Acquisition

Alkane Energy PLC
20 August 2003

20 August 2003



                 Alkane Energy plc ('Alkane' or 'the company')



Proposed acquisition of Pro2 Anlagentechnik GmbH ('Pro2') & Admission to trading
   on the Alternative Investment Market and delisting from the Official List.



Summary of the Acquisition



The Directors of Alkane today announce the proposed acquisition of a majority
interest in Pro2 for a total investment of €4.0m (£2.8m).  Pro2 is a specialist
gas processing, manufacturing and production company, which focuses on methane
extraction and utilisation.  Under the terms of the proposal, Alkane will pay
€2.04m to acquire 51% of Pro2's equity and a further €1.96m by way of a loan.



The acquisition is conditional upon shareholder approval at an EGM to be held on
18th September 2003.



The Acquisition



  • The Board believes that the Acquisition will create shareholder value and
    bring forward the company's breakeven date by a number of years.
  • The Board believes that Pro2 will:
      • Introduce new revenue streams for the proposed enlarged group by
        capitalising on German Green Energy Laws.
      • Enable Alkane to produce gas and generate electricity in Germany at
        significant premiums compared to the current UK market.
      • Give access to new markets in areas such as biogas, sewage gas, and
        landfill gas.
      • Enable Alkane's UK business to be revitalised through entry into the
        UK landfill methane market, which benefits from inclusion in the UK
        Government's 'Renewables Obligation'.
  • In its report and accounts for the year ending 31 December 2002, Pro2
    reported a turnover of £12.7m and a profit before taxation of £0.2m.
  • Pro2 employs 63 people and operates principally in Germany, but also
    operates in Belgium, France, Spain, Portugal, and the UK.



Move to trading on the Alternative Investment Market (AIM)



The Directors also announce today the Company's intention to move to AIM
following the EGM.  Alkane feel the move to AIM will give the company added
flexibility and will be a more appropriate environment for a company of Alkane's
size. Commencement of dealing on AIM is expected to occur on 19th September
2003.



Suspension of trading



The Company has today requested that its shares are suspended from trading
pending publication of a circular to shareholders setting out the proposals
described herein. A circular will be posted to shareholders today and it is
expected that trading will recommence at 8:30am on 21 August 2003. This
suspension is necessary as the Acquisition is classified a reverse takeover
under the UKLA Listing Rules.



Commenting on the proposed acquisition and move to AIM, Dr Cameron Davies,
Chairman of Alkane said:



'The successful completion of the acquisition of Pro2 will be a big step towards
profitability for Alkane and continues the strategic refocus of the company.
Pro2 operates in diverse methane markets in Europe, taking advantage of
favourable legislation, particularly in Germany, its principle area of
operation. In combination with Pro2, Alkane will be better able access the UK
landfill methane market, which receives UK legislative support.  We believe this
course will increase shareholder value and provide a route to advanced revenue
streams.'



For further information:


Alkane Energy plc
Dr Cameron Davies, Chairman                                                            Tel: [phone]
David Cross, Chief Executive

Brewin Dolphin Securities
Andrew Emmott                                                                          Tel: [phone]

Buchanan Communications
Judith Parry/Sophie Morton                                                     Tel: [phone] (today)
                                                                                01943 883990 (thereafter)
Ben Willey                                                                             Tel: [phone]





Acquisition of Pro2 Anlagentechnik GmbH

Admission to trading on the Alternative Investment Market and

delisting from the Official List

Interim Results

Notice of Extraordinary General Meeting



Introduction



I am pleased to announce that Alkane Energy plc has today agreed conditionally
to invest €4 million in cash, approximately £2.8 million, to acquire a majority
interest in the German gas processing, manufacturing and production company
Pro2 Anlagentechnik GmbH.  This is the next stage of our revised strategy to
diversify the Company's operations and seek new revenue streams which was
announced in March 2003.  Pro2 is already one of Alkane's partners, along with
A-TEC Anlagentechnik GmbH, in Alkane's first international project, Joarin,
which was announced on 10 March 2003. Upon Completion of the Acquisition, the
Directors anticipate that the break-even point for Alkane will be brought
forward by a number of years.



