TIDMAEG
RNS Number : 5914N
Active Energy Group PLC
26 September 2023
26 September 2023
Active Energy Group Plc
('Active Energy', the 'Company' or the 'Group')
Interim results for the six months ended 30 June 2023
Active Energy (AIM: AEG, OTCQB: ATGVF), a producer of
sustainably-sourced, energy-dense clean carbon products and
technologies, is pleased to announce its unaudited interim results
for the six months ended 30 June 2023.
HIGHLIGHTS
Operational highlights
-- Added industry skills and significant experience to senior
leadership team in the US driving the future growth of the
Company:
o In March 2023, appointment of Steve Schaar as Chief Operating
Officer for the Group to focus on the specific development of
CoalSwitch(R) production facilities in the United States and
Canada.
o In July 2023, appointment of Barron Hewetson as Chief
Technology Officer to focus on the future development of
CoalSwitch(R) products and production methods.
-- Continued focus on increasing the intellectual property
("IP") portfolio with Patents and Trademarks for CoalSwitch(R)
awarded in the US, Canada, Europe (including the UK) and additional
trademark applications have commenced in the US and throughout
Asia.
-- Accelerated the development of CoalSwitch(R) product types
and manufacturing methods to meet future customer demands for
sustainably sourced, energy-dense clean carbon products.
-- Developed commercial relationships to provide a shortlist of
new potential commercial partners and locations in the US and
worldwide for additional CoalSwitch(R) production.
-- Continued development of sales pipeline with a strategic
focus on certain industries for the future use of CoalSwitch(R)
production.
-- Progressed towards first production of CoalSwitch(R) via
confirmation that permits were granted in May 2023 to Player
Design, Inc ("PDI") through its associated entity Player Holdings,
LLC for the construction and operation of a CoalSwitch(R) reference
facility in Ashland, Maine (the "Ashland Reference Facility").
-- PDI has confirmed that first production of CoalSwitch(R) is
targeted to commence in November 2023 at the Ashland Reference
Facility.
Financial highlights
-- Operating loss from continuing operations of US$1.6 million
for the period (H1 2022: US$1.3 million).
-- Net cash position of US$1.2 million (H1 2022: US$3.9 million).
Post period end activity and Outlook
-- The new management team has been actively developing new
production partnerships in the US and internationally with the aim
to expand CoalSwitch (R) production volumes.
-- Active Energy has been developing new opportunities for
CoalSwitch(R), both in terms of future derivatives of CoalSwitch
(R) fuel and improved production processes, as the Group focusses
on larger scale production goals for CoalSwitch(R) fuel by
2025.
-- PDI's confirmation of the additional delays toward production
from the Ashland Reference Facility has been disappointing.
However, the delays have not impeded the interest from future
customers for CoalSwitch(R), who remain eager for fuel at the
earliest opportunity.
-- Active Energy joined the International Biomass Torrefaction
and Carbonization Council ("IBTC") working alongside many of the
key global players in the biomass supply chain.
Michael Rowan, CEO of Active Energy, said:
"Despite the recent confirmation by PDI of the delays in
completion of construction of the Ashland Reference Facility, the
new executive team, assembled in the first half of 2023, has
already developed a new and expanded technology roadmap designed to
create new opportunities for CoalSwitch (R) fuel.
"Specifically, the roadmap includes modifications and upgrades
to the existing proven technology as well as the addition of new
technologies that will improve efficiencies, create new product
offerings, and expand the depth and breadth of the clean carbon
products that Active Energy could produce to meet customer needs.
The creation of this additional IP will also open up new
opportunities to partner with industry leaders worldwide for future
CoalSwitch(R) production.
"The world needs sustainably sourced, energy-dense clean carbon
products, like CoalSwitch (R), and technologies to meet Net Zero
goals, mandates, and regulations. We believe that CoalSwitch(R),
with its planned technology developments and expanding in-house
expertise can help deliver on the future needs of customers
globally.
"Through 2023 Active Energy has been preparing for growth and,
with the current level of customer engagement, we look forward to
reporting on significant commercial progress and product
development in the remainder of 2023 and beyond."
Enquiries:
Active Energy Group Plc Michael Rowan (Chief Executive Officer) info@aegplc.com
Michelle Fagan (Chief Financial Officer)
Steve Schaar (Chief Operating Officer)
Barron Hewetson (Chief Technology Officer)
Allenby Capital Limited Nick Naylor/James Reeve/Daniel Dearden-Williams Office: +44 (0)20 3328 5656
Nominated Adviser and Broker (Corporate Finance)
Amrit Nahal (Sales/Corporate Broking)
------------------------------------------------------- -----------------------------
Camarco Tom Huddart / Emily Hall / Lily Pettifar aeg@camarco.co.uk
Financial PR Adviser Office: +44 (0)20 3757 4980
------------------------------------------------------- -----------------------------
Scoville PR John Williams aeg@camarco.co.uk
US PR Adviser
------------------------------------------------------- -----------------------------
Website LinkedIn Twitter
www.aegplc.com www.linkedin.com/company/activeenergy https://twitter.com/aegplc
@aegplc
-------------------------------------- ----------------------------
CHIEF EXECUTIVE's Statement
Introduction
The first half of 2023 has seen a significant step change in
activity for Active Energy Group. The Group's strategy remains to
commercialize CoalSwitch(R), a proprietary production technology
which, in the first instance transforms lower value wood waste
products into higher-value renewable fuels that can either co-fire
with coal to produce immediate environmental and emissions benefits
or replace existing biomass feedstock supplies.
