Preliminary Results

RNS Number : 3355I

Alkane Energy PLC

10 March 2010

 



10 March 2010

Alkane Energy plc

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

Unaudited preliminary results for the year ended 31 December 2009

Alkane Energy plc (AIM: ALK) the profitable alternative energy company that owns and operates power generation plants using coal mine methane as fuel, today announces its unaudited preliminary results for the year ended 31 December 2009.

Operational Highlights

·     Delivery of CMM project pipeline

-  Significant increase of 13MW in installed capacity; total now 30MW

-  Commissioning of two new CMM sites

- Drilling and other preparatory work completed on three additional sites scheduled for 2010

·     Sale of our minority holding in Pro2 and funds re-invested in CMM operations

·     First move taken into Conventional Gas through tolling contract with GDF Suez Energy UK ("GDF")

·     Collaboration agreement signed with The TEG Group plc ("Teg") for the development of biogas projects

Financial Highlights

·     Revenue up 21% to £6.3m (2008: £5.2m)

·     EBITDA up 42% to £3.7m (2008: £2.6m)

·     Underlying PBT up 71% to £2.4m (2008: £1.4m)

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

"2009 saw a step change in the performance of Alkane as we delivered record electricity output as new sites came into production. In addition, we started to see the benefits of developing new business streams based on our core skills. The opportunities for growth, both in our core business and related conventional gas and biogas sectors, leave us well placed to significantly develop our business."

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	0845 505 4343 020 7484 4040
Hudson Sandler Nick Lyon Kate Hough	020 7796 4133

Introduction

The Board of Alkane Energy plc is delighted to report record results for the year ended 31 December 2009.  The year has been characterised by investment in our core coal mine methane (CMM) operations funded by the proceeds from the sale of our minority stake in Pro2 Anlagentechnik GmbH ('Pro2').

Notable successes in the year have been:

·     commissioning of two new CMM sites;

·     drilling and other preparatory work completed on three additional sites scheduled for 2010;

·     conventional gas power generation commenced through a tolling contract with GDF;

·     a collaboration agreement signed with Teg for the development of biogas projects; and

·     the sale of our minority holding in Pro2.

We have delivered record electricity output at 95GWh (2008: 90GWh) and our turnover has risen by 21% to £6.3m (2008: £5.2m).  Alkane Energy's underlying profit before tax has also reached record levels with a 71% increase to £2.4m (2008: £1.4m).  The underlying earnings per share has risen by 70% from 1.52 pence in 2008 to 2.59 pence this year.  This has been achieved in an environment of volatile power pricing, however due to our strategy of forward selling, approximately 75% of our 2010 output is already covered at an average selling price of £40/MWh.

Strategy

Our intention is to build an integrated multi-platform business around our core gas to power skills.  The business areas we intend to pursue are:

·     core CMM, with the potential to grow to an installed capacity 50MW;

·     conventional gas generation through tolling and peak period operation;

·     biogas - our first move made through a collaboration agreement with Teg, with other opportunities being explored; and

·     others - we are continuing to explore other related areas, such as exploiting our coal bed methane (CBM) licences, consolidation of CMM industry or landfill gas.

We have set ourselves the target of expanding the Group's installed CMM capacity to 50MW, which should allow us to export in excess of 300GWh per annum to the grid.  By the end of 2009 we had achieved an installed CMM capacity of 23MW and have already drilled at three further sites that we expect to open during 2010.  We continue to explore a range of other sites and we would target to open three to four sites per annum until we reach 50MW.

We have also invested in research on new business streams building on Alkane's core skills.  These skills are the proven ability to profitably operate gas to power plants varying in size from 500kW to 10MW.  We use flexible modular engine units combined with remote site monitoring and mobile maintenance.  This gives us a flexible capital structure and a low cost operating model. 

The Board is confident that progress in researching new income streams will start to deliver.  Firstly the Group now has 7MW of conventional gas fired capacity on tolling contracts with GDF.  The surplus engines are effectively being "rented" to GDF who operate them at peak loads and when the grid calls for balancing capacity.  It is a straight forward route for us to extend the economic life of a site as the CMM gas reserves begin to decline. 

