Interim Results

RNS Number : 5957D

Alkane Energy PLC

17 September 2008

 



For immediate release                                                                                                 17 September 2008 

Alkane Energy plc 

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

Unaudited interim results for the half year to 30 June 2008

Alkane Energy plc (AIM: ALK) the profitable alternative energy company that operates environmentally friendly power generation plants using coal mine methane as fuel, today announces its unaudited interim results for the six months to 30 June 2008.

Highlights

• Good progress in UK business capitalising on buoyant energy prices 

• Robust performance from generation portfolio

• Total installed capacity increased 17% to 20MW equivalent

• 2.9MW of new capacity installed at Mansfield and Warsop

• Continued growth in power sales with 43 million kWh (2007 H1: 39 million kWh)

• New gas well drilled at Mansfield supplying gas for generators

• Successful application in 13th Onshore UK Licensing Round

  • 4 new blocks containing 6 abandoned coal mines

Financial Highlights 

• £1,245,000 of cash generated from operating activities (2007 H1 : £193,000)

• Sales up 10.4% to £2,604,000 (2007 H1: £2,359,000)

• CMM profits up 56% to £863,000 (2007 H1: £552,000)

• Profit attributable to equity holders £522,000 (2007 H1: £310,000)

• Basic earnings per share up to 0.57p (2007 H1: 0.34p)

• Net funds of £446,000 (2007: net debt £491,000)

Commenting on the interim results, Chief Executive, Dr. Cameron Davies, said:

'I am pleased to report that Alkane's CMM business continues to be profitable and highly cash generative. During the first half of the year we made good progress on our development programme with the installation of 2.9MW of new generating capacity. In addition, we generated a record 43 million kilowatt hours of electricity at an average price in H1 of £46/MWh, principally set by contracts signed in September 2007 before the recent rapid rise in prices. We have recently signed three forward contracts at substantially higher prices between £73/MWh and £81/MWh for around 50% of our output. In this positive business environment we look forward to the future of the company with added confidence.'

For more information please contact:

Alkane Energy plc Dr. Cameron Davies, CEO Steve Goalby, Finance Director	Tel: [phone] (Today) Tel: [phone]
Brewin Dolphin Investment Banking Andrew Emmott	Tel: [phone]
Buchanan Communications Dr. Ben Willey, Partner Miranda Higham, Associate	Tel: [phone] (Today)

CHAIRMAN'S STATEMENT

Introduction

Alkane increased its turnover in the first half of 2008 to £2,604,000 compared with £2,359,000 in the first half of 2007. Profit attributable to equity holders was £522,000 in the period compared with £310,000 for the same period in 2007.

Our power plants generated 43 million kilowatt hours of electricity during the first half with excellent availability. Our direct gas sales were 5 million cubic metres of coal mine methane (CMM) to local customers in Yorkshire and the East Midlands.  Alkane's methane plants have an advantage over other alternative energy sources as their output is more predictable.  On the basis of available power output, Alkane's 20MW installed capacity is equivalent to a 55MW wind farm.

Increased cash flow from the new generation capacity, and the availability of lease financing, have increased our cash and cash equivalent resources to £2,483,000, compared with £1,446,000 at 30 June 2007. These resources will be invested in our project development programme. 

Our 13th Onshore Licensing Round application was very successful as we were awarded 4 out of the 5 blocks for which we applied, covering 6 mines in the East Midlands.  

As gas prices are now at very high levels and onshore reserves are therefore increasingly valuable, we have retained expert consultants to evaluate the potential for Coal Bed Methane (CBM or Coal Seam Methane) production within our licence areas which could provide additional new revenue streams in the longer term.

Financial Overview 

Revenue for the first half of 2008 increased by 10% to £2,604,000 compared with £2,359,000 in H1 2007. The return on Group operations including non-recurring costs was £316,000 compared with £116,000 in 2007. The core CMM business produced an operating profit of £863,000 an increase of 56% on last year (before non-recurring costs, loss on deemed disposal and share of loss of associate).

Net cash flows from operating activities were £1,245,000 reflecting the strong operating performance of the CMM business, compared with £193,000 in H1 2007.

