Interim Results

RNS Number : 2540C

Active Energy Group PLC

28 September 2018

 

28 September 2018

Active Energy Group Plc

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

Interim Results

Active Energy, the AIM quoted international timber processing, forestry management and renewable energy business, announces its interim results for the six months to 30 June 2018.

OVERVIEW

·    Continued progress towards the commercialisation of CoalSwitch™ and PeatSwitch™ technologies and products across targeted markets and development of a third product, SuperFuel™:

o Ongoing negotiations regarding the sale of a PeatSwitch™ plant to Young Living Farms (YLF)

o Commencement of testing of PeatSwitch™ with new partners in the US to create new products using PeatSwitch™ technology

o CoalSwitch™ technology continuing to attract potential customers in North America and Europe - negotiations underway regarding regional joint ventures and plant sales

o Application submitted to EU to subsidise the Company's SuperFuel™ project in Poland with results expected in Q4 2018

o Five additional IP filings have taken place in the US and EU for CoalSwitch™ and PeatSwitch™

·    Ongoing discussions with stakeholders in the Provinces of Newfoundland and Labrador and Alberta, Canada, to finalise forestry licences and agreements through Timberland division, which would create revenue opportunities and secure long-term feedstock supply for both CoalSwitch™ and PeatSwitch™ roll outs

·     Loss for the six months ended 30 June 2018 was US$1,593,728 (2017: US$1,959,366) reflecting optimisation of expenses, combined with research and development tax credits

CHIEF EXECUTIVE'S STATEMENT

The commercialisation of our three key products, which we believe have the potential to revolutionise multiple industries and markets, has become Active Energy's focussed strategy in 2018.  I am delighted to report that momentum is increasing with industry and government recognition for the many benefits of our CoalSwitch™, PeatSwitch™ and SuperFuel™ products have to offer in North America and Europe.

The core pillar of our product range, and primary value driver, is our unique CoalSwitch™ technology. In addition, the Company has developed two further unique product lines; our biomass-derived PeatSwitch™ substrate, and SuperFuel™, a blended fuel product, utilising reclaimed and washed coal waste fines, in combination with CoalSwitch™.  Furthermore, the Company's forecast economics of a CoalSwitch™ plant can transform the metrics of marginal forestry assets and the Company intends to capitalise on this by building and operating CoalSwitch™ plants in key targeted locations where feedstock can be secured by long term forestry management agreements, timber licences or timber supply agreements through the Active Energy Timberlands division.

CoalSwitch™ - the world's only true drop-in coal replacement biomass fuel

Ongoing development activity in 2018 has further validated the unique properties of the CoalSwitch™ product and process; namely:

·    CoalSwitch™ has unique characteristics in terms of calorific value and friability (the ability to be ground to very fine powder) and energy density and bulk density levels are comparable to coal. As a result, the costs to transport it are efficient relative to any other coal alternative, such as traditional white biomass pellets.

·    CoalSwitch™ has hydrophobic qualities, which remove the need for expensive climate-controlled storage facilities/silos, unlike white pellet fuels that require climate-controlled storage and shipping.

·    CoalSwitch™ can improve coal-burning efficiencies when co-fired with coal, providing power plants with an easy route to sulphur and carbon dioxide emission reductions.

·    CoalSwitch™ can be used in coal fired power stations without the need for significant capital-intensive retrofitting.

·    CoalSwitch™ can be economically pelletized, briquetted, or baled, either alone or blended with coal without costly binders.

Commercialisation

The CoalSwitch™ technology has attracted significant direct interest from several potential partners and customers.  The potential customers range from forestry operations to utilities, predominantly in North America and Europe.

Active Energy is currently reviewing options to relocate its five-tonne-per-hour CoalSwitch™ plant, which began operations in February 2018, to a new site in order to take full advantage of new business opportunities.  As a result, current operations at the Utah site have been curtailed pending the plant relocation which is expected to be in Q4 2018.

In addition, Active Energy has received numerous requests for commercial samples and materials for test burning from utilities, power generators and forestry companies, once again, illustrating the industry's strong interest for our CoalSwitch™ product.

To support the roll out of future CoalSwitch™ plants, the Company is in discussions with global engineering procurement and construction contractors to ensure that the plants are constructed in the most efficient, and scalable manner. These partners are already involved in prospective transactions which Active Energy currently has under negotiation.

