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SECTION 6: UK COAL Plc: CURRENT ISSUES AND CONCLUDING COMMENTS

By 2009 UK Coal Plc was being affected by the decline in economic activity in a number of ways. The demand for coal and the price of coal declined and most importantly for the reinvention of UK Coal plc as a property company, land values fell. As a consequence, in August 2009 newspapers were reporting on UK Coal’s half year results and UK Coal plc’s deepening losses: £81m lost in the first half of 2009  as reported in the Yorkshire  Post with its story “Losses deepen for UK Coal as demand slumps1 . This was followed by the announcement in September that UK Coal plc was seeking to raise £100m with a rights issue as reported in The Times “UK Coal raises £100 million to play down debt”. 2 This fund raising exercise saved the company in the short term. Although the company is putting great stress on two major changes in the future,(ie the effects of gaining new, more advantageous coal contracts with generating companies and the improved prospects for coal if Carbon Capture and Storage technology becomes commercially viable), it still left the company financially vulnerable in the short to medium term. It had to somehow raise money notwithstanding its efforts to effectively mortgage some of its future production. 3 Such was its perilous financial state that its Auditors qualified the normal statement made for a viable company that is financially healthy with this statement in the 2009 Annual Report     

“GOING CONCERN

In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosures given in Note

1 to the financial statements concerning the ability of the Group and the Parent Company to continue as a going concern. We note that the

matters set out in Note 1 to the financial statements indicate the existence of material uncertainties which may cast significant doubt over

the ability of the Group and the Parent Company to continue as a going concern. 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.

PricewaterhouseCoopers LLP

Chartered Accountants and Registered Auditors

Leeds

27 April 2009” 4

Later in the year, when commenting on the 2009 Interim Report, Price Waterhouse are still referring to ‘material uncertainties’

“These matters, together with the other matters explained in the basis of preparation note, indicate the existence of material uncertainties

UK COAL plc: AN ALTERNATIVE REPORTPAGE 30

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