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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Aggregated Micro Power Holdings Plc | LSE:AMPH | London | Ordinary Share | GB00BC4F3V69 | ORD 0.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 92.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMAMPH
RNS Number : 5010J
Aggregated Micro Power Holdings PLC
29 June 2017
Aggregated Micro Power Holdings plc
("AMP", the "AMP Group" or the "Company")
Audited Results for the year ended 31 March 2017
and
Acquisition of 50.1% of Highland Wood Energy Limited
Aggregated Micro Power Holdings plc (AIM: AMPH), a distributed energy company specialising in the sale of wood fuels and the financing and installation of distributed energy projects including biomass boiler ESCOs (Energy Supply Contracts), stand by power generation and battery storage facilities, is pleased to announce a further wood fuels acquisition and its Audited Results for the year ended 31 March 2017.
Financial Highlights
-- Group revenues increased to GBP19.7m (GBP1.3m for the 15 months to 31 March 2016) -- Gross profit increased to GBP5.5m (GBP0.01m for the 15 months to 31 March 2016)
-- Profit from operations increased to GBP1.85m (loss of GBP7.7m for the 15 months to 31 March 2016)
-- Profit before tax increased to GBP0.93m (loss of GBP7.6m for the 15 months to 31 March 2016) -- Net assets as at 31 March 2017 increased to GBP10.4m (31 March 2016: GBP2.49m)
-- Net assets do not include any recognition for future deferred development fees that may be due from AMPIL and AMPIL2(a)
Operational Highlights
-- Successful integration of three wood fuels businesses under the Forest Fuels brand supplying over 100,000 tonnes of wood chip and wood pellet serving over 2,300 active customers
-- AMP's projects business arranged financing for 48 boilers, one heat pump and a 3MW peaking plant financed by AMPIL and AMPIL2(a)
-- AMP has also developed and arranged finance for a 21MW peaking plant at Kingsnorth which is in construction and has sold its interest in 37.5MWs of peaking plants to a third party
-- AMP has secured a 28.8% shareholding in Incubex (b)
Post Period End
-- On 25 May 2017, AMP assisted AMPIL2 to secure GBP29.46m of funding for further boiler development projects from AMP and other third parties(a)
-- AMP has announced today that it has subscribed GBP500,000 for new Ordinary Shares in Highland Wood Energy Limited equating to 50.1% of that company's issued share capital(c)
Richard Burrell, Chief Executive of Aggregated Micro Power Holdings plc, said:
"I am delighted to report a very strong set of full year results for AMP. The acquisition of three fuels businesses, which will see further turnover growth next year reflecting a full year's trading, has made for a transformational year at AMP. Today's acquisition of a 50.1% stake in Highland Wood Energy strengthens our presence in Scotland and enhances our service and maintenance expertise across the UK. At the same time, assets under management have grown to GBP66m comprising operational boilers, in-development peaking plant assets and other biomass assets on long term contracts. AMP has a growing pipeline of new project developments which should continue to generate upfront development fees as well as deferred development fees in subsequent years and hence we look forward to the future with confidence."
(a) AMPIL and AMPIL2 are special purpose vehicles which are wholly owned by Law Debenture Intermediary Corporation plc as trustee for general charitable purposes. AMPIL and AMPIL2 can issue listed loan notes to fund renewable energy projects acquired from AMPH and/or other developers. AMPIL2 which was launched in October 2016 with an initial GBP10.2m is the second special purpose vehicle which AMP Group has been able to access for its pipeline of developments and it follows on from the first AMPIL (Aggregated Micro Power Infrastructure Limited) special purpose vehicle which raised GBP12.4m from institutional and other investors in 2014 and 2015.
(b) IncubEx, LLC is a private limited liability company which will focus on product and business development, in conjunction with market-leading partners, to innovate and incubate new financial products and services that meet the needs of the rapidly growing global commodities markets. IncubEx brings together part of the team that helped build Climate Exchange into a successful business and Neil Eckert has become its non-executive chairman. AMP has made an investment in Incubex of US$778,718 to support its initial successful fundraise of US$3m on a post money valuation of US$10.5m.
(c) Highland Wood Energy Limited ("HWEnergy") is one of the leading biomass businesses in Scotland with an established track record in providing Heat Contracts (fuel, service & maintenance) to end customers throughout the UK which is highly complementary to Forest Fuels' existing business which is predominantly focused in England and Wales. In the year to 31 December 2016, HWEnergy had unaudited sales of GBP7.09m and PBT of GBP0.05m. In the year to 31 December 2016, approximately GBP3.2m of sales were in "recurring" revenues (heat, fuel and service) with the balance in "projects" sales (i.e. new installations). The business is based in Fort William in Scotland, and with an office in Bellshill, near Glasgow. It has an experienced team of 40 staff, with the business having worked exclusively in the design/build and operation of biomass systems for 14 years. HWEnergy supplies circa 9,000 tonnes of wood pellet and 8,000 tonnes of wood chip to circa 110 boilers predominantly in Scotland. It provides heat contracts to circa 70 boilers, supplying fuel, operation and maintenance services. In addition, it provides service and maintenance services to circa 250 boilers. HWEnergy provides a complete turnkey approach to delivering commercial biomass heating and CHP solutions and has designed and installed over 270 complex wood energy projects across Scotland and the north of England. AMP has a Call Option exercisable at any time within 3 years to acquire the remaining 49.9% of HWEnergy for a consideration of GBP2m which will be paid as to 50% in cash and 50% by the issue and allotment of new AMP Ordinary Shares. In the event that AMP does not exercise its Call Option after 3 years, HWEnergy existing shareholders have the right to purchase 30.1% of the business for a cash consideration of GBP500,000 which would leave AMP with a residual long term shareholding in HWEnergy of 20%. HWEnergy will be run as a separately managed business to Forest Fuels focusing primarily on Scotland and in partnership with Forest Fuels on all heat, service and maintenance contracts across the UK. All Forest Fuels' existing service and maintenance contracts in England and Wales will be delivered by HWEnergy, under the Forest Fuels brand.
Contacts
Aggregated Micro Power Holdings plc 020 7382 7800
Neil Eckert, Executive Chairman
Richard Burrell, CEO
Helene Crook, Investor Relations
Haggie Partners 020 7562 4444
Peter Rigby / Brian Norris
finnCap Ltd 020 7220 0500
Ed Frisby/Simon Hicks (Corporate Finance)
Stephen Norcross / Sultan Awan (Corporate Broking)
About Aggregated Micro Power Holdings plc
The AMP Group was established to develop, own and operate renewable energy generating facilities. It specialises in the sale of wood fuels and in the installation of distributed energy projects. AMP's wholly owned subsidiary Forest Fuels sells high quality wood chip and wood pellet to end customers throughout the UK, while its projects division installs biomass boiler and biomass CHP systems for a wide range of applications and customers. AMP is also active in developing projects for stand-by power generation and battery storage facilities which aim to balance the transmission grid at times of peak demand.
www.ampplc.co.uk
The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
Executive Chairman's Statement
This has been a watershed year for AMP. There are three areas where we are concentrating our attention: renewable heat; modern day power supply; and investments.
With renewable heat, we have aggregated a number of wood fuels businesses under the Forest Fuels brand and we are now one of the leading suppliers of wood pellet and wood chip to end customers in the UK. We strongly believe the market is ripe for further consolidation and expect further growth in turnover once the full year effect of the recent acquisitions takes effect. Scale gives us purchasing power and the ability to manage costs. At the same time, we want to offer very high quality customer service and build long term relationships on fuel supply, service and maintenance such that we become the best known and most trusted brand in the biomass market.
We have also developed and arranged financing for one of the largest Biomass Boiler portfolios in the UK. On 25 May it was announced that Aggregated Micro Power Infrastructure 2 plc ("AMPIL2") had closed its latest fund raise amounting to GBP29.46m. This was another landmark event and demonstrates that we now have the opportunity to facilitate increasing amounts of new capital for biomass assets from high quality institutional and other investors. In aggregate, AMPIL2 now has over GBP50m invested or available for biomass heat, CHP and grid balancing projects.
On the power side, we are developing "Grid Balancing" projects. The level of renewables, solar and wind, has destabilized wholesale electricity prices. The Grid needs small scale, fast response generation units to supply power when there are power shortages and prices spike. We have had an excellent year in this sector developing four projects with a combined capacity of circa 62MW.
If not revolution, we are now seeing rapid pace evolution. This is being driven by a number of factors namely: 15% of the supply into the National Grid is from wind or solar and on 21 April 2017, the whole of the UK supply was generated without coal fired generation which was the first day since the 1880s. At the same time, the first offshore wind farm to operate without a power subsidy will be built by one of our partners, Dong Energy. Electric Vehicle sales also continue to grow rapidly as air quality issues become better understood and more serious, especially with diesel vehicles. The holy grail in energy markets is storage. The energy density and transportability of oil and coal gave them pre-eminence as a fuel source for over a century. Renewables, batteries and small scale flexible generation now threaten this. We could, in the long term, see the "end of the main frame" or at least a huge reduction in grid reliance. Organizations are now starting to supply energy services "behind the meter".
These changes when momentum gathers pace will produce seismic behavioral and financial impacts as occurred when computing went "distributed" and recognizing that we spend so much more on energy than data, the opportunities are enormous. When Sheik Yamani, the Saudi Oil Minister, was asked when the world's oil would run out, he responded that the Stone Age didn't finish because we ran out of rocks.
Whilst the scale of the opportunity is large there is also great risk attached. Which technology will prevail, what regulatory regime will prevail and will government policy be as hard to fathom as has recently been the case? We want to avoid investing in technology so we remain agnostic to the ones we deploy our strategy is to develop value by aggregating revenue streams from small scale businesses and projects. These are held in off balance sheet investment vehicles. The end game may well be to roll up the various companies and form a modern day flexible heat and power generation business - a Challenger Utility.
