Interim Results
RJB Mining PLC
7 September 2000
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2000
RJB Mining PLC ('RJB'), the UK's leading coal mining company, today announces
its interim results for the six months ended 30 June 2000.
2000 1999
Turnover £381.7 m £345.2 m
Loss before tax £(10.2)m £(133.0)m
Earnings/ (Loss)
per share, after
tax and before exceptionals (8.5p) 4.5p
Dividend 5.0p 3.0p
* Cash inflow of £55.9m before dividend payments
* Total coal sales 12 million tonnes (1999: 11.4 million tonnes) - of which
10.7 million tonnes was sold for electricity generation
* Total coal production was 10 million tonnes, with 7.9 million tonnes from
deep mine operations
* Forward contracts for coal sales total £2.2 billion in the period to 2009
* Government State Aid expected to be paid in last quarter of 2000
backdated to April 2000
* Discussions continuing with a prospective bidder; no formal offer
received to date
Commenting on the results, Richard Budge, Chief Executive of RJB Mining said:
'Strong sales and cash flow have been achieved in the first half of the
year. Our business continues to be cash generative and with
transitional aid promised for the UK coal industry, we are well placed
to exploit the increasingly optimistic trends in the World Coal Market.'
'The Company remains focused on cost reduction, balancing sales with
production, and on maximising value to shareholders in the most
appropriate ways possible.'
For further information, please contact:
RJB Mining PLC Today 020 7457 2345
Richard Budge, Chief Executive
Gordon McPhie, Finance Director Thereafter 01302 751751
Gavin Anderson & Company
Gerald Gradwell 020 7457 2345
Fiona Grant Duff
CHAIRMAN'S INTERIM STATEMENT
Results
In the half year to 30 June 2000 net cash inflow from operations was £71.6
million (1999: £62.1 million). This resulted in a cash inflow of £55.9
million before dividend payments, after taxation, capital and costs of
servicing finance (1999: £30.4 million). These figures include the benefit of
£44.1 million from a reduction in coal stocks (1999: £14.7 million stock
increase), giving an underlying cash inflow of £11.8 million (1999: £45.0
million).
The strong cash generation in the period has been used to pay dividends and to
reduce gross indebtedness levels by £39.9 million to £30.6 million.
The Company has reported a loss before tax of £10.2 million (1999: loss £133.0
million) including an exceptional credit of £2.7 million from the release of a
provision for redundancy costs (1999: exceptional loss £137.0 million,
principally in respect of an impairment in the carrying value of colliery
assets).
Dividends
The Board has declared an interim dividend of 5.0 pence per share (1999: 3.0
pence per share) consistent with our focus on cash generation and returning
free cash to shareholders.
Business Review
As indicated in the AGM trading statement coal sales have been robust in the
first half year with an increase in sales volumes to 12.0 million tonnes
(1999: 11.4 million tonnes) reflecting the generally stronger than expected
market for coal in the UK. Electricity generation increased by 1.5% compared
with the previous year, and this, combined with a reduction in nuclear power
output, contributed to a 10.5% increase in coal use for electricity
generation, our main market.
Coal sales agreements concluded during the first half-year include a five year
25.5 million tonnes supply contract for AES Drax Power Ltd valued at around
£700 million, and a two year 300,000 tonnes supply contract for Castle Cement
operations in Lancashire.
Deep mine production in the period was 7.9 million tonnes (1999: 9.2 million
tonnes). As noted in the AGM Statement underground mine production was
affected by scheduled development work which influences the balance of
production during the year, leading to higher unit costs in the first half of
the financial year. The number of planned production panel changes for the
year total twenty-six, with fifteen changes occurring in the first half of the
year.
Sales of coal have reduced stocks by 1.8 million tonnes in the period to a
level of 2.1 million tonnes at 30 June 2000 (30 June 1999: 4.3 million
tonnes).
The announcement in the second half of 1999 of the intention to close
Ellington and Clipstone Collieries and the subsequent action taken to stop
development work at these collieries has also had an impact in reducing
production and therefore on the results for the period. In response to the
Government statement on State Coal Aid on 17 April, we are maintaining
operations at Ellington and Clipstone collieries. Development work has
restarted at both collieries, resulting in extended periods in which costs are
not offset by income from production.
