Interim Results
Alkane Energy PLC
19 September 2007
Immediate Release 19 September 2007
Alkane Energy plc ('Alkane' or 'the Company')
Unaudited interim results for the half-year ended 30 June 2007
Alkane Energy plc (AIM:ALK) the international renewable energy company that
designs, builds, operates and services methane treatment and electricity
generation plants. These plants greatly reduce emissions of damaging greenhouse
gases and help in global efforts to slow climate change.
Financial Highlights
•Profit after tax £310,000 (2006 H1: loss after tax £484,000)
•Earnings per share up to 0.34p (2006 H1: loss per share 0.53p)
•Turnover up 29.6% (excluding Pro2) £2,359,000 (2006 H1: £1,820,000)
•Pro2 now an associate company (2006 H1 Alkane turnover incl. Pro2
£8,435,000)
•Cash and cash equivalents £1,446,000 (2006 H1: £843,000)
•Net debt position of £491,000 (30 June 2006: £2,867,000)
Operational Highlights
United Kingdom - Alkane Energy UK Limited
•Turnover in first half £2,359,000 (2006 H1: £1,820,000)
•Record operating profit £513,000 (2006 H1: £76,000)
•17 MW of power generation and gas supply plants operating
•39% increase in energy output to 39 million kWh (2006 H1: 28 million kWh)
•Equivalent of 6MW of direct gas sales to customers
•Share of loss of associate Pro2, £34,000
German Associate - Pro2 Anlagentechnik GmbH
•Turnover up to £7,924,000 (2006 H1: £6,696,000)
• 2007 order book at record high
• New international renewable energy markets opening up
•Additional bank finance under negotiation
Dr Cameron Davies, Chief Executive, commenting on the interim results, said:
'Alkane made a record operating profit of £513,000 in the first half of 2007
with the UK power generation and gas sales business performing well. Our
existing mine gas plants generated the equivalent of 39 million kWh of
electricity in the first half of 2007, considerably higher than the 28 million
kWh in the first half of 2006. A full review of the mine gas potential of our
petroleum licence portfolio has identified a five year pipeline of generation
projects for development. Pro2 also improved its performance and came close to
break even in the first six months. Although a number of one off items have held
back profits in the first half, the background of robust electricity prices and
a strong portfolio performance give us confidence to push ahead with our
development plans.'
Enquiries:
Alkane Energy plc Tel: 01623 827927
Cameron Davies - Chief Executive Officer
Steve Goalby - Finance Director
Buchanan Communications Tel: 020 7466 5000
Ben Willey
Nicholas Melson
Miranda Higham
Brewin Dolphin Securities Tel: 0113 241 0136
Andrew Emmott
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report that Alkane was profitable during the first half of 2007
as a result of a good contribution from the UK business and a near break even
position at Pro2 Anlagentechnik GmbH (Pro2), which is now an associate company
in which Alkane holds a 38% interest. The UK business contributed a record
operating profit of £513,000. Our share of Pro2's much reduced loss was £34,000
leading to an overall profit of £310,000 compared with a loss of £484,000 in the
first half of 2006.
The increase in UK revenue and operating profit was principally due to the
addition of new plants to our portfolio, high average contract electricity
prices and high gas prices. Our portfolio of electricity contracts provides
visibility at attractive commercial prices into 2009 giving us continued good
returns on our mine gas projects. Forward market contracts indicate that
electricity prices will continue to rise gently in the medium term.
The Company generated a record 39 million kWh (kilowatt hours) of climate change
levy exempt electricity during the period compared with 28 million kWh in the
same period in 2006. An independent study of our licence areas has identified a
pipeline of more than 20 sites with potential for electricity generation and gas
supply plants subject to the results of drilling, connections and consents. We
are planning a programme to exploit this potential as quickly as possible.
Financial Overview
These results are the first to be produced under International Financial
Reporting Standards (IFRS). The comparative results for the six months to 30
June 2006 have been restated to IFRS, the net effect on earnings being a
reduction in the loss attributable to equity holders from £520,000 to £484,000.
The results are also the first to be published following the investment by new
shareholders of €1.4 million in the equity of Pro2 announced on 12 July 2007.
