TIDMAEG
RNS Number : 0217Z
Active Energy Group PLC
12 September 2022
12 September 2022
Active Energy Group Plc
('Active Energy', 'AEG', the 'Company' or the 'Group')
Interim results for the six months ended 30 June 2022
Active Energy, the AIM-quoted renewable energy business focused
on the production of next generation energy pellets, is pleased to
announce its unaudited interim results for the six months ended 30
June 2022.
HIGHLIGHTS
Operational highlights
-- Publication of the results of independent co-fire testing
completed under Rocky Mountain Power's Sustainable Transportation
and Energy Plan (the "STEP Program") in late 2021, which concluded
that CoalSwitch(R) could be co-fired with coal producing heating
values:
-- equivalent to coal; and
-- at a 12.9% premium to white pellet.
-- Obtained Chain of Custody and Controlled Wood certification
compliance in accordance with the Forest Stewardship Council(R)
("FSC") standards for CoalSwitch(R) in March 2022.
-- Completion in June 2022 of the independent study, by
LifeCycle Analysis, on the carbon impact of CoalSwitch(R),
confirming significant CO(2) reductions relative to both coal and
natural gas.
-- Completion of the sale of the Company's property at Lumberton
(the "Lumberton Site") in June 2022.
-- Engineering and project planning completed for a large scale
CoalSwitch(R) production facility, to be constructed by Player
Design International Inc ("PDI"), at Ashland, Maine (the "Ashland
Facility").
-- Commencement of the purchase, by PDI, of additional equipment
for future CoalSwitch(R) production operations at the Ashland
Facility.
Financial highlights
-- Sale of the Lumberton Site completed on 30 June 2022 with:
-- gross consideration of US$4.65 million; and
-- net cash proceeds of US$3.92 million received.
-- Results for the six-month period to 30 June 2022:
-- operating loss from continuing operations of US$1.3 million
for the period (H1 2021: US$1.0 million); and
-- net cash position at 30 June 2022 of US$3.9 million (31 Dec
2021: US$1.8 million).
Post period end activity
-- Expansion of AEG's US operations, including hiring of additional sales personnel in the US.
-- Completion of the transfer of all CoalSwitch(R) production
equipment from the Lumberton Site to the Ashland Facility.
-- Award of Malaysian Patent for future CoalSwitch(R) production to expand in Southeast Asia.
-- Completion of the share consolidation, resulting in 1 new
ordinary share for every 35 existing ordinary shares.
-- AEG's shares commenced trading on the OTCQB Venture Market in
the United States on 5 August 2022.
Outlook
-- The Company has a number of exciting opportunities as a
result of the recent passing of the Inflation Reduction Act in the
US.
-- AEG is focussed on securing long term offtake contracts for
CoalSwitch(R) in North America, Europe and Japan.
-- AEG continues to deliver test samples for customer analysis,
with recent deliveries to potential customers based in Europe.
-- PDI continues to undertake all preparatory work on the
Ashland Facility and remains confident that first deliveries of
CoalSwitch(R) fuel will commence in Q1 2023.
-- The Board continues to believe that CoalSwitch(R) will play a
significant role in the development of next generation biomass
fuels derived from lower value wood waste feedstock.
Michael Rowan, CEO of Active Energy, said:
"In the first half of the year, AEG has continued to make
significant progress towards commercialising CoalSwitch(R).
The testing programme for CoalSwitch (R) is consistently
demonstrating its advantages and economic benefits versus
traditional biomass pellets. We have completed the construction
planning with PDI at the Ashland Facility and await the next stage
of equipment deliveries so as to allow PDI to commence construction
activities at the site during the fourth quarter of this year.
Since the AGM we have already expanded the Company's sales
function, both in the US and internationally, to address increasing
customer enquiries for CoalSwitch (R) . For the remainder of this
year, AEG will be focused on converting these commercial
discussions into orders for CoalSwitch(R) for delivery in 2023 and
beyond. We will match these orders with the scale up to industrial
levels of production at the Ashland Facility.
The Board and the management team look forward to the remainder
of the year with confidence as AEG brings CoalSwitch(R) into the
market."
Enquiries:
Website LinkedIn Twitter
www.aegplc.com www.linkedin.com/company/activeenergy https://twitter.com/aegplc
@aegplc
-------------------------------------- ----------------------------
Enquiries
Active Energy Group Michael Rowan (Chief Executive info@aegplc.com
Plc Officer)
Andrew Diamond (Chief Financial
Officer)
--------------------------------- -------------------
Allenby Capital Nick Naylor/James Reeve/Freddie Office: +44 (0)20
Limited Wooding (Corporate Finance) 3328 5656
Nominated Adviser Amrit Nahal (Sales/Corporate
and Broker Broking)
--------------------------------- -------------------
Camarco Gordon Poole / Tom Huddart aeg@camarco.co.uk
Financial PR Adviser / Emily Hall Office: +44 (0)20
3757 4980
--------------------------------- -------------------
CHIEF EXECUTIVE's Statement
Introduction
AEG's strategy remains to commercialise CoalSwitch(R), a
proprietary technology which transforms lower value wood waste into
high-value biomass fuel that can either co-fire with coal to
produce immediate environmental and emissions benefits or replace
existing biomass feedstock supplies. The energy market requires a
scalable solution to produce next generation pellets in the volumes
required by customers and which can also accommodate the current
volumes demanded for traditional carbon intensive fuels, such as
coal. AEG believes that CoalSwitch(R) has the operational and
environmental benefits to be one of such fuels and is therefore
working to produce CoalSwitch(R) at industrial scale as soon as
possible.
