Preliminary Results
Alkane Energy PLC
19 March 2008
For Immediate Release 19 March 2008
Alkane Energy plc
('Alkane', 'the Group' or 'the Company')
Unaudited preliminary results for the year ended 31 December 2007
Alkane Energy plc (AIM: ALK) is a profitable green energy company specialising
in the use of coal mine methane as a fuel for electricity generation.
Headlines
• Adjusted PBT up to £1,343,000 from £841,000
• Profit attributable to equity holders £1,034,000 - in line with market
expectations
• Basic earnings per share 1.13p (2006: 1.17p)
• Continued growth in energy sales:
•Electricity - up 35% to 79.7 million KWh (2006: 59.3 million KWh)
•Gas - up 25% to 11.9 million cu. metres (2006: 9.5 million cu.
metres)
• Positive outlook for electricity prices
• 2008 development programme under way with:
•Successful gas well drilled at Mansfield
•Additional 1.35MW generator connected at Warsop
•Two new development projects approved by BERR
Note: Adjusted PBT excludes non-recurring costs, impairment of goodwill, loss on
deemed disposal and profit on licence sale
Commenting on the preliminary results, Chief Executive, Dr Cameron Davies, said:
'I am pleased to report good results from Alkane Energy with contracted income
secure until March 2009. Our adjusted year-end PBT was £1,343,000 an underlying
increase of 60% once non-recurring items have been stripped out.
'Our power plants generated a record 79.7 million kilowatt hours of electricity
during the year, up 35%, and our direct gas sales were 11.9 million cubic
metres, up 25% on 2006. We continue to sell our electricity into a strong market
with low input costs using our own gas reserves.
'The continued growth of Alkane is supported by our broad portfolio of licences
and the future project development pipeline.'
Alkane Energy plc Tel: 020 7466 5000 (Today)
Dr. Cameron Davies, CEO Tel: 01623 827927
Buchanan Communications Tel: 020 7466 5000
Dr. Ben Willey, Partner Tel: 0845 270 8611
Miranda Higham, Associate
Brewin Dolphin
Andrew Emmott, Director
Chairman's Statement
Introduction
Alkane's profit attributable to equity holders was £1,034,000 in 2007, a slight
decrease on the previous year. Profit before tax was £1,032,000 (2006:
£1,183,000), however, after adjustment for non-recurring items there was a 60%
increase in the underlying profit before tax to £1,343,000 in 2007 up from
£841,000 in 2006.
As a result of our expanding gas production capacity electricity sales continued
to rise and were 35% higher in 2007 than in the previous year but electricity
prices were lower at the time when new sales contracts were signed and growth in
power output only partially offset a lower price per MWh sold.
The installation of new generation capacity, a cash repayment of €1,000,000 from
Pro2, a non-core licence sale for £185,000, and the availability of lease
financing have increased our cash resources to £1,750,000 at year end from
£778,000 which has allowed us to push forward with our project development
programme in the first quarter 2008.
In March 2008, a successful gas well was completed at Mansfield on time and on
budget which should increase gas flow rates sufficiently to enable us to install
another 1.35MW generator in the second quarter of 2008. In addition, a second
1.35MW generator was installed at Warsop in the first quarter 2008. The output
from this new generation capacity is contracted at £51/MWh until September 2009.
This compares with an average price of £42/MWh achieved over the portfolio in
2007.
In BERR's 2008 13th Onshore Licensing Round, we applied for five new petroleum
exploration and development licences covering mines in the East Midlands and
South Yorkshire. The outcome of our application is expected in the Autumn 2008.
Financial Overview
Alkane's annual results are presented for the first time in accordance with
International Financial Reporting Standards (IFRS) and the comparative numbers
for 2006 have been restated from UK Generally Accepted Accounting Practice
(UK GAAP). The net effect has been to increase the profit attributable to equity
holders for 2006 from £1,015,000 to £1,074,000.
The results are also the first to be published following the investment of
€1,400,000 by new shareholders in the equity of Pro2 announced on 12 July 2007.
