REG - Active Energy Group - Interim results for the 6 months ended 30/06/2022
12/09/2022 07:00
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RNS Number : 0217Z Active Energy Group PLC 12 September 2022
12 September 2022
Active Energy Group Plc
('Active Energy', 'AEG', the 'Company' or the 'Group')
Interim results for the six months ended 30 June 2022
Active Energy, the AIM-quoted renewable energy business focused on the
production of next generation energy pellets, is pleased to announce its
unaudited interim results for the six months ended 30 June 2022.
HIGHLIGHTS
Operational highlights
· Publication of the results of independent co-fire testing completed
under Rocky Mountain Power's Sustainable Transportation and Energy Plan (the
"STEP Program") in late 2021, which concluded that CoalSwitch® could be
co-fired with coal producing heating values:
§ equivalent to coal; and
§ at a 12.9% premium to white pellet.
· Obtained Chain of Custody and Controlled Wood certification
compliance in accordance with the Forest Stewardship Council® ("FSC")
standards for CoalSwitch® in March 2022.
· Completion in June 2022 of the independent study, by LifeCycle
Analysis, on the carbon impact of CoalSwitch®, confirming significant CO(2)
reductions relative to both coal and natural gas.
· Completion of the sale of the Company's property at Lumberton (the
"Lumberton Site") in June 2022.
· Engineering and project planning completed for a large scale
CoalSwitch® production facility, to be constructed by Player Design
International Inc ("PDI"), at Ashland, Maine (the "Ashland Facility").
· Commencement of the purchase, by PDI, of additional equipment for
future CoalSwitch® production operations at the Ashland Facility.
Financial highlights
· Sale of the Lumberton Site completed on 30 June 2022 with:
§ gross consideration of US$4.65 million; and
§ net cash proceeds of US$3.92 million received.
· Results for the six-month period to 30 June 2022:
§ operating loss from continuing operations of US$1.3 million for the period
(H1 2021: US$1.0 million); and
§ net cash position at 30 June 2022 of US$3.9 million (31 Dec 2021: US$1.8
million).
Post period end activity
· Expansion of AEG's US operations, including hiring of additional
sales personnel in the US.
· Completion of the transfer of all CoalSwitch® production equipment
from the Lumberton Site to the Ashland Facility.
· Award of Malaysian Patent for future CoalSwitch® production to
expand in Southeast Asia.
· Completion of the share consolidation, resulting in 1 new ordinary
share for every 35 existing ordinary shares.
· AEG's shares commenced trading on the OTCQB Venture Market in the
United States on 5 August 2022.
Outlook
· The Company has a number of exciting opportunities as a result of
the recent passing of the Inflation Reduction Act in the US.
· AEG is focussed on securing long term offtake contracts for
CoalSwitch® in North America, Europe and Japan.
· AEG continues to deliver test samples for customer analysis, with
recent deliveries to potential customers based in Europe.
· PDI continues to undertake all preparatory work on the Ashland
Facility and remains confident that first deliveries of CoalSwitch® fuel will
commence in Q1 2023.
· The Board continues to believe that CoalSwitch® will play a
significant role in the development of next generation biomass fuels derived
from lower value wood waste feedstock.
Michael Rowan, CEO of Active Energy, said:
"In the first half of the year, AEG has continued to make significant progress
towards commercialising CoalSwitch®.
The testing programme for CoalSwitch® is consistently demonstrating its
advantages and economic benefits versus traditional biomass pellets. We have
completed the construction planning with PDI at the Ashland Facility and await
the next stage of equipment deliveries so as to allow PDI to commence
construction activities at the site during the fourth quarter of this year.
Since the AGM we have already expanded the Company's sales function, both in
the US and internationally, to address increasing customer enquiries for
CoalSwitch®. For the remainder of this year, AEG will be focused on
converting these commercial discussions into orders for CoalSwitch® for
delivery in 2023 and beyond. We will match these orders with the scale up to
industrial levels of production at the Ashland Facility.
The Board and the management team look forward to the remainder of the year
with confidence as AEG brings CoalSwitch® into the market."
