Interim Results

Alkane Energy PLC
21 September 2005


For immediate release                                         21 September 2005 


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

         Unaudited interim results for the half-year ended 30 June 2005

Alkane Energy (AIM: ALK) is an international renewable energy company that
designs, builds, operates and services methane treatment and generation plants.
 These plants greatly reduce emissions of damaging greenhouse gases and play a
vital role in world-wide efforts to reduce global warming.


Financial Highlights


   •Turnover down by 30% to £4,626,000 reflects timing of Pro2 revenue
    recognition
   •Pro2 order book at 92% of annual target at end August
   •EBITDA loss narrowed to £380,000 (First Half 2004: £459,000)
   •Reduction in loss to £875,000 (First Half 2004: loss £896,000)
   •Loss per share reduced to 0.97p (First Half 2004: 1.00p)



Operational Highlights


UK

   •Four new mine gas plants brought into production - two announced today
   •8.1MW of containerised generation now in place
   •Additional mine gas projects actively under investigation
   •Significant rise in energy prices underpins viability of future mine gas
    projects


Germany


   •Record firm orders at Pro2
   •Pro2 revenues continue to be second half weighted

   •Strategic partnerships increasing sales of biogas renewable energy
    systems
   •First orders to new markets in Hungary and Russia

   •Joarin mine gas electricity plant on stream
   •Preparations underway at a second mine gas site

Commenting on the interim results, Chief Executive, Dr Cameron Davies, said:

'In the first half of 2005, Alkane has made substantial progress across the
group, with 5.4MW of generating capacity built and commissioned and a further
2.7MW added since the period end.

'The backdrop of sustained high energy prices has improved the economics of our
business and we are delighted with the progress made at an operational level. A
number of new mine gas projects, previously mothballed, are now being actively
investigated with a view to bringing them into operation as soon as practicable.

'As a specialist in renewable energy technology with a strong and established
base in Europe, Alkane is in an excellent position to benefit from new
opportunities in the mine gas, biogas, biomass and landfill industries.'

Enquiries:
Alkane Energy plc                   Tel: [phone]
Dr Cameron Davies
Buchanan Communications             Tel: [phone] (today)
Eric Burns                          Tel: [phone] (thereafter)
Ben Willey                          Tel: [phone]




Chairman's Statement

Introduction

We have continued to make good progress towards our goal of becoming a
profitable electricity generator and supplier of systems and services for
renewable energy generation in the UK and worldwide.

The Company has broadened the base of its business by increasing its share of
existing markets and diversifying into new markets. As a result of our decision
to keep the full value chain from gas to electricity in-house, we completed two
new containerised mine gas plants in the period, at Bevercotes and Markham. As
announced today, Alkane has added two further sites to its portfolio, at
Mansfield Woodhouse and Whitwell.

In Germany, our turnover and profits continue to rise as the market for biogas
and other renewable energy systems increases. The nature of trading at Pro2, our
German subsidiary, means that revenue is significantly skewed towards the second
half of the year. This year is no exception with Pro2's firm order book for the
full year already at 92% of budget. Our mine gas project at Joarin in
Gelsenkirchen commenced generating renewable electricity in March.

Across Europe, energy prices are rising and the Company is in an excellent
position to take advantage of this improvement. A number of sites both in the UK
and Germany are under consideration for development and have the potential to
significantly increase our renewable generation capacity.

Financial Overview

During the six months ended 30 June 2005, the Company reported a reduction in
the loss for the period to £875,000 (First Half 2004: loss of £896,000).  A
gross profit of £1,858,000 (First Half 2004: £2,578,000) was recorded,
reflecting the lower level of turnover at Pro2. The operating loss for the
period was £1,072,000 (First Half 2004: £952,000) whilst the loss per share was
reduced to 0.97p (First Half 2004: 1.00p).

Cash balances at the period end were £4,051,000 (31 December 2004: £5,716,000)
whilst net funds at the half-year end were £62,000 (31 December 2004:
£2,591,000). Receipts from the leasing of the plant at Joarin, Mansfield
Woodhouse and Whitwell, a total of £1,500,000, will be received in the second
half of the year.

Pro2 recorded turnover for the period of  £3,951,000, reflecting a larger than
usual volume of work in progress as at 30 June, which is not recognised as
turnover until signed off by the customer on completion of commissioning.

The operating loss includes a provision of £160,000 against the investment made
in the Company's biogas project in Northern Ireland, further details of which
are provided below.



Operational Review

United Kingdom

Mine Gas

We are pleased to announce the completion of two new mine gas generation plants.
The plants, at Mansfield Woodhouse, Nottinghamshire and Whitwell, Derbyshire,
have a combined generating capacity of 2.7MW. Added to the 5.4MW output from
existing plants at Markham and Bevercotes, this takes Alkane's generating
capacity in the UK to 8.1MW.

