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Press Release

Coal & Allied annual results 2007 - Coal & Allied profit affected by infrastructure constraints and adverse weather

29 January 2008

Summary

Profit before tax was $79.3 million compared with $270.3 million in 2006
Profit after tax was $109.8 million compared with $207.6 million in 2006
2007 production of 23.9 million tonnes was 17 per cent lower than 2006
Final dividend has been maintained at 25 cents per ordinary share.

Commenting on the full year results, Coal & Allied’s Managing Director, Hubie van Dalsen, said; "Coal & Allied’s profit in 2007 was disappointing and was adversely affected by infrastructure constraints and Hunter Valley Coal Chain performance. This was exacerbated by severe flooding in the Hunter Valley in June following a severe weather event. Domestic sales were also lower.

"The profit after tax benefited from a one-off tax credit of $46 million, which was reported in the announcement of results for the half year to June 2007.

"Demurrage costs were substantially higher than 2006 because of the extended queue of ships awaiting loading and consequent delays at the port of Newcastle during the year.

"In 2007, Coal & Allied suffered a number of port allocation cutbacks, which prevented it from maximising its production capabilities in a market experiencing strong global demand and buoyant prices for thermal coal.

"In response to these cutbacks, Coal & Allied had to reduce production at its three operations. Coal & Allied is well placed to take advantage of the strong market conditions when capacity becomes available in the Hunter Valley Coal Chain."

Mr van Dalsen said the Capacity Balancing System was approved by the Australian Consumer and Competition Commission (ACCC) to manage allocations of port capacity to producers.

"After both the shipping queues and demurrage fees rose, producers later agreed to reinstate a revised Capacity Balancing System, which remains in place today,” Mr van Dalsen said.

"Coal & Allied has always maintained that a long term sustainable commercial framework is required to underpin investment and provide certainty in the Hunter Valley. We welcome the appointment of the former Premier of the State of New South Wales, Nick Greiner, as facilitator in finding a resolution to the Hunter Valley Coal Chain constraint issues. We look forward to a speedy and effective resolution to this critical infrastructure problem."



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