TIDMAFC
RNS Number : 7689C
AFC Energy Plc
23 June 2021
The information contained within this announcement is deemed by
the company to constitute inside information as stipulated under
the EU market abuse regulation (596/2014).
23 June 2021
AFC Energy plc
("AFC" or the "Company")
Interim Results
AFC Energy (AIM: AFC), a leading provider of hydrogen power
generation technologies, is pleased to announce its interim results
for the half year ended 30 April 2021. Highlights of those results
are as follows.
Commercial and Financial Highlights
-- Three new world class partners, strengthening global route to market:
o ABB : high power EV charging infrastructure / data
centres;
o Altaaqa Alternative Solutions : zero emission power solutions
in Saudi Arabia and the Middle East & North Africa regions
(MENA);
o Mace : hydrogen fuelled generators for construction sites.
-- Current book of over 50 qualified fuel cell deployment
enquiries - the majority of which represent multiple order
potential.
-- Revenue of GBP0.15 million (HY 2020: GBPnil) from initial
recognition of Extreme E commercial revenue following completion of
first race; under IFRS, additional Extreme E revenue to be
recognised on completion of remaining races.
-- Strategic investment from ABB and Dutco cornerstoning an
oversubscribed fundraise of GBP36m in April.
-- Stronger half year cash balance of GBP61.6m (HY 2020:
GBP2.8m) with investment in product development and increased
headcount resulting in an increased loss for the period of GBP3.3m
(HY 2020: GBP1.8m).
Operating Highlights
-- Successfully delivered first commercial fuel cell power system to Extreme E.
-- BK Gulf appointed as mass producer of fuel cell system balance of plant in Dubai.
-- Executive team strengthened following recruitment of Dr David
Harvey (Chief Technology Officer), Dr Mike Rendall (Chief Engineer
and Product Officer) and Mark Bailey (Chief Commercial Officer) in
2021.
Technology Highlights
-- Prototype design of high-density "S" series fuel cell stack completed.
-- World class testing lab for high density AEM fuel cell in
operation following launch in February 2021.
Outlook
-- AFC Energy expects to announce multiple new system orders in
the second half of this calendar year.
-- On track to complete design and system architecture of the
integrated ABB / AFC Energy high power EV charger unit by the end
of June.
-- On track to supply first fuel cell system to ABB site in Q3
for physical integration with high power EV charger.
-- Following COVID related delay, AFC Energy fuel cell system
now on track for dispatch to ACCIONA in Q4 2021.
-- Multiple new product releases expected for second half of this calendar year.
-- Juelich fuel cell system for German micro grid on schedule for completion in Q4 2021.
-- Receipt of first commercial scale ammonia cracker for system
integration next week that significantly advances competitive
upstream fuelling strategy.
-- Strategic collaboration in maritime sector under discussion.
-- Assembly and commissioning facility at Dunsfold Park opens
this week, incorporating office space for new engineering team.
-- Recruitment of new product engineers, manufacturing and field
technicians, fuel cell and polymer scientists, and commercial staff
expected to continue with on average of two new starters per
week.
-- Commencement of scale up of manufacturing process for
AlkaMem(R) anion exchange membrane ("AEM").
-- Preparation for delivery of full prototype high power dense
AEM fuel cell by calendar year end.
Adam Bond, Chief Executive of AFC Energy, said:
"AFC Energy continues to make great strides as a leading clean
energy business, now with the successful deployment of our hydrogen
power technology, the signing of international deployment
partnerships and the recruitment of a world class Executive Team
all essential elements in positioning ourselves for future
growth.
Our oversubscribed fundraising puts the business in a robust
financial position, allowing us to increase investment during the
remainder of the year in the people, technology and product
development needed to grow our order book and commensurate
revenue.
With carbon emissions now returning to pre-pandemic levels and
the UN stating that 2021 is a 'make or break year' in the fight
against climate change, the need and demand for our emissions-free
energy solutions has never been greater. In the year of COP 26, our
growth plans are central to the ongoing decarbonisation of key
global industries."
-S-
For further information:
AFC ENERGY AND ADVISORS
AFC Energy plc
Adam Bond (Chief Executive Officer) +44 (0) 14 8327 6726
Iain Thomson (Head of Communications and investors@afcenergy.com
Stakeholder Management)
WH Ireland - Nominated Adviser and Joint
Broker
M ike Coe (Corporate Finance)
Jasper Berry (Corporate Broking) +44 (0) 202 220 1666
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
FTI Consulting - Financial PR Advisors +44 (0) 203 727 1000
Sara Powell / Ben Brewerton afcenergy@fticonsulting.com
About AFC Energy plc
AFC Energy plc is a leading provider of hydrogen fuel cell power
systems to generate clean energy in support of the global energy
transition.
Based in the UK, the Company's scalable systems provide
off-grid, zero emission power that are already being deployed for
rapid electric vehicle charging and the replacement of diesel
generators for temporary power applications.
AFC Energy is also working with global partners in the
deployment of products for the Maritime, Ports, Data Centres and
Rail industries, emphasising the central role of its technology in
the decarbonisation of global industry.
Operational review
AFC Energy continues to make excellent progress in developing
and implementing its strategy for zero-emission hydrogen power
solutions to meet the world's energy challenges. Despite the
unprecedent social upheaval caused by the COVID-19 pandemic, we
have been able to welcome several new strategic partners to
accelerate the deployment of our systems across a host of global
industries - one of which elected to invest into our business to
highlight its commitment to our company, technology and target
markets. At the same time, our work in powering Extreme E, the
all-electric off-road race series, has shown the effectiveness of
our technology in operating in some of the world's harshest
climates.
