TIDMAEG
RNS Number : 5748B
Active Energy Group PLC
05 June 2023
05 June 2023
Active Energy Group Plc
("Active Energy" or the "Company")
Audited results for the year ended 31 December 2022
Active Energy (AIM: AEG, OTCQB: ATGVF), the international
biomass based renewable energy business, is pleased to announce the
publication of its audited results for the year ended 31 December
2022.
Operational Highlights:
-- Expansion of the Company's sales function in USA and Europe:
o first order for CoalSwitch(R) from Carolina Stalite for
CoalSwitch(R) fuel; and
o written indications of interest of the supply of up to 10,000
tonnes of fuel for clients in the UK in 2023.
-- Extension of IP protection, including the award of the
Malaysian Patent for future CoalSwitch(R) production in the South
East Asian Region.
-- In March 2022, the Group achieved Chain of Custody and
Controlled Wood Certification compliant with the Forest Stewardship
Council(R)("FSC(R)") standards for its CoalSwitch(R) fuel.
-- Completion of the Karbone Renewable Energy Credit and
Environmental Attribute Report published in November 2022,
demonstrating CoalSwitch(R) could qualify for significant
production and consumption subsidies from individual US states,
ranging up to $90 per ton.
-- Positive results received following the completion of the
independent study by LifeCycle Analysis in California on the carbon
impact of CoalSwitch(R) production published in June 2022, showing
a reduction of Co2 by 99% relative to coal.
-- Appointment of Michelle Fagan as the Company's interim Chief
Financial Officer in November 2022.
Financial Highlights:
-- Sale of the Lumberton Site completed on 30 June 2022 with:
o gross consideration of US $4.65million; and
o net cash proceeds of US$3.92million received.
-- Operating Loss for the year of US$1,343,745 (2021: US$5,881,768).
-- Cash at bank as at 31 December 2022 US$2,614,472 (2021: US$1,940,871).
-- Basic and diluted loss per share from continuing operations
of $0.35 cents (2021 Restated: $4.57 cents).
Activities post the year end:
-- Permit awarded to the Company's engineering partner, Player
Design International ("PDI") at the Ashland Reference Facility
(announced on 24 May 2023):
o final engineering and construction to commence and first fuel
production and deliveries expected to commence in Q3 2023;
o PDI confirms that full scale production volumes from Ashland
are anticipated to remain at a target rate of 35,000 tons per
annum.
-- Annual renewal of Custody and Controlled Wood certification
with the Forest Stewardship Council standards for its CoalSwitch(R)
fuel production from Ashland.
-- Appointment of Steve Schaar as Chief Operating Officer for
the Group to focus on the specific development of CoalSwitch(R)
production facilities in the United States and Canada.
-- Patents and Trademarks for CoalSwitch(R) awarded in the US,
Canada, Europe (including the UK) and additional trademark
applications have commenced throughout Asia, including Japan.
Michael Rowan, CEO, Active Energy Group, said:
"In 2022, Active Energy focussed on three key areas necessary to
both prepare for and execute a growth strategy, being: i) product
and production development; ii) market development; and iii)
building for growth. The most important recent development was the
issue of the permit to allow completion of the Ashland Reference
Facility. PDI has confirmed fuel production will commence in Q3
2023, allowing Active Energy to make its first customer deliveries
of CoalSwitch Ò .
"Active Energy significantly expanded its sales pipeline in
2022, investing in a new sales and marketing team in the U.S. and
U.K. and analysing key new markets for CoalSwitch Ò fuel. The
initial letters of intent received total circa 10,000 tonnes, and
current indications of interest received exceed annualised
production estimates for the Ashland Reference Plant. In addition,
the work with Karbone, the financial services platform focused on
decarbonisation markets, concluded that CoalSwitch Ò is likely to
be eligible for several US subsidies, incentives and carbon credits
that will make CoalSwitch Ò even more cost competitive with coal,
reducing additional barriers toward market adoption.
"The Company added depth and breadth to the team with the
addition of an interim Chief Financial Officer and a Chief
Operating Officer and these hires represent another step change for
the Company. We plan to further expand the US team in 2023. The
balance sheet at 31 December 2022 reflected control of cash and
costs and this discipline is being maintained as we continue to
actively expand our technology and business development efforts in
the coming months.
"Active Energy is now well prepared for growth and, with the
current level of customer engagement, we look forward to reporting
on significant commercial progress in 2023 and beyond."
Enquiries:
Active Energy Group Plc Michael Rowan (Chief Executive Officer) info@aegplc.com
Michelle Fagan (Chief Financial Officer)
Steve Schaar (Chief Operating Officer)
Allenby Capital Limited Nick Naylor/James Reeve/Daniel Dearden-Williams Office: +44 (0)20 3328 5656
Nominated Adviser and Broker (Corporate Finance)
Amrit Nahal (Sales/Corporate Broking)
--------------------------------------------------------- ----------------------------
Camarco Tom Huddart / Emily Hall / Lily Pettifar aeg@camarco.co.uk
Financial PR Adviser Office: +44 (0)20 3757 4980
--------------------------------------------------------- ----------------------------
Scoville PR John Williams jwilliams@scovillepr.com
US PR Adviser
--------------------------------------------------------- ----------------------------
Website LinkedIn Twitter
www.aegplc.com www.linkedin.com/company/activeenergy https://twitter.com/aegplc
@aegplc
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About Active Energy Group:
Headquartered in London with operations in the United States,
Active Energy Group plc (AIM: AEG, OTCQB:ATGVF) is a biomass-based
renewable energy company focused on the production and development
of next generation biomass products that have the potential to
transform coal fired power and heavy industries and the existing
renewable biomass industry.
AEG has developed a proprietary technology which transforms
waste biomass material into high-value renewable fuels. Its
patented product CoalSwitch(R) is a leading drop-in biomass
renewable fuel that can be blended and co-fired with coal at any
ratio without requiring significant plant modification or wholly
replacing existing biomass fuels. In 2022 Active Energy's partner,
Player Design Inc commenced the process for building a production
facility for Coalswitch(R) at PDI's facility at Ashland, Maine.
Under a "take or pay" arrangement Active Energy will purchase
CoalSwitch(R) from PDI for sale to the Company's prospective
customers in the US and Europe.
CHAIRMAN'S LETTER
The last 12 months have seen Active Energy Group continue to
make progress toward its goal of becoming one of the leading
manufacturers of next generation biomass pellets, focused primarily
on new technologies for black pellet production. Whilst awaiting
the issuance of the permit for the construction and operation of
the first CoalSwitch(R) production facility at Ashland, the Company
has used the time to invest in additional product development,
establish the Company's marketing operations and strengthen the
management team.
The Company has seen a substantial increase in the number of
commercial enquiries for CoalSwitch(R) fuel, driven primarily by
sales teams in the US and in the UK and aided by an increasing
market demand for an improved biomass pellet, accommodating revised
environmental regulation in the US and elsewhere, and continuing
market supply issues requiring alternative long-term sources of
biomass supply.
Active Energy has obtained first orders for CoalSwitch(R), which
the Board believes will lead to long term off take contracts for
the fuel and create future joint venture production opportunities,
both in the US and internationally.
Looking into 2023, the Company has to focus upon several key
milestones, including: i) working with PDI to obtain production of
commercial volumes of CoalSwitch(R) from the Ashland Reference
Facility; ii) delivering this fuel to identified prospective
customers in the US and internationally; and iii) commence planning
to expand production of CoalSwitch(R), principally through
partnerships with other parties, thereby establishing CoalSwitch(R)
as the market standard for next generation biomass fuels in the
coming years. In order to achieve these milestones Active Energy
has started building a US based management team and this will
continue in 2023.
Companies and utilities around the world are being pressed to
reduce emissions. By converting lower value wood waste into
high-value biomass fuel that can either co-fire with coal or
replace existing biomass pellets, CoalSwitch(R) offers a turnkey,
cost-effective and scalable solution. The Board believes that
CoalSwitch(R) represents a transformational opportunity for biomass
as a cleaner fuel helping global sustainability goals.
The Board remains confident about the future for Active Energy
Group, and I remain grateful for the ongoing support of all our
stakeholders and look forward to the future with confidence.
James Leahy
Non-executive Chairman
5 June 2023
CHIEF EXECUTIVE OFFICER'S STATEMENT
Executive Summary
Active Energy Group plc ("Active Energy" or the "Company") spent
2022 strategically focussed on three key areas: Product and
Production Development; Market Development; and Building for
Growth.
1. Product and Production Development: We knew at the beginning
of 2022 that it could take some time for our production partner
Player Design, Inc. ("PDI") to complete production design and
engineering, receive the required permits to complete construction,
install the requisite equipment and operate the first production
plant. We are pleased to report that as of 24 May 2023, the
relevant Permit has been granted and PDI is moving forward on
construction at the Ashland Reference Facility and commencing
future CoalSwitch(R) production.
2. Market Development: We spent the past year driving leads and
customer interest by investing in new sales leaders in the U.S. and
U.K. and via direct marketing, event sponsorship and thought
leadership. We also developed a strategy to obtain carbon credits
and renewable energy incentives in the US to make CoalSwitch(R)
cost-comparable to coal, helping to eliminate a barrier to
adoption.
3. Building for Growth: We added depth and breadth to the team
with the addition of a Chief Financial Officer and a US based Chief
Operating Officer; extended our patent and IP portfolio; and
secured a listing on the US Stock exchange. In 2023 we will
continue to invest in building our US based management team. We
also sold our Lumberton facility and associated litigation
proceeded toward closure. We continued to develop and improve the
core CoalSwitch(R) production technology.
As we proceed through the second quarter, we remain positive on
our prospects. Fuel production is expected to commence in the third
quarter of the current year, which will drive customer testing and
orders and the process of market adoption for black pellets can
accelerate. New regulations in the U.S. continue to drive coal
users to seek new and cleaner options and concerns about the
sustainability of using plantation trees for biomass are not
abating.
We believe we have the right product, the right team, and the
right time for commercialization.
1. Product and Production Development
Working with PDI, the Company spent the past year focussed on
engineering and design, permits, certifications and other
regulatory requirements needed to manufacture and sell
CoalSwitch(R).
Construction and Operational Permit for the Ashland Reference
Plant
Construction of the Ashland Reference Facility has commenced and
Active Energy announced that the appropriate permit had been
awarded to PDI by the Department of Environmental Protection in the
State of Maine on 24(th) of May 2023.
Active Energy, in close discussion with PDI, has made every
effort to provide the clearest timetable toward production.
However, we recognise that this timeline has extended beyond the
expectations that we initially set and then updated.
With this permit in place, construction activities have now
commenced, and the key manufacturing components will be delivered
to Ashland shortly. PDI has confirmed to the Company that
CoalSwitch(R) deliveries to Active Energy's customers should
commence in Q3 2023. The Company continues to receive requests,
both from the US and internationally, to visit operations at the
Ashland Reference Facility at the earliest opportunity.
Since the first CoalSwitch(R) production in mid-2021, Active
Energy has been working with PDI to improve the production process.
PDI successfully produced samples of CoalSwitch(R) fuel in the
summer of 2021 using the original steam treatment process under
Active Energy's patented technology. Since then, the CoalSwitch(R)
production process has been developed to enable PDI to increase
volumes efficiently and to create an economic production
process.
Improving Production Technology
Throughout 2022 and in 2023 to date, PDI has been developing
CoalSwitch(R) production operations at Ashland, Maine. PDI has
developed a new production reactor, and, with Active Energy's
assistance, the pro-forma design and development of these reactors
was completed during 2022. The revised configuration utilises some
of the Company's existing CoalSwitch(R) technology and develops the
steam explosion production technology to accommodate increased
production volumes of black pellets. This process has involved not
only designing a revised engineering configuration but also
substantial work on the environmental impact (resulting in PDI
working closely with the Department of Environmental Protection in
Maine).
Forest Stewardship Council Standards
Post the period end, Active Energy has also renewed its Chain of
Custody ("CoC") and Controlled Wood certification with the Forest
Stewardship Council (R)("FSC(R)") standards for its CoalSwitch(R)
fuel production in Maine thereby maintaining a significant
component of Active Energy's sustainability criteria.
ENplus A1 Certificate for CoalSwitch(R)
Throughout 2022 and in 2023, Active Energy delivered test
quantities of fuel for independent analysis by European customers
and independent laboratories alike. Active Energy will continue to
ensure that the CoalSwitch(R) program attains all the relevant
industry standard certifications, which in the UK will include
ENplus A1 certification. To date, the UK results have all
consistently demonstrated CoalSwitch(R)'s improved pellet
performance goals, namely the premium heating value properties, the
lower emissions and less ash content and the improved material
handling qualities which the industry is seeking. The Company is
aiming to obtain final approvals once new CoalSwitch(R) supplies
become available during Q3 2023.
2. Market Development
At its AGM in July 2022, the Company announced that, while PDI
would focus on the engineering development activities for the
CoalSwitch(R) program, Active Energy would focus on market
development activities, both in the US and internationally.
Hiring experienced sales leaders
Since mid-2022, the number of market enquiries for a 'black
pellet alternative' for biomass fuels has increased dramatically as
the biomass industry urgently seeks alternate sustainable
solutions. Over the last 12 months, Active Energy has created a
market presence which will secure a future pipeline of fuel orders
ahead of first production volumes from the Ashland Reference
Facility. To achieve this, since July 2022, Active Energy has hired
dedicated sales personnel both in the UK and the US to secure
orders for CoalSwitch(R). The Company has hired experienced
personnel not only from the biomass industry but also from
traditional fossil fuel industries to assist in marketing and sales
activities which have to not only promote CoalSwitch(R) fuel but
also create the future market.
