29th Sep 2008 10:09
AIM: GBF
GEM Biofuels Plc
("GEM" or the "Company")
Interim Results for the six months ended 30 June 2008
GEM Biofuels Plc ("GEM" or the "Company", AIM: GBF), the emerging feedstock supplier to the global biodiesel industry, announces its interim financial results for the six months to 30 June 2008.
Operational Highlights
Conclusion of the 2007/2008 planting season, with a total of 30,000 hectares planted (18,000 hectares planted during the period under review)
43,500 hectares now planted since commencement of operations
Offtake agreement signed with Natural Fuel Limited ("NFL") under which GEM will supply 55% of its crude Jatropha oil production to NFL
Care and maintenance procedures currently being carried out on all plantations and preparation for the 2008/2009 plantation season has commenced
Financial Highlights
Cash as at 30 June 2008: £1,511,068 (2007: £173,997)
Group loss for six months ending 30 June 2008: £386,002 (2007: £283,830)
Mr Paul Benetti, Chief Executive Officer, commented:
"The first half of 2008 has been an active period for the Company as we continue to roll out our aggressive plantation establishment programme such that a total of 43,500 hectares has been planted to date. GEM continues to have a positive socio-economic impact on the local community in Madagascar, employing and training local farmers and encouraging communes to maintain ownership of the land. Care and maintenance is currently being carried out on the plantations and preparation for the 2008/2009 season has commenced. We believe that our strategy of developing low-cost, sustainable Jatropha plantations will allow us to perform well against a backdrop of the many challenges facing the wider biofuels industry."
Enquiries:
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GEM Biofuels Plc |
W H Ireland |
Parkgreen Communications |
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Paul Benetti |
Tim Cofman-Nicoresti / Nicola Rayner |
Louise Goodeve / Lisa Kavanagh |
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Chief Executive Officer |
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|
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+61 (0) 8 6365 3038 |
+ 44 (0) 121 265 6330 |
+44 (0) 20 7933 8780 |
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+61 (0) 407 039 379 (mobile) |
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Notes to Editors
About GEM Biofuels
GEM Biofuels was founded in 2004 to capitalise on the opportunity presented by the local agricultural and socio-economic conditions in Madagascar to produce Jatropha oil for use as a biodiesel feedstock. Operations are based in the South of the island where the Jatropha tree grows wild.
The Company has secured 50 year agreements giving exclusive rights over 452,500 hectares (in excess of 1 million acres) to establish plantations, ranging in size from 2,500 - 50,000 hectares with a further 40,000 hectares of natural forest containing substantial numbers of mature Jatropha trees.
To date, the Company has planted 43,500 hectares of Jatropha and a total of 200,000 hectares is expected to be planted by 2010. Based on this, it is anticipated that the Group's production will be 20,000 tonnes per annum ("t.p.a.") of crude Jatropha oil in 2009 rising to 210,000 t.p.a. in 2014, after its trees mature.
GEM Biofuels Plc was admitted to trading on AIM in October 2007.
Jatropha
Jatropha is a small tree/shrub, growing to about five metres in height and is well suited for use in the production of biodiesel. Jatropha trees are relatively drought resistant and suitable for cultivation in sub tropical regions. The high oil yielding seeds are mildly toxic and as such Jatropha is not a food and its use in biodiesel production does not affect the cost of living of the indigenous population. Biodiesel refined from Jatropha oil complies with international standards, including EN14214 in Europe, the major market for biodiesel.
Whilst the current production of Jatropha seed for commercial purposes is small, it is substantially increasing due to its attractiveness as a biodiesel feedstock because of its ability to grow on marginal land and the fact that it is non-edible.
Report of the Chairman and of the Chief Executive Officer
We are pleased to announce our results for the six months ended 30 June 2008. The first half of 2008 has been an active period for GEM BioFuels Plc ("GEM" or the "Company") in which we have maintained our aggressive plantation establishment programme and continued to grow and strengthen our position as a significant participant in the biofuels industry.
