Half Yearly Report

RNS Number : 9274S
Active Energy Group PLC
30 September 2014
 



 

 

 

 

 

Active Energy Group Plc
("Active Energy Group" or the "Group" or the "Company" or "AEG")

 

Half-Yearly Results

 

 

 

Active Energy Group Plc (AIM: AEG.L), the London Stock Exchange AIM-listed international supplier of Biomass for Energy (BFE) fuel products, industrial wood chip, and forestry management and development services, announces its half yearly results for the six months to 30th June 2014.

Highlights:

·     Strong demand from Turkish MDF manufactures for AEG's high quality industrial woodchip is outstripping supply.

·     Supply chain improvements being put in place to meet increase in demand.

·     Volumes of woodchip shipped increased to 100,814 metric tonnes (H2 2013: 72,304) of which 61,185 metric tonnes (H2 2013: 14,573) were shipped across the Black Sea to Turkish MDF customers, now the Company's primary woodchip market in Europe.

·     Successful relocation of port facilities in Southern Ukraine from Mykolaiv to Yuzhny, a modern, secure and efficient port facility with access to all-year shipping lanes and the capacity to expand our core Black Sea business from.

·     In May 2014, unveiled a revolutionary Biomass fuel pelleting solution to international partners, industry specialists and potential project development investors in Belfast.

·     Established a standalone Pelleting company to focus on the commercialisation of the technology.

Financial Results:

·     Revenue increased to £6.4 million (H1 2013: £0.1m) achieved following the acquisition of Nikofeso and despite the political turmoil across the Ukraine.

·     Adjusting for the exclusion of non-cash, non-recurring costs and FX movements the Group reported an Adjusted Operating Loss of £0.355 million.

·     Restructuring programme initiated in Q2 aimed at reducing level of underlying administration spend. 

Post Half-Year End:

·     In July 2014, entered into an important new joint venture to exclusively commercialise in excess of 200,000 hectares (c.500,000 acres) of mature forestry assets in Alberta, Western Canada.

·     Formed JV company ("KAQUO Forestry and Natural Resources Development Corporation")

·     Commissioned a survey of 2% of the total land asset which will form the basis for commercialisation.

 

Active Energy Group Plc Chief Executive Officer, Richard Spinks, said, "AEG is now a very different company from the one that began this period. The additions of the Canadian JV and our pelleting technology on top of our existing wood chip businesses have significantly expanded the worth and potential of the Company.

 

I believe we adjusted and responded well to the challenges of the Ukraine's political and economic changes. The switch to Yuzhny together with the demand from Turkey makes us well placed to further expand the Black Sea core business. We are looking to install additional chipping capacity at Yuzhny to meet increasing demand, not only from our current customers, but also from the new business initiatives that we are currently pursuing.

KAQUO, our Canadian JV, is very exciting; we have formed a long term partnership to commercialize an extremely valuable asset and we are looking forward to working closely with the Métis Settlements to develop it on a long term, sustainable basis which, in turn, will attract investment and create employment opportunities for the local communities."



Enquiries:

Active Energy Group Plc
Richard Spinks, Chief Executive Officer                                                         Tel: +380 503 942 702
                                                                                                                                richard.spinks@active-energy.com

WH Ireland Ltd. (Nominated Adviser and Broker)
Chris Fielding / Mark Leonard                                                                          Tel: +44 20 7220 1666

Novella Communications
Tim Robertson / Ben Heath                                                                             Tel: +44 20 3151 7008
                                                                                                                                TimR@novella-comms.com

About Active Energy Group:

·   Company website: www.active-energy.com

·   Active Energy Group Plc, a London Stock Exchange AIM-listed company (AIM: AEG.L), is an international supplier of Biomass for Energy (BFE) wood chip for green energy power generation, industrial wood chip for MDF manufacturing, Biomass fuel granules and granulating systems, and forestry/timberland development and management services.

·   The Group, headquartered in London, operates from five locations:

o Ukraine, where it is the largest producer and exporter of MDF-quality wood chip

o Spain and Montenegro, from where it supplies BFE Biomass wood chip to European power plants

o The United Kingdom, where it operates an R&D facility for its new Biomass fuel granulating systems

o Canada, where it has entered into a landmark forestry joint venture - KAQUO Forestry & Natural Resources Development Corporation - with three indigenous Métis Settlements to commercialize c.200,000 hectares of mature forestry/timberland assets

·   The Group is led by a highly experienced and dedicated management team with a proven track record of working in the industries and regions from which its revenues are generated.

·   In June 2013, AEG acquired its major trading partner and raised approximately £3.5 million to facilitate future growth and expansion of its international production and shipping facilities.

