REG - Active Energy Group - Audited results for the year ended 31 Dec 2023
04/12/2024 07:00
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RNS Number : 6935O Active Energy Group PLC 04 December 2024
4 December 2024
Active Energy Group plc
("Active Energy" or the "Company")
Audited results for the year ended 31 December 2023
Active Energy (AIM: AEG, OTCQB: ATGVF), the biomass-based renewable energy
company focused on the production and development of next generation biomass
products, today announces its audited results for the year ended 31 December
2023.
Operational Highlights:
· Early in 2023, our production and engineering partner Player Design
Inc.("PDI") was awarded the requisite permits to complete a full-scale
construction and the installation of the requisite equipment to allow first
production at the Ashland Reference Facility in Maine.
· As the end of the calendar year approached, various deadlines and
goals for production of fuel had not been achieved. PDI informed Active Energy
that further delays in the commencement of production from the Reference
Facility were inevitable and indicative production deadlines would extend
further into H1 2024. Further, PDI indicated that it was unwilling to continue
with the existing commercial terms between the parties and wished to terminate
its relationship with Active Energy.
· Construction of the Reference Facility commenced mid-2023.
· Expansion of the Company's sales and engineering function in USA and
Europe with the hiring of Steve Schaar (COO) and Barron Hewetson (CTO). Both
had significant biomass industry expertise.
· During 2023, the intellectual property portfolio was extended with
new patents granted in the US and Canada and relevant trademarks granted in
North America and worldwide. Project delays were regularly notified to AEG
from PDI ranging from design issues, component delivery delays and subsequent
construction delays.
· Despite the delays AEG continued to secure future customer requests
both in the US and internally to visit the site at the earliest opportunity.
Financial Highlights:
· Operating Loss for the year of US$15,517,696 (2022: US$1,343,745).
· Cash at bank as at 31 December 2023 US$319,137 (2022: US$2,614,472).
· Basic and diluted loss per share from continuing operations of $2.37
cents (2022: earnings per share of $0.69 cents).
Activities post the year end:
· PDI indicated that it was unwilling to continue with existing
commercial terms and wanted to terminate its obligations toward AEG.
· An operational compromise could not be reached with PDI as PDI was
unwilling to agree a workable formula for this, so a compromise agreement was
agreed between the parties in February 2024 which saw $1.6m of cash returned
to AEG
· With limited financial resources post the settlement with PDI, in
April 2024 the company wound down its current business operations to examine
alternative options to continue to monetise the CoalSwitch® IP in other
forms.
· In October 2024 the Company raised £200,000 ($260,878) from Zen
Ventures Limited through the issue of loan notes, of which £27,616 ($36,022)
are convertible loan notes that will convert to new ordinary shares
representing 29.9% of the Company's issued share capital on 31 December 2024
(subject to shareholder approval).
· On the 1(st) of November 2024 Jason Zimmerman and Max Aitken resigned
as directors of the Company.
Enquiries:
Active Energy Group Plc Michael Rowan (Chief Executive Officer) info@aegplc.com
James Leahy (Non-Executive Chairman)
Allenby Capital Limited Nick Naylor/James Reeve/Daniel Dearden-Williams (Corporate Finance) Tel: +44 (0) 203 328 5656
Nominated Adviser and Joint Broker Amrit Nahal (Sales/Corporate Broking)
Zeus Antonio Bossi, Alexandra Campbell-Harris (Investment Banking) Tel: +44 (0) 203 829 5000
Joint Broker
Website LinkedIn Twitter
www.aegplc.com www.linkedin.com/in/active-energy-group-plc/ https://twitter.com/aegplc (https://twitter.com/aegplc)
@aegplc
STRATEGIC REPORT
GROUP STRATEGY
Following the termination of the Group's relationship with Player Design, Inc
the Group's strategy is now to realise the maximum value of the CoalSwitch®
intellectual property. In light of this the board does not consider that the
Group's existing KPIs have any continuing relevance. The Group's established
KPIs for 2023 are summarised below and naturally, given the circumstances,
none of these were met.
WHAT ARE THE COMPANY'S KEY PERFORMANCE INDICATORS?
· Establish production capacity through the commencement of the
first CoalSwitch® production operations in Ashland Reference Plant.
· Replicate these production facilities and construct
additional production facilities for CoalSwitch® at alternate sites in North
America and internationally.
· Complete off-take agreements, through trial orders, with
industrial partners, heating pellet suppliers or power generators in North
America and the rest of the world.
· Establish feedstock supply agreements with established
forestry product providers for the long-term supply of low-value residual and
waste materials, which meet established sustainability criteria, to produce
CoalSwitch®.
· Develop CoalSwitch® production technologies to further
improve the fuel performance and introduce new production technologies to
increase production efficiency and maximise economics.
· Increased shareholder returns.
HOW HAVE WE PERFORMED IN 2023?
· Working with our production partner PDI the focus was to
establish an operation production platform for the first CoalSwitch®
production at Ashland, Maine. PDI did complete some commercial milestones
toward construction of the production facility during 2023, including
acquiring permits to complete design work. However, many of the key agreed
milestones were not achieved and constant delays caused additional financial
and commercial pressures for AEG.
· While PDI focused on the production targets, AEG continued
driving commercial leads and customer interest for CoalSwitch® fuel both in
North America and internationally and continued to secure prospective customer
orders for initial CoalSwitch® production volumes.
· During H1 2023 AEG invested in new management expertise with
the hire of a COO & CTO based in the US, to complement the existing sales
activities in the US and worldwide.
· During H2 2023 AEG expanded its territorial horizons,
commencing sales activities in Southeast Asia to look for additional
production and sales opportunities for CoalSwitch®.
· During H2 2023 AEG was awarded the relevant CoalSwitch®
trademark patents for the EU. CoalSwitch® is now a registered and approved
trademark in all territories including US, Canda, Europe (including the UK)
and currently additional trademark applications have commenced throughout Asia
and Japan.
Board statement
Executive Summary
Active Energy Group plc ("Active Energy" or the "Company") spent most of 2023
focused on trying to ensure that the vital business components for its
commercial success were established and that the Company could successfully
move towards a production facility for CoalSwitch® fuel. Given the Company's
constrained access to capital throughout the year, the Company had to
continuously balance the strategic goals with economic realities. As events
post the year end demonstrated and despite all the positive contributions made
by all members of Active Energy' team during the last 18 months, the Company
had to sadly succumb to these economic realities in 2024.
The beginning of 2023 presented a series of challenges and opportunities for
Active Energy. The team's focus was upon three components to drive Active
Energy toward commercial success, and these included: -
Production Development at the Ashland Reference Facility in Maine (the
"Reference Facility"): Working with our production partner Player Design, Inc.
("PDI"), the Company's focus was to establish an operating production platform
to accommodate customer's requests for CoalSwitch® fuel and to have
CoalSwitch® fuel samples available to potential customers. In 2023, PDI did
complete certain commercial milestones toward construction of the Reference
Facility, including the award of the requisite permits to complete full scale
construction and the installation of the requisite equipment to allow first
production operations to commence. However, these processes were always behind
schedule and as the year progressed, these delays compounded additional
commercial pressures for Active Energy
Market and Product Development for CoalSwitch® fuel: While PDI focused on the
production challenges, Active Energy continued to drive toward commercial
leads and gather prospective customer interest. In the first half of 2023,
Active Energy invested in new management expertise to complement the existing
sales activities in the U.S. and worldwide. During 2023, there was the active
promotion of both the environmental and economic benefits of the fuel,
including developing strategies to obtain carbon credits and additional
renewable energy incentives in the US. In Q3 2023, the Company expanded its
territorial horizons, commencing work in Southeast Asia to look for additional
production and sales opportunities for the fuel.