I am also pleased to announce that the Company has today conditionally entered
into the Option Agreement with A-TEC which gives the Company development rights
over further CMM projects in Germany.



Given the size of the Acquisition in relation to Alkane, which is classified as
a reverse takeover, it requires the approval of Shareholders at the EGM.  If the
Acquisition Resolution is passed by Shareholders it is expected that Completion
will occur on 19 September 2003.  Further details of the Acquisition and
financial information on Pro2 are set out in the sections below and Parts 2 to 6
of this document.



At the same time, the Directors have decided to conditionally apply for
admission of the Ordinary Shares to trading on AIM and to delist from the
Official List.  AIM provides a more flexible and more appropriate environment
for a company of Alkane's size to operate in as a public company and is likely
to allow the Company to reduce the cost of any future transactions.  It is
therefore considered to be in the best interests of the Company to transfer its
quotation to AIM from the Official List. Subject to the Acquisition Resolution
being passed by Shareholders, it is expected that Admission will take place and
that trading in the Ordinary Shares on AIM will commence on 19 September 2003.
If the Acquisition Resolution is not passed, the Company intends to reapply for
its shares to be traded on AIM and it is expected that this would occur later in
2003.



Your Board also announces the Company's interim results for the six months ended
30 June 2003 which are set out in full in Part 4 of this document.



The purpose of this document is therefore to provide you with information on the
Acquisition, announce the Company's intention to move to AIM, present the
Interim Results and to recommend that you vote in favour of the Acquisition
Resolution at the EGM, which is necessary to give effect to the Proposals.



The Company's strategy and background to the Acquisition



The Company's strategy has its foundations in the capture of fugitive methane
emissions.  Methane is a greenhouse gas which when released into the atmosphere
has  a global warming potential which is 23 times higher than CO2 over a 100
year time horizon, consequently its capture is of important in the battle to
arrest climate change, which has its focus through the Kyoto Protocol.  The
capture of fugitive methane emissions is 9 times more effective than wind power
per unit of electricity generated in reducing carbon emission.



The EU and member states within the EU have entered into legislation to
encourage the reduction of carbon emissions.  The Directors believe that Germany
leads the way in Europe, where methane emissions from abandoned and operating
mines, landfill, sewage and biogas have been included in the Renewable Energy
Law, which provides a guaranteed price of £46/MWh for electricity generated by
using methane from these sources.



In the UK the Government has established the Renewables Obligation and included
therein methane from landfill and sewage.  The capture of methane from these
sources and its use to generate electricity thereby achieves income from the
sale of Renewable Obligation Certificates of approximately £48/MWh (Source:
Platts ROC Marker Price Projections, medium build scenario 2004) at current
prices, to the current wholesale price of electricity of about £20/MWh under
NETA. Methane from operating mines has been included in the UK Emissions Trading
Scheme, providing £21 million of additional income for the participants in
respect of carbon mitigation.



Methane from abandoned mines has not been included in the Renewables Obligation
by the UK Government. Although in the Finance Act 2002 electricity generated
from CMM was given exemption from the Climate Change Levy, this has not yet
received EU State Aid clearance. Consequently the electricity generated from the
capture of CMM from abandoned mines in the UK has no assistance and, unlike
other forms of green energy, has to operate unaided in the fiercely competitive
energy market.