The first six months of 2022 have presented AEG with both
opportunities and challenges as it seeks to market its
CoalSwitch(R) product. Since the start of the conflict in Ukraine
in February of this year interest in next generation biomass fuels
has increased substantially as existing biomass customers attempt
to secure fuel supply from across the globe (Ukraine and Russia
being significant suppliers of biomass before the start of the
conflict). Traditional sources of biomass supply are already
committed under long term contracts and prospective customers have
been investigating new supply options. AEG is now able to offer
CoalSwitch(R) to these existing biomass customers and also to new
customers who are examining alternatives to expensive traditional
fossil fuels.
Operational review during the period
i) Development of the Ashland Facility and future CoalSwitch (R) production capability
In 2022, the Company has continued to work closely with PDI, its
strategic partner, to move towards commercial levels of production
of CoalSwitch(R) from the Ashland Facility. To achieve this, PDI
and AEG have completed a redesign for a more efficient
manufacturing process, including an increase in the size of the
core process reactors to accommodate production of industrial
volumes of CoalSwitch(R). The redesign work was completed in Q2
2022 and key components have been ordered to ensure that future
production timelines can be achieved.
During Q2 2022, PDI assumed full responsibility for permitting,
financing and the future construction of the first CoalSwitch(R)
production facility (at Ashland) and AEG has now focused its
efforts toward establishing a global sales platform for
CoalSwitch(R) and developing the Company's existing intellectual
property. In July 2022, PDI stated that first production volumes
would commence at the Ashland Facility during the first quarter of
2023. PDI remains confident that this will be achieved.
The Ashland Facility will: i) demonstrate the ability for PDI
and AEG to operate a CoalSwitch(R) production facility; and ii) be
used to market CoalSwitch to both off take customers and potential
production partners. Construction activities at the Ashland
Facility are expected to commence in Q4 2022.
ii) CoalSwitch(R) testing program and prospective customer analysis
In order to accelerate customer interest, it has been essential
for AEG to co-ordinate test programs which demonstrate: i) the
economic and environmental benefits of CoalSwitch(R) against
existing biomass products; and ii) the ability to co-fire
CoalSwitch(R) with coal showing both the economic and environmental
benefits in such an exercise. All test results to date indicate
that CoalSwitch(R) has both competitive and environmental
advantages for customers.
In January 2022, AEG announced the results from the first phase
of the ongoing combustion testing programme of CoalSwitch(R).
CoalSwitch(R) fuel had been delivered to PacifiCorp in June 2021 as
part of the STEP Program in Utah. The programme has been funded by
Rocky Mountain Power to analyse next generation fuels. The results
demonstrated that CoalSwitch(R) has superior qualities over white
pellets, including its hydrophobic properties, ability to burn at
higher heating values and reduction in ash, nitrogen oxide and
sulphur dioxide emissions. AEG remains in continuous dialogue with
teams involved in the STEP Program and is planning additional
testing over the next 12 months.
Alongside this, the Company has been undertaking a rigorous
testing programme with prospective customers in Japan, North
America and, most recently, in Europe. The testing programme
demonstrates that CoalSwitch(R) offers a new pathway for heavy,
hard-to-decarbonize industries in the US and globally, who remain
under pressure to reduce emissions and pollution. CoalSwitch(R)
provides a unique ability to achieve these goals without requiring
costly, complex and yet-to-be-proven mitigation technologies. The
testing conducted earlier this year also confirmed that
CoalSwitch(R) can be burnt in existing furnaces without the need
for additional capital expenditure.
iii) AEG establishing industry standard environmental credentials
In addition to the product testing program, AEG continues to
focus on the quality of waste feedstock which is utilised in
CoalSwitch(R) production and the underlying processes to attain
this feedstock. With this aim, in March 2022, AEG received its
Chain of Custody and Controlled Wood certification compliant with
the Forest Stewardship Council(R) ("FSC") standards for its
CoalSwitch(R) fuel produced at Ashland. The certification confirms
to AEG's prospective customers that protection of the environment
is at the heart of its operations and that CoalSwitch(R) is
produced from responsibly managed sources.
The FSC certification is the basic market prerequisite to permit
any biomass products to be sold into many of AEG's target markets,
notably Japan, which is rapidly becoming one of the Company's key
potential long-term customers.
