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UK Coal Investors - UKC

Share Name	Share Symbol	Market	Stock Type
UK Coal	UKC	London	Ordinary Share

	Price Change	Price Change %	Share Price	Last Trade
	0.00	0.00%	8.20	01:00:00

Open Price	Low Price	High Price	Close Price	Previous Close
			8.20	8.20

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Posted at 10/12/2012 21:39 by crosswire UK Coal, Britain's biggest coal miner, makes final bid for survival Britain's biggest coal miner, UK Coal, has restructured in a last attempt to survive. Chairman Jonson Cox explains how he plans to see the industry to a fitting end. Chairman Jonson Cox is trying to turn around the group, which operates three deep mines in England and employs around 2,500 people. By Emma Rowley6:48PM GMT 10 Dec 20127 Comments Jonson Cox may be forgiven if he is a little bleary-eyed. Monday saw the chairman of UK Coal, Britain's biggest remaining coal miner, announce that the company's restructuring effort, eight months in the works, had been completed. Cox does not hide the truth, that the group came very close to collapse. "I can't tell you how many moments there have been [where he thought the restructure might not happen]," he says. "This is very complex, as it's involved deals with customers, the pension fund, the pension regulator, the Pension Protection Fund, the Government, Coal Authority and I've probably left someone out. "There have been moments where I thought we were on track and moments where I thought we were not going to make it, and it was exactly the same over this weekend. It's not done 'til it's done. And [Monday] morning at six o'clock I got a phone call to say it was completed." In a last-ditch attempt to ensure the company's survival, the restructure splits the struggling coal mines off from valuable property assets. The group has been renamed Coalfield Resources, to reflect how it is "making the most of what is left of the coalfields". The hope is that the mining arm can now achieve another 10 years of production, led by the newly-announced chief executive Kevin McCullough, currently chief operating officer of RWE npower. Meanwhile, shareholders should get some value through their 25pc stake in the property arm, called Harworth Estates. For Cox, at the helm of a company born out of the privatisation of the coal industry in 1994, the challenge is to give the British industry the exit it deserves. "I recognise fully that coal, as it is currently used to produce power, has a finite lifetime, because we have to decarbonise the energy supply chain," he says. "This industry is towards the end of its life. Let's give it a managed landing, rather than a catastrophic insolvency. "We've 2,500 very skilled miners, probably another 3,000 people in the supply chain. This is making sure they can get to their retirement, wind up the industry properly, pay off the liabilities, manage all the environmental consequences. Had we not pulled off the restructuring, it would have all ended catastrophically. That's not in anyone's interest." It has been a long road for Cox, who is not from a mining background. A Devon boy, his career has seen him do stints as managing director of Yorkshire Water and chief executive of Anglian Water Group. He was brought into UK Coal two years ago by its banks, led by Lloyds, and its biggest shareholder, property investor Peel Group as it teetered on insolvency, not least through decisions to pay its miners up to £1,000 a shift to incentivise output. "It had lost £269m in three years, bank debt and customer debt was £245m, pension debt £450m, equity value £90m. Debt overwhelmed equity," says Cox. "We had a great first year, stopped the rise in labour costs which had gone up 38pc in five years, brought costs down, redid the pension deal, halved the bank debt in a year. So it all looked like, through 2011, it was going well." And to those who question the market for coal, Cox checks the figures to point out that in the last 24 hours coal has met 44pc of UK energy needs. "Coal is keeping the lights on at the moment." But things go wrong very quickly in mining, given its high fixed costs which was soon brought home to him. "A year ago, our biggest mine at Daw Mill, as a result of planning and production decisions made in 2009, ran into the sand." One mining face had been dug in the wrong direction, meaning the structure was fighting against geological forces, while elsewhere the huge struts holding up the roof were looking precarious. "Imagine dominoes," explains Cox. As the company once again careered towards insolvency which would have returned it to the state, as no insolvency practitioners will take on such a safety liability management set out a plan. As a result, the mines stand alone, supported by a package agreed with stakeholders which sees the pension fund foregoing some deficit payments and customers improving contracts. Daw Mill in Warwickshire, however, is set to close. The plus for the shareholders and the £280m property