TIDMAMPH
RNS Number : 0852S
Aggregated Micro Power Holdings PLC
19 September 2014
Aggregated Micro Power Holdings plc
("AMPH" or the "Group")
Interim Results
Aggregated Micro Power Holdings plc, (AIM: AMPH), the renewable
energy developer focused on biomass energy generation, announces
its interim results for the six months ended 30 June 2014.
Highlights to 30 June 2014
-- Successful sale of AMP Heat (formerly a subsidiary of the
Group) and its portfolio of five biomass boiler projects to
Aggregated Micro Power Infrastructure Limited ("AMPIL") in May for
GBP508,458
-- Private equity placement raising GBP659,349 at 100p per share
Post-period end highlights
-- Successful admission to the AIM market in July 2014 raising
GBP9.5m at a price of 100p per share from new and existing
investors
-- Financial close reached on two biomass boiler projects which
are expected to be sold to AMPIL for GBP550,000 by the end of
2014
-- Planning submitted and options to lease secured on two sites
to build two new 1.5MW gasification plants next year
-- On-going development of the biomass boiler and gasification pipeline
-- Completion of the filter pot upgrades at the Group's existing
1MW plant at Low Plains and on track to complete the investment
program by mid-October to improve and increase the plant's wood
drying capacity
-- Low Plains is currently being commissioned and operating in
excess of 65% of its generating capacity and output is
incrementally being increased in line with its commissioning
schedule
-- Retention of WS Atkins to finalize the detailed design of the new build gasification plants
Richard Burrell, CEO of Aggregated Micro Power Holdings plc
commented: "In the reporting period under review we have been able
to streamline and structure into two principle business units
geared up for growth and focused on turning wood into electricity
and heat. In the lead up to the IPO, we obtained commitments on a
number of projects to install high specification, environmentally
friendly biomass boilers and are focused on building our pipeline
of installations. In addition, we have committed funds to the
expansion of the Low Plains facility in Cumbria and we are now in
planning on two further sites which we intend to develop next
year."
Aggregated Micro Power Holdings www.ampplc.co.uk
plc
Richard Burrell CEO Tel: 020 7382 7800
Neil Eckert Executive Chairman Tel: 020 7382 7800
finnCap Ltd (NOMAD & Broker) Tel: 020 72202
0500
Ed Frisby/Henrik Persson/Simon (Corporate Finance)
Hicks
Stephen Norcross (Corporate Broking)
Walbrook PR Ltd Tel: 020 7933 8780
Mike Wort Mob: 07900 608
002
Paul Cornelius Mob: 07866 384
707
Chairman's Statement
I am pleased to provide a report on our results for the first
half of the year, the first set of financial results since our
admission to AIM in July. These results are in line with the
Board's expectations and are in respect of the period prior to the
IPO of AMP.
In July we completed our admission to the AIM market of the
London Stock Exchange and raised GBP9.5m. These funds will be
deployed principally to finance the cost of developing our pipeline
of renewable energy projects.
Since admission, we have continued to work at Low Plains to
improve the operational and wood drying capacity of our existing 1
MW plant in Cumbria. We have completed an upgrade of the fly ash
removal system on schedule and as I write, are in the ramp-up phase
of commissioning. We can currently operate the plant in a stable
state in excess of 65% capacity and are continuing to enhance
operations. We are also on track to increase the plant's wood
drying capacity by the middle of October.
Our other proposed development sites for two 1.5 MW gasification
plants are progressing well and we have options to lease and are in
planning on both sites.
We have also reached financial close on two biomass boiler
projects at Champneys which we expect to sell to Aggregated Micro
Power Infrastructure Limited ("AMPIL") for approximately GBP550,000
by the end of 2014. This follows the successful sale of AMP Heat
(formerly a subsidiary of the Group) and its portfolio of five
biomass boiler projects to AMPIL in May for GBP508,458. AMPIL is a
separate company which will own and operate biomass boilers
developed by AMP, enabling AMP to optimise its cash position and
generate development fees through the sale of assets.
