REG - AFC Energy Plc - Annual Financial Report and Strategic Update
19/03/2025 07:15
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RNS Number : 1992B AFC Energy Plc 19 March 2025
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19 March 2025
AFC Energy PLC
("AFC Energy" or the "Company")
Final Results for year ended 31 October 2024 and Strategic Update
AFC Energy (AIM: AFC), a leading provider of hydrogen power generation
technologies, is pleased to announce its results for the year ended 31 October
2024 ("FY 2024"). The results are included below and copies are available
at www.afcenergy.com
(https://url.uk.m.mimecastprotect.com/s/uAxSCGwmyiJgm2SKNHZz?domain=afcenergy.com)
.
John Wilson, Chief Executive of AFC Energy, said:
"Since joining AFC Energy, my focus has been on working with the Board to
develop the optimal plan to accelerate our path to commercialisation shaped
around how we focus on areas of greatest opportunity and deliver a market
push, rather than relying solely on market pull.
We see a compelling opportunity to displace fossil or carbon-intensive fuels
by offering an integrated hydrogen solution that is both clean and
commercially viable on a total cost of ownership basis, thereby solving the
twin challenges of cost and availability that continue to restrict adoption.
We believe AFC Energy is well-positioned to be among the first to deliver a
commercially viable, zero-emission alternative to diesel at scale.
Today's launch of the Hy-5 ammonia cracker reflects that opportunity. We can
now provide hydrogen onsite, at materially lower cost and without the need for
complex supply chains or new infrastructure. This addresses both the economic
and logistical barriers faced by many construction companies and industrial
operators. Compared to alternatives like bottled hydrogen or static
electrolysers, Hy-5 will deliver a faster, more flexible and cost-effective
route to decarbonisation.
We continue to see significant opportunity in our fuel cell technology.
Through our joint venture with Speedy Hire, we've gained valuable deployment
experience and market insight, and a more cost-effective hydrogen supply will
unlock significant growth. We now see a clear path to lowering generator costs
and deploying scalable, modular systems that address the diverse demands of
our customers.
Together, our ammonia cracking and fuel cell technologies give us the ability
to offer a fully integrated, zero-emission alternative to diesel generators -
one that we believe will be competitive not just on sustainability grounds,
but also on cost. This combination gives us the ability to achieve price
parity with Stage 5 diesel generators, a critical benchmark for mainstream
commercial adoption, particularly in the construction sector. This underpins
the strategic direction we are now pursuing. We have already seen strong
engagement across multiple sectors, including infrastructure, transportation
and off-grid power. It is increasingly clear that hydrogen adoption can be
dramatically accelerated if we provide solutions that remove cost and
complexity from the equation. That is the role we intend to play.
Our strategy going forward is therefore about focus. We are directing more
of our resources into accelerating production of the Hy-5 and larger-scale
crackers, while also driving down the cost and increasing the scalability of
our fuel cell systems. We believe this will position AFC Energy for faster
growth and significantly greater value creation in the years ahead. We look
forward to updating shareholders as we execute this strategy and work towards
delivering clean, low-cost hydrogen power at scale."
FY 2024 Highlights:
· Delivery of 20, 30kW S Series H-Power Generators to our joint venture
with Speedy Hire Plc, Speedy Hydrogen Solutions, generating £4.0m of revenue
(2023: £nil);
· Deployment of 45 kVA H-Power Generator (comprising 30kW fuel cell and
60kWh battery) at an ACCIONA construction site in Madrid, Spain;
· Establishment of production facility capable of producing up to 250
fuel cells annually;
· Launch of Hyamtec to drive the commercialisation of AFC's proprietary
ammonia cracker technology for an affordable, scalable and accelerated route
for hydrogen production;
· £15.4 million cash at year end;
· Loss after tax of £17.4m (2023: £17.5m); and
· R&D investment in 2024 of £9.5m (2023: £8.5m), with £2.7m
R&D tax credits received (2023: £4.1m).
Post period developments
· Commencement of roll out and near term deployment of H-Power
generator sets to Speedy Hydrogen Solutions' end customers with continued
pipeline development;
· H-Power generator shipped to TAMGO for Aramco trial and mutual joint
business plan to capitalise on the regional opportunity under development;
· Launch of Gen 3 H-Power S+ 200kW generator, based on initial ABB
investment but at significantly lower price point - now on trial deployment
with Brett Aggregates; and
· Appointments of new CEO, John Wilson, and CFO, Karl Bostock, to drive
AFC's commercialisation.
Strategic Repositioning: from technology-led to market-led growth
· Successful commercialisation of AFC Energy's world-leading technology
is the clear focus for the new management team;
· Strategic priority is now on delivering low-cost, on-site hydrogen
production and price parity with incumbent diesel solutions; and
· We are focusing on market "push" through innovative lower cost
hydrogen solutions to remove final barriers to adoption.
Fuel Cell Priorities
· Focused on driving substantial manufacturing cost reductions for both
the S Series and S+ Series H-Power Generators;
· Programmes underway to deliver material reductions in size and weight
of the H-Power Generator product portfolio;
· Improving performance of S-Series stack technology; and
· Developing compact 100kW modular, scalable power module for S+
Series.
Hyamtec Priorities
· Commercialisation of Hy5, the world's first containerised, portable,
cracking module capable of producing up to 500kg/day which was launched today
for delivery from 2026;
· Scaling of multi-heat source increasing throughput 100 fold for large
scale industrial heat and hydrogen pipeline system;
· Improving energy efficiency and thermal response; and
· Confirmation and protection of the manufacturing methods for low-cost
assembly.
· Commercial roll-out and demonstration of Hyamtec systems to build up
in-field operational data; and
· Successful PCT (patent) applications filed based on core technology
with a further batch to follow in 2025.
End to End Solutions
· From 2026, hydrogen provided by Hy5, in conjunction with AFC fuel
cells aims to provide TCO (total cost of ownership) parity with a stage 5
diesel generator, accelerating the transition to clean energy at price point
equivalence; and
· Accelerated plans to further significantly reduce the cost of S
Series Generators by up to two thirds of current costs, resulting in decision,
in agreement with Speedy, to pause plans for mass roll out of generators to
preserve cash and drive substantial adoption in the medium term.
Outlook
· Additional 30kW fuel cell generator sales to Speedy Hydrogen
Solutions are expected to follow successful customer deployments:
o JV partners working to support increased customer deployments. Delivery of
further orders will follow achievement of targeted manufacturing cost
reductions; and
o We expect our strategic repositioning to significantly increase market
penetration and volume of units sold in the medium term due to achieving cost
parity with stage 5 diesel generators.
· Advanced discussions regarding development and deployment of large
scale cracker systems:
o Already able to deliver profitably at a highly competitive, and market
disruptive, price point; and
o Significant industrial engagement across multiple market application
segments.
· UK Government grants of up to £3.7 million secured for FY2025.
Investor Presentation
John Wilson, Chief Executive Officer and Karl Bostock, Chief Financial
Officer, will host a live presentation for retail investors via Investor Meet
Company on 20 March 2025, at 14.00 hrs GMT.
The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via your Investor Meet Company dashboard up until
19 March 2025, 17:00 hrs GMT, or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to meet AFC
ENERGY PLC
via: https://www.investormeetcompany.com/afc-energy-plc/register-investor
(https://www.investormeetcompany.com/afc-energy-plc/register-investor)
For further information, please contact:
AFC Energy plc +44 (0) 14 8327 6726
John Wilson (Chief Executive Officer) investors@afcenergy.com (mailto:investors@afcenergy.com)
Karl Bostock (Chief Financial Officer)
Peel Hunt LLP - Nominated Adviser and Joint Broker +44 (0) 207 418 8900
Richard Crichton / Georgia Langoulant / Emily Bhasin
Zeus - Joint Broker +44 (0) 203 829 5000
David Foreman / James Hornigold (Investment Banking)
Dominic King (Corporate Broking) / Rupert Woolfenden (Sales)
RBC Capital Markets - Joint Broker +44 (0) 20 7653 4000
Matthew Coakes / Teri Su
Eduardo Famini / Jack Wood
FTI Consulting - Financial PR Advisors +44 (0) 203 727 1000
Ben Brewerton / Chris Laing / Evie Taylor afcenergy@fticonsulting.com (mailto:afcenergy@fticonsulting.com)
About AFC Energy
AFC Energy plc is a leading innovator in hydrogen-based power and ammonia
cracking solutions, delivering clean energy for on-grid and off-grid
applications. The Company's hydrogen fuel cell technology provides a
sustainable alternative to diesel power generation, supporting electric
vehicle charging, decentralised power systems for construction, and temporary
power needs. AFC Energy is also exploring new opportunities across maritime,
data centres, and rail, driving the decarbonisation of growing electrification
demands.
The Company's subsidiary, Hyamtec, is commercialising proprietary ammonia
cracking technology to unlock new opportunities in distributed hydrogen
production. This includes hydrogen refuelling, natural gas displacement for
industrial processes, and hydrogen combustion engine conversions. Hyamtec's
solutions are designed to meet the decarbonisation needs of industries such as
mining, cement, asphalt, power generation, and heavy engineering, supporting
the global transition to clean energy.
Chairman's Report
This year, we achieved significant milestones that reflect our operational
progress, including the production and delivery of our first batch of fuel
cells, the successful launch of the Hyamtec brand, and the expansion of our
manufacturing capacity to support these developments. These achievements
reinforce AFC's position as a key contributor to the global energy transition.
The market environment for hydrogen is rapidly evolving, and the momentum
behind renewable energy remains strong. Globally, numerous large-scale
projects have reached final investment decisions to produce hydrogen from
renewable sources, with many adopting ammonia as a transport medium.
Challenges remain, particularly in the availability, logistics, and cost of
hydrogen. However, regulatory and commercial pressures on sectors such as
construction to achieve net-zero emissions is increasingly driving adoption of
clean energy alternatives. In the UK, initiatives such as the Hydrogen
Allocation Round and investments by the National Wealth Fund are paving the
way for increased hydrogen supply at more attractive prices. Against this
backdrop, AFC's ammonia cracking technology offers a transformative
opportunity to support decarbonisation in hard-to-abate sectors like heavy
manufacturing, cement, industrial heating and stationary engines, providing a
carbon-neutral alternative to LNG and natural gas.
Strategically, our focus on the construction sector represents a deliberate
and necessary shift in AFC's approach. Over recent years, we successfully
demonstrated our fuel cell technology across a variety of applications,
gaining positive feedback from partners. However, while the technology
performed to expectations, commercial traction in these sectors remained
elusive. Challenges such as the lack of affordable hydrogen supply,
infrastructure constraints, and transportation hurdles often stalled broader
adoption. Even in cases where hydrogen was available at competitive prices,
companies were hesitant to commit to substantial changes in their business
models, particularly where reliance on government subsidies created
uncertainties. The lack of experience with hydrogen as a fuel and a reluctance
to take on the risks of being first movers further compounded the issue.
Adoption will inevitably occur in these sectors, and whilst validation and
verification of our technology has been proven, our focus is now concentrated
on where the barriers to adoption are lower.
