | | | |
+-----------------------------------+----------+----------------+---------+---------+
| | | | | |
+-----------------------------------+----------+----------------+---------+---------+
| - Other services pursuant to | | | 11 | 8 |
| legislation | | | | |
+-----------------------------------+----------+----------------+---------+---------+
| - Tax services | | | 5 | 4 |
+-----------------------------------+----------+----------------+---------+---------+
| | | | | |
+-----------------------------------+----------+----------------+---------+---------+
| | | | 16 | 12 |
+-----------------------------------+----------+----------------+---------+---------+
| | | | | |
+-----------------------------------+----------+----------------+---------+---------+
7. INFORMATION REGARDING DIRECTORS AND EMPLOYEES
+------------------------------------+--------+--------+---------+---------+
| | | | 9 | 12 |
| | | | months | months |
+------------------------------------+--------+--------+---------+---------+
| | | | ended | ended |
+------------------------------------+--------+--------+---------+---------+
| | | | 31 | 30 |
| | | | March | June |
+------------------------------------+--------+--------+---------+---------+
| | | | 2010 | 2009 |
| | | | GBP'000 | GBP'000 |
+------------------------------------+--------+--------+---------+---------+
| Directors' emoluments | | | | |
+------------------------------------+--------+--------+---------+---------+
| Emoluments | | | 233 | 253 |
+------------------------------------+--------+--------+---------+---------+
| | | | | |
+------------------------------------+--------+--------+---------+---------+
| | | | GBP'000 | GBP'000 |
+------------------------------------+--------+--------+---------+---------+
| Highest paid director | | | | |
+------------------------------------+--------+--------+---------+---------+
| Emoluments | | | 78 | 98 |
+------------------------------------+--------+--------+---------+---------+
| | | | | |
+------------------------------------+--------+--------+---------+---------+
+-------------------------------------------+--+--------+---------+---------+
| | | | 9 | 12 |
| | | | months | months |
+-------------------------------------------+--+--------+---------+---------+
| | | | ended | ended |
+-------------------------------------------+--+--------+---------+---------+
| | | | 31 | 30 |
| | | | March | June |
+-------------------------------------------+--+--------+---------+---------+
| | | | 2010 | 2009 |
| | | | Number | Number |
+-------------------------------------------+--+--------+---------+---------+
| | | | | |
+-------------------------------------------+--+--------+---------+---------+
| Average number of persons employed | | | | |
| (including executive directors) | | | | |
+-------------------------------------------+--+--------+---------+---------+
| Directors | | | 2 | 2 |
+-------------------------------------------+--+--------+---------+---------+
| Production | | | 205 | 196 |
+-------------------------------------------+--+--------+---------+---------+
| Administration | | | 6 | 4 |
+-------------------------------------------+--+--------+---------+---------+
| | | | | |
+-------------------------------------------+--+--------+---------+---------+
| | | | 213 | 202 |
+-------------------------------------------+--+--------+---------+---------+
| | | | | |
+-------------------------------------------+--+--------+---------+---------+
| | | | GBP'000 | GBP'000 |
+-------------------------------------------+--+--------+---------+---------+
| | | | | |
+-------------------------------------------+--+--------+---------+---------+
| Staff costs during the period (including | | | | |
| directors) | | | | |
+-------------------------------------------+--+--------+---------+---------+
| Wages and salaries | | | 4,330 | 5,856 |
+-------------------------------------------+--+--------+---------+---------+
| Social security costs | | | 435 | 603 |
+-------------------------------------------+--+--------+---------+---------+
| Equity-settled share-based payments | | | - | 312 |
+-------------------------------------------+--+--------+---------+---------+
| | | | | |
+-------------------------------------------+--+--------+---------+---------+
| | | | 4,765 | 6,771 |
+-------------------------------------------+--+--------+---------+---------+
| | | | | |
+-------------------------------------------+--+--------+---------+---------+
GBP2,376,000 (2009 - GBP2,918,000) of wages and salaries costs and GBP239,000
(2009 - GBP302,000) of social security costs have been capitalised as part of
mine development costs.
8. INVESTMENT INCOME
+-----------------------------------+----------+--------+--------+---------+---------+
| | | | | 9 | 12 |
| | | | | months | months |
+-----------------------------------+----------+--------+--------+---------+---------+
| | | | | ended | ended |
+-----------------------------------+----------+--------+--------+---------+---------+
| | | | | 31 | 30 |
| | | | | March | June |
+-----------------------------------+----------+--------+--------+---------+---------+
| | | | | 2010 | 2009 |
| | | | | GBP'000 | GBP'000 |
+-----------------------------------+----------+--------+--------+---------+---------+
| | | | | | |
+-----------------------------------+----------+--------+--------+---------+---------+
| Interest on bank deposits | | | | 40 | 103 |
+-----------------------------------+----------+--------+--------+---------+---------+
| | | | | | |
+-----------------------------------+----------+--------+--------+---------+---------+
9. FINANCE COSTS
+---------------------------------------------+----------+--+-----+---------+---------+
| | | | | 9 | 12 |
| | | | | months | months |
+---------------------------------------------+----------+--+-----+---------+---------+
| | | | | ended | ended |
+---------------------------------------------+----------+--+-----+---------+---------+
| | | | | 31 | 30 |
| | | | | March | June |
+---------------------------------------------+----------+--+-----+---------+---------+