Capital expenditure was held on a tight rein during the period with
expenditure reduced to £11.2 million (1999: £18.5 million) including £ 5.1
million of deep mine development work. Levels of capital expenditure will
increase in the next 12 months to complete the development of the new mining
areas at Daw Mill and Riccall collieries and resume production at Ellington.
Surface mining operations produced 2.1 million tonnes (1999: 2.6 million
tonnes) from 13 sites. The surface mining results in the period benefited
from claims recoveries of £4.4 million. Planning approvals were received in
the period for a further 2.4 million tonnes from 2 sites, in a difficult
planning climate. Operations continue to focus on brown field sites and
locations that can maximize long term development potential.
Our operations in Australia, which predominantly comprise CIM Resources,
produced sales of £12.5 million from 0.8 million tonnes of coal, resulting in
a loss attributable to the Group of £0.4 million. These results were at
similar levels to the equivalent period in 1999, prior to the business
becoming a subsidiary. Coal prices in the Australian market are continuing
to show signs of improvement and this should be reflected in future results.
Monckton Coke & Chemicals sales in the first half were £8.6 million (1999:
£9.1 million) principally into the very competitive coke market, giving a pre-
tax loss of £0.3 million (1999: profit £0.1 million). The recent rise in
international prices should help the Company in the longer term but will have
little impact in the current year.
Property sales realised £3.6 million in the period, resulting in a profit
before tax of £0.7 million. The current land and property annualised rate of
rental income has been increased to £3.1 million pa (1999: £2.3 million) with
increased lettings on the Whitemoor and Asfordby business parks.
Ongoing Property Evaluation
The Company has recently commissioned surveyors, Fuller Peiser, to carry out a
valuation of the Group's total land and property assets in the UK. The Company
would expect to provide shareholders with further details once the review of
the valuation and options is completed. The ongoing review of the property
portfolio is consistent with the Group's approach to adding value through its
property assets both in the medium and long term.
Coal Subsidy Scheme
The Secretary of State for Trade and Industry, Stephen Byers, announced the
State Coal Aid scheme in April. The Government formally notified the European
Commission in late July of its intention to pay aid to the Coal Industry, and
has sought permission for such payments. It is anticipated that the European
approval process will take three months and that aid, backdated to the period
starting 17 April 2000, will be received in the last quarter of the year.
Outlook
The Company's principal market of supplying coal for electricity generation in
the UK will continue to be affected by regulatory and other changes within
that market, with the most imminent change being the introduction of new
electricity trading arrangements later this year. The introduction of the
State Coal subsidy should help the group to maintain production whilst
striving for increasing efficiencies. Recent drives to improve competitiveness
include the implementation of a Total Productive Mining (TPM) initiative
currently being introduced across the group.
Forward contracts for coal sales currently total £2.2 billion over a period
extending to March 2009. These contracts form a sound backbone for our sales
over the next 3 years. The increasing international price of coal and the
weakening of sterling against the US dollar have improved the competitive
position of UK coal production.
On 14 June the Company announced that it had received a preliminary approach
which may, or may not, lead to an offer being made for the shares in the
Company. Discussions have been continuing with the prospective bidder, but at
this stage no formal offer has been received.
Irrespective of whether an offer is received, the Company fundamentally has a
good forward sales order book, long term production assets, a low level of
borrowings and a valuable long-term property portfolio. In setting future
dividend levels, the Board will review cash generation and cash requirements
at each half year, with a view to returning free cash to shareholders.
