AMPH.L Regulatory News (AMPH)

Aggregated Micro Power Holdings plc

("AMP", the "Group" or the "Company")

Full Year Results for the twelve months ended 31 March 2019

Aggregated Micro Power Holdings plc (AIM: AMPH), trading as AMP Clean Energy, the specialist provider of distributed heat, power and renewable fuels, announces results for the twelve months ended 31 March 2019.

Financial Highlights

·; Group revenues increased by 14.5% to £49.5m (2018: £43.2m restated)

·; Gross profit was £10.8m (2018: £5.1 restated)

·; Adjusted EBITDA loss decreased to £1.5m (2018: loss of £3.0m restated)

·; Net assets as at 31 March 2019 increased to £24.1m (2018: £13.7m restated)

·; The balance sheet does not include any recognition for future deferred development fees that may be due from AMPIL(a)

Operational Highlights

·; Very strong progress in Urban Reserve with 50MWs consented, an additional 32MWs in planning and on track for 150MWs to have planning or be in planning by March 2020

·; Continued significant value from 29.1% stake in IncubEx with market share in European carbon at 15% benefiting from global growth in environmental markets

·; Difficult year in Wood Fuels due to restructuring, warm weather, rising fibre prices, adverse FX movements and loss making fixed price customer contracts and a £4.4m restatement to retained earnings in the prior year accounts

·; Significant pipeline of projects; emerging opportunities in roof-top solar, CHP and Waste Heat Recovery; and increased interest from Infra funds

Post Period End

·; AMP announced that it had facilitated AMPIL in securing further funding of £15.1m(a) for the financing of its biomass boiler portfolio and Urban Reserve projects

Richard Burrell, Chief Executive of Aggregated Micro Power Holdings plc, said:

"AMP has created a diversified business aligned to finding solutions to address the pending climate crisis. The use of distributed energy assets for heat and power, methods of managing intermittency in power supply and the increased role of global trading platforms in environmental markets will be critical to this climate agenda. AMP has laid down foundations in each of these areas and we are especially delighted with the progress in Urban Reserve and the strong performance in IncubEx."

Annual Report and Notice of Annual General Meeting

The Company confirms that its report and accounts for the twelve months ended 31 March 2019 (the "Annual Report") is being sent to shareholders today and is available on the Company's website www.ampcleanenergy.com/.

The Annual Report contains notice of the Company's Annual General Meeting, which will be held at the Company's registered office at 1 Dover Street, London W1S 4LD on 25 October 2019.

(a) Aggregated Micro Power Infrastructure 2 Limited ("AMPIL") is a special purpose vehicle which is wholly owned by Law Debenture Intermediary Corporation plc as trustee for general charitable purposes. AMPIL can issue listed loan notes to fund renewable energy projects acquired from AMP and/or other developers. AMPIL has to date raised £67.1m from institutional and other investors.

(b) IncubEx LLC is an incubator for exchange traded products, services, and technology solutions. At its core, IncubEx is a product and business development firm. The company works in conjunction with its global exchange partner, European Energy Exchange (EEX) and other leading service providers and stakeholders to design and develop new financial products in global environmental, reinsurance, and related commodity markets. The company has a specific focus on innovation and continuous improvement of products and services, including technology, trading solutions, and operational efficiencies. The IncubEx team is comprised of former key Climate Exchange executives and is uniquely positioned to capture these opportunities with its partners. The company was founded in 2016 and currently has offices in Chicago and London. www.theincubex.com

Contacts

Aggregated Micro Power Holdings plc 020 7382 7800

Neil Eckert, Executive Chairman

Richard Burrell, CEO

Izzy Deterding, Investor Relations

finnCap Ltd 020 7220 0500

Ed Frisby/Simon Hicks (Corporate Finance)

Andrew Burdis/Richard Chambers (ECM)

Whitman Howard Ltd 020 7659 1234

Mark Murphy (Institutional Sales)

Nick Lovering (Corporate Finance)

About Aggregated Micro Power Holdings plc

The Group was established to develop, own and operate renewable energy generating facilities. It specialises in the sale of wood fuels and in the installation of distributed energy projects. Trading as AMP Clean Energy, the Group sells high quality wood chip and wood pellet to end customers throughout the UK, while its projects division installs biomass boiler and biomass CHP systems for a wide range of applications and customers. AMP is also active in developing projects for stand-by power generation which aim to balance the transmission grid at times of peak demand.

www.ampcleanenergy.com

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

Executive Chairman's Statement

This year has been a year of contrasts: a very disappointing twelve months in wood fuels; but a strong out-performance in project development and continued progress from IncubEx, in which AMP holds a 29.08% investment.

The challenging year in wood fuels was impacted by the warm weather, rising fibre prices, adverse FX movements and certain loss making fixed price customer contracts. During the period, we were also implementing a planned but significant restructuring in wood fuels to integrate previously acquired businesses into a single management, operational and brand platform. With new management now in place, a number of issues came to our attention at the end of the financial year relating to stock in our depots, which has led to a significant restatement of last year's accounts and a reduction in stock balances impacting the reported retained earnings as at 31 March 2018. These issues are now firmly behind us and we have a much improved sales and finance function together with a more optimal fleet of vehicles.

On the other hand, our project development business has had a very strong year and we have created a market-leading position in flexible generation under the Urban Reserve brand. We have increased our targets for this forthcoming year in Urban Reserve and we have a number of parties who have expressed an interest to finance our increasing portfolio of Urban Reserve assets.

Following the year end in early May 2019, Aggregated Micro Power Infrastructure 2 plc ("AMPIL") secured further funding of £15.1m to enable it to finance the initial tranche of Urban Reserve projects and to purchase more clean energy assets in biomass and roof-top solar. This fund now has £67.1m of outstanding bonds and is increasingly reaching institutional scale.

In addition to the future deferred development fees that may be due from AMPIL as a result of the projects that have been financed, there is potential future upside in the valuation of AMP's 29.08% interest in IncubEx. IncubEx is an incubator for exchange traded products, services and technology solutions. It works in conjunction with its global exchange partner European Energy Exchange (EEX) to design and develop new financial products in the global environmental, reinsurance and related commodity markets. Incubex is growing rapidly in Europe and has recently announced the roll out of a suite of North America products in partnership with Nodal, EEX's US Power Exchange.

At a macro level we see the beginnings of a decoupling of the electricity market into a market for energy increasingly supplied by renewables (estimated to be more than 58% by 2050), and a market for flexibility supplied by dispatchable gas plant, battery storage and demand side response. We also see significant changes taking place on the demand side, driven by the electrification of heat, transport and industrial automation in buildings. These changes are likely to put significant pressure on electricity networks, particularly the lower voltage distribution networks where there is most demand from users. This will require smarter more flexible networks where energy flows are managed more locally. It will also require the Distribution Network Operators (DNOs) to either invest in their networks or defer network reinforcement by procuring flexible generation from third party operators like ourselves.