·   In May 2014, the Group announced the formation of a new subsidiary, AEG Pelleting Limited, to commercialize and market a revolutionary new Biomass for Energy (BFE) fuel granulating process that converts sawdust and other industrial and agricultural co-products into valuable fuel granules for use in large-scale power plants and micro-CHP boilers.

·   European Biomass for Energy (BFE) Market:

·   Turkish MDF Market:

 

CHAIRMAN'S STATEMENT

FOR THE SIX MONTH'S ENDED 30 JUNE 2014

I am pleased to present the Company's Interim Report for the six month's ended 30 June 2014.  The detailed results are set out in full in the accompanying Financial Statements. A summary of these results is set out below.

FINANCIAL SUMMARIES

INCOME STATEMENT

6 months ended

12 months ended

 

30 June 2014

30 June 2013

31 Dec 2013

 


£'000


£'000


£'000








Revenue


6,418


106


5,247

Cost of sales


(6,092)


-


(5,334)

Gross Profit


326


106


(87)

Admin Costs

 

 


(1,312)


(741)


(2,136)

Operating Loss


(986)


(635)


(2,223)

Other items


(62)


13


(45)

Loss for period


(1,048)


(622)


(2,268)










BALANCE SHEET

 



£'000


£'000


£'000

 

NON-CURRENT ASSETS


3,285


3,088


2,826

 

Cash


2,411


2,910


948

 

Inventories

Other Current assets


159


775


858

 

Other current assets


1,467


858


531

 

TOTAL CURRENT ASSETS


4,037


4,543


2,337

 

Short term loans


1,066


-


-

 

Trade and other payables


1,022


1,944


506

 

CURRENT LIABILITIES


2,088


1,944


506

 

NET CURRENT ASSSETS


1,949


2,599


1,831

 

Long term loans

Deferred income tax liability


2,562


857


877

 

Deferred Tax Liability


244


260


260

 

NON-CURRENT LIABILITIES


2,806


1,117


1,137

 

NET ASSETS


2,428


4,570


3,520

 

See below for a short reconciliation of the Group's adjusted operating losses this in order to reflect the non-cash and special project items which have impacted on our financial results for the period under review:



30th June 2014




£'000

OPERATING LOSS



986

Less:  Non-cash items




Depreciation and Amortisation


(100)


FX losses


(61)


Share based payments


(86)

(247)

Less: New projects




Pelleting


(134)


Canada JV (PC)


(50)

(184)

Less:Non-Recurring costs (pro forma)




Accounting, audit, professional


(100)


Port relocation/start-up


(100)

(200)

ADJUSTED OPERATING LOSS



355



 

BUSINESS REVIEW

The matters on which I would like to briefly comment upon are shown below:

Biomass and MDF Woodchip Division

·     The Company's strategy in H1-14 was to focus Ukrainian operations on increasing volumes to our Turkish customers. As the following tables demonstrates, we have achieved a significant increase in that core part of our business which delivers higher margins and makes lower cash demands due to the shorter payment cycles which characterize this part of our trade as compared with our biomass business.

Trade

H1 2014

H2 2013

Change % +/- H2-13

 

Q3-2014

(to date*)

Biomass

39,629

57,811

-31%

 

9,728

Black Sea

61,185

14,573

320%

 

42,816*

Total

100,814

72,384

39%

 

52,544*

 

*Excludes "Sider King" due to sail 30 September 2014 from Yuzhny with a cargo of ~13,000 metric tonnes for delivery to Turkey.

 

In contrast, Biomass has proven to deliver poor overall margins while placing a relatively high demand on working capital with payment cycles often being in excess of 30 days. As all Ukrainian-based biomass shipments have now ceased, the capacity underlying those volumes will be allocated in future to more profitable MDF cargoes. The biomass business in H1-2014 has continued to disappoint notwithstanding our efforts to open alternative supply routes from Spain and Montenegro. In particular, shipments from Montenegro have failed to meet the quantitative and qualitative criteria necessary to satisfy minimum product specifications; accordingly, management is maintaining a watching brief on the future of both of these supply channels.

 

•    While the relocation of our port facilities from Mykolaiv to Yuzhny resulted in some level of cost pressure, the move has proved itself ever more justified as it has delivered 100% on the benefits expected from it.  We now have an established presence in a modern, secure and efficient facility with greater access to all-year shipping lanes and the capacity to expand our core Black Sea business to meet the continuing requirements of our key Turkish customer base.

•    In line with the new port development the company has initiated operational knowledge and training programmes to streamline the product supply chain, an investment at the grass roots level of our business which will deliver value in future periods.

•    New capital equipment has been installed at Yuzhny port, which has substantially increased our chipping capacity in line with the growing customer demand from Turkey.

