ERHC Energy Inc (ERHE)

[RUBY1100]

Addax Petroleum announces record second quarter 2008 results
Wednesday August 6, 7:53 am ET


<< - 83 per cent increase in Funds Flow From Operations to $524 million - 190 per cent increase in Net Income to $293 million - 8 per cent increase in Production to 132.9 Mbbl/d >>

CALGARY, Aug. 6 /CNW/ - Addax Petroleum Corporation ("Addax Petroleum" or the "Corporation") (TSX:AXC and LSE:AXC), today announced its results for the quarter ended June 30, 2008. The financial results are prepared in accordance with Canadian GAAP and the reporting currency is US dollars.

This announcement coincides with the filing with the Canadian and U.K. securities regulatory authorities of Addax Petroleum's Unaudited Consolidated Financial Statements for the quarter ended June 30, 2008 and related Management's Discussion and Analysis. Copies of these documents may be obtained via www.sedar.com, www.londonstockexchange.com and the Corporation's website, www.addaxpetroleum.com.

A conference call and webcast will be held for analysts and investors today Wednesday, August 6, 2008 at 11.00 a.m. Eastern Time/4.00 p.m. London, U.K. Time. Full details can be found at the end of this announcement.

CEO's Comment

Commenting today, Addax Petroleum's President and Chief Executive Officer, Jean Claude Gandur, said: "I am pleased to report that robust production performance in a record oil price environment has propelled Addax Petroleum to yet another quarter of record financial results. Activity levels on all our business fronts were high through the second quarter and, on balance, our operational performance was good. Our production levels were slightly below expectations, and may remain so for the balance of the year, but continue to be strong given supply constraints ongoing in the sector. During the second quarter, we also continued to expand Addax Petroleum's property portfolio with four new license interest acquisitions. This new business activity is closely aligned with our dynamic exploration program, which had mixed results during the second quarter, but remain exciting for the balance of the year. I am particularly pleased and encouraged that our initiatives to commercialize our reserves in Kurdistan and gas resources in Nigeria are gaining momentum and can offer excellent value for our shareholders."


Selected Financial Highlights

<<
- Petroleum sales before royalties in the second quarter of 2008
amounted to $1,493 million, an increase of 98 per cent over petroleum
sales before royalties of $753 million in the second quarter of 2007.
The increase in petroleum sales before royalties was primarily driven
by a 81 per cent increase in the average crude oil sales price in the
second quarter of 2008 to $123.17 per barrel (/bbl) as compared to
$68.21/bbl realized in the second quarter of 2007 and an 11 per cent
increase in sales volumes between the same periods. Inventory levels
diminished slightly over the quarter as compared to Q1 2008 by
0.069 MMbbl, however the Corporation still retains a large oil
inventory balance that is expected to decline further before the end
of Q3 2008.

- Funds Flow From Operations for the second quarter of 2008 increased
83 per cent to $524 million ($3.37 per basic share) compared to
$287 million ($1.85 per basic share) in the second quarter of 2007.

- Net income in the second quarter of 2008 increased 190 per cent to
$293 million ($1.88 per basic share) compared to $101 million
($0.65 per basic share) in the corresponding period in 2007.

- Capital expenditures, excluding acquisition costs, increased by
34 per cent to $350 million in the second quarter of 2008 from
$261 million in the second quarter of 2007. Development capital
expenditures totaled $297 million in the second quarter, an increase
of 71 per cent over development capital expenditure of $174 million
in the second quarter of 2007. Exploration and appraisal capital
expenditures totaled $53 million in the quarter, a decrease of
39 per cent over exploration and appraisal capital expenditures of
$87 million in the second quarter of 2007.

- Acquisition costs associated with new business activities increased
to $19 million in the second quarter of 2008 from $nil in the second
quarter of 2007. New business activities included the acquisition of
two new exploration license areas for the Corporation's property
portfolio, the increase of the Corporation's working interest in two
other exploration license areas and the commencement of an integrated
gas utilization project in Nigeria.

