TIDMAMPH
RNS Number : 2486O
Aggregated Micro Power Holdings PLC
01 October 2019
Aggregated Micro Power Holdings plc
("AMP", the "Group" or the "Company")
Full Year Results for the twelve months ended 31 March 2019
Aggregated Micro Power Holdings plc (AIM: AMPH), trading as AMP
Clean Energy, the specialist provider of distributed heat, power
and renewable fuels, announces results for the twelve months ended
31 March 2019.
Financial Highlights
-- Group revenues increased by 14.5% to GBP49.5m (2018: GBP43.2m restated)
-- Gross profit was GBP10.8m (2018: GBP5.1 restated)
-- Adjusted EBITDA loss decreased to GBP1.5m (2018: loss of GBP3.0m restated)
-- Net assets as at 31 March 2019 increased to GBP24.1m (2018: GBP13.7m restated)
-- The balance sheet does not include any recognition for future
deferred development fees that may be due from AMPIL(a)
Operational Highlights
-- Very strong progress in Urban Reserve with 50MWs consented,
an additional 32MWs in planning and on track for 150MWs to have
planning or be in planning by March 2020
-- Continued significant value from 29.1% stake in IncubEx with
market share in European carbon at 15% benefiting from global
growth in environmental markets
-- Difficult year in Wood Fuels due to restructuring, warm
weather, rising fibre prices, adverse FX movements and loss making
fixed price customer contracts and a GBP4.4m restatement to
retained earnings in the prior year accounts
-- Significant pipeline of projects; emerging opportunities in
roof-top solar, CHP and Waste Heat Recovery; and increased interest
from Infra funds
Post Period End
-- AMP announced that it had facilitated AMPIL in securing
further funding of GBP15.1m(a) for the financing of its biomass
boiler portfolio and Urban Reserve projects
Richard Burrell, Chief Executive of Aggregated Micro Power
Holdings plc, said:
"AMP has created a diversified business aligned to finding
solutions to address the pending climate crisis. The use of
distributed energy assets for heat and power, methods of managing
intermittency in power supply and the increased role of global
trading platforms in environmental markets will be critical to this
climate agenda. AMP has laid down foundations in each of these
areas and we are especially delighted with the progress in Urban
Reserve and the strong performance in IncubEx."
Annual Report and Notice of Annual General Meeting
The Company confirms that its report and accounts for the twelve
months ended 31 March 2019 (the "Annual Report") is being sent to
shareholders today and is available on the Company's website
www.ampcleanenergy.com/.
The Annual Report contains notice of the Company's Annual
General Meeting, which will be held at the Company's registered
office at 1 Dover Street, London W1S 4LD on 25 October 2019.
(a) Aggregated Micro Power Infrastructure 2 Limited ("AMPIL") is
a special purpose vehicle which is wholly owned by Law Debenture
Intermediary Corporation plc as trustee for general charitable
purposes. AMPIL can issue listed loan notes to fund renewable
energy projects acquired from AMP and/or other developers. AMPIL
has to date raised GBP67.1m from institutional and other
investors.
(b) IncubEx LLC is an incubator for exchange traded products,
services, and technology solutions. At its core, IncubEx is a
product and business development firm. The company works in
conjunction with its global exchange partner, European Energy
Exchange (EEX) and other leading service providers and stakeholders
to design and develop new financial products in global
environmental, reinsurance, and related commodity markets. The
company has a specific focus on innovation and continuous
improvement of products and services, including technology, trading
solutions, and operational efficiencies. The IncubEx team is
comprised of former key Climate Exchange executives and is uniquely
positioned to capture these opportunities with its partners. The
company was founded in 2016 and currently has offices in Chicago
and London. www.theincubex.com
Contacts
Aggregated Micro Power Holdings plc 020 7382 7800
Neil Eckert, Executive Chairman
Richard Burrell, CEO
Izzy Deterding, Investor Relations
finnCap Ltd 020 7220 0500
Ed Frisby/Simon Hicks (Corporate Finance)
Andrew Burdis/Richard Chambers (ECM)
Whitman Howard Ltd 020 7659 1234
Mark Murphy (Institutional Sales)
Nick Lovering (Corporate Finance)
About Aggregated Micro Power Holdings plc
The Group was established to develop, own and operate renewable
energy generating facilities. It specialises in the sale of wood
fuels and in the installation of distributed energy projects.
Trading as AMP Clean Energy, the Group sells high quality wood chip
and wood pellet to end customers throughout the UK, while its
projects division installs biomass boiler and biomass CHP systems
for a wide range of applications and customers. AMP is also active
in developing projects for stand-by power generation which aim to
balance the transmission grid at times of peak demand.
www.ampcleanenergy.com
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
Executive Chairman's Statement
This year has been a year of contrasts: a very disappointing
twelve months in wood fuels; but a strong out-performance in
project development and continued progress from IncubEx, in which
AMP holds a 29.08% investment.
The challenging year in wood fuels was impacted by the warm
weather, rising fibre prices, adverse FX movements and certain loss
making fixed price customer contracts. During the period, we were
also implementing a planned but significant restructuring in wood
fuels to integrate previously acquired businesses into a single
management, operational and brand platform. With new management now
in place, a number of issues came to our attention at the end of
the financial year relating to stock in our depots, which has led
to a significant restatement of last year's accounts and a
reduction in stock balances impacting the reported retained
earnings as at 31 March 2018. These issues are now firmly behind us
and we have a much improved sales and finance function together
with a more optimal fleet of vehicles.
On the other hand, our project development business has had a
very strong year and we have created a market-leading position in
flexible generation under the Urban Reserve brand. We have
increased our targets for this forthcoming year in Urban Reserve
and we have a number of parties who have expressed an interest to
finance our increasing portfolio of Urban Reserve assets.
Following the year end in early May 2019, Aggregated Micro Power
Infrastructure 2 plc ("AMPIL") secured further funding of GBP15.1m
to enable it to finance the initial tranche of Urban Reserve
projects and to purchase more clean energy assets in biomass and
roof-top solar. This fund now has GBP67.1m of outstanding bonds and
is increasingly reaching institutional scale.
In addition to the future deferred development fees that may be
due from AMPIL as a result of the projects that have been financed,
there is potential future upside in the valuation of AMP's 29.08%
interest in IncubEx. IncubEx is an incubator for exchange traded
products, services and technology solutions. It works in
conjunction with its global exchange partner European Energy
Exchange (EEX) to design and develop new financial products in the
global environmental, reinsurance and related commodity markets.
Incubex is growing rapidly in Europe and has recently announced the
roll out of a suite of North America products in partnership with
Nodal, EEX's US Power Exchange.
At a macro level we see the beginnings of a decoupling of the
electricity market into a market for energy increasingly supplied
by renewables (estimated to be more than 58% by 2050), and a market
for flexibility supplied by dispatchable gas plant, battery storage
and demand side response. We also see significant changes taking
place on the demand side, driven by the electrification of heat,
transport and industrial automation in buildings. These changes are
likely to put significant pressure on electricity networks,
particularly the lower voltage distribution networks where there is
most demand from users. This will require smarter more flexible
networks where energy flows are managed more locally. It will also
require the Distribution Network Operators (DNOs) to either invest
in their networks or defer network reinforcement by procuring
flexible generation from third party operators like ourselves.
AMP's strength lies in its ability to develop, operate and
aggregate small-scale assets and in doing so, deliver energy close
to the point of consumption, where and when it is needed most. As
the push for decarbonisation intensifies, the balance of power in
the energy sector is gradually shifting from large transmission
connected power plant towards smaller plants connected on
distribution networks both in "front" and "behind" the meter where
distribution losses can be minimised, network reinforcement can be
avoided and heat can be more usefully used.
AMP is a business that now spans the small scale renewable heat
and power sector, can cross sell products and services to a
customer base of over 4,000 boiler systems, is vertically
integrated in the biomass space covering fuel supply, operation
& maintenance and installation and financing. It is a business
with a project development division which covers renewable heat,
flexible generation and a wide range of small-scale clean energy
solutions which can be provided to our significant customer
base.
It only remains for me to thank our hardworking non-executive
directors and executive management team. I look forward to
reporting further progress due course.
Neil Eckert
Executive Chairman
30 September 2019
Strategic Report
In the year to 31 March 2019, group revenues increased by 14.5%
to GBP49.5m (2018: GBP43.2m restated), gross profit was GBP10.8m
(2018: GBP5.1m restated), loss from operations decreased to GBP4.4m
(2018: loss of GBP1.4m restated) and loss after tax was GBP5.7m
(2018: loss of GBP2.5m restated). Cash flow from operations used
was GBP9.5m (2018: cash flow generated GBP3.0m restated).
The segment performance on an adjusted basis is disclosed in
Note 3.
Net assets as at 31 March 2019 increased to GBP24.1m (2018:
GBP13.7m restated). The balance sheet does not include any
recognition for future deferred development fees that may be due
from Aggregated Micro Power Infrastructure 2 plc ("AMPIL").
The Company engaged in multiple acquisitions over the course of
the financial years ending 2017 and 2018 which has resulted in
significant exceptional and non-recurring expenses incurred during
the natural process of integrating and restructuring the wood fuel
business segment over the last 24 months. These exceptional and
non-recurring expenses are disclosed in the Income Statement as
non-underlying items in order to give the users of these financial
statements a clearer understanding of the normalised operational
performance as well as to provide relevant comparatives for the
forthcoming financial year.
All comparative figures in the remainder of this Strategic
Report relate to the restated accounts for the year ended 31 March
2018.
Prior period restatement
During the last two years, the Wood Fuels business underwent a
transformative restructuring to bring all operations into a single
management and brand platform which has further consolidated its
market leading position. This has resulted in significant
non-recurring costs from depot closures, office relocations,
redundancies and stock revaluations; all of which has been expensed
through the profit and loss account.
During the year, we also replaced the senior management in the
fuels business and following the appointment of the new finance
director in the fuels business at the start of 2019, we conducted
an in-depth company-led review into prior period stock balances
which included the level of accruals and the accounting for goods
received not invoiced.
This review has concluded that, stock as at 31 March 2018 had
been overstated due to the systems incorrectly accounting for stock
movements around the 2018 year end with certain costs incorrectly
being capitalised and, in addition, the closure of several depots
as part of the restructure not being accurately reflected on the
balance sheet. This arose due to multiple stock management systems
and specific challenges of those acquired companies not operating
in unison during the busy trading period known as the "Beast from
the East". Also during this period, there were a number of
purchases which were incorrectly accounted for due to a back-log in
processing leading to an understatement of accruals and goods
received not invoiced.
The aggregate adjustment to Retained Earnings as at 31 March
2018 was a negative impact of GBP4.4m. This restatement is fully
described in Note 33.
The restatement relates to issues pertaining to the previous
financial year. This means that the restated audited accounts for
the 12 months to 31 March 2018 have been adjusted and that there is
no adverse effect on the profit and loss for the year to 31 March
2019.
Following this review there is an increased focus on operational
controls and systems relating to stock management and invoicing and
corrective action has been taken.
AMP Clean Energy Group strategy
AMP Clean Energy's mission is to help UK businesses unlock the
potential of decentralised, low carbon energy which supports the
UK's transition to a low carbon economy.
AMP develops, finances and manages small-scale distributed
energy projects with a focus on biomass heat and flexible
electricity generation sites under its Urban Reserve brand. AMP is
vertically integrated offering wood fuel supply and O&M
services. It has an active development business with current
opportunities in developing Urban Reserve sites, biomass heat
projects and CHP. It has the intention to further increase the
scope of the platform to new areas including waste heat recovery
and behind the meter solar.
AMP reports its results through three business segments: Wood
Fuels (including O&M); Project Development; and HQ &
Investments. Note 3 sets out in detail the earnings relating to the
three individual business segments and provides a breakdown of the
adjusted EBITDA by business segment which is the metric used by the
Directors to compare the underlying performance.
Wood Fuels
Revenues from this segment were GBP43.6m (2018: GBP40m) and the
adjusted EBITDA loss was GBP3.04m (2018: GBP2.5m loss).
Profits from the Wood Fuels segment have been impacted by
significantly warmer weather during the financial year and
particularly during February and March 2019. At the same time the
Wood Fuels business was exposed to a number of loss making fixed
price customer contracts which were set when fiber prices were
lower and there was a more favorable foreign exchange rate.
At the same time, the business has undertaken a planned
restructuring to bring all operations into a single management and
brand platform which has further consolidated its market leading
position. This has resulted in significant non-recurring costs from
depot closures, fleet rationalization, office relocations,
redundancies and stock revaluations; all of which has been expensed
through the profit and loss account. Additionally, a number of loss
making heat supply contracts with the
Mi-Generation customer base were terminated during the year
resulting in an impairment of GBP0.5m.
AMP Clean Energy sells high quality, RHI compliant, wood chip
and wood pellet to end customers throughout the UK in the form of
fuel only contracts, heat contracts and/or fuels plus operation and
maintenance. AMP sells fuel to around 4,000 boiler systems and
provides service and maintenance to over 950 biomass systems via
AMP's majority interest in Highland Wood Energy Limited
("HWE").
Project Development
Revenues from this segment increased by 88% to GBP6.0m (2018:
GBP3.2m) and adjusted EBITDA increased to GBP3.1m (2018: GBP1.2m)
following the sale of one SPV relating to a grid balancing project
in the form of revenue.
Under the Urban Reserve projects team, AMP developed gas-fired
peaking plants which provide flexible generation at times of peak
demand. Development of Urban Reserve plants were increasingly
concentrated on smaller sites in areas of high electricity demand
in industrial and urban areas. These sites can be connected to the
distribution network at lower voltage levels in areas where grid
constraints offer significant system benefits in terms of avoided
grid reinforcement costs and will potentially support the
anticipated growth in electric vehicles and the electrification of
heat.
AMP develops small scale peaking plants (2.0MW-6MW) fuelled by
natural gas and are dispatchable remotely and on demand. Due to
their size and flexibility, our plants branded as Urban Reserve,
can respond to the same price volatility as larger peaking plant
but because they are smaller they can connect to the lower voltage
networks (11kV and below) where most demand side users are
connected. They therefore benefit from credits ("known as GDUOS")
paid by the DNOs for generating during peak times and in addition
can participate in the flexibility auctions which are becoming a
more common place as a way of DNOs procuring flexibility and
deferring network reinforcement. In June 2019, we arranged for an
Urban Reserve project to sign a 5-year contract with UKPN to
provide flexibility between November and February, Monday to Friday
between 5pm and 7pm. The project will be paid an availability
payment and a utilisation payment when called upon to generate.
The typical footprint of an Urban Reserve project was between
3,500-5,000 ft(2) which means that our plant can be located in
industrial estates on land that might not otherwise have any value,
making them an interesting proposition to landlords. We will also
offer landlords and their tenants the opportunity to buy power and
heat directly, where economically advantageous to do so.
Being small provides significant revenue opportunities but
presents the challenge of scaling: the need to develop and then run
multiple projects with equal rigour for the same cost per MW as
larger projects. We believe we were uniquely placed to scale this
business because of the development approach we have developed over
the years which is highly data and software driven and replicable
wherever possible. Technology platforms and software also enable
multiple engines across multiple sites to be operated at the same
time, as if they were all located on the same site. Finally, our
nationwide Operation and Maintenance capability developed in the
wood fuels business, will be utilised to service our engines across
different locations.
AMP also aims to deliver cost and carbon savings to high
intensity heat and power users through its specialist industrial
renewables development team. AMP's strategy is to develop, manage
and facilitate financing of distributed energy projects focusing on
biomass heat and power and in due course, waste heat recovery to
reduce on-site, behind the meter, electricity costs. AMP's strategy
is to work with project developers and third-party infrastructure
vehicles to generate a wide range of development fees from
different projects. AMP sources projects from various introducers
and installers and works with the customer account managers in its
wood fuels business to offer all our customers a range of clean
energy solutions which includes the ability for biomass boiler
owners to sell their boilers in exchange for a heat supply
contract.
HQ & Investments
There were no revenues generated from the HQ & Investments
Division during the 12 months to 31 March 2019 GBPnil (2018:
GBPnil) and the adjusted EBITDA reflecting group administrative
expenses was a loss of GBP1.6m (2018: GBP1.7m).
The Investments division takes non-controlling interests in
equity investments in companies aligned to our corporate strategy.
Also within this segment are head office, PLC costs and the costs
of undertaking research and development into new distributed energy
opportunities.
AMP has a 29.08% shareholding in IncubEx LLC which is fair
valued on the AMP Balance Sheet. As at 31 March 2019, this amounted
to GBP11.4m (31 March 2018: GBP11.4m). Whilst the business
continues to grow its market share in European carbon markets, the
Directors believe that it is prudent, given the early stage nature
of the business, to keep the balance sheet value unchanged in the
absence of a third party transaction for IncubEx shares. The
Directors have also undertaken a DCF analysis and have used a
prudent approach to the key assumptions to support the unchanged
value. A sensitivity analysis is set out in Note 24.
IncubEx is an incubator for exchange traded products, services
and technology solutions. IncubEx works in conjunction with its
global exchange partner, European Energy Exchange (EEX) and other
leading service providers and stakeholders to design and develop
new financial products in global environmental, reinsurance, and
related commodity markets (e.g. wood pellet). The company has a
specific focus on innovation and continuous improvement of products
and services, including technology, trading solutions and
operational efficiencies.
IncubEx has recently launched the first tranche of North
American Environmental products in conjunction with the Nodal
Exchange. These products include a range of emission and renewable
energy certificate futures and options contracts. The contracts are
listed and cleared alongside Nodal Exchange's own existing
portfolio of energy products.
Issuance of Ordinary Shares
In October 2018, AMP issued 8,500,000 Ordinary Shares in
connection with a placing of GBP8.5m. The funds raised facilitated
AMP in issuing a redemption notice in respect of the GBP10.01m
nominal of 8% Convertible Loan Notes ("CLNs") in the Company. A
total of 91% of Noteholders elected to convert GBP9.13m nominal of
CLNs into equity in the Company, creating a further 11,702,811 new
Ordinary Shares in the Company. The remaining 9% Noteholder
holdings to the value of GBP0.88m nominal redeemed their CLN's at
par. The placing was supported by both existing investors as well
as new institutional and private investors.
The remainder of the net proceeds of the placing amounting to
GBP7.2m was used for the Wood Fuels business working capital and
investment in growth, Urban Reserve and investment in our service
and maintenance business.
The increase in equity and the reduction in debt has
considerably strengthened the AMP balance sheet and has reduced the
on-going interest costs.
Post period end
In May 2019, AMPIL secured further funding of GBP15.1m and now
has GBP67.1m of Loan Notes in issue.
Under the terms of its contract with AMPIL, AMP receives an
upfront 10% development fee on financial close of each project and
when AMPIL Loan Notes are repaid, AMP is entitled to receive 100%
of the excess returns in the form of deferred development fees.
Industry and policy background
AMP maintains its focus on two main areas within the clean
energy industry; first, the decarbonisation of heat, and second;
the continued growth of flexible generation in urban areas using
small-scale natural gas generators.
The UK's decarbonisation strategy, as set out in the Clean
Growth Strategy, relies heavily on the increased electrification of
the UK's energy system. The renewable energy sector continues to
gain ground, being the fastest growing source of energy, with
Imperial College London's research showing that the UK's renewable
energy capacity surpassed fossil fuels for the first time in
2018.
Electricity markets are the only markets in the world where the
supply and demand of the commodity must be met instantaneously so
where supply is unable to meet demand, there will be power
shortages. Under National Grid's Future Energy Scenarios (2018)
demand for electricity is expected to increase by between 25% to
50% from 2017 levels, driven in large part by the electrification
of heat and transport. This will require a doubling of generation
capacity because of the intermittent nature of renewables and is
likely to create significant pressure on the electricity networks,
particularly in areas of high population density.
Decarbonisation of heat:
Decarbonisation of heat is a key feature of the Government's low
carbon strategy. Currently only around 6% of heat in the UK comes
from renewable sources, putting the UK well behind the EU target of
12% by 2020.
The latest report from the Committee on Climate Change
recommended a new target for net zero carbon emissions by 2050. Key
to achieving this target is the decarbonisation of heat. Much of
the focus is on electrifying heat using heat pumps and other forms
of electric heating (e.g. Infra-Red panels), on green gas and on
hydrogen. These changes will require significant investments in
networks (gas and electricity) and in buildings. They will also
take time to implement and in the meantime, we believe Biomass has
a very important role to play.
The Renewable Energy Association's report "Bioenergy in the UK -
vision to 2032 and beyond" found that the UK could almost triple
the use of bioenergy as a source of heat - from the 6% today to 16%
by 2032, with biomass a major contributor.
The report found that wood fuels could make a substantially
larger contribution to meeting heating needs for buildings and
industry, playing a particular role in providing low carbon heating
in off gas-grid properties and those where heating via heat pumps
is more challenging. It concluded that bioenergy, which uses
sustainable biomass and biofuels produced from wood, crops and food
wastes, is the lowest cost route to heat decarbonisation, whilst
also providing a pathway to the development and commercial
deployment of future technologies.