PeatSwitch™ - a new high value soil amendment product

PeatSwitch™ is a beneficiated, soil substrate product made from waste fibre utilising the Company's proprietary PeatSwitch™ process.  Chemical and microbiological additives can be mixed with the advanced PeatSwitch™ carbon backbone to meet the specific requirements of an individual agricultural customer and more importantly any desired plant type or species specifically.

The process and product have a number of key benefits:

·    PeatSwitch™ utilises low value waste wood/trees, agricultural residues and invasive plant species (including pinyon pine and juniper)

·    PeatSwitch™ is a viable alternative to peat moss, for which global demand currently exceeds several million tonnes per annum (U.S. Geological Survey, Mineral Commodity Summaries, January 2018)

·    PeatSwitch™ offers a customised product as it can be easily adjusted and tailored for customers' specific requirements and uses, plant types and species

·    PeatSwitch™ is a species-specific substrate or soil amendment providing target pH, mineral content and microbial make-up required by the end user for any given specific use

·    Advanced testing programme close to completion including production in volume, shelf life and specific IP/Patent registrations for five initial species including a lavender-specific substrate blend

·    PeatSwitch™ provides an alternative solution to the forestry residuals and waste biomass problem - the US alone generates billions of tonnes of biomass annually, much of which is put into landfills or dried & burned, producing vast amounts of pollution

Commercialisation

On 11 June 2018, Active Energy entered into a memorandum of understanding with YLF for the sale of a three tonne per hour PeatSwitch™ plant.  Final commercial discussions are on-going with YLF relating to its Whispering Springs Farm in Mona, Utah, which has been identified for the initial plant.  Specification of the plant will include a configuration which includes two reactors and a 16-inch screw press. The plant has been designed to accommodate an additional reactor should this be required in the future.  YLF intends that the product produced will be utilised by YLF at its Whispering Springs Farm and/or sold through YLF's extensive distribution network as an advanced soil amendment.

Furthermore, Active Energy has received other enquiries from additional potential customers.  In June 2018, the Company supplied PeatSwitch™ test samples to Kellogg Garden Products, a market leading company in the development and manufacture of a range of garden and agricultural soil enhancement, based out of California, USA. The Company and Kellogg are currently undertaking a comparative testing programme to evaluate the properties of PeatSwitch™ against a variety of other existing options. The Company is confident that various commercial opportunities will open for PeatSwitch™ in the US market and results of this programme will be announced as appropriate.  

The Company believes the potential market for this product is vast, as not only does PeatSwitch™ provide a means of processing unwanted waste biomass, but it is also a viable alternative to peat moss, biochar and other alternatives and it can be specifically adjusted and tailored to each customer's requirements.

Superfuel - a CoalSwitch™ blend utilising reclaimed & washed coal waste fines

On 13 March 2018, Active Energy announced that it had signed a joint venture agreement with Cobant Sp. z o.o. ('Cobant'), a Polish research, development and environmental waste coal recovery company active in the land reclamation, environmental services and energy sectors. The aim of the joint venture is to commercialise opportunities to blend CoalSwitch™ with reclaimed coal from coal slurry dumps in Upper Silesia, Poland and thereby produce a "SuperFuel" product.   Active Energy and Cobant's combined strengths were utilised to develop processes to economically extract and wash coal fines and to blend with CoalSwitch™, without a binder, to form viable briquettes suitable for burning in any setting where coal is currently utilised, including due to the results achieved during the certification process, domestic/home, district heating as well as existing coal-fired power plants, more cleanly and within the most stringent of clean air regulations.

On 13 June 2018, Active Energy announced that the joint venture had received confirmation from the Polish Government Burn Test Laboratory that testing had been completed on the "SuperFuel™" product. The results demonstrated that the "SuperFuel™" has a similar calorific value to coal with significantly lower sulphur content and low ash and SOx and NOx emissions. The testing satisfied all the requirements of the Polish Government and its newly introduced Anti-Smog legislation.

