Active Energy Regulatory News (AEG)

29 June 2011

AIM: AEG

Active Energy Group plc

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

Final Results for the year ended 31 December 2010

Active Energy Group plc, the environmental services and solutions provider, is pleased to announce its final results for the year ended 31 December 2010.

Key Points

·; New strategy established to significantly enhance scope and scale of business

·; Revenues increased by 186% to £2,972,711 (2009: £1,036,188 restated as a result of the disposal of the Gasignition and Derlite businesses)

·; Loss for the year of £1,964,828 (2009: £1,175,876)

·; Loss per share was 1.95p (2009: loss per share of 1.63p)

·; Cash balances as at 31 December 2010 of £652,044 (2009: £840,122)

- raised £1.62m (net of expenses) post period end, in May 2011

·; Acquisition of Red Line Engineering Services Limited in April 2011

- launched strategy to provide a comprehensive service covering the environmental requirements of companies, through consultancy and design and installation to maintenance

- will allow Active Energy to capitalise on significant growth opportunities

·; Group well placed to realise growth ambitions

Gavin Little, Chairman of Active Energy, commented,

"Over the last two years, Active Energy has been transformed in line with growth opportunities within the environmental services sector.

I joined the Board in April 2011, at the time of the Red Line Engineering Services acquisition, because I believe that there are exciting opportunities for the Group to become the market-leading environmental services and solutions provider. The increasing demand for environmental solutions across a broad spectrum of issues is creating the potential for significant growth. The Group already has relationships and expertise, now including within the rail industry, and the Board is confident that it is well placed to realise its growth ambitions."

Enquiries:

CHAIRMAN'S REPORT

I am pleased to present the results for the year ended 31 December 2010 in my first report since joining Active Energy as Chairman in April 2011.

Over the last two years, Active Energy has been transformed in line with growth opportunities within the environmental services sector. Having initiated the transformation in 2009, with the establishment of a presence in the voltage optimisation market, during 2010, the Group made encouraging progress in strengthening its market position, building partnerships in both the UK and overseas and securing a number of new contracts.

The disposal of the Group's mature, legacy businesses, Gasignition and Derlite, was completed in October 2010. The two legacy businesses had continued to make losses, operating in challenging markets, and their disposal is expected to generate significant annualised cost savings as well as enabling the Group to focus on the opportunities within the environmental sector.

Over the course of 2010, the Board recognised that by broadening the range of environmental services and products offered, there was an opportunity to create a significantly larger company, with stronger sales pipelines and enhanced recurring revenues. Therefore, following the year end, in April 2011, Active Energy acquired Red Line Engineering Services Limited ("Red Line") with the intention of providing a comprehensive service covering the environmental requirements of companies, from consultancy and design through installation to maintenance and the acquisition will allow Active Energy to capitalise on the opportunities available. The acquisition enhances the Group's engineering capabilities and establishes a presence in the rail industry, where Red Line holds Transport for London approved supplier status. At the same time, the appointment of several new directors at an operational level will underpin our growth ambitions, bringing additional skills and sector experience.

We believe that the Group is well placed to grow substantially, benefiting from a first mover advantage. As companies seek to manage their environmental impact, driven by regulatory requirements and the potential for cost reductions, it is our aim to offer a market-leading proposition and following the placing to raise £1.8m (gross) completed in May 2011, the Group has a strong balance sheet and the foundations in place to accelerate its growth.

Financial review

Following the disposal of Gasignition and Derlite in October 2010, the results reported below only include continuing operations. 2009 figures have been restated to reflect the disposal.

For the year ended 31 December 2010, Group revenues for continuing activities almost tripled to £2.97m (2009: £1.04m) as our strategy to build a presence in the voltage optimisation market gained traction and we secured a number of new contracts. The loss for the year from continuing operations was £1.4m (2009: £0.87m). The loss for the year after accounting for a £0.55m loss from discontinued operations and a stock adjustment of £0.195m was £1.96m (2009: £1.18m). The loss per share was 1.95p (2009: 1.63p).

In October 2010, we sold our two non-core businesses in the UK and Thailand. Following the sale, the company will receive £545,000, which includes £300,000 of assumed debt to be repaid and sales proceeds of £245,000. The sale proceeds of £245,000 have a net present value of £213,500. The company has received £70,000 to date and the remainder is payable in instalments over the next five years.

