TIDMAFC
RNS Number : 6398H
AFC Energy Plc
31 July 2023
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).
31 July 2023
AFC Energy plc
("AFC" or the "Company")
Interim Results
AFC Energy Plc (AIM: AFC), a leading provider of hydrogen power
generation technologies, is pleased to announce its interim results
for the half year ended 30 April 2023.
Commercial Highlights
-- Successful H-Power Tower generator leased programme across
eight customer sites generating further revenue from S Series
platform
-- Follow on agreement with ACCIONA, for six-month lease with
option to purchase, of H-Power Generator plus battery energy
storage system, to be deployed in 2023
-- First deployment of H-Power Tower in film and TV production
sector with large US production studio
-- Confirmation of successful validation by ABB E-mobility of
new S+ Series liquid cooled fuel cell stacks
-- Successful completion of Extreme E Season 2 EV charging contract
-- Award (post period end) of up to GBP4.3m of matched grant
funding from UK Government to support transition from diesel
generators at UK construction, mining and quarrying sites
-- Announced (post period end) plan to execute on our plant hire
strategy with the proposed launch of a UK dedicated hydrogen
powered generator hire business with Speedy Hire
o 50:50 joint venture (JV) to be established
o Speedy Hire is the UK's leading tools and equipment hire
services company
o Initial commitment by joint venture of GBP2m in new H-Power
Generators
o Further orders expected in line with growing demand for zero
emission power across the UK
o Potential to become a significant UK hydrogen off-taker
leveraging further value
Operational highlights
-- S Series H-Power Tower & Generator :
o Completed production run of first 10 H-Power Towers for field
deployment and internal acceptance testing
o Design completed and ordering commenced for components of next
generation S Series 30kW H-Power Generator for completion this
year
o Appointment of consultants to support delivery of a scaled up
third party contract manufacturing strategy
-- S+ Series H-Power Generator :
o Design completed for 200kW H-Power Generator system
o c.850kW of new S+ Series fuel cell stacks (>100kW per
stack) already manufactured and ready for 200kW system integration
this year
o Ordering commenced for components of first 200kW S+ Series
liquid cooled fuel cell system
o 200kW system specification consistent with first ABB system
order with preparation for CE marking commenced
-- Ammonia cracker :
o Launch of AFC Energy's next generation ammonia cracker
technology platform
o Successfully produced first fuel cell grade hydrogen from
cracker reactor, demonstrating "Ammonia to Power" with AFC Energy
fuel cell integration
o Identified potential high-volume routes to market, with
partners, where the benefits of our novel technology are well
positioned
-- Hydrogen supply :
o Hydrogen offtake agreement with Air Products renewed (post
period end) at the Company's Stade facility in Northern Germany to
facilitate onsite factory acceptance testing of fuel cell systems
over the next five years
Financial highlights
-- Cash and cash equivalents at 30 April 2023 of GBP32.7m (30 April 2022: GBP48.6m)
-- Investment by ABB E-mobility in a further GBP2m in newly issued shares
-- Revenue of GBP0.2m (H1 2022: GBP0.3m)
-- Deferred revenue in respect of ABB contract at 30 April 2023
of GBP1.4m (30 April 2022: GBP2.0m)
-- Loss for the period of GBP6.3m (H1 2022: GBP7.8m)
-- R&D tax credit generated of GBP1.8m (H1 2022: GBP0.7m)
-- R&D credit receivable at 30 April 2023 of GBP4.8m (30 April 2022: GBP1.8m)
Outlook
-- Proposed launch of the Speedy Hire joint venture with initial H-Power Generator sales
-- Rental revenue from H-Power Towers (through Speedy Hire going
forwards) before transition to higher sales next financial year
-- Delivery of first next generation S Series H-Power Generator to ACCIONA during 2023
-- GBP/kW cost reduction, relative to H-Power Towers, of c.50%
given benefits of additional value engineering and scale
-- Complete manufacture during 2023 of first 200kW S+ H-Power
Generator (designed for ABB and subsequent CE marking)
-- Establish path to scaled contract manufacturing, with initial
system orders to be delivered from the Company's Dunsfold facility
in Surrey
-- Modular ammonia cracker system delivered for operation and
progression with prospective partners / customers of cracker
technology
-- Deliver the first scaled ammonia cracking test facility in the UK
Adam Bond, Chief Executive of AFC Energy, said:
"We continue to see an accelerated push to decarbonise hard to
abate sectors such as construction and temporary power and are
pleased to see this reflected in the traction we are receiving.
Clearly our focus must remain on delivery of our strategy of
initial customer deployments followed by cementing long term
collaborations with plant hire groups and, with our new partner
Speedy Hire in the UK, we now have a line of site to tangible
product sales and manufacturing scale up. The recently received
backing from the UK Government through our funding award, together
with the new targets in the displacement of diesel on construction
sites, creates a perfect backdrop for AFC Energy's success in the
UK."
-S-
AFC Energy plc +44 (0) 14 8327 6726
Adam Bond (Chief Executive Officer) investors@afcenergy.com
Peel Hunt LLP - Nominated Adviser and Joint
Broker
Richard Crichton / Tom Ballard / Georgia
Langoulant +44 (0) 207 418 8900
Zeus - Joint Broker
David Foreman / James Hornigold (Investment
Banking)
Dominic King (Corporate Broking) / Rupert
Woolfenden (Sales) +44 (0) 203 829 5000
FTI Consulting - Financial PR Advisors +44 (0) 203 727 1000
Ben Brewerton / Tilly Abraham / Dhruv Soni afcenergy@fticonsulting.com
About AFC Energy plc
AFC Energy plc is a leading provider of hydrogen fuel cell power
systems, both air cooled (S Series) and liquid cooled (S+ Series),
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.