Outlook
Following the successful IPO, we have a strong balance sheet and
cash resources to execute on a well-defined business plan which is
focused on the final commissioning of our plant in Cumbria, the
development of two further gasification sites and the installation
of a portfolio of biomass boilers. As each site comes on stream, we
intend to refinance assets to recycle our capital to enable further
developments.
AMP is well placed to construct a portfolio of distributed
generating assets and l look forward to updating shareholders on
progress when we publish our year end results in the spring.
Neil Eckert
18 September 2014
Independent Review Report to Aggregated Micro Power Holdings
plc
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2014 which comprises the condensed
consolidated statement of comprehensive income, the condensed
consolidated statement of financial position, the condensed
consolidated cash flow statement, the consolidated statement of
changes in equity and the related notes.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The interim report, including the financial information
contained therein, is the responsibility of and has been approved
by the directors. The directors are responsible for preparing the
interim report in accordance with the rules of the London Stock
Exchange for companies trading securities on AIM which require that
the half-yearly report be presented and prepared in a form
consistent with that which will be adopted in the company's annual
accounts having regard to the accounting standards applicable to
such annual accounts.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Our report has been prepared in accordance with the terms of our
engagement to assist the company in meeting the requirements of the
rules of the London Stock Exchange for companies trading securities
on AIM and for no other purpose. No person is entitled to rely on
this report unless such a person is a person entitled to rely upon
this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior
written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we
hereby expressly disclaim any and all such liability.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2014 is not prepared, in all material respects, in accordance
with the rules of the London Stock Exchange for companies trading
securities on AIM.
BDO LLP
Chartered Accountants and Registered Auditors
Location
United Kingdom
Date
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number
OC305127).
Interim condensed consolidated statement of comprehensive
income
For the six months ended 30 June 2014
Six months Six months Year ended
ended ended
30 Jun 2014 30 Jun 2013 31 Dec
2013
Unaudited Unaudited Audited
Note GBP GBP GBP
Continuing operations
Revenue 146,036 92,624 142,665
Cost of sales (59,269) (45,704) (12,776)
Gross profit 86,767 46,920 129,889
Administrative expenses (1,467,003) 1,002,565 (2,476,701)
Fair value adjustment on financial (397,114) - -
liabilities (Note 11)
---------------------------------------- ----- -------------------- -------------------- ----------------
Administrative expenses (1,864,117) (1,002,565) (2,476,701)
-------------------- -------------------- ----------------
Loss from operations (1,777,350) (955,645) (2,346,812)
Finance expense (56,410) (72,437) (98,449)
-------------------- -------------------- ----------------
Loss before tax (1,833,760) (1,028,082) (2,445,261)
Tax credit 54,148 - -
-------------------- -------------------- ----------------
Loss for the year from continuing
operations (1,779,612) (1,028,082) (2,445,261)
Loss on discontinued operations,
net of tax 4 (4,999) (94,835) (138,338)
Loss and total other comprehensive
loss for the period (1,784,611) (1,122,917) (2,583,599)
==================== ==================== ================
Loss per share attributable to the
ordinary equity holders of the parent
Continuing and discontinued operations
basic (Pence) 8 (11.2p) (9.9p) (19.9p)