AMP's strength lies in its ability to develop, operate and aggregate small-scale assets and in doing so, deliver energy close to the point of consumption, where and when it is needed most. As the push for decarbonisation intensifies, the balance of power in the energy sector is gradually shifting from large transmission connected power plant towards smaller plants connected on distribution networks both in "front" and "behind" the meter where distribution losses can be minimised, network reinforcement can be avoided and heat can be more usefully used.

AMP is a business that now spans the small scale renewable heat and power sector, can cross sell products and services to a customer base of over 4,000 boiler systems, is vertically integrated in the biomass space covering fuel supply, operation & maintenance and installation and financing. It is a business with a project development division which covers renewable heat, flexible generation and a wide range of small-scale clean energy solutions which can be provided to our significant customer base.

It only remains for me to thank our hardworking non-executive directors and executive management team. I look forward to reporting further progress due course.

Neil Eckert

Executive Chairman

30 September 2019

Strategic Report

In the year to 31 March 2019, group revenues increased by 14.5% to £49.5m (2018: £43.2m restated), gross profit was £10.8m (2018: £5.1m restated), loss from operations decreased to £4.4m (2018: loss of £1.4m restated) and loss after tax was £5.7m (2018: loss of £2.5m restated). Cash flow from operations used was £9.5m (2018: cash flow generated £3.0m restated).

The segment performance on an adjusted basis is disclosed in Note 3.

Net assets as at 31 March 2019 increased to £24.1m (2018: £13.7m restated). The balance sheet does not include any recognition for future deferred development fees that may be due from Aggregated Micro Power Infrastructure 2 plc ("AMPIL").

The Company engaged in multiple acquisitions over the course of the financial years ending 2017 and 2018 which has resulted in significant exceptional and non-recurring expenses incurred during the natural process of integrating and restructuring the wood fuel business segment over the last 24 months. These exceptional and non-recurring expenses are disclosed in the Income Statement as non-underlying items in order to give the users of these financial statements a clearer understanding of the normalised operational performance as well as to provide relevant comparatives for the forthcoming financial year.

All comparative figures in the remainder of this Strategic Report relate to the restated accounts for the year ended 31 March 2018.

Prior period restatement

During the last two years, the Wood Fuels business underwent a transformative restructuring to bring all operations into a single management and brand platform which has further consolidated its market leading position. This has resulted in significant non-recurring costs from depot closures, office relocations, redundancies and stock revaluations; all of which has been expensed through the profit and loss account.

During the year, we also replaced the senior management in the fuels business and following the appointment of the new finance director in the fuels business at the start of 2019, we conducted an in-depth company-led review into prior period stock balances which included the level of accruals and the accounting for goods received not invoiced.

This review has concluded that, stock as at 31 March 2018 had been overstated due to the systems incorrectly accounting for stock movements around the 2018 year end with certain costs incorrectly being capitalised and, in addition, the closure of several depots as part of the restructure not being accurately reflected on the balance sheet. This arose due to multiple stock management systems and specific challenges of those acquired companies not operating in unison during the busy trading period known as the "Beast from the East". Also during this period, there were a number of purchases which were incorrectly accounted for due to a back-log in processing leading to an understatement of accruals and goods received not invoiced.

The aggregate adjustment to Retained Earnings as at 31 March 2018 was a negative impact of £4.4m. This restatement is fully described in Note 33.

The restatement relates to issues pertaining to the previous financial year. This means that the restated audited accounts for the 12 months to 31 March 2018 have been adjusted and that there is no adverse effect on the profit and loss for the year to 31 March 2019.

Following this review there is an increased focus on operational controls and systems relating to stock management and invoicing and corrective action has been taken.

AMP Clean Energy Group strategy

AMP Clean Energy's mission is to help UK businesses unlock the potential of decentralised, low carbon energy which supports the UK's transition to a low carbon economy.

AMP develops, finances and manages small-scale distributed energy projects with a focus on biomass heat and flexible electricity generation sites under its Urban Reserve brand. AMP is vertically integrated offering wood fuel supply and O&M services. It has an active development business with current opportunities in developing Urban Reserve sites, biomass heat projects and CHP. It has the intention to further increase the scope of the platform to new areas including waste heat recovery and behind the meter solar.

AMP reports its results through three business segments: Wood Fuels (including O&M); Project Development; and HQ & Investments. Note 3 sets out in detail the earnings relating to the three individual business segments and provides a breakdown of the adjusted EBITDA by business segment which is the metric used by the Directors to compare the underlying performance.

Wood Fuels

Revenues from this segment were £43.6m (2018: £40m) and the adjusted EBITDA loss was £3.04m (2018: £2.5m loss).

Profits from the Wood Fuels segment have been impacted by significantly warmer weather during the financial year and particularly during February and March 2019. At the same time the Wood Fuels business was exposed to a number of loss making fixed price customer contracts which were set when fiber prices were lower and there was a more favorable foreign exchange rate.

At the same time, the business has undertaken a planned restructuring to bring all operations into a single management and brand platform which has further consolidated its market leading position. This has resulted in significant non-recurring costs from depot closures, fleet rationalization, office relocations, redundancies and stock revaluations; all of which has been expensed through the profit and loss account. Additionally, a number of loss making heat supply contracts with the

Mi-Generation customer base were terminated during the year resulting in an impairment of £0.5m.

AMP Clean Energy sells high quality, RHI compliant, wood chip and wood pellet to end customers throughout the UK in the form of fuel only contracts, heat contracts and/or fuels plus operation and maintenance. AMP sells fuel to around 4,000 boiler systems and provides service and maintenance to over 950 biomass systems via AMP's majority interest in Highland Wood Energy Limited ("HWE").

Project Development

Revenues from this segment increased by 88% to £6.0m (2018: £3.2m) and adjusted EBITDA increased to £3.1m (2018: £1.2m) following the sale of one SPV relating to a grid balancing project in the form of revenue.

Under the Urban Reserve projects team, AMP developed gas-fired peaking plants which provide flexible generation at times of peak demand. Development of Urban Reserve plants were increasingly concentrated on smaller sites in areas of high electricity demand in industrial and urban areas. These sites can be connected to the distribution network at lower voltage levels in areas where grid constraints offer significant system benefits in terms of avoided grid reinforcement costs and will potentially support the anticipated growth in electric vehicles and the electrification of heat.

