Annual Financial Report - PAR

RNS Number : 7440K

UK Coal PLC

26 April 2010

 



CONSOLIDATED INCOME STATEMENT
for the year ended 26 December 2009
					Year ended 26 December 2009		Year ended 27 December 2008
Continuing operations			Notes		£000		£000
Revenue			2		316,005		392,541
Cost of sales					(392,639)		(389,699)
Gross (loss)/profit					(76,634)		2,842
Net (decrease)/increase in fair value of investment properties					(25,704)		23
(Loss)/profit on disposal of investment properties					(3)		3,661
Net (loss)/gain on investment properties					(25,707)		3,684
Profit on sale of joint venture			30		6,534		-
Other operating income and expenses			4		(10,395)		(8,774)
Operating loss			2		(106,202)		(2,248)
Finance costs			6		(25,306)		(17,817)
Finance income			6		729		2,919
Net finance costs			6		(24,577)		(14,898)
Share of post-tax profit from joint ventures			14		1,719		1,503
Loss before tax			3		(129,060)		(15,643)
Tax credit/(charge)			8		1,513		(100)
Loss for the financial year					(127,547)		(15,743)
Attributable to:
Equity holders of the Company					(127,547)		(15,743)
Loss per share					pence		pence
Basic and diluted			11		(72.9)		(10.0)
STATEMENTS OF COMPREHENSIVE INCOME
for the year ended 26 December 2009
				Group Year ended 26 December 2009	Group Year ended 27 December 2008	Company Year ended 26 December 2009	Company Year ended 27 December 2008
			Notes	£000	£000	£000	£000
Loss for the financial year				(127,547)	(15,743)	(6,240)	(168,440)
Other comprehensive income:
Actuarial loss on industry wide pension schemes			24	(118,239)	(33,900)	-	-
Actuarial (loss)/gain on Blenkinsopp pension scheme			24	(402)	262	-	-
Actuarial loss on concessionary fuel reserve			24	(4,110)	(4,911)	-	-
Movement on deferred tax asset relating to retirement benefit liabilities			8	-	(2,257)	-	-
Cash flow hedges			22	3,134	(7,354)	-	-
Movement on deferred tax asset relating to cash flow hedges			8	(911)	2,378	-	-
Revaluation of property transferred from operating to investment properties			13	52	3,170	-	-
Total comprehensive loss for the financial year				(248,023)	(58,355)	(6,240)	(168,440)
Attributable to:
Equity holders of the Company				(248,023)	(58,355)	(6,240)	(168,440)

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
			Ordinary shares	Share premium account	Other reserves	Retained earnings	Total equity
		Notes	£000	£000	£000	£000	£000
Balance at January 2008			1,571	30,756	321,122	4,797	358,246
Loss for the financial year to December 2008			-	-	-	(15,743)	(15,743)
Other comprehensive income:
Actuarial losses on post retirement benefits		24	-	-	-	(38,549)	(38,549)
Movement on deferred tax asset in relation to retirement benefit liabilities			-	-	-	(2,257)	(2,257)
Fair value gain on revaluation of investment properties		13	-	-	23	(23)	-
Property revaluation on transfer to investment properties		13	-	-	3,170	-	3,170
Transfer of realised gain on disposed properties		27	-	-	(17,815)	17,815	-
Hedging reserve created - fair value gains in period			-	-	(7,354)	-	(7,354)
Movement on deferred tax asset in relation to cash flow hedges		8	-	-	2,378	-	2,378
Total comprehensive income for the period ended December 2008			-	-	(19,598)	(38,757)	(58,355)
Transactions with owners:
New shares issued		25	1	-	-	-	1
Accrual for long term incentive plan liabilities		25	-	-	-	540	540
			1	-	-	540	541
Balance at December 2008			1,572	30,756	301,524	(33,420)	300,432
Loss for the financial year to December 2009			-	-	-	(127,547)	(127,547)
Other comprehensive income:
Actuarial losses on post retirement benefits		24	-	-	-	(122,751)	(122,751)
Fair value loss on revaluation of investment properties		13	-	-	(25,704)	25,704	-
Property revaluation on transfer to investment properties		13	-	-	52	-	52
Transfer of realised gain on disposed properties		27	-	-	(6,592)	6,592	-
Hedging reserve - amortised in period			-	-	3,134	-	3,134
Movement on deferred tax asset in relation to cash flow hedges		8	-	-	(911)	-	(911)
Total comprehensive income for the period ended December 2009			-	-	(30,021)	(218,002)	(248,023)
Transactions with owners:
New shares issued		25	1,421	-	-	98,283	99,704
Accrual for long term incentive plan liabilities		25	-	-	-	676	676
			1,421	-	-	98,959	100,380
Balance at December 2009			2,993	30,756	271,503	(152,463)	152,789
Retained earnings include a cumulative actuarial loss on the Group's retirement benefit obligations of £138,199,000 (2008: loss of £15,448,000).
As disclosed in note 25, during the year the Group raised £99,704,000 (net of expenses) through a firm placing, placing and open offer.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
			Ordinary shares	Share premium account	Other reserves	Retained earnings	Total equity
Company		Notes	£000	£000	£000	£000	£000
At January 2008			1,571	30,756	257	407,462	440,046
New shares issued		25	1	-	-	-	1
Profit for the year			-	-	-	4,474	4,474
Provision for impairment of investment in subsidiaries		9	-	-	-	(172,914)	(172,914)
Long term incentive plan liabilities - value of employee services		25	-	-	-	540	540
At January 2009			1,572	30,756	257	239,562	272,147
New shares issued		25	1,421	-	-	98,283	99,704
Loss in the year			-	-	-	(6,240)	(6,240)
Long term incentive plan liabilities - value of employee services		25	-	-	-	676	676
At December 2009			2,993	30,756	257	332,281	366,287
As disclosed in note 25, during the year the Company raised £99,704,000 (net of expenses) through a firm placing, placing and open offer.

BALANCE SHEETS
at 26 December 2009
				Group As at 26 December 2009	Group  As at 27 December 2008	Company  As at 26 December 2009	Company  As at 27 December 2008
			Notes	£000	£000	£000	£000
ASSETS
Non-current assets
Operating property, plant and equipment			12	218,995	181,801	-	-
Surface mine development and restoration assets			12	22,607	28,479	-	-
				241,602	210,280	-	-
Investment properties			13	377,995	404,658	-	-
Investments in subsidiaries			14	-	-	300,310	300,310
Investment in joint ventures			14	3,263	2,778	-	-
Deferred tax asset			8	35,800	36,121	-	-
Trade and other receivables			15	1,963	1,527	-	-
				660,623	655,364	300,310	300,310
Current assets
Inventories			16	55,759	46,752	-	-
Trade and other receivables			17	24,676	39,991	201,847	155,463
Cash and cash equivalents			18	41,359	71,102	12,869	40,682
				121,794	157,845	214,716	196,145
Total assets				782,417	813,209	515,026	496,455
LIABILITIES
Current liabilities
Borrowings - bank loans, overdrafts and finance leases			19	(10,728)	(7,306)	-	-
- generator loans and prepayments			19	(2,990)	-	-	-
Derivative financial instruments			22	(721)	-	-	-
Trade and other payables			20	(104,276)	(104,052)	(147,658)	(224,308)
Provisions			21	(38,556)	(35,206)	-	-
				(157,271)	(146,564)	(147,658)	(224,308)
Net current (liabilities)/assets				(35,477)	11,281	67,058	(28,163)
Non-current liabilities
Borrowings - bank loans, overdrafts and finance leases			19	(117,194)	(172,057)	-	-
- generator loans and prepayments			19	(64,619)	-	-	-
Derivative financial instruments			22	(6,062)	(8,493)	-	-
Trade and other payables			20	(76)	(139)	-	-
Deferred tax liabilities			8	(422)	(815)	-	-
Provisions			21	(63,151)	(80,693)	-	-
Retirement benefit obligations			24	(220,833)	(104,016)	(1,081)	-
				(472,357)	(366,213)	(1,081)	-
Total liabilities				(629,628)	(512,777)	(148,739)	(224,308)
Net assets				152,789	300,432	366,287	272,147
SHAREHOLDERS' EQUITY
Capital and reserves
Called up share capital			25	2,993	1,572	2,993	1,572
Share premium				30,756	30,756	30,756	30,756
Revaluation reserve			27	127,497	130,339	-	-
Capital redemption reserve			27	257	257	257	257
Fair value reserve			27	146,502	175,904	-	-
Hedging reserve			27	(2,753)	(4,976)	-	-
Retained (loss)/earnings			26	(152,463)	(33,420)	332,281	239,562
Total shareholders' equity				152,789	300,432	366,287	272,147
These financial statements were approved by the Board of Directors on 26 April 2010 and were signed on its behalf by:
J S Lloyd		D G Brocksom			Company Registered No. 2649340
Chief Executive		Finance Director

STATEMENTS OF CASH FLOWS
for the year ended 26 December 2009
				Group Year ended 26 December 2009	Group Year ended 27 December 2008	Company Year ended 26 December 2009	Company Year ended 27 December 2008
			Notes	£000	£000	£000	£000
Cash flows from operating activities
Loss for the financial year			2	(127,547)	(15,743)	(6,240)	(168,440)
Depreciation/impairment of property, plant and equipment			12	32,864	37,913	-	-
Amortisation of surface mine development and restoration assets			12	9,961	12,583	-	-
Net fair value decrease/(increase) in investment properties			13	25,704	(23)	-	-
Net interest payable/(receivable) and unwinding of discount on provisions			6	24,577	14,898	5,400	(1,886)
Net charge for share-based remuneration				676	540	676	540
Share of post-tax profit from joint ventures				(1,719)	(1,503)	-	-
Profit on sale of joint venture			30	(6,534)	-	-	-
Loss/(profit) on disposal of investment properties				3	(3,661)	-	-
Profit on disposal of operating property, plant and equipment				(172)	(82)	-	-
Decrease/(increase) in capitalised surface mine restoration assets				1,456	(11,077)	-	-
(Decrease)/increase in provisions				(23,753)	(18,265)	1,081	-
Tax (credit)/charge			8	(1,513)	100	452	-
Provision for impairment of investments			14	-	-	-	172,914
Operating cash (outflows)/inflows before movements in working capital				(65,997)	15,680	1,369	3,128
Increase in stocks				(9,007)	(6,996)	-	-
Decrease/(increase) in receivables				14,879	(9,952)	(46,384)	10,638
Increase/(decrease) in payables				692	3,805	(74,793)	6,690
Cash (used in)/generated from operations				(59,433)	2,537	(119,808)	20,456
Loan arrangement fees paid				(4,155)	(1,231)	-	-
Interest paid				(13,406)	(12,518)	(7,709)	-
Cash (used in)/generated from operating activities				(76,994)	(11,212)	(127,517)	20,456
Cash flows from investing activities
Interest received				729	2,919	-	162
Net receipt from insurance and subsidence security funds				994	20,329	-	-
Net proceeds from sale of joint venture			30	8,726	-	-	-
Proceeds on disposal of investment properties				8,483	6,032	-	-
Proceeds on disposal of operating property, plant and equipment				400	217	-	-
Net investment in joint ventures				(208)	(933)	-	-
Development costs of investment properties				(8,064)	(14,090)	-	-
Pre-coaling expenditure for surface mines and deferred stripping costs				(5,545)	(9,874)	-	-
Purchase of operating property, plant and equipment				(53,233)	(25,753)	-	-
Cash (used in)/generated from investing activities				(47,718)	(21,153)	-	162
Cash flows from financing activities
Proceeds from issue of ordinary shares				99,704	1	99,704	1
Net (repayment of)/proceeds from bank loans				(59,278)	59,494	-	-
Net proceeds from generator loans and prepayments				63,609	-	-	-
Repayments of obligations under hire purchase and finance leases				(8,072)	(5,767)	-	-
Cash generated from financing activities				95,963	53,728	99,704	1
(Decrease)/increase in cash				(28,749)	21,363	(27,813)	20,619
At January
Cash				42,336	20,973	40,682	20,063
Cash equivalents				28,766	49,095	-	-
				71,102	70,068	40,682	20,063
Decrease in cash equivalents (net receipt from insurance and subsidence security funds)				(994)	(20,329)	-	-
(Decrease)/increase in cash				(28,749)	21,363	(27,813)	20,619
				41,359	71,102	12,869	40,682
At December
Cash				13,587	42,336	12,869	40,682
Cash equivalents				27,772	28,766	-	-
Cash and cash equivalents			18	41,359	71,102	12,869	40,682