Marketing activities in Europe
In the UK and Europe, the biomass industry has an established
presence and the consumption and performance of traditional 'white
pellet' biomass is well known. Active Energy's sales strategy has
focused toward these established white pellet consumers and the
sales team has had to demonstrate the economic and environmental
benefits of CoalSwitch(R) against these existing biomass fuels.
To date, the Company obtained indications of interest for the
supply of up to 10,000 tonnes of fuel from various parties in the
UK seeking the fuel as an alternate and improved heating supply
source. Initial conversations with prospective customers in the UK
have indicated a future pipeline in excess of 50,000 tonnes of
CoalSwitch(R) fuel, more than the Ashland Reference Facility could
currently supply. During 2022, the Company also signed various
Non-Disclosure Agreements with a range of European utilities who
wish to assess the proprietary qualities of CoalSwitch(R) for
long-term supply contracts and who also confirmed their desire to
visit the Ashland Reference Facility in 2023.
As a result of the Company's marketing activities, it has also
created an opportunity to sell MaineFlame pressed logs in the UK.
This product, which is primarily focussed for domestic use, is
currently produced at Ashland by PDI. As CoalSwitch(R) marketing
activities have progressed in the UK, future customers have
requested if Active Energy could additionally supply the pressed
logs. During Q1 2023, the Company obtained the relevant
authorisations and completed product testing to permit sales of the
fuel in the UK. With first orders having already been delivered,
Active Energy expects the revenues from these activities to be
modest, but profit margins are healthy, and the immediate sales
have provided an additional boost to the Company's credibility with
future CoalSwitch(R) customers in the UK.
Marketing activities in North America
Unlike Europe, North America does not have an established base
of biomass consumers. As a result, Active Energy has had to not
only initiate efforts to sell CoalSwitch(R) fuel, but also create
new market opportunities aligned to the current consumption of
fossil fuels. The focus has been to develop a market for co-firing
CoalSwitch(R) with coal.
During 2022, the first orders for fuel were obtained and a sales
pipeline was established. Active Energy's first US CoalSwitch(R)
fuel order came from Carolina Stalite ("Stalite"), an aggregates
producer based in North Carolina. Stalite remains eager for fuel
deliveries at the earliest opportunity during 2023. Their interest
extends beyond fuel deliveries and early-stage discussions have
been established for a future production joint venture in closer
proximity to their existing manufacturing facilities.
The sales activities and potential customer interest have also
focussed beyond the conventional power generation industry and
include various heavy industries including cement, pulp and paper
industries where local and national emissions regulations continue
to expand. Active Energy remains confident of future commercial
success and prospective customers on the US East Coast are
finalising terms for initial test volumes of fuel at identified
facilities. Active Energy's sales team have been required to
educate prospective clients, local regulators and address
production, consumption and emissions concerns. The fact that the
US sales team is now experienced and knowledgeable on many of these
issues is providing the Company with a competitive advantage.
The approval of the Inflation Reduction Act in Washington DC in
August 2022 provided a significant boost for the sustainability
agenda in the US. During Q4 2022, the US sales team received a
notable increase in commercial enquiries on the benefits of
co-firing CoalSwitch(R) with coal and, once the Ashland Reference
Facility is in operation, the Company anticipates a further
increase in commercial enquiries and orders for fuel.
In addition to developing the sales pipeline for CoalSwitch(R)
fuel in the US, Active Energy has also received enquiries from
parties wishing to acquire a CoalSwitch(R) production licence or
work on a joint venture basis to develop the additional
CoalSwitch(R) production facilities. In recent weeks, the Company
has also received enquiries to further develop the CoalSwitch(R)
production technology to further improve the fuel quality and to
accommodate larger scale production volumes from existing lumber
production facilities. Active Energy is now actively working with
these prospective partners and such arrangements will involve
future licensing and production royalty revenues for the Company,
as well as additional CoalSwitch(R) revenues.
Once CoalSwitch(R) fuel is in production at the Ashland
Reference Facility, Active Energy believes that demand from
prospective customers will increase and the process of commercial
negotiations, appropriate testing at specific facilities and
determining fuel supplies under long term contract will commence.
There is no question that all the pre-marketing activities of the
last 12 months has allowed the Company to develop this sales
pipeline and has provided the Board with increasing confidence that
future sales volumes will accelerate rapidly once first production
commences.
International marketing activities
In addition to marketing activities in Europe and North America,
during 2022 Active Energy continued its sales activities in Japan
through its partners based in Tokyo. Samples of fuel were delivered
throughout 2022 into Japan to various customers for initial test
analysis. The results have been consistent with the global results
from the CoalSwitch(R) Program. In South Africa, commercial
production partners continue to work on opportunities to address
immediate environmental concerns in regard to its current coal
supplies and consumption. In each instance, a process of fuel
verification (confirmed by independent testing) has been completed
and the Company is now in discussions on future commercial
arrangements.
Secured guidance on availability of credits and incentives in
the US.
During Q4 2022, the Company appointed Karbone, a financial
services platform focussed on renewable energy and decarbonisation
markets, to analyse the economic value of CoalSwitch(R) in its
production and future use. The Karbone analysis report demonstrated
that the consumption of CoalSwitch(R) creates opportunities for
subsidies in the US and Canada in terms of Renewable Energy Credits
(RECs) and Regional Greenhouse Gas Incentives (RGGIs) credits and
the creation of carbon credits marketable in the Voluntary Carbon
Markets (VCM).
The Karbone analysis shows that CoalSwitch(R) could qualify for
significant subsidies from individual US states of up to $90 per
ton in consumption which makes CoalSwitch(R) cost competitive with
coal consumption in the US. This has opened up significant new
commercial sales opportunities for CoalSwitch(R) sales in the US
and Canada. Further projects are being finalised with Karbone and
these activities continue alongside existing collaboration with
Brigham Young University and the University of Utah on future
co-firing test projects and new customer projects.
3. Building for Growth
The Company also took several key steps to prepare for growth
and scale expected after commencement of commercial production,
including technology development, IP extension and senior
management team additions.
Readied Technology for Commercialization
The Board are pleased with the technology developments that have
been achieved and with the underlying engineering and regulatory
work that has been completed whilst PDI and the Company awaited
issuance of the permit.
The new reactor will initially run toward a production target
double that of the initial CoalSwitch(R) production reactors and
once operational, PDI plans to increase the scale of production
volumes through Q3 and Q4 so as to achieve its initial goal of an
annualised target production rate of 35,000 tons per year. Upon
initial analysis, PDI has informed the Company that it believes
that the Ashland Reference Facility could increase toward higher
production volumes, but this will be reviewed through the initial
production phase in H2 2023.
Production of CoalSwitch(R) from the Ashland Reference Facility
will allow Active Energy to demonstrate an operational production
facility to identified and prospective customers of the fuel alike
and show prospective joint venture production partners or licensees
the benefits of the revised CoalSwitch(R) production process.
Strengthened management team
In November 2022, Michelle Fagan was appointed as the Company's
interim Chief Financial Officer. Michelle has been working with the
Company's management team since October 2020 and has 24 years'
experience as a finance professional.
In March 2023, the Company appointed Steve Schaar as Chief
Operating Officer to focus on the development of CoalSwitch(R)
production in the United States. Steve has more than 25 years'
experience of operations, project development, programme management
and new product launches from a broad range of industries.
The Company is in discussions with a number of senior executives
within the biomass sector in the US and intends to make further
hires in the coming months to strengthen its US operations. This
investment is in response to the significant number of
opportunities that the Company has in the US and the developing
market environment. The Board believes that the future growth of
Active Energy will require further investment in a US management
team.
Extended IP Protection
During 2022, Active Energy continued to develop and extend its
intellectual property portfolio for CoalSwitch(R) and production
know-how. On the 3 June 2022, the Company was awarded the Malaysian
Patent for future CoalSwitch(R) production in the region to
complement the existing patent awards in North America. More
importantly, the CoalSwitch(R) trademark has now been registered
and approved on all territories including US, Canada, Europe
(including the UK) and additional trademark applications have
commenced throughout Asia, including Japan.
In Japan, Active Energy has a pending new trademark application
for CoalSwitch under application No. 2023-047762, and in Canada the
CoalSwitch mark has been officially registered by the Canadian
Intellectual property Office. A new EU IPO trademark application
for the mark CoalSwitch has also been filed claiming priority to
Active Energy's UK trademark registration.
The award of the Trademarks and Patents remain an important step
for Active Energy as it grows its intellectual property portfolio
through the continued development of its CoalSwitch(R) technology
but also create brand awareness for the future of black pellet.
US$ quotation for Active Energy's shares in the US
The Company successfully completed its listing on OTCQB (Ticker:
ATGVF) in the US in August 2022, which will provide enhanced
investor benefits, including easier trading access for investors
located in the US, greater liquidity due to a broader pool of
potential investors and an increased corporate profile in the
US.
Completion of the Sale of Lumberton Site
On 31 March 2022, the Company announced that it had entered into
a sale and purchase agreement with Phoenix LLC for the sale of the
Lumberton Site for gross cash proceeds of US$4.65million. The
transaction closed successfully by 30 June 2022 and the net
proceeds of US$3.92 million were delivered to Active Energy. Active
Energy continues to work with commercial partners in North Carolina
to look for future opportunities for CoalSwitch(R) production.
Going concern
The Directors have given careful consideration to the
appropriateness of the going concern basis in the preparation of
the Annual Report and Accounts for the year ended 31 December 2022.
Further details of the Company's current financial position and
material uncertainties which may affect the Company's ability to
continue operating as a going concern are to be found in the
Financial Review and in Note 1 of the Financial Statements. The
Directors are confident that the funding required for the Group to
continue as a going concern will be secured within a period of
twelve months from the date of approval of the Financial Statements
and have therefore prepared the Financial Statements on a going
concern basis.
Post period end and outlook
The final approvals for PDI to complete the construction of and
commence operations at the Ashland Reference Facility in May 2023
marked the next key stage for the development and introduction of
CoalSwitch(R) as the next generation biomass fuel. It is a better
pellet than current biomass fuel supplies and through all the work
done over many years, Active Energy is actively addressing the
obvious sustainability concerns for biomass focussing on utilising
low value waste feedstocks and producing a high-grade fuel which
demonstrates improved burn and emissions test results.
Fuel deliveries to customers are now expected to commence in Q3
2023 and that will further increase prospective customer interest.
Deliveries to traditional coal intensive industries, not known for
their use of biomass, creates new markets and commercial
opportunities for CoalSwitch(R) and for Active Energy. Given the
increasing regulatory environment, particularly in the US, this
should prove to be an opportune time for Active Energy.
In recent months, notably with the hire of Steve Schaar, the
level of commercial and technology expertise within Active Energy
has increased significantly. Steve has brought an immense
operational knowledge to Active Energy and the Company is actively
developing new market opportunities. Operations at the Ashland
Reference Facility will prove to be just the start of the progress
toward a production goal of 500,000 tons of CoalSwitch(R) fuel by
2025, with the Company involved at a number of production sites
throughout North America.
It is expected that the CoalSwitch(R) production technologies
will also be developed to provide complimentary technologies that
will further enable improved black pellet fuel performance and
ensure production to larger scale volumes to accommodate current
market demand. These technologies will be IP protected, and Active
Energy will seek to license this technology to additional
production centres both inside and outside the US.
Most importantly, biomass is currently being re-reviewed for its
sustainability criteria. The application of this criteria means
that white pellet consumption is increasingly under question and
investigation. The market opportunity for Active Energy to become a
premium supplier of black pellet and develop its black pellet
production technologies has never been greater. CoalSwitch(R)
should become the market standard for black pellet fuel.
I would like to thank all my colleagues and commercial partners
for all their work and commitment toward the CoalSwitch(R) program
in 2022 and look forward to achieving commercial success in
2023.
Michael Rowan
Chief Executive Officer
5 June 2023
FINANCE REVIEW
FOR THE YEARED 31 DECEMBER 2022
The Consolidated Financial Statements for the year ended 31
December 2022 ("Current Year") is compared to the year ended 31
December 2021 ("Prior Year").
Financing
The Group started 2022 with a restructured balance sheet,
following the actions taken during 2021, and did not raise debt or
equity finance during the year. The Group had net cash of US$2.6m
at the end of the year (2021: US$1.9m) and is well positioned to
seek additional funding to expand operations at the Ashland
Reference Facility, develop complementary CoalSwitch(R) production
technologies and commercialise CoalSwitch(R).
Subsequent events
Since the period year end, the Company has continued to work
with PDI to progress towards the commencement of fuel production at
the Ashland Reference Facility. PDI has confirmed the award of a
construction and operational permit on 24 May 2023 and final
engineering and construction activities have commenced. Active
Energy has a 'take or pay' contract with PDI for all production
from the Ashland Reference Facility for the next 3 years.
Fundraising activities through 2022
There were no fundraising activities, either of equity or debt,
during 2022.
Performance
In the first half of 2022, the Company sold the Lumberton site
property and ceased all operations at Lumberton by 30 June 2022.
The Board agreed that moving the equipment from Lumberton to
Ashland and building the CoalSwitch(R) plant at Ashland was the
best strategy available at the time.