John Robinson
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 30 June 2000
6 months 6 months Year
to to to
30 June 30 June 31 December
2000 1999 1999
Notes £'000 £'000 £'000
Turnover -
continuing
operations 2 381,683 345,221 699,249
Cost of sales (380,720) (323,574) (655,427)
----------- ---------- ----------
Gross profit
before exceptional
items 963 21,647 43,822
Exceptional items:
Redundancy costs 3 2,666 (6,000) (11,221)
Impairment in
value of
colliery assets 3 - (131,000) (135,554)
----------- ----------- -----------
Total exceptional
cost of sales 2,666 (137,000) (146,775)
----------- ----------- -----------
Gross
profit/(loss) 3,629 (115,353) (102,953)
Other operating
income and expenses (8,851) (11,019) (20,022)
----------- ----------- -----------
Operating loss -
continuing operations (5,222) (126,372) (122,975)
Share of loss of
associate - (21) (21)
----------- ----------- -----------
(5,222) (126,393) (122,996)
Net interest
payable and
similar charges 4 (4,973) (6,592) (7,033)
----------- ---------- -----------
Loss on ordinary
activities before
taxation (10,195) (132,985) (130,029)
Taxation on loss
on ordinary 5 - 33,987 35,573
activities ----------- ----------- -----------
Loss on ordinary
activities after
taxation (10,195) (98,998) (94,456)
Equity minority
interest 409 - 152
----------- ----------- -----------
Loss for the
period after
minority interest (9,786) (98,998) (94,304)
Dividend 7 (7,292) (4,375) (10,938)
----------- ----------- -----------
Loss for the period 8 (17,078) (103,373) (105,242)
----------- ----------- -----------
Loss per ordinary
share 6 (6.7p) (67.9p) (64.7p)
----------- ----------- -----------
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the six months ended 30 June 2000
6 months 6 months Year
to to to
30 June 30 June 31 December
2000 1999 1999
£'000 £'000 £'000
Loss for the period
after minority interest (9,786) (98,998) (94,304)
Release of provision
for potential additional
consideration - - 18,919
Exchange adjustments (468) 198 467
----------- ----------- -----------
Total recognised
gains and losses for
the period (10,254) (98,800) (74,918)
----------- ----------- -----------
CONSOLIDATED BALANCE SHEET
for the six months ended 30 June 2000
At At At
30 June 30 June 31 December
2000 1999 1999
Notes £'000 £'000 £'000
Fixed assets
Tangible assets 458,684 489,469 484,567
Investments 57 1,166 79
----------- ----------- -----------
458,741 490,635 484,646
Current assets
Stocks 100,316 157,076 144,446
Debtors:
amounts falling
due after one year 50,703 50,814 59,047
Debtors:
amounts falling
due within one year 129,864 126,595 109,921
Cash at bank
and in hand 45,342 37,953 35,906
----------- ----------- -----------
326,225 372,438 349,320
----------- ----------- -----------
Total assets 784,966 863,073 833,966
----------- ----------- -----------
Equity
shareholders'
funds 8 336,805 337,032 354,351
Equity minority
interest 482 - 920
----------- ----------- -----------
Capital employed 337,287 337,032 355,271
Provisions for
liabilities and
charges 9 271,166 308,494 279,765
Creditors:
amounts falling
due after more
than one year 10 17,704 33,605 23,139
Creditors:
amounts falling
due within one
year 10 158,809 183,942 175,791
----------- ----------- -----------
447,679 526,041 478,695
----------- ----------- -----------
Total funds
employed 784,966 863,073 833,966
----------- ------------ -----------
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2000
6 months 6 months Year
to to to
30 June 30 June 31 December
2000 1999 1999
Note £'000 £'000 £'000
Operating
activities
Net cash inflow
from operating
activities 11 71,555 62,050 84,751
Returns from
investments and
servicing of finance
Interest paid (531) (1,096) (1,779)
Interest paid on
hire purchase and
finance leases (1,238) (2,406) (4,360)
Financing costs - - (2,025)
Interest paid on
Corporation Tax (2,700) - -
Interest paid on
discounted receivables - (1,282) (1,289)
Interest received 1,939 2,314 3,959
------------- ------------- -------------
Net cash outflow
from returns on
investments and
servicing of finance (2,530) (2,470) (5,494)
------------- ------------- -------------
Taxation (6,110) (11,094) (20,118)
Capital
expenditure and
financial investment
Development
expenditure capitalised (5,070) (3,631) (9,289)
Purchase of fixed assets (6,132) (14,841) (23,262)
Receipts from sale
of fixed assets 4,214 340 1,723
------------- ------------- -------------
(6,988) (18,132) (30,828)
Acquisitions and
disposals
Purchase of
subsidiary undertakings - - (5,469)
Net cash acquired
with subsidiary undertakings - - 2,361
------------- ------------- -------------
- - (3,108)
Equity dividends
paid
Dividends paid (6,559) (5,805) (10,176)
------------- ------------- -------------
Cash inflow before
use of liquid
resources and financing 49,368 24,549 15,027
------------- ------------- -------------
Financing
Repayment of bank
borrowings (27,949) (25,000) (4,080)
Hire purchase and
finance lease
capital repaid (11,983) (12,793) (26,238)
------------- ------------- -------------
Net cash outflow
from financing (39,932) (37,793) (30,318)
------------- ------------- -------------
Increase
(decrease) in cash 9,436 (13,244) (15,291)
------------- ------------- -------------
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2000
1 Preparation of interim statements
The interim financial statements have been prepared on the basis of the
accounting policies set out in the Group's 1999 statutory accounts. The
interim financial statements are not statutory accounts for the purposes
of S240 of the Companies Act 1985. The figures for the full year to 31
December 1999 do not constitute the statutory accounts for the year.