- At the end of the second quarter 2008, bank debt totaled
$910 million, a decrease of $40 million over the corresponding
quarter in 2007. Bank debt is currently drawn under a 5-year,
$1.6 billion senior secured term facility, with 4 years remaining. In
addition, during the quarter, a new two year loan facility was signed
and underwritten for an amount of $450 million, which may increase to
$500 million after syndication. No amounts have been drawn on this
facility as at June 30, 2008.


The following table summarizes the selected financial highlights:

-------------------------------------------------------------------------
Selected second quarter financial highlights Quarter ended
June 30
$ million unless otherwise stated 2008 2007 Change
-------------------------------------------------------------------------

Petroleum sales before royalties 1,493 753 98%
Average realized sales price, $/bbl 123.17 68.21 81%
Sales volumes, MMbbl 12.2 11.0 11%

Funds Flow From Operations 524 287 83%
Net income 293 101 190%

Weighted average common shares outstanding
(basic, millions) 156 155 1%
Funds Flow From Operations per share
($/basic share) 3.37 1.85 82%
Earnings per share ($/basic share) 1.88 0.65 189%

Weighted average common shares outstanding
(diluted, millions) 162 157 3%
Funds Flow From Operations per share
($/diluted share) 3.24 1.82 78%
Earnings per share ($/diluted share) 1.83 0.65 182%

Total assets 4,502 3,282 37%
Long-term debt, excluding convertible bonds 910 950 -4%

Capital Expenditures - by Region
Nigeria (excluding deepwater) & Cameroon 235 177 33%
Gabon 106 43 147%
Kurdistan Region of Iraq 9 35 -74%
Deepwater Nigeria & JDZ 3 2 50%
Corporate, acquisitions, farm-in and
license signature fees 16 4 300%
Total 369 261 41%

Capital Expenditures - by Type
Development 297 174 71%
Exploration & appraisal 53 87 -39%
subtotal 350 261 34%
Acquisitions, farm-in and license
signature fees 19 0 n/a
Total 369 261 41%
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-------------------------------------------------------------------------
Selected first half year financial highlights Half Year Ended
June 30
$ million unless otherwise stated 2008 2007 Change
-------------------------------------------------------------------------

Petroleum sales before royalties 2,647 1,380 92%
Average realized sales price, $/bbl 109.58 63.09 74%
Sales volumes, MMbbl 24.2 21.8 11%

Funds Flow From Operations 993 550 81%
Net income 533 180 196%

Weighted average common shares outstanding
(basic, millions) 156 155 1%
Funds Flow From Operations per share
($/basic share) 6.38 3.55 80%
Earnings per share ($/basic share) 3.42 1.16 195%

Weighted average common shares outstanding
(diluted, millions) 162 156 4%
Funds Flow From Operations per share
($/diluted share) 6.14 3.51 75%
Earnings per share ($/diluted share) 3.35 1.16 189%

Total assets 4,502 3,282 37%
Long-term debt, excluding convertible bonds 910 950 -4%

Capital Expenditures - by Region
Nigeria (excluding deepwater) & Cameroon 496 342 45%
Gabon 172 74 132%
Kurdistan Region of Iraq 16 50 -68%
Deepwater Nigeria & JDZ 6 5 20%
Corporate, acquisitions, farm-in and license
signature fees 19 6 217%
Total 709 477 49%

Capital Expenditures - by Type
Development 543 319 70%
Exploration & appraisal 147 158 -7%
subtotal 690 477 45%
Acquisitions, farm-in and license
signature fees 19 0 n/a
Total 709 477 49%
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Selected New Business Highlights

- The second quarter of 2008 continued an active new business program
for Addax Petroleum with the addition of two new exploration license
areas to the Corporation's property portfolio and the increase of the
Corporation's working interest in two other exploration license
areas. In addition, Addax Petroleum received Federal Government of
Nigeria approval of an integrated gas utilization initiative which
could lead to the development and monetization of the Corporation's
considerable gas resources in Nigeria.

