Active Energy Regulatory News (AEG)

26 April 2011

AIM: AEG

ACTIVE ENERGY GROUP PLC

("Active Energy" or "the Group" or "the Company")

Acquisition, Appointment of New Chairman & Strengthening of Management

Active Energy, which supplies cutting-edge voltage optimisation technology to reduce the energy consumption and CO₂ emissions of commercial buildings, is delighted to announce the acquisition of Red Line Engineering Services Limited ("Red Line"), an engineering services specialist established in 1999, for a consideration of £492,250 satisfied by the issue of 17,900,000 new ordinary shares ("Consideration Shares") of 1p each in the capital of the Company. The Company has also assumed the outstanding liabilities of Red Line amounting to approximately £60,000. As part of the acquisition, the Group announces the appointment of Gavin Little as Executive Chairman, to drive the growth of the enlarged business and the strengthening of the Company's management team. The acquisition of Red Line is conditional on Admission of the Consideration Shares ("Admission").

Red Line provides the Group with access to highly innovative technology and engineering (including specialised rail) capabilities and represents the first step in the Group's planned transformation into an end-to-end environmental electrical services and solutions business, significantly broadening the Company's service offering to manage the environmental requirements of companies. Red Line, in the 15-month period to 31 July 2010, recorded net profits after taxation of £45,265 and as at 31 July 2010 had net liabilities of £79,512. Red Line has been granted Transport for London ("TFL") approved supplier status which encompasses health and safety, and total quality processes for major installation and maintenance work.

The new Active Energy business model will offer integrated services that cover the broad spectrum of environmental issues including energy saving, renewable energy creation, recycling and carbon management. Across these sectors, the enlarged Group will provide a fully integrated process from auditing and recommending solutions using cutting-edge diagnostic surveys and independent review processes through to installation of the appropriate technologies. Red Line already delivers complex engineering solutions, from design through to installation and maintenance and specialising in the rail and transport industry. The acquisition will allow the enlarged Group to offer an end-to-end service offering with installation and maintenance services, strengthening customer relationships and significantly enhancing recurring revenue streams.

Gavin David Little, aged 44, will join the Board as Executive Chairman with effect from Admission. Philip Palmer, currently Chairman, will remain on the Board as an Executive Director. Gavin has over 20 years' sales, marketing and general management experience, most recently with British American Tobacco Co Plc ("BAT") as CEO of the Northern Europe region, where he was responsible for strategy and operations; overseeing the restructuring and corporate development of the £700m turnover business. Prior to this, Gavin was Chief Marketing Officer, USA, for Reynolds American Inc., a leading US tobacco company in which BAT is the major shareholder, having held previously a number of senior management roles globally within BAT.

Following Gavin's appointment the composition of the Board will be as follows; Gavin Little, Executive Chairman, Philip Palmer, Executive Director, and Christopher Foster, Executive Director. The Company intends to appoint at least one independent non-executive director as soon as practicable following Admission of the Consideration Shares.

In addition, the Group has appointed a number of new directors to the newly created operating subsidiary as part of the acquisition and in order to support the development of the end-to-end service offering. Following the acquisition, Andrew Smart, the founder and Managing Director of Red Line will join the Group as Operations Director with responsibility for the installation and maintenance business. Andy has worked as a senior project manager for major engineering companies including with London Underground, Marconi Avionics and Industrial Control Services Inc. (now part of Emerson Process Management). The Group has also appointed Laurence Unwin as Managing Director and John Tarbet as New Business Development Director. Laurence has in-depth knowledge of delivering significant infrastructure projects, having worked in senior management roles for Network Rail, Mouchel plc, Cubic Transportation Systems and Brookvex. John brings with him a wealth of business development experience, having most recently been instrumental in the establishment of a new environmental division for Brookvex, working with major clients such as London Underground, Transport for London and Symantec to deliver large scale, high profile energy saving projects.

Following completion of the acquisition the vendors of Red Line will hold the following shares in the capital of the Company:

As part of these arrangements Gavin Little has agreed that his remuneration of £50,000 per annum will be satisfied, for the first 12 months following his appointment, by the issue of new Ordinary Shares in the capital of the Company (after deductions for income taxes). In addition, Christopher Foster and Philip Palmer have agreed that 50 per cent. of their basic remuneration equating to £40,000 per annum respectively will also be satisfied by the issue of new Ordinary Shares.

The number of Ordinary Shares to be issued under these arrangements will be calculated on a monthly basis based on the volume weighted average middle-market price. The shares will be issued on the first anniversary of Admission and will be subject to orderly market arrangements in the 12 months following their issue.

In addition and in lieu of fees totaling £27,500 incurred in connection with the acquisition, Jendens Securities Limited, the Company's broker, will be issued with 1,000,000 new Ordinary Shares in the capital of the Company.

Application will be made for 18,900,000 new Ordinary Shares to be admitted to trading on AIM. Admission of such shares is expected to become effective and dealings are expected to commence on AIM on 3 May 2011. Following the issue of these shares, the Company will have 131,108,971 Ordinary Shares in issue.

As a result of the acquisition, the Directors will hold the following number of Ordinary Shares in the capital of the Company:

Commenting on the appointments and acquisition, Philip Palmer, Chairman, said;

"We believe that expanding our offering into an end-to-end environmental services and solutions business is a key development for Active Energy and will accelerate the growth of the Group significantly. 

I am delighted that Gavin is joining us to support this process, as his knowledge of strategic business development, sales and marketing will no doubt prove invaluable. I would also like to welcome all of our new appointments, who together strengthen our consultancy and installation capabilities considerably. We look forward to working with all the team to build a market-leading proposition."

Gavin Little commented;

"As environmental issues become increasingly important to big businesses, there is an opportunity to build a business which manages all environmental needs from assessment through to delivery of the appropriate solution and then to help our customers see it though to completion. Active Energy has already established a position in voltage optimisation and is well placed to expand into just such a business with a 'best in class' environmental services and solutions offering.

I am excited to be joining the Group and look forward to driving its strategic development, sales and shareholder value in the UK and beyond."

The following information falls to be disclosed under rule 17 and paragraph (g) of Schedule Two of the AIM Rules for Companies.

Gavin Little is or has been a director or partner of the following companies or partnerships in the preceding five years:

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