Enquiries:
Website LinkedIn Twitter
www.aegplc.com www.linkedin.com/company/activeenergy https://twitter.com/aegplc (https://twitter.com/aegplc)
@aegplc
Enquiries
Active Energy Group Plc Michael Rowan (Chief Executive Officer) info@aegplc.com
Andrew Diamond (Chief Financial Officer)
Allenby Capital Limited Nick Naylor/James Reeve/Freddie Wooding (Corporate Finance) Office: +44 (0)20 3328 5656
Nominated Adviser and Broker Amrit Nahal (Sales/Corporate Broking)
Camarco Gordon Poole / Tom Huddart / Emily Hall aeg@camarco.co.uk (mailto:aeg@camarco.co.uk)
Financial PR Adviser Office: +44 (0)20 3757 4980
CHIEF EXECUTIVE's Statement
Introduction
AEG's strategy remains to commercialise CoalSwitch®, a proprietary technology
which transforms lower value wood waste into high-value biomass fuel that can
either co-fire with coal to produce immediate environmental and emissions
benefits or replace existing biomass feedstock supplies. The energy market
requires a scalable solution to produce next generation pellets in the volumes
required by customers and which can also accommodate the current volumes
demanded for traditional carbon intensive fuels, such as coal. AEG believes
that CoalSwitch® has the operational and environmental benefits to be one of
such fuels and is therefore working to produce CoalSwitch® at industrial
scale as soon as possible.
The first six months of 2022 have presented AEG with both opportunities and
challenges as it seeks to market its CoalSwitch® product. Since the start of
the conflict in Ukraine in February of this year interest in next generation
biomass fuels has increased substantially as existing biomass customers
attempt to secure fuel supply from across the globe (Ukraine and Russia being
significant suppliers of biomass before the start of the conflict).
Traditional sources of biomass supply are already committed under long term
contracts and prospective customers have been investigating new supply
options. AEG is now able to offer CoalSwitch® to these existing biomass
customers and also to new customers who are examining alternatives to
expensive traditional fossil fuels.
Operational review during the period
i) Development of the Ashland Facility and future
CoalSwitch® production capability
In 2022, the Company has continued to work closely with PDI, its strategic
partner, to move towards commercial levels of production of CoalSwitch® from
the Ashland Facility. To achieve this, PDI and AEG have completed a redesign
for a more efficient manufacturing process, including an increase in the size
of the core process reactors to accommodate production of industrial volumes
of CoalSwitch®. The redesign work was completed in Q2 2022 and key components
have been ordered to ensure that future production timelines can be achieved.
During Q2 2022, PDI assumed full responsibility for permitting, financing and
the future construction of the first CoalSwitch® production facility (at
Ashland) and AEG has now focused its efforts toward establishing a global
sales platform for CoalSwitch® and developing the Company's existing
intellectual property. In July 2022, PDI stated that first production volumes
would commence at the Ashland Facility during the first quarter of 2023. PDI
remains confident that this will be achieved.
The Ashland Facility will: i) demonstrate the ability for PDI and AEG to
operate a CoalSwitch® production facility; and ii) be used to market
CoalSwitch to both off take customers and potential production partners.
Construction activities at the Ashland Facility are expected to commence in Q4
2022.
ii) CoalSwitch® testing program and prospective
customer analysis
In order to accelerate customer interest, it has been essential for AEG to
co-ordinate test programs which demonstrate: i) the economic and environmental
benefits of CoalSwitch® against existing biomass products; and ii) the
ability to co-fire CoalSwitch® with coal showing both the economic and
environmental benefits in such an exercise. All test results to date indicate
that CoalSwitch® has both competitive and environmental advantages for
customers.
In January 2022, AEG announced the results from the first phase of the ongoing
combustion testing programme of CoalSwitch®. CoalSwitch® fuel had been
delivered to PacifiCorp in June 2021 as part of the STEP Program in Utah. The
programme has been funded by Rocky Mountain Power to analyse next generation
fuels. The results demonstrated that CoalSwitch® has superior qualities over
white pellets, including its hydrophobic properties, ability to burn at higher
heating values and reduction in ash, nitrogen oxide and sulphur dioxide
emissions. AEG remains in continuous dialogue with teams involved in the STEP
Program and is planning additional testing over the next 12 months.
Alongside this, the Company has been undertaking a rigorous testing programme
with prospective customers in Japan, North America and, most recently, in
Europe. The testing programme demonstrates that CoalSwitch® offers a new
pathway for heavy, hard-to-decarbonize industries in the US and globally, who
remain under pressure to reduce emissions and pollution. CoalSwitch® provides
a unique ability to achieve these goals without requiring costly, complex and
yet-to-be-proven mitigation technologies. The testing conducted earlier this
year also confirmed that CoalSwitch® can be burnt in existing furnaces
without the need for additional capital expenditure.
iii) AEG establishing industry standard environmental
credentials
In addition to the product testing program, AEG continues to focus on the
quality of waste feedstock which is utilised in CoalSwitch® production and
the underlying processes to attain this feedstock. With this aim, in March
2022, AEG received its Chain of Custody and Controlled Wood certification
compliant with the Forest Stewardship Council® ("FSC") standards for its
CoalSwitch® fuel produced at Ashland. The certification confirms to AEG's
prospective customers that protection of the environment is at the heart of
its operations and that CoalSwitch® is produced from responsibly managed
sources.
