2007 INTERIM RESULTS5 September 2007

David JonesChairman

3

Further substantial value creation

• Improved operating performance• Increased value of property business• Pre-tax profit more than doubled• Stronger balance sheet

• Strong platform for further value creation. Clear strategy• Mining positioned to create value

• Good coal price environment• Good recovery at Daw Mill• Deep mines in profit since beginning of June• 4 new surface sites. More planning consents (3 out of 3 to date)

• Property delivering on targets• Estimate of worth now £900 million

• Power Generation - Full contribution from Stillingfleet in H2

Jon LloydChief Executive

5

Headlines

H1 2007 H1 2006 Restated

2006Full Year

£m £m £m47.7

(20.1)

27.6

(10.0)

17.668.6

Net Assets 323.9 188.3 244.1£1.56

51.821%

Operating Profit pre-Exceptional Items 45.0 20.4Exceptional Items 0.1 1.3

Operating Profit 45.1 21.7

Finance Costs and JV income (4.5) (5.0)

Profit before tax 40.6 16.7Property value gains included above 51.0 18.5

Net Assets per Share £2.06 £1.26

Net Debt 61.0 59.9Gearing: Net debt to equity ratio 19% 32%

Strong results and strong outlook

HARWORTH ESTATESThe UK COAL Property Division

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Harworth Estates : Key financials

H1 2007 H1 2006Revaluation gains £51.0m £18.5mNet rental income £ 0.8m £1.4m Profit on disposals £ 2.2m £ 0.0mProfit before interest & taxation £54.0m £19.9m

• Like for like valuation increase of 16.6%

Like for likeJun-07 Dec-06 Dec-06 to Jun-07

Business Parks 53.0 48.3 9.1%Commercial with planning 20.8 23.2 2.3%Other commercial & residential 212.0 157.3 26.9%Agricultural 112.1 115.1 8.5%

Total 397.9 343.9 16.6%

8

Harworth Estates : Progress towards £900 million

Estimate of Worth 2012 now £900m (Dec 2006 £800m) (+12.5%)

• 11 new sites added (£34m), planning progress (£48m), inflation to 2007 money (£18m)

3 new planning permissions gained – more expected in H2

• Consent for 250,000 sq ft and over 900 houses at Prince of Wales now expected in H2

• Five further consents scheduled in H2

• Gascoigne Wood planning for 100 acre site obtained (August)

Joint Venture Development Agreements

• Planning applications submitted on two JV properties for total of 1.5 million sq ft. Plentiful further JV opportunities with partners who can add value to schemes

Business Park occupancy levels remain near 100%

• Further expansion / build out opportunities during 2007-Asfordby,Bilsthorpe and Selby sites

Asset disposals £5.7m (H1 2006: £6.5m)

• Further disposals of assets with no development value or where value added already maximised. Cash reinvested in portfolio

9

Project Worth – On track, on time

Estimate of Worth

0

200

400

600

800

1,000

1,200

2005 2006 H1 07 2007 2008 2009 2010 2011 2012

£ m

illio

n

Project Worth

(Land only)

RICS Value (Land only)

Expected Development Profit

10

Harworth Estates : Key sites

Waverley Orgreave, J33 M1 Sheffield Parkway • 650,000 sq ft mixed use Business Park approved December 2006

• New sustainable community of up to 4,000 homes plus associated employment development community uses etc. progressing through Local Plan process

Prince of Wales – The Gateway to Pontefract, J32 M62 / A1M Junction• Outline Planning Application for over 900 homes and 250,000 sq ft office / light industrial

• Submitted December 2006. Post submission negotiations continue. Anticipated consent Q4 2007

• Anticipated start of infrastructure works Spring 2008

• Exemplar regeneration project. Strong support from local authority and other key stakeholders

Rossington Regeneration, J3 M18 Doncaster• Promoting mixed use urban extension with Doncaster MBC and other major land owners • Substantial residential development with employment uses creating 1,000 jobs• Dependent on delivery of FARRS road connection to M18 J3

11

Harworth Estates : Key sites

Cutacre, J4 M61 Bolton• 1,000 acres adjoining Greater Manchester motorway network and rail connected

