Interim Results

RNS Number : 3152S

Alkane Energy PLC

08 September 2010

 



8 September 2010

Alkane Energy plc

Unaudited interim results for the half year to 30 June 2010

Alkane Energy plc ("Alkane", "the Group" or "the Company") (AIM: ALK) the profitable alternative energy company, today announces its unaudited interim results for the six months to 30 June 2010.

Financial Highlights

§ Revenue increased by 7.5% to £3.1m (H1 2009: £2.8m)

§ EBITDA up 5% to £1.5m (H1 2009: £1.4m)

§ Production costs per MWh down 9%

§ Net assets increased to £16.6m (H1 2009: £15.6m)

Operational Highlights

§ Generating output increased by 32% to 52GWh (H1 2009: 39GWh)

§ One new site added in the first half - on track to deliver three new sites this year

§ 33% of expected output for 2011 contracted at c. £48/MWh

§ Good progress made on 2011 project pipeline - 3 projects well advanced

§ Extension of GDF SUEZ tolling contract for a further 18 months

§ First biogas planning application filed - 3 sites under appraisal

§ Expansion finance secured with three year £5.5m facility

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

"We have continued to see strong organic growth in our core coal mine methane business and will add further generation capacity in the second half.  In addition, we are seeing the benefits from our activities in related conventional gas and are making our first initiatives in the biogas sector.  Alkane is well placed in an environment where the pricing outlook appears to be strengthening and there are considerable consolidation opportunities."

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	020 7796 4133

Background Information

Alkane Energy has the UK's leading portfolio of coal mine methane ("CMM") licences, enabling the Company to extract gas from abandoned coal mines.  Alkane started extracting CMM in 1999 with sites at Shirebrook, Steetley and Markham.  Shirebrook and Markham are still operational today, a decade after they were opened.  Shirebrook is still producing CMM and surplus capacity has been deployed to conventional peak load along with capacity at Markham.  

The Group now generates power from 10 small scale (less than 10MW) power plants across the UK and sells this power through the electricity network, using standard modular reciprocating engines to generate the electricity.  The engine units and other plant are designed to be flexible and transportable and this allows additional capacity to be brought onto growing sites and underutilised plant to be moved to new sites to maximise efficiency. 

Alkane's skills and ambitions are not limited to CMM.  The operating model has already been transferred to running peak load plant using conventional gas.  Alkane currently operates 7MW across two sites on conventional gas with our trading partners GDF SUEZ Energy UK. 

The Biogas market also provides a potential new business stream which will require exactly the same power assets and core gas and electricity skills as CMM.

Coal Bed Methane is a longer term opportunity where Alkane has 500km² under licence and contingent resource estimates of circa 350 billion cubic feet. 

Introduction

Alkane has established itself as the UK's largest CMM operator trading from 10 sites during H1 2010.  Output has grown sharply by 32% as the recent record investment in new sites has increased overall installed capacity up to 33MW.  In respect of CMM we are well on our way to our stated target of 50MW. 

The following table shows our progress:

	2007 installed capacity	2008 installed capacity	2009 installed capacity	2010		Total
				Projects completed in H1	Projects  under construction
	MW	MW	MW	MW	MW	MW
CMM Electricity Generation sites	9.5	11	17	3	4.5	24.5
Gas supply sites (equivalent MW)	6	6	6	-	-	6
Conventional gas generation	-	-	7	-	-	7
Total	15.5	17	30	3	4.5	37.5

Financial performance

During the period the Group has generated £1.5m of EBITDA (H1 2009: £1.4m) which represents 48% of revenue (H1 2009: 49%).  This is a very healthy EBITDA ratio in this period of low selling prices and is a key source of funds for our organic investment plans to continue expanding the Group's installed production capacity.

Revenue has increased by 7.5% to £3.1m (H1 2009: £2.8m) reflecting a 32% increase in electricity output, which represents around 85% of revenue, to 52GWh (H1 2009: 39GWh).  Gas output, representing around 15% of turnover, was stable at 1.8m therms (H1 2009: 1.7m therms). 

The significant increase in electricity output offset the expected drop in selling prices being experienced during 2010.  Average selling prices have fallen from £54/MWh in 2009 to £44/MWh so far this year.  At these selling prices, Alkane has remained profitable and cash generative and we have used this cash flow to invest in new sites.