The need for sustainable power generators such as ours to
support industrial decarbonisation and address climate change is
greater than ever. Whilst public demand to reduce carbon emissions
and improve air quality is driving further public and private
investment into the energy transition, any emission reduction as a
result of pandemic lockdowns was temporary - with global CO 2
emissions rising again as economic activity recovers.
In this supportive environment, raising additional equity to
accelerate our progress made absolute sense and we were delighted
to complete a significantly oversubscribed fundraising in April
which raised gross proceeds of GBP36m. This creates a robust cash
position of GBP61.6m (HY 2020: GBP2.8m) at half-year end, giving
the necessary financial headroom to accelerate our growth plans to
build on the progress we made in the first half of the year.
Growing our partnership base for future sales and
distribution
Our commercial strategy is predicated on entering world class
partnerships and collaborations with key global companies to extend
our footprint and to generate significant future sales. Our route
to market is largely through these strategic collaborations, which
have the potential to secure large multi-system sales to meet their
customer demands for zero emission power generation.
The work we have completed in recent months in securing our
initial distribution partners is key to the successful execution of
our strategy and to date, we remain confident that this is the
correct strategy to be taking forward. This includes working with
these partners to further grow our commercial pipeline and in the
case of ABB and ACCIONA, we will deploy systems to their sites in
Europe this year to showcase the operability of our fuel cell
system.
The Directors are working with advisors and partners to
establish the best means by which the Company will be able to
disclose details of its order book and its commercial pipeline in
order to provide confidence to the market of the Company's
prospects. Working through distribution partners requires us to be
in full alignment with the deployment potential across each
distribution channel and whilst many of these discussions remain
confidential, we can confirm that at this time, we have a
development book of more than 50 discrete, qualified deployment
enquiries, many with multi-system order potential. The value of
this book could be significant pending the quantum of final system
orders; however, providing a value against this opportunity runs
the risk of materially underestimating, or overestimating, the
actual size of our pipeline. We believe however that the number of
live opportunities currently under development objectively
demonstrates the scale of opportunity which AFC Energy is presently
generating through its distribution partners.
From this book, we expect to announce further system deployments
in the second half of this calendar year.
RAPID EV CHARGING AND DATA CENTRES: ABB
The International Energy Agency's (IEA) recently published
Global EV Outlook shows that whilst only 10m electric vehicles were
on the road at the end of 2020, this could rise to anywhere between
145 million and 230 million worldwide by 2030 [1] . This
exponential increase will put the existing grid under huge strain;
we believe off-grid solutions will be required to support
inevitable grid reinforcement to meet charging demand.
This drove our decision in December 2020 to enter into a global
partnership with ABB, who are world leaders in electrification and
high power EV charging.. This partnership gives ABB access to AFC
Energy's leading fuel cell technologies for the rapid charging of
electric vehicles, whilst providing AFC Energy with access to a
global distribution network which has already sold rapid EV
charging equipment in over 80 countries.
We have successfully worked with ABB over the past six months to
design the requisite architecture that will enable the integration
of their charge-point infrastructure with our fuel cells to provide
an off-grid solution where the grid is constrained (or absent), and
we remain on track to commence operation of the first integrated
product in the second half of 2021. AFC Energy and ABB have also
commenced work in developing a marketing strategy for the product
to ABB customers worldwide.
The success of this work led to our partnership being
strengthened and extended with ABB in April. ABB made a strategic
equity investment into AFC Energy as part of our equity fundraise,
whilst also entering into a new Development Agreement for the
burgeoning global data centre market. ABB already works with many
of the world's largest hyper data centre owners in their quest to
achieve Net Zero emissions.
The scale of the hyperscale data centre market is enormous. Both
Microsoft and Google have already signalled their intention to move
beyond diesel generators in supplying back-up power for its
millions of servers, with the former committed to ending its
dependency on using diesel fuel in back-up generators by 2030,
along with a broader promise to be carbon negative by that point.
It is increasingly clear that rival fuel cell technologies such as
PEM, which use high cost hydrogen with large storage footprints,
and Solid Oxide, which is already being discarded as a technology
by some data centre owners due to its reliance on natural gas as a
feedstock (which does not achieve zero emission) and its slow
response time, are now being challenged within the increasing drive
towards a sustainable data centre market. This opens an enormous
opportunity for AFC Energy's high energy dense S-series fuel cell
which addresses both of these issues.
TEMPORARY POWER: ALTAAQA and MACE
Momentum continues to build for the temporary power market to
transition from diesel-driven equipment, with event operators, real
estate developers, constructors and plant hire companies
increasingly looking for clean energy alternatives. The liquid fuel
with the highest energy density without a carbon footprint is
ammonia. Ammonia, as a carrier of Hydrogen, therefore becomes an
ideal fuel for off-grid power at a fraction of the cost of
hydrogen. This plays to our technology's strength in its ability to
be fuelled using hydrogen derived from cracked ammonia, something
PEM fuel cells for example cannot do without the added high cost of
hydrogen gas clean up.
