TIDMALK
RNS Number : 6793N
Alkane Energy PLC
11 September 2013
11 September 2013
Alkane Energy plc
Unaudited interim results for the half year to 30 June 2013
Alkane Energy plc ("Alkane" "the Group" or "the Company") (AIM:
ALK) the independent gas to power producer, today announces its
unaudited interim results for the six months ended 30 June
2013.
Operational Highlights
-- 44% increase in output
-- Installed capacity of 81MW
-- Acquired assets performing ahead of plan
-- Increased demand for standby power response generation
Financial Highlights
-- Revenue increased by 109% to GBP11.1m (H1 2012: GBP5.3m)
-- Group profit before tax pre-exceptionals increased 48% to GBP1.4m (H1 2012: GBP1.0m)
-- EBITDA up 54% to GBP3.3m (H1 2012: GBP2.1m)
-- Operating cashflow of GBP2.6m (H1 2012: GBP1.9m)
-- EPS pre-exceptionals for continuing operations up 35% to 1.43p (H1 2012: 1.06p)
Commenting on the interim results, Chief Executive Officer, Neil
O'Brien, said:
"I am delighted to report another strong set of results for the
Group with a significant increase in installed capacity as well as
a 109% increase in revenue and a 54% increase in EBITDA.
"With the very real prospect of a shortfall in energy supply in
the UK we will continue with our strategy of growing output and
installed capacity. Furthermore our successful acquisition of the
Maltby Colliery CMM assets and the GBP6.0m fundraising leave us
well placed to support the Group's investment plans in its core gas
to power activities."
For more information please contact:
Alkane Energy plc
Neil O'Brien, Chief Executive
Officer
Steve Goalby, Finance Director 01623 827927
Altium Capital Limited (NOMAD)
Adrian Reed
Liam May 0845 505 4343
VSA Capital Limited
Andrew Raca 020 3005 5004
Liberum Capital Limited
Clayton Bush
Tim Graham 020 3100 2000
Hudson Sandler
Nick Lyon
Alex Brennan 020 7796 4133
Background information
Alkane Energy is one of the UK's fastest growing independent
power generators. The Company operates mid-sized "gas to power"
electricity plants providing both predictable and fast response
capacity to the grid. Following the completion of the acquisition
of the Maltby CMM Asset, Alkane now has a total of 81MW of
installed generating capacity and an electricity grid capacity of
100MW.
Alkane's main operations are based on a portfolio of coal mine
methane ("CMM") sites. Alkane has the UK's leading portfolio of CMM
licences, enabling the Company to extract gas from abandoned coal
mines.
As CMM declines at any one site Alkane retains valuable
generating capacity and a grid connection which can be redeployed
to power response. Power response sites are connected to mains gas
and produce electricity at times of high electrical demand or in
order to balance the electricity grid. Alkane now operates 30MW of
power response on mains gas.
The Group operates from 22 mid-size (up to 10MW) power plants
across the UK, 15 CMM only, 5 mains gas only, and 2 using both fuel
sources. Alkane uses standard modular reciprocating engines to
generate the electricity and sells this power through the
electricity network. The engine units and other plant are designed
to be flexible and transportable allowing additional capacity to be
brought onto growing sites and underutilised plant to be moved to
new sites to maximise efficiency.
Alkane has a range of core skills encompassing the entire
project development cycle including planning and permitting,
sourcing plant and managing the build and commissioning stage. This
has enabled Alkane to establish a design, build & operate
("DBO") business for third party clients in the biogas and oil
& gas industries.
The Group has more than 800km(2) of acreage under various
onshore Petroleum Exploration and Development Licences ("PEDLs").
Alkane retains a 100% interest in the majority of these PEDLs,
which extend to all of the hydrocarbons recoverable from these
licence areas. This includes any CMM, natural gas, coal bed methane
("CBM") or shale gas.
More information is available on our website
www.alkane.co.uk
Summary
The Board of Alkane Energy is delighted to announce record
interim results for the six months ended 30 June 2013. The Group
has made significant progress in delivering its strategy of
becoming one of the UK's largest independent power producers. Since
setting out our growth strategy in 2009 we have delivered increased
output every financial year and we are now the UK's largest
generator of electricity from coal mine methane ("CMM") with a
growing portfolio of sites providing fast response standby
generation. Alkane now generates enough power annually from our 22
operational power plants for the needs of around 70,000 homes.
Revenues have more than doubled compared with the same period
last year at GBP11.1m (H1 2012: GBP5.3m), with EBITDA for the
period at GBP3.3m (H1 2012: GBP2.1m). Group adjusted profit before
tax has increased to GBP1.4m (H1 2012: GBP1.0m) giving an adjusted
earnings per share of 1.43 pence (H1 2012: 1.06 pence). Both the
acquisition of the Maltby CMM assets and the associated fundraising
exceeded expectations. The placing was well supported by existing
and new institutional investors and the acquired assets are
performing ahead of plan. Gearing has reduced to 27% (H1 2012:
46%).
