RNS Number:9468S
Alkane Energy PLC
14 March 2002
14 March 2002
Alkane Energy plc ("Alkane" or "the company")
Preliminary Unaudited Results to 31 December 2001
Alkane Energy plc is the UK's leading commercial producer of Coal Mine Methane
(CMM) from abandoned mines.
Highlights
• Profit before taxation of £407,223 (2000: loss of £1,184,709)
• Cash reserves of £21m (2000: £26m)
• Five CMM producing sites now operational (2000: three sites)
• Heads of agreement signed with blue chip customers to replace Enron
• Target of sixteen new sites (including Barnsley and Wheldale) by end Q2
2003 rather than Q4 2002 as previously indicated
• Substantial additional acreage through farm-ins and 10th UK Onshore
Licensing Round
• Strong indications of Government support for the CMM industry
Commenting on the results, Executive Chairman, Dr Cameron Davies, said:
"This was another year of achievement for Alkane. I am delighted by the opening
of two new sites and the smooth introduction of our first containerised site at
Barnsley, Yorkshire. We have also consolidated our position as leaders in our
industry following the award of more acreage in the latest licensing round.
With the strong indications of Government support for the development of this
industry and increasingly positive sentiment towards the development of green
energy technologies, we believe that Alkane has a bright future ahead".
Enquiries:
Dr Cameron Davies, Executive Chairman Tel: 01623 827927
Alkane Energy plc
David Cross, Chief Executive
Alkane Energy plc
Judith Parry/Sophie Morton Tel: 020 7786 9600 (Today)
Binns & Co PR Ltd Thereafter: 0113 242 1171
Alkane Energy plc
Chairman's Statement
I am pleased to report that our first year as a public company has been one of
sustained progress on all fronts. We now have five operational sites, compared
to three twelve months ago. Although the unexpected collapse of Enron has
resulted in a longer delay to our site opening programme than previously
indicated, we believe that the impact will be one of timing only, as we have now
signed heads of agreement with new customers. Our customer base has been
strengthened considerably through agreements with such internationally known
names as ABB, Rexam Glass and Scottish & Southern Energy.
We have also used our new containerised extraction system for the first time at
our Barnsley plant, giving us the advantages of off-site construction and
portability, and increasing the opportunities for flexible application of our
technology.
I look forward with confidence to continuing the implementation of our
development plans in the next year.
Financial Highlights
The company made a profit on ordinary activities before taxation of £407,223
compared to a loss of £1,184,709 in 2000. This was achieved on turnover of
£1,017,400 (2000: £1,255,865). Sales were down as a result of an ongoing
problem at our Markham site, which I have addressed in more detail below.
The company's cash position remains strong with cash reserves at 31 December
2001 of £21m (2000: £26m). This cash is funding our ongoing capital investment
programme.
The Directors consider it prudent to establish a loan facility which will offer
Alkane maximum flexibility in meeting long-term cash flow requirements, and a
number of options are being considered.
In line with the policy outlined at the time of flotation, the Directors are not
proposing the payment of a dividend.
Green Energy Parks
The contributions to profits from both our Shirebrook and Steetley Green Energy
Parks were ahead of the previous year. Our plant at Shirebrook continued to
operate reliably and was able to meet the customer's requirements. At the
Steetley plant, the smallest of our sites with less than one tenth of the
equivalent operating profit contribution of Shirebrook, gas production was
temporarily halted in December 2001 to enable the customer to refurbish its
generating engines in an attempt to make them more reliable. This is providing
the opportunity to work-over the mine shaft to ensure that gas will flow in
sufficient quantities to meet future generating activities.
We opened Markham in 1999 and as previously reported, the customer encountered
problems because air was being drawn in from another mine which had not been
effectively sealed by the previous owners. Remedial work to seal this leak was
completed in August 2001 and we anticipated that the methane content would rise
allowing the customer to take more gas. The mine system did not react as
quickly as anticipated, as another point of air ingress was found at the nearby
Arkwright mine. We are currently working with the customer to adapt its plant
to cope with the lower concentrations of methane. The situation encountered at
Markham is unusual because this site is located on the edge of a coalfield where
seams are close to the surface. Our other sites have been built at deeper mines
buried under a thick layer of sealing strata.
Site Development Programme
I am delighted to report that two new sites, located at Barnsley and Wheldale in
Yorkshire, are now open and delivering gas to customers Rexam Glass and Scottish
& Southern Energy. The methane capture plants were ready to deliver gas at the
end of 2001 and commenced production in February 2002 in line with customer
requirements.
At the Barnsley site we have used our first containerised extraction system, a
significant new product development which optimises flexibility. We constructed
the plant off-site and then installed it on a simple concrete base. This opens
up opportunities for selling our technology and systems world-wide, as well as
allowing us to speed up the process of opening future sites.