We have long stated that our business model is not to be a
global plant hire business, but instead to be a supplier of zero
emission power solutions through adoption and sale of our alkaline
fuel cell technology. For this reason, partnering with those
businesses who have already established global footprints, customer
bases, and local support capability in the temporary power market,
is something we have focused on and continue to focus on as we
bring our fuel cell to market. For the most part, this process
comes with months of due diligence and business model framing of
particular relevance to the plant hire businesses and end users
used to operating fossil fuel premised gensets. We continue several
of these discussions across multiple global locations with
incumbent market leading operators who are seeking to address the
increasing demand of their customer base to meet Net Zero GHG
aspirations.
This commitment to provide a zero emission off-grid generator
underpinned the signing in April of a non-binding Memorandum of
Understanding with Altaaqa Alternative Solutions Company Limited
("Altaaqa"), a wholly owned member of the Zahid Group. Altaaqa owns
and operates one of the world's largest rental fleets of mobile
diesel power modules, with 2GW of capacity within its portfolio. It
is aiming to complement its conventional diesel power module
offering with sustainable, zero emission alternatives for sale and
hire. We are currently working closely with Altaaqa in furthering
this opportunity and hope to provide further updates to the market
later this year with the ultimate intention to establish an
exclusive dealership agreement for the distribution of the
Company's fuel cell systems into Saudi Arabia and the Middle East
& North Africa (MENA) regions.
The opportunity provided by the temporary power market was also
reflected in the signing of our first UK Strategic Partnership
Agreement with leading international consultancy and construction
business, Mace Group ("Mace"). Mace has established itself as an
industry leader through its adoption of highly ambitious
sustainability commitments contained in its 2026 Business Strategy,
including the removal of all diesel generators from its
construction sites by 2026 as part of a corporate commitment to
achieve a 10% year on year reduction in carbon emissions.
A small number of high-profile UK sites have already been
identified by the partnership for the initial leasing of our
hydrogen power systems for use from early 2022, with detailed
feasibility work already undertaken to support their deployment.
Joint promotion work will also be undertaken by the two companies
in the second half of 2021 to influence incumbent plant hire
businesses to invest in sustainable hydrogen power generator
technologies for on-hire to construction sites.
The announcement of these partnerships has resulted in an
increased number of real estate developers, principal contractors
and plant hire companies entering into discussions with us and
commencing diligence activities for similar deployments and I am
confident that we will be able to announce further temporary power
partnerships by the year end.
MARITIME AND RAIL: RICARDO
With the International Maritime Organisation (IMO) setting a 50%
greenhouse gas emission reduction target by 2050 [2] and the rail
sector recognising the need to decarbonise through energy
efficiency, new power sources and modal shift, both markets provide
an array of possibilities for our next generation high energy dense
S-Series fuel cell.
This underpinned our decision to enter into a collaboration
agreement with Ricardo plc in January for both companies to explore
and engineer innovative, zero greenhouse emission products with a
focus on transportation and stationary power generation.
With forecasts indicating up to 25% of global shipping will be
decarbonised through the adoption of ammonia fuelling systems, the
scale and size of this market for AFC Energy should not be
underestimated. We believe there is likely to be strong backing for
our S Series fuel cell technology once our first prototypes are
ready later this year, and we are already in discussions with
multiple ship designers, power providers and ship operators who are
exploring the adoption of alkaline fuel cell systems onboard new
and retrofitted ships as part of their commitment to achieving 50%
greenhouse gas emission reductions by 2050.
Deploying our technology internationally
One of the key moments for AFC Energy this year was achieved in
April, with one of our fuel cell systems charging Extreme E's
ODYSSEY 21 race vehicles at its inaugural round in Saudi Arabia.
Nine months of intensive work went into the design, build,
commissioning and testing of the system to withstand extreme
conditions and its deployment in such a high pressure, high-profile
setting is an enormous tribute to all of our staff and partner
organisations involved.
Our fuel cell and green hydrogen fuelling solution was also
successfully deployed to Senegal for the second round of the
Extreme E series in late May, prior to its further use at all three
remaining 2021 rounds. Income from this contract has begun to be
recognised in the first half, with further revenues to be booked by
year-end.
Two further system builds are in progress. At the request of
Acciona SA, our fuel cell system will now be deployed to a
construction site in Spain in Quarter 4 2021; this work 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,
forming part of Acciona SA's net-zero commitments and providing
another reference point for the international temporary power
market.
Similarly, the build of our 100kW system for Forschungzentrum
Juelich is progressing well, with this deployment also planned for
Quarter 4 2021. Our system will form part of an innovative
microgrid programme, the first of its kind in Europe, providing a
blueprint for sustainable, decentralised and integrated smart
infrastructure away from the centralized grid with an emphasis on
cutting-edge renewable and Hydrogen technologies. Revenue from this
contract will be recognised upon the initial deployment of the
system.
We continue to invest in our product lines and during the course
of 2021, we expect to make further announcements on new product
applications and configurations that we will be bringing to market.
These products are in direct response to customer enquiries and we
believe will further add to the value proposition of alkaline fuel
cell technology and its key role, alongside other fuel cell
technologies, in supporting a sustainable future.
Scaling up our manufacturing capability
The continued development of the Company's scalable
manufacturing capacity remains a key area of focus for the business
in order to address the expected future growth in system demand.
Following five months of extensive fit-out works, I am pleased to
say that our 30,000 sq. ft Assembly & Commissioning facility is
now open. All engineering & manufacturing staff will from this
month be working from this facility to assemble, commission and
dispatch all current and future fuel cell systems.