During the second half of 2022, the Company invested in
establishing a sales and marketing operations in both the United
States and the United Kingdom. During the year the Company
completed a series of independent laboratory analyses of the
CoalSwitch(R) fuel in the United States, United Kingdom, Europe,
and Japan and incurred appropriate costs in such exercise.
The Company incorporated tight financial controls and treasury
management to its finance department during late 2022 to ensure use
of funds is kept in line with enhancing shareholder's investment
and this has continued to date. The financial focus as the company
moves toward first stages of production from Ashland will be to
focus on enhancing shareholders return on investment in the most
efficient and effective way it possibly can.
Continuing operations
Impairment charges of US$1,000,000 (2021: US$2,000,000) relate
to one of the reactors which is being used for Research and
Development at Ashland.
Administrative costs were consistent with the prior year at
US$2,855,199 (2021: US$2,904,311). The net finance income of
US$24,173 (2021: net finance costs of US$303,712) represents
interest received on deposited funds less interest payable on
borrowings.
Discontinued operations
The termination of the saw log and sawmill businesses at
Lumberton during 2022 and the disposal of the Lumberton property
was completed on 30 June 2022 and resulted in net cash proceeds of
$3.92 million to the Group.
The overall operational loss for the year was US$1,343,745
(2021: US$5,881,768) with a basic and diluted loss per share of
0.83 cents (2021: 5.74 cents). Net finance income was interest
receivable on cash held on deposit less interest payable on
borrowings.
Financial position
Non-current assets
The Lumberton property was sold during the year along with
certain associated plant and equipment.
Additions to plant and equipment of US$231,087 and to
intellectual property of US$730,213 primarily relate to future
activities, including design and engineering for the forthcoming
Ashland Reference Facility, which is now under construction.
Current assets
Trade and other receivables of US$905,924 (2021: US$1,628,959)
consist mainly of US$774,668 of project advances to Player Design
Inc. for the development of the Ashland facility.
Current liabilities
Trade and other payables were US$1,199,796 (2021: US$1,222,030).
The largest reduction is due to stringent cost management reducing
the trade payables due at year end significantly. Trade payables
was $428,106 in 2022 and $775,709 in 2022.
Non-current liabilities
Loans and borrowings, related to COVID 19 Government loans,
decreased slightly to US$133,940 (2021: US$143,931) due to
repayments on the UK government guaranteed loan, which is repayable
over 5 years. Repayments on the US government loan commenced in
December 2022.
Cashflow
Operating cash outflows were US$2,554,563 (2021: US$5,618,404).
The reduced outflow results from the cessation of sawmill and saw
log operations during 2021 and Q1 2022 along with reductions in
working capital and cost management measures.
The net cash inflow from investing activities of US$3,037,257
(2021: net outflow of US$4,375,624) comprises proceeds of
US$3,767,471 from the disposal of the Lumberton Site less cash of
US$730,714 expended on the creation of intellectual property and
know how in relation to the new Ashland Reference Facility.
Cash and cash equivalents of US$2,614,472 were on hand at
December 2022 year end (2021: US$1,940,871).
Going concern
The Financial Statements have been prepared on a going concern
basis. Note 1 of the Financial Statements sets out the material
uncertainties relating to the Company's ability to continue as a
going concern.
Subsequent to the balance sheet date Player Design Inc. has been
granted the permits required to construct and operate CoalSwitch(R)
production at the plant in Ashland. However, there is uncertainty
around the timing of production which could affect both the Group's
future cash requirements and the timing of revenue cash generation
from sales of CoalSwitch(R).
The Directors have concluded that additional funding may be
required to execute the Board's strategy of commercialising
CoalSwitch(R). While there can be no guarantee that funding will be
available on terms that are acceptable to the Company, or at all,
the Directors are confident that the Company will be able to secure
sufficient equity finance at the required time.
The financial statements do not include any adjustments that
would arise if the Company were to be unable to continue as a going
concern.
Section 172 Statement
The Directors are well aware of their duty under Section 172 of
the Companies Act 2006 to act in the way which they consider, in
good faith, would be most likely to promote the success of the
Company for the benefit of its members as a whole and, in doing so,
to have regard (amongst other matters) to:
-- The likely consequences of any decision in the long term;
-- The interests of the Company's employees;
-- The need to foster the Company's business relationships with
suppliers, customers and others;
-- The impact of the Company's operations on the community and the environment;
-- The desirability of the company maintaining a reputation for
high standards of business conduct; and
-- The need to act fairly between members of the Company.
The Board recognises that the long-term success of the Group
requires positive interaction with its stakeholders, including
shareholders, customers, suppliers, governmental and regulatory
authorities. The Directors seek to actively identify and positively
engage with key stakeholders in an open and constructive manner.
The Board believes that this strategy enables our stakeholders to
better understand the activities, needs and challenges of the
business and enables the Board to better understand and address
relevant stakeholder views which will assist the Board in its
decision making and to discharge its duties under Section 172 of
the Companies Act 2006.
Further corporate governance matters related to this Section 172
Statement can be found on page 28.
Michelle Fagan
Interim Chief Financial Officer
5 June 2023
CONSOLIDATED STATEMENT OF INCOME AND OTHER COMPREHENSIVE
INCOME
FOR THE YEARED 31 DECEMBER 2022
Restated
2022 2021
CONTINUING OPERATIONS Note US$ US$
REVENUE 3 - -
------------ ------------
GROSS LOSS - (517,238)
Impairment charges 4 (1,000,000) (2,000,000)
Administrative expenses (2,855,384) (2,904,311)
Other income - 361,237
------------ ------------
OPERATING LOSS 6 (3,855,384) (5,060,312)
Net finance income/(costs) 7 24,173 (303,712)
Foreign exchange gains 3,269,176 685,920
LOSS BEFORE TAXATION (562,035) (4,678,104)
Taxation 8 - -
LOSS FROM CONTINUING OPERATIONS (562,035) (4,678,104)
LOSS FROM DISCONTINUED OPERATIONS 9 (781,710) (1,203,664)
LOSS FOR THE YEAR - ATTRIBUTABLE
TO THE PARENT COMPANY (1,343,745) (5,881,768)
============ ============
Basic and diluted loss per share
(US cents) - continuing operations 10 (0.35) (4.57)
Basic and diluted loss per share
(US cents) - discontinued operations 10 (0.48) (1.17)
Basic and diluted loss per share
(US cents) - all operations 10 (0.83) (5.74)
OTHER COMPREHENSIVE LOSS
Items that may be subsequently reclassified
to profit or loss
Exchange differences on translation
of operations (3,426,765) (2,239,354)
Total other comprehensive loss (3,426,765) (2,239,354)
------------ ------------
TOTAL COMPREHENSIVE LOSS FOR
THE YEAR (4,770,510) (8,121,122)
============ ============
The notes on pages 51 to 86 form part of these financial
statements.
CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
Group Group Company Company
2022 2021 2022 2021
NON-CURRENT ASSETS Note US$ US$ US$ US$
Intangible assets 11 8,064,585 5,659,024 - -
Property, plant & equipment 12 4,772,530 11,512,953 1,015 2,573
Investment in subsidiaries 13 - - 5,732,103 6,417,741
Long term loans 14 - - 21,444,342 25,296,460
Other financial assets 15 823,744 922,275 823,744 922,275
-------------
13,660,859 18,094,252 28,001,204 32,639,049
------------- ------------- ------------- -------------
CURRENT ASSETS
Inventory 16 - 27,250 - -
Trade and other receivables 17 905,924 1,628,959 131,197 432,041
Cash and cash equivalents 18 2,614,472 1,940,871 2,545,913 1,915,571
------------- -------------
3,520,396 3,597,080 2,677,110 2,347,612
TOTAL ASSETS 17,181,255 21,691,332 30,678,314 34,986,661
============= ============= ============= =============
CURRENT LIABILITIES
Trade and other payables 19 1,199,796 1,222,030 351,255 602,062
Loans and borrowings 21 13,724 14,013 11,920 13,015
1,213,520 1,236,043 363,175 615,077
------------- ------------- ------------- -------------
NON-CURRENT LIABILITIES
Deferred taxation 20 - 147,349 - -
Loans and borrowings 21 133,940 143,931 30,085 47,029
------------- ------------- ------------- -------------
133,940 291,280 30,085 47,029
------------- ------------- ------------- -------------
TOTAL LIABILITIES 1,347,460 1,527,323 393,260 662,106
------------- ------------- ------------- -------------
NET ASSETS 15,833,795 20,164,009 30,285,054 34,324,555
============= ============= ============= =============
EQUITY
Share capital - Ordinary
Shares 23 786,867 786,867 786,867 786,867
Share capital - Deferred
Shares 23 18,148,898 18,148,898 18,148,898 18,148,898
Share premium 55,349,883 55,349,883 55,349,883 55,349,883
Merger reserve 2,350,175 2,350,175 2,350,175 2,350,175
Foreign exchange reserve (5,851,094) (2,424,329) (5,744,107) (2,004,424)
Own shares held reserve (268,442) (268,442) (268,442) (268,442)
Convertible debt/warrant
reserve 690,937 1,165,911 690,937 1,165,911
Retained earnings (55,373,429) (55,449,600) (41,029,157) (41,204,313)
Revaluation reserve - 504,646 - -
------------- ------------- ------------- -------------
TOTAL EQUITY 15,833,795 20,164,009 30,285,054 34,324,555
============= ============= ============= =============
The Company has elected to take the exemption under section 408
of the Companies Act 2006 not to present the parent company's
income statement. The parent company's loss after tax for the year
was $740,114 (2021: $2,075,511).
The financial statements were approved and authorised for issue
by the Directors on 5 June 2023 and were signed on their behalf
by:
Michael Rowan
Chief Executive Officer
Company Number 03148295
The notes on pages 51 to 86 form part of these financial
statements.
GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2022
Own Convertible
Foreign shares debt and
Share Share Merger exchange held warrant Retained Revaluation Total
capital premium reserve reserve reserve reserve earnings Reserve equity
US$ US$ US$ US$ US$ US$ US$ US$ US$
At 31 December
2020 18,368,334 18,711,637 2,350,175 (184,975) (268,442) 3,701,803 (49,899,736) 504,646 (6,716,558)
Loss for the
year - - - - - - (5,881,768) - (5,881,768)
Other
comprehensive
income - - - (2,239,354) - - - - (2,239,354)
----------- ----------- ---------- ------------ ---------- ------------ ------------- ------------ ------------
Total
comprehensive
income - - - (2,239,354) - - (5,881,768) - (8,121,122)
----------- ----------- ---------- ------------ ---------- ------------ ------------- ------------ ------------
Issue of share
capital 334,391 13,087,809 - - - - - - 13,422,200
Conversion of
CLN 233,040 23,550,437 - - - (2,843,734) - - 20,939,743
Share based
payments and
warrants - - - - - 307,842 331,904 - 639,746
----------- ----------- ---------- ------------ ---------- ------------ ------------- ------------ ------------
At 31 December
2021 18,935,765 55,349,883 2,350,175 (2,424,329) (268,442) 1,165,911 (55,449,600) 504,646 20,164,009
=========== =========== ========== ============ ========== ============ ============= ============ ============
Loss for the
year - - - - - - (1,343,745) - (1,343,745)
Other
comprehensive
income - - - (3,426,765) - - - - (3,426,765)
----------- ----------- ---------- ------------ ---------- ------------ ------------- ------------ ------------
Total
comprehensive
income - - - (3,426,765) - - (1,343,745) - (4,770,510)
----------- ----------- ---------- ------------ ---------- ------------ ------------- ------------ ------------
Realisation of
revaluation
reserve - - - - - - 504,646 (504,646) -
Share based
payments and
warrants - - - - - (474,974) 915,270 - 440,296
At 31 December
2022 18,935,765 55,349,883 2,350,175 (5,851,094) (268,442) 690,937 (55,373,429) - 15,833,795
=========== =========== ========== ============ ========== ============ ============= ============ ============
The purpose and nature of each of the above reserves is
described in Note 25.
The notes on pages 51 to 86 form part of these financial
statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2022
Own Convertible
Foreign shares debt and
Share Share Merger exchange held warrant Retained Total
capital premium reserve reserve reserve reserve earnings equity
US$ US$ US$ US$ US$ US$ US$ US$
At 31 December
2020 18,368,334 18,711,637 2,350,175 (124,920) (268,442) 3,701,803 (39,460,706) 3,277,881
Loss for the
year - - - - - - (2,075,511) (2,075,511)
Other
comprehensive
income - - - (1,879,504) - - - (1,879,504)
----------- ----------- ---------- ------------ ---------- ------------ ------------- ------------
Total
comprehensive
income - - - (1,879,504) - - (2,075,511) (3,955,015)
----------- ----------- ---------- ------------ ---------- ------------ ------------- ------------
Issue of share
capital 334,391 13,087,809 - - - - - 13,422,200
Conversion of
CLN 233,040 23,550,437 - - - (2,843,734) - 20,939,743
Share based
payments
and warrants - - - - - 307,842 331,904 639,746
----------- ----------- ---------- ------------ ---------- ------------ ------------- ------------
At 31 December
2021 18,935,765 55,349,883 2,350,175 (2,004,424) (268,442) 1,165,911 (41,204,313) 34,324,555
=========== =========== ========== ============ ========== ============ ============= ============
Loss for the
year - - - - - - (740,114) (740,114)
Other
comprehensive
income - - - (3,739,683) - - - (3,739,683)
----------- ----------- ---------- ------------ ---------- ------------ ------------- ------------
Total
comprehensive
income - - - (3,739,683) - - (740,114) (4,479,797)
Share based
payments
and warrants - - - - - (474,974) 915,270 440,296
At 31 December
2022 18,935,765 55,349,883 2,350,175 (5,744,107) (268,442) 690,937 (41,029,157) 30,285,054
=========== =========== ========== ============ ========== ============ ============= ============
The purpose and nature of each of the above reserves is
described in Note 25.