| | | | | 2010 | 2009 |
| | | | | GBP'000 | GBP'000 |
+---------------------------------------------+----------+--+-----+---------+---------+
| | | | | | |
+---------------------------------------------+----------+--+-----+---------+---------+
| Interest on obligations under hire purchase | | | | 18 | 13 |
| | | | | | |
+---------------------------------------------+----------+--+-----+---------+---------+
| Other interest and similar charges | | | | 32 | 13 |
+---------------------------------------------+----------+--+-----+---------+---------+
| Unwinding of discount on provisions | | | | 45 | 55 |
+---------------------------------------------+----------+--+-----+---------+---------+
| Interest on parent company loan | | | | 154 | - |
+---------------------------------------------+----------+--+-----+---------+---------+
| | | | | | |
+---------------------------------------------+----------+--+-----+---------+---------+
| | | | | 249 | 81 |
+---------------------------------------------+----------+--+-----+---------+---------+
| | | | | | |
+---------------------------------------------+----------+--+-----+---------+---------+
10. TAX ON PROFIT ON ORDINARY ACTIVITIES
+-----------------------------------------------+---+--+---------+---------+
| | | | 9 | 12 |
| | | | months | months |
+-----------------------------------------------+---+--+---------+---------+
| | | | ended | ended |
+-----------------------------------------------+---+--+---------+---------+
| | | | 31 | 30 |
| | | | March | June |
+-----------------------------------------------+---+--+---------+---------+
| | | | 2010 | 2009 |
| | | | GBP'000 | GBP'000 |
+-----------------------------------------------+---+--+---------+---------+
| Current tax | | | - | - |
+-----------------------------------------------+---+--+---------+---------+
| Deferred tax expense | | | 91 | 570 |
+-----------------------------------------------+---+--+---------+---------+
| | | | | |
+-----------------------------------------------+---+--+---------+---------+
Corporation tax is calculated at 28% (2009 - 28%) of the estimated assessable
profit for the year. The charge for the year can be reconciled to the profit per
the income statement as follows:
+-------------------------------------------------+----------+--+---------+---------+
| | | | GBP'000 | GBP'000 |
+-------------------------------------------------+----------+--+---------+---------+
| | | | | |
+-------------------------------------------------+----------+--+---------+---------+
| Profit on ordinary activities before tax | | | 231 | 1,887 |
+-------------------------------------------------+----------+--+---------+---------+
| | | | | |
+-------------------------------------------------+----------+--+---------+---------+
| Tax on profit on ordinary activities before tax | | | 65 | 528 |
| at 28% (2009 - 28%) | | | | |
+-------------------------------------------------+----------+--+---------+---------+
| | | | | |
+-------------------------------------------------+----------+--+---------+---------+
| Tax effect of share of results of joint | | | (112) | (83) |
| ventures | | | | |
+-------------------------------------------------+----------+--+---------+---------+
| Tax effect of expenses not deductible for tax | | | 138 | 125 |
| purposes | | | | |
+-------------------------------------------------+----------+--+---------+---------+
| | | | | |
+-------------------------------------------------+----------+--+---------+---------+
| Tax expense for the period | | | 91 | 570 |
+-------------------------------------------------+----------+--+---------+---------+
| | | | | |
+-------------------------------------------------+----------+--+---------+---------+
11. EARNINGS PER SHARE
From continuing operations
The calculation of the basic and diluted earnings per share is based on the
following data:
+---------------------------------------------+--------+-------------+-------------+
| | | 9 | 12 |
| | | months | months |
| | | ended | ended |
| | | 31 | 30 |
| | | March | June |
+---------------------------------------------+--------+-------------+-------------+
| | | 2010 | 2009 |
| | | GBP'000 | GBP'000 |
+---------------------------------------------+--------+-------------+-------------+
| Earnings | | | |
+---------------------------------------------+--------+-------------+-------------+
| Earnings for the purposes of basic and | | 140 | 1,317 |
| diluted earnings per share being net profit | | | |
| attributable to equity holders of the | | | |
| parent | | | |
+---------------------------------------------+--------+-------------+-------------+
| | | | |
+---------------------------------------------+--------+-------------+-------------+
| Number of shares | | | |
+---------------------------------------------+--------+-------------+-------------+
| Weighted average number of ordinary shares | | 166,825,397 | 130,000,000 |
| for the purposes of basic earnings per | | | |
| share | | | |
+---------------------------------------------+--------+-------------+-------------+
| Effect of dilutive potential ordinary | | | |
| shares: | | | |
+---------------------------------------------+--------+-------------+-------------+
| Weighted average number of share warrants | | - | - |
| in issue | | | |
+---------------------------------------------+--------+-------------+-------------+
| | | | |
+---------------------------------------------+--------+-------------+-------------+
| Weighted average number of ordinary shares | | 166,825,397 | 130,000,000 |
| for the purposes of diluted earnings per | | | |
| share | | | |
+---------------------------------------------+--------+-------------+-------------+
| | | | |
+---------------------------------------------+--------+-------------+-------------+
The Group does have options and warrants in issue as disclosed in note 24 but
these are not considered to be dilutive and have been excluded from the weighted
average number of shares for the purpose of diluted earnings per share
calculation.