AMP develops small scale peaking plants (2.0MW-6MW) fuelled by natural gas and are dispatchable remotely and on demand. Due to their size and flexibility, our plants branded as Urban Reserve, can respond to the same price volatility as larger peaking plant but because they are smaller they can connect to the lower voltage networks (11kV and below) where most demand side users are connected. They therefore benefit from credits ("known as GDUOS") paid by the DNOs for generating during peak times and in addition can participate in the flexibility auctions which are becoming a more common place as a way of DNOs procuring flexibility and deferring network reinforcement. In June 2019, we arranged for an Urban Reserve project to sign a 5-year contract with UKPN to provide flexibility between November and February, Monday to Friday between 5pm and 7pm. The project will be paid an availability payment and a utilisation payment when called upon to generate.

The typical footprint of an Urban Reserve project was between 3,500-5,000 ft2 which means that our plant can be located in industrial estates on land that might not otherwise have any value, making them an interesting proposition to landlords. We will also offer landlords and their tenants the opportunity to buy power and heat directly, where economically advantageous to do so.

Being small provides significant revenue opportunities but presents the challenge of scaling: the need to develop and then run multiple projects with equal rigour for the same cost per MW as larger projects. We believe we were uniquely placed to scale this business because of the development approach we have developed over the years which is highly data and software driven and replicable wherever possible. Technology platforms and software also enable multiple engines across multiple sites to be operated at the same time, as if they were all located on the same site. Finally, our nationwide Operation and Maintenance capability developed in the wood fuels business, will be utilised to service our engines across different locations. 

AMP also aims to deliver cost and carbon savings to high intensity heat and power users through its specialist industrial renewables development team. AMP's strategy is to develop, manage and facilitate financing of distributed energy projects focusing on biomass heat and power and in due course, waste heat recovery to reduce on-site, behind the meter, electricity costs. AMP's strategy is to work with project developers and third-party infrastructure vehicles to generate a wide range of development fees from different projects. AMP sources projects from various introducers and installers and works with the customer account managers in its wood fuels business to offer all our customers a range of clean energy solutions which includes the ability for biomass boiler owners to sell their boilers in exchange for a heat supply contract.

HQ & Investments

There were no revenues generated from the HQ & Investments Division during the 12 months to 31 March 2019 £nil (2018: £nil) and the adjusted EBITDA reflecting group administrative expenses was a loss of £1.6m (2018: £1.7m).

The Investments division takes non-controlling interests in equity investments in companies aligned to our corporate strategy. Also within this segment are head office, PLC costs and the costs of undertaking research and development into new distributed energy opportunities.

AMP has a 29.08% shareholding in IncubEx LLC which is fair valued on the AMP Balance Sheet. As at 31 March 2019, this amounted to £11.4m (31 March 2018: £11.4m). Whilst the business continues to grow its market share in European carbon markets, the Directors believe that it is prudent, given the early stage nature of the business, to keep the balance sheet value unchanged in the absence of a third party transaction for IncubEx shares. The Directors have also undertaken a DCF analysis and have used a prudent approach to the key assumptions to support the unchanged value. A sensitivity analysis is set out in Note 24.

IncubEx is an incubator for exchange traded products, services and technology solutions. IncubEx works in conjunction with its global exchange partner, European Energy Exchange (EEX) and other leading service providers and stakeholders to design and develop new financial products in global environmental, reinsurance, and related commodity markets (e.g. wood pellet). The company has a specific focus on innovation and continuous improvement of products and services, including technology, trading solutions and operational efficiencies.

IncubEx has recently launched the first tranche of North American Environmental products in conjunction with the Nodal Exchange. These products include a range of emission and renewable energy certificate futures and options contracts. The contracts are listed and cleared alongside Nodal Exchange's own existing portfolio of energy products.

Issuance of Ordinary Shares

In October 2018, AMP issued 8,500,000 Ordinary Shares in connection with a placing of £8.5m. The funds raised facilitated AMP in issuing a redemption notice in respect of the £10.01m nominal of 8% Convertible Loan Notes ("CLNs") in the Company. A total of 91% of Noteholders elected to convert £9.13m nominal of CLNs into equity in the Company, creating a further 11,702,811 new Ordinary Shares in the Company. The remaining 9% Noteholder holdings to the value of £0.88m nominal redeemed their CLN's at par. The placing was supported by both existing investors as well as new institutional and private investors.

The remainder of the net proceeds of the placing amounting to £7.2m was used for the Wood Fuels business working capital and investment in growth, Urban Reserve and investment in our service and maintenance business.

The increase in equity and the reduction in debt has considerably strengthened the AMP balance sheet and has reduced the on-going interest costs.

Post period end

In May 2019, AMPIL secured further funding of £15.1m and now has £67.1m of Loan Notes in issue.

Under the terms of its contract with AMPIL, AMP receives an upfront 10% development fee on financial close of each project and when AMPIL Loan Notes are repaid, AMP is entitled to receive 100% of the excess returns in the form of deferred development fees.

Industry and policy background

AMP maintains its focus on two main areas within the clean energy industry; first, the decarbonisation of heat, and second; the continued growth of flexible generation in urban areas using small-scale natural gas generators.

The UK's decarbonisation strategy, as set out in the Clean Growth Strategy, relies heavily on the increased electrification of the UK's energy system. The renewable energy sector continues to gain ground, being the fastest growing source of energy, with Imperial College London's research showing that the UK's renewable energy capacity surpassed fossil fuels for the first time in 2018.

Electricity markets are the only markets in the world where the supply and demand of the commodity must be met instantaneously so where supply is unable to meet demand, there will be power shortages. Under National Grid's Future Energy Scenarios (2018) demand for electricity is expected to increase by between 25% to 50% from 2017 levels, driven in large part by the electrification of heat and transport. This will require a doubling of generation capacity because of the intermittent nature of renewables and is likely to create significant pressure on the electricity networks, particularly in areas of high population density.

Decarbonisation of heat:

Decarbonisation of heat is a key feature of the Government's low carbon strategy. Currently only around 6% of heat in the UK comes from renewable sources, putting the UK well behind the EU target of 12% by 2020.

The latest report from the Committee on Climate Change recommended a new target for net zero carbon emissions by 2050. Key to achieving this target is the decarbonisation of heat. Much of the focus is on electrifying heat using heat pumps and other forms of electric heating (e.g. Infra-Red panels), on green gas and on hydrogen. These changes will require significant investments in networks (gas and electricity) and in buildings. They will also take time to implement and in the meantime, we believe Biomass has a very important role to play.

The Renewable Energy Association's report "Bioenergy in the UK - vision to 2032 and beyond" found that the UK could almost triple the use of bioenergy as a source of heat - from the 6% today to 16% by 2032, with biomass a major contributor.

