TIDMALK

RNS Number : 4688Y

Alkane Energy PLC

09 September 2015

09 September 2015

Alkane Energy plc

("Alkane" or the "Group")

Unaudited interim results for the half year to 30 June 2015

Alkane Energy plc (AIM: ALK), the independent gas to power producer, today announces its unaudited interim results for the six months ended 30 June 2015.

Operational Highlights

   --     25% increase in output to 106GWh 
   --     Maltby and Carron Energy sites now fully operational 
   --     Record volume of baseload output in the period 
   --     Progressive improvement in STOR utilisation during H1 
   --     94% of the Group's expected 2015 baseload output contracted at an average price of GBP52/MWh 
   --     Awarded 101MW of Capacity Market contracts starting October 2018 

Financial Highlights

   --     Revenue increased by 23% to GBP8.7m (H1 2014: GBP7.1m) 
   --     Core generation revenue has grown 45% to GBP8.6m ( H1 2014: GBP5.9m) 
   --     Adjusted PBT increased by 166% to GBP1.4m (H1 2014: GBP0.5m) 
   --     Adjusted EBITDA increased by 50% to GBP3.8m (H1 2014: GBP2.5m) 

-- Net assets increased to GBP47.7m (H1 2014: GBP40.7m) following the acquisitions during H2 2014

   --     Adjusted EPS increased by 119% to 0.94p per share (H1 2014: 0.43p per share) 
   --     Increased loan facility with Lloyds to develop value enhancing projects 

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

"These strong results reflect the success of the investments we have made in both the coal mine methane and power response businesses. Against a backdrop of looming energy capacity shortage, combined with National Grid's initiatives to boost supply margins, Alkane's flexible, low cost portfolio of assets leaves the Company well placed to make further progress."

For more information please contact:

 
 Alkane Energy plc 
  Neil O'Brien, Chief Executive 
  Officer 
  Carl Kameen, Finance Director      01623 827 927 
 Liberum Capital Limited 
  Clayton Bush 
  Joshua Hughes                     020 3100 2000 
 VSA Capital Limited 
  Andrew Raca                        020 3005 5000 
 Hudson Sandler 
  Nick Lyon 
  Alex Brennan                       020 7796 4133 
 

Background information

Alkane is one of the UK's fastest growing independent power generators. The Company operates midsized "gas to power" electricity plants providing both baseload and fast response capacity to the grid. Alkane has a total installed generating capacity of 145MW and an electricity grid capacity of 160MW.

Alkane's baseload operations, where power is generated 24/7, are centred 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.

Power response sites are connected to mains gas and produce electricity at times of high electrical demand through peak running, or in order to balance the electricity grid through participation in the National Grid's short term operating reserve programme ("STOR"). Participants in STOR are paid premium rates when called upon by the Grid to meet temporary supply shortages. Alkane now operates 102MW of power response, one of the UK's largest power response businesses, with contracted STOR revenues extending out to 2025.

Alkane has been awarded 101MW of Capacity Mechanism Agreements starting from October 2018, with 55MW existing sites being secured on one year agreements and 46MW new sites on 15 year agreements over the period to September 2033.

The Group operates from 27 mid-size (up to 25MW) power plants across the UK, 13 CMM only, seven mains gas only, six using both fuel sources and one using kerosene only. Alkane uses a combination of standard modular reciprocating engines and gas turbines 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.

In June 2014 Alkane transferred its shale gas interests to Egdon Resources plc. It received 40 million Egdon shares making it the largest shareholder in Egdon, the UK's third largest shale operator.

More information is available on our website www.alkane.co.uk

Introduction

The Board of Alkane Energy announces its interim results for the six months ended 30 June 2015. Alkane has made significant progress in the first half of 2015, reflecting the full integration of the Maltby coal mine methane ("CMM") acquisition and the 2014 acquisition of the three Carron Energy sites.

Output has increased 25% to 106GWh (H1 2014: 85GWh) with growth being seen in both baseload CMM generation and in the expanded power response portfolio. Group revenues have increased 23% to GBP8.7m (H1 2014: GBP7.1m) and adjusted EBITDA has increased to GBP3.8m (H1 2014: GBP2.5m). Group adjusted PBT and EPS have improved by 166% and 119% respectively to GBP1.4m (H1 2014: GBP0.5m) and 0.94p (H1 2014: 0.43p).

Operations

Alkane has 27 medium sized power stations operational throughout the period and is expecting its 28(th) site to be operational before the end of this year.

 
 Installed capacity        2009   2010   2011   2012   2013   2014   H1 2015 
  (MW) 
------------------------  -----  -----  -----  -----  -----  -----  -------- 
 CMM                        17     23     27     37     45     45      45 
 Power response             7      8      8      31     36     98      98 
 Gas supply (equivalent 
  MW)                       6      6      6      2      2      2        2 
------------------------  -----  -----  -----  -----  -----  -----  -------- 
 Total                      30     37     41     70     83    145      145 
------------------------  -----  -----  -----  -----  -----  -----  -------- 
 

Baseload generation is fuelled by CMM from 18 sites. These sites are run 24/7 as this maximises cash flow and paybacks on the CMM development capital costs. Where the Group has excess grid and engine capacity or where it can acquire assets effectively, Alkane runs power response engines on bought-in mains gas. The use of bought-in gas increases the cost per MWh over the operating costs of CMM, but is still profitable when peak prices, such as during winter evenings and within the National Grid STOR programme, can be achieved.

Alkane has 145MW of installed engine capacity (H1 2014: 90MW) providing both baseload generation powered by CMM and peaking power response sites, powered by bought-in natural gas, offering both fast response standby and winter peak running capacity. Overall Group output has increased by 25% to 106GWh. Both sides of the generation business have seen expanded output in H1 2015 in comparison with the same period last year as new capacity has been developed.