The notes on pages 51 to 86 form part of these financial
statements.
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2022
Group Group Company Company
Note 2022 2021 2022 2021
US$ US$ US$ US$
Cash (outflow) from
operations 26 (2,554,563) (5,618,404) (711,370) (3,416,684)
Income tax paid - - - -
------------ ------------ ---------- --------------
Net cash (outflow)
from operating activities (2,554,563) (5,618,404) (711,370) (3,416,684)
============ ============ ========== ==============
Cash flows from investing
activities
Purchase of intangible
assets (730,213) - - -
Advances to acquire
property, plant and
equipment - (800,000) - -
Purchase of property,
plant and equipment - (3,957,944) - (2,979)
Sale of property,
plant and equipment 3,767,471 382,320 - -
------------ ------------ ---------- --------------
Net cash inflow/(outflow)
from investing activities 3,037,258 (4,375,624) - (2,979)
============ ============ ========== ==============
Cash flows from financing
activities
Issue of equity share
capital, net of share
issue costs - 12,722,200 - 12,722,200
Redemption of CLN - (1,571,222) - (1,571,222)
Intercompany loans
received/(advanced) - - 1,150,373 (6,617,719)
Unsecured debt repaid (13,652) (1,040,400) (13,174) (8,547)
Unsecured debt proceeds - 885,234 - -
Principal elements
of lease payments - (57,900) - -
------------ ------------ ---------- --------------
Net cash (outflow)/inflow
from financing activities (13,652) 10,937,912 1,137,199 4,524,712
============ ============ ========== ==============
Net increase in cash
and cash equivalents 469,043 943,884 425,829 1,105,049
Cash and cash equivalents
at beginning of the
year 1,940,871 999,631 1,915,571 811,901
Exchange gains/(losses)
on cash and cash equivalents 204,558 (2,644) 204,513 (1,379)
------------ ------------ ---------- --------------
Cash and cash equivalents
at end of the year 17 2,614,472 1,940,871 2,545,913 1,915,571
============ ============ ========== ==============
The notes on pages 51 to 86 form part of these financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
1. ACCOUNTING POLICIES
General information
Active Energy Group plc is a public limited company, limited by
shares, incorporated in England and Wales, and quoted on the AIM
market of the London Stock Exchange. Its registered office address
is 27/28 Eastcastle Street, London, W1W 8DH. The principal activity
of the Group is described in the Strategic Report.
Basis of preparation
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated. Certain prior year disclosures have been restated to
account for discontinued operations in accordance with the
requirements of IFRS 5.
On 31 December 2020, IFRS as adopted by the European Union at
that date was brought into UK law and became UK-adopted
International Accounting Standards, with future changes being
subject to endorsement by the UK Endorsement Board. Active Energy
Group plc transitioned to UK-adopted International Accounting
Standards in its consolidated financial statements on 1 January
2021. This change constituted a change in accounting framework
however there was no impact on recognition, measurement or
disclosure as a result of the change in framework.
Both the Company financial statements and the Group financial
statements (collectively the "Financial Statements") have been
prepared and approved by the Directors in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the UK, and with those parts of the Companies Act 2006 applicable
to companies reporting under IFRS. The Financial Statements have
been prepared on the historical cost basis, as modified by the
revaluation of property, plant and equipment, available for sale
financial assets and certain financial assets and liabilities,
including derivative financial instruments, held at fair value
through profit and loss.
The preparation of financial statements in compliance with IFRS
requires the use of accounting estimates. It also requires
management to exercise judgement in the most appropriate
application of the Group's accounting policies. The areas where
significant judgements and estimates have been made in preparing
the financial statements and their effects are disclosed at the end
of this note.
Going concern
In preparing the financial statements the Directors are required
to make an assessment of the Company's ability to continue as a
going concern and whether it is appropriate to prepare the
financial statements on a going concern basis.
Subsequent to the balance sheet date Player Design Inc. has been
granted the permit required to construct and operate CoalSwitch(R)
production at the plant in Ashland. However, there is uncertainty
around the timing to finalise construction which could affect both
the Group's future cash requirements and the timing of revenue cash
generation from sales of CoalSwitch(R).
The Directors have prepared cash flow forecasts to estimate the
Group's future cash requirements, and the resources available to
it, and these indicate that the Company should have sufficient cash
resources to continue in operation for the foreseeable future.
These forecasts involve a number of assumptions, the most
significant of which are:
-- the timing of completion of the Ashland plant and the
commencement of CoalSwitch(R) production.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
-- the level and timing of revenue generated by sales of CoalSwitch(R)
-- the successful disposal of surplus assets and the timing of disposal proceeds
-- the value and timing of pending tax credit claims
The Directors have concluded that additional funding may be
required to execute the Board's strategy of commercialising
CoalSwitch(R). While there can be no guarantee that funding will be
available on terms that are acceptable to the Company, or at all,
the Directors are confident that the Company will be able to secure
sufficient equity finance at the required time.
The Board are of the opinion that the factors set out above
constitute material uncertainties in relation to the Company's
ability to continue as a going concern.
The financial statements do not include any adjustments that
would arise if the Company were to be unable to continue as a going
concern.
Restatement of prior period
The statement of comprehensive income for the year ended 31
December 2021 has been restated to report the 2021 loss from
operations discontinued during 2022 within the loss from
discontinued operations line (see note 9). The overall loss for the
year ended 31 December 2021, the total comprehensive loss for the
year and net assets at 31 December 2021 are unaffected.
The Company consolidated its Ordinary Shares during 2022 and
consequently the loss per share and share options and warrants
disclosures for the year ended 31 December 2021 have been restated
to reflect the consolidated share capital (see notes 10 and 24).
The loss for the year ended 31 December 2021 and net assets at 31
December 2021 are unaffected.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
New and amended standards which are effective for these
Financial Statements
A number of amended standards became mandatory and are effective
for annual periods beginning on or after 1 January 2022 including
amendments to IFRS 16 (Covid-19 related rent concessions), IAS 16
(proceeds before intended use) and IAS 37 (onerous contracts), and
the Annual Improvements Cycle 2018-2020. These have not had a
material impact on the financial statements.
New and amended standards which are not yet effective for these
Financial Statements
There are a number of new and amended standards and
interpretations that are not mandatory for the year ended 31
December 2022 and have not been early adopted in these financial
statements. These will be adopted in the period when they became
mandatory unless otherwise indicated.
Application
date (accounting
Ref Title Summary periods commencing)
------- ----------------------- ---------------------------------------- ---------------------
IAS1 Presentation of Amendments: classification 1 January
Financial Statements of liabilities as current 2023
or non-current
Amendments: requirement to 1 January
disclose 'material' accounting 2023
policies instead of 'significant'
accounting policies
Amendments: clarification 1 January
of the impact of post balance 2024
sheet date conditions on the
classification of liabilities
as non-current
------- ----------------------- ---------------------------------------- ---------------------
IAS8 Accounting Policies, Amendments: definition of 1 January
Changes in Accounting accounting estimates and clarification 2023
Estimates and of the treatment of changes
Errors in accounting estimates
------- ----------------------- ---------------------------------------- ---------------------
IAS12 Income Taxes Amendments: clarification 1 January
of how deferred tax is accounted 2023
for on certain transactions
------- ----------------------- ---------------------------------------- ---------------------
IFRS16 Leases Amendments: clarification 1 January
of the measurement of sale 2024
and leaseback transactions
that qualify as sales transactions
under IFRS15
------- ----------------------- ---------------------------------------- ---------------------
IFRS17 Insurance contracts Replaces IFRS 4 'Insurance 1 January
Contracts' 2023
------- ----------------------- ---------------------------------------- ---------------------
These new and amended standards are not expected to have a
material impact on the Group.
Basis of consolidation
The financial information incorporates the results of the
Company and entities controlled by the Company (its subsidiaries).
Control is achieved when the Group has power over relevant
activities, is exposed, or has rights, to variable returns from its
involvement with the entity and has the ability to affect those
returns through its power over the entity. The consolidated
financial statements present the financial results of the Company
and its subsidiaries (the Group) as if they formed a single entity.
Where necessary, adjustments are made to the results of
subsidiaries to bring the accounting policies used into line with
those used by the Group. All intra-Group transactions, balances,
income and expenses are eliminated on consolidation.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
In the Company's statement of financial position, investments in
subsidiaries are stated at cost less provisions for any permanent
diminution in value. Total comprehensive income of non-wholly owned
subsidiaries is attributed to owners of the parent and to the
non-controlling interests in proportion to their relative ownership
interests, except when cumulative losses of the subsidiary result
in negative equity, whereafter total comprehensive income is
attributed to the Group.
Revenue recognition
Revenue is recognised in accordance with the requirements of
IFRS 15 'Revenue from Contracts with Customers'. The Company
recognises revenue to depict the transfer of promised goods and
services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those
goods or services. This core principle is delivered in a five-step
model framework: 1. Identify the contract(s) with the customer; 2.
Identify the performance obligations in the contract; 3. Determine
the transaction price; 4. Allocate the transaction price to the
performance obligations in the contract; and 5. Recognise revenue
when (or as) the entity satisfies a performance obligation.
Revenue is recognised when control of the products has been
transferred to the customer. Control is considered to have
transferred once products have been received by the customer unless
shipping terms dictate otherwise. Revenues exclude intra-group
sales and value added taxes and represent net invoice value less
estimated rebates, returns and settlement discounts. The net
invoice value is measured by reference to the fair value of the
consideration received or receivable by the Group for goods
supplied. In the case of income from licencing activities, revenue
is recognised as and when the relevant performance obligations
defined by the licence agreement have been satisfied. This may be
on initial grant of the licence if the grant is itself the
performance obligation. Alternatively, the performance obligation
may be dependent on certain further events, such as production
under the terms of the licence, in which case revenue will be
recognised as this occurs.
Goodwill and business combinations
On acquisition, the assets and liabilities and contingent
liabilities of subsidiaries are measured at their fair values at
the date of acquisition. Any excess of cost of acquisition over the
fair values of the identifiable net assets acquired is recognised
as goodwill. Any deficiency of the cost of acquisition below the
fair values of the identifiable net assets acquired (i.e. discount
on acquisition) is credited to the income statement in the period
of acquisition.
When the consideration transferred by the Group in a business
combination includes assets or liabilities from a contingent
consideration arrangement, the contingent consideration is measured
at its acquisition date fair value and included as part of the
consideration paid. Changes in the fair value of the consideration
that qualify as measurement period adjustments are adjusted
retrospectively, with corresponding adjustments against
goodwill.
Goodwill arising on consolidation is recognised as an intangible
asset and reviewed for impairment at least annually by comparing
the carrying value of the asset to the recoverable amount. Any
impairment is recognised immediately in profit or loss and is not
subsequently reversed.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
Impairment of non-financial assets (excluding inventories,
investment properties and deferred tax)
Impairment tests on goodwill and other intangible assets with
indefinite useful economic lives are undertaken annually at the
financial year end. Other non-financial assets are subject to
impairment tests whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where
the carrying value of an asset exceeds its recoverable amount (i.e.
the higher of value in use and fair value less costs to sell), the
asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of
an individual asset, the impairment test is carried out on the
smallest group of assets to which it belongs for which there are
separately identifiable cash flows; its cash generating units
("CGUs"). Goodwill is allocated on initial recognition to each of
the Group's CGUs that are expected to benefit from the synergies of
the combination giving rise to the goodwill. Impairment charges are
included in profit or loss, except to the extent they reverse gains
previously recognised in other comprehensive income. An impairment
loss recognised for goodwill is not reversed.
Intangible assets
Externally acquired intangible assets with a finite useful life
are initially recognised at cost and subsequently amortised on a
straight-line basis over their useful economic lives and tested for
impairment annually. Externally acquired intangible assets with an
infinite life are not amortised but are tested for impairment
annually.
Intangible assets are recognised on business combinations if
they are separable from the acquired entity or give rise to other
contractual/legal rights. The amounts ascribed to such intangibles
are arrived at by using appropriate valuation techniques.
Internally generated intangible fixed assets are recognised if
they meet the requirements set out by International Accounting
Standards. Specifically,
-- the asset must be separately identifiable that is to say that
either it is capable of being separated or divided from the entity
and sold, transferred, licensed, rented or exchanged; or it arises
from contractual or other legal rights, regardless of whether those
rights are transferable or separable from the entity or from other
rights and obligations;
-- the cost of the asset can be measured reliably;
-- the technical feasibility of completing the intangible asset;
-- the Group intends and is able to complete the intangible asset and use or sell it;
-- the intangible asset will generate probable future economic benefits;
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
Intangible assets (continued)
-- there are available and adequate technical, financial, and
other resources to complete and to use or sell the intangible
asset; and
-- Expenditure attributable to the intangible asset is measurable.
Property, plant and equipment
Property, plant and equipment is stated at cost, or deemed cost,
less accumulated depreciation and any recognised impairment loss.