The FSC certification is the basic market prerequisite to permit any biomass
products to be sold into many of AEG's target markets, notably Japan, which is
rapidly becoming one of the Company's key potential long-term customers.
In June 2022, Life Cycle Associates LLC, an independent business and
environmental consultancy based in California, also published a report which
demonstrated that CoalSwitch® is not only sustainably sourced, but also that
pellets made from lumbermill waste, including CoalSwitch®, reduce CO(2) by
99% relative to coal and 97% relative to natural gas.
iv) Announcement and completion of the sale of the
Lumberton Site
In late 2021, AEG appointed agents for the sale of the Lumberton Site in North
Carolina. A sale and purchase agreement was entered into with Phoenix
Investors LLC ("Phoenix") on 31 March 2022 and the transaction was completed
on 30 June 2022. The gross consideration was US$4.65 million and net cash
proceeds of US$3.92million have been received by AEG. All post transaction
closing conditions were successfully completed following the end of the
period. In addition, AEG generated additional cash proceeds of approximately
US$100k from the sale of supplemental equipment at the Lumberton Site that is
no longer required at the Ashland Facility.
Lumberton Energy Holdings ("LEH"), the subsidiary of AEG that held the
Lumberton Site, has continued to receive legal challenges from the Southern
Environmental Law Centre ("SELC") based in North Carolina. The allegations
claim breaches of existing wastewater treatment obligations at the Lumberton
Site applicable to both LEH, Phoenix and former owners of the facility. The
Board remains confident that LEH and its associated companies have at all
times remained compliant with all applicable environmental and permit
obligations at the Lumberton Site. Due to the false and defamatory nature of
the public statements made by SELC, the Board continues to explore all legal
options available to hold SELC accountable.
Post period end activities
i) Expansion of sales and marketing activities for
Active Energy
As a result of the increasing commercial interest in CoalSwitch®, AEG has,
since the period end, expanded its sales and marketing personnel in the US.
These individuals bring expertise and sales experience from the coal, utility
and biomass industries in North America and Europe and can provide the
technical sales support to prospective customers in North America and Europe.
Commercial discussions continue in Japan combined with dedicated fuel testing
programs with prospective customers and engineering partners. The
confirmation of definitive delivery schedules for CoalSwitch® in July 2022
has assisted AEG in all its current sales negotiations and has provided
greater confidence to these prospective customers of AEG's long-term
commitment to supply large scale volumes of CoalSwitch®.
ii) Patent awarded for the CoalSwitch® production
process in Malaysia
In July 2022, the Company was awarded a Malaysia Patent No. MY-191174-A (the
"Malaysia Patent") by the Intellectual Property Corporation of Malaysia in
respect of the process for beneficiating and cleaning biomass. The Malaysia
Patent combines with patents awarded in the United States in 2020 for the
manufacturing and production of CoalSwitch® and in Canada in 2021 for
beneficiating and cleaning biomass. Based upon current prospective customer
discussions, AEG continues to believe that Malaysia can be one of its primary
target markets for the production of CoalSwitch® fuel utilising the waste
wood residues from palm oil plantations.
The Company continues to file further patent applications globally, targeting
additional markets including Europe and will file additional supplemental
applications as the new process reactors are finalised.
iii) USD quotation for AEG's shares in the US
The Company also successfully completed its listing on OTCQB in the US in
August 2022 which will provide enhanced investor benefits, including easier
trading access for investors located in the US, greater liquidity due to a
broader pool of potential investors and an increased profile in the US.
iv) Board changes
The Company announced in August 2022 that Andrew Diamond will be stepping down
as CFO of AEG in December. The Board has commenced the search for a
replacement CFO and further updates will be made in due course. The Board
would like to thank Andrew for his contribution to the Company during the past
18 months.
Financial review
i) Performance
The Group generated no revenue during the six months ended 30 June 2022.
Profit for the six months ended 30 June 2022 was US$1.8 million (H1 2021: loss
of US$2.0 million), resulting in a basic and diluted total earnings per share
of 0.03c (H1 2021: loss per share of 0.06c).
Unrealised foreign exchange gains, resulting from the strengthening US dollar
relative to UK Sterling, account for the net finance gains which are reversed
in the translation adjustment within Other Comprehensive Losses.
ii) Net cash
The Group had a net cash position at 30 June 2022 of US$3.9 million (30 June
2021: US$1.1 million and 31 December 2021: US$1.8 million) and reflects the
receipt of the net proceeds from the sale of the Lumberton Site.
iii) Cash Flows
Operating cash outflows during the period were US$1.4 million (H1 2021: US$3.5
million) reflecting the Group's efforts to reduce and preserve available cash
resources.
Investing inflows of US$3.8 million reflect the sale of property proceeds (H1
2021: outflow of US$3.5 million). Intangible and PPE additions during the
period utilised project advances made in previous periods.