The Company's holding in Pro2 has reduced from 51% to 38% as a result of this
transaction, which was effective on 1 January 2007. Accordingly, Pro2, is
treated for reporting purposes as an associated company of Alkane Energy plc
rather than as a subsidiary from that date, and in these unaudited interim
results Alkane has reported its share of Pro2's results as one line in the
income statement, rather than consolidating turnover and costs by individual
category. The reduction in the Company's stake in Pro2 Anlagentechnik GmbH has
led to a deemed partial disposal, with an accounting loss of £120,000.
The comparisons of the numbers for the six months ended 30 June 2007,
particularly those for turnover, gross profit and operating profit, with the
same period last year are significantly affected by the change of status of Pro2
from subsidiary to associate. In order to facilitate comparison, the numbers for
H1 2006 are shown both with the Pro2 contribution excluded and as reported, and
the commentary refers first to the UK business, followed by a separate
commentary on the Pro2 business.
Alkane recorded turnover of £2,359,000 (2006 H1: excluding Pro2 £1,820,000; as
reported £8,435,000). The increase reflects a higher volume of gas and
electricity sales, due to the contribution of the new sites completed during
last year, with electricity sale prices averaging £44/MWh during the period
(2006 H1: £45/MWh). As a result of this growth, gross profit increased to
£1,549,000 (2006 H1: excluding Pro2 £886,000; as reported £2,558,000).
Operating profit increased significantly to £513,000 (2006 H1: excluding Pro2
£76,000; as reported, a loss of £1,105,000). The overall profit attributable to
equity holders was £310,000, (2006 H1: a loss of £484,000) whilst earnings per
share were 0.34p (2006 H1: loss per share of 0.53p).
As well as the bigger contribution from operating sites there are three
non-recurring items that affect operating profit. As announced on 21 March 2007
a licence, covering a flooded coal mine, was transferred to a coal bed methane
operator for £185,000; the external costs to date associated with the conversion
to IFRS are £60,000; and the Company incurred costs of £221,000 in respect of an
aborted corporate transaction.
Two further non-recurring items were the impairment of the balance of the
goodwill that was capitalised when the Company acquired Pro2 Services Limited in
March 2005 (£66,000) and a loss on the deemed disposal of Pro2 (£120,000). The
Company's share (38%) of the loss of Pro2 is £34,000. This is a significant
improvement on the results from Pro2 in H1 2006, a loss of £693,000. The
improvement is mainly due to increased turnover of £7,924,000 (H1 2006:
£6,696,000) and increased margins, which led to an operating profit of £93,000
(H1 2006: loss of £1,183,000). Pro2's renewable energy business is biased
towards the second half, and as in previous years it is expected that Pro2 will
record an overall profit at the year-end.
Pro2 Services Limited was acquired in order to provide in-house operating and
maintenance services, and to assist in the promotion of the German Pro2 business
in the UK. It also has a small business of servicing customers in the landfill
industry. This latter business has not met expectations and it was therefore
appropriate to write off £66,000, the balance of goodwill.
Net debt at 30 June 2007 stood at £491,000 (30 June 2006: excluding Pro2 net
funds of £171,000, as reported net debt of £2,867,000) whilst the balance of
cash and cash equivalents was £1,446,000 (30 June 2006: excluding Pro2
£1,291,000, as reported £843,000). Net cash inflows from operating activities
were £193,000 (2006 H1: excluding Pro2, £31,000, as reported outflows of
£1,826,000). The principal use of cash was capital expenditure on the addition
of a generator and preparatory work in respect of two new sites.
Mine Gas Operations
Alkane's plants generated 39 million kWh of climate change levy exempt
electricity during the period compared with 28 million kWh of electricity during
2006 H1 and project economics remain robust. The plants have operated at high
availability and our own service team is gradually taking on more of the routine
servicing operations from external contractors.
At Alkane UK's methane plant in Germany, the volumes and purity have been lower
than predicted at the Joarin mine gas plant, however it is now operating
steadily at a reduced rate with a single generation system. A technical study
has commenced into increasing the purity of the methane at Joarin along with
another study to verify past emissions savings for trading in the international
voluntary carbon market. The other container previously installed at Joarin has
been relocated to Warsop in the UK and is operating successfully.
We have applied for planning consent for additional 1.35MW generators at our
existing plants at Bevercotes and Warsop but the slow planning process has
delayed these additions probably until Q4 2007 and Q1 2008 respectively.