portfolio, of largely old mine sites, is that they are quarantined from the mines' financial risks, including the pension deficit. The market liked it, with the shares up as much as 24pc on the FTSE Fledgling Index, as analysts judged the deal to be "in the nick of time". Asked what the miners think of it all, Cox is careful: "We have a tremendous workforce ... there are, of course, a few who still hanker after the days when it was a state industry and it was inconceivable it could go under ... [but] when we started this process, on Friday night, if we hadn't got to where we've got to, it would have been an insolvency decision." There's still more work to be done, he adds, such as making sure the mines are cutting coal for around half the minutes in a day, rather than closer to a third, and examining how many staff tackle each job. "They've got just enough headroom to survive," he warns. "The next six months are absolutely critical." Read Full Thread Reply
Posted at 17/9/2012 17:21 by freddie ferret Mining performance not brilliant, poor is when you're not mining at all. On the land values I roughly agree, and that was the point I was making earlier, though as I have also said I do not think much of the way they have been capitalising on their vast land bank. They should be taking it from pre PP right through to house or flat sale IMHO. Part of the problem IMHO when reading the ARAA they are still to much like the old NCB (employee safty, lots and lots of turgid stuff, the ARAA are 30% at least, longer than they need be. They need a bit of good investor orientated PR). Read Full Thread Reply
Posted at 18/6/2012 07:21 by bigbigdave Sunday Times............ BRITAIN's miners have been offered a slice of the country's few remaining pits under a break-up plan being thrashed out by UK Coal. The struggling company will tell investors at the annual meeting on Friday that it is edging closer to a deal to split the mining operations from the extensive property portfolio. Jonson Cox, chief executive and turnaround expert, was parachuted in as chief executive in November 2010 to rescue Britain's largest coalmining business. In April, UK Coal notched up its first annual profit in four years, with pre-tax earnings of £58m. But Cox warned that the company's long-term survival could not be guaranteed without radical restructuring. UK Coal started life in 1974 as RJB Mining, founded by Richard Budge. After the privatisation of the industry in 1994, the company grew fivefold as it acquired British Coal's core activities - including the pension liabilities. It has wrestled with how to resolve the historic pension burden for some time. The pension deficit has ballooned to £430m, while UK Coal's market value is only £25m. Cox wants to tackle the situation by letting the scheme take an equity stake in the company's mining business, which includes eight mines. Trustees of the scheme have been told they will also be given an interest in the future cash stream from the property arm, Harworth Estates. This would leave the property business as a stand-alone operation, shorn of the pension burden. In return, the property arm would take on UK Coal's debts, which total £139m. The property business would need to tap investors for cash to give it the means to develop and start selling off parcels of land. Harworth owns 30,000 acres and plans to develop 85 sites over the next 10 years. UK Coal gave a hint of the plan in April, saying: "We hope to be able to report on the result of our negotiations at our [annual meeting] in June." Talks with banks, pension trustees and the company's workforce are continuing. It is understood it could take another month for these negotiations to be concluded. Read Full Thread Reply
Posted at 14/6/2012 10:13 by fugwit Interesting look at ukc on the latest diy investor website, some to the ratios for this stock that the chap highlights scream take a close look, even if there is little on ta basis to recommend ukc at the moment. Read Full Thread Reply
Posted at 20/3/2012 16:18 by warbaby43 Not a pretty tale, this Statement. It had been indicated at the Shareholder Presentations that a restructuring was pretty certain to come at some point and, indeed, many investors had been looking forward to seeing finally resolved the illogicality of a mining company sitting alongside a property company. It is, therefore, particularly unfortunate that the backdrop is now so difficult. At least, though, it would appear that the bank is at least conditionally on board, with thanks probably being due not only to David Brocksom but also to the continuing presence of Peel with its 29%+ shareholding. In fact it is likely that other investors should in no small measure be grateful to John Whittaker given the additional credibility his presence gives the company. However, the major holders of UKC debt are now the generators and the sort of deal Jonson Cox can cut with them, if any, is likely to have a determining impact on the business. Unfortunately, there is currently a