However, Active Energy's routes to the commercialization of its
next generation solution, CoalSwitch(R), (the "CoalSwitch (R)
Program") are multiplying as increasing Net Zero commitments are
being made by companies and countries. Aligned to that, biomass
fuel itself is under increasing focus and Active Energy continues
to believe that CoalSwitch (R) has the operational and
environmental benefits to become a leading fuel of the future.
In July 2022, the Board and PDI agreed to split responsibilities
on the CoalSwitch(R) Program, with PDI becoming responsible for the
engineering and production of CoalSwitch (R) and Active Energy
taking responsibility for marketing and sales. Commercial
arrangements for the sale of fuel from the Ashland Reference
Facility were established between the Company and PDI within a Take
or Pay agreement. Whilst these arrangements remain in place, during
the latter half of 2022, it became apparent to the Board that
Active Energy had to expand its senior management team in the US to
acquire relevant expertise in both fuel production and product
development in-house and to assist PDI.
Alongside this, the political environment changes in the US
during the second half of 2022 with the notable approval of the
Inflation Reduction Act ("IRA') meant that Active Energy was seeing
increasing enquiries from potential customers for the development
of alternative low carbon technologies that can help dramatically
reduce emissions for 'hard to decarbonize' industries. The Board
became aware that, whilst the development of the Ashland Reference
Facility by PDI would result in CoalSwitch(R) becoming available
for customers' initial orders in the short term, the indicative
production volumes from the Ashland Reference Facility may quickly
become insufficient to accommodate the anticipated needs of Active
Energy's future customers.
In each instance, Active Energy needed additional expertise to
not only support PDI (if required) but also provide a new
perspective and additional industry experience toward the
CoalSwitch (R) Program and to develop fuels toward meeting the
ever-increasing demands of future customers, both in the US and
internationally.
Strengthened Leadership Team
To execute on this strategy, Active Energy is extremely
encouraged that it was able to hire both a Chief Operating Officer
and Chief Technology Officer to help drive and execute the future
strategy.
In March 2023, the Company appointed Steve Schaar as Chief
Operating Officer to focus on the development of CoalSwitch(R)
production in the United States. Steve has more than 25 years'
experience of operations (including senior management roles at two
of Enviva's largest production plants), project development,
program management and new product launches from a broad range of
industries.
This appointment was followed shortly after, in July 2023, by
the appointment of Barron Hewetson as the Company's Chief
Technology Officer. Barron joined Active Energy from Enviva Biomass
Inc. At Enviva, he served in a number of roles, most recently as
the Director of Innovation and Product Management. During his time
in that role, Barron diversified Enviva's production portfolio by
negotiating contracts in new industry sectors and assisted in
contract negotiations totaling over $12.5 billion.
Both Steve and Barron have already made a significant impact for
Active Energy to achieve both existing and new goals under the
CoalSwitch (R) Program. The Company is in discussions with a number
of additional senior executives within the biomass sector in the US
and intends to make further hires at the appropriate time. The
Board believes that the future growth of Active Energy will require
further investment in a US management team and corporate
infrastructure in the coming months.
Operational review during the period
1. CoalSwitch(R) Program & Product Development
The energy market requires a scalable solution to produce next
generation fuels in the volumes required by customers and which can
also accommodate the current volumes demanded for traditional
carbon intensive fuels, such as coal.
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. In
this regard, Active Energy has particularly focused its marketing
activities on the pulp & paper and cement industries. Testing
conducted with industry partners earlier this year has confirmed
that CoalSwitch(R) can be burnt in existing furnaces without the
need for additional capital expenditure and produce emissions
improvements.
It has been clear to Active Energy's Board that there is
significant demand for sustainably sourced, energy-dense clean
carbon products and technologies. To meet that demand, Active
Energy needs to accelerate production of CoalSwitch(R) and create
variants of the fuel. Under the guidance of the Chief Technology
Officer, Active Energy is developing its CoalSwitch(R) fuels to
meet specific customer specifications that are now being presented
to Active Energy in commercial discussions.
To that end, Active Energy will now refer to the CoalSwitch(R)
product line going forward as three separate technologies which can
produce fuel to meet specific customer requirements: -
CoalSwitch(R) Program :
CoalSwitch(R) 1.0 : This production process refers to the
original manufacturing process which successfully produced fuel at
Ashland in 2021. This process is based on a small-scale static
reactor producing small volumes of fuel and which Active Energy may
continue to use for future research and development activities.
