TIDMAEG
RNS Number : 7158B
Active Energy Group PLC
14 June 2021
Active Energy Group Plc / EPIC: AEG / Sector: Alternative
Energy
14 June 2021
Active Energy Group Plc
("Active Energy", "AEG", "Group" or the "Company")
Audited Results for the year ended 31 December 2020
Active Energy, the London quoted renewable energy company
focused on the production and development of next generation
biomass products, is pleased to announce the publication of its
financial results for the year ended 31 December 2020.
CoalSwitch(TM) development and ongoing operations
-- Ongoing IP development with awards of patents in US in
December 2020 and Canada in June 2021. EU patent approval pending.
Ongoing applications for patents in South East Asia.
-- Air and construction permit awarded in August 2020 for the
Lumberton CoalSwitch(TM) facility (the "Lumberton Facility").
-- First commercial order from PacifiCorp to deliver
CoalSwitch(TM) ("CoalSwitch") to its coal-fired power plant in
Utah.
-- Appointment of Player Design Inc. ("PDI"), well known
throughout North America as an EPC for pellet manufacturing
facilities, as the Company's EPC contractor. Construction on time
and on budget until suspension in May to amend the air permit for
additional emissions reduction equipment.
-- Ongoing interaction with environmental regulators in North
Carolina to amend the permit and allow final completion of the
Lumberton Facility.
-- A second CoalSwitch production facility at Ashland in Maine,
USA (the "Ashland Facility") obtained requisite operating
permission to produce CoalSwitch from the State of Maine and a
joint venture established between AEG and PDI for CoalSwitch
production from the Ashland facility.
-- First production of CoalSwitch at the Ashland Facility in
June 2021 and commencement of delivery of CoalSwitch to PacifiCorp
in Utah.
-- Lumber operations continued at Lumberton throughout the
period despite COVID-19 restrictions. Saw log export operation
ceased in 2021, and sawmill activities under review.
Corporate activity
-- Equity fundraise of GBP1.51m (before expenses) completed in September 2020.
-- Funds raised of GBP800,000 (gross) via the issuance of
Convertible Loan Notes ("CLNs") during 2020.
-- Impairment of non-core assets and decision to focus resources
on commercialisation of CoalSwitch.
-- Awarded London Stock Exchange's Green Economy Mark reflecting
AEG's environmental credentials.
-- Balance sheet restructuring with a fundraise of GBP7.0 million (before expenses) and conversion/redemption of the entire outstanding CLN obligation completed in February 2021.
-- All PLC corporate security obligations extinguished.
Outlook
-- AEG is delivering on its strategy to commercialise
CoalSwitch, our proprietary technology which transforms waste
biomass material into high-value renewable fuels through AEG's own
resources and through commercial partnerships.
-- The Board believes that AEG's CoalSwitch technology process
has clear advantages over traditional biomass manufacturing
processes and that there are few alternative next generation
biomass fuels currently available.
-- CoalSwitch now available for customers for their independent
analysis, a significant milestone. The Company is witnessing
considerable market interest in North America in both its process
and product.
Annual General Meeting and Annual Report
The Annual General Meeting ("AGM") of the Company will be held
on 8 July 2021 at 3 p.m. at SP Angel Corporate Finance LLP, Prince
Frederick House, 35-39 Maddox Street, London, W1S 2PP.
Unfortunately, due to ongoing Covid-19 restrictions, with a
limited number of Company representatives attending in person to
ensure that a quorate meeting is held in accordance with the
Company's articles of association, the Directors strongly advise
shareholders not to attend the AGM in person but to vote for
resolutions using the proxy forms provided.
The following documents are now available on our website at:
https://www.aegplc.com/investors/regulatory-news/
-- 2020 Annual Report and Accounts;
-- Notice of Annual General Meeting; and
-- Proxy Form
Copies of the above-mentioned documents have been posted to the
Company's shareholders as per individual request.
Regulatory Information
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
S
Enquiries
Active Energy Group Michael Rowan (Chief info@aegplc.com
Plc Executive Officer)
Andrew Diamond (Chief
Financial Officer)
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SP Angel Corporate David Hignell / Caroline Office: +44 (0)20
Finance LLP Rowe 3470 0470
Nominated Adviser and (Corporate Finance)
Joint Broker Rob Rees (Sales)
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Allenby Capital Limited Nick Naylor/James Reeve Office: +44 (0)20
Joint Broker (Corporate Finance) 3328 5656
Amrit Nahal (Sales/Corporate
Broking)
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Camarco Gordon Poole / Tom Huddart aeg@camarco.co.uk
Financial PR Adviser / Emily Hall Office: +44 (0)20
3757 4980
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About Active Energy Group
Active Energy Group plc is a London listed (AIM: AEG) renewable
energy company focused on the production and development of next
generation biomass products that have the potential to transform
the traditional coal fired-power industry and existing renewable
biomass industry.
The Company has developed a proprietary technology which
transforms waste biomass material into high-value renewable fuels.
Its patented product CoalSwitch is a leading drop-in renewable fuel
that can be co-fired with coal, completely replace coal as an
alternative feedstock without requiring significant plant
modifications or replace existing biomass feedstock resources.
Active Energy Group's immediate strategic focus is the production
and commercialisation of CoalSwitch and further CoalSwitch fuel
blends that utilise other waste wood and residual materials.
CoalSwitch is a registered trademark belonging to AEG plc.
CHAIRMANS LETTER
Dear Shareholders
During 2020, Active Energy Group achieved a number of
significant milestones on its path to commercialising the
transformation of waste biomass material into high-value renewable
fuels . At the same time, it has been encouraging to witness the
changes within Active Energy as it matures into a company capable
of delivering fuel and its underlying technology to prospective
commercial partners in North America and internationally from its
UK base.
Having joined the Board in November 2019 as a Non-Executive
Director, I was appointed to the role of Non-Executive Chairman in
February 2021. I welcome the opportunity to make an increasing
contribution towards AEG in terms of achieving its commercial
goals, building out of a successful transatlantic operation and at
the same time founded on strong principles of corporate
governance.
Your Company made encouraging progress during 2020: having
acquired the site in Lumberton in April 2019, the Company moved to
assemble a new CoalSwitch(TM) ("CoalSwitch") manufacturing facility
at the site, established limited complementary lumber operations
and commenced an air permit approval process for the site. Local
interests were active in that debate which revealed concerns from
local environmental proponents about the construction of the
CoalSwitch reference plant. AEG welcomed the cross examination on
the issues and, after public consultation and full scrutiny by all
relevant local agencies, an air and construction permit was
approved and issued at the beginning of August 2020 by the North
Carolina Department of Environmental Quality ("NCDEQ").