Cost includes the purchase price and all directly attributable
costs. Depreciation is provided at the following annual rates in
order to write off each asset over its estimated useful life:
Plant and equipment - 2 to 10 years straight line
Furniture and office equipment - 2 to 5 years straight line
Buildings - 25 to 50 years straight line
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
Property is depreciated and is reviewed by means of an independent
property valuer on a three-year basis, unless indicators of
impairment exist, in which case an independent valuation will be
performed. Land is not depreciated.
Inventories
Inventories are initially recognised at cost, and subsequently
at the lower of cost and net realisable value. Cost is determined
using the first-in, first-out (FIFO) method. Cost comprises all
costs of purchase, costs of conversion and other costs incurred in
bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary
course of business, less applicable selling expenses. Inventory
consists of raw materials and finished timber products.
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision maker has been identified as the
management team including the Executive Directors.
Financial assets and liabilities
The Group classifies its financial assets at inception into
three measurement categories; 'amortised cost', 'fair value through
other comprehensive income' ("FVOCI") and 'fair value through
profit and loss' ("FVTPL"). The Group classifies its financial
liabilities, other than financial guarantees and loan commitments,
as measured at amortised cost. Management determines the
classification of its investments at initial recognition. A
financial asset or financial liability is measured initially at
fair value. At inception transaction costs that are directly
attributable to its acquisition or issue, for an item not at fair
value through profit or loss, are added to the fair value of the
financial asset and deducted from the fair value of the financial
liability.
Amortised cost measurement
The amortised cost of a financial asset or financial liability
is the amount at which the financial asset or liability is measured
at initial recognition, minus principal payments, plus or minus the
cumulative amortisation using the effective interest method of any
difference between the initial amount recognised and maturity
amount, minus any reduction for impairment.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
Financial assets and liabilities (continued)
Fair value measurement
Fair value is the amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing parties in
an arm's length transaction on the measurement date. The fair value
of assets and liabilities in active markets are based on current
bid and offer prices respectively. If the market is not active the
group establishes fair value by using appropriate valuation
techniques. These include the use of recent arm's length
transactions, reference to other instruments that are substantially
the same for which market observable prices exist, net present
value and discounted cash flow analysis.
Derecognition
Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or where the
group has transferred substantially all of the risks and rewards of
ownership. In a transaction in which the group neither retains nor
transfers substantially all the risks and rewards of ownership of a
financial asset and it retains control over the asset, the group
continues to recognise the asset to the extent of its continuing
involvement, determined by the extent to which it is exposed to
changes in the value of the transferred asset. There have not been
any instances where assets have only been partly derecognised. The
group derecognises a financial liability when its contractual
obligations are discharged, cancelled or expire.
Impairment
The Group assesses at each financial position date whether there
is objective evidence that a financial asset or group of financial
assets is impaired. If there is objective evidence (such as
significant financial difficulty of the obligor, breach of
contract, or it becomes probable that debtor will enter
bankruptcy), the asset is tested for impairment. The amount of the
loss is measured as the difference between the asset's carrying
amount and the present value of the estimated future cash flows
(excluding future expected credit losses that have not been
incurred) discounted at the financial asset's original effective
interest rate (that is, the effective interest rate computed at
initial recognition). The carrying amount of the asset is reduced
through use of an allowance account.
Taxation
Current taxes are based on the results shown in the Financial
Statements and are calculated according to local tax rules, using
tax rates enacted or substantively enacted by the year-end
date.
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the consolidated
statement of financial position differs from its tax base, except
for differences arising on:
-- the initial recognition of goodwill;
-- the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting or taxable profit;
and
-- investments in subsidiaries and jointly controlled entities
where the Group is able to control the timing of the reversal of
the difference and it is probable that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available to utilise the difference. The amount of the asset or
liability is determined using tax rates that have been enacted or
substantively enacted by the reporting date and are expected to
apply when the deferred tax liabilities/assets are
settled/recovered.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
Taxation (continued)
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable group company; or
-- different Group entities which intend either to settle
current tax assets/liabilities on a net basis, or to realise the
assets and settle the liabilities simultaneously, in each future
period in which significant amounts of deferred tax assets or
liabilities are expected to be settled/recovered.
Foreign currencies
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which they operate (their "functional
currency"). The Company and Consolidated financial statements are
presented in United States Dollar ("US Dollar", "US$"), which is
the Group's presentation currency as the Group's activities are
ultimately linked to the US Dollar. The Company's functional
currency is Pounds Sterling.
Transactions entered into by Group entities in a currency other
than their functional currency are recorded at the rates ruling
when the transactions occur. Foreign currency monetary assets and
liabilities are translated at the rates ruling at the reporting
date. Exchange differences arising on the retranslation of
unsettled monetary assets and liabilities are recognised
immediately in profit or loss.
On consolidation, the results of overseas operations are
translated into the Group's presentation currency, US Dollars, at
rates approximating to those ruling when the transactions took
place. All assets and liabilities of overseas operations, including
goodwill arising on the acquisition of those operations, are
translated at the rate ruling at the reporting date. Differences
arising on translating the opening net assets at opening rate and
the results of overseas operations at actual rate are recognised in
other comprehensive income and accumulated in the foreign exchange
reserve. Exchange differences recognised in the statement of
comprehensive income of Group entities' separate financial
statements on the translation of long-term monetary items forming
part of the Group's net investment in the overseas operation
concerned are reclassified to the foreign exchange reserve on
consolidation.
On disposal of a foreign operation, the cumulative exchange
differences recognised in the foreign exchange reserve relating to
that operation up to the date of disposal are transferred to the
consolidated statement of comprehensive income as part of the
profit or loss on disposal. The key US$/GBP exchange rates used to
prepare the accounts were as follows: rate at 31 December 2022:
1.2056; average for year-ended 31 December 2022: 1.237; rate at 31
December 2021: 1.350.
Convertible debt
The obligations associated with the issue of the Company's
convertible debt are allocated into their liability and equity
components. The amount initially attributed to the debt component
equals the discounted cash flows using a market rate of interest
that would be payable on a similar debt instrument that does not
include an option to convert. Subsequently, the debt component is
accounted for as a financial liability measured at amortised cost
until extinguished on conversion or maturity of the bond. The
remainder of the proceeds are allocated to the conversion option
and are recognised in the "Convertible debt reserve" within
shareholders' equity, net of income tax effects.
Where the proceeds from the convertible debt have been used to
finance construction of property, plant and equipment, or to invest
in intangible assets, then the associated borrowing costs are
allocated to the relevant asset in accordance with the requirements
of IAS23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
There were no outstanding convertible debt instruments as at 31
December 2022 as these were all converted in the prior year.
Leased assets
Leased assets are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is
available for use by the Group. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an
estimate of costs required to remove or restore the underlying
asset, less any lease incentives received. The right-of-use asset
is depreciated over the shorter of the asset's useful life and the
lease term on a straight-line basis. The initial measurement of the
corresponding lease liability is at the present value of the lease
payments that are not paid at the lease commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate. The lease payments include fixed payments, less any
lease incentive receivable, variable leases payments based on an
index or rate, and amounts expected to be payable by the lessee
under residual value guarantees.
The lease liability is subsequently measured at amortised cost
using the effective interest method. It is remeasured when there is
a change in future lease payments arising from a change in an index
or rate, if there is a change in the Group's estimate of the amount
expected to be payable under a residual value guarantee or if the
Group changes its assessment of whether it will exercise a
purchase, extension or termination option. When the lease liability
is remeasured in this way, a corresponding adjustment is made to
the carrying amount of the right-of-use asset or is recorded in
profit or loss if the carrying amount of the right-of-use asset has
been reduced to zero.
Share-based payments
Where employees receive remuneration in the form of shares or
share options, the fair value of the share-based employee
compensation arrangement at the date of the grant is recognised as
an employee benefit expense in the consolidated income statement.
The total expense to be apportioned over the vesting period of the
benefit is determined by reference to the fair value (excluding the
effect of non-market-based vesting conditions) at the date of the
grant. The assumptions underlying the number of awards expected to
vest are subsequently adjusted for the effects of non-market-based
vesting to reflect the conditions prevailing at the year-end date.
Fair value is measured using a valuation tool (Monte Carlo or Black
Scholes). The expected life used in the model has been adjusted,
based on management's best estimate, for the effects of the
non-transferability, exercise restrictions and behavioural
considerations.
Where equity instruments are granted to persons other than
employees, the consolidated income statement is charged with the
fair value of goods and services received; except where that fair
value cannot be estimated reliably, in which case they are measured
at the fair value of the equity instruments granted, measured at
the date the entity obtains the goods or the counterparty renders
the service.
Own shares held
Consideration paid/received for the purchase/sale of shares held
in escrow or in trust for the benefit of employees is recognised
directly in equity. The nominal value of such shares held is
presented within the "own shares held" reserve. Any excess of the
consideration received on the sale of the shares over the weighted
average cost of the shares sold is credited to retained
earnings.
Neither the purchase nor sale of own shares leads to a gain or
loss being recognised in the Group consolidated income
statement.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
Investment in subsidiaries
Investments in subsidiaries are stated at cost less provision
for impairment in the Company financial statements.
Critical accounting judgements and key sources of estimation
uncertainty
The preparation of financial information in conformity with
International Financial Reporting Standards requires management to
make estimates and judgements that affect the reported amounts of
assets and liabilities as well as the disclosure of contingent
assets and liabilities at the year-end date and the reported
amounts of revenues and expenses during the reporting period.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances. Management's consideration of going concern is
discussed elsewhere in the accounting policies note. The other
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were as follows:
Impairment of goodwill, intangible fixed assets, property plant
and equipment and other assets
Intangible assets relate solely to CoalSwitch(R) and PeatSwitch
patents, trademarks, and know-how. The Group has property plant and
equipment in the form of the CoalSwitch(R) production equipment.
The CoalSwitch(R) reactors damaged as a result of the component
failure at Ashland have been impaired with the remaining
CoalSwitch(R) production equipment subjected to a value in use
assessment to determine whether further impairment was required.
The use of these methods similarly requires the estimation of
future cash flows and the choice of a discount rate in order to
calculate the present value of the estimated future cash flows.
Furthermore, these methods require an assessment of various
strategies to develop and monetise these assets as well as an
assessment of the success of these strategies. Actual outcomes will
vary.
Share-based payments
In determining the fair value of LTIP awards and other equity
settled share-based payments, and the related charge to the income
statement, the Group makes assumptions about future events and
market conditions. In particular, judgements must be made as to the
fair value of each award granted. The fair value is determined
using a valuation model which is dependent on further estimates,
including the Group's future dividend policy, the timing with which
options will be exercised and the future volatility in the price of
the Group' shares. Such assumptions are based on publicly available
information and reflect market expectations and advice taken from
qualified personnel. Different assumptions about these factors
could materially affect the reported value of share-based
payments.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
1. ACCOUNTING POLICIES (continued)
Critical accounting judgements and key sources of estimation
uncertainty (continued)
Recognition of development costs within intangible fixed
assets
The Group undertakes certain development activity which is
recognised within intangible fixed assets if it meets certain
criteria laid down by international accounting standards. This
means that management is required to assess various factors
associated with these assets to determine whether the asset is
separately identifiable, that it is probable that future economic
benefits attributable to it will arise; the technical feasibility
of completing the asset; that the Group intends and is able to
complete the asset; and there are available and adequate technical,
financial, and other resources to complete the asset. All these
matters involve technical and economic judgement and changes to
these assessments can result in significant variations in the
carrying value and amounts charged to the consolidated statement of
comprehensive income in specific periods.
Recoverability of intercompany loans
The Active Energy Group plc company balance sheet includes
various loans to subsidiaries. Certain of these loans have been
impaired on the basis that the counterparty is unlikely to generate
sufficient future cash flows to repay the loan. This is based on an
assessment of the assets (including goodwill) of the counterparty
and its ability to monetise those assets in the future. Actual
results will vary.
2. SEGMENTAL INFORMATION
The Group reports three business segments:
-- "CoalSwitch(R)" denotes the Group's renewable wood pellet business.
-- "Wood processing" at the Lumberton site denotes the Group's
sawmill and saw log activities and the Lumberton property. The
sawmill and sawlog activities ceased during 2021 and are reported
as discontinuing operations. The results of these operations are
not included in the segmental reporting.
-- "Corporate and other" denotes the Group's corporate and other costs.
The business segments are aligned to the Group's strategy as
disclosed in the Strategic Report.
Factors that management used to identify the Group's reportable
segments
The Group's reportable segments are strategic business units
that offer different products or services.