Plantation Operations
During the period under the review, the Company established a further 18,000 hectares of Jatropha plantation in Southern Madagascar, representing an increase of 30,000 hectares over the 13,500 hectares reported in the Company's October 2007 Admission document. This brings the total planting since the start of operations to 43,500 hectares.
Along with plantation establishment, we have been developing and implementing management programmes to ensure regular checking and maintenance of the trees. As part of this process, local farmers are trained to establish and maintain firebreaks and ensure the reduction of competition from weeds and other vegetation.
As with our planting programmes, we continue to encourage the involvement of the communes and promote the substantial social and economic benefits that can be derived through the maintenance of successful plantations in their area.
Financial Review
In the six months ended 30 June 2008, the Group's loss on ordinary activities after taxation was £386,002 (2007: £283,830), or a loss per ordinary share of 1.40p (2007: 1.42p). The Group's cash balance at the end of the period was £1,511,068 (2007: £173,997).
Management
As planned the Company has continued to strengthen its operational management team with several appointments, particularly in Madagascar. We are building a team that will enable us to build GEM in to a leading force in the biodiesel feedstock supply industry.
Biodiesel Industry
Much of the biodiesel industry's continued growth is being driven by government regulation that is seeking to deal with issues such as environmental emissions, energy security and poverty reduction. However, there is an increasing move away from the historic 'incentive-based' legislation towards penalties-based regulation. This, combined with an increasing requirement for environmental sustainability in the production of biofuel feedstocks is improving the economic case for a low-cost, sustainable, non-food biodiesel feedstock supply industry in which we operate.
Sustainability offers companies such as GEM an advantage over traditional biofuel feedstock producers and we believe that Jatropha will meet the sustainability requirements currently being proposed. However the industry must be wary of excessive regulation in this area.
Outlook
The price of mineral oil remains close to record levels and as a result of these high prices and the rapid rise in the prices of agricultural products, particularly vegetable oils and associated foods, the need for an alternative, sustainable, non-food biodiesel feedstock crop is being increasingly recognised.
We believe Jatropha offers a viable solution to this dilemma. Its ability to provide a low-cost non-food feedstock, which can be grown in a sustainable manner with a potentially positive environmental impact by farmers in developing countries, makes Jatropha a logical solution.
We expect a period of continuing high prices for both mineral oil and vegetable oils and when combined with the increased 'sustainability' requirements of biodiesel feedstocks, we believe this bodes well for the future of Jatropha and GEM BioFuels.
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Paul R Benetti |
Simon D Hunt |
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Chief Executive Officer |
Non-Executive Chairman |
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Interim Consolidated Income Statements for the six months ended 30 June 2008 |
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Note |
Unaudited Six Months Ended 30 June 2008 £ |
Unaudited Six Months Ended 30 June 2007 £ |
Audited Year Ended 31 December 2007 £ |
|||||||||||||
|
Administrative expenses |
(393,129) |
(278,340) |
(1,032,495) |
|||||||||||||
|
Finance income |
5 |
37,340 |
417 |
20,743 |
||||||||||||
|
Other gains and losses |
(27,980) |
4,237 |
56,141 |
|||||||||||||
|
Finance costs |
5 |
(2,233) |
(10,144) |
(22,315) |
||||||||||||
|
Loss before tax |
(386,002) |
(283,830) |
(977,926) |
|||||||||||||
|
Tax expense |
6 |
- |
- |
- |
||||||||||||
|
LOSS FOR THE YEAR / PERIOD |
4 |
(386,002) |
(283,830) |
(977,926) |
||||||||||||
|
Loss per ordinary share |
11 |
|||||||||||||||
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Basic loss per ordinary share (pence) |
1.40 |
1.42 |
4.53 |
|||||||||||||
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Diluted loss per ordinary share (pence) |
1.40 |
1.42 |
4.53 |
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Notes to the financial statements are included on pages 10 to 13. |
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Interim Consolidated Balance Sheet as at 30 June 2008 |
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Note |
Unaudited 30 June 2008 £ |
Unaudited 30 June 2007 £ |
Audited 31 December 2007 £ |
||||||
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ASSETS |