The report found that wood fuels could make a substantially larger contribution to meeting heating needs for buildings and industry, playing a particular role in providing low carbon heating in off gas-grid properties and those where heating via heat pumps is more challenging. It concluded that bioenergy, which uses sustainable biomass and biofuels produced from wood, crops and food wastes, is the lowest cost route to heat decarbonisation, whilst also providing a pathway to the development and commercial deployment of future technologies.

The Government's main tool for decarbonising heat is the Renewable Heat Incentive (RHI). Under the RHI, 87% of renewable heat to date has come from biomass, which has been particularly successful in decarbonising community buildings, schools, hotels and agricultural processes. What is now needed is greater support for larger off-gas grid industrial processes to convert from fossil fuels. Biomass can produce high grade heat and steam making it ideally suited for process heat applications in contrast to electric heating which is largely limited to space heating. We also see a continued role for onsite gas CHP where heat and power can be produced more efficiently and growing interest from very large heat users to convert high temperature waste heat into electricity

The RHI remains open to new build projects until March 2021 and provides 20 years of income based on the amount of heat that is produced. Additionally, in May 2019, the Department for Business, Energy and Industrial Strategy announced that the RHI Tariff Guarantee would be extended to the 31 January 2021. Tariff Guarantees allow RHI applicants to secure a tariff before their system is commissioned. They are available for larger projects including biomass heat systems larger than 1MW, all biomass CHP systems and all geothermal systems. Prior to this announcement, these projects needed to be completed before the 31 January 2020 to qualify for a Tariff Guarantee. Installations that have already secured a Tariff Guarantee will not benefit from this extension; only new applications received after this announcement. The RHI scheme strongly supports the wood fuel market of which AMP has a c.30% market share. There is a commitment by the Government to spend c. £4.5 billion between 2016 and 2021.

Beyond the RHI scheme, in the Clean Growth Strategy, the Government has committed to phase out the installation of high carbon fossil fuel heating in buildings, starting with new builds, in the 2020s. This means a significantly reduced role for oil and gas as heating systems are changed over to fossil-free systems.

Flexible generation:

The growth of smaller 'distributed' generation, energy storage and demand side response is helping to provide the flexibility required to enable the continued growth of renewables and ensure security of supply.

The traditional model of transmission connected thermal plants is becoming increasingly uneconomic because of renewables and the downward pressure they are putting on average electricity prices. At the same time the intermittent nature of renewables and their growing share of generating capacity is increasing price volatility in electricity markets. The costs of solar PV and offshore wind have fallen significantly to the point where projects are now being built without subsidies, which would indicate that these trends - growing intermittency and volatility - are here to stay.

On the demand side, the expected growth in the electrification of heat and transport and continued industrial automation are likely to exacerbate constraints on the distribution networks in areas of greatest population density. As a result, DNOs are looking to procure flexible generation services from third party providers as an alternative to funding grid reinforcement themselves.

The other challenge we face is regulatory change. In November 2018, the Government was forced to suspend the Capacity Market (CM), its main policy tool to support the build of new capacity and safeguard security of supply. The suspension followed a decision by the European Court of justice to withdraw state aid approval after it ruled that the UK Government had disadvantaged demand side response in favour of fossil fuel generators. The overwhelming consensus is that the CM will be reinstated as some point. However, clearly this has been unhelpful for sentiment in general, even though CM payments are expected to make up a relatively small proportion of Urban Reserve revenues, at least in the near term and does not have a material adverse effect on the project pipeline.

The other area of potential disruption is the review of network access and use of system charges currently being undertaken by Ofgem, which will look at GDUOS credits among other things. Given the contribution these credits make to the revenue stack, this could have a negative impact on project returns, particularly for projects located in areas of reverse power flows where distribution connected generators are responsible for electricity flowing up onto the transmission network. We endeavour to manage this risk by ensuring that our projects are located in non-generation dominated areas and in areas of existing or future demand side constraint.

Conclusion:

On a global scale, we are seeing growing awareness from governments and communities of the need to make a long-term commitment to a more sustainable energy system, involving a reduced reliance on finite fossil fuels, minimization of waste and less reliance on a centralised grid infrastructure. Additional policy interventions are likely to be needed to further encourage innovation in clean energy to promote energy efficiency and we are seeing this move into the centre stage of political debates. Available policy levers include subsidy, regulation and taxation which allow the industry to build credible business cases for major investment in carbon reducing technology.

AMP Group objectives and KPIs for 2020 are as follows:

• Aim to improve profitability whilst maintaining its market leading position in the supply of wood fuels retailing (wood pellet and wood chip) to end customers combining fuel supply with operation and maintenance services to customers;

• Grow pipeline of behind the meter heat and CHP projects and undertake acquisitions of already installed systems to generate development fees and future carried interest from AMPIL Loan Note issuance;

• Generate development fees and future carried interest from natural gas peaking plants under the Urban Reserve brand;

• Continue research into the evolving energy market and consider opportunities in infrared heating and heat storage solutions;

• Continue to invest in businesses aligned to our corporate strategy and objectives; and

• Supplement AMP's cash resources with additional new funding from one or a combination of: the issue of new Ordinary Shares for cash; bank debt; the refinancing of existing assets; raising project finance from third party providers; asset financing of core items of equipment; or any other compelling financing mechanism where the Directors consider doing so to be in the best interests of the company and its Shareholders.

Risk factors

The principal risks of the business are documented below:

This Strategic Report was approved by the Board of Directors of the company on 30 September 2019 and signed on their behalf by:

Richard Burrell

Chief Executive Officer

30 September 2019

Directors' Report

For the year ended 31 March 2019

Strategic report

A review of the business and future developments of the Group are included within the strategic report above.

Results

Results for the year are set out in the Consolidated Statement of Comprehensive Income and in the Consolidated Statement of Changes in Equity.

The Group undertook a capital reduction in the year reducing share premium by £16.2m.

Directors

Neil Eckert (Executive Chairman)

Richard Burrell (Chief Executive Officer)

Mark Tarry (Chief Financial Officer, Managing Director of Urban Reserve)

Sir Laurence Magnus (Senior Non-Executive Director, Chair of the Audit and Remuneration Committees)

Sir Brian Williamson (Non-Executive Director)

The Rt. Hon. Sir Nicholas Soames (Non-Executive Director)

Robert Bland DL (Non-Executive Director)

Auditors

All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the company's auditors for the purposes of their audit and to establish that the auditors are aware of that information. The Directors are not aware of any relevant audit information of which the auditors are unaware.

BDO LLP have expressed their willingness to continue in office. A resolution to appoint BDO LLP as Auditors to the Company will be proposed at the AGM.

Directors' responsibilities

The Directors are responsible for preparing the Strategic report and Directors' report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and company and of the profit and loss of the Group for that period.