Measurement of operating segment profit or loss
The Group evaluates segmental performance on the basis of profit
or loss from operations calculated in accordance with IFRS but
excluding the results from discontinued operations in accordance
with IFRS 5.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
2. SEGMENTAL INFORMATION (continued)
2022 2022 2022 2022
Corporate
CoalSwitch(R) Wood processing & Other Total
US$ US$ US$ US$
Revenue - - - -
Operating (loss) (1,659,253) - (2,196,131) (3,855,384)
Profit/(loss) before
tax (1,659,274) - 1,097,239 (562,035)
Profit/(loss) for
the year (1,659,274) - 1,097,239 (562,035)
================== ================ ================== ============
Total Assets 13,649,225 49,589 3,482,441 17,181,255
================== ================ ================== ============
Total Liabilities 640,768 332,861 373,831 1,347,460
================== ================ ================== ============
Other segmental information:
Additions to Intangibles 730,213 - - 730,213
Additions to PPE 231,087 - - 231,087
Depreciation and amortisation - - 1,318 1,318
Impairment charges 1,000,000 - - 1,000,000
Restated Restated
2021 2021 2021 2021
Corporate
CoalSwitch(R) Wood processing & Other Total
US$ US$ US$ US$
Revenue - - - -
Operating segment (loss)/profit (2,952,909) 18,388 (1,743,583) (4,678,104)
(Loss)/profit before
tax (2,952,909) 18,388 (1,743,583) (4,678,104)
(Loss)/profit for
the year (2,952,909) 18,388 (1,743,583) (4,678,104)
================== ================ ================== ============
Total Assets 13,971,415 4,447,457 3,272,460 21,691,332
================== ================ ================== ============
Total Liabilities 355,952 501,047 670,324 1,527,323
================== ================ ================== ============
Other segmental information:
Additions to Intangibles 400,000 - - 400,000
Additions to PPE 3,942,465 12,500 2,979 3,957,944
Depreciation and amortisation - - 1,264 1,264
Impairment charges 2,000,000 - - 2,000,000
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
2. SEGMENTAL INFORMATION (continued)
Non-current assets are located as follows:
2022 2021
US$ US$
United Kingdom 824,759 924,848
United States 12,836,100 17,169,404
-----------
13,660,859 18,094,252
=========== ===========
3. REVENUE
2022 2021
Group US$ US$
Continuing operations - -
Discontinued operations:
Sales of product - 528,062
Other income - 116,852
- 644,914
===== ========
Sawmill and saw log activities ceased during 2021 and are
accounted for as discontinued operations (see Note 9). All revenue
was generated in the USA.
4. IMPAIRMENT CHARGES
2022 2021
US$ US$
Property, plant and equipment 1,000,000 2,000,000
----------- ----------
1,000,000 2,000,000
=========== ==========
All impairment charges relate to continuing operations. See note
12 for more information.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
5. EMPLOYEE COSTS AND DIRECTORS
The following table analyses group wages and salaries before any
allocations to property, plant and equipment or intangib l e
assets.
2022 2021
Group US$ US$
Continuing operations
Directors' fees and salaries 607,172 733,051
Social security costs 77,421 89,544
---------- ----------
684,593 822,595
Share based payments - directors 339,375 314,530
Share based payments - others 18,746 8,387
---------- ----------
1,042,714 1,145,512
========== ==========
Discontinued operations
Wages and salaries 106,699 416,071
Social security costs 9,323 37,076
---------- ----------
116,022 453,147
Share based payments - others - 8,987
---------- ----------
116,022 462,134
========== ==========
1,158,736 1,607,646
========== ==========
The average monthly number of employees during the year was as
follows:
2022 2021
Continuing operations
Directors 5 5
Administration 2 2
Discontinued operations
Production 1 12
----- -----
8 19
===== =====
Directors' and key management personnel remuneration
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of the Group. These are considered to be the directors
of the Company.
2022 2021
US$ US$
Directors' emoluments 607,172 730,891
Termination benefits 48,726 -
Share based payments 339,375 314,530
-------- ----------
995,273 1,045,421
======== ==========
The emoluments of the highest paid Director for the year,
excluding non-cash share-based payments, were $230,104 (2021:
$240,787).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
6. OPERATING LOSS
Restated
2022 2021
Group US$ US$
The operating loss is stated after charging:
Continuing operations
Impairment charges 1,000,000 2,000,000
Depreciation 1,318 1,264
Loss on disposal of fixed assets - 6,064
Auditor's remuneration - parent company
and consolidation 68,663 58,133
Auditor's remuneration - subsidiaries 34,610 35,086
Auditor's remuneration - taxation services 6,495 5,504
Auditor's remuneration - other services 2,023 3,715
Share based payments 358,121 630,759
Discontinued operations
Loss on disposal of fixed assets 455,140 -
Depreciation 18,556 172,643
Depreciation on Right-of-Use Assets - 72,511
Auditor's remuneration - 9,288
Share based payments - 8,987
7. NET FINANCE INCOME/(COSTS)
2022 2021
Group US$ US$
Continuing operations
Finance income
Interest income 28,412 -
28,412 -
-------- ----------
Finance costs
Interest on convertible loan - (164,400)
Other loan interest and charges (4,239) (139,312)
-------- ----------
(4,239) (303,712)
-------- ----------
24,173 (303,712)
======== ==========
Discontinued operations
Finance costs
Right-of-use lease interest - (22,265)
Other loan interest and charges (6,662) (7,322)
-------- ----------
(6,662) (29,587)
======== ==========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
8. TAXATION
Restated
2022 2021
Group US$ US$
Continuing operations
Current tax - -
Deferred tax - -
Total income tax expense - -
======== =========
Discontinued operations
Total income tax (credit) (1,395) (2,790)
======== =========
Factors affecting the tax charge
The tax on the Group assessed for the year is higher than the
standard rate of corporation tax in the UK. The difference is
explained below:
Restated
2022 2021
US$ US$
Loss before taxation (1,345,140) (5,884,558)
Standard rate of corporation tax 19% 19%
Loss before tax multiplied by standard
rate of corporation tax (255,577) (1,118,066)
Effects of:
Non-deductible expenses 353,655 492,956
Different tax rates in overseas jurisdictions (7,519) (9,492)
Tax credit included within loss from
discontinued operations 1,395 2,790
Losses (used)/not recognised (91,954) 631,812
------------ ------------
Tax expense/(credit) - -
============ ============
The Group's tax loss position can be summarised as follows:
2022 2021
US$ US$
Tax losses brought forward at 1 January 43,437,711 35,969,354
Taxable (profit)/loss for the year (517,596) 3,466,886
Adjustment in respect of prior periods (2,630,178) 4,001,471
Tax losses carried forward at 31 December 40,289,937 43,437,711
============ ===========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
9. DISCONTINUED OPERATIONS
During 2021 the Group discontinued its sawmill and saw log
operations under the wood processing operating segment. During 2022
the Group sold the Lumberton property that was used for these
operations. The results of these businesses are disclosed as a
single line item in the Consolidated Statement of Income in
accordance with IFRS5.
The analysis between continuing and discontinued operations is
as follows:
Continuing Discontinued
Year ended 31 December 2022 operations operations Total
US$ US$ US$
Revenue - - -
------------ ------------- ------------
Gross loss - (321,292) (321,292)
Impairment charges (1,000,000) - (1,000,000)
Administrative expenses (2,855,384) (14,700) (2,870,084)
Loss on disposal of PPE - (455,140) (455,140)
Other income - 14,689 14,689
------------ ------------- ------------
Operating loss (3,855,384) (776,443) (4,631,827)
Finance income/(costs) 3,293,349 (6,662) 3,286,687
------------ ------------- ------------
Loss before taxation (562,035) (783,105) (1,345,140)
Taxation - 1,395 1,395
------------ ------------- ------------
Loss for the year (562,035) (781,710) (1,343,745)
============ ============= ============
Cash outflows from operating activities (2,261,629) (292,934) (2,554,563)
Cash inflows from investing activities (730,212) 3,767,469 3,037,257
Cash outflows from financing activities (13,174) (478) (13,652)
Restated Restated
Continuing Discontinued
Year ended 31 December 2021 operations operations Total
US$ US$ US$
Revenue - 644,914 644,914
------------ ------------- ------------
Gross loss (517,238) (851,211) (1,368,449)
Impairment charges (2,000,000) - (2,000,000)
Administrative expenses (2,904,311) (372,203) (3,276,514)
Other income 361,237 46,547 407,784
------------ ------------- ------------
Operating loss (5,060,312) (1,176,867) (6,237,179)
Finance income/(costs) 382,208 (29,587) 352,621
------------ ------------- ------------
Loss before taxation (4,678,104) (1,206,454) (5,884,558)
Taxation - 2,790 2,790
------------ ------------- ------------
Loss for the year (4,678,104) (1,203,664) (5,881,768)
============ ============= ============
Cash outflows from operating activities (5,440,031) (178,373) (5,618,404)
Cash outflows from investing activities (4,305,224) (70,400) (4,375,624)
Cash inflows from financing activities 10,937,912 - 10,937,912
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
10. LOSS PER SHARE
Restated
2022 2021
US$ US$
Loss for the year:
Continuing operations (562,035) (4,678,104)
Discontinued operations (781,710) (1,203,664)
----------- -----------
Total operations (1,343,745) (5,881,768)
=========== ===========
Weighted number of Ordinary Shares in issue 161,863,136 102,450,087
Basic and diluted loss per share (US cents):
Continuing operations (0.35) (4.57)
Discontinued operations (0.48) (1.17)
----------- -----------
Total operations (0.83) (5.74)
=========== ===========
On 4 July 2022 the Company's Ordinary Shares were consolidated
on a 1 for 35 basis and the weighted average number of shares in
issue in 2022 has been adjusted to reflect this. The weighted
average number of shares and loss per share for 2021 have been
restated on the basis of the consolidated share capital and to
reflect the apportionment of the 2021 loss relating to the
operations discontinued in 2022.
11. INTANGIBLE ASSETS
Group Intellectual Timber
Goodwill property licences Total
US$ US$ US$ US$
Cost
At 31 December 2020 567,668 5,259,386 6,503,975 12,331,029
Additions - 400,000 - 400,000
Written off (567,668) - (6,503,975) (7,071,643)
At 31 December 2021 - 5,659,386 - 5,659,386
Additions - 730,213 - 730,213
Transferred from PPE - 1,675,348 - 1,675,348
At 31 December 2022 - 8,064,947 - 8,064,947
========== ============= ============ ============
Accumulated amortisation
At 31 December 2020 567,668 362 6,503,975 7,072,005
Released on assets written
off (567,668) - (6,503,975) (7,071,643)
---------- ------------- ------------ ------------
At 31 December 2021 - 362 - 362
At 31 December 2022 - 362 - 362
========== ============= ============ ============
Net book value
At 31 December 2022 - 8,064,585 - 8,064,585
========== ============= ============ ============
At 31 December 2021 - 5,659,024 - 5,659,024
========== ============= ============ ============
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
11. INTANGIBLE ASSETS (continued)
Goodwill
Goodwill arising on the acquisition of Renewable Logistics
Systems LLC ("RLS") in 2019 was fully impaired in 2020. The
associated sawmill and saw log operations ceased during 2021 and
accordingly the goodwill was written off in 2021.
Intellectual property
Intellectual property comprises costs incurred to secure the
rights and knowledge associated with the CoalSwitch(R) and
PeatSwitch technologies. These assets are accounted for as
indefinite life assets and assessed for impairment at each balance
sheet date. Recoverability of the intellectual property assets is
dependent on successfully commercialising CoalSwitch(R) which is
subject to uncertainties including: the capital costs required to
construct a CoalSwitch(R) facility; feedstock pricing; market
conditions and product sales prices; production efficiencies;
logistics costs; and the ability of the Group to access sufficient
financial resources to develop the product to economic maturity and
profitability. Management assessed each of these assumptions,
benchmarked them against available industry data and consulted with
an industry expert. The key assumption in estimating the
recoverable amount is considered to be the future selling price of
the CoalSwitch(R) product.
The recoverable amount of the intellectual property has been
estimated based on a value in use calculation. The calculation uses
a discounted cash flow model covering a three year period and
extrapolated to five years assuming no further growth, with a
discount rate of 12.5%. The estimated recoverable amount exceeds
the carrying value of the assets of the cash generating unit and
management have therefore concluded that the intellectual property
assets are not impaired.
Timber licences
Canadian and Ukrainian timber licences were fully impaired in
2020. Following the sale of AE Ukraine and the revoking of the
Newfoundland commercial cutting permit, these intangibles were
written off in 2021.
12. PROPERTY, PLANT AND EQUIPMENT
Group Furniture
Land & Plant and office
Buildings and equipment equipment Total
US$ US$ US$ US$
Cost
At 31 December 2020 4,281,829 6,573,255 10,349 10,865,433
Additions - 3,954,965 2,979 3,957,944
Disposals - (872,079) - (872,079)
Transfers 210,220 (337,444) - (127,224)
Foreign exchange movements - - (158) (158)
------------ --------------- ------------ ------------
At 31 December 2021 4,492,049 9,318,697 13,170 13,823,916
Additions - 375,357 - 375,357
Disposals (4,492,049) (247,192) - (4,739,241)
Transferred to intangible
assets - (1,675,348) - (1,675,348)
Foreign exchange movements - - (1,405) (1,405)
------------ --------------- ------------ ------------
At 31 December 2022 - 7,771,514 11,765 7,783,279
============ =============== ============ ============
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
12. PROPERTY, PLANT AND EQUIPMENT (continued)
Group Furniture
Land & Plant and office
Buildings and equipment equipment Total
US$ US$ US$ US$
Accumulated depreciation
At 31 December 2020 165,977 246,366 9,449 421,792
Depreciation for the year 128,366 116,788 1,264 246,418
Impairment charge - 2,000,000 - 2,000,000
Disposals - (229,907) - (229,907)
Transfers (96,343) (30,881) - (127,224)
Foreign exchange movements - - (116) (116)
----------- --------------- ---------------- -----------
At 31 December 2021 198,000 2,102,366 10,597 2,310,963
Charge for the year 18,000 556 1,318 19,874
Impairment charge - 1,000,000 - 1,000,000
Disposals (216,000) (102,922) - (318,922)
Foreign exchange movements - - (1,166) (1,166)
----------- --------------- ---------------- -----------
At 31 December 2022 - 3,000,000 10,749 3,010,749
=========== =============== ================ ===========
Net book value
At 31 December 2022 - 4,771,514 1,016 4,772,530
=========== =============== ================ ===========
At 31 December 2021 4,294,049 7,216,331 2,573 11,512,953
=========== =============== ================ ===========
The additions to plant and equipment in both 2021 and 2022
represent expenditure on assets under construction.