Chief Executive's Statement
I am pleased to report that in the first half of 2023, AFC
Energy has continued to make progress across all areas of its
business as it seeks to provide a technically and commercially
viable alternative to the $20bn a year diesel generator market.
Government and industry, both in the UK and overseas, continue
to support the transition away from highly polluting diesel
combustion engines with several high-profile infrastructure
projects now targeting diesel free sites this decade.
"HS2 are building the world's most sustainable high-speed
railway and the goal is to reduce carbon emissions and achieve net
zero from 2035. Cutting the diesel HS2 use to power the vast
construction operations - and stopping using it completely - is
fundamental to our ambition." Extract from HS2 Website
Publicly, a lot of the work undertaken in H1 only became
apparent after the period end, such as our collaboration with the
UK's leading tools and equipment hire services business, Speedy
Hire. This agreement has taken many months to get to this
stage.
Our collaboration with Speedy Hire to launch a dedicated
hydrogen powered generator plant hire business, is now a key focus
for AFC Energy's growth strategy. The joint venture (JV) is
targeting incorporation this year with an initial order commitment
of GBP2m towards the purchase of AFC Energy's latest S Series
H-Power Generators.
Growth in generator orders from the JV will be in line with
expected growing demand for zero emission power across the UK;
however, with many tens of thousands of diesel generators currently
in operation on construction sites in the UK, this market alone
offers tremendous growth potential.
Delivery of this, together with other commercial partnerships
currently under development, is a tribute to the highly skilled and
motivated workforce at AFC Energy to which I'm extremely
grateful.
Fuel Cell Update
The first half of 2023 saw 8 new leased deployments of the
H-Power Tower on construction and off-grid sites, further
validating the technology and its operability in a range of
conditions. The high quality feedback received from these field
trials has now been collated and has facilitated several
improvements and upgrades for the next generation H-Power
Generator. The first of this new version will be delivered to
ACCIONA under a new six-month lease and sale option agreement later
this year.
The accelerated nature in which AFC Energy's technology team
have been able to reflect system upgrades, scaled the system to
30kW and reduced component pricing has been a true testament to
their commitment to commercialisation.
We are forecasting that the 30kW H-Power Generator, harmonised
to an external battery energy storage system, will be on site later
this year and, with its sizing reflecting where we believe the
immediate market demand for power needs on construction sites lies,
we are confident of further system orders.
The strategy of first approaching end user construction
companies for H-Power Generator demonstration, building up a
critical mass of interest in the technology, and then collaborating
with the plant hire industry has been proven with our new
partnership with Speedy Hire. We have been working with the
management of Speedy Hire for several months to develop the
principles of a joint venture, believing this model affords many
commercial benefits for both companies, with an optimised risk /
reward balance achieved under this model. Based on feedback from
our initial phase of field trial customers, many of whom are also
customers of Speedy Hire, we believe the market for a scalable,
targeted, zero emission, hydrogen fuelled generator offering in the
UK market is strong. The JV will provide a clear avenue in which
both Speedy Hire and AFC Energy can achieve scale and first mover
advantage in addressing the needs of this growth market. The
initial focus of this venture will be on the 30kW H-Power
Generator.
Importantly, the potential scale that collaborations like Speedy
Hire present also mean our buying power across the supply chain
improves, meaning better pricing in a fairly short order. We are
already seeing large cost discounts across key fuel cell and
balance of plant components achieved through scale and are
confident this, and other partnerships, will enable AFC Energy to
progress quicker down the cost curve for our customers.
The growth in system orders requires a focus on manufacturing
scale up. Over the past two years, AFC Energy has invested in its
UK facilities and is well positioned to deliver sufficient H-Power
Generators at its Dunsfold site to meet short term deployment
needs. However, the uplift in future order quantities from
collaborations such as that with Speedy Hire necessitates the
review of third-party contract models for system components,
sub-assemblies, and entire generator assembly. We have appointed
consultants well versed in the scale up of hydrogen fuel cell
technologies, to support us in developing our strategy, assessing
opportunities for scaling up with an emphasis on Germany, which
benefits from a more mature hydrogen sector and increased
availability of lower cost hydrogen. We look forward to providing
further detail on this in due course.
Over the past six months, we have also seen material progress in
the validation of the liquid cooled, higher power density S+ Series
fuel cell generators. This technology was first tested in Germany
in October 2022 as part of our collaboration with ABB, and
following the successful validation, multiple stacks, each more
than 100kW in nameplate capacity, are now on site in Dunsfold
awaiting integration into individual 200kW modules.
We remain confident of completing the first 200kW H-Power
Generator this year, subject to the timely delivery of all
components across the supply chain. Once completed, we plan to
commence the CE marking process to enable sales across Europe.
