In an update on the year to the end of March, the clean energy specialist said its Urban Reserve and IncubEx units both performed above expectations but conceded that the wood fuels business had not burned as brightly as hoped, partly because of the mild weather in February and March.
On the plus side, management expects the wood fuels business to achieve satisfactory levels of profitability henceforth following a transformational restructuring.
The company advised that bringing all operations of the wood fuels division into a single management and brand platform will result in significant non-recurring costs from depot closures, office relocations, redundancies and stock re-evaluations, as a result of which the group reckons the underlying loss (EBITDA) for the year just ended will be in the region of £1.3mln, on revenue of £50mln.
Revenue and EBITDA expectations in respect of the year to 31 March 2020 have been left unchanged.
Development fee receipts from building urban flexible generation plants should be ahead of expectations due to the strong progress made in developing flexible generation sites for its Urban Reserve division.
As at 31 March 2019, the company had submitted planning applications for 13 sites amounting to 49.7 megawatts (Mw) of generation capacity; so far, ten sites (37.5 Mw) have received planning approval and the remaining three sites are expected to be decided upon shortly. In aggregate, this will provide a shovel ready portfolio of circa 50 Mw, putting the company halfway to achieving its revised short-to-medium term target of cranking out 100 Mw a year.
If that 100 Mw target is achieved, Urban Reserve should generate development fees of £5mln a year.
As for IncubEx, in which the company has a 29% stake, the firm generated revenues of more than €12mln in 2018, which was significantly ahead of expectations.
"After a difficult year in Wood Fuels, we truly believe we have a firm grasp on this business and expect it to achieve satisfactory levels of profitability going forward. We are delighted with the out-performance in both Urban Reserve and Incubex," said Richard Burrell, the chief executive officer of Aggregated Micro Power.
House broker ups target price
In a note to clients, analysts at the company’s house broker finnCap upped their target price to 156p from 135p, saying the “positive effect” of its Urban Reserve arm outweighed the weaker-than-expected performance for wood fuels, although it added that in the short term the shares would reflect today’s news and “need to see some profit delivery coming through”.
In lunchtime trading on Thursday, AMPH's shares were down 11.5% at 73p.
-- Adds broker change and share price --