As a result of this transaction the Company's holding in Pro2 was reduced from
51% to 38%, 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. Alkane's turnover in 2007 was therefore reduced
substantially from 2006 as the Company's share of Pro2's results is now reported
as one line in the income statement, rather than by consolidating turnover and
costs. In the second half of 2007, Pro2 completed repayment of the first
€1,000,000 instalment of our working capital loan.
Revenue in 2007 increased by 15% to £4,270,000, compared to £3,724,000 in 2006
when Pro2's revenue of £23,595,000 is excluded from the total of £27,319,000 in
2006. The return on Group operations including non-recurring costs in 2007 was
£705,000, compared to £817,000 in 2006.
The profit before tax for the year is £1,032,000, compared to £1,183,000 in
2006. However there were a number of non-recurring items which affect this
comparison:
• In 2007 there was the sale of a non-core licence for £185,000; in 2006 a
licence was sold for £350,000;
• There were costs of £221,000 in 2007 in respect of an abortive corporate
transaction;
• The external costs related to the transition to IFRS totalled £89,000 in
2007;
• The UK subsidiary Pro2 Services Limited (PSL) was acquired in 2005 in
order to provide in-house operating and maintenance services, and to assist
in the promotion of the German Pro2 business in the UK. The former objective
has been largely achieved but the market for gas engines has proved to be
small and not worth investing in. PSL also had a small business servicing
customers in the landfill industry but as this latter business has not met
expectations it was decided to cease marketing to external customers. As a
result, the outstanding amount of goodwill of £66,000 has been written off
in 2007; and
• The reduction in the Company's holding in Pro2 was classed as a deemed
disposal, with an accounting loss of £120,000 in 2007.
Taking account of the above items the underlying profit before tax is higher at
£1,343,000 compared to £841,000 in 2006. The main reasons for this are an
increase in volume of both electricity (35%) and gas sales (25%), and an
increased contribution from Pro2. Revenue per MWh of electricity sold in 2007
was £41.73, compared to £48.64 in 2006. These average prices include revenue
from the Climate Change Levy (CCL), which is classed by the EU as state aid and
will not continue after 1 November 2008, the end of its five year exemption
term. Forward electricity contracts, excluding CCL exemption, are currently
trading at £58/MWh for 2009 and £56/MWh for 2010. It is expected that these
higher prices will more than compensate for the loss of CCL related revenue.
In Germany, continued growth at Pro2 allowed it to repay €1,000,000 of the
€3,000,000 working capital loan to Alkane during the year. Sales increased
slightly in 2007 to £23,993,000 (2006: £23,595,000) but its profit for the year
increased substantially to £787,000 (2006: £55,000). Alkane's share of this
profit was £299,000 (38%) compared to £28,000 (51%) in 2006. However, future
growth in the German biogas market is uncertain as a result of higher commodity
prices for agricultural feedstock and changes to the renewable energy law. Pro2
is compensating for this by growth in sales to the international renewable
energy and rapidly expanding carbon emissions reduction markets.
Net cash flows from operating activities were £1,258,000 (including loan
repayment of £703,000 from Pro2). As a result we ended the year with net funds
of £755,000 (2006: net debt £2,010,000).
At the annual general meeting to be held on 7 May 2008 the Company will seek
approval to apply to the Court to cancel the share premium account. This will
enable the Company to consider the payment of dividends in future, provided that
the Company remains profitable, and has sufficient resources to prudently meet
these payments.
Operations Review
Mine Gas Plants
The electricity exports from our portfolio of generation plants increased by 35%
to 79,700 MWh compared with 59,300 MWh in 2006 and gas output rose to 11.9
million cubic metres compared with 9.5 million in 2006. Electricity prices fell
substantially in summer 2007 to around £25/MWh and as a result, in September, we
signed 18 month contracts on expiry of the previous contracts at an average of
around £38/MWh until March 2009.
In the light of increasing energy prices, the economics of new projects are kept
under constant review and as a result more capacity has been installed on
existing sites in order to maximise cash flows from exploitation of our proven
gas reserves. Our technical team is therefore pushing ahead with gas reserve
estimates, planning applications, land lease deals and grid connection
investigations in order to expedite the development of more mine gas sites from
our project portfolio.
