8 May 2014
Active Energy Group Plc
("Active Energy Group" or the "Group" or the "Company" or "AEG")
Nikofeso Holdings Limited Deferred Consideration Cancellation
and Brief Trading Update
On 4 June 2013, Active Energy Group Plc announced the acquisition from Windstar Investments S.A. ("Windstar") of Nikofeso Holdings Limited ("Nikofeso") for a total consideration of £3.75 million. The consideration comprised both initial and deferred elements, each of 62,500,000 ordinary shares and up to 12,500,000 warrants to subscribe ordinary shares at 3 pence per share. Settlement of the deferred element was subject to the satisfaction of certain determined performance criteria. As Nikofeso has not performed in line with the expectations of either the vendor or AEG, on 7 May 2014 Windstar and AEG agreed to the cancellation of the entire deferred consideration. As a consequence, the 62,500,000 ordinary shares held in escrow will be transferred into treasury, and warrants to subscribe for 12,500,000 ordinary shares will be cancelled.
As a result of the above, AEG's issued share capital and Total Voting Rights (excluding the 62,500,000 shares in treasury) will comprise 556,125,570 Ordinary Shares, which number may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.
The Board is pleased to announce that since our announcement of 10 April 2014, the two new supply routes from Spain and Montenegro for Biomass for Energy fuel (BFE) wood chip are proving their ability to meet the logistical demands being placed upon them, such that we are confident in fulfilling the contractual requirements of our Italian clients from these sources alone.
Spain delivered a further shipment in late April with a new cargo currently being loaded at Palamos, while Montenegro remains on track to complete the two remaining trial shipments planned for delivery before the end of May. While the political situation in Ukraine remains uncertain, the Group still expects to maintain a reasonable level of deliveries of MDF-grade wood chip to Turkey from our new facility at Yuzhny Port.
As a consequence the Group has traded in line with the Board's expectations set out in that most recent announcement. Further information on current trading will be set out in AEG's preliminary results for the year ended 31 December 2013, which are expected to be released in week commencing 2 June 2014.
Richard Spinks, Active Energy Group's CEO, commented: "The Board is delighted that the Group is currently performing well, notwithstanding the political situation in Ukraine. The one part of the Group, which has not performed as well as had at first been hoped, being the original Nikofeso business, has enabled us to agree with the Vendor the cancellation of the whole of the deferred consideration relating to the Acquisition; this has been a highly constructive outcome which will materially reduce the dilution that our shareholders would otherwise have incurred.
This decision was taken with the full support of Matteo Girlanda, our COO and principal at Nikofeso. Matteo has demonstrated a highly positive attitude in adversity and delivered a solid performance in developing and delivering the restructuring of the wood chip logistics chain. I know that I speak for all our stakeholders in expressing my thanks for his near tireless energy in that task in those circumstances and in continuing to focus primarily on the overall success of the business and the interests of all of our shareholders."
Enquiries:
Active Energy Group plc
Richard Spinks, Chief Executive Officer Tel: +380 503 942 702
WH Ireland (Nominated Adviser and Broker)
Chris Fielding Tel: +44 20 7220 1666
Novella Communications
Tim Robertson / Ben Heath Tel: +44 20 3151 7008
About Active Energy Group:
· Company website: www.active-energy.com
· Active Energy Group Plc, a London Stock Exchange-listed company (AIM: AEG), is an established supplier of wood chip and other products for Biomass for Energy fuel (BFE) and MDF manufacturing.
· The Group is led by a highly experienced and dedicated management team with a proven track record of working in the industries and regions from which its revenues are generated.
· In June 2013, AEG acquired its major trading partner and raised in excess of £3 million to facilitate future growth and expansion of its international production and shipping facilities.
· The Group currently operates from Ukraine, where it is the largest producer and exporter of MDF-quality wood chip; as well as Spain and Montenegro, from where it provides BFE Biomass wood chip fuel to power plants in Italy.
· European Biomass for Energy (BFE) Market:
o Biomass-fuelled power is expected to account for over 50% of European renewable energy, according to an EU directive on National Renewable Energy Action Plans.
o EU directives and continued commissioning of new Biomass and CHP power plants in Europe continue to generate additional demand for Biomass fuel, with little visibility on where that fuel will be sourced.
o The European Renewable Energy Council (EREC) estimates that Biomass-based energy production will grow from 43TWh (Terawatt Hours) in 2005 to 250TWh in 2020.
o Key NGO bodies such as the European Biomass Association and Eurelectric (the European Union of the Electricity Industry) advocate establishing harmonised, binding sustainability criteria for solid Biomass fuel.
· Turkish MDF Market:
o Turkey is one of the world's largest MDF producers, manufacturing circa 4.3 million m3 of finished materials in 2012. Currently almost 70% of its wood chip raw materials are sourced from the US, Canada and Latin America.
o AEG has established relationships with the major Turkish MDF manufacturers, and supplies high-quality wood chip from its Black Sea processing and shipping facilities in approximately one-tenth of the time of transatlantic suppliers; providing significant cost savings and cash-flow advantages, as well as considerably fresher and better quality products, to its customers.