The UK energy industry has experienced a severe fall in wholesale electricity
prices which eroded the margins achieved in CMM generation.  In addition, the
Company has learnt many lessons from its early prototype sites which will be
reflected in future developments, and in particular the importance of capturing
gas at a lower but steady rate, which requires the design of sites of a smaller
size than originally anticipated.  Despite existing sites making a cash
contribution to the Company, this combination of factors has rendered the
roll-out strategy envisaged by the Company at the time of Flotation commercially
unviable in the foreseeable electricity price regime.  On 27 March 2003 the
Company therefore announced that developments in the UK had been put on hold and
its cost base was to be reduced. As a result the Company estimates that it will
make cash savings of £900,000 per annum by cutting its workforce from 24 to 11
since March 2003 and through other cost saving measures.

.

Your Board continues to believe that a profitable business can be established in
capturing CMM in the UK, if CMM is included within a green energy scheme such as
the Renewables Obligation. The Board is therefore encouraged that progress is
being made in this regard as evidenced by the announcement of a DTI funded study
to investigate and recommend cost-effective means of controlling CMM emissions.
The study is expected to commence in September 2003 and is scheduled for
completion by the end of the year.



Whilst continuing to lobby the UK government to include CMM within the
Renewables Obligation, your Board has looked to diversify the business strategy
of the Company to focus upon other opportunities which the Board believes will
provide revenue streams to the Company from new but related markets and utilise
its core expertise in CMM such as:



•       emerging opportunities for CMM outside the UK;

•       applying the Company's skills in CMM to other energy sources, such as
landfill methane, which qualifies for the Renewables Obligation in the UK; and
within similar legislation elsewhere in the EU; and

•       the exploitation of the Company's modular containerised extraction
system for use at operating mines.



Your Board believes that this revised strategy, in particular its European
expansion plans, will ultimately create shareholder value at a faster pace than
if the Company operated solely in the UK.



The first step in the implementation of this revised strategy was taken by the
Company on 10 March 2003 when Alkane entered into the Joarin contract with Pro2
and A-TEC for the development of a CMM powered generation facility in Germany.
The advantage to the Company in pursuing this revised strategy is the assistance
afforded by the German Renewable Energy Law, which ensures that CMM sourced
electricity from this facility will have a guaranteed price of £46/MWh.  This
contrasts with a price of around £20/MWh currently available in the UK under
NETA. The Joarin project is, subject to certain conditions being met, supported
by legislative benefits which mitigate a proportion of the costs incurred.



As part of this revised strategy to seek new revenue streams by diversifying its
CMM activities onto the European mainland as quickly and as efficiently as
possible and to investigate the viability of farming other forms of gas
currently included in the Renewables Obligation in the UK such as landfill
methane, your Board has looked at the activities of similar businesses in
Germany.  The successes of Pro2 in developing technologies for the extraction of
gas from various sources including abandoned coal mines, whilst ensuring
profitable revenue streams, makes the acquisition of a majority interest in Pro2
by the Company, in the opinion of the Board, a commercially feasible and an
attractive step in driving forward the Company's revised strategy which the
Board expects to bring the Company to an earlier break-even date.



Information on Pro2



The existing Management Team have many years experience in the industry.  Under
their hands-on management, Pro2 specialises in the production, disposal and
processing of methane and its utilisation to create value.  This is achieved by
manufacturing and supplying a range of technologies and power plants to extract,
farm and/or dispose of gas.  The range of gases that such technologies have been
used to extract include landfill methane, biogas, sewage gas, natural gas and
coal mine methane.



Pro2 employs 63 people and operates principally across Europe, its main market
at present being Germany. It also operates in Belgium,  France, Spain, Portugal
and the UK principally through its subsidiaries and branch network which operate
sales and customer service functions.  The company's headquarters are situated
near Dusseldorf in Germany where its design and manufacturing operations are
based.



Benefits of the Acquisition



The Acquisition of Pro2 will expose Alkane to new growth markets which are
related to the Company's core business.  Pro2 operates in markets largely
created and expanded by government policies and regulations, which are
themselves driven by the issues of environment, health and safety and climate
change.  The Pro2 business is profitable, with a strong and experienced
management team, but the Directors and the Pro2 Management Team believe it now
lacks the capital required to benefit fully from Pro2's potential growth and
profitability.