At the existing Warsop site in Nottinghamshire, planning consent was obtained
from the local authority and an additional 1.35MW generator was installed in
March 2008. The electricity output from the new plant, which commenced
operations on 4 March 2008, is contracted for 18 months at a price of £51/MWh.
This addition to the portfolio has increased our total generating and gas supply
capacity to 18.5 MW.
At the Mansfield site, directional well drilling operations were successfully
completed in the first quarter 2008. This second well has now been flow tested
and is currently being connected to the internal gas gathering network. An
additional 1.35 MW generator ordered for this site will increase its capacity to
4.05MW and another of similar output has been ordered for Bevercotes. Both of
these new containerised plants are scheduled for delivery in June 2008.
Our seven UK mine gas plants continued to reduce carbon emissions from abandoned
coal mines within our licence areas and, through our trade association ACMMO, we
will continue to lobby for recognition of this by the Government.
German CMM
The Joarin power plant continued to generate steadily at around 1MW output and
made a small profit. In response to the lower than expected flows a gas reserve
report was commissioned from independent mining engineering consultants at the
Fraunhofer Institute in Oberhausen. The conclusion of the report was that
substantial gas reserves remain but that a second well will be required to
access this gas and circumvent the air leakage problem which has reduced the
current operating capacity. Plans are in preparation to select a site for this
second well.
Pro2 Services UK Limited
During the year the remaining external contracts were completed and the
operations team was brought in house. The technicians attended power generation
and electronic control system training courses at both Deutz and Pro2 in Germany
and this has enhanced our operational capability and allowed Pro2 Services to
replace expensive outsourced plant maintenance operations and routine servicing.
Prospects
The prospects for 2008 and for the medium term are encouraging, as electricity
prices remain high and some of our new plants are already signed up on contracts
at prices substantially above those for last year.
We will continue to develop our existing pipeline of defined projects and hope
to add to this existing portfolio with 13th Onshore Round licences later in the
year. This should sustain the Company on a steady growth path.
World interest in coal mine gas projects has increased substantially as
governments recognise that methane is 23 times more potent than carbon dioxide
as a greenhouse gas and that these projects make an important contribution to
reducing the rate of climate change. In order to take advantage of this growing
international market, we are actively seeking to grow the Company through an
acquisition or a merger with a similar profitable business in the sector.
In closing, I would like to thank my colleagues for their dedication in
continuing to operate a profitable business with good growth prospects.
John Lander
Chairman
GROUP INCOME STATEMENT (unaudited)
for the year ended 31 December 2007
2007 2006
£000 £000
REVENUE 4,270 27,319
Cost of sales (1,682) (18,981)
--------- --------
GROSS PROFIT 2,588 8,338
Administrative expenses (1,872) (7,521)
Non-recurring corporate costs (note 4) (310) -
Share of profit of associate 299 -
--------- --------
RETURN ON GROUP OPERATIONS 705 817
Other operating income 83 343
Loss on sale of fixed assets - (3)
Profit on sale of licence 185 350
Impairment of goodwill (note 8) (66) (8)
Loss on deemed disposal (note 9) (120) -
--------- --------
PROFIT ON ACTIVITIES BEFORE FINANCE INCOME/(COSTS) 787 1,499