Strengthen the Corporate Infrastructure with key management hires: We added
depth and breadth to the team with the hire of a US based Chief Operating
Officer and US based Chief Technology Officer during H1 2023. Both these
individuals had significant biomass industry expertise and were excited at the
commercial opportunities that CoalSwitch® could present for the existing
biomass industry. Later in 2023, we worked toward additional expansion of
these sales and production activities in South-East Asia with new team members
hired to develop their local networks in the region.
1. Production Development at the Ashland Reference Facility, Maine
Working with PDI, the Company spent 2023 working on engineering and design,
permits, certifications and other regulatory requirements needed to
manufacture and sell CoalSwitch®.
Construction and Operational Permit for the Reference Facility
Construction of the Reference Facility finally commenced in mid-2023 when
Active Energy announced that the appropriate permit had been awarded to PDI
and its associates by the Department of Environmental Protection in the State
of Maine on 24(th) May 2023. During the first half of 2023, PDI regularly
informed Active Energy of the various delays for the project ranging from
design issues, component delivery delays, permit delays and subsequent
construction delays. The Board made every effort to provide shareholders with
the clearest timetable toward production. However, it was recognised that the
timelines extended beyond the expectations that had been initially set.
Despite the delays, Active Energy continued to receive interest from
prospective customers, both in the US and internationally, and requests to
visit the operations at the Reference Facility. This provided important
encouragement to all parties that once the Reference Facility was operational,
the project could be successful.
However, project delays continued into H2 2023, with PDI unable to provide
updates on the status of the Reference Facility. The delays resulted in more
expense and PDI became increasingly concerned on the project viability. Active
Energy offered the new management resources at its disposal to assist PDI in
completing the project. These offers were declined by PDI as it chose to seek
its own resolution to the construction and operational issues at the Reference
Facility.
One key concern for PDI was the funding required to complete the construction
of the Reference Facility. PDI had initially agreed to meet all the costs of
construction through its own resources, but it became quickly apparent that,
owing to the project delays, this was becoming problematic for PDI to complete
alone. Active Energy was unable to assist given its own limited access to
capital at that time. Active Energy did have conversations with various
investors; however, all were hesitant to commit additional funding until
production of CoalSwitch® fuel at the Reference Facility had commenced.
2. Market and Product Development for CoalSwitch® fuel
In July 2022, the Company announced that, while PDI would focus on the
engineering development activities for the CoalSwitch® program focussing on
activities at Ashland, Active Energy would focus its efforts on market
development opportunities, both in the US and internationally. The commercial
goals between the parties were clear. PDI would focus on the completion of the
Reference Facility and Active Energy would establish the customer base and the
first markets for CoalSwitch® fuel. Upon first deliveries of CoalSwitch®
fuel, the strategy would then be finalised between the parties to work toward
the development of new production plants and product deliveries.
Sales and Promotional Activities during H1 2023
Since that announcement, Active Energy had forged its way to create a market
presence both for black pellet fuels and to secure a future pipeline of fuel
orders ahead of first production volumes from the Reference Facility. The
Company's experienced sales personnel faced regular challenges given the flow
of announcements around future production delays from the Reference Facility
during 2023 and yet, in spite of this, the team managed to preserve and
increase market interest.
The team presented at the Advanced Bioeconomy Leadership Conference in March
2023 in Washington DC to demonstrate the CoalSwitch® fuel merits to an
audience of Environmental, Social and Governance leaders, US Government
officials and, more importantly, prospective commercial partners. In addition,
in September 2023, Active Energy was elected to become a member of the
International Biomass Torrefaction and Carbonisation Council ("IBTC"). The
IBTC promotes the sustainable production of various torrefied or carbonised
technology products and considers all forms of fuels including the steam
treated pellets which CoalSwitch® fuels demonstrate.
Marketing activities in North America
Throughout the year, Active Energy also continued in its efforts to sell
CoalSwitch® fuel, and to create new market opportunities aligned to the
current consumption of fossil fuels in North America. The focus had been to
develop two distinct markets, the first for co-firing CoalSwitch® with coal
and the second to create new markets for these improved biomass fuels.
The focus of the sales activities and potential customer interest moved beyond
the conventional power generation industry and extended to include various
heavy industries including cement, pulp and paper industries, where local and
national emissions regulations continue to expand. The reception from the
prospective customers was highly encouraging.
The key to unlock each of these future sales opportunities had been for
CoalSwitch® fuel to be in production, in any amount of volume, at the
Reference Facility. Active Energy received the definitive feedback from
prospective customers that with delivered CoalSwitch® fuel, appropriate
testing at specific industrial facilities could commence and commercial
discussions on fuel supplies under long term contract could begin.
Continuing investment in IP
Throughout the year, Active Energy continued to extend its CoalSwitch®
intellectual property portfolio. In February 2023, the US patent office
granted two patents, and in Canada, one patent was granted for the treatment
and preparation of biomass to be used as a fuel. This was quickly followed by
the issuance of the relevant trademark registrations in both the US, Canada
and the UK. In June 2023, the Company was also awarded the relevant
CoalSwitch® trademark patents for the EU.
Relevant applications (both for patents and trademarks) continued throughout
the year and continued in these territories during 2024. Most importantly, the
CoalSwitch® trademark is now registered and approved in all territories
including US, Canada, Europe (including the UK) and additional trademark
applications have commenced throughout Asia, notably Japan.
The Board believed that securing the relevant trademarks and patents would be
a significant milestone for the Company as production volumes commenced.
Strengthening the intellectual property portfolio would not only support the
ongoing advancement of its CoalSwitch® technology, but also enhance brand
recognition positioning Active Energy well for the future sales and
development of black pellet fuels.
3. Strengthen the Corporate Infrastructure with key hires
The Company also took several key steps to prepare for future growth and scale
expected after commencement of first commercial production (including relevant
technology and 'know-how' developments) and to that end, during H1 2023,
Active Energy hired senior management team members to build the execution
capability.
Strengthened management team during 2023
In November 2022, Michelle Fagan had been appointed as the Company's 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. Her careful oversight during 2023 proved invaluable in the
strategic expansion of the executive team.
In March 2023, the Company appointed Steve Schaar as Chief Operating Officer
to focus on the development of CoalSwitch® production and operations in the
United States. Steve had more than 25 years' experience of operations, project
development, program management, and new product launches from a broad range
of industries. As new production centres would be added to the production
portfolio, Steve's experience would be invaluable.
In July 2023, the Company appointed Barron Hewetson as the Chief Technology
Officer to focus on the future development of CoalSwitch® products and new
production methods. Barron has over 20 years biomass industry experience, most
recently holding senior management positions at Enviva Biomass Inc. including
Director of Innovation and Product Management.
These individuals had the proven track record of producing and selling
millions of tons of biomass fuels. Each of these talented and experienced
individuals had joined Active Energy looking to assist in the future success
of CoalSwitch® and in a short time, they each made significant contributions
toward the organisation. The Board was wholly supportive of these hires and
believed that such hires would readily complement PDI's activities in
completing the Reference Facility.
Post period end and outlook
As the end of the calendar year approached, various deadlines and goals for
production of fuel had not been achieved. PDI informed Active Energy toward
the end of 2023 that further delays in the commencement of production from the
Reference Facility were inevitable and indicative production deadlines would
extend further into H1 2024. Further, PDI indicated that it was unwilling to
continue with the existing commercial terms between the parties and wanted to
end its relationship with Active Energy. The Group's activities in Ashland
ceased and management commenced the process of disposing of its plant and
equipment located in Ashland.