In preparing these financial statements, the Directors are required to:

·; select suitable accounting policies and then apply them consistently;

·; make judgements and accounting estimates that are reasonable and prudent;

·; state for the Group financial statements whether they have been prepared in accordance with IFRS as adopted by the European Union subject to any material departures disclosed and explained in the financial statements;

·; state for the company financial statements whether applicable UK Accounting Standards have been followed subject to any material departures disclosed and explained in the financial statements; and

·; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Going concern

As at 31 March 2019 the group had £2.4m in cash and net current assets of £0.3m. The directors and management have prepared a cash flow forecast to September 2020, 12 months from the date this report has been approved, which shows the group will remain cash positive. The Directors and Management note that given the seasonality of the fuels division revenues and the unpredictability of earning revenues on development fees, the first 6 months of cash flow forecast contains sensitivity. The Directors and Management manage this sensitivity by:

·; Risk weighting the development fee revenues based on prudent chance of success of completion;

·; Managing working capital through enhanced debtor collection, constant communication with key suppliers and managing costs in line with movements in revenues;

·; Post year-end, the company has drawn down £3.25m from AMPIL 2 Asset Ltd which has been secured on the shares in AMP Biomass Fuels Limited and this has replaced the £1.75m stock loan which was outstanding at the year end. This revised loan agreement expires July 2020 and as part of the cashflow forecast Management and the directors have considered that this loan will be rolled on maturity ; and

·; Monitoring other short term credit lines available to the group.

Whilst the Directors and Management continue to actively manage the sensitivity in near term cash flows, the cash flow forecast assumes that development fees are realised in a timely fashion each quarter. The Directors and Management are confident that development fees will be earned as part of the ordinary course of business and have therefore prepared the financial statements on a going concern basis. If insufficient development fees are earned each quarter, the Directors and Management have alternative funding arrangements available this would include support from the directors and managing working capital which could include the accelerated sale of inventory. Alongside this Management would look to raise funds through monetising the value in the investment division.

Website publication

The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Remuneration

The company remunerates the Directors in line with their experience, the size of the company and its growth objectives. All remuneration is reviewed and approved by the remuneration committee. Details of Directors' salaries and benefits are set out below and in Note 7.

*In addition to the above, consultancy services to the Group under a consultancy agreement between AMP Energy Services Limited and Mathieson Capital Investment Management Limited were also provided during the year. Mr Burrell has a significant interest in Mathieson Capital Investment Management Limited. The fee for these services was £107,678

(2018: £104,550).

Directors' interests

The following Directors held shares in the company as at 31 March 2019

Neil Eckert 9,166,647

Richard Burrell 3,195,116*

Mark Tarry 230,000

Sir Laurence Magnus 237,085

Sir Brian Williamson 128,571

The Rt. Hon. Sir Nicholas Soames 50,000

Robert Bland 337,922

*Includes 30,000 Ordinary Shares owned by Mathieson Capital Fund Management LLP and entity controlled by Richard Burrell

Dividend

No dividend is recommended to be paid in respect of the 2019 period (2018: nil).

Events after the reporting period

Refer to Note 31 to the accounts for details of events after the reporting date.

Financial instruments

Note 24 to the accounts sets out details of the Group's exposure to financial instruments.

Directors and their disclosures

Details of the composition of the Board of Directors are set out above.

Each of the persons who were Directors at the date the report was approved have confirmed that:

(a) so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and

(b) he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditor is aware of that information.

This Directors' Report was approved by the Board of Directors of the company on 30 September 2019 and signed on their behalf by:

Richard Burrell

Chief Executive Officer

Statement of Compliance with the QCA Corporate Governance Code

Background

Changes to AIM Rules in March 2018 require that all companies listed on AIM need to apply to a recognised corporate code by 28 September 2018. AMP has chosen to implement the QCA Corporate Governance Code ("QCA"). The QCA is based on ten broad principles and a corresponding set of disclosures and states what they consider to be appropriate arrangements for growing companies and ask them to provide an explanation about how they are meeting each principle through various disclosures. The way in which AMP meets these principles is detailed on the Company's website and incorporates information as to how the Board discharges its duties under the Companies Act 2006, s.172: www.ampcleanenergy.com/investors/corporate-governance

The Board considers that it does not depart from any of the principles of the QCA and AMP's statement of compliance sets out how the Company complies. This will be reviewed annually in line with the requirements of the QCA code.

Constitution of the board

During the period there were five full board meetings. The Audit Committee met twice during the period. The Remuneration Committee did not meet and the Nomination Committee did not meet.

The board was comprised of the following:

Sir Laurence Magnus Senior Non-executive

Sir Brian Williamson Non-executive

The Rt. Hon. Sir Nicholas Soames Non-executive

Robert Bland DL Non-executive

Neil Eckert Executive Chairman

Richard Burrell Chief Executive Officer

Mark Tarry Chief Financial Officer and Head of Projects

Committees of the board

The Audit Committee is made up of Sir Laurence Magnus (Chairman), Sir Brian Williamson, Robert Bland DL and The Rt. Hon. Sir Nicholas Soames, with the company secretary serving as secretary.

The Audit Committee's terms of reference requires the committee to meet at least 2 times per year to coincide with key dates in the company's financial reporting cycle and at such other times as the Committee Chairman shall require. The Committee is responsible for monitoring the integrity of the financial statements of the company including those which are relied upon by the Board. The Committee reviews the company's corporate reporting, risk management, financial statements and internal financial controls, considers the need for internal audits and the scope and planning of external audits and the findings of the audits and keeps under review the company's relationship with the external auditor.

The Remuneration Committee is made up of Sir Laurence Magnus (Chairman), Sir Brian Williamson, Robert Bland DL and The Rt Hon. Sir Nicholas Soames, with the company secretary serving as secretary.

The Remuneration Committee shall meet at such times as the Chairman of the Committee shall require. The purpose of the Committee is to recommend to the Board the company's general policy on remuneration and in particular to determine the remuneration packages for the Executive Chairman and the Executive Directors.

The Nomination Committee is made up of Sir Laurence Magnus (Chairman), Sir Brian Williamson, Robert Bland DL and The Rt. Hon. Sir Nicholas Soames, with the company secretary serving as secretary.

The Committee shall meet at such times as the Chairman of the Committee shall require. The purpose of the Committee is to review the structure, size and composition (including the skills, knowledge, experience and diversity) required of the Board and make recommendations to the Board with regard to any changes.

Attendance at meetings

During the period there were five board meetings and the details of attendees are set out below.

Sir Laurence Magnus (5/5)

Sir Brian Williamson (5/5)

The Rt. Hon. Sir Nicholas Soames (3/5)

Robert Bland DL (5/5)

Neil Eckert (4/5)

Richard Burrell (5/5)

Mark Tarry (5/5)

Bribery Act compliance

In 2014 the company adopted an Anti-Bribery and Corruption Policy. This is kept under review by the Audit Committee under its terms of reference.