Alkane's CMM plants in the UK are expected to capture approximately 20,000
tonnes of methane in 2005, equal to carbon dioxide savings of around 460,000
tonnes. This is equivalent to the carbon dioxide that would be saved by
operating around 300 one megawatt wind turbines.

Including the two new sites referred to above, four containerised electricity
generation plants have been built and brought into production and this portfolio
is performing in line with expectations. Contracts for electricity sales from
the sites at Mansfield Woodhouse and Whitwell were set in June at prices more
than 75% higher than those in place for Bevercotes and Markham. The timing of
the connection of these sites to the grid means that the full financial benefit
of this will be seen in the second half.

We have commenced a review of our partially developed and undeveloped mine gas
projects following the recent increase in both electricity and gas prices and
investigations are underway to bring forward the development of more sites where
the expected payback period is short.

Biogas

Our proposed biogas project at Fivemiletown, Northern Ireland, which is planned
to produce renewable electricity and organic fertiliser from bio-waste supplied
by local farms and food processors, has encountered difficulties in securing a
site for the plant. In view of this, we believe it prudent to make a provision
for the £160,000 invested in this project and this is reflected in the interim
results. We remain committed to the UK biogas market and discussions about
future projects have started with established waste operators about adding these
plants to existing waste sites, thus obviating the planning risks associated
with greenfield sites.

Germany


Pro2

The demand for containerised renewable energy systems, especially for biogas
projects, continues to grow and Pro2's healthy order book reflects this. New
mine gas cogeneration systems also experienced good demand during the period.

Although Pro2's turnover reduced to £3,951,000, compared with £6,263,000 for the
corresponding period in 2004, firm orders were at 92% of budget by the end of
August, and the business looks well on course to report continued progress at
the full year.

Mine Gas

Alkane's first German mine gas project, Joarin, developed with local partner
ATEC, has been generating electricity since March and is operating
satisfactorily. Under the German Renewable Energy Law 2000, the 1.8MW of
electricity exported from the plant is sold at a guaranteed premium price of
approximately £48/MWh to the local grid on a 20 year contract.

We have the option to participate in seven other similar projects and planning
applications have been submitted for boreholes into old mine workings at
Reinphan, Rialisa and Sabuela.

Mine Safety Systems

We have continued to actively market our containerised mine safety systems in
Russia and India and have welcomed delegations from coal mining companies in
both these nations and also from China. UK Trade and Investment, part of the
DTI, is supporting our marketing campaign and we expect our team to visit India
and China in the near future. A follow up visit to Russia is planned in order to
build on our first sale of a generation plant to that market. All of these
countries are expected to benefit from the Kyoto Clean Development Mechanism by
capturing mine methane and selling the resultant emissions credits.


Prospects


The first half of 2005 saw Alkane make considerable progress at an operational
level as mine gas sites were brought on stream in Germany and the UK. During the
second half, we expect a significant increase in revenues from our UK mine gas
generation assets and the completion of firm orders received by Pro2.

The new mine gas generation schemes are selling electricity at prices up to
three times higher that those prevailing at the low point in 2002 and this
backdrop underpins expected revenue growth at the UK operations. Turnover and
profits at Pro2 are set to make further progress whilst new export markets are
being pursued in Russia, India and China.

Alkane has built firm foundations for a profitable future in the renewable
energy systems and services market.

John Lander
Chairman











GROUP PROFIT AND LOSS ACCOUNT
for the six months ended 30 June 2005

                                       Six months     Six months    Year ended
                                            ended          ended   31 December
                                     30 June 2005   30 June 2004          2004
                                      (Unaudited)    (Unaudited)
                                           £ '000         £ '000        £ '000

TURNOVER                                    4,626          6,604        19,785

Cost of sales                              (2,768)        (4,026)      (14,910)

GROSS PROFIT                                1,858          2,578         4,875

Administrative expenses                    (3,247)        (3,687)       (6,041)
Other operating income                        317            157           413

OPERATING LOSS                             (1,072)          (952)         (753)

Profit on sale of fixed assets                  5              -           371

LOSS ON ORDINARY ACTIVITIES BEFORE
INTEREST                                   (1,067)          (952)         (382)

Interest receivable and similar               128            186           430
income
Interest payable and similar charges         (164)           (98)         (332)

LOSS ON ORDINARY ACTIVITIES BEFORE
TAXATION                                   (1,103)          (864)         (284)

Taxation                                      (66)           (23)         (267)

LOSS ATTRIBUTABLE TO SHAREHOLDERS          (1,169)          (887)         (551)


Minority interests                            294             (9)         (163)

LOSS FOR THE PERIOD                          (875)          (896)         (714)

Loss per ordinary share - basic and
diluted                                     (0.97p)        (1.00p)       (0.80p)


STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

                                      Six months      Six months    Year ended
                                           ended           ended   31 December
                                    30 June 2005    30 June 2004          2004
                                     (Unaudited)     (Unaudited)
                                          £ '000          £ '000        £ '000

Loss for the period                         (875)           (896)         (714)
Exchange rate differences                   (114)           (113)           (2)

TOTAL RECOGNISED GAINS AND LOSSES           (989)         (1,009)         (716)



GROUP BALANCE SHEET
at 30 June 2005

                                           as at          as at         as at
                                    30 June 2005   30 June 2004   31 December
                                     (Unaudited)    (Unaudited)          2004
                                           £'000          £'000         £'000

FIXED ASSETS

Intangible assets                            911            776           873

Tangible assets
Tangible fixed assets - gas
properties                                   242            787           431
Tangible fixed assets - generation         3,542              -         2,243
Tangible fixed assets - other              3,848          3,079         4,293
Investments                                  135            144             -
                                           7,767          4,010         6,967

                                           8,678          4,786         7,840

CURRENT ASSETS
Stock                                      5,547          3,928         1,505
Debtors: amounts falling due
within one year                            3,879          4,090         6,349
Debtors: amounts falling due after
more than one year                           186            295           258
Investments                                   32             29            30
Cash at bank and in hand                   4,051          7,235         5,716

                                          13,695         15,577        13,858

CREDITORS: amounts falling due
within one year                           (8,290)        (6,415)       (6,645)

NET CURRENT ASSETS                         5,405          9,162         7,213

TOTAL ASSETS LESS CURRENT
LIABILITIES                               14,083         13,948        15,053

CREDITORS: amounts falling due
after more than one year                  (2,918)        (1,897)       (2,665)

PROVISIONS FOR LIABILITIES AND
CHARGES                                   (1,986)        (2,000)       (1,998)

MINORITY INTERESTS                          (766)        (1,059)       (1,104)

NET ASSETS                                 8,413          8,992         9,286


CAPITAL AND RESERVES

Called up share capital                      452            449           449
Share premium account                     33,070         32,955        32,956
Profit and loss account                  (25,109)       (24,412)      (24,119)

TOTAL EQUITY SHAREHOLDERS' FUNDS           8,413          8,992         9,286



GROUP STATEMENT OF CASH FLOWS
for the six months ended 30 June 2005

                                       Six months     Six months    Year ended
                                            ended          ended   31 December
                                     30 June 2005   30 June 2004          2004
                                      (Unaudited)    (Unaudited)
                                           £ '000         £ '000        £ '000

NET CASH OUTFLOW FROM OPERATING
ACTIVITIES (note 6)                        (1,045)        (1,114)         (261)

RETURNS ON INVESTMENT AND SERVICING
OF FINANCE

Interest received                             150            152           405
Interest paid                                 (58)           (42)         (121)
Interest element of finance lease
payments                                       (4)           (12)          (93)
                                               88             98           191

TAXATION

Overseas tax paid                             (93)           (19)          (84)

CAPITAL EXPENDITURE AND FINANCIAL

INVESTMENT

Payments to acquire intangible fixed
assets                                         (6)            (7)           (8)
Payments to acquire tangible fixed         (1,700)          (262)       (2,946)
assets
Receipts from the sale of tangible
fixed assets                                    43              5           695

                                           (1,663)          (264)       (2,259)

ACQUISITIONS AND DISPOSALS

Purchase of subsidiary undertaking            (80)          (163)         (162)
Net cash acquired with subsidiary
undertaking                                    13            149           149
                                              (67)           (14)          (13)

NET CASH OUTFLOW BEFORE FINANCING          (2,780)        (1,313)       (2,426)

FINANCING

Increase in long term loans                   910              -             -
Repayment of long term loans                 (144)           (23)          (48)
Capital element of finance lease
rental payments                              (433)          (173)         (573)
Issue of ordinary share capital               118              8             8

DECREASE IN CASH (note 7)                  (2,329)        (1,501)       (3,039)







NOTES TO THE ACCOUNTS

1. BASIS OF PREPARATION

These unaudited interim financial statements, which are for the six months ended
30 June 2005, do not constitute Statutory Accounts within the meaning of Section
240 of the Companies Act 1985. They have been prepared using the accounting
policies set out in the Group's 2004 statutory accounts. The financial
information for the year ended 31 December 2004 is derived from the Group's
statutory accounts for that year which have been delivered to the Registrar of
Companies and on which the Group's auditors gave an unqualified report. The
auditors have not made a report under Section 235 of the Companies Act 1985 on
the statutory accounts for the year ended 31 December 2004. The auditors have
carried out a review of the financial information for the six months ended 30
June 2005.