We listen to the concerns of local environmental groups and
encourage the opportunity to interact with all parties to explain
more fully the environmental benefits of AEG's proprietary
technology processes. The recent construction delays, resulting
from the installation of additional enhanced emissions controlling
equipment, serve as further evidence that the Company remains
wholly focussed on current and future compliance with all
applicable environmental regulations. We must ensure that the
positive message of the opportunities and benefits that CoalSwitch
offers remain clear and the Company's focus on using residual
forestry and waste wood products from the timber industry is
delivered effectively.
In December 2020, the Company secured its first test order for
CoalSwitch from PacifiCorp, the largest grid operator in the
western United States and part of the Berkshire Hathaway Group. The
PacifiCorp order delivered to the Hunter Power Station in Utah
represents a fantastic opportunity for AEG to use a world-class
platform to test CoalSwitch performance. This trial run is being
conducted in conjunction with a study group from the University of
Utah and Brigham Young University and will provide exceptional data
and analysis of CoalSwitch performance in an operating environment,
which we anticipate will support future marketing activities and
additional commercial interest.
Our research and marketing activities in 2021 have already
identified that there are several timber producers with issues in
the handling of residual and waste wood products. Given the market
interest in an accelerated roll out and availability of CoalSwitch,
a near term emphasis on the production and delivery of smaller
volume production plants, with proximity to the timber producers
presents a unique opportunity for AEG. Aligned with this focus, we
are working with feedstock providers in the North-Eastern United
States and, having completed the second reference plant in Ashland,
Maine, these commercial goals can be achieved.
Given the current permitting issues in Lumberton, the CoalSwitch
plant in Ashland, which is now complete and operational, provided
an alternative location to produce CoalSwitch to fulfil initial
customer orders. I am pleased to report that at the time of writing
CoalSwitch is being delivered to the Hunter Power Station in
Utah.
A final significant development from work commenced in 2020 and
announced in February 2021 was the completion of the balance sheet
restructuring of the Convertible Loan Note ("CLN"). We were
encouraged by the support of the CLN holders throughout the process
to allow the Company to restructure the indebtedness, which had
been restricting the Company's growth strategy. We are also
grateful to those shareholders and new investors who contributed to
the GBP7.0 million (gross) capital raise in the same month. As
intended, the Company has utilised those funds mainly in the
construction of the Lumberton and Maine Facilities, and the ongoing
corporate development of AEG.
Significant effort has gone into strengthening your Board and
broadening the requisite skill sets. In January 2020, we were
delighted to announce the appointment of two independent
non-executive directors, Max Aitken based in the UK and Jason
Zimmermann, based in Canada. Each brings considerable experience,
relevant knowledge, and energy from their sectors of expertise in
the biomass and forestry industries. In late November 2020, we were
also able to attract Andrew Diamond to join the Board as Group
Finance Director, a post hitherto unfilled. The benefits of the new
board members to the Company are already being felt. As part of the
restructuring process, it was also announced that Antonio Esposito
would step down from the Board. Antonio has remained on hand to
focus on the construction and commissioning of the CoalSwitch
reference plants during his notice period. I wish to express my
gratitude, on behalf of the Board, to Antonio for his extraordinary
contribution to AEG over the years and particularly during the
difficult months of 2020 with the challenges presented by the
Covid-19 pandemic.
AEG's new Board is highly focused on the development and
commercial roll-out of the CoalSwitch product. The Company operates
within a limited budget and will seek to maximise returns from this
exciting technology. We wish to distinguish ourselves as a 'next
generation' biomass product which is distinct from existing
products, both in terms of feedstock sourcing to manufacture the
fuel and in terms of the creation of renewable fuel which exceeds
existing performance parameters. We believe strongly in the
positive environmental impact this product could have on the
operations of current coal-fired and biomass power producers, and
at the same time assisting the timber industry in making strides to
utilise residual products as feedstock. Our aim is to create an
environmental win-win for both industries as the world transitions
to a fully renewable energy state.
The Board is committed to the core principles of corporate
governance, as set out in the QCA corporate governance code and
each of the directors is currently ensuring that these principles
are observed.
The headwind in the form of Covid-19 that has harassed and
unsettled many businesses over the period to the end of calendar
2020, was also felt by AEG. On the ground in North Carolina there
were, for a period, severe restrictions on the movement of people
and product. I am pleased to say the situation has now improved in
part. Travel restrictions meant that the executive directors were
unable to make relevant site visits for the period, which impacted
on our ability to execute our growth strategy and, more importantly
hampered our efforts in establishing and developing an
infrastructure for community and local authority relations in North
Carolina. It is pleasing to note that most recently both our CEO
and FD have been able to cross the Atlantic to re-energise the
strategy planning and local relations. The pandemic has exacted a
tragic death toll across the globe, and AEG remains determined to
play its part in minimising the effects of the crisis where it
can.
AEG is focusing its capital allocation on CoalSwitch. Existing
timber cutting permits in Ukraine and Newfoundland do not align to
this strategy, and the Company is looking for an orderly exit from
those interests.
Further, whilst it was a positive to see revenues being
generated from the small-scale sawmill and saw log export
businesses, the act of felling trees and exporting lumber products
could not be supported in the context of a corporate strategy which
focuses on environmental credentials as a core operating
principle.
By contrast, the sawmill business has been instrumental in
identifying critical local business partners in the South-Eastern
United States from whom to source residual feedstock for future
CoalSwitch operations. Its immediate profitability has been
hampered by sub-scale throughput, a continuing requirement to
invest in additional capital expenditure and the extended industry
disruption caused by exceptional operating conditions within the
Covid-19 pandemic which remains at this time. The Board has decided
to exit the saw log export operations while the sawmill operation
remains under review.
These ancillary activities have consumed much of management's
time and effort and future operations need to be focused on the
development of CoalSwitch and its commercial roll-out, which is
where the Board believes AEG's greatest commercial opportunities
lie. The Financial Statements for 2020 contain impairments to
reflect these strategic decisions taken by the Board. The current
global focus on climate change and the US political landscape are
very encouraging for growth in the renewable energy industry,
including biomass sourced renewable fuels. We believe that
CoalSwitch is perfectly suited to take advantage of this
momentum.