The Directors believe that there is scope for Pro2 to facilitate the realisation
of Alkane's strategy, particularly through the exploitation of the following
synergies which exist between Alkane and Pro2:



•                     CMM

Pro2 will design, construct, operate and maintain the plant for the additional
CMM projects which Alkane has under option in Germany and in the UK if the
Government supports CMM by including it within a green energy scheme such as the
Renewables Obligation.



•                     UK landfill

Alkane's concept for developing landfill methane projects in the UK mirrors
Pro2's contracting model, therefore Pro2 can supply the plant for any future
projects undertaken by Alkane.

•                     Operating mines

Plant for the extraction of gas at operating mines can be manufactured by Pro2.



The Directors believe that these combined synergies of the Enlarged Group will
provide expertise, entry into new markets and new revenue streams, coupled with
sufficient capital to undertake this strategy



Pro2's activities



Pro2 designs and constructs equipment to capture and utilise methane in four
main product areas:

•                     Gas capture, through extraction systems;

•                     Gas utilisation, through generation and heat;

•                     Gas disposal, through the provision of flaring equipment;
                      and

•                     Gas treatment, involving the cleaning of the gas and the
                      extraction of harmful elements from the gas.



Pro2 supplies compact turnkey power generation units, installed in
sound-insulated containers, which can either be operated as isolated systems or
as standby emergency power supplies. The standardised container design permits
power plants to be replaced within a matter of hours and allows flexibility to
increase capacity by connecting units in series.



Pro2 has expertise in the design and construction of process systems, including
compressor stations and flare systems for the high-temperature combustion of
contaminated gases.  As with the co-generation units, the flare units are
modular and require little time for installation before they are operative.



The principal sources of gas in Pro2's activities are the following:



•                     Biogas and sewage gas



Biogas is formed from the decomposition of organic substances.  The utilisation
of biogas and sewage gas is  an environmentally sound form of generating
electricity and heat and provides a contribution towards the expanding use of
renewable energy resources.  Pro2 designs and builds turnkey solutions in this
field, from gas purification systems through to electricity generation plants .



•                     Landfill gas



Landfill gas is formed through the biodegradation of organic waste.  If released
uncontrolled into the atmosphere, this flammable gas is harmful both to the
environment and the climate.  For the treatment of landfill gas, Pro2 designs
and builds:

-                      gas collecting systems and compressor stations;

-                      flare systems and biofilter plants; and

-                      electricity generation or CHP units.

Only emissions of a certain quality can effectively be used and commercially
transformed into energy.  For the aftercare of landfills, Pro2 has developed gas
and exhaust air purification systems which allow the business to provide
environmentally-sound and efficient landfill gas utilisation or disposal over
the entire life cycle of the landfill site.



•                     CMM



Coal mine gas is methane mixed with nitrogen and carbon dioxide which escapes
from coal mines.  Pro2 offers solutions for gas exploitation as well as the
utilisation of methane from both abandoned and active coal mines for power and
heat generation.  Non-useable gas can be disposed of in an environmentally-sound
manner via Pro2's flare systems.



Pro2 revenue streams



Pro2 has three main income streams:



•                     Plant sales



In the 2002 financial year, Pro2 estimates that the design, regulatory approval,
planning and installation of plant for the treatment of gas, power generation,
and for the co-generation of heat and electricity represented 63% of Pro2's
turnover.  Plant sales values range between €150,000 and €2 million.



Typically these plant sales have the potential for a follow on service contract
in the region of 5-10% per annum of the original sales value.  As plant sales
continue, the installed base grows ensuring future underlying revenue streams.



•                     Service, maintenance and monitoring



Complementing the company's range of products, Pro2 operates an after-sales
customer service package which covers:

-                      Individual maintenance and servicing contracts from
monthly maintenance contracts through to complete operational management; and

-                      Online plant control which allows Pro2 to operate a
remote diagnosis and maintenance of every plant, 24 hours a day, 365 days a
year.