Production
Overall our installed capacity has reached 81MW (H1 2012: 70MW)
spread across 22 sites (H1 2012: 19 sites). In the first half of
the year these sites have delivered a 44% increase in output to
94GWh (H1 2012: 65GWh). This increase has come from growth in the
existing CMM baseload operations, higher demand for our standby
power response engines and a first time contribution from the
acquisition of the CMM site at Maltby Colliery.
The acquisition of the 11MW CMM facility at Maltby Colliery was
completed at the end of May 2013 and has moved into production
earlier than plan. We are encouraged by early performance at Maltby
and would expect output to be maximised following the full colliery
closure which is expected during the summer of 2014.
We have been increasing our presence in the power response
market over the last three years where excess CMM capacity is
re-deployed to mains gas fuelled generation. The engines are used
as peak load supply in the winter period and as standby capacity
for National Grid. We have seen increased levels of calls from
National Grid with an especially busy period since March 2013.
Design Build and Operate ("DBO")
We have been working on the delivery of seven DBO projects
during the first half of this year, the largest of which is the
re-drill and abandonment of the existing wells at Three Nooks Farm,
Staffordshire. Consequently we have seen an unusually large rise in
revenue this half year which is not expected to recur in 2014.
Our strategy is to use the DBO element of our business to
increase the scale of the Group's project team and to gain
increased knowledge in the biogas and oil & gas sectors with
the aim of finding profitable investment opportunities for us to
take ownership of long term production assets.
Finance
Revenue in the period reached GBP11.1m (H1 2012: GBP5.3m)
representing a 109% increase. The increase is due to a 44% increase
in output, up to 94GWh (H1 2012: 65GWh), together with growth in
the DBO business where revenue has grown to GBP4.7m (H1 2012:
GBP0.8m) which includes GBP2.9m of revenue from the one off
contract for refurbishment work at Three Nooks Farm,
Staffordshire.
Average baseload power prices achieved in the period were
GBP53/MWh (H1 2012: GBP52/MWh). We expect to see a full year
average price for 2013 of approximately GBP53/MWh, with 95% of our
expected 2013 output already contracted at an average price of
GBP53/MWh. Power prices in the market have been stable over the
last year and forward prices for 2014 are currently circa
GBP54/MWh. We have 17% of expected output in 2014 contracted at an
average price of GBP54/MWh.
Operating profit pre-exceptionals has grown to GBP1.7m (H1 2012:
GBP1.2m). The unusually large growth in the lower margin DBO
business, which is particularly due to the one-off contract at
Three Nooks Farm, has temporarily reduced overall Group margins.
Pre-exceptional operating margin is 16%, compared to 22% in the
first half of 2012, and EBITDA is GBP3.3m (H1 2012: GBP2.1m)
representing a 30% margin (H1 2012: 40%). Excluding exceptionals,
profit before tax has risen 48% to GBP1.4m (H1 2012: GBP1.0m).
Earnings per share pre-exceptionals is 1.43p (H1 2012: 1.06p).
Our cost base remains tightly controlled. Administrative
expenses before exceptional items have grown as the scale of the
business has increased to GBP1.9m (H1 2012: GBP1.3m) representing
17% of revenue compared to 24% last year.
The exceptional items in the published figures are an impairment
of GBP233k in respect of capitalised development costs relating to
the biogas business, the non-capital costs relating to the
acquisition of Maltby CMM assets (GBP148k); and other acquisition
expenses (GBP23k). The published figures with all of
pre-exceptional items included show profit before tax from
continuing and discontinued operations of GBP1,017k (H1 2012:
GBP1,012k) and earnings per share of 1.05p (H1 2012: 1.11p).
Group cashflow generated an operating inflow of GBP2.6m (H1
2012: GBP1.9m) with capital expenditure increasing to GBP8.5m (H1
2012: GBP3.5m), GBP5.8m of which was in respect of the Maltby CMM
assets purchase.
The Maltby CMM assets acquisition was completed on 24 May 2013,
with the initial consideration of GBP5.5m being partly funded by an
extension of the Group's borrowing facilities with Lloyds TSB Bank.
A term loan of GBP3.0m was provided, together with an increase in
the existing revolving credit facility from GBP6.5m to GBP7.0m. The
balance of the initial consideration was financed by a proportion
of the funds raised by a share placing. A total of GBP6.0m gross
was raised by the issue of 22m new ordinary shares at a placing
price of 27 pence per share. The balance of the funds raised in the
placing will provide additional working capital to support the
continued investment by the Group in its core gas to power
activities.
Net assets at 30 June 2013 stood at GBP31.2m (H1 2012: GBP22.5m)
with a strong asset base in engine capacity, site infrastructure,
100MW of grid capacity, and capitalised gas extraction costs
(planning and drilling costs). Overall the Group's net debt at 30
June 2013 was GBP8.6m (H1 2012: GBP10.3m) with gearing reduced to
27% (H1 2012: 46%). We have met all the bank covenant tests and in
the period we have repaid a total of GBP1.1m in loan and lease
repayments.
Following the maiden dividend paid in May 2013, the Board will
not be paying an interim dividend but the intention is to have a
progressive dividend policy over the coming years.
Operations
Our base load generation is fuelled by CMM from 17 sites. These
sites are run 24/7 and are remotely managed by the central control
based at Markham in Derbyshire. Overall our installed capacity has
reached 81MW (H1 2012: 70MW).