Finance income 267 124
Exchange gain arising from financing 155 -
Finance costs (177) (440)
--------- --------
NET FINANCE INCOME/(COSTS) 245 (316)
--------- --------
PROFIT BEFORE TAX 1,032 1,183
Tax credit / (expense) 2 (58)
--------- --------
PROFIT FOR THE YEAR 1,034 1,125
========= ========
PROFIT FOR THE PERIOD ATTRIBUTABLE TO:
Equity holders of the parent 1,034 1,074
Minority interest - 51
--------- --------
1,034 1,125
========= ========
Earnings per share
Basic, for profit for the year attributable to equity
holders of the parent 1.13p 1.17p
Diluted, for profit for the year attributable to equity
holders of the parent 1.11p 1.15p
The earnings per ordinary share calculation represents
total and continuing results
GROUP BALANCE SHEET (unaudited)
at 31 December 2007
2007 2006
£000 £000
NON-CURRENT ASSETS
Intangible assets - 774
Property, plant and equipment 3,888 6,443
Gas assets 3,315 3,374
Investments accounted for using the equity method 3,691 -
Other investments - 3
-------- ---------
10,894 10,594
-------- ---------
CURRENT ASSETS
Inventories 101 6,631
Trade and other receivables 3,130 7,768
Other financial assets 350 512
Cash and short-term deposits 1,750 946
-------- ---------
5,331 15,857
-------- ---------
TOTAL ASSETS 16,225 26,451
-------- ---------
CURRENT LIABILITIES
Trade and other payables (1,371) (9,381)
Financial liabilities (315) (1,084)
Income tax payable - (80)
Provisions (3) (4)
-------- ---------
(1,689) (10,549)
-------- ---------
NON-CURRENT LIABILITIES
Other payables - (43)
Financial liabilities (1,473) (2,939)
Provisions (1,519) (1,550)
-------- ---------
(2,992) (4,532)
-------- ---------
TOTAL LIABILITIES (4,681) (15,081)
-------- ---------
NET ASSETS 11,544 11,370
======== =========
EQUITY
Share capital 460 459
Share premium 33,259 33,234
Cumulative translation adjustment 113 -
Other reserves 107 81
Retained losses (22,395) (23,572)
-------- ---------
GROUP SHAREHOLDERS' EQUITY 11,544 10,202
Minority interests - 1,168
-------- ---------
TOTAL EQUITY 11,544 11,370
======== =========
GROUP STATEMENT OF CHANGES IN EQUITY (unaudited)
for the year ended 31 December 2007
Attributable to equity holders of the parent
---------------------------------
------- ------- ------- ------- -------
Issued Share Translation Other Retained Total
capital premium of foreign reserves(1) earnings(2) Equity
operations
£000 £000 £000 £000 £000 £000
At 1 January
2007 459 33,234 - 81 (23,572) 10,202
Foreign
currency
translation - - 113 5 143 261
-------- ------- ------- ------- ------- -------
Total income
and expense
for the period
recognised
directly in
equity - - 113 5 143 261
Profit for the
period - - - - 1,034 1,034
-------- ------- ------- ------- ------- -------
Total income
and expense
for the period - - 113 5 1,177 1,295
Share-based
payment - - - 21 - 21
Issue of share
capital 1 25 - - - 26
-------- ------- ------- ------- ------- -------
At 31 December
2007 460 33,259 113 107 (22,395) 11,544
======== ======= ======= ======= ======= =======
At 1 January
2006 456 33,189 - 56 (24,562) 9,139
Foreign
currency
translation - - - - (84) (84)
-------- ------- ------- ------- ------- -------
Total income
and expense
for the period
recognised
directly in
equity - - - - (84) (84)
Profit for the
period - - - - 1,074 1,074
-------- ------- ------- ------- ------- -------
Total income
and expense
for the period - - - - 990 990
Share-based
payment - - - 25 - 25
Issue of share
capital 3 45 - - - 48
-------- ------- ------- ------- ------- -------
At 31 December
2006 459 33,234 - 81 (23,572) 10,202
======== ======= ======= ======= ======= =======
(1) Other reserves comprise share-based payments.
(2) The balance of the foreign currency translation reserve at 31 December 2007
was £123,000 (31 December 2006: (£130,000)).
