UK Coal suffers heavy losses

The UK’s biggest coal miner warned that it was in a “poor position” as it published its results for the year ended December 25 2010.

Jonson Cox, the Doncaster-based company’s chairman, said: “The group delivered a further year of poor operational performance with a pre-tax loss of £124.6m, a loss per share of 41.8p and operating cash outflow of £35m. These results follow pre-tax losses of £129.1m in 2009 and £15.6m in 2008, bringing us to three years of unacceptable performance in a row.

“The board is determined to arrest the trend of under-delivery and to seek value for our shareholders. The viability of UK Coal over the medium term depends on appropriately rewarding the equity capital required to finance the business. The board fully appreciates that investors deserve a far better return than they have experienced over recent years. Over the last three months we have taken some immediate and difficult steps to improve performance, while a full strategic plan is developed.”

In a statement to accompany the results, UK Coal said: “It is clear that the group is in a poor position: over-financed by debt, encumbered with production costs which are too high and over exposed to the market for brownfield property. The board has taken stock of this position and is determined to arrest the trend of under-delivery and to seek value for our shareholders.”

Mr Cox said UK Coal will need to carry out difficult changes which will require the support of its employees, trade unions, banks, suppliers and customers.

He added: “With this support, the board is determined to do its best to re-create a safe and profitable group over the medium term for employees, other stakeholders and our long-suffering shareholders.”