Trading Update

RNS Number : 1437X

Active Energy Group PLC

09 February 2012

 



9 February 2012

AIM: AEG

ACTIVE ENERGY GROUP PLC

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

Trading Update

Active Energy, the AIM - quoted Biomass fuel and energy efficient solutions provider announces the following trading update.

Although Active Energy has performed in-line with market expectations at the operating level for the year ended 31 December 2011, the revenue visibility in the principal trading business, Active Energy Limited ("AEL"), following the period end has deteriorated significantly. The Board remains concerned that this trend will continue for the foreseeable future particularly given the increased competition in the voltage optimisation market and an increasing sales cycle amongst potential customers.  

Furthermore, the trading performance of Redline Engineering Services Limited ("Red Line") continues to disappoint. Red Line has failed to secure any significant orders in the period since it was acquired and the business has continued to consume cash.

As announced on 21 November 2011, the Company acquired Bioenerho leader Limited ("Bioenerho") (now renamed "Active Energy Ukraine") a biomass energy resources business based in Poland on that date.  Active Energy Ukraine is in an early stage of development and continues to build its operational presence on the ground in the Ukraine. It has received an initial order as part of the 80,000 tonne per year contract entered into with Medium Sp Z.o.o. and delivery of this initial order was completed in January 2012 with payment expected to be received in February 2012.

In the light of the lack of revenue visibility at AEL and Red Line and in order to preserve the remaining cash resources of the Company (estimated to be approximately £850,000) the Board has resolved to cease trading in both of these entities and to considerably scale back all non-essential expenditure in order to concentrate on the Biomass activities within Active Energy Ukraine.

As a result of these actions all employees of AEL and Red Line have been made redundant or are currently working their notice periods

In addition, the Company will incur a significant goodwill write off in the results for the year ended 31 December 2011 which the Company expects to announce in May 2012.

A further announcement regarding the Company's future strategy will be released in due course.

Commenting on the announcement:

Gavin Little, Executive Chairman said;

"Whilst these decisions are not easy to take we have to be mindful of the lack of revenue visibility in the voltage optimisation market and the fact that the performance of Red Line is not acceptable.

We have tried very hard to secure orders through Red Line from numerous efforts and our lead generation process, whilst being mindful of the cash draw to support these efforts, but to date we have not gained any significant orders and the outlook lacks true visibility.

The cash needed to support Red Line's efforts, with no planned results, is too great a burden on the business.  This leaves us with no option but to preserve our cash resources and seek to return shareholder value through the Biomass business, which we have got up and running quicker than planned"

Enquiries:

Active Energy Group Plc
Gavin Little,  Executive Chairman	Tel: [phone]
Office	Tel: [phone]
Merchant Securities Limited (Nominated Adviser and Broker)
Simon Clements	Tel: [phone]

 

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