GROUP CASH FLOW STATEMENT (unaudited)
for the year ended 31 December 2007
2007 2006
£000 £000
OPERATING ACTIVITIES
Profit before tax from continuing 1,032 1,183
operations
Adjustments to reconcile operating
profit to net cash flows:
Depreciation and impairment of
property, plant and equipment 507 1,373
and gas assets
Amortisation and impairment of 66 23
intangible assets
Share-based payments expense 20 28
Pension accrual expense - 27
Loss on sale of fixed assets - 3
Profit on sale of licence (185) (350)
Finance income (267) (124)
Finance expense 177 440
Loss on deemed disposal 120 -
Share of net profit of associate (299) -
Movements in provisions (32) (38)
Decrease/(increase) in trade and 817 (640)
other receivables
Increase in inventories (54) (3,270)
(Decrease)/increase in trade and (586) 1,638
other payables
Income tax paid (58) (151)
-------- ------------
NET CASH FLOWS FROM OPERATING 1,258 142
ACTIVITIES
CASH FLOWS FROM INVESTING ACIVITIES
Proceeds from sale of property, - 2,388
plant and equipment
Proceeds from sale of licence 185 350
Interest received 189 122
Purchase of subsidiary undertaking - (20)
Purchase of intangible assets - (5)
Purchase of property, plant and (629) (601)
equipment
Purchase of gas assets (246) (1,251)
------- -------------
NET CASH FLOWS (USED IN)/FROM (501) 983
INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of share capital 26 48
Proceeds from sale and finance 606 550
leaseback
Sale and finance leaseback rentals (350) (243)
Repayment of capital element of - (699)
finance leases
Repayment of long-term loans - (60)
Payments in respect of securities - (555)
Interest paid (180) (409)
---------------- ------
NET CASH FLOWS FROM/(USED IN) 102 (1,368)
FINANCING ACTIVITIES
Net increase/(decrease) in cash and cash 859 (243)
equivalents
Net foreign exchange difference - 8
Cash and cash equivalents at 1 January 1,241 1,525
--------- ------
CASH AND CASH EQUIVALENTS AT 31 DECEMBER 2,100 1,290
====== =========
NOTES TO THE ACCOUNTS
1. CORPORATE INFORMATION
The preliminary unaudited financial statements of the Group for the year ended
31 December 2007 were authorised for issue in accordance with a resolution of
the directors on 18 March 2008.
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 3.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared for the first time in accordance
with International Financial Reporting Standards (IFRS) as adopted by the
European Union and with those parts of the Companies Act 1985 applicable to
companies reporting under IFRS.
As these are the Group's first IFRS annual financial statements IFRS 1,
First-time Adoption of International Financial Reporting Standards, has been
applied. The financial statements should be read in conjunction with the Group's
Statement of Adoption of International Financial Reporting Standards, which was
published on 17 September 2007 and shows an explanation of how the transition to
IFRS 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 IFRS. The difference between the profit attributable to
equity owners of the parent under UK GAAP and under IFRS for the year ended 31
December 2006 is reconciled in note 14.
The Group has adopted all of the standards and interpretations that were
mandatory for accounting periods beginning on or after 1 January 2007 that are
relevant to the operations of the Group. 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 3, including revised
comparative information.
3. 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 year ended 31 December 2007 and 2006
respectively.
Year ended 31 December 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 4,201 69 4,270
Inter-segment sales - 200 200
---------- ---------- -------
Total revenue 4,201 269 4,470
---------- ---------- -------
---------- ---------- -------
Depreciation (514) - (514)
---------- ---------- -------
Impairment of goodwill - (66) (66)
---------- ---------- -------
Results
Segment profit 1,130 213 1,343
---------- ---------- -------
Corporate centre costs (658)
Corporate centre finance income 467
Loss on deemed disposal (120)
-------
Profit before tax from continuing
operations 1,032
=======
Year ended 31 December 2006 Continuing operations
Extraction of Manufacture Total
gas from coal supply, operate
measures and maintain
equipment
£000 £000 £000
Revenue
Revenue from external
customers 3,418 23,901 27,319
Inter-segment sales - 736 736
--------- ---------- -------
Total revenue 3,418 24,637 28,055
--------- ---------- -------
Depreciation (436) - (436)
--------- ---------- -------
Impairment of goodwill - (8) (8)
--------- ---------- -------
Results
Segment profit 832 377 1,209
--------- ---------- -------
Corporate centre costs (465)
Corporate centre finance income 439
-------
Profit before tax from continuing
operations 1,183
=======
The following table compares total segment assets, total segment liabilities and
segmental capital expenditure as at 31 December 2007 and 2006.
