TIDMAFC
RNS Number : 5832Q
AFC Energy Plc
01 March 2021
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
1 March 2021
AFC Energy plc
("AFC Energy" or the "Company")
Final Results for year ended 31 October 2020
AFC Energy (AIM: AFC), a leading provider of hydrogen power
generation technologies, is pleased to announce its results for the
year ended 31 October 2020. Highlights of those results are as
follows.
Commercial
-- Six-month engagement with global e-mobility leader, ABB,
culminating in the post year-end formation of a Strategic
Partnership to develop high power Electric Vehicle (EV) charging
solutions with established route to a growing worldwide EV
market.
-- Achieved first commercial orders, including appointment as
Official Charging Partner of FIA Accredited Extreme E in 2021,
providing sustainable off-grid power for rapid vehicle
charging.
-- Confirmed initial order book of GBP1.1m at year end, with
strong pipeline of commercial orders across prospective partners
and distributors currently under development.
-- Announced collaboration with global contractor ACCIONA,
highlighting opportunities for sustainable construction and
temporary power applications.
-- Introduced potential for alkaline fuel cell adoptions in high
growth micro grid applications with system sale to
Forschungszentrum Jülich ("Jülich") at its Living Lab Energy Campus
("LLEC") showcase in Germany.
-- Commenced strategic relationship with Ricardo plc post
year-end to explore alkaline fuel cell deployment across global
maritime, rail and stationary markets following growth in enquiries
- all new target industries for the business.
-- Oversubscribed GBP31.6m fundraise, strengthening balance sheet for accelerated growth.
Manufacturing
-- Confirmation of capital light manufacturing and scale up
strategy through supply chain strengthening in preparation for near
term growth potential in commercial orders.
-- Cemented partnership with BK Gulf through post year-end
agreement for mass scale up of containerised and skid mounted fuel
cell system fabrication.
-- Agreement reached post year-end to lease 30,000 sq. ft UK
based facility for the assembly, commissioning and dispatch of fuel
cell systems to customers.
Technology
-- Prototype design of high-density "S" series fuel cell system
completed and work commenced to assemble and demonstrate "short
stack" performance, prior to scaling up to full scale 10kW stack in
2021 and expected release of commercial-scale stacks to the market
in late 2022.
-- Initial supply of AlkaMem(R) membrane samples across multiple
non-fuel cell applications demonstrating the diversity of revenue
opportunities across non-core markets.
-- Design and engineering of world class testing and research
lab for high density fuel cell, launched after year-end in February
2021.
Key Financial Highlights
-- Stronger year end cash balance of GBP31.6m (FY 2019:
GBP1.6m), providing the basis for future growth.
-- Growing investment in product range reflected in increased
loss of GBP4.2m (FY 2019: GBP2.9m).
-- Strong pipeline growth across all target markets post
year-end with potential for commensurate revenue.
Outlook
-- Unprecedented global investment in hydrogen, with $300bn
project pipeline and 30 of the world's largest economies already
having national Hydrogen strategies in place.
-- Principle of 'building back better' and the bringing forward
of EV deployment post COVID-19 is driving strong Government action
on decarbonisation.
-- Leveraging the value of existing and new international
partnerships to enhance commercial route to market remains central
to driving growth in top line commercial revenue.
-- Systems to be completed and deployed to reinforce political
& regulatory support for industry's viable transition away from
diesel, with anticipated drive towards commercial sales.
-- Stronger balance sheet to support further investment in
containerised fuel cell systems to meet customer demand and hone
supply chain and manufacturing scale up potential.
-- Planned deployment of first integrated EV charger system
alongside ABB in second half of 2021.
-- Target delivery of first prototype high energy density "S"
series fuel cell stack with adoption of AFC Energy's new Alkamem(R)
membrane technology in 2021.
-- Continued international promotion of our work through the
Hydrogen Council and the Ammonia Energy Association.
Adam Bond, Chief Executive of AFC Energy, said:
"2020 was the year that hydrogen took centre stage as a key
enabler of a more sustainable future, fuelling a transformational
year for AFC Energy. A growing order book, new strategic
partnerships, a stronger cash position at year-end and a strong
global political will, evidenced by record levels of investment in
the sector, provides the basis for our future success.
Our outlook for the coming year is one of confidence, with both
Governmental policies and industry sentiment driving sustainable
change in our key target markets. The Company's stronger balance
sheet position enables us to invest in our people, products and
technology and we therefore expect cash burn to increase in the
coming year to deliver and grow our order book.
Leveraging the value of our existing international partnerships
and collaborations remains central to our approach in 2021. With
the required distribution channels, manufacturing and staffing
being put in place to turn our enquiry pipeline into commercial
sales with significant annuity revenue, I look forward to us making
a growing contribution to delivering emissions-free solutions to
the world's energy challenges."
-S-
AFC Energy plc +44 (0) 14 8327 6726
Adam Bond (Chief Executive Officer) Investors@afcenergy.com
Iain Thomson (Head of Communications and Stakeholder Management)
WH Ireland - Nominated Adviser and Joint Broker
M ike Coe (Corporate Finance)
Jasper Berry (Corporate Broking) +44 (0) 117 945 3470
M C Peat & Co LLP - Joint Broker
Charlie Peat +44 (0) 20 7104 2334
Zeus Capital Limited - Joint Broker
Daniel Harris (Corporate Finance)
John Goold/Dominic King (Corporate Broking) +44 (0) 203 829 5000
Tuva Partners - Public Relations
Alex Brooks +44 (0) 7900 205 460
For further information, please contact:
About AFC Energy plc
AFC Energy plc is commercialising a scalable alkaline fuel cell
system, to provide clean electricity for on and off grid
applications. The technology is now deployable in electric vehicle
chargers, off-grid decentralised power systems and industrial gas
plants as part of a portfolio approach to the decarbonisation of
local electricity needs (Afcenergy.com).
Chairman's report
The year ended 31 October 2020 was a transformational one for
AFC Energy. A supportive public policy environment, commercial
opportunity, strong customer engagement and product readiness all
converged and gave rise to our first commercial orders. The profile
of the company was also significantly heightened through becoming
the official charging partner for the inaugural Extreme E season,
alongside the forging of close ties with global partners in the EV
Charging (ABB) and Construction (Acciona) markets to grow our
international footprint and reputation.
The successful GBP31.6m fundraising that took place in July was
also a critical milestone in the development of the company,
directly supporting the transition from the development of our
products and technology into the manufacture and commercialisation
of them whilst providing significant financial headroom for
long-term planning. The company is in a strong position for future
growth.
Financial Overview
The successful restructuring of our finances in this financial
year provides a robust platform to accelerate the deployment of our
products into our key target markets. The year began with several
small fundraises which avoided the need for a drawdown from our
GBP4m convertible loan facility and provided sufficient liquidity
for the company to deliver against our customer commitments during
the first lockdown.
The successful conclusion of our July fundraise brought the
total funds raised for the year to GBP34 million. Careful use of
this funding prior to period end meant that we ended the year with
a cash balance of GBP31.6 million (FY 2019: GBP1.6 million). This
strong cash position supported our decision after period end to
cancel our Convertible Loan Note facility, having not drawn any
amounts from it during the eighteen months it was in place.
The operating loss for the year was GBP4.2 million (FY 2019:
GBP2.9 million), whilst cash absorbed by operations and investing
activities was GBP4.1 million (FY 2019: GBP2.8 million). This
directly reflected our increased investment in our operational and
technical headcount, tooling, demonstration equipment and costs
associated with assembling Extreme E's charging system.
Our commercial strategy has begun to be successfully
demonstrated by closing the year with an order book of GBP1.1
million (2019: GBP nil); more detail is provided within the
Operational Review.
People, culture and values
Our people have worked tirelessly throughout this financial year
to deliver our projects against tight deadlines within the backdrop
of social distancing and remote working. The way that our employees
have risen to the challenge of maintaining our research, product
development, manufacturing and assembly programmes to support our
projects despite the challenges posed by the COVID-19 pandemic has
made me immensely proud. On behalf of the Board, I would like to
thank them all for their professionalism, dedication and
understanding during a year like no other.
During the year we reviewed our remuneration policy to align
with our stakeholder objectives. The first step was a grant of
options to existing and new staff to align them with value creation
and our principal commercial targets. During the coming year we
will roll out further actions to ensure that we attract and retain
the right staff and that their objectives and interests are aligned
with our stakeholders.
Investor communications
The COVID-19 pandemic also directly affected how we communicated
with our shareholders during the period. Whilst many of our
institutional and private investors were present at our Electric
Vehicle Charging demonstration in December 2019, social
restrictions meant that our annual investor day - planned to
coincide with our Annual General Meeting - was postponed. The Board
remains committed to regular communication with the market and our
investors and is keen to resume its investor day activities in line
with Government guidelines.
We appointed Iain Thomson as Head of Communication and
Stakeholder Management in January 2021 and he will be facilitating
a virtual Capital Markets Morning in the Spring to bring us closer
to our investors. This event will be one of four key touchpoints
across the year where investors can learn more about the company
and its strategy, alongside our Annual General Meeting (AGM) and
materials relating to our Full Year and Half Year results.
The Board is also committed to high standards of public
reporting and will put a formal ESG reporting framework in place in
2021 to support investors to measure the positive impact the
company has on wider society and in successfully future proofing
itself. We believe that the company supports at least nine of the
UN's 17 Sustainable Development Goals but also recognise that
investors require further detail; a formal update will be provided
as part of our Half Year results.
Thank you
The continued hard work and technical ability of our staff has
ultimately set t he foundation for what the company will achieve in
coming years. My thanks also to our executive team for their
leadership, to my colleagues on the Board for their counsel, to our
shareholders for their support and commitment, to our customers who
recognise the quality of the products we provide, and to all of our
other stakeholders who provide input and guidance into our
projects.