At that point, Active Energy had limited cash resources available to it and
the Board was wholly aware that to commence on a new project with a new
commercial partner would be extremely challenging both in financial and
operational terms. The Board attempted to seek an operational compromise with
PDI to create even limited first production volumes of fuel from the Reference
Facility and thereby allowing Active Energy the opportunity to progress. No
such terms were agreed, and a settlement agreement was entered into with PDI
in March 2024 under which PDI returned funds advanced by Active Energy towards
development of the Ashland facility and PDI purchased the Group's plant and
equipment located in Ashland. All existing intellectual property relating to
CoalSwitch® was returned to Active Energy.
Active Energy became a listed corporate vehicle, with intellectual property to
produce a next generation black pellet fuel but with no project to demonstrate
nor commercialize this. In addition, Active Energy did not have the financial
resources to be able to commence a new project over a realistic project
timeframe and at that same time maintain the management team that the Board
had worked hard to build. During Q1 2024, the Board and the executive
management team attempted to find resolutions and examine all commercial
opportunities. These challenges were heightened with the public failure of
Enviva Biomass Inc., which fell into Chapter 11 during H1 2024. These
circumstances, together with the industry track record meant that Active
Energy could simply not attract any additional shareholder or outside investor
support to rebuild the business in sufficient time.
In the light of these circumstances, the Board made the decision on 9(th)
April 2024, to make cost cuts on the day to day running of the PLC and examine
alternative options to continue to monetise the CoalSwitch® intellectual
property in other forms. The operational team were released from their
obligations to Active Energy to look for alternate opportunities. The Board
remains extremely grateful for each team member's dedication and loyalty
through these difficult circumstances.
The Board would also like to thank all of their colleagues and commercial
partners for all their work and commitment toward the CoalSwitch® program in
2023 and 2024. Active Energy had built a team of biomass industry experience,
which the Board considered to be 'world leading' in its track record, each of
whom had the vision to progress an industry toward vastly improved
environmental standards within sensible economic goals. Unfortunately,
Active Energy was unable to access sufficient capital to prove these goals to
its shareholders and the industry as a whole.
Jason Zimmermann and Max Aitken resigned as directors of the Company on 1
November 2024.
Going concern
The Directors have given careful consideration to the appropriateness of the
going concern basis in the preparation of the Annual Report and Financial
Statements for the year ended 31 December 2023. Further details of the
Company's current financial position and ability to continue 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 for the next twelve months will be
available and have therefore prepared the Financial Statements on a going
concern basis.
Michael Rowan James Leahy
CEO Chairman
Date 3(rd) December 2024
FINANCE REVIEW FOR THE YEAR ENDED 31 DECEMBER 2023
The Consolidated Financial Statements for the year ended 31 December 2023
("Current Year") is compared to the year ended 31 December 2022 ("Prior
Year").
Financing
The Group did not raise debt or equity finance during the year. The Group had
net cash of US$0.3m at the end of the year (2022: US$2.6m).
Subsequent events
On 4 March 2024 the Group agreed a settlement with Player Design, Inc. and its
connected parties ("PDI") in relation to the Group's aborted operations in
Ashland, Maine. Under this settlement the Group received cash of $1,650,000
which represented consideration for the transfer of certain property, plant
and equipment to PDI, the return of certain cash advances made by the Group to
PDI for the development of the Ashland facility and the settlement of all
claims between the Group and PDI. The Group has been unable to secure a new
commercial partner with whom to commercialise its CoalSwitch® technology but
continues to own the intellectual property to produce a black pellet fuel. In
April 2024 the board decided to scale back the operations of the Group and
focus its efforts on trying to monetise its CoalSwitch® Technology.
Fundraising activities through 2023
There were no fundraising activities, either of equity or debt, during 2023.
Performance
During 2023 while PDI focused on the production challenges, AEG continued to
drive toward commercial leads and gather prospective customer interest. In the
first half of 2023 AEG invested in new management expertise to complement the
existing sales activities in the US and worldwide. During 2023, there was the
active promotion of both the environmental and economic benefits of the fuel,
including developing strategies to obtain carbon credits and additional
renewable energy incentives in the US. In Q3 2023, the Company expanded its
territorial horizons, commencing work in Southeast Asia to look for additional
production and sales opportunities for the fuel.
The Company continued its tight financial controls and treasury management
within its finance department during 2023 to ensure use of funds is kept in
line with enhancing shareholder's investment and this has continued to date.
Given the current situation the company finds itself in the company continues
to try find ways of enhancing shareholders return on investment in the most
efficient and effective way it possibly can.
Continuing/discontinued operations
The overall loss for the year was US$15,517,696 (2022: US$1,343,745) with a
basic and diluted loss per share of $9.59 cents (2022: $0.83 cents).
Administrative costs decreased year on year due to cost cutting measures at
US$3,338,410 (2022: US$3,191,376). The net finance income of US$23,802 (2022:
$24,173) represents interest received on deposited funds less interest payable
on borrowings.
Non-current assets
The CoalSwitch® Equipment and other plant and equipment held at the Ashland
Reference facility were held for sale at year end and were included in the PDI
settlement agreement post year end.
IP was held at an estimated sales proceeds value based on the IP assessment
report.
Current assets
Trade and other receivables of US$845,714 (2022: US$905,924) consist mainly of
US$774,669 of project advances to Player Design Inc. for the development of
the Ashland facility. These advances were repaid post year end as part of the
settlement agreement with PDI.
Current liabilities
Trade and other payables were US$665,564 (2022: US$1,199,796). The largest
reduction is due to stringent cost management reducing the trade payables due
at year end significantly. Trade payables was $381,926 in 2023 and $428,106 in
2022.
Non-current liabilities
Loans and borrowings, related to COVID 19 Government loans, decreased slightly
to US$120,846 (2022: US$133,940) 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 and continued throughout 2023.
Cashflow
Operating cash outflows were US$2,245,340 (2022: US$2,554,563). The reduced
outflow results from the reductions in working capital and cost management
measures.
There was no net cash flows from investing activities (2022: US$3,037,258
cash inflow comprising proceeds of US$3,767,471 from the disposal of the
Lumberton Site less cash of US$730,713 expended on the creation of
intellectual property and know how in relation to the new Ashland Reference
Facility).
Cash and cash equivalents of US$319,137 were on hand at December 2023 year end
(2022: US$2,614,472).
Going concern
The Financial Statements have been prepared on a going concern basis. In
October 2024 the Company received loan note finance of £200,000 from, a new
investor, Zen Ventures Limited and it has subsequently received a commitment
to provide additional future funding from Zen Ventures Limited and parties
connected to Zen Ventures Limited. The facility provided is up to £500,000
and is secured by a debenture. The Board, having reviewed the cash flow
forecasts, consider that this funding will be sufficient to enable the Company
to settle its liabilities as they fall due for at least one year from the date
of approval of these financial statements.
However, the loan notes, and by extension the future funding from Zen Ventures
Limited and its connected parties, are subject to approval by the Company's
shareholders at its next general meeting. The Board consider that this
represents a material uncertainty that may cast significant doubt on the
Company's ability to continue as a going concern (see note 1 to the financial
statements).
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.
