Interim Results

RNS Number : 1194Z

Alkane Energy PLC

16 September 2009

 



16 September 2009

Alkane Energy plc 

('Alkane', 'the Group' or 'the Company')

Unaudited interim results for the half year to 30 June 2009

Alkane Energy plc (AIM: ALK) the profitable alternative energy company that owns and operates power generation plants using coal mine methane as fuel, today announces its unaudited interim results for the six months to 30 June 2009.

Financial Highlights

• Revenue up 9% to £2.85m (2008: 2.60m)

• EBITDA up 26% to £1.40m (2008: £1.10m)

• Strong operating cash flow

• Receipts from sale of Pro2 currently £5.16m

• PBT before exceptional non cash accounting movements relating to the sale of Pro2 was £0.79 million (H1 2008: £0.87 million)

Operational Highlights

• Good progress towards achieving target of 50MW capacity

• Proceeds from sale of Pro2 funding expansion programme

• Development of new natural gas for standby facilities

• New project pipeline progressing well

Commenting on the interim results, Chief Executive Officer, Neil O'Brien, said:

'It has been a very encouraging six months as we remain on track to reach our medium term target of 50MW of installed coal mine methane capacity. Our strong balance sheet, high cash generation and proceeds from the disposal of Pro2 provide a sound base to progress further.'

For more information please contact:

Alkane Energy plc Neil O'Brien, Chief Executive Officer Steve Goalby, Finance Director	020 7796 4133 (today), then 01623 827927 020 7796 4133 (today), then 01623 827927
Altium Capital Limited Adrian Reed - Financial Advisory Chloe Ponsonby - Corporate Broking	0161 831 9133 020 7484 4040
Hudson Sandler Nick Lyon Hugo Jenkins	020 7796 4133

OPERATING AND FINANCIAL REVIEW

Introduction

Alkane is pleased to announce its unaudited interim results for the six months ended 30 June 2009. The first half of 2009 has been a busy and constructive period for the Group. The disposal of our German subsidiary, Pro2, has provided Alkane with the financial resources to accelerate the Group's investment programme in our core Coal Mine Methane ('CMM') business. Alkane's flexible low cost operating model gives us significant competitive advantage over other energy generators and we continue to invest in profitable projects even in these difficult economic times.

The Group's entire minority interest in Pro2 was sold on 1 March 2009. The total receipts are expected to be £6.63 million of which £5.16 million was received in this half year; the balance is due within 18 months on loan repayment schedules and the clearance of an escrow account.  The capital receipts from the disposal and continued strong operating cash flow have allowed us to accelerate the expansion of the Group's operations and £4.76 million has been invested in new projects during the six months to June 2009. This investment programme is a key feature of our strategy as we strive to reach our medium term target of 50MW of installed CMM capacity.

The following table shows our progress towards the 50MW target:

		CATEGORY
	Current installed capacity	Projects being commissioned	Pipeline projects under construction	Total
	MW	MW	MW	MW
Electricity Generation sites	11	6	7.5	24.5
Gas supply sites (equivalent MW)	6	-	0.5	6.5
Total	17	6	8	31

During the first half the output from the Group's UK sites was 39.3GWh (H1 2008: 40.8GWh). Output levels were slightly down due to a drop in production at our Bevercotes site where, as previously announced, lower gas volumes have resulted in the move of some capacity to other operating sites.  Also during the period we withdrew from the Group's only overseas site at Joarin in Germany. Following a reduction in gas flows at the site and due to a lack of scale in Germany the decision was made to redeploy the power generation plant back to the UK where higher rates of return are available.