After a long wait, it is undoubtedly an exciting time for your
Company. We look forward to the outcome from the forthcoming
deliveries of CoalSwitch fuel to customers, including PacifiCorp,
the co-firing test results, and the consequent commercial
opportunities. On these and other developments, I look forward to
updating you as we progress.
James Leahy
Non-executive Chairman
14 June 2021
CHIEF EXECUTIVE OFFICER'S STATEMENT
Strategy
Our strategy is to commercialise CoalSwitch, a proprietary
technology which transforms waste biomass material into high-value
renewable fuels.
Events in the last eighteen months have created new
opportunities for the biomass industry and an increasing market
awareness that biomass will play a part in future renewable energy
solutions. At the same time, increasing environmental regulation
and scrutiny is rightfully being applied. AEG is focussed on making
its contribution towards the biomass industry goals in developing
its unique proprietary technology to ensure that there is a
long-term future for next generation sustainable biomass
production. These goals will be achieved through a combination of
its own production facilities, creating commercial partnerships for
fuel production, and licensing the relevant technology.
AEG believes that CoalSwitch will have an immediate positive
impact on reducing emissions from existing coal-fired power
facilities. As a result, AEG is focussing its near-term commercial
activities on the production of next generation biomass fuels in
North America. The USA is only now aligning itself with other
countries in the use of sustainable power alternatives and
awareness of a need for solutions which mitigate pollution from the
consumption of fossil fuels. North America is already dominant in
the production of biomass fuels and has vast knowledge and
operating capacity in the production of such fuels for
international markets but, to date, domestic consumption has been
limited. By producing next generation fuels in the United States,
using waste biomass resources, AEG is intent on capturing this
immediate market opportunity.
Summary of 2020
Operationally, 2020 was an important year for AEG. We worked
toward the completion of a commercial scale CoalSwitch production
facility at Lumberton, North Carolina. At the same time, we
developed ancillary small-scale sawmill and saw log export
operations at the Lumberton site to demonstrate to prospective
commercial partners how CoalSwitch production aligns with
traditional timber operations. AEG has faced the challenges of the
Covid-19 pandemic and our colleagues have responded tremendously to
the difficulties presented by these operating conditions.
CoalSwitch operations
Lumberton is, and will remain, an important component for AEG's
future growth in the United States. Its location on the US East
Coast is commercially valuable. Our goal remains to develop it as a
'carbon neutral' site with its prime focus on the production and
development of next generation biomass fuels, using forestry
co-products. During 2020, a significant focus of management's time
was spent on securing the relevant air and construction permits
(the "Permits") for the Lumberton Facility, which involved working
with our partners in Robeson County, State Officials and with
officials at North Carolina Department of Environmental Quality
("NCDEQ"). A public hearing was scheduled to take place in March
2020, however due to Covid-19 restrictions, the meeting was
postponed to 22 June 2020. While the public hearing was not
technically required, for such a minor permit, AEG worked alongside
the local community to take the opportunity to address
environmental concerns. The public hearing process raised concerns
on the potential emissions from the production process and the
exact specifications of the manufacturing procedures, which are
wholly different to existing biomass manufacturing processes. AEG
welcomed the analysis of local groups and the NCDEQ and continues
to address these ongoing environmental concerns.
AEG has always ensured that all operations at the Lumberton Site
remain in compliance with all relevant environmental regulations.
The Board considers the recent claims made by the Southern Law
Environmental Centre to be totally without foundation and AEG is
seeking appropriate legal redress in North Carolina.
AEG obtained the requisite Permits in August 2020, thereby
allowing AEG to commence construction of the Lumberton Facility.
The Permits allow for CoalSwitch production through to November
2028 in volumes of up to 5tph (or circa 35,000 tonnes per
annum).
With the Permits obtained, AEG appointed Player Design Inc
("PDI") as its engineering, procurement, and construction partner
to orchestrate the planning and construction of the Lumberton
Facility. PDI has a well-respected reputation in the biomass
industry in North America, having completed a number of small and
large manufacturing facilities over the last two decades and their
involvement has proven invaluable.
In September 2020, PDI carried a full-scale review of all
equipment on site, independent evaluation of the CoalSwitch
technology and provided financial budgets towards the completion of
the first reference plant. The project plan was approved by the
Board in Q4 2020, and work commenced immediately. Despite ongoing
Covid-19 disruptions, additional equipment was sourced by PDI from
within the United States and the key component deliveries to the
Lumberton Facility commenced late in Q4 2020.
With visibility on a construction timeline for the Lumberton
Facility, in December 2020, AEG was pleased to announce the first
commercial order from PacifiCorp to test CoalSwitch fuel in its
coal-fired power plant at Hunter Valley in Utah. The fuel is to be
used for a test burn, co-firing with coal, monitored by both the
University of Utah and Brigham Young University. The results will
be published later this year to demonstrate the co-firing results
from CoalSwitch and the emissions benefits.
Post Period End
With all components on site, construction commenced in early
2021 and the Lumberton Facility was in the final stages of
construction, both on time and on budget, in early May 2021.
The CoalSwitch manufacturing process has certain novel elements
requiring both the NCDEQ and AEG to proceed cautiously to ensure
that the process meets and exceeds all current environmental
regulations. To that end, during construction, AEG and PDI added
additional emissions control equipment which satisfied standard
Environmental Protection Agency regulations in the United States.
Given the award of the Permits, in most circumstances in the US,
such improvements to minor permits are uncontroversial and
generally quickly accepted. However, NCDEQ decided to require a
formal permit amendment from AEG for these minor revisions. In May
2021, AEG complied with the notice from NCDEQ to suspend
construction of the additional components at the Lumberton
Facility, made the requisite amendment application and provided
relevant information to address NCDEQ's concerns. Discussions are
ongoing between AEG and NCDEQ to expedite the approval of the
amendment request.
The emissions data being gathered from the Ashland Facility is
expected to demonstrate that producing CoalSwitch is wholly
different from existing biomass production processes. However, it
is not possible to comment on the timing or process of obtaining
approval of the permit amendment. AEG's goal remains to commence
production of CoalSwitch from the Lumberton Facility at the
earliest opportunity.