In August 2018, the joint venture submitted an application to the EU to request grant funding to subsidise the development of its SuperFuel™ technology.  This application was delivered to the National Centre for Research and Development and has resulted in a number of follow-up committee meetings and requests for clarification.  These requests have now been dealt with and a decision is expected during Q4 2018. The joint venture partners have now acquired various off-take agreements with a number of Polish utilities in anticipation of the delivery of the SuperFuel™ product.  This will provide the platform for the commercial development of both CoalSwitch™ and SuperFuel™ in Europe, beginning in Poland.

Timberlands

Newfoundland

In Q2 2017, Active Energy announced that it had entered into an agreement in principle with the Government of Newfoundland and Labrador (the "Government") which envisaged the award of a forestry management agreement ("FMA") and Crown Timber Licence ("CTL") with a renewable 20-year term, relating to two Forest Management Districts, 17 and 18 located on the Great Northern Peninsula, of Newfoundland.

In H2 2017 Active Energy submitted various documents to the Ministry of Fisheries and Land Resources of the Crown Province of Newfoundland and Labrador associated with the application process for the FMAs.

During H1 2018 Active Energy continued to develop management and supplier capability as well as government relations, in order to ensure the future success of this business.  In addition, Active Energy and its consultants, have been working closely with the relevant ministries to enable the creation of the legislative framework to allow the issuance of FMAs in the Province.

On 23 July 2018, Active Energy announced that it had received a letter from the Government which confirmed that Active Energy's proposal was in the final stages of review by the relevant governmental departments.  The Government noted that as this is the first application of its kind regarding the grant of an FMA, it has provoked considerable interest and review from all those involved. The Government also stated that it anticipated that the proposal would be submitted to Cabinet for final approval during August 2018. On 12 September 2018 Active Energy announced that the Government had confirmed to the Company that the application and award process remained under the final stages of active review by all relevant Government Departments.

Meetings between the Company and the Government will be held in Newfoundland during the week commencing 1 October 2018 and the Board believes that a conclusion to this matter is imminent.  At this time, Active Energy remains committed to working with the Newfoundland and Labrador Government, in the mutually declared goal of reinvigorating the forestry industry in the aforementioned areas and to work together towards the regeneration of the local economy in that area of the Province. The Company will make further announcements on these developments as soon as practicable following the meetings next week.

Northern Alberta

Active Energy is also pursuing two complementary forestry opportunities in Northern Alberta with the intention of utilising these assets (either on a stand-alone or combined basis) to provide feedstock for a future CoalSwitch™ plant in the province.

On 17 May 2018, Active Energy announced that it had signed an MoU with Powerwood Canada ("Powerwood') which would allow Active Energy to assume a controlling interest in Powerwood.  Powerwood already had a number of forestry assets granted by the Crown in the name of the Province of Alberta.  However, the owners of Powerwood are focussed on the development of biomass power generation in the province and not on forestry management operations.  The owners of Powerwood are keen for Active Energy to utilise both its forestry expertise and CoalSwitch™ processes to increase the underlying value of the aspen stands, the dominant species in these forests.  All parties are now proceeding to complete the contractual arrangements, finalise the financing arrangements and commence commercial activities. The Company will make further announcements regarding the collaboration with Powerwood as soon as practicable.

Financial Review

The overall loss for the six months ended 30 June 2018 was US$1,593,728 (2017: US$1,959,366). The key components are as follows:

•   Administration costs were US$1,682,660 (2017: US$1,054,435) for the first six months of 2018. Of this US$462,064(2017: US$300,137) relates to non-cash share-based payments expenses. Active Energy undertook a thorough review and optimisation of these costs during the first half of 2018.

•   Finance costs were US$585,178 (2017: US$ 627,520) reflecting ongoing interest payments on the convertible loan notes, partially offset by foreign exchange gains.

•   Active Energy has recognised an income tax credit on continuing operations of US$1,222,946 (2017: US$4,484) reflecting anticipated research and development tax refunds associated with development of the Company's PeatSwitch™ and CoalSwitch™ products and processes.

•   Loss from discontinued operations was US$548,836 (2017: US$1,610,391) reflecting close out of contractual matters associated with Active Energy's former Ukrainian wood chip operations. No further costs are expected to be incurred on these operations, which ceased in 2017.