We had signed heads of agreement with Enron to develop new sites to supply gas
to power 100MW of electricity generation, but following Enron's demise we had to
find new customers. Heads of agreement have already been signed with ABB, the
multi-national power and automation technology company, for the development of
sites with a capacity of 50MW of electricity and with another significant
company involved in power generation for a further 50MW. We are pleased to have
replaced Enron with blue chip customers, although this has taken longer than
originally expected.
In addition to the five sites already opened, a further five sites are currently
under active development, with several other sites awaiting planning permission.
Within our portfolio of sites, gas is accessed either by a pre-existing vent
shaft or by a borehole. All of the five sites currently under active
development will require a borehole to access the methane gas, rather than
making use of an existing shaft. Only one of the five sites opened to date,
Barnsley, has required this approach. To date we have drilled proving boreholes
at four of the new sites located in Nottinghamshire, Lancashire and Yorkshire.
Whilst these proving boreholes confirm the presence of methane gas, production
boreholes may be drilled in different locations to maximise the gas output.
The overall effect of the demise of Enron and the time it has taken to find
replacement customers, together with technical refinements we are making at some
of our development sites, has been to slow down the pace of the site development
programme. As a result, we anticipate that a total of sixteen new sites
(including Barnsley and Wheldale) will be ready for gas draw down by the end of
the first half 2003, rather than at the end of December 2002. This will bring
the overall number of operational sites to nineteen. The next new sites will be
opened in Autumn 2002, with six of the new sites expected to be ready for gas
draw down by the end of this year.
10th UK Onshore Licensing Round
On 13th February 2002, despite strong competition, we were awarded the 8 new
licences applied for in the 10th UK Onshore Licensing Round, covering 1,188 km
(2).
We have also farmed into a number of new CMM and Coal Bed Methane (CBM) rights,
including the UK Gas areas in South Wales announced on 11 March 2002, and
relinquished other acreage which has been assessed as having no commercial
potential. The net contribution has been an increase of 346 km(2). This brings
our total acreage to 5,816 km(2), substantially more than any other CMM
extractor in the UK.
Government Support for the Industry
The company, through the Association of Coal Mine Methane Operators (ACMMO), has
continued to lobby the government for support for the industry. This has proved
successful as the Energy Minister, Mr Brian Wilson, has publicly acknowledged
the case for CMM development. We are very encouraged that the recently
announced results of the Performance and Innovation Unit's review of energy
policy, commissioned by the Government, has shown such a commitment to the
development of a low carbon economy. In view of this we remain optimistic that
CMM will be granted full exemption from Climate Change Levy in the near future.
Other forms of financial assistance are also under discussion.
Strategy
At the time of its flotation Alkane identified certain strategic objectives,
which remain unchanged. They are to:
- Use the Shirebrook design as the model for future site developments.
- Roll out 100 or more sites over the next five years.
- Seek to acquire more extraction rights over acreage with CMM and CBM
potential.
- Concentrate on CMM whilst monitoring technological and market
developments of the emerging CBM industry in the UK.
Prospects
Our first year as a public company has been an active one and we expect to
continue this high level of activity as we progress into next year. In order to
meet the demands of this increased activity we have now reinforced our team with
additional project managers and specialists and have extended our network of
contractors.
Whilst the Enron situation was a very unfortunate and unforeseeable diversion,
we are delighted to have signed heads of agreement with replacement blue chip
customers. This process has however taken longer than originally expected and
will consequently result in a short deferral of the site development programme
as referred to above. Accordingly we do not expect to see the real financial
benefits and profitability from the roll out programme until 2003 when a larger
number of the new plants producing gas will be open.
In conclusion, we are pleased to have made good progress during the year,
installing our first containerised site at Barnsley and extending our acreage in
the 10th Onshore Licensing Round. The Board looks forward with confidence to
continuing the implementation of Alkane's development plans.
I would like to thank our shareholders for their support and confidence during
the year and our team for their professionalism, hard work and commitment to the
development of the company.