AEG has received several enquiries from prospective customers
and partners who wish to test CoalSwitch product and observe an
operational production facility in the heart of North Carolina. AEG
has also received additional commercial enquiries about additional
uses for the Lumberton Site and these are currently being evaluated
by AEG to work alongside the forthcoming operational CoalSwitch
reference plant.
Joint Venture with PDI
As construction continued at the Lumberton Facility in Q2 2021,
PDI itself also received additional enquiries for CoalSwitch fuel,
principally from prospective partners in North-Eastern United
States. PDI and AEG both wanted to build a second facility to
increase production capacity in the United States, and to benefit
from the additional operating data from a second working CoalSwitch
facility.
PDI is based in Maine, with a series of engineering and
manufacturing operations, and in April 2021 arranged for AEG and
PDI to meet with local regulatory and environmental agencies in
Maine to examine the possibility of building a second such
facility. Following the meeting, an operating permit was granted to
allow the operation of a second CoalSwitch production facility at
Ashland, Maine (the "Ashland Facility"). This permit allowed for
the production of an initial 1,000 tons of CoalSwitch by no later
than 31 July 2021. Following submission of emissions results, we
will submit a permit application to increase production capacity up
to 35,000 tonnes per annum.
PDI and its associated companies own the Ashland Facility. AEG
and PDI agreed that the most efficient route forward was via a
joint venture between the parties, details of which were announced
on 26 May 2021. In summary, the joint venture only applies to
production activities from the Ashland Facility and allows for a
fully operational second CoalSwitch reference plant to produce fuel
for onward sale and to further demonstrate the operating technology
to prospective customers.
Sales teams assembled in the United States and
internationally
During the first half of 2021, AEG assembled a sales team in
North Carolina who are currently marketing to a variety of
prospective off-take customers for CoalSwitch fuel and potential
commercial production partners across North America. In addition,
AEG has also appointed sales representatives in Japan to
accommodate customer enquiries for CoalSwitch. AEG has complemented
these activities with the addition of a data analysis team to
assemble a proprietary database on the fuel requirements of
prospective customers throughout North America.
The marketing feedback, the expanding data information and
general background of increasing environmental awareness in the US
has accelerated prospective customer interest for CoalSwitch fuel
and the immediate customer demand for test samples of CoalSwitch
fuel. The joint venture with PDI, complementing the activities at
the Lumberton Facility form a further critical step forward for the
full-scale commercial roll out of CoalSwitch.
CoalSwitch technology - Continuing Technology and Commercial
Development
Throughout 2020, AEG continued to develop and extend its
intellectual property portfolio regarding CoalSwitch and the
underlying production processes within the production reactors. In
December 2020, AEG was awarded an additional patent in the US
(Patent No 10,858,607). After this award, an additional and
complementary patent application was filed in the US.
In late 2019, applications had also been made to file for
Canadian patents. On 7 June 2021, the Canadian Intellectual
Property Office indicated that we have been granted a notice of
allowance, meaning that AEG will be awarded the Canadian
patent.
AEG has maintained a continual filing, review, and renewal
programme for its current intellectual property ("IP") during 2020
and will continue to expand the IP portfolio and know-how as the
first operational data and fuel testing from production fuels are
completed. In 2021, AEG has also been establishing links with
various academic institutions in the US and Canada whose forestry
expertise will facilitate and accelerate expansion of AEG's
technical knowledge of CoalSwitch IP and further increase market
awareness of these next generation biomass fuels.
International interest for licensing the CoalSwitch production
technology has also continued and with those forthcoming
opportunities, AEG has ensured that the proprietary technology is
correctly protected. Applications are being processed for patents
for the EU (including the UK) and territories in South-East Asia.
The timing of any such patent awards will not affect the timing of
prospective commercial opportunities, given the current validity of
the US patents.
AEG has continued to develop commercial relationships for
complementary licensing and production deals both in North America
and elsewhere. The first precedent was established in Canada in
2019.During 2020 and 2021, AEG has engaged in several additional
enquires. Ongoing discussions continue with parties in South-East
Asia, India, South Africa and within the US.
Sawmill and lumber activities at Lumberton
During 2020, the initial focus for operations at the Lumberton
site had been on the establishment of an operational lumber
business, whose focus was not only to generate revenues to allow
the Lumberton site to function, but also to become a component of
the forthcoming CoalSwitch production operations.
To consolidate the operations from existing joint venture
arrangements, in March 2020, AEG and RLS agreed to operate all the
lumber activities in Lumberton under the trading name Active Energy
Renewable Power ("AERP"). The prime operations were the production
of rail ties and saw log export. Both operations continued to
operate through Covid-19 but remained small scale. Operation of the
sawmill has brought a number of benefits, including establishing
AERP's reputation in North Carolina with local lumber suppliers and
commercial partners, who are increasingly enthusiastic to supply
forestry waste and residual for the forthcoming CoalSwitch
operations.
Post Period End
In Q2 2021, the Board determined that saw log export was neither
aligned with the future environmental strategy for the Group nor
was it able to produce sufficient economic returns to become a
profitable operation. To achieve a profitable operation AEG would
be required to invest heavily in equipment to expand production and
scale up these operations. The Board has therefore decided to focus
its capital allocation toward CoalSwitch production activities and
has decided to withdraw from saw log export operations. The
sawmill, which is viewed as more complementary to the Group's
strategy, has continued to operate through H1 2021 as it supports
forthcoming CoalSwitch operations with the processing of residual
feedstock. Decisions made on its future will depend on NCDEQ's
approval of the Permit amendments and how the Lumberton Facility
develops in the coming months.
Forestry assets in Ukraine and Newfoundland and Labrador
Prior to 2018, AEG's strategy was based upon the ownership of
timberland assets which might assist in the commercial development
and production of biomass fuels.
In respect of the Province of Newfoundland and Labrador (the
"Province') AEG was awarded commercial cutting permits with a
5-year duration which included certain performance thresholds
required to be achieved prior to May 2021. During 2020 and 2021,
Covid-19 restrictions prevented any travel to the Province. In
2020, AEG appointed advisers to seek modifications to the
commercial cutting permits, which were initially rejected by the
Province. Nonetheless AEG continues to work with the Province to
mitigate the consequences resulting from not achieving the required
harvesting thresholds during this difficult period. AEG believes
that there are benefits for the Province in establishing a
CoalSwitch solution and working with local lumber partners to
utilise the cutting permits.
In Ukraine, AEG also held timberland interests for an area
surrounding Lyubomi through its operating subsidiary, AE Ukraine.