Financial 

The first half saw revenue increase from £2.60 million (H1: 2008) to £2.85 million this year representing a 9% increase. The Company benefitted from forward electricity contracts entered into in 2008 and achieved a 21% increase in average selling price to £59.5/MWh (H1 2008: £49.3/MWh).  Over the past 18 months market electricity prices have been volatile, and have fallen considerably from the peaks reached in 2008. Unless there is a significant upturn in market prices, our average selling price in 2010 will be lower than this year.  Output in the UK in the period was 39.3GWh (2008: 40.8GWh).  The decision to exit Joarin resulted in a revenue loss of £0.13 million compared to the same period last year. Gas sales in the period were 1.7 million therms (H1 2008: 1.8 million). The average gas selling price moved up by 16% to 29.4p/therm (H1 2008: 25.3p/therm).

The Group adopts a flexible but prudent policy on forward contracting for electricity sales, ensuring that there is an even spread of rolling renewals over any twelve month period to limit Group exposure to individual low price periods. The Group has contracts in place for the next twelve months covering 58% of our current installed capacity at an average price of £48/MWh. Our development and capital expenditure programmes are carefully managed to reflect these external factors.

An important characteristic of the Group is the strong cash flow generated by the Alkane business model, demonstrated by EBITDA from continuing operations for the first half of £1.40 million (H1 2008:£1.10 million). The 2009 figure shows EBITDA from continuing operations running at 49% of revenue (H1 2008: 42%). This cash flow is one of the major sources of finance for our investment programme in new plant in the UK.

Following the disposal of Pro2, there are a number of exceptional, non-cash, accounting movements related to the Group's holding in Pro2 and certain loans made to Pro2 which were sold or rescheduled as part of the disposal process. The profit before tax for the six months to June 2009 before these exceptional items was £0.79 million (H1 2008: £0.87 million). The fall in profit before tax is due to a rescheduling of depreciation charges so that costs relating to major overhauls are now depreciated over a shorter period than the plant itself. Total depreciation in H1 2009 was £0.59 million compared to £0.28 million in H1 2008.

Earnings per share from continuing operations in the first half amounted to 0.45p (H1 2008: 1.08p).  Excluding the impact of the Pro2 exceptional items described above, earnings per share were 0.85p (H1 2008: 0.92p)

As at 30 June 2009, the Group had no net debt and cash balances of £3.51 million, the majority of which has been committed to funding future growth in the Group's CMM portfolio.

Operations 

The UK operations have performed creditably after a difficult start to the year. Output levels in the UK were slightly down due to a drop in gas production at our Bevercotes site where we have reduced capacity to 2.7MW.

The other UK sites have performed well. As previously indicated, the Group withdrew from its one German site, from where the 1.35MW engine has been redeployed for use in the UK. Current installed capacity, as set out above, totals 17MW. 

 

The cash receipts from the Pro2 disposal plus the Group's strong operating cash flow has allowed the Group to push ahead with the rollout programme with £4.76 million invested in projects during the six months to June 2009. The projects currently being commissioned, set out above, refers to the Group's new Bilsthorpe and Shirebrook sites. The new site at Bilsthorpe is currently operating at 3.1MW; maximum capacity at this site is 4.65MW dependent upon future operating performance. It was first drilled in January of this year and started exporting to the electricity network from June. This project was delivered ahead of schedule and on budget and is one of our fastest ever construction phases. Shirebrook has been a further project success. Until recently it had been a 'gas only' site for the Group. After drilling a new access pipe, output has been restored to the site and we have upgraded facilities to operate our own electricity generators.

The new project pipeline, with sites under construction set out above, is progressing extremely well. The Group has drilled and is gas testing at three sites in Yorkshire, Nottinghamshire and Staffordshire. Whilst there is still a large amount of administration and construction work to complete, we are hopeful that all three sites will be exporting electricity within 9 to 18 months.  

The Group's recent excellent performance on new projects shows the strength of our project portfolio. Nonetheless, there are unavoidable uncertainties within the business in respect of land acquisition and planning and also in respect of the level and life span of gas reserves. One example of this is that the Group has yet to find economically viable gas reserves within our South Wales licence area, however work continues to identify commercially viable reserves.  