Matters reserved for the Board

In June 2014 the company adopted a schedule of Matters Reserved for the Board. This includes the approval of Group strategy and policies, major acquisitions and disposals, major capital projects and financing, Group budgets and material contracts entered into other than in the ordinary course of business, reviewing the functioning of the internal control environment and reviewing corporate governance arrangements. The Board is responsible for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives. It also retains oversight of the risk management and internal control systems with the aim that these are sound and protect shareholders' interests. This is kept under review by the Audit Committee under its terms of reference.

Relations with shareholders

The company endeavours to maintain communication with shareholders through regulatory announcements, via the company's website and by direct contact with its major shareholders. The Board values the views of its shareholders and fosters continuing dialogue with investment and fund managers, other investors and equity analysts to ensure that the investing community receives an informed view of the Group's prospects, plans and progress.

Independent auditor's report to the members of Aggregated Micro Power Holdings Plc

Opinion

We have audited the financial statements of Aggregated Micro Power Holdings Plc (the 'Parent Company') and its subsidiaries (the 'Group') for the year ended 31 March 2019 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity, Consolidated Statement of Cash Flows, the Company Statement of Financial Position and the Company Statement of Changes in Equity and notes to the financial statements, including a summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard in the United Kingdom and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion:

• the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 March 2019 and of the Group's loss for the year then ended;

• the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

• the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusion relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the Directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group's or the Parent Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole

In 2018 we disclosed that a profit based measure (6.5% of profit before tax) was used to calculate materiality. As disclosed in note 1, the 2018 results have been restated and the Group is loss making. Although the Group is loss making, it is still a trading entity and the readers of the financial statements will be interested in the trading performance and therefore we have calculated materiality based on 1% of revenue for 2019.

Whilst materiality for the financial statements as a whole was £470,000, each significant component of the group was audited to a lower level of materiality in the range of £50k to £350k. Performance materiality has been set at 65% of materiality, this percentage has been selected by assessing criteria such as historic judgement levels, complexity, history of errors found, and the control environment in the group. The performance materiality is used to determine the financial statement areas that are included within the scope of our audit and the extent of sample sizes during the audit.

We agreed with the Audit Committee that we would report to the Committee all individual audit differences identified during the course of our audit in excess of £9,000 (2018:£8,000).

An overview of the scope of our audit

Our group audit was scoped by obtaining an understanding of the group and its environment, including the group's system of internal control, and assessing the risks of material misstatement in the financial statements at the group level.

Our group audit scope focused on the group's largest trading entity AMP Clean Energy, Highland Wood Energy Limited and AMP Energy Services Limited which were subject to full scope audits. Together with the parent company and its group consolidation, which was also subject to a full scope audit, these represent all the trading components of the group. All of the components including the group were audited by BDO LLP.

Other information

The Directors are responsible for the other information. The other information comprises the information included in the Audited Report and Financial Statements, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the Parent Company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of Directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of Directors

As explained more fully in the Directors' responsibilities statement set out above, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website : www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the Parent Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Matt Crane (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

London, UK

30 September 2019

Consolidated Statement of Changes in Equity

For year ended 31 March 2019

Share capital: Nominal value of shares issued.

Share premium: Amount subscribed for share capital in excess of the nominal value.

Capital contribution: Relates to funding from the shareholders for which no share capital was issued and that funding meets the definition of an equity instrument.

Retained deficit: All other net losses and transactions with owners (e.g. dividends) not recognised elsewhere.

Merger reserve: Created on the issue of shares on acquisition of its subsidiary accounted for in line with the Company's Act 2006 provisions.

Other reserve: Amount raised through the use of a cashbox structure and applying merger relief on business combination where the consideration for shares in another company includes issued shares and on completion of the transaction, the company issuing the shares will have secured at least a 90% equity holding in the other company.

Convertible debt option reserve: Amount recorded as equity on the initial fair value measurement of issued convertible loan notes.

Consolidated Statement of Cash Flows

For year ended 31 March 2019

Notes to the Financial Statements

For the year ended 31 March 2019

1 Accounting policies

Basis of preparation

The company is a public limited company. It is limited by share capital and is incorporated in England and Wales. Its registered number is 08372177.

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the periods presented, unless otherwise stated.

Comparative figures in the financial statements are in respect of the audited twelve month period to 31 March 2018. The Statement of income, Statement of Financial position, Statement of changes in Equity and Cash Flow Statement have been restated to show the impact of a prior year adjustment. Further details can be found in Note 33.

These financial statements have been prepared under the historical cost convention (except for items measured at fair value through profit and loss) and in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs").

The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies. The areas where significant judgments and estimates have been made in preparing the financial statements and their effect are disclosed in Note 2. The financial statements are drawn up in Pound Sterling, the presentational currency of the Group.

Changes in accounting policies

The group has applied the same accounting policies and methods of computation in its annual consolidated financial statements as in its 2018 annual financial statements, except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2018, and will be adopted in the 2019 annual financial statements. New standards impacting the Group that will be adopted in the annual financial statements for the year ended 31 March 2019, and which have given rise to changes in the Group's accounting policies are:

·; IFRS 9 Financial Instruments; and

·; IFRS 15 Revenue from Contracts with Customers.

Details of the impact these two accounting standards are given in Note 34. Other new and amended standards and Interpretations issued by the IASB that will apply for the first time in the next annual financial statements are not expected to impact the Group as they are either not relevant to the Group's activities or require accounting which is consistent with the Group's current accounting policies.

There are a number of standards and interpretations which have been issued by the International Accounting Standards Board that are effective in future accounting periods that the Group has decided not to adopt early. The most significant of these are:

·; IFRS 16 Leases (mandatorily effective for periods beginning on or after 1 January 2019)

·; IFRIC 23 Uncertainty over Income Tax Positions (effective 1 January 2019).

Details of the impact that these two standards will have are given below. Other new and amended standards and Interpretations issued by the IASB that will apply for the first time in the next annual financial statements are not expected to impact the Group as they are either not relevant to the Group's activities or require accounting which is consistent with the Group's current accounting policies.

IFRS 16 Leases (mandatorily effective for periods beginning on or after 1 January 2019)

Adoption of IFRS 16 will result in the Group recognising right of use assets and lease liabilities for all contracts that are, or contain, a lease. This treatment would result in discounting future lease payments and recognising the right of use of assets as a fixed asset and long-term liability in the financial statements. For leases currently classified as operating leases, under current accounting requirements the Group does not recognise related assets or liabilities, and instead spreads the lease payments on a straight-line basis over the lease term, disclosing in its annual financial statements the total commitment. The impact of future periods is being considered and Management are in the process of quantifying the impact.