During 2020, AEG sought to dispose of these assets. As it was
unable to do so, the Board decided to accelerate the impairment of
the entire asset from the balance sheet and cease any further
activities in Ukraine.
Financing Activities during 2020 and post period in 2021
During the year, AEG completed a series of financing activities,
including the issuance of some additional convertible loan notes in
June 2020, and an equity fundraising in August 2020 of GBP1.5
million (before expenses), completed upon the news of the award of
the Permits for the Lumberton Facility. The funding for this came
from existing shareholders and bondholders and we remain grateful
to their support.
These events were a prelude to the balance sheet restructuring
completed in February 2021, where all outstanding convertible loan
notes were converted to equity or redeemed to ensure the full
extinguishment of the outstanding Convertible Loan Note (the
"Notes"). At the same time, AEG was grateful for the support of
existing and new shareholders to raise additional equity totalling
GBP7 million (before expenses). Most importantly the redemption or
conversion of the Notes meant that all former security obligations
which were incumbent upon the entire AEG group were extinguished,
allowing AEG the flexibility to properly utilise its balance sheet.
In addition, the Company will benefit from reduced finance charges
going forward.
Appointment of a Finance Director
The appointment of Andrew Diamond as Finance Director in January
2021 was a significant appointment for AEG. Andrew's previous PLC
experience has already proven invaluable in recent months.
Post Period End
All the foundations achieved in 2020 allowed AEG to move toward
the delivery stage of its strategy in H1 2021. While the Lumberton
Facility has been under construction in recent months, the
management team has already been building toward the next stage of
growth for AEG. The joint venture with PDI and the assembly and
completion of a second CoalSwitch facility in Maine within 14 weeks
demonstrate the forthcoming commercial opportunities AEG is seeking
to realise.
Outlook
AEG is delivering on our strategy to commercialise CoalSwitch,
our proprietary technology which transforms waste biomass material
into high-value renewable fuels through AEG's own resources and
through commercial partnerships.
The Board believes that AEG's CoalSwitch technology process has
clear advantages over traditional biomass manufacturing processes
and that there are few alternative next generation biomass fuels
currently available.
Our achievement in making CoalSwitch available for customers for
their independent analysis is a significant milestone and we are
now witnessing considerable market interest in North America in
both our process and our product.
Our clear focus is on accelerating the commercialisation of
CoalSwitch.
Michael Rowan
Chief Executive Officer
14 June 2021
FINANCE REVIEW
FOR THE YEARED 31 DECEMBER 2020
Having started as the incoming Finance Director on 1 January
2021, a look back at the year ended 31 December 2020 ("Current
Year") reveals a year where progress has been made, but the rate of
that progress was hampered by Covid-19 related factors. I can
report that the rate of progress following the year end is much
improved, and the Company is now at a very exciting point where it
has just produced the first commercial volumes of CoalSwitch from
its Ashland Facility.
Subsequent events
It is unusual to start a report with events which happen after
the period being reported upon but given the magnitude of these
events it is appropriate to do so this year.
In January 2021, Advanced Biomass Solutions Plc, a subsidiary of
the Company, completed and drew upon a debt facility of GBP550,000.
The debt instrument is repayable within twelve months based on
monthly capital repayments following a four-month repayment
holiday. Initiation fees of 7% were payable, and interest is
charged at 10% p.a. payable quarterly in arrears. The Company has
provided a corporate guarantee as security.
In February 2021, the convertible loan note ("CLN") holders
agreed to either convert their CLN's or have them redeemed.
Furthermore, the CLN holders agreed to a release of the securities
held over the Companies assets in favour of the CLN holders. At the
same time the Company raised GBP7.0 million in a fundraising
(before expenses), principally to progress the final stages of
construction of the Lumberton Facility. At the time of reporting
the CLN obligation has been fully extinguished. The shares in issue
at the reporting date were 3,902,051,743, compared to 1,541,178,043
at 31 December 2020. This injection of funding, along with the
removal of the debt and the underlying security obligations have
provided the Company an opportunity to deliver on its long-promised
product: CoalSwitch .
On 20 May 2021, the Company announced its joint venture
arrangement with Player Design Inc. ("PDI"). Under the JV, AEG and
PDI will jointly own and operate a CoalSwitch plant in Ashland,
Maine. The plant has been completed and is in production and will
supply CoalSwitch for customers, including PacifiCorp.
Going concern
The Financial Statements have been prepared on a going concern
basis. Note 1 of the Financial Statements lays out the material
uncertainties relating to the Company's ability to continue as a
going concern. The proceeds raised in February 2021, after fees and
certain CLN redemptions, have been used to construct the CoalSwitch
plants in Lumberton NC and Ashland Maine, and further funding will
be required in the coming 12-month period to finance expansion of
CoalSwitch production, additional research and testing programs and
marketing activities.
Summary of 2020
Having acquired the property in Lumberton, in 2019 (the "Prior
Year") the Company made application for an air and construction
permit ("Permit") to enable the construction of the CoalSwitch
reference plant. The Permit was issued on 4 August 2020, after
lengthy delays due to Covid-19. Following the Permit issuance, the
Company proceeded to engage a contractor for final engineering
designs and plan the construction of the 5tph CoalSwitch plant,
with equipment orders, in addition to equipment previously acquired
by AEG, being placed late in the year.
In March 2020, the Company acquired a 100% interest in the
lumber activities at Lumberton from its joint venture partner
Renewable Logistics Systems LLC ("RLS"). As consideration, AEG
agreed to pay RLS US$350,000 in equity for the outstanding 70%
equity interest, waive $250,000 of loans, and a further $150,000
has been provided for as contingent consideration. AEG issued
64,863,412 new ordinary shares of 1p to RLS. The assets and
inventory acquired were transferred into Active Energy Renewable
Power LLC ("AERP"), which has since operated the lumber
businesses.
The acquisition allowed the Company to:
-- Control the lumber operations at Lumberton outright;
-- Assess the local timber suppliers with the intention of
securing a long-term feedstock provider for the CoalSwitch
reference plant; and
-- Demonstrate to future prospective customers the benefit of
locating a CoalSwitch plant alongside lumber operations.