CoalSwitch(R) 2.0: This revised production process is the basis
of the Ashland Reference Facility currently under construction by
PDI and to be operated by its operating company, Maineflame Inc.
This facility should be able to produce increased volumes of
CoalSwitch(R) fuel utilizing steam technologies.
CoalSwitch(R) 3.0: The recent focus has been to further improve
both the fuel quality and production processes with the next stage
of CoalSwitch(R) fuel development. Active Energy has been working
with Omega Thermal Solutions Group LLC, based in the US, to develop
a new manufacturing process to create a variant of CoalSwitch(R)
fuel focusing on a torrefaction production process with improved
performance metrics, such as higher fixed carbon results that will
enable Active Energy Group to participate in expanded markets such
as soil amendments, air filtration, ferro silicon and the
metallurgical steel industries. The anticipated scale of production
volumes will also increase significantly.
Active Energy anticipates that each of these technologies will
obtain appropriate IP protection in the US and internationally, and
Active Energy will subsequently seek to license the relevant
technology platforms to additional production partners both inside
and outside the US.
Since Q1 2023, the management team have been focused on these
product and production improvements and, led by Steve Schaar,
Active Energy is currently in discussions with various commercial
partners in the US to establish additional production facilities
either on a proprietary or a joint venture basis. Steve has brought
an immense operational knowledge to Active Energy and the Company
is actively developing these skills toward new market
opportunities. A shortlist of potential partners throughout the US
has already been developed, each partner looking at decarbonization
and Active Energy is focused on delivering a number of those
partnerships in the near term.
2. CoalSwitch(R) production facilities
The strategy for Active Energy is to build out production
operations, either on a proprietary basis or on a joint venture
basis with existing operators, on both a small-scale and
large-scale basis. During H1 2023, Active Energy commenced several
commercial discussions with operating partners to produce
CoalSwitch(R) fuel. These conversations are ongoing, nonetheless,
the variant of fuel creating the greatest level of commercial
interest is currently CoalSwitch(R) 3.0, with its higher heating
value and capacity to be produced on a continuous basis at greater
production volumes.
The Ashland Reference Facility
The Ashland Reference Facility is being constructed by and will
be operated by the Company's commercial partner, PDI, and its
affiliates. AEG is responsible for sales of CoalSwitch(R) produced
from the Ashland Reference Facility a under its take-or-pay
agreement with PDI and entered into in June 2022. During H1 2023,
PDI informed Active Energy of a series of delays in both component
manufacture and permits. Whilst the permits were granted in May
2023, PDI has recently advised AEG that it now anticipates that
construction of the Ashland Facility will not be completed and
ready to commence production, during Q3 2023, as PDI had previously
indicated to the Company. In light of this, a renegotiation of the
existing take-or-pay agreement is underway between the parties to
reflect the delays in production.
The Company understands that, while the key components are on
site, the latest delays in completion of construction relate to
continuing delays in receipt of certain other components and
associated equipment for the plant. The Company has been informed
that PDI continues to plan for operations at the Ashland Facility
to commence as soon as possible and that PDI remains hopeful of
commencement of production later in November 2023.
Active Energy remains wholly supportive of PDI's efforts and is
working with PDI to support and ensure that production of
CoalSwitch(R) fuel will commence at the earliest opportunity.
3. Market development
Active Energy has been focused on market development activities,
both in the US and internationally. Since mid-2022, the number of
market enquiries for a 'black pellet alternative' for biomass fuels
has increased dramatically as the biomass industry urgently seeks
alternate sustainable solutions. Over the last 12 months, Active
Energy has created a market presence which is expected to secure a
future pipeline of fuel orders.
In the US, the first orders for fuel have been obtained and a
future sales pipeline is being established. This includes the first
US CoalSwitch(R) fuel order from Carolina Stalite ("Stalite"), an
aggregates producer based in North Carolina.
The sales activities and potential customer interest have also
focused beyond the conventional power generation industry and
include various heavy industries including the cement and pulp
& paper industries, where local and national emissions
regulations continue to expand. An active sales program continues
in anticipation of first fuel deliveries from the Ashland Reference
Facility and Active Energy remains confident of future commercial
success with prospective customers on the US East Coast now
finalizing terms for initial test volumes of fuel at identified
facilities.
To date, the Company has also obtained indications of interest
for the supply of up to 10,000 tonnes of fuel from various parties
based in the UK seeking the CoalSwitch(R) fuel as a supply
alternate with improved heating performance properties. Marketing
with future customers in the UK has indicated a future pipeline in
excess of 50,000 tonnes of CoalSwitch(R) fuel per annum. Additional
market interest has been received from Europe, Japan, and
South-East Asia.