- New business highlights for the second quarter of 2008 include the
following:

Gulf of Guinea Shallow Water (Nigeria and Cameroon)

- The integrated gas utilization project in Nigeria was proposed by
Addax Petroleum together with partners Chrome Oil Services
Limited, a leading Nigerian oil and gas company, and Korea Gas
Corporation, South Korea's national gas company and the largest
LNG importer in the world (the "Consortium"). As approved by the
Federal Government of Nigeria, the project is intended to include
the exploration and development of gas fields in Nigeria,
including the Corporation's OML137, to secure the gas reserves
necessary to commercialize a new LNG production facility of up to
10 million tons per annum to be sited on Brass Island in Bayelsa
State, to provide domestic power generation capacity of up to
1,000 megawatts and to provide feedstock for the development of
petrochemical facilities. As part of the Federal Government
approval, the Consortium has been instructed to cooperate with the
Nigerian Ministry of State for Energy (Gas), the Department of
Petroleum Resources and the Nigerian National Petroleum
Corporation to establish fiscal and commercial terms for the
upstream and downstream activities that meet the required
investment levels for all participants in the project. The
Corporation believes that these negotiations will take place
rapidly and can be concluded in a timely fashion to achieve final
investment decision by the end of 2009;

- The Corporation was awarded a 40 per cent interest in Oil
Prospecting License ("OPL") 227, offshore Nigeria. Addax Petroleum
has paid a farm-in fee to our license area partners and a
signature bonus to the Federal Government of Nigeria, and is
obligated to fund 80 per cent of a work program comprising a
minimum of 500 km(2) of 3D seismic acquisition during the
exploration period. Addax Petroleum will also initially fund
80 per cent of all capital and operating costs on OPL227, and will
be entitled to a higher than pro-rata share of the net production
from OPL227 until all capital costs have been recovered after
which all parties will be entitled to their pro rata share of
production; and,

- Addax Petroleum signed a Production Sharing Contract ("PSC") with
the Republic of Cameroon, relating to the Iroko exploration
license area. Under the PSC, Addax Petroleum acquires a
100 per cent interest in the Iroko license area and is the
operator. The Société Nationale des Hydrocarbures ("SNH"), the
national oil company of Cameroon, holds a back-in right of 30% in
case of a development. In consideration for its interest in Iroko,
Addax Petroleum paid a signature bonus of $3 million and will
undertake within the first three years a minimum work program
valued at $17.5 million, which includes the acquisition of 3D
seismic data and the drilling of one well.

Gabon

- Addax Petroleum acquired an additional 18 per cent working
interest in the Iris Marin license area offshore Gabon by the
acquisition of a subsidiary of Sterling Energy plc. Addax
Petroleum will hold up to a 51.33 per cent working interest in the
Iris Marin license area and, subject to Government approval,
intends to become the operator.

Joint Development Zone ("JDZ")

- Addax Petroleum was awarded an additional 7.2 per cent
participating interest in Block 4 of the Nigeria/Sao Tome and
Principe JDZ by an independent arbitration tribunal. The award
increases Addax Petroleum's interest in the license area from
38.3 per cent to 45.5 per cent. Addax Petroleum is also the
operator of Block 4. Addax Petroleum has contracted to commence
drilling operations in JDZ Block 4 in the fourth quarter of 2008,
but believes that the drilling rig will not be delivered until the
second half of 2009. In the interim, the Corporation continues to
seek a rig of opportunity to drill the Kina prospect in JDZ
Block 4 as early as the fourth quarter of 2008.

Selected Exploration and Appraisal Highlights

- During the second quarter of 2008, Addax Petroleum continued
progressing the exploration program within its property portfolio
through the drilling of four exploration and appraisal wells offshore
Cameroon, commencing a seismic acquisition campaign onshore Gabon and
additional appraisal work in the Kurdistan Region of Iraq.

- Exploration and appraisal highlights for the second quarter of 2008
include the following:

Gulf of Guinea Shallow Water (Nigeria and Cameroon)

- In Cameroon, the Corporation completed drilling its first
exploration wells in the Ngosso and Iroko license areas. As part
of the campaign, Addax Petroleum drilled two wells plus a
sidetrack at Ngosso and one well at Iroko. The sidetrack drilled
as part of the Ngosso drilling campaign established a gross
hydrocarbon column of 79 feet while the two Ngosso exploration
wells were plugged and abandoned. The Corporation believes the
sidetrack discovery may be developed in the future together with
existing oil discoveries in an overall field development. The
Iroko well encountered hydrocarbons in the main objective interval
and the Corporation is currently evaluating core, pressure and
wireline data obtained during the drilling of the well. The
Corporation plans to enter the next exploration period, including
a commitment to drill one exploration well, and to acquire
additional 3D seismic data on the prospective northern part of the
license area.