In addition we announced in December 2009 that Alkane had signed a collaboration agreement with Teg to jointly fund and operate anaerobic digestion sites.  These sites will use waste material from commercial and municipal sources to generate methane that can be used as a renewable energy source for our existing engine fleet.  We will look to move into the build phase as soon as all the necessary permits have been received.

Looking longer term the Group continues to monitor industry progress on CBM in the UK.  Alkane has a portfolio of CBM assets covering 500 sq km and the mid-case resource estimate is calculated at over 350 billion cubic feet (BCF).  We are seeking ways to exploit these resources and the most likely route forward would be a joint venture with a partner who is able to bring CBM operational experience and access to funding.

Financial

Results

Underlying profit before tax was £2.4m (2008: £1.4m) and underlying earnings per share was 2.59 pence (2008: 1.52 pence). Including the impact of the Pro2 disposal and other non-recurring costs, the published profit before tax was £2.1m (2008: £1.9m) which represents 33% of turnover. The 2009 figures include a charge of £0.1m for the start up phase of our biogas research.

Record CMM revenues were achieved in 2009 at £6.3m (2008: £5.2m) which is the sixth successive year of growth in CMM revenues and the fourth successive year of growth for electricity output for the Group which increased to 95GWh (2008: 90GWh).

Selling prices have benefited from the contracts taken out in 2008 when market prices were considerably higher than now.  This has resulted in average selling prices for the year being £56/MWh (2008: £48/MWh).  Direct gas sales are marginally down on 2008 at 3.4m therms (2008: 3.7m therms) but average pricing in the year improved to 27 pence per therm (2008: 21 pence per therm).

EBITDA margins from CMM were 59% of turnover (2008: 50%) an improvement driven by the higher selling prices.  The strong EBITDA is a reflection of the cash generation nature of the Group due to the level of non-cash depreciation in a capital intensive business.

The disposal of Pro2 led to an accounting profit on disposal of £0.8m, which is shown under the heading discontinued operations.  There is uncertainty about the recoverability of the outstanding amounts, and we have therefore taken the prudent step of making an impairment charge of £1.4m which gives full cover until the situation becomes clearer.  As a result the overall profit on continuing and discontinued operations is £1.4m (2008: £2.4m), and earnings per share on this basis is 1.51 pence (2008: 2.59 pence). 

The Board is not recommending the declaration of a dividend (2008: nil), but continues to review this on an annual basis.

Balance Sheet and Cash Flow

The majority of our net assets are invested in active sites with the plant and construction costs included under the heading Plant Property and Equipment.  The research, project work and grid connections needed to bring these sites on line are classified as 'Gas Assets'.  We do not capitalise any project costs until we have reasonable expectation of a site going live. 

At year end the net debt was £1.6m (2008: net cash £0.6m).  This debt represents asset financing of engine units with an extended repayment schedule. Our growth plans for CMM are designed to exploit our current licence portfolio.  We are funding this programme by a combination of the Pro2 disposal, strong EBITDA operating cash flows and the use of finance lease debt facilities on engines.  These sources of funding have been sufficient to fund our programme to date, and we remain convinced that the Group can access sufficient facilities for future CMM growth. 

The cash flow statement is dominated by two items this year.  Firstly the total of £5.8m in cash returned to the business arising from the sale of our minority interest in Pro2, £3.2m from the sale of the equity and £2.6m from the repayment of loans.  Secondly 2009 was a record year of investment for the Group, with £10.7m spent on capital during this year (2008: £3.0m).  The investment programme has brought our first production online at Bilsthorpe and Shirebrook.  It has also funded the drilling and work programmes at three further sites, all of which we aim to bring on-stream in 2010; completion of these will involve £2.6m during 2010.

Power Pricing

The total UK electricity market is estimated to be in excess of 350TWh which has seen a 6% decline in 2009 because of falling demand due to the recession.  CMM is part of the specialist onshore gas market along with landfill and biogas generating round the clock baseload production.  In total this specialist sector has around 1,000MW of installed capacity.

The recession has resulted in a degree of excess capacity in the wider industry and this has led, along with falling commodity prices, to a decline in industry selling prices.  Market electricity prices peaked at over £90/MWh in 2008 but since have fallen back to around £40/MWh in late 2009.  This means we are expecting to see a decline in our selling prices in 2010 but the outlook for prices is more positive in 2011 and beyond.