4. Continued extension of IP Protection
As Active Energy continues to develop and expand its product
portfolio, it has become more important to ensure appropriate IP
protection. In the period under review, Active Energy was awarded
multiple patents for turning forest waste into clean energy. This
included two Patents from the United States Patent and Trademark
Office and one from the Canadian Patent Office. Post period end, a
further CoalSwitch(R) production patent was awarded by the US
Patent and Trademark Office.
In addition, Active Energy received trademarks from the United
States Patent and Trademark Office, the UK Intellectual Property
Office, the European Union Intellectual Property Office and the
Canadian Patent and Trademark Office for the CoalSwitch(R)
brand.
The award of the trademarks and patents remain an important step
for Active Energy as it grows its intellectual property portfolio
through the continued development of its CoalSwitch(R)
technologies. The increasing brand awareness for CoalSwitch(R) is
further assisting Active Energy in all its marketing
activities.
Post period end activities and outlook
Active Energy is actively addressing all the obvious
sustainability concerns for biomass fuels focusing on utilizing low
value waste feedstocks and producing high-grade fuels which can be
co-fired and consistently demonstrate improved burn and emissions
test results.
Post-period end, Active Energy's activities have accelerated
substantially both in terms of product development, including the
development of the various CoalSwitch(R) production technologies,
but also in respect of future production opportunities in the US
and internationally. The level of engagement from prospective
commercial partners seeking joint venture co-operation with Active
Energy has provided the Board with encouragement that Active
Energy's corporate strategy is the right one.
In September 2023, Active Energy was elected to join IBTC, an
organization promoting the sustainable production of vital
torrefied or carbonized technology products on a global scale, with
an aim to efficiently replace carbon-emitting fuels such as coal.
The organization aligns wholly with Active Energy's energy mission
to increase the awareness and education around cleaner, carbon
neutral fuels and their benefits.
Whilst the delays at the Ashland Reference Facility are
frustrating, Active Energy remains wholly supportive of PDI in its
efforts and anticipates that the new production and sales
opportunities for CoalSwitch(R) will prove all the hard work and
effort over the last two years will be commercially successful.
I would like to thank all my colleagues and commercial partners
for all their work and commitment toward the CoalSwitch(R) program
and look forward to achieving commercial success in the remainder
of 2023 and 2024.
Michael Rowan
CEO
26 September 2023
FINANCIAL REVIEW
Performance
The operating loss for the period was US$1.6 million (H1 22:
US$1.3 million), comprising administrative expenses.
The loss for the period includes unrealized foreign exchange
losses of US$1.1 million (H1 22: gains of US$3.2 million),
resulting from the weakening US Dollar relative to Sterling.
The basic and diluted loss per share were 1.67 cents (H1 22:
earnings per share of 0.82 cents).
Cash Flows
The Group reports a cash position at 30 June 2023 of US$1.2
million (31 December 2022: US$2.6 million).
Operating cash outflows of US$1.2 million (H1 22: US$1.4
million) reflect the Group's efforts to reduce expenditure and
preserve available cash resources.
Investing inflows in H1 22 of US$3.8 million comprised property
sale proceeds. There were no investing cash flows in H1 23.
Aside from minor loan repayments of US$9k (H1 22: US$7k) there
were no financing cash flows during the period.
Going concern
The interim financial statements have been prepared on a going
concern basis. Note 3 to the interim financial statements expands
on the directors' considerations relating to the Group's ability to
continue as a going concern. At 30 June 2023 the Group had cash of
US$1.2 million (31 December 2022: US$2.6 million).
PDI has been granted the permits required to construct and
operate the Ashland Reference Facility. Uncertainty around the
timing of production still remains which directly affects the
timing of revenue cash generation from sales of CoalSwitch(R) and
therefore the Group's future cash requirements . PDI has advised
that production is expected to commence in November 2023.
The Board has concluded that additional funding will likely be
required to execute the Board's strategy of commercializing
CoalSwitch(R). While there can be no guarantee that funding will be
available on terms that are acceptable to the Company, or at all,
the Directors remain positive that the Company will be able to
secure sufficient equity finance at the required time.
The financial statements do not include any of the adjustments
that would arise if the Company were to be unable to continue as a
going concern.
Directors' Responsibility Statement
The Directors confirm that to the best of their knowledge the
unaudited interim financial statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting'.