The Group continues to work on a number of additional projects which will provide us with a portfolio of potential new sites for 2010 and beyond.

Strategy

At the start of 2009, we set ourselves a target of reaching, within the medium term, 50MW of installed CMM capacity. The table above shows that we are already making excellent progress towards this strategic target, with capacity set to rise to 31MW as the projects currently under construction are commissioned. The Group remains committed to delivering on this target from within our current CMM licence portfolio and from the existing resources available to the Group. The Board firmly believe that the first half of 2009 has been a major step forward in delivering on the potential of the Alkane Group.  

Alkane also continues to look at other opportunities to improve the quality of earnings of the Group. Work has started on creating an 8MW portfolio of natural gas fired standby facilities using surplus capacity at Shirebrook and Markham. When available, Alkane will be able to provide these facilities to utilise our valuable grid and generating capacity to provide electricity, generated from mains natural gas, at times of peak demand and associated electricity pricing. The Group has a highly flexible engine fleet and expertise in remote management facilities which enable us to support this new operating model and allow us to extend the life of a site beyond the CMM reserve period.

The Group continues to research other areas of activity for Alkane to deploy our expertise and asset management skills. As stated with our full year results, we are committed to maximising the value of our current CMM operations whilst looking at additional complementary and proven technology areas to expand the Group.

People

As previously announced, Cameron Davies is retiring as an executive director on 31 October 2009. I am pleased to confirm that Cameron has agreed that upon his retirement he will take on the role of non-executive director, thus ensuring that the Group continues to benefit from his knowledge and experience. Also as previously announced, David Oldham is to retire as Technical Director on 31 July 2010. We are pleased to have appointed Neil Shailer to the non-Board role of managing director of the CMM business, and he is taking over the day-to-day operations in an orderly handover from David.

Outlook

2009 is benefiting from stable capacity and strong pricing from forward contracts entered into in 2008, alongside the shift change in the speed of development of the new project pipeline. With new capacity already on line we expect to see a rise in output in the second half. While pricing volatility is likely to lead to lower power prices in 2010, an increase in output would provide an offsetting factor.

Our balance sheet is robust with no net debt and a business model which generates strong operating cash flows. Together with the funds from the disposal of Pro2 this has allowed us to undertake the largest ever investment programme for the Group, the benefit of which we will start to see during the rest of this year and in the years to come.

Subject to any unforeseen operating changes, we remain confident of meeting City expectations for the full year.

John Lander

Chairman

  CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the 6 months ended 30 June 2009

		For the six	For the six	For the year
		months ended	months ended	ended
		30 June	30 June	31 December
		2009	2008	2008
		Unaudited	Unaudited	Audited
	Notes	£'000	£'000	£'000
Revenue		2,845	2,604	5,191
Cost of sales		(952)	(826)	(2,093)
Gross profit		1,893	1,778	3,098
Administrative expenses		(1,142)	(915)	(1,862)
Non-recurring costs	3	-	(72)	(108)
Return on operations		751	791	1,128
Other operating income		54	30	63
Proceeds from surrender of leases		-	-	350
Impairment of gas assets		-	-	(200)
Profit on activities before finance income/(costs)		805	821	1,341
Finance income		65	139	294
Exchange (loss)/gain arising from financing		(365)	145	495
Finance costs		(85)	(87)	(182)
Net finance (costs)/income		(385)	197	607
Profit before tax	4	420	1,018	1,948
Tax (charge)/credit	5	-	(21)	60
Profit for the period from continuing operations		420	997	2,008
Discontinued operations:
Net profit on disposal of associate	6	767	-	-
Share of loss/(profit) of associate		-	(475)	383
Profit for the period attributable to equity holders of the parent		1,187	522	2,391
Other comprehensive income
Exchange differences on translation of foreign operations		-	122	814
Exchange difference on long-term loan		-	109	433
Exchange difference transferred to profit or loss on disposal of foreign operation		(927)	-	-
Total comprehensive income for the period
attributable to equity holders of the parent		260	753	3,638
Earnings per share
From continuing operations:
Basic, for profit for the period attributable to equity holders of the parent	7	0.45p	1.08p	2.17p
Diluted, for profit for the period attributable to equity holders of the parent	7	0.45p	1.07p	2.15p
From continuing and discontinued operations:
Basic, for profit for the period attributable to equity holders of the parent	7	1.28p	0.57p	2.59p
Diluted, for profit for the period attributable to equity holders of the parent	7	1.26p	0.56p	2.56p