The emphasis of the business is now on the scaling up of H-Power
Generators, initially with a focus on the air cooled S Series,
where we believe the majority of the short term system demand lies
within our core target markets. With this in mind, the Company has
decided, in collaboration with Juelich, to cancel the contract
announced in 2020, for the sale of a 100kW L Series generator,
which if delivered, would now prove a distraction to the Company's
core technology and customer targets. Juelich confirmed it would
only expect to be in a position to receive any fuel cell system in
2024 and so, with the progression of AFC Energy's technology, cost
inflation and the delay to delivery, this was a mutual
decision.
Fuel Conversion Update
In March this year, we announced the launch of our next
generation ammonia cracking technology platform. For AFC Energy,
maritime was always regarded as a key target market due to its
growing emphasis on hydrogen carrier fuels such as ammonia. Indeed,
last year, the International Energy Agency confirmed its estimate
that up to 45% of the maritime fleet will be decarbonised through
the adoption of ammonia fuels.
For this reason, the development of an ammonia cracker was
always part of the technology development roadmap. However, the
accelerating global search for energy security and independence
means that the role of ammonia has become far more pronounced with
large volumes of clean ammonia contracted to be imported to Europe,
and Asia, from countries benefiting from low-cost hydrogen
production. This in turn has created a short-term opportunity to
position the Company's ammonia cracking technology to capitalise on
the immediacy of this demand.
Over the past six months, much testing and validation of the
Company's new cracker technology has been carried out, validating
the performance of the system and enabling progress towards a fully
working modular reactor core. Longevity testing of reactors has
continued to build operational hours with limited, if any, evidence
of strain on materials.
The reactor has a number of commercialisation opportunities,
both as a cracker to make hydrogen within a combustion engine
architecture, which is something we are speaking to engine
manufacturers about, through to hydrogen refuelling infrastructure
to support the decarbonisation of transport, namely trucks and
heavy-duty transport where "traditional" hydrogen refuelling
infrastructure is not feasible.
We continue to explore a number of these use cases that are
generated through our core cracker technology and expect to be
making further progress with partners towards demonstrations later
this year. Firstrevenue from the cracker is not expected before
2025.
ABB E-mobility
On 28 March 2023, after internal analysis following the trials
in October 2022, ABB E-mobility confirmed that AFC Energy had
successfully validated the first S+ Series liquid cooled fuel cell
stacks. Operating in parallel, the initial stacks provided a 100kW
nameplate rating. As a result of this, the Sale and Development
Agreement, signed on 15 November 2021, was revised such that:
- ABB will have a pre-agreed discount, to be spread over the
purchases of the first ten fuel cell systems, the first of which
would be purchased under the revised contract, with the subsequent
nine at ABB's option; and
- The payment of the remaining GBP2.0m, of the GBP4.0m, to be
used for the purchase of issued shares in AFC Energy.
The GBP2.0m balance, was received on 5 April 2023 and the shares
issued shortly thereafter. The shares are of the same class and
have the same voting rights as those already in issue. The cash
value to AFC Energy of the original contract therefore remains
unchanged at GBP4.0m. Payment for the first, and subsequent 200kW
S+ Series H-Power Generators would be in addition to the
GBP4.0m.
Financial update
We recognised revenue in the period of GBP0.2m (H1 2022:
GBP0.3m). GBP0.1m of this revenue was generated by the last race in
the Extreme-E five-race series, with the balance coming from
rentals of the H-Power Towers to customers including: Keltbray and
Kier.
Operating costs of GBP8.2m (H1 2022: GBP8.8m) were predominantly
incurred in respect of qualifying R&D activities and generated
an R&D credit for the period of GBP1.8m (H1 2022: GBP0.7m), as
set out in the table below:
Qualifying R&D expenditure GBP'm
* Materials 1.6
* Payroll 3.0
* Other 0.7
---------------------------- ------
5.3
Non-qualifying expenditure 2.9
---------------------------- ------
8.2
---------------------------- ------
R&D credit 1.8
---------------------------- ------
In keeping with the Company's changing status from research to
development to commercialisation, operating costs are stated after
deduction of GBP0.2m in respect of capitalised development costs
for the S Series H-Power Generator. This is the first time such
costs have been capitalised by the Company.
The GBP2.0m receipt from ABB and GBP1.0m receipt from R&D
credits in respect of the 2021 financial year meant that the
Company finished the year with a cash balance of GBP32.7m, in line
with the expected cash burn for overheads of about GBP1.1m per
month (based on GBP6.8m over six-months). A summary of the cash
flow is set out within the table below:
GBP'm
Net loss before tax (8.0)
Non-cash items 1.2
-------------------------- ------
(6.8)
R&D credits received 1.0
Working capital movement (2.3)
-------------------------- ------
(8.1)
Investing activities (1.1)
Financing activities 1.7
(7.5)
Opening cash 40.2
-------------------------- ------
32.7
-------------------------- ------
The cash position at 30 June 2023 was GBP30.4m with monthly cash
burn expected to increase towards GBP1.5m per month (before
reimbursements under the grant) as the company scales up for
delivery of the S Series H-Power Generators for the grant, ACCIONA
and Speedy Hire.
Outlook
We remain extremely optimistic over the outlook for the hydrogen
economy and AFC Energy's role in it. Material funding continues to
be allocated by both Governments and the private sector and we now
are seeing the fruits of that investment.
For AFC Energy, the focus for the remainder of this year is to
make the first delivery of the next generation H-Power Generators,
with a particular focus on fulfilling market demand from Speedy
Hire in the UK and ACCIONA in Spain. We are confident that we are
on track to deliver on these commitments, thereby underpinning our
revenue targets for next year.