The final part of the piece is investments where we have aspirations to run an energy focused investment management arm. The first stage of this is a strategic investment in IncubEx. This business will design and promote financial products in environmental, energy, power and weather markets. It is operated by the same management team that operated at Climate Exchange plc where I was CEO. AMP owns 28.8% of IncubEx and I have become its non-executive chairman.
In conclusion, 2017 was a transformational year for AMP as has been reflected by the uplift in our share price from 62.5p to 96p. We want 2018 to be the year where we show further growth in our biomass businesses and a significant expansion in assets we develop and manage.
Neil Eckert
Executive Chairman
28 June 2017
Strategic Report
We are pleased to present our Financial Results for the 12 months ending 31 March 2017. The comparative figures in the audited financial statements are in respect of the audited three month period to 31 March 2016. There are no comparative results in respect of the 12 months ending 31 March 2015.
To assist in a more meaningful comparison, this Strategic Report includes a segmental analysis comparing the 12 months to 31 March 2017 with the 15 months to 31 March 2016.
Results
I am delighted to report a transformational set of results for AMP in respect of the 12 month period to 31 March 2017.
Group revenues increased to GBP19.7m (compared to GBP1.3m for the 15 months to 31 March 2016, and GBP0.2m for the audited 3 month period to 31 March 2016), gross profit increased to GBP5.4m (compared to GBP0.01m for the 15 months to 31 March 2016 and GBP0.1m for the audited 3 month period to 31 March 2016), profit from operations increased to GBP1.85m (compared to a loss of GBP7.7m for the 15 months to 31 March 2016 and a loss of GBP0.5m for the audited 3 month period to 31 March 2016) and profit before tax increased to GBP0.93m (compared to a loss of GBP7.6m for the 15 months to 31 March 2016 and loss of GBP0.5m for the audited 3 month period to 31 March 2016).
Net assets as at 31 March 2017 increased to GBP8.26m (31 March 2016: GBP2.49m) and the balance sheet does not include any recognition for future deferred development fees that may be due from Aggregated Micro Power Infrastructure Limited ("AMPIL1") and Aggregated Micro Power Infrastructure 2 plc ("AMPIL2").
Hot Features
Premium
Aggregated
Micro Power 15 Month Period Ended March
Holdings plc Year Ended March 2017 2016
------------------------------------------------------------ -----------------------------------------------------------
Operating Forest Project Gasification Project
segments Fuels development Investments Total Projects Development Investments Total
GBP GBP GBP GBP GBP GBP GBP
Revenue 15,841,292 3,877,850 - 19,719,142 168,440 1,160,855 - 1,329,295
Cost of sales (12,825,159) (1,419,899) - (14,245,058) (591,886) (722,477) - (1,314,363)
-------------- ------------- ------------- -------------- -------------- ------------- ------------- -------------
Gross profit 3,016,133 2,457,951 - 5,474,084 (423,446) 438,378 - 14,932
Other operating
income 235,776 163,813 - 399,589 16,250 65,000 - 81,250
Administrative
expenses (2,494,726) (879,688) (1,845,478) (5,219,892) (1,077,970) (926,275) (1,955,297) (3,959,542)
-------------- ------------- ------------- -------------- -------------- ------------- ------------- -------------
Adjusted EBITDA 757,183 1,742,076 (1,845,478) 653,781 (1,485,166) (422,897) (1,955,297) (3,863,360)
Depreciation (353,760) - (4,799) (358,559) (125,663) - (3,224) (128,887)
Impairment
Loss - - - - (5,354,918) - - (5,354,918)
Finance expense (114,963) - (469,323) (584,286) - - (16,228) (16,228)
Amortisation
Intangibles - - (174,672) (174,672) - - - -
Amortisation
Loan Cost - - (335,248) (335,248) - - - -
P&L on sale
of Assets 151,368 - - 151,368 - - - -
Other
Non-Recurring
Costs (72,914) (99,672) (125,362) (297,948) (182,336) - 1,881,820 1,699,484
FV Adjustment
on Investment
in Associate - - 1,879,044 1,879,044 - - - -
Tax credit 59,614 - 34,755 94,369 - - 169,680 169,680
-------------- ------------- ------------- -------------- -------------- ------------- ------------- -------------
Profit/(Loss)
from
operations 426,528 1,642,404 (1,041,083) 1,027,849 (7,148,083) (422,897) 76,751 (7,494,229)
============== ============= ============= ============== ============== ============= ============= =============
AMP Group strategy
During this transformational year, AMP has become one of the leading UK suppliers of wood fuels under the Forest Fuels brand. At the same time AMP has grown its project development business with finance provided via third party infrastructure vehicles producing development fee revenues for this year and the prospect of deferred development fees in due course.
AMP operates through three business divisions: Forest Fuels; Project Development; and Investments.
AMP's wholly owned subsidiary Forest Fuels sells high quality wood chip and wood pellet to end customers throughout the UK in the form of fuel only contracts, heat contracts and/or fuels plus operation and maintenance. Forest Fuels is the leading supplier of premium grade, RHI compliant wood chip and wood pellet with over 2,300 customers, 40 depots and 4 regional offices. AMP's strategy is to grow its wood fuels customer base by a combination of organic growth and further in-fill acquisitions in strategic locations.
AMP's project development division develops, manages and facilitates financing of distributed energy projects focusing on biomass heat and biomass CHP for a wide range of applications and customers. We also develop and finance gas-fired peaking plants and battery storage to provide reserve power and frequency stability which aim to balance the transmission grid at times of peak demand. AMP's strategy is to continue developing its own projects and to work with other project developers and third party infrastructure vehicles to generate a wide range of development fees from different projects.
AMP Investments aim to grow funds under management and to build up off-balance sheet deferred development fees and carried interest together with making long term equity investments in companies aligned to our corporate strategy. It includes the overhead costs of the Board and related PLC expenses.
Forest Fuels
The acquisition of Forest Fuels, Midlands Wood Fuel, the customer base of Mi-Generation and PEL Limited marked a significant development for AMP and for its strategic ambitions. Following the acquisition of Forest Fuels which completed on 30 March 2016 and the three subsequent acquisitions of Midlands Wood Fuel and the Mi-Generation pellet customer list which both completed in July 2017 and PEL Limited which completed in December 2016, AMP's strategy has been to integrate these businesses under a single brand (Forest Fuels) and form a single management team and infrastructure focused on selling wood chip and wood pellet to end customers throughout the UK.
These acquisitions have accelerated AMP's growth by providing a market leading distribution capability in wood fuels and providing us with a platform for further roll-up opportunities. The Directors believe that by combining the business development activities and offering both long term financing for biomass boilers and CHP systems together with long term wood fuels and maintenance contracts to end customers, there are significant opportunities to increase revenues.
Supply of chip and pellet to the right geographical locations and at the right price is critical to the future success of Forest Fuels and to the boilers developed by AMP and owned by AMPIL1 and AMPIL2. During the last 12 months, we are delighted to have struck two important commercial agreements with two of the largest and most respected suppliers in our industry: AW Jenkinson on wood chip supply; and Copenhagen Merchants on wood pellet supply. Both of these suppliers have also become stakeholders in AMP in the form of subscribing for Convertible Notes which aligns interests with all our shareholders over the longer term.
Revenues from the Forest Fuels division for the 12 months to 31 March 2017 were GBP15.5m, gross profit was GBP2.7m, EBITDA was GBP0.7m and profit from operations was GBP0.4m. These results do not yet reflect a full year of trading for Midlands Wood Fuel, Mi-Generation and PEL Limited which were acquired part way through the year as described above. In the year to 31 March 2018, we are targeting annualised sales to be in excess of GBP20m.
Project Development
AMP's project development team focuses on developing and installing biomass heat and biomass CHP systems for a wide range of commercial customers including schools, care homes, hotels, farms and industrial users of processed heat. AMP's business model for project development is to charge a 10% development fee at financial close on each project financed by AMPIL1 or AMPIL2 and this fee is calculated with reference to the total capital cost of each project.
The team sources projects from various introducers and installers and works with the customer account managers at Forest Fuels to offer all fuel customers with a commercial boiler buy back scheme to allow them to sell their biomass installations at any time. The installations would be acquired by AMPIL. In the year to 31 March 2017, AMP arranged financing for 48 boilers and one heat pump. AMP also arranged finance via AMPIL2 for a 3MW natural gas peaking plant which is located next to an existing biomass CHP site which was developed by AMP and financed by AMPIL1 last year.
AMP has developed and arranged finance for a 21MW gas peaking plant which is situated on the Kingsnorth Industrial Estate in Kent which is in construction for a value of GBP14.1m. The project will install natural gas reciprocating engines selling power to the grid at times of peak demand. The project won a Capacity Market agreement in 2015 and commercial operations are expected to start before 1 October 2017. Finance for this project was provided from funds managed by Triple Point Investment Management LLP and Triple Point Lease Partners. During the year, AMP also sold its development interest in 37.5MWs of natural gas peaking plants to a third party.
AMP has a significant development interest in two large scale biomass CHP developments in Immingham and Hull. Both these schemes have secured planning permission and grid connection offers for 49.0MW and 49.9MW respectively. AMP and its development partners intend to secure external, off-balance sheet construction finance for these projects which is contingent on both schemes achieving Government incentives in the form of Contracts for Difference.
Revenues from the Project Development Division for the 12 months to 31 March 2017 were GBP3.9m, gross profit was GBP2.5m, EBITDA was GBP1.7m and profit from operations was GBP1.6m.
