Audited results for the year ended 31/12/2022
05 June 2023
Active Energy Group Plc
("Active Energy" or the "Company")
Audited results for the year ended 31 December 2022
Active Energy (AIM: AEG, OTCQB: ATGVF), the international biomass based renewable energy business, is pleased to announce the publication of its audited results for the year ended 31 December 2022.
Operational Highlights:
· Expansion of the Company's sales function in USA and Europe:
o first order for CoalSwitch® from Carolina Stalite for CoalSwitch® fuel; and
o written indications of interest of the supply of up to 10,000 tonnes of fuel for clients in the UK in 2023.
· Extension of IP protection, including the award of the Malaysian Patent for future CoalSwitch® production in the South East Asian Region.
· In March 2022, the Group achieved Chain of Custody and Controlled Wood Certification compliant with the Forest Stewardship Council®("FSC®") standards for its CoalSwitch® fuel.
· Completion of the Karbone Renewable Energy Credit and Environmental Attribute Report published in November 2022, demonstrating CoalSwitch® could qualify for significant production and consumption subsidies from individual US states, ranging up to $90 per ton.
· Positive results received following the completion of the independent study by LifeCycle Analysis in California on the carbon impact of CoalSwitch® production published in June 2022, showing a reduction of Co2 by 99% relative to coal.
· Appointment of Michelle Fagan as the Company's interim Chief Financial Officer in November 2022.
Financial Highlights:
· Sale of the Lumberton Site completed on 30 June 2022 with:
o gross consideration of US $4.65million; and
o net cash proceeds of US$3.92million received.
· Operating Loss for the year of US$1,343,745 (2021: US$5,881,768).
· Cash at bank as at 31 December 2022 US$2,614,472 (2021: US$1,940,871).
· Basic and diluted loss per share from continuing operations of $0.35 cents (2021 Restated: $4.57 cents).
Activities post the year end:
· Permit awarded to the Company's engineering partner, Player Design International ("PDI") at the Ashland Reference Facility (announced on 24 May 2023):
o final engineering and construction to commence and first fuel production and deliveries expected to commence in Q3 2023;
o PDI confirms that full scale production volumes from Ashland are anticipated to remain at a target rate of 35,000 tons per annum.
· Annual renewal of Custody and Controlled Wood certification with the Forest Stewardship Council standards for its CoalSwitch® fuel production from Ashland.
· Appointment of Steve Schaar as Chief Operating Officer for the Group to focus on the specific development of CoalSwitch® production facilities in the United States and Canada.
· Patents and Trademarks for CoalSwitch® awarded in the US, Canada, Europe (including the UK) and additional trademark applications have commenced throughout Asia, including Japan.
Michael Rowan, CEO, Active Energy Group, said:
"In 2022, Active Energy focussed on three key areas necessary to both prepare for and execute a growth strategy, being: i) product and production development; ii) market development; and iii) building for growth. The most important recent development was the issue of the permit to allow completion of the Ashland Reference Facility. PDI has confirmed fuel production will commence in Q3 2023, allowing Active Energy to make its first customer deliveries of CoalSwitchÒ.
"Active Energy significantly expanded its sales pipeline in 2022, investing in a new sales and marketing team in the U.S. and U.K. and analysing key new markets for CoalSwitchÒ fuel. The initial letters of intent received total circa 10,000 tonnes, and current indications of interest received exceed annualised production estimates for the Ashland Reference Plant. In addition, the work with Karbone, the financial services platform focused on decarbonisation markets, concluded that CoalSwitchÒ is likely to be eligible for several US subsidies, incentives and carbon credits that will make CoalSwitchÒ even more cost competitive with coal, reducing additional barriers toward market adoption.
"The Company added depth and breadth to the team with the addition of an interim Chief Financial Officer and a Chief Operating Officer and these hires represent another step change for the Company. We plan to further expand the US team in 2023. The balance sheet at 31 December 2022 reflected control of cash and costs and this discipline is being maintained as we continue to actively expand our technology and business development efforts in the coming months.
"Active Energy is now well prepared for growth and, with the current level of customer engagement, we look forward to reporting on significant commercial progress in 2023 and beyond."
Enquiries:
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Active Energy Group Plc |
Michael Rowan (Chief Executive Officer) Michelle Fagan (Chief Financial Officer) Steve Schaar (Chief Operating Officer) |
info@aegplc.com |
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Allenby Capital Limited Nominated Adviser and Broker |
Nick Naylor/James Reeve/Daniel Dearden-Williams (Corporate Finance) Amrit Nahal (Sales/Corporate Broking) |
Office: +44 (0)20 3328 5656 |
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Camarco Financial PR Adviser |
Tom Huddart / Emily Hall / Lily Pettifar |
aeg@camarco.co.uk Office: +44 (0)20 3757 4980 |
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Scoville PR US PR Adviser |
John Williams |
jwilliams@scovillepr.com |
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Website |
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www.aegplc.com |
www.linkedin.com/company/activeenergy
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@aegplc |
About Active Energy Group:
Headquartered in London with operations in the United States, Active Energy Group plc (AIM: AEG, OTCQB:ATGVF) is a biomass-based renewable energy company focused on the production and development of next generation biomass products that have the potential to transform coal fired power and heavy industries and the existing renewable biomass industry.
AEG has developed a proprietary technology which transforms waste biomass material into high-value renewable fuels. Its patented product CoalSwitch® is a leading drop-in biomass renewable fuel that can be blended and co-fired with coal at any ratio without requiring significant plant modification or wholly replacing existing biomass fuels. In 2022 Active Energy's partner, Player Design Inc commenced the process for building a production facility for Coalswitch® at PDI's facility at Ashland, Maine. Under a "take or pay" arrangement Active Energy will purchase CoalSwitch® from PDI for sale to the Company's prospective customers in the US and Europe.
CHAIRMAN'S LETTER
The last 12 months have seen Active Energy Group continue to make progress toward its goal of becoming one of the leading manufacturers of next generation biomass pellets, focused primarily on new technologies for black pellet production. Whilst awaiting the issuance of the permit for the construction and operation of the first CoalSwitch® production facility at Ashland, the Company has used the time to invest in additional product development, establish the Company's marketing operations and strengthen the management team.
The Company has seen a substantial increase in the number of commercial enquiries for CoalSwitch® fuel, driven primarily by sales teams in the US and in the UK and aided by an increasing market demand for an improved biomass pellet, accommodating revised environmental regulation in the US and elsewhere, and continuing market supply issues requiring alternative long-term sources of biomass supply.
Active Energy has obtained first orders for CoalSwitch®, which the Board believes will lead to long term off take contracts for the fuel and create future joint venture production opportunities, both in the US and internationally.
Looking into 2023, the Company has to focus upon several key milestones, including: i) working with PDI to obtain production of commercial volumes of CoalSwitch® from the Ashland Reference Facility; ii) delivering this fuel to identified prospective customers in the US and internationally; and iii) commence planning to expand production of CoalSwitch®, principally through partnerships with other parties, thereby establishing CoalSwitch® as the market standard for next generation biomass fuels in the coming years. In order to achieve these milestones Active Energy has started building a US based management team and this will continue in 2023.
Companies and utilities around the world are being pressed to reduce emissions. By converting lower value wood waste into high-value biomass fuel that can either co-fire with coal or replace existing biomass pellets, CoalSwitch® offers a turnkey, cost-effective and scalable solution. The Board believes that CoalSwitch® represents a transformational opportunity for biomass as a cleaner fuel helping global sustainability goals.
The Board remains confident about the future for Active Energy Group, and I remain grateful for the ongoing support of all our stakeholders and look forward to the future with confidence.
James Leahy
Non-executive Chairman
5 June 2023
CHIEF EXECUTIVE OFFICER'S STATEMENT
Executive Summary
Active Energy Group plc ("Active Energy" or the "Company") spent 2022 strategically focussed on three key areas: Product and Production Development; Market Development; and Building for Growth.
1. Product and Production Development: We knew at the beginning of 2022 that it could take some time for our production partner Player Design, Inc. ("PDI") to complete production design and engineering, receive the required permits to complete construction, install the requisite equipment and operate the first production plant. We are pleased to report that as of 24 May 2023, the relevant Permit has been granted and PDI is moving forward on construction at the Ashland Reference Facility and commencing future CoalSwitch® production.
2. Market Development: We spent the past year driving leads and customer interest by investing in new sales leaders in the U.S. and U.K. and via direct marketing, event sponsorship and thought leadership. We also developed a strategy to obtain carbon credits and renewable energy incentives in the US to make CoalSwitch® cost-comparable to coal, helping to eliminate a barrier to adoption.
3. Building for Growth: We added depth and breadth to the team with the addition of a Chief Financial Officer and a US based Chief Operating Officer; extended our patent and IP portfolio; and secured a listing on the US Stock exchange. In 2023 we will continue to invest in building our US based management team. We also sold our Lumberton facility and associated litigation proceeded toward closure. We continued to develop and improve the core CoalSwitch® production technology.
As we proceed through the second quarter, we remain positive on our prospects. Fuel production is expected to commence in the third quarter of the current year, which will drive customer testing and orders and the process of market adoption for black pellets can accelerate. New regulations in the U.S. continue to drive coal users to seek new and cleaner options and concerns about the sustainability of using plantation trees for biomass are not abating.
We believe we have the right product, the right team, and the right time for commercialization.
1. Product and Production Development
Working with PDI, the Company spent the past year focussed on engineering and design, permits, certifications and other regulatory requirements needed to manufacture and sell CoalSwitch®.
Construction and Operational Permit for the Ashland Reference Plant
Construction of the Ashland Reference Facility has commenced and Active Energy announced that the appropriate permit had been awarded to PDI by the Department of Environmental Protection in the State of Maine on 24th of May 2023.
Active Energy, in close discussion with PDI, has made every effort to provide the clearest timetable toward production. However, we recognise that this timeline has extended beyond the expectations that we initially set and then updated.
With this permit in place, construction activities have now commenced, and the key manufacturing components will be delivered to Ashland shortly. PDI has confirmed to the Company that CoalSwitch® deliveries to Active Energy's customers should commence in Q3 2023. The Company continues to receive requests, both from the US and internationally, to visit operations at the Ashland Reference Facility at the earliest opportunity.
Since the first CoalSwitch® production in mid-2021, Active Energy has been working with PDI to improve the production process. PDI successfully produced samples of CoalSwitch® fuel in the summer of 2021 using the original steam treatment process under Active Energy's patented technology. Since then, the CoalSwitch® production process has been developed to enable PDI to increase volumes efficiently and to create an economic production process.
Improving Production Technology
Throughout 2022 and in 2023 to date, PDI has been developing CoalSwitch® production operations at Ashland, Maine. PDI has developed a new production reactor, and, with Active Energy's assistance, the pro-forma design and development of these reactors was completed during 2022. The revised configuration utilises some of the Company's existing CoalSwitch® technology and develops the steam explosion production technology to accommodate increased production volumes of black pellets. This process has involved not only designing a revised engineering configuration but also substantial work on the environmental impact (resulting in PDI working closely with the Department of Environmental Protection in Maine).
Forest Stewardship Council Standards
Post the period end, Active Energy has also renewed its Chain of Custody ("CoC") and Controlled Wood certification with the Forest Stewardship Council®("FSC®") standards for its CoalSwitch® fuel production in Maine thereby maintaining a significant component of Active Energy's sustainability criteria.
ENplus A1 Certificate for CoalSwitch®
Throughout 2022 and in 2023, Active Energy delivered test quantities of fuel for independent analysis by European customers and independent laboratories alike. Active Energy will continue to ensure that the CoalSwitch® program attains all the relevant industry standard certifications, which in the UK will include ENplus A1 certification. To date, the UK results have all consistently demonstrated CoalSwitch®'s improved pellet performance goals, namely the premium heating value properties, the lower emissions and less ash content and the improved material handling qualities which the industry is seeking. The Company is aiming to obtain final approvals once new CoalSwitch® supplies become available during Q3 2023.
2. Market Development
At its AGM in July 2022, the Company announced that, while PDI would focus on the engineering development activities for the CoalSwitch® program, Active Energy would focus on market development activities, both in the US and internationally.
Hiring experienced sales leaders
Since mid-2022, the number of market enquiries for a 'black pellet alternative' for biomass fuels has increased dramatically as the biomass industry urgently seeks alternate sustainable solutions. Over the last 12 months, Active Energy has created a market presence which will secure a future pipeline of fuel orders ahead of first production volumes from the Ashland Reference Facility. To achieve this, since July 2022, Active Energy has hired dedicated sales personnel both in the UK and the US to secure orders for CoalSwitch®. The Company has hired experienced personnel not only from the biomass industry but also from traditional fossil fuel industries to assist in marketing and sales activities which have to not only promote CoalSwitch® fuel but also create the future market.
Marketing activities in Europe
In the UK and Europe, the biomass industry has an established presence and the consumption and performance of traditional 'white pellet' biomass is well known. Active Energy's sales strategy has focused toward these established white pellet consumers and the sales team has had to demonstrate the economic and environmental benefits of CoalSwitch® against these existing biomass fuels.
To date, the Company obtained indications of interest for the supply of up to 10,000 tonnes of fuel from various parties in the UK seeking the fuel as an alternate and improved heating supply source. Initial conversations with prospective customers in the UK have indicated a future pipeline in excess of 50,000 tonnes of CoalSwitch® fuel, more than the Ashland Reference Facility could currently supply. During 2022, the Company also signed various Non-Disclosure Agreements with a range of European utilities who wish to assess the proprietary qualities of CoalSwitch® for long-term supply contracts and who also confirmed their desire to visit the Ashland Reference Facility in 2023.