In addition, during the first half of 2018 Active Energy invested US$1,321,830 in further development of the inaugural CoalSwitch™ reference plant. In addition, Active Energy spent US$528,207 on the development of Active Energy's CoalSwitch™ and PeatSwitch™ technologies and securing forestry assets in Canada, reflecting Active Energy's continued commitment to these projects.

On 26 June 2018 Active Energy announced that it had raised £1m (before expenses) through the issue of 33,333,333 new ordinary shares of 1p each ('Ordinary Shares') at a price of 3p per share from new and existing investors. Proceeds associated with this share issue were received either side of 30 June 2018. Any proceeds received after 30 June 2018 were recorded as trade and other receivables in the balance sheet as at 30 June 2018.

In addition, during the first half of 2018 a number of convertible loan note holder took the opportunity to convert debt to equity and as a result an additional 49,633,228 shares were issued in exchange for loan stock.  The resulting balance sheet reallocation from debt to equity, combined with the share issue, but partially offset by the loss for the period, improved Active Energy's net liability position from US$2,534,966 as at 31 December 2017 to US$254,270 as at 30 June 2018.

Corporate Governance

The Board recognise the importance of sound corporate governance. As a Company whose shares are traded on AIM, the Board has adopted the Quoted Alliance's Corporate Governance Code and has issued a Corporate Governance Statement which has been published on the Company's website and can be found at https://www.aegplc.com/investors/corporate-governance/.

Outlook

2017 was a year of transition for AEG as we ceased our Ukrainian wood fibre business and refocussed our strategy around the revolutionary CoalSwitch™ products and processes. This forms the basis of our derivative products (PeatSwitch™ and SuperFuel™) and is complementary to our forestry assets.

The Board's focus has now shifted to commercialisation of these products in our key markets, primarily being USA, Canada and Europe. The aim is to secure the greatest market opportunities, including customers and strategic partnerships for CoalSwitch™ and develop derivative products such as PeatSwitch™ and SuperFuel™. To complement this, Active Energy continues to use its underlying knowledge and experience in forestry management to secure and monetise strategic timber licences; thereby generating additional revenue streams and underpinning long term contracts for CoalSwitch™ through visibility of these secured feedstock arrangements.

The Board recognises that the road for shareholders has been long and that a number of commercial negotiations are still ongoing, but with the unwavering commitment of our team, combined with the inherent value in our technology and business model, I am confident that we will reach our commercial and strategic goals.

Michael Rowan

28 September 2018

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE  2018

			30 June 2018		30 June 2017		31 December 2017
	Note		(Unaudited)		(Unaudited)		(Audited)
			US$		US$		US$
REVENUE	2		-				-
Cost of sales			-				-
GROSS PROFIT			-		-		-
R&D expenditure					-		(2,389,807)
Administrative expenses			(1,682,660)		(1,054,435)		(2,870,721)
OPERATING LOSS			(1,682,660)		(1,054,435)		(5,260,528)
Finance income			-		277,936		-
Finance costs			(585,178)		(627,520)		(3,031,054)
Profit on reclassification of assets relating to associates and joint venture			-		1,050,560		-
(Loss) from continuing operations			(2,267,838)		(353,459)		(8,291,582)
Income tax credit on continuing operations			1,222,946		4,484		355,491
(Loss)/profit from discontinued operations	2		(548,836)		(1,610,391)		(7,284,981)
LOSS FOR THE PERIOD			(1,593,728)		(1,959,366)		(15,221,072)
Profit/Loss attributable to Non‐controlling Interest			(165,953)				437,110
Loss attributable to the Parent Company			(1,759,681)		(1,959,366)		(14,783,962)
OTHER COMPREHENSIVE INCOME/(EXPENSE):
Items that may be subsequently reclassified to profit or loss
Exchange differences on translation of operations			(73,195)		(146,730)		137,734
Revaluation of assets held for resale					-		331,585
Total other comprehensive expense			(73,195)		(146,730)		469,319
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD			(1,832,876)		(2,106,096)		(14,314,643)
(Loss) per share (US cent) - continuing operations	5		(0.12)		(0.04)		(0.90)
(Loss)/profit per share (US cent) - discontinued operations			(0.06)		(0.20)		(0.88)
Basic and Diluted (loss) per share (US cent)			(0.18)		(0.24)		(1.78)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018