• Master Planning and stakeholder consultation underway

• Aim to create 250 acre premium mixed use Business Park for consent 2010/2011

• All Party political support

Lounge, A42 Ashby de la Zouch• 100 acre, 850,000 sq ft distribution facility. Joint Venture with Gazeley. Planning application

made• Further employment space opportunities within the site boundary

Ellistown, South Leicestershire• Distribution Park and industrial development. Initial 28 acre planning application made• First phase 300,000 sq ft eco-designed distribution warehouse facility. JV with Legal & General

and Graftongate Developments• Phase II 240,000 sq ft further development of medium size and smaller commercial units

12

Harworth Estates : Key sites

Chatterley Valley, A500 Stoke on Trent • 25 acre rail connected employment site. JV with Prologis and adjoining owner over larger

development area• Outline planning consent for employment development in place. Detailed Planning Application

to follow, increasing site density

Riccall Business Park, Selby, Yorkshire• Former Selby Coalfield satellite mine site• Change of use for 70,000 sq ft business space approved June 2007 following Public Inquiry• Heads of Terms agreed with occupier for c50% current available space• Expected first occupancy by Q4 following building refurbishment

COAL MARKET OVERVIEW

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Markets Position – Coal-fired Power Generation

• Global coal demand increasing - adding to upward price pressure• Increased dependency on high cost, low sulphur Russian imports• South Africa and Australia majoring on Far East and India• Short term Australian disruption, supply shortage in Pacific

• UK demand and price continuing to increase• Coal burn in UK power stations remains strong, although likely to be lower than 58mt

in 2007 (2006 58mt, 2005 52mt)• Coal-fired power stations competing with gradually increasing gas prices

• Increasing coal imports (2006 50mt, 2005, 43mt)• FGD capacity increasing particularly in the Aire Valley, improving UKC position

• Coal Forum Interim Report states• There will always be a market for all likely volume of indigenous coal production• It can compete with international coal based on forward prices • Next phase of the Forum to commence in October 2007

15

UK COAL: Market Positioning

• UK COAL well placed to benefit from increasing spot sales prices• Physical limitations of UK supply infrastructure give local producers an advantage• UK COAL has increased prices against this background

• Obtaining spot prices (API#2) plus 25p/GJ delivery premium • Future sales mix will be a blend of

• The residue of long-term contracts• (estimated 65% of sales tonnage 2007, 36% by 2009)

• Market priced spot deals – currently @ £1.95/GJ for new business• New contracts at market rates which compete with imports on a delivered price/heat

basis for term supplies

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NW Europe Spot Steam Coal Price(Ex-Pit Price, assuming 25p freight differential Add-On)

0.8

1

1.2

1.4

1.6

1.8

2

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

£/

GJ

Actual

Forward

UKC Average ESI Proceeds

Source: API#2 - McCloskey Group / TFS BrokersEx.Rate - Bank Of England

Basis: <1%S, CIF NW Europe, 6000 Kcal / Kg NAR (25.122 GJ/Tonne)

Assumptions: Prices include 25p/GJ for freight to compare with UK COAL’s delivered priceForward Exchange Rate of $2.00/£NB: A 10 cent exchange rate drop raises prices by 7p/GJAt 8mt/year, a 10p/GJ increase in price equates to ~£19m additional income

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Contracted ESI (Electricity Supply Industry) Sales Projection July 2007 (mt)

Current Contracts 2007 2008 2009 2010 Total

Total (in millions tonnes)- at average £1.52/GJ

5.0 4.1 3.4 2.7 15.2

• 2007 expected price range: £1.47-£1.54/GJ, av £1.52/GJ (subject to outturn of international prices and RPI)

• If all current negotiations are successfully completed• Tonnage contracted will increase by a further 11.5mt• Prices will reflect current market plus 25p freight premium• As a result, average ESI price will increase by 5p/GJ in 2007 to £1.57/GJ (subject to outturn

of international prices and RPI)• Industrial and Domestic market is developed via C4E. These sales are at higher prices and

increase overall average realisation by around 6p/GJ

DEEP MINING

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Deep Mines : Overview

• Operational issues flagged in 2006• Consequential lower production volumes; higher production costs• But

• Strengthened operation performance• Good progress on accessing market prices• Mines in profit since June• Improved outlook

