CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024

1.      GENERAL INFORMATION

Active Energy Group plc ("AEG") is a renewable energy company focused on the production and development of next generation biomass products that have the potential to transform the traditional coal fired-power industry and the existing renewable biomass industry. The Company is quoted in London (AIM: AEG); however, its shares are currently suspended from trading.

The Company is incorporated in England and Wales (Company number 03148295) and the address of the registered office is 27-28 Eastcastle Street, London, W1W 8DH, United Kingdom.

2.      BASIS OF PRESENTATION

The annual financial statements are prepared and approved by the Directors in accordance with UK-adopted International Accounting Standards ("IFRS") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The condensed consolidated interim financial report for the half-year reporting period ended 30 June 2024 has been prepared in accordance with the UK-adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

The Interim Financial Statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's consolidated financial statements for the year ended 31 December 2023. The Interim Financial Statements are presented in US Dollars, except as otherwise indicated. The Interim Financial Statements have been prepared on a going concern basis, under the historical cost convention, except for the revaluation of certain financial instruments.

The Interim Financial Statements are unaudited and do not constitute full statutory accounts under Section 434 of the Companies Act 2006. The financial information in respect of the year ended 31 December 2023 has been extracted from the statutory accounts which have been delivered to the Registrar of Companies. The Group's independent auditor's report on those accounts was unqualified and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006. The auditor's report on those accounts highlighted a material uncertainty in relation to going concern. The auditor did not qualify their report in respect of this matter. The financial information for the half years ended 30 June 2024 and 30 June 2023 is unaudited and the twelve months to 31 December 2023 is audited.

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 2023 and which will form the basis of the 2024 financial statements, except for the new and amended standards which have become effective since the beginning of the previous financial year. These new and amended standards are not expected to materially affect the Group.

The preparation of financial statements in compliance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the most appropriate application of the Group's accounting policies. The areas where significant judgments and estimates have been made in preparing these interim financial statements are not materially different from those disclosed in the financial statements for the year ended 31 December 2023.

Restatement of prior period

The statement of comprehensive income for the six months ended 30 June 2023 has been restated to report the loss for that period from operations discontinued later in 2023 within the loss from discontinued operations line (see note 7). The overall loss for the six months ended 30 June 2023, the total comprehensive loss for the period and net assets at 30 June 2023 are unaffected.

These Interim Financial Statements were approved by the Board of Directors on 18 December 2024.

3.      GOING CONCERN

The Directors are required to give careful consideration to the appropriateness of the going concern basis in the preparation of the interim financial statements.

Following the termination of the Group's relationship with Player Design, Inc. the Company is now principally a holding company, and its projected future cash requirements comprise its ongoing compliance and management costs. The Company has prepared cash flow forecasts to estimate these future cash requirements, and the resources available to it, and these indicate that the Company should have sufficient cash resources to continue in operation for at least one year from the date of approval of these financial statements.

In October 2024 the Company received loan note finance of £200,000 from Zen Ventures Limited and it has subsequently received a commitment to provide additional future funding from Zen Ventures Limited and parties connected to Zen Ventures Limited. The Board, having reviewed the cash flow forecasts, consider that this funding commitment will be sufficient to enable the Company to settle its liabilities as they fall due for at least one year from the date of approval of these financial statements.

The financial statements have therefore been prepared on a going concern basis.

The Zen Ventures Limited loan note finance includes £27,616 of convertible loan notes that will convert to new ordinary shares representing 29.9% of the Company's issued share capital on 31 December 2024, contingent upon, inter alia, the suspension in trading in the Company's shares on AIM, a market operated by the London Stock Exchange plc, having been lifted by this date. To achieve this the Company must, inter alia, publish its interim results for the six months ended 30 June 2024 and the Board are very confident of meeting this requirement before 31 December 2024.

However, the loan notes, and by extension the future funding from Zen Ventures Limited and its connected parties, are also subject to approval by the Company's shareholders at its next general meeting. The Board consider that this represents a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern.

The financial statements do not include any of the adjustments that would be required if they were not prepared on a going concern basis.

4.      Basis of consolidation

The financial information incorporates the results of AEG and entities controlled by AEG (its subsidiaries). Control is achieved when the Group has power over relevant activities, is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The consolidated interim financial statements present the financial results of AEG and its subsidiaries (the Group) as if they formed a single entity. Where necessary, adjustments are made to the results of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

5.      NET FINANCE GAINS/(COSTS)

6.      LOSS PER SHARE

Basic and diluted loss per share is the same where the effect of any potential shares is anti-dilutive and is therefore excluded.

7.      DISCONTINUED OPERATIONS

During 2023 the Group discontinued its CoalSwitch® operations in Ashland, Maine. During 2022 the Group sold the Lumberton property that was used for its wood processing operations. The results of these businesses are disclosed as a single line item in the Consolidated Statement of Income in accordance with IFRS5. The analysis between continuing and discontinued operations is as follows:

7.    SEGMENTAL INFORMATION

The Group reports two business segments:

·      "CoalSwitch®" denotes the Group's renewable wood pellet business. Activities have ceased and are reported as discontinued operations.