			30 June 2018		30 June 2017		31 December 2017
			US$		US$		US$
	Note		(Unaudited)		(Unaudited)		(Audited)
NON-CURRENT ASSETS
Intangible assets			8,560,736		4,156,195		8,054,947
Property, plant and equipment			4,988,441		2,298,127		3,791,611
Available for sale financial assets			715,663		105,595		786,873
Other financial assets			-		9,564,292		-
			14,264,840		16,124,209		12,633,431
CURRENT ASSETS
Inventory			20,349		92,328		20,349
Trade and other receivables			2,651,672		2,888,608		517,902
Cash and cash equivalents			261,421		2,119,250		142,049
			2,933,442		5,100,186		680,300
TOTAL ASSETS			17,198,282		21,224,395		13,313,731
CURRENT LIABILITIES
Trade and other payables			4,143,720		372,240		1,944,676
Loans and borrowings			565,235		104,592		-
Finance leases falling due in less than one year			140,607				89,607
Income tax liabilities			-		1,439		-
			4,849,562		478,271		2,034,283
NON-CURRENT LIABILITIES
Deferred income tax liabilities			379,684		388,653		384,169
Finance leases falling due in more than one year			154,993				205,993
Loans and borrowings			12,068,313		14,980,876		13,224,252
			12,602,990		15,369,529		13,814,414
TOTAL LIABILITIES			17,452,552		15,847,800		15,848,697
NET ASSETS			(254,270)		5,376,595		(2,534,966)
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT
Share capital	4		15,615,160		12,845,566		14,493,246
Share premium			17,289,527		13,526,024		14,740,478
Merger reserve			2,350,175		2,350,175		2,350,175
Foreign exchange reserve			34,885		(176,384)		108,080
Own shares held reserve			(779,222)		(779,222)		(779,222)
Convertible debt / warrant reserve			2,744,801		1,075,301		2,930,209
Retained earnings			(37,247,881)		(23,464,865)		(35,950,264)
Non‐controlling Interest			(261,715)		-		(427,668)
TOTAL EQUITY			(254,270)		5,376,595		(2,534,966)

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS TO 30 JUNE 2018

					30 June 2018		30 June 2017		31 December 2017
				Note	US$		US$		US$
Cash (outflow)/inflow from operations				3	448,869		(2,903,956)		(5,821,095)
Income tax paid					-		(5,235)		(6,684)
Net cash (outflow)/inflow from operating activities					448,869		(2,909,191)		(5,827,779)
Cash flows from investing activities
Purchase of intangible assets					(528,207)		-		(1,438,017)
Contribution to associate					-		(408,805)		-
Loan to joint venture partner					-		(2,164,794)		-
Purchase of property, plant and equipment					(1,321,830)		(202)		(3,923,481)
Sale of property, plant and equipment					151,983		840		221,504
Finance income					-		277,936		-
Net cash outflow from investing activities					(1,698,054)		(2,295,025)		(5,139,994)
Cash flows from financing activities
Issue of equity share capital, net of share issue costs					1,320,288		280,540		3,142,674
Loans raised					1,024,590		5,485,293		7,537,671
Finance expenses					(984,049)		(598,725)		(1,693,031)
Net cash inflow from financing activities					1,360,829		5,167,108		8,987,314
Net increase/(decrease) in cash and cash equivalents					111,644		(37,108)		(1,980,459)
Cash and cash equivalents at beginning of the period					142,049		2,121,841		2,121,841
Exchange (losses)/gains on cash and cash equivalents					7,728		34,517		667
Cash and cash equivalents at end of the period					261,421		2,119,250		142,049

