HARWORTH ESTATES THE UK COAL PROPERTY BUSINESS

UK COAL PLCPROPERTY PORTFOLIO

PRESENTATION7 NOVEMBER 2006

HARWORTH ESTATESTHE UK COAL PROPERTY BUSINESS

Welcome


Gerry SpindlerChief Executive Officer

• Focus on the UK Coal Property Business

• Introduce Jon Lloyd, Group Property Director

• Demonstrate scale and nature of the property portfolio and its key role in the strategy of the Group

• Demonstrate very significant upside beyond current valuations for accounting purposes

• Opportunity for questions and discussion

• Head of Property, HBOS Plc240 staff£450 million p.a. rev. budget£150 million p.a. capital budgetCorporate Real Estate, security, health & safety

• Regional Managing Director, DTZ

• Property Director, Yorkshire Water

Jon Lloyd

Jon Lloyd BSc FRICSGroup Property Director

Chief Executive Harworth Estates


• The size of the prize

• Value vs. Valuation – What’s it really worth?

• Objectives and the approach to value creation

• Timeline to worth

• One of the largest brownfield value opportunitiesin the UK today

• Opportunity to create portfolio worth £800m+ in 6 years

• Land for over 25m sq ft of employment development

• Land for over 14,000 homes

• The first 60 priority sites only – 2,650 acres net, 12,000 acres gross, from 49,500 acres

• Substantial value from development phase in addition

• Significant further long term value from balance of estate

The size of the prize

• Valuation for accounting purposes – RICS Red Book

• Methodology designed to capture current cash flow / inherently conservative and not forward looking

• Valuation dependent on milestones actually achieved and comparable market data

• Accounting valuation does not measure scope for value creation as further planning milestones achieved

Value vs. ValuationWhat’s it really worth?

Methodology for Worth

Development Phase

Worth

Estimated cost of

Infrastructure etc.

Current RICS Valuation

Project Land Value with

Consent

Risk Adjustment

THE ESTATE – 49,500 ACRES

Area Rent Roll

Reported RICS Value

as at 31 Dec. 2005

Indicative Valueas at 31 Dec 2006

(Pre-sales)

Operating Deep Mines 2,850 acres £0.14 Not Valued Not Valued

Surface Mines – Inc Restoration

15,500 acres £0.55 £88.3 £94

Investment Properties 280 acres £1.407 £17.7 £26

Development Properties

2,600 acres £0.35 £29.9 £40

Agricultural Land and Other Longer Term Development Land

28,000 acres £2.453 £137.9 £150

49,500 Acres £4.9 million £274 million £310 million

Manchester

M1Birmingham

NewcastleUponTyne

A1

Leeds

M62

Manchester

M1Birmingham

NewcastleUponTyne

A1

Leeds

M62

• Identify a long term supply of development sites

• Promote those sites through the planning process

• Secure optimum value accretion

• Aggressively grow the asset base of the Company

• Maximize net capital receipts on any disposals

• Selectively develop out sites to optimize shareholder returns

• To become one of the largest brownfield regeneration specialists in UK

Objectives

Business Approach

• Harness and exploit the skills, knowledge and experience of some of the best companies and people in the industry

• Develop a significant number of key relationships across a wide range of disciplines – employ and partner with the best in class

• Respect and support the communities within which we work and encourage economic regeneration within them

• Be an exemplar for the principles of sustainable development, leaving our sites improved for future generations

• Display a will to win – “think we can, we can”

Bennerley

Dalginch

Thorne

Wardley

WORKING WITH THEBEST IN CLASS

SOME KEY RELATIONSHIPS


Development Advisors.Planning Advisors.

Agency


Valuers.Planning Advisors.

Agency


Master Planners

Planning Advisors.Master Planners.Urban Designers


Engineering Consultancy


A key development partner

Target Value CreationThe First 60 Priority Sites


Timeline to Worth

£274mValuation

2007consent forPhase 1 Prince of WalesPhase 1 Waverley/Orgreave

£800m+Worth

2012

2010consent for Phase 2 Waverley/Orgreave

Regularly hitting milestones, regularly achieving consents

2005

2009consent forPhase 2 Prince of Wales

2011consent forCutacre Business Park, Bolton

HARWORTH ESTATESTHE UK COAL PROPERTY COMPANYKey Assumptions

• 2006 values– no allowance for inflation or time value of money

• Planning risk adjusted for timing and likelihood

• Modeled to show asset growth

• Serviced land values with planning consent after allowing for site promotion, remediation and servicing costs – residual value typically between 66/75% of serviced land value