We have a rolling programme placing 12 month sales contracts.  This ensures that we are renewing some of our sales contracts each quarter to smooth out the worst of the volatility in the market. Approximately 75% of our 2010 output is already covered at an average selling price of £40/MWh.

In addition, we operate a flexible business model designed to maintain Alkane's position as a low cost producer.  We have modular standard plant which can be re-deployed to other CMM sites or be transferred to tolling contracts or biogas locations.  Our cost base is controlled by having unmanned sites using remote monitoring and being maintained by our in-house mobile engineering team.

So even at these lower selling prices we believe that our business model is capable of continuing to produce trading profits and positive cash flow, leaving the Group well placed as the market recovers.

Operations

The Group's strategy review completed by the Board at the start of 2009 re-confirmed the potential of our UK CMM business.  This business offers growth potential and attractive rates of return.  Our core skills are in CMM and we have established the UK's leading CMM licence portfolio together with the project management and operational skills to open new sites and maximise engine output. The funds from the Pro2 disposal have allowed us to embark on the Group's largest ever investment programme.

Alkane started the year with 17MW of CMM capacity at 6 sites and has finished the year with 30MW installed capacity at 9 sites covering both CMM and conventional gas tolling contracts. In total the Group generated 95GWh (2008: 90GWh) and in addition we sold 3.4m therms to direct gas customers (2008: 3.7m therms).  It has been one of the busiest ever years for the Group with a number of operational changes. 

Our business model is designed to be as flexible as possible to mitigate against a depletion of gas reserves. We have seen lower output at one of our major sites at Bevercotes in Nottinghamshire, and we have withdrawn from our only German based CMM site at Joarin.  Even allowing for these reductions, the Group has been able to show an increase to a record output with an especially strong second half to the year.  We will continue to monitor performance by site and use the in-house experience to determine the most effective operating patterns for the fleet.

The Group has historically presented its operations in terms of installed capacity, i.e. MW per site.  In respect of the core CMM operations the output of sites will vary depending on the stage of the life cycle of the reserve (start-up, steady state, decline).  Accordingly in addition to installed capacity in MW we will now also present actual energy delivery in units (GWh for electricity and million therms for direct gas sales), so providing greater transparency of revenue.  The following table shows our progress in respect of site development:

		CATEGORY
	Current installed capacity	Projects   being commissioned	Projects  under development	Total
	MW	MW	MW	MW
CMM generation	11	6	7.5	24.5
Conventional gas generation	-	7	-	7
Gas supply (equivalent MW)	6	-	0.5	6.5
Total	17	13	8	38

Core CMM

We have seen record electrical output for the Group in 2009 as new sites come on stream.  We have commissioned two new sites during the second half of 2009 - Shirebrook and Bilsthorpe.  We have successfully drilled a borehole at Shirebrook to enable CMM production of 2MW, and we are also running an additional 6MW of tolling utilising conventional gas.  Bilsthorpe started more slowly than anticipated but we expect that the output will build up over time as mining work in that area ceases.

The project team has been very busy in preparing sites for 2010.  We have already successfully drilled at three sites and we are expecting all of these to come on stream later in 2010 as planning and grid connections are completed.   The project team are also working on a number of projects for 2011.  These negotiations are at varying stages with planners and landlords.

Conventional gas generation

2009 saw Alkane make its first move into a new business stream with the tolling contract with GDF.  Under this contract, Alkane effectively rents surplus capacity at Shirebrook and Markham to GDF, who are responsible for the conventional gas supply and the plant running regime for these engine units.  Whilst this is our first move into this new business area it is built on our existing plant capacity and our core gas to power skills.

The Alkane Team

Full credit should be given to the Alkane team for these results.  The engineering team started the year managing 17MW of CMM capacity at 6 sites and have finished the year with 30MW installed capacity, covering both CMM and tolling, at 9 sites.  The project team have also overseen the Group's largest ever capital expenditure programme, which has opened the new sites and provided for the preparation work on the three potential sites for 2010.