NOTES TO THE FINANCIAL STATEMENTS
1 ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
These consolidated financial statements have been prepared in accordance with European Union ("EU") Endorsed International Financial Reporting Standards ("IFRSs"),  IFRIC interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.  The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment properties taken through the income statement. IFRSs also require an alternative treatment to the historic cost convention in certain circumstances (principally in the areas of retirement benefit obligations, share based payments and financial instruments).
Trading accounts within the Group are made up to an appropriate week end date around 31 December each year. For 2009, trading is shown for the year ended on 26 December 2009 (2008: year ended 27 December 2008).
The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2009:
- IAS 1 (revised), 'Presentation of Financial Statements',  The most significant change within IAS 1 (revised) is the requirement to produce a statement of comprehensive income setting out all items of income and expense relating to non-owner changes in equity. There is choice between presenting comprehensive income in one statement or in two statements comprising an income statement and a separate statement of comprehensive income.  The Group has elected to present comprehensive income in two statements.  In addition, IAS 1 (revised) requires the statement of changes in shareholders' equity to be presented as a primary statement. The other revisions to IAS 1 have not had a significant impact on the presentation of the group's financial information. The 2009 financial statements have been prepared under the revised disclosure requirements.
- IFRS 2 (amendment),  'Share-based payment', deals with vesting conditions and cancellations. It clarifies that the only conditions that are vesting are service conditions and performance conditions only and other features of a share-based payment are not. The Group and Company has adopted IFRS 2 (amendment) from 1 January 2009. The amendment does not have a material impact on the Group or Company's financial statements.
- IFRS 7 'Financial instruments  - Disclosures' (amendment), the amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level. The amendment does not have a material impact on the Group or Company's financial statements.
- IFRS 8, 'Operating Segments'.  IFRS 8 replaces IAS 14, 'Segment Reporting', and requires the disclosure of segment information on the same basis as the management information provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Executive Management Committee.  The adoption of this standard has not resulted in a change in the group's reportable segments.
- IAS 23 (revised), 'Borrowing Costs'. IAS 23 (revised), requires the capitalisation of borrowing costs which are directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use). The adoption of this standard has resulted in a change in accounting policy as the Group previously elected to expense borrowing costs as incurred. The impact of IAS 23 (revised) on the Group's results is not significant at 26 December 2009.
The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2009, but are not currently relevant to the Group:
- IFRIC 13 'Customer Loyalty Programmes';
- IFRIC 15, 'Agreements for the Construction of Real Estate'; and
- IFRIC 16, 'Hedges of a Net Investment in a Foreign Operation'.
The following new standards, amendments to standards and interpretations have been issued but are not effective for the financial year beginning 1 January 2009 and have not been adopted early:
- IFRS 3 (revised), 'Business Combinations' and consequential amendments to IAS 27, 'Consolidated and Separate Financial Statements', IAS 28, 'Investments in Associates' and IAS 31, 'Interests in Joint Ventures', effective prospectively to business combinations for which the acquisition date is on or after the first annual reporting period beginning on or after 1 July 2009.  The Group will apply IFRS 3 (revised) to all business combinations from 1 January 2010, subject to endorsement by the EU.
- IFRIC 17, 'Distributions of Non-Cash Assets to Owners', effective for annual periods beginning on or after 1 July 2009.  This is not currently applicable to the group, as it has not made any non-cash distributions, and
- IFRIC 18, 'Transfers of Assets From Customers', effective for transfers of assets received on or after 1 July 2009.  This is not relevant to the Group as it has not received any assets from customers.
1 ACCOUNTING POLICIES continued
Going concern
The financial statements are prepared on the basis that the Group is a going concern.  In forming its opinion as to going concern, the Board prepares a cash flow forecast based upon its assumptions as to production and trading as well as taking into account the available borrowing facilities in line with the Treasury Policy disclosed in the Directors' Report. The Board also prepares a number of alternative scenarios modelling the business variables and key risks and uncertainties as summarised in the operating and financial review.  The key factors that have been considered in this regard are: -       The deep mines operate with a cost base which is largely fixed relative to production levels.  Consequently, unexpectedly large interruptions or prolonged reductions in production can have a material adverse impact on cash flow.  Recent performance has been illustrative of the difficulties inherent in deep mining operations and, in particular, the impact of unpredictable geological conditions and/or other operational issues on production volumes from our deep mines. The Board believes that these risks are now much reduced as Kellingley and Thoresby have started producing coal from their new seams and as Daw Mill has started the ramp up of its new face. -       Bank funding arrangements contain, in certain cases, covenants based upon interest cover, capital expenditure, loan to property value, adjusted net asset values and operating profits adjusted for property revaluations and depreciation in particular.  Property valuations affect the loan to value covenants and net asset values and similarly net asset values are affected by operational performance. Breach of covenants could result in the need to pay down in part some of these loans or to a renegotiation of terms or, in extremis, a reduction or withdrawal of facilities by the banks concerned. -       Although the majority of coal production for the next 12 months is on fixed or capped/floor pricing bases, revenues in respect of certain floating rate contracts and uncontracted coal will vary based upon the market price for coal, which is expressed in dollars, and sterling/dollar exchange rates.  These variables have, over the last year, proved to be very volatile and therefore there is a risk of unpredictability in coal revenues and cash flows. The Board notes that the matters set out above indicate the existence of material uncertainties which may cast significant doubt over the Group's ability to continue as a going concern.  Nevertheless, the Board confirms its belief that it is appropriate to use the going concern basis of preparation for these financial statements of the Group.  The financial statements do not include the adjustments that would result if the Group or the parent company were unable to continue as a going concern.
Consolidation
The consolidated financial information incorporates the financial statements of UK COAL ('the Company') and its subsidiaries, together 'the Group'.
Subsidiaries are entities over which the Group has power to govern the financial and operating policies. Control is presumed to exist where the Group owns more than half of the voting rights, unless in exceptional circumstances where it can be demonstrated that ownership does not constitute control. The consolidated financial statements includes all the assets, liabilities, revenues, expenses and cash flows of the parent and its subsidiaries, after eliminating intercompany balances and transactions. The results of subsidiaries sold or acquired are included in the consolidated income statement up to, or from, the date control passes.
The Group uses the purchase method of accounting to consolidate subsidiaries. On acquisition, the identifiable assets, liabilities and contingent liabilities being acquired are measured at their fair values at the date of acquisition. Accounting policies are changed where necessary to bring them into line with those adopted by the Group.
Joint ventures are those entities over whose activities the Group has joint control established by contractual agreement. Interests in joint ventures through which the Group carries on its business are classified as jointly controlled entities and accounted for using the equity method.  This involves recording the investment initially at cost to the Group, and then in subsequent periods, adjusting the carrying amount of the investment to reflect the Group's share of the joint venture's results less any impairment in carrying value and any other changes to the joint venture's net assets such as dividends.
Foreign currencies
The presentational currency of the Group is sterling. Transactions in other currencies are translated at the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities are translated at year end exchange rates and the resulting exchange rate differences are included in the consolidated income statement within the results of operating activities if arising from trading activities and within finance cost/income if arising from financing.
All Group companies have a functional currency of sterling which is consistent with the presentational currency of the consolidated Group financial statements.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments , has been identified as the Executive Management Committee as detailed in Note 2.
The performance of the operating segments is assessed on a measure of operating profit/loss. This measurement basis excludes the effect of non-trading exceptional items and finance costs and income which are not included in the results of the operating businesses. Total assets for the segments exclude deferred tax and cash and cash equivalents (unrestricted) as these are managed centrally. Cash and cash equivalents that are subject to restriction have been included within the appropriate segment, along with the related provisions.
The Group manages its business primarily by reference to operating segments, and this approach is adopted in the accounting policies as the primary segment.  Deep mining comprises the underground mining operations of the Group and related labour services, the methane generation operations and the captive insurance company.  Surface mining incorporates all mining activities at surface level, together with the plant hire operations of the Group.  The Property division, Harworth Estates, maintains, develops and rents the Group's property portfolio.  Any activity not falling into any of these categories is included in the Other segment. As the Group is based and operates in a single geographical market, the United Kingdom, no secondary geographical segmentation is provided.
Revenue
Revenue comprises sales (excluding intra group sales) of coal, property rental income and other external sales, including sales of power and of labour services.
Coal transactions
Revenue is recognised when delivery of the product or service has been made and when the customer has a legally binding obligation to settle under the terms of the contract and has assumed all significant risks and rewards of ownership.
A large proportion of production is sold under medium to long term contracts. Revenue is only recognised on individual sales when all of the significant risks and rewards of ownership have been transferred to a third party. In most instances this is when the product is despatched, being the point at which title to the product is transferred to the purchaser.
Service transactions
Rental income is recognised during the period in which rents due to the Group accrue.  Sales of power are recognised when electricity is transferred into the local distribution network.
1 ACCOUNTING POLICIES continued
Exceptional items
Items that are both material and non recurring and whose significance is sufficient to warrant separate disclosure and identification within the consolidated financial statements are referred to as exceptional items and disclosed within their relevant income statement category within note 2, segmental reporting.  Items that may give rise to classification as exceptional items include, but are not limited to, significant and material restructuring closures and reorganisation programmes, asset impairments, and profits or losses on the disposal of businesses.
Exceptional items are divided into non-trading and trading exceptional items, depending upon the impact of the event giving rise to the cost or income on the ongoing trading operations and the nature of the costs or income involved. Non-trading exceptional items include costs and income arising from closure, rationalisation and business disposals.
Property related transactions, including changes in the fair value of investment properties, and profits and losses arising on the disposal of property assets are not included in the definition of exceptional items as they are expected to recur, but are separately disclosed on the face of the consolidated income statement, where material.
Coal Investment Aid
Coal Investment Aid is received as a contribution towards qualifying expenditure, as defined by the Department of Business, Enterprise and Regulatory Reform ("DBERR"), incurred by the Group. If the expenditure has been charged in the consolidated income statement then the related investment aid is credited to the consolidated income statement in the same period. Where the investment aid relates to the purchase of property, plant and equipment, the investment aid is held on the consolidated balance sheet as deferred income and is credited to the consolidated income statement over the lives of the assets to which it relates.
Profit or loss on disposal
Disposals are accounted for when legal completion of the sale has occurred or there has been an unconditional exchange of contracts. Profits or losses on disposal arise from deducting the asset's net carrying value from the net proceeds (being net purchase consideration less clawback liability arising on disposal) and is recognised in the consolidated income statement. Net carrying value includes valuation in the case of investment properties and historic cost or deemed cost less accumulated depreciation in the case of all other property, plant and equipment.
In the case of investment properties, the revaluation reserve, which arose on transfer from operating property to investment property, for the property disposed of is treated as realised on disposal of the property and transferred to retained earnings.
Investment properties and operating properties
The Group holds the following types of freehold property:
- Working deep mines in production
- Working surface mines in production
- Property held for administrative purposes
- Property held for rental income, capital appreciation or both
Working deep mines in production, working surface mines in production, and property held for administrative purposes are held as operating properties (as these assets are used or intended to be used within the operations of the Group) and are accounted for at historic depreciated cost, in accordance with IAS 16 'Property, Plant and Equipment'.
All other freehold properties are held as investment properties (as these are held to earn rentals or for capital appreciation or both) and are accounted for at valuation and in accordance with IAS40 'Investment Property' or if appropriate, in inventories as assets held for disposal.
Investment properties
Investment properties comprise freehold land and buildings and are measured at fair value. The fair values are determined by obtaining an independent valuation prepared in accordance with the current edition of the Appraisal and Valuation Standards published by the Royal Institution of Chartered Surveyors. External, independent valuation firms having appropriate, recognised professional qualifications and recent experience in the location and category of property being valued, value the portfolio at each reporting date.
In accordance with IAS 40, for properties transferred from operating properties to investment properties, any difference between the book value and the first valuation on recognition as an investment property is taken to reserves. Subsequent gains or losses arising from changes in the fair values of assets are recognised in the consolidated income statement, net of any property clawback by DBERR (see accounting policy on property clawback) on deemed disposal. Investment properties are not depreciated.
Properties being held for their long term rental income or capital appreciation but with the added potential for coal extraction are held as investment properties, being transferred to operating properties at fair value when planning permission to mine the site has been received and mining operations have commenced and are transferred back to investment properties once mining has terminated.
Where the development of investment property commences with a view to sale, the property is transferred from investment properties to inventories at fair value, which is then considered to represent deemed cost.
1 ACCOUNTING POLICIES continued
Operating properties
Operating properties which are acquired or constructed are initially recorded at cost, being the purchase price of the asset and other costs incurred to bring the asset into existing use, and subsequently stated at historic cost less accumulated depreciation (other than freehold land which is not depreciated). Where properties are transferred from investment properties to operating properties, this transfer is made at fair value, which is then considered to represent deemed cost.
Properties which have historically been used as working deep mines or working surface mines (operating properties) are transferred to property held for rental income or capital appreciation (investment properties), when there is a change in use, at the point when a decision is made to pursue planning with a view to future development (rather than for short term sale) or rental, and once mining has ceased. IAS 16 is applied up to the date of transfer and any difference at that date between the book value and fair value is taken to the revaluation reserve.
Properties in the course of development
Directly attributable costs incurred in the course of developing a property are capitalised as part of the cost of the property. For operating properties amortisation of these costs follows the depreciation policy for the property. Development costs on investment properties are capitalised and the change in value is recognised through the next revaluation.
Exploration and evaluation
Exploration and evaluation expenditure comprises costs that are directly attributable to: - Researching and analysing existing exploration data; - Conducting geological studies, exploratory drilling and sampling; - Examining and testing extraction and treatment methods; and/or - Compiling prefeasibility and feasibility studies.
Exploration expenditure relates to the initial search for deposits with economic potential.  Evaluation expenditure arises  from a detailed assessment of deposits that have been identified as having economic potential.
Capitalisation of exploration and evaluation (pre-coaling) expenditure commences when there is a high degree of confidence in the project's viability and hence it is probable that future economic benefits will flow to the Group.  Such capitalised exploration and evaluation expenditure is reviewed for impairment when facts and circumstances indicate that its carrying value exceeds its recoverable amount.
Subsequent recovery of the resulting carrying value depends on successful development of the area of interest or sale of the project.  If a project does not prove viable, all irrecoverable costs associated with the project net of any related impairment provisions are written off.
Plant and equipment
The cost of plant and equipment comprises its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in accordance with agreed specifications. Plant and equipment is stated at historic cost less accumulated depreciation.
Once a mining project has been established as commercially viable, expenditure other than that on land, buildings, plant and equipment is capitalised under 'mine development assets' together with any amount transferred from 'exploration and evaluation'.
During the development of a mine, before production commences, development stripping costs are capitalised as part of the investment in construction of the mine (see accounting policy on mining assets).
Costs associated with commissioning new assets, in the period before they are capable of operating in the manner intended by management, are capitalised.  Development costs incurred after the commencement of production are capitalised to the extent they are expected to give rise to a future economic benefit.
On conversion to IFRS, the Group opted to continue to measure operating property, plant and equipment (excluding investment properties) at historic cost, less accumulated depreciation, in the consolidated balance sheet.
1 ACCOUNTING POLICIES continued
Mining assets
Mine development
The purpose of mine development is to access and establish infrastructure in order to allow the safe and efficient extraction of recoverable reserves. Depreciation on mine development is charged from the time when full production commences or from when the assets are put to use. On commencement of full production, depreciation is charged over the estimated tonnage of the recoverable reserves. Coal extracted prior to the commencement of full production is credited against the cost of mine development where it can be clearly shown that the production of saleable material is directly attributable to bring the asset to the condition necessary for it to be capable of operating in the manner intended by management; otherwise such revenue (and the costs of producing the saleable material) is recognised in the income statement.
Mines and surface works
Assets acquired on the privatisation of British Coal in 1994 were valued at discounted net recoverable value, based on the contemporary mining plans, in accordance with the accounting guidance existing at that time. Depreciation is charged over the estimated tonnage of the recoverable reserves. Subsequent additions to mines and surface works are accounted for at cost, and depreciated over their individual estimated reserves.
Seismic and geological mapping costs
Expenditure on seismic and geological mapping costs which increases the value of the reserves by identifying additional reserves over and above those previously recognised, or increases the value of the existing known reserves by providing information which enables reserve estimates to be increased, is capitalised. This expenditure is depreciated over the estimated tonnage of the recoverable reserves as these are extracted. If the information does not fulfil either of these criteria, the cost is charged to the consolidated income statement as incurred.
Surface mine development and restoration assets
Costs incurred prior to coaling for surface mines are capitalised as surface mine development and restoration assets within tangible fixed assets and a separate provision for the outstanding restoration and rehabilitation obligations is established. Both of these costs are then charged to the consolidated income statement (net of any residual value) over the recoverable reserves of the mine. Expenditure on sites not expected to be worked within ten years is written off.
Deferred stripping costs
Overburden and other mine waste materials are often removed during the initial development of a mine site in order to access the mineral deposit. This activity is referred to as development stripping. The directly attributable costs (inclusive of an allocation of relevant overhead expenditure) are capitalised as surface mine development assets and are amortised together with restoration and pre-coaling costs, once coaling commences, over the tonnage of coal expected to be extracted.
The Group defers stripping costs incurred subsequently,  during the production stage of its operations, for those operations where this is the most appropriate basis for matching the costs against the related economic benefits and the effect is material.
The amount of stripping costs deferred is based on the ratio obtained by dividing the tonnage of waste mined by the quantity of coal mined.  Stripping costs incurred during the period are deferred to the extent that the current period ratio exceeds the remaining life of mine ratio.  Such deferred costs are then charged against reported profits to the extent that, in subsequent periods, the current period ratio falls short of the life of mine ratio.  Changes to the life of mine ratio are accounted for prospectively.
If the Group were to expense the production stage stripping costs as incurred, there would be greater volatility in the year to year results from operations and excess stripping costs would be expensed at an earlier stage of a mine's operation.
1 ACCOUNTING POLICIES continued
Depreciation
The costs of operating properties, excluding freehold land, and the cost of all other plant and equipment, less estimated residual value, are written off on a straight line basis over the asset's expected useful life. Residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Changes to the estimated residual values or useful lives are accounted for prospectively. The costs of heavy surface mining and other plant and equipment are depreciated at varying rates depending upon their expected usage.
Indicative expected lives for non-current assets are set out below:
Freehold land	not depreciated
Operating properties (excluding land)	25 to 50 years
Mines and surface works - Heavy mining equipment	8 to 20 years
Plant and equipment
- Plant and equipment	3 to 15 years
- Motor vehicles	3 to 5 years
Impairment
Operating property, plant and equipment are reviewed for impairment if there is any indication that their carrying amount may not be recoverable.
The carrying value of cash generating units (taking into account related liabilities and allocated central net assets) is tested for impairment by comparison with expected relevant future cash flows discounted at the pre-tax cost of capital taking into account appropriate risk; provision is made for any impairment identified. Cash generating units comprise individual mines or groups of mines depending upon the nature of the income streams derived from each.
When a review for impairment is conducted, the recoverable amount is assessed by reference to the higher of 'value in use' (being the present value of expected future cash flows of the relevant cash generating unit) or 'fair value less costs to sell'. Where there is no binding sale agreement or active market, fair value less costs to sell is based on the best information available to reflect the amount the Group could receive for the cash generating unit in an arm's length transaction.
Future cash flows are based on:
- Estimates of the quantities of the reserves and resources for which there is a high degree of confidence of economic extraction
- Anticipated production levels and costs
- Anticipated coal prices
Cost levels incorporated in the cash flow forecasts are based on the current long term mine plan for the cash generating unit. For impairment reviews, recent cost levels are considered, together with expected changes in costs that are compatible with the current condition of the business and which meet the requirements of IAS 36, 'Impairment of assets'. IAS 36 'Impairment of assets' includes a number of restrictions on the future cash flows that can be recognised in respect of restructurings and improvement related to capital expenditure.'
Hire purchases and leases - as lessee
Leases which transfer substantially all the risks and rewards of ownership to the Group are treated as finance leases. All other leases are treated as operating leases. Assets held under hire purchase and finance lease arrangements are capitalised and depreciated according to the depreciation rate of the applicable asset category.  The outstanding capital obligations are included in payables. Interest is allocated to accounting periods over the hire purchase or lease term to reflect a constant rate of charge on the remaining balance of the obligation. Costs in respect of the operating leases are charged to the consolidated income statement as incurred.
Hire purchases and leases - as lessor
The Group grants leases over land and buildings in the course of its property business.  These do not substantially transfer the risks and rewards of ownership to the lessee, and therefore they are accounted for as operating leases.
1 ACCOUNTING POLICIES continued
Financial instruments
The Group recognises financial instruments when it becomes party to the contractual provisions of the instrument. Financial assets are derecognised when the contractual right to receive the cash flows expire or it has transferred the financial asset and the economic benefit of the cash flows. Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expires.
Financial instruments are used to support the Group's operations. Interest is charged to the consolidated income statement as incurred or earned. Issue costs for instruments subsequently recorded at amortised cost are netted against the fair value of the related debt instruments on initial recognition and are charged to the consolidated income statement over the term of the relevant facility.
Financial instruments are recorded initially at fair value. Subsequent measurement depends on the designation of the instrument, as follows:
a) Financial assets/liabilities held for short term gain, including derivatives other than hedging instruments, are measured at fair value and movements in fair value are credited/charged to the consolidated income statement in the period.
b) Loans and receivables/payables and non-derivative financial assets/liabilities with fixed or determinable payments that are not quoted in an active market, are measured at amortised cost. These are included in current assets/liabilities except for instruments that mature after more than 12 months which are included in non current assets/liabilities.
The Group holds derivative financial instruments ('derivatives') to manage exposure to fluctuations in interest rates. Derivatives are designated as hedges, when applicable, and treated as such from the inception of the relevant contracts. Amounts payable or receivable in respect of interest rate swap agreements are recognised as adjustments to the interest expense over the period of the contracts.
Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are recognised directly in equity, and the ineffective portion is recognised immediately in the income statement as a finance cost. If the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of an asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in recognition of an asset or a liability, amounts deferred in equity are recognised in the income statement in the same period in which the hedged item affects net profit or loss.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the income statement in the period.
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised immediately in the income statement as a finance cost.
Borrowing costs
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated income statement over the period of the borrowings using the effective interest method.
Inventories
Inventories are valued at the lower of cost and net realisable value. Values of spares and consumables are based on average purchase prices. Appropriate provisions are made for slow moving and obsolete stock. Coal is recognised as stock when delivered to the surface and is valued at the average cost of extraction.
Trade receivables
Trade receivables are recognised initially at fair value and are subsequently reduced by any provision for impairment.  A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due.  Indicators of impairment would include financial difficulties of the debtor, likelihood of the debtor's insolvency, default in payment or a significant deterioration in credit worthiness.  Any impairment is recognised in the income statement within 'other operating income and expenses'.  When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against 'other operating income and expenses' in the income statement.
1 ACCOUNTING POLICIES continued
Trade payables
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Accounts payables are classified as current if payment is due within one year or less, if not , they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Property clawback
Under the terms of the 1994 privatisation Sale and Purchase Agreement, DBERR is entitled to a percentage of any property gain (above certain thresholds and after deducting an amount representing corporation tax thereon) accruing, or treated as accruing to the Group, as a result of the disposal or deemed disposal or major development of certain properties acquired at privatisation. The percentage applied is 27% for 2009, reducing by 3 percentage points per annum until 31 March 2015, when it reduces to zero. If properties are disposed of, or are deemed to have been disposed of during this period, a part of the relevant gain will become payable to DBERR. A liability for clawback in respect of property disposals is recognised only when an actual or deemed disposal occurs. A liability for clawback on a deemed disposal as a result of granting a lease is recognised over the life of the lease.
Cash and cash equivalents
In the preparation of the Group's and Company's cash flow statements, cash and cash equivalents represent short term liquid investments which are readily realisable. Cash which is subject to restrictions, being held to match certain liabilities, is included in cash and cash equivalents in the consolidated balance sheet.
Provisions for restoration, rehabilitation and environmental costs
An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing production of a mining property. These costs consist of shaft treatment and pit top restoration, spoil heap restoration, pumping activities and ground and ground water contamination at deep mines and soil excavation and surface rehabilitation at surface mines.
Such costs arising from the decommissioning of plant and other site restoration work, discounted to their estimated present value, are provided for and capitalised within operating property, plant and equipment at the start of each project, as soon as the obligation to incur such costs arises. These provisions do not include any additional obligations which are expected to arise from future damage and are estimated on the basis of a closure plan. These costs are charged against income over the life of the operation, through the depreciation of the asset as an operating cost and the unwinding of the discount on the provision as a financing cost.
Costs for restoration of subsequent site damage which is created on an ongoing basis during production are provided for at their estimated present values and charged against income as extraction progresses.
Changes in the measurement of a liability relating to the decommissioning of plant or other site preparation work that result from changes in the estimated timing or amount of the cash flow, or a change in the discount rate, are added to, or deducted from, the cost of the related asset in the current period. If a decrease in the liability exceeds the carrying amount of the asset, the excess is recognised immediately in the income statement. If the asset value is increased and there is an indication that the revised carrying value is not recoverable, an impairment test is performed in accordance with the accounting policy above.
Other provisions
Surface damage (subsidence)
Provision is made for the estimated present value of the cost of damage to structures on the surface as a result of settlement during the production phase of underground mining. The provision is calculated in respect of each colliery, location of mining activity and type of property affected or likely to be affected based on claims expected and claims submitted and using historical settlement experience. These costs are charged to the income statement. Movements in the provisions are presented as an operating cost, except for the unwinding of the discount which is shown as a financing cost.
Employer and public liability claims
The Group has established a DBERR approved and Financial Services Authority ("FSA") regulated UK based insurance subsidiary (Harworth Insurance Company Limited). This insures employer and public liability risks, buying reinsurance with third parties above certain levels. Provision is made for the estimated value of both known, and incurred but not reported, third party claims on an actuarially determined basis taking into account expected reinsurance recoveries.
Redundancy
Provision is made for the estimated present value of redundancy costs when there is a demonstrable commitment to terminate the employment of either an employee or group of employees. The expected amounts of redundancy payments, including any amounts in respect of ex gratia payments, are provided where the employment terminations have been communicated to employees. These costs are charged to the income statement. Movements in the provisions are presented as an operating cost, except for the unwinding of the discount which is shown as a financing cost.
Where contributions to redundancy costs have been firmly committed by third parties, these contributions are credited to the consolidated income statement in the same period to the extent, that the related redundancy cost has been recognised.
1 ACCOUNTING POLICIES continued
Employee benefits
Pension obligations
The Group operates pension schemes providing benefits based on final pensionable pay for employees who joined the Group on privatisation in 1994. Employees within defined benefit schemes are members of industry wide schemes, being either the Industry Wide Coal Staff Superannuation Scheme ("IWCSSS") or the Industry Wide Mineworkers' Pension Scheme ("IWMPS"), both of which commenced on privatisation following the Coal Industry Act 1994. The assets of the Schemes are held separately from those of the Group, being funds administered by Trustees of the Schemes. A qualified actuary assesses the cost of current service and revalue the schemes annually under the provisions of IAS 19 using the Projected Unit Credit Method. A full valuation for funding purposes is carried out by the Schemes' actuaries triennially. The Group accounts for pensions and similar benefits under IAS 19 'Employee benefits'. In respect of defined benefit plans, obligations are measured at discounted present value and plan assets are recorded at fair value. Service costs are charged systematically over the service lives of employees and financing costs are recognised in the periods in which they arise. Actuarial gains and losses are recognised in the Statement of Comprehensive Income.
The Group also operates defined contribution schemes in respect of all employees who joined after the privatisation date in 1994. The cost of this is charged to the consolidated income statement as incurred.
Concessionary fuel
Provision is made for the estimated liability arising from the obligation to provide concessionary fuel benefits to certain retired and current employees. The costs of the concessionary fuel benefits are determined annually by a qualified actuary using the same Projected Unit Credit Method adopted for the pension schemes. The arrangement is unfunded so no assets are held directly to meet the obligations. The regular service cost and interest on the scheme liabilities are charged to the consolidated income statement. Actuarial gains and losses are charged to the Statement of Comprehensive Income, representing the difference between actual and expected performance.
Share-based payments
The fair value of share plans is recognised as an expense in the consolidated income statement over the expected vesting period of the grant. The fair value of share plans is determined at the date of grant, taking into account any market based vesting conditions attached to the award. Non-market based vesting conditions (e.g. earnings per share targets) are taken into account in estimating the number of awards likely to vest. The estimate of the number of awards likely to vest is reviewed regularly and the expense charged adjusted accordingly. The fair value of employee share option plans is calculated using a generally accepted simulation model.
The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium (any increment) when the options are exercised.
Taxation
Current tax
The charge or credit for current tax is based on the results for the year adjusted for items that are either not subject to taxation or for expenditure which cannot be deducted in computing the tax charge or credit. The tax charge or credit is calculated using taxation rates that have been enacted or substantively enacted at the balance sheet date.
Deferred tax
Deferred tax is recognised using the balance sheet liability method on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit. Deferred tax is recognised in respect of all taxable temporary timing differences, with certain limited exceptions:
- deferred tax is not provided on the initial recognition of an asset or liability in a transaction that does not affect accounting profit or taxable profit and is not a business combination; and - deferred tax assets are only recognised if it is probable that there will be sufficient profits from which the future reversal of the underlying timing differences can be deducted. In deciding whether future reversal is probable, the directors review the Group's forecasts and make an estimate of the aggregate deferred tax asset that should be recognised. This aggregate deferred tax asset is then allocated into the different categories of deferred tax, taking account of the fact that the deferred tax asset in relation to the pension deficit will be recognised over a longer period, as the pension liability reverses over the average remaining service life of employees.
In relation to investment properties, a deferred tax liability is provided on the basis of normal income tax rules for the proportion of the property's carrying amount expected to be recovered through use and is provided using capital gains tax rules in respect of the remainder of the property's carrying amount (including all land) expected to be recovered through sale. Provision is made for gains on disposal of property, plant and equipment that have been rolled over into replacement assets only where, at the balance sheet date, there is a commitment to dispose of the replacement assets.
Deferred tax is calculated at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited to the consolidated income statement, except where it applies to items credited or charged to equity, in which case the deferred tax is also dealt with in equity.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
1 ACCOUNTING POLICIES continued
Dividend distribution
Dividend distribution to the Company's shareholders is recognised in the financial statements in the year in which the dividends are paid (in the case of interim dividends) or approved by the Company's shareholders (in the case of final dividends).
Judgements in applying accounting policies and key sources of estimation uncertainty
Many of the amounts included in the financial statements involve the use of judgement and/or estimation.  These judgements and estimates are based on management's best knowledge of the relevant facts and circumstances, having regard to previous experience, but actual results may differ from the amounts included in the financial statements.  Information about such judgements and estimation is contained in the accounting policies and/or the notes to the financial statements, and the key areas summarised below.
Areas of judgement and sources of estimation uncertainty that have the most significant effect on the amounts recognised in the financial statements are:
Estimation of future production levels Along with estimations required as part of the going concern review, estimates of future production are used in the forecasting process which is used in the assessment of the carrying value of certain assets, impairment charges, colliery asset lives and coal reserve estimates.
Review of asset carrying values and impairment charges The Group performs impairment testing in accordance with the accounting policy stated on above.  The calculation of recoverable amount requires the use of estimates and assumptions consistent with the most recent budgets and plans that have been formally approved by management.  Significant factors considered when using estimates to assess the carrying value of assets include future coal prices, expected annual production, expected colliery operating costs, remaining colliery lives and coal reserves and discount rates.  Refer to note 12 for the key assumptions used in the calculations.
Estimation of colliery asset lives Capitalised mine development costs (deep and surface mines) are amortised over the tonnage of coal expected to be extracted in the future. If the amount of coal expected to be extracted varies, this will impact on the amount of the asset which should be carried in the consolidated balance sheet. See accounting policy above.
Determination of coal reserve estimates Reserves are used in the calculation of depreciation, amortisation and impairment charges, the assessment of life of mine stripping ratios and for forecasting the timing of the payment of close down and restoration and clean up costs.
In assessing the life of a mine for accounting purposes, mineral resources are only taken into account where there is a high degree of confidence of economic extraction.  There are numerous uncertainties inherent in estimating coal reserves, and assumptions that are valid at the time of estimation may change significantly when new information becomes available.
Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of reserves and may, ultimately, result in the reserves being restated.
Deferral of stripping costs See accounting policy above.
Capitalisation of exploration and evaluation costs   See accounting policy above.
Estimation of fair value of investment property The fair value of investment property reflects, amongst other things, rental income from our current leases, assumptions about rental income from future leases and the possible outcome of planning applications, in the light of current market conditions. The valuation has been arrived at primarily after consideration of market evidence for similar property, although in the case of those properties where it is considered market value will be informed by their ultimate redevelopment potential, development appraisals have been undertaken to estimate the residual value of the landholding after due regard to the cost of, and revenue from the development of the property. In such instances, on account of the sensitivity of the market value to the detail of any future planning consent, and the potential for material variance in the actuality of development costs, as compared with our own estimates, together with the subjective nature of hope value, the values reported are subject to material uncertainty, and a change in fair values could have a material impact on the Group's results.  Investment properties are disclosed in note 13.
Estimation of post retirement benefit obligations Retirement benefits represent obligations that will be settled in the future and require assumptions to project benefit obligations and fair values of plan assets. Retirement benefit accounting is intended to reflect the recognition of future benefit costs over the employee's approximate service period, based on the terms of the plans and the investment and funding decisions made by the Group.  These are subject to actuarial estimates of, amongst other items, rate of return on investments, rate of salary increases, rate of price inflation, the cost of funding future liabilities and post retirement life expectancy.  Details of the significant estimates used are set out in note 24.
Estimation of other provisions (including clawback liabilities) Provisions are dependent on assessments of whether the criteria for recognition have been met, including estimates of the outcome and the amount of the potential cost of resolution. Provisions are recognised by a charge against income when it is probable that a liability has been incurred and the amount of such liability can be reasonably estimated.
Estimation of close down and restoration costs Estimated provisions are established in the consolidated balance sheet and amortised in proportion to the coal expected to be extracted from a site.  If that expected tonnage or the actual cost varies, then the provision may be under or over stated.  Estimates for environmental restoration provisions are based on the nature and seriousness of the contamination as well as on the technology required for clean up.  The provisions are disclosed in note 21.
Recoverability of deferred tax assets The recognition of deferred tax assets requires considerable judgement as to the future profitability of the mining business. The recognition of a deferred tax liability in relation to property revaluations requires an estimate to be made of the proportion of the value of a property which will be recovered through use, compared to the proportion of the value which will be recovered through sale. Deferred tax is disclosed in note 8.