Investments
AMP's head office team aims to grow funds under management to support the project development team to generate annual management fees and to build up off-balance sheet deferred development fees and carried interest. The team also identifies long term equity investments in companies which are aligned to our corporate strategy.
AMPIL1 and AMPIL2 are special purpose vehicles which are wholly owned by Law Debenture Intermediary Corporation plc as trustee for general charitable purposes. AMPIL1 and AMPIL2 can issue 8% listed loan notes to fund renewable energy projects acquired from AMP and/or other developers. Under the terms of its contract with AMPIL1 and AMPIL2, AMP receives an upfront 10% development fee on each project and when AMPIL and AMPIL2 Loan Notes are repaid, AMP is entitled to receive 100% of the excess returns in the form of deferred development fees.
AMPIL2 which was launched in October 2016 with an initial GBP10.17m is the second special purpose vehicle which AMP Group has been able to access for its pipeline of developments and it follows on from AMPIL 1 which raised GBP12.4m from institutional and other investors in 2014 and 2015. After the year end, AMP announced in May 2017 that it has secured further funding of GBP29.46m for the financing of its biomass boiler portfolio and future grid balancing projects from AMPIL2.
In May 2017, AMP invested US$778,718 in IncubEx LLC, a private limited liability company which will focus on product and business development, in conjunction with market-leading partners, to innovate and incubate new financial products and services that meet the needs of the rapidly growing global commodities and clean energy markets. IncubEx brings together part of the team that helped build Climate Exchange into a successful business and Neil Eckert has become its non-executive chairman. AMP has a 28.8% stake in Incubex LLC and this has resulted in a fair value adjustment of GBP1.88m in the Company's Balance Sheet as at 31 March 2017.
As budgeted, there were no revenues generated from the Investments Division during the 12 months to 31 March 2017. Administrative expenses which include the Board, PLC and related head office costs amounted to GBP1.8m, interest expenses on the Convertible Notes amounted to GBP0.47m, amortisation of intangible assets other than goodwill relating to the acquisition of the fuels businesses was GBP0.14m and non-recurring costs were GBP0.13m resulting in a loss from operations from this segment of GBP1.04m.
Issuance of Ordinary Shares and Convertible Notes
During the 12 months to 31 March 2017, the Company issued GBP8.93m in Ordinary Shares to the vendors of PEL Limited and to existing and new investors to finance the cash portion of the acquisitions and to supplement group working capital.
During the year, the Company issued two tranches of Convertible Notes comprising GBP5.94m in aggregate and they have a conversion price equal to 86 pence per Ordinary Share. The initial tranche of Convertible Notes were issued in March 2016 for a nominal value of GBP4.07m and are identical in every respect, save for the conversion price, which is 70 pence per Ordinary Share. The Company can redeem the Convertible Notes at par after 31 March 2018 or the Convertible Note holder can convert the Convertible Notes into Ordinary Shares. The Convertible Notes have an 8 per cent. coupon per annum, paid quarterly in arrears and redeem at par, if not previously converted, on 30 March 2021. The Company has now issued GBP10.01m Convertible Notes in total.
Industry and policy background
We believe that there are a number of features of the renewable heat market which are highly beneficial for the AMP Group:
-- The market for wood pellet and wood chip is strongly supported by the RHI scheme which will remain in place until March 2021;
-- Accredited installations receive the RHI for 20 years providing long term demand for wood fuel. RHI payments are linked to inflation which should help support the inflationary growth in wood fuel prices, all things being equal;
-- Government policy is increasingly focused on the decarbonisation of large industrial heat users where onsite biomass CHP systems can deliver value for money and CO2 savings for both the government and end customers; and
-- The UK's success in decarbonising electricity generation has not been matched in the heating sector. At approximately 6% of total heat capacity, renewable heat lags well behind the government's 2020 target of 12%.
We believe that there are a number of features of the modern day power market which are highly beneficial for the AMP Group:
-- Intermittency from solar and wind combined with demand from electric vehicles at times of peak demand is driving growth in stand-by, flexible power generation;
-- The expected loss of system inertia from the closure of thermal power plants (in particular coal and combined cycle gas turbines) is likely to increase the grid's sensitivity to frequency changes and therefore create demand for battery energy storage to regulate frequency;
-- The structure of the energy markets, in the UK and elsewhere, provide a commercial opportunity for the small scale energy facilities that comprise the AMP Group's primary areas of focus, making use of local "behind the meter" energy sources to generate and supply energy close to the point of demand, so capturing higher retail prices for the energy produced and reducing the costs arising from energy delivery losses and grid charges;
-- The UK's drive to decarbonise (the Government has a legally binding target of reducing the UK's greenhouse gas emissions by 80% by 2050 against 1990 levels) is expected to require significant structural changes to the power market, with 8GW of coal fired generating capacity already decommissioned since 2012 due to the Large Combustion Plant Directive and a further 10GW is expected to close by 2025, most of which will happen by 2020. In addition 2GW of gas fired CCGT's is expected to close by 2020. Taken together this represents approximately 25% of Great Britain's generating capacity. This reduction in thermal generating capacity is expected to increase power price volatility and reduce system inertia.
-- The world's capital investment in electricity generation has been thoroughly disrupted by the arrival of renewables. The UK has a peculiarly acute version of the problem that has arisen, owing to long term policy advocating private ownership of generation. This has resulted in large investment in renewables (and especially wind) but insufficient investment in flexible generation and storage necessary to keep the lights on. The UK Government's National Infrastructure Committee reported in 2016 on the need for regulatory support for investment in interconnectors, demand side response and energy storage; and,
-- National Grid's latest consultation on System Needs and Product Strategy (June 2017) aims to simplify the way in which frequency and flexible generation are procured and reinforces AMP's grid balancing strategy.
AMP Group objectives and KPIs for 2017/8 are as follows:
-- Aim to be a market leader in the supply of wood fuels retailing (wood pellet and wood chip) to end customers via a combination of organic growth and targeted acquisitions;
-- Grow pipeline of biomass boiler, biomass CHP and existing boiler acquisitions generating development fees and future carried interest from AMPIL Loan Note issuance;
-- Generate development fees and future carried interest from natural gas peaking plants and from battery storage projects;
-- Build up annuity revenues from developing or acquiring an energy focused asset management business;
-- Continue to invest in businesses aligned to our corporate strategy and objectives; and
-- Supplement AMP's cash resources with additional new funding from one or a combination of: the issue of new Ordinary Shares for cash; the issue of new Convertible Notes; the refinancing of existing assets; raising project finance from third party providers; asset financing of core items of equipment; or any other compelling financing mechanism where the Directors consider doing so to be in the best interests of the company and its Shareholders.
2016 KPI Comments on performance during year
---------------------------------------------------------- ----------------------------------------------------------
Aim to be the market leader in wood fuels retailing Achieved. Following the acquisition of Midlands Wood
(wood pellet and wood chip) via a combination Fuel, the Mi-Generation customer base
of organic growth and targeted acquisitions. and PEL Limited, Forest Fuels is becoming one of the
largest distributors of wood fuels to
RHI-led end customers. The business has also grown its
customer volumes with organic growth
during the year.
---------------------------------------------------------- ----------------------------------------------------------
Grow pipeline of biomass boiler developments and Achieved. The results for Project Development also
existing boiler acquisitions generating development reflect development fees earned on 48 boilers,
fees and future carried interest from AMPIL Loan Note one heat pump and a 3MW gas peaking plant. AMPIL2 raised
issuance. GBP10.17m of 8% listed loan notes
in October 2016. The Company's pipeline of future boiler
investments which existed as at 31
March 2017 enabled a further tap issue for AMPIL2 of
GBP29.5m which completed after the period
end on 25 May 2017.
---------------------------------------------------------- ----------------------------------------------------------
Generate development fees and future carried interest Achieved. The results for Project Development also
from larger scale development projects, reflect development fees earned on a 21MW
energy storage and from the capacity market where it gas peaking plant, a 3MW gas peaking plant and two
makes commercial sense to do so. further gas peaking plant developments
of 37.5MWs in aggregate.
---------------------------------------------------------- ----------------------------------------------------------
Supplement AMP's cash resources with additional new Achieved. The Company issued 12.1m new Ordinary Shares
funding from one or a combination of: during the year and GBP5.94m nominal
the issue of new Ordinary Shares for cash; the issue of of Convertible Notes were issued in two tranches. As at
new Convertible Notes; the refinancing 31 March 2017, The Company had no
of existing assets; raising project finance from third bank debt other than GBP1.2m of asset finance on plant
party providers; asset financing of and equipment and a GBP3.1m invoice
core items of equipment; or any other compelling discounting facility in Forest Fuels.
financing mechanism where the Directors consider
doing so to be in the best interests of the company and
its Shareholders.
---------------------------------------------------------- ----------------------------------------------------------
Risk factors
The principal risks of the business are documented below:
Risk Mitigation Procedure
---------------------------------------------------------- ----------------------------------------------------------
Staff retention risk Long term lock in arrangements and incentivization
structure to retain key staff through equity
ownership.
Contractual minimum notice periods for key staff
sufficient to ensure time for recruitment/handover.
---------------------------------------------------------- ----------------------------------------------------------
Public policy risk including changes to renewable Minimise construction timetable for individual projects.
incentives Changes to public policy mechanisms
can adversely affect project returns but the Group is
only exposed during the time between
financial close and commencement of operations.
Small scale projects which AMP is developing have
relatively short construction times and
so lower public policy exposure. In addition, where
practicable, the company will seek to
use existing public policy measures to lock in an
entitlement to specific incentive rates
before construction commences.
---------------------------------------------------------- ----------------------------------------------------------
Feedstock price risk The company will monitor prices and establish a policy
for hedging exposures including managing
merchant risk, including the development of a wood fuel
supply model as a natural hedge against
increasing biomass fuel prices.