The Board would like to pass on its thanks for eight years Board service to Peter Fraser, who retired in May.  In addition the Board wishes to thank Cameron Davies, one of the founders of Alkane, who stood down as an executive director towards the end of 2009 and has taken up the role of non-executive director.  I am delighted to announce that Joe Darby joined the Board in January 2010, and we look forward to benefiting from Joe's extensive energy industry experience.

The Board would like to take this opportunity to thank the entire Alkane team for their sterling efforts, hard work and contribution to such a busy 2009.

Outlook

In 2009 Alkane carried out its largest ever investment programme and produced record levels of power generation.  With the production from the sites developed last year, together with the new sites currently under development, we expect to increase production again in 2010.  As previously announced, prices in 2010 will be weaker as current wholesale prices are significantly lower than in 2009.  However, it is widely expected that prices will rise in the medium to longer term, and with its increased production the Group is well placed to benefit.

Meanwhile the Board continues to explore other opportunities within the gas to power sector to take advantage of its proven skills in managing small scale, flexible and low cost power generation.  We believe that this gives us an ideal platform to grow in the alternative energy sector.  We have started to deliver on this potential with our first moves into conventional gas and biogas.  This programme should provide us with an extended arena to grow into in future years.

John Lander

Chairman

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited)

for the year ended 31 December 2009

 

		2009	2008
	Notes	£'000	£'000
Revenue		6,292	5,191
Cost of sales		(2,026)	(2,093)
Gross profit		4,266	3,098
Administrative expenses		(1,933)	(1,862)
Non-recurring costs	3	-	(108)
Return on Group operations		2,333	1,128
Other operating income		152	63
Proceeds from surrender of leases		-	350
Impairment of gas assets		(18)	(200)
Profit on activities before finance income/(costs)		2,467	1,341
Finance income		109	294
Exchange (loss)/gain arising from financing		(307)	495
Finance costs		(185)	(182)
Net finance (costs)/income		(383)	607
Profit before tax		2,084	1,948
Tax (charge)/credit	5	(1)	60
Profit for the period from continuing operations		2,083	2,008
Discontinued operations:
Net profit on disposal of associate	6	767	-
Impairment charge	6	(1,448)	-
Share of profit of associate		-	383
Profit for the year attributable to equity holders of the parent		1,402	2,391
Other comprehensive income
Exchange differences on translation of foreign operations		-	814
Exchange difference on long-term loan		-	433
Exchange difference transferred to profit or loss on disposal of foreign operation		(927)	-
Total comprehensive income for the year attributable to equity
holders of the parent		475	3,638
Earnings per ordinary share
From continuing operations:
Basic, for profit for the year attributable to equity holders of the parent	7	2.24p	2.17p
Diluted, for profit for the year attributable to equity holders of the parent	7	2.22p	2.15p
From continuing and discontinued operations:
Basic, for profit for the year attributable to equity holders of the parent	7	1.51p	2.59p
Diluted, for profit for the year attributable to equity holders of the parent	7	1.49p	2.56p

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (unaudited)

at 31 December 2009

		2009	2008
	Notes	£'000	£'000
NON-CURRENT ASSETS
Property, plant and equipment	8	9,355	5,932
Gas assets	9	8,937	4,477
		18,292	10,409
CURRENT ASSETS
Inventories		223	144
Trade and other receivables		1,450	5,334
Other financial assets		-	350
Cash and short-term deposits		904	1,826
		2,577	7,654
Assets held for sale	6	-	3,322
		2,577	10,976
TOTAL ASSETS		20,869	21,385
CURRENT LIABILITIES
Trade and other payables		(1,019)	(2,799)
Finance lease obligations		(665)	(402)
Provisions		(13)	-
		(1,697)	(3,201)
NON-CURRENT LIABILITIES
Finance lease obligations		(2,045)	(1,507)
Provisions		(1,348)	(1,399)
		(3,393)	(2,906)
TOTAL LIABILITIES		(5,090)	(6,107)
NET ASSETS		15,779	15,278
EQUITY
Share capital		464	464
Share premium		72	72
Cumulative translation adjustment		-	927
Other reserves		8,557	8,531
Retained earnings		6,686	5,284
TOTAL EQUITY		15,779	15,278