Having served as Chairman for nearly four years it is my
intention to retire at the end of the forthcoming Annual General
Meeting and I shall therefore not be seeking re-election. It has
been a challenging and often exciting period for the company and
following the most recent fund raising and the excellent new
relationships with Acciona, ABB and Ricardo the company is well
placed to accelerate its commercialisation in 2021 and beyond. The
Board is progressing a process to identify a successor Chairman and
once that person has been appointed I wish them and the company
every success in the exciting years ahead.
John Rennocks
Chairman
26 February 2021
Operational review
2020 was the year Hydrogen took centre stage. With an
unprecedented $300 billion pencilled for investment into new
project pipelines and an estimated 18% of the world's energy needs
forecast to come from hydrogen over the next few decades [1] , this
is very much just the start.
For AFC Energy, 2020 was a year in which foundations were laid
with first commercial sales, strategic partnerships cemented with
global routes to market, high profile technology branding, and
unprecedented policy backing across the clean air and sustainable
energy agendas.
In 2020 alone, 30 of the world's largest economies confirmed
Hydrogen Strategies, promoting the sector for the first time into
mainstream clean energy portfolio solutions. Such policy support,
together with our commercial progress over these past 12 months,
cements the company's position as a market leader in the global
transition away from diesel generators.
The World has changed ... and with change comes the opportunity
to make things better
COVID-19 has placed significant challenges on us all that will
see huge changes in both people's day to day social interactions
and in the pursuit of national and personal endeavours.
Recent studies ([2]) have however highlighted how the global
pandemic has, through implementation of national lockdowns and
reduced economic activity, seen significant improvements in air
quality, reduced greenhouse gas emissions and improved water
quality.
As we begin to rebuild the economic drivers of our economies,
the policy imperatives being driven by central governments
worldwide increasingly reflect the principal of "building back
better". A key element of this is a growing recognition of the role
Hydrogen is and will continue to play in supporting society to
build back in a more sustainable and environmental conscious
manner.
For AFC Energy, this reality is reflected in the need to reduce
society's reliance on fossil fuels and in particular, diesel
fuelled power generation. Industries that currently rely on diesel
generators all have the potential to benefit from the unique
selling points of our proprietary alkaline fuel cell system
technology. For over 200 million viewers who will be watching the
inaugural Extreme E season powered by our zero-emission technology,
AFC Energy will be at the heart of this global transition away from
diesel.
Today, AFC Energy is engaging with several of the world's
leading constructors, diesel generator distributors and global
electrification providers in showcasing the strong environmental
credentials our fuel cell technology can play in aiding the world's
search for Net Zero. Our pipeline of project opportunities has, in
response to these environmental circumstances, continued to grow
during the course of the 2020 and 2021 lockdowns and we are excited
to start converting these opportunities into long term annuity
revenue streams.
With hundreds of billions of dollars now committed to making the
Hydrogen sector a reality, and a relatively small number of core
commercial and near commercial technology providers in place today
to make this happen, the opportunity for AFC Energy has never been
more compelling.
First Commercial Orders and Pipeline Growth
2020 saw the conclusion of AFC Energy's first commercial
contracts with an order book of GBP1.1m for delivery during 2021.
Our revenue pipeline and partnerships however continue to
strengthen alongside the commitment of constructors, power
generators and Governments to pursue zero carbon commitments.
Our business model of working through global partners such as
ABB continues to validate the merit of our focused go to market
strategy.
Extreme E was a high profile first contract for the Company
which not only delivers revenue, but also tremendous global
marketing opportunities. The series will showcase the modular
system's flexibility in operating in some of the harshest
environmental conditions on Earth, from desert to glacier, and
provide a real life, real time demonstration of our system's
operability to partners and customers.
To a large degree, our pipeline is strongly supported by
Government policy and regulations. These are mandating, at an
accelerating rate, a reduction in diesel combustion engines in
transport systems, the removal of many of the benefits available to
offgrid power generation (such as the UK's subsidy on red diesel
ending for the Construction sector from 2022) and enforcing new low
emissions standards on stationary power generators. All of these
factors are now forcing industry to reconsider the drivers of
technology choice in the alternative adoption of legacy diesel
generators. This, supported by our low capital cost targets and the
ability of our systems to accept low grade hydrogen fuel, enables
the Company to position itself in a market which reflects premium
priced power, and does not require short term Government subsidy in
order to be successful.
First Global Distribution Channel
Significant effort was also made during the year in promoting
and demonstrating our technology both at home and abroad.
This began with the Dunsfold to Dundee roadshow in February that
physically demonstrated the capabilities of our new EV charger unit
and acted as a catalyst for further press coverage and interest in
our products.
This roadshow culminated in both our agreement with Extreme E
and the announcement after year end of our global partnership with
world leaders in electrification, ABB. This partnership not only
gives ABB access to AFC Energy's leading fuel cell technologies for
the rapid charging of electric vehicles, it also provides AFC
Energy with access to a global distribution network which has
already sold rapid EV charging equipment in over 80 countries.
Work has already begun with ABB to integrate their chargepoints
with our fuel cells to provide an off-grid solution where the grid
is constrained (or absent), with the integrated product launch
targeted for later this year. Importantly, we are already in
discussions with several of ABB's customers who have expressed
interest in the system in locations where large power demand
exists, such as high-volume logistics hubs, but where adequate grid
connectivity does not.
To put the importance of this agreement into context, our
commercial team can now access a global market of some 1.2 billion
existing vehicles [3] , compared with a domestic market of just
38.7 million vehicles [4] .
This model of working through global distributors can be
evidenced across all of AFC Energy's key target markets and we hope
to be making further announcements in this regard later in the
year.
New Partnerships and Collaborations
To accelerate our growth and extend our commercial footprint
across the world, we have also begun to enter into a series of
partnerships and collaborations with key global companies and we
view this as a principal part of our commercial strategy moving
forward in order to generate a larger volume of sales.
In June, we announced a partnership with Acciona SA in support
of their stated intention to decarbonise their portfolio of global
construction sites. Our programme of work with Acciona this year
will explore logistics chains, fuelling strategy (with ammonia),
regulatory compliance and the cost effectiveness of our system
compared to diesel fuel in off-grid construction applications.
Partnerships such as that announced with Acciona are being
developed across several constructors and diesel genset
distributors and create large opportunities for early deployment of
H-Power systems in markets driven by sustainability agendas.
After period end for example, we also entered into a
collaboration agreement with Ricardo plc for both companies to
jointly explore and engineer innovative, zero greenhouse emission
products with a focus on transportation and stationary power
generation, thereby taking advantage of clear growth in industrial
customer demand. The partnership is closely considering the
benefits achieved using low cost, readily available, and high
energy dense green ammonia fuel (rather than hydrogen gas) as a
fuel of choice in off-grid or remote power needs, including
international shipping and distributed power generation.
Manufacturing scale up
Our 2020 contracts and the strength of our potential order
pipeline placed a spotlight on our dependence upon the small
workforce we have at Dunsfold. We subsequently took three actions
to ensure that our manufacturing capability can meet current and
future orders.
Our partnership with BK Gulf, announced after period end,
supports the immediate scale up of manufacturing capacity for
delivery of our power systems through the delivery of the Company's
containerised fuel cell balance of plant. BK Gulf has the existing
capacity to deliver several hundred fitted out containerised
modules per annum to address future customer demand, with the first
fabricated units expected this year. In parallel with this work, BK
Gulf has also commenced a detailed value engineering process to
further optimise our system layout and drive cost reduction. Our
partnership with De Nora also remains strong following the
extension of our Joint Development Agreement, with their electrodes
continuing to be used in all of our projects.
Our successful GBP31.6 million fundraise in July also supported
two key internal actions. To further scale up fuel cell system
assembly and commissioning to satisfy existing and future orders,
we announced in November that we'd taken a lease over a 30,000 sq.
ft unit at Dunsfold Park to serve as our first large scale
H-Power(TM) assembly and commissioning facility. This provides the
space for the assembly of fuel cell systems of any scale before
commissioning and despatch to customers.
In addition, the fundraise provided the financial headroom to
recruit new manufacturing, engineering and commercial staff in
support of the deployment of our systems into the Company's key
target markets. We will be announcing a further strengthening of
our executive team shortly and it's a tribute to our progress that
we can now attract such talent to our business.
Product and technology development
Our technology platform is at the heart of our value
proposition, and with a three pillar approach to technology
development, we are confident our market leading position in
alkaline fuel cell systems continues to be strengthened.
The first of these pillars represents the HydroX-Cell(L) fuel
cell system which is currently set for deployment in all of our
current and near term pipeline of projects. The focus here
continues to be predicated on lowering of cost and enhancement of
performance. Our partnership with Industrie De Nora continues to
pay dividends as they further invest in our L Series electrode
technology through Joint Development Agreement, with BK Gulf now
supporting the value engineering of modular, containerised
systems.
The second pillar represents to HydroX-Cell(S) fuel cell system
which continues to be scaled up towards a full commercial prototype
system expected for delivery later this year. The S Series system
continues to demonstrate market leading power densities for
alkaline fuel cell systems designed to compete head on with
existing Proton Exchange Membrane (PEM) based technologies in
mobile applications where power density and footprint are key. The
key differentiator is the alkaline system's ability to accept lower
grade, and therefore lower cost Hydrogen (including that sourced
from Ammonia) with a far lower loading of high cost metals within
its electro-chemistry. We continue to believe the S Series fuel
cell will be a game changer for the hydrogen sector.