The current forward price curve is showing year on year price increases for the next three years.  We have forward contracted 33% of our 2011 expected output at c. £48/MWh.  This increase in selling price is a very encouraging trend for the Group as we bring on our new capacity.  Alkane has retained its prudent forward selling policy.  We have a regular rolling programme to forward sell on base load contracts.  This policy is designed to give us visibility on cash flow and income over the next 12 months. 

The underlying PBT has fallen marginally to £0.7m (H1 2009: £0.8m).  This results principally from the increased depreciation charges arising from the additional capacity; the investment in new capacity has sharply increased output which has broadly compensated for the lower prices experienced this year.  We have protected profits and cash flow in the period by reducing production costs per MWh to £8.64/MWh (H1 2009 £9.51/MWh).  In addition the 32% increase in output has been achieved with no increase in administrative expenses.

The published PBT figure, which last year included the negative impact of the foreign exchange movements related to the Pro2 disposal, has increased to £0.7m (H1 2009: £0.4m).

Earnings per share from continuing operations in the first half amounted to 0.70p (H1 2009: 0.45p).  Excluding the impact of the exchange movements described above, underlying earnings per share were 0.70p (H1 2009: 0.85p).

Balance sheet and cash flow

Net assets have increased to £16.6m (H1 2009: £15.6m) as we have reinvested the cash generated from operations and the sale of Pro2 Anlagentechnik GmbH.  Our balance sheet is dominated by the fixed asset figure of £20.0m invested in sites, grid connections and engines.  Fixed assets have increased by £6.5m since June 2009 as new sites have been commissioned.  Our modular engines are on average only 3 years old and have the potential for many more years of on-going operation.

Our net debt level is a very modest £2.4m (H1 2009: £0.9m net funds) representing gearing of just 15%.  In July 2010 we entered into a new £5.5m revolving credit facility with Lloyds TSB Bank Plc. The three year committed facility extends to July 2013 and has an interest charge of 2.5% above LIBOR.  Covenants are in place in respect of growth of net worth, EBITDA levels relative to outstanding debt, interest cover, minimum electricity pricing levels, and proportion of output under contract.  This new facility will provide the Group with clarity of funding, lower finance costs and the ability to push ahead with its stated CMM roll out plan. 

Cash flow from operating activities in the period was £1.5m (H1 2009: £2.2m).  We have continued the expansion plans started last year and invested a further £2.2m (H1 2009: £4.8m) so far this year in new capacity. In addition we have received a net payment of £130k as deferred consideration on last year's disposal of Pro2.  We are still owed £864k in respect of this transaction, with an agreed repayment schedule running to 2013.  As previously announced we have fully provided against this debt.

Operational performance

The Alkane model has delivered strong organic growth in H1 2010.  Electricity output has risen by 32% to 52GWh, and so far in 2010 we have opened one new site, our first site in the West Midlands, at the former Florence colliery site near Stoke-on-Trent.

We are on track to add a further two sites to our network during H2 of this year, with building work well advanced at Newmarket, Yorkshire and at a new site in Mansfield, Nottinghamshire.  By the end of 2010 we will have 12 operating sites, a step up in critical mass which will mean we are well placed to increase output in 2011. 

We are progressing well with our drill programme for next year's new capacity. We intend to have three new sites opened during 2011, subject to the drill results, planning and grant of permits.

Strategy

The Alkane strategy starts with our core CMM business.  We have a strong licence position from which we aim to expand to generate 300GWh p.a.  We are embarked on a roll out programme to open new sites and we expect that we will have over 20 sites, with a capacity of approximately 50MW, to reach our output target.  If we achieve this target we will have trebled output from 2009.

Alkane started extracting CMM in 1999 with sites at Shirebrook, Steetley and Markham.  Shirebrook and Markham are still operational today a decade after they were opened.  Shirebrook is still producing CMM and surplus capacity has been deployed to conventional peak load along with capacity at Markham.  We seek to install production capacity on a site to run for 10 years or more.

There is the potential to consolidate the UK CMM sector and Alkane has looked at a number of acquisition opportunities.  With an extensive and attractive portfolio of sites in our own licence area Alkane will only buy assets at a fair price.  We are already preparing our research for the next Licensing Round, which we hope will allow us to extend our portfolio.