Whilst assembly & commissioning remains internal to the
business to protect our Intellectual Property, our manufacturing
strategy remains capital-light with all key component manufacture
being outsourced - allowing the business to flex to demand without
creating unnecessary financial risk. Our long-term supply
partnerships with De Nora (Electrodes), BK Gulf (containerised fuel
cell balance of plant) and Advanced Plastics (flow plates) all
remain in place to satisfy current and future contracts.
Investing in our technology and assets
Our three-pillar approach to technology development remains
central to our investment case and an intensive amount of work has
taken place on all three elements in the first half of 2021.
Work on developing our L-Series technology - used as the basis
for all current contracts - remains focused on reducing cost to
further reduce the gap in operating costs compared to the
equivalent diesel generator use. Our current pipeline of projects,
including delivery of the ABB integrated EV charger will see the
adoption of this technology platform. Importantly, later this
month, our first commercial scale ammonia cracker unit will arrive
when we commence work to fully integrate controls and operating
systems between these two technologies. We expect this work to take
a couple of months.
Our next generation S-Series technology, incorporating our
AlkaMem(R) anion exchange membrane (AEM), represent the other two
pillars of our technology range and opens up a range of new markets
for the business including for Maritime and Transportation
applications as a result of its superior power density whilst being
significantly cheaper to run versus commercially available Proton
Exchange Membrane (PEM) fuel cells. The opening of our world-class
AEM research and testing facility at Dunsfold in February directly
supports our roadmap for demonstration of a pre-commercial
prototype of our new S-Series fuel cell stack in the second half of
2021, prior to the release of the first commercial stacks by the
end of 2022. We therefore continue to be on schedule for this
important work package.
Alkamem(R) also represents a significant commercial opportunity
in its own right, given its potential use in a number of non-fuel
cell applications including fuel synthesis, desalination and
electrodialysis. Development work on AlkaMem(R) in 2021 has focused
on enhancing the membrane's mechanical strength and stability in
order to improve its end performance and we are continuing to
prepare the membrane for third party uses in 2021. AFC Energy is
also exploring other internal applications for the membrane which
we as a company could exploit in the Hydrogen space, opening
further sizable markets not previously considered by the Company
with the intention of further growing shareholder value in this
emerging growth market.
The appointment in May 2021 of Dr David B. Harvey as our new
Chief Technology Officer was a further significant milestone in
accelerating the development of our technology. Dr Harvey is a
world recognised expert in the field of fuel cell technology and
electrochemical systems having spent over a decade as Group Leader
and Senior Research Engineer at Ballard Power Systems and Head of
Fuel Cell Development at Fuel Cell Powertrain GmbH. His
understanding of catalysts, membranes, advanced materials and cell
/ stack development is essential in further accelerating the
commercialisation of both the S-Series system and Alkamem(R) and
his appointment is a reflection of the tremendous progress we're
continuing to make as a business.
Growing our workforce
The final key element in positioning the business for sustained
growth is the creation of an extremely strong Executive team, with
three key appointments made in the first half of the year.
Alongside the appointments of Dr David B Harvey and Dr Mike Rendall
as Chief Engineer and Product Officer, we were also delighted in
May 2021 to welcome Mark Bailey as our new Chief Commercial
Officer. Mark has over two decades of energy sector expertise
acquired through a series of high-profile roles at Engie and
Connected Energy, developing an impressive track record in working
with - and growing - innovative energy solutions businesses. Mark
is now responsible for delivering our commercial strategy across
each of our target markets.
To meet the growth in demand for our systems and to accelerate
the development of all three of our technology pillars, we have
also begun a significant recruitment programme to grow our
workforce from the 40 staff in post today to around 100 by the end
of 2021. A range of commercial, sales, design, manufacturing and
commissioning engineers, alongside fuel cell scientists, testing
and fabrication specialists and prototyping & assembly
technicians are being hired and inducted into the business to drive
the Company's development.
Finances
We stated in our July 2020 fundraising of GBP31.6 million that
the proceeds would be used to support the continued development of
the Company as it moves from the development phase of its products
and technology into the manufacture and commercialisation of them.
The scale up of our manufacturing capabilities, an increase in
headcount and increased investment in our technology and assets
resulted in an operating loss of GBP3.6 million (2020: GBP2.1
million). Investment in fixed assets of GBP1.8 million comprised
the fit out of the assembly & commissioning facility, the build
of the Extreme E system and additional AEM fuel cell test stands.
Furthermore, GBP0.5 million has been invested in stock for systems
to be delivered later this year.
The initial recognition of commercial revenue from Extreme E,
representing completion of its first race in Saudi Arabia,
contributed to initial booked revenue of GBP0.15m (HY 2020:
GBPnil), with further payments to be made in 2021 following the
completion of each remaining round.
At the end of April, we had a robust cash position of GBP61.6m
(HY 2020: GBP2.8m) giving the necessary financial headroom to
accelerate our growth plans.
Outlook
As we reflected at our virtual Capital Markets Event on 5 May,
our position is now one of strength. For the first time, we have
the financial and organisational capacity to harness our
market-leading technology to generate significant recurring
commercial revenue streams.