Applications to drill the first new mine gas appraisal boreholes have also been
made and detailed documentation is being prepared for submission to the local
authorities and DBERR (formerly DTI).
A 5-year generation project pipeline has been identified following an evaluation
of gas reserves by independent consultants at partially developed and
undeveloped sites within our licence portfolio. The study concluded that there
are more than 20 sites with potential for mine gas generation and gas supply
plants, subject to the results of drilling, grid connections and planning.
The application for planning permission for a pilot biodiesel generation plant
at Markham was turned down on amenity grounds but we are investigating the other
potential green energy solutions to use this and our other valuable unused grid
connections.
Pro2 Anlagentechnik GmbH
The confidence shown by the highly respected new investors and the proceeds of
the equity investment are helping Pro2 to source increased funding for working
capital and project finance. The first agreement has been reached to provide an
increased overdraft facility from a new bank. Negotiations are expected to be
completed soon on loan, mezzanine and project finance.
In the first half of 2007, Pro2's turnover increased to £7,924,000 from
£6,696,000 as a result of strong demand for biogas-fuelled renewable electricity
plants in Germany and new orders from the rapidly expanding French landfill and
biogas markets. The company made a small net loss of £89,000 compared with a
loss of £1,361,000 in 2006. The firm order book for 2007 is at a record high and
the outlook for 2008 is for continued growth. The board of Alkane and the new
Pro2 supervisory board believe that a well-funded Pro2 will be able to continue
to grow and also significantly improve its profitability.
Carbon Emissions Trading
We have initiated a study by Dutch emissions trading company Carbon-TF B.V. to
verify our current and historic emissions reductions. TUV Nord, the German world
leader in emissions measurement and accredited by the UNFCCC (United Nations
Framework Convention on Climate Change), has started the verification process.
The objective is to verify all or part of Alkane's last 7 years' emissions
savings, which exceed 2 million tonnes of carbon dioxide equivalent. If they are
verified then Carbon-TF will trade these Verified Emissions Reductions (VERs) on
Alkane's behalf in the voluntary international carbon market. VERs are actual
carbon emissions reductions created by the capture of methane rather than
offsets provided by tree planting or carbon sinks.
Outlook
Alkane has again made good progress during the first half, with an increase in
turnover in the UK and an increased profit as a result of good performance here,
and a much improved performance from Pro2. Looking ahead, the second half
weighting is less pronounced than it has been in the past and we are currently
trading in line with market expectations.
Commercially attractive electricity prices for our current projects are now tied
in with contracts giving visibility on operating revenues up to Summer 2009 and
as our pipeline of potential projects is developed the business will continue to
grow.
I consider that the future of the Company is secure and planning is under way
for a smooth succession to the next generation of managers. Finally, I would
like to welcome our new non-executive board member, Julia Henderson, who has
already made a valuable contribution to our discussions.
John Lander
Chairman
GROUP INCOME STATEMENT
for the six months ended 30 June 2007
Six months Six months
ended ended
30 June 2007 30 June 2006
(Unaudited) (Unaudited)
£ '000 £ '000
REVENUE 2,359 8,435
Cost of sales (810) (5,877)
-------- --------
GROSS PROFIT 1,549 2,558
Administrative expenses (1,279) (3,830)
Other operating income 58 167
Profit on sale of licence 185 -
-------- --------
OPERATING PROFIT/LOSS 513 (1,105)
Finance income 131 65
Finance costs (87) (214)
-------- --------
NET FINANCE INCOME/(COSTS) 44 (149)
IMPAIRMENT OF GOODWILL (note 7) (66) -
LOSS ON DEEMED DISPOSAL (note 5) (120) -
SHARE OF LOSS OF ASSOCIATE (34) -
-------- --------
PROFIT/(LOSS) BEFORE TAX 337 (1,254)
Tax (27) 102
-------- --------
PROFIT/(LOSS) FOR THE PERIOD 310 (1,152)
======== ========
PROFIT/(LOSS) FOR THE PERIOD ATTRIBUTABLE TO:
Equity holders of the parent 310 (484)
Minority interest - (668)
-------- --------
310 (1,152)
======== ========
Earnings/(loss) per share
Basic, for profit/(loss) for the period
attributable to equity holders of the parent 0.34p (0.53p)
Diluted, for profit/(loss) for the period