As such, the construction sector presented a uniquely compelling requirement
for hydrogen solutions. In this industry, immediate demand is being driven by
significant infrastructure projects with zero- emission mandates and
regulatory changes such as the removal of advantageous red diesel pricing in
the UK. These dynamics created an environment where hydrogen is not just a
desirable option but an essential one. At the same time, the construction
sector is challenging, with demanding environmental conditions, a need for
highly mobile and user-friendly equipment, and requirements for seamless
integration into existing workflows and risk assessments. Tackling these
challenges has given us the opportunity to refine and enhance our offering,
building capabilities that can be applied across less demanding sectors in the
future.
Our partnership with Speedy Hire plc, through the Speedy Hydrogen Solutions
joint venture, has been pivotal in this strategy. Speedy's willingness to
invest as a first mover in this sector aligns perfectly with the immediate
needs of the UK construction market. By working closely with Speedy and major
UK construction companies, we are gaining invaluable insights that inform the
continuous development of our products and associated services. The rental
model employed by Speedy also lowers the risk for end users, making it easier
for them to adopt hydrogen- powered solutions. Furthermore, the
characteristics of our 30kW fuel cells often allow them to replace much larger
diesel generators, particularly when deployed as part of hybrid systems
incorporating renewable or traditional energy sources.
This focused approach has enabled us to transition away from one-off projects
in other sectors, where short-term commercial traction was unclear, to
concentrate on scaling and improving our current fuel cell solutions. In
parallel, we are investing in the development of future iterations and
scaling- up opportunities. The experience and success we are achieving with
Speedy in the UK serves as a potential blueprint for geographic expansion into
markets such as the Middle East and the US.
Our strategic rationale also includes the development of ammonia cracking
technology. With major global players committing to hydrogen production using
ammonia as a carrier, we see a clear path to addressing the needs of energy-
intensive, hard-to-abate sectors such as cement, asphalt and mining. Ammonia
is also the obvious choice for marine applications, given the scale and
efficiency required.
In certain use cases, hydrogen combustion engines (powered by
ammonia-cracked hydrogen) offer a better solution than fuel cells,
particularly for heavy-duty equipment like excavators and other plant
machinery.
The pace of our development, combined with validation and interest from
leading industrial players, reinforces our confidence in the potential of our
technology. We are developing a roadmap to deliver on-site cost parity (or
even superiority) with diesel, without relying on government subsidies before
2030.
By unlocking the potential for cost- effective hydrogen deployment, we are
laying the groundwork for widespread adoption of this critical fuel, driving
decarbonisation and opening new opportunities for AFC Energy in the global
clean energy economy.
This year has also been notable for governance and leadership transitions.
We achieved ISO certifications 9001, 24001, and 14001, which underscore our
commitment to operational excellence and sustainability.
Internally, we continue to enhance our sustainability framework through an
active ESG Committee chaired by Monika Biddulph, reflecting our commitment to
being a responsible business. Our executive management has been strengthened
by the addition of John Wilson and Karl Bostock, whose proven track records in
scaling engineering companies make them the ideal leaders for AFC's next
growth phase. At the same time, we acknowledge the significant contributions
of Adam Bond, who, after twelve years with the company (ten as CEO) returned
to his family in Australia, and Peter Dixon-Clarke, who provided invaluable
support over the past two years as CFO. During this transitional period, I
stepped in as interim CEO before resuming my role as Non- Executive Chairman.
While we have chosen not to make changes to the composition of our
Non-Executive Directors at this time, we remain aware of the need to improve
diversity.
We successfully raised £15.8 million (gross) during the year, an important
achievement in a challenging small-cap market. This funding has supported our
strategic initiatives and strengthened our financial position. Shareholder
engagement has been a priority, with visits from institutional investors and
the introduction of interactive 'Investor Meets Company' sessions, which have
broadened our communication with retail shareholders.
One of the Board's key responsibilities is fostering the Company's corporate
culture. To do so, the Board regularly reviews AFC Energy's culture,
behaviours, skills and principal risks against the values the Company has
adopted, including the results of the staff survey. The Board considers that
the executive management continues to build the appropriate culture and
underlying processes to maintain and enhance a corporate culture fit for
success.
Looking to the future, we are focused on scaling our operations to meet the
increasing global demand for clean energy solutions.
Chief Executive Officer's Report
This year, we took a major step forward in repositioning the Company,
transforming from a research-driven organisation into one with serious
manufacturing capability and a clear focus on commercialisation.
We successfully delivered our first significant revenues in the Company's
history and launched our world-leading capabilities in ammonia cracking
technology. These achievements reflect the depth of our innovation and our
commitment to delivering sustainable, zero-emission power solutions at scale.
Hydrogen is poised to become a cornerstone of the future zero- carbon economy.
Whilst much attention has been focused on the production of hydrogen, there
remains a critical need to address its usage and transport. AFC Energy is
uniquely positioned to bridge this gap, with solutions that enable hydrogen to
be utilised effectively for off-grid power, as a clean alternative to diesel,
and through ammonia cracking to provide a scalable and immediate solution in
hard-to-abate sectors. These include industries currently reliant on gas or
LNG, where electricity is not a viable substitute.
In the short term, our joint venture with Speedy Hire plc (Speedy), Speedy
Hydrogen Solutions, has provided us with a unique opportunity to address an
immediate and compelling need in the construction sector. By collaborating
with Speedy, we have been able to deliver practical, deployable solutions,
gaining invaluable insights that inform our product development and strategy.
This year's operational achievements reflect the hard work and adaptability of
our team. A significant milestone was the establishment of a production
facility capable of producing up to 250 fuel cell units annually (demonstrated
by a production run with output greater than five units per week on a single
shift). Such a production run requires the assembly of nearly 1,000 components
per unit from a global supply chain. Usability was a particular focus - our
redesigned user interface now mimics traditional diesel generators, making it
more accessible to operators unfamiliar with hydrogen technology. Integration
with battery energy storage systems and advanced telemetry for remote
monitoring has added further value, ensuring our solutions meet the complex
needs of modern construction sites.
The launch of our Hyamtec subsidiary has opened up a wealth of opportunities
in ammonia cracking. Over the past two years, we have focused on developing
and protecting the intellectual property for a wide range of applications. Our
work includes collaborations with institutions like the University of
Nottingham to integrate ammonia crackers with engines, the production of the
largest operational modular cracker capable of producing hydrogen to fuel-cell
quality, and the development of smaller, more flexible units for live testing
and deployment. Discussions are also underway with potential partners for
large-scale deployments in energy- intensive sectors, such as asphalt
production.
Of course, challenges remain. Hydrogen pricing and logistics continue to pose
barriers, while adoption in some sectors, such as EV charging and marine, is
hindered by market readiness rather than our technology. However, these
markets are now showing signs of accelerating and it is also possible that
ammonia cracking will play a part in addressing these issues, allowing
hydrogen to be transported efficiently and used flexibly across multiple
applications.
Our people have been at the heart of our success this year, enabling us to
transition from engineering to production and deployment with remarkable
speed. Staff numbers peaked at 145 to support intensive production and
engineering projects, but we have since reduced this to under 120. Contractors
have largely been converted to employees, reducing costs and reinforcing the
stability of our workforce as we scale for the future.
Looking ahead, AFC Energy's goal is clear: to position ourselves as a world
leader in the deployment of hydrogen-fuelled solutions. We aim to demonstrate
an effective path forward for our chosen sectors, not just in the UK but
globally. We also see significant potential to unlock shareholder value
through the expansion of our ammonia cracker business, helping to overcome key
barriers and open new markets for hydrogen as a fuel.
To support these ambitions, we have begun playing a more active role in the UK
hydrogen ecosystem. Through engagement with bodies like Hydrogen UK and the UK
Government, as well as collaboration with other world- leading hydrogen
companies, we believe the UK has the potential to replicate its leadership in
offshore wind within the hydrogen economy. By fostering collaboration across
the value chain - from electrolysers and fuel cells to distribution and
combustion engines - the UK can capture and retain its world-leading
intellectual property, driving both economic and environmental value.
AFC Energy is proud to be at the forefront of this transition. With our
innovative solutions, strategic focus, and commitment to sustainability, we
are well-positioned to lead in shaping the future of hydrogen- powered energy.
Chief Financial Officer's Report
FY 2024 represented an important step in the Company's journey to
commercialising the market leading technology it has created. During the year
there were two milestone events, namely the deployment of an S Series
generator into Acciona and the manufacture and sale of 20 S Series generators
to the joint venture, Speedy Hydrogen Solutions (SHS) which was completed at
the end of Q4. The production run of these 20 units represents a successful
pilot manufacturing run and as expected for this stage in the development
cycle, these units delivered a gross loss of £1.7m (2023: £0.3m) which was
£1.2m favourable versus initial forecast.
Due to the progress made in commercialising the Company's technology, the
Directors believe it is appropriate to recognise £4.4m (2023: £nil) of
development costs under IAS 38 Intangible Assets. The development cost
attributable to fuel cells totalled £3.2m and fuel processing was £1.2m.
Following the successful delivery of £4.0m of revenue (2023: £0.2m) the
Company produced a loss after tax of £17.4m (2023: £17.5m). This loss was
driven by operating costs of £18.1m (2023: £20.0m) offset by interest earned
of £0.3m (2023: £0.5m), R&D tax credits of £1.9m (2023:£2.1m) and
other income, consisting of grant income £0.1m (2023:£nil), RDEC £0.2m
(2023:£nil) and other incidental income £0.1m (2023:£nil). Of the £18.1m
of operating costs, £1.7m (2023: £4.7m) related to R&D materials not
qualifying for capitalisation,£9.1m (2023: £9.6m) to staff costs and £7.3m
(2023: £5.7m) to other administrative expenses. Of the administrative
expenses, £4.0m (2023: £2.4m) related to non-cash items, mainly depreciation
and share-based payments.
During FY2024, the Company incorporated Hyamtec Limited with the intention of
creating a separate operating division for the Company's fuel processing
activities. However, during FY24 no transfer of trade or assets were made and
although reference is made to the Hyamtec division, for reporting purposes,
all of the activity sits within AFC Energy plc.
Closing cash position of £15.4m
A summary of the cash flow for the 2024 financial year is set out within the
table below:
2024 2023
Net Loss Before Tax (19.3) (19.6)
Non-cash items 3.9 2.2
R&D Credits Received 2.7 4.1
Working Capital (6.2) 0.2
(18.9) (13.1)
Investing Activities (7.7) (1.2)
Financing Activities 14.6 1.5
(12.0) (12.8)
Opening Cash 27.4 40.2
Closing Cash 15.4 27.4
Operational cash burn (i.e., before investing or financing activities) of
£18.9m included £6.2m of increased working capital. £4.0m relates to a
trade debtor receivable from Speedy Hydrogen Solutions Limited pursuant to
invoices raised in October 2024. The Company has also invested in £1.8m of
inventory to support the commercialisation phase of the S Series.
This inventory will support future builds as well as providing critical spare
parts once the units are being used in the field. In Q1 of FY25, the business
made cost reductions in order to reduce the ongoing cash burn rate to £1.0m
per month. On a linear basis, this suggests a cash runway at similar
expenditure levels, of 12 months beyond the end of the 2024 financial year.
However, taking into account the unwinding of the opening debtor balance
together with grant income and the receipt of R&D tax credits, the runway
extends to March 2026. This cash runway will reduce in proportion to the rate
at which the Company scales up its commercial and manufacturing capabilities
and additional funds will be required to deliver these. In preparing the base
case for the going concern assessment, other factors have been taken into
consideration (refer to note 2 to the financial information).