Aside from minor loan repayments there were no financing activities during the
period (H1 2021: inflows of US$8.0 million resulting from issues of share
capital less convertible loan note redemptions).
Conclusion and outlook
The first half of this financial year has seen AEG continue to make progress.
The CoalSwitch® product, the underlying production technology and AEG are
each obtaining increased profiles which the Board believes will deliver the
favourable results CoalSwitch® truly deserves.
The production process is proven and in PDI we have an excellent partner to
build, finance and operate the first CoalSwitch® facility at Ashland. Our
continuous testing programme has resulted in CoalSwitch® obtaining
recognition as a proven, next generation biomass fuel with strong
environmental credentials and improved heating values over existing biomass
fuels.
In the last 3 weeks, the US market opportunity has been invigorated with the
recent passing of the Inflation Reduction Act. AEG believes the legislation
will either help accelerate demand for CoalSwitch® fuel, unlock new funding
opportunities for the sale of CoalSwitch® technology, accelerate project
development of additional CoalSwitch® production sites in the US, or
potentially all three. This can be financed in a number of ways including loan
guarantees, tax incentives or grant funding. AEG is now working with advisers
in the US to better understand the opportunities and how best to seize them.
We expect to be able to report back in the coming weeks and months.
Our focus for the remainder of 2022 will be upon converting the numerous
commercial discussions, which we are currently having, into firm orders for
CoalSwitch® or additional production facilities using the CoalSwitch®
technology. The Board and management look forward to the remainder of the
financial year with confidence as AEG seeks to bring CoalSwitch® to market.
Michael Rowan
CEO
9 September 2022
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022
30 June 2022 30 June 2021
Restated
Unaudited Unaudited
Note US$ US$
CONTINUING OPERATIONS
REVENUE 8 - -
GROSS PROFIT - -
Other operating income - 364,631
Administrative expenses (1,324,274) (1,407,387)
OPERATING LOSS (1,324,274) (1,042,756)
Net finance gains / (costs) 5 3,151,471 (443,731)
PROFIT / (LOSS) BEFORE TAXATION 1,827,197 (1,486,487)
Taxation - 1,395
PROFIT / (LOSS) FROM CONTINUING OPERATIONS 7 1,827,197 (1,485,092)
LOSS FROM DISCONTINUED OPERATIONS 7 (1,292) (554,224)
PROFIT / (LOSS) FOR THE PERIOD - attributable to Parent 7 1,825,905 (2,039,316)
Basic and Diluted gain / (loss) per share (US cent):
- Continuing operations 6 0.03 (0.04)
- Discontinued operations 6 - (0.02)
- Total operations 6 0.03 (0.06)
OTHER COMPREHENSIVE LOSS
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of operations (3,281,270) (1,185,420)
Revaluation of land and buildings (504,646) -
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (1,960,011) (3,224,736)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
30 June 2022 31 December 2021
Unaudited Audited
Note US$ US$
NON-CURRENT ASSETS
Intangible assets 9 6,089,238 5,659,024
Property, plant and equipment 10 7,544,105 11,512,953
Other financial assets 828,902 922,275
14,462,245 18,094,252
CURRENT ASSETS
Inventory - 27,250
Trade and other receivables 11 938,010 1,628,959
Cash and cash equivalents 13 4,097,214 1,940,871
5,035,224 3,597,080
TOTAL ASSETS 19,497,469 21,691,332
CURRENT LIABILITIES
Trade and other payables 12 952,182 1,222,030
Loans and borrowings 13 12,195 14,013
964,377 1,236,043
NON-CURRENT LIABILITIES
Deferred income tax liabilities - 147,349
Loans and borrowings 13 141,032 143,931
141,032 291,280
TOTAL LIABILITIES 1,105,409 1,527,323
NET ASSETS 18,392,060 20,164,009
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT
Share capital - Ordinary shares 14 786,867 786,867
Share capital - Deferred shares 18,148,898 18,148,898
Share premium 55,349,883 55,349,883
Merger reserve 2,350,175 2,350,175
Foreign exchange reserve (5,705,599) (2,424,329)
Own shares held reserve (268,442) (268,442)
Convertible debt / warrant reserve 1,165,911 1,165,911
Retained earnings (53,435,633) (55,449,600)
Revaluation reserve - 504,646
TOTAL EQUITY 18,392,060 20,164,009
.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022
Share capital Share premium Merger reserve Foreign exchange reserve Own shares held reserve Convertible debt and warrant reserve Retained earnings
Revaluation Reserve Total equity
US$ US$ US$ US$ US$ US$ US$ US$ US$
At 31 December 2020 18,368,334 18,711,637 2,350,175 (184,975) (268,442) 3,701,803 (49,899,736) 504,646 (6,716,558)
Total comprehensive loss - - - (1,185,420) - - (2,039,316) - (3,224,736)
Issue of share capital 98,218 8,896,425 - - - - - - 8,994,643
Conversion of CLN 233,040 23,550,437 - - - (2,843,734) - - 20,939,743
Share based payments - - - - - - 76,811 - 76,811
At 30 June 2021 18,699,592 51,158,499 2,350,175 (1,370,395) (268,442) 858,069 (51,862,241) 504,646 20,069,903
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
Total comprehensive loss - - - (3,281,270) - - 1,825,905 (504,646) (1,960,011)
Share based payments - - - - - - 188,062 - 188,062