Recoverability of the plant and equipment assets is dependent on
successfully commercialising CoalSwitch(R); which is subject to
uncertainties including: the capital costs required to construct a
CoalSwitch(R) production facility; feedstock pricing; market
conditions and product sales prices; production efficiencies;
logistics costs; and the ability of the Group to access sufficient
financial resources to develop the product to economic maturity and
profitability. Management assessed each of these assumptions,
benchmarked them against available industry data and consulted with
an industry expert. The key assumption in estimating the
recoverable amount is considered to be the future selling price of
the CoalSwitch(R) product.
The recoverable amount of the plant and equipment has been
estimated based on a value in use calculation. The calculation uses
a discounted cash flow model covering a three year period and
extrapolated to five years assuming no further growth, with a
discount rate of 12.5%. The estimated recoverable amount exceeds
the carrying value of the assets of the cash generating unit and
management have therefore concluded that the plant and equipment
assets are not impaired.
The $1,000,000 impairment charge relates to a reactor that has
been taken out of service and is being used for research and
development purposes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
12. PROPERTY, PLANT AND EQUIPMENT (continued)
Company - office equipment
2022 2021
US$ US$
Cost
At 1 January 13,170 10,349
Additions - 2,979
Foreign exchange movements (1,407) (158)
-------- -------
At 31 December 11,763 13,170
======== =======
Accumulated depreciation
At 1 January 10,597 9,449
Charge for the year 1,318 1,264
Foreign exchange movements (1,167) (116)
-------- -------
At 31 December 10,748 10,597
======== =======
Net book value 1,015 2,573
======== =======
13. INVESTMENTS IN SUBSIDIARIES
2022 2021
US$ US$
Cost
At 1 January 11,554,112 5,992,561
Additions - 10,200,000
Disposals - (4,496,618)
Foreign exchange movements (1,234,383) (141,831)
------------ ------------
At 31 December 10,319,729 11,554,112
============ ============
Impairment provision
At 1 January 5,136,371 4,496,618
Impairment charge - 1,295
Transfer from long term loans - 5,200,000
Disposals - (4,496,618)
Foreign exchange movements (548,745) (64,924)
------------ ------------
At 31 December 4,587,626 5,136,371
============ ============
Net book value 5,732,103 6,417,741
============ ============
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
13. INVESTMENTS IN SUBSIDIARIES (continued)
At 31 December 2022 the Group held share capital and had a
controlling interest in each of the following companies:
Country Percentage Dissolution
Subsidiary undertaking of incorporation Nature of business Holding Date
2022 2021
-------------------------------------------------------------------------- ------
Advanced Biomass Solutions Biomass for energy
Limited United Kingdom development 100 100
------------------- ------------------------ ------ ----- -------------
Lumberton Energy Holdings Property Holding
LLC United States Company 100 100
------------------- ------------------------ ------ ----- -------------
Active Energy Renewable Biomass for energy
Power LLC United States development 100 100
------------------- ------------------------ ------ ----- -------------
Biomass for energy
CSW2Maine LLC United States development 100 100
------------------- ------------------------ ------ ----- -------------
Timberlands Newfoundland Biomass for energy 9 August
& Labrador Inc Canada development 100 100 2022
------------------- ------------------------ ------ ----- -------------
24 January
AEG Trading Limited United Kingdom Wood chip distribution 100 100 2023
------------------- ------------------------ ------ ----- -------------
Timberlands International Biomass for energy 24 January
Limited United Kingdom development 100 100 2023
------------------- ------------------------ ------ ----- -------------
23 September
Nikofeso Holdings Limited Cyprus Wood chip distribution - 100 2022
------------------- ------------------------ ------ ----- -------------
Wood processing 29 August
Renewable Energy Systems United States and distribution 100 100 2022
------------------- ------------------------ ------ ----- -------------
Active Energy Services 28 June
UK Limited (formerly 2022
AEG CoalSwitch(R) Limited)
(5) United Kingdom Corporate Services - 89
------------------- ------------------------ ------ ----- -------------
AEG CoalSwitch(R) USA Biomass for energy 01 March
LLC United States development 100 100 2020
------------------- ------------------------ ------ ----- -------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
14. INTERCOMPANY LOANS
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Carrying value at beginning
of the year - - 25,296,460 23,204,528
Loans (received)/advanced
during the year - - (1,150,373) 7,153,319
Capitalised as investments
in subsidiaries (see
note 13) - - - (10,200,000)
Impairment provision
transferred to investments
in subsidiaries - - - 5,200,000
Interest accrued - - - 164,400
Foreign exchange movements - - (2,701,745) (225,787)
------ ------ ------------ -------------
Carrying value at end
of the year - - 21,444,342 25,296,460
====== ====== ============ =============
Long term loans are loans made to subsidiaries of the Company
and are repayable on demand.
15. OTHER FINANCIAL ASSETS
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Fair value at beginning
of the year 922,275 931,312 922,275 931,312
Foreign exchange movements (98,531) (9,037) (98,531) (9,037)
Fair value at end of the
year 823,744 922,275 823,744 922,275
========= ======== ========= ========
Other financial assets consist of an unquoted equity instrument
which is valued at fair value through other comprehensive income
and classified as a non-current asset. The instrument is
denominated in Pounds Sterling.
This asset is valued according to Level 3 inputs as defined by
IFRS 13 and is therefore subject to management's judgement of
unobservable inputs. The asset is currently held at its historic
cost which represents management's best estimate of its fair
value.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
16. INVENTORY
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Raw materials - 27,250 - -
------ ------- -------- --------
Total Inventory - 27,250 - -
====== ======= ======== ========
17. TRADE AND OTHER RECEIVABLES
The carrying value of trade and other receivables, after
deduction of appropriate allowances for irrecoverable amounts,
approximates to their fair value. These assets are not interest
bearing and are received over a short period of time with an
insignificant risk of changes in fair value.
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Project advances 774,669 1,190,315 - -
Prepayments 73,461 83,529 73,461 76,926
Other receivables 57,794 355,115 57,736 355,115
Total 905,924 1,628,959 131,197 432,041
======== ========== ======== ========
Trade and other receivables that have not been received within
the payment terms are classified as overdue. There were no trade
and other receivables overdue at 31 December 2022 or 31 December
2021 and accordingly there were no impairment provisions at either
date. An analysis of the Group's trade and other receivables by
currency is provided in note 27.
18. CASH AND CASH EQUIVALENTS
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Cash at bank 2,614,472 1,940,871 2,545,913 1,915,571
========== ========== ========== ==========
Cash and cash equivalents are defined as cash at bank, demand
deposits and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
19. TRADE AND OTHER PAYABLES
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Trade payables 428,106 775,709 170,975 345,196
Accruals and deferred
income 587,106 232,639 145,696 194,217
Social security and other
taxes 34,584 63,682 34,584 62,649
Other payables 150,000 150,000 - -
---------- ---------- -------- --------
1,199,796 1,222,030 351,255 602,062
========== ========== ======== ========
The carrying value of trade and other payables approximates to
their fair value. Payments occur over a short period and the risk
of changes in value is insignificant. The full balance of the trade
and other payables becomes due and payable within three months of
the reporting date. These are classified as financial liabilities
on the balance sheet and are measured at amortised cost.
The amounts shown are undiscounted and represent the contractual
cash flows. An analysis of the Group's trade and other payables
classified as financial liabilities by currency is provided in note
27.
20. DEFERRED TAXATION
Deferred tax is calculated on temporary differences under the
liability method using tax rates applicable in the respective Group
entities' jurisdiction.
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Carrying value at beginning
of the year 147,349 150,139 - -
Reversal of temporary differences (147,349) (2,790) - -
---------- -------- -------- --------
- 147,349 - -
========== ======== ======== ========
The deferred tax provision at 31 December 2021 related to the
revaluation of land and buildings which were sold during 2022.
A deferred tax asset has not been recognised in respect of the
Group's tax losses due to uncertainties around the Group's ability
to utilise the losses.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
21. LOANS AND BORROWINGS
The book value and fair value of loans and borrowings are as
follows:
Group Book value Fair value Book value Fair value
2022 2022 2021 2021
US$ US$ US$ US$
Non-Current
Other loans 133,940 133,940 143,931 143,931
----------- ----------- ----------- -----------
Current
Other loans 13,724 13,724 14,013 14,013
=========== =========== =========== ===========
Total loans and
borrowings 147,664 147,664 157,944 157,944
=========== =========== =========== ===========
Company Book value Fair value Book value Fair value
2022 2022 2021 2021
US$ US$ US$ US$
Non-Current
Other loans 30,085 30,085 47,029 47,029
----------- ----------- ----------- -----------
Current
Other loans 11,920 11,920 13,015 13,015
----------- ----------- ----------- -----------
Total loans and
borrowings 42,005 42,005 60,044 60,044
=========== =========== =========== ===========
Convertible debt
Convertible Debt was converted In February 2021 and all
obligations were extinguished. There is no further debt.
Other loans
Other loans comprise a bank loan to the Company guaranteed by
the UK government and a loan to a subsidiary from the US
government. The loans are repayable over 5 and 30 years
respectively, with interest rates of 2.5% p.a. and 3.75% p.a.
respectively. The US government loan is secured against the assets
of the subsidiary by way of a floating charge.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
21. LOANS AND BORROWINGS (continued)
The following table analyses the maturity of the other loans.
The amounts shown are undiscounted and represent contractual cash
flows.
Group 0-1 year 1-2 years 2-5 years >5 years Total
US$ US$ US$ US$ US$
At 31 December 2022 13,724 14,095 23,924 95,921 147,664
--------- ---------- ---------- --------- --------
At 31 December 2021 14,013 15,400 40,324 88,207 157,944
--------- ---------- ---------- --------- --------
Company 0-1 year 1-2 years 2-5 years >5 years Total
US$ US$ US$ US$ US$
At 31 December 2022 11,920 12,221 17,864 - 42,005
--------- ---------- ---------- --------- --------
At 31 December 2021 13,015 13,346 33,683 - 60,044
--------- ---------- ---------- --------- --------
The carrying value of loans and borrowings approximates to fair
value.
22. RIGHT-OF-USE ASSETS AND LIABILITIES
Group 2022 2021
US$ US$
Non-current asset - plant and equipment
At 1 January - 326,299
Additions - -
Depreciation - (72,511)
Disposals - (253,788)
----- ----------
Net book value - plant and equipment - -
===== ==========
Lease liability
At 1 January - 339,308
Additions - -
Interest expense on leases - 22,265
Lease payments - (57,900)
Lease termination - (303,673)
----- ----------
Total lease liability - -
===== ==========
Current lease liability - -
Non-current lease liability - -
Total lease liability - -
===== ==========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
23. CALLED UP SHARE CAPITAL
2022 2022 2021 2021
Number US$ Number US$
Ordinary shares
At 1 January 5,665,209,745 786,867 1,541,178,043 219,436
Issue of shares 15 - 4,124,031,702 567,431
Share consolidation (5,503,346,624) - - -
---------------- ----------- -------------- -----------
31 December 161,863,136 786,867 5,665,209,745 786,867
================ =========== ============== ===========
Deferred shares
of GBP0.0099 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 GBP0.0001 each were consolidated into Ordinary
Shares of GBP0.0035 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 GBP0.0035 each.
During 2021 the Company issued 4,124,031,702 Ordinary Shares and
received net proceeds of US$12.7m.
The Deferred Shares have not been admitted to trading on the
Alternative Investment Market, carry no voting rights and are
purchasable for an aggregate sum of GBP1.
24. SHARE OPTIONS AND WARRANTS
On 4 July 2022 the Company's Ordinary Shares were consolidated
on a 1 for 35 basis and corresponding adjustments have been made to
the number and exercise price of the share options and warrants in
issue. All share options and warrants disclosures for 2021 within
this note have been restated to reflect the effect of the share
consolidation.
From time to time the Company has entered into share option and
warrant arrangements under which the holders are entitled to
subscribe for a percentage of the Company's Ordinary Share capital.
Options under the LTIP and JSOP are detailed below. All other
options and warrants vest immediately. The number of warrants and
share options exercisable at 31 December 2022 was 5,768,463 (2021:
6,482,749). During the year 714,286 (2021: nil) options and
warrants expired.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
24. SHARE OPTIONS AND WARRANTS (continued)
The movements of warrants and share options during the year was
as follows:
Restated Restated
2022 2022 2021 2021
Weighted Weighted
Average Number of Average Number of
Exercise Warrants Exercise Warrants
Price and Share Price and Share
(British Options (British Options
pence) pence)
At 1 January 103.95 6,482,749 124.95 3,098,571
Expired 35.00 (714,286) - -
Granted - - 85.05 3,384,178
At 31 December 112.68 5,768,463 103.95 6,482,749
============ ============
At 31 December 2022, the weighted average remaining contractual
life of warrants and share options exercisable was 4.95 years
(2021: 5.38 years). There were no share options issued under the
LTIP in 2022 (2021: 2,470,556) issued. No warrants were issued in
2022 (2021: 913,622 issued). No options were granted in 2022; the
weighted average exercise price of the options and warrants granted
in 2021 was 85.05 pence).
A charge of $358,121 (2021: $639,746) has been recognised in the
Statement of Comprehensive Income in respect of equity settled
share based payments.