surplus of coal supply in Europe and the rest of the world, with ARA stuck below $100 and $20+ behind where it was just a few months ago. With China currently absent from the spot market, no sustained rise is expected until its return, probably later in the year, and this is reflected in the futures market, ie: Q2 12 $99.70 Q3 12 $104.05 Q412 $107.70 Q1 13 $110.45 2013 $113.00 However, even despite our LibDem government being seemingly bent on the longer term extermination of coal power generation, UK generators will still need to have some regard to the security of their coal supply and as can be seen from this view from major energy consultancy Wood Mackenzie, thermal coal supply is expected to tighten and prices to remain high in the longer term: Even in a contracting market, therefore, UK generators are likely to wish to see preserved for the short and medium terms, their largest and most economic local supplier. With regard to the epicentre of UKC's present troubles, Daw Mill, it would seem most unlikely that this latest visit to the Really Really Absolutely Last and Final Chance Saloon is going to turn out any differently, and mention of 2014 seems something of a red herring. At current prices the eleven week 175,000 t shortfall amounts to over £11m and with normal costs exceeding £2m per week, such a situation is plainly unsustainable without UKC going completely bust well inside the year. May would seem the far more likely date for closure unless the mine can show signs of being able to consistently produce at or very close to the 40kt per week required for any degree of profitability Unfortunately, collectively Daw Mill seems unable and unwilling to face up to the desperation of its situation. However, the other contributing factor to Daw Mill's chronic present difficulties has been the apparently flawed mining plan which led the pit into the cul de sac of having to mine against the stress resulting in very difficult roof conditions and then shear from a very difficult face. This plan would have been drawn up and validated under the previous management round about, I would guess, 2008 or 2009 but was then allowed to remain in place apparently unchallenged and unaltered. If indeed it is the case, as seemed to be indicated at the last Shareholder Presentation, that the mining plan was so flawed, then no doubt at some stage Jonson Cox is going to require an external audit not only into how and why the plan came into being and how and why it was allowed to remain in place until after a point of no return, but also into the process at all UKC mines of how mining plans are drawn up and, just as importantly, how and by whom they are internally audited and signed off. Daw Mill undoubtedly represents a crisis for UKC as a company, but as all the management textbooks tell us, every such crisis presents an opportunity to confront those changes which have long been resisted and delayed, so here arrives a moment of truth for every level of management in UKC but will they have the nous, the grip and the conviction to seize it. All shareholders can do is hope enough of them stand up to be counted. Read Full Thread Reply
Posted at 07/2/2012 15:04 by loafofbread Of interest ATH may be in play. Peter Gyllenhammer just taken a 20% stake. Activist investor who bought in during last years failed bid talks with HG. Might be worth watching. Read Full Thread Reply
Posted at 03/12/2011 12:40 by apdi71 Oxygen has an atomic mass of approximately 16, carbon of approximately 14, so take one carbon and add two oxygens and you have three grammes of CO2 going up the chimney for every gram of coal burned.... of course coal is not pure carbon, so this is a handwaving approximation. Also released from coal combustion is a far more potent infra red absorbing gas, the polar molecule oxygen dihydride. From memory, the UK produced a vastly greater tonnage of CO2 a century ago (roughly a gigaton annually, compared to 600 or so million) than today, the CO2 output per person has plunged. Is it time to invest in British coal?. Does the performance of companies such as crystalvox, torotrak and (to a lesser extent) pure wafer mean that the investing community thinks the gig is up for eco-tech companies?. The house builders share price falls preceded the housing market collapse, could smart investors be signaling that the state will ease up on its anti coal stance, its production and use for power?. I've been out of UKC since they stopped paying the divi. Thinking out loud.. With so much apparently about to go wrong everywhere - banking and state insolvencies - where is one to invest one's limited savings/capital with the hope enabling someone to produce something useful profitably - and at a profit that is not dependent on the whims of politicians?. Here is a US projection of generation costs- note that shale gas has crashed the price of gas in the US. Europe (and the UK) also have big shale gas potential : A critique of the PTB sponsored hatchet job on UK shale gas here: Read Full Thread Reply