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited)

for the year ended 31 December 2009

		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 2009	464		72	927	8,531	5,284	15,278
Total comprehensive income and expense for the period	-		-	(927)	-	1,402	475
Share based payment	-		-	-	26	-	26
At 31 December 2009	464		72	-	8,557	6,686	15,779
At 1 January 2008	460		33,259	113	107	(22,395)	11,544
Total comprehensive income and expense for the period	-		-	814	-	2,824	3,638
Share based payment	-		-	-	5	-	5
Cancellation of share premium	-		(33,274)	-	8,419	24,855	-
Issue of share capital	4		87	-	-	-	91
At 31 December 2008	464		72	927	8,531	5,284	15,278

 

(1)   Other reserves comprise share-based payments of £138,000 (2008: £112,000), and a distributable reserve of £8,419,000 (2008: £8,419,000) created following cancellation of the share premium.

(2)   The balance of the foreign currency translation reserve at 31 December 2009 was nil (31 December 2008: £555,000).

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)

for the year ended 31 December 2009

		2009	2008
	Notes	£'000	£'000
Operating activities
Profit before tax from continuing operations		2,084	1,948
Adjustments to reconcile operating profit to net cash flows:
Depreciation and impairment of property, plant and equipment and
gas assets		1,225	1,261
Share-based payments expense		26	5
Proceeds from surrender of leases		-	(350)
Finance income		(109)	(294)
Finance expense		185	182
Movements in provisions		(38)	(123)
Decrease/(increase) in trade and other receivables		2,235	(377)
Increase in inventories		(79)	(43)
Decrease in trade and other payables		(214)	(25)
Income tax refunded		132	16
Net cash flows from operating activities		5,447	2,200
Cash flows from investing activities
Proceeds from sale of investment in associate		3,162	-
Proceeds from surrender of leases		-	350
Interest received		176	401
Dividends received		-	182
Purchase of property, plant and equipment		(5,709)	(1,784)
Purchase of gas assets		(4.964)	(1,230)
Net cash flows used in investing activities		(7,335)	(2,081)
Cash flows from financing activities
Issue of share capital		-	92
Proceeds from sale and finance leaseback		1,417	402
Sale and finance leaseback rentals		(616)	(355)
Interest paid		(185)	(182)
Net cash flows from/(used in) financing activities		616	(43)
Net (decrease)/increase in cash and cash equivalents		(1,272)	76
Cash and cash equivalents at 1 January		2,176	2,100
Cash and cash equivalents at 31 December	11	904	2,176

 

NOTES TO THE ACCOUNTS

1.     CORPORATE INFORMATION

The interim condensed consolidated financial statements of the Group for the year ended 31 December 2009 were authorised for issue in accordance with a resolution of the directors on 9 March 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 activity of the Group is described in Note 4.

2.     BASIS OF PREPARATION AND ACCOUNTING POLICIES

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.  The accounting policies which follow set out those policies which apply in preparing financial statements for the Group and the Company.  The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual statement of comprehensive income and related notes. The result for the year of that Company is a loss of £301,000 (2008: £407,000).

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies.

The policies set out in the most recently published full accounts have been followed.  The Group has adopted all of the standards and interpretations that were mandatory for accounting periods beginning on or after 1 January 2009 that are relevant to the operations of the Group.

3.     NON-RECURRING COSTS

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

		2009 unaudited	2008
		£'000	£'000
Costs of corporate transactions		-	108

4.     SEGMENT INFORMATION

Operating segments

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

   Seasonality of operations

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

5.     TAXATION

The tax charge of £1,000 for the year ended 31 December 2009 and tax credit of £60,000 for the year ended 31 December 2008 relate to our site in Germany and comprises advance payments to the German tax authorities net of a refund received that relates to prior years.

6.     SALE OF ASSOCIATE

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

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

	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 has placed €720,000 (£640,000) from the consideration into an escrow account to act as collateral against any warranties or other claims. Of the shareholder loan of €1,960,000 (£1,873,000) made to Pro2 Anlagentechnik GmbH, €1,000,000 (£956,000) was sold at face value on 2 March 2009. The balance is due to be repaid in instalments during 2010: €50,000 (£45,000) was received on 5 January with further instalments of €50,000 on 4 June, €100,000 on 4 September, €260,000 on 4 December and €500,000 on 31 December.