 
 Output (GWh)      H1 2013   H2 2013   2013   H1 2014   H2 2014   2014   H1 2015 
----------------  --------  --------  -----  --------  --------  -----  -------- 
 Baseload            85        88      173      76        98      174      92 
----------------  --------  --------  -----  --------  --------  -----  -------- 
 Power response       9        10       19       9        12       21      14 
----------------  --------  --------  -----  --------  --------  -----  -------- 
 Total               94        98      192      85        110     195      106 
----------------  --------  --------  -----  --------  --------  -----  -------- 
 

Alkane is the UK's largest CMM operator with 18 sites spread across Yorkshire, Nottinghamshire and Staffordshire. Baseload output has benefitted from a full 6 months of production at the largest facility at Maltby after the mine's successful sealing during H1 2014.

Power response activity has increased following the acquisition of the Carron Energy sites in July 2014 boosting output during the peak winter running season. Alkane experienced a material increase in STOR run hours from April onwards following a lull in our supply to the National Grid STOR programme demand over the winter months and is now also benefitting from lower gas commodity prices. This improved level of activity has continued into Q3 2015.

Pricing

The overall pricing position remains beneficial to Alkane as the fast response low cost operations take advantage of peak pricing and of availability payments for standby power. Alkane perceives two major forces on pricing - commodity costs and industry supply dynamics.

On the pure commodity side of the pricing equation, the falls in global commodity prices seen over the last 12 months have resulted in lower baseload pricing. Alkane has a rolling programme of forward selling its baseload power so the Group's exposure to short term pricing volatility is very limited. Overall Alkane has sold 94% of its 2015 expected output at GBP52/MWh (2014: GBP53/MWh) and 56% of its 2016 expected output at GBP50/MWh.

The fall in baseload pricing has been counteracted by an improved "spark spread" margin for the bought-in gas used in power response.

The UK energy market is beginning to see greater volatility in pricing as the supply margin deteriorates and National Grid, as the system operator, has to take additional measures to ensure the system is supplied 24/7. Alkane benefits in a number of ways from these market forces. Firstly its winter running programme is focussed on the peak price period from 4pm to 7pm each working day. Overall winter peak prices have increased by 16% from GBP195/MWh in the winter 2014/15 to an estimated GBP227/MWh this coming winter. In addition, Alkane has seen significant increases of availability and capacity payments. This is largely due to the acquisition of the Carron Energy sites but we have also seen new contract wins under the National Grid Demand Side Balancing Reserve ("DSBR").

Design, Build and Operate ("DB0")

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The Group's DBO activity is focussed on biogas and working with other onshore oil and gas operators. Whilst H1 has seen lower activity Alkane has won a supply contract and is expecting an increase in DBO revenue in H2.

Market and Strategy

The UK energy market is seeing a number of ongoing key themes, namely:

   --     the closure of old and coal powered capacity to address the de-carbonising agenda; 

-- the proportion of the UK electricity market supplied by intermittent renewables has risen to over 20% and is expected to carry on rising;

-- the last 12 months have seen a sharp fall in global commodity prices and this has been passed on in lower UK power prices; and

-- the UK energy market is experiencing a period of tight supply margins. National Grid and Ofgem have recently re-stated that the coming winters will witness the lowest supply /demand margin for over a decade with spare capacity falling to just 5%.

Alkane is well placed to respond to these changes. The Company has a low cost, fast response and flexible portfolio of assets. Alkane's operating model is to use standardised modular plant, the vast majority of sites are gas powered which gives it a considerable cost advantage against diesel peaking plant. Alkane has a central control room operating all 27 sites and uses mobile field technicians for planned and reactive maintenance to ensure good reliability and to ensure costs are tightly controlled.

The Capacity Market is part of the Government's reforms intended to ensure sufficient capacity on the system to provide a reliable electricity supply in the face of the far tighter supply position than recent years. Alkane has been awarded 101MW of Capacity Agreements starting from October 2018, with 55MW existing sites being secured on one year agreements and 46MW new sites on 15 year agreements over the period to September 2033. The Company is intending to take part in the December 2015 auction in order to secure Capacity Agreements for new and existing sites for the period from October 2019.

As previously announced, in May 2015 Ofgem opened an investigation into whether Alkane had complied with the requirements of Rule 5.13.1(b) of the Capacity Market Rules. Alkane does not believe it is in breach of the Capacity Market Rules and is fully cooperating with Ofgem's investigation which has yet to reach a conclusion.

Alkane earns regular predictable income from its CMM production combined with contracted capacity revenue from National Grid. Its power response assets have committed contracts for the winter peak evening period and also receive STOR and demand side income when called by the grid.

Alkane retains an 18% share of Egdon Resources plc who took on Alkane's shale gas acreage accumulated through the CMM licence round applications started in 1996. The transfer of assets to Egdon Resources undertaken in June 2014 has resulted in Alkane retaining an economic interest in shale and not having to devote cash or management resources to this arena. Shale is potentially a large scale contributor to the UK energy mix and the Board believed that it could best exploit this asset by working with Egdon to create a larger well-funded entity which has scale and focus on this longer term acreage potential.

Financial

Revenue in the period was GBP8.7m (H1 2014: GBP7.1m). Revenue in the core generation business was GBP8.6m (H1 2014: GBP5.9m).

As highlighted in the table below the H1 2014 results included a number of exceptional items which have been adjusted for when comparing to H1 2015. H1 2015 results do not include any exceptional items.