As a result of the Company's marketing activities, it has also created an opportunity to sell MaineFlame pressed logs in the UK. This product, which is primarily focussed for domestic use, is currently produced at Ashland by PDI. As CoalSwitch® marketing activities have progressed in the UK, future customers have requested if Active Energy could additionally supply the pressed logs. During Q1 2023, the Company obtained the relevant authorisations and completed product testing to permit sales of the fuel in the UK. With first orders having already been delivered, Active Energy expects the revenues from these activities to be modest, but profit margins are healthy, and the immediate sales have provided an additional boost to the Company's credibility with future CoalSwitch® customers in the UK.
Marketing activities in North America
Unlike Europe, North America does not have an established base of biomass consumers. As a result, Active Energy has had to not only initiate efforts to sell CoalSwitch® fuel, but also create new market opportunities aligned to the current consumption of fossil fuels. The focus has been to develop a market for co-firing CoalSwitch® with coal.
During 2022, the first orders for fuel were obtained and a sales pipeline was established. Active Energy's first US CoalSwitch® fuel order came from Carolina Stalite ("Stalite"), an aggregates producer based in North Carolina. Stalite remains eager for fuel deliveries at the earliest opportunity during 2023. Their interest extends beyond fuel deliveries and early-stage discussions have been established for a future production joint venture in closer proximity to their existing manufacturing facilities.
The sales activities and potential customer interest have also focussed beyond the conventional power generation industry and include various heavy industries including cement, pulp and paper industries where local and national emissions regulations continue to expand. Active Energy remains confident of future commercial success and prospective customers on the US East Coast are finalising terms for initial test volumes of fuel at identified facilities. Active Energy's sales team have been required to educate prospective clients, local regulators and address production, consumption and emissions concerns. The fact that the US sales team is now experienced and knowledgeable on many of these issues is providing the Company with a competitive advantage.
The approval of the Inflation Reduction Act in Washington DC in August 2022 provided a significant boost for the sustainability agenda in the US. During Q4 2022, the US sales team received a notable increase in commercial enquiries on the benefits of co-firing CoalSwitch® with coal and, once the Ashland Reference Facility is in operation, the Company anticipates a further increase in commercial enquiries and orders for fuel.
In addition to developing the sales pipeline for CoalSwitch® fuel in the US, Active Energy has also received enquiries from parties wishing to acquire a CoalSwitch® production licence or work on a joint venture basis to develop the additional CoalSwitch® production facilities. In recent weeks, the Company has also received enquiries to further develop the CoalSwitch® production technology to further improve the fuel quality and to accommodate larger scale production volumes from existing lumber production facilities. Active Energy is now actively working with these prospective partners and such arrangements will involve future licensing and production royalty revenues for the Company, as well as additional CoalSwitch® revenues.
Once CoalSwitch® fuel is in production at the Ashland Reference Facility, Active Energy believes that demand from prospective customers will increase and the process of commercial negotiations, appropriate testing at specific facilities and determining fuel supplies under long term contract will commence. There is no question that all the pre-marketing activities of the last 12 months has allowed the Company to develop this sales pipeline and has provided the Board with increasing confidence that future sales volumes will accelerate rapidly once first production commences.
International marketing activities
In addition to marketing activities in Europe and North America, during 2022 Active Energy continued its sales activities in Japan through its partners based in Tokyo. Samples of fuel were delivered throughout 2022 into Japan to various customers for initial test analysis. The results have been consistent with the global results from the CoalSwitch® Program. In South Africa, commercial production partners continue to work on opportunities to address immediate environmental concerns in regard to its current coal supplies and consumption. In each instance, a process of fuel verification (confirmed by independent testing) has been completed and the Company is now in discussions on future commercial arrangements.
Secured guidance on availability of credits and incentives in the US.
During Q4 2022, the Company appointed Karbone, a financial services platform focussed on renewable energy and decarbonisation markets, to analyse the economic value of CoalSwitch® in its production and future use. The Karbone analysis report demonstrated that the consumption of CoalSwitch® creates opportunities for subsidies in the US and Canada in terms of Renewable Energy Credits (RECs) and Regional Greenhouse Gas Incentives (RGGIs) credits and the creation of carbon credits marketable in the Voluntary Carbon Markets (VCM).
The Karbone analysis shows that CoalSwitch® could qualify for significant subsidies from individual US states of up to $90 per ton in consumption which makes CoalSwitch® cost competitive with coal consumption in the US. This has opened up significant new commercial sales opportunities for CoalSwitch® sales in the US and Canada. Further projects are being finalised with Karbone and these activities continue alongside existing collaboration with Brigham Young University and the University of Utah on future co-firing test projects and new customer projects.
3. Building for Growth
The Company also took several key steps to prepare for growth and scale expected after commencement of commercial production, including technology development, IP extension and senior management team additions.
Readied Technology for Commercialization
The Board are pleased with the technology developments that have been achieved and with the underlying engineering and regulatory work that has been completed whilst PDI and the Company awaited issuance of the permit.
The new reactor will initially run toward a production target double that of the initial CoalSwitch® production reactors and once operational, PDI plans to increase the scale of production volumes through Q3 and Q4 so as to achieve its initial goal of an annualised target production rate of 35,000 tons per year. Upon initial analysis, PDI has informed the Company that it believes that the Ashland Reference Facility could increase toward higher production volumes, but this will be reviewed through the initial production phase in H2 2023.
Production of CoalSwitch® from the Ashland Reference Facility will allow Active Energy to demonstrate an operational production facility to identified and prospective customers of the fuel alike and show prospective joint venture production partners or licensees the benefits of the revised CoalSwitch® production process.
Strengthened management team
In November 2022, Michelle Fagan was appointed as the Company's interim Chief Financial Officer. Michelle has been working with the Company's management team since October 2020 and has 24 years' experience as a finance professional.
In March 2023, the Company appointed Steve Schaar as Chief Operating Officer to focus on the development of CoalSwitch® production in the United States. Steve has more than 25 years' experience of operations, project development, programme management and new product launches from a broad range of industries.
The Company is in discussions with a number of senior executives within the biomass sector in the US and intends to make further hires in the coming months to strengthen its US operations. This investment is in response to the significant number of opportunities that the Company has in the US and the developing market environment. The Board believes that the future growth of Active Energy will require further investment in a US management team.
Extended IP Protection
During 2022, Active Energy continued to develop and extend its intellectual property portfolio for CoalSwitch® and production know-how. On the 3 June 2022, the Company was awarded the Malaysian Patent for future CoalSwitch® production in the region to complement the existing patent awards in North America. More importantly, the CoalSwitch® trademark has now been registered and approved on all territories including US, Canada, Europe (including the UK) and additional trademark applications have commenced throughout Asia, including Japan.
In Japan, Active Energy has a pending new trademark application for CoalSwitch under application No. 2023-047762, and in Canada the CoalSwitch mark has been officially registered by the Canadian Intellectual property Office. A new EU IPO trademark application for the mark CoalSwitch has also been filed claiming priority to Active Energy's UK trademark registration.
The award of the Trademarks and Patents remain an important step for Active Energy as it grows its intellectual property portfolio through the continued development of its CoalSwitch® technology but also create brand awareness for the future of black pellet.
US$ quotation for Active Energy's shares in the US
The Company successfully completed its listing on OTCQB (Ticker: ATGVF) in the US in August 2022, which will provide enhanced investor benefits, including easier trading access for investors located in the US, greater liquidity due to a broader pool of potential investors and an increased corporate profile in the US.
Completion of the Sale of Lumberton Site
On 31 March 2022, the Company announced that it had entered into a sale and purchase agreement with Phoenix LLC for the sale of the Lumberton Site for gross cash proceeds of US$4.65million. The transaction closed successfully by 30 June 2022 and the net proceeds of US$3.92 million were delivered to Active Energy. Active Energy continues to work with commercial partners in North Carolina to look for future opportunities for CoalSwitch® production.
Going concern
The Directors have given careful consideration to the appropriateness of the going concern basis in the preparation of the Annual Report and Accounts for the year ended 31 December 2022. Further details of the Company's current financial position and material uncertainties which may affect the Company's ability to continue operating as a going concern are to be found in the Financial Review and in Note 1 of the Financial Statements. The Directors are confident that the funding required for the Group to continue as a going concern will be secured within a period of twelve months from the date of approval of the Financial Statements and have therefore prepared the Financial Statements on a going concern basis.
Post period end and outlook
The final approvals for PDI to complete the construction of and commence operations at the Ashland Reference Facility in May 2023 marked the next key stage for the development and introduction of CoalSwitch® as the next generation biomass fuel. It is a better pellet than current biomass fuel supplies and through all the work done over many years, Active Energy is actively addressing the obvious sustainability concerns for biomass focussing on utilising low value waste feedstocks and producing a high-grade fuel which demonstrates improved burn and emissions test results.
Fuel deliveries to customers are now expected to commence in Q3 2023 and that will further increase prospective customer interest. Deliveries to traditional coal intensive industries, not known for their use of biomass, creates new markets and commercial opportunities for CoalSwitch® and for Active Energy. Given the increasing regulatory environment, particularly in the US, this should prove to be an opportune time for Active Energy.
In recent months, notably with the hire of Steve Schaar, the level of commercial and technology expertise within Active Energy has increased significantly. Steve has brought an immense operational knowledge to Active Energy and the Company is actively developing new market opportunities. Operations at the Ashland Reference Facility will prove to be just the start of the progress toward a production goal of 500,000 tons of CoalSwitch® fuel by 2025, with the Company involved at a number of production sites throughout North America.
It is expected that the CoalSwitch® production technologies will also be developed to provide complimentary technologies that will further enable improved black pellet fuel performance and ensure production to larger scale volumes to accommodate current market demand. These technologies will be IP protected, and Active Energy will seek to license this technology to additional production centres both inside and outside the US.
Most importantly, biomass is currently being re-reviewed for its sustainability criteria. The application of this criteria means that white pellet consumption is increasingly under question and investigation. The market opportunity for Active Energy to become a premium supplier of black pellet and develop its black pellet production technologies has never been greater. CoalSwitch® should become the market standard for black pellet fuel.
I would like to thank all my colleagues and commercial partners for all their work and commitment toward the CoalSwitch® program in 2022 and look forward to achieving commercial success in 2023.
Michael Rowan
Chief Executive Officer
5 June 2023
FINANCE REVIEW
FOR THE YEAR ENDED 31 DECEMBER 2022
The Consolidated Financial Statements for the year ended 31 December 2022 ("Current Year") is compared to the year ended 31 December 2021 ("Prior Year").
Financing
The Group started 2022 with a restructured balance sheet, following the actions taken during 2021, and did not raise debt or equity finance during the year. The Group had net cash of US$2.6m at the end of the year (2021: US$1.9m) and is well positioned to seek additional funding to expand operations at the Ashland Reference Facility, develop complementary CoalSwitch® production technologies and commercialise CoalSwitch®.
Subsequent events
Since the period year end, the Company has continued to work with PDI to progress towards the commencement of fuel production at the Ashland Reference Facility. PDI has confirmed the award of a construction and operational permit on 24 May 2023 and final engineering and construction activities have commenced. Active Energy has a 'take or pay' contract with PDI for all production from the Ashland Reference Facility for the next 3 years.
Fundraising activities through 2022
There were no fundraising activities, either of equity or debt, during 2022.
Performance
In the first half of 2022, the Company sold the Lumberton site property and ceased all operations at Lumberton by 30 June 2022. The Board agreed that moving the equipment from Lumberton to Ashland and building the CoalSwitch® plant at Ashland was the best strategy available at the time.
During the second half of 2022, the Company invested in establishing a sales and marketing operations in both the United States and the United Kingdom. During the year the Company completed a series of independent laboratory analyses of the CoalSwitch® fuel in the United States, United Kingdom, Europe, and Japan and incurred appropriate costs in such exercise.
The Company incorporated tight financial controls and treasury management to its finance department during late 2022 to ensure use of funds is kept in line with enhancing shareholder's investment and this has continued to date. The financial focus as the company moves toward first stages of production from Ashland will be to focus on enhancing shareholders return on investment in the most efficient and effective way it possibly can.
Continuing operations
Impairment charges of US$1,000,000 (2021: US$2,000,000) relate to one of the reactors which is being used for Research and Development at Ashland.
Administrative costs were consistent with the prior year at US$2,855,199 (2021: US$2,904,311). The net finance income of US$24,173 (2021: net finance costs of US$303,712) represents interest received on deposited funds less interest payable on borrowings.
Discontinued operations
The termination of the saw log and sawmill businesses at Lumberton during 2022 and the disposal of the Lumberton property was completed on 30 June 2022 and resulted in net cash proceeds of $3.92 million to the Group.
The overall operational loss for the year was US$1,343,745 (2021: US$5,881,768) with a basic and diluted loss per share of 0.83 cents (2021: 5.74 cents). Net finance income was interest receivable on cash held on deposit less interest payable on borrowings.
Financial position
Non-current assets
The Lumberton property was sold during the year along with certain associated plant and equipment.
Additions to plant and equipment of US$231,087 and to intellectual property of US$730,213 primarily relate to future activities, including design and engineering for the forthcoming Ashland Reference Facility, which is now under construction.
Current assets
Trade and other receivables of US$905,924 (2021: US$1,628,959) consist mainly of US$774,668 of project advances to Player Design Inc. for the development of the Ashland facility.
Current liabilities
Trade and other payables were US$1,199,796 (2021: US$1,222,030). The largest reduction is due to stringent cost management reducing the trade payables due at year end significantly. Trade payables was $428,106 in 2022 and $775,709 in 2022.
Non-current liabilities
Loans and borrowings, related to COVID 19 Government loans, decreased slightly to US$133,940 (2021: US$143,931) due to repayments on the UK government guaranteed loan, which is repayable over 5 years. Repayments on the US government loan commenced in December 2022.
Cashflow
Operating cash outflows were US$2,554,563 (2021: US$5,618,404). The reduced outflow results from the cessation of sawmill and saw log operations during 2021 and Q1 2022 along with reductions in working capital and cost management measures.
