RCS - AFC Energy Plc - Quarterly Newsletter <Origin Href="QuoteRef">AFEN.L</Origin>

AFC EnergyAnnouncement

30/06/2016 07:30

RNS Number : 7253C
AFC Energy Plc
30 June 2016
AFC Energy Quarterly Newsletter- June 2016
Dear Shareholder,
It is my pleasure to present to shareholders an overview of the Company's activities and achievements over the past quarter ended 30th June 2016. 
As many of you will have seen, the last quarter has been witness to multiple external factors that have had material effects on global markets, political certainty and international energy policy. Despite these events, which have led to uncertainty across the capital markets in particular, I'm pleased to announce that AFC Energy has continued to focus on progressing its targeted milestones for 2016. 
I'm acutely aware several shareholders have expressed concerns over the fall in our share price in recent months. Whilst it is not always appropriate for me to comment specifically on share price movements or targets, it is true to say that the Company has had a material overhang in its stock at least since March 2016 where several million shares have been sold on market by one seller which many saw culminate in a block trade a week or so ago and therefore closing out their position. 
Highlights
 Technology & Product development
 Results of AGM
 Receipt of 2.05m EU funding reimbursement
Technology & Product development
In the first quarter of 2016, we announced the commissioning of the KORE fuel cell system in Germany and the activities we were undertaking to investigate and document the findings achieved during that process, together with the previous twelve months' work. 
At the Annual General Meeting (AGM) in April this year, I provided shareholders with a timeline of activities which were planned to be undertaken during the course of 2016. Examples of outcomes and activities achieved during the course of the second quarter include:
1. Recommencement of operations at Stade, whereby the KORE system is being utilised to test key concepts of Generation 2 fuel cell stack design improvements;
2. Achievement of the longest running trial to date of a single fuel cell stack at Stade with further longevity testing ongoing;
3. On schedule to deliver the 10kW single stack product design & manufacture; 
4. On schedule to deliver the 1MW product concept & design; and
5. Unmanned operation of the KORE system in Germany further evidencing the ability to operate the fuel cell system remotely and safely. 
In summary, there is significant work ongoing within the technical team and with our partners plantIng towards delivery of our 2016 technical milestones.
Results of the 2016 Annual General Meeting
We held the AGM at Chelsea Football Club on 28th April and I was pleased to see not only a good turnout from shareholders, but also observe the robust approval of all resolutions. This further demonstrates the ongoing strong support we have from our loyal shareholder base, who continue to believe in the opportunities for future success following the progress made by the Company going into 2016. 
The AGM also provided an excellent opportunity to provide more colour around the rationale for the Milestones, which we have set for 2016 and the progress which the team is making, in order to achieve them. With the shareholder Q&A session lasting nearly an hour, following my main presentation, I think this afforded our shareholders an excellent platform to table all the priority areas of interest. Equally, I trust that the shareholders found the discussion interesting and informative.
Although we had a strong turnout on the day, I am conscious that it was not possible for all our shareholders to attend. For their benefit, some of the key messages from the day included the following: 
 On the technical side, we are seeking to demonstrate improved operational longevity of the fuel cell stack and to progress towards commercial industry standard operating levels for longevity and availability during 2016
 In relation to the plant development targets, we are concentrating our efforts under the strategic partnership with plantIng, to support the development of 10kW to 1MW fuel cell systems, in addition to the 240kW Product. In order to facilitate the accelerated deployment of potential commercial projects, we decided to design and deploy a single cartridge 10kW system before the end of this year and deploy our larger 1MW system in 2017
 In relation to the commercial/strategic milestones, we are seeking to build on the agreement we have entered with plantIng, by continuing to pursue a number of strategic partnership opportunities and potential fuel cell deployment opportunities internationally. We remain focused on procuring value added partnerships with recognised industrial and institutional groups as well as commencing scoping studies and securing contracts for at least two fuel cell projects
With regards the pipeline of projects being pursued, I have had the opportunity to visit both Korea and Dubai again during the quarter to support ongoing initiatives in those two regions and I hope to have further announcements in relation to these in the coming months. Importantly, all of the work undertaken by the Company over the past six months is directly relevant to the delivery of our strategic milestones.
Receipt of 2.05 million EU funding reimbursement
On 16th June, we were pleased to announce the receipt of a 2.052m cash payment from the European Union's Fuel Cells and Hydrogen Joint Undertaking (FCH JU); this amount arises after taking into account net cash payments to other project partners for the POWER-UP programme. The funds, which were reimbursed, relate to the POWER-UP project for the period ended 30th June 2015.
We expect to receive further EU reimbursements, in respect of the POWER-UP project, for the claim period post 30th June 2015. The team has been submitting the relevant claims and pro-actively following up with the relevant EU teams which supervise this area, to ensure we procure funds which are owed to us on a timely basis, and in turn, optimise our working capital position.
BREXIT
Last week, we saw the outcomes of the BREXIT referendum where the UK voted to leave the European Union. 
Despite this decision, AFC Energy will continue to deliver on its commitments under the two outstanding EU programmes for which the Company is the project Co-ordinator, namely POWER-UP and ALKAMMONIA, and we expect to receive all outstanding grant funding arising from these projects. 
Going forward, there is uncertainty over the applicability of EU funding for new projects which may or may not arise and we are in dialogue with the EU FCH JU in regards to future EU-funded opportunities. Of course this will not preclude the Company from pursuing any commercial project opportunities in the EU.
In addition, as many of the short-term opportunities for the Company under investigation relate to projects in non-EU Member States, this would help to mitigate any impact from BREXIT on the Company's business plan or commercialisation strategy going forward. 
As is the case for all other businesses, we will of course need to wait and see the outcome of progress made during the transition period, before the terms of the exit are agreed and implemented. We will carefully monitor these developments and report back to shareholders in due course.
Conclusion
In conclusion, I am again pleased to report that the technical development activities for the fuel cell stack and balance of plant remain broadly on schedule and we have started to test the key concepts for design improvements to the fuel cell stacks. Further, the team is continuing constructive dialogue with parties in the Middle East and South Korea, towards securing scoping studies and potential contracts. 
I am also pleased to report that active dialogue with potential industrial partners is continuing. At the same time, the team has been reviewing and augmenting the Company's portfolio of patents and intellectual property. We are also reviewing opportunities to outsource certain sub-assemblies, in order to further accelerate our technology development. 
The growing opportunity for development of the global hydrogen economy remains abundantly clear - increasing demand for cutting edge technology that efficiently creates clean and sustainable energy. AFC now has a fuel cell cartridge capable of operating at or above its nameplate capacity and we are continuing the momentum generated in 2015 to improve the longevity and availability of our fuel cell system, so as to meet industry demands for commercial deployment. 
I would like to thank all the staff, partners and contractors working with AFC together with the EU's FCH JU, and the Board, for their continued support and look forward to reporting back to shareholders as we progress further towards achievement of the 2016 Milestones. 
Yours sincerely,
Adam Bond
Chief Executive Officer

This information is provided by RNS
The company news service from the London Stock Exchange
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