·      "Corporate and other" denotes the Group's corporate and other costs.

The business segments are aligned to the Group's strategy as disclosed in the Strategic Report within its 2023 Annual Report.

Factors that management used to identify the Group's reportable segments

The Group's reportable segments are strategic business units that offer different products or services.

Measurement of operating segment profit or loss

The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with IFRS but excluding the results from discontinued operations in accordance with IFRS 5.

8.           INTANGIBLE ASSETS

The adjustment to additions in 2023 results from further information becoming available in relation to the cost of the 2022 additions, subsequent to the approval of the 2022 financial statements.

Intellectual property comprises costs incurred to secure the rights and knowledge associated with the CoalSwitch® and PeatSwitch technologies. These assets are accounted for as indefinite life assets and assessed for impairment at each balance sheet date. These have been impaired to their recoverable amount, which has been determined to be their fair value less costs to sell. The key assumption in estimating the recoverable amount is considered to be the estimated selling price of the intellectual property assets.

9.           PROPERTY, PLANT AND EQUIPMENT

The adjustment to additions in 2023 results from further information becoming available in relation to the cost of the 2022 additions, subsequent to the approval of the 2022 financial statements.

At 31 Dec 2023 the plant and equipment was impaired to its recoverable amount which was determined to be its fair value less costs to sell. This valuation was based on the amounts subsequently realised for these assets.

10.        OTHER FINANCIAL ASSETS

Other financial assets consist of an unquoted equity instrument which is valued at fair value through other comprehensive income and classified as a non-current asset. The instrument is denominated in Pounds Sterling.

This asset is valued according to Level 3 inputs as defined by IFRS 13 and is therefore subject to management's judgement of unobservable inputs. The asset is currently held at its historic cost which represents management's best estimate of its fair value.

11.        TRADE AND OTHER RECEIVABLES

No impairment provisions have been raised against trade and other receivables.

The carrying value of trade and other receivables approximates to fair value.

12.        TRADE AND OTHER PAYABLES

The carrying value of trade and other payables approximates to fair value.

13.        NET CASH

14.        SHARE CAPITAL - ORDINARY SHARES

15.        CONTINGENT LIABILITIES

The Group has received legal claims from former subcontractors in the USA in respect of alleged unpaid remuneration. The Group disputes these claims and is advised that they are unlikely to be successful, and the Board therefore does not consider it likely that any payment will be required to settle the claims. The Board's best estimate of the cost to the Group, were these claims to be successful, is $360,653. No provision has been made for this sum in these financial statements.

16.        RELATED PARTY DISCLOSURES

During the period, the Group paid $18,954 (H1 2023: $nil) to Rowan & Associates Limited, a company owned by Michael Rowan (a director of the Company), in respect of director's fees.

During the period, the Group paid $11,056 (H1 2023: $22,076) to Zimmfor Management Services Limited, a company owned by Jason Zimmerman (a director of the Company), in respect of director's fees.

Transactions between the Company and its subsidiaries, which are related party transactions, have been eliminated on consolidation. These transactions, which are incurred in the ordinary course of business and under normal commercial terms, are substantially the same in nature as those disclosed in the Annual report and Accounts at 31 December 2023.

17.        CAPITAL COMMITMENTS

The Group had no capital commitments at 30 June 2024 (31 December 2023: Nil).

18.        SUBSEQUENT EVENTS

The Company's shares were suspended from trading on AIM on 1 July 2024, pursuant to AIM Rule 19. On 4 December 2024 the Company published its accounts for the year ended 31 December 2023 Trading in the Company's shares remained suspended on AIM pending the Company announcing its interim results for the six months ended 30 June 2024.  Following this announcement, it is expected that trading in the Company's shares on AIM will be recommenced at 7:30am on 18 December 2024.

On 22 July 2024 the Group placed its subsidiary Advanced Biomass Solutions Limited into a members' voluntary liquidation. The Group expects the company to realise its assets and settle its liabilities at amounts approximate to their carrying values.

In October 2024 the Company raised £200,000 ($260,878) through the issue of loan notes, of which £27,616 ($36,022) are convertible loan notes that will convert to new ordinary shares representing 29.9% of the Company's issued share capital on 31 December 2024 (subject to shareholder approval). The loan notes are secured by way of a fixed and floating charge over the assets of the Company.

On 1 November 2024 Jason Zimmermann and Max Aitken resigned as directors of the Company.

19.        RECONCILIATION OF LOSS FOR THE PERIOD TO CASH OUTFLOWS FROM OPERATING ACTIVITIES

20.        COPIES OF THE INTERIM FINANCIAL STATEMENTS

Copies of the Consolidated Interim Financial Statements will be made available on the Company's website at www.aegplc.com.