Continuing operations basic (Pence) (11.2p) (9.1p) (18.9p)
Interim condensed consolidated statement of financial
position
As at 30 June 2014 30 Jun 2014 30 Jun 2013 31 Dec
2013
Unaudited Unaudited Audited
Note GBP GBP GBP
Non-current assets
Property, plant and equipment 5 6,232,746 5,328,971 6,011,108
Total non-current assets 6,232,746 5,328,971 6,011,108
----------------- ------------- ------------
Current assets
Inventories 16,156 12,303 12,303
Work in Progress 34,428 - -
Trade and other receivables 187,789 249,217 126,510
Cash and cash equivalents 166,544 76,390 342,103
Total current assets 404,917 337,910 480,916
----------------- ------------- ------------
Total assets 6,637,663 5,666,881 6,492,024
----------------- ------------- ------------
Current liabilities
Trade and other payables 915,705 408,049 429,108
Loans and borrowings 569,857 - -
----------------- ------------- ------------
Total current liabilities 1,485,562 408,049 429,108
----------------- ------------- ------------
Non-current liabilities
Loans and borrowings 893,006 1,472,215 1,075,673
Financial liabilities 1,191,342 - -
Total non-current liabilities 2,084,348 1,472,215 1,075,673
----------------- ------------- ------------
Total liabilities 3,569,910 1,880,264 1,504,781
----------------- ------------- ------------
Net assets 3,067,753 3,786,617 4,987,243
----------------- ------------- ------------
Equity attributable to equity
holders of the company
Paid up share capital 7 80,973 64,508 77,687
Share premium 7 5,152,475 1,876,145 4,496,412
Merger reserve 7,103,105 7,869,471 7,897,333
Retained deficit (9,268,800) (6,023,507) (7,484,189)
----------------- ------------- ------------
Total equity 3,067,753 3,786,617 4,987,243
----------------- ------------- ------------
The financial statements were approved by the Directors on
18/09/14 and signed on their behalf by:
Interim condensed consolidated statement of changes in
equity
As at 30 June 2014
Six month ended 30 Share Share Capital Retained Merger reserve Total
June 2014 capital premium Contribution deficit
GBP GBP GBP GBP GBP GBP
Equity as at 1 January
2014 77,687 4,496,412 - (7,484,189) 7,897,333 4,987,243
Issue of share capital 3,286 656,063 - - - 659,349
Loss for the period - - - (1,784,611) - (1,784,611)
Reorganisation (note
11) - - - - (794,228) (794,228)
--------- ----------- -------------- ----------- --------------- -----------
Equity as at 30 June
2014 80,973 5,152,475 - (9,268,800) 7,103,105 3,067,753
========= =========== ============== =========== =============== ===========
Six month ended 30 Share Share Capital Retained
June 2013 capital premium Contribution deficit Merger reserve Total
GBP GBP GBP GBP GBP GBP
Equity as at 1 January
2013 54,078 6,167,447 1,702,024 (4,900,590) - 3,022,959
Issue of share capital 10,430 1,876,145 - - - 1,886,575
Loss for the period - - - (1,122,917) - (1,122,917)
Reorganisation - (6,167,447) (1,702,024) - 7,869,471 -
--------- ----------- -------------- ----------- --------------- -----------
Equity as at 30 June
2013 64,508 1,876,145 - (6,023,507) 7,869,471 3,786,617
--------- ----------- -------------- ----------- --------------- -----------
Issue of share capital 13,179 2,620,267 - - - 2,633,446
Loss for the period - - - (1,460,682) - (1,460,682)
Capital contribution - - - - 27,862 27,862
--------- ----------- -------------- ----------- --------------- -----------
Equity as at 31 December
2013 77,687 4,496,412 - (7,484,189) 7,897,333 4,987,243
========= =========== ============== =========== =============== ===========
Share Capital: The value of the number of shares issued.
Share premium: Amount subscribed for share capital in excess of
the nominal value.
Retained earnings: All other net gains and losses and
transactions with owners (e.g. dividends) not recognised elsewhere.
Capital contribution: Relates to funding from the shareholders for
which no share capital was issued and that funding meets the
definition of an equity.