attributable to equity holders of the parent 0.33p (0.53p)
The earnings/(loss) per ordinary share calculation
represents total and continuing results
GROUP BALANCE SHEET
at 30 June 2007
as at as at as at
30 June 2007 30 June 2006 31 December 2006
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
NON-CURRENT ASSETS
Intangible assets - 790 774
Property, plant and equipment 3,334 5,939 6,443
Gas assets 3,352 2,898 3,374
Investments accounted for using
the equity method 3,070 - -
Other investments - - 3
-------- -------- ---------
9,756 9,627 10,594
-------- -------- ---------
CURRENT ASSETS
Inventories 78 7,020 6,631
Trade and other receivables 3,656 5,797 7,768
Other financial assets 350 505 512
Cash and short-term deposits 1,096 1,071 946
-------- -------- ---------
5,180 14,393 15,857
-------- -------- ---------
TOTAL ASSETS 14,936 24,020 26,451
-------- -------- ---------
CURRENT LIABILITIES
Trade and other payables (895) (8,590) (9,381)
Financial liabilities (304) (1,517) (1,084)
Income tax payable - (119) (80)
Provisions (4) (1) (4)
-------- -------- ---------
(1,203) (10,227) (10,549)
-------- -------- ---------
NON-CURRENT LIABILITIES
Other payables - (66) (43)
Financial liabilities (1,633) (2,925) (2,939)
Provisions (1,550) (1,587) (1,550)
-------- -------- ---------
(3,183) (4,578) (4,532)
-------- -------- ---------
TOTAL LIABILITIES (4,386) (14,805) (15,081)
-------- -------- ---------
NET ASSETS 10,550 9,215 11,370
======== ======== =========
EQUITY
Share capital 460 457 459
Share premium 33,259 33,207 33,234
Other reserves 97 110 81
Retained losses (23,266) (25,037) (23,572)
-------- -------- ---------
GROUP SHAREHOLDERS' EQUITY 10,550 8,737 10,202
Minority interests - 478 1,168
-------- -------- ---------
TOTAL EQUITY 10,550 9,215 11,370
======== ======== =========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2007
Attributable to equity holders of the parent
--------------------------
------- ------- ------- -------
Issued Share Retained Other Total
capital premium earnings reserves equity
£'000 £'000 £'000 £'000 £'000
At 1 January 2007 459 33,234 (23,572) 81 10,202
Foreign currency
translation - - (4) 5 1
------- ------- ------- ------- -------
Total income and expense
for the period recognised
directly in equity - - (4) 5 1
Profit for the period - - 310 - 310
------- ------- ------- ------- -------
Total income and expense
for the period - - 306 5 311
Share-based payment - - - 11 11
Issue of share capital 1 25 - - 26
------- ------- ------- ------- -------
At 30 June 2007 (unaudited) 460 33,259 (23,266) 97 10,550
======= ======= ======= ======= =======
At 1 January 2006 456 33,189 (24,562) 56 9,139
Foreign currency
translation - - 41 - 41
------- ------- ------- ------- -------
Total income and expense
for the period recognised
directly in equity - - 41 - 41
Loss for the period - - (484) - (484)
------- ------- ------- ------- -------
Total income and expense
for the period - - (443) - (443)
Share-based payment - - (32) 54 22
Issue of share capital 1 18 - - 19
------- ------- ------- ------- -------
At 30 June 2006 (unaudited) 457 33,207 (25,037) 110 8,737
======= ======= ======= ======= =======
GROUP CASH FLOW STATEMENT
for the six months ended 30 June 2007
Six months Six months
ended ended
30 June 2007 30 June 2006
(Unaudited) (Unaudited)
£ '000 £ '000
OPERATING ACTIVITIES
Profit/(loss) before tax from continuing
operations 337 (1,254)
Adjustments to reconcile operating profit/(loss to
net cash flows:
Depreciation and impairment of property, plant and
equipment and gas assets 247 674
Amortisation and impairment of intangible assets 66 8
Share-based payments expense 10 22
Pension accrual expense - 14
Profit on sale of licence (185) -
Finance income (131) (65)
Finance expense 87 214
Loss on deemed disposal 120 -
Share of net loss of associate 34 -
Movements in provisions - (1)
Decrease in trade and other receivables 193 914
Increase in inventories (31) (3,563)
(Decrease)/increase in trade and other payables (525) 1,130
Income tax (paid)/refunded (29) 81
-------- --------
NET CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES 193 (1,826)
CASH FLOWS FROM INVESTING ACIVITIES
Proceeds from sale of property, plant and
equipment - 2,451
Proceeds from sale of licence 185 -
Interest received 93 68
Purchase of subsidiary undertaking - (20)
Purchase of intangible assets - (5)
Purchase of property, plant and equipment (466) (104)
Purchase of gas assets (145) (595)
-------- --------
NET CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES (333) 1,795
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of share capital 26 19
Proceeds from sale and finance leaseback 606 -