H1 2007 H1 2006Loss before Exceptional Items (£15.4m) (£2.2m)

Cost per GJ before Exceptional Items £1.73 £1.41

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Daw Mill

H1 2007 H1 2006 FY 2006Output (millions tonnes) 1.161 1.631 2.725

Full cost per GJ (including exceptionals) £1.61 £1.08 £1.22Cash cost/GJ (including exceptionals) £1.23 £0.78 £0.93

H2 and Outlook• A new face is planned by Q4• Proven reserves 29 mt• Mineral potential 40 mt• Cost reducing as development activities improve

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Kellingley

H1 2007 H1 2006 FY 2006Output 0.821 1.239 2.104

Full cost per GJ £2.09 £1.35 £1.56Cash cost/GJ £1.86 £1.21 £1.39

• Operated in line with expectations• Negotiated a major geological fault

H2 and Outlook• £5 million spent to date accessing new reserves• Lower costs in H2 due to continued production• Face change in December• Beeston seam comes on line in 2009• Proven reserves 12 mt• Mineral potential 44 mt• Reduced costs once into Beeston

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Thoresby

H1 2007 H1 2006 FY 2006Output 0.552 0.871 1.449

Full cost per GJ £2.31 £1.54 £1.74Cash cost/GJ £2.05 £1.31 £1.48

• Face change achieved 2 weeks early

H2 and Outlook• No face change in H2• 3 mt reserves • 20 mt of resource with additional investment. Progress in contract negotiations.

Excellent potential returns at today’s coal prices - if achieved

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Welbeck

H1 2007 H1 2006 Full Year 2006

Output 0.636 0.602 1.186

Full cost per GJ £1.72 £1.68 £1.66Cash cost/GJ £1.53 £1.53 £1.50

• Improved development performance enabled continued production through 2007• Additional reserves accessed as a result• Final closure now in 2008• Forecast cash positive other than redundancy• No land development potential – leasehold site

SURFACE MINING

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Surface mining : Overview

H1 2007 H1 2006Output tonnes 0.7mt 0.2mt Profit before interest & tax £4.5m £1.2mCost per GJ £1.29 £1.55

With Planning Awaiting Consent To be submitted in H2 2007

Reserves (m tonnes) 4.9 3.3 4.9

• Flow of planning decisions has radically improved scale and potential of surface mine business

• 4 sites now in production• More sites in pipeline

• Improved productivity • Accessing market prices

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Surface mining : Planning update

Active sites increased from one to four Total Reserves

• North Stobswood (Northumberland) 525 k tonnes

• Stony Heap (Co. Durham) 54 k tonnes

• Cutacre (Greater Manchester) 878 k tonnes

• Maidens Hall (Northumberland) 242 k tonnes1,699 k tonnes

Sites with consent increased by three to five

• Steadsburn (Northumberland) Q4 2007 1,088 k tonnes

• Sharlston (West Yorkshire) Q4 2007 360 k tonnes

• Long Mooor (Leicestershire) Q4 2007 725 k tonnes

• Oxcroft (Derbyshire) Q3 2007 15 k tonnes

• Lodge House (Derbyshire) Q2 2008 1,000 k tonnes3,188 k tonnes

Applications awaiting planning decisions

• Potland Burn (Northumberland) 2,000 k tonnes

• Park Wall North (Co. Durham) 1,250 k tonnes3,250 k tonnes

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Surface mining : Outlook

• Total surface mine reserves exceed 97m tonnes• Planning environment remains challenging but 100% success in 2007 with 3 new

planning consents • Additional planning consents expected in 2007• Other schemes under consideration for submission 2007

• Huntington Lane (Shrophsire) 900 k tonnes• Blair House (Fife) 700 k tonnes• Chesterfield Canal (Derbyshire) 500 k tonnes• Bradley (Co. Durham) 500 k tonnes• Minorca (Leicestershire) 1,300 k tonnes• Butterwell (Northumberland) 1,000 k tonnes

4,900 k tonnes• Fully engaged with Local Authorities on forward programme • Business capable of delivering 2m tonnes plus output per year consistently

POWER GENERATION

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Harworth Power : Operational review

• Operating profit £2.0 million (H1 2006: £1.6 million)• Installed capacity 29MW• 23% increase, electricity generation 80,000 MWh - 2006: 65,000 MWh• Three windfarm planning applications submitted