The remainder of this financial year will see continued rental
revenue from H-Power Towers (via Speedy Hire) and hydrogen sales
into those sites, before the transition to a larger sales-based
revenue model through our relationship with Speedy Hire and other
potential distributors, dealers and plant hire businesses
overseas.
The continued execution of our strategy to deliver a zero
emission, hydrogen fuelled generator to displace diesel continues
to align very well with industry projections and commitments and so
it is important to capitalise on these opportunities with short
term focus on market penetration and deployments.
We will continue to deliver on our manufacturing strategy
highlighting progress with potential third-party contract
manufacturers who can support our ambitious scale up targets.
Further evidence of a scaled up, modular ammonia cracker
technology is also forecast over the next six months, highlighting
the potential value AFC Energy has not just in fuel cell
technology, but also hydrogen generation - each a huge addressable
market in their own right.
STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 April 2023
Six months Six months Year ended
ended ended 31 October
30 April 30 April 2022
Note 2023 2022 GBP000
GBP000 GBP000 Audited
Unaudited Unaudited
--------------------------------- ------- ----------- ----------- ------------
Revenue from customer
contracts 3 201 276 582
Cost of sales (164) (251) (467)
--------------------------------- ------- ----------- ----------- ------------
Gross income 37 25 115
Other income 13 - 22
Operating costs 4 (8,209) (8,627) (19,749)
--------------------------------- ------- ----------- ----------- ------------
Operating loss (8,159) (8,602) (19,612)
--------------------------------- ------- ----------- ----------- ------------
Finance cost 5 (42) (25) (19)
Bank interest receivable 5 184 84 143
--------------------------------- ------- ----------- ----------- ------------
Loss before tax (8,017) (8,543 ) (19,488)
--------------------------------- ------- ----------- ----------- ------------
Taxation 6 1,765 745 3,042
--------------------------------- ------- ----------- ----------- ------------
Loss for the financial
period and total comprehensive
loss attributable to
owners of the Company (6,252) (7,798) (16,446)
--------------------------------- ------- ----------- ----------- ------------
Basic loss per share 7 (0.85) (1.06)p (2.24)p
Diluted loss per share 7 (0.85) (1.06)p (2.24)p
--------------------------------- ------- ----------- ----------- ------------
All amounts relate to continuing operations. There were no items
of other comprehensive income during the period.
The above unaudited statement of profit and loss should be read
in conjunction with the accompanying notes.
STATEMENT OF FINANCIAL POSITION
As at 30 April 2023
30 April 30 April 31 October
2023 2022 2022
Note GBP000 GBP000 GBP000
Unaudited Unaudited Audited
--------------------------- ------- ----------- ----------- -----------
Assets
Non-current assets
Intangible assets 8 496 890 311
Right-of-use assets 9 1,353 733 976
Tangible fixed assets 10 3,761 3,197 3,282
--------------------------- ------- ----------- ----------- -----------
5,610 4,820 4,569
--------------------------- ------- ----------- ----------- -----------
Current assets
Inventory 43 668 43
Receivables 11 2,892 935 1,160
Income tax receivable 4,815 1,778 4,075
Cash and cash equivalents 32,736 48,578 40,220
Restricted cash 612 612 612
--------------------------- ------- ----------- ----------- -----------
41,098 52,571 46,110
--------------------------- ------- ----------- ----------- -----------
Total assets 46,708 57,391 50,679
--------------------------- ------- ----------- ----------- -----------
Current liabilities
Payables 12 (3,084) (3,920) (3,644)
Lease liabilities (478) (266) (298)
--------------------------- ------- ----------- ----------- -----------
(3,562) (4,186) (3,942)
--------------------------- ------- ----------- ----------- -----------
Non-current liabilities
Lease liabilities (847) (490) (698)
Provisions (301) (400) (301)
--------------------------- ------- ----------- ----------- -----------
(1,148) (890) (999)
--------------------------- ------- ----------- ----------- -----------
Total liabilities (4,710) (5,076) (4,941)
--------------------------- ------- ----------- ----------- -----------
Total net assets 41,998 52,315 45,738
--------------------------- ------- ----------- ----------- -----------
Capital and reserves
attributable to owners
of the Company
Share capital 745 735 735
Share premium 118,477 116,457 116,487
Other reserve 4,585 2,673 4,073
Retained deficit (81,809) (67,550) (75,557)
--------------------------- ------- ----------- ----------- -----------
Total equity attributable
to shareholders 41,998 52,315 45,738
--------------------------- ------- ----------- ----------- -----------
The above unaudited statement of financial position should be
read in conjunction with the accompanying notes.
STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 April 2023
Share Share Other Retained
capital premium reserve loss Total
GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------------- --------- --------- --------- --------- ---------
Balance at 1 November 2022 735 116,487 4,073 (75,557) 45,738
Loss after tax for the period - - - (6,252) (6,252)
-------------------------------------- --------- --------- --------- --------- ---------
Total comprehensive income - - - (6,252) (6,252)
Issue of equity shares 10 1,990 - - 2,000
Exercise of share options
Equity settled share-based
payments
* Charged in the period - - 512 - 512
-------------------------------------- --------- --------- --------- --------- ---------
Total transactions with shareholders 10 1,990 512 - 2,512
-------------------------------------- --------- --------- --------- --------- ---------
Balance at 30 April 2023 745 118,477 4,585 (81,809) 41,998
-------------------------------------- --------- --------- --------- --------- ---------
For the six months ended 30 April 2022
Share Share Other Retained
capital premium reserve loss Total
GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------------- --------- --------- --------- --------- ---------
Balance at 1 November 2021 734 116,448 2,456 (59,752) 59,886
Loss after tax for the period - - - (7,798) (7,798)
-------------------------------------- --------- --------- --------- --------- ---------
Total comprehensive income - - - (7,798) (7,798)
Issue of equity shares 1 9 - - 10
Exercise of share options
Equity settled share-based
payments
* Charged in the period - - 217 - 217
-------------------------------------- --------- --------- --------- --------- ---------
Total transactions with shareholders 1 9 217 - 227
-------------------------------------- --------- --------- --------- --------- ---------
Balance at 30 April 2022 735 116,457 2,673 (67,550) 52,315
-------------------------------------- --------- --------- --------- --------- ---------
For the year ended 31 October 2022
Share Share Other Retained
capital premium reserve loss Total
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------------------- --------- --------- --------- --------- ---------
Balance at 1 November 2021 734 116,448 2,456 (59,752) 59,886
Loss after tax for the year - - - (16,446) (16,446)
----------------------------------------------- --------- --------- --------- --------- ---------
Total comprehensive income - - - (16,446) (16,446)
Issue of equity shares 1 39 - - 40
Exercise of share options
Equity settled share-based
payments
* Lapsed or exercised in the period - - (641) 641 -
* Charged in the period - - 1,682 - 1,682
Fair value of warrants accounted
for as equity - - 576 - 576
----------------------------------------------- --------- --------- --------- --------- ---------
Total transactions with shareholders 1 39 1,617 641 2,258
----------------------------------------------- --------- --------- --------- --------- ---------
Balance at 31 October 2022 735 116,487 4,073 (75,557) 45,738
----------------------------------------------- --------- --------- --------- --------- ---------
The above unaudited statements of changes in equity should be
read in conjunction with the accompanying note.
CASH FLOW STATEMENT
For the six months ended 30 April 2022
30 April 30 April 31 October
2023 2022 2022
Note GBP000 GBP000 GBP000
Unaudited Unaudited Audited
------------------------------ ------- ----------- ----------- -----------
Cash flows from operating
activities
Loss before tax for the
period (8,017) (8,543) (19,488)
Adjustments for:
Amortisation of intangible
assets 8 34 61 473
Impairment of intangible
assets 8 - - 294
Depreciation of right
of use asset 9 229 151 379
Depreciation of tangible
assets 10 578 559 994
Impairment of tangible
assets 10 - - 255
Loss on disposal of tangible
assets 10 - - 126
Equity-settled share-based
payment expenses 512 217 1,682
Interest received 5 (184) (84) (143)
Lease finance charges 5 35 15 33
------------------------------ ------- ----------- ----------- -----------
Cash flows from operating
activities before changes
in working capital and
provisions (6,813) (7,624) (15,395)
R&D tax credits received 1,025 549 546
Increase/(decrease) in
inventory - (7) 618
(Increase)/decrease in
other receivables (2,153) 79 (145)
Increase/(decrease) in
payables (141) 2,224 1,948
Increase/(decrease) in
provision - (253) (353)
------------------------------ ------- ----------- ----------- -----------
Cash absorbed by operating
activities (8,082) (5,032) (12,781)
Cash flows from investing
activities
Purchase of plant and
equipment 10 (1,057) (1,488) (2,388)
Additions to intangible
assets 8 (218) (205) (334)
Interest received 5 184 84 151
------------------------------ ------- ----------- ----------- -----------
Net cash absorbed by
investing activities (1,091) (1,609) (2,571)
Cash flows from financing
activities
Proceeds from the issue 2,000 - -
of share capital
Proceeds from the exercise
of options - 9 40
Proceeds from the grant
of warrants - - 576
Lease payments (276) (150) (381)
Lease interest paid 5 (35) (15) (38)
------------------------------ ------- ----------- ----------- -----------
Net cash from financing
activities 1,689 (156) 197
Net decrease in cash
and cash equivalents (7,484) (6,796) (15,155)
Cash and cash equivalents
at start of period 40,220 55,375 55,375
------------------------------ ------- ----------- ----------- -----------
Cash and cash equivalents
at end of period 32,736 48,578 40,220
------------------------------ ------- ----------- ----------- -----------
The above unaudited statement of cash flows should be read in
conjunction with the accompanying note.
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
These interim results for the six-months ended 30 April 2023 are
unaudited. They have been prepared in accordance with IAS 34
'Interim Financial Reporting' in conformity with Companies Act
2006. These 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 2022. The comparative information contained in the report
does not constitute the accounts within the meaning of section 435
of the Companies Act 2006.
A number of new or amended standards became applicable for the
current reporting period. The Company did not have to change its
accounting policies or make retrospective adjustments as a result
of adopting these standards.
These interim results have been prepared on a going concern
basis notwithstanding the trading losses being carried forward and
the expectation that trading losses will continue for the near
future as the company transitions from research and development to
commercial operations.
The directors are required to assess whether it is appropriate
prepare these interim results on a going concern basis. In making
this assessment the directors need to be satisfied that the company
can meet its obligations as they fall due for at least 12 months
from the date of this report.