12. INTANGIBLE FIXED ASSETS
+---------------------------------------------+--------+--------+----------+
| | | | Mineral |
| | | | reserves |
| | | | GBP'000 |
+---------------------------------------------+--------+--------+----------+
| Cost and net book value | | | |
+---------------------------------------------+--------+--------+----------+
| At 31 March 2010 and 30 June 2009 | | | 2,133 |
+---------------------------------------------+--------+--------+----------+
| | | | |
+---------------------------------------------+--------+--------+----------+
13. PROPERTY, PLANT AND EQUIPMENT
+--------------+----------------------+-----------+----------------+-------------+----------------+
| | | | | Surface | |
| | | | Mines | development | |
| | | | and | and | |
| | Leasehold | Plant | surface | restoration | |
| | buildings | and | works | assets | Total |
| | GBP'000 | machinery | GBP'000 | GBP'000 | GBP'000 |
| | | GBP'000 | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| Cost | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| At 1 | 270 | 3,623 | 12,365 | 2,907 | 19,165 |
| July | | | | | |
| 2008 | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| Additions | 243 | 1,684 | 6,198 | 150 | 8,275 |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| Disposals | - | (57) | - | - | (57) |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| At 30 | 513 | 5,250 | 18,563 | 3,057 | 27,383 |
| June | | | | | |
| 2009 | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| Additions | 100 | 651 | 6,631 | 571 | 7,953 |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| At 31 | 613 | 5,901 | 25,194 | 3,628 | 35,336 |
| March | | | | | |
| 2010 | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| Depreciation | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| At 1 | - | 353 | 468 | 1,099 | 1,920 |
| July | | | | | |
| 2008 | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| Charge | 11 | 438 | 277 | 315 | 1,041 |
| for | | | | | |
| the | | | | | |
| year | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| Eliminated | - | (26) | - | - | (26) |
| on | | | | | |
| disposal | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| At 30 | 11 | 765 | 745 | 1,414 | 2,935 |
| June | | | | | |
| 2009 | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| Charge | 32 | 387 | 75 | 186 | 680 |
| for | | | | | |
| the | | | | | |
| year | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| At 31 | 43 | 1,152 | 820 | 1,600 | 3,615 |
| March | | | | | |
| 2010 | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| Net | | | | | |
| book | | | | | |
| value | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| At 31 | 570 | 4,749 | 24,374 | 2,028 | 31,721 |
| March | | | | | |
| 2010 | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| At 30 | 502 | 4,485 | 17,818 | 1,643 | 24,448 |
| June | | | | | |
| 2009 | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
| | | | | | |
+--------------+----------------------+-----------+----------------+-------------+----------------+
The net book value of plant and machinery includes GBP881,973 (2009 -
GBP443,448), related to assets held under hire purchase agreements.
14. INVESTMENTS
The investments consist of bonds held with the Coal Authority and Neath and Port
Talbot Council in respect of mine reinstatement commitments for both drift mine
and opencast activities.
+-------------------------+-----------+------+---------------+------------+---------+----------+
| | | | Mine | Investment | |
| | | | reinstatement | in joint | |
| | | | bonds | ventures | Total |
| | | | GBP'000 | GBP'000 | GBP'000 |
+-------------------------+-----------+------+---------------+------------+--------------------+
| Cost and net book value | | | | | |
+-------------------------+-----------+------+---------------+------------+--------------------+
| | | | | | |
+-------------------------+-----------+------+---------------+------------+--------------------+
| At 1 July 2008 | | | 507 | - | 507 |
+-------------------------+-----------+------+---------------+------------+--------------------+
| Additions | | | 15 | 297 | 312 |
+-------------------------+-----------+------+---------------+------------+--------------------+
| Disposals | | | (219) | - | (219) |
+-------------------------+-----------+------+---------------+------------+--------------------+
| | | | | | |
+-------------------------+-----------+------+---------------+------------+--------------------+
| At 30 June 2009 | | | 303 | 297 | 600 |
+-------------------------+-----------+------+---------------+------------+--------------------+
| Additions | | | 456 | - | 456 |
+-------------------------+-----------+------+---------------+------------+--------------------+
| Share of profit in the | | | - | 400 | 400 |
| period | | | | | |
+-------------------------+-----------+------+---------------+------------+--------------------+
| | | | | | |
+-------------------------+-----------+------+---------------+------------+--------------------+
| At 31 March 2010 | | | 759 | 697 | 1,456 |
+-------------------------+-----------+------+---------------+------------+--------------------+
| | | | | | |
+-------------------------+-----------+------+---------------+------------+--------------------+
| | | 31 | 30 | |
| | | March | June | |
| | | 2010 | 2009 | |
| | | GBP'000 | GBP'000 | |
+--------------------------------------------+---------------+------------+---------+----------+
| Aggregated amounts relating to joint | | | | |
| ventures | | | | |
+--------------------------------------------+---------------+------------+---------+----------+
| Total assets | | 3,391 | 2,359 | |
+--------------------------------------------+---------------+------------+---------+----------+
| Total liabilities | | 1,997 | 1,764 | |
+--------------------------------------------+---------------+------------+---------+----------+
| | | | | |
+--------------------------------------------+---------------+------------+---------+----------+
| Revenues | | 3,385 | 2,282 | |
+--------------------------------------------+---------------+------------+---------+----------+
| Profit after tax | | 799 | 595 | |
+--------------------------------------------+---------------+------------+---------+----------+
| | | | | |
+-------------------------+-----------+------+---------------+------------+---------+----------+
A list of the significant investments in joint ventures - including the name,
country of incorporation, proportion of ownership interest - is given in note 4
to the company's separate financial statements.
15. INVENTORIES
+------------------------------+----+--------+---------+---------+---------+
| | | | | 31 | 30 |
| | | | | March | June |
+------------------------------+----+--------+---------+---------+---------+
| | | | | 2010 | 2009 |
| | | | | GBP'000 | GBP'000 |
+------------------------------+----+--------+---------+---------+---------+
| | | | | | |
+------------------------------+----+--------+---------+---------+---------+
| Finished goods, goods for | | | | | |
| resale and materials | | | | 625 | 1,345 |
+------------------------------+----+--------+---------+---------+---------+
| | | | | | |
+------------------------------+----+--------+---------+---------+---------+
16. OTHER FINANCIAL ASSETS
+-----------------------------------+----------+--------+--------+---------+---------+
| | | | | 31 | 30 |
| | | | | March | June |
+-----------------------------------+----------+--------+--------+---------+---------+
| | | | | 2010 | 2009 |
| | | | | GBP'000 | GBP'000 |
+-----------------------------------+----------+--------+--------+---------+---------+
| Trade and other receivables | | | | | |
+-----------------------------------+----------+--------+--------+---------+---------+
| Trade receivables | | | | 965 | 913 |
+-----------------------------------+----------+--------+--------+---------+---------+
| Other receivables | | | | 135 | 15 |
+-----------------------------------+----------+--------+--------+---------+---------+
| Loans to joint venture (see note | | | | 200 | 370 |
| 29) | | | | | |
+-----------------------------------+----------+--------+--------+---------+---------+
| Prepayments and accrued income | | | | 1,559 | 632 |
+-----------------------------------+----------+--------+--------+---------+---------+
| | | | | | |
+-----------------------------------+----------+--------+--------+---------+---------+
| | | | | 2,859 | 1,930 |
+-----------------------------------+----------+--------+--------+---------+---------+
| | | | | | |
+-----------------------------------+----------+--------+--------+---------+---------+
The average credit period taken on sale was 52 days (2009 - 20 days).