In June 2022, Life Cycle Associates LLC, an independent business
and environmental consultancy based in California, also published a
report which demonstrated that CoalSwitch(R) is not only
sustainably sourced, but also that pellets made from lumbermill
waste, including CoalSwitch(R), reduce CO(2) by 99% relative to
coal and 97% relative to natural gas.
iv) Announcement and completion of the sale of the Lumberton Site
In late 2021, AEG appointed agents for the sale of the Lumberton
Site in North Carolina. A sale and purchase agreement was entered
into with Phoenix Investors LLC ("Phoenix") on 31 March 2022 and
the transaction was completed on 30 June 2022. The gross
consideration was US$4.65 million and net cash proceeds of
US$3.92million have been received by AEG. All post transaction
closing conditions were successfully completed following the end of
the period. In addition, AEG generated additional cash proceeds of
approximately US$100k from the sale of supplemental equipment at
the Lumberton Site that is no longer required at the Ashland
Facility.
Lumberton Energy Holdings ("LEH"), the subsidiary of AEG that
held the Lumberton Site, has continued to receive legal challenges
from the Southern Environmental Law Centre ("SELC") based in North
Carolina. The allegations claim breaches of existing wastewater
treatment obligations at the Lumberton Site applicable to both LEH,
Phoenix and former owners of the facility. The Board remains
confident that LEH and its associated companies have at all times
remained compliant with all applicable environmental and permit
obligations at the Lumberton Site. Due to the false and defamatory
nature of the public statements made by SELC, the Board continues
to explore all legal options available to hold SELC
accountable.
Post period end activities
i) Expansion of sales and marketing activities for Active Energy
As a result of the increasing commercial interest in
CoalSwitch(R), AEG has, since the period end, expanded its sales
and marketing personnel in the US. These individuals bring
expertise and sales experience from the coal, utility and biomass
industries in North America and Europe and can provide the
technical sales support to prospective customers in North America
and Europe.
Commercial discussions continue in Japan combined with dedicated
fuel testing programs with prospective customers and engineering
partners. The confirmation of definitive delivery schedules for
CoalSwitch(R) in July 2022 has assisted AEG in all its current
sales negotiations and has provided greater confidence to these
prospective customers of AEG's long-term commitment to supply large
scale volumes of CoalSwitch(R).
ii) Patent awarded for the CoalSwitch(R) production process in Malaysia
In July 2022, the Company was awarded a Malaysia Patent No.
MY-191174-A (the "Malaysia Patent") by the Intellectual Property
Corporation of Malaysia in respect of the process for beneficiating
and cleaning biomass. The Malaysia Patent combines with patents
awarded in the United States in 2020 for the manufacturing and
production of CoalSwitch(R) and in Canada in 2021 for beneficiating
and cleaning biomass. Based upon current prospective customer
discussions, AEG continues to believe that Malaysia can be one of
its primary target markets for the production of CoalSwitch(R) fuel
utilising the waste wood residues from palm oil plantations.
The Company continues to file further patent applications
globally, targeting additional markets including Europe and will
file additional supplemental applications as the new process
reactors are finalised.
iii) USD quotation for AEG's shares in the US
The Company also successfully completed its listing on OTCQB in
the US in August 2022 which will provide enhanced investor
benefits, including easier trading access for investors located in
the US, greater liquidity due to a broader pool of potential
investors and an increased profile in the US.
iv) Board changes
The Company announced in August 2022 that Andrew Diamond will be
stepping down as CFO of AEG in December. The Board has commenced
the search for a replacement CFO and further updates will be made
in due course. The Board would like to thank Andrew for his
contribution to the Company during the past 18 months.
Financial review
i) Performance
The Group generated no revenue during the six months ended 30
June 2022.
Profit for the six months ended 30 June 2022 was US$1.8 million
(H1 2021: loss of US$2.0 million), resulting in a basic and diluted
total earnings per share of 0.03c (H1 2021: loss per share of
0.06c).
Unrealised foreign exchange gains, resulting from the
strengthening US dollar relative to UK Sterling, account for the
net finance gains which are reversed in the translation adjustment
within Other Comprehensive Losses.
ii) Net cash
The Group had a net cash position at 30 June 2022 of US$3.9
million (30 June 2021: US$ 1.1 million and 31 December 2021: US$1.8
million) and reflects the receipt of the net proceeds from the sale
of the Lumberton Site.
iii) Cash Flows
Operating cash outflows during the period were US$1.4 million
(H1 2021: US$3.5 million) reflecting the Group's efforts to reduce
and preserve available cash resources.
Investing inflows of US$3.8 million reflect the sale of property
proceeds (H1 2021: outflow of US$3.5 million). Intangible and PPE
additions during the period utilised project advances made in
previous periods.
Aside from minor loan repayments there were no financing
activities during the period (H1 2021: inflows of US$8.0 million
resulting from issues of share capital less convertible loan note
redemptions).
Conclusion and outlook
The first half of this financial year has seen AEG continue to
make progress. The CoalSwitch(R) product, the underlying production
technology and AEG are each obtaining increased profiles which the
Board believes will deliver the favourable results CoalSwitch(R)
truly deserves.
The production process is proven and in PDI we have an excellent
partner to build, finance and operate the first CoalSwitch(R)
facility at Ashland. Our continuous testing programme has resulted
in CoalSwitch(R) obtaining recognition as a proven, next generation
biomass fuel with strong environmental credentials and improved
heating values over existing biomass fuels.