The directors make their assessment based on a cash flow model
prepared by management which sets out expected cash flows through
to 31 October 2024. Extending the period beyond the minimum 12
months from the date of this report provides additional comfort
when making the assessment.
Downside sensitivities have been applied to the cash flows
primarily related to an overspend of product development costs (for
both materials and labour) and an under-recovery of R&D tax
credits.
Having concluded that the company remains a going concern, these
interim results have therefore been prepared on that basis.
2. 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, which researches
and develops fuel cell and fuel conversion technologies. In the
period to 30 April 2023, the Company operated mainly in the United
Kingdom. All non-current assets are in the United Kingdom.
3. REVENUE
Six months Six months Year ended
ended ended 31 October
30 April 30 April 2022
2023 2022 GBP000
GBP000 GBP000 Audited
Unaudited Unaudited
----------------------- ----------- ----------- ------------
Rendering of services
earned over time
Rental 133 107 225
Other revenue 68 169 357
----------------------- ----------- ----------- ------------
Revenue 201 276 582
----------------------- ----------- ----------- ------------
Being
Cah consideration 129 82 367
Consideration in kind 72 194 215
----------------------- ----------- ----------- ------------
Revenue 201 276 582
----------------------- ----------- ----------- ------------
The consideration in kind related to marketing services received
from the customer and fair valued in accordance with the contract.
The fair value was expressly quantified in the contract and agreed
by both parties.
4. OPERATING COSTS
The operating costs consist of:
Six months Six months Year ended
ended ended 31 October
30 April 30 April 2022
2023 2022 GBP000
GBP000 GBP000 Audited
Unaudited Unaudited
------------------------------- ----------- ----------- ------------
Materials 1,502 2,788 5,105
Payroll (excluding directors) 3,078 1,483 4,907
4,580 4,271 10,012
Directors' costs 776 813 1,642
Other employment costs 463 655 1,047
Occupancy costs 368 972 772
Other administrative expenses 911 985 2,750
------------------------------- ----------- ----------- ------------
7,098 7,695 16,223
Amortisation of intangible
assets 34 62 474
Depreciation of Right of
Use assets 229 151 379
Depreciation of tangible
fixed assets 578 559 994
Less depreciation of rental
asset charged to cost of
sales (96) (112) (218)
Consideration in kind 72 194 215
Share based payments 512 217 1,682
Operating costs capitalised (218) - -
------------------------------- ----------- ----------- ------------
8,209 8,766 19,749
------------------------------- ----------- ----------- ------------
Occupancy costs include repairs and maintenance, utilities and
lease payments. For the six-months ended 30 April 2022, occupancy
costs included information technology costs, which have been
reclassified into administrative expenses to better reflect the
nature of the costs.
5. NET FINANCE INCOME
Six months Six months Year ended
ended ended 31 October
30 April 30 April 2022
2023 2022 GBP000
GBP000 GBP000 Audited
Unaudited Unaudited
--------------------------- ----------- ----------- ------------
Lease interest (35) (15) (38)
Exchange rate differences - (9) 21
Bank charges (7) (1) (2)
--------------------------- ----------- ----------- ------------
Total finance cost (42) (25) (19)
--------------------------- ----------- ----------- ------------
Bank interest receivable 184 84 143
--------------------------- ----------- ----------- ------------
142 59 124
--------------------------- ----------- ----------- ------------
6. TAXATION
Six months Six months Year ended
ended ended 31 October
30 April 30 April 2022
2023 2022 GBP000
GBP000 GBP000 Audited
Unaudited Unaudited
----------------------------- ----------- ----------- ------------
Recognised in the statement
of comprehensive income:
R&D tax credit - current
period 1,765 745 3,050
R&D tax credit - prior
year - - (8)
Total tax credit 1,765 745 3,042
----------------------------- ----------- ----------- ------------
7. 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 31 October
30 April 30 April 2022
2023 2022 GBP000
GBP000 GBP000 Audited
Unaudited Unaudited
------------------------------ ----------- ----------- ------------
Basic loss per share (pence) 0.85 1.06p 2.24p
Diluted loss per share
(pence) 0.85 1.06p 2.24p
Loss attributable to equity
Shareholders GBP6,252 GBP7,798k 16,466k
------------------------------ ----------- ----------- ------------
Weighted average number
of shares in issue 736,732 734,500 734,745
------------------------------ ----------- ----------- ------------
Diluted earnings per share:
There are share options and warrants outstanding as at 30 April
2023 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.