At 30 June 2022 18,935,765 55,349,883 2,350,175 (5,705,599) (268,442) 1,165,911 (53,435,633) - 18,392,060
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022
30 June 2022 30 June 2021
Unaudited Unaudited
Note US$ US$
Cash flows from operating activities
Profit / (loss) for the period 1,825,905 (2,039,316)
Adjustments for:
Non-cash / separately disclosed items (3,077,626) (403,481)
Working capital outflow (157,222) (1,047,804)
Net cash outflow from operating activities 18 (1,408,943) (3,490,601)
Cash flows from investing activities
Purchase of property, plant and equipment (1,412) (3,543,036)
Proceeds on sale of property, plant and equipment 3,767,469 -
Net cash inflow / (outflow) from investing activities 3,766,057 (3,543,036)
Cash flows from financing activities
Issue of equity share capital, net of share issue costs - 8,994,643
Redemption of CLNs - (1,484,728)
Loans repaid (6,918) (97,251)
Proceeds from loans advanced - 750,296
Principal elements of lease payments - (57,900)
Finance expenses paid - (87,752)
Net cash (outflow) / inflow from financing activities (6,918) 8,017,308
Net increase in cash and cash equivalents 2,350,196 983,671
Cash and cash equivalents at beginning of the period 1,940,871 999,631
Exchange (losses) / gains on cash and cash equivalents (193,853) 4,227
Cash and cash equivalents at end of the period 4,097,214 1,987,529
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022
1. GENERAL INFORMATION
Active Energy Group plc ("AEG") is a renewable energy company focused on the
production and development of next generation biomass products that have the
potential to transform the traditional coal fired-power industry and the
existing renewable biomass industry. The Company is quoted in London (AIM:
AEG) and trades on the OTCQB Venture Market in the USA (OTCQB: "ATGVF").
The Company is incorporated in England and Wales (Company number 03148295) and
the address of the registered office is 27-28 Eastcastle Street, London, W1W
8DH, United Kingdom.
2. BASIS OF PRESENTATION
The Group and Company financial statements are prepared and approved by the
Directors in accordance with International Financial Reporting Standards
("IFRS") as adopted in the UK, and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
The condensed consolidated interim financial report for the half-year
reporting period ended 30 June 2022 has been prepared in accordance with the
UK-adopted International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
The Interim Financial Statements do not include all the information and
disclosures required in the annual financial statements and should be read in
conjunction with the Group's consolidated financial statements for the year
ended 31 December 2021. The Interim Financial Statements are presented in US
Dollars, except as otherwise indicated. The Interim Financial Statements have
been prepared on a going concern basis, under the historical cost convention,
except for the revaluation of certain financial instruments.
The Interim Financial Statements is unaudited and does not constitute full
statutory accounts under Section 434 of the Companies Act 2006. The financial
information in respect of the year ended 31 December 2021 has been extracted
from the statutory accounts which have been delivered to the Registrar of
Companies. The Group's Independent Auditor's report on those accounts was
unqualified and did not contain a statement under section 498(2) or 498(3) of
the Companies Act 2006. The auditor's report on those accounts included a
material uncertainty in relation to the going concern assumptions detailed in
the notes to those accounts. The auditor did not qualify their report in
respect of this matter. The financial information for the half years ended 30
June 2022 and 30 June 2021 is unaudited and the twelve months to 31 December
2021 is audited. Certain information disclosed in the 30 June 2021 Interim
Financial Statements has been restated as required to aid comparability.
The accounting policies applied by the Group in this financial information are
the same as those applied by the Group in its financial statements for the
year ended 31 December 2021 and which will form the basis of the 2022
financial statements, except for a number of new and amended standards which
have become effective since the beginning of the previous financial year.
These new and amended standards are not expected to materially affect the
Group.
The preparation of financial statements in compliance with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise judgment in the most appropriate application in applying the Group's
accounting policies. The areas where significant judgments and estimates have
been made in preparing these interim financial statements are not materially
different from those disclosed in the financial statements for the year ended
31 December 2021.
These Interim Financial Statements were approved by the Board of Directors on
9 September 2022.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022
3. GOING CONCERN
The Directors are required to give careful consideration to the
appropriateness of the going concern basis in the preparation of the interim
financial statements.