Gabon

- The Corporation has recently completed a 2D seismic survey on its
Remboue licence area during Q2 2008. The Corporation has also
commenced a large-scale seismic acquisition survey on its onshore
properties which is expected to include some 700-1000 km of
2D seismic on its Maghena and Epaemeno licence areas by mid-2009.

Gulf of Guinea Deep Water (Nigeria and JDZ)

- The Corporation continued its evaluation of drilling locations in
the JDZ license areas and its efforts to secure a rig of
opportunity to commence drilling operations in the fourth quarter
of 2008. In OPL291, the Corporation is also planning to acquire
3D seismic survey in the second half of 2008.

Kurdistan Region of Iraq

- Addax Petroleum has imported a second, larger drilling rig
(Kurdistan-1) and is expects to commence drilling the TT-10 well
in August 2008, followed by the drilling of the Kewa Chirmila
exploration well; and

- A successful acid stimulation campaign was performed on two wells
during the second quarter. The stimulation campaign was focused on
reservoir intervals which had previously demonstrated moderate
flow potential. In all instances, flow potential was significantly
improved. In the Shiranish formation in the TT-04 well, the flow
rate was improved from 3,940 bbl/d pre-acidization to 11,080 bbl/d
post-acidization. In the TT-06 well, two intervals were acidized
resulting in flow rate improvements pre and post acidization from
2,020 bbl/d to 18,580 bbl/d in the Kometan formation and from
1,500 bbl/d to 3,080 bbl/d in the Qamchuqa formation.

Selected Operational Highlights

- Average gross working interest oil production in the second quarter
of 2008 was 132,880 barrels per day (bbl/d) representing an increase
of approximately 8 per cent over the 2007 average production of
123,000 bbl/d. Average oil production in the second quarter of 2008
included 105,500 bbl/d from Nigeria and 27,390 bbl/d from Gabon
compared to a 2007 second quarter average production level of
104,100 bbl/d and 18,900 bbl/d, respectively.

- Development project highlights in the second quarter of 2008 include:

Nigeria

- drilled 8 new development wells which included 4 oil production
wells and 2 water injection wells in OML123, 1 oil production well
in OML126 and 1 oil production well in OML124;

- placed a total of 2 new oil production wells on production in the
quarter, representing 2 of the 6 production wells drilled in the
quarter;

- experienced contractor delays during the construction and
installation of pipelines and related facilities which have
resulted in approximately 6 Mbbl/d being shut-in at Oron West
South in OML123. Partial production from Oron West South is
expected to commence in Q3 2008, with full production expected to
follow in Q4 2008 after the completion of related infrastructure
construction. The Corporation has also been experiencing
logistical constraints on its Nigeria properties related to
increased security measures implemented during the quarter; and

- continued preparation of the Kita Marine and Antan field
development plans.

Gabon

- drilled 5 new development wells onshore of which 3 were in the
Addax Petroleum operated Tsiengui field in the Maghena license
area and 2 were in the Shell-operated Koula field in the Awoun
license area;

- placed a total of 3 new oil production wells on production in the
Tsiengui field in the quarter of which 1 was drilled in the
quarter and 2 were drilled in the previous quarter;

- experienced delays arising from the rectification of a well
completion failure and temporarily higher than expected decline
rates in some producing wells which inhibited production growth at
the current drilling rates. New production from the Awoun license
and increased capacity with the completion of the pipeline to
Shell's Rabi facility are expected to augment production; and

- continued ongoing surface facilities development at the onshore
Addax Petroleum operated Tsiengui and Obangue fields and the
Shell-operated Koula field, including the extension of the
Corporation's onshore oil export pipeline system, and at the
offshore non-operated Ebouri field.

Kurdistan Region of Iraq

- completed the construction of the first phase for an early
production system to provide approximately 10,000 bbl/d of
capacity. Continuing construction on the early production system
is expected to provide further capacity;

- continued trial production from the Taq Taq field at reduced rates
with intermittent local sales. The Corporation is targeting to
commence commercial oil production attributable to its working
interest in the second half of 2008; and

- conducted studies during the quarter to support front-end
engineering and design for an export pipeline.