•    Local currency devaluation in the Ukrainian Hyrvnia (UAH) has had a net positive impact on our cost base, resulting in a lower cost of sales per metric tonne loaded at the FOB level. However, this has been less than the "headline" change in the FX rate change mainly because of cost increases in a number of key areas which are either directly US$ denominated or US$ influenced, items such as port costs and fuel.

No commentary on any Ukrainian-based business would be complete without reiterating that the political (and some operational) issues in our core territory continue to generate highly challenging trading conditions.  Be that the loss of what would have most likely proved to have been a source of good margin biomass product from Eastern Ukraine that is now denied to us, or the massive issues that have impacted on our CEO from the predations of the separatist movement in Donetsk which have so far lost him his home, operating a growing business in these circumstances is a huge challenge and it is a tribute to the fortitude of the executive that such positive developments have been achieved at all.

Of course, all of our stakeholders would have preferred to have seen progress more quickly achieved but I am confident that the operating indicators for the woodchip business are largely positive.



 

Administrative costs

•    Administrative costs increased in part due to non-recurring (third party accounting service providers, re-structuring of Mykolaiv port operations), non-cash expenses and a continuing increase in the Company's operational tempo as it seeks to expand its sphere of operations both geographically (in North America in particular), and to new operations such as pelleting and, of course, the new operations that will most likely emerge from the Canadian project with the Métis Settlements.

•    The pelleting project consumed initiation and early stage development costs in H1-14 amounting to some £134k.

•    There has been an inevitable continuation in the Group spend on travel, legal and associated costs as a direct result of many initiatives being so actively developed.

•    A restructuring programme was initiated in Q2 this year which is planned to result in a reduced level of underlying admin spend.  This currently includes the provision of accountancy services in-house rather than being outsourced to third party service providers and will extend to the relocation out of London of all management reporting activities.

CURRENT TRADING AND PROSPECTS

The Black Sea Trade

•    There is a strong forward focus on cargoes for MDF with expected continuing improvements in volumes and margins, this latter aspect due to the FOB cost of woodchip being anticipated to decrease in H2-14.

•    Cost control and process improvements are being implemented to produce greater efficiencies in the supply chain to more consistently deliver the seamless supply of wood from forest to port to factory. Continuing staff and operative training should lead to fewer equipment breakdowns and, crucially, the minimization of demurrage costs that have sometimes resulted therefrom.

•    Contracts are in place and customers are keen for the Company to ramp up both its rate and size of shipments. Implementation of robust supply chain processes means the Group can harness these willing markets.

•    The current strategy of building our Black Sea trade to capture the improved margins and cash flows mentioned above continues to trend positively and serves to underscore the progress that management has so far made in this area through its various continuous improvement programmes.

•    New customer opportunities are being actively pursued for both softwood and hardwood supplies which may lead to a possible further investment in additional chipping facilities at Yuzhny port.  Specific announcements will be made as appropriate.

•      While the aggregate gross margin on trading for the period under review has been only ~5%, as previously commented upon, this figure was depressed by the poor results arising from biomass cargoes. As a consequence of the process improvements currently being implemented and the continuation of positive economic influences, management expects that cargoes in future periods will produce significantly better results.

In short, the Black Sea trade continues to represent a considerable growth opportunity in line with the Board's original expectations. Notwithstanding that the rate of development has been less than hoped for, the core plan remains intact and accessible - subject only to the continuing availability of development capital and the absence of any material deterioration in the political climate in Ukraine.

Pelleting division

•    This project established "proof of concept" in the successful system trials and demonstrations carried out in Belfast earlier this year.  Since that time detailed discussions have been conducted by management with key partners in the project with a view to establishing a detailed business plan in early course.

•    Management expects to bring this project to commercial development as soon as possible.

Canadian Joint Venture

•    This project was first unveiled by the Company on 18 July when we announced the establishment of a joint venture with the Métis Indians to work with three of the eight Métis Settlements to commercialize the significant forestry assets controlled by them.  At that time it was believed that the forestry assets controlled by the first three Settlements comprised at least 100,000 hectares of mature forest expected to yield more than 20 million cubic metres of commercial standing timber.

•    As no land survey had then been commissioned and detailed legal due diligence had not been initiated,  the project was recognised as having great potential, notwithstanding that much work would have to be done by both the Company and its partners in order to establish the full physical and economic extent of the asset and its optimal path to commercialisation.

•    Since that time, our CEO (with other members of the management team) has devoted a considerable amount of time and effort into kick-starting the base level of effort required to address the key issues facing the joint venture.

•    On 28 August, and only a little over a month after the first announcement was made, the Company was pleased to inform the market that the JV company ("KAQUO Forestry and Natural Resources Development Corporation") had been formed and that a survey of 2% of the total land asset had been commissioned; that this work was expected to take around two months to complete, thereby indicating a market update on the project in late October/early November this year.

