Half Yearly Report

RNS Number : 0012T

Active Energy Group PLC

21 September 2010

 

21 September 2010

ACTIVE ENERGY GROUP PLC

('Active Energy', the 'Company' or the 'Group')

 

Interim results for the six months ended 30 June 2010

Active Energy, the AIM-quoted voltage optimisation specialist, previously named Cinpart, announces its interim results for the six months ended 30 June 2010 (the "period").

Highlights:

·      Encouraging progress in establishing platform for growth for its voltage optimisation technology

·      Total revenue of £2.8 million (2009: £0.8 million)

-  voltage optimisation subsidiary now principal revenue contributor

·      Loss for the period of £630,529 (2009: loss of £704,992)

·      Loss per share of 0.72 pence (2009 restated: loss of 1.27 pence)

·      Strategic relationships secured in first half:

-  February 2010 - SSE Contracting, part of Scottish and Southern Energy plc, to support the winning and delivery of new contracts in the UK

-  June 2010 - County Executives of America, which represents elected county leaders across 700 counties in the USA, to support development of a presence in the USA

·      Post period end, placing at 7p per share to raise £1.32 million net of expenses

·      Well placed to capitalise on growth opportunities

Philip Palmer, Active Energy's chairman, commented:

"We have made encouraging progress in the first half in building Active Energy's presence in the voltage optimisation marketplace and the strategic relationships established should underpin future growth.  The developments since the start of the second half, both the sales and partnerships secured and the placing to provide additional working capital, will also support the Group's development going forward.

As a result, we believe that Active Energy is well placed to capitalise on the demand for energy efficient products in the UK and, increasingly, overseas."

Enquiries:

Active Energy Group Plc
Kevin Baker, Chief Executive Christopher Foster, Executive Director	Tel: [phone] Tel: [phone]
Merchant Securities Limited (Nominated Adviser)
John East / Simon Clements	Tel: [phone]
Jendens Securities Limited (Joint Broker)
Kim Richardson	Tel: [phone]
Rivington Street Corporate Finance Limited (Joint Broker)
Peter Greensmith	Tel: [phone]
Biddicks (Financial PR)
Sophie Lane	Tel: [phone]

About Active Energy Group: 

Active Energy Group plc (AIM: AEG) is a holding company that owns 72.2 per cent of Active Energy Limited. The Active Energy subsidiary manufactures and supplies the VoltageMaster, a device that can reduce electricity consumption in commercial buildings by up to 20 per cent.

Wholly owned subsidiaries in the Group include Derlite Co Limited; based in Thailand, this company is an international manufacturer of electrical and non-electrical components specialising in ignition systems for gas appliances and Gasignition Limited; a trading company supplying electrical components to small and medium-sized European gas appliance manufacturers.

About Active Energy

Active Energy owns the rights, intangible assets and intellectual property of VoltageMaster, a range of voltage optimisation equipment for commercial buildings that reduces voltage, and consequently energy consumed, by up to 20 per cent. The VoltageMaster, a sophisticated device that is adaptable to complement existing infrastructures, optimises the voltage used in a building by adjusting the electricity voltage supplied to the whole building. In addition, the reduced energy consumption produced by the VoltageMaster provides reduced carbon emissions.

CHAIRMAN'S STATEMENT

On behalf of the Board, I present the June 2010 half year results for Active Energy Group plc, previously named Cinpart plc.  The change of name, approved following the period end at the Annual General Meeting held on 30 July 2010, reflects the focus on our voltage optimisation business since its launch in March 2009 and the growth potential which this business offers.  As these results demonstrate, the voltage optimisation subsidiary, Active Energy Limited, is now the Group's principal revenue generator and we continue to see a significant opportunity to build a presence in this early-stage market.

Financial Review

Group revenues for the period were £2,799,117 (2009: £802,604), with our voltage optimisation business contributing £1,684,798.  The legacy businesses, Gasignition Limited in the United Kingdom and Derlite Limited in Thailand, together experienced growth in revenue of 39 per cent to £1,114,319, compared to £802,604 in a weak first half last year.