2  SEGMENTAL REPORTING
The Group has adopted the provisions of IFRS 8 'Operating segments' for the first time in these financial statements. This standard requires the disclosure of segmental information on the same basis as the management information provided to the chief operating decision-maker.
The chief operating decision-maker has been identified as the Executive Management Committee, as detailed below. The Committee manages and co-ordinates all strategic and key operational issues. As at 26 December 2009, the Executive Management Committee consisted of the following individuals:
Chief Executive                                                                                           Jon Lloyd Finance Director                                                                                          David Brocksom Production Director                                                                                      William Tinsley Commercial Contracts Director                                                                    Philip Garner Company Secretary                                                                                     Richard Cole Subsequent to the year end Gareth Williams as Mining Director, David Stewart as Human Resources Director and Stuart Hoult as Safety Director have been appointed to the Executive Management Committee.
The performance of the operating segments is assessed on a measure of operating profit/loss. This measurement basis excludes the effect of non-trading exceptional items and finance costs and income which are not included in the results of the operating businesses. Total assets for the segments exclude deferred tax and cash and cash equivalents (unrestricted) as these are managed centrally. Cash and cash equivalents that are subject to restriction have been included within the appropriate segment, along with the related provisions.
The Committee considers that the operating segments comprise the following:
Deep mining
The Group had 4 operating deep mines in 2009 located in central and northern England. The Group has estimated total reserves and resources of approximately 100 million tonnes. The closed/sold deep mines consist of the closed Rossington colliery, the mothballed Harworth colliery and the Maltby colliery which was sold.  The Group generates electricity from mines methane at both operating and closed sites. Although the decision to close the Welbeck colliery has been made and provisions for the closure costs are included in 2009, as the mine was still working in 2010 it is reported as an ongoing deep mine and will become a closed deep mine for 2010 reporting.
Surface mining
The Group had 4 active coaling surface mines and planning committee approval or consent to mine 4 further sites. Planning consent in respect of surface mine reserves of 18 million tonnes has either already been granted, applied for or is planned to be applied for during 2010.
Property
The Group had a portfolio of approximately 43,500 acres and has identified circa 4,500 net acres of this land as offering prime prospects for a mix of business park, residential, distribution and community development.  Certain land has been identified as potentially suitable for wind farms and this opportunity is being pursued.
Other
This includes any operations not controlled by the mining or property businesses and unallocated central activities which do not represent a separate reportable segment in accordance with IFRS 8.
Revenue
					Year ended December 2009		Year ended December 2008
Revenue from operations arises from:					£000		£000
Sale of goods					309,528		374,798
Rendering of services					660		12,624
Rental income					5,817		5,119
					316,005		392,541
Revenues of approximately £276,000,000 (2008: £325,000,000) are derived from three external customers. These revenues are attributable to the deep and surface mining segments.