CONSOLIDATED STATEMENT OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
restated
2023 2022
CONTINUING OPERATIONS Note US$ US$
Administrative expenses (2,521,981) (2,178,118)
OPERATING LOSS 4 (2,521,981) (2,178,118)
Net finance income 5 23,802 24,173
Foreign exchange (loss)/gains (1,335,635) 3,268,157
(LOSS)/PROFIT BEFORE TAXATION (3,833,814) 1,114,212
Taxation 6 - -
(LOSS)/PROFIT FROM CONTINUING OPERATIONS (3,833,814) 1,114,212
LOSS FROM DISCONTINUED OPERATIONS 7 (11,683,882) (2,457,957)
LOSS FOR THE YEAR - ATTRIBUTABLE TO THE PARENT COMPANY (15,517,696) (1,343,745)
Basic and diluted (loss)profit per share (US cents) - continuing operations 8 (2.37) 0.69
Basic and diluted (loss) per share (US cents) - discontinued operations 8 (7.22) (1.52)
Basic and diluted (loss) per share (US cents) - all operations 8 (9.59) (0.83)
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that may be subsequently reclassified to profit or loss
Exchange differences on translation of operations 1,381,325 (3,426,765)
Total other comprehensive Income/(loss) 1,381,325 (3,426,765)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (14,136,371) (4,770,510)
The notes form part of these financial statements.
CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
Group Group Company Company
2023 2022 2023 2022
NON-CURRENT ASSETS Note US$ US$ US$ US$
Intangible assets 9 63,670 8,064,585 - -
Property, plant & equipment 10 154 4,772,530 154 1,015
Investment in subsidiaries 11 - - - 5,732,103
Intercompany Receivables 12 - - 21,444,342
Other financial assets 13 870,047 823,744 870,047 823,744
933,871 13,660,859 870,201 28,001,204
CURRENT ASSETS
Trade and other receivables 14 845,714 905,924 59,023 131,197
Intercompany Receivables 12 - - - -
Cash and cash equivalents 15 319,137 2,614,472 38,445 2,545,913
1,164,851 3,520,396 2,226,501 2,677,110
Non-current assets held for sale 16 875,330 - - -
2,040,181 3,520,396 2,226,501 2,677,110
TOTAL ASSETS 2,974,052 17,181,255 3,096,702 30,678,314
CURRENT LIABILITIES
Trade and other payables 17 665,564 1,199,796 487,601 351,255
Loans and borrowings 18 14,781 13,724 12,908 11,920
680,345 1,213,520 500,509 363,175
NON-CURRENT LIABILITIES
Loans and borrowings 18 120,846 133,940 18,864 30,085
120,846 133,940 18,864 30,085
TOTAL LIABILITIES 801,191 1,347,460 519,373 393,260
NET ASSETS 2,172,861 15,833,795 2,577,329 30,285,054
EQUITY
Share capital - Ordinary Shares 19 786,867 786,867 786,867 786,867
Share capital - Deferred Shares 19 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 (4,469,769) (5,851,094) (4,725,115) (5,744,107)
Own shares held reserve (268,442) (268,442) (268,442) (268,442)
Convertible debt/warrant reserve 690,937 690,937 690,937 690,937
Retained earnings (70,415,688) (55,373,429) (69,755,874) (41,029,157)
TOTAL EQUITY 2,172,861 15,833,795 2,577,329 30,285,054
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 $29,202,154 (2022: $740,114).
The financial statements were approved and authorised for issue by the
Directors on 2024 and were signed on their behalf by:
Michael Rowan
Chief Executive Officer
Company Number 03148295
The notes form part of these financial statements.
GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
Share capital Share premium Merger reserve Foreign exchange reserve Own shares held reserve Convertible debt and warrant reserve Retained earnings
Revaluation Reserve Total equity
US$ US$ US$ US$ US$ US$ US$ US$ US$
At 31 December 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 loss - - - (3,426,765) - - - - (3,426,765)
Total comprehensive loss - - - (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
Loss for the year - - - - - - (15,517,696) - (15,517,696)
Other comprehensive income - - - 1,381,325 - - - - 1,381,325
Total comprehensive income/(loss) - - - 1,381,325 - - (15,517,696) - (14,136,371)
Share based payments and warrants - - - - - - 475,437 - 475,437
At 31 December 2023 18,935,765 55,349,883 2,350,175 (4,469,769) (268,442) 690,937 (70,415,688) - 2,172,861
The purpose and nature of each of the above reserves is described in Note 22.
The notes form part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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 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 loss - - - (3,739,683) - - - (3,739,683)
Total comprehensive loss - - - (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
Loss for the year - - - - - - (29,202,154) (29,202,154)
Other comprehensive income - - - 1,018,992 - - - 1,018,992
Total comprehensive income/(loss) - - - 1,018,992 - - (29,202,154) (28,183,162)
Share based payments and warrants - - - - - - 475,437 475,437
At 31 December 2023 18,935,765 55,349,883 2,350,175 (4,725,115) (268,442) 690,937 (69,755,874) 2,577,329
The purpose and nature of each of the above reserves is described in Note 22.
The notes form part of these financial statements.
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
Group Group Company Company
Note 2023 2022 2023 2022
US$ US$ US$ US$
Cash (outflow) from operations 23 (2,879,469) (2,554,563) (2,463,338) (711,370)
Income tax received 634,129 - - -
Net cash (outflow) from operating activities (2,245,340) (2,554,563) (2,463,338) (711,370)
Cash flows from investing activities
Purchase of intangible assets - (730,213) - -
Sale of property, plant and equipment - 3,767,471 - -
Net cash inflow/(outflow) from investing activities - 3,037,258 - -
Cash flows from financing activities
Intercompany loans received - - - 1,150,373
Unsecured debt repaid (18,981) (13,652) (13,245) (13,174)
Net cash (outflow)/inflow from financing activities (18,981) (13,652) (13,245) 1,137,199
Net (decrease)/increase in cash and cash equivalents (2,264,321) 469,043 (2,476,583) 425,829
Cash and cash equivalents at beginning of the year 2,614,472 1,940,871 2,545,913 1,915,571
Exchange gains/(losses) on cash and cash equivalents (31,014) 204,558 (30,885) 204,513
Cash and cash equivalents at end of the year 15 319,137 2,614,472 38,445 2,545,913
The notes on form part of these financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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. On 1(st) July 2024 the company's shares were suspended from
trading on the AIM market.
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.
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.
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.
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.
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.
Following the termination of the Group's relationship with Player Design, Inc.
the Company is now principally a holding company and its projected future cash
requirements comprise its ongoing compliance and management costs. The Company
has prepared cash flow forecasts to estimate these 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 at least one year
from the date of approval of these financial statements.
In October 2024 the Company received loan note finance of £200,000 from Zen
Ventures Limited and it has subsequently received a commitment to provide
additional future funding from Zen Ventures Limited and parties connected to
Zen Ventures Limited. The Board, having reviewed the cash flow forecasts,
consider that this funding commitment will be sufficient to enable the Company
to settle its liabilities as they fall due for at least one year from the date
of approval of these financial statements.
The financial statements have therefore been prepared on a going concern
basis.
The Zen Ventures Limited loan note finance includes £27,616 of convertible
loan notes that will convert to new ordinary shares representing 29.9% of the
Company's issued share capital on 31 December 2024, contingent upon, inter
alia, the suspension in trading in the Company's shares on AIM, a market
operated by the London Stock Exchange plc, having been lifted by this date. To
achieve this the Company must, inter alia, publish its annual report and
financial statements for the year ended 31 December 2023 and its interim
results for the six months ended 30 June 2024 and the Board are very confident
of meeting these requirements before 31 December 2024.
However, the loan notes, and by extension the future funding from Zen Ventures
Limited and its connected parties, are also subject to approval by the
Company's shareholders at its next general meeting. The Board consider that
this represents a material uncertainty that may cast significant doubt on the
Company's ability to continue as a going concern.
