UK Coal in sale of land to help pay down debt

The Doncaster-based group also said it is in talks with all the major housebuilders about setting up joint ventures to develop its brownfield sites.

The news came as the group announced a 129.1m pre-tax loss in 2009, following problems at all four of its underground mines. The loss compares with a pre-tax loss of 15.6m in 2008.

Last month the group said it was assessing a merger approach from coal miner Hargreaves Services that could mitigate the effects of its exposure to deep mines.

But yesterday Hargreaves Services said there had been unavoidable delays to the start of due diligence because of UK Coal's other commitments.

Hargreaves reiterated that discussions remain at a very preliminary stage and many analysts believe they will come to nothing.

Nick Spoliar at Altium Securities said: "With no certainty that a transaction will result, we reiterate our comment on March 11 that 'we have seldom seen an announcement more thickly encrusted with qualifications'."

The initial announcement that the two were in talks was made at a very preliminary stage.

UK Coal is keen to pay down debts which stood at 182m at the year end, but now stand at 236m.

Chief executive Jon Lloyd said that reducing debt has become paramount for the group. "It has become a situation, we would have preferred not to get to this level," he said.

The group has increased its loan facilities by up to a further 30m.

The group has 28,000 acres of agricultural land, principally arable and pasture, and intends to sell around 9,000 acres. Mr Lloyd said the land was scattered all over the country from Leicestershire up to the Scottish border. "We have seen a strong interest in the land. We are working through what we want for surface mining and what will never be mined," he said.

He added that he expects to see significant sales in Yorkshire, but the sites are yet to be confirmed.

Mr Lloyd said the group has around 12,000 acres of brownfield, of which around 4,500 will be developed while the rest is used as parkland or other green space.

The value of its property portfolio fell to 394m in 2009, down from 422m in 2008, although it showed an improvement in the second half.

UK Coal's total production fell to 7.0 million tonnes in 2009, from 7.9 million tonnes in 2008.

Output should rise to 7.6 million tonnes in 2010, although a difficult start to this year means it produced only 1.0 million tonnes in the first quarter.

The group expects three of its deep mines to be running at full production over the next month. A new seam at Kellingley in Yorkshire was brought into production last month while the new seam at Thoresby in Nottinghamshire commenced in the first week of April. Daw Mill near Coventry was completed over the past few days.

The fourth deep mine, the Welbeck colliery in Nottinghamshire, was set to close in the first quarter but will now continue operating until May.

The group expects to see a real step up in revenues from the middle of 2011.

Pay freeze for directors

UK Coal directors' salaries have been frozen in light of last year's performance.

The company said chief executive Jon Lloyd had his pay frozen at 375,000 while finance director David Brocksom saw his pay remain at 234,675.

Bonuses have also been cut after targets on safety, cash flow, profit and group coal sales were missed.

In July, a worker at the Thoresby site died when a stack of pipes being unloaded underground slipped from the transport vehicle.

This accident was followed by a fatality at the Kellingley mine, resulting in the Health and Safety Executive (HSE) preventing the firm from continuing to operate on the affected face until it had replaced components in its roof supports.