Coal International - Interim Results

RNS Number:2400R
Coal International Plc
31 March 2008

COAL INTERNATIONAL PLC
("Coal International" or "the Company")

Interim Unaudited Group Results for the six months ended 31 December 2007

London: 31 March 2008 - The Directors are pleased to announce the Company's
unaudited consolidated results for the six months ended 31 December 2007.

Highlights

• Continued development at Atlantic Leaseco's Gauley Eagle property

• Expansion of 3rd party coal purchases and custom blending

• Acquisition of additional coal leases

• Widen seam underground mine permit issued to Atlantic Leaseco

• Acquired property in Cowen, West Virginia to construct rail
loading facility on the CSX system

• Commencement of operations at Maple Coal Company

• Completed refurbishment at Katie Preparation Plant

• First production and ramp-up at Maple Coal's Eagle No.1 underground mine

• Secured equipment financing for preparation plant

• Improving markets for thermal and metallurgical coals supporting efforts to
implement longer term coal sales contracts

• Continued improvement in safety performance and operating efficiencies

• Turnover for the period increased to £17.2 million from £7.6 million* in
the corresponding 2006 period

• Loss per share decreased to 1.79p from 4.43p* in the corresponding 2006
period.

Post-period Highlights

• Secured 12 month agreement to utilise a Kanawha River barge loading
facility for Maple Coal and Atlantic Leaseco mining operations

• Awarded Joseph A. Holmes Safety Association Award from the West Virginia
Office of Miners' Health, Safety & Training

• Received WVDEP (West Virginia Department for Environmental Protection)
permit amendment to allow expansion of the Crooked Run surface mine

• Secured toll loading agreement to provide Atlantic Leaseco access for
Norfolk & Southern ("NS") rail origin markets

*2006 comparatives include certain balances as at and for the period ended 31
December 2006 which have been restated for the conversion to IFRS and consistent
with the restatement of the 30 June 2006 comparatives in the Annual Report and
Accounts for 2007.

For further information contact:

Coal International
W. Durand Eppler, Chief Executive +44 (0) 20 7409 0890

Bankside Consultants
Oliver Winters +44 (0) 20 7367 8874

Cenkos Securities +44 (0) 20 7397 8900
Adrian Hargrave

NOTES TO EDITORS

Coal International is an international coal operating and investment company
with operating properties in West Virginia, USA and interests in coal producers
in Canada and the UK.

The Company's West Virginia properties are owned and operated through its
wholly-owned subsidiary Atlantic Development and Capital LLC ("ADC") and ADC's
wholly-owned subsidiaries Maple Coal Co (which owns the Maple property) and
Atlantic Leaseco LLC (which owns Gauley Eagle and other properties).

For further information please go to www.coal-international.com

Chief Executive's Report

FINANCE

The financial information for the period ended 31 December 2007 is the first the
Group has been required to prepare in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the European Union. In preparing
this financial information, the Group has started from an opening balance sheet
as at 1 July 2006, the Group's date of transition to IFRS, and made those
changes in accounting policies and other restatements required by IFRS 1 for the
first time adoption of IFRS. Further details of this transition are set out in
note 17 of the financial information.

Specifically the impact on equity at the opening balance sheet date of 1 July
2006 was a decrease of £330,000. The impact on equity for the year ended 30
June 2007 was an increase of £2.85 million.

In addition, following a review of the 2006 financial statements, certain
balances as at and for the period ended 31 December 2006 have been restated for
the conversion to IFRS and consistent with the restatement of the 30 June 2006
comparatives in the Annual Report and Accounts for 2007. A detailed description
of each restated balance is provided in note 3.

The Group's turnover increased in the period to £17.2 million as compared to
£7.6 million for the 6 months to December 2006 as a result of increasing sales
volume and prices in West Virginia. The after tax loss of the Group for the
period amounted to £1.7 million (31 December 2006: £3.1 million.)

At 31 December 2007 the net assets of the Group were £55.5 million (31 December
2006: £56.8 million).

In August 2007 Energybuild Group Plc ("Energybuild") was admitted to trading on
AIM. As a result, the Group's interest in Energybuild decreased from 50% to 23%
and the investment was reclassified from a subsidiary to an associate. The
profit recognised on the deemed disposal of £367,484 and the impact the change
in classification has had on ongoing operations is described in note 9. Net
assets of Energybuild as at the date of disposal were £8.5 million. The
carrying value of the associate investment in Energybuild as at 31 December 2007
was £5.0 million.

In order to fund ongoing expansion at Maple Coal, ADC sourced further third
party financing from First National Capital Corporation and CIT, totaling
approximately US$7.7 million during the period.

REVIEW OF OPERATIONS

Atlantic Leaseco (Gauley Eagle Property)

The Gauley Eagle facility is now operating at a sustainable rate of annual
production of 750,000 short tons per annum of marketable coal assuming current
equipment and labour configurations. With both thermal and metallurgical markets
being very strong for Gauley Eagle coals, opportunities to enable production to
be increased are being evaluated.

Marketing opportunities for Gauley Eagle have been expanded by securing rights
to utilise a loading dock on the Kanawha River through calendar year 2008. The
dock provides blending opportunities not previously held by Gauley Eagle. Gauley
Eagle has also negotiated a toll loading arrangement that provides access to the
NS Railroad. Gauley Eagle has recently initiated permitting for a coal load-out
facility on the CSX Railroad on property owned by Atlantic Leaseco in Cowen,
West Virginia.

Operations at Maple commenced in June 2007 which has created marketing synergies
that allow for blending of coals from the two properties and enables Gauley
Eagle to participate in metallurgical coal markets. It is anticipated that
Gauley Eagle will expand participation in metallurgical markets throughout the
next year by blending coal from Maple's Eagle seam, other local operators and
production from the recently acquired Peerless seam reserves.

Issuance of the Lower Muddlety surface mine permit is expected in the second
quarter of 2008. Lower Muddlety will enable Gauley Eagle to increase the
proportion of surface mine production and provide access to the Kittanning seams
currently mined at the Silo Mains underground mine. The additional Kittanning
coal can be sold directly to, or blended with Eagle Seam coal, for additional
sales into the metallurgical coal market.

Permitting efforts to develop a replacement for the Silo Mains underground mine
are well advanced. The new mine will be called Black Pearl and it will provide
access to approximately 750,000 marketable tons of Kittanning coal that may be
sold into the thermal or metallurgical markets.

Atlantic Leaseco has been active in building on its existing asset base at
Gauley Eagle with significant new property acquisitions and by advancing
permitting activities to allow for expanded production. During 2007, the Group
acquired approximately 2,760 acres of additional coal properties adjacent to or
synergistic with the Gauley Eagle property, increasing the size of the Group's
Gauley Eagle properties to approximately 21,200 acres.

Maple Coal

Eagle No. 1 mine has completed development and construction mining for access to
the downhill conveyor that feeds the Katie Preparation Plant. Installation of an
overland belt is planned during the second quarter of 2008 that will eliminate
the need and cost of trucking raw coal to the plant. Production has steadily
improved as the mine has expanded.

There has been very strong demand for the Eagle seam coal in the metallurgical
coal market. Further production expansion is planned throughout 2008. A second
continuous miner unit will reach full production in April meeting the targeted
720,000 tonnes per annum level. A third continuous miner unit is being evaluated
for start up in July, but which is reliant on equipment availability and third
party or other equipment financing being sourced, that would increase the
annualised production rate for Eagle No. 1 Mine to 900,000 tons.

The Katie Preparation Plant has ramped up production and operated well since
commissioning in July 2007. The plant feed rate is consistently exceeding design
capacity while maintaining product quality superior to customer specification.
The plant capacity is designed to clean production from two continuous miner
units. A 200 ton per hour upgrade will be made when the third unit is
commissioned at Eagle No. 1 Mine.

Thermal market prices are very favourable for supporting start up of surface
mining at Maple Coal and may make it more attractive for financiers to support
the Company's equipment costs. Availability of surface mining equipment is being
evaluated for accelerated start up of the Sycamore South Surface Mine. The
primary markets for Sycamore South production will be those that can be accessed
through the Kanawha River.

Atlantic Development & Capital LLC, Statistical Summary

Six months ended 31 December 2007

Three months Three months
ended ended
ADC Consolidated 30.09.07 31.12.07 TOTAL
Raw Short Tons Produced 474,507 439,435 913,942
Raw Short Tons Purchased 97,567 86,014 183,581
Marketable Short Tons Produced 231,634 222,220 453,854
Marketable Short Tons Purchased 65,348 65,360 130,708
Short Tons Sold 310,637 297,698 608,335

ADC 30.09.07 31.12.07 TOTAL
Raw Short Tons Produced - - -
Raw Short Tons Purchased 53,728 55,003 108,731
Marketable Short Tons Produced - - -
Marketable Short Tons Purchased 53,728 55,003 108,731
Short Tons Sold 53,728 55,003 108,731

Atlantic Leasco (Gauley Eagle Property) 30.09.07 31.12.07 TOTAL
Raw Short Tons Produced 356,406 321,065 677,471
Raw Short Tons Purchased 43,839 31,011 74,850
Marketable Short Tons Produced 179,937 163,614 343,551
Marketable Short Tons Purchased 11,620 10,357 21,977
Short Tons Sold 200,238 185,158 385,396

Maple Coal 30.09.07 31.12.07 TOTAL
Raw Short Tons Produced 118,101 118,370 236,471
Raw Short Tons Purchased - - -
Marketable Short Tons Produced 51,697 58,606 110,303
Marketable Short Tons Purchased - - -
Short Tons Sold 52,411 55,919 108,330

Deepgreen 30.09.07 31.12.07 TOTAL
Raw Short Tons Produced - - -
Raw Short Tons Purchased - - -
Marketable Short Tons Produced - - -
Marketable Short Tons Purchased - - -
Short Tons Sold 4,260 1,618 5,878

INVESTMENTS

Energybuild Group Plc

Energybuild Group Plc (23% owned by Coal International following dilution in
placing prior to AIM admission) was admitted to AIM on 6 August 2007 raising
£9.7 million net of loan repayments and expenses. It has made significant
progress in the development of both the Aberpergwm Colliery and Nant y Mynydd
open cast site in South Wales.