Finally, the third pillar represents the AlkaMem(R) anion
exchange membrane, used within the S Series fuel cell system, but
which can equally be applied in other non fuel cell applications
such as alkaline water electrolysis. AlkaMem(R) has now been
dispatched to several leading industrial and research entities and
continues to highlight the potential for our technology in these
markets. 2020 presented certain challenges across the AlkaMem(R)
supply chain however we are now through this and continue to
prepare the membrane for third party users in 2021.
Fuel
The unique selling point of our equipment to accept low grade,
cheaper hydrogen sources - especially ammonia, which has been
confirmed as our strongest competitive advantage by our customers.
Adoption of ammonia as a preferred vector for the carriage of
Hydrogen is gaining momentum, particularly in heavy mobile
applications such as shipping. We are continuing to work closely
with the ammonia industry, including joining the Ammonia Energy
Association as Gold Members in 2020.
Outlook
Our outlook for the coming year is one of confidence, with both
Governmental policies and industry sentiment driving sustainable
change in our key target markets. The company's strong balance
sheet position enables us to invest in our people, products and
technology and we therefore expect cash burn to modestly increase
in the coming year - partly offset by an increase in customer
revenues - to accelerate our commercial growth.
With regulations pertaining to diesel generation continuing to
tighten, environmental and societal change agendas becoming more
prevalent, the rate of Electric Vehicle deployment and their
required rate of charge increasing, and the cost of Hydrogen
continuing to fall whilst diesel does the opposite, this will drive
additional interest and ultimately drive sales of our products in
our target markets.
Beyond this clear opportunity, we have also begun to put in
place the required distribution channels, manufacturing and
staffing to turn these opportunities into significant revenue.
Leveraging the value of our international partnerships and
collaborations remains central to our approach in 2021.
Whilst the COVID-19 pandemic has had an obvious impact on all
businesses, we demonstrated in 2020 that we have been able to work
safely and efficiently in meeting the needs of our customers whilst
continuing to develop our product base. I expect us to maintain
this momentum throughout 2021.
This transformational year has been the result of innovative,
passionate and committed effort by a team with the single-minded
desire to bring "emissions-free solutions to the world's energy
challenges". I wish to take this opportunity to thank our staff,
partners and supply chain for their tremendous efforts and I look
forward to even greater things in the future.
Adam Bond
Chief Executive Officer
26 February 2021
Statement of Comprehensive Income
FOR THE YEARED 31 OCTOBER 2020
Year ended Year ended
31 October 31 October
2020 2019
Note GBP GBP
--------------------------------------------------------------------- ----- ------------- -------------
Revenue from customer contracts - -
Cost of sales - (26)
------------------------------------------------------------------------- ----- ------------- -------------
Gross loss - (26)
Other income 32,892 39,729
Administrative expenses (4,639,104) (3,606,266)
------------------------------------------------------------------------- ----- ------------- -------------
Operating loss 5 (4,606,212) (3,566,563)
------------------------------------------------------------------------- ----- ------------- -------------
Finance cost 8 (178,407) (52,805)
------------------------------------------------------------------------- ----- ------------- -------------
Loss before tax (4,784,619) (3,619,368)
------------------------------------------------------------------------- ----- ------------- -------------
Taxation 9 559,627 768,528
------------------------------------------------------------------------- ----- ------------- -------------
Loss for the financial year and total comprehensive loss attributable to
owners of the Company (4,224,992) (2,850,840)
------------------------------------------------------------------------- ----- ------------- -------------
Basic loss per share 10 (0.80)p (0.68)p
Diluted loss per share 10 (0.80)p (0.68)p
------------------------------------------------------------------------- ----- ------------- -------------
All amounts relate to continuing operations.
The notes form part of these financial statements.
Statement of Financial Position
AS AT 31 OCTOBER 2020
31 October 31 October
2020 2019
Note GBP GBP
------------------------------------------------------------ ----- ------------- -------------
Assets
Non-current assets
Intangible assets 11 769,269 606,041
Right of use assets 12 247,505 361,738
Tangible fixed assets 13 940218 396,935
1,956,992 1,364,714
------------------------------------------------------------ ----- ------------- -------------
Current assets
Inventory 15 249,370 95,423
Receivables 16 1,043,880 1,151,998
Cash and cash equivalents 17 31,301,467 1,327,935
Restricted cash 17 270,027 259,072
-------------------------------------------------------------- ----- ------------- -------------
32,864,744 2,834,428
------------------------------------------------------------ ----- ------------- -------------
Total assets 34,821,736 4,199,142
-------------------------------------------------------------- ----- ------------- -------------
Capital and reserves attributable to owners of the Company
Share capital 18 676,006 447,988
Share premium 18 81,417,845 47,389,424
Other reserve 1,512,974 2,204,774
Retained deficit (50,582,856) (47,185,257)
-------------------------------------------------------------- ----- ------------- -------------
Total equity attributable to Shareholders 33,023,969 2,856,929
-------------------------------------------------------------- ----- ------------- -------------
Current liabilities
Payables 20 1,236,796 667,811
Lease liabilities 21 113,431 113,431
1,350,227 781,242
------------------------------------------------------------ ----- ------------- -------------
Non-current liabilities
Lease liabilities 21 146,368 259,799
Provisions 22 301,172 301,172
-------------------------------------------------------------- ----- ------------- -------------
447,540 560,971
------------------------------------------------------------ ----- ------------- -------------
Total liabilities 1,797,767 1,342,213
Total equity and liabilities 34,821,736 4,199,142
-------------------------------------------------------------- ----- ------------- -------------
The notes form part of these financial statements.
These financial statements were approved and authorised for
issue by the Board on 26 February 2021.
ADAM BOND GRAEME LEWIS
Chief Executive Officer Chief Financial Officer
AFC Energy plc
Registered number: 05668788
Statement of Changes in Equity
FOR THE YEARED 31 OCTOBER 2020
Share Share Other Retained Total
Capital Premium Reserve Deficit Equity
Note GBP GBP GBP GBP GBP
----------------------- ----- -------- ----------- ----------- ------------- -------------
31 October 2018 391,698 45,506,524 2,908,021 (44,487,129) 4,319,114
Adjustment from
the adoption of
IFRS 16 - - - (6,794) (6,794)
------------------------ ----- -------- ----------- ----------- ------------- -------------
Adjusted balance
at 31 October
2018 391,698 45,506,524 2,908,021 (44,493,923) 4,312,320
Comprehensive
loss for the year - - - (2,850,840) (2,850,840)
Issue of equity
shares 56,290 1,882,900 - - 1,939,190
Equity-settled
share-based payments - - (703,247) 159,506 (543,741)
------------------------ ----- -------- ----------- ----------- ------------- -------------
Transactions with
owners 56,290 1,882,900 (703,247) 159,506 1,395,449
------------------------ ----- -------- ----------- ----------- ------------- -------------
31 October 2019 447,988 47,389,424 2,204,774 (47,185,257) 2,856,929
Comprehensive
loss for the year - - - (4,224,992) (4,224,992)
Issue of equity
shares 18 226,873 33,798,289 - - 34,025,162
Exercise of share
options 1,145 230,132 231,277
Equity-settled
share-based payments 19 - - (691,800) 827,393 135,593
Transactions with
owners 228,018 34,028,421 (691,800) 827,393 34,392,032
------------------------ ----- -------- ----------- ----------- ------------- -------------
31 October 2020 676,006 81,417,845 1,512,974 (50,582,856) 33,023,969
------------------------ ----- -------- ----------- ----------- ------------- -------------
Share capital is the amount subscribed for shares at nominal
value.
Share premium represents the excess of the amount subscribed for
share capital over the nominal value of these shares net of share
issue expenses.
Other reserve represents the charge to equity in respect of
unexercised equity-settled share-based payments.
Retained deficit represents the cumulative loss of the Company
attributable to equity Shareholders.
The notes form part of these financial statements.
Cash Flow Statement
FOR THE YEARED 31 OCTOBER 2020
31 October 31 October
2020 2019
Note GBP GBP
----------------------------------------------------------- ---- ---- ---- ---- ----- ------------ ------------
Cash flows from operating activities
Loss before tax for the year (4,784,619) (3,619,368)
Adjustments for:
Amortisation of intangible assets 11 108,014 35,388
Depreciation of right of use asset 12 114,233 114,233
Depreciation of property and equipment 13 143,758 88,950
Depreciation of decommissioning asset 13 31,365 31,364
Equity-settled share-based payment expenses 19 135,593 (543,741)
Interest received 8 (6,168) (4,173)
Gain on disposal of investment and allied agreements 14 (80,000) (20,000)
Cash flows from operating activities before changes in working capital and
provisions (4,337,824) (3,917,347)
R&D tax credits received 644,523 1,299,360
(Increase)/Decrease in restricted cash (10,955) 6,702
(Increase)/Decrease in inventory (153,947) 68,297
Decrease in receivables 23,222 76,910
Increase in payables 568,985 26,264
Cash absorbed by operating activities (3,265,996) (2,439,814)
----------------------------------------------------------------------------------- ----- ------------ ------------
Cash flows from investing activities
Purchase of plant and equipment 13 (718,406) (224,253)
Additions to intangible assets 11 (171,242) (198,743)
Interest received 8 6,168 4,173
Proceeds from disposal of investment and allied agreements 14 80,000 20,000
----------------------------------------------------------------------------------- ----- ------------ ------------
Net cash absorbed by investing activities (803,480) (398,823)
----------------------------------------------------------------------------------- ----- ------------ ------------
Cash flows from financing activities
Proceeds from the issue of share capital 35,558,667 1,888,940
Costs of issue of share capital (1,633,505) (149,750)
Proceeds from the exercise of options 231,277 -
Lease payments (113,431) (124,686)
Net cash from financing activities 34,043,008 1,614,504
----------------------------------------------------------------------------------- ----- ------------ ------------
Net increase/(decrease) in cash and cash equivalents 29,973,532 (1,224,133)
Cash and cash equivalents at start of year 1,327,935 2,552,068
----------------------------------------------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at end of year 17 31,301,467 1,327,935
----------------------------------------------------------------------------------- ----- ------------ ------------
The notes form part of these financial statements.
