annual report and financial statements 2004
 ath resources plc
aardvark tmc ltd
wholly owned subsidiary operating the
skares road site
aardvark tfc ltd
intermediate holding company
srmmc
société des ressources minières du massif central
wholly owned french prospecting company
ath garleffan ltd
wholly owned subsidiary operating the
garleffan site
the uk opencast coal
industry produced
12 1
million
tonnes
of coal in 2003 69 million
tonnes of which was from
scotland this comprised 24
of total uk coal production
ifc group structure
1 corporate statement and highlights
2 chairman’s statement
3 chief executive’s statement
4 financial review
6 board of directors
7 site locations
company information
8 directors’ report
10 corporate governance report
11 remuneration committee report
13 independent auditors’ report
14 consolidated profit and loss account
15 consolidated balance sheet
16 company balance sheet
17 consolidated cash flow statement
18 accounting policies
20 notes to the financial statements
31 notice of annual general meeting
coal was used to generate 
347 
of the uk’s electricity in 2003
ath resources plc is one of
the largest producers of coal
in the uk and produced
13
million
tonnes
in the period to
26 september 2004 ath resources plc annual report and financial statements 2004 1
ath resources plc “ath” is an operator of
opencast coal mines and is currently the third
largest producer of coal in the uk through its
two operational sites situated in east ayrshire
in scotland ath provides coal principally to the
electricity supply industry and also the industrial
and house coal markets
throughout the development and mining process
ath focuses on the restoration and rehabilitation
of the sites and land is returned to various uses
including agriculture forestry nature conservation
and other forms of development
ath resources plc became a public company
in june 2004 when the company was listed on
aim the company intends to grow organically
particularly in scotland where the company’s uk
operations are presently concentrated it will also
pursue suitable complementary acquisitions which
meet strict pre determined criteria
highlights
• november 2003 purchase of garleffan opencast coal site
• june 2004 successful fund raising and listing on aim
•august 2004 disposal of part 18 acres of a former opencast
coal site in scotland for house building
•september 2004 appointment of michel guy as director of
srmmc the company’s french opencast mining subsidiary
• september 2004 new sales contract signed with drax power
for the supply of 250000 tonnes of coal from a further
extension at skares road
 chairman’s statement
2 ath resources plc annual report and financial statements 2004
this year has seen a massive step change 
in both the size of the group and its public
profile commencing operations in 1998 as
a one site venture capital backed opencast
coal mine with ambitions then limited to the
successful development of the skares road
site it is particularly pleasing to report on a
year that has seen the continuing profitable
operation of the group’s original mine the
doubling of the group’s operations through
the acquisition from law mining of a second
site at garleffan and the successful listing on
the alternative investment market “aim”
taken individually any one of these events
could be judged as constituting a successful
year to have achieved all three demonstrates
not only ath’s ambition to become a major
player in the uk coal mining industry but
also the ability of a young and committed
management team to deliver complex and
strategically demanding targets
business progress
profitability after allowing for all of the
exceptional costs associated with the
acquisition and the float is in line with the
board’s expectations and plans are in place
to further improve performance in the coming
year extensions are planned at both of the
group’s existing sites and new planning
applications will shortly be made to extend
ath’s operations to other parts of scotland
in france progress continues to be made
towards developing new opencast sites which
will provide coal for french coal consumers
board changes
during the year the board has been strengthened
by the addition of two nonexecutive directors
vaughan williams recently retired from bhp
billiton is widely experienced in the coal
industry and brings industry knowledge and
considerable management experience to the
board ivana slade an executive with alchemy
partners is widely experienced in all aspects of
ma and fund raising these two appointments
ensure that the board has all the skills necessary
to take it forward 
in france the group is particularly pleased to
have secured the services of michel guy as a
director of its french subsidiary michel has
a coal importation business in france and is
well placed to ensure that the output from the
two french mines will have a smooth path
to market
strategy
there is no doubt that the coal industry
which currently is responsible for producing
some 35 of this country’s electricity faces
some significant political and fiscal challenges
whilst the country has failed to evolve a credible
and balanced longterm energy policy the
demand for electricity continues to increase and
the older nuclear power stations are reaching the
end of their useful lives current policy places too
much reliance upon renewables imported gas
from russia and liquified natural gas from the
middle east and south america this means that
coal will continue to have to play a significant part
in this country’s electricity generation
ath’s strategy will be to maintain a relatively
small but stable share of that market its low
cost of operation and its access to low sulphur
scottish coal should ensure the success of
that strategy there also remains a significant
market for domestic fuel in which ath is already
established as a major supplier and in which
it will continue to operate 
worldwide demand for coal continues to rise
with the economic growth of china and this
together with high freight costs means that the
selling price for coal will remain high for the
foreseeable future the vast majority of ath’s
sales contracts are at selling prices significantly
below current market levels therefore revenues
should increase as these contracts are renewed
against this the high cost of oil has significantly
increased the group’s operating costs as it is
a major consumer of gas oil 
the listing of ath on aim has strategically
placed the group to take advantage of the
many opportunities that will become available
in the near future and the board looks forward
to reporting on further developments in the
coming year
david port
nonexecutive chairman
“it is with great pleasure that i present the first
annual report of the group following its listing
and am pleased to be able to report on a
momentous and yet profitable period of
enlargement and development”
 ath resources plc annual report and financial statements 2004 3
this financial period has been the most eventful
in the group’s development it has seen two
major structural changes to the group first
the acquisition of the garleffan opencast coal
site from law mining ltd on 28 november 2003
assisted by new funding from alchemy partners
and bank of scotland effectively doubling
the size of the group second the listing of
the group on aim on 11 june 2004 has
positioned the group exceptionally well for
future development
operational review
the skares road mine has performed very well
through the period coal production has been
scaled back during the second half as the
mine switched operational areas into higher
stripping ratios the mine produced and sold
800000 tonnes of coal and its products
continued to perform strongly in the household
and industrial coal markets
following its acquisition the garleffan mine
was subject to a turnaround through the year
the mine required deepening in order that the
reserve was maximised and the excavation
cuts needed to be realigned for efficient
operation this process has been completed
along with the reorganisation and relocation
of many of the coal preparation and support
services areas in addition this mine has
benefited from significant investment in new
overburden excavation and transportation
equipment and is now set to operate to its
maximum efficiency for the remainder of its life
despite these major changes to the operations 
the mine produced 640000 tonnes of coal
over the ten month period of ath control
in addition in august the group successfully
concluded the disposal of a parcel of its
development land at hannahston in ayrshire
for which planning permission for 36 houses
had been granted on a restored opencast site
development projects
the development of new business opportunities
has received constant attention since the listing
in fife the muir dean project is moving towards
a planning application with terms agreed on
the final major land parcel two other ayrshire
sites are also being prepared for planning
application early in 2005 these developments
will see planning permission being sought
for more than three million tonnes this winter
additionally prospecting is ongoing at other
new projects in scotland in advance of further
applications for planning permission
the société des ressources minières du
massif central “srmmc” projects are also
developing steadily with an application for
a mining permit for the commentry project
progressing through the planning system and
the transfer of the bertholene concession
completed during this coming winter both
sites will have exploration works commentry
for quality analysis and bertholene for scheme
design both projects will also be the subject
of environmental assessments as part of the
application process and it is planned to have
both mines available for commencement in 