£9.5m of R&D investment (with £4.4m being capitalised)
During FY2024, the Company invested £9.5m (2023:£8.5m) in research and
development, of which 89% is expected to qualify under the UK Government's
R&D tax credit scheme. This was deployed as follows:
2024 2023
Materials 3.7 3.3
Labour 4.6 4.7
Other 1.2 0.5
Total before capitalisation 9.5 8.5
Capitalised (4.4) -
Total profit and loss charge 5.1 8.5
Key developments achieved during FY 2024 include:
· Prototype build of the second generation of fuel processing cracker.
· Deployment of an enhanced high-throughput cracker test facility,
allowing for a 25x increase in scale and 10x increase in pressure.
· Completed phase one of the accelerated durability assessment
achieving more than 4,500 hours of operation without failure on the S Series
fuel cell product.
· Finalised design for next generation S Series and S+ Series fuel
cells and commenced prototype build.
Government Grants
During the year the Company has benefitted from a UK Government grant awarded
by the Department for Energy Security and Net Zero under its Red Diesel
Replacement scheme. A field trial is expected for both the air cooled and
liquid cooled generators, alongside a hybrid battery, at one, or more Brett
Aggregates quarries.
During the 2024 financial year, this grant contributed £0.5m towards the
funding of development costs of which £0.1m has been recognised in the
statement of comprehensive income, and the remainder recognised as deferred
income which will be released in line with the amortisation of the capitalised
development costs. The grant has a cap of £4.3m with the mechanics consisting
of a 50% reimbursement of qualifying costs.
Joint venture with Speedy Hire
Last year the annual report explained the commercial elements of the joint
venture with Speedy Hire. Key highlights include execution of joint venture
agreements, joint investment into the joint venture of £1.2m and sales of
equipment from the Company to the joint venture totalling £4.0m. Speedy are
now responsible for the deployment of these units into the field to
demonstrate market acceptance and are being supported by the AFC Energy team.
Future orders from the joint venture are dependent on the success of these
deployments.
Going concern
Management believes that whilst the accounts are correctly prepared on a going
concern basis, there is a material uncertainty with regards to going concern.
It is not unusual for a company at our stage of development to be in this
position.
To deliver on the Company's intention to commercialise its growing market
opportunities it needs to scale up its manufacturing output and continue
investing in research and development, both of which will require additional
funding. Whilst the Board recognises the challenges of fundraising in the
current economic climate, it is confident that when the Company chooses to
seek additional funding it will be available. This view is based primarily on
the:
· growing levels of interest expressed by the construction market in
the recent joint venture with Speedy Hire plc;
· continued positive feedback from external advisors; and
· growing levels of institutional engagement, in both the fuel cell and
fuel processing value streams, particularly following recent site visits.
This is further discussed in the notes to the accounts.
Statement of Comprehensive Income for the year ended 31 October 2024
Year ended 31 October 2024 Year ended
31 October
2023
Note £000 £000
Revenue from customer contracts 5 4,002 227
Cost of sales (5,868) (294)
Gross loss (1,866) (67)
Other income 6 429 41
Operating costs 7 (18,133) (19,994)
Operating loss (19,570) (20,020)
Finance income 11 316 512
Finance costs 11 (55) (53)
Loss before tax (19,309) (19,561)
Taxation 12 1,890 2,086
Loss for the financial year and total comprehensive loss attributable to the
owners of the company
(17,419) (17,475)
Basic loss per share (pence) 13 (2.22) (2.36)
Diluted loss per share (pence) 13 (2.22) (2.36)
All amounts relate to continuing operations. There was no other
comprehensive income in the year (2023: £nil).
Statement of financial position as at 31 October 2024
Year ended Year ended 31 October 2023
31 October 2024
Note £000 £000
Assets
Non-current assets
Intangible assets 14 4,626 264
Right-of-use assets 15 646 1,097
Investment in joint venture 16 625 -
Property, plant and equipment 17 4,666 3,756
10,563 5,117
Current assets
Inventory 18 1,948 178
Trade and other receivables 19 6,737 1,231
Income tax receivable 1,517 2,088
Restricted cash 20 433 258
Cash and cash equivalents 20 15,374 27,366
26,009 31,121
Total assets 36,572 36,238
Current liabilities
Trade and other payables 21 4,955 3,728
Lease liabilities 22 505 477
Provisions 23 217 -
5,677 4,205
Non-current liabilities
Lease liabilities 22 159 647
Provisions 23 468 301
627 948
Total liabilities 6,304 5,153
Capital and reserves attributable to the owners of the parent
Share capital 24 854 746
Share premium 24 133,555 118,520
Other reserve 4,629 3,779
Retained loss (108,770) (91,960)
Total equity attributable to shareholders 30,268 31,085
Total equity and liabilities 36,572 36,238
Statement of changes in equity for the year ended 31 October 2024
Share capital Share premium Other reserve Retained loss Total
£000 £000 £000 £000 £000
Balance at 1 November 2022 735 116,487 4,073 (75,557) 45,738
Loss after tax for the year - - - (17,475) (17,475)
Issue of equity shares 10 1,990 - - 2,000
Equity-settled share-based payments
- Lapsed or exercised in the year 1 43 (1,072) 1,072 44
- Charged in the year - - 778 - 778
Fair value of warrants accounted for as equity
- - - - -
Balance at 31 October 2023 746 118,520 3,779 (91,960) 31,085
Loss after tax for the year - - - (17,419) (17,419)
Issue of equity shares 105 14,810 - - 14,915
Equity-settled share-based payments
- Lapsed or exercised in the year 3 225 (609) 609 228
- Charged in the year - - 1,459 - 1,459
Balance at 31 October 2024 854 133,555 4,629 (108,770) 30,268
Share capital is the amount subscribed for shares at the 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. The issue
of shares above is presented net of issue cost (refer to Note 24 for further
details on issue costs).
Other reserve represents the charge to equity in respect of unexercised
equity-settled share-based payments and warrants granted.
Retained deficit represents the cumulative loss of the Company attributable to
equity shareholders of the parent company.
Cash flow statement for the year ended 31 October 2024
Year ended 31 October 2024 Year ended 31 October 2023
Note £000 £000
Cash flows from operating activities
Loss before tax for the year (19,309) (19,561)
Adjustments for:
Amortisation of intangible assets 14 81 110
Loss on disposal of intangible assets 14 - 1
Depreciation of right-of-use assets 15 470 455
Depreciation of property, plant and equipment 17 2,043 1,099
Loss on disposal of property, plant and equipment - 34
Share-based payments 25 1,459 778
Finance income (316) (428)
Lease finance charges 41 69
R&D tax credits receivable (224) -
Working capital changes:
(Increase) in restricted cash (176) 354
(Increase) in inventory (1,770) (135)
(Increase) in receivables (5,506) (109)
Increase in payable 1,227 121
Increase in provisions 384 -
(21,596) (17,212)
R&D tax credits received 2,685 4,073
Net cash flows from operating activities (18,911) (13,139)
Capital investment in joint venture 16 (625) -
Purchase of plant and equipment 17 (2,952) (1,607)
Additions to intangible assets 14 (4,443) (63)
Interest received 11 316 428
Net cash flows used in investing activities (7,704) (1,242)
Proceeds from the issue of share capital 15,792 2,000
Proceeds from the exercise of options 228 45
Cost of issue of share capital 24 (877) -
Lease payments 22 (520) (518)
Net cash flows from financing activities 14,623 1,527
Net increase/(decrease) in cash and cash equivalents
(11,992) (12,854)
Cash and cash equivalents at the start of the year 27,366 40,220
Cash and cash equivalents at the end of the year 20 15,374 27,366
Notes forming part of the financial information
1. Corporate information
AFC Energy Plc (the Company or the parent) is a public limited company
incorporated in England & Wales. The address of the registered office is
Unit 71.4, Dunsfold Park, Cranleigh, Surrey, GU6 8TB. The Company is quoted
on the AIM Market of the London Stock Exchange with the ticker symbol LSE:AFC.
The principal activity of the Company is the development and manufacturing of
fuel cells and development of fuel processing technology and equipment.
2. Accounting policies
Accounting convention
The final results for the year ended 31 October 2024 were approved by the
Board of Directors on 18 March 2025. The final results do not constitute full
accounts within the meaning of section 434 of the Companies Act 2006 but are
derived from audited financial information for the year ended 31 October 2024
and the year ended 31 October 2023.
This announcement is prepared on the same basis as set out in the audited
statutory accounts for the year ended 31 October 2024. The accounts for the
years ended 31 October 2024 and 31 October 2023, upon which the auditors
issued unqualified opinions, also had no statement under section 498(2) or (3)
of the Companies Act 2006. The auditors' report includes reference to the
material uncertainty relating to going concern. See below for more details of
the going concern assessment performed by the Board of Directors.
While the financial information included in this results announcement has been
prepared in accordance with the recognition and measurement criteria of UK
adopted international accounting standards (IFRS), this announcement does not
in itself contain sufficient information to comply with IFRS.
The Company has taken advantage of the exemption under Section 402 of the
Companies Act 2006, which allows a parent company not to prepare consolidated
financial information where its subsidiaries are immaterial both individually
and in aggregate.
The directors have assessed the size, nature, and financial impact of the
company's subsidiaries and have concluded that they are immaterial for the
purpose of presenting a true and fair view of the company's financial
position. Accordingly, the company has not prepared consolidated financial
information and instead has prepared individual financial information in
accordance with applicable accounting standards.
The company accounts for its investment in joint ventures at cost in
accordance with IAS 27 Separate Financial Statements. For further details
refer to the accounting policy note below.
This financial information is prepared in pounds sterling and rounded to the
nearest thousand.
Going concern
The financial information has 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 to medium future as the
Company transitions from predominantly undertaking research and development to
a more commercial basis.
In line with normal practice, and prior to signing this report, the Directors
are required to assess whether it is appropriate to prepare the financial
information 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.
As part of this assessment, the Directors reviewed the Company's forecast cash
position through to March 2026. This was based on the agreed budget for the
2025 financial year and the forecast for the 2026 financial year. The company
has sufficient cash reserves to continue to operate as planned until end of
March 2026 however it will require additional funding beyond this date. Should
the forecast not be met, additional funding would be required within the going
concern assessment period.
The Board reviewed possible downside scenarios to establish the resilience of
the Company's cash reserves and identified the impact of continuing high
levels of cost inflation, particularly on employee remuneration and supply
chain, combined with delays of sales receipts as a particular risk.
Based on this assessment, and on the Company's intention to capitalise on its
growing market opportunities by scaling up its manufacturing output and
continuing to invest in research and development, the Board has concluded that
additional funding will be required to deliver on these plans.
Whilst the Company is a going concern, further funding will be required for
the period beyond the 12 months after the approval of the annual financial
information, which indicates the existence of a material uncertainty that may
cast significant doubt on the Company's ability to continue as a going
concern.
Whilst the Board recognises the challenges of fundraising in the current
economic climate, it is confident that when the Company does choose to seek
additional funding that it will be available. This view is based primarily
on the:
~ recent technical successes of both the fuel cell and fuel processing
teams;
~ UK Government requirements for construction tenders to include a
non-diesel solution for onsite electricity generation;
~ growing levels of interest expressed by the construction market in
the recent joint venture with Speedy Hire Plc;
~ positive feedback from external advisors; and
~ growing levels of institutional engagement, in both the fuel cell
and fuel processing value streams, particularly following recent site visits.