The Board has decided it will apply the modified retrospective adoption method in IFRS 16, and, therefore, will only recognise leases on balance sheet under IFRS 16 from 1 April 2019. In addition, it has decided to measure right-of-use assets by reference to the measurement of the lease liability on that date. This will ensure there is no immediate impact to net assets on that date. 

At 31 March 2019 operating lease commitments amounted to £815,918 (see note 25), which is not expected to materially different to the anticipated position on 31 March 2019 under IFRS 16 or the amount which is expected to be disclosed at 31 March 2020 under IFRS 16. Assuming the Group's lease commitments remain at this level, the effect of discounting those commitments is anticipated to result in right-of-use assets and lease liabilities of approximately £1,464,735 being recognised on 1 April 2019, however, further work still needs to be carried out to determine whether and when extension and termination options are likely to be exercised, which will result in the actual liability recognised being higher than this. 

Instead of recognising an operating expense for its operating lease payments, the group will instead recognise interest on its lease liabilities and amortisation on its right-of-use assets.

IFRIC 23 Uncertainty over Income Tax Positions

IFRIC 23 clarifies how to recognise and measure current and deferred income tax assets and liabilities when there is uncertainty over income tax treatments. There is no expected impact on the result from operations of the Group.

Basis of consolidation

Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquirer's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.

Business combinations

The purchase method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange. Where equity instruments are issued in a business combination, the fair value of the instruments is their published price at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuations methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Except for non-current assets or disposal Groups classified as held for sale (which are measured at fair value less costs to sell), all identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

The excess of the cost of the business combination over the net fair value of the Group's share of the identifiable net assets acquired is recognised as goodwill. If the cost of acquisition is less than the Group's share of the net fair value of the identifiable net assets of the subsidiary, the difference is recognised as a gain in the Statement of Comprehensive Income, but only after a reassessment of the identification and measurement of the net assets required.

Where settlement of any part of the consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the Group's incremental borrowing rate, being the rate at which similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Goodwill

Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Contingent consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified as a financial liability, re measured subsequently through profit and loss. Direct costs of acquisition are recognised immediately as an expense.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised. As at the acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combination's synergies. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the Statement of Comprehensive Income. An impairment loss recognised for goodwill is not reversed.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Intangibles acquired in a business combination

Intangible assets acquired separately are capitalised at cost and subsequently amortised on a straight-line basis over their useful economic lives.

Intangibles are recognised on business combinations, if they are separately identifiable from the acquired entity or arise from other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see critical estimates and judgements section). Intangibles acquired through a business combination are recognised at fair value as at the date of acquisition. Following initial recognition, the cost model is applied.

The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:

Intangible asset Useful economic life Valuation method

Brand 20 years Estimated discounted cash flows

Long term contracts and customer relationships 10 years Estimated discounted cash flows

Intangible assets are tested for impairment where an indicator of impairment exists, and in the case of indefinite life intangibles annually, either individually or at the cash generating unit level. Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis. Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Comprehensive Income when the net asset is derecognised.

Going concern

As at 31 March 2019 the group had £2.4m in cash and net current assets of £0.3m. The directors and management have prepared a cash flow forecast to September 2020, 12 months from the date this report has been approved, which shows the group will remain cash positive. The Directors and Management note that given the seasonality of the fuels division revenues and the unpredictability of earning revenues on development fees, the first 6 months of cash flow forecast contains sensitivity. The Directors and Management manage this sensitivity by:

·; Risk weighting the development fee revenues based on prudent chance of success of completion;

·; Managing working capital through enhanced debtor collection, constant communication with key suppliers and managing costs in line with movements in revenues;

·; Post year-end, the company has drawn down £3.25m from AMPIL 2 Asset Ltd which has been secured on the shares in AMP Biomass Fuels Limited and this has replaced the £1.75m stock loan which was outstanding at the year end. This revised loan agreement expires July 2020 and as part of the cashflow forecast Management and the directors have considered that this loan will be rolled on maturity ; and

·; Monitoring other short term credit lines available to the group.

Whilst the Directors and Management continue to actively manage the sensitivity in near term cash flows, the cash flow forecast assumes that development fees are realised in a timely fashion each quarter. The Directors and Management are confident that development fees will be earned as part of the ordinary course of business and have therefore prepared the financial statements on a going concern basis. If insufficient development fees are earned each quarter, the Directors and Management have alternative funding arrangements available this would include support from the directors and managing working capital which could include the accelerated sale of inventory. Alongside this Management would look to raise funds through monetising the value in the investment division.

Revenue recognition

Sale of goods

Performance obligations and timing of revenue

The group recognises wood fuel sales on delivery to the customer.

Determining the transaction price

Price is determined either under a fixed contract or spot sale at a price per tonne (Pellet) or meter cube (Chip). These prices are linked to market prices.

Allocating amounts to performance obligations

The Group's contracts with customers for the sale of wood fuels generally includes one performance obligation being the delivery of such wood fuel. Revenue from the sale of wood fuel is recognised at a point in time when control of the asset is transferred to the customer which is upon delivery.

This recognition is in accordance with IFRS 15.

Rendering of services

Operations and maintenance contracts

Performance obligations and timing of revenue

The Group's contracts with customers to provide operations and maintenance services which includes scheduled maintenance services and emergency call out services. These services are either combined into a single customer contract or are supplied separately.

Determining the transaction price

Price is determined either under an annual fixed price contract or at an agreed call out fee.

Allocating amounts to performance obligations

Maintenance service revenue has been recognised on a straight line basis rather than on delivery of the service. IFRS 15 requires revenue to be recognised at the time when the services performance obligations (i.e. the services required under the contract) are completed. There is however no impact on an annual basis as these timing differences between revenue recognition and the delivery of the performance obligations, are eliminated over the course of a full year as contract terms run concurrently with the year end and cyclical heating season.

This recognition is in accordance with IFRS 15.

Emergency call out services and any spare parts used during these call outs are recognised at a point in time when the service is requested and in accordance with IFRS 15.

RHI support and consultancy service

The Group's RHI support and consultancy services are provided throughout the year via a monthly subscription service. The revenue is recognised over time as the services are rendered as the customers simultaneously receive and consume the benefits provided by the Group.

This recognition is in accordance with IFRS 15.

Heat Supply sales

Performance obligations and timing of revenue

The Group's contracts with customers to provide heat supply sales is a combined contract which includes:

·; the supply of heat from the combustion of wood fuel; and,

·; the provision of operations and maintenance services.

Each service has distinct performance obligations and is delivered at different times. Revenue from these contracts however has been recognised as a combined service on a £/Kilowatt-hour basis multiplied by the amount of heat supplied as measured on the heat meter. IFRS 15 dictates individual streams should be recognised when the performance obligations under each has been completed.