The Government's main tool for decarbonising heat is the
Renewable Heat Incentive (RHI). Under the RHI, 87% of renewable
heat to date has come from biomass, which has been particularly
successful in decarbonising community buildings, schools, hotels
and agricultural processes. What is now needed is greater support
for larger off-gas grid industrial processes to convert from fossil
fuels. Biomass can produce high grade heat and steam making it
ideally suited for process heat applications in contrast to
electric heating which is largely limited to space heating. We also
see a continued role for onsite gas CHP where heat and power can be
produced more efficiently and growing interest from very large heat
users to convert high temperature waste heat into electricity
The RHI remains open to new build projects until March 2021 and
provides 20 years of income based on the amount of heat that is
produced. Additionally, in May 2019, the Department for Business,
Energy and Industrial Strategy announced that the RHI Tariff
Guarantee would be extended to the 31 January 2021. Tariff
Guarantees allow RHI applicants to secure a tariff before their
system is commissioned. They are available for larger projects
including biomass heat systems larger than 1MW, all biomass CHP
systems and all geothermal systems. Prior to this announcement,
these projects needed to be completed before the 31 January 2020 to
qualify for a Tariff Guarantee. Installations that have already
secured a Tariff Guarantee will not benefit from this extension;
only new applications received after this announcement. The RHI
scheme strongly supports the wood fuel market of which AMP has a
c.30% market share. There is a commitment by the Government to
spend c. GBP4.5 billion between 2016 and 2021.
Beyond the RHI scheme, in the Clean Growth Strategy, the
Government has committed to phase out the installation of high
carbon fossil fuel heating in buildings, starting with new builds,
in the 2020s. This means a significantly reduced role for oil and
gas as heating systems are changed over to fossil-free systems.
Flexible generation:
The growth of smaller 'distributed' generation, energy storage
and demand side response is helping to provide the flexibility
required to enable the continued growth of renewables and ensure
security of supply.
The traditional model of transmission connected thermal plants
is becoming increasingly uneconomic because of renewables and the
downward pressure they are putting on average electricity prices.
At the same time the intermittent nature of renewables and their
growing share of generating capacity is increasing price volatility
in electricity markets. The costs of solar PV and offshore wind
have fallen significantly to the point where projects are now being
built without subsidies, which would indicate that these trends -
growing intermittency and volatility - are here to stay.
On the demand side, the expected growth in the electrification
of heat and transport and continued industrial automation are
likely to exacerbate constraints on the distribution networks in
areas of greatest population density. As a result, DNOs are looking
to procure flexible generation services from third party providers
as an alternative to funding grid reinforcement themselves.
The other challenge we face is regulatory change. In November
2018, the Government was forced to suspend the Capacity Market
(CM), its main policy tool to support the build of new capacity and
safeguard security of supply. The suspension followed a decision by
the European Court of justice to withdraw state aid approval after
it ruled that the UK Government had disadvantaged demand side
response in favour of fossil fuel generators. The overwhelming
consensus is that the CM will be reinstated as some point. However,
clearly this has been unhelpful for sentiment in general, even
though CM payments are expected to make up a relatively small
proportion of Urban Reserve revenues, at least in the near term and
does not have a material adverse effect on the project
pipeline.
The other area of potential disruption is the review of network
access and use of system charges currently being undertaken by
Ofgem, which will look at GDUOS credits among other things. Given
the contribution these credits make to the revenue stack, this
could have a negative impact on project returns, particularly for
projects located in areas of reverse power flows where distribution
connected generators are responsible for electricity flowing up
onto the transmission network. We endeavour to manage this risk by
ensuring that our projects are located in non-generation dominated
areas and in areas of existing or future demand side
constraint.
Conclusion:
On a global scale, we are seeing growing awareness from
governments and communities of the need to make a long-term
commitment to a more sustainable energy system, involving a reduced
reliance on finite fossil fuels, minimization of waste and less
reliance on a centralised grid infrastructure. Additional policy
interventions are likely to be needed to further encourage
innovation in clean energy to promote energy efficiency and we are
seeing this move into the centre stage of political debates.
Available policy levers include subsidy, regulation and taxation
which allow the industry to build credible business cases for major
investment in carbon reducing technology.
AMP Group objectives and KPIs for 2020 are as follows:
-- Aim to improve profitability whilst maintaining its market
leading position in the supply of wood fuels retailing (wood pellet
and wood chip) to end customers combining fuel supply with
operation and maintenance services to customers;
-- Grow pipeline of behind the meter heat and CHP projects and
undertake acquisitions of already installed systems to generate
development fees and future carried interest from AMPIL Loan Note
issuance;
-- Generate development fees and future carried interest from
natural gas peaking plants under the Urban Reserve brand;
-- Continue research into the evolving energy market and
consider opportunities in infrared heating and heat storage
solutions;
-- Continue to invest in businesses aligned to our corporate strategy and objectives; and
-- Supplement AMP's cash resources with additional new funding
from one or a combination of: the issue of new Ordinary Shares for
cash; bank debt; the refinancing of existing assets; raising
project finance from third party providers; asset financing of core
items of equipment; or any other compelling financing mechanism
where the Directors consider doing so to be in the best interests
of the company and its Shareholders.
Review of the 2018 KPIs Comments on performance during year
1. Maintaining position as the market Achieved. Turnover increased and the consolidation of all wood
leader in wood fuels retailing (wood fuels businesses under a single
pellet and wood chip) via organic brand - AMP Clean Energy - has helped to further strengthen our
growth within the Group. market position in wood fuels.
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2. Grow pipeline of biomass boiler Achieved. The results for Project Development include development
developments and existing boiler acquisitions fees earned on boiler buy
generating development fees and future backs and there remains a strong pipeline of industrial renewables
carried interest from AMPIL Loan Note and boiler investments
issuance. for AMPIL.
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3. Generate development fees and future Achieved. The results for Project Development reflect development
carried interest from natural gas fees earned on selling the
peaking plants development rights for circa 50 MWs of Urban Reserve assets to
AMPIL and the sale of development
rights to 20MW project connected at 33kV to another third party.
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4. Continue research into the evolving Achieved. AMP continues to explore opportunities to increase its
energy market and consider opportunities expertise in developing and
in EV charging, infrared heating, aggregating small-scale distributed energy assets and is
battery storage, renewable electricity specifically looking at ways to store
supply, green gas and CNG heat more effectively in collaboration with the University of
Birmingham.
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5. Supplement AMP's cash resources Achieved. The Company issued 8.5 million ordinary shares at 100p
with additional new funding from one per share as part of a placing
or a combination of: the issue of in October 2018. The placing proceeds were used to fund the call of
new Ordinary Shares for cash; the the Fixed Rate Secured
rationalising of the existing Company 8% Series I and Series II 2021 Convertible Loan Notes ("CLNs") in
structure; raising project finance the Company.
from third party providers; asset
financing of core items of equipment; The call of the CLNs showed significant confidence in the Company's
or any other compelling financing business plan with 91%
mechanism where the Directors consider of noteholders (a total of GBP9.13m nominal out of the GBP10.01m
doing so to be in the best interests nominal) electing to convert
of the company and its Shareholders. their CLNs into new ordinary shares in the Company.
---------------------------------------------------------------------
Risk factors
The principal risks of the business are documented below:
Staff retention risk Long term lock-in arrangements and incentivisation structure to retain key
staff through equity
ownership as well as contractual minimum notice periods for key staff
sufficient to ensure
sufficient time for recruitment/handover.
AMP has introduced a dedicated Human Resources function to ensure that Group
wide objectives
and performance is managed effectively at an individual level whilst at the
same time ensuring
that the well-being of staff is maintained to the highest level, consistent
with the size
of the current business.
.
Public policy risk AMP aims to minimise the construction timetable for individual projects.
including changes to Changes to public
renewable incentives policy mechanisms can adversely affect project returns but the Group is only
exposed during
the time between financial close and commencement of operations.
Where practicable, the Company will seek to use existing public policy measures
to lock-in
an entitlement to specific incentive rates before construction commences.
---------------------------------------------------------------------------------
Feedstock price risk For larger contracts, AMP aims to match customer contracts with specific fixed
prices from
feedstock suppliers to match volumes and avoid in-year exposure to rising input
prices. The
Company has established annual supply contracts with multiple suppliers to
minimise exposure
and supply shortages where these are available at a reasonable price. The
Company aims to
further protect its gross margins by maintaining a significant proportion of
spot customers.
Increasingly, where customers sign long term contracts, the terms allow for
fiber price rises
to be passed on periodically.
---------------------------------------------------------------------------------
Exchange rate risk The Company will consider forward buying of exchange rate instruments to
protect its downside
risk on importing fuels and machinery from abroad.
---------------------------------------------------------------------------------
Brexit The Brexit vote has three significant implications for the AMP Group:
1. Continued and general uncertainty as regards future Government energy policy
and delayed
decisions as regards implementation and timing of policy revisions to the RHI
and other subsidy
frameworks. The Brexit vote and its political aftermath appears to have slowed
down Government
decision making as ministerial and Government responsibilities have changed.
2. Where a 'no deal' Brexit scenario occurs, there will be the imposition of a
carbon tax
on carbon dioxide emissions (and other greenhouse gas emissions on a carbon
equivalent basis)
produced by UK installations that are currently in the EU ETS ("European
Emissions Trading
Scheme") but all indications expect this to be on broadly similar terms.
3. AMP imports wood pellet from Europe and although this year we have seen a
slight increase
in the strength of the pound, its overall weakness since pre-Brexit has made
imports more
expensive although they still remain competitive compared to UK produced wood
pellet. Exchange
rate fluctuations can cause a lag effect with gross profit margin when higher
import costs
cannot be immediately absorbed by increased selling prices.
AMP does not foresee import tariffs on wood pellet imported from the EU and
there are no tariffs
on fibre imports from outside the EU. There are also no tariffs on fibre
imports on WTO terms.
There may well be an increase in the need for Urban Reserve sites and therefore
additional
revenue opportunities if energy policy relating to the interconnectors with
Europe result
in restrictions or tariffs on electricity imported from Europe especially at
times of peak
demand.
---------------------------------------------------------------------------------
Planning risk The Company will seek to minimise the extent of exposure and financial
commitment prior to
successful planning approvals.
---------------------------------------------------------------------------------
Environment A wide variety of work equipment and machinery is used across the industry and
Agency / Health and Safety risks industrial
sites have potential exposure to environmental and Health and Safety ('H&S')
issues.
Health and Safety risk assessment has been undertaken, and relevant policies
are in place.
H&S review is given priority at management meetings and Board Meetings. Staff
training is
provided as appropriate.
---------------------------------------------------------------------------------
This Strategic Report was approved by the Board of Directors of
the company on 30 September 2019 and signed on their behalf by:
Richard Burrell
Chief Executive Officer
30 September 2019
Directors' Report
For the year ended 31 March 2019
Strategic report
A review of the business and future developments of the Group
are included within the strategic report above.
Results
Results for the year are set out in the Consolidated Statement
of Comprehensive Income and in the Consolidated Statement of
Changes in Equity.
The Group undertook a capital reduction in the year reducing
share premium by GBP16.2m.
Directors
Neil Eckert (Executive Chairman)
Richard Burrell (Chief Executive Officer)
Mark Tarry (Chief Financial Officer, Managing Director of Urban
Reserve)
Sir Laurence Magnus (Senior Non-Executive Director, Chair of the
Audit and Remuneration Committees)
Sir Brian Williamson (Non-Executive Director)
The Rt. Hon. Sir Nicholas Soames (Non-Executive Director)
Robert Bland DL (Non-Executive Director)
Auditors
All of the current Directors have taken all the steps that they
ought to have taken to make themselves aware of any information
needed by the company's auditors for the purposes of their audit
and to establish that the auditors are aware of that information.
The Directors are not aware of any relevant audit information of
which the auditors are unaware.
BDO LLP have expressed their willingness to continue in office.
A resolution to appoint BDO LLP as Auditors to the Company will be
proposed at the AGM.
Directors' responsibilities
The Directors are responsible for preparing the Strategic report
and Directors' report and the financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the Group financial statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union and the company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and
applicable law). Under company law the Directors must not approve
the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and company
and of the profit and loss of the Group for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state for the Group financial statements whether they have
been prepared in accordance with IFRS as adopted by the European
Union subject to any material departures disclosed and explained in
the financial statements;
-- state for the company financial statements whether applicable
UK Accounting Standards have been followed subject to any material
departures disclosed and explained in the financial statements;
and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Going concern
As at 31 March 2019 the group had GBP2.4m in cash and net
current assets of GBP0.3m. The directors and management have
prepared a cash flow forecast to September 2020, 12 months from the
date this report has been approved, which shows the group will
remain cash positive. The Directors and Management note that given
the seasonality of the fuels division revenues and the
unpredictability of earning revenues on development fees, the first
6 months of cash flow forecast contains sensitivity. The Directors
and Management manage this sensitivity by:
-- Risk weighting the development fee revenues based on prudent
chance of success of completion;
-- Managing working capital through enhanced debtor collection,
constant communication with key suppliers and managing costs in
line with movements in revenues;
-- Post year-end, the company has drawn down GBP3.25m from AMPIL
2 Asset Ltd which has been secured on the shares in AMP Biomass
Fuels Limited and this has replaced the GBP1.75m stock loan which
was outstanding at the year end. This revised loan agreement
expires July 2020 and as part of the cashflow forecast Management
and the directors have considered that this loan will be rolled on
maturity ; and
-- Monitoring other short term credit lines available to the group.
Whilst the Directors and Management continue to actively manage
the sensitivity in near term cash flows, the cash flow forecast
assumes that development fees are realised in a timely fashion each
quarter. The Directors and Management are confident that
development fees will be earned as part of the ordinary course of
business and have therefore prepared the financial statements on a
going concern basis. If insufficient development fees are earned
each quarter, the Directors and Management have alternative funding
arrangements available this would include support from the
directors and managing working capital which could include the
accelerated sale of inventory. Alongside this Management would look
to raise funds through monetising the value in the investment
division.
Website publication
The Directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Remuneration
The company remunerates the Directors in line with their
experience, the size of the company and its growth objectives. All
remuneration is reviewed and approved by the remuneration
committee. Details of Directors' salaries and benefits are set out
below and in Note 7.
Year ended 31 March Year ended 31 March
2019 2018
Director Salary Other Total Salary Other Total
benefits benefits
Neil Eckert 215,373 2,520 217,893 209,100 2,007 211,107
Richard Burrell* 107,687 21,537 129,224 104,550 20,910 125,460
Mark Tarry 147,084 15,870 162,954 142,800 15,301 158,101
Sir Laurence Magnus 25,000 - 25,000 25,000 - 25,000
Robert Williamson 15,000 - 15,000 15,000 - 15,000
The Rt. Hon. Sir Nicholas
Soames 15,000 - 15,000 15,000 - 15,000
Robert Bland DL 15,000 - 15,000 15,000 - 15,000
Total 540,144 39,927 580,071 526,950 38,218 564,668
========== =========== ========== ========= =========== =========
*In addition to the above, consultancy services to the Group
under a consultancy agreement between AMP Energy Services Limited
and Mathieson Capital Investment Management Limited were also
provided during the year. Mr Burrell has a significant interest in
Mathieson Capital Investment Management Limited. The fee for these
services was GBP107,678
(2018: GBP104,550).
Directors' interests
The following Directors held shares in the company as at 31
March 2019
Neil Eckert 9,166,647
Richard Burrell 3,195,116*
Mark Tarry 230,000
Sir Laurence Magnus 237,085
Sir Brian Williamson 128,571
The Rt. Hon. Sir Nicholas Soames 50,000
Robert Bland 337,922
*Includes 30,000 Ordinary Shares owned by Mathieson Capital Fund
Management LLP and entity controlled by Richard Burrell
Dividend
No dividend is recommended to be paid in respect of the 2019
period (2018: nil).
Events after the reporting period
Refer to Note 31 to the accounts for details of events after the
reporting date.
Financial instruments
Note 24 to the accounts sets out details of the Group's exposure
to financial instruments.
Directors and their disclosures
Details of the composition of the Board of Directors are set out
above.
Each of the persons who were Directors at the date the report
was approved have confirmed that:
(a) so far as the director is aware, there is no relevant audit
information of which the company's auditor is unaware, and
(b) he has taken all the steps that he ought to have taken as a
director in order to make himself aware of any relevant audit
information and to establish that the company's auditor is aware of
that information.
This Directors' Report was approved by the Board of Directors of
the company on 30 September 2019 and signed on their behalf by:
Richard Burrell
Chief Executive Officer
Statement of Compliance with the QCA Corporate Governance
Code
Background
Changes to AIM Rules in March 2018 require that all companies
listed on AIM need to apply to a recognised corporate code by 28
September 2018. AMP has chosen to implement the QCA Corporate
Governance Code ("QCA"). The QCA is based on ten broad principles
and a corresponding set of disclosures and states what they
consider to be appropriate arrangements for growing companies and
ask them to provide an explanation about how they are meeting each
principle through various disclosures. The way in which AMP meets
these principles is detailed on the Company's website and
incorporates information as to how the Board discharges its duties
under the Companies Act 2006, s.172:
www.ampcleanenergy.com/investors/corporate-governance
The Board considers that it does not depart from any of the
principles of the QCA and AMP's statement of compliance sets out
how the Company complies. This will be reviewed annually in line
with the requirements of the QCA code.
Constitution of the board
During the period there were five full board meetings. The Audit
Committee met twice during the period. The Remuneration Committee
did not meet and the Nomination Committee did not meet.
The board was comprised of the following:
Sir Laurence Magnus Senior Non-executive
Sir Brian Williamson Non-executive
The Rt. Hon. Sir Nicholas Soames Non-executive
Robert Bland DL Non-executive
Neil Eckert Executive Chairman
Richard Burrell Chief Executive Officer
Mark Tarry Chief Financial Officer and Head of Projects
Committees of the board
The Audit Committee is made up of Sir Laurence Magnus
(Chairman), Sir Brian Williamson, Robert Bland DL and The Rt. Hon.
Sir Nicholas Soames, with the company secretary serving as
secretary.
The Audit Committee's terms of reference requires the committee
to meet at least 2 times per year to coincide with key dates in the
company's financial reporting cycle and at such other times as the
Committee Chairman shall require. The Committee is responsible for
monitoring the integrity of the financial statements of the company
including those which are relied upon by the Board. The Committee
reviews the company's corporate reporting, risk management,
financial statements and internal financial controls, considers the
need for internal audits and the scope and planning of external
audits and the findings of the audits and keeps under review the
company's relationship with the external auditor.
The Remuneration Committee is made up of Sir Laurence Magnus
(Chairman), Sir Brian Williamson, Robert Bland DL and The Rt Hon.
Sir Nicholas Soames, with the company secretary serving as
secretary.
The Remuneration Committee shall meet at such times as the
Chairman of the Committee shall require. The purpose of the
Committee is to recommend to the Board the company's general policy
on remuneration and in particular to determine the remuneration
packages for the Executive Chairman and the Executive
Directors.
The Nomination Committee is made up of Sir Laurence Magnus
(Chairman), Sir Brian Williamson, Robert Bland DL and The Rt. Hon.
Sir Nicholas Soames, with the company secretary serving as
secretary.
The Committee shall meet at such times as the Chairman of the
Committee shall require. The purpose of the Committee is to review
the structure, size and composition (including the skills,
knowledge, experience and diversity) required of the Board and make
recommendations to the Board with regard to any changes.
Attendance at meetings
During the period there were five board meetings and the details
of attendees are set out below.
Sir Laurence Magnus (5/5)
Sir Brian Williamson (5/5)
The Rt. Hon. Sir Nicholas Soames (3/5)
Robert Bland DL (5/5)
Neil Eckert (4/5)
Richard Burrell (5/5)
Mark Tarry (5/5)
Bribery Act compliance
In 2014 the company adopted an Anti-Bribery and Corruption
Policy. This is kept under review by the Audit Committee under its
terms of reference.
Matters reserved for the Board
In June 2014 the company adopted a schedule of Matters Reserved
for the Board. This includes the approval of Group strategy and
policies, major acquisitions and disposals, major capital projects
and financing, Group budgets and material contracts entered into
other than in the ordinary course of business, reviewing the
functioning of the internal control environment and reviewing
corporate governance arrangements. The Board is responsible for
determining the nature and extent of the principal risks it is
willing to take in achieving its strategic objectives. It also
retains oversight of the risk management and internal control
systems with the aim that these are sound and protect shareholders'
interests. This is kept under review by the Audit Committee under
its terms of reference.
Relations with shareholders
The company endeavours to maintain communication with
shareholders through regulatory announcements, via the company's
website and by direct contact with its major shareholders. The
Board values the views of its shareholders and fosters continuing
dialogue with investment and fund managers, other investors and
equity analysts to ensure that the investing community receives an
informed view of the Group's prospects, plans and progress.