Number of operational 2008 2009 2010 2011 2012 H1 2013
sites
----------------------------- ----- ----- ----- ----- ----- --------
CMM 7 8 10 11 16 17
Power response - 1 2 2 7 7
Gas supply (equivalent
MW) 2 2 2 2 1 1
----------------------------- ----- ----- ----- ----- ----- --------
Total 8 9 12 13 20 22
----------------------------- ----- ----- ----- ----- ----- --------
(note - total does not
sum as some sites operate
in more than one category)
Installed capacity 2008 2009 2010 2011 2012 H1 2013
----------------------------- ----- ----- ----- ----- ----- --------
MW MW MW MW MW MW
CMM 14 17 23 27 37 43
Power response - 7 8 8 31 36
Gas supply (equivalent
MW) 6 6 6 6 2 2
----------------------------- ----- ----- ----- ----- ----- --------
Total 20 30 37 41 70 81
----------------------------- ----- ----- ----- ----- ----- --------
With the Maltby acquisition we acquired 11MW engine capacity,
half of which may be re-deployed to power response during the
summer of next year as the colliery is finally closed and
abandoned, and the table above includes the capacity on this basis.
Until then all the capacity will remain at Maltby as we are
expecting a period of variable production dependent on barometric
pressure prior to the sealing of the coal shafts. We are delighted
to report that first production was achieved five weeks ahead of
plan.
We continue to work on the drill and build phase of new sites
with one further site expected in Yorkshire by the end of 2013 and
two new sites expected in 2014. Overall we are working on anything
up to 10 potential sites at any one time to bring them through the
permitting, planning, drill and build phases.
The STOR market has seen ongoing price pressure with standby
payments continuing to fall but we are seeing an increased number
of hours run to offset the lower margins. Our low cost base has
allowed us to successfully tender for contracts up to March 2014
and we continue to operate in the winter peak load market.
Market
The UK electricity market has seen a shift to coal fired power
stations over the last 18 months as USA coal demand has fallen and
excess stocks have lowered global coal prices. The UK's fleet of
gas fired power stations has suffered margin erosion and reduced
capacity as a number have been closed, mothballed or taken offline.
However with recent large scale closure of coal fired capacity to
meet EU carbon directives, the UK electricity generating industry
is likely to move from over capacity to a much tighter supply
position within two years. Ofgem has appraised the excess capacity
to fall as low as just 2% under certain scenarios by the winter of
2015/2016.
As the supply side tightens we would expect to see a greater
number of calls and improved earnings in our power response
business, and the forward electricity market is showing price
increases in 2015 which should benefit the CMM baseload
operations.
Overall the Group has 823km(2) of onshore licences. In February
2012 we announced a potential Coal Bed Methane ("CBM") joint
venture with Aberdeen Drilling Management. After a comprehensive
appraisal of the geological constraints, resource potential and
commercial viability of CBM in the area under consideration it has
been decided not to progress with the joint venture and as such we
have no plans to develop CBM at the current time. We are continuing
our early stage evaluation of our licences and the development
options open to us in relation to shale resources. The Board notes
the recent BGS Shale Gas Study and UK government's proposals around
the regulation of the shale industry and continues to monitor
progress in this area.
The Group is preparing for a number of DECC initiatives
including the Capacity Mechanism and the launch of the 14(th)
Onshore Licensing Round. Whilst final notification of policies in
these areas would be beneficial we continue to grow the Group
through organic roll out of new sites and through acquisitions.
Outlook
Trading since the period end has been in line with our
expectations. Ofgem's "Electricity Capacity Assessment" published
in June indicated that supply margins in the UK electricity market
could fall as low as 2% by the winter 2015/16. Alkane's strategy is
to continue to grow output and installed capacity as the market
tightens. These interim results are a pleasing step in the delivery
of this strategy and we remain confident that 2013 will be another
year of progress for the Group.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the 6 months ended 30 June 2013
For the For the For the
six six year
months ended months ended
ended
30 June 30 June 31 December
2013 2012 2012
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