Merger reserve: Merger relief reserve represents the share
premium and capital contribution of AMP Limited as included
under the merger accounting principles'
Interim consolidated statement of cash flows
Note Six months Six months Year ended
ended ended 31 Dec 2013
30 Jun 2014 30 Jun 2013 Audited
Unaudited Unaudited GBP
GBP GBP
Operating activities
Loss for the period before tax (1,784,611) (1,122,917) (2,583,599)
Adjustments for:
Tax credit received (54,148) - -
Fair value adjustment on 397,114 - -
financial
liabilities at fair value through
profit and loss
Gain on disposal of subsidiary (6,699) - -
Interest paid 56,410 72,437 98,449
Depreciation of property, plant
and equipment 5 30,329 4,174 17,461
------------------------ --------------------- ------------------
(1,361,605) (1,046,306) (2,467,689)
Movement in foreign exchange 18 - 2,022
(Increase)/decrease in inventories (3,853) 14,685 14,685
Increase in work in progress (34,428) - -
(Increase)/decrease in trade and
other receivables (61,279) (77,919) 44,788
Increase in trade and other payables 486,597 154,587 56,679
------------------------ --------------------- ------------------
387,055 (91,353) 118,174
------------------------ --------------------- ------------------
Cash generated from operations (974,550) (954,953) (2,349,515)
------------------------ --------------------- ------------------
Tax credit received 54,148 - -
------------------------ --------------------- ------------------
Net cash flows from operating
activities (920,402) (954,953) (2,349,515)
------------------------ --------------------- ------------------
Investing activities
Purchase of property, plant and
equipment (719,726) (763,113) (1,421,761)
Proceeds from the sale of subsidiary 508,458 - -
------------------------ --------------------- ------------------
Net cash used in investing activities (211,268) (763,113) (1,421,761)
------------------------ --------------------- ------------------
Financing activities
Proceeds from issue of shares 659,349 1,580,927 3,899,850
Proceeds from borrowings 548,241 - -
Payments of borrowings (245,989) - -
Payments of interest on (2,090) - -
borrowings
Payments of finance lease (3,400) - -
------------------------ --------------------- ------------------
Net cash used in financing activities 956,111 1,580,927 3,899,850
------------------------ --------------------- ------------------
Net increase in cash and cash
equivalents (175,559) (137,139) 128,574
Cash and cash equivalents at beginning
of period 342,103 213,529 213,529
Cash and cash equivalents at end
of period 166,544 76,390 342,103
------------------------ --------------------- ------------------
Notes to interim condensed consolidated financial statements For
the six months ended 30 June 2014
1.Basis of preparation
The financial information in these interim results is that of
the holding company and all of its subsidiaries (the Group). It has
been prepared in accordance with the recognition and measurement
requirements of International Financial Reporting Standards as
adopted for use in the EU (IFRSs). The accounting policies applied
by the Group in this financial information are the same as those
applied by the Group in its financial statements for the year ended
31 December 2013 and which will form the basis of the 2014
financial statements.
A number of new and amended standards have become effective for
periods beginning on 1 January 2014; however none of these is
expected to materially affect the Group.
The Group's results are currently not materially affected by
seasonal variations.
The comparative financial information presented herein for the
year ended 31 December 2013 does not constitute full statutory
accounts for that period. The Group's annual report and accounts
for the year ended 31 December 2013 have been delivered to the
Registrar of Companies. The Group's independent auditor's report on
those statutory accounts was unqualified, did not draw attention to
any matters by way of emphasis, and did not contain a statement
under 498(2) or 498(3) of the Companies Act 2006.
The financial information for the half-years ended 30 June 2014
and 30 June 2013 is unaudited.
2. Use of estimates and judgements
There have been no material revisions to the nature and amount
of changes in estimates of amounts reported in the annual financial
statements 2013, other than disclosed in note 11.
3. Segmental information
The Group operates in one business and geographic segment, being
renewable energy projects in the United Kingdom only.