•    This later announcement also reported that the asset was now believed to amount to double the area first estimated, now being assessed to be at least 200,000 hectares of high quality forestry.

•    Detailed legal and commercial development elements of the project are being worked on contemporaneous with the forestry survey and the Company expects to make a series of announcements on these matters in the upcoming calendar quarter and beyond.

Group Outlook

·   The Group has successfully concluded the integration of its new woodchip business and has made considerable progress in developing important initiatives in both its new pelleting operation and Canadian joint venture. It now stands ready to deliver on the very considerable opportunities that are currently vested in it which have the potential to realise significant growth in shareholder value.

·     Current shipping volumes for Q3-14 to date continue to reflect the implementation of the trading strategy for our woodchip business, with a significant increase in cargoes for MDF with a concomitant reduction in those for biomass.  This will also result in improved trading gross margins which are expected to show further positive growth as the benefits of operating efficiencies feed through.

·     AEG is a small company that operates in difficult jurisdictions and with a current low margin core trade. Considerable investment in that trade has been expended in the last 12 months when trading losses have been incurred and growth has been hard won. Going forward, it therefore remain pivotal that volume and margin growth expectations continue to be met and that central costs are driven down consistent with the needs of the business and its capacity to develop and manage multiple operating  channels.

Management

Shareholders will have noted the announcement on 26 September 2014 of the appointment to the Board of Brian Evans-Jones as Finance Director of the Group.  Brian's appointment is part of the overall restructuring plan intended to both streamline reporting processes and drive down the overall administrative costs of the Group, to be achieved in part by the relocation of the accounting and finance function from its current London base.

 

This is also the time for me to announce that this will be my last Chairman's Statement for Active Energy Group as, by mutual consent, I will be stepping down from the Chair with immediate effect.  I have served in this position for nearly two years and have been able to support the management team through the period when the Group sought first to acquire and then, in June last year, complete the acquisition of Nikofeso Group alongside the refinancing of the Company.

It is therefore appropriate that the Company should now seek a new chairman to support and guide management in what promise to be truly significant opportunities into which AEG will have to put a major level of effort from a Board able to deliver operationally in the resources sector and with a Chair that has demonstrable strengths in the sectors and regions in which AEG operates. A search process is already underway and an announcement as to my successor will be made as soon as appropriate.

As a shareholder myself, there is nothing more than I could wish for AEG than that it delivers fully on its inherent promise; management's interests remain closely aligned with all of our stakeholders and, alongside thanking my Board colleagues for their support during the last two years, I will close by wishing them, as well as all of our dedicated staff, every success for the future.

 

Colin Hill

Non-Executive chairman

London: 30th September 2014

INDEPENDENT REVIEW REPORT TO ACTIVE ENERGY GROUP PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2014 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of cash flows and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors.  The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose.  No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent.  Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2014 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

Emphasis of matter - Going concern

In forming our conclusion on the condensed set of financial statements, which is not modified, we have considered the adequacy of the disclosures made in note 1 concerning the group's and parent's ability to continue as a going concern.  As set out in note 1, there are material uncertainties that may cast significant doubt about the group's and parent company's ability to continue as a going concern and meet their liabilities as they fall due.  In particular the ability of the group and parent to obtain additional funding to finance additional working capital requirements as and when required, or in the event that volume and margin improvements over the next twelve months fall below management's expectations.  The condensed set of financial statements do not include the adjustments that would result if the group and company were unable to continue as a going concern.

 

 

 

BDO LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

29 September 2014


CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2014

 



6 months to 30/06/14

6 months to 30/06/13

12 months to 31/12/13


Note

Unaudited

Unaudited

Audited



£

£

£






REVENUE

2

6,417,628

105,538

5,246,542

Cost of sales


(6,092,081)

-

(5,333,620)






GROSS PROFIT / (LOSS)


325,547

105,538

(87,078)






Administrative expenses


(1,311,143)

(740,900)

(2,135,873)






OPERATING LOSS


(985,596)

(635,362)

(2,222,951)






Finance income


5,200

6,182

13,958

Finance costs


(83,445)

(10,413)

(64,649)






LOSS BEFORE TAXATION


(1,063,841)

(639,593)

(2,273,642)






Income tax


16,086

17,877

6,015






LOSS FOR THE PERIOD

2

(1,047,755)

(621,716)

(2,267,627)









Restated


Loss per share (pence) - basic and fully diluted

10

(0.19)

(0.26)

(0.58)







CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS

FOR THE SIX MONTHS ENDED 30 JUNE 2014

 



6 months to 30/06/14

6 months to 30/06/13

12 months to 31/12/13



Unaudited

Unaudited

Audited



£

£

£






LOSS FOR THE PERIOD


(1,047,755)

(621,716)