2  SEGMENTAL REPORTING continued
Year ended December 2009	Ongoing deep mines	Closed /sold deep mines*	Deep mining	Surface mining	Property	Other +	Total
	£000	£000	£000	£000	£000	£000	£000
Continuing operations
Revenue - gross	250,566	-	250,566	67,842	6,690	1	325,099
Revenue - intra Group	(368)	-	(368)	(7,870)	(856)	-	(9,094)
Revenue - external	250,198	-	250,198	59,972	5,834	1	316,005
Operating (loss)/profit before non-trading exceptional items and net decrease in fair value of investment properties	(70,486)	-	(70,486)	1,853	1,229	(24)	(67,428)
Net decrease in fair value of investment properties	-	-	-	-	(25,704)	-	(25,704)
Operating (loss)/profit before non-trading exceptional items	(70,486)	-	(70,486)	1,853	(24,475)	(24)	(93,132)
Non-trading exceptional items
- Profit on sale of joint venture	-	-	-	-	-	6,534	6,534
- Rationalisation, closure and other costs	(15,508)	(3,434)	(18,942)	(355)	-	(307)	(19,604)
Operating (loss)/profit after non-trading exceptional items	(85,994)	(3,434)	(89,428)	1,498	(24,475)	6,203	(106,202)
Finance costs							(25,306)
Finance income							729
Net finance costs							(24,577)
Share of post-tax profit from joint ventures  - property							1,331
- Coal4Energy							388
Loss before tax							(129,060)
Tax credit							1,513
Loss for the year							(127,547)
Other segmental items
Capital expenditure	69,843	-	69,843	264	8,272	132	78,511
Depreciation	29,677	-	29,677	2,330	163	65	32,235
Surface mine development costs and restoration assets capitalised	-	-	-	5,686	-	-	5,686
Amortisation of surface mine development and restoration assets	-	-	-	9,961	-	-	9,961
Provisions - non cash charge	13,222	-	13,222	(771)	-	20	12,471
*     Closed/sold deep mines includes income and expenditure arising at the Harworth colliery.
+    Other consists of operations not controlled by the mining or property businesses and unallocated central activities which do not represent a separate reportable segment in accordance with IFRS 8.
Property operating profit includes the net decrease in fair value of properties of £25,704,000 and loss on disposal of investment properties of £3,000.
Non-trading exceptional items
Rationalisation, closure and other costs are predominantly associated with the deep mines operations and consist of costs and income arising as a result of the closure of the Welbeck colliery of £10,456,000 (representing redundancy costs of £10,294,000, impairment of stores equipment of £3,487,000 and impairment of fixed assets of £629,000 offset by a pension curtailment of £3,954,000), the estimated cost of fines as a result of HSE investigations into recent deep mine incidents of £5,000,000, care, maintenance and exploration costs of £3,486,000 for the mothballed Harworth colliery and other redundancy costs of £662,000.
All trading and non-trading exceptional items are included in cost of sales with the exception of the estimated costs of fines which are within other operating income and expense.

2  SEGMENTAL REPORTING continued
Year ended December 2008	Ongoing deep mines	Closed/ sold deep mines*	Deep mining	Surface mining	Property	Other +	Total
	£000	£000	£000	£000	£000	£000	£000
Continuing operations
Revenue - gross	309,103	-	309,103	83,575	5,181	2,195	400,054
Revenue - intra Group	-	-	-	(7,125)	(20)	(368)	(7,513)
Revenue - external	309,103	-	309,103	76,450	5,161	1,827	392,541
Operating profit/(loss) before non-trading exceptional items and net increase in fair value of investment properties	(12,795)	-	(12,795)	10,416	4,683	(489)	1,815
Net increase in fair value of investment properties	-	-	-	-	23	-	23
Operating profit/(loss) before non-trading exceptional items	(12,795)	-	(12,795)	10,416	4,706	(489)	1,838
Non-trading exceptional items
- Rationalisation, closure and other costs	(468)	(3,456)	(3,924)	(162)	-	-	(4,086)
Operating (loss)/profit after non-trading exceptional items	(13,263)	(3,456)	(16,719)	10,254	4,706	(489)	(2,248)
Finance costs							(17,817)
Finance income							2,919
Net finance costs							(14,898)
Share of post-tax (loss)/profit from joint ventures  - property							(59)
- Coal4Energy							1,562
Loss before tax							(15,643)
Tax charge							(100)
Loss for the year							(15,743)
Other segmental items
Capital expenditure	21,487	-	21,487	3,137	15,219	-	39,843
Depreciation	34,772	-	34,772	2,936	162	43	37,913
Surface mine development costs and restoration assets capitalised	-	-	-	20,951	-	-	20,951
Amortisation of surface mine development and restoration assets	-	-	-	12,583	-	-	12,583
Provisions - non cash charge	6,900	-	6,900	14,370	-	45	21,315
*     Closed/sold deep mines includes income and expenditure arising at the Harworth colliery.
+    Other consists of operations not controlled by the mining or property businesses and unallocated central activities which do not represent a separate reportable segment in accordance with IFRS 8.
Property operating profit includes the net appreciation in fair value of properties of £23,000 and profit on disposal of investment properties of £3,661,000.
Non-trading exceptional items
Rationalisation, closure and other costs are predominantly associated with the deep mines operations and consist of care, maintenance and exploration costs of £3,447,000 for the mothballed Harworth colliery and redundancy costs of £1,072,000, offset by income of £433,000 from the release of provisions following the settlement of HMRC and redundancy disputes, since these were recorded as exceptional costs in prior years.
All trading and non-trading exceptional items are included in cost of sales.

2  SEGMENTAL REPORTING continued
Balance sheet
at December 2009
	Ongoing deep mines	Closed/ sold deep mines*	Deep mining	Surface mining	Property	Other +	Total
	£000	£000	£000	£000	£000	£000	£000
Segment assets	292,536	145	292,681	46,134	390,401	551	729,767
Investment in joint ventures	-	-	-	-	3,263	-	3,263
Total segment assets	292,536	145	292,681	46,134	393,664	551	733,030
Cash and cash equivalents (unrestricted)							13,587
Deferred tax asset							35,800
Total assets per balance sheet							782,417
Balance sheet
at December 2008
	Ongoing deep mines	Closed/ sold deep mines*	Deep mining	Surface mining	Property	Other +	Total
	£000	£000	£000	£000	£000	£000	£000
Segment assets	258,022	13	258,035	54,792	418,043	1,104	731,974
Investment in joint ventures	-	-	-	-	874	1,904	2,778
Total segment assets	258,022	13	258,035	54,792	418,917	3,008	734,752
Cash and cash equivalents (unrestricted)							42,336
Deferred tax asset							36,121
Total assets per balance sheet							813,209
*     Closed/sold deep mines includes the assets of Harworth and Rossington collieries and Maltby colliery which was sold .
+    Other consists of operations not controlled by the mining or property businesses and unallocated central activities which do not represent a separate reportable segment in accordance with IFRS 8.
Cash and cash equivalents that are subject to restriction have been included within the appropriate segment, along with the related provisions.
3  LOSS BEFORE TAX
			Notes		Year ended December 2009		Year ended December 2008
					£000		£000
Loss before tax is stated after (charging)/crediting:
Depreciation of property, plant and equipment - owned assets			12		(27,069)		(34,100)
Depreciation of property, plant and equipment - under finance leases			12		(5,166)		(3,813)
Amortisation of surface mine development, restoration and closure assets			12		(9,961)		(12,583)
Impairment of operating plant and equipment			12		(629)		-
Coal Investment Aid			33		2,867		3,106
(Loss)/profit on disposal of investment properties					(3)		3,661
Profit on disposal of operating property, plant and equipment					172		82
Repairs and maintenance for deep and surface mining					(73,967)		(64,427)
Staff costs			5		(182,176)		(175,333)
Spares and consumables used					(45,338)		(44,700)
Operating expense for rental investment property					(2,000)		(2,251)
Operating lease payments					(314)		(317)
4 OTHER OPERATING INCOME AND EXPENSES					Year ended December 2009		Year ended December 2008
					£000		£000
Administrative expenses					(14,241)		(13,547)
Other operating income					3,846		4,773
Other operating income and expenses					(10,395)		(8,774)
Due to the nature of the Group's business, distribution expenses are treated as a part of cost of sales. Other operating income includes Coal Investment Aid of £2,867,000 (2008: £3,106,000).

5 EMPLOYEE INFORMATION
The average number of persons (including the Board of Directors) employed by the Group during the year was:
				Group		Company
				Year ended December 2009	Year ended December 2008	Year ended December 2009	Year ended December 2008
				Number	Number	Number	Number
Deep mining				2,443	2,554	-	-
Surface mining				575	531	-	-
Property				20	19	-	-
Other				74	75	7	7
				3,112	3,179	7	7
5 EMPLOYEE INFORMATION continued
Total staff costs for the Group were:
				Group		Company
				Year ended December 2009	Year ended December 2008	Year ended December 2009	Year ended December 2008
Staff costs (including the Board of Directors)				£000	£000	£000	£000
Wages and salaries				151,434	145,258	1,009	1,151
Social security costs				15,312	14,535	120	120
Pension and post retirement benefit costs				14,754	15,000	183	168
Share-based payments				676	540	676	540
				182,176	175,333	1,988	1,979
Wage and salary costs in 2009 include the benefit of pension curtailment gains of £3,954,000 (2008: £nil) as disclosed within notes 2 and 24.
Key management compensation
					Year ended December 2009		Year ended December 2008
					£000		£000
Salaries and short-term employee benefits					1,441		1,386
Post employment benefits					279		240
Termination benefits					216		-
Share-based payments					-		34
					1,936		1,660
The compensation details above are for members of the Executive Management Committee during the year.  Current members of the Executive Management Committee are given in note 2.
Directors' remuneration and interests
Detailed information relating to directors' remuneration and their interests in share options is indicated by* in the Directors' Remuneration Report and forms part of these financial statements.
6  FINANCE INCOME AND COSTS
					Year ended December 2009		Year ended December 2008
					£000		£000
Interest expense
- Bank borrowings					(12,569)		(11,816)
- Hire purchase agreements and finance leases					(998)		(879)
- Unwinding of discount on provisions					(3,626)		(4,257)
- Amortisation of the issue costs of bank loans					(2,697)		(1,626)
- Generator loans and prepayments					(4,000)		-
Gains on interest rate swaps not eligible for hedge accounting					1,714		761
Amortisation of interest rate swaps recycled from reserves					(3,130)		-
Finance costs					(25,306)		(17,817)
Finance income					729		2,919
Net finance costs					(24,577)		(14,898)