Revenue 11,076 5,287 14,660
Cost of sales (7,478) (2,862) (8,586)
------------- ---------- ------------
Gross profit 3,598 2,425 6,074
Administrative expenses (1,854) (1,255) (2,641)
Exceptional administrative expenses 13 (404) (274) (587)
------------- ---------- ------------
Total administrative expenses (2,258) (1,529) (3,228)
Return on Group operations 1,340 896 2,846
Other operating income 3 15 20
Profit on activities before finance
costs 1,343 911 2,866
Finance income 8 27 37
Exchange loss arising from financing - (3) (7)
Finance costs (334) (251) (608)
------------- ---------- ------------
Net finance costs (326) (227) (578)
Profit before tax 1,017 684 2,288
Taxation 4 100 100 100
Profit for the period from continuing
operations 1,117 784 2,388
------------- ---------- ------------
Discontinued operations:
Impairment reversal 5 - 328 495
Profit for the period attributable
to equity holders of the parent 1,117 1,112 2,883
Other comprehensive income - - -
Total comprehensive income for the
period attributable to equity
------------- ---------- ------------
holders of the parent 1,117 1,112 2,883
------------- ---------- ------------
Earnings per share
From continuing operations:
Basic, for profit for the period attributable
to equity holders of the parent 6 1.05p 0.78p 2.38p
Diluted, for profit for the period
attributable to equity holders of the
parent 6 1.00p 0.76p 2.24p
From continuing and discontinued operations:
Basic, for profit for the period attributable
to equity holders of the parent 6 1.05p 1.11p 2.87p
Diluted, for profit for the period
attributable to equity holders of the
parent 6 1.00p 1.08p 2.67p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 June 2013
30 June 30 June 31 December
2013 2012 2012
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
NON-CURRENT ASSETS
Property, plant and equipment 8 23,302 19,415 20,007
Gas assets 9 20,597 17,178 17,376
Intangible assets 1,209 1,209 1,395
Deferred tax asset 900 800 800
---------- ---------- ------------
46,008 38,602 39,578
CURRENT ASSETS
Inventories 469 543 472
Trade and other receivables 3,338 2,788 4,729
Cash and cash equivalents 3,053 560 1,569
---------- ---------- ------------
6,860 3,891 6,770
TOTAL ASSETS 52,868 42,493 46,348
---------- ---------- ------------
CURRENT LIABILITIES
Trade and other payables (3,625) (2,918) (5,963)
Finance lease obligations (524) (787) (705)
Long-term borrowings (1,500) (1,500) (1,500)
Provisions (368) (21) (328)
---------- ---------- ------------
(6,017) (5,226) (8,496)
NON-CURRENT LIABILITIES
Finance lease obligations (210) (736) (417)
Long-term borrowings (9,396) (7,864) (7,145)
7.5% Convertible loan stock 14 (2,081) (1,853) (1,970)
Deferred payments (900) (1,125) (900)
Provisions (3,018) (3,140) (3,018)
---------- ---------- ------------
(15,605) (14,718) (13,450)
TOTAL LIABILITIES (21,622) (19,944) (21,946)
---------- ---------- ------------
NET ASSETS 31,246 22,549 24,402
---------- ---------- ------------
EQUITY ATTRIBUTABLE TO OWNERS
OF THE PARENT
Share capital 15 618 504 507
Share premium 6,905 1,217 1,248
Other reserves 9,256 9,148 9,196
Retained earnings 14,467 11,680 13,451
TOTAL EQUITY 31,246 22,549 24,402
---------- ---------- ------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2013
Attributable to equity holders
of the parent
Issued Share Other Retained Total
capital premium(1) reserves(2) earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2013 507 1,248 9,196 13,451 24,402
Profit and total comprehensive income
for the period - - - 1,117 1,117
Dividend - - - (101) (101)
Share-based payment - - 60 - 60
Issue of share capital 111 5,657 - - 5,768
At 30 June 2013 (Unaudited) 618 6,905 9,256 14,467 31,246
--------- ------------ ------------- ---------- --------
At 1 January 2012 499 1,216 8,629 10,568 20,912
Profit and total comprehensive income
for the period - - - 1,112 1,112
Equity component of convertible
loan notes - - 232 - 232
Merger relief - - 244 - 244
Share-based payment - - 43 - 43
Issue of share capital 5 1 - - 6
At 30 June 2012 (Unaudited) 504 1,217 9,148 11,680 22,549
--------- ------------ ------------- ---------- --------
At 1 January 2012 499 1,216 8,629 10,568 20,912
Profit and total comprehensive income
for the year - - - 2,883 2,883
Equity component of convertible
loan notes - - 232 - 232
Merger relief - - 244 - 244
91
Share-based payment - - 91 - -
Issue of share capital 8 32 - - 40
At 31 December 2012 (Audited) 507 1,248 9,196 13,451 24,402
--------- ------------ ------------- ---------- --------
(1) During the six months ended 30 June 2013 GBP274,000 was
written off against the share premium account in respect of costs
relating to the issue of shares.