The financial statements do not include any of the adjustments that would be
required if they were not prepared on a going concern basis.
Restatement of prior period
The statement of comprehensive income for the year ended 31 December 2022 has
been restated to report the 2022 loss from operations discontinued during 2023
within the loss from discontinued operations line (see note 7). The overall
loss for the year ended 31 December 2022, the total comprehensive loss for the
year and net assets at 31 December 2022 are unaffected.
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 2023. 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 2023 and have not been early
adopted in these financial statements.
These are summarised in the following table and 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 1 January 2024
Amendments: classification of debt with covenants
1 January 2024
IFRS 7 Financial Instruments: Disclosures Amendments: classification and measurement of financial instruments 1 January 2026
IFRS 7 Financial Instruments: Disclosures Amendments: supplier finance arrangements 1 January 2024
IFRS 9 Financial Instruments Amendments: classification and measurement of financial instruments 1 January 2026
IFRS 16 Leases Amendments: clarification of the measurement of sale and leaseback 1 January 2024
transactions that qualify as sales transactions under IFRS15
IFRS 18 Presentation and Disclosures Presentation and Disclosures in Financial Statements 1 January 2027
IAS7 Supplier Finance arrangements Amendments: additional disclosures about supplier finance arrangements 1 January 2024
The impact of the initial application of these amendments and new standards on
the Group's financial statements is not yet known.
Discontinued operations
An operational business unit is classified as a discontinued operation when it
has been either disposed of or classified as held for sale in accordance with
IFRS 5 at the reporting date. The results of discontinued operations are shown
separately in the income statement.
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.
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;
· 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
once assets are available for use 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.
Non-current assets held for sale
A non-current asset (or disposal group) is classified as held for sale if its
carrying amount will be recovered principally through a sale transaction
rather than through continuing use, it is available for immediate sale in its
present condition subject only to terms that are usual and customary for sales
of such assets (or disposal groups) and its sale is considered highly
probable.
Non-current assets (or disposal groups) classified as held for sale are
measured at the lower of their carrying amount immediately before their
classification as held for sale and their fair value less costs to sell.
Immediately before the initial classification of an asset (or disposal group)
as held for sale, the carrying amount of the asset (or all the assets and
liabilities in the disposal group) shall be measured in accordance with
accounting standard applicable to the asset (or the standards applicable to
the respective assets and liabilities in the disposal group).
Non-current assets (or disposal groups) classified as held for sale are
presented separately from other assets in the statement of financial position.
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
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.
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 2023: 1.2734; average for year-ended 31 December 2023: 1.2438;
rate at 31 December 2022: 1.2056.
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.
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 UK-adopted
International Accounting 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:
Critical accounting judgements and key sources of estimation uncertainty
(continued)
Impairment of intangible fixed assets.
Intangible assets relate solely to CoalSwitch® and PeatSwitch patents,
trademarks, and know-how. These have been impaired to their recoverable
amount, which has been determined to be their fair value less costs to sell.
Management have estimated fair value through consultation with brokers and
other market participants and consider these to be Level 3 inputs as defined
by IFRS 13 (and that the assets are therefore subject to management's
judgement of unobservable inputs).
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.
Valuation of unquoted equity investment
The other financial assets included in the Group and Company statement of
financial position comprise an investment in an unquoted private company which
itself holds certain illiquid, difficult to value investments that have yet to
generate any return. The information available with which to estimate the fair
value of this investment is limited and includes primarily the company's
financial statements and the prices at which the company has raised recent
equity finance. Additionally, judgement is required to estimate the discount
that would be applied by a market participant to the value of the company's
investment on account of it being a minority, non-controlling interest. The
fair values implied by the limited information that is available are
inconsistent, and highly variable, and management have therefore concluded
that the most reliable estimate of the investment's value is its cost price.
The investment is therefore carried at its cost price being management's best
estimate of fair value.
2. SEGMENTAL INFORMATION
The Group reports two business segments:
· "CoalSwitch®" denotes the Group's renewable wood pellet
business. Production activities have ceased and are reported as discontinued
operations.
· "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.
2023 2023 2023
CoalSwitch® Corporate Total
& Other
US$ US$ US$
Revenue - - -
Operating loss - (2,521,981) (2,521,981)
Loss before tax - (3,833,814) (3,833,814)
Loss for the year - (3,833,814) (3,833,814)
Total Assets 1,975,897 998,155 2,974,052
Total Liabilities 153,548 647,643 801,191
Other segmental information:
Adjustment to prior year additions to intangibles 300,000 - 300,000
Adjustment to prior year additions to PPE 100,000 - 100,000
Depreciation and amortisation - 898 898
Impairment of intangibles 7,700,914 - 7,700,914
Impairment of PPE 3,796,184 - 3,796,184
2022 Restated
2022
Restated
2022
CoalSwitch® Corporate Total
& Other
US$ US$ US$
Revenue - - -
Operating loss - (2,178,118) (2,178,118)
Profit before tax - 1,114,212 1,114,212
Profit for the year - 1,114,212 1,114,212
Total Assets 13,649,225 3,532,030 17,181,255
Total Liabilities 640,768 706,692 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
The remaining assets and liabilities derived from the "Wood Processing"
segment that ceased activity in 2021 have been transferred into the "Corporate
and Other" segment and the 2022 segmental analysis has been restated to
reflect this.
Non-current assets are located as follows:
2023 2022
US$ US$
United Kingdom 870,201 824,759
United States 63,670 12,836,100
933,871 13,660,859
3. EMPLOYEE COSTS AND DIRECTORS
The following table analyses group wages and salaries before any allocations
to property, plant and equipment or intangible assets.
2023 2022
Group US$ US$
Continuing operations
Wages and salaries 508,723 607,172
Social security costs 57,501 77,421
566,224 684,593
Share based payments - directors 319,636 339,375
Share based payments - others 155,801 18,746
1,041,661 1,042,714
Discontinued operations
Wages and salaries 365,697 106,699
Social security costs 27,463 9,323
393,160 116,022
1,434,821 1,158,736
The average monthly number of employees during the year was as follows:
2023 2022
Continuing operations
Directors 4 5
Administration 1 2
Discontinued operations
Management 2 -
Administration 1 -
Production - 1
8 8
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.
2023 2022
US$ US$
Directors' emoluments 453,995 607,172
Termination benefits - 48,726
Share based payments 319,636 339,375
773,631 995,273
The emoluments of the highest paid Director for the year, excluding non-cash
share-based payments, were $279,860 (2022: $230,104).