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 30 June 2009

		30 June	30 June	31 December
		2009	2008	2008
		Unaudited	Unaudited	Audited
	Notes	£'000	£'000	£'000
NON-CURRENT ASSETS
Property, plant and equipment	8	6,953	5,291	5,932
Gas assets	9	6,566	3,754	4,477
Investments accounted for using the equity method		-	3,495	-
		13,519	12,540	10,409
CURRENT ASSETS
Inventories		188	101	144
Trade and other receivables		3,980	3,019	5,334
Other financial assets		-	350	350
Cash and short-term deposits		3,507	2,133	1,826
		7,675	5,603	7,654
Assets held for sale	6	-	-	3,322
		7,675	5,603	10,976
TOTAL ASSETS		21,194	18,143	21,385
CURRENT LIABILITIES
Trade and other payables		(1,663)	(2,282)	(2,799)
Financial liabilities		(652)	(412)	(402)
Provisions		(17)	(6)	-
		(2,332)	(2,700)	(3,201)
NON-CURRENT LIABILITIES
Financial liabilities		(1,965)	(1,625)	(1,507)
Provisions		(1,346)	(1,459)	(1,399)
		(3,311)	(3,084)	(2,906)
TOTAL LIABILITIES		(5,643)	(5,784)	(6,107)
NET ASSETS		15,551	12,359	15,278
EQUITY
Share capital		464	463	464
Share premium		72	33,318	72
Cumulative translation adjustment		-	235	927
Other reserves		8,544	107	8,531
Retained earnings		6,471	(21,764)	5,284
TOTAL EQUITY		15,551	12,359	15,278

  CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 June 2009

		Attributable to equity holders of the parent
	Issued		Share	Translation	Other	Retained	Total
	capital		premium	of foreign operations	reserves(1)	earnings	equity
	£'000		£'000	£'000	£'000	£'000	£'000
At 1 January 2009	464		72	927	8,531	5,284	15,278
Total comprehensive income and expense for the period	-		-	(927)	-	1,187	260
Share-based payment	-		-	-	13	-	13
At 30 June 2009 (Unaudited)	464		72	-	8,544	6,471	15,551
At 1 January 2008	460		33,259	113	107	(22,395)	11,544
Total comprehensive income and expense for the period	-		-	122	-	631	753
Issue of share capital	3		59	-	-	-	62
At 30 June 2008 (Unaudited)	463		33,318	235	107	(21,764)	12,359
At 1 January 2008	460		33,259	113	107	(22,395)	11,544
Total comprehensive income and expense for the period	-		-	814	-	2,824	3,638
Share-based payment	-		-	-	5	-	5
Cancellation of share premium	-		(33,274)	-	8,419	24,855	-
Issue of share capital	4		87	-	-	-	91
At 31 December 2008 (Audited)	464		72	927	8,531	5,284	15,278

 (1) Other reserves comprise share-based payments of £125,000 (30 June 2008: £107,000; 31 December 2008: £112,000), and a distributable reserve of £8,419,000 (30 June 2008: nil; 31 December 2008: £8,419,000) created following cancellation of the share premium account.