Notes Forming Part of the Financial Statements
1. CORPORATE INFORMATION
AFC Energy plc ("the Company") is a public limited company
incorporated in England & Wales and quoted on the Alternative
Investment Market of the London Stock Exchange.
The address of its registered office is Unit 71.4 Dunsfold Park,
Stovolds Hill, Cranleigh, Surrey GU6 8TB.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The financial statements of AFC Energy plc have been prepared in
accordance with International Financial Reporting Standards
("IFRSs"), International Accounting Standards ("IASs") and
International Financial Reporting Interpretations Committee
("IFRIC") interpretations (collectively "IFRSs") as adopted for use
in the European Union and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
These results are audited, however the financial information
does not constitute statutory accounts as defined under section 434
of the Companies Act 2006. The financial information for the year
ended 31 October has been derived from the Company's statutory
accounts for that year. The auditors' report on the statutory
accounts for the year ended 31 October 2020 was unqualified and did
not contain statements under section 498 of the Companies Act
2006.
The accounting policies used in completing this financial
information have been consistently applied in all periods shown.
These accounting policies are detailed in the Company's financial
statements for the year ended 31 October 2020 which can be found on
the Company's website.
The financial statements have been prepared on a going concern
basis notwithstanding the trading losses being carried forward and
the expectation that the trading losses will continue for the near
future as the Company transitions from research and development to
commercial operations.
The Company currently consumes cash resources and will continue
to do so until sales revenues are sufficiently high to generate net
cash inflows. Management have prepared and reviewed five-year
financial projections aligned with ongoing technological,
operational and commercial strategies. During the initial period of
commercialisation there will be negative cash flows the size of
which will be dependent upon the speed at which revenue grows. On
31 October 2020 unrestricted cash resources were GBP 31.3 million.
The Directors have reasonable expectation that sufficient funding
exists to meet payment obligations as and when they fall due. The
directors' having taken into account current cash resources,
identified risks including the impact of Covid 19 and financial
forecasts the Company has adequate resources to continue in
operational existence for the foreseeable future (being a period of
at least twelve months from the date of this report). Thus, the
Directors believe that it is reasonable to continue to adopt the
going concern basis in preparing the annual report and financial
statements.
The accounting policies set out below have, unless otherwise
stated, been applied consistently in these financial
statements.
Judgements made by the Directors in the application of these
accounting policies that have significant effect on the financial
statements and estimates with a significant risk of material
adjustment in the next year are discussed in note 3.
a. Standards, Amendments and Interpretations to Published
Standards not yet Effective.
At the date of authorisation of these financial statements, all
the IASB and IFRIC standards and interpretations, which are
effective for annual accounting periods beginning on or after the
stated effective date have been adopted.
b. Capital Policy
The Company manages its equity as capital. Equity comprises the
items detailed within the principal accounting policy for equity
and financial details can be found in the statement of financial
position. The Company adheres to the capital maintenance
requirements as set out in the Companies Act.
c. Revenue recognition
To determine whether to recognise revenue, a 5-step process is
followed:
-- Identifying the contract with a customer
-- Identifying the performance obligations
-- Determining the transaction price
-- Allocating the transaction price to the performance obligations
-- Recognising revenue as the performance obligations are satisfied.
Revenue is generated from complex contracts covering the
-- Sale of goods and parts,
-- Sale of services and maintenance, and
-- Lease contracts.
and may be either a single or multiple contracts. Multiple
contracts are accounted for as a single contract where one or more
of the following criteria are met
-- The contracts were negotiated as a single commercial package,
-- Consideration of one contract depends upon the other contract, and
-- Some or all of the goods and services comprise a single performance obligation.
Performance obligations of the contracts are analysed between
either physical goods and services delivered or service level
agreements. The transaction price of the performance obligations
are based upon the contract terms taking in to account both cash
and non-cash consideration. Non- cash consideration is valued at
fair value taking in to consideration contract terms and known arms
length pricing where available.
Revenue is recognised either at a point in time or over time, as
the performance obligations are satisfied by transferring the
promised goods or services to its customers. Contract liabilities
are recognised for consideration received in respect of unsatisfied
performance obligation and reports these amounts as other Contract
and other liabilities in the statement of financial position.
Similarly, if a performance obligation is satisfied before it
receives the consideration, a contract asset or a receivable is
recognised in the statement of financial position, depending on
whether something other than the passage of time is required before
the consideration is due.
Sale (standard products) contracts - Revenue from standard
products will be recognised at a point of time only when the
performance obligation has been fulfilled and ownership of the
goods has transferred, which is typically at site or factory
acceptance, which is the official handover of control of the goods
to the customer.
-- During the product build, deposits and progress payments will
be reflected in the balance sheet as deferred income.
-- Costs incurred on projects to date will not be included in
the statement of comprehensive income but will be accumulated on
the balance sheet as work in progress (as they are considered
recoverable) and transferred to cost of sales once the revenue
applicable to those costs can be recognised in the accounts. Should
costs exceed anticipated revenues, a provision will be recognised
and the surplus costs expensed with immediate effect.
Sale (customised products) contracts - Revenues for customised
contracts will be recognised over time according to how much of the
performance obligation has been satisfied. This is measured using
the input method, comparing the extent of inputs towards satisfying
the performance obligation with the expected total inputs required.
Any changes in expectation are reflected in the total inputs figure
as they become known. The progress percentage obtained is then
applied to the revenue associated with that performance
obligation.
Lease and long-term service contracts - Revenue is recognised
over time based on outputs provided to the customer, because this
is the most accurate measurement of the satisfaction of the
performance obligation. Revenue can comprise a fixed rental charge
and a variable charge related to the usage of assets or other
services (including pass-through fuel).
d. Other Income
Other income represents sales by the Company of waste
materials.
e. Development Costs
Identifiable non-recurring engineering and design costs and
other prototype costs incurred to develop a technically and
commercially feasible product are capitalised.
f. Foreign Currency
The financial statements of the Company are presented in the
currency of the primary economic environment in which it operates
(the functional currency) which is pounds sterling. In accordance
with IAS 21, transactions entered into by the Company in a currency
other than the functional currency are recorded at the rates ruling
when the transactions occur. At each Statement of Financial
Position date, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at the Statement of Financial
Position date.
g. Inventory
Inventory is recorded at the lower of cost and net realisable
value.
h. Other Receivables
These assets are initially recognised at fair value and are
subsequently measured at amortised cost less any provision for
impairment.
i. Tangible fixed assets
Property and equipment are stated at cost less any subsequent
accumulated depreciation and impairment losses.
Right-of-use assets are measured at either:
- Their carrying amount as if IFRS 16 has been applied since
commencement, discounted using the lessee's incremental borrowing
rate at the date of initial application
- An amount equal to the lease liability, adjusted for any
prepaid or accrued lease payments
Where parts of an item of property and equipment have different
useful lives, they are accounted for as separate items of property
and equipment.
Depreciation is charged to the statement of comprehensive income
within cost of sales and administrative expenses on a straight-line
basis over the estimated useful lives of each part of an item of
property, plant and equipment. The estimated useful lives are as
follows:
-- Right of use asset - building life of the lease
-- Leasehold improvements 1 to 3 years
-- Decommissioning asset life of the lease
-- Fixtures, fittings and equipment 1 to 3 years
-- Motor vehicles 3 to 4 years
-- Demonstration equipment 5 years
-- Rental fleet 5 years
Expenses incurred in respect of the maintenance and repair of
property and equipment are charged against income when incurred.
Refurbishment and improvement expenditure, where the benefit is
expected to be long lasting, is capitalised as part of the
appropriate asset.
The useful economic lives of property, plant and equipment and
the carrying value of tangible fixed assets are assessed annually
and any impairment is charged to the statement of comprehensive
income.
j. Intangible Assets
Expenditure in establishing a patent is capitalised and written
off over its useful life.
Other intangible assets that are acquired by the Company are
stated at cost less accumulated amortisation and impairment
losses.
Amortisation of intangible assets is charged using the
straight-line method to administrative expenses over the following
period:
-- Development costs 5 years
-- Patents 20 years
Useful lives are based on the management's estimates of the
period that the assets will generate revenue, which are
periodically reviewed for continued appropriateness and any
impairment is charged to the statement of comprehensive income.
k. Impairment testing of intangible assets and property, plant
and equipment
At each statement of financial position date, the carrying
amounts of the assets are reviewed to determine whether there is
any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment
loss (if any). In assessing whether an impairment is required, the
carrying value of the asset is compared with its recoverable
amount. The recoverable amount is the higher of the fair value less
costs of disposal (FVLCD) and value in use (VIU).
l. Lease liabilities
Measurement and recognition of leases as lessee
At lease commencement date, a right of use and lease liability
are recognised on the Statement of Financial Position. The right of
use asset is measured at cost, which comprises the initial
measurement of the lease liability, any initial direct costs
incurred, an estimate of costs to dismantle and remove the asset at
the end of the lease term and any lease payments made in advance of
the lease commencement date.
Lease payments included in the measurement of the lease
liability are made up of fixed payments (including in substance
fixed), variable payments based on an index or rate, amounts
expected to be payable under a residual value guarantee and
payments arising from options reasonably certain to be
exercised.