3. OPERATING LOSS
2023 2022
Group US$ US$
The operating loss is stated after charging:
Continuing operations
Depreciation 898 1,318
Auditor's remuneration - parent company and consolidation 99,504 68,663
Auditor's remuneration - subsidiaries - 34,610
Auditor's remuneration - taxation services 2,488 6,495
Auditor's remuneration - other services 5,099 2,023
Share based payments 475,437 358,121
Discontinued operations
Impairment charges intangibles 7,573,575 -
Impairment charges PPE 3,796,184 1,000,000
Loss on disposal of fixed assets - 455,140
Depreciation - 18,556
4. NET FINANCE INCOME/(COSTS)
2023
2022
Group US$ US$
Continuing operations
Finance income
Interest income 24,745 28,412
24,745 28,412
Finance costs
Other loan interest and charges (943) (4,239)
(943) (4,239)
23,802 24,173
Discontinued operations
Finance income
Interest income 3,981 -
3,981 -
Finance costs
Other loan interest and charges (4,425) (6,662)
(4,425) (6,662)
(444) (6,662)
5. TAXATION
2023 2022
Group US$ US$
Continuing operations
Current tax - -
Deferred tax - -
Total income tax expense - -
Discontinued operations
Total income tax (credit) (634,129) (1,395)
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
2023 2022
US$ US$
Loss before taxation (16,151,825) (1,343,745)
Standard rate of corporation tax 23.50% 19%
Loss before tax multiplied by standard rate of corporation tax (3,795,679) (255,312)
Effects of:
Non-deductible expenses 2,809,395 353,486
Different tax rates in overseas jurisdictions - (7,519)
Tax credit included within loss from discontinued operations 634,129 1,395
Losses (used)/not recognised 352,155 (92,050)
Tax expense - -
The Group's tax loss position can be summarised as follows:
2023 2022
US$ US$
Tax losses brought forward at 1 January 40,289,937 43,437,711
Taxable (profit)/loss for the year 4,196,953 (517,596)
Losses expired during year (6,129,757) -
Adjustment in respect of prior periods 1,506,849 (2,630,178)
Tax losses carried forward at 31 December 39,863,982 40,289,937
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.
6. DISCONTINUED OPERATIONS
During 2023 the Group discontinued its CoalSwitch® operations in Ashland, Maine. During 2022 the Group sold the Lumberton property that was used for its wood processing 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 2023 Continuing operations Discontinued operations Total
US$ US$ US$
Revenue - - -
Impairment charges - (11,497,099) (11,497,099)
Administrative expenses (2,521,981) (816,429) (3,338,410)
Loss on disposal of PPE - - -
Other income - - -
Operating loss (2,521,981) (12,313,528) (14,835,509)
Finance income/(costs) (1,311,833) (4,483) (1,316,316)
Loss before taxation (3,833,814) (12,318,011) (16,151,825)
Taxation - 634,129 634,129
Loss for the year (3,833,814) (11,683,882) (15,517,696)
Cash outflows from operating activities (2,463,338) 217,998 (2,245,340)
Cash inflows from investing activities - - -
Cash outflows from financing activities (13,245) (5,736) (18,981)
Year ended 31 December 2022 Restated Total
Restated Discontinued
Continuing operations
operations
US$ US$ US$
Impairment charges - (1,000,000) (1,000,000)
Administrative expenses (2,178,118) (1,013,258) (3,191,376)
Loss on disposal of PPE - (455,140) (455,140)
Other income - 14,689 14,689
Operating loss (2,178,118) (2,453,709) (4,631,827)
Finance income/(costs) 3,292,330 (5,643) 3,286,687
Profit/(Loss) before taxation 1,114,212 (2,459,352) (1,345,140)
Taxation - 1,395 1,395
Profit/Loss for the year 1,114,212 (2,457,957) (1,343,745)
Cash outflows from operating activities (711,370) (1,843,193) (2,554,563)
Cash outflows from investing activities - 3,037,257 3,037,257
Cash inflows from financing activities (13,174) (478) (13,652)
8. (LOSS)/PROFIT PER SHARE
2023 Restated
2022
US$ US$
(Loss)/profit for the year:
Continuing operations (3,833,814) 1,114,212
Discontinued operations (11,683,882) (2,457,957)
Total operations (15,517,696) (1,343,745)
Weighted number of Ordinary Shares in issue 161,863,136 161,863,136
Basic and diluted (loss)/profit per share (US cents):
Continuing operations (2.37) 0.69
Discontinued operations (7.22) (1.52)
Total operations (9.59) (0.83)
The share options set out in note 21 are not dilutive in relation to the
restated profit per share on continuing operations for the year ended 31
December 2022 because the Company's average share price for the year did not
exceed the exercise price of any of the share options in issue. The share
options are anti-dilutive in relation to all the loss per share measures
presented for the years ended 31 December 2023 and 31 December 2022 because
their inclusion would decrease the loss per share in each case.
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. Loss per share for 2022 has been restated to reflect
the 2023 split of continued/discontinued operations.
9. INTANGIBLE ASSETS
Group Intellectual Total
property
US$ US$
Cost
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
Adjustment to prior year additions (300,000) (300,000)
At 31 December 2023 7,764,947 7,764,947
Accumulated amortisation
At 31 December 2021 362 362
At 31 December 2022 362 362
Impairment of intangibles 7,700,915 7,700,915
At 31 December 2023 7,701,277 7,701,277
Net book value
At 31 December 2023 63,670 63,670
At 31 December 2022 8,064,585 8,064,585
The adjustment to additions in 2023 results from further information becoming
available in relation to the cost of the 2022 additions, subsequent to the
approval of the 2022 financial statements.
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. These have been impaired to their recoverable
amount, which has been determined to be their fair value less costs to sell.
The key assumption in estimating the recoverable amount is considered to be
the estimated selling price of the intellectual property assets.
10. PROPERTY, PLANT AND EQUIPMENT
Group Land and buildings Plant and equipment Furniture and office equipment Total
US$ US$ US$ US$
Cost
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
Adjustment to prior year additions - (100,000) - (100,000)
Transfer to non- current asset held for sale (7,671,514) - (7,671,514)
Foreign exchange movements - - 660 660
At 31 December 2023 - - 12,425 12,425
Group Land and Buildings Plant and equipment Furniture and office equipment Total
US$ US$ US$ US$
Accumulated depreciation
At 31 December 2021 198,000 2,102,366 10,597 2,310,963
Depreciation 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
Charge for the year - - 898 898
Impairment charge - 3,796,184 - 3,796,184
Transfer to non-current asset held for sale (6,796,184) - (6,796,184)
Foreign exchange movements - - 624 624
At 31 December 2023 - - 12,271 12,271
Net book value
At 31 December 2023 - - 154 154
At 31 December 2022 - 4,771,514 1,016 4,772,530
The additions to plant and equipment in 2022 represent expenditure on assets
under construction. The adjustment to additions in 2023 results from further
information becoming available in relation to the cost of the 2022 additions,
subsequent to the approval of the 2022 financial statements.
The plant and equipment has been impaired to its recoverable amount which has
been determined to be its fair value less costs to sell. This valuation has
been based on the amounts realised for these assets subsequent to the end of
the accounting period. The 2022 impairment charge of $1,000,000 related to a
reactor that has been taken out of service and was being used for research and
development purposes.
Company - office equipment
2023 2022
US$ US$
Cost
At 1 January 11,763 13,170
Foreign exchange movements 660 (1,407)
At 31 December 12,423 11,763
Accumulated depreciation
At 1 January 10,748 10,597
Charge for the year 898 1,318
Foreign exchange movements 623 (1,167)
At 31 December 12,269 10,748
Net book value 154 1,015
11. INVESTMENTS IN SUBSIDIARIES
2023 2022
US$ US$
Cost
At 1 January 10,319,729 11,554,112
Disposals (4,732,881) -
Foreign exchange movements 467,464 (1,234,383)
At 31 December 6,054,312 10,319,729
Impairment provision
At 1 January 4,587,626 5,136,371
Charge for the year 5,913,580 -
On disposals (4,732,881) -
Foreign exchange movements 285,987 (548,745)
At 31 December 6,054,312 4,587,626
- 5,732,103
Net book value
At the balance sheet date 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
2023 2022
Advanced Biomass Solutions Limited United Kingdom Biomass for energy development 100 100 -
Lumberton Energy Holdings LLC United States Property Holding Company 100 100 19 April 2024
Active Energy Renewable Power LLC United States Biomass for energy development 100 100 22 April 2024
CSW2Maine LLC United States Biomass for energy development - 100 21 August 2023
AEG Trading Limited United Kingdom Wood chip distribution - 100 24 January 2023
Timberlands International Limited United Kingdom Biomass for energy development - 100 24 January
2023
Advanced Biomass Solutions Limited was placed into a members' voluntary
liquidation on 22 July 2024.