Independent auditor's report to the members of Aggregated Micro
Power Holdings Plc
Opinion
We have audited the financial statements of Aggregated Micro
Power Holdings Plc (the 'Parent Company') and its subsidiaries (the
'Group') for the year ended 31 March 2019 which comprise the
Consolidated Statement of Comprehensive Income, Consolidated
Statement of Financial Position, Consolidated Statement of Changes
in Equity, Consolidated Statement of Cash Flows, the Company
Statement of Financial Position and the Company Statement of
Changes in Equity and notes to the financial statements, including
a summary of significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. The financial reporting framework that has been
applied in the preparation of the Parent Company financial
statements is applicable law and United Kingdom Accounting
Standards, including Financial Reporting Standard 102 The Financial
Reporting Standard in the United Kingdom and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group's and of the Parent Company's affairs as at 31
March 2019 and of the Group's loss for the year then ended;
-- the Group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
-- the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
and the Parent Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the
UK, including the FRC's Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Conclusion relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- the Directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the Directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the Group's or the Parent Company's ability to continue
to adopt the going concern basis of accounting for a period of at
least twelve months from the date when the financial statements are
authorised for issue
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key Audit Matter Going Concern
Although the group is loss making, as disclosed
in note 1, these financial statements have been
prepared on a going concern basis. The directors
and Management have prepared a cash flow forecast
to the end of September 2020, 12 months from
the date this report has been approved, which
shows the group will remain cash positive.
The group experiences sensitivity in the first
6 months of its cash flow forecast due to the
unpredictability of monetising development projects
into cash and the seasonality of revenues on
the wood fuels business.
Given the key judgements and assumptions applied
by the Directors and Management in preparing
the cash flow forecast and the inherent sensitivities,
we continue to assess going concern as a significant
risk.
How we addressed We have agreed the opening cash position used
the key audit in the cash flow forecast to the audited position
matter in the at 31 March 2019.
audit
We have challenged the key estimates applied
to EBITDA forecasts through to both historical
performance and actual results for the FY2020
financial year. We have verified evidence to
support key estimates such as sales price and
purchase price of fibre to contracts. We have
compared the operating cost estimates to actual
costs incurred in FY2019 and results to date.
We have challenged Management as to the timing
of cash inflows in relation to project development
fees. We obtained Management's risk weighted
analysis for the completion of project developments.
We have considered the current status of these
projects and the timing to achieve financial
close.
We have sensitised the cash flows to evaluate
the minimum funding requirements.
We have verified the drawn down secured short
term working capital facility and assessed the
reasonableness of Management's judgement that
this will be rolled on maturity in July 2020.
We have discussed the progress of securing cash
from development fees in the next 4 months and
verified documentation to support Management's
effort to secure these.
We have discussed and challenged Management's
assertion that further funds could be secured
if development fees are not earned and agreed
supporting documentation to support this judgement.
We have reviewed the disclosure regarding going
concern in the directors' report and notes to
the financial statements to check these are
reasonable based on the work performed above.
---------------------------------------------------------
Key Observation
The disclosures regarding going concern in the directors'
report and notes to the financial statements reflect the key
judgements that the Directors and Management have made in
their going concern assessment.
Key Audit Matter Prior Year Adjustment to Stock and Goods Received
Not Invoiced (GRNI)
As reported in note 33, a material error was
identified in respect of the accounting for
the existence of inventory and completeness
of Good Received Not Invoiced and accruals in
the AMP Clean Energy business pertaining to
the 31 March 2018 year end.
The review conducted by Management concluded
that stock had been overstated due to systems
incorrectly accounting for stock movements around
the 2018 year end and the closure of several
depots as part of the restructure not being
accurately reflected on the balance sheet.
A further adjustment was noted whereby an intercompany
transaction between Forest Fuels and Billington
Bioenergy had not been eliminated on consolidation
and as a result stock was overstated at 31 March
2018.
During the 2019 audit it was also identified
that a number of purchases were accounted for
in the incorrect financial period due to a delay
in processing of invoices.
As discussed in note 33, as a result of the
matters set out in that note, adjustments have
been made to the figures for the year ended
31 March 2018. The aggregated impact on the
profit or loss for these adjustments is GBP4.4m.
How we addressed We have performed the following testing on
the key audit the prior year adjustments -
matter in the * We have obtained Management's updated stock listing
audit for 31 March 2018 and verified that stock counted as
part of the year end stock counts has been
appropriately included.
* Where stock counts occurred post year end we have
obtained Management's roll back reconciliation and
agreed a sample of transactions to proof of delivery
and despatch, in and out of the depots.
* For inventory relating to depots that had closed
before the 31 March 2018 year end, we have verified
supporting information (delivery dockets) to
demonstrate the last transaction occurring at each
depot.
* We have verified the contract with the key suppliers
to ascertain that the group did not have legal title
to stock incorrectly held on the balance sheet.
* We have obtained Management's updated GRNI and
Accruals schedule and have undertaken tests of
existence and completeness. This included verifying a
sample of transactions to supporting documents
(invoice and proof of delivery) to check that the
transaction has been included in the correct
accounting period. We also verified a sample of
physical invoices received post period end back to
the revised reconciliation and verified a sample of
post year end bank transactions to supporting
documents (invoice and proof of delivery) to check
that post year end payments have been included in the
correct accounting period.
* We have verified the FY2018 adjusted Group
consolidation to ensure that intercompany transaction
between Billington Biomass and Forest Fuels has now
been correctly eliminated.
* We have reviewed the disclosures in note 33
pertaining to the prior year adjustments to ensure
these adequately disclose the circumstances and
impact of the errors.
-------------------------------------------------------------------
Key Observation
The prior year adjustments pertaining to inventory and GRNI
have been appropriately accounted for and disclosed within
the financial statements.
Key Audit Matter Valuation of Incubex
As detailed in note 23, the group holds a 29.08%
investment in Incubex, an incubator for exchange
traded products, services and technology solutions
in environmental markets.
In accordance with the Investment in Associate
accounting policy in Note 2, the investment
is accounted for at fair value through profit
and loss in line with the venture capital organisation
exemption under IAS 28 'Investments in Associates
and Joint Ventures'. The investment is unlisted
and Management has prepared a discounted cash
flow (DCF) valuation to support the valuation
of the investment which is in line with the
previous value established by reference to the
last fundraising in Incubex.
Management are required to assess at each reporting
date whether they continue to meet the characteristics
of a venture capital organisation (VCO) under
IAS 28. If they do not meet the characteristics
of a VCO, the investment would need to be valued
under the equity method.
Given the key judgements applied by Management
in determining the nature and value of the investment
this is deemed a key audit matter
How we addressed We have assessed Management's judgement of,
the key audit whether the parent company still meets the characteristics
matter in the of venture capital organisation and is entitled
audit to elect to recognise the investment in Incubex
at fair value against the requirements of the
standard.
We agreed the underlying number of shares held
by the group to share certificates, as well
as the Incubex Share Register. We have confirmed
no further shares were acquired in the 2019
financial year.
We have obtained Management's DCF valuation
and challenged the key estimates applied. This
included agreeing:
* Year to date financial information to current market
trading data;
* Growth estimates to empirical market information;
* Costs to current year to date financial information
and;
* Discount rate to benchmarked industry information;
We sensitised the key estimates noted above
and verified these sensitivities to Management's
disclosure in note 24.
We interviewed Incubex key management personnel
to understand operational developments in the
year and strategic plans for the future.
We have reviewed the disclosure in the financial
statements to ensure these adequately disclose
Management's key judgements, estimates and sensitivities.
-------------------------------------------------------------
Key Observation
The investment in Incubex has been appropriately accounted
for in line with the requirements of the accounting standards
and the fair valuation of this investment is deemed appropriate
as at 31 March 2019.
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the
financial statements. Importantly, misstatements below these levels
will not necessarily be evaluated as immaterial as we also take
account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole
FY2019 FY2018
Group materiality GBP470,000 GBP300,000
------------------------ -----------------------
Basis for determining 1% of Revenue 6.5% of Profit before
materiality Tax (as reported
at the time)
------------------------ -----------------------
Parent Company Materiality GBP420,000 GBP270,000
------------------------ -----------------------
Basis for determining Capped at 90% of group Capped at 90% of
materiality materiality group materiality
------------------------ -----------------------
Group performance GBP305,000 GBP225,000
materiality
Basis for performance 65% of group materiality 75% of group materiality
materiality
-------------------------- --------------------------
Parent company performance GBP315,000 GBP202,500
materiality
-------------------------- --------------------------
Basis for performance 75% of materiality 75% of materiality
materiality
-------------------------- --------------------------
In 2018 we disclosed that a profit based measure (6.5% of profit
before tax) was used to calculate materiality. As disclosed in note
1, the 2018 results have been restated and the Group is loss
making. Although the Group is loss making, it is still a trading
entity and the readers of the financial statements will be
interested in the trading performance and therefore we have
calculated materiality based on 1% of revenue for 2019.
Whilst materiality for the financial statements as a whole was
GBP470,000, each significant component of the group was audited to
a lower level of materiality in the range of GBP50k to GBP350k.
Performance materiality has been set at 65% of materiality, this
percentage has been selected by assessing criteria such as historic
judgement levels, complexity, history of errors found, and the
control environment in the group. The performance materiality is
used to determine the financial statement areas that are included
within the scope of our audit and the extent of sample sizes during
the audit.
We agreed with the Audit Committee that we would report to the
Committee all individual audit differences identified during the
course of our audit in excess of GBP9,000 (2018:GBP8,000).
An overview of the scope of our audit
Our group audit was scoped by obtaining an understanding of the
group and its environment, including the group's system of internal
control, and assessing the risks of material misstatement in the
financial statements at the group level.
Our group audit scope focused on the group's largest trading
entity AMP Clean Energy, Highland Wood Energy Limited and AMP
Energy Services Limited which were subject to full scope audits.
Together with the parent company and its group consolidation, which
was also subject to a full scope audit, these represent all the
trading components of the group. All of the components including
the group were audited by BDO LLP.
Other information
The Directors are responsible for the other information. The
other information comprises the information included in the Audited
Report and Financial Statements, other than the financial
statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We
have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
Directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the Directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and
the Parent Company and its environment obtained in the course of
the audit, we have not identified material misstatements in the
strategic report or the Directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the Parent Company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of Directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors' responsibilities
statement set out above, the Directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the Directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group's and the Parent Company's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the
Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website : www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the Parent Company's members, as a
body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to
the Parent Company's members those matters we are required to state
to them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Parent Company and the
Parent Company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Matt Crane (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
30 September 2019
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2019
Restated
Year ended 31 March 2019 Year ended 31 March 2018
Underlying Non-underlying Total Underlying Non-underlying Total
Note GBP GBP GBP GBP GBP GBP
Continuing
operations
Revenue 4 49,539,100 - 49,539,100 43,162,969 - 43,162,969
Cost of sales (38,734,025) - (38,734,025) (38,048,103) - (38,048,103)
-------------- ---------------- -------------- -------------- ---------------- -------------------
Gross profit 10,805,075 - 10,805,075 5,114,866 - 5,114,866
Other operating
income 5 32,763 - 32,763 127,702 - 127,702
Administrative
expenses (14,906,419) - (14,906,419) (11,142,051) - (11,142,051)
Non-recurring
administrative
expenses 6 - - - - (461,951) (461,951)
Impairment of
intangible 11 - (463,306) (463,306) - - -
Impairment of
receivables 6 (615,067) - (615,067) - - -
Restructuring
expenses
incurred 6 - - - - (1,119,046) (1,119,046)
Restructuring
provision 6 - 56,532 56,532 - (569,678) (569,678)
------------------ ------ -------------- ---------------- -------------- -------------- ---------------- -------------------
Total
administrative
costs (15,521,486) (406,774) (15,928,260) (11,142,051) (2,150,675) (13,292,726)
Fair value
adjustment
on deferred
consideration 28 - 710,344 710,344 - (848,194) (848,194)
Gain on
financial
asset at fair
value
through profit
and
loss 23 - - - 7,507,175 - 7,507,175
Loss from
operations 6 (4,683,648) 303,570 (4,380,078) 1,607,692 (2,998,869) (1,391,177)
Finance income 25,286 - 25,286 3,105 - 3,105
Finance expense 8 (1,362,802) - (1,362,802) (1,353,830) - (1,353,830)
-------------- ---------------- -------------- -------------- ---------------- -------------------
Loss before tax (6,021,164) 303,570 (5,717,594) 256,967 (2,998,869) (2,741,902)
Tax
credit/(charge) 9 (203) - (203) 255,775 - 255,775
-------------- ---------------- -------------- -------------- ---------------- -------------------
Profit and total
comprehensive
income for the
year (6,021,367) 303,570 (5,717,797) 512,742 (2,998,869) (2,486,127)
Loss for the
year
attributable to:
Owners of the
business (5,514,629) (2,468,657)
Non-controlling
interest (203,168) (17,470)
(5,717,797) (2,486,127)
============== ================ ============== ============== ================ ===================
Basic and
diluted
loss per share
attributable
to the ordinary
equity
holders of the
parent 29 (11.39) (6.22)
Consolidated Statement of Financial Position
As at 31 March 2019
31 March 31 March
2019 2018
(As restated)
Note GBP GBP
Non-current assets
Property, plant and equipment 10 5,039,392 6,314,203
Investment in associate 23 11,410,120 11,410,120
Intangibles 11 9,295,160 10,200,006
Total non-current assets 25,744,672 27,924,329
-------------------------- ---------------
Current assets
Inventories 13 2,398,713 1,772,566
Trade and other receivables 14 11,295,093 11,925,685
Cash and cash equivalents 15 2,383,616 4,161,375
Total current assets 16,077,422 17,859,626
-------------------------- ---------------
Total assets 41,822,094 45,783,955
-------------------------- ---------------
Current liabilities
Trade and other payables 16 13,297,632 19,099,309
Provisions 19 6,000 569,678
Loans and borrowings 18 2,442,707 631,244
Total current liabilities 15,746,339 20,300,231
-------------------------- ---------------
Non-current liabilities
Loans and borrowings 18 1,215,633 10,304,022
Deferred contingent consideration 17 72,594 812,039
Deferred tax liability 9 673,975 695,157
Total non-current liabilities 1,962,202 11,811,218
-------------------------- ---------------
Total liabilities 17,708,541 32,111,449
-------------------------- ---------------
Net assets 24,113,553 13,672,506
-------------------------- ---------------
Equity
Paid up share capital 20 316,970 215,956
Share premium 20 17,106,745 16,192,845
Merger reserve 6,648,126 6,648,126
Other reserve 20 10,711,532 10,682,431
Convertible debt option reserve - 1,149,255
Retained deficit (10,862,641) (21,612,095)
-------------------------- ---------------
Equity attributable to equity shareholders
of the parent company 23,920,732 13,276,518
Non-controlling interest 30 192,821 395,988
-------------------------- ---------------
Total equity 24,113,553 13,672,506
-------------------------- ---------------
Consolidated Statement of Changes in Equity
For year ended 31 March 2019
As restated
Year ended Convertible
31 March Share Share Retained Merger Other debt option Non-Controlling Total
2018 capital premium deficit reserve Reserve reserve Total Interests Equity
GBP GBP GBP GBP GBP GBP GBP GBP GBP
Equity
as at 1
April 2017 189,052 12,519,616 (19,447,786) 6,648,126 9,046,180 1,453,603 10,408,791 - 10,408,791
Profit
for the
period - - (2,468,657) - - - (2,468,657) (17,470) (2,486,127)
------------- -------------
Total
comprehensive
income - - (2,468,657) - - - (2,468,657) (17,470) (2,486,127)
Issue of
share capital 26,904 3,681,229 - - 1,591,878 - 5,300,011 - 5,300,011
Equity
element
of convertible
debt - - 304,348 - - (304,348) - - -
Fair value
adjustment
of EMI
Options - - - - 44,373 - 44,373 - 44,373
Share issue
cost - (8,000) - - - - (8,000) - (8,000)
Non-controlling
interest
arising
on acquisition - - - - - - - 413,458 413,458
Year ended
31 March
2018 215,956 16,192,845 (21,612,095) 6,648,126 10,682,431 1,149,255 13,276,518 395,988 13,672,506
========= ============== ============== =========== ============ ===================== ============= ================= =============
Year ended Convertible
31 March Share Share Retained Merger Other debt option Non-Controlling Total
2019 capital premium deficit reserve Reserve reserve Total Interests Equity
GBP GBP GBP GBP GBP GBP GBP GBP GBP
Equity
as at 1
April 2018 215,956 16,192,845 (21,612,095) 6,648,126 10,682,431 1,149,255 13,276,518 395,988 13,672,506
Retained
income
opening
balance
adjustment - - (150,051) - - - (150,051) - (150,051)
--------- -------------- -------------- ----------- ------------ --------------------- ------------- ----------------- -------------
Equity
as at 1
April 2018 215,956 16,192,845 (21,762,146) 6,648,126 10,682,431 1,149,255 13,126,467 395,988 13,522,455
Profit
for the
period - (5,514,629) - - - (5,514,629) (203,167) (5,717,796)
--------- -------------- -------------- ----------- ------------ --------------------- ------------- ----------------- -------------
Total
comprehensive
income - - (5,514,629) - - - (5,514,629) (203,167) (5,717,796)
Issue of
share capital 42,500 8,457,500 - - - 8,500,000 - 8,500,000
Equity
element
of convertible
debt - - 209,550 - - (209,550) - - -
Conversion
of convertible 58,514 9,074,761 11,739 - - (939,705) 8,205,309 - 8,205,309
Capital
reduction (16,192,845) 16,192,845 - - - - - -
Share issue
cost - (425,516) - - - (425,516) - (425,516)
Fair value
adjustment
of EMI
Options - - - - 29,101 - 29,101 - 29,101
Year ended
31 March
2019 316,970 17,106,745 (10,862,641) 6,648,126 10,711,532 - 23,920,732 192,821 24,113,553
========= ============== ============== =========== ============ ===================== ============= ================= =============
Share capital: Nominal value of shares issued.
Share premium: Amount subscribed for share capital in excess of
the nominal value.
Capital contribution: Relates to funding from the shareholders
for which no share capital was issued and that funding meets the
definition of an equity instrument.
Retained deficit: All other net losses and transactions with
owners (e.g. dividends) not recognised elsewhere.
Merger reserve: Created on the issue of shares on acquisition of
its subsidiary accounted for in line with the Company's Act 2006
provisions.
Other reserve: Amount raised through the use of a cashbox
structure and applying merger relief on business combination where
the consideration for shares in another company includes issued
shares and on completion of the transaction, the company issuing
the shares will have secured at least a 90% equity holding in the
other company.
Convertible debt option reserve: Amount recorded as equity on
the initial fair value measurement of issued convertible loan
notes.
Consolidated Statement of Cash Flows
For year ended 31 March 2019
31 March 31 March
2019 2018
(As restated)
Note GBP GBP
Operating activities
Loss for the period after tax (5,717,797) (2,486,127)
Adjustments for:
Provision for restructure 19 - 569,678
Tax credit 9 203 (64,624)
Interest Income (25,285) (3,104)
Fair value adjustment on financial liabilities
at fair value through profit and loss 28 (710,344) 803,821
Gain on financial asset at fair value
through profit and loss 23 - (7,507,175)
Loss on disposal of property, plant &
equipment 149,103 18,351
Bad debt expense 309,389 -
Impairment loss 11 463,306 -
Finance Cost 8 1,362,802 1,353,830
Movement in foreign exchange 228,919 640,099
Amortisation of intangibles 11 421,378 421,810
Depreciation of property, plant and equipment 10 1,515,443 950,129
------------- ---------------
Cash flows from operating activities before
changes to working capital (2,002,883) (5,303,312)
Change in working capital, net of effects
from acquisition of subsidiaries
(Increase)/decrease in inventories (626,147) 1,298,788
(Increase)/decrease in trade and other
receivables 171,152 336,253
(Decrease)/increase in trade and other
payables (7,060,241) 6,630,413
(7,515,236) 8,265,454
------------- ---------------
Cash (used)/generated from operations (9,518,119) 2,962,142
------------- ---------------
Investing activities
Investment in associate - (1,500,000)
Purchase of property, plant and equipment (48,256) (1,661,474)
Proceeds from sale of assets 307,880 300,368
Interest received 25,285 3,104
Net cash used in investing activities 284,909 (2,858,002)
------------- ---------------
Financing activities
Share issue cost (425,516) (8,000)
Proceeds from invoice discounting 465,764 1,010,739
Redemptions of convertible loan notes (878,825) -
Proceeds from issue of ordinary shares 8,500,000 3,752,496
Proceeds from loan 1,750,000 -
Payments of interest on borrowings (889,855) (967,682)
Payments on finance lease (1,066,117) (549,284)
Net cash generated from financing activities 7,455,451 3,238,269
------------- ---------------
Net (decrease)/increase in cash and cash
equivalents (1,777,759) 3,342,409
Cash and cash equivalents at beginning
of period 4,161,375 818,966
Cash and cash equivalents at end of period 21 2,383,616 4,161,375
============= ===============
Notes to the Financial Statements
For the year ended 31 March 2019
1 Accounting policies
Basis of preparation
The company is a public limited company. It is limited by share
capital and is incorporated in England and Wales. Its registered
number is 08372177.
