UK Coal shares improve slightly as senior directors step down

The Doncaster firm is to split responsibility for its coal and property operations after a grim year in which it has been hit by geological problems at its deep mines, safety concerns and the impact of the recession on the coal market.

Jon Lloyd will leave the company, having seen its shares lose more than 92 per cent of their value since he became chief executive.

Britain's biggest miner plans to appoint an executive chairman, who would be accountable for the managing directors of the two businesses.

Current chairman David Jones will also leave the group.

The market gave a modest welcome to the planned reshuffle, with shares in UK Coal closing at 38p last night, up 2p.

The firm said the two divisional managing directors would sit on the board.

Gareth Williams, group mining director, will head the mining division from August 1 and Owen Michaelson, non-executive director and a representative of Peel Holdings, will leave Peel to become full-time managing director of the property division. Peel is the largest shareholder of UK Coal, having 28.3 per cent.

Mr Williams, who was raised in New Zealand, was appointed to the board as mining director on February and previously worked at Anglo Coal, the thermal coal unit of Anglo American.

Mr Michaelson, a chartered surveyor, has been a non-executive director since October 2007.

It is understood that UK Coal hopes to have an executive chairman in place by the end of the year but there is no firm timescale.

Last week UK Coal reported a 94m half-year loss but at the time Mr Lloyd said progress with its deep mines, coal contracts and developing its vast estate showed it was "moving in the right direction".

It owns the bulk of the former British Coal's coalfields, including Daw Mill deep mine in the West Midlands, Thoresby in Nottinghamshire and Kellingley, near Knottingley, in West Yorkshire.

All three have now been fully ramped up.

Total production in the first six months of the year was 2.7 million tonnes, down from 3.7 million tonnes a year earlier.

Yesterday Mr Jones said the firm had completed the transition of its deep mining business to three mines and that the legacy contracts, which have constrained UK Coal over many years, will be largely completed next year.

"In parallel, our property business has demonstrated the substantial value it can realise and, over the coming years, will be moving into its development phase."

Shares in UK Coal lost almost two-thirds of their value in the past year and have slumped 92 per cent since Mr Lloyd succeeded Gerry Spindler as chief executive in September 2007.

Charles Kernot, an analyst at Evolution Securities, stuck to a "buy" recommendation for UK Coal, saying: "The creation of the two separate business units for mining and property sounds sensible as this should enable each very different division to focus on its own challenges and opportunities."

COMPANY BEGINS TO RISE ABOVE PROBLEMS

UK Coal has endured a poor year but there are signs it is coming to terms with its problems.

Production at its three deep mines is continuing after millions of pounds of upgrades and it can now sell coal on better terms, having rid itself of legacy contracts which meant it was selling coal at weak prices.

It is also making progress in cutting its debt pile and wants to sell part of its estate. It hopes to complete the majority of its planned disposal of agricultural land by the end of the year. UK Coal was in merger talks for three months with Hargreaves Services, which owns Maltby colliery near Rotherham, but in June the rival walked away from a deal when its scale and complexity became clear.