2006 although only one at a time will be brought
into production
market
the market for coal in the uk remains buoyant
international coal prices remain very high on the
back of worldwide growth in demand driven by
china and the far east infrastructure limitations
will slow any pricing falls as production tries to
catch up with demand consequently as we
renew coal sales contracts from 2006 we expect
to see some uplift in pricing to the benefit of
the business
finally this has been an extraordinary year for
our business which has only been made
possible by the commitment and dedication
of the employees over several years and in
particular the last twelve months i would like
to thank each of them for their support and
effort that has collectively developed this
business to the strong position it now holds
thomas allchurch
chief executive
chief executive’s statement
“coal mining still plays a vital part in the economy
of the uk through the generation of a third of our
electricity without which the lights would go out
this winter on a local scale the well paid jobs
and investment that the industry brings to the
former deep mining towns in ayrshire is welcomed
by all concerned”
 4 ath resources plc annual report and financial statements 2004
turnover
turnover for the period was £314m on sales of
13 million tonnes with an average price of £24
per tonne sales by product comprised
t’m £’m
electricity supply industry “esi” 11 252
domestic 01 34
industrial 01 28
total 13 314
esi customers supplied in the period were eon
drax power edf energy and british energy
with the increase in world coal prices which
have risen by over 40 during the last year 
the group will be able to capitalise on improved
domestic and industrial prices this winter and
as the group’s portfolio of esi contracts come
up for renewal over the coming years
profit before interest and tax
profit before interest and tax was £14m
earnings before interest tax depreciation
and amortisation was £64m reflecting the
high upfront costs of acquiring mining assets
and the capital intensive nature of operating
the business
overall this is considered a satisfactory result
as the skares road site has performed in line
with expectations and the group’s garleffan
site has been substantially improved following
the purchase of garleffan the plant fleet has
been renewed and the site reengineered
this turnaround is now complete and the site
is now operating efficiently
the cost of gas oil which accounts for some
10 of direct costs has risen recently in
response to the well publicised rise in crude
oil prices as the majority of sales are at
formulated prices there is limited opportunity
to pass through this increase to our customers
the group is investigating mechanisms
both financially and operationally to manage
this shortterm cost increase as we currently
believe that over the coming financial year oil
prices will return to around 35 per barrel
interest
interest charges of £11m were incurred in the
period of these charges £05m were in respect
of the repayment of loan stock interest and
will not be incurred again following the listing
the group has been cash positive and so
the main ongoing interest charge will be in
respect of finance leases and hire purchase
contracts and the unwinding of the discount
on the restoration provision which is not a
cash flow item
the group manages its exposure to interest
rates by acquiring plant and machinery on
fixed rate hire purchase agreements
financial review
“trading for the period was in line with the directors’
expectations at the time of the listing on aim which
raised some £115m after costs and has enabled
the balance sheet to be degeared leaving the
group cash positive in order that it may pursue
its development programme”
summary of the financial review
• turnover £314m
• earnings before interest tax
depreciation and amortisation £64m
• profit before interest and tax £14m
• final dividend £10m 336p per share
• earnings per share 044p
 the rh120 excavator is the workhorse of the
opencast coal industry this 265 tonne machine is
capable of moving 15m
3
of overburden in each
bucket loading 100 tonne dump trucks in four
passes the group operates seven of these
machines together with a fleet of 30 large dump
trucks all supported by the manufacturer under
repair and maintenance contract to ensure
maximum availability
coal for power station customers is blended on
site from the different coal seams to meet strict
contract specifications quality control is ensured
by a complex sampling regime from coal face
through the process yard to final dispatch by train
in order to meet the quality standards required
by the six different power stations supplied in
the period
hannahston was an abandoned opencast coal
site in ayrshire which the group restored and
developed into mixed housing community access
and nature conservation uses the group has
disposed of 18 acres of the site with planning
consent for 36 houses during the period
ath resources plc annual report and financial statements 2004 5
tax
the effective rate of tax was 66 compared
with a standard rate of tax of 30 the primary
cause for this variation in effective rate was the
effect of depreciation charges being in excess
of capital allowances
dividends and earnings per share
the board is recommending a final dividend 
of £10m equivalent to 336p per share
subject to approval by the members at the
annual general meeting “agm” as there
was not an obligation to pay the proposed
dividend at 26 september 2004 it has not
been accrued for in the financial statements
earnings per share for the period was 044p
cash flow
net cash inflow from operating activities was
£87m and the group was cash positive at
£25m as at 26 september 2004 whilst net debt
was £32m £53m of this difference is in respect
of finance leases and hire purchase contracts
outstanding on the plant fleet and the balancing
£04m is in respect of commercial mortgages
on properties acquired at the muir dean site
capital expenditure
during the period the group acquired capital
equipment with a value of £28m comprising an
rh120 excavator and four tr100 dumptrucks
at 26 september 2004 the group had placed
orders worth £25m for a further five tr100
dumptrucks and two caterpillar d9 bulldozers
as part of its ongoing policy of renewing plant
to ensure that the group operates a modern
and cost effective plant fleet
international financial 
reporting standards “ifrs”
the london stock exchange has now confirmed
that companies listed on aim will not have
to apply ifrs until accounting periods
commencing on or after 1 january 2007
consequently the first set of fully compliant
ifrs financial statements will not be required
until the year ending september 2008
in the meantime the group will be 
appraising the impact of adopting ifrs 
and briefing accordingly
richard croston
finance director
 6 ath resources plc annual report and financial statements 2004
board of directors 
david port fcma
nonexecutive chairman
david port qualified as a chartered
management accountant whilst with
national freight company limited
now exel plc where he rose to
become group chief accountant
following three years at northern
foods plc as finance director of the
dairy division he joined british fuels
limited as finance director and rose
to chief executive and chairman
leading the management buyout from
british coal during the privatisation
process and disposing profitably of
the business in a trade sale in 1997
from 1997 to 2001 david was executive
chairman of sylvan international limited
a £200m turnover timber business with
operations in france david is currently
chairman of petrol express limited
nonexecutive director of global
natural gas limited and nonexecutive
director of global natural energy plc
david has been nonexecutive chairman
of the group since its establishment
in 1998 
richard croston aca
finance director
richard croston qualified as a
chartered accountant in 1992 with
price waterhouse and worked in their
audit department richard had periods
of secondment to clients including
british gas energy centres limited
and debenhams plc as a financial
accountant and beverley building
society as financial controller
richard joined the group in 1998
as financial controller and has been
finance director of the group
since 2000 
tom allchurch
chief executive
tom allchurch is a graduate mining
engineer and has spent his entire career
in the development and operation of
opencast coal mines tom initially trained
as a site engineer with shand mining
limited a contractor to british coal
before joining bayford mining limited
a smaller private mining company
in 1986 in 1991 tom joined rackwood
colliery company limited as projects
manager and was responsible for
the development of a number of uk
and french projects including skares
road tom left rackwood in 1998
leading the management team in
acquiring the rights to operate
and subsequently acquire the
skares road mine tom was chairman
of the coal industry trade association
the confederation of uk coal producers
in 2001 and 2002 since 1998 tom
was managing director of the group
and became chief executive when the
company listed on aim 
alistair black mba
operations director 
alistair commenced his training as a
site engineer with coal contractors
limited in 1986 progressing to site
manager of the roughcastle north
site in 1994 in 1996 alistair joined
rackwood as regional production
manager responsible for two opencast
and one underground mine in scotland
alistair joined the group in 1998 as
operations manager for the skares
road mine and became operations
director in 2000 alistair gained his mba
from heriot watt university in 1999
he is also the health and safety
director for the group 
mike tod mrics
development director
mike tod is a chartered minerals