The net cash inflow from investing activities of US$3,037,257 (2021: net outflow of US$4,375,624) comprises proceeds of US$3,767,471 from the disposal of the Lumberton Site less cash of US$730,714 expended on the creation of intellectual property and know how in relation to the new Ashland Reference Facility.
Cash and cash equivalents of US$2,614,472 were on hand at December 2022 year end (2021: US$1,940,871).
Going concern
The Financial Statements have been prepared on a going concern basis. Note 1 of the Financial Statements sets out the material uncertainties relating to the Company's ability to continue as a going concern.
Subsequent to the balance sheet date Player Design Inc. has been granted the permits required to construct and operate CoalSwitch® production at the plant in Ashland. However, there is uncertainty around the timing of production which could affect both the Group's future cash requirements and the timing of revenue cash generation from sales of CoalSwitch®.
The Directors have concluded that additional funding may be required to execute the Board's strategy of commercialising CoalSwitch®. While there can be no guarantee that funding will be available on terms that are acceptable to the Company, or at all, the Directors are confident that the Company will be able to secure sufficient equity finance at the required time.
The financial statements do not include any adjustments that would arise if the Company were to be unable to continue as a going concern.
Section 172 Statement
The Directors are well aware of their duty under Section 172 of the Companies Act 2006 to act in the way which they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole and, in doing so, to have regard (amongst other matters) to:
· The likely consequences of any decision in the long term;
· The interests of the Company's employees;
· The need to foster the Company's business relationships with suppliers, customers and others;
· The impact of the Company's operations on the community and the environment;
· The desirability of the company maintaining a reputation for high standards of business conduct; and
· The need to act fairly between members of the Company.
The Board recognises that the long-term success of the Group requires positive interaction with its stakeholders, including shareholders, customers, suppliers, governmental and regulatory authorities. The Directors seek to actively identify and positively engage with key stakeholders in an open and constructive manner. The Board believes that this strategy enables our stakeholders to better understand the activities, needs and challenges of the business and enables the Board to better understand and address relevant stakeholder views which will assist the Board in its decision making and to discharge its duties under Section 172 of the Companies Act 2006.
Further corporate governance matters related to this Section 172 Statement can be found on page 28.
Michelle Fagan
Interim Chief Financial Officer
5 June 2023
CONSOLIDATED STATEMENT OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
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|
|
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Restated |
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|
|
|
2022 |
|
2021 |
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CONTINUING OPERATIONS |
Note |
|
US$ |
|
US$ |
|
|
|
|
|
|
|
|
REVENUE |
3 |
|
- |
|
- |
|
|
|
|
|
|
|
|
GROSS LOSS |
|
|
- |
|
(517,238) |
|
Impairment charges |
4 |
|
(1,000,000) |
|
(2,000,000) |
|
Administrative expenses |
|
|
(2,855,384) |
|
(2,904,311) |
|
Other income |
|
|
- |
|
361,237 |
|
|
|
|
|
|
|
|
OPERATING LOSS |
6 |
|
(3,855,384) |
|
(5,060,312) |
|
|
|
|
|
|
|
|
Net finance income/(costs) Foreign exchange gains |
7
|
|
24,173 3,269,176 |
|
(303,712) 685,920 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE TAXATION |
|
|
(562,035) |
|
(4,678,104) |
|
|
|
|
|
|
|
|
Taxation |
8 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM CONTINUING OPERATIONS |
|
|
(562,035) |
|
(4,678,104) |
|
|
|
|
|
|
|
|
LOSS FROM DISCONTINUED OPERATIONS |
9 |
|
(781,710) |
|
(1,203,664) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FOR THE YEAR - ATTRIBUTABLE TO THE PARENT COMPANY |
|
|
(1,343,745) |
|
(5,881,768) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share (US cents) - continuing operations |
10 |
|
(0.35) |
|
(4.57) |
|
Basic and diluted loss per share (US cents) - discontinued operations |
10 |
|
(0.48) |
|
(1.17) |
|
Basic and diluted loss per share (US cents) - all operations |
10 |
|
(0.83) |
|
(5.74) |
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE LOSS |
|
|
|
|
|
|
Items that may be subsequently reclassified to profit or loss |
|
|
|
|
|
|
Exchange differences on translation of operations |
|
|
(3,426,765) |
|
(2,239,354) |
|
|
|
|
|
|
|
|
Total other comprehensive loss |
|
|
(3,426,765) |
|
(2,239,354) |
|
|
|
|
|
|
|
|
TOTAL COMPREHENSIVE LOSS FOR THE YEAR |
|
|
(4,770,510) |
|
(8,121,122) |
|
|
|
|
|
|
|
The notes on pages 51 to 86 form part of these financial statements.
CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
|
|
|
Group |
|
Group |
|
Company |
|
Company |
|
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
NON-CURRENT ASSETS |
Note |
US$ |
|
US$ |
|
US$ |
|
US$ |
|
Intangible assets |
11 |
8,064,585 |
|
5,659,024 |
|
- |
|
- |
|
Property, plant & equipment |
12 |
4,772,530 |
|
11,512,953 |
|
1,015 |
|
2,573 |
|
Investment in subsidiaries |
13 |
- |
|
- |
|
5,732,103 |
|
6,417,741 |
|
Long term loans |
14 |
- |
|
- |
|
21,444,342 |
|
25,296,460 |
|
Other financial assets |
15 |
823,744 |
|
922,275 |
|
823,744 |
|
922,275 |
|
|
|
13,660,859 |
|
18,094,252 |
|
28,001,204 |
|
32,639,049 |
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
Inventory |
16 |
- |
|
27,250 |
|
- |
|
- |
|
Trade and other receivables |
17 |
905,924 |
|
1,628,959 |
|
131,197 |
|
432,041 |
|
Cash and cash equivalents |
18 |
2,614,472 |
|
1,940,871 |
|
2,545,913 |
|
1,915,571 |
|
|
|
3,520,396 |
|
3,597,080 |
|
2,677,110 |
|
2,347,612 |
|
TOTAL ASSETS |
|
17,181,255 |
|
21,691,332 |
|
30,678,314 |
|
34,986,661 |
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
Trade and other payables |
19 |
1,199,796 |
|
1,222,030 |
|
351,255 |
|
602,062 |
|
Loans and borrowings |
21 |
13,724 |
|
14,013 |
|
11,920 |
|
13,015 |
|
|
|
1,213,520 |
|
1,236,043 |
|
363,175 |
|
615,077 |
|
NON-CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
Deferred taxation |
20 |
- |
|
147,349 |
|
- |
|
- |
|
Loans and borrowings |
21 |
133,940 |
|
143,931 |
|
30,085 |
|
47,029 |
|
|
|
133,940 |
|
291,280 |
|
30,085 |
|
47,029 |
|
TOTAL LIABILITIES |
|
1,347,460 |
|
1,527,323 |
|
393,260 |
|
662,106 |
|
NET ASSETS |
|
15,833,795 |
|
20,164,009 |
|
30,285,054 |
|
34,324,555 |
|
EQUITY |
|
|
|
|
||||
|
Share capital - Ordinary Shares |
23 |
786,867 |
|
786,867 |
|
786,867 |
|
786,867 |
|
Share capital - Deferred Shares |
23 |
18,148,898 |
|
18,148,898 |
|
18,148,898 |
|
18,148,898 |
|
Share premium |
|
55,349,883 |
|
55,349,883 |
|
55,349,883 |
|
55,349,883 |
|
Merger reserve |
|
2,350,175 |
|
2,350,175 |
|
2,350,175 |
|
2,350,175 |
|
Foreign exchange reserve |
|
(5,851,094) |
|
(2,424,329) |
|
(5,744,107) |
|
(2,004,424) |
|
Own shares held reserve |
|
(268,442) |
|
(268,442) |
|
(268,442) |
|
(268,442) |
|
Convertible debt/warrant reserve |
|
690,937 |
|
1,165,911 |
|
690,937 |
|
1,165,911 |
|
Retained earnings |
|
(55,373,429) |
|
(55,449,600) |
|
(41,029,157) |
|
(41,204,313) |
|
Revaluation reserve |
|
- |
|
504,646 |
|
- |
|
- |
|
TOTAL EQUITY |
|
15,833,795 |
|
20,164,009 |
|
30,285,054 |
|
34,324,555 |
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent company's income statement. The parent company's loss after tax for the year was $740,114 (2021: $2,075,511).
The financial statements were approved and authorised for issue by the Directors on 5 June 2023 and were signed on their behalf by:
Michael Rowan
Chief Executive Officer
Company Number 03148295
The notes on pages 51 to 86 form part of these financial statements.
GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
Share capital |
Share premium |
Merger reserve |
Foreign exchange reserve |
Own shares held reserve |
Convertible debt and warrant reserve |
Retained earnings |
|
|
|
Revaluation Reserve |
Total equity |
||||||||
|
|
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
|
At 31 December 2020 |
18,368,334 |
18,711,637 |
2,350,175 |
(184,975) |
(268,442) |
3,701,803 |
(49,899,736) |
504,646 |
(6,716,558) |
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(5,881,768) |
- |
(5,881,768) |
|
Other comprehensive income |
- |
- |
- |
(2,239,354) |
- |
- |
- |
- |
(2,239,354) |
|
Total comprehensive income |
- |
- |
- |
(2,239,354) |
- |
- |
(5,881,768) |
- |
(8,121,122) |
|
Issue of share capital |
334,391 |
13,087,809 |
- |
- |
- |
- |
- |
- |
13,422,200 |
|
Conversion of CLN |
233,040 |
23,550,437 |
- |
- |
- |
(2,843,734) |
- |
- |
20,939,743 |
|
Share based payments and warrants |
- |
- |
- |
- |
- |
307,842 |
331,904 |
- |
639,746 |
|
At 31 December 2021 |
18,935,765 |
55,349,883 |
2,350,175 |
(2,424,329) |
(268,442) |
1,165,911 |
(55,449,600) |
504,646 |
20,164,009 |
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(1,343,745) |
- |
(1,343,745) |
|
Other comprehensive income |
- |
- |
- |
(3,426,765) |
- |
- |
- |
- |
(3,426,765) |
|
Total comprehensive income |
- |
- |
- |
(3,426,765) |
- |
- |
(1,343,745) |
- |
(4,770,510) |
|
Realisation of revaluation reserve |
- |
- |
- |
- |
- |
- |
504,646 |
(504,646) |
- |
|
Share based payments and warrants |
- |
- |
- |
- |
- |
(474,974) |
915,270 |
- |
440,296 |
|
At 31 December 2022 |
18,935,765 |
55,349,883 |
2,350,175 |
(5,851,094) |
(268,442) |
690,937 |
(55,373,429) |
- |
15,833,795 |
The purpose and nature of each of the above reserves is described in Note 25.
The notes on pages 51 to 86 form part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
Share capital |
Share premium |
Merger reserve |
Foreign exchange reserve |
Own shares held reserve |
Convertible debt and warrant reserve |
Retained earnings |
|
|
Total equity |
||||||||
|
|
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
|
At 31 December 2020 |
18,368,334 |
18,711,637 |
2,350,175 |
(124,920) |
(268,442) |
3,701,803 |
(39,460,706) |
3,277,881 |
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(2,075,511) |
(2,075,511) |
|
Other comprehensive income |
- |
- |
- |
(1,879,504) |
- |
- |
- |
(1,879,504) |
|
Total comprehensive income |
- |
- |
- |
(1,879,504) |
- |
- |
(2,075,511) |
(3,955,015) |
|
Issue of share capital |
334,391 |
13,087,809 |
- |
- |
- |
- |
- |
13,422,200 |
|
Conversion of CLN |
233,040 |
23,550,437 |
- |
- |
- |
(2,843,734) |
- |
20,939,743 |
|
Share based payments and warrants |
- |
- |
- |
- |
- |
307,842 |
331,904 |
639,746 |
|
At 31 December 2021 |
18,935,765 |
55,349,883 |
2,350,175 |
(2,004,424) |
(268,442) |
1,165,911 |
(41,204,313) |
34,324,555 |
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(740,114) |
(740,114) |
|
Other comprehensive income |
- |
- |
- |
(3,739,683) |
- |
- |
- |
(3,739,683) |
|
Total comprehensive income |
- |
- |
- |
(3,739,683) |
- |
- |
(740,114) |
(4,479,797) |
|
Share based payments and warrants |
- |
- |
- |
- |
- |
(474,974) |
915,270 |
440,296 |
|
At 31 December 2022 |
18,935,765 |
55,349,883 |
2,350,175 |
(5,744,107) |
(268,442) |
690,937 |
(41,029,157) |
30,285,054 |
The purpose and nature of each of the above reserves is described in Note 25.
The notes on pages 51 to 86 form part of these financial statements.