Based on the above, the Directors have concluded that the Company remains a
going concern and the financial information hastherefore been prepared on that
basis.
The accounting policies set out below have, unless otherwise stated, been
applied consistently in the financial information.
Judgments made by the Directors in the application of these accounting
policies that have significant effect on the financial information and
estimates with a significant risk of material adjustment in the next year are
discussed in note 3.
Standards, amendments and interpretations to published standards not yet
effective
The following amendments to the accounting standards, issued by the IASB and
endorsed by the UK, were adopted by the Company from 1 November 2023 with no
material impact on the Company's results, financial position or disclosures:
· IAS 1 and IFRS Practice Statement 2 (amended) - Disclosure of
Accounting Policies;
· IAS 8 (amended) - Definition of Accounting Estimate;
· IAS 12 (amended) - Income Taxes: Deferred Tax Related to Assets and
Liabilities Arising from a Single Transaction;
· IAS 12 (amended) - International Tax Reform - Pillar Two Model Rules;
· IFRS 17 (amended) - Insurance Contracts; IFRS 17 (amended) and IFRS 9
- Comparative Information
The following standard and amendments issued by the IASB have been endorsed by
the UK and have not been adopted by the Company. The Company intends to adopt
these new and amended standards and interpretations, if applicable, when they
become effective:
· IAS 1 (amended) - Classification of liabilities as current or
non-current, Non-current Liabilities with Covenants;
· IFRS 10 and IAS 28 (amended) - Sale or Contribution of Assets between
an Investor and its Associate or Joint Venture;
· IFRS 16 (amended) - Lease Liability in a Sale and Leaseback;
· IAS 7 and IFRS 7 (amended) - Supplier Finance Arrangements;
· IAS 21 (amended) - Lack of Exchangeability
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 2006.
Revenue recognition
To determine whether to recognise revenue, a five-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; and
• Recognising revenue as the performance obligations
are satisfied.
Complex contracts include competing priorities such as financial targets,
support capabilities, and delivery schedules. A complex contract will have
multiple independent issues which must all be negotiated individually.
Revenue is generated from complex contracts covering the:
• Sale of goods and parts,
• Sale of services and maintenance, and
• Short-term rental contracts which may be either
single or multiple contracts. Multiple contracts are accounted for as a
single contract where one or more of the following criteria are met:
o The contracts were negotiated as a single commercial package,
o Consideration of one contract depends upon the other contract, or
o Some or all the goods and services comprise a single performance
obligation.
The promises in each contract are analysed to determine if these represent
performance obligations individually, or in combination with other promises.
Performance obligations in the contracts are analysed between either distinct
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. In the event there are multiple
performance obligations in a contract, the price is allocated to the
performance obligations based on the relative costs of fulfilling each
obligation plus a margin.
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. Deferred revenue is recognised for consideration
received in respect of unsatisfied performance obligations and the Company
reports these amounts as payables in the statement of financial position.
Similarly, if a performance obligation is satisfied in advance of any
consideration, a contract asset is recognised in the statement of financial
position.
Rental as service 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 as it matches the consumption of the benefits obtained
by the customer. The customer is simultaneously receiving and consuming the
benefits as the Company performs its obligations. Revenue can comprise a
fixed rental charge and a variable charge related to the usage of assets or
other services including pass-through costs where pass-through refers to the
variable charge, for example Hydrogen.
Sale (standard products) contracts
Certain products are not deemed bespoke because the company can sell them to
various customers. Revenue from such standard products is - recognised at a
point of time only when the performance obligation has been fulfilled and
ownership of the goods has transferred, which is typically factory or site
acceptance test, which is the official handover of control of the goods to the
customer. .
During the product build, deposits and progress payments are reflected in the
statement of financial position as deferred revenue.
Sale (customised products) contracts
Certain bespoke products under customised contracts have no alternative use to
the company. In addition such contracts have a right to payment for
performance to date. Revenues from such customised products are recognised
over time according to how much of the performance obligation has been
satisfied. This is measured using the input or output method. Under the
input method, the extent of inputs towards satisfying the performance
obligation is compared 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 transaction price
associated with that performance obligation. Under the output method, revenue
is recognised on the basis of direct measurement of the value to the customer
of the goods or services transferred to date relative to the remaining goods
and services promised under the contract.
Government grants
Government grants are recognised where there is reasonable assurance that the
grant will be received and all attached conditions will be complied with. When
the grant relates to an expense item, it is recognised as income on a
systematic basis over the periods that the related costs, for which it is
intended to compensate, are expensed. The company presents grants related to
an expense item as other operating income in the statement of comprehensive
income.
When the grant relates to an asset, it is recognised as income in equal
amounts over the expected useful life of the related asset.
Foreign currency
The financial information of the Company is presented in the currency of the
primary economic environment in which it operates (the functional currency)
which is pounds sterling. In accordance with IAS 21, transactions entered
into by the Company in a currency other than the functional currency are
recorded at the rates ruling when the transactions occur.
At each Statement of Financial Position date, monetary items denominated in
foreign currencies are retranslated at the rates prevailing at the date of the
Statement of Financial Position.
Inventory
Inventory is recorded at the lower of actual cost and net realisable value,
applying the average cost methodology.
Work in progress comprises direct labour, direct materials and direct
overheads. Direct labour is allocated on an input basis that reflects the
consumption of those resources in the production process.
Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents
comprise cash balances and bank overdrafts that form an integral part of the
Company's cash management process. They are recorded in the statement of
financial position and valued at amortised cost.
Restricted cash represents bank deposit accounts where disbursement is
dependent upon certain contractual performance conditions.
Other receivables
These assets are initially recognised at fair value and are subsequently
measured at amortised cost less any provision for impairment.
Property, plant and equipment
Property and equipment are stated at cost less any subsequent accumulated
depreciation and impairment losses. 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/or operating expenses on a straight-line basis over the estimated
useful lives of each part of an item of plant, machinery and equipment.
Depreciation of the assets commences when the assets are available for use.
The estimated useful lives are as follows:
Decommissioning asset Life of the contract
Leasehold improvements Life of the lease
Plant, machinery and equipment 3 to 10 years
Rental assets 3 to 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 tangible fixed assets are reviewed annually, and
any revision is accounted for as a change in accounting estimate and the net
book value of the asset, at the time of the revision, is depreciated over the
remaining revised economic life of the asset.
Right-of-use assets
At inception each contract is assessed as to whether it conveys the right to
control the use of an identified asset and obtain substantially all the
economic benefits from the use of that asset, for a period in exchange for
consideration. If so, the contract should be accounted for as a lease and
the Company should recognise a right-of-use asset, and related lease
liability, at the lease commencement date.
The right-of-use assets comprise the corresponding lease liability, lease
payments made before the commencement date, less any lease incentives received
and any initial direct costs. They are subsequently measured at cost less
accumulated depreciation and impairment losses. The lease liability is
initially measured at the present value of the lease payments and discounted
using the interest rate implicit in the lease or, if that rate cannot be
determined, the incremental borrowing rate is used. The lease liability
continues to be measured at amortised cost using the effective interest
method. It is remeasured when there is a change in the future lease
payments. When the lease liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right-of-use asset.
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 to in-substance payments. Interest
expense is recognised in finance costs in the statement of comprehensive
income.
Right-of-use assets are depreciated on a straight-line basis over the shorter
of the lease term and the estimated useful lives of the assets. The
depreciation expense is recognised within operating costs or cost of sales
depending on the nature of the underlying asset.
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 are 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.
The Company has elected not to recognise right-of-use assets and lease
liabilities for leases of less than 12-months and leases of low value assets.
These largely relate to short-term rentals of equipment. The lease payments
associated with these leases are expensed on a straight-line basis over the
lease term.
Intangible assets
The useful economic lives of intangible fixed assets are reviewed annually,
and any revision is accounted for as a change in accounting estimate and the
net book value of the asset, at the time of the revision, is amortised over
the remaining revised economic life of the asset. Amortisation only commences
when the asset is available for use.
Development costs
Development expenditures on an individual project are recognised as an
intangible asset when the Company can demonstrate:
· The technical feasibility of completing the intangible asset so that
the asset will be available for use or sale
· Its intention to complete and its ability and intention to use or
sell the asset
· How the asset will generate future economic benefits
· The availability of resources to complete the asset
· The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the
asset is carried at cost less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins when development is
complete, and the asset is available for use. It is amortised over the period
of expected future benefit. Amortisation is recorded in operating costs.
During the period of development, the asset is tested for impairment annually.
Research costs are expensed as incurred.
Patent and commercial rights
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 operating expenses over
the following periods:
Patents 10 to 20 years
Commercial rights 5 years
Investment in joint ventures
The Company holds 50% interest in a joint venture, Speedy Hydrogen Services
Limited.
A joint venture is a type of joint arrangement whereby the parties that have
joint control of the arrangement have rights to the net assets of the joint
venture. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities
require the unanimous consent of the parties sharing control.
The Company's investment in its joint venture is initially recognised at cost,
including directly attributable transaction costs. Subsequently, the carrying
amount is adjusted for any impairment losses, if applicable. The Company
assesses the investment for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
Impairment testing of intangible assets and property, plant and equipment
At each statement of financial position date, the carrying amounts of the
assets are reviewed to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated 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).
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 (FVTPL), directly attributable transaction costs.
Receivables are initially recognised at transaction price. 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 Company does not have any financial assets
categorised as FVTPL or FVOCI.
Financial assets at amortised cost
A financial asset is measured at amortised 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 FVTPL. Financial assets classified as
amortised cost are measured after initial recognition at amortised cost using
the effective interest method, less any provision for impairment Cash,
restricted cash, trade receivables and certain other assets are classified as,
and measured at, amortised cost.
Financial liabilities
Financial liabilities are classified as measured at amortised 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 recognised in profit
or loss.
Other financial liabilities are subsequently measured at amortised cost using
the effective interest method. Gains and losses are recognised in net
earnings when the liabilities are derecognised as well as through the
amortisation 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 lease liabilities
are classified as, and measured at, amortised cost.
Impairment of financial assets
A loss allowance for expected credit losses is recognised in the Statement of
Comprehensive Income for financial assets measured at amortised cost. At
each year end date, on a forward-looking basis, the Company assesses the
expected credit losses associated with its financial assets (such as trade
receivables) carried at amortised cost.
The expected loss rates are based on the historical credit losses adjusted to
reflect current and forward-looking information on economic factors affecting
the ability of the customers to settle the receivables.
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 the statement of Comprehensive Income.
Share-based payment transactions
The fair value of options granted under the Employee Share Option Plan, the
Employee Performance Share Plan and the Save-As-You-Earn scheme are recognised
as an employee benefits expense, with a corresponding increase in equity.