Subsequent to initial measurement, the liability will be reduced
for payments made and increased for interest. It is remeasured to
reflect any reassessment or modification, or if there are changes
in in-substance payments.
When the lease liability is remeasured, the corresponding
adjustment is reflected in the right of use asset, or profit and
loss if the right of use asset is already reduced to zero.
Short term leases and low value assets have been accounted for
using the practical expedients set out in IFRS 16 and the payments
are recognised as an expense in profit or loss on a straight-line
basis over the lease term.
m. Financial Instruments
Financial instruments are measured on initial recognition at
fair value, plus, in the case of financial instruments other than
those classified as fair value through profit or loss ("FVPL"),
directly attributable transaction costs. Financial instruments are
recognized when the Company becomes a party to the contracts that
give rise to them and are classified as amortized cost, fair value
through profit or loss or fair value through other comprehensive
income, as appropriate. The Company considers whether a contract
contains an embedded derivative when the entity first becomes a
party to it. The embedded derivatives are separated from the host
contract if the host contract is not measured at fair value through
profit or loss and when the economic characteristics and risks are
not closely related to those of the host contract. Reassessment
only occurs if there is a change in the terms of the contract that
significantly modifies the cash flows that would otherwise be
required.
In the periods presented the Group does not have any financial
assets categorised as FVPL or FVOCI.
Financial assets at amortized cost
A financial asset is measured at amortized cost if it is held
within a business model whose objective is to hold assets to
collect contractual cash flows and its contractual terms give rise
on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding, and is
not designated as FVPL. Financial assets classified as amortized
cost are measured subsequent to initial recognition at amortized
cost using the effective interest method. Cash, restricted cash,
trade receivables and certain other assets are classified as and
measured at amortized cost.
Financial liabilities
Financial liabilities are classified as measured at amortized
cost or FVTPL. A financial liability is classified as at FVTPL if
it is classified as held-for-trading, it is a derivative or it is
designated as such on initial recognition. Financial liabilities at
FVTPL are measured at fair value and net gains and losses,
including any interest expense, are recognized in profit or loss.
Other financial liabilities are subsequently measured at amortized
cost using the effective interest method. Gains and losses are
recognized in net earnings when the liabilities are derecognized as
well as through the amortization process. Borrowing liabilities are
classified as current liabilities unless the Company has an
unconditional right to defer settlement of the liability for at
least 12 months after the statement of financial position date.
Accounts payable and accrued liabilities and finance leases are
classified as and measured at amortized cost.
Impairment of financial assets
A loss allowance for expected credit losses is recognized in OCI
for financial assets measured at amortized cost. At each balance
sheet date, on a forward-looking basis, the Company assesses the
expected credit losses associated with its financial assets carried
at amortized cost. The impairment methodology applied depends on
whether there has been a significant increase in credit risk. The
expected credit losses are required to be measured through a loss
allowance at an amount equal to the 12-month expected credit losses
(expected credit losses that result from those default events on
the financial instrument that are possible within 12 months after
the reporting date) or full lifetime expected credit losses
(expected credit losses that result from all possible default
events over the life of the financial instrument). A loss allowance
for full lifetime expected credit losses is required for a
financial instrument if the credit risk of that financial
instrument has increased significantly since initial
recognition.
Derecognition of financial assets and liabilities
A financial asset is derecognized when either the rights to
receive cash flows from the asset have expired or the Company has
transferred its rights to receive cash flows from the asset or has
assumed an obligation to pay the received cash flows in full
without material delay to a third party. If neither the rights to
receive cash flows from the asset have expired nor the Company has
transferred its rights to receive cash flows from the asset, the
Company will assess whether it has relinquished control of the
asset or not. If the Company does not control the asset then
derecognition is appropriate. A financial liability is derecognized
when the associated obligation is discharged or cancelled or
expires. When an existing financial liability is replaced by
another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such
an exchange or modification is treated as the derecognition of the
original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognized in net
earnings.
n. Share-Based Payment Transactions
The fair value of options and warrants granted is recognised as
an employee expense with a corresponding increase in Other Reserve.
The fair value of the expense is estimated at grant date using
either the Black-Scholes option valuation model considering the
terms and conditions upon which they were granted or a Log normal
Monte Carlo stochastic model for market conditions. The expense
accrues from the grant date until the options and warrants have
unconditionally vested. Where vesting is dependent upon market or
non-market performance criteria the vesting period is estimated at
the grant date and, in the case of non-market performance criteria,
is revised annually. When an option or warrant is exercised the
balance is transferred to share capital with excess value going to
the premium account whereas those that lapse are transferred to
retained earnings. Where options or warrants are amended by the
introduction of new schemes and the absorption of earlier schemes
by agreement between the Company and the beneficiary the net
difference in valuation is charged to earnings in the appropriate
period.
o. Provisions
Provisions are recognised when the Company has a present
obligation as a result of a past event and it is probable that the
Company will be required to settle the obligation. Provisions are
measured at the present value of management's best estimate of the
expenditure required to settle the present obligation at the
Statement of Financial Position date and are discounted to present
value where the effect is material.
p. Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the statement of comprehensive
income except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable or recoverable on the
taxable income for the year, using tax rates enacted or
substantively enacted at the Statement of Financial Position date
together with any adjustment to tax payable in respect of previous
years.
Deferred tax assets are not recognised due to the uncertainty of
their recovery.
q. R&D Tax Credits
The Company's research and development activities allow it to
claim R&D tax credits from HMRC in respect of qualifying
expenditure; these credits are reflected in the statement of
comprehensive income in the taxation line depending on the nature
of the credit.
r. Pension Contributions
The Company operates a defined contribution pension scheme which
is open to all employees and makes monthly employer contributions
to the scheme in respect of employees who join the scheme. These
employer contributions are currently capped at 4% of the employee's
salary and are reflected in the statement of comprehensive income
in the period for which they are made.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
AND UNCERTAINTY
In the preparation of the financial statements, management makes
certain judgements and estimates that impact the financial
statements. While these judgements are continually reviewed, the
facts and circumstances underlying these judgements may change,
resulting in a change to the estimates that could impact the
results of the Company. In particular:
Significant management judgements:
The following are the judgements made by management in applying
the accounting policies of the Company that have the most
significant effect on the financial statements:
Customer contracts and revenue recognition
Customer contracts typically include the provision of
-- engineering, manufacturing, installation, commissioning, and
maintenance of standard and customised alkaline fuel cell systems
and integrated auxiliary equipment, and
-- access to or sale of technology.
These performance obligations are provided for as either
-- Lease contract, or
-- Sale contract
In accordance with IFRS 16 management defines a lease as "A
contract, or part of a contract, that conveys the right to use an
identified asset for a period of time in exchange for
consideration". For such a contract to exist the user of the asset
needs to have the right to:
-- Obtain substantially all the economic benefits from the use of the asset.
-- The right to direct the use of the asset.
All other contracts, or part of a contract, are treated as sale
contracts.
Sales contracts are analysed in accordance with the 5-step
principle laid out by IFRS 15 and management distinguish
between
-- Standard products,
-- Customised products, and
-- Services.
The distinction between standard and customised products arises
from whether the products and auxiliary components up to the point
of customer handover have alternative uses. Customised contracts by
their nature do not create an asset with an alternative use as they
are customised to the customers' requirements which cannot be
easily converted for use on another project.
Customer agreements can be complex, involve multiple legal
documents and have a duration covering multiple accounting periods
including different performance obligations and payment terms
designed to manage cash flow rather than the underlying arm's
length transaction price. Management use judgement to identify the
specific performance obligations and allocate the total expected
revenue to the identified performance obligations. These judgements
are made based on the interpretation of key clauses and conditions
within each customer contract. Revenue is recognised when the
performance obligation has been met. For standard products the
performance obligations are assumed to be met when the customer
takes delivery usually evidenced by either a factory or site
acceptance test depending upon the agreed delivery terms. For
customised products management consider that revenue can be
recognised over time due to their status as custom builds. In
accounting for their revenue under this method, management must
take a view of the total costs required for each performance
obligation together with the actual spend already recognised in
cost of sales to be able to recognise an equivalent proportion of
the revenue for that performance obligation. As this relates to
expense not yet incurred, the projections are largely based on
budgeted costs or quotes for costs. Management view this as a much
more reliable measure of progress towards completion of the
performance obligation than the output method as, despite
contracting with milestone payments, these are not reliable
measures of progress or value to the customer but instead have been
designed to aid cash flow.
Project reviews covering cost forecasts and technical progress
are monitored periodically to ensure that any potential losses are
recognised immediately in the accounts in accordance with IAS
37.
Income Taxes and Withholding Taxes
The Company believes that its receivables for tax recoverable
are adequate for all open audit years based on its assessment of
many factors, including experience and interpretations of tax law.
This assessment relies on estimates and assumptions and may involve
a series of complex judgements about future events. To the extent
that the final tax outcome of these matters is different from the
amounts recorded, such differences will impact income tax expense
in the period in which such determination is made.
Capitalisation of Development Expenditure
The Company uses the criteria of IAS 38 to determine whether
development expenditure should be capitalised. Management identify
separately non-recurring engineering, design costs and prototype
costs incurred to develop demonstration units used in marketing
activities and customer trials. Management believe that the
Development Expenditure will continue to support marketing and
customer trials for the foreseeable future. This assessment relies
upon judgements about future customer behaviour taking in to
account the feedback received from prospective customers and future
product improvements which influence the economic useful life and
residual value of said assets. To the extent that customer demand
or competing products enter the market the economic useful life and
residual value of the Development Expenditure may change which will
impact depreciation and amortisation expenses for the period in
which such determination is made.
