Investor blow as ATH cuts dividend

The Doncaster-based group, one of the UK's biggest coal miners, said it intends to write down the value of Glenmuckloch by 750,000 as it approaches the end of its life.

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

The group's shares closed down 7.25p to 53p.

Analyst Asa Bridle at Seymour Pierce said that while the top line looks secure enough, he was lowering his pre-tax profit forecast from 4m to 2.5m. Due to the problems faced this year, ATH expects to downgrade the final dividend for the year to 2.0p, taking the full year total to 3.0p – half that of last year's.

Analysts at Fairfax said: "Clearly the results are going to be disappointing and the cut in the dividend will no doubt impact the share price as this has long been a yield story."

But they added that the company does not appear to be in any longer term difficulty as its reserves are now at a higher level than ever before. The company, which competes with Doncaster-based UK Coal and Hargreaves Services, said proved reserves currently stand at six million tonnes, with total reserves of 8.5 million tonnes.

ATH went into the red during the first half after floods and freezing temperatures hit coal production last winter.

A combination of the floods in Cumbria and the heavy snow and freezing temperatures in Scotland hit the group hard.

For the six months to April 4, ATH reported a pre-tax loss of 2.9m, compared with a profit of 90,000 last time.

Yesterday it said sales in the second half have recovered strongly, with volumes for the full year approaching expected levels of 1.8 million tonnes. Sales prices averaged over 43 per tonne in the second half, in line with expectations.