We will therefore continue to use our strong balance sheet
position to invest in our people, products and technology to
effectively scale-up the business to drive revenue growth. This
includes the assembly and testing of several new L-Series fuel cell
systems ahead of future orders, alongside the significant increase
in staffing headcount to accelerate system production and
development. We therefore expect our investment to increase in the
second half of 2021. This will be partly offset by an expected
increase in customer revenues, successfully leveraging the value of
our international partnerships and collaborations.
This confidence is supported by governmental policies and
industry sentiment continuing to work in the Company's favour. The
IEA's recently announced roadmap for realizing net-zero carbon
dioxide (CO(2) ) emissions signalled a critical shift in its
ambition, determining that a 38% emissions reduction must be
achieved by 2030 to remain on-track for net-zero 2050. With carbon
emissions on the rise again as the world recovers from the COVID-19
pandemic and COP26 later this year acting as a catalyst for action,
we believe this stark scenario will drive further investment and
regulation to ultimately support the deployment of our
products.
AFC Energy has made enormous strides over the past six months
and I want to express my thanks to our staff, partners and
investors that have supported the business to become one of the
world's leading hydrogen fuel cell businesses. We are poised to
play a key role in addressing climate change as the most pressing
issue facing the world today.
Adam Bond
Chief Executive Officer
23 June 2021
STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 April 2021
Six-months Six-months Year ended
ended ended
30 April 2021 30 April 31 October
2020 2020
GBP GBP GBP
Note Unaudited Unaudited Audited
--------------------------------- ----- -------------- -------------- --------------
Revenue 3 149,062 - -
Cost of sales (145,235) - -
--------------------------------- ----- -------------- -------------- --------------
Gross profit 3,827 - -
Other income - 28,187 32,892
Administrative expenses (3,589,960) (2,161,300) (4,639,104)
--------------------------------- ----- -------------- -------------- --------------
Operating loss (3,586,133) (2,133,113) (4,606,212)
--------------------------------- ----- -------------- -------------- --------------
Finance cost 4 (12,136) (8,709) (178,407)
--------------------------------- ----- -------------- -------------- --------------
Loss before tax (3,598,269) (2,141,822) (4,784,619)
--------------------------------- ----- -------------- -------------- --------------
Taxation 5 283,072 321,273 559,627
--------------------------------- ----- -------------- -------------- --------------
Loss for the financial
period and total comprehensive
loss attributable to owners
of the Company (3,315,197) (1,820,549) (4,224,992)
--------------------------------- ----- -------------- -------------- --------------
Basic loss per share 6 (0.49)p (0.40)p (0.80)p
Diluted loss per share 6 (0.49)p (0.40)p (0.80)p
--------------------------------- ----- -------------- -------------- --------------
All amounts relate to continuing operations.
STATEMENT OF FINANCIAL POSITION
As at 30 April 2021
30 April 30 April 2020 31 October
2021 2020
GBP GBP GBP
Note Unaudited Unaudited Audited
----------------------------------- ----- ------------- -------------- -------------
Assets
Non-current assets
Intangible assets 7 770,884 616,519 769,269
Right of use assets 8 1,079,884 304,621 247,505
Property and equipment 9 1,653,806 477,618 940,218
Long term receivable - 100,000 -
3,504,574 1,498,758 1,956,992
----------------------------------- ----- ------------- -------------- -------------
Current assets
Inventory 10 759,596 95,423 249,370
Other receivables 11 1,639,580 1,433,658 1,043,880
Cash and cash equivalents 12 61,292,135 2,514,326 31,301,467
Restricted cash 12 260,772 261,165 270,027
----------------------------------- ----- ------------- -------------- -------------
63,952,083 4,304,572 32,864,744
----------------------------------- ----- ------------- -------------- -------------
Total assets 67,456,657 5,803,330 34,821,736
----------------------------------- ----- ------------- -------------- -------------
Capital and reserves attributable
to owners of the Company
Share capital 13 732,823 477,362 676,006
Share premium 13 116,186,140 51,100,883 81,417,845
Other reserve 1,752,974 2,204,774 1,512,974
Retained deficit (53,898,053) (49,005,806) (50,582,856)
----------------------------------- ----- ------------- -------------- -------------
Total equity attributable
to Shareholders 64,773,884 4,777,213 33,023,969
----------------------------------- ----- ------------- -------------- -------------
Current liabilities
Trade and other payables 14 1,286,753 407,935 1,236,796
Lease liabilities 15 660,283 113,431 113,431
----------------------------------- ----- ------------- -------------- -------------
1,947,036 521,366 1,350,227
----------------------------------- ----- ------------- -------------- -------------
Non-current liabilities
Lease liabilities 15 434,565 203,579 146,368
Provisions 16 301,172 301,172 301,172
----------------------------------- ----- ------------- -------------- -------------
735,737 504,751 447,540
----------------------------------- ----- ------------- -------------- -------------
Total liabilities 2,682,773 1,026,117 1,797,767
----------------------------------- ----- ------------- -------------- -------------
Total equity and liabilities 67,456,657 5,803,330 34,821,736
----------------------------------- ----- ------------- -------------- -------------
STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 April 2021
Share Share Other Retained Total
Capital Premium Reserve Deficit Equity
GBP GBP GBP GBP GBP
Unaudited Unaudited Unaudited Unaudited Unaudited
---------------------------- ---------- ------------ ---------- ------------- ------------
Balance at 31 October
2020 676,006 81,417,845 1,512,974 (50,582,856) 33,023,969
Comprehensive loss for
the period - - - (3,315,197) (3,315,197)
Issue of equity shares 56,260 34,631,901 - - 34,688,161
Exercise of share options 557 136,394 - - 136,951
Equity-settled share-based
payments - - 240,000 - 240,000
---------------------------- ---------- ------------ ---------- ------------- ------------
Transactions with owners 56,817 34,768,295 240,000 - 35,065,112
---------------------------- ---------- ------------ ---------- ------------- ------------
Balance at 30 April
2021 732,823 116,186,140 1,752,974 (53,898,053) 64,773,884
---------------------------- ---------- ------------ ---------- ------------- ------------
For the six months ended 30 April 2020
Share Share Other Retained Total
Capital Premium Reserve Deficit Equity
GBP GBP GBP GBP GBP
Unaudited Unaudited Unaudited Unaudited Unaudited
---------------------------- ---------- ----------- ---------- ------------- ------------
Balance at 31 October
2019 447,988 47,389,424 2,204,774 (47,185,257) 2,856,929
Comprehensive loss for
the period - - - (1,820,549) (1,820,549)
Issue of equity shares 29,374 3,744,792 - - 3,774,166
Equity-settled share-based
payments - (33,333) - (33,333)
---------------------------- ---------- ----------- ---------- ------------- ------------
Transactions with owners 29,374 3,711,459 - - 3,740,833
---------------------------- ---------- ----------- ---------- ------------- ------------
Balance at 30 April
2020 477,362 51,100,883 2,204,774 (49,005,806) 4,777,213
---------------------------- ---------- ----------- ---------- ------------- ------------
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
equity-settled share-based payments.