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS TO 30 June 2018

	Share capital	Share premium	Merger reserve	Foreign exchange reserve	Own shares held reserve	Convertible debt and warrant reserve	Retained earnings
								Non-controlling Interest	Total equity
	US$	US$	US$	US$	US$	US$	US$	US$	US$
At 31 December 2016	12,621,134	13,469,916	2,350,175	(29,654)	(779,222)	1,075,301	(21,805,636)	-	6,902,014
Loss for the period	-	-	-	-	-	-	(1,959,366)	-	(1,959,366)
Other comprehensive income	-	-	-	(146,730)	-	-	-	-	(146,730)
Issue of share capital	224,432	56,108	-	-	-	-	-	-	280,540
Share based payments	-	-	-	-	-	-	300,137	-	300,137
At 30 June 2017	12,845,566	13,526,024	2,350,175	(176,384)	(779,222)	1,075,301	(23,464,865)	-	5,376,595
At 31 December 2016	12,621,134	13,469,916	2,350,175	(29,654)	(779,222)	1,075,301	(21,805,636)	-	6,902,014
Loss for the period	-	-	-	-	-	-	(15,221,072)	-	(15,221,072)
Other comprehensive income	-	-	-	137,734	-	-	331,585	-	469,319
Issue of share capital	1,872,112	1,270,562	-	-	-	-	-	-	3,142,674
Embedded derivative on issue of CLN	-	-	-	-	-	1,854,908	-	-	1,854,908
Share based payments	-	-	-	-	-	-	307,749	-	307,749
Minority Interest	-	-	-	-	-	-	437,110	(427,668)	9,442
At 31 December 2017	14,493,246	14,740,478	2,350,175	108,080	(779,222)	2,930,209	(35,950,264)	(427,668)	(2,534,966)
Loss for the period	-	-	-	-	-	-	(1,593,728)	-	(1,593,728)
Other comprehensive income	-	-	-	(73,195)	-	-	-	-	(73,195)
CLN conversions	681,818	1,668,857	-		-	(315,248)	-	-	2,035,427
Issue of share capital	440,096	880,192	-	-	-	-	-	-	1,320,288
Embedded derivative on CLN issue	-	-	-	-	-	129,840	-	-	129,840
Share based payments	-	-	-	-	-	-	462,064	-	462,064
Minority Interest							(165,953)	165,953	-
At 30 June 2018	15,615,160	17,289,527	2,350,175	34,885	(779,222)	2,744,801	(37,247,881)	(261,715)	(254,270)

NOTES FORMING PART OF THE INTERIM REPORT

 

1. GENERAL INFORMATION AND BASIS OF PRESENTATION

 

General information

Active Energy Group plc is a company incorporated in England and Wales and quoted on the AIM market of the London Stock Exchange. The address of the registered office is 27-28 Eastcastle Street, London, W1W 8DH. The Group's principal activities are the development and commercialisation of cutting-edge renewable energy and soil replacement products; and the development of timber resources.

Basis of preparation

The financial information in these interim results is that of the holding company and all of its subsidiaries. It has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards as adopted for use in the EU (IFRSs). The accounting policies applied by the Group in this financial information are the same as those applied by the Group in its financial statements for the year ended 31 December 2017 and which will form the basis of the 2018 financial statements, except for a number of new and amended standards which have become effective since the beginning of the previous financial year. These new and amended standards are not expected to materially affect the Group.

The financial information presented herein does not constitute full statutory accounts under Section 434 of the Companies Act 2006 and was not subject to a formal review by the auditors. The financial information in respect of the year ended 31 December 2017 has been extracted from the statutory accounts which have been delivered to the Registrar of Companies. The Group's Independent Auditor's report on those accounts was unqualified and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006. The auditor's report on those accounts included a reference to the going concern assumptions detailed in the notes to those accounts, whereby the auditor drew attention to this note by way of emphasis of matter. The auditor did not qualify their report in respect of this matter. The financial information for the half years ended 30 June 2018 and 30 June 2017 is unaudited and the twelve months to 31 December 2017 is audited.

These interim accounts have been prepared in accordance with IAS 34.

Going concern

The Group's primary revenue generating business segment, the Ukrainian wood fibre business, was discontinued during 2017. As a result this unit has not generated any revenues in 2018. Following the cessation of this operating segment, the group has focused its efforts on the CoalSwitch™ and Forestry and Natural Resources business segments. Neither of these business segments have generated material revenues at the date of signing these interim financial statements.

The Directors have considered the cash requirements of the business for the following 12 months. As part of this process, they have taken into account existing liabilities, along with detailed operating cashflow requirements. The projections prepared include ongoing running costs of the Group and committed expenditure at the date of approving the financial statements.

The Directors have identified, and are in the process of securing, various sources of funds including issue of additional equity and/or debt, shareholder loans, tax credits and sale of plant and/or investments. The directors have implemented various cost reduction measures and further initiatives may be undertaken if necessary.