A list of the current Directors is available on the Company's
website: www.aegplc.com
Michelle Fagan
CFO
26 September 2023
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND OTHER
COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIODED 30 JUNE 2023
Restated
30 June
30 June 2023 2022
Unaudited Unaudited
Note US$ US$
CONTINUING OPERATIONS
REVENUE 7 - -
============= ============
GROSS PROFIT - -
Administrative expenses (1,598,916) (1,324,274)
------------- ------------
OPERATING LOSS (1,598,916) (1,324,274)
Net finance income/(costs) 5 18,175 (2,780)
Foreign exchange (losses)/gains (1,115,188) 3,154,251
------------- ------------
(LOSS)/PROFIT BEFORE TAXATION (2,695,929) 1,827,197
Taxation - -
------------- ------------
(LOSS)/PROFIT FROM CONTINUING
OPERATIONS 7 (2,695,929) 1,827,197
LOSS FROM DISCONTINUED OPERATIONS 7 (1,358) (505,938)
(LOSS)/PROFIT FOR THE PERIOD
- attributable to parent 7 (2,697,287) 1,321,259
============= ============
Basic and diluted (loss)/earnings
per share (US cents):
- Continuing operations 6 (1.67) 1.13
- Discontinued operations 6 - (0.31)
- Total operations 6 (1.67) 0.82
OTHER COMPREHENSIVE INCOME/(LOSSES)
Items that may be subsequently
reclassified to profit or loss:
Exchange differences on translation
of operations 1,155,425 (3,281,270)
TOTAL COMPREHENSIVE LOSS FOR
THE PERIOD (1,541,862) (1,960,011)
============= ============
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
31 December
30 June 2023 2022
Unaudited Audited
Note US$ US$
NON-CURRENT ASSETS
Intangible assets 9 8,064,585 8,064,585
Property, plant, and equipment 10 4,772,122 4,772,530
Other financial assets 861,917 823,744
13,698,624 13,660,859
------------- -------------
CURRENT ASSETS
Trade and other receivables 11 896,875 905,924
Cash and cash equivalents 13 1,241,681 2,614,472
-------------
2,138,556 3,520,396
------------- -------------
TOTAL ASSETS 15,837,180 17,181,255
============= =============
CURRENT LIABILITIES
Trade and other payables 12 1,317,379 1,199,796
Loans and borrowings 13 15,570 13,724
1,332,949 1,213,520
------------- -------------
NON-CURRENT LIABILITIES
Loans and borrowings 13 126,431 133,940
-------------
126,431 133,940
------------- -------------
TOTAL LIABILITIES 1,459,380 1,347,460
------------- -------------
NET ASSETS 14,377,800 15,833,795
============= =============
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 (4,695,669) (5,851,094)
Own shares held reserve (268,442) (268,442)
Convertible debt / warrant
reserve 690,937 690,937
Retained earnings (57,984,849) (55,373,429)
TOTAL EQUITY 14,377,800 15,833,795
============= =============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTH PERIODED 30 JUNE 2023
Restated
Restated Restated
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$
(Unaudited)
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) - - 1,321,259 - (1,960,011)
Realization of
revaluation
reserve - - - - - - 504,646 (504,646) -
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
=========== =========== ========== ============ ========== ============ ============= ============ ============
(Unaudited)
At 31 December
2022 18,935,765 55,349,883 2,350,175 (5,851,094) (268,442) 690,937 (55,373,429) - 15,833,795
Total
comprehensive
loss - - - 1,155,425 - - (2,697,287) - (1,541,862)
Share based
payments - - - - - - 85,867 - 85,867
At 30 June
2023 18,935,765 55,349,883 2,350,175 (4,695,669) (268,442) 690,937 (57,984,849) - 14,377,800
=========== =========== ========== ============ ========== ============ ============= ============ ============
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIODED 30 JUNE 2023
Restated
30 June 30 June
2023 2022
Unaudited Unaudited
Note US$ US$
Cash flows from operating activities
(Loss)/profit for the period (2,697,287) 1,321,259
Adjustments for:
Non-cash and non-operating items 1,411,862 (2,572,980)
Working capital decrease/(increase) 126,632 (157,222)
------------ ------------
Net cash outflow from operating activities 19 (1,158,793) (1,408,943)
Cash flows from investing activities
Purchase of property, plant, and equipment - (1,412)
Proceeds on sale of property, plant,
and equipment - 3,767,469
------------ ------------
Net cash inflow from investing activities - 3,766,057
------------ ------------
Cash flows from financing activities
Loans repaid (9,436) (6,918)
------------ ------------
Net cash outflow from financing activities (9,436) (6,918)
------------ ------------
Net (decrease)/increase in cash and
cash equivalents (1,168,229) 2,350,196
Cash and cash equivalents at beginning
of the period 2,614,472 1,940,871
Exchange losses on cash and cash equivalents (204,562) (193,853)
------------ ------------
Cash and cash equivalents at end
of the period 1,241,681 4,097,214
============ ============
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODED 30 JUNE 2023
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's annual 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 statements for the
half year reporting period ended 30 June 2023 have 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
2022. 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 are unaudited and do not
constitute full statutory accounts under Section 434 of the
Companies Act 2006. The financial information in respect of the
year ended 31 December 2022 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 highlighted a material uncertainty in relation to going
concern. The auditor did not qualify their report in respect of
this matter. The financial information for the half years ended 30
June 2023 and 30 June 2022 is unaudited. The financial information
for the year ended 31 December 2022 is audited.