2007 2006
unaudited
£000 £000
Extraction of gas from coal measures 10,322 8,486
Manufacture, supply, operate and maintain equipment 125 17,229
--------- ---------
Total segment assets 10,447 25,715
Goodwill - 756
Corporate centre 778 695
Investment in associate 3,691 -
Loan to associate 1,612 -
Inter-segment adjustment (303) (715)
--------- ---------
Total consolidated assets 16,225 26,451
========= =========
Extraction of gas from coal measures (4,551) (4,184)
Manufacture, supply, operate and maintain equipment (9) (11,145)
--------- ---------
Total segment liabilities (4,560) (15,329)
Corporate centre (186) (254)
Inter-segment adjustment 65 502
--------- ---------
Total consolidated liabilities (4,681) (15,081)
========= =========
Extraction of gas from coal measures 1,457 1,647
Manufacture, supply, operate and maintain equipment - 1,341
--------- ---------
Total capital expenditure 1,457 2,988
========= =========
Geographical Segments
Year ended 31 December 2007 (unaudited) Continuing operations
United Kingdom Continental Total
Europe
£000 £000 £000
Revenue
Revenue from external customers 3,985 285 4,270
Inter-segment sales 200 - 200
--------- --------- --------
Total revenue 4,185 285 4,470
--------- --------- --------
Depreciation (446) (68) (514)
--------- --------- --------
Impairment of goodwill (66) - (66)
--------- --------- --------
Results
Segment profit 1,038 305 1,343
--------- --------- --------
Corporate centre costs (658)
Corporate centre finance income 467
Loss on deemed disposal (120)
--------
Profit before tax from
continuing operations 1,032
========
Year ended 31 December 2006 Continuing operations
United Kingdom Continental Total
Europe
£000 £000 £000
Revenue
Revenue from external customers 3,323 23,996 27,319
Inter-segment sales 152 584 736
--------- -------- ---------
Total revenue 3,475 24,580 28,055
--------- -------- ---------
Depreciation (391) (45) (436)
--------- -------- ---------
Impairment of goodwill (8) - (8)
--------- -------- ---------
Results
Segment profit 871 338 1,209
--------- -------- ---------
Corporate centre costs (465)
Corporate centre finance income 439
---------
Profit before tax from
continuing operations 1,183
=========
The following table compares total segment assets, total segment liabilities and
segmental capital expenditure as at 31 December 2007 and 2006.
2007 2006
unaudited
£000 £000
United Kingdom 9,652 7,869
Continental Europe 795 17,846
--------- ---------
Total segment assets 10,447 25,715
Goodwill - 756
Corporate centre 778 695
Investment in associate 3,691 -
Loan to associate 1,612 -
Inter-segment adjustment (303) (715)
--------- ---------
Total consolidated assets 16,225 26,451
========= =========
United Kingdom (4,514) (4,186)
Continental Europe (46) (11,143)
--------- ---------
Total segment liabilities (4,560) (15,329)
Corporate centre (186) (254)
Inter-segment adjustment 65 502
--------- ---------
Total consolidated liabilities (4,681) (15,081)
========= =========
United Kingdom 1,457 1,647
Continental Europe - 1,341
--------- ---------
Total capital expenditure 1,457 2,988
========= =========
4. NON-RECURRING ITEMS
The following table is an analysis of non-recurring costs:
2007 2006
unaudited
£000 £000
Corporate costs 221 -
IFRS implementation costs 89 -
-------- ---------
310 -
======== =========
The corporate costs were incurred in respect of an aborted corporate
transaction, and the IFRS implementation costs refer to the external costs
incurred in the transition from UK GAAP to IFRS.