In June 2022, the Group disposed of the property in Lumberton, North Carolina.
The proceeds of the sale are reflected in the cash and cash equivalents and
other receivables. The Group has debt of US$153,227 at 30 June 2022 and was in
a net cash position of US$3,943,987.
The Group's strategy is to accelerate the supply of production volumes of
CoalSwitch®. The Company has been working with Player Design International
Inc ("PDI") to redesign the manufacturing process and process reactors to
enable production volumes of CoalSwitch®. PDI has now committed to take full
responsibility for permitting, financing and constructing the first
CoalSwitch® production plant in Ashland, Maine (the "Ashland Facility")
which PDI will own and operate. PDI has already ordered the parts required for
the completion of the Ashland Facility and has confirmed that first production
volumes of CoalSwitch® will commence during the first quarter of 2023.
Active Energy will sell these volumes of CoalSwitch®, once produced, to
prospective customers.
On the basis of the considerations set out above, the Directors have concluded
that it is appropriate to prepare the interim financial statements on a going
concern basis. These Interim Financial Statements do not include any
adjustments to the carrying amount and classification of assets and
liabilities that may arise if the Group or the Parent Company was unable to
continue as a going concern.
4. Basis of consolidation
The financial information incorporates the results of AEG and entities
controlled by AEG (its subsidiaries). Control is achieved when the Group has
power over relevant activities, is exposed, or has rights, to variable returns
from its involvement with the entity and has the ability to affect those
returns through its power over the entity. The consolidated interim financial
statements present the financial results of AEG 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.
5. NET FINANCE GAINS / (COSTS)
30 June 30 June
2022 2021
Unaudited Unaudited
Continuing operations
Foreign exchange 3,154,251 (359,220)
Loan interest (2,780) (84,511)
Discontinued operations
Loan interest and charges (5,543) (25,506)
Total operations 3,145,928 (469,237)
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022
6. GAIN / (LOSS) PER SHARE
30 June 30 June
2022 2021
Unaudited Unaudited
Weighted average ordinary shares in issue (Number) 5,665,209,746 3,206,905,598
Gain / (loss) for the period (US$):
Continuing operations 1,827,197 (1,485,092)
Discontinued operations (1,292) (554,224)
Total operations 1,825,905 (2,039,316)
0.03 (0.04)
Basic and diluted gain / (loss) per share (US cent):
Continuing operations
Discontinued operations - (0.02)
Total operations 0.03 (0.06)
Basic and diluted loss per share are the same where the effect of any
potential shares is anti-dilutive and is therefore excluded.
7. DISCONTINUED OPERATIONS
During 2021 the Group discontinued its sawmill and saw log operations, and in
2022 the Group disposed of its Lumberton Site. These operations and assets
were reflected in the wood processing segment. The results of these businesses
are disclosed as a single line item in the Condensed Consolidated Statement of
Income in accordance with IFRS 5.
The subsidiary carrying out the sawmill and saw log operations has not been
disposed therefore no gain or loss on disposal is applicable.
The analysis between continuing and discontinued operations is as follows:
Six months to 30 June 2022 (Unaudited) Continuing Discontinued Total
operations operations
US$ US$ US$
Revenue - - -
Gross loss - - -
Administrative expenses (1,324,274) 2,856 (1,321,418)
Other income - - -
Operating loss (1,324,274) 2,856 (1,321,418)
Finance costs 3,151,471 (5,543) 3,145,928
Gain /(loss) before taxation 1,827,197 (2,687) 1,824,510
Taxation - 1,395 1,395
Loss for the period 1,827,197 (1,292) 1,825,905
Cash outflows from operating activities (1,337,753) (71,190) (1,408,943)
Cash outflows from investing activities (1,412) 3,767,469 3,766,057
Cash inflows from financing activities (6,918) - (6,918)
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022
7. DISCONTINUED OPERATIONS (CONTINUED)
Six months to 30 June 2021 (Unaudited) Continuing Discontinued Total
operations operations
Restated Restated Restated
US$ US$ US$
Revenue - 636,241 636,241
Gross loss - (496,588) (496,588)
Administrative expenses (1,407,387) (78,677) (1,486,064)
Other income 364,631 46,547 411,178
Operating loss (1,042,756) (528,718) (1,571,474)
Finance costs (443,731) (25,506) (469,237)
Loss before taxation (1,486,487) (554,224) (2,040,711)
Taxation 1,395 - 1,395
Loss for the period (1,485,092) (554,224) (2,039,316)
Cash outflows from operating activities (3,527,471) 36,870 (3,490,601)
Cash outflows from investing activities (3,472,636) (70,400) (3,543,036)
Cash inflows from financing activities 8,075,208 (57,900) 8,017,308
8. SEGMENTAL INFORMATION
The Group reports three business segments:
· "CoalSwitch®" denotes the Group's renewable wood pellet
business.