Estimation uncertainty:
Information about estimates and assumptions that may have the
most significant effect on recognition and measurement on assets,
liabilities and expenses is provided below.
Share-Based Payments
Certain employees (including Directors and senior Executives) of
the Company receive remuneration in the form of share-based payment
transactions, whereby employees render services as consideration
for equity instruments ("equity-settled transactions").
The fair value is determined using either the Black-Scholes
valuation model or a Log-normal Monte Carlo stochastic model for
market conditions. Both are appropriate considering the effects of
the vesting conditions, expected exercise period and the dividend
policy of the Company.
The cost of equity-settled transactions is accrued, together
with a corresponding increase in equity over the period the
directors expect the performance criteria will be fulfilled. For
market performance criteria this estimate is made at the time of
grant considering historic share price performance and volatility.
For non-market performance criteria an estimate is made at the time
of grant and reviewed annually thereafter considering progress on
the operational objectives set, plans and budgets.
Expected volatility has been based on the 3.5-year historical
volatility of share price. Vesting requirements are three years for
the exercise of warrants and options, except for 500,000 options
granted which vest in two years. Certain options granted to
Directors are also subject to performance conditions described in
note 18.
Decommissioning Provision
The Company has set-up a decommissioning provision for the
removal of the plant and equipment installed at the Stade site in
Germany, the cost of which is based on estimates. Various scenarios
have been considered which estimate the range of costs to be from
GBP 35,000 to GBP 301,000 dependent upon agreements reached with
lessor.
4. SEGMENTAL ANALYSIS
Operating segments are determined by the chief operating
decision maker based on information used to allocate the Company's
resources. The information as presented to internal management is
consistent with the statement of comprehensive income. It has been
determined that there is one operating segment, the development of
fuel cells. In the year to 31 October 2020, the Company operated
mainly in the United Kingdom and in Germany. All non-current assets
are located in the United Kingdom.
5. OPERATING LOSS
This has been stated after:
Year ended Year ended
31 October 31 October
2020 2019
GBP GBP
--------------------------------------------------- ----------- -----------
Amortisation/Impairment of intangible assets 108,014 35,338
Depreciation of right of use asset 114,233 114,233
Depreciation of property and equipment 143,758 88,950
Depreciation of decommissioning asset 31,365 31,364
R&D expenditure 1,553,519 1,808,080
Equity-settled share-based payment expense 135,593 (543,741)
Foreign exchange differences (23,046) 27,068
Auditor's remuneration - audit 49,172 56,500
Auditor's remuneration - corporation tax services 7,450 6,700
Auditor's remuneration - R&D tax credit services 25,000 25,000
-------------------------------------------------------- ----------- -----------
6. STAFF NUMBERS AND COSTS, INCLUDING DIRECTORS
The average numbers of employees in the year were
Year ended Year ended
31 October 31 October
2020 2019
Number Number
----------------------------------- ----------- -----------
Support, operations and technical 24 20
Administration 6 6
---------------------------------------- ----------- -----------
30 26
----------------------------------- ----------- -----------
The aggregate payroll costs for these persons were:
GBP GBP
------------------------------------------------------ ---------- ----------
Wages and salaries (including Directors' emoluments) 1,901,966 1,628,330
Social security 192,706 183,353
Employer's pension contributions 72,084 40,606
Equity-settled share-based payment expense 135,593 (543,741)
----------------------------------------------------------- ---------- ----------
2,302,349 1,308,548
------------------------------------------------------ ---------- ----------
7. DIRECTORS' REMUNERATION
Year ended Year ended
31 October 31 October
2020 2019
GBP GBP
-------------------------------------------- ----------- -----------
Wages and salaries 963,559 645,876
Social security 104,667 81,177
Equity-settled share-based payment expense 89,943 19,663
Other compensation 67,717 61,066
Company pension contributions 36,433 11,938
------------------------------------------------- ----------- -----------
1,262,319 819,720
-------------------------------------------- ----------- -----------
The remuneration, details of share options and interests in the
Company's shares of each Director are shown in the Directors'
Report.
8. NET FINANCe COST
Year ended Year ended
31 October 31 October
2020 2019
GBP GBP
-------------------------- ----------- -----------
Lease Interest 12,072 16,955
Bank charges 172,503 40,023
------------------------------- ----------- -----------
Finance cost 184,575 56,978
Bank interest receivable (6,168) (4,173)
------------------------------- ----------- -----------
178,407 52,805
-------------------------- ----------- -----------
9. TAXATION
Year ended Year ended
31 October 31 October
2020 2019
Recognised in the statement of comprehensive income GBP GBP
------------------------------------------------------------------- ------------ ------------
R&D tax credit - current year (518,099) (602,995)
R&D tax credit - prior year (41,528) (165,533)
------------------------------------------------------------------------ ------------ ------------
Total tax credit (559,627) (768,528)
Reconciliation of effective tax rates
Loss before tax (4,775,519) (3,619,368)
------------------------------------------------------------------------ ------------ ------------
Tax using the domestic rate of corporation tax of 19% (2019: 19%) (907,349) (687,680)
------------------------------------------------------------------------ ------------ ------------
Effect of:
R&D tax credit - prior year (41,528) (165,533)
Timing differences not deductible for tax purposes 29,792 (14,929)
R&D allowance (383,719) (446,596)
Tax credit on losses surrendered (518,099) (602,995)
Depreciation in excess of capital allowances 27,314 16,957
Losses surrendered for research and development 678,888 790,131
Unutilised losses carried forward 555,074 342,117
Total tax credit (559,627) (768,528)
------------------------------------------------------------------------ ------------ ------------
Potential deferred tax assets have not been recognised but are
set out below
Year ended Year ended
31 October 31 October
2020 2019
GBP000s GBP000s
------------------------------ ----------- -----------
Share based payments 30 -
Losses carried forward 5,879 4,747
----------------------------------- ----------- -----------
Potential deferred tax asset 5,909 4,747
----------------------------------- ----------- -----------
The deferred tax assets have not been recognised as the
Directors consider that it is unlikely that they will be realised
in the foreseeable future. The potential deferred tax asset are
calculated using the estimated UK tax rate of 19% (2019: 17%).
10. LOSS PER SHARE
The calculation of the basic loss per share is based upon the
net loss after tax attributable to ordinary Shareholders of GBP
4,224,992 (2019: loss of GBP2,850,840) and a weighted average
number of shares in issue for the year.
Year ended Year ended
31 October 31 October
2020 2019
-------------------------------------------- ------------- -------------
Basic loss per share (pence) (0.80)p (0.68)p
Diluted loss per share (pence) (0.80)p (0.68)p
Loss attributable to equity Shareholders GBP4,224,992 GBP2,850,840
-------------------------------------------- ------------- -------------
Weighted average number of shares in issue 528,865,765 418,024,570
------------------------------------------------- ------------- -------------
Diluted earnings per share
As set out in note 18, there are share options and warrants
outstanding as at 31 October 2020 which, if exercised, would
increase the number of shares in issue. Given the losses for the
year, there is no dilution of losses per share in the year ended 31
October 2020 nor the previous year.
11. INTANGIBLE ASSETS
Development Patents Commercial Intangible
costs rights assets
GBP GBP GBP GBP
--------------------- ------------ -------- ----------- -----------
Cost
1 November 2018 - 680,113 - 680,113
Retirements - - - -
Additions 149,460 49,283 - 198,743
31 October 2019 149,460 729,396 - 878,856
Retirements - - - -
Additions 79,583 70,309 121,350 271,242
----------------------- ------------ -------- ----------- -----------
31 October 2020 229,043 799,705 121,350 1,150,098
----------------------- ------------ -------- ----------- -----------
Amortisation
1 November 2018 - 237,427 - 237,427
Retirements - - - -
Charge for the year - 35,388 - 35,388
----------------------- ------------ -------- ----------- -----------
31 October 2019 - 272,815 - 272,815
Retirements - - -
Charge for the year 28,138 70,775 9,101 108,014
----------------------- ------------ -------- ----------- -----------
31 October 2020 28,138 343,590 9,101 380,829
----------------------- ------------ -------- ----------- -----------
Net book value 31
October 2019 149,460 456,581 - 606,041
----------------------- ------------ -------- ----------- -----------
Net book value 31
October 2020 200,905 456,115 112,249 769,269
----------------------- ------------ -------- ----------- -----------
The commercial rights include the global preferential rights to
integrate the HiiRoc plasma-based technology which were acquired by
an initial payment in shares of GBP 100,000 and future payments in
kind through the provision of technical support.