Determining the transaction price

Price is determined under a fixed term contract at a price per Kilowatt-hour.

Allocating amounts to performance obligations

Revenue recognition on the heat supply component is recognised on a per £/Kilowatt-hour basis as heat is used and obligations discharged when heat is generated. The sale of heat through discharge and consumption is directly correlated to metered heat generation on a per Kilowatt-hour basis.

The operations and maintenance services component revenue is an immaterial percentage of the revenue generated from these contracts. As the contracts run concurrently with the financial year and the heating season there is no impact on an annual basis regarding potential differences between revenue recognition and delivery of the performance obligations as the contract terms run concurrently with the year end and cyclical heating season.

This recognition is in accordance with IFRS 15.

Project revenue and development fees

Performance obligations and timing of revenue

The Group's contracts with customers to provide asset management services, asset development, and portfolio management service generally all have one performance obligation.

Allocating amounts to performance obligations

Asset management services are recognised on a straight-line basis over time, as the benefits provided by the Group are received and consumed in equal measure over the course of a year. Asset development costs are expensed save for grid connection deposits which are held on balance sheet at cost. These costs are recharged when projects are brought to financial close.

Asset development fees are recognised when they are probable, which is at a point in time when control has passed to the end customer. Control is considered to have passed when all key contracts have been signed and substantially all work has been completed or when payment of the project is received. Development costs associated with these projects are typically passed on to the buyer and where this is not possible these costs are considered for impairment in line with IFRS 9 using the simplified model.

Portfolio management service fees are recognised on a straight-line basis over time, as the benefits provided by the Group are also received and consumed in equal measure over the course of a year.

This recognition is in accordance with IFRS 15.

Retirement Benefits: Defined contribution schemes

Contributions to defined contribution schemes are charged to the profit and loss in the year to which they relate.

Property, plant and equipment

All property, plant and equipment are stated at cost less depreciation. Such costs include costs directly attributable to making the asset capable of operating as intended. Costs attributable to assets under construction are included within

the capitalised costs of those assets and include refurbishment and commissioning costs.

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs.

Depreciation on assets under construction does not commence until they are complete and available for use.

Depreciation is provided on all items of property, plant and equipment so as to write off their carrying value over the expected useful economic lives. It is provided at the following rates:

Impairment

Non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.

Impairment charges are included in profit and loss, except to the extent they reverse gains previously recognised in other comprehensive income. An impairment loss recognised for goodwill is not reversed.

Financial instruments

The Group classifies its financial assets and liabilities as receivables and loans, discussed below, due to the purpose for which the asset or liability was acquired.

Financial assets

Financial assets are classified as amortised cost or financial assets at fair value through profit and loss (FVPL).

The Group's financial assets mainly comprise of cash, trade and other receivables, and investments in associates. Cash comprises cash in hand and deposits held at call with banks.

Amortised Cost

These assets principally arise from the provision of goods and services e.g. trade receivables.

They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix to determine the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within administration expenses in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position.

Financial assets at Fair Value through Profit and Loss

Financial assets designated as at Fair Value through Profit and Loss ("FVPL") upon initial recognition, this includes an investment in associate. This financial asset is designated upon initial recognition on the basis that it is the first of a Group of financial assets that are managed and have their performance evaluated on a fair value basis, in accordance with risk management and investment strategies of the Group.

In accordance with the exemption within IAS 28 Investments in Associates and Joint Ventures, the Group does not account for its investments in associates using the equity method. Instead, the Group has elected to measure its investments in associates at FVPL.

This investment in associate has initially been recognised in the statement of financial position at fair value. The investment is carried in the statement of financial position at fair value with changes in fair value recognised in the consolidated statement of comprehensive income in the finance income or expense line.

Interest and dividends earned or paid on these instruments are recorded separately in interest revenue or expense and dividend revenue or expense in the statement of comprehensive income.

Financial liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired. The accounting policy for each category is as follows:

Financial liabilities at fair value through profit and loss

This category comprises the deferred contingent consideration on acquisitions which is discussed in more detail in note 24. This consideration is revalued at each reporting date. It is adjusted against goodwill within 12 months following the acquisition and through the income statement thereafter.

They are carried in the consolidated statement of financial position at fair value with changes in fair value recognised in the consolidated statement of comprehensive income.

Fair value measurement

The Group measures its investment in associate at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or, in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

For all other financial instruments not traded in an active market, the fair value is determined by using valuation techniques deemed to be appropriate in the circumstances. Valuation techniques include the market approach (i.e. using recent arm's length market transactions adjusted as necessary and reference to the current market value of another instrument that is substantially the same). Where an arm's length valuation is unavailable the Group uses the Discounted Cash Flow valuation methodology.

Valuation techniques for contingent consideration is assessed based on the full value of the potential consideration adjusted for the risk of the projects not being successful.

The Group has classified the investment in its associate as Level 3.

Other financial liabilities

The second category comprises other financial liabilities which includes the following items:

Loans and borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding. Loans and borrowings include an invoice discounting facility.

Liability components of convertible loan notes are measured as described further below.

Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

The option to acquire the resulting share capital of HWE was initially recognised at their fair value on acquisition and is subsequently fair valued at each reporting period.

Convertible debt

The proceeds received from the issue of the convertible debt are allocated between their financial liability and equity components. The financial liability is initially recognised at fair value (being the discounted cash flows using a market rate of interest that would be payable on a similar instrument that does not include an option to convert). Subsequently, the financial liability is measured at amortised cost.

The equity component is assigned to the residual amount after deducting this fair value liability from the fair value of the financial instrument as a whole. It is recognised in the 'Convertible debt option reserve' within shareholders' equity, net of income tax effects. More information is provided in note 18.

Foreign currency

Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit and loss.

Share Capital

Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability. The Group's Ordinary Shares are classified as equity instruments.

Leased Assets

Where substantively all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group (a "finance lease"), the asset is treated as if it had been purchased outright. The amount initially recognised as an asset is the lower of the fair value of the leased property and the present value of the minimum lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and interest. The interest element is charged to the consolidated statement of comprehensive income over the period of the lease and is calculated so that it represents a constant proportion of the lease liability. The capital element reduces the balance owed to the lessor.

Where substantively all of the risks and rewards incidental to ownership are not transferred to the Group (an 'operating lease'), the total rentals payable under the lease are charged to the consolidated statement of comprehensive income on a straight line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight line basis.

Deferred taxation

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:

- the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

- investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantially enacted by the consolidated statement of financial position date and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either: the same taxable Group company; or different company entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets and liabilities are expected to be settled or recovered.

Operating Segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the management team including the Chairman, Chief Executive Officer, and Chief Financial Officer.