 
 Exceptional items                     H1 2015      H2 2014 
                                       Unaudited    Unaudited 
-----------------------------------  -----------  ----------- 
                                       GBP'000      GBP'000 
----------------------------------- 
 Profit on transfer of licences to 
  Egdon Resources                         -          9,990 
-----------------------------------  -----------  ----------- 
 Impairment of assets                     -         (3,180) 
-----------------------------------  -----------  ----------- 
 Exceptional expenses                     -           (82) 
-----------------------------------  -----------  ----------- 
 Net exceptional items                    -          6,728 
-----------------------------------  -----------  ----------- 
 
 Reported Operating profit              1,903        7,636 
-----------------------------------  -----------  ----------- 
 Net exceptional items                    -         (6,728) 
-----------------------------------  -----------  ----------- 
 Adjusted Operating profit              1,903         908 
-----------------------------------  -----------  ----------- 
 
 Reported PBT                           1,408        7,257 
-----------------------------------  -----------  ----------- 
 Net exceptional items                    -         (6,728) 
-----------------------------------  -----------  ----------- 
 Adjusted PBT                           1,408         529 
-----------------------------------  -----------  ----------- 
 
 Reported EBITDA                        3,799        9,263 
-----------------------------------  -----------  ----------- 
 Net exceptional items                    -         (6,728) 
-----------------------------------  -----------  ----------- 
 Adjusted EBITDA                        3,799        2,535 
-----------------------------------  -----------  ----------- 
 

Gross profit was GBP3.7m (H1 2014: GBP2.2m), with the gross margin at 42% (H1 2014: 32%) reflecting the fact that proportionately more revenue was generated from the higher margin generation business unit rather than the DBO business unit. Operating profit has increased by GBP1.0m to GBP1.9m (H1 2014: GBP0.9m), whilst PBT has increased by 166% to GBP1.4m (H1 2014: GBP0.5m).

The Company's cost base remains tightly controlled. Administrative expenses before exceptional items were GBP1.8m (H1 2014: GBP1.5m).

EBITDA was GBP3.8m (H1 2014: GBP2.5m), representing a 44% margin (H1 2014: 36%). Earnings per share was 0.94 pence (H1 2014: 0.43 pence).

Group cash flow generated an operating inflow of GBP4.7m (H1 2014: GBP1.3m) with capital expenditure of GBP5.1m compared to GBP3.0m in H1 2014. Included within H1 2015 capital expenditure is GBP2.0m relating to the second tranche of consideration payable in respect of the Maltby acquisition. Capital expenditure was also incurred in respect of a new CMM site near Doncaster to be commissioned before the end of the year.

Net assets at 30 June 2015 stood at GBP47.7m (H1 2014: GBP40.7m) with a strong asset base in engine capacity, site infrastructure, grid capacity, capitalised gas extraction costs (planning and drilling costs) and the significant investment in Egdon. In line with expectations Group net debt at 30 June 2015 was GBP19.3m (H1 2014: GBP12.4m) with gearing at 41% (H1 2014: 31%). Alkane has met all the bank covenant tests and in the period a total of GBP1.9m in loan and lease repayments has been made. A GBP2.0m increase in the bank debt facility was made available in June 2015 to pursue value enhancing projects.

A dividend of 0.3 pence per share was paid in June 2015 (H1 2014: 0.2 pence per share).

Outlook

Alkane is well placed to benefit from a number of key initiatives in the UK energy market.

The UK Onshore oil and gas industry is seeing support from the UK government which is keen to see the industry develop domestically sourced production as part of a varied energy mix. DECC are due to award further onshore licences by the end of this year and are fast-tracking planning processes. Alkane has applied for a number of CMM prospects in the 14(th) Licensing Round and we look forward to the completion of the round awards.

The shale sector is benefiting from UK government policy initiatives around issuing new licences, and simplifying the planning process. Whilst there are still risks around resource appraisal, environmental regulation and commerciality, Alkane can benefit from any upside without a cash drain on its core business.

Our power response business is seeing improved profitability as spark spread margins widen and is benefitting from National Grid's additional measures to boost supply margins during the coming winter.

Consolidated Statement of Comprehensive Income

for the six months ended 30 June 2015

 
                                                               For the     For the       For the 
                                                                   six         six          year 
                                                          months ended      months         ended 
                                                                             ended 
                                                               30 June     30 June   31 December 
                                                                  2015        2014          2014 
-----------------------------------------------  ------  -------------  ----------  ------------ 
                                                             Unaudited   Unaudited       Audited 
-----------------------------------------------  ------  -------------  ----------  ------------ 
 
                                                  Notes        GBP'000     GBP'000       GBP'000 
 
 Revenue                                                         8,723       7,064        15,961 
 Cost of sales                                                 (5,052)     (4,818)       (9,445) 
-----------------------------------------------  ------  -------------  ----------  ------------ 
 
 Gross profit                                                    3,671       2,246         6,516 
 
 Impairment of assets                                                -     (3,180)       (4,069) 
 
 Administrative expenses                                       (1,768)     (1,465)       (2,873) 

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 Exceptional expenses                                                -        (82)         (922) 
 
 Total administrative expenses                                 (1,768)     (1,547)       (3,795) 
 
 Return on Group operations                                      1,903     (2,481)       (1,348) 
 
 Profit on transfer of licences                      13              -       9,990         9,953 
 Impairment of available for sale financial 
  asset                                                              -           -       (5,036) 
 Other operating income                                             10         127           663 
 
 Profit on activities before net finance 
  costs                                                          1,913       7,636         4,232 
 
 Finance income                                                      3           3             7 
 Finance costs                                                   (508)       (382)       (1,029) 
-----------------------------------------------  ------  -------------  ----------  ------------ 
 
 Net finance costs                                               (505)       (379)       (1,022) 
 
 
 Profit before tax                                               1,408       7,257         3,210 
 Taxation                                             4             34           -           228 
-----------------------------------------------  ------  -------------  ----------  ------------ 
 
 Profit for the period attributable 
  to equity holders of the parent                                1,442       7,257         3,438 
-----------------------------------------------  ------  -------------  ----------  ------------ 
 
 Other comprehensive income (items 
  that may be reclassified to profit 
  or loss) 
 Available for sale financial assets                 13             86         500             - 
 
 Total comprehensive income for the 
  period attributable to equity holders 
  of the parent                                                  1,528       7,757         3,438 
                                                         -------------  ----------  ------------ 
 
 
 
 
 
 Earnings per ordinary share 
 
 Basic, for profit for the period attributable 
  to equity holders of the parent                     5          0.94p       5.85p         2.56p 
 Diluted, for profit for the period 
  attributable to equity holders of 
  the parent                                          5          0.91p       5.14p         2.39p 
 
 
 

Consolidated Statement of Financial Position

at 30 June 2015

 
                                             30 June         30 June      31 December 
                                              2015              2014             2014 
---------------------------------  ------  ----------  -------------  --------------- 
                                            Unaudited      Unaudited          Audited 
---------------------------------  ------  ----------  -------------  --------------- 
 