(2) Other reserves comprise the equity component of convertible
loan notes of GBP232,000 (30 June and 31 December 2012:
GBP232,000), a share-based payments reserve of GBP361,000 (30 June
2012: GBP253,000; 31 December 2012: GBP301,000), a merger relief
reserve of GBP244,000 (30 June 2012: nil; 31 December 2012:
GBP244,000), and a distributable reserve of GBP8,419,000 (30 June
and 31 December 2012: GBP8,419,000) created following cancellation
of the share premium account.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2013
For the For the For the
six six year
months ended months ended ended
30 June 30 June 31 December
2013 2012 2012
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
Operating activities
Profit before tax from continuing
operations 1,017 684 2,288
Adjustments to reconcile operating
profit to net cash flows:
Depreciation and impairment of
property, plant and equipment
and gas assets 1,939 812 3,209
Bargain purchase written off - - (541)
Convertible loan note facility
fee - 60 60
Share-based payments expense 60 43 91
Finance income (8) (27) (37)
Finance expense 334 251 608
Movements in provisions 40 123 (15)
Decrease/(increase) in trade and
other receivables 1,391 (490) (2,442)
Decrease/(increase) in inventories 3 (38) 33
(Decrease)/increase in trade and
other payables (2,150) 456 3,280
Net cash flows from operating
activities 2,626 1,874 6,534
Cash flows from investing activities
Payments received - 328 495
Interest received 8 16 37
Purchase of property, plant and
equipment (4,863) (2,019) (3,801)
Purchase of gas assets (3,604) (1,503) (2,315)
Purchase of subsidiaries 12 - (4,761) (4,661)
Net cash flows used in investing
activities (8,459) (7,939) (10,245)
Cash flows from financing activities
Issue of share capital 5,768 - 34
Issue of 7.5% convertible loan
notes - 2,000 2,000
Sale and finance leaseback rentals (388) (435) (839)
Proceeds from long-term borrowing 3,001 4,512 4,543
Repayment of long-term borrowing (750) - (750)
Dividend paid to equity holders (101) - -
of the parent
Interest paid (213) (197) (453)
------------- ------------- ------------
Net cash flows from financing
activities 7,317 5,880 4,535
Net increase/(decrease) in cash
and cash equivalents 1,484 (185) 824
Cash and cash equivalents at beginning
of period 1,569 745 745
------------- ------------- ------------
Cash and cash equivalents at close
of period 17 3,053 560 1,569
------------- ------------- ------------
NOTES TO THE ACCOUNTS
1. CORPORATE INFORMATION
The interim condensed consolidated financial statements of the
Group for the six months ended 30 June 2013 were authorised for
issue in accordance with a resolution of the directors on 10
September 2013.
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
3.
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 435 of the Companies Act 2006.
The comparative figures for the year ended 31 December 2012 were
derived from the statutory accounts for that year which have been
delivered to the Registrar of Companies. Those accounts received an
unqualified audit report which did not contain statements under
section 498(2) or (3) (accounting records or returns inadequate,
accounts not agreeing with records and returns or failure to obtain
necessary information and explanations) of the Companies Act
2006.
The interim condensed financial statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting' as adopted by
the European Union and the AIM rules of the London Stock Exchange.
This report should be read in conjunction with the Group's Annual
Report and Accounts 2012, which have been prepared in accordance
with IFRSs as adopted by the European Union.
Going concern
The Board is required to assess whether the Group has adequate
resources to continue operations for the foreseeable future. After
making enquiries, the directors have a reasonable expectation that
the Company and the Group will continue in operational existence
for the foreseeable future (being a period of at least 12 months
from the date of this report). For this reason they continue to
adopt the going concern basis for preparing the financial
statements.
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 2012.
The preparation of interim financial statements requires
management to make judgments, 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 2012, and no other change in estimate has had a material
effect on the current period. All other significant estimates and
judgments have been disclosed in the Group's Annual Report and
Accounts for the year ended 31 December 2012. Actual results may
differ from these estimates.
In March 2013 Pro2 Anlagentechnik GmbH invested in Alkane
Services Limited, a Group company, and from that date holds a
non-controlling interest of 25% of the share capital. The minority
interest arising in the six months to 30 June 2013 was not material
and has not been reflected in the interim financial statements.
Alkane Services Limited has been renamed Alkane Pro2 Services
Limited.
These condensed consolidated interim financial statements have
been prepared on the basis of IFRSs in issue that are effective at
the Group's annual reporting date as at 31 December 2013.
3. SEGMENT INFORMATION
Operating segments
The directors consider that there are two operating
segments:
-- The extraction of gas for power generation and for direct sale;
-- The design, build and operation of projects for external customers.
The operating segment reporting format reflects the Group's
management and reporting structure.
Seasonality of operations
There is no significant seasonal nature to the Group's business
segments.
Six months Six months Year ended
ended ended 31 December
30 June
30 June 2013 2012 2012
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Extraction of gas
Total segment revenue 6,390 4,486 10,583
------------- ----------- ------------
Depreciation (1,699) (1,220) (2,887)
------------- ----------- ------------
Interest expense (239) (260) (499)
------------- ----------- ------------
Segment profit before tax 1,417 1,171 2,865
------------- ----------- ------------
Design, build and operate projects
for external customers
Total segment revenue 4,686 801 4,077
------------- ----------- ------------
Impairment (233) (312) (312)
------------- ----------- ------------
Segment profit/(loss) before
tax 361 (287) 374
------------- ----------- ------------
Total
Total revenue 11,076 5,287 14,660
------------- ----------- ------------
Total depreciation/impairment (1,932) (1,532) (3,199)
------------- ----------- ------------
Total interest expense (239) (260) (499)
------------- ----------- ------------
Profit before tax from operating
segments 1,778 884 3,239
------------- ----------- ------------
Corporate centre (771) (748) (1,512)
Consolidation adjustment 10 548 561
------------- ----------- ------------
Profit before tax from continuing
operations 1,017 684 2,288
Discontinued operations - 328 495
------------- ----------- ------------
Profit before tax 1,017 1,012 2,783
------------- ----------- ------------
The following table reconciles total segment assets, total
segment liabilities and segment additions to non-current
assets.