2. TURNOVER

Turnover is attributable to two continuing activities:

a)       the extraction and sale of gas from coal measures for power generation
and burner tip use; and

b)       the manufacturing, supplying and operating of gas handling and power
generation equipment across a range of gases.

Turnover is derived from three geographical segments. There is no material
difference between turnover analysed by origin and by destination.

Segmental analysis by activity            Extraction of Manufacturing   Group
                                          gas from coal supplying and   total
                                               measures     operating
                                                            equipment    
                                                 £ '000        £ '000   £ '000
Six months ended 30 June 2005 (unaudited)
Turnover                                            675         3,951    4,626
Loss before
tax and
minority
interests                                          (518)         (585)  (1,103)

Six months ended 30 June 2004 (unaudited)
Turnover                                            341         6,263    6,604
(Loss)/profit
before tax and
minority
interests                                          (932)           68     (864)

Year ended 31 December 2004
Turnover                                            699        19,086   19,785
(Loss)/profit
before tax and
minority
interests                                        (1,190)          906     (284)

Geographical segmental         United Kingdom Continental     Rest of    Group
analysis                                           Europe   the World    total
                                       £ '000      £ '000      £ '000   £ '000

Six months ended 30 June 2005
(unaudited)
Turnover                                  444       4,182           -    4,626
(Loss)/profit before
tax and minority
interests                                (740)       (368)          5   (1,103)

Six months ended 30 June 2004
(unaudited)
Turnover                                  341       6,263           -    6,604
(Loss)/profit before
tax and minority
interests                                (932)         68           -     (864)

Year ended 31 December 2004
Turnover                                  707      19,074           4   19,785
(Loss)/profit before
tax and minority
interests                              (1,186)        529         373     (284)

3. ACQUISITION OF PRO2 SERVICES LIMITED  

On 23 March 2005 the Company acquired 100% of the issued share capital of Farley
Energy Engineering Limited (Farley) for a consideration of £70,000 and
associated costs of £10,000. Farley had net liabilities of £9,000 at the date of
acquisition, and provisional goodwill arising on the acquisition is £89,000.
Farley has been renamed Pro2 Services Limited.

4. LOSS PER SHARE

The basic and diluted loss per ordinary share is based on a loss of £875,000
(six months ended 30 June 2004: loss of £896,000; year ended 31 December 2004:
loss of £714,000) on a weighted average of 89,829,303 ordinary shares (six
months ended 30 June 2004: 89,690,633; year ended 31 December 2004: 89,732,717).

5. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS

                                       Six months     Six months    Year ended
                                            ended          ended   31 December
                                     30 June 2005   30 June 2004          2004
                                      (Unaudited)    (Unaudited)
                                           £ '000         £ '000        £ '000

Decrease in cash                           (2,329)        (1,501)       (3,039)
Repayment of long term loans                  144             23            48
Capital element of finance lease
rental payments                               433            173           573


CHANGE IN NET FUNDS ARISING FROM 
CASH FLOWS                                 (1,752)        (1,305)       (2,418)


Increase in long term loan                   (910)             -             -
Finance leases entered into                     -              -        (1,046)
Exchange rate differences                     133            107            (7)

CHANGE IN NET FUNDS                        (2,529)        (1,198)       (3,471)

NET FUNDS AT START OF PERIOD                2,591          6,062         6,062

NET FUNDS AT END OF PERIOD                     62          4,864         2,591

6. RECONCILIATION OF OPERATING LOSS TO NET CASH FLOW FROM OPERATING ACTIVITIES

                                  Six months        Six months      Year ended
                                       ended             ended     31 December
                                30 June 2005      30 June 2004            2004
                                 (Unaudited)       (Unaudited)
                                      £ '000            £ '000          £ '000

Operating loss                        (1,072)             (952)           (753)
Depreciation                             636               450             920
Amortisation                              56                43             109
(Increase)/decrease in stock          (4,109)           (1,560)            987
Decrease/(increase) in debtors         2,316               553          (1,627)
Increase in creditors                  1,141               352             105
Decrease in provisions                   (13)                -              (2)

NET CASH OUTFLOW FROM OPERATING
ACTIVITIES                            (1,045)           (1,114)           (261)



7. ANALYSIS OF NET FUNDS 

                              As at   Cash flow       Exchange          As at
                          1 January                       rate        30 June
                               2005                differences           2005                      
                                                                  (unaudited)
                             £ '000   £ '000            £ '000         £ '000

Cash at bank and in hand      5,716      (1,657)            (8)         4,051
Overdraft                         -        (672)             -           (672)
                              5,716      (2,329)            (8)         3,379

Long term loans                (322)       (766)            15         (1,073)
Finance leases               (2,803)        433            126         (2,244)
                              2,591      (2,662)           133             62

8. GENERAL NOTE

Copies of this interim report have been sent to registered shareholders and
further copies are available from the Company's registered office.


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