7  AUDITOR'S REMUNERATION
During the year the Group obtained the following services from its auditors, PricewaterhouseCoopers LLP, at costs as detailed below:
					Year ended December 2009		Year ended December 2008
					£000		£000
Audit services
- Fees payable to the Company auditors for the audit of the parent Company and the consolidated accounts					75		70
Non-audit services
- The audit of the Company's subsidiaries pursuant to legislation					240		220
- Other services pursuant to legislation					50		81
- Tax advisory and compliance services					38		111
- Other services					288		121
					691		603
From time to time, the Group employs PricewaterhouseCoopers LLP on assignments additional to their statutory audit duties where their expertise and experience with the Group are important. They are awarded assignments on a competitive basis. The Audit Committee reviews non-audit assignments quarterly, and approves all assignments above a predetermined cost threshold.
8  TAX
					Year ended December 2009		Year ended December 2008
Analysis of tax (credit)/charge in the year					£000		£000
Corporation tax					(530)		100
Deferred tax					(983)		-
Tax (credit)/charge					(1,513)		100
The tax for the year is different to the standard rate of corporation tax in the UK of 28% (2008: 28%).  The differences are explained below:
					Year ended December 2009		Year ended December 2008
					£000		£000
Loss before tax					(129,060)		(15,643)
Loss before tax multiplied by rate of corporation tax in the UK of 28% (2008: 28%)					(36,137)		(4,380)
Effects of:
Expenses not deducted and income not chargeable for tax purposes					4,701		2,255
Deferred tax not recognised					29,924		2,225
Total tax (credit)/charge					(1,512)		100
8  TAX continued
Deferred taxation
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 28% (2008: 28%). Deferred tax assets and liabilities are offset when there is a legally enforced right to offset current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority.  The Group's deferred tax liability in respect of fixed assets can all be offset in this way, apart from the liability of £422,000 (2008:£815,000) in respect of revaluation gains on investment properties expected to be recovered through future use.
					As at December 2009		As at December 2008
					£000		£000
Deferred tax asset - to be recovered after more than 12 months					35,800		36,121
Deferred tax liability - to be recovered after more than 12 months					(422)		(815)
Net deferred tax asset					35,378		35,306
The movement on the deferred tax asset is shown below:
					Year ended December 2009		Year ended December 2008
					£000		£000
At the beginning of the year					35,306		35,185
Amounts credited to the consolidated income statement					983		-
Amounts charged/(credited) to consolidated statement of comprehensive income					(911)		121
At the end of the year					35,378		35,306
A deferred tax asset of £35,800,000 (2008: £36,121,000) has been recognised to the extent that it is expected to be recovered, based on forecasts of future taxable profits. Further deferred tax assets have not been recognised owing to the uncertainty as to their recoverability. If these deferred tax assets were recognised, the total asset would be £179,896,000 (2008: £113,314,000) as set out below:
				As at December 2009 Total amount recognised	As at December 2009 Total potential asset/ (liability)	As at December 2008 Total  amount recognised	As at December 2008 Total potential asset/ (liability)
				£000	£000	£000	£000
Fixed asset timing differences				(422)	36,144	(815)	29,228
Other timing differences				-	10,335	-	9,596
Trading losses				24,800	69,684	24,643	42,987
Retirement benefit liabilities				9,100	61,833	9,100	29,125
Cash flow hedges				1,900	1,900	2,378	2,378
Net deferred tax asset				35,378	179,896	35,306	113,314
The fixed asset timing difference relates to the deferred tax liability arising from the directors' estimate of the proportion of revaluation gains on investment properties which will be recovered through use. No tax liability has been recognised in relation to the balance of the gain which is expected to be realised through sale, due to the fact that the Group has unrecognised capital losses brought forward of £387,000,000 (2008: £388,000,000).
The movement on deferred tax asset (charged)/credited to equity during the year is as follows:
					2009		2008
					£000		£000
Movement on deferred tax asset relating to retirement benefit liabilities in the period					-		(2,257)
Movement on deferred tax asset relating to cash flow hedges in the period					(911)		2,378
Deferred tax asset movement credited/(charged) to equity					(911)		121
The Company has no recognised or unrecognised deferred tax in 2009 or 2008.
9  LOSS FOR THE FINANCIAL YEAR OF THE PARENT ENTITY
As permitted by section 408 of the Companies Act 2006, the Company's income statement has not been included separately in these financial statements. The loss for the financial year was £6,240,000 (2008: loss £168,440,000).  There was an impairment charge against the carrying value of investments in subsidiaries in 2008 of £172,914,000 (see note 14).
10 DIVIDENDS
No dividends have been paid or proposed in relation to 2009 or 2008.
11 LOSS PER SHARE
Loss per share has been calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of shares in issue and ranking for dividend during the year.
In calculating the diluted loss per share, the weighted average number of ordinary shares is adjusted for the diluting effect of share options potentially issuable under the Group's employee share option plans.
					Year ended December 2009		Year ended December 2008
					£000		£000
Loss before tax					(129,060)		(15,643)
Tax credit/(charge)					1,513		(100)
Loss for the year					(127,547)		(15,743)
Weighted average number of shares used for basic earnings per share calculation					175,008,424		157,154,163
Dilutive effect of share options					-		-
Weighted average number of shares used for diluted earnings per share calculation					175,008,424		157,154,163
Basic and diluted loss per share (pence)					(72.9)		(10.0)
Loss per share, as adjusted to exclude tax, for the year is 73.7 pence (2008: loss 10.0 pence).

12 OPERATING PROPERTY, PLANT AND EQUIPMENT
		Operating properties	Deep mines including surface works	Plant and equipment	Sub total	Surface mine development and restoration assets	Total
Group		£000	£000	£000	£000	£000	£000
Cost:
At January 2009		14,961	808,417	90,790	914,168	49,628	963,796
Additions		208	69,843	396	70,447	5,686	76,133
Disposals		-	(2,233)	(1,471)	(3,704)	(14,557)	(18,261)
Transfer to investment properties		(161)	-	-	(161)	-	(161)
At December 2009		15,008	876,027	89,715	980,750	40,757	1,021,507
Depreciation:
At January 2009		4,119	659,731	68,517	732,367	21,149	753,516
Charge for the year		163	28,422	3,650	32,235	9,961	42,196
Impairment		-	629	-	629	-	629
Disposals		-	(2,233)	(1,243)	(3,476)	(12,960)	(16,436)
At December 2009		4,282	686,549	70,924	761,755	18,150	779,905
Net book amount:
At December 2009		10,726	189,478	18,791	218,995	22,607	241,602
Cost:
At January 2008		19,676	786,937	90,615	897,228	37,939	935,167
Additions		1,129	21,480	3,144	25,753	20,951	46,704
Disposals		-	-	(2,969)	(2,969)	(9,262)	(12,231)
Transfer to investment properties		(5,844)	-	-	(5,844)	-	(5,844)
At December 2008		14,961	808,417	90,790	914,168	49,628	963,796
Depreciation:
At January 2008		4,346	626,262	67,069	697,677	17,828	715,505
Charge for the year		162	33,469	4,282	37,913	12,583	50,496
Disposals		-	-	(2,834)	(2,834)	(9,262)	(12,096)
Transfer to investment properties		(389)	-	-	(389)	-	(389)
At December 2008		4,119	659,731	68,517	732,367	21,149	753,516
Net book amount:
At December 2008		10,842	148,686	22,273	181,801	28,479	210,280
Surface mine development and restoration assets net book amounts includes capitalised pre-coaling costs of £12,446,000 (2008: £12,471,000 ), restoration/rehabilitation costs of £6,720,000 (2008: £12,340,000) and deferred stripping costs of £3,441,000 (2008: £3,668,000). These are depreciated over the estimated tonnage of the recoverable reserves as these are extracted.
Surface mine asset additions in the period of £5,686,000 (2008: £20,951,000) comprise £3,911,000 (2008: £6,206,000) in respect of pre-coaling expenditure, £141,000 (2008: £11,077,000) recognised as a non-current asset on the creation of a corresponding provision for restoration and rehabilitation costs and £1,634,000 (2008: £3,668,000) of deferred stripping costs.
Included in operating property, plant and equipment is £78,452,000 (2008: £20,132,000) of capitalised work in progress which is not depreciated.
Assets under finance leases, disclosed under deep mines including surface works and plant and equipment, have the following net book amounts:
					As at December 2009		As at December 2008
					£000		£000
Cost					45,989		26,245
Aggregate depreciation					(26,273)		(12,739)
Net book amount					19,716		13,506
The movement in aggregate depreciation is the net of new equipment leased and new leases for 2009 including previously owned assets with previous aggregate depreciation.
In accordance with IAS 36, tangible fixed assets are reviewed for impairment if there is any indication that their carrying amount may not be recoverable. An impairment review has been performed for the tangible fixed assets of the deep and surface mining business as a result of the significant operating loss recorded by the Group in the year ended 26 December 2009. In the year ended December 2009 £629,000 of Welbeck colliery fixed assets were impaired, however, no other impairment charges were recognised. The estimates of recoverable amount were based on value-in-use calculations, using a pre-tax discount rate of 14.7% which reflects the specific risks of the business. These calculations use cash flow projections based on financial budgets approved by management covering a five year period. Cash flows beyond the five year period are extrapolated assuming a zero growth rate.
Sensitivity analysis No impairment of fixed assets would be recognised by the Group if any of the following occurred in isolation: - The revised estimated pre-tax discount rate applied to the discounted cash flows was increased to over 20%; - The estimated long-term price of coal of $100/tonne assumed in calculating the discounted cash flows decreased by 10%; and - The estimated level of annual production assumed in calculating the discounted cash flows decreased by 0.25 million tonnes.
13 INVESTMENT PROPERTIES
					As at December 2009		As at December 2008
At valuation - Group					£000		£000
At the beginning of the year					404,658		384,291
Additions					8,064		14,090
Disposals					(9,236)		(2,371)
Fair value (decrease)/increase					(25,704)		23
Transfer from operating property, plant and equipment at net book amount					161		5,455
Revaluation of property transferred to investment properties					52		3,170
At the end of the year					377,995		404,658
The properties were valued at December 2009, in accordance with the Appraisal and Valuation Standards of the Royal Institution of Chartered Surveyors, by three firms, BNP Paribas Real Estates, Smiths Gore and Bell Ingram, all independent firms with relevant experience of valuations of this nature. The valuation excludes any deduction of rehabilitation and restoration costs which are stated within provisions in the balance sheet.
Key assumptions within the basis of fair value are:
- The sites will be cleared of redundant buildings, levelled and prepared ready for development
- The values are on a basis that no material environmental contamination exists on the subject or adjoining sites, or where this is present the sites will be remediated to a standard consistent with the intended use, the costs for such remediation being separately provisioned
- No deduction or adjustment has been made in relation to clawback provisions, or other taxes which may be payable in certain events
Had the above investment properties been carried at historic cost, rather than fair value, their value would be £103,995,000 (2008: £98,397,000).
Land and buildings with a value of £351,319,000 (2008: £345,280,000) are subject to fixed charges to cover borrowings against those assets and £9,010,000 (2008: £7,886,000) are subject to restrictions as they cover insurance requirements.  Other property, plant and equipment is subject to floating charges to cover liabilities due to bank borrowings.
14 INVESTMENTS
Investment in joint ventures
The Group holds 50% of the issued shares in UK Strategic Partnership Limited as a joint venture company with Strategic Sites Limited for the development of certain investment properties.  The first development was at the Advanced Manufacturing Park at Waverley, South Yorkshire.
During 2009 the Group acquired 50% of the issued shares in Bates Regeneration Limited as a joint venture company with Banks Property Limited for the development of an investment property at Blyth, Northumberland.
In January 2009, the Group sold its 50% shareholding in Coal4Energy to Hargreaves Services PLC, realising a profit on sale of £6,534,000.
					2009		2008
					£000		£000
At the beginning of the year					2,778		342
Additions					1,060		933
Share of profit/(loss)   - property joint ventures					1,331		(59)
- Coal4energy Limited					388		1,562
Sale of share of joint venture					(2,294)		-
Dividends					-		-
At the end of the year					3,263		2,778
The Group's share of the results of its joint ventures, all of which are unlisted, and its share of the assets (including goodwill and liabilities) are as follows:
	Country of incorporation		Assets	Liabilities	Revenues	Profit/(loss)	Interest held
			£'000	£'000	£'000	£'000	%
2009
UK Strategic Partnership Limited	England and Wales		4,079	(3,166)	321	40	50
Bates Regeneration Limited	England and Wales		2,350	-	-	1,291	50
Coal4Energy Limited	England and Wales		-	-	7,506	388	-
Total			6,429	(3,166)	7,827	1,719
2008
Coal4Energy Limited	England and Wales		9,696	(7,792)	36,630	1,562	50
UK Strategic Partnership Limited	England and Wales		4,230	(3,356)	-	(59)	50
Total			13,926	(11,148)	36,630	1,503

14 INVESTMENTS continued
Investment in subsidiaries
Company							£000
Cost:
At January and December 2009							473,224
Provision for impairment:
At January 2009							(172,914)
Charge for the year							-
At December 2009							(172,914)
Net book amount:
At December 2009							300,310
Cost:
At January and December 2008							473,224
Provision for impairment:
At January 2008							-
Charge for the year							(172,914)
At December 2008							(172,914)
Net book amount:
At December 2008							300,310
In 2008, as a result of the decline in the Group's market capitalisation, the investment held by the parent company was written down to its estimated recoverable amount. Note 12 details the value-in-use calculations. No further impairment charge has been made in 2009.
Investments in subsidiaries are stated at cost.  As permitted by section 616 of the Companies Act 2006, where the relief afforded under section 612 of the Companies Act 2006 applies, cost is the aggregate of the nominal value of the relevant number of the Company's shares and the fair value of any other consideration given to acquire the share capital of the subsidiary undertakings.  The Directors consider that to give full particulars of all subsidiary undertakings would lead to a statement of excessive length.  A list of principal subsidiary undertakings is given below.  A full list of subsidiary undertakings will be annexed to the Company 's next annual return.
Particulars of the principal Group undertakings at December 2009 are as follows:
	Activity				Description of shares held		Proportion of nominal value of issued share capital held by the Company %
Harworth Group Limited	Holding company				Ordinary		-
UK Coal Holdings Limited	Holding company				Ordinary		100
Harworth Insurance Company Limited	Insurance				Ordinary		100
Harworth Power Limited	Power generation				Ordinary		-
Mining Services Limited	Surface mining plant operations				Ordinary		-
UK Coal Mining Limited	Underground and surface mining				Ordinary		-
Centechnology (UK) Limited	Labour contracting services				Ordinary		-
EOS Inc.Ltd	Property company				Ordinary		-
Harworth Estates (Agricultural Land) Limited	Property company				Ordinary		-
Harworth Estates (Waverley Prince) Limited	Property company				Ordinary		-
Potland Burn Limited	Property company				Ordinary		-
The Group owns 100% of the issued share capital and voting rights of all of the above companies.
All of the above companies are incorporated in England and Wales. They are all included in the Group's consolidated results.
15  TRADE AND OTHER RECEIVABLES - NON-CURRENT
Amounts classed as non-current are as  follows:
				Group		Company
				As at December 2009	As at December 2008	As at December 2009	As at December 2008
				£000	£000	£000	£000
Other receivables				1,963	1,527	-	-
Other receivables include £1,335,000 (2008: £865,000) of long-term deposits held as security for surface mines.