(2,267,627)






OTHER COMPREHENSIVE INCOME





Exchange differences on translation of foreign operations


(215,546)

67,753

(182,925)











TOTAL COMPREHENSIVE LOSS FOR PERIOD


(1,263,301)

(553,963)

(2,450,552)






 

 


CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2014




 

Restated




30/06/14

30/06/13

31/12/13



Unaudited

Unaudited

Audited



£

£

£

NON-CURRENT ASSETS

Note




Intangible assets

4

2,540,833

3,046,742

2,714,155

Property, plant and equipment

5

744,043

40,806

112,003



3,284,876

3,087,548

2,826,158






CURRENT ASSETS





Inventories


159,422

775,207

857,610

Trade and other receivables

6

1,466,687

858,805

531,467

Cash and cash equivalents


2,411,665

2,910,159

948,222



4,037,774

4,544,171

2,337,299






TOTAL ASSETS


7,322,650

7,631,719

5,163,457

 

CURRENT LIABILITIES





Trade and other payables

7

1,021,863

1,943,861

501,852

Income tax liability


-

-

4,253

Loans and borrowings

8

1,066,099

-

-



2,087,962

1,943,861

506,105











NON-CURRENT LIABILITIES





Deferred income tax liabilities


244,376

260,438

260,462

Loans and borrowings

8

2,562,088

857,160

876,808



2,806,464

1,117,598

1,137,270






TOTAL LIABILITIES


4,894,426

3,061,459

1,643,375






NET ASSETS


2,428,224

4,570,260

3,520,082






EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT










Share capital


6,190,256

5,626,655

6,186,256

Share premium


4,385,335

4,222,354

4,380,335

Merger reserve


1,502,500

1,502,500

1,502,500

Foreign exchange reserve


(445,052)

21,172

(229,506)

Own shares held reserve


(899,570)

(719,420)

(899,570)

Convertible debt, warrant and capital reserve


698,458

621,873

621,873

Retained earnings


(9,003,703)

(6,704,874)

(8,041,806)






TOTAL EQUITY


2,428,224

4,570,260

3,520,082



























CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS TO 30 JUNE 2014

 



6 months to 30/06/14

6 months to 30/06/13

12 months to 31/12/13


Note 

Unaudited

Unaudited

Audited



£

£

£











Cash outflow from operations

3

(909,038)

(227,153)

(2,580,106)

Income tax paid


(4,253)

(3,909)

(26,199)






Net cash outflow from operating activities 


(913,291)

(231,062)

(2,606,305)






Cash flows from investing activities





Acquisition of subsidiary, net of cash acquired


-

67,674

67,674

Purchase of property, plant and equipment


(319,844)

-

(132,045)

Interest received


5,200

6,182

13,958






Net cash inflow/(outflow) from investing activities


(314,644)

73,856

(50,413)






Cash flows from financing activities





Issue of equity share capital


-

1,880,862

2,467,012

Convertible loan from shareholder


-

1,000,000

1,000,000

Issue expenses


-

-

-

Interest paid on convertible loan note


(45,000)

-

(45,000)

Issue of debt


2,807,964

-

-






Net cash inflow from financing activities


2,762,964

2,880,862

3,422,012











Net increase in cash and cash equivalents 


1,535,029

2,723,656

765,294






Cash and cash equivalents at beginning of period


948,222

158,004

158,004






Effect of exchange rate changes


(71,586)

28,499

24,924






Cash and cash equivalents at end of period


2,411,665

2,910,159

948,222







       CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

         FOR THE SIX MONTHS TO 30 JUNE 2014


 

Share capital

Unaudited

 

Share premium

Unaudited

 

Merger reserve

Unaudited

Foreign exchange reserve

Unaudited

Own Share Held Reserve

Unaudited

Convertible Debt, warrant and capital reserve

Unaudited

 

Retained earnings

Unaudited

 

Total equity

Unaudited

 


£

£

£

£

£

£

£

£

 










 

At 1 January 2013

2,373,522

4,209,901

940,000

(46,581)

(94,420)

308,507

(6,087,713)

1,603,216

 

Loss for the period

-

-

-

-

-

-

(621,716)

(621,716)

 

Other comprehensive income

-

-

-

67,753

-

-

-

67,753

 

Total comprehensive loss for the period

-

-

-

67,753

-

-

(621,716)

(553,963)

 

Issue of share capital

2,350,799

98,541

562,500

-

-

-

-

3,011,840

 

Conversion of convertible loan

277,334

-

-

-

-

(277,334)

-

-

 

Issue of convertible loan

-

-

-

-

-

142,840

-

142,840

 

Issue of warrants

-

-

-

-

-

447,860

-

447,860

 

Share based payments

-

-

-

-

-

-

4,555

4,555

 