· "Wood processing" denotes the Group's sawmill and saw log
activities and the Lumberton property. Sawmill and saw log activities were
discontinued during 2021 and the property was sold during 2022. The results
for these activities are reported as discontinued operations and are
accordingly not included in the segmental reporting.
· "Corporate and other" denotes the Group's corporate and other
costs.
The business segments are aligned to the Group's strategy. The comparative
segmental information has been restated to align with the current reporting
segments.
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.
8. SEGMENTAL INFORMATION (continued)
Six months to 30 June 2022 CoalSwitch Wood Corporate Total
processing & Other
(Unaudited) US$ US$ US$ US$
Revenue - - - -
Operating segment (loss) (194,341) - (1,129,933) (1,324,274)
Segment (loss) before tax (194,362) - 2,021,559 1,827,197
Tax credit/(charge) - - - -
Segment (loss) for the period (194,362) - 2,021,559 1,827,197
Total Assets 14,405,844 170,573 4,921,052 19,497,469
Total Liabilities 312,927 264,171 528,311 1,105,409
Other segmental information:
Capital Expenditure: 325,357 - 1,414 326,771
Additions to Intangibles 430,214 - - 430,214
Depreciation & amortisation - - 709 709
Six months to 30 June 2021 CoalSwitch Wood processing Corporate Total
& Other
(Unaudited) US$ US$ US$ US$
Revenue - - - -
Operating segment (loss) (110,467) (42,758) (889,531) (1,042,756)
Segment (loss) before tax (216,463) (42,758) (1,227,266) (1,486,487)
Tax credit/(charge) - 1,395 - 1,395
Segment (loss) for the period (216,463) (41,363) (1,227,266) (1,485,092)
Total Assets 15,418,397 4,529,664 2,846,790 22,794,851
Total Liabilities 1,418,977 577,024 728,947 2,724,948
Other segmental information:
Capital Expenditure 4,235,999 12,500 2,997 4,251,496
Depreciation & amortisation - 36,000 554 36,554
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022
9. INTANGIBLE ASSETS
Goodwill Intellectual Timber Total
property licences
US$ US$ US$ US$
Cost
At 31 December 2020 567,668 5,259,386 6,503,975 12,331,029
Additions - 400,000 - 400,000
Written off (567,668) - (6,503,975) (7,071,643)
At 31 December 2021 - 5,659,386 - 5,659,386
Additions - 430,214 - 430,214
At 30 June 2022 - 6,089,600 - 6,089,600
Accumulated amortisation
At 31 December 2020 567,668 362 6,503,975 7,072,005
Amortisation charge - - - -
Written off (567,668) - (6,503,975) (7,071,643)
At 31 December 2021 - 362 - 362
Amortisation charge - - - -
At 30 June 2022 - 362 - 362
Net book value
At 30 June 2022 - 6,089,238 - 6,089,238
At 31 December 2021 - 5,659,024 - 5,659,024
Intellectual property comprises costs incurred to secure the rights and
knowledge associated with the CoalSwitch® and PeatSwitch™ technologies.
Recoverability of intellectual property assets is dependent on successfully
commercialising CoalSwitch®, which is subject to a number of uncertainties
including the ability of the Group to access financial resources to develop
the projects and bring the product to economic maturity and profitability.
Management determined that no impairment was required. Management will
continue to monitor the recoverability of these assets.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022
10. PROPERTY, PLANT AND EQUIPMENT
Land & Buildings Plant and equipment Furniture and office equipment Total
US$ US$ US$ US$
Cost
At 31 December 2020 4,281,829 6,573,255 10,349 10,865,433
Additions - 3,954,965 2,979 3,957,944
Disposals - (872,079) - (872,079)
Transfers 210,220 (337,444) - (127,224)
Foreign exchange differences - - (158) (158)
At 31 December 2021 4,492,049 9,318,697 13,170 13,823,916
Additions - 325,357 1,414 326,771
Disposals (4,492,049) (102,922) - (4,594,971)
Foreign exchange differences - - (1,426) (1,426)
At 30 June 2022 - 9,541,132 13,158 9,554,290
Accumulated depreciation
At 31 December 2020 165,977 246,366 9,449 421,792
Charge for the year 128,366 116,788 1,264 246,418
Impairment charges - 2,000,000 - 2,000,000
Disposals - (229,907) - (229,907)
Transfers (96,343) (30,881) - (127,224)
Foreign exchange differences - - (116) (116)
At 31 December 2021 198,000 2,102,366 10,597 2,310,963
Charge for the period 18,000 556 709 19,265
Disposals (216,000) (102,922) - (318,922)
Foreign exchange differences - - (1,121) (1,121)
At 30 June 2022 - 2,000,000 10,185 2,010,185
Net book value
At 30 June 2022 - 7,541,132 2,973 7,544,105
At 31 December 2021 4,294,049 7,216,331 2,573 11,512,953
Plant and equipment additions relate to CoalSwitch® production facility
activity in Maine. Following the sale of the Lumberton property, Coalswitch®
equipment has been relocated to Maine.