The Group reported a loss for the period of £630,529 (2009: loss of £704,992).  Included within this loss is a non-cash charge of £81,987 (2009: £163,328) relating to options issued to directors in February 2010.  The overall loss reflects the early-stage development of the Active Energy voltage optimisation business as the sales achieved in the period under review were insufficient to cover overheads. Loss per share was 0.72p (2009 restated: loss per share of 1.27p).

Net assets as at 30 June 2010 were £1,559,289 (2009: £806,234), including cash balances of £97,988 (2009: £160,169). Post the period end, on 16 July 2010, Active Energy Group completed a placing of 19,871,425 new ordinary shares, raising gross proceeds of £1.39 million (£1.32 million after expenses).

Taking account of the net proceeds of the July 2010 share issue, on a pro-forma basis at 30 June 2010 the Group's net assets would have amounted to £2.9 million and cash and cash equivalents would have been reported at £1.4 million.

The Directors are not recommending the payment of a dividend (2009: £nil).

Operating Review

During the first six months of the current financial year, we made encouraging progress in establishing Active Energy's platform for growth.  In February 2010, in the UK, we entered into a strategic relationship with a subsidiary of Scottish and Southern Energy plc, Southern Electric Contracting (now rebranded as SSE Contracting).  This agreement supports the winning and delivery of new contracts, with SSE Contracting being one of the UK's largest mechanical and electrical contractors in the UK.  The partnership has already proved beneficial for Active Energy in winning a number of meaningful contracts and, having launched a formal training programme for SSE Contracting's sales and installation staff, we are working together to convert the exciting sales opportunities available.

In June 2010, we took a further significant step forward with our growth ambitions, signing a strategic partnership in the USA.  The agreement is with County Executives of America, which represents elected county leaders across 700 counties in the USA, acting on behalf of 48 per cent of the US population, in aggregate. Under the terms of the agreement, County Executives of America is actively promoting our voltage optimisation technology to government bodies and potential commercial partners, as well as assisting with introductions to county authority owned public facilities.  In July 2010, following the period end, the Group also secured a Memorandum of Understanding with three organisations based in Ohio: the County of Summit, Ohio; the Summit County Port Authority; and Northeast Ohio Trade and Economic Consortium.  The Group intends to establish a US presence in a cost effective location in order to service the expected demand for our voltage optimisation products.

We continue to see high levels of interest in our voltage optimisation products and our pipeline of new business opportunities is encouraging.  In the first half, we secured new business including a major contract with the Ministry of Justice and installations with other well known names such as Moto, Holiday Inn, Porsche, Pernod Ricard, G4S and Arcelor Mittal.  At the start of the second half, we also won orders to supply VoltageMaster units to five prisons across the UK.  These orders were secured through the framework agreement announced on 2 September 2009 with members of the Eastern Shires Purchasing Organisation ("ESPO"), a local authority purchasing consortium which Government departments are able to use to simplify their purchasing process.

We are currently at an advanced stage of negotiations with a number of potential customers and we are undertaking trial installations on behalf of several large organisations.  Whilst the conversion of business prospects is, at times, proving protracted, we believe that the trial installations will demonstrate effectively to prospective clients the benefits of our technology, which can reduce energy consumption by up to 20 per cent, and we remain confident that the potential for Active Energy to build its market share remains strong.

The demand for energy efficient products is growing, driven increasingly by regulation as well as the need to cut costs. In the UK, the government's CRC Energy Efficiency Scheme requires larger companies to purchase CO₂ credits according to how much CO₂ they produce and is designed to encourage a proactive approach to reducing CO₂emissions, with an annual league table being published to rank and award financial incentives to the best performers.  The deadline to register is 30 September 2010 and it is estimated that some 20,000 companies and public bodies will be required to sign up, with 5,000 of these becoming scheme participants obliged to purchase CO₂ credits.  Internationally, governments are also becoming more committed to reducing CO₂ emissions and our partners in the USA are actively promoting our voltage optimisation technology at a senior level in Washington DC, from Congress up to the White House,as well as to major public facilities across America.