30 June 30 June 31 December
2013 2012 2012
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Extraction of gas 48,841 40,940 42,460
Design, build and operate projects
for external customers 2,625 435 3,579
---------- ---------- ------------
Total segment assets 51,466 41,375 46,039
Corporate centre 2,387 359 686
Intangible assets arising on
consolidation 1,209 1,209 1,209
Consolidation adjustments (2,194) (450) (1,586)
---------- ---------- ------------
Total consolidated assets 52,868 42,493 46,348
---------- ---------- ------------
Extraction of gas (26,283) (22,032) (21,959)
Design, build and operate projects
for external customers (2,655) (993) (3,693)
---------- ---------- ------------
Total segment liabilities (28,938) (23,025) (25,652)
Corporate centre (8,816) (6,152) (5,555)
Consolidation adjustments 16,132 9,233 9,261
---------- ---------- ------------
Total consolidated liabilities (21,622) (19,944) (21,946)
---------- ---------- ------------
Extraction of gas 8,221 10,642 6,234
Design, build and operate projects
for external customers 47 111 96
---------- ---------- ------------
Total segment additions to
non-current assets 8,268 10,753 6,330
Deferred tax asset 100 100 100
Corporate centre 1 3 -
Total consolidated additions
to non-current assets 8,369 10,856 6,430
---------- ---------- ------------
4. TAXATION
There is no tax charge for the current period (six months ended
30 June 2012: nil, year ended 31 December 2012: nil). A deferred
tax asset of GBP100,000 has been recognised in the period to the
extent that future taxable profits will be available to be utilised
against unused tax losses and other temporary differences (six
months ended 30 June 2012: GBP100,000, year ended 31 December 2012:
GBP100,000).
5. DISCONTINUED OPERATIONS
In 2012 the Company received payments totalling EUR610,000
(GBP495,000) being instalments due in respect of an outstanding
loan to Deutsche KWK GmbH, an operation discontinued in 2009 at
which time the outstanding balance was fully impaired and included
as loss on discontinued operations. The reversal of this impairment
in that year was therefore included in discontinued operations. No
further repayments are due in respect of this loan.
A further loan to Deutsche KWK GmbH is outstanding; after
exchange rate differences of GBP6,000 the balance at 30 June 2013
is EUR145,000 (GBP124,000) (30 June 2012: EUR145,000 (GBP117,000);
31 December 2012 EUR145,000 (GBP118,000)). This balance is due to
be repaid on 31 December 2013. The loan was fully impaired in 2009,
and having reviewed the position at 30 June 2013 there remains a
fundamental uncertainty in respect of the recovery of the
outstanding balance of the loan and consequently there has been no
reversal of the balance of the impairment charge.
6. 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 period.
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 period 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 Year ended
ended 30 ended 30 31 December
June June
2013 2012 2012
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit for the period from continuing
operations 1,117 784 2,388
Profit for the period from discontinued
operations - 328 495
------------ ------------ ------------
Profit attributable to equity
holders of the parent 1,117 1,112 2,883
------------ ------------ ------------
No. No. No.
Basic weighted average number
of ordinary shares 106,130,525 100,115,933 100,542,097
Dilutive effect of share options 4,112,645 2,380,782 2,806,103
Dilutive effect of convertible
loan notes(1) 12,782,857 - 12,342,857
------------ ------------ ------------
Diluted weighted average number
of ordinary shares 123,026,027 102,496,715 115,691,057
------------ ------------ ------------
(1) For the purposes of calculating the dilutive earnings per
share, the profit for the period from continuing operations and the
profit attributable to equity holders of the parent have been
adjusted by the transaction costs and interest charges of
GBP110,000 (six months ended 30 June 2012: nil; year ended 31
December 2012: GBP201,000) that would have been avoided if
conversion was to have occurred. The revised profit for the period
from continuing operations on this basis is GBP1,227,000 (six
months ended 30 June 2012: no revisions; year ended 31 December
2012: GBP2,589,000) and the revised profit attributable to equity
holders of the parent is GBP1,227,000 (six months ended 30 June
2012: no revisions; year ended 31 December 2012: GBP3,084,000).
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 that would have
changed significantly the number of ordinary shares or potential
ordinary shares outstanding at the end of the period if those
transactions had occurred before the end of the period.
7. DIVIDEND
During the six months ended 30 June 2013 the Company paid a
dividend of 0.1 pence per share totalling GBP101,000 (six months
ended 30 June 2012 and year ended 31 December 2012: nil).
8. PROPERTY, PLANT AND EQUIPMENT
Acquisitions and disposals
During the six months ended 30 June 2013, the Group acquired
assets with a cost of GBP4,661,000 (six months ended 30 June 2012:
GBP7,800,000; year ended 31 December 2012: GBP9,792,000). Included
within additions for the period ended 30 June 2013 is GBP3,000,000
relating to the acquisition of Maltby coal mine methane assets (see
note 11). The figures in 2012 included GBP5,674,000 (after fair
value adjustments) acquired as part of the acquisition of Greenpark
Energy Limited. There were no disposals during the period (30 June
and 31 December 2012: nil).