The total amount to be expensed is determined by reference to the fair value
of the options granted:
* Including any market performance conditions (e.g., the Company's share
price)
* Excluding the impact of any service and non-market performance vesting
conditions (e.g., profitability, sales growth targets and remaining an
employee for a specified time)
* Including the impact of any non-vesting conditions (e.g., the
requirement for employees to save or hold shares for a specific period)
The total expense is recognised over the vesting period, which is the period
over which all the specified vesting conditions are to be satisfied. At the
end of each period, the entity revises its estimates of the number of options
that are expected to vest based on the non-market vesting and service
conditions. It recognises the impact of the revision to original estimates, if
any, in profit or loss, with a corresponding adjustment to equity.
Modifications after the vesting date to terms and conditions of equity-based
payments which increase the fair value are recognised over the remaining
vesting period. If the fair value of the revised equity-based payments is less
than the original valuation, then the original valuation is expensed as if the
modification never occurred.
The fair value of warrants issued is also recognised as a share-based payment
expense with a corresponding increase in equity.
Provisions
General
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.
Onerous contracts
If the company has a contract that is onerous, the present obligation under
the contract is recognised and measured as a provision. However, before a
separate provision for an onerous contract is established, the Company
recognises any impairment loss that has occurred on assets dedicated to that
contract. An onerous contract is a contract under which the unavoidable costs
(i.e., the costs that the Company cannot avoid because it has the contract) of
meeting the obligations under the contract exceed the economic benefits
expected to be received under it.
Warranty provisions
Warranty provisions are recognised for the estimated liability to repair or
replace products under warranty at the time revenue is recognised. The
provision is an estimate calculated based on most likely serviceable component
to wear out at modular and generator level, level of volumes, product mix and
repair and replacement cost.
Decommissioning liability
The Company records a provision for decommissioning costs to remediate the
environmental damage of a manufacturing facility for supply of hydrogen fuel.
Decommissioning costs are provided for at the present value of expected costs
to settle the obligation using estimated cash flows and are recognised as part
of the cost of the relevant asset. The cash flows are discounted at a current
pre-tax rate that reflects the risks specific to the decommissioning
liability. The unwinding of the discount, where material, is expensed as
incurred and recognised in the statement of profit or loss as a finance cost.
The estimated future costs of decommissioning are reviewed annually and
adjusted as appropriate.
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.
Tax due for the current and prior periods is recognised as a liability, to the
extent that it has not yet been settled, and as an asset if the amounts
already paid exceed the amount due. The benefit of a tax loss which can be
carried back to recover current tax of a prior period is recognised as an
asset.
Current tax assets and liabilities are measured at the amount expected to be
paid to/ recovered from taxation authorities, using the rates/laws that have
been enacted or substantively enacted by the balance sheet date.
A deferred tax asset is recognised for deductible temporary differences,
unused tax losses and unused tax credits to the extent that it is probable
that taxable profit will be available against which the deductible temporary
differences can be utilised, unless the deferred tax asset arises from the
initial recognition of an asset or liability other than in a business
combination which, at the time of the transaction, does not affect accounting
profit or taxable profit.
The carrying amount of deferred tax assets are reviewed at the end of each
reporting period and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow the benefit of part or
all of that deferred tax asset to be utilised. Any such reduction is
subsequently reversed to the extent that it becomes probable that sufficient
taxable profit will be available.
A deferred tax asset is recognised for an unused tax loss carry forward or
unused tax credit if, and only if, it is considered probable that there will
be sufficient future taxable profit against which the loss or credit carry
forward can be utilised.
The Company does not currently recognise a deferred tax asset in relation to
trading losses, as near-term taxable profits, against which to offset the
asset, are not considered probable.
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 under the SME
R&D Tax Relief Scheme and the Research & Development Expenditure
Credit (RDEC) Scheme. Under the SME scheme, the company recognises R&D tax
credits in the taxation line in the statement of comprehensive income and it
recognises the RDEC credit as other income above the operating profit line in
the statement of comprehensive income.
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
capped at 5% of the employee's salary and are reflected in the statement of
comprehensive income in the period for which they are made.
The amount recognised in the period is the contribution payable in exchange
for services rendered by employees during the period.
3. Critical accounting judgments and key sources of estimation uncertainty
In the preparation of the financial information, management makes certain
judgments and estimates that impact the financial information. While these
judgments are continually reviewed, the facts and circumstances underlying
these judgments may change, resulting in a change to the estimates that could
impact the results of the Company. In particular:
Critical accounting judgments
The following are the judgments made by management in applying the accounting
policies of the Company that have the most significant effect on the financial
information:
Customer contracts and revenue recognition
Customer contracts typically include the provision of goods or services,
including sales of hydrogen fuel cells generators and related equipment,
installation and maintenance services, engineering services and provision of
hydrogen.
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.
For customised products contracts management uses judgment in determining
whether certain promises withing the contract constitute distinct performance
obligations, whether those are satisfied over time or at a point in time and
finally on the most appropriate method of allocating the transaction price.
These judgments are made based on the interpretation of key clauses and
conditions within each customer contract.
For standard product contracts where revenue is recognised at a point in time
rather than over time, management uses judgement to assess the point of
transfer of control to the customer at the point of acceptance of the products
by the customer.
Capitalisation of development expenditure
The Company capitalises costs for product development projects. Such costs
include non-recurring engineering, design costs and prototype costs. Initial
capitalisation of costs is based on management's judgement that technological
and economic feasibility is confirmed, usually when a product development
project has reached a defined milestone according to an established project
management model. All development costs associated with the fuel cell cash
generating (production) unit have been capitalised from the point of signing
the Supply and Maintenance Agreement with Speedy Hydrogen Solutions (SHS)
Limited on 14(th) November 2023. A key milestone for all liquid cooled fuel
cell related projects was the signing of the exclusive distribution agreement
with Tamgo group on 4(th) September 2023 and therefore all development costs,
related to liquid-cooled projects incurred the year ended 31 October 2024 have
been capitalised on projects related to this.
For the Fuel Processing Cash Generating Unit a key milestone event for
establishing economic feasibility was the externally verified Hydrogen purity
output, announced via RNS on 4(th) December 2023.
In determining the amounts to be capitalised, management makes assumptions
regarding the expected future cash generation of the project and the expected
period of benefits. At 31 October 2024, the carrying amount of capitalised
development costs was £3,244,000 for fuel cell manufacturing technologies and
£1,160,000 for fuel processing.
Principal versus agent considerations - hydrogen fuel cells sales to joint
venture
Management have determined that the joint venture is the principal in the
contractual relationship with its customer because on balance it obtains
control over the products once those are transferred over to them. This is
also contractually supported by the fact that the joint venture takes the
inventory risk and has discretion in establishing the prices with its
customer.
Key source of estimation uncertainty
Impairment of development expenditure
Impairment exists when the carrying value of an asset or cash generating unit
exceeds its recoverable amount, which is the higher of its fair value less
costs of disposal and its value in use. The fair value less costs of disposal
calculation is based on available data from binding sales transactions,
conducted at arm's length, for similar assets or observable market prices less
incremental costs of disposing of the asset. The value in use calculation is
based on a DCF model. The cash flows are derived from the budget for the next
five years and do not include restructuring activities that the Company is not
yet committed to or significant future investments that will enhance the
performance of the assets of the CGU being tested. The recoverable amount is
sensitive to the discount rate used for the DCF model as well as the expected
future cash-inflows and the growth rate used for extrapolation purposes. These
estimates are relevant to the capitalised development costs recognised by the
Company. The key assumptions used to determine the recoverable amount for the
different CGUs, including a sensitivity analysis, are disclosed and further
explained in Note 14.
Share-based payments
Certain employees (including Directors and senior Executives) of the Company
receive remuneration in the form of share-based payment, whereby employees
render services as consideration for equity instruments (equity-settled
transactions).
The fair value is determined using either the Black-Scholes valuation model,
Modified Binomial Tree model or a Monte Carlo model for market-based
conditions. Both are appropriate for considering the effects of the vesting
conditions, expected exercise period and the dividend policy of the Company.
The cost of equity-settled transactions is expensed, 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-based 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.
The estimation uncertainty relating to share-based payments is not at risk of
material change in future years other than in relation to management's
estimate of the extent to which the non-market-based performance criteria will
be met.
4. Segmental analysis
Operating segments are determined by the chief operating decision maker based
on information used to allocate the Company's resources. The information as
presented to internal management is consistent with the Statement of
Comprehensive Income. It has been determined that there is one operating
segment, the development of fuel cells. In the year to 31 October 2024, the
Company operated mainly in the United Kingdom. All non-current assets are in
the United Kingdom.
Revenue for the period was all generated from fuel cell systems.
The fuel processing operations are expected to commence in future financial
years, and therefore it is not appropriate to detail this as a separate
operating segment.
5. Revenue
Year ended 31 October 2024 Year ended 31 October 2023
Revenue from contracts with customers £000 £000
Sales of fuel cell generators 3,976 137
Rental revenue 26 -
Other revenue - 90
4,002 227
Being:
Cash consideration 4,002 161
Consideration in kind - 66
4,002 227
£3,829,000 of the revenue during 2024 was recognised at a point in time
rather than over time.
The consideration in kind relates to marketing services received from the
customer and is fair valued in accordance with the contract.
One customer A (FY23: one customer B) accounted for more than 10% of
revenue:
Year ended 31 October 2024 Year ended 31 October 2023
£000 % £000 %
Customer A 3,829 95.6
Customer B - - 130 57.1
The majority of the other revenue relates to sales of hydrogen to the renter
of the fuel cell generators.
Unsatisfied performance obligations were:
Within two to five years
Within one year
Total
£000 £000 £000
31 October 2023 1,423 - 1,423
31 October 2024 1,571 148 1,423
The aggregate amount of the transaction price allocated to contracts that are
not fully satisfied as of 31 October 2024 was £1,571,000 (2023: £1,423,000).
£1.4m deferred revenue is to be recognised over a three year period from the
date a commercial and fully certified product is available. The £1.4m
deferred revenue liability is to be offset against each unit sold to the
customer at a rate of £150,000 per unit, up to a maximum value of £1.5m.
6. Other income
Year ended 31 October 2024 Year ended 31 October 2023
£000 £000
Government grants income 130 -
R&D expenditure credits 224 -
Other 75 41
429 41
7. Operating costs
Year ended 2024 Year ended 2023
Total Total
£000 £000
Materials 1,685 4,679
1,685 4,679
Payroll costs
Payroll (excluding directors) 6,746 6,690
Directors' costs 1,526 1,895
Other employment costs 865 1,033
9,137 9,618
Other administrative expenses
Occupancy costs 461 884
Other administrative expenses 2,825 2,370
3,286 3,254
Non-cash costs
Amortisation of intangible assets 81 110
Depreciation of right-of-use assets 470 455
Depreciation of tangible fixed assets
2,043 1,099
Less depreciation of rental asset charged to cost of sales
(28) (65)
Consideration in kind - 66
Share-based payments charge 1,459 778
4,025 2,443
18,133 19,994
Research and development costs
The Company's fuel cells manufacturing and fuel processing research and
development activities concentrate on the development of new design,
engineering and prototype build. In 2024 the Company spent in total
£9,512,000 (2023: £8,487,000) on research and development.
Research and development costs of £5,108,000 (2023: £8,487,000) that are not
eligible for capitalisation have been expensed in the period incurred and
recognised in operating expenses.
In 2024 development costs meeting the recognition criteria for capitalisation
under IAS 38 Intangible Assets were £4,403,000 (2023: £Nil) (refer to note
14). Out of the total of £4,403,000 capitalised development costs,
£1,507,000 relate to staff costs.