4. Discontinued operations
On the 1 May 2014, the Group sold AMP Heat Limited including its
portfolio of five biomass boiler projects, to Aggregated Micro
Power Infrastructure Limited ("AMPIL") for a cash consideration of
GBP508,458. AMPIL is a special purpose vehicle which is wholly
owned by Law Debenture plc as trustee for general charitable
purposes and is not a related party of the AMP Group for UK company
law purposes. AMP has contracted with AMPIL to provide fuel and
operation and maintenance services for the boilers.
The results of discontinued operation which have been included
in the condensed income statement, were as follows.
Six months Six months Year
ended ended ended
30 Jun 30 Jun 31 Dec
2014 2013 2013
Results of discontinued operations Unaudited Unaudited Audited
GBP GBP GBP
Revenue less cost of sales (4,441) - -
Administration expenses (7,257) (94,835) (138,338)
----------- ----------- ----------
Loss before and after taxation from discontinued
operation (11,698) (94,835) (138,338)
Gain on disposal of discontinued operations, 6,699 - -
net of tax
----------- ----------- ----------
Loss after tax for the period from a
discontinued operations (4,999) (94,835) (138,338)
=========== =========== ==========
A gain of GBP6,699 arose on disposal of AMP Heat Limited, being
the proceeds of disposal less the carrying amount of the assets and
liabilities as per below calculation.
(In GBP
'000)
Consideration received 508,458
Cash disposed of (1,658)
----------------------
Net cash inflow on disposal of discontinued
operations 506,800
Net assets disposed of
Property, plant and equipment 591,959
Trade and other receivables 18,039
Trade and other payables (109,897)
500,101
Pre-tax gain on disposal 6,699
Related tax income -
----------------------
Gain on disposal 6,699
======================
4. Discontinued operations
Six months Six months Year ended
ended ended
30 Jun 2014 30 Jun 2013 31 Dec 2013
Cash flow from discontinued operation Unaudited Unaudited Audited
GBP GBP GBP
Operating activities
Loss before tax (11,698) (94,835) (138,338)
Adjustments for
Gain on disposal of the discontinued 6,699 - -
operations
Depreciation 2,257 - -
(2,742) (94,835) (138,338)
Increase in trade and other
receivables 332 (5) (332)
Increase/(decrease) in trade - 31 -
and other payables
332 26 (332)
------------------------ ---------------------------- ---------------------
Cash generated from operations (2,410) (94,809) (138,670)
------------------------ ---------------------------- ---------------------
Investing activities
Proceeds from sale of subsidiary 508,458 - -
Purchase of property, plant and
equipment (309,559) - (194,458)
Net cash used in investing activities 198,899 - (194,458)
------------------------ ---------------------------- ---------------------
Net cash flows from discontinued
operations 196,489 (98,809) (333,128)
======================== ============================ =====================
5. Property, Plant and equipment
Assets Plant Furniture Computer Motor Total
Under & & Fixtures Equipment Cars
Construction Machinery
GBP GBP GBP GBP GBP
Cost
As at 1 January 2013 4,412,133 135,208 8,000 1,426 39,841 4,596,608
Additions for 2013 1,255,616 199,534 - 791 - 1,455,941
Disposals for 2013 - - (8,000) - - (8,000)
As at 31 December 2013 5,667,749 334,742 - 2,217 39,841 6,044,549
Additions for the period 843,926 - - - - 843,926
Disposals for the period(1) (594,216) - - - (594,216)
Transfers (594,216) 594,216 - - - -
As at 30 June 2014 5,917,459 334,742 2,217 39,841 6,294,259
-------------- ----------- ------------ ----------- ------- ----------
Depreciation
As at 1 January 2013 - 6,804 4,889 871 3,416 15,980
Charge for the year
2013 - 13,753 (4,889) 629 7,968 17,461
As at 31 December 2013 - 20,557 - 1,500 11,384 33,441
Charge for the period - 9,846 - 211 20,272 30,329