Net funds at 30 June 2008 stood at £446,000 (30 June 2007: net debt of £491,000) whilst the balance of cash and cash equivalents was £2,483,000 (30 June 2007: £1,446,000).  

The Group's adjusted profit before tax was £470,000 (2007: £620,000), comprising profit of £945,000 from the CMM business (2007: £654,000), an increase of 44.5%, and a loss of £475,000 from Pro2 (2007: loss £34,000). The adjusted profit before tax is calculated after adding back:

• Non-recurring costs in respect of abortive corporate transactions of £72,000 (2007: £222,000);

• Non-recurring external costs of the transition to IFRS in 2007 of £60,000;

• Goodwill of £66,000 in respect of the external business of Alkane Services Limited which was written off in 2007;

• A deemed loss on disposal in 2007 of £120,000 relating to the reduction of the Company's holding in Pro2;

and after deducting:

• An exchange gain of £145,000 on the loans made to Pro2 and on euro-denominated bank balances (2007: £nil); and

• The sale of a non-core licence for £185,000 in 2007.

The reported profit before tax for the period is £543,000 (2007: £337,000).  

The increase in CMM revenue is due to higher volume in the UK where electricity sales were up by 11.7% as a result of the installation of new capacity.  Revenue per MWh of electricity sold in H1 2008 was £49, compared with £47 in H1 2007. 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 £79/MWh for 2009 and £74/MWh for 2010. It is expected that higher prices will more than compensate for the loss of CCL related revenue.  Alkane's gas sales were lower in the period by 17% due to a maintenance shutdown of the Yorkshire Electricity grid which affected Wheldale.

Pro2 in Germany continues to grow its revenue, with sales of £12.0m in H1 2008 compared with £7.9m in H1 2007. However costs have increased as the company has built up resources in order to increase sales into the international market as the German biogas market has contracted. This has resulted in an increased loss, of which Alkane's share is £475,000 compared with £34,000 at the same stage in 2007. Pro2's renewable energy business is biased towards the second half, and we expect that as in previous years Pro2 will perform well over the full year.

Operations Review

Mine Gas Plants

Alkane has a portfolio of 11 containerised electricity generation plants and 2 gas supply plants operating in the UK and Germany.  At Mansfield, a second gas well was completed and a third generator (1.55MW) was installed. The total gas and installed electricity capacity at Mansfield is now equivalent to 5.25MW, our largest alternative energy production site.   At Warsop, a second 1.35MW generator was installed bringing total export capacity to 2.7MW.  As a result of this increased capacity our electricity sales continued to rise and were 10.2% higher than in the first half of 2007.

We have recently signed three forward electricity sales contracts at £81/MWh for Mansfield 3 (covering the 6 months from 1 October 2008); £73/MWh for Bevercotes (12 months from 1 April 2009); and £75/MWh for Sherwood and Whitwell (9 months from 1 April 2009) which compare with an average of £46/MWh for all sites in the first half of 2008.

Alkane's total generating and gas supply capacity has now reached the milestone of 20MW and new projects should increase this further in 2009.  

The Company intends to install a fourth generator at Bevercotes, which is currently in the planning application stage, with other projects continuing in the overall planning and development process. As part of this, a borehole was drilled into an old mine in South Wales in August and it is currently being tested for gas and water levels.

Alkane's negative carbon footprint as a result of capture and use of methane emissions is now equivalent to removing 280,000 average cars from the UK's roads annually.  Our power generation output is equivalent to supplying around 25,000 domestic customers with electricity. 

The verification process to gain value for our emissions credits is making slower progress than we expected due to changes in the voluntary emissions market in Europe but we continue to push for accreditation of these potentially valuable assets.

German CMM

The Joarin power plant continued to generate steadily at around 1MW output and produces a small profit. A second well location to access identified gas reserves is currently being researched by independent mining engineering consultants at the Fraunhofer Institute in Oberhausen.  

Pro2 Anlagentechnik

Pro2, Alkane's 38% owned associate company, increased its turnover in the first half to £12.0 million. It has a full order book for 2008 and has already a large order book for delivery in 2009.  Due to investment in extra production capacity, new international markets and the seasonal nature of power plant sales in Europe, the company was loss making in the first half.

