ATH warns over trading and dividend

The Doncaster-based group warned unexpected geological conditions at its Glenmuckloch mine in Scotland has reduced production.

ATH said as the mine is nearing the end of its life, it has decided to write down the value of remaining work in progress, worth around 750,000.

"This writedown, together with the one-off costs associated with recovering sales volumes from the group's other mines,has significantly impacted trading performance for the year," said the group.

Shares fell more than 12 per cent in early trading to 53p a share.

ATH said despite this, its reserves of 8.5 million tonnes are higher than at any other point in its history.

The group has committed to investing 14m in mines over the next year, and said this investment, combined with old contracts to sell coal at low prices, has forced it to slash the final dividend.

It plans to pay a final dividend in January of 2p a share, making a total 2010 dividend of 3p per share. That is less than half the 6.15p payout in 2009.

ATH insisted its outlook is bright, following July's sale of its regeneration business to a newly-formed company, RecyCoal, headed by its former chief executive Tom Allchurch.

It said: "The new executive team believe that the investments being made in developing the group's new mines, and its strong reserve base when combined with significantly improving selling prices which will become available as and when the legacy contracts fall away, will generate substantial improvements to future revenues and margins for the group.

"The first of these legacy contracts expires during the next 18 months and the group is already looking at opportunities to enter into new sales contracts with electricity generators."