|||||||||
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Non current assets |
|
||||||||
|
Goodwill |
|
|
|
788,400 |
|
786,199 |
787,614 |
||
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Property, plant and equipment |
7 |
|
|
41,924 |
|
56,806 |
47,650 |
||
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Plantation assets |
|
|
|
351,162 |
|
89,678 |
168,379 |
||
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Other assets |
|
|
|
- |
|
16,174 |
- |
||
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|
|
|
1,181,486 |
|
948,857 |
1,003,643 |
|||
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Current Assets |
|||||||||
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Inventories |
3,648 |
6,106 |
5,654 |
||||||
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Cash and cash equivalents |
1,511,068 |
173,997 |
2,169,831 |
||||||
|
1,514,716 |
180,103 |
2,175,485 |
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TOTAL ASSETS |
2,696,202 |
1,128,960 |
3,179,128 |
||||||
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LIABILITIES |
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Current liabilities |
|||||||||
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Trade and other payables |
8 |
71,512 |
494,417 |
144,049 |
|||||
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TOTAL LIABILITIES |
71,512 |
494,417 |
144,049 |
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NET CURRENT ASSETS / (LIABILITIES) |
1,443,204 |
(314,314) |
2,031,436 |
||||||
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NET ASSETS |
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|
|
2,624,690 |
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634,543 |
3,035,079 |
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EQUITY |
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Issued capital |
276,015 |
200,000 |
276,015 |
||||||
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Share premium reserve |
4,391,866 |
1,564,708 |
4,391,866 |
||||||
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Currency translation reserve |
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|
|
(213,102) |
|
(185,954) |
(188,716) |
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Share option reserve |
194,221 |
- |
194,221 |
||||||
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Accumulated losses |
(2,024,310) |
(944,211) |
(1,638,307) |
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TOTAL EQUITY |
2,624,690 |
634,543 |
3,035,079 |
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These financial statements were approved by the Board of Directors and authorised for use on 26 September 2008. |
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Signed on behalf of the Board of Directors by: |
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Simon D Hunt Non-Executive Chairman |
Paul R Benetti Chief Executive Officer |
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Notes to the financial statements are included on pages 10 to 13. |
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Statements of Changes in Equity
for the six months ended 30 June 2008
|
Note |
Share Capital |
Share Premium |
Currency Translation Reserve |
Share Option Reserve |
Accumulated Losses |
Total |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
||
|
Balance at Incorporation |
2 |
- |
- |
- |
- |
2 |
|
|
Loss for the period |
- |
- |
- |
- |
(660,381) |
(660,381) |
|
|
Acquisition of subsidiaries |
99,998 |
782,355 |
- |
- |
- |
882,353 |
|
|
Issue of shares during the period |
100,000 |
782,353 |
- |
- |
- |
882,353 |
|
|
Translation into presentation currency |
- |
- |
(190,294) |
- |
- |
(190,294) |
|
|
Balance at 31 December 2006 (Audited) |
200,000 |
1,564,708 |
(190,294) |
- |
(660,381) |
914,033 |
|
|
Loss for the period |
- |
- |
- |
- |
(283,830) |
(283,830) |
|
|
Translation into presentation currency |
- |
- |
4,340 |
- |
- |
4,340 |
|
|
Balance at 30 June 2007 |
200,000 |
1,564,708 |
(185,954) |
- |
(944,211) |
634,543 |
|
|
Loss for the period |
- |
- |
- |
- |
(694,097) |
(694,097) |
|
|
Issue of shares during the period |
76,015 |
3,689,210 |
- |
- |
- |
3,765,225 |
|
|
Issue of options |
- |
- |
- |
194,221 |
- |
194,221 |
|
|
Share issue cost |
- |
(862,052) |
- |
- |
- |
(862,052) |
|
|
Translation into presentation currency |
- |
- |
(2,762) |
- |
- |
(2,762) |
|
|
Balance as at 31 December 2007 (Audited) |
276,015 |
4,391,866 |
(188,716) |
194,221 |
(1,638,307) |
3,035,079 |
|
|
Loss for the period |
- |
- |
- |
- |
(386,002) |
(386,002) |
|
|
Translation into presentation currency |
- |
- |
(24,387) |
- |
- |
(24,387) |
|
|
Balance as at 30 June 2008 |
276,015 |
4,391,866 |
(213,103) |
194,221 |
(2,024,309) |
2,624,690 |
|
Notes to the financial statements are included on pages 10 to 13.