In the last 3 weeks, the US market opportunity has been
invigorated with the recent passing of the Inflation Reduction Act.
AEG believes the legislation will either help accelerate demand for
CoalSwitch(R) fuel, unlock new funding opportunities for the sale
of CoalSwitch(R) technology, accelerate project development of
additional CoalSwitch(R) production sites in the US, or potentially
all three. This can be financed in a number of ways including loan
guarantees, tax incentives or grant funding. AEG is now working
with advisers in the US to better understand the opportunities and
how best to seize them. We expect to be able to report back in the
coming weeks and months.
Our focus for the remainder of 2022 will be upon converting the
numerous commercial discussions, which we are currently having,
into firm orders for CoalSwitch(R) or additional production
facilities using the CoalSwitch(R) technology. The Board and
management look forward to the remainder of the financial year with
confidence as AEG seeks to bring CoalSwitch(R) to market.
Michael Rowan
CEO
9 September 2022
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND OTHER
COMPREHENSIVE INCOME
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
30 June
30 June 2022 2021
Restated
Unaudited Unaudited
Note US$ US$
CONTINUING OPERATIONS
REVENUE 8 - -
============= ============
GROSS PROFIT - -
Other operating income - 364,631
Administrative expenses (1,324,274) (1,407,387)
------------- ------------
OPERATING LOSS (1,324,274) (1,042,756)
Net finance gains / (costs) 5 3,151,471 (443,731)
------------- ------------
PROFIT / (LOSS) BEFORE TAXATION 1,827,197 (1,486,487)
Taxation - 1,395
------------- ------------
PROFIT / (LOSS) FROM CONTINUING
OPERATIONS 7 1,827,197 (1,485,092)
LOSS FROM DISCONTINUED OPERATIONS 7 (1,292) (554,224)
PROFIT / (LOSS) FOR THE PERIOD
- attributable to Parent 7 1,825,905 (2,039,316)
============= ============
Basic and Diluted gain / (loss)
per share (US cent):
- Continuing operations 6 0.03 (0.04)
- Discontinued operations 6 - (0.02)
- Total operations 6 0.03 (0.06)
OTHER COMPREHENSIVE LOSS
Items that may be subsequently
reclassified to profit or loss:
Exchange differences on translation
of operations (3,281,270) (1,185,420)
Revaluation of land and buildings (504,646) -
TOTAL COMPREHENSIVE LOSS FOR
THE PERIOD (1,960,011) (3,224,736)
============= ==============
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
31 December
30 June 2022 2021
Unaudited Audited
Note US$ US$
NON-CURRENT ASSETS
Intangible assets 9 6,089,238 5,659,024
Property, plant and equipment 10 7,544,105 11,512,953
Other financial assets 828,902 922,275
14,462,245 18,094,252
------------- -------------
CURRENT ASSETS
Inventory - 27,250
Trade and other receivables 11 938,010 1 ,628,959
Cash and cash equivalents 13 4,097,214 1,940,871
-------------
5,035,224 3,597,080
------------- -------------
TOTAL ASSETS 19,497,469 21,691,332
============= =============
CURRENT LIABILITIES
Trade and other payables 12 952,182 1,222,030
Loans and borrowings 13 12,195 14,013
964,377 1,236,043
------------- -------------
NON-CURRENT LIABILITIES
Deferred income tax liabilities - 147,349
Loans and borrowings 13 141,032 143,931
-------------
141,032 291,280
------------- -------------
TOTAL LIABILITIES 1,105,409 1,527,323
------------- -------------
NET ASSETS 18,392,060 20,164,009
============= =============
EQUITY ATTRIBUTABLE TO OWNERS
OF THE PARENT
Share capital - Ordinary shares 14 786,867 786,867
Share capital - Deferred shares 18,148,898 18,148,898
Share premium 55,349,883 55,349,883
Merger reserve 2,350,175 2,350,175
Foreign exchange reserve (5,705,599) (2,424,329)
Own shares held reserve (268,442) (268,442)
Convertible debt / warrant
reserve 1,165,911 1,165,911
Retained earnings (53,435,633) (55,449,600)
Revaluation reserve - 504,646
------------- -------------
TOTAL EQUITY 18,392,060 20,164,009
============= =============
.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
Own Convertible
Foreign shares debt and
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$
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)
Total
comprehensive
loss - - - (1,185,420) - - (2,039,316) - (3,224,736)
Issue of share
capital 98,218 8,896,425 - - - - - - 8,994,643
Conversion of
CLN 233,040 23,550,437 - - - (2,843,734) - - 20,939,743
Share based
payments - - - - - - 76,811 - 76,811
----------- ----------- ---------- ------------ ---------- ------------ ------------- ------------ ------------
At 30 June
2021 18,699,592 51,158,499 2,350,175 (1,370,395) (268,442) 858,069 (51,862,241) 504,646 20,069,903
=========== =========== ========== ============ ========== ============ ============= ============ ============
At 31 December
2021 18,935,765 55,349,883 2,350,175 (2,424,329) (268,442) 1,165,911 (55,449,600) 504,646 20,164,009
Total
comprehensive
loss - - - (3,281,270) - - 1,825,905 (504,646) (1,960,011)
Share based
payments - - - - - - 188,062 - 188,062
At 30 June
2022 18,935,765 55,349,883 2,350,175 (5,705,599) (268,442) 1,165,911 (53,435,633) - 18,392,060
=========== =========== ========== ============ ========== ============ ============= ============ ============
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
30 June 30 June
2022 2021
Unaudited Unaudited
Note US$ US$
Cash flows from operating activities
Profit / (loss) for the period 1,825,905 (2,039,316)
Adjustments for:
Non-cash / separately disclosed items (3,077,626) (403,481)
Working capital outflow (157,222) (1,047,804)
------------ ------------
Net cash outflow from operating activities 18 (1,408,943) (3,490,601)
Cash flows from investing activities
Purchase of property, plant and equipment (1,412) (3,543,036)