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the periods presented, unless otherwise
stated.
Comparative figures in the financial statements are in respect
of the audited twelve month period to 31 March 2018. The Statement
of income, Statement of Financial position, Statement of changes in
Equity and Cash Flow Statement have been restated to show the
impact of a prior year adjustment. Further details can be found in
Note 33.
These financial statements have been prepared under the
historical cost convention (except for items measured at fair value
through profit and loss) and in accordance with International
Financial Reporting Standards, International Accounting Standards
and Interpretations (collectively IFRSs) issued by the
International Accounting Standards Board (IASB) as adopted by the
European Union ("adopted IFRSs").
The preparation of financial statements in compliance with
adopted IFRS requires the use of certain critical accounting
estimates. It also requires Group management to exercise judgment
in applying the Group's accounting policies. The areas where
significant judgments and estimates have been made in preparing the
financial statements and their effect are disclosed in Note 2. The
financial statements are drawn up in Pound Sterling, the
presentational currency of the Group.
Changes in accounting policies
The group has applied the same accounting policies and methods
of computation in its annual consolidated financial statements as
in its 2018 annual financial statements, except for those that
relate to new standards and interpretations effective for the first
time for periods beginning on (or after) 1 January 2018, and will
be adopted in the 2019 annual financial statements. New standards
impacting the Group that will be adopted in the annual financial
statements for the year ended 31 March 2019, and which have given
rise to changes in the Group's accounting policies are:
-- IFRS 9 Financial Instruments; and
-- IFRS 15 Revenue from Contracts with Customers.
Details of the impact these two accounting standards are given
in Note 34. Other new and amended standards and Interpretations
issued by the IASB that will apply for the first time in the next
annual financial statements are not expected to impact the Group as
they are either not relevant to the Group's activities or require
accounting which is consistent with the Group's current accounting
policies.
There are a number of standards and interpretations which have
been issued by the International Accounting Standards Board that
are effective in future accounting periods that the Group has
decided not to adopt early. The most significant of these are:
-- IFRS 16 Leases (mandatorily effective for periods beginning on or after 1 January 2019)
-- IFRIC 23 Uncertainty over Income Tax Positions (effective 1 January 2019).
Details of the impact that these two standards will have are
given below. Other new and amended standards and Interpretations
issued by the IASB that will apply for the first time in the next
annual financial statements are not expected to impact the Group as
they are either not relevant to the Group's activities or require
accounting which is consistent with the Group's current accounting
policies.
IFRS 16 Leases (mandatorily effective for periods beginning on
or after 1 January 2019)
Adoption of IFRS 16 will result in the Group recognising right
of use assets and lease liabilities for all contracts that are, or
contain, a lease. This treatment would result in discounting future
lease payments and recognising the right of use of assets as a
fixed asset and long-term liability in the financial statements.
For leases currently classified as operating leases, under current
accounting requirements the Group does not recognise related assets
or liabilities, and instead spreads the lease payments on a
straight-line basis over the lease term, disclosing in its annual
financial statements the total commitment. The impact of future
periods is being considered and Management are in the process of
quantifying the impact.
The Board has decided it will apply the modified retrospective
adoption method in IFRS 16, and, therefore, will only recognise
leases on balance sheet under IFRS 16 from 1 April 2019. In
addition, it has decided to measure right-of-use assets by
reference to the measurement of the lease liability on that date.
This will ensure there is no immediate impact to net assets on that
date.
At 31 March 2019 operating lease commitments amounted to
GBP815,918 (see note 25), which is not expected to materially
different to the anticipated position on 31 March 2019 under IFRS
16 or the amount which is expected to be disclosed at 31 March 2020
under IFRS 16. Assuming the Group's lease commitments remain at
this level, the effect of discounting those commitments is
anticipated to result in right-of-use assets and lease liabilities
of approximately GBP1,464,735 being recognised on 1 April 2019,
however, further work still needs to be carried out to determine
whether and when extension and termination options are likely to be
exercised, which will result in the actual liability recognised
being higher than this.
Instead of recognising an operating expense for its operating
lease payments, the group will instead recognise interest on its
lease liabilities and amortisation on its right-of-use assets.
IFRIC 23 Uncertainty over Income Tax Positions
IFRIC 23 clarifies how to recognise and measure current and
deferred income tax assets and liabilities when there is
uncertainty over income tax treatments. There is no expected impact
on the result from operations of the Group.
Basis of consolidation
Where the company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the
company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between Group
companies are eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the acquisition method. In the
statement of financial position, the acquirer's identifiable
assets, liabilities and contingent liabilities are initially
recognised at their fair values at the acquisition date. The
results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is
obtained. They are deconsolidated from the date on which control
ceases.
Business combinations
The purchase method of accounting is used to account for all
business combinations regardless of whether equity instruments or
other assets are acquired. Cost is measured as the fair value of
the assets given, shares issued or liabilities incurred or assumed
at the date of exchange. Where equity instruments are issued in a
business combination, the fair value of the instruments is their
published price at the date of exchange unless, in rare
circumstances, it can be demonstrated that the published price at
the date of exchange is an unreliable indicator of fair value and
that other evidence and valuations methods provide a more reliable
measure of fair value. Transaction costs arising on the issue of
equity instruments are recognised directly in equity.
Except for non-current assets or disposal Groups classified as
held for sale (which are measured at fair value less costs to
sell), all identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition
date.
The excess of the cost of the business combination over the net
fair value of the Group's share of the identifiable net assets
acquired is recognised as goodwill. If the cost of acquisition is
less than the Group's share of the net fair value of the
identifiable net assets of the subsidiary, the difference is
recognised as a gain in the Statement of Comprehensive Income, but
only after a reassessment of the identification and measurement of
the net assets required.
Where settlement of any part of the consideration is deferred,
the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the
Group's incremental borrowing rate, being the rate at which similar
borrowing could be obtained from an independent financier under
comparable terms and conditions.
Goodwill
Goodwill on acquisition is initially measured at cost being the
excess of the cost of the business combination over the Group's
interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities. Contingent consideration is
included in cost at its acquisition date fair value and, in the
case of contingent consideration classified as a financial
liability, re measured subsequently through profit and loss. Direct
costs of acquisition are recognised immediately as an expense.
Following initial recognition, goodwill is measured at cost less
any accumulated impairment losses. Goodwill is not amortised. As at
the acquisition date, any goodwill acquired is allocated to each of
the cash-generating units expected to benefit from the
combination's synergies. Goodwill is reviewed for impairment,
annually or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired. Impairment is
determined by assessing the recoverable amount of the
cash-generating unit to which the goodwill relates. Where the
recoverable amount of the cash-generating unit is less than the
carrying amount, an impairment loss is recognised in the Statement
of Comprehensive Income. An impairment loss recognised for goodwill
is not reversed.
Where goodwill forms part of a cash-generating unit and part of
the operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the
carrying amount of the operation when determining the gain or loss
on disposal of the operation. Goodwill disposed of in this
circumstance is measured on the basis of the relative values of the
operation disposed of and the portion of the cash-generating unit
retained.
Intangibles acquired in a business combination
Intangible assets acquired separately are capitalised at cost
and subsequently amortised on a straight-line basis over their
useful economic lives.
Intangibles are recognised on business combinations, if they are
separately identifiable from the acquired entity or arise from
other contractual/legal rights. The amounts ascribed to such
intangibles are arrived at by using appropriate valuation
techniques (see critical estimates and judgements section).
Intangibles acquired through a business combination are recognised
at fair value as at the date of acquisition. Following initial
recognition, the cost model is applied.
The significant intangibles recognised by the Group, their
useful economic lives and the methods used to determine the cost of
intangibles acquired in a business combination are as follows:
Intangible asset Useful economic life Valuation method
Brand 20 years Estimated discounted cash flows
Long term contracts and customer relationships 10 years
Estimated discounted cash flows
Intangible assets are tested for impairment where an indicator
of impairment exists, and in the case of indefinite life
intangibles annually, either individually or at the cash generating
unit level. Useful lives are also examined on an annual basis and
adjustments, where applicable, are made on a prospective basis.
Gains or losses arising from de-recognition of an intangible asset
are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognised in the
Statement of Comprehensive Income when the net asset is
derecognised.
Going concern
As at 31 March 2019 the group had GBP2.4m in cash and net
current assets of GBP0.3m. The directors and management have
prepared a cash flow forecast to September 2020, 12 months from the
date this report has been approved, which shows the group will
remain cash positive. The Directors and Management note that given
the seasonality of the fuels division revenues and the
unpredictability of earning revenues on development fees, the first
6 months of cash flow forecast contains sensitivity. The Directors
and Management manage this sensitivity by:
-- Risk weighting the development fee revenues based on prudent
chance of success of completion;
-- Managing working capital through enhanced debtor collection,
constant communication with key suppliers and managing costs in
line with movements in revenues;
-- Post year-end, the company has drawn down GBP3.25m from AMPIL
2 Asset Ltd which has been secured on the shares in AMP Biomass
Fuels Limited and this has replaced the GBP1.75m stock loan which
was outstanding at the year end. This revised loan agreement
expires July 2020 and as part of the cashflow forecast Management
and the directors have considered that this loan will be rolled on
maturity ; and
-- Monitoring other short term credit lines available to the group.
Whilst the Directors and Management continue to actively manage
the sensitivity in near term cash flows, the cash flow forecast
assumes that development fees are realised in a timely fashion each
quarter. The Directors and Management are confident that
development fees will be earned as part of the ordinary course of
business and have therefore prepared the financial statements on a
going concern basis. If insufficient development fees are earned
each quarter, the Directors and Management have alternative funding
arrangements available this would include support from the
directors and managing working capital which could include the
accelerated sale of inventory. Alongside this Management would look
to raise funds through monetising the value in the investment
division.
Revenue recognition
Sale of goods
Performance obligations and timing of revenue
The group recognises wood fuel sales on delivery to the
customer.
Determining the transaction price
Price is determined either under a fixed contract or spot sale
at a price per tonne (Pellet) or meter cube (Chip). These prices
are linked to market prices.
Allocating amounts to performance obligations
The Group's contracts with customers for the sale of wood fuels
generally includes one performance obligation being the delivery of
such wood fuel. Revenue from the sale of wood fuel is recognised at
a point in time when control of the asset is transferred to the
customer which is upon delivery.
This recognition is in accordance with IFRS 15.
Rendering of services
Operations and maintenance contracts
Performance obligations and timing of revenue
The Group's contracts with customers to provide operations and
maintenance services which includes scheduled maintenance services
and emergency call out services. These services are either combined
into a single customer contract or are supplied separately.
Determining the transaction price
Price is determined either under an annual fixed price contract
or at an agreed call out fee.
Allocating amounts to performance obligations
Maintenance service revenue has been recognised on a straight
line basis rather than on delivery of the service. IFRS 15 requires
revenue to be recognised at the time when the services performance
obligations (i.e. the services required under the contract) are
completed. There is however no impact on an annual basis as these
timing differences between revenue recognition and the delivery of
the performance obligations, are eliminated over the course of a
full year as contract terms run concurrently with the year end and
cyclical heating season.
This recognition is in accordance with IFRS 15.
Emergency call out services and any spare parts used during
these call outs are recognised at a point in time when the service
is requested and in accordance with IFRS 15.
RHI support and consultancy service
The Group's RHI support and consultancy services are provided
throughout the year via a monthly subscription service. The revenue
is recognised over time as the services are rendered as the
customers simultaneously receive and consume the benefits provided
by the Group.
This recognition is in accordance with IFRS 15.
Heat Supply sales
Performance obligations and timing of revenue
The Group's contracts with customers to provide heat supply
sales is a combined contract which includes:
-- the supply of heat from the combustion of wood fuel; and,
-- the provision of operations and maintenance services.
Each service has distinct performance obligations and is
delivered at different times. Revenue from these contracts however
has been recognised as a combined service on a GBP/Kilowatt-hour
basis multiplied by the amount of heat supplied as measured on the
heat meter. IFRS 15 dictates individual streams should be
recognised when the performance obligations under each has been
completed.
Determining the transaction price
Price is determined under a fixed term contract at a price per
Kilowatt-hour.
Allocating amounts to performance obligations
Revenue recognition on the heat supply component is recognised
on a per GBP/Kilowatt-hour basis as heat is used and obligations
discharged when heat is generated. The sale of heat through
discharge and consumption is directly correlated to metered heat
generation on a per Kilowatt-hour basis.
The operations and maintenance services component revenue is an
immaterial percentage of the revenue generated from these
contracts. As the contracts run concurrently with the financial
year and the heating season there is no impact on an annual basis
regarding potential differences between revenue recognition and
delivery of the performance obligations as the contract terms run
concurrently with the year end and cyclical heating season.
This recognition is in accordance with IFRS 15.
Project revenue and development fees
Performance obligations and timing of revenue
The Group's contracts with customers to provide asset management
services, asset development, and portfolio management service
generally all have one performance obligation.
Allocating amounts to performance obligations
Asset management services are recognised on a straight-line
basis over time, as the benefits provided by the Group are received
and consumed in equal measure over the course of a year. Asset
development costs are expensed save for grid connection deposits
which are held on balance sheet at cost. These costs are recharged
when projects are brought to financial close.
Asset development fees are recognised when they are probable,
which is at a point in time when control has passed to the end
customer. Control is considered to have passed when all key
contracts have been signed and substantially all work has been
completed or when payment of the project is received. Development
costs associated with these projects are typically passed on to the
buyer and where this is not possible these costs are considered for
impairment in line with IFRS 9 using the simplified model.
Portfolio management service fees are recognised on a
straight-line basis over time, as the benefits provided by the
Group are also received and consumed in equal measure over the
course of a year.
This recognition is in accordance with IFRS 15.
Retirement Benefits: Defined contribution schemes
Contributions to defined contribution schemes are charged to the
profit and loss in the year to which they relate.
Property, plant and equipment
All property, plant and equipment are stated at cost less
depreciation. Such costs include costs directly attributable to
making the asset capable of operating as intended. Costs
attributable to assets under construction are included within
the capitalised costs of those assets and include refurbishment
and commissioning costs.
Items of property, plant and equipment are initially recognised
at cost. As well as the purchase price, cost includes directly
attributable costs.
Depreciation on assets under construction does not commence
until they are complete and available for use.
Depreciation is provided on all items of property, plant and
equipment so as to write off their carrying value over the expected
useful economic lives. It is provided at the following rates:
Plant and machinery 3-20 years straight Office equipment 3-5 years straight
- line - line
Land and upgrade 3-20 years straight Computer equipment 3-5 years straight
- line - line
Fixtures and fittings 3-5 years straight Motor vehicle 3-5 years straight
- line - line
Impairment
Non-financial assets are subject to impairment tests whenever
events or changes in circumstances indicate that their carrying
amount may not be recoverable. Where the carrying value of an asset
exceeds its recoverable amount (i.e. the higher of value in use and
fair value less costs to sell), the asset is written down
accordingly.
Impairment charges are included in profit and loss, except to
the extent they reverse gains previously recognised in other
comprehensive income. An impairment loss recognised for goodwill is
not reversed.
Financial instruments
The Group classifies its financial assets and liabilities as
receivables and loans, discussed below, due to the purpose for
which the asset or liability was acquired.
Financial assets
Financial assets are classified as amortised cost or financial
assets at fair value through profit and loss (FVPL).
The Group's financial assets mainly comprise of cash, trade and
other receivables, and investments in associates. Cash comprises
cash in hand and deposits held at call with banks.
Amortised Cost
These assets principally arise from the provision of goods and
services e.g. trade receivables.
They are initially recognised at fair value plus transaction
costs that are directly attributable to their acquisition or issue,
and are subsequently carried at amortised cost using the effective
interest rate method, less provision for impairment.
Impairment provisions for current and non-current trade
receivables are recognised based on the simplified approach within
IFRS 9 using a provision matrix to determine the determination of
the lifetime expected credit losses. During this process the
probability of the non-payment of the trade receivables is
assessed. This probability is then multiplied by the amount of the
expected loss arising from default to determine the lifetime
expected credit loss for the trade receivables. For trade
receivables, which are reported net, such provisions are recorded
in a separate provision account with the loss being recognised
within administration expenses in the consolidated statement of
comprehensive income. On confirmation that the trade receivable
will not be collectable, the gross carrying value of the asset is
written off against the associated provision.
The Group's financial assets measured at amortised cost comprise
trade and other receivables and cash and cash equivalents in the
consolidated statement of financial position.
Financial assets at Fair Value through Profit and Loss
Financial assets designated as at Fair Value through Profit and
Loss ("FVPL") upon initial recognition, this includes an investment
in associate. This financial asset is designated upon initial
recognition on the basis that it is the first of a Group of
financial assets that are managed and have their performance
evaluated on a fair value basis, in accordance with risk management
and investment strategies of the Group.
In accordance with the exemption within IAS 28 Investments in
Associates and Joint Ventures, the Group does not account for its
investments in associates using the equity method. Instead, the
Group has elected to measure its investments in associates at
FVPL.
This investment in associate has initially been recognised in
the statement of financial position at fair value. The investment
is carried in the statement of financial position at fair value
with changes in fair value recognised in the consolidated statement
of comprehensive income in the finance income or expense line.
Interest and dividends earned or paid on these instruments are
recorded separately in interest revenue or expense and dividend
revenue or expense in the statement of comprehensive income.
Financial liabilities
The Group classifies its financial liabilities into one of two
categories, depending on the purpose for which
the liability was acquired. The accounting policy for each category is as follows:
Financial liabilities at fair value through profit and loss
This category comprises the deferred contingent consideration on
acquisitions which is discussed in more detail in note 24. This
consideration is revalued at each reporting date. It is adjusted
against goodwill within 12 months following the acquisition and
through the income statement thereafter.
They are carried in the consolidated statement of financial
position at fair value with changes in fair value recognised in the
consolidated statement of comprehensive income.
Fair value measurement
The Group measures its investment in associate at fair value at
each reporting date. Fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place
either in the principal market for the asset or liability or, in
the absence of a principal market, in the most advantageous market
for the asset or liability. The principal or the most advantageous
market must be accessible to the Group. The fair value of an asset
or a liability is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming that market participants act in their economic best
interest.
For all other financial instruments not traded in an active
market, the fair value is determined by using valuation techniques
deemed to be appropriate in the circumstances. Valuation techniques
include the market approach (i.e. using recent arm's length market
transactions adjusted as necessary and reference to the current
market value of another instrument that is substantially the same).
Where an arm's length valuation is unavailable the Group uses the
Discounted Cash Flow valuation methodology.
Valuation techniques for contingent consideration is assessed
based on the full value of the potential consideration adjusted for
the risk of the projects not being successful.
The Group has classified the investment in its associate as
Level 3.
Other financial liabilities
The second category comprises other financial liabilities which
includes the following items:
Loans and borrowings are initially recognised at fair value net
of any transaction costs directly attributable to the issue of the
instrument. Such interest bearing liabilities are subsequently
measured at amortised cost using the effective interest rate
method, which ensures that any interest expense over the period to
repayment is at a constant rate on the balance of the liability
carried in the consolidated statement of financial position. For
the purposes of each financial liability, interest expense includes
initial transaction costs and any premium payable on redemption, as
well as any interest or coupon payable while the liability is
outstanding. Loans and borrowings include an invoice discounting
facility.
Liability components of convertible loan notes are measured as
described further below.
Trade payables and other short-term monetary liabilities, which
are initially recognised at fair value and subsequently carried at
amortised cost using the effective interest method.
The option to acquire the resulting share capital of HWE was
initially recognised at their fair value on acquisition and is
subsequently fair valued at each reporting period.
Convertible debt
The proceeds received from the issue of the convertible debt are
allocated between their financial liability and equity components.
The financial liability is initially recognised at fair value
(being the discounted cash flows using a market rate of interest
that would be payable on a similar instrument that does not include
an option to convert). Subsequently, the financial liability is
measured at amortised cost.
The equity component is assigned to the residual amount after
deducting this fair value liability from the fair value of the
financial instrument as a whole. It is recognised in the
'Convertible debt option reserve' within shareholders' equity, net
of income tax effects. More information is provided in note 18.
Foreign currency
Transactions entered into by Group entities in a currency other
than the currency of the primary economic environment in which they
operate (their "functional currency") are recorded at the rates
ruling when the transactions occur. Foreign currency monetary
assets and liabilities are translated at the rates ruling at the
reporting date. Exchange differences arising on the retranslation
of unsettled monetary assets and liabilities are recognised
immediately in profit and loss.