Share issue expenses

-

(86,088)

-

-

-

-

-

(86,088)

 

Treasury shares issued

625,000

-

-

-

(625,000)

-

-

-

 










 










 

At 30 June 2013

5,626,655

4,222,354

1,502,500

21,172

(719,420)

621,873

(6,704,874)

4,570,260

 










 

Loss for the period

-

-

-

-

-

-

(1,645,911)

(1,645,911)

 

Other comprehensive Income

-

-

-

(250,678)

-

-

-

(250,678)

 

Total comprehensive loss for the period

-

-

-

(250,678)

-

-

(1,645,911)

(1,896,589)

 

Issue of share capital

409,601

120,481

-

-

-

-

-

530,082

 

Share based payments

-

-

-

-

-

-

308,979

308,979

 

JSOP shares issued

150,000

37,500

-

-

(180,150)

-

-

7,350

 










 

At 31 December 2013

6,186,256

4,380,335

1,502,500

(229,506)

(899,570)

621,873

(8,041,806)

3,520,082

 










 

Loss for the period

-

-

-

-

-

-

(1,047,755)

(1,047,755)


 

Other comprehensive income

-

-

-

(215,546)

-

-

-

(215,546)


 

Total comprehensive loss for the period

-

-

-

(215,546)

-

-

(1,047,755)

(1,263,301)


 

Issue of share capital

4,000

5,000

-

-

-

-

-

9,000


 

Share based payments

-

-

-

-

-

-

85,858

85,858


 

Equity component of loan issue

-

-

-

-

-

76,585

-

76,585


 











 

At 30 June 2014

    6,190,256

4,385,335

1,502,500

(445,052)

(899,570)

698,458

(9,003,703)

2,428,224



 










-


 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS TO 30 JUNE 2014

 

1.    Accounting policies

Accounting periods

The accounting reference date of the Group is 31 December. The current half year interim results are for the six months ended 30 June 2014. The comparative half year interim results are for the six months ended 30 June 2013. The comparative year's results are for the twelve months ended 31 December 2013.

 

Financial information

The financial information for the six months ended 30 June 2014 and the six months ended 30 June 2013 are unaudited and have been drawn up in compliance with IAS 34 and the AIM Rules of the London Stock Exchange. The comparative financial information for the full year ended 31 December 2013 has, however, been derived from the audited statutory financial statements for that period. A copy of those statutory accounts for that period has been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified and did not contain statements under Chapter 3 of Part 16 of the Companies Act 2006, but did include an emphasis of matter in respect of the ability to obtain additional funding if expected trading levels are not achieved. These conditions indicated the existence of material uncertainties which may have cast doubt about the Group's ability to continue as a going concern.

 

Basis of preparation

The half year interim financial statements have been prepared on a going concern basis using the recognition and measurement principles of IFRS as endorsed for use in the European Union. The accounting policies used in the preparation of these condensed financial statements are set out in the statutory financial statements for the period ended 31 December 2013 which are also the policies that are expected to be applicable at 31 December 2014.

 

Going Concern       

Based on the latest trading expectations and associated cash flow forecasts of the Group headed by Active Energy Group plc, the Directors have considered the cash requirements for the Group, and subject to meeting the growth in forecast volumes and margin improvements, together with obtaining funding for any additional working capital needs, the Directors believe that the Group will be able to meet their liabilities as they fall due for a period of at least 12 months from the date of these interims. The Directors are confident they would be able to raise any additional funding as and when required, particularly given the successful raising of finance during this interim period. However, this cannot be guaranteed, particularly in the event that trading falls below management's expectations. As such the ability to obtain additional funding, should it be required, is considered to be a material uncertainty that may cash significant doubt over the Group's ability to continue as a going concern.

 

Restatement of 2013 Interim Comparatives

The balance sheet as at 30 June 2013 has been restated to correct the accounting for the issue of the convertible loan note, the value of shares issued on acquisition, the treatment of deferred consideration, the recognition of the fair value of warrants issued and the timing of the recognition of cash share subscriptions over the period end. The impact of these adjustments is to reduce net assets previously reported as at 30 June 2013 by £1,670,165, with a reduction in intangible assets of £320,609, an increase in trade and other receivables of £217,254, a reduction in cash and cash equivalents of £709,650 and an increase in loans and borrowings of £857,160. There was no impact to the statement of income for the comparative period.  



 

 

2.      SEGMENTAL INFORMATION

The principal operations can be segmented into operations surrounding loads destined for Biomass Fuels and loads for the manufacture of MDF.



