UK Coal sells land to combat losses

UK Coal is selling off swathes of its land across the country after making a larger than expected pre-tax loss of £129m last year.

The country's largest coal mining company is selling potential pit development land in the Midlands, North East and Scotland, amounting to a third of its 28,000-acre portfolio of agricultural land. It is estimated to fetch £35 million.

The pre-tax loss sank from £15 million the previous year, and revenues dived from £392 million to £316 million.

The company is facing difficulties including low brownfield prices and geological problems at its underground mines.

UK Coal has taken on £30 million in new loans and extended the terms of its existing loans. Its gearing level was 119 per cent at the end of 2009, compared with 46 per cent in 2008. Total borrowing at the end of March was £236 million.

Chairman David Jones said: "We intend to take advantage of the current strong market values for agricultural land to pursue the disposal of a significant proportion of our agricultural estate and to explore joint-venturing the development of a larger part of our brownfield land portfolio."

The brownfield land has been set aside for commercial and residential development and, while the company believes the land is worth £820 million, is sitting on the books at £394 million.

The turnover in 2009 of £316 million was 20 per cent lower than the 2008 figure of £392.5 million, partly reflecting lower production over the same period from 7.9 million tonnes to 6.9 million tonnes.

Newly upgraded mines are expected to produce 7.6 million tonnes this year, however. Losses per share were 72.9p, against the prior year's 10p loss. The shares fell 1½p to 55p.

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