Active Energy to cease UK operations
Active Energy says that in order to focus on its Ukraine biomass project, which it recently purchased, it would close its two UK-based businesses.
The company says that although its performance was what it had expected last year, its revenues had ‘deteriorated significantly’ and it is worried this would continue in the future because of increased competition and a rise in sales cycles amongst possible customers.
It says its trading performance of Redline Engineering Services, its subsidiary, was disappointing because it had not managed to sign any orders since it had been acquired, although it was costing money.
However, in the Ukraine, Active Energy has secured an 80,000 tonne a year contract with Medium Sp Z.o.o. in January 2012, with the payment for this expected later this month.
In order to keep the company cash resources, which are about £850,000 (€1 million), the company plans to stop trading in the UK and scale back what it deems ‘non-essential expenditure’ so that it can concentrate on its Ukraine biomass venture.
‘We have tried very hard to secure orders through Red Line from numerous efforts and our lead generation process, whilst being mindful of the cash draw to support these efforts, but to date we have not gained any significant orders and the outlook lacks true visibility,’ says Gavin Little, executive chairman of Active Energy. ‘The cash needed to support Red Line's efforts, with no planned results, is too great a burden on the business. This leaves us with no option but to preserve our cash resources and seek to return shareholder value through the Biomass business, which we have got up and running quicker than planned.’