Dr Cameron Davies
Executive Chairman
ALKANE ENERGY PLC
GROUP PROFIT AND LOSS ACCOUNT
for the year ended 31 December 2001
2001 2000
(unaudited)
£ £
TURNOVER 1,017,400 1,255,865
Cost of sales (533,980) (631,709)
----- -----
GROSS PROFIT 483,420 624,156
Administrative expenses (1,323,245) (997,079)
Other operating income 23,458 7,512
----- -----
OPERATING LOSS (816,367) (365,411)
Bank interest receivable 1,223,590 102,891
Interest payable - (922,189)
----- -----
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 407,223 (1,184,709)
Taxation - 432
----- -----
PROFIT/(LOSS) FOR THE FINANCIAL YEAR 407,223 (1,184,277)
ACCUMULATED LOSSES BROUGHT FORWARD (2,225,296) (1,041,019)
----- -----
ACCUMULATED LOSSES CARRIED FORWARD (1,818,073) (2,225,296)
=========== ===========
Earnings/(loss) per ordinary share - basic 0.45p (3.56p)
Earnings/(loss) per ordinary share - fully diluted 0.44p (3.56p)
STATEMENT OF RECOGNISED GAINS AND LOSSES
There are no recognised gains or losses for the year other than the profit of
£407,223 (2000: £1,184,277 loss).
ALKANE ENERGY PLC
GROUP BALANCE SHEET
at 31 December 2001
2001 2000
(unaudited)
£ £
FIXED ASSETS
Intangible assets 31,000 61,998
Tangible fixed assets - gas properties 11,165,288 5,555,985
Tangible fixed assets - other 236,327 150,237
----- -----
11,432,615 5,768,220
----- -----
CURRENT ASSETS
Stock 19,302 17,368
Debtors 651,422 534,472
Cash at bank and in hand 20,930,231 25,957,614
----- -----
21,600,955 26,509,454
CREDITORS: amounts falling due within one year (1,278,580) (1,037,358)
----- -----
NET CURRENT ASSETS 20,322,375 25,472,096
----- -----
TOTAL ASSETS LESS CURRENT LIABILITIES 31,754,990 31,240,316
PROVISIONS FOR LIABILITIES AND CHARGES (179,229) (129,778)
----- -----
NET ASSETS 31,575,761 31,110,538
=========== ===========
CAPITAL AND RESERVES
Called up share capital 448,297 446,794
Share premium account 32,945,537 32,889,040
Profit and loss account (1,818,073) (2,225,296)
----- -----
TOTAL EQUITY SHAREHOLDERS' FUNDS 31,575,761 31,110,538
=========== ===========
ALKANE ENERGY PLC
GROUP STATEMENT OF CASH FLOWS
for the year ended 31 December 2001
2001 2000
(unaudited)
£ £
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (NOTE A) (763,657) (41,301)
----- -----
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 1,225,713 34,656
Interest paid (184,544) (911,458)
----- -----
1,041,169 (876,802)
TAXATION
Corporation tax - 329
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments to acquire tangible fixed assets - gas properties (5,118,248) (1,390,341)
Payments to acquire tangible fixed assets - other (218,217) (23,835)
----- -----
(5,336,465) (1,414,176)
----- -----
NET CASH OUTFLOW BEFORE FINANCING (5,058,953) (2,331,950)
FINANCING
Issue of ordinary share capital 31,570 28,037,270
Issue of convertible loan stock - 2,380,000
Repayment of convertible loan stock - (2,800,000)
----- -----
31,570 27,617,270
----- -----
(DECREASE)/INCREASE IN CASH (5,027,383) 25,285,320
=========== ===========
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2001 2000
(unaudited)
£ £
(Decrease)/increase in cash (5,027,383) 25,285,320
Cash outflow from loans - 420,000
----- -----
CHANGE IN NET DEBT ARISING FROM CASH FLOWS (5,027,383) 25,705,320
Loans converted into shares - 5,000,000
NET FUNDS AT 1 JANUARY 25,957,614 (4,747,706)
----- -----
NET FUNDS AT 31 DECEMBER (NOTE B) 20,930,231 25,957,614
=========== ===========
NOTES TO THE STATEMENT OF CASH FLOWS
A Reconciliation of operating loss to net cash outflow from operating activities
2001 2000
(unaudited)
£ £
Operating loss (816,367) (365,411)
Depreciation 147,088 147,442
Amortisation 30,998 31,000
(Increase) in stock (1,934) (8,399)
(Increase) in debtors (119,073) (267,925)
(Decrease)/increase in creditors (4,369) 421,992
----- -----
Net cash outflow from operating activities (763,657) (41,301)
=========== ===========
B Analysis of net funds
At 1 January At 31 December
2001 Cash flow 2001
(unaudited) (unaudited)
£ £ £
Cash at bank and in hand 25,957,614 (5,027,383) 20,930,231
=========== =========== ===========
GENERAL NOTES
1. The preliminary unaudited financial statements for the year ended
31 December 2001 were approved by the board of directors on 13 March 2002.
2. (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 2000 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 & accounts will be sent to
shareholders during April 2002 and will be available from the company's
registered office, Edwinstowe House, High Street, Edwinstowe,
Nottinghamshire NG21 9PR.
This information is provided by RNS
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