9. GAS ASSETS
Acquisitions and disposals
During the six months ended 30 June 2013, the Group acquired
assets with a cost of GBP3,561,000 (six months ended 30 June 2012:
GBP3,000,000; year ended 31 December 2012: GBP3,751,000). Included
within additions for the period ended 30 June 2013 is GBP2,754,000
relating to the acquisition of Maltby coal mine methane assets (see
note 11). The figures in 2012 included GBP1,539,000 (after fair
value adjustments) acquired as part of the acquisition of Greenpark
Energy Limited. There were no disposals during the period (30 June
and 31 December 2012: nil).
10. CAPITAL COMMITMENTS
At 30 June 2013, the Group had the following capital commitments
contracted for but not provided in the financial statements:
-- Acquisition of property, plant and equipment GBP794,000 (30
June 2012: GBP319,000; 31 December 2012 GBP523,000);
-- Acquisition of gas assets GBP248,000 (30 June 2012: GBP104,000; 31 December 2012: GBP1,000);
-- Acquisition of Maltby coal mine methane assets GBP2,000,000
(30 June and 31 December 2012: nil). See note 11.
11. ACQUISITION OF MALTBY COAL MINE METHANE ASSETS
On 24 May 2013, Regent Park Energy Limited, a wholly owned
subsidiary, completed the purchase of coal mine methane assets
located at Maltby Colliery for a consideration of GBP5,500,000.
The purchase was partly funded by an extension of the Group's
borrowing facilities with Lloyds TSB Bank plc. A term loan of
GBP3,000,000, secured by way of legal charges over the Group's
assets, has been provided to finance the acquisition, to be repaid
in quarterly payments over two years commencing in April 2014. At
the same time the existing revolving credit facility was increased
from GBP6,500,000 to GBP7,000,000. The balance of the consideration
was financed by a proportion of the funds raised by a share
placing. A total of GBP6,000,000 was raised by the issue of
22,222,223 new ordinary shares at a placing price of 27 pence per
share.
The assets acquired comprise plant and machinery of GBP3,000,000
and site infrastructure (including grid connection) of
GBP2,754,000. The Directors have carried out an assessment of the
assets acquired and have concluded that no fair value adjustments
are required.
A further payment of GBP2,000,000 will be made to acquire
additional site infrastructure assets six months after the Maltby
Colliery mine shafts are satisfactorily sealed as part of the
planned closure of Maltby Colliery. The closure is not within the
control of the Company, but is expected to occur by October
2014.
12. ACQUISITION OF GREENPARK ENERGY LIMITED
On 26 April 2012 the Group completed the purchase of the entire
issued share capital of Greenpark Energy Limited, a company with
seven coal mine methane (CMM) extraction licences and six
operational sites generating from both CMM and natural gas.
The total consideration for the shares is as follows:
GBP'000
Cash(1)(2) 4,661
Issue of shares(3) 250
Total consideration 4,911
--------
(1) Financed by way of the issue of GBP2,000,000 convertible
loan notes (see note 14) and an increase in borrowing facilities.
The Group extended its borrowing facilities with Lloyds TSB Bank. A
term loan of GBP3,000,000, secured by way of legal charges over the
Group's assets, was provided to finance the acquisition, to be
repaid in quarterly payments over two years. At the same time the
existing revolving credit facility was reduced from GBP7,500,000 to
GBP6,500,000.
(2) The cash consideration included GBP500,000 paid into escrow
in respect of certain property issues and in order to allow for any
claims under the warranties included in the Share Purchase
Agreement. A settlement in respect of the property issues and a
number of warranty issues was reached with the vendors on 23
January 2013. Under the settlement GBP400,000 of the funds held in
escrow was released to the vendors and GBP100,000 was returned to
the Company as a reduction in consideration. In addition a deferred
consideration of GBP225,000 that had been due to be paid on 30
September 2013 was cancelled. The total reduction in consideration
as a result of the settlement was GBP325,000. The Company has no
further recourse under the warranty provisions of the Share
Purchase Agreement.
(3) Part of the consideration was the issue of 1,162,237 new
Ordinary Shares at a price of 21.51 pence per share.
Net assets with a book value of GBP11,911,000 were acquired at
the date of acquisition. The Directors have carried out a fair
value assessment of the identifiable assets, liabilities and
contingent liabilities of Greenpark Energy Limited and concluded
that the net fair value at the date of acquisition is GBP5,775,000.
The following table shows the identifiable material assets and
liabilities acquired, the fair value adjustments, the fair value
and the resulting bargain purchase.
Acquired Fair value Fair Value
on 26 April adjustments
2012
GBP'000 GBP'000 GBP'000
Buildings 1,166 (391) 775
Plant 8,061 (3,162) 4,899
Gas assets 3,135 (1,596) 1,539
Receivables 602 - 602
Payables (444) (185) (629)
Other provisions - (323) (323)
Site restoration provision(1) (609) (802) (1,411)
------------- ------------- -----------
11,911 (6,459) 5,452
------------- ------------- -----------
GBP'000
Fair value as above 5,452
less Consideration 4,911
-----------
Bargain purchase 541
-----------
(1) The site restoration provision is recognised for the
expected costs of the restoration of operating sites. The fair
value adjustment represents a reassessment of the amount required
to meet the expected costs. A discount factor is applied to the
expected costs in order to arrive at the present value reflected in
the provision.