In 2021, the Board has reassessed AEG's strategy, and determined
that the saw log export business, which involved loading sawlogs
into containers to be shipped to South-East Asia, did not align
with AEG's strategy of being a consumer of residual and waste
forestry products from the lumber industry. The Company has not
been able to operate the container business at a scale to produce
profitable returns. Whilst the objectives above were achieved, the
level of capital investment required to scale up and operate
profitably was deemed unacceptable and the Board decided to exit
this business.
Likewise, the sawmill business has also struggled to operate
profitably, principally due to a lack of capital investment to
allow the business to operate at a scale that recovers the fixed
cost elements. The Board is determined to focus its time and
capital allocations on CoalSwitch and has placed this business
under review.
Statement of Consolidated Income
Despite revenues, principally from the sale of lumber, of US$1.8
million (2019: US$1.9 million mainly from the granting of a
CoalSwitch licence), the costs incurred in processing and selling
the lumber products resulted in a gross loss of US$1.1 million
(2019: gross profit of US$1.9 million). As mentioned above, the
Company was unable to operate at a scale large enough in either the
sawmill or saw log export businesses to generate profits and has
taken appropriate action in 2021.
Furthermore, the Board determined that the timber-cutting
licences in Ukraine and Newfoundland are not aligned with AEG's
environmental strategy and the Company will seek to dispose or
amend these licences, if permitted. The Company will not allocate
future capital to the development these licenses. Consequently, the
Board has determined that it is prudent to fully impair these
assets. A non-cash impairment charge of US$4.2 million has been
raised (2019: US$nil). In addition to the impairments of licences,
with losses generated by the lumber and saw log export businesses,
a full impairment of the goodwill arising on the RLS acquisition of
US$0.6 million (2019: US$nil). The total impairment charge for the
year was US$4.8 million (2019: US$nil).
Administrative expenses of US$1.7 million (2019: US$2.8 million)
reflect ongoing corporate costs and business development activity.
Excluding non-cash share-based payments, administrative expenses
were US$1.6 million (2019: US$2.4 million), with losses on disposal
of assets of US$0.7 million recorded in the prior year. Finance
expenses were US$ 1.3 million (2019: US$ 2.5 million ). These costs
relate to ongoing servicing of the Group's Convertible Loan Notes,
other loan interest and foreign exchange gains and losses, offset
by interest capitalised to tangible and intangible fixed
assets.
The tax credit of US$0.2 million (2019: US$0.9 million) reflects
the deferred tax impact resulting from the impairment of assets in
the current year, and income associated with research and
development tax credits.
Loss for the year was US$8.8 million (2019: US$2.5 million).
Other comprehensive loss of US$0.7 million (2019: income of US$1.2
million) reflects a reversal of the non-cash revaluation of other
financial assets raised in the prior year of $0.5 million, with a
gain of US$0.5 million related to the Lumberton property
revaluation in the prior year. Total comprehensive loss was US$9.4
million (2019: US$1.3 million). Loss per share (basic and diluted)
was US$0.65 (2019: US$0.21).
Statement of financial position
As a result of the operating losses in 2020, and in particular
the impairment provisions raised against non-core operations and
licences, the Group's overall net assets position declined to a net
liability position of US$5.9 million (2019: net asset position of
US$ 0.4 million), underlining the importance of the CLN conversion
which occurred after financial year end.
Non-current assets decreased to US$16.6 million (2019: US$ 19.9
million). This decrease relates to the impairment of the intangible
licences in Ukraine and Newfoundland and the revaluation of other
financial assets. Current assets remained stable at US$1.5 million
(2019: US$1.5 million).
Current liabilities decreased to US$2.4 million (2019: US$2.5
million). Non-current liabilities increased to US$22.5 million
(2019: US$18.6 million) as a result of new CLN issuances, and CLN
issuances in settlement of CLN interest charges for the first three
quarters of the year.
Statement of cash flows
The Group utilised cash of US$1.3 million in operating
activities (2019: generated US$1.7 million).
US$1.5 million of proceeds were received from CLN issuances
(2019: US$2.8 million). Net proceeds of US$1.8 million were raised
in the September placing.
US$1.0 million of cash and cash equivalents was on hand at year
end (2019: US$0.4 million).
Andrew Diamond
Finance Director
14 June 2021
CONSOLIDATED STATEMENT OF INCOME AND OTHER COMPREHENSIVE
INCOME
FOR THE YEARED 31 DECEMBER 2020
2020 2019
US$ US$
REVENUE 1,810,206 1,895,972
------------ ------------
GROSS (LOSS)/PROFIT (1,122,864) 1,895,972
Impairment charges (4,758,707) -
Administrative expenses (1,743,294) (2,779,473)
------------ ------------
OPERATING LOSS (7,624,865) (883,501)
Finance costs (1,347,230) (2,461,376)
LOSS FROM CONTINUING OPERATIONS (8,972,095) (3,344,877)
Taxation 214,176 874,655
------------ ------------
LOSS FOR THE YEAR - ATTRIBUTABLE
TO THE PARENT COMPANY (8,757,919) (2,470,222)
============ ============
Basic and Diluted loss per share
(US cent) (0.65) (0.21)
OTHER COMPREHENSIVE (LOSS) / INCOME
Items that may be subsequently reclassified
to profit or loss
Exchange differences on translation
of operations (117,701) 137,540
Revaluation of land and buildings - 504,646
Revaluation of other financial
assets (539,327) 563,948
------------ ------------
Total other comprehensive (loss)
/ income (657,028) 1,206,134
------------ ------------
TOTAL COMPREHENSIVE LOSS FOR THE
YEAR (9,414,947) (1,264,088)
============ ============
CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
Group Group Company Company
2020 2019 2020 2019
US$ US$ US$ US$
NON-CURRENT ASSETS
Intangible assets 5,259,024 9,180,466 - -
Property, plant &
equipment 10,443,641 9,231,743 900 -
Investment in subsidiaries - - 1,495,943 1,455,091
Long term loans - - 23,204,528 23,272,315
Other financial assets 931,312 1,470,639 931,312 1,470,649
-------------
16,633,977 19,882,848 25,632,683 26,198,055
------------- ------------- ------------- -------------
CURRENT ASSETS
Inventory 237,506 - - -
Trade and other receivables 270,755 1,146,815 - 954,232
Cash and cash equivalents 999,631 397,323 811,901 360,622
------------- -------------
1,507,892 1,544,138 811,901 1,314,854
TOTAL ASSETS 18,141,869 21,426,986 26,444,584 27,512,909