16 INVENTORIES
				Group		Company
				As at December 2009	As at December 2008	As at December 2009	As at December 2008
				£000	£000	£000	£000
Coal stocks				28,690	21,412	-	-
Spares and consumables				27,069	25,340	-	-
				55,759	46,752	-	-
The cost of inventories recognised as an expense and included in cost of sales amounted to £45,338,000 (2008: £44,700,000).
During the year, a further provision of £3,487,000 (2008: £883,000) has been created against spares and consumables stock and a net realisable value provision of £3,600,000 (2008: £nil) created against coal stocks, the charges for which are included in cost of sales.
17 TRADE AND OTHER RECEIVABLES - CURRENT
				Group		Company
				As at December 2009	As at December 2008	As at December 2009	As at December 2008
				£000	£000	£000	£000
Trade receivables				18,388	32,508	-	-
Less: provision for impairment of trade receivables				(273)	(136)	-	-
Net trade receivables				18,115	32,372	-	-
Other receivables				1,348	1,399	1,296	949
Prepayments and accrued income				5,213	5,750	-	-
Amounts owed by joint ventures				-	470	-	-
Amounts owed by subsidiary undertakings				-	-	200,551	154,514
				24,676	39,991	201,847	155,463
The carrying amount of trade and other receivables approximate to their fair value. All of the Group's receivables are denominated in sterling.
Due to the nature of the Group's activities, a substantial amount of the Group's sales are to a limited number of large industrial customers within the power generation sector.  Whilst this concentration provides an increased credit risk, due to the financial strength of the power sector, management does not believe that this is significant.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables as disclosed in note 22. The Group does not hold any collateral as security.
Movements on the Group provisions for impairment of trade receivables are as follows:
						Group
						2009	2008
						£000	£000
At the beginning of the year						136	22
Provisions for impairment of receivables						266	200
Receivables written off during the year as uncollectible						(1)	(77)
Unused amounts reversed						(128)	(9)
At the end of the year						273	136
The creation and releases of the provision for impaired receivables have either been included in cost of sales or other operating income and expenses in the consolidated income statement.  Amounts charged to the allowance account are generally written off when there is no expectation of any additional recoveries.
The other classes of assets within trade and other receivables do not contain impaired assets.
As of December 2009, there were provisions against trade receivables of £273,000 (2008: £136,000) which were impaired. The Group has assessed that it is unlikely that these receivables will be recovered.  The ageing of these receivables is as follows:
						Group
						As at December 2009	As at December 2008
						£000	£000
3 to 6 months						-	136
Over 6 months						273	-
As of December 2009, trade receivables of £493,000 (2008: £2,653,000) were past due but not impaired. These relate to a number of customers for whom there is no recent history of default and consequently there are no indications at the reporting date that they will not meet their payment obligations. The ageing analysis of these trade receivables is as follows:
						Group
						As at December 2009	As at December 2008
						£000	£000
Up to 3 months						408	1,901
Over 3 months						85	752
						493	2,653
18 CASH AND CASH EQUIVALENTS
				Group		Company
				As at December 2009	As at December 2008	As at December 2009	As at December 2008
				£000	£000	£000	£000
Cash deposited to cover insurance requirements				19,104	20,425	-	-
Subsidence security fund				8,668	8,341	-	-
				27,772	28,766	-	-
Cash held and other cash balances				13,587	42,336	12,869	40,682
				41,359	71,102	12,869	40,682
Total cash held subject to restrictions to cover insurance and surface damage liabilities at the year end amounts to £27,772,000 (2008: £28,766,000).  In addition to this, security to cover surface damage liabilities in the form of an insurance bond for £10,000,000 (2008: £10,000,000) is in place.
19  BORROWINGS
				Group		Company
				As at December 2009	As at December 2008	As at December 2009	As at December 2008
Current				£000	£000	£000	£000
Bank loans, overdrafts and finance leases due within one year or on demand:
Secured - bank loans and overdrafts				5,710	1,365	-	-
Finance lease obligations				5,018	5,941	-	-
				10,728	7,306	-	-
Generator loans and prepayments due within one year				2,990	-	-	-
Total borrowings - due within one year or on demand				13,718	7,306	-	-
				Group		Company
				As at December 2009	As at December 2008	As at December 2009	As at December 2008
Non-current				£000	£000	£000	£000
Bank loans, overdrafts and finance leases due after more than one year:
Secured - bank loans and overdrafts				104,943	169,871	-	-
Finance lease obligations				12,251	2,186	-	-
				117,194	172,057	-	-
Generator loans and prepayments due after more than one year				64,619	-	-	-
Total borrowings - due after more than one year				181,813	172,057	-	-
The carrying value of the Group's external borrowings, which consist of floating rate and fixed rate short-term borrowings, approximates to fair value.  All of the Group's borrowings are denominated in sterling.
Bank loans and overdrafts due within one year or on demand are stated after deduction of unamortised borrowing costs of £2,307,000 (2008: £1,841,000).  Non-current bank loans and overdrafts are stated after deduction of unamortised borrowing costs of £1,859,000 (2008: £1,020,000).  The Group's Revolving Credit Facility can be drawn when required and is committed until July 2011.
During the period, the Group made repayments of £62,730,000 against bank loans and overdrafts. Additional finance lease facilities of £17,214,000 have been secured during the period. These leases are due to be repaid in the period 2012 through to 2014.   The balance relates to payments against finance leases.
During the period, the Group has entered into certain contracts for coal supply which have resulted in increased cash flows to the business in 2009 and 2010.  These benefits together with accrued implied interest are treated as generator loans and prepayments, and will be repaid either out of later revenue or as separate repayments in the period commencing in August 2010 and ending in 2015.  Interest is charged on these outstanding amounts using actual or implied interest rates. At December 2009, these generator loans and prepayments were not fully drawn. When fully drawn, the average interest rate on these balances will be 11%.
During 2009, new bank loans were taken out with a value of £3,451,000 (2008: £13,929,000), secured on the Group's investment properties and certain other fixed assets.
The bank loans and overdrafts are secured by way of fixed and floating charges over certain assets of the Group.
The maturity profile of the Group's drawn and undrawn external bank facilities is as follows:
					2009		2008
					£000		£000
Expiring within 1 year					8,017		12,606
Expiring between 1 and 2 years					64,348		102,389
Expiring between 2 and 5 years					94,454		91,424
					166,819		206,419
These facilities are all nominally at floating interest rates, but interest rate swaps with principal value of £120,211,000 (2008: £125,779,000) are held to convert these borrowings to fixed interest rates.
Of the unutilised borrowing facilities, £nil (2008: £17,715,000) is linked to certain properties and can only be utilised against expenditure related to these properties.
The maturity profile of the Group's bank and finance lease borrowings is as follows:
Group	Debt £000	Generator loans and prepayments £000	2009 Finance leases £000	Total  £000	Debt £000	2008 Finance leases £000	Total £000
Within 1 year	5,710	2,990	5,018	13,718	1,365	5,941	7,306
Between 1 and 2 years	11,068	17,043	3,426	31,537	96,469	2,011	98,480
Between 2 and 5 years	93,875	45,134	8,825	147,834	73,402	175	73,577
More than 5 years	-	2,442	-	2,442	-	-	-
	110,653	67,609	17,269	195,531	171,236	8,127	179,363
The minimum lease payments under finance leases fall due as follows:
					As at December 2009		As at December 2008
					£000		£000
Within 1 year					5,993		6,442
Between 1 and 5 years					13,859		2,298
					19,852		8,740
Future finance charges on finance leases					(2,583)		(613)
Present value of finance lease liabilities					17,269		8,127
Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.
The Company had no external borrowings at December 2009 or December 2008.
20 TRADE AND OTHER PAYABLES
				Group		Company
				As at December 2009	As at December 2008	As at December 2009	As at December 2008
				£000	£000	£000	£000
Current
Trade payables				60,989	47,787	-	-
Amounts owed to subsidiary undertakings				-	-	147,513	224,049
Other taxation and social security				3,757	12,958	-	-
Accruals and deferred income				39,530	43,307	145	259
				104,276	104,052	147,658	224,308
Non-current
Accruals and deferred income				76	139	-	-
Included within accruals and deferred income is £1,011,000 (2008: £3,878,000) representing contributions to capital expenditure in the form of Coal Investment Aid (see note 33).

21 PROVISIONS
		At January 2009	Provided in year	Released in year	Utilised in year	Unwinding of discount	At December 2009
Group		£000	£000	£000	£000	£000	£000
Employer and public liabilities		18,716	3,635	(2,105)	(4,065)	-	16,181
Surface damage		13,419	1,866	(419)	(2,166)	510	13,210
		32,135	5,501	(2,524)	(6,231)	510	29,391
Claims		62	2	(49)	-	-	15
Redundancy		1,196	10,865	(149)	(2,845)	-	9,067
Restoration and closure costs of surface mines		59,358	3,628	(4,754)	(21,208)	2,237	39,261
Restoration and closure costs of deep mines:
- shaft treatment and pit top		9,748	198	-	(5)	370	10,311
- spoil heaps		2,841	-	(57)	-	108	2,892
- pumping costs		5,327	-	(96)	-	202	5,433
Ground/groundwater contamination		5,232	-	(94)	-	199	5,337
		115,899	20,194	(7,723)	(30,289)	3,626	101,707
In accordance with IAS 37 'Provisions, contingent liabilities and contingent assets', discounting has not been applied against the insurance provisions in respect of employer and public liabilities.
The total of provisions created, net of provisions released, was £12,471,000 (2008: £21,315,000). This included a net charge of £10,716,000 (2008: £639,000) for non-trading exceptional items.
Provisions have been analysed between current and non-current as follows:
						As at December 2009	As at December 2008
						£000	£000
Current						38,556	35,206
Non-current						63,151	80,693
						101,707	115,899
Provisions are expected to be settled within the timescales set out in the following table.  It should be noted that these are based on the information available at the time the consolidated financial statements were prepared and are subject to a number of estimates and uncertainties, as noted below:
			Within 1 year	1-2 years	2-5 years	More than 5 years	Total
			£000	£000	£000	£000	£000
Employer and public liabilities			7,556	2,998	5,361	266	16,181
Surface damage			3,035	2,705	5,671	1,799	13,210
			10,591	5,703	11,032	2,065	29,391
Claims			15	-	-	-	15
Redundancy			9,067	-	-	-	9,067
Restoration and closure costs of surface mines			15,461	5,291	12,974	5,535	39,261
Restoration and closure costs of deep mines:
- shaft treatment and pit top			2,549	845	378	6,539	10,311
- spoil heaps			873	456	193	1,370	2,892
- pumping costs			-	-	-	5,433	5,433
Ground/groundwater contamination			-	-	-	5,337	5,337
			38,556	12,295	24,577	26,279	101,707
21 PROVISIONS continued
The nature of the Group's obligations and an indication of the uncertainties surrounding each of the above provisions is provided below:
Employer and public liabilities Provisions are made for current and estimated obligations in respect of claims made by employees, contractors and the general public relating to accident or disease as a result of the business activities of the Group. These relate primarily to the claims held by the Group's captive insurance company, Harworth Insurance Limited. Ownership over land and buildings and dedicated cash deposits, as set out in notes 13 and 18, has been granted to cover these provisions.
Surface damage Provision is made for the Group's liability to compensate for subsidence damage arising from past mining operations. Claims can be lodged by the public up to six years after the date of the relevant damage. The estimate is based on historical claims experience, following a detailed assessment of the nature of the damage foreseen. Security over dedicated cash deposits and an insurance bond, as set out in note 18, has been granted to cover these provisions.
Claims Where surface mine sites owned by the Group are mined by external contractors and mining conditions vary from those specified in the contract, the external contractors may be entitled to claim further costs incurred. Claims are settled with individual contractors, generally at the completion of a surface mining site. All claims provisions are based on known mining conditions encountered, historical experience and contracted rates.
Redundancy Provision is made for current estimated future costs of redundancy and ex-gratia payments to be made where this has been communicated to those employees concerned.
Restoration and closure costs of surface mines Provisions are made for the total costs of reinstatement of soil excavation and for surface restoration, such as topsoil replacement and landscaping. Costs become payable after coal mining has been completed. Further liabilities for aftercare can extend after restoration, for a period of up to six years.
Restoration and closure costs of deep mines:
Shaft treatment and pit top - provisions are made to meet the Group's liability to fill and cap all mine shafts and return pit top areas to a condition consistent with the required planning permission. No liabilities will arise until decommissioning of each individual colliery. The current pit top provision reflects existing planning permissions that require pit areas to be restored to former use, usually agricultural. The Group will, where possible, seek planning permission for development use, which, if successful, may reduce the expected cost.
Spoil heaps - provisions are made for the costs payable to bring spoil heaps to a condition consistent with the required planning permission and to complete approved restoration schemes. An element of spoil heap restoration is ongoing, although the majority of costs will be incurred after the decommissioning of a colliery.
Pumping costs - there is a legal requirement to continue pumping activities at certain mine sites following closure and for a period into the future. The provision is based on current experience and the net present value of future cost projections. Pumping costs on continuing operations are expensed as incurred.
Ground/groundwater contamination - provisions are made for the Group's legal or constructive obligation to address ground and groundwater pollutants at its operating sites. The provision is based on estimates of volumes of contaminated soil and the historical contract costs of ground contamination treatment. These costs will usually be incurred following the decommissioning of a site.
22 FINANCIAL INSTRUMENTS AND DERIVATIVES
The Group's principal financial instruments include derivative financial instruments, trade and other receivables, cash and cash equivalents, restricted cash, interest bearing borrowings and trade and other payables.
Derivative financial instruments
					Assets		Liabilities
					£000		£000
At the end of the year
Fair value - 2009					-		6,783
Fair value - 2008					-		8,493
The Group uses interest rate swaps in order to fix the interest payable on a large proportion of its variable rate borrowings. The fair value of derivative financial instruments is valued, where possible, using quoted market prices. The fair value of these instruments equals the book value at December 2009 and December 2008. For those swaps which are effective cash flow hedges under IAS 39 the effective portion of their fair value movements has been deferred in reserves. Exposures have been presented as net positions by a counterparty whenever there is the intention and ability to legally set off assets and liabilities.
Under IFRS 7 'Financial Instruments: Disclosures' all derivative financial instruments are classed as level 2 as they are not traded in an active market and the fair value is therefore determined through discounting future cash flow.
Hedging relationships
As at December 2009, cash flow hedges were in place up to July 2012. The movement in effective hedging relationships in the year was a gain of £4,000 (2008: loss £7,354,000) and is recorded in the hedge reserve within equity (see Note 27). The movement in the fair value of contracts which are not effective for hedge accounting purposes, or which were not designated as cash flow hedges, being a gain of £1,714,000 (2008: £761,000) in the year is presented within finance costs in the consolidated income statement (see note 6). The application of hedge accounting in the year has resulted in an income statement credit of £1,714,000 (2008: £761,000) for ineffective hedges, a credit to reserves of £4,000 (2008; charge of £7,354,000) (for effective hedge relationships) and a charge to income of £3,130,000 (2008: £nil), representing the amortisation of reserves for discontinued hedging relationships. The total notional principal of outstanding interest rate swaps that the Group is committed to is £120,211,000 (2008: £125,779,000). The weighted average fixed interest rate and period to maturity of the Group's interest rate swaps was 7.73% (2008: 7.32%) and 1.4 years (2008: 2.2 years), respectively. The Company has no interest rate swaps.
Other financial assets and liabilities				December 2009		December 2008
				Book value	Fair value	Book value	Fair value
Group				£000	£000	£000	£000
Assets
Cash and cash equivalents				41,359	41,359	71,102	71,102
Trade and other receivables				26,639	26,639	41,518	41,518
Derivative financial instruments				-	-	-	-
Liabilities
Bank borrowings				110,653	110,653	171,236	171,236
Finance lease liabilities				17,269	17,269	8,127	8,127
Generator loans and prepayments				67,609	78,611	-	-
Trade and other payables				104,352	104,352	104,191	104,191
Derivative financial instruments				6,783	6,783	8,493	8,493
In accordance with IAS 39, the Group classifies the assets and liabilities in the analysis above as 'loans and receivables' and 'other financial liabilities', respectively. At the 2009 and 2008 year ends, the Group did not have any 'held to maturity' or 'available for sale' financial assets or 'held for trading' financial assets and liabilities as defined by IAS 39. At the year end date, the Company held cash and cash equivalents of £12,869,000 (2008: £40,682,000).
The carrying value of the Group's external borrowings, which consist of floating rate and fixed rate short-term borrowings, approximates to fair value. Details of the maturity profile of these financial liabilities are included in note 19. The carrying value of other long-term receivables approximates to fair value. For other financial assets and liabilities, which are all short-term in nature, the carrying value approximates to fair value.
23 FINANCIAL RISK MANAGEMENT
The Group's activities expose it to a variety of financial risks: market (interest rate) risk, credit risk and liquidity risk.  The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.  The Group uses derivative financial instruments to hedge certain risk exposures.
Risk management is carried out by a central treasury function under policies approved by the Board of Directors.  Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group's mining and property businesses.  The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments and investment of excess liquidity.
Interest rate risk
The Group has an exposure to interest rate risk arising on changes in interest rates in the United Kingdom and therefore seeks to limit this net exposure. This is achieved by the use of derivative instruments such as interest rate swaps to hedge a proportion of the Group's borrowings over the period of the related loan. These interest rate swaps, allow the Group to exchange, at specified intervals (usually quarterly), the difference between contracted fixed rates and floating rate interest payable on borrowings calculated by reference to the agreed notional amounts. The Group does not enter into instruments which are leveraged or held for speculative purposes.
If interest rates on sterling denominated borrowings during the year had been 2% higher or lower with all other variables held constant, post-tax profit for the year would have been £539,000 (2008: £638,000) lower or higher, as a result of higher or lower interest expense on floating rate borrowings which have not been economically hedged with an interest rate swap contract. An increase or decrease of 2% represents the Group's assessment of a reasonably possible change in interest rates.
The sensitivity of post-tax profit is calculated based on floating rate borrowings at the balance sheet date, after deducting amounts hedged into fixed rates by interest rate swaps.
Currency risk
During 2009 and 2008, the Group's borrowings at variable and fixed rates were denominated in sterling. No foreign exchange contracts were entered into in 2009 (none in 2008) as the Group has no direct material foreign exchange exposure.
Credit risk
The Group is subject to credit risk arising from outstanding receivables and committed cash and cash equivalents and deposits with banks and financial institutions. The Group's policy is to manage credit exposure to trading counterparties within defined trading limits. All of the Group's significant counterparties are assigned internal credit limits.
The Group sells coal to large industrial and commercial customers. All of its electricity supply industry customers have an investment grade quality rating (from Standard and Poor's) of between A and BBB+. No credit limits were exceeded during the reporting period and management does not expect any losses from non-performance by these counterparties.
If any of the Group's customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, the Group assesses the credit quality of the customer taking into account its financial position, past experience and other factors.
The Group is exposed to counterparty credit risk on cash and cash equivalent balances. The Group holds cash on deposit with a number of financial institutions. The Group manages its credit risk exposure by limiting individual deposits to clearly defined limits. For banks and financial institutions, only independently rated parties with an investment grade quality rating (from Standard and Poor's) of at least A- rated are accepted.
23 FINANCIAL RISK MANAGEMENT continued
Liquidity risk
The Group is subject to the risk that it will not have sufficient borrowing facilities to fund its existing business and its future plan for growth. The Group manages its liquidity requirements with the use of both short and long-term cash flow forecasts. These forecasts are supplemented by a financial headroom position which is used to demonstrate funding adequacy for at least a 12 month period.
Subsequent to the year end, in support of the committed credit facilities, the Group has renegotiated some of its coal supply contracts with its customers with the result that increased cash flows have been agreed in the form of generator loans and prepayments.
The Group's main source of liquidity is its operating mining business. Cash generation by this business is dependent upon the reliability of the Group's deep and surface mines in producing coal, the realised selling price for coal, operational risk and capital investment expenditure and maintenance requirements. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, Group treasury aims to maintain flexibility in funding by keeping committed credit lines available.
The net debt position, excluding restricted cash, of £137,027,000 at the beginning of the year had increased during the year to £181,944,000 at the year end.  The Group generated negative cash flow from operating activities after capital expenditure for the year of £124,712,000 (2008: £32,365,000).
As at December 2009, 52% of the total bank facilities of £166,819,000 was provided by banks which, following the takeover by Lloyds TSB plc of HBOS plc, are now part of the Lloyds Banking Group plc.  Also, at December 2009 10% was provided by Landsbanki, the failed Icelandic bank which is seeking to close and recover its loan book as part of the bank's closure process.
The Group's committed borrowing facilities are subject to financial covenants based on loan to value (''LTV'') calculations which are tested on a quarterly basis. These covenants restrict the Group's ability to access committed facilities within a range of 45% - 75% of the value of certain properties on which the borrowings are secured. These covenants affect 98% of the facilities as at December 2009. The Group is currently in compliance with these covenants at the year end date. However, a decrease in the valuations of the Group's properties could impact on covenants resulting in increased charges and potential reduction in the availability of facilities.
The table below analyses the Group's financial liabilities which will be settled on a net basis into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the gross contractual undiscounted cash flows.
			Less than 1 year	Between 1 and 2 years	Between 2 and 5 years	Over 5 years
			£000	£000	£000	£000
At December 2009
Bank borrowings			12,898	17,066	100,844	-
Finance lease liabilities			5,993	4,274	9,585	-
Generator loans and prepayments			4,432	20,853	51,155	2,442
Trade and other payables			104,276	76	-	-
Derivative financial instruments			2,992	988	(27)	-
At December 2008
Bank borrowings			11,218	107,109	75,842	-
Finance lease liabilities			6,442	2,112	186	-
Trade and other payables			104,052	139	-	-
Derivative financial instruments			4,050	1,566	1,616	-
Capital risk management
The Group is subject to the risk that its capital structure will not be sufficient to support the growth of the business. The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total equity. Net debt is calculated as total borrowings (including borrowings as shown in the consolidated balance sheet) less unrestricted cash and cash equivalents. The gearing ratios for the Group at December 2009 and December 2008 were as follows:
				2009		2008
				£000		£000
Total borrowings				195,531		179,363
Less: Unrestricted cash and cash equivalents (note 18)				(13,587)		(42,336)
Net debt				181,944		137,027
Total equity				152,788		300,432
Gearing ratio				119.1%		45.6%