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
|
Group |
|
Group |
|
Company |
|
Company |
|
|
Note |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
US$ |
|
US$ |
|
US$ |
|
US$ |
|
Cash (outflow) from operations |
26 |
(2,554,563) |
|
(5,618,404) |
|
(711,370) |
|
(3,416,684) |
|
Income tax paid |
|
- |
|
- |
|
- |
|
- |
|
Net cash (outflow) from operating activities |
|
(2,554,563) |
|
(5,618,404) |
|
(711,370) |
|
(3,416,684) |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
Purchase of intangible assets |
|
(730,213) |
|
- |
|
- |
|
- |
|
Advances to acquire property, plant and equipment |
|
- |
|
(800,000) |
|
- |
|
- |
|
Purchase of property, plant and equipment |
|
- |
|
(3,957,944) |
|
- |
|
(2,979) |
|
Sale of property, plant and equipment |
|
3,767,471 |
|
382,320 |
|
- |
|
- |
|
Net cash inflow/(outflow) from investing activities |
|
3,037,258 |
|
(4,375,624) |
|
- |
|
(2,979) |
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
Issue of equity share capital, net of share issue costs |
|
- |
|
12,722,200 |
|
- |
|
12,722,200 |
|
Redemption of CLN |
|
- |
|
(1,571,222) |
|
- |
|
(1,571,222) |
|
Intercompany loans received/(advanced) |
|
- |
|
- |
|
1,150,373 |
|
(6,617,719) |
|
Unsecured debt repaid |
|
(13,652) |
|
(1,040,400) |
|
(13,174) |
|
(8,547) |
|
Unsecured debt proceeds |
|
- |
|
885,234 |
|
- |
|
- |
|
Principal elements of lease payments |
|
- |
|
(57,900) |
|
- |
|
- |
|
Net cash (outflow)/inflow from financing activities |
|
(13,652) |
|
10,937,912 |
|
1,137,199 |
|
4,524,712 |
|
Net increase in cash and cash equivalents |
|
469,043 |
|
943,884 |
|
425,829 |
|
1,105,049 |
|
Cash and cash equivalents at beginning of the year |
|
1,940,871 |
|
999,631 |
|
1,915,571 |
|
811,901 |
|
Exchange gains/(losses) on cash and cash equivalents |
|
204,558 |
|
(2,644) |
|
204,513 |
|
(1,379) |
|
Cash and cash equivalents at end of the year |
17 |
2,614,472 |
|
1,940,871 |
|
2,545,913 |
|
1,915,571 |
The notes on pages 51 to 86 form part of these financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1. ACCOUNTING POLICIES
General information
Active Energy Group plc is a public limited company, limited by shares, incorporated in England and Wales, and quoted on the AIM market of the London Stock Exchange. Its registered office address is 27/28 Eastcastle Street, London, W1W 8DH. The principal activity of the Group is described in the Strategic Report.
Basis of preparation
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 years presented, unless otherwise stated. Certain prior year disclosures have been restated to account for discontinued operations in accordance with the requirements of IFRS 5.
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. Active Energy Group plc transitioned to UK-adopted International Accounting Standards in its consolidated financial statements on 1 January 2021. This change constituted a change in accounting framework however there was no impact on recognition, measurement or disclosure as a result of the change in framework.
Both the Company financial statements and the Group financial statements (collectively the "Financial Statements") have been prepared and approved by the Directors in accordance with International Financial Reporting Standards ("IFRS") as adopted by the UK, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The Financial Statements have been prepared on the historical cost basis, as modified by the revaluation of property, plant and equipment, available for sale financial assets and certain financial assets and liabilities, including derivative financial instruments, held at fair value through profit and loss.
The preparation of financial statements in compliance with IFRS requires the use of accounting estimates. It also requires management to exercise judgement in the most appropriate application of the Group's accounting policies. The areas where significant judgements and estimates have been made in preparing the financial statements and their effects are disclosed at the end of this note.
Going concern
In preparing the financial statements the Directors are required to make an assessment of the Company's ability to continue as a going concern and whether it is appropriate to prepare the financial statements on a going concern basis.
Subsequent to the balance sheet date Player Design Inc. has been granted the permit required to construct and operate CoalSwitch® production at the plant in Ashland. However, there is uncertainty around the timing to finalise construction which could affect both the Group's future cash requirements and the timing of revenue cash generation from sales of CoalSwitch®.
The Directors have prepared cash flow forecasts to estimate the Group's future cash requirements, and the resources available to it, and these indicate that the Company should have sufficient cash resources to continue in operation for the foreseeable future. These forecasts involve a number of assumptions, the most significant of which are:
· the timing of completion of the Ashland plant and the commencement of CoalSwitch® production.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
· the level and timing of revenue generated by sales of CoalSwitch®
· the successful disposal of surplus assets and the timing of disposal proceeds
· the value and timing of pending tax credit claims
The Directors have concluded that additional funding may be required to execute the Board's strategy of commercialising CoalSwitch®. While there can be no guarantee that funding will be available on terms that are acceptable to the Company, or at all, the Directors are confident that the Company will be able to secure sufficient equity finance at the required time.
The Board are of the opinion that the factors set out above constitute material uncertainties in relation to the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that would arise if the Company were to be unable to continue as a going concern.
Restatement of prior period
The statement of comprehensive income for the year ended 31 December 2021 has been restated to report the 2021 loss from operations discontinued during 2022 within the loss from discontinued operations line (see note 9). The overall loss for the year ended 31 December 2021, the total comprehensive loss for the year and net assets at 31 December 2021 are unaffected.
The Company consolidated its Ordinary Shares during 2022 and consequently the loss per share and share options and warrants disclosures for the year ended 31 December 2021 have been restated to reflect the consolidated share capital (see notes 10 and 24). The loss for the year ended 31 December 2021 and net assets at 31 December 2021 are unaffected.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
New and amended standards which are effective for these Financial Statements
A number of amended standards became mandatory and are effective for annual periods beginning on or after 1 January 2022 including amendments to IFRS 16 (Covid-19 related rent concessions), IAS 16 (proceeds before intended use) and IAS 37 (onerous contracts), and the Annual Improvements Cycle 2018-2020. These have not had a material impact on the financial statements.
New and amended standards which are not yet effective for these Financial Statements
There are a number of new and amended standards and interpretations that are not mandatory for the year ended 31 December 2022 and have not been early adopted in these financial statements. These will be adopted in the period when they became mandatory unless otherwise indicated.
|
Ref |
Title |
Summary |
Application date (accounting periods commencing) |
|
IAS1 |
Presentation of Financial Statements |
Amendments: classification of liabilities as current or non-current
Amendments: requirement to disclose 'material' accounting policies instead of 'significant' accounting policies
Amendments: clarification of the impact of post balance sheet date conditions on the classification of liabilities as non-current |
1 January 2023
1 January 2023
1 January 2024 |
|
IAS8 |
Accounting Policies, Changes in Accounting Estimates and Errors |
Amendments: definition of accounting estimates and clarification of the treatment of changes in accounting estimates |
1 January 2023 |
|
IAS12 |
Income Taxes |
Amendments: clarification of how deferred tax is accounted for on certain transactions |
1 January 2023 |
|
IFRS16 |
Leases |
Amendments: clarification of the measurement of sale and leaseback transactions that qualify as sales transactions under IFRS15 |
1 January 2024 |
|
IFRS17 |
Insurance contracts |
Replaces IFRS 4 'Insurance Contracts'
|
1 January 2023 |
These new and amended standards are not expected to have a material impact on the Group.
Basis of consolidation
The financial information incorporates the results of the Company and entities controlled by the Company (its subsidiaries). Control is achieved when the Group has power over relevant activities, is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The consolidated financial statements present the financial results of the Company and its subsidiaries (the Group) as if they formed a single entity. Where necessary, adjustments are made to the results of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
In the Company's statement of financial position, investments in subsidiaries are stated at cost less provisions for any permanent diminution in value. Total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the non-controlling interests in proportion to their relative ownership interests, except when cumulative losses of the subsidiary result in negative equity, whereafter total comprehensive income is attributed to the Group.
Revenue recognition
Revenue is recognised in accordance with the requirements of IFRS 15 'Revenue from Contracts with Customers'. The Company recognises revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This core principle is delivered in a five-step model framework: 1. Identify the contract(s) with the customer; 2. Identify the performance obligations in the contract; 3. Determine the transaction price; 4. Allocate the transaction price to the performance obligations in the contract; and 5. Recognise revenue when (or as) the entity satisfies a performance obligation.
Revenue is recognised when control of the products has been transferred to the customer. Control is considered to have transferred once products have been received by the customer unless shipping terms dictate otherwise. Revenues exclude intra-group sales and value added taxes and represent net invoice value less estimated rebates, returns and settlement discounts. The net invoice value is measured by reference to the fair value of the consideration received or receivable by the Group for goods supplied. In the case of income from licencing activities, revenue is recognised as and when the relevant performance obligations defined by the licence agreement have been satisfied. This may be on initial grant of the licence if the grant is itself the performance obligation. Alternatively, the performance obligation may be dependent on certain further events, such as production under the terms of the licence, in which case revenue will be recognised as this occurs.
Goodwill and business combinations
On acquisition, the assets and liabilities and contingent liabilities of subsidiaries are measured at their fair values at the date of acquisition. Any excess of cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the income statement in the period of acquisition.
When the consideration transferred by the Group in a business combination includes assets or liabilities from a contingent consideration arrangement, the contingent consideration is measured at its acquisition date fair value and included as part of the consideration paid. Changes in the fair value of the consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill.
Goodwill arising on consolidation is recognised as an intangible asset and reviewed for impairment at least annually by comparing the carrying value of the asset to the recoverable amount. Any impairment is recognised immediately in profit or loss and is not subsequently reversed.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
Impairment of non-financial assets (excluding inventories, investment properties and deferred tax)
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other 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.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest group of assets to which it belongs for which there are separately identifiable cash flows; its cash generating units ("CGUs"). Goodwill is allocated on initial recognition to each of the Group's CGUs that are expected to benefit from the synergies of the combination giving rise to the goodwill. Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognised in other comprehensive income. An impairment loss recognised for goodwill is not reversed.
Intangible assets
Externally acquired intangible assets with a finite useful life are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives and tested for impairment annually. Externally acquired intangible assets with an infinite life are not amortised but are tested for impairment annually.
Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques.
Internally generated intangible fixed assets are recognised if they meet the requirements set out by International Accounting Standards. Specifically,
· the asset must be separately identifiable that is to say that either it is capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged; or it arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations;
· the cost of the asset can be measured reliably;
· the technical feasibility of completing the intangible asset;
· the Group intends and is able to complete the intangible asset and use or sell it;
· the intangible asset will generate probable future economic benefits;
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
Intangible assets (continued)
· there are available and adequate technical, financial, and other resources to complete and to use or sell the intangible asset; and
· Expenditure attributable to the intangible asset is measurable.
Property, plant and equipment
Property, plant and equipment is stated at cost, or deemed cost, less accumulated depreciation and any recognised impairment loss. Cost includes the purchase price and all directly attributable costs. Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life:
Plant and equipment - 2 to 10 years straight line
Furniture and office equipment - 2 to 5 years straight line
Buildings - 25 to 50 years straight line
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Property is depreciated and is reviewed by means of an independent property valuer on a three-year basis, unless indicators of impairment exist, in which case an independent valuation will be performed. Land is not depreciated.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less applicable selling expenses. Inventory consists of raw materials and finished timber products.
Segment reporting
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 Executive Directors.
Financial assets and liabilities
The Group classifies its financial assets at inception into three measurement categories; 'amortised cost', 'fair value through other comprehensive income' ("FVOCI") and 'fair value through profit and loss' ("FVTPL"). The Group classifies its financial liabilities, other than financial guarantees and loan commitments, as measured at amortised cost. Management determines the classification of its investments at initial recognition. A financial asset or financial liability is measured initially at fair value. At inception transaction costs that are directly attributable to its acquisition or issue, for an item not at fair value through profit or loss, are added to the fair value of the financial asset and deducted from the fair value of the financial liability.
Amortised cost measurement
The amortised cost of a financial asset or financial liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal payments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initial amount recognised and maturity amount, minus any reduction for impairment.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
Financial assets and liabilities (continued)
Fair value measurement
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction on the measurement date. The fair value of assets and liabilities in active markets are based on current bid and offer prices respectively. If the market is not active the group establishes fair value by using appropriate valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same for which market observable prices exist, net present value and discounted cash flow analysis.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or where the group has transferred substantially all of the risks and rewards of ownership. In a transaction in which the group neither retains nor transfers substantially all the risks and rewards of ownership of a financial asset and it retains control over the asset, the group continues to recognise the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset. There have not been any instances where assets have only been partly derecognised. The group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.
Impairment
The Group assesses at each financial position date whether there is objective evidence that a financial asset or group of financial assets is impaired. If there is objective evidence (such as significant financial difficulty of the obligor, breach of contract, or it becomes probable that debtor will enter bankruptcy), the asset is tested for impairment. The amount of the loss is measured as the difference between the asset's carrying amount and the present value of the estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset's original effective interest rate (that is, the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through use of an allowance account.
Taxation
Current taxes are based on the results shown in the Financial Statements and are calculated according to local tax rules, using tax rates enacted or substantively enacted by the year-end date.
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 goodwill;
· 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 to utilise the difference. The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/assets are settled/recovered.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
Taxation (continued)
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 Group entities which intend either to settle current tax assets/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 or liabilities are expected to be settled/recovered.
Foreign currencies
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which they operate (their "functional currency"). The Company and Consolidated financial statements are presented in United States Dollar ("US Dollar", "US$"), which is the Group's presentation currency as the Group's activities are ultimately linked to the US Dollar. The Company's functional currency is Pounds Sterling.
Transactions entered into by Group entities in a currency other than their functional currency are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss.
On consolidation, the results of overseas operations are translated into the Group's presentation currency, US Dollars, at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve. Exchange differences recognised in the statement of comprehensive income of Group entities' separate financial statements on the translation of long-term monetary items forming part of the Group's net investment in the overseas operation concerned are reclassified to the foreign exchange reserve on consolidation.
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the profit or loss on disposal. The key US$/GBP exchange rates used to prepare the accounts were as follows: rate at 31 December 2022: 1.2056; average for year-ended 31 December 2022: 1.237; rate at 31 December 2021: 1.350.
Convertible debt
The obligations associated with the issue of the Company's convertible debt are allocated into their liability and equity components. The amount initially attributed to the debt component equals the discounted cash flows using a market rate of interest that would be payable on a similar debt instrument that does not include an option to convert. Subsequently, the debt component is accounted for as a financial liability measured at amortised cost until extinguished on conversion or maturity of the bond. The remainder of the proceeds are allocated to the conversion option and are recognised in the "Convertible debt reserve" within shareholders' equity, net of income tax effects.