12. RIGHT of uSE ASSETS
Buildings
GBP
1 November 2018 -
Adoption of IFRS 16 475,971
Additions -
Disposals -
--------------------- ----------
1 November 2019 475,971
Additions -
Disposals -
--------------------- ----------
31 October 2020 475,971
--------------------- ----------
Depreciation
1 November 2018 -
Charge for the year 114,233
Disposals -
--------------------- ----------
1 November 2019 114,233
Charge for the year 114,233
Disposals -
31 October 2020 228,466
--------------------- ----------
Net Book Value
31 October 2019 361,738
--------------------- ----------
31 October 2020 247,505
--------------------- ----------
13. TANGIBLE FIXED ASSETS
Leasehold Decommissioning Fixtures, Motor Demonstration Rental Total
improvements Asset fittings vehicles equipment asset
and equipment
GBP GBP GBP GBP GBP GBP GBP
-------------- -------------- ---------------- -------------- ---------- -------------- -------- ----------
Cost
1 November
2018 337,462 301,172 1,297,742 17,994 - - 1,954,370
Additions - - 30,849 - 193,404 - 224,253
Disposals (115,950) - (3,800) - - - (119,750)
1 November
2019 221,512 301,172 1,324,791 17,994 193,404 - 2,058,873
Additions - - 161,697 - 133,571 423,138 718,406
Disposals - - - - - -
-------------- -------------- ---------------- -------------- ---------- -------------- -------- ----------
31 October
2020 221,512 301,172 1,486,488 17,994 326,975 423,138 2,777,279
-------------- -------------- ---------------- -------------- ---------- -------------- -------- ----------
Depreciation
1 November
2018 337,462 170,486 1,135,432 17,994 - - 1,661,374
Charge for
the year - 31,364 88,950 - - - 120,314
Disposals (115,950) - (3,800) - - - (119,750)
1 November
2019 221,512 201,850 1,220,582 17,994 - - 1,661,938
Charge for
the year - 31,365 89,801 - 53,957 - 175,123
Disposals - - - - - - -
-------------- -------------- ---------------- -------------- ---------- -------------- -------- ----------
31 October
2020 221,512 233,215 1,310,383 17,994 53,957 - 1,837,061
-------------- -------------- ---------------- -------------- ---------- -------------- -------- ----------
Net Book
Value
1 November
2019 - 99,322 104,209 - 193,404 - 396,935
-------------- -------------- ---------------- -------------- ---------- -------------- -------- ----------
31 October
2020 - 67,957 176,105 - 273,018 423,138 940,218
-------------- -------------- ---------------- -------------- ---------- -------------- -------- ----------
The Company has set-up a decommissioning asset for the removal
of the plant and equipment installed at the Stade site in Germany
and for dilapidations associated with the leasehold premises at
Dunsfold in the UK, the cost of which is based on estimates. No
decision has been taken about the date when the plant will be
decommissioned.
Minimum lease payments receivable on rental assets are GBP
200,000 (2019: GBP nil) of which GBP 150,000 mature within twelve
months and GBP 50,000 between one and two years.
14. INVESTMENT
The previously held investment in the unlisted share capital of
Waste2Tricity Ltd (a registered company in England & Wales) was
sold on 12 March 2019 for GBP20,000. Simultaneously, the licence
agreements with Waste2Tricity Limited and Waste2Tricity
International (Thailand) Limited were terminated and GBP 80,000
compensation was received in the current period. The investment in
Waste2Tricity was fully provided and due to the lack of
overwhelming evidence that the financial position had improved the
recovery of the provision has been recognized when proceeds were
received.
15. INVENTORY
Year ended Year ended
31 October 31 October
2020 2019
GBP GBP
----------- ----------- -----------
Inventory 249,370 95,423
---------------- ----------- -----------
16. RECEIVABLES
Year ended Year ended
31 October 31 October
2020 2019
GBP GBP
---------------------------- ---- ---- ---- ---- ---- ----------- -----------
Current:
Accounts receivable 60,000 13,941
R&D tax credits receivable 518,099 602,995
EU grants receivable 106,642 106,642
Other receivables 204,367 136,068
Prepayments 154,772 292,352
---------------------------------------------------------- ----------- -----------
1,043,880 1,151,998
----------------------------------------------------- ----------- -----------
There is no significant difference between the fair value of the
receivables and the values stated above.
17. CASH AND CASH EQUIVALENTS
Year ended Year ended
31 October 31 October
2020 2019
GBP GBP
--------------- ----------- -----------
Cash at bank 286,578 718,057
Bank deposits 31,014,889 609,878
-------------------- ----------- -----------
31,301,467 1,327,935
--------------- ----------- -----------
Cash at bank and bank deposits consist of cash. There is no
material foreign exchange movement in respect of cash and cash
equivalents.
Restricted cash, not included in cash and cash equivalents, is
EUR300,000 held in escrow to support a bank guarantee in favour of
Air Products GmbH relating to contractual obligations by the
Company in relation to the Stade site in Germany.
18. ISSUED SHARE CAPITAL
Ordinary Share premium Total
shares
Number GBP GBP GBP
----------------------- ---- --- ------------ ---------------------------- -------------- ------------
Issue of shares 18
November 2019 2,600,000 2,600 517,400 520,000
Issue of shares 20
January 2020 5,882,353 5,882 994,118 1,000,000
Issue of shares 22
January 2020 5,882,353 5,882 994,118 1,000,000
Issue of shares 31
January 2020 526,316 526 99,474 100,000
Issue of shares 13
March 2020 483,332 483 38,184 38,667
Issue of shares 23
March 2020 14,000,000 14,000 1,386,000 1,400,000
Exercise of options
9 June 2020 550,000 550 113,575 114,125
Exercise of options
9 June 2020 37,500 38 5,737 5,775
Exercise of options
11 June 2020 40,000 40 6,120 6,160
Exercise of options
25 June 2020 500,000 500 103,250 103,750
Issue of shares 3
July 2020 24,364,875 24,365 3,874,015 3,898,380
Issue of shares 6
July 2020 71,107,125 71,107 11,306,033 11,377,140
Issue of shares 15
July 2020 625,000 625 99,375 100,000
Issue of shares 20
July 2020 101,403,000 101,403 16,123,077 16,224,480
Exercise of options
29 September 2020 16,666 17 1,450 1,467
Cost of shares issued (1,633,505) (1,633,505)
------------------------ ------- ------------ ---------------------------- -------------- ------------
Issued share capital 228,018,520 228,018 34,028,421 34,256,439
31 October 2019 447,987,790 447,988 47,389,424 47,837,412
31 October
2020 676,006,310 676,006 81,417,845 82,093,851
------------------------------- ---------------- ---------------------------- -------------- ------------
The issue of shares on 31 January 2020 were part payment for
certain commercial rights received in exchange for funding HiiRoc
scaling up programme. The total consideration was GBP 100,000 in
shares plus future technical support up to GBP 300,000.
All issued shares are fully paid. The Company considers its
capital and reserves attributable to equity Shareholders to be the
Company's capital. In managing its capital, the Company's primary
long-term objective is to provide a return for its equity
Shareholders through capital growth. Going forward the Company will
seek to maintain a gearing ratio that balances risks and returns at
an acceptable level and to maintain a sufficient funding base to
enable the Company to meet its working capital needs. The Company's
commercial activities are at an early stage and management
considers that no useful target debt to equity gearing ratio can be
identified at this time.
Details of the Company's capital are disclosed in the statement
of changes in equity.
There have been no other significant changes to the Company's
management objectives, policies and processes in the year nor has
there been any change in what the Company considers to be
capital.
19. Share BASED PAYMENTS
Employee Share Option Plan
The establishment of the Employee Share Option Plan was approved
by the Board on 1 August 2018 and amended on 10 October 2018. The
Plan is designed to attract, retain and motivate employees. Under
the Plan, participants can be granted options which vest
unconditionally or conditioned upon achieving certain performance
targets. Participation in the Plan is solely at the Board's
discretion and no employee has a contractual right to participate
in the Plan or to receive any guaranteed benefits.
Options are granted under the Plan for no consideration and
carry no dividend nor voting rights.
When exercisable, each option is convertible into one ordinary
share.
Set out below are summaries of options granted under the
Plan
Average exercise Number of options Average exercise Number of options
price per share price per share
option (GBP) option (GBP)
2020 2020 2019 2019
------------------------ ----------------- ------------------ ----------------- ------------------
1 November 2019 0.33 11,745,000 0.31 13,330,000
Granted during
the year 0.16 4,885,000 -
Exercised during
the year 0.17 (1,627,498) 0.03 (300,000)
Lapsed during
the year 0.30 (581,667) 0.24 (1,285,000)
------------------------ ----------------- ------------------ ----------------- ------------------
31 October 2020 0.30 14,420,835 0.33 11,745,000
------------------------ ----------------- ------------------ ----------------- ------------------
Vested and exercisable
at 31 October
2020 3,386,666
Share options outstanding at the end of the year have the
following expiry dates and exercise prices.
Grant date Expiry date Exercise price Share options Share options
(GBP)
2020 2019
----------------- ----------------- --------------- -------------- --------------
17 April 2009 17 April 2019 0.0313 - 90,000
13 April 2010 13 April 2020 0.24 - 75,000
7 July 2010 6 July 2020 0.2075 - 1,050,000
7 November 2012 7 November 2022 0.3575 170,000 170,000
2 December 2013 1 December 2023 0.34 135,000 135,000
14 April 2015 13 April 2025 0.41 150,000 150,000
17 July 2015 17 July 2025 0.51 6,000,000 6,000,000
10 September
2018 1 August 2024 0.088 658,335 1,575,000
15 October 2018 15 October 2024 0.16 2,500,000 2,500,000
31 December
2019 20 April 2030 0.1635 2,750,000 0
20 April 2020 20 April 2030 0.154 2,057,500 0
----------------- ----------------- --------------- -------------- --------------
14,420,835 11,745,000
The assessed fair value at grant date of options granted during
the year ended 31 October 2020 was
Option price Average Average Average Average Average Average Amount
(pence) grant expected risk-free dividend implied fair value expensed
date share volatility interest yield (per option per option in 2020
price (per annum) rate (per annum) life (pence) (GBP)
(pence) annum) (years)
---------------------- ------------ ------------- ----------- ------------ ------------ ------------ ----------
8.8 6.58 81.2% 0.80% 0% 1 2.2 15,500
15.4 14.9 99.6% 0.11% 0% 1.5 6.9 45,649
16.35 16.35 95,5% 0.54% 0% 2.0 8.1 74,443
---------------------- ------------ ------------- ----------- ------------ ------------ ------------ ----------
Total charge
for the year
(2019: GBP (549,227)) 135,593
Warrants
The Board has the discretion to award warrants from time to time
to third parties. Typically, warrants are granted and vest upon
certain performance targets. Grant of warrants is solely at the
Board's discretion.