The company will establish supply contracts to minimise
exposure where these are available
at a reasonable price.
---------------------------------------------------------- ----------------------------------------------------------
Brexit The Brexit vote has three significant implications for
the AMP Group:
Continued and general uncertainty as regards future
Government energy policy and delayed decisions
as regards implementation and timing of policy revisions
to the RHI and CfD subsidy frameworks.
The Brexit vote and its political aftermath appears to
have slowed down Government decision
making as ministerial and Government responsibilities
have changed.
Forest Fuels imports wood pellet from Europe and the
weaker pound has made imports more expensive
although they still remain competitive compared to UK
produced wood pellet. Exchange rate
fluctuations can cause a lag effect with gross profit
margin when higher import costs cannot
be immediately absorbed by increased selling prices. The
possible imposition of import tariffs
on wood pellet could mean that the Company may need to
source a higher proportion of its wood
pellet supply from UK producers.
There may well be an increase in the need for Grid
Balancing sites and therefore further revenue
opportunities if energy policy relating to the
interconnectors with Europe result in restrictions
or tariffs on electricity imported from Europe
especially at times of peak demand.
---------------------------------------------------------- ----------------------------------------------------------
Planning risk The company will seek to minimise the extent of exposure
and financial commitment prior to
successful planning approvals.
---------------------------------------------------------- ----------------------------------------------------------
Environment Industrial sites have potential exposure to
Agency / Health and Safety risks environmental and Health and Safety ('H&S') issues.
Health and Safety risk assessment has been undertaken,
and relevant policies are in place.
Health and Safety review is given priority at management
meetings and Board Meetings. Staff
training is provided as appropriate.
---------------------------------------------------------- ----------------------------------------------------------
Tax compliance risk Tax computations are outsourced to a professional
service provider.
---------------------------------------------------------- ----------------------------------------------------------
Richard Burrell
Chief Executive Officer
28 June 2017
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2017
Year ended Period ended
31 Mar 31 Mar 2016
2017
Note GBP GBP
Continuing operations
Revenue 4 19,719,142 203,901
Cost of sales (14,245,059) (75,397)
-------------- --------------
Gross profit 5,474,083 128,504
Other operating income 5 397,585 16,250
Administrative expenses (5,899,702) (695,175)
Fair value adjustment on deferred consideration 25 - 43,514
Gain on financial asset at fair value through
profit or loss 20 1,879,044 -
Profit/(Loss) from operations 6 1,851,010 (506,907)
Finance income 2,004 130
Finance expense 8 (919,534) (16,358)
-------------- --------------
Profit/(Loss) before tax 933,480 (523,135)
Tax credit 9 94,369 169,680
-------------- --------------
Profit/(Loss) for the year and total comprehensive
expense attributable to the ordinary equity
shareholders of the parent 1,027,849 (353,455)
============== ==============
Earnings per share attributable to the
ordinary equity holders of the parent 26 3.19 (1.33)
The notes form an integral part of these financial statements
Consolidated Statement of Financial Position
As at 31 March 2017
31 Mar 2017 31 Mar 2016
Note GBP GBP
Non-current assets
Property, plant and equipment 10 2,364,747 785,390
Investment in associate 20 2,402,945 -
Intangibles 11 9,862,560 2,720,334
Total non-current assets 14,630,252 3,505,724
------------------------------ --------------
Current assets
Inventories 13 2,609,018 1,257,780
Trade and other receivables 14 10,747,768 4,721,285
Cash and cash equivalents 15 818,966 801,871
Total current assets 14,175,752 6,780,936
------------------------------ --------------
Total assets 28,806,004 10,286,660
------------------------------ --------------
Current liabilities
Trade and other payables 16 8,052,510 3,934,047
Loans and borrowings 17 494,412 90,024
Total current liabilities 8,546,922 4,024,071
------------------------------ --------------
Non-current liabilities
Loans and borrowings 17 9,270,958 3,454,821
Deferred Contingent Consideration 25 8,218 8,218
Deferred tax liability 9 571,115 307,977
Total non-current liabilities 9,850,291 3,771,016
------------------------------ --------------
Total liabilities 18,397,213 7,795,087
------------------------------ --------------
Net assets 10,408,791 2,491,573
------------------------------ --------------
Equity attributable to equity holders
of the company
Paid up share capital 18 189,052 144,423
Share premium 18 12,519,616 11,069,200
Merger reserve 6,648,126 6,648,126
Other reserve 9,046,180 4,546,180
Convertible debt option reserve 1,453,603 559,279
Retained deficit (19,447,786) (20,475,635)
------------------------------ --------------
Total equity 10,408,791 2,491,573
------------------------------ --------------
The financial statements were approved by the Directors on 28 June 2017 and signed on their behalf by:
Richard Burrell, Chief Executive Officer
The notes form an integral part of these financial statements
Consolidated Statement of Changes in Equity
For year ended 31 March 2017
Period ended Convertible
31 March 2016 Share Share Retained Merger Other debt option
capital premium deficit reserve Reserve reserve Total
GBP GBP GBP GBP GBP GBP GBP
Equity as at
1 January 2016 128,473 9,484,658 (20,122,180) 6,648,126 4,546,180 - 685,257
Loss for the
period - - (353,455) - - - (353,455)
------------
Total
comprehensive
expenses - - (353,455) - - - (353,455)
Issue of share
capital 15,950 1,706,650 - - - - 1,722,600
Equity element
of convertible
debt - - - - - 587,399 587,399
Share issue
cost - (122,108) - - - (28,120) (150,228)
Year ended 31
March 2016 144,423 11,069,200 (20,475,635) 6,648,126 4,546,180 559,279 2,491,573
========== ============ ============== =========== ============ ============== ============
Year ended 31 Convertible
March 2017 Share Share Retained Merger Other debt option
capital premium deficit reserve Reserve reserve Total
GBP GBP GBP GBP GBP GBP GBP
Equity as at
1 April 2016 144,423 11,069,200 (20,475,635) 6,648,126 4,546,180 559,279 2,491,573
Profit for the
period - - 1,027,849 - - - 1,027,847
---------- ------------ -------------- ----------- ------------ -------------- ------------
Total
comprehensive
expenses - - 1,027,849 - - - 1,027,847
Issue of share
capital 44,629 1,490,370 - 4,500,000 - 6,034,999
Equity element
of convertible
debt - - - - - 894,324 894,324
Share issue
cost - (39,954) - - - - (39,954)
Movement between
reserves - - - - - - -
Equity as at
31 March 2017 189,052 12,519,616 (19,447,786) 6,648,126 9,046,180 1,453,603 10,408,789
========== ============ ============== =========== ============ ============== ============
Share capital: Nominal value of shares issued.
Share premium: Amount subscribed for share capital in excess of the nominal value.
Capital contribution: Relates to funding from the shareholders for which no share capital was issued and that funding meets the definition of an equity instrument.
Retained deficit: All other net losses and transactions with owners (e.g. dividends) not recognised elsewhere.
Merger reserve: Created on the issue of shares on acquisition of its subsidiary accounted for in line with the Company's Act 2006 provisions.
Other reserve: Amount raised through the use of a cashbox structure and applying merger relief on business combination where the consideration for shares in another company includes issued shares and on completion of the transaction, the company issuing the shares will have secured at least a 90% equity holding in the other company
Convertible debt option reserve: Amount recorded as equity on the initial fair value measurement of issued convertible loan notes
The notes form an integral part of these financial statements
Consolidated Statement of Cash Flows
For year ended 31 March 2017
31 Mar 2017 31 Mar 2016
Note GBP GBP
Operating activities
Loss for the period after tax 1,027,849 (353,455)
Adjustments for:
Write-off of development fee 57,734 -
Tax credit 9 (94,369) (169,680)
Interest Income (2,004) (130)
Fair value adjustment on financial
liabilities at fair value through
profit and loss 24 - (43,514)
Gain on financial asset at fair value (1,879,044) -
through profit or loss
(Profit)/Loss on disposal of FA (151,368) -
Interest paid 8 584,286 15,468
Movement in foreign exchange 41,063 406
Amortisation of intangibles 11 174,672 -
Depreciation of property, plant and
equipment 10 358,561 723
Cash flows from operating activities
before changes to working capital 117,380 (550,182)
Change in working capital, net of
effects from acquisition of subsidiaries
(Increase)/decrease in inventories (1,351,239) 60,692
(Increase)/decrease in trade and
other receivables (7,792,615) 493,475
Increase/(decrease) in trade and
other payables 4,542,249 (162,312)
(4,601,605) 391,855
-------------- --------------
Cash generated from operations (4,484,225) (158,327)
-------------- --------------
R&D tax credit received - 169,680
Net cash flows from operating activities (4,484,225) 11,353
-------------- --------------
Investing activities
Acquisition of a subsidiary, net
of cash acquired (1,850,888) (2,310,888)
Investment in associate (523,901) -
Purchase of intangibles (300,000) -
Purchase of property, plant and equipment (300,950) (700)
Proceeds from sale of assets 402,923 -
Loans to third party (92,106) (58,150)
Interest received 2,004 129
Net cash used in investing activities (2,662,918) (2,369,609)
-------------- --------------
Financing activities
Share issue cost (39,954) (122,108)
Proceeds from issue of convertible
notes 5,033,197 2,833,519
Proceeds from issue of ordinary shares 3,217,645 -
CLN issue cost (282,194) (195,019)
Payments of interest on borrowings (495,763) (30,544)
Payments on financial lease (268,692) (1,657)
Net cash used in financing activities 6,828,990 2,484,191
-------------- --------------
Net increase in cash and cash equivalents 17,095 125,935
Cash and cash equivalents at beginning
of period 801,871 675,936
Cash and cash equivalents at end
of period 818,966 801,871
============== ==============
Aggregated Micro Power Holdings plc.