============= ============= ============= =============
CURRENT LIABILITIES
Trade and other payables 2,091,657 2,391,229 1,183,827 1,441,593
Lease liabilities 136,891 - - -
Other current liabilities 150,000
Loans and borrowings 21,772 108,850 21,772 -
2,400,320 2,500,079 1,205,599 1,441,593
------------- ------------- ------------- -------------
NON-CURRENT LIABILITIES
Deferred taxation 150,139 364,316 - -
Lease liabilities 202,417 - - -
Loans and borrowings 22,105,551 18,190,732 21,961,104 18,190,732
------------- ------------- ------------- -------------
22,458,107 18,555,048 21,961,104 18,190,732
------------- ------------- ------------- -------------
TOTAL LIABILITIES 24,858,427 21,055,127 23,166,703 19,632,325
------------- ------------- ------------- -------------
NET (LIABILITIES)/ASSETS (6,716,558) 371,859 3,277,881 7,880,584
============= ============= ============= =============
EQUITY
Share capital - Ordinary
shares 219,436 17,265,379 219,436 17,265,379
Share capital - Deferred
shares 18,148,898 - 18,148,898 -
Share premium 18,711,637 17,303,159 18,711,637 17,303,159
Merger reserve 2,350,175 2,350,175 2,350,175 2,350,175
Foreign exchange reserve (184,975) (67,274) (124,920) (468,793)
Own shares held reserve (268,442) (268,442) (268,442) (268,442)
Convertible debt/warrant
reserve 3,701,803 3,490,621 3,701,803 3,490,621
Retained earnings (49,899,736) (40,206,405) (39,460,706) (31,791,515)
Revaluation reserve 504,646 504,646 - -
------------- ------------- ------------- -------------
TOTAL EQUITY (6,716,558) 371,859 3,277,881 7,880,584
============= ============= ============= =============
GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2020
Own Convertible Non-controlling
Foreign shares debt and Interest
Share Share Merger exchange held warrant Retained Revaluation Total
capital premium reserve reserve reserve reserve earnings Reserve equity
US$ US$ US$ US$ US$ US$ US$ US$ US$ US$
At 31 December
2018 17,265,379 17,303,159 2,350,175 (204,815) (268,442) 2,720,933 (38,310,938) - (358,043) 497,408
Loss for the
year - - - - - - (2,470,222) - - (2,470,222)
Other
comprehensive
income - - - 137,541 - - 563,948 - - 701,489
----------- ----------- ---------- ---------- ---------- ------------ ------------- ------------ ---------------- ------------
Total
comprehensive
income - - - 137,541 - - (1,906,274) - - (1,768,733)
----------- ----------- ---------- ---------- ---------- ------------ ------------- ------------ ---------------- ------------
Revaluation of
land
& buildings - - - - - - 504,646 - 504,646
Embedded
derivative
on CLN issue - - - - - 769,688 - - - 769,688
Share based
payments - - - - - - 368,850 - - 368,850
Minority
Interest
adjustment - - - - - - (358,043) - 358,043 -
----------- ----------- ---------- ---------- ---------- ------------ ------------- ------------ ---------------- ------------
At 31 December
2019 17,265,379 17,303,159 2,350,175 (67,274) (268,442) 3,490,621 (40,206,405) 504,646 - 371,859
=========== =========== ========== ========== ========== ============ ============= ============ ================ ============
Loss for the
year - - - - - - (8,757,919) - - (8,757,919)
Other
comprehensive
income - - - (117,701) - - (539,327) - - (657,028)
----------- ----------- ---------- ---------- ---------- ------------ ------------- ------------ ---------------- ------------
Total
comprehensive
income - - - (117,701) - - (9,297,246) - - (9,414,947)
----------- ----------- ---------- ---------- ---------- ------------ ------------- ------------ ---------------- ------------
Issue of share
capital 835,801 1,381,401 - - - - (452,467) 1,764,735
Conversion of
CLN 267,154 27,077 - - - - - - - 294,231
Embedded
derivative
on CLN issue - - - - - 211,182 - - - 211,182
Share based
payments - - - - - - 56,382 - - 56,382
At 31 December
2020 18,368,334 18,711,637 2,350,175 (184,975) (268,442) 3,701,803 (49,899,736) 504,646 - (6,716,558)
=========== =========== ========== ========== ========== ============ ============= ============ ================ ============
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31
DECEMBER 2020
Own Convertible
Foreign shares debt and
Share Share Merger exchange held warrant Retained Total
capital premium reserve reserve reserve reserve earnings equity
US$ US$ US$ US$ US$ US$ US$ US$
At 31 December
2018 17,265,379 17,303,159 2,350,175 (716,115) (268,422) 2,720,933 (33,830,064) 4,825,025
Profit for the
year - - - - - - 1,105,751 1,105,751
Other
comprehensive
income - - - 247,322 - - 563,948 811,270
----------- ----------- ---------- ---------- ---------- ------------ ------------- ------------
Total
comprehensive
income - - - 247,322 - - 1,669,669 1,917,021
----------- ----------- ---------- ---------- ---------- ------------ ------------- ------------
Embedded
derivative
on CLN issue - - - - - 769,688 - 769,688
Share based
payments - - - - - - 368,850 368.850
----------- ----------- ---------- ---------- ---------- ------------ ------------- ------------
At 31 December
2019 17,265,379 17,303,159 2,350,175 (468,793) (268,442) 3,490,621 (31,791,515) 7,880,584
=========== =========== ========== ========== ========== ============ ============= ============
Loss for the
year - - - - - - (6,733,779) (6,733,779)
Other
comprehensive
income - - - 343,873 - - (539,327) (195,454)
----------- ----------- ---------- ---------- ---------- ------------ ------------- ------------
Total
comprehensive
income - - - 343,873 - - (7,273,106) (6,929,233)
----------- ----------- ---------- ---------- ---------- ------------ ------------- ------------
Issue of share
capital 835,801 1,381,401 - - - - (452,467) 1,764,735
Conversion of
CLN 267,154 27,077 - - - - - 294,231
Embedded
derivative
on CLN issue - - - - - 211,182 - 211,182
Share based
payments - - - - - - 56,382 56,382
----------- ----------- ---------- ---------- ---------- ------------ ------------- ------------
At 31 December
2020 18,368,334 18,711,637 2,350,175 (124,920) (268,442) 3,701,803 (39,460,706) 3,277,881
=========== =========== ========== ========== ========== ============ ============= ============
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
Group Group Company Company
2020 2019 2020 2019
US$ US$ US$ US$
Cash (outflow)/inflow
from operations (1,302,560) 1,675,831 (1,761,243) 1,201,865
Income tax paid - - - -
------------ ------------ ------------- -------------
Net cash (outflow)/inflow
from operating activities (1,302,560) 1,675,831 (1,761,243) 1,201,865
Cash flows from investing
activities
Purchase of intangible
assets (661,939) (519,312) - -
Increase in share
of subsidiary undertaking - - - (1,396,666)
Purchase of property,
plant and equipment (738,993) (1,756,619) (1,222) -
Sale of property,
plant and equipment - 362,790 - -
------------ ------------ ------------- -------------