At Aberpergwm, Energybuild accessed the 18ft seam, one of the two principal
target seams in September 2007 and acquired the whole of the Tower Colliery
plant pool for £1.4 million. Three road heading machines were ordered in
preparation for the in seam development of reserves accessed by reaching the
18ft landings and delivery was taken for two Free Steered Vehicles to assist in
the delivery of supplies underground. The workforce was increased to advance
the colliery development and strengthen mine management, principally with men
moving from the now closed Tower colliery.

At Nant y Mynydd, an extension to the opencast site was obtained in November
2007. Energybuild restructured the management team and rationalised operations
and production is now at 2,000 tonnes per week.

In early 2008 a deal was signed with Coal Recovery Investments Limited to
develop tip based coal recovery schemes in South Wales.

International coal prices continue to rise, particularly for high quality
anthracite coal and the fundamentals remain strong with target production for
the financial year 2008 from the Aberpergwm Colliery of 22,000 tonnes increasing
to 265,000 tonnes in 2009 and 440,000 tonnes in 2010

NEMI Northern Energy & Mining Inc ("NEMI")

NEMI is a Vancouver based company whose principal asset is a 20% holding in the
Peace River Coal Joint Venture (JV), managed by Anglo Coal (60%). Hillsborough
Resources, Inc. holds the remaining 20%. The Peace River Coal JV consolidated
the north eastern British Columbia coal holdings of the three parties and
manages the Trend mine, which was anticipated to produce 1 million tonnes of
hard coking coal in 2007, (recently authorised to expand to 2 million tonnes of
annual production). The Peace River Coal JV also has a 50% interest in the
Belcourt-Saxon Joint Venture, a significant development asset in north eastern
British Columbia for which a bankable feasibility study is currently being
completed. Western Canadian Coal Corporation holds the other 50 per cent. of
the Belcourt-Saxon Joint Venture.

In March 2008, subsequent to the period end, NEMI issued C$10.99 million
convertible debentures in order to fund part of its participation in the Peace
River Coal JV.

PRINCIPLE RISKS AND UNCERTAINTIES FOR THE REMAINDER OF THE FINANCIAL YEAR

The key risks faced by the Group are set out in the Annual Report and Accounts
for the year ended 30 June 2007 which is available on the Company's website.

More specifically, in order to continue to expand the business, the Group is
reliant on the timely availability of equipment, employees and third party
equipment finance. As the business is still developing there is no guarantee
that this additional equipment and finance will be available.

FURTHER INFORMATION

The Company announced on 24 January 2008 that it had received a preliminary
approach that may or may not lead to an offer being made for the Company. The
Company can confirm that discussions are continuing and a further announcement
will be made in due course.

W. Durand Eppler

Chief Executive

Statement of Directors' responsibilities

The board confirm that the Interim condensed financial information has been
prepared in accordance with the Disclosure Rules and Transparency Rules of the
UK Financial Services Authority and International Financial Reporting Standards
(IFRS), as adopted by the European Union. The accounting policies applied are
consistent with those described in note 2 of the condensed financial information
and give a true and fair view of the assets, liabilities, financial position and
profit of the Group.

The Chief Executive's report includes a fair view of the business and important
events impacting it, as well as a description of the principle risks and
uncertainties of the business. The Interim condensed financial information
includes a fair view of the related party disclosure requirements.

The board of the Company consists of John Byrne, non-executive chairman, John
Conlon, non-executive director and W. Durand (Randy) Eppler, Chief Executive.

Coal International Plc
Condensed consolidated income statement
For the six months ended 31 December 2007

Six months ended Year ended
Note 31 31 30 June
December December 2007
2007 2006 Unaudited
Unaudited
Unaudited (Restated*) (Restated*)
£'000 £'000 £'000

Revenue 4 17,282 7,586 18,092
Cost of sales (19,803) (10,188) (24,915)
---------- ---------- ----------
Gross loss (2,521) (2,602) (6,823)

Other operating expenses (1,106) (1,029) (2,402)
Share of results of associates 9 1,054 - (95)
---------- ---------- ----------
Operating loss (2,573) (3,631) (9,320)

Other gains and losses 9 367 - -
Finance income 49 35 94
Finance costs (1,046) (664) (1,097)
Impairment write-down of
associate investment - - (2,511)
---------- ---------- ----------
Loss before tax (3,203) (4,260) (12,834)
Income tax credit 6 1,455 1,181 2,942
---------- ---------- ----------
Loss for the period (1,748) (3,079) (9,892)

Minority interest - 101 229
---------- ---------- ----------
Loss attributable to equity
holders of the parent (1,748) (2,978) (9,663)
========== ========== ==========
Loss per share Basic and
Diluted 7 (1.79p) (4.43p) (13.84p)

All results relate to continuing operations.

* Following a review of the 2006 financial statements, certain balances as at
and for the period ended 31 December 2006 have been restated. A detailed
description of each restated balance is provided in note 3. In addition the
figures for the year ended 30 June 2007 and the period ended 31 December 2006
have been adjusted for the implementation of International Financial Reporting
Standards. A description of these adjustments is provided in note 17.

Coal International Plc
Condensed consolidated statement of recognised income and expense
For the six months ended 31 December 2007

Six months ended Year ended
31 31 December 30 June
December 2006 2007
2007 Unaudited Unaudited
Unaudited (Restated*) (Restated*)
£'000 £'000 £'000

Exchange differences on translation of
foreign operations 95 (1,190) (1,887)
Decrease in unnrealised surplus on
revaluation of intangible mineral rights
and liabilities (214) - -
Loss on revaluation of available-for-sale
investments taken to equity - (3,340) -
---------- ---------- ----------
Net expense recognised directly in
equity (119) (4,530) (1,887)

Transferred to the carrying amount of
interest in associate - - 3,340

Loss for the period (1,748) (2,978) (9,663)
---------- ---------- ----------
Total recognised expense for
the period (1,867) (7,508) (8,210)
==========
Prior year adjustment (as explained in
Note 3 and Annual Report and Accounts
2007) 7,170 7,739
---------- ----------
Total recognised losses since
previous annual report (338) (471)
========== ==========

All results relate to continuing operations.

* Following a review of the 2006 financial statements, certain balances as at
and for the period ended 31 December 2006 have been restated. A detailed
description of each restated balance is provided in note 3. In addition the
figures for the year ended 30 June 2007 and the period ended 31 December 2006
have been adjusted for the implementation of International Financial Reporting
Standards. A description of these adjustments is provided in note 17.

Coal International Plc
Condensed consolidated balance sheet
At 31 December 2007

Note 31 31 December 30 June
December 2006 2007
2007 Unaudited Unaudited
Unaudited (Restated*) (Restated*)
£'000 £'000 £'000
Non-current assets
Intangible assets 39,157 47,427 45,695
Property, plant and equipment 8 34,423 33,198 41,234
Interests in associates 9 9,318 - 3,141
Investments 3,255 5,266 2,928
---------- ---------- ----------
86,153 85,891 92,998
---------- ---------- ----------
Current assets
Inventories 5 252 1,247 751
Trade and other receivables 5,281 3,025 3,208
Cash and cash equivalents 207 1,056 3,850
---------- ---------- ----------
5,740 5,328 7,809
---------- ---------- ----------
Total assets 91,893 91,219 100,807
========== ========== ==========
Current liabilities
Trade and other payables (6,890) (4,893) (6,196)
Borrowings 10 (2,463) (1,784) (4,438)
---------- ---------- ----------

(9,353) (6,677) (10,634)
---------- ---------- ----------
Net current liabilities (3,613) (1,349) (2,825)
---------- ---------- ----------
Non-current liabilities
Borrowings 10 (18,297) (13,414) (15,443)
Deferred tax liabilities (2,363) (6,430) (4,744)
Provisions (6,367) (7,555) (7,316)
Other non-current liabilities - (277) (1,248)
---------- ---------- ----------
(27,027) (27,676) (28,751)
---------- ---------- ----------
Total liabilities (36,380) (34,353) (39,385)
========== ========== ==========
Net assets 55,513 56,866 61,422
========== ========== ==========

Coal International Plc
Condensed consolidated balance sheet
At 31 December 2007
Note 31 31 December 30 June
December 2006 2007
2007 Unaudited Unaudited
Unaudited (Restated*) (Restated*)
£'000 £'000 £'000
Equity
Ordinary share capital 12 9,758 33,625 9,758
Deferred share capital 12 26,900 - 26,900
Share premium account 13 14,274 9,175 14,274
Other reserve 13 16,468 16,423 16,468
Available-for-sale investment
reserve 13 - (3,340) -
Revaluation reserve 13 10,044 10,258 10,258
Convertible loan notes
reserve 13 379 - 379
Translation reserve 13 (3,570) (3,138) (3,665)
Retained earnings 13 (18,833) (10,614) (17,299)
---------- ---------- ----------
Equity attributable to equity
holders of the parent 55,420 52,389 57,073

Minority interest 93 4,477 4,349
---------- ---------- ----------
Total equity 55,513 56,866 61,422
========== ========== ==========

* Following a review of the 2006 financial statements, certain balances as at
and for the period ended 31 December 2006 have been restated. A detailed
description of each restated balance is provided in note 3. In addition the
figures for the year ended 30 June 2007 and the period ended 31 December 2006
have been adjusted for the implementation of International Financial Reporting
Standards. A description of these adjustments is provided in note 17.