surveyor and commenced his career
gold mining with gencor in south
africa and subsequently moved to
uranium mining in namibia with rtz
in 1990 mike returned to the uk to
work as a consultant for wardell
armstrong a leading uk mining and
minerals consultancy firm mike joined
tom allchurch’s project team in 1995
and was instrumental in the development
of and subsequent acquisition by the
management team of skares road
and its management buyout in 1998
mike has been the development director
of the group since 1998
vaughan williams
nonexecutive director
vaughan williams has a degree
in politics from exeter university
vaughan spent four years at british steel
from 1968 to 1972 before joining a
predecessor company of bhp minerals
europe limited as coal sales manager
later promoted to director responsible
for coal sales in europe cis the middle
east and africa vaughan then moved
to bhp coal australia pty limited in
1986 as manager of their marketing
operations after returning from australia
vaughan became deputy managing
director at bhp minerals europe limited
in 1988 and subsequently managing
director in 1990 vaughan then became
vice president marketing at bhp billiton
diamonds inc in 2000 where he
remained until 2003 he joined the
group in 2004
john hodgson
marketing director
john hodgson commenced his career
with the national coal board in 1964 as
a chemist in the scientific department
from where he progressed to assistant
regional marketing and preparation
officer in 1975 in 1981 john joined
burnett  hallamshire fuels plc as
production director responsible for the
production and marketing of coal from
twelve coal washing operations in 1984
john transferred to rushcliffe fuels
limited and was managing director
from 1989 to 1993 john joined british
fuels in 1993 as general manager of
the international and sourcing division
responsible for sourcing the entire
company’s solid fuel requirements
john joined the group in 1998 as its
marketing director 
ivana slade
nonexecutive director
ivana slade is the representative
of the alchemy plan on the board
ivana has been an investment
executive at alchemy partners since
2001 previously bear stearns in
london and new york ivana worked
in the mergers and acquisitions team
she holds a masters degree in business
administration and economics from
the university of st gallen switzerland
the alchemy plan is entitled to appoint
a director to the board for as long
as it retains an interest in 10 or more
of the company’s issued share capital 
david port fcma
nonexecutive chairman
tom allchurch
chief executive 
mike tod mrics
development director 
john hodgson
marketing director 
richard croston aca
finance director and
company secretary
alistair black mba
operations director 
vaughan williams
nonexecutive director
ivana slade
nonexecutive director
 ath resources plc annual report and financial statements 2004 7
site locations
company information
directors
d c port
nonexecutive chairman
t j allchurch
chief executive
m t w tod
development director
j k hodgson
marketing director
r a croston
finance director
a black
operations director
v m f williams
nonexecutive director
i slade
nonexecutive director
secretary
r a croston
registered office
richmonds house
white rose way
doncaster dn4 5jh
company number
4928463
bankers
bank of scotland
110 queen street
glasgow g1 3by
solicitors
eversheds
cloth hall court
infirmary street
leeds ls1 2jb
auditors
baker tilly
2 whitehall quay
leeds ls1 4hg
nominated adviser and broker
seymour pierce limited
bucklersbury house
3 queen victoria street
london ec4n 8el
financial pr advisors
abchurch communications limited
100 cannon street
london ec4n 6eu
registrar
capita registrars
the registry
34 beckenham road
beckenham
kent br3 4tu
muir dean
skares road
 garleffan
doncaster
bertholene
commentry
united kingdom france
 8 ath resources plc annual report and financial statements 2004
the directors submit their report and the audited financial statements of ath resources plc for the period ended 26 september 2004
principal activities
the principal activity of the company is that of a holding company the principal activity of the group is the operation of opencast coal sites and
subsequent sale to uk electricity generators industrial and domestic customers the group operates under the title of ath resources
review of developments and future prospects
the company was incorporated on 10 october 2003 as ever 2206 limited and changed its name to ath resources limited on 13 november 2003
on 14 november 2003 the authorised share capital was increased to £100000 consisting of 100000 ordinary shares of £1 each these were
reclassified as 75720 ‘a’ ordinary shares and 24280 ‘b’ ordinary shares
on 28 november 2003 19470 ‘a’ ordinary shares and 24280 ‘b’ ordinary shares were issued at par for cash
on 28 november 2003 the company acquired the whole of the issued share capital of aardvark tmc limited for a total consideration of £5907000
the consideration was satisfied by means of a loan note being granted to the members of aardvark tmc limited which attracted interest at the rate
of 12 per annum and the issue of 56250 ‘a’ ordinary shares the loan notes were redeemed on the listing of the company
on the same day the company acquired the whole of the issued share capital of ath garleffan limited at par on 28 november 2003
ath garleffan limited acquired the garleffan opencast coal mine from law mining limited
on 1 april 2004 the share capital was further increased to £102895 by the creation of 2895 ‘b’ ordinary shares of £1 each which were issued at
par for cash
on 26 may 2004 the company was reregistered as a public limited company and its name changed to ath resources plc
on 7 june 2004 the authorised and issued ordinary shares were reclassified as ordinary shares of £1 each the authorised share capital was
increased from £102895 to £1000000 the authorised and issued ordinary shares were subdivided by 200 into ordinary shares of 05p each
on 11 june 2004 the company issued a further 9191176 ordinary shares to the general public via an initial public offering when the company listed
on the alternative investment market “aim” of the london stock exchange at an issue price of £136 per ordinary share
the group’s trading performance for the period was in line with directors’ expectations which was influenced by the planned reengineering of the
recently acquired garleffan site in order to improve operational efficiencies supported by a strong performance at the skares road site
statement of directors’ responsibilities
company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the
group and of the profit or loss of the group for that period in preparing those financial statements the directors are required to
•
select suitable accounting policies and then apply them consistently
•
make judgements and estimates that are reasonable and prudent
•
state whether applicable accounting standards have been followed subject to any material departures disclosed and explained in the financial
statements and
•
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business
the directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the
group and to enable them to ensure that the financial statements comply with the requirements of the companies act 1985 they are also responsible
for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities
directors’ report
 ath resources plc annual report and financial statements 2004 9
directors
the directors in office during the period under review and their interests in the equity of the company were
26 september 2004
ordinary shares
d c port appointed 28 november 2003 334400
t j allchurch appointed 14 november 2003 2089600
m t w tod appointed 28 november 2003 1393000
j k hodgson appointed 28 november 2003 614600
r a croston appointed 28 november 2003 418000
a black appointed 28 november 2003 501800
j p moulton appointed 28 november 2003 – resigned 12 may 2004 —
v m f williams appointed 12 may 2004 1400
i slade appointed 12 may 2004 —
everdirector limited appointed 10 october 2003 – resigned 14 november 2003 —
the directors other than v m f williams held their interests in the equity of the company at the date of appointment
at 26 september 2004 i slade had a beneficial interest in 7791059 ordinary shares of the company through the alchemy investment plan 
coinvestment scheme
substantial shareholdings
the company has been informed that on 1 december 2004 the following shareholders held substantial holdings in the issued ordinary shares 
of the company
number of holding
ordinary shares 
alchemy partners nominees limited 7791059 26
framlington high income fund 2550000 9
t j allchurch 2089600 7
shires smaller companies plc 1445329 5
m t w tod 1393000 5
abn amro high income fund 1273705 4
shires income plc 1115854 4
universities superannuation share 1048195 4
gartmore uk equity income fund 918761 3
payment policy
it is the group’s policy to pay suppliers in accordance with agreed terms provided the supplier has also complied with agreed terms and conditions
at 26 september 2004 the trade creditors of the group represented 52 days of purchases
auditors
a resolution to appoint baker tilly as auditors will be proposed at the annual general meeting “agm”
by order of the board
r a croston
secretary
7 december 2004
 10 ath resources plc annual report and financial statements 2004
introduction
ath resources plc was listed on aim on 11 june 2004 although the rules of aim do not require the company to comply with the combined code on
corporate governance “the code” the company fully supports the principles set out in the code and will attempt to comply wherever possible given
both the size and resources available to the company details are provided below of how the company applies the code
the board