The German renewable energy law was amended in June 2008 with additional feedstock allowances and premium prices to encourage the use of farm, food and other bio-waste as well as cropped biomass in the production of biogas. After a difficult year for the industry the German biogas sector looks set to grow again from 1 January 2009 when the new renewable energy tariffs take effect.

Outlook

In the first half 2008, our electricity generation and gas supply operations have demonstrated their potential with good growth in profits and strong cash generation.

Alkane's future prospects are encouraging, as electricity prices continue to rise and output from 50% of our plants are already signed up on contracts at prices substantially higher than those currently in place.  The medium term outlook is positive with the forward electricity price curve remaining high at around £80/MWh up to 2010 and with Alkane's own existing gas reserves becoming more valuable, whilst giving the company the advantage of low fuel input costs. 

Electricity prices coupled with existing operational sites and the Group's undeveloped project pipeline gives Alkane good visibility on future growth. The balance sheet is strong, with net funds and good cash generation giving the capability to continue investment in new sites and additional generating capacity.

In closing, I would like to thank my colleagues for their hard work and dedication. 

John Lander

Chairman

GROUP INCOME STATEMENT

for the 6 months ended 30 June 2008

		For the six	For the six
		months ended	months ended
		30 June	30 June
		2008	2007
		Unaudited	Unaudited
	Notes	£'000	£'000
Revenue		2,604	2,359
Cost of sales		(826)	(810)
Gross profit		1,778	1,549
Administrative expenses		(915)	(997)
Non-recurring costs	3	(72)	(282)
Loss on deemed disposal		-	(120)
Share of loss of associate		(475)	(34)
Return on Group operations		316	116
Other operating income		30	58
Profit on sale of licence		-	185
Impairment of goodwill		-	(66)
Profit on activities before finance income/(costs)		346	293
Finance income		139	131
Exchange gain arising from financing		145	-
Finance costs		(87)	(87)
Net finance income		197	44
Profit before tax	4	543	337
Tax	5	(21)	(27)
Profit for the period attributable to equity holders of the parent		522	310
Earnings per share
Basic, for profit for the period attributable to equity holders of the parent	6	0.57p	0.34p
Diluted, for profit for the period attributable to equity holders of the parent	6	0.56p	0.33p
The earnings per ordinary share calculation represents total and continuing results.

  GROUP BALANCE SHEET

at 30 June 2008

		30 June	30 June	31 December
		2008	2007	2007
		Unaudited	Unaudited	Audited
	Notes	£'000	£'000	£'000
NON-CURRENT ASSETS
Property, plant and equipment	7	5,291	3,334	3,888
Gas assets	8	3,754	3,352	3,315
Investments accounted for using the equity method		3,495	3,070	3,691
		12,540	9,756	10,894
CURRENT ASSETS
Inventories		101	78	101
Trade and other receivables		3,019	3,656	3,130
Other financial assets		350	350	350
Cash and short-term deposits		2,133	1,096	1,750
		5,603	5,180	5,331
TOTAL ASSETS		18,143	14,936	16,225
CURRENT LIABILITIES
Trade and other payables		(2,282)	(895)	(1,371)
Financial liabilities		(412)	(304)	(315)
Provisions		(6)	(4)	(3)
		(2,700)	(1,203)	(1,689)
NON-CURRENT LIABILITIES
Financial liabilities		(1,625)	(1,633)	(1,473)
Provisions		(1,459)	(1,550)	(1,519)
		(3,084)	(3,183)	(2,992)
TOTAL LIABILITIES		(5,784)	(4,386)	(4,681)
NET ASSETS		12,359	10,550	11,544
EQUITY
Share capital	10	463	460	460
Share premium		33,318	33,259	33,259
Cumulative translation adjustment		235	-	113
Other reserves		107	97	107
Retained losses		(21,764)	(23,266)	(22,395)
TOTAL EQUITY		12,359	10,550	11,544