8. Auditor's remuneration
Fees paid to the auditors included within the operating costs were:
Year ended 31 October 2024 Year ended 31 October 2023
£000 £000
Audit 260 218
Other assurance services - 17
9. Employee numbers and costs, including directors
The average number of employees in the year were:
Year ended 31 October 2024 Year ended 31 October 2023
£000 £000
Support, operations and technical 130 113
Directors 6 7
136 120
The aggregate payroll costs for directors and employees were:
Year ended 31 October 2024 Year ended 31 October 2023
£000 £000
Wages and salaries 8,803 7,290
Social security 992 1,000
Employers' pension contributions 335 295
Total employee costs 10,130 8,585
Less: capitalised as development costs (1,507) -
8,623 8,585
Equity-settled share-based payments expense 1,459 778
10,082 9,363
Details of the employee costs associated with the company's key management
personnel are included in note 27.
10. Directors' remuneration
Year ended 31 October 2024 Year ended 31 October 2023
£000 £000
Salary and benefits 1,153 1,599
Pension 28 46
Total directors' remuneration 1,181 1,645
In addition directors received total of £235,000 (2023: £Nil) termination
benefits in the year.
Year ended 31 October 2024 Year ended 31 October 2023
Highest paid director £000 £000
Wages and salaries 503 601
Termination benefit 235 -
Benefits in kind 45 44
783 645
Employers' pension contributions 17 16
800 661
11. Net finance income/(cost)
Year ended 31 October 2024 Year ended 31 October 2023
£000 £000
Lease interest (41) (69)
Exchange rate differences - 22
Bank charges (14) (6)
Total finance cost (55) (53)
Finance income 316 512
Net finance income 261 459
12. Taxation
Year ended 31 October 2024 Year ended 31 October 2023
£000 £000
Recognised in the statement of comprehensive income
R&D tax credit - current year 1,293 2,088
R&D tax credit - prior year 597 (2)
Total tax credit 1,890 2,086
Reconciliation of effective tax rates
Loss before tax (19,309) (19,561)
Tax using the domestic rate of corporation tax at 25.00% (2023: 22.52%)
4,827 4,405
Effect of:
Change in unrecognised deferred tax resulting from tax losses
(2,430) (2,443)
Non-deductible items (245) (43)
Depreciation in excess of capital allowances (19) (6)
Other differences (320) -
R&D expenditure credits (75) -
R&D enhanced deduction on qualifying R&D expenditure
913 1,959
R&D rate adjustment on surrendered losses (1,358) (1,784)
Adjustment to R&D tax credit - prior year 597 (2)
Total tax credit 1,890 2,086
Deferred tax assets that have not been recognised are set out below:
Year ended 31 October 2024 Year ended 31 October
2023
£000 £000
Intangible assets (1,814) (429)
Property, plant and equipment 1,923 860
Share-based payments 142 57
Other differences - 11
Losses carried forward 16,825 14,389
Unrecognised deferred tax assets 17,076 14,888
Deferred tax assets of £1,814,000 (2023: £429,000) have been recognised but
offset against deferred tax liabilities of the same amount arising in the same
jurisdiction.
The cumulative tax losses in the amount of £67.3 million (2023: £57.6
million) that are available indefinitely for offsetting against future taxable
profits have not been recognised as the Directors consider that it is unlikely
that they will be realised in the foreseeable future.
The prior year R&D tax credit of £597,000 is largely due to a higher tax
rates for R&D intensive schemes enacted post 31 October 2023.
The 2021 Finance Act increased the UK corporation tax rate to 25% from 1 April
2023, which will affect any future tax charges.
13. 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 year.
Year ended 31 October 2024 Year ended 31 October 2023
Basic loss per share (pence) (2.22) (2.36)
Diluted loss per share (pence) (2.22) (2.36)
Loss attributable to equity shareholders £000 (17,419) (17,475)
Weighted average number of shares in issue 784,681,892 741,451,346
Diluted earnings per share
As set out in note 25, there are share options and warrants (accounted for
under IFRS 2: Share based payments) outstanding as at 31 October 2024 which,
if exercised, would increase the number of shares in issue. Given the losses
for the year, there is no dilution of losses per share in the year ended 31
October 2024 nor the previous year.
14. Intangible assets
Total intangible assets
Patents & commercial rights
Development costs
£000 £000 £000
Cost
At 1 November 2022 229 1,341 1,570
Additions - 63 63
Disposals (229) - (229)
At 31 October 2023 - 1,404 1,404
Additions 4,403 40 4,443
Disposals - - -
At 31 October 2024 4,403 1,444 5,847
Amortisation
At 1 November 2022 229 1,030 1,259
Charge for the year - 110 110
Impairment charge (229) - (229)
At 31 October 2023 - 1,140 1,140
Charge for the year - 81 81
Disposals - - -
At 31 October 2024 - 1,221 1,221
Net book value
At 31 October 2023 - 264 264
At 31 October 2024 4,403 223 4,626
Impairment review of capitalised development costs
For impairment testing purpose internally generated capitalised development
costs are allocated to two cash generating units ('CGU') - Fuel Processing and
Fuel Cells, which are likely to be future operating and reportable segments.
The value in use for both fuel processing and fuel cells manufacturing CGUs,
is based on the cash flows expected to be generated by the projected
production profiles over 5 years since commencement of production. Estimated
production volumes and cash flows, including operating and capital
expenditure, are derived from the business plans for the two units. Key
assumptions used in the value in use calculations for both CGUs were the post
tax discount rates of 16.3%, a terminal growth rate of 3% and significant
growth in the operating cash flows as a result of the projected increase in
production profiles.
No impairment of the development costs balances in either fuel cells or fuel
processing is recognized during 2024. Recoverable amounts are significantly
exceeding carrying values even when applying large swings in key assumptions
underpinning the value in use calculations for both fuel processing and fuel
cells manufacturing CGUs.
15. Right-of-use assets
Cars Buildings Total
£000 £000 £000
Cost
At 1 November 2021 - 1,885 1,885
Additions - 576 576
Disposals - (476) (476)
At 31 October 2023 - 1,985 1,985
Additions 19 - 19
Disposals - - -
At 31 October 2024 19 1,985 2,004
Depreciation
At 1 November 2022 - 909 909
Charge for the year - 455 455
Disposals - (476) (476)
At 31 October 2023 - 888 888
Charge for the year 1 469 470
At 31 October 2024 1 1,357 1,358
Net book value
At 31 October 2023 - 1,097 1,097
At 31 October 2024 18 628 646
Refer to Note 22 for disclosure of the associated lease liabilities.
16. Investment in joint venture
The Company has a 50% interest in a joint venture, Speedy Hydrogen Solutions
Limited. The joint venture was incorporated on 6(th) November 2023 and the two
joint venture partners invested £625,000 capital each.
2024
£000
1 November 2023 -
Capital invested 625
Impairment -
31 October 2024 625
As part of the JV agreement the Company along with its partner may subscribe
to up to £3,750,000 Secured Loan Notes. The loan notes are repayable in three
years' time and interest is payable at 2.00% above bank of England base rate.
The milestone conditions required for the allotment of the loan notes had not
occurred as of 31(st) October 2024.
17. Property, plant and equipment
Rental Asset Plant, machinery and equipment
Total
Leasehold improvements Decommissioning Asset Assets under construction
£000 £000 £000 £000 £000 £000
Cost
At 1 November 2022 - 2,570 300 3,562 406 6,838
Additions - 985 - 334 288 1,607
Disposals - (9) - (25) - (34)
At 31 October 2023 - 3,546 300 3,871 694 8,411
Additions 348 169 167 1,886 382 2,952
Transfers - 303 - 103 (406) -
Disposals - - - (2,483) - (2,483)
At 31 October 2024 348 4,018 467 3,377 670 8,880
Depreciation
At November 2022 - 746 285 2,525 - 3,556
Charge for the year - 648 15 436 1,099
At 31 October 2023 - 1,394 300 2,961 - 4,655
Charge for the year 29 1,221 77 715 2,043
Disposals - - (2,483) - (2,483)
At 31 October 2024 29 2,615 377 1,193 - 4,214
Net book value
At 31 October 2023 - 2,152 - 910 694 3,756
At 31 October 2024 319 1,403 90 2,184 670 4,666
18. Inventory
31 October 2024 31 October 2023
£000 £000
Raw materials 1,782 185
Work-in-progress 615 405
Provision (449) (412)
Inventory 1,948 178
Inventory expensed as cost of sales during the year was £5,348,000 (2023:
£nil). As at 31 October 24, work -in-progress was written down by £449,000
to net realisable value.
19. Trade and other receivables
31 October 2024 31 October 2023
£000 £000
Trade receivables 249 107
Receivable from joint venture 4,114 -
VAT receivables 8 383
Other receivables 313 217
Prepayments 2,053 524
6,737 1,231
The company has committed to provide sufficient funds to the joint venture
along with JV partners to settle the obligation (refer also to note 16).
Included within prepayments is an amount of £1,378,000 (2023: £119,000) in
relation to payments made to suppliers in advance of receipt of stock.
There is no significant difference between the fair value of the receivables
and the values stated above.
20. Cash and cash equivalents
31 October 2024 31 October 2023
£000 £000
Cash at bank 769 303
Bank deposits 14,605 27,063
15,374 27,366
There is no material foreign exchange movement in respect of cash and cash
equivalents.
Restricted cash of £433,720 (2023: £258,000) is not included within cash and
cash equivalents and is held in escrow to support bank guarantees provided
under contractual obligations to suppliers and customers.
21. Trade and other payables
31 October 2024 31 October 2023
£000 £000
Trade payables 1,826 931
Deferred revenue 1,804 1,423
Other payables 468 416
Accruals 857 958
4,955 3,728
Included in Accruals as of 31 October 2024 is an amount of £290,000 in
relation to bonuses (2023: £690,000).
Deferred revenue under the ABB contract of £2m is reduced by £577,000 fair
value of the warrants granted on the same day, 15 November 2021, as the two
contracts are considered to be linked.
22. Lease liabilities
Changes in liabilities arising from financing activities:
Year ended 31 October 2024 Year ended 31 October 2023
£000 £000
Opening position 1,124 996
Cash flows
Repayment (520) (516)
Non-cash
Additions 19 575
Interest expense 41 69
664 1,124
31 October 2024 31 October 2023
£000 £000
Lease liabilities less than 12 months 505 477
Lease liabilities more than 12 months 159 647
664 1,124
£647,000 of the Company's lease liability as at 31 October 2024 relates to
buildings for the occupancy of the campus at Dunsfold Park. A number of
buildings are occupied under licences and these have not been recognised as
right-of-use assets. Of the leases recognised as right-of-use assets, the
Company has a commitment on one lease until February 2027 with a break clause
in February 2025. The Company has a commitment on one lease until November
2025 with no break clauses. Two leases were renewed in January 2023 until
January 2026 with no break clauses.
The expense relating to short term leases and leases of low value assets
incurred during the year is £84,250 (2023: £102,000).
23. Provisions
Product warranties Decommissioning Total
£000 £000 £000
Balance at 31 October 2023 - 301 301
Additions 217 167 384
Utilisation - - -
Balance at 31 October 2024 217 468 685
Current 217 - 217
Non-current - 468 468
Decommissioning
Included within the total of £468,000 above, £417,150 relates to a provision
for the estimated costs of removing the plant and equipment installed at site
owned by a supplier of hydrogen fuel. 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.