|
Interim Consolidated Cash Flow Statement for the six months ended 30 June 2008 |
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Note |
Unaudited Six Months Ended 30 June 2008 £ |
Unaudited Six Months Ended 30 June 2007 £ |
Audited Year Ended 31 December 2007 £ |
||||||||
|
Cash flows from operating activities |
|||||||||||
|
Cash used in operations |
9 |
(509,919) |
(271,895) |
(822,531) |
|||||||
|
Cash flows from investing activities |
|||||||||||
|
Purchases of property, plant and equipment |
(12,293) |
(5,962) |
(30,300) |
||||||||
|
Purchases of plantation assets |
(165,738) |
(31,178) |
(98,843) |
||||||||
|
Interest received |
37,340 |
417 |
20,743 |
||||||||
|
Interest paid |
- |
- |
(2,396) |
||||||||
|
Net cash used in investing activities |
(140,691) |
(36,723) |
(110,796) |
||||||||
|
Cash flows from financing activities |
|||||||||||
|
Proceeds from issue of shares |
- |
- |
3,500,000 |
||||||||
|
Proceeds from borrowings |
- |
270,000 |
- |
||||||||
|
Proceeds from converting RAB Loan Notes to shares |
- |
- |
250,000 |
||||||||
|
Payment for share issue costs |
- |
- |
(862,052) |
||||||||
|
Net cash provided by financing activities |
- |
270,000 |
2,887,948 |
||||||||
|
Net increase in cash and cash equivalents |
(650,610) |
(38,618) |
1,954,621 |
||||||||
|
Cash and cash equivalents at the beginning of the year/from incorporation |
2,169,831 |
212,615 |
212,615 |
||||||||
|
Effects of exchange rate changes on the balance of cash held in foreign currencies |
(8,153) |
- |
2,595 |
||||||||
|
Cash and cash equivalents at the end of the year / period |
1,511,068 |
173,997 |
2,169,831 |
||||||||
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Notes to the financial statements are included on pages 10 to 13. |
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Notes to the Interim Results for the six months ended 30 June 2008 |
1. GENERAL INFORMATION
GEM BioFuels PLC is a company domiciled and incorporated in the Isle of Man with company registration number 115011C. The Company's ordinary shares are traded on AIM.
The consolidated accounts for GEM BioFuels Plc and its subsidiary (the "Group") have been prepared for the six months ended 30 June 2008.
The Company's registered address is 34 North Quay, Douglas, Isle of Man IM1 4LB.
The functional currency of the company and the consolidated financial statements is United States Dollars ('USD') as it is the currency of the primary economic environment in which the Group operates. The consolidated financial statements are presented in Pounds Sterling (presentation currency) for the convenience of readers. The translation between the functional and presentation currency is in accordance with the Group's stated policy.
2. BASIS OF PREPARATION
The Group interim financial statements are prepared on the historical cost basis.
The financial information for the six months ended 30 June 2008 is unaudited and has been prepared in accordance with the accounting policies set out in the Group's Annual Report for the year ended 31 December 2007 ("Annual Report") and should be read in conjunction with the Annual Report. The financial information for the six months ended 30 June 2007 is also unaudited and the results have not been reviewed by the Group's auditors. The financial information relating to the year ended 31 December 2007 has been extracted from the full report for that year. The report of the Auditors on the 2007 accounts was unqualified. The statutory accounts for the year ended 31 December 2007 were approved at the Group's Annual General Meeting on 23 September 2008.