Coal International Plc
Condensed consolidated cash flow statement
For the six months ended 31 December 2007
Six months ended Year ended
Note 31 31 30 June
December December 2007
2007 2006 Unaudited
Unaudited
Unaudited (Restated*) (Restated*)
£'000 £'000 £'000

Net cash used in operating activities 11 (1,601) (3,796) (4,212)
---------- ---------- ----------
Investing activities

Interest received 49 35 94
Purchase of property, plant and
equipment (4,788) (7,159) (16,861)
Acquisition of interests in
associates 9 (500) (175) -
Disposal of subsidiary 9 (238) - -
Mine restoration - - (539)
Grant received - 30 718
Purchase of investments (311) (160) (175)
Liquidation of investments - 624 317
---------- ---------- ----------
Net cash used in investing
activities (5,788) (6,805) (16,446)
---------- ---------- ----------
Financing activities

Interest paid (160) (69) (72)
Issue of ordinary share capital - - 8,493
Issue of share capital by
subsidiary - 1,450 1,450
Share issue expense - - (361)
Repayment of loan - (76) (50)
Proceeds from loans 3,900 10,102 14,672
Proceeds from equity component of
convertible loan notes - - 379
---------- ---------- ----------
Net cash from financing
activities 3,740 11,407 24,511
---------- ---------- ----------
Net (decrease)/increase in
cash and cash equivalents (3,649) 806 3,853

Cash and cash equivalents at
beginning of period 3,850 250 (3)

Effect of foreign exchange rate
changes 6 - -
---------- ---------- ----------
Cash and cash equivalents at
end of period 207 1,056 3,850
========== ========== ==========

* Following a review of the 2006 financial statements, certain balances as at
and for the period ended 31 December 2006 have been restated. A detailed
description of each restated balance is provided in note 3. In addition the
figures for the year ended 30 June 2007 and the period ended 31 December 2006
have been adjusted for the implementation of International Financial Reporting
Standards. A description of these adjustments is provided in note 17.

Coal International Plc

Notes to the condensed consolidated financial information

For the six months ended 31 December 2007

1. General information and authorisation of the condensed financial
information

Coal International Plc is a public limited company incorporated in the United
Kingdom under the Companies Act 1985. The company's ordinary shares are traded
on the Alternative Investment Market of the London Stock Exchange. The principal
activities of the company and its subsidiaries ("the Group") consist of
producing coal and identifying, evaluating and making investments in or
acquisitions of coal mining projects.

The condensed financial information does not constitute statutory accounts for
the purpose of section 240 of the Companies Act 1985. The figures for the year
ended 30 June 2007 have been extracted from the Group audited accounts for that
year as adjusted for the implementation of International Financial Reporting
Standards ("IFRS"). The figures for the period ended 31 December 2006 have been
extracted from the Group interim results for the six months to December 2006 as
adjusted for the implementation of IFRS. In addition the figures for the period
to 31 December 2006 have been adjusted for misstatements as described in further
detail below and within note 3. IFRS implementation adjustments,
reconciliations of profit and equity and related narrative explanations for both
periods are included within note 17.

The condensed financial information for the Group for the six months ended 31
December 2007 has not been audited or reviewed. The condensed financial
information of the Group for the six months ended 31 December 2007 was
authorised for issue by the board of directors on 31 March 2008.

2. Significant accounting policies

Basis of preparation

The condensed consolidated financial information has been prepared in accordance
with IFRS as adopted for use by the European Union ("EU"), including
International Accounting Standard IAS 34 Interim Financial Reporting, and
applied in accordance with the Companies Act 1985.

The accounting policies used to prepare the opening balance sheet at 1 July 2006
and comparative financial information for the period to 31 December 2006 and the
year to 30 June 2007 have been prepared in accordance with those IFRSs
effective, or issued and early adopted, at the date of this condensed financial
information. The IFRSs that will be applicable at 30 June 2008 are not known
with certainty at the time of preparing the condensed financial information. As
a result, the accounting policies used to prepare this financial information are
subject to change up to the reporting date of the Group's first full IFRS
financial statements and consequently there is a possibility that the opening
IFRS balance sheet and comparative financial information may require adjustment
before inclusion in the Group's first full IFRS financial statements for the
year ending 30 June 2008. Under IFRS, only a complete set of financial
statements comprising a balance sheet, income statement, statement of changes in
equity, and cash flow statement, together with comparative financial information
and explanatory notes, can provide a fair presentation of the Group's financial
position, results of operations and cash flows in accordance with IFRS.

For all periods up to and including the year ended 30 June 2007, the Group
prepared its financial statements in accordance with United Kingdom generally
accepted accounting practice (UK GAAP). This financial information, for the 6
months to 31 December 2007 is the first the Group is required to prepare in
accordance with IFRS as adopted by the EU. Refer to note 17 for further details
of the transition to IFRS. The condensed consolidated financial information
shows the results, cash flows and balance sheet positions as if the Group had
transitioned to IFRS on 1 July 2006.

The Group's financial statements for the year ended 30 June 2006 were restated
following identification of a number of misstatements and omitted disclosures.
Accordingly, the comparative financial information for the six months ended 31
December 2006 has been restated. A reconciliation of the restated comparative
condensed financial information from the previously published interim financial
information for the six months period to 31 December 2006 is included in note 3.

2. Significant accounting policies (continued)

The condensed financial information presented has been prepared on a going
concern basis under the historical cost convention except for the revaluation of
certain financial instruments. The Group's financial information is presented in
pounds sterling and all values are rounded to the nearest thousand pounds (£'
000) unless otherwise stated.

The following standards and interpretations have not been applied in the
condensed financial information as, although in issue at the date of
preparation, they were not effective for the periods covered by the condensed
financial information:

IFRS 8 'Operating Segments' effective periods beginning on or after 1 January
2009;

IFRIC 12 'Service Concession Arrangements' effective periods beginning on or
after 1 January 2008;

IFRIC 13 'Customer Loyalty Programmes' effective periods beginning on or after 1
July 2008; and

IFRIC 14 'IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction' effective periods beginning on or after 1
January 2008.

The directors anticipate that the adoption of these standards and
interpretations on or after 31 December 2007 will have no material impact on the
financial statements of the Group.

Basis of consolidation

The consolidated financial information incorporates the financial information of
the Company and entities controlled by the Company (its subsidiaries) made up to
the reporting period. Control is achieved where the Company has the power to
govern the financial and operating policies of an investee entity so as to
obtain benefits from its activities.

Minority interests in the net assets of consolidated subsidiaries are identified
separately from the parent company's equity therein. Minority interests consist
of the amount of those interests at the date of the original business
combination and the minority's share of changes in equity since the date of the
combination. Losses applicable to the minority in excess of the minority's
interest in the subsidiary's equity are allocated against the interests of the
Group except to the extent that the minority has a binding obligation and is
able to make an additional investment to cover the losses.

The results of subsidiaries acquired or disposed of during the year are included
in the consolidated income statement from the effective date of acquisition or
up to the effective date of disposal, as appropriate.

All intra-group transactions, balances, income and expenses are eliminated on
consolidation.

Business combinations

The acquisition of subsidiaries in a business combination is accounted for using
the purchase method. The cost of the acquisition is measured at the aggregate of
the fair values, at the date of exchange, of assets given, liabilities incurred
or assumed, and equity instruments issued by the Group in exchange for control
of the acquiree, plus any costs directly attributable to the business
combination. The acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3 are recognised
at their fair value at the acquisition date, except for non-current assets (or
disposal groups) that are classified as held for sale in accordance with IFRS 5
'Non Current Assets Held for Sale and Discontinued Operations', which are
recognised and measured at fair value less costs to sell.

Where there is a difference between the Group's interest in the net fair value
of the acquiree's identifiable assets, liabilities and contingent liabilities
and the cost of the business combination, any excess cost is recognised in the
balance sheet as goodwill and any excess net fair value is recognised
immediately in the income statement as negative goodwill on acquisition of
subsidiary.

The interest of minority shareholders in the acquiree is initially measured at
the minority's proportion of the net fair value of the assets, liabilities and
contingent liabilities recognised.

2. Significant accounting policies (continued)

Interests in associates

An associate is an entity over which the Group is in a position to exercise
significant influence, but not control or joint control, through participation
in the financial and operating policy decisions of the investee. Significant
influence is the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control over those
policies.

The results and assets and liabilities of associates are incorporated in these
financial statements using the equity method of accounting except when
classified as held for sale. Investments in associates are carried in the
balance sheet at cost as adjusted by post-acquisition changes in the Group's
share of the net assets of the associates, less any impairment in the value of
individual investments. Losses of the associates in excess of the Group's
interest in those associates are not recognised unless the Group has an
obligation to fund such losses.

To the extent that the cost of acquisition is less than the Group's share of the
fair values of the identifiable net assets of the associate at the date of
acquisition (i.e. a discount on acquisition), such discount is credited in the
income statement in the period of acquisition.

Where a Group company transacts with an associate of the Group, profits and
losses are eliminated to the extent of the Group's interest in the relevant
associate. Losses may provide evidence of an impairment of the asset transferred
in which case appropriate provision is made for impairment.

The reporting dates of certain associates and the Group differ. Where reporting
dates differ, interim results for the period to the reporting date of the Group
are incorporated into the calculation of investments in associates. Associates'
accounting policies are adjusted where necessary materially to conform to those
used by the Group for like transactions and events in similar circumstances.

Revenue recognition

Revenue from sale of coal and other services is recognised to the extent that it
is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured. Revenue is measured at the fair value of the
consideration received or receivable and represents amounts receivable for goods
and services provided in the normal course of business, net of discounts, VAT
and other sales-related taxes.

Sales of goods are recognised when goods are delivered and title has passed as
specified in the respective contract. The cost of transportation including
trucking is recorded as an expense in the cost of mining.

Interest income is accrued on a time basis by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts through the expected life
of the financial asset to that asset's net carrying amount.

Leases

Leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other
leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Group at their
fair value or, if lower, at the present value of the minimum lease payments,
each determined at the inception of the lease. The corresponding liability to
the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the
lease obligation so as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged directly against income.