 

H1 2014

H1 2014

H1 2014



MDF

Unaudited

Biomass

Unaudited

Total

Unaudited



£

£

£











Revenue from external customers


4,037,900

2,379,728

6,417,628






Operating loss and loss before tax


(33,472)

(336,409)

(369,881)

Tax credit


-

16,086

16,086






Loss for the period


(33,472)

(320,323)

(353,795)






       

        Other segmented items included in the condensed statement of comprehensive income:

 

Depreciation on property plant and equipment

 

 

8,542

6,315

 

15,447

Amortisation of intangibles


-

84,661

84,661

 



 

H1 2013

H1 2013

H1 2013



MDF

Unaudited

Biomass

Unaudited

Total

Unaudited



£

£

£











Revenue from external customers


-

105,538

105,538






Operating loss and loss before tax


-

(341,897)

(341,897)

Tax credit


-

17,877

17,877






Loss for the period


-

(324,020)

(324,020)






         Other segmented items included in the condensed statement of comprehensive income:

 

Depreciation on property plant and equipment

 

 

-

386

 

386

Amortisation of intangibles


-

94,090

94,090



 

2.      SEGMENTAL INFORMATION (CONTINUED)

 


Full Year 2013

 

Full Year

2013

 

Full Year 2013



MDF

Audited

Biomass

Audited

Total

Audited



£

£

£






Revenue from external customers


981,303

4,265,239

5,246,542

 

Operating loss and loss before tax


(98,869)

(392,222)

(491,091)

Tax credit


-

6,015

6,015






Loss for the period


(98,869)

(386,207)

(485,076)






       

        Other segmented items included in the income statement:

Depreciation on property plant and equipment


(4,902)

(19,448)

(24,350)

Amortisation of intangibles


-

(171,357)

(171,357)






All assets and liabilities and capital expenditure for the period are inter-changeable between the divisions and therefore no segmental analysis has been presented.

 

Reconciliation of reportable segment profit or loss, assets and liabilities to the Group's corresponding amounts are as follows:


H1

2014

Unaudited

H1

2013

Unaudited

Full year

2013

Audited


£

£

£





Total profit or loss from reportable segments

(353,795)

(324,020)

(485,076)

Unallocated amount - corporate expenses

(529,857)

(293,465)

(1,346,426)

Unallocated amount - finance income

5,200

6,182

13,958

Unallocated amount - finance expense

(83,445)

(10,413)

(64,649)

Share based payments

(85,858)

-

(385,434)

Loss for the period

(1,047,755)

(621,716)

(2,267,627)






3.      RECONCILIATION OF LOSS BEFORE TAXATION TO

         CASH OUTFLOWS FROM OPERATING ACTIVITIES


6 months to

30/06/14

6 months to

30/06/13

12 months to

31/12/13


Unaudited

Unaudited

Audited


£

£

£





Loss for the period

(1,047,755)

(621,716)

(2,267,627)

Adjustments for:




Share based payment expense

85,858

-

385,434

Depreciation

15,447

386

24,350

Amortisation of intangibles

84,661

94,090

171,508

Loss on disposal of property, plant and equipment

-

-

31,910

Finance Income

(5,200)

(6,182)

(13,958)

Finance costs paid

83,445

10,413

64,648

Income Tax

(16,087)

(17,887)

(6,015)


(799,631)

(540,896)

(1,609,750)





Decrease / (Increase) Inventory

 685,955

-

(82,403)

Decrease / (Increase) in receivables

(945,972)

70,492

344,775

Increase / (decrease) in payables

150,610

243,251

(1,232,728)





Net cash inflow/(outflow) from operating activities

(909,038)

(227,153)

(2,580,106)





















 

 

 

 

 

 

                                                                                                               

                                                                                                               


4.      GOODWILL AND INTANGIBLE ASSETS


Goodwill

Contractual 

Other

Total



relationships 




Unaudited

£

Unaudited

£

Unaudited

£

Unaudited

£

Cost





At 1 January 2014

1,343,239

1,713,568

213

3,057,020

Foreign exchange difference

(43,878)

(52,244)

(2)

(96,124)

At 30 June 2014

1,299,361

1,661,324

211

2,960,896






Accumulated amortisation





At 1 January 2014

-

342,714

151

342,865

Charge for year

-

84,661

-

84,661

Foreign exchange difference

-

(7,463)

-

(7,463)

At 30 June 2014

-

419,912

151

420,063






Net book value





At 30 June 2014

1,299,361

1,241,412

60

2,540,833






At 31 December 2013

1,343,239

1,370,854

62

2,714,155






Goodwill arose on the acquisition of Nikofeso on 27 June 2013. Contractual relationships comprise licenses granted by the Lyubomi Forest in the Ukraine.