The accounting policies applied by the Group in the interim
financial statements are the same as those applied by the Group in
its financial statements for the year ended 31 December 2022.
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 of 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 2022.
These interim financial statements were approved by the Board of
Directors on 26 September 2023.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODED 30 JUNE 2023
3. GOING CONCERN
In preparing the interim financial statements the directors are
required to make an assessment of the Company's ability to continue
as a going concern and whether it is appropriate to prepare the
interim financial statements on a going concern basis.
In May 2023 Player Design, Inc. were granted the permits
required to construct and operate the CoalSwitch(R) reference plant
in Ashland, Maine. Player Design have advised that production of
CoalSwitch(R) should commence in November 2023 but there remains
uncertainty around the timing and there have been previously
announced delays in construction of the plant. As a consequence,
there is uncertainty around when cash will be generated from sales
of the CoalSwitch(R) product.
The Company's cash flow forecasts include a number of key
assumptions:
-- the timing of the completion of the Ashland plant and commencement of CoalSwitch(R) production
-- the level and timing of revenue generated by sales of CoalSwitch(R)
-- the successful disposal of surplus assets and the timing of receipt of the disposal proceeds
-- the value and timing of receipt of pending tax credit claims
An independent assessment of the assets that are surplus to the
construction of the Ashland facility has been commissioned and the
directors await this report to consider whether a market exists to
dispose of these assets at a reasonable price. A tax credit claim
has been submitted to the UK tax authorities and a response is
anticipated within four to six weeks of the release of these
interim financial statements.
The directors have concluded that additional funding is likely
to be required in order to execute the Board's strategy of
commercializing CoalSwitch(R). While there can be no guarantee that
funding will be available on terms that are acceptable to the
Company, or at all, the directors remain positive that the Company
will be able to secure sufficient equity finance at the required
time.
However, the Board are of the opinion that the factors set out
above constitute material uncertainties in relation to the
Company's ability to continue as a going concern.
The financial statements do not include any of the adjustments
that would arise if the Company were to be 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.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODED 30 JUNE 2023
5. NET FINANCE GAINS/(COSTS)
30 June 30 June
2023 2022
Unaudited Unaudited
Continuing operations
Interest receivable 20,162 -
Loan interest (1,987) (2,780)
---------- ----------
Net finance cost of continuing operations 18,175 (2,780)
Discontinued operations
Loan interest and charges - (5,543)
---------- ----------
Net finance cost of discontinued operations - (5,543)
---------- ----------
Total operations 18,175 (8,323)
---------- ----------
6. LOSS/EARNINGS PER SHARE
Restated
30 June 30 June
2023 2022
Unaudited Unaudited
Weighted average ordinary shares in
issue (Number) 161,863,136 161,863,136
(Loss)/profit for the period (US$):
Continuing operations (2,695,929) 1,827,197
Discontinued operations (1,358) (505,938)
------------ ------------
Total operations (2,697,287) 1,321,259
============ ============
Basic (loss)/earnings per share (US
cents):
Continuing operations (1.67) 1.13
Discontinued operations - (0.31)
------------ ------------
Total operations (1.67) 0.82
============ ============
7. DISCONTINUED OPERATIONS
During 2021 the Group discontinued its sawmill and saw log
operations under the wood processing operating segment. During 2022
the Group sold the Lumberton property that was used for these
operations. The results of these businesses are disclosed as a
single line item in the Condensed Consolidated Statement of Income
in accordance with IFRS5.
The analysis between continuing and discontinued operations is
as follows:
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODED 30 JUNE 2023
7. DISCONTINUED OPERATIONS (CONTINUED)
Six months to 30 June 2023 Continuing Discontinued
(Unaudited) operations operations Total
US$ US$ US$
Revenue - - -
============ ============= ============
Gross loss - - -
Administrative expenses (1,598,916) (923) (1,599,839)
Operating loss (1,598,916) (923) (1,599,839)
Net finance income/(costs) 18,175 - 18,175
Foreign exchange losses (1,115,188) (435) (1,115,623)
------------ ------------- ------------
Loss before taxation (2,695,929) (1,358) (2,697,287)
Taxation - - -
------------ ------------- ------------
Loss for the period (2,695,929) (1,358) (2,697,287)
============ ============= ============
Cash outflows from operating
activities (1,157,870) (923) (1,158,793)
Cash outflows from investing
activities - - -
Cash outflows from financing
activities (9,436) - (9,436)
Six months to 30 June 2022 Restated Restated
(Unaudited) Continuing Discontinued
operations operations Total
US$ US$ US$
Revenue - - -
============ ============== ============
Gross loss - - -
Administrative expenses (1,324,274) (46,650) (1,370,924)
Loss on disposal of PPE - (455,140) (455,140)
Operating loss (1,324,274) (501,790) (1,826,064)
Net finance costs (2,780) (5,543) (8,323)
Foreign exchange gains 3,154,251 - 3,154,251
------------ -------------- ------------
Profit/(Loss) before taxation 1,827,197 (507,333) 1,319,864
Taxation - 1,395 1,395
------------ -------------- ------------
Profit/(Loss) for the period 1,827,197 (505,938) 1,321,259
============ ============== ============
Cash outflows from operating
activities (1,337,753) (71,190) (1,408,943)
Cash (outflows)/inflows from
investing activities (1,412) 3,767,469 3,766,057
Cash outflows from financing
activities (6,918) - (6,918)
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODED 30 JUNE 2023
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. The Sawmill and saw log
activities ceased during 2021 and are reported as discontinued
operations The results of these operations are 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 as
disclosed in the Strategic Report. The Group's reportable segments
are strategic business units that offer different products or
services.