the board of directors comprises five executive directors two independent nonexecutive directors one of whom is the chairman and an
alchemy plan nominated nonexecutive director
the board generally meets each month and receives a board pack comprising individual reports from each of the executive directors together with
any other material deemed necessary for the board to discharge its duties it is the board’s responsibility for formulating reviewing and approving the
group’s strategy budgets major items of expenditure and acquisitions
board committees
the board has established three committees audit remuneration and nominations all having written terms of delegated responsibilities
audit committee
the audit committee comprises the three nonexecutive directors and is scheduled to meet twice a year it is the audit committee’s role to provide
formal and transparent arrangements for considering how to apply the financial reporting and internal control requirements of the code whilst
maintaining an appropriate relationship with the independent auditors of the group in order to comply with the requirement of the code that at least
one member has relevant financial experience the chairman of the board sits on the audit committee 
remuneration committee
the remuneration committee comprises the three nonexecutive directors and the chief executive and meets at least once a year normally in june
it is the remuneration committee’s role to establish a formal and transparent policy on executive remuneration and to set remuneration packages for
individual directors
nominations committee
the nominations committee comprises the three nonexecutive directors and the chief executive and meets as required to consider and make
recommendations on the appointment of directors to the board
shareholder relations
the company meets with its institutional shareholders and analysts as appropriate and will use the agm to encourage communication with private
shareholders in addition the company intends to use the annual report and accounts interim statement and web site wwwathcouk to provide
further information to shareholders
the board considers vaughan williams to be the senior independent director
internal control and risk management
the board is responsible for the system of internal control and for reviewing its effectiveness such systems are designed to manage rather than
eliminate risks and can provide only reasonable and not absolute assurance against material misstatement or loss each year on behalf of the board
the audit committee reviews the effectiveness of these systems this is achieved primarily by considering the risks potentially affecting the group and
from discussions with the external auditors 
the group does not currently have an internal audit function due to the small size of the administrative function which amounts to six people and the
high level of director review and authorisation of transactions
a comprehensive budgeting process is completed once a year and is reviewed and approved by the board the group’s results as compared
against budget are reported to the board on a monthly basis and discussed in detail at each meeting of the board
the group maintains appropriate insurance cover in respect of legal actions against the directors as well as against material loss or claims against
the group and reviews the adequacy of the cover regularly
corporate governance report
 ath resources plc annual report and financial statements 2004 11
introduction
companies trading on aim are not required to provide a formal remuneration report however in line with current best practice this report provides
information to enable a greater level of understanding as to how directors’ remuneration is determined
the remuneration committee of the board is responsible for considering directors’ remuneration packages and makes its recommendations to the
board the committee comprises the three nonexecutive directors and meets at least once a year normally in june
remuneration policy
remuneration packages are designed to be competitive and to reward above average performance executive directors receive salary fully financed
company car death in service benefit critical illness and medical cover pension contribution annual bonuses and share options
service contracts
the executive directors have service agreements with the company dated 28 november 2003 for an initial twelve months thereafter subject to
termination upon twelve months’ notice being given by either party
pensions
the group does not have a pension scheme instead makes contributions to executive directors’ personal pension schemes of 125 of annual salary
performance incentives
the group operates an annual cash bonus scheme and grants share options
the annual bonus scheme provides for a maximum bonus of 30 of salary to be paid by reference to achievement of a group earnings target 10
surpassing the earnings target 10 and individual personal targets 10
the company has the following share incentive arrangements
•
an inland revenue approved executive share option scheme “approved scheme”
•
an unapproved executive share option scheme “unapproved scheme” and
•
a long term incentive plan “ltip” together “the schemes”
under the approved scheme an option may only be exercised during the period commencing 2 november 2007 and ending on 31 october 2014
provided that the group’s earnings pretax in the three year period from 1 october 2003 to 30 september 2006 is at least 3868p the exercise price
per share is £149
under the unapproved scheme an option may only be exercised during the period commencing 12 june 2007 and ending on 10 june 2014 provided
that the group’s earnings pretax in the three year period from 1 october 2003 to 30 september 2006 is at least 3868p the exercise price per share
is £136
under the ltip an award will only vest allowing the award holder to call for the shares subject to the award if earnings per share of the company in
the three year period from 1 october 2003 to 30 september 2006 is at least 6442p no consideration is to be paid by award holders on vesting
none of the option shares or ltip require payment to be made by participants to receive the benefit of an option
the options and awards have been granted pursuant to the schemes to the following directors
approved unapproved ltip
t j allchurch 20134 335000 335000
m t w tod 20134 220000 240000
j k hodgson 20134 150000 170000
r a croston 20134 150000 170000
a black 20134 150000 170000
the ltip awards and the unapproved scheme share options were granted on 11 june 2004 and the approved scheme share options were granted
on 1 november 2004 following the approval for the scheme by the inland revenue
remuneration committee report
 remuneration committee report
12 ath resources plc annual report and financial statements 2004
nonexecutive directors
the nonexecutive directors entered into letters of appointment dated 12 may 2004 both d c port and v m f williams were appointed for an initial
three year term which can be terminated upon six months’ notice being given by either party they receive a fee of £50000 and £20000 respectively
i slade is the alchemy plan nominated nonexecutive director and replaced j p moulton in that role the group pays an annual fee of £20000 to alchemy
partners in respect of this appointment fees of £55180 were paid to alchemy partners in the period if the alchemy plan’s shareholding in the company
falls below 10 of the issued share capital the right to appoint ceases
directors’ remuneration
details of directors’ remuneration are set out below
salary benefits bonus emoluments pension total
££££££
executive directors
t j allchurch 95209 10224 40000 145433 11901 157334
m t w tod 68708 8154 20000 96862 8589 105451
j k hodgson 52917 12642 11478 77037 6614 83651
r a croston 46958 10113 93042 150113 5686 155799
a black 49125 9058 73572 131755 5942 137697
nonexecutive directors
d c port 30208 — 104000 134208 — 134208
v m f williams 7500 — — 7500 — 7500
i slade ——————
total 350625 50191 342092 742908 38732 781640
bonus payments to t j allchurch and d c port of £40000 and m t w tod and r a croston of £20000 respectively were paid following the successful
listing of the company on aim d c port r a croston and a black each received a bonus of £64000 on the purchase of aardvark tmc limited
representing their accrued rights under a shadow share scheme the balance of bonus payments was due from the winding up of the aardvark tmc limited
employee share option scheme
 ath resources plc annual report and financial statements 2004 13
we have audited the financial statements on pages 14 to 30
this report is made solely to the company’s members as a body in accordance with section 235 of the companies act 1985 our audit work has
been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditors’ report and for no
other purpose to the fullest extent permitted by law we do not accept or assume responsibility to anyone other than the company and the
company’s members as a body for our audit work for this report or for the opinions we have formed
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report and the financial statements in accordance with applicable law and united kingdom
accounting standards are set out in the statement of directors’ responsibilities
our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and united kingdom auditing standards
we report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the
companies act 1985 we also report to you if in our opinion the directors’ report is not consistent with the financial statements if the company
has not kept proper accounting records if we have not received all the information and explanations we require for our audit or if information
specified by law regarding directors’ remuneration and transactions with the company is not disclosed