Warrants are granted for no consideration and carry no dividend
nor voting rights.
When exercisable, each warrant is convertible into one ordinary
share.
Set out below are summaries of warrants granted under the
Plan
Average exercise Number of warrants Average exercise Number of warrants
price per warrant price per warrant
(GBP) (GBP)
2020 2020 2019 2019
------------------------ ------------------- ------------------- ------------------- -------------------
1 November 2019 0.14 5,793,800 0.15 4,643,800
Granted during
the year 0.20 4,500,000 0.05 3,000,000
Exercised during
the year
Lapsed during
the year 0.14 (5,793,800) 0.03 (1,450,000)
------------------------ ------------------- ------------------- ------------------- -------------------
31 October 2020 0.20 4,500,000 0.14 5,793,800
------------------------ ------------------- ------------------- ------------------- -------------------
Vested and exercisable -
at 31 October
2020
Warrants outstanding at the end of the year have the following
expiry dates and exercise prices.
Grant date Expiry date Exercise price Share options Share options
(GBP)
2020 2019
----------------- ----------------- --------------- -------------- --------------
13 April 2010 13 April 2020 0.24 - 2,793,800
24 June 2019 24 June 2021 0.048 - 3,000,000
19 October 2020 31 January 2021 0.185 1,500,000 -
19 October 2020 13 October 2021 0.195 1,000,000 -
19 October 2020 13 April 2022 0.21 1,000,000 -
19 October 2020 13 October 2022 0.23 1,000,000 -
4,500,000 5,793,800
The assessed fair value at grant date of warrants for the year
ended 31 October 2020 was nil (2019: GBP 5,486)
SAYE
No SAYE were granted and the scheme ended during the period. The
movements were
Average exercise Number of SAYE Average exercise Number of SAYE
price per SAYE price per SAYE
(GBP) (GBP)
2020 2020 2019 2019
------------------------ ----------------- --------------- ----------------- ---------------
1 November 2019 0.12 207,736 0.12 207,736
Granted during - -
the year
Exercised during - -
the year
Lapsed during
the year 0.12 (207,736) -
------------------------ ----------------- --------------- ----------------- ---------------
31 October 2020 0.12 207,736
------------------------ ----------------- --------------- ----------------- ---------------
Vested and exercisable -
at 31 October
2020
SAYE outstanding at the end of the year have the following
expiry dates and exercise prices.
Grant date Expiry date Exercise price Share options Share options
(GBP)
2020 2019
--------------- --------------- --------------- -------------- --------------
28 April 2016 28 April 2019 0.122 - 207,736
- 207,736
Share based payment charge
2020 2019
----------------------- -------- ----------
GBP GBP
Employee Share Option
Plan 135,593 (549,227)
Warrants - -
SAYE - 5,486
----------------------- -------- ----------
135,593 (543,741)
20. PAYABLES
Year ended Year ended
31 October 31 October
2020 2019
GBP GBP
---------------------- ----------- -----------
Current liabilities:
Trade payables 347,167 298,590
Advance payments 150,000 28,187
Other payables 199,261 182,096
Accruals 540,368 158,938
--------------------------- ----------- -----------
1,236,796 667,811
---------------------- ----------- -----------
21. LEASE LIABILITIES
Year ended Year ended
31 October 31 October
2020 2019
GBP GBP
Lease liabilities less than 12 months 113,431 113,431
Lease liabilities more than 12 months 146,368 259,799
--------------------------------------- ------------ ------------
259,799 373,230
--------------------------------------- ------------ ------------
22. PROVISIONS
2020 2019
Decommissioning Decommissioning
provision provision
GBP GBP
-------------------------- ---------------- ----------------
Non-current liabilities:
1 November 301,172 301,172
Addition - -
Utilisation - -
-------------------------- ---------------- ----------------
31 October 301,172 301,172
------------------------------- ---------------- ----------------
The Company has set-up a decommissioning provision associated
with a commitment to remove the plant and equipment installed at
the Stade site in Germany at a future date.
23. FINANCIAL INSTRUMENTS
In common with other businesses, the Company is exposed to risks
that arise from its use of financial instruments. This note
describes the Company's objectives, policies and processes for
managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented
throughout these financial statements.
Principal Financial Instruments
The principal financial instruments used by the Company, from
which financial instrument risk arises, are as follows:
Year ended Year ended
31 October 31 October
2020 2019
GBP GBP
---------------------------------------------------- ----------- -----------
Financial instruments held at amortised cost:
Cash and cash equivalents 31,014,889 1,327,935
Receivables 1,043,880 1,151,998
Total financial assets held at amortised cost 32,058,769 2,479,933
Other payables 1,496,595 1,041,041
Total financial liabilities held at amortised cost 1,496,595 1,041,041
--------------------------------------------------------- ----------- -----------
Financial instruments that are measured subsequent to initial
recognition at fair value are grouped into three levels based on
the degree to which the fair value is observable as defined by IFRS
7:
-- Level 1 fair value measurements are those derived from
unadjusted quoted prices in active markets for identical assets and
liabilities.
-- Level 2 fair value measurements are those derived from
inputs, other than quoted prices included within Level 1, that are
observable either directly (i.e. as prices) or indirectly (i.e.
derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data.
All financial instruments are Level 1 and none have been
transferred between Levels during the year.
General Objectives, Policies and Processes
The Board has overall responsibility for the determination of
the Company's risk management objectives and policies and, while
retaining ultimate responsibility for them, it has delegated part
of the authority for designing and operating processes that ensure
the effective implementation of the objectives and policies to the
Company's finance team. The Board receives reports from the
financial team through which it reviews the effectiveness of the
processes put in place and the appropriateness of the objectives
and policies it sets.
The overall objective of the Board is to set policies that seek
to reduce ongoing risk as far as possible without unduly affecting
the Company's competitiveness and flexibility. Further details
regarding these policies are set out below.
Credit Risk
Credit risk arises principally from the Company's other
receivables and cash and cash equivalents. It is the risk that the
counterparty fails to discharge its obligation in respect of the
instrument. The maximum exposure to credit risk equals the carrying
value of these items in the financial statements as shown
below:
Year ended Year ended
31 October 31 October
2020 2019
GBP GBP
--------------------------- ----------- -----------
Receivables 1,043,880 1,151,998
Cash and cash equivalents 31,014,889 1,327,935
-------------------------------- ----------- -----------
The Company's principal other receivables arose from: a) VAT
receivable from UK and German tax authorities b) an R&D tax
credit c) grant funding receivable from the EU. Credit risk with
cash and cash equivalents is reduced by placing funds with banks
with acceptable credit ratings and government support where
applicable and on term deposits with a range of maturity dates. At
the year end, most cash were temporarily held on short-term
deposit.
Liquidity Risk
Liquidity risk arises from the Company's management of working
capital and the amount of funding required for the development
programme. It is the risk that the Company will encounter
difficulty in meeting its financial obligations as they fall due.
The Company's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due.
The principal liabilities of the Company are trade and other
payables in respect of the ongoing product development programme.
Trade payables are all payable within two months. The Board
receives cash flow projections on a regular basis as well as
information on cash balances.
Interest Rate Risk
The Company is exposed to interest rate risk in respect of
surplus funds held on deposit and, where appropriate, uses fixed
interest term deposits to mitigate this risk.
Fair Value of Financial Liabilities
Year ended Year ended
31 October 31 October
2020 2019
GBP GBP
-------------------------------------- ----------- -----------
Trade and other payables 1,236,796 667,811
Lease liabilities less than one year 113,431 113,431
Lease liabilities more than one year 146,368 259,799
------------------------------------------- ----------- -----------
1,496,595 1,041,041
There is no difference between the fair value and book value of
trade and other payables and provisions.
The Company does not enter into forward exchange contracts or
otherwise hedge its potential foreign exchange exposure. The Board
monitors and reviews its policies in respect of currency risk on a
regular basis.
24. CAPITAL COMMITMENTS AND OTHER OBLIGATIONS
The Company had no capital commitments outstanding at 31 October
2020 (2019: GBPnil).
The aggregate amount of the transaction price allocated to
contracts that are fully unsatisfied as at 31 October 2020 was GBP
354,000 (2019: GBP nil). The Company expects to recognise these
revenues within the next twelve months.
25. FINANCING FACILITIES
On 11 April 2019, a GBP4 million equity financing facility was
signed for a period of 36 months from the signing date with a
further six-month period, post the expiry date of the facility, to
repay any outstanding amounts.
26. EVENTS AFTER THE REPORTING PERIOD
After the reporting date
-- the financing facility was terminated by mutual agreement. No
drawdowns had been made on the facility, and
-- the vesting conditions of Adam Bond's share options were
reviewed and amended by the Remuneration committee.
o The target prices were adjusted to 42.5p, 64p and 85p
(respectively) to take into account the change in the share capital
since July 2015.
o A retention clause was added to these options such that a
specified number of shares should not be sold between the date of
exercise and the first anniversary of these revisions. This holding
requirement is reduced by the number of shares necessary to meet
the tax liability arising from the exercise of the options.
o The operational performance conditions for all but one of the
original targets have either been achieved, or a comparable measure
achieved. The exercise price of these options has been adjusted
from 51p to 22p, in line with changes in the share capital since
July 2015.
27. ULTIMATE CONTROLLING PARTY
There is no ultimate controlling party.
[1] Taken from Hydrogen Council/McKinsey report, 'A perspective
on Hydrogen Investment, Deployment and Cost Competitiveness'
(February 2021)
[2] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7498239/
[3] Taken from
https://about.bnef.com/electric-vehicle-outlook/
[4] Taken from
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/882196/vehicle-licensing-statistics-2019.pdf
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