Product warranties
As at 31 October 2024 £217,000 provision is recognised for expected warranty
claims on hydrogen fuel cells generators sold during the year. It is expected
that these costs will be incurred in the next financial year. The provision is
an estimate calculated based on most likely serviceable component to wear out
at modular and generator level, level of volumes, product mix and repair and
replacement cost.
24. Issued share capital
Share premium before costs of issue Share premium net of costs of issue
Ordinary shares Share capital Costs of issue
Price
£ £000 £000 £000 £000
At 1 November 2022 735,351,171 - 735 119,756 (3,269) 116,487
Issue of shares
5 April 2023 10,000,000 2,000,000 10 1,990 - 1,990
Exercise of options
1 June 2023 10,000 - - - - -
Exercise of warrants
14 June 2023 900,000 44,325 1 43 - 43
Exercise of PSP award
22 September 2023 255,136 255 - - - -
At 1 November 2023 746,516,307 - 746 121,789 (3,269) 118,520
Exercise of options
13 March 2024 900,000 79,200 1 78 - 78
Exercise of options
23 May 2024 25,000 2,000 - 2 - 2
Exercise of options
04 June 204 37,500 5,775 - 6 - 6
Issue of shares
13 June 2024 74,741,630 11,211,244 75 11,137 (670) 10,467
Issue of shares
1 July 2024 30,537,369 4,580,605 30 4,550 (207) 4,343
Exercise of options
11 September 2024 1,600,000 140,800 2 139 - 139
854,357,806 - 854 137,701 (4,146) 133,555
The Company considers its capital and reserves attributable to equity
shareholders to be the Company's capital. In managing its capital, the
Company's primary long-term objective is to provide a return for its equity
shareholders through capital growth. Going forward the Company will seek to
maintain a gearing ratio that balances risks and returns at an acceptable
level and to maintain a sufficient funding base to enable the Company to meet
its working capital needs. The Company has no debt, other than property
leases, and therefore a target debt to equity ratio is not relevant at the
time.
Share premium is shown before the permitted deduction of costs of issue.
After such deduction the value equals £133,555,000.
Details of the Company's capital are disclosed in the statement of changes in
equity.
There have been no other significant changes to the Company's management
objectives, policies and processes in the year nor has there been any change
in what the Company considers to be capital.
25. Share-based payments
Share-based payment charge:
31 October 2024 31 October 2023
£000 £000
Employee Share Option Plan 911 48
Employee Performance Share Plan 591 612
SAYE (43) 118
1,459 778
Employee Share Option Plan
The establishment of the Employee Share Option Plan was approved by the Board
on 1 August 2018 and amended on 10 October 2018. The Plan is designed to
attract, retain and motivate employees. Under the Plan, participants can be
granted options which vest unconditionally or conditionally upon achieving
certain performance targets. Participation in the Plan is solely at the
Board's discretion and no employee has a contractual right to participate in
the Plan or to receive any guaranteed benefits.
Options are granted under the Plan for no consideration and carry no dividend
nor voting rights.
When exercisable, each option is convertible into one ordinary share.
Set out below are summaries of options granted under the Plan:
Average Average exercise price per share option
exercise price 2023
per share
option Number of options Number of options
2024 2024 2023
£ £
At 1 November 0.32 12,970,500 0.35 13,717,167
Granted during the year 0.12 10,428,013 0.16 2,125,000
Exercised during the year 0.09 (2,562,500) 0.09 (10,000)
Lapsed during the year 0.19 (285,000) 0.17 (2,861,667)
Forfeited during the year 0.19 (290,000) - -
Amended during the year:
Options at original exercise price
- - 0.62 (1,000,000)
Options at rebased exercise price
- - 0.11 1,000,000
At 31 October 0.07 20,261,013 0.32 12,970,500
Vested and exercisable at 31 October 7,283,000 9,630,500
Share options outstanding at the end of the year have the following expiry
dates and exercise prices:
Share options 2024 Share options 2023
Grant date Expiry date Exercise price
£
02 December 2013 01 December 2023 0.3400 - 120,000
17 July 2015** 17 July 2028 0.2200 6,000,000 6,000,000
10 September 2018 01 August 2024 0.0880 - 190,000
15 October 2018 15 October 2024 0.0880 - 2,500,000
20 April 2020 20 April 2030 0.1540 783,000 820,500
09 June 2023* 28 June 2031 0.1000 500,000 500,000
09 June 2023* 28 June 2031 0.1250 500,000 500,000
09 June 2023 28 June 2031 0.1526 1,500,000 1,500,000
04 July 2022 04 July 2032 0.1900 215,000 215,000
27 April 2023 27 April 2033 0.0188 625,000 625,000
04 April 2024 04 April 2034 0.1300 238,013 -
18 April 2024 18 April 2034 0.1900 5,890,000 -
10 June 2024 10 June 2034 0.2000 70,000 -
13 June 2024 13 June 2034 0.1600 110,000 -
24 July 2024 24 July 2034 0.1600 110,000 -
05 September 2024 05 September 2034 0.0010 3,400,000 -
06 September 2024 06 September 2034 0.1300 250,000 -
07 October 2024 07 October 2034 0.1300 70,000 -
20,261,013 12,970,500
* Award amended by Deed of Variation in 2023.
** Award amended by Deed of Variation in 2024.
On 13(th) May 2024, the Company extended by 3 years the expiry term of the
6,000,000 shares options granted originally on 17(th) July 2015 under the
Employee Share Option Plan. The extension of the expiry period resulted in an
increase of the fair value of the affected share options by £409,000, which
has been recognised as an additional share-based payment expense in the
current financial year.
The fair value of the modified share options was determined using 1) Black-
Scholes model for 3,000,000 share options not subject to any market conditions
and 2) Hybrid model, a combination between Monte Carlo simulation and Binomial
tree model, for 3,000,000 share options subject to market conditions. The
inputs and assumptions incorporated in the valuation are listed in the table
below. The valuation date is the modification date of 14(th) May 2024.
The table below sets out the inputs used in determining the fair value of the
grants of options per the previous table as well as the expense recognised in
the accounts in the current year. The grants in the previous table are
linked below based on the exercise price and grant date.
Average grant date share price Average expected volatility per annum Average risk-free interest rate per annum Average dividend yield per annum Average implied option life in years Average fair value per option
Amount expense in 2024
Exercise price
Grant date
£ £ £ £000
04 July 2022 0.1900 0.1900 95.00% 1.83% 0.00% 3.0 0.1140 8
27 April 2023 0.1880 0.1882 78.00% 3.82% 0.00% 3.0 0.0990 21
09 June 2023 0.1000 0.1682 72.00% 4.51% 0.00% 0.7 0.0791 8
09 June 2023 0.1000 0.1682 72.00% 4.51% 0.00% 0.9 0.0825 8
09 June 2023 0.1250 0.1682 72.00% 4.51% 0.00% 1.7 0.0817 24
09 June 2023 0.1250 0.1682 72.00% 4.51% 0.00% 1.9 0.0847 7
09 June 2023 0.1530 0.1682 72.00% 4.51% 0.00% 2.7 0.0856 7
09 June 2023 0.1530 0.1682 72.00% 4.51% 0.00% 2.9 0.0883 22
04 April 2024 0.1300 1.1700 85.08% 3.77% 0.00% - 0.1500 16
18 April 2024 0.1900 0.1900 85.06% 4.01% 0.00% - 0.1600 319
10 June 2024 0.2000 0.1900 85.56% 4.05% 0.00% - 0.1600 3
13 June 2024 0.1600 0.1600 85.40% 3.86% 0.00% - 0.1400 4
24 July 2024 0.1600 0.1500 85.40% 3.89% 0.00% - 0.1300 2
05 September 2024 0.0010 0.1300 85.36% 3.63% 0.00% - 0.1300 50
06 September 2024 0.1300 0.1200 85.35% 3.60% 0.00% - 0.1000 2
07 October 2024 0.1300 0.1000 85.33% 3.88% 0.00% - 0.0800 1
13 May 2024* 0.2200 0.2100 76.50% 4.13% 0.00% - 0.0972 182
13 May 2024* 0.2200 0.2100 76.50% 4.13% 0.00% - 0.1213 227
911
* The grant date is the date of modification of the
original share options granted on 17(th) July 2015.
Performance Share Plan
The establishment of the Performance Share Plan was approved by the Board on 1
September 2021. The Plan is designed to attract, retain and motivate
employees. Under the Plan, participants can be granted options which vest
unconditionally or conditionally upon achieving certain performance targets.
Participation in the Plan is solely at the Board's discretion and no employee
has a contractual right to participate in the Plan or to receive any
guaranteed benefits. Award holders are not required to make payment for the
grant of an award unless the board determines otherwise.
Options are granted under the Plan for no consideration and carry no dividend
nor voting rights.
When exercisable, each option is convertible into one ordinary share.
Set out below are summaries of options granted under the Plan:
Average exercise price per share option Average exercise price per share option
2024 2023
Number of options Number of options
2024 2023
£
At 1 November 0.001 7,600,904 - 6,131,266
Granted during the year 0.001 6,295,394 0.001 4,664,000
Exercised during the year 0.001 - 0.001 (255,136)
Lapsed during the year 0.001 (620,970) 0.001 (2,939,226)
At 31 October 0.001 13,275,328 0.001 7,600,904
Vested and exercisable at 31 October - -
Share options outstanding at the end of the year have the following expiry
dates and exercise prices:
Share options 2024 Share options 2023
Grant date Expiry date Exercise price
£
19 November 2021 19 November 2031 0.001 - 620,970
12 July 2022 12 July 2032 0.001 2,315,934 2,315,934
1 June 2023 1 June 2033 0.001 4,664,000 4,664,000
02 May 2024 02 May 2034 0.001 369,405 -
02 May 2024 02 May 2024 0.001 5,925,989 -
13,275,328 7,600,904
The table below sets out the inputs used in determining the fair value of the
grants of options per the previous table as well as the expense recognised in
the accounts in the current year. The grants in the previous table are
linked below based on the exercise price and grant date.
Average grant date share price Average expected volatility per annum Average risk-free interest rate per annum Average dividend yield per annum Average implied option life in years Average fair value per option
Amount expenses in 2024
Exercise price
Grant date
Pence Pence Pence £000
19 November 2021 0.001 53.80 76.00% 0.05% 0.00% 0.40 0.43 -
19 November 2021 0.001 53.80 76.00% 0.35% 0.00% 1.40 0.42 80
19 November 2021 0.001 53.80 76.00% 0.05% 0.00% 3.00 0.45 35
15 July 2022 0.001 20.70 95.00% 1.76% 0.00% 3.00 12.70 91
15 July 2022 0.001 20.70 95.00% 1.76% 0.00% 3.00 16.60 119
01 June 2023 0.001 17.91 74.00% 4.29% 0.00% 3.00 8.79 68
01 June 2023 0.001 17.91 74.00% 4.29% 0.00% 3.00 10.92 85
02 May 2024 0.001 18.00 88.11% 4.03% 0.00% 3.00 15.00 9
02 May 2024 0.001 18.00 67.50% 4.49% 0.00% 3.00 10.00 104
Total charge for the year (2023: £612,000) 591
Three grants were made on 19 November 2021. The first two, of the three
disclosed above, related to the Transitional LTIP, and was made in two
tranches. The first tranche had a risk free rate of 0.05% whilst the second
tranche had a risk-free rate of 0.35%. The third, of the three above,
related to the PSP LTIP and had a risk free rate of 0.05%.