                                    Notes     GBP'000        GBP'000          GBP'000 
 
 Non-current assets 
 Property, plant and equipment          7      33,268         23,291           33,833 
 Gas assets                             8      27,390         21,215           26,054 
 Intangible assets                              1,386          1,618            1,446 
 Derivative financial instrument                    -             22                - 
 Deferred tax asset                                 -            900                - 
 Available for sale financial 
  asset                                13       5,550         11,000            5,464 
                                               67,594         58,046           66,797 
---------------------------------  ------ 
 
 Current assets 
 Inventories                                      848            439              872 
 Trade and other receivables                    4,302          5,740            6,310 
 Cash and cash equivalents                      1,018            519            1,084 
---------------------------------  ------  ----------  -------------  --------------- 
                                                6,168          6,698            8,266 
 
 Total assets                                  73,762         64,744           75,063 
---------------------------------  ------  ----------  -------------  --------------- 
 
 Current liabilities 
 Trade and other payables                     (3,469)        (5,253)          (7,192) 
 Finance lease obligations                      (443)          (586)            (446) 
 Borrowings due within one year               (2,799)        (1,500)          (2,815) 
 7.5% Convertible loan stock                        -              -          (2,337) 
 Provisions                                      (36)          (180)             (81) 
---------------------------------  ------  ----------  -------------  --------------- 
                                              (6,747)        (7,519)         (12,871) 
---------------------------------  ------  ----------  -------------  --------------- 
 
 Non-current liabilities 
 Finance lease obligations                    (1,124)        (1,567)          (1,377) 
 Long-term borrowings                        (15,987)        (9,281)         (14,497) 
 7.5% Convertible loan stock                        -        (2,210)                - 
 Deferred payments                              (480)          (900)            (480) 
 Derivative financial instrument                  (7)              -             (10) 
 Deferred tax liability                          (57)              -             (91) 
 Provisions                                   (1,666)        (2,585)          (1,666) 
---------------------------------  ------  ----------  -------------  --------------- 
                                             (19,321)       (16,543)         (18,121) 
---------------------------------  ------  ----------  -------------  --------------- 
 
 Total liabilities                           (26,068)       (24,062)         (30,992) 
---------------------------------  ------  ----------  -------------  --------------- 
 
 Net assets                                    47,694         40,682           44,071 
---------------------------------  ------  ----------  -------------  --------------- 
 
 
 Equity attributable to owners 
  of the parent 
 Share capital                         16         811            621              739 
 Share premium                                 17,222          7,016           14,557 
 Hedging reserve                                  (7)             22             (10) 
 Other reserves                                 9,040          9,297            9,198 
 Retained earnings                             20,628         23,726           19,587 
 
 Total equity                                  47,694         40,682           44,071 
---------------------------------  ------  ----------  -------------  --------------- 
 

Consolidated Statement of Changes in Equity

for the six months ended 30 June 2015

 
                                                             Attributable to equity holders 
                                                                      of the parent 
                                     Issued             Share   Hedging         Other   Retained     Total 
                                    capital        premium(1)   reserve   reserves(2)   earnings    equity 
                                    GBP'000           GBP'000   GBP'000       GBP'000    GBP'000   GBP'000 
 
 At 1 January 2015                      739            14,557      (10)         9,198     19,587    44,071 
 
 Profit for the period                    -                 -         -             -      1,442     1,442 
 Other comprehensive income 
  for the period                          -                 -         -             -         86        86 
                                   --------  ----------------  --------  ------------  ---------  -------- 
 Total comprehensive income 
  for the period                          -                 -         -             -      1,528     1,528 
 
 Dividend (note 6)                        -                 -         -             -      (487)     (487) 
 Fair value of derivative 
  instrument                              -                 -         3             -          -         3 
 
 Share-based payment                      -                 -         -            62          -        62 
 
 Equity component of convertible 
  loan notes                              -               220         -         (220)          -         - 
 
 Issue of share capital                  72             2,445         -             -          -     2,517 
                                   --------  ----------------  --------  ------------  ---------  -------- 
 
 At 30 June 2015 (Unaudited)            811            17,222       (7)         9,040     20,628    47,694 
                                   --------  ----------------  --------  ------------  ---------  -------- 
 
 
 At 1 January 2014                      618             6,906        22         9,230     16,217    32,993 
 
 Profit for the period                    -                 -         -             -      7,257     7,257 
 Other comprehensive income 
  for the period                          -                 -         -             -        500       500 
                                   --------  ----------------  --------  ------------  ---------  -------- 
 Total comprehensive income 
  for the period                          -                 -         -             -      7,757     7,757 
 
 Dividend (note 6)                        -                 -         -             -      (248)     (248) 
 
 Share-based payment                      -                 -         -            78          -        78 
 
 Equity component of convertible 
  loan notes                              -                11         -          (11)          -         - 

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 Issue of share capital                   3                99         -             -          -       102 
 
 
 At 30 June 2014 (Unaudited)            621             7,016        22         9,297     23,726    40,682 
                                   --------  ----------------  --------  ------------  ---------  -------- 
 
 
 At 1 January 2014                      618             6,906        22         9,230     16,217    32,993 
 
 Profit for the year                      -                 -         -             -      3,438     3,438 
 Other comprehensive income 
  for the year                            -                 -         -             -          -         - 
                                   --------  ----------------  --------  ------------  ---------  -------- 
 Total comprehensive income 
  for the year                            -                 -         -             -      3,438     3,438 
 
 Dividend (note 6)                        -                 -         -             -      (249)     (249) 
 
 Fair value of derivative 
  instrument                              -                 -      (32)             -          -      (32) 
 
 Share-based payment                      -                 -         -           160          -       160 
 
 Share options lapsed and 
  exercised during the year               -                 -         -         (181)        181         - 
 
 Equity component of convertible 
  loan notes                              -                11         -          (11)          -         - 
 
 Issue of share capital                 121             7,640         -             -          -     7,761 
 
 
 At 31 December 2014 (Audited)          739            14,557      (10)         9,198     19,587    44,071 
                                   --------  ----------------  --------  ------------  ---------  -------- 
 

(1) During the year ended 31 December 2014 GBP364,000 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 nil (30 June 2014: GBP221,000 and 31 December 2014: GBP220,000), a share-based payments reserve of GBP377,000 (30 June 2014: GBP413,000 and 31 December 2014: GBP315,000), a merger relief reserve of GBP244,000 (30 June and 31 December 2014: GBP244,000) and a distributable reserve of GBP8,419,000 (30 June and 31 December 2014: GBP8,419,000) that was created following a capital reduction.