Ageing of past due but not impaired receivables
+--------+--------+--------+--------+---------+---------+
| | | | | GBP'000 | GBP'000 |
+--------+--------+--------+--------+---------+---------+
| 30-60 | | | | 144 | 58 |
| days | | | | | |
+--------+--------+--------+--------+---------+---------+
| 60-90 | | | | - | 1 |
| days | | | | | |
+--------+--------+--------+--------+---------+---------+
| 90-120 | | | | 116 | 12 |
| days | | | | | |
+--------+--------+--------+--------+---------+---------+
| | | | | | |
+--------+--------+--------+--------+---------+---------+
| | | | | 260 | 71 |
+--------+--------+--------+--------+---------+---------+
| | | | | | |
+--------+--------+--------+--------+---------+---------+
The directors consider that the carrying amount of trade and other receivables
approximates their fair value.
Cash and cash equivalents
These comprise cash in hand and deposits held on short-term deposit. The
carrying amount of these assets approximates to their fair value.
Credit risk
The Group's principal financial assets are bank balances and cash, and trade and
other receivables.
The Group's credit risk is primarily attributable to its trade and other
receivables. The amounts presented in the balance sheet are net of allowances
for doubtful receivables, estimated by the Group's management based on prior
experience and its assessment of the current economic environment. The Group has
no provision for doubtful debts and has not recorded any bad debts in the
current or prior periods. There is a concentration of receivables credit risk
with the Group's three principal customers. The directors have concluded that
two are of sufficient size and financial strength so as to not expose it to any
significant credit risk. The third customer went into creditor's voluntary
liquidation after the year end although the Group has not been exposed to any
financial loss. Furthermore, the Group has signed a contract with Coal 4 Energy
Limited since the year-end replacing the lost contract.
The credit risk on liquid funds is limited because the counterparties are banks
with high credit-ratings assigned by the international credit-rating agencies.
There is no significant concentration of credit risk on liquid funds.
17. INTEREST-BEARING LOANS AND BORROWINGS
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | 31 | 30 |
| | | | | March | June |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | 2010 | 2009 |
| | | | | GBP'000 | GBP'000 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Current liabilities | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Hire purchase agreements | | | | 370 | 146 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Non-current liabilities | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Hire purchase agreements | | | | 283 | 124 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
The hire purchase obligations are repayable as follows:
+--------------------------------+----+--------+--------+---------+---------+
| | | | | GBP'000 | GBP'000 |
+--------------------------------+----+--------+--------+---------+---------+
| Hire purchase contracts | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| Within one year | | | | 370 | 146 |
+--------------------------------+----+--------+--------+---------+---------+
| Between one and two years | | | | 283 | 124 |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | 653 | 270 |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
Obligations under hire purchase contracts are secured on the related assets.
+--------------------------------+----+--------+--------+---------+---------+
| | | | | GBP'000 | GBP'000 |
+--------------------------------+----+--------+--------+---------+---------+
| Minimum lease payments | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| Within one year | | | | 398 | 161 |
+--------------------------------+----+--------+--------+---------+---------+
| In the second to fifth years | | | | 315 | 137 |
| inclusive | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | 713 | 298 |
+--------------------------------+----+--------+--------+---------+---------+
| Less : Future finance charges | | | | (60) | (28) |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| Present value of lease | | | | 653 | 270 |
| obligations | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| Present value of minimum lease | | | | | |
| payments | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| Within one year | | | | 370 | 146 |
+--------------------------------+----+--------+--------+---------+---------+
| In the second to fifth years | | | | 283 | 124 |
| inclusive | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| Present value of lease | | | | 653 | 270 |
| obligations | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| Analysed as: | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| Amounts due for settlement | | | | 370 | 146 |
| within 12 months | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| Amounts due for settlement | | | | 283 | 124 |
| after 12 months | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | 653 | 270 |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
It is the group's policy to lease certain of its fixtures and equipment under
hire purchase agreements. The average lease term is 3 years. For the
nine-month period ended 31 March 2010, the average effective borrowing rate was
9.5% (2009 - 10.8%). Interest rates are fixed at the contract date. All leases
are on a fixed repayment basis and no arrangements have been entered into for
contingent rental payments.
All lease obligations are denominated in sterling.
The fair value of the group's lease obligations is approximately equal to their
carrying amount.
The group's obligations under hire purchase agreements are secured by the
lessors' rights over the assets disclosed in note 13.
18. OTHER FINANCIAL LIABILITIES
Trade and other payables
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | 31 | 30 |
| Trade and other payables | | | | March | June |
| | | | | 2010 | 2009 |
| | | | | GBP'000 | GBP'000 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Current liabilities | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Trade accounts payable | | | | 3,134 | 3,869 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Other taxation and social security | | | | 318 | 721 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Accruals | | | | 1,127 | 1,942 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | 4,579 | 6,532 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing costs. The average credit period taken for trade purchases
is 127 days (2009 - 103 days). The directors consider that the carrying amount
of trade and other payables approximates their fair value.