Notes to the Financial Statements
For the year ended 31 March 2017
1 Accounting policies
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 periods presented, unless otherwise stated.
The comparative figures in the financial statements are in respect of the audited three month period (1 January 2016 to 31 March 2016) to 31 March 2016.
These financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs").
The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies. The areas where significant judgments and estimates have been made in preparing the financial statements and their effect are disclosed in Note 2. The financial statements are drawn up in Pound Sterling, the presentational currency of the Group.
Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the company
New interpretations and a number of amendments are effective for the first time for periods beginning on 1 April 2016, and have been adopted in these financial statements. None of the amendments resulted in effect on the group's consolidated financial statements.
At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Group.
Management anticipates that all of the pronouncements will be adopted in the Group's accounting policy for the first period beginning after the effective date of the pronouncement. The new standards and interpretations are not expected to have a material impact on the Group's financial statements.
-- IFRS 9 Financial Instruments (effective 1 January 2018) -- IFRS 15 Revenue from Contracts with Customers (effective 1 January 2018) -- IFRS 16 Leases (effective 1 January 2019)
-- Amendments to IAS 12: Recognition of Deferred Tax Assets for unrealised losses (effective 1 January 2017)
-- Amendments to IAS 7: Disclosure initiative (Not yet endorsed)
-- Clarifications of IFRS 15 Revenue from Contracts with Customers (effective 1 January 2019)
-- Annual Improvements to IFRSs (2012-2016 Cycle) (effective 1 January 2018).
Management are in the process of assessing the impact of IFRS 9, 15 and 16 on the financial statements.
Basis of consolidation
Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquirer's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.
Business combinations
The purchase method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange. Where equity instruments are issued in a business combination, the fair value of the instruments is their published price at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuations methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.
Except for non-current assets or disposal groups classified as held for sale (which are measured at fair value less costs to sell), all identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.
The excess of the cost of the business combination over the net fair value of the Group's share of the identifiable net assets acquired is recognised as goodwill. If the cost of acquisition is less than the Group's share of the net fair value of the identifiable net assets of the subsidiary, the difference is recognised as a gain in the Statement of Comprehensive Income, but only after a reassessment of the identification and measurement of the net assets required.
Where settlement of any part of the consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the Group's incremental borrowing rate, being the rate at which similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Goodwill
Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Contingent consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified as a financial liability, re measured subsequently through profit or loss. Direct costs of acquisition are recognised immediately as an expense.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised. As at the acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combination's synergies. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the Statement of Comprehensive Income. An impairment loss recognised for goodwill is not reversed.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.
Intangibles acquired in a business combination
Other intangible assets acquired both separately and from a business combination
Intangible assets acquired separately are capitalised at cost and subsequently amortised on a straight-line basis over their useful economic lives.
Intangibles recognised on business combinations, if they are separately identifiable from the acquired entity or arise from other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see critical estimates and judgements section). Intangibles acquired through a business combination are recognised at fair value as at the date of acquisition. Following initial recognition, the cost model is applied.
The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:
Intangible asset Useful economic life Valuation method
Brand 20 years Estimated discounted cash flows from
royalties
Long term contracts and customer relationships 10 years Estimated discounted cash flows
Intangible assets are tested for impairment where an indicator of impairment exists, and in the case of indefinite life intangibles annually, either individually or at the cash generating unit level. Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis. Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Comprehensive Income when the net asset is derecognised.
Going concern
After reviewing the Group's operations, financial position and short and long term cash flow forecasts, the Directors believe that the Group has adequate resources to continue operating and meet its financial obligations.
Revenue recognition
Revenue for the Group is measured at the fair value of the consideration received or receivable. The Group recognises revenue for services provided it is probable that future economic benefits will flow to the entity.
Development, management and consultancy fees are recognised in the period that the service is rendered.
In circumstances where biomass boiler projects are sold at financial close (development stage) and where the majority
of installation costs are funded by the buyer, revenues from the sale of a project are recognised as development fees and development costs which are directly attributable to the development of biomass boiler projects and any costs which are recharged at cost are recorded in work in progress and subsequently transferred to cost of sales at financial close. Financial close is typically defined as the point at which projects have a full suite of documentation (which may
include a license to occupy, lease, heat off take agreement) acceptable to the buyer.
AMP has also acted as agent for other developers introducing projects to AMPIL. In such circumstances development fees have been shared and the fees have been recognised net of any commissions payable to third parties, and are recognized as the services are delivered.
Revenues from electricity, ROCs and RHI are recognised at the point of generation and are based on the combination of sales prices achieved, the average market prices observed for ROC sales, published tariff levels and metered generation.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
Revenue from maintenance and consulting services is recognised by reference to the stage of completion and agreed contractual milestones. When the contract outcome cannot be measured reliably, revenue is recognised only to the extent that the expenses incurred are eligible to be recovered.
Retirement Benefits: Defined contribution schemes
Contributions to defined contribution schemes are charged to the profit and loss in the year to which they relate.
Property, plant and equipment
All property, plant and equipment are stated at cost less depreciation. Such costs include costs directly attributable to making the asset capable of operating as intended. Costs attributable to assets under construction are included within
the capitalised costs of those assets and include refurbishment and commissioning costs.
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs.
Depreciation on assets under construction does not commence until they are complete and available for use.
Depreciation is provided on all items of property, plant and equipment so as to write off their carrying value over the expected useful economic lives. It is provided at the following rates:
Plant and machinery - 3-20 years straight line
Farm and upgrade - 3-20 years straight line
Fixtures and fittings - 3-5 years straight line
Office equipment - 3-5 years straight line
Computer equipment - 3-5 years straight line
Motor vehicle - 3-5 years straight line
Impairment
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.
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.
Financial instruments
The Group classifies its financial assets and liabilities as receivables and loans, discussed below, due to the purpose for which the asset or liability was acquired.
Financial assets
The Group's financial assets mainly comprise of cash, trade and other receivables, and investments in associates. Cash comprises cash in hand and deposits held at call with banks.
Financial assets are classified as loans and receivables, and financial assets at fair value through profit or loss (FVPL).
Trade and other receivables are not interest bearing and are stated at their nominal value as reduced by appropriate impairments for irrecoverable amounts or additional costs required to effect recovery.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable.
Financial assets and liabilities at FVPL
Financial instruments designated as at FVPL upon initial recognition, this includes an investment in associate. This financial asset is designated upon initial recognition on the basis that it is the first of a group of financial assets that are managed and have their performance evaluated on a fair value basis, in accordance with risk management and investment strategies of the Group.
In accordance with the exemption within IAS 28 Investments in Associates and Joint Ventures, the Group does not account for its investments in associates using the equity method. Instead, the Group has elected to measure its investments in associates at FVPL.
This investment in associate has initially been recognised in the statement of financial position at fair value.
After initial measurement, the Group measures its financial instruments which are classified as at FVPL, at fair value.
Subsequent changes in the fair value of those financial instruments are recorded in net gain or loss on financial assets and liabilities at FVPL in the statement of comprehensive income. Interest and dividends earned or paid on these instruments are recorded separately in interest revenue or expense and dividend revenue or expense in the statement of comprehensive income.
Fair value measurement
The Group measures its investment in associate at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or, in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
For all other financial instruments not traded in an active market, the fair value is determined by using valuation techniques deemed to be appropriate in the circumstances. Valuation techniques include the market approach (i.e., using recent arm's length market transactions adjusted as necessary and reference to the current market value of another instrument that is substantially the same).
The Group has classified the investment in associate as Level 3.
Financial liabilities
The Group classifies its financial liabilities into one of two categories, depending on the purpose for which
the liability was acquired. The accounting policy for each category is as follows:
Financial liabilities at fair value through profit and loss
This category comprises the deferred contingent consideration on acquisitions which is discussed in more detail in note 24. This consideration is revalued at each reporting date. It is adjusted against goodwill within 12 months following the acquisition and through the income statement thereafter.
Other financial liabilities
Other financial liabilities include the following items:
Loans and borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding. Loans and borrowings include an invoice discounting facility.
Liability components of convertible loan notes are measured as described further below.
Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.
Convertible debt
The proceeds received from the issue of the convertible debt are allocated between their financial liability and equity components. The financial liability is initially recognised at fair value (being the discounted cash flows using a market rate of interest that would be payable on a similar instrument that does not include an option to convert). Subsequently, the financial liability is measured at amortised cost
The equity component is assigned to the residual amount after deducting this fair value liability from the fair value of the financial instrument as a whole. It is recognised in the 'Convertible debt option reserve' within shareholders' equity, net of income tax effects. More information is provided in note 20.
Share Capital
Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability. The Group's Ordinary Shares are classified as equity instruments.
Leased Assets
Where substantively all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group (a "finance lease"), the asset is treated as if it had been purchased outright. The amount initially recognised as an asset is the lower of the fair value of the leased property and the present value of the minimum lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and interest. The interest element is charged to the consolidated statement of comprehensive income over the period of the lease and is calculated so that it represents a constant proportion of the lease liability. The capital element reduces the balance owed to the lessor.
Where substantively all of the risks and rewards incidental to ownership are not transferred to the Group (an 'operating lease'), the total rentals payable under the lease are charged to the consolidated statement of comprehensive income on a straight line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight line basis.
Deferred taxation
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 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 against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantially enacted by the consolidated statement of financial position date and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted.
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 company entities which intend either to settle current tax assets and 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 and liabilities are expected to be settled or recovered.
Operating Segments
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 Chairman, Chief Executive Officer, and Chief Financial Officer.