Sale and finance leaseback rentals (201) (105)
Repayment of capital element of finance leases - (371)
Repayment of long-term loans - (27)
Interest paid (86) (161)
-------- --------
NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES 345 (645)
Net increase/(decrease) in cash and cash
equivalents 205 (676)
Net foreign exchange difference - (6)
Cash and cash equivalents at 1 January 1,241 1,525
-------- --------
CASH AND CASH EQUIVALENTS AT 30 JUNE (note 3) 1,446 843
======== ========
NOTES TO THE ACCOUNTS
1. CORPORATE INFORMATION
The interim condensed financial statements of the Group for the six months ended
30 June 2007 were authorised for issue in accordance with a resolution of the
directors on 18 September 2007.
Alkane Energy plc is a public limited company incorporated and domiciled in
England whose shares are publicly traded.
The principal activities of the Group are described in note 6.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Basis of preparation
The interim condensed consolidated financial statements are unaudited and do not
constitute statutory financial statements within the meaning of Section 240 of
the Companies Act 1985.
These are the Group's first IFRS condensed consolidated interim financial
statements for part of the period covered by the first IFRS annual financial
statements. The Group's financial statements have been prepared in accordance
with International Reporting Standards as adopted by the EU and IFRS 1
First-time Adoption of International Financial Reporting Standards has been
applied. The condensed consolidated interim financial statements do not include
all of the information required for full annual financial statements, and should
be read in conjunction with the Group's annual financial statements as at 31
December 2006 and the Group's statement of Adoption of International Reporting
Standards showing an explanation of how the transition to IFRSs has affected the
reported financial position, financial performance and cash flows of the Group.
This Statement includes reconciliations of equity and profit or loss for
comparative periods reported under UK GAAP to those reported for those periods
under IFRSs.
Significant accounting policies
The preparation of the condensed consolidated interim financial statements has
resulted in changes to the accounting policies as compared with the most recent
annual financial statements prepared under previous GAAP.
The accounting policies adopted in the preparation of the interim condensed
consolidated financial statements are consistent with those presented in the
IFRS Transition Statements for the opening balance sheet at the date of
transition (1 January 2006) and the comparative periods (30 June 2006 and 31
December 2006).
The impact of the transition from previous GAAP to IFRSs is explained in the
Group's Statement of Adoption of International Financial Reporting Standards.
The accounting policies have been applied consistently throughout the Group for
purposes of these condensed consolidated interim financial statements.
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of policies
and reported amounts of assets and liabilities, income and expenses. 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 or available for early adoption at the Group's first IFRS annual
reporting date as at 31 December 2007. Based on these IFRSs, the Board of
Directors have made assumptions about the accounting policies expected to be
adopted (accounting policies) when the first IFRS annual financial statements
are prepared for the year ended 31 December 2007. The IFRSs that will be
effective or available for voluntary early adoption in the annual financial
statements for the period ended 31 December 2007 are still subject to change and
to the issue of additional interpretations and therefore cannot be determined
with certainty. Accordingly, the accounting policies for that annual period that
are relevant to this interim financial information will be determined only when
the first IFRS financial statements are prepared at 31 December 2007.
The Group has early adopted the following standard:
IFRS 8 Operating segments
The Group has elected to adopt IFRS 8 as of 1 January 2007. This standard
requires disclosure of information about the Group's operating segments.
Adoption of this standard did not have any effect on the financial position or
performance of the Group. The Group determined that the operating segments were
the same as the business segments previously identified under IAS 14. Additional
disclosures about each of these segments are shown in Note 6, including revised
comparative information.
