Alkemy Capital. Regulatory News (ALK)

6 Mar 2006 07:02

Alkane Energy PLC06 March 2006 6 March 2006 For immediate release Alkane Energy plc ("Alkane" or "the Group") TRADING UPDATE Alkane Energy, the international energy company that designs, builds, operatesand services climate change reduction and renewable electricity generationplants, provides the following update on trading. The Group's results for the year ended 31 December 2005 will be below marketexpectations and the results will show an operating loss before exceptionalitems. Trading in the second half in the UK was adversely affected byoperational problems at a number of sites. Two of Alkane's more mature coalmine methane plants experienced problems under ground in the last quarter andwork is ongoing to try to bring these back into service. Three newer sitessuffered teething troubles and finished the year below budget. Pro2 (Alkane's51 per cent owned German subsidiary) also finished the year below budget. Pro2has a strong seasonal bias towards the final quarter and the level of salesachieved in the final quarter of 2005 was less than expected. In addition, theresults in the second half were adversely affected by one-off warranty claimsand provisions against trade debtors. Pro2 is actively pursuing counter claimsagainst the original manufacturer of equipment relating to the warranty claimsand payment of the unpaid debtors. In December 2005, Alkane lent Euro3.0 million to Pro2 to support its seasonalworking capital requirements. Pro2 is expected to repay this loan in the firsthalf of 2006 as its working capital demands return to normal following the peaktrading period at the end of 2005. The loan was not budgeted and has meant thatAlkane has had to delay investment in a number of new coal mine methane projectsin the UK and as a result management have reduced their budgets for 2006. Despite the short term operational problems described above, the outlook formine gas power generation in the UK is excellent. Alkane has a strong base ofoperational coal mine methane sites underpinned by contracted electricity pricesof over £50/MWh. In addition, Alkane has an attractive pipeline of coal minemethane sites to exploit in the UK to provide organic growth. The outlook for Pro2 in Europe is also promising. As at the end of February,the business had secured a record firm order book covering over 70 per cent ofits 2006 budget. It has recorded its first orders for flare systems, installedto produce carbon credits, and is experiencing high demand for its containerisedbiogas generation plants and associated services. Looking beyond operational matters, the economic and political climate remainsvery favourable for the renewable electricity and carbon credits markets inwhich Alkane is a growing force. Both these markets are expected to be strongdrivers for sales and service over the next few years. Preliminary results for the year ended 31 December 2005 will be released on 22March 2006. Enquiries: Alkane Energy plc Buchanan CommunicationsDr Cameron Davies, Chief Executive Eric Burns, Account DirectorTel: 01623 827927 Tel: 01943 883990 This information is provided by RNS The company news service from the London Stock Exchange