Consolidated Statement of Cash Flows

for the six months ended 30 June 2015

 
                                                        For the        For the       For the 
                                                            six            six          year 
                                                   months ended   months ended         ended 
                                                        30 June        30 June   31 December 
                                                           2015           2014          2014 
----------------------------------------  ------  -------------  -------------  ------------ 
                                                      Unaudited      Unaudited       Audited 
----------------------------------------  ------  -------------  -------------  ------------ 
                                           Notes        GBP'000        GBP'000       GBP'000 
 
 Operating activities 
 Profit before tax from continuing 
  operations                                              1,408          7,257         3,210 
 Adjustments to reconcile operating 
  profit to net cash flows: 
 Transfer of licences                         13              -       (10,500)       (9,953) 
 Impairment of available for sale 
  financial asset                                             -              -         5,036 
 Depreciation of property, plant 
  and equipment                                           1,439          1,320         2,462 
 Gas asset depletion                                        387            292           756 
 Gas asset impairment                                         -          3,180         3,832 
 Gas asset write off                                          -            213             - 
 Property, plant and equipment 
  impairment                                                  -              -           237 
 Intangible asset amortisation                               60             15            65 
 Share-based payments expense                                62             78           160 
 Finance income                                             (3)            (3)           (7) 
 Finance expense                                            508            382         1,029 
 Movements in provisions                                   (45)          (118)         (615) 
 Decrease/(increase) in trade and 
  other receivables                                       2,008        (1,583)       (1,666) 
 Decrease/(increase) in inventories                          24             25          (15) 
 (Decrease)/increase in trade and 
  other payables                                        (1,184)            755           112 
----------------------------------------  ------  -------------  -------------  ------------ 
 Net cash flows from operating 
  activities                                              4,664          1,313         4,643 
----------------------------------------  ------  -------------  -------------  ------------ 
 
 Cash flows from investing activities 
 Finance income received                                      3              3             7 
 Purchase of property, plant and 
  equipment                                             (3,358)        (1,341)       (5,358) 
 Purchase of gas assets                                 (1,777)        (1,639)       (2,036) 
 Purchase of subsidiaries                                     -              -      (10,991) 
 Cash acquired on acquisition of 
  subsidiaries                                                -              -           323 
----------------------------------------  ------  -------------  -------------  ------------ 
 Net cash flows used in investing 
  activities                                            (5,132)        (2,977)      (18,055) 
----------------------------------------  ------  -------------  -------------  ------------ 
 
 Cash flows from financing activities 
 Issue of share capital                                      96             13         7,659 
 Proceeds from sale and finance 
  leaseback                                                   -          2,000         1,995 
 Sale and finance leaseback rentals                       (256)          (259)         (584) 
 Proceeds from long-term borrowings                       3,090          3,220         9,170 
 Repayment of long-term borrowings                      (1,650)        (3,100)       (3,657) 
 Dividend paid to equity holders 
  of the parent                                           (486)          (249)         (249) 
 Finance expense paid                                     (392)          (280)         (676) 
----------------------------------------  ------  -------------  -------------  ------------ 
 Net cash flows from financing 
  activities                                                402          1,345        13,658 
----------------------------------------  ------  -------------  -------------  ------------ 
 
 Net (decrease)/increase in cash 
  and cash equivalents                                     (66)          (319)           246 
 Cash and cash equivalents at beginning 
  of period                                               1,084            838           838 
----------------------------------------  ------  -------------  -------------  ------------ 
 
 Cash and cash equivalents at close 
  of period                                   17          1,018            519         1,084 
----------------------------------------  ------  -------------  -------------  ------------ 
 

Notes to the Accounts

   1.   Corporate Information 

The interim condensed consolidated financial statements of the Group for the six months ended 30 June 2015 were authorised for issue in accordance with a resolution of the directors on 8 September 2015.

Alkane Energy plc is a public limited company incorporated and domiciled in England whose shares are publicly traded. The Company's registered number is 02966946.

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 2014 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 2014, which have been prepared in accordance with IFRSs as adopted by the European Union.

Going concern

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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 2014.

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 2014 and no change in estimate has had a material effect on the current period. All significant estimates and judgments have been disclosed in the Group's Annual Report and Accounts for the year ended 31 December 2014. Actual results may differ from these estimates.

In March 2013 Pro2 Anlagentechnik GmbH invested in Alkane Services Limited, a Group company, and held a non-controlling interest of 25% of the share capital. Alkane Services was renamed Alkane Pro2 Services Limited. Pro2 Anlagentechnik GmbH entered into administration in December 2014, following which the 25% shareholding was bought in April 2015 for a nominal sum. Alkane Pro2 Services Limited has been renamed back to Alkane 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 2015. None of the new standards adopted have had a material impact on the financial statements.

   3.   Segment Information 

Operating segments

The directors consider that there are two operating segments:

   --      The extraction and utilisation 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 variation to either of the Group's business segments. Whilst electricity selling prices are higher during the winter, this has an equal effect on the first and second halves of the financial year.