Proceeds on sale of property, plant
and equipment 3,767,469 -
------------ ------------
Net cash inflow / (outflow) from
investing activities 3,766,057 (3,543,036)
------------ ------------
Cash flows from financing activities
Issue of equity share capital, net
of share issue costs - 8,994,643
Redemption of CLNs - (1,484,728)
Loans repaid (6,918) (97,251)
P roceeds from loans advanced - 750,296
Principal elements of lease payments - (57,900)
Finance expenses paid - (87,752)
------------ ------------
Net cash (outflow) / inflow from
financing activities (6,918) 8,017,308
------------ ------------
Net increase in cash and cash equivalents 2,350,196 983,671
Cash and cash equivalents at beginning
of the period 1,940,871 999,631
Exchange (losses) / gains on cash
and cash equivalents (193,853) 4,227
------------ ------------
Cash and cash equivalents at end
of the period 4,097,214 1,987,529
============ ============
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
1. GENERAL INFORMATION
Active Energy Group plc ("AEG") is a 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 the existing renewable
biomass industry. The Company is quoted in London (AIM: AEG) and
trades on the OTCQB Venture Market in the USA (OTCQB: "ATGVF").
The Company is incorporated in England and Wales (Company number
03148295) and the address of the registered office is 27-28
Eastcastle Street, London, W1W 8DH, United Kingdom.
2. BASIS OF PRESENTATION
The Group and Company financial statements are prepared and
approved by the Directors in accordance with International
Financial Reporting Standards ("IFRS") as adopted in the UK, and
with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS.
The condensed consolidated interim financial report for the
half-year reporting period ended 30 June 2022 has been prepared in
accordance with the UK-adopted International Accounting Standard
34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
The Interim Financial Statements do not include all the
information and disclosures required in the annual financial
statements and should be read in conjunction with the Group's
consolidated financial statements for the year ended 31 December
2021. The Interim Financial Statements are presented in US Dollars,
except as otherwise indicated. The Interim Financial Statements
have been prepared on a going concern basis, under the historical
cost convention, except for the revaluation of certain financial
instruments.
The Interim Financial Statements is unaudited and does not
constitute full statutory accounts under Section 434 of the
Companies Act 2006. The financial information in respect of the
year ended 31 December 2021 has been extracted from the statutory
accounts which have been delivered to the Registrar of Companies.
The Group's Independent Auditor's report on those accounts was
unqualified and did not contain a statement under section 498(2) or
498(3) of the Companies Act 2006. The auditor's report on those
accounts included a material uncertainty in relation to the going
concern assumptions detailed in the notes to those accounts. The
auditor did not qualify their report in respect of this matter. The
financial information for the half years ended 30 June 2022 and 30
June 2021 is unaudited and the twelve months to 31 December 2021 is
audited. Certain information disclosed in the 30 June 2021 Interim
Financial Statements has been restated as required to aid
comparability.
The accounting policies applied by the Group in this financial
information are the same as those applied by the Group in its
financial statements for the year ended 31 December 2021 and which
will form the basis of the 2022 financial statements, except for a
number of new and amended standards which have become effective
since the beginning of the previous financial year. These new and
amended standards are not expected to materially affect the
Group.
The preparation of financial statements in compliance with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise judgment in the most appropriate
application in applying the Group's accounting policies. The areas
where significant judgments and estimates have been made in
preparing these interim financial statements are not materially
different from those disclosed in the financial statements for the
year ended 31 December 2021.
These Interim Financial Statements were approved by the Board of
Directors on 9 September 2022.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
3. GOING CONCERN
The Directors are required to give careful consideration to the
appropriateness of the going concern basis in the preparation of
the interim financial statements.
In June 2022, the Group disposed of the property in Lumberton,
North Carolina. The proceeds of the sale are reflected in the cash
and cash equivalents and other receivables. The Group has debt of
US$153,227 at 30 June 2022 and was in a net cash position of
US$3,943,987.
The Group's strategy is to accelerate the supply of production
volumes of CoalSwitch(R). The Company has been working with Player
Design International Inc ("PDI") to redesign the manufacturing
process and process reactors to enable production volumes of
CoalSwitch(R). PDI has now committed to take full responsibility
for permitting, financing and constructing the first CoalSwitch (R)
production plant in Ashland, Maine (the "Ashland Facility") which
PDI will own and operate. PDI has already ordered the parts
required for the completion of the Ashland Facility and has
confirmed that first production volumes of CoalSwitch (R) will
commence during the first quarter of 2023. Active Energy will sell
these volumes of CoalSwitch (R) , once produced, to prospective
customers.