Taking this into account and following a detailed review by the Directors of the group's cashflow requirements, the directors believe that the Group will have sufficient cash resources to continue to trade for a period of at least 12 months from the date that the interim financial statements are issued. Consequently, the financial statements have been prepared on a going concern basis.

However, as of the date of signing these financial statements, none of the potential sources of funds have been finalised and therefore there can be no guarantee that further funds will be received. These circumstances indicate the existence of a material uncertainty which may cast significant doubt on the Company's ability to continue as a going concern.

Basis of consolidation

The financial information incorporates the results of AEG plc and entities controlled by the AEG plc (its subsidiaries). Control is achieved when the Group has power over relevant activities, is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The consolidated interim financial statements present the financial results of AEG plc 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.

2.       SEGMENTAL INFORMATION

The Group reports two operating continuing business segments:

·    "Forestry & Natural Resources" denotes the Group's initiatives to secure ownership of the entire timber supply chain from forest to finished product

·    "CoalSwitch™/PeatSwitch™" denotes the Group's renewable wood pellet and soil replacement business.

Revenues and costs associated with the Ukrainian Wood Fibre business have been reclassified            as discontinued operations.

Factors that management used to identify the Group's reportable segments

The Group's reportable segments are strategic business units that offer different products. During the business development stage they are managed separately because each business operates in different markets and locations. In future these business segments may be combined into single operations and reporting structures will be revisited accordingly.

Profits and losses associated with the Ukrainian wood fibre business were reclassified as discontinuing in  2017 and have therefore be excluded from the analysis below.

For the 6 months to 30 June  2018 (Unaudited)	Forestry & Natural Resources	CoalSwitch™/ PeatSwitch	Total
	US$	US$	US$
Revenue from external customers	-	-	-
Operating segment profit/(loss)	(22,422)	(112,110)	(134,532)
Finance costs	-	-	-
Segment profit/(loss) before tax	(22,422)	(112,110)	(134,532)
Tax credit / (charge)	4,484	1,218,462	1,222,946
Segment profit/(loss) for the period	(17,938)	1,106,352	1,088,414

For the 6 months to 30 June 2017 (Unaudited)	Forestry & Natural Resources	CoalSwitch™/ PeatSwitch	Total
	US$	US$	US$
Revenue from external customers	-	-	-
Operating segment profit/(loss)	1,028,138	-	1,028,138
Finance costs	-	-	-
Segment profit/(loss) before tax	1,028,138	-	1,028,138
Tax credit / (charge)	4,484	-	4,484
Segment profit/(loss) for the period	1,032,622	-	1,032,622

For the 12 months to 31 December 2017 (Audited)	Forestry & Natural Resources	CoalSwitch™/ PeatSwitch	Total
	US$	US$	US$
Revenue from external customers	-	-	-
Operating segment profit(loss)	-	(3,260,588)	(3,260,588)
Finance costs	-	-	-
Segment profit/(loss) before tax	-	(3,260,588)	(3,260,588)
Tax credit / (charge)	-	346,522	346,522
Segment profit/(loss) for the period	-	(2,914,066)	(2,914,066)

Capital expenditure relating to the CoalSwitch™/PeatSwitch segment was US$1,622,908 (Full Year 2017:US$3,877,226) and capital expenditure relating to the Forestry and natural resource segment was US$227,129 (Full Year 2017: US$896,957).

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

			6 months ended 30 June 2018 (unaudited) US$	6 months ended 30 June 2017 (unaudited) US$		Year ended 31 December 2017 (audited) US$
	Total profit/(loss) from reportable segments	1,088,414			1,032,622	(2,914,066)
	Unallocated amount - corporate expenses	(1,086,064)			(731,876)	(1,683,222)
	Unallocated amount - finance income	-			277,936	-
	Unallocated amount - finance expense	(585,178)			(627,520)	(3,031,054)
	Share based payments	(462,064)			(300,137)	(307,749)
	Discontinued operations	(548,836)			(1,610,391)	(7,284,981)
	Loss for the period	(1,593,728)			(1,959,366)	(15,221,072)