24 RETIREMENT BENEFIT OBLIGATIONS
Defined contribution pension schemes
The Group operates defined contribution pension schemes in respect of all employees who joined after the privatisation date in 1994.  Contributions to defined contribution schemes in the year amounted to £1,494,000 (2008: £1,368,000).
Defined benefit obligations
The balance sheet amounts in respect of retirement benefit obligations are:
				Group		Company
				As at December 2009	As at December 2008	As at December 2009	As at December 2008
				£000	£000	£000	£000
Industry wide schemes				184,873	74,079	-	-
Blenkinsopp				1,081	660	1,081	-
Concessionary fuel				34,879	29,277	-	-
				220,833	104,016	1,081	-
Contributions to defined benefit schemes during the year amounted to £19,682,000 (2008: £20,116,000). At December 2009, contributions of £nil remained unpaid (2008: £nil).
Industry wide schemes
The Group operates pension schemes providing benefits based on final pensionable pay.  The majority of the employees within defined benefit schemes are members of industry wide schemes, being either the Industry Wide Coal Staff Superannuation Scheme ("IWCSSS") or the Industry Wide Mineworkers' Pension Scheme ("IWMPS"), both of which commenced on privatisation following the Coal Industry Act 1994. The pension schemes are valued annually by qualified independent actuaries for the purposes of IAS 19 and the preparation of financial statements.  The assumptions which usually have the most significant effect on the results of the valuation are the discount rate, which is based on bond yields, and the rates of increases in salaries and pensions.  The main assumptions underlying the valuations of the Group sections of each scheme were as follows:
					As at December 2009		As at December 2008
Discount rate					5.7% p.a.		6.5% p.a.
Rate of return on investments					6.9% p.a.		6.4% p.a.
Rate of salary increases					4.5% p.a.		3.6% p.a.
Rate of price inflation					3.5% p.a.		2.6% p.a.
Rate of return on equities					7.7% p.a.		7.0% p.a.
Rate of return on debt					5.1% p.a.		5.2% p.a.
Rate of cash commutation					20.0%- 25.0%		20.0%- 25.0%
					Year ended December 2009		Year ended December 2008
Longevity at age 60 for current pensioners (years)
IWMPS and IWCSSS
- Men					22.1 - 23.8		22.0 - 23.7
IWCSSS
- Women					26.4		26.3
Longevity at age 60 for future pensioners (years)
IWMPS and IWCSSS
- Men					23.4-24.7		23.3-24.7
IWCSSS
- Women					27.2		27.2
IWCSSS pensions in payment are assumed to increase in line with price inflation. For the IWMPS, the assumed pension increases depend on the period of service accrual (before April 1997: no increases, 1997 to 2005: in line with price inflation, after April 2005: 2.5%).
The overall expected rate of return on assets is based on an historic view of the yields from equities and the rates prevailing on applicable bonds at the balance sheet date.
The amounts recognised in the consolidated balance sheet are as follows:
			2009	2008	2007	2006	2005
			£000	£000	£000	£000	£000
Fair value of plan assets			379,949	316,464	372,188	348,325	301,540
Present value of funding obligations			(564,822)	(390,543)	(421,081)	(442,794)	(418,270)
Net liability recognised in the balance sheet			(184,873)	(74,079)	(48,893)	(94,469)	(116,730)
None of the pension schemes owns any shares in the Company.
The amounts recognised in the consolidated income statement are:
					Year ended December 2009		Year ended December 2008
					£000		£000
Current service cost					(11,413)		(12,341)
Interest cost					(25,472)		(24,534)
Expected return on plan assets					20,694		25,473
Effect of curtailment or settlement					3,954		-
					(12,237)		(11,402)
Current service cost is charged to cost of sales, with interest cost less expected return on plan assets included in administration expenses and the effect of curtailment or settlement is included in non-trading exceptional items. A further £118,239,000 loss (2008: £33,900,000 gain) has been reflected in the statement of comprehensive income in the year. This represents the net effect of experience and actuarial gains and losses on the schemes in the year.
24 RETIREMENT BENEFIT OBLIGATIONS continued
					Year ended December 2009		Year ended December 2008
Change in assets					£000		£000
Fair value of plan assets at the start of the year					316,464		372,188
Expected return on plan assets					20,694		25,473
Actuarial gains / (losses) on assets					31,840		(92,915)
Employer contributions					19,682		20,116
Plan participants' contributions					3,922		3,762
Benefits paid					(12,653)		(12,160)
Fair value of plan assets at the end of the year					379,949		316,464
The major categories of the schemes' assets are as follows:
					As at December 2009		As at December 2008
					£000		£000
Equity securities					260,044		215,889
Debt securities					119,905		100,575
					379,949		316,464
The actual return on plan assets was a gain of £52,534,000 (2008: loss of £67,442,000).
					Year ended December 2009		Year ended December 2008
Change in defined benefit obligations					£000		£000
Present value of defined benefit obligation at the start of the year					(390,543)		(421,081)
Current service cost					(11,413)		(12,341)
Interest cost					(25,472)		(24,534)
Plan participants' contributions					(3,922)		(3,762)
Curtailment gain					3,954		-
Actuarial (loss) / gain					(150,079)		59,015
Benefits paid					12,653		12,160
Present value of defined benefit obligation at the end of the year					(564,822)		(390,543)
					Year ended December 2009		Year ended December 2008
Analysis of the movement of the balance sheet liability					£000		£000
At the start of the year					(74,079)		(48,893)
Total amounts recognised in the income statement					(12,237)		(11,402)
Contributions					19,682		20,116
Net actuarial loss recognised in the year					(118,239)		(33,900)
At the end of the year					(184,873)		(74,079)
					Year ended December 2009		Year ended December 2008
Cumulative actuarial gains and losses recognised in equity					£000		£000
At the start of the year					(10,000)		23,900
Net actuarial loss in the year					(118,239)		(33,900)
At the end of the year					(128,239)		(10,000)
					Year ended December 2009		Year ended December 2008
Experience gains and losses					£000		£000
Actual return less expected return on schemes' assets					31,840		(92,915)
Experience losses arising on schemes' liabilities					(7,412)		(2,914)
Changes in assumptions underlying present value of liabilities					(142,667)		61,929
Net actuarial loss					(118,239)		(33,900)

24 RETIREMENT BENEFIT OBLIGATIONS continued
History of experience losses
			2009	2008	2007	2006	2005
			£000	£000	£000	£000	£000
Actual return less expected return on schemes' assets			31,840	(92,915)	(237)	9,634	36,975
Percentage of year end scheme assets			8%	(29)%	0%	3%	12%
Experience losses arising on schemes' liabilities			(7,412)	(2,914)	(1,495)	(3,721)	(5,242)
Percentage of the present value of schemes' liabilities			1%	1%	0%	1%	1%
Contributions are determined by a qualified actuary on the basis of triennial valuations, using the projected credit unit method.  The most recent valuations for the purpose of determining contributions were at 31 December 2006, which were agreed in December 2008.
The contribution expected to be paid to the schemes during the year ending December 2010 is around £22,000,000 including current service costs.
Blenkinsopp
Blenkinsopp is a section of the IWMPS covering the pension arrangements of the various companies comprising parts of the former British Coal.  Blenkinsopp Collieries Limited was sold by the Group in 1998. However, it has since gone into liquidation and the retirement liabilities have reverted to the Group and at the end of 2009 to the Company.  The liability as at December 2009 is £1,081,000 (2008: £660,000), employer's contributions for the year were £70,000 (2008: £nil), the amount recognised in the income statement is £89,000 (2008: £87,000) (current service costs £38,000 (2008: current service cost £38,000) and interest cost less expected return on plan assets £51,000 (2008: £49,000)) and the loss recognised in the statement of comprehensive income is £402,000 (2008: gain £262,000). Cumulative actuarial gains recognised in equity for this Blenkinsopp section were £324,000 (2008: £726,000).
Concessionary fuel
The Group operates a concessionary fuel arrangement in the UK. Provision for concessionary fuel is made to cover the future retirement costs for those employees who currently benefit as part of their regular terms of employment, or former employees who are benefiting in retirement. This relates only to employees who transferred under privatisation. A 1% annual allowance is made to reduce the provision for employees who are expected to be unable to take the benefits.
An actuarial valuation for the purpose of IAS 19 was carried out by an independent actuary at December 2009.   The major assumptions used by the actuary were:
					Year ended December 2009		Year ended December 2008
Discount rate					5.7% p.a.		6.5% p.a.
Inflation assumption					3.5% p.a.		2.6% p.a.
The amounts recognised in the balance sheet are as follows:
			2009	2008	2007	2006	2005
			£000	£000	£000	£000	£000
Net liability recognised in the balance sheet			(34,879)	(29,277)	(23,443)	(24,727)	(24,309)
The amounts recognised in the consolidated income statement are:
					Year ended December 2009		Year ended December 2008
					£000		£000
Current service cost					(441)		(309)
Interest cost					(1,890)		(1,347)
					(2,331)		(1,656)
Current service cost is charged to cost of sales and interest cost is included in administration expenses. A further loss of £4,110,000 (2008: £4,911,000 loss) has been reflected in the statement of comprehensive income in the year. This represents the net effect of experience and actuarial gains and losses on the schemes in the year.
					Year ended December 2009		Year ended December 2008
Analysis of the movement of the balance sheet liability					£000		£000
Concessionary fuel reserve at the start of the year					(29,277)		(23,443)
Current service cost					(441)		(309)
Benefits paid to former employees during the year					839		733
Interest cost					(1,890)		(1,347)
Actuarial loss					(4,110)		(4,911)
Concessionary fuel reserve at the end of the year					(34,879)		(29,277)
The valuation of the balance sheet liability has been based on market prices for the related coal products at the end of the year.