we read other information contained in the annual report and consider whether it is consistent with the audited financial statements this other
information comprises only the chairman’s statement the chief executive’s statement the financial review and the directors’ report we consider
the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements
our responsibilities do not extend to any other information
basis of opinion
we conducted our audit in accordance with auditing standards issued by the auditing practices board an audit includes examination on a test
basis of evidence relevant to the amounts and disclosures in the financial statements it also includes an assessment of the significant estimates
and judgements made by the directors in the preparation of the financial statements and of whether the accounting policies are appropriate to the
company’s circumstances consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement whether caused by fraud or other
irregularity or error in forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements
opinion
in our opinion the financial statements give a true and fair view of the state of the company and group’s affairs at 26 september 2004 and of the
group profit for the period then ended and have been properly prepared in accordance with the companies act 1985
baker tilly
registered auditor
chartered accountants
2 whitehall quay
leeds
ls1 4hg
7 december 2004
independent auditors’ report
to the members of ath resources plc
 14 ath resources plc annual report and financial statements 2004
consolidated profit and loss account
for the period ended 26 september 2004
notes £ £ 
turnover 1 31390930 
cost of sales 27267466
gross profit 4123464
administrative expenses 2976607
exceptional legal and professional costs 358464
other operating income 578625
2756446
operating profit 2 1367018 
interest receivable 3 13535 
interest payable and similar charges 4 1115920
1102385
profit on ordinary activities before taxation 264633
tax on profit on ordinary activities 6 174432
profit on ordinary activities after taxation 90201
retained profit for the period 20 90201
basic and diluted earnings per share 7 044p
the profit on ordinary activities before taxation arises from the group’s operations all of which were acquired on 28 november 2003 and which 
are continuing
there are no recognised gains or losses other than as stated in the profit and loss account
 ath resources plc annual report and financial statements 2004 15
consolidated balance sheet
as at 26 september 2004
notes £ £ 
fixed assets
goodwill 8 6148116 
site development costs 9 606741 
tangible fixed assets 10 10590022 
investments 11 2 
17344881
current assets
stocks 12 5007841 
debtors 13 8115563 
cash at bank 2525196
15648600
creditors amounts falling due within one year 14 11080880
net current assets 4567720
total assets less current liabilities 21912601
creditors amounts falling due after more than one year 15 4010044
provisions for liabilities and charges 17 6262090
net assets 11640467
capital and reserves
called up share capital 18 148851 
share premium account 19 11401415 
profit and loss account 20 90201 
equity shareholders’ funds 21 11640467
approved by the board on 7 december 2004
t j allchurch
director
 16 ath resources plc annual report and financial statements 2004
notes £ £ 
fixed assets
investments 11 5907001 
current assets
debtors 13 5170492 
cash at bank 92734
net current assets 5263226
total assets less current liabilities 11170227
net assets 11170227
capital and reserves
called up share capital 18 148851 
share premium account 19 11401415 
profit and loss account 20 380039
equity shareholders’ funds 21 11170227
approved by the board on 7 december 2004
t j allchurch
director
company balance sheet
as at 26 september 2004
 ath resources plc annual report and financial statements 2004 17
notes £ £ 
net cash flow from operating activities 25a 8677466 
returns on investment and servicing of finance
interest received 13535
interest paid 655513
interest element of finance leases 274182
916160
taxation paid 668796
capital expenditure
payments to acquire tangible fixed assets 514712
receipts from sales of tangible fixed assets 575813
acquisitions
net overdrafts acquired with subsidiary 25e 1626037
purchase of business 5835000
7399936
cash flow before financing 307426
financing
issue of ordinary shares 11494016
new secured loan 3000000
repayment of secured loan 3050000
issue of loan notes 1480530
repayment of loan notes 7331280
capital element of finance lease payments 2760644
2832622
increase in cash 25c 2525196
consolidated cash flow statement
for the period ended 26 september 2004
 18 ath resources plc annual report and financial statements 2004
basis of accounting
the financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards
accounting period
the company has drawn up its accounts for the period from incorporation to 26 september 2004
consolidation
the accounts consolidate the accounts of the company and all of its subsidiary undertakings other than as stated below the results of subsidiaries
acquired during the period are included from the effective date of acquisition
the accounts do not consolidate the results of the french subsidiary société des ressources minières du massif central “srmmc” as it is not
material for the purposes of giving a true and fair view note 11
the accounts do not consolidate the results of aardvark esop limited as it is considered dormant for the period and is not material for the purposes
of giving a true and fair view the trustees intend to wind up the esop as it has no further interest in the shares of aardvark tmc limited a subsidiary
of the group
aardvark tmc limited “aardvark” has 20000 ‘b’ ordinary shares subscribed at nominal value of 1p each in addition to the ordinary shares wholly
owned by ath resources plc
the ‘b’ ordinary shares only carry the rights to receive a one off dividend in the event that aardvark tfc limited or srmmc aardvark’s subsidiary and
subsubsidiary are awarded damages in respect of existing and future litigation against the french state the ‘b’ ordinary shares carry no voting rights
or rights to receive any other dividend as a result the ‘b’ ordinary shares are not accounted for as a minority interest
the company has not presented its own profit and loss account as permitted by section 2304 of the companies act 1985
site development expenditure costs
the costs of prospecting and identifying new sites are expensed until such time that a prospective site is considered by the board to be economically
viable and that there is a high degree of probability and commitment that the site will be worked costs then incurred in preparing and developing
sites are capitalised up to the start of production upon commencement of production depreciation is charged on a tonnage basis
goodwill
consolidated goodwill being the excess consideration over the fair values of the assets acquired on the purchase of subsidiary undertakings
is capitalised and charged to profit over ten years goodwill in respect of the asset purchase of the garleffan site is charged to profit on a tonnage
basis over the estimated total recoverable reserves
tangible fixed assets
depreciation is provided on cost in annual instalments over the estimated useful life of assets which are reviewed annually the rates of depreciation
are as follows
freehold land – production sites tonnage basis over the estimated total recoverable reserve
– nonproduction not depreciated
plant and machinery 20 – 50
fixtures fittings and equipment 20 – 25
motor vehicles 20 – 333
accounting policies
 ath resources plc annual report and financial statements 2004 19
stocks and work in progress
stocks and work in progress are valued at the lower of cost and net realisable value 
finance leases and hire purchase contracts
tangible assets acquired under finance leases and hire purchase contracts are capitalised at the estimated fair value at the date of inception of each
lease or contract the total finance charges are allocated over the period of the lease in such a way as to give a reasonably constant charge on the
outstanding liability
operating lease agreements
rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits
on a straight line basis over the period of the lease
deferred taxation
deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date timing
differences are differences between the group’s taxable profits and its results as stated in the financial statements that arise from the inclusion of
gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements
deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing differences are expected to reverse based
on tax rates and laws that have been enacted or substantially enacted by the balance sheet date deferred tax is measured on a nondiscounted basis
pension contributions
the group does not operate a pension scheme for the benefit of its employees but instead makes contributions to their personal pension policies
the contributions due for the period are charged to the profit and loss account
capital instruments
capital instruments are accounted for and classified as equity or nonequity share capital according to their form
final void provisions
following the conclusion of coal extraction the final working void of an opencast coal site must be back filled the total cost of this operation is
recognised as a provision on site commissioning when the obligation arises the amount provided represents the present value of the expected costs
costs are charged to the provision as incurred and the unwinding of the discount being the difference between the present value and the total cost of
the provision is included in the interest charge for the period an asset is created for an amount equivalent to the initial provision this is charged to