 
                                       Six months   Six months     Year ended 
                                            ended        ended    31 December 
                                          30 June      30 June           2014 
                                             2015         2014 
                                        Unaudited    Unaudited        Audited 
                                          GBP'000      GBP'000        GBP'000 
 Extraction and utilisation of 
  gas 
 Total segment revenue                      8,590        5,936         14,811 
                                      -----------  -----------  ------------- 
 Depreciation and impairment              (1,802)      (4,802)        (7,340) 
                                      -----------  -----------  ------------- 
 Interest expense                           (485)        (281)          (793) 
                                      -----------  -----------  ------------- 
 Segment profit/(loss) before 
  tax                                       1,983      (2,025)            287 
                                      -----------  -----------  ------------- 
 
 Design, build and operate projects 
  for external customers 
 Total segment revenue                        133        1,130          1,158 
                                      -----------  -----------  ------------- 
 Impairment                                     -            -              - 
                                      -----------  -----------  ------------- 
 Segment loss before tax                    (168)         (61)          (516) 
                                      -----------  -----------  ------------- 
 
 Total 
 Total revenue                              8,723        7,066         15,969 
                                      -----------  -----------  ------------- 
 Total depreciation and impairment        (1,802)      (4,802)        (7,340) 
                                      -----------  -----------  ------------- 
 Total interest expense                     (485)        (281)          (793) 
                                      -----------  -----------  ------------- 
 Profit/(loss) before tax from 
  operating segments                        1,815      (2,086)          (229) 
                                      -----------  -----------  ------------- 
 Corporate centre                           (417)        (657)        (1,499) 
 Profit on sale of licences                     -        9,990          9,953 
 Impairment of available for sale 
  financial asset                               -            -        (5,036) 
 Consolidation adjustment                      10           10             21 
                                      -----------  -----------  ------------- 
 Profit before tax                          1,408        7,257          3,210 
                                      -----------  -----------  ------------- 
 

The following table reconciles total segment assets, total segment liabilities and segment additions to non-current assets.

 
                                             30 June     30 June   31 December 
                                                2015        2014          2014 
                                           Unaudited   Unaudited       Audited 
                                             GBP'000     GBP'000       GBP'000 
 Extraction and utilisation of 
  gas                                         60,644      58,105        68,060 
 Design, build and operate projects 
  for external customers                       1,446       1,815         1,616 
----------------------------------------  ----------  ----------  ------------ 
 Total segment assets                         62,090      59,920        69,676 
 Corporate centre                              6,163      11,251         5,695 
 Intangible assets arising on 
  consolidation                                6,489       1,209           789 
 Consolidation adjustments                     (980)     (7,636)       (1,097) 
----------------------------------------  ----------  ----------  ------------ 
 Total consolidated assets                    73,762      64,744        75,063 
----------------------------------------  ----------  ----------  ------------ 
 
 Extraction and utilisation of 
  gas                                       (39,005)    (23,517)      (31,918) 
 Design, build and operate projects 
  for external customers                       (910)     (1,823)       (2,063) 
----------------------------------------  ----------  ----------  ------------ 
 Total segment liabilities                  (39,915)    (25,340)      (33,981) 
 Corporate centre                            (2,549)    (13,280)       (5,362) 
 Consolidation adjustments                    16,396      14,558         8,351 
----------------------------------------  ----------  ----------  ------------ 
 Total consolidated liabilities             (26,068)    (24,062)      (30,992) 
----------------------------------------  ----------  ----------  ------------ 
 
 Extraction and utilisation of 
  gas                                          2,597       2,860        21,629 
 Design, build and operate projects                -           -             - 
  for external customers 
                                          ----------  ----------  ------------ 
 Total segment additions to non-current 
  assets                                       2,597       2,860        21,629 
 Available for sale financial 
  asset                                           86      11,000         5,464 
 Deferred tax asset                               34           -           228 
 Corporate centre                                  -           -             - 
 Total consolidated additions 
  to non-current assets                        2,717      13,860        27,321 
----------------------------------------  ----------  ----------  ------------ 
 
   4.   Taxation 

There is no tax charge for the current period (six months ended 30 June 2014: nil, year ended 31 December 2014: nil). A deferred tax credit of GBP34,000 has been recognised in the period (six months ended 30 June 2014: nil, year ended 31 December 2014: GBP228,000).

   5.   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.

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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 
                                            2015          2014          2014 
                                       Unaudited     Unaudited       Audited 
 
                                         GBP'000       GBP'000       GBP'000 
 
 Profit attributable to equity 
  holders of the parent                    1,442         7,257         3,438 
                                    ------------  ------------  ------------ 
 
 
                                             No.           No.           No. 
 
 Basic weighted average number 
  of Ordinary Shares                 153,541,068   124,137,446   134,375,182 
 Dilutive effect of share options      4,204,844     6,124,309     5,918,707 
 Dilutive effect of convertible 
  loan notes(1)                        8,755,545    13,045,714    13,520,000 
----------------------------------  ------------  ------------  ------------ 
 Diluted weighted average number 
  of Ordinary Shares                 166,501,457   143,307,469   153,813,889 
----------------------------------  ------------  ------------  ------------ 
 

(1) For the purposes of calculating the dilutive earnings per share, the profit for the period attributable to equity holders of the parent has been adjusted by the transaction costs and interest charges of GBP66,000 (six months ended 30 June 2014: GBP103,000 and year ended 31 December 2014: GBP234,000) that would have been avoided if conversion was to have occurred. The revised profit for the period attributable to equity holders of the parent on this basis is GBP1,508,000 (six months ended 30 June 2014: GBP7,360,000 and year ended 31 December 2014: GBP3,672,000).

A total of 22,222,222 Ordinary Shares were issued and admitted to trading on AIM on 21 July 2014 in respect of a share placing carried out in conjunction with the acquisition of three power response companies from Carron Energy Limited and Dragon Generation Limited (see note 12).

6,411,732 shares were issued and admitted to trading on AIM on 22 April 2015 and a further 7,486,728 shares were issued and admitted to trading on AIM on 1 May 2015 pursuant to the conversion of the GBP2,000,000 Convertible No. 1 Loan Notes 2012 issued on the 26 April 2012 in order to finance the acquisition of Greenpark Energy Limited.

   6.   Dividend 

During the six months ended 30 June 2015 the Company paid a dividend of 0.3 pence per share totalling GBP486,000 (six months ended 30 June 2014 and year ended 31 December 2014: a dividend of 0.2 pence per share totalling GBP249,000).