2. Significant accounting policies (continued)

Rentals payable under operating leases are charged to income on a straight-line
basis over the term of the relevant lease.

Benefits received and receivable as an incentive to enter into an operating
lease are also spread on a straight-line basis over the lease term.

Foreign currencies

The individual financial statements of each Group company are maintained in the
currency of the primary economic environment in which it operates (its
functional currency). For the purpose of the consolidated financial statements,
the results and financial position of each Group company are expressed in pound
sterling, which is the functional currency of the Company, and the presentation
currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions
in currencies other than the entity's functional currency (foreign currencies)
are recorded at the rates of exchange prevailing on the dates of the
transactions. At each balance sheet date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated at the rates prevailing
on the balance sheet date. Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the rates prevailing at
the date when the fair value was re-determined. Non-monetary items that are
measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in the income statement for the
period. Exchange differences arising on the retranslation of non-monetary items
carried at fair value are included in the income statement for the period except
for differences arising on the retranslation of non-monetary items in respect of
which gains and losses are recognised directly in equity.

For the purpose of presenting consolidated financial statements, the assets and
liabilities of the Group's foreign operations are translated at exchange rates
prevailing on the balance sheet date. Income and expense items are translated at
the average exchange rates for the period, unless exchange rates fluctuate
significantly during that period, in which case the exchange rates at the date
of transactions are used. Exchange differences arising, if any, are classified
as equity and transferred to the Group's translation reserve. Such translation
differences are recognised as income or as expenses in the period in which the
operation is disposed of.

Fair value adjustments arising on the acquisition of a foreign entity are
treated as assets and liabilities of the foreign entity and translated at the
closing rate.

When a monetary item forms part of a net investment in a foreign operation,
exchange differences are recognised in equity.

Finance costs

Finance costs of financial liabilities are recognised in the income statement in
accordance with the effective interest rate method.

Finance costs which are directly attributable to the construction of property,
plant and equipment are capitalised as part of the cost of those assets.

The commencement of capitalisation begins when both finance costs and
expenditures for the asset are being incurred and activities that are necessary
to get the asset ready for use are in progress. Capitalisation ceases when
substantially all the activities that are necessary to get the asset ready for
use are complete.

2. Significant accounting policies (continued)

Operating loss

Operating loss is stated after the share of results of associates but before
investment revenue, finance costs and other gains and losses.

Taxation

The tax expense represents the sum of the tax currently payable and deferred
tax.

Current tax is based on taxable profit for the year. Taxable profit differs from
net profit as reported in the income statement because it excludes items of
income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible.

Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised for all deductible temporary differences,
carry forward of unused tax assets and unused tax losses to the extent that it
is probable that taxable profits will be available against which deductible
temporary differences and the carry forward of unused tax credits and unused tax
losses can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from the initial recognition of goodwill or from the
initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the tax profit nor the
accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, except where the Group is
able to control the reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences arising
on investments in subsidiaries and associates, only to the extent that it is
probable that the temporary difference will reverse in the foreseeable future
and taxable profit will be available against which the temporary difference can
be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.

Unrecognised deferred tax assets are reassessed at each balance sheet date and
are recognised to the extent that it has become probable that future taxable
profits will allow the deferred tax asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised, based on tax
rates (and tax laws) that have been enacted or substantively enacted at the
balance sheet date. Deferred tax is charged or credited in the income statement,
except when it relates to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current tax assets and liabilities on a net
basis.

Intangible assets

Exploration and evaluation assets and mineral assets

Exploration and evaluation assets arising from a business combination are
recognised as an intangible asset and initially measured at estimated fair
value, generally based on the excess of the cost of the business combination
over the Group's interest in the net fair value of the other identifiable
assets, liabilities and contingent liabilities recognised, unless a more
reliable indicator of fair value is available.

2. Significant accounting policies (continued)

The costs of exploration properties and leases, which include the cost of
acquiring prospective properties and exploration rights and costs incurred in
exploration and evaluation activities, are capitalised as intangible assets as
part of exploration and evaluation assets.

Mineral properties relate to those properties where commercial extraction is
demonstrable. Mineral properties acquired in a business combination are
recognised as an intangible asset, being the excess of the present value of the
economic reserves over the allocated amount of related property, plant and
equipment and exploration and evaluation costs.

Exploration and evaluation assets are carried forward during the exploration and
evaluation stage and are assessed for impairment in accordance with the
indicators of impairment as set out in IFRS 6 'Exploration for and Evaluation of
Mineral Resources'. In circumstances where a property is abandoned, the
cumulative capitalised costs relating to the property are written off in the
period. No amortisation is charged prior to the commencement of production.

When commercial production commences exploration, evaluation and development
costs previously capitalised are amortised over the commercial reserves of the
mining property on a unit of production basis.

Property, plant and equipment

Land is stated at cost less any recognised impairment loss. Buildings and plant
and equipment are stated at cost less accumulated depreciation and any
recognised impairment loss.

Costs of developing new mines or significantly expanding the capacity of
existing mines are capitalised until the mine begins production at which point
these assets are amortised on a units-of-production basis. Revenue generated
from mining production of properties being developed is offset against the costs
of the new mines during development.

The provision for the future cost of rehabilitation and restoration activities
in respect of mining properties is recognised as part of the cost of the related
property, plant and equipment at the time of the commencement of commercial
production and establishment of plant sites, based on management's assessment of
the expected future cash flows associated with rehabilitation and restoration
activities.

Depreciation is provided on all depreciable property, plant and equipment at
rates calculated to write off the cost of each asset on a straight-line basis
over its expected useful life as follows:

Buildings 50 years
Plant and machinery 5% to 15%
Office equipment 15% to 20%
Vehicles 5% to 50%

The cost of maintenance, repairs and replacement of minor items of property,
plant and equipment are charged to the income statement as incurred. Renewals
and asset improvements are capitalised.

An item of property, plant and equipment is derecognised upon disposal or when
no further economic benefits are expected from its use or disposal. Upon sale or
retirement of property, plant and equipment, the cost and related accumulated
depreciation are eliminated from the financial statements. Any resulting gains
or losses are included in the income statement.

2. Significant accounting policies (continued)

Impairment of tangible and intangible assets

At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any).

Where the asset does not generate cash flows that are independent from other
assets, the Group estimates the recoverable amount of the cash-generating unit
to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognised as income immediately.

Government Grants

Government grants relate to funds received under the Coal Investment Aid Scheme
in Wales. These grants were used to acquire property, plant and equipment and
are held in the balance sheet as deferred income and released to the profit and
loss over the expected useful life of the asset concerned.

Coal royalties

Certain land lease agreements provide for the payment of minimum royalties which
are recoupable from future coal production. Minimum payments paid in advance
are deferred and recorded within prepayments. These prepayments are charged to
the cost of coal sales as mining occurs or recorded as an expense at the earlier
of the expiration of the recoupment period or at the same time the current
mining plans indicate that they will not be recoupable and therefore have become
impaired.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost
comprises direct materials and, where applicable, direct labour costs and those
overheads that have been incurred in bringing the inventories to their present
location and condition. Net realisable value represents the estimated selling
price less all estimated costs of completion and costs to be incurred in
marketing, selling and distribution.

Financial instruments

Financial assets and financial liabilities are recognised in the Group's balance
sheet when the Group becomes a party to the contractual provisions of the
instrument.

Trade receivables

Trade receivables are measured at initial recognition at fair value, and are
subsequently measured at amortised cost using the effective interest rate
method. Appropriate allowances for estimated irrecoverable amounts are
recognised in the income statement when there is objective evidence that the
asset is impaired.

2. Significant accounting policies (continued)

Investments

Investments are recognised and derecognised on a trade date where a purchase or
sale of an investment is under a contract whose terms require delivery of the
investment within the timeframe established by the market concerned, and are
initially measured at cost, including transaction costs.

Investments are classified as either held for trading, available for sale or
held to maturity. Those classified as held for trading and available for sale
are measured at subsequent reporting dates at fair value. Held to maturity
investments are measured at amortised cost.

Where investments are held for trading, gains and losses arising from changes in
fair value are included in the income statement for the period. For available
for sale investments, gains and losses arising from changes in fair value are
recognised directly in equity, until the security is disposed of or is
determined to be impaired, at which time the cumulative gain or loss previously
recognised in equity is included in the income statement for the period.
Impairment losses recognised in the income statement for equity investments
classified as available for sale are not subsequently reversed through the
income statement.

The fair value of investments that are actively traded in organised financial
markets is determined by reference to quoted market bid prices at the close of
business on the balance sheet date. For investments with no active market, fair
value is determined using valuation techniques. Such techniques include using
recent arm's length market transactions; reference to the current market value
of another instrument that is substantially the same; discounted cash flow
analysis and option pricing models.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities.

Convertible loan notes

Convertible loan notes are regarded as compound instruments, consisting of a
liability component and an equity component. At the date of issue, the fair
value of the liability component is estimated using the prevailing market
interest rate for similar non-convertible debt. The difference between the
proceeds of issue of the convertible loan notes and the fair value assigned to
the liability component, representing the embedded option to convert the
liability into equity of the Group, is included in equity. The amount measured
in equity is not subsequently remeasured.

The interest expense on the liability component is calculated by applying the
prevailing market interest rate for similar non-convertible debt to the
liability component of the instrument. The difference between this amount and
the interest paid is added to the carrying amount of the convertible loan note.

Trade payables

Trade payables are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest rate method.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received,
net of direct issue costs.

2. Significant accounting policies (continued)

Derivative financial instruments

Changes in the fair value of derivative financial instruments that do not
qualify for hedge accounting are recognised in the income statement as they
arise.

Provisions

Provisions are recognised when the Group has a present obligation as a result of
a past event, and it is probable that the Group will be required to settle that
obligation. Provisions are measured at the directors' best estimate of the
expenditure required to settle the obligation at the balance sheet date, and are
discounted to present value where the effect is material.