CONSOLIDATED STATEMENT OF CASH FLOWS 

for the six months ended 30 June 2009

		For the six	For the six	For the year
		months ended	months ended	ended
		30 June	30 June	31 December
		2009	2008	2008
		Unaudited	Unaudited	Audited
	Notes	£'000	£'000	£'000
Operating activities
Profit before tax from continuing operations		420	1,018	1,948
Adjustments to reconcile operating profit to net cash flows:
Depreciation and impairment of property, plant and equipment and gas assets		589	281	1,261
Share-based payments expense		13	-	5
Proceeds from surrender of leases		-	-	(350)
Finance income		(65)	(139)	(294)
Finance expense		85	87	182
Movements in provisions		(36)	(57)	(123)
Decrease/(increase) in trade and other receivables		1,271	29	(377)
Increase in inventories		(44)	-	(43)
(Decrease)/increase in trade and other payables		(78)	17	(25)
Income tax refunded		19	9	16
Net cash flows from operating activities		2,174	1,245	2,200
Cash flows from investing activities
Proceeds from sale of investment in associate		3,161	-	-
Proceeds from surrender of leases		-	-	350
Interest received		129	198	401
Dividends received		-	-	182
Purchase of property, plant and equipment		(2,911)	(855)	(1,784)
Purchase of gas assets		(1,845)	(429)	(1,230)
Net cash flows used in investing activities		(1,466)	(1,086)	(2,081)
Cash flows from financing activities
Issue of share capital		-	62	92
Proceeds from sale and finance leaseback		957	402	402
Sale and finance leaseback rentals		(249)	(153)	(355)
Interest paid		(85)	(87)	(182)
Net cash flows from/(used in) financing activities		623	224	(43)
Net increase in cash and cash equivalents		1,331	383	76
Cash and cash equivalents at beginning of period		2,176	2,100	2,100
Cash and cash equivalents at close of period	11	3,507	2,483	2,176

NOTES TO THE ACCOUNTS

1.  CORPORATE INFORMATION

The interim condensed consolidated financial statements of the Group for the six months ended 30 June 2009 were authorised for issue in accordance with a resolution of the directors on 15 September 2009.

Alkane Energy plc is a public limited company incorporated and domiciled in England whose shares are publicly traded. The Company's registered number is 2966946.

The principal activities of the Group are described in Note 4.

2.  BASIS OF PREPARATION AND ACCOUNTING POLICIES

Basis of preparation

The interim condensed financial statements are unaudited and do not constitute statutory financial statements within the meaning of section 435 of the Companies Act 2006.

The comparative figures for the year ended 31 December 2008 were derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. Those accounts received an unqualified audit report which did not contain statements under section 498(2) or (3) (accounting records or returns inadequate, accounts not agreeing with records and returns or failure to obtain necessary information and explanations) of the Companies Act 2006.

The interim condensed financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. This report should be read in conjunction with the Group's Annual Report and Accounts 2008, which have been prepared in accordance with IFRSs as adopted by the European Union.

Accounting policies

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those presented in the Group's Annual Report and Accounts for the year ended 31 December 2008. 

The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. There have been no significant changes in the bases upon which estimates have been determined compared to those applied at 31 December 2008, and no change in estimate has had a material effect on the current period. All significant estimates and judgments have been disclosed in the Group's Annual Report and Accounts for the year ended 31 December 2008. Actual results may differ from these estimates. 

These condensed consolidated interim financial statements have been prepared on the basis of IFRSs in issue that are effective at the Group's annual reporting date as at 31 December 2009.

3.  NON-RECURRING COSTS

      The following table is an analysis of non-recurring costs:

		Six months	Six months	Year
		ended	ended	ended
		30 June	30 June	31 December
		2009	2008	2008
		Unaudited	Unaudited	Audited
		£'000	£'000	£'000
Costs of corporate transactions		-	72	108

4.  SEGMENT INFORMATION

      Operating segments

The directors consider that there is only one operating segment being the extraction of gas from coal measures for power generation and burner tip use. The disclosures for this operating segment have already been given in these financial statements.