   7.   Property, Plant and Equipment 

Acquisitions and disposals

During the six months ended 30 June 2015, the Group acquired assets with a cost of GBP874,000 (six months ended 30 June 2014: GBP1,295,000; year ended 31 December 2014: GBP13,216,000). Included within additions for the period ended June 2014 and the year ended 31 December 2014 is GBP900,000 relating to the acquisition of Wheldale power response assets (see note 11). The figures for the year ended 31 December 2014 also included GBP8,090,000 relating to the acquisition of the three power response companies form Carron Energy Limited and Dragon Energy Limited (see note 12). There were no disposals during the period (30 June and 31 December 2014: nil).

   8.   Gas Assets 

Acquisitions and disposals

During the six months ended 30 June 2015, the Group acquired assets with a cost of GBP1,723,000 (six months ended 30 June 2014: GBP1,565,000; year ended 31 December 2014: GBP8,413,000). Included within additions for the period ended June 2014 and the year ended 31 December 2014 is GBP600,000 relating to the acquisition of Wheldale power response assets (see note 11). The figures for the year ended 31 December 2014 also included GBP4,207,000 relating to the acquisition of the three power response companies form Carron Energy Limited and Dragon Energy Limited (see note 12). There were no disposals during the period (30 June and 31 December 2014: nil).

During the six months ended 30 June 2014 and the year ended 31 December 2014 impairment tests of gas assets relating to producing licence areas was carried out. The test took into account the expected future price of energy and the expected production life. The test conducted during the six months ended 30 June 2014 identified one producing licence area with a carrying value that would not be recovered and an impairment charge of GBP787,000 (30 June 2015: nil) was made. A further two licence areas were identified in the second half of 2014 with carrying values that would not be recovered and a further impairment charge of GBP652,000 was recognised. The total impairment charge recognised in the year ended 31 December 2014 was GBP1,439,000. No such impairment has been deemed required by the directors in the current period.

During the six months ended 30 June 2014 and the year ended 31 December 2014 an impairment review of exploration and evaluation costs relating to non-producing licence areas was carried out in the period. Following the review an impairment charge of GBP2,393,000 (30 June 2015: nil) was made in respect of costs that would not lead to commercial operations. No such impairment has been deemed required by the directors in the current period.

   9.   Fair Value 
   (a)   Carrying Amount versus Fair Value 

The following table compares the carrying amounts and fair values of the group's financial assets and financial liabilities as at 30 June 2015.

The group considers that the carrying amount of the following financial assets and financial liabilities are a reasonable approximation of their fair value:

   -       Trade receivables 
   -       Trade payables 
   -       Cash and cash equivalents 
 
                           As at 30 June 2015     As at 31 December 
                                                         2014 
                            Carrying      Fair   Carrying       Fair 
                              Amount     Value     Amount      Value 
 Financial Assets 
 Available-for-sale 
  investments                  5,550     5,550      5,464      5,464 
 Total                         5,550     5,550      5,464      5,464 
 
 Financial Liabilities 
 Loans and borrowings         20,353    20,353     19,135     19,135 
 Derivative financial 
  liabilities                      7         7         10         10 
 Total                        20,360    20,360     19,145     19,145 
-----------------------  -----------  --------  ---------  --------- 
 
   (b)   Fair value Hierarchy 

The level within the fair value hierarchy within which the financial asset or financial liability is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement.

Financial assets and financial liabilities are classified in their entirety into only one of the three levels.

The fair value hierarchy has the following levels:

   -       Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities 

- Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

- Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 
                            As at 30   Level   Level 2   Level 3 
                           June 2015       1 
 Financial Assets 
 Available-for-sale 
  investments                  5,550   5,550         -         - 
 Total                         5,550   5,550         -         - 
 
 Financial Liabilities 
 Derivative financial 
  liabilities                      7       -         7         - 
 Total                             7       -         7         - 
-----------------------  -----------  ------  --------  -------- 
 
 
                            As at 31   Level   Level 2   Level 3 
                            December       1 
                                2014 
 Financial Assets 
 Available-for-sale 
  investments                  5,464   5,464         -         - 
 Total                         5,464   5,464         -         - 
 
 Financial Liabilities 
 Derivative financial 
  liabilities                     10       -        10         - 
 Convertible loan stock        2,337       -     2,337         - 
 Total                         2,347       -     2,347         - 
------------------------  ----------  ------  --------  -------- 
 
 
                             As at 30    Level   Level 2   Level 3 
                            June 2014        1 
 Financial Assets 
 Available-for-sale 
  investments                  11,000   11,000         -         - 
 Derivative financial 
  instrument                       22        -        22         - 
 Total                         11,022   11,000        22         - 
 
 Financial Liabilities 
 Convertible loan stock         2,210        -     2,210         - 
 Total                          2,210        -     2,210         - 
------------------------  -----------  -------  --------  -------- 
 
   (c)   Transfers during the period 

During the six month period to 30 June 2015:

   -       There were no transfers between Level 1 and Level 2 fair value measurements 
   -       There were no transfers into or out of Level 3 fair value measurements 
   (d)   Valuation techniques 
   (i)            Available-for-sale investments 

For Level 1 available-for-sale investments the group uses the closing market price as at the reporting date per share multiplied by the number of shares held.

   (ii)           Derivative financial liabilities 

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Derivative financial liabilities comprise an interest swap rate. The determination of fair value includes reference to the market value as at the reporting date.

   (iii)          Loans and borrowings 

Loans and borrowings include amounts advanced to the group at both fixed and variable rates of interest.

Fair value for disclosure purposes as at the reporting date is determined by reference to the present value of the future contracted cash flows discounted at the observable market interest rates for instruments with similar characteristics to those held by the group (Level 2).

10. Capital Commitments

At 30 June 2015, the Group had the following capital commitments contracted for but not provided in the financial statements:

-- Acquisition of property, plant and equipment GBP242,000 (30 June 2014: GBP107,000; 31 December 2014: GBP41,000);

-- Acquisition of gas assets GBP174,000 (30 June 2014: GBP890,000; 31 December 2014: GBP759,000);

-- Acquisition of Maltby coal mine methane assets nil (30 June 2014: GBP2,000,000, 31 December 2014: nil).