The following companies, which were all wholly owned by the group, were
dissolved during 2022:
Timberlands Newfoundland & Labrador, Inc. (United States)
Nikofeso Holdings Limited (Cyprus)
Renewable Energy Systems (United States)
Active Energy Services UK Limited (United Kingdom)
12. INTERCOMPANY LOANS
Group Group Company Company
2023 2022 2023 2022
US$ US$ US$ US$
Carrying value at beginning of the year - - 21,444,342 25,296,460
Impairment of investments in subsidiaries - - (19,454,760) -
Loans received during the year - - - (1,150,373)
Foreign exchange movements - - 139,451 (2,701,745)
Carrying value at end of the year - - 2,129,033 21,444,342
Intercompany loans are loans made to subsidiaries of the Company and are
repayable on demand. In 2023 they have been classified as current asset as
they were expected to be paid within the next 12 months (2022: classified as
non-current asset as they were expected to be paid after 12 months).
13. OTHER FINANCIAL ASSETS
Group Group Company Company
2023 2022 2023 2022
US$ US$ US$ US$
Fair value at beginning of the year 823,744 922,275 823,744 922,275
Foreign exchange movements 46,303 (98,531) 46,303 (98,531)
Fair value at end of the year 870,047 823,744 870,047 823,744
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.
14. 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
2023 2022 2023 2022
US$ US$ US$ US$
Project advances 774,669 774,669 - -
Prepayments 38,041 73,461 38,041 73,461
Other receivables 33,004 57,794 20,982 57,736
Total 845,714 905,924 59,023 131,197
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 2023 or 31 December 2022 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 24.
15. CASH AND CASH EQUIVALENTS
Group Company Company
Group
2023 2022 2023 2022
US$ US$ US$ US$
Cash at bank 319,137 2,614,472 38,445 2,545,913
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.
16. NON-CURRENT ASSETS HELD FOR SALE
The non-current assets classified as held for sale during the year comprise plant and equipment at the CoalSwitch® production facility that was under construction in Ashland, Maine following the termination of the Group's relationship with Player Design, Inc. (see note 27).
These assets were previously held as property, plant and equipment and were impaired to their fair value less costs to sell immediately before reclassification as non-current assets held for sale, with an impairment charge of $3,796,184 recognised in the income statement within the loss from discontinued operations. The assets were sold in March 2024 for consideration that was approximately equal to their carrying values at the balance sheet date.
These non-current assets are presented within the CoalSwitch® operating segment.
7. TRADE AND OTHER PAYABLES
Group Group Company Company
2023 2022 2023 2022
US$ US$ US$ US$
Trade payables 381,926 428,106 238,385 170,975
Accruals and deferred income 268,727 587,106 234,305 145,696
Social security and other taxes 14,911 34,584 14,911 34,584
Other payables - 150,000 - -
665,564 1,199,796 487,601 351,255
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 24.
18. 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
2023 2023 2022 2022
US$ US$ US$ US$
Non-Current
Other loans 120,846 120,846 133,940 133,940
Current
Other loans 14,781 14,781 13,724 13,724
Total loans and borrowings 135,627 135,627 147,664 147,664
Company Book value Fair value Book value Fair value
2023 2023 2022 2022
US$ US$ US$ US$
Non-Current
Other loans 18,864 18,864 30,085 30,085
Current
Other loans 12,908 12,908 11,920 11,920
Total loans and borrowings 31,772 31,772 42,005 42,005
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.
19. CALLED UP SHARE CAPITAL
2023 2023 2022 2022
Number US$ Number US$
Ordinary shares
At 1 January 161,863,136 786,867 5,665,209,745 786,867
Issue of shares - - 15 -
Share consolidation - - (5,503,346,624) -
161,863,136 786,867 161,863,136 786,867
31 December
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.
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.
The Ordinary Shares were suspended from trading on AIM on 1 July 2024 and
will remain suspended, pursuant to AIM Rule 19, until the Company has
published its annual report and accounts for the year ended 31 December 2023
and its interim report and accounts for the six months ended 30 June 2024.
20. CONTINGENT LIABILITIES
The Group has received legal claims from former subcontractors in the USA in
respect of alleged unpaid remuneration. The Group disputes these claims and is
advised that they are unlikely to be successful, and the Board therefore does
not consider it likely that any payment will be required to settle the claims.
The Board's best estimate of the cost to the Group, were these claims to be
successful, is $360,653. No provision has been made for this sum in these
financial statements.
21. 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 to reflect this.
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 2023 was
2,699,336 (2022: 5,768,463). During the year 598,571 (2022: 714,286) options
and warrants expired.
The movements of warrants and share options during the year was as follows:
2023 2023 2022 2022
Weighted Weighted
Average Number of Average Number of
Exercise Warrants Exercise Warrants
Price and Share Price and Share
(British pence) Options (British pence) Options
At 1 January 112.68 5,768,463 103.95 6,482,749
Expired 86.21 (598,571) 35.00 (714,286)
Granted 9.83 8,283,840 - -
At 31 December 50.53 13,453,732 112.68 5,768,463
At 31 December 2023, the weighted average remaining contractual life of
warrants and share options exercisable was 7.42 years (2022: 4.95 years).
There were 8,283,840 share options issued under the LTIP during 2023 (2022:
none issued). No warrants were issued in 2023 or 2022. The weighted average
exercise price of the options and warrants granted in 2023 was 9.83 pence
(none issued in 2022).
A charge of $475,437 (2022: $358,121) has been recognised in the Statement of
Comprehensive Income in respect of equity settled share based payments.
Options and warrants outstanding at 31 December 2023 and 2022 were exercisable
as follows:
Exercise price (British pence) 2023 2022
Number Number
8.30p 3,594,470 -
10.00p 2,344,685 -
12.00p 2,344,685 -
17.50p 428,571 428,571
45.15p 609,081 609,081
52.50p - 214,286
67.73p 304,540 304,540
70.44p 1,235,278 1,235,278
105.00p - 384,287
123.27p 1,235,278 1,235,278
157.50p 585,714 585,714
175.00p 57,143 57,143
210.00p 128,571 128,571
297.50p 585,714 585,714
At 31 December 13,453,730 5,768,463
The above disclosures relate to both the Company and the Group.
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 on various dates up to 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 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 if the option is expected to vest. Share based payment
expenses are recognised in the income statement in accordance with the
provisions of IFRS2.
The inputs to the Black Scholes model for the valuation of the options issued
during 2023 were:
Share price on date of grant:
6.15p
Exercise price:
8.30p, 10.00p and 12.00p
Expected volatility (of share price):
99.66%
Option life:
10 years
Risk free interest rate:
4.55%
Expected volatility was determined based on historic volatility over the three
year period prior to the grant date of the option.
At the inception of the plan, options over 2,470,556 shares were granted to
directors and other participants. Further options were granted in July 2023
over 8,283,840 shares.
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 2023 or 2022. At 31
December 2023 and 31 December 2022 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.
22. 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.
Retained earnings Cumulative net gains and losses recognised in the consolidated statement of
comprehensive income.