5. EARNINGS PER ORDINARY SHARE
Basic earnings per share amounts are calculated by dividing net profit for the
year attributable to ordinary equity holder of the parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing net profit for the
year attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year 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:
2007 2006
unaudited
£000 £000
Net profit attributable to equity holders of the
parent 1,034 1,074
========= =========
2007 2006
unaudited
Basic weighted average number of ordinary shares 91,865,828 91,540,638
Dilutive effect of share options 1,267,876 1,674,321
--------- ---------
Diluted weighted average number of ordinary shares 93,133,704 93,214,959
========= =========
6. CASH AND CASH EQUIVALENTS
For the purpose of the Group cash flow statement, cash and cash equivalents are
comprised of the following:
31 December 31 December
2007 2006
unaudited
£ 000 £ 000
Cash at bank and in hand 1,750 946
Liquid resources 350 512
Bank overdraft - (168)
----------- ----------
2,100 1,290
=========== ==========
7. TAXATION
The major components of the tax credit/(expense) in the Group income statement
are:
31 December 31 December
2007 2006
unaudited
£000 £000
Foreign tax - 191
Tax over-provided in previous years (2) (133)
----------- ----------
(2) 58
=========== ==========
8. 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, taking into account the market for that business and the
priority to provide services to other Group companies. This review has concluded
that the company should cease marketing to external customers. The goodwill
capitalised when the company was acquired in 2005 was related to external
business and therefore it has been concluded that it has been fully impaired. As
a result the outstanding amount of £66,000 has been written off in the year.
9. 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 values 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 year to 31 December
2007 when compared to the year ended 31 December 2006. In the Balance Sheet for
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 2006
10. PROPERTY, Plant and equipment
Acquisitions and disposals
During the year ended 31 December 2007 the Group acquired assets with a cost of
£1,248,000 (2006: £1,821,000). There were no disposals during the year ended 31
December 2007 (2006: £2,391,000). The carrying value of the assets held at
31 December 2006 by Pro2 Anlagentechnik GmbH totalled £3,564,000. On 1 January
2007 Pro2 issued new equity shares to third party investors and Alkane Energy
plc's interest was reduced from 51% to 38.01%. As a result Pro2 has from that
date been treated for reporting purposes as an associate company rather than as
a subsidiary, and the assets are no longer shown within Property, Plant and
Equipment. They have therefore been classed as disposals in the year ended 31
December 2007. Arising from the transition to IFRS and the implementation of IAS
16 (Property, plant and equipment) assets with a carrying value of £2,867,000
have been reclassified from Gas Properties to Property, Plant and Equipment as
at 1 January 2006. The balance of the assets within Gas Properties has been
renamed as Gas Assets.
Sale and finance leaseback
During the year ended 31 December 2007 the Group entered into two new sale and
finance leaseback agreements for items of plant with a total cost of £606,000.
11. gas assets
Acquisitions and disposals
During the year ended 31 December 2007 the Group acquired assets with a cost of
£209,000 (2006: £1,167,000). There were no disposals during the year ended 31
December 2007 (2006: nil).
12. Capital commitments
At 31 December 2007 the Group had capital commitments contracted for but not
provided in the accounts for the acquisition of property, plant and equipment of
£22,000 (2006: £95,000).
13. Share capital
During the year ended 31 December 2007, options over 200,000 ordinary shares
were exercised in respect of the Post Admission Share Option Plan.
14. TRANSITION TO IFRS
The Group adopted IFRS with effect from 1 January 2006, and the results for the
year ended 31 December 2006 have been restated from UK GAAP. The following table
reconciles the profit reported under UK GAAP with that restated to IFRS:
2006
£000
Profit for the year attributable to equity holders of the parent as
reported under UKGAAP 1,015
Adjustment in respect of IAS 19 (Employee Benefits) (30)
Adjustment in respect of IFRS 3 (Business Combinations) 89
---------
Profit for the year attributable to equity holders of the parent as
restated to IFRS 1,074
=========
15. GENERAL NOTE
a. The preliminary unaudited financial information set out above does not
constitute full accounts within the meaning of Section 254 of the Companies Act
1985.
b. Audited statutory accounts in respect of the year ended 31 December
2006 have been delivered to the Registrar of Companies and those accounts were
subject to an unqualified report by the auditors.
c. Copies of the audited annual report and accounts for the year ended
31 December 2007 will be sent to shareholders during April 2008 and will be
available from the Company's registered office - Edwinstowe House, High Street,
Edwinstowe, Nottinghamshire NG21 9PR.
This information is provided by RNS
The company news service from the London Stock Exchange
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