  GROUP STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 June 2008

		Attributable to equity holders of the parent
	Issued		Share	Translation	Other	Retained	Total
	capital		premium	of foreign	reserves(1)	earnings	equity
				operations
	£'000		£'000	£'000	£'000	£'000	£'000
At 1 January 2008	460		33,259	113	107	(22,395)	11,544
Foreign currency translation	-		-	122	-	109	231
Total income and expense for the period recognised directly in equity	-		-	122	-	109	231
Profit for the period	-		-	-	-	522	522
Total income and expense for the period	-		-	122	-	631	753
Issue of share capital	3		59	-	-	-	62
At 30 June 2008 (Unaudited)	463		33,318	235	107	(21,764)	12,359
At 1 January 2007	459		33,234	-	81	(23,572)	10,202
Foreign currency translation	-		-	-	5	(4)	1
Total income and expense for the period recognised directly in equity	-		-	-	5	(4)	1
Profit for the period	-		-	-	-	310	310
Total income and expense for the period	-		-	-	5	306	311
Share-based payment	-		-	-	11	-	11
Issue of share capital	1		25	-	-	-	26
At 30 June 2007 (Unaudited)	460		33,259	-	97	(23,266)	10,550

 (1) Other reserves comprise share-based payments.

GROUP CASH FLOW STATEMENT 

for the six months ended 30 June 2008

		For the six	For the six
		months ended	months ended
		30 June	30 June
		2008	2007
		Unaudited	Unaudited
	Notes	£'000	£'000
OPERATING ACTIVITIES
Profit before tax from continuing operations		543	337
Adjustments to reconcile operating profit to net cash flows:
Depreciation and impairment of property, plant and equipment and gas assets		281	247
Amortisation and impairment of intangible assets		-	66
Share-based payments expense		-	10
Profit on sale of licence		-	(185)
Finance income		(139)	(131)
Finance expense		87	87
Loss on deemed disposal		-	120
Share of net loss of associate		475	34
Movements in provisions		(57)	-
Decrease in trade and other receivables		29	193
Increase in inventories		-	(31)
Increase/(decrease) in trade and other payables		17	(525)
Income tax refunded/(paid)		9	(29)
NET CASH FLOWS FROM OPERATING ACTIVITIES		1,245	193
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of licence		-	185
Interest received		198	93
Purchase of property, plant and equipment		(855)	(466)
Purchase of gas assets		(429)	(145)
NET CASH FLOWS USED IN INVESTING ACTIVITIES		(1,086)	(333)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of share capital		62	26
Proceeds from sale and finance leaseback		402	606
Sale and finance leaseback rentals		(153)	(201)
Interest paid		(87)	(86)
NET CASH FLOWS FROM FINANCING ACTIVITIES		224	345
Net increase in cash and cash equivalents		383	205
Cash and cash equivalents at 1 January		2,100	1,241
CASH AND CASH EQUIVALENTS AT 30 JUNE	11	2,483	1,446

NOTES TO THE ACCOUNTS

1. CORPORATE INFORMATION

The interim condensed consolidated financial statements of the Group for the six months ended 30 June 2008 were authorised for issue in accordance with a resolution of the directors on 16 September 2008.

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

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

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES

Basis of preparation

The interim condensed financial statements are unaudited and do not constitute statutory financial statements within the meaning of section 240 of the Companies Act 1985.

The interim condensed financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. This report should be read in conjunction with the Group's Annual Report and Accounts 2007, which have been prepared in accordance with IFRSs as adopted by the European Union.

Accounting policies

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those presented in the Group's Annual Report and Accounts for the year ended 31 December 2007. 

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. There have been no significant changes in the bases upon which estimates have been determined compared to those applied at 31 December 2007, and no change in estimate has had a material effect on the current period. All significant estimates and judgements have been disclosed in the Group's Annual Report and Accounts for the year ended 31 December 2007. 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 annual reporting date as at 31 December 2008.

3. NON-RECURRING COSTS

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

		Six  months	Six months
		ended  30 June	ended  30 June
		2008	2007
		Unaudited	Unaudited
		£'000	£'000
Corporate costs		72	221
IFRS implementation costs		-	61
		72	282

The corporate costs in 2008 and 2007 were incurred in respect of aborted corporate transactions. The IFRS implementation costs in 2007 refer to the external costs incurred in the transition from UK GAAP to IFRS.