 

5.      PROPERTY, PLANT AND EQUIPMENT


Plant and equipment

Furniture and office equipment

Total


Unaudited

£

Unaudited

£

Unaudited

£

Cost




At 1 January 2014

139,157

14,860

154,017

Additions

650,440

-

650,440

Foreign exchange difference

(4,361)

(70)

(4,431)

At 30 June 2014

785,236

14,790

800,026





Accumulated amortisation




At 1 January 2014

29,607

12,407

42,014

Charge for year

15,286

161

15,447

Foreign exchange difference

(1,407)

(71)

(1,478)

At 30 June 2014

43,486

12,497

55,983





Net book value




At 30 June 2014

741,750

2,293

744,043





At 31 December 2013

109,550

2,453

112,003






6.      TRADE AND OTHER RECEIVABLES


30/06/14

Unaudited

30/06/13

Unaudited

31/12/13

Audited


£

£

£





Trade receivables

935,341

300,825

150,331

Provision for impairment

-

(31,294)

(46,632)

 

Trade receivables - net

 

935,341

 

269,531

 

103,699

Other debtors

225,985

556,427

154,716

VAT

36,910

32,847

18,662

Prepayments and accrued income

268,451

-

254,390


 

1,466,687

 

858,805

 

531,467

 

7.      TRADE AND OTHER PAYABLES


30/06/14

Unaudited

30/06/13

Unaudited

31/12/13

Audited


£

 

£

£





Trade payables

627,892

702,117

270,523

Accruals and deferred income

259,976

1,241,744

231,329

Other payables

133,995

-

-

 

 

 

1,021,863

 

1,943,861

 

501,852





8.      LOANS AND BORROWINGS


30/06/14

30/06/13

31/12/13


Unaudited

Unaudited

Audited


£

£

£

Current




Loans

1,066,099

-

-





Non-current




Convertible loans

896,808

857,160

876,808

Loans

1,665,280

-

-

 

 

 

2,562,088

 

857,160

 

876,808

Current loans of £1,066,099 were issued in the period. £1,007,399 comprises a 20 million Ukrainian Hryvnias (UAH) unsecured loan from an unrelated Ukrainian company, Industrial-Financial Company Ruteks Limited provided under a Ukrainian Fiscal Incentive Programme and is repayable by 31 December 2014. Under the terms of this agreement, Ruteks is entitled to a participation fee of US$5 per tonne on all shipments financed under this agreement. The remaining £58,700 consists of short term borrowing from the Group's largest shareholder, the Gravendonck foundation, which has been repaid subsequent to period end.

 

 

8.      LOANS AND BORROWINGS (CONTINUED)

Non-current loans of £1,665,280  issued in the period comprises $3,000,000 of unsecured loans from the group's largest shareholder, the Gravendonck Foundation, repayable by Gravendonck giving not less than 12 months and 1 days notice. In respect of these loans $2,000,000 accrues interest at an annual rate of 15% payable quarterly in arrears and $1,000,000 is interest free.  The fair value of the liability component on the interest free loan was £510,435, calculated using a determined market rate of interest of 15% for an equivalent interest bearing loan, is included in non-current borrowings. The residual equity component of £76,584 is included in reserves.

9.    SHARE CAPITAL



Ordinary shares of 1p each


 

Number

£

Allotted, called up and fully paid




Ordinary

As at 1 January 2014


618,625,570

6,186,256

Shares issued


400,000

4,000





As at 30 June 2014


619,025,570

6,190,256





On 9 May 2014, 400,000 ordinary shares of 1p each were issued to settle an outstanding liability for professional fees of £9,000. Included in shares issues are 77,710,000 of own shares held.

 

10.  LOSS PER SHARE



6 months to

30/06/14

6 months to

30/06/13

12 months to

31/12/13


 

Unaudited

 

Unaudited

Restated

Audited



£

£

£






Weighted average number of ordinary shares in issue


541,030,487

241,498,259

391,315,205











Loss after taxation


(1,047,755)

(621,716)

(2,267,627)
















Loss per share (pence) - basic and fully diluted


0.19

0.26

0.58






 

        


11.   SUBSEQUENT EVENTS

On 16 July 2014 450,000 ordinary shares of 1 pence each were issued in satisfaction of a former employee's share options. On 16th July Share Options were issued. 450,000 shares were issued in satisfaction of share options belonging to a former employee of the company.

On 18 July 2014 the Company entered into a new joint venture agreement to exclusively commercialise mature forestry assets in Alberta, Western Canada.

On 23 July 2014 the Company entered into an agreement with Alpha Prospects plc ("Alpha") for the transfer of £255,000 principal amount of loan notes 2016 issued by Derlite Ltd., a former subsidiary of the Company, held by the company and the associated issue to Alpha of 2,000,000 ordinary shares in the Company, in consideration for which the Alpha will issue the Company 12,200,000 ordinary shares in Alpha.

12.   Copies of the interim report will be available to download from the Company's website www.active-energy.com

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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