3. CASH AND CASH EQUIVALENTS
For the purpose of the interim consolidated cash flow statement, cash and cash
equivalents are comprised of the following:
30 June 2007 30 June 2006
(Unaudited) (Unaudited)
£ '000 £ '000
Cash at bank and in hand 1,096 1,071
Short term deposits 350 505
Bank overdraft - (733)
-------- --------
1,446 843
======== ========
4. INCOME TAX
The major components of income tax expense in the interim consolidated income
statement are:
30 June 2007 30 June 2006
(Unaudited) (Unaudited)
£ '000 £ '000
Foreign tax (29) -
Tax over-provided in previous years 2 102
-------- --------
(27) 102
======== ========
5. Business COMBINATIONS
On 1 January 2007 Pro2 Anlagentechnik GmbH issued new equity shares to third
party investors for an amount of €1,400,528. As a result Alkane Energy plc's
interest was reduced from 51% to 38.01%. There is therefore a deemed disposal
which gives rise to a loss.
The book value of the net assets at the date of disposal were as follows:
£ '000 £ '000
Non-current assets 3,585
Inventories 6,584
Trade and other receivables 6,657
Other financial assets 162
Cash and short-term deposits 55
Current liabilities (11,644)
Non-current liabilities (3,023)
--------
Net assets at 1 January 2007 2,376
Cash inflow following transaction (€1,400,528) 942
--------
3,318
Effective interest in Pro2 before issue of new equity:
--------------------------------------------------------
51% of £2,376,000 1,212
Plus goodwill on acquisition 665 1,877
--------
Effective interest in Pro2 after issue of new equity:
-------------------------------------------------------
38.01% of £3,318,000 1,261
Plus goodwill on acquisition x 38.01/51 496 1,757
--------
--------
Loss on Disposal (120)
========
The reduction in the Company's holding means that from the transaction date of
1 January 2007 Pro2 Anlagentechnik GmbH has been treated for reporting purposes
as an associated company of Alkane Energy plc, using the equity method of
accounting. In previous periods the results of Pro2 Anlagentechnik GmbH were
fully consolidated as a subsidiary undertaking. Under the equity method of
accounting the Company's share of Pro2 Anlagentechnik GmbH's results are shown
as one line in the income statement, rather than consolidating turnover and
costs by individual category. There is therefore a significant reduction in
revenue, cost of sales and administrative expenses in the six months to 30 June
2007 when compared to the six months to 30 June 2006. In the Balance Sheet for
the six months ended 30 June 2007, the Group's investment in Pro2 Anlagentechnik
GmbH is reported as one line, Investments accounted for using the equity method,
leading to significant reductions in property, plant and equipment, inventories,
trade and other receivables, and other payables and financial liabilities when
compared to the six months ended 30 June 2006.
6. SEGMENT INFORMATION
Business segments
The Group is comprised of the following business segments:
• Extraction of gas from coal measures for power generation and burner tip
use; and
• The manufacture, supply, operation and maintenance of equipment.
Seasonality of operations
There is no significant seasonal nature to the Group's business of the
extraction and use of gas. However manufacture and supply of equipment by the
associated company Pro2 Anlagentechnik GmbH's is biased towards the second half,
principally due to the effect of the German renewable energy law under which
electricity prices available for equipment commissioned by customers fall on 1
January each year.
The following tables present revenue and profit information regarding the
Group's business segments for the six months ended 30 June 2007 and 2006
respectively.
Six months ended 30 June 2007 (unaudited) Continuing operations
Extraction of Manufacture Total
gas from coal supply, operate
measures and maintain
equipment
£ '000 £ '000 £ '000
Revenue
Revenue from external customers 2,308 51 2,359
Inter-segment sales - 102 102
--------- -------- ---------
Total revenue 2,308 153 2,461
--------- -------- ---------
Results
Segment profit/(loss) 860 (136) 724
--------- -------- ---------
Corporate centre costs (497)
Corporate centre finance income 230
Loss on deemed disposal (120)
---------
Profit before tax from
continuing operations 337
---------
Six months ended 30 June 2006 (unaudited) Continuing operations
Extraction of Manufacture Total
gas from coal supply, operate
measures and maintain
equipment
£ '000 £ '000 £ '000
Revenue
Revenue from external customers 1,627 6,808 8,435
Inter-segment sales - 99 99
--------- -------- ---------
Total revenue 1,627 6,907 8,534
--------- -------- ---------
Results
Segment
profit/(loss) 129 (1,475) (1,346)
--------- -------- ---------
Corporate
centre costs (128)
Corporate centre finance income 220
---------
Loss before tax from
continuing operations (1,254)
-----------------------
The following table compares total segment assets as at 30 June 2007 and as at
the date of the last annual financial statements (31 December 2006).