Cash balances as at 31 December 2010 were £652,044 (2009: £840,122). In July 2010, Active Energy completed a placing of 19,871,425 new ordinary shares, raising gross proceeds of £1.39 million (£1.32 million after expenses). In August 2010, there was also a Bonus Issue of shares made to existing shareholders, equating to 1 new Ordinary Share for every 20 Ordinary Shares held. After the period end, in May 2011, the Group completed a further placing of 65,500,000 new ordinary shares to raise £1.8m gross (£1.62m net of expenses) to assist the Company's development into an end-to-end environmental services and solutions business, providing a robust platform for future growth.

The Directors will not be recommending the payment of a dividend (2009: £nil).

Operating review

As indicated above, Active Energy has undergone a considerable transformation since the launch of the voltage optimisation business in 2009. The year under review demonstrates encouraging momentum, with the Group achieving significant progress.

In February 2010, Active Energy entered into a partnership with a subsidiary of Scottish and Southern Energy plc, SSE Contracting (formerly Southern Electric Contracting), to provide both sales and installation support. Under the terms of the agreement, Active Energy was recognised as the preferred supplier of voltage optimisation technology to SSE Contracting, with the agreement also enabling the Group to install major orders within tight frameworks, such as the Ministry of Justice contract signed in February 2010 for VoltageMaster units across 52 courts. The partnership has also helped to secure new contracts with the likes of the National Trust, RNLI and SAGA.

The Group is also working closely with government bodies in the UK and the framework agreement with the Eastern Shires Purchasing Organisation, a local authority purchasing consortium for Government departments, helped the Group to secure contracts with five prisons across the UK. The agreement simplifies the purchasing process for Government departments and it is therefore encouraging that it was renewed for a further year, until August 2012.

Having focused the Group strategy on building a presence in the energy efficiency sector with a voltage optimisation offering, the Group's mature, legacy businesses, Gasignition Limited in the UK and Derlite Limited in Thailand, continued to face challenging market conditions. Therefore, in October 2010, Active Energy completed the disposal of these two non-core businesses to Kevin Baker, who stepped down from his role as Active Energy's Chief Executive at the same time.

Demand for environmentally friendly products has continued to grow, driven by regulatory requirements and the need to reduce energy costs, and Active Energy has benefited from this trend. During the year under review, the Group won some significant new contracts, including South Lanarkshire Council and Nuneaton and Bedworth Council and since the start of the new financial year, further new contracts have been secured with the likes of the National Physical Laboratory, Edinburgh Council and Peterborough City Council.

Post-period events

Following the year end, the Board entered a new phase in its development as it expanded its offering to include full environmental services and solutions. The new strategy commenced in April 2011, with the acquisition of Red Line which significantly enhances Active Energy's engineering capabilities and opens up new market opportunities, especially in the rail industry. At the time of the acquisition, Gavin Little joined the Board as Executive Chairman to lead the growth phase, bringing 20 years' sales, marketing and general management experience, most recently with British American Tobacco Co Plc 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. Philip Palmer, formerly Chairman, remains on the Board as Executive Director. The management team was further strengthened by the appointment of three operational directors, Laurence Unwin as Managing Director, Andrew Smart as Operations Director and John Tarbet as New Business Development Director. The three directors have extensive experience of winning and delivering major engineering and environmental projects, and their knowledge and skills will help to drive the Group's future development.

In order to take advantage of opportunities available, in May 2011, the Company completed a placing to raise £1.8m gross. The funds will be used to support the delivery of the new strategy.

Change of name

At the Annual General Meeting held on 30 July 2010 a special resolution was approved by shareholders to change the name of the company to Active Energy Group plc, to reflect the growth of that part of the Group's businesses.

Bonus issue

A Bonus Issue of 5,343,148 ordinary shares was approved by shareholders at the Annual General Meeting held on 30 July 2010 and were admitted to trade on AIM on 2 August 2010.

Cancellation of deferred shares

On 17 November 2009 at an Extraordinary General Meeting the shareholders of the Company approved a proposal for the Company to make an application to the High Court for the cancellation of all the Company's deferred shares and a reduction in the Company's share premium account in order to create sufficient reserves and thus eliminate the Company's accumulated losses of £5,599,643, which existed as at 31 December 2008. The Company received an Order from the Court confirming the reduction of capital and approving the new Statement of Capital on 18 February 2010.