Where necessary, the comparatives have been reclassified from the previously reported interim results to take into account any presentational changes made in the Annual Report.
These interim financial statements were approved by the board of directors on 26 September 2008.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the process of applying the Group's accounting policies, the Directors have made the following judgements that have the most significant effect on the amounts recognised in the financial statements.
Impairment of goodwill
Following a detailed review of the business combinations acquired, the Directors are satisfied that the carrying amount of the goodwill is justified and no impairment loss is to be recognised at the period end.
Impairment of biological assets
Following a review of the company's plantation and forest assets, the company has determined that as at 30 June 2008 the biological asset will be measured at the cost of initial planting as little if any biological transformation had occurred at 30 June 2008 and accordingly cost reflected the best approximation at fair value.
4. SEGMENT REPORTING
The Group's primary reporting format is its geographical segment, while its secondary reporting format is its business segment.
The Group has one geographical segment being Madagascar.
The Group has one business segment, which is the production of feedstock for the Biodiesel market.
5. NET FINANCING INCOME
|
Unaudited Six Months Ended 30 June 2008 £ |
Unaudited Six Months Ended 30 June 2007 £ |
Audited Year Ended 31 December 2007 £ |
|||
|
Interest income from financial institutions |
37,340 |
417 |
20,743 |
||
|
Gross interest expenses (i) |
(2,233) |
(10,144) |
(22,315) |
||
|
Net financing income |
35,107 |
(9,727) |
(1,572) |
(i) Included in the gross interest expense of £22,315 (Group) and £20,801 (Company) is an amount of £19,919 of non cash interest relating to the RAB convertible notes. Refer to note 16 for further details.
6. INCOME TAX EXPENSE
The Income Tax (Amendment) Act 2006 provides that a standard zero rate of income tax will apply to the company in the Isle of Man for 2006/07 and subsequent years of assessment. Therefore no provision for liability to Isle of Man income tax has been included in these accounts.
The company's subsidiary pays tax at a rate of 30% on its taxable profits. No tax charge has been recorded in the current period in respect of the operations of the subsidiary due to losses arising. A deferred tax asset has not been recognised in respect of these losses due to the unpredictability of future income streams in the company.
7. PROPERTY, PLANT AND EQUIPMENT
|
Attributable to the Group COST |
Motor Vehicles £ |
Fixtures and equipment £ |
Total £ |
|
|
At Incorporation |
- |
- |
- |
|
|
Additions |
10,983 |
27,084 |
38,067 |
|
|
Acquisition of Subsidiary |
27,349 |
- |
27,349 |
|
|
At 31 December 2006 (Audited) |
38,332 |
27,084 |
65,416 |
|
|
Additions |
1,484 |
15,523 |
17,006 |
|
|
At 30 June 2007 |
39,816 |
42,607 |
82,422 |
|
|
Additions |
8,490 |
4,803 |
13,293 |
|
|
Disposals |
- |
(21,513) |
(21,513) |
|
|
Exchange difference |
2,942 |
4,501 |
7,443 |
|
|
At 31 December 2007 (Audited) |
51,248 |
30,398 |
81,645 |
|
|
Additions |
6,765 |
5,528 |
12,293 |
|
|
Exchange difference |
(11,237) |
3,578 |
(7,658) |
|
|
At 30 June 2008 |
46,776 |
39,504 |
86,280 |
|
|
ACCUMULATED DEPRECIATION |
||||
|
At Incorporation |