3. RECONCILIATION OF LOSS BEFORE TAXATION TO CASH OUTFLOWS FROM OPERATING ACTIVITIES

					30 June 2018		30 June 2017		31 December 2017
					US$		US$		US$
Loss for the period				(1,593,728)			(1,959,366)		(15,221,072)
Adjustments for:
Share of loss of associate				-			(1,050,560)		-
Share based payment expense				462,064			300,137		307,749
Depreciation				-			178,275		280,473
Amortisation of intangibles				22,418			22,422		44,835
R&D expensed to income statement				-			-		1,244,045
Write off of goodwill				-			-		2,212,930
Loss/ (profit) on disposal of PP&E				(26,983)			-		2,130,018
Revaluation of investments for resale				-			-		(454,928)
Foreign currency translations				373,895			(126,321)		(556,421)
Finance income				-			(277,936)		-
Finance expenses				585,178			795,497		3,031,054
Income tax				(4,484)			(298)		(4,781)
				(181,640)		(2,118,150)			(6,986,098)
(Increase)/decrease in inventories				-			332,670		404,649
(Increase)/decrease in trade and other receivables				(2,133,770)			(238,276)		2,132,430
(Decrease)/increase in trade and other payables				2,764,279			(880,200)		(1,372,076)
Net cash outflow from operating activities				448,869			(2,903,956)		(5,821,095)

4.  SHARE CAPITAL

	Number	US$
Allotted, called up and fully paid1
Ordinary shares of 1p each
(Unaudited)	983,071,276	14,493,246
At 1 January 20181
Shares issued for cash	33,333,333	440,096
Conversion of CLN	49,633,228	681,818
At 30 June 2018	1,066,037,837	15,615,160
	Number	US$
(Unaudited)
At 1 January 2017	840,381,500	12,621,134
Shares issued for cash	17,623,110	224,432
At 30 June 2017	858,004,610	12,845,566
	Number	US$
(Audited)
At 1 January 2017	840,381,500	12,621,134
Shares issued for cash	142,689,776	1,872,112
As at 31 December 2017	983,071,276	14,493,246

Note 1) On 26 June 2018 AEG announced that it has raised £1m (before expenses) through the issue of 33,333,333 new Ordinary Shares at a price of 3p per share from new and existing investors (the 'Placing').  The proceeds of the Placing were received into AEG plc's bank accounts either side of the 30 June 2018. The full amount of the Placing proceeds are included in the share capital above. However, only the cash received prior to 30 June 2018 is included cash and cash equivalents on the balance sheet as 30 June 2018. Proceeds of the Placing that were received after the 30 June 2018 are shown as trade and other receivables on the balance sheet as 30 June 2018.

5.            LOSS PER SHARE

	6 months to 30 June 2018	6 months to 30 June 2017	12 months to 31 December 2017
	(Unaudited)	(Unaudited)	(Audited)
	US$	US$	US$
Weighted average ordinary shares in issue	965,318,148	807,344,890	829,908,445
(Loss) from continuing operations	(1,210,845)	(348,975)	(7,498,981)
(Loss)/profit per share (US cent) - discontinued operations	(548,836)	(1,610,391)	(7,284,981)
Loss attributable to the Parent Company	(1,759,681)	(1,959,366)	(14,783,962)
(Loss) per share (US cent) - continuing operations	(0.12)	(0.04)	(0.90)
(Loss)/profit per share (US cent) - discontinued operations	(0.06)	(0.20)	(0.88)
Basic and Diluted (loss) per share (US cent)	(0.18)	(0.24)	(1.78)

6.            COPIES OF THE INTERIM REPORT

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

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

Enquiries & Further Information:

Website	LinkedIn
www.active-energy.com www.aeg-plc.com	www.linkedin.com/company/activeenergy

Enquiries
Active Energy Group Plc	Michael Rowan Chief Executive Officer	[e-mail]
	Richard Spinks Executive Director	[e-mail]
Northland Capital Partners Limited Nominated Adviser	David Hignell/Gerry Beaney	Office: [phone]
Optiva Securities Ltd Broker	Graeme Dickson/Ed McDermott	Office: [phone]
St Brides Partners Financial PR Adviser	Susie Geliher / Gaby Jenner	[e-mail] Office: [phone]

 

END

 

 

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