The Group's legacy businesses, Gasignition Limited in the United Kingdom and Derlite Limited in Thailand, saw improved trading during the first half of the year.  Following the downturn in 2008 and 2009, demand for the gas ignition components, which the legacy businesses supply to white goods manufacturers, picked up towards the end of 2009 and the Group benefited from having retained customers during the downturn.  Conditions in this sector remain challenging and the Board is actively monitoring the performance of this division.

Outlook

We have made encouraging progress during the first half of the year in building our presence in the voltage optimisation marketplace and the strategic relationships established should underpin our development going forward.  The developments since the start of the second half, both the sales and partnerships secured and the placing to provide additional working capital, will support the Group going forward.

We continue to see exciting sales opportunities across a number of sectors; however, the lead times for closing sales are proving longer than originally anticipated, especially when securing major orders.  Nevertheless, we believe that Active Energy is well placed to capitalise on the demand for energy efficient products in the UK and, increasingly, overseas.

Philip Palmer

Chairman

21 September 2010

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2010

		Six months ended 30 June 2010	Six months ended 30 June  2009	Year ended 31 December 2009
	Notes	Unaudited	Unaudited	Audited
		£	£	£
Revenue		2,799,117	802,604	2,880,197
Cost of sales		(2,216,881)	(556,537)	(2,167,579)
Gross profit		582,236	246,067	712,618
Other income		5,741	2,329	14,332
Administrative expenses		(1,213,736)	(946,875)	(1,891,384)
Loss from operations		(625,759)	(698,479)	(1,164,434)
Finance cost		(4,785)	(6,733)	(11,823)
Finance income		15	220	381
Loss before tax		(630,529)	(704,992)	(1,175,876)
Income tax expense		-	-	-
Loss for the period		(630,529)	(704,992)	(1,175,876)
Other comprehensive income
Exchange differences on translation of foreign operations		(17,517)	(55,502)	(107,253)
Total comprehensive income for the period		(648,046)	(760,494)	(1,283,129)
Earnings per share
Basic and diluted (pence)	2	(0.72)	(1.27)	(1.76)

The loss and total comprehensive income for each period are attributable in full to the owners of the parent, with none being attributable to minority interests. This represents a restatement in respect of the results for the period ended 30 June 2009, for which losses of £52,756 were previously attributed to minority interests. The restatement has had the effect of increasing the basic and diluted loss per share attributable to equity holders of the Company for that period to 1.27 pence per share from 1.17 pence per share as previously reported.

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2010

	Notes	30 June 2010 Unaudited	30 June 2009 Restated Unaudited	31 December 2009 Audited
		£	£	£
Assets
Non-current assets
Goodwill		285,653	105,028	285,653
Property, plant and equipment		197,220	160,669	191,106
		482,873	265,697	476,759
Current assets
Inventories		871,951	357,119	428,202
Trade and other receivables		1,855,326	545,958	1,726,873
Cash and cash equivalents		97,988	160,169	840,122
		2,825,265	1,063,246	2,995,197
Total assets		3,308,138	1,328,943	3,471,956
Liabilities
Current liabilities
Trade and other payables		1,709,245	454,641	1,254,803
Financial liabilities
Interest bearing loans		39,604	53,487	21,284
Corporate tax		-	3,304	-
		1,748,849	511,432	1,276,087
Non-current liabilities
Financial liabilities
Interest bearing loans		-	11,277	1,101
Total liabilities		1,748,849	522,709	1,277,188
Net assets		1,559,289	806,234	2,194,768
Equity
Called up share capital	3	869,944	4,131,444	4,317,217
Share premium		2,162,899	2,564,873	4,315,269
Merger reserve		128,571	128,571	128,571
EBT share reserve		(94,420)	-	(25,000)
Retained earnings		(1,510,682)	(6,090,899)	(6,561,783)
Foreign exchange reserve		2,977	72,245	20,494
Total equity attributable to equity holders of the parent		1,559,289	806,234	2,194,768

Retained earnings and total equity attributable to equity holders of the parent at 30 June 2009 have been restated in respect of a retained deficit of £52,756 previously attributed to minority interests.