Disposals for the period - (2,257) - - - (2,257)
As at 30 June 2014 - 28,146 - 1,711 31,656 61,513
-------------- ----------- ------------ ----------- ------- ----------
Net book value
As at 1 January 2013 4,412,133 128,404 3,111 555 36,425 4,580,628
============== =========== ============ =========== ======= ==========
As at 31 December 2013 5,667,749 314,185 - 717 28,457 6,011,108
============== =========== ============ =========== ======= ==========
As at 30 June 2014 5,917,459 306,596 - 506 8,185 6,232,746
============== =========== ============ =========== ======= ==========
Disposal due to disposal of AMP Heat Limited (See note 4)
6. Financial instruments
30 June 2014 0-3 3 months 1 to 5 Over
months to 1 year years 5 years
Financial Liabilities GBP GBP GBP GBP
Trade and other payables 915,705 - - -
Loans and borrowings 563,065 - - 869,198
Finance Lease 1,698 5,094 23,808 -
Financial liability (note 11) - - 1,191,342 -
---------- ----------- ---------- ----------
1,480,468 5,094 1,215,150 869,198
========== =========== ========== ==========
31 December 2013 0-3 3 months 1 to 5 Over
months to 1 year years 5 years
Financial Liabilities GBP GBP GBP GBP
Trade and other payables 429,108 - - -
Loans and borrowings - - - 1,075,673
---------- ----------- ---------- ----------
429,108 - - 1,075,673
========== =========== ========== ==========
7. Share capital
30 June 2014 No of shares Issued Share premium
capital
Nos. GBP GBP
Ordinary shares of GBP0.005
each
As at 1 January 2014 15,535,153 77,687 4,496,412
Issued for cash during the
period 659,349 3,286 656,063
------------- -------- --------------
As at 30 June 2014 16,194,502 80,973 5,152,475
============= ======== ==============
31 December 2013 No of shares Issued Share premium
capital
Nos. GBP GBP
Ordinary shares of GBP0.005
each
As at 1 January 2013 54,078 54,078 6,167,447
Share issued 29 January 2013 925 925 -
------------- -------- --------------
Share designated from GBP1
to GBP0.005 11,000,600 55,003 6,167,447
Transfer to merger reserve
on reorganisation - - (6,167,447)
Share issues* 4,138,226 20,702 4,102,067
Debt to equity swap 396,327 1,982 394,345
------------- -------- --------------
As at 31 December 2013 15,535,153 77,687 4,496,412
============= ======== ==============
*Issued share disclosure in December 2013 were understated by
400 shares which have been restated. No impact on earnings per
share.
8. Loss per share
Basic loss per share is calculated by dividing the loss
attributable to equity holders of the Group by the weighted average
number of ordinary shares in issue during the year:
Six months Six months Year ended
ended ended
30 Jun 30 Jun 31 Dec 2013
2014 2014
Unaudited Unaudited Audited
GBP GBP GBP
Loss attributable to equity holders
of the Company (1,784,611) (1,122,917) (2,583,599)
Weighted average number of shares 15,906,055 11,287,160 12,951,216
Continuing and discontinued operations
basic (pence) (11.2p) (9.9p) (19.9p)
Continuing operations basic (Pence) (11.2p) (9.1p) (18.9p)
9. Related Party transactions
Parties are considered to be related if one party has the
ability to control the other party or to exercise significant
influence over the other party in making financial or operational
decisions.
The Directors and senior management of the Company and the
subsidiaries within the Group who meet the definition of "Key
Management personnel" under IAS 24 are considered to be related
parties.
Richard Burrell, Chief Executive Officer of the Group, has a
significant interest in Mathieson Capital LLP to which AMP Energy
Services Limited (a subsidiary), paid consultancy fees of GBP82,368
(2013: GBP174,235). Mathieson Capital LLP also had an outstanding
loan to the Company of GBP303,674 (December 2013: GBPnil) and
accrued interest of GBP9,391 (December 2013: GBPnil) as at 30 June
2014.