They have been abridged from the statutory accounts which have been filed
with the Registrar of Companies and contain the auditors' report, which
was unqualified and did not contain a statement under either S237(2) or
S237(3) of the Companies Act 1985. The half year figures which are for a
27 week period (1999: 26 weeks), have not been audited, but have been
reviewed by the auditors. The auditors' review report is included with
the interim statements. The interim financial statements were approved
by the Board on 7 September 2000.
2 Segmental and geographical analysis
6 months to 6 months to Year to
30 June 30 June 31 December
2000 1999 1999
£'000 £'000 £'000
(a)Turnover
Coal sales - deep mines 293,278 275,229 521,429
Coal sales - surface mines 59,865 56,908 138,529
Surface mines
contract mining
and associated activities 7,352 4,006 10,922
Manufactured fuel
and combined heat and power 8,647 9,078 16,818
Coal sales - Australia 12,541 - 11,551
------------- ------------- -------------
381,683 345,221 699,249
------------- ------------- -------------
Geographical
Analysis
United Kingdom 366,715 343,133 683,010
European Union Coutries 192 692 285
Rest of Europe 2,235 1,396 4,403
Australia 12,541 - 11,551
------------- ------------- -------------
381,683 345,221 699,249
------------- ------------- -------------
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2000
6 months to 6 months to Year to
30 June 30 June 31 December
2000 1999 1999
£'000 £'000 £'000
(b) Profit/(loss) before
taxation
Coal sales - deep mines (17,750) 5,640 12,489
Coal sales - surface mines 8,420 3,636 9,300
Surface mines contract
mining and associated
activities 2,456 1,299 1,932
Manufactured fuel and
combined heat and power (279) 53 (33)
Coal sales - Australia (735) - 112
----------- ----------- ------------
Operating profit/(loss)
before exceptional items (7,888) 10,628 23,800
Share of loss of associate - (21) (21)
Redundancy and closure
costs 2,666 (6,000) (11,221)
Impairment in value of
colliery assets - (131,000) (135,554)
Net interest payable (4,973) (6,592) (7,033)
------------- ------------- -------------
Loss before taxation (10,195) (132,985) (130,029)
------------- ------------- -------------
The profit before taxation on surface mines contract mining and associated
activities includes £0.7 million of profit on the sale of land and property
assets.
Due to the nature of the Group's business, distribution expenses are treated
as a part of cost of sales.
3. Exceptional items
6 months to 6 months to Year to
30 June 30 June 31 December
2000 1999 1999
£'000 £'000 £'000
Redundancy costs (2,666) 6,000 11,221
Impairment in value
of colliery assets - 131,000 135,554
Interest payable to
Inland Revenue - - * 985
Interest provision
for potential
additional consideration - - * (6,690)
------------- ------------- -------------
(2,666) 137,000 141,070
------------- ------------- -------------
*Included in net interest payable
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2000
4. Net interest payable and similar charges
6 months to 6 months to Year to
30 June 30 June 31 December
2000 1999 1999
£'000 £'000 £'000
On bank loans,
overdrafts and other
loans repayable
within 5 years 369 946 1,775
Amortisation of loan
issue costs (FRS 4) 357 117 355
Interest paid on hire
purchase and finance
leases 1,506 2,400 4,021
Discounting of
receivables 124 646 1,334
Unwinding of discount
on provisions 4,456 4,199 9,146
Interest payable on
Corporation Tax 100 532 985
Interest provision
for potential
additional consideration - - (6,690)
Interest receivable (1,939) (2,248) (3,893)
------------- ------------- -------------
4,973 6,592 7,033
------------- ------------- -------------
5. Tax on profit on ordinary activities
6 months to 6 months to Year to
30 June 30 June 31 December
2000 1999 1999
£'000 £'000 £'000
United Kingdom
corporation tax
at 30% (1999:30%)
Current - (500) (4,018)
Deferred - (29,626) (28,320)
Overseas taxation - - 61
Under/(over)
provision in
respect of prior
years
Current - (3,861) (3,296)
------------- ------------- -------------
- (33,987) (35,573)
------------- ------------- -------------
No tax liability arises as the group incurred losses in the period. The group
has not recognised any benefit for these losses.