8. INTANGIBLE ASSETS
D evelopment C ommercial Intangible
costs P atents rights assets
GBP000 GBP000 GBP000 GBP000
-------------------------- ------------- ----------- ------------ -----------
Cost
As at 1 November 2022 229 1,220 121 1,570
Additions 2 18 1 - 219
D isposal (229) - - (229)
-------------------------- ------------- ----------- ------------ -----------
As at 30 April 2023 218 1,221 121 1,560
-------------------------- ------------- ----------- ------------ -----------
Amortisation
As at 1 November 2022 229 979 51 1,259
Charge for the financial
period - 22 12 34
D isposal (229) - - (229)
-------------------------- ------------- ----------- ------------ -----------
As at 30 April 2023 - 1,001 63 1,064
-------------------------- ------------- ----------- ------------ -----------
Net book value
As at 1 November 2022 - 241 70 311
As at 30 April 2023 218 219 58 496
-------------------------- ------------- ----------- ------------ -----------
D evelopment C ommercial Intangible
costs P atents rights assets
GBP000 GBP000 GBP000 GBP000
-------------------------- ------------- ----------- ------------ -----------
Cost
As at 1 November 2021 229 886 121 1,236
Additions - 206 - 334
-------------------------- ------------- ----------- ------------ -----------
As at 30 April 2022 229 1,092 121 1,442
-------------------------- ------------- ----------- ------------ -----------
Amortisation
As at 1 November 2021 74 384 33 491
Charge for the financial
period 0 14 47 61
-------------------------- ------------- ----------- ------------ -----------
As at 30 April 2022 74 398 80 552
-------------------------- ------------- ----------- ------------ -----------
Net book value
As at 1 November 2021 155 504 88 747
As at 30 April 2022 155 694 41 890
-------------------------- ------------- ----------- ------------ -----------
D evelopment C ommercial Intangible
costs P atents rights assets
GBP000 GBP000 GBP000 GBP000
----------------------- ------------- ----------- ------------ -----------
Cost
As at 1 November 2021 229 886 121 1,236
Additions - 334 - 334
----------------------- ------------- ----------- ------------ -----------
As at 31 October 2022 229 1,220 121 1,570
----------------------- ------------- ----------- ------------ -----------
Amortisation
As at 1 November 2021 74 384 33 491
Charge for the year 34 422 18 474
Impairment charge 121 173 - 294
----------------------- ------------- ----------- ------------ -----------
As at 31 October 2022 229 979 51 1,259
----------------------- ------------- ----------- ------------ -----------
Net book value
As at 1 November 2021 155 504 88 747
As at 31 October 2022 - 241 70 311
----------------------- ------------- ----------- ------------ -----------
9. RIGHT-OF-USE ASSETS
Buildings
GBP000
-------------------------- ----------
Cost
As at 1 November 2022 1,885
Additions 606
Disposals ( 476)
----------------------------- ----------
As at 30 April 2023 2,009
----------------------------- ----------
Depreciation
As at 1 November 2022 909
Charge for the financial
period 229
Disposals ( 476)
----------------------------- ----------
As at 30 April 2023 662
----------------------------- ----------
Net book value
As at 1 November 2022 976
As at 30 April 2023 1,353
----------------------------- ----------
Buildings
GBP000
-------------------------- ----------
Cost
As at 1 November 2021 1,415
Additions -
-------------------------- ----------
As at 30 April 2022 1,415
----------------------------- ----------
Depreciation
As at 1 November 2021 531
Charge for the financial
period 151
----------------------------- ----------
As at 30 April 2022 682
----------------------------- ----------
Net book value
As at 1 November 2021 884
As at 30 April 2022 733
----------------------------- ----------
Buildings
GBP000
----------------------- ----------
Cost
As at 1 November 2021 1,415
Additions 470
-------------------------- ----------
As at 31 October 2022 1,885
-------------------------- ----------
Depreciation
As at 1 November 2021 530
Charge for the year 379
As at 31 October 2022 909
-------------------------- ----------
Net book value
As at 1 November 2021 884
As at 31 October 2022 976
-------------------------- ----------
10.tangible fixed ASSETS
Fixtures,
fittings
Leasehold Decommissioning and Motor Demonstration
Improvements Asset equipment vehicles equipment Subtotal
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
Cost
As at 1 November
2022 2,570 300 1,581 18 504 4,973
Additions - - 32 32 - 64
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
As at 30 April
2023 2,570 300 1,613 50 504 5,037
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
Depreciation
As at 1 November
2022 746 285 1,327 18 334 2,710
Charge for the
financial period 303 5 79 - 23 410
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
As at 30 April
2023 1,049 290 1,406 18 357 3,120
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
Net book value
As at 1 November
2022 1,824 15 254 - 170 2,263
As at 30 April
2023 1,521 10 207 32 147 1,917
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
Manu-
facturing Assets
Rental Computer and test under
Subtotal asset equipment stands construction Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
Cost
As at 1 November
2022 4,973 703 318 438 406 6,838
Additions 64 - 9 - 984 1,057
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
As at 30 April
2023 5,037 703 327 438 1,390 7,895
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
Depreciation
As at 1 November
2022 2,710 504 157 185 - 3,556
Charge for the
financial period 410 96 46 26 - 578
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
As at 30 April
2023 3,120 600 203 211 - 4,134
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
Net book value
As at 1 November
2022 2,263 199 161 253 406 3,282
As at 30 April
2023 1,917 103 124 227 1,390 3,761
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
The company has set up a decommissioning asset for the estimated
cost of removing the plant and equipment installed at the Stade
site in Germany. Having renewed the Stade hydrogen offtake
agreement for a further five-years, from January 2023, no decision
has been taken as to when the site might be decommissioned.
GBP1.2m of the assets under construction relate to leasehold
improvement work concluded following the end of the six-month
period.