Upon initial recognition of provision for restoration and rehabilitation, a
corresponding amount is capitalised as the part of the carrying amount of
related property, plant and equipment.

The provision is measured at the present value of the estimated future
expenditure with the corresponding adjustment going to the cost of the asset.
The provision is increased as further disturbance occurs, creating a further
obligation to rehabilitate. The unwinding of discount of the provision is
included within finance costs.

Employee leave benefits

Liabilities for wages and salaries, including non-monetary benefits and accrued
but unused annual leave are recognised in respect of employees' services up to
the reporting date. They are measured at the amounts expected to be paid when
the liabilities are settled.

Retirement benefit costs

Payments to defined contribution retirement benefit schemes are charged as an
expense as they fall due.

Share-based payments

The Group has applied the requirements of IFRS 2 'Share-based Payment'. In
accordance with the transitional provisions, IFRS 2 has been applied to all
grants of equity instruments after 7 November 2002 that were unvested at 1
January 2005.

The Group issues equity-settled share-based payments to certain employees.
Equity-settled share-based payments are measured at fair value (excluding the
effect of non market-based vesting conditions) at the date of grant. The fair
value determined at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest

Key sources of estimation uncertainty

The preparation of financial statements requires management to make estimates
and assumptions that affect the amounts reported for assets and liabilities as
at the balance sheet date and the amounts reported for revenues and expenses
during the year. The nature of estimation means that actual outcomes could
differ from those estimates. The key sources of estimation uncertainty that have
a significant risk of causing material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed below.

Share-based payments

The estimation of share-based payment costs requires the selection of an
appropriate valuation model and consideration as to the inputs necessary for the
valuation model chosen. The Group has made estimates as to the volatility of its
own shares, the probable life of options granted and the time of exercise of
those options. The model used by the Group is the Black-Scholes Model.

2. Significant accounting policies (continued)

Fair values recognised in business combinations

The estimation of fair values of intangible mineral rights and mineral assets
and any associated property, plant and equipment acquired in business
combinations involves estimates over the quantities of minerals that may be
recovered and the technical and commercial feasibility of extraction, which may
be highly uncertain. Generally, fair values assigned to exploration and
evaluation assets are limited so as not to generate negative goodwill where
there is significant uncertainty over the estimates of fair value.

Restoration provision

The estimation of the amount of restoration provision involves estimates of the
expected future cash flows associated with rehabilitation and restoration
activities, which may be highly uncertain. Management has estimated the
provision based on an assessment of the expected future cash flows relating to
certain 'clean-up' activities.

Impairment

Determining whether intangible and tangible assets are impaired requires an
estimation of the value in use of the cash-generating units to which the asset
has been allocated. The value in use calculation requires the entity to estimate
future cash flows expected to arise from the cash-generating unit and a suitable
discount rate in order to calculate present value.

3. Adjustments to restate comparative condensed financial
information

Following the identification of a number of misstatements and omitted
disclosures in the financial statements for the year ended 30 June 2006 the
Board requested a review of the financial controls of the Group including a
review of the 2006 financial statements. These misstatements were corrected in
the comparative financial information included in the financial statements for
the year ended 30 June 2007.

In preparing this condensed consolidated financial information, the comparative
results for the six months to 31 December 2006 have been restated in line with
the restatements in the previously published 30 June 2007 Group financial
statements. A reconciliation of the amounts originally stated under UK GAAP to
restated UK GAAP amounts for each primary statement is provided below. A
detailed description of each adjustment then follows.

As described in notes 1 and 2, for all periods up to and including the year
ended 30 June 2007, the Group prepared its financial statements in accordance
with UK GAAP. The financial information, for the 6 months to 31 December 2007 is
the first the Group is required to prepare in accordance with IFRS. Accordingly,
the comparative information has also been adjusted for any UK GAAP to IFRS
differences as described in note 17.

3. Adjustments to restate comparative condensed financial information
(continued)

Consolidated income statement 31 December Restatements 31
2006 December
As stated 2006
All amounts shown under UK GAAP- Restated
see note 17 for transition to IFRS Unaudited Unaudited Unaudited
£'000 £'000 £'000

Revenue 7,586 - 7,586
Cost of sales (9,675) (418) (10,093)
---------- ---------- ----------
Gross loss (2,089) (418) (2,507)

Other operating expenses (1,098) 144 (954)
Share of results of associates (31) 31 -
---------- ---------- ----------
Operating loss (3,218) (243) (3,461)

Finance income 16 19 35
Finance costs (359) (104) (463)
---------- ---------- ----------
Loss before tax (3,561) (328) (3,889)

Tax 12 - 12
---------- ---------- ----------
Loss for the period (3,549) (328) (3,877)

Minority interest 101 - 101
---------- ---------- ----------
Loss attributable to equity
holders of the parent (3,448) (328) (3,776)
========== ========== ==========

Consolidated statement of recognised 31 December Restatements 31
income and expense 2006 December
2006
All amounts shown under UK GAAP- see As stated Restated
note 17 for transition to IFRS Unaudited Unaudited Unaudited
£'000 £'000 £'000

Loss for the financial year (3,448) (328) (3,776)

Exchange differences on translation of
foreign operations (1,190) (170) (1,360)
---------- ---------- ----------
Total recognised (losses)/gains
relating to the year (4,638) (498) (5,136)
========== ========== ==========

Coal International Plc
Notes to the condensed consolidated financial information
For the six months ended 31 December 2007

3. Adjustments to restate comparative condensed financial
information (continued)

Consolidated balance sheet 31 Restatements 31
December December
2006 2006
All amounts shown under UK GAAP- As stated Restated
see note 17 for transition to IFRS Unaudited Unaudited Unaudited
£'000 £'000 £'000

Non-current assets
Goodwill 27,741 (27,741) -
Mining properties and mineral rights 11,704 27,964 39,668
Property, plant and equipment 28,018 5,180 33,198
Investments 8,575 31 8,606
---------- ---------- ----------
76,038 5,434 81,472
---------- ---------- ----------
Current assets
Inventories 1,247 - 1,247
Trade and other receivables 3,005 20 3,025
Cash and cash equivalents 958 98 1,056
---------- ---------- ----------
5,210 118 5,328
---------- ---------- ----------
Total assets 81,248 5,552 86,800
========== ========== ==========
Current liabilities
Trade and other payables (4,817) - (4,817)
Borrowings (1,784) - (1,784)
Other liabilities (77) - (76)
---------- ---------- ----------
(6,678) - (6,677)
---------- ---------- ----------
Net current (liabilities)/
assets (1,468) 118 (1,350)
---------- ---------- ----------
Non-current liabilities
Deferred grants received (1,752) 1,475 (277)
Borrowings (13,162) (50) (13,212)
Provisions (7,748) 193 (7,555)
---------- ---------- ----------
(22,662) 1,618 (21,044)
---------- ---------- ----------
Total liabilities (29,340) 1,618 (27,722)
========== ========== ==========
Net assets 51,908 7,170 59,078
========== ========== ==========

Coal International Plc

Notes to the condensed consolidated financial information

For the six months ended 31 December 2007

3. Adjustments to restate comparative condensed financial
information (continued)

Consolidated balance sheet 31 Restatements 31
December December
2006 2006
All amounts shown under UK GAAP- As stated Restated
see note 17 for transition to IFRS Unaudited Unaudited Unaudited
£'000 £'000 £'000
Equity
Ordinary share capital 33,625 - 33,625
Share premium account 10,172 (997) 9,175
Other reserve 14,808 1,615 16,423
Revaluation reserve - 10,258 10,258
Translation reserve (1,190) (1,948) (3,138)
Retained earnings (7,688) (4,054) (11,742)
---------- ---------- ----------
Equity attributable to equity
holders of the parent 49,727 4,874 54,601

Minority interest 2,181 2,296 4,477
---------- ---------- ----------
Total equity 51,908 7,170 59,078
========== ========== ==========

Consolidated cash flow statement 31 December Restatements 31 December
2006 2006
All amounts shown under UK GAAP- see As stated Restated
note 17 for transition to IFRS Unaudited Unaudited Unaudited
£'000 £'000 £'000

Net cash used in operating activities (3,815) (53) (3,868)

Investing activities
Interest received 16 19 35
Purchase of fixed assets (7,159) - (7,159)
Acquisition of interest in
associate (175) - (175)
Purchase of investments (160) - (160)
Proceeds realised on investments 624 - 624
---------- ---------- ----------
Net cash used in investing
activities (6,854) 19 (6,835)
---------- ---------- ----------
Financing activities
Interest paid (69) - (69)
Other financing activities 11,467 39 11,506
---------- ---------- ----------
Net cash from financing
activities 11,398 39 11,437
---------- ---------- ----------
Net cash inflow 729 5 734

Currency translation on foreign
operations (21) 93 72
---------- ---------- ----------
Net increase in cash during
the year 708 98 806
========== ========== ==========

Coal International Plc
Notes to the condensed consolidated financial information
For the six months ended 31 December 2007

3. Adjustments to restate comparative condensed financial
information (continued)

A summary table and description of each adjustment to the income statement,
balance sheet and statement of recognised income and expense are provided below.
The restatements to the cash flow statement are described separately below.