LTIPs, options and warrants outstanding at 31 December 2022 and
2021 were exercisable as follows:
Restated Restated
Exercise price range (British pence,
US cents in brackets) 2022 2021
Number Number
17.50p (23.10 cents) 428,571 428,571
35.00p (46.20 cents) - 571,429
35.00p (44.10 cents) - 142,857
45.15p (61.95 cents) 609,081 609,081
52.50p (70.70 cents) 214,286 214,286
67.90p (92.75 cents) 304,540 304,540
70.35p (98.70 cents) 1,235,278 1,235,278
105.00p (141.75 cents) 384,287 384,287
123.20p (172.55 cents) 1,235,278 1,235,278
157.50p (219.80 cents) 585,714 585,714
175.00p (236.25 cents) 57,143 57,143
210.00p (283.15 cents) 128,571 128,571
297.50p (415.10 cents) 585,714 585,714
---------- ----------
At 31 December 5,768,463 6,482,749
========== ==========
The above disclosures relate to both the Company and the
Group.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
24. SHARE OPTIONS AND WARRANTS (continued)
LTIP awards
In February 2021, the Company implemented its Long Term
Incentive Plan ("LTIP") to incentivise the Company's Executive
Directors, certain other Directors, and members of the Senior
Management team.
Awards under the LTIP take the form of premium priced options
over the Company's Ordinary Shares which are exercisable from the
third anniversary of the date of grant (subject to several market
standard specific exceptions). LTIP options have an expiry date of
ten years from the award date. The LTIP allows for up to 7% of the
Company's issued share capital to be allocated to participants and
includes malus and clawback clauses.
The Group measures the fair value of LTIP awards using the Black
Scholes valuation model. The share-based payment expense is
recorded over the vesting period of the option. Share based payment
expenses are recognised in the income statement in accordance with
the provisions of IFRS2.
At the inception of the scheme, 2,470,556 LTIP options were
granted to directors and other participants. No further awards were
granted during 2021 or 2022. Half of the options have an exercise
price of 70.44p (a premium of 75% to the share price on 25 February
2021) and the remaining options are exercisable at a price of
123.27p (a premium of 75% to the exercise price of the first
tranche).
JSOP awards
Under the Joint Share Ownership Plan ("JSOP"), shares in the
Company were jointly purchased at fair market value by the sole
participating employee and the trustees of the JSOP Trust, with
such shares held in the JSOP Trust. For accounting purposes, the
awards are valued as employee share options. There is only one
participant in the JSOP and the Company no longer utilises the JSOP
to incentivise employees.
The company awarded JSOP shares in 2013 and has made no further
awards since. The JSOP share based payment charge was expensed
during the vesting period and there was no associated share based
payment charge in 2022 or 2021. At 31 December 2022 and 31 December
2021 there were 400,000 fully vested shares held in the JSOP Trust.
No JSOP shares were sold during either year.
The JSOP trust holds the shares of the JSOP until such time as
the JSOP shares are vested and the participating employee exercises
their rights under the JSOP. The JSOP trust is granted an interest
bearing loan by the Company in order to fund the purchase of its
interest in the JSOP shares. The loan held by the trust is
eliminated on consolidation in the financial statements of the
Group. The Company funded portion of the share purchase price is
deemed to be held in treasury until such time as the shares are
transferred to the employee and is recorded as a reduction in
equity in both the Group and Company financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
25. RESERVES
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
Share premium Amounts subscribed for share capital in excess
of nominal value.
Merger reserve Difference between fair value and nominal value
of shares issued to acquire interests of more
than 90% in subsidiaries.
Foreign exchange Gains and losses arising from retranslating
reserve the net assets of overseas operations into US
Dollars.
Own shares held Cost of own shares held by the employee benefit
reserve trust, the JSOP trust or the company as shares
held in escrow.
Convertible debt/warrant Equity component of the convertible loan and
reserve warrants issued that do not form part of a share
based payment.
Revaluation reserve Surpluses arising on the revaluation of property,
plant, and equipment.
Retained earnings Cumulative net gains and losses recognised in
the consolidated statement of comprehensive
income.
26. NOTE SUPPORTING THE STATEMENT OF CASH FLOWS
Reconciliation of loss before taxation to cash outflows from
operating activities:
Group 2022 2021
US$ US$
Loss for the year (1,343,745) (5,881,768)
Adjustments for:
Share based payment expense 358,121 639,746
Depreciation 19,874 246,418
Gain on redemption of Loans/CLNs - (407,776)
Impairment of PPE and intangible
assets 1,000,000 2,000,000
Gain on disposal of right of use
assets - (49,885)
Loss on disposal of PPE 212,626 6,064
Foreign currency translations (3,456,479) (1,261,221)
Finance expenses 9,473 162,531
Income tax (1,395) (2,790)
------------ ------------
(3,201,525) (4,548,681)
Decrease in inventories 27,250 210,256
Decrease/(increase) in trade and
other receivables 641,946 (258,204)
(Decrease) in trade and other payables (22,234) (1,021,775)
------------ ------------
Net cash (outflow) from operating
activities (2,554,563) (5,618,404)
============ ============
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
26. NOTE SUPPORTING THE STATEMENT OF CASH FLOWS (continued)
Company 2022 2021
US$ US$
Loss for the year (740,114) (2,075,511)
Adjustments for:
Share based payment expense 358,121 639,746
Depreciation 1,318 1,264
Gain on redemption of loans/CLNs - (361,229)
Foreign currency translations (381,967) (608,102)
Finance expenses 5,474 3,102
---------- ------------
(757,168) (2,400,730)
Decrease/(Increase) in trade and other
receivables 300,844 (432,041)
(Decrease) in trade and other payables (255,046) (583,913)
Net cash (outflow) from operating activities (711,370) (3,416,684)
========== ============
Cash to net debt reconciliation:
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
Cash and cash equivalents 2,614,472 1,940,871 2,545,913 1,915,571
Borrowings (147,664) (157,944) (42,005) (60,044)
Net Cash/(debt) 2,466,808 1,782,927 2,503,908 1,855,527
Cash and liquid investments 2,614,472 1,940,871 2,545,913 1,915,571
Fixed rate instruments (147,664) (157,944) (42,005) (60,044)
Net Cash/(debt) 2,466,808 1,782,927 2,503,908 1,855,527
Net Debt Reconciliation:
Group
Unsecured
Cash and loans Total Net Debt
cash equivalents Debt
US$ US$ US$ US$
Net cash/(debt) at 1 January
2022 1,940,871 (157,944) (157,944) 1,782,927
Cash flows 469,042 4,179 4,179 473,221
Foreign exchange movements 204,559 6,101 6,101 210,660
Net cash/(debt) at 31
December 2022 2,614,472 (147,664) (147,664) 2,466,808
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
26. NOTE SUPPORTING THE STATEMENT OF CASH FLOWS (continued)
Net Debt Reconciliation:
Company
Cash and Unsecured Total
cash equivalents loans Debt Net Debt
US$ US$ US$ US$
Net cash/(debt) at 1 January
2022 1,915,571 (60,044) (60,044) 1,855,527
Cashflows 425,831 11,939 11,939 437,770
Foreign exchange movements 204,511 6,100 6,100 210,611
Net cash/(debt) at 31
December 2022 2,545,913 (42,005) (42,005) 2,503,908
27. FINANCIAL INSTRUMENTS
The Group's treasury policy is to avoid transactions of a
speculative nature. In the course of trading the Group is exposed
to a number of financial risks that can be categorised as market,
credit, and liquidity risks. The board reviews these risks and
their impact on the activities of the Group on an ongoing
basis.
The principal financial instruments used by the Group, from
which financial instrument risk arises, are:
-- Trade and other receivables
-- Cash and cash equivalents
-- Trade and other payables
-- Available-for-sale financial assets
-- Loans and borrowings
A summary of the financial instruments held is provided
below.
Financial assets Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
At amortised cost:
Cash and cash equivalents 2,614,472 1,940,871 2,545,913 1,915,571
Amounts due from group companies - - 21,444,342 25,296,460
Other receivables 38,366 355,115 38,308 355,115
2,652,838 2,295,986 24,028,563 27,567,146
At fair value:
Financial investments 823,744 922,275 823,744 922,275
Total financial assets 3,476,582 3,218,261 24,852,307 28,489,421
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
27. FINANCIAL INSTRUMENTS (continued)
Financial liabilities Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
At amortised cost:
Trade payables 428,106 775,709 170,975 345,196
Other current liabilities 150,000 150,000 - -
Loans and Borrowings 147,664 157,944 42,005 60,044
Total financial liabilities 725,770 1,083,653 212,980 405,240
Fair value measurement
The fair value measurement of the Group's financial and
non-financial assets and liabilities utilises market observable
inputs and data as far as possible. Inputs used in determining fair
value measurements are categorised into different levels based on
how observable the inputs used in the valuation technique utilised
are (the 'fair value hierarchy'):
Level 1: Quoted prices in active markets for identical items
(unadjusted)
Level 2: Observable direct or indirect inputs other than Level 1
inputs
Level 3: Unobservable inputs (i.e. not derived from market
data).
The classification of an item into the above levels is based on
the lowest level of the inputs used that has a significant effect
on the fair value measurement of the item.
Transfers of items between levels are recognised in the period
they occur.
Market Risk
Currency risk
The Group's financial risk management objective is broadly to
seek to make neither profit nor loss from exposure to currency or
interest rate risks. The Group is exposed to transactional foreign
exchange risk and takes profits and losses as they arise as, in the
opinion of the directors, the cost of hedging against fluctuations
would be greater than the potential benefits.
The Group's cash and cash equivalents are denominated in the
following currencies:
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
US Dollars 2,062,984 25,607 1,996,724 764
UK Pounds Sterling 551,456 1,915,136 549,157 1,914,679
Euros 32 128 32 128
2,614,472 1,940,871 2,545,913 1,915,571
The Group's trade and other receivables are denominated in the
following currencies:
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
US Dollars 774,727 1,531,393 - 334,475
UK Pounds Sterling 131,197 97,566 131,197 97,566
905,924 1,628,959 131,197 432,041
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
27. FINANCIAL INSTRUMENTS (continued)
The Group's trade and other payables are denominated in the
following currencies:
Group Group Company Company
2022 2021 2022 2021
US$ US$ US$ US$
US Dollars 848,541 617,297 - 13,609
UK Pounds Sterling 351,255 599,934 351,255 583,654
Euros - 4,799 - 4,799
1,199,796 1,222,030 351,255 602,062
The effect of a 5 per cent strengthening of the US Dollar at the
reporting date on the foreign currency denominated net financial
instruments carried at that date would, all other variables held
constant, have been a reduction in net assets of $15,782 (2021:
$67,054). A 5 per cent weakening of the US Dollar would, on the
same basis, have increased net assets by the same amount.
Interest rate risk
The Group and Company finance their operations through a mixture
of equity and loans. The remaining debt consists of government
issued or guaranteed debt with fixed rates of interest.
Credit risk
Operational
The Group did not generate any revenue during the period and its
exposure to credit risk is therefore limited. The Group does not
enter into derivative contracts to manage credit risk. Further
information on trade and other receivables is presented in note
17.
Financial
Financial risk relates to non-performance by banks in respect of
cash deposits and is mitigated by the selection of institutions
with a strong credit rating.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital and payments to its suppliers. The Group retains
operational liquidity risk as it starts to commercialise
CoalSwitch(R). During this period there is a risk that the Group
will encounter difficulties in meeting its financial obligations as
they fall due.
The Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they fall
due. The Group finances its operations through a mix of equity and
debt instruments. The Group's objective is to provide funding for
future growth. The Group's policies aim to ensure sufficient
liquidity is available to meet foreseeable needs through the
preparation of short and long term forecasts. Further details of
the Directors' going concern assessment are set out in note 1.
The Group had loans of $147,664 at 31 December 2022 (2021:
$157,944). No personal guarantees were in place.
Capital risk management
The Group's objective when managing capital is to establish and
maintain a capital structure that safeguards the Group as a going
concern and provides a return to shareholders.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
28. RELATED PARTY DISCLOSURES
As at 31 December 2022 all fees complied with directors'
contractual obligations and were paid up to date. Details of
directors' remuneration are set out in the Directors' Remuneration
Report.
During 2022 the Group paid $53,539 (2021: $43,342) to INJ London
Limited for sales and marketing services. This company is owned by
Max Aitken, a director of the Company.
During 2021 the Group paid $2,327 to Zimmfor Management Services
for an assessment of carbon credits related to CoalSwitch(R). This
company is owned by Jason Zimmermann, a director of the
Company.
Transactions between the Company and its subsidiaries have been
eliminated on consolidation. These transactions, which were
incurred in the ordinary course of business and under normal
commercial terms, were as follows:
2022 2021
US$ US$
Sale of property, plant and equipment - 588,392
Allocation of management time and expenses 65,826 205,650
Interest charges - 164,400
The Company's intercompany receivable balances at the year end
were as follows:
2022 2021
US$ US$
Amounts due from Group companies 21,444,342 25,296,460
29. CAPITAL COMMITMENTS
The Group had no capital commitments at 31 December 2022 or 31
December 2021.
30. SUBSEQUENT EVENTS
There have been no disclosable events since the balance sheet
date.
31. ULTIMATE CONTROLLING PARTY
The company has no overall controlling party.
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END
FR FFFEIRTISIIV
(END) Dow Jones Newswires
June 05, 2023 02:00 ET (06:00 GMT)
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