In the 2002 financial year, Pro2 estimates that this represented 9% of Pro2's
turnover.



•                     Contracting



The contracting side of the Pro2 business allows customers to benefit from the
Pro2 products without the requirement for capital expenditure.  This covers a
range of options from hiring out plant for a few months to allow the necessary
preliminary testing on a site, to operating plant on a long term basis to
facilitate the utilisation and disposal of gases.



Profit drivers



The Directors believe that the future growth in the profitability of Pro2 will
be driven principally by three factors:

•                     the EU market for biogas, landfill gas and sewage gas
which is growing rapidly, with forecast capacity estimated to increase from
1,500 MW in 2001 to 4,000 MW in 2010 (source: Frost & Sullivan 2003), allowing
growth opportunities as EU member states increase their efforts to contain and
reduce methane emissions;

•                     changes in the sales mix of Pro2, away from lower margin
plant sales onto higher margin contracting and servicing as referred to above;
and

•                     attaining more favourable purchasing terms, through the
enlargement of its capital base.



Thus far in its development, Pro2 has been financed with limited debt finance
provided by banks and capital provided by the Pro2 Shareholders who are also the
managing directors. The Directors and Pro2's Management Team believe that this
lack of capital is now restricting Pro2's growth and profitability. The €4
million being invested by the Company will be retained in Pro2 where it will be
used primarily to finance Pro2's working capital requirement and future growth.



Competition



Pro2 competes with a number of companies which operate in the same sectors.
However the  Pro2 Management Team consider that the only other company offering
a comparable complete sales and service package for the same range of gases as
Pro2 is Haase Energietechnik AG.



Jenbacher AG and GAS Energietechnologie GmbH operate in the landfill, sewage,
biogas and CMM sectors and produce and operate co-generation plants.  However
customers of both companies need to find local partners to operate the
compressor stations and flare systems required to deal with the lower quality
gas.



Current trading



Pro2's results for the year ended 31 December 2002 are detailed in Part 3 of
this document. Since the year end, Pro2 has continued to perform in line with
the expectations of the Pro2 Management Team, with increased sales and a full
order book.  The business is on course to achieve its internally set sales
growth targets for 2003.



Financial Information



The Acquisition will result in the net assets of Pro2 being consolidated in the
Enlarged Group's results.  The trading record of Pro2 for the 3 years ended 31
December 2003 is summarised below.  The financial information has been extracted
from the Accountants' Report included in Part 3 of this document.  Shareholders
should read the whole of this document and not just rely on the summarised
information below.


                                                      Year ended       Year ended       Year ended
                                                     31 December      31 December      31 December
                                                            2000             2001             2002
                                                            £000             £000             £000

Turnover                                                   6,005            8,739           12,677

Cost of Sales                                            (3,906)          (5,567)          (8,793)

Gross Profit                                               2,099            3,172            3,884

Administrative expenses                                  (2,132)          (2,947)          (3,700)
Other income                                                 178              116              214

Operating profit                                             145              341              398

Interest receivable and similar income                         2                7               11

Interest payable and similar charges                        (82)            (181)            (186)

Profit on ordinary activities before taxation                 65              167              223




Terms of the Acquisition



The principal terms of the Acquisition are documented in the Acquisition
Agreements.



Under the Acquisition Agreements, Alkane is to provide both debt and equity
finance at Completion by advancing €2,040,000 for a 51 per cent interest in the
total issued share capital of Pro2 and €1,960,000 by means of a shareholder loan
to Pro2.  This Investment is to be treated purely as additional funds to be made
available to Pro2 to grow and expand the business and, as such, the Pro2
Shareholders will not receive any proportion of the Investment.