Where the proceeds from the convertible debt have been used to finance construction of property, plant and equipment, or to invest in intangible assets, then the associated borrowing costs are allocated to the relevant asset in accordance with the requirements of IAS23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
There were no outstanding convertible debt instruments as at 31 December 2022 as these were all converted in the prior year.
Leased assets
Leased assets are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs required to remove or restore the underlying asset, less any lease incentives received. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. The initial measurement of the corresponding lease liability is at the present value of the lease payments that are not paid at the lease commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. The lease payments include fixed payments, less any lease incentive receivable, variable leases payments based on an index or rate, and amounts expected to be payable by the lessee under residual value guarantees.
The lease liability is subsequently measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Share-based payments
Where employees receive remuneration in the form of shares or share options, the fair value of the share-based employee compensation arrangement at the date of the grant is recognised as an employee benefit expense in the consolidated income statement. The total expense to be apportioned over the vesting period of the benefit is determined by reference to the fair value (excluding the effect of non-market-based vesting conditions) at the date of the grant. The assumptions underlying the number of awards expected to vest are subsequently adjusted for the effects of non-market-based vesting to reflect the conditions prevailing at the year-end date. Fair value is measured using a valuation tool (Monte Carlo or Black Scholes). The expected life used in the model has been adjusted, based on management's best estimate, for the effects of the non-transferability, exercise restrictions and behavioural considerations.
Where equity instruments are granted to persons other than employees, the consolidated income statement is charged with the fair value of goods and services received; except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
Own shares held
Consideration paid/received for the purchase/sale of shares held in escrow or in trust for the benefit of employees is recognised directly in equity. The nominal value of such shares held is presented within the "own shares held" reserve. Any excess of the consideration received on the sale of the shares over the weighted average cost of the shares sold is credited to retained earnings.
Neither the purchase nor sale of own shares leads to a gain or loss being recognised in the Group consolidated income statement.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
Investment in subsidiaries
Investments in subsidiaries are stated at cost less provision for impairment in the Company financial statements.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial information in conformity with International Financial Reporting Standards requires management to make estimates and judgements that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the year-end date and the reported amounts of revenues and expenses during the reporting period.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management's consideration of going concern is discussed elsewhere in the accounting policies note. The other significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were as follows:
Impairment of goodwill, intangible fixed assets, property plant and equipment and other assets
Intangible assets relate solely to CoalSwitch® and PeatSwitch patents, trademarks, and know-how. The Group has property plant and equipment in the form of the CoalSwitch® production equipment. The CoalSwitch® reactors damaged as a result of the component failure at Ashland have been impaired with the remaining CoalSwitch® production equipment subjected to a value in use assessment to determine whether further impairment was required. The use of these methods similarly requires the estimation of future cash flows and the choice of a discount rate in order to calculate the present value of the estimated future cash flows. Furthermore, these methods require an assessment of various strategies to develop and monetise these assets as well as an assessment of the success of these strategies. Actual outcomes will vary.
Share-based payments
In determining the fair value of LTIP awards and other equity settled share-based payments, and the related charge to the income statement, the Group makes assumptions about future events and market conditions. In particular, judgements must be made as to the fair value of each award granted. The fair value is determined using a valuation model which is dependent on further estimates, including the Group's future dividend policy, the timing with which options will be exercised and the future volatility in the price of the Group' shares. Such assumptions are based on publicly available information and reflect market expectations and advice taken from qualified personnel. Different assumptions about these factors could materially affect the reported value of share-based payments.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
Critical accounting judgements and key sources of estimation uncertainty (continued)
Recognition of development costs within intangible fixed assets
The Group undertakes certain development activity which is recognised within intangible fixed assets if it meets certain criteria laid down by international accounting standards. This means that management is required to assess various factors associated with these assets to determine whether the asset is separately identifiable, that it is probable that future economic benefits attributable to it will arise; the technical feasibility of completing the asset; that the Group intends and is able to complete the asset; and there are available and adequate technical, financial, and other resources to complete the asset. All these matters involve technical and economic judgement and changes to these assessments can result in significant variations in the carrying value and amounts charged to the consolidated statement of comprehensive income in specific periods.
Recoverability of intercompany loans
The Active Energy Group plc company balance sheet includes various loans to subsidiaries. Certain of these loans have been impaired on the basis that the counterparty is unlikely to generate sufficient future cash flows to repay the loan. This is based on an assessment of the assets (including goodwill) of the counterparty and its ability to monetise those assets in the future. Actual results will vary.
2. SEGMENTAL INFORMATION
The Group reports three business segments:
· "CoalSwitch®" denotes the Group's renewable wood pellet business.
· "Wood processing" at the Lumberton site denotes the Group's sawmill and saw log activities and the Lumberton property. The sawmill and sawlog activities ceased during 2021 and are reported as discontinuing operations. The results of these operations are not included in the segmental reporting.
· "Corporate and other" denotes the Group's corporate and other costs.
The business segments are aligned to the Group's strategy as disclosed in the Strategic Report.
Factors that management used to identify the Group's reportable segments
The Group's reportable segments are strategic business units that offer different products or services.
Measurement of operating segment profit or loss
The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with IFRS but excluding the results from discontinued operations in accordance with IFRS 5.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2. SEGMENTAL INFORMATION (continued)
|
|
2022 |
2022 |
2022 |
2022 |
|
|
CoalSwitch® |
Wood processing |
Corporate & Other |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
|
|
|
|
|
|
|
Revenue |
- |
- |
- |
- |
|
Operating (loss) |
(1,659,253) |
- |
(2,196,131) |
(3,855,384) |
|
Profit/(loss) before tax |
(1,659,274) |
- |
1,097,239 |
(562,035) |
|
Profit/(loss) for the year |
(1,659,274) |
- |
1,097,239 |
(562,035) |
|
Total Assets |
13,649,225 |
49,589 |
3,482,441 |
17,181,255 |
|
Total Liabilities |
640,768 |
332,861 |
373,831 |
1,347,460 |
|
Other segmental information: |
|
|
|
|
|
Additions to Intangibles |
730,213 |
- |
- |
730,213 |
|
Additions to PPE |
231,087 |
- |
- |
231,087 |
|
Depreciation and amortisation |
- |
- |
1,318 |
1,318 |
|
Impairment charges |
1,000,000 |
- |
- |
1,000,000 |
|
|
|
Restated |
|
Restated |
|
|
2021 |
2021 |
2021 |
2021 |
|
|
CoalSwitch® |
Wood processing |
Corporate & Other |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
|
|
|
|
|
|
|
Revenue |
- |
- |
- |
- |
|
Operating segment (loss)/profit |
(2,952,909) |
18,388 |
(1,743,583) |
(4,678,104) |
|
(Loss)/profit before tax |
(2,952,909) |
18,388 |
(1,743,583) |
(4,678,104) |
|
(Loss)/profit for the year |
(2,952,909) |
18,388 |
(1,743,583) |
(4,678,104) |
|
Total Assets |
13,971,415 |
4,447,457 |
3,272,460 |
21,691,332 |
|
Total Liabilities |
355,952 |
501,047 |
670,324 |
1,527,323 |
|
Other segmental information: |
|
|
|
|
|
Additions to Intangibles |
400,000 |
- |
- |
400,000 |
|
Additions to PPE |
3,942,465 |
12,500 |
2,979 |
3,957,944 |
|
Depreciation and amortisation |
- |
- |
1,264 |
1,264 |
|
Impairment charges |
2,000,000 |
- |
- |
2,000,000 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2. SEGMENTAL INFORMATION (continued)
Non-current assets are located as follows:
|
|
2022 |
|
2021 |
|
|
US$ |
|
US$ |
|
United Kingdom |
824,759 |
|
924,848 |
|
United States |
12,836,100 |
|
17,169,404 |
|
|
13,660,859 |
|
18,094,252 |
3. REVENUE
|
|
2022
|
|
2021 |
|
Group
|
US$ |
|
US$ |
|
Continuing operations |
- |
|
- |
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
Sales of product |
- |
|
528,062 |
|
Other income |
- |
|
116,852 |
|
|
- |
|
644,914 |
Sawmill and saw log activities ceased during 2021 and are accounted for as discontinued operations (see Note 9). All revenue was generated in the USA.
4. IMPAIRMENT CHARGES
|
|
2022
|
|
2021 |
||
|
|
US$ |
|
US$ |
||
|
|
|
|
|
|
|
|
Property, plant and equipment |
1,000,000 |
|
2,000,000 |
||
|
|
1,000,000 |
|
2,000,000 |
||
All impairment charges relate to continuing operations. See note 12 for more information.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
5. EMPLOYEE COSTS AND DIRECTORS
The following table analyses group wages and salaries before any allocations to property, plant and equipment or intangible assets.
|
|
2022
|
|
2021 |
|
Group |
US$ |
|
US$ |
|
Continuing operations |
|
|
|
|
Directors' fees and salaries |
607,172 |
|
733,051 |
|
Social security costs |
77,421 |
|
89,544 |
|
|
684,593 |
|
822,595 |
|
Share based payments - directors |
339,375 |
|
314,530 |
|
Share based payments - others |
18,746 |
|
8,387 |
|
|
1,042,714 |
|
1,145,512 |
|
Discontinued operations |
|
|
|
|
Wages and salaries |
106,699 |
|
416,071 |
|
Social security costs |
9,323 |
|
37,076 |
|
|
116,022 |
|
453,147 |
|
Share based payments - others |
- |
|
8,987 |
|
|
116,022 |
|
462,134 |
|
|
1,158,736 |
|
1,607,646 |
The average monthly number of employees during the year was as follows:
|
|
2022
|
|
2021 |
|
Continuing operations |
|
|
|
|
Directors |
5 |
|
5 |
|
Administration |
2 |
|
2 |
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
Production |
1 |
|
12 |
|
|
8 |
|
19 |
Directors' and key management personnel remuneration
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group. These are considered to be the directors of the Company.
|
|
2022 |
|
2021 |
|
|
US$ |
|
US$ |
|
Directors' emoluments |
607,172 |
|
730,891 |
|
Termination benefits |
48,726 |
|
- |
|
Share based payments |
339,375 |
|
314,530 |
|
|
995,273 |
|
1,045,421 |
The emoluments of the highest paid Director for the year, excluding non-cash share-based payments, were $230,104 (2021: $240,787).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
6. OPERATING LOSS
|
|
2022
|
|
Restated 2021 |
|
Group |
US$ |
|
US$ |
|
The operating loss is stated after charging: |
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
|
|
Impairment charges |
1,000,000 |
|
2,000,000 |
|
Depreciation |
1,318 |
|
1,264 |
|
Loss on disposal of fixed assets |
- |
|
6,064 |
|
Auditor's remuneration - parent company and consolidation |
68,663 |
|
58,133 |
|
Auditor's remuneration - subsidiaries |
34,610 |
|
35,086 |
|
Auditor's remuneration - taxation services |
6,495 |
|
5,504 |
|
Auditor's remuneration - other services |
2,023 |
|
3,715 |
|
Share based payments |
358,121 |
|
630,759 |
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
Loss on disposal of fixed assets |
455,140 |
|
- |
|
Depreciation |
18,556 |
|
172,643 |
|
Depreciation on Right-of-Use Assets |
- |
|
72,511 |
|
Auditor's remuneration |
- |
|
9,288 |
|
Share based payments |
- |
|
8,987 |
|
|
|
|
|
|
|
|
|
|
7. NET FINANCE INCOME/(COSTS)
|
|
2022
|
|
2021 |
|
Group |
US$ |
|
US$ |
|
|
|
|
|
|
Continuing operations |
|
|
|
|
Finance income |
|
|
|
|
Interest income |
28,412 |
|
- |
|
|
28,412 |
|
- |
|
Finance costs |
|
|
|
|
Interest on convertible loan |
- |
|
(164,400) |
|
Other loan interest and charges |
(4,239) |
|
(139,312) |
|
|
(4,239) |
|
(303,712) |
|
|
|
|
|
|
|
24,173 |
|
(303,712) |
|
Discontinued operations |
|
|
|
|
Finance costs |
|
|
|
|
Right-of-use lease interest |
- |
|
(22,265) |
|
Other loan interest and charges |
(6,662) |
|
(7,322) |
|
|
(6,662) |
|
(29,587) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
8. TAXATION
|
|
|
|
Restated |
|
|
2022
|
|
2021 |
|
Group |
US$ |
|
US$ |
|
Continuing operations |
|
|
|
|
Current tax |
- |
|
- |
|
|
|
|
|
|
Deferred tax |
- |
|
- |
|
Total income tax expense |
- |
|
- |
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
Total income tax (credit) |
(1,395) |
|
(2,790) |
|
|
|
|
|
Factors affecting the tax charge
The tax on the Group assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:
|
|
|
|
Restated |
|
|
2022 |
|
2021 |
|
|
US$ |
|
US$ |
|
Loss before taxation |
(1,345,140) |
|
(5,884,558) |
|
Standard rate of corporation tax |
19% |
|
19% |
|
Loss before tax multiplied by standard rate of corporation tax |
(255,577) |
|
(1,118,066) |
|
Effects of: |
|
|
|
|
Non-deductible expenses |
353,655 |
|
492,956 |
|
Different tax rates in overseas jurisdictions |
(7,519) |
|
(9,492) |
|
Tax credit included within loss from discontinued operations |
1,395 |
|
2,790 |
|
Losses (used)/not recognised |
(91,954) |
|
631,812 |
|
Tax expense/(credit) |
- |
|
- |
|
|
|
|
|
The Group's tax loss position can be summarised as follows:
|
|
2022 |
|
2021 |
|
|
US$ |
|
US$ |
|
Tax losses brought forward at 1 January |
43,437,711 |
|
35,969,354 |
|
Taxable (profit)/loss for the year |
(517,596) |
|
3,466,886 |
|
Adjustment in respect of prior periods |
(2,630,178) |
|
4,001,471 |
|
Tax losses carried forward at 31 December |
40,289,937 |
|
43,437,711 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
9. DISCONTINUED OPERATIONS
During 2021 the Group discontinued its sawmill and saw log operations under the wood processing operating segment. During 2022 the Group sold the Lumberton property that was used for these operations. The results of these businesses are disclosed as a single line item in the Consolidated Statement of Income in accordance with IFRS5.