- Operating netbacks in the second quarter of 2008 increased
78 per cent to $91.14/bbl compared to $51.17/bbl in the second
quarter of 2007. Unit operating expenses in the second quarter of
2008 increased to $9.55/bbl, an increase of 66 per cent over the 2007
level of $5.75/bbl as the Corporation continues to face cost
inflation pressures for the provision of services.

The following table summarizes selected operational information:

-------------------------------------------------------------------------
Selected second quarter operational highlights Quarter ended
June 30
2008 2007 Change
-------------------------------------------------------------------------
Quarter average gross working interest
oil production (Mbbl/d)
Nigeria (offshore) 98.5 96.6 2%
Nigeria (onshore) 7.0 7.5 -7%
Nigeria sub-total 105.5 104.1 1%

Gabon (offshore) 7.0 6.4 9%
Gabon (onshore) 20.4 12.5 63%
Gabon sub-total 27.4 18.9 45%

Total 132.9 123.0 8%

Prices, expenses and netbacks ($/bbl)
Average realized sales price 123.17 68.21 81%
Operating expenses 9.55 5.75 66%
Operating netback 91.14 51.17 78%
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-------------------------------------------------------------------------
Selected first half year operational highlights Half Year Ended
June 30
2008 2007 Change
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Quarter average gross working interest
oil production (Mbbl/d)
Nigeria (offshore) 100.4 94.4 6%
Nigeria (onshore) 7.2 6.6 9%
Nigeria sub-total 107.6 101.0 7%

Gabon (offshore) 7.0 6.4 9%
Gabon (onshore) 21.4 12.2 75%
Gabon sub-total 28.4 18.6 53%

Total 136.0 119.6 14%

Prices, expenses and netbacks ($/bbl)
Average realized sales price 109.58 63.09 74%
Operating expenses 8.81 6.72 31%
Operating netback 81.78 46.75 75%
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>>

Dividend


During the second quarter of 2008, the Corporation paid a dividend of CDN$0.10 per share. The Board of Directors of the Corporation declared a dividend of CDN$0.10 per share on August 5, 2008 which is payable on September 11, 2008 to shareholders of record on August 28, 2008. In accordance with Canada Revenue Agency Guidelines, dividends paid by the Corporation during the period are eligible dividends.
Recent Developments

Since the end of the second quarter of 2008, the Corporation made the following announcements:


- on July 4, 2008, the Corporation announced the results of drilling 3
exploration wells plus a sidetrack in the Ngosso and Iroko license
areas;
- on July 7, 2008, the Corporation announced that the historic
milestone of 200 million barrels of oil production from the Addax
Petroleum operated OML123 offshore Nigeria had been achieved; and
- on July 16, 2008, the Corporation announced that it has been awarded
an additional 7.2 per cent participating interest in Block 4 of the
Nigeria/Sao Tome and Principe JDZ by an independent arbitration
tribunal, increasing Addax Petroleum's interest in the license area
to 45.5 per cent.

Outlook
Due to year-to-date results, delays in the installation of pipelines and related facilities and other operational issues, the Corporation is revising its production outlook for 2008. Addax Petroleum expects annual average working interest gross oil production for 2008 to be approximately 136,000 to 140,000 bbl/d. The Corporation's capital budget for 2008 remains unchanged at $1,615 million.

Analyst Conference Call

Financial analysts are invited to participate in a conference call and webcast today Tuesday, August 6, at 11:00 a.m. Eastern Time / 4:00 p.m. London, U.K. time with Mr. Jean Claude Gandur, President and Chief Executive Officer, Mr. Michael Ebsary, Chief Financial Officer and Mr. James Pearce, Chief Operating Officer. The media and shareholders may participate on a listen only basis. To participate in the conference call, please dial one of the following:


Toronto: 416 644 3419
Toll-free (Canada and the US): 1 800 732 6179
Toll-free (UK): 00 800 2288 3501
Toll-free (Switzerland): 00 800 2288 3501


A replay of the call will be available at [phone] or [phone], passcode 21277903 followed by the number sign until Friday, August 22, 2008.
Investors are invited to listen to the live webcast of the presentation via the following link:

http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2363680

The presentation slides for the above will be available prior to the conference call and webcast on Addax Petroleum's website at www.addaxpetroleum.com.