It is the intention of Pro2 and Alkane that the existing Management Team be
retained and granted control over the day to day running and management of Pro2.
Alkane's influence over the activities of Pro2 is provided by, inter alia, its
majority interest in Pro2's voting share capital, provisions in the Pro2
Articles, which for example provide that the Company has the power to appoint a
managing director of Pro2, and the Pro2 Rules of Procedure under which certain
actions require the consent of Alkane at a shareholders' meeting.



The current management of Pro2 are retaining equity in the Company and have each
been given new service contracts with the aim of ensuring each of the existing
Management Team remain motivated and incentivised by the Acquisition.   The Pro2
Directors' Service Agreements provide the following:



(a)           a fixed initial term of three years, followed by rolling twelve
month notice periods;

(b)           a bonus plan based upon the achievement of major annual targets in
Pro2's 5 year plan:  and

(c)           non-compete provisions which  prohibit any member of the
Management Team from being employed by or establishing a business that competes
with Pro2 for the duration of the Pro2 Directors' Service Agreements and for up
to one year after termination.



Further information on the provisions of the Acquisition Agreements and the
terms of the Acquisition are set out in Part 2 of this document.



Option agreement to develop more CMM projects in Germany



The Company will, as part of the Acquisition, enter into the A-TEC Option
Agreement  to potentially develop A-TEC's remaining seven licences for CMM
projects in the Nordrhein-Westfalen region of Germany. The A-TEC Option
Agreement provides the Company with the option, but not the obligation, to
develop each of these projects on substantially the same terms as those
applicable to the Joarin project. Only the options over the first four licences
are legally binding on A-TEC.



These CMM projects in Germany benefit from the favourable terms under the German
Renewable Energy Law with its guaranteed price of £46/MWh.Your Board intends to
utilise the synergies of the Enlarged Group by instructing Pro2 to construct and
operate these plants on its behalf. For these projects your Board looks for a
target payback period of under three years with a target internal rate of return
(IRR) of 38%.



The use of Pro2's modular containerised equipment enables the sunk cost on a
project to be minimised.  The equipment can be sized to the available gas
supply, and any surplus equipment can be used elsewhere as it is suitable for
CMM and landfill projects.



The completion of the A-TEC Option Agreement is conditional upon the
Shareholders passing the Acquisition Resolution.



Current trading of Alkane



The interim results of Alkane for the six months ended 30 June 2003 are set out
in Part 4 of this document.



As Alkane's developments in the UK have been put on hold, there is no longer a
reasonable prospect that the value of the majority of the assets will be
recovered out of short to medium term cash flows. Consequently it has been
necessary to write down the carrying value of these assets. This has resulted in
an exceptional item of £19,321,000 of which £16,926,000 comprises the write down
of the assets portfolio, £2,000,000 has been provided for the costs of
restoration of the fully and partially developed site portfolio, while the
remaining sum accounts for items such as the redundancy package offered to
employees of Alkane as part of the Company's strategy of reducing headcount.



Since 30 June 2003, sales and realised prices have been at a lower level than
in the first half of the year reflecting the seasonal drop in demand and
electricity price tariffs during the summer months.



Prospects of the Enlarged Group



The Directors believe that Alkane's financial and trading prospects for the
current financial year and for the future development of the Enlarged Group fall
broadly into five main areas:



•                     Pro2



For reasons explained earlier in this letter, the Directors believe that Pro2 is
well positioned to take advantage of the growth potential in its chosen market
sector.  It is the intention of the Board that the  enlarged capital base
arising from Alkane's investment will facilitate this growth, where
profitability can increase both through sales volume growth and margin
improvement.  The market growth is underpinned by government policies and
legislation, such as the German Renewable Energy Law.