Share Capital
Financial instruments issued by the Group are classified as
equity only to the extent that they do not meet the definition of a
financial liability. The Group's Ordinary Shares are classified as
equity instruments.
Leased Assets
Where substantively all of the risks and rewards incidental to
ownership of a leased asset have been transferred to the Group (a
"finance lease"), the asset is treated as if it had been purchased
outright. The amount initially recognised as an asset is the lower
of the fair value of the leased property and the present value of
the minimum lease payments payable over the term of the lease. The
corresponding lease commitment is shown as a liability. Lease
payments are analysed between capital and interest. The interest
element is charged to the consolidated statement of comprehensive
income over the period of the lease and is calculated so that it
represents a constant proportion of the lease liability. The
capital element reduces the balance owed to the lessor.
Where substantively all of the risks and rewards incidental to
ownership are not transferred to the Group (an 'operating lease'),
the total rentals payable under the lease are charged to the
consolidated statement of comprehensive income on a straight line
basis over the lease term. The aggregate benefit of lease
incentives is recognised as a reduction of the rental expense over
the lease term on a straight line basis.
Deferred taxation
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the consolidated
statement of financial position differs from its tax base, except
for differences arising on:
- the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting or taxable profit;
and
- investments in subsidiaries and jointly controlled entities
where the Group is able to control the timing of the reversal of
the difference and it is probable that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantially enacted by the
consolidated statement of financial position date and are expected
to apply when the deferred tax liabilities or assets are settled or
recovered. Deferred tax balances are not discounted.
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either: the same taxable
Group company; or different company entities which intend either to
settle current tax assets and liabilities on a net basis, or to
realise the assets and settle the liabilities simultaneously, in
each future period in which significant amounts of deferred tax
assets and liabilities are expected to be settled or recovered.
Operating Segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision maker has been identified as the
management team including the Chairman, Chief Executive Officer,
and Chief Financial Officer.
Management monitors the operating results of business segments
separately for the purpose of making decisions about resources to
be allocated and of assessing performance. Segment performance is
evaluated based on operating profit and loss. Finance costs,
finance income and income taxes are managed on a Group basis (note
3).
Inventories
Raw materials and consumables are initially recognised at cost,
and subsequently at the lower of the cost and net realisable value.
Cost comprises all costs incurred in bringing the inventories to
their present location and condition.
Raw materials and consumables are used on a first in, first out
basis. Work In Progress relates to expenditure on biomass boiler,
Combined Heat and Power ('CHP') and grid balancing projects, which
are recognised at cost until they are sold.
Government grants
Government grants are recognised where there is reasonable
assurance that the grant will be received and all attached
conditions will be complied with. When the grant relates to an
expense item, it is recognised as income on a systematic basis over
the periods that the related costs, for which it is intended to
compensate, are expensed. When the grant relates to an asset, it is
recognised as income in equal amounts over the expected useful life
of the related asset.
Invoice Discounting
Invoice discounting is a short term working capital facility
provided by the Royal Bank of Scotland to be used for the
designated purpose of remitting sales invoices in the fuels segment
where customers have been granted long credit terms over 30 days.
The facility has a total available drawn down value as at 31 March
2019 of GBP4.6m.
The facility has been recognised as trade and other payables per
note 16. The Group is responsible for the settlement of any drawn
facility and will incur the loss if a trade receivable is not
recovered. Amounts drawn under the facility are treated as debt in
the Cash flow statement.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks, other short term highly liquid investments with
original maturities of three months or less and for the purpose of
the statement of cash flows - bank overdrafts. Bank overdrafts are
shown within loans and borrowings in current liabilities on the
consolidated statement of financial position.
Restructuring Provisions
The group has recognised a provision liability of uncertain
timing or amount for costs which relate to restructuring, involving
dilapidations, closing of depots and onerous contracts. The
provision is measured at the best estimate of the expenditure
required to settle the obligation at reporting date.
2 Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including the expectations
of future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are discussed below.
Estimates
(a) Property, plant and equipment
Property, plant and equipment is depreciated over the useful
lives of the assets. Useful lives are based on management's
estimates of the period that the assets will generate revenue,
which are reviewed annually for continued appropriateness.
(b) Fair value of deferred contingent consideration
The fair value of Neil Eckert's and Richard Burrell's deferred
contingent consideration relating to the Group's merger and
acquisition of AMP Energy Services Limited (formerly Environova
Consulting Limited) and Mathieson Biomass Limited respectively has
been valued to market and recognised in the statements of
comprehensive income and financial position. For details of the
estimates and judgements see note 28.
The fair value of the deferred contingent consideration relating
to the Group's acquisition of Forest Fuels Holdings Limited and its
controlled subsidiaries has been valued to market and recognised in
the statements of comprehensive income and financial position. For
details of the estimates and judgements see note 28.
(c) Impairment of assets
All assets, excluding goodwill, are reviewed for indicators of
impairment. Impairment tests are carried out when there is a
trigger event. Goodwill is tested for impairment on an annual
basis. The recoverable amount of the fixed assets is calculated
using a discounted cash flow ('DCF') model where an appropriate, or
market based, discount rate is applied to future cash flows
expected to be generated by the assets. Under IAS 36 an asset is
impaired if its carrying value is greater than its recoverable
amount or fair value. For details of the estimates and judgements
see note 10.
(d) Valuation of intangible assets
A valuation exercise on intangibles has been performed as part
of a Purchase Price Allocation exercise. The values of these
intangibles and of the balance sheet acquired are provisional and
within one year of the date of acquisition may be adjusted as a
result of the finalisation of valuations. Please refer to note 11
for further information on the key assumptions used in this
exercise. Impairment of intangible assets including goodwill is
calculated using estimated future cash flows and a judgemental
discount rate.
(e) Useful lives of intangible assets
The useful life used to amortise intangible assets relates to
the expected future performance of the assets acquired and
management's estimate of the period over which economic benefit
will be derived from the asset. The basis for determining the
useful life for the most significant categories of intangible
assets is as follows:
-- The useful life of long term contracts and customer
relationships principally reflects management's view of the average
economic life of the customer base and is assessed by reference to
customer churn rates. An increase in churn rates may lead to a
reduction in the estimated useful life and an increase in the
amortisation.
(f) Call Option to purchase remaining shares in Highland Wood Energy
Management has considered the option to acquire the remaining
49.9% shareholding in Highlands Wood Energy Limited, has an
immaterial value at 31 March 2019 Management reassess the value of
this option at each reporting date.
g) IFRS 9 and IFRS 15
There have been no material revisions to the nature and amount
of estimates of amounts reported in prior periods except where the
implementation of IFRS 9 and IFRS 15 discussed above requires a
different approach to the accounting previously applied.
Significant estimates and judgements that have been required for
the implementation of these new standard are:
-- estimating the lifetime losses of short-term trade
receivables for the purposes of IFRS 9's expected credit loss
model;
-- estimating the amount of variable consideration under IFRS 15
for which it is highly unlikely there would be a significant future
reversal in the future; and,
-- assessing whether goods and services identified in some of
the Group's consultancy contracts are distinct within the context
of the contract and, to the extent they are, estimating the
standalone selling prices for the purposes of allocating the
transaction price on a relative stand-alone basis to the
performance obligations identified.
Judgements
(a) Investment in associate - financial asset at fair value through profit and loss
In accordance with the exemption within IAS 28 Investments in
Associates and Joint Ventures, the Group does not account for its
investments in associates using the equity method. Instead, the
Group has elected to measure its investments in associates at FVPL
as per note 23. The Directors have assessed that the Group meets
the definition of a "venture capital organisation". Such
characteristics of a venture capital organisation may include, but
are not limited to:
-- investments are held for the short- to medium-term rather than for the long-term;
-- the most appropriate point for exit is actively monitored; and
-- investments form part of a portfolio, Incubex being the first
investment of such nature, which is monitored and managed
separately from the core operational business and without
distinguishing between investments that qualify as associates or
joint ventures and those that do not.
The Group's intention is to hold investments in associates for
up to 5 years. The strategy of the Group is to hold significant
interest in the companies within the same sector of operation and
subsequently engage in an exit strategy.
(b) Interest in other entities
In accordance with IFRS 12, the Group considers Aggregated Micro
Power Infrastructure 2 Plc ("AMPIL") to be an unconsolidated
structured entity. The Group considers it has neither control nor
significant influence. There are no Group directors on the board of
AMPIL. There is no equity interest ownership held by the Group in
AMPIL. AMPIL is owned and governed by a third party in The Law
Debenture Corporation Plc (see further disclosures in Note 32).
3 Segmental information
For management purposes, the Group is organised into business
units based on its products and services. During the period, the
Group's three main operating segments were: Project Development,
Wood Fuels and Investments & HQ.
-- AMP's project development division develops, finances and
manages distributed energy projects focusing on biomass heat and
biomass CHP for a wide range of applications and customers. We also
develop and finance gas-fired peaking plants to provide reserve
power at times of peak demand.
-- Wood Fuels sells high quality wood chip and wood pellet to
end customers throughout the UK in the form of fuel only contracts,
heat contracts and/or fuels plus operation and maintenance.
-- AMP Investments and HQ aim to grow funds under management. It
includes the overhead costs of the Board and related PLC
expenses.
The directors have taken the decision to report segment
performance on an "adjusted" earnings before interest, taxation,
depreciation and amortization ("EBITDA") basis disclosed. The
Company has engaged in multiple acquisitions over the course of
financial years ending 2017 and 2018, which has resulted in
significant exceptional and non-recurring expenses incurred or
provisioned during the natural process of integrating and
restructuring the wood fuel business segment.
These exceptional and non-recurring expenses are disclosed below
EBITDA in order to give the users of these financial statements a
clearer understanding of normalised operational performance as well
as provide relevant comparatives for the forthcoming financial
year. Further disclosure of these expenses have been made in note
6.
The Group was exclusively focused on UK operations, and all
non-current assets are located in the UK.
The Group has completed several acquisitions of wood fuel
businesses over the last three years which has resulted in
significant exceptional and non-recurring expenses being incurred.
This has included a restructuring provision which has been
recognised following the announcement of the planned restructuring
of the wood fuel business segment, which was announced in March
2018.
The performance of each segment is reported below.
Operating segments Wood fuels Project development HQ & Total
For the Year Ending 31 March Investments
2019
GBP GBP GBP GBP
Revenue 43,557,766 5,981,334 - 49,539,100
Cost of sales (37,812,850) (921,175) - (38,734,025)
-------------- --------------------- -------------- --------------
Gross profit 5,744,916 5,060,159 - 10,805,075
Other operating income 57,597 - 450 58,047
Administrative expenses (8,849,154) (1,929,912) (1,603,755) (12,382,821)
-------------- --------------------- -------------- --------------
*Adjusted EBITDA (3,046,641) 3,130,247 (1,603,305) (1,519,699)
Depreciation (1,374,160) - (141,283) (1,515,443)
Finance expense (930,356) - (432,446) (1,362,802)
Amortisation intangibles - - (441,540) (441,540)
P&L on sale of assets (149,103) - - (149,103)
FX Gain/(Loss) (228,919) - - (228,919)
Administrative costs non -recurring (188,594) - - (188,594)
Impairment loss (463,306) - - (463,306)
Restructuring costs incurred 56,535 56,535
Fair Value Adjustment - deferred
shares - - 710,345 710,345
Impairment of trade receivables (615,067) (615,067)
Tax credit (43,855) - 43,651 (204)
Profit / (Loss) for the year (6,983,466) 3,130,247 (1,884,578) (5,717,797)
============== ===================== ============== ==============
Segment assets 10,490,044 4,800,386 26,531,664 41,822,094
Segment liabilities (20,520,807) (719,458) 3,531,725 (17,708,541)
(10,030,763) 4,080,928 30,063,389 24,113,553
============== ===================== ============== ==============
Year ending 31 March 2018
As restated
Wood fuels Project development HQ & Total
Investments
GBP GBP GBP GBP
Revenue 40,009,412 3,153,557 - 43,162,969
Cost of sales (36,397,027) (739,975) - (37,137,002)
-------------- --------------------- -------------- --------------
Gross profit 3,612,385 2,413,582 - 6,025,967
Other operating income 122,672 - 5,030 127,702
Administrative expenses (6,204,736) (1,186,414) (1,717,647) (9,108,797)
-------------- --------------------- -------------- --------------
*Adjusted EBITDA (2,469,679) 1,227,168 (1,712,617) (2,955,128)
Depreciation (917,997) - (32,132) (950,129)
Finance expense (410,226) - (943,604) (1,353,830)
Amortisation intangibles - - (421,810) (421,810)
P&L on sale of assets (18,353) - - (18,353)
FX gain/loss (639,860) - - (639,860)
Cost of sales - non recurring (911,101) (911,101)
Administrative costs non -recurring (461,951) (461,951)
Restructuring costs incurred (582,996) (504,280) (31,768) (1,119,044)
Restructuring provision (569,677) - - (569,677)
Gain on financial asset at
fair value through profit &
loss - - 7,507,175 7,507,175
Fair value adjustment on deferred
consideration - - (848,194) (848,194)
Tax credit - - 255,775 255,775
Profit / (Loss) for the year (6,981,840) 722,888 3,772,825 (2,486,127)
============== ===================== ============== ==============
Segment assets 10,647,749 3,383,748 31,752,458 45,783,955
Segment liabilities (15,424,320) (863,460) (15,823,668) (32,111,449)
(4,776,571) 2,520,288 15,928,790 13,672,507
============== ===================== ============== ==============
* Adjusted EBITDA is earnings before interest, tax, depreciation
and amortisation, as well as nonrecurring income and costs.
4 Revenue
Year ended Year ended
31 March 31 March
2019 2018
(Restated)
GBP GBP
Wood fuel sales 43,213,003 39,760,437
Development, Management and Consultancy
fees 5,981,334 3,153,557
RHI income (Heat contracts) 344,763 248,975
49,539,100 43,162,969
====================== ============
Year to 31 March 2019
Wood Fibre Wood Heat Maintenance Fee & RHI
Sales Sales Sales Income Total
GBP GBP GBP GBP GBP
Product Type
Goods 35,863,479 - - - 35,863,479
Services - 2,930,237 2,087,615 8,657,769 13,675,621
------------ ----------- ------------- ----------- ------------
35,863,479 2,930,237 2,087,615 8,657,769 49,539,100
============ =========== ============= =========== ============
Timing of transfer of
goods and services
Point in time (delivery
to customer premises) 35,863,479 - 2,087,615 5,361,338 43,312,432
Over time - 2,930,237 - 3,296,431 6,226,668
------------ ----------- ------------- ----------- ------------
35,863,479 2,930,237 2,087,615 8,657,769 49,539,100
============ =========== ============= =========== ============
Year to 31 March 2018
Wood Fibre Wood Heat Maintenance Fee & RHI
Sales Sales Sales Income Total
GBP GBP GBP GBP GBP
Product Type
Goods 32,960,419 - - - 32,960,419
Services - 2,523,955 991,053 6,687,542 10,202,550
------------ ----------- ------------- ----------- ------------
32,960,419 2,523,955 991,053 6,687,542 43,162,969
============ =========== ============= =========== ============
Timing of transfer of
goods and services
Point in time (delivery
to customer premises) 32,960,419 - 991,053 3,153,557 37,105,029
Over time - 2,523,955 - 3,533,985 6,057,940
------------ ----------- ------------- ----------- ------------
32,960,419 2,523,955 991,053 6,687,541 43,162,969
============ =========== ============= =========== ============
5 Other income
Other operating income
Year ended Year ended
31 March 31 March
2019 2018
(Restated)
GBP GBP
Other income 32,763 127,702
32,763 127,702
============ ============
6 Operating profit
Year ended Year ended
31 March 31 March
2019 2018
(Restated)
GBP GBP
Depreciation 1,515,443 950,129
Amortisation of intangibles 441,540 421,810
Impairment of intangibles 463,306 -
Auditors remuneration:
-audit related services for the audit
of this company 11,577 11,577
-audit related services for the audit
of the subsidiaries 184,963 131,737
Foreign Exchange Loss 228,919 639,860
Operating lease payments 1,231,611 854,401
Staff costs 6,872,790 4,634,426
Loss on sale of assets 149,103 18,352
Consultancy Fees 757,274 766,038
Bad Debts Written off 305,678 -
Provision for bad debts 309,389 -
Other Administrative expense 3,111,978 2,713,482
Non recurring cost of sales
Non recurring cost of sales expenses of nil (2018: GBP911,000).
The amount in 2018 related to a number of additional charges which
include, inter alia, certain costs related to drying contract
inefficiencies. Following the implementation of HWE's operation and
maintenance services, these are not expected to occur in the
future.
Restructuring provision
The restructuring provision costs of nil (2018: GBP569,678). The
2018 figure relates to the closure of certain depots and includes
the termination payments under lease contractual arrangements and
dilapidation costs to be incurred.
Restructuring expenses incurred
The restructuring expenses of nil (2018: GBP1,119,046). The 2018
figure relates to costs incurred during 2018 as part of the
restructuring and integration and include costs of integrating IT
systems, the impairment of assets which will not be used in the
newly integrated business and the rebranding of vehicles.
7 Staff cost (including directors)
comprise: Year ended Year ended
31 March 2019 31 March 2018
(Restated)
GBP GBP
Wages and salaries 6,129,722 4,078,520
Social security contributions and
similar taxes 424,652 273,357
Defined contribution pension costs 223,542 144,507
Other personnel related costs 94,874 138,042
6,872,790 4,634,426
========================== ========================
Average number of staff 141 128
========================== ========================
Directors' salaries
Year ended Year ended
31 March 2019 31 March 2018
(Restated)
GBP GBP
Short term employee benefits 703,953 526,450
Payments to Mathieson Capital Investment Management Ltd 107,687 104,550
Other personnel cost 8,022 3,029
Total pension and other post-employment benefit costs 52,627 35,190
872,289 669,219
======================== =======================
Highest paid Director
Year ended Year ended
31 March 2019 31 March 2018
(Restated)
GBP GBP
Short term employee benefits 215,373 209,100
Total pension and other post-employment benefit costs 2,520 20,910
217,893 230,010
======================== =======================
Key management personnel are all the Directors of the
company.
8 Finance expense
Year ended Year ended
31 March 31 March
2019 2018
(Restated)
GBP GBP
Interest expense 582,233 207,727
Convertible Loan Note interest 567,889 1,074,638
Finance Lease interest 212,680 71,465
1,362,802 1,353,830
============ ============
9 Taxation
Year ended Year ended
31 March 31 March
2019 2018
(Restated)
GBP GBP
Current tax credit (12,815) 191,150
Deferred tax expense 12,612 64,625
------------- -------------
Total tax credit (203) 255,775
------------- -------------
- -
Profit/ (Loss) before income taxes (5,717,594) (2,741,902)
------------- -------------
Expected tax charge based on the
standard rate of United Kingdom
corporation tax - -
at the domestic rate of 19% (2018:
19%) (1,086,343) (520,961)
Expenses not deductible for tax
purposes 540,732 279,018
(Gains)/loss not taxable 134,965 (1,329,831)
Unprovided losses carried forward 410,849 1,507,150
R & D tax credit received - (191,151)
Total credit/(charge) 203 (255,775)
============= =============
Deferred tax
Consolidated statement
of financial position
Year ended Year ended
31 March 31 March
2019 2018
(Restated)
GBP GBP
Accelerated depreciation for tax purposes 29,404 8,222
Fair Value uplift on business combinations (703,379) (703,379)
Net deferred tax asset / (liability) (673,975) (695,157)
======================== ================
Reconciliation of deferred tax liabilities Year ended Year ended
31 Mar 31 Mar 2018
2019
GBP GBP
Opening (695,157) (571,115)
Deferred taxes acquired in business
combinations - (188,666)
Amortisation intangible assets 76,772 64,624
Accelerated depreciation for tax purposes (55,590) -
Closing (673,975) (695,157)
======================== ================
The majority of unutilised losses are expected to be utilised
within five years. In prior year, the Group made appropriate
(charges)/credits to timing difference, acquired intangible assets
and unutilised losses to recognise the enacted tax reductions.
The tax losses to carry forward which are unprovided at the end
of the year amounted GBP15,598,141(2018: GBP13,435,773), the
unrecognised deferred tax on these balances at 17% are GBP2,651,683
(2018: GBP2,552,797). Deferred tax assets for these losses have not
been recognised, due to uncertainty over profitability. Deferred
tax has been calculated based on rates substantively enacted at the
balance sheet date, being 17% (2018: 19%).