• Assumptions independently stress tested

• Portfolio approach

• Management estimates of worth

Case Studies



Prince of Wales – Target Outputs

£17m

£55m+

2005

2010

• 80 acres of housing and associated uses

• 20 acres of employment land

• 70 acres of Country Park

33

Prince of Wales

Waverley / Orgreave

A New Community Adjoining Rotherham and Sheffield


HARWORTH ESTATESTHE UK COAL PROPERTY COMPANYWaverley / Orgreave- Target Outputs

• 100 acres Advanced Manufacturing Park

• 70 acres Highfield Commercial B1/B2/B8 mixed employment development

• 210 acres residential as sustainable community

• 20 acres other associated uses – local retail, food, drink, health, education, community etc.

• 300 acre Country Park and lakes

£60m

£195m

2005

2010

40

Waverley/Orgreave

Cutacre


HARWORTH ESTATESTHE UK COAL PROPERTY COMPANYCutacre – Target Outputs

• 200 acre strategic mixed use Business Park

£6m £45m+

2005

2011

48

Cutacre

In Brief…

…two more typical examples


Asfordby Business Park


53

ASFORDBY BUSINESS PARK

AERIAL PHOTOGRAPH Melton Mowbray 06

AP

Asfordby Business Park

LoungeDistribution Park

A42, ASHBY DE LA ZOUCH, LEICESTERSHIRE


56

LOUNGE DISTRIBUTION PARK

aerial pic Ashby 04

Lounge Distribution Park

HARWORTH ESTATESTHE UK COAL PROPERTY COMPANY

• One of the largest brownfield value opportunities in the UK

– Diverse portfolio 60 sites +

– Owned freehold by The Company

– Potential for in excess of 14,000 homes and 25m sq ft business space

– Sustainable locations

• In excess of £800m estimate of worth by 2012

• Additional development phase profits

To Summarise

Chris MaweGroup Finance Director


HARWORTH ESTATESTHE UK COAL PROPERTY COMPANYFinancial Review

• Valuation

• Taxation

– Capital gains

– Planning Gain Supplement

• Clawback

HARWORTH ESTATESTHE UK COAL PROPERTY COMPANYValuation

• Substantial value creation opportunities

• Substantial taxation capacity

• Limited clawback effect

• Substantial net shareholder value growth

£274m

£800m+

2005

2012

HARWORTH ESTATESTHE UK COAL PROPERTY COMPANYTaxation

• Risks to value are relatively low

• Capital Gains (potentially large and taxable)

– In excess of £400m shelter

– Fully applicable to the property gains

– Careful planning & no legislative changes will provide a valuable asset

HARWORTH ESTATESTHE UK COAL PROPERTY COMPANYClawback

• Additional levy• Not the issue many people think it is

– Reduces by 3% per annum (36% to 12% in 2014)– Nil from 2015 onwards– Additional 30% allowance for notional Capital Gains Tax

• Only crystallized on commencement of Material Development

• Can manage clawback effectively• On average, Company calculates max 15% effective

rate

HARWORTH ESTATESTHE UK COAL PROPERTY COMPANYPlanning Gain Supplement

• Government uncertain (still on the drawing board?)

• Consultation phase to go through

• Limited effect on portfolio value

– Up to 25% provision of social housing and community schemes already deducted from value

– Brownfield land expected to have lower effective rate

• Substantial industry lobbying perhaps paying off?

• Risk of further tax considered low

QuestionsGerry Spindler

Jon LloydChris Mawe


UK COAL PLCPROPERTY PORTFOLIO

PRESENTATION7 NOVEMBER 2006



a) this presentation contains estimates, projections, targets or forecasts which have been prepared by the management of UK Coal plc (the Company) and involve significant elements of subjective judgement and analysis which may or may not be correct. Neither the Company nor any other person makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this presentation nor as to the reasonableness of any assumption contained herein and any responsibility or liability (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. Nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future;

b) this presentation does not constitute an offer or invitation for the sale or purchaseof securities;

c) this presentation does not constitute a recommendation or advice; and

d) this presentation is being given on the basis that each person in the United Kingdom to whom it is presented is reasonably believed to be such a person as is described in Article 19 (“Investment professionals”) or Article 49 (“High net worth companies, unincorporated associations etc”) of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005.

DisclaimerThis presentation is given for information only. In particular:

This disclaimer will not exclude any liability for, or remedy in respect of, fraudulent misrepresentation.

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HARWORTH ESTATES THE UK COAL PROPERTY BUSINESS