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Active Energy expanding across its portfolio

Active Energy has three stand-alone, but complementary divisions
Active Energy expanding across its portfolio
Forestry and woodchip - all in a day's work for Active Energy

In July this year, Active Energy Group PLC (LON:AEG) chief Richard Spinks told shareholders that the group had a solid foundation for the company to expand, grow the market share, and enhance its financial performance.

His words appear to be ringing true, as the group has made several strides in recent weeks in building up its portfolio of complementary businesses.

Active Energy, a mainly Ukraine focused group, has three divisions. These are a forestry management business called AEG TimberLands;  a wood chip for MDF supplier AEG WoodFibre, which is the core revenue generator, and AEG CoalSwitch, which is all about replacing coal with alternative fuels.

At AEG WoodFibre in 2015, trading volumes increased by 43% to 220,748 tonnes, while  revenues increased by 40% to $24.378 million from $17.395 million in 2014.

A rise in capacity at AEG WoodFibre

Significantly, the group revealed it had raised just over £2mln to boost capacity by a third at the division - the woodchip processing firm.

Funds raised will be used at the Yuzhny Port in Ukraine to buy and install a new fixed chipper that will take capacity to around 4,000 tonnes of raw material a day.

More mobile chippers and log handling equipment will also be acquired, the firm said.

In July, it said the business was targeting turnover in excess of US$35mln for 2016, compared to the US$24.37mln it managed in 2015.

A key forestry deal

The firm's forestry business is broad and expanding. It has a joint venture with three Métis Settlements of Alberta, Canada, to commercialise more than 300,000 hectares (around 750,000 acres) of assets owned by them.

This woodland is reckoned to contain over 35 million cubic metres of mature standing timber, as well as low-grades for industrial applications.

And in July, the business got a shot in the arm with a Ukraine deal. It struck a forestry deal with a regional government in the country covering around 186,500 hectares of mature trees.

The plan is to exploit the project by commercial logging but also the demolition wood waste and wood process by-products including bark, sawdust and thinning.

Spinks said at the time: "We believe that this will be the first of a number of agreements within Ukraine and it represents an important milestone for Active Energy's operations within the country and the region."

Significantly, the  MoU will also allow for increased use of forest waste, which is currently just burnt in situ, but could be used to produce AEG CoalSwitch's innovative fuel replacement product. 

Active said it envisaged building a facility to manufacture AEG's CoalSwitch product close to the forestry, to  supply the region's existing coal-fired power plants.

AEG CoalSwitch gaining traction

The CoalSwitch technology, which the group has been heavily publicising, is an  environmentally-friendly process that cleanses raw biomass from contaminants that harm the atmosphere and damage power plant furnaces. It has been through positive tests at the University of Utah.

The alternative fuel can be burned in coal fired power stations, or alongside coal, getting rid of the need for an expensive conversion.

An automated pelleting plant has been developed in Salt Lake City, Utah, and it is now able to produce commercial samples, and first deliveries of the product have been made to prospective partners for testing in territories including the United Kingdom, Canada, Ukraine and Malaysia.

A transformational 2015

The year to December 31 last year saw Active Energy report a US$1.98mln gross profit, compared to US$2.73mln in the prior year. It had a US$3.4mln operating loss and a US$5.7mln net loss.

Operations were impacted by disruptions in the second and third quarters, because of bans on supplying certain wood products into Turkey, but the key emphasis was on investment and expansion.

"This has been a transformational period for Active Energy with our core business, AEG WoodFibre, providing a cornerstone for the development of our diversified operations,” Spinks had said.

Shares today gained 7.55% to 2.85p, giving the group a market cap of £18mln.

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Active Energy Group PLC Timeline

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