10 Plant, Property and Equipment
Assets Plant
Under Farm Land & Office Motor
Construction & Upgrade and Buildings Machinery Equipment Vehicles Total
GBP GBP GBP GBP GBP GBP GBP
Cost
As at 31
March
2017 47,740 6,906,294 - 2,315,931 286,753 733,157 10,289,875
--------------- ------------ --------------- ------------ ------------ ----------- ------------
Additions
from
Business
Combinations - - 278,462 1,585,606 312,005 1,840,336 4,016,409
Additions for
the period 16,650 - 32,494 1,601,796 448,160 617,252 2,716,352
Disposals for
the period - - - (269,455) (169,789) (20,659) (459,903)
As at 31
March
2018 64,390 6,906,294 310,956 5,233,878 877,129 3,170,086 16,562,733
--------------- ------------ --------------- ------------ ------------ ----------- ------------
Depreciation
As at 31
March
2017 47,740 6,906,294 - 814,091 61,958 95,045 7,925,128
--------------- ------------ --------------- ------------ ------------ ----------- ------------
Additions
from
Business
Combinations - - - 662,327 215,980 636,154 1,514,461
Charge for
the
period 3,000 - 17,488 670,419 70,545 188,677 950,129
Disposals for
the period - - - (132,146) (9,042) - (141,188)
As at 31
March
2018 50,740 6,906,294 17,488 2,014,691 339,441 919,876 10,248,530
--------------- ------------ --------------- ------------ ------------ ----------- ------------
Net book
value
=============== ============ =============== ============ ============ =========== ============
As at 31
March
2017 - - - 1,501,840 224,795 638,112 2,364,747
=============== ============ =============== ============ ============ =========== ============
As at 31
March
2018 13,650 - 293,468 3,219,187 537,688 2,250,210 6,314,203
=============== ============ =============== ============ ============ =========== ============
Assets Land Plant
Under Farm and & Office Motor
Construction & Upgrade Buildings Machinery Equipment Vehicles Total
GBP GBP GBP GBP GBP GBP GBP
Cost
As at 31 March
2018 64,390 6,906,294 310,956 5,233,878 877,129 3,170,086 16,562,733
-------------- ------------ ------------ ------------ ------------ ----------- ------------
Prior period
Restatement* - - (10,097) (602,647) 326,235 416,791 130,282
Reclassification - - - (760,141) - 760,141 -
Additions for
the period - - 14,128 106,475 461,874 115,138 697,615
Disposals for
the period - - - (380,904) (52,253) (296,610) (729,767)
As at 31 March
2019 64,390 6,906,294 314,987 3,596,661 1,612,985 4,165,546 16,660,863
-------------- ------------ ------------ ------------ ------------ ----------- ------------
Depreciation
As at 31 March
2018 50,740 6,906,294 17,488 2,014,691 339,441 919,876 10,248,530
-------------- ------------ ------------ ------------ ------------ ----------- ------------
Prior period
Restatement* - - (10,097) (602,647) 326,235 416,791 130,282
Reclassification - - - (279,109) - 279,109 -
Charge for the
period - - 7,735 569,620 304,234 633,854 1,515,443
Disposals for
the period - - - (89,953) (34,746) (148,086) (272,785)
As at 31 March
2019 50,740 6,906,294 15,126 1,612,602 935,164 2,101,544 11,621,471
-------------- ------------ ------------ ------------ ------------ ----------- ------------
Net book value
============== ============ ============ ============ ============ =========== ============
As at 31 March
2018 13,650 - 293,468 3,219,187 537,688 2,250,210 6,314,203
============== ============ ============ ============ ============ =========== ============
As at 31 March
2019 13,650 - 299,861 1,984,059 677,821 2,064,002 5,039,392
============== ============ ============ ============ ============ =========== ============
The net book value of the assets under lease arrangements at 31
March 2019 were GBP2,456,781 (31 March 2018: 2,081,459)
There is a fixed and floating charge over the fixed assets of
the business in favour of the RBS invoice discounting facility.
*The restatement relates to the misclassification of assets and
depreciation within the fixed asset notes, notably trucks being
included in plant and machinery. This does not impact the total net
book value but impacts the costs classifications.
11 Intangible Assets
Long term contracts
and customer
As Restated relationships Brand Goodwill Total
GBP GBP GBP GBP
Cost
As at 31 March 2017 3,514,945 972,833 5,549,454 10,037,232
Additions on acquisition
of subsidiary 375,619 - 377,684 753,303
Additions for the period 103,251 - - 103,251
--------------------- --------- ----------- ------------
As at 31 March 2018 3,993,815 972,833 5,927,138 10,893,786
--------------------- --------- ----------- ------------
Amortisation
As at 31 March 2017 133,042 41,629 - 174,671
Amortisation charge
for the period 373,168 48,642 - 421,810
Adjustment of Goodwill - - 97,300 97,300
As at 31 March 2018 506,210 90,271 97,300 693,781
--------------------- --------- ----------- ------------
Net book value
As at 31 March 2017 3,381,903 931,204 5,549,454 9,862,561
--------------------- --------- ----------- ------------
As at 31 March 2018 3,487,605 882,562 5,829,838 10,200,006
===================== ========= =========== ============
Long term contracts
and customer
relationships Brand Goodwill Total
GBP GBP GBP GBP
Cost
As at 31 March 2018 3,993,815 972,833 5,927,138 10,893,786
Additions on acquisition
of subsidiary - - - -
--------------------- --------- ----------- ------------
As at 31 March 2019 3,993,815 972,833 5,927,138 10,893,786
--------------------- --------- ----------- ------------
Amortisation
As at 31 March 2018 506,210 90,271 97,300 693,781
Amortisation charge
for the period 395,390 46,150 - 441,540
Impairment charge for
the year 463,306 - - 463,306
As at 31 March 2019 1,364,906 136,421 97,300 1,598,627
--------------------- --------- ----------- ------------
Net book value
As at 31 March 2018 3,487,605 882,562 5,829,838 10,200,006
--------------------- --------- ----------- ------------
As at 31 March 2019 2,628,909 836,412 5,829,838 9,295,160
===================== ========= =========== ============
The Goodwill of the group is allocated to one cash generating
unit, the Wood Fuels division.
Goodwill impairment
The Group is required to test, on an annual basis, whether
goodwill has suffered any impairment. The recoverable amount is
determined based on value in use calculations. The use of this
method requires the estimation of future cash flows and the
determination of a discount rate in order to calculate the present
value of the cash flows. The forecasts provided have been based on
historic and expected cash flows. Operating margins have been based
on past experience and future expectations in the light of
anticipated economic and market conditions. Growth rates are set at
2% (2018: 2%). A pre-tax discount rate of 15% (2018:15%) has been
applied to pre-tax cash flows over 5 years.
Sensitivity Analysis
1% increase in growth GBP362,700 movement in Net
rate Present Value
1% decrease in growth (GBP362,716) movement in Net
rate Present Value
1% increase in discount (GBP1,284,834) movement in
rate Net Present Value
1% decrease in discount GBP1,485,795 movement in Net
rate Present Value
Long term contracts impairment
The Group took the decision on the 21st February 2019 to write
off the MI-Generation ("MI GEN") Intangible asset for the net book
value of GBP463,306, due to the contracts becoming loss making. The
Group acquired the MI GEN customer list and associated heat
contracts on the 29th June 2016 for an amount of GBP300,000 in cash
and GBP354,079 in deferred consideration. The nature of the
acquisition was to purchase the heat supply contracts with
customers and provide the fuel supply, while outsourcing the
maintenance to MI-Generation Ltd. The heat contract profitability
can be isolated to one intangible asset. No onerous loss provision
is required.
12 Business combinations
Business combinations in the prior period
Billington Bioenergy Limited
On 25 October 2017, the Group completed on the acquisition of
100% of the share capital of Billington Bioenergy Limited
('Billingtons'), a wood pellet supplier, for a total consideration
of GBP1,936,315 which comprised of the issue of GBP1.6m in new
Ordinary Shares issued at a price of 98.5 pence per share and
GBP0.3m in cash. There is no contingent or deferred consideration
or debt assumed. The acquisition was made to further strengthen the
Group's position in the wood pellet market.
As at 25 October 2017 Billingtons had a net asset value of
GBP1,393,652. These identifiable intangibles have been assessed as
part of a fair value exercise at a Group level and are therefore
excluded from the opening book value in the table below. The Group
has recognised the provisional fair values of identifiable assets
and liabilities as follows:
31 March 2018
Opening book Closing fair
value Fair value adjustment value
GBP GBP GBP
Intangibles - 375,619 375,619
Tangible assets 1,514,784 - 1,514,784
Cash 677,067 - 677,067
Inventory 233,857 - 233,857
Receivables 487,969 - 487,969
Total Assets 2,913,677 375,619 3,289,296
------------------------------ --------------- ----------------------- --------------
Trade and other payables (1,282,438) - (1,282.438)
Deferred tax liability - (63,856) (63,856)
Non-Current liabilities (237,586) (237,586)
Total Liabilities (1,520,024) (63,855) (1,583,880)
------------------------------ --------------- ----------------------- --------------
Net Assets 1,393,652 311,764 1,705,416
============================== =============== ======================= ==============
Fair value of consideration
paid 1,936,315
--------------
Goodwill 230,899
Under IFRS 3 a fair value assessment of the Billington Bioenergy
Limited ('Billingtons') balance sheet was performed at the
acquisition date in line with the Business Combination accounting
policy in note 1 to these financial statements.
The goodwill recognised will not be deductible for tax
purposes.
The excess of consideration over net assets (book value)
purchased has been assessed as part of a Purchase Price Allocation
exercise and allocated to goodwill. The values of these intangibles
and of the balance sheet acquired are provisional and within one
year of the date of acquisition may be adjusted as a result of the
finalisation of valuations.
The corresponding adjustment will be made to goodwill.
Highland Wood Energy Limited
On 28 June 2017, the Group completed on the acquisition of 50.1%
of the share capital of Highland Wood Energy ('HWEnergy'), a
supplier of biomass heating, servicing and installation, for a
total consideration of GBP500,000 paid in cash. There is no
contingent or deferred consideration or debt assumed. The
acquisition was made to further strengthen the Group's position in
the biomass heating market. AMP has a call option to purchase the
remaining 49.9% from HWEnergy within 3 years for a consideration of
GBP2,000,000 which will be paid, 50% in cash and 50% in the
allotment of new ordinary shares in AMP. In the event that AMP does
not exercise its option within 3 years, HWE Energy's minority
shareholders have the right to buy back 30.1% of the business for a
cash consideration of GBP500,000 which would leave AMP with a
residual interest of 20%.
As at 28 June 2017 Highland Wood Energy had a net asset value of
GBP828,575. These identifiable intangibles have been assessed as
part of a fair value exercise at a Group level and are therefore
excluded from the opening book value in the table below. The Group
has recognised the provisional fair values of identifiable assets
and liabilities as follows:
31 March 2018
Opening book Closing fair
value Fair value adjustment value
GBP GBP GBP
Intangibles - - 0
Tangible assets 987,166 - 987,166
Cash 156,680 - 156,680
Inventory 228,479 - 228,479
Receivables 1,088,102 - 1,088,102
Total Assets 2,460,427 - 2,460,427
-------------------------------- ---------------- ----------------------- --------------
Trade and other payables (1,591,278) - (1,591,278)
Deferred tax liability - - 0
Non-Current liabilities (40,574) (40,574)
---------------- --------------
Total Liabilities (1,631,852) - (1,631,852)
-------------------------------- ---------------- ----------------------- --------------
Net Assets 828,575 - 828,575
================================ ================ ======================= ==============
Fair value of consideration
paid 500,000
--------------
Goodwill 84,884
Consideration attributable to non-controlling
interest 413,459
Under IFRS 3 a fair value assessment of the Highland Wood Energy
('HWEnergy') balance sheet was performed at the acquisition date in
line with the Business Combination accounting policy in note 1 to
these financial statements.
The goodwill recognised will not be deductible for tax
purposes.
The excess of consideration over net assets (book value)
purchased has been assessed as part of a Purchase Price Allocation
exercise and allocated to goodwill. The values of these intangibles
and of the balance sheet acquired are provisional and within one
year of the date of acquisition may be adjusted as a result of the
finalisation of valuations.
The corresponding adjustment will be made to goodwill.
13 Inventories
Year ended Year ended
31 March 31 March
2019 2018
(Restated)
GBP GBP
Raw materials and consumables 1,787,132 1,530,347
Grid balancing work in progress 416,878 88,850
Biomass boilers work in progress 194,703 153,369
2,398,713 1,772,566
======================= =======================
There is a fixed charge over raw materials in relation to the
short term loan (see note 18)
14 Trade and other receivables
Year ended Year ended
31 March 31 March
2019 2018
(Restated)
GBP GBP
Trade receivables* 7,853,574 9,488,975
Other receivables 194,277 804,188
VAT receivables 319,960 308,723
Prepayments 330,807 167,901
Accrued income 2,596,475 1,155,898
11,295,093 11,925,685
======================= ======================
* As at 31 March 2019, an expected credit loss provision of
GBP404,916 (31 March 2018: GBP13,916) was recognised. The Group
have not adopted a fully retrospective approach to the adoption of
IFRS 9; the expected credit loss provision for 2018 was calculated
as GBP150,015 and has been recognised as an opening adjustment to
retained earnings. See
Note 34 for more details on transition.
Included in Trade receivables are contract revenue balances
outstanding.
Contract assets Year ended Year ended
31 March 31 March
2019 2018
(Restated)
GBP GBP
At 1 April - -
Accrued development fees 492,591 -
Maintenance contracts 167,720 -
At 31 March 660,311 -
============ ============
15 Cash and cash equivalents Year ended Year ended
31 March 31 March
2019 2018
(Restated)
GBP GBP
Cash at bank and hand 2,383,616 4,161,375
2,383,616 4,161,375
============ ============
16 Trade and other payables
Year ended Year ended
31 March 31 March
2019 2018
(Restated)
GBP GBP
Trade payables 7,266,518 12,469,913
Accruals 168,934 723,354
Other payables 809,363 1,198,950
Invoice discounting 4,602,762 4,136,998
VAT payables 388,235 524,381
Employment tax and social security 61,820 45,713
13,297,632 19,099,309
====================== =======================
17 Deferred Consideration
Year ended Year ended
31 March 31 March
2019 2018
(Restated)
GBP GBP
Deferred contingent consideration 64,376 812,039
------------ ------------
64,376 812,039
============ ============
Balance includes fair valuation of deferred contingent
consideration further disclosed in note 28.
18 Loans and borrowings
Current liabilities Year ended Year ended
31 March 31 March
2019 2018
(Restated)
GBP GBP
Other loan - finance
lease 665,738 631,244
====
Short term loan 1,776,969 -
2,442,707 631,244
=============================== ============== ==============
Year ended Year ended
Financial liabilities 31 Mar 2019 31 Mar 2018
(Restated)
GBP GBP
Convertible Loan Notes - 8,862,845
Other loan - finance
lease 1,215,633 1,441,177
====
1,215,633 10,304,022
=============================== ============== ==============
The fair value of non-current liabilities is not materially
different to their carrying value.
All the Convertible Loan Notes were either redeemed or converted
to Equity shares in Dec 2018. GBP878,825 Convertible Loan Notes
were redeemed and paid. The remaining were converted to Equity
shares. 5,819,642 Convertible Loan Notes were converted at GBP0.7
and 5,883,169 were converted at GBP0.86.
Of the GBP10.01m convertible loan notes, GBP9.1m were converted
to shares, they were converted at the initial conversion price of
GBP0.7m and GBP0.86m, this realised an increase in share capital
and share premium of GBP9.13m. GBP0.9m of shares were redeemed for
cash. The fair value at the date of conversation was GBP12k
different to the carrying value of the financial liability, this
has been recycled into retained earnings. The net impact on the
income statement on conversion amounted to GBP0.2m.
AMPIL 2 Asset Limited issued loan to Stock Warehouse Company
Limited, a subsidiary of Aggregated Micro Power Holdings PLC on
31(st) May 2018. The loan was for a principal amount of
GBP1,750,000 with an effective interest rate of 12.5%. Stock
Warehouse Company Limited pledged as security to AMPIL 2 Asset
Limited 100% of their inventory. Due to the inventory balance being
less than the loan balance the loan is in breach at the end of the
year, this is shown within current as the loan is a rolling credit
facility. Following the end of the year the loan principal was
increased to GBP3,400,000. The loan has a term of 6 months from the
date of draw down. The Loan is secured over the shares of Forest
Fuels Holdings Limited.
19 Provision
Year ended Year ended
31 Mar 2019 31 Mar 2018
(Restated)
GBP GBP
Opening Balance 569,678 45,516
Additions during the year - 568,013
Amounts used (563,678) (43,851)
Closing balance 6,000 569,678
================= =====================
The Group commenced the wood fuels restructuring plan on 1 April
2018, which is now largely complete. Restructuring the wood fuels
business was required given the multiple acquisitions of UK pellet
and chip suppliers in 2016, 2017 and 2018. A GBP569,678
restructuring provision was set aside to cover the costs of system
integration, the reduction of depots and several other synergistic
initiatives.
20 Share Capital
31 March 2018 - Restated No of shares Issued capital Share premium Other reserves
Nos. GBP GBP GBP
Ordinary shares of GBP0.005
each
As at 31st March 2017 37,810,422 189,053 12,519,616 9,046,180
Issued for cash during the
period 3,756,356 18,782 3,681,229 -
Issued as consideration
as part of business
combination 1,624,365 8,121 - 1,591,878
Share issue expense (8,000) -
Fair value adjustment of
EMI Options 44,373
As at 31 March 2018 43,191,143 215,956 16,192,845 10,682,431
=============== ==================== =============== ===========================
31 March 2019 No of shares Issued capital Share premium Other reserves
Nos. GBP GBP GBP
Ordinary shares of GBP0.005
each
As at 31st March 2018 43,191,143 215,956 16,192,845 10,682,431
--------------- -------------------- --------------- ---------------------------
Issued for cash during the
period 8,500,000 42,500 8,457,500 -
Issued as consideration
at CLN conversion 11,702,811 58,514 9,074,761 -
Share issue expense (425,516) -
Capital reduction* (16,192,845) 29,101
As at 31 March 2019 63,393,954 316,970 17,106,745 10,711,532
=============== ==================== =============== ===========================
*on 11 April 2018 there was a capital reduction where share
premium was moved to retained earnings to create distributable
reserves.
The Company has ordinary shares which carry no right to fixed
income. Share capital represents consideration received or amounts
based on fair value.
In November 2018, 8,500,000 new Ordinary Shares were issued to
existing and new investors pursuant to a placing of GBP8.1m for
cash (net of fees). These share issues were issued at a placing
price of GBP1 per share. In December 2018 the company converted CLN
holders to equity shareholders in which 5,819,642 shares were
issued at a placing price of GBP0.7 and 5,883,169 share were issued
at a placing price of GBP0.86.
21 Notes supporting statement of
cash flows
Cash and cash equivalents for purposes of the statement of cash
flows comprises:
Year ended Year ended
31 March 31 March
2019 2018
GBP GBP
Cash at bank available on demand 2,383,616 4,161,375
------------- -------------
2,383,616 4,161,375
============= =============
Movement in Net
Debt
2019 Cash flow Non-cash flow
Opening Interest Debt to New finance
balance accrued equity leases Closing
GBP GBP GBP GBP GBP GBP
Convertible loan 8,862,845 (878,825) - (7,984,020) - -
Invoice discounting 4,136,998 465,764 - - - 4,602,762
Finance lease 2,072,421 (1,066,117) 224,687 - 650,380 1,881,371
Short term loan - 1,750,000 26,969 - - 1,776,969
Movement in Net
Debt
2018 Cash flow Non-cash flow
Opening Interest Debt to New finance
balance accrued equity leases Closing
GBP GBP GBP GBP GBP GBP
Convertible loan 8,548,161 - 314,687 - - 8,862,848
Invoice discounting 3,126,258 1,010,740 - - - 4,136,998
Finance lease 1,217,209 (477,819) - - 1,333,031 2,072,421
*Invoice discounting of GBP4.6m (2018: GBP4.1m) has been
included Trade and other payables in Note 16.