Alkane's skills and ambitions are not limited to CMM.  Our operating model has already been transferred to running peak load plant run on conventional gas.  We currently operate 7MW across two sites on conventional gas with our trading partners GDF SUEZ Energy UK.  We are using surplus second hand engine capacity and grid connections at existing sites which allows us to extend asset life.  As previously announced, following the success of the initial year, we have extended the contract for a further 18 months with GDF SUEZ, in respect of a capacity of 10MW and incorporating peak operations.  We expect an approximate doubling of revenues from this source during 2011.

We continue to look for areas where we can extend the use of our core skills in methane gas handling and running small scale power sites.  The biogas market has strong growth potential in which we are starting to make our first initiatives.  We have filed our first planning application for a biogas plant at Whitwell, Derbyshire.  In addition we have been working with our collaboration partner in the municipal waste market, the TEG Group PLC, on bids for three of the regions in the Welsh Assembly waste round.  We also continue to appraise projects in the agricultural biogas sector to work on projects as either an equity partner or energy equipment provider.

Coal Bed Methane is a longer term opportunity where Alkane has 500km² under licence and contingent resource estimates of circa 350 billion cubic feet.  We are monitoring activity in this sector and are preparing a programme to confirm these resource estimates. 

The Alkane team

As ever, the Board would wish credit to be given to all of the Alkane team who have contributed to the progress achieved so far this year.  The in-house team together with our key trading partners are taking on the challenges to deliver growth for Alkane.

The Board would like to highlight the contribution of David Oldham, who retired as Technical Director and stepped down from the Board on 14 July 2010.  David has been instrumental in creating and delivering the Alkane business model.  As a founder of the company David has steered the Group through its early development phase into generation and leaves us at a time when Alkane is producing record output and with a healthy portfolio of new sites to bring on stream.

Outlook

We have a clear strategy in place to continue to build the UK's largest and most profitable coal mine methane company.  The second half will see further generation capacity added to the Group's portfolio within an environment where the pricing outlook appears to be strengthening and we have the funding in place to develop these organic growth opportunities. 

Combined with the other opportunities that the Group is pursuing within both the CMM sector and more widely in conventional gas, biogas, heat and CBM, we look forward to reporting a further six months of strong progress at our preliminary results for the year ended 31 December 2010.

John Lander

Chairman

Neil O'Brien

Chief Executive Officer

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the 6 months ended 30 June 2010

 

		For the six	For the six	For the year
		months ended	months ended	ended
		30 June	30 June	31 December
		2010	2009	2009
		Unaudited	Unaudited	Audited
	Notes	£'000	£'000	£'000
Revenue		3,057	2,845	6,292
Cost of sales		(1,243)	(952)	(2,026)
Gross profit		1,814	1,893	4,266
Administrative expenses		(1,117)	(1,142)	(1,933)
Return on operations before other operating income and charges		697	751	2,333
Other operating income		25	54	152
Impairment of gas assets		-	-	(18)
Profit on activities before finance income/(costs)		722	805	2,467
Finance income		38	65	109
Exchange gain/(loss) arising from financing		1	(365)	(307)
Finance costs		(108)	(85)	(185)
Net finance (costs)/income		(69)	(385)	(383)
Profit before tax		653	420	2,084
Tax charge	4	-	-	(1)
Profit for the period from continuing operations		653	420	2,083
Discontinued operations:
Net profit on disposal of associate	5	-	767	767
Impairment charge	5	-	-	(1,448)
Deferred payments received	5	130	-	-
Profit/(loss) from discontinued operations		130	767	(681)
Profit for the period attributable to equity holders of the parent		783	1,187	1,402
Other comprehensive income
Exchange difference transferred to profit or loss on disposal of foreign operation		-	(927)	(927)
Total comprehensive income for the period attributable
to equity holders of the parent		783	260	475
Earnings per share
From continuing operations:
Basic, for profit for the period attributable to equity holders of the parent	6	0.70p	0.45p	2.24p
Diluted, for profit for the period attributable to equity holders of the parent	6	0.70p	0.45p	2.22p
From continuing and discontinued operations:
Basic, for profit for the period attributable to equity holders of the parent	6	0.84p	1.28p	1.51p
Diluted, for profit for the period attributable to equity holders of the parent	6	0.83p	1.26p	1.49p