Posted at 03/10/2011 15:31 by nofool spob, what you have "done again" IMO, is produce yet another excellent thread, with even more excellent charts. That's what I mean, and I am impressed with the amount of times you have done this - to selflessly assist traders and investors alike. Thank you, nofool Read Full Thread Reply
Posted at 23/8/2011 10:34 by greatwhitefunkmaster UK Coal swings to profits, but financial position remains challenging 9:42 am by Sergei Balashov UK Coal managed to reduce its debt by £35 million to £207 million during the first half UK Coal (LON:UKC) has made "reasonable progress" during the first six months of the year, swinging to profits for the first time in four years as its coal production and revenues climbed. However, Britain's largest coal producer noted that its financial position still remains "challenging" as it has lost £270 million over the last three years, leaving it with a £207 million debt, down £35 million from end-2010. "Whilst we are making progress, particularly in tackling historically unreliable production, pension liabilities and rising employment costs, there remains much to do. Most importantly we need, operating safely, to start generating cash from our mining business," said chairman of UK Coal Jonson Cox. During the period, UK Coal's total revenues jumped from £141.3 million in the same period last year to £256.1 million in the six months to end June as production rose from 2.7 million tonnes to 4.1 million tonnes. As turnover climbed, the company was able to post a pre-tax profit of £22.1 million compared to a loss of £93.2 million in the first half of 2010. Property disposals reached £54 million during the first half, representing the majority of all disposals targeted for the whole year. UK Coal said it continues to market "surplus agricultural and other land" to proceed with its debt reduction programme. Investors welcomed the report as shares in UK Coal climbed 2.5 percent to trade at 39.5 pence in early deals, giving the company a market cap of £118.2 million. Read Full Thread Reply
Posted at 10/1/2011 15:27 by spob Commodities daily: Forgotten energy By Javier Blas FT 10 Jan 2011 For many investors, oil and natural gas are the only energy commodities. But thermal coal, used to fire power stations, is also important even if it is often overlooked. Don't get me wrong, oil is still the most important source of energy, but rather than concentrating only on whether its price its $100 a barrel, investors should also pay attention to whether thermal coal prices continue their climb up towards records. Thermal coal is still the main source of electricity around the world. For example, China, the world's biggest energy consumer, relies on it for more than 80 per cent of its electricity supplies; Japan, around 65 per cent, and the US, for nearly 40 per cent. The cost of thermal coal in the Australian port city of Newcastle, a benchmark in the coal-dependent region of Asia, has risen above $130 a tonne, the highest in two years. Worse, senior mining executives and traders say that annual contracts, which run April-April because they are set on the basis of the Japanese fiscal year, could rise as high as $140 a tonne, an all-time high, above the record of $125 a tonne set in 2008. The chatter about record prices is well above the forecast from most City of London analysts, who are forecasting annual contract prices of $115-$125 a tonne. The negotiations for the 2011-12 year with Japan, South Korea and Taiwan are about to start and traders believe they are going to be one of the most difficult ever. The increase in thermal coal annual prices, which affect around 40-50 per cent of the seaborne trade of coal, will put pressure on electricity prices across the world, particularly in Asia, where coal is the main energy commodity to fire power stations. The flooding in Queensland state in Australia is partly behind the spike, but there are other elements at play related to unusual heavy rains. Wet weather in Colombia, South Africa and Indonesia has also curtailed production in those key exporters. Meanwhile, demand is strong, with China and India buying more and more overseas. For investors, a lack of thermal coal futures means that it is difficult to gain exposure easily to rising prices. True, sophisticated investors could turn to thermal coal swaps, with several banks involved in the trade of private, bilateral over-the-counter financial contracts. Beyond, equities are the only source of exposure, with companies from London-listed Xstrata to New York-listed Peabody. But the array of equity investment will increase this year with the arrival of two key companies to the London market: Bumi, the Indonesian thermal coal exporter, which is listing in the UK through Vallar, the London-listed cash shell founded by financier Nat Rothschild; and the flotation mid year of Glencore, the trader which is a powerhouse in coal. Read Full Thread Reply

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