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2000
6. Earnings per share
Earnings per share have been based on the number of shares in issue and
ranking for dividend, which is unchanged at 145,847,273.
6 months 6 months to Year to
to 30 June 30 June 31 December
2000 1999 1999
pence pence pence
Earnings/(loss) per
share after taxation
before exceptional items (8.5) 4.5 7.4
Earnings/(loss) per
share after taxation (6.7) (67.9) (64.7)
7. Dividends
The ordinary dividend will be paid on 23 October 2000 to shareholders on
the register on 22 September 2000. The interim report will be circulated
to all ordinary shareholders and will be available at the Company's
registered office at Harworth Park, Blyth Road, Harworth, Doncaster, South
Yorkshire DN11 8DB.
2000 2000 1999 1999
pence pence
per share £'000 per share £'000
Interim 5.0 7,292 3.0 4,375
Final 4.5 6,563
------------- -------------
7.5 10,938
------------- -------------
8. Movement in shareholders' funds
6 months
to
30 June
2000
£'000
Shareholders' funds at 1 January 2000 354,351
Retained loss for the period (17,078)
Exchange adjustment (468)
-------------
Shareholders' funds at 30 June 2000 336,805
-------------
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2000
9. Provisions for liabilities and charges
At 1 Jan Created Released Utilised Unwinding At 30 June
2000 in period in period in period of discount 2000
£'000 £'000 £'000 £'000 £'000 £'000
Provisions 276,208 9,478 (4,783) (17,750) 4,456 267,609
Deferred
taxation 3,557 - - - - 3,557
-------- -------- -------- -------- -------- --------
279,765 9,478 (4,783) (17,750) 4,456 271,166
-------- -------- -------- -------- -------- --------
10. Creditors
The creditors figures shown in the balance sheet include the following
liabilities:-
30 June 30 June 31 December
2000 1999 1999
£'000 £'000 £'000
Creditors - amounts
falling due after
more than one year
Hire purchase and
finance leases liabilities 11,942 29,557 17,755
------------- ------------- -------------
Creditors - amounts
falling due within
one year
Bank borrowings 1,481 9,941 29,074
Hire purchase and
finance lease liabilities 15,666 23,479 21,836
------------- ------------- -------------
17,147 33,420 50,910
------------- ------------- -------------
Bank borrowings at 30 June 2000 are stated after deduction of FRS4 unamortised
costs of £1,515,000 (31/12/1999: £1,871,000).
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2000
11. Reconciliation of operating loss to net cash inflow from operating
activities.
6 months to 6 months to Year to
30 June 30 June 31 December
2000 1999 1999
Continuing activities
Operating loss (5,222) (126,372) (122,975)
Depreciation on
tangible fixed assets 35,437 40,297 70,423
Decrease/(increase)
in stocks 44,130 (14,688) (917)
Decrease/(increase)
in debtors (11,723) 54,899 88,354
Increase/(decrease)
in creditors 8,933 (29,086) (85,688)
Impairment in
colliery values - 137,000 135,554
------------ ------------- -------------
Net cash inflow from
operating activities 71,555 62,050 84,751
------------- ------------- -----------
REVIEW REPORT BY THE AUDITORS
TO THE BOARD OF DIRECTORS OF RJB MINING PLC
We have been instructed by the Company to review the financial information set
out in this document and we have read the other information contained in the
interim report for any apparent misstatements or material inconsistencies with
the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing
Rules of the Financial Services Authority require that the accounting policies
and presentation applied to the interim figures should be consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board. A review consists principally
of making enquiries of group management and applying analytical procedures to
the financial information and underlying financial data, and based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions. It is substantially less in scope than an audit performed
in accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly we do not express an audit opinion on
the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2000.
PricewaterhouseCoopers
Chartered Accountants
Nottingham
7 September 2000
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