      Seasonality of operations

There is no significant seasonal nature to the Group's business of the extraction and use of gas.

5.  TAXATION

There is no tax charge for the current period. The tax charge of £21,000 for the six months ended 30 June 2008 and tax credit of £60,000 for the year ended 31 December 2008 relate to our site in Germany and comprise advance payments to the German tax authorities net of a refund received that relates to prior years.

6.  SALE OF ASSOCIATE

On 2 March 2009 the Group completed the sale of its 38% equity interest in Pro2 Anlagentechnik GmbH for a consideration of €3,600,000. The net profit on disposal is £767,000.

The economic effective date for the sale is 1 January 2009. Calculation of the net profit on disposal is therefore based on the net assets of Pro2 Anlagentechnik GmbH at 31 December 2008.

		£'000
Book value of net assets at 31 December 2008		2,617
Goodwill		705
Assets held for sale at 31 December 2008		3,322
Sale proceeds received		3,212
Loss on disposal before costs		(110)
Cost of disposal		(50)
		(160)
Release of translation reserves from equity		927
Net profit on disposal		767

Alkane has placed €720,000 from the consideration into an escrow account to act as collateral against any warranties or other claims. Subject to no claims, the sum in escrow will be released to Alkane in 2010.

The shareholder loan of €1,960,000 made to Pro2 Anlagentechnik GmbH has been treated as follows:

€1,000,000 was sold at face value on 2 March 2009. The balance is repayable in two instalments, €460,000 on 31 December 2009 and €500,000 on 31 December 2010. Repayment of these instalments is dependent on the continuing success of Pro2 Anlagentechnik GmbH. There are no indications that the instalments will not be recovered when due.

The €2,000,000 outstanding balance of the €3,000,000 working capital loan made to Pro2 in 2005 was repaid in full on 10 February 2009.

7.  EARNINGS PER SHARE

Basic earnings per share amounts are calculated by dividing net profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share amounts are calculated by dividing net profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

The following reflects the income and share data used in the basic and diluted earnings per share computations:

	Six months	Six months	Year ended
	ended 30 June	ended 30 June	31 December
	2009	2008	2008
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Profit for the period from continuing operations	420	997	2,008
Profit attributable to equity holders of the parent	1,187	522	2,391
	No.	No.	No.
Basic weighted average number of ordinary shares	92,883,878	92,146,067	92,488,613
Dilutive effect of share options	952,106	977,006	765,596
Diluted weighted average number of ordinary shares	93,835,984	93,123,073	93,254,209

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements.

8.  PROPERTY, PLANT AND EQUIPMENT

      Acquisitions and disposals

During the six months ended 30 June 2009, the Group acquired assets with a cost of £1,494,000 (six months ended 30 June 2008: £1,542,000; year ended 31 December 2008: £2,801,000). There were no disposals during the period (six months ended 30 June 2008: nil; year ended 31 December 2008: nil).

      Sale and finance leaseback

During the six months ended 30 June 2009, the Group entered into a new lease agreement for two items of plant with a total cost of £969,000.

9.  GAS ASSETS

Acquisitions and disposals

During the six months ended 30 June 2009, the Group acquired assets with a cost of £2,204,000 (six months ended 30 June 2008: £581,000; year ended 31 December 2008: £1,666,000). There were no disposals during the period (six months ended 30 June 2008: nil; year ended 31 December 2008: nil).

10.  CAPITAL COMMITMENTS

At 30 June 2009, the Group had the following capital commitments contracted for but not provided in the financial statements:

Acquisition of property, plant and equipment £1,382,000 (30 June 2008: £133,000; 31 December 2008 £1,142,000);

Acquisition of gas assets £263,000 (30 June 2008: £334,000; 31 December 2008: £284,000).