Net cash outflow from
investing activities (1,400,932) (1,913,141) (1,222) (1,396,666)
Cash flows from financing
activities
Issue of equity share
capital, net of share
issue costs 1,754,489 - 1,754,489 -
Issue of CLN 1,467,778 2,762,781 1,467,778 2,762,781
Intercompany loans
advanced - - (1,076,176) -
Unsecured debt repaid - (1,218,857) - (1,000,000)
Unsecured debt proceeds 212,600 - 68,183 -
Principal elements
of lease payments (95,758) - - -
Finance expenses (37,842) (1,207,093) - (1,207,093)
------------ ------------ ------------- -------------
Net cash inflow from
financing activities 3,301,267 336,831 2,214,244 555,688
------------ ------------ ------------- -------------
Net increase in cash
and cash equivalents 597,775 99,521 451,779 360,887
Cash and cash equivalents
at beginning of the
year 397,323 298,768 360,622 234
Exchange losses on
cash and cash equivalents 4,533 (966) (500) (499)
------------ ------------ ------------- -------------
Cash and cash equivalents
at end of the year 999,631 397,323 811,901 360,622
============ ============ ============= =============
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
1. PUBICATION OF NON-STATUTORY ACCOUNTS
The financial information, for the year ended 31 December 2020,
set out in this announcement does not constitute statutory
accounts. This information has been extracted from the Group's 31
December 2020 statutory financial statements upon which the
auditors' opinion is unqualified. However, the auditors' report
highlights material uncertainty relating to going concern and
includes the following additional key audit matters:
-- Recoverability of intangible assets; and
-- Recoverability of property, plant and equipment and other assets, Group and Parent.
2. BASIS OF PREPARATION
The financial information, for the year ended 31 December 2020,
set out in this announcement, has been:
-- presented in accordance with International Financial
Reporting Standards ("IFRSs"), however this preliminary
announcement does not contain sufficient information to comply with
IFRSs. The IFRS compliant Consolidated Financial Statements is
published in the Annual Report and Accounts for the year ended 31
December 2020, available on the Company's website;
-- prepared on the going concern basis, however the Directors
have highlighted a number of material uncertainties which may
affect the Company's ability to continue operating as a going
concern; and
-- prepared on the basis of the accounting policies as stated in
the Report and Accounts for the year ended 31 December 2019, with
the exception of those changes required in the application of new
and revised IFRSs, none of which has a material impact on the
Group.
3. GOING CONCERN
The Directors are required to give careful consideration to the
appropriateness of the going concern basis in the preparation of
the Financial Statements.
During 2020 the Group applied for and obtained a construction
and air permit for the CoalSwitch(TM) reference plant in Lumberton,
North Carolina. Engineering and design works for the plant were
completed, and the required equipment procured. Construction of the
3tph plant commenced in 2021. Despite an interruption to the
construction required to amend the air permit for additional
emissions control equipment, the reference plant is anticipated to
be commissioned during Q3 2021. The Company has signed a joint
venture agreement with Player Design Inc., on a 50/50 basis, to
develop a 5tph CoalSwitch(TM) plant in Ashland, Maine, which is
strategically located in proximity to several large timber
manufacturers who have significant wood residuals to dispose of.
Managements plans to expand the production capacity of both the
Lumberton and Ashland CoalSwitch(TM) plants will result in the
Group having capacity to produce 140,000 tons of CoalSwitch(TM) per
annum from the start of 2022.
The Group announced its first order of CoalSwitch by PacifiCorp
for their Hunter Power Station, a coal-fired power plant in Utah,
in December 2020. This first order is significant and will be
incorporated in a test burn in conjunction with a study group from
the University of Utah to assess the performance of CoalSwitch(TM)
in terms of calorific value and emissions reductions. The ability
to provide samples to prospective customers, in conjunction with
the data and findings from the PacifiCorp test burn will greatly
enhance existing marketing efforts to obtain long-term off-take
agreements.
In February 2021, the Company restructured its balance sheet by
securing the conversion and redemption of the entire convertible
loan note obligation ("CLN"). Furthermore, the securities in place
for the CLN holders have been revoked. At the same time the Company
recapitalised the business by raising GBP7.0 million (gross) to be
used principally for the construction of the Lumberton CoalSwitch
reference plant, certain CLN redemptions and improvement of the
working capital position.
At the reporting date the Group has sufficient funding to
complete both the Lumberton and Ashland CoalSwitch(TM) plants, and
to fund near-term administration, working capital costs and debt
servicing but will need to seek additional funding to finance
further plant expansions and/or new plant developments.
Uncertainties exist in relation to the performance of the
CoalSwitch product, the completion of the Lumberton and Ashland
CoalSwitch plants, the Group's ability to locate and secure
long-term off-take agreements for CoalSwitchTM and the Company's
ability to secure additional funding, either equity or debt, to
support these activities. These conditions indicate the existence
of a material uncertainty which may cast significant doubt over the
Group's ability to continue as a going concern.
The Directors have reviewed the cash forecasts in respect of the
Group's operating and planned growth activities. The expected cash
flows, plus available cash on hand, after allowing for funds
required and allowing for existing debt facilities, are not
sufficient to cover these activities. The Company will need to
raise funding to support operations in the twelve-month period from
the date of approval of these Financial Statements. The Directors
are confident, based on the CoalSwitch(TM) progress made to date,
and the restructured balance sheet of the Group, that it will be
able to secure the funding required.
On the basis of the considerations set out above, the Directors
have concluded that it is appropriate to prepare the Financial
Statements on a going concern basis. These Financial Statements do
not include any adjustments to the carrying amount and
classification of assets and liabilities that may arise if the
Group or the Parent Company was unable to continue as a going
concern.
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