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 30 June 2010

		30 June	30 June	31 December
		2010	2009	2009
		Unaudited	Unaudited	Audited
	Notes	£'000	£'000	£'000
NON-CURRENT ASSETS
Property, plant and equipment	7	9,776	6,953	9,355
Gas assets	8	10,202	6,566	8,937
Buildings	9	30	-	-
		20,008	13,519	18,292
CURRENT ASSETS
Inventories		249	188	223
Trade and other receivables		1,491	3,980	1,450
Cash and cash equivalents		881	3,507	904
		2,621	7,675	2,577
TOTAL ASSETS		22,629	21,194	20,869
CURRENT LIABILITIES
Trade and other payables		(1,272)	(1,663)	(1,019)
Financial liabilities		(856)	(652)	(665)
Provisions		(7)	(17)	(13)
		(2,135)	(2,332)	(1,697)
NON-CURRENT LIABILITIES
Financial liabilities		(2,411)	(1,965)	(2,045)
Provisions		(1,482)	(1,346)	(1,348)
		(3,893)	(3,311)	(3,393)
TOTAL LIABILITIES		(6,028)	(5,643)	(5,090)
NET ASSETS		16,601	15,551	15,779
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT
Share capital		465	464	464
Share premium		96	72	72
Other reserves		8,571	8,544	8,557
Retained earnings		7,469	6,471	6,686
TOTAL EQUITY		16,601	15,551	15,779

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 June 2010

		Attributable to equity holders of the parent
	Issued		Share	Translation	Other	Retained	Total
	Capital		premium	of foreign	reserves(1)	earnings	equity
				operations
	£'000		£'000	£'000	£'000	£'000	£'000
At 1 January 2010	464		72	-	8,557	6,686	15,779
Profit for the period	-		-	-	-	783	783
Total comprehensive income and expense for the period	-		-	-	-	783	783
Issue of share capital	1		24	-	-	-	25
Share-based payment	-		-	-	14	-	14
At 30 June 2010 (Unaudited)	465		96	-	8,571	7,469	16,601
At 1 January 2009	464		72	927	8,531	5,284	15,278
Profit for the period	-		-	-	-	1,187	1,187
Other comprehensive income	-		-	(927)	-	-	(927)
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 2009	464		72	927	8,531	5,284	15,278
Profit for the period	-		-	-	-	1,402	1,402
Other comprehensive income	-		-	(927)	-	-	(927)
Total comprehensive income and expense for the period	-		-	(927)	-	1,402	475
Share-based payment	-		-	-	26	-	26
At 31 December 2009 (Audited)	464		72	-	8,557	6,686	15,779

 

 ⁽¹⁾ Other reserves comprise share-based payments of £152,000 (30 June 2009: £125,000; 31 December 2009: £138,000) and a

distributable reserve of £8,419,000 (30 June and 31 December 2009: £8,419,000) created following cancellation of the share premium

account.

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

for the six months ended 30 June 2010

		For the six	For the six	For the year
		months ended	months ended	ended
		30 June	30 June	31 December
		2010	2009	2009
		Unaudited	Unaudited	Audited
	Notes	£'000	£'000	£'000
Operating activities
Profit before tax from continuing operations		653	420	2,084
Adjustments to reconcile operating profit to net cash flows:
Depreciation and impairment of property, plant and equipment and gas assets		730	589	1,225
Share-based payments expense		14	13	26
Finance income		(38)	(65)	(109)
Finance expense		108	85	185
Movements in provisions		128	(36)	(38)
(Increase)/decrease in trade and other receivables		(40)	1,271	2,235
Increase in inventories		(26)	(44)	(79)
Decrease in trade and other payables		(29)	(78)	(214)
Income tax (paid)/refunded		(1)	19	132
Net cash flows from operating activities		1,499	2,174	5,447
Cash flows from investing activities
Proceeds from sale of investment in associate		130	3,161	3,162
Interest received		39	129	176
Purchase of property, plant and equipment		(761)	(2,911)	(5,709)
Purchase of gas assets		(1,374)	(1,845)	(4,964)
Purchase of buildings		(30)	-	-
Net cash flows used in investing activities		(1,996)	(1,466)	(7,335)
Cash flows from financing activities
Issue of share capital		25	-	-
Proceeds from sale and finance leaseback		1,074	957	1,417
Sale and finance leaseback rentals		(517)	(249)	(616)
Interest paid		(108)	(85)	(185)
Net cash flows from financing activities		474	623	616
Net (decrease)/increase in cash and cash equivalents		(23)	1,331	(1,272)
Cash and cash equivalents at beginning of period		904	2,176	2,176
Cash and cash equivalents at close of period	12	881	3,507	904

NOTES TO THE ACCOUNTS

1.     CORPORATE INFORMATION

The interim condensed consolidated financial statements of the Group for the six months ended 30 June 2010 were authorised for issue in accordance with a resolution of the directors on 7 September 2010.