On the basis of the considerations set out above, the Directors
have concluded that it is appropriate to prepare the interim
financial statements on a going concern basis. These Interim
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.
4. Basis of consolidation
The financial information incorporates the results of AEG and
entities controlled by AEG (its subsidiaries). Control is achieved
when the Group has power over relevant activities, is exposed, or
has rights, to variable returns from its involvement with the
entity and has the ability to affect those returns through its
power over the entity. The consolidated interim financial
statements present the financial results of AEG and its
subsidiaries (the Group) as if they formed a single entity. Where
necessary, adjustments are made to the results of subsidiaries to
bring the accounting policies used into line with those used by the
Group. All intra-Group transactions, balances, income and expenses
are eliminated on consolidation.
5. NET FINANCE GAINS / (COSTS)
30 June 30 June
2022 2021
Unaudited Unaudited
Continuing operations
Foreign exchange 3,154,251 (359,220)
Loan interest (2,780) (84,511)
Discontinued operations
Loan interest and charges (5,543) (25,506)
---------- ----------
Total operations 3,145,928 (469,237)
========== ==========
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
6. GAIN / (LOSS) PER SHARE
30 June 30 June
2022 2021
Unaudited Unaudited
Weighted average ordinary shares in
issue (Number) 5,665,209,746 3,206,905,598
Gain / (loss) for the period (US$):
Continuing operations 1,827,197 (1,485,092)
Discontinued operations (1,292) (554,224)
-------------- --------------
Total operations 1,825,905 (2,039,316)
Basic and diluted gain / (loss) per
share (US cent):
Continuing operations 0.03 (0.04)
Discontinued operations - (0.02)
-------------- --------------
Total operations 0.03 (0.06)
============== ==============
Basic and diluted loss per share are the same where the effect
of any potential shares is anti-dilutive and is therefore
excluded.
7. DISCONTINUED OPERATIONS
During 2021 the Group discontinued its sawmill and saw log
operations, and in 2022 the Group disposed of its Lumberton Site.
These operations and assets were reflected in the wood processing
segment. The results of these businesses are disclosed as a single
line item in the Condensed Consolidated Statement of Income in
accordance with IFRS 5.
The subsidiary carrying out the sawmill and saw log operations
has not been disposed therefore no gain or loss on disposal is
applicable.
The analysis between continuing and discontinued operations is
as follows:
Six months to 30 June 2022 Continuing Discontinued
(Unaudited) operations operations Total
US$ US$ US$
Revenue - - -
============ ============= ============
Gross loss - - -
Administrative expenses (1,324,274) 2,856 (1,321,418)
Other income - - -
------------ ------------- ------------
Operating loss (1,324,274) 2,856 (1,321,418)
Finance costs 3,151,471 (5,543) 3,145,928
------------ ------------- ------------
Gain /(loss) before taxation 1,827,197 (2,687) 1,824,510
Taxation - 1,395 1,395
------------ ------------- ------------
Loss for the period 1,827,197 (1,292) 1,825,905
============ ============= ============
Cash outflows from operating
activities (1,337,753) (71,190) (1,408,943)
Cash outflows from investing
activities (1,412) 3,767,469 3,766,057
Cash inflows from financing
activities (6,918) - (6,918)
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
7. DISCONTINUED OPERATIONS (CONTINUED)
Six months to 30 June 2021 Continuing Discontinued
(Unaudited) operations operations Total
Restated Restated Restated
US$ US$ US$
Revenue - 636,241 636,241
============ ============= ============
Gross loss - (496,588) (496,588)
Administrative expenses (1,407,387) (78,677) (1,486,064)
Other income 364,631 46,547 411,178
------------ ------------- ------------
Operating loss (1,042,756) (528,718) (1,571,474)
Finance costs (443,731) (25,506) (469,237)
------------ ------------- ------------
Loss before taxation (1,486,487) (554,224) (2,040,711)
Taxation 1,395 - 1,395
------------ ------------- ------------
Loss for the period (1,485,092) (554,224) (2,039,316)
============ ============= ============
Cash outflows from operating
activities (3,527,471) 36,870 (3,490,601)
Cash outflows from investing
activities (3,472,636) (70,400) (3,543,036)
Cash inflows from financing
activities 8,075,208 (57,900) 8,017,308
8. SEGMENTAL INFORMATION
The Group reports three business segments:
-- "CoalSwitch(R) " denotes the Group's renewable wood pellet business.
-- "Wood processing" denotes the Group's sawmill and saw log
activities and the Lumberton property. Sawmill and saw log
activities were discontinued during 2021 and the property was sold
during 2022. The results for these activities are reported as
discontinued operations and are accordingly not included in the
segmental reporting.
-- "Corporate and other" denotes the Group's corporate and other costs.
The business segments are aligned to the Group's strategy. The
comparative segmental information has been restated to align with
the current reporting segments.