Legal Notice - Forward-Looking Statements

Certain statements in this report constitute forward-looking statements under applicable securities legislation. Such statements are generally identifiable by the terminology used, such as "may", "will", "should", "could", "would", "anticipate", "believe", "intend", "expect", "plan", "estimate", "budget", "outlook" or other similar wording. Forward-looking information includes, but is not limited to, reference to business strategy and goals, future capital and other expenditures, reserves and resources estimates, drilling plans, construction and repair activities, the submission of development plans, seismic activity, production levels and the sources of growth thereof, project development schedules and results, results of exploration activities and dates by which certain areas may be developed or may come on-stream, royalties payable, financing and capital activities, contingent liabilities, environmental matters, government approvals and syndication of new financing. By its very nature, such forward-looking information requires Addax Petroleum to make assumptions that may not materialize or that may not be accurate. This forward-looking information is subject to known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such information. Such factors include, but are not limited to: imprecision of reserves and resources estimates, ultimate recovery of reserves, prices of oil and natural gas, general economic, market and business conditions; industry capacity; competitive action by other companies; fluctuations in oil prices; refining and marketing margins; the ability to produce and transport crude oil and natural gas to markets; the ability to market and sell natural gas under its production sharing contracts; the effects of weather and climate conditions; the results of exploration and development drilling and related activities; fluctuations in interest rates and foreign currency exchange rates; the ability of suppliers to meet commitments; actions by governmental authorities, including increases in taxes; decisions or approvals of administrative tribunals; changes in environmental and other regulations; risks attendant with oil and gas operations, both domestic and international; international political events; expected rates of return; and other factors, many of which are beyond the control of Addax Petroleum. More specifically, production may be affected by such factors as exploration success, production start-up timing and success, facility reliability, reservoir performance and natural decline rates, water handling, and drilling progress. Capital expenditures may be affected by cost pressures associated with new capital projects, including labour and material supply, project management, drilling rig rates and availability, and seismic costs. These factors are discussed in greater detail in filings made by Addax Petroleum with the Canadian provincial securities commissions.

Readers are cautioned that the foregoing list of important factors affecting forward-looking information is not exhaustive. Furthermore, the forward-looking information contained in this report is made as of the date of this report and, except as required by applicable law, Addax Petroleum does not undertake any obligation to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise. The forward-looking information contained in this report is expressly qualified by this cautionary statement.

Non-GAAP Measures

Addax Petroleum defines "Funds Flow From Operations" or "FFFO" as net cash from operating activities before changes in non-cash working capital. Management believes that in addition to net income, FFFO is a useful measure as it demonstrates Addax Petroleum's ability to generate the cash necessary to repay debt or fund future growth through capital investment. Addax Petroleum also assesses its performance utilizing Operating Netbacks which it defines as the per barrel pre-tax profit margin associated with the production and sale of crude oil and is calculated as the average realized sales price less royalties and operating expenses, on a per barrel basis. FFFO and Operating Netback are not recognized measures under Canadian GAAP. Readers are cautioned that these measures should not be construed as an alternative to net income or cash flow from operating activities determined in accordance with Canadian GAAP or as an indication of Addax Petroleum's performance. Addax Petroleum's method of calculating this measure may differ from other companies and accordingly, it may not be comparable to measures used by other companies.

For further information

Mr. Michael Ebsary, Chief Financial Officer, Tel.: [phone], [e-mail]
Ms. Marie-Gabrielle Cajoly, Press Relations, Tel.: [phone], [e-mail]
Mr. Patrick Spollen, Investor Relations, Tel.: [phone], [e-mail]
Mr. Craig Kelly, Investor Relations, Tel.: [phone], [e-mail]
Mr. Nick Cowling, Press Relations, Tel.: [phone], [e-mail]
Mr. James Henderson, Press Relations, Tel.: [phone], [e-mail]
Mr. Alisdair Haythornthwaite, Press Relations, Tel.: [phone], [e-mail]