11. Purchase of Wheldale power response facilities

On 5 February 2014 the Group acquired the Wheldale power response facilities from SSE plc, for a total consideration of GBP1,500,000. The initial consideration for the acquisition was GBP1,100,000 paid in cash on completion, with a GBP400,000 deferred cash payment paid on 31 October 2014. The facilities comprise an installed engine capacity of 7.5MW and a grid connection of 10MW. As part of the financial arrangements to fund the acquisition the Group increased its banking facilities with Lloyds Bank plc by GBP1,000,000.

12. Acquisition of power response Companies

On 21 July 2014 the Group acquired the entire issued share capital of three power response companies from Carron Energy Limited and Dragon Generation Limited. All three companies generate electricity, with two (Darent Power Limited and Rhymney Power Limited) generating from natural gas and the third (Leven Power Limited) generating from kerosene.

Total consideration for the acquisition was GBP12,064,000; cash consideration comprised GBP10,991,000 and in addition the Group took on a GBP1,073,000 term loan facility with Lombard North Central plc. The acquisition was partly funded by a term loan of GBP5,500,000 provided by Lloyds Bank plc, repayable in monthly instalments over 5 years commencing in August 2014. The balance was financed by a proportion of the funds raised by a share placing. A total of GBP8,000,000 was raised by the issue of 22,222,222 new Ordinary Shares at a placing of 36 pence per share.

Net assets with a book value of GBP6,162,000 were acquired at the date of acquisition. The directors carried out a fair value assessment of the identifiable assets, liabilities and contingent liabilities of the three companies acquired and concluded that the net fair value at the date of acquisition was GBP10,991,000. The following table shows the identifiable material assets and liabilities acquired, the fair value adjustments, and the fair value.

 
                                 Acquired     Fair value   Fair value 
                               on 21 July    adjustments 
                                     2014 
                                  GBP'000        GBP'000      GBP'000 
 Buildings                            432              -          432 
 Plant                              5,785          1,873        7,658 
 Gas assets                           347          3,860        4,207 
 Contract                               -            298          298 
 Inventories                          393              -          393 
 Receivables                          597              -          597 
 Payables                           (626)              -        (626) 
 Loan repayable                   (1,073)              -      (1,073) 
 Deferred tax liability              (16)        (1,202)      (1,218) 
 Cash and cash equivalents            323              -          323 
                                    6,162          4,829       10,991 
                             ------------  -------------  ----------- 
 
                                                              GBP'000 
 Fair value as above                                           10,991 
 less Consideration                                            10,991 
                                                          ----------- 
                                                                    - 
                                                          ----------- 
 

In the year ended 31 December 2014, costs of GBP600,000 were incurred in advisory, professional and other fees in order to effect the acquisition. The net amount of GBP600,000 was expensed in the Consolidated Statement of Comprehensive Income under the heading of exceptional administrative expenses.

13. Transfer of licences

On 12 June 2014 the Group transferred its shale gas interests in certain UK petroleum and development licences to Egdon Resources plc in exchange for 40,000,000 new ordinary shares of 1 pence each in Egdon Resources plc an AIM listed company whose registered office is at The Wheat House, 98 High Street, Odiham, Hampshire RG29 1LP. At the date of transfer the share price of Egdon Resources plc was 26.25 pence, valuing the gross consideration at GBP10,500,000.

A profit of GBP9,990,000 on the transfer was recognised in the period six months ended 30 June 2014 (six months ended 30 June 2015: nil). Associated costs of sale attributable to the transfer of shale gas interests are detailed below:

 
                                               Six months     Year ended 
                                                 ended 30    31 December 
                                                June 2014           2014 
                                                Unaudited        Audited 
                                                  GBP'000        GBP'000 
 Gross consideration                               10,500         10,500 
 Non-capital costs relating to the transfer 
  of licences                                       (297)          (334) 
 Capital costs relating to the transfer 
  of licences                                       (213)          (213) 
 Profit on transfer of licences                     9,990          9,953 
                                              -----------  ------------- 
 

The listed equity investment represents an 18% interest in Egdon Resources plc shares and is classified as an available for sale financial asset. The Group's interest in Egdon Resources plc has not been treated as an associated undertaking as the Group does not have a significant influence over the company. The shares are revalued at fair value at the end of each period. The fair value disclosed is the mid price at the statement of financial position date. The movement in the fair value of available for sale financial assets is determined under Level 1 Inputs, being quoted prices in active markets that the Group has the ability to access as of the measurement date.

There was a 12 month lock-in period from the date of issue of the consideration shares during which time the Company was precluded from disposal of the shares. The lock-in period has now lapsed but the Group does not intend to dispose of this investment in the foreseeable future.

An impairment of GBP5,036,000 was recognised in the year ended 31 December 2014 (30 June 2015: nil, 30 June 2014: nil) in light of a reduction in the share price indicating there was a permanent diminution in the investment value.

14. Exceptional Items

 
                                        Six months   Six months     Year ended 
                                             ended        ended    31 December 
                                           30 June      30 June           2014 
                                              2015         2014 
                                         Unaudited    Unaudited        Audited 
                                           GBP'000      GBP'000        GBP'000 
 Bad debt written off                            -            -          (310) 
 Costs relating to acquisitions and 
  other corporate transactions                   -         (82)          (612) 
                                                 -         (82)          (922) 
 Impairment of assets                            -      (3,180)        (4,069) 
                                      ------------  -----------  ------------- 
                                                 -      (3,262)        (4,991) 
 -------------------------------------------------  -----------  ------------- 
 

15. 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. The convertible loan notes were convertible at a fixed conversion price of 17.5 pence. Interest was at a fixed rate of 7.5% per annum, which was rolled up quarterly and included as principal to be repaid.

As at 30 June 2015 the Convertible Loan Notes have all converted. 6,411,732 shares were issued and admitted to trading on AIM on 22 April 2015 and a further 7,486,728 shares were issued and admitted to trading on AIM on 1 May 2015.

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