By Max Clarke
The UK’s largest coal mining company, UK Coal, is continuing to struggle with after tax losses close to £125 million for the second year running.
Goal gas recovery and investment in windfarms, amongst other forays into the expanding renewables market have failed to stem the losses of the FTSE 250 company.
In order to stem bottom line losses the company, which owns some 40,000 acres of land, sold 1,500 acres of agricultural property and intend to develop 30,000 homes on its remaining land assets over the coming decade.
A Strategic Recovery Review to address ‘deep rooted’ problems is also underway but the recent doubling in the cost of deep ground coal mining, from £28 to £56 per tonne, poses serious barriers to the company’s profitability.
"The Group delivered a further year of poor operational performance with a pre-tax loss of £124.6million,” commented Jonson Cox, chairman of the mining group, “a loss per share of 41.8p and operating cash outflow of £35.0 million.
“These results follow pre-tax losses of £129.1 million in 2009 and £15.6 million 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.
Concluded Cox: “Over the last three months we have taken some immediate and difficult steps to improve performance, while a full strategic plan is developed."