The analysis between continuing and discontinued operations is as follows:
|
Year ended 31 December 2022 |
Continuing operations |
Discontinued operations |
Total |
|
|
US$ |
US$ |
US$ |
|
Revenue |
- |
- |
- |
|
|
|
|
|
|
Gross loss |
- |
(321,292) |
(321,292) |
|
Impairment charges |
(1,000,000) |
- |
(1,000,000) |
|
Administrative expenses |
(2,855,384) |
(14,700) |
(2,870,084) |
|
Loss on disposal of PPE |
- |
(455,140) |
(455,140) |
|
Other income |
- |
14,689 |
14,689 |
|
Operating loss |
(3,855,384) |
(776,443) |
(4,631,827) |
|
Finance income/(costs) |
3,293,349 |
(6,662) |
3,286,687 |
|
Loss before taxation |
(562,035) |
(783,105) |
(1,345,140) |
|
Taxation |
- |
1,395 |
1,395 |
|
Loss for the year |
(562,035) |
(781,710) |
(1,343,745) |
|
|
|
|
|
|
Cash outflows from operating activities |
(2,261,629) |
(292,934) |
(2,554,563) |
|
Cash inflows from investing activities |
(730,212) |
3,767,469 |
3,037,257 |
|
Cash outflows from financing activities |
(13,174) |
(478) |
(13,652) |
|
|
Restated |
Restated |
|
|
Year ended 31 December 2021 |
Continuing operations
|
Discontinued operations |
Total |
|
|
US$ |
US$ |
US$ |
|
Revenue |
- |
644,914 |
644,914 |
|
|
|
|
|
|
Gross loss |
(517,238) |
(851,211) |
(1,368,449) |
|
Impairment charges |
(2,000,000) |
- |
(2,000,000) |
|
Administrative expenses |
(2,904,311) |
(372,203) |
(3,276,514) |
|
Other income |
361,237 |
46,547 |
407,784 |
|
Operating loss |
(5,060,312) |
(1,176,867) |
(6,237,179) |
|
Finance income/(costs) |
382,208 |
(29,587) |
352,621 |
|
Loss before taxation |
(4,678,104) |
(1,206,454) |
(5,884,558) |
|
Taxation |
- |
2,790 |
2,790 |
|
Loss for the year |
(4,678,104) |
(1,203,664) |
(5,881,768) |
|
|
|
|
|
|
Cash outflows from operating activities |
(5,440,031) |
(178,373) |
(5,618,404) |
|
Cash outflows from investing activities |
(4,305,224) |
(70,400) |
(4,375,624) |
|
Cash inflows from financing activities |
10,937,912 |
- |
10,937,912 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
10. LOSS PER SHARE
|
|
|
|
|
|
Restated |
||||
|
|
2022 |
|
|
|
2021 |
|
|||
|
|
US$ |
|
|
|
US$ |
|
|||
|
Loss for the year: |
|
|
|
|
|
|
|||
|
Continuing operations |
(562,035) |
|
|
|
(4,678,104) |
|
|||
|
Discontinued operations |
(781,710) |
|
|
|
(1,203,664) |
|
|||
|
Total operations |
(1,343,745) |
|
|
|
(5,881,768) |
|
|||
|
|
|
|
|
|
|
|
|||
|
Weighted number of Ordinary Shares in issue |
161,863,136 |
|
|
|
102,450,087 |
|
|||
|
|
|
|
|
|
|
|
|||
|
Basic and diluted loss per share (US cents): |
|
|
|
|
|
|
|||
|
Continuing operations |
(0.35) |
|
|
|
(4.57) |
|
|||
|
Discontinued operations |
(0.48) |
|
|
|
(1.17) |
|
|||
|
Total operations |
(0.83) |
|
|
|
(5.74) |
|
|||
On 4 July 2022 the Company's Ordinary Shares were consolidated on a 1 for 35 basis and the weighted average number of shares in issue in 2022 has been adjusted to reflect this. The weighted average number of shares and loss per share for 2021 have been restated on the basis of the consolidated share capital and to reflect the apportionment of the 2021 loss relating to the operations discontinued in 2022.
11. INTANGIBLE ASSETS
|
Group |
Goodwill |
Intellectual property |
Timber licences |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
|
Cost |
|
|
|
|
|
At 31 December 2020 |
567,668 |
5,259,386 |
6,503,975 |
12,331,029 |
|
Additions |
- |
400,000 |
- |
400,000 |
|
Written off |
(567,668) |
- |
(6,503,975) |
(7,071,643) |
|
At 31 December 2021 |
- |
5,659,386 |
- |
5,659,386 |
|
Additions |
- |
730,213 |
- |
730,213 |
|
Transferred from PPE |
- |
1,675,348 |
- |
1,675,348 |
|
At 31 December 2022 |
- |
8,064,947 |
- |
8,064,947 |
|
|
|
|
|
|
|
Accumulated amortisation |
|
|
|
|
|
At 31 December 2020 |
567,668 |
362 |
6,503,975 |
7,072,005 |
|
Released on assets written off |
(567,668) |
- |
(6,503,975) |
(7,071,643) |
|
At 31 December 2021 |
- |
362 |
- |
362 |
|
At 31 December 2022 |
- |
362 |
- |
362 |
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
At 31 December 2022 |
- |
8,064,585 |
- |
8,064,585 |
|
At 31 December 2021 |
- |
5,659,024 |
- |
5,659,024 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
11. INTANGIBLE ASSETS (continued)
Goodwill
Goodwill arising on the acquisition of Renewable Logistics Systems LLC ("RLS") in 2019 was fully impaired in 2020. The associated sawmill and saw log operations ceased during 2021 and accordingly the goodwill was written off in 2021.
Intellectual property
Intellectual property comprises costs incurred to secure the rights and knowledge associated with the CoalSwitch® and PeatSwitch technologies. These assets are accounted for as indefinite life assets and assessed for impairment at each balance sheet date. Recoverability of the intellectual property assets is dependent on successfully commercialising CoalSwitch® which is subject to uncertainties including: the capital costs required to construct a CoalSwitch® facility; feedstock pricing; market conditions and product sales prices; production efficiencies; logistics costs; and the ability of the Group to access sufficient financial resources to develop the product to economic maturity and profitability. Management assessed each of these assumptions, benchmarked them against available industry data and consulted with an industry expert. The key assumption in estimating the recoverable amount is considered to be the future selling price of the CoalSwitch® product.
The recoverable amount of the intellectual property has been estimated based on a value in use calculation. The calculation uses a discounted cash flow model covering a three year period and extrapolated to five years assuming no further growth, with a discount rate of 12.5%. The estimated recoverable amount exceeds the carrying value of the assets of the cash generating unit and management have therefore concluded that the intellectual property assets are not impaired.
Timber licences
Canadian and Ukrainian timber licences were fully impaired in 2020. Following the sale of AE Ukraine and the revoking of the Newfoundland commercial cutting permit, these intangibles were written off in 2021.
12. PROPERTY, PLANT AND EQUIPMENT
|
Group |
Land & Buildings |
Plant and equipment |
Furniture and office equipment |
Total |
|
|
|
US$ |
US$ |
US$ |
US$ |
|
|
Cost |
|
|
|
|
|
|
At 31 December 2020 |
4,281,829 |
6,573,255 |
10,349 |
10,865,433 |
|
|
Additions |
- |
3,954,965 |
2,979 |
3,957,944 |
|
|
Disposals |
- |
(872,079) |
- |
(872,079) |
|
|
Transfers |
210,220 |
(337,444) |
- |
(127,224) |
|
|
Foreign exchange movements |
- |
- |
(158) |
(158) |
|
|
At 31 December 2021 |
4,492,049 |
9,318,697 |
13,170 |
13,823,916 |
|
|
Additions |
- |
375,357 |
- |
375,357 |
|
|
Disposals |
(4,492,049) |
(247,192) |
- |
(4,739,241) |
|
|
Transferred to intangible assets |
- |
(1,675,348) |
- |
(1,675,348) |
|
|
Foreign exchange movements |
- |
- |
(1,405) |
(1,405) |
|
|
At 31 December 2022 |
- |
7,771,514 |
11,765 |
7,783,279 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
12. PROPERTY, PLANT AND EQUIPMENT (continued)
|
Group |
Land & Buildings |
Plant and equipment |
Furniture and office equipment |
Total |
|
|
|
US$ |
US$ |
US$ |
US$ |
|
|
Accumulated depreciation |
|
|
|
|
|
|
At 31 December 2020 |
165,977 |
246,366 |
9,449 |
421,792 |
|
|
Depreciation for the year |
128,366 |
116,788 |
1,264 |
246,418 |
|
|
Impairment charge |
- |
2,000,000 |
- |
2,000,000 |
|
|
Disposals |
- |
(229,907) |
- |
(229,907) |
|
|
Transfers |
(96,343) |
(30,881) |
- |
(127,224) |
|
|
Foreign exchange movements |
- |
- |
(116) |
(116) |
|
|
At 31 December 2021 |
198,000 |
2,102,366 |
10,597 |
2,310,963 |
|
|
Charge for the year |
18,000 |
556 |
1,318 |
19,874 |
|
|
Impairment charge |
- |
1,000,000 |
- |
1,000,000 |
|
|
Disposals |
(216,000) |
(102,922) |
- |
(318,922) |
|
|
Foreign exchange movements |
- |
- |
(1,166) |
(1,166) |
|
|
At 31 December 2022 |
- |
3,000,000 |
10,749 |
3,010,749 |
|
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
At 31 December 2022 |
- |
4,771,514 |
1,016 |
4,772,530 |
|
|
At 31 December 2021 |
4,294,049 |
7,216,331 |
2,573 |
11,512,953 |
The additions to plant and equipment in both 2021 and 2022 represent expenditure on assets under construction.
Recoverability of the plant and equipment assets is dependent on successfully commercialising CoalSwitch®; which is subject to uncertainties including: the capital costs required to construct a CoalSwitch® production facility; feedstock pricing; market conditions and product sales prices; production efficiencies; logistics costs; and the ability of the Group to access sufficient financial resources to develop the product to economic maturity and profitability. Management assessed each of these assumptions, benchmarked them against available industry data and consulted with an industry expert. The key assumption in estimating the recoverable amount is considered to be the future selling price of the CoalSwitch® product.
The recoverable amount of the plant and equipment has been estimated based on a value in use calculation. The calculation uses a discounted cash flow model covering a three year period and extrapolated to five years assuming no further growth, with a discount rate of 12.5%. The estimated recoverable amount exceeds the carrying value of the assets of the cash generating unit and management have therefore concluded that the plant and equipment assets are not impaired.
The $1,000,000 impairment charge relates to a reactor that has been taken out of service and is being used for research and development purposes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
12. PROPERTY, PLANT AND EQUIPMENT (continued)
|
Company - office equipment |
|
|
|
|
|
2022 |
|
2021 |
|
|
US$ |
|
US$ |
|
Cost |
|
|
|
|
At 1 January |
13,170 |
|
10,349 |
|
Additions |
- |
|
2,979 |
|
Foreign exchange movements |
(1,407) |
|
(158) |
|
At 31 December |
11,763 |
|
13,170 |
|
Accumulated depreciation |
|
|
|
|
At 1 January |
10,597 |
|
9,449 |
|
Charge for the year |
1,318 |
|
1,264 |
|
Foreign exchange movements |
(1,167) |
|
(116) |
|
At 31 December |
10,748 |
|
10,597 |
|
|
|
|
|
|
Net book value |
1,015 |
|
2,573 |
13. INVESTMENTS IN SUBSIDIARIES
|
|
2022 |
|
2021 |
|
|
US$ |
|
US$ |
|
Cost |
|
|
|
|
At 1 January |
11,554,112 |
|
5,992,561 |
|
Additions |
- |
|
10,200,000 |
|
Disposals |
- |
|
(4,496,618) |
|
Foreign exchange movements |
(1,234,383) |
|
(141,831) |
|
At 31 December |
10,319,729 |
|
11,554,112 |
|
Impairment provision |
|
|
|
|
At 1 January |
5,136,371 |
|
4,496,618 |
|
Impairment charge |
- |
|
1,295 |
|
Transfer from long term loans |
- |
|
5,200,000 |
|
Disposals |
- |
|
(4,496,618) |
|
Foreign exchange movements |
(548,745) |
|
(64,924) |
|
At 31 December |
4,587,626 |
|
5,136,371 |
|
Net book value |
5,732,103 |
|
6,417,741 |
|
|
|
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
13. INVESTMENTS IN SUBSIDIARIES (continued)
At 31 December 2022 the Group held share capital and had a controlling interest in each of the following companies:
|
Subsidiary undertaking |
Country of incorporation |
Nature of business |
Percentage Holding |
Dissolution Date
|
|
|
|
|
|
2022 |
2021 |
|
|
Advanced Biomass Solutions Limited |
United Kingdom |
Biomass for energy development |
100 |
100 |
|
|
Lumberton Energy Holdings LLC |
United States |
Property Holding Company |
100 |
100 |
|
|
Active Energy Renewable Power LLC |
United States |
Biomass for energy development |
100 |
100 |
|
|
CSW2Maine LLC |
United States |
Biomass for energy development |
100 |
100 |
|
|
Timberlands Newfoundland & Labrador Inc |
Canada |
Biomass for energy development |
100 |
100 |
9 August 2022 |
|
AEG Trading Limited |
United Kingdom |
Wood chip distribution |
100 |
100 |
24 January 2023 |
|
Timberlands International Limited |
United Kingdom |
Biomass for energy development |
100 |
100 |
24 January 2023 |
|
Nikofeso Holdings Limited |
Cyprus |
Wood chip distribution |
- |
100 |
23 September 2022 |
|
Renewable Energy Systems |
United States |
Wood processing and distribution |
100 |
100 |
29 August 2022 |
|
Active Energy Services UK Limited (formerly AEG CoalSwitch® Limited) 5 |
United Kingdom |
Corporate Services |
- |
89 |
28 June 2022 |
|
AEG CoalSwitch® USA LLC |
United States |
Biomass for energy development |
100 |
100 |
01 March 2020 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
14. INTERCOMPANY LOANS
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
US$ |
US$ |
US$ |
US$ |
|
Carrying value at beginning of the year |
- |
- |
25,296,460 |
23,204,528 |
|
Loans (received)/advanced during the year |
- |
- |
(1,150,373) |
7,153,319 |
|
Capitalised as investments in subsidiaries (see note 13) |
- |
- |
- |
(10,200,000) |
|
Impairment provision transferred to investments in subsidiaries |
- |
- |
- |
5,200,000 |
|
Interest accrued |
- |
- |
- |
164,400 |
|
Foreign exchange movements |
- |
- |
(2,701,745) |
(225,787) |
|
Carrying value at end of the year |
- |
- |
21,444,342 |
25,296,460 |
Long term loans are loans made to subsidiaries of the Company and are repayable on demand.