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 3.

2.     BASIS OF PREPARATION AND ACCOUNTING POLICIES

Basisof 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 2009 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 2009, 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 2009.

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 2009, 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 2009.  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 2010.

3.     SEGMENT INFORMATION

Operating segments

The directors consider that there are two operating segments:

• The extraction of gas from coal measures for power generation and burner tip use;
• The development and operation of Biogas projects.         

There is currently no revenue from the Biogas activity, which is in the early stages of development, and the segment assets are less than 10% of the Group total. The business segment is therefore not separately disclosed, as permitted under IFRS8, Operating Segments.

Seasonality of operations

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

4.     TAXATION

There is no tax charge for the current period (6 months ended 30 June 2009: nil). The tax charge of £1,000 for the year ended 31 December 2009 relates to interest earned on securities held in Germany.

5.     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 (£3,212,000).  The €2,000,000 (£1,739,000) outstanding balance of the €3,000,000 (£2,771,000) working capital loan made to Pro2 in 2005 was repaid in full on 10 February 2009.

Profit on Disposal

The net profit on disposal was £767,000.  The economic effective date for the sale was 1 January 2009.  Calculation of the net profit on disposal was therefore based on the net assets of Pro2 Anlagentechnik GmbH at 31 December 2008.

	Equity	Loans	Total
	£'000	£'000	£'000
Book value of net assets at 31 December 2008	2,617	-	2,617
Goodwill	705	-	705
Assets held for sale at 31 December 2008	3,322	-	3,322
Shareholder loans	-	1,873	1,873
	3,322	1,873	5,195
Sale proceeds received	2,570	956	3,526
Exchange rate movement	2	64	66
Deferred amounts	640	853	1,493
Loss on disposal before costs	(110)	-	(110)
Cost of disposal	(50)	-	(50)
	(160)	-	(160)
Release of translation reserves from equity	927	-	927
Net profit on disposal	767	-	767

Alkane placed £640,000 from the consideration into an escrow account to act as collateral against any warranties or other claims. Of the shareholder loan of £1,873,000 made to Pro2 Anlagentechnik GmbH, £956,000 was sold at face value on 2 March 2009. The balance was due to be repaid in instalments: £45,000 was received on 5 January 2010.

Impairment

Pro2's trading has been impacted by the economic recession as a result of which there was a fundamental uncertainty at 31 December 2009 as to the recovery of the balance of the deferred amounts of £1,493,000. An impairment charge was therefore taken in the year ended 31 December 2009 against that amount, less the £45,000 that had been received on 5 January 2010.

Events since 31 December 2009

During the six months to 30 June 2010 the Company received £45,000 in respect of the outstanding loan; this payment represented the unimpaired balance at 31 December 2009.  In addition the Company received £161,000 in respect of the impaired amount.  After legal and other directly related costs of £31,000 the net deferred amount received in the six months to 30 June 2010 and credited to the Statement of Comprehensive Income is £130,000.  A commercial agreement was reached with Deutsche KWK GmbH, the parent company of Pro2, under which £346,000 of the funds held in escrow were returned to them as a reduction in the selling price of the equity.  After exchange rate differences of £77,000, the balance outstanding at 30 June 2010 in respect of the transaction is £864,000 with an agreed repayment schedule running to 2013.  This balance is fully impaired. It represents loans made to Deutsche KWK GmbH, and includes the outstanding balance of £745,000 in respect of a shareholder loan originally made to Pro2, the liability for which was transferred to Deutsche KWK GmbH during the period. 