Retained deficit represents the cumulative loss of the Company
attributable to equity shareholders.
CASH FLOW STATEMENT
For the six months ended 30 April 2021
Six-months Six-months Year ended
ended ended
30 April 2021 30 April 31 October
2020 2020
GBP GBP GBP
Unaudited Unaudited Audited
-------------------------------------- -------------- ------------ ------------
Cash flows from operating activities
Loss before tax for the period (3,598,269) (2,141,822) (4,784,619)
Adjustments for:
Amortisation of intangible
assets 54,621 29,740 108,014
Depreciation of right of use
asset 103,933 57,117 114,233
Depreciation of property and
equipment 121,778 67,568 143,758
Depreciation of decommissioning
asset 15,682 15,682 31,365
Equity-settled share-based
payment expenses 240,000 - 135,593
Interest received (6,155) (1,111) (6,168)
Gain on disposal of investment - - (80,000)
Cash flows from operating activities
before changes in working capital
and provisions (3,068,410) (1,972,826) (4,337,824)
R&D tax credits received - - 644,523
Increase/(Decrease) in restricted
cash 9,255 (2,093) (10,955)
Increase in inventory (510,226) - (153,947)
(Increase)/Decrease in other
receivables (312,628) 39,613 23,222
Increase/(Decrease) in trade
and other payables 49,957 (259,876) 568,985
-------------------------------------- -------------- ------------ ------------
Cash absorbed by operating
activities (3,832,052) (2,195,182) (3,265,996)
-------------------------------------- -------------- ------------ ------------
Cash flows from investing activities
Purchase of plant and equipment (1,787,359) (163,933) (718,406)
Additions to intangible assets (56,236) (40,218) (171,242)
Interest received 6,155 1,111 6,168
Proceeds from disposal of investment - - 80,000
-------------------------------------- -------------- ------------ ------------
Net cash absorbed by investing
activities (1,837,440) (203,040) (803,480)
-------------------------------------- -------------- ------------ ------------
Cash flows from financing activities
Proceeds from the issue of
share capital 36,424,451 3,958,667 35,558,667
Costs of issue of share capital (1,599,339) (317,834) (1,633,505)
Proceeds from the exercise
of options - - 231,277
Leasing finance received/(repaid) 847,773 (49,688) (101,359)
Interest paid (12,724) (6,532) (12,072)
Net cash from financing activities 35,660,161 3,584,613 34,043,008
-------------------------------------- -------------- ------------ ------------
Net (decrease)/increase in
cash and cash equivalents 29,990,668 1,186,391 29,973,532
Cash and cash equivalents at
start of period 31,301,467 1,327,935 1,327,935
-------------------------------------- -------------- ------------ ------------
Cash and cash equivalents at
end of period 61,292,135 2,514,326 31,301,467
-------------------------------------- -------------- ------------ ------------
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
1. Significant accounting policies
Details of the significant accounting policies are set out
below.
a) Basis of preparation
The interim results for the six-months ended 30 April 2021 are
unaudited. They have been prepared in accordance with IAS 34
'Interim Financial Reporting' as adopted by the EU. The interim
results have been drawn up using the accounting policies and
presentation consistent with those disclosed and applied in the
annual report and accounts for the year ended 31 October 2020. The
comparative information contained in the report does not constitute
the accounts within the meaning of section 240 of the Companies Act
1985 and section 435 of the Companies Act 2006.
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 enough 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 dependent upon
the speed at which revenue grows. At 30 April 2021 unrestricted
cash resources were GBP61.3 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.
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 is
based upon the contract terms considering both cash and non-cash
consideration. Non-cash consideration is valued at fair value
taking into consideration contract terms and known arm's 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 obligations and reports these amounts as 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 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 either accrued or 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 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 amortized 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 Group reviews
the carrying amounts of the assets 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 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.