Recoverability of plant and equipment assets is dependent on successfully
commercialising CoalSwitch®, which is subject to a number of uncertainties
including the ability of the Group to access financial resources to develop
the projects and bring the product to economic maturity and profitability.
Management determined that no impairment was required. Management will
continue to monitor the recoverability of these assets.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022
11. TRADE AND OTHER RECEIVABLES
30 June 31 December
2022 2021
Unaudited Audited
US$ US$
Project advances 774,668 1,190,315
Retained proceeds on sale of property 150,000 -
Other receivables 13,342 438,644
938,010 1,628,959
No impairment provisions have been raised against trade and other receivables.
Retained proceeds on the sale of the Lumberton Site have been received post
period end.
The carrying value of trade and other receivables approximates to fair value.
12. TRADE AND OTHER PAYABLES
30 June 31 December
2022 2021
Unaudited Audited
US$ US$
Trade payables 241,279 775,709
Social security and other taxes 59,496 63,682
Accruals and deferred income 501,407 232,639
Other payables 150,000 150,000
952,182 1,222,030
Accruals includes amounts relating to Ashland construction costs which have
not yet been invoiced.
The carrying value of trade and other payables approximates to fair value.
13. NET CASH
30 June 31 December
2022 2021
Unaudited Audited
US$ US$
Cash and cash equivalents 4,097,214 1,940,871
Loans and borrowings (153,227) (157,944)
3,943,987 1,782,927
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022
14. SHARE CAPITAL - ORDINARY SHARES
Number of US$
shares
Allotted, called up and fully paid shares of 0.01p each
At 1 January 2021 1,541,178,043 219,436
Issue of shares 4,124,031,702 567,431
At 31 December 2021 and 30 June 2022 5,665,209,745 786,867
At the Company's Annual General Meeting on 4 July 2022, shareholders approved
a 1 for 35 share consolidation. Following the share consolidation, the Company
has 161,863,136 ordinary shares of 0.35 pence each.
15. RELATED PARTY DISCLOSURES
During the period, the Group paid US$37,520 to INJ London Ltd for sales and
marketing services (H1 2021: US$8,680). This company is owned by Max Aitken.
At 30 June 2022, the Directors had US$91,667 of unpaid salary and fees (H1
2021: Nil). These fees have subsequently been paid.
Transactions between the Company and its subsidiaries, which are related party
transactions, have been eliminated on consolidation. These transactions, which
are incurred in the ordinary course of business and under normal commercial
terms, are substantially the same in nature as those disclosed in the Annual
report and Accounts at 31 December 2021.
16. CAPITAL COMMITMENTS
There were no capital commitments at 30 June 2022 (31 December 2021: Nil).
17. SUBSEQUENT EVENTS
On 5 August 2022 the Company commenced trading its ordinary shares on the
OTCQB Venture Market in the United States of America under the ticker symbol
"ATGVF".
On 10 August 2022, Andrew Diamond resigned as a director of the Company.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022
18. RECONCILIATION OF LOSS FOR THE PERIOD TO CASH OUTFLOWS FROM OPERATING ACTIVITIES
30 June 30 June
2022 2021
Unaudited Unaudited
US$ US$
Gain /(loss) for the period 1,825,905 (2,039,316)
Adjusted for:
Share based payment expense 188,062 76,811
Depreciation 19,265 164,323
Gains on disposal of right of use assets - (49,884)
Gain on redemption of CLNs - (411,177)
Profit on disposal of property, plant and equipment (292,020) -
Foreign currency translations (2,999,405) (292,176)
Finance expenses 7,876 110,017
Income tax (1,395) (1,395)
(1,251,721) (2,442,797)
Decrease / (increase) in inventories 27,250 (3,841)
Decrease in trade and other receivables 85,376 186,648
Decrease in trade and other payables (269,848) (1,230,611)
Net cash outflow from operating activities (1,408,943) (3,490,601)
19. COPIES OF THE INTERIM FINANCIAL STATEMENTS
Copies of the Consolidated Interim Financial Statements will be made available
on the Company's website at www.aegplc.com (http://www.aegplc.com) .
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