The new Statement of Capital indicates that there are 112,208,971 allotted issued and fully paid ordinary 1p shares with value of £1,122,090.

Outlook

Your Board believes that the progress made to date at Active Energy establishes a strong platform for the Company's future growth. The Board believes that there are exciting opportunities for Active Energy to position itself as the market-leading environmental services and solutions provider. The increasing demand for environmental solutions across a broad spectrum of issues is creating the potential for significant growth. The Group already has relationships and expertise, now including within the rail industry, and the Board is confident that it is well placed to realise its growth ambitions.

Gavin Little

Chairman

29 June 2011

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010

CONSOLIDATED STATEMENT OF COMPERHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2010

CONSOLIDATED STATEMENT OF FINANCIAL POSTIION AS AT 31 DECEMBER 2010

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2010

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2010

NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2010

1. RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010

1. ACCOUNTING POLICIES

Basis of preparation

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as endorsed for use in the European Union (IFRSs), this announcement does not contain sufficient information to comply with IFRSs.

This preliminary financial information does not constitute the company's statutory accounts for the years ended 31 December 2010 or 2009, but is derived from those accounts. Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 will be filed following the company's annual general meeting.

The auditors have reported on those accounts. Their report for the year ended 31 December 2010 was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain a statement under Section 498(2) or 498(3) of the Companies Act 2006.

Their report for 31 December 2009 did not contain a statement under Section 498(2) or 498(3) of the Companies Act 2006 but included an emphasis of matter in respect of a material uncertainty regarding the achievability of the forecasts and the ability to obtain additional funding which may have cast doubt over the Group's ability to continue as a going concern.

2. NET FINANCE INCOME

3. INCOME TAX

Analysis of the tax charge

No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2010 nor for the year ended 31 December 2009.

Factors affecting the tax charge

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

4. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares.

Reconciliations are set out below.

Share options of 7,545,172 (2009: 6,400,886) have been excluded from EPS calculations, which may become diluted in the future.

5. DISCONTINUED OPERATIONS

On 29 October 2010, the Group sold assets as part of the Group's disposal of its Gasignition segment, for cash consideration of £245,000.

The Consolidated Income Statement comparatives for 2009 have been restated as necessary to reflect the effect of discontinued operations.

Statements of cash flows

The statement of cash flows includes the following amounts relating to discontinued operations:

6. POST BALANCE SHEET EVENTS

On 26 April 2011 the Group acquired 100% of the voting equity instruments of Red Line Engineering Services Limited, a company whose principal activity is engineering services specialists. The principal reason for this acquisition was to enable the Group to provide an end-to-end service in the environmental services and solutions sector. The directors believe that the acquisition will accelerate the growth of the rGoup significantly.

At the date of authorisation of these financial statements a detailed assessment of the fair value of the identifiable net assets has not been completed.

The Company issued 17,900,000 ordinary shares of 1p each as consideration for the acquisition. The shares at the date of acquisition had a market value of 2.75p per share.

Whilst the full fair value review has not yet been completed, it is expected that the Group will recognise goodwill on the acquisition of approximately £557,000. The goodwill represents assets such as the assembled workforce, intangible assets and expected synergies from combined operations, which do not qualify for separate recognition.

As part of the acquisition, the Group announced 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 directors believe that expanding the Group's offering into an end-to-end environmental services and solutions business will be a key development for Active Energy and will accelerate the growth of the Group significantly.

On 10 May 2011, the Company announced that it had raised approximately £1.8 million, gross of expenses, through the issue of 65,500,000 new ordinary 1p shares in the capital of the Company at a placing price of 2.75p per share to new and existing institutional and retail investors. The proceeds of the placing, amounting to approximately £1.62 million, will be used for working capital generally and in particular, to assist the Company's strategy to transform the business into an end-to-end environmental services and solutions business.

7. Dividends

The Directors will not be recommending the payment of a dividend.

8. Availability of Report & Accounts

Copies of the Report and Accounts will be posted to shareholders shortly and will be available from the Company's registered office, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU and the Company's website http://www.active-energy-group.com.