Factors that management used to identify the Group's reportable
segments
The Group's reportable segments are strategic business units
that offer different products or services.
Measurement of operating segment profit or loss
The Group evaluates segmental performance on the basis of profit
or loss from operations calculated in accordance with IFRS but
excluding the results from discontinued operations in accordance
with IFRS 5.
8. SEGMENTAL INFORMATION (continued)
Six months to 30 June Wood Corporate
2022 CoalSwitch processing & Other Total
(Unaudited) US$ US$ US$ US$
Revenue - - - -
Operating segment (loss) (194,341) - (1,129,933) (1,324,274)
Segment (loss) before
tax (194,362) - 2,021,559 1,827,197
Tax credit/(charge) - - - -
----------------- -------------- ------------------ ------------
Segment (loss) for
the period (194,362) - 2,021,559 1,827,197
================= ============== ================== ============
Total Assets 14,405,844 170,573 4,921,052 19,497,469
================== ============
Total Liabilities 312,927 264,171 528,311 1,105,409
================== ============
Other segmental information:
Capital Expenditure: 325,357 - 1,414 326,771
Additions to Intangibles 430,214 - - 430,214
Depreciation & amortisation - - 709 709
Six months to 30 June Corporate
2021 CoalSwitch Wood processing & Other Total
(Unaudited) US$ US$ US$ US$
Revenue - - - -
Operating segment (loss) (110,467) (42,758) (889,531) (1,042,756)
Segment (loss) before
tax (216,463) (42,758) (1,227,266) (1,486,487)
Tax credit/(charge) - 1,395 - 1,395
----------------- ---------------- ------------------ ------------
Segment (loss) for
the period (216,463) (41,363) (1,227,266) (1,485,092)
================= ================ ================== ============
Total Assets 15,418,397 4,529,664 2,846,790 22,794,851
================== ============
Total Liabilities 1,418,977 577,024 728,947 2,724,948
================== ============
Other segmental information:
Capital Expenditure 4,235,999 12,500 2,997 4,251,496
Depreciation & amortisation - 36,000 554 36,554
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
9. INTANGIBLE ASSETS
Intellectual Timber
Goodwill property licences Total
US$ US$ US$ US$
Cost
---------- ------------- ------------ ------------
At 31 December 2020 567,668 5,259,386 6,503,975 12,331,029
---------- ------------- ------------ ------------
Additions - 400,000 - 400,000
Written off (567,668) - (6,503,975) (7,071,643)
---------- ------------- ------------ ------------
At 31 December 2021 - 5,659,386 - 5,659,386
========== ============= ============ ============
Additions - 430,214 - 430,214
At 30 June 2022 - 6,089,600 - 6,089,600
========== ============= ============ ============
Accumulated amortisation
---------- ------------- ------------ ------------
At 31 December 2020 567,668 362 6,503,975 7,072,005
---------- ------------- ------------ ------------
Amortisation charge - - - -
Written off (567,668) - (6,503,975) (7,071,643)
---------- ------------- ------------ ------------
At 31 December 2021 - 362 - 362
========== ============= ============ ============
Amortisation charge - - - -
At 30 June 2022 - 362 - 362
========== ============= ============ ============
Net book value
At 30 June 2022 - 6,089,238 - 6,089,238
========== ============= ============ ============
At 31 December 2021 - 5,659,024 - 5,659,024
========== ============= ============ ============
Intellectual property comprises costs incurred to secure the
rights and knowledge associated with the CoalSwitch(R) and
PeatSwitch(TM) technologies.
Recoverability of intellectual property assets is dependent on
successfully commercialising CoalSwitch(R), which is subject to a
number of uncertainties including the ability of the Group to
access financial resources to develop the projects and bring the
product to economic maturity and profitability. Management
determined that no impairment was required. Management will
continue to monitor the recoverability of these assets.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
10. PROPERTY, PLANT AND EQUIPMENT
Furniture
Land & Plant and and office
Buildings equipment equipment Total
US$ US$ US$ US$
Cost
------------ ----------- ------------ ------------
At 31 December 2020 4,281,829 6,573,255 10,349 10,865,433
------------ ----------- ------------ ------------
Additions - 3,954,965 2,979 3,957,944
Disposals - (872,079) - (872,079)
Transfers 210,220 (337,444) - (127,224)
Foreign exchange differences - - (158) (158)
------------ ----------- ------------ ------------
At 31 December 2021 4,492,049 9,318,697 13,170 13,823,916
============ =========== ============ ============
Additions - 325,357 1,414 326,771
Disposals (4,492,049) (102,922) - (4,594,971)
Foreign exchange differences - - (1,426) (1,426)
------------ ----------- ------------ ------------
At 30 June 2022 - 9,541,132 13,158 9,554,290
============ =========== ============ ============
Accumulated depreciation
------------ ----------- ------------ ------------
At 31 December 2020 165,977 246,366 9,449 421,792
------------ ----------- ------------ ------------
Charge for the year 128,366 116,788 1,264 246,418
Impairment charges - 2,000,000 - 2,000,000
Disposals - (229,907) - (229,907)
Transfers (96,343) (30,881) - (127,224)
Foreign exchange differences - - (116) (116)
------------ ----------- ------------ ------------
At 31 December 2021 198,000 2,102,366 10,597 2,310,963
============ =========== ============ ============
Charge for the period 18,000 556 709 19,265
Disposals (216,000) (102,922) - (318,922)
Foreign exchange differences - - (1,121) (1,121)
------------ ----------- ------------ ------------
At 30 June 2022 - 2,000,000 10,185 2,010,185
============ =========== ============ ============
Net book value
At 30 June 2022 - 7,541,132 2,973 7,544,105
============ =========== ============ ============
At 31 December 2021 4,294,049 7,216,331 2,573 11,512,953
============ =========== ============ ============
Plant and equipment additions relate to CoalSwitch(R) production
facility activity in Maine. Following the sale of the Lumberton
property, Coalswitch(R) equipment has been relocated to Maine.