4. 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 is biased towards the second half of the year, 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 2008 and 2007 respectively:

Six months ended 30 June 2008 (Unaudited)		Continuing operations
		Extraction of gas from coal measures	Manufacture, supply, operate and maintain equipment	Total
		£'000	£'000	£'000
Revenue
Revenue from external customers		2,600	4	2,604
Inter-segment sales		-	121	121
Total revenue		2,600	125	2,725
Depreciation		(283)	-	(283)
Results
Segment profit/(loss)		1,038	(446)	592
Corporate centre costs				(270)
Corporate centre finance income				221
Profit before tax from continuing operations				543

Six months ended 30 June 2007 (Unaudited)		Continuing operations
		Extraction of gas from coal measures	Manufacture, supply, operate and maintain equipment	Total
		£'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
Depreciation		(255)	-	(255)
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

  The following table compares total segment assets, total segment liabilities and segmental capital expenditure as at 30 June 2008 and as at the date of the last annual financial statements (31 December 2007).

	30 June	31 December
	2008	2007
	Unaudited	Audited
	£'000	£'000
Extraction of gas from coal measures	12,566	10,322
Manufacture, supply, operate and maintain equipment	154	125
Total segment assets	12,720	10,447
Corporate centre	666	778
Investment in associate	3,590	3,691
Loan to associate	1,573	1,612
Inter-segment adjustment	(406)	(303)
Total consolidated assets	18,143	16,225
Extraction of gas from coal measures	(5,748)	(4,551)
Manufacture, supply, operate and maintain equipment	(9)	(9)
Total segment liabilities	(5,757)	(4,560)
Corporate centre	(148)	(186)
Inter-segment adjustment	121	65
Total consolidated liabilities	(5,784)	(4,681)
Extraction of gas from coal measures	2,123	1,457
Manufacture, supply, operate and maintain equipment	-	-
Total capital expenditure	2,123	1,457

Geographical Segments

Six months ended 30 June 2008 (Unaudited)		Continuing operations
		United Kingdom	Continental Europe	Total
		£'000	£'000	£'000
Revenue
Revenue from external customers		2,463	141	2,604
Inter-segment sales		121	-	121
Total revenue		2,584	141	2,725
Depreciation		(249)	(34)	(283)
Results
Segment profit/(loss)		1,058	(466)	592
Corporate centre costs				(270)
Corporate centre finance income				221
Profit before tax from continuing operations				543

Six months ended 30 June 2007 (Unaudited)		Continuing operations
		United Kingdom	Continental Europe	Total
		£'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
Depreciation		(221)	(34)	(255)
Results
Segment profit/(loss)		769	(45)	724
Corporate centre costs				(497)
Corporate centre finance income				230
Loss on deemed disposal				(120)
Profit before tax from continuing operations				337

The following table compares total segment assets, total segment liabilities and segmental capital expenditure as at 30 June 2008 and as at the date of the last annual financial statements (31 December 2007).

	30 June	31 December
	2008	2007
	Unaudited	Audited
	£'000	£'000
United Kingdom	11,989	9,652
Continental Europe	731	795
Total segment assets	12,720	10,447
Corporate centre	666	778
Investment in associate	3,590	3,691
Loan to associate	1,573	1,612
Inter-segment adjustment	(406)	(303)
Total consolidated assets	18,143	16,225
United Kingdom	(5,745)	(4,514)
Continental Europe	(12)	(46)
Total segment liabilities	(5,757)	(4,560)
Corporate centre	(148)	(186)
Inter-segment adjustment	121	65
Total consolidated liabilities	(5,784)	(4,681)
United Kingdom	2,123	1,457
Continental Europe	-	-
Total capital expenditure	2,123	1,457

5. TAXATION

Tax charge in the income statement

	Six months		Six months
	ended  30 June		ended  30 June
	2008		2007
	Unaudited		Unaudited
	£'000		£'000
Current income tax:
Foreign tax	(21)		(29)
UK tax over provided in previous years	-		2
Tax charge in the income statement	(21)		(27)

The tax charge for the period relates to our site in Germany and comprises advance payments to the German tax authorities of £32,000 for 2008, net of an £11,000 refund received that relates to prior years.