15. OTHER FINANCIAL ASSETS
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
US$ |
US$ |
US$ |
US$ |
|
Fair value at beginning of the year |
922,275 |
931,312 |
922,275 |
931,312 |
|
Foreign exchange movements |
(98,531) |
(9,037) |
(98,531) |
(9,037) |
|
Fair value at end of the year |
823,744 |
922,275 |
823,744 |
922,275 |
Other financial assets consist of an unquoted equity instrument which is valued at fair value through other comprehensive income and classified as a non-current asset. The instrument is denominated in Pounds Sterling.
This asset is valued according to Level 3 inputs as defined by IFRS 13 and is therefore subject to management's judgement of unobservable inputs. The asset is currently held at its historic cost which represents management's best estimate of its fair value.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
16. INVENTORY
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
US$ |
US$ |
US$ |
US$ |
|
Raw materials |
- |
27,250 |
- |
- |
|
Total Inventory |
- |
27,250 |
- |
- |
17. TRADE AND OTHER RECEIVABLES
The carrying value of trade and other receivables, after deduction of appropriate allowances for irrecoverable amounts, approximates to their fair value. These assets are not interest bearing and are received over a short period of time with an insignificant risk of changes in fair value.
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
US$ |
US$ |
US$ |
US$ |
|
Project advances |
774,669 |
1,190,315 |
- |
- |
|
Prepayments |
73,461 |
83,529 |
73,461 |
76,926 |
|
Other receivables |
57,794 |
355,115 |
57,736 |
355,115 |
|
Total |
905,924 |
1,628,959 |
131,197 |
432,041 |
Trade and other receivables that have not been received within the payment terms are classified as overdue. There were no trade and other receivables overdue at 31 December 2022 or 31 December 2021 and accordingly there were no impairment provisions at either date. An analysis of the Group's trade and other receivables by currency is provided in note 27.
18. CASH AND CASH EQUIVALENTS
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
US$ |
US$ |
US$ |
US$ |
|
Cash at bank |
2,614,472 |
1,940,871 |
2,545,913 |
1,915,571 |
Cash and cash equivalents are defined as cash at bank, demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
19. TRADE AND OTHER PAYABLES
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
US$ |
US$ |
US$ |
US$ |
|
Trade payables |
428,106 |
775,709 |
170,975 |
345,196 |
|
Accruals and deferred income |
587,106 |
232,639 |
145,696 |
194,217 |
|
Social security and other taxes |
34,584 |
63,682 |
34,584 |
62,649 |
|
Other payables |
150,000 |
150,000 |
- |
- |
|
|
1,199,796 |
1,222,030 |
351,255 |
602,062 |
The carrying value of trade and other payables approximates to their fair value. Payments occur over a short period and the risk of changes in value is insignificant. The full balance of the trade and other payables becomes due and payable within three months of the reporting date. These are classified as financial liabilities on the balance sheet and are measured at amortised cost.
The amounts shown are undiscounted and represent the contractual cash flows. An analysis of the Group's trade and other payables classified as financial liabilities by currency is provided in note 27.
20. DEFERRED TAXATION
Deferred tax is calculated on temporary differences under the liability method using tax rates applicable in the respective Group entities' jurisdiction.
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
US$ |
US$ |
US$ |
US$ |
|
Carrying value at beginning of the year |
147,349 |
150,139 |
- |
- |
|
Reversal of temporary differences |
(147,349) |
(2,790) |
- |
- |
|
|
- |
147,349 |
- |
- |
The deferred tax provision at 31 December 2021 related to the revaluation of land and buildings which were sold during 2022.
A deferred tax asset has not been recognised in respect of the Group's tax losses due to uncertainties around the Group's ability to utilise the losses.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
21. LOANS AND BORROWINGS
The book value and fair value of loans and borrowings are as follows:
|
Group |
Book value |
Fair value |
Book value |
Fair value |
|
|
2022 |
2022 |
2021 |
2021 |
|
|
US$ |
US$ |
US$ |
US$ |
|
Non-Current |
|
|
|
|
|
Other loans |
133,940 |
133,940 |
143,931 |
143,931 |
|
Current |
|
|
|
|
|
Other loans |
13,724 |
13,724 |
14,013 |
14,013 |
|
|
|
|
|
|
|
Total loans and borrowings |
147,664 |
147,664 |
157,944 |
157,944 |
|
|
|
|
|
|
|
Company |
Book value |
Fair value |
Book value |
Fair value |
|
|
2022 |
2022 |
2021 |
2021 |
|
|
US$ |
US$ |
US$ |
US$ |
|
Non-Current |
|
|
|
|
|
Other loans |
30,085 |
30,085 |
47,029 |
47,029 |
|
Current |
|
|
|
|
|
Other loans |
11,920 |
11,920 |
13,015 |
13,015 |
|
|
|
|
|
|
|
Total loans and borrowings |
42,005 |
42,005 |
60,044 |
60,044 |
Convertible debt
Convertible Debt was converted In February 2021 and all obligations were extinguished. There is no further debt.
Other loans
Other loans comprise a bank loan to the Company guaranteed by the UK government and a loan to a subsidiary from the US government. The loans are repayable over 5 and 30 years respectively, with interest rates of 2.5% p.a. and 3.75% p.a. respectively. The US government loan is secured against the assets of the subsidiary by way of a floating charge.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
21. LOANS AND BORROWINGS (continued)
The following table analyses the maturity of the other loans. The amounts shown are undiscounted and represent contractual cash flows.
|
Group |
0-1 year |
1-2 years |
2-5 years |
>5 years |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
US$ |
|
At 31 December 2022 |
13,724 |
14,095 |
23,924 |
95,921 |
147,664 |
|
At 31 December 2021 |
14,013 |
15,400 |
40,324 |
88,207 |
157,944 |
|
|
|
|
|
|
|
|
Company |
0-1 year |
1-2 years |
2-5 years |
>5 years |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
US$ |
|
At 31 December 2022 |
11,920 |
12,221 |
17,864 |
- |
42,005 |
|
At 31 December 2021 |
13,015 |
13,346 |
33,683 |
- |
60,044 |
The carrying value of loans and borrowings approximates to fair value.
22. RIGHT-OF-USE ASSETS AND LIABILITIES
|
Group |
2022 |
|
2021 |
|
|
US$ |
|
US$ |
|
Non-current asset - plant and equipment |
|
|
|
|
At 1 January |
- |
|
326,299 |
|
Additions |
- |
|
- |
|
Depreciation |
- |
|
(72,511) |
|
Disposals |
- |
|
(253,788) |
|
Net book value - plant and equipment |
- |
|
- |
|
|
|
|
|
|
Lease liability |
|
|
|
|
At 1 January |
- |
|
339,308 |
|
Additions |
- |
|
- |
|
Interest expense on leases |
- |
|
22,265 |
|
Lease payments |
- |
|
(57,900) |
|
Lease termination |
- |
|
(303,673) |
|
Total lease liability |
- |
|
- |
|
|
|
|
|
|
Current lease liability |
- |
|
- |
|
Non-current lease liability |
- |
|
- |
|
Total lease liability |
- |
|
- |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
23. CALLED UP SHARE CAPITAL
|
|
2022 |
2022 |
2021 |
2021 |
|
|
Number |
US$ |
Number |
US$ |
|
Ordinary shares |
|
|
|
|
|
At 1 January |
5,665,209,745
|
786,867 |
1,541,178,043 |
219,436 |
|
Issue of shares |
15 |
- |
4,124,031,702 |
567,431 |
|
Share consolidation |
(5,503,346,624) |
- |
- |
- |
|
31 December |
161,863,136 |
786,867 |
5,665,209,745 |
786,867 |
|
Deferred shares of £0.0099 each |
|
|
|
|
|
At 1 January |
1,287,536,163 |
18,148,898 |
1,287,536,163 |
18,148,898 |
|
At 31 December |
1,287,536,163 |
18,148,898 |
1,287,536,163 |
18,148,898 |
|
Total share capital |
|
18,935,765 |
|
18,935,765 |
All shares have been allotted, called up and fully paid. The Ordinary Shares of £0.0001 each were consolidated into Ordinary Shares of £0.0035 each on 4 July 2022 (see below).
At the Company's Annual General Meeting on 4 July 2022, shareholders approved a 1 for 35 share consolidation of the Company's Ordinary Shares. Following the share consolidation, the Company had 161,863,136 Ordinary Shares of £0.0035 each.
During 2021 the Company issued 4,124,031,702 Ordinary Shares and received net proceeds of US$12.7m.
The Deferred Shares have not been admitted to trading on the Alternative Investment Market, carry no voting rights and are purchasable for an aggregate sum of £1.
24. SHARE OPTIONS AND WARRANTS
On 4 July 2022 the Company's Ordinary Shares were consolidated on a 1 for 35 basis and corresponding adjustments have been made to the number and exercise price of the share options and warrants in issue. All share options and warrants disclosures for 2021 within this note have been restated to reflect the effect of the share consolidation.
From time to time the Company has entered into share option and warrant arrangements under which the holders are entitled to subscribe for a percentage of the Company's Ordinary Share capital. Options under the LTIP and JSOP are detailed below. All other options and warrants vest immediately. The number of warrants and share options exercisable at 31 December 2022 was 5,768,463 (2021: 6,482,749). During the year 714,286 (2021: nil) options and warrants expired.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
24. SHARE OPTIONS AND WARRANTS (continued)
The movements of warrants and share options during the year was as follows:
|
|
|
|
Restated |
Restated |
|
|
2022 |
2022 |
2021 |
2021 |
|
|
Weighted Average Exercise Price (British pence) |
Number of Warrants and Share Options |
Weighted Average Exercise Price (British pence) |
Number of Warrants and Share Options |
|
At 1 January |
103.95 |
6,482,749 |
124.95 |
3,098,571 |
|
Expired |
35.00 |
(714,286) |
- |
- |
|
Granted |
- |
- |
85.05 |
3,384,178 |
|
At 31 December |
112.68 |
5,768,463 |
103.95 |
6,482,749 |
At 31 December 2022, the weighted average remaining contractual life of warrants and share options exercisable was 4.95 years (2021: 5.38 years). There were no share options issued under the LTIP in 2022 (2021: 2,470,556) issued. No warrants were issued in 2022 (2021: 913,622 issued). No options were granted in 2022; the weighted average exercise price of the options and warrants granted in 2021 was 85.05 pence).
A charge of $358,121 (2021: $639,746) has been recognised in the Statement of Comprehensive Income in respect of equity settled share based payments.
LTIPs, options and warrants outstanding at 31 December 2022 and 2021 were exercisable as follows:
|
Restated |
|
Restated |
|
Exercise price range (British pence, US cents in brackets) |
2022 |
2021 |
|
Number |
Number |
|
|
17.50p (23.10 cents) |
428,571 |
428,571 |
|
35.00p (46.20 cents) |
- |
571,429 |
|
35.00p (44.10 cents) |
- |
142,857 |
|
45.15p (61.95 cents) |
609,081 |
609,081 |
|
52.50p (70.70 cents) |
214,286 |
214,286 |
|
67.90p (92.75 cents) |
304,540 |
304,540 |
|
70.35p (98.70 cents) |
1,235,278 |
1,235,278 |
|
105.00p (141.75 cents) |
384,287 |
384,287 |
|
123.20p (172.55 cents) |
1,235,278 |
1,235,278 |
|
157.50p (219.80 cents) |
585,714 |
585,714 |
|
175.00p (236.25 cents) |
57,143 |
57,143 |
|
210.00p (283.15 cents) |
128,571 |
128,571 |
|
297.50p (415.10 cents) |
585,714 |
585,714 |
|
At 31 December |
5,768,463 |
6,482,749 |
The above disclosures relate to both the Company and the Group.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
24. SHARE OPTIONS AND WARRANTS (continued)
LTIP awards
In February 2021, the Company implemented its Long Term Incentive Plan ("LTIP") to incentivise the Company's Executive Directors, certain other Directors, and members of the Senior Management team.
Awards under the LTIP take the form of premium priced options over the Company's Ordinary Shares which are exercisable from the third anniversary of the date of grant (subject to several market standard specific exceptions). LTIP options have an expiry date of ten years from the award date. The LTIP allows for up to 7% of the Company's issued share capital to be allocated to participants and includes malus and clawback clauses.