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

Pro2's trading during 2009 has been impacted by the economic recession as a result of which there is a fundamental uncertainty as to the recovery of the balance of the deferred amounts of £1,493,000 shown in the table above. An impairment charge has therefore been taken against that amount, less the £45,000 that has been received in 2010.

7.     EARNINGS PER ORDINARY 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 year.

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 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:

	2009	2008
	unaudited
	£'000	£'000
Profit for the year from continuing operations	2,083	2,008
Profit attributable to equity holders of the parent	1,402	2,391
	No.	No.
Basic weighted average number of ordinary shares	92,883,878	92,488,613
Dilutive effect of share options	1,134,040	765,596
Diluted weighted average number of ordinary shares	94,017,918	93,254,209

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

8.     PROPERTY, PLANT AND EQUIPMENT

Acquisitions and disposals

During the year ended 31 December 2009, the Group acquired assets with a cost of £4,386,000 (2008: £2,801,000). There were no disposals during the period (2008: nil).

              Sale and finance leaseback

During the year 31 December 2009, the Group entered into 2 new lease agreements for 3 items of plant with a total cost of £1,310,000 (2008: one agreement with a cost of £402,000).

9.     GAS ASSETS

Acquisitions and disposals

During the year ended 31 December, the Group acquired assets with a cost of £4,722,000 (2008: £1,666,000). There were no disposals during the year (2008: nil).

10.  CAPITAL COMMITMENTS

At 31 December 2009, the Group had capital commitments contracted for but not provided in the financial statements of £71,000 for the acquisition of property, plant and equipment (2008 £1,142,000) and of £443,000 for the acquisition of gas assets (2008: £284,000).

11.  ADDITIONAL CASH FLOW INFORMATION

Analysis of net debt

	1        January  2009	Cash flow	Other     non-cash movements	Exchange rate differences	31 December 2009
					Unaudited
	£'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 (debt)/funds	267	(2,103)	-	30	(1,806)
Securities	305	503	(620)	-	188
Adjusted net (debt)/funds*	572	(1,600)	(620)	30	(1,618)

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

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

12.  RELATED PARTY TRANSACTIONS

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

	2009	2008
	unaudited
	£'000	£'000
(a) Sales of goods and services
Sale of goods
-       A-TEC Anlagentechnik GmbH1	-	230
Sale of services
-       Associate2	-	48
	-	278
(b) Purchases of goods and services
Purchase of goods
-       Associate2	-	1,508
Purchase of services
-       Associate2	-	17
-       A-TEC Anlagentechnik GmbH1	-	174
	-	1,699
(c) Year-end balances arising from sales/purchases of goods/services
Receivables from related parties:
-       Associate2	-	48
-       A-TEC Anlagentechnik GmbH1	-	14
Payments to related parties:
-       Associate2	-	1,532
-       A-TEC Anlagentechnik GmbH1	-	12
Outstanding balances arising from the sale and purchase of goods and services between related parties are unsecured and interest free.
(d) Key management compensation
	2009	2008
	Unaudited
	£'000	£'000
Salaries and other short term employee benefits	695	562
Long term benefits	55	42
Share-based payments	26	5
	776	609
(e) Loans to related parties
Loans to associate2:
-  beginning of year	3,847	3,086
-  opening adjustment - equity interest in associate sold	(3,847)	-
-  interest charged	-	195
-  interest received	-	(307)
-  exchange difference	-	873
-  end of year	-	3,847

The loans to associate relate to former associate company Pro2 Anlagentechnik GmbH.

¹Achim Wörsdörfer, a director and shareholder of our former associate company Pro2 Anlagentechnik GmbH, is also a director of A-TEC Anlagentechnik GmbH.

²Refers to transactions with our former associate company Pro2 Anlagentechnik GmbH.

13.  GENERAL NOTE

a.   The preliminary unaudited financial information set out above does not constitute full accounts within the meaning of Section 435 of the Companies Act 2006.

b.   Audited statutory accounts in respect of the year ended 31 December 2008 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 2009 will be sent to shareholders during April 2009 and will be available from the Company's registered office - Edwinstowe House, High Street, Edwinstowe, Nottinghamshire NG21 9PR.

 

 

END

 

 

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