23. NOTE SUPPORTING THE STATEMENT OF CASH FLOWS
Reconciliation of loss before taxation to cash outflows from operating
activities:
Group 2023 2022
US$ US$
Loss for the year (15,517,696) (1,343,745)
Adjustments for:
Share based payment expense 475,437 358,121
Depreciation 898 19,874
Impairment of PPE and intangible assets 11,497,099 1,000,000
Adjustments to PPE and intangible asset additions 400,000 -
Loss on disposal of PPE - 212,626
Foreign currency translations 1,368,070 (3,456,479)
Finance expenses 4,874 9,473
Income tax (634,129) (1,395)
(2,405,447) (3,201,525)
Decrease in inventories - 27,250
Decrease in trade and other receivables 60,210 641,946
(Decrease) in trade and other payables (534,232) (22,234)
Net cash (outflow) from operating activities (2,879,469) (2,554,563)
2023 2022
Company
US$ US$
Loss for the year (29,202,154) (740,114)
Adjustments for:
Share based payment expense 475,437 358,121
Depreciation 898 1,318
Impairment of investments 5,913,580 -
Impairment of intercompany loans 19,454,760 -
Foreign currency translations 684,678 (381,967)
Finance expenses 943 5,474
(2,671,858) (757,168)
Decrease in trade and other receivables 72,174 300,844
Increase/(decrease) in trade and other payables 136,346 (255,046)
Net cash (outflow) from operating activities (2,463,338) (711,370)
Cash to net debt reconciliation:
Group Group Company Company
2023 2022 2023 2022
US$ US$ US$ US$
Cash and cash equivalents 319,137 2,614,472 38,445 2,545,913
Borrowings (135,627) (147,664) (31,772) (42,005)
Net Cash/(debt) 183,510 2,466,808 6,673 2,503,908
Cash and liquid investments 319,137 2,614,472 38,445 2,545,913
Fixed rate instruments (135,627) (147,664) (31,772) (42,005)
Net Cash/(debt) 183,510 2,466,808 6,673 2,503,908
Net Debt Reconciliation:
Group Cash and cash equivalents
Unsecured
loans Total Debt Net Cash
US$ US$ US$ US$
Net cash/(debt) at 1 January 2023 2,614,472 (147,664) (147,664) 2,466,808
Cash flows (2,264,321) 18,981 18,981 (2,245,340)
Foreign exchange movements (31,014) (6,944) (6,944) (37,958)
Net cash/(debt) at 31 December 2023 319,137 (135,627) (135,627) 183,510
Net Debt Reconciliation:
Company Cash and cash equivalents
Unsecured loans
Total Debt Net Cash
US$ US$ US$ US$
Net cash/(debt) at 1 January 2023 2,545,913 (42,005) (42,005) 2,503,908
Cashflows (2,476,583) 12,302 12,302 (2,464,281)
Foreign exchange movements (30,885) (2,069) (2,069) (32,954)
Net cash/(debt) at 31 December 2023 38,445 (31,772) (31,772) 6,673
24. 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
· Equity investments
· Loans and borrowings
A summary of the financial instruments held is provided below.
Financial assets Group Group Company Company
2023 2022 2023 2022
US$ US$ US$ US$
At amortised cost:
Cash and cash equivalents 319,137 2,614,472 38,445 2,545,913
Amounts due from group companies - - 2,129,033 21,444,342
Other receivables - 38,366 - 38,308
319,137 2,652,838 2,167,478 24,028,563
At fair value:
Financial investments 870,047 823,744 870,047 823,744
Total financial assets 1,189,184 3,476,582 3,037,525 24,852,307
Financial liabilities Group Group Company Company
2023 2022 2023 2022
US$ US$ US$ US$
At amortised cost:
Trade payables 381,926 428,106 238,385 170,975
Other current liabilities 268,727 737,107 234,305 145,696
Loans and Borrowings 135,627 147,664 31,772 42,005
Total financial liabilities 786,280 1,312,877 504,462 358,676
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
2023 2022 2023 2022
US$ US$ US$ US$
US Dollars 62,134 2,062,984 31,242 1,996,724
UK Pounds Sterling 257,003 551,456 7,203 549,157
Euros - 32 - 32
319,137 2,614,472 38,445 2,545,913
The Group's trade and other receivables are denominated in the following
currencies:
Group Group Company Company
2023 2022 2023 2022
US$ US$ US$ US$
US Dollars 786,691 774,727 - -
UK Pounds Sterling 59,023 131,197 59,023 131,197
845,714 905,924 59,023 131,197
The Group's trade and other payables are denominated in the following
currencies:
Group Group Company Company
2023 2022 2023 2022
US$ US$ US$ US$
US Dollars 177,965 848,541 - -
UK Pounds Sterling 487,601 351,255 487,601 351,255
665,566 1,199,796 487,601 351,255
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 an increase in
net assets of $8,171 (2022: $15,782 reduction in net assets). A 5 per cent
weakening of the US Dollar would, on the same basis, have decreased 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 14.
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. Without revenue generating activities the Group has
inherent liquidity risk and there is a risk that the Group will encounter
difficulties during this period 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 itself
through a mix of equity and debt instruments. The Group's objective is 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 $135,627 at 31 December 2023 (2022: $147,664). 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.
25. RELATED PARTY DISCLOSURES
As at 31 December 2023 all fees complied with directors' contractual
obligations and were paid up to date. Details of directors' remuneration are
set out in the Directors' report.
In 2023 there were related party transactions with Zimmfor Management Services
Limited and Jason Zimmermann for $43,533 in respect of directors' fees. (2022:
$nil)
The Group paid $nil (2022: $53,539) to INJ London Limited for sales and
marketing services. This company is owned by Max Aitken, who was a director of
the Company.
Transactions between the Company and its subsidiaries have been eliminated on
consolidation. These transactions, which were incurred in the ordinary course
of business and under normal commercial terms, were as follows:
2023 2022
US$ US$
Allocation of management time and expenses - 65,826
The Company's intercompany receivable balances at the year end were as
follows:
2023 2022
US$ US$
Amounts due from Group companies 2,129,033 21,444,342
26. CAPITAL COMMITMENTS
The Group had no capital commitments at 31 December 2023 or 31 December 2022.
27. SUBSEQUENT EVENTS
On 4 March 2024 the Group agreed a settlement with Player Design, Inc. and its
connected parties ("PDI") in relation to the Group's aborted operations in
Ashland, Maine. Under this settlement the Group received cash of $1,650,000
which represented consideration for the transfer of certain property, plant
and equipment to PDI (classified as non-current assets held for sale in these
financial statements), the return of certain cash advances made by the Group
to PDI for the development of the Ashland facility and the settlement of all
claims between the Group and PDI. The 31 December 2023 fair value of the
non-current assets held for sale has been determined based on the
consideration ultimately received for them under the settlement with PDI.
The Company's shares were suspended from trading on AIM on 1 July 2024 and
will remain suspended, pursuant to AIM Rule 19, until the Company has
published its annual report and accounts for the year ended 31 December 2023
and its interim report and accounts for the six months ended 30 June 2024.
On 22 July 2024 the Group placed its subsidiary Advanced Biomass Solutions
Limited into a members' voluntary liquidation. The Group expects the company
to realise its assets and settle its liabilities at amounts approximate to
their carrying values.
In October 2024 the Company raised £200,000 ($260,878) through the issue of
loan notes, of which £27,616 ($36,022) are convertible loan notes that will
convert to new ordinary shares representing 29.9% of the Company's issued
share capital on 31 December 2024 (subject to shareholder approval). The loan
notes are secured by way of a fixed and floating charge over the assets of the
Company.
On 1 November 2024 Jason Zimmermann and Max Aitken resigned as directors of
the Company.
28. ULTIMATE CONTROLLING PARTY
The company has no overall controlling party.
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