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.
Six months to 30 June
2023 Wood Corporate
(Unaudited) CoalSwitch processing & Other Total
US$ US$ US$ US$
Revenue - - - -
Operating loss (455,920) - (1,142,996) (1,598,916)
Loss before tax (457,273) - (2,238,656) (2,695,929)
Tax credit/(charge) - - - -
------------------ ------------- ------------------ ------------
Loss for the period (457,273) - (2,238,656) (2,695,929)
================== ============= ================== ============
Total Assets 13,692,476 - 2,144,704 15,837,180
================== ============= ================== ============
Total Liabilities 865,295 1,532 592,553 1,459,380
================== ============= ================== ============
Other segmental information:
Capital Expenditure: - - - -
Additions to Intangibles - - - -
Depreciation & amortization - - 445 445
Six months to 30 June
2022 Corporate
(Unaudited) CoalSwitch Wood processing & Other Total
US$ US$ US$ US$
Revenue - - - -
Operating loss (194,341) - (1,129,933) (1,324,274)
(Loss)/profit before
tax (194,362) - 2,021,559 1,827,197
Tax credit/(charge) - - - -
----------------- ----------------- ------------------ ------------
(Loss)/profit 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 & amortization - - 709 709
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODED 30 JUNE 2023
9. INTANGIBLE ASSETS
Intellectual
property
US$
Cost
At 31 December 2021 5,659,386
Additions 730,213
Transferred from PPE 1,675,348
-------------
At 31 December 2022 (audited) 8,064,947
Additions -
At 30 June 2023 (unaudited) 8,064,947
=============
Accumulated amortization
At 31 December 2021 362
Amortization charge -
At 31 December 2022 (audited) 362
Amortization charge -
At 30 June 2023 (unaudited) 362
=============
Net book value
At 30 June 2023 (unaudited) 8,064,585
=============
At 31 December 2022 (audited) 8,064,585
=============
Intellectual property comprises costs incurred to secure the
rights and knowledge associated with the CoalSwitch(R) and
PeatSwitch technologies.
The recoverability of the intellectual property assets is
dependent on successfully commercializing CoalSwitch(R), which is
subject to a number of uncertainties including the ability of the
Group to access financial resources to develop and bring the
product to economic maturity and profitability.
The recoverable amount of the intellectual property has been
estimated based on a value in use calculation. The calculation uses
a discounted cash flow model covering a two and a half year period
and extrapolated to five years assuming no further growth, with a
discount rate of 12.5%. The estimated recoverable amount exceeds
the carrying value of the assets of the cash generating unit and
management have therefore concluded that the intellectual property
assets are not impaired.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODED 30 JUNE 2023
10. PROPERTY, PLANT AND EQUIPMENT
Furniture
Land & Plant and and office
Buildings equipment equipment Total
US$ US$ US$ US$
Cost
At 31 December 2021 4,492,049 9,318,697 13,170 13,823,916
Additions - 375,357 - 375,357
Disposals (4,492,049) (247,192) - (4,739,241)
Transfers to Intangible
Assets - (1,675,348) - (1,675,348)
Foreign exchange differences - - (1,405) (1,405)
------------ ------------ ------------ ------------
At 31 December 2022
(audited) - 7,771,514 11,765 7,783,279
Foreign exchange differences - - 545 545
------------ ------------ ------------ ------------
At 30 June 2023 (unaudited) - 7,771,514 12,310 7,783,824
============ ============ ============ ============
Accumulated depreciation
At 31 December 2021 198,000 2,102,366 10,597 2,310,963
Charge for the year 18,000 556 1,318 19,874
Impairment charges - 1,000,000 - 1,000,000
Disposals (216,000) (102,922) - (318,922)
Foreign exchange differences - - (1,166) (1,166)
------------ ------------ ------------ ------------
At 31 December 2022
(audited) - 3,000,000 10,749 3,010,749
Charge for the period - - 445 445
Foreign exchange differences - - 508 508
------------ ------------ ------------ ------------
At 30 June 2023 (unaudited) - 3,000,000 11,702 3,011,702
============ ============ ============ ============
Net book value
At 30 June 2023 (unaudited) - 4,771,514 608 4,772,122
============ ============ ============ ============
At 31 December 2022
(audited) - 4,771,514 1,016 4,772,530
============ ============ ============ ============
Plant and equipment additions relate to the CoalSwitch(R)
production facility in Maine. Following the sale of the Lumberton
property CoalSwitch(R) equipment has been relocated to Maine.