After 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
recognised when the Company becomes a party to the contracts that
give rise to them and are classified as amortised 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 after initial recognition at amortized cost using
the effective interest method. Cash, restricted cash, other
receivables 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 recognised in OCI
for financial assets measured at amortised 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 amortised 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 derecognised 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 derecognised
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 recognised 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 the
Black-Scholes option valuation model considering the terms and
conditions upon which they were granted and 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 administrative expenses or 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 3% of the employee's
salary and are reflected in the statement of comprehensive income
in the period for which they are made.
2 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
identifies separately non-recurring engineering, design costs and
prototype costs incurred to develop demonstration units used in
marketing activities and customer trials. Management believes 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.
Estimates 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
GBP35,000 to GBP301,000 dependent upon agreements reached with
lessor.
3. 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 period to 30 April 2021, the Company operated
mainly in the United Kingdom and in Germany. All non-current assets
are in the United Kingdom.
4. FINANCe cost
Six-months Six-months Year ended
ended ended
30 April 30 April 31 October
2021 2020 2020
GBP GBP GBP
Unaudited Unaudited Audited
-------------------------- ----------- ----------- -----------
Lease interest 12,724 6,532 12,072
Bank charges 5,567 3,288 172,503
Bank interest receivable (6,155) (1,111) (6,168)
-------------------------- ----------- ----------- -----------
Total finance cost 12,136 8,709 178,407
-------------------------- ----------- ----------- -----------
5. TAXATION
Six-months Six-months Year ended
ended ended
30 April 30 April 31 October
2021 2020 2020
GBP GBP GBP
Recognised in the statement Unaudited Unaudited Audited
of comprehensive income:
--------------------------------- ----------- ----------- -----------
R&D tax credit - current period (283,072) (321,273) (518,099)
R&D tax credit - prior year - - (41,528)
--------------------------------- ----------- ----------- -----------
Total tax credit (283,072) (321,273) (559,627)
--------------------------------- ----------- ----------- -----------
6. LOSS PER SHARE
The calculation of the basic loss per share is based upon the
net loss after tax attributable to ordinary Shareholders and a
weighted average number of shares in issue for the period.
Six-months Six-months Year ended
ended ended
30 April 2021 30 April 2020 31 October
2020
Unaudited Unaudited Audited
-------------------------------- -------------- -------------- -------------
Basic loss per share (pence) 0.49p 0.40p 0.80p
Diluted loss per share (pence) 0.49p 0.40p 0.80p
Loss attributable to equity GBP3,315,197 GBP1,820,549 GBP4,224,992
Shareholders
-------------------------------- -------------- -------------- -------------
Weighted average number of
shares in issue 674,707,843 460,105,587 528,865,765
-------------------------------- -------------- -------------- -------------
Diluted earnings per share:
There are share options and warrants outstanding as at 30 April
2021 which, if exercised, would increase the number of shares in
issue. However, the diluted loss per share is the same as the basic
loss per share, as the loss for the period has an anti-dilutive
effect.
7. INTANGIBLE ASSETS
Development Patents Commercial Total
costs rights
GBP GBP GBP GBP
Cost:
------------------------------ ------------ -------- ----------- ----------
At 31 October 2020 229,043 799,705 121,350 1,150,098
Additions - 56,236 - 56,236
------------------------------ ------------ -------- ----------- ----------
At 30 April 2021 (unaudited) 229,043 855,941 121,350 1,206,334
------------------------------ ------------ -------- ----------- ----------
Amortisation:
------------------------------ ------------ -------- ----------- ----------
At 31 October 2020 28,138 343,590 9,101 380,829
Charge for the period 22,905 19,581 12,135 54,621
------------------------------ ------------ -------- ----------- ----------
At 30 April 2021 (unaudited) 51,043 363,171 21,236 435,450
------------------------------ ------------ -------- ----------- ----------
Net Book Value:
------------------------------ ------------ -------- ----------- ----------
At 31 October 2020 200,905 456,115 112,249 769,269
------------------------------ ------------ -------- ----------- ----------
At 30 April 2021 (unaudited) 178,000 492,770 100,114 770,884
------------------------------ ------------ -------- ----------- ----------
8. RIGHT of uSE ASSETS
Buildings
GBP
31 October 2020 475,971
Additions 936,312
30 April 2021 (unaudited) 1,412,283
--------------------------- ----------
Depreciation
31 October 2020 228,466
Charge for the period 103,933
30 April 2021 (unaudited) 332,399
--------------------------- ----------
Net Book Value
30 April 2021 (unaudited) 1,079,884
--------------------------- ----------
31 October 2020 247,505
--------------------------- ----------
9. PROPERTY AND EQUIPMENT
Leasehold Decommissioning Fixtures, Motor Demonstration Rental Total
improvements Asset fittings vehicles equipment asset
and
equipment
GBP GBP GBP GBP GBP GBP GBP
-------------- ------------- ---------------- ----------- ---------- -------------- -------- ------------
Cost
31 October
2020 221,512 301,172 1,486,488 17,994 326,975 423,138 2,777,279
Additions 409,117 - 161,639 - - 280,291 851,047
30 April
2021
(unaudited) 630,629 301,172 1,648,127 17,994 326,975 703,429 3,628,326
-------------- ------------- ---------------- ----------- ---------- -------------- -------- ------------
Depreciation
31 October
2020 221,512 233,215 1,310,383 17,994 53,957 - 1,837,061
Charge for
the p er
iod 6,723 15,682 47,206 - 32,698 35,150 137,459
30 April
2021
(unaudited) 228,235 248,897 1,357,589 17,994 86,655 35,150 1,974,521
-------------- ------------- ---------------- ----------- ---------- -------------- -------- ------------
Net Book
Value
30 April
2021
(unaudited) 402,394 52,275 290,538 - 240,320 668,279 1,653,806
-------------- ------------- ---------------- ----------- ---------- -------------- -------- ------------
31 October
2020 - 67,957 176,105 - 273,018 423,138 940,218
-------------- ------------- ---------------- ----------- ---------- -------------- -------- ------------
10. INVENTORY
30 April 30 April 31 October
2021 2020 2020
GBP GBP GBP
Unaudited Unaudited Audited
----------- ---------- ---------- -----------
Inventory 759,596 95,423 249,370
----------- ---------- ---------- -----------
11. OTHER RECEIVABLES
30 April 30 April 31 October
2021 2020 2020
GBP GBP GBP
Unaudited Unaudited Audited
---------------------------- ---------- ---------- -----------
Current :
R&D tax credits receivable 801,171 924,268 518,099
EU grants receivable 104,547 106,598 106,642
Other receivables 430,860 125,955 264,367
Prepayments 303,002 276,837 154,772
---------------------------- ---------- ---------- -----------
1,639,580 1,433,658 1,043,880
---------------------------- ---------- ---------- -----------
There is no significant difference between the fair value of the
receivables and the values stated above.