22 Subsidiaries
As at 31 March 2019, the Company had the following
principal subsidiaries:
Principal activity Country of Percentage of
incorporation ordinary shares
held
2019 2018
---------------------------------- ----------------------- ------------------ ------------------ -------------
Aggregated Micro Power England and
Limited Holding company Wales 100% 100%
England and
Mathieson Biomass Limited Non-trading Wales 100% 100%
AMP Low Plains Limited Power and heat England and
* generation Wales 100% 100%
Development
of renewable
AMP Energy Services Limited energy projects England and
* and services Wales 100% 100%
England and
Sterivert Limited * Non-trading Wales 100% 100%
England and
Midlands Wood Fuel Limited Non-trading Wales 100% 100%
England and
PEL (Fuels) Limited Non-trading Wales 100% 100%
Forest Fuels Holdings England and
Limited Holding company Wales 100% 100%
England and
AMP Biomass Fuels Ltd* Wood fuels Wales 100% 100%
England and
Lakes Biomass Limited* Non-trading Wales 100% 100%
Forest Fuels Boiler Company England and
Limited * Non-trading Wales 100% 100%
Highland Wood Energy
Limited Biomass Heating Scotland 50.01% 50.01%
Billington Bioenergy England and
Limited Wood fuels Wales 100% 100%
AMP Hull Reserve Power England and
Limited Project development Wales 100% 100%
English Wood Fuels Limited England and
* Dormant Wales 100% 100%
England and
Silvapower Limited * Dormant Wales 100% 100%
North West Wood Fuels England and
Limited * Dormant Wales 100% 100%
Anglia Biofuels Limited England and
* Dormant Wales 100% 100%
Stock Warehouse Company England and
Limited * Wood fuels Wales 100% 100%
England and
Urban Reserve Ltd Dormant Wales 100% 100%
Urban Reserve (Southern) England and
Ltd Dormant Wales 100% 100%
Urban Reserve (London) England and
Ltd Dormant Wales 100% 100%
Urban Reserve (South England and
East) Ltd Dormant Wales 100% 100%
Urban Reserve (Eastern) England and
Ltd Dormant Wales 100% 100%
*Held indirectly
The registered address of all subsidiaries is 3rd Floor, 1 Dover
Street, London, England, W1S 4LD
23 Associates
The following entities have been included in the consolidated
financial statements:
Name of Principal activity Place of Proportion of
associate incorporation ownership rights
held by the Group
31 March 2019
Design and promotion of
financial
products in environmental,
Incubex energy,
LLC power and weather markets USA 29.08%
b) Reconciliation of investment in associate at fair value through
profit and loss
Year ended Year ended
31 March 2019 31 March 2018
GBP GBP
Opening 11,410,120 2,402,945
Additions - 1,500,000
Gain of fair value through
profit and loss - 7,507,175
---------------- -------------------------
Closing 11,410,120 11,410,120
---------------- -------------------------
In the previous year ending March 2018 the Group invested in Incubex,
LLC. The Group paid a par value of $0.001 per share for Class
A shares, and paid $7.50 per share for Class B shares. A gain
on the investment's fair value was recognised in the income statement
based on valuation techniques detailed in Note 24. The directors
have undertaken a DCF valuation exercise and considered the key
assumptions such as growth rates and discount rates, the investment
value is unchanged.
As at 31 March 2019, IncubEx had total assets of $6.6m, cash and
cash equivalents of $5.7m, current liabilities of $1.2m, zero
debt and net assets of $5.4m.
24 Financial instruments - Risk Management
The Group is exposed through its operations to
the following financial risks:
* Credit risk
* Liquidity risk
* Market price risk
* Foreign exchange risk
In common with all other businesses, the Group is exposed to
risks that arise from its use of financial instruments. This note
describes the Group's objectives, policies and processes for
managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented
throughout these financial statements.
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure
them from previous periods unless otherwise stated in this
note.
(i) Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
-- Trade and other receivables
-- Cash and cash equivalents
-- Investment in associate - financial asset at fair value through profit and loss
-- Trade and other payables
-- Loans and borrowings
-- Deferred contingent consideration
(ii) Financial instruments by category
Financial asset
Financial assets at
Financial assets measured fair value through
at amortised cost profit and loss
31 March 31 March 31 March 31 March
2019 2018 2019 2018
(Restated) (Restated)
GBP GBP GBP GBP
Current
financial
assets
Trade
receivables 7,853,574 9,488,975 - -
Cash and
cash
equivalents 2,383,616 4,161,375 - -
Other
receivables 2,790,754 1,960,086 - -
13,027,943 15,610,436 - -
======================== ======================== ================================ =================
Non-current
financial
assets
Investment
in
associates - - 11,410,120 11,410,120
- - 11,410,120 11,410,120
======================== ======================== ================================ =================
Financial Liabilities
Financial liabilities Financial liabilities
measured at amortised at fair value through
cost profit and loss
Current
financial 31 March 31 March 31 March 31 March
liabilities 2019 2018 2019 2018
(Restated) (Restated)
GBP GBP GBP GBP
Trade Payables 7,266,518 12,469,912 - -
Accruals and
Other
Payables 809,363 2,492,398 - -
Invoice
Discounting 4,602,762 4,136,998 - -
Obligation
under finance
lease 665,738 631,244 - -
Short term
loan 1,776,969 -
15,121,350 19,730,552 - -
========================== ========================== ================================ ===========================
Non-Current
financial
liabilities
Deferred
contingent
consideration - - 72,594 812,039
Obligation
under finance
lease 1,215,633 1,441,177 - -
Loans - 8,862,845 - -
1,215,633 10,304,022 72,594 812,039
========================== ========================== ================================ ===========================
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash
and cash equivalents, trade and other receivables, trade and other
payables, and loans and borrowings.
Due to their short-term nature, the carrying value of cash and
cash equivalents, trade and other receivables, trade and other
payables and loans and borrowings approximates their fair
value.
(iv) Financial instruments measured at fair value
The fair value hierarchy of financial instruments is set out
below
-- Financial asset at fair value through profit and loss - equity investment - Level 3
-- Financial liability at fair value through profit and loss -
deferred consideration - Level 2
There was no transfer between levels during the year. The
valuation techniques and significant unobservable inputs used in
determining the fair value measurement of level 2 and level 3
financial instruments, as well as the inter-relationship between
key unobservable inputs and fair value, are set out below:
Financial asset at fair value through profit and loss - equity
investment - Level 3
The fair value of the Level 3 investment in associate has been
determined using a discounted cash flow model. Using forecast
growth rates based on the potential size of the market, a discount
rate of 15% was applied to these forecasted cash flows over a 5
year period.
Quantitative information on significant unobservable inputs -
equity investment - Level 3
The Directors note that the discounted cash flow valuation used
to assess the carrying value of Incubex contains a number of
sensitivities relating to Incubex's assumed market share, its cost
base and the value of the discount rate applied. These
sensitivities are shown in the table below.
Variable Sensitised Value of AMPs Impact on AMP
29.08% stake profit or loss
5% Increase in market GBP14,490,944 +GBP3,080,824
share
5% Decrease in market GBP8,316,044 -GBP3,094,076
share
3% Increase in costs GBP11,268,902 -GBP141,218
3% Decrease in costs GBP11,538,086 +GBP127,966
5% Increase in discount GBP6,655,491 -GBP4,754,629
rate(*)
5% Decrease in discount GBP20,573,539 +GBP9,163,419
rate(*)
(*) Discount rate is based on 20% with no margin of error
variable
Financial liability at fair value through profit and loss -
deferred consideration - Level 2
The Group's only financial liability measured at fair value
through profit and loss is the deferred contingent consideration,
details of the method for valuing deferred consideration is
included in note 28. The deferred contingent consideration is
considered a level 2, as observable inputs are used when
calculating the fair value, using the Monte Carlo method.
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Group's finance function. The Board receives monthly reports from
the Group Financial Controller through which it reviews the
effectiveness of the processes put in place and the appropriateness
of the objectives and policies it sets. The Group's internal
auditors also review the risk management policies and processes and
report their findings to the Audit Committee.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. Further details regarding
these policies are set out below:
Credit risk
Credit risk is the risk that an issuer or counterparty will be
unable or unwilling to meet a commitment it has entered into with
the Group. The Group is mainly exposed to credit risk from credit
sales. At 31 March 2019 the Group had trade receivables of
GBP11,295,093 (2018: GBP11,925,685).
The Group attempts to mitigate credit risk by assessing the
credit rating of new customers prior to entering into contracts and
by entering into contracts with customers with agreed credit terms
as well as monitoring the trade receivables balances outstanding
regularly and at the reporting date do not expect any losses from
non-performance by counterparties. Credit risk also arises from
cash and cash equivalents with amounts held by banks. At the
reporting date the Group's financial assets exposed to credit risk
are as follows:
31 March
2019 31 March 2018
GBP GBP
Cash balances 2,383,616 4,161,375
Trade and other receivables 10,644,328 11,449,061
13,027,944 15,610,436
=================== ===================
The Directors are unaware of any factors affecting the
recoverability of outstanding balances at 31 March 2019 and 31
March 2018, expected credit loss provisions have been calculated In
accordance with the policy in Note 1.
Foreign exchange risk
Foreign exchange risk arises when individual Group entities
enter into transactions denominated in a currency other than their
functional currency. The Group is predominantly exposed to currency
risk on its imported pellet purchases which make up approximately
80% of total pellet volumes and are denominated in Euros. The
exchange rate volatility we have seen over the year has had a
negative impact on earnings of GBP228,919 (2018: GBP639,860, see
Note 3). Where possible we endeavour to buy forward or when spot
rates are favourable, but the volatility and downward trend we have
seen in Euro Sterling has made longer term hedging expensive. The
Group continues to monitor this strategy on a regular basis.
Liquidity risk
Liquidity risk arises from the management of working capital and
the finance charges and principal repayments on its debt
instruments.
Management's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. Management also prepares 12 month cash flow projections
as well as information regarding cash balances on a daily basis. At
the end of the financial year, these projections indicated that the
Group expected to have sufficient liquid resources to meet its
obligations under all reasonably expected circumstances.
Cash flow is monitored across all Group subsidiaries on a
rolling 13 week forecast.
The table below summarises the maturity profile of the Group's
financial liabilities based on contractual undiscounted
payments:
Period
ended 31 Between Between
March Less than 3 to 12 1 and 2 and Over
2019 On demand 3 months months 2 years 5 years 5 Years
GBP GBP GBP GBP GBP GBP
Trade
Payables 453,419 6,813,099 - - - -
Accruals
and other
payables - 5,881,113 150,000 - - -
Obligation
under
finance
lease 82,559 201,332 508,357 998,436 90,687 -
Loans and - - 1,776,969 - -
borrowings -
Interest
cost on
finance
lease - - 73,052 62,179 3,924 -
535,978 12,895,544 2,508,378 1,060,615 94,611 -
=========== ============== ===================== ==================== ============ ===========================
Period
ended 31
March Between Between
2018 Less than 3 to 12 1 and 2 and Over
Restated On demand 3 months months 2 years 5 years 5 Years
GBP GBP GBP GBP GBP GBP
Trade
Payables 1,377,683 8,703,838 315,551 - - -
Accruals
and other
payables 113,763 8,312,968 12,000 - - -
Obligation
under
finance
lease - 42,573 139,034 592,851 1,032,887 265,076
Loans and - - - - 6,326,502 -
borrowings
Interest
cost on
finance
lease 4,249 6,572 18,267 86,798 176,064 7,522
Interest
costs on
loans and
borrowings - - 930,018 803,162 803,162 -
1,495,695 17,065,951 1,414,870 1,482,811 8,338,615 272,598
=========== ============== ===================== ==================== ============ ===========================
Market price risk
The fuels business has exposed to the movement in the underlying
price of fibre. Where possible the Group seeks to manage this
exposure with contractual arrangements which enables it to minimise
this risk. 1% increase (decrease) in the price of the fibre would
result in an immaterial decrease (increase) in EBITDA margin.
Capital Management
The Group's capital is made up of share capital, share premium,
capital contribution, convertible debt reserve as noted in the
Statement of Changes in Equity and loans as described in note
18.
The Group's objectives when maintaining capital are:
-- To safeguard the entity's ability to continue as a going
concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
-- To provide an adequate return to shareholders by pricing
products and services commensurately with the level of risk.
The Group manages its capital structure and makes adjustments to
it in the light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or
adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders,
issue new shares, or sell assets to reduce debt.
The Group monitors its net debt to equity ratio and looks to
ensure that the business has sufficient capital and liquidity to
meet required interest and principal repayments.
25 Operating lease payments Year ended Year ended
31 March 31 March
2019 2018
(Restated)
GBP GBP
Not more than one year 815,918 570,762
Later than one year and not later
than five years 1,194,890 1,076,204
Later than five years
2,010,808 1,646,966
============ ============
26 Finance lease payments Year ended Year ended
31 March 31 March
2019 2018
(Restated)
GBP GBP
Not more than one year 738,790 631,244
Later than one year and not later
than five years 1,237,785 1,502,596
Later than five years - 36,959
1,976,575 2,170,799
============ ============
27 Related party transactions
Richard Burrell, Chief Executive Officer of the Group, has a
significant interest in Matheson Capital Investment Management
Limited to which the Group paid a fee of GBP107,678 (2018:
GBP104,550) for the provision of strategic advice and other
services. Richard Burrell holds 3,195,116 shares as at 31st March
2019 in AMP Group after conversion of CLN to Equity shares.
Mathieson Capital Fund Management LLP, an entity owned by Richard
Burrell, holds 30,000 shares in the Group
Neil Eckert owns 9,166,647 shares as at 31st March 2019 in AMP
Group after conversion of CLN to Equity shares.
The Group has a deferred contingent consideration agreement in
place with Neil Eckert and Mathieson Capital LLP's (an entity
controlled by Richard Burrell). The derived contingent value of all
3,999,999 options has been calculated at GBP39,616 (2018:
GBP5,404), of which GBP26,411 (2087: GBP3,621) is allocated to Neil
Eckert and GBP13,205 (2018: GBP1,783) to Mathieson Capital LLP.
More details can be found in note 28.
Sir Laurence Magnus, Non Executive Director of the Group, owns
237,085 shares as at 31st March 2019 in AMP Group after conversion
of CLN to Equity shares.
Sir Brian Williamson, Non Executive Director of the Group, owns
128,571 shares as at 31st March 2019 in AMP Group after conversion
of CLN to Equity shares.
Robert Bland DL, Non Executive Director of the Group, owns
337,922 shares as at 31st March 2019 in AMP Group after conversion
of CLN to Equity shares.
Nicholas Soames, Non Executive Director of the Group, owns
50,000 shares in AMP Group as at 31st March 2019.
Mark Tarry, Executive Director of the Group, owns 230,000 shares
in AMP Group as at 31st March 2019.
All of the transactions with related parties took place at an
arm's length price. The conversion of CLN to equity shares, the
Mathieson Capital Investment Management Limited agreement and the
deferred contingent consideration agreements with the related
parties were all made at arm's length.
28 Deferred contingent consideration and employee options
AMP Energy Services and Mathieson Biomass
The final terms of the deferred consideration, which relates to
the Group's acquisition of AMP Energy Services Limited (formerly
Environova Consulting Limited) and Mathieson Biomass Limited, were
amended and agreed on the 25 June 2014 ("Valuation Date"). The
deferred consideration is subject to performance criteria linked to
Total Shareholder Returns ("TSR") over the period 30 June 2014
through to 31 December 2020 ("Performance Period").
The vesting criteria are as follows:
-- Annualised TSR is greater than 12% over the Performance Period; all shares vest;
-- Annualised TSR is less than 8% over the Performance Period; no shares vest;
-- Annualised TSR is between 8% and 12% over the Performance
Period; a pro rata proportion of shares vest; and,
-- At any time during the Performance Period annualised TSR
exceeds 15%, all shares vest immediately.
A Monte Carlo Simulation model was used to determine the fair
value of the deferred consideration as at the Valuation Date.
Inputs to the model include the market price of the call options at
the Valuation date, the exercise price, the assumed volatility of
the share price, the current level of risk free rates of return,
the dividend yield and the expected exit date. The biggest driver
of value in the model is the assumed volatility rate, which was
derived by applying a weighting to volatility rates observed from a
portfolio of publicly traded companies in the renewable energy and
power generation sectors and from the Group's share price since
admission on AIM.
The Group conducted an independent valuation of Neil Eckert's
and Mathieson Capital LLP's (an entity controlled by Richard
Burrell) deferred contingent consideration which could lead to a
maximum of 3,999,999 Ordinary Shares, or 2,666,666 and 1,333,333
Ordinary Shares respectively being issued. The valuation was
conducted in accordance with the principles set out in IFRS 3.
The derived contingent value of all 3,999,999 options has been
calculated at GBP39,616 allocated GBP26,411 to Neil Eckert and
GBP13,205 to Mathieson Capital LLP. The valuation was based on an
assumed volatility of 25% (2018: 25%) which is in line with the
observed volatility of other traded companies in the Group's sector
peer group and is higher than the volatility seen in the Group's
share price since admission to AIM.
AMP Biomass Fuel Ltd
On 30 March 2016, the Company entered into an acquisition
agreement for the purchase of Forest Fuels Holdings Limited and its
controlled entities. This agreement also included a deferred
consideration element based on the same TSR performance measures as
noted above. The maximum number of shares which could vest is
1,000,000.
The Forest Fuels agreement included a further deferred
consideration element based on EBTIDA performance measures in the
years to 31 December 2016, 31 December 2017 and 31 December 2018.
The maximum number of shares which could vest was 1,500,000. The
Board determined that it was in shareholders' interests to align
all management incentives to the same TSR linked performance
condition. Therefore a Deed of Variation between the Company and
the various sellers of Forest Fuels Holdings Limited was signed on
15 February 2018 and up to 2,500,000 ordinary shares may now be
issued to the sellers of Forest Fuels Holdings Limited, depending
upon on the same TSR performance measures as noted above
A further Monte Carlo Simulation model was used to determine the
fair value of the deferred consideration based on the terms of the
AMP Energy Services Limited and Mathieson Biomass Limited model.
The derived contingent value of all the 2,500,000 options has been
calculated at GBP24,760 (2018: GBP309,162).
Employee EMI Options
In addition to the deferred consideration, 1,578,786 share
options issued under the Group's EMI plan and the non-employee
share option plan are outstanding at 31 March 2018. The options are
subject to the same TSR criteria as the deferred consideration and
are subject to strike prices between GBP0.54 and GBP1.075. Share
options are valued on the date of issue and not revalued. The value
of these options is GBP73,474 (2018: GBP44,373).
Fair value adjustment on deferred
consideration Year ended Year ended
31 March 31 March
2019 2018
GBP GBP
AMP Energy Services and Mathieson
Biomass 39,616 494,659
Forest Fuels 24,760 309,162
Employee EMI Options 73,474 44,373
------------ ------------
137,850 848,194
============ ============
29 Loss per share Year ended Year ended
31 March 31 March
2019 2018
GBP GBP
Loss attributable to equity
holders of the company (5,717,797) (2,486,127)
Weighted average number of shares 50,187,880 39,948,247
Continuing operations basic
(Pence) (11.39) (6.22)
The basic earnings per share have been calculated using the loss
attributable to shareholders of the parent company, Aggregated
Micro Power Holdings plc.
We have considered the impact of the Share options and
convertible loan notes on the diluted EPS. These are anti-dilutive
in both 2018 and 2019 and thus diluted EPS has not been presented
for either year.
30 Non-Controlling Interest
Highland Wood Energy Limited, a 50.1% owned subsidiary of the
Company, has material non-controlling
interests (NCI).
Summarised financial information in relation to Highland Wood
Energy Limited, before intra-group
eliminations, is presented below together with amounts
attributable to NCI:
Year ended Year ended
31 March 31 March
For the year ended 31 March 2019 2018
Revenue 9,032,951 5,987,326
Cost of sales (5,655,831) (3,795,791)
------------- -------------
Gross Profit 3,377,120 2,191,535
Administrative expenses (3,743,138) (2,213,919)
Operating loss (366,018) (22,384)
Finance expense (28,178) (12,627)
------------- -------------
Loss before tax (394,196) (35,011)
Tax expense (12,954) -
------------- -------------
Loss after tax (407,150) (35,011)
============= =============
Profit/(loss) allocated to NCI (203,168) (17,470)
Cash flows from operating activities (717,607) (130,569)
Cash flows from investing activities (80,130) 20,970
Cash flows from financing activities 805,574 87,516
------------- -------------
Net cash inflows/(outflows) 7,837 (22,083)
As at March
Assets:
Property plant and equipment 847,468 878,353
Inventories 412,498 426,619
Trade and other debtors 1,157,333 1,522,792
Cash and cash equivalents 142,434 134,597
Liabilities:
Trade and other payables 1,330,735 2,077,994
Loans and borrowings 842,582 90,802
Net Assets 386,416 793,565
============= =============
Accumulated non-controlling
interests 192,821 395,989
31 Events after the reporting period
The Group drew down on a further stock loan of GBP300,000 in
April 2019 and GBP1,800,000 in July 2019.
32 Structured Entities
Aggregated Micro Power Infrastructure 2 plc (AMPIL) is a special
purpose vehicle which is wholly controlled by Law Debenture
Intermediary Corporation Plc.
AMP Plc group provides a number of goods and services to AMPIL
governed by contractual operating arrangements which include:
- Development fees on project sold to AMPIL - 2019 GBP4,438,204 (2018: GBP2,379,891)
- Wood fuel sales - 2019 GBP1,453,215 (2018: GBP1,177,099)
- Operational and Maintenance fees - 2019 GBP684,996 (2017: GBP612,120)
- Management services - 2019 GBP208,578 (2018: GBP732,000)
The group are also entitled to receive 100% of the excess
returns in the form of deferred development fees when the
outstanding loan notes in AMPIL are repaid.