•                     CMM projects and developments in the UK



The Directors believe that Alkane's  UK CMM business can only be viable if CMM
is included in a green energy scheme such as the Renewables Obligation, which
would ensure a higher price for CMM produced electricity than is presently the
case under NETA. The DTI funded study into CMM mitigation will identify
mechanisms to stimulate capture of CMM emissions, for example through the
commercial utilisation of the methane for electricity production. It will look
at the German Government's support for CMM, which by inclusion in the German
Renewable Energy Law gives a guaranteed price for renewable energy. Alkane,
through its involvement in the trade association ACMMO, expects to participate
in the study through the provision of a supervisory board member and technical
and commercial information to the appointed contractor.  The study is due to be
completed before the end of this calendar year.  If CMM were to be included in
the Renewables Obligation, based on the current ROCs price of £48/MWh, the sales
in respect of existing sites would increase by £3 million per annum.



In addition, the  first sites developed by the Company in the UK have enabled
your Board to learn many lessons.  We have consequently  developed a new design
and operation methodology for implementation at any future sites once the
economic conditions for CMM change. Recently wholesale electricity prices which
were around £17/MWh in March 2003 have shown a marked increase, with the forward
prices for 2006 rising to around £24/MWh. This is excellent news for Alkane as
the Company's results have been affected by the depressed wholesale electricity
market. However, your Board is mindful of the volatile nature of the market and
although encouraged by  the suggested trend in power pricing, remain convinced
that a fully economic UK CMM business will only be developed by the Company if
CMM is included in the UK's Renewables Obligation.



•                     CMM projects in Germany



The Joarin project, the Company's first German CMM project which was announced
on 10 March 2003 is progressing and the Directors estimate that the site will be
operational in the second quarter of 2004.  The opportunity for more CMM
projects in Germany arises from the  A-TEC Option Agreement referred to above
which potentially grants the Enlarged Group access to further sites.



•                     Landfill projects in the UK



The Acquisition will provide Alkane with  opportunity in the medium term to
exploit synergies with Pro2 thereby allowing the Enlarged Group to enter the UK
landfill methane market.  The Directors believe that the landfill market in the
UK is presently  fragmented.  In addition, given the uncertainties of future
electricity prices and ROC values, companies such as Alkane which has the
ability to fund a number of projects from its own resources will have an
advantage over companies which have to rely upon loan financing for developing
sites and exploiting business opportunities .



•                     Containers



As a further aspect of Alkane's diversification, your Board has been
investigating the exploitation of the Company's modular containerised extraction
systems for use in operating mines both inside and outside the UK. This mobile
modular system has benefits for mine operators, particularly overseas should
such operators be seeking to raise safety levels , and where the utilisation of
the extracted methane can be combined with carbon mitigation under the Kyoto
Protocol. The Company has received enquiries from overseas in respect of its
extraction system, however the Board believes that the nature of this business
stream is a long process from enquiry to order and to the eventual delivery of
the extraction system.



EGM



A notice convening an EGM is set out at the end of this document.  The EGM will
be held at the offices of Ashurst Morris Crisp at Broadwalk House, 5 Appold
Street, London EC2A 2HA at 10.30 am on 18 September 2003.  At the EGM the
Acquisition Resolution will be proposed and, in order to be duly passed, will
require 50 per cent. of those persons who, being eligible so to do, vote in
favour in person or by proxy at the EGM.  The Proposals cannot be implemented
unless the Acquisition Resolution is duly passed.



Further information



A circular with the full details of this proposed transaction is being sent out
to shareholders today.



Recommendation



Your Board, which has been so advised by Brewin Dolphin, consider that the terms
of the Acquisition are in the best interests of the Company and of the
Shareholders of the Company as a whole.  In providing advice to the Board,
Brewin Dolphin has taken into account the Directors' commercial assessments.
The Directors unanimously recommend Shareholders  to vote in favour of the
Acquisition Resolution as set out in the notice of EGM at the end of this
document, as they have irrevocably committed to do in respect of their own
beneficial holdings which amount in aggregate to 6,666,000 Ordinary Shares,
representing approximately 7.8 per cent. of the issued ordinary share capital of
the Company at the date of this document.




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