Consolidated income statement Six months
ended
31 December
2006
Unaudited
£'000

Loss before taxation as stated (3,561)

Amortisation of mineral rights (b) (192)
Derecognition of share of
associate result (d) 31
Adjustment to provision for
restoration (e) (156)
Other (11)
----------
(328)
Loss before taxation as restated (3,889)
==========

Consolidated statement of recognised income and Six months ended
expense 31 December
2006
Unaudited
£'000

Total recognised losses for the year as stated (4,638)

Restatement of loss for the year (328)
Adjustment to foreign currency
recognised on acquisition (a) (170)
----------
(498)
Total recognised losses for
the year as restated (5,136)
==========

Coal International Plc
Notes to the condensed consolidated financial information
For the six months ended 31 December 2007

3. Adjustments to restate comparative condensed financial
information (continued)

Consolidated balance sheet 31 December
2006
Unaudited
£'000
Net assets as stated
51,908
Adjustment to acquisition accounting
Decrease in goodwill (a) (27,741)
Increase in mineral rights (a) 32,602
Decrease in accruals (a) 1,475
Reclassification from intangible assets (f) (4,636)
Reclassification to tangible assets (f) 4,636
Adjustment to provision for restoration and
related asset to reflect effect of discounting (e) 735
Derecognition of share of associate result (d) 31
Other 68
----------
7,170
Net assets as restated 59,078
==========

Total capital employed as stated 51,908

Adjustment to acquisition accounting
Decrease in cost of acquisition (a) (848)
Recognition of fair value adjustments (a) 10,258
Adjustments to minority interest on
acquisition (a) 2,296
Share based payments (c) 1,412
Adjustment to opening retained earnings (g) (3,726)
Adjustment to opening foreign currency reserve (g) (1,778)
Restatement to the income statement for the
period (328)
Other (116)
----------
7,170
Total capital employed as restated 59,078
==========

a)Adjustments to acquisition accounting

Impact on Balance Sheet

As described in the Annual Report and Accounts 2007, management revisited the
accounting treatment of the acquisition of the remaining interest in King-Coal
Corporation Limited (King-Coal) and a further interest in Energybuild Holdings
Limited (Energybuild) which occurred during the year ended 30 June 2006. Revised
acquisition notes were presented within note 17 of the Annual Report and
Accounts 2007 which reflected both revised book value of assets and liabilities
acquired and, where applicable, fair value adjustments.

It was concluded for both the acquisitions of King-Coal and Energybuild that a
fair value uplift to intangible mineral rights was required on acquisition and
therefore no goodwill arose on either transaction. The fair value uplift was
based upon an assessment of the future cash flows which were expected to be
generated from the underlying mining properties.

Coal International Plc

Notes to the condensed consolidated financial information

For the six months ended 31 December 2007

3. Adjustments to restate comparative condensed financial information
(continued)

In addition to the above, it was determined that a consistent treatment of
goodwill and intangible assets should be applied to previous acquisitions of the
group, therefore goodwill which arose on the acquisition of Maple Coal
Corporation in December 2005 was reclassified to mineral rights at 30 June 2006.

A reconciliation between opening mineral rights at 30 June 2005 and restated
closing mineral rights at 30 June 2006 was provided in the Annual Report and
Accounts 2007. A reconciliation between the restated balance at 30 June 2006 and
the restated balance at 31 December 2006 as shown above is as follows:

£'000
Unaudited

Restated at 30 June 2006 40,399
Amortisation charge for the period (365)
Exchange adjustment (366)
---------
Restated at 31 December 2006 39,668
=========

In addition to the fair value adjustments relating to mineral rights, an
additional fair value adjustment relating to the acquisition of Energybuild
arose where it was concluded that there was nil value attributable to grants
previously received under the Coal Investment Aid Scheme. The amount included as
a liability at book value within Energybuild was in accordance with SSAP 4 and
reflected the amount of deferred income remaining to be recognised over the term
of the grant (£1,475,000). However as the fixed assets acquired are recognised
at fair value, there is no similar liability to the Group on acquisition.

Impact on statement of recognised income and expense

As described in the Annual Report and Accounts 2007, the fair value adjustments
described above resulted in the recognition of a revaluation reserve of
£10,258,000. The reserve represents the Group's share of the increase in fair
value of the net assets in King-Coal and Energybuild between the dates each
became an associate and the dates they became a subsidiary.

Impact on equity

An additional adjustment related to the acquisition of Energybuild during the
period was to the cost of acquisition, which was adjusted to reflect the market
price on the date of acquisition in order to calculate the fair value of shares
issued. As shares were issued at a premium, the adjustment to the acquisition
cost is an adjustment of £848,000 to the share premium account.

A further misstatement which was not relevant at 30 June 2006 relates to a
foreign currency exchange adjustment which was included as part of the
investment elimination entry relating to the acquisition of King-Coal. As the
acquisition accounting was revised as described above, this entry was not
applicable. The effect to the foreign currency reserve was £170,000.

The effect of the above adjustments to the fair value of consideration and the
fair value of assets and liabilities acquired are reflected in the minority
interest.

b) Amortisation of mineral rights

As a result of the recognition of additional mineral rights on the acquisition
of King-Coal and Energybuild, additional amortisation relating to the restated
balance was calculated on a units-of-production basis, which amounted to
£192,000.

Coal International Plc

Notes to the condensed consolidated financial information

For the six months ended 31 December 2007

3. Adjustments to restate comparative condensed financial
information (continued)

c) Share-based payments

As described within the Annual Report and Accounts 2007, Coal International
adopted FRS 20 (IFRS 2) 'Share Based Payment' for the year ended 30 June 2007
and restated the results for the year ended 30 June 2006 on a comparable basis.
The amount of £1,412,000 recognised within reserves above, represents the charge
recognised in 2006. For the year ended 30 June 2007, the warrants issued under
the Energybuild Group Plc equity-settled scheme, which were granted in May 2007
have not been included in the restated amounts at 31 December 2006.

d) Derecogntion of share of associate result

Within the financial information at 31 December 2006 as originally presented,
Northern Energy and Mining Inc (NEMI) was classified as an associate as a result
of the acquisition of an additional interest in November 2006. However at 30
June 2007 management revisited the accounting treatment of NEMI and concluded
that it did not become an associate of the group until Coal International
Directors W Durand Eppler and J Byrne were appointed to the NEMI Board on 20
March 2007. As such, the share of associate result previously recognised has
been reversed.

e) Adjustment to provision for restoration

As described in the Annual Report and Accounts 2007 following a third party
review by an independent assessor it was determined that the restoration
provision relating to the US-based mining properties were understated. As such
the Directors concluded it was necessary to restate the provisions and related
restoration asset based on the output from the third party assessment. At 31
December 2006 this restatement has been rolled forward to reflect the effect of
depreciation of the asset and the unwinding of the discount on the provision for
the 6 month period.

Impact on Balance Sheet at 31 December 2006

The net impact on the balance sheet as a result of restating the provisions is
as follows:
£'000
Unaudited
Increase in restoration asset 542
Decrease in restoration provision 193
---------
Adjustment to cost of restoration 735
=========

Impact on Income Statement for 6 months ended 31 December 2006

The net impact on the income statement as a result of restating the provisions
is as follows:
£'000
Unaudited
Increase in interest expense: unwinding discount on (52)
provisions
Increase in depreciation charge (104)
---------
Adjustment to cost of restoration (156)
=========

f) Reclassification between intangible and tangible assets

The reclassification between intangible assets and tangible assets of £4,636,000
is of a similar nature to the adjustment at 30 June 2006 as disclosed in the
Annual Report and Accounts 2007 which rose due to a difference in presentation
of 'Construction in Progress' and 'Mine Development'. A consistent presentation
across each reporting period is now reflected.

Coal International Plc

Notes to the condensed consolidated financial information

For the six months ended 31 December 2007

3. Adjustments to restate comparative condensed financial
information (continued)

g) Adjustments to opening balances

Adjustments to restate the opening balance sheet position have been made
consistent with Note 24 of the Annual Report and Accounts 2007.

Cash flow statement

As a result of the restatements to the income statement and balance sheet, some
adjustments were required to be made to the cash flow statement. The adjustments
reflect the cash effect of the underlying transactions which occurred during the
year.

4. Segment information

The following is an analysis of the revenue and results for each period,
analysed by geographic segment, the Group's primary basis of segmentation:

Six months ended Year ended
Revenue 31 31 30 June
December December 2007
2007 2006 Restated
Restated
Unaudited Unaudited Unaudited
£'000 £'000 £'000

North America 16,971 4,992 13,331
Wales 311 2,594 4,761
Corporate - - -
---------- ---------- ----------
17,282 7,586 18,092
========== ========== ==========

Six months ended Year ended
Segment loss 31 31 30 June
December December 2007
2007 2006
Restated Restated
Unaudited Unaudited Unaudited
£'000 £'000 £'000

North America (2,925) (2,974) (7,226)
Wales (169) (120) (255)
Corporate 521 (537) (1,839)
---------- ---------- ----------
(2,573) (3,631) (9,320)
========== ========== ==========

5. Inventories

Included in cost of sales for the six months ended 31 December 2007 is an amount
of £60,000 in respect of an allowance recognised to reduce the carrying amount
of inventories to their net realisable value.

Coal International Plc

Notes to the condensed consolidated financial information

For the six months ended 31 December 2007

6. Income tax credit

The income tax credit represents the recognition of deferred tax assets relating
principally to US losses arising in the period which are offset against US
deferred tax liabilities. Income tax is accrued based on the estimated average
annual effective income tax rate of 34% in North America and 30% in the United
Kingdom.

7. Loss per share

The calculation of the basic and diluted loss per share is based on the
following data:

Six months ended Year ended
Loss 31 31 30 June
December December 2007
2007 2006 Restated
Restated
Unaudited Unaudited Unaudited
£'000 £'000 £'000
Loss for the purposes of basic loss per
share being net loss attributable
to equity holders of the parent (1,748) (2,978) (9,663)
Effect of dilutive potential ordinary - - -
shares
Loss for the purposes of diluted loss
per share (1,748) (2,978) (9,663)

Six months ended
31 31 Year ended
December December 30 June
2007 2006 2007
Restated Restated
Unaudited Unaudited Unaudited
Number of shares
Weighted average number of ordinary
shares for the purposes of basic loss per
share 97,584,303 67,249,371 69,825,762

Effect of dilutive potential ordinary - - -
shares

Weighted average number of ordinary
shares for the purposes of diluted loss
per share 97,584,303 67,249,371 69,825,762

Certain options and warrants and convertible loan notes of the Group are not
dilutive and are therefore excluded from the weighted average number of ordinary
shares for the purposes of diluted loss per share.