the profit and loss account on a tonnage basis over the estimated life of the recoverable reserves
turnover
turnover represents the invoiced value net of value added tax of goods sold to customers 
employee share schemes
the company operates a number of share based incentives as outlined in the remuneration committee’s report the cost of awards to employees
being the difference between the market price at the date of award and the amount of consideration due is recognised over the period of the
employee’s related performance where there is a reasonable expectation that the performance criteria will be met
financial instruments
income and expenditure arising on financial instruments are recognised on an accruals basis and credited or charged to the profit and loss account 
in the financial period to which they relate
 20 ath resources plc annual report and financial statements 2004
1 turnover and segmental reporting
the group’s turnover was derived from its principal activity undertaken wholly within the uk 
2 operating profit
£
operating profit is stated after charging
depreciation of tangible assets
owned assets 1126253
leased assets 1584631
amortisation of site development costs 493001
amortisation of goodwill 1872806
rentals under operating leases
plant and machinery 2996036
land and buildings 16084
auditors’ remuneration – audit 20000
– tax 8425
– corporate finance 62375
– aim listing £91743 debited to share premium —
3 interest receivable
£
other interest receivable 13535
4 interest payable and similar charges
£
loan stock interest 488526
bank overdraft and loan interest 166987
finance lease interest 274182
restoration provision discount 186225
1115920
notes to the financial statements
for the period ended 26 september 2004
 ath resources plc annual report and financial statements 2004 21
5 employees
staff costs during the period including directors £
wages and salaries 4914979
redundancy costs 74885
social security costs 515034
pension costs 37248
5542146
average number of employees no
office and management 22
production 152
174
directors’ emoluments £
directors’ emoluments 742908
pension contributions 38732
781640
highest paid director
emoluments 145433
pension contributions 11901
157334
during the period fees of £55180 were paid to alchemy partners llp for the services of i slade and j p moulton
6 taxation 
group £
corporation tax
current year 407894
deferred taxation 233462
174432
 22 ath resources plc annual report and financial statements 2004
notes to the financial statements
for the period ended 26 september 2004
6 taxation continued
the tax assessed for the period is higher than the standard rate of corporation tax as explained below
group £
profit on ordinary activities before taxation 264633
profit on ordinary activities multiplied by standard rate of tax for the period of 30 79390
effect of expenses not allowable for tax purposes 76883
effect of depreciation in excess of capital allowances 218195
effect of shortterm timing differences 33426
total current tax 407894
7 earnings per share
basic and diluted earnings per share is calculated on profit after tax of £90201 and a weighted average number of shares of 20302635 the diluted
earnings per share takes account of share options outstanding however as the performance criteria for the share options had not been met there is
no adjustment to the weighted average number of shares
8 goodwill
group £
arising on acquisition of subsidiary note 25e 1972128
arising on purchase of business 6048794
26 september 2004 8020922
amortisation
charge in the period 1872806
26 september 2004 1872806
net book value
26 september 2004 6148116
during the period ath garleffan limited a subsidiary of the group purchased the garleffan opencast coal mine from law mining limited along with
certain related assets and liabilities the following values are considered by the directors to materially equate to fair value
£
tangible fixed assets 3199427
stocks and work in progress 2500000
finance leases and hire purchase contracts 1438221
4261206
goodwill 6048794
10310000
cash consideration – on completion 1725000
– deferred note 15 8585000
10310000
 ath resources plc annual report and financial statements 2004 23
9 site development costs
group £
cost
subsidiary acquired 1099742
26 september 2004 1099742
amortisation
charge in the period 493001
26 september 2004 493001
net book value
26 september 2004 606741
10 tangible fixed assets
freehold plant and motor 
land machinery vehicles total 
group £ £ £ £ 
cost
subsidiary acquired 2090847 5149084 — 7239931 
additions 688000 5810883 49335 6548218 
disposals — 572239 — 572239
26 september 2004 2778847 10387728 49335 13215910 
depreciation
charge in the period 642262 2058344 10278 2710884 
disposals — 84996 — 84996
26 september 2004 642262 1973348 10278 2625888 
net book value
26 september 2004 2136585 8414380 39057 10590022 
finance lease agreements
depreciation charge — 1574353 10278 1584631 
net book value — 7122046 39057 7161103 
 24 ath resources plc annual report and financial statements 2004
notes to the financial statements
for the period ended 26 september 2004
11 investments
group company 
investments in subsidiary undertakings £ £ 
cost
additions 2 5907001 
26 september 2004 2 5907001 
country of type proportion of proportion of nature of 
registration of shares voting rights held shareholding business
name of company directly owned
aardvark tmc limited england ordinary 100 100 opencast coal mining
ath garleffan limited england ordinary 100 100 opencast coal mining
held by subsidiary
aardvark tfc limited england ordinary 100 100 intermediate holding company
aardvark esop limited england ordinary 100 100 corporate trustee to aardvark 
qualifying employee share 
ownership trust
société des ressources france ordinary 100 100 coal prospecting
minières du massif central “srmmc”
aardvark tmc limited has 20000 ‘b’ ordinary shares subscribed at nominal value of 1p each in addition to the ordinary shares wholly owned
by ath resources limited
the ‘b’ ordinary shares carry the rights only to receive a one off dividend in the event that its subsidiary aardvark tfc limited or its subsidiary
is awarded damages in respect of the existing and future litigation against the french state the ‘b’ ordinary shares carry no voting rights or rights
to receive any other dividend as a result the ‘b’ ordinary shares are not accounted for as a minority interest
aardvark esop limited acts as corporate trustee to the aardvark qualifying employee share ownership trust an employee share ownership plan
“esop” registered with the inland revenue and holds shares in and for the benefit of the employees of aardvark tmc limited all entries in the
financial records of the company were in the capacity as corporate trustee to the esop and as such the company is considered dormant
srmmc share capital and reserves at 31 december 2003 were €65335 and the company incurred a loss of €46940 during that year the group
provided funding to the company of £24000 during the period to 26 september 2004 which has been charged to profit there were no balances
owing at the balance sheet date
aardvark tfc limited aardvark esop limited and srmmc are not consolidated in the accounts as they are not considered material for the
purposes of giving a true and fair view
12 stocks
group company 
££ 
coal stocks 838246 —
work in progress 4123347 — 
other stocks 46248 — 
5007841 — 
 ath resources plc annual report and financial statements 2004 25
13 debtors
group company 
££ 
amounts due from subsidiary undertakings — 5170492 
trade debtors 4483175 —
restoration asset 2777626 —
prepayments and accrued income 174254 — 
other debtors 9200 — 
deferred taxation asset 671308 — 
8115563 5170492 
the restoration asset falls due after more than one year
deferred taxation asset group £
subsidiary acquired 437846
profit and loss account credit 233462
26 september 2004 671308
the deferred tax asset comprises the following amounts
£
depreciation in excess of capital allowances 637882
other timing differences 33426
26 september 2004 671308
14 creditors amounts falling due within one year
group company 
££ 
bank loan note 15 50000 — 
finance leases and hire purchase contracts note 15 2963960 — 
trade creditors 3032136 — 
corporation tax 335144 — 
other taxation and social security 860558 — 
other creditors 143277 — 
deferred consideration note 15 3150000 — 
accruals and deferred income 545805 — 
11080880 — 
 26 ath resources plc annual report and financial statements 2004
15 creditors amounts falling due after more than one year 
group company 
££ 
bank loan 344500 — 
finance leases and hire purchase contracts 2340544 — 
deferred consideration 1325000 — 
4010044 — 
amounts included above are repayable over varying periods by monthly instalments as follows
finance leases
and hire purchase deferred
bank loan contracts consideration
£££ 
within one year 50000 2963960 3150000
more than one year but not more than two years 50000 1460132 1325000
more than two years but not more than five years 150000 880412 — 
five years or more 144500 — —
394500 5304504 4475000
the bank loan is secured by a fixed charge over certain assets of the group the company is party to a cross guarantee with its subsidiary
undertakings in respect of bank loans and overdrafts held by group companies which are secured by debentures over the assets of the group
obligations under finance leases and hire purchase contracts are secured on the related assets
16 financial instruments
the group’s financial instruments comprise bank loans cash and finance leases and hire purchase contracts the purpose of these financial
instruments is to finance the group’s operations all are considered to be stated at fair value shortterm debtors and creditors have been omitted