6. EARNINGS PER SHARE

Basic 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.

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:

	Six months		Six months
	ended  30 June		ended  30 June
	2008		2007
	Unaudited		Unaudited
	£'000		£'000
Net profit attributable to equity holders of the parent	522		310
	2008		2007
Basic weighted average number of ordinary shares	92,146,067		91,803,720
Dilutive effect of share options	977,006		1,326,979
Diluted weighted average number of ordinary shares	93,123,073		93,130,699

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

7. PROPERTY, PLANT AND EQUIPMENT

    Acquisitions and disposals

During the six months ended 30 June 2008, the Group acquired assets with a cost of £1,542,000 (2007: £571,000). There were no disposals during the period (2007: nil).

   Sale and finance leaseback

During the six months ended 30 June 2008, the Group entered into a new lease agreement for an item of plant with a total cost of £451,000

8. GAS ASSETS

Acquisitions and disposals

During the six months ended 30 June 2008, the Group acquired assets with a cost of £581,000 (2007: £109,000). There were no disposals during the period (2007: nil).

9. CAPITAL COMMITMENTS

At 30 June 2008, the Group had the following capital commitments contracted for but not provided in the financial statements:

             Acquisition of property, plant and equipment £133,000 (30 June 2007: £75,000);

             Acquisition of gas assets £334,000 (30 June 2007: £21,000).

10. SHARE CAPITAL

During the six months ended 30 June 2008 options over 678,422 ordinary shares were exercised in the respect of the savings related share option scheme.

11. ADDITIONAL CASH FLOW INFORMATION

Analysis of net funds/(net debt)

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

	1 January 2007	Cash flow	Other non-cash movements	Exchange rate differences	30 June 2007
	Audited				Unaudited
	£'000	£'000	£'000	£'000	£'000
Cash at bank and in hand	946	205	(55)	-	1,096
Overdraft	(168)	-	168	-	-
Liquid resources	512	-	(162)	-	350
Cash and cash equivalents	1,290	205	(49)	-	1,446
Sale and finance leaseback	(1,532)	(405)	-	-	(1,937)
Long-term loans	(227)	-	227	-	-
Finance leases	(2,096)	-	2,096	-	-
Net debt	(2,565)	(200)	2,274	-	(491)
Securities	555	-	(72)	-	483
Adjusted net debt*	(2,010)	(200)	2,202	-	(8)

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

Other non-cash movements in 2007 relate to the non-consolidation of Pro2 now that it is reported as an associate. 

Cash at bank and liquid resources are held in banks with a high quality credit rating.

12. RELATED PARTY TRANSACTIONS

Transactions entered into and trading balances outstanding at 30 June with related parties are as follows:

	Six months		Six months
	ended 30 June		ended 30 June
	2008		2007
	Unaudited		Unaudited
	£’000		£’000
(a) Sales of good and services
-          Associate	23		33
-          A-TEC Anlagentechnik GmbH1	141		117
	164		150
(b) Purchases of good and services
-          Associate	1,351		252
-          A-TEC Anlagentechnik GmbH1	97		91
	1,448		343
(c) Period-end balances arising from sales/purchases of goods/services	30 June 2008		30 June 2007
	Unaudited		Unaudited
	£’000		£’000
Receivables from related parties:
-          Associate	23		145
-          A-TEC Anlagentechnik GmbH1	10		32
Payments to related parties:
-          Associate	1,354		103
-          A-TEC Anlagentechnik GmbH1	10		26

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

(d) Loans to associate	2008		2007
	£'000		£'000
At 1 January	3,086		3,446
Interest charged	85		83
Interest received	(143)		(53)
Exchange difference	220		-
At 30 June	3,248		3,476

The loans to associate relate to Pro2 Anlagentechnik GmbH a 38.01% associate undertaking.

There are two loans:

• A loan for €1,960,000 made in 2003, wholly repayable on 30 June 2013. Interest is charged at 8% per annum.

• A loan for €3,000,000 made in 2005, wholly repayable by 30 June 2007. €1,000,000 was repaid in 2007 with an extension granted on the outstanding balance. Interest is charged at 3% per annum.

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

13. GENERAL NOTE

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

 

END

 

 

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