Aggregated Micro Power Holdings plc (AIM: AMPH), trading as AMP Clean Energy, the specialist provider of distributed heat, power and renewable fuels, announces a further trading update in respect of the twelve months ended 31 March 2019.
The Company re-affirms its previous guidance made on 11 April 2019 in respect of the Annual Results to 31 March 2019; it is expected to show revenues and income of £50m and an EBITDA loss in the region of £1.3m.
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 and redundancies; all of which has been expensed through the profit and loss account.
The senior management in the fuels business has been replaced and following the appointment of the new wood fuels finance director 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 is likely to show a negative impact of £4.7m, reflecting an increase in cost of sales and therefore reduction in gross profit for the 2018 financial year with the majority relating to a reduction in the value of inventories as at 31 March 2018. The restated Net Assets as at 31 March 2018 will be of the order of £13.3m and the Net Assets as at 31 March 2019 will be of the order of £23.8m. As at 31 March 2019, the Company had net cash of £0.5m compared to net debt of £6.8m as at 31 March 2018 (excludes invoice discounting).
The restatements relate to the previous financial year and therefore the audited accounts for the 12 months to 31 March 2019 will include certain restatements in relation to the 2018 financial year comparatives. There is no adverse effect on the profit and loss for the year to 31 March 2019.
The audit of the 31 March 2019 financial statements is ongoing and the Company expects to publish its Audited results on or before 30 September 2019.
Richard Burrell, Chief Executive of Aggregated Micro Power Holdings plc, said:
“Our Wood Fuels business has been through a very difficult integration of several businesses resulting in the restatement relating to the financial year ended 31 March 2018. Whilst this is exceptionally disappointing, we now believe these issues are firmly behind us.
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