11.  ADDITIONAL CASH FLOW INFORMATION

Analysis of net funds

	1 January 2009	Cash flow	Exchange rate differences	30 June 2009
	Audited			Unaudited
	£'000	£'000	£'000	£'000
Cash at bank and in hand	1,826	1,727	(46)	3,507
Liquid resources	350	(350)	-	-
Cash and cash equivalents	2,176	1,377	(46)	3,507
Sale and finance leaseback	(1,909)	(753)	45	(2,617)
Net funds	267	624	(1)	890
Securities	305	509	(29)	785
Adjusted net funds*	572	1,133	(30)	1,675

	1 January 2008	Cash flow	Exchange rate differences	30 June 2008
	Audited			Unaudited
	£'000	£'000	£'000	£'000
Cash at bank and in hand	1,750	349	34	2,133
Liquid resources	350	-	-	350
Cash and cash equivalents	2,100	349	34	2,483
Sale and finance leaseback	(1,788)	(249)	-	(2,037)
Net funds	312	100	34	446
Securities	443	(115)	-	328
Adjusted net funds*	755	(15)	34	774

	1 January 2008	Cash flow	Exchange rate differences	31 December 2008
	Audited			Audited
	£'000	£'000	£'000	£'000
Cash at bank and in hand	1,750	76	-	1,826
Liquid resources	350	-	-	350
Cash and cash equivalents	2,100	76	-	2,176
Sale and finance leaseback	(1,788)	(47)	(74)	(1,909)
Net funds	312	29	(74)	267
Securities	443	(138)	-	305
Adjusted net funds*	755	(109)	(74)	572

*This includes the effect of securities paid on finance lease transactions that are closely related to those items.

12.  RELATED PARTY TRANSACTIONS

Transactions entered into and trading balances outstanding with related parties are as follows:

	Six months	Six months	Year ended
	ended 30 June	ended 30 June	31 December
	2009	2008	2008
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
(a) Sales of goods and services
Associate1	-	23	230
A-TEC Anlagentechnik GmbH2	-	141	48
	-	164	278
(b) Purchases of goods and services
Associate1	-	1,351	1,525
A-TEC Anlagentechnik GmbH2	-	97	174
	-	1,448	1,699
(c) Period-end balances arising from sales/purchases of goods/services	30 June 2009	30 June 2008	31 December 2008
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Receivables from related parties:
Associate1	-	23	48
A-TEC Anlagentechnik GmbH2	-	10	14
Payments to related parties:
Associate1	-	1,354	1,532
A-TEC Anlagentechnik GmbH2	-	10	12

Outstanding balances arising from the sale and purchase of goods and services between related parties are unsecured and interest free.

	Six months	Six months	Year ended
	ended 30 June	ended 30 June	31 December
	2009	2008	2008
	Unaudited	Unaudited	Audited
(d) Key management compensation	£'000	£'000	£'000
Salaries and other short-term employee benefits	363	267	562
Long-term benefits	29	23	42
Share-based payments	13	-	5
	405	290	609

(e) Loans to associate	30 June  2009	30 June  2008	31 December 2008
	£'000	£'000	£'000
	Unaudited	Unaudited	Audited
At 1 January	3,847	3,086	3,086
No longer classed as a related party1	(3,847)	-	-
Interest charged	-	85	195
Interest received	-	(143)	(307)
Exchange difference	-	220	873
At period end	-	3,248	3,847

The loans to associate relate to Pro2 Anlagentechnik GmbH which was a 38.01% associate undertaking up to 31 December 2008 (see note 6).

1Up to 31 December 2008 Pro2 Anlagentechnik GmbH was a 38.01% associate company. Effective from 1 January 2009, the investment in Pro2 Anlagentechnik GmbH was sold.

2Achim Wörsdörfer, a director and shareholder of Pro2 Anlagentechnik GmbH, an associate company up to 31 December 2008, is also a director of A-TEC Anlagentechnik GmbH.

13.  GENERAL NOTE

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

 

END

 

 

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