19. CONTINGENT CONSIDERATION
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | 31 | 30 |
| | | | | March | June |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | 2010 | 2009 |
| | | | | GBP'000 | GBP'000 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Non-current liabilities | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Contingent consideration | | | | 353 | 319 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
The contingent consideration is the net present value of the Group's best
estimate of future additional payments expected to be made in respect of
entities previously acquired. The contingent consideration is expected to be
payable as follows:
+--------------------------------+----+--------+--------+---------+---------+
| | | | | GBP'000 | GBP'000 |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| Between two and five years | | | | 353 | 319 |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | GBP'000 | GBP'000 |
+--------------------------------+----+--------+--------+---------+---------+
| Movement in deferred | | | | | |
| consideration | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| At beginning of financial | | | | 319 | 276 |
| period | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| Unwinding of discount | | | | 34 | 43 |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| At end of financial period | | | | 353 | 319 |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
20. DEFERRED INCOME
+----------------------------------+----+-------+----------+----------+----------+--------+----------+--------+----------+--------+----------+
| | | | | 31 March | 30 June | |
+-----------------------------------------------+----------+----------+-------------------+-------------------+-------------------+----------+
| | | | | 2010 | 2009 | |
| | | | | GBP'000 | GBP'000 | |
+-----------------------------------------------+----------+----------+-------------------+-------------------+-------------------+----------+
| | | | | | |
+----------------------------------+----+----------------------------------------+-------------------+-------------------+-------------------+
| Current liabilities | | | | 167 | 167 |
+----------------------------------+----+----------------------------------------+-------------------+-------------------+-------------------+
| Non-current liabilities | | | | 2,969 | 3,095 |
+----------------------------------+----+----------------------------------------+-------------------+-------------------+-------------------+
| | | | | | |
+----------------------------------+----+----------------------------------------+-------------------+-------------------+-------------------+
| | | | | 3,136 | 3,262 |
+----------------------------------+----+----------------------------------------+-------------------+-------------------+-------------------+
| | | | | | |
+----------------------------------+----+----------------------------------------+-------------------+-------------------+-------------------+
| | | | | | | | | | | | |
+----------------------------------+----+-------+----------+----------+----------+--------+----------+--------+----------+--------+----------+
The deferred income relates to the BIS grant movement in respect of the Coal
Investment Aid scheme.
The grants were in relation to costs which have been capitalised as part of mine
development - the grant income is being released to the income statement to
match the depreciation charge on the related mine development assets.
+--------------------------------+----+--------+--------+---------+---------+
| | | | | GBP'000 | GBP'000 |
+--------------------------------+----+--------+--------+---------+---------+
| Movement in deferred income | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| Opening balance | | | | 3,262 | 3,400 |
+--------------------------------+----+--------+--------+---------+---------+
| Grant received | | | | - | 11 |
+--------------------------------+----+--------+--------+---------+---------+
| Amortisation | | | | (126) | (149) |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
| Closing balance | | | | 3,136 | 3,262 |
+--------------------------------+----+--------+--------+---------+---------+
| | | | | | |
+--------------------------------+----+--------+--------+---------+---------+
21. DEFERRED TAX
+-----------------------------+------+---+--------+--------+---------+---------+
| | | | | 9 | 12 |
| | | | | months | months |
+------------------------------------+---+--------+--------+---------+---------+
| | | | | ended | ended |
+------------------------------------+---+--------+--------+---------+---------+
| | | | | 31 | 30 |
| | | | | March | June |
+------------------------------------+---+--------+--------+---------+---------+
| | | | | 2010 | 2009 |
+------------------------------------+---+--------+--------+---------+---------+
| | | | | GBP'000 | GBP'000 |
+------------------------------------+---+--------+--------+---------+---------+
| | | | | | |
+------------------------------------+---+--------+--------+---------+---------+
| Opening balance | | | | 783 | 125 |
+------------------------------------+---+--------+--------+---------+---------+
| Charged to the income statement | | | | 91 | 570 |
+------------------------------------+---+--------+--------+---------+---------+
| Charged to reserves re share-based | | | | - | 88 |
| payment | | | | | |
+------------------------------------+---+--------+--------+---------+---------+
| | | | | |
+----------------------------------------+--------+--------+---------+---------+
| Closing balance | | | | 874 | 783 |
+-----------------------------+----------+--------+--------+---------+---------+
| | | | | |
+----------------------------------------+--------+--------+---------+---------+
| | | | | | | |
+-----------------------------+------+---+--------+--------+---------+---------+
The amounts of deferred taxation provided in the financial statements are as
follows:
+------------------------------------+--------+--------+---------+---------+
| | | | GBP'000 | GBP'000 |
+------------------------------------+--------+--------+---------+---------+
| | | | | |
+------------------------------------+--------+--------+---------+---------+
| Accelerated capital allowances | | | 3,621 | 3,084 |
+------------------------------------+--------+--------+---------+---------+
| Short-term timing differences | | | (464) | (962) |
+------------------------------------+--------+--------+---------+---------+
| Unutilised revenue losses | | | (2,283) | (1,339) |
+------------------------------------+--------+--------+---------+---------+
| | | | | |
+------------------------------------+--------+--------+---------+---------+
| | | | 874 | 783 |
+------------------------------------+--------+--------+---------+---------+
| | | | | |
+------------------------------------+--------+--------+---------+---------+
22. PROVISIONS
+----------------------------+--------+--------+---------+---------+---------+
| | | Restoration costs |
+----------------------------+--------+--------------------------------------+
| | | | | Surface | |
| | | | Drift | mines | Total |
| | | | mines | GBP'000 | GBP'000 |
| | | | GBP'000 | | |
+----------------------------+--------+--------+---------+---------+---------+
| | | | | | |
+----------------------------+--------+--------+---------+---------+---------+
| At 1 July 2008 | | | 135 | 880 | 1,015 |
+----------------------------+--------+--------+---------+---------+---------+
| Additions | | | - | 150 | 150 |
+----------------------------+--------+--------+---------+---------+---------+
| Unwinding of discount | | | 12 | - | 12 |
+----------------------------+--------+--------+---------+---------+---------+
| Utilised | | | - | (964) | (964) |
+----------------------------+--------+--------+---------+---------+---------+
| | | | | | |
+----------------------------+--------+--------+---------+---------+---------+
| At 30 June 2009 | | | 147 | 66 | 213 |
+----------------------------+--------+--------+---------+---------+---------+
| Additions | | | - | 571 | 571 |
+----------------------------+--------+--------+---------+---------+---------+
| Unwinding of discount | | | 12 | - | 12 |
+----------------------------+--------+--------+---------+---------+---------+
| Utilised | | | - | (438) | (438) |
+----------------------------+--------+--------+---------+---------+---------+
| | | | | | |
+----------------------------+--------+--------+---------+---------+---------+
| At 31 March 2010 | | | 159 | 199 | 358 |
+----------------------------+--------+--------+---------+---------+---------+
| | | | | | |
+----------------------------+--------+--------+---------+---------+---------+
Restoration and closure costs - Drift mines
Shaft treatment and pit-top provisions are made to meet the liability to fill
and cap all mine shafts and return pit-top areas to a condition consistent with
the required planning permission. No transfer of economic benefits will arise
until decommissioning of each individual colliery. The current pit-top
provision reflects existing planning permissions that require pit-top areas to
be restored to former use, usually agriculture.