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2010

	Share capital	Share premium	Retained earnings	Translation of foreign operations	Merger reserve	EBT share reserve	Total  equity
Balance at 1 January 2009	3,766,748	2,233,163	(5,549,235)	127,747	128,571	-	706,994
Issue of share capital	364,696	364,696	-	-	-	-	729,392
Share issue costs	-	(32,986)	-	-	-	-	(32,986)
Share option expense	-	-	163,328	-	-	-	163,328
Total comprehensive income for the period (restated)	-	-	(704,992)	(55,502)	-	-	(760,494)
Balance at 30 June 2009 (restated)	4,131,444	2,564,873	(6,090,899)	72,245	128,571	-	806,234
At 1 January 2009	3,766,748	2,233,163	(5,549,235)	127,747	128,571	-	706,994
Issue of share capital	550,469	2,229,761	-	-	-	-	2,780,230
Share issue costs	-	(147,655)	-	-	-	-	(147,655)
Share option expense	-	-	163,328	-	-	-	163,328
EBT share purchase	-	-	-	-	-	(25,000)	(25,000)
Total comprehensive income for the period	-	-	(1,175,876)	(107,253)	-	-	(1,283,129)
At 31 December 2009	4,317,217	4,315,269	(6,561,783)	20,494	128,571	(25,000)	2,194,768
At 1 January 2010	4,317,217	4,315,269	(6,561,783)	20,494	128,571	(25,000)	2,194,768
Share cancellation and capital reduction	(3,447,273)	(2,152,370)	5,599,643	-	-	-	-
Share option expense	-	-	81,987	-	-	-	81,987
EBT share purchase	-	-	-	-	-	(69,420)	(69,420)
Total comprehensive income for the period	-	-	(630,529)	(17,517)	-	-	(648,046)
At 30 June 2010	869,944	2,162,899	(1,510,682)	2,977	128,571	(94,420)	1,559,289

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2010

		Six months ended 30 June 2010 Unaudited	Six months ended 30 June 2009 Unaudited	Year ended 31 December 2009 Audited
		£	£	£
Cash flows from operating activities
Loss for the period		(630,529)	(704,992)	(1,175,876)
Adjustments for
Depreciation charges		35,874	31,309	63,763
Share based payment expense		81,987	163,328	163,328
Exchange translation gain		(68,668)	(33,248)	(81,157)
Finance costs		4,785	6,733	11,797
Finance income		(15)	(220)	(382)
		(576,566)	(537,090)	(1,018,527)
(Increase) / decrease in trade & other receivables		(75,860)	1,734	(1,114,410)
Increase in trade & other payables		421,222	17,743	828,747
(Increase) / decrease in inventories		(417,115)	47,050	(46,515)
Net cash used in operating activities		(648,319)	(470,563)	(1,350,705)
Cash flows from investing activities
Purchase of property, plant and equipment		(29,763)	(11,753)	(64,690)
Investment in subsidiary		-	-	(180,625)
Finance income received		15	220	382
Net cash used in investing activities		(29,748)	(11,533)	(244,933)
Cash flows from financing activities
Repayment of loans		-	(23,595)	-
Repayment of finance leases		(11,893)	(15,799)	(21,963)
Receipt / (repayment) of bank loans and other borrowing		36,830	(30,073)	(86,976)
Proceeds on issue of shares		-	696,406	2,507,575
Purchase of EBT shares		(69,420)	-	(25,000)
Finance costs paid		(4,785)	(6,733)	(11,797)
Net cash generated from / (used in) financing activities		(49,268)	620,206	2,361,839
Net (decrease) / increase in cash and cash equivalents		(727,335)	138,110	766,201
Cash and cash equivalents at start of period		840,122	22,059	22,059
Exchange (losses) / gains on cash and cash equivalents		(14,799)	-	51,862
Cash and cash equivalents at end of period		97,988	160,169	840,122

NOTES TO THE INTERIM STATEMENT

For the six months ended 30 June 2010

1.       Accounting policies

Basis of preparation

This financial information has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively EU Adopted IFRSs).

The principal accounting policies used in preparing the interim results are those the Group expects to apply in its financial statements for the year ended 31 December 2010 and are unchanged from those disclosed in the Group's Annual Report and Financial Statements for the year ended 31 December 2009.

Non-statutory accounts

The financial information for the year ended 31 December 2009 set out in this interim report does not comprise the Group's statutory accounts as defined in section 435 of the Companies Act 2006.