6.     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
	2010		2009		2009
	Unaudited		Unaudited		Audited
	£'000		£'000		£'000
Profit for the period from continuing operations	653		420		2,083
Profit attributable to equity holders of the parent	783		1,187		1,402
	No.		No.		No.
Basic weighted average number of ordinary shares	93,024,209		92,883,878		92,883,878
Dilutive effect of share options	790,701		952,106		1,134,040
Diluted weighted average number of ordinary shares	93,814,910		93,835,984		94,017,918

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.

7.     PROPERTY, PLANT AND EQUIPMENT

Acquisitions and disposals

During the six months ended 30 June 2010, the Group acquired assets with a cost of £978,000 (six months ended 30 June 2009: £1,494,000; year ended 31 December 2009 £4,386,000). There were no disposals during the period (30 June and 31 December 2009: nil).

Sale and finance leaseback

During the six months ended 30 June 2010, the Group entered into two new lease agreements for two items of plant with a total cost of £1,030,000.

8.     GAS ASSETS

Acquisitions and disposals

During the six months ended 30 June 2010, the Group acquired assets with a cost of £1,439,000   (six months ended 30 June 2009: £2,204,000; year ended 31 December 2009: £4,722,000). There were no disposals during the period (30 June and 31 December 2009: nil).

9.     BUILDINGS

Acquisitions and disposals

During the six months ended 30 June 2010, the Group acquired assets with a cost of £30,000   (six months ended 30 June 2009: nil; year ended 31 December 2009: nil). There were no disposals during the period (30 June and 31 December 2009: nil).

10.  CAPITAL COMMITMENTS

At 30 June 2010, the Group had the following capital commitments contracted for but not provided in the financial statements:

Acquisition of property, plant and equipment £539,000 (30 June 2009: £1,382,000; 31 December 2009 £71,000);

Acquisition of gas assets £210,000 (30 June 2009: £263,000; 31 December 2009: £443,000).

11.  SUBSEQUENT EVENTS

To support the planned expansion of the Group's core CMM business, on 6 July 2010 the Company entered into a £5.5 million Revolving Credit Facility.  The three year committed facility extends to July 2013 and has an interest charge of 2.5% above LIBOR.  Covenants are in place in respect of growth of net worth, EBITDA levels relative to outstanding debt, interest cover, minimum electricity pricing levels and proportion of electricity output under contract.

12.  ADDITIONAL CASH FLOW INFORMATION

Analysis of net funds

	1 January 2010	Cash flow	Other non-cash movements	Exchange rate differences	30 June 2010
	Audited				Unaudited
	£'000	£'000	£'000	£'000	£'000
sh at bank and in hand	904	(23)	-	-	881
Sale and finance leaseback	(2,710)	(579)	-	22	(3,267)
Net debt	(1,806)	(602)	-	22	(2,386)
Securities	188	40	-	-	228
Adjusted net debt*	(1,618)	(562)	-	22	(2,158)
	1 January 2009	Cash flow	Other non-cash movements	Exchange rate differences	30 June 2009
	Audited				Unaudited
	£'000	£'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 2009	Cash flow	Other non-cash movements	Exchange rate differences	31 December 2009
	Audited				Audited
	£'000	£'000	£'000	£'000	£'000
Cash at bank and in hand	1,826	(922)	-	-	904
Liquid resources	350	(350)	-	-	-
Cash and cash equivalents	2,176	(1,272)	-	-	904
Sale and finance leaseback	(1,909)	(831)	-	30	(2,710)
Net funds	267	(2,103)	-	30	(1,806)
Securities	305	503	(620)	-	188
Adjusted net funds*	572	(1600)	(620)	30	(1,618)

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

13.  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
	2010		2009		2009
	Unaudited		Unaudited		Audited
(a) Key management compensation	£'000		£'000		£'000
Salaries and other short-term employee benefits	307		363		695
Long-term benefits	24		29		55
Share-based payments	13		13		26
	344		405		776

(b) Loans to associate	30 June 2010		30 June 2009		31 December 2009
	£'000		£'000		£'000
	Unaudited		Unaudited		Audited
At 1 January	-		3,847		3,847
No longer classed as a related party	-		(3,847)		(3,847)
At period end	-		-		-

The loans to associate relate to Pro2 Anlagentechnik GmbH which was a 38.01% associate undertaking up to 31 December 2008 (see note 5). Effective from 1 January 2009, the investment in Pro2 Anlagentechnik GmbH was sold.

14.  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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