12. CASH AND CASH EQUIVALENTS
30 April 30 April 31 October
2021 2020 2020
GBP GBP GBP
Unaudited Unaudited Audited
--------------- ----------- ---------- -----------
Cash at bank 1,001,020 430,728 286,578
Bank deposits 60,291,115 2,083,598 31,014,889
--------------- ----------- ---------- -----------
61,292,135 2,514,326 31,301,467
--------------- ----------- ---------- -----------
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 (30 April 2020: 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.
13. ISSUED SHARE CAPITAL
Ordinary Share Capital Share premium Total
shares
Number GBP GBP GBP
Unaudited Unaudited Unaudited Unaudited
-------------------------------------- ------------ -------------- -------------- ------------
At 31 October 2020 676,006,310 676,006 81,417,845 82,093,851
Exercise of options 25 November 2020 55,000 55 4,785 4,840
Exercise of options 01 December 2020 90,000 90 13,770 13,860
Exercise of options 15 January 2021 114,500 115 17,519 17,634
Exercise of options 15 January 2021 25,000 25 2,175 2,200
Exercise of options 15 January 2021 35,000 35 12,478 12,513
Exercise of options 15 January 2021 15,000 15 5,085 5,100
Exercise of options 6 April 2021 150,000 150 61,350 61,500
Issue of shares 23 April 2021 56,259,690 56,260 34,631,901 34,688,161
Exercise of options 26 April 2021 32,500 32 4,972 5,004
Exercise of options 26 April 2021 40,000 40 14,260 14,300
At 30 April 2021 732,823,000 732,823 116,186,140 116,918,963
-------------------------------------- ------------ -------------- -------------- ------------
All issued shares are fully paid.
14. TRADE AND OTHER PAYABLES
30 April 30 April 31 October
2021 2020 2020
GBP GBP GBP
Unaudited Unaudited Audited
---------------------- ---------- ---------- -----------
Current liabilities:
Trade payables 396,171 2,486 347,167
Deferred income 112,500 - 150,000
Other payables 233,228 204,794 199,261
Accruals 544,854 200,655 540,368
---------------------- ---------- ---------- -----------
1,286,753 407,935 1,236,796
---------------------- ---------- ---------- -----------
15. LEASE LIABILITIES
30 April 30 April 31 October
2021 2020 2020
GBP GBP GBP
Unaudited Unaudited Audited
Lease liabilities less than 12
months 660,283 113,431 113,431
Lease liabilities more than 12
months 301,172 203,579 146,368
-------------------------------- ----------- ----------- -----------
961,455 317,010 259,799
-------------------------------- ----------- ----------- -----------
16. Provisions
30 April 30 April 31 October
2021 2020 2020
GBP GBP GBP
Unaudited Unaudited Audited
--------------------------- ---------- ---------- -----------
Decommissioning provision 301,172 301,172 301,172
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 and for dilapidations
associated with the leasehold premises at Dunsfold in the UK.
17. EVENTS AFTER THE REPORTING PERIOD
There have been no events after the reporting period.
18. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in this interim statement
does not constitute accounts as defined by the Companies Act 2006.
The financial information for the preceding period is based on the
statutory accounts for the year ended 31 October 2020. Those
accounts, upon which the auditors issued an unqualified opinion,
have been delivered to the Registrar of Companies.
Copies of the interim statement may be obtained from the Company
Secretary, AFC Energy PLC, Unit 71.4 Dunsfold Park, Cranleigh,
Surrey GU6 8TB, and can be accessed from the Company's website at
www.afcenergy.com.
[1]
https://iea.blob.core.windows.net/assets/ed5f4484-f556-4110-8c5c-4ede8bcba637/GlobalEVOutlook2021.pdf
[2] Taken from
https://www.imo.org/en/MediaCentre/HotTopics/Pages/Reducing-greenhouse-gas-emissions-from-ships.aspx
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END
IR FTMMTMTMTTFB
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