• Royal Oak final planning (3 turbines)• Stonish Hill (3 turbines)• Lynemouth at appeal (3 turbines) • 3 further schemes in pre-submission consultation

• Continue to progress other opportunities – methane, wind, other renewables

Chris MaweFinance Director

FINANCIAL REVIEW

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Group Income Statement

H1 2007 H1 2006Restated

£m £m

Revenue 146.2 193.3 Cost of Sales (164.3) (190.8)Gross (loss)/profit (18.1) 2.5 Coal Investment Aid 1.5 5.2 Investment property uplift 51.0 18.5 Profit on sale of Maltby 12.2 - Other items (1.5) (4.5)Operating Profit 45.1 21.7 Net finance costs (4.8) (5.0)JV Income 0.3 0.0 Profit before tax 40.6 16.7

Earnings per share (pence) 34.2 11.2

• Revenues reflect fewer operating mines

• Price benefit £11m versus H1 2006

• Daw Mill impact £20m • Planned face changes in H1• Maltby represented good

premium above net assets• EPS up 205% reflecting

strong result

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Segmental Operating Profit

H1 2007 H1 2006Restated

£m £mDeep mining (15.4) (2.2) Surface mining 4.5 1.2 Property 54.0 19.9 Power 1.9 1.6 Other - (0.1)

45.0 20.4 Exceptional Items 0.1 1.3

Operating Profit 45.1 21.7

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Group Cash Flow

• Strong cash management

• Invested £25m in capital and land restoration

• £5m additional pension contributions

• £5m further rationalising deep mines

H1 2007 H1 2006 2006Restated Full Year

£m £m £mDA excluding property value gains 5.2 27.4 4.7

and profit on business saletal, development and pre-coaling expenditure (14.9) (13.4) (36.6)oration, rehabilitation and claims payments (11.2) (11.0) (22.7)

y payments (5.1) (4.5) (10.2)tional pension contributions (5.2) (5.2) (10.4)eeds on disposal of property, plant and equipment 5.3 6.9 24.2 s proceeds on sale of Maltby Colliery 21.5 - - Investment Aid received 1.2 7.0 11.1 nterest received/(paid) (1.9) (2.3) (4.7)king capital and other movements (6.6) (11.4) 16.9 h flow from operating and investing activities (11.7) (6.5) (27.7)e issue proceeds - - 29.1 ipts from coal/insurance deposits 2.5 (10.1) (9.9)ment in net debt (9.2) (16.6) (8.5)

at start of period (51.8) (43.3) (43.3)bt at end of period (61.0) (59.9) (51.8)

EBIT CapiRestRedundancAddiProcGrosCoalNet iWorCasSharReceMoveNet debtNet de

34

Group Balance Sheet – Continued to strengthen

• Net assets increased by £80m (33%) since December 2006• £50m property value gains• Pension and Concessionary Fuel deficit reduction of £41m

• Full provisions held for obligations to close, restore and rehabilitate • Deferred tax asset £36m recognising some tax losses against future profits (£73m still

unrecognised)• CGT tax shelter £411m

Segmental Balance Sheet at June 30 2007 H1 H1 Dec

£m 20072006

Restated 2006Fixed Assets 588.8 508.9 550.8Provisions (141.1) (159.0) (147.2)Pension scheme provisions (57.7) (93.7) (95.8)Concessionary Fuel provisions (22.0) (23.7) (24.7)Deferred Tax asset 35.7 0.0 35.7Deferred Tax liability (1.2) (1.0) (1.2)Net Debt (61.0) (60.0) (51.8)Allocated net assets 341.5 171.5 265.8Net working capital (17.6) 16.8 (21.7)Total Net Assets £m 323.9 188.3 244.1

35

Pension Schemes IAS 19 deficits 2003-June 2007(Showing real interest rates: bond yields net of RPI)

• Deficit more than halved since December 2005 to £51m

• £24m additional contributions already made

• Latest mortality assumptions reflected

• Recent market turmoil has had some short term effect

36

Summary

• Strong H1

• Strengthened operating performance and prospects for mining businesses

• Significant increase in value of property business

• UK COAL well positioned for H2 and beyond

Thank you