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RNS Number : 4636T
AFC Energy Plc
15 November 2023
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15 November 2023
AFC Energy PLC
("AFC Energy" or the "Company")
First Commercial H-Power Orders with Launch of "Speedy Hydrogen
Solutions" Joint Venture
AFC Energy (AIM: AFC), a leading provider of hydrogen power
generation technologies, is pleased to announce the signing of its
Joint Venture Agreement (the "JVA") with Speedy Hire Plc
("Speedy"), for the formation of a dedicated hydrogen powered
generator plant hire business, Speedy Hydrogen Solutions Ltd
("SHS").
Highlights
-- SHS incorporated as a 50:50 Joint Venture to provide
exclusive access to AFC Energy's H-Power Generators across the UK
and Irish markets.
-- First year H-Power Generator sales to SHS of up to GBP4.7m.
-- Exclusivity subject to SHS satisfying annual growth in
minimum order quantity over first three years.
-- H-Power Generator sales to be phased into SHS over the first contract year.
-- AFC Energy to procure and sell hydrogen fuel, technical and operational support to SHS.
-- Speedy to provide marketing, accounting and logistical support to SHS's operations.
-- Strong customer interest with growing pipeline.
Background
Speedy Hire is the UK and Ireland's leading provider of tools,
specialist equipment and services and is seeing strong demand from
its customers for sustainable portable power solutions. This demand
is driven by tendering requirements and emission regulations with
UK projects such as HS2 targeting the removal of diesel generators
from all sites by 2029.
On 28 July 2023, Speedy and AFC Energy announced the proposed
launch of a dedicated hydrogen powered generator plant hire
business servicing the UK and Irish construction and temporary
power markets. Since the announcement, strong interest has been
confirmed from Speedy's customers with a growing pipeline
established.
Today, both companies are pleased to announce the launch of
Speedy Hydrogen Solutions.
Key Terms
SHS is a newly incorporated joint venture to be owned equally by
Speedy and AFC Energy and is positioned to be the market leader in
the UK and Ireland's hydrogen generator hire market.
SHS is governed by a newly executed JVA and will purchase
H-Power Generators from AFC Energy for hiring to Speedy on
commercial terms. Speedy will on-hire the H-Power Generators, on a
three year exclusive basis, to its customers in the UK and
Ireland.
AFC Energy will sell H-Power Generators and services to SHS
under a Supply and Maintenance Agreement ("SMA"), also executed,
which will include the procurement and sale of hydrogen fuel, as
well as site surveys, technical and operational support to Speedy
and its customers. Incremental revenue opportunities arise from the
provision of ancillary support and equipment under the SMA.
Speedy will in turn, under a separate agreement, provide
marketing, accounting and logistical support to SHS and its own
customers.
The H-Power Generators will be available for hire exclusively in
the UK and Ireland from late this year through Speedy for an
initial three-year period.
Speedy and AFC Energy shall each have the right to appoint two
Directors to the Board of the JV.
Order
Under the SMA, SHS commits to an initial order from AFC Energy,
for delivery throughout the first six months of 2024, of generators
at a committed value of GBP2m with the intention to increase orders
up to c.GBP4.7m across the first full contract year (commencing 1
Nov. 2023). The delivery profile of generators above the committed
value is subject to performance and market uptake consistent with
the business plan.
A minimum order quantity is provided for under the Supply and
Maintenance Agreement between AFC Energy and SHS, which increases
annually, in order for SHS to maintain exclusivity in the UK and
Ireland. The minimum order quantity is phased over three years,
with potential for further growth to meet customer demand at the
time.
Joint Venture Funding
To fund the first contract year's orders, an initial total
equity injection into SHS (as a subscription for shares) of
GBP1.25m (GBP0.625m each) shall be made upon formation of SHS. This
injection shall be funded out of each company's respective cash
reserves which, in the case of AFC Energy, stood at c.GBP27m at 31
October 2023.
Subsequent tranches of funding will become payable into SHS in
the form of commercial interest bearing loan notes from each of
Speedy and AFC Energy to support the increased number of H-Power
Generators deployed into SHS. Payment is expected to be made from
existing cash resources of each company. Future payments into SHS
shall be predicated on satisfaction of certain operational
milestones in accordance with the JVA.
Dan Evans, Chief Executive at Speedy Hire, said :
" Our JV with AFC Energy further strengthens our market
leadership in combining product innovation and sustainability
solutions that are increasingly critical and in demand from our
customers. We continue to make progress in the delivery of our
ambitious plan to be a net zero business by 2040 and, together with
other recently announced developments like the acquisition of Green
Power Hire, provide strong and unique evidence of our Velocity
strategy in action."
Adam Bond, Chief Executive at AFC Energy, said:
"We are pleased to announce this exciting collaboration with the
UK's leading sustainable plant hire business, Speedy Hire. We have
every confidence that SHS will support the UK and Irish
construction sector's transition away from diesel towards its
ambitious decarbonisation targets, representing a game changer in
the way sustainable off-grid power is delivered to industry. With
strong interest already evidenced from contractors and at industry
events, we expect this venture to now raise the bar in the delivery
of sustainable off-grid power."
For further information, please contact:
AFC Energy plc +44 (0) 14 8327 6726
Adam Bond (Chief Executive Officer) investors@afcenergy.com
Peel Hunt LLP - Nominated Adviser and Joint
Broker
Richard Crichton / Tom Ballard / Georgia
Langoulant +44 (0) 207 418 8900
Zeus - Joint Broker
David Foreman / James Hornigold (Investment
Banking)
Dominic King (Corporate Broking) / Rupert
Woolfenden (Sales) +44 (0) 203 829 5000
FTI Consulting - Financial PR Advisors +44 (0) 203 727 1000
Ben Brewerton / Nick Hennis / Tilly Abraham afcenergy@fticonsulting.com
About AFC Energy
AFC Energy plc is a leading provider of hydrogen energy
solutions, to provide clean electricity for on and off grid power
applications. The Company's fuel cell technology is now deployable
as electric vehicle chargers, off-grid decentralised power systems
for construction and temporary power with emerging opportunities
across maritime, data centres and rail as part of a portfolio
approach to the decarbonisation of society's growing
electrification needs.
About Speedy Hire
Founded in 1977, Speedy is the UK's leading provider of tools
and equipment hire services to a wide range of customers in the
construction, infrastructure, industrial, and support services
markets, as well as to local trade, and retail. The Group provides
complementary support services through the provision of training,
asset management and compliance services. Speedy is certified
nationally to ISO50001, ISO9001, ISO14001, ISO17020, ISO27001 and
ISO45001. The Group operates from c.180 fixed sites and selected
B&Q stores across the UK and Ireland together with a number of
on-site facilities at client locations and through a joint venture
in Kazakhstan.
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