SAYE
Save-as-you-earn (SAYE) 'Sharesave' schemes are open to all eligible
employees. The SAYE schemes allows eligible employees to commit to making a
deduction from salary on a monthly basis over three years. At the end of the
three-year period, employees can purchase the Company's ordinary shares of 0.1
pence each ("Ordinary Shares") using the funds saved.
The first AFC Energy SAYE scheme was launched in August 2022 at an exercise
price of 20.48 pence per Ordinary Share, representing a 20% discount to the
closing market price of the Ordinary Shares prior to the scheme being launched
on 3 August 2022.
The second AFC Energy SAYE scheme was launched in September 2023 at an
exercise price of 14.304 pence per Ordinary Share, representing a 20% discount
to the closing market price of the Ordinary Shares prior to the scheme being
launched on 6 September 2023.
The discounts to the closing market prices are in line with the limits of the
SAYE scheme as defined by HMRC.
Average exercise price per option 2024 Average exercise price per option 2023
Number of options 2024 Number of options 2024
Pence £
01 November 17.44 3,944,601 20.48 2,007,400
Granted during the year - - 14.30 1,937,201
Forfeited during the year 19.42 (1,915,803) - -
31 October 15.58 2,028,798 17.44 3,944,601
Vested and exercisable at 31 October - - - -
Exercise price Share options 2024 Share options 2023
Pence
Grant date Expiry date
03 August 2022 31 March 2026 20.480 420,989 2,007,400
19 October 2023 30 April 2027 14.304 1,607,809 1,937,201
Average grant date share price Average expected volatility per annum Average risk-free interest rate per annum Average dividend yield per annum Average implied option life in years Average fair value per option
Amount expenses in 2023
Exercise price
Grant date
Pence Pence Pence £000
03 August 2022 20.480 25.60 95.00% 2.93% 0.00% 3.08 17.700 (80)
19 October 2023 14.304 13.97 73.00% 4.72% 0.00% 3.03 7.060 37
Total charge for the year (2023: £118,000) (43)
Warrants
While the Board issues share options to employees, the Board has the
discretion to award warrants from time to time to non-employees, such as
non-executive directors and third parties. Typically, warrants are granted
and vest upon certain performance targets. Grant of warrants is solely at
the Board's discretion.
Warrants are granted for no consideration and carry no dividend nor voting
rights. When exercisable, each warrant is convertible into one ordinary
share.
Set out below are summaries of warrants granted under the Plan:
Average exercise price per warrant 2024 Average exercise price per warrant 2023
Number of warrants 2024 Number of warrants 2023
£ £
01 November 0.670 11,802,720 0.540 15,702,720
Granted during the year - - - -
Exercised during the year* - - 0.049 (900,000)
Lapsed during the year 0.585 (6,802,720) 0.210 (3,000,000)
31 October 0.770 5,000,000 11,802,720
Vested and exercisable at 31 October - 3,401,360
Average grant date share price Average expected volatility per annum Average risk-free interest rate per annum Average dividend yield per annum Average implied warrant life in years Average fair value per warrant
Amount expenses in 2024
Warrant price
Grant date
Pence Pence Pence £000
13 October 2020 19.5 18.56 102.76% (0.02)% 0.00% 1 7.01 -
Total charge for the year (2023: £NIL) -
Average grant date share price Average expected volatility per annum Average risk-free interest rate per annum Average dividend yield per annum Average implied warrant life in years Average fair value per warrant
Accounted as equity in 2024
Warrant price
Grant date
Pence Pence Pence £000
15 November 2021 58.8 58.8 59.1% 0.65% 0.00% 2 6.3 -
15 November 2021 58.8 58.8 59.1% 0.65% 0.00% 2 11.3 -
15 November 2021 58.8 58.8 59.1% 0.65% 0.00% 2 9.9 -
Accounted as equity (2023: £NIL) -
In the case of the ABB warrants in the table above, the warrant life is two
years from the date of vesting. The first tranche of 3.4 million warrants
have fully vested and expired on 4 February 2024 without having been
exercised. Under the revised agreement signed on 28 March 2023, ABB will
invest the £2.0 million balance into newly issued share capital, which means
that the original milestones 1 and 2 no longer apply. During 2024 the related
warrants have been cancelled.
Warrants outstanding at the end of the year have the following expiry dates
and exercise prices.
Exercise price Warrants 2024 Warrants 2023
Grant date Expiry date
13 January 2021 13 March 2025 0.770 5,000,000 5,000,000
15 November 2021 04 February 2024 0.590 - 3,401,360
15 November 2021 24 months after vesting 0.590 - 1,700,680
15 November 2021 24 months after vesting 0.590 - 1,700,680
5,000,000 11,802,720
* These warrants represent share-based payments which
have been accounted for under IFRS 2 and disclosures have been made which are
required for share based payments, these can be found in notes 9 and 25.
26. Financial instruments
In common with other businesses, the Company is exposed to risks that arise
from its use of financial instruments. This note describes the Company's
objectives, policies and processes for managing those risks and the methods
used to measure them. Further quantitative information in respect of these
risks is presented throughout this financial information.
Principal financial instruments
The principal financial instruments used by the Company, from which financial
instrument risk arises, are as follows:
Year ended 31 October Year ended 31 October 2023
2024
Note £000 £000
Financial instruments held at amortised cost:
Cash and cash equivalents 20 15,374 27,366
Restricted cash 433 258
Trade and other receivables 19 4,676 324
Total financial assets held at amortised cost 20,483 27,948
Trade & other payables 21 3,151 2,304
Leases 22 664 1,124
Total financial liabilities held at amortised cost 3,815 3,428
There is no significant difference between the fair value and book value of
financial instruments.
The Company does not enter forward exchange contracts or otherwise hedge its
potential foreign exchange exposure. The Board monitors and reviews its
policies in respect of currency risk on a regular basis.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Company's
risk management objectives and policies and, while retaining ultimate
responsibility for them, it has delegated part of the authority for designing
and operating processes that ensure the effective implementation of the
objectives and policies to the Company's finance team. The Board receives
reports from the financial team through which it reviews the effectiveness of
the processes put in place and the appropriateness of the objectives and
policies it sets.
The overall objective of the Board is to set policies that seek to reduce
ongoing risk as far as possible without unduly affecting the Company's
competitiveness and flexibility. Further details regarding these policies
are set out below.
Credit risk
Credit risk arises principally from the Company's trade and other receivables
and cash and cash equivalents. It is the risk that the counterparty fails to
discharge its obligation in respect of the instrument. The maximum exposure
to credit risk equals the carrying value of these items in the financial
information as shown below:
Year ended 31 October 2024 Year ended 31 October 2023
£000 £000
Cash and cash equivalents 15,374 27,366
Restricted cash 433 258
Tarde and other receivables 4,676 324
Credit risk with cash and cash equivalents is reduced by placing funds with
banks with acceptable credit ratings and government support where applicable
and on term deposits with a range of maturity dates. At the year end, most
cash were temporarily held on short-term deposit. The credit risk provision
is estimated on a case by case basis taking into account public information of
the counterparty and payment history and no loss is expected. No expected
credit loss has been made as at 31 October 2024 and 2023 as they are estimated
to be de minimis.
Liquidity risk
Liquidity risk arises from the Company's management of working capital and the
amount of funding required for the development programme. It is the risk
that the Company will encounter difficulty in meeting its financial
obligations as they fall due. The Company's policy is to ensure that it will
always have sufficient cash to allow it to meet its liabilities when they
become due.
The principal liabilities of the Company are trade and other payables in
respect of the ongoing product development programme. Trade payables are all
payable within two months. The Board receives cash flow projections on a
regular basis as well as information on cash balances.
The following table shows the Company's financial liabilities by relevant
maturity grouping based on contractual maturities. The amounts included in
the analysis are contractual, undiscounted cashflows.
Total contracted cash flows
Less than one year One to two years Two to five years Carrying amount
31 October 2024 £000 £000 £000 £000 £000
Trade & other payables 3,151 - - 3,151 3,151
Lease liabilities 525 144 19 688 664
Total financial liabilities 3,676 144 19 3,839 3,815
Total contracted cash flows
Less than one year One to two years Two to five years Carrying amount
31 October 2023 £000 £000 £000 £000 £000
Trade & other payables 2,304 - - 2,304 2,304
Lease liabilities 518 518 151 1,187 1,124
Total financial liabilities 2,822 518 151 3,491 3,428
See also note 22, which sets out the lease liabilities for less than 12 months
and more than 12 months.
Interest rate risk
The Company is exposed to interest rate risk in respect of surplus funds held
on deposit and, where appropriate, uses fixed interest term deposits to
mitigate this risk.
27. Related party transactions
Details of Directors' remuneration are given in note 10. A full list of
subsidiaries and joint ventures is given in note 28.
Joint venture
During the year the Company made sales of £3,829,000 to Speedy Hydrogen
Solutions Limited, a joint venture in which the company is a venturer (refer
also to note 16 and note 28). As at the year end, £4,114,000 is receivable
from Speedy Hydrogen Solutions Limited and it is included within trade and
other receivables (refer to Note 19).
Remuneration of key management personnel
Key management personnel are those individuals who have authority and
responsibility for planning, directing and controlling the activities of the
Company. For AFC Energy Plc these are considered to be all executive and
non-executive directors in office during each financial year.
Year ended 31 October 2024 Year ended 31 October 2023
£000 £000
Short-term employee benefits:
Salaries and bonuses 1,101 1,526
Termination benefits 234 -
Benefits in kind 52 74
1,387 1,600
Post-employment benefits:
Defined contribution pension plans 28 46
1,415 1,646
Share-based payments 756 629
Total 2,171 2,275
Aggregate gains made by directors on the exercise of share options and
warrants was £nil (2023: £129,225).
During the year the directors, in aggregate, subscribed for a total of 666,666
ordinary shares for a total consideration of £100,000.
28. Joint venture, subsidiary and ultimate controlling
party
The company controls 50% of the voting rights of joint venture, Speedy
Hydrogen Solutions Limited, which is accounted for and disclosed in accordance
with IFRS 11 Joint Arrangements. The joint venture is registered in the United
Kingdom with a company number 15264396. The address of the registered office
is Chase House 16 The Parks, Newton-Le-Willows, Merseyside, United Kingdom
WA12 0JQ. The principal activity of the joint venture is the leasing of
hydrogen fuel cells.
On 29 August 2024, the company incorporated Hyamtec Limited, the only
subsidiary of the company. The subsidiary is registered in the United
Kingdom with a registration number 15924441. The address of the registered
office is Unit 71.4 Dunsfold Park, Cranleigh, Surrey, United Kingdom, GU6 8TB.
The subsidiary is 100% owned by the company and it has not traded since
incorporation. Total unpaid share capital of £100 is included within other
payables on the company statement of financial position.
There is no ultimate controlling party.
29. Events occurring after the end of the reporting
period
None of which are disclosable.
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