from all disclosures
it is and has been throughout the period under review the group’s policy that no trading in financial instruments shall be undertaken the main risk
arising from the group’s financial instruments is interest rate risk 
the bank loan is secured by a fixed charge over certain assets of the group the bank loan is repayable over eight years and bears interest based on
the bank’s base rate plus 2 
finance leases and hire purchase contracts are secured on the specific asset to which the agreement relates and are on fixed rate terms
the weighted average interest rate is 7
17 provisions for liabilities and charges
group company 
££ 
final void provision
subsidiary acquired 2964463 —
created in the period 4095000 — 
unwinding of discount 186225 — 
released to profit and loss 983598 — 
26 september 2004 6262090 — 
the £983598 released to profit in the period was offset by an adjustment in respect of the restoration asset of £369189
notes to the financial statements
for the period ended 26 september 2004
 ath resources plc annual report and financial statements 2004 27
18 called up share capital
allotted called up
authorised and fully paid 
no of shares no of shares £ 
ordinary shares of 05p each 200000000 29770176 148851
the company was incorporated on 10 october 2003 with an authorised share capital of £1000 divided into 1000 ordinary shares of £1 each of which
one was issued
on 14 november 2003 the authorised share capital was increased to £100000 consisting of 100000 ordinary shares of £1 each these were
reclassified as 75720 ‘a’ ordinary shares and 24280 ‘b’ ordinary shares
on 28 november 2003 19470 ‘a’ ordinary shares and 24280 ‘b’ ordinary shares were issued at par for cash
on 28 november 2003 the company issued 56250 ‘a’ ordinary shares as part of the consideration for the acquisition of aardvark tmc limited
on 1 april 2004 the share capital was further increased to £102895 by the creation of 2895 ‘b’ ordinary shares of £1 each which were issued at par
for cash
on 7 june 2004 the authorised and issued ordinary shares were reclassified as ordinary shares of £1 each the authorised share capital was
increased from £102895 to £1000000 the authorised and issued ordinary shares were subdivided by 200 into ordinary shares of 05p each
on 11 june 2004 the company issued a further 9191176 ordinary shares to the general public via an initial public offering when the company listed
on aim
19 share premium account
group company 
££ 
issue of ordinary shares 12454043 12454043 
expenses of issue 1052628 1052628
11401415 11401415 
20 profit and loss account
group company 
££ 
retained profitloss for the period 90201 380039
26 september 2004 90201 380039
21 reconciliation of movement in shareholders’ funds
group company 
££ 
issue of ordinary shares 11550266 11550266 
profitloss attributable to members of the company 90201 380039
net increase in shareholders’ funds 11640467 11170227 
closing shareholders’ funds 11640467 11170227 
22 pension commitments
the group makes contributions to its employees’ own personal pension schemes the contributions for the period of £37248 are charged to the profit
and loss account
 28 ath resources plc annual report and financial statements 2004
23 operating lease commitments
at 26 september 2004 the group was committed to making the following payments during the next year in respect of operating leases
£
plant and machinery
leases which expire within one year 26858
leases which expire between two and five years 339960
land and buildings
leases which expire between two and five years 20500
24 capital commitments
at 26 september 2004 the group was committed to acquiring plant and machinery 
£
contracted but not provided 2529000
25 cash flows
a reconciliation of operating profit to net cash inflow from operating activities £
operating profit 1367018
depreciation and amortisation 5076691
profit on disposal of assets 88570
decrease in stocks 1708593
increase in debtors 3925856
increase in creditors and provisions 4539590
net cash flow from operating activities 8677466
acquisition
excluding other 
cash flow net overdrafts movements 26 september 2004 
b analysis of net debt £ £ £ £ 
cash at bank 2525196 — — 2525196 
debt due within one year 5850750 50000 5850750 50000
debt due beyond one year 50000 394500 — 344500
finance leases and hire purchase contracts 2760644 3792848 4272300 5304504
8661394
11186590 4237348 10123050 3173808
notes to the financial statements
for the period ended 26 september 2004
 ath resources plc annual report and financial statements 2004 29
25 cash flows continued
c  reconciliation of net cash inflow to movement in net debt £
increase in cash 2525196
cash flow from changes in debt 8661394
change in net debt resulting from cash flows 11186590
net debt acquired with subsidiary 4237348
new debt issued 5850750
new finance leases and hire purchase contracts 4272300
movement in net debt in period 3173808
net debt at 26 september 2004 3173808
d other movements in net debt
during the period the group entered into finance leases and hire purchase contracts arrangements in respect of assets with a total capital value at the
inception of the agreements of £4272300 
part of the consideration for the purchase of subsidiary undertakings that occurred during the period comprised shares and loan notes further
details of the acquisitions are set out below
e acquisitions of subsidiaries
on 28 november 2003 the company acquired the whole of the issued share capital of aardvark tmc limited for a total consideration of £5907000
the consideration was satisfied by means of a loan note being granted to the members of aardvark tmc limited which attracted interest at the rate
of 12 per annum and the issue of 56250 ‘a’ ordinary shares
£
net assets acquired fair value
site development costs 1099742
tangible fixed assets 7239931
investments 2
stocks 4216434
debtors 3839817
bank overdrafts 1626037
bank loans 444500
creditors 3633206
finance leases 3792848
provisions 2964463
3934872
goodwill note 8 1972128
5907000
satisfied by
shares allotted 56250
loan notes 5850750
5907000
on the same day the company acquired the whole of the issued share capital of ath garleffan limited at par on 28 november 2003 ath garleffan
limited acquired the garleffan opencast coal mine from law mining limited note 8
 30 ath resources plc annual report and financial statements 2004
26 related party transactions
during the period the group paid alchemy partners llp £55180 for the services of i slade and j p moulton nonexecutive directors of the
company no balances were owed to alchemy partners llp at 26 september 2004
in addition loan notes of £5757280 and interest of £382960 thereon were repaid to the alchemy investment plan coinvestment scheme during
the period
also during the period the group repaid loan notes deferred dividend and interest thereon to the following directors and their spouses
capital interest total
£££
t j allchurch 904050 60633 964683
m t w tod 602700 40422 643122
j k hodgson 265897 17833 283730
d c port 72353 4853 77206
1845000 123741 1968741
notes to the financial statements
for the period ended 26 september 2004
 ath resources plc annual report and financial statements 2004 31
notice of annual general meeting
notice is hereby given that the annual general meeting “agm” of ath resources plc the “company” will be held on monday 10 january 2005
at 1100am at the offices of eversheds llp solicitors cloth hall court infirmary street leeds ls1 2jb for the following purposes
ordinary business
to consider and if thought fit pass the following ordinary resolutions
1 to receive and adopt the directors’ report and financial statements for the period ended 26 september 2004
2 to declare a final dividend for the period ended 26 september 2004 of 336p per ordinary share of 05p each in the capital of the company
to be paid on 14 january 2005 to members whose names appear on the register of members at the close of business on 24 december 2004
3 to reelect t j allchurch as a director who retires by rotation in accordance with article 111 of the company’s articles of association and
being eligible offers himself for reelection
4 to reelect j k hodgson as a director who retires by rotation in accordance with article 111 of the company’s articles of association and
being eligible offers himself for reelection
5 to reelect a black as a director who retires by rotation in accordance with article 111 of the company’s articles of association and
being eligible offers himself for reelection
6 to reappoint baker tilly as auditors of the company to hold office until the conclusion of the next agm at which accounts are laid before the
company and to authorise the directors to fix their remuneration
7 to receive and approve the remuneration committee report
special business
to consider and if thought fit pass the following resolutions which will be proposed as to resolution 8 as an ordinary resolution and as to
resolutions 9 and 10 as special resolutions
8 that subject to and in accordance with article 16 of the articles of association of the company the directors be and they hereby are generally
and unconditionally authorised for the purposes of section 80 of the companies act 1985 the “act” in substitution for any existing authority to
allot relevant securities within the meaning of section 80 of the act to exercise all powers of the company to allot grant options over offer or
otherwise deal with or dispose of relevant securities up to an aggregate nominal value of £49617 being approximately one third of the current
issued share capital of the company provided that this authority shall expire 15 months from the date of this resolution or at the conclusion