The provision level has been reassessed and the amount of GBP159,000 represents
the cost of the restoration obligations discounted to present day value. The
discount has been released to the income statement. The initial provision is
not expected to be utilised for at least ten years.
The provision along with the mine life is reconsidered annually.
Restoration and closure costs - Surface mines
This provision relates to the total estimated costs of the reinstatement of soil
excavation and of surface restoration such as topsoil replacement and
landscaping. Restoration costs will be payable when individual sites are
completed, and payments against aftercare liabilities will extend beyond the
life of each contract. The costs accrued are expected to be incurred during the
next two years. The restoration liability is expected to be completed in the
near term and therefore discounting the provisions is not required.
23. CALLED UP SHARE CAPITAL
+--------------------------------------------------+----------+----------+----------+---------+---------+
| | | | | 31 | 30 |
| | | | | March | June |
+--------------------------------------------------+----------+----------+----------+---------+---------+
| | | | | 2010 | 2009 |
| | | | | GBP'000 | GBP'000 |
+--------------------------------------------------+----------+----------+----------+---------+---------+
| Authorised | | | | | |
+--------------------------------------------------+----------+----------+----------+---------+---------+
| 500,000,000 ordinary shares of 10p each | | | | 50,000 | 50,000 |
+--------------------------------------------------+----------+----------+----------+---------+---------+
| | | | | | |
+--------------------------------------------------+----------+----------+----------+---------+---------+
| Called up, allotted and fully paid | | | | | |
+--------------------------------------------------+----------+----------+----------+---------+---------+
| 130,000,000 ordinary shares of 10p each | | | | 13,000 | 13,000 |
+--------------------------------------------------+----------+----------+----------+---------+---------+
| 96,666,667 ordinary shares of 10p each | | | | 9,667 | - |
+--------------------------------------------------+----------+----------+----------+---------+---------+
| | | | | | |
+--------------------------------------------------+----------+----------+----------+---------+---------+
| At 31 March 2010 | | | | 22,667 | 13,000 |
+--------------------------------------------------+----------+----------+----------+---------+---------+
| | | | | | |
+--------------------------------------------------+----------+----------+----------+---------+---------+
During the period, 96,666,667 ordinary shares of 10p each were issued at a
premium of 5p each, giving rise to share premium of GBP4,833,000, against which
expenses of GBP423,000 were charged. Of the shares issued in the period,
29,790,127 were for the conversion of the Western Coal Corp. loan as described
in note 29.
24. SHARE-BASED PAYMENTS
Equity-settled directors' and certain other parties' warrants
During the year ended 30 June 2007, the company issued warrants to directors and
certain other parties of the company. Warrants are exercisable at a price of
20p for three or four years from the date of grant. All vesting conditions had
been met on the date of grant.
Details of the warrants outstanding during the period are as follows:
+-----------------------------------+------------+----------+------------+----------+
| | 31 March 2010 | 30 June 2009 |
+-----------------------------------+-----------------------+-----------------------+
| | Number | Weighted | Number | Weighted |
| | of | average | of | average |
| | warrants | exercise | warrants | exercise |
| | | price | | price |
| | | GBP | | GBP |
+-----------------------------------+------------+----------+------------+----------+
| | | | | |
+-----------------------------------+------------+----------+------------+----------+
| Outstanding at the beginning and | 10,000,000 | 0.20 | 10,000,000 | 0.20 |
| end of period | | | | |
+-----------------------------------+------------+----------+------------+----------+
| | | | | |
+-----------------------------------+------------+----------+------------+----------+
| Exercisable at the end of the | 10,000,000 | 0.20 | 10,000,000 | 0.20 |
| period | | | | |
+-----------------------------------+------------+----------+------------+----------+
| | | | | |
+-----------------------------------+------------+----------+------------+----------+
No warrants were exercised during the nine month period or the prior year. The
warrants outstanding at 31 March 2010 and 30 June 2009, when issued, had a
weighted average exercise price of GBP0.20 and a weighted average remaining
contractual life of 3.3 years. 4,000,000 warrants were granted on 15 May 2007.
