News: Hargreaves reports on Maltby Colliery mothballing
Hargreaves Services plc, the UK's leading supplier of solid fuels, has reported its latest financial results for a "challenging and rewarding year" that included the mothballing of Maltby Colliery in Rotherham.
Setbacks during the year ending May 31 2013 included the mothballing of Maltby and a case of fraud at its Belgium division which meant that net loss after this exceptional impact was £49.6m. However pre-tax profits still increased to £52.2m, up from £49.2m in 2012.
Following the acquisition of the assets of ATH Resources and a switch from deep mining to surface mining, revenues from continuing operations were £843.3m, an increase of £225.4m over the prior year.
The board is recommending a final dividend of 13.6p for shareholders, an increase of 15.3% year on year.
Maltby occupies a site of 500 acres and employed over 500 staff and contractors. It is the last coking coal mine left in the UK and produced both high quality coking coal and power station coal.
The owners confirmed the mothballing in December last year following no viable alternative solution being found to geological reports that indicated that the risks associated with mining a new panel, called T125, had not significantly reduced and that the panel is not viable on health & safety, geological, and financial grounds.
In the latest financial statement, Hargreaves said that "The closure of Maltby was a difficult decision that we recognised would affect a large number of people both within and outside the group.
"The loss of jobs at Maltby is very regrettable. The group, management and unions worked together closely to minimise the inevitable socio-economic impacts. In this regard, great efforts continue to be made to find alternative jobs for as many of the workforce as possible."
A number of Maltby miners have successfully transferred across to Hatfield Colliery near Doncaster, which Hargreaves has managed on behalf of its owners for the last two years. A large number of skilled workers have also been recruited to the group's contracting arm, Hargreaves Technical Resources.
Without capital intensive underground workings, Maltby continues to trade with approximately one million tonnes of tiny coal particles called "fines" harvested and processed. Hargreaves also sold Maltby's methane assets to Alkane Energy in a £7.5m deal.
Overall, the mothballing process led to a reported loss (including closure costs) of £59.8m net of tax incurred in the year which is in line with Hargreaves' plan. These costs included the operating loss to the point of decision to mothball the mine, redundancy costs, closure and settlement costs to the end of the year, and non cash write offs relating to plant and equipment, development costs and other related assets.
The process to sell the remainder of the plant and equipment is ongoing and the closure and restoration programme, including the filling and capping of mine shafts, remains on track to be completed during the current financial year.
Hargreaves, which provides management services and support to Hatfield Colliery Limited from Maltby Colliery Limited, is also expected to "vigorously defend" any claim from Network Rail following the land slip that closed rail lines for five months at Hatfield earlier this year.
Tim Ross, chairman of Hargreaves Services, said: "It has been both a challenging and rewarding year. Whilst the group suffered setbacks at both Maltby and in Belgium, we have made significant strategic progress. Following a successful equity raise in April, the Group has accelerated the development of its surface mining business to become the key coal producer and distributor in the UK market."
Hargreaves Services website
Images: Hargreaves Services
Setbacks during the year ending May 31 2013 included the mothballing of Maltby and a case of fraud at its Belgium division which meant that net loss after this exceptional impact was £49.6m. However pre-tax profits still increased to £52.2m, up from £49.2m in 2012.
Following the acquisition of the assets of ATH Resources and a switch from deep mining to surface mining, revenues from continuing operations were £843.3m, an increase of £225.4m over the prior year.
The board is recommending a final dividend of 13.6p for shareholders, an increase of 15.3% year on year.
Maltby occupies a site of 500 acres and employed over 500 staff and contractors. It is the last coking coal mine left in the UK and produced both high quality coking coal and power station coal.
The owners confirmed the mothballing in December last year following no viable alternative solution being found to geological reports that indicated that the risks associated with mining a new panel, called T125, had not significantly reduced and that the panel is not viable on health & safety, geological, and financial grounds.
In the latest financial statement, Hargreaves said that "The closure of Maltby was a difficult decision that we recognised would affect a large number of people both within and outside the group.
"The loss of jobs at Maltby is very regrettable. The group, management and unions worked together closely to minimise the inevitable socio-economic impacts. In this regard, great efforts continue to be made to find alternative jobs for as many of the workforce as possible."
A number of Maltby miners have successfully transferred across to Hatfield Colliery near Doncaster, which Hargreaves has managed on behalf of its owners for the last two years. A large number of skilled workers have also been recruited to the group's contracting arm, Hargreaves Technical Resources.
Without capital intensive underground workings, Maltby continues to trade with approximately one million tonnes of tiny coal particles called "fines" harvested and processed. Hargreaves also sold Maltby's methane assets to Alkane Energy in a £7.5m deal.
Overall, the mothballing process led to a reported loss (including closure costs) of £59.8m net of tax incurred in the year which is in line with Hargreaves' plan. These costs included the operating loss to the point of decision to mothball the mine, redundancy costs, closure and settlement costs to the end of the year, and non cash write offs relating to plant and equipment, development costs and other related assets.
The process to sell the remainder of the plant and equipment is ongoing and the closure and restoration programme, including the filling and capping of mine shafts, remains on track to be completed during the current financial year.
Hargreaves, which provides management services and support to Hatfield Colliery Limited from Maltby Colliery Limited, is also expected to "vigorously defend" any claim from Network Rail following the land slip that closed rail lines for five months at Hatfield earlier this year.
Tim Ross, chairman of Hargreaves Services, said: "It has been both a challenging and rewarding year. Whilst the group suffered setbacks at both Maltby and in Belgium, we have made significant strategic progress. Following a successful equity raise in April, the Group has accelerated the development of its surface mining business to become the key coal producer and distributor in the UK market."
Hargreaves Services website
Images: Hargreaves Services
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