As a result of the fair value assessment, a bargain purchase of
GBP541,000 arose in respect of the transaction. Costs of GBP903,000
were incurred in advisory, professional and other fees in order to
effect the acquisition, of which GBP747,000 was incurred in the
year ended 31 December 2012 (year ended 31 December 2011:
GBP156,000). The net amount of GBP362,000 was expensed in the
Consolidated Statement of Comprehensive Income under the heading of
exceptional administrative expenses.
On 10 May 2012 the name of Greenpark Energy Limited was changed
to Regent Park Energy Limited.
13. EXCEPTIONAL ADMINISTRATIVE EXPENSES
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Costs related to the acquisition of
Greenpark Energy Limited (see note
12) (13) (500) (747)
Bargain purchase arising from the acquisition
of Greenpark Energy Limited (see note
12) - 539 541
Impairment of biogas development costs (233) (313) (312)
Costs relating to the acquisition of
Seven Star Natural Gas Limited - - (14)
Non-capital costs relating to the acquisition - -
of Maltby coal mine methane assets
(see note 11) (148)
Costs relating to the acquisition of
licence (10) - -
Costs of aborted corporate transactions - - (55)
----------- ----------- -------------
(404) (274) (587)
----------- ----------- -------------
14. CONVERTIBLE LOAN NOTES
On 26 April 2012 the Company issued GBP2,000,000 convertible
loan notes, with the proceeds being utilised to partly fund the
acquisition of Greenpark Energy Limited (see note 12). Interest is
at a fixed rate of 7.5% per annum, which is rolled up quarterly in
arrears and included as principal to be repaid or converted. The
convertible loan is unsecured. The convertible loan notes are
convertible at any time prior to repayment or automatic conversion
at the holder's option, at a conversion price, fixed at 17.5 pence.
If any element of the convertible loan is not converted, it is
otherwise repayable on the date which is 3 years and 1 day after
the issue date.
The liability component of the convertible loan notes was
GBP1,768,000. This has been calculated by discounting the total sum
payable over the full term of the loan notes by an effective
interest rate of 12%. The equity component of GBP232,000 has been
taken to other reserves.
15. AUTHORISED AND ISSUED SHARE CAPITAL
30 June 30 June 31 December
2013 2012 2012
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Authorised
1,000,000,000 ordinary shares of 0.5p
each 5,000 5,000 5,000
Allotted, called up and fully paid thousands GBP'000
Ordinary Shares of 0.5p each
At 1 January 2013 101,113 507
Issued on exercise of share options 250 1
Issued as a result of share placings 22,222 110
---------- --------
At 30 June 2013 (Unaudited) 123,585 618
========== ========
At 1 January 2012 99,701 499
Issued as part of consideration for acquisition 1,162 5
At 30 June 2012 (Unaudited) 100,863 504
========== ========
At 1 January 2012 99,701 499
Issued on exercise of share options 250 2
Issued as part of consideration for acquisition 1,162 6
---------- --------
At 31 December 2012 (Audited) 101,113 507
========== ========
16. SUBSEQUENT EVENTS
On 5 August 2013 the Group completed the acquisition of a part
licence interest in United Kingdom Onshore Licence AL010 for coal
mine methane exploitation for a consideration of GBP275,000, and
the buyout of a royalty which related to revenue from the Group's
operating site at Florence, Staffordshire for a consideration of
GBP150,000.
17. ADDITIONAL CASH FLOW INFORMATION
Analysis of net funds
1 January Cash 30 June
2013 flow 2013
Audited Unaudited
GBP'000 GBP'000 GBP'000
Cash at bank and
in hand 1,569 1,484 3,053
Sale and finance
leaseback (1,122) 388 (734)
Long-term loan (8,645) (2,251) (10,896)
Net debt (8,198) (379) (8,577)
Securities 256 - 256
---------- -------- ----------
Adjusted net debt* (7,942) (379) (8,321)
1 January Cash Other Exchange 30 June
2012 flow non-cash rate 2012
movements differences
Audited Unaudited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and
in hand 745 (185) - - 560
Sale and finance
leaseback (1,961) 435 - 3 (1,523)
Long-term loan (4,852) (4,512) - - (9,364)
Net debt (6,068) (4,262) - 3 (10,327)
Securities 222 12 61 - 295
---------- -------- ----------- ------------- ----------
Adjusted net debt* (5,846) (4,250) 61 3 (10,032)
1 January Cash Other Exchange 31 December
2012 flow non-cash rate 2012
movements differences
Audited Audited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and
in hand 745 824 - - 1,569
Sale and finance
leaseback (1,961) 836 - 3 (1,122)
Long-term loan (4,852) (3,793) - - (8,645)
Net debt (6,068) (2,133) - 3 (8,198)
Securities 222 (27) 61 - 256
---------- -------- ----------- ------------- ------------
Adjusted net debt(1) (5,846) (2,160) 61 3 (7,942)
(1) This includes the effect of securities paid on finance lease
transactions that are closely related to those items.
18. 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. It will also be available on the
Company's website, www.alkane.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR NKKDPABKDFCD
Grafico Azioni Alkemy Capital Investments (LSE:ALK)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Alkemy Capital Investments (LSE:ALK)
Storico
Da Lug 2023 a Lug 2024