Neil Eckert who was a Director throughout the period has an
outstanding loan to the Company of GBP990,231 (December 2013:
GBP990,231) and accrued interest of GBP128,967(December 2013:
GBP85,441) as at 30 June 2014.
10. Events after the reporting period
On the 18 July, the Group completed a successful Initial Public
Offering on AIM, the proceeds of which will be used to fund a
pipeline of gasification and biomass boiler projects. Since then,
the Group has signed a heat supply agreement with Champneys health
spa for the installation of two biomass boilers and has completed
the filter upgrade programme at its 1MW gasification plant at Low
Plains. Construction of a new wood chip drying facility at Low
Plains is underway and is expected to finish in mid October. The
Group has also entered into options to lease for two further sites
and has submitted planning applications to build a 1.5MW
gasification plant at each site.
The Group has repaid Richard Burrell's shareholder loan in full
plus accrued interest of GBP314,814 and partly paid
GBP250,000 of Neil Eckert's shareholder loan leaving an
outstanding balance of GBP882,086 as at the end of August
2014.
11. Deferred contingent consideration
The final terms of the deferred consideration, which relates to
the Group's acquisition of AMP Energy Services Limited (formerly
Environova Limited) and Mathieson Biomass Limited, were amended and
agreed on the 25 June 2014 ("Valuation Date"). The deferred
consideration is subject to performance criteria linked to Total
Shareholder Returns ("TSR") over the period 30 June 2014 through to
31 December 2017 ("Performance Period").
The vesting criteria are as follows:
-- Annualised TSR is greater than 12% over the Performance Period all shares vest;
-- Annualised TSR is less than 8% over the Performance Period no shares vest;
-- Annualised TSR is between 8% and 12% over the Performance
Period a pro rata proportion of shares vest; and,
-- At any time during the Performance Period annualised TSR
exceeds 15%, all shares vest immediately.
A Black-Scholes Option Pricing model was used to determine the
fair value of the deferred consideration as at the Valuation Date.
Inputs to the model include the market price of the call options at
the Valuation Date, the exercise price, the assumed volatility of
the share price, the current level of risk free rates of return,
the dividend yield and the expected exit date. The biggest driver
of value in the model is the assumed volatility rate, which was
derived from a portfolio of publicly traded companies in the
renewable energy and power generation sectors.
The Group conducted an independent valuation of Neil Eckert's
and Mathieson Capital LLP's (an entity controlled by Richard
Burrell) deferred contingent consideration which could lead to a
maximum of 3,999,999 ordinary shares, or 2,666,666 and 1,333,333
ordinary shares respectively being issued. The valuation was
conducted in accordance with the principles set out in IFRS 3.
The derived contingent value of all 3,999,999 options has been
calculated at GBP1,191,342, allocated GBP794,228 to Neil Eckert and
GBP397,114 to Mathieson Capital LLP.
The acquisition of AMP Energy Services Limited fell outside the
scope of IFRS 3 and was accounted for using principles of merger
accounting contained in FRS 6 'Acquisitions and Mergers' issued by
the UK Accounting Standards Board. The Group has adopted the policy
that any adjustment to the consideration under merger accounting is
adjusted against the merger reserve.
11. Deferred contingent consideration (cont'd)
The acquisition of Mathieson Biomass Limited was treated as an
acquisition under IFRS 3. The contingent consideration was
classified as a financial liability at fair value through profit
and loss at inception and is valued at each reporting date. Any
fair value adjustment which falls outside the 12 months following
the acquisition date is recognised through the income
statement.
In addition to the deferred consideration, 225,000 share options
are outstanding at 30 June 2014. The options are subject to the
same TSR criteria as the deferred consideration but have a strike
price of GBP1.00 and therefore are expected to have an immaterial
contingent value over the five day vesting period between the
Valuation Date and 30 June 2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LFFFLAEITLIS
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