8. Property, plant and equipment

During the period the Group spent approximately £2,796,000 on various mining
equipment to complete the second operating unit at the Maple property as well as
additional surface mining equipment. In addition approximately £1,525,000 in
development costs were incurred to cut through and seal areas of old works.

Apart from the dilution in interest of Energybuild Group Plc (refer note 9 for
further information) there were no disposal of property, plant and equipment
during the period.

Coal International Plc

Notes to the condensed consolidated financial information

For the six months ended 31 December 2007

9. Interests in associates

Interest in Energybuild Group Plc

At 30 June 2007 Coal International held a 50% interest in Energybuild Group Plc
(Energybuild). On 6 August 2007 Energybuild listed on the Alternative Investment
Market placing 75,000,000 shares at 20p per share. Coal International acquired
2,500,000 shares in this transaction however due to the remaining shares being
issued to parties external to the Group, Coal International's interest was
diluted to 23.08%. Accordingly, for the period from 6 August 2007 to 31 December
2007 Energybuild was classified as an associate and the results no longer
consolidated.

This transaction has given rise to a gain on deemed disposal of £367,000 due to
an increase in the value of Coal International's effective interest in
Energybuild before and after the placing. As a result of the deemed disposal the
relevant portion of the revaluation gain originally recognised on acquisition
£214,000, has been transferred to retained earnings.

The impact of Energybuild on the Group's results for each period presented were
as follows:

Period from Six months Year ended
1 July 2007 ended 31 30 June
to 6 August December 2007
2007 2006 Restated
Unaudited Restated
£'000 Unaudited Unaudited
£'000 £'000

Revenue 310 2,593 4,761
Cost of Sales (455) (2,652) (4,602)
Other operating expenses (24) (61) (420)
Finance costs (17) (65) 14
---------- ---------- ----------
Loss before tax (186) (185) (247)
Income tax expense - - -
---------- ---------- ----------
Loss after tax (186) (185) (247)
========== ========== ==========

In addition, for the period from the date of becoming an associate, 6 August
2007, to 31 December 2007 Coal International recognised an equity accounted
share of the Energybuild loss of £106,000.

Coal International Plc

Notes to the condensed consolidated financial information

For the six months ended 31 December 2007

9. Interests in associates (continued)

The net assets of Energybuild at the date of deemed disposal and at 30 June 2007
were:
6 August 30 June
2007 2007
Unaudited Unaudited
£'000 £'000

Mining properties and mineral rights 5,075 5,075
Property, plant and equipment 10,384 10,384
Inventories 332 332
Trade and other receivables 1,361 1,050
Cash and cash equivalents 238 238
Trade and other payables (3,997) (3,500)
Borrowings (3,678) (3,678)
Provisions (1,203) (1,203)
---------- ----------
8,512 8,698
---------- ==========
Cash and loans converted in placing less
placing fees 13,689
----------
Fair value of assets and liabilities post
placing 22,201

23.08% interest in net assets post placing 5,123
50% interest in net assets pre placing (4,256)
----------
Gain on movement in interest held in
Energybuild 867
Cash paid by Company to take part in placing (500)
----------
Gain on deemed disposal 367

Net cash outflow arising on deemed disposal:

Cash paid by Company during placing (500)
Cash and cash equivalents disposed of (238)
----------
(738)
==========

Interest in Northern Energy and Mining Inc

At 30 June 2007 the Group had a 20% interest in Northern Energy and Mining Inc
(NEMI). There has been no change to the interest held in NEMI during the period.
Refer to note 17 for further information in relation to the classification of
this investment in accordance with IFRS. During the period to 31 December 2007
Coal International recognised an equity accounted share of the NEMI profit for
the period of £1,160,000.

Coal International Plc

Notes to the condensed consolidated financial information

For the six months ended 31 December 2007

10. Borrowings

At 30 June 2007 the Group had an amount owing to Cambrian Mining Plc of
£13,932,000 reflecting principal and interest outstanding on a £13,500,000
convertible loan facility. During the period, this loan increased as a result of
accrued interest, amounting to £590,000. Refer to note 16 for further
information on the loan.

On 12 December 2007, the Group's US subsidiary obtained funding from First
National Capital Corporation for an amount of US$4,000,000 to fund equipment
purchases. The loan has an effective interest rate of 17% and is repayable over
a 36 month period. In addition, a further drawdown of an existing arrangement
with CIT was made of approximately US$3,700,000 also to fund equipment
purchases. The CIT loan bears interest at varying rates of approximately 9.5%
and is also repayable over a 36 month period.

11. Reconciliation of loss before tax to net cash used in operating
activities

Six months ended Year ended
31 31 30 June
December December 2007
2007 2006
Restated Restated
Unaudited Unaudited Unaudited
£'000 £'000 £'000

Operating loss for the period (2,573) (3,631) (9,320)

Adjustments for:
Share of result of associates (1,054) - 95
Depreciation and amortisation 1,944 1,364 3,080
Share-based payment expense - - 45
Increase/(decrease) in provisions (67) - 370
Decrease/(increase) in inventories 166 (505) 29
(Increase)/decrease in trade and other
receivables (3,371) (770) (1,132)
Increase/(decrease) in trade
and other payables 3,375 (401) 1,683
Impairment of mining properties and
mineral rights - - 1,011
Amortisation of grant - - (13)
Exchange differences (21) 147 (60)
---------- ---------- ----------
Cash used in operations (1,601) (3,796) (4,212)

Income taxes paid - - -
---------- ---------- ----------
Net cash used in operating activities (1,601) (3,796) (4,212)
========== ========== ==========

Cash and cash equivalents (which are presented as a single class of assets on
the face of the balance sheet) comprise cash at bank and other short-term highly
liquid investments with a maturity of three months or less.

12. Share Capital

Ordinary share capital at 31 December 2007 amounted to £9,758,000 and deferred
share capital amounted to £26,900,000. There was no movement in the issued
capital of the Group in the current interim reporting period. At 31 December
2006 the ordinary share capital of the Group was £33,625,000. As described in
the Annual Report and Accounts 2007, effective 31 May 2007 the authorised share
capital of the company was split into 981,002,516 ordinary shares of 10p and
268,997,484 deferred shares of 10p.

On 31 May 2007 each shareholder's existing shareholding was converted from one
existing ordinary share of 50p each to one ordinary share of 10p each and 4
deferred shares of 10p each. In addition, effective 31 May 2007 the Company
issued 30,334,932 ordinary shares of 10p each at 28p per share.

13. Condensed statement of changes in equity

Share Other Available Revaluation Convertible Translation Retained
for sale reserve loan note reserve earnings
premium reserves investment reserve
reserve
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Opening balance
as at 1 July 2006
(as previously
reported) 10,172 14,808 - - - - (4,240)
Exchange translation
(as previously
reported) - - - - - (1,190) -
Loss (as previously
reported) - - - - - (3,448)
Prior year adjustments
(note 3) (997) 1,615 - 10,258 - (1,948) (4,054)
IFRS adjustments
(note 17) - - (3,340) - - - 1,128
-------- -------- -------- -------- -------- -------- --------
Restated as at
31 December 2006 9,175 16,423 (3,340) 10,258 - (3,138) (10,614)
Issue of shares* 5,460 - - - - - -
Share issue expense* (361) - - - - - -
Restated loss
for the period** - - - - - - (6,685)
Share based payments* - 45 - - - - -
IFRS adjustment
(note 17) - 3,340 - - - -
Equity component
of convertible
loan note* - - - - 379 - -
Restated currency
translation ** - - - - - (527) -
-------- -------- -------- -------- -------- -------- --------
Restated as at
30 June 2007 14,274 16,468 - 10,258 379 (3,665) (17,299)
Loss for the
period - - - - - - (1,748)
Currency translation - - - - - 95 -
Deemed disposal of
subsidiary (note 9) - - - (214) - - 214
-------- -------- -------- -------- -------- -------- --------
As at 31 December
2007 14,274 16,468 - 10,044 379 (3,570) (18,833)
======== ======== ======== ======== ======== ======== ========

* Refer to Annual Report and Accounts 2007 for descriptions of these
items.

** Represents movements in reserve balance for the 6 month period from 1
January 2007 to 30 June 2007. These amounts have not been previously reported as
results presented were for the year to 30 June 2007.

14. Contingencies and commitments

There has been no significant change to commitment and contingencies as
described in the Annual Report and Accounts 2007.

15. Events after the balance sheet date

In March 2008 NEMI issued C$10.99 million convertible debentures in order to
fund part of its participation in the Peace River Coal JV.

16. Related party transactions

The Group had the following material transactions with related parties during
the period ended 31 December 2007.

Transactions with directors and director related entities

The Group paid an amount of £80,000 to Sierra Partners (owned by W. Eppler) for
professional fees, travel and other miscellaneous expenses. The outstanding
balance owing to Sierra Partners at 31 December 2007 was £15,000.

Transactions with ultimate parent entity Cambrian Mining Plc ("Cambrian")

The Company has a service agreement with Cambrian Mining Plc to provide
administration services and consequently has no employees. The Group paid an
amount of £25,000 during the period to Cambrian in relation to these services.
The outstanding balance at 31 December 2007 was £31,000.

As described in the Annual Report and Accounts on 13 November 2006 the Company
entered into an agreement with Cambrian to provide a working capital facility of
up to US$12,500,000 to be used to fund the Maple metallurgical coal project. The
loan is repayable over 24 months and has an interest rate of LIBOR plus 4%. At
31 December 2007 the Company had repaid all amounts outstanding under the
facility.