30 June 31 December
2007 2006
(Unaudited) (Audited)
£ '000 £ '000
Extraction of gas from coal measures 4,882 4,284
Manufacture, supply, operate and maintain equipment 99 6,103
-------- ---------
Total segment assets 4,981 10,387
Goodwill - 756
Corporate centre 586 441
Investment in associate 3,070 -
Loan to associate 2,128 -
Inter-segment adjustment (215) (214)
-------- ---------
Total consolidated assets 10,550 11,370
-------- ---------
Geographical Segments
Six months ended 30 June 2007 (unaudited) Continuing operations
United Kingdom Continental Total
Europe
£ '000 £ '000 £ '000
Revenue
Revenue from external customers 2,242 117 2,359
Inter-segment sales 102 - 102
--------- -------- ---------
Total revenue 2,344 117 2,461
--------- -------- ---------
Results
Segment profit/(loss) 835 (111) 724
--------- -------- ---------
Corporate centre costs (497)
Corporate centre finance income 230
Loss on deemed disposal (120)
---------
Profit before tax from
continuing operations 337
=========
Six months ended 30 June 2006 (unaudited) Continuing operations
United Kingdom Continental Total
Europe
£ '000 £ '000 £ '000
Revenue
Revenue from external customers 1,636 6,799 8,435
Inter-segment sales 17 82 99
--------- -------- ---------
Total revenue 1,653 6,881 8,534
--------- -------- ---------
Results
Segment profit/(loss) 77 (1,423) (1,346)
--------- -------- ---------
Corporate centre costs (128)
Corporate centre finance income 220
---------
Loss before tax from continuing
operations (1,254)
=========
The following table compares total segment assets as at 30 June 2007 and as at
the date of the last annual financial statements (31 December 2006).
30 June 31 December
2007 2006
(Unaudited) (Audited)
£ '000 £ '000
United Kingdom 4,296 3,684
Continental Europe 685 6,703
-------- --------
Total segment assets 4,981 10,387
Goodwill - 756
Corporate centre 586 441
Investment in associate 3,070 -
Loan to associate 2,128 -
Inter-segment adjustment (215) (214)
-------- --------
Total consolidated assets 10,550 11,370
-------- --------
7. Impairment of goodwill
Pro2 Services Limited, a 100% owned subsidiary, provides maintenance support
services to external customers and to other Group companies. A review has been
undertaken of the future profitability of Pro2 Services Limited in respect of
external business and this has concluded that the goodwill capitalised when the
company was acquired in 2005 has been impaired. As a result the outstanding
amount of £66,000 has been written off in the period.
8. Plant and equipment
Acquisitions and disposals
During the six months ended 30 June 2007 the Group acquired assets with a cost
of £571,000 (2006: £645,000). There were no disposals during the six months
ended 30 June 2007 (2006: £36,000).
Sale and finance leaseback
During the six months ended 30 June 2007 the Group entered into two new sale and
finance leaseback agreements for items of plant with a total cost of £606,000.
9. Gas assets
Acquisitions and disposals
During the six months ended 30 June 2007 the Group acquired assets with a cost
of £109,000 (2006: £566,000). There were no disposals during the six months
ended 30 June 2007 (2006: nil).
10. Capital commitments
At 30 June 2007 the Group had capital commitments of £75,000 contracted for but
not provided in the accounts (2006: £135,000) of which £54,000 (2006: £115,000)
relates to the purchase of plant and equipment and £21,000 (2006: £20,000)
relates to the purchase of gas assets.
11. Share capital
During the six months ended 30 June 2007, options over 200,000 ordinary shares
were exercised in respect of the Post Admission Share Option Plan.
12. 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.
This information is provided by RNS
The company news service from the London Stock Exchange
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