Management monitors the operating results of business segments separately for the purpose of making decisions about resources to be allocated and of assessing performance. Segment performance is evaluated based on operating profit or loss. Finance costs, finance income and income taxes are managed on a group basis (note 3).
Foreign currency
Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (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.
Inventories
Raw materials and consumables are initially recognised at cost, and subsequently at the lower of the cost and net realisable value. Cost comprises all costs incurred in bringing the inventories to their present location and condition.
Raw materials and consumables are used on a first in, first out basis. Work In Progress relates to expenditure on biomass boiler, Combined Heat and Power ('CHP') and grid balancing projects, which are recognised at cost until they are sold.
Costs which are directly attributable to the development of biomass boiler, CHP and grid balancing projects, and which have a reasonable expectation of obtaining the consents required for further development, and to the extent that those costs do not exceed expected recoverable amounts, are treated as Work In Progress and not expensed.
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.
2 Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including the expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Judgements and accounting estimates and assumptions
(a) Property, plant and equipment
Property, plant and equipment is depreciated over the useful lives of the assets. Useful lives are based on management's estimates of the period that the assets will generate revenue, which are reviewed annually for continued appropriateness. The carrying values are tested for impairment when there is an indication that the value of the assets might be impaired. Impairment tests are based upon future cash flow forecasts and these forecasts are based upon management judgement. Future events could cause the assumptions to change, therefore this could have an adverse effect on the future results of the Group.
(b) Fair value of deferred contingent consideration
The fair value of Neil Eckert's and Richard Burrell's deferred contingent consideration relating to the Group's merger and acquisition of AMP Energy Services Limited (formerly Environova Consulting Limited) and Mathieson Biomass Limited respectively has been valued to market and recognised in the statements of comprehensive income and financial position. For details of the estimates and judgements see note 25.
The fair value of the deferred contingent consideration relating to the Group's acquisition of Forest Fuels Holdings Limited and its controlled subsidiaries has been valued to market and recognised in the statements of comprehensive income and financial position. For details of the estimates and judgements see note 25.
(c) Impairment of assets
All assets, excluding goodwill, are reviewed for indicators of impairment. Impairment tests are carried out when there is a trigger event. Goodwill is tested for impairment on an annual basis. The recoverable amount of the fixed assets is calculated using a discounted cash flow ('DCF') model where an appropriate, or market based, discount rate is applied to future cash flows expected to be generated by the assets. Under IAS 36 an asset is impaired if its carrying value is greater than its recoverable amount or fair value. For details of the estimates and judgements see note 10.
(d) Loan receivables
The Real Ventures loan receivables of GBP528,000, included in trade and other receivables, are currently being held at cost ahead of the government's auction for Contracts for Difference which is scheduled for later in the year. Management remain confident that the loans will be repaid if the projects are successful in the auction.
(e) Impairment of Bad and doubtful debts
All trade and other receivables aged outside standard terms of trade are assessed for recoverability. Management estimates the bad and doubtful debt provision based on customer payment history as well as customer credit ratings and record a doubtful debt provision where appropriate.
(f) Taxes
Deferred tax assets are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, as well as for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies. Refer to note 9 for further information on deferred tax assets on carried forward losses. Deferred taxes are recognised at the substantively enacted rate, being the rate they are expected to be utilised.
(g) Valuation of intangible assets
A valuation exercise on intangibles has been performed as part of a Purchase Price Allocation exercise. The values of these intangibles and of the balance sheet acquired are provisional and within one year of the date of acquisition may be adjusted as a result of the finalisation of valuations. Please refer to note 11 for further information on the key assumptions used in this exercise. Impairment of intangible assets including goodwill is calculated using estimated future cash flows and a judgemental discount rate.
(h) Useful lives of intangible assets
The useful life used to amortise intangible assets relates to the expected future performance of the assets acquired and management's estimate of the period over which economic benefit will be derived from the asset. The basis for determining the useful life for the most significant categories of intangible assets is as follows:
-- The useful life of long term contracts and customer relationships principally reflects management's view of the average economic life of the customer base and is assessed by reference to customer churn rates. An increase in churn rates may lead to a reduction in the estimated useful life and an increase in the amortisation charge.
(i) Investment in associate - financial asset at fair value through profit or loss
In accordance with the exemption within IAS 28 Investments in Associates and Joint Ventures, the Group does not account for its investments in associates using the equity method. Instead, the Group has elected to measure its investments in associates at FVPL. The Directors have assessed that the Group meets the definition of a "venture capital organisation". Such characteristics of a venture capital organisation may include, but are not limited to:
-- investments are held for the short- to medium-term rather than for the long-term; -- the most appropriate point for exit is actively monitored; and
-- investments form part of a portfolio, Incubex being the first investment of such nature, which is monitored and managed separately from the core operational business and without distinguishing between investments that qualify as associates or joint ventures and those that do not.
The Group's intention is to hold investments in associates for up to 5 years. The strategy of the Group is to hold significant interest in the companies within the same sector of operation and subsequently engage in an exist strategy.
3 Revenue
Year ended Period ended
31 Mar 2017 31 Mar 2016
GBP GBP
Electricity generation 15,296 18,590
Wood fuel sales 15,522,328 988
Development, Management and Consultancy
fees 4,181,518 184,323
19,719,142 203,901
============== ==============
4 Taxation
Year ended Period ended
31 Mar
31 Mar 2017 2016
GBP GBP
Current tax credit 59,614 169,680
Deferred tax expense 34,754 -
Total tax credit 94,368 169,680
-------------- --------------
Profit/(Loss) before income taxes 933,480 (523,135)
-------------- --------------
Expected tax charge based on the standard
rate of United Kingdom corporation tax
at the domestic rate of 20% (2016: 20.25%) 186,696 (104,627)
Expenses not deductible for tax purposes 113,017 210
(Gains)/loss not taxable (405,896) (8,702)
Unprovided losses carried forward 11,815 113,119
R & D tax credit received - (169,680)
Total (credit) (94,368) (169,680)
-------------- --------------
Deferred tax
Consolidated statement Consolidated statement
of financial position of profit or loss
Period
Year ended ended Year ended Period ended
31 Mar 31 Mar 31 Mar
2017 2016 2017 31 Mar 2016
GBP GBP GBP GBP
Accelerated depreciation
for tax purposes (56,402) (56,402) - -
Fair Value uplift on business
combinations (549,467) (251,575) - -
Deferred tax expense / (benefit) 34,754 - 34,754 -
------------- ----------- ------------ --------------
Net deferred tax asset /
(liability) (571,115) (307,977) - -
------------- ----------- ------------ --------------
Reconciliation of deferred
tax liabilities Year ended Period ended
31 Mar 31 Mar
2017 2016
GBP GBP
Opening (307,977) -
Deferred taxes acquired
in business combinations - (56,402)
Deferred taxes on fair value
uplift on business combinations (297,891) (251,575)
Deferred tax expense / (benefit) 34,754 -
Closing (571,115) (307,977)
------------ --------------
A deferred tax asset on carried forward loss has not been recognised on the basis that there is no certainty over the future taxable profits. Losses carried forward to be utilised against future profits is GBP13,580,490 (2016: GBP12,285,308). Deferred tax unrecognised at the end of the year amounts to GBP2,580,293 (2016: GBP2,088,502). The deferred tax rate for 31 March 2017 is 19% being the substantively enacted rate at the end of the period.
The main rate of UK corporation tax has decreased from 21% to 20% from 1 April 2015, resulting in an effective corporation tax rate of 20% for this accounting period. This will further reduce to 19% from 1 April 2017 and 17% from 1 April 2020.
Further tax credits for 2017 are expected; the quantum of which are unknown and no provision has been included within these accounts on the grounds there is no certainty they will be received.
5 Property, plant and equipment
Plant
Assets Under Farm & & Office Motor
Construction Upgrade Machinery Equipment Vehicles Total
GBP GBP GBP GBP GBP GBP
Cost
As at 1 January 2016 47,740 6,906,294 757,848 4,628 38,000 7,754,510
Additions for the
period - - - 700 - 700
Additions from
Business
Combinations 486,680 147,148 149,003 782,831
As at 31 March 2016 47,740 6,906,294 1,244,528 152,476 187,003 8,538,041
-------------- ----------- -------------- ------------- ------------ --------------
Additions for the
period - - 901,714 66,438 134,321 1,102,473
Additions from
Business
Combinations - - 530,580 68,668 487,123 1,086,371
Disposals for the
period - - (360,891) (829) (75,290) (437,010)
As at 31 March 2017 47,740 6,906,294 2,315,931 286,753 733,157 10,289,875
-------------- ----------- -------------- ------------- ------------ --------------
Depreciation
As at 1 January 2016 47,740 6,906,294 756,999 2,896 38,000 7,751,929
Charge for the period - - 398 325 - 723
-------------- ----------- -------------- ------------- ------------ --------------
As at 1 March 2016 47,740 6,906,294 757,397 3,221 38,000 7,752,652
-------------- ----------- -------------- ------------- ------------ --------------
Charge for the period - - 236,668 59,560 62,333 358,561
Disposals for the
year (179,974) (823) (5,288) (186,085)
-------------- ----------- -------------- ------------- ------------ --------------
As at 31 March 2017 47,740 6,906,294 814,091 61,958 95,045 7,925,127
-------------- ----------- -------------- ------------- ------------ --------------
Net book value
As at 1 January 2016 - - 849 1,732 - 2,581
============== =========== ============== ============= ============ ==============
As at 31 March 2016 - - 487,131 149,256 149,003 785,388
============== =========== ============== ============= ============ ==============
As at 31 March 2017 - - 1,502,840 224,795 638,112 2,364,747
============== =========== ============== ============= ============ ==============
The net book value of the assets under lease arrangements at 31 March 2017 were GBP1,531,428 (31 March 2016: 440,806)
There is a fixed and floating charge over the fixed assets of the business in favour of the RBS invoice discounting facility.