- |
- |
- |
|
|
Charge for the period |
11,344 |
3,228 |
14,572 |
|
|
At 31 December 2006 (Audited) |
11,344 |
3,228 |
14,572 |
|
|
Charge for the period |
7,075 |
3,968 |
11,043 |
|
|
At 30 June 2007 |
18,419 |
7,196 |
25,615 |
|
|
Charge for the period |
6,658 |
4,100 |
10,758 |
|
|
Disposals |
- |
(4,772) |
(4,772) |
|
|
Exchange difference |
1,725 |
670 |
2,395 |
|
|
At 31 December 2007 (Audited) |
26,802 |
7,194 |
33,996 |
|
|
Charge for the period |
9,866 |
4,137 |
14,003 |
|
|
Exchange difference |
(4,408) |
765 |
(3,643) |
|
|
At 31 December 2008 |
32,260 |
12,096 |
44,356 |
|
|
NET BOOK VALUE |
||||
|
At 30 June 2008 |
14,516 |
27,408 |
41,924 |
8. TRADE AND OTHER PAYABLES
|
Unaudited 30 June 2008 £ |
Unaudited 30 June 2007 £ |
Audited 31 December 2007 £ |
|||
|
Trade payables |
36,593 |
236,917 |
53,283 |
||
|
Accrued expenses |
34,919 |
- |
90,766 |
||
|
71,512 |
236,917 |
144,049 |
9. NOTES TO THE CASH FLOW STATEMENT
|
Unaudited Six Months Ended 30 June 2008 £ |
Unaudited Six Months Ended 30 June 2007 £ |
Audited Year Ended 31 December 2007 £ |
|||
|
Loss for the year / period |
(386,002) |
(283,830) |
(977,926) |
||
|
Adjustments for: |
|||||
|
Finance costs |
2,233 |
10,144 |
22,315 |
||
|
Loss on disposal of property, plant and equipment |
- |
16,741 |
|||
|
Share option expense |
- |
- |
194,221 |
||
|
Foreign exchange gain |
(27,982) |
8,036 |
(7,165) |
||
|
Interest income received and receivable |
(37,340) |
- |
(20,743) |
||
|
Depreciation of property, plant and equipment |
13,715 |
11,044 |
21,801 |
||
|
Operating cash flows before movements in working capital |
(435,376) |
(254,606) |
(750,756) |
||
|
Increase in inventories |
(2,006) |
(2,513) |
(2,061) |
||
|
Decrease/(increase) in other assets |
- |
(7,174) |
9,000 |
||
|
(Decrease)/increase in payables |
(72,537) |
(7,602) |
(78,714) |
||
|
Net cash used in operating activities |
(509,919) |
(271,895) |
(822,531) |
10. GROUP ENTITIES
|
Significant subsidiaries |
Country of incorporation |
Ownership interest |
|
|
Green Energy Madagascar sarl |
Madagascar |
100% |
There were no acquisitions or disposals of investments during the year. The movement in the investment in subsidiary is due to foreign exchange differences.
11. LOSS PER ORDINARY SHARE
|
Unaudited Six Months Ended 30 June 2008 £ |
Unaudited Six Months Ended 30 June 2007 £ |
Audited Year Ended 31 December 2007 £ |
|||
|
Weighted average number of shares Loss per ordinary share - basic - diluted |
27,601,501 1.40 1.40 |
20,000,000 1.42 1.42 |
21,596,315 4.53 4.53 |
The number of shares in issue at 30 June 2008 was 27,601,501 (2007 - 20,000,000). For the purpose of calculating the diluted loss per share 1,986,666 (2007 - nil) options have not been included as the share options are not dilutive.
12. RELATED PARTY TRANSACTIONS
There have been no related party transactions that have a material effect on the financial position of performance of the group in the first six months of the financial year.
13. ULTIMATE CONTROLLING PARTY
During the period to 30 June 2008, the ultimate controlling party of the Group is RAB Special Situations (Master) Fund Limited ('RAB'), a company incorporated in the Cayman Islands.
14. EVENTS AFTER THE BALANCE SHEET DATE
There have been no after balance date events that have a material effect on the financial position of performance of the group in the first six months of the financial year.
Related Shares:
HUN.L