The recoverability of the plant and equipment assets is
dependent on successfully commercializing CoalSwitch(R), which is
subject to a number of uncertainties including the ability of the
Group to access financial resources to develop and bring the
product to economic maturity and profitability.
The recoverable amount of the plant and equipment has been
estimated based on a value in use calculation. The calculation uses
a discounted cash flow model covering a two and a half year period
and extrapolated to five years assuming no further growth, with a
discount rate of 12.5%. The estimated recoverable amount exceeds
the carrying value of the assets of the cash generating unit and
management have therefore concluded that the plant and equipment
assets are not impaired.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODED 30 JUNE 2023
11. TRADE AND OTHER RECEIVABLES
30 June 31 December
2023 2022
Unaudited Audited
US$ US$
Project advances 624,688 774,669
Prepayments 53,642 73,461
Other receivables 218,545 57,794
---------- ------------
896,875 905,924
========== ============
No impairment provisions have been made against trade and other
receivables.
The carrying value of trade and other receivables approximates
to fair value.
12. TRADE AND OTHER PAYABLES
30 June 31 December
2023 2022
Unaudited Audited
US$ US$
Trade payables 531,620 428,106
Social security and other taxes 3,173 34,584
Accruals and deferred income 632,586 587,106
Other payables 150,000 150,000
---------- ------------
1,317,379 1,199,796
========== ============
The carrying value of trade and other payables approximates to
fair value.
13. NET CASH
30 June 31 December
2023 2022
Unaudited Audited
US$ US$
Cash and cash equivalents 1,241,681 2,614,472
============ ============
Loans and borrowings - current liabilities (15,570) (13,724)
Loans and borrowings - non current liabilities (126,431) (133,940)
------------ ------------
Loans and borrowings - total liabilities (142,001) (147,664)
============ ============
1,099,680 2,466,808
============ ============
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2023
14. SHARE CAPITAL - ORDINARY SHARES
Number of
shares US$
Allotted, called up and fully paid
shares of 0.01p each
At 1 January 2022 5,665,209,745 786,867
Issue of shares 15 -
Share consolidation (5,503,346,624) -
----------------- ---------
At 31 December 2022 and 30 June 2023 161,863,136 786,867
================= =========
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 six month period ended 30 June 2022 the Group paid
$37,520 to INJ London Ltd for sales and marketing services. This
company is owned by Max Aitken. There were no transactions during
the six month period ended 30 June 2023.
At 30 June 2022 there were $91,667 of unpaid directors' salaries
and fees which have subsequently been paid. There were no unpaid
directors' salaries or fees at 30 June 2023.
16. CAPITAL COMMITMENTS
There were no capital commitments at 30 June 2023 (31 December
2022: Nil).
17. SUBSEQUENT EVENTS
There have been no disclosable events since the balance sheet
date.
18. RESTATEMENT OF PRIOR PERIOD
The statement of comprehensive income for the six month period
ended 30 June 2022 has been restated to correct an error in the
accounting for the disposal of revalued property, plant and
equipment during the period. This correction increases the loss
from discontinued operations for the period by $504,646 and
therefore reduces the profit for the period by the same amount. The
total comprehensive loss for the period and net assets at 30 June
2022 are not affected. The disposal was accounted for correctly in
the financial statements for the year ended 31 December 2022.
The Company consolidated its ordinary share capital during the
second half of 2022 and consequently the loss/earnings per share
for the six months ended 30 June 2022 have been restated to reflect
the consolidated share capital (see notes 6 and 14). The loss for
the period ended 30 June 2022 and net assets at 30 June 2022 are
unaffected.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2023
19. RECONCILIATION OF LOSS FOR THE PERIOD TO CASH OUTFLOWS FROM
OPERATING ACTIVITIES
Restated
30 June 30 June
2023 2022
Unaudited Unaudited
US$ US$
(Loss)/profit for the period (2,697,287) 1,321,259
Adjusted for:
Share based payment expense 85,867 188,062
Depreciation 445 19,265
Profit on disposal of property, plant,
and equipment - 212,626
Foreign currency translations 1,323,578 (2,999,414)
Finance expenses 1,972 7,876
Income tax - (1,395)
------------ ------------
(1,285,425) (1,251,721)
Decrease / (increase) in inventories - 27,250
Decrease in trade and other receivables 9,049 85,376
Increase/Decrease in trade and other
payables 117,583 (269,848)
------------ ------------
Net cash outflow from operating activities (1,158,793) (1,408,943)
============ ============
20. COPIES OF THE INTERIM FINANCIAL STATEMENTS
Copies of the interim financial statements will be made
available on the Company's website at www.aegplc.com .
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