Fixtures,
fittings
Leasehold Decommissioning and Motor Demonstration
Improvements Asset equipment vehicles equipment Subtotal
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
Cost
As at 1 November
2021 958 300 1,340 18 622 3,258
Additions 1,100 - 350 - - 1,450
Disposals - - - - (118) (118)
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
As at 30 April
2022 2,058 300 1,690 18 504 4,570
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
Depreciation
As at 1 November
2021 302 265 1,244 18 198 2,027
Charge for the
financial period 145 10 33 - 105 293
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
As at 30 April
2022 447 275 1,277 18 303 2,320
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
Net book value
As at 1 November
2021 655 35 96 - 424 1,211
As at 30 April
2022 1,611 25 413 - 201 2,250
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
Manu-
facturing Assets
Rental Computer and test under
Subtotal asset equipment stands construction Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
Cost
As at 1 November
2021 3,258 703 199 436 - 4,576
Additions 1,450 - 64 - - 1,514
Disposals (118) - - - - (118)
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
As at 30 April
2022 4,570 703 263 436 - 5,972
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
Depreciation
As at 1 November
2021 2,027 98 86 96 - 2,307
Charge for the
financial period 293 111 26 38 - 468
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
As at 30 April
2022 2,320 209 112 134 - 2,775
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
Net book value
As at 1 November
2021 1,211 605 113 340 - 2,269
As at 30 April
2022 2,250 494 151 302 - 3,197
------------------- -------------- ---------------- ----------- ----------- -------------- ---------
Fixtures,
fittings
Leasehold Decommissioning and Motor Demonstration
Improvements Asset equipment vehicles equipment Subtotal
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------ -------------- ---------------- ----------- ----------- -------------- ---------
Cost
As at 1 November
2021 958 300 1,340 18 622 3,258
Additions 1,620 - 241 - - 1,861
Disposals (8) - - - (118) (126)
------------------ -------------- ---------------- ----------- ----------- -------------- ---------
As at 31 October
2022 2,570 300 1,581 18 504 4,973
------------------ -------------- ---------------- ----------- ----------- -------------- ---------
Depreciation
As at 1 November
2021 302 265 1,244 18 198 2,027
Charge for the
year 444 20 83 - 69 616
Impairment - - - - 67 67
As at 31 October
2022 746 285 1,327 18 334 2,710
------------------ -------------- ---------------- ----------- ----------- -------------- ---------
Net book value
As at 1 November
2021 655 35 96 - 424 1,211
As at 31 October
2022 1,824 15 254 - 170 2,263
------------------ -------------- ---------------- ----------- ----------- -------------- ---------
Manu-
facturing Assets
Rental Computer and test under
Subtotal asset equipment stands construction Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------ -------------- ---------------- ----------- ----------- -------------- ---------
Cost
As at 1 November
2021 3,258 703 199 436 - 4,576
Additions 1,861 - 119 2 406 2,388
Disposals (126) - - - - (126)
------------------ -------------- ---------------- ----------- ----------- -------------- ---------
As at 31 October
2022 4,973 703 318 438 406 6,838
------------------ -------------- ---------------- ----------- ----------- -------------- ---------
Depreciation
As at 1 November
2021 2,027 98 86 96 - 2,307
Charge for the
year 616 218 71 89 - 994
Impairment 67 188 - - - 255
As at 31 October
2022 2,710 504 157 185 - 3,556
------------------ -------------- ---------------- ----------- ----------- -------------- ---------
Net book value
As at 1 November
2021 1,211 605 113 340 - 2,269
As at 31 October
2022 2,263 199 161 253 406 3,282
------------------ -------------- ---------------- ----------- ----------- -------------- ---------
11. RECEIVABLES
30 April 30 April 31 October
2023 2022 2022
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
------------------- ----------- ----------- -----------
Trade receivables 166 57 142
VAT receivables 1,110 - 401
Other receivables 844 565 303
Prepayments 772 313 314
2,892 935 1,160
------------------- ----------- ----------- -----------
There is no significant difference between the fair value of the
receivables and the values stated above. Of the GBP1.1m of VAT
receivables, GBP0.7m was received in May 2023.
The increase in other receivables is mainly due to the increase
in advance payments made to suppliers, as the value of materials
purchases increases.
12. PAYABLES
30 April 30 April 31 October
2023 2022 2022
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
------------------ ----------- ----------- -----------
Trade payables 986 770 445
Deferred revenue 1,424 2,177 1,600
Other payables 485 217 349
Accruals 189 756 1,250
3,084 3,920 3,644
------------------ ----------- ----------- -----------
The deferred revenue relates to non-refundable payments made
under the November 2021 ABB contract. As part of the renegotiation
of this contract in March 2023, it was agreed with ABB that this
balance would be earned evenly against pre-agreed discounts over
the sale of the first ten units to ABB. If these sales are not all
made within the pre-agreed time period then any residual balance
will be deemed earned by the company, as the payments are
non-refundable.
The GBP0.2m reduction in deferred revenue between 31 October
2022 and 30 April 2023 reflects the cancellation of the Juelich
contract.
13. PosT BALANCE SHEET EVENTS
On 18 July 2023, the company announced that it had renewed the
hydrogen offtake agreement at the Stade facility in Germany. The
contract is for a five-year period, from January 2023, with a
six-month notice period.
On 26 July 2023, the company announced that it had secured a UK
Government Grant of up to GBP4.3m in match funding.
On 27 July 2023, the company announced that it had appointed,
effective 1 August 2023, Duncan Neale as a non-executive director
and chair of the Audit Committee.
On 28 July 2023, the company announced the proposed launch of a
dedicated hydrogen powered generator plant hire business as a joint
venture with Speedy Hire plc.
14. 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 2022. 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 .
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END
IR RMMJTMTJJBFJ
(END) Dow Jones Newswires
July 31, 2023 02:00 ET (06:00 GMT)
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