24 RETIREMENT BENEFIT OBLIGATIONS continued
					Year ended December 2009		Year ended December 2008
Cumulative actuarial gains and losses recognised in equity					£000		£000
At the start of the year					(6,174)		(1,263)
Net actuarial loss in the year					(4,110)		(4,911)
At the end of the year					(10,284)		(6,174)
					Year ended December 2009		Year ended December 2008
Experience gains and losses					£000		£000
Experience gain/(loss) on concessionary fuel reserve					3,559		(8,510)
Changes in assumptions underlying present value of liabilities					(7,669)		3,599
Total amount in statement of comprehensive income					(4,110)		(4,911)
			2009	2008	2007	2006	2005
History of experience gains and losses			£000	£000	£000	£000	£000
Experience gain/(loss) on concessionary fuel reserve			3,559	(8,510)	444	1,258	-
Percentage of concessionary fuel reserve			10%	(29)%	2%	5%	0%
25  CALLED UP SHARE CAPITAL
				2009		2008
				Number of		Number of
Group and Company				shares	£000	shares	£000
Authorised share capital
At the start and end of the year
Ordinary shares of 1 pence each				Unlimited	Unlimited	250,000,000	2,500
Issued and fully paid
Ordinary shares of 1 pence each
At the start of the year				157,252,747	1,572	157,128,220	1,571
Issued during the year				142,045,413	1,421	124,527	1
At the end of the year				299,298,160	2,993	157,252,747	1,572
No shares vested during 2009 under the Long Term Incentive Plan ("LTIP"). 124,527 ordinary shares were issued at par on 31 October 2008 to fulfil awards crystallised under the LTIP.
Firm placing, placing and open offer
On 16 September, the Group announced that it proposed to raise up to approximately £106,000,000 (£100,000,000 net of expenses) by way of a firm placing, placing and open offer made to institutional and other professional investors and to qualifying shareholders of 142,045,413 shares at the issue price of 75 pence per share.  The principal reason for making the open offer was to provide qualifying shareholders an opportunity to invest in the Group at the same price at which the placing shares were issued and to mitigate the dilutive effects of the placing.  The minimum pro rata entitlement of qualifying shareholders under the open offer was calculated on the basis of 11 open offer shares for every 20 ordinary shares held.
The firm placing, placing and open offer all duly completed on 9 October 2009, raising £106,534,000 (£99,704,000 net of expenses).
Ordinarily, the excess of the net proceeds over the nominal value of the share capital would be credited to an undistributable share premium account. However, the firm placing, placing and open offer were effected through a structure which resulted in the excess of the proceeds over the nominal value of the share capital issued being recognised within retained earnings under Section 25 of the Companies Act 2006.
Long Term Incentive Plan
A Long Term Incentive Plan was introduced in 2000 for Executive Directors and Senior Executives.  Details of the plan are set out in the Directors' Remuneration Report.  During the year, nil (2008: 124,527) shares were reserved against the award of shares under the LTIP.  The shares are awarded at an exercise price of £nil.  Shares outstanding at December 2009 are as follows:
						2009	2008
						Number	Number
Exercisable from 2010						-	279,126
Exercisable from 2011						414,936	359,570
Exercisable from 2012						1,023,288	-

The awards granted in the year were valued using a Monte Carlo simulation utilising Black-Scholes methodology as follows:
				2009	2008	2007	2007
Grant date				5 May	22 April	18 September	2 March
Share price at grant date				£1.38	£4.53	£5.03	£4.95
Exercise price				£nil	£nil	£nil	£nil
Number of employees				18	18	10	17
Shares under option				886,740	366,160	144,406	241,411
Vesting period (years)				3	3	3	3
Expected volatility				46.7%	34.3%	33.5%	33.5%
Option life (years)				3	3	3	3
Expected life (years)				2.66	2.69	2.23	2.84
Risk free rate				1.92%	4.36%	4.97%	5.05%
Possibility of ceasing employment before vesting				5% pa	5% pa	5% pa	5% pa
Fair value per option				£0.82	£1.97	£2.83	£2.91
The expected volatility is based on historical volatility over the last nine years.  The expected life is the average expected period to exercise.  The risk free rate of return is the yield on zero-coupon UK Government bonds of a term consistent with the assumed option life.  A reconciliation of option movements over the year to December 2009 is shown below:
					Year ended December 2009		Year ended December 2008
					Number		Number
Outstanding at the start of the year					638,696		793,831
Granted					886,740		366,160
Exercised					-		(124,527)
Adjustment for share issue uplift					234,890		-
Expired					(322,102)		(396,768)
Outstanding at the end of the year					1,438,224		638,696
As a result of new shares being issued by the company in October 2009 (55,556,403 shares were issued by firm placing and 86,489,010 issued by placing and open offer at 75 pence each) all existing awards have been adjusted to take account of the placing and open offer element of the capital raising at the time they vest. The adjustment is  calculated by multiplying the original number of shares under each award by 1.154 which was determined in accordance with the theoretical ex entitlement price ('TEEP') formula.
The total charge for the year relating to employee share-based payment plans was £676,000 (2008: £540,000) all of which related to equity settled share-based payment transactions.
26 RETAINED EARNINGS
					2009		2008
Group				Notes	£000		£000
At January					(33,420)		4,797
Loss for the financial year					(127,547)		(15,743)
Actuarial losses on post retirement benefits				24	(122,751)		(38,549)
Movement on deferred tax asset in relation to retirement benefit liabilities					-		(2,257)
Fair value loss/(gain) on revaluation of investment properties				13	25,704		(23)
Transfer of realised gain on disposed properties				27	6,592		17,815
New shares issued					98,283		-
Accrual for long-term incentive plan liabilities					676		540
At December					(152,463)		(33,420)
					2009		2008
Company				Notes	£000		£000
At January					239,562		407,462
New shares issued					98,283		-
(Loss)/profit in the year					(6,240)		4,474
Provision for impairment of investment in subsidiaries				9	-		(172,914)
Long term incentive plan liabilities - value of employee services				25	676		540
At December					332,281		239,562

27 OTHER RESERVES
Group
			Hedging reserve	Revaluation reserve	Capital redemption reserve	Fair value reserve	Total
		Notes	£000	£000	£000	£000	£000
At January 2008			-	143,014	257	177,851	321,122
Revaluation on recognition of investment properties		13	-	3,170	-	-	3,170
Transfer of realised gain on disposed properties			-	(15,845)	-	(1,970)	(17,815)
Fair value gain on revaluation of investment properties		13	-	-	-	23	23
Cash flow hedges			(7,354)	-	-	-	(7,354)
Movement in deferred tax asset on cash flow hedges		8	2,378	-	-	-	2,378
At January 2009			(4,976)	130,339	257	175,904	301,524
Revaluation on recognition of investment properties		13	-	52	-	-	52
Transfer of realised gain on disposed properties			-	(2,894)	-	(3,698)	(6,592)
Fair value gain on revaluation of investment properties		13	-	-	-	(25,704)	(25,704)
Hedging reserve - amortised in period			3,130	-	-	-	3,130
Cash flow hedges			4	-	-	-	4
Movement in deferred tax asset on cash flow hedges		8	(911)	-	-	-	(911)
At December 2009			(2,753)	127,497	257	146,502	271,503
Company
						Capital  redemption reserve	Total
						£000	£000
At January 2008 and 2009 and December 2008 and 2009						257	257
None of the other reserves balances at either the 2009 or 2008 year ends represented realised reserves.
28 CAPITAL AND OTHER FINANCIAL COMMITMENTS
Capital expenditure contracted for at the end of the reporting period but not yet incurred is as follows:
					As at December 2009		As at December 2008
Group					£000		£000
Property, plant and equipment					26,274		38,613
Investment property					1,118		865
					27,392		39,478
29 OPERATING LEASE COMMITMENTS
Group
The minimum lease payments due to the Group under non-cancellable operating leases, all of which relate to property rentals, are as follows:
					As at December 2009		As at December 2008
					£000		£000
Lease expiring:
Within 1 year					4,632		4,354
Later than 1 year and less than 5 years					8,061		5,890
After 5 years					21,695		20,007
					34,388		30,251
The minimum lease payments due by the Group under non-cancellable operating leases, all of which relate to rights over land usage, are as follows:
					As at December 2009		As at December 2008
					£000		£000
Lease expiring:
Within 1 year					227		220
Later than 1 year and less than 5 years					355		347
After 5 years					412		261
					994		828
The Company had no interest in any operating leases (2008: £nil).

30 SALE OF BUSINESS
The Group disposed of its 50% holding in Coal4Energy Limited, the joint venture with Hargreaves Services PLC, at the end of January 2009.  Before the disposal, the joint venture earned profits of £388,000 (2008: £1,562,000).  The disposal resulted in net proceeds after the costs of sale of £8,726,000 and realised a profit on sale of £6,534,000.
31  CONTINGENT LIABILITIES
Guarantees have been given in the normal course of business for performance bonds of £4,265,000 (2008: £1,235,000) to cover the performance of work under a number of Group contracts.
The Company is liable for the pension schemes contributions and deficit on the industry wide schemes.  Furthermore, the Company has provided a guarantee for an insurance bond for £10,000,000 which is used as security to cover surface damage liabilities.
There are no other material contingent liabilities at December 2009 for which provision has not been made in these financial statements.
32  RELATED PARTY TRANSACTIONS
Group
During the year, the Group made various payments to industry wide defined benefit pension schemes.  Details of these transactions are set out in note 24 to the financial statements.
Key management compensation is disclosed in note 5.
Transactions with joint ventures
The following transactions were carried out with the joint ventures, in the case of Bates Regeneration Limited for November and December 2009 only and in the case of Coal4Energy Limited for January 2009 only:
					Year ended December 2009		Year ended December 2008
					£000		£000
UK Strategic Partnership Limited
Sale of land to related party					-		1,292
Purchases of goods and services from related party					-		143
Bates Regeneration Limited
Sale of land to related party					750		-
Coal4Energy Limited
Sales of goods and services to related party:
- Coal					5,600		24,436
- Services					84		580
					5,684		25,016
Purchases of goods and services from related party:
- Coal					-		5
- Finance costs					-		3
					-		8
Sales and purchases to and from the joint ventures were carried out on commercial terms and conditions and at market prices.
Profit of £nil (2008: £62,000) has been recognised in the period on the sale of land to UK Strategic Partnership Limited.
Loss of £1,231,000 (2008: £nil) has been recognised in the period on the sale of land to Bates Regeneration Limited.
Balances owing from/(to) joint ventures
Coal4Energy Limited
The balance arising from sales of goods and services was £nil (2008: £61,000) owed from the joint venture, and the balance arising from purchase of goods and services was £nil (2008: £nil).
UK Strategic Partnership Limited
The balance arising from sales was £nil (2008: £409,000).

Company
The Group manages its financing arrangements centrally.  Amounts are transferred within the Group dependent on the operational needs of individual companies. All amounts are repayable on demand, carry no security and incur interest at LIBOR +2%, except UK Coal Mining Limited at LIBOR +3.5%. Details of the Company's cash and indebtedness are set out in notes 17 and 20 and amounts due from or owed to subsidiary undertakings are set out below:
					As at December 2009		As at December 2008
Owed to:-					£000		£000
UK Coal Mining Limited					(80,269)		(187,321)
Harworth Power Limited					(8,430)		(6,728)
Centechnology (UK) Limited					(2,444)		(1,168)
Harworth Park Services Limited					(8)		(8)
UK Coal Holdings Limited					(35)		(28)
Harworth Group Limited					(6,376)		(12,799)
Harworth Guarantee Co. Limited					(45)		(36)
Potland Burn Limited					(25,960)		-
Dormant and non-trading companies					(23,946)		(15,961)
					(147,513)		(224,049)
					As at December 2009		As at December 2008
Owed by:-					£000		£000
Mining Services Limited					4,031		4,184
LHTC Limited					2,979		2,438
Harworth Mining Limited					6,292		4,060
EOS Inc. Ltd					9,435		6,650
Harworth Estates (Agricultural Land) Limited					22,734		17,992
Harworth Estates (Waverley Prince) Limited					73,525		53,750
Harworth Insurance Limited					478		312
Dormant and non-trading companies					81,077		65,128
					200,551		154,514
Peel Holdings Limited
In connection with the firm placing, placing and open offer announced on 16 September 2009, the Company agreed to pay to Goodweather Holdings Limited ("Goodweather"), the Group's major shareholder, a subsidiary of Peel Holdings Limited, a commission equal to 4.5 % of the aggregate value at the issue price of the number of shares acquired in the open offer by Goodweather, equivalent to approximately £825,000.  The payment of this commission was a related party transaction pursuant to the Listing Rules and the appropriate confirmations set out in Listing Rule 11.1.10 were provided to the FSA.
33 GOVERNMENT GRANTS
The Group has received support from the Government, in the form of, Coal Investment Aid, in order to provide assistance towards investment in the industry.  Details of how this aid is treated is set out in note 1 to the financial statements.  Amounts credited to the income statement are as follows:
					Year ended December 2009		Year ended December 2008
					£000		£000
Release of deferred income					2,867		3,106
34 POST BALANCE SHEET EVENTS
As outlined in the operating and financial review, the Group has restructured its banking arrangements since the year end.  The principal changes are: §  to increase the amounts available under the £52 million revolving credit facility ("RCF") by an additional line of up to £20 million, reducing over the winter period; §  to extend the maturity of the RCF to the end of July 2011, in line with the maturity date of the additional line; §  to modify the financial profile of the HEWPL term loan facility, including providing the Group with the ability to roll up interest into the loan in the period to June 2011. Repayment of this facility will be £12 million in July 2011, together with rolled up interest, thereafter amortising at a rate of £2.5 million per quarter until final repayment in July 2013; and §  to increase the effective interest rates on the HEPWL, HEAL and RCF facilities. Over and above these extended bank facilities, we have agreed a further £10m of unsecured stand-by facility from Peel Holdings, which is available for drawing in the event that the RCF is fully drawn.  This facility also expires at the end of July 2011.

 

END

 

 

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