The statutory accounts for the year ended 31 December 2009, which were prepared under International Financial Reporting Standards, International Accounting Standards and IFRIC interpretations (collectively IFRS), have been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, but did include an emphasis of matter relating to going concern, to which the auditors drew attention by way of emphasis without qualifying their report. The auditors' report did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006.

The financial information for the 6 month periods ended 30 June 2010 and 30 June 2009 is unaudited.

The results for the period ended 30 June 2009 and the financial position reported at that date have been restated in respect of the losses for that period previously attributed to minority interests. The restatement has had no impact on the Group's reported net assets at 30 June 2009, but has had the effect of increasing the basic and diluted loss per share attributable to equity holders of the Company to 1.27 pence per share (previously reported as 1.17 pence per share). Retained earnings and total equity attributable to equity holders of the Company at 30 June 2009 have been restated accordingly in the unaudited consolidated statements of financial position and of changes in equity for that period.

2.       Earnings per share

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares. Diluted EPS shows a lower loss per share for each of the periods included in this interim report; accordingly it has not been disclosed.

Reconciliations are set out below:

	Six months ended 30 June 2010 Unaudited £	2010 Weighted average number of shares	Per-share amount pence
Basic EPS
Loss attributable to ordinary shareholders	(630,529)	86,994,398	(0.72)
Effect of dilutive securities
Options	-	7,240,886	-
Diluted loss per share	(630,529)	94,235,284	(0.72)
	Year ended 31 December  2009  Audited  £	2009 Weighted average number of shares	Per-share amount pence
Basic EPS
Earnings attributable to ordinary shareholders	(1,175,876)	66,806,784	(1.76)
Effect of dilutive securities
Options	-	6,400,886	-
Diluted loss per share	(1,175,876)	73,207,670	(1.76)
	Six months ended 30 June 2009 Unaudited £	2009 Weighted average number of shares	Per-share amount pence
Basic EPS
Earnings attributable to ordinary shareholders	(704,992)	55,592,613	(1.27)
Effect of dilutive securities
Options	-	7,148,142	-
Diluted loss per share	(704,992)	62,740,755	(1.27)

The losses attributable to ordinary shareholders for the six months ended 30 June 2009 have been restated to include losses of £52,756 that were reported in the 2009 interim statement as attributable to a minority interest. This has increased the loss per share attributable to ordinary shareholders for that period to 1.27 pence (previously reported as 1.17 pence).

3.       Movements in called up share capital

	Six months ended 30 June  2010 Unaudited Number	Six months ended 30 June 2009 Unaudited Number	Year ended 31 December  2009 Audited Number
Allotted, issued and fully paid:
New ordinary shares of 1p each	86,994,398	68,417,133	86,994,398
Deferred shares of 9.5p each	-	15,409,000	15,409,000
New deferred shares of 0.49p each	-	404,779,408	404,779,408
	86,994,398	488,605,541	507,182,806
	Six months ended 30 June 2010 Unaudited Value £	Six months ended 30 June 2009 Unaudited Value £	Year ended 31 December 2009 Audited Value £
Allotted, issued and fully paid:
New ordinary shares of 1p each	869,944	684,171	869,944
Deferred shares of 9.5p each	-	1,463,855	1,463,855
New deferred shares of 0.49p each	-	1,983,418	1,983,418
	869,944	4,131,444	4,317,217

Following an application made on 17 November 2009, on 18 February 2010 the Company received an Order from the High Court directing that all deferred shares of the Company be cancelled.

4.       Post balance sheet events

On 16 July 2010 the Company issued 19,871,425 new ordinary shares at 7 pence per share to raise £1.39 million (£1.32m net of expenses of the issue).

Furthermore, following the approval at the Annual General Meeting on 30 July 2010 of a 1 for 20 bonus issue of shares, an additional 5,343,148 ordinary shares were issued. The Company now has a total of 112,208,971 ordinary shares in issue.

5.       Sundry information

These consolidated interim financial statements were approved by the Board of Active Energy for issue on 21 September 2010.

Copies of the interim report and financial statements will be available on the Company's website at www.active-energy-group.com

 

END

 

 

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