Recoverability of plant and equipment assets is dependent on
successfully commercialising CoalSwitch(R), which is subject to a
number of uncertainties including the ability of the Group to
access financial resources to develop the projects and bring the
product to economic maturity and profitability. Management
determined that no impairment was required. Management will
continue to monitor the recoverability of these assets.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
11. TRADE AND OTHER RECEIVABLES
30 June 31 December
2022 2021
Unaudited Audited
US$ US$
Project advances 774,668 1,190,315
Retained proceeds on sale of property 150,000 -
Other receivables 13,342 438,644
---------- ------------
938,010 1,628,959
========== ============
No impairment provisions have been raised against trade and
other receivables. Retained proceeds on the sale of the Lumberton
Site have been received post period end.
The carrying value of trade and other receivables approximates
to fair value.
12. TRADE AND OTHER PAYABLES
30 June 31 December
2022 2021
Unaudited Audited
US$ US$
Trade payables 241,279 775,709
Social security and other taxes 59,496 63,682
Accruals and deferred income 501,407 232,639
Other payables 150,000 150,000
---------- ------------
952,182 1,222,030
========== ============
Accruals includes amounts relating to Ashland construction costs
which have not yet been invoiced.
The carrying value of trade and other payables approximates to
fair value.
13. NET CASH
30 June 31 December
2022 2021
Unaudited Audited
US$ US$
Cash and cash equivalents 4,097,214 1,940,871
Loans and borrowings (153,227) (157,944)
---------- ------------
3,943,987 1,782,927
========== ============
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
14. SHARE CAPITAL - ORDINARY SHARES
Number of
shares US$
Allotted, called up and fully paid
shares of 0.01p each
At 1 January 2021 1,541,178,043 219,436
Issue of shares 4,124,031,702 567,431
-------------- --------
At 31 December 2021 and 30 June 2022 5,665,209,745 786,867
============== ========
At the Company's Annual General Meeting on 4 July 2022,
shareholders approved a 1 for 35 share consolidation. Following the
share consolidation, the Company has 161,863,136 ordinary shares of
0.35 pence each.
15. RELATED PARTY DISCLOSURES
During the period, the Group paid US$37,520 to INJ London Ltd
for sales and marketing services (H1 2021: US$8,680). This company
is owned by Max Aitken.
At 30 June 2022, the Directors had US$91,667 of unpaid salary
and fees (H1 2021: Nil). These fees have subsequently been
paid.
Transactions between the Company and its subsidiaries, which are
related party transactions, have been eliminated on consolidation.
These transactions, which are incurred in the ordinary course of
business and under normal commercial terms, are substantially the
same in nature as those disclosed in the Annual report and Accounts
at 31 December 2021.
16. CAPITAL COMMITMENTS
There were no capital commitments at 30 June 2022 (31 December
2021: Nil).
17. SUBSEQUENT EVENTS
On 5 August 2022 the Company commenced trading its ordinary
shares on the OTCQB Venture Market in the United States of America
under the ticker symbol "ATGVF".
On 10 August 2022, Andrew Diamond resigned as a director of the
Company.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022
18. RECONCILIATION OF LOSS FOR THE PERIOD TO CASH OUTFLOWS FROM OPERATING ACTIVITIES
30 June 30 June
2022 2021
Unaudited Unaudited
US$ US$
Gain /(loss) for the period 1,825,905 (2,039,316)
Adjusted for:
Share based payment expense 188,062 76,811
Depreciation 19,265 164,323
Gains on disposal of right of use assets - (49,884)
Gain on redemption of CLNs - (411,177)
Profit on disposal of property, plant
and equipment (292,020) -
Foreign currency translations (2,999,405) (292,176)
Finance expenses 7,876 110,017
Income tax (1,395) (1,395)
------------ ------------
(1,251,721) (2,442,797)
Decrease / (increase) in inventories 27,250 (3,841)
Decrease in trade and other receivables 85,376 186,648
Decrease in trade and other payables (269,848) (1,230,611)
------------ ------------
Net cash outflow from operating activities (1,408,943) (3,490,601)
============ ============
19. COPIES OF THE INTERIM FINANCIAL STATEMENTS
Copies of the Consolidated Interim Financial Statements will be
made available on the Company's website at www.aegplc.com .
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