of the next agm of the company in 2006 whichever is earlier unless previously renewed varied or revoked by the company in general meeting
except that the company may before such expiry make an offer or agreement which would or might require relevant securities of the company
to be allotted after such expiry and the directors may allot relevant securities in pursuance of that offer or agreement as if the authority conferred
by this resolution had not expired
9 that subject to the passing of resolution 8 as set out in this notice of agm and in accordance with article 17 of the articles of association of
the company the directors be and hereby are generally empowered pursuant to section 95 of the act to allot equity securities in substitution for any
existing authority to allot equity securities within the meaning of section 94 of the act for cash pursuant to the authority conferred by resolution 8
as set out in this notice of agm as if section 891 of the act did not apply to such allotment provided that this power shall be limited to the allotment
of equity securities
a in connection with or pursuant to an offer by way of a rights issue open offer or other preemptive offer in favour of ordinary shareholders
in proportion as nearly as practicable but subject to such exclusions or other arrangements as the directors may deem necessary or
desirable to deal with fractional entitlements or legal or practical problems under the laws of or the requirements of any regulatory body
or any stock exchange in any territory to the respective number of ordinary shares held by them and
b to the allotment otherwise than pursuant to subparagraph a above of equity securities up to an aggregate nominal value of £7443
and such power shall expire 15 months from the date of this resolution or at the conclusion of the agm of the company to be held in 2006
whichever is earlier save that the company may before such expiry make an offer or agreement which would or might require equity securities
to be allotted after such expiry and the directors may allot equity securities in pursuance of such an offer or agreement as if the power conferred
hereby had not expired
 32 ath resources plc annual report and financial statements 2004
special business continued
10 that the company be generally and unconditionally authorised pursuant to article 9 of the articles of association of the company and pursuant
to section 166 of the act to make market purchases as defined in section 163 of the act of ordinary shares of 05p each in the capital of the
company provided that
101 the maximum number of shares hereby authorised to be purchased is 1488509 being approximately 5 of the current issued ordinary
share capital of the company
102 the minimum price which may be paid for such shares is 05p per ordinary share being the nominal value thereof
103 the maximum price exclusive of expenses which may be paid for such shares shall not be more than 105 of the average of the middle
market quotation for ordinary shares of 05p each in the capital of the company for these shares taken from the listing of the alternative
investment market of the london stock exchange plc over the five business days immediately preceding the day on which the contract for
purchase is made and
104 the authority shall expire 15 months from the date of this resolution or at the conclusion of the next agm of the company in 2006 whichever
is earlier provided that the company may before such expiry make a contract to purchase its own shares which would or might be executed
wholly or partly after such expiry and the company may make a purchase of its own shares in pursuance of such contract as if the authority
conferred hereby had not expired
by order of the board
r a croston
company secretary
7 december 2004
notes
1 any member entitled to attend and vote at the agm is entitled to appoint one or more proxies who need not be a member of the company to
attend and on a poll vote instead of the member completion and return of a form of proxy will not preclude a member from attending and voting
at the meeting in person should he subsequently decide to do so
2 in order to be valid any form of proxy power of attorney or other authority under which it is signed or a notarially certified or office copy of such
power or authority must reach the company’s registrars capita registrars proxy department the registry 34 beckenham road beckenham
kent br3 4tu not less than 48 hours before the time of the meeting or of any adjournment of the meeting
3 as permitted by regulation 41 of the uncertificated securities regulations 2001 shareholders who hold shares in uncertificated form must be
entered on the company’s share register at 1100 am on 6 january 2005 in order to be entitled to attend and vote at the agm such shareholders
may only cast votes in respect of shares held at such time changes to entries on the relevant register after that time shall be disregarded in
determining the rights of any person to attend or vote at the meeting
4 copies of the service contracts of each of the directors and the register of directors’ interests in shares of the company kept pursuant to section
325 of the act will be available for inspection at the registered office of the company during usual business hours on any weekday saturdays and
public holidays excluded from the date of this notice until the date of the agm and at the place of the agm from at least 15 minutes prior to and
until the conclusion of the agm
notice of annual general meeting
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Summary:
 chairman’s statement
2 ath resources plc annual report and financial statements 2004
this year has seen a massive step change 
in both the size of the group and its public
profile commencing operations in 1998 as
a one site venture capital backed opencast
coal mine with ambitions then limited to the
successful development of the skares road
site it is particularly pleasing to report on a
year that has seen the continuing profitable
operation of the group’s original mine the
doubling of the group’s operations through
the acquisition from law mining of a second
site at garleffan and the successful listing on
the alternative investment market “aim”
taken individually any one of these events
could be judged as constituting a successful
year to have achieved all three demonstrates
not only ath’s ambition to become a major
player in the uk coal mining industry but
also the ability of a young and committed
management team to deliver complex and
strategically demanding targets
business progress
profitability after allowing for all of the
exceptional costs associated with the
acquisition and the float is in line with the
board’s expectations and plans are in place
to further improve performance in the coming
year extensions are planned at both of the
group’s existing sites and new planning
applications will shortly be made to extend
ath’s operations to other parts of scotland
in france progress continues to be made
towards developing new opencast sites which
will provide coal for french coal consumers
board changes
during the year the board has been strengthened
by the addition of two nonexecutive directors
vaughan williams recently retired from bhp
billiton is widely experienced in the coal
industry and brings industry knowledge and
considerable management experience to the
board ivana slade an executive with alchemy
partners is widely experienced in all aspects of
ma and fund raising these two appointments
ensure that the board has all the skills necessary
to take it forward 
in france the group is particularly pleased to
have secured the services of michel guy as a
director of its french subsidiary michel has
a coal importation business in france and is
well placed to ensure that the output from the
two french mines will have a smooth path
to market
strategy
there is no doubt that the coal industry
which currently is responsible for producing
some 35 of this country’s electricity faces
some significant political and fiscal challenges
whilst the country has failed to evolve a credible
and balanced longterm energy policy the
demand for electricity continues to increase and
the older nuclear power stations are reaching the
end of their useful lives current policy places too
much reliance upon renewables imported gas
from russia and liquified natural gas from the
middle east and south america this means that
coal will continue to have to play a significant part
in this country’s electricity generation
ath’s strategy will be to maintain a relatively
small but stable share of that market its low
cost of operation and its access to low sulphur
scottish coal should ensure the success of
that strategy there also remains a significant
market for domestic fuel in which ath is already
established as a major supplier and in which
it will continue to operate 
worldwide demand for coal continues to rise
with the economic growth of china and this
together with high freight costs means that the
selling price for coal will remain high for the
foreseeable future the vast majority of ath’s
sales contracts are at selling prices significantly
below current market levels therefore revenues
should increase as these contracts are renewed
against this the high cost of oil has significantly
increased the group’s operating costs as it is
a major consumer of gas oil 
the listing of ath on aim has strategically
placed the group to take advantage of the
many opportunities that will become available
in the near future and the board looks forward
to reporting on further developments in the
coming year
david port
nonexecutive chairman
“it is with great pleasure that i present the first
annual report of the group following its listing
and am pleased to be able to report on a
momentous and yet profitable period of
enlargement and development”