UK Coal PLC " It's All In The Property Stupid !"

Interesting pre close update this morning.
As usual, deep mines are just about to break into a profitable glowing future?
Cash flow was not mentioned. But is clearly diabolical.

But the one that I found most interesting was this:
“Overall, surface mining made a profit of #0.2 million in the five months to November 2005 (2004: Loss of #2.2 million). Additionally, the surface mining business has incurred #5.4 million of costs on restoration and rehabilitation of former surface and deep mine properties. The cost of this work has been either capitalised or charged against previously reserved liabilities set up on the inception of the mining schemes.”

If I was a shareholder I would want an explanation of that. For a long time I had been predicting that Crouch would go bust, which they did, and that the consequences would be an enormous reinstatement bill to UKC, which they acknowledged after Crouch’s bust by a £16m, IIRC, provision. Before the event and the subsequent provision, I reckoned they would incurr more like £25m of extra cost. The restoration costs of both deep and surface mines are normally covered by provisions (or supposed to be – the Crouch / Stobbs Wood ones obviously were insufficient as I knew they would be), so why are they now “Capitalising” some costs. If they are saying that backfilling the hole at Stobbs enhances the property value that’s a very sneaky way to try and hide the bad news that reinstatement is costing more than expected. Surely not.

Still believe that there will be no takeover exactly as I posted on the previous “bid” story, as a good look at the books will frighten the hell out of any potential bidder.

Regards