6 Business combinations during the period
Midland Wood Fuels
On 8 August 2016, the Group completed on the acquisition of 100% of the share capital of Midlands Wood Fuels Limited ('MWF'), a wood fuel supplier, for cash consideration of GBP1,400,000. The acquisition was made to further strengthen the Group's position in the wood fuel market and was funded from the issue of GBP3.47m Convertible Loan Notes and the placing of 2,308,271 Ordinary Shares at 66.5 pence per Ordinary Share. As part of the acquisition GBP910,000 of shareholder loans held by the sellers of MWF were novated to Aggregated Micro Power Holdings plc before being exchanged for GBP910,000 of Convertible Loan Notes. The Group also repaid an existing loan of GBP135,299 between MWF and Funding Circle.
As at 8 August 2016 MWF had a net asset value of GBP639,713. These identifiable intangibles recognised have been assessed as part of a fair value exercise at a Group level and are therefore excluded from the opening book value in the table below. The Group has recognised the provisional fair values of identifiable assets and liabilities as follows:
31 March 2017
Opening book
value Fair value adjustment Closing fair value
GBP GBP GBP
Intangibles - 469,062 469,062
Tangible assets 865,646 - 865,646
Cash 49,112 - 49,112
Inventory 1,175,473 - 1,175,473
Receivables 444,779 - 444,779
-------------- ----------------------- --------------------
Total Assets 2,535,010 469,062 3,004,072
-------------- ----------------------- --------------------
Trade and other payables 765,571 - 765,571
Deferred tax liability - 79,741 79,741
Non-Current liabilities 1,519,047 - 1,519,047
-------------- ----------------------- --------------------
Total Liabilities 2,284,618 79,741 2,364,359
-------------- ----------------------- --------------------
Net Assets 250,392 389,321 639,713
============== ======================= ====================
Fair value of consideration
paid 1,400,000
--------------------
Goodwill 760,288
Under IFRS 3 a fair value assessment of the Midlands Wood Fuels Limited ('MWF') balance sheet was performed at the acquisition date in line with the Business Combination accounting policy in note 1 to these financial statements.
The goodwill recognised will not be deductible for tax purposes.
The excess of consideration over net assets (book value) purchased has been assessed as part of a Purchase Price Allocation exercise and allocated to goodwill. The values of these intangibles and of the balance sheet acquired are provisional and within one year of the date of acquisition may be adjusted as a result of the finalisation of valuations.
The corresponding adjustment will be made to goodwill.
The discount rate on which management has based its valuation of the customer contracts and brands is 21%, which reflects management's best estimate of the discount rate which when applied to MWF's forecast EBITDA gives an NPV equal the total consideration paid.
It is impractical to disclose the contribution of this business combination to group revenues and profit since acquisition as the trading and assets of this business have been incorporated into the Forest Fuels cash generating unit (CGU) and has not been reported. Information on pre-acquisition trading is not available.
PEL (Fuel) Limited
On 19 December 2016, the Group completed on the acquisition of 100% of the share capital of PEL (Fuel) Limited, a premium grade wood pellet supplier, for a total consideration of GBP5,000,000 which comprised of the issue of GBP4.5m in new Ordinary Shares issued at a price of 68 pence per share and GBP0.5m in cash. There is no contingent or deferred consideration or debt assumed. The acquisition was made to further strengthen the Group's position in the wood fuel market.
As at 19 December 2016 PEL had a net asset value of GBP1,993,391. The Group has recognised the provisional fair values of identifiable assets and liabilities as follows:
31 March 2017
Opening book
value Fair value adjustment Closing fair value
GBP GBP GBP
Intangibles 210,000 1,967,000 2,177,000
Tangible assets 150,781 - 150,781
Total Assets 360,781 1,967,000 2,327,781
-------------- ----------------------- --------------------
Trade and other payables - - -
Deferred Tax - 334,390 334,390
-------------- ----------------------- --------------------
Non-Current liabilities - - -
-------------- ----------------------- --------------------
Total Liabilities - 334,390 334,390
-------------- ----------------------- --------------------
Net Assets 360,781 1,632,610 1,993,391
============== ======================= ====================
Fair value of consideration
paid 5,000,000
--------------------
Goodwill 3,006,609
Under IFRS 3 a fair value assessment of the "PEL" balance sheet was performed at the acquisition date in line with the Business Combination accounting policy in note 1 to these financial statements.
The goodwill recognised will not be deductible for tax purposes.
The excess of consideration over net assets (book value) purchased has been assessed as part of a Purchase Price Allocation exercise and allocated to goodwill. The values of these intangibles and of the balance sheet acquired are provisional and within one year of the date of acquisition may be adjusted as a result of the finalisation of valuations.
The corresponding adjustment will be made to goodwill.
The discount rate on which management has based its valuation of the customer contracts and brands is 10.8%, which reflects management's best estimate of the discount rate which when applied to PEL's forecast EBITDA gives an NPV equal the total consideration paid and payable including deferred consideration.
It is impractical to disclose the contribution of this business combination to group revenues and profit since acquisition as the trading and assets of this business have been incorporated into the Forest Fuels cash generating unit (CGU) and has not been reported.
Forest Fuels - business combination in the comparative period
On 30 March 2016, the AMP PLC acquired 100% of the share capital in Forest Fuels Holdings Limited a wood fuel supply Group and its subsidiary entities ('Forest Fuels'). The principal reason for this acquisition was to enter the UK wood fuel market with a view to utilising product for existing and future biomass heating projects.
The consideration consists of an initial consideration of GBP2,965,000 and a deferred contingent consideration of up to 2,500,000 Ordinary Shares in performance-related deferred consideration, of which 1,000,000 Ordinary Shares are linked to the same TSR conditions set out below in note 24 and 1,500,000 Ordinary Shares are linked to the average EBITDA of Forest Fuels in the two financial periods ending (i) 31 December 2016 and 31 December 2017; and, (ii) 31 December 2017 and 31 December 2018, see note 24 for details and valuations of the contingent consideration.
As at 31 March 2016 Forest Fuels had a net asset value of GBP1,642,303. These intangibles have been assessed as part of a fair value exercise at a Group level and are therefore excluded from the opening book value in the table below. The Group has recognised the fair values of identifiable assets and liabilities as follows:
31 March 2016
Opening book
value Fair value adjustment Closing fair value
GBP GBP GBP
Intangibles - 1,397,637 1,397,637
Tangible assets 782,831 - 782,831
Cash 154,112 - 154,112
Inventory 1,180,007 - 1,180,007
Receivables 2,166,601 - 2,166,601
-------------- ----------------------- --------------------
Total Assets 4,283,552 1,397,637 5,681,188
-------------- ----------------------- --------------------
Trade and other payables 3,525,773 - 3,525,773
Deferred tax liability - 307,977 307,977
Non-Current liabilities 205,135 - 205,135
-------------- ----------------------- --------------------
Total Liabilities 3,730,908 307,977 4,038,885
-------------- ----------------------- --------------------
Net Assets 552,643 1,089,660 1,642,303
============== ======================= ====================
Fair value of consideration
paid 2,965,000
--------------------
Goodwill 1,322,697
Under IFRS 3 a fair value assessment of the Forest Fuels balance sheet was performed at the acquisition date in line with the Business Combination accounting policy in note 1 to these financial statements.
The goodwill recognised will not be deductible for tax purposes.
Forest Fuels did not contribute to group revenues and profit due to the fact this was acquired on the 30 March 2016 and the effect of 1 day of trading would not be material to the group. If the acquisition had occurred on the 1 January 2016 the group revenue would have been GBP3,112,311 and the group profit before tax of GBP33,885 for the period to the 31 March 2016.
The excess of consideration over net assets (book value) purchased has been assessed as part of a Purchase Price Allocation exercise and allocated to goodwill. The values of these intangibles and of the balance sheet acquired have been finalised, and there were no changes to the provisional accounting for the business combination presented in the comparative period audited financial statements
The discount rate on which management has based its valuation of the customer contracts and brands is 21%, which reflects management's best estimate of the discount rate which when applied to Forest Fuels' forecast EBITDA gives an NPV equal the total consideration paid and payable including deferred consideration.
7 Associates
The following entities have been included in the consolidated financial statements using the equity method:
Name of associate Principal activity Place of Proportion of
incorporation ownership rights
held by the Group
31 March 2017
Design and promotion
of financial products
in environmental, energy,
Incubex LLC power and weather markets USA 28.8%
a) Summarised financial information (material associates)
31 Mar
Incubex LLC 2017
As at 31 March 2017
Current Assets $2,531,139
Non-current assets -
Current Liabilities $179,874
Non-current liabilities -
Period ending 31 March 2017
Revenues -
Profit from continuing operations -
Other comprehensive income -
Total comprehensive income -
=============
Dividends received from associate -
b) Reconciliation of investment in associate at fair value
through profit or loss
Year ended
31 March
2017
GBP
Opening -
Additions 498,659
Gain of fair value through profit or loss 1,879,044
------------------
Closing 2,377,703
------------------
During the year the Group invested in Incubex, LLC. The Group
paid a par value of $0.001 per share for Class A shares, and
paid $7.50 per share for Class B shares. A gain on fair value
through profit or loss has been recognised on initial recognition
of the Class A shares based on valuation techniques detailed
in Note 21.
8 Loss per share Year ended Period ended
31 Mar
31 Mar 2017 2016
GBP GBP
Profit/(Loss) attributable to equity
holders of the company 1,027,849 (353,455)
Weighted average number
of shares 32,195,510 26,500,766
Continuing operations basic
(Pence) 3.19 (1.33)
The basic earnings per share have been calculated using the profit/(loss) attributable to shareholders of the parent company, Aggregated Micro Power Holdings plc. The basic and dilutive profit/(loss) per share are the same.