As described in the Annual Report and Accounts 2007, the Company has a
convertible loan facility with Cambrian for £13,500,000 plus accrued interest.
The loan is convertible into ordinary shares in Coal International at 60p. The
loan has not yet been converted and bears interest at LIBOR plus 2.5%. At 31
December 2007 the gross amount outstanding was £14,897,000 which has been
allocated between an equity and debt component. Interest of £590,000 was
incurred on the loan during the period.

As described in the Annual Report and Accounts 2007 pursuant to a Release and
Substitution Agreement, Cambrian agreed to guarantee certain lease obligations
of Atlantic Leaseco LLC, an indirect subsidiary of King Coal, in connection with
two lease agreements (the "Tioga Lease" and the "PBB Lease") covering the rights
transferred by Gauley Eagle. The maximum lease guarantee obligations of Cambrian
is US$1,000,000 per lease, being a total of US$2,000,000.

Pursuant to a lease with Pardee Minerals LLC dated 10 November 2005, Cambrian
has agreed to guarantee the obligations of Maple Coal Co. as lessee in relation
to a lease over coal property in Kanawha and Fayette Counties, West Virginia up
to a maximum amount of USD$2,000,000, for the duration of the lease. No fees
were charged to provide guarantees.

Transactions with other related parties

The Company entered into a marketing agreement with Cambrian Marketing Limited
with effect from 16 November 2005, a wholly owned subsidiary of Cambrian Mining
Plc pursuant to which Cambrian Marketing Limited has been appointed as its
exclusive agent throughout the world to facilitate the promotion and sale of
coal produced by the Company and its subsidiaries. In consideration for the
provision of services set out in the agreement, the Company will pay Cambrian
Marketing Limited a royalty of the net sales value of all coal sales made by any
subsidiaries of the Company (other than Deepgreen West Virginia Inc) of 1.5% for
coal produced in the US and 1% for coal produced outside the US.

16. Related party transactions (continued)

The Company will also pay a royalty of 5% of the net sales value of coal sales
by Deepgreen West Virginia Inc. The term of the agreement is for an initial
period of five years. At 31 December 2007 the Group incurred royalties payable
of £271,000 to Cambrian Marketing Limited. This amount is owing at 31 December
2007.

17. Transition to IFRS

For all periods up to and including the year ended 30 June 2007, the Group
prepared its financial statements in accordance with United Kingdom generally
accepted accounting practice (UK GAAP). This condensed consolidated financial
information for the period ended 31 December 2007 is the first the Group is
required to prepare in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union.

Accordingly, the Group has prepared financial statements which comply with IFRSs
applicable for periods beginning on or after 1 January 2006 and the significant
accounting policies meeting those requirements are described in note 2.

In preparing this financial information, the Group has started from an opening
balance sheet as at 1 July 2006, the Group's date of transition to IFRSs, and
made those changes in accounting policies and other restatements required by
IFRS 1 for the first time adoption of IFRSs. This note explains the principal
adjustments made by the Group in restating its UK GAAP balance sheet as at 1
July 2006 and its previously published UK GAAP financial statements for the
period ended 31 December 2006, and the year ended 30 June 2007.

Exemptions applied

IFRS 1 'First-time adoption of International Financial Reporting Standards'
allows first-time adopters exemptions from the general requirement to apply
IFRSs retrospectively. The Group has taken the following exemptions:

• IFRS 3 'Business Combinations' has not been applied to acquisitions of
subsidiaries or of interests in associates and joint ventures that occurred
before 1 July 2006.

• IAS 39 'Financial Instruments: Recognition and Measurement' has been
applied to designate a financial asset as available for sale on initial
recognition

IFRS adjustments to opening balance sheet
Restatement of equity at 1 July 2006 £'000
Unaudited
Equity under UK GAAP 62,865

Adjustment for:
Uplift to fair value of mining properties and mineral
rights (a) 7,854
as a result of recognition of deferred tax liability
Recognition of net deferred tax liability (a) (7,524)
----------
Restated equity under IFRS 63,195
==========

17. Transition to IFRS (continued)

17. Transition to IFRS (continued)

IFRS adjustments to balance sheet at 31 December 2006
Restatement of equity at 31 December 2006 £'000
Unaudited
Equity under UK GAAP (as restated, see note 3) 59,078

Adjustments for:
Uplift to fair value of mining properties and mineral
rights (a) 7,854
as a result of recognition of deferred tax liability
Recognition of additional amortisation expense on
mining (d) (95)
properties and mineral rights
Recognition of initial net deferred tax liability (a) (7,524)
Movement in deferred tax liability during the period (a) 1,094
Recognition of mark to market loss on available for
sale (b) (3,340)
investment
Recognition of financial liability at amortised cost (c) (201)
----------
Restated equity under IFRS 56,866
==========

IFRS adjustments to balance sheet at 30 June 2007
Restatement of equity at 30 June 2007 £'000
Unaudited
Equity under UK GAAP 58,572

Adjustments for:
Uplift to fair value of mining properties and mineral
rights (a) 7,854
as a result of recognition of deferred tax liability
Recognition of additional amortisation expense on
mining (d) (260)
properties and mineral rights
Recognition of initial net deferred tax liability (a) (7,524)
Movement in deferred tax liability during the period (a) 2,780
----------
Restated equity under IFRS 61,422
==========

IFRS adjustment to income statement for the period to 31 December 2006
Restatement of loss for the period to 31 December £'000
2006
Unaudited
Loss under UK GAAP (as restated, see note 3) (3,776)

Adjustments for:
Recognition of additional interest expense in
accordance with (c) (201)
the effective interest rate method
Movement in deferred tax liability during the period (a) 1,169
Foreign exchange impact of movement in tax liability (a) (75)
Recognition of additional amortisation expense on
mining (d) (95)
properties and mineral rights
----------
Loss under IFRS (2,978)
==========

17. Transition to IFRS (continued)

IFRS adjustment to income statement for the year to 30 June 2007
Restatement of loss for the year to 30 June 2007 £'000
Unaudited
Loss under UK GAAP (12,183)

Adjustments for
Movement in deferred tax liability during the period (a) 2,930
Foreign exchange impact of movement in tax liability (a) (150)
Recognition of additional amortisation expense on
mining (d) (260)
properties and mineral rights
----------
Loss under IFRS (9,663)
==========

Description of adjustments

(a) Deferred tax adjustments

Under UK GAAP, deferred tax is provided on timing differences, whereas IFRS
requires provisions to be made for temporary differences between carrying values
and the related tax base. As a result, deferred tax needs to be recognised under
IFRS where no deferred tax was recognised under UK GAAP.

In accordance with the requirements of IFRS, deferred tax has been provided on
the temporary difference created by the allocation of fair values to mining
properties and mineral rights recognised on acquisition of King-Coal and
Energybuild in the period to 30 June 2006. Descriptions of these acquisitions
can be found in the Annual Report and Accounts 2007. At the date of acquisition
this resulted in the recognition of a deferred tax liability amounting to
£7,524,000, including an offset for deferred tax assets relating to losses of
the underlying subsidiaries acquired.

Consequently, the recognition of deferred tax affected the fair value of the
assets and liabilities acquired resulting in an increase in mining properties
and mineral rights at the date of acquisition of £7,854,000.

The difference between the opening mining properties and mineral rights balance
and the deferred tax liability of £330,000 at the date of acquisition is
recognised within retained earnings within the opening balance sheet. The income
statement tax credits for each period represent the recognition of deferred tax
assets in respect of losses incurred in the relevant periods which are being
offset against deferred tax liabilities arising on acquisitions as noted above.
In the period to 31 December 2007, a further reduction in the net deferred tax
liability arises due to the deconsolidation of Energybuild. Subsequent to
initial recognition, the mining properties and mineral rights balance is
amortised on a units of production basis (refer (d) below).

b) Reclassification of investment

At 1 July 2006, a reclassification adjustment is required between investment
captions in the balance sheet in relation to the investment in Northern Energy
and Mining Inc (NEMI) which was classified as an 'investment' under UK GAAP but
under IFRS is required to be classified as an 'available for sale investment'.

IFRS requires that available for sale investments are measured at fair value,
which for listed investments is market value. However as described in the Annual
Report and Accounts 2007 the investment in NEMI was impaired to its market value
at 30 June 2006 and therefore no measurement adjustment was required at the date
of transition to IFRS.

Coal International Plc

Notes to the condensed consolidated financial information

For the six months ended 31 December 2007

17. Transition to IFRS (continued)

For the period ending 31 December 2006, there was a decline in the share price
of NEMI and accordingly a loss of £3,340,000 was booked to the investment to
recognise it at its market value at the balance sheet date. In accordance with
IFRS this loss is recognised within equity, specifically within an available for
sale reserve.

As described in the Annual Report and Accounts 2007 NEMI became an associate of
the Group on 20 March 2007 - the date significant influence was obtained. From
this date the investment is classified as an interest in associate and accounted
for in accordance with the equity method of accounting. Accordingly the loss
previously recognised in the available for sale reserve is transferred to the
cost of the investment at this date.

(c) Recognition of financial liabilities at amortised cost

IAS 39 'Financial Instruments: Recognition and Measurement' requires financial
liabilities to be recognised at amortised cost using the effective interest
rate. For the period to 31 December 2006 it was determined that an adjustment of
£201,000 was required to increase the interest expense and related liability
balance associated with the loan from Cambrian Mining Plc in line with that
which would be calculated under the effective interest rate method. For other
periods presented under IFRS no adjustment was required.

(d) Recognition of additional amortisation expense

As a result of the recognition of a deferred tax liability and corresponding
increase in mining properties and mineral rights additional amortisation is
required to be recognised calculated on a units of production basis.

Impact on cash flow statement

As the IFRS adjustments described above had no impact on cash there are no
significant changes to the cash flow statement other than presentational
differences due to compliance with IAS 1 'Presentation of Financial Statements'
and IAS 7 'Cash Flow Statements' and adjustments to the reconciliation of loss
before tax to net cash from operating activities for each period to reflect the
income statement adjustments described above.

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IR SDEFWFSASELD