6,000,000 warrants were granted on 15 May 2006. The aggregate of the estimated
fair values of the warrants granted on those dates is GBP149,094. The inputs
into the Black-Scholes model are as follows:
+-------------------------------------------+----------+----------+-------+--------+--------+
| | | | | 31 | 30 |
| | | | | March | June |
| | | | | 2010 | 2009 |
+-------------------------------------------+----------+----------+-------+--------+--------+
| | | | | | |
+-------------------------------------------+----------+----------+-------+--------+--------+
| Weighted average share price | | | | 15p | 15p |
+-------------------------------------------+----------+----------+-------+--------+--------+
| Weighted average exercise price | | | | 20p | 20p |
+-------------------------------------------+----------+----------+-------+--------+--------+
| Expected volatility | | | | 16% | 16% |
+-------------------------------------------+----------+----------+-------+--------+--------+
| Expected life | | | | 3 | 3 |
| | | | | years | years |
+-------------------------------------------+----------+----------+-------+--------+--------+
| Risk-free rate | | | | 5.5% | 5.5% |
+-------------------------------------------+----------+----------+-------+--------+--------+
| Expected dividend yield | | | | 0% | 0% |
+-------------------------------------------+----------+----------+-------+--------+--------+
Equity-settled directors' and certain employees' share options
The company issued 7,500,000 share options to directors and senior management of
the group on 16 July 2008. The options are exercisable at a price of 30p after
16 July 2010. All vesting conditions had been met on the date of grant.
Details of the options outstanding at the end of the period are as follows:
+------------------------------------+-----------+----------+------+----+----------+
| | 31 March 2010 | 30 June 2009 |
+------------------------------------+-----------------------------+---------------+
| | Number | Weighted | Number | Weighted |
| | of | average | of | average |
| | options | exercise | options | exercise |
| | | price | | price |
| | | GBP | | GBP |
+------------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------------+-----------+----------+-----------+----------+
| Outstanding at the beginning of | 7,500,000 | 0.30 | - | - |
| period | | | | |
+------------------------------------+-----------+----------+-----------+----------+
| Granted during the period | - | | 7,500,000 | 0.30 |
+------------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------------+-----------+----------+-----------+----------+
| Outstanding at the end of the | 7,500,000 | 0.30 | 7,500,000 | 0.30 |
| period | | | | |
+------------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------------+-----------+----------+-----------+----------+
| Exercisable at the end of the | 7,500,000 | 0.30 | 7,500,000 | 0.30 |
| period | | | | |
+------------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------------+-----------+----------+-----------+----------+
| | | | | | |
+------------------------------------+-----------+----------+------+----+----------+
No options were exercised during the year or the prior year. The options
outstanding at 31 March 2010 and 30 June 200, when issued had a weighted average
exercise price of GBP0.30 and a weighted average remaining contractual life of
2.1 years. The aggregate of the estimated fair values of the options granted on
those dates is GBP311,843.
The inputs into the Black-Scholes model are as follows:
+-------------------------------------------+----------+----------+-------+--------+--------+
| | | | | 31 | 30 |
| | | | | March | June |
| | | | | 2010 | 2009 |
+-------------------------------------------+----------+----------+-------+--------+--------+
| | | | | | |
+-------------------------------------------+----------+----------+-------+--------+--------+
| Weighted average share price | | | | 23p | 23p |
+-------------------------------------------+----------+----------+-------+--------+--------+
| Weighted average exercise price | | | | 30p | 30p |
+-------------------------------------------+----------+----------+-------+--------+--------+
| Expected volatility | | | | 51% | 51% |
+-------------------------------------------+----------+----------+-------+--------+--------+
| Expected life | | | | 562 | 562 |
| | | | | days | days |
+-------------------------------------------+----------+----------+-------+--------+--------+
| Risk-free rate | | | | 5% | 5% |
+-------------------------------------------+----------+----------+-------+--------+--------+
| Expected dividend yield | | | | 0% | 0% |
+-------------------------------------------+----------+----------+-------+--------+--------+
Expected volatility was determined by the volatility of the share price since
listing.
25. OPERATING LEASE ARRANGEMENTS
The company has leases in relation to the land and buildings from which it
operates.
Annual rent is payable to the Aberpergwm Estate (Jersey) Limited and the
Forestry Commission on a unit of production basis over the period of the lease
which expires in more than five years' time.
Fixed annual rent is payable in respect of the Treforgan lease in the sum of
GBP12,000 to Mr M R and Mrs K P Davies - see note 29.
26. CAPITAL COMMITMENTS
There were capital commitments at the end of the nine month period of GBP1
million for shuttle cars and breaker and GBP1.4 million for two Quad bolters
from Joy Mining Machinery Limited (2009 - GBPnil).
27. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | 9 | 12 |
| | | | | months | months |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | ended | ended |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | 31 | 30 |
| | | | | March | June |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | 2010 | 2009 |
| | | | | GBP'000 | GBP'000 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Profit from operations | | | | 140 | 1,317 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Adjustment for: | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Investment revenues | | | | (40) | (103) |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Finance costs | | | | 249 | 81 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Deferred tax | | | | 91 | 570 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Depreciation of property, plant and | | | | 680 | 1,041 |
| equipment | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Profit on sale of fixed assets | | | | (20) | (9) |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Amortisation of government grant | | | | (126) | (149) |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Increase/(decrease) in provisions | | | | 145 | (814) |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Share of joint venture profits | | | | (400) | (297) |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Equity-settled share-based payments | | | | - | 312 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Operating cash flows before movement in | | | | 719 | 1,949 |
| working capital | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
| (Increase)/decrease in receivables | | | | (1,037) | 928 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| (Decrease)/Increase in payables | | | | (1,754) | 2,527 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Decrease/(increase) in inventory | | | | 720 | (113) |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Cash (utilised)/generated by operations | | | | (1,352) | 5,291 |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Interest paid | | | | (36) | (26) |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
| Net cash (outflow)/inflow from operating | | | | (1,388) | 5,265 |
| activities | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
| | | | | | |
+-------------------------------------------+----------+----------+--------+---------+---------+
28. FINANCIAL INSTRUMENTS
Capital risk management
The Group manages its capital to ensure that the Group will be able to continue
as a going concern while maximising the return to shareholders through the
optimisation of the debt and equity balance. The capital structure of cash and
cash equivalents and equity attributable to equity holders of the parent
comprising issued capital, reserves and retained earnings, is disclosed in the
balance sheet.