9 Events after the reporting period
Highland Wood Energy Investment
On 28 June 2017, AMP announced that it has subscribed GBP500,000 for new Ordinary Shares in Highland Wood Energy Limited equating to 50.1% of the enlarged business. This was undertaken as part of Group's strategy of acquiring wood fuels and biomass providers.
The Directors consider it impracticable to the disclose any financial effects that may be required under IFRS 3 Business Combinations due to this agreement being signed on the same day as the consolidated financial statements.
10 Posting to shareholders
The Company's Report and Accounts for the year ended 31 March 2017 are available to view on the Company's website: www.ampplc.co.uk and will be sent to shareholders shortly.
Company Statement of Financial Position
For the year ended 31 March 2017
31 Mar 31 Mar
2017 2016
Note GBP GBP
Fixed assets
Investments in subsidiaries 31 9,196,103 3,020,004
Investments in associate 2,402,945 -
-------------- --------------
Total non-current assets 11,599,048 3,020,004
-------------- --------------
Current assets
Debtors: Amounts falling due within
one year 33 9,209,306 2,690,031
Cash 125,087 524,459
-------------- --------------
Total current assets 9,334,393 3,214,490
-------------- --------------
Current liabilities
Trade and other creditors 34 80,751 214,212
Total current liabilities 80,751 214,212
-------------- --------------
Total assets less current liabilities 20,852,690 6,020,282
-------------- --------------
Non-current liabilities
Loans and borrowings 17 8,696,155 3,319,452
Total non-current liabilities 8,696,155 3,319,452
-------------- --------------
Total liabilities 8,776,906 3,533,664
-------------- --------------
Net current assets 9,253,642 3,000,278
-------------- --------------
Net assets 12,156,535 2,700,830
============== ==============
Equity attributable to equity holders
of the company
Paid up share capital 18 189,052 144,423
Share premium account 18 12,519,616 11,069,200
Other reserve 9,046,180 4,546,180
Convertible debt option reserve 1,453,683 559,278
Retained earnings (11,051,996) (13,618,251)
Total equity 12,156,535 2,700,830
============== ==============
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the company is not presented as part of these financial statements. The company's total comprehensive loss for the financial year was GBP1,107,143 (2016: GBP258,588). The company financial statements were authorised for issue by the board of Directors on 28 June 2017 by:
Richard Burrell
Chief Executive Officer
The notes form part of these company financial statements.
Company Statement of Changes in Equity
For the year ended 31 March 2017
Period ended 31 Convertible
March 2016 Share Share Other debt option Retained
capital premium Reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
Equity as at 1
January 2016 128,473 9,484,658 4,546,180 - (13,876,839) 282,472
Loss for the period - - - - 258,588 258,588
---------- ------------ ----------- -------------- -------------- ------------
Total comprehensive
expenses - - - - 258,588 258,588
Issue of share
capital 15,950 1,706,650 - - - 1,722,600
Share issue cost - (122,108) - - - (122,108)
Equity element
of convertible
loan notes - - - 587,399 - 587,399
Share issue cost (28,120) - (28,120)
Equity as at 31
March 2016 144,423 11,069,200 4,546,180 559,279 (13,618,251) 2,700,830
========== ============ =========== ============== ============== ============
Year ended 31 March Convertible
2017 Share Share Other debt option Retained
capital premium Reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
Equity as at 1
April 2016 144,423 11,069,200 4,546,180 559,279 (13,618,251) 2,700,830
Profit for the
period - - - - 2,566,337 2,566,337
---------- ------------ ----------- -------------- -------------- ------------
Total comprehensive
income - - - - 2,566,255 2,566,337
Issue of share
capital 44,629 1,490,370 4,500,000 - - 6,034,999
Share issue cost - (39,954) - - - (39,954)
Equity element
of convertible
loan notes - - - 894,324 - 894,324
Share issue costs - - - - - -
Equity as at 31
March 2017 189,052 12,519,616 9,046,180 1,453,683 (11,051,996) 12,156,535
========== ============ =========== ============== ============== ============
Share capital: Nominal value of shares issued.
Share premium: Amount subscribed for share capital in excess of the nominal value.
Retained earnings: All other net profits and transactions with owners (e.g. dividends) not recognised elsewhere.
Other reserve: Amount raised through the use of a cashbox structure and applying merger relief on business combination where the consideration for shares in another company includes issued shares and on completion of the transaction, the company issuing the shares will have secured at least a 90% equity holding in the other company.
Convertible debt option reserve: Amount recorded as equity on the initial fair value measurement of issued convertible loan notes
The Notes form part of these company financial statements.
28 Accounting policies
The financial statements of the company for the year ended 31 March 2017 have been prepared in accordance with FRS 102, the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland issued by the Financial Reporting Council.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 2).
Parent company disclosure exemptions
In preparing the separate financial statements of the parent company, advantage has been taken of the following disclosure exemptions available under FRS 102:
-- Only one reconciliation of the number of shares outstanding at the beginning and end of the period has been presented as the reconciliation for the group and the parent company would be identical
-- No cash flow statement has been presented for the parent company
-- No disclosure has been given for the aggregate remuneration of the key management personnel of the parent company as their remuneration is included in the totals for the group as a whole.
Investments in associate undertakings
Investments in associate undertakings are initially recognised in the statement of financial position at fair value. After initial measurement, the Company measures its financial instruments which are classified as at FVPL, at fair value.
Investments in subsidiary undertakings
Investments by the company in the shares of subsidiary undertakings are stated at cost less any provision, where in the opinion of the Directors, there has been a permanent impairment in the value of any such investment. Contingent consideration is recognised when it is probable it will be paid.
Deferred tax
Deferred tax is recognised on all timing differences where the transaction or events that give rise to an obligation to pay more tax in the future, or a right to pay less tax in the future, have occurred by the consolidated statement of financial position date. Deferred tax assets are recognised when it is more likely than not that they will be recovered. Deferred tax is measured using rates of tax that have been enacted or substantively enacted by the consolidated statement of financial position date.
Financial assets
Financial assets, other than investments are initially measured at transaction price (including transaction costs) and subsequently held at cost, less any impairment.
Financial liabilities and equity
Financial liabilities and equity are classified according to the substance of the financial instrument's contractual obligations, rather than the financial instrument's legal form. Financial liabilities, are initially measured at transaction price (including transaction costs) and subsequently held at amortised cost.
Convertible debt
The proceeds received from the issue of the convertible debt are allocated between their financial liability and equity components. The financial liability is initially recognised at fair value (being the discounted cash flows using a market rate of interest that would be payable on a similar instrument that does not include an option to convert). Subsequently, the financial liability is measured at amortised cost
The equity component is assigned to the residual amount after deducting this fair value liability from the fair value of the financial instrument as a whole. It is recognised in the 'Convertible debt option reserve' within shareholders' equity, net of income tax effects. More information is provided in note 20.
29 Employees
The company had no direct employees, other than the Directors, in the period to 31 March 2017. No costs of employment were recharged to the company in the period to 31 March 2017.
30 Directors
Details of the remuneration of the company's Directors are outlined in Note 7 of the Group's financial statements and the director's report. 4 non-executive Directors were remunerated (Total: GBP62,500) from the company in year ended March 2017. The executive Directors are employed and paid out of AMP Energy Services Limited, which is a wholly owned subsidiary of the company. The non-executive Directors are paid directly by the company.
Key management personnel are all the Directors of the company.
31 Investments
Year ended Period ended
31 Mar 2017 31 Mar
2016
GBP GBP
Cost at 1 January 2016 3,020,004 55,004
Additions 6,176,099 2,965,000
Cost at 31 March 2017 9,196,103 3,020,004
============== ==============
32 Principal subsidiary undertakings
The principal subsidiary undertakings of the company are disclosed in Note 19 of the Group financial
statements. Their activities are described in the strategic report.
33 Debtors
Year Ended Period Ended
31 Mar 2017 31 Mar
2016
GBP GBP
Debtors: Amounts falling due within
one year
Prepayments 19,097 26,589
Other debtors - unpaid share capital 31,091 1,787,582
Amounts owed by group undertakings 9,159,117 875,860
-------------- --------------
9,209,306 2,690,031
============== ==============
Interest on the intercompany debt is charged at 12% per annum and is repayable on demand with a final redemption date of 2023.
Creditors: amounts falling within
34 one year
Year Ended Period Ended
31 Mar 2017 31 Mar
2016
GBP GBP
Trade creditors due within 1 year 10,379 11,889
Accruals 70,372 202,323
80,751 214,212
============== ==============
35 Financial instruments
Loans and receivables
--------------------------
31 Mar 31 Mar
2017 2016
GBP GBP
Current financial assets
Debtors 4,371 2,690,031
Cash 125,087 524,459
Other receivables 9,178,215 -
9,307,673 3,214,490
============ ============
Financial liabilities
measured at amortised
cost
31 Mar 31 Mar
Current financial liabilities 2017 2016
GBP GBP
Creditors 80,751 214,212
80,751 214,212
============ ==============
Non Current financial 31 Mar 31 Mar
liabilities 2017 2016
GBP GBP
Loans and borrowings 8,696,155 3,319,452
8,696,155 3,319,452
============ ==============
Financial instruments not measured at fair value includes cash, debtors, creditors, and loans and borrowings.
Due to their short-term nature, the carrying value of cash, debtors, creditors, and loans and borrowings approximates their fair value.
36 Financial and capital commitments
The company had no financial or capital commitments at 31 March 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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June 29, 2017 02:00 ET (06:00 GMT)
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