33 Prior year restatement
Due to the reorganization and new management within the wood
fuels division, certain issues were identified with regard to the
inventory and payables system. This led management to conduct a
full review of the prior period inventory balances.
Restatement A:
Inventory
During the 2019 stock take the Group conducted a management led
review into prior period stock balances which included the level of
accruals and the accounting for goods received not invoiced.
This review has concluded that, stock as at 31 March 2018 had
been overstated due to the systems incorrectly accounting for stock
movements around the 2018 year end with certain costs incorrectly
being capitalised and, in addition, the closure of several depots
as part of the restructure not being accurately reflected on the
balance sheet. This arose due to multiple stock management systems
and specific challenges of those acquired companies not operating
in unison during the busy trading period known as the "Beast from
the East". This led to a decrease in the inventory balance of
GBP3.1m. In addition a further adjustment of GBP0.7m to
intercompany eliminations between Forest Fuels and Billingtons
Bioenergy.
Creditor completeness
During this period it was identified that there were a number of
purchases which were incorrectly accounted for due to a back-log in
processing leading to an understatement of accruals and goods
received not invoiced. This led to an increase in creditors of
GBP1.6m, which was offset by a decrease of GBP1.3m which related to
intercompany eliminations between Forest Fuels and Billingtons
Bioenergy, resulting in a net increase in creditors of GBP0.3m.
Restatement A:
a) increase in cost of sales of (GBP4,378,482) and an increase
in administration expenses of (GBP26,122);
b) decrease in inventories of (GBP2,939,930);
c) decrease in trade and other receivables of (GBP26,122);
d) increase in trade and other payables of (GBP1,438,552);
Restatement B:
In addition to Restatement A, an inter-company adjustment was
reported in the interim financial statements relating to the
elimination of intercompany balances at cost, which took place
between Forest Fuels and Billington Bioenergy.
As a result of Restatements A and B, the aggregate reduction to
Retained Earnings as at 31 March 2018 is GBP4,404,604. The
breakdown of this prior period aggregate restatement is as
follows:
Restatement B:
a) decrease in inventories of (GBP730,134);
b) decrease in trade and other receivables of (GBP614,986);
c) decrease in trade and other payables of GBP1,345,120
All of the above errors have been corrected by restating each of
the effected financial statement line items for the prior periods
as follows:
Consolidated Statement of Comprehensive Year ended Year ended
Income extract
31 March Increase/ 31 March
2018 (Decrease) 2018
(As restated)
GBP GBP GBP
Revenue 43,162,969 - 43,162,969
Cost of sales (38,048,103) (4,378,482) (33,669,621)
--------------- ------------------------ --------------
Gross profit 5,114,866 (4,378,482) 9,493,348
Other operating income 127,702 - 127,702
------------------------------------------ --------------- ------------------------ --------------
Administrative expenses (11,142,051) (26,122) (11,115,929)
Non-recurring administrative (461,951) - (461,951)
Restructuring expenses incurred (1,119,046) - (1,119,046)
Restructuring provision (569,678) - (569,678)
------------------------------------------ --------------- ------------------------ --------------
Total Administrative costs (13,292,726) (4,404,604) (13,266,604)
------------------------------------------ --------------- ------------------------ --------------
Fair value adjustment on deferred
consideration (848,194) - (848,194)
Gain on financial asset at fair
value through profit & loss 7,507,175 - 7,507,175
------------------------------------------ --------------- ------------------------ --------------
Profit/(Loss) from operations (1,391,177) (4,404,604) 3,013,427
Consolidated Balance Sheet 31 March Increase 31 March
extract 2018 2018
(As restated) /(Decrease)
GBP GBP GBP
Non-current assets
Property, plant and equipment 6,314,203 - 6,314,203
Investment in associate 11,410,120 - 11,410,120
Intangibles 10,138,105 - 10,138,105
Total non-current assets 27,862,428 - 27,862,428
--------------- ------------------------ ------------
Current assets
Inventories 1,772,566 (3,670,064) 5,442,630
Trade and other receivables 11,987,586 (641,108) 12,628,694
Cash and cash equivalents 4,161,375 - 4,161,375
------------------------
Total current assets 17,921,527 (4,311,172) 22,232,699
--------------- ------------------------ ------------
Total assets 45,783,955 (4,311,172) 50,095,127
--------------- ------------------------ ------------
Current liabilities
Trade and other payables 19,099,309 93,433 19,005,876
Provisions 569,678 - 569,678
Loans and borrowings 631,244 - 631,244
Total current liabilities 20,300,231 93,433 20,206,798
--------------- ------------------------ ------------
Non-current liabilities
Loans and borrowings 10,304,022 - 10,304,022
Deferred Contingent Consideration 812,039 - 812,039
Deferred tax liability 695,157 695,157
Total non-current liabilities 11,811,218 - 11,811,218
--------------- ------------------------ ------------
Total liabilities 32,111,449 93,433 32,018,016
--------------- ------------------------ ------------
Net assets 13,672,506 (4,404,604) 18,077,111
--------------- ------------------------ ------------
The restatement for 31 March 2018 also led to a change in EPS
for the previous financial year. Due to a decrease in net profit
the EPS decreased from GBP4.85 to -GBP7.09.
The correction further affected some of the amounts disclosed in
the Notes. Therefore, those notes are restated as well.
The 2018 comparatives have been restated in these financial
statements to include the effect of the adjustments shown above.
Under paragraph 10(f) of IAS 1 Presentation of financial
statements, this restatement would ordinarily require the
presentation of a third consolidated statement of financial
position as at 1 April 2017. However, as the restatement of the
provisional fair values would have no effect on the statement of
financial position as at that date, the Directors do not consider
that this would provide useful additional information and as
consequence, have not presented a third consolidated statement of
financial position due to prior period restatement.
34 Effect of change in accounting policies
The Group adopted IFRS 9 and IFRS 15 with a transition date of 1
January 2018. The group has chosen not to restate comparatives on
adoption of IFRS 9 and, therefore, are not reflected in the
restated prior year financial statements. Rather, these changes
have been processed at the date of initial application (i.e. 1
April 2018) and recognised in the opening equity balances.
IFRS 9 Financial Instruments
IFRS 9 has replaced IAS 39 Financial Instruments: Recognition
and Measurement, and has had an effect on the Group in the
following areas:
-- Impairment provision on financial assets measured at
amortised cost (such as trade and other receivables) have been
calculated in accordance with IFRS 9's expected credit loss model,
which differs from the incurred loss model previously required by
IAS 39. This has resulted in an increase/decrease to the impairment
provision at 1 April 2018 from that previously reported of
GBP150,015.
The transition method requires a retrospective application for
the first time adoption of IFRS 9, however the standard has allowed
an exemption to not restate the comparative information with
differences being recorded in opening retained earnings, these
changes have been processed at the date of initial application
(i.e. 1 April 2018), and presented in the statement of changes in
equity for the year ended 31 March 2019.
IFRS 9 considerations
Classification and measurement
There was no impact to the annual consolidated financial
position resulting from the Group applying the classification and
measurement requirements of IFRS 9.
Impairment
The adoption of IFRS 9 has changed the Group's accounting for
impairment losses for financial assets by replacing IAS 39's
incurred loss approach with a forward-looking expected credit loss
approach.
To incorporate forward-looking information into the expected
credit loss model, the following information was used; the debtor's
age analysis, the bad debt allowance history for the past three
years, and the credit score against each customer. Management have
used this information to support their assumptions when compiling a
provision matrix.
The Group will apply the simplified approach on all trade
receivables and contract assets.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 established a five-step model to account for revenue
arising from contracts with customers. Under IFRS 15, revenue is
recognised at an amount that reflects the consideration to which an
entity expects to be entitled in exchange for transferring goods or
services to a customer.
IFRS 15 considerations
Sale of goods
The group historically recognised wood fuel sales on delivery to
the customer. The Group's contracts with customers for the sale of
wood fuels generally includes one performance obligation being the
delivery of such wood fuel. The Group has concluded that the
revenue from the sale of wood fuel should be recognised at a point
in time when control of the asset is transferred to the customer
which is upon delivery. This is consistent with current recognition
and the adoption of IFRS 15 does not have any impact on revenue
recognition on wood fuel sales.
Rendering of services
Operations and maintenance contracts
The Group's contracts with customers to provide operations and
maintenance services which includes scheduled maintenance services
and emergency call out services. These services are either combined
into a single customer contract or are supplied separately.
Maintenance service revenue has been recognised on a straight
line basis rather than on delivery of the service. IFRS 15 requires
revenue to be recognised at the time when the services performance
obligations (i.e. the services required under the contract) are
completed. There is however no impact at 31 March 2019 as these
timing differences between revenue recognition and the delivery of
the performance obligations, were eliminated over the course of the
full year as contract terms run concurrently with the year end and
cyclical heating season. Therefore, this recognition is in
accordance with IFRS 15 and no adjustments have been made.
Historically emergency call out services and any spare parts
used during these call outs are recognised at a point in time when
the service is requested and adoption of IFRS 15 would not impact
this recognition.
RHI support and consultancy service
The Group's RHI support and consultancy services are provided
throughout the year via a monthly subscription service and the
revenue should be recognised over time as the services are rendered
as the customers simultaneously receive and consume the benefits
provided by the Group. There is no impact on the revenue
recognition following the adoption of IFRS 15.
Heat Supply sales
The Group's contracts with customers to provide heat supply
sales is a combined contract which includes:
-- the supply of heat from the combustion of wood fuel; and,
-- the provision of operations and maintenance services.
Each service has distinct performance obligations and is
delivered at different times. Revenue from these contracts however
has been recognised as a combined service on a GBP/Kilowatt-hour
basis multiplied by the amount of heat supplied as measured on the
heat meter. Following adoption of IFRS 15 individual streams should
be recognised when the performance obligations under each has been
completed.
There are no changes to the revenue recognition for the heat
supply component of the contract because heat is generated and sold
to the customer simultaneously. Meanwhile, revenue from the
operation and maintenance services is a small percentage of the
revenue generated from these contracts. These contracts run
concurrently with the financial year. Therefore, the adoption of
IFRS 15 did not have any impact on revenue recognition of the Heat
supply sales.
Project revenue and development fees
The Group's contracts with customers to provide asset management
services, asset development, and portfolio management service
generally all have one performance obligation.
Asset management services are recognised on a straight-line
basis over time, as the benefits provided by the Group are received
and consumed in equal measure over the course of a year.
Asset development fees are recognised when they are probable,
which is at a point in time when control has passed to the end
customer. Control is considered to have passed when all key
contracts have been signed and substantially all work has been
completed or when payment for the project has been received.
Development costs associated with these projects are typically
passed on to the buyer and where this is not possible these are
costs are considered for impairment in line with IFRS 9 using the
simplified model.
Portfolio management service fees are recognised on a
straight-line basis over time, as the benefits provided by the
Group are also received and consumed in equal measure over the
course of a year.
Therefore, the adoption of IFRS 15 did not have any impact on
revenue recognition of the above services.
Company Statement of Financial Position
For the year ended 31 March 2018
31 March 31 March 2018
2019
Note GBP GBP
Fixed assets
Tangible Fixed Assets 43 283,407 357,794
Investments in subsidiaries 38 11,754,644 12,054,644
Investments in associate 23 11,410,120 11,410,120
Total non-current assets 23,448,171 23,822,558
Current assets
Debtors: Amounts falling due
within one year 40 16,351,146 7,617,840
Cash and cash equivalents 24,216 135,564
Total current assets 16,375,362 7,753,405
Current liabilities
Creditors: amount falling due
within one year 40 224,799 407,069
Total current liabilities 224,799 407,069
Total assets less current liabilities 39,598,734 31,168,894
Non-current liabilities
Loans and borrowings 42 - 8,862,845
Deferred Tax Liability 24,688 -
Deferred Contingent Consideration 17 72,594 812,039
Total non-current liabilities 97,282 9,674,884
Total liabilities 322,081 10,081,953
Net current assets 16,150,563 7,346,336
Net assets 39,501,452 21,494,010
Equity attributable to equity
holders of the company
Paid up share capital 20 316,970 215,956
Share premium account 20 17,106,745 16,192,845
Other reserve 10,711,532 10,682,431
Convertible debt option reserve - 1,149,255
Retained earnings 11,366,205 (6,746,478)
Total equity 39,501,452 21,494,010
As permitted by Section 408 of the Companies Act 2006, the
profit and loss account of the company is not presented as part of
these financial statements. The company's total comprehensive loss
for the financial year was GBP1,698,548 (2018: profit of
GBP4,001,089). The company financial statements were authorised for
issue by the board of Directors on 30(th) September 2019 by:
Richard Burrell
Chief Executive Officer
Company Statement of Changes in Equity
For the year ended 31 March 2019
Period ended 31 Convertible
March Share debt option Retained
2018 capital Share premium Other Reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
Equity as at 1
April
2017 189,052 12,519,616 9,046,180 1,453,603 (11,051,914) 12,156,536
Profit for the
period - - - - 4,001,089 4,001,089
Total
comprehensive
income - - - - 4,001,089 4,001,089
Issue of share
capital 26,904 3,681,229 1,591,878 - 5,300,011
Share issue cost - (8,000) - (8,000)
Equity element of
convertible
loan notes - - - (304,348) 304,348 -
Fair value
adjustment
of EMI Options 44,373 44,373
Equity as at 31
March
2018 215,956 16,192,845 10,682,431 1,149,255 (6,746,477) 21,494,009
Period ended 31 Convertible
March Share debt option Retained
2019 capital Share premium Other Reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
Equity as at 1
April
2018 215,956 16,192,845 10,682,431 1,149,255 (6,746,477) 21,494,009
Profit for the
period 1,698,548 1,698,548
Total
comprehensive
income 1,698,548 1,698,548
Issue of share
capital 42,500 8,457,500 - - - 8,500,000
Capital Reduction - (16,192,845) - - 16,192,845 -
Share issue cost - (425,516) - - - (425,516)
Equity Element of
convertible
debt - - - (209,550) 209,550 -
Conversion of
convertible 58,514 9,074,761 - (939,705) 11,739 8,205,309
Fair value
adjustment
of EMI Options - - 29,101 - - 29,101
Equity as at 31
March
2019 316,970 17,106,745 10,711,532 - 11,366,205 39,501,452
Share capital: Nominal value of shares issued.
Share premium: Amount subscribed for share capital in excess of
the nominal value.
Retained earnings: All other net profits and transactions with
owners (e.g. dividends) not recognised elsewhere.
Other reserve: Amount raised through the use of a cashbox
structure and applying merger relief on business combination where
the consideration for shares in another company includes issued
shares and on completion of the transaction, the company issuing
the shares will have secured at least a 90% equity holding in the
other company.
Convertible debt option reserve: Amount recorded as equity on
the initial fair value measurement of issued convertible loan
notes.
35 Accounting policies
The financial statements of the company for the year ended 31
March 2019 have been prepared in accordance with FRS 102, the
Financial Reporting Standard applicable in the United Kingdom and
Republic of Ireland issued by the Financial Reporting Council.
The preparation of financial statements in compliance with FRS
102 requires the use of certain critical accounting estimates. It
also requires Group management to exercise judgement in applying
the Group's accounting policies (see note 2).
Parent company disclosure exemptions
In preparing the separate financial statements of the parent
company, advantage has been taken of the following disclosure
exemptions available under FRS 102:
-- Only one reconciliation of the number of shares outstanding
at the beginning and end of the period has been presented as the
reconciliation for the Group and the parent company would be
identical
-- No cash flow statement has been presented for the parent company
-- No disclosure has been given for the aggregate remuneration
of the key management personnel of the parent company as their
remuneration is included in the totals for the Group as a
whole.
Investments in associate undertakings
Investments in associate undertakings are initially recognised
in the statement of financial position at fair value. After initial
measurement, the Company measures its financial instruments which
are classified as at FVPL, at fair value.
Investments in subsidiary undertakings4
Investments by the company in the shares of subsidiary
undertakings are stated at cost less any provision, where in the
opinion of the Directors, there has been a permanent impairment in
the value of any such investment. Contingent consideration is
recognised when it is probable it will be paid.
Deferred tax
Deferred tax is recognised on all timing differences where the
transaction or events that give rise to an obligation to pay more
tax in the future, or a right to pay less tax in the future, have
occurred by the consolidated statement of financial position date.
Deferred tax assets are recognised when it is more likely than not
that they will be recovered. Deferred tax is measured using rates
of tax that have been enacted or substantively enacted by the
consolidated statement of financial position date.
Financial assets
Financial assets, other than investments are initially measured
at transaction price (including transaction costs) and subsequently
held at cost, less any impairment.
Financial liabilities and equity
Financial liabilities and equity are classified according to the
substance of the financial instrument's contractual obligations,
rather than the financial instrument's legal form. Financial
liabilities, are initially measured at transaction price (including
transaction costs) and subsequently held at amortised cost.
Convertible debt
The proceeds received from the issue of the convertible debt are
allocated between their financial liability and equity components.
The financial liability is initially recognised at fair value
(being the discounted cash flows using a market rate of interest
that would be payable on a similar instrument that does not include
an option to convert). Subsequently, the financial liability is
measured at amortised cost
The equity component is assigned to the residual amount after
deducting this fair value liability from the fair value of the
financial instrument as a whole. It is recognised in the
'Convertible debt option reserve' within shareholders' equity, net
of income tax effects. More information is provided in note 20.
36 Employees
The company had no direct employees, other than the Directors,
in the period to 31 March 2019. No costs of employment were
recharged to the company in the period to 31 March 2019.
37 Directors
Details of the remuneration of the company's Directors are
outlined in Note 7 of the Group's financial statements and the
director's report. 4 non-executive Directors were remunerated
(Total: GBP70,000) from the company in year ended March 2019. The
executive Directors are employed and paid out of AMP Energy
Services Limited, which is a wholly owned subsidiary of the
company. The non-executive Directors are paid directly by the
company.
Key management personnel are all the Directors of the
company.
38 Investments
Year ended Year ended
31 March 31 March
2019 2018
GBP GBP
Cost at 1 April 2018 12,054,644 9,196,103
MI Generation investment transfer (300,000) -
Additions - 2,858,541
Cost at 31 March 2019 11,754,644 12,054,644
Mi-Generation transfer related to costs paid by AMP PLC on
behalf of Forest Fuel Limited for the acquisition of the
Mi-Generation contracts, this amount has been removed from
investment and transferred to Forest Fuels Limited.
39 Principal subsidiary undertakings
The principal subsidiary undertakings of the company are
disclosed in Note 22 of the Group financial
statements. Their activities are described in the strategic
report.
40 Debtors
Year Ended Year Ended
31 March 31 March
2019 2018
GBP GBP
Debtors: Amounts falling due within
one year
Prepayments 199,911 80,355
Other debtors 53,235 64,185
Amounts owed by Group undertakings 16,098,000 7,553,655
16,351,146 7,698,195
Interest on the intercompany debt is charged at 12% per annum
and is repayable on demand
with a final redemption date of 2023.
Creditors: amounts falling within
41 one year
Year Ended Year Ended
31 March 31 March
2019 2018
GBP GBP
Trade creditors due within 1 year 84,284 208,059
Accruals 47,559 79,786
Other creditors 92,956 119,224
224,799 407,069
42 Financial instruments
Financial assets measured
at fair value
31 March 31 March
2019 2018
GBP GBP
Current financial assets
Debtors - 6,891
Cash 24,216 135,565
Other receivables 16,098,000 7,610,949
16,122,216 7,753,405
Financial liabilities measured
at Fair value through profit
and loss
Current financial 31 March 31 March
liabilities 2019 2018
GBP GBP
Creditors 224,799 476,724
224,799 476,724
Financial liabilities
measured at amortised
cost
Non-Current financial 31 March 31 March
liabilities 2019 2018
GBP GBP
Loans and borrowings - 8,862,845
- 8,862,845
Financial instruments not measured at fair value includes cash,
debtors, creditors, and loans and borrowings.
Due to their short-term nature, the carrying value of cash,
debtors, creditors, and loans and borrowings approximates their
fair value.
43 Plant, Property and Equipment
Furniture Computer
& fixture Office Equipment Equipment Total
GBP GBP GBP GBP
Cost
As at 1 April
2018 303,439 31,374 47,948 382,761
Additions 27,998 13,895 17,123 59,016
As at 31 March
2019 331,437 45,269 65,071 441,777
Depreciation
As at 1 April
2018 18,751 1,672 4,543 24,966
Charge for the
period 101,542 11,616 20,246 133,404
As at 31 March
2019 120,293 13,288 24,789 158,370
Net book value - - - -
As at 1 April
2018 284,687 29,702 43,405 357,794
As at 31 March
2019 211,144 31,981 40,282 283,407
44 Financial and capital commitments
The company had no financial or capital commitments at 31 March
2019.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EAFEFELENFEF
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