The Group is not subject to externally imposed capital requirements.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including
the criteria for recognitions, the basis of measurement and the basis on which
income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument, are disclosed in note 3 to the
financial statements.
Financial risk management
The board manages the financial risks of the Group. These risks may include
market risk (including currency risk, fair value interest rate risk and price
risk), credit risk, liquidity risk and cash flow interest rate risk.
Market risk
The Group's activities have not yet exposed it significantly to the financial
risks of changes in foreign currency exchange rates and interest rates. If these
risks arise in future the Board will consider whether it is appropriate to enter
into derivative financial instruments to manage its exposure to interest rate
and foreign currency risk.
Credit risk management
Credit risk refers to the risk that a customer will default on its contractual
obligations resulting in financial loss to the Group. The Group has adopted a
policy of only dealing with creditworthy customers and obtains sufficient detail
on creditworthiness before making terms available.
Trade receivables consist of a small number of customers at present. However,
as the customer base grows the evaluation of customer creditworthiness will
become more important. Ongoing credit evaluation is performed on the financial
condition of accounts receivable. No credit guarantee insurance has been
obtained at present as none of the group's customers has yet been identified as
a credit risk.
The Group is exposed to three major customers. Of these three customers the
directors have concluded that two are of sufficient size and financial strength
so as to not expose it to any significant credit risk. The third customer went
into creditor's voluntary liquidation after the year end although the Group has
not been exposed to any financial loss. Furthermore, the Group has signed a
contract with Coal 4 Energy Limited since the year-end replacing the lost
contract.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the board of
directors. The Group manages liquidity risk by maintaining adequate cash
reserves and continuously monitors forecast and actual cash flows. It has no
bank borrowing at present.
Liquidity
The Group expects to meet its obligations from its cash reserves, its operating
cash flows and external financing.
The only interest bearing liabilities relate to the hire purchase arrangements
as detailed in note 17. The maturity profile of the Group's financial
liabilities is indicated by their presentation in the balance sheet and related
notes.
Fair value of financial instruments
The fair value of non-derivative financial assets and liabilities is considered
to equal the carrying value of the related assets and liabilities in the
financial statements. The Group does not presently have any derivative financial
instruments or any other financial instruments measured at fair value.
29. RELATED PARTY TRANSACTIONS
During the period the Group received a loan from Western Coal Corp. in the sum
of GBP4.3 million at an interest rate of 12% per annum. This loan and all
accrued interest were converted into shares upon the private placement that took
place in December 2009.
The Group purchased coal to the value of GBP1,012,000 from its joint venture
coal tip washing business, Energy Recovery Investments Limited and sold
aggregate to the value of GBP121,065 to its joint venture aggregates business,
Energybuild Aggregates Limited.
As at the period-end the Group owed GBP423,614 (2009 - GBP487,354) to
Energybuild Recovery Investments Limited.
As described in note 19, the Group continues to record contingent consideration
of GBP353,000 (2009 - GBP319,000) in respect of the lease previously granted by
Rhidian Davies to Mineral Extraction Handling Limited (MEHL) which is equal to
1.85 per cent of the net revenue of the Group which is attributable to the
Treforgan Mine after the deduction of operating mine costs.
Energy Recovery Investments Limited has repaid the loan borrowed in the previous
financial year to the sum of GBP170,000. Interest totalling GBP85,079 has been
charged at a rate of 15% per annum and is secured by a fixed and floating charge
on the assets of that company.
30. ULTIMATE PARENT
From 1 August 2008 to 13 July 2009, the ultimate parent company and controlling
party was considered to be Cambrian Mining Plc (now Cambrian Mining Limited). On
13 July 2009 Western Canadian Coal Corp. (Western Coal Corp.) acquired 100%
interest in Cambrian Mining Limited and now has a 54.7% interest in Energybuild
Group Plc. Western Coal Corp. is now considered to be the ultimate parent and
controlling party.
Western Coal Corp. is the parent of the smallest and largest group of which the
company is a member and for which group financial statements are drawn up.
Copies of the financial statements of Western Coal Corp. are available from that
Company's registered office at 1600-925 West Georgia Street, Vancouver, British
Columbia, V6C 3L2 or from the company's website, Westerncoal.com.
* * ENDS * *
Notes:
Energybuild Group Plc is an AIM listed developer and producer of Welsh
anthracite and surface mined coal. The Company is presently developing the
Aberpergwm Mine and adjoining underground anthracite coal reserves and resources
located in the Neath and Dulais Valleys of South Wales. The mine has a proven
and probable coal reserve of 6.8 million tonnes and estimated recoverable
inferred coal resource of 36.9 million tonnes. Energybuild also operates the
nearby Nant y Mynydd and Forest Quarry surface opencast coal and stone mining
areas and has identified further possible opencast sites within the Aberpergwm
Surface Lease for potential development.
Western Coal is a producer of high quality metallurgical coal from mines in
northeast British Columbia (Canada) and high quality metallurgical coal and
compliant thermal coal from mines located in West Virginia (USA). Western Coal
also owns approximately 55% of Energybuild Group Plc (EBG: AIM) which produces
high quality anthracite and metallurgical coal in South Wales (UK). The company
is headquartered in Vancouver, BC, Canada, and trades on the AIM and TSX stock
exchanges under the symbol "WTN". More information can be found at
www.westerncoal.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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