The Group measures the fair value of LTIP awards using the Black Scholes valuation model. The share-based payment expense is recorded over the vesting period of the option. Share based payment expenses are recognised in the income statement in accordance with the provisions of IFRS2.
At the inception of the scheme, 2,470,556 LTIP options were granted to directors and other participants. No further awards were granted during 2021 or 2022. Half of the options have an exercise price of 70.44p (a premium of 75% to the share price on 25 February 2021) and the remaining options are exercisable at a price of 123.27p (a premium of 75% to the exercise price of the first tranche).
JSOP awards
Under the Joint Share Ownership Plan ("JSOP"), shares in the Company were jointly purchased at fair market value by the sole participating employee and the trustees of the JSOP Trust, with such shares held in the JSOP Trust. For accounting purposes, the awards are valued as employee share options. There is only one participant in the JSOP and the Company no longer utilises the JSOP to incentivise employees.
The company awarded JSOP shares in 2013 and has made no further awards since. The JSOP share based payment charge was expensed during the vesting period and there was no associated share based payment charge in 2022 or 2021. At 31 December 2022 and 31 December 2021 there were 400,000 fully vested shares held in the JSOP Trust. No JSOP shares were sold during either year.
The JSOP trust holds the shares of the JSOP until such time as the JSOP shares are vested and the participating employee exercises their rights under the JSOP. The JSOP trust is granted an interest bearing loan by the Company in order to fund the purchase of its interest in the JSOP shares. The loan held by the trust is eliminated on consolidation in the financial statements of the Group. The Company funded portion of the share purchase price is deemed to be held in treasury until such time as the shares are transferred to the employee and is recorded as a reduction in equity in both the Group and Company financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
25. RESERVES
The following describes the nature and purpose of each reserve within equity:
|
Reserve |
Description and purpose |
|
Share premium |
Amounts subscribed for share capital in excess of nominal value. |
|
Merger reserve |
Difference between fair value and nominal value of shares issued to acquire interests of more than 90% in subsidiaries. |
|
Foreign exchange reserve |
Gains and losses arising from retranslating the net assets of overseas operations into US Dollars. |
|
Own shares held reserve |
Cost of own shares held by the employee benefit trust, the JSOP trust or the company as shares held in escrow. |
|
Convertible debt/warrant reserve |
Equity component of the convertible loan and warrants issued that do not form part of a share based payment. |
|
Revaluation reserve |
Surpluses arising on the revaluation of property, plant, and equipment. |
|
Retained earnings |
Cumulative net gains and losses recognised in the consolidated statement of comprehensive income. |
26. NOTE SUPPORTING THE STATEMENT OF CASH FLOWS
Reconciliation of loss before taxation to cash outflows from operating activities:
|
Group |
|
2022 |
|
2021 |
|
|
|
US$ |
|
US$ |
|
Loss for the year |
|
(1,343,745) |
|
(5,881,768) |
|
Adjustments for: |
|
|
|
|
|
Share based payment expense |
|
358,121 |
|
639,746 |
|
Depreciation |
|
19,874 |
|
246,418 |
|
Gain on redemption of Loans/CLNs |
|
- |
|
(407,776) |
|
Impairment of PPE and intangible assets |
|
1,000,000 |
|
2,000,000 |
|
Gain on disposal of right of use assets |
|
- |
|
(49,885) |
|
Loss on disposal of PPE |
|
212,626 |
|
6,064 |
|
Foreign currency translations |
|
(3,456,479) |
|
(1,261,221) |
|
Finance expenses |
|
9,473 |
|
162,531 |
|
Income tax |
|
(1,395) |
|
(2,790) |
|
|
|
(3,201,525) |
|
(4,548,681) |
|
Decrease in inventories |
|
27,250 |
|
210,256 |
|
Decrease/(increase) in trade and other receivables |
|
641,946 |
|
(258,204) |
|
(Decrease) in trade and other payables |
|
(22,234) |
|
(1,021,775) |
|
Net cash (outflow) from operating activities |
|
(2,554,563) |
|
(5,618,404) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
26. NOTE SUPPORTING THE STATEMENT OF CASH FLOWS (continued)
|
Company |
2022 |
|
2021 |
|
|
US$ |
|
US$ |
|
Loss for the year |
(740,114) |
|
(2,075,511) |
|
Adjustments for: |
|
|
|
|
Share based payment expense |
358,121 |
|
639,746 |
|
Depreciation |
1,318 |
|
1,264 |
|
Gain on redemption of loans/CLNs |
- |
|
(361,229) |
|
Foreign currency translations |
(381,967) |
|
(608,102) |
|
Finance expenses |
5,474 |
|
3,102 |
|
|
(757,168) |
|
(2,400,730) |
|
Decrease/(Increase) in trade and other receivables |
300,844 |
|
(432,041) |
|
(Decrease) in trade and other payables |
(255,046) |
|
(583,913) |
|
Net cash (outflow) from operating activities |
(711,370) |
|
(3,416,684) |
Cash to net debt reconciliation:
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
US$ |
US$ |
US$ |
US$ |
|
Cash and cash equivalents |
2,614,472 |
1,940,871 |
2,545,913 |
1,915,571 |
|
Borrowings |
(147,664) |
(157,944) |
(42,005) |
(60,044) |
|
Net Cash/(debt) |
2,466,808 |
1,782,927 |
2,503,908 |
1,855,527 |
|
|
|
|
|
|
|
Cash and liquid investments |
2,614,472 |
1,940,871 |
2,545,913 |
1,915,571 |
|
Fixed rate instruments |
(147,664) |
(157,944) |
(42,005) |
(60,044) |
|
Net Cash/(debt) |
2,466,808 |
1,782,927 |
2,503,908 |
1,855,527 |
Net Debt Reconciliation:
|
Group |
Cash and cash equivalents |
Unsecured loans |
Total Debt |
Net Debt |
|
|
US$ |
US$ |
US$ |
US$ |
|
Net cash/(debt) at 1 January 2022 |
1,940,871 |
(157,944) |
(157,944) |
1,782,927 |
|
Cash flows |
469,042 |
4,179 |
4,179 |
473,221 |
|
Foreign exchange movements |
204,559 |
6,101 |
6,101 |
210,660 |
|
Net cash/(debt) at 31 December 2022 |
2,614,472 |
(147,664) |
(147,664) |
2,466,808 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
26. NOTE SUPPORTING THE STATEMENT OF CASH FLOWS (continued)
Net Debt Reconciliation:
Company |
Cash and cash equivalents |
Unsecured loans |
Total Debt |
Net Debt |
|
|
US$ |
US$ |
US$ |
US$ |
|
Net cash/(debt) at 1 January 2022 |
1,915,571 |
(60,044) |
(60,044) |
1,855,527 |
|
Cashflows |
425,831 |
11,939 |
11,939 |
437,770 |
|
Foreign exchange movements |
204,511 |
6,100 |
6,100 |
210,611 |
|
Net cash/(debt) at 31 December 2022 |
2,545,913 |
(42,005) |
(42,005) |
2,503,908 |
27. FINANCIAL INSTRUMENTS
The Group's treasury policy is to avoid transactions of a speculative nature. In the course of trading the Group is exposed to a number of financial risks that can be categorised as market, credit, and liquidity risks. The board reviews these risks and their impact on the activities of the Group on an ongoing basis.
The principal financial instruments used by the Group, from which financial instrument risk arises, are:
· Trade and other receivables
· Cash and cash equivalents
· Trade and other payables
· Available-for-sale financial assets
· Loans and borrowings
A summary of the financial instruments held is provided below.
|
Financial assets |
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
US$ |
US$ |
US$ |
US$ |
|
At amortised cost: |
|
|
|
|
|
Cash and cash equivalents |
2,614,472 |
1,940,871 |
2,545,913 |
1,915,571 |
|
Amounts due from group companies |
- |
- |
21,444,342 |
25,296,460 |
|
Other receivables |
38,366 |
355,115 |
38,308 |
355,115 |
|
|
2,652,838 |
2,295,986 |
24,028,563 |
27,567,146 |
|
At fair value: |
|
|
|
|
|
Financial investments |
823,744 |
922,275 |
823,744 |
922,275 |
|
Total financial assets |
3,476,582 |
3,218,261 |
24,852,307 |
28,489,421 |
|
|
|
|
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
27. FINANCIAL INSTRUMENTS (continued)
|
Financial liabilities |
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
US$ |
US$ |
US$ |
US$ |
|
At amortised cost: |
|
|
|
|
|
Trade payables |
428,106 |
775,709 |
170,975 |
345,196 |
|
Other current liabilities |
150,000 |
150,000 |
- |
- |
|
Loans and Borrowings |
147,664 |
157,944 |
42,005 |
60,044 |
|
Total financial liabilities |
725,770 |
1,083,653 |
212,980 |
405,240 |
Fair value measurement
The fair value measurement of the Group's financial and non-financial assets and liabilities utilises market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation technique utilised are (the 'fair value hierarchy'):
Level 1: Quoted prices in active markets for identical items (unadjusted)
Level 2: Observable direct or indirect inputs other than Level 1 inputs
Level 3: Unobservable inputs (i.e. not derived from market data).
The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on the fair value measurement of the item.
Transfers of items between levels are recognised in the period they occur.
Market Risk
Currency risk
The Group's financial risk management objective is broadly to seek to make neither profit nor loss from exposure to currency or interest rate risks. The Group is exposed to transactional foreign exchange risk and takes profits and losses as they arise as, in the opinion of the directors, the cost of hedging against fluctuations would be greater than the potential benefits.
The Group's cash and cash equivalents are denominated in the following currencies:
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
US$ |
US$ |
US$ |
US$ |
|
US Dollars |
2,062,984 |
25,607 |
1,996,724 |
764 |
|
UK Pounds Sterling |
551,456 |
1,915,136 |
549,157 |
1,914,679 |
|
Euros |
32 |
128 |
32 |
128 |
|
|
2,614,472 |
1,940,871 |
2,545,913 |
1,915,571 |
The Group's trade and other receivables are denominated in the following currencies:
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
US$ |
US$ |
US$ |
US$ |
|
US Dollars |
774,727 |
1,531,393 |
- |
334,475 |
|
UK Pounds Sterling |
131,197 |
97,566 |
131,197 |
97,566 |
|
|
905,924 |
1,628,959 |
131,197 |
432,041 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
27. FINANCIAL INSTRUMENTS (continued)
The Group's trade and other payables are denominated in the following currencies:
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
US$ |
US$ |
US$ |
US$ |
|
US Dollars |
848,541 |
617,297 |
- |
13,609 |
|
UK Pounds Sterling |
351,255 |
599,934 |
351,255 |
583,654 |
|
Euros |
- |
4,799 |
- |
4,799 |
|
|
1,199,796 |
1,222,030 |
351,255 |
602,062 |
The effect of a 5 per cent strengthening of the US Dollar at the reporting date on the foreign currency denominated net financial instruments carried at that date would, all other variables held constant, have been a reduction in net assets of $15,782 (2021: $67,054). A 5 per cent weakening of the US Dollar would, on the same basis, have increased net assets by the same amount.
Interest rate risk
The Group and Company finance their operations through a mixture of equity and loans. The remaining debt consists of government issued or guaranteed debt with fixed rates of interest.
Credit risk
Operational
The Group did not generate any revenue during the period and its exposure to credit risk is therefore limited. The Group does not enter into derivative contracts to manage credit risk. Further information on trade and other receivables is presented in note 17.
Financial
Financial risk relates to non-performance by banks in respect of cash deposits and is mitigated by the selection of institutions with a strong credit rating.
Liquidity risk
Liquidity risk arises from the Group's management of working capital and payments to its suppliers. The Group retains operational liquidity risk as it starts to commercialise CoalSwitch®. During this period there is a risk that the Group will encounter difficulties in meeting its financial obligations as they fall due.
The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they fall due. The Group finances its operations through a mix of equity and debt instruments. The Group's objective is to provide funding for future growth. The Group's policies aim to ensure sufficient liquidity is available to meet foreseeable needs through the preparation of short and long term forecasts. Further details of the Directors' going concern assessment are set out in note 1.
The Group had loans of $147,664 at 31 December 2022 (2021: $157,944). No personal guarantees were in place.
Capital risk management
The Group's objective when managing capital is to establish and maintain a capital structure that safeguards the Group as a going concern and provides a return to shareholders.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
28. RELATED PARTY DISCLOSURES
As at 31 December 2022 all fees complied with directors' contractual obligations and were paid up to date. Details of directors' remuneration are set out in the Directors' Remuneration Report.
During 2022 the Group paid $53,539 (2021: $43,342) to INJ London Limited for sales and marketing services. This company is owned by Max Aitken, a director of the Company.
During 2021 the Group paid $2,327 to Zimmfor Management Services for an assessment of carbon credits related to CoalSwitch®. This company is owned by Jason Zimmermann, a director of the Company.
Transactions between the Company and its subsidiaries have been eliminated on consolidation. These transactions, which were incurred in the ordinary course of business and under normal commercial terms, were as follows:
|
|
2022 |
|
2021 |
|
|
|
US$ |
|
US$ |
|
|
Sale of property, plant and equipment |
- |
|
588,392 |
|
|
Allocation of management time and expenses |
65,826 |
|
205,650 |
|
|
Interest charges |
- |
|
164,400 |
|
The Company's intercompany receivable balances at the year end were as follows:
|
|
2022 |
|
2021 |
|
|
|
US$ |
|
US$ |
|
|
Amounts due from Group companies |
21,444,342 |
|
25,296,460 |
|
29. CAPITAL COMMITMENTS
The Group had no capital commitments at 31 December 2022 or 31 December 2021.
30. SUBSEQUENT EVENTS
There have been no disclosable events since the balance sheet date.
31. ULTIMATE CONTROLLING PARTY
The company has no overall controlling party.
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